SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT (No. 33-43758)
UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. ____ [ ]
Post-Effective Amendment No. 10 [X]
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 (811-6453) [X]
FIDELITY COURT STREET TRUST II
_______________________________________________
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, MA
02109____________________________________________________
(Address of Principal Executive Offices)
Registrant's Telephone Number (617)
570-7000______________________________________________
Arthur S. Loring, Secretary
82 Devonshire Street
Boston, MA
02109___________________________________________________________________
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
( ) Immediately upon filing pursuant to paragraph (b)
(X) On January 14, 1994 pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)
( ) On ( ) pursuant to paragraph (a) of Rule 485
Registrant was filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of
1940 and will file the notice required by such Rule before January 31,
1994.
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO
SPARTAN CONNECTICUT 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 Highlights
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 .............................. *
5A .............................. Performance
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
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO
SPARTAN CONNECTICUT MUNICIPAL HIGH YIELD PORTFOLIO
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 ............................ Interest of FMR Affiliates
e ............................ *
f ............................ Distribution and Service Plans
g ............................ *
h ............................ Description of the Trusts
i ............................ Interest of FMR Affiliates
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 ............................ Interest of FMR Affiliates
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 January 14, 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.
The funds seek a high level of current income free from federal income tax
and Connecticut personal income tax. Spartan Connecticut Municipal Money
Market invests in high-quality, short-term instruments and is designed to
maintain a stable $1.00 share price. Spartan Connecticut Municipal
High Yield invests in a broader range of securities.
SPARTAN(Registered trademark)
CONNECTICUT
MUNICIPAL
MONEY MARKET
PORTFOLIO
and
SPARTAN(Registered trademark)
CONNECTICUT
MUNICIPAL
HIGH YIELD
PORTFOLIO
PROSPECTUS
JANUARY 14, 1994
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.
CTR-pro-194
(Registered trademark)
82 Devonshire Street, Boston, MA 02109
CONTENTS
KEY FACTS 3 THE FUNDS AT A GLANCE
3 WHO MAY WANT TO INVEST
EXPENSES AND PERFORMANCE 4 EXPENSES Each fund's yearly
operating expenses.
5 FINANCIAL HIGHLIGHTS A summary
of each fund's financial data.
7 PERFORMANCE How each fund has
done over time.
YOUR ACCOUNT 9 DOING BUSINESS WITH FIDELITY
9 TYPES OF ACCOUNTS Different
ways to set up your account.
10 HOW TO BUY SHARES Opening an
account and making additional
investments.
12 HOW TO SELL SHARES Taking money
out and closing your account.
14 INVESTOR SERVICES Services to
help you manage your account.
16 DIVIDENDS, CAPITAL GAINS, AND
TAXES
SHAREHOLDER AND 18 TRANSACTION DETAILS Share price
ACCOUNT POLICIES calculations and the timing of
purchases and redemptions.
20 EXCHANGE RESTRICTIONS
THE FUNDS IN DETAIL 22 CHARTER How each fund is
organized.
23 BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.
24 INVESTMENT PRINCIPLES Each
fund's overall approach to
investing.
25 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 Spartan Connecticut Municipal
Money Market.
As with any mutual fund, there is no assurance that a fund will
achieve its goal.
SPARTAN CONN. MONEY MARKET
GOAL: High current tax-free income for Connecticut residents while
maintaining a stable share price .
STRATEGY: Invests mainly in high-quality, short-term securities whose
interest is free from federal income tax and Connecticut personal
income tax.
SIZE: As of November 30, 1993, the fund had over $ 163 million in
assets.
SPARTAN CONN. HIGH YIELD
GOAL: High current tax-free income for Connecticut residents.
STRATEGY: Invests mainly in investment-grade, long-term securities whose
interest is free from federal income tax and Connecticut personal income
tax.
SIZE: As of November 30, 1993, the fund had over $ 450 million in
assets.
WHO MAY WANT TO INVEST
These non-diversified funds may be appropriate for investors in higher tax
brackets who seek high current income that is free from federal income tax
and Connecticut personal income tax. Each fund's level of risk, and
potential reward, depend on the quality and maturity of its investments.
Spartan Connecticut Municipal Money Market is managed to keep its share
price stable at $1.00. Spartan Connecticut Municipal High Yield, with its
broader range of investments, has the potential for higher yields, but also
carries a higher degree of risk.
These funds do not constitute a balanced investment plan. 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. When you sell your
shares of Spartan Connecticut Municipal High Yield, 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 & PERFORMANCE
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund. See page 13 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 Spartan Connecticut Municipal Money Market None
for Spartan Connecticut Municipal High Yield .50%
Exchange and wire transaction fees $5.00
Checkwriting fee, per check written (available for Spartan Connecticut
Municipal Money Market) $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 23 ).
The following are projections based on historical expenses, and are
calculated as a percentage of average net assets.
SPARTAN CONN. MONEY MARKET
Management fee . 50%
12b-1 fee None
Other expenses .00%
Total fund operating expenses .50%
SPARTAN CONN. HIGH YIELD
Management fee . 55%
12b-1 fee None
Other expenses .00%
Total fund operating expenses .55 %
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:
SPARTAN CONN. MONEY MARKET
Account open Account closed
After 1 year $ 5 $ 10
After 3 years $ 16 $ 21
After 5 years $ 28 $ 33
After 10 years $ 63 $ 68
SPARTAN CONN. HIGH YIELD
Account open Account closed
After 1 year $ 6 $ 11
After 3 years $ 18 $ 23
After 5 years $ 31 $ 36
After 10 years $ 69 $ 74
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 Coopers & Lybrand,
independent accountants. Their unqualified report is included in the
funds' Annual Report. The Annual Report is incorporated by reference into
(is legally a part of) the Statement of Additional Information.
SPARTAN CONNECTICUT MONEY MARKET
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1.Selected Per - Share Data and Ratios
2.Fiscal years ended November 30 1991C 1992 1993
3.Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000
4.Income from Investment Operations .029 .030 .022
Net interest income
5. Dividends from net interest income (.029) (.030) (.022)
6.Net asset value, end of period $ 1.000 $ 1.000 $ 1.000
7.Total returnB 2.97% 3.08% 2.21%
8.Net assets, end of period (000 omitted) $ 22,247 $ 86,672 $ 163,10
2
9.Ratio of expenses to average net assets - .02% .24%
10.Ratio of expenses to average net assets before .50%A .50% .50%
expense reductions
11.Ratio of net interest income to average net assets 4.05%A 2.90% 2.17%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
C FROM MARCH 4, 1991 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30,
1991
SPARTAN CONNECTICUT HIGH YIELD
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
12.Selected Per-Share Data
and Ratios
13.Fiscal years 1987C 1988 1989 1990 1991 1992 1993
ended
November 30
14.Net asset $ 10.000 $ 10.030 $ 10.300 $ 10.730 $ 10.730 $ 10.880 $ 11.220
value, beginning of
period
15.Income from .056 .698 .706 .687 .684 .689 .680
Investment
Operations
Net investment
income
16. Net realized .030 .270 .430 .020 .188 .338 .619
and unrealized
gain (loss) on
investment s
17. Total from .086 .968 1.136 .707 .872 .1.027 1.299
investment
operations
18.Less (.056) (.698) (.706) (.687) (.684) (.689) (.680)
Distributions
From net interest
income
19. From net - - - (.020) (.040) - -
realized gain
on investments
20. Total (.056) (.698) (.706) (.707) (.724) (.689) (.680)
distributions
21. Redemption - - - - .002 .002 .001
fees added to
paid in capital
22.Net asset $ 10.030 $ 10.300 $ 10.730 $ 10.730 $ 10.880 $ 11.220 $ 11.840
value, end of
period
23.Total returnB .86% 9.91% 11.36% 6.89% 8.43% 9.72% 11.81%
24.Net assets, end $ 3,890 $ 73,906 $ 180,38 $ 251,85 $ 346,78 $ 413,74 $ 450,113
of period (000 5 5 1 8
omitted)
25.Ratio of .65% .11% .54% .62% .55% .55% .55%
expenses to A
average net assets
26.Ratio of 7.45% 1.06% .73% .62% .60% .55% .55%
expenses to A
average net assets
before expense
reductions
27.Ratio of net 6.15% 7.10% 6.62% 6.51% 6.34% 6.21% 5.81%
interest income to A
average net assets
28.Portfolio - 11% 8% 18% 6% 11% 45%
turnover rate
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
C FROM OCTOBER 29, 1987 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30,
1987
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 and do
not reflect the effect of any transaction fees you may have paid. The
figures would be lower if fees were taken into account.
Each fund's fiscal year runs from December 1 through November 30. The
tables below show each fund's performance over past fiscal years compared
to a measure of inflation. The chart s on page 8 help you
compare the yields of these funds to those of their competitors.
SPARTAN CONN. MONEY MARKET
For the Fiscal periods Past 1 Life of
ended November 30, 1993 Year Fund A
Average annual
total return 2.21% 3.01%
Cumulative
total return 2.21% 8.48%
Consumer Price
Index 2.68% 8.16%
SPARTAN CONN. HIGH YIELD
For the Fiscal periods Past 1 Past 5 Life of
ended November 30, 1993 Year Years Fund B
Average annual
total return 11.81% 9.63% 9.67%
Cumulative
total return 11.81% 58.34% 75.53%
Consumer Price
Index 2.68% 21.20% 26.45%
A FROM MARCH 4, 1991
B FROM OCTOBER 29, 1987
EXPLANATION OF TERMS
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)
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 fund
are calculated according to a standard that is required for all
stock and bond funds. Because this differs from other accounting methods,
the quoted yield may not equal the income actually paid to shareholders.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
THE COMPETITIVE FUNDS AVERAGE S for Spartan Connecticut Municipal
Money Market are the IBC/Donoghue's MONEY FUND
AVERAGES (registered trademark) /All Tax-Free, which currently
reflects the performance of over 325 mutual funds with similar
objectives. These averages are published in the MONEY FUND
REPORT(Registered trademark) by IBC USA (Publications), Inc. The
competitive funds average s for Spartan Connecticut Municipal High
Yield are published by Lipper Analytical Services, Inc. The fund
compares its performance to the other single state municipal debt
funds, which currently reflects the performance of over 12 mutual
funds with similar objectives. Both of these averages assume
reinvestment of distributions.
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.
SPARTAN CONN. MONEY MARKET
7-day yields
Percent
age %
Row: 1, Col: 1, Value: nil
Row: 1, Col: 2, Value: 4.49
Row: 2, Col: 1, Value: nil
Row: 2, Col: 2, Value: 4.0
Row: 3, Col: 1, Value: nil
Row: 3, Col: 2, Value: 4.29
Row: 4, Col: 1, Value: nil
Row: 4, Col: 2, Value: 4.33
Row: 5, Col: 1, Value: nil
Row: 5, Col: 2, Value: 4.01
Row: 6, Col: 1, Value: nil
Row: 6, Col: 2, Value: 3.85
Row: 7, Col: 1, Value: nil
Row: 7, Col: 2, Value: 3.99
Row: 8, Col: 1, Value: nil
Row: 8, Col: 2, Value: 4.05
Row: 9, Col: 1, Value: 4.46
Row: 9, Col: 2, Value: 4.38
Row: 10, Col: 1, Value: 4.22
Row: 10, Col: 2, Value: 3.89
Row: 11, Col: 1, Value: 4.1
Row: 11, Col: 2, Value: 3.71
Row: 12, Col: 1, Value: 4.55
Row: 12, Col: 2, Value: 4.33
Row: 13, Col: 1, Value: 3.15
Row: 13, Col: 2, Value: 2.69
Row: 14, Col: 1, Value: 3.13
Row: 14, Col: 2, Value: 2.62
Row: 15, Col: 1, Value: 3.36
Row: 15, Col: 2, Value: 2.97
Row: 16, Col: 1, Value: 3.48
Row: 16, Col: 2, Value: 3.07
Row: 17, Col: 1, Value: 3.32
Row: 17, Col: 2, Value: 3.0
Row: 18, Col: 1, Value: 2.97
Row: 18, Col: 2, Value: 2.46
Row: 19, Col: 1, Value: 2.62
Row: 19, Col: 2, Value: 2.14
Row: 20, Col: 1, Value: 2.61
Row: 20, Col: 2, Value: 2.15
Row: 21, Col: 1, Value: 3.11
Row: 21, Col: 2, Value: 2.67
Row: 22, Col: 1, Value: 2.48
Row: 22, Col: 2, Value: 2.13
Row: 23, Col: 1, Value: 2.54
Row: 23, Col: 2, Value: 2.16
Row: 24, Col: 1, Value: 3.17
Row: 24, Col: 2, Value: 2.69
Row: 25, Col: 1, Value: 2.16
Row: 25, Col: 2, Value: 1.81
Row: 26, Col: 1, Value: 2.21
Row: 26, Col: 2, Value: 1.87
Row: 27, Col: 1, Value: 2.28
Row: 27, Col: 2, Value: 1.96
Row: 28, Col: 1, Value: 2.32
Row: 28, Col: 2, Value: 1.98
Row: 29, Col: 1, Value: 2.49
Row: 29, Col: 2, Value: 2.13
Row: 30, Col: 1, Value: 2.1
Row: 30, Col: 2, Value: 1.79
Row: 31, Col: 1, Value: 2.14
Row: 31, Col: 2, Value: 1.86
Row: 32, Col: 1, Value: 2.16
Row: 32, Col: 2, Value: 1.97
Row: 33, Col: 1, Value: 2.28
Row: 33, Col: 2, Value: 2.16
Row: 34, Col: 1, Value: 2.02
Row: 34, Col: 2, Value: 1.95
Row: 35, Col: 1, Value: 1.98
Row: 35, Col: 2, Value: 1.91
Spartan
Conn.
Money
Market
Competitive
funds
average
1992
1991
1993
SPARTAN CONN. HIGH YIELD
30-day yields
Percent
age %
Row: 1, Col: 1, Value: 6.609999999999999
Row: 1, Col: 2, Value: 6.470000000000001
Row: 2, Col: 1, Value: 6.49
Row: 2, Col: 2, Value: 6.38
Row: 3, Col: 1, Value: 6.53
Row: 3, Col: 2, Value: 6.52
Row: 4, Col: 1, Value: 6.33
Row: 4, Col: 2, Value: 6.3
Row: 5, Col: 1, Value: 6.26
Row: 5, Col: 2, Value: 6.2
Row: 6, Col: 1, Value: 6.45
Row: 6, Col: 2, Value: 6.37
Row: 7, Col: 1, Value: 6.42
Row: 7, Col: 2, Value: 6.29
Row: 8, Col: 1, Value: 6.149999999999999
Row: 8, Col: 2, Value: 6.159999999999999
Row: 9, Col: 1, Value: 6.31
Row: 9, Col: 2, Value: 6.09
Row: 10, Col: 1, Value: 6.23
Row: 10, Col: 2, Value: 6.119999999999999
Row: 11, Col: 1, Value: 6.18
Row: 11, Col: 2, Value: 6.1
Row: 12, Col: 1, Value: 6.08
Row: 12, Col: 2, Value: 5.91
Row: 13, Col: 1, Value: 6.23
Row: 13, Col: 2, Value: 6.05
Row: 14, Col: 1, Value: 6.41
Row: 14, Col: 2, Value: 6.04
Row: 15, Col: 1, Value: 6.39
Row: 15, Col: 2, Value: 6.04
Row: 16, Col: 1, Value: 6.3
Row: 16, Col: 2, Value: 5.970000000000001
Row: 17, Col: 1, Value: 6.07
Row: 17, Col: 2, Value: 5.71
Row: 18, Col: 1, Value: 5.57
Row: 18, Col: 2, Value: 5.470000000000001
Row: 19, Col: 1, Value: 5.81
Row: 19, Col: 2, Value: 5.55
Row: 20, Col: 1, Value: 5.9
Row: 20, Col: 2, Value: 5.51
Row: 21, Col: 1, Value: 6.13
Row: 21, Col: 2, Value: 5.74
Row: 22, Col: 1, Value: 6.03
Row: 22, Col: 2, Value: 5.6
Row: 23, Col: 1, Value: 5.89
Row: 23, Col: 2, Value: 5.56
Row: 24, Col: 1, Value: 5.67
Row: 24, Col: 2, Value: 5.34
Row: 25, Col: 1, Value: 5.37
Row: 25, Col: 2, Value: 5.05
Row: 26, Col: 1, Value: 5.41
Row: 26, Col: 2, Value: 4.92
Row: 27, Col: 1, Value: 5.41
Row: 27, Col: 2, Value: 5.0
Row: 28, Col: 1, Value: 5.359999999999999
Row: 28, Col: 2, Value: 4.89
Row: 29, Col: 1, Value: 5.23
Row: 29, Col: 2, Value: 4.84
Row: 30, Col: 1, Value: 5.19
Row: 30, Col: 2, Value: 4.72
Row: 31, Col: 1, Value: 5.02
Row: 31, Col: 2, Value: 4.619999999999999
Row: 32, Col: 1, Value: 4.89
Row: 32, Col: 2, Value: 4.41
Row: 33, Col: 1, Value: 4.85
Row: 33, Col: 2, Value: 4.430000000000001
Row: 34, Col: 1, Value: 5.119999999999999
Row: 34, Col: 2, Value: nil
Row: 35, Col: 1, Value: nil
Row: 35, Col: 2, Value: nil
Spartan
Conn. High
Yield
Competitive
funds
average
1992
1991
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 1991 THROUGH OCTOBER 1993. 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.
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 75 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. Spartan Connecticut Municipal 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.
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 11 . 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
For Spartan Conn. Money Market $25,000
TO ADD TO AN ACCOUNT $1,000
Through automatic investment plans $500
MINIMUM BALANCE $5,000
For Spartan Conn. 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 (bullet) Exchange from another (bullet) Exchange from another
1-800-544-7777 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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MAIL (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 and mail to the address
application. printed on your account
statement.
(bullet) Exchange by mail: call
1-800-544-6666 for
instructions.
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IN PERSON (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 (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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AUTOMATICALLY (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.
TDD - SERVICE FOR THE DEAF AND HEARING-IMPAIRED: 1-800-544-0118
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HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. 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.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $5,000
worth of shares in the account ($10,000 for Spartan Connecticut Municipal
Money Market) to keep it open.
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(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 Connecticut Municipal
Money Market you may write an unlimited number of checks. Do not, however,
try to close out your account by check.
ACCOUNT TYPE SPECIAL REQUIREMENTS
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IF YOU SELL SHARES OF SPARTAN CONNECTICUT 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.
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PHONE All account types (bullet) Maximum check request:
1-800-544-7777 $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 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 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 All account types (bullet) Minimum check: $1,000.
(bullet) All account owners must sign
a signature card to receive a
checkbook.
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TDD - SERVICE FOR THE DEAF AND HEARING-IMPAIRED: 1-800-544-0118
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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.
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)
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
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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 unless you initiate your transaction on
Fidelity's automated exchange service.
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
20 .
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
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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.
DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA
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.
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND
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.
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A BECAUSE BOND FUND SHARE PRICES FLUCTUATE, THAT FUND MAY NOT BE AN
APPROPRIATE CHOICE FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
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DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment income and
capital gains , if any, to shareholders each year. Income dividends
are declared daily and paid monthly. Capital gains earned by the bond fund
are normally distributed in January and December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. Spartan Connecticut
Municipal High Yield offers four options, Spartan Connecticut Municipal
Money Market offers three options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions, if
any, will be automatically reinvested in additional shares of the fund. If
you do not indicate a choice on your application, you will be assigned this
option.
2. INCOME-EARNED OPTION. 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 Spartan Connecticut
Municipal 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. A 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 extent a fund's income dividends are derived from state tax-free
obligations, they will be free from the Connecticut income tax on
individuals, trusts, and estates . S ubject to adoption of proposed
regulations, long-term capital gain distributions , to the extent
derived from Connecticut obligations, would also be free from this tax.
Additionally, income dividends and long-term capital gain distributions
derived from Connecticut obligations would not be subject to the net
Connecticut minimum tax.
During fiscal 1993, 100% of each fund's income dividends was free from
federal income tax, and 91% and 100% were free from Connecticut taxes for
Spartan Connecticut Municipal Money Market and Spartan Connecticut
Municipal High Yield, respectively. 22.6% of Spartan Connecticut Municipal
Money Market's and 8.1% of Spartan Connecticut Municipal High Yield'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 capital
gain 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.
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 fund, 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 20 . 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) Spartan Connecticut Municipal Money Market reserves the right to
limit all accounts maintained or controlled by any one person to a maximum
total balance of $2 million.
(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 Spartan Connecticut Municipal High Yield, if
applicable, 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 share 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 Spartan Connecticut
Municipal Money Market), you will be given 30 days' notice to reestablish
the minimum balance. If you do not increase your balance, Fidelity reserves
the right to close your account and send the proceeds to you. Your shares
will be redeemed at the NAV 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, Spartan
Connecticut Municipal Money Market is currently a non-diversified fund of
Fidelity Court Street Trust II, and Spartan Connecticut Municipal High
Yield is currently a non-diversified fund of Fidelity Court Street Trust.
Both trusts are open-end management investment companies. Fidelity Court
Street Trust II was organized as a Delaware business trust on June 20,
1991. Fidelity Court Street Trust was organized as a Massachusetts business
trust on April 21, 1977. There is a remote possibility that one fund might
become liable for a misstatement in the prospectus about another fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet 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. You are entitled to one
vote for each share you own.
FMR AND ITS AFFILIATES
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 200
(bullet) Assets in Fidelity mutual
funds: over $ 200 billion
(bullet) Number of shareholder
accounts: over 15 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(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 Spartan Connecticut Municipal Money
Market.
Peter Allegrini is vice president and manager of Spartan Connecticut
Municipal High Yield, which he has managed since October 1987. Mr.
Allegrini also manages Advisor High Income Municipal, as well as Michigan
and Ohio Tax-Free High Yield. He joined Fidelity in 1982.
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 Spartan Connecticut Municipal Money
Market.
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:
.50% for Spartan Connecticut Municipal Money Market and .55% for Spartan
Connecticut Municipal High Yield.
The total management fee rate for Spartan Connecticut Municipal Money
Market for fiscal 1993, after reimbursement, was . 24%.
FMR HAS SUB-ADVISORY AGREEMENTS with FTX, which has primary responsibility
for providing investment management for Spartan Connecticut Municipal 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.
To offset shareholder service costs, FMR or its affiliates also collect the
funds' $5.00 exchange fee, $5.00 account closeout fee, $5.00 fee for wire
purchases and redemptions, and, for Spartan Connecticut Municipal Money
Market, the $2.00 checkwriting charge. For fiscal 1993, these fees amounted
to $2,435, $256, $520, and $1,684 , respectively, for Spartan
Connecticut Municipal Money Market and $6,270, $1,475, and $890 ,
respectively, for Spartan Connecticut Municipal High Yield.
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 1993, the portfolio turnover rate for Spartan Connecticut
Municipal High Yield was 45%. This rate varies from year to year.
INVESTMENT PRINCIPLES
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET seeks high current income
that is free from federal income tax and Connecticut income tax 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-tree securities , and
normally invests so that at least 80% of the fund's income is 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 the 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 CONNECTICUT MUNICIPAL HIGH YIELD seeks high current income that
is free from federal income tax and Connecticut income tax 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 is free from both federal and Connecticut
personal income taxes.
EACH FUND'S yield and the 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.
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.
Each fund's performance is closely tied to the economic and political
conditions within the state of Connecticut. The state's economy is
sensitive to some industry trends, such as the level of defense spending.
For the last several years, Connecticut has been in a recession and its
budget has experienced deficits.
FMR normally invests each fund's assets according to its investment
strategy. The funds do not expect to invest in federally taxable
obligations, and Spartan Connecticut Municipal High Yield also does 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 it 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 Spartan Connecticut Municipal
High Yield's portfolio. These figures are dollar-weighted averages of
month-end portfolio holdings during fiscal 1993, 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 CONNECTICUT MUNICIPAL HIGH YIELD
Fiscal 1993 debt holdings, by rating MOODY'S STANDARD & POOR'S
INVESTORS SERVICE, INC. CORPORATION
Rating Average A Rating AverageA
INVESTMENT GRADE
Highest quality Aaa AAA
High quality Aa 65.0% AA 67.3%
Upper-medium grade A A
Medium grade Baa 13.3% BBB 10.9%
LOWER QUALITY
Moderately speculative Ba 1.8% BB 1.8%
Speculative B 0.0% B 0.0%
Highly speculative Caa 0.0% CCC 0.0%
Poor quality Ca CC
Lowest quality, no interest C C
In default, in arrears -- - D 0.0%
80.1% 80.0%
A THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED BY MOODY'S OR
S&P AMOUNTED TO 7.7%. 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.
0.0%
0.0%
RESTRICTIONS: Spartan Connecticut Municipal 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 Connecticut 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
interest on which federal law prohibits the states from taxing. 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 CONNECTICUT MUNICIPAL MONEY MARKET seeks as high a level of current
income, exempt from federal income tax and, to the extent possible, exempt
from Connecticut personal income tax, as is consistent with preservation of
capital and liquidity. The fund will normally invest so that at least 65%
of its total assets are invested in state tax-free obligations and at least
80% of its income will be exempt from federal income tax.
SPARTAN CONNECTICUT MUNICIPAL HIGH YIELD seeks a high level of current
income, exempt from federal income tax and Connecticut personal income tax.
The fund will normally invest so that at least 80% of its income is exempt
from both federal and Connecticut personal income taxes.
EACH FUND may borrow only for temporary or emergency purposes, but not in
an amount exceeding 33% of its total assets.
This prospectus is printed on recycled paper using soy-based inks.
SPARTAN(registered trademark) CONNECTICUT MUNICIPAL HIGH YIELD PORTFOLIO
A FUND OF FIDELITY COURT STREET TRUST
SPARTAN(registered trademark) CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO
A FUND OF FIDELITY COURT STREET TRUST II
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 14 , 1994
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated January 14 , 1994). Please
retain this document for future reference. The Annual Report for the
fiscal year ended November 30, 1993 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 Connecticut
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)
CTR-ptB-194
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) of the 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 CONNECTICUT 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 has the right to obtain
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 considered 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 municipal securities 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 other instruments; 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 objectives, 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 may borrow money only (a) from a bank or from a registered
investment company or fund for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (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 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 objectives, 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.
INVESTMENT LIMITATIONS OF SPARTAN CONNECTICUT 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 bonds or any other class of securities preferred over shares of
the fund in respect of the fund's assets or earnings, provided that
Fidelity Court Street Trust may issue additional series of shares in
accordance with its Declaration of Trust;
(2) sell securities short, unless it owns, or by virtue of ownership of
other securities has the right to obtain, securities equivalent in kind and
amount to the securities sold short, and provided that transactions in
futures contracts are not deemed to constitute short sales;
(3) 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 the fund may make initial and variation margin payments in
connection with transactions in futures contracts and options on futures
contracts;
(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 (less liabilities other
than borrowings). Any borrowings that come to exceed 33 1/3% of the value
of the fund's total assets by reason of a decline in total assets will be
reduced within three days 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,
instrumentalities, territories or possessions, or issued or guaranteed by a
state government or political subdivision thereof) if, as a result, more
than 25% of the value of its total assets would be invested in securities
of companies having their principal business activities 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 (but this shall not prevent the fund from
purchasing or selling futures contracts); 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.
Investment limitation (4) is construed in conformity with the 1940 Act,
and, accordingly, "three 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 may borrow money only (a) from a bank or from a registered
investment company or fund for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (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 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.
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 high yield fund's limitations on futures and options transactions,
see the section entitled "Limitations on Futures and Options Transactions"
beginning on page 8.
AFFILIATED BANK TRANSACTIONS. Pursuant to exemptive orders issued by the
Securities and Exchange Commission (SEC), the funds may engage in
transactions with banks 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; and transactions in U.S. government securities with affiliated
banks that are primary dealers in these securities.
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 a U.S. government security;
rated in accordance with applicable rules in one of the two highest
categories for short-term securities by at least two nationally recognized
rating services (or by one, if only one rating service has rated the
security); or, if unrated, judged to be of equivalent quality by FMR.
High-quality securities are divided into "first tier" and "second tier"
securities. First tier securities have received the highest rating (e.g.,
Standard & Poor's A-1 rating) from at least two rating services (or
one, if only one has rated the security). Second tier securities have
received ratings within the two highest categories (e.g., Standard &
Poor's A-1 or A-2) from at least two rating services (or one, if only one
has rated the security), but do not qualify as first tier securities. If a
security has been assigned different ratings by different ratings services,
at least two rating services must have assigned the higher rating in order
for FMR to determine eligibility on the basis of that higher rating. Based
on procedures adopted by the Board of Trustees, FMR may determine that an
unrated security is of equivalent quality to a rated first or second tier
security.
The fund may not invest more that 5% of its total assets in second tier
securities. In addition, the fund may not invest more than 1% of its total
assets or $1 million (whichever is greater) in the second tier securities
of a single issuer.
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 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 high yield fund may purchase securities on a
when-issued basis in connection with the refinancing of an issuer's
outstanding indebtedness. Refunding contracts require the issuer to sell
and the fund to buy refunded municipal obligations at a stated price and
yield on a settlement date that may be several months or several years in
the future. The fund generally will not be obligated to pay the full
purchase price if it fails to perform under a refunding contract. Instead,
refunding contracts generally provide for payment of liquidated damages to
the issuer (currently 15-20% of the purchase price). The 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, the fund will place
liquid assets in a segregated custodial account equal in amount to its
obligations under refunding contracts.
INVERSE FLOATERS. The high yield fund 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 fund s 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 consider s
variable rate instruments structured in this way (Participating
VRDOs) to be essentially equivalent to other VRDOs it
purchase s . The IRS has not ruled whether the interest on
Participating VRDOs is tax-exempt and, accordingly, a fun d
intend s to purchase these instruments based on opinions of bond
counsel.
T he money market fund may invest in variable or floating
rate instrument s that ultimately mature in 397 days if
the fund acquires a right to sell the instruments that meets certain
requirements set forth in Rule 2a-7. V ariable rate
instrument s (including instruments subject to a demand feature) that
mature in 397 days or less may be deemed to have
maturit ies 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 . I nstead,
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 high yield fund's standards for high-quality, taxable
obligations are essentially the same as those described by Moody's
Investors Service, Inc. (Moody's) in rating corporate obligations within
its two highest ratings of Prime-1 and Prime-2, and those described by
Standard & Poor's 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 Connecticut
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.
INDEXED SECURITIES. The high yield fund may purchase securities whose
prices are indexed to the prices of other securities, securities indicies,
or other financial indicators. Indexed securities typically, but not
always, are debt securities or deposits whose value at maturity or coupon
rate is determined by reference to a specific instrument or statistic.
Indexed securities may have principal payments as well as coupon payments
that depend on the performance of one or more interest rates. Their coupon
rates or principal payments may change by several percentage points for
every 1% interest rate change. One example of indexed securities is
inverse floaters.
The performance of indexed securities depends to a great extent on the
performance of the security or other instrument to which they are indexed,
and may also be influenced by interest rate changes. At the same time,
indexed securities are subject to the credit risks associated with the
issuer of the security, and their values may decline substantially if the
issuer's creditworthiness deteriorates. Indexed securities may be more
volatile than the underlying instruments.
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 the funds in
connection with bankruptcy proceedings), it is each fund's current policy
to limit repurchase agreement transactions to 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 by FMR. Such
transactions may increase fluctuations in the market value of a 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 the funds' investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment). 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 high yield fund 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 high yield fund writes, all or a
portion of the value of the underlying instrument may be illiquid depending
on the assets held to cover the option and the nature and terms of any
agreement the fund may have to close out the option before expiration. In
the absence of market quotations, illiquid investments for the money market
fund are valued for purposes of monitoring amortized cost valuation and for
the high yield fund priced at fair value as determined in good faith by a
committee appointed by the Board of Trustees. If through a change in
values, net assets, or other circumstances, a fund were in a position where
more than 10% of its net assets 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.
INTERFUND BORROWING PROGRAM. The fund has received permission from the SEC
to lend money to and borrow money from other funds advised by FMR or its
affiliates. Interfund loans and borrowings normally will extend overnight,
but can have a maximum duration of seven days. Loans may be called on one
day's notice. The fund will lend through the program only when the returns
are higher than those available at the same time from other short-term
instruments (such as repurchase agreements), and will borrow through the
program only when the costs are equal to or lower than the cost of bank
loans. The fund may have to borrow from a bank at a higher interest rate
if an interfund loan is called or not renewed. Any delay in repayment to a
lending fund could result in a lost investment opportunity or additional
borrowing costs.
LOWER-RATED MUNICIPAL SECURITIES. The high yield fund may invest a portion
of its assets in lower-rated municipal securities as described in the
Prospectus.
While the market for Connecticut municipals is considered to be adequate,
adverse publicity and changing investor perceptions may affect the ability
of outside pricing services used by the 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.
The 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.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS (HIGH YIELD FUND
ONLY) . The fund has filed a notice of eligibility for exclusion from
the definition of the term "commodity pool operator" with the Commodity
Futures Trading Commission (CFTC) and the National Futures Association,
which regulate trading in the futures markets. The fund intends to comply
with Section 4.5 of 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, the 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 fund's investments in futures contracts and
options, and the fund's policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information may be
changed as regulatory agencies permit.
FUTURES CONTRACTS. When the 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 fund's 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, the 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 the 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 would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates the 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. The 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, the 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 fund's current or
anticipated investments exactly. The 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.
Options 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. The 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 the 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 fund 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.
HEALTH CARE INDUSTRY. The health care industry is subject to regulatory
action by a number of private and governmental agencies, including federal,
state, and local governmental agencies. A major source of revenues for the
health care industry is payments from the Medicare and Medicaid programs.
As a result, the industry is sensitive to legislative changes and
reductions in governmental spending for such programs. Numerous other
factors may affect the industry, such as general and local economic
conditions; demand for services; expenses (including malpractice insurance
premiums); and competition among health care providers. In the future, the
following elements may adversely affect health care facility operations:
adoption of legislation proposing a national health insurance program;
medical and technological advances which dramatically alter the need for
health services or the way in which such services are delivered; and
efforts by employers, insurers, and governmental agencies to reduce the
costs of health insurance and health care services.
HOUSING. Housing revenue bonds are generally issued by a state, county,
city, local housing authority, or other public agency. They are secured by
the revenues derived from mortgages purchased with the proceeds of the bond
issue. It is extremely difficult to predict the supply of available
mortgages to be purchased with the proceeds of an issue or the future cash
flow from the underlying mortgages. Consequently, there are risks that
proceeds will exceed supply, resulting in early retirement of bonds, or
that homeowner repayments will create an irregular cash flow.
Many factors may affect the financing of multi-family housing projects,
including acceptable completion of construction, proper management,
occupancy and rent levels, economic conditions, and changes to current laws
and regulations.
SPECIAL FACTORS AFFECTING CONNECTICUT
The following only highlights some of the more significant financial trends
and problems, and is based on information drawn from official statements
and prospectuses relating to securities offerings of the State of
Connecticut, its agencies and instrumentalities, as available on the date
of this Statement of Additional Information. FMR has not independently
verified any of the information contained in such official statements and
other publicly available documents, but is not aware of any fact which
would render such information inaccurate.
Manufacturing has historically been Connecticut's single most important
economic activity. The State's manufacturing industry is diversified, but
from 1970 to 199 2 manufacturing employment declined 30.8 %.
During this period, employment in other non - agricultural
establishments (including government) increased 6 0.8 %, particularly
in the service, trade, and finance categories. In 1992, manufacturing
accounted for only 20. 1 % of total nonagricultural employment in
Connecticut. Defense-related business plays an important role in the
Connecticut economy, and economic activity has been affected by the volume
of defense contracts awarded to Connecticut firms. On a per capita basis,
defense awards in Connecticut have traditionally been among the highest in
the nation, but reductions in defense spending have had a substantial
adverse impact on Connecticut's economy , and the state's largest defense
contractors have announced substantial labor force reductions to occur over
the next four years.
The annual average unemployment rate (seasonally adjusted) in Connecticut
decreased from 6.9% in 1982 to a low of 3.0% in 1988 , but it reached
7.4% as of May 1993 . Pockets of more significant unemployment and
poverty exist in some of Connecticut's cities and towns, the economic
conditions of which are causing them severe financial problems, resulting
in some cases in the reporting of operating and accumulated deficits.
Connecticut is in a recession the depth and duration of which are
uncertain.
While the State's General Fund ended fiscal 1984-85, 1985-86 and 1986-87
with operating surpluses of approximately $365,500,000, $250,100,000 and
$365,200,000, respectively, the State recorded operating deficits in its
General Fund for fiscal 1987-88, 1988-89, 1989-90, and 1990-91 alone of
$115,600,000, $28,000,000, $259,000,000, and $809,000,000, respectively.
In the fall of 1991, the State issued $965,712,000 of Economic Recovery
Notes to help fund its accumulated General Fund deficit. Largely as a
result of the enactment in 1991 of a general income tax on resident and
non-resident individuals, trusts, and estates the State's General Fund
ended fiscal 1991-92 and 1992-93 with an operating surplus of
$110,000,000 and $113,500,000, respectively .
The state's two major revenue raising taxes have been the sales and
use taxes and the corporation business tax, each of which is sensitive to
changes in the level of economic activity in the State, but the Connecticut
income tax on individuals, trusts, and estates is expected to supersede
each of them in importance. Motor fuel taxes and other
transportation-related taxes are paid into a Special Transportation Fund
while all other tax revenues are carried in the General Fund.
The repair and maintenance of the State's highways and bridges will require
major expenditures in the near term. The State has adopted legislation
that provides for, among other things, the issuance of special tax
obligation bonds, the proceeds of which will be used to pay for
improvements to the State's transportation system. The bonds are payable
solely from motor vehicle and other transportation-related taxes and fees
deposited in the Special Transportation Fund. However, the amount of
revenues is dependent on the occurrence of future events, including a
possible rise in fuel prices, and may thus differ materially from projected
amounts. The cost of this infrastructure program, to be met from federal,
State and local funds, is currently estimated at $ 9.5 billion. The
State expects to issue $3. 7 billion of special tax obligation bonds
over a ten-year period commenced July 1, 1984 to finance a major portion of
the State's share of such cost.
The State's budget problems led to ratings of its general obligation bonds
being lowered early in 1990, from Aa1 to Aa by Moody's Investors Service,
Inc., and from AA+ to AA by Standard & Poor's Corporation. Because of
concern over Connecticut's lack of a plan to deal with accumulated
projected deficits in its General Fund, on September 13, 1991, Standard
& Poor's further lowered its ratings of the State's general obligation
bonds and certain other obligations that depend in part on the
creditworthiness of the State to AA-. State and regional economic
difficulties, reductions in revenues, and increased expenses could lead to
further fiscal problems for the State and its political subdivisions,
authorities, and agencies. This could result in declines in the value of
their outstanding obligations, increases in their future borrowing costs,
and impairment of their ability to pay debt service on their obligations.
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 each fund by FMR (either directly or through affiliated
sub-advisers) pursuant to authority contained in the management contracts.
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
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 subsidiary of FMR Corp., if the commissions are fair,
reasonable, and comparable to commissions charged by non-affiliated,
qualified brokerage firms for similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, except in accordance with
regulations of the Securities and Exchange Commission. 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 years ended November 30, 1993, 1992, and 1991, 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
each fund 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.
The high yield fund's turnover rates for fiscal 1993 and 1992 were
45 % and 11%, 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 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
HIGH YIELD FUND. Valuations of portfolio securities furnished by the
pricing service employed by the fund 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. Futures contracts and options are
valued on the basis of market quotations if available.
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.
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 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 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 also may calculate a compound effective yield by
compounding the base period return over a one-year period. In addition to
the current yield, the money market fund may quote yields in advertising
based on any historical seven-day period. Yields for the money market fund
are calculated on the same basis as other money market funds, as required
by regulation.
For the HIGH YIELD FUND, yields used in advertising are computed by
dividing the fund's interest income for a given 30-day or one-month period,
net of expenses, by the average number of shares entitled to receive
dividends during the period, dividing this figure by the fund's net asset
value per share at the end of the period, and annualizing the result
(assuming compounding of income) in order to arrive at an annual percentage
rate. Yields do not reflect the fund's .50% redemption fee, which applies
to shares held less than 180 days. Income is calculated for purposes of
the high yield fund's yield quotations in accordance with standardized
methods applicable to all stock and bond funds. In general, interest
income is reduced with respect to bonds trading at a premium over their par
value by subtracting a portion of the premium from income on a daily basis,
and is increased with respect to bonds trading at a discount by adding a
portion of the discount to daily income. Capital gains and losses
generally are excluded from the calculation.
Income calculated for the purposes of determining the high yield fund's
yield differs from income as determined for other accounting purposes.
Because of the different accounting methods used, and because of the
compounding of income assumed in yield calculations, the high yield fund's
yield may not equal its distribution rate, the income paid to your account,
or the income reported in the fund's financial statements.
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 and state tax
rate. (If only a portion of the fund's yield is tax-exempt, only that
portion is adjusted in the calculation.)
The tables below and on page 14 show the effect of a shareholder's
tax status on effective yield under federal and state income tax laws for
199 4 . 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-exempt yield. While each fund invests principally in
obligations whose interest is exempt from federal and state income tax,
other income received by the funds may be taxable. The tables do not take
into account local taxes, if any, payable on a fund's distributions.
Use this table to find your approximate effective tax bracket taking into
account federal and state taxes for 199 4 .
199 4 TAX RATES
Federal Income Single Return
Taxable Tax Combined Income Joint Return
Income Bracke t Bracket* Combined Income*
Single Return Joint Return
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
$22, 751 - $5 5 , 1 00 N.A. 28% 31.24% N.A.
N.A. $3 8 , 001 - $ 91,850 28% N.A. 30.92%**
$5 5 , 101 - 115,000 $ 91,851 - 140,000 31% 34.11% 34.11%
$115,001 - 250,000 $140,001 - 250,000 36% 38.88% 38.88%
$250,00 1 and above $250,00 1 and above 39.6% 42.32% 42.32%
</TABLE>
* The Connecticut rates assumed for 199 4 are the highest effective
marginal rates applicable for the indicated federal rate
bracket. The table assumes that Connecticut adjusted gross income equals
federal taxable income.
** After the automatic credit.
PLEASE NOTE: The 199 4 combined tax brackets are based on the
assumption that 100% of the fund's income is free from federal and state
taxes. In fiscal 1993, 9 % of the income from the money market
fund and none of the income from the high yield fund were subject to
state taxes.
Having determined your effective tax bracket, use the table below to
determine the tax-equivalent yield for a given tax-free yield.
If your effective combined federal and state personal tax rate in
199 4 is:
30.92% 31.24% 34.11% 38.88% 42.32%
<TABLE>
<CAPTION>
<S> <C>
To match these
tax-free yields: Your taxable investment would have to earn the following yield:
</TABLE>
2.0% 2.90% 2.91% 3.04% 3.27% 3.47%
3.0 4.34 4.36 4.55 4.91 5.20
4.0 5.79 5.82 6.07 6.54 6.93
5.0 7.24 7.27 7.59 8.18 8.67
6.0 8.69 8.73 9.11 9.82 10.40
7.0 10.13 10.18 10.62 11.45 12.14
8.0 11.58 11.63 12.14 13.09 13.87
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 yield will be lower. In the table 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, the funds' yields fluctuate, 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 the
funds' yields will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates the funds' yields will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to the funds from the continuous sale of their shares will likely
be invested in instruments producing lower yields than the balance of the
funds' holdings, thereby reducing the fund's current yields. 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 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 funds.
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 effects of each fund's $5.00
account closeout fee and, with respect to the high yield fund, the .50%
redemption fee, 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 (HIGH YIELD FUND ONLY) . Charts and graphs using the
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 November 30, 1993. Figures for both funds include the
effect of the $5.00 account closeout fee and 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 Five Life of One Five Life of
Year Years Fund* Year Years Fund*
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Money Market Fund 2.21 % n/a 3.01 % 2.21 % n/a 8.49 %
High Yield Fund 11.81 % 9.63 % 9.67 % 11.81 % 58.34 % 75.53 %
</TABLE>
* The money market fund commenced operations on March 4, 1991 and the high
yield fund commenced operations on October 29, 1987.
The money market fund's 7-day yield as of November 30, 1993 was
1.96 %, with a corresponding tax-equivalent yield of 3.19 %.
The high yield fund's 30-day yield as of November 30, 1993 was
5.12 %, with a corresponding tax-equivalent yield of 8.38 %.
Tax-equivalent yields are based on a 199 4 combined
effective federal and Connecticut state income tax rate of
38.88 %, and reflect that an estimated 10.1 % of money market
fund's income (and none of the high yield fund's income) were
subject to state taxes on November 30, 1993 . If FMR had not
reimbursed certain fund expenses during the periods, total returns would
have been lower. These figures do not reflect the funds' $5 account
closeout fees.
The following tables show the income and capital elements of each fund's
total return from their respective commencement of operations to November
30, 1993. 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 March 4, 1991 (commencement of
operations) to November 30, 1993, a hypothetical $10,000 investment in the
money market fund would have grown to $ 10,849 , assuming all
distributions were reinvested. This was a period of fluctuating interest
rates 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.
<TABLE>
<CAPTION>
<S> <C> <C>
SPARTAN CONNECTICUT MUNICIPAL 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
Year Ended $10,000 Dividends Capital Gain Total of
November 30 Investment Distributions Distributions Value S&P DJIA Living**
500
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1993 $10,000 $ 849 $0 $ 10,849 $ 13,534 $ 13,752 $10,816
1992 10,000 614 0 10,614 12,292 11,986 10,534
1991* 10,000 297 0 10,297 10,373 10,192 10,223
</TABLE>
* From March 4, 1991 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on March 4,
1991, the net amount invested in fund shares was $10,000. The cost of the
initial investment ($10,000), together with the aggregate cost of
reinvested dividends for the period covered (their cash value at the time
they were reinvested), amounted to $ 10,849 . 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 $ 816 . The fund did not distribute any
capital gains during the period. If FMR had not reimbursed certain
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 account closeout fee.
HIGH YIELD FUND. During the period October 29, 1987 (commencement of
operations) to November 30, 1993, a hypothetical $10,000 investment in the
fund would have grown to $ 17,553 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 CONNECTICUT MUNICIPAL HIGH YIELD PORTFOLIO INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of
Initial Reinvested Reinvested Cost
Year Ended $10,000 Dividends Capital Gain Total of
November 30 Investment Distributions Distributions Value S&P DJIA Living**
500
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1993 $
11,840 $ 5,633 $ 80 $ 17,553 $ 24,229 $ 24,540 $ 12,645
1992
11,220 4,403 76 15,699 22,006 21,389 12,316
1991
10,880 3,355 73 14,308 18,570 18,188 11,951
1990
10,730 2,443 23 13,196 15,430 15,550 11,605
1989
10,730 1,615 0 12,345 15,987 15,815 10,919
1988
10,300 786 0 11,086 12,218 11,907 10,434
1987*
10,030 56 0 10,086 9,907 9,962 10,009
</TABLE>
* From October 29, 1987 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on October
29, 1987, 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 $ 15,231 . If distributions had
not been reinvested, the amount of distributions earned from the fund over
time would have been smaller, and the cash payments for the period would
have amounted to $ 4,200 for income dividends and $ 60 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 account closeout fee,
or the .50% redemption fee applicable to shares held less than 180 days.
The funds 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 addition, the high yield fund's performance may be compared in
advertising to the performance of unmanaged indices of municipal bond
prices and yields and to representative individual municipal securities and
unit investment trusts comprised of municipal securities.
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.
Each 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 325 tax-free money market
funds. The Bond Fund Report AverageS(registered
trademark)/ Municipal , which is reported in the BOND FUND
REPORT(registered trademark), covers over 350 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 high
yield fund, however, invests in longer-term instruments and its share price
changes daily in response to a variety of factors.
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.
Each fund may present its fund number, Quotron(registered trademark)
number, and CUSIP number, and discuss or quote its current portfolio
manager.
The high yield fund may advertise examples of the effects of periodic
investment plans, including the principle of dollar cost averaging. In
such a program, an investor invests a fixed dollar amount in a fund at
periodic intervals, thereby purchasing fewer shares when prices are high
and more shares when prices are low. While such a strategy does not assure
a profit or guard against loss in a declining market, the investor's
average cost per share can be lower than if fixed numbers of shares are
purchased at the same intervals. In evaluating such a plan, investors
should consider their ability to continue purchasing shares during periods
of low price levels.
As of November 30, 1993, FMR advised 41 tax-free funds with a total
value of over $ 25 billion, and 20 Spartan funds with
approximately $ 20 billion in assets. According to the Investment
Company Institute, over the past eight years, assets in tax-exempt
funds increased from $45 billion in 1984 to approximately $291 billion at
the end of 1992. The funds 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 (observed) , 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.
FSC normally determines each fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier
if trading on the NYSE is restricted or as permitted by the 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 a fund's NAV. Shareholders receiving securities or other
property on redemption may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the 1940 Act, the funds are required to give
shareholders at least 60 days' notice prior to terminating or modifying the
exchange privilege. Under the Rule, the 60-day notification requirement
may be waived if (i) the only effect of a modification would be to reduce
or eliminate an administrative fee, redemption fee, or deferred sales
charge ordinarily payable at the time of an exchange, or (ii) the fund
suspends the redemption of the shares to be exchanged as permitted under
the 1940 Act or the rules and regulations thereunder, or the fund to be
acquired suspends the sale of its shares because it is unable to invest
amounts effectively in accordance with its investment objective and
policies.
In the Prospectus, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. To the extent that each fund's income is derived from federally
tax-exempt interest, the daily dividends declared by the fund are also
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 on 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 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 the exempt-interest dividend.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the high
yield fund on the sale of securities and distributed to shareholders are
federally taxable as long-term capital gains, regardless of the length of
time that the shareholders have held their shares. If a shareholder
receives a long-term capital gain distribution on shares of the 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 NAV of $1.00 per
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. The high yield 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 high yield fund's investments in such instruments. Fidelity Court
Street Trust and Fidelity Court Street Trust II treat each of
their respective funds as a separate entity for tax purposes.
At November 30, 1993, the money market fund had a capital loss
carryforward of approximately $7,460 of which $40, $2,090, and $5,330 will
expire on November 30, 1999, 2000, and 2001, respectively.
CONNECTICUT TAXES. The Connecticut income tax is imposed at the rate of
4.5% on the Connecticut taxable income of resident and non-resident
individuals, trusts, and estates. Connecticut taxable income is federal
adjusted gross income after certain modifications (Connecticut AGI), less a
personal exemption. The amount of the personal exemption varies depending
on the taxpayer's filing status and is phased out as the amount of
Connecticut AGI increases. For a husband and wife filing a joint return,
the personal exemption is $24,000 but decreases to zero as Connecticut AGI
increases between $48,001 and $71,001. For an individual filing a separate
return, the exemption is $12,000 but decreases to zero as Connecticut AGI
increases between $24,001 and $35,001. A credit is also provided depending
on the taxpayer's filing status and Connecticut AGI. The credit ranges
from 75% to 10% of the Connecticut income tax, decreasing as
Connecticut AGI increases. No credit is available if Connecticut AGI
exceeds $96,000 in the case of a husband and wife filing a joint return, or
$48,000 in the case of an individual filing separately. Special exemption
and credit rules apply to an individual filing as a head of household or a
surviving spouse. The personal exemption and credit, where applicable,
lower the effective rate of tax below the flat 4.5% statutory rate.
Dividends paid by the fund s that qualify as exempt-interest
dividends for federal income tax purposes are not subject to the
Connecticut income tax to the extent they are derived from obligations
issued by or on behalf of the State of Connecticut, any political
subdivision thereof, or any public instrumentality, state or local
authority, district, or similar public entity created under laws of the
State of Connecticut, or derived from obligations of U.S. possessions
and territories - the interest on which federal law prohibits
the states from taxing. Exempt-interest dividends derived from other
sources and any distributions by the funds that are treated as
taxable dividends for federal income tax purposes are includable in
Connecticut AGI for purposes of the Connecticut income tax.
Amounts, if any, treated as capital gains or losses for federal income tax
purposes, such as from capital gain distributions on shares of the high
yield fund or arising upon the sale, redemption, or other disposition
of shares of the fund by a shareholder, are includable in Connecticut AGI
for purposes of the Connecticut income tax to the same extent as
they are taxable for federal income tax purposes , except that, subject
to the adoption of proposed regulations, capital gain dividends would not
have to be included in Connecticut AGI to the extent derived from
obligations issued by or on behalf of the State of Connecticut or any of
its political subdivisions.
The net Connecticut minimum tax is imposed for taxable years commencing
after 1992 on taxpayers subject to both the Connecticut income tax and the
federal AMT. The net Connecticut minimum tax is based on what the
taxpayer's federal AMT tax base would be if computed taking certain
Connecticut modifications into account. Included in these modifications,
subject to the adoption of proposed regulations, would be the elimination
of exempt-interest dividends on private activity bonds issued by the State
of Connecticut or any if its political subdivisions, and capital gain
dividends to the extent derived from such obligations.
In addition, the Connecticut corporation business tax is imposed on any
corporation or association carrying on, or having the right to carry on,
business in Connecticut. Distributions from any source that are treated as
federally tax-exempt dividends are includable in gross income for purposes
of the corporation business tax. However, the corporation business tax
allows a deduction for 70% of amounts includable in taxable income
thereunder that are treated as dividends for federal income tax purposes,
such as distributions of taxable net investment income and net short-term
capital gains, but disallows deductions for expenses related to such
amounts.
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 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 Court Street Trust prior to the money market fund's
conversion from a series of Fidelity Court Street Trust to a series of
Fidelity Court Street Trust II served Fidelity Court Street 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 Investment Company
Act of 1940) by virtue of their affiliation with either trust or with 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, (money market fund only) 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, (money market fund only) 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 the Trustees of the Greenwich 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, (money market fund only) 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).
PETER ALLEGRINI, is Vice President of the high yield fund (1990) and other
funds advised by FMR and an employee 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 fund 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 November 30, 1993, the Trustees and officers of the funds
owned, in the aggregate, less than 1% of each fund's total
outstanding shares. Also, on that date, Mr. Arthur C. Tauck, 6 Bluff Pt.,
Westport, CT, owned of record or beneficially approximately 5.15% of the
Spartan Connecticut Municipal Money Market Portfolio.
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under FMR's 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 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 expenses; 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 portfolio and general accounting record maintenance
through FSC.
FMR pays all other expenses of the funds with the following exceptions:
fees and expenses of all Trustees who are not "interested persons" of the
Trust or FMR (the non-interested Trustees); interest on borrowings; taxes;
brokerage commissions (if any); and nonrecurring expenses as may arise,
including costs of any litigation to which the funds may be a party, and
any obligation they may have to indemnify the officers and Trustees with
respect to litigation.
FMR is the money market fund's manager pursuant to a management contract
dated February 28, 1992. The contract was approved by Fidelity Court
Street Trust as sole shareholder of the fund on February 28, 1992, in
conjunction with an Agreement and Plan of Conversion 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 December 11, 1992. Besides reflecting the
fund's redomiciling, the February 28, 1992 contract is identical to the
fund's prior management contract with FMR, which was approved by FMR as
sole shareholder on March 1, 1991.
FMR is the high yield fund's manager pursuant to a management contract
dated January 1, 1992 which was approved by shareholders on December 11,
1991.
For the services of FMR under these contracts, the funds pay FMR a monthly
management fee at the annual rate of .50% (money market fund) and .55%
(high yield fund), respectively, 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.
Prior to January 1, 1992, FMR was the high yield fund's manager pursuant to
a management contract dated March 1, 1989. For the services of FMR under
that contract, the fund paid FMR a monthly management fee composed of two
elements: a group fee rate and an individual fund fee rate. The group fee
rate was based on the average monthly net assets of all the registered
investment companies with which FMR had management contracts and was
calculated on a cumulative basis pursuant to a graduated schedule that
ranged from .37% to .15%. The individual fund fee rate was .25%.
FMR may, from to time, voluntarily reimburse all or a portion of a fund's
operating expenses (excluding interest, taxes, brokerage commissions and
extraordinary expenses). The tables below outline expense limitations (as
a percentage of the funds' average net assets) in effect from either
commencement of operations (money market fund) or for the last three fiscal
years (high yield fund) to November 30, 1993. The tables also show the
amount of management fees incurred under each contract and the amounts
reimbursed by FMR for each fiscal period.
MONEY MARKET FUND:
From To Expense Limitation
September 1, 1993 September 30, 1993 .40%
August 1, 1993 August 31, 1993 .30%
July 1, 1993 July 31, 1993 .25%
June 1, 1993 June 30, 1993 .20%
May 1, 1993 May 31, 1993 .15%
March 1, 1993 April 30, 1993 .10%
September 1, 1992 February 28, 1993 .05%
March 4, 1991 August 31, 1992 0%
Management Fees Amount of
Fiscal Year Before Reimbursement Reimbursements
1993 $ 641,483 $ 331,281
1992 $243,088 $233,746
1991 $ 48, 500 $ 48,533
HIGH YIELD FUND:
From To Expense Limitation
January 1, 1991 -- .55%
July 1, 1989 March 1, 1990 .65%
Management Fees Amount of
Fiscal Year Before Reimbursement Reimbursements
1993 $ 2,474,254 $ 0
1992 $2,110,249 $ 11,998
1991 $1,251,310 $ 142,655
To defray shareholder service costs, FMR or its affiliates also collect the
funds' $5.00 exchange fees, $5.00 account closeout fees, $5.00 fees for
wire purchases and redemptions, and the money market fund's $2.00
checkwriting charge. The high yield fund's .50% redemption fee is
retained by the fund. Shareholder transaction fees and charges
collected for the fiscal years ended November 30, 1993, 1992, and 1991 are
indicated in the table below.
MONEY MARKET FUND:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Fiscal Year Exchange Fees Account Closeout Fees Wire Fees Checkwriting Charge
</TABLE>
1993 $2,435 $256 $520 $ 1,684
1992 $2,215 $179 $610 $ 1,544
1991 $ 325 $ 5 $ 55 $ 100
HIGH YIELD FUND:
Fiscal Year Exchange Fees Account Closeout Fees Wire Fees
1993 $6,270 $1,475 $ 890
1992 $8,140 $1,340 $ 2,020
1991 $2,465 $ 460 $ 675
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. During the fiscal periods ended November 30,
1993, 1992, and 1991 FMR paid FMR Texas fees of $ 320,741 , $121,544
and $24,250, 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 the funds' shares. 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.
Each fund's plan has been approved by the Trustees. As required by the
Rule, the Trustees carefully considered all pertinent factors relating to
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 plan by local entities with whom shareholders have
other relationships. The high yield fund's plan was approved by the fund's
shareholders at their meeting on November 16, 1988. The money market
fund's plan was approved by Fidelity Court Street Trust on February 28,
1992 as the-then sole shareholder of the fund, pursuant to an Agreement and
Plan of Conversion approved by public shareholders of the fund on December
11, 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 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 the funds' accounting
records. United Missouri is entitled to reimbursement for fees paid to FSC
from FMR, which must bear these costs pursuant to its management contract
with each fund.
Prior to January 1, 1992 (in accordance with the terms of the high yield
fund's March 1, 1989 contract with FMR) the high yield fund reimbursed its
custodian and transfer agent (Shawmut Bank, N.A. from commencement of
operations to November 7, 1991, and, subsequently, United Missouri) for
fees paid to FSC for transfer agent and pricing and bookkeeping services.
The fees paid by the high yield fund's custodian bank to FSC for the fiscal
years ended November 30, 1992, and 1991 are indicated in the table below.
Fiscal Year Transfer Agent Fees Pricing and Bookkeeping Fees
1992 $ 15,595 $ 14,703
1991 $228,464 $140,129
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 Court Street Trust (the Massachusetts
Trust) is an open-end management investment company originally organized as
a Massachusetts business trust on April 21, 1977. On August 1, 1987, the
Massachusetts Trust's name was changed from Fidelity High Yield Municipals
to Fidelity Court Street Trust. Currently, there are four funds of the
Massachusetts Trust: Spartan Connecticut Municipal High Yield Portfolio,
Fidelity High Yield Tax-Free Portfolio, Spartan Florida Municipal Income
Portfolio, and Spartan New Jersey Municipal High Yield Portfolio. The
Massachusetts Trust's Declaration of Trust permits the Trustees to create
additional funds.
Fidelity Court Street 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 four funds of the Delaware Trust:
Fidelity Connecticut Municipal Money Market Portfolio, Spartan Connecticut
Municipal Money Market Portfolio, Spartan Florida Municipal Money
Market Portfolio, and Fidelity New Jersey Tax-Free Money Market Portfolio.
Fidelity Court Street Trust II entered into an agreement to acquire all of
the assets of Spartan Connecticut Municipal Money Market Portfolio,
a series of the Massachusetts Trust on February 28, 1992. 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 a trust or any
of its funds, the right of the trust or the fund to use the identifying
names "Fidelity" and "Spartan" may be withdrawn. There is a remote
possibility that one fund might become liable for any misstatement in its
prospectus or statement of additional information about another fund.
The assets of each trust received for the issue or sale of shares of each
of its funds and all income, earnings, profits and proceeds thereof,
subject only to the rights of creditors, are especially allocated to such
fund, and constitute the underlying assets of such fund. The underlying
assets of each fund are segregated on the books of account, and are to be
charged with the liabilities with respect to such fund and with a share of
the general expenses of their respective trusts. Expenses with respect to
the trusts are to be allocated in proportion to the asset value of their
respective funds, except where allocations of direct expense can otherwise
be fairly made. The officers of the trusts, subject to the general
supervision of the 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 of a certain trust. In the event of the dissolution or
liquidation of a trust, shareholders of each fund of that trust are
entitled to receive as a class the underlying assets of such fund available
for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY - MASSACHUSETTS TRUST. The Massachusetts
Trust is an entity of the type commonly known as "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust may, under
certain circumstances, be held personally liable for the obligations of the
trust. The Declaration of Trust provides that the Massachusetts Trust
shall not have any claim against shareholders except for the payment of the
purchase price of shares and requires that each agreement, obligation, or
instrument entered into or executed by the Massachusetts Trust or its
Trustees shall include a provision limiting the obligations created thereby
to the Massachusetts Trust and its assets. The Declaration of Trust
provides for indemnification out of each fund's property of any
shareholders held personally liable for the obligations of the fund. The
Declaration of Trust also provides that each fund shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the risk of
a shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which the fund itself would be unable to
meet its obligations. FMR believes that, in view of the above, the risk of
personal liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects Trustees
against any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of their office.
SHAREHOLDER AND TRUSTEE LIABILITY - DELAWARE TRUST. The Delaware Trust is
a business trust organized under Delaware law. Delaware law provides that
shareholders shall be entitled to the same limitations of personal
liability extended to stockholders of private corporations for profit. The
courts of some states, however, may decline to apply Delaware law on this
point. The Trust Instrument contains an express disclaimer of shareholder
liability for the debts, liabilities, obligations, and expenses of the
Delaware Trust and requires that a disclaimer be given in each contract
entered into or executed by the Delaware Trust or its Trustees. The Trust
Instrument provides for indemnification out of each fund's property of any
shareholder or former shareholder held personally liable for the
obligations of the fund. The Trust Instrument also provides that each fund
shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the fund and satisfy any judgment
thereon. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which
Delaware law does not apply, no contractual limitation of liability was in
effect, and the fund is unable to meet its obligations. FMR believes that,
in view of the above, the risk of personal liability to shareholders is
extremely remote.
The Trust Instrument further provides that the Trustees shall not be
personally liable to any person other than the Delaware Trust or its
shareholders; moreover, the Trustees shall not be liable for any conduct
whatsoever, provided that the Trustees are not protected against any
liability to which they would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of their office.
VOTING RIGHTS - BOTH TRUSTS. Each fund's capital consists of shares of
beneficial interest. The shares have no preemptive or conversion rights;
voting and dividend rights, the right of redemption, and the privilege of
exchange are described in the Prospectus. Shares are fully paid and
nonassessable, except as set forth under the respective "Shareholder and
Trustee Liability" headings on page 24 . Shareholders representing
10% or more of a trust or one of its funds may, as set forth in the
Declaration of Trust or Trust Instrument, call meetings of the trust or
fund for any purpose related to the trust or fund, as the case may be,
including, in the case of a meeting of an entire trust, the purpose of
voting on removal of one or more Trustees.
A trust or any fund may be terminated upon the sale of its assets to (or,
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, however, the Trustees of the Delaware
Trust may, without prior shareholder approval, change the form of the
organization of the Delaware Trust by merger, consolidation, or
incorporation. If not so terminated or reorganized, the trusts and their
funds will continue indefinitely.
Under the Trust Instrument, the Trustees may, without shareholder vote,
cause the Delaware Trust to merge or consolidate into one or more trusts,
partnerships, or corporations, so long as the surviving entity is an
open-end management investment company that will succeed to or assume the
Delaware Trust registration statement, or cause the Delaware Trust to be
incorporated under Delaware law. The Delaware Trust may also invest all of
its assets in another investment company.
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 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. Coopers & Lybrand, One Post Office Square, Boston,
Massachusetts (high yield fund) and 1999 Bryan Street, Dallas, Texas (money
market fund) serves as the trusts' 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 year ended November 30, 1993 is a
separate report supplied with this Statement of Additional Information and
is incorporated herein by reference.
APPENDIX
The descriptions that follow are examples of eligible ratings for the
funds. A fund may, however, consider the ratings for other types of
investments and the ratings assigned by other rating 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 in 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 the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
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.
B - Bonds rated B generally lack characteristics of a desirable investment.
Assurance of interest and principal payments of or maintenance of other
terms of the contract over any long period of time may be small.
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 principal or
interest.
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.
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
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.
FIDELITY CONNECTICUT MUNICIPAL MONEY MARKET 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 Fund at a Glance; Who May Want
to Invest
3 a .............................. Financial Highlights
b .............................. *
c .............................. Performance
4 a i............................. Charter
ii........................... The Fund 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 .............................. *
5A .............................. *
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
FIDELITY CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO
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 Contract
b ............................ Management Contract
c, d ............................ Interest of FMR Affiliates
e ............................ *
f ............................ Distribution and Service Plan
g ............................ *
h ............................ Description of the Trust
i ............................ Interest of FMR Affiliates
17 a ............................ Portfolio Transactions
b ............................ *
c ............................ Portfolio Transactions
d, e ............................ *
18 a ............................ Description of the Trust
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 ............................ Interest of FMR Affiliates
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 the fund
invests and the services available to shareholders.
A Statement of Additional Information dated January 14, 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 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.
Connecticut Municipal Money Market seeks a high level of current income
free from federal income tax and Connecticut personal income tax. It
maintains a stable $1.00 share price by investing in high-quality,
short-term municipal obligations.
FIDELITY
CONNECTICUT
MUNICIPAL MONEY
MARKET
PORTFOLIO
PROSPECTUS
JANUARY 14, 1994
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.
CTR-pro-194
(Registered trademark)
82 Devonshire Street, Boston, MA 02109
CONTENTS
KEY FACTS 3 THE FUND AT A GLANCE
3 WHO MAY WANT TO INVEST
EXPENSES AND PERFORMANCE 4 EXPENSES The fund's yearly
operating expenses.
5 FINANCIAL HIGHLIGHTS A summary
of the fund's financial data.
6 PERFORMANCE How the fund has
done over time.
YOUR ACCOUNT 8 DOING BUSINESS WITH FIDELITY
8 TYPES OF ACCOUNTS Different
ways to set up your account .
9 INVESTOR SERVICES Services to
help you manage your account.
10 HOW TO BUY SHARES Opening an
account and making additional
investments.
12 HOW TO SELL SHARES Taking money
out and closing your account.
14 DIVIDENDS, CAPITAL GAINS, AND
TAXES
SHAREHOLDER AND 16 TRANSACTION DETAILS Share price
ACCOUNT POLICIES calculations and the timing of
purchases and redemptions.
17 EXCHANGE RESTRICTIONS
THE FUND IN DETAIL 19 CHARTER How the fund is
organized.
20 BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.
21 INVESTMENT PRINCIPLES The fund's
overall approach to investing.
22 SECURITIES AND INVESTMENT
PRACTICES
<r>KEY FACTS</r>
THE FUND AT A GLANCE
GOAL: High current tax-free income for Connecticut residents while
maintaining a stable share price. As with any mutual fund, there is no
assurance that the fund will achieve its goal.
STRATEGY: Invests mainly in high-quality, short-term securities
whose interest is free from federal income tax and Connecticut
personal income tax.
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 the fund.
SIZE: As of November 30, 1993, the fund had over $ 288 million in
assets.
WHO MAY WANT TO INVEST
This non-diversified fund may be appropriate for investors in higher tax
brackets who seek high current income that is free from federal
income tax and Connecticut personal income tax . The rate of
income will vary from day to day, generally reflecting changes in interest
rates. The fund is managed to keep its share price stable at $1.00.
By itself, the fund does not constitute a balanced investment plan.
However, because it emphasizes stability, it could be well-suited for a
portion of your savings.
THE SPECTRUM OF
FIDELITY FUNDS
Broad categories of Fidelity
funds are presented here in
order of ascending risk.
Generally, investors seeking
to maximize return must
assume greater risk.
Connecticut Municipal Money
Market is in the MONEY
MARKET category.
(arrow) MONEY MARKET Seeks
income and stability by
investing in high-quality,
short-term investments.
(bullet) INCOME Seeks income by
investing in bonds.
(bullet) GROWTH AND INCOME
Seeks long-term growth and
income by investing in stocks
and bonds.
(bullet) GROWTH Seeks long-term
growth by investing mainly in
stocks.
(checkmark)
<r>EXPENSES & PERFORMANCE</r>
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 the fund's assets. The 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. The fund's expenses are factored into its
share price or dividends and are not charged directly to shareholder
accounts (see page 20 ).
The following are projections based on historical expenses, and are
calculated as a percentage of average net assets.
Management fee .42 %
12b-1 fee None
Other expenses .19%
Total fund operating expenses .61 %
EXAMPLES: Let's say, hypothetically, that the 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 year $ 6
After 3 years $ 20
After 5 years $ 34
After 10 years $ 76
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
UNDERSTANDING
EXPENSES
Operating a mutual fund
involves a variety of
expenses for portfolio
management, shareholder
statements, tax reporting, and
other services. These costs
are paid from the fund's
assets; their effect is already
factored into any quoted
share price or return.
(checkmark)
FINANCIAL HIGHLIGHTS
The table that follows has been audited by Coopers & Lybrand,
independent accountants. Their unqualified report is included in the fund's
Annual Report. The Annual Report is incorporated by reference into (is
legally a part of) the Statement of Additional Information.
SELECTED PER-SHARE DATA
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
29.Fiscal years ended November 30 1989B 1990 1991 1992 1993
30.Net asset value, beginning of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
31.Income from Investment .016 .056 .044 .027 .019
Operations
Net interest income
32. Dividends from net interest (.016) (.056) (.044) (.027) (.019)
income
33.Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
34.Total returnC 1.60% 5.77 4.54 2.74 1.87
% % % %
35.RATIOS AND SUPPLEMENTAL
DATA
36.Net assets, end of period (000 $ 80,808 $ 376,03 $ 418,33 $ 331,90 $ 288,56
omitted) 1 7 9 6
37.Ratio of expenses to average net -- .23 .07 .43 .61
assets % % % %
38.Ratio of expenses to average net 1.24% .63 .59 .59 .61
assets before expense reductions A % % % %
39.Ratio of net interest income to 6.35% 5.59 4.45 2.76 1.87
average net assets A % % % %
</TABLE>
A ANNUALIZED
B FROM AUGUST 29, 1989 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30,
1989
C TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED.
PERFORMANCE
Money market fund performance can be measured as TOTAL RETURN or YIELD. The
total returns and yields that follow are based on historical fund results.
The fund's fiscal year runs from December 1 through November 30. The tables
below show the fund's performance over past fiscal years compared to a
measure of inflation. The chart on page 7 helps you compare the
yields of this fund to those of its competitiors.
AVERAGE ANNUAL TOTAL RETURNS
Fiscal periods ended Past 1 Life of
November 30, 1993 year fundA
Spartan Conn. Money Market 1.87% 3.87%
Consumer Price
Index 2.68 3.76
CUMULATIVE TOTAL RETURNS
Fiscal periods ended Past 1 Life of
November 30, 1993 year fundA
Spartan Conn. Money Market 1.87% 17.58%
Consumer Price
Index 2.68 17.01
A FROM MARCH 4, 1991
EXPLANATION OF TERMS
UNDERSTANDING
PERFORMANCE
SEVEN-DAY YIELD illustrates
the income earned by a
money market fund over a
recent seven-day period.
TOTAL RETURN reflects both the
reinvestment of income and
the change in a fund's share
price. Since money market
funds maintain a stable $1.00
share price, current
seven-day yields are the
most common illustration of
money market fund
performance.
(checkmark)
TOTAL RETURN is the change in value of an investment in the 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 the fund over a
given period of time, expressed as an annual percentage rate. When a 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.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
THE COMPETITIVE FUNDS AVERAGES are the IBC/Donoghue's MONEY FUND
AVERAGES(registered trademark), which assume reinvestment of distributions.
The fund compares its performance to the All Tax-Free category. These
averages, which currently reflect the performance of over 325 mutual funds
with similar objectives, are published in the MONEY FUND REPORT(Registered
trademark) by IBC USA (Publications), Inc.
The fund's recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
7-DAY YIELDS
Percent
age %
Row: 1, Col: 1, Value: 5.07
Row: 1, Col: 2, Value: 4.49
Row: 2, Col: 1, Value: 4.39
Row: 2, Col: 2, Value: 4.0
Row: 3, Col: 1, Value: 4.56
Row: 3, Col: 2, Value: 4.29
Row: 4, Col: 1, Value: 4.609999999999999
Row: 4, Col: 2, Value: 4.33
Row: 5, Col: 1, Value: 4.33
Row: 5, Col: 2, Value: 4.01
Row: 6, Col: 1, Value: 4.28
Row: 6, Col: 2, Value: 3.85
Row: 7, Col: 1, Value: 4.23
Row: 7, Col: 2, Value: 3.99
Row: 8, Col: 1, Value: 4.23
Row: 8, Col: 2, Value: 4.05
Row: 9, Col: 1, Value: 4.54
Row: 9, Col: 2, Value: 4.38
Row: 10, Col: 1, Value: 4.149999999999999
Row: 10, Col: 2, Value: 3.89
Row: 11, Col: 1, Value: 4.09
Row: 11, Col: 2, Value: 3.71
Row: 12, Col: 1, Value: 4.33
Row: 12, Col: 2, Value: 4.33
Row: 13, Col: 1, Value: 3.22
Row: 13, Col: 2, Value: 2.69
Row: 14, Col: 1, Value: 3.05
Row: 14, Col: 2, Value: 2.62
Row: 15, Col: 1, Value: 3.16
Row: 15, Col: 2, Value: 2.97
Row: 16, Col: 1, Value: 3.1
Row: 16, Col: 2, Value: 3.07
Row: 17, Col: 1, Value: 2.94
Row: 17, Col: 2, Value: 3.0
Row: 18, Col: 1, Value: 2.32
Row: 18, Col: 2, Value: 2.46
Row: 19, Col: 1, Value: 2.14
Row: 19, Col: 2, Value: 2.14
Row: 20, Col: 1, Value: 2.1
Row: 20, Col: 2, Value: 2.15
Row: 21, Col: 1, Value: 2.54
Row: 21, Col: 2, Value: 2.67
Row: 22, Col: 1, Value: 1.91
Row: 22, Col: 2, Value: 2.13
Row: 23, Col: 1, Value: 2.02
Row: 23, Col: 2, Value: 2.16
Row: 24, Col: 1, Value: 2.6
Row: 24, Col: 2, Value: 2.69
Row: 25, Col: 1, Value: 1.7
Row: 25, Col: 2, Value: 1.81
Row: 26, Col: 1, Value: 1.72
Row: 26, Col: 2, Value: 1.87
Row: 27, Col: 1, Value: 1.87
Row: 27, Col: 2, Value: 1.96
Row: 28, Col: 1, Value: 1.93
Row: 28, Col: 2, Value: 1.98
Row: 29, Col: 1, Value: 2.11
Row: 29, Col: 2, Value: 2.13
Row: 30, Col: 1, Value: 1.69
Row: 30, Col: 2, Value: 1.79
Row: 31, Col: 1, Value: 1.8
Row: 31, Col: 2, Value: 1.86
Row: 32, Col: 1, Value: 1.85
Row: 32, Col: 2, Value: 1.97
Row: 33, Col: 1, Value: 2.01
Row: 33, Col: 2, Value: 2.16
Row: 34, Col: 1, Value: 1.88
Row: 34, Col: 2, Value: 1.95
Row: 35, Col: 1, Value: 1.92
Row: 35, Col: 2, Value: 1.91
Connecticut
Muni
Money Market
Competitive
funds average
1992
1991
1993
THE 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 NOVEMBER 1993.
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 75 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in the fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in the fund through a brokerage account. You can
choose the fund as your core account for your Fidelity Ultra Service
Account or FidelityPlus SM 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.
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.
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.
Exchanges 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
17 .
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 services that let you transfer money into your fund
account, or between fund accounts, automatically.
FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND
MINIMUM $100
FREQUENC Monthly or quarterly
Y
SETTING Complete the
UP appropriate section on
the fund application.
For existing accounts,
call 1-800-544-6666
for an application.
DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY
FUND
MINIMUM $100
FREQUENC Every pay period
Y
SETTING Check the
UP appropriate box on
the fund application,
or call
1-800-544-6666 for
an authorization form.
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND
MINIMUM $100
FREQUENC Monthly, bimonthly,
Y quarterly, or annually
SETTING To establish, call
UP 1-800-544-6666 after
both accounts are
opened.
HOW TO BUY SHARES
THE FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. The fund is managed to keep its share price stable at $1.00.
The 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.
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 11 . 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 $5,000
TO ADD TO AN ACCOUNT $500
Through automatic investment plans $100
MINIMUM BALANCE $1,000
<TABLE>
<CAPTION>
<S> <C> <C>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
PHONE (bullet) Exchange from another (bullet) Exchange from another
1-800-544-7777 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 (bullet) Complete and sign the (bullet) Make your check
application. Make your payable to "Fidelity
check payable to Connecticut Municipal
"Fidelity Connecticut Money Market
Municipal Money Portfolio." Indicate your
Market Portfolio." Mail fund account number
to the address on your check and mail
indicated on the to the address printed
application. on your account
statement.
(bullet) Exchange by mail: call
1-800-544-6666 for
instructions.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
IN PERSON (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 (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 "Fidelity
Bank Routing Connecticut Municipal
#021001033, Money Market
Account #00163053. Portfolio" and include
Specify "Fidelity your account number
Connecticut Municipal and your name.
Money Market
Portfolio" and include
your new account
number and your
name.
AUTOMATICALLY (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>
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TDD - SERVICE FOR THE DEAF AND HEARING-IMPAIRED: 1-800-544-011 8
</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.
TO SELL SHARES THROUGH YOUR FIDELITY ULTRA SERVICE OR FIDELITYPLUS
ACCOUNT, call 1-800-544-6262 to receive a handbook with instructions.
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
<TABLE>
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PHONE All account types (bullet) Maximum check request:
1-800-544-7777 $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 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 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.
CHECK All account types (bullet) Minimum check: $500.
except retirement (bullet) All account owners must sign
a signature card to receive a
checkbook.
</TABLE>
<TABLE>
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TDD - SERVICE FOR THE DEAF AND HEARING-IMPAIRED: 1-800-544-0118
</TABLE>
DIVIDENDS, CAPITAL GAINS, AND TAXES
The 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.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. The fund offers three
options:
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. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions, if any.
7. 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 record date of the distribution. The mailing of distribution checks
will begin within seven days.
TAXES
As with any investment, you should consider how an investment in a tax-free
fund could affect you. Below are some of the fund's tax implications.
Interest income that the fund earns is distributed to shareholders as
income dividends. Interest that is federally tax-free remains tax-free when
it is distributed.
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 .
The 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)
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. The 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 extent the fund's income dividends are derived from state
tax-free obligations, they will be free from the Connecticut income
tax on individuals, trusts, and estates. Subject to adoption of proposed
regulations, long-term capital gain distributions, to the extent derived
from Connecticut obligations, would also be free from this tax.
Additionally, income dividends and long-term capital gain distributions
derived from Connecticut obligations would not be subject to the net
Connecticut minimum tax.
During fiscal 1993, 100 % of the fund's income dividends was free
from federal income tax and 95.3 % was free from Connecticut taxes.
28.8 % of the fund's income dividends was subject to the federal
alternative minimum tax.
<r>SHAREHOLDER AND ACCOUNT POLICIES</r>
TRANSACTION DETAILS
THE FUND IS OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates the fund's net asset value as of the
close of business of the NYSE, normally 4 p.m. Eastern time.
THE FUND'S NAV is the value of a single share. The NAV is computed by
adding up 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.
Like most money market funds, the 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.
THE FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
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.
THE FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. The fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page 17 . Purchase orders may be refused if, in FMR's opinion,
they are of a size that would disrupt management of the 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) The 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 the 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 FUND 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.
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 the
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) The 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.
Fidelity Distributors Corporation (FDC) may, at its own expense, provide
promotional incentives to qualified recipients who support the sale of
shares of the fund without reimbursement from the fund. 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 the 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) The 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 the 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 the fund.
Although the fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time. The
fund reserves 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 FUND IN DETAIL
CHARTER
CONNECTICUT MUNICIPAL MONEY MARKET IS A MUTUAL FUND: an investment
that pools shareholders' money and invests it toward a specified goal. In
technical terms, the fund is currently a non-diversified fund of Fidelity
Court Street Trust II, an open-end management investment company organized
as a Delaware business trust on June 20, 1991.
THE 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 fund's activities,
review contractual arrangements with companies that provide services to the
fund, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUND 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. You are entitled to one vote for each
share you own.
FMR AND ITS AFFILIATES
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 200
(bullet) Assets in Fidelity mutual
funds: over $200 billion
(bullet) Number of shareholder
accounts: over 15 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(checkmark)
The fund is managed by FMR, which handles the fund's business affairs. FTX
has primary responsibility for providing investment management services.
FDC distributes and markets Fidelity's funds and services. Fidelity Service
Co. (FSC) performs transfer agent servicing functions for the fund.
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 trust), 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 the fund's transfer agent, although it
employs FSC to perform these functions for the fund. It is located at 1010
Grand Avenue, Kansas City, Missouri.
To carry out the fund's transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that the fund
receives services and commission rates comparable to those of other
broker-dealers.
BREAKDOWN OF EXPENSES
Like all mutual funds, the fund pays fees related to its daily operations.
Expenses paid out of the fund's assets are reflected in its share price or
dividends; they are neither billed directly to shareholders nor deducted
from shareholder accounts.
The 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. The fund also pays OTHER EXPENSES, which
are explained at right .
FMR may, from time to time, agree to reimburse the fund for management fees
and other expenses above a specified limit. FMR retains the ability to be
repaid by the 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 the 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 November 1993, the group fee rate was .1627 %. The individual
fund fee rate is .50%. The total management fee rate for fiscal 1993 was
.42 %.
FMR HAS A SUB-ADVISORY AGREEMENT with FTX, which has primary responsibility
for providing investment management, while FMR retains responsibility for
providing other management services. FMR pays FTX 50% of its management fee
(before expense reimbursements) for these services. FMR paid FTX
.21 % of the fund's average net assets for fiscal 1993.
OTHER EXPENSES
UNDERSTANDING THE
MANAGEMENT FEE
The management fee FMR
receives is designed to be
responsive to changes in
FMR's total assets under
management. Building this
variable into the fee
calculation assures
shareholders that they will
pay a lower rate as FMR's
assets under management
increase.
(checkmark)
While the management fee is a significant component of the fund's annual
operating costs, the fund has other expenses as well.
FSC performs many transaction and accounting functions. These services
include processing shareholder transactions, valuing the fund's
investments, and handling securities loans. In fiscal 1993, FSC received
fees equal to .17 % of the fund's average net assets.
The fund also pays other expenses, such as legal, audit, and custodian
fees; proxy solicitation costs; and the compensation of trustees who are
not affiliated with Fidelity.
The fund has adopted a Distribution and Service Plan. This plan recognizes
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 fund does not pay FMR any separate fees for this
service.
INVESTMENT PRINCIPLES
THE FUND SEEKS TO EARN A HIGH LEVEL OF CURRENT INCOME that is exempt
from federal income tax and from Connecticut income tax 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.
If you are subject to the federal alternative minimum tax, you should note
that the 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.
The fund's performance is closely tied to economic and political conditions
within the state of Connecticut. The state's economy is sensitive to some
industry trends, such as the level of defense spending. For the last
several years, Connecticut has been in a recession and its budget has
experienced deficits.
The fund stresses tax-free income, preservation of capital, and liquidity.
It does not seek the higher yields or capital appreciation that more
aggressive investments may provide. The fund's yield will vary from day to
day, generally reflecting current short-term interest rates and other
market conditions.
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. In general, securities with longer
maturities are more vulnerable to price changes, although they may provide
higher yields. 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.
FMR normally invests the fund's assets according to its investment
strategy . The fund does not expect to invest in federally taxable
obligations, but will invest a portion of its assets in state taxable
obligations . When FMR considers it appropriate, however, it may
temporarily 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 fund may invest, and strategies FMR may employ in
pursuit of the fund's investment objective. 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
fund achieve its goal. As a shareholder, you will receive financial reports
every six months detailing fund holdings and describing recent investment
activities.
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. The
securities may carry fixed, variable, or floating interest rates. The fund
may own a municipal security directly or may own one through a
participation interest.
STATE TAX-FREE SECURITIES include municipal securities issued
by the state of Connecticut 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 are 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
interest on which federal law prohibits the states from taxing . 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.
OTHER MUNICIPAL SECURITIES may include asset-backed securities and
zero coupon bonds.
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.
PUT FEATURES entitle the holder to put (sell back) an instrument to the
issuer or a financial intermediary. In exchange for this benefit, the fund
may pay periodic fees or accept a lower interest rate. Demand features,
standby commitments, and tender options are types of put features.
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 the market value of the fund's 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
the fund.
RESTRICTIONS: The 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 fund is considered non-diversified. Generally, to meet
quarterly federal tax requirements at the close quarter, the fund does not
invest more than 25% of its total assets in any one issuer and, with
respect to 50% of total assets, does not invest more than 5% of its total
assets in any one issuer. These limitations do not apply to U.S. government
securities. The fund may invest more than 25% of its total assets in
tax-free securities that finance similar types of projects.
BORROWING. The fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements, and may make additional
investments while borrowings are outstanding.
RESTRICTIONS: The 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 paragraph restates all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraph, can be changed without shareholder approval.
The fund seeks as high a level of current income exempt from federal income
tax and, to the extent possible, from Connecticut personal income tax, as
is consistent with preservation of capital. Under normal conditions, at
least 80% of the fund's income distributions will be exempt from federal
income tax and at least 65% of the fund's total assets will be invested in
state tax-free obligations. The fund may borrow only for temporary or
emergency purposes, but not in an amount exceeding 33% of its total assets.
FIDELITY CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO
A FUND OF FIDELITY COURT STREET TRUST II
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 1 4 , 1994
This Statement is not a prospectus but should be read in conjunction with
the fund's current Prospectus (dated January 1 4 , 1994). Please
retain this document for future reference. The Annual Report for the
fiscal year ended November 30, 1993 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 Connecticut
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 Contract
Distribution and Service Plan
Interest of FMR Affiliates
Description of the Trust
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISER
FMR Texas Inc. (FMR Texas)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENTS
United Missouri Bank, N.A. (United Missouri) and Fidelity Service Co. (FSC)
CTM-ptB-194
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 the 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.
The 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) of the 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. THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue bonds or any other class of securities preferred over shares of
the fund in respect of the fund's assets or earnings, provided that
Fidelity Court Street Trust II may issue additional series of shares in
accordance with the Trust Instrument;
(2) sell securities short, unless it owns, or by virtue of ownership of
other securities has the right to obtain, securities equivalent in kind and
amount to the securities sold short;
(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 the value of its total assets (less liabilities other
than borrowings). Any borrowings that come to exceed 33 1/3% of the value
of the fund's total assets by reason of a decline in total assets will be
reduced within three days (exclusive of Sundays and holidays) to the extent
necessary to comply with the 33 1/3% limitation;
(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,
instrumentalities, territories or possessions, or issued or guaranteed by a
state government or political subdivision thereof) if, as a result, more
than 25% of the value of its total assets would be invested in securities
of companies having their principal business activities 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 objectives, 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 may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as an
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (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 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 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 objectives, 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.
AFFILIATED BANK TRANSACTIONS. Pursuant to exemptive orders issued by the
Securities and Exchange Commission (SEC), the fund may engage in
transactions with banks that are, or may be considered to be, "affiliated
persons" of the fund 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; and transactions in U.S. government securities with affiliated
banks that are primary dealers in these securities.
QUALITY AND MATURITY. 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 a U.S. government security; rated in accordance with
applicable rules in one of the two highest categories for short-term
securities by at least two nationally recognized rating services (or by
one, if only one rating service has rated the security); or, if unrated,
judged to be of equivalent quality by FMR.
High-quality securities are divided into "first tier" and "second tier"
securities. First tier securities have received the highest rating (e.g.,
Standard & Poor's A-1 rating) from at least two rating services (or
one, if only one has rated the security). Second tier securities have
received ratings within the two highest categories (e.g., Standard &
Poor's A-1 or A-2) from at least two rating services (or one, if only one
has rated the security), but do not qualify as first tier securities. If a
security has been assigned different ratings by different ratings services,
at least two rating services must have assigned the higher rating in order
for FMR to determine eligibility on the basis of that higher rating. Based
on procedures adopted by the Board of Trustees, FMR may determine that an
unrated security is of equivalent quality to a rated first or second tier
security.
The fund may not invest more that 5% of its total assets in second tier
securities. In addition, the fund may not invest more than 1% of its total
assets or $1 million (whichever is greater) in the second tier securities
of a single issuer.
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. The fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by the 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.
When purchasing securities on a delayed-delivery basis, the fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because the 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 the 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 the 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.
The 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.
VARIABLE OR FLOATING RATE DEMAND 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
securities 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.
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 fund 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 the fund to tender (or put) its bonds to an
institution at periodic intervals and to receive the principal amount
thereof. The 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, the fund intends to purchase these
instruments based on opinions of bond counsel.
The 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, the fund effectively holds a demand
obligation that bears interest at the prevailing short-term tax-exempt
rate. Subject to applicable regulatory requirements, the 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 fund, 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, the 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. The fund may
acquire standby commitments to enhance the liquidity of portfolio
securities, but only when the issuers of the commitments present minimal
risk of default.
Ordinarily the 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. The 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
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 fund; and the possibility that the maturities of the
underlying securities may be different from those of the commitments.
MUNICIPAL LEASE OBLIGATIONS. The 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 fund 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 the 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 fund does not intend to invest in
securities whose interest is federally taxable; however, from time to time,
the 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, the 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 the 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 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 Connecticut
legislature that would affect the state tax treatment of the fund's
distributions. If such proposals were enacted, the availability of
municipal obligations and the value of the fund's holdings would be
affected and the Trustees would reevaluate the fund's investment objective
and policies.
The 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, the fund may hold cash that is not earning income. In
addition, there may be occasions when, in order to raise cash to meet
redemptions, the fund may be required to sell securities at a loss.
REPURCHASE AGREEMENTS. In a repurchase agreement, the 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. The fund may engage in
repurchase agreements with respect to any security in which it is
authorized to invest, even if 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 the fund in connection with bankruptcy proceedings), it is the 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 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 the fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of the fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment). Investments currently considered
by the fund to be illiquid include restricted securities and municipal
lease obligations determined by FMR to be illiquid. In the absence of
market quotations, illiquid investments are valued for purposes of
monitoring amortized cost valuation at fair value as determined in good
faith by a committee appointed by the Board of Trustees. If through a
change in values, net assets, or other circumstances, the 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, the 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, the fund might
obtain a less favorable price than prevailed when it decided to seek
registration of the security. However, in general, the fund anticipates
holding restricted securities to maturity or selling them in an exempt
transaction.
INTERFUND BORROWING PROGRAM. The fund has received permission from the SEC
to lend money to and borrow money from other funds advised by FMR or its
affiliates. Interfund loans and borrowings normally will extend overnight,
but can have a maximum duration of seven days. Loans may be called on one
day's notice. The fund will lend through the program only when the returns
are higher than those available at the same time from other short-term
instruments (such as repurchase agreements), and will borrow through the
program only when the costs are equal to or lower than the cost of bank
loans. The fund may have to borrow from a bank at a higher interest rate
if an interfund loan is called or not renewed. Any delay in repayment to a
lending fund could result in a lost investment opportunity or additional
borrowing costs.
HOUSING. Housing revenue bonds are generally issued by a state,
country, city, local housing authority, or other public agency. T hey
are secured by the revenues derived from mortgages purchased with the
proceeds of the bond issue. It is extremely difficult to predict the supply
of available mortgages to be purchased with the proceeds of an issue or the
future cash flow from the underlying mortgages. Consequently, there are
risks that proceeds will exceed supply, resulting in early retirement of
bonds, or that homeowner repayments will create an irregular cash flow.
Many factors may affect the financing of multi-family housing projects,
including acceptable completion of construction, proper management,
occupancy and rent levels, economic conditions, and changes to current laws
and regulations.
SPECIAL FACTORS AFFECTING CONNECTICUT
The following only highlights some of the more significant financial trends
and problems, and is based on information drawn from official statements
and prospectuses relating to securities offerings of the State of
Connecticut, its agencies and instrumentalities, as available on the date
of this Statement of Additional Information. FMR has not independently
verified any of the information contained in such official statements and
other publicly available documents, but is not aware of any fact which
would render such information inaccurate.
Manufacturing has historically been Connecticut's single most important
economic activity. The State's manufacturing industry is diversified, but
from 1970 to 199 2 manufacturing employment declined 30.8 %.
During this period, employment in other non - agricultural
establishments (including government) increased 6 0.8 %, particularly
in the service, trade, and finance categories. In 199 2 ,
manufacturing accounted for only 20 .1 % of total nonagricultural
employment in Connecticut. Defense-related business plays an important
role in the Connecticut economy, and economic activity has been affected by
the volume of defense contracts awarded to Connecticut firms. On a per
capita basis, defense awards in Connecticut have traditionally been among
the highest in the nation, but reductions in defense spending have had a
substantial adverse impact on Connecticut's econom y, and the state's
largest defense contractors have announced substantial labor force
reductions to occur over the next four years.
The annual average unemployment rate (seasonally adjusted) in Connecticut
decreased from 6.9% in 1982 to a low of 3.0% in 1988 , but it reached
7. 4 % as of May 1993 . Pockets of more significant
unemployment and poverty exist in some of Connecticut's cities and towns,
the economic conditions of which are causing them severe financial
problems, resulting in some cases in the reporting of operating and
accumulated deficits. Connecticut is in a recession the depth and duration
of which are uncertain.
While the State's General Fund ended fiscal 1984-85, 1985-86 and 1986-87
with operating surpluses of approximately $365,500,000, $250,100,000 and
$365,200,000, respectively, the State recorded operating deficits in its
General Fund for fiscal 1987-88, 1988-89, 1989-90, and 1990-91 alone of
$115,600,000, $28,000,000, $259,000,000, and $809,000,000, respectively.
In the fall of 1991, the State issued $965,712,000 of Economic Recovery
Notes to help fund its accumulated General Fund deficit. Largely as a
result of the enactment in 1991 of a general income tax on resident and
non-resident individuals, trusts, and estates the State's General Fund
ended fiscal 1991-92 and 1992-93 with an operating surplus of
$110,000,000 and $113,500,000, respectively .
The state's two major revenue raising taxes have been the sales and
use taxes and the corporation business tax, each of which is sensitive to
changes in the level of economic activity in the State, but the Connecticut
income tax on individuals, trusts, and estates is expected to supersede
each of them in importance. Motor fuel taxes and other
transportation-related taxes are paid into a Special Transportation Fund
while all other tax revenues are carried in the General Fund.
The repair and maintenance of the State's highways and bridges will require
major expenditures in the near term. The State has adopted legislation
that provides for, among other things, the issuance of special tax
obligation bonds, the proceeds of which will be used to pay for
improvements to the State's transportation system. The bonds are payable
solely from motor vehicle and other transportation-related taxes and fees
deposited in the Special Transportation Fund. However, the amount of
revenues is dependent on the occurrence of future events, including a
possible rise in fuel prices, and may thus differ materially from projected
amounts. The cost of this infrastructure program, to be met from federal,
State and local funds, is currently estimated at $ 9.5 billion. The
State expects to issue $3. 7 billion of special tax obligation bonds
over a ten-year period commenced July 1, 1984 to finance a major portion of
the State's share of such cost.
The State's budget problems led to ratings of its general obligation bonds
being lowered early in 1990, from Aa1 to Aa by Moody's Investors Service,
Inc., and from AA+ to AA by Standard & Poor's Corporation. Because of
concern over Connecticut's lack of a plan to deal with accumulated
projected deficits in its General Fund, on September 13, 1991, Standard
& Poor's further lowered its ratings of the State's general obligation
bonds and certain other obligations that depend in part on the
creditworthiness of the State to AA-. State and regional economic
difficulties, reductions in revenues, and increased expenses could lead to
further fiscal problems for the State and its political subdivisions,
authorities, and agencies. This could result in declines in the value of
their outstanding obligations, increases in their future borrowing costs,
and impairment of their ability to pay debt service on their obligations.
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 fund by FMR (either directly or through affiliated
sub-advisers) pursuant to authority contained in the 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 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 fund may execute portfolio transactions with broker-dealers who provide
research and execution services to the fund or other accounts over which
FMR or its affiliates exercise investment discretion. Such services may
include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; 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 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 fund may be useful to FMR in rendering investment management
services to the fund or its other clients and, conversely, such research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the fund. 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 fund to pay such higher commissions, FMR must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or FMR's overall
responsibilities to the fund 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 fund, 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 subsidiary of FMR Corp., if the commissions are fair,
reasonable, and comparable to commissions charged by non-affiliated,
qualified brokerage firms for similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, except in accordance with
regulations of the Securities and Exchange Commission. 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 f iscal years ended November 30, 1993, 1992, and
1991, the fund 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
fund and review the commissions paid by the fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to the fund.
From time to time the Trustees will review whether the recapture for the
benefit of the fund of some portion of the brokerage commissions or similar
fees paid by the fund on portfolio transactions is legally permissible and
advisable. The 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 fund to seek such recapture.
Although the Trustees and officers of the fund are substantially the same
as those of other funds managed by FMR, investment decisions for the 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 fund
is concerned. In other cases, however, the ability of the fund to
participate in volume transactions will produce better executions and
prices for the fund. It is the current opinion of the Board of Trustees
that the desirability of retaining FMR as investment adviser to the fund
outweighs any disadvantages that may be said to exist from exposure to
simultaneous transactions.
VALUATION OF PORTFOLIO SECURITIES
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.
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 fund may quote performance in various ways. All performance
information supplied by the fund in advertising is historical and is not
intended to indicate future returns. The fund's yield and total return
fluctuate in response to market conditions and other factors.
YIELD CALCULATIONS. To compute the fund's yield for a period, the net
change in value of a hypothetical account containing one share (exclusive
of capital gains) 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 fund also may calculate a compound effective yield
by compounding the base period return over a one-year period. In addition
to the current yield, the fund may quote yields in advertising based on any
historical seven-day period. Yields for the fund are calculated on the
same basis as other money market funds, as required by regulation.
The 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 the fund's yield
by the result of one minus a stated federal or combined federal and state
tax rate. (If only a portion of the fund's yield is tax-exempt, only that
portion is adjusted in the calculation.)
The table s below show the effect of a shareholder's tax status on
effective yield under federal and state income tax laws for 199 4 .
It shows the approximate yield a taxable security must provide at various
income brackets to produce after-tax yields equivalent to those of
hypothetical tax-exempt obligations yielding from 2.0% to 8 .0%. Of
course, no assurance can be given that the fund will achieve any specific
tax-exempt yield. While the fund invests principally in obligations whose
interest is exempt from federal and state income tax, other income received
by the fund may be taxable. The tables do not take into account local
taxes, if any, payable on the fund's distributions.
Use this table to find your approximate effective tax bracket taking into
account federal and state taxes for 199 4 .
199 4 TAX RATES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Federal Single Return Joint Return
Taxable Income Income Tax Combined Income Combined Income
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Single Return Joint Return Bracket Tax Bracket* Tax Bracket*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
$ 22 ,751 - 5 5 , 1 00 N.A. 28% 31.24% N.A.
N.A. $ 38,001 - 91,850 28% N.A. 30.92% **
$ 5 5 , 1 01 - 115,000 $ 91,851 - 140,000 31% 34.11% 34.11%
$115,001 - 250,000 140,001 - 250,000 36% 38.88% 38.88%
$250,001 and above $250,001 and above 39.6% 42.32% 42.32%
</TABLE>
* The Connecticut rates assumed for 199 4 are the highest effective
marginal rates applicable for the indicated federal rate bracket. The
table assumes that Connecticut adjusted gross income equals federal taxable
income.
** After the automatic credit.
PLEASE NOTE: The 199 4 combined tax brackets are based on the
assumption that 100% of the fund's income is free from federal and
state taxes. In fiscal 199 3 , 4.7 % of the income from the
fund was subject to state taxes.
Having determined your effective tax bracket, use the table below to
determine the tax-equivalent yield for a given tax-free yield.
If your effective combined federal and state personal tax rate in
199 4 is:
30.92% 31.24% 34.11% 38.88% 42.32%
<TABLE>
<CAPTION>
<S> <C>
To match these
tax-free yields: Your taxable investment would have to earn the following yield:
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2.0% 2.90% 2.91% 3.04% 3.27% 3.47%
3.0 4.34 4.36 4.55 4.91 5.20
4.0 5.79 5.82 6.07 6.54 6.93
5.0 7.24 7.27 7.59 8.18 8.67
6.0 8.69 8.73 9.11 9.82 10.40
7.0 10.13 10.18 10.62 11.45 12.14
8.0 11.58 11.63 12.14 13.09 13.87
</TABLE>
The fund may invest a portion of its assets in obligations that are subject
to state or federal income taxes. When the fund invests in these
obligations, its tax-equivalent yields will be lower. In the table above,
tax-equivalent yields are calculated assuming investments are 100%
federally and state tax-free.
Yield information may be useful in reviewing the fund's performance and in
providing a basis for comparison with other investment alternatives.
However, the fund's yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should 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 the
fund's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates the fund's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to the fund from the continuous sale of its shares will likely be
invested in instruments producing lower yields than the balance of the
fund's holdings, thereby reducing the fund's current yield. In periods of
rising interest rates, the opposite can be expected to occur.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of the 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 the 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 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 the 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, the fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. An example of this type of
illustration is given on the following page . Total returns, yields,
and other performance information may be quoted numerically or in a table,
graph, or similar illustration.
HISTORICAL RESULTS. The following table shows the fund's 7-day yield,
tax-equivalent yield, average annual total returns, and cumulative total
returns for the period ended November 30, 1993:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
7-day Tax-Equivalent Average Annual Total Returns Cumulative Total Returns
</TABLE>
Yield Yield One Year Life of Fund* One Year Life of Fund*
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1.90 % 3.10 % 1.87 % 3.87 % 1.87 % 17.58 %
</TABLE>
* The fund commenced operations on August 29, 1989.
The tax-equivalent yield is based on a 199 4 combined
effective federal and state income tax bracket of 3 8.88 % and
reflects that on November 30, 1993 an estimated 5.8 % of the fund's
income for the period was subject to state taxes.
NOTE: If FMR had not reimbursed certain fund expenses during the periods,
the fund's total returns would have been lower.
The following table shows the income and capital elements of the fund's
total return from August 29, 1989 (commencement of operations) to November
30, 1993. The table compares the fund's return to the record of the
Standard & Poor's 500 Composite Stock Price Index (S&P), 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 and DJIA
comparisons are provided to show how the 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 fund invests in money market instruments, common stocks
represent a different type of investment from the fund. Common stocks
generally offer greater potential growth than the fund, 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 investment such as the fund. The S&P and DJIA are based on
the prices of unmanaged groups of stocks and, unlike the fund's returns,
their returns do not include the effect of paying brokerage commissions,
spreads, or other costs of investing.
D uring the period August 29, 1989 (commencement of operations) to
November 30, 1993, a hypothetical investment of $10,000 in the fund would
have grown to $ 11,758 , assuming all dividends were reinvested. This
was a period of widely fluctuating interest rates 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of
Period Ended Value of Initial Reinvested Reinvested Total S& Cost of
;P
11/30 $10,000 Investment Dividends Capital Gains Value 500 DJIA Living **
1993 $10,000 $ 1,758 $ 0 $ 11,758 $ 15,023 $ 15,454 $ 11,701
1992 10,000 1,542 0 11,542 13,644 13,470 11,396
1991 10,000 1,234 0 11,234 11,514 11,454 11,059
1990 10,000 746 0 10,746 9,567 9,793 10,738
1989* 10,000 160 0 10,160 9,912 9,960 10,104
</TABLE>
* From August 29, 1989 (commencement of operations) through November 30,
1989.
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made August 29,
1989, the net amount invested in fund shares was $10,000. The cost of the
initial investment ($10,000), together with the aggregate cost of
reinvested dividends for the period covered (their cash value at the time
they were reinvested) amounted to $ 11,758 . If distributions had not
been reinvested, the amount of distributions earned from the fund over time
would have been smaller, and the cash payments (dividends) for the period
would have amounted to $ 1,623 . There were no capital gain
distributions during this period. If FMR had not reimbursed certain fund
expenses, the fund's returns would have been lower.
The 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, the fund's performance may be compared to mutual
fund performance indices prepared by Lipper.
From time to time, the 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.
The 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 325 tax-free money market
funds.
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.
The fund may present its fund number, Quotron(registered trademark) number,
and CUSIP number, and discuss or quote its current portfolio manager.
The 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.
As of November 30, 1993, FMR managed 41 tax-free funds with a total
value of over $25 billion. According to the Investment Company Institute,
over the past ten years, assets in tax-exempt money market funds increased
from $ 13.2 billion in 1982 to approximately $ 95
billion at the end of 1 992 . The 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
The 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 (observed) , 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.
FSC normally determines the fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier
if trading on the NYSE is restricted or as permitted by the SEC. To the
extent that portfolio securities are traded in other markets on days when
the NYSE is closed, the 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 the fund's NAV. Shareholders receiving securities or other
property on redemption may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the 1940
Act), the fund is required to give shareholders at least 60 days' notice
prior to terminating or modifying its exchange privilege. Under the Rule,
the 60-day notification requirement may be waived if (i) the only effect of
a modification would be to reduce or eliminate an administrative fee,
redemption fee, or deferred sales charge ordinarily payable at the time of
an exchange, or (ii) the fund suspends the redemption of the shares to be
exchanged as permitted under the 1940 Act or the rules and regulations
thereunder, or the fund to be acquired suspends the sale of its shares
because it is unable to invest amounts effectively in accordance with its
investment objective and policies.
In the Prospectus, the fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. To the extent that the fund's income is derived from federally
tax-exempt interest, the daily dividends declared by the fund are also
federally tax-exempt. The fund 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 fund purchases municipal obligations based on opinions of bond counsel
regarding the federal income tax status of the obligations. These opinions
generally will be based on 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 purposes. Interest from private activity securities will be
considered tax-exempt for purposes of the fund's policies of investing so
that at least 80% of its income is free from federal income tax. Interest
from private activity securities is a tax- preference item for the purpose
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 the alternative minimum
taxable income of the corporation. If a shareholder receives an
exempt-interest dividend and sells shares at a loss after holding them for
a period of six months or less, the loss will be disallowed to the extent
of the amount of exempt-interest dividend.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the fund
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 the 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 fund 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
recharacteri z ation of gain from the sale of bonds purchased at a
discount after April 30, 1993 are not considered income for purposes of the
fund's policy of investing so that at least 80% of its income is free from
federal income tax. The 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 per share.
TAX STATUS OF THE FUND. The 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, the fund intends to distribute 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. The fund is treated as a separate entity from
the other funds of Fidelity Court Street Trust II for tax purposes.
As of November 30, 1993, the fund had a capital loss carryover aggregating
approximately $ 10,700 available to offset future capital gains, to
the extent provided by regulations of which $ 1,400 , $ 400, and
$8,900 will expire on November 30, 1999 , 2000, and 2001
respectively. 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.
CONNECTICUT TAXES. The Connecticut income tax is imposed at the
rate of 4.5% on the Connecticut taxable income of resident and non-resident
individuals, trusts, and estates. Connecticut taxable income is federal
adjusted gross income after certain modifications (Connecticut AGI), less a
personal exemption. The amount of the personal exemption varies depending
on the taxpayer's filing status and is phased out as the amount of
Connecticut AGI increases. For a husband and wife filing a joint return,
the personal exemption is $24,000 but decreases to zero as Connecticut AGI
increases between $48,001 and $71,001. For an individual filing a separate
return, the exemption is $12,000 but decreases to zero as Connecticut AGI
increases between $24,001 and $35,001. A credit is also provided depending
on the taxpayer's filing status and Connecticut AGI. The credit ranges
from 75% to 10% of the Connecticut income tax, decreasing as
Connecticut AGI increases. No credit is available if Connecticut AGI
exceeds $96,000 in the case of a husband and wife filing a joint return, or
$48,000 in the case of an individual filing separately. Special exemption
and credit rules apply to an individual filing as a head of household or a
surviving spouse. The personal exemption and credit, where applicable,
lower the effective rate of tax below the flat 4.5% statutory rate.
Dividends paid by the fund that qualify as exempt-interest dividends for
federal income tax purposes are not subject to the Connecticut income tax
to the extent they are derived from obligations issued by or on behalf of
the State of Connecticut, any political subdivision thereof, or any public
instrumentality, state or local authority, district, or similar public
entity created under laws of the State of Connecticut , or derived from
obligations of U.S. possessions and territories - the interest on which
federal law prohibits the states from taxing. Exempt-interest
dividends derived from other sources and any distributions by the fund that
are treated as taxable dividends for federal income tax purposes are
includable in Connecticut AGI for purposes of the Connecticut income
tax. Amounts, if any, treated as capital gains or losses for federal
income tax purposes, such as from capital gain distributions on shares of
the fund or arising upon the sale, redemption, or other disposition of
shares of the fund by a shareholder, are includable in Connecticut AGI for
purposes of the Connecticut income tax to the same extent as they are
taxable for federal income tax purposes , except that, subject to the
adoption of proposed regulations, capital gain dividends would not have to
be included in Connecticut AGI to the extent derived from obligations
issued by or on behalf of the State of Connecticut or any of its political
subdivisions.
The net Connecticut minimum tax is imposed for taxable years commencing
after 1992 on taxpayers subject to both the Connecticut income tax and the
federal AMT. The net Connecticut minimum tax is based on what the
taxpayer's federal AMT tax base would be if computed taking certain
Connecticut modifications into account. Included in these modifications,
subject to the adoption of proposed regulations, would be the elimination
of exempt-interest dividends on private activity bonds issued by the State
of Connecticut or any if its political subdivisions, and capital gain
dividends to the extent derived from such obligations.
In addition, the Connecticut corporation business tax is imposed on any
corporation or association carrying on, or having the right to carry on,
business in Connecticut. Distributions from any source that are treated as
federally tax-exempt dividends are includable in gross income for purposes
of the corporation business tax. However, the corporation business tax
allows a deduction for 70% of amounts includable in taxable income
thereunder that are treated as dividends for federal income tax purposes,
such as distributions of taxable net investment income and net short-term
capital gains, but disallows deductions for expenses related to such
amounts.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences affecting the fund and its shareholders, and no
attempt has been made to discuss individual tax consequences. Investors
should consult their tax advisers to determine whether the fund is suitable
to their particular tax situation.
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 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. Trustees and officers elected or
appointed prior to the trust's conversion to a Delaware business trust
served the Massachusetts business trust in identical capacities. All
persons named as Trustees 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 Investment Company Act of 1940) 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 Landes 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 Greenwich 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).
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 fund 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 November 30, 1993, the Trustees and officers of the fund
owned , in the aggregate, less than 1 % of the total
outstanding shares of the fund.
MANAGEMENT CONTRACT
The fund employs FMR to furnish investment advisory and other services.
Under its management contract with the fund, FMR acts as investment adviser
and, subject to the supervision of the Board of Trustees, directs the
investments of the fund in accordance with its investment objective,
policies, and limitations. FMR also provides the fund with all necessary
office facilities and personnel for servicing the fund's investments, and
compensates all officers of the trust, all Trustees who are "interested
persons" of the trust or FMR, and of 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 fund. These services include providing facilities
for maintaining the fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with the fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining the fund's
records and the registration of the fund's shares under federal and state
law; developing management and shareholder services for the fund; 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, the fund pays all of its expenses, without limitation,
that are not assumed by those parties. The fund pays for typesetting,
printing, and mailing proxy material to shareholders, legal expenses, and
the fees of the custodian, auditor, and non-interested Trustees. Although
the fund's management contract provides that the fund will pay for
typesetting, printing, and mailing prospectuses, statements of additional
information, notices, and reports to existing shareholders, pursuant to
United Missouri's sub-transfer agent agreement with FSC, FSC bears the
cost of providing these services to existing shareholders. Other expenses
paid by the fund include interest, taxes, brokerage commissions, the fund's
proportionate share of insurance premiums and Investment Company Institute
dues, and the costs of registering shares under federal and state
securities laws. The fund is also liable for such nonrecurring expenses as
may arise, including costs of any litigation to which the fund may be a
party, and any obligation it may have to indemnify the trust's officers and
Trustees with respect to litigation.
FMR is the fund's manager pursuant to a management contract dated February
28, 1992. The contract was approved by Fidelity Court Street Trust as sole
shareholder of the fund on February 28, 1992, 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 business Trust. The Agreement and
Plan of Conversion was approved by public shareholders of the fund on
December 11, 1991. The contract is identical to the fund's prior contract
with FMR, dated November 30, 1990, which was approved by shareholders on
October 3, 1990. For the services of FMR under the contract, the 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 the
registered investment companies with which FMR has management contracts and
is calculated on a cumulative basis pursuant to the graduated fee rate
schedule shown on the left of the chart on page 16 . On the right,
the effective fee rate schedule, shows the results of cumulatively applying
the annualized rates at varying asset levels. For example, the effective
annual group fee rate at $ 227 billion of group net assets - their
approximate level for November 1993 - was . 1627 %, which is the
weighted average of the respective fee rates for each level of group net
assets up to that level.
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 - 336 .1350
Over 336 .1325
* The rates shown for average group assets in excess of $174 billion were
adopted by FMR on a voluntary basis on November 1, 1993 pending shareholder
approval of a new management contract reflecting the extended schedule.
The extended schedule provides for lower management fees as total assets
under management increase. The schedule shown above (minus the
breakpoints added November 1, 1993) was voluntarily adopted by FMR on
January 1, 1992 until shareholders could meet to approve the amended
management contract. Prior to January 1, 1992, the fund's group fee rate
was based on a schedule with breakpoints ending at .150% for average group
assets in excess of $84 billion.
The individual fund fee rate is .25%. Based on the average net assets of
funds advised by FMR for November 1993, the annual management fee rate
would be calculated as follows:
Group Fee Rate Individual Fund Fee Rate Total Management Fee Rate
. 1627 % + .25% = . 4127 %
One-twelfth (1/12) of this annual management fee rate is then applied to
the fund's average net assets for the current month, giving a dollar amount
which is the fee for that month.
FMR may, from time to time, voluntarily reimburse all or a portion of the
fund's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). The table on page 17
outlines expense limitations (as a percentage of the fund's average net
assets) in effect from the fund's commencement of operations, August 29,
1989, through the date of this Statement of Additional Information. This
table is followed by a second table showing gross management fees payable
to FMR for each of the past three fiscal years and amounts reimbursed to
the fund during the fiscal years ended November 30, 1993, 1992, and 1991 as
a result of the expense limitations.
Expense Limitations
From To Expense Limitation
August 1, 1992 September 30, 1992 .55
June 1, 1992 July 31, 1992 .50
May 1, 1992 May 31, 1992 .45
April 1, 1992 April 30, 1992 .40
March 1, 1992 March 31, 1992 .35
February 1, 1992 February 29, 1992 .30
January 1, 1992 January 31, 1992 .25
December 1, 1991 December 31, 1991 .20
October 1, 1991 November 30, 1991 .15
August 1, 1991 September 30, 1991 .10
July 1, 1991 July 31, 1991 .05
April 8, 1991 June 30, 1991 .00
March 1, 1991 April 7, 1991 .10
October 15, 1990 February 28, 1991 .05
Management Fees and Reimbursements
Fiscal Management Fee Amount of
Year Before Reimbursement* Reimbursements
1993 $ 1,250,120 $ 0
1992 $1,604,629 $ 637,836
1991 $1,784,555 $2,175,712
* These fee amounts were equal to .4163%, .4225%, and .4301% (annualized),
respectively, of the fund's average net assets during the corresponding
fiscal year.
SUB-ADVISER. 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 expense
reimbursements that may be in effect from time to time. For fiscal 1993,
1992, and 1991, FMR paid FMR Texas fees equal to $ 616,962 ,
$800,764, and $889,535, respectively, under the sub-advisory agreement.
DISTRIBUTION AND SERVICE PLAN
The fund has adopted a distribution and service plan (the plan )
under Rule 12b-1 of the Investment Company Act of 1940 (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 plan to
allow the fund and FMR to incur certain expenses that might be considered
to constitute indirect payment by the fund of distribution expenses. Under
the plan , if payment by the 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 plan .
The plan specifically recognizes 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 fund. In
addition, the plan provides that FMR may use its resources, including
management fee revenues, to make payments to third parties that provide
assistance in selling shares of the fund, or to third parties, including
banks, that render shareholder support services. For the fiscal years
ended November 30, 1993, 1992, and 1991, payments of $ 16,197 ,
$3,102, and $5,486, respectively, have been made by FMR to third parties
for the fund.
As required by the Rule, the Trustees carefully considered all pertinent
factors relating to the implementation of the plan prior to its approval,
and have determined that there is a reasonable likelihood that the plan
will benefit the fund and its shareholders. In particular, the Trustees
noted that the plan does not authorize payments by the fund other than
those made to FMR under its management contract with the fund. To the
extent that the plan gives FMR and FDC greater flexibility in connection
with the distribution of shares of the fund, additional sales of the fund's
shares may result. Additionally, certain shareholder support services may
be provided more effectively under the plan by local entities with whom
shareholders have other relationships. The fund's plan was approved by
Fidelity Court Street Trust on February 28, 1992, as the then sole
shareholder of the fund, pursuant to an Agreement and plan of
Conversion approved by the public shareholders of the fund on December 11,
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 operations of the fund
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 fund may execute portfolio
transactions with and purchase securities issued by depository institutions
that receive payments under the plan. 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 the 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
fund. 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 per regular account with a
balance of $5,000 or more, $10.00 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 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 per account fees of $95 and monetary transactions charges
of $20 or 17.50, depending on the nature of services provided.
Prior to December 6, 1991, Shawmut Bank, N.A. (Shawmut) served as the
fund's 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 fund. 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). 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 changes 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 years ended November 30, 1993, 1992, and 1991
were $ 448,621 , $447,021, and $412,207, respectively.
United Missouri has an additional sub-contract with FSC, pursuant to which
FSC performs the calculations necessary to determine the fund's net asset
value per share and dividends and maintains the fund's accounting records.
The annual fee rates for these pricing and bookkeeping services are based
on the fund's average net assets, specifically, .0175% for the first $500
million of average net assets and .0075% for average net assets in excess
of $500 million. The fee is limited to a minimum of $20,000 and a maximum
of $750,000 per year.
Prior to December 6, 1991, 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 fund's average net assets and one pertaining to the type and number
of transactions the fund made.
Pricing and bookkeeping fees, including reimbursement for out-of-pocket
expenses, paid to FSC for fiscal 1993, 1992, and 1991 were $ 61,606 ,
$86,609, and $115,068, respectively. The transfer agent fees and charges
and pricing and bookkeeping fees described above are paid to FSC by United
Missouri, which is entitled to reimbursement from the fund 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 fund shareholders
participating in the Fidelity Ultra Service Account program. FBSI directly
charges each Ultra Service Account client 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 fund shareholders participating in the
Fidelity Ultra Service Account program amounted to approximately
$ 24,265 for fiscal 1993.
The 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 the 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 TRUST
TRUST ORGANIZATION. Fidelity Connecticut Municipal Money Market Portfolio
is a fund of Fidelity Court Street Trust II (the trust), an open-end
management investment company organized as a Delaware business trust on
June 20, 1991. Fidelity Connecticut Municipal Money Market Portfolio
acquired all the assets of Fidelity Connecticut Municipal Money Market
Portfolio, a series of Fidelity Court Street Trust, on February 28, 1992
pursuant to an agreement approved by shareholders on December 11, 1991.
Currently there are four funds of the trust: Fidelity Connecticut
Municipal Money Market Portfolio, Spartan Connecticut Municipal Money
Market Portfolio, Spartan Florida Municipal Money Market Portfolio,
and Fidelity New Jersey Tax-Free Money Market Portfolio. The 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" or "Spartan" may be withdrawn.
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 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 trust and
requires that a disclaimer be given in each contract entered into or
executed by the trust or the 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, if they have
exercised reasonable care, shall not be personally liable to any person
other than the 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. The fund's capital consists of shares of beneficial
interest. 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 Trust Instrument, call meetings of the trust or fund
for any purpose related to the trust or fund, as the case may be,
including, in the case of a meeting of 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, or 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; however, the Trustees may, without prior shareholder approval,
change the form of organization of the trust by merger, consolidation, or
incorporation. If not so terminated or reorganized, the trust and its
funds will continue indefinitely. Under the Trust Instrument, the Trustees
may, without shareholder vote, cause the trust to merge or consolidate into
one or more trusts, partnerships, or corporations or cause the trust to be
incorporated under Delaware law, so long as the surviving entity is an
open-end management investment company that will succeed to or assume the
trust registration statement. The trust may also invest all of its assets
in another investment company.
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 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. Coopers & Lybrand, 1999 Bryan Street, Dallas, Texas serves as
the trust's independent accountant. The auditor examines financial
statements for the fund and provides other audit, tax, and related
services.
FINANCIAL STATEMENTS
The fund's Annual Report for the fiscal year ended November 30, 1993 is a
separate report supplied with this Statement of Additional Information and
is incorporated herein by reference.
APPENDIX
The descriptions that follow are examples of eligible ratings for the fund.
The fund may, however, consider the ratings for other types of investments
and the ratings assigned by other rating 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
in 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.
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.
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 the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities.
Those bonds in the Aa group which Moody's believes possess the strongest
investment attributes are designated by the symbol Aa1.
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.
The rating AA may be modified by the addition of a plus or minus to show
relative standing within the rating category.
Fidelity Court Street Trust:
Spartan Florida Municipal Income Portfolio
Fidelity Court Street Trust II:
Spartan Florida Municipal Money Market 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
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
Fidelity Court Street Trust:
Spartan Florida Municipal Income Portfolio
Fidelity Court Street Trust II:
Spartan Florida Municipal Money Market Portfolio
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 January 14, 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.
The funds seek a high level of current income free from federal income tax
and the Florida intangible tax. Spartan Florida Municipal Money Market
invests in high-quality, short-term instruments and is designed to maintain
a stable $1.00 share price. Spartan Florida Municipal Income invests in a
broader range of securities.
SPARTAN(Registered trademark)
FLORIDA MUNICIPAL
FUNDS
PROSPECTUS
JANUARY 14, 1994
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.
CTR-pro-194
(Registered trademark)
82 Devonshire Street, Boston, MA 02109
CONTENTS
KEY FACTS 4 THE FUNDS AT A GLANCE
4 WHO MAY WANT TO INVEST
EXPENSES AND PERFORMANCE 5 EXPENSES Each fund's yearly
operating expenses.
6 FINANCIAL HIGHLIGHTS A summary
of each fund's financial data.
8 PERFORMANCE How each fund has
done over time.
YOUR ACCOUNT 11 DOING BUSINESS WITH FIDELITY
11 TYPES OF ACCOUNTS Different
ways to set up your account.
12 HOW TO BUY SHARES Opening an
account and making additional
investments.
14 HOW TO SELL SHARES Taking money
out and closing your account.
16 INVESTOR SERVICES Services to
help you manage your account.
18 DIVIDENDS, CAPITAL GAINS, AND
TAXES
SHAREHOLDER AND 20 TRANSACTION DETAILS Share price
ACCOUNT POLICIES calculations and the timing of
purchases and redemptions.
22 EXCHANGE RESTRICTIONS
THE FUNDS IN DETAIL 24 CHARTER How each fund is
organized.
25 BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.
26 INVESTMENT PRINCIPLES Each
fund's overall approach to
investing.
27 SECURITIES AND INVESTMENT
PRACTICES
<r>KEY FACTS</r>
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 Spartan Connecticut Municipal
Money Market.
As with any mutual fund, there is no assurance that a fund will achieve its
goal.
SPARTAN CONN. MONEY MARKET
GOAL: High current tax-free income, and exemption from the Florida
intangible tax while maintaining a stable share price .
STRATEGY: Invests mainly in high-quality, short-term Florida municipal
securities.
SIZE: As of November 30, 199 3 , the fund had over $ 306 million
in assets.
SPARTAN CONN. HIGH YIELD
GOAL: High current tax-free income, and exemption from the Florida
intangible tax.
STRATEGY: Invests mainly in long - term, investment-grade Florida
municipal securities.
SIZE: As of November 30, 199 3 , the fund had over $ 428 million
in assets.
WHO MAY WANT TO INVEST
These non-diversified funds may be appropriate for investors in higher tax
brackets who seek high current tax-free income and an investment
that is free from the Florida intangible tax. Each fund's level of risk,
and potential reward, depend on the quality and maturity of its
investments. Spartan Florida Municipal Money Market is managed to keep its
share price stable at $1.00. Spartan Florida Municipal Income, with its
broader range of investments, has the potential for higher yields, but also
carries a higher degree of risk.
These funds do not constitute a balanced investment plan. 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. When you sell your
shares of Spartan Florida Municipal Income, 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 20 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 )
for Spartan Connecticut Municipal Money Market None
for Spartan Connecticut Municipal High Yield .50%
Exchange and wire transaction fees $5.00
Checkwriting fee, per check written $2.00
(available for Spartan Florida Municipal Money Market)
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 25).
The following are projections based on historical expenses, and are
calculated as a percentage of average net assets.
SPARTAN CONN. MONEY MARKET
Management fee (after reimbursement) 0.40%
12b-1 fee None
Other expenses 0.00%
Total fund operating expenses 0.40%
SPARTAN CONN. HIGH YIELD
Management fee (after reimbursement) 0.50%
12b-1 fee None
Other expenses 0.00 %
Total fund operating expenses 0.50%
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:
SPARTAN CONN. MONEY MARKET
Account open Account closed
After 1 year $ 4 $ 9
After 3 years $ 13 $ 18
After 5 years $ 22 $ 27
After 10 years $ 51 $ 56
SPARTAN CONN. HIGH YIELD
Account open Account closed
After 1 year $ 5 $ 10
After 3 years $ 16 $ 21
After 5 years $ 28 $ 33
After 10 years $ 63 $ 68
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
FMR has voluntarily agreed to temporarily limit Spartan Connecticut
Municipal Money Market's and Spartan Florida Municipal Income's operating
expenses to .40% and .50%, respectively, of its average net assets. If
these agreements were not in effect, the management fee, other expenses,
and total operating expenses would be .50%, .00%, and .50% for Spartan
Florida Municipal Money Market, and .55%, .00%, and .55% for Spartan
Florida Municipal Income, 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 Coopers & Lybrand,
independent accountants. Their unqualified report is included in the
funds' Annual Report. The funds' Annual Report is incorporated by reference
into (is legally a part of) the Statement of Additional Information.
SPARTAN FLORIDA MUNICIPAL MONEY MARKET
<TABLE>
<CAPTION>
<S> <C> <C>
40.Selected Per-Share Data and Ratios
41.Years ended November 30, 1992B 1993
42.Net asset value, beginning of period $ 1.000 $ 1.000
43.Income from Investment Operations .008 .025
Net interest income
44. Dividends from net interest income (.008) (.025)
45.Net asset value, end of period $ 1.000 $ 1.000
46.Total return C .78% 2.51%
47.Net assets, end of period (000 omitted) $ 49,467 $ 306,741
48.Ratio of expenses to average net assets -% .18%
49.Ratio of expenses to average net assets before expense .50% .50%
reductions A
50.Ratio of net interest income to average net assets 2.91% 2.48%
A
</TABLE>
A ANNUALIZED
B FROM AUGUST 24, 1992 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1992
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
SPARTAN FLORIDA MUNICIPAL INCOME
<TABLE>
<CAPTION>
<S> <C> <C>
51.Selected Per-Share Data and Ratios 1992B 1993
52.Years ended November 30,
53.Net asset value, beginning of period $ 10.000 $ 10.520
54.Income from Investment Operations .459 .615
Net investment income
55. Net realized and unrealized gain (loss) on investments .514 .777
56. Total from investment operations .973 1.392
57.Less Distributions (.459) (.615)
From net interest income
58. From net realized gain on investments - (.010)
59. Total distributions (.459) (.625)
60.Redemption fees added to paid in capital .006 .003
61.Net asset value, end of period $ 10.520 $ 11.290
62.Total returnC 9.94% 13.52%
63.Net assets, end of period (000 omitted) $ 237,109 $ 428,367
64.Ratio of expenses to average net assets .03% .25%
A
65.Ratio of expenses to average net assets before expense .55% .55%
reductions A
66.Ratio of net interest income to average net assets 6.25% 5.52%
A
67.Portfolio turnover rate 38% 50%
A
</TABLE>
A ANNUALIZED
B FROM MARCH 16, 1992 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1992
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
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 and do
not reflect the effect of any transaction fees you may have paid. The
figures would be lower if fees were taken into account.
Each fund's fiscal year runs from December 1 through November 30. The
tables below show each fund's performance over past fiscal years compared
to a measure of inflation. The charts on page 9 help you compare the yields
of these funds to those of their competitors.
SPARTAN CONN. MONEY MARKET
Fiscal periods ended Past 1 Life of
November 30, 199 3 Year fundA
Average annual
total return 2.51% 2.59%
Cumulative
total return 2.51% 3.31%
Consumer Price Index 2.68% n/a
SPARTAN CONN. HIGH YIELD
Fiscal periods ended Past 1 Life of
November 30, 199 3 Year fundB
Average annual
total return 13.52% 13.81%
Cumulative
total return 13.52% 24.80%
Consumer Price Index 2.68% n/a
A FROM AUGUST 24, 1992
B FROM OCTOBER 29, 1987
EXPLANATION OF TERMS
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, if
any, and any change in a
fund's share price.
(checkmark)
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 Spartan Florida
Income 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.
SPARTAN FLORIDA MUNICIPAL MONEY MARKET
7-day yields
Percent
age %
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: 2.81
Row: 4, Col: 2, Value: 2.38
Row: 5, Col: 1, Value: 2.65
Row: 5, Col: 2, Value: 2.3
Row: 6, Col: 1, Value: 3.45
Row: 6, Col: 2, Value: 3.04
Row: 7, Col: 1, Value: 2.45
Row: 7, Col: 2, Value: 2.15
Row: 8, Col: 1, Value: 2.35
Row: 8, Col: 2, Value: 1.97
Row: 9, Col: 1, Value: 2.58
Row: 9, Col: 2, Value: 2.18
Row: 10, Col: 1, Value: 2.62
Row: 10, Col: 2, Value: 2.18
Row: 11, Col: 1, Value: 2.78
Row: 11, Col: 2, Value: 2.38
Row: 12, Col: 1, Value: 2.37
Row: 12, Col: 2, Value: 1.97
Row: 13, Col: 1, Value: 2.56
Row: 13, Col: 2, Value: 2.19
Row: 14, Col: 1, Value: 2.48
Row: 14, Col: 2, Value: 2.38
Row: 15, Col: 1, Value: 2.71
Row: 15, Col: 2, Value: 2.14
Row: 16, Col: 1, Value: 2.4
Row: 16, Col: 2, Value: 2.08
Spartan
Florida
Municipal
Money
Market
Competitive
funds average
1992
1993
SPARTAN FLORIDA MUNICIPAL INCOME
30-day yields
Percent
age %
Row: 1, Col: 1, Value: 6.34
Row: 1, Col: 2, Value: 5.45
Row: 2, Col: 1, Value: 6.470000000000001
Row: 2, Col: 2, Value: 5.51
Row: 3, Col: 1, Value: 6.319999999999999
Row: 3, Col: 2, Value: 5.64
Row: 4, Col: 1, Value: 6.470000000000001
Row: 4, Col: 2, Value: 5.78
Row: 5, Col: 1, Value: 6.19
Row: 5, Col: 2, Value: 5.57
Row: 6, Col: 1, Value: 6.13
Row: 6, Col: 2, Value: 5.44
Row: 7, Col: 1, Value: 6.01
Row: 7, Col: 2, Value: 5.430000000000001
Row: 8, Col: 1, Value: 5.609999999999999
Row: 8, Col: 2, Value: 5.109999999999999
Row: 9, Col: 1, Value: 5.609999999999999
Row: 9, Col: 2, Value: 4.85
Row: 10, Col: 1, Value: 5.6
Row: 10, Col: 2, Value: 4.95
Row: 11, Col: 1, Value: 5.51
Row: 11, Col: 2, Value: 4.859999999999999
Row: 12, Col: 1, Value: 5.319999999999999
Row: 12, Col: 2, Value: 4.75
Row: 13, Col: 1, Value: 5.34
Row: 13, Col: 2, Value: 4.75
Row: 14, Col: 1, Value: 5.159999999999999
Row: 14, Col: 2, Value: 4.8
Row: 15, Col: 1, Value: 4.94
Row: 15, Col: 2, Value: 4.619999999999999
Row: 16, Col: 1, Value: 4.819999999999999
Row: 16, Col: 2, Value: 4.48
Spartan
Florida
Municipal
Income
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
OCTOBER 1992 THROUGH OCTOBER 1993. THE BOTTOM CHART SHOW THE 30-DAY
ANNUALIZED NET YIELDS FOR THE FUND AND ITS COMPETITIVE FUNDS AVERAGE AS OF
THE LAST DAY OF EACH MONTH FROM JULY 1992 THROUGH OCTOBER 1993. YIELDS
FOR THE FUNDS WOULD HAVE BEEN LOWER IF FIDELITY HAD NOT REIMBURSED CERTAIN
FUND EXPENSES.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
THE COMPETITIVE FUNDS AVERAGE for Spartan Connecticut Municipal Money
Market is the IBC/Donoghue's MONEY FUND AVERAGES(registered trademark)/All
Tax-Free category, which currently reflects the performance of over 300
mutual funds with similar objectives. This average is published in the
MONEY FUND REPORT(Registered trademark) by IBC USA (Publications), Inc. The
competitive funds average for Spartan Connecticut Municipal High Yield is
published by Lipper Analytical Services, Inc. The fund compares its
performance to the other single state municipal debt funds which currently
reflects the performance of over 40 mutual funds with similar objectives.
Both of these averages assume reinvestment of distributions.
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
walk-in Investor Centers in over 75 cities 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 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. Spartan Connecticut Municipal 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.
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 13 . 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
For Spartan Florida Municipal Money Market $25,000
TO ADD TO AN ACCOUNT $1,000
Through automatic investment plans $500
MINIMUM BALANCE $5,000
For Spartan Florida Municipal 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.
(checkmark)
<TABLE>
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TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
PHONE (bullet) Exchange from another (bullet) Exchange from another
1-800-544-7777 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 (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 (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 (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.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
AUTOMATICALLY (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 - 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.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $5,000
worth of shares in the account ($10,000 for Spartan Connecticut Municipal
Money Market) to keep it open.
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(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 Florida Municipal Money
Market, you may write an unlimited number of checks. Do not, however, try
to close out your account by check.
ACCOUNT TYPE SPECIAL REQUIREMENTS
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IF YOU SELL SHARES OF SPARTAN FLORIDA MUNICIPAL INCOME AFTER HOLDING THEM FOR 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>
<TABLE>
<CAPTION>
<S> <C> <C>
PHONE All account types (bullet) Maximum check request:
1-800-544-7777 $100,000.
(bullet) For Money Line transfers to
your bank account; minimum:
$2,500; 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 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 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>
CHECK All account types (bullet) Minimum check: $1,000.
(bullet) All account owners must sign
a signature card to receive a
checkbook.
<TABLE>
<CAPTION>
<S> <C> <C>
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.
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)
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)
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 22.
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.
<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
$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, THAT FUND MAY NOT BE AN
APPROPRIATE CHOICE 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 fund are
normally distributed in January and December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. Each fund offers
four options (three for Spartan Connecticut Municipal 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, will be
automatically reinvested, but you will be sent a check for each dividend
distribution. This option is not available for Spartan Connecticut
Municipal 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
realize any capital gains.
(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, a 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 after April 30, 1993 are taxed as dividends.
Long-term capital gain distributions are taxed as long-term capital gains.
These distributions are taxable when they are paid, whether you take them
in cash or reinvest them. However, distributions declared in December and
paid in January are taxable as if they were paid on December 31. Fidelity
will send you and the IRS a statement showing the tax status of the
distributions paid to you in the previous year.
The interest from some municipal securities is subject to the federal
alternative minimum tax. Each fund may invest up to 100% of its assets in
these securities. Individuals who are subject to the tax must report this
interest on their tax returns.
Each fund has received a ruling from the Florida Department of Revenue
that, if on the close of business on the last business day of any calendar
year, a fund's assets consist solely of those exempt from Florida
intangible tax, shares of the fund owned by Florida residents will be
exempt from the tax. Items exempt from Florida intangible tax include
Florida municipal obligations, certain obligations of the U.S. government
or its agencies, territories, and possessions, and cash.
In the event a fund owns any asset on that day that is subject to the
Florida Intangible tax, all or a portion of the value of a fund's shares
will be subject to the tax. In order to assure exemption of each fund's
shares from the tax, FMR would seek to sell or dispose of any
non-qualifying assets on or before the last business day of the calendar
year. As a result, a fund could potentially receive a lower price for the
securities sold or incur additional costs or taxable capital gains.
During fiscal 1993, 100% of each fund's income dividends were free from
federal income tax and 28% and 9% of Spartan Florida Municipal Money
Market's and Spartan Florida Municipal Income's income dividends,
respectively, were subject to the federal alternative minimum tax. FMR
anticipates that each fund's shares will be free from the Florida
intangible 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 capital
gain 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.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding up 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 fund, 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 22. 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) Spartan Connecticut Municipal Money Market reserves the right to
limit all accounts maintained or controlled by any one person to a maximum
total balance of $2 million.
(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 Spartan Connecticut Municipal High Yield, if
applicable, 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 redemption fee applies in addition to the $5.00 exchange fee and any
applicable sales charges associated with purchasing shares of the fund into
which you are exchanging.
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 Spartan Connecticut
Municipal Money Market) , you will be given 30 days' notice to
reestablish the minimum balance. If you do not increase your balance,
Fidelity reserves the right to close your account and send the proceeds to
you. Your shares will be redeemed at the NAV 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.
<
r>THE FUNDS IN DETAIL</r>
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders'
money and invests it toward a specified goal. In technical terms,
Spartan Connecticut Municipal Money Market is currently a non-diversified
fund of Fidelity Court Street Trust II, and Spartan Connecticut Municipal
High Yield is currently a non-diversified fund of Fidelity Court Street
Trust. Both trusts are open-end management investment companies. Fidelity
Court Street Trust II was organized as a Delaware business trust on June
20, 1991. Fidelity Court Street Trust was organized as a Massachusetts
business trust on April 21, 1977. There is a remote possibility that one
fund might become liable for a misstatement in the prospectus about another
fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet 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. You are entitled to one
vote for each share you own.
FMR AND ITS AFFILIATES
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 20 0
(bullet) Assets in Fidelity mutual
funds: over $ 200 billion
(bullet) Number of shareholder
accounts: over 14 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(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 Spartan Connecticut Municipal Money
Market.
Anne Punzak is manager and vice president of Spartan Florida Municipal
Income, which she has managed since March of 1992, Insured Tax-Free,
Aggressive Tax-Free, and Spartan Aggressive Municipal Income. She joined
Fidelity in 1984 .
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 Spartan Florida Municipal Money Market.
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:
.50% for Spartan Connecticut Municipal Money Market and .55% for Spartan
Connecticut Municipal High Yield. The total management fee rate for Spartan
Florida Municipal Money Market and Spartan Florida Municipal Income for
fiscal 1993, after reimbursement, were .18 %, and .25 %,
respectively.
FMR HAS A SUB-ADVISORY AGREEMENT with FTX, which has primary responsibility
for providing investment management for Spartan Connecticut Municipal 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.
To offset shareholder service costs, FMR or its affiliates also collect the
funds' $5.00 exchange fee, $5.00 account closeout fee, $5.00 fee for wire
purchases and redemptions, and the $2.00 checkwriting charge. For fiscal
19 93 , these fees amounted to $ 2,625 , $ 327.08 ,
$ 305 , and $ 1,143.57 , respectively, for Spartan Connecticut
Municipal Money Market and $ 3,140 , $ 845 , $ 185 , and
$ 0 , respectively, for Spartan Connecticut Municipal High Yield.
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 1993, the portfolio turnover rate for Spartan Connecticut
Municipal High Yield was 50 %. This rate varies from year to year.
INVESTMENT PRINCIPLES
SPARTAN FLORIDA MUNICIPAL MONEY MARKET seeks high current income that is
exempt from federal income tax 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.
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 FLORIDA MUNICIPAL INCOME seeks high current income that
is exempt from federal income tax by focusing on municipal bonds 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.
EACH FUND 'S yield and the bond fund's share price change 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 Florida. Because of the importance of
foreign trade, agriculture, construction, and tourism in Florida,
the state's economy is sensitive to trends in these industries.
FMR normally invests at least 65% of each fund's total assets in securities
that are free from the Florida intangible tax, and normally invests so that
at least 80% of each fund's income distributions are free from federal
income tax.
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 , expects to invest only in federally tax-free obligations,
and expects the fund's shares to be exempt from the Florida intangible tax.
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 federally
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 credit worthiness. 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 Spartan Florida Municipal
Income's portfolio. These figures are dollar-weighted averages of month-end
portfolio holdings during fiscal 1993, 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.
RESTRICTIONS: Spartan Florida Municipal Income 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.
SPARTAN FLORIDA MUNICIPAL INCOME
FISCAL 1993 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 64.3 % AA 77.0 %
Upper-medium grade A A
Medium grade Baa 17.8 % BBB 9.93 %
LOWER QUALITY
Moderately speculative Ba 0.0 % BB 0.0 %
Speculative B 0.0 % B 0.0 %
Highly speculative Caa 0.0 % CCC 0.0 %
Poor quality Ca 0.0 % CC 0.0 %
Lowest quality, no interest C C
In default, in arrears -- D 0.0 %
82.10 % 86.93 %
A THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED BY MOODY'S OR
S&P AMOUNTED TO 6.6 %. 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.
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.
FLORIDA MUNICIPAL SECURITIES include obligations issued by the state of
Florida or its counties, municipalities, authorities, or other
subdivisions . The ability of issuers to repay their debt can be
affected by many factors that impact the economic vitality of either the
state or a region within the state.
Other securities include general obligations of the 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 FLORIDA MUNICIPAL MONEY MARKET seeks as high a level of current
income exempt from federal income tax, as is consistent with preservation
of capital and liquidity by investing in high-quality, short-term municipal
obligations.
SPARTAN FLORIDA MUNICIPAL INCOME seeks the highest level of current income,
exempt from federal income tax, available from municipal bonds judged by
FMR to be of investment-grade quality. The fund may also invest a portion
of its assets in bonds rated below investment-grade quality.
EACH FUND will normally invest so that at least 80% of its income
distributions are free from federal income tax. Each fund may borrow only
for temporary or emergency purposes, but not in an amount exceeding 33% of
its total assets.
SPARTAN(registered trademark) FLORIDA MUNICIPAL MONEY MARKET PORTFOLIO
A FUND OF FIDELITY COURT STREET TRUST II
SPARTAN(registered trademark) FLORIDA MUNICIPAL INCOME PORTFOLIO
A FUND OF FIDELITY COURT STREET TRUST
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 14 , 1994
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated January 14 , 1994). Please
retain this document for future reference. The Annual Reports of the money
market fund and the income fund for the fiscal periods ended November 30,
1993 are 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 Florida
Special Factors Affecting Puerto Rico 12
Portfolio Transactions 12
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. ( FTX )
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT S
United Missouri Bank, N.A. (United Missouri) and Fidelity Service Co. (FSC)
SFC-ptb-194
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) of the 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 FLORIDA 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) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) if, as a result, more than 25% of the
fund's total assets would be invested in securities of companies whose
principal business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; or
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(8) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objectives, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) 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.
(vi 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.
(vii i ) 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 objectives, 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.
INVESTMENT LIMITATIONS OF SPARTAN FLORIDA MUNICIPAL INCOME PORTFOLIO
(INCOME FUND)
THE FOLLOWING ARE THE INCOME 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.
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 disposed of in
the ordinary course of business at approximately the prices at which they
are valued.
(vi) The fund does not currently intend to engage in repurchase agreements
or make loans, but this limitation does not apply to purchases of debt
securities.
(vii) The fund does not currently intend to (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.
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"
on page 7 .
INVESTMENT POLICIES
QUALITY AND MATURITY. Pursuant to procedures adopted by the Board of
Trustees, the money market fund may purchase only high-quality securities
that FMR believes present minimal credit risks. To be considered
high-quality, a security must be a U.S. government security; rated in
accordance with applicable rules in one of the two highest categories for
short-term securities by at least two nationally recognized rating services
(or by one, if only one rating service has rated the security); or, if
unrated, judged to be of equivalent quality by FMR.
High-quality securities are divided into "first tier" and "second tier"
securities. First tier securities have received the highest rating (e.g.,
Standard & Poor's A-1 rating) from at least two rating services (or
one, if only one has rated the security). Second tier securities have
received ratings within the two highest categories (e.g., Standard &
Poor's A-1 or A-2) from at least two rating services (or one, if only one
has rated the security), but do not qualify as first tier securities. If a
security has been assigned different ratings by different ratings services,
at least two rating services must have assigned the higher rating in order
for FMR to determine eligibility on the basis of that higher rating. Based
on procedures adopted by the Board of Trustees, FMR may determine that an
unrated security is of equivalent quality to a rated first or second tier
security.
The fund may not invest more that 5% of its total assets in second tier
securities. In addition, the fund may not invest more than 1% of its total
assets or $1 million (whichever is greater) in the second tier securities
of a single issuer.
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.
AFFILIATED BANK TRANSACTIONS. Pursuant to exemptive orders issued by the
Securities and Exchange Commission (SEC), the funds may engage in
transactions with banks 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; and transactions in U.S. government
securities with affiliated banks that are primary dealers in these
securities.
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 income 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. Spartan Florida Income may purchase securities
on a when-issued basis in connection with the refinancing of an issuer's
indebtedness. Refinancing contracts require the issuer to sell and the fund
to buy refinanced municipal obligations at a stated price and yield on a
settlement date that may be several months or several years in the future.
The fund generally will not be obligated to pay the full purchase price if
it fails to perform under a refunding contract. Instead, refunding
contracts generally provide for payment of liquidated damages to the issuer
(currently 15-20% of the purchase price). The 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, the fund will place liquid
assets in a segregated custodial account equal in amount to its obligations
under refunding contracts.
INVERSE FLOATERS Spartan Florida Income 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 DEMAND 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 VRDO or FRDO 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 the funds to tender (or put) its bonds to an
institution at periodic intervals and to receive the principal amount
thereof. The funds consider variable rate instruments structured in this
way (Participating VRDOs) to be essentially equivalent to other VRDOs they
purchase. The IRS has not ruled whether the interest on Participating VRDOs
is tax-exempt, and, accordingly the funds intend to purchase these
instruments based on opinions of bond counsel.
Spartan Florida Money Market 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. The money market fund may purchase a demand
instrument with a remaining final maturity in excess of 397 days only if
the demand feature can be exercised on no more than 30 days' notice (a) at
any time or (b) at specific intervals not exceeding 397 days.
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 income fund's standards for high quality taxable
obligations are essentially the same as those described by Moody's
Investors Service, Inc. (Moody's) in rating corporate obligations within
its two highest ratings of Prime-1 and Prime-2, and those described by
Standard and 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 Florida legislature
that would affect the state tax treatment of the funds' distributions. If
such proposals were enacted, the availability of municipal obligations and
the value of each fund's holdings would be affected and the Trustees would
reevaluate each fund's investment objective 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.
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, (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 income fund to be illiquid include over-the-counter options. With
respect to both funds, FMR may determine some, restricted securities and
municipal lease obligations to be illiquid. However, with respect to
over-the-counter options the income fund writes, all or a portion of the
value of the underlying instrument may be illiquid depending on the assets
held to cover the option and the nature and terms of any agreement the fund
may have to close out the option before expiration. In the absence of
market quotations, illiquid investments for the money market fund are
valued for purposes of monitoring amortized cost valuation and for the
income fund are priced at fair value as determined in good faith by
a committee appointed by the Board of Trustees. If through a change in
values, net assets, or other circumstances, a fund were in a position where
more than 10% of its net assets 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 a 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 income fund may invest a portion of
its assets in lower-rated municipal securities as described in the
Prospectus.
While the market for Florida municipal securities is considered to be
adequate, adverse publicity and changing investor perceptions may affect
the ability of outside pricing services used by the fund to value its
portfolio securities, and the fund's ability to dispose of lower-rated
bonds. The outside pricing services are monitored by FMR and reported to
the Board to determine whether the servicers are furnishing prices tha t
accurately reflect fair value. The impact of changing investor perceptions
may be especially pronounced in markets where municipal securities are
thinly traded.
The income 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.
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 a repurchase
agreement with respect to any security in which it is authorized to invest,
even if 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 the 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 by FMR. Such
transactions may increase fluctuations in the market value of the funds'
assets and may be viewed as a form of leverage.
INDEXED SECURITIES. The income fund may purchase securities whose prices
are indexed to the prices of other securities, securities indices, or other
financial indicators. Indexed securities typically, but not always, are
debt securities or deposits whose value at maturity or coupon rate is
determined by reference to a specific instrument or statistic. Indexed
securities may have principal payments as well as coupon payments that
depend on the performance of one or more interest rates. Their coupon rates
or principal payments may change by several percentage points for every 1%
interest rate change. One example of indexed securities is inverse
floaters.
The performance of indexed securities depends to a great extent on the
performance of the security or other instrument to which they are indexed,
and may also be influenced by interest rate changes. At the same time,
indexed securities are subject to the credit risks associated with the
issuer of the security, and their values may decline substantially if the
issuer's creditworthiness deteriorates. Indexed securities may be more
volatile than the underlying instruments.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The fund has filed a
notice of eligibility for exclusion from the definition of the term
" commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets. The fund intends to comply with 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, the 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 fund's investments in futures contracts and
options, and the fund's policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, may be
changed as regulatory agencies permit.
FUTURES CONTRACTS. When the 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 Index of municipal bonds. 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 the
fund 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 fund's 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, the 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 the 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 would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates the 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. The 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, the 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 fund's current or
anticipated investments exactly. The 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.
Options 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. The 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 the 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 fund 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.
ELECTRIC UTILITIES INDUSTRY. The electric utilities industry has been
experiencing, or may experience in the future, problems, including (a) the
effects of inflation upon construction and operating costs, (b) the
availability and cost of fuel, (c) the availability and cost of capital,
(d) the effects of conservation on energy demand, (e) the effects of
rapidly changing environmental, safety, and licensing requirements, and
other federal, state, and local regulations, (f) timely and sufficient rate
increases, (g) opposition to nuclear power, and (h) increased competition.
HOUSING. Housing revenue bonds are generally issued by a state, county,
city, local housing authority, or other public agency. They are secured by
the revenues derived from mortgages purchased with the proceeds of the bond
issue. It is extremely difficult to predict the supply of available
mortgages to be purchased with the proceeds of an issue or the future cash
flow from the underlying mortgages. Consequently, there are risks that
proceeds will exceed supply, resulting in early retirement of bonds, or
that homeowner repayments will create an irregular cash flow.
Many factors may affect the financing of multi-family housing projects,
including acceptable completion of construction, proper management,
occupancy and rent levels, economic conditions, and changes to current laws
and regulations.
HEALTH CARE INDUSTRY. The health care industry is subject to regulatory
action by a number of private and governmental agencies, including federal,
state, and local governmental agencies. A major source of revenues for the
health care industry is payments from the Medicare and Medicaid programs.
As a result, the industry is sensitive to legislative changes and
reductions in governmental spending for such programs. Numerous other
factors may affect the industry, such as general and local economic
conditions; demand for services; expenses (including malpractice insurance
premiums); and competition among health care providers. In the future, the
following elements may adversely affect health care facility operations:
adoption of legislation proposing a national health insurance program;
medical and technological advances which dramatically alter the need for
health services or the way in which such services are delivered; and
efforts by employers, insurers, and governmental agencies to reduce the
costs of health insurance and healthcare services.
SPECIAL FACTORS AFFECTING FLORIDA
THE STATE BUDGET. The State operates under a biennial budget which is
formulated in even numbered years and presented for approval to the
Legislature in odd numbered years. A supplemental budget request process is
utilized in the even numbered years for refining and modifying the primary
budget. Under the State Constitution and applicable statutes, the State
budget as a whole and each separate fund within the State budget, must be
kept in balance from currently available revenues during each State fiscal
year. (The State's fiscal year runs from July 1 through June 30.) The
Governor and the Comptroller of the State are charged with the
responsibility of ensuring that sufficient revenues are collected to meet
appropriations and that no deficit occurs in any State fund.
The financial operations of the State covering all receipts and
expenditures are maintained through the use of three types of funds; the
General Revenue Fund, Trust Funds, and Working Capital Fund. The majority
of the State's tax revenues are deposited in the General Revenue Fund and
moneys in the General Revenue Fund are expended pursuant to appropriations
acts. In fiscal year 199 2 -199 3 , expenditures for education,
health and welfare, and public safety represented approximately 49 %,
30 %, and 11 % respectively, of expenditures from the General
Revenue Fund. The Trust Funds consist of moneys received by the State
which, under law or trust agreement, are segregated for a purpose
authorized by law. Revenues in the General Revenue Fund exceeding the
amount needed to meet appropriations may be transferred to the Working
Capital Fund.
REVENUES. Estimated revenues of $13,010 million for 1993-94 (excluding
Hurricane Andrew related revenues and expenses) represent an increase of
7.9% over revenues for 1992-93. Estimated revenues for 1994-95 of $13,947
million (excluding Hurricane Andrew impacts) represent an increase of 7.2%
over 1993-1994.
In fiscal year 199 2 -199 3 , the State derived approximately
6 2 % of its total direct revenues for deposit in the General Revenue
Fund, Trust Funds, and Working Capital Fund from State taxes. Federal
grants and other special revenues account for the remaining revenues. The
greatest single source of tax receipts in the State is the sales and use
tax. For the fiscal year ended June 30, 199 3 , receipts from the
sales and use tax totaled $ 9,426 million, an increase of
approximately 12.5 % over fiscal year 19 91 -9 2 . This
amount includes non-recurring increases attributable to the rebuilding and
reconstruction following the hurricane. The second largest source of
State tax receipts is the tax on motor fuels. Receipts from the taxes on
motor fuels are almost entirely dedicated to Trust Funds for specific
purposes and are not included in the General Revenue Fund. For the fiscal
year ended June 30, 199 2 , preliminary data indicate that collections
of this tax totaled $1, 475.5 million .
The State does not impose a personal income tax or ad valorem taxes on real
property or tangible personal property. The imposition of any such tax by
the State would require approval by referendum of an amendment to the State
Constitution. However, the State does impose a corporate income tax on the
net income of corporations, organizations, associations, and other
artificial entities for the privilege of conducting business, deriving
income or existing within the State. For the fiscal year ended June 30,
199 3 , receipts from the corporate income tax totaled $ 846 .6
million, a n increase of approximately 5.6 % from fiscal year
19 92 -9 3 . The Documentary Stamp Tax collections totaled
$ 639 million during fiscal year 199 2 -9 3 , an increase
of approximately 2.7 % over fiscal year 19 91 -9 2 . The
Alcoholic Beverage Tax, an excise tax on beer, wine, and liquor, totaled
$442.2 million in 1992-93, an increase of 1.6% from fiscal year
1991-92 . The Florida lottery produced sales of $2.1 3 billion of
which $8 10.4 million was used for education in fiscal year
199 1 -9 2 .
The primary source of revenue for local governments is ad valorem taxes on
real estate and tangible personal property. Under the State Constitution,
ad valorem taxes may not be levied by counties, municipalities, school
districts, and water management districts in excess of the following
respective millages upon the assessed value of real estate and tangible
personal property: for all county purposes, 10 mills; for all municipal
purposes, 10 mills; for all school purposes, 10 mills; and for water
management purposes, either 0.05 mill or 1.0 mill, depending upon
geographic location. These millage limitations do not apply to taxes levied
for payment of bonds and taxes levied for periods not longer than two years
when authorized by a vote of the electors. (Note: one mill equals one-tenth
of one cent).
The State Constitution and statutes provide for the exemption of homesteads
from certain taxes. The homestead exemption is an exemption from all
taxation, except for assessments for special benefits, up to a specific
amount of the assessed valuation of the homestead. This exemption is
available to every person who has the legal or equitable title to real
estate and maintains thereon his or her permanent home. All permanent
residents of the State are currently entitled to a $25,000 homestead
exemption from levies by all taxing authorities, however, such exemption is
subject to change upon voter approval.
On November 3, 1992, the voters of the State of Florida passed an amendment
to the Florida Constitution establishing a limitation on the annual
increase in assessed valuation of homestead property, of the lesser of 3%
or the increase in the Consumer Price Index during the relevant year,
except in the event of a sale thereof during such year, and except as to
improvements thereto during such year. Assessments as of January 1, 1993
will not be subject to the foregoing limitation. The amendment did not
alter any of the millage rates described above.
Since municipalities, counties, school districts and other special purpose
units of local governments with power to issue general obligation bonds
have authority to increase the millage levy for voter approved general
obligation debt to the amount necessary to satisfy the related debt service
requirements, the amendment is not expected to adversely affect the ability
of these entities to pay the principal of or interest on such general
obligation bonds. However, in periods of high inflation, those local
government units whose operating millage levies are approaching the
constitutional cap and whose tax base consists largely of residential real
estate, may, as a result of the above-described amendment, need to place
greater reliance on non-ad valorem revenue sources to meet their operating
budget needs.
STATE BONDS. The State Constitution does not permit the State to issue debt
obligations to fund governmental operations. Generally, the State
Constitution authorizes State bonds pledging the full faith and credit of
the State only to finance or refinance the cost of State fixed capital
outlay projects, upon approval by a vote of the electors, and provided that
the total outstanding principal amount of such bonds does not exceed 50% of
the total tax revenues of the State for the two preceding fiscal years.
Revenue bonds may be issued by the State or its agencies without a vote of
the electors only to finance or refinance the cost of State fixed capital
outlay projects which are payable solely from funds derived directly from
sources other than State tax revenues.
Exceptions to the general provisions regarding the full faith and credit
pledge of the State are contained in specific provisions of the State
Constitution which authorize the pledge of the full faith and credit of the
State, without electorate approval, but subject to specific coverage
requirements, for: certain road projects, county education projects, State
higher education projects, the State system of public education,
construction of air and water pollution control and abatement facilities,
solid waste disposal facilities, and certain other water facilities.
LOCAL BONDS. The State Constitution provides that counties, school
districts, municipalities, special districts, and local governmental bodies
with taxing powers may issue debt obligations payable from ad valorem
taxation and maturing more than 12 months after issuance, only (i) to
finance or refinance capital projects authorized by law, provided that
electorate approval is obtained; or (ii) to refund outstanding debt
obligations and interest and redemption premium thereon at a lower net
average interest cost rate.
Counties, municipalities, and special districts are authorized to issue
revenue bonds to finance a variety of self-liquidating projects pursuant to
the laws of the State. Such revenue bonds are to be secured by and payable
from the rates, fees, tolls, rentals, and other changes for the services
and facilities furnished by the financed projects. Under State law,
counties and municipalities are permitted to issue bonds payable from
special tax sources for a variety of purposes, and municipalities and
special districts may issue special assessment bonds.
THE STATE ECONOMY. The State has grown dramatically since 1980 and ranks
fourth among the 50 states with an estimated population of 13. 4
million, an increase of approximately 41.5 % since 1980. Since 1980,
the prime working age population (18-44) has grown at an average annual
rate of 3. 3 %. Florida's total working age population (18-59)
comprises 5 4 % of the total state population. Non-farm employment
grew by approximately 5 7.9 % since 1980. The service sector is
Florida's largest employment sector, presently accounting for 31.7 %
of total non-farm employment. Manufacturing jobs in Florida are
concentrated in the area of high-tech and value added sectors, such as
electrical and electronic equipment as well as printing and publishing. Job
gains in Florida's manufacturing sector have exceeded national
averages , increasing by 8.4 % between 1980 and 199 2.
Although the job creation rate for the State of Florida since 1980 is over
two times the rate for the nation as a whole, since 1989 the unemployment
rate for the State has risen faster than the national average. The
average rate of unemployment for Florida since 1980 is 6.5%, while the
national average is 7.1%.
On August 24, 1992 Hurricane Andrew passed through South Florida. Property
damage is estimated to be between $20 and $30 billion. The office of the
Governor has estimated that the costs to State and local governments for
emergency services and damage to public facilities and infrastructure are
approximately $1 billion. The Governor's office has estimated lost State
revenue to be between $21.5 million and $38.5 million including utilities
taxes, lottery revenues, tolls and State Park fees. For the local
governments in Dade County and the Dade County School Board lost revenues
are estimated to be between $155.9 million and $258.6 million as a result
of reduction in property values.
The U.S. Congress has passed a disaster aid package which will provide
$10.6 billion in aid to South Florida. This includes Federal Emergency
Management Agency ( " FEMA") payment to State and local governments
for repair to facilities owned by local governments, schools and
universities, additional costs for debris removal and public safety
services related to the hurricane and grants to State and local governments
to make up for lost revenue. Also included is funding for grants and loans
to individuals for small business assistance, economic development, housing
allowance and repairs. The State will be required to match the FEMA funding
for those grants and loans with $32.5 million of State and local money.
FEMA also has an Individual and Family Grants Program which is available to
uninsured and under-insured households through which up to $11,500 per
household is available to help cover losses. The State will be required to
match this program 25% to the FEMA's 75%. At this time, the State estimates
its matching requirement will not exceed $100 million.
The Florida Revenue Estimating Conference has estimated additional
non-recurring General Revenues as a result of the hurricane totaling
$ 645.8 million during fiscal years 1992-93 , 1993-94 and
1994-95 . In a special session of the Legislature held December 9 to
December 11, 1992, the Legislature enacted a law that sets aside an
estimated $ 630.4 million of the $ 645.8 million to be used by
State and local government agencies to defray a wide array of expenditures
related to Hurricane Andrew.
The ability of the State and its local units of government to repay
indebtedness may be affected by numerous factors which impact on the
economic vitality of the State in general and the particular region of the
State in which the issuer of the debt is located. South Florida is
particularly susceptible to international trade and currency imbalances and
to economic dislocations in Central and South America, due to its
geographical location and its involvement with foreign trade, tourism, and
investment capital. The central and northern portions of the State are
impacted by problems in the agricultural sector, particularly with regard
to the citrus and sugar industries. Short-term adverse economic conditions
may be created in these areas, and in the State as a whole, due to crop
failures, severe weather conditions, or other agriculture-related problems.
The State economy also has historically been somewhat dependent on the
tourism and construction industries and is sensitive to trends in those
sectors.
The foregoing information regarding the State and its local units of
government constitutes only a brief summary and does not purport to be a
complete description of the matters covered. This summary is based solely
upon information drawn from official statements relating to offerings of
general obligation bonds of the State and has not been independently
verified.
SPECIAL 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 the management contracts.
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 a 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 funds 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 is generally 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 their 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 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 Securities and Exchange Commission. 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.
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 the funds over representative
periods of time to determine if they are reasonable in relation to the
benefits to the fund.
The income fund's portfolio turnover rate for the fiscal period March 16,
1992 (commencement of operations) to November 30, 1992 and fiscal 1993 was
38% (annualized) and 50 %, 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. The funds seek 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 the funds
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 a fund is concerned.
In other cases, however, the ability of the funds to participate in volume
transactions will produce better executions and prices for the funds. It is
the current opinion of the Trustees that the desirability of retaining FMR
as investment adviser to the funds outweighs any disadvantages that may be
said to exist from exposure to simultaneous transactions.
VALUATION OF PORTFOLIO SECURITIES
INCOME FUND. Valuations of portfolio securities furnished by the pricing
service employed by the income fund 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. Futures contracts and options
are valued on the basis of market quotations, if available.
MONEY MARKET FUND. The money market 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 money
market fund would receive if it sold the instrument.
Valuing the money market 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; these conditions are summarized in the Prospectus.
The Board of Trustees of the money market fund oversee FMR's adherence to
SEC rules concerning money market funds, and has established procedures
designed to stabilize the money market 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 money market
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 money market fund's yield
based on amortized cost may be higher than the yield based on market
valuations. Under these circumstances, a shareholder in the money market
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 income fund's share price and both
funds' yields and total returns fluctuate in response to market conditions
and other factors. The value of the income fund's shares when redeemed may
be worth 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 a compound effective yield by
compounding the base period return over a one-year period. In addition to
the current yield, the money market fund may quote yields in advertising
based on any historical seven-day period. Yields for the money market fund
are calculated on the same basis as other money market funds, as required
by regulation.
The INCOME FUND'S yields used in advertising are computed by dividing the
fund's interest income for a given 30-day or one-month period, net of
expenses, by the average number of shares entitled to receive dividends
during the period, dividing this figure by the fund's (NAV) at the
end of the period, and annualizing the result (assuming compounding of
income) in order to arrive at an annual percentage rate. Yields do not
reflect the income fund's .50% redemption fee, which applies to shares held
less than 180 days. Income is calculated for purposes of the income fund's
yield quotations in accordance with standardized methods applicable to all
stock and bond funds. In general, interest income is reduced with respect
to bonds trading at a premium over their par value by subtracting a portion
of the premium from income on a daily basis, and is increased with respect
to bonds trading at a discount by adding a portion of the discount to daily
income. Capital gains and losses generally are excluded from the
calculation.
Income calculated for purposes of determining the income fund's yield
differs from income as determined for other accounting purposes. Because of
the different accounting methods used, and because of the compounding of
income assumed in yield calculations, the income fund's yield may not equal
its distribution rate, the income paid to your account, or the income
reported in the income fund's financial statements.
A fund's tax-equivalent yield is the rate an investor would have to earn
from a fully taxable investment 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 tax rate. (If only a portion of the
fund's yield is tax-exempt, only that portion is adjusted in the
calculation.)
The table below shows the effect of a shareholder's tax status on effective
yield under federal income tax laws for 1994. It shows the approximate
yield a taxable security must earn at various income brackets to produce
after-tax yields equivalent to those of 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-exempt 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.
1994 TAX RATES AND TAX-EQUIVALENT YIELDS
Taxable Federal Tax-Free Yield is:
Income* Tax 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00%
Single Return Joint Return Bracket Then
taxable-equivalent yield is:
$22,751 - $55,100 $38,001 - $91,850 28% 2.78% 4.17% 5.56% 6.94% 8.33%
9.72% 11.11%
$55,101 - $115,000 $91,851 - $140,000 31% 2.90% 4.35% 5.80% 7.25% 8.70%
10.14% 11.59%
$115,001 - $250,000 $140,001 - $250,000 36% 3.13% 4.69% 6.25% 7.81%
9.38% 10.94% 12.50%
$250,001 - + $250,001 - + 39.6% 3.31% 4.97% 6.62% 8.28% 9.93% 11.59%
13.25%
* Taxable income (gross income after all exemptions, adjustments, and
deductions) based on 1994 tax rates.
Each fund may invest a portion of its assets in obligations that are
subject to federal income tax. When a fund invests in these obligations,
its tax-equivalent yield will be lower. In the table above, tax-equivalent
yields are calculated assuming investments are 100% federally tax-free .
In fiscal 1993, 0% of each fund's income was subject to federal tax.
Yield information may be useful in reviewing the funds' performance and in
providing a basis for comparison with other investment alternatives.
However, the funds' yields fluctuate, 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, the
funds' yields will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates, the funds' yields will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to the funds from the continuous sale of shares will likely be
invested in instruments producing lower yields than the balance of the
funds' holdings, thereby reducing the funds' current yields. 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 funds' 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 entire period. For
example, a cumulative return of 100% over ten years would produce an
average annual return of 7.18%, which is the steady annual rate 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 actual year-to-year performance of
a fund.
In addition to average annual total returns, a fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. 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 income 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 the income fund's net asset
values, adjusted net asset values, and benchmark indicates 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 NAV's are not adjusted for sales charges, if any.
HISTORICAL RETURNS. The following table shows the funds' total returns for
the periods ended November 30, 1993. Figures include the effect of each
fund's $5 account closeout fee based on an average size account. The income
fund's total returns do not include the effect of the .50% redemption fee
applicable to shares held less than 180 days.
CUMULATIVE TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
One Year Life of Fund* One Year Life of Fund*
Money Market Fund 2.50 % 3.30 % 2.50 % 2.59 %
Income Fund 13.51 % 24.79 % 13.51 % 13.81 %
* The money market fund commenced operations on August 24, 1992 and the
income fund commenced operations on March 16, 1992.
The money market fund's 7-day yield as of November 30, 1993 was
2.26 % with a corresponding tax-equivalent yield of 3.53 %. The
income fund's 30-day yield as of November 30, 1993 was 5.06 % with a
corresponding tax-equivalent yield of 7.91 %. Tax-equivalent yields
are based on the 1994 federal income tax bracket of 36 %. If FMR had
not reimbursed certain fund expenses during the period, the yields and
tax-equivalent yields would have been 1.94 % and 3.03 %,
respectively, for the money market fund and 4.76 % and 7.44 %,
respectively, for the income fund, and both funds' total returns would have
been lower. These figures do not reflect the funds' $5 account closeout
fees.
The following tables show the income and capital elements of each fund's
total returns from commencement of operations through November 30, 1993.
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 August 24, 1992 (commencement of
operations) through November 30, 1993, a hypothetical $10,000 investment in
the money market fund would have grown to $ 10,331 , assuming all
distributions were reinvested. This was a period of fluctuating interest
rates 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 FLORIDA MUNICIPAL MONEY MARKET PORTFOLIO INDICES
Value of Value of Value of
Initial Reinvested Reinvested Cost
Year Ended $10,000 Dividend Capital Gain Total of
November 30 , Investment Distributions Distributions Value S&P
500 DJIA Living**
1992* $10,000 $78 $0 $10,078 $10,489 $10,24 1 $10,078
1993 $ 10,000 $ 331 $ 0 $ 10,331 $ 11,548
$ 11,750 $ 10,348
* From August 24, 1992 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on August 24,
1992, the net amount invested in fund shares was $10,000. The cost of the
initial investment ($10,000), together with the aggregate cost of
reinvested dividends for the period covered (their cash value at the time
they were reinvested), amounted to $ 10,331 . 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 $ 326. 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 account closeout fee.
INCOME FUND. During the period March 16, 1992 (commencement of operations)
through November 30, 1993, a hypothetical $10,000 investment in the fund
would have grown to $ 12,480 assuming all distributions were
reinvested. This was a period of 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 FLORIDA MUNICIPAL INCOME FUND INDICES
Value of Value of Value of
Initial Reinvested Reinvested Cost
Year Ended $10,000 Dividend Capital Gain Total of
November 30 Investment Distributions Distributions Value S&P 500 DJIA
Living**
1992* $10,520 $474 $0 $10,994 $10,864 $10,4 31 $10,194
1993 $ 11,290 $ 1,179 $ 11 $ 12,480 $ 11,962
$ 11,968 $ 10,467
*From March 16, 1992 (commencement of operations).
**From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on March 16,
1992, the net amount invested in fund shares was $10,000. The cost of the
initial investment ($10,000), together with the aggregate cost of
reinvested dividends for the period covered (their cash value at the time
they were reinvested), amounted to $ 11,139 . If distributions had not
been reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $ 1,074 for income dividends and $ 10 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 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 ranking s
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, the fund's performance may be compared to mutual fund
performance indices prepared by Lipper.
From time to time, the 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 period of time may also be quoted in advertising.
Fidelity may provide information designed to help individual understand
their investment goals and explore various financial strategies. For
example, Fidelity's FundMatch Program includes a workbook describing
general principles of investing, such as assets 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 Portfolio Advisory 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
combination s 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.
The funds may compare their performance or the performance of securities in
which they 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, covers over 300 tax-free money market funds.
The BOND FUND REPORT AVERAGES (registered trademark) ,
Municipal which is reported in the BOND FUND REPORT (Registered
trademark) , covers over 350 municipal bond funds. When
evaluating comparisons to money market funds, investors should consider the
relevant differences in investment objectives and policies. Specifically,
money markets funds invest in short-term, high-quality instruments and seek
to maintain a stable $1.00 share price. The income fund, however, invests
in longer-term instruments and its share price changes 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 invest s 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.
The fund may present its fund number, Quotron number, and CUSIP number, and
discuss or quote its current portfolio manager.
The income fund may advertise examples of the effects of periodic
investment plans, including the principle of dollar cost averaging. In such
a program, an investor invests a fixed dollar amount in a fund at periodic
intervals, thereby purchasing fewer shares when prices are high and more
shares when prices are low. While such a strategy does not assure a profit
or guard against loss in a declining market, the investor's average cost
per share can be lower than if fixed numbers of shares are purchased at the
same intervals. In evaluating such a plan, investors should consider their
ability to continue purchasing shares during periods of low price levels.
As of November 30, 1993, FMR advised 40 tax-free funds with a total
value of over $ 26 billion. As of November 30, 1993, FMR managed
30 Spartan funds with approximately $ 20 billion in assets.
According to the Investment Company Institute, over the past ten years,
assets in tax-exempt funds increased from $7.3 billion in 1981 to
approximately $ 353 billion as of October 30, 1993 . The funds
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 NAV is calculated each day the New
York Stock Exchange (NYSE) is open for trading. The NYSE has designated the
following holiday closings for the remainder of 1994: Washington's Birthday
(observed), Good Friday, Memorial Day (observed), Independence Day
(observed), Labor Day, Thanksgiving Day , 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.
FSC normally determines each fund's NAV as of the close of the NYSE
(normally 4:00pm 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 funds 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 a fund's NAV. Shareholders receiving securities or other property
on redemption may realize either 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 shares to be exchanged as permitted under the 1940 Act or the
rules and regulations thereunder, or the fund to be acquired suspends the
sale of its shares or because it is unable to invest amounts effectively in
accordance with its investment objective and policies.
In the Prospectus, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. To the extent that each fund's income is derived from federally
tax-exempt interest, the daily dividends declared by the fund are also
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 in the Internal Revenue Code
as " qualified bonds") is subject to the federal alternative minimum
tax (AMT), although the interest continues to be excludable from gross
income for other 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
purpose 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 the exempt-interest dividend.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the income
fund on the sale of securities and distributed to shareholders are
federally taxable as long-term capital gains, regardless of the length of
time that the shareholders have held their shares. If a shareholder
receives a long-term capital gain distribution on shares of the fund and
such shares are held for 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.
As of November 30, 199 3 , the money market fund had a capital loss
carry forward aggregating $ 1240 available to offset future
capital gains, to the extent provided by regulations, of which
$114 will expire on November 30, 2000 , and $1,126 will expire on
November 30, 2001. 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.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
" regulated investment company" for tax purposes, so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company and
avoid being subject to federal income or excise taxes at the fund level,
each fund intends to distribute substantially all of its net investment
income and net realized capital gains (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 each 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 income fund's investments in such
instruments. The money market fund is treated as a separate entity from the
other funds of Fidelity Court Street Trust II for tax purposes. The income
fund is treated as a separate entity from the other funds of Fidelity Court
Street Trust for tax purposes.
FLORIDA TAX MATTERS. The State of Florida does not currently impose an
income tax on individuals. Thus, individual shareholders of the funds will
not be subject to any Florida income tax on distributions received from the
fund. However, Florida does currently impose an income tax on limited
liability companies and certain corporations. Consequently,
distributions may be taxable to corporate and limited liability
companies and shareholders.
The State of Florida currently imposes an " intangible tax" at the
annual rate of two mills, or .20% on certain securities and other
intangible personal property owned by Florida residents. With respect to
the first mill, or first .10%, of the intangible tax, every natural person
is entitled each year to an exemption of the first $20,000 of the value of
the property subject to the tax. A husband and wife filing jointly will
have an exemption of $40,000. With respect to the last mill, or last .10%,
of the intangible tax, every natural person is entitled each year to an
exemption of the first $100,000 of the value of the property subject to the
tax. A husband and wife filing jointly will have an exemption of $200,000.
Notes, bonds, and other obligations issued by the State of Florida or its
municipalities, counties, and other taxing districts, or by the U.S.
government, its agencies and certain U.S. territories and possessions (such
as Guam, Puerto Rico and the Virgin Islands) are exempt from this
intangible tax. If on the last business day of any year, the fund consists
solely of such exempt assets, then the fund's shares will be exempt from
the Florida intangible tax payable in the following year.
In order to take advantage of the exemption from the intangible tax in any
year, a fund must sell any non-exempt assets held in its portfolio during
the year and reinvest the proceeds in exempt assets on or before the last
business day of the calendar year. Transaction costs involved in
restructuring a fund in this fashion would likely reduce investment return
and might exceed any increased investment return the fund achieved by
investing in non-exempt assets during the year.
The foregoing is a general and abbreviated summary of certain provisions of
Florida law. You should consult your tax adviser to determine the precise
application of Florida or other state law to your particular situation.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax considerations generally affecting the funds and its 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. All persons named as Trustees and
officers 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 -
money market fund only), 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 (money market fund only - 1993) 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, 30195 Chagrin Blvd., Suite 104W, Pepper Pike, 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), the National Arts
Stabilization Fund, Greenwich Hospital Association (1989), and Valuation
Research Corp. (appraisals and valuations, 1993).
*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), and 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 (money market
fund only - 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).
ANNE PUNZAK, is Vice President of the Income Fund and a Vice President of
other funds advised by FMR, and a Vice President of FMR.
ARTHUR S. LORING, Secretary, is Senior Vice President and General
Counsel of FMR, Vice President - Legal of FMR Corp., and
Clerk of FDC.
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 fund 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 November 30, 1993, the Trustees and officers of each fund 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 FMR's management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of the fund in accordance with its investment objective,
policies, and limitations. FMR also provides 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 the 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 Prospectuses and Statements 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
portfolio 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 of 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 the money market fund's manager pursuant to a management contract
dated July 16, 1992 which was approved by FMR, then sole shareholder of the
fund, on August 22, 1992. FMR is the income fund's manager pursuant to a
contract dated February 20, 1992 which was approved by FMR, then sole
shareholder of the fund on March 13, 1992.
For the services of FMR under the management contracts, each fund pays FMR
a monthly management fee at the annual rate of .50% (money market fund) and
.55% (income fund), respectively, 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 each
fund's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses).
The tables below outline expense limitations (as a percentage of each
fund's average net assets) in effect from each fund's commencement of
operations (August 24, 1992 - money market fund; March 16, 1992
- income fund) through the date of this Statement of Additional
Information. The tables also show the amount of management fees incurred
under each contract and the amounts reimbursed by FMR for each fiscal
period from commencement of operations through the date of this Statement
of Additional Information.
MONEY MARKET FUND:
From To Expense Limitation
August 24, 1992 February 28, 1993 .00%
March 1, 1993 April 30, 1993 .05%
May 1, 1993 May 31, 1993 .10%
June 1, 1993 June 30, 1993 .15%
July 1, 1993 July 31, 1993 .20%
August 1, 1993 August 31, 1993 .25%
September 1, 1993 September 30, 1993 .30%
October 1, 1993 October 31, 1993 .35%
November 1, 1993 -- .40%
Management Fees Amount of
Fiscal Period Before Reimbursement Reimbursements
1992* $21,467 $21,474
1993 $1,021,002 $655,781
INCOME FUND:
From To Expense Limitation
March 16, 1992 August 31, 1992 .00%
September 1, 1992 January 31, 1993 .05%
February 1, 993 February 28, 1993 .10%
April 1, 1993 May 31, 1993 .15%
June 1, 1993 July 31, 1993 .25%
August 1, 1993 August 3 1 , 1993 .30%
September 1, 1993 September 30, 1993 .35%
October 1, 1993 October 31, 1993 . 4 5%
November 1, 1993 -- .50%
Management Fees Amount of
Fiscal Period Before Reimbursement Reimbursements
1992** $463,640 $438,561
1993 $2,073,795 $ 1,147,661
* From August 24,1992 (commencement of operations) through
November 30, 1992.
** From March 16, 1992 (commencement of operations) through November 30,
1992.
If FMR were not temporarily reimbursing these expenses, the money market
and income funds' yields would be lower and their total operating expenses
would be .50% and .55%, respectively, of each fund's net assets.
To defray shareholder service costs, FMR or its affiliates also collect the
funds' $5.00 exchange fees, $5.00 account closeout fees, $5.00 fees for
wire purchases and redemptions, and the money market fund's $2.00
checkwriting charge. Shareholder transaction fees and charges collected for
the fiscal periods ended November 30, 1993 and 1992 are indicated in the
tables below.
MONEY MARKET FUND:
Exchange Fees Account Closeout Fees Wire Fees Checkwriting Charge
1992 $275 $0 $30 $50
1993 $2,625 $327 $305 $1,144
INCOME FUND:
Exchange Fees Account Closeout Fees Wire Fees
1992 $1,030 $185 $50
1993 $3,140 $845 $185
SUB-ADVISER . With respect to the money market fund, FMR has entered
into a sub-advisory agreement with FMR Texas Inc. (FTX ) pursuant to which
FTX has primary responsibility for providing portfolio investment
management services to the fund. Under the sub-advisory agreement, FMR pays
FTX a fee equal to 50% of the management fee payable to FMR under its
current management contract with the fund. The fees paid to FTX are not
reduced by any voluntary or mandatory expense reimbursements that may be in
effect from time to time. During the fiscal period August 24, 1992
(commencement of operations) to November 30, 199 2 and fiscal
199 3 FMR paid FTX $510,511 and $10,734, 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 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 the funds' shares. In addition, the
Plans provide that FMR may use its resources, including 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 such
payments to date.
Each fund's Plan has been approved by the Trustees. As required by the
Rule, the Trustees carefully considered all pertinent factors relating to
implementation of the Plan prior to its approval, and have determined that
there is a reasonable likelihood that the Plan will benefit the funds and
their shareholders. In particular, the Trustees noted that the Plans do not
authorize payments by each fund other than those made to FMR under its
management contract with the fund. 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 each fund's 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 FMR, then sole shareholder
of the funds, on August 22, 1992 (money market fund) and March 13, 1992
(income fund).
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services, or
servicing and recordkeeping functions. FDC intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the funds
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. 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 NAV
and dividends and maintains the funds' accounting records. United Missouri
is entitled to reimbursement for fees paid to FSC from FMR, which must bear
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 the funds, which are continuously
offered at NAV. Promotional and administrative expenses in connection with
the offer and sale of shares of the funds are paid by FMR.
DESCRIPTION OF THE TRUSTS
TRUST ORGANIZATION. Fidelity Court Street Trust (the Massachusetts trust)
is an open-end management investment company organized as a Massachusetts
business trust on April 21, 1977. On August 1, 1987, the
Massachusetts trust's name was changed from Fidelity High Yield
Municipals to Fidelity Court Street Trust. Currently, there are four funds
of the Massachusetts trust: Spartan Connecticut Municipal High Yield
Portfolio, Fidelity High Yield Tax-Free Portfolio, Spartan New Jersey
Municipal High Yield Portfolio, and Spartan Florida Municipal Income
Portfolio. The Massachusetts trust's Declaration of Trust permits the
Trustees to create additional funds.
Fidelity Court Street 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 four funds of the Delaware trust:
Fidelity Connecticut Municipal Money Market Portfolio, Fidelity New Jersey
Tax-Free Money Market Portfolio, Spartan Florida Municipal Money Market
Portfolio, and Spartan Connecticut Municipal Money Market Portfolio. 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" or " Spartan" may be withdrawn. There is a remote
possibility that one fund might become liable for any misstatement in its
prospectus or statement of additional information about another fund.
The assets of each trust received for the issue or sale of shares of each
of its funds and all income, earnings, profits, and proceeds thereof,
subject only to the rights of creditors, are especially allocated to such
fund, and constitute the underlying assets of such fund. The underlying
assets of each fund are segregated on the books of account, and are to be
charged with the liabilities with respect to such fund and with a share of
the general expenses of their respective trusts. Expenses with respect to
the trusts are to be allocated in proportion to the asset value of their
respective funds, except where allocations of direct expense can otherwise
be fairly made. The officers of the trusts, subject to the general
supervision of the Boards of Trustees, have the power to determine which
expenses are allocable to a given fund, or which are general or allocable
to all of the funds of a certain trust. In the event of the dissolution or
liquidation of a trust, shareholders of each fund of that trust are
entitled to receive as a class the underlying assets of such fund available
for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY - MASSACHUSETTS TRUST. The
Massachusetts trust is an entity of the type commonly known as
" Massachusetts business trust." Under Massachusetts law, shareholders
of such a trust may, under certain circumstances, be held personally liable
for the obligations of the trust. The Declaration of Trust provides that
the Massachusetts trust shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or instrument entered into or executed by the
Massachusetts trust or its Trustees shall include a provision limiting the
obligations created thereby to the Massachusetts trust and its assets. The
Declaration of Trust provides for indemnification out of each fund's
property of any shareholders held personally liable for the obligations of
the fund. The Declaration of Trust also provides that each fund shall, upon
request, assume the defense of any claim made against any shareholder for
any act or obligation of the fund and satisfy any judgment thereon. Thus,
the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the fund itself
would be unable to meet its obligations. FMR believes that, in view of the
above, the risk of personal liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects 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 they would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties involved
in the conduct of their office.
VOTING RIGHTS - BOTH TRUSTS. Each fund's capital consists of shares of
beneficial interest. The shares have no preemptive or conversion rights;
voting and dividend rights, the right of redemption, and the privilege of
exchange are described in the Prospectus. Shares are fully paid and
nonassessable, except as set forth under the respective " Shareholder
and Trustee Liability" headings above. Shareholders representing 10% or
more of a trust or one of its funds may, as set forth in the Declaration of
Trust or Trust Instrument, call meetings of the trust or fund for any
purpose related to the trust or fund, as the case may be, including, in the
case of a meeting of an entire trust, the purpose on voting on removal of
one or more Trustees.
A trust or any fund may be terminated upon the sale of its assets to (or,
in the case of the Delaware trust and its funds, merger with) another
open-end management investment company or series thereof, or upon
liquidation and distribution of its assets. Generally such terminations
must be approved by vote of the holders of a majority of the outstanding
shares of the trust or the fund, however, the Trustees of the Delaware
trust may, without prior shareholder approval, change the form of the
organization of the Delaware trust by merger, consolidation, or
incorporation. If not so terminated or reorganized, the trusts and their
funds will continue indefinitely.
Under the Trust Instrument, the Trustees may, without shareholder vote,
cause the Delaware trust to merge or consolidate into one or more trusts,
partnerships, or corporations, so long as the surviving entity is an
open-end management investment company that will succeed to or assume the
Delaware trust registration statement, or cause the Delaware trust to be
incorporated under Delaware law. The Delaware trust may also invest all of
its assets in another investment company.
CUSTODIAN. United Missouri Bank, N.A., 1010 Grand Avenue, Kansas City,
Missouri, 64106, 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 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. Coopers & Lybrand, One Post Office Square, Boston,
Massachusetts, (income fund) and 1999 Bryan Street, Dallas, Texas (money
market fund) 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
The funds' Annual Reports for the fiscal periods ended November 30,
199 3 are separate reports supplied with this Statement of Additional
Information and are incorporated herein by reference.
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.
APPENDIX
The descriptions that follow are examples of eligible ratings for the
funds. A fund may, however, consider the ratings for other types of
investments and the ratings assigned by other rating 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 the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than 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.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of
other terms of the contract over any long period of time may be small.
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
principal or 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.
The ratings from AA to B may be modified by the addition of a plus or minus
to show relative standing within the major rating categories.
FIDELITY NEW JERSEY TAX-FREE MONEY MARKET PORTFOLIO
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
<S> <C>
Part A - Prospectus
Form N-1A Item Number: Prospectus Caption:
1 a,b........................................................... Cover Page
2 a.............................................................. Expenses
b,c........................................................... *
3 a.............................................................. Financial Highlights
b............................................................. *
c.............................................................. Performance
4 a(i).......................................................... Charter
a(ii)......................................................... Securities and Investment Practices; Investment Principles;
The Fund at a Glance
b............................................................ Securities and Investment Policies
c.............................................................. Investment Principles; Securities and Investment
Limitations
5 a.............................................................. Charter
b............................................................. Cover Page; Breakdown of Expenses
c............................................................. *
d,e,f....................................................... Charter
5A....................................................... Performance
6 a(i).......................................................... Charter
a(ii)......................................................... Transaction Details; Exchange Restrictions; How to Sell
Securities
a(iii)........................................................ *
b.................................................... Charter
c,d........................................................... *
e.............................................................. Cover Page; How to Buy Shares; How to Sell Shares;
Transaction Details; Doing Business with Fidelity
f............................................................. Dividends, Capital Gains, and Taxes
g............................................................ Dividends, Capital Gains, and Taxes; The Fund at a Glance
7 a.............................................................. Charter
b(i-iv)..................................................... Transaction Details
b(v)......................................................... Doing Business with Fidelity
c.............................................................. *
d............................................................. How to Buy Shares
e.......................................................... *
f.......................................................... Breakdown of Expenses
8 a.............................................................. How to Sell Shares; Breakdown of Expenses; Exchange
Restrictions
b............................................................. Doing Business with Fidelity
c.............................................................. Transaction Details
d............................................................. How to Sell Shares; Transaction Details; Exchange
Restrictions
9............................................................... *
________________
* Not Applicable
</TABLE>
FIDELITY NEW JERSEY TAX-FREE MONEY MARKET PORTFOLIO
CROSS REFERENCE SHEET (CONTINUED)
<TABLE>
<CAPTION>
<S> <C>
Part B Statement of Additional Information Caption
10, 11.................................................................... Cover Page
12......................................................................... *
13 a,b,c................................................................. Investment Policies and Limitations
d...................................................................... Portfolio Transactions
14 a,b.................................................................... Trustees and Officers
c....................................................................... *
15 a,b.................................................................... *
c....................................................................... Trustees and Officers
16 a(i)................................................................... Portfolio Transactions; FMR
a(ii).................................................................. Trustees and Officers
a(iii),b.............................................................. Management Contract; Interest of FMR Affiliates
c,d................................................................... Interest of FMR Affiliates
e, f, g............................................................... *
h...................................................................... Description of the Trust
i....................................................................... Interest of FMR Affiliates
17 a,b,c,d............................................................. Portfolio Transactions
e....................................................................... *
18 a....................................................................... Description of the Trust
b...................................................................... *
19 a....................................................................... Additional Purchase and Redemption Information
b...................................................................... Valuation of Portfolio Securities; Additional
Purchase and Redemption Information
c....................................................................... *
20......................................................................... Distributions and Taxes
21 a....................................................................... Interest of FMR Affiliates
b, c................................................................... *
22.......................................................................... Performance
23......................................................................... Financial Statements
_______________
* Not Applicable
</TABLE>
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how the fund
invests and the services available to shareholders.
A Statement of Additional Information dated January 14, 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 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.
New Jersey Tax-Free Money Market seeks a high level of current income
exempt from federal income tax and the New Jersey Gross Income Tax. It
maintains a stable $1.00 share price by investing in high-quality,
short-term municipal obligations.
FIDELITY
NEW JERSEY
TAX-FREE
MONEY MARKET
PORTFOLIO
PROSPECTUS
JANUARY 14, 1994
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.
CTR-pro-194
(Registered trademark)
82 Devonshire Street, Boston, MA 02109
CONTENTS
KEY FACTS 3 THE FUND AT A GLANCE
3 WHO MAY WANT TO INVEST
EXPENSES AND PERFORMANCE 4 EXPENSES The fund's yearly
operating expenses.
5 FINANCIAL HIGHLIGHTS A summary
of the fund's financial data.
6 PERFORMANCE How the fund has
done over time.
YOUR ACCOUNT 8 DOING BUSINESS WITH FIDELITY
9 INVESTOR SERVICES Services to
help you manage your account.
10 HOW TO BUY SHARES Opening an
account and making additional
investments.
12 HOW TO SELL SHARES Taking money
out and closing your account.
14 DIVIDENDS, CAPITAL GAINS, AND
TAXES
SHAREHOLDER AND 15 TRANSACTION DETAILS Share price
ACCOUNT POLICIES calculations and the timing of
purchases and redemptions.
17 EXCHANGE RESTRICTIONS
THE FUND IN DETAIL 18 CHARTER How the fund is
organized.
19 BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.
20 INVESTMENT PRINCIPLES The fund's
overall approach to investing.
21 SECURITIES AND INVESTMENT
PRACTICES
<r>KEY FACTS</r>
THE FUND AT A GLANCE
GOAL: High current tax-free income for New Jersey residents while
maintaining a stable share price. As with any mutual fund, there is no
assurance that the fund will achieve its goal.
STRATEGY: Invests mainly in high-quality, short-term municipal
obligations whose interest is exempt from federal income tax and the New
Jersey Gross Income Tax.
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 the fund.
SIZE: As of November 30, 1993, the fund had over $ 359 million in
assets.
WHO MAY WANT TO INVEST
This non-diversified fund may be appropriate for investors in higher tax
brackets who seek current income that is exempt from federal and New Jersey
income taxes. The rate of income will vary from day to day, generally
reflecting changes in interest rates. The fund is managed to keep its share
price stable at $1.00.
By itself, this fund does not constitute a balanced investment plan.
However, because it emphasizes stability, it could be well-suited for a
portion of your savings.
THE SPECTRUM OF
FIDELITY FUNDS
Broad categories of Fidelity
funds are presented here in
order of ascending risk.
Generally, investors seeking
to maximize return must
assume greater risk. Fidelity
Spartan Connecticut
Municipal Money Market is in
the MONEY MARKET category.
(arrow) MONEY MARKET Seeks
income and stability by
investing in high-quality,
short-term investments.
(bullet) INCOME Seeks income by
investing in bonds.
(bullet) GROWTH AND INCOME
Seeks long-term growth and
income by investing in stocks
and bonds.
(bullet) GROWTH Seeks long-term
growth by investing mainly in
stocks.
(checkmark)
<r>EXPENSES AND PERFORMANCE</r>
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 the fund's assets. The 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. The fund's expenses are factored into its
share price or dividends and are not charged directly to shareholder
accounts (see page 19 ).
The following are projections based on historical expenses, and are
calculated as a percentage of average net assets.
Management fee .42 %
12b-1 fee None
Other expenses .21 %
Total fund operating expenses .63 %
EXAMPLES: Let's say, hypothetically, that the 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 year $ 6
After 3 years $ 20
After 5 years $ 35
After 10 years $ 79
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
UNDERSTANDING
EXPENSES
Operating a mutual fund
involves a variety of
expenses for portfolio
management, shareholder
statements, tax reporting, and
other services. These costs
are paid from the fund's
assets; their effect is already
factored into any quoted
share price or return.
(checkmark)
FINANCIAL HIGHLIGHTS
The table that follows has been audited by Coopers & Lybrand ,
independent accountants. Their unqualified report is included in the fund's
Annual Report. The Annual Report is incorporated by reference into (is
legally a part of) the Statement of Additional Information.
SELECTED PER-SHARE DATA
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
68.Years e nded November 1988 C 1989 1990 1991 1992 1993
30,
69.Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of period
70.Income from Investment .037 .063 .056 .042 .028 .019
Operations
Net interest income
71. Dividends from net (.037) (.063) (.056) (.042) (.028) (.019)
interest income
72.Net asset value, end of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
73.Total r eturn B 3.76% 6.45 5.72 4.29 2.81 1.94
% % % % %
74.RATIOS AND SUPPLEMENTAL DATA
75.Net assets, end of $ 137,425 $ 347,48 $ 443,58 $ 368,33 $ 359,09 $ 359,58
period 5 5 3 3 7
(000 omitted)
76.Ratio of expenses to -% .15 .27 .65 .64 .63
average net assets % % % % %
77.Ratio of expenses to .94% .68 .61 .65 .64 .63
average A % % % % %
net assets before expense
reductions
78.Ratio of net interest 5.61% 6.24 5.57 4.23 2.78 1.92
income A % % % % %
to average net assets
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED
C FROM MARCH 17, 1988 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30,
1988
PERFORMANCE
Money market fund performance can be measured as TOTAL RETURN or YIELD. The
total returns and yields that follow are based on historical fund results
and do not reflect the effect of taxes.
The fund's fiscal year runs from December 1 through November 30. The tables
below show the fund's performance over past fiscal years compared to a
measure of inflation. The chart on page 7 helps you compare the yield of
this fund to those of its competitors.
AVERAGE ANNUAL TOTAL RETURNS
Fiscal periods ended Past 1 Past 5 Life of
November 30, 1993 year years fundA
Spartan Conn. Money Market 1.94% 4.23% 4.36%
Consumer Price
Index 2.68% 3.92% n/a
CUMULATIVE TOTAL RETURNS
Fiscal periods ended Past 1 Past 5 Life of
November 30, 1993 year years fundA
Spartan Conn. Money Market 1.94% 23.00% 27.62%
Consumer Price
Index 2.68% 21.20% n/a
A FROM MARCH 4, 1991
EXPLANATION OF TERMS
UNDERSTANDING
PERFORMANCE
SEVEN-DAY YIELD illustrates
the income earned by a
money market fund over a
recent seven-day period. TOTAL
RETURN reflects both the
reinvestment of income and
the change in a fund's share
price. Since money market
funds maintain a stable $1.00
share price, current seven-day
yields are the most common
illustration of money market
fund performance.
(checkmark)
TOTAL RETURN is the change in value of an investment in the 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 the fund over a
given period of time, expressed as an annual percentage rate. When a 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.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
7-D AY YIELDS
Percent
age %
Row: 1, Col: 1, Value: 4.48
Row: 1, Col: 2, Value: 4.49
Row: 2, Col: 1, Value: 4.04
Row: 2, Col: 2, Value: 4.0
Row: 3, Col: 1, Value: 4.53
Row: 3, Col: 2, Value: 4.29
Row: 4, Col: 1, Value: 4.46
Row: 4, Col: 2, Value: 4.33
Row: 5, Col: 1, Value: 4.1
Row: 5, Col: 2, Value: 4.01
Row: 6, Col: 1, Value: 3.86
Row: 6, Col: 2, Value: 3.85
Row: 7, Col: 1, Value: 4.0
Row: 7, Col: 2, Value: 3.99
Row: 8, Col: 1, Value: 4.04
Row: 8, Col: 2, Value: 4.05
Row: 9, Col: 1, Value: 4.38
Row: 9, Col: 2, Value: 4.38
Row: 10, Col: 1, Value: 3.82
Row: 10, Col: 2, Value: 3.89
Row: 11, Col: 1, Value: 3.78
Row: 11, Col: 2, Value: 3.71
Row: 12, Col: 1, Value: 4.26
Row: 12, Col: 2, Value: 4.33
Row: 13, Col: 1, Value: 2.87
Row: 13, Col: 2, Value: 2.69
Row: 14, Col: 1, Value: 2.9
Row: 14, Col: 2, Value: 2.62
Row: 15, Col: 1, Value: 2.98
Row: 15, Col: 2, Value: 2.97
Row: 16, Col: 1, Value: 3.19
Row: 16, Col: 2, Value: 3.07
Row: 17, Col: 1, Value: 2.96
Row: 17, Col: 2, Value: 3.0
Row: 18, Col: 1, Value: 2.45
Row: 18, Col: 2, Value: 2.46
Row: 19, Col: 1, Value: 2.33
Row: 19, Col: 2, Value: 2.14
Row: 20, Col: 1, Value: 2.42
Row: 20, Col: 2, Value: 2.15
Row: 21, Col: 1, Value: 2.85
Row: 21, Col: 2, Value: 2.67
Row: 22, Col: 1, Value: 2.28
Row: 22, Col: 2, Value: 2.13
Row: 23, Col: 1, Value: 2.32
Row: 23, Col: 2, Value: 2.16
Row: 24, Col: 1, Value: 2.74
Row: 24, Col: 2, Value: 2.69
Row: 25, Col: 1, Value: 1.85
Row: 25, Col: 2, Value: 1.81
Row: 26, Col: 1, Value: 1.81
Row: 26, Col: 2, Value: 1.87
Row: 27, Col: 1, Value: 1.92
Row: 27, Col: 2, Value: 1.96
Row: 28, Col: 1, Value: 1.95
Row: 28, Col: 2, Value: 1.98
Row: 29, Col: 1, Value: 2.09
Row: 29, Col: 2, Value: 2.13
Row: 30, Col: 1, Value: 1.64
Row: 30, Col: 2, Value: 1.79
Row: 31, Col: 1, Value: 1.82
Row: 31, Col: 2, Value: 1.86
Row: 32, Col: 1, Value: 1.94
Row: 32, Col: 2, Value: 1.97
Row: 33, Col: 1, Value: 2.12
Row: 33, Col: 2, Value: 2.16
Row: 34, Col: 1, Value: 1.98
Row: 34, Col: 2, Value: 1.95
Row: 35, Col: 1, Value: 1.92
Row: 35, Col: 2, Value: 1.91
Spartan
Conn. Money
Market
Competitive
funds average
1992
1991
1993
THE CHART SHOWS THE SEVEN-DAY EFFECTIVE YIELDS FOR THE FUND AND ITS
COMPETITIVE FUNDS AVERAGE AS OF THE LAST TUESDAY OF EACH MONTH FROM
JANUARY 1991 THROUGH NOVEMBER 1993.
THE COMPETITIVE FUNDS AVERAGES are the IBC/Donoghue's MONEY FUND
AVERAGES(registered trademark), which assume reinvestment of distributions.
The fund compares its performance to the All Tax-Free category. These
averages, which currently reflect the performance of over 325 mutual
funds with similar objectives, are published in the MONEY FUND
REPORT(Registered trademark) by IBC USA (Publications), Inc.
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance 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 75 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in the fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in the fund through a brokerage account. You can
choose the fund as your core account for your Fidelity Ultra Service
Account or FidelityPlusSM 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 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.
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.
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.
Exchanges 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 17.
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 services that let you transfer money into your fund
account, or between fund accounts, automatically.
FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND
MINIMUM $100
FREQUENCY Monthly or quarterly
SETTING UP Complete the
appropriate section
on the fund
application. For
existing accounts,
call 1-800-544-6666
for an application.
DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY
FUND
MINIMUM $100
FREQUENCY Every pay period
SETTING UP Check the
appropriate box on
the fund application,
or call
1-800-544-6666 for
an authorization form.
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND
MINIMUM $100
FREQUENCY Monthly, bimonthly,
quarterly, or annually
SETTING UP To establish, call
1-800-544-6666 after
both accounts are
opened.
HOW TO BUY SHARES
THE FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. The fund is managed to keep its share price stable at $1.00.
The 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.
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 11 . 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 $5,000
TO ADD TO AN ACCOUNT $250
Through automatic investment plans $100
MINIMUM BALANCE $1,000
<TABLE>
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TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
PHONE (bullet) Exchange from another (bullet) Exchange from another
1-800-544-7777 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 (bullet) Complete and sign the (bullet) Make your check
application. Make your payable to "Fidelity New
check payable to Jersey Tax-Free Money
"Fidelity New Jersey Market Portfolio."
Tax-Free Money Indicate your fund
Market Portfolio." Mail account number on
to the address your check, and mail to
indicated on the the address printed on
application. your account statement.
(bullet) Exchange by mail: call
1-800-544-6666 for
instructions.
</TABLE>
<TABLE>
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IN PERSON (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>
WIRE (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 "Fidelity New
Bank Routing Jersey
#021001033, Tax-Free Money Market
Account #00163053. Portfolio"
Specify "Fidelity New and include your
Jersey Tax-Free Money account number
Market Portfolio" and and your name.
include your new
account number and
your name.
<TABLE>
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AUTOMATICALLY (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.
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.
TO SELL SHARES THROUGH YOUR FIDELITY ULTRA SERVICE OR FIDELITYPLUS ACCOUNT,
call 1-800-544-6262 to receive a handbook with instructions.
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 All account types (bullet) Maximum check request:
1-800-544-7777 $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 Individual, Joint (bullet) The letter of instruction must
Tenant, Sole be signed by all persons
Proprietorship, required to sign for
UGMA, UTMA transactions, exactly as their
names appear on the
Trust account.
(bullet) The trustee must sign the
letter indicating capacity as
trustee. If the trustee's name
Business or is not in the account
Organization registration, provide a copy of
the trust document certified
within the last 60 days.
(bullet) At least one person
authorized by corporate
Executor, resolution to act on the
Administrator, account must sign the letter.
Conservator, (bullet) Include a corporate
Guardian resolution with corporate seal
or a signature guarantee.
(bullet) Call 1-800-544-6666 for
instructions.
WIRE 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>
CHECK All account types (bullet) Minimum check: $500.
(bullet) All account owners must sign
a signature card to receive a
checkbook.
<TABLE>
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TDD - SERVICE FOR THE DEAF AND HEARING-IMPAIRED: 1-800-544-0118
</TABLE>
DIVIDENDS, CAPITAL GAINS, AND TAXES
The 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.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. The fund offers three
options:
8. 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.
9. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions, if any.
10. 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 record date of the distribution. The mailing of distribution checks
will begin within seven days.
TAXES
As with any investment, you should consider how an investment in a tax-free
fund could affect you. Below are some of the fund's tax implications.
Interest income that the 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. The fund may invest so that up to 20% of its
income is derived from these securities. Individuals who are subject to the
tax must report this interest on their tax returns.
To the extent the fund's income and capital gain distributions are derived
from state tax-free investments , they will be free from the New
Jersey Gross Income Tax.
During fiscal 1993, 100% of the fund's income dividends w as free
from federal income tax, and 100% w as free from the New Jersey Gross
Income Tax. 17.9% of the fund's income dividends w as subject to the
federal alternative minimum tax.
SHAREHOLDER AND ACCOUNT POLICIES
TRANSACTION DETAILS
THE FUND IS OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates the fund's net asset value as of the
close of business of the NYSE, normally 4 p.m. Eastern time.
THE FUND'S NAV is the value of a single share. The NAV is computed by
adding up 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.
Like most money market funds, the 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.
THE FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
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.
THE FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. The fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page 17 . Purchase orders may be refused if, in FMR's opinion,
they are of a size that would disrupt management of the 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) The 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 the 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 FUND 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.
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 the
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) The 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.
Fidelity Distributors Corporation (FDC) may, at its own expense, provide
promotional incentives to qualified recipients who support the sale of
shares of the fund without reimbursement from the fund. 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 the 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) The 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 the 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 the fund.
Although the fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time. The
fund reserves 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.
<
r>THE FUND IN DETAIL</r>
CHARTER
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET IS A MUTUAL FUND: an investment
that pools shareholders' money and invests it toward a specified goal. In
technical terms, the fund is currently a non-diversified fund of Fidelity
Fidelity Court Street Trust II, an open-end management investment company
organized as a Delaware business trust on June 20, 1991.
THE 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 fund's activities,
review contractual arrangements with companies that provide services to the
fund, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUND 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. You are entitled to one vote for each
share you own.
FMR AND ITS AFFILIATES
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 200
(bullet) Assets in Fidelity mutual
funds: over $200 billion
(bullet) Number of shareholder
accounts: over 14 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(checkmark)
The fund is managed by FMR, which handles the fund's business affairs. FTX
has primary responsibility for providing investment management services.
FDC distributes and markets Fidelity's funds and services. Fidelity Service
Co. (FSC) performs transfer agent servicing functions for the fund.
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 trust), 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 the fund's transfer agent, although it
employs FSC to perform these functions for the fund. It is located at 1010
Grand Avenue, Kansas City, Missouri.
To carry out the fund's transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that the fund
receives services and commission rates comparable to those of other
broker-dealers.
BREAKDOWN OF EXPENSES
Like all mutual funds, the fund pays fees related to its daily operations.
Expenses paid out of the fund's assets are reflected in its share price or
dividends; they are neither billed directly to shareholders nor deducted
from shareholder accounts.
The 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. The fund also pays OTHER EXPENSES, which
are explained at right.
FMR may, from time to time, agree to reimburse the fund for management fees
and other expenses above a specified limit. FMR retains the ability to be
repaid by the 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 the 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 November 1993, the group fee rate was .1627%. The individual fund fee
rate is .50%. The total management fee rate for fiscal 1993 was .42%.
UNDERSTANDING THE
MANAGEMENT FEE
The management fee FMR
receives is designed to be
responsive to changes in
FMR's total assets under
management. Building this
variable into the fee
calculation assures
shareholders that they will
pay a lower rate as FMR's
assets under management
increase.
(checkmark)
FMR HAS A SUB-ADVISORY AGREEMENT with FTX, which has primary responsibility
for providing investment management, while FMR retains responsibility for
providing other management services. FMR pays FTX 50% of its management fee
(before expense reimbursements) for these services. FMR paid FTX .21% of
the fund's average net assets for fiscal 1993.
OTHER EXPENSES
While the management fee is a significant component of the fund's annual
operating costs, the fund has other expenses as well.
FSC performs many transaction and accounting functions. These services
include processing shareholder transactions, valuing the fund's
investments, and handling securities loans. In fiscal 1993, FSC received
fees equal to .20% of the fund's average net assets.
The fund also pays other expenses, such as legal, audit, and custodian
fees; proxy solicitation costs; and the compensation of trustees who are
not affiliated with Fidelity.
The fund has adopted a Distribution and Service Plan. This plan recognizes
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 fund does not pay FMR any separate fees for this
service.
INVESTMENT PRINCIPLES
THE FUND SEEKS TO EARN A HIGH LEVEL OF CURRENT INCOME that is exempt from
federal income tax and from the New Jersey Gross Income Tax 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 so that at least 80% of the fund's income is free from
both federal income tax and the New Jersey Gross Income Tax.
If you are subject to the federal alternative minimum tax, you should note
that the fund may invest a portion 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.
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. In general, securities with longer
maturities are more vulnerable to price changes, although they may provide
higher yields. 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.
The fund stresses tax-free income, preservation of capital, and liquidity.
It does not seek the higher yields or capital appreciation that more
aggressive investments may provide. The fund's yield will vary from day to
day, generally reflecting current short-term interest rates and other
market conditions.
The fund's performance is closely tied to economic and political conditions
within the state of New Jersey. The state's economy has been sluggish in
the last several years. Also, New Jersey relies heavily upon federal
assistance, receiving more aid than most states.
FMR normally invests the fund's assets according to its investment
strategy. The fund does not expect to invest in federally taxable
obligations, but may invest a portion of its assets in state taxable
obligations. When FMR considers it appropriate, however, it may temporarily
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 fund may invest, and strategies FMR may employ in
pursuit of the fund's investment objective. 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
fund achieve its goal. As a shareholder, you will receive financial reports
every six months detailing fund holdings and describing recent investment
activities.
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. The
securities may carry fixed, variable, or floating interest rates. The fund
may own a municipal security directly or may own one through a
participation interest.
STATE TAX-FREE SECURITIES include obligations issued by the s tate of
New Jersey 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.
OTHER MUNICIPAL SECURITIES may include asset-backed securities and zero
coupon bonds.
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.
PUT FEATURES entitle the holder to put (sell back) an instrument to the
issuer or a financial intermediary. In exchange for this benefit, the fund
may pay periodic fees or accept a lower interest rate. Demand features,
standby commitments, and tender options are types of put features.
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 the market value of the fund's 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
the fund.
RESTRICTIONS: The 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 fund is considered non-diversified. To meet quarterly
federal tax requirements, however, the fund generally does not invest more
than 25% of its total assets in any one issuer and, w ith 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. The fund may invest more than 25% of its total assets in
tax-free securities that finance similar types of projects.
BORROWING. The fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements, and may make additional
investments while borrowings are outstanding.
RESTRICTIONS: The 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 paragraph restates all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraph, can be changed without shareholder approval.
The fund seeks as high a level of current income, exempt from federal
income tax and the New Jersey Gross Income Tax, as is consistent with
preservation of capital. Under normal conditions, at least 80% of the
fund's income will be exempt from both federal income tax and New Jersey
Gross Income Tax. The fund may borrow only for temporary or
emergency purposes, but not in an amount exceeding 33% of its total assets.
This prospectus is printed on recycled paper using soy-based inks.
FIDELITY NEW JERSEY TAX-FREE MONEY MARKET PORTFOLIO
A FUND OF FIDELITY COURT STREET TRUST II
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 14, 1994
This Statement is not a prospectus but should be read in conjunction with
the fund's current Prospectus (dated January 14, 1994 ). Please
retain this document for future reference. The Annual Report for the fiscal
year ended November 30, 1993 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 Jersey
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 Contract
Distribution and Service Plan
Interest of FMR Affiliates
Description of the Trust 19
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
SUB-ADVISER
FMR Texas Inc. (FTX)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
CUSTODIAN AND TRANSFER AGENT
United Missouri Bank, N.A. (United Missouri) and Fidelity Service Co. (FSC)
NJS-ptb-194
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 the 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.
The 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) of the 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. THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue bonds or any other class of securities preferred over shares of
the fund in respect of the fund's assets or earnings, provided that
Fidelity Court Street Trust II may issue additional series of shares in
accordance with the Trust Instrument;
(2) sell securities short, unless it owns, or by virtue of ownership of
other securities has the right to obtain, securities equivalent in kind and
amount to the securities sold short;
(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,
instrumentalities, territories or possessions, or issued or guaranteed by a
state government or political subdivision thereof) if, as a result, more
than 25% of the value of its total assets would be invested in securities
of companies having their principal business activities 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 (but this shall not prevent the fund from
purchasing or selling futures contracts); 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 limit
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 objectives, 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 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 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 objectives, 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.
AFFILIATED BANK TRANSACTIONS. Pursuant to exemptive orders issued by the
Securities and Exchange Commission (SEC), the fund may engage in certain
transactions with banks that are, or may be considered to be, "affiliated
persons" of the fund 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; and transactions in U.S. government securities with affiliated
banks that are primary dealers in these securities.
QUALITY AND MATURITY. 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 dollarweighted average maturity of
90 days or less.
DELAYED-DELIVERY TRANSACTIONS. The fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by the 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.
When purchasing securities on a delayed-delivery basis, the fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because the 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 the 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 the 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.
The 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.
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.
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 fund may invest in fixed-rate bonds that are subject to third party
puts and in participation interests in such bonds held by a bank in trust
or otherwise. These bonds and participation interests have tender options
or demand features that permit the fund to tender (or put) its bonds to an
institution at periodic intervals and to receive the principal amount
thereof. The 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, the fund intends to purchase these
instruments based on opinions of bond counsel.
The fund may invest in variable or floating rate
instrument s 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 matur ities 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 may 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, the fund effectively holds a demand
obligation that bears interest at the prevailing short-term tax-exempt
rate. Subject to applicable regulatory requirements, the 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 fund, 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 .
I nstead, 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, the 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. The fund may
acquire standby commitments to enhance the liquidity of portfolio
securities, but only when the issuers of the commitments present minimal
risk of default.
Ordinarily the fund may not transfer a standby commitment to a third party,
although it could sell the underlying municipal security to a third party
at any time. The 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 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 fund; and the possibility that the maturities of the
underlying securities may be different from those of the commitments.
MUNICIPAL LEASE OBLIGATIONS. The 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 fund 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
the 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 purchase, 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 fund does not intend to invest in
securities whose interest is federally taxable; however, from time to time,
the 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, the 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 the 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 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 Jersey legislature
that would affect the state tax treatment of the fund's distributions. If
such proposals were enacted, the availability of municipal obligations and
the value of the fund's holdings would be affected and the Trustees would
reevaluate the fund's investment objective and policies.
The 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, the fund may hold cash that is not earning income. In
addition, there may be occasions when, in order to raise cash to meet
redemptions, the fund may be required to sell securities at a loss.
REPURCHASE AGREEMENTS. In a repurchase agreement, the 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. The fund may engage in a
repurchase agreement with respect to any security in which it is authorized
to invest, even if 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 the fund
in connection with bankruptcy proceedings), it is the fund's current policy
to limit repurchase agreement transactions to those parties whose
creditworthiness has been reviewed and found satisfactory by FMR.
REVERSE REPURCHASE AGREEMENT. In a reverse repurchase agreement, the 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 is deemed satisfactory by 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 the fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of the fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment). Investments currently considered
by the fund to be illiquid include restricted securities and municipal
lease obligations determined by FMR to be illiquid. In the absence of
market quotations, illiquid investments are valued for purposes of
monitoring amortized cost valuation at fair value as determined in good
faith by a committee appointed by the Board of Trustees. If through a
change in values, net assets, or other circumstances, the 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, the 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, the fund might
obtain a less favorable price than prevailed when it decided to seek
registration of the security. However, in general, the fund anticipates
holding restricted securities to maturity or selling them in an exempt
transaction.
INTERFUND BORROWING PROGRAM. The 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 form a
bank at a higher interest rate if an interfund loan is not called or
renewed.
SPECIAL FACTORS AFFECTING NEW JERSEY
The following highlights only some of the more significant financial trends
and problems affecting New Jersey, and is based on information drawn from
official statements and prospectuses relating to securities offerings of
the State of New Jersey, its agencies and instrumentalities, as available
on the date of this Statement of Additional Information. FMR has not
independently verified any of the information contained in such official
statements and other publicly available documents, but is not aware of any
fact which would render such information inaccurate.
On November 2, 1993, Christine Todd Whitman was elected to replace James
Florio as Governor of the State. Governor-Elect Whitman will take office on
January 18, 1994. As a matter of public record, Governor-Elect Whitman
during her campaign publicized her intention to reduce taxes in the State.
At this time the effect of Governor-Elect Whitman's election cannot be
evaluated.
The State's 1993 Fiscal Year budget became law on June 30, 1993.
Changes in economic activity in the State and the nation, consumption
of durable goods, corporate financial performance and other factors that
are difficult to predict may result in actual collections for Fiscal Year
199 4 being more or less than forecasted. The State is bound,
however, by the constitutional requirement that no appropriations law may
be enacted if the amount of money appropriated therein, together with all
other prior appropriations made for the same Fiscal Year, exceeds the total
amount of anticipated revenues available for such Fiscal Year as certified
by the Governor.
By the beginning of the national recession, construction activity had
already been declining in New Jersey for nearly two years. As the rapid
acceleration of real estate prices forced many would-be homeowners out of
the market and high non-residential vacancy rates reduced new commitments
for offices and commercial facilities, construction employment began to
decline; also growth had tapered off markedly in the service sectors and
the long-term downtrend of factory employment had accelerated partly
because of a leveling off of industrial demand nationally. The onset of
recession caused an acceleration of New Jersey's job losses in construction
and manufacturing, as well as an employment downturn in such previously
growing sectors as wholesale trade, retail trade, finance, utilities,
trucking and warehousing.
Reflecting the economic downturn, the rate of unemployment in the State
rose from 3.6% during the first quarter of 1989 to an estimated 6.6% in
1991. In 1992 the State's unemployment rate moved ahead of the nation's
for the first time in a decade to an annual average of 8.4% versus 7.4% in
the United States.
In 1992, employment and services in government turned around in the
State, growing over the year by 0.7% and 0.3%, respectively. These
increases were outweighed by the declines in other sectors - especially in
manufacturing, wholesale and retail trade and construction - resulting in a
decline in non-farm employment of 1.7% in 1992. Non-farm employment
continued to decline in 1993 but the rate of decline has tapered off.
Employment in the last five months of 1993 was 1.0% lower than in the same
period in 1992. Gains were recorded in services, government,
finance/insurance/real estate and transportation/communication/ and public
utilities. Declines continued in trade, construction and manufacturing.
Recovery is likely to be slow and uneven in New Jersey . Some
sectors, like commercial and industrial construction, will undoubtedly lag
because of continued excess capacity. Also, employers in rebounding sectors
can be expected to remain cautious about hiring until they become convinced
that improved business will be sustained. Other firms will continue to
merge or downsize to increase profitability. As a result, job gains will
probably come grudgingly and unemployment will recede at a correspondingly
slow pace.
There is a Constitutional provision that requires the State to maintain a
balanced budget. The State operates on a fiscal year beginning July 1 and
ending June 30. The General F und is the fund into which all State
revenues not otherwise restricted by statute are deposited and from which
appropriations are made. The largest part of the total financial operations
of the State is accounted for in the General F und, which includes
revenues received from taxes and unrestricted by statute, most federal
revenues, and certain miscellaneous revenue items. The appropriation acts
enacted by the Legislature and approved by the Governor provide the basic
framework for the operation of the General F und. The undesignated
General F und balance at year end for F iscal Year 1991
was $1.4 million, Fi scal Y ear 1992 was $7 60.8
million and for Fiscal Year 1993 is estimated to have been $687.8
million. For Fiscal Year 1993 the balance in the undesignated General Fund
is projected to be $42.2 million.
$ 687.3 million is provided in the fiscal 199 4 Appropriations
Act as the State's contributions to public retirement plans. Between March
31 and July 1, 199 2 , independent actuaries reported that the
market value of all assets of the retirement funds was $ 34.3
billion compared to a $3 2 . 4 billion accrued liability,
representing a funding level of 105.9 % calculated under the
traditional approach of book value of assets to projected accrued
liability.
According to recently published statistics, New Jersey is among those
states which receive the highest amount of federal aid. Federal aid
received in the General F und and Special Transportation fund
amounted to $4. 29 billion for the fiscal year ended June 30,
1992 , is estimated to have been $4.85 billion for the fiscal year ended
June 30, 1993 and is projected to be $5.61 billion for the fiscal year
ending June 30, 1994. The largest portion of federal aid is made up of
entitlements, whereby the State is reimbursed for expenditures up to a
certain percentage of total cost. Whether federal aid is received under a
formula, an entitlement, or a categorical grant program, the actual
expenditure of funds may be either at the State level, the local level, or
some other level, such as a non-profit agency.
The State finances capital projects primarily through the sale of its
general obligation bonds. These bonds are backed by the full faith and
credit of the State. Tax revenues and certain other fees are pledged to
meet the principal and interest payments required to pay the debt fully. No
general obligation debt can be issued by the State without prior voter
approval, except that no voter approval is required for any law authorizing
the creation of a debt for the purpose of refinancing all or a portion of
outstanding debt of the State, so long as such law requires that the
refinancing provide a debt service savings.
In addition to payment from bond proceeds, capital construction can also be
funded by appropriation of current revenues on a pay-as-you-go basis. This
amount represents 2.2% of the total budget. In fiscal 1993, the amount is
$331.0 million for transportation projects.
The aggregate outstanding general obligation bonded indebtedness of the
State as of June 30, 199 3 was $3. 5497 billion. The debt
service obligation for outstanding indebtedness is $ 119.9 million
for fiscal year 1993.
The State has extensive control over school districts, cities, counties and
local financing authorities. State laws impose specific limitations on
local appropriations, with exemptions subject to state approval. The State
shares the proceeds of a number of taxes, with funds going primarily for
local education programs, homestead rebates, medicaid and welfare programs.
Certain bonds are issued by localities, but supported by direct state
payments. In addition, the State participates in local wastewater treatment
programs.
At any given time, there are various numbers of claims and cases pending
against the State. State agencies and employees, seeking recovery of
monetary damages that are primarily paid out of the fund created pursuant
to the Tort Claims Act, N.J.S.A. 59:1-1 ET. SEQ. In addition, at any given
time there are various contract claims against the State and State agencies
seeking recovery of monetary damages. The State is unable to estimate its
exposure for these claims. An independent study estimated an aggregate
potential exposure of $50 million for tort claims pending, as of January 1,
1982. It is estimated that were a similar study made of claims currently
pending the amount of estimated exposure would be higher. Moreover, New
Jersey is involved in a number of other lawsuits in which adverse decisions
could materially affect revenue or expenditures. Such cases include
challenges to its system of educational funding, the methods by which the
State Department of Human Services shares with county governments, the
maintenance recoveries and costs for residents in State psychiatric
hospitals, and residential facilities for the developmentally disabled.
Other lawsuits, that could materially affect revenue or expenditures
include a suit by a number of taxpayers seeking refunds of taxes paid to
the Spill Compensation F und pursuant to N.J.S.A. 58:10-23.11, a suit
alleging that unreasonably low Medicaid payment rates have been implemented
for long-term care facilities in New Jersey, (a method of funding the
judicial system) and a suit seeking return of moneys paid by various
counties for maintenance of Medicaid or Medicare eligible residents of
institutions and facilities for the developmentally disabled and a suit
challenging the imposition of premium tax surcharges on insurers doing
business in New Jersey, and assessments upon property and casualty
liability insurers pursuant to the Fair Automobile Insurance Reform Act.
Legislation enacted June 30, 1992, effective immediately, called for
revaluation of several public employee pension funds, authorized an
adjustment to the assumed rate of return on investment and refunds $773
million in public employer contributions to the State from various pension
funds, to be reflected as a revenue source for Fiscal Year 1992 and $226
million in Fiscal Year 1993 and each fiscal year thereafter. Several labor
unions filed suit seeking a judgment directing the State Treasurer to
refund all monies transferred from the pension funds and paid into the
General F und. On February 5, 1993, the Superior Court granted the
State's motion for summary judgement as to all claims. An appeal has been
filed with the Appelate Division of Superior Court. An adverse
determination would have a significant impact on Fiscal Years 1992 ,
1993 , and 1994 revenue estimates.
Bond Ratings - In July 1991, Standard & Poor's Corporation
("Standard & Poors") downgraded New Jersey General Obligation Bonds
from AAA to AA+. Fitch Investor Service, Inc. rates New Jersey General
Obligation Bonds AAA. Citing a developing pattern of reliance on
non-recurring measures to achieve budgetary balance, four years of
financial operations marked by revenue shortfalls and operating deficits,
and the likelihood that financial pressures will persist, on August 24,
1992 Moody's lowered from Aaa to Aa1 the rating assigned to New Jersey
general obligation bonds. On July 6, 1992, Standard & Poor's removed
New Jersey's General Obligation Bonds from Credit Watch and affirmed
its AA+ ratings on New Jersey's general obligation and various lease and
appropriation backed debt, but its ratings outlook was revised to negative
for the longer term horizon (beyond four months) for resolution of two
items cited in the Credit Watch listing: (i) the Federal Health Care
Facilities Administration ruling concerning retroactive medicaid hospital
reimbursements and (ii) the state's uncompensated health care funding
system, which is pending review by the United States Supreme Court.
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 fund by FMR (either directly or through affiliated
sub-advisers) pursuant to authority contained in the 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 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 fund may execute portfolio transactions with broker-dealers who provide
research and execution services to the fund or other accounts over which
FMR or its affiliates exercise investment discretion. Such services may
include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; 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 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 is generally 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 fund may be useful to FMR in rendering investment management
services to the fund or its other clients, and, conversely, such research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the fund. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid the
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts
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
fund to pay such higher commissions, FMR must determine in good faith that
such commissions are reasonable in relation to the value of the brokerage
and research services provided by such executing broker-dealers, viewed in
terms of a particular transaction or FMR's overall responsibilities to the
fund 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 fund 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, reasonable, and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services.
Section 11(a) of the Securities and 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 Securities and Exchange Commission. 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.
The fund paid no brokerage commissions for the fiscal years ended November
30, 1993, 1992 , and 1991.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
fund and review the commissions paid by the fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to the fund.
From time to time the Trustees will review whether the recapture for the
benefit of the fund of some portion of the brokerage commissions or similar
fees paid by the fund on portfolio transactions is legally permissible and
advisable. The 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 fund to seek such recapture.
Although the Trustees and officers of the fund are substantially the same
as those of other funds managed by FMR, investment decisions for the 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 fund is
concerned. In other cases, however, the ability of the fund to participate
in volume transactions will produce better executions and prices for the
fund. It is the current opinion of the Trustees that the desirability of
retaining FMR as investment adviser to the fund outweighs any disadvantages
that may be said to exist from exposure to simultaneous transactions.
VALUATION OF PORTFOLIO SECURITIES
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.
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 fund may quote its performance in various ways. All performance
information supplied by the fund in advertising is historical and is not
intended to indicate future returns. The fund's yield and total returns
fluctuate in response to market conditions and other factors.
YIELD CALCULATIONS. To compute the 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 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 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 fund may
quote yields in advertising based on any historical seven-day period.
The fund's tax-equivalent yield is the rate an investor would have to earn
from a fully taxable investment to equal the fund's tax-free yield after
taxes. Tax-equivalent yields are calculated by dividing the fund's yield by
the result of one minus a stated federal or combined federal and state tax
rate. (If only a portion of the fund's yield is tax-exempt, only that
portion is adjusted in the calculation.)
The tables below 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 earn 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 the fund will achieve any specific tax-exempt yield. While the
fund invests principally in obligations whose interest is exempt from
federal and state income tax, other income received by the fund may be
taxable. The tables do not take into account local taxes, if any, payable
on fund distributions.
1994 TAX-RATES AND EQUIVALENT YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Taxable Income* Marginal Federal Combined New Jersey and
Income Tax New Jersey Federal Effective
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Single Return Joint Return Bracket Marginal Rate Tax Bracket **
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
$22, 751 -$35,000 $3 8,001 -$50,000 28% 2.5% 29.80%
-- $50,001-$70,000 28% 3.5% 30.52%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
$35,001-$40,000 $70,001-$80,000 28% 5.0% 31.60%
$40,001-$ 55,1 00 $80,001-$ 91,850 28% 6.5% 32.68%
$5 5,101 -$75,000 $ 91,851 -$140,000 31% 6.5% 35.49%
</TABLE>
$75,001-$115,000 -- 31% 7.0% 35.83%
-- $140,001-$150,000 36% 6.5% 40.16%
$115,001-$250,000 $150,001-$250,000 36% 7.0% 40.48%
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
$250,001 & $250,001 & above 39.6% 7.0% 43.83%
above
</TABLE>
* Net amount subject to federal income tax after deductions and exemptions.
Assumes ordinary income only; does not include the effect of preferential
rate on long-term capital gains.
** Excludes the impact of the phaseout of personal exemptions, limitations
on itemized deductions, and other credits, exclusions, and adjustments
which may increase a taxpayer's marginal tax rate. An increase in a
shareholder's marginal tax rate would increase that shareholder's
tax-equivalent yield.
Having determined your effective tax bracket above, use the tax table below
to determine the tax-equivalent yield for a given tax-free yield.
If your combined effective federal and state
personal income tax rate in 1994 is:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
29.80% 30.52% 31.60% 32.68% 35.49% 35.83% 40.16% 40.48% 43.83%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
To match these
tax-free rates: Your taxable investment would have to earn the following yield:
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2.0% 2.85% 2.88% 2.92% 2.97% 3.10% 3.12% 3.34% 3.36% 3.56%
3.0% 4.27% 4.32% 4.39% 4.46% 4.65% 4.68% 5.01% 5.04% 5.34%
4.0% 5.70% 5.76% 5.85% 5.94% 6.20% 6.23% 6.68% 6.72% 7.12%
5.0% 7.12% 7.20% 7.31% 7.43% 7.75% 7.79% 8.36% 8.40% 8.90%
6.0% 8.55% 8.64% 8.77% 8.91% 9.30% 9.35% 10.03% 10.08% 10.68%
7.0% 9.97% 10.07% 10.23% 10.40% 10.85% 10.91% 11.70% 11.76% 12.46%
8.0% 11.40% 11.51% 11.70% 11.88% 12.40% 12.47% 13.37% 13.44% 14.24%
</TABLE>
The fund may invest a portion of its assets in obligations that are subject
to state or federal income taxes. When the fund invests in these
obligations, its tax-equivalent yield will be lower. In the table above,
tax-equivalent yields are calculated assuming investments are 100%
federally and state tax-free.
Yield information may be useful in reviewing the fund's performance and in
providing a basis for comparison with other investment alternatives.
However, the fund's yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. The fund's yields are
calculated on the same basis as other money market funds, as required by
applicable regulations. When comparing investment alternatives, investors
should also note the quality and maturity of the portfolio securities of
respective investment companies they have chosen to consider.
Investors should recognize that in periods of declining interest rates the
fund's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates the fund's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to the fund from the continuous sale of its shares will likely be
invested in instruments producing lower yields than the balance of the
fund's holdings, thereby reducing the fund's current yield. In periods of
rising interest rates, the opposite can be expected to occur.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of the 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
returns are calculated by determining the growth or decline in value of a
hypothetical historical investment in the 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 entire 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 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 the 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, the fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price, if any) 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.
HISTORICAL RESULTS. The following table shows the fund's yield,
tax-equivalent yield, average annual total returns, and cumulative total
returns for the periods ended November 30, 1993:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
7-day Tax-Equivalent Average Annual Total Returns Cumulative Total Returns
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Yield Yield One Year Life of Fund* One Year Life of Fund*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1.89 % 3.18 % 1.94 % 4.36 %** 1.94 % 27.62 %**
</TABLE>
* The fund commenced operations on March 17, 1988.
** If FMR had not reimbursed certain fund expenses during these periods,
the total returns would have been lower.
The tax-equivalent yield is based a 1994 combined effective
federal and state income tax bracket of 40.48 %. None of
the fund's income for the period was subject to state taxes.
The following table shows the income and capital elements of the fund's
total return from March 17, 1988 (commencement of operations) to November
30, 1993. The table compares the fund's return to the record of the
Standard & Poor's 500 Composite Stock Price Index (S&P500), 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&P500 and DJIA
comparisons are provided to show how the 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 fund invests in money market instruments, common stocks
represent a different type of investment from the fund. Common stocks
generally offer greater potential growth than the fund, 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 investment such as the fund. The S&P500 and DJIA are based
on the prices of unmanaged groups of stocks and, unlike the fund's returns,
their returns do not include the effect of paying brokerage commissions,
spreads, or other costs of investing.
During the period March 17, 1988 (commencement of operations) to November
30, 1993, a hypothetical $10,000 investment in the fund would have grown to
$ 12,762 , assuming all dividends were reinvested. This was a period
of widely fluctuating interest rates 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.
FIDELITY NEW JERSEY TAX-FREE MONEY MARKET INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of
Period Period Initial Value of Cost
Ended Ended $10,000 Reinvested Reinvested Total of
November 30 Investment Dividends Capital Gains Value S&P5 DJIA Living**
00
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1993 $10,000 $ 2,762 $ 0 $ 12,762 $ 20,746 $ 21,649 $ 12,515
1992 $10,000 $2,519 $0 $12,519 $18,843 $18, 868 $12,189
1991 $10,000 $2,178 $0 $12,178 $15,901 $16,045 $11,828
1990 $10,000 $1,676 $0 $11,676 $13,212 $13,718 $11,485
1989 $10,000 $1,045 $0 $11,045 $13,689 $13,951 $10,807
1988* $10,000 $ 376 $0 $10,376 $10,462 $10,504 $10,326
</TABLE>
* From March 17, 1988 (commencement of operations).
**From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on March 17,
1988, 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 $12, 762 . If distributions had not
been reinvested, the amount of distributions earned from the fund over time
would have been smaller, and the cash payments (dividends) for the period
would have amounted to $2 ,444 . The fund did not distribute any
capital gains during the period. If FMR had not reimbursed certain fund
expenses, the fund's returns would have been lower.
The 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, the fund's performance may be compared to mutual fund
performance indices prepared by Lipper.
From time to time, the fund's performance also may 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.
The 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 325 tax-free money market
funds.
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.
The fund may present its fund number, QuotronTM number, and CUSIP number,
and discuss or quote its current portfolio manager.
As of November 30, 1993, FMR advised 40 tax-free funds with a total
value of over $ 25 billion. According to the Investment Company
Institute, assets in tax-exempt money market funds increased from $ 23.8
billion in 198 4 to approximately $ 96.5 billion at the end
of 199 2 . The 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
The 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.
FSC normally determines the fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier
if trading on the NYSE is restricted or as permitted by the SEC. To the
extent that portfolio securities are traded in other markets on days when
the NYSE is closed, the 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 the fund's NAV. Shareholders receiving securities or other
property on redemption may realize either a gain or loss for tax purposes,
and will incur any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the 1940
Act), the fund is required to give shareholders at least 60 days' notice
prior to terminating or modifying its exchange privilege. Under the Rule,
the 60-day notification requirement may be waived if (i) the only effect of
a modification would be to reduce or eliminate an administrative fee,
redemption fee, or deferred sales charge ordinarily payable at the time of
an exchange, or (ii) the fund suspends the redemption of the shares to be
exchanged as permitted under the 1940 Act or the rules and regulations
thereunder, or the fund to be acquired suspends the sale of its shares
because it is unable to invest amounts effectively in accordance with its
investment objective and policies.
In the Prospectus, the fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. To the extent that the fund's income is derived from federally
tax-exempt interest, the daily dividends declared by the fund are also
federally tax-exempt. The fund will send each shareholder a notice in
January describing the tax status of dividends and capital gains (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 fund purchases municipal obligations based on opinions of bond counsel
regarding the federal income tax status of the obligations. These opinions
will generally 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" bonds (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 purposes.
Interest from private activity securities will be considered tax-exempt for
purposes of the fund's policies of investing so that at least 80% of its
income is free from federal income tax. Interest from private activity
securities is a tax preference item for the purposes of determining whether
a taxpayer is subject to the AMT and the amount of AMT tax 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.
It is the current position of the Staff of the Securities and Exchange
Commission 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 the fund's income distributions would have to be
exempt from the AMT as well as exempt from 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
exceed 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 fund
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 the shareholder receives a
long-term capital gain distribution on shares of the 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 fund are taxable to
shareholders as dividends, not as capital gains. Distributions from the
short-term capital gains do not qualify for the dividends-received
deduction. Dividend distributions resulting from a recharacterization of
gain from the sales of bonds purchased at a discount after April 30,
1993 are not considered income for purposes of the fund's policy of
investing so that at least 80% of its income is free from federal income
tax . The 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 per share.
TAX STATUS OF THE FUND. The 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, the 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. The fund is treated as a
separate entity from the other portfolios of Fidelity Court Street Trust II
for tax purposes.
As of November 30, 1993, the fund had a capital loss carryover aggregating
approximately $ 16,000 available to offset future capital gains, to
the extent provided by regulations, of which $2,600, $200, and $13,200
will expire on November 30, 1997, 1999, and 2001, respectively.
NEW JERSEY TAX CONSEQUENCES. A New Jersey statute requires that at least
80% of the aggregate principal amount of the fund's total investments be
invested in state-tax-free securities.
The fund's exempt-interest dividends, to the extent attributable to
interest from securities the interest on which is exempt from New Jersey
Gross Income Tax, also will be exempt from the New Jersey Gross Income Tax.
Distributions attributable to gains from securities the interest on which
is exempt from New Jersey Gross Income Tax also will be exempt from the New
Jersey Gross Income Tax. An investment in or distributions from investment
interest and capital gains of the fund including exempt-interest dividends,
will be subject to the New Jersey Corporation Business (Franchise) Tax and
the New Jersey Corporation Income Tax.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax considerations generally affecting the fund and its shareholders,
and no attempt has been made to discuss individual tax consequences.
Investors should consult their tax advisers to determine whether the fund
is suitable to their particular tax situation.
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. FTX, 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 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. Trustees and officers elected or
appointed to Fidelity Court Street Trust prior to the fund's conversion
from a series of that trust to a series of Fidelity Court Street Trust II
served Fidelity Court Street 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 Investment Company Act of 1940) by virtue of their affiliation with
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 FTX 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 FTX 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 of 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 (1987), 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 if the Board of Trustees of the Greenwich 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), and 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 FTX (1990).
Under a retirement program which 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 fund, 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 November 30, 1993, the Trustee's and officers of the fund owned in
the aggregate less than 1% of the fund's outstanding shares.
MANAGEMENT CONTRACT
The fund employs FMR to furnish investment advisory and other services.
Under its management contract with the fund, FMR acts as investment adviser
and, subject to the supervision of the Board of Trustees, directs the
investments of the fund in accordance with its investment objective,
policies, and limitations. FMR also provides the fund with all necessary
office facilities and personnel for servicing the fund's investments, and
compensates all officers of the trust, all Trustees who are "interested
persons" of the trust or 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 fund. These services include providing facilities
for maintaining the fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with the fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining the fund's
records and the registration of the fund's shares under federal and state
law; developing management and shareholder services for the fund; 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, the fund pays all of its expenses, without limitation,
that are not assumed by those parties. The fund pays for typesetting,
printing, and mailing proxy material to shareholders, legal expenses, and
the fees of the custodian, auditor, and non-interested Trustees. Although
the fund's 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 the fund include interest, taxes,
brokerage commissions, the fund's proportionate share of insurance premiums
and Investment Company Institute dues, and the costs of registering shares
under federal and state securities laws. The fund is also liable for such
nonrecurring expenses as may arise, including costs of any litigation to
which the fund may be a party and any obligation it may have to indemnify
the trust's officers and Trustees with respect to litigation.
FMR is the fund's manager pursuant to a management contract dated February
28, 1992. The contract was approved by Fidelity Court Street Trust as sole
shareholder of the fund on February 28, 1992 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 December 11,
1991. Besides reflecting the fund's redomiciling, the February 28, 1992
contract is identical to the fund's prior management contract with FMR,
which was approved by shareholders of the fund on November 16, 1988.
For the services of FMR under the contract, the 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 fee rate schedule shown on the left of the
table on the next page . On the right, the effective fee rate schedule
shows the results of cumulatively applying the annualized rates at varying
asset levels. For example, the effective annual fee rate at $ 227
billion of group net assets -- their approximate level for November 1993 --
was . 1627 %, which is the weighted average of the respective fee
rates for each level of group net assets up to $ 227 billion.
GROUP FEE RATE SCHEDULE* EFFECTIVE ANNUAL FEE RATES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
AVERAGE
ANNUALIZED
GROUP
EFFECTIVE
GROUP
RATE NET
ANNUAL
ASSETS ASSETS FEE RATE
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
0 - $ 3 billion .370 0 % $ 0.5 billion .3700%
3 - 6 .340 0 25 .2664
6 - 9 .310 0 50 .2188
9 - 12 .280 0 75 .1986
12 - 15 .250 0 100 .1869
15 - 18 .220 0 125 .1793
18 - 21 .200 0 150 .1736
21 - 24 .190 0 175 .1695
24 - 30 .180 0 200 .1658
30 - 36 .175 0 225 .1629
36 - 42 .170 0 250 .1604
42 - 48 .165 0 275 .1583
48 - 66 .160 0 300 .1565
66 - 84 .155 0 325 .1548
84 - 120 .150 0 350 .1533
120 - 174 .145 0
174 - 228 .140 0
228 - 282 .1375
282 - 336 .1350
Over 336 .1325
</TABLE>
* The rates shown for average group assets in excess of $174 billion were
adopted by FMR on a voluntary basis November 1, 1993, pending shareholder
approval of a new management contract reflecting the extended schedule.
The extended schedule provides for lower management fees as total assets
under management increase.
The individual fund fee rate is .25%. Based on the average net assets of
the funds advised by FMR for November 1993, the annual management fee rate
for the fund would be calculated as follows:
GROUP FEE RATE INDIVIDUAL FUND
MANAGEMENT
FEE RATE FEE RATE
.1627 % + .25% = .4127 %
One-twelfth (1/12) of this annual management fee rate is then applied to
the fund's average net assets for the current month, giving a dollar amount
which is the fee for that month.
The schedule shown above (minus the breakpoints added November 1, 1993)
was voluntarily adopted by FMR on January 1, 1992 until shareholders could
meet to approve the amended management contract. Prior to January 1, 1992,
the fund's group fee rate was based on a schedule with breakpoints ending
at .150% for average group assets in excess of $84 billion. FMR had
voluntarily adopted the shorter schedule on August 1, 1988.
For fiscal 1993, 1992, and 1991, FMR received $ 1,488,405 ,
$1,523,230, and $1,757,611, respectively for its services as investment
adviser to the fund. These fees are equal to . 42 %, . 42 %, and
. 43 % of the fund's average net assets for those periods.
SUB-ADVISER. FMR has entered into a sub-advisory agreement with FTX
pursuant to which FTX has primary responsibility for providing portfolio
investment management services to the fund. Under the sub-advisory
agreement, FMR pays FTX a fee equal to 50% of the management fee payable to
FMR under its management contract with the fund (net of third party
payments described below). The fees paid to FTX are not reduced by any
voluntary or mandatory expense reimbursements that may be in effect from
time to time. For fiscal 1993, 1992 and 1991, FMR paid FTX total fees of
$ 706,997 , $733,256, and $864,588, respectively.
DISTRIBUTION AND SERVICE PLAN
The fund has adopted a distribution and service plan (the p lan)
under Rule 12b-1 of the Investment Company Act of 1940 (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 p lan to
allow the fund and FMR to incur certain expenses that might be considered
to constitute indirect payment by the fund of distribution expenses. Under
the p lan, if the payment by the 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 p lan.
The p lan specifically recognizes that FMR, either directly or
through FDC, may use its management fee revenues, past profits, or other
resources, without limitation, to pay promotional and administrative
expenses in connection with the offer and sale of shares of the fund. In
addition, the p lan provides that FMR may use its resources,
including its management fee revenues, to make payments to third parties
that provide assistance in selling the fund's shares or to third parties,
including banks, that render shareholder support services. For the fiscal
years ended 1993, 1992, and 1991, payments made by FMR to third parties
amounted to $ 74,411 , $56,719, and $28,435, respectively, for the
fund.
The fund's p lan has been approved by the Trustees. As required by
the Rule, the Trustees carefully considered all pertinent factors relating
to the implementation of the p lan prior to its approval, and have
determined that there is a reasonable likelihood that the p lan will
benefit the fund and its shareholders. In particular, the Trustees noted
that the p lan does not authorize payments by the fund other than
those made to FMR under its management contract with the fund. To the
extent that the p lan gives FMR and FDC greater flexibility in
connection with the distribution of shares of the fund, additional sales of
the fund's shares may result. Additionally, certain shareholder support
services may be provided more effectively under the p lan by local
entities with whom shareholders have other relationships. The p lan
was approved by Fidelity Court Street Trust on February 28, 1992, as the
then sole shareholder of the fund, pursuant to an Agreement and Plan of
Conversion approved by public shareholders of the fund on December 11,
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 fund
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 fund may execute portfolio
transactions with and purchase securities issued by depository institutions
that receive payments under the p lan. 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 the 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 fund.
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 per regular account with a
balance of $5,000 or more, $10.00 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 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 transaction charges of $20 and
$17.50, respectively, depending on the nature of services provided.
Prior to December 6, 1991, Shawmut Bank, N.A. (Shawmut), served as the
fund's custodian and transfer agent and also sub-contracted FSC to perform
the processing activities associated with providing transfer agent and
shareholder servicing functions for the fund. 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 years ended November 30, 1993, 1992, and 1991
were $ 625,080 , $ 604,901 , and $ 665,025 respectively.
United Missouri has an additional sub-contract with FSC, pursuant to which
FSC performs the calculations necessary to determine the fund's net asset
value per share and dividends and maintains the fund's accounting records.
The annual fee rates for these pricing and bookkeeping services are based
on the fund's average net assets, specifically, .0175% for the first $500
million of average net assets and .0075% for average net assets in excess
of $500 million. The fee is limited to a minimum of $20,000 and a maximum
of $750,000 per year.
Prior to December 6, 1991, 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 fund's average net assets and one pertaining the type and number of
transactions the fund made.
Pricing and bookkeeping fees, including reimbursement for out of pocket
expenses, paid to FSC for fiscal 1993, 1992, and 1991 were $ 75,109 ,
$ 83,135 , and $ 103,242 , respectively. The transfer agent fees
and charges and pricing and bookkeeping fees described above are paid to
FSC by United Missouri, which is entitled to reimbursement from the fund
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 fund shareholders
participating in the Fidelity Ultra Service Account program. FBSI directly
charges each Ultra Service Account client 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 fund shareholders participating in the
Fidelity Ultra Service Account program amounted to approximately
$ 65,737 for fiscal 1993.
The 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 the 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 TRUST
TRUST ORGANIZATION. Fidelity New Jersey Tax-Free Money Market Portfolio is
a fund of Fidelity Court Street Trust II (the trust), an open-end
management investment company organized as a Delaware business trust on
June 20, 1991. The fund acquired all of the assets of the Fidelity New
Jersey Tax-Free Money Market Portfolio, a series of Fidelity Court Street
Trust (a Massachusetts business trust) on February 28, 1992 pursuant to an
agreement approved by shareholders on December 11, 1991. Currently, there
are four funds of the trust: Fidelity Connecticut Municipal Money Market
Portfolio, Fidelity New Jersey Tax-Free Money Market Portfolio, Spartan
Florida Municipal Money Market Portfolio and Spartan Connecticut Municipal
Money Market Portfolio. The 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 name s
"Fidelity" and "Spartan" may be withdrawn.
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 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 trust and requires
that a disclaimer be given in each contract entered into or executed by the
trust or the 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, if they have
exercised reasonable care, shall not be personally liable to any person
other than the 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. Each fund's capital consists of shares of beneficial
interest. 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 trust Instrument, call meetings of the trust or fund for
any purpose related to the trust or fund, as the case may be, including, in
the case of a meeting of 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, or 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;
however, the Trustees may, without prior shareholder approval, change the
form of organization of the trust by merger, consolidation, or
incorporation. If not so terminated or reorganized, the trust and its funds
will continue indefinitely. Under the Trust Instrument, the Trustees may,
without shareholder vote, cause the trust to merge or consolidate into one
or more trusts, partnerships, or corporations, or cause the trust to be
incorporated under Delaware law, so long as the surviving entity is an
open-end management investment company that will succeed to or assume the
trust registration statement. The trust may also invest all of its assets
in another investment company, so long as 30 days advance notification,
currently required by state securities regulators, is provided to
shareholders of the fund.
CUSTODIAN. United Missouri N.A., 1010 Grand Avenue, Kansas City, MO 64110,
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 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. Coopers & Lybrand , 1999 Bryan Street, Dallas, Texas
serves as the trust's independent accountant. The auditor examines
financial statements for the fund and provides other audit, tax, and
related services.
FINANCIAL STATEMENTS
The fund's Annual Report for the fiscal year ended November 30, 1993 is a
separate report supplied with this Statement of Additional Information and
is incorporated herein by reference.
APPENDIX
The descriptions that follow are examples of eligible ratings for the fund.
The fund may, however, consider the ratings for other types of investments
and the ratings assigned by other rating organizations when determining the
eligibility of a particular investment.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S R ATINGS OF
S TATE AND M UNICIPAL N OTES:
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 differences between
short-term credit risk and long-term risk. Factors affecting the liquidity
of the borrower and short term cyclical elements are critical in short-term
ratings, while other facts 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.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S R ATINGS OF
S TATE AND M UNICIPAL N OTES:
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.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S M UNICIPAL
B OND R ATINGS:
AAA - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt 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 which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long term risks appear somewhat
larger than in Aaa securities.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S M UNICIPAL
B OND R ATINGS:
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.
Fidelity Court Street Trust II
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a)(1) Financial Statements for Fidelity Connecticut Municipal Money
Market Portfolio for the fiscal year ended November 30, 1993 are
incorporated herein by reference to the Statement of Additional Information
and are filed herein as Exhibit 24(a)(1).
(2) Financial Statements for Fidelity New Jersey Tax-Free Money Market
Portfolio for the fiscal year ended November 30, 1993 are incorporated
herein by reference to the Statement of Additional Information and are
filed herein as Exhibit 24(a)(2).
(3) Combined Financial Statements for Spartan Connecticut Municipal
Money Market Portfolio and Spartan Connecticut Municipal High Yield
Portfoliofor the fiscal year ended November 30, 1993 are incorporated
herein by reference to the Statement of Additional Information and are
filed herein as Exhibit 24(a)(3).
(4) Combined Financial Statements for Spartan Florida Municipal Money
Market Portfolio and Spartan Florida Municipal Income Portfolio for the
fiscal year ended November 30, 1993 are incorporated herein by reference to
the Statement of Additional Information and are filed herein as Exhibit
24(a)(4).
(b) Exhibits:
(1) Trust Instrument dated June 20, 1991 is incorporated by reference as
Exhibit 1(a) to the initial Registration Statement on Form N-1A.
(2) Bylaws of the Trust is incorporated by reference as Exhibit 2 to the
initial Registration State- ment Form N-1A.
(3) Not applicable.
(4) Not applicable.
(5)(a) Management Contract between Fidelity Court Street Trust II: Spartan
Florida Municipal Money Market Portfolio and Fidelity Management &
Research Company, dated July 16, 1993, is filed herein as Exhibit 5(a).
(b) Management Contract between Fidelity Court Street Trust II:
Fidelity New Jersey Tax-Free Money Market Portfolio and Fidelity Management
& Research Company dated February 28, 1992, is incorporated herein by
reference to Exhibit 5(a) to Post-Effective Amendment No. 2.
(c) Management Contract between Fidelity Court Street Trust II:
Fidelity Connecticut Municipal Money Market Portfolio and Fidelity
Management & Research Company, dated February 28, 1992, is incorporated
herein by reference to Exhibit 5(c) to Post-Effective Amendment No. 9.
(d) Management Contract between Fidelity Court Street Trust II:
Spartan Connecticut Municipal Money Market Portfolio and Fidelity
Management & Research Company dated February 28, 1992, is incorporated
herein by reference to Exhibit 5(c) to Post-Effective Amendment No. 2.
(e) Sub-Advisory Agreement between FMR Texas Inc. and Fidelity
Management & Research Company with respect to Spartan Florida Municipal
Money Market Portfolio, dated July 16, 1993, is filed herein as Exhibit
5(e).
(f) Sub-Advisory Agreement between FMR Texas Inc. and Fidelity
Management & Research Company with respect to Fidelity New Jersey
Tax-Free Money Market Portfolio dated February 28, 1992, is incorporated
herein by reference to Exhibit 5(d) to Post-Effective Amendment No. 2.
(g) Sub-Advisory Agreement between FMR Texas Inc. and Fidelity
Management & Research Company with respect to Fidelity Connecticut
Municipal Money Market Portfolio dated February 28, 1992, is incorporated
herein by reference to Exhibit 5(e) to Post-Effective Amendment No. 2.
(h) Sub-Advisory Agreement between FMR Texas Inc. and Fidelity
Management & Research Company with respect to Spartan Connecticut
Municipal Money Market Portfolio dated February 28, 1992, is incorporated
herein by reference to Exhibit 5(f) to Post-Effective Amendment No. 2.
(6)(a) Form of General Distribution Agreement between Fidelity Court
Street Trust II: Spartan Florida Municipal Money Market Portfolio and
Fidelity Distributors Corporation was filed as Exhibit 6(a) to
Post-Effective Amendment No. 4.
(b) General Distribution Agreement between Fidelity Court Street
Trust II: Fidelity New Jersey Tax-Free Money Market Portfolio and Fidelity
Distributors Corporation dated February 28, 1992, is incorporated herein by
reference to Exhibit 6(a) to Post-Effective Amendment No. 2.
(c) General Distribution Agreement between Fidelity Court Street
Trust II: Fidelity Connecticut Municipal Money Market Portfolio and
Fidelity Distributors Corporation, dated February 28, 1992, is incorporated
herein by reference to Exhibit 6(c) to Post-Effective Amendment No. 9.
(d) General Distribution Agreement between Fidelity Court Street
Trust II: Spartan Connecticut Municipal Money Market Portfolio and Fidelity
Distributors Corporation dated February 28, 1992, is incorporated herein by
reference to Exhibit 6(c) to Post-Effective Amendment No. 2.
(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 the initial Registration Statement on Form N-1A.
(8) Custodian Agreement dated October 17, 1991, between Registrant and
United Missouri Bank, N.A. is incorporated herein by reference to Exhibit 8
to Post-Effective Amendment No. 4.
(9)(a) Transfer Agent Agreement between Fidelity Court Street Trust II and
United Missouri Bank, N.A., dated February 28, 1992 is incorporated herein
by reference to Exhibit 9(a) to Post-Effective Amendment No. 5.
(b) Form of Appointment of Sub-Transfer Agent and Schedule A for
Fidelity Court Street Trust II: Spartan Florida Municipal Money Market
Portfolio was filed as Exhibit 9(b) to Post-Effective Amendment No. 4.
(c) Appointment of Sub-Transfer Agent and Schedule A for Fidelity
Court Street Trust II: Fidelity New Jersey Tax-Free Money Market Portfolio
is incorporated herein by reference to Exhibit 9(c) to Post-Effective
Amendment No. 5.
(d) Appointment of Sub-Transfer Agent and Schedule A for Fidelity
Court Street Trust II: Fidelity Connecticut Municipal Money Market
Portfolio is incorporated herein by reference to Exhibit 9(d) to
Post-Effective Amendment No. 5.
(e) Appointment of Sub-Transfer Agent and Schedule A for Fidelity
Court Street Trust II: Spartan Connecticut Municipal Money Market Portfolio
is incorporated herein by reference to Exhibit 9(e) to Post-Effective
Amendment No. 5.
(f) Service Agreement between Fidelity Court Street Trust II and
United Missouri Bank, N.A., dated February 28, 1992 is incorporated herein
by reference to Exhibit 9(f) to Post-Effective Amendment No. 5.
(g) Form of Appointment of Sub-Servicing Agent and Schedules B and C
for Fidelity Court Street Trust II: Spartan Florida Municipal Money Market
Portfolio was filed as Exhibit 9(f) to Post-Effective Amendment No. 4.
(h) Appointment of Sub-Servicing Agent and Schedules B and C for
Fidelity Court Street Trust II: Fidelity New Jersey Tax-Free Money Market
Portfolio is incorporated herein by reference to Exhibit 9(h) to
Post-Effective Amendment No. 5.
(i) Appointment of Sub-Servicing Agent and Schedules B and C for
Fidelity Court Street Trust II: Fidelity Connecticut Municipal Money Market
Portfolio is incorporated herein by reference to Exhibit 9(i) to
Post-Effective Amendment No. 5.
(j) Appointment of Sub-Servicing Agent and Schedules B and C for
Fidelity Court Street Trust II: Spartan Connecticut Municipal Money Market
Portfolio incorporated herein by reference to Exhibit 9(j) to
Post-Effective Amendment No. 5.
(10) Opinion of counsel is incorporated herein by reference as Exhibit 10
in the initial Registration Statement on Form N-1A.
(11) Consent of Coopers & Lybrand is filed herein as Exhibit 11.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15)(a) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Court Street Trust II: Spartan Florida Municipal Money Market Portfolio is
incorporated herein by reference to Exhibit 15(a) to Post-Effective
Amendment No. 4.
(b) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Court Street Trust II: Fidelity New Jersey Tax- Free Money Market
Portfolio is incorporated herein by reference to Exhibit 15(a) to
Post-Effective Amendment No. 2.
(c) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Court Street Trust II: Fidelity Connecticut Municipal Money Market
Portfolio is incorporated herein by reference to Exhibit 15(b) to
Post-Effective Amendment No. 2.
(d) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Court Street Trust II: Spartan Connecticut Municipal Money Market
Portfolio is incorporated herein by reference to Exhibit 15(c) to
Post-Effective Amendment No. 2.
(16) Schedule for computation of performance quotations is incorporated
herein by reference to Exhibit 16 to the initial Registration Statement on
Form N-1A.
(16)(b) An additional computation of a performance quotation, on behalf of
the Registrant, is incorporated herein by reference to Exhibit 16(b) to
Post-Effective Amendment No. 8.
Item 25. Persons Controlled by or Under Common Control with Registrant
The Registrant's Board of Trustees is the same as the Board of Trustees of
other funds managed by Fidelity Management & Research Company. In
addition, the officers of these funds are substantially identical.
Nonetheless, Registrant takes the position that it is not under common
control with these other funds since the power residing in the respective
boards and officers arises as the result of an official position with the
respective funds.
Item 26. Number of Holders of Securities
November 30, 1993
Title of Class: Shares of Beneficial Interest
Number of Record Holders
Name of Series
Fidelity New Jersey Tax-Free Money Market Portfolio 16,376
Fidelity Connecticut Municipal Money Market Portfolio 10,000
Spartan Connecticut Municipal Money Market Portfolio 1,568
Spartan Florida Municipal Money Market Portfolio 2,712
Item 27. Indemnification
Pursuant to Del. Code Ann. title 12 (sub section) 3817, a Delaware
business trust may provide in its governing instrument for the
indemnification of its officers and trustees from and against any and all
claims and demands whatsoever. Article X, Section 10.02 of the Declaration
of Trust states that the Registrant shall indemnify any present trustee or
officer to the fullest extent permitted by law against liability, and all
expenses reasonably incurred by him or her in connection with any claim,
action, suit or proceeding in which he or she is involved by virtue of his
or her service as a trustee, officer, or both, and against any amount
incurred in settlement thereof. Indemnification will not be provided to a
person adjudged by a court or other adjudicatory body to be liable to the
Registrant or its shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of his or her duties (collectively,
"disabling conduct"), or not to have acted in good faith in the reasonable
belief that his or her action was in the best interest of the Registrant.
In the event of a settlement, no indemnification may be provided unless
there has been a determination, as specified in the Declaration of Trust,
that the officer or trustee did not engage in disabling conduct.
Pursuant to Section 11 of the Distribution Agreement, the Registrant
agrees to indemnify and hold harmless the Distributor and each of its
directors and officers and each person, if any, who controls the
Distributor within the meaning of Section 15 of the 1933 Act against any
loss, liability, claim, damages or expense arising by reason of any person
acquiring any shares, based upon the ground that the registration
statement, Prospectus, Statement of Additional Information, shareholder
reports or other information filed or made public by the Registrant
included a materially misleading statement or omission. However, the
Registrant does not agree to indemnify the Distributor or hold it harmless
to the extent that the statement or omission was made in reliance upon, and
in conformity with, information furnished to the Registrant by or on behalf
of the Distributor. The Registrant does not agree to indemnify the parties
against any liability to which they would be subject by reason of their own
disabling conduct.
Pursuant to the agreement by which Fidelity Service Company (Service) is
appointed sub-transfer agent, the Transfer Agent agrees to indemnify
Service for its losses, claims, damages, liabilities and expenses to the
extent the Transfer Agent is entitled to and receives indemnification from
the Registrant for the same events. Under the Transfer Agency Agreement,
the Registrant agrees to indemnify and hold the Transfer Agent harmless
against any losses, claims, damages, liabilities, or expenses resulting
from:
(1) any claim, demand, action or suit brought by any person other than the
Registrant, which names the Transfer Agent and/or the Registrant as a party
and is not based on and does not result from the Transfer Agent's willful
misfeasance, bad faith, negligence or reckless disregard of its duties, and
arises out of or in connection with the Transfer Agent's performance under
the Transfer Agency Agreement; or
(2) any claim, demand, action or suit (except to the extent contributed to
by the Transfer Agent's willful misfeasance, bad faith, negligence or
reckless disregard of its duties) which results from the negligence of the
Registrant, or from the Transfer Agent's acting upon any instruction(s)
reasonably believed by it to have been executed or communicated by any
person duly authorized by the Registrant, or as a result of the Transfer
Agent's acting in reliance upon advice reasonably believed by the Transfer
Agent to have been given by counsel for the Registrant, or as a result of
the Transfer Agent's acting in reliance upon any instrument or stock
certificate reasonably believed by it to have been genuine and signed,
countersigned or executed by the proper person.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR 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 Danoff 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 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity
Service Co., 82 Devonshire Street, Boston, MA 02109, or the funds'
custodian United Missouri Bank, N.A., 1010 Grand Avenue, Kansas City, MO.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
Not Applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for the effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment No. 10 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Boston, and Commonwealth of Massachusetts, on the 6th day of
January 1993.
FIDELITY COURT STREET TRUST II
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 6, 1993
Edward C. Johnson 3d (Principal Executive Officer)
</TABLE>
/s/Gary L. French Treasurer January 6, 1993
Gary L. French
/s/J. Gary Burkhead Trustee January 6, 1993
J. Gary Burkhead
/s/Ralph F. Cox * Trustee January 6, 1993
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee January 6, 1993
Phyllis Burke Davis
/s/Richard J. Flynn * Trustee January 6, 1993
Richard J. Flynn
/s/E. Bradley Jones * Trustee January 6, 1993
E. Bradley Jones
/s/Donald J. Kirk * Trustee January 6, 1993
Donald J. Kirk
/s/Peter S. Lynch * Trustee January 6, 1993
Peter S. Lynch
/s/Edward H. Malone * Trustee January 6, 1993
Edward H. Malone
Marvin L. Mann_____ Trustee January 6, 1993
Marvin L. Mann
/s/Gerald C. McDonough* Trustee January 6, 1993
Gerald C. McDonough
/s/Thomas R. Williams * Trustee January 6, 1993
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>
Daily Money Fund Fidelity Institutional Tax-Exempt Cash Portfolios
Daily Tax-Exempt Money Fund Fidelity Institutional Investors Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust II
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Court Street Trust II Fidelity New York Municipal Trust II
Fidelity Hereford Street Trust Fidelity Phillips Street Trust
Fidelity Institutional Cash Portfolios Fidelity Union Street Trust II
</TABLE>
in addition to 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 any
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Pre-Effective Amendments or
Post-Effective Amendments to said Registration Statements on Form N-1A or
any successor thereto, any Registration Statements on Form N-14, and any
supplements or other instruments in connection therewith, and generally to
do all such things in my name and behalf in connection therewith as said
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>
Daily Money Fund Fidelity Institutional Tax-Exempt Cash Portfolios
Daily Tax-Exempt Money Fund Fidelity Institutional Investors Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust II
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Court Street Trust II Fidelity New York Municipal Trust II
Fidelity Hereford Street Trust Fidelity Phillips Street Trust
Fidelity Institutional Cash Portfolios Fidelity Union Street Trust II
</TABLE>
in addition to any other investment company for which Fidelity Management
& Research Company acts as investment adviser and for which the
undersigned individual serves as a Director, Trustee or General Partner
(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 Xupolos, each of them singly, my true and lawful
attorney-in-fact, with full power of substitution, and with full power to
each of them, to sign for me and my name in the appropriate capacities any
Registration Statements of the Funds on Form N-1A or any successor thereto,
any and all subsequent Pre-Effective Amendments or Post-Effective
Amendments to said Registration Statements on Form N-1A or any successor
thereto, any Registration Statements on Form N-14, and any supplements or
other instruments in connection therewith, and generally to do all such
things in my name and behalf in connection therewith as said
attorneys-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and Investment Company Act of
1940, and all related requirements of the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorney-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/Donald J. Kirk
Edward C. Johnson 3d Donald J. Kirk
/s/J. Gary Burkhead /s/Peter S. Lynch
J. Gary Burkhead Peter S. Lynch
/s/Ralph F. Cox /s/Marvin L. Mann
Ralph F. Cox Marvin L. Mann
/s/Phyllis Burke Davis /s/Edward H. Malone
Phyllis Burke Davis 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
EXHIBIT 24(A)(1)
FIDELITY
(Registered trademark)
CONNECTICUT
MUNICIPAL
MONEY MARKET
PORTFOLIO
ANNUAL REPORT
NOVEMBER 30, 1993
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 8 A summary of major shifts in the
fund's investments over the last six
months
and one year.
INVESTMENTS 9 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 13 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 17 Footnotes to the financial
statements.
REPORT OF INDEPENDENT 19 The auditor's opinion.
ACCOUNTANTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Once the new year begins, many people start reviewing their finances and
calculating their tax bills. No one wants to pay more taxes than they have
to. But a recent survey of 500 U.S. households, conducted by Fidelity and
Yankelovich Partners, showed that few people have taken steps to reduce
their taxes under the new legislation. Many were not even aware that the
new tax laws were retroactive to January 1993.
Whether or not you're someone whose tax bill will increase as a result of
these changes, it may make sense to consider ways to keep more of what you
earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in Federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider tax-free investments like municipal bonds and municipal
bond funds. Often these can provide higher after-tax yields than comparable
taxable investments. For example, if you're in the new 36% Federal income
tax bracket and invest $10,000 in a taxable investment yielding 7%, you'll
pay $252 in Federal taxes and receive $448 in income. That same $10,000
invested in a tax-free bond fund yielding 5.5% would allow you to keep $550
in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center.
Wishing you a prosperous new year,
Edward C. Johnson 3d, Chairman
PERFORMANCE: THE BOTTOM LINE
To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects the change in a fund's share price
over a given period and reinvestment of its dividends (or income). Yield
measures the income paid by a fund. Since a money market fund tries to
maintain a $1 share price, yield is an important measure of performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1993 PAST 1 LIFE OF
YEAR FUND
Fidelity Connecticut Municipal
Money Market Portfolio 1.87% 17.58%
Consumer Price Index 2.68% 17.01%
Average Connecticut Tax-Free
Money Market Fund 1.89% 16.37%
CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, one year or since the fund started on August 29, 1989. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, you would end up with $1,050. Comparing the fund's performance
to the consumer price index (CPI) helps show how your investment did
compared to inflation. To measure how the fund stacked up against its
peers, you can compare its return to the average Connecticut tax-free money
market fund's total return. This average currently reflects the performance
of ten Connecticut tax-free money market funds tracked by IBC/Donoghue.
(The periods covered by the CPI and IBC/Donoghue numbers are the closest
available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1993 PAST 1 LIFE OF
YEAR FUND
Fidelity Connecticut Municipal
Money Market Portfolio 1.87% 3.87%
Consumer Price Index 2.68% 3.76%
Average Connecticut Tax-Free
Money Market Fund 1.89% 3.63%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had achieved that return
by performing at a constant rate each year.
YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
11/30/92 2/28/93 5/31/93 8/31/93 11/30/93
Fidelity Connecticut Municipa 1.99% 1.64% 2.18% 1.83% 1.90%
l
Money Market Portfolio
Average Connecticut 1.99% 1.76% 2.11% 1.87% 1.81%
Tax-Free
Money Market Fund
Fidelity Connecticut Municip 3.25% 2.68% 3.56% 2.99% 3.10%
al
Money Market Portfolio -
Tax-equivalent
Average All Taxable 2.77% 2.71% 2.64% 2.64% 2.69%
Money Market Fund
</TABLE>
Row: 1, Col: 1, Value: 1.99
Row: 1, Col: 2, Value: 1.99
Row: 2, Col: 1, Value: 1.64
Row: 2, Col: 2, Value: 1.76
Row: 3, Col: 1, Value: 2.18
Row: 3, Col: 2, Value: 2.11
Row: 4, Col: 1, Value: 1.83
Row: 4, Col: 2, Value: 1.87
Row: 5, Col: 1, Value: 1.9
Row: 5, Col: 2, Value: 1.81
3% -
2% -
1% -
0%
Fidelity Connecticut
Municipal Money
Market Portfolio
Average Connecticut
Tax-Free Money
Market Fund
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods, expressed as annual
percentage rates. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The chart above shows the fund's
current seven-day yield at quarterly intervals over the past year. You can
compare these yields to those of the average Connecticut tax-free money
market fund. Or you can look at the fund's tax-equivalent yields.
Tax-equivalent yields are based on a combined effective 1993 federal and
Connecticut state income tax rate of 38.88% and reflect that a portion of
the fund's yields for the periods were subject to state taxes. The
tax-equivalent figures are useful in seeing how the fund stacked up against
the average taxable money market fund as tracked by IBC/Donoghue. A portion
of the fund's income may be subject to the federal alternative minimum tax.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS REFLECT PAST RESULTS RATHER
THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield -- the yield you'd have to
earn on a similar taxable
investment to match the
tax-free yield -- makes the
comparison more meaningful.
Keep in mind that the U.S.
government neither insures nor
guarantees a money market
fund. In fact, there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Scott Orr, Portfolio
Manager of Connecticut Municipal Money Market Portfolio
Q. SCOTT, CAN YOU BRING US UP TO DATE ON THE SHORT-TERM SIDE OF THE MARKET
AS OF THE END OF NOVEMBER?
A. During the past 12 months, the market was uneventful. The Federal
Reserve kept the federal funds rate at 3% - where it's been since September
1992 - and that held short-term interest rates low. Fears of inflation
bounced rates up slightly last May and again in late October. But neither
episode caused me to significantly change the way I managed the fund. Over
the last six months, supply and demand factors had a bigger influence on
how I positioned the fund than changes in interest rates.
Q. CAN YOU EXPLAIN?
A. Sure. Because Connecticut is so small, there is often a low supply of
short-term municipal debt in the state, especially issues with six-month to
one-year maturities. That was the case through the summer, which forced me
to keep the fund's average maturity on the short side. All of that changed
in September. Suddenly, several state agencies and authorities - the
Connecticut Housing Finance Authority among others - flooded the
muni-market with new issues. The new supply was more than Connecticut funds
like ours could snatch up, so issuers boosted yields to attract national
buyers. I responded by selling some of the fund's lower-yielding issues to
make room for this longer-maturity, higher-yielding debt. The move was
reflected in the fund's average maturity, which increased from 41 days at
the end of August to 80 days by the end of September. I've kept that figure
on the long side ever since by holding on to the higher-yielding issues.
Q. HOW DID THE FUND'S PERFORMANCE LOOK NEXT TO THE COMPETITION?
A. Total return for the year ended November 30, 1993 was 1.87%, compared to
1.89% for the average Connecticut tax-free money market fund tracked by
IBC/Donoghue. The fund's seven-day yield on November 30 was 1.90%, compared
to 2.18% at the end of May. The latest yield translates into a
tax-equivalent yield of 3.10% for investors in the 38.88% combined
effective 1993 federal and state tax bracket.
Q. WHAT INFLUENCED PERFORMANCE?
A. One relatively new investing strategy that helped performance was the
use of simple derivatives. They combine a long-term municipal bond with a
"put," or an option to sell to a third party, typically a bank. The end
product is an investment that pays a short-term variable interest rate and
can be put on short notice, usually seven days. It acts much like any other
variable rate demand note the fund might own, with one key difference: the
yield is slightly higher, a fact that has more to do with the added
complexity of these instruments than added risk. Derivatives made up about
11% of the fund's investments at the end of November.
Q. HOW DO YOU SEE THE NEXT SIX MONTHS SHAPING UP?
A. Rates in the tax-free market generally have been drifting lower, even
during upturns in the taxable market. In an environment of falling rates,
I'll probably hold onto my longer-term issues to take advantage of their
higher yields. In general, I think rates will remain in a narrow range over
the next six months. The economy is showing signs of strength. I wouldn't
be surprised if, at some point, the Fed decides there's a real threat of
rising inflation and moves to tighten the money supply by raising the
federal funds rate. As the likelihood of tightening increases, I might
position the fund to take advantage of rising rates by shortening its
average maturity.
FUND FACTS
GOAL: tax-free income and
stability by investing in
high-quality, short-term,
Connecticut municipal
securities
START DATE: August 29, 1989
SIZE: as of November 30,
1993, over $288 million
MANAGER: Scott Orr, since
October 1993; manager
Spartan Connecticut Municipal
Money Market, since October
1993; Fidelity Michigan
Municipal Money Market,
Fidelity New Jersey Tax-Free
Money Market and Spartan
New Jersey Money Market,
since January 1992
(checkmark)
WORDS TO KNOW
COMMERCIAL PAPER: A security
issued by a municipality to
finance capital or operating
needs.
FEDERAL FUNDS RATE: The interest
rate banks charge each other
for overnight loans.
MATURITY: The time remaining
before an issuer is scheduled
to repay the principal amount
on a debt security. When the
fund's average maturity -
weighted by dollar amount -
is short, the fund manager is
anticipating a rise in interest
rates. When the average
maturity is long, the manager
is expecting rates to fall.
When the average maturity is
neutral, the manager wants
the flexibility to respond to
rising rates, while still
capturing a portion of the
higher yields available from
issues with longer maturities.
MUNICIPAL NOTE: A security
issued in advance of future
tax or other revenues and
payable from those specific
sources.
TENDER BOND: A variable-rate,
long-term security that gives
the bond holder the option to
redeem the bond at face
value before maturity.
VARIABLE RATE DEMAND NOTE
(VRDN): A tender bond that
can be redeemed on short
notice, typically one or seven
days. VRDNs are useful in
managing the fund's average
maturity and liquidity.
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
11/30/93 5/31/93 11/30/92
0 - 30 65 67 53
31 - 90 9 22 19
91 - 180 5 5 8
181 - 397 21 6 20
WEIGHTED AVERAGE MATURITY
11/30/93 5/31/93 11/30/92
Fidelity Connecticut
Municipal Money Market
Portfolio 76 days 41 days 79 days
Average Connecticut
Tax-Free Money
Market Fund* 76 days 44 days 61 days
ASSET ALLOCATION
AS OF 11/30/93 AS OF 5/31/93
Row: 1, Col: 1, Value: 53.0
Row: 1, Col: 2, Value: 18.0
Row: 1, Col: 3, Value: 23.0
Row: 1, Col: 4, Value: 5.0
Row: 1, Col: 5, Value: 2.0
Row: 1, Col: 1, Value: 48.0
Row: 1, Col: 2, Value: 21.0
Row: 1, Col: 3, Value: 3.0
Row: 1, Col: 4, Value: 20.0
Row: 1, Col: 5, Value: 8.0
Variable rate
demand notes
(VRDNs) 53%
Commercial
paper 18%
Tender bonds 23%
Municipal
notes 5%
Other 1%
Variable rate
demand notes
(VRDNs) 48%
Commercial
paper 21%
Tender bonds 3%
Municipal
notes 20%
Other 8%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(Registered trademark)
INVESTMENTS NOVEMBER 30, 1993
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CONNECTICUT - 79.6%
Connecticut Dev. Auth. Arpt. Facs. Rev. (Arpt. Hotel Bradley
Assoc. Ltd. Partnership Proj.) 2.25%, LOC Daiwa
Bank, VRDN $ 2,000,000 $ 2,000,000 207907AK
Connecticut Dev. Auth. Hlth. Care Rev. (Corp. for Independent
Living Proj.), VRDN:
Series 1990, 2.25%, LOC Cr. Commercial de France 8,700,000 8,700,000
207913AP
Series 1993 A, 2.25%, LOC Daiwa Bank 5,300,000 5,300,000 207913BK
Connecticut Dev. Auth. Ind. Dev. Rev., VRDN: (b)
(Cap. Dist Energy Ctr. Proj.):
(Lindenmaier Precision Co. Ohaus Proj) Series 1988,
2.45%, LOC Morgan Guaranty 8,000,000 8,000,000 207914AH
Series 1986, 2.55%, LOC Canadian Imperial
Bank of Commerce 8,600,000 8,600,000 207727DS
Series 1988, 2.55%, LOC Canadian Imperial
Bank of Commerce 200,000 200,000 207914AA
Connecticut Dev. Auth. Poll. Cont. Rev. (Light & Power Co.
Proj. 1993), VRDN: (b)
Series A, 2.15%, LOC Deutsche Bank AG 13,200,000 13,200,000 207728BA
Series B, 2.20%, LOC Union Bank of Switzerland 13,100,000 13,100,000
207728BB
Connecticut Dev. Auth. Solid Waste Disp. Facs. Rev., VRDN: (b)
(Exeter Energy Proj.):
Series 1989 A, 2.30%, LOC Sanwa Bank 3,000,000 3,000,000 207910AW
Series 1989 B, 2.30%, LOC Sanwa Bank 9,300,000 9,300,000 207910AX
Series 1989 C, 2.30%, LOC Sanwa Bank 1,300,000 1,300,000 207910AY
(Rand-Whitney Containerboard):
2.30%, LOC Chase Manhattan Bank 6,700,000 6,700,000 207910BQ
Connecticut Dev. Auth. (Shelton Inn Proj.) Series 1986,
2.90%, LOC Bank of Tokyo, VRDN (b) 6,000,000 6,000,000 207727DN
Connecticut Gen. Oblig. Bond:
Series 1991 A, 6% 12/15/93 700,000 700,918 207726C4
Series 1993 B, 2.65%, (Liquidity Enhancement
Bankers Trust) (c) 5,800,000 5,800,000 20772EGE
Series 1993 B, 7.0% 3/15/94 1,500,000 1,517,837 2077264J
Connecticut Gen. Oblig. Ctfs. of Prtn., Series PA1,
2.50%, (Liquidity Enhancement Merrill Lynch) (c) 5,000,000 5,000,000
20772EBG
Connecticut Gen. Oblig. Tender Option Bonds Series Mgt. 17A,
2.40%, (Liquidity Enhancement Morgan Guaranty) (c) 500,000 500,000
2077265D
Connecticut Health & Edl. Facs. Auth. Rev.:
(Charlotte Hungerford Hosp.) Series B, 2.30%,
LOC Mitsubishi Bank Ltd., VRDN 600,000 600,000 207742GT
(Kent School) Series A, 2.20%, LOC
Barclays Bank PLC, VRDN 5,600,000 5,600,000 207742JF
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CONNECTICUT - CONTINUED
Connecticut Health & Edl. Facs. Auth. Rev. - continued
(Windham Commty. Mem. Hosp.) Series B, 2.35% 12/14/93,
LOC Banque Paribas, VT $ 5,000,000 $ 5,000,000 207994SS
(Yale University), VT:
Series L:
2.45% 12/9/93 1,000,000 1,000,000 207994RV
2.60% 2/8/94 3,550,000 3,550,000 207994SN
2.55% 2/17/94 1,000,000 1,000,000 207994SQ
Series M:
2.50% 12/13/93 2,900,000 2,900,000 207994RG
2.50% 2/8/94 4,300,000 4,300,000 207994SR
Series N, 2.55% 2/17/94 2,100,000 2,100,000 207994SP
Series O:
2.45% 12/8/93 2,900,000 2,900,000 207994RY
2.50% 12/13/93 4,700,000 4,700,000 207994RH
2.60% 2/16/94 5,300,000 5,300,000 207994SG
Connecticut Hsg. Fin. Auth. (Hsg. Mtg. Fin. Prog.):
Series 1989 D, VT: (b)
2.60% 12/8/93 585,000 585,000 207995FX
2.50% 12/10/93 2,645,000 2,645,000 207995FU
2.45% 12/14/93 1,880,000 1,880,000 207995FV
2.60% 2/9/94 7,000,000 7,000,000 207995GA
Series 1992 D-2, 2.75% 5/16/94, MT 7,975,000 7,975,000 2077454L
Series 1993 H-1, 2.80% 11/15/94, MT 13,200,000 13,200,000 207746BK
Series 1993 H-2, 2.90% 11/15/94, MT (b) 8,900,000 8,900,000 207746BL
Connecticut Second Lien Spl. Tax Oblig. Bonds
(Transport Infrastructure) Series 1, 2.45%,
LOC Industrial Bank of Japan, VRDN 12,500,000 12,500,000 207757HF
Connecticut Special Assessment Unemployment Rev.:
Series 1993 B, 2.25%, LOC Ind. Bank of Japan, VRDN 1,000,000 1,000,000
207756AR
Series 1993 C, 3% 7/1/94, (FGIC Insured), MT 24,555,000 24,582,592
207756AS
Connecticut Tender Option Bonds:
Series A, 2.70%, (Liquidity Enhancement Sumitomo Bank) (c) 3,000,000
3,000,000 207756AU
Series BT 89, 2.60%, (Liquidity Enhancement Banker's Trust) (c)
3,400,000 3,400,000 2077265F
Hartford Redev. Auth. (Underwood Towers Proj.)
(FSA Insured) (Liquidity Enhancement Sumitomo Trust &
Banking), 2.45%, VRDN 1,400,000 1,400,000 416461AY
New Haven Starter Sportswear, Series 1986, 2.60%,
LOC Nat'l. Westminster Bank, VRDN (b) 3,100,000 3,100,000 645032AD
229,036,347
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
FLORIDA - 2.2%
Dade County Ind. Dev. Rev. (Montenay-Dade Ltd. Proj.)
Series 1990 A, 2.40%, LOC Banque Paribas, VRDN (b) $ 3,900,000 $ 3,900,000
233561AB
Indian Trace Community Dev. Dist. (Broward Co. Basin I
Wtr. Mgmt.), 3.10% 12/1/93, LOC Tokai Bank, VT 2,500,000 2,500,000
227994JQ
6,400,000
NEW YORK - 1.9%
New York City Ind. Dev. Agcy. Ind. Dev. Rev. (Nippon
Cargo Airlines Co.) Series 1992, 2.45%, LOC Ind.
Bank of Japan, VRDN (b) 2,500,000 2,500,000 649705FV
New York City Ind. Dev. Auth. Ind. Dev. Rev. (Japan
Airlines Co. Proj.) Series 1991, 2.10%, LOC Morgan
Guaranty Trust, VRDN (b) 2,800,000 2,800,000 649705GT
5,300,000
PUERTO RICO - 14.4%
Puerto Rico Commonwealth TRAN Series A, 3% 7/29/94 13,500,000 13,523,001
745144VX
Puerto Rico Hwy. and Trans. Rev., Series 1993 X, 2%,
LOC Union Bank of Switzerland, VRDN 9,000,000 9,000,000 745181LA
Puerto Rico Ind. Med. Higher Ed. & Envir. Cont. Fac. Fin.
Auth. (Inter-America Univ.), Series 1988, 2.60%,
LOC Bank of Tokyo, VT 5,500,000 5,500,000 745993JM
Puerto Rico Variable Rate Trust Certificates 2.175%,
(Liquidity Enhancement Bankers Trust) (c) 13,280,000 13,280,000
99299DAA
41,303,001
SOUTH CAROLINA - 0.2%
South Carolina Jobs Econ. Dev. Auth. Rev. (Wellman Inc. Proj.)
Series 1992, 2.30%, LOC Wachovia Bank, VRDN (b) 500,000 500,000
837031DA
VIRGINIA - 1.0%
Richmond Ind. Dev. Auth. (I) Rev. (Cogentrix Richmond Inc. Proj.)
Series 1990 A, 2.35%, LOC Banque Paribas, VRDN (b) 700,000 700,000
765415KE
Richmond Ind. Dev. Auth. (III) Rev. (Cogentrix Richmond Inc. Proj.)
Series 1991 B, 2.35%, LOC Banque Paribas, VRDN (b) 2,300,000 2,300,000
765415LV
3,000,000
WYOMING - 0.7%
Sublette County Poll. Cont. Rev. (Exxon Corp.)
Series 1987 A, 2.15%, VRDN (b) 2,100,000 2,100,000 864283AB
TOTAL INVESTMENTS - 100% $ 287,639,348
Total Cost for Income Tax Purposes $ 287,639,348
SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
FRDN - Floating Rate Demand Notes
MT - Mandatory Tender
OT - Optional Tender
RAN - Revenue Anticipation Notes
TAN - Tax Anticipation Notes
TRAN - Tax & Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
VT - Variable Tender
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
(c) Provides evidence of ownership in an underlying pool of municipal
bonds.
CAPITAL LOSS CARRYFORWARDS
At November 30, 1993, the fund had a capital loss carryforward of
approximately $10,700 of which $1,400, $400, and $8,900 will expire on
November 30, 1999, 2000, and 2001, respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
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NOVEMBER 30, 1993
79.ASSETS 80. 81.
82.Investment in securities, at value (Note 1) - 83. $ 287,639,348
See accompanying schedule
84.Cash 85. 257,566
86.Receivable for investments sold 87. 200,069
88.Interest receivable 89. 988,638
90. 91.TOTAL ASSETS 92. 289,085,621
93.LIABILITIES 94. 95.
96.Share transactions in process $ 298,007 97.
98.Dividends payable 45,962 99.
100.Accrued management fee 98,639 101.
102.Other payables and accrued expenses 76,595 103.
104. 105.TOTAL LIABILITIES 106. 519,203
107.108.NET ASSETS 109. $ 288,566,418
110.Net Assets consist of: 111. 112.
113.Paid in capital 114. $ 288,577,086
115.Accumulated net realized gain (loss) on 116. (10,668)
investments
117.118.NET ASSETS, for 288,577,086 shares 119. $ 288,566,418
outstanding
120.121.NET ASSET VALUE, offering price and 122. $1.00
redemption price per share ($288,566,418 (divided by)
288,577,086 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED NOVEMBER 30, 1993
123.124.INTEREST INCOME 125. $ 7,425,705
126.EXPENSES 127. 128.
129.Management fee (Note 2) $ 1,250,120 130.
131.Transfer agent, accounting and custodian fees and 537,501 132.
expenses (Note 2)
133.Non-interested trustees' compensation 4,633 134.
135.Registration fees 119 136.
137.Audit 18,109 138.
139.Legal 6,379 140.
141.Miscellaneous 4,613 142.
143. 144.TOTAL EXPENSES 145. 1,821,474
146.147.NET INTEREST INCOME 148. 5,604,231
149.150.NET REALIZED GAIN (LOSS) ON INVESTMENTS 151. (8,977)
(NOTE 1)
152.153.NET INCREASE IN NET ASSETS RESULTING FROM 154. $ 5,595,254
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED NOVEMBER 30,
1993 1992
155.INCREASE (DECREASE) IN NET ASSETS
156.Operations $ 5,604,231 $ 10,487,346
Net interest income
157. Net realized gain (loss) on investments (8,977) (360)
158. Increase (decrease) in net unrealized gain from - (2,387)
accretion of market discount
159. 5,595,254 10,484,599
160.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING
FROM OPERATIONS
161.Dividends to shareholders from net interest income (5,604,231) (10,487,346)
162.Share transactions at net asset value of $1.00 per 559,818,327 474,293,211
share
Proceeds from sales of shares
163. Reinvestment of dividends from net interest 5,341,588 9,994,062
income
164. Cost of shares redeemed (608,493,596) (570,712,655)
165. (43,333,681) (86,425,382)
Net increase (decrease) in net assets and shares
resulting from share transactions
166. (43,342,658) (86,428,129)
167.TOTAL INCREASE (DECREASE) IN NET ASSETS
168.NET ASSETS 169. 170.
171. Beginning of period 331,909,076 418,337,205
172. End of period $ 288,566,418 $ 331,909,076
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
173. YEARS ENDED NOVEMBER 30, AUGUST 29, 198
9
(COMMENCEME
NT
OF OPERATIONS) T
O
NOVEMBER 30,
174. 1993 1992 1991 1990 1989
175.SELECTED PER-SHARE D
ATA
176.Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of period
177.Income from Investme .019 .027 .044 .056 .016
nt
Operations
Net interest income
178. Dividends from net int (.019) (.027) (.044) (.056) (.016)
erest
income
179.Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
end of period
180.TOTAL RETURN (dagger) 1.87% 2.74% 4.54% 5.77% 1.60%
181.RATIOS AND SUPPLEMENTAL DATA
182.Net assets, end of peri $ 288,566 $ 331,909 $ 418,337 $ 376,031 $ 80,808
od
(in millions)
183.Ratio of expenses to a .61% .43% .07% .23% -
verage
net assets
184.Ratio of expenses to a .61% .59% .59% .63% 1.24%*
verage
net assets before expens
e
reductions
185.Ratio of net interest inc 1.87% 2.76% 4.45% 5.59% 6.35%*
ome to
average net assets
</TABLE>
* ANNUALIZED
(dagger) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
NOTES TO FINANCIAL STATEMENTS
for the period ended November 30, 1993
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Connecticut Municipal Money Market Portfolio (the fund) is a fund
of Fidelity Court Street Trust II (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the Investment
Company Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Delaware business trust. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. Accretion
of market discount represents unrealized gain until realized at the time of
a security disposition or maturity.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates ranging from
.15% to .37% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .25%.
For the period, the management fee was equivalent to an annual rate of .42%
of average net assets.
On December 12, 1991, the Board of Trustees approved a new group fee rate
schedule with rates ranging from .14% to .37%. Effective January 1, 1992,
FMR has voluntarily agreed to implement this new group fee rate schedule as
it results in the same or a lower management fee.
SUB-ADVISER FEE. As the fund's investment sub-adviser, FMR Texas Inc., a
wholly owned subsidiary of FMR, receives a fee from FMR of 50% of the
management fee payable to FMR. The fee is paid prior to any voluntary
expense reimbursements which may be in effect, and after reducing the fee
for any payments by FMR pursuant to the fund's Distribution and Service
Plan.
2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the Act, FMR or the
fund's distributor, Fidelity Distributors Corporation (FDC), an affiliate
of FMR, may use their resources to pay administrative and promotional
expenses related to the sale of the fund's shares. Subject to the approval
of the Board of Trustees, the Plan also authorizes payments to third
parties that assist in the sale of the fund's shares or render shareholder
support services. FMR or FDC has informed the fund that payments made to
third parties under the Plan amounted to $16,197 for the period.
TRANSFER AGENT AND ACCOUNTING FEES. United Missouri Bank, N.A. (the Bank)
is the custodian and transfer and shareholder servicing agent for the fund.
The Bank has entered into sub-contracts with Fidelity Service Co. (FSC), an
affiliate of FMR, under which FSC performs the activities associated with
the fund's transfer and shareholder servicing agent and accounting
functions. The fund pays transfer agent fees based on the type, size,
number of accounts and number of transactions made by shareholders. FSC
pays for typesetting, printing and mailing of all shareholder reports,
except proxy statements. The accounting fee is based on the level of
average net assets for the month plus out-of-pocket expenses. For the
period, FSC received transfer agent and accounting fees amounting to
$448,621 and $61,606, respectively.
Shareholders participating in the Fidelity Ultra Service Account(Registered
trademark) Program (the Program) pay a $5.00 monthly fee to Fidelity
Brokerage Services, Inc. (FBSI), an affiliate of FMR, for performing
services associated with the Program. For the period, fees paid to FBSI by
shareholders participating in the Program amounted to $24,265.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
Fidelity Court Street Trust II:
Fidelity Connecticut Municipal
Money Market Portfolio:
We have audited the accompanying statement of assets and liabilities of
Fidelity Court Street Trust II: Municipal Money Market Portfolio including
the schedule of portfolio investments, as of November 30, 1993, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended,
and the financial highlights for each of the four years in the period then
ended and the period August 29, 1989 (commencement of operations) to
November 30, 1989. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of November 30, 1993, by correspondence with the
custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Court Street Trust II: Municipal Money Market Portfolio as of
November 30, 1993, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the four years in the
period then ended and the period August 29, 1989 (commencement of
operations) to November 30, 1989, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND
Dallas, Texas
December 21, 1993
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Thomas D. Maher, Assistant
Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
United Missouri Bank, N.A.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO
FIDELITY'S TAX-FREE
MONEY MARKET FUNDS
California Tax-Free Money Market
Connecticut Municipal Money Market
Massachusetts Tax-Free Money Market
Michigan Municipal Money Market
New Jersey Tax-Free Money Market
New York Tax-Free Money Market
Ohio Municipal Money Market
Spartan(Registered trademark) California Municipal
Money Market
Spartan Connecticut Municipal
Money Market
Spartan Florida Municipal Money Market
Spartan Massachusetts Municipal
Money Market
Spartan Municipal Money Fund
Spartan New Jersey Municipal
Money Market
Spartan New York Municipal
Money Market
Spartan Pennsylvania Municipal
Money Market
Tax-Exempt Money Market
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0111
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
EXHIBIT 24(A)(3)
FIDELITY
(Registered trademark)
CONNECTICUT
MUNICIPAL
PORTFOLIOS
ANNUAL REPORT
NOVEMBER 30, 1993
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.
SPARTAN CONNECTICUT MUNICIPAL HIGH YIELD PORTFOLIO
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the last six
months
and one year.
INVESTMENTS 11 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 19 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO
PERFORMANCE 23 How the fund has done over time.
FUND TALK 25 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 27 A summary of major shifts in the
fund's investments over the last six
months
and one year.
INVESTMENTS 28 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 32 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 36 Footnotes to the financial
statements.
REPORT OF INDEPENDENT 39 The auditor's opinion.
ACCOUNTANTS
</TABLE>
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Once the new year begins, many people start reviewing their finances and
calculating their tax bills. No one wants to pay more taxes than they have
to. But a recent survey of 500 U.S. households, conducted by Fidelity and
Yankelovich Partners, showed that few people have taken steps to reduce
their taxes under the new legislation. Many were not even aware that the
new tax laws were retroactive to January 1993.
Whether or not you're someone whose tax bill will increase as a result of
these changes, it may make sense to consider ways to keep more of what you
earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in Federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider tax-free investments like municipal bonds and municipal
bond funds. Often these can provide higher after-tax yields than comparable
taxable investments. For example, if you're in the new 36% Federal income
tax bracket and invest $10,000 in a taxable investment yielding 7%, you'll
pay $252 in Federal taxes and receive $448 in income. That same $10,000
invested in a tax-free bond fund yielding 5.5% would allow you to keep $550
in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center.
Wishing you a prosperous new year,
Edward C. Johnson 3d, Chairman
SPARTAN CONNECTICUT MUNICIPAL HIGH YIELD PORTFOLIO
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells bonds
that have grown in value), and the effect of the $5 account closeout fee.
You can also look at the fund's income.
CUMULATIVE TOTAL RETURNS
YEARS ENDED NOVEMBER 30, 1993 PAST 1 PAST 5 LIFE
YEAR YEARS OF FUND
Spartan Connecticut Municipal
High Yield Portfolio 11.81% 58.33% 75.52%
Lehman Brothers Municipal Bond Index 11.09% 61.12% n/a
Average Connecticut Tax-exempt
Municipal Bond Fund 12.08% 57.20% n/a
Consumer Price Index 2.68% 21.20% n/a
CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, one year, five years, or since the fund started on October 29,
1987. For example, if you invested $1,000 in a fund that had a 5% return
over the past year, you would end up with $1,050. You can compare these
figures to the performance of the Lehman Brothers Municipal Bond index - a
broad gauge of the municipal bond market. To measure how the fund stacked
up against its peers, you can look at the average Connecticut tax-exempt
municipal bond fund, which reflects the performance of 12 Connecticut
municipal bond funds tracked by Lipper Analytical Services. Both benchmarks
include reinvested dividends and capital gains, if any. Comparing the
fund's performance to the consumer price index helps show how your fund did
compared to inflation.
AVERAGE ANNUAL TOTAL RETURNS
YEARS ENDED NOVEMBER 30, 1993 PAST 1 PAST 5 LIFE
YEAR YEARS OF FUND
Spartan Connecticut Municipal
High Yield Portfolio 11.81% 9.63% 9.67%
Lehman Brothers Municipal Bond Index 11.09% 10.01% n/a
Average Connecticut Tax-exempt
Municipal Bond Fund 12.08% 9.47% n/a
Consumer Price Index 2.68% 3.92% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
Spartan CT Hi LB Muni
10/31/87 10000.00 10000.00
11/30/87 10121.14 10261.10
12/31/87 10253.38 10409.99
01/31/88 10621.32 10780.79
02/29/88 10727.51 10894.75
03/31/88 10415.77 10767.82
04/30/88 10463.24 10849.66
05/31/88 10515.59 10818.30
06/30/88 10713.45 10976.57
07/31/88 10766.94 11048.14
08/31/88 10821.12 11057.86
09/30/88 11033.66 11258.01
10/31/88 11228.48 11456.71
11/30/88 11123.75 11351.77
12/31/88 11289.83 11467.90
01/31/89 11442.62 11705.06
02/28/89 11333.30 11571.50
03/31/89 11345.51 11543.84
04/30/89 11654.63 11817.90
05/31/89 11899.34 12063.35
06/30/89 12098.25 12227.17
07/31/89 12229.61 12393.59
08/31/89 12100.69 12272.25
09/30/89 12064.54 12235.44
10/31/89 12207.62 12384.71
11/30/89 12387.76 12601.44
12/31/89 12467.79 12704.77
01/31/90 12357.27 12645.06
02/28/90 12469.60 12757.60
03/31/90 12491.35 12761.43
04/30/90 12296.36 12669.55
05/31/90 12602.21 12945.74
06/30/90 12730.25 13059.66
07/31/90 12919.65 13251.64
08/31/90 12687.36 13059.49
09/30/90 12769.38 13067.33
10/31/90 12962.06 13303.85
11/30/90 13241.66 13571.25
12/31/90 13302.08 13630.97
01/31/91 13449.70 13813.62
02/28/91 13534.39 13933.80
03/31/91 13556.04 13939.37
04/30/91 13728.33 14124.77
05/31/91 13850.06 14250.48
06/30/91 13743.00 14236.23
07/31/91 13906.13 14409.91
08/31/91 14057.21 14600.12
09/30/91 14183.28 14789.92
10/31/91 14323.10 14923.03
11/30/91 14357.59 14964.82
12/31/91 14709.44 15286.56
01/31/92 14731.79 15321.72
02/29/92 14739.08 15326.32
03/31/92 14671.72 15332.45
04/30/92 14749.26 15468.90
05/31/92 14951.26 15651.44
06/30/92 15245.81 15914.38
07/31/92 15720.88 16391.81
08/31/92 15498.37 16231.17
09/30/92 15604.48 16336.68
10/31/92 15338.53 16176.58
11/30/92 15752.70 16466.14
12/31/92 15918.26 16634.09
01/31/93 16155.62 16827.05
02/28/93 16812.50 17436.19
03/31/93 16583.73 17251.36
04/30/93 16736.58 17425.60
05/31/93 16834.45 17523.19
06/30/93 17132.67 17815.82
07/31/93 17158.03 17838.98
08/31/93 17547.21 18210.03
09/30/93 17760.00 18417.63
10/31/93 17769.50 18452.62
11/30/93 17613.40 18290.24
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan
Connecticut Municipal High Yield Portfolio on October 31, 1987, shortly
after the fund started. As the chart shows, by November 30, 1993, the value
of your investment would have grown to $17,613 - a 76.13% increase on your
initial investment. This assumes you still own the fund on November 30, and
therefore does not include the effect of the $5 account closeout fee. For
comparison, look at how the Lehman Brothers Municipal Bond index did over
the same period. With dividends reinvested, the same $10,000 would have
grown to $18,290 - a 82.90% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, move in the
opposite direction of interest
rates. In turn, the share price,
return, and yield of a fund
that invests in bonds will vary.
That means if you sell your
shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
INCOME
YEARS ENDED NOVEMBER 30, 1993 1992 1991 1990 1989
Income return 6.29% 6.59% 6.65% 6.71% 7.19%
Capital gain returns 0.00% 0.00% 0.38% 0.19% 0.00%
Change in share price 5.52% 3.12% 1.39% -0.01% 4.16%
Total return 11.81% 9.71% 8.42% 6.89% 11.35%
Income returns, capital gain returns, and changes in share price are all
part of a bond fund's total return. An income return reflects the dividends
paid by the fund. A capital gain return reflects the amount paid by the
fund to shareholders based on the profits realized from selling bonds that
have grown in value. The returns assume the dividends or gains are
reinvested. Changes in the fund's share price include changes in the prices
of the bonds owned by the fund. Change in share price and total return
figures include the effect of the $5 account closeout fee on an average
size account.
DIVIDENDS AND YIELD
PERIODS ENDED NOVEMBER 30, 1993 PAST 30 PAST 6 PAST 1
DAYS MONTHS YEAR
Dividends per share n/a 33.62(cents) 67.96(cents)
Annualized dividend rate n/a 5.64% 5.81%
Annualized yield 5.12% n/a n/a
Tax-equivalent yield 8.38% n/a n/a
Dividends per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $11.89 over
the past six months and $11.70 over the past year, you can compare the
fund's income over these two periods. The 30-day annualized yield is a
standard formula for all funds based on the yields of the bonds in the
fund, averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It also
helps you compare funds from different companies on an equal basis. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the fund's tax-free yield, if you're in the 38.88%
combined federal and state tax bracket.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Generally, interest rates fell during
the year ended November 30, 1993.
As a result, bond prices rose and
most fixed-income investors -
including those in tax-free bonds -
enjoyed attractive returns. The
period began amid expectations of
higher interest rates to come. This
was based on signs that the
economic recovery was finally taking
hold, as well as uncertainty over the
spending plans of the
president-elect. But as President
Clinton promised to tackle the deficit
and fight inflation, the bond market
signaled its approval. The yield on
the benchmark 30-year Treasury
bond dipped below 6% in September
and reached an historic low of 5.79%
in mid-October. By the end of the
period, as inflation fears returned, the
30-year bond was yielding 6.30%.
Two factors affected tax-free bonds
specifically: On the positive side,
higher federal taxes - discussed all
year and approved in August -
boosted demand. At the same time,
record new issuance kept supplies
high, which somewhat dampened
prices. Overall during the period,
tax-free bonds performed well
compared to other fixed-income
investments. The Lehman Brothers
Municipal Bond Index - a broad
measure of the tax-free bond market
- - rose 11.09%. By comparison, the
Lehman Brothers Aggregate Bond
Index - which tracks
investment-grade taxable bonds -
rose only 10.89%, due in part to
relatively poor performance by
mortgage-backed securities.
An interview with Peter Allegrini,
Portfolio Manager of Spartan Connecticut Municipal High Yield Portfolio
Q. PETER, HOW DID THE FUND DO?
A. For the 12 months ended November 30, 1993, the fund had a total return
of 11.81%. That slightly lagged the average Connecticut tax-exempt
municipal bond fund which returned 12.08% over the same period, according
to Lipper Analytical Services.
Q. WHAT'S BEHIND THAT PERFORMANCE?
A. The fund had a slightly shorter duration than other Connecticut funds -
meaning it was less sensitive to interest rate declines than other funds.
As interest rates fell over the past year, funds with longer durations
tended to do better. This fund is one of the oldest Connecticut funds
available, and so, has some premium bonds that trade to their shorter call
dates, rather than to their stated maturities. I hold on to them because
they carry an interest rate above the current rate for similar bonds and
they help generate the fund's above-average income. But I've worked
steadily all year to lengthen the fund's duration to 8.3 years on November
30, 1993. Over the next six months to a year, I'll probably keep the fund's
duration between 8 and 8 1/2 years because I think long-term interest rates
could continue to fall.
Q. WHAT KINDS OF BONDS DID YOU BUY TO LENGTHEN THE FUND'S DURATION?
A. Mainly non-callable bonds and discount bonds. At the end of the period
the fund had about a 26% stake in non-callable bonds, which are bonds that
can't be prematurely returned to their issuers, and therefore have a longer
duration. That's because non-callables always trade to their maturity date,
rather than a shorter call date. When interest rates are falling and bond
prices are rising, non-callable bonds tend to do well. It's the same for
discount bonds, which trade at less than face value because they carry an
interest rate below the current rate for similar bonds.
Q. ARE YOU CONCERNED THAT FEDERAL HEALTH-CARE REFORM WILL HURT THE FUND'S
29% STAKE IN HEALTH-CARE BONDS?
A. Not particularly. More than half the fund's hospital bonds are insured,
which means that timely interest and principal payments are guaranteed.
Unlike other states, pressure to cut costs and be more competitive, isn't
really a factor for Connecticut hospitals. The state's health authorities
have strategically located hospitals in key areas around the state, so most
of those don't have much competition from other hospitals in the same area.
Also, Connecticut doesn't suffer from an oversupply of hospital beds like
other states do.
Q. AT THE END OF NOVEMBER, ABOUT 53% OF THE FUND WAS CONCENTRATED IN
INTERMEDIATE BONDS WITH MATURITIES OF FIVE TO 20 YEARS. WHAT MADE THEM SO
ATTRACTIVE?
A. During the past year the slope of the yield curve - or the difference in
yield between different maturity bonds - was fairly flat, meaning you
didn't get rewarded much for taking on the extra risk of buying a bond with
a 30-year maturity. For example, you could pick up about 95% of the yield
of a 30-year bond with a 15-year bond. I just didn't think that a 5%
difference in yield justified the added price risk of a 30-year bond.
Q. HOW DOES CONNECTICUT'S ECONOMY STACK UP AGAINST THE NATIONAL AVERAGE?
A. I think Connecticut's economy is in the process of bottoming and has
started to stabilize. The state's economy has a heavy emphasis on the
defense and insurance industries, which haven't done very well lately. Both
sectors have gone through huge restructurings, primarily by cutting jobs.
These changes are not cyclical, they're permanent and it may take a while
for all the effects of massive restructuring to work their way through. On
a brighter note, the state's fiscal situation is improving, primarily as a
result of the tax reform enacted in 1991. New tax laws have brought
stability to the amount of revenues collected and the state has balanced
its budget for two straight years.
Q. SO, ARE YOU OPTIMISTIC ABOUT MUNICIPAL BONDS FOR 1994?
A. I am. I expect interest rates to continue to stay low, despite some
recent jitters in the bond market. Most commodity prices and wages, two
early warning signals for higher inflation, have stabilized, with no real
signs of heading up. As long as inflation stays down, and economic growth
stays at a 2% to 3% level, interest rates and bond yields could continue to
stay low. Even so, it's probably realistic for investors to expect more
modest returns than we've seen during the past 12 months.
FUND FACTS
GOAL: to provide high current
income exempt from
Connecticut state and federal
income tax by investing
primarily in bonds rated Baa
or better
START DATE: October 29, 1987
SIZE: as of November 30,
1993, over $450.1 million
MANAGER: Peter Allegrini,
since October 1987; manager,
Fidelity Advisor High Income
Municipal Fund, since
November 1985; Fidelity
Michigan Tax-Free and Ohio
Tax-Free Funds, since
November 1985; formerly
manager, Fidelity Minnesota
Tax-Free Fund from
November 1985 - September
1993; formerly manager
Spartan Pennsylvania
Municipal Fund, August 1986
- - September 1993
(checkmark)
PETER ALLEGRINI'S INVESTMENT
STRATEGY:
"I try to find the best value for
the money, across a variety of
credit qualities. I manage the
fund for total rate of return,
not just high yield. The best
way to achieve a consistently
high rate of return is to keep
the fund invested for a
substantial amount of income
and to take advantage of
changes in interest rates,
which sometimes create
inefficient prices. In October,
for example, many investors
sold bonds because they
feared a surge in inflation.
That created an opportunity
to buy some attractive bonds
at cheaper prices."
(bullet) Because of recent tax hikes
at the federal level, some
Connecticut residents could
be subject to a tax-rate as
high as 42.32% in 1994.
(bullet) For the year ended
November 30, 1993, the
fund's share price fluctuated
between a high of $12.18 and
a low of $11.24 It closed the
fiscal year at $11.84.
DISTRIBUTIONS:
The Board of Trustees of
Fidelity Court Street Trust:
Spartan Connecticut
Municipal High Yield Portfolio
voted to pay on December
20, 1993 to shareholders of
record at the opening of
business on December 17,
1993, a distribution of $.33
derived from capital gains
realized from sales of
portfolio securities.
SPARTAN CONNECTICUT MUNICIPAL HIGH YIELD PORTFOLIO
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF NOVEMBER 30, 1993
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE SECTORS
6 MONTHS AGO
Health Care 28.9 32.4
General Obligation 24.1 18.4
Education 9.4 8.7
Special Tax 6.1 4.5
Transportation 6.0 n/a
AVERAGE YEARS TO MATURITY AS OF NOVEMBER 30, 1993
6 MONTHS AGO
Years 20.7 20.8
AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF NOVEMBER 30, 1993
6 MONTHS AGO
Years 8.3 6.8
DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, THE SHARE PRICE OF A FUND WITH A
FIVE-YEAR DURATION WILL FALL 5%.
QUALITY DIVERSIFICATION AS OF NOVEMBER 30, 1993
(MOODY'S RATINGS)
Aaa 28.5%
Aa, A 36.5%
Baa 24.9%
Ba or B 1.8%
Non-rated 8.3%
Row: 1, Col: 1, Value: 28.5
Row: 1, Col: 2, Value: 36.4
Row: 1, Col: 3, Value: 24.9
Row: 1, Col: 4, Value: 2.0
Row: 1, Col: 5, Value: 8.300000000000001
THIS CHART EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS.
SPARTAN CONNECTICUT MUNICIPAL HIGH YIELD PORTFOLIO
INVESTMENTS/NOVEMBER 30, 1993
(Showing Percentage of Total Value of Investments)
MUNICIPAL BONDS - 99.0%
MOODY'S
RATINGS PRINCIPAL VALUE
(UNAUDITED) (E) AMOUNT (NOTE 1)
CONNECTICUT - 87.0%
Berlin Unltd. Tax:
7.10% 6/15/04 A1 $ 100,000 $ 116,875 084851LB
7.20% 6/15/06 A1 135,000 159,469 084851LD
Branford Gen. Oblig. Unltd. Tax :
7% 6/15/08, (FGIC Insured) Aaa 500,000 586,875 105385ME
7% 6/15/09, (FGIC Insured) Aaa 500,000 587,500 105385MF
Bridgeport Gen. Oblig. Series B, 7.75% 11/15/10 Ba 3,235,000 3,578,719
108151SE
Bridgeport Unltd. Tax Series A:
7.20% 3/1/98 Ba 930,000 977,662 108151RE
7.40% 3/1/00 Ba 1,080,000 1,158,300 108151RJ
7.25% 6/1/02 Ba 565,000 608,081 108151QE
7.625% 1/15/09 Ba 1,500,000 1,631,250 108151RM
Brookfield Gen. Oblig. :
5.25% 7/15/10 Aa 200,000 199,500 112709JE
5.25% 7/15/11 Aa 200,000 198,500 112709JF
5.25% 7/15/12 Aa 200,000 198,250 112709JG
5.25% 7/15/13 Aa 190,000 188,337 112709JH
Canterbury Unltd. Tax:
7.20% 5/1/05 A 350,000 415,625 138105BL
7.20% 5/1/06 A 195,000 231,806 138105BM
Cheshire Unltd. Tax :
6.90% 2/15/06 A1 100,000 115,125 165375KS
6.90% 2/15/07 A1 100,000 114,875 165375KT
6.90% 2/15/08 A1 100,000 114,625 165375KU
Colchester Unltd. Tax 7.10% 12/15/04,
(MBIA Insured) Aaa 210,000 251,475 192792DZ
Connecticut Clean Wtr. Fund Rev.:
Series 1991, 7% 1/1/11 Aa 2,500,000 2,818,750 207915BC
5.875% 4/1/08 Aa 1,000,000 1,072,500 207915DS
6% 10/1/12 Aa 5,800,000 6,314,750 207915DU
Connecticut Dev. Auth. Health Care Rev.:
(Jerome Home Proj.) 8% 11/1/19 - 2,000,000 2,165,000 207913AC
(Masonic Charity Foundation) 6.50% 8/1/20,
(AMBAC Insured) Aaa 5,800,000 6,329,250 207913AM
Connecticut Dev. Auth. Health Care Rfdg.
(Duncaster, Inc. Proj.) 6.75% 9/1/15 Aa3 3,000,000 3,240,000 207901BD
Connecticut Dev. Auth. 1st. Mtg. Gross Rev.
(Health Care Proj.):
(Baptist Homes, Inc.):
8.75% 9/1/12 - 2,415,000 2,544,806 207902JK
9% 9/1/22 - 4,240,000 4,542,100 207902JL
(Inter-Church Residences, Inc.):
9.50% 5/1/13 - 1,200,000 1,312,500 207902HE
9.625% 4/1/21 - 3,500,000 3,850,000 207902HF
(Mary Wade Home, Inc. Proj.)
8.875%, 12/1/18 - 1,670,000 1,786,900 207902FD
MUNICIPAL BONDS - CONTINUED
MOODY'S
RATINGS PRINCIPAL VALUE
(UNAUDITED) (E) AMOUNT (NOTE 1)
CONNECTICUT - CONTINUED
Connecticut Dev. Auth. Parking Facs. Rev.
(Hartford Hosp.) 6.875% 10/1/06,
(MBIA Insured) (b) Aaa $ 5,195,000 $ 5,805,413 207903AN
Connecticut Dev. Auth. Poll. Cont. Rev. :
(Pfizer, Inc. Proj.) 6.55% 2/15/13 Aaa 4,000,000 4,470,000 207728AW
(United Illuminating Co. Proj.) 9.50% 6/1/16 BBB- 2,625,000 2,933,437
207728AS
Connecticut Dev. Auth. Solid Waste & Elec. Rev.
(Ogden Martin Sys. Bristol, Inc.) 10% 7/1/14 BBB+ 2,570,000 2,852,700
207908AR
Connecticut Dev. Auth. Rev. (Hartford Civic Ctr.)
Series A:
6% 11/15/07 A1 1,525,000 1,650,812 207910CE
6% 11/15/08 A1 3,050,000 3,290,187 207910CF
4.75% 11/15/13 A1 1,525,000 1,408,719 207910CL
Connecticut Dev. Auth. Wtr. Facs. Rev. Rfdg.
(Bridgeport Hydraulic Co. Proj.):
Series A, 6.05% 3/1/29, (MBIA Insured) (f) Aaa 2,000,000 2,070,000
207900AX
7.75% 8/1/19 A 4,000,000 4,095,000 207900AP
7.25% 6/1/20 A 1,000,000 1,110,000 207900AQ
Connecticut Gen. Oblig.:
Rfdg. Unltd. Tax, Series B, 5.50% 3/15/10 Aa 3,000,000 3,068,750
2077265A
(College Savings Plan):
Series A:
0% 5/15/07 Aa 2,250,000 1,102,500 207726VC
0% 5/15/10 Aa 7,980,000 3,341,625 207726VF
0% 5/15/11 Aa 3,350,000 1,319,062 207726B6
Series 1991 A, 0% 5/15/10 Aa 1,000,000 418,750 207726B5
Series B, 0% 11/1/06 Aa 2,800,000 1,449,000 207726TH
Unltd. Tax:
Series A, 0% 6/15/10 Aa 2,188,000 910,755 20772EAN
Series B:
0%, 12/15/10 Aa 2,428,000 986,375 207726E9
0%, 12/15/11 Aa 1,496,000 570,350 207726F2
(College Savings Plan - Cap. Appreciation) :
Series A:
0% 12/1/07 Aa 4,000,000 1,920,000 207726QP
0% 12/1/08 Aa 558,000 252,495 207726QR
Series B, 0% 11/15/10 Aa 4,460,000 1,817,450 207726XY
Unltd. Tax Series B, 0% 11/1/09 Aa 11,390,000 4,911,937 207726TL
Series A:
0% 7/1/98 Aa 780,000 642,525 207726RR
0% 7/1/03 Aa 4,000,000 2,510,000 207726RW
0% 7/1/04 Aa 4,514,000 2,674,545 207726RX
0% 7/1/05 Aa 750,000 415,312 207726RY
0% 7/1/07 Aa 2,430,000 1,190,700 207726SA
0% 7/1/08 Aa 4,690,000 2,169,125 207726SB
MUNICIPAL BONDS - CONTINUED
MOODY'S
RATINGS PRINCIPAL VALUE
(UNAUDITED) (E) AMOUNT (NOTE 1)
CONNECTICUT - CONTINUED
Connecticut Health & Edl. Facs. Auth. Rev. :
(Bridgeport Hosp.) Series A, 6.625% 7/1/18,
(MBIA Insured) Aaa $ 3,825,000 $ 4,236,187 207742UH
(Bristol Hosp.) Issue A:
7% 7/1/09 (MBIA Insured) Aaa 2,500,000 2,806,250 207742FD
7% 7/1/20 (MBIA Insured) Aaa 4,180,000 4,692,050 207742FE
(Cap. Asset Issue) Series C:
6.875% 1/1/10, (MBIA Insured) Aaa 1,000,000 1,111,250 207742JD
7% 1/1/20, (MBIA Insured) Aaa 3,730,000 4,205,575 207742JE
(Fairfield Univ.) Series F:
6.875% 7/1/09 A 3,540,000 3,916,125 207742CM
6.90% 7/1/14 A 1,000,000 1,107,500 207742CN
(Hartford Univ.):
Series C, 8% 7/1/18, (Pre-Refunded to
7/1/03 @ 100) (c) Aaa 7,310,000 8,982,162 2077414A
Series D, 6.80% 7/1/22 Baa 6,320,000 6,873,000 207742YA
(Lutheran Gen. Health Care Sys.) 7.375% 7/1/19 Aaa 3,195,000 3,861,956
207742BF
(New Britain Mem. Hosp.) Series A,
7.75% 7/1/22 BBB- 12,900,000 14,335,125 207742PD
(Norwalk Health Care, Inc.) Series A,
8.70% 7/1/22 - 6,600,000 6,946,500 207742TR
(Quinnipiac Coll.):
Rfdg. Series D:
6%, 7/1/13 BBB- 3,750,000 3,754,687 207742F3
6% 7/1/23 BBB- 3,975,000 3,975,000 207742F4
Series C, 7.75% 7/1/20 BBB- 1,000,000 1,197,500 207742GU
(St. Francis Hosp. & Med. Ctr.) 5% 7/1/13,
(FGIC Insured) Aaa 6,000,000 5,685,000 207742J9
(St. Mary's Hosp.)
Issued B:
7.60% 7/1/03 Baa 900,000 988,875 2077414V
7.80% 7/1/09 Baa 7,985,000 8,573,894 2077414S
Series C, 7.375% 7/1/20 Baa 7,420,000 7,902,300 207742GR
(St. Raphael Hosp.) Series H:
6.50% 7/1/11, (AMBAC Insured) Aaa 2,780,000 3,113,600 207742S5
6.50% 7/1/13, (AMBAC Insured) Aaa 3,125,000 3,523,437 207742S7
5.25% 7/1/14, (AMBAC Insured) Aaa 4,400,000 4,328,500 207742R3
(Sacred Heart Univ.) Series A, 6.85% 7/1/22,
LOC Fleet Nat'l. Bank A 1,000,000 1,086,250 207742YN
(Sharon Healthcare, Inc.) Series A:
8.75% 7/1/06 - 450,000 480,375 207742NE
9% 7/1/13 - 1,300,000 1,408,875 207742NF
9.20% 7/1/21 - 1,500,000 1,642,500 207742NG
(Taft School):
Series A, 7.40% 7/1/10 A 2,190,000 2,581,462 207742FU
Series A, 7.375% 7/1/20 A 1,700,000 1,999,625 207742FV
(The Griffin Hosp.) Series A, 6% 7/1/13 Baa1 5,000,000 4,925,000
207742C8
MUNICIPAL BONDS - CONTINUED
MOODY'S
RATINGS PRINCIPAL VALUE
(UNAUDITED) (E) AMOUNT (NOTE 1)
CONNECTICUT - CONTINUED
Connecticut Health & Edl. Facs. Auth. Rev. - continued
(Tolland County Health Care, Inc.) Series A:
8.75% 7/1/08 - $ 350,000 $ 373,625 207742NS
9% 7/1/13 - 1,000,000 1,083,750 207742NT
9.20% 7/1/21 - 3,600,000 3,942,000 207742NU
(Trinity College) Series C, 6% 7/1/22,
(MBIA Insured) Aaa 3,000,000 3,153,750 207742WU
(Waterbury Hosp.) Issue B, 7% 7/1/20,
(FSA Insured) Aaa 2,800,000 3,139,500 207742HS
(Yale-New Haven Hosp.):
Series D, 9% 7/1/12, (HIB Insured)
(Pre-Refunded to 7/1/95 @ 102) (c) Aaa 300,000 331,125 207741V7
Series F, 7.10% 7/1/25, (MBIA Insured) Aaa 12,000,000 13,575,000
207742HG
(Yale Univ.) 9.038% 5/15/30 (d) Aaa 7,000,000 7,472,500 207742WW
Connecticut Higher Ed. Supplemental Loan Auth. Rev.:
(Family Ed. Loan Prog.) Series A: (b)
6.80% 11/15/02 A 480,000 517,800 207743BW
7.20% 11/15/10 A 975,000 1,084,687 207743CE
Series A: (b)
7.375% 11/15/05 A 590,000 646,050 207743BH
7.50% 11/15/10 A 2,035,000 2,230,869 207743BN
Connecticut Hsg. Fin. Auth. (Hsg. Mtg. Fin. Prog.) :
Series A, 7.50% 11/15/09 (b) Aa 3,355,000 3,602,431 207745W3
Series B, 8.80% 11/15/02 Aa 3,000,000 3,243,750 207745K7
Sub-Series B-1, 7.55% 11/15/08 Aa 2,000,000 2,175,000 207745Y5
Sub-Series B-3:
7.70% 11/15/09 (b) Aa 2,950,000 3,193,375 207745Y3
7.755% 11/15/22 (b) Aa 2,515,000 2,706,769 207745Y6
Series C, 7.625% 11/15/17 Aa 545,000 562,031 207745A7
Sub-Series C-1, 6.60% 11/15/23 Aa 1,500,000 1,599,375 2077453X
Series E, 8.75% 11/15/18 Aa 4,455,000 4,694,456 207745A2
Connecticut Muni. Elec. Energy Co-op. Pwr. Supply
Sys. Rev. Series A, 5% 1/1/18, (MBIA Insured) Aaa 7,750,000 7,275,312
207752CS
Connecticut Resource Recovery Auth. Rev.
(American Refuse Fuel Co.) 8.10% 11/15/15 (b) A2 4,500,000 5,242,500
207755FA
Connecticut Spl. Tax. Oblig. Rev. (Trans. Infrastructure):
Rfdg. Series 1993 A, 5.375% 9/1/08 A1 6,705,000 6,780,431 207757NF
Series A:
Rfdg. 5.25% 9/1/07 A1 7,165,000 7,227,694 207757NE
7.125% 6/1/10 A1 3,550,000 4,206,750 207757HD
Series B:
0% 6/1/08 A1 3,500,000 1,601,250 207757DQ
6.10% 9/1/08 A1 2,500,000 2,706,250 207757LU
6.15% 9/1/09 A1 3,500,000 3,819,375 207757LV
6.50% 10/1/10 A1 3,250,000 3,664,375 207757KF
6.125% 9/1/12 A1 6,400,000 6,936,000 207757LY
6.50% 10/1/12 A1 2,500,000 2,818,750 207757KH
MUNICIPAL BONDS - CONTINUED
MOODY'S
RATINGS PRINCIPAL VALUE
(UNAUDITED) (E) AMOUNT (NOTE 1)
CONNECTICUT - CONTINUED
Danbury Impt. Unltd. Tax 6.70% 2/1/07 Aa $ 305,000 $ 350,750 235865PX
Eastern Resources Recovery Auth. Solid Waste Rev.
(Wheelabrator Lisbon Proj.)
Series A, 5.50% 1/1/15 (b) A 8,000,000 7,560,000 276318AL
Franklin Unltd. Tax :
7.30% 3/15/04 A 225,000 263,812 352550AQ
7.30% 3/15/05 A 225,000 265,781 352550AR
7.30% 3/15/06 A 225,000 268,312 352550AS
Hartford County Metropolitan Dist.:
Unltd. Tax (School Boards) 9.50% 6/1/03 Aa1 100,000 134,000 416488EE
6.20% 11/15/09 Aa1 250,000 274,687 416488GD
Manchester Hsg. Dev. Agcy. (Multi-Family Hsg.)
7.20% 12/1/18 - 1,565,000 1,611,950 562132AB
Mansfield Gen. Oblig. Unltd. Tax:
6.80% 6/15/03 A1 300,000 343,875 564198EQ
6.80% 6/15/04 A1 300,000 346,125 564198ER
6.80% 6/15/07 A1 300,000 345,750 564198EU
6.80% 6/15/08 A1 150,000 173,250 564198EV
Meriden Unltd. Tax 7% 10/1/07, (MBIA Insured) Aaa 500,000 591,875
589535QJ
Milford Gen. Oblig.:
Unltd. Tax:
6.70% 2/1/05 Aa 400,000 457,000 599377KT
6.70% 2/1/07 Aa 315,000 360,675 599377KV
6.70% 2/1/08 Aa 315,000 361,462 599377KW
5.20% 1/15/11 Aa 550,000 540,375 599377PW
5.20% 1/15/13 Aa 500,000 488,125 599377PY
Monteville Gen. Oblig.:
6.30% 3/1/10 Aa 405,000 451,069 615292GU
7% 3/15/13 Aa 220,000 266,200 615292DK
7% 3/15/14 Aa 220,000 267,575 615292DL
7% 3/15/15 Aa 210,000 256,725 615292DM
Naugatuck Unltd. Tax:
7.25% 9/1/04, (MBIA Insured) Aaa 215,000 258,269 639064LK
6.90% 6/15/07, (FGIC Insured) Aaa 485,000 568,663 639064KR
7.40% 9/1/07, (MBIA Insured) Aaa 370,000 452,325 639064LN
7.40% 9/1/08, (MBIA Insured) Aaa 370,000 452,325 639064LP
New Britain:
Unltd. Tax:
Rfdg. 6% 2/1/12, (MBIA Insured) Aaa 400,000 431,000 642713TN
7% 4/1/07, (MBIA Insured) Aaa 580,000 680,775 642713QZ
7% 4/1/08, (MBIA Insured) Aaa 580,000 682,950 642713RA
Series B, 6% 3/1/12, (MBIA Insured) Aaa 2,000,000 2,155,000 642713VF
New Haven Facs. Rev. (Easter Seal Goodwill
Rehabilitation Proj.) 8.875% 4/1/16 - 1,600,000 1,690,000 645032AJ
New Haven Gen. Oblig.:
Series A, 7.40% 3/1/12 Baa 1,000,000 1,096,250 645019K2
8.25% 8/15/01 Baa 3,280,000 3,829,400 645019H9
MUNICIPAL BONDS - CONTINUED
MOODY'S
RATINGS PRINCIPAL VALUE
(UNAUDITED) (E) AMOUNT (NOTE 1)
CONNECTICUT - CONTINUED
Newington Unltd. Tax:
6.50% 2/1/06 A1 $ 320,000 $ 359,600 651469KB
6.60% 2/1/07 A1 200,000 226,250 651469KC
North Haven Unltd. Tax 7% 10/1/08 Aa 375,000 439,219 659579LW
North Thompsonville Fire Dist.:
6.75% 6/1/07, (MBIA Insured) Aaa 180,000 205,200 66286HAR
6.75% 6/1/08, (MBIA Insured) Aaa 190,000 216,838 66286HAS
6.75% 6/1/09, (MBIA Insured) Aaa 200,000 233,250 66286HAT
6.75% 6/1/10, MBIA Insured) Aaa 215,000 252,088 66286HAU
6.75% 6/1/11, (MBIA Insured) Aaa 230,000 271,113 66286HAV
Norwalk Hsg. Auth. Mtg. Rev. (Monterey Village)
Series 1985 B, Section 8, 9% 11/1/99 BBB 180,000 188,550 668868BE
Oxford Gen. Oblig. Unltd. Tax 6.90% 2/1/07,
(FGIC Insured) Aaa 925,000 1,018,656 691412CM
Plainville Gen. Oblig.:
Unltd. Tax:
6.60% 8/15/09 A1 250,000 286,563 726770LF
6.60% 8/15/10 A1 250,000 286,563 726770LG
6.60% 8/15/11 A1 250,000 287,813 726770LH
6.60% 8/15/08 A1 250,000 282,500 726770LE
Stamford Gen. Oblig.:
Unltd. Tax:
6.60% 1/15/07 Aaa 295,000 338,144 852631WM
6.60% 1/15/08 Aaa 1,480,000 1,700,150 852631WN
6.60% 1/15/09 Aaa 1,000,000 1,166,250 852631WP
7% 6/15/08, (FGIC Insured) Aaa 500,000 586,875 862811MZ
6.125% 11/1/12 Aaa 1,050,000 1,134,000 852631XX
Thomaston Unltd. Tax:
6.50% 8/1/07 A 210,000 232,838 884510FG
6.50% 8/1/08 A 210,000 234,150 884510FH
6.50% 8/1/09 A 210,000 235,988 884510FJ
Vernon Unltd. Tax:
7.10% 10/15/07 A1 250,000 292,188 924427MA
7.10% 10/15/08 A1 250,000 292,813 924427MB
Voluntown Gen. Oblig. Unltd. Tax:
6.75% 10/1/03 A 210,000 238,875 928822BE
6.75% 10/1/04 A 210,000 239,138 928822BF
6.80% 10/1/06 A 210,000 243,075 928822BH
6.80% 10/1/07 A 210,000 240,187 928822BJ
6.80% 10/1/08 A 210,000 245,438 928822BK
6.80% 10/1/09 A 185,000 215,063 928822BL
West Haven Impt. Unltd. Tax 6.70% 2/15/04,
(MBIA Insured) Aaa 710,000 819,163 953140MZ
Winchester Gen. Oblig. Unltd. Tax:
7.10% 11/15/06 A1 125,000 147,031 972737EU
7.10% 11/15/08 A1 110,000 132,688 972737EW
MUNICIPAL BONDS - CONTINUED
MOODY'S
RATINGS PRINCIPAL VALUE
(UNAUDITED) (E) AMOUNT (NOTE 1)
CONNECTICUT - CONTINUED
Wolcott Gen. Oblig. Unltd. Tax:
7% 6/15/09, (FGIC Insured) Aaa $ 445,000 $ 525,100 977623HE
7% 6/15/10, (FGIC Insured) Aaa 440,000 522,500 977623HF
Woodstock Spl. Oblig. Rev. (Woodstock Academy):
7% 3/1/07, (AMBAC Insured) Aaa 725,000 830,125 980324AS
7% 3/1/08, (AMBAC Insured) Aaa 725,000 830,125 980324AT
384,886,456
PUERTO RICO - 11.7%
Puerto Rico Commonwealth Gen. Oblig. Rfdg.
Unltd. Tax, 5% 7/1/21 Baa1 5,000,000 4,587,500 745144KJ
Puerto Rico Commonwealth Hwy. & Trans. Auth. Rev.:
Rfdg.:
Series W, 5.50% 7/1/13 Baa1 14,250,000 14,054,063 745181BZ
Series X, 5.50% 7/1/13 Baa1 2,500,000 2,465,625 745181CA
Series X, 5.50% 7/1/15 Baa1 8,000,000 7,880,000 745181FD
Series W, 5.50% 7/1/15 Baa1 2,000,000 1,970,000 745181CB
Puerto Rico Elec. Pwr. Auth. Pwr. Rev. Resources
Auth. Pwr. Rev.:
Series P, 7% 7/1/21 Baa1 1,750,000 1,931,563 745268LL
Series R, 6.25% 7/1/17 Baa1 1,000,000 1,048,750 745268ND
Puerto Rico Pub. Bldgs. Auth. Rev. Rfdg.
Series L, 5.50% 7/1/21 Baa1 12,000,000 11,850,000 745235GJ
Puerto Rico Tel. Auth. Rev.:
6.85% 1/1/03, (AMBAC Insured) (d) Aaa 1,000,000 1,016,250 745297HT
6.95% 1/1/04, (AMBAC Insured) (d) Aaa 2,000,000 2,037,500 745297HX
8.03% 1/16/15, MBIA Insured) (d) Aaa 3,000,000 3,086,250 745297JT
51,927,501
U.S. VIRGIN ISLANDS - 0.3%
Virgin Islands Wtr. & Pwr. Auth. Elec. Sys.
Series A, 7.40% 7/1/11 - 1,000,000 1,138,750 927688BX
TOTAL MUNICIPAL BONDS (Cost $405,017,048) 437,952,707
MUNICIPAL NOTES (A) - 1.0%
CONNECTICUT - 1.0 %
Connecticut Spl. Assessment Unemployment Rev.
Series 1993 B, 2.25%, LOC Industrial Bank of
Japan, Mitsubishi Bank, VRDN VMIG 1 1,100,000 1,100,000 207756AR
Connecticut State Dev. Auth. (Light & Pwr. Co.
Proj. 1993) Series A, 2.15%, LOC
Deutsche Bank, VRDN VMIG 1 3,400,000 3,400,000 207728BA
TOTAL MUNICIPAL NOTES (Cost $4,500,000) 4,500,000
TOTAL INVESTMENTS - 100% (Cost $409,517,048) $ 442,452,707
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
(c)(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
(c)(c) Security collateralized by an amount sufficient to pay interest and
principal.
(c)(d) Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate multiplied by a specified
factor. If the floating rate is high enough, the coupon rate may be zero or
be a negative amount that is carried forward to reduce future interest
and/or principal payments. The price may be considerably more volatile than
the price of a comparable fixed rate security.
(c)(e) Standard & Poor's Corporation credit ratings are used in the
absence of a rating by Moody's Investors Service, Inc.
(c) Security purchased on a delayed delivery basis. (see Note 2 of Notes to
Financial Statements).
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investments for the period ended is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 60.1% AAA, AA, A 71.0%
Baa 18.1% BBB 9.3%
Ba 1.8% BB 1.8%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 8.3%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investments, is as follows:
Health Care 28.9%
General Obligation 24.1
Others
(individually less than 10%) 47.0
TOTAL 100.0%
INCOME TAX INFORMATION
At November 30, 1993, the aggregate cost of investment securities for
income tax purposes was $409,520,381. Net unrealized appreciation
(depreciation) aggregated $32,932,326, of which $34,625,973 related to
appreciated investment securities and $1,693,647 related to depreciated
investment securities.
The fund hereby designates $790,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
SPARTAN CONNECTICUT MUNICIPAL HIGH YIELD PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
NOVEMBER 30, 1993
3.ASSETS 4. 5.
6.Investment in securities, at value (cost $409,517,048) 7. $ 442,452,707
(Notes 1 and 2) - See accompanying schedule
8.Cash 9. 29,926
10.Receivable for investments sold 11. 21,250,455
12.Interest receivable 13. 7,629,876
14. 15.TOTAL ASSETS 16. 471,362,964
17.LIABILITIES 18. 19.
20.Payable for investments purchased 21. 22.
23. Regular delivery $ 17,369,532 24.
25. Delayed delivery (Note 2) 1,978,480 26.
27.Payable for fund shares redeemed 1,303,890 28.
29.Dividends payable 393,053 30.
31.Accrued management fee 205,385 32.
33. 34.TOTAL LIABILITIES 35. 21,250,340
36.37.NET ASSETS 38. $ 450,112,624
39.Net Assets consist of: 40. 41.
42.Paid in capital 43. $ 404,508,282
44.Accumulated undistributed net realized gain (loss) on 45. 12,668,683
investments
46.Net unrealized appreciation (depreciation) on 47. 32,935,659
investment securities
48.49.NET ASSETS, for 38,008,433 shares outstanding 50. $ 450,112,624
51.52.NET ASSET VALUE, offering price and redemption 53. $11.84
price per share ($450,112,624 (divided by) 38,008,433 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED NOVEMBER 30, 1993
54.INTEREST 55. $ 28,653,720
56.EXPENSES 57. 58.
59.Management fee (Note 4) 60.
$ 2,474,254
61.Non-interested trustees' compensation 62.
2,885
63. 64.TOTAL EXPENSES 65. 2,477,139
66.67.NET INVESTMENT INCOME 68. 26,176,581
69.REALIZED AND UNREALIZED GAIN (LOSS) ON 71. 72.
INVESTMENTS
(NOTES 1 AND 3)
70.Net realized gain (loss) on:
73. Investment securities 16,259,306 74.
75. Futures contracts (1,364,615) 14,894,691
76.Change in net unrealized appreciation (depreciation) 77. 78.
on:
79. Investment securities 8,977,415 80.
81. Futures contracts 756 8,978,171
82.83.NET GAIN (LOSS) 84. 23,872,862
85.86.NET INCREASE (DECREASE) IN NET ASSETS 87. $ 50,049,443
RESULTING FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED NOVEMBER 30,
1993 1992
88.INCREASE (DECREASE) IN NET ASSETS
89.Operations $ 26,176,581 $ 24,220,829
Net investment income
90. Net realized gain (loss) on investments 14,894,691 (511,592)
91. Change in net unrealized appreciation (depreciation) 8,978,171 12,190,553
on investments
92. 93.NET INCREASE (DECREASE) IN NET ASSETS 50,049,443 35,899,790
RESULTING FROM
OPERATIONS
94.Distributions to shareholders from net investment (26,176,581) (24,220,829)
income
95.Share transactions 109,111,103 136,138,818
Net proceeds from sales of shares
96. Reinvestment of distributions from net investment 21,413,874 20,385,554
income
97. Cost of shares redeemed (118,085,422) (101,311,107)
98. Redemption fees (Note 1) 52,698 74,383
99. Net increase (decrease) in net assets resulting 12,492,253 55,287,648
from
share transactions
100. 36,365,115 66,966,609
101.TOTAL INCREASE (DECREASE) IN NET ASSETS
102.NET ASSETS 103. 104.
105. Beginning of period 413,747,509 346,780,900
106. End of period $ 450,112,624 $ 413,747,509
107.OTHER INFORMATION 109. 110.
108.Shares
111. Sold 9,381,355 12,299,965
112. Issued in reinvestment of distributions from net 1,827,287 1,837,742
investment income
113. Redeemed (10,079,212) (9,137,279)
114. Net increase (decrease) 1,129,430 5,000,428
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
115. YEARS ENDED NOVEMBER 30,
116. 1993 1992 1991 1990 1989
117.SELECTED PER-SHARE DATA
118.Net asset value, $ 11.220 $ 10.880 $ 10.730 $ 10.730 $ 10.300
beginning of period
119.Income from .680 .689 .684 .687 .706
Investment
Operations
Net investment
income
120. Net realized and .619 .338 .188 .020 .430
unrealized gain (loss)
on investments
121. Total from 1.299 1.027 .872 .707 1.136
investment operations
122.Less Distributions (.680) (.689) (.684) (.687) (.706)
From net interest
income
123. From net realized - - (.040) (.020) -
gain on investments
124. Total distributions (.680) (.689) (.724) (.707) (.706)
125.Redemption fees .001 .002 .002 - -
added to paid in
capital
126.Net asset value, $ 11.840 $ 11.220 $ 10.880 $ 10.730 $ 10.730
end of period
127.TOTAL RETURN 11.81 9.72 8.43 6.89 11.36
% % % % %
128.RATIOS AND SUPPLEMENTAL DATA
129.Net assets, end of $ 450,113 $ 413,748 $ 346,781 $ 251,855 $ 180,385
period (000 omitted)
130.Ratio of expenses .55 .55 .55 .62 .54
to average net assets % % % % %
131.Ratio of expenses .55 .55 .60 .62 .73
to average net assets % % % % %
before expense
reductions
132.Ratio of net 5.81 6.21 6.34 6.51 6.62
interest income to % % % % %
average net assets
133.Portfolio turnover 45 11 6 18 8
rate % % % % %
</TABLE>
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO
PERFORMANCE: THE BOTTOM LINE
To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects the change in a fund's share price
over a given period, reinvestment of its dividends (or income), and the
effect of the fund's $5 account closeout fee. Yield measures the income
paid by a fund. Since a money market fund tries to maintain a $1 share
price, yield is an important measure of performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1993 PAST 1 LIFE OF
YEAR FUND
Spartan Connecticut Municipal
Money Market Portfolio 2.21% 8.48%
Consumer Price Index 2.68% 8.16%
Average Connecticut Tax-Free
Money Market Fund 1.89% 7.66%
CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - one
year, or since the fund started on March 4, 1991. For example, if you
invested $1,000 in a fund that had a 5% return over the past year, you
would end up with $1,050. Comparing the fund's performance to the consumer
price index (CPI) helps show how your investment did compared to inflation.
To measure how the fund stacked up against its peers, you can compare its
return to the average Connecticut tax-free money market fund's total
return. This average currently reflects the performance of ten Connecticut
tax-free money market funds tracked by IBC/Donoghue. (The periods covered
by the CPI and IBC/Donoghue numbers are the closest available match to
those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1993 PAST 1 LIFE OF
YEAR FUND
Spartan Connecticut Municipal
Money Market Portfolio 2.21% 3.01%
Consumer Price Index 2.68% 2.89%
Average Connecticut Tax-Free
Money Market Fund 1.89% 2.72%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had achieved that return
by performing at a constant rate each year.
YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
11/30/92 2/28/93 5/31/93 8/31/93 11/30/93
Spartan Connecticut Municip 2.48% 2.10% 2.56% 2.14% 1.96%
al
Money Market Portfolio
Average Connecticut 1.99% 1.76% 2.11% 1.87% 1.81%
Tax-Free
Money Market Fund
Spartan Connecticut 4.05% 3.43% 4.16% 3.49% 3.19%
Municipal Money Market
Portfolio - Tax-equivalent
Average All Taxable 2.77% 2.71% 2.64% 2.64% 2.69%
Money Market Fund
</TABLE>
Row: 1, Col: 1, Value: 2.48
Row: 1, Col: 2, Value: 1.99
Row: 2, Col: 1, Value: 2.1
Row: 2, Col: 2, Value: 1.76
Row: 3, Col: 1, Value: 2.56
Row: 3, Col: 2, Value: 2.11
Row: 4, Col: 1, Value: 2.14
Row: 4, Col: 2, Value: 1.87
Row: 5, Col: 1, Value: 1.96
Row: 5, Col: 2, Value: 1.81
Spartan Connecticu
t
Municipal Money
Market Portfolio
Average
Connecticut
Tax-Free Money
Market Fund
3% -
2% -
1% -
0%
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods, expressed as annual
percentage rates. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The chart above shows the fund's
current seven-day yield at quarterly intervals over the past year. This
would have been lower if Fidelity had not reimbursed certain fund expenses.
You can compare these yields to those of the average Connecticut tax-free
money market fund. Or you can look at the fund's tax-equivalent yields.
Tax-equivalent yields are based on a combined effective 1993 federal and
Connecticut state income tax rate of 38.88% and reflect that a portion of
the fund's yields for the periods were subject to state taxes. The
tax-equivalent figures are useful in seeing how the fund stacked up against
the average taxable money market fund as tracked by IBC/Donoghue. A portion
of the fund's income may be subject to the federal alternative minimum tax.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS REFLECT PAST RESULTS RATHER
THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield -- the yield you'd have to
earn on a similar taxable
investment to match the
tax-free yield -- makes the
comparison more meaningful.
Keep in mind that the U.S.
government neither insures nor
guarantees a money market
fund. In fact, there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Scott Orr, Portfolio
Manager of Spartan Connecticut Municipal Money Market Portfolio
Q. SCOTT, CAN YOU BRING US UP TO DATE ON THE SHORT-TERM SIDE OF THE MARKET
AS OF THE END OF NOVEMBER?
A. I can best describe the market over the past year as uneventful. The
Federal Reserve has kept the federal funds rate at 3% since September 1992,
and that held short-term interest rates low. Fears of inflation bounced
rates up slightly last May and again in late October. But neither episode
caused me to significantly change the way I managed the fund. Over the last
six months, supply and demand factors had a bigger influence on how I
positioned the fund than changes in interest rates.
Q. CAN YOU EXPLAIN?
A. Sure. Because Connecticut is so small, there is often a low supply of
short-term municipal debt in the state, especially issues with six-month to
one-year maturities. That was the case through the summer, which forced me
to keep the fund's average maturity on the short side. All of that changed
in September. Suddenly, several state agencies and authorities - the
Connecticut Housing Finance Authority among others - flooded the
muni-market with new issues. The new supply was more than Connecticut funds
like ours could snatch up, so issuers boosted yields to attract national
buyers. I responded by selling some of the fund's lower-yielding issues to
make room for this longer-maturity, higher-yielding debt. The move was
reflected in the fund's average maturity, which increased from 38
days at the end of August to 80 days by the end of September. I've kept
that figure on the long side ever since by holding on to the
higher-yielding issues.
Q. HOW DID THE FUND'S PERFORMANCE LOOK NEXT TO THE COMPETITION?
A. Total return for the year ended November 30, 1993 was 2.21%, compared to
1.89% for the average Connecticut tax-free money market fund tracked by
IBC/Donoghue. The fund's seven-day yield on November 30 was 1.96%, compared
to 2.56% at the end of May. The latest yield translates into a
tax-equivalent yield of 3.19% for investors in the 38.88% combined
effective 1993 federal and state tax bracket.
Q. WHAT INFLUENCED PERFORMANCE?
A. One relatively new investing strategy that helped performance was is the
use of simple derivatives. They combine a long-term municipal bond with a
"put," or an option to sell to a third party, typically a bank. The end
product is an investment that pays a short-term variable interest rate and
can be put on short notice, usually seven days. It acts much like any other
variable rate demand note the fund might own, with one key difference: the
yield is slightly higher, a fact that has more to do with the added
complexity of these instruments than added risk. Derivatives made up about
8% of the fund at the end of November.
Q. HOW DO YOU SEE THE NEXT SIX MONTHS SHAPING UP?
A. Rates in the tax-free market generally have been drifting lower, even
during upturns in the taxable market. In an environment of falling rates, I
want to hold onto my longer-term issues to take advantage of their higher
yields. In general, I think rates will remain in a narrow range over the
next six months. The economy is showing signs of strength. I wouldn't be
surprised if, at some point, the Fed decides there's a real threat of
rising inflation and moves to tighten the money supply by raising the
federal funds rate. As the likelihood of tightening increases, I might
position the fund to take advantage of rising rates by shortening its
average maturity.
FUND FACTS
GOAL: tax-free income and
stability by investing in
high-quality, short-term,
Connecticut municipal securities
START DATE: March 4, 1991
SIZE: as of November 30,
1993, over $163 million
MANAGER: Scott Orr, since
October 1993; manager, Fidelity
Connecticut Municipal Money
Market, since October 1993;
Fidelity Michigan Municipal
Money Market, Fidelity New
Jersey Tax-Free Money Market
& Spartan New Jersey
Money Market, since
January 1992
(checkmark)
WORDS TO KNOW
COMMERCIAL PAPER: A security
issued by a municipality to
finance capital or operating
needs.
FEDERAL FUNDS RATE: The interest
rate banks charge each other
for overnight loans.
MATURITY: The time remaining
before an issuer is scheduled
to repay the principal amount
on a debt security. When the
fund's average maturity -
weighted by dollar amount -
is short, the fund manager is
anticipating a rise in interest
rates. When the average
maturity is long, the manager
is expecting rates to fall.
When the average maturity is
neutral, the manager wants
the flexibility to respond to
rising rates, while still
capturing a portion of the
higher yields available from
issues with longer maturities.
MUNICIPAL NOTE: A security
issued in advance of future
tax or other revenues and
payable from those specific
sources.
TENDER BOND: A variable-rate,
long-term security that gives
the bond holder the option to
redeem the bond at face
value before maturity.
VARIABLE RATE DEMAND NOTE
(VRDN): A tender bond that
can be redeemed on short
notice, typically one or seven
days. VRDNs are useful in
managing the fund's average
maturity and liquidity.
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
11/30/93 5/31/93 11/30/92
0 - 30 66 71 59
31 - 90 10 19 15
91 - 180 5 5 9
181 - 397 19 5 17
WEIGHTED AVERAGE MATURITY
11/30/93 5/31/93 11/30/92
Spartan Connecticut
Municipal Money Market
Portfolio 72 days 38 days 72 days
Average Connecticut
Tax-Free Money 76 days 44 days 61 days
Market Fund*
ASSET ALLOCATION
AS OF 11/30/93 AS OF 5/31/93
Row: 1, Col: 1, Value: 54.0
Row: 1, Col: 2, Value: 19.0
Row: 1, Col: 3, Value: 21.0
Row: 1, Col: 4, Value: 5.0
Row: 1, Col: 5, Value: 2.0
Row: 1, Col: 1, Value: 53.0
Row: 1, Col: 2, Value: 21.0
Row: 1, Col: 3, Value: 4.0
Row: 1, Col: 4, Value: 15.0
Row: 1, Col: 5, Value: 7.0
Variable rate
demand notes
(VRDNs) 54%
Commercial
paper 19%
Tender bonds 21%
Municipal
notes 5%
Other 1%
Variable rate
demand notes
(VRDNs) 53%
Commercial
paper 21%
Tender bonds 4%
Municipal
notes 15%
Other 7%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(Registered trademark)
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO
INVESTMENTS/NOVEMBER 30, 1993
(Showing Percentage of Total Value of Investments)
MUNICIPAL SECURITIES (A) - 100%
MOODY'S
RATINGS PRINCIPAL VALUE
(UNAUDITED) (E) AMOUNT (NOTE 1)
CALIFORNIA - 0.8%
California Poll. Cont. Fing. Auth. Resource Recovery Rev.
(Delano Proj.) Series 1990, 2.20%,
LOC Algemene Bank, VRDN (b) $ 300,000 $ 300,000 130535BB
Orange County Apt. Dev. Rfdg., Series 1990 A, 3.10%
12/1/93, LOC Tokai Bank, VT 1,000,000 1,000,000 684990GB
1,300,000
CONNECTICUT - 75.9%
Connecticut Dev. Auth. Arpt. Facs. Rev. (Arpt. Hotel Bradley
Assoc. Ltd. Partnership Proj.) 2.25%, LOC Daiwa
Bank, VRDN 6,500,000 6,500,000 207907AK
Connecticut Dev. Auth. Hlth. Care Rev. (Corp. for Independent
Living Proj.), VRDN:
Series 1990, 2.25%, LOC Cr. Commercial de France 4,100,000 4,100,000
207913AP
Series 1993 A, 2.25%, LOC Daiwa Bank 2,400,000 2,400,000 207913BK
Connecticut Dev. Auth. Poll. Cont. Rev. (Conn. Light &
Power Co. Proj. 1993), VRDN:
Series A, 2.15%, LOC Deutsche Bank 7,500,000 7,500,000 207728BA
Series B, 2.20%, LOC Union Bank of Switzerland (b) 7,900,000 7,900,000
207728BB
Connecticut Dev. Auth. Rev. Gen. Oblig. Bond,
Series 1993 A, 5% 11/15/94 750,000 766,154 207910BR
Connecticut Dev. Auth. (Shelton Inn Proj.) Series 1986,
2.90%, LOC Bank of Tokyo, VRDN (b) 200,000 200,000 207727DN
Connecticut Dev. Auth. Solid Waste Disp. Fac. Rev., VRDN: (b)
(Exeter Energy Proj.):
Series 1989 A, 2.30%, LOC Sanwa Bank 1,500,000 1,500,000 207910AW
Series 1989 B, 2.30%, LOC Sanwa Bank 4,900,000 4,900,000 207910AX
(Rand-Whitney Containerboard), 2.30%,
LOC Chase Manhattan Bank 3,300,000 3,300,000 207910BQ
Connecticut Economic Recovery Gen. Oblig. Notes,
Series 1991 B, 2.25%, BPA Canadian Imperial
Bank, VRDN 1,700,000 1,700,000 207726D2
Connecticut Gen. Oblig. Ctfs. of Prtn., Series PA1,
2.50%, (Liquidity Enhancement Merrill Lynch) (c) 2,000,000 2,000,000
20772EBG
Connecticut Gen. Oblig. Series 1992 B, 4.50% 5/15/94 500,000 503,763
207726P4
Connecticut Gen. Oblig. Tender Option Bonds: (c)
Series BT 89, 2.60%, (Liquidity Enhancement
Banker's Trust) 1,600,000 1,600,000 2077265F
Series BT 130, 2.65%, (Liquidity Enhancement
Bankers Trust) 3,200,000 3,200,000 20772EGE
Series Mgt. 17A, 2.40%, (Liquidity Enhancement Morgan
Guaranty) 500,000 500,000 2077265D
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S
RATINGS PRINCIPAL VALUE
(UNAUDITED) (E) AMOUNT (NOTE 1)
CONNECTICUT - CONTINUED
Connecticut Health & Ed. Facs. Auth. Rev.:
VRDN:
(Charlotte Hungerford Hosp.) Series B, 2.30%,
LOC Mitsubishi Bank Ltd. $ 1,800,000 $ 1,800,000 207742GT
(Kent School) Series A, 2.20%, LOC Barclays Bank PLC 5,900,000
5,900,000 207742JF
VT:
(Windham Commty. Mem. Hosp.) Series B, 2.35%
12/14/93, LOC Banque Paribas 4,000,000 4,000,000 207994SS
(Yale University):
Series L:
2.60% 2/8/94 1,550,000 1,550,000 207994SN
2.55% 2/17/94 500,000 500,000 207994SQ
Series M:
2.45% 12/8/93 2,000,000 2,000,000 207994SA
2.60% 2/16/94 3,900,000 3,900,000 207994SH
Series N:
2.45% 12/9/93 1,100,000 1,100,000 207994RW
2.50% 12/13/93 1,000,000 1,000,000 207994RJ
2.60% 2/16/94 1,350,000 1,350,000 207994SK
Series O:
2.45% 12/8/93 1,150,000 1,150,000 207994RY
2.60% 2/16/94 1,500,000 1,500,000 207994SG
Connecticut Hsg. Fin. Agcy. Hsg. Mtg. Fin. Prog.
Bonds, MT:
Series 1992 D-2, 2.75% 5/16/94 4,000,000 4,000,000 2077454L
Series 1993 H-1, 2.80% 11/15/94 6,800,000 6,800,000 207746BK
Series 1993 H-2, 2.90% 11/15/94 (b) 4,500,000 4,500,000 207746BL
Connecticut Hsg. Fin. Auth. Hsg. Mtg. Fin. Prog., VT: (b)
Series 1989 D:
2.55% 12/8/93 1,165,000 1,165,000 207995FY
2.50% 12/10/93 1,000,000 1,000,000 207995FU
2.45% 12/14/93 255,000 255,000 207995FV
2.60% 2/9/94 3,500,000 3,500,000 207995GA
Series 1990 C, 2.70% 2/8/94 800,000 800,000 207995GB
Connecticut Second Lien Special Tax Oblig. Bonds
(Transport Infrastructure) Series 1, 2.45%,
LOC Industrial Bank of Japan, VRDN 7,100,000 7,100,000 207757HF
Connecticut Spl. Assessment Unemployment Compensation
Advance Fund Rev. Tender Option Bonds, Series 1993 A,
2.70%, (Liquidity Enhancement Sumitomo Bank) (c) 2,000,000 2,000,000
207756AU
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S
RATINGS PRINCIPAL VALUE
(UNAUDITED) (E) AMOUNT (NOTE 1)
CONNECTICUT - CONTINUED
Connecticut Spl. Assessment Unemployment Rev.,:
Series 1993 B, 2.25%, LOC Ind. Bank of Japan, VRDN $ 1,000,000 $
1,000,000 207756AR
Series 1993 C, 3% 7/1/94, MT 12,000,000 12,013,489 207756AS
Hartford Redev. Auth. (Underwood Towers Proj.), 2.45%,
(FSA Insured) (Liquidity Enhancement Sumitomo Trust &
Banking Ltd.), VRDN 1,700,000 1,700,000 416461AY
Milford BAN 2.68% 2/17/94 400,000 400,018 599377QA
120,553,424
FLORIDA - 2.6%
Dade County Ind. Dev. Rev. (Montenay-Dade Ltd. Proj.)
Series 1990 A, 2.40%, LOC Banque Paribas, VRDN (b) 4,100,000 4,100,000
233561AB
NEW YORK - 1.0%
New York City Ind. Dev. Agcy. Ind. Dev. Rev.
(Nippon Cargo Airlines Co.) Series 1992, 2.45%,
LOC Ind. Bank of Japan, VRDN (b) 1,600,000 1,600,000 649705FV
PUERTO RICO - 13.7%
Puerto Rico Commonwealth TRAN Series A, 3% 7/29/94 7,000,000 7,012,917
745144VX
Puerto Rico Hwy. and Trans. Rev. Series 1993 X, 2%,
LOC Union Bank of Switzerland,VRDN 6,000,000 6,000,000 745181LA
Puerto Rico Ind. Med. Higher Ed. & Envir. Cont. Fac. Fin. Auth., VT:
(A.G. Mendez Proj.) Series 1991, 2.45% 12/1/93,
LOC Banco Santander 700,000 700,000 745993JP
(Inter-America Univ.) Series 1988, 2.60% 12/7/93,
LOC Bank of Tokyo 4,000,000 4,000,000 745993JM
Puerto Rico Variable Rate Trust Certificates 2.175%
(Liquidity Enhancement Bankers Trust) (c) 4,060,000 4,060,000 99299DAA
21,772,917
SOUTH CAROLINA - 1.7%
South Carolina Jobs Econ. Dev. Auth. Rev.
(Wellman Inc. Proj.), VRDN: (b)
Series 1990, 2.30%, LOC Wachovia Bank & Trust 1,200,000 1,200,000
837031BP
Series 1992, 2.30%, LOC Wachovia Bank & Trust 1,500,000 1,500,000
837031DA
2,700,000
VIRGINIA - 4.3%
Richmond Ind. Dev. Auth. (I) Rev. (Cogentrix of Richmond
Inc. Proj.) Series 1990 A, 2.35%, LOC Banque
Paribas, VRDN (b) 3,600,000 3,600,000 765415KE
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S
RATINGS PRINCIPAL VALUE
(UNAUDITED) (E) AMOUNT (NOTE 1)
VIRGINIA - CONTINUED
Richmond Ind. Dev. Auth. (II) Rev.(Cogentrix of Richmond
Inc. Proj.) Series 1991 A, 2.35%, LOC Banque
Paribas, VRDN (b) $ 1,800,000 $ 1,800,000 765415KF
Southampton County Ind. Dev. Auth. Ind. Rev.
(Hadson Pwr. 11 - Southampton Proj.) Series 1990 A,
2.30%, LOC Credit Suisse, VRDN (b) 1,400,000 1,400,000 841022AA
6,800,000
TOTAL INVESTMENTS - 100% $ 158,826,341
Total Cost for Income Tax Purposes $ 158,826,341
SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
FRDN - Floating Rate Demand Notes
MT - Mandatory Tender
OT - Optional Tender
RAN - Revenue Anticipation Notes
TAN - Tax Anticipation Notes
TRAN - Tax & Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
VT - Variable Tender
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
(c) Provides evidence of ownership in an underlying pool of municipal
bonds.
INCOME TAX INFORMATION
At November 30, 1993, the fund had a capital loss carryforward of
approximately $7,460 of which $40, $2,090, and $5,330 will expire on
November 30, 1999, 2000, and 2001, respectively.
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
NOVEMBER 30, 1993
134.ASSETS 135. 136.
137.Investment in securities, at value (Note 1) - 138. $ 158,826,341
See accompanying schedule
139.Cash 140. 4,052,021
141.Receivable for investments sold 142. 600,169
143.Interest receivable 144. 456,867
145. 146.TOTAL ASSETS 147. 163,935,398
148.LIABILITIES 149. 150.
151.Payable for investments purchased $ 767,763 152.
153.Dividends payable 2,855 154.
155.Accrued management fee 63,157 156.
157. 158.TOTAL LIABILITIES 159. 833,775
160.161.NET ASSETS 162. $ 163,101,623
163.Net Assets consist of: 164. 165.
166.Paid in capital 167. $ 163,109,080
168.Accumulated net realized gain (loss) on 169. (7,457)
investments
170.171.NET ASSETS, for 163,109,080 shares 172. $ 163,101,623
outstanding
173.174.NET ASSET VALUE, offering price and 175. $1.00
redemption price per share ($163,101,623 (divided by)
163,109,080 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED NOVEMBER 30, 1993
176.177.INTEREST INCOME 178. $ 3,100,095
179.EXPENSES 180. 181.
182.Management fee (Note 4)
$ 641,483
183.Non-interested trustees' compensation 827 184.
185. Total expenses before reductions 642,310 186.
187. Expense reductions (Note 5) (331,281) 311,029
188.189.NET INTEREST INCOME 190. 2,789,066
191.192.NET REALIZED GAIN (LOSS) ON INVESTMENTS 193. (5,334)
(NOTE 1)
194.195.NET INCREASE IN NET ASSETS RESULTING FROM 196. $ 2,783,732
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED NOVEMBER 30,
1993 1992
197.INCREASE (DECREASE) IN NET ASSETS
198.Operations $ 2,789,066 $ 1,412,862
Net interest income
199. Net realized gain (loss) on investments (5,334) (2,086)
200. Increase (decrease) in net unrealized gain from - (342)
accretion of market discount
201. 2,783,732 1,410,434
202.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM
OPERATIONS
203.Dividends to shareholders from net interest income (2,789,066) (1,412,862)
204.Share transactions at net asset value of $1.00 per 224,246,405 121,556,249
share
Proceeds from sales of shares
205. Reinvestment of dividends from net interest 2,693,169 1,363,445
income
206. Cost of shares redeemed (150,504,642) (58,492,682)
207. 76,434,932 64,427,012
Net increase (decrease) in net assets and shares
resulting from share transactions
208. 76,429,598 64,424,584
209.TOTAL INCREASE (DECREASE) IN NET ASSETS
210.NET ASSETS 211. 212.
213. Beginning of period 86,672,025 22,247,441
214. End of period $ 163,101,623 $ 86,672,025
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
215. YEARS ENDED NOVEMBER 30, MARCH 4, 1991
(COMMENCEME
NT
OF OPERATIONS) T
O
NOVEMBER 30,
216. 1993 1992 1991
217. 218. 219.
220.SELECTED PER-SHARE DATA
221.Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000
222.Income from Investment Operations .022 .030 .029
Net interest income
223. Dividends from net interest income (.022) (.030) (.029)
224.Net asset value, end of period $ 1.000 $ 1.000 $ 1.000
225.TOTAL RETURN (dagger) 2.21% 3.08% 2.97%
226.RATIOS AND SUPPLEMENTAL DATA
227.Net assets, end of period (000 omitted) $ 163,102 $ 86,672 $ 22,247
228.Ratio of expenses to average net .24% .02% -
assets (dagger)(dagger)
229.Ratio of expenses to average net .50% .50% .50%*
assets
before expense reductions (dagger)(dagger)
230.Ratio of net interest income to average 2.17% 2.90% 4.05%*
net assets
</TABLE>
* ANNUALIZED
(dagger) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(dagger)(dagger) SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
for the period ended November 30, 1993
1. SIGNIFICANT ACCOUNTING
POLICIES.
Spartan Connecticut Municipal High Yield Portfolio (the high yield fund) is
a fund of Fidelity Court Street Trust. Spartan Connecticut Municipal Money
Market Portfolio (the money market fund) is a fund of Fidelity Court Street
Trust II. Each trust is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as an open-end management investment
company. Fidelity Court Street Trust and Fidelity Court Street Trust II
(the trusts) are organized as a Massachusetts business trust and a Delaware
business trust, respectively. Each fund is authorized to issue an unlimited
number of shares. The following summarizes the significant accounting
policies of the money market fund and the high yield fund:
SECURITY VALUATION.
HIGH YIELD FUND. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
Securities for which quotations are not readily available through the
pricing service are valued at their fair value as determined in good faith
under consistently applied procedures under the general supervision of the
Board of Trustees.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the Act, and certain
conditions therein, securities are valued initially at cost and thereafter
assume a constant amortization to maturity of any discount or premium.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to income taxes to
the extent that it distributes all of its taxable income for the fiscal
year. The schedules of investments include information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. For the
money market fund, accretion of market discount represents unrealized gain
until realized at the time of a security disposition or maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income. Distributions to shareholders from
realized capital gains on investments, if any, are recorded on the
ex-dividend date.
REDEMPTION FEES. Shares held in the high yield fund less than 180 days are
subject to a redemption fee equal to .50% of the proceeds of the redeemed
shares. The fee, which is retained by the fund, is accounted for as an
addition to paid in capital.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis
of identified cost.
2. OPERATING POLICIES.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The fund
identifies securities as segregated in its custodial records with a value
at least equal to the amount of the purchase commitment.
FUTURES CONTRACTS AND OPTIONS. The high yield fund may invest in futures
contracts and write options. These investments involve, to varying degrees,
elements of market risk and risks in excess of the amount recognized in the
Statement of Assets and Liabilities. The face or contract amounts reflect
the extent of the involvement the high yield fund has in the particular
classes of instruments. Risks may be caused by an imperfect correlation
between movements in the price of the instruments and the price of the
underlying securities and interest rates. Risks also may arise if there is
an illiquid secondary market for the instruments, or due
to the inability of counterparties to perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
3. PURCHASES AND SALES OF
INVESTMENTS.
HIGH YIELD FUND. Purchases and sales of securities, other than short-term
securities, aggregated $210,010,966 and $197,122,719, respectively. The
face value of futures contracts opened and closed amounted to $247,245,563
and $252,995,251, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, Fidelity Management
& Research Company (FMR) pays all expenses except the compensation of
the non-interested Trustees and certain exceptions such as interest, taxes,
brokerage commissions and extraordinary expenses. FMR receives a fee that
is computed daily at an annual rate of .50% and .55% of average net assets
for the money market and high yield funds, respectively.
FMR also bears the cost of providing shareholder services to each fund. For
the period, FMR or its affiliates collected certain transaction fees from
shareholders which aggregated $8,635 and $4,895 for the high yield and
money market funds, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SUB-ADVISER FEE. As the money market fund's investment sub-adviser, FMR
Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR of
50% of the management fee payable to FMR. The fee is paid prior to any
voluntary expense reimbursements which may be in effect, and after reducing
the fee for any payments by FMR pursuant to the fund's Distribution and
Service Plan.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plans (the Plans), and in accordance with Rule 12b-1 of the Act, FMR or the
funds' distributor, Fidelity Distributors Corporation (FDC), an affiliate
of FMR, may use their resources to pay administrative and promotional
expenses related to the sale of each fund's shares. Subject to the approval
of each Board of Trustees, the Plans also authorize payments to third
parties that assist in the sale of each fund's shares or render shareholder
support services. FMR or FDC has informed the funds that payments made to
third parties under the Plans amounted to $2,763 for the high yield fund
and no payments were made for the money market fund for the period.
5. REIMBURSEMENT OF
EXPENSES.
FMR has voluntarily agreed to reimburse the money market fund for total
operating expenses (excluding interest, taxes, brokerage commissions and
extraordinary expenses) above a specified percentage of average net assets.
During the period, this expense limitation ranged from expenses in excess
of an annual rate of .05% to .50% of average net assets and the
reimbursement amounted to $331,281.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Court Street Trust and Fidelity Court Street
Trust II and the Shareholders of Spartan Connecticut Municipal High Yield
Portfolio and Spartan Connecticut Municipal Money
Market Portfolio:
We have audited the accompanying statements of assets and liabilities of
Spartan Connecticut Municipal High Yield Portfolio, a portfolio of Fidelity
Court Street Trust, and Spartan Connecticut Municipal Money Market
Portfolio, a portfolio of Fidelity Court Street Trust II including the
schedules of portfolio investments, as of November 30, 1993, the related
statements of operations for the year then ended, the statements of changes
in net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended
for the Spartan Connecticut Municipal High Yield Portfolio, and the
financial highlights for each of the two years in the period then ended and
for the period March 4, 1991 (commencement of operations) to November 30,
1991 for the Spartan Connecticut Municipal Money Market Portfolio. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of November 30, 1993 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Spartan Connecticut Municipal High Yield Portfolio and Spartan
Connecticut Municipal Money Market Portfolio as of November 30, 1993, the
results of their operations for the year then ended, the changes in their
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended
for the Spartan Connecticut Municipal High Yield Portfolio, and the
financial highlights for each of the two years in the period then ended and
for the period March 4, 1991 (commencement of operations) to November 30,
1991 for the Spartan Connecticut Municipal Money Market Portfolio, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
December 30, 1993
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
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Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
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2.
For the ten most frequently
requested Fidelity fund quotes.
3.
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Portfolios.(Registered trademark)
4.
To change your Personal
Identification Number (PIN).
5.
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representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
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PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. FOR MORE
INFORMATION ON ANY
FIDELITY FUND INCLUDING MANAGEMENT FEES AND CHARGES, CALL 1-800-544-8888
FOR A FREE
PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
TO WRITE FIDELITY
Please locate the address that is closest to you. We'll give your
correspondence immediate attention and send you written confirmation upon
completion of your request. Please send ALL correspondence about retirement
accounts to Dallas.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 2269
Boston, MA 02107-2269
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30280
Salt Lake City, UT 84130-0280
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
Additional Payments
P.O. Box 2656
Boston, MA 02293-0656
Fidelity Investments
Additional Payments
P.O. Box 620024
Dallas, TX 75262-0024
Fidelity Investments
Additional Payments
P.O. Box 31455
Salt Lake City, UT 84131-0455
OVERNIGHT EXPRESS
Fidelity Investments
Additional Payments
World Trade Center
164 Northern Avenue
Boston, MA 02210
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02103-0878
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02101-0193
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 620024
Dallas, TX 75262-0024
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
2249 Galiano Street
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
32 West Central Boulevard
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road, South
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
1 West Pennsylvania Ave.
Towson, MD
7401 Wisconsin Avenue
Bethesda, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
101 Cambridge Street
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
38 South Sixth Street
Minneapolis, MN
MISSOURI
700 West 47th Street
Kansas City, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
1903 East Ninth Street
Cleveland, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
1010 Lamar Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
175 East 400 South Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8300 Boone Boulevard
Vienna, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Peter Allegrini, Vice President,
HIGH YIELD FUND
Thomas D. Maher, Assistant
Vice President, MONEY MARKET FUND
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*, MONEY MARKET FUND
Phyllis Burke Davis*, MONEY MARKET FUND
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*, MONEY MARKET FUND
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
United Missouri Bank, N.A.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO
FIDELITY'S TAX-FREE
MONEY MARKET FUNDS
California Tax-Free Money Market
Connecticut Municipal Money Market
Massachusetts Tax-Free Money Market
Michigan Municipal Money Market
New Jersey Tax-Free Money Market
New York Tax-Free Money Market
Ohio Municipal Money Market
Spartan California Municipal
Money Market
Spartan Connecticut Municipal
Money Market
Spartan Florida Municipal Money Market
Spartan Massachusetts Municipal
Money Market
Spartan Municipal Money Fund
Spartan New Jersey Municipal
Money Market
Spartan New York Municipal
Money Market
Spartan Pennsylvania Municipal
Money Market
Tax-Exempt Money Market
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0111
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
EXHIBIT 24(A)(4)
FIDELITY
(Registered trademark)
FLORIDA
MUNICIPAL
FUNDS
ANNUAL REPORT
NOVEMBER 30, 1993
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.
SPARTAN FLORIDA MUNICIPAL INCOME PORTFOLIO
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the last six
months
and one year.
INVESTMENTS 11 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 21 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
SPARTAN FLORIDA MUNICIPAL MONEY MARKET PORTFOLIO
PERFORMANCE 25 How the fund has done over time.
FUND TALK 27 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 29 A summary of major shifts in the
fund's investments over the last six
months
and one year.
INVESTMENTS 30 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 35 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 39 Footnotes to the financial
statements.
REPORT OF INDEPENDENT 42 The auditor's opinion.
ACCOUNTANTS
</TABLE>
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Once the new year begins, many people start reviewing their finances and
calculating their tax bills. No one wants to pay more taxes than they have
to. But a recent survey of 500 U.S. households, conducted by Fidelity and
Yankelovich Partners, showed that few people have taken steps to reduce
their taxes under the new legislation. Many were not even aware that the
new tax laws were retroactive to January 1993.
Whether or not you're someone whose tax bill will increase as a result of
these changes, it may make sense to consider ways to keep more of what you
earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in Federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider tax-free investments like municipal bonds and municipal
bond funds. Often these can provide higher after-tax yields than comparable
taxable investments. For example, if you're in the new 36% Federal income
tax bracket and invest $10,000 in a taxable investment yielding 7%, you'll
pay $252 in Federal taxes and receive $448 in income. That same $10,000
invested in a tax-free bond fund yielding 5.5% would allow you to keep $550
in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center.
Wishing you a prosperous new year,
Edward C. Johnson 3d, Chairman
SPARTAN FLORIDA MUNICIPAL INCOME PORTFOLIO
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells bonds
that have grown in value), and the effect of the $5 account closeout fee.
You can also look at the fund's income. If Fidelity had not reimbursed
certain fund expenses during the periods shown, the total returns,
dividends and yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1993 PAST 1 LIFE OF
YEAR FUND
Spartan Florida Municipal Income Portfolio 13.51% 24.79%
Lehman Brothers Municipal Bond Index 11.08% n/a
Average Florida Tax-exempt
Municipal Bond Fund 12.22% 20.83%
Consumer Price Index 2.68% 4.52%
CUMULATIVE TOTAL RETURNS reflect actual performance over a set period, in
this case, one year or since the fund started on March 16, 1992. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, you would end up with $1,050. You can compare these figures to
the performance of the Lehman Brothers Municipal Bond index - a broad gauge
of the municipal bond market. To measure how the fund stacked up against
its peers, you can look at the average Florida municipal bond fund, which
reflects the performance of 43 Florida tax-exempt municipal bond funds
tracked by Lipper Analytical Services. Both benchmarks include reinvested
dividends and capital gains, if any. Comparing the fund's performance to
the consumer price index helps show how your fund did compared to
inflation.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1993 PAST 1 LIFE OF
YEAR FUND
Spartan Florida Municipal Income Portfolio 13.51% 13.81%
Lehman Brothers Municipal Bond Index 11.08% n/a
Average Florida Tax-exempt
Municipal Bond Fund 12.22% 12.02%
Consumer Price Index 2.68% 2.82%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
Spartan FLA Lehman Muni
03/31/92 10000.00 10000.00
04/30/92 10172.61 10089.00
05/31/92 10350.02 10208.05
06/30/92 10575.19 10379.55
07/31/92 11028.25 10690.93
08/31/92 10779.39 10586.16
09/30/92 10823.44 10654.97
10/31/92 10580.51 10550.55
11/30/92 10944.39 10739.41
12/31/92 11095.24 10848.95
01/31/93 11245.75 10974.80
02/28/93 11812.46 11372.08
03/31/93 11626.24 11251.54
04/30/93 11765.70 11365.18
05/31/93 11841.81 11428.83
06/30/93 12066.54 11619.69
07/31/93 12101.29 11634.79
08/31/93 12393.62 11876.80
09/30/93 12566.59 12012.19
10/31/93 12600.06 12035.02
11/30/93 12423.64 11929.11
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan
Florida Municipal Income Portfolio on March 31, 1992, shortly after the
fund started. As the chart shows, by November 30, 1993, the value of your
investment would have grown to $12,424 - a 24.24% increase on your initial
investment. This assumes you still own the fund on November 30, and
therefore does not include the effect of the $5 account closeout fee. For
comparison, look at how the Lehman Brothers Municipal Bond index did over
the same period. With dividends reinvested, the same $10,000 would have
grown to $11,929 - a 19.29% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, move in the
opposite direction of interest
rates. In turn, the share price,
return, and yield of a fund
that invests in bonds will vary.
That means if you sell your
shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
INCOME
MARCH 16, 1992
(COMMENCEME
NT
OF OPERATIONS) T
YEARS ENDED NOVEMBER 30, 1993 O
NOVEMBER 30,
1992
Income return 6.10% 4.74%
Capital gain returns .10% 0%
Change in share price 7.31% 5.19%
Total return 13.51% 9.93%
Income returns, capital gains returns, and changes in share price are all
part of a bond fund's total return. An income return reflects the dividends
paid by the fund. A capital gain return reflects the amount paid by the
fund to shareholders based on the profits it has from selling bonds that
have grown in value. Both returns assume the dividends or gains are
reinvested. Changes in the fund's share price include changes in the prices
of the bonds owned by the fund. Change in share price and total return
figures include the effect of the $5 account closeout fee.
DIVIDENDS AND YIELD
PERIODS ENDED NOVEMBER 30, 1993 PAST 30 PAST 6 PAST 1
DAYS MONTHS YEAR
Dividends per share n/a 30.12(cents) 61.50(cents)
Annualized dividend rate n/a 5.29% 5.54%
Annualized yield 5.06% n/a n/a
Tax-equivalent yield 7.91% n/a n/a
Dividends per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $11.34 over
the past six months and $11.10 over the past year, you can compare the
fund's income over these two periods. The 30-day annualized yield is a
standard formula for all funds based on the yields of the bonds in the
fund, averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It also
helps you compare funds from different companies on an equal basis. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the fund's tax-free yield, if you're in the 36%
combined federal tax bracket.
SPARTAN FLORIDA MUNICIPAL INCOME PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Generally, interest rates fell during
the year ended November 30, 1993.
As a result, bond prices rose and
most fixed-income investors -
including those in tax-free bonds -
enjoyed attractive returns. The
period began amid expectations of
higher interest rates to come. This
was based on signs that the
economic recovery was finally taking
hold, as well as uncertainty over the
spending plans of the
president-elect. But as President
Clinton promised to tackle the deficit
and fight inflation, the bond market
signaled its approval. The yield on
the benchmark 30-year Treasury
bond dipped below 6% in September
and reached an historic low of 5.79%
in mid-October. By the end of the
period, as inflation fears returned, the
30-year bond was yielding 6.30%.
Two factors affected tax-free bonds
specifically: On the positive side,
higher federal taxes - discussed all
year and approved in August -
boosted demand. At the same time,
record new issuance kept supplies
high, which somewhat dampened
prices. Overall during the period,
tax-free bonds performed well
compared to other fixed-income
investments. The Lehman Brothers
Municipal Bond Index - a broad
measure of the tax-free bond market
- - rose 11.08%. By comparison, the
Lehman Brothers Aggregate Bond
Index - which tracks
investment-grade taxable bonds -
rose only 10.89%, due in part to
relatively poor performance by
mortgage-backed securities.
An interview with Anne Punzak,
Portfolio Manager of Spartan Florida
Municipal Income Portfolio
Q. ANNE, HOW DID THE FUND DO?
A. For the 12 months ended November 30, 1993, the fund had a total return
of 13.51%. That outpaced the average Florida municipal bond fund which
returned 12.22% over the same period, according to Lipper Analytical
Services.
Q. WHAT STRATEGIES HELPED THE FUND BEAT THE AVERAGE?
A. Mainly, having a longer than average duration - meaning it was more
sensitive to changes in interest rates. A year ago, I felt the economy
would grow slowly, and that interest rates would continue to fall. Since
interest rates did fall quite a bit over the past 12 months, having a
longer duration - 8.5 years at the end of November - really helped the
fund.
Q. HOW DID YOU GO ABOUT LENGTHENING THE FUND'S DURATION?
A. Primarily by investing in non-callable bonds. These are bonds that can't
be prematurely returned to their issuers, and therefore have a longer
duration. That's because non-callable bonds always trade to their maturity
date, rather than a shorter call date. When interest rates are falling and
bond prices are rising - as they have been during the past year -
non-callable bonds tend to do well. I focused on non-callables that were
cheap compared to what I thought their prices should be.
Q. MUNICIPAL RATING AGENCIES HAVE RECENTLY EXPRESSED CONCERN ABOUT ELECTRIC
UTILITY BONDS. ARE YOU WORRIED THAT THE FUND'S 19.9% STAKE IN THEM WILL BE
AFFECTED?
A. No, because the rating agencies have singled out investor-owned electric
utilities as being at risk. Though the fund has invested in some very
strong investor-owned utilities, I stick mainly to public electric
utilities. Investor-owned electric utilities have to compete with one
another for large, industrial customers. But public electric utilities,
which serve primarily homeowners, don't face much competition. I'm
optimistic about public electric utility bonds because they typically
provide attractive yields and should become scarce once refinancings are
completed. There were major buildup programs during the '80s, which means
there's little need for new plants. The scarcity should help push up
prices. I look for electric utilities with high ratings and strong
managements like Jacksonville Electric Authority, the fund's largest
investment.
Q. DO YOU STILL THINK THAT THE FUND'S 18.1% STAKE IN HEALTH-CARE BONDS
WON'T BE HURT BY PRESIDENT CLINTON'S HEALTH-CARE REFORM PROPOSALS?
A. Yes. In fact I believe that some hospitals could actually benefit from
health-care reform. I look for hospitals located in growing suburban areas
with strong HMO relationships that have done a good job managing costs.
Reform could spur a number of consolidations within the sector, which might
also offer some opportunities. I'm particularly interested in smaller,
lower-rated hospitals that I think could benefit from being taken over by a
larger, higher rated hospital. The acquired hospital's bonds would assume
the higher rating of its acquirer. When a municipal bond is upgraded, the
price of that bond can increase.
Q. WHAT'S YOUR OUTLOOK FOR FLORIDA MUNICIPAL BONDS?
A. I'm optimistic partly because the supply of Florida munis could decrease
while demand could increase. Over the past several years there's been an
abundant supply of Florida municipals, driven in part by issuers
refinancing older, more expensive debt. But that supply should diminish
somewhat as refinancings slow. On the demand side of the equation, higher
taxes could motivate investors to buy more tax-free municipals to shield
their income from higher taxes. Decreased supply and increased demand are
normally a recipe for higher prices.
Q. WHAT'S YOUR OUTLOOK FOR FLORIDA'S ECONOMY?
A. Despite the negative publicity, Florida's economy is doing well. Retail
sales and housing permits have picked up. The state's done a good job of
transforming its economy from one that's heavily reliant on tourism and
agriculture to one that's a more balanced mix of those industries and
service and trade businesses. There's been a substantial increase in the
number of financial services companies opening or relocating operations in
the state. Florida has also benefited from many companies opening offices
there to take advantage of the state's proximity to Latin and South
American markets. Over the next year, I believe that Florida will
experience similar, if not faster, growth than the nation as a whole.
FUND FACTS
GOAL: high current income
exempt from federal income
tax and the Florida intangible
personal property tax by
investing mainly in long-term,
investment-grade Florida
municipal bonds
START DATE: March 16, 1992
SIZE: as of November 30,
1993, over $428 million
MANAGER: Anne Punzak,
since March 1992; manager,
Fidelity Aggressive Tax Free
Fund, since January, 1986;
Fidelity High Yield Tax-Free
Fund, since October 1993;
Spartan Aggressive Municipal
Bond Fund, since April 1993,
Fidelity Insured Tax-free
Fund, October 1989 to
September 1993
(checkmark)
ANNE PUNZAK'S OUTLOOK
ON INTEREST RATES:
"Although the United States
economy is still limping along,
it's healthier than it was a year
ago and inflation, appears to
be in check. Two early
inflationary
signs-commodity prices and
wages - haven't shown any
real evidence of rebounding.
To me, that signals that
inflation could remain where it
is for some time. Even though
national economic growth has
picked up a little, inflation
hasn't risen. All other things
being equal, it's quite possible
that we're in for several years
of 3% or 4% growth, with
inflation in the 2% range. A
low growth, low inflation
environment is usually
positive for bonds.
(bullet) Transportation bonds are
the fund's largest sector
concentration at 19.8% of the
fund's investments. They're
attractive because their
backed primarily by tolls and
excise taxes and most have
strong credit quality.
DISTRIBUTIONS:
The Board of Trustees of
Fidelity Court Street Trust,
Spartan Florida Municipal
Income Portfolio voted to pay
on December 20, 1993, to the
shareholders of record at the
opening of business on
December 17, 1993 a
distribution of $.20 derived
from capital gains realized
from sales of portfolio
securities.
SPARTAN FLORIDA MUNICIPAL INCOME PORTFOLIO
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF NOVEMBER 30, 1993
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE SECTORS
6 MONTHS AGO
Electric Revenue 19.9 23.1
Transportation 19.8 17.8
Health Care 18.1 13.9
Water & Sewer 10.9 9.7
General Obligation 10.3 8.2
AVERAGE YEARS TO MATURITY AS OF NOVEMBER 30, 1993
6 MONTHS AGO
Years 19.68 20.30
AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF NOVEMBER 30, 1993
6 MONTHS AGO
Years 8.5 8.0
DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, THE SHARE PRICE OF A FUND WITH A
FIVE-YEAR DURATION WILL FALL 5%.
QUALITY DIVERSIFICATION AS OF NOVEMBER 30, 1993
(MOODY'S RATINGS)
Aaa 56.9%
Aa, A 7.5%
Baa 28.6%
Non-rated 7%
Row: 1, Col: 1, Value: 56.9
Row: 1, Col: 2, Value: 7.5
Row: 1, Col: 3, Value: 28.6
Row: 1, Col: 4, Value: 7.0
THIS CHART EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS.
SPARTAN FLORIDA MUNICIPAL INCOME PORTFOLIO
INVESTMENTS/NOVEMBER 30, 1993
(Showing Percentage of Total Value of Investments)
MUNICIPAL BONDS - 96.6%
MOODY'S RATINGS(E) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
FLORIDA - 83.9%
Acme Impt. Dist. Wtr. & Swr. Rev. Rfdg.
6% 6/1/09, (MBIA Insured) Aaa $ 650,000 $ 714,187 004692CH
Alachua County Health Facs. Auth. Health Facs. Rev.:
Rfdg. (Santa Fe Healthcare Facs. Proj.)
6% 11/15/09 Baa 1,950,000 1,942,687 010685FT
6.05% 11/15/09 Baa 3,500,000 3,460,624 010685FU
(Beverly Enterprises Proj.) 10.125% 4/1/10 - 895,000 1,025,893
010686AA
(Santa Fe Health Care Facs. Proj.)
7.60% 11/15/13 Baa 1,000,000 1,106,250 010685FN
Bay County Ind. Dev. Correctional Facs. Rev.
(Corrections Corp. America Proj.) Series A,
8.875% 11/1/05(b) - 2,855,000 3,015,593 072224AA
Boynton Beach Util. Sys. Rev. Rfdg.
6.25% 11/1/12, (FGIC Insured) Aaa 1,500,000 1,595,624 103580AM
Brevard County Health Facs. Auth. Rev. Rfdg.
(Westhoff Mem. Hosp.) Series B,
7.20% 4/1/13 Baa1 750,000 811,874 107416JH
Broward County Arpt. Sys. Rev. Rfdg. Series C,
5% 10/1/05, (AMBAC Insured) Aaa 5,000,000 4,993,750 114894BG
Broward County Health Facs. Auth. Hosp. Rev.
(Holy Cross Hosp. Inc.) 5.85% 6/1/12,
(AMBAC Insured) Aaa 2,000,000 2,067,500 115023CR
Broward County School Dist. Rfdg. 115067EJ
5.60% 2/15/07 A1 2,000,000 2,065,000 115067EJ
Broward County School Dist. Rfdg. Unltd. Tax
5.70% 2/15/08 A1 2,000,000 2,065,000 115067EK
Cape Canaveral Hosp. Dist. Ctfs. Rev.
6.875% 1/1/21, (AMBAC Insured) Aaa 250,000 274,687 139252BU
Charlotte County Util. Rev. Rfdg. 5.25%
10/1/21, (FGIC Insured) Aaa 4,650,000 4,434,937 160811BP
Citrus County Poll. Cont. Rev. Rfdg. (Florida Pwr.
Corp. Crystal River):
Series A, 6.625% 1/1/27 A1 2,700,000 2,926,124 177464AL
Series B, 6.35% 2/1/22 A1 5,000,000 5,343,750 177464AN
Cocoa Wtr. & Swr. Rev. Impt. Series B,
5.125% 10/1/13, (AMBAC Insured) Aaa 4,575,000 4,289,344 191783BW
Collier County Ind. Dev. Auth. Retirement Rent
Hsg. Rev. Rfdg. (Beverly Enterprises Proj.)
10.75% 3/1/03 - 1,395,000 1,701,900 194643AB
Collier County Wtr. Swr. Dist. Wtr. Rev.
6.375% 7/1/10, (FGIC Insured) Aaa 1,000,000 1,080,000 222642DG
Dade County Aviation Rev.(b):
Series P, 6.75% 10/1/94 Aa 2,900,000 2,990,625 233455KX
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS(E) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Dade County Aviation Rev.(b)- Continued:
Series B, 6.25% 10/1/05, (MBIA Insured) Aaa $ 2,000,000 $ 2,170,000
233455TZ
Series B, 6.55% 10/1/13, (MBIA Insured) Aaa 2,000,000 2,167,500
233455UB
Dade County Edl. Facs. Auth. Rev. Rfdg.
(Intl. Univ. Proj.) 5% 10/1/16, (MBIA Insured) Aaa 2,000,000 1,872,500
233490KB
Dade County Pub. Facs. Rev. Rfdg.
(Jackson Mem. Hosp.) Series A, 4.75% 6/1/10,
(MBIA Insured) Aaa 3,540,000 3,256,800 233543GG
Delray Beach Wtr. & Swr. Rev. Series B,
(AMBAC Insured):
0% 10/1/12 Aaa 4,475,000 1,543,875 247325MY
0% 10/1/13 Aaa 2,760,000 897,000 247325MZ
0% 10/1/14 Aaa 4,400,000 1,336,500 247325NB
Dunedin Hosp. Rev. (Mease Health Care)
(MBIA Insured):
6.75% 11/15/21 Aaa 1,000,000 1,152,500 265368CR
5.25% 11/15/06 Aaa 1,400,000 1,412,250 265368DF
Dunedin Util Sys. Rev. Rfdg. 6.25% 10/1/11,
(FGIC Insured) Aaa 1,360,000 1,484,100 265377BH
Dunes Commty. Dev. Dist. Rev. Rfdg.
(Wtr. & Swr. Proj.) 6.10% 10/1/18 A3 1,500,000 1,545,000 265437BQ
Duval County Hsg. Fin. Auth. Single Family
Mtg. Rev. Series C, 7.70% 9/1/24,
(FGIC Insured) (GNMA Coll.) Aaa 745,000 787,838 267156KN
Escambia County Health Facs. Auth. Rev. Rfdg.:
Rfdg. (Baptist Hosp. Inc.) 6% 10/1/14 BBB+ 2,400,000 2,361,000
296110DT
(Baptist Hosp. & Baptist Manor) 6.75%
10/1/14 BBB+ 3,250,000 3,428,750 296110DH
Escambia County Hsg. Fin. Auth. Single Family
Mtg. Rev. (Multi-County Prog.) Series A,
6.90% 4/1/20, (GNMA Coll.) (b) Aaa 1,000,000 1,067,500 296122JU
Escambia County Poll. Cont. Rev. Rfdg.
(Gulf Pwr. Co. Proj.) 6.75% 3/1/22 A2 2,000,000 2,127,500 296130BL
Escambia County Util. Auth. Rev. Series B, 6.25%
1/1/15 (FGIC Insured) Aaa 1,500,000 1,651,875 296177GB
Florida Board Ed. Cap. Outlay (Pub. Ed.) 341421BF:
Series A 341421BF:
0% 6/1/14 Aa 1,500,000 390,000 341420P8
6.75% 6/1/21 Aa 1,870,000 2,052,325 341421BF
7.25% 6/1/23 Aa 325,000 377,813 341420Q8
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS(E) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Florida Board Ed. Cap. Outlay (Pub. Ed.) 341421BF: - continued
Series B, 6.70% 6/1/22 Aa $ 2,250,000 $ 2,463,750 341421CN
Series C, 6.625% 6/1/22 Aa 1,000,000 1,095,000 341421DX
Florida Board of Ed. Cap. Outlay Rfdg. Unltd.
Tax (Pub. Ed.) Series D, 5.125% 6/1/22 Aa 8,000,000 7,530,000 341421RC
Florida Division Board Fin. Dept. Gen. Svcs. Rev.
(Dept. of Natural Resources Preservation 2000)
Series A, (AMBAC Insured):
6.25% 7/1/07 Aaa 1,000,000 1,082,500 342812SQ
6.25% 7/1/08 Aaa 2,500,000 2,706,250 342812SR
6.75% 7/1/08 Aaa 1,350,000 1,503,563 342812QX
Florida Hsg. Fin. Agcy. SIngle Family Mtg. Rev.
Series A, 7.90% 1/1/16 AA 1,040,000 1,067,300 340736BR
Florida Keys Aqueduct Auth. Wtr. Rev.
5.25% 9/1/21, (AMBAC Insured) Aaa 1,800,000 1,723,500 340765EX
Florida Mid-Bay Bridge Auth. Rev..
Series A:
7.50% 10/1/17 - 1,700,000 1,880,625 342814AL
6.875% 10/1/22 - 3,000,000 3,491,250 342814AM
Florida Muni. Pwr. Agcy. Rev.:
Rfdg. (St. Lucie Proj.) 5.50% 10/1/12,
(FGIC Insured) Aaa 2,635,000 2,631,706 342816JE
Rfdg. (Stanton II Proj.) 4.50% 10/1/16,
(AMBAC Insured) Aaa 3,000,000 2,628,750 342816LC
(Stanton II Proj.) 6.50% 10/1/20,
(AMBAC Insured) Aaa 2,000,000 2,285,000 342816HH
Florida Tpk. Auth. Tpk. Rev. Series A: 343136CE
Rdfg. 5.10% 7/1/04, (FDIC Insured) Aaa 1,000,000 1,017,500 343136EU
Rfdg. 5% 7/1/19, (FGIC Insured) Aaa 2,100,000 1,958,250 343136FL
5.25% 7/1/06, (FGIC Insured) Aaa 1,500,000 1,520,625 343136EW
5.90% 7/1/06, (FGIC Insured) Aaa 5,000,000 5,287,500 343136DC
7.20% 7/1/11, (AMBAC Insured) Aaa 1,500,000 1,762,500 343136CE
6.30% 7/1/12, (FGIC Insured) Aaa 1,000,000 1,068,750 343136DJ
5.25% 7/1/22, (FGIC Insured) Aaa 1,000,000 957,500 343136FB
6.35% 7/1/22, (FGIC Insured) Aaa 1,630,000 1,727,800 343136GB
Gainesville Util. Sys. Rev.:
Series A, 6.50% 10/1/22 Aa 1,225,000 1,330,656 362848GE
Series B, 5.50% 10/1/13 Aa 1,750,000 1,745,625 362848HR
Greater Orlando Aviation Auth. Arpt. Facs. Rev: 392274FX
Series A: 392274FX
6.50% 10/1/05, (FGIC Insured) (b) Aaa 3,550,000 3,913,875 392274FX
6.375% 10/1/21, (FGIC Insured) (b) Aaa 6,310,000 6,672,825 392274GA
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS(E) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Greater Orlando Aviation Auth. Arpt. Facs. Rev. - continued 392274FX
Rfdg. Series D, 6.20% 10/1/08,
(AMBAC Insured) Aaa $ 1,000,000 $ 1,076,250 392274HU
Hernando County Ind. Dev. Rev. Rfdg.
(Beverly Enterprises, Inc.) 10% 9/1/11 - 1,000,000 1,180,000 427666AS
Hillsborough County Aviation Auth. Rev. Rfdg.
(Tampa Int'l. Aprt.): 432308JH
Series A, 6.90% 10/1/11, (FGIC Insured) Aaa 4,250,000 4,701,563
Series B, 5.30% 10/10/06, (FGIC Insured) Aaa 2,075,000 2,108,719
432308LE
Hillsborough County Cap. Impt. Rev.
(County Proj.) 2nd Series, 6.75% 7/1/22 A 3,120,000 3,393,000 43232LCH
Hillsborough County Envir. Sensitive Land
Acquisition & Protection Ltd. Tax
6.375% 7/1/11 A 2,000,000 2,142,500 432290EV
Hillsborough County Util. Rev. Rfdg.
(Cap. Appreciation) Series A: 432347FH
0% 8/1/05 Baa1 17,445,000 9,420,300 432347FH
0% 8/1/06 Baa1 10,000,000 5,062,500 432347FJ
0% 8/1/07 Baa1 9,250,000 4,405,313 432347FK
7% 8/1/14 Baa1 ,1,500,000 1,667,812 432347GP
Homestead Spl. Ins. Assessment Rev. (Hurricane
Andrew Covered Claims) (MBIA Insured): 437762AD
3.85% 3/1/95 Aaa 1,750,000 1,758,750 437762AD
5% 3/1/01 Aaa 3,000,000 3,052,500 437762AR
Jacksonville Beach Utils. Rev. 5.50% 10/1/14,
(MBIA Insured) Aaa 1,000,000 998,750 469286KV
Jacksonville Elec. Auth. Rev.:
Rfdg. (St. Johns River Pwr. 2) Series 7,
5.75%10/1/12 Aa1 9,750,000 9,908,438 469363S6
Rfdg. (St. Johns River Issue 2) Series 8,
5.125%10/1/07 Aa1 1,000,000 998,750 469363Y2
(Bulk Pwr. Supply) 6.75% 10/1/21 AA 3,500,000 3,994,375 469363P4
(Elec. Sys.) Series 3 A, 5.25% 10/1/28 Aa1 3,000,000 2,838,750
469363W3
Jacksonville Excise Tax Rev. Rfdg. 6.25%
10/1/05, (AMBAC Insured) Aaa 2,000,000 2,195,000 469383NF
Jacksonville Health Facs. Auth. Hosp. Rev.:
Rfdg. (Methodist Hosp. Proj.) Series A,
8% 10/1/15 - 2,260,000 2,186,550 469404HG
(Baptist Med. Ctr.) Series A, 7.30% 6/1/19,
(MBIA Insured) Aaa 500,000 563,125 469404GJ
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS(E) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Jacksonville Health Facs. Auth. Ind. Dev. Rev.:
(Cypress Village Proj.) 7% 12/1/14 Baa1 $ 1,000,000 $ 1,073,750 46940HAZ
Rfdg. (Cypress Village Proj.):
(Nat'l. Benevolent Assn.) 7% 12/1/22 Baa1 2,000,000 2,132,500 46940HBA
(Nat'l. Benevolent Assn.) 6.25% 12/1/23 Baa1 2,000,000 1,997,500
46940HBR
Jacksonville Hosp. Rev. (Univ. Med. Ctr.)
(Connie Lee Insured)
6.50% 2/1/07 AAA 2,000,000 2,147,500 46940TAR
6.60% 2/1/21 AAA 1,275,000 1,389,750 46940TAT
Jacksonville Ind. Dev. Rev. Rfdg.
(Cargill, Inc. Proj.) 6.40% 3/1/11 (c) AA- 1,250,000 1,342,188 469407AZ
Jacksonville Wtr. & Swr. Gen. Wtrwks. Dev. Rev.
(Jacksonville Suburban Utils.) 6.75%
6/1/22 (b) A2 1,000,000 1,088,750 469510AA
Key West Util. Board Elec. Rev. Rfdg.
0% 10/1/14, (AMBAC Insured) Aaa 6,755,000 2,060,275 493230JS
Kissimmee Util. Auth. Elec. Sys. Rev. Rfdg. & Impt.
5.25% 10/1/18, (FGIC Insured) Aaa 3,000,000 2,880,000 497850DA
Kissemmee Wtr. & Swr. Rev. Rfdg.
6% 10/1/11, (AMBAC Insured) Aaa 2,000,000 2,097,500 497857DX
Lake Worth Rfdg. 5.80% 10/1/05,
(AMBAC Insured) Aaa 1,000,000 1,055,000 511354CZ
Lee County Cap. Impt. Rev. Rfdg. Series B,
(MBIA Insured):
0% 10/1/11 Aaa 1,975,000 720,875 523484HE
0% 10/1/12 Aaa 1,060,000 367,025 523484HF
Lee County Hosp. Board Directors Hosp.
Rev. 9.524% 3/26/20, (MBIA Insured)(d) Aaa 1,000,000 1,120,000 52349FCG
Lee County Ind. Dev. Auth. Econ. Dev. Rev. Rfdg.
(Encore Nursing Ctr.) (Beverly Enterprises, Inc.)
8.125% 12/1/07 - 1,000,000 1,063,750 52348PAA
Lee County Trans. & Cap. Facs. Rev. Rfdg.
Series A, 5.50% 10/1/13, (MBIA Insured) Aaa 2,000,000 2,000,000
523481BC
Leesburg Hosp. Rev. Rfdg. (Leesburg Reg'l.
Med. Ctr. Proj.) Series B, 5.625% 7/1/13 Baa1 1,500,000 1,415,625
524360DH
Leon County 5.50% 10/1/07, (MBIA Insured) Aaa 1,000,000 1,022,500
52643HAM
Marion County Hosp. Dist. Rev. Rfdg.
(Munroe Reg'l. Med. Ctr.) 6.25% 10/1/12,
(FGIC Insured) Aaa 1,000,000 1,060,000 568787DP
Melbourne Wtr. & Swr. Rev. Rfdg. Series A,
6.50% 10/1/14, (FGIC Insured) Aaa 1,000,000 1,088,750 585395VY
Miami Beach Health Facs. Auth. Hosp. Rev. Rfdg.
(Mt. Sinai Med. Ctr. Proj.) (Cap. Gtd. Insured):
6.25% 11/15/08 Aaa 2,000,000 2,137,500 593211AL
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS(E) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Miami Beach Health Facs. Auth. Hosp. Rev. Rfdg.
(Mt. Sinai Med. Ctr. Proj.) (Cap. Gtd. Insured):- continued
6.25% 11/15/19 Aaa $ 4,350,000 $ 4,567,500 593211AM
Miami Sports & Exhibit Auth. Spl. Oblig. Rfdg.
Series A, 6.15% 10/1/09, (FGIC Insured) Aaa 1,500,000 1,590,000
593496BX
Naples Hosp. Rev. Rfdg. (Naples Commty.
Hosp., Inc. Proj.) 5.10% 10/1/07,
(MBIA Insured) Aaa 3,205,000 3,148,913 630475CF
Nassau County Poll. Cont. Rev. Rfdg.
6.2% 7/1/15 Baa 1,000,000 1,041,250 631582AW
(ITT Rayonier Proj.):
7.65% 6/1/06 Baa2 1,415,000 1,572,419 631582AA
6.25% 6/1/10 Baa2 9,500,000 9,951,250 631582AQ
North Broward Hosp. Dist. Rev.: 658000EG
Rfdg. 6.40% 1/1/06, (MBIA Insured) Aaa 950,000 1,037,875 658000EL
Rfdg. 6.25% 1/1/12, (MBIA Insured) Aaa 3,000,000 3,172,500 658000FB
6.50% 1/1/12, (MBIA Insured) Aaa 350,000 378,438 658000EG
Ocala Util. Sys. Rev. Rfdg. Sub-Series A,
6.25% 10/1/15, (AMBAC Insured) Aaa 250,000 264,063 674564BJ
Orange County Health Facs. Auth.
(Orlando Regl. Healthcare) Series A,
5.75% 11/1/07, (MBIA Insured) Aaa 2,000,000 2,075,000 684503RZ
Orange County Hsg. Fin. Auth. Mtg. Rev.
Series A, 7.875% 9/1/10, (GNMA Coll.) (b) AAA 585,000 614,981 684904DC
Orange County Solid Waste Facs. Rev.
6.25% 10/1/12, (FGIC Insured) Aaa 2,175,000 2,324,531 684534BL
Orlando & Orange Co. Expressway Auth.
Rev. Rfdg. Sr. Lien : 686543HU
5.25% 7/1/12, (AMBAC Insured) Aaa 2,000,000 1,955,000 686543JG
5.25% 7/1/14, (AMBAC Insured) Aaa 2,425,000 2,358,313 686543HU
Orlando Util. Commission Wtr. & Elec. Rev. : 686509TS
Rfdg. Sub-Series D, 6.75% 10/1/17 Aa 1,000,000 1,153,750 686509TS
Sub-Series A: 686509TY
6% 10/1/20 Aa 3,500,000 3,600,625 686509UF
6.50% 10/1/20 Aa 1,405,000 1,512,131 686509TY
5.50% 10/1/26 Aa 3,935,000 3,831,706 686509TZ
Orlando Util. Commission Wtr. & Elec.
7.902%, 10/31/13 (d) Aa 3,000,000 3,071,250 686509XA
Osceola County Gas Tax Rev. Rfdg. & Impt.
6% 4/1/09, (FGIC Insured) Aaa 1,915,000 2,010,750 688024BC
Palm Beach County Arpt. Sys. Rev. Rfdg.
6.375%, 10/1/14, (MBIA Insured) Aaa 1,000,000 1,067,500 696499BK
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS(E) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Pasco County Wtr. & Swr. Rev. Rfdg.
Series A, 5.75% 10/1/07, (FGIC Insured) Aaa $ 3,500,000 $ 3,640,000
702541CV
Pembroke Pines Cons. Util. Sys. Rev. Rfdg.
6.25% 9/1/17, (FGIC Insured) Aaa 1,000,000 1,051,250 706436AQ
Pinellas County Health Facs. Auth. Sun Coast
Health Sys. Rev. (Sun Coast Hosp. Proj.)
Series A, 8.50% 3/1/20 BBB 2,970,000 3,318,975 72316EAA
Plantation Health Facs. Auth. Rev. (Covenant
Retirement Communities Inc.)
7.75% 12/1/22 - 2,500,000 2,596,875 72736MAN
Polk County Ind. Dev. Auth. Ind. Dev. Rev.
(Winter Haven Hosp.) Series 2,
6.25% 9/1/15, (MBIA Insured) Aaa 1,500,000 1,590,000 731120LK
Reedy Creek Impt. Dist. Util. Rev.
(Cap. Appreciation) Series 1991-1,
6.25% 10/1/11, (MBIA Insured) AaA 3,500,000 3,701,250 75845HCA
St. John's County Indl. Dev. Auth. Rev. Rfdg. : 790397AQ
(Flagler Hosp. Proj.) 6% 8/1/22 A 4,240,000 4,282,400 79039MAM
(Vicars Lndg. Proj.) Series A, 6.75% 2/15/12 - 4,000,000 3,870,000
790397AQ
St. Lucie County Solid Waste Disp. Rev.
(Florida Pwr. & Lt. Co. Proj.) 6.70% 5/1/27 (b) A2 2,000,000
2,167,500 79208EAT
St. Petersburg Health Facs. Auth. Rev.: 793309CX
(Allegany Health Sys.) Series A, 7% 12/1/15,
(MBIA Insured) Aaa 1,000,000 1,130,000 793309CX
(Allegany Health Sys. Loan Proj.)
5.75% 12/1/21, (MBIA Insured) Aaa 140,000 141,225 793309DP
(Allegany Health Sys. - St. Mary's) 7% 12/1/21,
(MBIA Insured) Aaa 1,500,000 1,695,000 793309CZ
Sarasota Wtr. & Swr. Util. Rev. First Rfdg.
9.305% 10/1/11, (FGIC Insured)(d) Aaa 2,000,000 2,317,500 803408GB
Seminole County Wtr. & Swr. Rev. Rfdg. & Impt.: 816705EF
6% 10/1/09, (MBIA Insured) Aaa 1,500,000 1,605,000 816705EJ
6% 10/1/12, (MBIA Insured) Aaa 1,500,000 1,597,500 816705EF
Sumter County School Dist. Rev.
(Multi-Dist. Loan Prog.) 7.15% 11/1/15,
(Cap. Guaranty Insured) Aaa 1,000,000 1,215,000 866537BC
Sunrise Pub. Facs. Rev. Series B,
0% 10/1/13, (MBIA Insured) Aaa 2,840,000 937,200 86768GAY
Sunrise Spl. Tax Dist. #1 Rfdg. 6.375% 11/1/21,
LOC Bayer Hypotheken Bank Aa1 2,000,000 2,115,000 86768RAP
Tallahassee Health Facs. Facs. Rev. Rfdg.
(Tallahassee Mem. Regl. Med.) Series B,
6% 12/1/09, (MBIA Insured) Aaa 2,000,000 2,080,000 874485CJ
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS(E) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Tallahassee Muni. Elec. Rev. Series B,
6.20% 10/1/12 Aa $ 4,500,000 $ 4,725,000 874466KY
Tampa Cap. Impt. Proj. Rev.
Series B: 875148AU
8.25% 10/1/05 BBB 4,500,000 4,972,500 875148AU
8.375% 10/1/18 A- 1,800,000 1,991,250 875148AV
Tampa Rev. (Allegheny Health Sys. - St. Joseph)
6.75% 12/1/17, (MBIA Insured) Aaa 150,000 165,563 875231BD
Tampa Wtr. & Swr. Rev. (Short/Rites)
Series A-1, 9.410% 10/1/06,
(FGIC Insured) (d) Aaa 3,000,000 3,513,750 875290GY
Tarpan Springs Health Facs. Auth. Hosp. Rev.
(Helen Ellis Mem. Hosp. Proj.) : 876258CC
7.5% 5/1/11 BBB- 1,225,000 1,313,813 876258CC
7.625% 5/1/21 BBB- 245,000 263,988 876258CD
347,251,542
PUERTO RICO - 11.5%
Puerto Rico Commonwealth Aqueduct & Swr.
Auth. Rev. Series A, 7.875% 7/1/17 Baa 1,000,000 1,147,500 745160KC
Puerto Rico Commonwealth Gen. Oblig.
5% 7/1/21 Baa1 3,850,000 3,532,375 745144KJ
Puerto Rico Commonwealth Hwy. & Trans. Auth. Hwy.
Rev.: 745181BA
Rfdg. Series X, 5.50% 7/1/15 Baa1 5,000,000 4,925,000 745181FD
Series T, 6.625% 7/1/18 Baa1 7,500,000 8,165,625 745181BA
Series W: 745181BZ
5.50% 7/1/13 Baa1 8,000,000 7,890,000 745181BZ
5.50% 7/1/15 Baa1 4,000,000 3,940,000 745181CB
Puerto Rico Commonwealth Infrastructuring
Fing. Auth. Spl. Series A, 7.50% 7/1/09 Baa1 1,000,000 1,127,500
745219AR
Puerto Rico Commonwealth Rfdg. & Impt.
Unltd. Tax 5.30% 7/1/04 Baa1 2,000,000 2,020,000 745144KC
Puerto Rico Elec. Pwr. Auth. Pwr. Rev. : 745268JT
Series N, 7.125% 7/1/14 Baa1 800,000 873,000 745268JT
Series P, 7% 7/1/21 Baa1 4,450,000 4,911,688 745268LL
Puerto Rico Elec. Pwr. Auth. Rev.
(Pwr. Resources Auth.) Series R,
6.25% 7/1/17 Baa1 2,000,000 2,097,500 745268ND
Puerto Rico Pub. Bldgs. Auth. Rev. Rfdg.
Series L, 5.50% 7/1/21 Baa1 3,000,000 2,962,500 745235GJ
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS(E) PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 1)
PUERTO RICO - CONTINUED
Puerto Rico Tel. Auth. Rev. 6.95% 1/1/04,
(AMBAC Insured) Inverse Floating
Rate Notes (d) Aaa $ 4,000,000 $ 4,075,000 745297HX
47,667,688
U.S. VIRGIN ISLANDS - 1.7%
Virgin Islands Pub. Fin. Auth. Rev. Rfdg.
Series A, 7.25% 10/1/18
(Escrowed to Maturity) (b) - 6,300,000 6,977,250 927676CF
GUAM - 2.9%
Guam Arpt. Auth. Gen. Rev. Series B,
6.40% 10/1/05 (b) BBB 2,500,000 2,637,500 400648BB
Guam Arpt. Auth. Rev. : 400648BK
6.30% 10/1/22 BBB 2,150,000 2,227,938 400653AN
Series A: 400648BK
6.60% 10/1/10 BBB 1,500,000 1,588,125 400648BK
5.25% 10/1/13 BBB 1,250,000 1,164,063 400653BF
Series B, 6.70% 10/1/23 BBB 3,950,000 4,201,813 400648BM
11,819,439
TOTAL MUNICIPAL BONDS (Cost $397,113,630) 413,715,919
MUNICIPAL NOTES (A) - 3.4%
FLORIDA - 3.4%
Dade County Health Facs. Auth. Hosp. Rev.
(Miami Childrens Hosp. Proj.) Series 1990,
2.35%, LOC Barnett Bank, VRDN VMIG 8,600,000 8,600,000 233904KQ
Dade County Ind. Dev. Rev. (Montenay Dade
Ltd. Proj.) Series 1990-A, 2.40%, LOC
Banque Paribas, VRDN A-1 5,000,000 5,000,000 233561AB
Hillsborough County Ind. Dev. Auth. Poll. Cont.
Rev. Rfdg. (Tampa Elec. Co. Proj.)
Series 1990, 1.90%, VRDN - 1,100,000 1,100,000 432320CL
TOTAL MUNICIPAL NOTES (Cost $14,700,000) 14,700,000
TOTAL INVESTMENTS - 100% (Cost $411,813,630) $ 428,415,919
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
(c) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(c) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
(c) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $1,342,188 or 0.3% of net
assets.
(c) Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate multiplied by a specified
factor. If the floating rate is high enough, the coupon rate may be zero or
be a negative amount that is carried forward to reduce future interest
and/or principal payments. The price may be considerably more volatile than
the price of a comparable fixed rate security.
(c) Standard & Poor's Corporation credit ratings are used in the
absence of a rating by Moody's Investors Service, Inc.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investments for the period ended is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 60% AAA, AA, A 74%
Baa 21% BBB 16%
Ba .1% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The distribution of municipal securities by revenue source, as a percentage
of total value of investments, is as follows:
Electric Revenue 19.9%
Transportation 19.8%
Health Care 18.1%
Water & Sewer 10.9%
General Obligation 10.3%
Others (individually
less than 10%) 21.0
TOTAL 100.0%
INCOME TAX INFORMATION
At November 30,1993 the aggregate cost of investment securities for income
tax purposes was $411,813,630 Net unrealized appreciation aggregated
$16,602,289, of which $17,978,595 related to appreciated investment
securities and $1,376,306 related to depreciated investment securities.
The fund hereby designates $794,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
SPARTAN FLORIDA MUNICIPAL INCOME PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
NOVEMBER 30, 1993
6.ASSETS 7. 8.
9.Investment in securities, at value (cost $411,813,630) 10. $ 428,415,919
(Notes 1 and 2) - See accompanying schedule
11.Cash 12. 241,924
13.Receivable for investments sold 14. 1,001,819
15.Interest receivable 16. 6,117,812
17.Receivable from investment adviser for expense 18. 17,821
reductions (Note 5)
19. 20.TOTAL ASSETS 21. 435,795,295
22.LIABILITIES 23. 24.
25.Payable for investments purchased $ 6,559,318 26.
27.Dividends payable 672,981 28.
29.Accrued management fee 196,032 30.
31. 32.TOTAL LIABILITIES 33. 7,428,331
34.35.NET ASSETS 36. $ 428,366,964
37.Net Assets consist of: 38. 39.
40.Paid in capital 41. $ 403,756,117
42.Accumulated undistributed net realized gain (loss) on 43. 8,008,558
investments
44.Net unrealized appreciation (depreciation) on 45. 16,602,289
investment securities
46.47.NET ASSETS, for 37,951,331 shares outstanding 48. $ 428,366,964
49.50.NET ASSET VALUE, offering price and redemption 51. $11.29
price per share ($428,366,964 (divided by) 37,951,331 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED NOVEMBER 30, 1993
52.INTEREST 53. $ 21,762,517
54.EXPENSES 55. 56.
57.Management fee (Note 4) $ 2,073,795
58.Non-interested trustees' compensation 2,365 59.
60. Total expenses before reductions 2,076,160 61.
62. Expense reductions (Note 5) (1,147,661) 928,499
63.64.NET INVESTMENT INCOME 65. 20,834,018
66.REALIZED AND UNREALIZED GAIN (LOSS) ON 68. 69.
INVESTMENTS
(NOTES 1 AND 3)
67.Net realized gain (loss) on:
70. Investment securities 8,367,459 71.
72. Futures contracts (249,214) 8,118,245
73.Change in net unrealized appreciation (depreciation) 74. 75.
on:
76. Investment securities 15,486,147 77.
78. Futures contracts (50,618) 15,435,529
79.80.NET GAIN (LOSS) 81. 23,553,774
82.83.NET INCREASE (DECREASE) IN NET ASSETS 84. $ 44,387,792
RESULTING FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
85. YEAR ENDED MARCH 16, 1992
NOVEMBER 30, (COMMENCEMENT
1993 OF OPERATIONS) TO
NOVEMBER 30,
1992
86.INCREASE (DECREASE) IN NET ASSETS
87.Operations $ 20,834,018 $ 5,269,681
Net investment income
88. Net realized gain (loss) on investments 8,118,245 117,708
89. Change in net unrealized appreciation (depreciation) 15,435,529 1,166,760
on investments
90. 91.NET INCREASE (DECREASE) IN NET ASSETS 44,387,792 6,554,149
RESULTING FROM
OPERATIONS
92.Distributions to shareholders from: (20,834,018) (5,269,681)
Net investment income
93. Net realized gain (227,395) -
94.Share transactions 242,254,359 250,151,152
Net proceeds from sales of shares
95. Reinvestment of distributions from: 13,798,681 3,577,304
Net investment income
96. Net realized gain 162,331 -
97. Cost of shares redeemed (88,378,513) (17,974,253)
98. Redemption fees (Note 1) 94,890 70,166
99. Net increase (decrease) in net assets resulting 167,931,748 235,824,369
from
share transactions
100. 191,258,127 237,108,837
101.TOTAL INCREASE (DECREASE) IN NET ASSETS
102.NET ASSETS 103. 104.
105. Beginning of period 237,108,837 -
106. End of period $ 428,366,964 $ 237,108,837
107.OTHER INFORMATION 109. 110.
108.Shares
111. Sold 22,071,403 23,926,650
112. Issued in reinvestment of distributions from: 1,237,013 341,743
Net investment income
113. 15,431 -
Net realized gain
114. Redeemed (7,911,287) (1,729,622)
115. Net increase (decrease) 15,412,560 22,538,771
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C>
116. YEAR ENDED MARCH 16, 1992
NOVEMBER 30, (COMMENCEMENT
1993 OF OPERATIONS) TO
NOVEMBER 30,
1992
117.SELECTED PER-SHARE DATA
118.Net asset value, beginning of period $ 10.520 $ 10.000
119.Income from Investment Operations .615 .459
Net investment income
120. Net realized and unrealized gain (loss) on .777 .514
investments
121. Total from investment operations 1.392 .973
122.Less Distributions (.615) (.459)
From net interest income
123. From net realized gain on investments (.010) -
124. Total distributions (.625) (.459)
125.Redemption fees added to paid in capital .003 .006
126.Net asset value, end of period $ 11.290 $ 10.520
127.TOTAL RETURN (dagger) 13.52% 9.94%
128.RATIOS AND SUPPLEMENTAL DATA
129.Net assets, end of period (000 omitted) $ 428,367 $ 237,109
130.Ratio of expenses to average net assets .25% .03%*
131.Ratio of expenses to average net assets before .55% .55%*
expense reductions (dagger)(dagger)
132.Ratio of net interest income to average 5.52% 6.25%*
net assets
133.Portfolio turnover rate 50% 38%*
</TABLE>
* ANNUALIZED
(dagger) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(dagger)(dagger) SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS.
SPARTAN FLORIDA MUNICIPAL MONEY MARKET PORTFOLIO
PERFORMANCE: THE BOTTOM LINE
To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects the change in a fund's share price
over a given period, reinvestment of its dividends (or income), and the
effect of the fund's $5 account closeout fee. Yield measures the income
paid by a fund. Since a money market fund tries to maintain a $1 share
price, yield is an important measure of performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1993 PAST 1 LIFE OF
YEAR FUND
Spartan Florida Municipal
Money Market Portfolio 2.50% 3.30%
Consumer Price Index 2.68% 3.48%
Average All Tax-Free
Money Market Fund 2.00% 2.64%
CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - one
year, or since the fund started on August 24,1992. For example, if you
invested $1,000 in a fund that had a 5% return over the past year, you
would end up with $1,050. Comparing the fund's performance to the consumer
price index (CPI) helps show how your investment did compared to inflation.
To measure how the fund stacked up against its peers, you can compare its
return to the average all tax-free money market fund's total return. This
average currently reflects the performance of 333 tax-free money market
funds tracked by IBC/Donoghue. (The periods covered by the CPI and
IBC/Donoghue numbers are the closest available match to those covered by
the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1993 PAST 1 LIFE OF
YEAR FUND
Spartan Florida Municipal
Money Market Portfolio 2.50% 2.59%
Consumer Price Index 2.68% 2.77%
Average All Tax-Free
Money Market Fund 2.00% 2.03%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had achieved that return
by performing at a constant rate each year.
YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
11/30/92 2/28/93 5/31/93 8/31/93 11/30/93
Spartan Florida 2.65% 2.29% 2.80% 2.48% 2.26%
Municipal Money Market
Portfolio
Average Tax-Free 2.18% 1.82% 2.20% 2.00% 1.94%
Money Market Fund
Spartan Florida 4.14% 3.58% 4.38% 3.88% 3.53%
Municipal Money Market
Portfolio - Tax-equivalent
Average All Taxable 2.77% 2.71% 2.64% 2.64% 2.69%
Money Market Fund
</TABLE>
Row: 1, Col: 1, Value: 2.65
Row: 1, Col: 2, Value: 2.18
Row: 2, Col: 1, Value: 2.29
Row: 2, Col: 2, Value: 1.82
Row: 3, Col: 1, Value: 2.8
Row: 3, Col: 2, Value: 2.2
Row: 4, Col: 1, Value: 2.48
Row: 4, Col: 2, Value: 2.0
Row: 5, Col: 1, Value: 2.26
Row: 5, Col: 2, Value: 1.94
Spartan Florida
Municipal Money
Market Portfolio
Average Florida
Tax-Free Money
Market Fund
3% -
2% -
1% -
0%
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods, expressed as annual
percentage rates. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The chart above shows the fund's
current seven-day yield at quarterly intervals over the past year. This
would have been lower if Fidelity had not reimbursed certain fund expenses.
You can compare these yields to the average all tax-free money market fund.
Or you can look at the fund's tax-equivalent yield, which is based on a
combined effective 1993 federal tax rate of 36%. The tax-equivalent figures
are useful in seeing how the fund stacked up against the average taxable
money market fund as tracked by IBC/Donoghue.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS REFLECT PAST RESULTS RATHER
THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield -- the yield you'd have to
earn on a similar taxable
investment to match the
tax-free yield -- makes the
comparison more meaningful.
Keep in mind that the U.S.
government neither insures nor
guarantees a money market
fund. In fact, there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
SPARTAN FLORIDA MUNICIPAL MONEY MARKET PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Deborah Watson,
Portfolio Manager of Spartan Florida
Municipal Money Market Portfolio
Q. DEB, CAN YOU DESCRIBE THE CONDITIONS YOU'VE FACED FOR THE LAST YEAR?
A. Sure. In terms of interest rates, there's not much to report. Tax-free
short-term rates took their cue from the federal funds rate, which held
steady at or near 3% all year. We encountered renewed inflation fears last
May, and again in late October. But both episodes were temporary, and so
did not significantly influence the way I managed the fund. In the absence
of major interest-rate swings, technical factors also played an important
part in guiding my strategy.
Q. IN WHAT WAY?
A. Like most states, Florida does the bulk of its borrowing in mid-summer.
The annual increase in supply generally presents a good buying opportunity,
and I anticipated that by gradually lowering the fund's average maturity
into the 30-day range by the end of June. Then, as supply entered the
market and interest rates remained stable, I bought longer-term issues and
extended the fund's average maturity again - to 79 days by the end of
October. Throughout November, I maintained a long average maturity, this
time in anticipation of the flood of new assets into the fund that occurs
each year in the weeks leading up to January 1, when Florida levies its
intangibles tax. But supply was scarce, and by the end of November, the
average maturity rolled down slightly to 66 days.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on November 30, 1993 was 2.26%, compared to
2.65% last year. The tax-equivalent yield for investors in the 36% federal
tax bracket was 3.53%. Total return for the same period was 2.50%. That
beat the total return of the average all tax-free money market fund tracked
by IBC/Donoghue, which was 2.00%.
Q. WHY DID THE FUND BEAT ITS PEERS?
A. There were several factors: successful interest-rate forecasting; a 25%
stake in issues subject to the alternative minimum tax, which offer more
yield; and a 14% stake in some simple derivatives. The derivatives I bought
combine a long-term municipal bond with a "put," or an option to sell to a
third party, typically a bank. The end product is an investment that pays a
short-term variable interest rate and can be put on short notice, usually
seven days. It acts much like any other variable rate demand note the fund
might own, with one key difference: the yield is slightly higher, a fact
that has more to do with the added complexity of these instruments than
added investment risk.
Q. WHAT'S AHEAD FOR THE FUND?
A. Shareholders can expect a sharp increase in the percentage of the fund's
variable rate demand notes (VRDN) as we approach January 1, and a
corresponding drop in the fund's average maturity. That trend should begin
to reverse itself later in January as assets flow back out of the fund. In
the months ahead, the short-term market may experience some volatility. I
expect the economy to continue to show sporadic signs of improvement,
leading to growing expectations that the fed may move to increase rates.
Therefore, I would probably take a more defensive approach, and keep the
average maturity somewhere between 50 and 65 days.
FUND FACTS
GOAL: income exempt from
federal income tax and the
Florida intangible personal
property tax and stability by
investing in high-quality,
short-term Florida municipal
securities
START DATE: August 24, 1992
SIZE: as of November 30,
1993, over $300 million
MANAGER: Deborah Watson,
since August 1992; manager,
Spartan California and
Pennsylvania Municipal Money
Market Portfolios, since 1989;
and Fidelity California Tax-Free
Money Market Fund, since
1988
(checkmark)
WORDS TO KNOW
COMMERCIAL PAPER: A security
issued by a municipality to
finance capital or operating
needs.
FEDERAL FUNDS RATE: The interest
rate banks charge each other
for overnight loans.
MATURITY: The time remaining
before an issuer is scheduled
to repay the principal amount
on a debt security. When the
fund's average maturity -
weighted by dollar amount -
is short, the fund manager is
anticipating a rise in interest
rates. When the average
maturity is long, the manager
is expecting rates to fall.
When the average maturity is
neutral, the manager wants
the flexibility to respond to
rising rates, while still
capturing a portion of the
higher yields available from
issues with longer maturities.
MUNICIPAL NOTE: A security
issued in advance of future
tax or other revenues and
payable from those specific
sources.
TENDER BOND: A variable-rate,
long-term security that gives
the bond holder the option to
redeem the bond at face
value before maturity.
VARIABLE RATE DEMAND NOTE
(VRDN): A tender bond that
can be redeemed on short
notice, typically one or seven
days. VRDNs are useful in
managing the fund's average
maturity and liquidity.
SPARTAN FLORIDA MUNICIPAL MONEY MARKET PORTFOLIO
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
11/30/93 5/31/93 11/30/92
0 - 30 63 66 64
31 - 90 13 18 20
91 - 180 1 10 1
181 - 397 23 6 15
WEIGHTED AVERAGE MATURITY
11/30/93 5/31/93 11/30/92
Spartan Florida
Municipal Money Market
Portfolio 66 days 46 days 60 days
Average Florida Tax-Free
Money Market Fund* 64 days 48 days 62 days
ASSET ALLOCATION
AS OF 11/30/93 AS OF 11/30/92
Row: 1, Col: 1, Value: 59.0
Row: 1, Col: 2, Value: 15.0
Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 18.0
Row: 1, Col: 5, Value: 8.0
Row: 1, Col: 1, Value: 56.0
Row: 1, Col: 2, Value: 28.0
Row: 1, Col: 3, Value: 2.0
Row: 1, Col: 4, Value: 14.0
Row: 1, Col: 5, Value: 2.0
Variable rate
demand notes
(VRDNs) 59%
Commercial
paper 15%
Tender bonds 0%
Municipal
notes 18%
Other 8%
Variable rate
demand notes
(VRDNs) 56%
Commercial
paper 28%
Tender bonds 1%
Municipal
notes 14%
Other 1%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(Registered trademark)
SPARTAN FLORIDA MUNICIPAL MONEY MARKET PORTFOLIO
INVESTMENTS/NOVEMBER 30, 1993
(Showing Percentage of Total Value of Investments)
MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
FLORIDA - 100%
Alachua County Health Facs. (Academic Research Bldg.
Proj. 1989) 2.75% 1/7/94, LOC Barnett Bank of
Jacksonville, VT $ 1,500,000 $ 1,500,000 0106859A
Alachua County Bonds 4.30% 2/1/94, (FSA Insured) 2,340,000 2,346,583
010691BH
Brevard County Hsg. Fin. Auth. (Sun Pointe Bay Apts. Proj.)
Series 1993 2.40%, VRDN 500,000 500,000 106904EC
Brevard County Hsg. Rev. (Palm Place Hsg. Proj.)
Series 1985, 2.30%, LOC Chemical Bank ,VRDN 2,160,000 2,160,000
106904DY
Broward County Airport System Rev. 2.90% 10/1/94
(AMBAC Insured) (c) 1,500,000 1,501,181 114894AU
Broward County Fin. Auth. Multi-Family Hsg. Rev.
(Parkview Partnership Ltd. Proj.)
Series 1985, 2.675%, LOC Fuji Bank, VRDN 200,000 200,000 115027CL
Broward County Hsg. Fin. Auth. (Sawgrass Pines Apt. Proj.)
Series 1993 A, 2.80%, LOC First Union Bank of Florida (c) 11,000,000
11,000,000 115027CX
Broward County Ind. Dev. Auth. Ind. Dev. Rev. (Rib Associates
Proj.) Series 1989, 2.55%, LOC Sun Bank, VRDN ( c) 1,540,000 1,540,000
115032AA
Broward County Sales Tax Rev. Notes Series 1989 B, CP (c):
2.45%, 12/14/93, LOC Industrial Bank of Japan 500,000 499,972 1150329P
2.70%, 1/12/94, LOC Industrial Bank of Japan 2,400,000 2,400,000
1150329N
Charlotte County School Dist. TAN, Series 1993,
3.25% 6/30/94 6,750,000 6,769,155 160803AX
Collier County Ind. Dev. Auth. Wtr. & Swr. Ind. Dev. Rev.
(Marco Island Util. Proj.) Series 1992, 2.55%
LOC Sun Bank, VRDN (c) 5,125,000 5,125,000 19464TAB
Collier County Wtr. & Swr. Ind. Dev. Rev. Series 1990
(Marco Island Util. Proj.) 2.55%, LOC Sun Bank,
VRDN (c) 6,700,000 6,700,000 19464TAA
Dade County Aviation Facs. Rev., Series 1984 A, 2.40%,
LOC Fuji Bank, VRDN 2,500,000 2,500,000 233455FK
Dade County Health Facs. Auth. Hosp. Rev. Bonds (Baptist
Hosp. of Miami Proj.) 6.20% 5/1/94 1,320,000 1,339,275 233904FE
Dade County Ind. Dev. Rev. VRDN:
(Montenay-Dade Proj.) :
Series 1988, 2.40%, LOC Banque Paribas (c) 3,500,000 3,500,000
233494AP
Series 1990 A, 2.40%, LOC Banque Paribas (c) 18,840,000 18,840,000
233561AB
(Dolphins Stadium Proj.) :
Series 1985 B, 2.40%, LOC Citibank, Marine Midland
Bank 2,900,000 2,900,000 233905BA
Series 1985 C, 2.40%, LOC Citibank 2,400,000 2,400,000 233905BB
Series 1985 D, 2.40%, LOC Citibank 1,300,000 1,300,000 233905BC
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Dade County Ind. Dev. Rev. VRDN: - continued
(Flamingo Graphics Proj.) Series 1989, 2.55%
LOC Sun Bank (c) $ 485,000 $ 485,000 233905BV
(Guastafeste Proj.) Series 1987, 2.55%,
LOC Sun Bank (c) 835,000 835,000 233905BN
(Guastafeste Proj.) Series 1991, 2.55%
LOC Sun Bank (c) 815,000 815,000 233905CQ
Dade County Multi-Family Hsg. Rev. (Biscayne View
Apts. Proj.) Series 1993, 2.70%, (BPA Commonwealth
Life Ins. Co.), VRDN (c) 15,000,000 15,000,000 233911HX
Duval County Multi-Family Hsg. Fin. Auth. Rev. (Lakes
of Mayport Apts.) Series 1985 F, 2.60%, LOC Bank of
Boston, VRDN 3,200,000 3,200,000 267152EV
Escambia Co. Solid Waste. Disp. Rev. (Monsanto Co. Proj.),
Series 1993, 2.65%, VRDN, (c) 5,300,000 5,300,000 296163AZ
Florida Dept. of Trans. Tpk. Rev. Rfdg. Ctfs. of Partnership,
Series 1993 A, 2.55%, (FGIC Insured),
(Liquidity Enhancement Merrill Lynch) (b) 12,360,000 12,360,000
343136GC
Florida Hsg. Fin. Agcy. Mult-Family Gtd. Mtg. Rev., VRDN:
Series 1983 K, 2.40% 1,160,000 1,160,000 340737KW
Series 1983 J, 2.40% 2,400,000 2,400,000 340737KV
Florida Hsg. Fin. Agcy. Multi-Family Hsg. Rev., VRDN:
(Beville-Oxford Proj.) Series 1990 B, 2.50% 1,000,000 1,000,000
3407375U
(Brandon-Oxford Proj.) Series 1990 C, 2.50% 5,500,000 5,500,000
3407375T
(Hillsborough-Oxford Proj.) Series D, 2.50% 200,000 200,000 3407375V
(Players Club) Series 1991 C, 3.12%,
LOC Sumitomo Trust 7,100,000 7,100,000 3407376B
(Town Colony II Proj.) Series 1985 EE, 2.40% 1,000,000 1,000,000
340737ZS
Florida League of Cities First Muni. Pooled Loan Prog.,VT:
Series 1, 2.70% 1/18/94, LOC Sumitomo Bank 5,500,000 5,500,000
321991CF
Series 2, 2.75% 1/25/94, LOC Sumitomo Bank 2,900,000 2,900,000
321991CD
Series 2, 2.70% 1/20/94, LOC Sumitomo Bank 2,000,000 2,000,000
321991CH
Florida Muni. Pwr. Agcy., Ctfs. of Partnership
(Stanton II Proj.) Series 1993, 2.55%, (AMBAC Insured),
(Liquidity Enhancement Merrill Lynch) (b) 3,660,000 3,660,000 342816LF
Florida State Board of Ed. Cap. Outlay Multi Modal
Tender Option Bonds, Series 1993 A, 2.55%, (Liquidity
Enhancement Citibank) (b) 5,230,000 5,230,000 341421LX
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Florida State Board of Ed. Cap. Outlay, Series 86 A,
BTP Class A Ctfs., 2.50% (Liquidity Enhancement
Banker's Trust) (b) $ 4,008,600 $ 4,008,600 341421RJ
Florida State Board of Ed. Cap. Outlay Pub Ed.Gen. Oblig.:
Series B, 5.30%, 6/1/94 1,500,000 1,518,838 341421GJ
Series C, 4.80%, 6/1/94 4,700,000 4,749,294 341421MA
Florida State Div. Fin. Dept. Natural Resource Preservation,
Series 2000 A, 6.10% 7/1/94, (AMBAC Insured) 1,000,000 1,018,838
342812QH
Hillsborough County Cap. Impt. Prog. Rev. (Criminal
Justice Facs. Proj. 4.75%, 8/1/94, (FGIC Insured) 3,035,000 3,069,525
43232FCE
Hillsborough County Ind. Dev. Auth. Poll. Cont. Rev. Rfdg.,
(Tampa Elec. Co. Gann Coal Proj.) Series 1992,
1.90%, VRDN 700,000 700,000 432320CM
Homestead Spl. Ins. Assessment Rev. Bonds
(Hurricane Andrew Cvd. Claims)
Series 1993, 2.875% 3/1/94, (MBIA Insured) 1,200,000 1,200,000 437762AB
Indian River County Hosp. Dist. Hosp. Rev.:
Series 1985, 2.50%, LOC Kredietbank, VRDN 2,600,000 2,600,000
454408AB
Series 1988, 2.75%, 1/21/94, LOC Kredietbank, VT 2,350,000 2,350,000
45499CAE
Series 1989, 2.65% 12/7/93, LOC Kredietbank, VT 1,200,000 1,200,000
45499CAA
Series 1989, 2.80% 1/25/94, LOC Kredietbank, VT 3,000,000 3,000,000
45499CAC
Series 1990, 2.80% 2/17/94, LOC Kredietbank, VT 5,000,000 5,000,000
45499CAG
Indian Trace Commty. Dev. Dist. (Broward Co. Basin I
Wtr. Mgmt. Spl. Benefit), VT:
Series 1991:
3.10% 12/6/93, LOC Tokai Bank 1,500,000 1,500,000 227994JR
3.10% 12/7/93, LOC Tokai Bank 2,000,000 2,000,000 227994JT
3.10% 12/6/93, LOC Tokai Bank 3,000,000 3,000,000 227994JS
Jacksonville Elec. Auth. Rev. Ctfs. of Partnership, 2.50%, 4693635T
(Liquidity Enhancement Merrill Lynch ) (b) 3,320,000 3,320,000
4693635T
Jacksonville Elec. Auth. Rev. (St. John's River Pwr. Pk. Sys.)
10% 10/1/94 3,000,000 3,235,092 469363FW
Jacksonville Hosp. Rev. (Baptist Medical Ctr. Proj.), VRDN: 469404CZ
Series 1984, 2.30%, LOC First Union Nat'l Bank 4,710,000 4,710,000
469404CZ
Series 1989, 2.30%, LOC First Union Nat'l Bank 550,000 550,000
46940TAF
Jacksonville Ind. Dev. Rev. (Samuel C. Taylor Foundation
1987 Proj.) 2.55%, LOC Barnett Bank of
Jacksonville, VRDN 1,800,000 1,800,000 469407AY
Lee County Gas Tax Ref. Bd. 3.25% 10/1/94
(MBIA Insured)(d) 1,260,000 1,264,864 52349LAQ
Lee County Hosp. Board Hosp. Rev. Series 1992 C,
(Lee Memorial Hosp. Proj.) 2.70% 1/14/94, VT 3,000,000 3,000,000
523995AE
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Marion County Hsg. Fin. Auth. VRDN:
(Belvedere Apt. Proj.) Series 1985 C, 2.60%,
LOC Bank of Boston $ 2,650,000 $ 2,650,000 568788AA
(Oakhurst Apt. Proj.) Series 1985 E, 2.60%,
LOC Bank of Boston 2,700, 568788AB000 2,700,000
(Paddock Place Proj.) Series 1985 F, 2.60%,
LOC Bank of Boston 2,500,000 2,500,000 568788AC
(Summer Trace Apts.) Series 1985 D, 2.60%
LOC Bank of Boston 2,500,000 2,500,000 568788AD
Martin County Ind. Dev. Auth. Ind. Dev. Rev.
Series 1992 A, (Indiantown Cogeneration Proj.) 2.40%,
LOC Credit Suisse, VRDN (c) 2,900,000 2,900,000 573904AF
Martin County School Dist. TAN 3.40% 6/30/94 5,000,000 5,012,667
573900BA
Miami TAN 3.25% 9/28/94 5,000,000 5,018,856 593388T2
Monroe County School Dist. RAN Series 1992, 3.25%
12/28/93 2,500,000 2,500,000 610518AG
Ocean Hwy, & Port Auth. Series 1990, 2.55%,
LOC ABN-AMRO Bank, VRDN (c) 5,300,000 5,300,00 678438AA0
Okeechobee County Solid Waste Rev. (Chambers Waste Sys.)
Series 1992, 2.90%, LOC NationsBank, VRDN (c) 1,000,000 1,000,000
678438AA
Orange County Health Facs Auth. Custodial Receipt,
Series 1993, 2.60%, (MBIA Insured)
(Liquidity Enhancement Sakura Bank) (b) 13,435,000 13,435,000 684503SY
Orange County Health Fac. Auth. Rfdg. Prog. Rev. Series 1985
2.75%, 1/11/94, (MBIA Insured), VT 3,000,000 3,000,000 68499CAD
Orange County School Dist. TAN 3% 6/30/94 23,500,000 23,536,879
684519AQ
Orange County Solid Waste Facs. Rev. Rfdg. Series 1993,
3.50% 10/1/94 (MBIA Insured) 1,170,000 1,176,666 684534BQ
Orlando & Orange Expressway Rev. Auth. Rev.
Ctfs. of Partnership, 2.55%, (AMBAC Insured)
(Liquidity Enhancement Merrill Lynch) (b) 6,300,000 6,300,000
686543JX
Orlando Util. Commission Wtr. & Elec. Rev. 10.50%
10/1/94 1,360,000 1,485,413 686509RS
Palm Beach County Hsg. Fin. Auth. Rev. (Lake Crystal
Apts. Proj. Phase II) Series 1988 A, 2.50%,
LOC Citibank, VRDN (c) 7,480,000 7,480,000 696508CV
Pasco County School Dist. TAN 3.25% 6/30/94 6,800,000 6,819,297
702537CW
Pasco County School Dist. TRAN 3% 10/27/94 2,160,000 2,160,000 702537CX
Pinellas County Health Facs. Auth. Rev. (Pooled Hosp. Loan
Prog.) 2%, LOC Chemical Bank, VRDN 1,100,000 1,100,000 72316MAA
Putnam County Solid Wst. Assessment Rfdg. Bonds,
Series 1993, 2.70% 6/1/94, (MBIA Insured) 955,000 955,000 746483AN
St. Lucie County School Dist. TAN 3.25% 6/30/94 4,400,000 4,406,047
792076BV
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
FLORIDA - CONTINUED
St. Lucie School Dist RAN 3.75% 4/18/94 $ 2,600,000 $ 2,603,320 792076BU
Sarasota County Pub. Hosp. Dist. Rev., VT:
(Sarasota Memorial Hosp.):
Series 1991, 2.75% 1/13/94 2,700,000 2,700,000 803996LC
Series 1993 A, 2.60% 1/6/94 5,000,000 5,000,000 803996LV
TOTAL INVESTMENTS - 100% $ 319,700,362
Total Cost for Income Tax Purposes $ 319,700,345
SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
FRDN - Floating Rate Demand Notes
MT - Mandatory Tender
OT - Optional Tender
RAN - Revenue Anticipation Notes
TAN - Tax Anticipation Notes
TRAN - Tax & Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
VT - Variable Tender
LEGEND
(c) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(c) Provides evidence of ownership in an underlying pool of municipal
bonds.
(c) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
(c) Security purchased on a delayed delivery basis. Interest rate to be
determined at settlement date (see Note 2 of Notes to Financial
Statements).
CAPITAL LOSS CARRYFORWARDS
At November 30,1993, the fund had a capital loss carryforward of
approximately $1200 of which $100, and $1,100 will expire on November 30,
2000, and 2001, respectively.
SPARTAN FLORIDA MUNICIPAL MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
NOVEMBER 30, 1993
134.ASSETS 135. 136.
137.Investment in securities, at value (Note 1) - See 138. $ 319,700,362
accompanying schedule
139.Cash 140. 4,159,249
141.Interest receivable 142. 1,697,836
143. 144.TOTAL ASSETS 145. 325,557,447
146.LIABILITIES 147. 148.
149.Payable for investments purchased $ 18,697,119 150.
151.Dividends payable 28,361 152.
153.Accrued management fee 91,074 154.
155. 156.TOTAL LIABILITIES 157. 18,816,554
158.159.NET ASSETS 160. $ 306,740,893
161.Net Assets consist of: 162. 163.
164.Paid in capital 165. $ 306,742,133
166.Accumulated net realized gain (loss) on 167. (1,257)
investments
168.Unrealized gain from accretion of market discount 169. 17
(Note 1)
170.171.NET ASSETS, for 306,742,133 shares 172. $ 306,740,893
outstanding
173.174.NET ASSET VALUE, offering price and 175. $1.00
redemption price per share ($306,740,893 (divided by)
306,742,133 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED NOVEMBER 30, 1993
176.177.INTEREST INCOME 178. $ 5,435,697
179.EXPENSES 180. 181.
182.Management fee (Note 4) $ 1,021,002
183.Non-interested trustees' compensation 1,223 184.
185. Total expenses before reductions 1,022,225 186.
187. Expense reductions (Note 5) (655,781) 366,444
188.189.NET INTEREST INCOME 190. 5,069,253
191.REALIZED AND UNREALIZED GAIN (LOSS) ON 193. (1,143)
INVESTMENTS
(NOTE 1)
192.Net realized gain (loss) on investment securities
194.Increase (decrease) in net unrealized gain from 195. 17
accretion
of market discount
196.197.NET GAIN (LOSS) 198. (1,126)
199.200.NET INCREASE IN NET ASSETS RESULTING FROM 201. $ 5,068,127
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED AUGUST 24, 1992
NOVEMBER 30, (COMMENCEMENT
OF OPERATIONS) TO
NOVEMBER 30,
1993 1992
202.INCREASE (DECREASE) IN NET ASSETS
203.Operations $ 5,069,253 $ 124,626
Net interest income
204. Net realized gain (loss) on investments (1,143) (114)
205. Increase (decrease) in net unrealized gain from 17 -
accretion of market discount
206. 5,068,127 124,512
207.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING
FROM OPERATIONS
208.Dividends to shareholders from net interest income (5,069,253) (124,626)
209.Share transactions at net asset value of $1.00 per 523,059,131 58,251,173
share
Proceeds from sales of shares
210. Reinvestment of dividends from net interest 4,777,607 112,763
income
211. Cost of shares redeemed (270,561,793) (8,896,748)
212. 257,274,945 49,467,188
Net increase (decrease) in net assets and shares
resulting from share transactions
213. 257,273,819 49,467,074
214.TOTAL INCREASE (DECREASE) IN NET ASSETS
215.NET ASSETS 216. 217.
218. Beginning of period 49,467,074 -
219. End of period $ 306,740,893 $ 49,467,074
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C>
220. YEAR ENDED AUGUST 24, 1992
NOVEMBER 30, (COMMENCEMENT
1993 OF OPERATIONS) TO
NOVEMBER 30,
1992
221.SELECTED PER-SHARE DATA
222.Net asset value, beginning of period $ 1.000 $ 1.000
223.Income from Investment Operations .025 .008
Net interest income
224. Dividends from net interest income (.025) (.008)
225.Net asset value, end of period $ 1.000 $ 1.000
226.TOTAL RETURN (dagger) 2.51% .78%
227.RATIOS AND SUPPLEMENTAL DATA
228.Net assets, end of period (000 omitted) $ 306,741 $ 49,467
229.Ratio of expenses to average net assets .18% -%
230.Ratio of expenses to average net assets before .50% .50%*
expense reductions (dagger)(dagger)
231.Ratio of net interest income to average net assets 2.48% 2.91%*
</TABLE>
* ANNUALIZED
(dagger) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(dagger)(dagger) SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
for the period ended November 30, 1993
1. SIGNIFICANT ACCOUNTING
POLICIES.
Spartan Florida Municipal Income Portfolio(the income fund) is a fund of
Fidelity Court Street Trust. Spartan Florida Municipal Money Market
Portfolio (the money market fund) is a fund of Fidelity Court Street Trust
II. Each trust is registered under the Investment Company Act of 1940, as
amended (the 1940 Act), as an open-end management investment company.
Fidelity Court Street Trust and Fidelity Court Street Trust II (the trusts)
are organized as a Massachusetts business trust and a Delaware business
trust, respectively. Each fund is authorized to issue an unlimited number
of shares. The following summarizes the significant accounting policies of
the money market fund and the income fund:
SECURITY VALUATION.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
INCOME FUND. Securities are valued based upon a computerized matrix system
and/or appraisals by a pricing service, both of which consider market
transactions and dealer-supplied valuations. Short-term securities maturing
within sixty days are valued either at amortized cost or original cost plus
accrued interest, both of which approximate current value. Securities for
which quotations are not readily available through the pricing service are
valued at their fair value as determined in good faith under consistently
applied procedures under the general supervision of the Board of Trustees.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to income taxes to
the extent that it distributes all of its taxable income for the fiscal
year. The schedules of investments include information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. For the
money market fund, accretion of market discount represents unrealized gain
until realized at the time of a security disposition or maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income. Distributions to shareholders from
realized capital gains on investments, if any, are recorded on the
ex-dividend date.
REDEMPTION FEES. Shares held in the income fund less than 180 days are
subject to a redemption fee equal to .50% of the proceeds of the redeemed
shares.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
A portion of the fee is accounted for as a reduction of transfer agent
expenses. This portion of the redemption fee is used to offset the
transaction costs and other expenses that short-term trading imposes on the
fund and its shareholders. The remainder of the redemption fee is accounted
for as an addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FUTURES CONTRACTS AND OPTIONS. The income fund may invest in futures
contracts and write options. These investments involve, to varying degrees,
elements of market risk and risks in excess of the amount recognized in the
Statement of Assets and Liabilities. The face or contract amounts reflect
the extent of the involvement the high yield fund has in the particular
classes of instruments. Risks may be caused by an imperfect correlation
between movements in the price of the instruments and the price of the
underlying securities and interest rates. Risks also may arise if there is
an illiquid secondary market for the instruments, or due to the inability
of counterparties to perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The fund
may receive compensation for interest forgone on entering into delayed
delivery transactions. The fund identifies securities as segregated in its
custodial records with a value at least equal to the amount of the purchase
commitment.
3. PURCHASES AND SALES OF
INVESTMENTS.
INCOME FUND. Purchases and sales of securities, other than short-term
securities, aggregated $507,056,918 and $333,830,247 respectively. The face
value of futures contracts opened and closed amounted to $ 67,962,094 and
$75,462,094, respectively
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, Fidelity Management
& Research Company (FMR) pays all expenses except the compensation of
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
the non-interested Trustees and certain exceptions such as interest, taxes,
brokerage commissions and extraordinary expenses. FMR receives a fee that
is computed daily at an annual rate of .50% and .55% of average net assets
for the money market and income funds, respectively.
FMR also bears the cost of providing shareholder services to each fund. For
the period, FMR or its affiliates collected certain transaction fees from
shareholders which aggregated $4,401 and $4,170 for the Money Market and
Income funds, respectively.
SUB-ADVISER FEE. As the money market fund's investment sub-adviser, FMR
Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR of
50% of the management fee payable to FMR. The fee is paid prior to any
voluntary expense reimbursements which may be in effect, and after reducing
the fee for any payments by FMR pursuant to the fund's Distribution and
Service Plan.
5. EXPENSE REDUCTIONS.
FMR has voluntarily agreed to reimburse the funds for total operating
expenses (excluding interest, taxes, brokerage commissions and
extraordinary expenses) above a specified percentage of average net assets.
MONEY MARKET FUND. For the period, this expense limitation ranged from an
annual rate of 0% to .40% of average net assets and the reimbursement
amounted to $655,781.
INCOME FUND. For the period, this expense limitation ranged from an annual
rate of .05% to .50% of average net assets and the reimbursement amounted
to $1,147,661.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Court Street
Trust and Fidelity Court Street Trust II
and the Shareholders of the
Spartan Florida Municipal Income
Portfolio and the Spartan Florida
Municipal Money Market Portfolio:
We have audited the accompanying statements of assets and liabilities of
Spartan Florida Municipal Income Portfolio, a portfolio of the Fidelity
Court Street Trust, and Spartan Florida Municipal Money Market Portfolio ,
a portfolio of Fidelity Court Street Trust II, including the schedules of
portfolio investments, as of November 30, 1993, the related statements of
operations for the year then ended, and the statements of changes in net
assets and the financial highlights for the year ended November 30 ,1993
and the period from March 16, 1992 (commencement of operations) to November
30, 1992 for the Spartan Municipal Income Portfolio, and the year ended
November 30, 1993 and the period from August 24, 1992 (commencement of
operations) to November 30, 1992 for the Spartan Florida Municipal Money
Market Portfolio .These financial statements and financial highlights are
the responsibility of the Funds' management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of November 30, 1993 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Spartan Florida Municipal Income Portfolio and Spartan Florida Municipal
Money Market Portfolio as of November 30, 1993, the results of their
operations for the year then ended and the changes in their net assets and
financial highlights for the year ended November 30,1993 and the period
from March 16, 1992 (commencement of operations) to November 30, 1992 for
the Spartan Municipal Income Portfolio, and the year ended November 30,
1993 and the period from August 24,1992 (commencement of operations) to
November 30, 1992 for the Spartan Florida Municipal Money Market Portfolio
in conformity with generally accepted accounting principals.
COOPERS & LYBRAND
Boston, Massachusetts
December 30, 1993
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios.(Registered trademark)
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. FOR MORE
INFORMATION ON ANY
FIDELITY FUND INCLUDING MANAGEMENT FEES AND CHARGES, CALL 1-800-544-8888
FOR A FREE
PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Anne Punzak, Vice President
Thomas D. Maher, Assistant
Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*(see note)
Phyllis Burke Davis*(see note)
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*(see note)
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
United Missouri Bank, N.A.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO
FIDELITY'S TAX-FREE
MONEY MARKET FUNDS
California Tax-Free Money Market
Connecticut Municipal Money Market
Massachusetts Tax-Free Money Market
Michigan Municipal Money Market
New Jersey Tax-Free Money Market
New York Tax-Free Money Market
Ohio Municipal Money Market
Spartan California Municipal
Money Market
Spartan Connecticut Municipal
Money Market
Spartan Florida Municipal Money Market
Spartan Massachusetts Municipal
Money Market
Spartan Municipal Money Fund
Spartan New Jersey Municipal
Money Market
Spartan New York Municipal
Money Market
Spartan Pennsylvania Municipal
Money Market
Tax-Exempt Money Market
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0111
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
(see note) MONEY MARKET ONLY
EXHIBIT 24(A)(2)
FIDELITY
(Registered trademark)
NEW JERSEY
TAX-FREE
MONEY MARKET
PORTFOLIO
ANNUAL REPORT
NOVEMBER 30, 1993
CONTENTS
CHECK PAGE NUMBERS !!!
PERFORMANCE 3 How the fund has done over time.
FUND TALK 5 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 7 A summary of major shifts in the
fund's investments over the last six
months
and one year.
INVESTMENTS 8 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 14 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 18 Footnotes to the financial
statements.
REPORT OF INDEPENDENT 20 The auditor's opinion.
ACCOUNTANTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
PERFORMANCE: THE BOTTOM LINE
To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects the change in a fund's share price
over a given period and reinvestment of its dividends (or income). Yield
measures the income paid by a fund. Since a money market fund tries to
maintain a $1 share price, yield is an important measure of performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1993 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Fidelity New Jersey Tax-Free
Money Market Portfolio 1.94% 23.00% 27.62%
Consumer Price Index 2.68% 21.20% 25.15%
Average New Jersey Tax-Free
Money Market Fund 2.00% n/a n/a
CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, one year, five years, or since the fund started on March 17,
1988. For example, if you invested $1,000 in a fund that had a 5% return
over the past year, you would end up with $1,050. Comparing the fund's
performance to the consumer price index (CPI) helps show how your
investment did compared to inflation. To measure how the fund stacked up
against its peers, you can compare its return to the average New Jersey
tax-free money market fund's total return. This average currently reflects
the performance of 12 New Jersey tax-free money market funds tracked by
IBC/Donoghue. (The periods covered by the CPI and IBC/Donoghue numbers are
the closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1993 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Fidelity New Jersey Tax-Free
Money Market Portfolio 1.94% 4.23% 4.36%
Consumer Price Index 2.68% 3.92% 4.04%
Average New Jersey Tax-Free
Money Market Fund 2.00% n/a n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
11/30/92 2/28/93 5/31/93 8/31/93 11/30/93
Fidelity New Jersey Tax-Fr 2.26% 1.67% 2.14% 1.92% 1.89%
ee
Money Market Portfolio
Average New Jersey 2.20% 1.74% 2.18% 1.80% 1.86%
Tax-Free Money Market
Fund
Fidelity New Jersey Tax-Fr 3.80% 2.81% 3.60% 3.23% 3.18%
ee
Money Market Portfolio -
Tax-equivalent
Average All Taxable 2.77% 2.71% 2.64% 2.64% 2.69%
Money Market Fund
</TABLE>
Row: 1, Col: 1, Value: 2.26
Row: 1, Col: 2, Value: 2.2
Row: 2, Col: 1, Value: 1.67
Row: 2, Col: 2, Value: 1.74
Row: 3, Col: 1, Value: 2.14
Row: 3, Col: 2, Value: 2.18
Row: 4, Col: 1, Value: 1.92
Row: 4, Col: 2, Value: 1.8
Row: 5, Col: 1, Value: 1.89
Row: 5, Col: 2, Value: 1.86
Fidelity New Jersey
Tax-Free Money
Market Portfolio
Average New Jersey
Tax-Free Money
Market Fund
3% -
2% -
1% -
0%
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods, expressed as annual
percentage rates. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The chart above shows the fund's
current seven-day yield at quarterly intervals over the past year. You can
compare these yields to the average tax-free money market fund. Or you can
look at the fund's tax-equivalent yield, which is based on a combined
effective 1993 federal and New Jersey state income tax rate of 40.48%. The
tax-equivalent figures are useful in seeing how the fund stacked up against
the average taxable money market fund as tracked by IBC/Donoghue.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS REFLECT PAST RESULTS RATHER
THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield -- the yield you'd have to
earn on a similar taxable
investment to match the
tax-free yield -- makes the
comparison more meaningful.
Keep in mind that the U.S.
government neither insures nor
guarantees a money market
fund. And there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Scott Orr,
Portfolio Manager of New Jersey Tax-Free Money Market Fund
Q. SCOTT, WHAT INFLUENCED TAX-FREE MONEY MARKET RATES IN NEW JERSEY
LAST YEAR?
A. New Jersey closely tracked the broader market for tax-free issues, which
in turn took its cue from the stable 3% federal funds rate. There were
times, of course, when technical factors nudged rates one way or the other,
and occasionally the movement was sharp. Last January, for example, rates
plunged from highs that for a while had actually surpassed taxable rates,
which is very rare. Otherwise, the market was mostly calm. Rates rose
slightly in April on inflation fears, and again in July during the
borrowing season, but soon fell back into a narrow, more predictable range.
Q. HOW DID YOU RESPOND?
A. While rates were falling late last winter, I shortened the fund's
average maturity. There were signs then that the economy was improving, and
I wanted to be ready in case interest rates turned up. By the end of
January, the fund's average maturity had dropped into the high 50s from
more than 70 days last November. In retrospect, I may have acted
prematurely; for a long time, rates hardly budged. But that gave me more
flexibility later on, and in May I began extending it again. I stayed long
through October, then began to cut back in November as available supply
decreased. The fund's average maturity was 75 days at the end of November,
which was still aggressive.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield, 2.14% six months ago, was 1.89% on November
30, 1993. The latest yield translates into a tax-equivalent yield of 3.18%
for investors in the 40.48% combined effective 1993 federal and state tax
bracket. Through November, the fund's one-year total return was 1.94%,
slightly less than the 2.00% return reported by the average New Jersey
tax-free money market fund, according to IBC/Donoghue.
Q. HOW DO YOU EXPLAIN THE RESULTS?
A. On the down side, the fund was probably a bit shorter than it should
have been last spring. I therefore held fewer higher-yielding securities at
the longer end of the maturity range. Beyond that, the fund has a 20% cap
on issues subject to the alternative minimum tax (AMT); many of my
competitors have higher limits, and that boosted their returns. On the up
side, I've had good success lately with some simple derivatives. They
combine a long-term municipal bond with a "put," or an option to sell to a
third party, typically a bank. The end product is an investment that pays a
short-term variable interest rate and can be put on short notice, usually
seven days. It acts much like any other variable rate demand note the fund
might own, with one key difference: the yield is slightly higher, a fact
that has more to do with the added complexity of these instruments than
added investment risk. All told, derivatives made up about 7% of the fund
at the end of November.
Q. WHAT'S YOUR OUTLOOK AND HOW WILL THAT AFFECT THE WAY YOU MANAGE THE
FUND?
A. I'm not terribly worried about the New Jersey economy. Throughout the
recession, New Jersey has managed its fiscal affairs well, and I see little
danger of a statewide reduction in its credit rating. Nationally, I think
the Fed is unlikely to raise interest rates until the first quarter of
1994. One way to maximize returns in a stable environment is by extending
the fund's average maturity. I'll probably aim for somewhere around the
high 70s.
FUND FACTS
GOAL: tax-free income &
stability by investing in
high-quality, short-term
New Jersey municipal
securities
START DATE: March 17, 1988
SIZE: as of November 30,
1993, over $359 million
MANAGER: Scott Orr, since
January 1992; manager,
Fidelity New Jersey Tax-Free
Money Market Fund and
Fidelity Michigan Municipal
Money Market Fund, since
January 1992;
Fidelity and Spartan
Connecticut Municipal Money
Market Funds, since October
1993
(checkmark)
WORDS TO KNOW
(bullet) COMMERCIAL PAPER: A
security issued by a
municipality to finance capital
or operating needs.
(bullet) FEDERAL FUNDS RATE: The
interest rate banks charge
each other for overnight
loans.
(bullet) MATURITY: The time
remaining before an issuer is
scheduled to repay the
principal amount on a debt
security. When the fund's
average maturity, weighted by
dollar amount, is short, the
fund manager is anticipating a
rise in interest rates. When
the average maturity is long,
the manager is expecting
rates to fall. When the
average maturity is neutral,
the manager wants the
flexibility to respond to rising
rates, while still capturing a
portion of the higher yields
available from issues with
longer maturities.
(bullet) MUNICIPAL NOTE: A security
issued in advance of future
tax or other revenues and
payable from those specific
sources.
(bullet) TENDER BOND: A
variable-rate, long-term
security that gives the fund
manager the option to redeem
the bond at face value before
maturity.
(bullet) VARIABLE RATE DEMAND NOTE
(VRDN): A tender bond that
can be redeemed on short
notice, typically one or seven
days. VRDNs are useful in
managing the fund's average
maturity and liquidity.
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
11/30/93 5/31/93 11/30/92
0 - 30 57 60 59
31 - 90 16 14 14
91 - 180 9 11 7
181 - 397 18 15 20
WEIGHTED AVERAGE MATURITY
11/30/93 5/31/93 11/30/92
Fidelity New Jersey
Tax-Free Money Market
Portfolio 75 days 69 days 73 days
Average New Jersey
Tax-Free Money
Market Fund* 65 days 57 days 67 days
ASSET ALLOCATION
AS OF 11/30/93 AS OF 5/31/93
Row: 1, Col: 1, Value: 50.0
Row: 1, Col: 2, Value: 9.0
Row: 1, Col: 3, Value: 8.0
Row: 1, Col: 4, Value: 30.0
Row: 1, Col: 5, Value: 3.0
Row: 1, Col: 1, Value: 51.0
Row: 1, Col: 2, Value: 8.0
Row: 1, Col: 3, Value: 3.0
Row: 1, Col: 4, Value: 34.0
Row: 1, Col: 5, Value: 4.0
Variable rate
demand notes
(VRDNs) 50%
Commercial
paper 9%
Tender bonds 8%
Municipal
notes 30%
Other 3%
Variable rate
demand notes
(VRDNs) 51%
Commercial
paper 8%
Tender bonds 3%
Municipal
notes 34%
Other 4%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(Registered trademark)
INVESTMENTS NOVEMBER 30, 1993
Showing Percentage of Total Value of Investments
MUNICIPAL SECURITIES (A) - 100%
MOODY'S
RATINGS PRINCIPAL VALUE
(UNAUDITED) (E) AMOUNT (NOTE 1)
NEW JERSEY - 92.5%
Atlantic County Impt. Auth. Rev. (Pooled Gov't. Ln. Prog.)
2.50%, LOC Marine Midland Bank NA,
Hong Kong Shanghai Banking Corp., VRDN $ 7,500,000 $ 7,500,000 048506AA
Atlantic Highland BAN 2.96% 8/19/94 1,000,000 1,000,273 048573HK
Avalon Borough BAN 2.98% 3/16/94 900,000 900,203 053375GN
Bayonne BAN 2.90% 5/04/94 12,000,000 12,007,478 072887NN
Bergen County Gen. Impt. Bonds 4.40% 3/1/94 1,450,000 1,456,659
083761ZV
Bergen County Schools Gen. Oblig. Bonds 4.40% 3/1/94 575,000 577,641
083761ZW
Bernards Township Sewerage Auth. Swr. Rev. Rfdg.,
Series 1985, 3.15% 12/15/93, OT 4,500,000 4,500,000 085329CQ
Bridgewater BAN 2.72% 12/1/93 2,000,000 2,000,000 108709LP
Burlington County BAN 2.77% 11/4/94 1,900,000 1,900,260 121637PK
Camden County BAN 3.25% 2/23/94 2,500,000 2,502,793 132807SW
Camden County Impt. Auth. Solid Waste Disp. Rev. Rfdg. Bonds
(Gtd. Landfill Proj.) 2.75% 7/01/94 1,215,000 1,213,233 13281TAJ
Cape May County BAN 3.25% 8/11/94 14,500,000 14,543,921 139501JB
Cape May County Utils. Auth. Solid Wst. Resource
Recovery Rev. (Daneco Cape May Inc.)
Series 1991, 2.80% 11/30/94, MT 4,000,000 4,000,000 139535CE
Clark Township BAN 2.60% 2/10/94 2,000,000 2,000,185 181558ED
Cumberland County Gen. Impt. Bonds 4.50% 9/15/94
(FSA Insured) 1,200,000 1,216,220 230561LJ
Englewood School BAN 2.65% 1/7/94 2,000,000 2,000,000 293191JE
Essex County Impt. Auth. Rev. (Pooled Gov't Ln. Prog.), VRDN:
Series 1985, 2.35%, LOC Tokai Bank 10,885,000 10,885,000 296809AB
Series 1986 2.35% LOC Banco Santander Puerto Rico 1,800,000 1,800,000
296809AC
Florence Township BAN 3.03% 3/16/94 1,300,000 1,301,038 340279EH
Hudson County BAN 3.26% 10/12/94 3,700,000 3,708,677 443726SD
Hudson County Gen. Oblig. Bonds 4.20% 8/1/94 1,025,000 1,033,668
443726RN
Hudson County Impt. Auth. Rev., VRDN:
(Essential Purp. Pooled Gov't. Ln. Prog.) Series 1986,
2.45%, LOC Marine Midland Bank 27,895,000 27,895,000 443728AB
(Solid Wst. Resource Recovery) Series 1989 A:
2.35%, LOC Swiss Bank Corp 1,500,000 1,500,000 443729AG
2.45%, LOC Sumitomo Bank (b) 6,800,000 6,800,000 443729AE
Hudson County TAN 3.325% 2/17/94 7,000,000 7,007,689 443726RM
Hunterdon County BAN 2.81% 12/2/93 2,300,000 2,300,000 445754BP
Lawrence Township BAN 3.25% 8/24/94 750,000 752,389 520372FT
Lower Township BAN 2.75% 3/1/94 1,000,000 1,000,469 548622CX
Manchester Township BAN 3.06% 7/15/94 1,570,000 1,570,550 562462EJ
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S
RATINGS PRINCIPAL VALUE
(UNAUDITED) (E) AMOUNT (NOTE 1)
NEW JERSEY - CONTINUED
Maplewood Township BAN 2.75% 1/21/94 $ 700,000 $ 700,286 565624EM
Mercer County Impt. Auth. Rev. (Pooled Gov't. Loan Prog.)
Series 1985, 2.35%, LOC Credit Suisse, VRDN 200,000 200,000 587844DC
Mercer County TAN 2.60% 4/15/94 2,200,000 2,200,000 587839NJ
Middlesex Borough BAN 2.85% 2/15/94 1,000,000 1,000,503 596612FP
Monmouth County BAN 3.25% 9/01/94 3,000,000 3,010,945 609558XM
Monmouth County Impt. Auth. Rev.
(Pooled Gov't. Loan Prog.) Series 1986, 2.35%,
LOC Union Bank of Switzerland, VRDN 12,300,000 12,300,000 609566AA
Moorestown Township BAN 2.82% 9/07/94 1,100,000 1,100,570 616004LB
Morristown Township BAN 3.125% 10/13/94 2,000,000 2,006,303 618533SM
New Jersey Custodial Receipts, Series 1991 A-13,
2.30%, (Liquidity Enhancement Sakura Bank) (c) 1,185,000 1,185,000
55377EAE
New Jersey Econ. Dev. Auth. Econ. Dev. Rev. ,VRDN: 6457752P
Rfdg. (856 Centennial Ave. Assoc.) Series 1985, 2.35%,
LOC Barclays Bank (b) 1,750,000 1,750,000 6457752Y
Rfdg. (Curtiss-Wright Corp.) Series 1992, 2.30%,
LOC Bank of Nova Scotia 3,000,000 3,000,000 64577MQE
Rfdg.(Polymeric Res. Corp. Proj.) Series 1998-B,2.50%,
LOC Bank of Tokyo 1,500,000 1,500,000 645775S4
(1420 Chestnum Ave.) Series 1989 FF, 2.50%,
LOC Barclays Bank (b) 1,350,000 1,350,000 6457755W
(AVP Realty Holdings, Inc.) Series 1989 A, 2.50%,
LOC Barclays Bank (b) 1,350,000 1,350,000 6457752S
(Arden Group) Series 1989 BB, 2.50%,
LOC Barclays Bank (b) 1,650,000 1,650,000 6457755X
(Assoc. for Retarded Citizens) Series 89 CC 2.40%
LOC Barclays Bank 1,200,000 1,200,000 6457755Y
(Base 10 Sys.) 2.25%, LOC Bank of New York 4,700,000 4,700,000
6457779A
(Center For Aging Applewook Proj.) 2.30%,
LOC Banque Paribas 2,600,000 2,600,000 6457756N
(Church & Dwight Co.) Series 1991, 2.10%,
LOC Bank of Nova Scotia 3,300,000 3,300,000 64577MEM
(Composite Issue 1987-Series A-G) Series 87-D, 2.50%,
LOC Nat'l. Westminister Bank (b) 885,000 885,000 645775H8
(Composite Issue 1988-Series K-S) Series 1988 P, 2.40%,
LOC Barclays Bank 1,450,000 1,450,000 645775S9
(Composite Issue A-C & E-L) Series 1989 E, 2.40%,
LOC Barclays Bank 600,000 600,000 6457752T
(Dial Realty) Series 1988-L, 2.50%,
LOC Barclays Bank (b) 2,750,000 2,750,000 645775T3
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S
RATINGS PRINCIPAL VALUE
(UNAUDITED) (E) AMOUNT (NOTE 1)
NEW JERSEY - CONTINUED
New Jersey Econ. Dev. Auth. Econ. Dev. Rev.: - continued 6457752P
(E.P. Henry Corp.) Series 1989-K, 2.50%,
LOC Barclays Bank (b) $ 600,000 $ 600,000 6457752W
(Guttenplan's Bakery) Series 1989-G, 2.50%,
LOC Barclays Bank (b) 700,000 700,000 6457752V
(Hirsh Enterprises) Series 1989 II, 2.50%,
LOC Barclay Bank (b) 550,000 550,000 6457755U
(J.W. Holding Group) Series 1989 GG, 2.50%,
LOC Barclays Bank (b) 700,000 700,000 6457756A
(M&S Realty) Series 1988-N, 2.50%,
LOC Barclays Bank (b) 1,050,000 1,050,000 645775T5
(Pictorial Offset Corp.) Series 1989 H, 2.50%,
LOC Barclays Bank (b) 2,400,000 2,400,000 6457752P
(Russ Berrie & Co., Inc.) 2.60%, LOC Citibank 5,100,000 5,100,000
645775QD
New Jersey Econ. Dev. Auth. Facs. Rev. Rfdg.
(Bayonne/IMMT Bayonne Proj.) Series 1993, 1.95%,
LOC First Chicago, VRDN 1,000,000 1,000,000 64577EAC
New Jersey Econ. Dev. Auth. Ind. Dev. Auth. Rev.
(Marriott Corp.) Series 1984, 2.40%,
LOC Nat'l. Westminster Bank, VRDN 1,800,000 1,800,000 645777GV
New Jersey Econ. Dev. Auth. Poll. Cont. Rev.
(Hoffman-La Roche Inc. Proj.) Series 1985, 2.55%,
LOC Bankers Trust, VRDN 3,000,000 3,000,000 6457789A
New Jersey Econ. Dev. Auth. Port Fac. Rev.
(Trailer Marine Proj.) Series 1983, 2.95%,
LOC Chemical Bank, VRDN 900,000 900,000 645901AA
New Jersey Econ. Dev. Auth. Rev.: 645996CY
(Bel Ray Co., Inc.) Series 1989 I, 2.50%,
LOC Barclays Bank, VRDN (b) 250,000 250,000 6457752L
(Chambers Cogeneration Ltd. Partnership 1991 Proj.) VT: (b)
2.40% 12/1/93, LOC Swiss Bank Corp. 4,000,000 4,000,000 645996DC
2.15% 12/9/93, LOC Swiss Bank Corp. 1,500,000 1,500,000 645996DN
2.60%, 1/25/94, LOC Swiss Bank Corp. 2,000,000 2,000,000 645996DG
2.50% 1/26/94, LOC Swiss Bank Corp. 3,800,000 3,800,000 645996DB
2.50% 1/26/94, LOC Swiss Bank Corp. 5,500,000 5,500,000 645996DL
2.50% 2/24/94, LOC Swiss Bank Corp. 2,000,000 2,000,000 645996DH
(Keystone Proj.) Series 1992, VT: (b)
2.15% 12/9/93, LOC Union Bank of Switzerland 1,500,000 1,500,000
645996DM
2.60% 1/18/94 LOC Union Bank of Switzerland 4,000,000 4,000,000
645996CY
2.60% 1/25/94, LOC Union Bank of Switzerland 6,000,000 6,000,000
645996DK
2.55% 1/27/94 LOC Union Bank of Switzerland 1,000,000 1,000,000
645996DF
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S
RATINGS PRINCIPAL VALUE
(UNAUDITED) (E) AMOUNT (NOTE 1)
NEW JERSEY - CONTINUED
New Jersey Econ. Dev. Auth. Rev.: 645996CY - continued
(Morris Hall Proj.) 3%, OT $ 3,700,000 $ 3,700,000 645905HW
New Jersey Econ. Dev. Econ. Rev.
(Richard L. Tauber Issue) Series 93 B-1, 2.30%,
LOC Nat'l. Westminster, VRDN 2,700,000 2,700,000 645905KY
New Jersey Gen. Oblig. Adjustable Rate Trust Ctfs.,
Series 1991-1, 2.35%,
(Liquidity Enhancement Morgan Guaranty) (c) 3,000,000 3,000,000
41595VNJ
New Jersey Gen. Oblig. Tender Option Bonds: (c) 646038YC
Series Mgt-8, 2.35%,
(Liquidity Enhancement Morgan Guaranty) 3,900,000 3,900,000 646038YC
Series Mgt-49C, 2.35%,
(Liquidity Enhancement Morgan Guaranty) 1,000,000 1,000,000 645905KS
Series Mgt-49D, 2.35%,
(Liquidity Enhancement Morgan Guaranty) 4,300,000 4,300,000 645905KT
Series BT-113, 2.80%
(Liquidity Enhancement Bankers Trust) 2,000,000 2,000,000 646038XD
New Jersey Health Care Fac. Fin. Auth. Rev.
(Cap. Asset Fin. Prog.) Series 1985 B, 2.25%,
LOC Chemical Bank, VRDN 5,000,000 5,000,000 645793BK
New Jersey Hsg. & Mtg. Fin. Agcy. Rev.
Series 1993 1-A 2.90% 9/29/94, MT 14,500,000 14,500,000 6461286L
New Jersey Partnership Ctfs.: (c)
Series PA-6, 2.40% 9,020,000 9,020,000 646038YM
Series 1985, 2.55% 1,196,000 1,196,000 645771FS
New Jersey Sports and Exposition Auth., Series 1992 C,
2.15%, (MBIA Insured) VRDN 2,000,000 2,000,000 64603RAW
New Jersey Turnpike Auth. Turnpike Rev., Series 1991 D,
2.20%, (FGIC Insured) VRDN 10,500,000 10,500,000 646139JR
Newark Tax Appeal Bonds 3.45%, (AMBAC Insured) 1,500,000 1,507,919
650366L6
North Arlington BAN:
2.54% 12/10/93 3,294,510 3,294,541 657254GB
2.76% 1/19/94 2,017,000 2,017,155 657254GD
North Brunswick Township TAN 2.75% 2/15/94 2,100,000 2,101,062 658017KM
Ocean City BAN 2.75% 1/20/94 2,500,000 2,500,331 674684HT
Ocean County BAN 3% 12/8/93 3,800,000 3,800,213 674735MK
Ocean County Utilities Auth. Wstwtr. Rev. Bonds
9.75% 1/1/94 4,500,000 4,661,950 674758AP
Passaic County BAN:
2.82% 12/7/93 1,100,000 1,100,040 702724YA
2.72% 3/15/94 2,600,000 2,600,147 702724YD
3.125% 3/15/94 8,488,000 8,498,219 702724YB
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S
RATINGS PRINCIPAL VALUE
(UNAUDITED) (E) AMOUNT (NOTE 1)
NEW JERSEY - CONTINUED
Somerset County Ind. Poll. Cont. Auth. (Somerset New
Jersey Minnesota Mining & Manufacturing 3M)
2.60%, VRDN $ 600,000 $ 600,000 834672AD
South Brunswick Township Gen. Oblig. TAN
2.875% 2/15/94 3,000,000 3,002,280 836785PB
South Plainfield Borough (Middlesex County)
TAN 2.83% 2/15/94 2,000,000 2,001,337 839431NF
Union City BAN 2.96% 10/19/94 1,250,000 1,250,881 905734JR
329,764,028
NEW YORK & NEW JERSEY - 5.1%
New York & New Jersey Port Auth. Rev., VRDN:
Series 1991, 2.3989% (b) 8,800,000 8,800,000 733990QP
Series 1992, 2.175% 6,800,000 6,800,000 733990SE
New York & New Jersey Port Auth. Spl. Proj. Rev.
(Kiac Partners Proj.) Series 3, 2.20%,
LOC Deutsche Bank, VRDN (b) 1,500,000 1,500,000 73358EAF
New York & New Jersey Port Auth. Rev., Series B,
2.55% 2/1/94, CP 1,150,000 1,150,000 733990UG
18,250,000
PUERTO RICO - 2.4%
Puerto Rico Commonwealth TRAN Series A, 3% 7/29/94 8,500,000 8,513,138
745144VX
TOTAL INVESTMENTS - 100% $ 356,527,166
Total Cost for Income Tax Purposes $356,526,758
SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
FRDN - Floating Rate Demand Notes
MT - Mandatory Tender
OT - Optional Tender
RAN - Revenue Anticipation Notes
TAN - Tax Anticipation Notes
TRAN - Tax & Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
VT - Variable Tender
LEGEND
(c) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(c) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
(c) Security provides evidence of ownership in an underlying pool of
municipal bonds.
INCOME TAX INFORMATION
At November 30,1993, the fund had a capital loss carryforward of
approximately $16,000 of which $2,600, $200 and $13,200 will expire on
November 30, 1997, 1999 and 2001, respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
NOVEMBER 30, 1993
6.ASSETS 7. 8.
9.Investment in securities, at value (Note 1) - 10. $ 356,527,166
See accompanying schedule
11.Cash 12. 1,105,457
13.Interest receivable 14. 2,182,885
15. 16.TOTAL ASSETS 17. 359,815,508
18.LIABILITIES 19. 20.
21.Dividends payable $ 14,306 22.
23.Accrued management fee 122,051 24.
25.Other payables and accrued expenses 91,827 26.
27. 28.TOTAL LIABILITIES 29. 228,184
30.31.NET ASSETS 32. $ 359,587,324
33.Net Assets consist of: 34. 35.
36.Paid in capital 37. $ 359,603,005
38.Accumulated net realized gain (loss) on investments 39. (16,089)
40.Unrealized gain from accretion of market discount 41. 408
(Note 1)
42.43.NET ASSETS, for 359,603,005 shares outstanding 44. $ 359,587,324
45.46.NET ASSET VALUE, offering price and redemption 47. $1.00
price per share ($359,587,324 (divided by) 359,603,005 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED NOVEMBER 30, 1993
48.49.INTEREST INCOME 50. $ 9,113,387
51.EXPENSES 52. 53.
54.Management fee (Note 2) $ 1,488,405 55.
56.Transfer agent, accounting and custodian fees and 732,213 57.
expenses (Note 2)
58.Non-interested trustees' compensation 4,956 59.
60.Registration fees 1,302 61.
62.Audit 14,457 63.
64.Legal 3,737 65.
66.Miscellaneous 6,018 67.
68. 69.TOTAL EXPENSES 70. 2,251,088
71.72.NET INTEREST INCOME 73. 6,862,299
74.REALIZED AND UNREALIZED GAIN (LOSS) ON 76. (13,233)
INVESTMENTS
(NOTE 1)
75.Net realized gain (loss) on investment securities
77.Increase (decrease) in net unrealized gain from 78. 389
accretion
of market discount
79.80.NET GAIN (LOSS) 81. (12,844)
82.83.NET INCREASE IN NET ASSETS RESULTING FROM 84. $ 6,849,455
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED NOVEMBER 30,
1993 1992
85.INCREASE (DECREASE) IN NET ASSETS
86.Operations $ 6,862,299 $ 10,027,153
Net interest income
87. Net realized gain (loss) on investments (13,233) 9,751
88. Increase (decrease) in net unrealized gain from 389 11
accretion of market discount
89. 90.NET INCREASE (DECREASE) IN NET ASSETS 6,849,455 10,036,915
RESULTING FROM
OPERATIONS
91.Dividends to shareholders from net interest income (6,862,299) (10,027,153)
92.Share transactions at net asset value of $1.00 per 725,152,808 603,016,717
share
Proceeds from sales of shares
93. Reinvestment of dividends from net interest income 6,595,536 9,491,169
94. Cost of shares redeemed (731,240,792) (621,757,823)
95. Net increase (decrease) in net assets and shares 507,552 (9,249,937)
resulting
from share transactions
96. 97.TOTAL INCREASE (DECREASE) IN NET ASSETS 494,708 (9,240,175)
98.NET ASSETS 99. 100.
101. Beginning of period 359,092,616 368,332,791
102. End of period $ 359,587,324 $ 359,092,616
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
103. YEARS ENDED NOVEMBER 30,
104. 1993 1992 1991 1990 1989
105.SELECTED PER-SHARE DATA
106.Net asset $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
value, beginning
of period
107.Income from .019 .028 .042 .056 .063
Investment
Operations
Net interest
income
108. Dividends (.019) (.028) (.042) (.056) (.063)
from
net interest
income
109.Net asset $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
value,
end of period
110.TOTAL RETURN 1.94% 2.81% 4.29% 5.72% 6.45%
111.RATIOS AND SUPPLEMENTAL
DATA
112.Net assets, $ 359,587 $ 359,093 $ 368,333 $ 443,585 $ 347,485
end of period
(000 omitted)
113.Ratio of .63% .64% .65% .27% .15%
expenses
to average net
assets
114.Ratio of .63% .64% .65% .61% .68%
expenses
to average net
assets before
expense
reductions
115.Ratio of net 1.92% 2.78% 4.23% 5.57% 6.24%
interest
income to
average net
assets
</TABLE>
NOTES TO FINANCIAL STATEMENTS
for the period ended November 30, 1993
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity New Jersey Tax-Free Money Market Portfolio (the fund) is a fund of
Fidelity Court Street Trust II (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the Investment
Company Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Delaware business trust. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. Accretion
of market discount represents unrealized gain until realized at the time of
a security disposition or maturity.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between
the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates ranging from
.15% to .37% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .25%.
For the period, the management fee was equivalent to an annual rate of .42%
of average net assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .14% to .37%. Effective January 1, 1992, FMR has voluntarily
agreed to implement this new group fee rate schedule as it results in the
same or a lower management fee.
SUB-ADVISER FEE. As the fund's investment sub-adviser, FMR Texas Inc., a
wholly owned subsidiary of FMR, receives a fee from FMR of 50% of the
management fee payable to FMR. The
2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SUB-ADVISER FEE - CONTINUED
fee is paid prior to any voluntary expense reimbursements which may be in
effect, and after reducing the fee for any payments by FMR pursuant to the
fund's Distribution and Service Plan.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or
the fund's distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $74,411 for the
period.
TRANSFER AGENT AND ACCOUNTING FEES. United Missouri Bank, N.A. (the Bank)
is the custodian and transfer and shareholder servicing agent for the fund.
The Bank has entered into a sub-contract with Fidelity Service Co. (FSC),
an affiliate of FMR, under which FSC performs the activities associated
with the fund's transfer and shareholder servicing agent and accounting
functions. The fund pays transfer agent fees based on the type, size,
number of accounts and number of transactions made by shareholders. FSC
pays for typesetting, printing and mailing of all shareholder reports,
except proxy statements. The accounting fee is based on the level of
average net assets for the month plus out-of-pocket expenses. For the
period, FSC received transfer agent and accounting fees amounting to
$625,080 and $75,109, respectively.
Shareholders participating in the Fidelity Ultra Service Account(Registered
trademark) Program (the Program) pay a $5.00 monthly fee to Fidelity
Brokerage Services, Inc. (FBSI), an affiliate of FMR, for performing
services associated with the Program. For the period, fees paid to FBSI by
shareholders participating in the Program amounted to $65,737.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
Fidelity Court Street Trust II:
Fidelity New Jersey Tax-Free
Money Market Portfolio:
We have audited the accompanying statement of assets and liabilities of
Fidelity Court Street Trust II: Fidelity New Jersey Tax-Free Money Market
Portfolio including the schedule of portfolio investments, as of November
30, 1993, and the related statement of operations for the year then ended,
the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years
in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
investments owned as of November 30, 1993, by correspondence with the
custodian .. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Court Street Trust II: Fidelity New Jersey Tax-Free Money
Market Portfolio as of November 30, 1993, the results of its operations for
the year then ended, the changes in its net assets for each of the two
years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND
Dallas, Texas
December 21, 1993
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios.(Registered trademark)
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. FOR MORE
INFORMATION ON ANY
FIDELITY FUND INCLUDING MANAGEMENT FEES AND CHARGES, CALL 1-800-544-8888
FOR A FREE
PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
2249 Galiano Street
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
32 West Central Boulevard
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road, South
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
1 West Pennsylvania Ave.
Towson, MD
7401 Wisconsin Avenue
Bethesda, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
101 Cambridge Street
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
38 South Sixth Street
Minneapolis, MN
MISSOURI
700 West 47th Street
Kansas City, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
1903 East Ninth Street
Cleveland, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
1010 Lamar Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
175 East 400 South Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8300 Boone Boulevard
Vienna, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Thomas D. Maher, Assistant
Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
United Missouri Bank, N.A.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO
FIDELITY'S TAX-FREE
MONEY MARKET FUNDS
California Tax-Free Money Market
Connecticut Municipal Money Market
Massachusetts Tax-Free Money Market
Michigan Municipal Money Market
New Jersey Tax-Free Money Market
New York Tax-Free Money Market
Ohio Municipal Money Market
Spartan(Registered trademark) California Municipal
Money Market
Spartan Connecticut Municipal
Money Market
Spartan Florida Municipal Money Market
Spartan Massachusetts Municipal
Money Market
Spartan Municipal Money Fund
Spartan New Jersey Municipal
Money Market
Spartan New York Municipal
Money Market
Spartan Pennsylvania Municipal
Money Market
Tax-Exempt Money Market
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0111
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
EXHIBIT 5(A)
MANAGEMENT CONTRACT
between
FIDELITY COURT STREET TRUST II
Spartan Florida Municipal Money Market Portfolio
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
AGREEMENT made this 16th day of July 1992, by and between Fidelity Court
Street Trust II, a Delaware business trust which may issue one or more
series of shares of beneficial interest (hereinafter called the "Fund"), on
behalf of Spartan Florida Municipal Money Market Portfolio (hereinafter
called the "Portfolio"), and Fidelity Management & Research Company, a
Massachusetts corporation (hereinafter called the "Adviser").
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio
office space and all necessary office facilities, equipment and personnel
for servicing the investments of the Portfolio; and shall pay the salaries
and fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser undertakes to pay all expenses involved in the operation
of the Portfolio, except the following, which shall be paid by the
Portfolio: (i) taxes; (ii) the fees and expenses of all Trustees of the
Fund who are not "interested persons" of the Fund or of the Adviser; (iii)
brokerage fees and commissions; (iv) interest expenses with respect to
borrowings by the Portfolio; and (v) such non-recurring and extraordinary
expenses as may arise, including actions, suits or proceedings to which the
Portfolio is or is threatened to be a party and the legal obligation that
the Portfolio may have to indemnify the Fund's Trustees and officers with
respect thereto. It is understood that service charges billed directly to
shareholders of the Portfolio, including charges for exchanges,
redemptions, or other services, shall not be payable by the Adviser, but
may be received and retained by the Adviser or its affiliates.
The Adviser, at its own expense, shall place all orders for the purchase
and sale of portfolio securities for the Portfolio's account with brokers
or dealers selected by the Adviser, which may include brokers or dealers
affiliated with the Adviser. The Adviser shall use its best efforts to
seek to execute portfolio transactions at prices which are advantageous to
the Portfolio and at commission rates which are reasonable in relation to
the benefits received. In selecting brokers or dealers qualified to
execute a particular transaction, brokers or dealers may be selected who
also provide brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) to the Portfolio
and/or the other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Adviser determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Adviser and its affiliates have
with respect to accounts over which they exercise investment discretion.
The Trustees of the Fund shall periodically review the commissions paid by
the Portfolio to determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits to the
Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. For the services and facilities to be furnished hereunder, the Adviser
shall receive a monthly management fee, payable monthly as soon as
practicable after the last day of each month, at the annual rate of .50% of
the average net assets of the Portfolio (computed in the manner set forth
in the Fund's Trust Instrument) determined as of the close of business on
each day throughout the month; provided that the fee, so computed, shall be
reduced by the compensation, including reimbursement of expenses, paid by
the Portfolio to those Trustees who are not "interested persons" of the
Fund or the Adviser. In the case of initiation or termination of this
Contract during any month, the fee shall be reduced proportionately based
on the number of business days during which it is in effect and the fee
computed upon the average net assets for the business days it is so in
effect for that month.
4. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
5. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 5, this Contract shall continue in force until June 30, 1993
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 5, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment of
any penalty, by action of its Trustees or Board of Directors, as the case
may be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
6. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Trust Instrument and
agrees that the obligations assumed by the Fund pursuant to this Contract
shall be limited in all cases to the Portfolio and its assets, and the
Adviser shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Portfolio or any other Portfolios of
the Fund. In addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Trust Instrument are separate and distinct from those of any and all other
Portfolios.
7. This contract shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, all as
of the date written above.
FIDELITY COURT STREET TRUST II
on behalf of Spartan Florida Municipal
Money Market Portfolio
By /s/J. Gary Burkhead
Senior Vice President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By /s/J. Gary Burkhead
President
LG921740020
EXHIBIT 5(E)
SUB-ADVISORY AGREEMENT
between
FMR Texas Inc.
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
AGREEMENT made this 16th day of July, 1992, by and between FMR Texas Inc.,
a Texas corporation with principal offices at 400 East Las Colinas
Boulevard, Irving, Texas (hereinafter called the "Sub-Adviser") and
Fidelity Management & Research Company, a Massachusetts corporation
with principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Adviser").
WHEREAS the Adviser has entered into a Management Contract with Fidelity
Court Street Trust II, a Delaware business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Spartan Florida Municipal Money Market Portfolio
(hereinafter called the "Portfolio"), pursuant to which the Adviser is to
act as investment manager and adviser to the Portfolio, and
WHEREAS the Sub-Adviser was formed for the purpose of providing investment
management of money market mutual funds, both taxable and tax-exempt,
advising generally with respect to money market instruments, and managing
or providing advice with respect to cash management.
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Adviser and the Sub-Adviser agree as follows:
1. (a) The Sub-Adviser shall, subject to the supervision of the Adviser,
direct the investments of the Portfolio in accordance with the investment
objective, policies and limitations as provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 and rules thereunder, as amended from
time to time (the "1940 Act"), and such other limitations as the Portfolio
may impose by notice in writing to the Adviser or Sub-Adviser. The
Sub-Adviser shall also furnish for the use of the Portfolio office space
and all necessary office facilities, equipment and personnel for servicing
the investments of the Portfolio; and shall pay the salaries and fees of
all personnel of the Sub-Adviser performing services for the Portfolio
relating to research, statistical and investment activities. The
Sub-Adviser is authorized, in its discretion and without prior consultation
with the Portfolio or the Adviser, to buy, sell, lend and otherwise trade
in any stocks, bonds and other securities and investment instruments on
behalf of the Portfolio. The investment policies and all other actions of
the Portfolio are and shall at all times be subject to the control and
direction of the Fund's Board of Trustees.
(b) The Sub-Adviser shall also furnish such reports, evaluations,
information or analyses to the Fund and the Adviser as the Fund's Board of
Trustees or the Adviser may request from time to time or as the Sub-Adviser
may deem to be desirable. The Sub-Adviser shall make recommendations to
the Fund's Board of Trustees with respect to Portfolio policies, and shall
carry out such policies as are adopted by the Trustees. The Sub-Adviser
shall, subject to review by the Board of Trustees, furnish such other
services as the Sub-Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Agreement and
which are not otherwise furnished by the Adviser.
(c) The Sub-Adviser, at its own expense, shall place all orders for the
purchase and sale of portfolio securities for the Portfolio's account with
brokers or dealers selected by the Sub-Adviser, which may include brokers
or dealers affiliated with the Adviser or Sub-Adviser. The Sub-Adviser
shall use its best efforts to seek to execute portfolio transactions at
prices which are advantageous to the Portfolio and at commission rates
which are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction, brokers
or dealers may be selected who also provide brokerage and research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act
of 1934) to the Portfolio and/or the other accounts over which the
Sub-Adviser, Adviser or their affiliates exercise investment discretion.
The Sub-Adviser is authorized to pay a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Sub-Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination
may be viewed in terms of either that particular transaction or the overall
responsibilities which the Sub-Adviser and its affiliates have with respect
to accounts over which they exercise investment discretion. The Trustees
of the Fund shall periodically review the commissions paid by the Portfolio
to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Portfolio.
2. The Sub-Adviser will be compensated by the Adviser on the following
basis for the services to be furnished hereunder: the Adviser agrees to
pay the Sub-Adviser a monthly fee equal to 50% of the management fee which
the Portfolio is obligated to pay the Adviser under the Portfolio's
Management Contract with the Adviser. Such fee shall not be reduced to
reflect expense reimbursements or fee waivers by the Adviser, if any, in
effect from time to time.
3. It is understood that Trustees, officers, and shareholders of the Fund
are or may be or become interested in the Adviser or the Sub-Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser or the Sub-Adviser are or may be or become
similarly interested in the Fund, and that the Adviser or the Sub-Adviser
may be or become interested in the Fund as a shareholder or otherwise.
4. It is understood that the Portfolio will pay all its expenses other
than those expressly stated to be payable by the Sub-Adviser hereunder or
by the Adviser under the Management Contract with the Portfolio, which
expenses payable by the Portfolio shall include, (i) taxes; (ii) the fees
and expenses of all Trustees of the Fund who are not "interested persons"
of the Fund, the Adviser or the Sub-Adviser; (iii) brokerage fees and
commissions; (iv) interest expenses with respect to borrowings by the
Portfolio; and (v) such non-recurring and extraordinary expenses as may
arise, including actions, suits or proceedings to which the Portfolio is or
is threatened to be a party and the legal obligation that the Portfolio may
have to indemnify the Fund's Trustees and officers with respect thereto.
5. The Services of the Sub-Adviser to the Adviser are not to be deemed to
be exclusive, the Sub-Adviser being free to render services to others and
engage in other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Adviser's ability to meet all of its
obligations with respect to rendering investment advice hereunder. The
Sub-Adviser shall for all purposes be an independent contractor and not an
agent or employee of the Adviser or the Fund. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Sub-Adviser, the
Sub-Adviser shall not be subject to liability to the Adviser, the Fund or
to any shareholder of the Portfolio for any act or omission in the course
of, or connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Agreement shall continue in force until June 30,
1993 and indefinitely thereafter, but only so long as the continuance after
such period shall be specifically approved at least annually by vote of the
Fund's Board of Trustees or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Adviser, the
Sub-Adviser and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of the Agreement
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to such Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Adviser, the Sub-Adviser or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or by vote of a majority of its outstanding voting
securities. This Agreement shall terminate automatically in the event of
its assignment.
7. The Sub-Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Trust Instrument of the Fund and
agrees that any obligation of the Fund or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Adviser shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Adviser seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
8. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the
Investment Company Act of 1940 as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized all as of the date written above.
FMR TEXAS INC.
By /s/Charles F. Dornbush
Treasurer
FIDELITY MANAGEMENT &
RESEARCH COMPANY
By /s/J. Gary Burkhead
President
LG921740021
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Court Street Trust II and Shareholders of:
Fidelity Connecticut Municipal Money Market Portfolio
Fidelity New Jersey Tax-Free Money Market Portfolio
Spartan Connecticut Municipal Money Market Portfolio
Spartan Florida Municipal Money Market Portfolio
We hereby consent to the incorporation by reference into each fund's
Statement of Additional Information in Post Effective Amendment No. 10 to
the Registration Statement on Form N-1A (the "Registration Statement") of
Fidelity Connecticut Municipal Money Market Portfolio, and Fidelity New
Jersey Tax-Free Money Market Portfolio, of our reports dated December 21,
1993; and Spartan Connecticut Municipal Money Market Portfolio, and Spartan
Florida Municipal Money Market Portfolio, of our reports dated December 30,
1993 relating to the financial statements and financial highlights which
are incorporated by reference in said Statements of Additional Information.
We also consent to the incorporation by reference in this Post-Effective
Amendment of our reports dated, December 30, 1993, accompanying the
financial statements of Spartan Connecticut Municipal High Yield Portfolio
and Spartan Florida Municipal Income Portfolio.
We further consent to the references to our Firm in the Prospectuses and
Statements of Additional Information under the headings "Financial
Highlights" and "Auditor."
/s/ COOPERS & LYBRAND
COOPERS & LYBRAND
Dallas, Texas
January 6, 1994
