SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (No. 33-43758)
UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 16 [X]
and
REGISTRATION STATEMENT (No. 811-6453)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 16 [X]
Fidelity Court Street Trust II
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: 617-570-7000
Arthur S. Loring, Secretary
82 Devonshire Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) immediately upon filing pursuant to paragraph (b).
( ) on ( ) pursuant to paragraph (b).
( ) 60 days after filing pursuant to paragraph (a)(1).
(X) on (January 10, 1998) pursuant to paragraph (a)(1) of Rule 485
( ) 75 days after filing pursuant to paragraph (a)(2).
( ) on ( ) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
( ) this post-effective amendment designates a new effective date
for a previously filed
post-effective amendment.
NEW JERSEY MUNICIPAL FUNDS:
SPARTAN NEW JERSEY MUNICIPAL MONEY MARKET FUND
FIDELITY NEW JERSEY MUNICIPAL MONEY MARKET FUND
CROSS-REFERENCE SHEET
FORM N-1A
ITEM NUMBER
PROSPECTUS PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C>
1 Cover Page
2a Expenses
b,c Contents; The Fund at a Glance; Who May Want to Invest
3a **
b *
c,d Performance
4a(i) Charter
(ii) The Fund at a Glance; Investment Principles and Risks
b Investment Principles and Risks
c Who May Want to Invest; Investment Principles and Risks
5a Charter
b(i) Cover Page; The Fund at a Glance; Charter; Doing Business with Fidelity
b(ii) Charter
b(iii) Expenses; Breakdown of Expenses
c Charter
d Charter; Breakdown of Expenses
e Cover Page; Charter
f Expenses
g(i) Charter
g(ii) *
5A Performance
6a(i) Charter
a(ii) How to Buy Shares; How to Sell Shares; Transaction Details; Exchange
Restrictions
a(iii) Charter
b *
c Transaction Details; Exchange Restrictions
d *
e Doing Business with Fidelity; How to Buy Shares; How to Sell Shares;
Investor Services
f,g Dividends, Capital Gains, and Taxes
h *
7a Cover Page; Charter
b Expenses; How to Buy Shares; Transaction Details
c *
d How to Buy Shares
e *
f Breakdown of Expenses
8 How to Sell Shares; Investor Services; Transaction Details; Exchange
Restrictions
9 *
</TABLE>
* Not Applicable
** To be filed by subsequent amendment.
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how
each fund invests and the services available to shareholders.
To learn more about each fund and its investments, you can obtain a
copy of each fund's most recent financial report and portfolio
listing, or a copy of the Statement of Additional Information (SAI)
dat ed January 10, 1998. The SAI has been filed with the
Securities and Exchange Commission (SEC) and is available along with
other related materials on the SEC's Internet Web site
(http://www.sec.gov). The SAI is incorporated herein by reference
(legally forms a part of the prospectus). For a free copy of either
document, call Fidelity at 1-800-544-8888.
Investments in money market funds are neither insured nor
guaranteed by the U.S. Government, and there can be no assurance that
a fund will maintain a stable $1.00 share price.
THE MONEY MARKET FUNDS MAY INVEST A SIGNIFICANT PERCENTAGE OF
THEIR ASSETS IN THE SECURITIES OF A SINGLE ISSUER AND THEREFORE
MAY BE RISKIER THAN OTHER TYPES OF MONEY MARKET FUNDS.
Mutual fund shares are not deposits or obligations of, or guaranteed
by, any depository institution. Shares are not insured by the FDIC,
Federal Reserve Board, or any other agency, and are subject to
investment risks, including possible loss of principal amount
invested.
LIKE ALL MUTUAL FUNDS, THESE
SECURITIES HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
NJT-pro-0198
NEW JERSEY
MUNICIPAL
FUNDS
Each fund seeks a high level of current income free from
federal income tax and the New Jersey Gross Income Tax.
SPARTAN(registered trademark) NEW JERSEY MUNICIPAL MONEY MARKET FUND
(fund number 423, trading symbol FSJXX)and FIDELITY NEW JERSEY
MUNICIPAL MONEY MARKET FUND
(fund number 417, trading symbol FNJXX)
maintain a stable $1.00 share price by investing in high-quality,
short-term municipal money market securities.
SPARTAN(registered trademark) NEW JERSEY MUNICIPAL INCOME FUND
invests in investment-grade municipal securities.
(fund number 416, trading symbol FNJHX)
PROSPECTUS
JANUARY 10, 1998(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET,
BOSTON, MA 02109
CONTENTS
KEY FACTS THE FUNDS AT A GLANCE
WHO MAY WANT TO INVEST
EXPENSES Each fund's yearly operating
expenses.
FINANCIAL HIGHLIGHTS A summary of
each fund's financial data.
PERFORMANCE How each fund has done
over time.
THE FUNDS IN DETAIL CHARTER How each fund is organized.
INVESTMENT PRINCIPLES AND RISKS Each
fund's overall approach to investing.
BREAKDOWN OF EXPENSES How
operating costs are calculated and what
they include.
YOUR ACCOUNT DOING BUSINESS WITH FIDELITY
TYPES OF ACCOUNTS Different ways to
set up your account.
HOW TO BUY SHARES Opening an
account and making additional
investments.
HOW TO SELL SHARES Taking money out
and closing your account.
INVESTOR SERVICES Services to help you
manage your account.
SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS,
ACCOUNT POLICIES AND TAXES
TRANSACTION DETAILS Share price
calculations and the timing of purchases
and redemptions.
EXCHANGE RESTRICTIONS
KEY FACTS
THE FUNDS AT A GLANCE
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946
and is now America's largest mutual fund manager. FMR Texas Inc. (FMR
Texas), a subsidiary of FMR, chooses investments for Spartan New
Jersey Municipal Money Market and Fidelity New Jersey Municipal Money
Market.
As with any mutual fund, there is no assurance that a fund will
achieve its goal.
SPARTAN NJ MUNI MONEY
FIDELITY NJ MUNI MONEY
GOAL: High current tax-free income for New Jersey residents, while
maintaining a stable $1.00 share price.
STRATEGY: Invest mainly in high-quality, short-term municipal money
market securities whose interest is free from federal income tax and
the New Jersey Gross Income Tax.
SIZE: As of November 30, 1997, Spartan NJ Muni Money and Fidelity NJ
Muni Money had over $__ [m/b]illion and $__ [m/b]illion in assets,
respectively.
SPARTAN NJ MUNI INCOME
GOAL: High current tax-free income for New Jersey residents.
STRATEGY: Invests normally in investment-grade municipal securities
whose interest is free from federal income tax and the New Jersey
Gross Income Tax. Managed to generally react to changes in interest
rates similarly to municipal bonds with maturities between 8 and 18
years.
SIZE: As of November 30, 1997, the fund had over $__ [m/b]illion 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
and from the New Jersey Gross Income Tax. Each fund's level of risk
and potential reward depend on the quality and maturity of its
investments. The money market funds are managed to keep
their share prices stable at $1.00. The bond fund, with its broader
range of investments, has the potential for higher yields, but also
carries a higher degree of risk. You should consider your investment
objective and tolerance for risk when making an investment
decision.
The value of the funds' investments and the income they generate will
vary from day to day, and generally reflect interest rates, market
conditions, and other federal and state political and economic news.
When you sell your shares of the bond fund, they may be worth
more or less than what you paid for them. By themselves, these funds
do not constitute a balanced investment plan.
Non-diversified funds may invest a greater portion of their assets in
securities of individual issuers than diversified funds. As a result,
changes in the market value of a single issuer could cause greater
fluctuations in share value than would occur in a more diversified
fund.
THE SPECTRUM OF
FIDELITY FUNDS
BROAD CATEGORIES OF FIDELITY
FUNDS ARE PRESENTED HERE IN
ORDER OF ASCENDING RISK.
GENERALLY, INVESTORS SEEKING TO
MAXIMIZE RETURN MUST ASSUME
GREATER RISK. SPARTAN NJ
MUNICIPAL MONEY MARKET AND
FIDELITY NJ MUNICIPAL MONEY
MARKET ARE IN THE MONEY
MARKET CATEGORY, AND SPARTAN
NJ MUNICIPAL INCOME IS IN THE
INCOME CATEGORY.
(RIGHT ARROW) MONEY MARKET SEEKS
INCOME AND STABILITY BY
INVESTING IN HIGH-QUALITY,
SHORT-TERM INVESTMENTS.
(RIGHT ARROW) INCOME SEEKS INCOME BY
INVESTING IN BONDS.
(SOLID BULLET) GROWTH AND INCOME SEEKS
LONG-TERM GROWTH AND INCOME
BY INVESTING IN STOCKS AND
BONDS.
(SOLID BULLET) GROWTH SEEKS LONG-TERM
GROWTH BY INVESTING MAINLY IN
STOCKS.
(CHECKMARK)
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you may pay when you buy,
sell, or exchange shares of a fund. In addition, you may be charged an
annual account maintenance fee if your account balance falls below
$2,500. See "Transaction Details," page __, for an explanation of how
and when these charges apply.
Sales charge on purchases None
and reinvested distributions
Deferred sales charge on redemptions None
Redemption fee (Short-term trading fee)
on shares held less than 180 days
(as a % of amount redeemed)
for Spartan NJ Muni Income (only) 0.50%
Exchange fee $5.00
for Spartan NJ Muni Money (only)
Wire transaction fee $5.00
for Spartan NJ Muni Money (only)
Checkwriting fee, per check written $2.00
for Spartan NJ Muni Money (only)
Account closeout fee $5.00
for Spartan NJ Muni Money (only)
Annual account maintenance fee $12.00
(for accounts under $2,500)
THE FEES FOR INDIVIDUAL TRANSACTIONS are waived if your account
balance at the time of the transaction is $50,000 or more.
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's
assets. Each of Spartan NJ Municipal Money Market and Spartan
NJ Municipal Income pays a management fee to FMR. FMR is
responsible for the payment of all other expenses for Spartan NJ
Municipal Money Market and Spartan NJ Municipal Income with
certain limited exceptions. Fidelity NJ Municipal Money Market pays
a management fee to FMR. Fidelity NJ Municipal Money Market also
incurs other expenses for services such as maintaining shareholder
records and furnishing shareholder statements and financial reports. A
fund's expenses are factored into its share price or dividends and are
not charged directly to shareholder accounts (see "Breakdown of
Expenses" page ).
The following figures are based on historical expenses [ ONLY IF
A FUND HAS A MATERIAL (AS DIRECTED BY FUND REPORTING) TRANSFER AGENT
OR REDEMPTION FEE REIMBURSEMENT, EXPENSE CAP CHANGE, OR MANAGEMENT
CONTRACT CHANGE OTHER THAN A BREAKPOINT CHANGE: , adjusted to
reflect current fees,] of each fund and are calculated as a percentage
of average net assets of each fund. [FUND REPORTING WILL DETERMINE IF
ANY OF THE FOLLOWING IS APPROPRIATE. IF YOU ARE A-FILING, INCLUDE THE
LANGUAGE: A portion of the brokerage commissions that certain funds
pay is used to reduce each of those fund's expenses. In addition, on
behalf of Spartan NJ Municipal Money Market and Spartan NJ Municipal
Income, FMR has entered into arrangements with each fund's custodian
and transfer agent whereby credits realized as a result of uninvested
cash balances are used to reduce fund expenses. Fidelity NJ Municipal
Money Market has entered into arrangements with its custodian and
transfer agent whereby credits realized as a result of uninvested cash
balances are used to reduce custodian and transfer agent expenses.
Including these reductions, the total fund operating expenses
presented in the table would have been __% for Spartan NJ Municipal
Money Market, __% for Fidelity NJ Municipal Money Market, and __% for
Spartan NJ Municipal Income.
SPARTAN NJ MUNI MONEY
Management fee [(after reimbursement)] %
12b-1 fee None
Other expenses %
Total fund operating expenses %
FIDELITY NJ MUNI MONEY
Management fee [(after reimbursement)] %
12b-1 fee None
Other expenses %
Total fund operating expenses %
SPARTAN NJ MUNI INCOME
Management fee [(after reimbursement)] %
12b-1 fee None
Other expenses %
Total fund operating expenses %
EXAMPLES: Let's say, hypothetically, that each fund's annual
return is 5% and that your shareholder transaction expenses and
each fund's annual operating expenses are exactly as just
described. For every $1,000 you invested, here's how much you would
pay in total expenses if you close your account after the number of
years indicated and, for Spartan NJ Municipal Money Market, if you
leave your account open:
SPARTAN NJ MUNI MONEY
Account open Account closed
1 year $ $
3 years $ $
5 years $ $
10 years $ $
FIDELITY NJ MUNI MONEY
1 year $
3 years $
5 years $
10 years $
SPARTAN NJ MUNI INCOME
1 year $
3 years $
5 years $
10 years $
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected expenses or returns, all of which may vary.
[IF FUND IS IN REIMBURSEMENT: FMR has voluntarily agreed to reimburse
[Name(s) of Fund(s) in Reimbursement] to the extent that total
operating expenses exceed __% of its average net assets. If this
agreement were not in effect, the management fee, other expenses, and
total operating expenses would have been __%, __%, and __%,
respectively. Expenses eligible for reimbursement do not include
interest, taxes, brokerage commissions, or extraordinary expenses.]
FINANCIAL HIGHLIGHTS
The financial highlights tables that follow have been audited
by either Coopers & Lybrand L.L.P. (Fidelity NJ Municipal
Money Market and Spartan NJ Municipal Income) or Price Waterhouse
LLP (Spartan NJ Municipal Money Market) , independent
accountants. The funds' financial highlights, financial statements,
and reports of the auditors are included in each fund's Annual
Report, and are incorporated by reference into (are legally a part of)
the funds' SAI. Contact Fidelity for a free copy of an Annual Report
or the SAI..
[FINANCIAL HIGHLIGHTS TO BE FILED BY SUBSEQUENT AMENDMENT.]
PERFORMANCE
Mutual fund performance can be measured as TOTAL RETURN or
YIELD. The total returns that follow are based on historical fund
results and do not reflect the effect of any transaction fees you may
have paid. The figures would be lower if fees were taken into account.
Each fund's fiscal year runs from December 1 through November 30. The
tables below show each fund's performance over past fiscal
years compared to different measures, including a comparative index
and a competitive funds average for the bond fund and a measure of
inflation for the money market funds. Data for the comparative index
for Spartan NJ Municipal Income is available only from September 30,
1995 to the present. The chart on page __ presents calendar year
performance for the bond fund .
AVERAGE ANNUAL TOTAL RETURNS
Fiscal periods ended Past 1 Past 5 Life of
November 30, 1997 year years fundA
Spartan NJ Muni Money % % %
Fidelity NJ Muni Money % % %
Consumer Price Index % % %
Spartan NJ Muni Income % % %
Lehman Bros. NJ Muni. Bond Index w/Prt. Auth. of NY/NJ % % %
Lipper NJ Muni. Debt Funds Avg. % % %
CUMULATIVE TOTAL RETURNS
Fiscal periods ended Past 1 Past 5 Life of
November 30, 1997 year years fundA
Spartan NJ Muni Money % % %
Fidelity NJ Muni Money % % %
Consumer Price Index % % %
Spartan NJ Muni Income % % %
Lehman Bros. NJ Muni. Bond Index w/Prt. Auth. of NY/NJ % % %
Lipper NJ Muni. Debt Funds Avg. % % %
A FROM COMMENCEMENT OF OPERATIONS MAY 1, 1990 (SPARTAN NJ MUNICIPAL
MONEY MARKET), MARCH 17, 1988 (FIDELITY NJ MUNICIPAL MONEY MARKET),
JANUARY 1, 1988 (SPARTAN NJ MUNICIPAL INCOME).
[IF APPLICABLE: If FMR had not reimbursed certain fund expenses during
these periods, [yields and] total returns would have been lower.
UNDERSTANDING
PERFORMANCE
YIELD ILLUSTRATES THE INCOME
EARNED BY A FUND OVER A RECENT
PERIOD. SEVEN-DAY YIELDS ARE
THE MOST COMMON ILLUSTRATION OF
MONEY MARKET PERFORMANCE.
30-DAY YIELDS ARE USUALLY USED
FOR BOND FUNDS. YIELDS CHANGE
DAILY, REFLECTING CHANGES IN
INTEREST RATES.
TOTAL RETURN REFLECTS BOTH THE
REINVESTMENT OF INCOME AND
CAPITAL GAIN DISTRIBUTIONS, AND
ANY CHANGE IN A FUND'S SHARE
PRICE.
(CHECKMARK)
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated
period of time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate
of return that, if achieved annually, would have produced the same
cumulative total return if performance had been constant over the
entire period. Average annual total returns smooth out variations in
performance; they are not the same as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. When a
money market fund yield assumes that income earned is
reinvested, it is called an EFFECTIVE YIELD. A TAX-EQUIVALENT YIELD
shows what an investor would have to earn before taxes to equal a
tax-free yield. Yields for the bond fund are calculated
according to a standard that is required for all stock and bond funds.
Because this differs from other accounting methods, the quoted yield
may not equal the income actually paid to shareholders.
YEAR-BY-YEAR TOTAL RETURNS
CALENDAR YEARS 1989 1990 1991 1992 1993 1994 1995 1996
SPARTAN NJ
MUNI INCOME % % % % % % % %
LEHMAN BROS. NJ MUNI. BOND INDEX
W/PRT. AUTH. OF NY/NJ % % % % % % % %
LIPPER NJ MUNI. DEBT
FUNDS AVG. % % % % % % % %
CONSUMER PRICE INDEX % % % % % % % %
PERCENTAGE (%)
(LARGE SOLID BOX) SPARTAN NJ
MUNI INCOME
ROW: 1, COL: 1, VALUE: NIL
ROW: 1, COL: 2, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 2, COL: 2, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 3, COL: 2, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 4, COL: 2, VALUE: NIL
ROW: 5, COL: 1, VALUE: NIL
ROW: 5, COL: 2, VALUE: NIL
ROW: 6, COL: 1, VALUE: NIL
ROW: 6, COL: 2, VALUE: NIL
ROW: 7, COL: 1, VALUE: NIL
ROW: 7, COL: 2, VALUE: NIL
ROW: 8, COL: 1, VALUE: NIL
ROW: 8, COL: 2, VALUE: NIL
ROW: 9, COL: 1, VALUE: NIL
ROW: 9, COL: 2, VALUE: NIL
ROW: 10, COL: 1, VALUE: NIL
ROW: 10, COL: 2, VALUE: NIL
LEHMAN BROTHERS NEW JERSEY MUNICIPAL BOND INDEX WITH PORT AUTHORITY OF
NY/NJ is a total return performance benchmark for New Jersey
investment-grade municipal bonds, including Port Authority of New York
and New Jersey bonds, with maturities of at least one year.
Unlike the bond fund's returns, the total returns of the
comparative index do not include the effect of any brokerage
commissions, transaction fees, or other costs of investing.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. Government.
THE COMPETITIVE FUNDS AVERAGE is the Lipper New Jersey
Municipal Debt Funds Average for Spartan NJ Municipal Income. As of
November 30, 1997, the average reflected the performance of
___ mutual funds with similar investment objectives. This
average, published by Lipper Analytical Services, Inc., excludes the
effect of sales loads.
The funds' recent strategies, performance, and holdings are detailed
twice a year in financial reports, which are sent to all shareholders.
For current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools
shareholders' money and invests it toward a specified goal. Spartan
NJ Municipal Money Market and Fidelity NJ Municipal Money Market
are non-diversified funds of Fidelity Court Street Trust II.
Spartan NJ Municipal Income is a non-diversified fund of Fidelity
Court Street Trust. Both trusts are open-end management
investment companies. Fidelity Court Street Trust II was
organized as a Delaware business trust on June 20, 1991. Fidelity
Court Street Trust was organized as a Massachusetts business trust
on April 21, 1977. There is a remote possibility that one fund
might become liable for a misstatement in the prospectus about another
fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is
responsible for protecting the interests of shareholders. The trustees
are experienced executives who meet periodically throughout the year
to oversee the funds' activities, review contractual arrangements with
companies that provide services to the fund s, and review the
fund s' performance. The trustees serve as trustees for other
Fidelity funds. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUND S MAY HOLD SPECIAL SHAREHOLDER MEETINGS AND MAIL PROXY
MATERIALS. These meetings may be called to elect or remove trustees,
change fundamental policies, approve a management contract, or for
other purposes. Shareholders not attending these meetings are
encouraged to vote by proxy. Fidelity will mail proxy materials in
advance, including a voting card and information about the proposals
to be voted on. T he number of votes you are entitled to is
based upon the dollar value of your investment.
FMR AND ITS AFFILIATES
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(solid bullet) Number of Fidelity mutual
funds: over ___
(solid bullet) Assets in Fidelity mutual
funds: over $___ billion
(solid bullet) Number of shareholder
accounts: over __ million
(solid bullet) Number of investment
analysts and portfolio
managers: over ___
(checkmark)
The funds are managed by FMR, which chooses their investments
and handles their business affairs. FMR Texas, located in Irving,
Texas, has primary responsibility for providing investment management
services for the money market funds.
Norm Lind is manager of Spartan NJ Municipal Income, which he has
managed since April 1997. He also manages several other Fidelity
funds. Since joining Fidelity in 1986, Mr. Lind has worked as an
analyst and manager.
Fidelity investment personnel may invest in securities for their own
account s pursuant to a code of ethics that establishes
procedures for personal investing and restricts certain transactions.
Fidelity Distributors Corporation (FDC) distributes and markets
Fidelity's funds and services.
UMB Bank, n.a. (UMB) is each fund's transfer agent, and is
located at 1010 Grand Avenue, Kansas City, Missouri. UMB
employs Fidelity Service Company, Inc. (FSC) to perform transfer
agent servicing functions for each fund.
FMR Corp. is the ultimate parent company of FMR and FMR Texas. Members
of the Edward C. Johnson 3d family are the predominant owners of a
class of shares of common stock representing approximately 49% of the
voting power of FMR Corp. Under the Investment Company Act of 1940
(the 1940 Act), control of a company is presumed where one individual
or group of individuals owns more than 25% of the voting stock of that
company; therefore, the Johnson family may be deemed under the 1940
Act to form a controlling group with respect to FMR Corp.
[NOTE: INCLUDE BENEFICIAL OWNERSHIP INFORMATION, IF APPLICABLE: As
of [DATE NOT EARLIER THAN 30 DAYS PRIOR TO SEC FILING DATE],
approximately ____% of [NAME OF FUND]'s total outstanding shares were
held by [NAME OF SHAREHOLDER]; approximately ___% of [NAME OF FUND]'s
total outstanding shares were held by [NAME OF SHAREHOLDER]; and
approximately ___% of [NAME OF FUND]'s total outstanding shares were
held by [NAME OF SHAREHOLDER].]
FMR may use its broker-dealer affiliates and other firms that sell
fund shares to carry out a fund's transactions, provided that the fund
receives brokerage services and commission rates comparable to those
of other broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
MONEY MARKET FUNDS IN GENERAL. The yield of a money market
fund will change daily based on changes in interest rates and market
conditions. Money market funds comply with industry-standard
requirements on the quality, maturity, and diversification of their
investments, which are designed to help maintain a stable $1.00 share
price. Of course, there is no guarantee that a money market fund will
be able to maintain a stable $1.00 share price. It is possible that a
major change in interest rates or a default on the fund's investments
could cause its share price (and the value of your investment) to
change.
FIDELITY'S APPROACH TO MONEY MARKET FUNDS. Money market
funds earn income at current money market rates. In managing money
market funds, FMR stresses preservation of capital, liquidity, and
income. The fund will purchase only high-quality securities that FMR
believes present minimal credit risks and will observe maturity
restrictions on securities it buys.
SPARTAN NJ MUNICIPAL MONEY MARKET seeks to earn a high level of
current income that is free from federal income tax and 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. 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 is free from federal income tax.
FIDELITY NJ MUNICIPAL MONEY MARKET seeks to earn a high level of
current income that is free from federal income tax and 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. FMR normally invests so that at least 80% of the fund' s income
is free from federal income tax and New Jersey Gross Income Tax.
BOND FUNDS IN GENERAL. The yield and share price of a bond fund change
daily based on changes in interest rates and market conditions, and in
response to other economic, political or financial events. The types
and maturities of the securities a bond fund purchases and the credit
quality of their issuers will impact a bond fund's reaction to these
events.
INTEREST RATE RISK. In general, bond prices rise when interest rates
fall and fall when interest rates rise. Longer-term bonds are usually
more sensitive to interest rate changes. In other words, the longer
the maturity of a bond, the greater the impact a change in interest
rates is likely to have on the bond's price. In addition, short-term
interest rates and long-term interest rates do not necessarily move in
the same amount or in the same direction. A short-term bond tends to
react to changes in short-term interest rates and a long-term bond
tends to react to changes in long-term interest rates.
ISSUER RISK. The price of a bond is affected by the credit quality of
its issuer. Changes in the financial condition of an issuer, changes
in general economic conditions, and changes in specific economic
conditions that affect a particular type of issuer can impact the
credit quality of an issuer. Lower quality bonds generally tend to be
more sensitive to these changes than higher quality bonds.
MUNICIPAL MARKET RISK. Municipal securities are backed by the entity
that issued them and/or other revenue streams. Municipal security
values may be significantly affected by political changes as well as
uncertainties in the municipal market related to taxation or the
rights of municipal securities holders.
FIDELITY'S APPROACH TO BOND FUNDS. The total return from a bond
includes both income and price gains or losses. In selecting
investments for a bond fund, FMR considers a bond's expected income
together with its potential for price gains or losses. While income is
the most important component of bond returns over time, a bond fund's
emphasis on income does not mean the fund invests only in the
highest-yielding bonds available, or that it can avoid losses of
principal.
FMR focuses on assembling a portfolio of income-producing bonds that
it believes will provide the best balance between risk and return
within the range of eligible investments for the fund. FMR's
evaluation of a potential investment includes an analysis of the
credit quality of the issuer, its structural features, its current
price compared to FMR's estimate of its long-term value, and any
short-term trading opportunities resulting from market inefficiencies.
In structuring a bond fund, FMR allocates assets among different
market sectors (for example, general obligation bonds of a state or
bonds financing a specific project) and different maturities based on
its view of the relative value of each sector or maturity. The
performance of the fund will depend on how successful FMR is in
pursuing this approach.
SPARTAN NJ MUNICIPAL INCOME seeks high current income that is free
from federal income tax and New Jersey Gross Income Tax by investing
in investment-grade municipal securities under normal conditions. FMR
normally invests so that at least 80% of the fund's income is free
from federal income tax and New Jersey Gross Income Tax.
Although the fund does not maintain an average maturity within a
specified range, FMR seeks to manage the fund so that it generally
reacts to changes in interest rates similarly to municipal bonds with
maturities between eight and 18 years.
EACH FUND normally invests in municipal securities. As required by
New Jersey statute, FMR normally invests so that at least 80% of the
aggregate principal amount of each fund's total investments is
invested in state municipal securities.
In addition, FMR may invest all of each fund's assets in
municipal securities issued to finance private activities. The
interest from these securities is a tax-preference item for purposes
of the federal alternative minimum tax.
Each fund's performance is affected by the economic and
political conditions within the state of New Jersey. The state has
benefitted from the national recovery. New Jersey's recovery is in its
sixth year and appears to be sustainable now that the national
economy has had a "soft landing." New Jersey relies heavily on federal
assistance, receiving more aid than most states.
The funds differ primarily with respect to the level of income
provided and the stability of their share price. The money market
funds seek to provide income while maintaining a stable share price.
The bond fund seeks to provide a higher level of income by investing
in a broader range of securities. As a result, the bond fund does not
seek to maintain a stable share price. As of November 30, 1997, the
dollar-weighted average maturity for the bond fund was approximately
__ years. In addition, since the money market funds concentrate their
investments in New Jersey municipal securities, an investment in the
money market funds may be riskier than an investment in other types of
money market funds.
FMR may use various techniques to hedge a portion of a bond
fund's risks, but there is no guarantee that these strategies will
work as intended. When you sell your shares of a bond fund, they may
be worth more or less than what you paid for them.
FMR normally invests each fund's assets according to its
investment strategy. The funds do not expect to invest in federally
taxable obligations, and the bond fund does not expect to
invest in state taxable obligations. Each fund also reserves
the right to invest without limitation in short-term instruments, to
hold a substantial amount of uninvested cash, or to invest more than
normally permitted in taxable obligations for temporary, defensive
purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of
related risks. Any restrictions listed supplement those discussed
earlier in this section. A complete listing of each fund's
limitations and more detailed information about each fund's
investments are contained in the funds' SAI. Policies and
limitations are considered at the time of purchase; the sale of
instruments is not required in the event of a subsequent change in
circumstances.
FMR may not buy all of these instruments or use all of these
techniques unless it believes that they are consistent with a
fund's investment objective and policies and that doing so will help a
fund achieve its goal. Fund holdings and recent investment strategies
are detailed in each fund's financial reports, which are sent
to shareholders twice a year. For a free SAI or financial report, call
1-800-544-8888.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers
to borrow money from investors. The issuer generally pays the investor
a fixed, variable, or floating rate of interest, and must repay the
amount borrowed at maturity. Some debt securities, such as zero coupon
bonds, do not pay current interest, but are sold at a discount from
their face values.
Debt securities have varying levels of sensitivity to changes in
interest rates and varying degrees of credit quality. In general, bond
prices rise when interest rates fall, and fall when interest rates
rise. Longer-term bonds and zero coupon bonds are generally more
sensitive to interest rate changes.
In addition, bond prices are also affected by the credit quality of
the issuer. Investment-grade debt securities are medium- and
high-quality securities. Some, however, may possess speculative
characteristics, and may be more sensitive to economic changes and to
changes in the financial condition of issuers.
RESTRICTIONS: Spartan NJ Municipal Income normally invests in
investment-grade securities, but reserves the right to invest up to 5%
of its assets in below investment-grade securities (sometimes called
"junk bonds"). A security is considered to be investment-grade if it
is rated investment-grade by Moody's Investors Service, Standard &
Poor's, Duff & Phelps Credit Rating Co., or Fitch Investors Service,
L.P., or is unrated but judged by FMR to be of equivalent quality.
MONEY MARKET SECURITIES are high-quality, short-term instruments
issued by municipalities, local and state governments, and other
entities. These securities may carry fixed, variable, or floating
interest rates. Some money market securities employ a trust or similar
structure to modify the maturity, price characteristics, or quality of
financial assets so that they are eligible investments for money
market funds. If the structure does not perform as intended, adverse
tax or investment consequences may result.
CREDIT AND LIQUIDITY SUPPORT. Issuers may employ various forms of
credit and liquidity enhancement, including letters of credit,
guarantees, puts and demand features, and insurance, provided by
foreign or domestic entities such as banks and other financial
institutions. These arrangements expose a fund to the credit
risk of the entity providing the credit or liquidity support. Changes
in the credit quality of the provider could affect the value of the
security and a fund's share price. In addition, in the case of foreign
providers of credit or liquidity support, extensive public information
about the provider may not be available, and unfavorable political,
economic, or governmental developments could affect its ability to
honor its commitment.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
or private purposes, including general financing for state and local
governments, or financing for specific projects or public facilities.
They may be fully or partially backed by the local government, or by
the credit of a private issuer or the current or anticipated revenues
from specific projects or assets. Because many municipal securities
are issued to finance similar types of projects, especially those
relating to education, health care, housing, transportation, and
utilities, the municipal markets can be affected by conditions in
those sectors. In addition, all municipal securities may be affected
by uncertainties regarding their tax status, legislative changes, or
rights of municipal securities holders. A municipal security may be
owned directly or through a participation interest.
STATE MUNICIPAL SECURITIES include municipal obligations issued by the
state of New Jersey o r its counties, municipalities, authorities,
or other subdivisions. The ability of issuers to repay their debt
can be affected by many factors that impact the economic vitality of
either the state or a region within the state.
Other state municipal securities include obligations of the U.S.
territories and possessions such as Guam, the Virgin Islands, Puerto
Rico, and their political subdivisions and public corporations. The
economy of Puerto Rico is closely linked to the U.S. economy, and will
be affected by the strength of the U.S. dollar, interest rates, the
price stability of oil imports, and the continued existence of
favorable tax incentives.
ASSET-BACKED SECURITIES include interests in pools of purchase
contracts, financing leases, or sales agreements entered into by
municipalities. The value of these securities depends on many factors,
including changes in interest rates, the availability of information
concerning the pool and its structure, the credit quality of the
underlying assets, the market's perception of the servicer of the
pool, and any credit enhancement provided. In addition, these
securities may be subject to prepayment risk.
VARIABLE AND FLOATING RATE SECURITIES have interest rates that are
periodically adjusted either at specific intervals or whenever a
benchmark rate changes. Inverse floaters have interest rates that move
in the opposite direction from a benchmark, making the security's
market value more volatile.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire
land, equipment, or facilities. If the municipality stops making
payments or transfers its obligations to a private entity, the
obligation could lose value or become taxable.
PUT FEATURES entitle the holder to put (sell back) a security to the
issuer or another party. In exchange for this benefit, a fund may
accept a lower interest rate. The credit quality of the investment may
be affected by the creditworthiness of the put provider. Demand
features, standby commitments, and tender options are types of put
features.
PRIVATE ENTITIES may be involved in some municipal securities. For
example, industrial revenue bonds are backed by private entities, and
resource recovery bonds often involve private corporations. The
viability of a project or tax incentives could affect the value and
credit quality of these securities.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various
techniques to increase or decrease its exposure to changing security
prices, interest rates, or other factors that affect security values.
These techniques may involve derivative transactions such as buying
and selling options and futures contracts, entering into swap
agreements, 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 a fund's investments, these techniques could
result in a loss, regardless of whether the intent was to reduce risk
or increase return. These techniques may increase the volatility of a
fund and may involve a small investment of cash relative to the
magnitude of the risk assumed. In addition, these techniques could
result in a loss if the counterparty to the transaction does not
perform as promised.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined
by FMR, under the supervision of the Board of Trustees, to be
illiquid, which means that they may be difficult to sell promptly at
an acceptable price. The sale of some illiquid securities and some
other securities may be subject to legal restrictions. Difficulty in
selling securities may result in a loss or may be costly to a fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more
than 10% of its assets would be invested in illiquid securities.
WHEN-ISSUED AND FORWARD PURCHASE OR SALE TRANSACTIONS are trading
practices in which payment and delivery for the security take place at
a later date than is customary for that type of security. The market
value of the security could change during this period.
CASH MANAGEMENT. A fund may invest in money market securities
and in a money market fund available only to funds and accounts
managed by FMR or its affiliates, whose goal is to seek a high level
of current income exempt from federal income tax while maintaining a
stable $1.00 share price. A major change in interest rates or a
default on the money market fund's investments could cause its share
price to change.
RESTRICTIONS: Spartan NJ Municipal Income does not currently
intend to invest in a money market fund.
DIVERSIFICATION. Diversifying a fund's investment portfolio can
reduce the risks of investing. This may include limiting the amount of
money invested in any one issuer or, on a broader scale, in any one
industry or type of project. Economic, business, or political changes
can affect all securities of a similar type. A fund that is not
diversified may be more sensitive to changes in the market value of a
single issuer or industry.
RESTRICTIONS: Each fund is considered non-diversified.
Generally, to meet federal tax requirements at the close of each
quarter, each fund does not invest more than 25% of its total
assets in any one issuer and, with respect to 50% of total assets,
does not invest more than 5% of its total assets in any issuer. These
limitations do not apply to U.S. Government securities or to
securities of other investment companies. Each fund may invest
more than 25% of its total assets in tax-free securities that finance
similar types of projects.
BORROWING. Each fund may borrow from banks or from other funds
advised by FMR, or through reverse repurchase agreements. If a
fund borrows money, its share price may be subject to greater
fluctuation until the borrowing is paid off. If a fund makes
additional investments while borrowings are outstanding, this may be
considered a form of leverage.
RESTRICTIONS: Each fund may borrow only for temporary or
emergency purposes, but not in an amount exceeding 331/3% of its total
assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages
are fundamental, that is, subject to change only by shareholder
approval. The following paragraphs restate all those that are
fundamental. All policies stated throughout this prospectus, other
than those identified in the following paragraphs, can be changed
without shareholder approval.
Spartan NJ Municipal Money Market seeks as high a level of current
income, exempt from federal income tax and, to the extent possible,
from the New Jersey Gross Income Tax, as is consistent with the
preservation of capital by investing in high-quality, short-term
municipal obligations. Under normal conditions, the fund will invest
so that at least 80% of its income is exempt from federal income tax.
Fidelity NJ Municipal Money Market seeks as high a level of current
income, exempt from federal income tax and the New Jersey Gross Income
Tax, as is consistent with preservation of capital. Under normal
conditions, at least 80% of the fund's income will be exempt from both
federal income tax and New Jersey Gross Income Tax.
Spartan NJ Municipal Income seeks a high level of current income
exempt from federal income tax and the New Jersey Gross Income Tax.
Under normal conditions, the fund will invest so that at least 80% of
its income is exempt from both federal income tax and New Jersey Gross
Income Tax.
Each fund may borrow only for temporary or emergency purposes, but not
in an amount exceeding 331/3% of its total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its
share price or dividends; they are neither billed directly to
shareholders nor deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its
investments and business affairs. FMR in turn pays fees to an
affiliate who provides assistance with these services for the money
market funds. Fidelity NJ Municipal Money Market also pays OTHER
EXPENSES, which are explained on page __.
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 AND OTHER EXPENSES
Each fund's management fee is calculated and paid to FMR every
month. FMR pays all of the other expenses of Spartan NJ Municipal
Money Market and Spartan NJ Municipal Income with limited exceptions.
The annual management fee rates for Spartan NJ Municipal Money Market
and Spartan NJ Municipal Income are 0.50% and 0.55% of its average net
assets, respectively. For Fidelity NJ Municipal Money Market, 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 0.37%, and it
drops as total assets under management increase.
For the fiscal year ended October 31, 1997, Spartan New Jersey
Municipal Money Market paid FMR, after reimbursement, fees equal to
__% of average net assets.
For November 1997, the group fee rate was __%. The individual fund
fee rate is 0.25% for Fidelity NJ Municipal Money Market.
The total management fee rate for the fiscal year ended November 30,
1997 was __% for Fidelity NJ Municipal Money Market.
[INCLUDE THIS FIRST PHRASE IF ANY FUND IS IN REIMBURSEMENT: Because of
a reimbursement arrangement,] [T/t]he total management fee rate for
the fiscal year ended [month] 19__ is estimated to be __% for Fidelity
New Jersey Municipal Money Market and __%.
FMR Texas i s Spartan NJ Municipal Money Market and Fidelity NJ
Municipal Money Market's sub-adviser and has primary
responsibility for managing their investments. FMR is responsible for
providing other management services. FMR pays FMR Texas 50% of its
management fee (before expense reimbursements) for FMR Texas's
services. FMR paid FMR Texas fees equal to __% of Spartan NJ Municipal
Money Market's average net assets for the fiscal year ended
October 31, 1997, and __% of Fidelity NJ Municipal Money Market's
average net assets for the fiscal year ended November 30, 1997.
While the management fee is a significant component of Fidelity NJ
Municipal Money Market's annual operating costs, the fund has
other expenses as well.
UMB is the transfer and service agent for each fund. UMB has
entered into sub-agreements with FSC under which FSC performs transfer
agency, dividend disbursing, shareholder servicing, and accounting
functions for the funds. These services include processing shareholder
transactions, valuing each fund's investments, and calculating each
fund's share price and dividends.
Under the terms of the sub-agreements, FSC receives all related
fees paid to UMB by Fidelity NJ Municipal Money Market and
by FMR on behalf of Spartan NJ Municipal Money Market and Spartan
NJ Municipal Income.
For the fiscal year ended November 1997, Fidelity NJ Municipal
Money Market paid transfer agency and pricing and bookkeeping fees
equal to __% of its average net assets. [FUND REPORTING TO ADD AS
APPROPRIATE: These amounts are before expense reductions, if any .]
In the case of Spartan NJ Municipal Money Market and Spartan NJ
Municipal Income, FMR, not the funds, pays for these services.
Fidelity NJ Municipal Money Market also pays other expenses,
such as legal, audit, and custodian fees; in some instances, proxy
solicitation costs; and the compensation of trustees who are not
affiliated with Fidelity.
Each of Spartan NJ Municipal Money Market and Spartan NJ Municipal
Income also pays other expenses, such as brokerage fees and
commissions, interest on borrowings, taxes, and the compensation of
trustees who are not affiliated with Fidelity.
To offset shareholder service costs, FMR or its affiliates also
collect Spartan NJ Municipal Money Market's $5.00 exchange fee,
$5.00 account closeout fee, $5.00 fee for wire purchases and
redemptions, and the $2.00 checkwriting charge.
Each fund has adopted a DISTRIBUTION AND SERVICE PLAN.
Each plan recognizes that FMR may use its management fee
revenues, as well as its past profits or its resources from any
other source, to pay FDC for expenses incurred in connection with
the distribution of fund shares. FMR directly, or through FDC, may
make payments to third parties, such as banks or broker-dealers,
that engage in the sale of, or provide shareholder support
services for, the fund's shares. Currently, the Board of Trustees
of each fund has not authorized such payments.
For the fiscal year ended October 31, 1997, the portfolio turnover
rate for Spartan NJ Municipal Money Market was __%. For the fiscal
year ended November 1997, the portfolio turnover rates for Fidelity NJ
Municipal Money Market and Spartan NJ Municipal Income were __% and
__%, respectively. These rates vary from year to year. [ IF RATE IS
100 OR MORE%: High turnover rates increase transaction costs and
may increase taxable capital gains. FMR considers these effects when
evaluating the anticipated benefits of short-term investing.]
(null)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:
S For mutual funds, 1-800-544-8888
S For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity
has
over __ walk-in Investor Centers across the country.
(null)Types of Accounts
You may set up an account directly in a fund or, if you own or intend
to purchase
individual securities as part of your total investment portfolio, you
may consider
investing in a fund through a brokerage account. You can choose
Fidelity NJ
Municipal Money Market as your core account for your Fidelity Ultra
Service
AccountR or FidelityPlusSM brokerage account.
You may purchase or sell shares of the funds through an investment
professional,
including a broker, who may charge you a transaction fee for this
service.
If you invest through FBSI, another financial institution, or an
investment
professional, read their program materials for any special provisions,
additional
service features or fees that may apply to your investment in a fund.
Certain
features of the fund, such as the minimum initial or subsequent
investment
amounts, may be modified.
The different ways to set up (register) your account with Fidelity are
listed
in the table that follows.
Ways to Set Up Your Account
Individual or Joint Tenant
For your general investment needs
Individual accounts are owned by one person. Joint accounts can have
two or
more owners (tenants).
Gifts or Transfers to a Minor (UGMA, UTMA)
To invest for a child's education or other future needs
These custodial accounts provide a way to give money to a child and
obtain
tax benefits. An individual can give up to $10,000 a year per child
without
paying federal gift tax. Depending on state laws, you can set up a
custodial
account under the Uniform Gifts to Minors Act (UGMA) or the Uniform
Transfers
to Minors Act (UTMA).
Trust
For money being invested by a trust
The trust must be established before an account can be opened.
Business or Organization
For investment needs of corporations, associations, partnerships, or
other
groups
Requires a special application.
(null)How to Buy Shares
The price to buy one share of each fund is the fund's net asset value
per share
(NAV). Each money market fund is managed to keep its NAV stable at
$1.00. Each
fund's shares are sold without a sales charge.
Your shares will be purchased at the next NAV calculated after your
investment
is received and accepted. Each fund's NAV is normally calculated each
business
day at 4:00 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 39.
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:
S Mail in an application with a check, or
S Open your account by exchanging from another Fidelity fund.
If you buy shares by check or Fidelity Money LineR, 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
for Spartan NJ Municipal Money Market $25,000
for Fidelity NJ Municipal Money Market $5,000
for Spartan NJ Municipal Income $10,000
To Add to an Account
for Spartan NJ Municipal Money Market $1,000
Through regular investment plans* $500
for Fidelity NJ Municipal Money Market $250
Through regular investment plans* $100
for Spartan NJ Municipal Income $1,000
Through regular investment plans* $500
Minimum Balance
for Spartan NJ Municipal Money Market $10,000
for Fidelity NJ Municipal Money Market $2,000
for Spartan NJ Municipal Income $5,000
*For more information about regular investment plans, please refer to
"Investor
Services," page __.
These minimums may vary for investments through Fidelity Portfolio
Advisory
Services. Refer to the program materials for details.
(null)
To Open an Account
To Add to an Account
Phone
1-800-544-7777
S Exchange from another Fidelity fund account with the same
registration, including
name, address, and taxpayer ID number.
S Exchange from another Fidelity fund account with the same
registration, including
name, address, and taxpayer ID number.
S Use Fidelity Money Line to transfer from your bank account. Call
before your
first use to verify that this service is in place on your account.
Maximum
Money Line: up to $100,000.
Mail
S Complete and sign the application. Make your check payable to the
complete
name of the fund. Mail to the address indicated on the application.
S Make your check payable to the complete name of the fund. Indicate
your fund
account number on your check and mail to the address printed on your
account
statement.
S Exchange by mail: call 1-800-544-6666 for instructions.
In Person
S Bring your application and check to a Fidelity Investor Center. Call
1-800-544-9797
for the center nearest you.
S Bring your check to a Fidelity Investor Center. Call 1-800-544-9797
for the
center nearest you.
Wire
S There may be a $5.00 fee for each wire purchase for Spartan NJ
Municipal Money
Market.
S Call 1-800-544-7777 to set up your account and to arrange a wire
transaction.
S Wire within 24 hours to:
Bankers Trust Company,
Bank Routing #021001033,
Account #00163053.
Specify the complete name of the fund and include your new account
number and
your name.
S There may be a $5.00 fee for each wire purchase for Spartan NJ
Municipal Money
Market.
S Wire to:
Bankers Trust Company,
Bank Routing #021001033,
Account #00163053.
Specify the complete name of the fund and include your account number
and your
name.
Automatically
S Not available.
S 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
(null)How to Sell Shares
You can arrange to take money out of your fund account at any time by
selling
(redeeming) some or all of your shares.
The price to sell one share of Spartan NJ Municipal Money Market or
Fidelity
NJ Municipal Money Market is the fund's NAV. The price to sell one
share of
Spartan NJ Municipal Income is the fund's NAV minus the short-term
trading
fee, if applicable. If you sell shares of Spartan NJ Municipal Income
after
holding them less than 180 days, the fund will deduct a short-term
trading
fee equal to 0.50% of the value of those shares.
Your shares will be sold at the next NAV calculated after your order
is received
and accepted, minus the short-term trading fee, if applicable. Each
fund's
NAV is normally calculated each business day at 4:00 p.m. Eastern
time.
To sell shares of Fidelity NJ Municipal Money Market 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
$10,000 worth of shares in the account for Spartan NJ Municipal
Money Market, $2,000 for Fidelity NJ Municipal Money Market, and
$5,000 for
Spartan NJ Municipal Income Money Market Fund 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:
S You wish to redeem more than $100,000 worth of shares,
S Your account registration has changed within the last 30 days,
S The check is being mailed to a different address than the one on
your account
(record address),
S The check is being made payable to someone other than the account
owner, or
S 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:
S Your name,
S The fund's name,
S Your fund account number,
S The dollar amount or number of shares to be redeemed, and
S Any other applicable requirements listed in the table that follows.
Unless otherwise instructed, Fidelity will send a check to the record
address.
Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Checkwriting
If you have a checkbook for your account in Spartan NJ Municipal Money
Market
or Fidelity NJ Municipal Money Market, you may write an unlimited
number of
checks. Do not, however, try to close out your account by check.
(null)
Account Type
Special Requirements
If you sell shares of Spartan NJ Municipal Income after holding them
less than
180 days, the fund will deduct a short-term trading fee equal to 0.50%
of the
value of those shares.
If your account balance is less than $50,000, there are fees for
individual
redemption transactions for Spartan NJ Municipal Money Market: $2.00
for each
check you write and $5.00 for each exchange, bank wire, and account
closeout.
Phone
1-800-544-7777
All account types
S Maximum check request: $100,000.
S For Money Line transfers to your bank account; minimum: $10;
maximum: up to
$100,000.
S 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 Tenant, Sole Proprietorship, UGMA, UTMA
Trust
Business or Organization
Executor, Administrator, Conservator, Guardian
S The letter of instruction must be signed by all persons required to
sign for
transactions, exactly as their names appear on the account.
S The trustee must sign the letter indicating capacity as trustee. If
the trustee's
name is not in the account registration, provide a copy of the trust
document
certified within the last 60 days.
S At least one person authorized by corporate resolution to act on the
account
must sign the letter.
S Include a corporate resolution with corporate seal or a signature
guarantee.
S Call 1-800-544-6666 for instructions.
Wire
All account types
S 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.
S Your wire redemption request must be received and accepted by
Fidelity before
4 p.m. Eastern time for money to be wired on the next business day.
Check
All account types
S Minimum check: $1,000 for Spartan NJ Municipal Money Market and $500
for Fidelity
NJ Municipal Money Market.
S All account owners must sign a signature card to receive a
checkbook.
TDD - Service for the Deaf and Hearing-Impaired: 1-800-544-0118
(null)Investor Services
Fidelity provides a variety of services to help you manage your
account.
Information Services
Fidelity's telephone representatives are available 24 hours a day, 365
days a year. Whenever you call, you can
speak with someone equipped to provide the information or service you
need.
24-Hour Service
Account Assistance
1-800-544-6666
Account Transactions
1-800-544-7777
Product Information
1-800-544-8888
Retirement Account Assistance
1-800-544-4774
TouchTone XpressSM
1-800-544-5555
Automated service
3
Statements and reports that Fidelity sends to you include the
following:
S Confirmation statements (after every transaction, except
reinvestments, that
affects your account balance or your account registration)
S Account statements (quarterly)
S Financial reports (every six months)
To reduce expenses, only one copy of most financial reports and
prospectuses
will be mailed to your household, even if you have more than one
account in
the fund. Call 1-800-544-6666 if you need copies of financial reports,
prospectuses,
or historical account information.
Transaction Services
Exchange privilege. You may sell your fund shares and buy shares of
other Fidelity funds by telephone
or in writing. You may pay a $5.00 fee for each exchange out of
Spartan NJ
Municipal Money Market, unless you place your transaction through
Fidelity's
automated exchange services.
Note that exchanges out of a fund are limited to four per calendar
year (except
for Fidelity NJ Municipal Money Market), and that they may have tax
consequences
for you. For details on policies and restrictions governing exchanges,
including
circumstances under which a shareholder's exchange privilege may be
suspended
or revoked, see page 53.
Fidelity Money Liner 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.
Systematic withdrawal plans let you set up periodic redemptions from
your account.
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
$500
for Spartan NJ Muni Money Market and Spartan NJ Muni Income
$100
for Fidelity NJ Muni Money Market
Frequency
Monthly or quarterly
Setting up or changing
S For a new account, complete the appropriate section on the fund
application.
S For existing accounts, call 1-800-544-6666 for an application.
S 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
$500
for Spartan NJ Muni Money Market and Spartan NJ Muni Income
$100
for Fidelity NJ Muni Money Market
Frequency
Every pay period
Setting up or changing
S Check the appropriate box on the fund application, or call
1-800-544-6666 for
an authorization form.
S Changes require a new authorization form.
Fidelity Automatic Exchange Service
To move money from a Fidelity money market fund to another Fidelity
fund
Minimum
$500
for Spartan NJ Muni Money Market and Spartan NJ Muni Income
$100 for Fidelity NJ Muni Money Market
Frequency
Monthly, bimonthly, quarterly, or annually
Setting up or changing
S To establish, call 1-800-544-6666 after both accounts are opened.
S To change the amount or frequency of your investment, call
1-800-544-6666.
A Because bond fund share prices fluctuate, that fund may not be an
appropriate
choice for direct deposit of your entire check.
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment
income and capital gains, if any, to shareholders each year. Income
dividends are declared daily and paid monthly. Capital gains earned
by the bond fund are normally distributed in January and December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on
the application, call 1-800-544-6666 for instructions. The bond
fund offers four options, and the money market funds offer three
options.
1. REINVESTMENT OPTION. Your dividend and capital gain distributions,
if any, will be automatically reinvested in additional shares of the
fund. If you do not indicate a choice on your application, you will be
assigned this option.
2. INCOME-EARNED OPTION. (bond fund only) Your capital gain
distributions, if any, will be automatically reinvested, but you will
be sent a check for each dividend distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital
gain distributions, if any.
4. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividend and
capital gain distributions, if any, will be automatically invested in
another identically registered Fidelity fund.
Dividends will be reinvested at the fund's NAV on the last day of the
month. Capital gain distributions, if any, will be reinvested at the
NAV as of the date the fund deducts the distribution from its NAV. The
mailing of distribution checks will begin within seven days.
UNDERSTANDING
DISTRIBUTIONS
AS A FUND SHAREHOLDER, YOU ARE
ENTITLED TO YOUR SHARE OF THE
FUND'S NET INCOME AND GAINS
ON ITS INVESTMENTS. THE FUND
PASSES ITS EARNINGS ALONG TO ITS
INVESTORS AS DISTRIBUTIONS.
EACH FUND EARNS INTEREST FROM
ITS INVESTMENTS. THESE ARE
PASSED ALONG AS DIVIDEND
DISTRIBUTIONS. THE FUND MAY
REALIZE CAPITAL GAINS IF IT SELLS
SECURITIES FOR A HIGHER PRICE
THAN IT PAID FOR THEM. THESE
ARE PASSED ALONG AS CAPITAL
GAIN DISTRIBUTIONS. MONEY
MARKET FUNDS USUALLY DON'T
MAKE CAPITAL GAIN DISTRIBUTIONS.
(CHECKMARK)
TAXES
As with any investment, you should consider how an investment in a
tax-free fund could affect you. Below are some of the funds' tax
implications.
TAXES ON DISTRIBUTIONS. Interest income that a fund earns is
distributed to shareholders as income dividends. Interest that is
federally tax-free remains tax-free when it is distributed.
However, gain on the sale of tax-free bonds results in taxable
distributions. Short-term capital gains and a portion of the gain on
bonds purchased at a discount are taxed as dividends. Long-term
capital gain distributions are taxed as long-term capital gains. These
distributions are taxable when they are paid, whether you take them in
cash or reinvest them. However, distributions declared in December and
paid in January are taxable as if they were paid on December 31.
Fidelity will send you and the IRS a statement showing the tax status
of the distributions paid to you in the previous year.
The interest from some municipal securities is subject to the federal
alternative minimum tax. Each fund may invest up to 100% of its
assets in these securities. Individuals who are subject to the tax
must report this interest on their tax returns.
In order to pass through tax-exempt interest for New Jersey personal
income tax purposes, the fund, among other requirements, must have at
least 80% of the aggregate principal amount of its total investments
invested in certain New Jersey state tax-free obligations at the close
of each quarter of the tax year.
During the fiscal year ended November 1997, __% of each fund's
income dividends was free from federal income tax, and __%, __%, and
__% were free from the New Jersey Gross Income Tax for Spartan NJ
Municipal Money Market, Fidelity NJ Municipal Money Market, and
Spartan NJ Municipal Income, respectively. __% of Spartan NJ Municipal
Money Market's, __% of Fidelity NJ Municipal Money Market's, and __%
of Spartan NJ Municipal Income's income dividends were subject to
the federal alternative minimum tax.
TAXES ON TRANSACTIONS. Your bond fund redemptions - including
exchanges to other Fidelity funds - are subject to capital gains tax.
A capital gain or loss is the difference between the cost of your
shares and the price you receive when you sell them.
Whenever you sell shares of a fund, Fidelity will send you a
confirmation statement showing how many shares you sold and at what
price. You will also receive a consolidated transaction statement
every January. However, it is up to you or your tax preparer to
determine whether this sale resulted in a capital gain and, if so, the
amount of tax to be paid. Be sure to keep your regular account
statements; the information they contain will be essential in
calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares when a fund has
realized but not yet distributed income or capital gains, you will pay
the full price for the shares and then receive a portion of the price
back in the form of a taxable distribution.
TRANSACTION DETAILS
THE FUND S ARE OPEN FOR BUSINESS each day the New York Stock
Exchange (NYSE) is open. FSC normally calculates each fund's
NAV as of the close of business of the NYSE, normally 4:00 p.m.
Eastern time.
EACH FUND'S NAV is the value of a single share. The NAV is
computed by adding the value of the fund's investments, cash, and
other assets, subtracting its liabilities, and then dividing the
result by the number of shares outstanding.
Each money market fund's assets are valued on the basis of
amortized cost. This method minimizes the effect of changes in a
security's market value and helps each money market fund to
maintain a stable $1.00 share price.
For the bond fund, assets are valued primarily on the basis of
information furnished by a pricing service or market quotations, if
available , or by another method that the Board of Trustees
believes accurately reflects fair value.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify
that your social security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding for failing to
report income to the IRS. If you violate IRS regulations, the IRS can
require a fund to withhold 31% of your taxable distributions and
redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE OR
ELECTRONICALLY. Fidelity will not be responsible for
any losses resulting from unauthorized transactions if it
follow s reasonable security procedures designed to
verify the identity of the investor . Fidelity will request
personalized security codes or other information, and may also record
calls. For transactions conducted through the Internet, Fidelity
recommends the use of an Internet browser with 128-bit encryption .
You should verify the accuracy of your confirmation statements
immediately after you receive them. If you do not want the ability to
redeem and exchange by telephone, call Fidelity for instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during
periods of unusual market activity), consider placing your order by
mail or by visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES
for a period of time. Each fund also reserves the right to
reject any specific purchase order, including certain purchases by
exchange. See "Exchange Restrictions" on page . Purchase orders may be
refused if, in FMR's opinion, they would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your shares will be
purchased at the next NAV calculated after your
investment is received and accepted. Note the following:
(small solid bullet) All of your purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check,
each check must have a value of at least $50.
(small solid bullet) Each fund reserves the right to limit the number
of checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will
be canceled and you could be liable for any losses or fees a fund or
its transfer agent has incurred.
(small solid bullet) Spartan NJ Municipal Money Market reserves
the right to limit all accounts maintained or controlled by any one
person to a maximum total balance of $2 million.
(small solid bullet) You begin to earn dividends as of the first
business day following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money
order, U.S. Treasury check, Federal Reserve check, or direct deposit
instead.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements
with FDC may enter confirmed purchase orders on behalf of customers by
phone, with payment to follow no later than the time when a fund is
priced on the following business day. If payment is not received by
that time, the financial institution could be held liable for
resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at
the next NAV calculated after your order is received and
accepted , minus the short-term trading fee, if applicable. Note
the following:
(small solid bullet) Normally, redemption proceeds will be mailed to
you on the next business day, but if making immediate payment could
adversely affect a fund, it may take up to seven days to pay you.
(small solid bullet) Shares will earn dividends through the date of
redemption; however, shares redeemed on a Friday or prior to a holiday
will continue to earn dividends until the next business day.
(small solid bullet) Fidelity Money Line redemptions generally will be
credited to your bank account on the second or third business day
after your phone call.
(small solid bullet) Each fund may hold payment on redemptions
until it is reasonably satisfied that investments made by check or
Fidelity Money Line have been collected, which can take up to seven
business days.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.
(small solid bullet) If you sell shares by writing a check and the
amount of the check is greater than the value of your account, your
check will be returned to you and you may be subject to additional
charges.
(small solid bullet) If your Fidelity NJ Municipal Money Market
account is not an Ultra Service Account, there is a $1.00 charge for
each check written under $500.
A SHORT-TERM TRADING FEE of 0.50% will be deducted from the
redemption amount if you sell your shares of Spartan NJ Municipal
Income after holding them less than 180 days. This fee is paid to the
fund rather than Fidelity, and is designed to offset the brokerage
commissions, market impact, and other costs associated with
fluctuations in fund asset levels and cash flow caused by short-term
shareholder trading.
A short-term trading fee, if applicable, is charged on exchanges out
of Spartan NJ Municipal Income. If you bought shares on
different days, the shares you held longest will be redeemed first for
purposes of determining whether the short-term trading fee applies.
The short-term trading fee does not apply to shares that were acquired
through reinvestment of distributions.
THE FEES FOR INDIVIDUAL TRANSACTIONS for Spartan NJ Municipal Money
Market are waived if your account balance at the time of the
transaction is $50,000 or more. Otherwise, you should note the
following:
(small solid bullet) The $2.00 checkwriting charge will be deducted
from your account.
(small solid bullet) The $5.00 exchange fee will be deducted from the
amount of your exchange.
(small solid bullet) The $5.00 wire fee will be deducted from the
amount of your wire.
(small solid bullet) The $5.00 account closeout fee does not apply to
exchanges or wires, but it will apply to checkwriting.
FIDELITY RESERVES THE RIGHT TO DEDUCT AN ANNUAL MAINTENANCE FEE of
$12.00 from accounts with a value of less than $2,500, subject to an
annual maximum charge of $24.00 per shareholder. It is expected that
accounts will be valued on the second Friday in November of each year.
Accounts opened after September 30 will not be subject to the fee for
that year. The fee, which is payable to the transfer agent, is
designed to offset in part the relatively higher costs of servicing
smaller accounts. This fee will not be deducted from Fidelity
brokerage accounts, retirement accounts (except non-prototype
retirement accounts), accounts using regular investment plans, or if
total assets with Fidelity exceed $30,000. Eligibility for the $30,000
waiver is determined by aggregating Fidelity accounts maintained by
FSC or FBSI which are registered under the same social security number
or which list the same social security number for the custodian of a
Uniform Gifts/Transfers to Minors Act account.
IF YOUR ACCOUNT BALANCE FALLS BELOW $10,000 for Spartan NJ
Municipal Money Market, $2,000 for Fidelity NJ Municipal Money Market,
and $5,000 for Spartan NJ Municipal Income, 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, minus the short-term
trading fee, if applicable, and, for Spartan NJ Municipal Money
Market, the $5.00 account closeout fee will be charged.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to
qualified recipients who support the sale of shares of the
fund s without reimbursement from the fund s. Qualified
recipients are securities dealers who have sold fund shares or others,
including banks and other financial institutions, under special
arrangements in connection with FDC's sales activities. In some
instances, these incentives may be offered only to certain
institutions whose representatives provide services in connection with
the sale or expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of
a fund for shares of other Fidelity funds. However, you should
note the following:
(small solid bullet) The fund you are exchanging into must be
available for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification
number.
(small solid bullet) Before exchanging into a fund, read its
prospectus.
(small solid bullet) If you exchange into a fund with a sales charge,
you pay the percentage-point difference between that fund's sales
charge and any sales charge you have previously paid in connection
with the shares you are exchanging. For example, if you had already
paid a sales charge of 2% on your shares and you exchange them into a
fund with a 3% sales charge, you would pay an additional 1% sales
charge.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Because excessive trading can hurt fund
performance and shareholders, Spartan NJ Municipal Money Market and
Spartan NJ Municipal Income reserve the right to temporarily or
permanently terminate the exchange privilege of any investor who makes
more than four exchanges out of the fund per calendar year. Accounts
under common ownership or control, including accounts with the same
taxpayer identification number, will be counted together for purposes
of the four exchange limit.
(small solid bullet) Each fund reserves the right to refuse
exchange purchases by any person or group if, in FMR's judgment, the
fund would be unable to invest the money effectively in accordance
with its investment objective and policies, or would otherwise
potentially be adversely affected.
(small solid bullet) Your exchanges may be restricted or refused if a
fund receives or anticipates simultaneous orders affecting significant
portions of the fund's assets. In particular, a pattern of exchanges
that coincides with a "market timing" strategy may be disruptive to
a fund.
Although the fund s will attempt to give you prior notice
whenever they are reasonably able to do so, they may impose these
restrictions at any time. The fund s reserve the right to
terminate or modify the exchange privilege in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
fees of up to 1.00% on purchases, administrative fees of up to
$7.50, and trading fees of up to 1.50% on exchanges. Check each
fund's prospectus for details.
From Filler pages
NEW JERSEY MUNICIPAL FUNDS:
SPARTAN NEW JERSEY MUNICIPAL MONEY MARKET FUND
FIDELITY NEW JERSEY MUNICIPAL MONEY MARKET FUND
CROSS-REFERENCE SHEET
FORM N-1A
ITEM NUMBER
PART B STATEMENT OF ADDITIONAL INFORMATION SECTION
<TABLE>
<CAPTION>
<S> <C>
10, 11 Cover Page
12 Description of the Trust
13a-c Investment Policies and Limitations
d Portfolio Transactions
14a, b Trustees and Officers
c *
15a, b *
c Trustees and Officers
16a(i) FMR; Portfolio Transactions
a(ii) Trustees and Officers
a(iii), b Management Contract
c,d Contracts with FMR Affiliates
e *
f Distribution and Service Plan
g *
h Description of the Trust
i Contracts with FMR Affiliates
17a,b,c Portfolio Transactions
d,e *
18a Description of the Trust
b *
19a Additional Purchase and Redemption Information
b Valuation of Portfolio Securities; Additional Purchase and Redemption
Information
c *
20 Distributions and Taxes
21a Contracts with FMR Affiliates
b Contracts with FMR Affiliates
c *
22a Performance
b *
23 **
</TABLE>
* Not Applicable
** To be filed by subsequent amendment.
SPARTAN(Registered trademark) NEW JERSEY MUNICIPAL MONEY MARKET FUND
AND
FIDELITY NEW JERSEY MUNICIPAL MONEY MARKET FUND
FUNDS OF FIDELITY COURT STREET TRUST II
SPARTAN(Registered trademark) NEW JERSEY MUNICIPAL INCOME FUND
A FUND OF FIDELITY COURT STREET TRUST
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 10, 1998
This Statement of Additional Information (SAI) is not a
prospectus but should be read in conjunction with the funds' current
Prospectus (d ate d January 10, 1998). Please retain this
document for future reference. The funds' Annual Reports are separate
documents supplied with this SAI. To obtain a free additional copy of
a Prospectus or an Annual Report, please call Fidelity at
1-800-544-8888.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Special Considerations Affecting New Jersey
Special Considerations Affecting Puerto Rico
Portfolio Transactions
Valuation
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contracts
Distribution and Service Plans
Contracts with FMR Affiliates
Description of the Trus ts
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISER
FMR Texas Inc. (FMR Texas) (money market funds)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
UMB Bank, n.a. (UMB)
and Fidelity Service Company, Inc. (FSC)
NJT -ptb- 0198
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in
the Prospectus. Unless otherwise noted, whenever an investment policy
or limitation states a maximum percentage of a fund's assets that may
be invested in any security or other asset, or sets forth a policy
regarding quality standards, such standard or percentage limitation
will be determined immediately after and as a result of the fund's
acquisition of such security or other asset. Accordingly, any
subsequent change in values, net assets, or other circumstances will
not be considered when determining whether the investment complies
with the fund's investment policies and limitations.
A fund's fundamental investment policies and limitations cannot
be changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940 (1940
Act)) of the fund. However, except for the fundamental investment
limitations listed below, the investment policies and limitations
described in this SAI are not fundamental and may be changed without
shareholder approval.
INVESTMENT LIMITATIONS OF SPARTAN NEW JERSEY MUNICIPAL MONEY MARKET
FUND
(SPARTAN NJ MUNICIPAL MONEY MARKET)
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the
Investment Company Act of 1940;
(2) sell securities short, unless it owns, or by virtue of ownership
of other securities, has the right to obtain at no added cost,
securities equivalent in kind and amount to the securities sold short;
(3) purchase securities on margin, except that the fund may obtain
such short-term credits as are necessary for the clearance of
transactions;
(4) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent
necessary to comply with the 33 1/3% limitation;
(5) underwrite securities issued by others (except to the extent that
the fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities);
(6) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies
or instrumentalities, or tax-exempt obligations issued
or guaranteed by a U.S. territory or possession or a state
or local government, or a political subdivision of any
of the foregoing ) if, as a result, more than 25% of the
fund's total assets would be invested in securities of companies
whose principal business activities are in the same
industry;
(7) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(8) purchase or sell physical commodities unless acquired as a result
of ownership of securities; or
(9) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties (but
this 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 managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to purchase securities
on margin, except that the fund may obtain such short-term credits as
are necessary for the clearance of transactions, and provided that
margin payments in connection with futures contracts and options on
futures contracts shall not constitute purchasing securities on
margin.
(iii ) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (4)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any
security if, as a result, more than 10% of its net assets would be
invested in securities that are deemed to be illiquid because they are
subject to legal or contractual restrictions on resale or because they
cannot be sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to engage in repurchase
agreements or make loans but this limitation does not apply to
purchases of debt securities.
(vi) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For purposes of limitations (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 purposes of limitation (i), Subchapter M generally requires the
fund to invest no more than 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
For the fund's policies on quality and maturity, see the section
entitled "Quality and Maturity" on page __.
INVESTMENT LIMITATIONS OF FIDELITY NEW JERSEY MUNICIPAL MONEY MARKET
FUND
(FIDELITY NJ MUNICIPAL MONEY MARKET)
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the
Investment Company Act of 1940.
(2) 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
or instrumentalities, or tax-exempt obligations issued
or guaranteed by a U.S. territory or possession or a state
or local government, or a political subdivision of any
of the foregoing ) if, as a result, more than 25% of the
fund's total assets would be invested in the securities of
companies whose principal business activities are in the
same industry;
(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) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund 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.
(iii) The fund does not currently intend to purchase any
security if, as a result, more than 10% of its net assets would be
invested in securities that are deemed to be illiquid because they are
subject to legal or contractual restrictions on resale or because they
cannot be sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(iv) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.
(v) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For purposes of limitations (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 purposes of limitation (i), Subchapter M generally requires the
fund to invest no more than 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
For the fund's policies on quality and maturity, see the section
entitled "Quality and Maturity" on page __.
INVESTMENT LIMITATIONS OF SPARTAN NEW JERSEY MUNICIPAL INCOME FUND
(SPARTAN NJ MUNICIPAL INCOME)
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others (except to the extent that
the fund may be deemed an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities);
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a
U.S. territory or possession or a state or local government, or a
political subdivision of any of the foregoing) if, as a result, more
than 25% of the fund's total assets would be invested in securities of
companies whose principal business activities are in the same
industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(7) lend any security or make any loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties (but this
limit does not apply to purchases of debt securities or to repurchase
agreements).
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities
short, unless it owns or has the right to obtain securities equivalent
in kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities
on margin, except that the fund may obtain such short-term credits as
are necessary for the clearance of transactions, and provided that
margin payments in connection with futures contracts and options on
futures contracts shall not constitute purchasing securities on
margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(v) The fund does not currently intend to purchase any security
if, as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vi) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.
(vii) The fund does not currently intend to invest all of its
assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objective,
policies, and limitations as the fund.
For purposes of limitations (4) and (i), FMR identifies the issuer of
a security depending on its terms and conditions. In identifying the
issuer, FMR will consider the entity or entities responsible for
payment of interest and repayment of principal and the source of such
payments; the way in which assets and revenues of an issuing political
subdivision are separated from those of other political entities; and
whether a governmental body is guaranteeing the security.
For purposes of limitation (i) , Subchapter M generally requires
the fund to invest no more than 25% of its total assets in securities
of any one issuer and to invest as least 50% of total assets so that
no more than 5% of the fund's total assets are invested in the
securities of any one issuer. However, Subchapter M allows unlimited
investments in cash, cash items, government securities (as defined in
Subchapter M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related
risks. FMR may not buy all of these instruments or use all of these
techniques unless it believes that doing so will help the fund achieve
its goal.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions
with financial institutions that are, or may be considered to be,
"affiliated persons" of the fund under the Investment Company Act of
1940. These transactions may include repurchase agreements with
custodian banks; short-term obligations of, and repurchase agreements
with, the 50 largest U.S. banks (measured by deposits); municipal
securities; U.S. Government securities with affiliated financial
institutions that are primary dealers in these securities; short-term
currency transactions; and short-term borrowings. In accordance with
exemptive orders issued by the Securities and Exchange Commission
(SEC), the Board of Trustees has established and periodically reviews
procedures applicable to transactions involving affiliated financial
institutions.
DELAYED-DELIVERY TRANSACTIONS. Each fund may buy and sell
securities on a delayed-delivery or when-issued basis. These
transactions involve a commitment by a fund to purchase or sell
specific securities at a predetermined price or yield, with payment
and delivery taking place after the customary settlement period for
that type of security. Typically, no interest accrues to the purchaser
until the security is delivered. The bond fund may receive fees
for entering into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, each
fund assumes the rights and risks of ownership, including the risk of
price and yield fluctuations. Because a fund is not required to
pay for securities until the delivery date, these risks are in
addition to the risks associated with the fund's other investments. If
a fund remains substantially fully invested at a time when
delayed-delivery purchases are outstanding, the delayed-delivery
purchases may result in a form of leverage. When delayed-delivery
purchases are outstanding, the fund will set aside appropriate liquid
assets in a segregated custodial account to cover its purchase
obligations. When a fund has sold a security on a
delayed-delivery basis, the fund does not participate in further gains
or losses with respect to the security. If the other party to a
delayed-delivery transaction fails to deliver or pay for the
securities, the fund could miss a favorable price or yield
opportunity, or could suffer a loss.
Each fund may renegotiate delayed-delivery transactions after
they are entered into, and may sell underlying securities before they
are delivered, which may result in capital gains or losses.
FEDERALLY TAXABLE OBLIGATIONS. Under normal conditions, the
fund s do not intend to invest in securities whose interest is
federally taxable. However, from time to time on a temporary basis,
each fund may invest a portion of its assets in fixed-income
obligations whose interest is subject to federal income tax.
Should a fund invest in federally taxable obligations, it would
purchase securities that in FMR's judgment are of high quality. These
would include obligations issued or guaranteed by the U.S. Government
or its agencies or instrumentalities; obligations of domestic banks;
and repurchase agreements. The bond fund's standards for high-quality,
taxable obligations are essentially the same as those described by
Moody's Investors Service, Inc. (Moody's) in rating corporate
obligations within its two highest ratings of Prime-1 and Prime-2, and
those described by Standard & Poor's (S&P) in rating corporate
obligations within its two highest ratings of A-1 and A-2. A money
market fund will purchase taxable obligations only if they meet its
quality requirements.
Proposals to restrict or eliminate the federal income tax exemption
for interest on municipal obligations are introduced before Congress
from time to time. Proposals also may be introduced before the New
Jersey legislature that would affect the state tax treatment of the
funds' distributions. If such proposals were enacted, the availability
of municipal obligations and the value of the funds' holdings would be
affected and the Trustees would reevaluate the funds' investment
objectives and policies.
FUTURES AND OPTIONS. need to specify "bond"?. The following sections
pertain to futures and options: Asset Coverage for Futures and Options
Positions, Combined Positions, Correlation of Price Changes, Futures
Contracts, Futures Margin Payments, Limitations on Futures and Options
Transactions, Liquidity of Options and Futures Contracts, OTC Options,
Purchasing Put and Call Options, and Writing Put and Call Options.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The bond 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 a fund's assets could impede portfolio management or the fund's
ability to meet redemption requests or other current obligations.
COMBINED POSITIONS. A fund may purchase and write options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the
overall position. For example, a fund may purchase a put option and
write a call option on the same underlying instrument, in order to
construct a combined position whose risk and return characteristics
are similar to selling a futures contract. Another possible combined
position would involve writing a call option at one strike price and
buying a call option at a lower price, in order to reduce the risk of
the written call option in the event of a substantial price increase.
Because combined options positions involve multiple trades, they
result in higher transaction costs and may be more difficult to open
and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of
types of exchange-traded options and futures contracts, it is likely
that the standardized contracts available will not match a fund's
current or anticipated investments exactly. The bond fund may invest
in options and futures contracts based on securities with different
issuers, maturities, or other characteristics from the securities in
which they typically invest, which involves a risk that the options or
futures position will not track the performance of a fund's other
investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a
fund's investments well. Options and futures prices are affected by
such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument, and the time
remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation may also result
from differing levels of demand in the options and futures markets and
the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of daily price
fluctuation limits or trading halts. A fund may purchase or sell
options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to
attempt to compensate for differences in volatility between the
contract and the securities, although this may not be successful in
all cases. If price changes in a fund's options or futures positions
are poorly correlated with its other investments, the positions may
fail to produce anticipated gains or result in losses that are not
offset by gains in other investments.
FUTURES CONTRACTS. When a fund purchases a futures contract, it agrees
to purchase a specified underlying instrument at a specified future
date. When a fund sells a futures contract, it agrees to sell
the underlying instrument at a specified future date. The price at
which the purchase and sale will take place is fixed when the fund
enters into the contract. Some currently available futures contracts
are based on specific securities, such as U.S. Treasury bonds or
notes, and some are based on indices of securities prices, such as the
Bond Buyer Municipal Bond Index. Futures can be held until their
delivery dates, or can be closed out before then if a liquid secondary
market is available.
The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument. Therefore,
purchasing futures contracts will tend to increase a fund's exposure
to positive and negative price fluctuations in the underlying
instrument, much as if it had purchased the underlying instrument
directly. When a fund sells a futures contract, by contrast,
the value of its futures position will tend to move in a direction
contrary to the market. Selling futures contracts, therefore, will
tend to offset both positive and negative market price changes, much
as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract
is not required to deliver or pay for the underlying instrument unless
the contract is held until the delivery date. However, both the
purchaser and seller are required to deposit "initial margin" with a
futures broker, known as a futures commission merchant (FCM), when the
contract is entered into. Initial margin deposits are typically equal
to a percentage of the contract's value. If the value of either
party's position declines, that party will be required to make
additional "variation margin" payments to settle the change in value
on a daily basis. The party that has a gain may be entitled to receive
all or a portion of this amount. Initial and variation margin payments
do not constitute purchasing securities on margin for purposes of
a fund's investment limitations. In the event of the bankruptcy
of an FCM that holds margin on behalf of a fund, the fund may
be entitled to return of margin owed to it only in proportion to the
amount received by the FCM's other customers, potentially resulting in
losses to the fund.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The bond fund has
filed a notice of eligibility for exclusion from the definition of
the term "commodity pool operator" with the Commodity Futures Trading
Commission (CFTC) and the National Futures Association, which regulate
trading in the futures markets. The bond fund intends to comply
with Rule 4.5 under the Commodity Exchange Act, which limits the
extent to which the fund can commit assets to initial margin deposits
and option premiums.
In addition, the bond fund will not: (a) sell futures
contracts, purchase put options, or write call options if, as a
result, more than 25% of the fund's total assets would be hedged with
futures and options under normal conditions; (b) purchase futures
contracts or write put options if, as a result, the fund's total
obligations upon settlement or exercise of purchased futures contracts
and written put options would exceed 25% of its total assets; or (c)
purchase call options if, as a result, the current value of option
premiums for call options purchased by the fund would exceed 5% of the
fund's total assets. These limitations do not apply to options
attached to or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
The above limitations on the bond fund's investments in futures
contracts and options, and the fund's policies regarding futures
contracts and options discussed elsewhere in this SAI, may be changed
as regulatory agencies permit.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or
futures contract at any particular time. Options may have relatively
low trading volume and liquidity if their strike prices are not close
to the underlying instrument's current price. In addition, exchanges
may establish daily price fluctuation limits for options and futures
contracts, and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days
when the price fluctuation limit is reached or a trading halt is
imposed, it may be impossible for a fund to enter into new positions
or close out existing positions. If the secondary market for a
contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require a fund to continue to hold a
position until delivery or expiration regardless of changes in its
value. As a result, a fund's access to other assets held to
cover its options or futures positions could also be impaired.
OTC OPTIONS. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract
size, and strike price, the terms of over-the-counter (OTC) options
(options not traded on exchanges) generally are established through
negotiation with the other party to the option contract. While this
type of arrangement allows the fund s greater flexibility to
tailor an option to its needs, OTC options generally involve greater
credit risk than exchange-traded options, which are guaranteed by the
clearing organization of the exchanges where they are traded.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a
fund obtains the right (but not the obligation) to sell the option's
underlying instrument at a fixed strike price. In return for this
right, the fund pays the current market price for the option (known as
the option premium). Options have various types of underlying
instruments, including specific securities, indices of securities
prices, and futures contracts. The fund may terminate its position in
a put option it has purchased by allowing it to expire or by
exercising the option. If the option is allowed to expire, the fund
will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the
strike price. A fund may also terminate a put option position by
closing it out in the secondary market at its current price, if a
liquid secondary market exists.
The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying
instrument's price does not fall enough to offset the cost of
purchasing the option, a put buyer can expect to suffer a loss
(limited to the amount of the premium paid, plus related transaction
costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right
to purchase, rather than sell, the underlying instrument at the
option's strike price. A call buyer typically attempts to participate
in potential price increases of the underlying instrument with risk
limited to the cost of the option if security prices fall. At the same
time, the buyer can expect to suffer a loss if security prices do not
rise sufficiently to offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When a fund writes a put option,
it takes the opposite side of the transaction from the option's
purchaser. In return for receipt of the premium, the fund assumes the
obligation to pay the strike price for the option's underlying
instrument if the other party to the option chooses to exercise it.
When writing an option on a futures contract, the fund will be
required to make margin payments to an FCM as described above for
futures contracts. A fund may seek to terminate its position in
a put option it writes before exercise by closing out the option in
the secondary market at its current price. If the secondary market is
not liquid for a put option the fund has written, however, the fund
must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set
aside assets to cover its position.
If security prices rise, a put writer would generally expect to
profit, although its gain would be limited to the amount of the
premium it received. If security prices remain the same over time, it
is likely that the writer will also profit, because it should be able
to close out the option at a lower price. If security prices fall, the
put writer would expect to suffer a loss. This loss should be less
than the loss from purchasing the underlying instrument directly,
however, because the premium received for writing the option should
mitigate the effects of the decline.
Writing a call option obligates a fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise
of the option. The characteristics of writing call options are similar
to those of writing put options, except that writing calls generally
is a profitable strategy if prices remain the same or fall. Through
receipt of the option premium, a call writer mitigates the effects of
a price decline. At the same time, because a call writer must be
prepared to deliver the underlying instrument in return for the strike
price, even if its current value is greater, a call writer gives up
some ability to participate in security price increases.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed
of in the ordinary course of business at approximately the prices at
which they are valued. Under the supervision of the Board of Trustees,
FMR determines the liquidity of a fund's investments and,
through reports from FMR, the Board monitors investments in illiquid
instruments. In determining the liquidity of a fund's
investments, FMR may consider various factors, including (1) the
frequency of trades and quotations, (2) the number of dealers and
prospective purchasers in the marketplace, (3) dealer undertakings to
make a market, (4) the nature of the security (including any demand or
tender features), and (5) the nature of the marketplace for trades
(including the ability to assign or offset the fund's rights and
obligations relating to the investment).
For the money market funds, FMR may determine some restricted
securities and municipal lease obligations to be illiquid.
For the bond fund, investments currently considered to be
illiquid include over-the-counter options. Also, FMR may determine
some restricted securities and municipal lease obligations to be
illiquid. However, with respect to over-the-counter options a
fund writes, all or a portion of the value of the underlying
instrument may be illiquid depending on the assets held to cover the
option and the nature and terms of any agreement the fund may have to
close out the option before expiration.
In the absence of market quotations, illiquid investments for the
money market funds are valued for purposes of monitoring amortized
cost valuation, and for the bond fund are priced at fair value
as determined in good faith by a committee appointed by the Board of
Trustees. If through a change in values, net assets, or other
circumstances, a fund were in a position where more than 10% of its
net assets was invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
INDEXED SECURITIES. A fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, or
other financial indicators. Indexed securities typically, but not
always, are debt securities or deposits whose value at maturity or
coupon rate is determined by reference to a specific instrument or
statistic. Indexed securities may have principal payments as well as
coupon payments that depend on the performance of one or more interest
rates. Their coupon rates or principal payments may change by several
percentage points for every 1% interest rate change. One example of
indexed securities is inverse floaters.
The performance of indexed securities depends to a great extent on the
performance of the security or other instrument to which they are
indexed, and may also be influenced by interest rate changes. At the
same time, indexed securities are subject to the credit risks
associated with the issuer of the security, and their values may
decline substantially if the issuer's creditworthiness deteriorates.
Indexed securities may be more volatile than the underlying
instruments.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive
order issued by the SEC, each fund has received permission to
lend money to, and borrow money from, other funds advised by FMR or
its affiliates, but each fund currently intends to participate
in this program only as a borrower. Interfund borrowings normally
extend overnight, but can have a maximum duration of seven days. A
fund will borrow through the program only when the costs are equal to
or lower than the costs of bank loans. Loans may be called on one
day's notice, and a fund may have to borrow from a bank at a higher
interest rate if an interfund loan is called or not renewed.
INVERSE FLOATERS have variable interest rates that typically move in
the opposite direction from prevailing short-term interest rate levels
- - rising when prevailing short-term interest rates fall, and vice
versa. This interest rate feature can make the prices of inverse
floaters considerably more volatile than bonds with comparable
maturities.
LOWER-QUALITY MUNICIPAL SECURITIES. The bond fund may invest a
portion of its assets in lower-quality municipal securities as
described in the Prospectus.
While the market for New Jersey municipals is considered to be
[adequate/substantial], adverse publicity and changing investor
perceptions may affect the ability of outside pricing services used by
a fund to value its portfolio securities, and the fund's ability to
dispose of lower-quality bonds. The outside pricing services are
monitored by FMR and reported to the Board to determine whether the
services are furnishing prices that accurately reflect fair value. The
impact of changing investor perceptions may be especially pronounced
in markets where municipal securities are thinly traded.
The bond fund may choose, at its expense or in conjunction with
others, to pursue litigation or otherwise exercise its rights as a
security holder to seek to protect the interests of security holders
if it determines this to be in the best interest of the fund's
shareholders.
MARKET DISRUPTION RISK. The value of municipal securities may be
affected by uncertainties in the municipal market related to
legislation or litigation involving the taxation of municipal
securities or the rights of municipal securities holders in the event
of a bankruptcy. Municipal bankruptcies are relatively rare, and
certain provisions of the U.S. Bankruptcy Code governing such
bankruptcies are unclear and remain untested. Further, the application
of state law to municipal issuers could produce varying results among
the states or among municipal securities issuers within a state. These
legal uncertainties could affect the municipal securities market
generally, certain specific segments of the market, or the relative
credit quality of particular securities. Any of these effects could
have a significant impact on the prices of some or all of the
municipal securities held by a fund, making it more difficult for
the money market funds to maintain a stable net asset value per
share.
MONEY MARKET SECURITIES are high-quality, short-term obligations. Some
money market securities employ a trust or other similar structure to
modify the maturity, price characteristics, or quality of financial
assets. For example, put features can be used to modify the maturity
of a security or interest rate adjustment features can be used to
enhance price stability. If the structure does not perform as
intended, adverse tax or investment consequences may result. Neither
the Internal Revenue Service (IRS) nor any other regulatory authority
has ruled definitively on certain legal issues presented by structured
securities. Future tax or other regulatory determinations could
adversely affect the value, liquidity, or tax treatment of the income
received from these securities or the nature and timing of
distributions made by the funds.
MUNICIPAL LEASES and participation interests therein may take the form
of a lease, an installment purchase, or a conditional sale contract
and are issued by state and local governments and authorities to
acquire land or a wide variety of equipment and facilities. Generally,
a fund will not hold such obligations directly as a lessor of the
property, but will purchase a participation interest in a municipal
obligation from a bank or other third party. A participation interest
gives a fund a specified, undivided interest in the obligation in
proportion to its purchased interest in the total amount of the
obligation.
Municipal leases frequently have risks distinct from those associated
with general obligation or revenue bonds. State constitutions and
statutes set forth requirements that states or municipalities must
meet to incur debt. These may include voter referenda, interest rate
limits, or public sale requirements. Leases, installment purchases, or
conditional sale contracts (which normally provide for title to the
leased asset to pass to the governmental issuer) have evolved as a
means for governmental issuers to acquire property and equipment
without meeting their constitutional and statutory requirements for
the issuance of debt. Many leases and contracts include
"non-appropriation clauses" providing that the governmental issuer has
no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis.
Non-appropriation clauses free the issuer from debt issuance
limitations.
MUNICIPAL SECTORS:
[IF FUND >20% (OR MGR EXPECTS TO BE) IN THIS INDUSTRY:ELECTRIC
UTILITIES. The electric utilities industry has been experiencing, and
will continue to experience, increased competitive pressures. Federal
legislation in the last two years will open transmission access to any
electricity supplier, although it is not presently known to what
extent competition will evolve. Other risks include: (a) the
availability and cost of fuel, (b) the availability and cost of
capital, (c) the effects of conservation on energy demand, (d) the
effects of rapidly changing environmental, safety, and licensing
requirements, and other federal, state, and local regulations, (e)
timely and sufficient rate increases, and (f) opposition to nuclear
power.]
[IF FUND >20% (OR MGR EXPECTS TO BE) IN THIS INDUSTRY:HEALTH CARE. The
health care industry is subject to regulatory action by a number of
private and governmental agencies, including federal, state, and local
governmental agencies. A major source of revenues for the health care
industry is payments from the Medicare and Medicaid programs. As a
result, the industry is sensitive to legislative changes and
reductions in governmental spending for such programs. Numerous other
factors may affect the industry, such as general and local economic
conditions; demand for services; expenses (including malpractice
insurance premiums); and competition among health care providers. In
the future, the following elements may adversely affect health care
facility operations: adoption of legislation proposing a national
health insurance program; other state or local health care reform
measures; medical and technological advances which dramatically alter
the need for health services or the way in which such services are
delivered; changes in medical coverage which alter the traditional
fee-for-service revenue stream; and efforts by employers, insurers,
and governmental agencies to reduce the costs of health insurance and
health care services.]
[IF FUND >20% (OR MGR EXPECTS TO BE) IN THIS INDUSTRY:HOUSING. Housing
revenue bonds are generally issued by a state, county, city, local
housing authority, or other public agency. They generally are secured
by the revenues derived from mortgages purchased with the proceeds of
the bond issue. It is extremely difficult to predict the supply of
available mortgages to be purchased with the proceeds of an issue or
the future cash flow from the underlying mortgages. Consequently,
there are risks that proceeds will exceed supply, resulting in early
retirement of bonds, or that homeowner repayments will create an
irregular cash flow. Many factors may affect the financing of
multi-family housing projects, including acceptable completion of
construction, proper management, occupancy and rent levels, economic
conditions, and changes to current laws and regulations.]
[IF FUND >20% (OR MGR EXPECTS TO BE) IN THIS INDUSTRY:EDUCATION. In
general, there are two types of education-related bonds; those issued
to finance projects for public and private colleges and universities,
and those representing pooled interests in student loans. Bonds issued
to supply educational institutions with funds are subject to the risk
of unanticipated revenue decline, primarily the result of decreasing
student enrollment or decreasing state and federal funding. Among the
factors that may lead to declining or insufficient revenues are
restrictions on students' ability to pay tuition, availability of
state and federal funding, and general economic conditions. Student
loan revenue bonds are generally offered by state (or substate)
authorities or commissions and are backed by pools of student loans.
Underlying student loans may be guaranteed by state guarantee agencies
and may be subject to reimbursement by the United States Department of
Education through its guaranteed student loan program. Others may be
private, uninsured loans made to parents or students which are
supported by reserves or other forms of credit enhancement. Recoveries
of principal due to loan defaults may be applied to redemption of
bonds or may be used to re-lend, depending on program latitude and
demand for loans. Cash flows supporting student loan revenue bonds are
impacted by numerous factors, including the rate of student loan
defaults, seasoning of the loan portfolio, and student repayment
deferral periods of forbearance. Other risks associated with student
loan revenue bonds include potential changes in federal legislation
regarding student loan revenue bonds, state guarantee agency
reimbursement and continued federal interest and other program
subsidies currently in effect.]
[IF FUND >20% (OR MGR EXPECTS TO BE) IN THIS INDUSTRY:)WATER AND
SEWER. Water and sewer revenue bonds are often considered to have
relatively secure credit as a result of their issuer's importance,
monopoly status, and generally unimpeded ability to raise rates.
Despite this, lack of water supply due to insufficient rain, run-off,
or snow pack is a concern that has led to past defaults. Further,
public resistance to rate increases, costly environmental litigation,
and Federal environmental mandates are challenges faced by issuers of
water and sewer bonds.]
[IF FUND >20% (OR MGR EXPECTS TO BE) IN THIS INDUSTRY:(TRANSPORTATION.
Transportation debt may be issued to finance the construction of
airports, toll roads, highways, or other transit facilities. Airport
bonds are dependent on the general stability of the airline industry
and on the stability of a specific carrier who uses the airport as a
hub. Air traffic generally follows broader economic trends and is also
affected by the price and availability of fuel. Toll road bonds are
also affected by the cost and availability of fuel as well as toll
levels, the presence of competing roads and the general economic
health of an area. Fuel costs and availability also affect other
transportation-related securities, as do the presence of alternate
forms of transportation, such as public transportation.]
PUT FEATURES entitle the holder to sell a security back to the issuer
or a third party at any time or at specified intervals. They are
subject to the risk that the put provider is unable to honor the put
feature (purchase the security). Put providers often support their
ability to buy securities on demand by obtaining letters of credit or
other guarantees from other entities. Demand features, standby
commitments, and tender options are types of put features.
QUALITY AND MATURITY (MONEY MARKET FUNDS ). Pursuant to
procedures adopted by the Board of Trustees, the fund s may
purchase only high-quality securities that FMR believes present
minimal credit risks. To be considered high-quality, a security must
be rated in accordance with applicable rules in one of the two highest
categories for short-term securities by at least two nationally
recognized rating services (or by one, if only one rating service has
rated the security); or, if unrated, judged to be of equivalent
quality by FMR.
High-quality securities are divided into "first tier" and "second
tier" securities. First tier securities are those deemed to be in the
highest rating category (e.g., Standard & Poor's A-1 or SP-1), and
second tier securities are those deemed to be in the second highest
rating category (e.g., Standard & Poor's A-2 or SP-2).
The fund s currently intend to limit their investments to
securities with remaining maturities of 397 days or less, and to
maintain a dollar-weighted average maturity of 90 days or less. When
determining the maturity of a security, the fund may look to an
interest rate reset or demand feature.
REFUNDING CONTRACTS. A fund may purchase securities on a
when-issued basis in connection with the refinancing of an issuer's
outstanding indebtedness. Refunding contracts require the issuer to
sell and the fund to buy refunded municipal obligations at a stated
price and yield on a settlement date that may be several months or
several years in the future. A fund generally will not be
obligated to pay the full purchase price if it fails to perform under
a refunding contract. Instead, refunding contracts generally provide
for payment of liquidated damages to the issuer (currently 15-20% of
the purchase price). A fund may secure its obligations under a
refunding contract by depositing collateral or a letter of credit
equal to the liquidated damages provisions of the refunding contract.
When required by SEC guidelines , a fund will place liquid
assets in a segregated custodial account equal in amount to its
obligations under refunding contracts.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund
purchases a security and simultaneously commits to sell that security
back to the original seller at an agreed-upon price. The resale price
reflects the purchase price plus an agreed-upon incremental amount
which is unrelated to the coupon rate or maturity of the purchased
security. To protect the fund from the risk that the original seller
will not fulfill its obligation, the securities are held in an account
of the fund at a bank, marked-to-market daily, and maintained at a
value at least equal to the sale price plus the accrued incremental
amount. While it does not presently appear possible to eliminate all
risks from these transactions (particularly the possibility that the
value of the underlying security will be less than the resale price,
as well as delays and costs to a fund in connection with bankruptcy
proceedings), it is each fund's current policy to engage in
repurchase agreement transactions with parties whose creditworthiness
has been reviewed and found satisfactory by FMR.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, a fund may be obligated to pay all or
part of the registration expense and a considerable period may elapse
between the time it decides to seek registration and the time it may
be permitted to sell a security under an effective registration
statement. If, during such a period, adverse market conditions were to
develop, a fund might obtain a less favorable price than
prevailed when it decided to seek registration of the security.
However, in general, the money market funds anticipate holding
restricted securities to maturity or selling them in an exempt
transaction.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement,
a fund sells a portfolio instrument to another party, such as a
bank or broker-dealer, in return for cash and agrees to repurchase the
instrument at a particular price and time. While a reverse repurchase
agreement is outstanding, the fund will maintain appropriate liquid
assets in a segregated custodial account to cover its obligation under
the agreement. A fund will enter into reverse repurchase
agreements only with parties whose creditworthiness has been found
satisfactory by FMR. Such transactions may increase fluctuations in
the market value of the fund's assets and may be viewed as a form of
leverage.
SOURCES OF CREDIT OR LIQUIDITY SUPPORT. FMR may rely on its evaluation
of the credit of a bank or other entity in determining whether to
purchase a security supported by a letter of credit guarantee, put or
demand feature, insurance or other source of credit or liquidity.
STANDBY COMMITMENTS are puts that entitle holders to same-day
settlement at an exercise price equal to the amortized cost of the
underlying security plus accrued interest, if any, at the time of
exercise. A fund may acquire standby commitments to enhance the
liquidity of portfolio securities. In evaluating the credit of a
foreign bank or other foreign entities, FMR will consider whether
adequate public information about the entity is available and whether
the entity may be subject to unfavorable political or economic
developments, currency controls, or other government restrictions that
might affect its ability to honor its commitment.
Ordinarily a fund will not transfer a standby commitment to a
third party, although it could sell the underlying municipal security
to a third party at any time. A fund may purchase standby commitments
separate from or in conjunction with the purchase of securities
subject to such commitments. In the latter case, the fund would pay a
higher price for the securities acquired, thus reducing their yield to
maturity.
Issuers or financial intermediaries may obtain letters of credit or
other guarantees to support their ability to buy securities on demand.
FMR may rely upon its evaluation of a bank's credit in determining
whether to support an instrument supported by a letter of credit. In
evaluating a foreign bank's credit, FMR will consider whether adequate
public information about the bank is available and whether the bank
may be subject to unfavorable political or economic developments,
currency controls, or other governmental restrictions that might
affect the bank's ability to honor its credit commitment.
Standby commitments are subject to certain risks, including the
ability of issuers of standby commitments to pay for securities at the
time the commitments are exercised; the fact that standby commitments
are not marketable by the funds; and the possibility that the
maturities of the underlying securities may be different from those of
the commitments.
TENDER OPTION BONDS are created by coupling an intermediate- or
long-term, fixed-rate, tax-exempt bond (generally held pursuant to a
custodial arrangement) with a tender agreement that gives the holder
the option to tender the bond at its face value. As consideration for
providing the tender option, the sponsor (usually a bank,
broker-dealer, or other financial institution) receives periodic fees
equal to the difference between the bond's fixed coupon rate and the
rate (determined by a remarketing or similar agent) that would cause
the bond, coupled with the tender option, to trade at par on the date
of such determination. After payment of the tender option fee, a fund
effectively holds a demand obligation that bears interest at the
prevailing short-term tax-exempt rate. In selecting tender option
bonds for the funds, FMR will consider the creditworthiness of the
issuer of the underlying bond, the custodian, and the third party
provider of the tender option. In certain instances, a sponsor may
terminate a tender option if, for example, the issuer of the
underlying bond defaults on interest payments.
VARIABLE OR FLOATING RATE OBLIGATIONS, including certain participation
interests in municipal instruments, have interest rate adjustment
formulas that help stabilize their market values. Many variable and
floating rate instruments also carry demand features that permit a
fund to sell them at par value plus accrued interest on short notice.
In many instances bonds and participation interests have tender
options or demand features that permit a fund to tender (or put) the
bonds to an institution at periodic intervals and to receive the
principal amount thereof. A fund considers variable rate instruments
structured in this way (Participating VRDOs) to be essentially
equivalent to other VRDOs it purchases. The IRS has not ruled whether
the interest on Participating VRDOs is tax-exempt and, accordingly, a
fund intends to purchase these instruments based on opinions of bond
counsel. A fund may also invest in fixed-rate bonds that are subject
to third party puts and in participation interests in such bonds held
by a bank in trust or otherwise.
VARIABLE AND FLOATING RATE SECURITIES provide for periodic adjustments
of the interest rate paid on the security. Variable rate securities
provide for a specified periodic adjustment in the interest rate,
while floating rate securities have interest rates that change
whenever there is a change in a designated benchmark rate. Some
variable or floating rate securities have put features.
ZERO COUPON BONDS do not make regular interest payments. Instead, they
are sold at a deep discount from their face value and are redeemed at
face value when they mature. Because zero coupon bonds do not pay
current income, their prices can be very volatile when interest rates
change. In calculating its daily dividend, a fund takes into account
as income a portion of the difference between a zero coupon bond's
purchase price and its face value.
SPECIAL CONSIDERATIONS AFFECTING NEW JERSEY
The following highlights only some of the more significant financial
trends and problems affecting New Jersey (the State), and is based on
information drawn from official statements and prospectuses relating
to securities offerings of the State, its agencies and
instrumentalities, as available on the date of this SAI. FMR has not
independently verified any of the information contained in such
official statements and other publicly available documents, but is not
aware of any fact which would render such information inaccurate.
Effective January 1, 1994, the State's personal income tax rates were
cut by 5% for all taxpayers. Effective January 1, 1995, the State's
personal income tax rates were cut by an additional 10% for most
taxpayers. By a bill signed into law on July 4, 1995, the State's
personal income tax rates have been further reduced so that coupled
with the prior rate reductions, beginning with tax year 1996, personal
income tax rates will be, depending upon a taxpayer's level of income
and filing status, 30%, 15% or 9% lower than 1993 rates. At this time
the effect of the tax reduction cannot be evaluated.
The State's 1997 Fiscal Year budget became law on June 30, 1996.
Changes in economic activity in the State and the nation, consumption
of durable goods, corporate financial performance and other factors
that are difficult to predict may result in actual collections for
Fiscal Year 1997 being more or less than forecasted. The State is
bound, however, by the constitutional requirement that no
appropriations law may be enacted if the amount of money appropriated
therein, together with all other prior appropriations made for the
same Fiscal Year, exceeds the total amount of anticipated revenues
available for such Fiscal Year as certified by the Governor.
The State's economic base is diversified, consisting of a variety of
manufacturing, construction and service industries, supplemented by
rural areas with selective commercial agriculture. After enjoying an
extraordinary boom during the mid-1980s, the State, as well as the
rest of the Northeast, slipped into a slowdown well before the onset
of the national recession which officially began in July 1990
(according to the National Bureau of Economic Research). By the
beginning of the national recession, construction activity had already
been declining in the State for nearly two years, growth had tapered
off markedly in the service sectors, and the long-term downtrend of
factory employment had accelerated partly because of a leveling off of
industrial demand nationally. The onset of recession caused an
acceleration of the State's job losses in construction and
manufacturing, as well as an employment downturn in such previously
growing sectors as wholesale trade, retail trade, finance, utilities,
trucking and warehousing. The net effect was a decline in the State's
total nonfarm wage and salary employment from a peak of 3,689,800 in
1989 to a low of 3,457,900 in 1992. This loss was followed by an
employment gain of 200,700 from May 1992 to August 1996, a recovery of
77% of the jobs lost during the recession. More than two-thirds of
this number, nearly 138,000 jobs, were recovered in the 31 month
period from January 1994 to August 1996.
Reflecting the economic downturn, the rate of unemployment in the
State rose from a low of 3.6% during the first quarter of 1989 to a
recessionary peak of 8.5% during 1992 (according to U.S. Bureau of
Labor Statistics and the New Jersey Department of Labor, Division of
Labor Market and Demographic Research). Since then, the unemployment
rate fell to an average of 6.4% in 1995 and 6.1% for the four month
period from May 1996 through August 1996.
For the recovery period as a whole, May 1992 to August 1996,
service-producing employment in the State has expanded by 228,500
jobs. Hiring has been reported by food stores, auto dealers, wholesale
distributors, trucking and warehousing firms, utilities, business and
engineering/management service firms, hotels/hotel-casinos, social
service agencies, and health care providers other than hospitals.
Employment growth was particularly strong in business services and its
personnel supply component with increases of 17,500 and 8,100,
respectively, in the 12-month period ending August 1996.
In the manufacturing sector, employment losses slowed between 1992 and
1994. After an average annual job loss of 33,500 from 1989 through
1992, the State's factory job losses fell to 13,300 during 1993 and
7,300 during 1994. During 1995, however, manufacturing job losses
increased slightly to 9,100, reflecting a slowdown in national
manufacturing production activity. While experiencing growth in the
number of production workers in 1994, the number declined in 1995 at
the same time that managerial and office staff were also reduced as
part of nationwide downsizing. Through August 1996 layoffs of white
collar workers and corporate downsizing appear to be abating.
Conditions have slowly improved in the construction industry, where
employment has risen by 15,600 since its low in May 1992. Between 1992
and 1995, this sector's hiring rebound was driven primarily by
increased homebuilding and nonresidential projects. During 1996,
public works projects and homebuilding became the growth segments
while nonresidential construction lessened.
Nonresidential construction activity, as measured by contract awards,
grew by 9.7% in 1993, 19.6% in 1994, and 3.0% in 1995. More recently,
nonresidential building construction contracts fell by 20.5% in the
first eight months of 1996. This decline is largely attributable to an
abundance of large, one-time contract awards during 1995, including a
$202.9 million contract for the construction of a state prison.
Residential construction contracts through August 1996, despite
monthly fluctuations. increased by 1.4% for the first eight months of
1996 as compared to the first eight months of 1995 ($1,502 million and
$1,481 million, respectively). Nonbuilding or infrastructure
construction rose robustly by 17.8% during this period. Despite these
increases, total construction contracts declined by 3.9% when
comparing the first eight months of 1995 and 1996.
Improvements in overall employment opportunities and the economy in
general have led to increased consumer spending during the recovery.
While overall retail sales in the State grew by only 1.6% during 1993,
they performed much better in 1994, advancing by 7.8% which exceeded
the 7.5% growth registered nationwide. During 1995, especially the
winter months, consumer confidence and actual consumer spending
moderated both nationally and in the State. For all of 1995, retail
sales in the State grew by 2.3%. Retail sales regained momentum in
1996 and have been on a moderately upward trend, rising to an annual
rate of $76.5 billion through June. The State's pickup in growth after
a blizzard-related January decline resulted in sales growth of 4.2%
when comparing the first six months of 1995 with those of 1996. The
rising trend in retail sales has translated into steady increases in
retail trade jobs (both full- and part-time) with a rise in retail
employment from December 1995 to August 1996 of 6,900 jobs.
Total new vehicle registrations (new passenger cars and light trucks
and vans) rose robustly in 1993 by more than 18%, and in 1994 by 5.8%,
but declined by 4.4% in 1995. Through July 1996 however, total new
vehicle registrations rose by 3.5% compared to the same time period in
1995.
Unemployment in the State through August 1996 has been receding.
According to the U.S. Bureau of Labor Statistics, the jobless rate
dropped from 7.5% in 1993 to 6.8% in 1994 and to 6.4% in 1995.
Subsequently, it has dropped to 6.1% for the four-month period from
May 1996 through August 1996.
The insured unemployment rate, i.e., the number of individuals
claiming benefits as a percentage of the number of workers covered by
unemployment insurance, declined from 3.9% during calendar years 1991
and 1992 to 3.3% during 1993 and then averaged 3.2% throughout 1994,
1995 and the first six months of 1996. As of August 1, 1996, the
State's unemployment insurance trust fund balance stood at $2.1
billion.
The State has benefited from the national recovery. The State's
recovery is in its fifth year and appears to be sustainable now that
the national economy has "soft-landed". The U.S. economy is in a
period of steady, moderate growth, having slowed enough during the
fourth quarter of 1995 and first quarter of 1996 to avoid inflation,
but not enough to slip into a recession. While the latest national
indicators show that economic growth accelerated during the second
quarter of this year, the inflation remained low.
Business investment expenditures and consumer spending have increased
substantially in the nation as well as in the State. Capital and
consumer spending may very well continue to rise due to the sustained
character of the recovery, although the interest-sensitive
homebuilding industry may provide only a moderate amount of stimulus
both nationally and in the State. It is expected that the employment
and income growth that has and is taking place will lead to further
growth in consumer outlays. Reasons for cautious optimism in the State
include increasing employment levels, a declining jobless rate, and a
higher-than-national level of per capita personal income.
If the nation's economic growth rate slows from the robust 4.7% in the
second quarter of 1996, business expansion could become somewhat more
subdued in the State as the rest of 1996 unfolds. However, the State's
economy should have enough momentum to keep its trend line pointing
upwards. Its growth potential is not yet limited by the labor supply
constraints beginning to affect some other parts of the country.
Prospects for New Jersey are favorable. Although growth is likely to
be slower than in the nation, the locational advantages that have
served New Jersey well for many years will still be there. Structural
changes that have been going on for years can be expected to continue,
with job creation concentrated most heavily in the service sectors.
There is a Constitutional provision that requires the State to
maintain a balanced budget. The State operates on a fiscal year
beginning July 1 and ending June 30. For example, "Fiscal Year 1997"
refers to the State's fiscal year beginning July 1, 1996 and ending
June 30, 1997. The General Fund is the fund into which all State
revenues not otherwise restricted by statute are deposited and from
which appropriations are made. The largest part of the total financial
operations of the State is accounted for in the General Fund, which
includes revenues received from taxes and unrestricted by statute,
most federal revenues, and certain miscellaneous revenue items. The
appropriation acts enacted by the Legislature and approved by the
Governor provide the basic framework for the operation of the General
Fund. The undesignated General Fund balance at year end for Fiscal
Year 1993 was $937 million, for Fiscal Year 1994 $926 million, and for
Fiscal Year 1995 $569 million. For Fiscal Year 1996, undesignated
General Fund balance is estimated to be $471 million, and for Fiscal
Year 1997, the balance in the undesignated General Fund is estimated
to be $255 million.
The Fiscal 1997 Appropriations Act provides $628.5 million as the
State's contributions to public retirement plans. Between July 1, 1993
and July 1, 1994, independent actuaries reported that the market value
of all assets of the retirement funds was $42.9 billion compared to a
$40.3 billion accrued liability, representing a funding level of
106.5%, determined in accordance with the principles of the Financial
Accounting Standards Board. The present value of projected benefits,
determined in accordance with the principles of the Government
Accounting Standards Board, of the funds is $49.6 billion,
representing a funding level for projected benefits of 82.4%.
According to recently published statistics, the State is among those
states which receive the highest amount of federal aid. Federal aid
received in the General Fund and Special Transportation fund amounted
to $4.38 billion for the Fiscal Year ended June 30, 1993, $4.20
billion for the Fiscal Year ended June 30, 1994, $4.62 billion for the
Fiscal Year ended June 30, 1995, and is projected to be $5.48 billion
for the Fiscal Year ending June 30, 1996 and $5.46 billion for the
fiscal year ending June 30, 1997. 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 Fiscal Year 1997
budget. In Fiscal Year 1997, the amount is $352.6 million of which
$304.5 million is for transportation projects.
The aggregate outstanding general obligation bonded indebtedness of
the State as of June 30, 1996 was $3.688 billion. For fiscal Year
1997, $446.9 million has been appropriated for principal and interest
payments for general obligation bonds.
The State has extensive control over school districts, cities,
counties and local financing authorities. State laws impose specific
limitations on local appropriations, with exemptions subject to state
approval. The State shares the proceeds of a number of taxes, with
funds going 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. Moreover,
the State is involved in a number of other lawsuits in which the State
has the potential for either a significant loss of revenue or a
significant unanticipated expenditure. Such cases include challenges
to its system of educational funding, the methods by which the State
Department of Human Services shares with county governments, the
maintenance recoveries and costs for residents in State psychiatric
hospitals, and residential facilities for the developmentally
disabled, a suit challenging the constitutionality of hazardous and
solid waste licensure renewal fees collected by the Department of
Environmental Protection, a suit alleging tort and contractual claims
against the State associated with a resource recovery facility, a suit
seeking return of moneys paid by various counties for maintenance of
Medicaid or Medicare eligible residents of institutions and facilities
for the developmentally disabled, a suit challenging assessments upon
property and casualty liability insurers pursuant to the Fair
Automobile Insurance Reform Act, and suits seeking return of moneys
paid by various hospitals pursuant to the Health Care Cost Reform Act
of 1992.
NEW JERSEY EDUCATION ASSOCIATION ET AL. V. STATE OF NEW JERSEY ET AL.
represents a challenge to amendments to the pension laws enacted on
June 30, 1994 (P.L. 1994, Chapter 62), which concerned the funding of
the Teachers Pension and Annuity Fund (TPAF), the Public Employee's
Retirement System (PERS), and Police and Fireman's Retirement System
(PFRS), the State Police Retirement System (SPRS) and the Judicial
Retirement System (JRS). The complaint was filed in the United States
District Court of New Jersey on October 17, 1994. The statute, as
enacted, made several changes affecting these retirement systems
including changing the actuarial funding method to projected unit
credit; continuing the prefunding of post-retirement medical benefits
but at a reduced level for TPAF and PERS; revising the employee member
contribution rate to a flat 5% for TPAF and PERS; extending the
phase-in period for the revised TPAF actuarial assumptions; changing
the phase-in period for funding of cost-of-living adjustments and
reducing the inflation assumption for the Cost of Living Adjustment
for all retirement systems; and decreasing the average salary increase
assumption for all retirement systems. Plaintiffs allege that the
changes resulted in lower employer contributions in order to reduce a
general budget deficit. The complaint further alleges that certain
provisions of Chapter 62 violate the contract, due process, and taking
clauses of the United States and New Jersey Constitutions, and further
constitute a breach of the State's fiduciary duty to participants in
TPAF and PERS. Plaintiffs seek to permanently enjoin the State from
administering, enforcing or otherwise implementing Chapter 62. An
adverse determination against the State would have a significant
impact upon the fiscal year 1996 budget. The State has filed a motion
to dismiss and a motion for summary judgment.
On October 6, 1995, the Court issued it opinion in which it dismissed
the State as a party to the action. The only defendant is Treasurer
Clymer. The claims surviving the motion are: (1) breach of trust and
fiduciary duty (against the Treasurer in both his individual and
official capacities); (2) violation of due process (against the
Treasurer in both his individual and official capacities); and (3) a
42. U.S.C. (sub-section)1983 claim (against the Treasurer in his
individual capacity).
The forms of relief sought related to these surviving claims are (1) a
declaration that certain provisions of Chapter 62 violate due process
of law under the Fifth and Fourteenth Amendments to the U.S.
Constitution; (2) a declaration that the enactment and implementation
of certain provisions of Chapter 62 constitute a breach of the
fiduciary obligations owed to contributing participants, vested
participants and retirees of the TPAF and PERS; (3) a declaration that
Chapter 62 contravenes the statutory and common law duties to
administer and fund the plans in an actuarially sound and fiscally
responsible manner; (4) a permanent injunction against administering,
enforcing or otherwise implementing certain provisions of Chapter 62;
and (5) directing payment of plaintiffs' attorneys' fees,
disbursements and costs pursuant to 42 U.S.C. (sub-section)1988.
The State filed a motion for reconsideration or, in the alternative,
for certification to the Third Circuit Court of Appeals, of the
remaining claims. By order dated December 19, 1995, the District Court
denied the motion in all respects. On January 29, 1996, the State, on
behalf of Treasurer Clymer, filed a Petition for a Writ of Mandamus
and a Motion for a Stay of the Proceedings below, pending
consideration and disposition of the petition, with the Third Circuit
Court of Appeals. In the petition, Treasurer Clymer asked the Court of
Appeals to direct the District Court to dismiss the complaint or enter
summary judgment in his favor. Alternatively, the Treasurer asked the
Court of Appeals to order the District Court to vacate its order
denying summary judgment and resolve that motion as a matter of law
without discovery or fact finding or to certify the issues for
interlocutory appeal. The Third Circuit Court of Appeals denied the
motion and petition on February 20, 1996. Discovery is proceeding this
matter. The State intends to vigorously defend this action.
Currently, the State's general obligation bonds are rated AA+ by
Standard & Poor's, Aa1 by Moody's Investors Service, Inc. and AA+ by
Fitch Investors Service, L.P.
SPECIAL CONSIDERATIONS AFFECTING PUERTO RICO
The following highlights some of the more significant financial trends
and problems affecting the Commonwealth of Puerto Rico (the
Commonwealth or Puerto Rico), and is based on information drawn from
official statements and prospectuses relating to the securities
offerings of Puerto Rico, its agencies and instrumentalities, as
available on the date of this SAI. FMR has not independently verified
any of the information contained in such official statements,
prospectuses, and other publicly available documents, but is not aware
of any fact which would render such information materially inaccurate.
The economy of Puerto Rico is closely linked to that of the United
States. In fiscal 1995, trade with the United States accounted for
approximately 89% of Puerto Rico's exports and approximately 65% of
its imports. In this regard, in fiscal 1995 Puerto Rico experienced a
$4.6 billion positive adjusted merchandise trade balance.
Since fiscal 1985, personal income, both aggregate and per capita, has
increased consistently each fiscal year. In fiscal 1995, aggregate
personal income was $27.0 billion ($26.2 billion in 1992 prices) and
personal per capita income was $7,296 ($7,074 in 1992 prices). Gross
domestic product in fiscal 1992 was $23.7 billion and gross product in
fiscal 1996 was $30.2 billion; ($26.7 billion in 1992 prices). This
represents an increase in gross product of 27.5% from fiscal 1992 to
1996 (12.7% in 1992 prices). For fiscal 1997, an increase in gross
domestic product of 2.7% over fiscal 1996 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
value of the U.S. dollar, the price stability of oil imports, any
increase or decrease in the number of visitors to the island, the
level of exports, the level of federal transfers, and the cost of
borrowing.
Puerto Rico's economy continued to expand throughout the five-year
period from fiscal 1992 through fiscal 1996. Almost every sector of
the economy participated, and record levels of employment were
achieved. Factors behind the continued expansion included
government-sponsored economic development programs, periodic declines
in the exchange value of the U.S. dollar, the level of federal
transfers, and the relatively low cost of borrowing funds during the
period.
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 U.S. average and has been
increasing in recent years. Despite long-term improvements, the
unemployment rate rose from 16.5% to 16.8% from fiscal 1992 to fiscal
1993. However, by the end of fiscal 1994, the unemployment rate
dropped to 15.9% and as of the end of fiscal 1996, stands at 13.8%.
Despite this downturn, there is a possibility that the unemployment
rate will increase.
Manufacturing is the largest sector in the economy accounting for
$17.7 billion or 41.8% of gross domestic product in fiscal 1995.
Manufacturing has experienced a basic change over the years as a
result of the influx of higher wage, high technology industries such
as the pharmaceutical industry, electronics, computers,
microprocessors, scientific instruments and high technology machinery.
The service sector, which includes finance, insurance, real estate,
wholesale and retail trade, hotels and related services and other
services, ranks second in its contribution to gross domestic product
and is the sector that employs the greatest number of people. In
fiscal 1995, the service sector generated $15.9 billion in gross
domestic product or 37.5% of the total. Employment in this sector
grew from 449,000 in fiscal 1992 to 527,000 in fiscal 1996, a
cumulative increase of 17.6%, which increase was greater than the
11.8% cumulative growths in employment over the same period, providing
46.7% of total employment. The government sector of the Commonwealth
plays an important role in the economy of the island. In fiscal year
1995, the government accounted for $4.5 billion or 10.6% of Puerto
Rico's gross domestic product and provided 21.7% of the total
employment. Tourism also contributes significantly to the island
economy, accounting for $1.8 billion of gross domestic product in
fiscal 1995.
The present administration has developed and is implementing a new
economic development program which is based on the premise that the
private sector should provide the primary impetus for economic
development and growth. This new program, which is referred to as the
New Economic Model, promotes changing the role of the government from
one of being a provider of most basic services to that of a
facilitator for private sector initiatives and encourages private
sector investment by reducing government-imposed regulatory
restraints.
The New Economic Model contemplates the development of initiatives
that will foster private investment in, and private management of,
sectors that are served more efficiently and effectively by the
private enterprise. One of these initiatives has been the adoption of
a new tax code intended to expand the tax base, reduce top personal
and corporate tax rates, and simplify the tax system.
The New Economic Model also seeks to identify and promote areas in
which Puerto Rico can compete more effectively in the global markets.
Tourism has been identified as one such area because of its potential
for job creation and contribution to the gross product. In 1993, a
new Tourism Incentives Act and a Tourism Development Fund were
implemented in order to provide special tax incentives and financing
for the development of new hotel projects and the tourism industry.
As a result of these initiatives, new hotels have been constructed or
are under construction which have increased the number of hotel rooms
on the island from 8,415 in fiscal 1992 to 10,345 in fiscal 1996 and
to 12,250 by the end of fiscal 1997.
The New Economic Model also seeks to reduce the size of the
government's direct contribution to gross domestic product. As part
of this goal, the government has transferred certain governmental
operations and sold a number of its assets to private parties. Among
these are: (i) the sale of the assets of the Puerto Rico Maritime
Authority; (ii) the execution of a five-year management agreement for
the operation and management of the Aqueducts and Sewer Authority by a
private company; (iii) the execution by the Aqueducts and Sewer
Authority of a construction and operating agreement with a private
consortium for the design, construction, and operation of an
approximately 75 million gallon per day water pipeline to the San Juan
metropolitan area from the Dos Bocas reservoir in Utuado; and (iv) the
execution by the Electric Power Authority of power purchase contracts
with private power producers under which two cogeneration plants (with
a total capacity of 800 megawatts) will be constructed.
As part of the government's program to facilitate the provision of
private health services, in 1994 a new health insurance program was
started in the Fajardo region to provide qualifying Puerto Rico
residents with comprehensive health insurance coverage. In
conjunction with this program certain public health facilities are
being privatized. The administration's goal is to provide universal
health insurance for such qualifying residents. The total cost of
this program will depend on the number of municipalities included and
the total number of participants. As of June 30, 1996, over 760,000
persons were participating in the program at an annual cost to the
Commonwealth of approximately $296 million.
One of the factors assisting the development of the manufacturing
sector in Puerto Rico has been the federal and Commonwealth tax
incentives available, most notably section 936 of the Internal Revenue
Code of 1986, as amended ("Section 936") and the Commonwealth's
Industrial Incentives Program. 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 during a 10, 15, 20, or 25 year period
depending on location.
For many years, U.S. companies operating in Puerto Rico enjoyed a
special tax credit that was available under Section 936 of the Code.
Originally, the credit provided an effective 100% federal tax
exemption for operating and qualifying investment income from Puerto
Rico sources. Amendments to Section 936 made in 1993 (the "1993
Amendments") instituted two alternative methods for calculating the
tax credit and limited the amount of the credit that a qualifying
company could claim. These limitations are based on a percentage of
qualifying income (the "percentage of income limitation") and on
qualifying expenditures on wages and other wage related benefits (the
"economic activity limitation" or "wage credit limitation"). As a
result of amendments incorporated in the Small Business Job Protection
Act of 1996 enacted by the U.S. Congress and signed into law by
President Clinton on August 20, 1996 (the "1996 Amendments"), the tax
credit is now being phased out over a ten-year period for existing
claimants and is no longer available for corporations that establish
operations in Puerto Rico after October 13, 1995 (including existing
Section 936 Corporations (as defined below) to the extent
substantially new operations are established in Puerto Rico). The
1996 Amendments also moved the credit based on the economic activity
limitation to Section 30A of the Code and phased it out over 10 years.
In addition, the 1996 Amendments eliminated the credit previously
available for income derived from certain qualified investments in
Puerto Rico. The Section 30A Credit and the remaining Section 936
credit are discussed below.
SECTION 30A. The 1996 Amendments added a new Section 30A to the Code.
Section 30A permits a "qualifying domestic corporation" ("QDC") that
meets certain gross income tests (which are similar to the 80% and 75%
gross income tests of Section 936 of the Code discussed below) to
claim a credit (the "Section 30A Credit") against the federal income
tax imposed on taxable income derived from sources outside the United
States from the active conduct of a trade or business in Puerto Rico
or from the sale of substantially all the assets used in such business
("possession income").
A QDC is a U.S. corporation which (i) was actively conducting a trade
or business in Puerto Rico on October 13, 1995, (ii) had a Section 936
election in effect for its taxable year that included October 13,
1995, (iii) does not have in effect an election to use the percentage
limitation of Section 936(a)(4)(B) of the Code, and (iv) does not add
a "substantial new line of business."
The Section 30A Credit is limited to the sum of (i) 60% of qualified
possession wages as defined in the Code, which includes wages up to
85% of the maximum earnings subject to the OASDI portion of Social
Security taxes plus an allowance for fringe benefits of 15% of
qualified possession wages, (ii) a specified percentage of
depreciation deductions ranging between 15% and 65%, based on the
class life of tangible property, and (iii) a portion of Puerto Rico
income taxes paid by the QDC, up to a 9% effective tax rate (but only
if the QDC does not elect the profit-split method for allocating
income from intangible property).
A QDC electing Section 30A of the Code may compute the amount of its
active business income, eligible for the Section 30A Credit, by using
either the cost sharing formula, the profit-split formula, or the
cost-plus formula, under the same rules and guidelines prescribed for
such formulas as provided under Section 936 (see discussion below).
To be eligible for the first two formulas, the QDC must have a
significant presence in Puerto Rico.
In the case of taxable years beginning after December 31, 2001, the
amount of possession income that would qualify for the Section 30A
Credit would be subject to a cap based on the QDC's possession income
for an average adjusted base period ending before October 14, 1995.
Section 30A applies only to taxable years beginning after December 31,
1995 and before January 1, 2006.
SECTION 936. Under Section 936 of the Code, as amended by the 1996
Amendments, and as an alternative to the Section 30A Credit, U.S.
corporations that meet certain requirements and elect its application
("Section 936 Corporations") are entitled to credit against their U.S.
corporate income tax, the portion of such tax attributable to income
derived from the active conduct of a trade or business within Puerto
Rico ("active business income") and from the sale or exchange of
substantially all assets used in the active conduct of such trade or
business. To qualify under Section 936 in any given taxable year, a
corporation must derive for the three-year period immediately
preceding the end of such taxable year, (i) 80% or more of its gross
income from sources within Puerto Rico, and (ii) 75% or more of its
gross income from the active conduct of a trade or business in Puerto
Rico.
Under Section 936, a Section 936 Corporation may elect to compute its
active business income, eligible for the Section 936 credit, under one
of three formulas: (A) a cost-sharing formula, whereby it is allowed
to claim all profits attributable to manufacturing intangibles, and
other functions carried out in Puerto Rico, provided it contributes to
the research and development expenses of its affiliated group or pays
certain royalties; (B) a profit-split formula, whereby it is allowed
to claim 50% of the net income of its affiliated group from the sale
of products manufactured in Puerto Rico; or (C) a cost-plus formula,
whereby it is allowed to claim a reasonable profit on the
manufacturing costs incurred in Puerto Rico. To be eligible for the
first two formulas, the Section 936 Corporation must have a
significant business presence in Puerto Rico for purposes of the
Section 936 rules.
As a result of the 1993 Amendments and the 1996 Amendments, the
Section 936 credit is only available to companies that elect the
percentage of income limitation and is limited in amount to 40% of the
credit allowable prior to the 1993 Amendments, subject to a five-year
phase-in period from 1994 to 1998 during which period the percentage
of the allowable credit is reduced from 60% to 40%.
In the case of taxable years beginning on or after 1998, the
possession income subject to the Section 936 credit will be subject to
a cap based on the Section 936 Corporation's possession income for an
average adjusted base period ending on October 14, 1995. The Section
936 credit is eliminated for taxable years beginning in 2006.
OUTLOOK. It is not possible at this time to determine the long-term
effect on the Puerto Rico economy of the enactment of the 1996
Amendments to Section 936. The Government of Puerto Rico does not
believe there will be short-term or medium-term material adverse
effects on Puerto Rico's economy as a result of the enactment of the
1996 Amendments. The Government of Puerto Rico further believes that
during the phase-out period sufficient time exists to implement
additional incentive programs to safeguard Puerto Rico's competitive
position. Additionally, the Governor intends to propose a new federal
incentive program similar to what is now provided under Section 30A.
Such program would provide U.S. companies a tax credit based on
qualifying wages paid, other wage related expenses such as fringe
benefits, depreciation expenses for certain tangible assets, and
research and development expenses, and would restore the credit
granted to passive income under Section 936 prior to its repeal by the
1996 Amendments. Under the Governor's proposal, the credit granted to
qualifying companies would continue in effect until Puerto Rico shows,
among other things, substantial economic improvements in terms of
certain economic parameters.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed
on behalf of each fund by FMR pursuant to authority contained in the
fund's management contract. In the case of the money market funds, FMR
has granted investment management authority to the sub-adviser (see
the section entitled "Management Contracts"), and the sub-adviser is
authorized to place orders for the purchase and sale of portfolio
securities, and will do so in accordance with the policies described
below. FMR is also responsible for the placement of transaction orders
for other investment companies and accounts for which it or its
affiliates act as investment adviser. Securities purchased and sold by
the money market funds generally will be traded on a net basis (i.e.,
without commission). In selecting broker-dealers, subject to
applicable limitations of the federal securities laws, FMR considers
various relevant factors, including, but not limited to, the size and
type of the transaction; the nature and character of the markets for
the security to be purchased or sold; the execution efficiency,
settlement capability, and financial condition of the broker-dealer
firm; the broker-dealer's execution services rendered on a continuing
basis; and the reasonableness of any commissions.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other accounts
over which FMR or its affiliates exercise investment discretion. Such
services may include advice concerning the value of securities; the
advisability of investing in, purchasing, or selling securities; and
the availability of securities or the purchasers or sellers of
securities. In addition, such broker-dealers may furnish analyses and
reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; effect
securities transactions, and perform functions incidental thereto
(such as clearance and settlement). FMR maintains a listing of
broker-dealers who provide such services on a regular basis. However,
as many transactions on behalf of the money market 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 generally is made by FMR (to the
extent possible consistent with execution considerations) based upon
the quality of research and execution services provided.
The receipt of research from broker-dealers that execute transactions
on behalf of the funds may be useful to FMR in rendering investment
management services to the funds or its other clients, and conversely,
such research provided by broker-dealers who have executed transaction
orders on behalf of other FMR clients may be useful to FMR in carrying
out its obligations to the funds. The receipt of such research has not
reduced FMR's normal independent research activities; however, it
enables FMR to avoid the additional expenses that could be incurred if
FMR tried to develop comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that
are in excess of the amount of commissions charged by other
broker-dealers in recognition of their research and execution
services. In order to cause each fund to pay such higher commissions,
FMR must determine in good faith that such commissions are reasonable
in relation to the value of the brokerage and research services
provided by such executing broker-dealers, viewed in terms of a
particular transaction or FMR's overall responsibilities to the funds
and its other clients. In reaching this determination, FMR will not
attempt to place a specific dollar value on the brokerage and research
services provided, or to determine what portion of the compensation
should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided
assistance in the distribution of shares of the funds, or shares of
other Fidelity funds to the extent permitted by law. FMR may use
research services provided by and place agency transactions with
National Financial Services Corporation (NFSC), an indirect subsidiary
of FMR Corp., if the commissions are fair, reasonable, and comparable
to commissions charged by non-affiliated, qualified brokerage firms
for similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members
of national securities exchanges from executing exchange transactions
for accounts which they or their affiliates manage, unless certain
requirements are satisfied. Pursuant to such requirements, the Board
of Trustees has authorized NFSC to execute portfolio transactions on
national securities exchanges in accordance with approved procedures
and applicable SEC rules.
Each fund's Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio
transactions on behalf of the funds and review the commissions paid by
each fund over representative periods of time to determine if they are
reasonable in relation to the benefits to the fund.
For the fiscal periods ended November 30, 1997 and 1996, the portfolio
turnover rates were __% and 57% for Spartan NJ Municipal Income.
[EQUITY OR BOND FUNDS WITH A PORTFOLIO TURNOVER RATE OVER 100%:
Because a high turnover rate increases transaction costs and may
increase taxable gains, FMR carefully weighs the anticipated benefits
of short-term investing against these consequences. An increased
turnover rate is due to a greater volume of shareholder purchase
orders, short-term interest rate volatility and other special market
conditions.
For the fiscal years ended [FYE CHANGE] 1997, 1996, and 1995, Spartan
NJ Municipal Money Market paid [no brokerage commissions/ brokerage
commissions of $____, $0, and $0, respectively; Fidelity NJ Municipal
Money Market paid [no brokerage commissions/brokerage commissions of
$____, $0, and $0, respectively; Spartan NJ Municipal Income paid [no
brokerage commissions/brokerage commissions of $____, $0, and $0,
respectively]. [IF APPROPRIATE: During the fiscal year ended November
1997, this amounted to approximately __%, __% and __%, respectively,
of the aggregate brokerage commissions paid by each fund involving
approximately __%, __%, and __%, respectively, of the aggregate dollar
amount of transactions for which the funds paid brokerage
commissions.]
During the fiscal year ended [FYE CHANGE] 1997, Spartan NJ Municipal
Money Market paid $__ in commissions to brokerage firms that provided
research services involving approximately $___of transactions; during
the fiscal year ended November 1997 Fidelity NJ Municipal Money Market
and Spartan NJ Municipal Income paid $__ and $__, respectively in
commissions to brokerage firms that provided research services
involving approximately $___ and $__, respectively of transactions.
The provision of research services was not necessarily a factor in the
placement of all this business with such firms. [IF APPLICABLE:During
the fiscal year ended November 1997, the fund(s) paid no fees to
brokerage firms that provided research services.]
From time to time the Trustees will review whether the recapture for
the benefit of the funds of some portion of the brokerage commissions
or similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at
present no other recapture arrangements are in effect. The Trustees
intend to continue to review whether recapture opportunities are
available and are legally permissible and, if so, to determine in the
exercise of their business judgment whether it would be advisable for
each fund to seek such recapture.
Although the Trustees and officers of each fund are substantially the
same as those of other funds managed by FMR, investment decisions for
each fund are made independently from those of other funds managed by
FMR or accounts managed by FMR affiliates. It sometimes happens that
the same security is held in the portfolio of more than one of these
funds or accounts. Simultaneous transactions are inevitable when
several funds and accounts are managed by the same investment adviser,
particularly when the same security is suitable for the investment
objective of more than one fund or account.
When two or more funds are simultaneously engaged in the purchase or
sale of the same security, the prices and amounts are allocated in
accordance with procedures believed to be appropriate and equitable
for each fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as each fund is
concerned. In other cases, however, the ability of the funds to
participate in volume transactions will produce better executions and
prices for the funds. It is the current opinion of the Trustees that
the desirability of retaining FMR as investment adviser to each fund
outweighs any disadvantages that may be said to exist from exposure to
simultaneous transactions.
VALUATION
For the money market funds, Fidelity Service Company, Inc. (FSC)
normally determines each fund's net asset value per share (NAV) as of
the close of the New York Stock Exchange (NYSE) (normally 4:00 p.m.
Eastern time). For the bond fund, FSC normally determines the fund's
NAV as of the close of the NYSE (normally 4:00 p.m. Eastern time). The
valuation of portfolio securities is determined as of this time for
the purpose of computing each fund's NAV.
TAX-FREE BOND FUND. Portfolio securities are valued by various
methods. If quotations are not available, fixed-income securities are
usually valued on the basis of information furnished by a pricing
service that uses a valuation matrix which incorporates both
dealer-supplied valuations and electronic data processing techniques.
Use of pricing services has been approved by the Board of Trustees. A
number of pricing services are available, and the fund may use various
pricing services or discontinue the use of any pricing service.
Futures contracts and options are valued on the basis of market
quotations, if available. Securities of other open-end investment
companies are valued at their respective NAVs.
Securities and other assets for which there is no readily available
market value are valued in good faith by a committee appointed by the
Board of Trustees. The procedures set forth above need not be used to
determine the value of the securities owned by the fund if, in the
opinion of a committee appointed by the Board of Trustees, some other
method would more accurately reflect the fair market value of such
securities.
MONEY MARKET FUNDS. Portfolio securities and other assets are valued
on the basis of amortized cost. This technique involves initially
valuing an instrument at its cost as adjusted for amortization of
premium or accretion of discount rather than its current market value.
The amortized cost value of an instrument may be higher or lower than
the price a fund would receive if it sold the instrument.
Securities of other open-end investment companies are valued at their
respective NAVs.
During periods of declining interest rates, a fund's yield based on
amortized cost valuation may be higher than would result if the fund
used market valuations to determine its NAV. The converse would apply
during periods of rising interest rates.
Valuing each fund's investments on the basis of amortized cost and use
of the term "money market fund" are permitted pursuant to Rule 2a-7
under the 1940 Act. Each fund must adhere to certain conditions under
Rule 2a-7, as summarized in the section entitled "Quality and
Maturity" on page ___.
The Board of Trustees oversees FMR's adherence to the provisions of
Rule 2a-7 and has established procedures designed to stabilize each
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 a fund's amortized cost per share may result in
material dilution or other unfair results to shareholders, the
Trustees have agreed to take such corrective action, if any, as they
deem appropriate to eliminate or reduce, to the extent reasonably
practicable, the dilution or unfair results. Such corrective action
could include selling portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio
maturity; withholding dividends; redeeming shares in kind;
establishing NAV by using available market quotations; and such other
measures as the Trustees may deem appropriate.
PERFORMANCE
The funds may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is
not intended to indicate future returns. A bond fund's share price,
and each fund's yield and total return fluctuate in response to market
conditions and other factors, and the value of a bond fund's shares
when redeemed may be more or less than their original cost.
YIELD CALCULATIONS. To compute the money market funds' 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 funds 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 funds may quote yields in advertising based on any
historical seven-day period. Yields for the money market funds are
calculated on the same basis as other money market funds, as required
by regulation.
For the bond fund, yields are computed by dividing the fund's interest
income for a given 30-day or one-month period, net of expenses, by the
average number of shares entitled to receive dividends during the
period, dividing this figure by the fund's NAV at the end of the
period, and annualizing the result (assuming compounding of income) in
order to arrive at an annual percentage rate. Yields do not reflect
the fund's 0.50% short-term trading fee, which applies to shares held
less than 180 days. Income is calculated for purposes of the bond
fund's yield quotations in accordance with standardized methods
applicable to all stock and bond funds. In general, interest income is
reduced with respect to bonds trading at a premium over their par
value by subtracting a portion of the premium from income on a daily
basis, and is increased with respect to bonds trading at a discount by
adding a portion of the discount to daily income. Capital gains and
losses generally are excluded from the calculation.
Income calculated for the purposes of determining the bond fund's
yield differs from income as determined for other accounting purposes.
Because of the different accounting methods used, and because of the
compounding of income assumed in yield calculations, the bond fund's
yield may not equal its distribution rate, the income paid to your
account, or the income reported in the fund's financial statements.
Yield information may be useful in reviewing a fund's performance and
in providing a basis for comparison with other investment
alternatives. However, each fund's yield fluctuates, unlike
investments that pay a fixed interest rate over a stated period of
time. When comparing investment alternatives, investors should also
note the quality and maturity of the portfolio securities of
respective investment companies they have chosen to consider.
Investors should recognize that in periods of declining interest rates
a fund's yield will tend to be somewhat higher than prevailing market
rates, and in periods of rising interest rates the fund's yield will
tend to be somewhat lower. Also, when interest rates are falling, the
inflow of net new money to a fund from the continuous sale of its
shares will likely be invested in instruments producing lower yields
than the balance of the fund's holdings, thereby reducing the fund's
current yield. In periods of rising interest rates, the opposite can
be expected to occur.
A fund's tax-equivalent yield is the rate an investor would have to
earn from a fully taxable investment before taxes to equal the fund's
tax-free yield. Tax-equivalent yields are calculated by dividing a
fund's yield by the result of one minus a stated federal or combined
federal and state income tax rate. If only a portion of a fund's yield
is tax-exempt, only that portion is adjusted in the calculation.
The following tables show the effect of a shareholder's tax status on
effective yield under federal and state income tax laws for 1998. The
second table shows the approximate yield a taxable security must
provide at various income brackets to produce after-tax yields
equivalent to those of hypothetical tax-exempt obligations yielding
from ___% to ___%. Of course, no assurance can be given that a fund
will achieve any specific tax-exempt yield. While the funds invest
principally in obligations whose interest is exempt from federal and
state income tax, other income received by the funds may be taxable.
The tables do not take into account local taxes, if any, payable on
fund distributions.
Use the first table to find your approximate effective tax bracket
taking into account federal and state taxes for 1998.
1998 TAX RATES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Taxable Income* Federal New Jersey Federal and State
Marginal Rate State Effective Rate**
Marginal Rate
Single Return Joint Return
</TABLE>
$ $ $ $ % % %
% % %
% % %
% % %
% % %
% % %
% % %
% % %
% % %
% % %
* Net amount subject to federal income tax after deductions and
exemptions. Assumes ordinary income only.
** Excludes the impact of the phaseout of personal exemptions,
limitations on itemized deductions, and other credits, exclusions, and
adjustments which may increase a taxpayer's marginal tax rate. An
increase in a shareholder's marginal tax rate would increase that
shareholder's tax-equivalent yield.
Having determined your effective tax bracket, use the following table
to determine the tax-equivalent yield for a given tax-free yield.
If your combined federal and state effective tax rate in 1998 is:
% % % % % % % %
<TABLE>
<CAPTION>
<S> <C>
To match these Your taxable investment would have to earn the following yield:
tax-free rates:
</TABLE>
% % % % % % % % %
% % % % % % % % %
% % % % % % % % %
% % % % % % % % %
% % % % % % % % %
% % % % % % % % %
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, the tax-equivalent yields are calculated assuming investments
are 100% federally and state tax-free.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect
all aspects of a fund's return, including the effect of reinvesting
dividends and capital gain distributions, and any change in the fund's
NAV over a stated period. Average annual total returns are calculated
by determining the growth or decline in value of a hypothetical
historical investment in a fund over a stated period, and then
calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had
been constant over the period. For example, a cumulative total return
of 100% over ten years would produce an average annual total return of
7.18%, which is the steady annual rate of return that would equal 100%
growth on a compounded basis in ten years. While average annual total
returns are a convenient means of comparing investment alternatives,
investors should realize that a fund's performance is not constant
over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to the actual
year-to-year performance of the fund.
In addition to average annual total returns, the fund may quote
unaveraged or cumulative total returns reflecting the simple change in
value of an investment over a stated period. Average annual and
cumulative total returns may be quoted as a percentage or as a dollar
amount, and may be calculated for a single investment, a series of
investments, or a series of redemptions, over any time period. Total
returns may be broken down into their components of income and capital
(including capital gains and changes in share price) in order to
illustrate the relationship of these factors and their contributions
to total return. Total returns may be quoted on a before-tax or
after-tax basis and may or may not include the effect of Spartan NJ
Municipal Income's 0.50% short-term trading fee on shares held less
than 180 days. Excluding the fund's short-term trading fee from a
total return calculation produces a higher total return figure. Total
returns, yields, and other performance information may be quoted
numerically or in a table, graph, or similar illustration, and may
omit or include the effect of Spartan NJ Municipal Money Market's
$5.00 account closeout fee.
NET ASSET VALUE. Charts and graphs using a fund's net asset values,
adjusted net asset values, and benchmark indices may be used to
exhibit performance. An adjusted NAV includes any distributions paid
by a fund and reflects all elements of its return. Unless otherwise
indicated, a fund's adjusted NAVs are not adjusted for sales charges,
if any.
HISTORICAL FUND RESULTS. The following tables show the money market
fund's 7-day yields, the bond fund's 30-day yields, each fund's
tax-equivalent yields, and total returns for periods ended November
30, 1997. Total return figures include the effect of Spartan NJ
Municipal Money Market's $5.00 account closeout fee based on an
average size account, but not Spartan NJ Municipal Income's 0.50%
short-term trading fee, applicable to shares held less than 180 days.
The tax-equivalent yield is based on a combined effective federal and
state income tax rate of __% and reflects that, as of November 30,
1997, [none/ an estimated __%] of [NAME FUNDS]'s income was subject to
state taxes. Note that each fund may invest in securities whose income
is subject to the federal alternative minimum tax.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Returns Cumulative Total Returns Cumulative Total Returns
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Seven-D Tax- One Five Life of One Five One Five Life of
ay Equivalent Year Years Fund* Year Years Life of Year Years Fund*
Yield Yield Fund*
Spartan NJ Muni % % % % % % % % % % %
Money
</TABLE>
* From May 1, 1990 (commencement of operations).
[IF FUND IS OR HAS BEEN IN REIMBURSEMENT:Note: If FMR had not
reimbursed certain fund expenses during these periods, the fund's [IF
FUND IS CURRENTLY IN REIMBURSEMENT: yield would have been ___% and]
total returns would have been lower. ]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Returns Cumulative Total Returns
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Seven-Day Tax- One Five One Five
Yield Equivalent Year Years Life of Year Years Life of
Yield Fund* Fund*
Fidelity NJ Muni % % % % % % % %
Money
</TABLE>
* From March 17, 1988 (commencement of operations).
[IF FUND IS OR HAS BEEN IN REIMBURSEMENT:Note: If FMR had not
reimbursed certain fund expenses during these periods, the fund's [IF
FUND IS CURRENTLY IN REIMBURSEMENT: yield would have been ___% and]
total returns would have been lower. ]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Returns Cumulative Total Returns
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thirty Day Tax- One Five One Five
Yield Equivalent Year Years Life of Year Years Life of
Yield Fund* Fund*
Spartan NJ Muni % % % % % % % %
Income
</TABLE>
* From January 1, 1988 (commencement of operations).
[IF FUND IS OR HAS BEEN IN REIMBURSEMENT:Note: If FMR had not
reimbursed certain fund expenses during these periods, the fund's [IF
FUND IS CURRENTLY IN REIMBURSEMENT: yield would have been ___% and]
total returns would have been lower. ]
The following tables show the income and capital elements of each
fund's cumulative total return. The tables compare each fund's return
to the record of the Standard & Poor's 500 Index (S&P 500), the Dow
Jones Industrial Average (DJIA), and the cost of living, as measured
by the Consumer Price Index (CPI), over the same period. The CPI
information is as of the month-end closest to the initial investment
date for each fund. The S&P 500 and DJIA comparisons are provided to
show how each fund's total return compared to the record of a broad
unmanaged index of common stocks and a narrower set of stocks of major
industrial companies, respectively, over the same period. Because each
fund invests in fixed-income securities, common stocks represent a
different type of investment from the funds. Common stocks generally
offer greater growth potential than the funds, but generally
experience greater price volatility, which means greater potential for
loss. In addition, common stocks generally provide lower income than
fixed-income investments such as the funds. The S&P 500 and DJIA
returns are based on the prices of unmanaged groups of stocks and,
unlike each fund's returns, do not include the effect of brokerage
commissions or other costs of investing.
The following tables show the growth in value of a hypothetical
$10,000 investment in each fund during the life of each fund, as
applicable, assuming all distributions were reinvested. The figures
below reflect the fluctuating interest rates and bond prices of the
specified periods and should not be considered representative of the
dividend income or capital gain or loss that could be realized from an
investment in a fund today. Tax consequences of different investments
have not been factored into the figures below.
During the period from May 1, 1990 (commencement of operations) to
November 30, 1997, a hypothetical $10,000 investment in Spartan NJ
Municipal Money Market would have grown to $______.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SPARTAN NEW JERSEY MUNICIPAL MONEY MARKET FUND INDICES
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
November 30 Initial Reinvested Reinvested Value Living**
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1997 $ 10,000 $ $ 0 $ $ $ $
1996 $ 10,000 $ $ 0 $ $ $ $
1995 $ 10,000 $ $ 0 $ $ $ $
1994 $ 10,000 $ $ 0 $ $ $ $
1993 $ 10,000 $ $ 0 $ $ $ $
1992 $ 10,000 $ $ 0 $ $ $ $
1991 $ 10,000 $ $ 0 $ $ $ $
1990* $ 10,000 $ $ 0 $ $ $ $
</TABLE>
* From May 1, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Spartan NJ
Municipal Money Market on May 1, 1990, the net amount invested in fund
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $______. If distributions had
not been reinvested, the amount of distributions earned from the fund
over time would have been smaller, and cash payments for the period
would have amounted to $______ for dividends. The fund did not
distribute any capital gains during the period. The figures in the
table do not include the effect of the fund's $5.00 account closeout
fee.
During the period from March 17, 1988 (commencement of operations) to
November 30, 1997, a hypothetical $10,000 investment in Fidelity NJ
Municipal Money Market would have grown to $______.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY NEW JERSEY MUNICIPAL MONEY MARKET FUND INDICES
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Year Value of Value of Value of Total S&P 500 DJIA Cost of
Ended Initial Reinvested Reinvested Value Living**
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1997 $ 10,000 $ $ 0 $ $ $ $
1996 $ 10,000 $ $ 0 $ $ $ $
1995 $ 10,000 $ $ 0 $ $ $ $
1994 $ 10,000 $ $ 0 $ $ $ $
1993 $ 10,000 $ $ 0 $ $ $ $
1992 $ 10,000 $ $ 0 $ $ $ $
1991 $ 10,000 $ $ 0 $ $ $ $
1990 $ 10,000 $ $ 0 $ $ $ $
1989 $ 10,000 $ $ 0 $ $ $ $
1988* $ 10,000 $ $ 0 $ $ $ $
</TABLE>
* From March 17, 1988 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Fidelity
NJ Municipal Money Market 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 dividend and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $________. If distributions
had not been reinvested, the amount of distributions earned from the
fund over time would have been smaller, and cash payments for the
period would have amounted to $_______ for dividends. The fund did not
distribute any capital gains during the period.
During the period from January 1, 1988 (commencement of operations) to
November 30, 1997, a hypothetical $10,000 investment in Spartan NJ
Municipal Income would have grown to $______.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SPARTAN NEW JERSEY MUNICIPAL INCOME FUND INDICES
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Year Value of Value of Value of Total S&P 500 DJIA Cost of
Ended Initial Reinvested Reinvested Value Living* *
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1997 $ $ $ $ $ $ $
1996 $ $ $ $ $ $ $
1995 $ $ $ $ $ $ $
1994 $ $ $ $ $ $ $
1993 $ $ $ $ $ $ $
1992 $ $ $ $ $ $ $
1991 $ $ $ $ $ $ $
1990 $ $ $ $ $ $ $
1989 $ , $ $ $ $ $ $
1988* $ $ $ $ $ $ $
</TABLE>
* From January 1, 1988 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Spartan NJ
Municipal Income on January 1, 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 and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $________. If distributions had
not been reinvested, the amount of distributions earned from the fund
over time would have been smaller, and cash payments for the period
would have amounted to $________ for dividends and $________ for
capital gains distributions. The figures in the table do not include
the effect of the fund's 0.50% short-term trading fee applicable to
shares held less than 180 days.
PERFORMANCE COMPARISONS. A fund's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be expressed
as mutual fund rankings prepared by Lipper Analytical Services, Inc.
(Lipper), an independent service located in Summit, New Jersey that
monitors the performance of mutual funds. Generally, Lipper rankings
are based on total return, assume reinvestment of distributions, do
not take sales charges or trading fees into consideration, and are
prepared without regard to tax consequences. Lipper may also rank
funds based on yield. In addition to the mutual fund rankings, a
fund's performance may be compared to stock, bond, and money market
mutual fund performance indices prepared by Lipper or other
organizations. When comparing these indices, it is important to
remember the risk and return characteristics of each type of
investment. For example, while stock mutual funds may offer higher
potential returns, they also carry the highest degree of share price
volatility. Likewise, money market funds may offer greater stability
of principal, but generally do not offer the higher potential returns
available from stock mutual funds.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and
periodicals. For example, the fund may quote Morningstar, Inc. in its
advertising materials. Morningstar, Inc. is a mutual fund rating
service that rates mutual funds on the basis of risk-adjusted
performance. Rankings that compare the performance of Fidelity funds
to one another in appropriate categories over specific periods of time
may also be quoted in advertising.
A fund's performance may also be compared to that of a benchmark index
representing the universe of securities in which the fund may invest.
The total return of a benchmark index reflects reinvestment of all
dividends and capital gains paid by securities included in the index.
Unlike a fund's returns, however, the index returns do not reflect
brokerage commissions, transaction fees, or other costs of investing
directly in the securities included in the index.
Spartan New Jersey Municipal Income may compare its performance to
that of the Lehman Brothers New Jersey Municipal Bond Index with Port
Authority of NY/NJ, a total return performance benchmark for New
Jersey investment-grade municipal bonds, including Port Authority of
New York and New Jersey bonds, with maturities of at least one year.
Issues included in the index have been issued after December 31, 1990
and have an outstanding par value of at least $50 million. Subsequent
to December 31, 1995, zero coupon bonds and issues subject to the
alternative minimum tax are included in the index.
A fund may be compared in advertising to Certificates of Deposit (CDs)
or other investments issued by banks or other depository institutions.
Mutual funds differ from bank investments in several respects. For
example, a fund may offer greater liquidity or higher potential
returns than CDs, a fund does not guarantee your principal or your
return, and fund shares are not FDIC insured.
Fidelity may provide information designed to help individuals
understand their investment goals and explore various financial
strategies. Such information may include information about current
economic, market, and political conditions; materials that describe
general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; questionnaires
designed to help create a personal financial profile; worksheets used
to project savings needs based on assumed rates of inflation and
hypothetical rates of return; and action plans offering investment
alternatives. Materials may also include discussions of Fidelity's
asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides
historical returns of the capital markets in the United States,
including common stocks, small capitalization stocks, long-term
corporate bonds, intermediate-term government bonds, long-term
government bonds, Treasury bills, the U.S. rate of inflation (based on
the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
Fidelity funds may use the performance of these capital markets in
order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with
the security types in any capital market may or may not correspond
directly to those of the funds. Ibbotson calculates total returns in
the same method as the funds. The funds may also compare performance
to that of other compilations or indices that may be developed and
made available in the future.
A money market fund may compare its performance or the performance of
securities in which it may invest to averages published by IBC
Financial Data, Inc. of Ashland, Massachusetts. These averages assume
reinvestment of distributions. IBC's MONEY FUND REPORT
AVERAGES(trademark)/All Tax-Free, which is reported in IBC's MONEY
FUND REPORT(trademark), covers over ___ tax-free money market funds.
A fund may compare and contrast in advertising the relative advantages
of investing in a mutual fund versus an individual municipal bond.
Unlike tax-free mutual funds, individual municipal bonds offer a
stated rate of interest and, if held to maturity, repayment of
principal. Although some individual municipal bonds might offer a
higher return, they do not offer the reduced risk of a mutual fund
that invests in many different securities. The initial investment
requirements and sales charges of many tax-free mutual funds are lower
than the purchase cost of individual municipal bonds, which are
generally issued in $5,000 denominations and are subject to direct
brokerage costs.
In advertising materials, Fidelity may reference or discuss its
products and services, which may include other Fidelity funds;
retirement investing; brokerage products and services; model
portfolios or allocations; saving for college or other goals;
charitable giving; and the Fidelity credit card. In addition, Fidelity
may quote or reprint financial or business publications and
periodicals as they relate to current economic and political
conditions, fund management, portfolio composition, investment
philosophy, investment techniques, the desirability of owning a
particular mutual fund, and Fidelity services and products. Fidelity
may also reprint, and use as advertising and sales literature,
articles from Fidelity Focus(Registered trademark), a quarterly
magazine provided free of charge to Fidelity fund shareholders.
A fund may present its fund number, Quotron(trademark) number, and
CUSIP number, and discuss or quote its current portfolio manager.
VOLATILITY. A bond fund may quote various measures of volatility and
benchmark correlation in advertising. In addition, the fund may
compare these measures to those of other funds. Measures of volatility
seek to compare the fund's historical share price fluctuations or
total returns to those of a benchmark. Measures of benchmark
correlation indicate how valid a comparative benchmark may be. All
measures of volatility and correlation are calculated using averages
of historical data. In advertising, a fund may also discuss or
illustrate examples of interest rate sensitivity.
MOMENTUM INDICATORS indicate a bond fund's price movements over
specific periods of time. Each point on the momentum indicator
represents the fund's percentage change in price movements over that
period.
A bond fund may advertise examples of the effects of periodic
investment plans, including the principle of dollar cost averaging. In
such a program, an investor invests a fixed dollar amount in a fund at
periodic intervals, thereby purchasing fewer shares when prices are
high and more shares when prices are low. While such a strategy does
not assure a profit or guard against loss in a declining market, the
investor's average cost per share can be lower than if fixed numbers
of shares are purchased at the same intervals. In evaluating such a
plan, investors should consider their ability to continue purchasing
shares during periods of low price levels.
As of November 30, 1997, FMR advised over $__ billion in tax-free fund
assets, $__ billion in money market fund assets, $___ billion in
equity fund assets, $__ billion in international fund assets, and $___
billion in Spartan fund assets. The funds may reference the growth and
variety of money market mutual funds and the adviser's innovation and
participation in the industry. The equity funds under management
figure represents the largest amount of equity fund assets under
management by a mutual fund investment adviser in the United States,
making FMR America's leading equity (stock) fund manager. FMR, its
subsidiaries, and affiliates maintain a worldwide information and
communications network for the purpose of researching and managing
investments abroad.
In addition to performance rankings, each fund may compare its total
expense ratio to the average total expense ratio of similar funds
tracked by Lipper. A fund's total expense ratio is a significant
factor in comparing bond and money market investments because of its
effect on yield.
ADDITIONAL PURCHASE 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
1997 and 1998: New Year's Day, Martin Luther King's Birthday (in
1998), Presidents' Day, Good Friday, Memorial Day, Independence Day
(observed), Labor Day, Thanksgiving Day, and Christmas Day. Although
FMR expects the same holiday schedule to be observed in the future,
the NYSE may modify its holiday schedule at any time. In addition, the
funds will not process wire purchases and redemptions on days when the
Federal Reserve Wire System is closed.
FSC normally determines each fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated
earlier if trading on the NYSE is restricted or as permitted by the
Securities and Exchange Commission (SEC). To the extent that portfolio
securities are traded in other markets on days when the NYSE is
closed, a fund's NAV may be affected on days when investors do not
have access to the fund to purchase or redeem shares. In addition,
trading in some of a fund's portfolio securities may not occur on days
when the fund is open for business.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are
valued in computing a fund's NAV. Shareholders receiving securities or
other property on redemption may realize a gain or loss for tax
purposes, and will incur any costs of sale, as well as the associated
inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the
1940 Act), each fund is required to give shareholders at least 60
days' notice prior to terminating or modifying its exchange privilege.
Under the Rule, the 60-day notification requirement may be waived if
(i) the only effect of a modification would be to reduce or eliminate
an administrative fee, redemption fee, or deferred sales charge
ordinarily payable at the time of an exchange, or (ii) the fund
suspends the redemption of the shares to be exchanged as permitted
under the 1940 Act or the rules and regulations thereunder, or the
fund to be acquired suspends the sale of its shares because it is
unable to invest amounts effectively in accordance with its investment
objective and policies.
In the Prospectus, each fund has notified shareholders that it
reserves the right at any time, without prior notice, to refuse
exchange purchases by any person or group if, in FMR's judgment, the
fund would be unable to invest effectively in accordance with its
investment objective and policies, or would otherwise potentially be
adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and
the U.S. Postal Service cannot deliver your checks, or if your checks
remain uncashed for six months, Fidelity may reinvest your
distributions at the then-current NAV. All subsequent distributions
will then be reinvested until you provide Fidelity with alternate
instructions.
DIVIDENDS. To the extent that each fund's income is designated as
federally tax-exempt interest, the daily dividends declared by the
fund are also federally tax-exempt. Short-term capital gains are
distributed as dividend income, but do not qualify for the
dividends-received deduction. These gains will be taxed as ordinary
income. Each fund will send each shareholder a notice in January
describing the tax status of dividend and capital gain distributions
(if any) for the prior year.
Shareholders are required to report tax-exempt income on their federal
tax returns. Shareholders who earn other income, such as Social
Security benefits, may be subject to federal income tax on up to 85%
of such benefits to the extent that their income, including tax-exempt
income, exceeds certain base amounts.
A fund purchases municipal securities whose interest FMR believes is
free from federal income tax. Generally, issuers or other parties
have entered into covenants requiring continuing compliance with
federal tax requirements to preserve the tax-free status of interest
payments over the life of the security. If at any time the covenants
are not complied with, or if the IRS otherwise determines that the
issuer did not comply with relevant tax requirements, interest
payments from a security could become federally taxable retroactive to
the date the security was issued. For certain types of structured
securities, the tax status of the pass-through of tax-free income may
also be based on the federal and state tax treatment of the structure.
As a result of the Tax Reform Act of 1986, interest on certain
"private activity" securities is subject to the federal alternative
minimum tax (AMT), although the interest continues to be excludable
from gross income for other tax purposes. Interest from private
activity securities will be considered tax-exempt for purposes of each
fund's policies of investing so that at least 80% of its income 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.
A portion of the gain on bonds purchased with market discount after
April 30, 1993 and short-term capital gains distributed by each fund
are taxable to shareholders as dividends, not as capital gains.
Dividend distributions resulting from a recharacterization of gain
from the sale of bonds purchased with market discount after April 30,
1993 are not considered income for purposes of each fund's policy of
investing so that at least 80% of its income is free from federal
income tax. The money market funds may distribute any net realized
short-term capital gains and taxable market discount once a year or
more often, as necessary, to maintain its net asset value at $1.00 per
share.
Corporate investors should note that a tax preference item for
purposes of the corporate AMT is 75% of the amount by which adjusted
current earnings (which includes tax-exempt interest) exceeds the
alternative minimum taxable income of the corporation. If a
shareholder receives an exempt-interest dividend and sells shares at a
loss after holding them for a period of six months or less, the loss
will be disallowed to the extent of the amount of exempt-interest
dividend.
NEW JERSEY TAX CONSEQUENCES. In order to pass through tax-exempt
interest and dividends for New Jersey Gross Income Tax purposes, among
other requirements, at the close of each quarter of the tax year, the
fund must have not less than 80% of the aggregate principal amount of
the fund's investments (excluding financial options, futures, forward
contracts and similar financial instruments relating to
interest-bearing obligations) invested in obligations issued by New
Jersey or New Jersey local government entities or certain other
federal and New Jersey tax-exempt obligations of qualifying issuers
(the "80% Test"). In the event the fund does not meet the 80% Test,
distributions by the fund will be taxable to shareholders for New
Jersey Gross Income Tax purposes. Interest on indebtedness incurred or
continued to purchase or carry fund shares is not deductible either
for New Jersey Gross Income Tax purposes or federal income tax
purposes to the extent attributable to exempt-interest dividends.
Exempt-interest dividends and gains paid to a corporate shareholder
will be subject to the New Jersey Corporation Business (Franchise) Tax
and the New Jersey Corporation Income Tax.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by each
fund on the sale of securities and distributed to shareholders are
federally taxable as long-term capital gains, regardless of the length
of time shareholders have held their shares. If a shareholder receives
a capital gain distribution on shares of a fund, and such shares are
held six months or less and are sold at a loss, the portion of the
loss equal to the amount of the capital gain distribution will be
considered a long-term loss for tax purposes. Short-term capital gains
distributed by each fund are taxable to shareholders as dividends, not
as capital gains. The money market funds do not anticipate
distributing long-term capital gains.
[FOR FUNDS DECLARING A CAPITAL GAIN DIVIDEND: As of November 30, 1997,
the fund hereby designates approximately $____ as a capital gain
dividend for the purpose of the dividend-paid deduction.
(USE THIS PARAGRAPH ONLY FOR FUNDS WITH A CAPITAL LOSS CARRYOVER) As
of November 30, 1997 [the fund/Name of Fund(s)] had a capital loss
carryforward aggregating approximately $____. This loss carryforward,
of which $___, $___, and $___will expire on November 30, 199_, ___,
____, and ____ , respectively, is available to offset future capital
gains.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" for tax purposes so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company
and avoid being subject to federal income or excise taxes at the fund
level, each fund intends to distribute substantially all of its net
investment income and net realized capital gains within each calendar
year as well as on a fiscal year basis, and intends to comply with
other tax rules applicable to regulated investment companies.
Each fund is treated as a separate entity from the other funds of
Fidelity Court Street Trust II (Spartan NJ Municipal Money Market and
Fidelity NJ Municipal Money Market) and Fidelity Court Street Trust
(Spartan NJ Municipal Income) for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some
of the tax consequences generally affecting each fund and its
shareholders, and no attempt has been made to discuss individual tax
consequences. In addition to federal income taxes, shareholders may be
subject to state and local taxes on fund distributions, and shares may
be subject to state and local personal property taxes. Investors
should consult their tax advisers to determine whether a fund is
suitable to their particular tax situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent organized in
1972. The voting common stock of FMR Corp. is divided into two
classes. Class B is held predominantly by members of the Edward C.
Johnson 3d family and is entitled to 49% of the vote on any matter
acted upon by the voting common stock. Class A is held predominantly
by non-Johnson family member employees of FMR Corp. and its affiliates
and is entitled to 51% of the vote on any such matter. The Johnson
family group and all other Class B shareholders have entered into a
shareholders' voting agreement under which all Class B shares will be
voted in accordance with the majority vote of Class B shares. Under
the 1940 Act, control of a company is presumed where one individual or
group of individuals owns more than 25% of the voting stock of that
company. Therefore, through their ownership of voting common stock and
the execution of the shareholders' voting agreement, members of the
Johnson family may be deemed, under the 1940 Act, to form a
controlling group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by its division, Fidelity Investments Retail Marketing
Company, which provides marketing services to various companies within
the Fidelity organization.
Fidelity investment personnel may invest in securities for their own
accounts pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the funds, establishes procedures
for personal investing and restricts certain transactions. For
example, all personal trades in most securities requires
pre-clearance, and participation in initial public offerings is
prohibited. In addition, restrictions on the timing of personal
investing in relation to trades by Fidelity funds and on short-term
trading have been adopted.
TRUSTEES AND OFFICERS
The Trustees, Members of the Advisory Board, and executive officers of
the 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 II prior to the fund's conversion from a
series of a Massachusetts business trust served in identical
capacities. All persons named as Trustees and Members of the Advisory
Board also serve in similar capacities for other funds advised by FMR.
The business address of each Trustee, Member of the Advisory Board,
and officer who is an "interested person" (as defined in the
Investment Company Act of 1940) is 82 Devonshire Street, Boston,
Massachusetts 02109, which is also the address of FMR. The business
address of all the other Trustees is Fidelity Investments, P.O. Box
9235, Boston, Massachusetts 02205-9235. Those Trustees who are
"interested persons" by virtue of their affiliation with either the
trust or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d (67), Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman
of the Board and of the Executive Committee of FMR; Chairman and a
Director of FMR Texas Inc., Fidelity Management & Research (U.K.)
Inc., and Fidelity Management & Research (Far East) Inc.
J. GARY BURKHEAD (56), Member of the Advisory Board (1997), is Vice
Chairman and a Member of the Board of Directors of FMR Corp. (1997)
and President and Chief Executive Officer of the Fidelity
Institutional Group (1997). Previously, Mr. Burkhead served as
President of Fidelity Management & Research Company.
RALPH F. COX (65), Trustee, is President of RABAR Enterprises
(management consulting-engineering industry, 1994). Prior to February
1994, he was President of Greenhill Petroleum Corporation (petroleum
exploration and production). Until March 1990, Mr. Cox was President
and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of USA Waste Services,
Inc. (non-hazardous waste, 1993), CH2M Hill Companies (engineering),
Rio Grande, Inc. (oil and gas production), and Daniel Industries
(petroleum measurement equipment manufacturer). In addition, he is a
member of advisory boards of Texas A&M University and the University
of Texas at Austin.
PHYLLIS BURKE DAVIS (65), Trustee (1992). Prior to her retirement in
September 1991, Mrs. Davis was the Senior Vice President of Corporate
Affairs of Avon Products, Inc. She is currently a Director of
BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores),
and previously served as a Director of Hallmark Cards, Inc.
(1985-1991) and Nabisco Brands, Inc. In addition, she is a member of
the President's Advisory Council of The University of Vermont School
of Business Administration.
ROBERT M. GATES (54), Trustee (1997), is a consultant, author, and
lecturer (1993). Mr. Gates was Director of the Central Intelligence
Agency (CIA) from 1991-1993. From 1989 to 1991, Mr. Gates served as
Assistant to the President of the United States and Deputy National
Security Advisor. Mr. Gates is currently a Trustee for the Forum For
International Policy, a Board Member for the Virginia Neurological
Institute, and a Senior Advisor of the Harvard Journal of World
Affairs. In addition, Mr. Gates also serves as a member of the
corporate board for LucasVarity PLC (automotive components and diesel
engines), Charles Stark Draper Laboratory (non-profit), NACCO
Industries, Inc. (mining and manufacturing), and TRW Inc. (original
equipment and replacement products).
E. BRADLEY JONES (70), Trustee. Prior to his retirement in 1984, Mr.
Jones was Chairman and Chief Executive Officer of LTV Steel Company.
He is a Director of TRW Inc. (original equipment and replacement
products), Consolidated Rail Corporation, Birmingham Steel
Corporation, and RPM, Inc. (manufacturer of chemical products), and he
previously served as a Director of NACCO Industries, Inc. (mining and
manufacturing, 1985-1995), Hyster-Yale Materials Handling, Inc.
(1985-1995), and Cleveland-Cliffs Inc (mining), and as a Trustee of
First Union Real Estate Investments. In addition, he serves as a
Trustee of the Cleveland Clinic Foundation, where he has also been a
member of the Executive Committee as well as Chairman of the Board and
President, a Trustee and member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic
Florida.
DONALD J. KIRK (65), Trustee, is Executive-in-Residence (1995) at
Columbia University Graduate School of Business and a financial
consultant. From 1987 to January 1995, Mr. Kirk was a Professor at
Columbia University Graduate School of Business. Prior to 1987, he was
Chairman of the Financial Accounting Standards Board. Mr. Kirk is a
Director of General Re Corporation (reinsurance), and he previously
served as a Director of Valuation Research Corp. (appraisals and
valuations, 1993-1995). In addition, he serves as Chairman of the
Board of Directors of the National Arts Stabilization Fund, Chairman
of the Board of Trustees of the Greenwich Hospital Association, a
Member of the Public Oversight Board of the American Institute of
Certified Public Accountants' SEC Practice Section (1995), and as a
Public Governor of the National Association of Securities Dealers,
Inc. (1996).
*PETER S. LYNCH (54), Trustee, is Vice Chairman and Director of FMR
(1992). Prior to May 31, 1990, he was a Director of FMR and Executive
Vice President of FMR (a position he held until March 31, 1991); Vice
President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). In addition, he
serves as a Trustee of Boston College, Massachusetts Eye & Ear
Infirmary, Historic Deerfield (1989) and Society for the Preservation
of New England Antiquities, and as an Overseer of the Museum of Fine
Arts of Boston.
WILLIAM O. McCOY (64), Trustee (1997), is the Vice President of
Finance for the University of North Carolina (16-school system, 1995).
Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman
of the Board of BellSouth Corporation (telecommunications, 1984) and
President of BellSouth Enterprises (1986). He is currently a Director
of Liberty Corporation (holding company, 1984), Weeks Corporation of
Atlanta (real estate, 1994), Carolina Power and Light Company
(electric utility, 1996), and the Kenan Transport Co. (1996).
Previously, he was a Director of First American Corporation (bank
holding company, 1979-1996). In addition, Mr. McCoy serves as a member
of the Board of Visitors for the University of North Carolina at
Chapel Hill (1994) and for the Kenan-Flager Business School
(University of North Carolina at Chapel Hill, 1988).
GERALD C. McDONOUGH (68), Trustee and Chairman of the non-interested
Trustees, is Chairman of G.M. Management Group (strategic advisory
services). Mr. McDonough is a Director of York International Corp.
(air conditioning and refrigeration), Commercial Intertech Corp.
(hydraulic systems, building systems, and metal products, 1992), CUNO,
Inc. (liquid and gas filtration products, 1996), and Associated
Estates Realty Corporation (a real estate investment trust, 1993). Mr.
McDonough served as a Director of ACME-Cleveland Corp. (metal working,
telecommunications, and electronic products) from 1987-1996.
MARVIN L. MANN (64), Trustee (1993) is Chairman of the Board,
President, and Chief Executive Officer of Lexmark International, Inc.
(office machines, 1991). Prior to 1991, he held the positions of Vice
President of International Business Machines Corporation ("IBM") and
President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993), Imation Corp. (imaging and information storage, 1997), and
Infomart (marketing services, 1991), a Trammell Crow Co. In addition,
he serves as the Campaign Vice Chairman of the Tri-State United Way
(1993) and is a member of the University of Alabama President's
Cabinet.
*ROBERT C. POZEN (51), Trustee (1997) and Senior Vice President, is
also President and a Director of FMR (1997); and President and a
Director of FMR Texas Inc. (1997), Fidelity Management & Research
(U.K.) Inc. (1997), and Fidelity Management & Research (Far East) Inc.
(1997). Previously, Mr. Pozen served as General Counsel, Managing
Director, and Senior Vice President of FMR Corp.
THOMAS R. WILLIAMS (69), Trustee, is President of The Wales Group,
Inc. (management and financial advisory services). Prior to retiring
in 1987, Mr. Williams served as Chairman of the Board of First
Wachovia Corporation (bank holding company), and Chairman and Chief
Executive Officer of The First National Bank of Atlanta and First
Atlanta Corporation (bank holding company). He is currently a Director
of ConAgra, Inc. (agricultural products), Georgia Power Company
(electric utility), National Life Insurance Company of Vermont,
American Software, Inc., and AppleSouth, Inc. (restaurants, 1992).
DWIGHT D. CHURCHILL (43), is Vice President of Bond Funds, group
leader of the Bond Group, and Senior Vice President of FMR (1997). Mr.
Churchill joined Fidelity in 1993 as Vice President and Group Leader
of Taxable Fixed-Income Investments. Prior to joining Fidelity, he
spent three years as president and CEO of CSI Asset Management, Inc.
in Chicago, an investment management subsidiary of The Prudential.
BOYCE I. GREER (41), is Vice President of Money Market Funds (1997),
Group Leader of the Money Market Group (1997), and Senior Vice
President of FMR (1997). Mr. Greer served as the Leader of the
Fixed-Income Group for Fidelity Management Trust Company (1993-1995)
and was Vice President and Group Leader of Municipal Fixed-Income
Investments (1996-1997). Prior to 1993, Mr. Greer was an associate
portfolio manager.
FRED L. HENNING, JR. (58), is Vice President of Fidelity's
Fixed-Income Group (1995) and Senior Vice President of FMR (1995).
Before assuming his current responsibilities, Mr. Henning was head of
Fidelity's Money Market Division.
NORMAN LIND (41), is Vice President of Spartan New Jersey Municipal
Income Fund (1996), other funds advised by FMR, and is an employee of
FMR (__).
SCOTT A. ORR (35) is Vice President of Spartan New Jersey Municipal
Money Market Fund and Fidelity New Jersey Municipal Money Market Fund
(1996), other funds advised by FMR, and is an employee of FMR (_).
ARTHUR S. LORING (50), Secretary, is Senior Vice President (1993) and
General Counsel of FMR, Vice President-Legal of FMR Corp., and Vice
President and Clerk of FDC.
RICHARD A. SILVER (50), Treasurer (1997), is Treasurer of the Fidelity
funds and is an employee of FMR (1997). Before joining FMR, Mr. Silver
served as Executive Vice President, Fund Accounting & Administration
at First Data Investor Services Group, Inc. (1996-1997). Prior to
1996, Mr. Silver was Senior Vice President and Chief Financial Officer
at The Colonial Group, Inc. Mr. Silver also served as Chairman of the
Accounting/Treasurer's Committee of the Investment Company Institute
(1987-1993).
THOMAS D. MAHER (52), Assistant Vice President, is Assistant Vice
President of Fidelity's municipal bond funds (1996) and of Fidelity's
money market funds and Vice President and Associate General Counsel of
FMR Texas Inc.
JOHN H. COSTELLO (51), Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH (51), Assistant Treasurer (1994), is an employee of
FMR (1994). Prior to becoming Assistant Treasurer of the Fidelity
funds, Mr. Rush was Chief Compliance Officer of FMR Corp. (1993-1994)
and Chief Financial Officer of Fidelity Brokerage Services, Inc.
(1990-1993).
THOMAS J. SIMPSON (39), Assistant Treasurer, is Assistant Treasurer of
Fidelity's municipal bond funds (1996) and of Fidelity's money market
funds (1996) and an employee of FMR (1996). Prior to joining FMR, Mr.
Simpson was Vice President and Fund Controller of Liberty Investment
Services (1987-1995).
The following table sets forth information describing the compensation
of each Trustee and Member of the Advisory Board of each fund for his
or her services for the fiscal year ended November 30, 1997, or
calendar year ended December 31, 1996, as applicable.
COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Trustees Aggregate Aggregate Aggregate Total
and Compensation Compensation Compensation Compensation
Members of the Advisory Board from from from from the
Sp. NJ Muni Fidelity NJ Muni Sp. NJ Muni Fund Complex*
MM[B,]C MM[B,]D Income[B,]E A
[,+] [,+] [,+]
J. Gary Burkhead ** $ $ $ $ 0
Ralph F. Cox $ $ $ 137,700
Phyllis Burke Davis $ $ $ 134,700
Richard J. Flynn*** $ $ $ 168,000
Robert M. Gates **** $ $ $ 0
Edward C. Johnson 3d ** $ $ $ 0
E. Bradley Jones $ $ $ 134,700
Donald J. Kirk $ $ $ 136,200
Peter S. Lynch ** $ $ $ 0
William O. McCoy***** $ $ $ 85,333
Gerald C. McDonough $ $ $ 136,200
Edward H. Malone*** $ $ $ 136,200
Marvin L. Mann $ $ $ 134,700
Robert C. Pozen** $ $ $ 0
Thomas R. Williams $ $ $ 136,200
</TABLE>
* Information is for the calendar year ended December 31, 1996 for 235
funds in the complex.
** Interested Trustees of the funds and Mr. Burkhead are compensated
by FMR.
*** Richard J. Flynn and Edward H. Malone served on the Board of
Trustees through December 31, 1996.
****Mr. Gates was appointed to the Board of Trustees of Fidelity Court
Street Trust effective March 1, 1997. Mr. Gates was elected to the
Board of Trustees of Fidelity Court Street Trust II on ______________.
*****During the period from May 1, 1996 through December 31, 1996,
William O. McCoy served as a Member of the Advisory Board of each
trust. Mr. McCoy was appointed to the Board of Trustees Fidelity Court
Street Trust effective January 1, 1997. Mr. McCoy was elected to the
Board of Trustees Fidelity Court Street Trust II on _______.
[TREASURER'S OFFICE WILL ANCHOR THIS FOOTNOTE AS APPROPRIATE FOR YOUR
FUND(S): A Compensation figures include cash, a pro rata portion of
benefits accrued under the retirement program for the period ended
December 30, 1996 and required to be deferred, and may include amounts
deferred at the election of Trustees.]
C The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $__, Phyllis Burke Davis, $__, Richard J. Flynn, $0, [FOR FUNDS
WHOSE TRUSTS ARE ABLE TO APPOINT OR HAVE ELECTED MR. GATES AS TRUSTEE:
Robert M. Gates, $__,] E. Bradley Jones, $__, Donald J. Kirk, $__,
[FOR FUNDS WHOSE TRUSTS ARE ABLE TO APPOINT OR HAVE ELECTED MR. MCCOY
AS TRUSTEE: William O. McCoy, $__,] Gerald C. McDonough, $__, Edward
H. Malone, $__, Marvin L. Mann, $__, and Thomas R. Williams, $__.
D The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $__, Phyllis Burke Davis, $__, Richard J. Flynn, $0, [FOR FUNDS
WHOSE TRUSTS ARE ABLE TO APPOINT OR HAVE ELECTED MR. GATES AS TRUSTEE:
Robert M. Gates, $__,] E. Bradley Jones, $__, Donald J. Kirk, $__,
[FOR FUNDS WHOSE TRUSTS ARE ABLE TO APPOINT OR HAVE ELECTED MR. MCCOY
AS TRUSTEE: William O. McCoy, $__,] Gerald C. McDonough, $__, Edward
H. Malone, $__, Marvin L. Mann, $__, and Thomas R. Williams, $__.
E The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $__, Phyllis Burke Davis, $__, Richard J. Flynn, $0, [FOR FUNDS
WHOSE TRUSTS ARE ABLE TO APPOINT OR HAVE ELECTED MR. GATES AS TRUSTEE:
Robert M. Gates, $__,] E. Bradley Jones, $__, Donald J. Kirk, $__,
[FOR FUNDS WHOSE TRUSTS ARE ABLE TO APPOINT OR HAVE ELECTED MR. MCCOY
AS TRUSTEE: William O. McCoy, $__,] Gerald C. McDonough, $__, Edward
H. Malone, $__, Marvin L. Mann, $__, and Thomas R. Williams, $__.]
[TREASURER'S OFFICE WILL ANCHOR THIS FOOTNOTE AS APPROPRIATE FOR YOUR
FUND(S): F For the fiscal year ended November 30, 1997, certain of the
non-interested Trustees' aggregate compensation from [the/a] fund
includes accrued voluntary deferred compensation as follows: [trustee
name, dollar amount of deferred compensation, fund name]; [trustee
name, dollar amount of deferred compensation, fund name]; and [trustee
name, dollar amount of deferred compensation, fund name].]
Under a retirement program adopted in July 1988 and modified in
November 1995 and November 1996, each non-interested Trustee who
retired before December 30, 1996 may receive payments from a Fidelity
fund during his or her lifetime based on his or her basic trustee fees
and length of service. The obligation of a fund to make such payments
is neither secured nor funded. A Trustee became eligible to
participate in the program at the end of the calendar year in which he
or she reached age 72, provided that, at the time of retirement, he or
she had served as a Fidelity fund Trustee for at least five years.
Under a deferred compensation plan adopted in September 1995 and
amended in November 1996 (the Plan), non-interested Trustees must
defer receipt of a portion of, and may elect to defer receipt of an
additional portion of, their annual fees. Amounts deferred under the
Plan are treated as though equivalent dollar amounts had been invested
in shares of a cross-section of Fidelity funds including funds in each
major investment discipline and representing a majority of Fidelity's
assets under management (the Reference Funds). The amounts ultimately
received by the Trustees under the Plan will be directly linked to the
investment performance of the Reference Funds. Deferral of fees in
accordance with the Plan will have a negligible effect on a fund's
assets, liabilities, and net income per share, and will not obligate a
fund to retain the services of any Trustee or to pay any particular
level of compensation to the Trustee. A fund may invest in the
Reference Funds under the Plan without shareholder approval.
As of December 30, 1996, the non-interested Trustees terminated the
retirement program for Trustees who retire after such date. In
connection with the termination of the retirement program, each
then-existing non-interested Trustee received a credit to his or her
Plan account equal to the present value of the estimated benefits that
would have been payable under the retirement program. The amounts
credited to the non-interested Trustees' Plan accounts are subject to
vesting and are treated as though equivalent dollar amounts had been
invested in shares of the Reference Funds. The amounts ultimately
received by the Trustees in connection with the credits to their Plan
accounts will be directly linked to the investment performance of the
Reference Funds. The termination of the retirement program and related
crediting of estimated benefits to the Trustees' Plan accounts did not
result in a material cost to the funds.
[IF EITHER FMR OR AN FMR AFFILIATE IS DEEMED TO OWN 1% OR MORE OF A
FUND'S SHARES: As of [DATE NOT EARLIER THAN 30 DAYS PRIOR TO SEC
FILING DATE], approximately __% of [Fund Name]'s total outstanding
shares was held by [an] FMR affiliate[s]. FMR Corp. is the ultimate
parent company of [this/these] FMR affiliate[s]. By virtue of his
ownership interest in FMR Corp., as described in the "FMR" section on
page ___, Mr. Edward C. Johnson 3d, President and Trustee of the fund,
may be deemed to be a beneficial owner of these shares. As of the
above date, with the exception of Mr. Johnson 3d's deemed ownership of
[Fund Name]'s shares, the Trustees, Members of the Advisory Board, and
officers of the funds owned, in the aggregate, less than __% of each
fund's total outstanding shares.]
[IF NEITHER FMR NOR AN FMR AFFILIATE IS DEEMED TO OWN 1% OR MORE OF
THE FUND'S SHARES: As of [DATE NOT EARLIER THAN 30 DAYS PRIOR TO SEC
FILING DATE], the Trustees, Members of the Advisory Board, and
officers of each fund owned, in the aggregate, less than __% of each
fund's total outstanding shares.]
[REVISE AS APPROPRIATE; REQUEST INFORMATION FROM KENDRA
MCGEORGE/ANTHONY AMADOR: As of [DATE NOT EARLIER THAN 30 DAYS PRIOR TO
SEC FILING DATE], the following owned of record or beneficially 5% or
more of a fund's outstanding shares:]
[REQUEST INFORMATION FROM KENDRA MCGEORGE/ANTHONY AMADOR (IF FUND HAS
A SHAREHOLDER WHO OWNS 25% OR MORE): A shareholder owning of record or
beneficially more than 25% of a fund's outstanding shares may be
considered a controlling person. That shareholder's vote could have a
more significant effect on matters presented at a shareholders'
meeting than votes of other shareholders.]
MANAGEMENT CONTRACTS
FMR is manager of Spartan NJ Municipal Money Market and Spartan NJ
Municipal Income pursuant to management contracts dated December 30,
1991 and January 1, 1992, respectively, which were approved by
shareholders on October 23, 1991 and December 11, 1991, respectively.
FMR is manager of Fidelity NJ Municipal Money Market pursuant to a
management contract dated ________ which was approved by shareholders
on _____________. FMR went to shareholders on ____________ to request
modification of the management fee that FMR receives from the fund and
to provide for lower fees when FMR's assets under management exceed
certain levels. The _____________ amended contract also includes a
discussion of FMR's ability to use brokers and dealers to execute
portfolio transactions. Except for the modifications discussed above,
the ____________ contract is identical to the fund's prior management
contract with FMR, dated February 28, 1992.
MANAGEMENT SERVICES. Each fund employs FMR to furnish investment
advisory and other services. Under the terms of its management
contract with each fund, FMR acts as investment adviser and, subject
to the supervision of the Board of Trustees, directs the investments
of the fund in accordance with its investment objective, policies, and
limitations. FMR also provides each fund with all necessary office
facilities and personnel for servicing the fund's investments,
compensates all officers of each fund and all Trustees who are
"interested persons" of the trusts or of FMR, and all personnel of
each fund or FMR performing services relating to research,
statistical, and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of each fund. These services include
providing facilities for maintaining each fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters, and other persons dealing with each fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining each fund's records and the
registration of each fund's shares under federal securities laws and
making necessary filings under state securities laws; developing
management and shareholder services for each fund; and furnishing
reports, evaluations, and analyses on a variety of subjects to the
Trustees.
MANAGEMENT-RELATED EXPENSES (FIDELITY NJ MUNICIPAL MONEY MARKET). In
addition to the management fee payable to FMR and the fees payable to
the transfer, dividend disbursing, and shareholder servicing agent,
and pricing and bookkeeping agent, the fund pays all of its expenses
that are not assumed by those parties. The fund pays for the
typesetting, printing, and mailing of its proxy materials to
shareholders, legal expenses, and the fees of the custodian, auditor
and non-interested Trustees. The fund's management contract further
provides that the fund will pay for typesetting, printing, and mailing
prospectuses, statements of additional information, notices, and
reports to shareholders; however, under the terms of each fund's
transfer agent agreement, the transfer agent bears the costs of
providing these services to existing shareholders. Other expenses
paid by the fund include interest, taxes, brokerage commissions, the
fund's proportionate share of insurance premiums and Investment
Company Institute dues, and the costs of registering shares under
federal securities laws and making necessary filings under state
securities laws. The fund is also liable for such non-recurring
expenses as may arise, including costs of any litigation to which the
fund may be a party, and any obligation it may have to indemnify its
officers and Trustees with respect to litigation.
MANAGEMENT-RELATED EXPENSES (SPARTAN NJ MUNICIPAL MONEY MARKET AND
SPARTAN NJ MUNICIPAL INCOME). Under the terms of its management
contract with each fund, FMR is responsible for payment of all
operating expenses of each fund with certain exceptions. Specific
expenses payable by FMR include expenses for typesetting, printing,
and mailing proxy materials to shareholders, legal expenses, fees of
the custodian, auditor and interested Trustees, each fund's
proportionate share of insurance premiums and Investment Company
Institute dues, and the costs of registering shares under federal
securities laws and making necessary filings under state securities
laws. Each fund's management contract further provides that FMR will
pay for typesetting, printing, and mailing prospectuses, statements of
additional information, notices, and reports to shareholders; however,
under the terms of each fund's transfer agent agreement, the transfer
agent bears the costs of providing these services to existing
shareholders. FMR also pays all fees associated with transfer agent,
dividend disbursing, and shareholder services, and pricing and
bookkeeping services.
FMR pays all other expenses of Spartan NJ Municipal Money Market and
Spartan NJ Municipal Income with the following exceptions: fees and
expenses of the non-interested Trustees, interest, taxes, brokerage
commissions (if any), and such nonrecurring expenses as may arise,
including costs of any litigation to which a fund may be a party, and
any obligation it may have to indemnify its officers and Trustees with
respect to litigation.
MANAGEMENT FEES. For the services of FMR under each management
contract, each of Spartan NJ Municipal Money Market and Spartan NJ
Municipal Income pays FMR a monthly management fee at the annual rate
of 0.50% and 0.55%, respectively, of its average net assets throughout
the month.
The management fee paid to FMR by Spartan NJ Municipal Money Market
and Spartan NJ Municipal Income is reduced by an amount equal to the
fees and expenses paid by the fund to the non-interested Trustees.
For the services of FMR under the management contract, Fidelity NJ
Municipal Money Market pays FMR a monthly management fee which has two
components: a group fee rate and an individual fund fee rate.
The group fee rate is based on the monthly average net assets of all
of the registered investment companies with which FMR has management
contracts.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
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 400 .1507
174 - 228 .1400
228 - 282 .1375
282 - 336 .1350
Over 336 .1325
Prior to ________________, the group fee rate was based on a schedule
with breakpoints ending at .1500% for average group assets in excess
of $84 billion. The group fee rate breakpoints shown above for average
group assets in excess of $120 billion and under $228 billion were
voluntarily adopted by FMR on January 1, 1992. The additional
breakpoints shown above for average group assets in excess of $228
billion were voluntarily adopted by FMR on November 1, 1993.
On August 1, 1994, FMR voluntarily revised the prior extensions to the
group fee rate schedule, and added new breakpoints for average group
assets in excess of $156 billion and under $372 billion as shown in
the schedule below. The revised group fee rate schedule was identical
to the above schedule for average group assets under $156 billion.
On January 1, 1996, FMR voluntarily added new breakpoints to the
revised schedule for average group assets in excess of $372 billion.
The revised group fee rate schedule and its extensions provide for
lower management fee rates as FMR's assets under management increase.
The fund's current management contract reflects the group fee rate
schedule above for average group assets under $156 billion and the
group fee rate schedule below for average group assets in excess of
$156 billion.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
120 - $156 billion .1450% $ 150 billion .1736%
156 - 192 .1400 175 .1690
192 - 228 .1350 200 .1652
228 - 264 .1300 225 .1618
264 - 300 .1275 250 .1587
300 - 336 .1250 275 .1560
336 - 372 .1225 300 .1536
372 - 408 .1200 325 .1514
408 - 444 .1175 350 .1494
444 - 480 .1150 375 .1476
480 - 516 .1125 400 .1459
Over 516 .1100 425 .1443
450 .1427
475 .1413
500 .1399
525 .1385
550 .1372
The group fee rate is calculated on a cumulative basis pursuant to the
graduated fee rate schedule shown above on the left. The schedule
above on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $___ billion of group net assets - the approximate level for
November 1997 - was ___%, which is the weighted average of the
respective fee rates for each level of group net assets up to $__
billion.
The individual fund fee rate for Fidelity NJ Municipal Money Market is
0.25%. Based on the average group net assets of the funds advised by
FMR for November 1997, the fund's annual management fee rate would be
calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Group Fee Rate Individual Fund Fee Rate Management
Fee Rate
Fidelity NJ Municipal 0.___% + 0.25% = 0.___%
Money Market
</TABLE>
One-twelfth of this annual management fee rate is applied to the
fund's net assets averaged for the most recent month, giving a dollar
amount, which is the fee for that month.
The following table shows the amount of management fees paid by each
fund to FMR for the past three fiscal years, and the amount of credits
reducing management fees for Spartan NJ Municipal Money Market and
Spartan NJ Municipal Income.
Fund Amount of
November Credits Reducing Management Fees
Management Fees Paid to FMR
Spartan NJ Municipal Money 1997 $ $*
Market
1996 $ $*
1995 $ $*
Fidelity NJ Municipal Money 1997 $ $
Market
1996 $ $
1995 $ $
Spartan NJ Municipal Income 1997 $ $*
1996 $ $*
1995 $ $*
* After reduction of fees and expenses paid by the fund to the
non-interested Trustees.
FMR may, from time to time, voluntarily reimburse all or a portion of
a fund's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). FMR retains the ability to
be repaid for these expense reimbursements in the amount that expenses
fall below the limit prior to the end of the fiscal year.
Expense reimbursements by FMR will increase a fund's total returns and
yield, and repayment of the reimbursement by a fund will lower its
total returns and yield.
During the past three fiscal years, FMR voluntarily agreed, subject to
revision or termination, to reimburse the fund if and to the extent
that its aggregate operating expenses, including management fees, were
in excess of an annual rate of its average net assets. The table below
shows the periods of reimbursement and levels of expense limitations
for the applicable fund; the dollar amount of management fees incurred
under the fund's contract before reimbursement; and the dollar amount
of management fees reimbursed by FMR under the expense reimbursement
for each period.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Period of Aggregate
Expense Limitation Operating Fiscal Years Management Fee Amount of
From To Expense Ended Before Management Fee
Limitation November 30** Reimbursement Reimbursement
Spartan NJ December 1, August 1, 0.35% 1997 $* $
Municipal 1995 1997
Money Market
1996 $* $
1995 $* $
</TABLE>
* After reduction of fees and expenses paid by the fund to the
non-interested Trustees.
** Spartan NJ Municipal Money Market's fiscal year end changed from
October 31 to November 30.
To defray shareholder service costs, FMR or its affiliates also
collect Spartan NJ Municipal Money Market's $5.00 exchange fee, $5.00
account closeout fee, $5.00 fee for wire purchases and redemptions,
and $2.00 checkwriting charge. Effective April 1, 1997, the following
fees for individual transactions for Spartan NJ Municipal Income have
been eliminated: $5.00 exchange fee, the $5.00 wire fee , and the
$5.00 account closeout fee. Shareholder transaction fees and charges
collected by FMR are shown in the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Fiscal Period Account Checkwriting
Ended Exchange Fees Closeout Fees Wire Fees Charges
Spartan NJ
Municipal Money
Market
11/1/97-11/30/97* $ $ $ $
10/31/97 $ $ $ $
10/31/96 $1,800 $666 $420 $3,876
10/31/95 $2,545 $776 $500 $4,048
Spartan NJ
Municipal Income
11/30/97 $ $ $ n/a
11/30/96 $2,600 $1,650 $375 n/a
11/30/95 $3,205 $1,710 $395 n/a
</TABLE>
* Spartan NJ Municipal Money Market's fiscal year end changed from
October 31 to November 30.
SUB-ADVISER. On behalf of Spartan NJ Municipal Money Market and
Fidelity NJ Municipal Money Market, 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 funds.
Under the terms of the sub-advisory agreements, dated December 31,
1991 and February 28, 1992 for Spartan NJ Municipal Money Market and
Fidelity NJ Municipal Money Market, respectively, which were approved
by shareholders on October 23, 1991 and December 11, 1991,
respectively, FMR pays FMR Texas fees equal to 50% of the management
fee payable to FMR under its management contract with each 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.
Fees paid to FMR Texas by FMR on behalf of Spartan NJ Municipal Money
Market and Fidelity NJ Municipal Money Market for the past three
fiscal years are shown in the table below.
Fund Fiscal Period Ended Fees Paid to FMR Texas
Spartan NJ Municipal Money Market
11/1/97-11/30/97* $
10/31/97 $
10/31/96 $ 1,227,161
10/31/95 $ 1,108,374
Fidelity NJ Municipal Money Market
11/30/97 $
11/30/96 $ 863,206
11/30/95 $ 813,180
* Spartan NJ Municipal Money Market's fiscal year end changed from
October 31 to November 30 effective November 1997.
DISTRIBUTION AND SERVICE PLANS
The Trustees have approved Distribution and Service Plans on behalf of
each fund (the Plans) pursuant to Rule 12b-1 under the 1940 Act (the
Rule). The Rule provides in substance that a mutual fund may not
engage directly or indirectly in financing any activity that is
primarily intended to result in the sale of shares of the fund except
pursuant to a plan approved on behalf of the fund under the Rule. The
Plans, as approved by the Trustees, allow the funds and FMR to incur
certain expenses that might be considered to constitute indirect
payment by the funds of distribution expenses.
Under each Plan, if the payment of management fees by the fund to FMR
is deemed to be indirect financing by the fund of the distribution of
its shares, such payment is authorized by the Plan. Each Plan
specifically recognizes that FMR may use its management fee revenue,
as well as its past profits or its other resources, to pay FDC for
expenses incurred in connection with the distribution of fund shares.
In addition, each Plan provides that FMR, directly or through FDC, may
make payments to third parties, such as banks or broker-dealers, that
engage in the sale of fund shares, or provide shareholder support
services. Currently, each fund's Board of Trustees has not authorized
such payments for the funds' shares.
[IF FMR MADE ANY DEFENSIVE THIRD PARTY PAYMENTS IN CALENDAR YEAR:
Payments made by FMR [FOR DEFENSIVE PLANS ONLY: either directly or]
through [FDC/NFSC] to third parties for the [FOR ADVISOR FUNDS AND VIP
FUNDS PRINTING PRIOR TO 1998: calendar/ FOR ALL OTHER FUNDS: fiscal]
year ended 19__ amounted to $____ [for [Fund/Class Name]], $____ [for
[Fund/Class Name]], and $_____ [for [Fund/Class Name]].
[IF FMR DID NOT MAKE ANY DEFENSIVE THIRD PARTY PAYMENTS IN CALENDAR
YEAR: FMR made no payments [FOR DEFENSIVE PLANS ONLY: either directly
or] through [FDC/NFSC] to third parties for the fiscal year ended
19__.
Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan, and
determined that there is a reasonable likelihood that the Plan will
benefit the fund and its shareholders. In particular, the Trustees
noted that each Plan does not authorize payments by the fund other
than those made to FMR under its management contract with the fund. To
the extent that each Plan gives FMR and FDC greater flexibility in
connection with the distribution of fund shares, additional sales of
fund shares may result. Furthermore, certain shareholder support
services may be provided more effectively under the Plans by local
entities with whom shareholders have other relationships.
Each of Spartan NJ Municipal Money Market and Fidelity NJ Municipal
Money Market's Plans were approved by shareholders, in connection with
reorganization transactions on December 30, 1991 and December 11,
1991, respectively, pursuant to Agreements and Plans of Conversion.
Spartan NJ Municipal Income's Plan was approved by shareholders on
November 16, 1988.
The Glass-Steagall Act generally prohibits federally and state
chartered or supervised banks from engaging in the business of
underwriting, selling, or distributing securities. Although the scope
of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, FDC believes
that the Glass-Steagall Act should not preclude a bank from performing
shareholder support services, or servicing and recordkeeping
functions. FDC intends to engage banks only to perform such functions.
However, changes in federal or state statutes and regulations
pertaining to the permissible activities of banks and their affiliates
or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions,
if any, would be necessary to continue to provide efficient and
effective shareholder services. In such event, changes in the
operation of the funds might occur, including possible termination of
any automatic investment or redemption or other services then provided
by the bank. It is not expected that shareholders would suffer any
adverse financial consequences as a result of any of these
occurrences. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein, and
banks and other financial institutions may be required to register as
dealers pursuant to state law.
Each fund may execute portfolio transactions with, and purchase
securities issued by, depository institutions that receive payments
under the Plans. No preference for the instruments of such depository
institutions will be shown in the selection of investments.
CONTRACTS WITH FMR AFFILIATES
Each fund has entered into a transfer agent agreement with UMB. Under
the terms of the agreements, UMB provides transfer agency, dividend
disbursing, and shareholder services for each fund. UMB in turn has
entered into sub-transfer agent agreements with FSC, an affiliate of
FMR. Under the terms of the sub-agreements, FSC performs all
processing activities associated with providing these services for
each fund and receives all related transfer agency fees paid to UMB.
For providing transfer agency services, FSC receives an annual account
fee and an asset-based fee each based on account size and fund type
for each retail account and certain institutional accounts. With
respect to certain institutional retirement accounts, FSC receives an
annual account fee and an asset-based fee based on account type or
fund type. These annual account fees are subject to increase based on
postal rate changes.
FSC also collects small account fees from certain accounts with
balances of less than $2,500.
In addition, UMB receives the pro rata portion of the transfer agency
fees applicable to shareholder accounts in each Fidelity Freedom Fund,
a fund of funds managed by an FMR affiliate, according to the
percentage of the Freedom Fund's assets that is invested in a fund.
FSC pays out-of-pocket expenses associated with providing transfer
agent services. In addition, FSC bears the expense of typesetting,
printing, and mailing prospectuses, statements of additional
information, and all other reports, notices, and statements to
existing shareholders, with the exception of proxy statements.
FSC has entered into a sub-agreement with Fidelity Brokerage Services,
Inc. (FBSI), an affiliate of FMR. Under the terms of this
sub-agreement, FBSI performs certain recordkeeping, communication, and
other services for shareholders of Fidelity NJ Municipal Money Market
participating in the Fidelity Ultra Service Account program. FBSI
directly charges a monthly administrative fee to each Ultra Service
Account client who chooses certain additional features. This fee is in
addition to the transfer agency fee received by FSC.
Each fund has also entered into a service agent agreement with UMB.
Under the terms of the agreements, UMB provides pricing and
bookkeeping services for each fund. UMB in turn has entered into
sub-service agent agreements with FSC. Under the terms of the
sub-agreements, FSC performs all processing activities associated with
providing these services, including calculating the NAV and dividends
for each fund and maintaining each fund's portfolio and general
accounting records, and receives all related pricing and bookkeeping
fees paid to UMB.
For providing pricing and bookkeeping services, FSC receives a monthly
fee based on each fund's average daily net assets throughout the
month. The annual fee rates for pricing and bookkeeping services are
.0400% for fixed-income funds and .0175% for money market funds of the
first $500 million of average net assets and .0200% for fixed-income
funds and .0075% for money market funds of average net assets in
excess of $500 million. The fee, not including reimbursement for
out-of-pocket expenses, is limited to a minimum of $60,000 for
fixed-income funds and $40,000 for money market funds, and a maximum
of $800,000 per year.
Pricing and bookkeeping fees, including reimbursement for
out-of-pocket expenses, paid by Fidelity NJ Municipal Money Market to
FSC for the past three fiscal years are shown in the table below.
Fund 1997 1996 1995
Fidelity NJ Municipal Money Market $ $88,500 $87,056
For Spartan NJ Municipal Money Market and Spartan NJ Municipal Income,
FMR bears the cost of transfer agency, dividend disbursing, and
shareholder services and pricing and bookkeeping services under the
terms of its management contract with each fund.
Each fund has entered into a distribution agreement with FDC, an
affiliate of FMR organized as a Massachusetts corporation on July 18,
1960. FDC is a broker-dealer registered under the Securities Exchange
Act of 1934 and a member of the National Association of Securities
Dealers, Inc. The distribution agreements call for FDC to use all
reasonable efforts, consistent with its other business, to secure
purchasers for shares of the fund, which are continuously offered at
NAV. Promotional and administrative expenses in connection with the
offer and sale of shares are paid by FMR.
DESCRIPTION OF THE TRUSTS
TRUSTS' ORGANIZATION. Spartan NJ Municipal Money Market and Fidelity
NJ Municipal Money Market are funds (series) of Fidelity Court Street
Trust II (the Delaware trust), an open-end management investment
company organized as a Delaware business trust on June 20, 1991.
Fidelity NJ Municipal Money Market acquired all of the assets of
Fidelity NJ Tax-Free Money Market Portfolio, as series of Fidelity
Court Street Trust on February 28, 1992 pursuant to an agreement
approved by shareholders on December 11, 1991. Prior to January 10,
1998, Spartan NJ Municipal Money Market was a fund of Fidelity Beacon
Street Trust (Delaware trust), an open-end management investment
company organized as a Delaware business trust on June 19, 1979. On
April 19, 1990, the trust's name was changed from Fidelity Tax-Exempt
Money Market Trust to Fidelity Beacon Street Trust. On December 30,
1991, the trust was converted to a Delaware business trust pursuant to
an agreement approved by shareholders on October 23, 1991. The
Delaware trust, which was organized on June 20, 1991 under the name
Fidelity Beacon Street Trust II, succeeded to the name Fidelity Beacon
Street Trust on December 30, 1991. Currently there are five funds of
the Delaware trust: Fidelity Connecticut Municipal Money Market Fund,
Fidelity New Jersey Municipal Money Market Fund, Spartan Connecticut
Municipal Money Market Fund, Spartan New Jersey Municipal Money Market
Fund, and Spartan Florida Municipal Money Market Fund. The Delaware
trust's Trust Instrument permits the Trustees to create additional
funds.
Spartan New Jersey Municipal Income Fund is a fund of Fidelity Court
Street Trust, an open-end management investment company organized as a
Massachusetts business trust on April 21, 1977. On August 1, 1987, the
trust's name was changed from Fidelity High Yield Municipals to
Fidelity Court Street Trust. Currently there are four funds of the
trust: Spartan Municipal Income Fund, Spartan Connecticut Municipal
Income Fund, Spartan New Jersey Municipal Income Fund, and Spartan
Florida Municipal Income Fund. The Massachusetts trust's Declaration
of Trust permits the Trustees to create additional funds.
In the event that FMR ceases to be investment adviser to a trust or
any of its funds, the right of the trust or the fund to use the
identifying names "Fidelity" and "Spartan" may be withdrawn. There is
a remote possibility that one fund might become liable for any
misstatement in its prospectus or statement of additional information
about another fund.
The assets of each trust received for the issue or sale of shares of
each of its funds and all income, earnings, profits, and proceeds
thereof, subject only to the rights of creditors, are especially
allocated to such fund, and constitute the underlying assets of such
fund. The underlying assets of each fund are segregated on the books
of account, and are to be charged with the liabilities with respect to
such fund and with a share of the general expenses of their respective
trusts. Expenses with respect to the trusts are to be allocated in
proportion to the asset value of their respective funds, except where
allocations of direct expense can otherwise be fairly made. The
officers of the trusts, subject to the general supervision of the
Boards of Trustees, have the power to determine which expenses are
allocable to a given fund, or which are general or allocable to all of
the funds of a certain trust. In the event of the dissolution or
liquidation of a trust, shareholders of each fund of that trust are
entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY - MASSACHUSETTS TRUST. The
Massachusetts trust is an entity of the type commonly known as
"Massachusetts business trust." Under Massachusetts law, shareholders
of such a trust may, under certain circumstances, be held personally
liable for the obligations of the trust. The Declaration of Trust
provides that the Massachusetts trust shall not have any claim against
shareholders except for the payment of the purchase price of shares
and requires that each agreement, obligation, or instrument entered
into or executed by the Massachusetts trust or its Trustees shall
include a provision limiting the obligations created thereby to the
Massachusetts trust and its assets. The Declaration of Trust provides
for indemnification out of each fund's property of any shareholders
held personally liable for the obligations of the fund. The
Declaration of Trust also provides that each fund shall, upon request,
assume the defense of any claim made against any shareholder for any
act or obligation of the fund and satisfy any judgment thereon. Thus,
the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the fund
itself would be unable to meet its obligations. FMR believes that, in
view of the above, the risk of personal liability to shareholders is
remote.
The Declaration of Trust further provides that the Trustees, if they
have exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects Trustees
against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of their
office.
SHAREHOLDER AND TRUSTEE LIABILITY - DELAWARE TRUST. The Delaware trust
is a business trust organized under Delaware law. Delaware law
provides that shareholders shall be entitled to the same limitations
of personal liability extended to stockholders of private corporations
for profit. The courts of some states, however, may decline to apply
Delaware law on this point. The Trust Instrument contains an express
disclaimer of shareholder liability for the debts, liabilities,
obligations, and expenses of the Delaware trust and requires that a
disclaimer be given in each contract entered into or executed by the
Delaware trust or its Trustees. The Trust Instrument provides for
indemnification out of each fund's property of any shareholder or
former shareholder held personally liable for the obligations of the
fund. The Trust Instrument also provides that each fund shall, upon
request, assume the defense of any claim made against any shareholder
for any act or obligation of the fund and satisfy any judgment
thereon. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which
Delaware law does not apply, no contractual limitation of liability
was in effect, and the fund is unable to meet its obligations. FMR
believes that, in view of the above, the risk of personal liability to
shareholders is extremely remote.
The Trust Instrument further provides that the Trustees shall not be
personally liable to any person other than the Delaware trust or its
shareholders; moreover, the Trustees shall not be liable for any
conduct whatsoever, provided that Trustees are not protected against
any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
VOTING RIGHTS - BOTH TRUSTS. Each fund's capital consists of shares of
beneficial interest. As a shareholder, you receive one vote for each
dollar value of net asset value you own. The shares have no preemptive
or conversion rights; voting and dividend rights, the right of
redemption, and the privilege of exchange are described in the
Prospectus. Shares are fully paid and nonassessable, except as set
forth under the respective "Shareholder and Trustee Liability"
headings above. Shareholders representing 10% or more of a trust or
one of its funds may, as set forth in the Declaration of Trust or
Trust Instrument, call meetings of the trust or fund for any purpose
related to the trust or fund, as the case may be, including, in the
case of a meeting of an entire trust, the purpose on voting on removal
of one or more Trustees.
A trust or any fund may be terminated upon the sale of its assets to
(or, in the case of the Delaware trust and its funds, merger with)
another open-end management investment company or series thereof, or
upon liquidation and distribution of its assets. Generally such
terminations must be approved by vote of the holders of a majority of
the trust or the fund, as determined by the current value of each
shareholder's investment in the fund or trust; however, the Trustees
of the Delaware trust may, without prior shareholder approval, change
the form of the organization of the Delaware trust by merger,
consolidation, or incorporation. If not so terminated or reorganized,
the trusts and their funds will continue indefinitely.
Under the Trust Instrument, the Trustees may, without shareholder
vote, cause the Delaware trust to merge or consolidate into one or
more trusts, partnerships, or corporations, so long as the surviving
entity is an open-end management investment company that will succeed
to or assume the Delaware trust registration statement, or cause the
Delaware trust to be incorporated under Delaware law. Each fund may
also invest all of its assets in another investment company.
CUSTODIAN. UMB Bank, n.a., 1010 Grand Avenue, Kansas City, Missouri,
is custodian of the assets of the funds. The custodian is responsible
for the safekeeping of a fund's assets and the appointment of any
subcustodian banks and clearing agencies. The custodian takes no part
in determining the investment policies of a fund or in deciding which
securities are purchased or sold by a fund. However, a fund may invest
in obligations of the custodian and may purchase securities from or
sell securities to the custodian.
FMR, its officers and directors, its affiliated companies, and the
Board of Trustees may, from time to time, conduct transactions with
various banks, including banks serving as custodians for certain funds
advised by FMR. Transactions that have occurred to date include
mortgages and personal and general business loans. In the judgment of
FMR, the terms and conditions of those transactions were not
influenced by existing or potential custodial or other fund
relationships.
AUDITOR. ____________________ serves as Spartan NJ Municipal Money
Market's independent accountant. The auditor examines financial
statements for the funds and provides other audit, tax, and related
services.
AUDITOR. __________________(Spartan NJ Municipal Income) and
_________________ (Fidelity NJ Municipal Money Market) serves as the
funds' independent accountant. The auditor examines financial
statements for the funds and provides other audit, tax, and related
services.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the
fiscal year ended November 30, 1997, and reports of the auditors, are
included in each fund's Annual Report, which are separate reports
supplied with this SAI. The funds' financial statements, including the
financial highlights, and reports of the auditors are incorporated
herein by reference. For a free additional copy of the funds' Annual
Report, contact Fidelity at 1-800-544-8888, 82 Devonshire Street,
Boston, MA 02109.
APPENDIX
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value
of each investment by the time remaining to its maturity, adding these
calculations, and then dividing the total by the value of the fund's
portfolio. An obligation's maturity is typically determined on a
stated final maturity basis, although there are some exceptions to
this rule.
For example, if it is probable that the issuer of an instrument will
take advantage of a maturity-shortening device, such as a call,
refunding, or redemption provision, the date on which the instrument
will probably be called, refunded, or redeemed may be considered to be
its maturity date. When a municipal bond issuer has committed to call
an issue of bonds and has established an independent escrow account
that is sufficient to, and is pledged to, refund that issue, the
number of days to maturity for the prerefunded bond is considered to
be the number of days to the announced call date of the bonds.
DESCRIPTION OF MOODY'S INVESTORS SERVICE RATINGS OF MUNICIPAL
OBLIGATIONS
Moody's ratings for short-term municipal obligations will be
designated Moody's Investment Grade ("MIG"). A two-component rating is
assigned to variable rate demand obligations. The first component
represents an evaluation of the degree of risk associated with
scheduled principal repayment and interest payments and is designated
by a long-term rating, e.g., "Aaa" or "A." The second component
represents an evaluation of the degree of risk associated with the
demand feature and is designated "VMIG."
MIG 1/VMIG 1 - This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity
support, or demonstrated broad-based access to the market for
refinancing.
MIG 2/VMIG 2 - This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.
DESCRIPTION OF STANDARD & POOR'S RATINGS OF MUNICIPAL NOTES
Municipal notes maturing in three years or less will likely receive a
"note" rating symbol. Notes that have a put option or demand feature
are assigned a dual rating. The first rating addresses the likelihood
of repayment of principal and payment of interest due and for
short-term obligations is designated by a note rating symbol. The
second rating addresses only the demand feature, and is designated by
a commercial paper rating symbol, e.g., "A-1" or "A-2."
SP-1 - Strong capacity to pay principal and interest. Issues
determined to possess very strong characteristics are given a plus (+)
designation.
SP-2 - Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term
of the notes.
DESCRIPTION OF MOODY'S INVESTORS SERVICE RATINGS OF MUNICIPAL
OBLIGATIONS
Moody's ratings for long-term municipal obligations fall within nine
categories. They range from Aaa (highest quality) to C (lowest
quality). Those bonds within the Aa through B categories that Moody's
believes possess the strongest credit attributes within those
categories are designated by the symbol "1."
AAA - Bonds that are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than the Aaa securities.
A - Bonds that are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
BAA - Bonds that are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
BA - Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B - Bonds that are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
CAA - Bonds that are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect
to principal or interest.
CA - Bonds that are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked short-comings.
C - Bonds that are rated C are the lowest-rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
DESCRIPTION OF STANDARD & POOR'S RATINGS OF MUNICIPAL DEBT
Municipal debt issues may be designated by Standard & Poor's as either
investment grade ("AAA" through "BBB") or speculative grade ("BB"
through "D"). While speculative grade debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major exposures to adverse conditions. Ratings from
AA through CCC may be modified by the addition of a plus sign (+) or
minus sign (-) to show relative standing within the major rating
categories.
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the highest rated issues only in
small degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in
higher-rated categories.
BB - Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to inadequate capacity to meet timely
interest and principal payments. The BB rating category is also used
for debt subordinated to senior debt that is assigned an actual or
implied BBB- rating.
B - Debt rated B has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair
capacity or willingness to pay interest and repay principal. The B
rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and
economic conditions to meet timely payment of interest and repayment
of principal. In the event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or
B- rating.
CC - Debt rated CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C
rating may be used to cover a situation where a bankruptcy petition
has been filed but debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest
is being paid.
D - Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The
D rating will also be used upon the filing of a bankruptcy petition if
debt service payments are jeopardized.
FIDELITY COURT STREET TRUST II
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) (i) Financial Statements and Financial Highlights for the fiscal
year ended November 30, 1997, will be filed by subsequent amendment.
(b) Exhibits:
(1) Trust Instrument, dated June 20, 1991 is incorporated herein by
reference to Exhibit 1 of Post-Effective Amendment No. 12.
(2) Bylaws of the Trust, as amended, are incorporated herein by
reference to Exhibit 2(a) of Fidelity Union Street II Trust (File No.
33-43757) Post-Effective Amendment No. 10.
(3) Not applicable.
(4) Not applicable.
(5)(a) Management Contract, dated July 16, 1993, between Fidelity
Court Street Trust II on behalf of Spartan Florida Municipal Money
Market Portfolio (currently known as Spartan Florida Municipal Money
Market Fund) and Fidelity Management & Research Company, is
incorporated herein by reference to Exhibit 5(a) of Post-Effective
Amendment No. 10.
(b) Management Contract, dated February 28, 1992, between
Fidelity Court Street Trust II on behalf of Fidelity New Jersey
Tax-Free Money Market Portfolio (currently known as Fidelity New
Jersey Municipal Money Market Fund) and Fidelity Management & Research
Company is incorporated herein by reference to Exhibit 5(b) of
Post-Effective Amendment No. 12.
(c) Management Contract, dated February 28, 1992, between
Fidelity Court Street Trust II on behalf of Fidelity Connecticut
Municipal Money Market Portfolio (currently known as Fidelity
Connecticut Municipal Money Market Fund) and Fidelity Management &
Research Company, is incorporated herein by reference to Exhibit 5(c)
of Post-Effective Amendment No. 9.
(d) Management Contract, dated February 28, 1992, between
Fidelity Court Street Trust II on behalf of Spartan Connecticut
Municipal Money Market Portfolio (currently known as Spartan
Connecticut Municipal Money Market Fund) and Fidelity Management &
Research Company, is incorporated herein by reference to Exhibit 5(d)
of Post-Effective Amendment No. 12.
(e) Management Contract, dated December 30, 1991, between Spartan
New Jersey Municipal Money Market Portfolio (currently known as
Spartan New Jersey Municipal Money Market Fund) and Fidelity
Management & Research Co. is incorporated herein by reference to
Exhibit 5(c) of Fidelity Beacon Street Trust's Post-Effective
Amendment No. 36 (File No. 2-64791).
(f) Sub-Advisory Agreement, dated July 16, 1993, between FMR
Texas Inc. and Fidelity Management & Research Company, on behalf of
Spartan Florida Municipal Money Market Portfolio (currently known as
Spartan Florida Municipal Money Market Fund), is incorporated herein
by reference to Exhibit 5(e) of Post-Effective Amendment No. 10.
(g) Sub-Advisory Agreement, dated February 28, 1992, between FMR
Texas Inc. and Fidelity Management & Research Company, on behalf of
Fidelity New Jersey Tax-Free Money Market Portfolio (currently known
as Fidelity New Jersey Municipal Money Market Fund) is incorporated
herein by reference to Exhibit 5(f) of Post-Effective Amendment No.
12.
(h) Sub-Advisory Agreement, dated February 28, 1992, between FMR
Texas Inc. and Fidelity Management & Research Company, on behalf of
Fidelity Connecticut Municipal Money Market Portfolio (currently known
as Fidelity Connecticut Municipal Money Market Fund) is incorporated
herein by reference to Exhibit 5(g) of Post-Effective Amendment No.
12.
(i) Sub-Advisory Agreement, dated February 28, 1992, between FMR
Texas Inc. and Fidelity Management & Research Company, on behalf of
Spartan Connecticut Municipal Money Market Portfolio (currently known
as Spartan Connecticut Municipal Money Market Fund) is incorporated
herein by reference to Exhibit 5(h) of Post-Effective Amendment No.
12.
(j) Sub-Advisory Agreement, dated December 30, 1991, between
Fidelity Management & Research Company and FMR Texas Inc. on behalf of
Spartan New Jersey Municipal Money Market Portfolio (currently known
as Spartan New Jersey Municipal Money Market Fund) is incorporated
herein by reference to Exhibit 5(d) of Fidelity Beacon Street Trust's
Post-Effective Amendment No. 33 (File No. 2-64791).
(6)(a) General Distribution Agreement, dated July 16, 1992, between
Fidelity Court Street Trust II on behalf of Spartan Florida Municipal
Money Market Portfolio (currently known as Spartan Florida Municipal
Money Market Fund) and Fidelity Distributors Corporation, is
incorporated herein by reference to Exhibit 6(a) of Post-Effective
Amendment No. 12.
(b) General Distribution Agreement, dated February 28, 1992,
between Fidelity Court Street Trust II on behalf of Fidelity New
Jersey Tax-Free Money Market Portfolio (currently known as Fidelity
New Jersey Municipal Money Market Fund) and Fidelity Distributors
Corporation, is incorporated herein by reference to Exhibit 6(b) of
Post-Effective Amendment No. 12.
(c) General Distribution Agreement, dated February 28, 1992,
between Fidelity Court Street Trust II on behalf of Fidelity
Connecticut Municipal Money Market Portfolio (currently known as
Fidelity Connecticut Municipal Money Market Fund) and Fidelity
Distributors Corporation, is incorporated herein by reference to
Exhibit 6(c) of Post-Effective Amendment No. 9.
(d) General Distribution Agreement, dated February 28, 1992,
between Fidelity Court Street Trust II on behalf of Spartan
Connecticut Municipal Money Market Portfolio (currently known as
Spartan Connecticut Municipal Money Market Fund) and Fidelity
Distributors Corporation, is incorporated herein by reference to
Exhibit 6(d) of Post-Effective Amendment No. 12.
(e) General Distribution Agreement, dated December 30, 1991,
between Spartan New Jersey Municipal Money Market Portfolio (currently
known as Spartan New Jersey Municipal Money Market Fund) and Fidelity
Distributors Corporation is incorporated herein by reference to
Exhibit 6(b) of Fidelity Beacon Street Trust's Post-Effective
Amendment No. 33 (File No. 2-64791).
(f) Amendments to the General Distribution Agreement between the
Registrant and Fidelity Distributors Corporation, dated March 14, 1996
and July 15, 1996, are incorporated herein by reference to Exhibit
6(a) of Fidelity Court Street Trust's Post-Effective Amendment No. 61
(File No. 2-58774).
(g) Amendments to the General Distribution Agreement between
Spartan New Jersey Municipal Money Market Fund and Fidelity
Distributors Corporation, dated March 14, 1996 and July 15, 1996, are
incorporated herein by reference to Exhibit 6(a) of Fidelity Court
Street Trust's Post-Effective Amendment No. 61 (File No. 2-58774).
(7)(a) Retirement Plan for Non-Interested Person Trustees, Directors
or General Partners, as amended on November 16, 1995, is incorporated
herein by reference to Exhibit 7(a) of Fidelity Select Portfolio's
(File No. 2-69972) Post-Effective Amendment No. 54.
(7)(b) The Fee Deferral Plan for Non-Interested Person Directors and
Trustees of the Fidelity Funds, effective as of September 14, 1995 and
amended through November 14, 1996, is incorporated herein by reference
to Exhibit 7(b) of Fidelity Aberdeen Street Trust's (File No.
33-43529) Post-Effective Amendment No. 19.
(8)(a) Custodian Agreement, Appendix B, and Appendix C, dated
December 1, 1994, between UMB Bank, n.a. and the Registrant is
incorporated herein by reference to Exhibit 8 of Fidelity California
Municipal Trust's Post-Effective Amendment No. 28 (File No. 2-83367).
(8)(b) Appendix A, dated October 17, 1996, to the Custodian
Agreement, dated December 1, 1994, between UMB Bank, n.a. and the
Registrant is incorporated herein by reference to Exhibit 8(a) of
Fidelity Court Street Trust's Post-Effective Amendment No. 61 (File
No. 2-58774).
(9) Not applicable.
(10) Not applicable.
(11) Not applicable.
(12) Not applicable.
(13) Not applicable.
(14) (a) Fidelity Individual Retirement Account Custodial Agreement
and Disclosure Statement, as currently in effect, is incorporated
herein by reference to Exhibit 14(a) to Fidelity Union Street Trust's
(File No. 2-50318) Post-Effective Amendment No. 87.
(b) Fidelity Institutional Individual Retirement Account Custodial
Agreement and Disclosure Statement, as currently in effect, is
incorporated herein by reference to Exhibit 14(d) to Fidelity Union
Street Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(c) National Financial Services Corporation Individual Retirement
Account Custodial Agreement and Disclosure Statement, as currently in
effect, is incorporated herein by reference to Exhibit 14(h) to
Fidelity Union Street Trust's (File No. 2-50318) Post-Effective
Amendment No. 87.
(d) Fidelity Portfolio Advisory Services Individual Retirement
Account Custodial Agreement and Disclosure Statement, as currently in
effect, is incorporated herein by reference to Exhibit 14(i) to
Fidelity Union Street Trust's (File No. 2-50318) Post-Effective
Amendment No. 87.
(e) Fidelity 403(b)(7) Custodial Account Agreement, as currently in
effect, is incorporated herein by reference to Exhibit 14(e) to
Fidelity Union Street Trust's (File No. 2-50318) Post-Effective
Amendment No. 87.
(f) National Financial Services Corporation Defined Contribution
Retirement Plan and Trust Agreement, as currently in effect, is
incorporated herein by reference to Exhibit 14(k) to Fidelity Union
Street Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(g) The CORPORATEplan for Retirement Profit Sharing/401K Plan, as
currently in effect, is incorporated herein by reference to Exhibit
14(l) to Fidelity Union Street Trust's (File No. 2-50318)
Post-Effective Amendment No. 87.
(h) The CORPORATEplan for Retirement Money Purchase Pension Plan,
as currently in effect, is incorporated herein by reference to Exhibit
14(m) to Fidelity Union Street Trust's (File No. 2-50318)
Post-Effective Amendment No. 87.
(i) Fidelity Investments Section 403(b)(7) Individual Custodial
Account Agreement and Disclosure Statement, as currently in effect, is
incorporated herein by reference to Exhibit 14(f) to Fidelity
Commonwealth Trust's (File No. 2-52322) Post Effective Amendment No.
57.
(j) Plymouth Investments Defined Contribution Retirement Plan and
Trust Agreement, as currently in effect, is incorporated herein by
reference to Exhibit 14(o) to Fidelity Commonwealth Trust's (File No.
2-52322) Post Effective Amendment No. 57.
(k) The Fidelity Prototype Defined Benefit Pension Plan and Trust
Basic Plan Document and Adoption Agreement, as currently in effect, is
incorporated herein by reference to Exhibit 14(d) to Fidelity
Securities Fund's (File No. 2-93601) Post Effective Amendment No. 33.
(l) The Institutional Prototype Plan Basic Plan Document,
Standardized Adoption Agreement, and Non-Standardized Adoption
Agreement, as currently in effect, is incorporated herein by reference
to Exhibit 14(o) to Fidelity Securities Fund's (File No. 2-93601) Post
Effective Amendment No. 33.
(m) The CORPORATEplan for Retirement 100SM Profit Sharing/401(k)
Basic Plan Document, Standardized Adoption Agreement, and
Non-Standardized Adoption Agreement, as currently in effect, is
incorporated herein by reference to Exhibit 14(f) to Fidelity
Securities Fund's (File No. 2-93601) Post Effective Amendment No. 33.
(n) The Fidelity Investments 401(a) Prototype Plan for Tax-Exempt
Employers Basic Plan Document, Standardized Profit Sharing Plan
Adoption Agreement, Non-Standardized Discretionary Contribution Plan
No. 002 Adoption Agreement, and Non-Standardized Discretionary
Contribution Plan No. 003 Adoption Agreement, as currently in effect,
is incorporated herein by reference to Exhibit 14(g) to Fidelity
Securities Fund's (File No. 2-93601) Post Effective Amendment No. 33.
(o) Fidelity Investments 403(b) Sample Plan Basic Plan Document and
Adoption Agreement, as currently in effect, is incorporated herein by
reference to Exhibit 14(p) to Fidelity Securities Fund's (File No.
2-93601) Post Effective Amendment No. 33.
(p) Fidelity Defined Contribution Retirement Plan and Trust
Agreement, as currently in effect, is incorporated herein by reference
to Exhibit 14(c) to Fidelity Securities Fund's (File No. 2-93601) Post
Effective Amendment No. 33.
(q) Fidelity SIMPLE-IRAPlan Adoption Agreement, Company Profile
Form, and Plan Document, as currently in effect, is incorporated
herein by reference to Exhibit 14(q) of Fidelity Aberdeen Street
Trust's (File No. 33-43529) Post-Effective Amendment No. 19.
(15)(a) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Court Street Trust II on behalf of Spartan Florida Municipal
Money Market Portfolio (currently known as Spartan Florida Municipal
Money Market Fund) is incorporated herein by reference to Exhibit
15(a) of Post-Effective Amendment No. 12.
(b) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Court Street Trust II on behalf of Fidelity New Jersey
Tax-Free Money Market Portfolio (currently known as Fidelity New
Jersey Municipal Money Market Fund) is incorporated herein by
reference to Exhibit 15(b) of Post-Effective Amendment No. 12.
(c) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Court Street Trust II on behalf of Fidelity Connecticut
Municipal Money Market Portfolio (currently known as Fidelity
Connecticut Municipal Money Market Fund) is incorporated herein by
reference to Exhibit 15(c) of Post-Effective Amendment No. 12.
(d) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Court Street Trust II on behalf of Spartan Connecticut
Municipal Money Market Portfolio (currently known as Spartan
Connecticut Municipal Money Market Fund) is incorporated herein by
reference to Exhibit 15(d) of Post-Effective Amendment No. 12.
(e) Distribution and Service Plan pursuant to Rule 12b-1 for
Spartan New Jersey Municipal Money Market Portfolio (currently known
as Spartan New Jersey Municipal Money Market Fund) is incorporated by
reference to Exhibit 15(b) of Beacon Street Trust's Post-Effective
Amendment No. 41 (File No. 2-64791).
(16)(a) Schedule for computation of performance quotations for
Fidelity Connecticut Municipal Money Market Portfolio (currently known
as Fidelity Connecticut Municipal Money Market Fund) is incorporated
herein by reference to Exhibit 16 of Post-Effective Amendment No. 12.
(a) A schedule for the computation of performance quotations
(7-day yields) for Fidelity Tax-Exempt Money Market Trust (currently
known as Fidelity Municipal Money Market Fund) is incorporated herein
by reference to Exhibit 16 (b) of Post-Effective Amendment No. 39.
(17) Financial Data Schedules will be filed by subsequent amendment.
(18) Not applicable.
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
Number of Record Holders
on August 31, 1997
Fidelity New Jersey Municipal Money Market Fund 17,131
Fidelity Connecticut Municipal Money Market Fund 9,475
Spartan Connecticut Municipal Money Market Fund 1,173
Spartan Florida Municipal Money Market Fund 2,546
Spartan New Jersey Municipal Money Market Fund 3,644
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
Trust Instrument 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
Trust Instrument, 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, Inc.
("Service") is appointed sub-transfer agent, the Transfer Agent agrees
to indemnify Service for Service's losses, claims, damages,
liabilities and expenses (including reasonable counsel fees and
expenses) (losses) to the extent that the Transfer Agent is entitled
to and receives indemnification from the Portfolio for the same
events. Under the Transfer Agency Agreement, the Registrant agrees to
indemnify and hold the Transfer Agent harmless against any losses,
claims, damages, liabilities, or expenses (including reasonable
counsel fees and expenses) resulting from:
(1) any claim, demand, action or suit brought by any person other
than the Registrant, including by a shareholder which names the
Transfer Agent and/or the Registrant as a party and is not based on
and does not result from the Transfer Agent's willful misfeasance, bad
faith or negligence or reckless disregard of duties, and arises out of
or in connection with the Transfer Agent's performance under the
Transfer Agency Agreement; or
(2) any claim, demand, action or suit (except to the extent
contributed to by the Transfer Agent's willful misfeasance, bad faith
or negligence or reckless disregard of duties) which results from the
negligence of the Registrant, or from the Transfer Agent's acting upon
any instruction(s) reasonably believed by it to have been executed or
communicated by any person duly authorized by the Registrant, or as a
result of the Transfer Agent's acting in reliance upon advice
reasonably believed by the Transfer Agent to have been given by
counsel for the Registrant, or as a result of the Transfer Agent's
acting in reliance upon any instrument or stock certificate reasonably
believed by it to have been genuine and signed, countersigned or
executed by the proper person.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY (FMR)
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held,
during the past two fiscal years, the following positions of a
substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Board of FMR; President and Chief
Executive Officer of FMR Corp.; Chairman of the
Board and Director of FMR, FMR Corp., FMR Texas
Inc., FMR (U.K.) Inc., and FMR (Far East) Inc.;
Chairman of the Board and Representative Director of
Fidelity Investments Japan Limited; President and
Trustee of funds advised by FMR.
Robert C. Pozen President and Director of FMR; Senior Vice President
and Trustee of funds advised by FMR; President and
Director of FMR Texas Inc., FMR (U.K.) Inc., and
FMR (Far East) Inc.; General Counsel, Managing
Director, and Senior Vice President of FMR Corp.
J. Gary Burkhead President of FIIS; President and Director of FMR, FMR
Texas Inc., FMR (U.K.) Inc., and FMR (Far East) Inc.;
Managing Director of FMR Corp.; Senior Vice
President and Trustee of funds advised by FMR.
Peter S. Lynch Vice Chairman of the Board and Director of FMR.
Marta Amieva Vice President of FMR.
John Carlson Vice President of FMR.
Dwight D. Churchill Senior Vice President of FMR.
Barry Coffman Vice President of FMR.
Arieh Coll Vice President of FMR.
Stephen G. Manning Assistant Treasurer of FMR
William Danoff Senior Vice President of FMR and of a fund advised by
FMR.
Scott E. DeSano Vice President of FMR.
Craig P. Dinsell Vice President of FMR.
Penelope Dobkin Vice President of FMR and of a fund advised by FMR.
George C. Domolky Vice President of FMR.
Bettina Doulton Vice President of FMR and of funds advised by FMR.
Margaret L. Eagle Vice President of FMR and a fund advised by FMR.
Richard B. Fentin Senior Vice President of FMR and Vice President of a
fund advised by FMR.
Gregory Fraser Vice President of FMR and of a fund advised by FMR.
Jay Freedman Assistant Clerk of FMR; Clerk of FMR Corp., FMR
(U.K.) Inc., and FMR (Far East) Inc.; Secretary of FMR
Texas Inc.
Robert Gervis Vice President of FMR.
David L. Glancy Vice President of FMR and of a fund advised by FMR.
Kevin E. Grant Vice President of FMR and of funds advised by FMR.
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
Boyce I. Greer Senior Vice President of FMR.
Bart A. Grenier Vice President of FMR and of High-Income Funds
advised by FMR.
Robert Haber Vice President of FMR.
Richard C. Habermann Senior Vice President of FMR; Vice President of funds
advised by FMR.
William J. Hayes Senior Vice President of FMR; Vice President of Equity
funds advised by FMR.
Richard Hazlewood Vice President of FMR and of a fund advised by FMR.
Fred L. Henning Jr. Senior Vice President of FMR; Vice President of
Fixed-Income funds advised by FMR.
Bruce Herring Vice President of FMR.
John R. Hickling Vice President of FMR and of a fund advised by FMR.
Robert F. Hill Vice President of FMR; Director of Technical Research.
Curt Hollingsworth Vice President of FMR and of funds advised by FMR.
Abigail P. Johnson Senior Vice President of FMR and of a fund advised by
FMR; Associate Director and Senior Vice President of
Equity funds advised by FMR.
David B. Jones Vice President of FMR.
Steven Kaye Vice President of FMR and of a fund advised by FMR.
Francis V. Knox Vice President of FMR; Compliance Officer of FMR
(U.K.) Inc.
David P. Kurrasch Vice President of FMR.
Robert A. Lawrence Senior Vice President of FMR; Associate Director and
Senior Vice President of Equity funds advised by FMR;
Vice President of High Income funds advised by FMR.
Harris Leviton Vice President of FMR and of a fund advised by FMR.
Bradford E. Lewis Vice President of FMR and of funds advised by FMR.
Mark G. Lohr Vice President of FMR; Treasurer of FMR, FMR (U.K.)
Inc., FMR (Far East) Inc., and FMR Texas Inc.
Arthur S. Loring Senior Vice President, Clerk, and General Counsel of
FMR; Vice President/Legal, and Assistant Clerk of
FMR Corp.; Secretary of funds advised by FMR.
Richard R. Mace Jr. Vice President of FMR and of funds advised by FMR.
Charles Mangum Vice President of FMR.
Kevin McCarey Vice President of FMR.
Diane McLaughlin Vice President of FMR.
Neal P. Miller Vice President of FMR.
Robert H. Morrison Vice President of FMR; Director of Equity Trading.
David L. Murphy Vice President of FMR and of funds advised by FMR.
Scott Orr Vice President of FMR.
Jacques Perold Vice President of FMR.
Anne Punzak Vice President of FMR.
Kenneth A. Rathgeber Vice President of FMR; Treasurer of funds advised by
FMR.
Kennedy P. Richardson Vice President of FMR.
Mark Rzepczynski Vice President of FMR.
Lee H. Sandwen Vice President of FMR.
Patricia A. Satterthwaite Vice President of FMR and of a fund advised by FMR.
Fergus Shiel Vice President of FMR.
Carol Smith-Fachetti Vice President of FMR.
Steven J. Snider Vice President of FMR.
Thomas T. Soviero Vice President of FMR and of a fund advised by FMR.
Richard Spillane Senior Vice President of FMR; Associate Director and
Senior Vice President of Equity funds advised by FMR;
Senior Vice President and Director of Operations and
Compliance of FMR (U.K.) Inc.
Thomas Sprague Vice President of FMR.
Robert E. Stansky Senior Vice President of FMR; Vice President of a fund
advised by FMR.
Scott Stewart Vice President of FMR.
Cythia Straus Vice President of FMR.
Thomas Sweeney Vice President of FMR and of a fund advised by FMR.
Beth F. Terrana Senior Vice President of FMR; Vice President of a fund
advised by FMR.
Yoko Tilley Vice President of FMR.
Joel C. Tillinghast Vice President of FMR and of a fund advised by FMR.
Robert Tuckett Vice President of FMR.
Jennifer Uhrig Vice President of FMR and of funds advised by FMR.
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR.
</TABLE>
(2) 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.
Edward C. Johnson 3d Chairman of the Board and Director of FMR
Texas, FMR, FMR Corp., FMR (Far East) Inc.,
and FMR (U.K.) Inc.; Chairman of the Board of
FMR; President and Chief Executive Officer of
FMR Corp.; Chairman of the Board and
Representative Director of Fidelity Investments
Japan Limited; President and Trustee of funds
advised by FMR.
J. Gary Burkhead President of FIIS; President and Director of FMR
Texas, FMR, FMR (Far East) Inc., and FMR
(U.K.) Inc.; Managing Director of FMR Corp.;
Senior Vice President and Trustee of funds
advised by FMR.
Robert C. Pozen President and Director of FMR; Senior Vice
President and Trustee of funds advised by FMR;
President and Director of FMR Texas Inc., FMR
(U.K.) Inc., and FMR (Far East) Inc.; General
Counsel, Managing Director, and Senior Vice
President of FMR Corp.
Robert H. Auld Vice President of FMR Texas.
Robert K. Duby Vice President of FMR Texas and of funds
advised by FMR.
Robert Litterst Vice President of FMR Texas and of funds
advised by FMR.
Thomas D. Maher Vice President of FMR Texas and Assistant Vice
President of Money Market funds advised by
FMR.
Scott A. Orr Vice President of FMR Texas and of funds
advised by FMR.
Burnell R. Stehman Vice President of FMR Texas and of funds
advised by FMR.
John J. Todd Vice President of FMR Texas and of funds
advised by FMR.
Mark G. Lohr Treasurer of FMR Texas, FMR (U.K.) Inc., FMR
(Far East) Inc., and FMR; Vice President of
FMR.
Stephen G. Manning Assistant Treasurer of FMR Texas, FMR (U.K.)
Inc., FMR (Far East) Inc., and FMR; Vice
President and Treasurer of FMR Corp.
Jay Freedman Secretary of FMR Texas; Clerk of FMR (U.K.)
Inc., FMR (Far East) Inc., and FMR Corp.;
Assistant Clerk of FMR.
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for
most funds advised by FMR.
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Michael Mlinac Director None
James Curvey Director None
Martha B. Willis President None
Arthur S. Loring Vice President and Clerk Secretary
Caron Ketchum Treasurer and Controller None
Gary Greenstein Assistant Treasurer None
Jay Freedman Assistant Clerk None
Linda Holland Compliance Officer None
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity
Service Company, Inc., 82 Devonshire Street, Boston, MA 02109, or the
funds' custodian UMB Bank, n.a., 1010 Grand Avenue, Kansas City, MO.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 16 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 5th day
of November 1997.
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 November 5, 1997
Edward C. Johnson 3d (Principal Executive Officer)
/s/Richard A. Silver Treasurer November 5, 1997
Richard A. Silver
/s/Ralph F. Cox * Trustee November 5, 1997
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee November 5, 1997
Phyllis Burke Davis
/s/E. Bradley Jones * Trustee November 5, 1997
E. Bradley Jones
/s/Donald J. Kirk * Trustee November 5, 1997
Donald J. Kirk
/s/Peter S. Lynch * Trustee November 5, 1997
Peter S. Lynch
/s/Marvin L. Mann * Trustee November 5, 1997
Marvin L. Mann
/s/Gerald C. McDonough * Trustee November 5, 1997
Gerald C. McDonough
/s/Thomas R. Williams * Trustee November 5, 1997
Thomas R. Williams
</TABLE>
(dagger) Signatures affixed by Robert C. Pozen pursuant to a power of
attorney dated July 17, 1997 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of
attorney dated December 19, 1996 and filed herewith.
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee, or General
Partner, as the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Aberdeen Street Trust Fidelity Hereford Street Trust
Fidelity Advisor Series I Fidelity Income Fund
Fidelity Advisor Series II Fidelity Institutional Cash Portfolios
Fidelity Advisor Series III Fidelity Institutional Tax-Exempt Cash Portfolios
Fidelity Advisor Series IV Fidelity Investment Trust
Fidelity Advisor Series V Fidelity Magellan Fund
Fidelity Advisor Series VI Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series VII Fidelity Money Market Trust
Fidelity Advisor Series VIII Fidelity Mt. Vernon Street Trust
Fidelity Beacon Street Trust Fidelity Municipal Trust
Fidelity Boston Street Trust Fidelity Municipal Trust II
Fidelity California Municipal Trust Fidelity New York Municipal Trust
Fidelity California Municipal Trust II Fidelity New York Municipal Trust II
Fidelity Capital Trust Fidelity Phillips Street Trust
Fidelity Charles Street Trust Fidelity Puritan Trust
Fidelity Commonwealth Trust Fidelity Revere Street Trust
Fidelity Concord Street Trust Fidelity School Street Trust
Fidelity Congress Street Fund Fidelity Securities Fund
Fidelity Contrafund Fidelity Select Portfolios
Fidelity Corporate Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Court Street Trust Fidelity Summer Street Trust
Fidelity Court Street Trust II Fidelity Trend Fund
Fidelity Covington Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Daily Money Fund Fidelity U.S. Investments-Government Securities
Fidelity Destiny Portfolios Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity Union Street Trust II
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Newbury Street Trust
Fidelity Financial Trust Variable Insurance Products Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund II
Fidelity Government Securities Fund Variable Insurance Products Fund III
Fidelity Hastings Street Trust
</TABLE>
in addition to any other investment company for which Fidelity
Management & Research Company or an affiliate acts as investment
adviser and for which the undersigned individual serves as President
and Director, Trustee, or General Partner (collectively, the "Funds"),
hereby constitute and appoint Robert C. Pozen my true and lawful
attorney-in-fact, with full power of substitution, and with full power
to him to sign for me and in my name in the appropriate capacity, all
Registration Statements of the Funds on Form N-1A, Form N-8A, or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A, Form N-8A, or any successor thereto, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such
things in my name and on my behalf in connection therewith as said
attorney-in-fact deems necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and the Investment Company
Act of 1940, and all related requirements of the Securities and
Exchange Commission. I hereby ratify and confirm all that said
attorney-in-fact or his substitutes may do or cause to be done by
virtue hereof. This power of attorney is effective for all documents
filed on or after August 1, 1997.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d_ July 17, 1997
Edward C. Johnson 3d
POWER OF ATTORNEY
We, the undersigned Directors, Trustees, or General Partners, as the
case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Aberdeen Street Trust Fidelity Government Securities Fund
Fidelity Advisor Annuity Fund Fidelity Hastings Street Trust
Fidelity Advisor Series I Fidelity Hereford Street Trust
Fidelity Advisor Series II Fidelity Income Fund
Fidelity Advisor Series III Fidelity Institutional Cash Portfolios
Fidelity Advisor Series IV Fidelity Institutional Tax-Exempt Cash Portfolios
Fidelity Advisor Series V Fidelity Institutional Trust
Fidelity Advisor Series VI Fidelity Investment Trust
Fidelity Advisor Series VII Fidelity Magellan Fund
Fidelity Advisor Series VIII Fidelity Massachusetts Municipal Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust
Fidelity Boston Street Trust Fidelity Mt. Vernon Street Trust
Fidelity California Municipal Trust Fidelity Municipal Trust
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Capital Trust Fidelity New York Municipal Trust
Fidelity Charles Street Trust Fidelity New York Municipal Trust II
Fidelity Commonwealth Trust Fidelity Phillips Street Trust
Fidelity Congress Street Fund Fidelity Puritan Trust
Fidelity Contrafund Fidelity Revere Street Trust
Fidelity Corporate Trust Fidelity School Street Trust
Fidelity Court Street Trust Fidelity Securities Fund
Fidelity Court Street Trust II Fidelity Select Portfolios
Fidelity Covington Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Daily Money Fund Fidelity Summer Street Trust
Fidelity Daily Tax-Exempt Fund Fidelity Trend Fund
Fidelity Destiny Portfolios Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity U.S. Investments-Government Securities
Portfolio, L.P. Fund, L.P.
Fidelity Devonshire Trust Fidelity Union Street Trust
Fidelity Exchange Fund Fidelity Union Street Trust II
Fidelity Financial Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Variable Insurance Products Fund II
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company or an affiliate acts as investment adviser and for
which the undersigned individual serves as Directors, Trustees, or
General Partners (collectively, the "Funds"), hereby constitute and
appoint Arthur J. Brown, Arthur C. Delibert, Stephanie A. Djinis,
Robert C. Hacker, Thomas M. Leahey, Richard M. Phillips, and Dana L.
Platt, each of them singly, our true and lawful attorneys-in-fact,
with full power of substitution, and with full power to each of them,
to sign for us and in our names in the appropriate capacities, all
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A or any successor thereto, any Registration
Statements on Form N-14, and any supplements or other instruments in
connection therewith, and generally to do all such things in our names
and behalf in connection therewith as said attorneys-in-fact deems
necessary or appropriate, to comply with the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, and all
related requirements of the Securities and Exchange Commission. I
hereby ratify and confirm all that said attorneys-in-fact or their
substitutes may do or cause to be done by virtue hereof. This power
of attorney is effective for all documents filed on or after January
1, 1997.
WITNESS our hands on this nineteenth day of December, 1996.
/s/Edward C. Johnson 3d___________ /s/Peter S. Lynch________________
Edward C. Johnson 3d Peter S. Lynch
/s/J. Gary Burkhead_______________ /s/William O. McCoy______________
J. Gary Burkhead William O. McCoy
/s/Ralph F. Cox __________________ /s/Gerald C. McDonough___________
Ralph F. Cox Gerald C. McDonough
/s/Phyllis Burke Davis_____________ /s/Marvin L. Mann________________
Phyllis Burke Davis Marvin L. Mann
/s/E. Bradley Jones________________ /s/Thomas R. Williams ____________
E. Bradley Jones Thomas R. Williams
/s/Donald J. Kirk __________________
Donald J. Kirk
