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. 19 [X]
and
REGISTRATION STATEMENT (No. 811-6453)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 19 [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: 617-563-7000
Eric D. Roiter, Secretary
82 Devonshire Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) immediately upon filing pursuant to paragraph (b).
(X) on (January 10, 1998) pursuant to paragraph (b).
( ) 60 days after filing pursuant to paragraph (a)(1).
( ) on ( ) pursuant to paragraph (a)(1) of Rule 485.
( ) 75 days after filing pursuant to paragraph (a)(2).
( ) on ( ) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
( ) this post-effective amendment designates a new effective date
for a previously filed
post-effective amendment.
FIDELITY'S 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 Financial Highlights
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
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)
dated 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.
NJN-pro-0198
FIDELITY'S
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 maintain a stable
$1.00 share price by investing in high-quality, short-term municipal
money market securities.
(fund number 417, trading symbol FNJXX)
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. Fidelity
Investments Money Management, Inc. (FIMM) , a subsidiary of FMR,
chooses investments for Spartan New Jersey Municipal Money
Market and Fidelity New Jersey Municipal Money Market.
Beginning January 1, 1999, FIMM will choose investments for Spartan
New Jersey Municipal Income.
As with any mutual fund, there is no assurance that a fund will
achieve its goal.
SPARTAN NJ MUNI MONEY AND
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 New Jersey Municipal
Money Market and Fidelity New Jersey Municipal Money Market had
over $ 524 million and $ 487 million 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 $ 361 million
in assets.
WHO MAY WANT TO INVEST
These non-diversified funds may be appropriate for investors in higher
tax brackets who seek high current income that is free from federal
income tax and 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 N EW
JERSEY MUNICIPAL MONEY
MARKET AND FIDELITY NEW
JERSEY MUNICIPAL MONEY
MARKET ARE IN THE MONEY
MARKET CATEGORY, AND SPARTAN
NEW JERSEY 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 (except the short-term trading
fee) 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 fund pays a management fee to FMR. FMR is responsible for
the payment of all other expenses for Spartan N ew J ersey
Municipal Money Market and Spartan N ew Jersey Municipal Income
with certain limited exceptions. Fidelity N ew Jersey 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 of each fund
and are calculated as a percentage of average net assets of each fund.
SPARTAN NJ MUNI MONEY
Management fee 0.50 %
12b-1 fee None
Other expenses 0.00 %
Total fund operating expenses 0.50 %
FIDELITY NJ MUNI MONEY
Management fee 0.39 %
12b-1 fee None
Other expenses 0.22 %
Total fund operating expenses 0.61 %
SPARTAN NJ MUNI INCOME
Management fee 0.55 %
12b-1 fee None
Other expenses 0.00 %
Total fund operating expenses 0.55 %
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 N ew Jersey Municipal Money Market, if you leave your
account open:
SPARTAN NJ MUNI MONEY
Account open Account closed
1 year $ 5 $ 10
3 years $ 16 $ 21
5 years $ 28 $ 33
10 years $ 63 $ 68
FIDELITY NJ MUNI MONEY
1 year $ 6
3 years $ 20
5 years $ 34
10 years $ 76
SPARTAN NJ MUNI INCOME
1 year $ 6
3 years $ 18
5 years $ 31
10 years $ 69
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected expenses or returns, all of which may vary.
FINANCIAL HIGHLIGHTS
The financial highlights tables that follow have been audited by
either Coopers & Lybrand L.L.P. (Fidelity N ew Jersey Municipal
Money Market and Spartan N ew Jersey Municipal Income) or Price
Waterhouse LLP (Spartan N ew Jersey 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.
SPARTAN NEW JERSEY MUNICIPAL MONEY MARKET FUND
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios
Years ended October 31 1997G 1997 1996 1995 1994 1993 1992 1991 1990A
Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of period
Income from Investment .003 .032 .032 .036 .024 .021 .032 .047 .029
Operations
Net interest income
Less Distributions (.003) (.032) (.032) (.036) (.024) (.021) (.032) (.047) (.029)
From net interest income
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total returnB,C .27% 3.22% 3.24% 3.65% 2.45% 2.17% 3.24% 4.84% 2.92%
Net assets, end of period $ 524 $ 521 $ 505 $ 470 $ 396 $ 313 $ 349 $ 348 $ 210
(In millions)
Ratio of expenses to .50%F .40%D .35%D .31%D .28%D .44%D .29%D .11%D .00%D
average net assets
Ratio of expenses to average net .50%F .40% .34%E .31% .28% .44% .29% .11% .00%
assets after expense reductions
Ratio of net interest income to 3.28%F 3.15% 3.20% 3.59% 2.44% 2.15% 3.20% 4.68% 5.90%F
average net assets
</TABLE>
A MAY 1, 1990 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1990
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
F ANNUALIZED
G FOR THE ONE MONTH PERIOD ENDED NOVEMBER 30, 1997
FIDELITY NEW JERSEY MUNICIPAL MONEY MARKET FUND
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios
Years ended November 30 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988D
Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of period
Income from Investment .030 .029 .033 .022 .019 .028 .042 .056 .063 .037
Operations
Net interest income
Less Distributions (.030) (.029) (.033) (.022) (.019) (.028) (.042) (.056) (.063) (.037)
From net interest income
Net asset value, end of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
Total returnB,C 3.03% 2.93% 3.33% 2.19% 1.94% 2.81% 4.29% 5.72% 6.45% 3.76%
Net assets, end of period $ 488 $ 423 $ 435 $ 400 $ 360 $ 359 $ 368 $ 444 $ 347 $ 137
(In millions)
Ratio of expenses to .61% .63% .62% .62% .63% .64% .65% .27%E .15%E .00%E
average net assets
Ratio of expenses to
average .61% .61%F .62% .62% .63% .64% .65% .27% .15% .00%
net assets after expense
reductions
Ratio of net interest
income 2.98% 2.89% 3.28% 2.17% 1.92% 2.78% 4.23% 5.57% 6.24% 5.61%A
to average net assets
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FROM MARCH 17, 1988 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30,
1988.
E FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
SPARTAN NEW JERSEY MUNICIPAL INCOME FUND
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios
Years ended November
30 1997 1996 1995 1994G 1993 1992 1991 1990 1989 1988B
Net asset
value, $ 11.380 $ 11.420 $ 10.320 $ 11.760 $ 11.240 $ 11.020 $ 10.620 $ 10.650 $ 10.190 $ 10.000
beginning of period
Income from
Investment .561 .588 .623 .637 .640 .694 .694 .674 .710 .678
Operations
Net interest income
Net realized
and .140 -- 1.099 (1.291) .678 .298 .398 .050 .460 .190
unrealized gain (loss)
Total from
investment .701 .588 1.722 (.654) 1.318 .992 1.092 .724 1.170 .868
operations
Less
Distributions (.561) (.588) (.623) (.637) (.640) (.694) (.694) (.674) (.710) (.678)
From net interest income
From net realized
gain (.140) (.040) -- (.150) (.160) (.080) -- (.080) -- --
Total
distributions (.701) (.628) (.623) (.787) (.800) (.774) (.694) (.754) (.710) (.678)
Redemption fees
added -- -- .001 .001 .002 .002 .002 -- -- --
to paid in capital
Net asset
value, $ 11.380 $ 11.380 $ 11.420 $ 10.320 $ 11.760 $ 11.240 $ 11.020 $ 10.620 $ 10.650 $ 10.190
end of period
Total
returnC,D 6.44% 5.37% 17.06% (5.86)% 12.12% 9.33% 10.63% 7.15% 11.82% 8.94%
Net assets, end of
period $ 362 $ 357 $ 367 $ 327 $ 423 $ 343 $ 290 $ 210 $ 159 $ 90
(In millions)
Ratio of expenses
to .55% .55% .55% .55% .55% .51%E .52%E .65%E .56%E .00%E
average net assets
Ratio of expenses
to .55% .52%F .55% .55% .55% .51% .52% .65% .56% .00%
average net assets after
expense reductions
Ratio of net
interest 5.00% 5.26% 5.64% 5.70% 5.52% 6.22% 6.44% 6.47% 6.76% 7.52%A
income to average net
assets
Portfolio turnover
rate 16% 57% 36% 8% 25% 33% 42% 82% 90% 140%A
</TABLE>
A ANNUALIZED
B FROM JANUARY 1, 1988 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30,
1988
C TOTAL RETURNS DO NOT INCLUDE THE FORMER ACCOUNT CLOSEOUT FEE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
E FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES.
G EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF
POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT
PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL
DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INTEREST
INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
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 to the right 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 N ew Jersey 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
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Spartan NJ Muni Money 3.23% 2.96% 3.42%
Fidelity NJ Muni Money 3.03% 2.68% 3.74%
Consumer Price Index 1.83 % 2.61 % n/a
Spartan NJ Muni Income 6.44% 6.74% 8.21%
Lehman Bros. NJ Muni. Bond Index w/Prt. Auth. of NY/NJ 6.87% n/a n/a
Lipper NJ Muni. Debt Funds Avg. 6.44% 6.50% n/a
</TABLE>
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fiscal periods ended
Past 1
Past 5
Life of
November 30, 1997 year years fundA
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Spartan NJ Muni Money 3.23% 15.68% 29.13%
Fidelity NJ Muni Money 3.03% 14.14% 42.90%
Consumer Price Index 1.83% 13.73% n/a
Spartan NJ Muni Income 6.44% 38.58% 118.79%
Lehman Bros. NJ Muni. Bond Index w/Prt. Auth. of NY/NJ 6.87% n/a n/a
Lipper NJ Muni. Debt Funds Avg. 6.44% 37.06% n/a
</TABLE>
A FROM COMMENCEMENT OF OPERATIONS MAY 1, 1990 (SPARTAN N EW
JERSEY MUNICIPAL MONEY MARKET), MARCH 17, 1988 (FIDELITY N EW
JERSEY MUNICIPAL MONEY MARKET), JANUARY 1, 1988 (SPARTAN N EW
JERSEY MUNICIPAL INCOME).
If FMR had not reimbursed certain fund expenses during these periods,
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.
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 N ew J ersey Municipal Income.
As of November 30, 1997, the average reflected the performance of
57 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.
YEAR-BY-YEAR TOTAL RETURNS
Calendar years 1989 1990 1991 1992 1993 1994 1995 1996
SPARTAN NJ MUNI INCOME 10.35% 7.14% 12.33% 8.71% 13.06% -5.75%
15.35% 4.07%
Lehman Bros. NJ Muni. Bond Index
w/Prt. Auth. of NY/NJ n/a n/a n/a n/a n/a n/a n/a 4.23%
Lipper NJ Muni. Debt
Funds Avg. 9.86% 7.23% 11.97% 8.97% 12.47% -6.51% 16.01%
3.25%
Consumer Price Index 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Percentage (%)
Row: 1, Col: 1, Value: 0.0
Row: 2, Col: 1, Value: 0.0
Row: 3, Col: 1, Value: 10.35
Row: 4, Col: 1, Value: 7.14
Row: 5, Col: 1, Value: 12.33
Row: 6, Col: 1, Value: 8.719999999999999
Row: 7, Col: 1, Value: 13.06
Row: 8, Col: 1, Value: -5.75
Row: 9, Col: 1, Value: 15.35
Row: 10, Col: 1, Value: 4.07
(LARGE SOLID BOX) Spartan NJ
Muni Income
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 N ew
J ersey Municipal Money Market and Fidelity N ew
J ersey Municipal Money Market are non-diversified funds of
Fidelity Court Street Trust II . Spartan N ew
J ersey 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 funds, and review the funds' performance. The
trustees serve as trustees for other Fidelity funds. The majority of
trustees are not otherwise affiliated with Fidelity.
THE FUNDS 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. The number of votes you are entitled to is based upon
the dollar value of your investment.
FMR AND ITS AFFILIATES
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds in
the world.
(solid bullet) Number of Fidelity mutual
funds: over 227
(solid bullet) Assets in Fidelity mutual
funds: over $ 521 billion
(solid bullet) Number of shareholder
accounts: over 34 million
(solid bullet) Number of investment
analysts and portfolio
managers: over 275
(checkmark)
The funds are managed by FMR, which chooses their investments and
handles their business affairs. FIMM, located in Merrimack,
New Hampshire , has primary responsibility for providing investment
management services for the money market funds. Beginning January
1, 1999, FIMM will have primary responsibility for providing
investment management services for Spartan New Jersey Municipal
Income.
Norm Lind is Vice President and manager of Spartan N ew
J ersey 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
accounts 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 FIMM .
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.
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
for 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 a money market
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
money market fund s will purchase only high-quality
securities that FMR believes present minimal credit risks and will
observe maturity restrictions on securities it buys.
SPARTAN NEW JERSEY 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 , including securities structured so that they are eligible
investments for the fund. FMR normally invests at least 65% of the
fund's total assets in state municipal securities and normally
invests the fund's assets so that at least 80% of the fund's
income is free from federal income tax.
FIDELITY NEW JERSEY 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 , including securities structured so that they are eligible
investments for the fund . FMR normally invests the fund's
assets 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 NEW JERSEY 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 the fund's assets 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. As of November 30, 1997, the
fund's dollar-weighted average maturity was approximately 12.7
years.
EACH FUND normally invests in municipal securities. As required by New
Jersey statute, FMR normally invests each fund's assets so that
at least 80% of the aggregate principal amount of the fund's
total investments is invested in certain New Jersey state tax-free
obligations at the close of each quarter of the tax-year.
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
"soft landed. " 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. 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 N ew J ersey 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 IBCA, Inc., 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. M oney market securities may be
structure d or may employ a trust or similar structure 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 or its counties, municipalities, authorities, or
other subdivisions. The ability of issuers to repay their debt can be
affected by many factors that impact the economic vitality of either
the state or a region within the state.
Other state 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 N ew J ersey 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 N ew J ersey 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 N ew J ersey 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 N ew J ersey 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 N ew J ersey Municipal Money Market also pays
OTHER EXPENSES, which are explained below.
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 N ew J ersey
Municipal Money Market and Spartan N ew J ersey Municipal
Income with limited exceptions. The annual management fee rates for
Spartan N ew J ersey Municipal Money Market and Spartan
N ew J ersey Municipal Income are 0.50% and 0.55% of its
average net assets, respectively. For Fidelity N ew
J ersey 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 N ew
J ersey Municipal Money Market paid FMR, after
reimbursement, fees equal to 0.40 % of average net assets.
For the one month period ended November 30, 1997, Spartan New Jersey
Municipal Money Market paid FMR fees equal to an annualized rate of
0.50% of average net assets.
For November 1997, the group fee rate was 0.1376 %. The
individual fund fee rate is 0.25% for Fidelity N ew
J ersey Municipal Money Market.
The total management fee rate for the fiscal year ended November 30,
1997 was 0.39 % for Fidelity N ew J ersey Municipal
Money Market.
FIMM is Spartan N ew J ersey Municipal Money
Market 's and Fidelity N ew J ersey Municipal Money
Market's sub-adviser and has primary responsibility for managing their
investments. FMR is responsible for providing other management
services. FMR pays FIMM 50% of its management fee (before
expense reimbursements) for FIMM's services. FMR paid FMR Texas
Inc., the predecessor company to FIMM, fees equal to 0.25 %
of Spartan N ew J ersey Municipal Money Market's average
net assets for the fiscal year ended October 31, 1997 and 0.25% on
an annualized basis for the one month period ended November 30, 1997,
and 0.20 % of Fidelity N ew J ersey Municipal
Money Market's average net assets for the fiscal year ended November
30, 1997.
Beginning January 1, 1999, FIMM will have primary responsibility for
managing Spartan New Jersey Municipal Income's Investments. FMR will
pay FIMM 50% of its management fee (before reimbursements) for FIMM's
services.
While the management fee is a significant component of Fidelity N ew
J ersey 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 N ew J ersey Municipal Money
Market and by FMR on behalf of Spartan N ew J ersey
Municipal Money Market and Spartan N ew J ersey Municipal
Income.
For the fiscal year ended November 1997, Fidelity N ew
J ersey Municipal Money Market paid transfer agency and
pricing and bookkeeping fees equal to 0.20 % of its average net
assets. These amounts are before expense reductions, if any.
In the case of Spartan N ew J ersey Municipal Money Market
and Spartan N ew J ersey Municipal Income, FMR, not the
funds, pays for these services.
Fidelity N ew J ersey 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 N ew J ersey Municipal Money Market and
Spartan N ew J ersey 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 N ew J ersey 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 authorized such
payments.
For the fiscal year ended November 30, 1997 , the portfolio
turnover rate for Spartan New Jersey Municipal Income was 16%. This
rate varies from year to year.
YOUR ACCOUNT
DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of
America's first mutual funds. Today, Fidelity is the largest mutual
fund company in the country, and is known as an innovative provider of
high-quality financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage
Services, Inc. (FBSI). Fidelity is also a leader in providing
tax-sheltered retirement plans for individuals investing on their own
or through their employer.
Fidelity is committed to providing investors with practical
information to make investment decisions. Based in Boston, Fidelity
provides customers with complete service 24 hours a day, 365 days a
year, through a network of telephone service centers around the
country.
To reach Fidelity for general information, call these numbers:
(small solid bullet) For mutual funds, 1-800-544-8888
(small solid bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity
has over 80 walk -in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in a fund or, if you own or intend
to purchase individual securities as part of your total investment
portfolio, you may consider investing in a fund through a brokerage
account. You can choose Fidelity New Jersey Municipal Money Market as
your core account for your Fidelity Ultra Service Account(registered
trademark) 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.
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
invest ment is received in proper form. Each fund's NAV is
normally calculated each business day at 4:00 p.m. Eastern time.
Each fund 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.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application
and mail it along with your check. You may also open your account in
person or by wire as described on page . If there is no application
accompanying this prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(small solid bullet) Mail in an application with a check, or
(small solid bullet) Open your account by exchanging from another
Fidelity fund.
If you buy shares by check or Fidelity Money Line(registered
trademark), and then sell those shares by any method other than by
exchange to another Fidelity fund, the payment may be delayed for up
to seven business days to ensure that your previous investment has
cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT
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.
<TABLE>
<CAPTION>
<S> <C> <C>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
PHONE 1-800-544-7777
(PHONE_GRAPHIC) (SMALL SOLID BULLET) EXCHANGE FROM
ANOTHER FIDELITY FUND (SMALL SOLID BULLET) EXCHANGE FROM ANOTHER FIDELITY FUND
ACCOUNT WITH THE SAME REGISTRATION, ACCOUNT WITH THE SAME REGISTRATION,
INCLUDING NAME, ADDRESS, AND INCLUDING NAME, ADDRESS, AND
TAXPAYER ID NUMBER. TAXPAYER ID NUMBER.
(SMALL SOLID BULLET) USE FIDELITY MONEY LINE TO TRANSFER
FROM YOUR BANK ACCOUNT. CALL BEFORE
YOUR FIRST USE TO VERIFY THAT THIS
SERVICE IS IN PLACE ON YOUR ACCOUNT.
MAXIMUM MONEY LINE: UP TO
$100,000.
MAIL (MAIL_GRAPHIC) (SMALL SOLID BULLET) COMPLETE AND SIGN
THE APPLICATION. (SMALL SOLID BULLET) MAKE YOUR CHECK PAYABLE TO THE
MAKE YOUR CHECK PAYABLE TO THE COMPLETE NAME OF THE FUND. INDICATE
COMPLETE NAME OF THE FUND. MAIL TO YOUR FUND ACCOUNT NUMBER ON YOUR
THE ADDRESS INDICATED ON THE CHECK AND MAIL TO THE ADDRESS PRINTED
APPLICATION. ON YOUR ACCOUNT STATEMENT.
(SMALL SOLID BULLET) EXCHANGE BY MAIL: CALL
1-800-544-6666 FOR INSTRUCTIONS.
IN PERSON
(HAND_GRAPHIC) (SMALL SOLID BULLET) BRING YOUR
APPLICATION AND CHECK TO A (SMALL SOLID BULLET) BRING YOUR CHECK TO A FIDELITY INVESTOR
FIDELITY INVESTOR CENTER. CALL CENTER. CALL 1-800-544-9797 FOR THE
1-800-544-9797 FOR THE CENTER CENTER NEAREST YOU.
NEAREST YOU.
WIRE (WIRE_GRAPHIC) (SMALL SOLID BULLET) THERE MAY BE A $5.00
FEE FOR EACH (SMALL SOLID BULLET) THERE MAY BE A
$5.00 FEE FOR EACH
WIRE PURCHASE FOR SPARTAN NJ WIRE PURCHASE FOR SPARTAN NJ
MUNICIPAL MONEY MARKET. MUNICIPAL MONEY MARKET.
(SMALL SOLID BULLET) CALL
1-800-544-7777 TO SET UP YOUR (SMALL SOLID BULLET) WIRE TO:
ACCOUNT AND TO ARRANGE A WIRE BANKERS TRUST COMPANY,
TRANSACTION. BANK ROUTING #021001033,
(SMALL SOLID BULLET) WIRE WITHIN 24
HOURS TO: ACCOUNT #00163053.
BANKERS TRUST COMPANY, SPECIFY THE COMPLETE NAME OF THE
BANK ROUTING #021001033, FUND AND INCLUDE YOUR ACCOUNT
ACCOUNT #00163053. NUMBER AND YOUR NAME.
SPECIFY THE COMPLETE NAME OF THE
FUND AND INCLUDE YOUR NEW ACCOUNT
NUMBER AND YOUR NAME.
AUTOMATICALLY
(AUTOMATIC_GRAPHIC) (SMALL SOLID BULLET) NOT AVAILABLE. (SMALL SOLID BULLET) USE FIDELITY AUTOMATIC ACCOUNT
BUILDER. SIGN UP FOR THIS SERVICE
WHEN OPENING YOUR ACCOUNT, OR CALL
1-800-544-6666 TO ADD IT.
(TDD_GRAPHIC) TDD - SERVICE FOR THE DEAF AND HEARING IMPAIRED: 1-800-544-0118
</TABLE>
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares.
THE PRICE TO SELL ONE SHARE of Spartan N ew Jersey Municipal Money
Market or Fidelity New Je rsey Municipal Money Market is the fund's
NAV. The PRICE TO SELL ONE SHARE of Spartan New Jersey Municipal
Income is the fund's NAV minus the short-term trading fee, if
applic able. If you sell shares of Spartan New Jers ey 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 i n proper for m, 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 NEW JE RSEY 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 New Je rsey
Municipal Money Market, $2,000 for Fidelity New J ersey Municipal
Money Market, and $5,000 for Sp artan New Jersey M unicipal
Income 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:
(small solid bullet) You wish to redeem more than $100,000 worth of
shares,
(small solid bullet) Your account registration has changed within the
last 30 days,
(small solid bullet) The check is being mailed to a different address
than the one on your account (record address),
(small solid bullet) The check is being made payable to someone other
than the account owner, or
(small solid bullet) The redemption proceeds are being transferred to
a Fidelity account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if
authorized under state law), securities exchange or association,
clearing agency, or savings association. A notary public cannot
provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(small solid bullet) Your name,
(small solid bullet) The fund's name,
(small solid bullet) Your fund account number,
(small solid bullet) The dollar amount or number of shares to be
redeemed, and
(small solid bullet) 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 acc ount in Spartan New Jersey
Municipal Mo ney Market or Fidelity New Jersey Municipal Money
Market, you may write an unlimited number of checks. Do not, however,
try to close out your account by check.
ACCOUNT TYPE SPECIAL REQUIREMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
IF YOU SELL SHARES OF SPARTAN NEW JERSEY 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.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FOR SPARTAN NEW JERSEY MUNICIPAL MONEY MARKET; IF YOUR ACCOUNT BALANCE IS LESS THAN
$50,000, THERE ARE FEES FOR INDIVIDUAL REDEMPTION TRANSACTIONS: $2.00 FOR EACH CHECK YOU
WRITE AND $5.00 FOR EACH EXCHANGE, BANK WIRE, AND ACCOUNT CLOSEOUT.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
PHONE 1-800-544-777
(PHONE_GRAPHIC) ALL ACCOUNT TYPES (SMALL SOLID BULLET) MAXIMUM CHECK REQUEST: $100,000.
(SMALL SOLID BULLET) FOR MONEY LINE TRANSFERS TO YOUR BANK ACCOUNT;
MINIMUM: $10; MAXIMUM: UP TO $100,000.
(SMALL SOLID BULLET) YOU MAY EXCHANGE TO OTHER FIDELITY FUNDS IF
BOTH ACCOUNTS ARE REGISTERED WITH THE SAME
NAME(S), ADDRESS, AND TAXPAYER ID NUMBER.
MAIL OR IN PERSON
(MAIL_GRAPHIC)
(HAND_GRAPHIC) INDIVIDUAL, JOINT TENANT, (SMALL SOLID BULLET) THE LETTER OF INSTRUCTION MUST BE SIGNED BY ALL
SOLE PROPRIETORSHIP, PERSONS REQUIRED TO SIGN FOR TRANSACTIONS,
UGMA, UTMA EXACTLY AS THEIR NAMES APPEAR ON THE ACCOUNT.
TRUST (SMALL SOLID BULLET) 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.
BUSINESS OR ORGANIZATION (SMALL SOLID BULLET) AT LEAST ONE PERSON AUTHORIZED BY CORPORATE
RESOLUTION TO ACT ON THE ACCOUNT MUST SIGN THE
LETTER.
(SMALL SOLID BULLET) INCLUDE A CORPORATE RESOLUTION WITH CORPORATE
SEAL OR A SIGNATURE GUARANTEE.
EXECUTOR, ADMINISTRATOR, (SMALL SOLID BULLET) CALL 1-800-544-6666 FOR INSTRUCTIONS.
CONSERVATOR, GUARDIAN
WIRE (WIRE_GRAPHIC) ALL ACCOUNT TYPES (SMALL SOLID BULLET) YOU MUST SIGN UP FOR THE WIRE FEATURE BEFORE
USING IT. TO VERIFY THAT IT IS IN PLACE, CALL
1-800-544-6666. MINIMUM WIRE: $5,000.
(SMALL SOLID BULLET) YOUR WIRE REDEMPTION REQUEST MUST BE RECEIVED
IN PROPER FORM BY FIDELITY BEFORE 4:00 P.M.
EASTERN TIME FOR MONEY TO BE WIRED ON THE NEXT
BUSINESS DAY.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
CHECK (CHECK_GRAPHIC) ALL ACCOUNT TYPES (SMALL SOLID BULLET) MINIMUM CHECK: $1,000 FOR SPARTAN NJ
MUNICIPAL MONEY MARKET AND $500 FOR
FIDELITY NJ MUNICIPAL MONEY MARKET.
(SMALL SOLID BULLET) ALL ACCOUNT OWNERS MUST SIGN A SIGNATURE CARD
TO RECEIVE A CHECKBOOK.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
(TDD_GRAPHIC) TDD - SERVICE FOR THE DEAF AND HEARING IMPAIRED: 1-800-544-0118
</TABLE>
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your
account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365
days a year. Whenever you call, you can speak with someone equipped to
provide the information or service you need.
24-HOUR SERVICE
ACCOUNT ASSISTANCE
1-800-544-6666
ACCOUNT 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
(checkmark)
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements (after every transaction,
except reinvestments, that affects your account balance or your
account registration)
(small solid bullet) Account statements (quarterly)
(small solid bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed to your household, even if you have more
than one account in 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 New Jersey 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 New Je rsey Mu nicipal 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 .
FIDELITY MONEY LINE(registered trademark) enables you to transfer
money by phone between your bank account and your fund account. Most
transfers are complete within three business days of your call.
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
<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 MONTHLY OR QUARTERLY (SMALL SOLID BULLET) FOR A NEW ACCOUNT, COMPLETE THE APPROPRIATE SECTION ON THE
FOR SPARTAN NJ MUNI FUND APPLICATION.
MONEY MARKET AND (SMALL SOLID BULLET) FOR EXISTING ACCOUNTS, CALL 1-800-544-6666 FOR AN APPLICATION.
SPARTAN NJ MUNI INCOME (SMALL SOLID BULLET) TO CHANGE THE AMOUNT OR FREQUENCY OF YOUR INVESTMENT, CALL
$100 1-800-544-6666 AT LEAST THREE BUSINESS DAYS PRIOR TO YOUR
FOR FIDELITY NJ MUNI MONEY NEXT SCHEDULED INVESTMENT DATE.
MARKET
</TABLE>
DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A
FIDELITY FUNDA
<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 EVERY PAY PERIOD (SMALL SOLID BULLET) CHECK THE APPROPRIATE BOX ON THE FUND APPLICATION, OR CALL
FOR SPARTAN NJ MUNI 1-800-544-6666 FOR AN AUTHORIZATION FORM.
MONEY MARKET AND (SMALL SOLID BULLET) CHANGES REQUIRE A NEW AUTHORIZATION FORM.
SPARTAN NJ MUNI INCOME
$100
FOR FIDELITY NJ MUNI MONEY
MARKET
</TABLE>
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY
FUND
<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 Monthly, bimonthly, (small solid bullet) To establish, call 1-800-544-6666 after both accounts are
for Spartan NJ
Muni quarterly, or opened.
Money Market and annually (small solid bullet) To change the amount or frequency of your investment, call
Spartan NJ Muni Income 1-800-544-6666.
$100 for Fidelity NJ Muni
Money Market
</TABLE>
A BECAUSE BOND FUND SHARE PRICES FLUCTUATE, THAT FUND MAY NOT BE AN
APPROPRIATE CHOICE FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
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 October 1997 and the one month period
ended November 1997, 100% of Spartan New Jersey Municipal Money
Market's income dividends were free from federal income tax, and
99.77% and 99.99% were free from the New Jersey Gross Income Tax,
respectively. During the fiscal year ended November 1997,
100 % of Fidelity New Jersey Municipal Money Market's and
Spartan New Jersey Municipal Income's income dividends w ere
free from federal income tax, and 100 % and 99.80 %
were free from the New Jersey Gross Income Tax, respectively.
During the fiscal year ended October 1997 and the one month period
ended November 1997, 31.67 % and 33.02% of Spartan New
Jersey Municipal Money Market's income dividends were subject
to the federal alternative minimum tax. During the fiscal year ended
November 1997 , 28.59 % of Fidelity New Jersey
Municipal Money Market's, and 6.20 % of Spartan New
Jersey 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 FUNDS 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 follows reasonable security procedures
designed to verify the identity of the investor. Fidelity will request
personalized security codes or other information, and may also record
calls. For transactions conducted through the Internet, Fidelity
recommends the use of an Internet browser with 128-bit encryption. You
should verify the accuracy of your confirmation statements immediately
after you receive them. If you do not want the ability to 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.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your shares will be purchased
at the next NAV calculated after your investment is received in
proper form . 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 New Jersey 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 in proper
form , 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 New Jersey 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 New Jersey 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 New Jersey 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 (except the short-term trading
fee) are waived if your account balance at the time of the
transaction is $50,000 or more. Otherwise, you should note the
following:
(small solid bullet) The $2.00 checkwriting 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 New
Jersey Municipal Money Market, $2,000 for Fidelity New
Jersey Municipal Money Market, and $5,000 for Spartan New
Jersey 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, minus the
short-term trading fee, if applicable on the day your account is
closed and, for Spartan New Jersey Municipal Money Market
the $5.00 account closeout fee will be charged.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to
qualified recipients who support the sale of shares of the funds
without reimbursement from the funds. Qualified recipients are
securities dealers who have sold fund shares or others, including
banks and other financial institutions, under special arrangements in
connection with FDC's sales activities. In some instances, these
incentives may be offered only to certain institutions whose
representatives provide services in connection with the sale or
expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of a
fund for shares of other Fidelity funds. However, you should note the
following:
(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 New Jersey Municipal
Money Market and Spartan New Jersey 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 funds will attempt to give you prior notice whenever they
are reasonably able to do so, they may impose these restrictions at
any time. The funds reserve the right to terminate or modify the
exchange privilege in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to 1.00% , and trading fees of up to
1.50% of the amount exchanged . Check each fund's prospectus for
details
This prospectus is printed on recycled paper using soy-based inks.
FIDELITY'S 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 Financial Statements
</TABLE>
* Not Applicable
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
(dated 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 Regarding New Jersey
Special Considerations Regarding 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 Trusts
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISER
Fidelity Investments Money Management, Inc. (FIMM) (money
market funds)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT S
UMB Bank, n.a. (UMB)
and Fidelity Service Company, Inc. (FSC)
NJN -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
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
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
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others (except to the extent that
the fund may be deemed an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities);
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a
U.S. territory or possession or a state or local government, or a
political subdivision of any of the foregoing) if, as a result, more
than 25% of the fund's total assets would be invested in securities of
companies whose principal business activities are in the same
industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(7) lend any security or make any loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties (but this
limit does not apply to purchases of debt securities or to repurchase
agreements).
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vi) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.
(vii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
with substantially the same fundamental investment objective,
policies, and limitations as the fund.
For purposes of 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 funds 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. The following sections pertain to futures and
options for the bond fund : 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 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 fund will not: (a) sell futures contracts, purchase
put options, or write call options if, as a result, more than 25% of
the fund's total assets would be hedged with futures and options under
normal conditions; (b) purchase futures contracts or write put options
if, as a result, the fund's total obligations upon settlement or
exercise of purchased futures contracts and written put options would
exceed 25% of its total assets; or (c) purchase call options if, as a
result, the current value of option premiums for call options
purchased by the fund would exceed 5% of the fund's total assets.
These limitations do not apply to options attached to or acquired or
traded together with their underlying securities, and do not apply to
securities that incorporate features similar to options.
The above limitations on the fund's investments in futures contracts
and options, and the fund's policies regarding futures contracts and
options discussed elsewhere in this 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 funds 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, 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.
M oney market securities may be structure d or may
employ a trust or similar structure so that they are eligible
investments for the funds . For example, put features can be used
to modify the maturity of a security or interest rate adjustment
features can be used to enhance price stability. If 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:
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 funds 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 funds 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 REGARDING NEW JERSEY
The following highlights only some of the more significant financial
trends and problems affecting New Jersey (the "State"), and is based
on information drawn from official statements and prospectuses
relating to securities offerings of the State, its agencies and
instrumentalities, as available on the date of this SAI. FMR has not
independently verified any of the information contained in such
official statements and other publicly available documents, but is not
aware of any fact which would render such information inaccurate.
T he State's personal income tax rates were reduced so
that coupled with the prior rate reductions, beginning with tax year
1996, personal income tax rates are , depending upon a
taxpayer's level of income and filing status, 30%, 15% or 9% lower
than 1993 rates.
The State's economic base is diversified, consisting of a variety of
manufacturing, construction and service industries, supplemented by
rural areas with selective commercial agriculture. After enjoying an
extraordinary boom during the mid-1980s, the State, as well as the
rest of the Northeast, slipped into a slowdown well before the onset
of the national recession which officially began in July 1990
(according to the National Bureau of Economic Research). By the
beginning of the national recession, construction activity had already
been declining in the State for nearly two years, growth had tapered
off markedly in the service sectors, and the long-term downtrend of
factory employment had accelerated partly because of a leveling off of
industrial demand nationally. The onset of recession caused an
acceleration of the State's job losses in construction and
manufacturing, as well as an employment downturn in such previously
growing sectors as wholesale trade, retail trade, finance, utilities,
trucking and warehousing. The net effect was a decline in the State's
total nonfarm wage and salary employment from a peak of 3,689,800 in
1989 to a low of 3,457,900 in 1992. This loss was followed by an
employment gain of 2 55 , 6 00 from May 1992 to June
199 7 , a recovery of 97.5 % of the jobs lost during the
recession.
Reflecting the downturn, the rate of unemployment in the State rose
from a low of 3.6% during the first quarter of 1989 to a recessionary
peak of 8.5% during 1992 (according to U.S. Bureau of Labor Statistics
and the New Jersey Department of Labor, Division of Labor Market and
Demographic Research). Since then, the unemployment rate fell to an
average of 6. 2 % in 199 6 and 5 . 5 % for
the six month period from January 199 7 through
June 199 7 .
For the recovery period as a whole, May 1992 to June
199 7 , service-producing employment in the State has expanded by
28 3 ,500 jobs. Hiring has been reported by food stores,
wholesale distributors, trucking and warehousing firms, security
and commodity brokers , business and engineering/management service
firms, hotels/hotel-casinos, social service agencies, and health care
providers other than hospitals. Employment growth was particularly
strong in business services and its personnel supply component with
increases of 17, 3 00 and 7 , 500 , respectively, in
the 12-month period end ed June 199 7 .
In the manufacturing sector, employment losses slowed between 1992 and
1994. After an average annual job loss of 33,500 from 1989 through
1992, the State's factory job losses fell to 13,300 during 1993 and
7,300 during 1994. During 1995 and 1996 , however, manufacturing
job losses increased slightly to 10 ,100 and 13,900,
respectively , reflecting a slowdown in national manufacturing
production activity.
Conditions have slowly improved in the construction industry, where
employment has risen by 1 8 ,600 since its low in May 1992.
Between 1992 and 199 6 , this sector's hiring rebound was driven
primarily by increased homebuilding and nonresidential projects.
During 1996 and the first five months of 1997 , public works
projects and homebuilding became the growth segments while
nonresidential construction lessened but remained positive .
Nonresidential construction activity, as measured by contract awards,
grew by 19.6% in 1994, 3.0% in 1995 , and 7.0% in 1996 . More
recently, nonresidential building construction contracts increased
by 45.8% in the first five months of 1997 compared with the same
period in 1996.
Residential construction contracts , despite monthly
fluctuations , increased by 1 7 . 1 % for the first
five months of 199 7 as compared to the first five
months of 199 6 ($ 989 million and $8 45 million,
respectively). Nonbuilding or infrastructure construction rose
robustly by 64.0 % during this period. Helped by these
increases, total construction contracts rose by
41 . 0 % when comparing the first five months of
199 6 and 199 7 .
The rising economic trend experienced in the State has led to
higher retail sales, which showed steady growth from 1992 through
1996, including a 3.8% increase from 1995 to 1996. The higher retail
sales, in turn, produced steady increases in retail trade jobs (both
full and part time). Retail trade employment has risen by nearly
49,000 since a May 1992 low point. From December 1996 to June 1997,
the number of retail jobs rose by 8,700.
Total new vehicle registrations (new passenger cars and light trucks
and vans) rose in 1994 by 5.8%, declined by 4.4% in 1995 , then rose
2.6% in 1996 . Through May 199 7 however, total new
vehicle registrations rose by 2.8 % compared to the same time
period in 199 6 .
Unemployment in the State through June 199 7 has been
receding. According to the U.S. Bureau of Labor Statistics, the
jobless rate dropped from 6.8% in 1994 to 6.4% in 1995 and to 6.2%
in 1996 . Subsequently, it has dropped to 5.5 % for the
f irst six month s of 1997.
The insured unemployment rate, i.e., the number of individuals
claiming benefits as a percentage of the number of workers covered by
unemployment insurance, declined from 3.9% during calendar years 1991
and 1992 to 3.3% during 1993 and then averaged 3.2% throughout 1994,
1995 , and 1996. As of July 1, 199 7 , the State's
unemployment insurance trust fund balance stood at $2. 2
billion.
The State has benefited from the national recovery. The State's
recovery is in its sixth y ear and appears to be sustainable now
that the national economy has "soft-landed". While the latest national
indicators show that economic growth accelerated during the
first quarter of this year, the inflation rate remained
low.
Business investment expenditures and consumer spending have increased
substantially in the nation as well as in the State. Capital and
consumer spending may very well continue to rise due to the sustained
character of the recovery, although the interest-sensitive
homebuilding industry may provide only a moderate amount of stimulus
both nationally and in the State. It is expected that the employment
and income growth that has and is taking place will lead to further
growth in consumer outlays. Reasons for cautious optimism in the State
include increasing employment levels, a low jobless rate, and a
higher-than-national level of per capita personal income.
If the nation's economic growth rate slows from the robust
5.9 % growth in the first quarter of 199 7 ,
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 affect ing some other parts of the country.
Looking further ahead, p rospects for New Jersey a ppear
favorable. While growth is likely to be slower than in the
nation, the locational advantages that have served New Jersey well for
many years will still be there. Structural changes that have been
going on for years can be expected to continue, with job creation
concentrated most heavily in the service sectors.
There is a Constitutional provision that requires the State to
maintain a balanced budget. The State operates on a fiscal year
beginning July 1 and ending June 30. For example, "Fiscal Year 1997"
refers to the State's fiscal year beginning July 1, 1996 and ending
June 30, 1997. Changes in economic activity in the State and the
nation, consumption of durable goods, corporate financial performance
and other factors that are difficult to predict may result in actual
collections for Fiscal Year 1997 being more or less than forecasted.
The State is bound, however, by the constitutional requirement that no
appropriations law may be enacted if the amount of money appropriated
therein, together with all other prior appropriations made for the
same Fiscal Year, exceeds the total amount of anticipated revenues
available for such Fiscal Year as certified by the Governor. The
General Fund is the fund into which all State revenues not otherwise
restricted by statute are deposited and from which appropriations are
made. The largest part of the total financial operations of the State
is accounted for in the General Fund, which includes revenues received
from taxes and unrestricted by statute, most federal revenues, and
certain miscellaneous revenue items. The appropriation act
provide s the basic framework for the operation of the General
Fund. The undesignated General Fund balance at year end for Fiscal
Year 1994 was $926 million, for Fiscal Year 1995 $569
million , and for Fiscal Year 1996 $442 million. For
Fiscal Year 1997, the balance at year end in the undesignated
General Fund is estimated to be $2 69 million.
Legislation approved by the Governor on June 5, 1997 revised
funding provisions applicable to the State retirement systems. The
legislation provides that the value of the assets of the retirement
systems shall be the full fair market value of the assets as of the
valuation date of the valuation reports applicable to Fiscal Year
1998. Additionally, on the same date, legislation was enacted to
authorize the New Jersey Economic Development Authority (the
"Authority") to issue bonds, notes or other obligations for the
purpose of financing in full or in part the unfunded accrued pension
liability for the State's seven retirement plans. On June 30, 1997,
the Authority issued bonds pursuant to this legislation (the "Pension
Bonds"). For Fiscal Year 1997, $368.7 million was provided as the
State's contribution to the State's retirement systems, which
appropriation takes into account funding from the proceeds of the
Pension Bonds and the change in the asset valuation method authorized
by the recent legislation (collectively, the "1997 Pension
Transaction"). The appropriation for the State's required contribution
which would have been $664,469,510 has been revised to $250,303,611,
thereby resulting in a reduction of $414 million in the required
contribution by the State for Fiscal Year 1998. Between July 1, 1995
and March 31, 1996, independent actuaries reported that the market
value of all assets of the retirement funds was $47.3 billion compared
to a $43.0 billion accumulated benefit obligation, representing a
funding level of 110.1%, determined in accordance with the principles
of the Financial Accounting Standards Board. The present value of
projected benefits, determined in accordance with the principles of
the Government Accounting Standards Board, of the funds is $49.7
billion, representing a funding level for projected benefits of 87.4%.
As of this date, the consulting actuaries to the State are in the
process of performing the actuarial valuation and therefore, these
numbers do not reflect the impact of the 1997 Pension Transaction.
However, it is anticipated that the market value of all assets of the
funds shall exceed the accumulated benefit obligations.
Federal aid received in the General Fund and Special Transportation
fund amounted to $4.20 billion for the Fiscal Year ended June 30,
1994, $4.62 billion for the Fiscal Year ended June 30, 1995 ,
$ 4.69 billion for the Fiscal Year end ed June 30,
1996 , and is projected to be $5.4 0 billion for
the F iscal Y ear ending June 30, 1997 and $6.04
billion for the fiscal year ending June 30, 1998.
The State finances capital projects primarily through the sale of its
general obligation bonds. These bonds are backed by the full faith and
credit of the State. Tax revenues and certain other fees are pledged
to meet the principal and interest payments required to pay the debt
fully. No general obligation debt can be issued by the State without
prior voter approval, except that no voter approval is required for
any law authorizing the creation of a debt for the purpose of
refinancing all or a portion of outstanding debt of the State, so long
as such law requires that the refinancing provide a debt service
savings.
In addition to payment from bond proceeds, capital construction can
also be funded by appropriation of current revenues on a pay-as-you-go
basis. In Fiscal Year 199 8 , the amount appropriated to this
purpose is $5 16 . 0 million of which
$3 8 0. 3 million is for transportation projects.
The aggregate outstanding general obligation bonded indebtedness of
the State as of June 30, 199 7 was $3. 437 billion. For
F iscal Year 199 8 , $4 83 . 7 million has been
appropriated for principal and interest payments for general
obligation bonds.
The State has extensive control over school districts, cities,
counties and local financing authorities. State laws impose specific
limitations on local appropriations, with exemptions subject to state
approval. The State shares the proceeds of a number of taxes, with
funds going for , among other things, local education programs,
homestead rebates, medicaid and welfare programs.
At any given time, there are various numbers of claims and cases
pending against the State , State agencies and employees,
seeking recovery of monetary damages that are primarily paid out of
the fund created pursuant to the Tort Claims Act, N.J.S.A. 59:1-1 ET.
SEQ. In addition, at any given time there are various numbers of
contract and other claims against the State and State
agencies , including environmental claims asserted against the
State, among other parties, arising from the alleged disposal of
hazardous waste. The State is unable to estimate its exposure for
these claims. Moreover, the State is involved in a number of other
lawsuits in which the State has the potential for either a significant
loss of revenue or a significant unanticipated expenditure. Such cases
include challenges to its system of educational funding, the methods
by which the State Department of Human Services shares with county
governments, the maintenance recoveries and costs for residents in
State psychiatric hospitals, and residential facilities for the
developmentally disabled, a suit challenging the constitutionality of
hazardous and solid waste licensure renewal fees collected by the
Department of Environmental Protection, a suit alleging tort and
contractual claims against the State associated with a resource
recovery facility, a suit seeking return of moneys paid by various
counties for maintenance of Medicaid or Medicare eligible residents of
institutions and facilities for the developmentally disabled, a suit
challenging assessments upon property and casualty liability insurers
pursuant to the Fair Automobile Insurance Reform Act, and suits
seeking return of moneys paid by various hospitals pursuant to the
Health Care Cost Reform Act of 1992.
NEW JERSEY EDUCATION ASSOCIATION ET AL. V. STATE OF NEW JERSEY ET AL.
represents a challenge to amendments to the pension laws enacted on
June 30, 1994 (P.L. 1994, Chapter 62), which concerned the funding of
the Teachers Pension and Annuity Fund (TPAF), the Public Employee's
Retirement System (PERS), and Police and Fireman's Retirement System
(PFRS), the State Police Retirement System (SPRS) and the Judicial
Retirement System (JRS). The complaint was filed in the United States
District Court of New Jersey on October 17, 1994. The statute, as
enacted, made several changes affecting these retirement systems
including changing the actuarial funding method to projected unit
credit; continuing the prefunding of post-retirement medical benefits
but at a reduced level for TPAF and PERS; revising the employee member
contribution rate to a flat 5% for TPAF and PERS; extending the
phase-in period for the revised TPAF actuarial assumptions; changing
the phase-in period for funding of cost-of-living adjustments and
reducing the inflation assumption for the Cost of Living Adjustment
for all retirement systems; and decreasing the average salary increase
assumption for all retirement systems. Plaintiffs allege that the
changes resulted in lower employer contributions in order to reduce a
general budget deficit. The complaint further alleges that certain
provisions of Chapter 62 violate the contract, due process, and taking
clauses of the United States and New Jersey Constitutions, and further
constitute a breach of the State's fiduciary duty to participants in
TPAF and PERS. Plaintiffs seek to permanently enjoin the State from
administering, enforcing or otherwise implementing Chapter 62. An
adverse determination against the State would have a significant
impact upon the fiscal year 199 7 budget. The State has filed a
motion to dismiss and a motion for summary judgment.
On October 6, 1995, the Court issued it s 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 D ue P rocess
(against the Treasurer in both his individual and official
capacities); and (3) a 42. U.S.C. (sub-section)1983 claim (against the
Treasurer in his individual capacity).
The forms of relief sought related to these surviving claims are (1) a
declaration that certain provisions of Chapter 62 violate due process
of law under the Fifth and Fourteenth Amendments to the U.S.
Constitution; (2) a declaration that the enactment and implementation
of certain provisions of Chapter 62 constitute a breach of the
fiduciary obligations owed to contributing participants, vested
participants and retirees of the TPAF and PERS; (3) a declaration that
Chapter 62 contravenes the statutory and common law duties to
administer and fund the plans in an actuarially sound and fiscally
responsible manner; (4) a permanent injunction against administering,
enforcing or otherwise implementing certain provisions of Chapter 62;
and (5) directing payment of plaintiffs' attorneys' fees,
disbursements and costs pursuant to 42 U.S.C. (sub-section)1988.
The State filed a motion for reconsideration or, in the alternative,
for certification to the Third Circuit Court of Appeals, of the
remaining claims. By order dated December 19, 1995, the District Court
denied the motion in all respects. On January 29, 1996, the State, on
behalf of Treasurer Clymer, filed a Petition for a Writ of Mandamus
and a Motion for a Stay of the Proceedings below, pending
consideration and disposition of the petition, with the Third Circuit
Court of Appeals. In the petition, Treasurer Clymer asked the Court of
Appeals to direct the District Court to dismiss the complaint or enter
summary judgment in his favor. Alternatively, the Treasurer asked the
Court of Appeals to order the District Court to vacate its order
denying summary judgment and resolve that motion as a matter of law
without discovery or fact finding or to certify the issues for
interlocutory appeal. The Third Circuit Court of Appeals denied the
motion and petition on February 20, 1996. The matter is currently
stayed pending the adoption of the Appropriations Act for Fiscal Year
1998. The State intends to vigorously defend this action.
Currently, the State's general obligation bonds are rated AA+ by
Standard & Poor's, Aa1 by Moody's Investors Service, Inc. and AA+ by
Fitch IBCA, Inc.
SPECIAL CONSIDERATIONS REGARDING PUERTO RICO
The following highlights some of the more significant financial
trends and problems affecting the Commonwealth of Puerto Rico (the
"Commonwealth" or "Puerto Rico"), and is based on information drawn
from official statements and prospectuses relating to the securities
offerings of Puerto Rico, its agencies and instrumentalities, as
available on the date of this SAI. FMR has not independently verified
any of the information contained in such official statements,
prospectuses and other publicly available documents, but is not aware
of any fact which would render such information materially
inaccurate.
The economy of Puerto Rico is fully integrated with that of the
United States, and in fiscal 1996 trade, with the United States
accounted for approximately 88% of Puerto Rico's exports and
approximately 62% of its imports. In this regard, in fiscal 1996
Puerto Rico experienced a $3.2 billion positive adjusted merchandise
trade balance.
Since fiscal 1985 personal income, both aggregate and per capita,
has increased consistently each fiscal year. In fiscal 1996 aggregate
personal income was $29.4 billion ($27.8 billion in 1992 prices) and
personal per capita income was $7,882 ($7,459 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 27.7% from fiscal 1992 to
1996 (12.9% in 1992 prices).
Puerto Rico's more than decade-long economy expansion continued
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.
Average employment increased from 999,000 in Fiscal 1993, to
1,128,300 in fiscal 1997. Unemployment although at relatively low
historical levels remains above the average for the United States.
Average unemployment decreased from 16.8% in fiscal 1993, to 13.1% in
fiscal 1997.
Manufacturing is the largest sector in the economy accounting for
$18.9 billion or 41.4% of gross domestic product in fiscal 1996. The
manufacturing sector employed 152,489 workers as of March 1997.
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 wholesale and retail trade and
finance, insurance, and real estate, hotels and related services and
other services, ranks second in its contribution to gross domestic
product and is the sector that employs the greatest number of people.
In fiscal 1996, the service sector generated $17.1 billion in gross
domestic product or 37.6% of the total. Employment in this sector grew
from 449,000 in fiscal 1992 to 527,000 in fiscal 1996, a cumulative
increase of 17.4%, which increase was greater than the 11.9%
cumulative growth in employment over the same period, providing 48% of
total employment. The government sector of the Commonwealth plays an
important role in the economy of the island. In fiscal year 1996 the
government accounted for $4.6 billion or 10.7% of Puerto Rico's gross
domestic product and provided 22.5% of the total employment. Tourism
also contributes significantly to the island economy, accounting for
$1.9 billion of gross domestic product in fiscal 1996.
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. Another
initiative consists of improving and expanding Puerto Rico's
infrastructure to facilitate private sector development and growth,
such as the construction of the water pipeline and cogeneration
facilities described below and the construction of a light rail system
for the San Juan metropolitan area.
The New Economic Model also seeks to identify and promote areas in
which Puerto Rico can compete more effectively in the global markets.
Tourism has been identified as one such area because of its potential
for job creation and contribution to the gross product. In 1993, a new
Tourism Incentives Act and a Tourism Development Fund were implemented
in order to provide special tax incentives and financing for the
development of new hotel projects and the tourism industry. As a
result of these initiatives, new hotels have been constructed or are
under construction which have increased the number of hotel rooms on
the island from 8,415 in fiscal 1992 to 10,877 at the end of fiscal
1997 and to a projected 11,972 by the end of fiscal 1998.
The New Economic Model also seeks to reduce the size of the
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; (v) the
Corrections Administration entered into operating agreements with two
private companies for the operation of three new correctional
facilities; (vi) the Government entered into a definitive agreement to
sell certain assets of a pineapple juice processing business and sold
certain mango growing operations; (vii) the Government is in the
process of transferring to local sugar cane growers certain sugar
processing facilities; (viii) the Government sold two hotel properties
and is currently negotiating the sale of a complex consisting of two
hotels and a convention center; (ix) the Government has announced its
intention to sell the Puerto Rico Telephone Company and is currently
involved in the sale process.
One of the goals of the Rossello administration is to change Puerto
Rico's public health care system from one in which the government
provides free health services to low income individuals through public
health facilities owned and administered by the government to one in
which all medical services are provided by the private sector and the
government provides comprehensive health insurance coverage for
qualifying (generally low income) Puerto Rico residents. Under this
new system, the Government selects, through a bidding system, one
private health insurance company in each of several designated regions
of the island and pays such insurance company the insurance premium
for each eligible beneficiary within such region. This new health
insurance system is now covering 61 municipalities out of a total of
78 on the island. It is expected that 11 municipalities will be added
by the end of fiscal 1998 and 5 more by the end of fiscal 1999. The
total cost of this program will depend on the number of municipalities
included in the program, the number of participants receiving
coverage, and the date coverage commences. As of June 30, 1997, over
1,090,592 persons were participating in the program at an estimated
annual cost to Puerto Rico for fiscal 1997 of approximately $521
million. In conjunction with this program, the operation of certain
public health facilities has been transferred to private entities. The
Government's current privatization plan for health facilities provides
for the transfer of ownership of all health facilities to private
entities. The Government has announced that it has selected various
private companies with which it is commencing negotiations expected to
culminate in the sale of ten health facilities to such companies.
One of the factors assisting the development of the manufacturing
sector in Puerto Rico has been the federal and Commonwealth tax
incentives available, particularly those under the Puerto Rico
Industrial Incentives Program and Sections 30A and 936 of the Internal
Revenue Code, as amended (the "Code").
The Industrial Incentives Program, through the 1987 Industrial
Incentive Act (the "1987 Act"), grants corporations engaged in certain
qualified activities a fixed 90% exemption from Commonwealth income
and property taxes and a 60% exemption form municipal license taxes
during a 10, 15, 20, or 25 year period depending on location. The 1987
Act also provides a special deduction equal to 15% of the production
payroll for companies whose net income from operation is less than
$30,000 per production employee and fully exempts from income,
property and local taxes the income from certain qualified investments
in Puerto Rico ("passive income") companies which make qualified
investments for fixed periods of not less than 5 years are eligible to
reduce the withholding tax (also known as the "tollgate tax") imposed
on dividend and liquidating distributions from a maximum of 10% to a
minimum rate of 5%, depending on the amount and term of these
investments. In 1993, the 1987 Act was amended to require the
prepayment of a portion of the tollgate tax payable on distributions
in an amount equal to 5% of the company's annual income after the
payment of income taxes. Additionally, companies were granted the
option to pay an up front flat tax of 14% on annual net income and
repatriate profits free of tollgate taxes.
On August 25, 1997 a bill providing for a new industrial incentives
law was introduced in the Puerto Rico Legislature (the "1998 Tax
Incentives Bill"). The benefits provided by the 1998 Tax Incentives
Bill would be available to new companies as well as companies
currently conducting tax exempt operations in Puerto Rico which choose
to renegotiate their existing tax exemption grant. For companies
qualifying thereunder, the 1998 Tax Incentives Bill would impose
income tax rates ranging from 2% to 7%. In addition, it would grant
90% exemption from property taxes, 100% exemption form municipal
license taxes during the first eighteen months of operation and
between 80% and 60% thereafter, and 100% exemption from municipal
excise taxes. The 1998 Tax Incentives Bill also provides various
special deductions designated to stimulate employment and
productivity, research and development and capital investment in
Puerto Rico. Under the 1998 Tax Incentives Bill, companies would be
able to repatriate or distribute their profits free of tollgate taxes.
In addition, passive income derived from designated investments would
continue to be fully exempt from income and municipal license taxes.
Individual shareholders of an exempted business would be allowed a
credit against their Puerto Rico income taxes equal to 30% of their
proportionate share in the exempted business' income tax liability.
Gain from the sale or exchange of shares of an exempted business by
its shareholders during the exemption period would be subject to a 4%
income tax rate.
For many years, U.S. companies operating in Puerto Rico enjoyed a
special tax credit that was available under Section 936 of the Code.
Originally, the credit provided an effective 100% federal tax
exemption for operating and qualifying investment income from Puerto
Rico sources. Amendments to Section 936 made in 1993 (the "1993
Amendments") instituted two alternative methods for calculating the
tax credit and limited the amount of the credit that a qualifying
company could claim. These limitations are based on a percentage of
qualifying income (the "percentage of income limitation") and on
qualifying expenditures on wages and other wage related benefits (the
"economic activity limitation", also known as the "wage credit
limitation"). As a result of amendments incorporated in the Small
Business Job Protection Act of 1996 enacted by the United States
Congress and signed into law by President Clinton on August 20, 1996
(the "1996 Amendments"), as described below 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 United States 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, United
States corporations that meet certain requirements and elect its
application ("Section 936 Corporations") are entitled to credit
against their United States 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 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 936
credit is eliminated for taxable years beginning in 2006.
PROPOSAL TO EXTEND THE PHASEOUT OF SECTION 30A. During 1997, the
Government proposed to Congress the enactment of a new permanent
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 and other wage related expenses, such
as fringe benefits, as well as depreciation expenses for certain
tangible assets and research and development expenses. Under the
Governor's proposal, the credit granted to qualifying companies would
continue in effect until Puerto Rico shows, among other things,
substantial economic improvements in terms of certain economic
parameters. The fiscal 1998 budget submitted by President Clinton to
Congress in February 1997 included a proposal to modify Section 30A to
(i) extend the availability of the Section 30A Credit indefinitely;
(ii) make it available to companies establishing operations in Puerto
Rico after October 13, 1995; and (iii) eliminate the income cap.
President Clinton's proposal, however, was not included in the fiscal
1998 federal budget. While the Government of Puerto Rico plans to
continue lobbying for this proposal, it is not possible at this time
to predict whether the Section 30A Credit will be so modified.
OUTLOOK. It is not possible at this time to determine the long-term
effect on the Puerto Rico economy of the enactment of the 1996
Amendments. The Government of Puerto Rico does not believe there will
be short-term or medium-term material adverse effects on Puerto Rico's
economy as a result of the enactment of the 1996 Amendments. The
Government of Puerto Rico further believes that during the phase-out
period sufficient time exists to implement additional incentive
programs to safeguard Puerto Rico's competitive position.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed
on behalf of each fund by FMR pursuant to authority contained in the
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 16 % and 57% for Spartan N ew
J ersey Municipal Income.
For the fiscal years ended October 31, 1997, 1996, 1995 and
the one month period ended November 30, 1997 , Spartan N ew
J ersey Municipal Money Market paid no brokerage
commissions . For the fiscal years ended November 30, 1997, 1996,
and 1995, Fidelity N ew J ersey Municipal Money
Market and Spartan New Jersey Municipal Income paid no
brokerage commissions .
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 2.0 % to 10.0 %. 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* New Jersey State
Federal Federal and State
Marginal Rate** Marginal Rate Combined
Effective Rate** *
Single Return Joint Return
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
$ 0 - $ 20,000 $ 0 - $ 20,000 1.4 % 15.00 %
16.19 %
20,001 - 25,350 20,001 - 42,350 1.75 % 15.00 %
16.49 %
25,351 - 35,000 42,351 - 50,000 1.75 % 28.00 %
29.26 %
50,001 - 70,000 2.45 % 28.00 %
29.76 %
35,001 - 40,000 70,001 - 80,000 3.50 % 28.00 %
30.52 %
40,001 - 61,400 80,001 - 102,300 5.525 % 28.00 %
31.98 %
61,401 - 75,000 102,301 - 150,000 5.525 % 31.00 %
34.81 %
75,001 - 128,100 150,001 - 155,950 6.37 % 31.00 %
35.40 %
128,101 - 278,450 155,951 - 278,450 6.37 % 36.00 %
40.08 %
over 278,450 over 278,450 6.37 % 39.60 %
43.45 %
</TABLE>
* This amount represents taxable income as defined in the Internal
Revenue Code. It is assumed the taxable income as defined in the
Internal Revenue code is the same as under the New Jersey Personal
Income Tax law, however, New Jersey taxable income may differ due to
differences in exemptions, itemized deductions, and other items.
** Beginning with the 1996 taxable year , t he New Jersey
graduated income tax rates have been reduced.
*** For federal tax purposes, theses combined rates reflect the
applicable marginal rates for 1998, including indexing for
inflation. These rates include the effect of deducting states taxes on
your Federal return.
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> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16.19% 16.49% 29.26% 29.76% 30.52% 31.98% 34.81 % 35.40% 40.08% 43.45 %
To match Your taxable investment would have to earn the following yield:
these
tax-free
yields :
2.0% 2.39% 2.39% 2.83% 2.85% 2.88% 2.94% 3.07 % 3.10 % 3.34% 3.54 %
3.0% 3.58% 3.59% 4.24% 4.27% 4.32% 4.41% 4.60 % 4.64 % 5.01% 5.30 %
4.0% 4.77% 4.79% 5.65% 5.70% 5.76% 5.88% 6.14 % 6.19 % 6.68% 7.07 %
5.0% 5.97% 5.99% 7.07% 7.12% 7.20% 7.35% 7.67 % 7.74 % 8.34% 8.84 %
6.0% 7.16% 7.18% 8.48% 8.54% 8.64% 8.82% 9.20 % 9.29 % 10.01% 10.61 %
7.0% 8.35% 8.38% 9.90% 9.97% 10.07% 10.29% 10.74 % 10.84 % 11.68% 12.38 %
8.0% 9.55% 9.58% 11.31% 11.39% 11.51% 11.76% 12.27% 12.38% 13.35% 14.15%
9.0% 10.74% 10.78% 12.72% 12.81% 12.95% 13.23% 13.81% 13.93% 15.02% 15.91%
10.0% 11.93% 11.97% 14.14% 14.24% 14.39% 14.70% 15.34% 15.48% 16.69% 17.68%
</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
N ew J ersey 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 N ew
J ersey 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 do not include the effect of
Spartan N ew J ersey Municipal Money Market's $5.00
account closeout fee based on an average size account, or
Spartan N ew J ersey 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 40.08 % and reflects that, as of
November 30, 1997, none of the funds' income was subject to
state taxes. Note that each fund may invest in securities whose income
is subject to the federal alternative minimum tax.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Returns Cumulative Total Returns
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Seven-Day Tax- One Five Life of One Five Life of
Yield Equivalent Year Years Fund* Year Years Fund*
Yield
Spartan NJ
Muni 3.35% 5.59 % 3.23 % 2.96 % 3.42 % 3.23 % 15.68 % 29.13 %
Money
</TABLE>
* From May 1, 1990 (commencement of operations).
Note: If FMR had not reimbursed certain fund expenses during these
periods, the fund's 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 Life of One Five Life of
Yield Equivalent Year Years Fund* Year Years Fund*
Yield
Fidelity NJ
Muni 3.24% 5.41 % 3.03 % 2.68 % 3.74 % 3.03 % 14.14 % 42.90 %
Money
</TABLE>
* From March 17, 1988 (commencement of operations).
Note: If FMR had not reimbursed certain fund expenses during these
periods, the fund's 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 Life of One Five Life of
Yield Equivalent Year Years Fund* Year Years Fund*
Yield
Spartan NJ
Muni 4.41% 7.36 % 6.44 % 6.74 % 8.21 % 6.44 % 38.58 % 118.79 %
Income
</TABLE>
* From January 1, 1988 (commencement of operations).
Note: If FMR had not reimbursed certain fund expenses during these
periods, the fund's 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 N ew
J ersey Municipal Money Market would have grown to
$ 12,913 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SPARTAN N EW J ERSEY MUNICIPAL MONEY MARKET INDICES
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Year
Ended Value of Value of Value of Total S&P 500 DJIA Cost of
Initial Reinvested Reinvested Value Living**
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1997 $ 10,000 $ 2,913 $ 0 $ 12,913 $ 35,593 $ 36,188 $ 12,529
1996 $ 10,000 $ 2,509 $ 0 $ 12,509 $ 27,696 $ 29,625 $ 12,304
1995 $ 10,000 $ 2,119 $ 0 $ 12,119 $ 21,661 $ 22,564 $ 11,916
1994 $ 10,000 $ 1,691 $ 0 $ 11,691 $ 15,813 $ 16,223 $ 11,629
1993 $ 10,000 $ 1,400 $ 0 $ 11,400 $ 15,650 $ 15,553 $ 11,311
1992 $ 10,000 $ 1,163 $ 0 $ 11,163 $ 14,214 $ 13,559 $ 11,016
1991 $ 10,000 $ 827 $ 0 $ 10,827 $ 11,995 $ 11,530 $ 10,690
1990* $ 10,000 $ 339 $ 0 $ 10,339 $ 9,966 $ 9,858 $ 10,380
</TABLE>
* From May 1, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Spartan
New Jersey Municipal Money Market on May 1, 1990, the net amount
invested in fund shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $12,913. 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 $2,561 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
N ew J ersey Municipal Money Market would have grown to
$ 14,290 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY N EW J ERSEY MUNICIPAL MONEY MARKET 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 $ 4,290 $ 0 $ 14,290 $ 47,185 $ 50,358 $ 13,863
1996 $ 10,000 $ 3,870 $ 0 $ 13,870 $ 36,716 $ 41,224 $ 13,614
1995 $ 10,000 $ 3,475 $ 0 $ 13,475 $ 28,715 $ 31,400 $ 13,185
1994 $ 10,000 $ 3,041 $ 0 $ 13,041 $ 20,963 $ 22,575 $ 12,867
1993 $ 10,000 $ 2,762 $ 0 $ 12,762 $ 20,746 $ 21,642 $ 12,515
1992 $ 10,000 $ 2,519 $ 0 $ 12,519 $ 18,843 $ 18,868 $ 12,189
1991 $ 10,000 $ 2,178 $ 0 $ 12,178 $ 15,901 $ 16,045 $ 11,828
1990 $ 10,000 $ 1,676 $ 0 $ 11,676 $ 13,212 $ 13,718 $ 11,485
1989 $ 10,000 $ 1,045 $ 0 $ 11,045 $ 13,689 $ 13,951 $ 10,807
1988* $ 10,000 $ 376 $ 0 $ 10,376 $ 10,462 $ 10,504 $ 10,326
</TABLE>
* From March 17, 1988 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Fidelity
N ew J ersey 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 $ 14,290 . 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
$ 3,576 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 N ew
J ersey Municipal Income would have grown to $ 21,879 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SPARTAN N EW J ERSEY MUNICIPAL INCOME 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 $ 11,380 $ 9,517 $ 982 $ 21,879 $ 49,890 $ 51,955 $ 13,995
1996 $ 11,380 $ 8,452 $ 724 $ 20,556 $ 38,820 $ 42,532 $
13,744
1995 $ 11,420 $ 7,429 $ 658 $ 19,507 $ 30,361 $ 32,395 $
13,310
1994 $ 10,320 $ 5,751 $ 594 $ 16,665 $ 22,165 $ 23,291 $
12,990
1993 $ 11,760 $ 5,491 $ 451 $ 17,702 $ 21,936 $ 22,329 $
12,634
1992 $ 11,240 $ 4,344 $ 204 $ 15,788 $ 19,923 $ 19,467 $
12,305
1991 $ 11,020 $ 3,326 $ 95 $ 14,441 $ 16,813 $ 16,554 $
11,941
1990 $ 10,620 $ 2,341 $ 92 $ 13,053 $ 13,969 $ 14,153 $
11,594
1989 $ 10,650 $ 1,532 $ 0 $ 12,182 $ 14,474 $ 14,394 $
10,910
1988* $ 10,190 $ 704 $ 0 $ 10,894 $ 11,061 $ 10,838 $
10,425
</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
N ew J ersey 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
$ 20,118 . 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
$ 6,498 for dividends and $ 650 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 425 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;
and charitable giving. In addition, Fidelity may quote or reprint
financial or business publications and periodicals as they relate to
current economic and political conditions, fund management, portfolio
composition, investment philosophy, investment techniques, the
desirability of owning a particular mutual fund, and Fidelity services
and products. Fidelity may also reprint, and use as advertising and
sales literature, articles from Fidelity Focus(Registered trademark),
a quarterly magazine provided free of charge to Fidelity fund
shareholders.
A fund may present its fund number, Quotron(trademark) number, and
CUSIP number, and discuss or quote its current portfolio manager.
VOLATILITY. A bond fund may quote various measures of volatility and
benchmark correlation in advertising. In addition, the fund may
compare these measures to those of other funds. Measures of volatility
seek to compare the fund's historical share price fluctuations or
total returns to those of a benchmark. Measures of benchmark
correlation indicate how valid a comparative benchmark may be. All
measures of volatility and correlation are calculated using averages
of historical data. In advertising, a 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 $ 29 billion in
tax-free fund assets, $ 99 billion in money market fund assets,
$ 388 billion in equity fund assets, $ 71 billion in
international fund assets, and $ 24 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
1998: New Year's Day, Martin Luther King's Birthday, 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 F ederal income tax
purposes to the extent attributable to exempt-interest dividends.
Exempt-interest dividends and gains paid to a corporate shareholder
will be subject to the New Jersey Corporation Business (Franchise) Tax
and the New Jersey Corporation Income Tax.
On February 21, 1997, the Tax Court of New Jersey ruled against the
Division of Taxation and held that distributions paid by mutual funds
are immune from taxation by New Jersey to the extent that the
distributions are attributable to interest earned on U.S. government
obligations regardless of whether the 80% Test is met. As a result of
the court decision, the State of New Jersey could be forced to pay
substantial amounts in tax refunds to state residents who are mutual
fund investors. At this time the effect of this litigation cannot be
evaluated.
CAPITAL 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.
As of November 30, 1997, Spartan New Jersey Municipal Income
hereby designates approximately $ 131,000 as a capital gain
dividend for the purpose of the dividend-paid deduction.
As of November 30, 1997 Spartan New Jersey Municipal Money
Market had a capital loss carryforward aggregating approximately
$ 71,000 . This loss carryforward, of which $ 24,000 ,
$ 16,000 , $2,000 and $ 29,000 will expire on
November 3 0 , 2000 , 2002 , 2003 , and
2004 , respectively, is available to offset future capital
gains.
As of November 30, 1997 Fidelity New Jersey Municipal Money Market
had a capital loss carryforward aggregating approximately $55,000.
This loss carryforward, of which $8,000, $21,000, and $26,000 will
expire on November 30, 2001, 2003, and 2005, 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 N ew J ersey
Municipal Money Market and Fidelity N ew J ersey Municipal
Money Market) and Fidelity Court Street Trust (Spartan N ew
J ersey 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 Fidelity Investments Money Management, 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 of Fidelity Personal Investments and Brokerage
Group (1997). Previously, Mr. Burkhead served as President of
Fidelity Management & Research Company.
RALPH F. COX (65), Trustee, is President of RABAR Enterprises
(management consulting-engineering industry, 1994). Prior to February
1994, he was President of Greenhill Petroleum Corporation (petroleum
exploration and production). Until March 1990, Mr. Cox was President
and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of USA Waste Services,
Inc. (non-hazardous waste, 1993), CH2M Hill Companies (engineering),
Rio Grande, Inc. (oil and gas production), and Daniel Industries
(petroleum measurement equipment manufacturer). In addition, he is a
member of advisory boards of Texas A&M University and the University
of Texas at Austin.
PHYLLIS BURKE DAVIS (65), Trustee (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
and Brush-Wellman Inc. (metal refining) from 1983-1997 .
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 Fidelity Investments Money Management, 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) and other funds advised by FMR . Prior to
his current responsibilities, Mr. Lind managed a variety of Fidelity
funds.
SCOTT A. ORR (35) is Vice President of Spartan New Jersey Municipal
Money Market Fund (1996) and Fidelity New Jersey Municipal
Money Market Fund (1996) and other funds advised by FMR .
Prior to his current responsibilities, Mr. Orr has managed a variety
of Fidelity funds.
ERIC D. ROITER (49), Secretary (1998), is Vice President (1998) and
General Counsel of FMR (1998). Mr. Roiter was an Adjunct Member,
Faculty of Law, at Columbia University Law School (1996-1997). Prior
to joining Fidelity, Mr. Rotier was a partner at Debevoise & Plimption
(1981-1997) and served as an Assistant General Counsel of the U.S.
Securities and Exchange Commission (1979-1981).
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
Fidelity Investments Money Management, 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, 199 7 , as applicable.
COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Trustees Aggregate Aggregate Aggregate Total
and Compensation Compensation from Compensation Compensation
Members of the Advisory Board from Fidelity NJ Muni from from the
Sp. NJ Muni MM B Sp. NJ Muni Fund Complex*A
MMB ,C,D Income B
J. Gary Burkhead ** $ 0 $ 0 $ 0 $ 0
Ralph F. Cox $ 213 $ 189 $ 146 214,500
Phyllis Burke Davis $ 208 $ 184 $ 143 210,000
Richard J. Flynn*** $ 27 $ 11 $ 10 0
Robert M. Gates **** $ 0 $ 0 $ 113 176,000
Edward C. Johnson 3d ** $ 0 $ 0 $ 0 0
E. Bradley Jones $ 209 $ 186 $ 144 211,500
Donald J. Kirk $ 209 $ 186 $ 144 211,500
Peter S. Lynch ** $ 0 $ 0 $ 0 0
William O. McCoy***** $ 73 $ 62 $ 150 214,500
Gerald C. McDonough $ 255 $ 229 $ 177 264,500
Edward H. Malone*** $ 26 $ 11 $ 9 0
Marvin L. Mann $ 213 $ 189 $ 146 214,500
Robert C. Pozen** $ 0 $ 0 $ 0 0
Thomas R. Williams $ 213 $ 189 $ 146 214,500
</TABLE>
* Information is for the calendar year ended December 31, 199 7
for 23 0 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 December
17, 1997 .
***** 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 of
Fidelity Court Street Trust effective January 1, 1997. Mr. McCoy was
elected to the Board of Trustees of Fidelity Court Street Trust
II on December 17, 1997 .
A Compensation figures include cash, amounts required to be
deferred, and may include amounts deferred at the election of
Trustees. For the calendar year ended December 31, 1997, the Trustees
accrued required deferred compensation from the funds as follows:
Ralph F. Cox $75,000, Phyllis Burke Davis, $75,000, Robert M. Gates,
$62,500, E. Bradley Jones, $75,000, Donald J. Kirk, $75,000, William
O. McCoy, $75,000, Gerald C. McDonough, $87,500, Marvin L. Mann,
$75,000, and Thomas R. Williams, $75,000. Certain of the
non-interested Trustees elected voluntarily to defer a portion of
their compensation: Ralph F. Cox, $53,699; Marvin L. Mann, $53,699;
and Thomas R. Williams, $62,462.
B Compensation figures include cash .
C Information is for the fiscal year ended October 31, 1997.
D Aggregate Compensation from Spartan New Jersey Municipal Money
Market Fund for the one month period ended November 30, 1997: J. Gary
Burkhead, $0, Ralph F. Cox, $17, Phyllis Burke Davis, $17, Richard J.
Flynn, $0, Robert M. Gates, $17, Edward C. Johnson 3d, $0, E. Bradley
Jones, $17, Donald J. Kirk, $17, Peter S. Lynch, $0, William O. McCoy,
$17, Gerald C. McDonough, $21, Edward H. Malone, $0, Marvin L. Mann,
$17, Robert C. Pozen, $0, Thomas R. Williams, $17.
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.
As of November 30, 1997, the Trustees, Members of the Advisory
Board, and officers of each fund owned, in the aggregate, less than 1%
of each fund's total outstanding shares.
As of November 30, 1997, the following owned of record 5% or
more of a fund's outstanding shares:
Spartan New Jersey Municipal Income: National Financial Services
Corporation, Boston, MA (8.65%).
Spartan New Jersey Municipal Money Market: National Financial
Services Corporation, Boston, MA (37.51%).
MANAGEMENT CONTRACTS
FMR is manager of Spartan N ew J ersey Municipal Money
Market and Spartan N ew J ersey Municipal Income pursuant
to management contracts dated January 10, 199 8 and
January 1, 1992, respectively, which were approved by shareholders on
November 2 6 , 199 7 and December 11, 1991,
respectively.
FMR is manager of Fidelity N ew J ersey Municipal Money
Market pursuant to a management contract dated January 1, 1998,
which was approved by shareholders on December 17, 1997 . FMR
went to shareholders on December 17, 1997 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 January 1, 1998 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 January 1, 1998 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 N EW J ERSEY
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 N EW J ERSEY
MUNICIPAL MONEY MARKET AND SPARTAN N EW J ERSEY MUNICIPAL
INCOME). Under the terms of its management contract with each fund,
FMR is responsible for payment of all operating expenses of each fund
with certain exceptions. Specific expenses payable by FMR include
expenses for typesetting, printing, and mailing proxy materials to
shareholders, legal expenses, fees of the custodian, auditor and
interested Trustees, each fund's proportionate share of insurance
premiums and Investment Company Institute dues, and the costs of
registering shares under federal securities laws and making necessary
filings under state securities laws. Each fund's management contract
further provides that FMR will pay for typesetting, printing, and
mailing prospectuses, statements of additional information, notices,
and reports to shareholders; however, under the terms of each fund's
transfer agent agreement, the transfer agent bears the costs of
providing these services to existing shareholders. FMR also pays all
fees associated with transfer agent, dividend disbursing, and
shareholder services, and pricing and bookkeeping services.
FMR pays all other expenses of Spartan New Jersey Municipal Money
Market and Spartan New Jersey Municipal Income with the following
exceptions: fees and expenses of the non-interested Trustees,
interest, taxes, brokerage commissions (if any), and such nonrecurring
expenses as may arise, including costs of any litigation to which a
fund may be a party, and any obligation it may have to indemnify its
officers and Trustees with respect to litigation.
MANAGEMENT FEES. For the services of FMR under each management
contract, each of Spartan New Jersey Municipal Money Market and
Spartan New Jersey 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 New Jersey Municipal Money
Market and Spartan New Jersey Municipal Income is reduced by an amount
equal to the fees and expenses paid by the fund to the non-interested
Trustees.
For the services of FMR under the management contract, Fidelity New
Jersey Municipal Money Market pays FMR a monthly management fee which
has two components: a group fee rate and an individual fund fee rate.
The group fee rate is based on the monthly average net assets of all
of the registered investment companies with which FMR has management
contracts.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
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 January 1, 1998, 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 $ 543 billion of group net assets - the approximate
level for November 1997 - was 0.1376 %, which is the weighted
average of the respective fee rates for each level of group net assets
up to $ 543 billion.
The individual fund fee rate for Fidelity N ew J ersey
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. 1376 % + 0.25% = 0. 3876 %
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 N ew J ersey
Municipal Money Market and Spartan N ew J ersey Municipal
Income.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fund Fiscal Period Ended Amount of Management Fees
Credits Reducing Paid to FMR
Management Fees
Spartan NJ Municipal Money
Market
1997 11/30** $ 951 $ 213,575 *
1997 10/31 $ 11,191 $ 2,612,461 *
1996 $ 38,426 $ 2,454,322*
1995 $ 0 $ 2,216,748 *
Fidelity NJ Municipal Money 11/30
Market
1997 N/A $ 1,796,786
1996 N/A $ 1,726,411
1995 N/A $ 1,712,699
Spartan NJ Municipal Income 11/30
1997 $ 11,308 $ 1,941,931 *
1996 $ 95,620 $ 1,966,301 *
1995 $ 0 $ 1,930,146 *
</TABLE>
* After reduction of fees and expenses paid by the fund to the
non-interested Trustees.
** Spartan New Jersey Municipal Money Market's fiscal year end
changed from October 31 to November 30 effective November 30,
1997.
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>
Period of Aggregate Fiscal Years Management Amount of
Expense Limitation Operating Ended Fee Management
From To Expense October 31 Before Fee
Limitation Reimbursemen Reimbursemen
t t
August 1, 1997 Oct. 31, 1997 -- 199 7 $ 2,612,461* $ 520,685
Spartan NJ
Municipal
Money
Market
July 1, 1997 July 31, 1997 0.45%
June 2, 1997 June 30, 1997 0.40%
Nov. 1, 1996 June 1, 1997 0.35%
Dec. 1, 1995 Oct. 31, 1996 0.35% 1996 $ 2,454,322* $ 748,187
Nov. 1, 1995 Nov. 30, 1995 0.32%
July 1, 1995 Oct. 31, 1995 0.32% 1995 $ 2,216,748* $ 855,981
Nov. 1, 1994 June 30, 1995 0.30%
</TABLE>
* After reduction of fees and expenses paid by the fund to the
non-interested Trustees.
To defray shareholder service costs, FMR or its affiliates also
collect Spartan N ew J ersey 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 Exchange Fees Account Wire Fees Checkwriting
Ended Closeout Fees Charges
Spartan NJ
Municipal Money
Market
11/30/97* $ 65 $ 23 $ 30 $ 248
10/31/97 $ 1,960 $ 696 $ 275 $ 4,145
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 $ 1,160 $ 630 $ 95 N/A
11/30/96 $ 2,600 $ 1,650 $ 375 N/A
11/30/95 $ 3,205 $ 1,710 $ 395 N/A
</TABLE>
* Spartan N ew J ersey Municipal Money Market's fiscal
year end changed from October 31 to November 30 , effective November
30, 1997 .
SUB-ADVISER. On behalf of Spartan N ew J ersey Municipal
Money Market and Fidelity N ew J ersey Municipal Money
Market, FMR has entered into a sub-advisory agreement with FIMM
pursuant to which FIMM has primary responsibility for providing
portfolio investment management services to the funds.
Under the terms of the sub-advisory agreements, FMR pays
F I M M fees equal to 50% of the management fee payable to
FMR under its management contract with each fund. The fees paid to
F IM M are not reduced by any voluntary or mandatory expense
reimbursements that may be in effect from time to time.
Fees paid to FMR Texas Inc. (FMR Texas), the predecessor company to
FIMM, by FMR on behalf of Spartan N ew J ersey
Municipal Money Market and Fidelity N ew J ersey 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
11/30/97* $ 106,788
10/31/97 $ 1,306,231
10/31/96 $ 1,227,161
10/31/95 $ 1,108,374
Fidelity NJ Municipal Money Market
11/30/97 $ 898,393
11/30/96 $ 863,206
11/30/95 $ 8 56,350
* Spartan N ew J ersey Municipal Money Market's fiscal
year end changed from October 31 to November 30 , effective November
30, 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 authorized such
payments for the funds' shares.
FMR made no payments either directly or through FDC to third parties
for the fiscal year ended 1997.
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 N ew J ersey Municipal Money Market and
Fidelity N ew J ersey 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 N ew
J ersey 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 N ew J ersey
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 N ew J ersey
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 $ 93,106 $ 88,500 $ 87,056
For Spartan N ew J ersey Municipal Money Market and
Spartan N ew J ersey 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 N ew J ersey Municipal Money
Market and Fidelity N ew J ersey 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. Prior to January 10,
1998, Spartan New Jersey Municipal Money Market was a fund of Fidelity
Beacon Street Trust, an open-end management investment company
organized as a Delaware business trust on June 19, 1979. Fidelity
N ew J ersey Municipal Money Market acquired all of the
assets of Fidelity New Jersey Tax-Free Money Market Portfolio, a
series of Fidelity Court Street Trust on February 28, 1992 pursuant to
an agreement approved by shareholders on December 11, 1991. Currently
there are five funds of 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 N ew Jersey Municipal Income is a fund of Fidelity Court
Street Trust (the Massachusetts 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. Price Waterhouse LLP, 160 Federal Street, Boston,
Massachusetts, serves as Spartan N ew J ersey
Municipal Money Market's independent accountant. The auditor examines
financial statements for the funds and provides other audit, tax, and
related services.
AUDITOR. Coopers & Lybrand L.L.P., One Post Office Square, Boston,
Massachusetts, serves as independent accountant for Fidelity NJ
Municipal Money Market and Spartan New Jersey Municipal Income .
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 October 31, 1997 and/or November 30, 1997
as applicable , 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) Financial Statements and Financial Highlights, included in the
Annual Reports, for Fidelity New Jersey Municipal Money Market Fund
for the fiscal year ended November 30, 1997, and Spartan New Jersey
Municipal Money Market Fund for the fiscal year ended October 31, 1997
and the fiscal period ended November 30, 1997, are incorporated herein
by reference into the funds' Statement of Additional Information, and
were filed on January 7, 1998, pursuant to Rule 30d-1 under the
Investment Company Act of 1940 and are incorporated herein by
reference.
(b) Exhibits:
(1)(a) Trust Instrument, dated June 20, 1991 is incorporated herein
by reference to Exhibit 1 of Post-Effective Amendment No. 12.
(b) Form of Trust Supplement, is filed herein as Exhibit 1(b).
(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) Form of Management Contract, dated January 1, 1998, between
Fidelity Court Street Trust II on behalf of Fidelity New Jersey
Municipal Money Market Fund and Fidelity Management & Research
Company, is filed herein as Exhibit 5(b).
(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) Form of Management Contract, dated January 10, 1998, between
Fidelity Court Street Trust II on behalf of Spartan New Jersey
Municipal Money Market Fund and Fidelity Management & Research
Company, is filed herein as Exhibit 5(e).
(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) Form of Sub-Advisory Agreement, dated January 10, 1998,
between Fidelity Investments Money Management, Inc. and Fidelity
Management & Research Company, on behalf of Spartan New Jersey
Municipal Money Market Fund, is filed herein as Exhibit 5(j).
(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) Form of General Distribution Agreement, dated January 10,
1998, between Fidelity Court Street Trust II on behalf of Spartan New
Jersey Municipal Money Market Fund and Fidelity Distributors
Corporation, is filed herein as Exhibit 6(e).
(f) Amendments to the General Distribution Agreement between
Spartan Florida Municipal Money Market Fund, Fidelity New Jersey
Municipal Money Market Fund, Fidelity Connecticut Municipal Money
Market Fund, Spartan Connecticut 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. 33-3529)
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) Consent of Auditors is filed herein as Exhibit 11.
(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 Fund, is incorporated herein by reference to
Exhibit 15(c) of Post-Effective Amendment No. 18.
(d) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Court Street Trust II on behalf of Spartan Connecticut
Municipal Money Market Fund, is incorporated herein by reference to
Exhibit 15(d) of Post-Effective Amendment No. 18.
(e) Distribution and Service Plan pursuant to Rule 12b-1 for
Spartan New Jersey Municipal Money Market Fund, is filed herein as
Exhibit 15(e).
(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 for Fidelity New Jersey Municipal Money
Market Fund and Spartan New Jersey Municipal Money Market Fund are
filed herein as Exhibit 17.
(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 November 30, 1997
Fidelity New Jersey Municipal Money Market Fund 17,175
Fidelity Connecticut Municipal Money Market Fund 9,416
Spartan Connecticut Municipal Money Market Fund 1,150
Spartan Florida Municipal Money Market Fund 2,630
Spartan New Jersey Municipal Money Market Fund 3,562
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.
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 High-Income Funds advised by
FMR;Vice President of 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 and Vice President of
Fidelity Real Estate High Income and Fidelity Real
Estate High Income II funds advised by 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.
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.
Eric Roiter Vice President and General Counsel of FMR and
Secretary of funds advised by 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.
Cynthia Strauss 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
Eric Roiter Vice President Secretary
Caron Ketchum Treasurer and Controller None
Gary Greenstein Assistant Treasurer None
Jay Freedman Assistant Clerk None
Linda Holland Compliance Officer None
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 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 certifies that it meets
all of the requirements for the effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and
has duly caused this Post-Effective Amendment No. 19 to the
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston, and Commonwealth of
Massachusetts, on the 6th day of January, 1998.
FIDELITY COURT STREET TRUST II
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
(Signature) (Title) (Date)
<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d (dagger) President and Trustee January 6, 1998
Edward C. Johnson 3d (Principal Executive Officer)
/s/Richard A. Silver Treasurer January 6, 1998
Richard A. Silver
/s/Robert C. Pozen Trustee January 6, 1998
Robert C. Pozen
/s/Ralph F. Cox * Trustee January 6, 1998
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee January 6, 1998
Phyllis Burke Davis
/s/Robert M. Gates ** Trustee January 6, 1998
Robert M. Gates
/s/E. Bradley Jones * Trustee January 6, 1998
E. Bradley Jones
/s/Donald J. Kirk * Trustee January 6, 1998
Donald J. Kirk
/s/Peter S. Lynch * Trustee January 6, 1998
Peter S. Lynch
/s/Marvin L. Mann * Trustee January 6, 1998
Marvin L. Mann
/s/William O. McCoy * Trustee Janaury 6, 1998
William O. McCoy
/s/Gerald C. McDonough * Trustee January 6, 1998
Gerald C. McDonough
/s/Thomas R. Williams * Trustee January 6, 1998
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.
** Signature affixed by Robert C. Hacker pursuant to a power of
attorney dated March 6, 1997 and filed herewith.
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee, or General
Partner, as the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Aberdeen Street Trust Fidelity Hereford Street Trust
Fidelity Advisor Series I Fidelity Income Fund
Fidelity Advisor Series II Fidelity Institutional Cash Portfolios
Fidelity Advisor Series III Fidelity Institutional Tax-Exempt Cash Portfolios
Fidelity Advisor Series IV Fidelity Investment Trust
Fidelity Advisor Series V Fidelity Magellan Fund
Fidelity Advisor Series VI Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series VII Fidelity Money Market Trust
Fidelity Advisor Series VIII Fidelity Mt. Vernon Street Trust
Fidelity Beacon Street Trust Fidelity Municipal Trust
Fidelity Boston Street Trust Fidelity Municipal Trust II
Fidelity California Municipal Trust Fidelity New York Municipal Trust
Fidelity California Municipal Trust II Fidelity New York Municipal Trust II
Fidelity Capital Trust Fidelity Phillips Street Trust
Fidelity Charles Street Trust Fidelity Puritan Trust
Fidelity Commonwealth Trust Fidelity Revere Street Trust
Fidelity Concord Street Trust Fidelity School Street Trust
Fidelity Congress Street Fund Fidelity Securities Fund
Fidelity Contrafund Fidelity Select Portfolios
Fidelity Corporate Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Court Street Trust Fidelity Summer Street Trust
Fidelity Court Street Trust II Fidelity Trend Fund
Fidelity Covington Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Daily Money Fund Fidelity U.S. Investments-Government Securities
Fidelity Destiny Portfolios Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity Union Street Trust II
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Newbury Street Trust
Fidelity Financial Trust Variable Insurance Products Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund II
Fidelity Government Securities Fund Variable Insurance Products Fund III
Fidelity Hastings Street Trust
</TABLE>
in addition to any other investment company for which Fidelity
Management & Research Company or an affiliate acts as investment
adviser and for which the undersigned individual serves as President
and Director, Trustee, or General Partner (collectively, the "Funds"),
hereby constitute and appoint Robert C. Pozen my true and lawful
attorney-in-fact, with full power of substitution, and with full power
to him to sign for me and in my name in the appropriate capacity, all
Registration Statements of the Funds on Form N-1A, Form N-8A, or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A, Form N-8A, or any successor thereto, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such
things in my name and on my behalf in connection therewith as said
attorney-in-fact deems necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and the Investment Company
Act of 1940, and all related requirements of the Securities and
Exchange Commission. I hereby ratify and confirm all that said
attorney-in-fact or his substitutes may do or cause to be done by
virtue hereof. This power of attorney is effective for all documents
filed on or after August 1, 1997.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d_ July 17, 1997
Edward C. Johnson 3d
POWER OF ATTORNEY
We, the undersigned Directors, Trustees, or General Partners, as the
case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Aberdeen Street Trust Fidelity Government Securities Fund
Fidelity Advisor Annuity Fund Fidelity Hastings Street Trust
Fidelity Advisor Series I Fidelity Hereford Street Trust
Fidelity Advisor Series II Fidelity Income Fund
Fidelity Advisor Series III Fidelity Institutional Cash Portfolios
Fidelity Advisor Series IV Fidelity Institutional Tax-Exempt Cash Portfolios
Fidelity Advisor Series V Fidelity Institutional Trust
Fidelity Advisor Series VI Fidelity Investment Trust
Fidelity Advisor Series VII Fidelity Magellan Fund
Fidelity Advisor Series VIII Fidelity Massachusetts Municipal Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust
Fidelity Boston Street Trust Fidelity Mt. Vernon Street Trust
Fidelity California Municipal Trust Fidelity Municipal Trust
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Capital Trust Fidelity New York Municipal Trust
Fidelity Charles Street Trust Fidelity New York Municipal Trust II
Fidelity Commonwealth Trust Fidelity Phillips Street Trust
Fidelity Congress Street Fund Fidelity Puritan Trust
Fidelity Contrafund Fidelity Revere Street Trust
Fidelity Corporate Trust Fidelity School Street Trust
Fidelity Court Street Trust Fidelity Securities Fund
Fidelity Court Street Trust II Fidelity Select Portfolios
Fidelity Covington Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Daily Money Fund Fidelity Summer Street Trust
Fidelity Daily Tax-Exempt Fund Fidelity Trend Fund
Fidelity Destiny Portfolios Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity U.S. Investments-Government Securities
Portfolio, L.P. Fund, L.P.
Fidelity Devonshire Trust Fidelity Union Street Trust
Fidelity Exchange Fund Fidelity Union Street Trust II
Fidelity Financial Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Variable Insurance Products Fund II
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company or an affiliate acts as investment adviser and for
which the undersigned individual serves as Directors, Trustees, or
General Partners (collectively, the "Funds"), hereby constitute and
appoint Arthur J. Brown, Arthur C. Delibert, Stephanie A. Djinis,
Robert C. Hacker, Thomas M. Leahey, Richard M. Phillips, and Dana L.
Platt, each of them singly, our true and lawful attorneys-in-fact,
with full power of substitution, and with full power to each of them,
to sign for us and in our names in the appropriate capacities, all
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A or any successor thereto, any Registration
Statements on Form N-14, and any supplements or other instruments in
connection therewith, and generally to do all such things in our names
and behalf in connection therewith as said attorneys-in-fact deems
necessary or appropriate, to comply with the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, and all
related requirements of the Securities and Exchange Commission. I
hereby ratify and confirm all that said attorneys-in-fact or their
substitutes may do or cause to be done by virtue hereof. This power
of attorney is effective for all documents filed on or after January
1, 1997.
WITNESS our hands on this nineteenth day of December, 1996.
/s/Edward C. Johnson 3d___________ /s/Peter S. Lynch________________
Edward C. Johnson 3d Peter S. Lynch
/s/J. Gary Burkhead_______________ /s/William O. McCoy______________
J. Gary Burkhead William O. McCoy
/s/Ralph F. Cox __________________ /s/Gerald C. McDonough___________
Ralph F. Cox Gerald C. McDonough
/s/Phyllis Burke Davis_____________ /s/Marvin L. Mann________________
Phyllis Burke Davis Marvin L. Mann
/s/E. Bradley Jones________________ /s/Thomas R. Williams ____________
E. Bradley Jones Thomas R. Williams
/s/Donald J. Kirk __________________
Donald J. Kirk
POWER OF ATTORNEY
I, the undersigned Director, Trustee, or General Partner, as the case
may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Aberdeen Street Trust Fidelity Government Securities Fund
Fidelity Advisor Annuity Fund Fidelity Hastings Street Trust
Fidelity Advisor Series I Fidelity Hereford Street Trust
Fidelity Advisor Series II Fidelity Income Fund
Fidelity Advisor Series III Fidelity Institutional Cash Portfolios
Fidelity Advisor Series IV Fidelity Institutional Tax-Exempt Cash Portfolios
Fidelity Advisor Series V Fidelity Institutional Trust
Fidelity Advisor Series VI Fidelity Investment Trust
Fidelity Advisor Series VII Fidelity Magellan Fund
Fidelity Advisor Series VIII Fidelity Massachusetts Municipal Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust
Fidelity Boston Street Trust Fidelity Mt. Vernon Street Trust
Fidelity California Municipal Trust Fidelity Municipal Trust
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Capital Trust Fidelity New York Municipal Trust
Fidelity Charles Street Trust Fidelity New York Municipal Trust II
Fidelity Commonwealth Trust Fidelity Phillips Street Trust
Fidelity Congress Street Fund Fidelity Puritan Trust
Fidelity Contrafund Fidelity Revere Street Trust
Fidelity Corporate Trust Fidelity School Street Trust
Fidelity Court Street Trust Fidelity Securities Fund
Fidelity Court Street Trust II Fidelity Select Portfolios
Fidelity Covington Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Daily Money Fund Fidelity Summer Street Trust
Fidelity Daily Tax-Exempt Fund Fidelity Trend Fund
Fidelity Destiny Portfolios Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity U.S. Investments-Government Securities
Portfolio, L.P. Fund, L.P.
Fidelity Devonshire Trust Fidelity Union Street Trust
Fidelity Exchange Fund Fidelity Union Street Trust II
Fidelity Financial Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Variable Insurance Products Fund II
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company or an affiliate acts as investment adviser and for
which the undersigned individual serves as Director, Trustee, or
General Partner (collectively, the "Funds"), hereby constitute and
appoint Arthur J. Brown, Arthur C. Delibert, Stephanie A. Djinis,
Robert C. Hacker, Thomas M. Leahey, Richard M. Phillips, and Dana L.
Platt, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to
sign for me and in my name in the appropriate capacities, all
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A or any successor thereto, any Registration
Statements on Form N-14, and any supplements or other instruments in
connection therewith, and generally to do all such things in my name
and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, and all
related requirements of the Securities and Exchange Commission. I
hereby ratify and confirm all that said attorneys-in-fact or their
substitutes may do or cause to be done by virtue hereof. This power
of attorney is effective for all documents filed on or after March 1,
1997.
WITNESS my hand on the date set forth below.
/s/Robert M. Gates March 6, 1997
Robert M. Gates
Exhibit 1(b)
Form of Supplement To
Trust Instrument of
Fidelity Court Street Trust II
This Supplement to the Trust Instrument of Fidelity Court Street Trust
II, (the "Trust"), dated June 20, 1991 is adopted pursuant to a
resolution of the shareholders adopted at a meeting on December 17,
1997 as follows:
1. The second paragraph of Section 7.01 of the Trust Instrument is
amended and restated as follows:
VOTING POWERS.
Section 7.01. ... On any matter submitted to a vote of the
Shareholders, all Shares shall be voted separately by individual
Series, except (i) when required by the 1940 Act, Shares shall be
voted in the aggregate and not by individual Series; and (ii) when the
Trustees have determined that the matter affects the interests of more
than one Series, then the Shareholders of all such Series shall be
entitled to vote thereon. The Trustees may also determine that a
matter affects only the interests of one or more classes of a Series,
in which case any such matters shall be voted on by such class or
classes. A Shareholder of each Series shall be entitled to one vote
for each dollar of net asset value (number of shares owned times net
asset value per share) of such Series, on any matter on which such
Shareholder is entitled to vote and each fractional dollar amount
shall be entitled to a proportionate fractional vote.There shall be no
cumulative voting in the election of Trustees. Shares may be voted in
person or by proxy, or in any manner provided for in the Bylaws. A
proxy may be given in writing. The Bylaws may provide that proxies may
also, or may instead, be given by any electronic or telecommunications
device or in any other manner. Notwithstanding anything else herein or
in the Bylaws, in the event a proposal by anyone other than the
officers or Trustees of the Trust is submitted to a vote of the
Shareholders of one or more Series or of the Trust, or in the event of
any proxy contest or proxy solicitation or proposal in opposition to
any proposal by the officers or Trustees of the Trust, Shares may be
voted only in person or by written proxy. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any
action required or permitted by law, this Trust Instrument or any
Bylaws of the Trust to be taken by Shareholders.
IN WITNESS WHEREOF, the undersigned, being a trustee of the Trust,
has executed this instrument.
________________________
Robert C. Pozen, as Trustee and not individually.
Dated: January , 1998
Exhibit 5(b)
FORM OF
MANAGEMENT CONTRACT
between
FIDELITY COURT STREET TRUST II:
FIDELITY NEW JERSEY MUNICIPAL MONEY MARKET FUND
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
AMENDMENT made this 1st day of January, 1998, by and between Fidelity
Court Street Trust II, a Delaware business trust which may issue one
or more series of shares of beneficial interest (hereinafter called
the "Fund"), on behalf of Fidelity New Jersey Municipal Money Market
Fund (hereinafter called the "Portfolio"), and Fidelity Management &
Research Company, a Massachusetts corporation (hereinafter called the
"Adviser") as set forth in its entirety below.
Required authorization and approval by shareholders and Trustees
having been obtained, the Fund, on behalf of the Portfolio, and the
Adviser hereby consent, pursuant to Paragraph 6 of the existing
Management Contract dated February 28, 1992, to a modification of said
Contract in the manner set below. The Amended Management Contract
shall, when executed by duly authorized officers of the Fund and
Adviser, take effect on January 1, 1998 or the first day of the month
following approval.
1. (a) Investment Advisory Services. The Adviser undertakes to act
as investment adviser of the Portfolio and shall, subject to the
supervision of the Fund's Board of Trustees, direct the investments of
the Portfolio in accordance with the investment objective, policies
and limitations as provided in the Portfolio's Prospectus or other
governing instruments, as amended from time to time, the Investment
Company Act of 1940 and rules thereunder, as amended from time to time
(the "1940 Act"), and such other limitations as the Portfolio may
impose by notice in writing to the Adviser. The Adviser shall also
furnish for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the
investments of the Portfolio; and shall pay the salaries and fees of
all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all
personnel of the Fund or the Adviser performing services relating to
research, statistical and investment activities. The Adviser is
authorized, in its discretion and without prior consultation with the
Portfolio, to buy, sell, lend and otherwise trade in any stocks, bonds
and other securities and investment instruments on behalf of the
Portfolio. The investment policies and all other actions of the
Portfolio are and shall at all times be subject to the control and
direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for
the performance by its affiliates of) the management and
administrative services necessary for the operation of the Fund. The
Adviser shall, subject to the supervision of the Board of Trustees,
perform various services for the Portfolio, including but not limited
to: (i) providing the Portfolio with office space, equipment and
facilities (which may be its own) for maintaining its organization;
(ii) on behalf of the Portfolio, supervising relations with, and
monitoring the performance of, custodians, depositories, transfer and
pricing agents, accountants, attorneys, underwriters, brokers and
dealers, insurers and other persons in any capacity deemed to be
necessary or desirable; (iii) preparing all general shareholder
communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered,
maintaining the registration and qualification of the Portfolio's
shares under federal and state law; and (vii) investigating the
development of and developing and implementing, if appropriate,
management and shareholder services designed to enhance the value or
convenience of the Portfolio as an investment vehicle.
The Adviser shall also furnish such reports, evaluations, information
or analyses to the Fund as the Fund's Board of Trustees may request
from time to time or as the Adviser may deem to be desirable. The
Adviser shall make recommendations to the Fund's Board of Trustees
with respect to Fund policies, and shall carry out such policies as
are adopted by the Trustees. The Adviser shall, subject to review by
the Board of Trustees, furnish such other services as the Adviser
shall from time to time determine to be necessary or useful to perform
its obligations under this Contract.
(c) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or
dealers selected by the Adviser, which may include brokers or dealers
affiliated with the Adviser. The Adviser shall use its best efforts
to seek to execute portfolio transactions at prices which are
advantageous to the Portfolio and at commission rates which are
reasonable in relation to the benefits received. In selecting brokers
or dealers qualified to execute a particular transaction, brokers or
dealers may be selected who also provide brokerage and research
services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) to the Portfolio and/or the other
accounts over which the Adviser or its affiliates exercise investment
discretion. The Adviser is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Adviser determines in
good faith that such amount of commission is reasonable in relation to
the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Adviser and its affiliates have with respect to accounts over which
they exercise investment discretion. The Trustees of the Fund shall
periodically review the commissions paid by the Portfolio to determine
if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor.
The Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of
the Fund are or may be or become interested in the Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser are or may be or become similarly
interested in the Fund, and that the Adviser may be or become
interested in the Fund as a shareholder or otherwise.
3. The Adviser will be compensated on the following basis for the
services and facilities to be furnished hereunder. The Adviser shall
receive a monthly management fee, payable monthly as soon as
practicable after the last day of each month, composed of a Group Fee
and an Individual Fund Fee.
(a) Group Fee Rate. The Group Fee Rate shall be based upon the
monthly average of the net assets of the registered investments
companies having Advisory and Service or Management Contracts with the
Adviser (computed in the manner set forth in the fund's Declaration of
Trust or other organizational document) determined as of the close of
business on each business day throughout the month. The Group Fee Rate
shall be determined on a cumulative basis pursuant to the following
schedule:
Average Net Assets Annualized Fee Rate (for each level)
Over $0.0 - 3 billion 0.3700%
3 - 6 0.3400
6 - 9 0.3100
9 - 12 0.2800
12 - 15 0.2500
15 - 18 0.2200
18 - 21 0.2000
21 - 24 0.1900
24 - 30 0.1800
30 - 36 0.1750
36 - 42 0.1700
42 - 48 0.1650
48 - 66 0.1600
66 - 84 0.1550
84 - 120 0.1500
120 - 156 0.1450
156 - 192 0.1400
192 - 228 0.1350
228 - 264 0.1300
264 - 300 0.1275
300 - 336 0.1250
336 - 372 0.1225
372 - 408 0.1200
408 - 444 0.1175
444 - 480 0.1150
480 - 516 0.1125
Over 516 0.1100
(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
.25%.
The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate shall constitute
the Annual Management Fee Rate. One-twelfth of the Annual Management
Fee Rate shall be applied to the average of the net assets of the
Portfolio (computed in the manner set forth in the Fund's Declaration
of Trust or other organizational document) determined as of the close
of business on each business day throughout the month.
4. It is understood that the Portfolio will pay all its expenses
other than those expressly stated to be payable by the Adviser
hereunder, which expenses payable by the Portfolio shall include,
without limitation, (i) interest and taxes; (ii) brokerage commissions
and other costs in connection with the purchase or sale of securities
and other investment instruments; (iii) fees and expenses of the
Fund's Trustees other than those who are "interested persons" of the
Fund or the Adviser; (iv) legal and audit expenses; (v) custodian,
registrar and transfer agent fees and expenses; (vi) fees and expenses
related to the registration and qualification of the Fund and the
Portfolio's shares for distribution under state and federal securities
laws; (vii) expenses of printing and mailing reports and notices and
proxy material to shareholders of the Portfolio; (viii) all other
expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other
registered investment companies having Advisory and Service or
Management Contracts with the Adviser, of 50% of insurance premiums
for fidelity and other coverage; (x) its proportionate share of
association membership dues; (xi) expenses of typesetting for printing
Prospectuses and Statements of Additional Information and supplements
thereto; (xii) expenses of printing and mailing Prospectuses and
Statements of Additional Information and supplements thereto sent to
existing shareholders; and (xiii) such non-recurring or extraordinary
expenses as may arise, including those relating to actions, suits or
proceedings to which the Portfolio is a party and the legal obligation
which the Portfolio may have to indemnify the Fund's Trustees and
officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and
engage in other activities, provided, however, that such other
services and activities do not, during the term of this Contract,
interfere, in a material manner, with the Adviser's ability to meet
all of its obligations with respect to rendering services to the
Portfolio hereunder. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to the Portfolio or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security or other investment
instrument.
6. (a) Subject to prior termination as provided in sub-paragraph (d)
of this paragraph 6, this Contract shall continue in force until May
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such date shall be specifically approved at least
annually by vote of the Trustees of the Fund or by vote of a majority
of the outstanding voting securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on
the part of the Fund to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment
of any penalty, by action of its Trustees or Board of Directors, as
the case may be, or with respect to the Portfolio by vote of a
majority of the outstanding voting securities of the Portfolio. This
Contract shall terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust
or other organizational document and agrees that the obligations
assumed by the Fund pursuant to this Contract shall be limited in all
cases to the Portfolio and its assets, and the Adviser shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio or any other Portfolios of the Fund. In
addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust or other organizational document are separate and
distinct from those of any and all other Portfolios.
8. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts, without giving
effect to the choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have
the respective meanings specified in the 1940 Act, as now in effect or
as hereafter amended, and subject to such orders as may be granted by
the Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
FIDELITY COURT STREET TRUST II
ON BEHALF OF FIDELITY NEW JERSEY MUNICIPAL MONEY MARKET FUND
By _________________________________________
Senior Vice President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By _________________________________________
President
Exhibit 5(e)
FORM OF
MANAGEMENT CONTRACT
between
FIDELITY COURT STREET TRUST II:
SPARTAN NEW JERSEY MUNICIPAL MONEY MARKET FUND
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
AGREEMENT made this 10th day of January, 1998, by and between
Fidelity Court Street Trust II, a Delaware business trust which may
issue one or more series of shares of beneficial interest (hereinafter
called the "Fund"), on behalf of Spartan New Jersey Municipal Money
Market Fund (hereinafter called the "Portfolio"), and Fidelity
Management & Research Company, a Massachusetts corporation
(hereinafter called the "Adviser").
1. (a) Investment Advisory Services. The Adviser undertakes to act
as investment adviser of the Portfolio and shall, subject to the
supervision of the Fund's Board of Trustees, direct the investments of
the Portfolio in accordance with the investment objective, policies
and limitations as provided in the Portfolio's Prospectus or other
governing instruments, as amended from time to time, the Investment
Company Act of 1940 and rules thereunder, as amended from time to time
(the "1940 Act"), and such other limitations as the Portfolio may
impose by notice in writing to the Adviser. The Adviser shall also
furnish for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the
investments of the Portfolio; and shall pay the salaries and fees of
all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all
personnel of the Fund or the Adviser performing services relating to
research, statistical and investment activities. The Adviser is
authorized, in its discretion and without prior consultation with the
Portfolio, to buy, sell, lend and otherwise trade in any stocks, bonds
and other securities and investment instruments on behalf of the
Portfolio. The investment policies and all other actions of the
Portfolio are and shall at all times be subject to the control and
direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for
the performance by its affiliates of) the management and
administrative services necessary for the operation of the Fund. The
Adviser shall, subject to the supervision of the Board of Trustees,
perform various services for the Portfolio, including but not limited
to: (i) providing the Portfolio with office space, equipment and
facilities (which may be its own) for maintaining its organization;
(ii) on behalf of the Portfolio, supervising relations with, and
monitoring the performance of, custodians, depositories, transfer and
pricing agents, accountants, attorneys, underwriters, brokers and
dealers, insurers and other persons in any capacity deemed to be
necessary or desirable; (iii) preparing all general shareholder
communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered,
maintaining the registration and qualification of the Portfolio's
shares under federal and state law; and (vii) investigating the
development of and developing and implementing, if appropriate,
management and shareholder services designed to enhance the value or
convenience of the Portfolio as an investment vehicle.
The Adviser shall also furnish such reports, evaluations, information
or analyses to the Fund as the Fund's Board of Trustees may request
from time to time or as the Adviser may deem to be desirable. The
Adviser shall make recommendations to the Fund's Board of Trustees
with respect to Fund policies, and shall carry out such policies as
are adopted by the Trustees. The Adviser shall, subject to review by
the Board of Trustees, furnish such other services as the Adviser
shall from time to time determine to be necessary or useful to perform
its obligations under this Contract.
(c) The Adviser undertakes to pay all expenses involved in the
operation of the Portfolio, except the following, which shall be paid
by the Portfolio: (i) taxes; (ii) the fees and expenses of all
Trustees of the Fund who are not "interested persons" of the Fund or
of the Adviser; (iii) brokerage fees and commissions; (iv) interest
expenses with respect to borrowings by the Portfolio; and (v) such
non-recurring and extraordinary expenses as may arise, including
actions, suits or proceedings to which the Portfolio is or is
threatened to be a party and the legal obligation that the Portfolio
may have to indemnify the Fund's Trustees and officers with respect
thereto. It is understood that service charges billed directly to
shareholders of the Portfolio, including charges for exchanges,
redemptions, or other services, shall not be payable by the Adviser,
but may be received and retained by the Adviser or its affiliates.
The Adviser, at its own expense, shall place all orders for the
purchase and sale of portfolio securities for the Portfolio's account
with brokers or dealers selected by the Adviser, which may include
brokers or dealers affiliated with the Adviser. The Adviser shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) to the Portfolio and/or the other
accounts over which the Adviser or its affiliates exercise investment
discretion. The Adviser is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Adviser determines in
good faith that such amount of commission is reasonable in relation to
the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Adviser and its affiliates have with respect to accounts over which
they exercise investment discretion. The Trustees of the Fund shall
periodically review the commissions paid by the Portfolio to determine
if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor.
The Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of
the Fund are or may be or become interested in the Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser are or may be or become similarly
interested in the Fund, and that the Adviser may be or become
interested in the Fund as a shareholder or otherwise.
3. For the services and facilities to be furnished hereunder, the
Adviser shall receive a monthly management fee, payable monthly as
soon as practicable after the last day of each month, at the annual
rate of .50% of the average net assets of the Portfolio (computed in
the manner set forth in the Fund's Trust Instrument) determined as of
the close of business on each day throughout the month; provided that
the fee, so computed, shall be reduced by the compensation, including
reimbursement of expenses, paid by the Portfolio to those Trustees who
are not "interested persons" of the Fund or the Adviser. In case of
initiation or termination of this Contract during any month, the fee
shall be reduced proportionately based on the number of business days
during which it is in effect and the fee computed upon the average net
assets for the business days it is so in effect for that month.
4. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and
engage in other activities, provided, however, that such other
services and activities do not, during the term of this Contract,
interfere, in a material manner, with the Adviser's ability to meet
all of its obligations with respect to rendering services to the
Portfolio hereunder. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to the Portfolio or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security.
5. (a) Subject to prior termination as provided in sub-paragraph (d)
of this paragraph 5, this Contract shall continue in force until May
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such date shall be specifically approved at least
annually by vote of the Trustees of the Fund or by vote of a majority
of the outstanding voting securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on
the part of the Fund to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 5, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment
of any penalty, by action of its Trustees or Board of Directors, as
the case may be, or with respect to the Portfolio by vote of a
majority of the outstanding voting securities of the Portfolio. This
Contract shall terminate automatically in the event of its assignment.
6. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Trust Instrument and
agrees that the obligations assumed by the Fund pursuant to this
Contract shall be limited in all cases to the Portfolio and its
assets, and the Adviser shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Portfolio
or any other Portfolios of the Fund. In addition, the Adviser shall
not seek satisfaction of any such obligations from the Trustees or any
individual Trustee. The Adviser understands that the rights and
obligations of any Portfolio under the Trust Instrument are separate
and distinct from those of any and all other Portfolios.
7. This contract shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts, without giving
effect to the choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have
the respective meanings specified in the 1940 Act, as now in effect or
as hereafter amended, and subject to such orders as may be granted by
the Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
FIDELITY COURT STREET TRUST II
on behalf of Spartan New Jersey Municipal Money Market Fund
By
Senior Vice President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By
President
Exhibit 5(j)
FORM OF
SUB-ADVISORY AGREEMENT
between
FIDELITY INVESTMENTS MONEY MANAGEMENT, INC.
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
AGREEMENT made this 10th day of January, 1998, by and between
Fidelity Investments Money Management, Inc., a New Hampshire
Corporation with principal offices at Contra Way, P.O. Box 9600,
Merrimack, New Hampshire (hereinafter called the "Sub-Adviser") and
Fidelity Management & Research Company, a Massachusetts corporation
with principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Adviser").
WHEREAS the Adviser has entered into a Management Contract with
Fidelity Court Street Trust II, a Delaware business trust which may
issue one or more series of shares of beneficial interest (hereinafter
called the "Fund"), on behalf of Spartan New Jersey Municipal Money
Market Fund (hereinafter called the "Portfolio"), pursuant to which
the Adviser is to act as investment manager and adviser to the
Portfolio, and
WHEREAS the Sub-Adviser was formed for the purpose of providing
investment management of money market mutual funds, both taxable and
tax-exempt, advising generally with respect to money market
instruments, and managing or providing advice with respect to cash
management.
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Adviser and the Sub-Adviser agree
as follows:
1. (a) The Sub-Adviser shall, subject to the supervision of the
Adviser, direct the investments of the Portfolio in accordance with
the investment objective, policies and limitations as provided in the
Portfolio's Prospectus or other governing instruments, as amended from
time to time, the Investment Company Act of l940 and rules thereunder,
as amended from time to time (the "l940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser or Sub-Adviser. The Sub-Adviser shall also furnish for the
use of the Portfolio office space and all necessary office facilities,
equipment and personnel for servicing the investments of the
Portfolio; and shall pay the salaries and fees of all personnel of the
Sub-Adviser performing services for the Portfolio relating to
research, statistical and investment activities. The Sub-Adviser is
authorized, in its discretion and without prior consultation with the
Portfolio or the Adviser, to buy, sell, lend and otherwise trade in
any stocks, bonds and other securities and investment instruments on
behalf of the Portfolio. The investment policies and all other
actions of the Portfolio are and shall at all times be subject to the
control and direction of the Fund's Board of Trustees.
(b) The Sub-Adviser shall also furnish such reports, evaluations,
information or analyses to the Fund and the Adviser as the Fund's
Board of Trustees or the Adviser may request from time to time or as
the Sub-Adviser may deem to be desirable. The Sub-Adviser shall make
recommendations to the Fund's Board of Trustees with respect to
Portfolio policies, and shall carry out such policies as are adopted
by the Trustees. The Sub-Adviser shall, subject to review by the
Board of Trustees, furnish such other services as the Sub-Adviser
shall from time to time determine to be necessary or useful to perform
its obligations under this Agreement and which are not otherwise
furnished by the Adviser.
(c) The Sub-Adviser, at its own expense, shall place all orders for
the purchase and sale of portfolio securities for the Portfolio's
account with brokers or dealers selected by the Sub-Adviser, which may
include brokers or dealers affiliated with the Adviser or Sub-Adviser.
The Sub-Adviser shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the
Portfolio and at commission rates which are reasonable in relation to
the benefits received. In selecting brokers or dealers qualified to
execute a particular transaction, brokers or dealers may be selected
who also provide brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of l934) to
the Portfolio and/or the other accounts over which the Sub-Adviser,
Adviser or their affiliates exercise investment discretion. The
Sub-Adviser is authorized to pay a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting
that transaction if the Sub-Adviser determines in good faith that such
amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer.
This determination may be viewed in terms of either that particular
transaction or the overall responsibilities which the Sub-Adviser and
its affiliates have with respect to accounts over which they exercise
investment discretion. The Trustees of the Fund shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.
2. The Sub-Adviser will be compensated by the Adviser on the
following basis for the services to be furnished hereunder: the
Adviser agrees to pay the Sub-Adviser a monthly fee equal to 50% of
the management fee which the Portfolio is obligated to pay the Adviser
under the Portfolio's Management Contract with the Adviser. Such fee
shall not be reduced to reflect expense reimbursements or fee waivers
by the Adviser, if any, in effect from time to time.
3. It is understood that Trustees, officers, and shareholders of the
Fund are or may be or become interested in the Adviser or the
Sub-Adviser as directors, officers or otherwise and that directors,
officers and stockholders of the Adviser or the Sub-Adviser are or may
be or become similarly interested in the Fund, and that the Adviser or
the Sub-Adviser may be or become interested in the Fund as a
shareholder or otherwise.
4. It is understood that the Portfolio will pay all its expenses
other than those expressly stated to be payable by the Sub-Adviser
hereunder or by the Adviser under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include,
without limitation, (i) taxes; (ii) fees and expenses of the Fund's
Trustees other than those who are "interested persons" of the Fund,
the Sub-Adviser, or the Adviser; (iii) brokerage fees and commissions;
(iv) interest expense with regard to borrowings by the Portfolio; and
(v) such non-recurring and extraordinary expenses as may arise,
including actions, suits or proceedings to which the Portfolio is or
is threatened to be a party and the legal obligation that the
Portfolio may have to indemnify the Fund's Trustees and officers with
respect thereto.
5. The Services of the Sub-Adviser to the Adviser are not to be
deemed to be exclusive, the Sub-Adviser being free to render services
to others and engage in other activities, provided, however, that such
other services and activities do not, during the term of this
Agreement, interfere, in a material manner, with the Sub-Adviser's
ability to meet all of its obligations with respect to rendering
investment advice hereunder. The Sub-Adviser shall for all purposes
be an independent contractor and not an agent or employee of the
Adviser or the Fund. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Adviser, the Sub-Adviser shall not be
subject to liability to the Adviser, the Fund or to any shareholder of
the Portfolio for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d)
of this paragraph 6, this Agreement shall continue in force until May
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at least
annually by vote of the Fund's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Adviser,
the Sub-Adviser and the Portfolio, such consent on the part of the
Portfolio to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of the
Agreement must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to such Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Adviser, the Sub-Adviser or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or by vote of a majority of its
outstanding voting securities. This Agreement shall terminate
automatically in the event of its assignment.
7. The Sub-Adviser is hereby expressly put on notice of the
limitation of shareholder liability as set forth in the Trust
Instrument of the Fund and agrees that any obligations of the Fund or
the Portfolio arising in connection with this Agreement shall be
limited in all cases to the Portfolio and its assets, and the
Sub-Adviser shall not seek satisfaction of any such obligation from
the shareholders or any shareholder of the Portfolio. Nor shall the
Sub-Adviser seek satisfaction of any such obligation from the Trustees
or any individual Trustee.
8. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the Investment Company Act of 1940 as now in effect or as
hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
FIDELITY INVESTMENTS MONEY MANAGEMENT, INC.
By
Treasurer
FIDELITY MANAGEMENT & RESEARCH COMPANY
By
President
Exhibit 6(e)
FORM OF
GENERAL DISTRIBUTION AGREEMENT
between
FIDELITY COURT STREET TRUST II:
Spartan New Jersey Municipal Money Market Fund
and
FIDELITY DISTRIBUTORS CORPORATION
Agreement made this 10th day of January, 1998, between Fidelity Court
Street Trust II, a Delaware business trust having its principal place
of business in Wilmington, Delaware and which may issue one or more
series of beneficial interest ("Issuer"), with respect to shares of
Spartan New Jersey Municipal Money Market Fund, a series of the
Issuer, and Fidelity Distributors Corporation, a Massachusetts
corporation having its principal place of business in Boston,
Massachusetts ("Distributors").
In consideration of the mutual promises and undertakings herein
contained, the parties agree as follows:
1. Sale of Shares - The Issuer grants to Distributors the right to
sell shares on behalf of the Issuer during the term of this Agreement
and subject to the registration requirements of the Securities Act of
1933, as amended ("1933 Act"), and of the laws governing the sale of
securities in the various states ("Blue Sky Laws") under the following
terms and conditions: Distributors (i) shall have the right to sell,
as agent on behalf of the Issuer, shares authorized for issue and
registered under the 1933 Act, and (ii) may sell shares under offers
of exchange, if available, between and among the funds advised by
Fidelity Management & Research Company ("FMR") or any of its
affiliates.
2. Sale of Shares by the Issuer - The rights granted to the
Distributor shall be nonexclusive in that the Issuer reserves the
right to sell its shares to investors on applications received and
accepted by the Issuer. Further, the Issuer reserves the right to
issue shares in connection with the merger or consolidation, or
acquisition by the Issuer through purchase or otherwise, with any
other investment company, trust, or personal holding company.
3. Shares Covered by this Agreement - This Agreement shall apply to
unissued shares of the Issuer, shares of the Issuer held in its
treasury in the event that in the discretion of the Issuer treasury
shares shall be sold, and shares of the Issuer repurchased for resale.
4. Public Offering Price - Except as otherwise noted in the Issuer's
current Prospectus and/or Statement of Additional Information, all
shares sold to investors by the Distributor or the Issuer will be sold
at the public offering price. The public offering price for all
accepted subscriptions will be the net asset value per share, as
determined in the manner described in the Issuer's current Prospectus
and/or Statement of Additional Information, plus a sales charge (if
any) described in the Issuer's current Prospectus and/or Statement of
Additional Information. The Issuer shall in all cases receive the net
asset value per share on all sales. If a sales charge is in effect,
the Distributor shall have the right subject to such rules or
regulations of the Securities and Exchange Commission as may then be
in effect pursuant to Section 22 of the Investment Company Act of 1940
to pay a portion of the sales charge to dealers who have sold shares
of the Issuer. If a fee in connection with shareholder redemptions is
in effect, the Issuer shall collect the fee on behalf of Distributors
and, unless otherwise agreed upon by the Issuer and Distributors,
Distributors shall be entitled to receive all of such fees.
5. Suspension of Sales - If and whenever the determination of net
asset value is suspended and until such suspension is terminated, no
further orders for shares shall be processed by the Distributor except
such unconditional orders as may have been placed with the Distributor
before it had knowledge of the suspension. In addition, the Issuer
reserves the right to suspend sales and the Distributor's authority to
process orders for shares on behalf of the Issuer if, in the judgment
of the Issuer, it is in the best interests of the Issuer to do so.
Suspension will continue for such period as may be determined by the
Issuer.
6. Solicitation of Sales - In consideration of these rights granted to
the Distributor, the Distributor agrees to use all reasonable efforts,
consistent with its other business, to secure purchasers for shares of
the Issuer. This shall not prevent the Distributor from entering into
like arrangements (including arrangements involving the payment of
underwriting commissions) with other issuers. This does not obligate
the Distributor to register as a broker or dealer under the Blue Sky
Laws of any jurisdiction in which it is not now registered or to
maintain its registration in any jurisdiction in which it is now
registered. If a sales charge is in effect, the Distributor shall
have the right to enter into sales agreements with dealers of its
choice for the sale of shares of the Issuer to the public at the
public offering price only and fix in such agreements the portion of
the sales charge which may be retained by dealers, provided that the
Issuer shall approve the form of the dealer agreement and the dealer
discounts set forth therein and shall evidence such approval by filing
said form of dealer agreement and amendments thereto as an exhibit to
its currently effective Registration Statement under the 1933 Act.
7. Authorized Representations - The Distributor is not authorized by
the Issuer to give any information or to make any representations
other than those contained in the appropriate registration statements
or Prospectuses and Statements of Additional Information filed with
the Securities and Exchange Commission under the 1933 Act (as these
registration statements, Prospectuses and Statements of Additional
Information may be amended from time to time), or contained in
shareholder reports or other material that may be prepared by or on
behalf of the Issuer for the Distributor's use. This shall not be
construed to prevent the Distributor from preparing and distributing
sales literature or other material as it may deem appropriate.
8. Portfolio Securities - Portfolio securities of the Issuer may be
bought or sold by or through the Distributor, and the Distributor may
participate directly or indirectly in brokerage commissions or
"spreads" for transactions in portfolio securities of the Issuer.
9. Registration of Shares - The Issuer agrees that it will take all
action necessary to register shares under the 1933 Act (subject to the
necessary approval of its shareholders) so that there will be
available for sale the number of shares the Distributor may reasonably
be expected to sell. The Issuer shall make available to the
Distributor such number of copies of its currently effective
Prospectus and Statement of Additional Information as the Distributor
may reasonably request. The Issuer shall furnish to the Distributor
copies of all information, financial statements and other papers which
the Distributor may reasonably request for use in connection with the
distribution of shares of the Issuer.
10. Expenses - The Issuer shall pay all fees and expenses (a) in
connection with the preparation, setting in type and filing of any
registration statement, Prospectus and Statement of Additional
Information under the 1933 Act and amendments for the issue of its
shares, (b) in connection with the registration and qualification of
shares for sale in the various states in which the Board of Trustees
of the Issuer shall determine it advisable to qualify such shares for
sale (including registering the Issuer as a broker or dealer or any
officer of the Issuer as agent or salesman in any state), (c) of
preparing, setting in type, printing and mailing any report or other
communication to shareholders of the Issuer in their capacity as such,
and (d) of preparing, setting in type, printing and mailing
Prospectuses, Statements of Additional Information and any supplements
thereto sent to existing shareholders.
As provided in the Distribution and Service Plan adopted by the
Issuer, it is recognized by the Issuer that FMR may make payment to
Distributors with respect to any expenses incurred in the distribution
of shares of the Issuer, such payments payable from the past profits
or other resources of FMR including management fees paid to it by the
Issuer.
11. Indemnification - The Issuer agrees to indemnify and hold harmless
the Distributor and each of its directors and officers and each
person, if any, who controls the Distributor within the meaning of
Section 15 of the 1933 Act against any loss, liability, claim, damages
or expense (including the reasonable cost of investigating or
defending any alleged loss, liability, claim, damages, or expense and
reasonable counsel fees incurred in connection therewith) arising by
reason of any person acquiring any shares, based upon the ground that
the registration statement, Prospectus, Statement of Additional
Information, shareholder reports or other information filed or made
public by the Issuer (as from time to time amended) included an untrue
statement of a material fact or omitted to state a material fact
required to be stated or necessary in order to make the statements not
misleading under the 1933 Act, or any other statute or the common law.
However, the Issuer 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
Issuer by or on behalf of the Distributor. In no case (i) is the
indemnity of the Issuer in favor of the Distributor or any person
indemnified to be deemed to protect the Distributor or any person
against any liability to the Issuer or its security holders to which
the Distributor or such person would otherwise be subject by reason of
wilful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Issuer to
be liable under its indemnity agreement contained in this paragraph
with respect to any claim made against the Distributor or any person
indemnified unless the Distributor or person, as the case may be,
shall have notified the Issuer in writing of the claim within a
reasonable time after the summons or other first written notification
giving information of the nature of the claim shall have been served
upon the Distributor or any such person (or after the Distributor or
such person shall have received notice of service on any designated
agent). However, failure to notify the Issuer of any claim shall not
relieve the Issuer from any liability which it may have to the
Distributor or any person against whom such action is brought
otherwise than on account of its indemnity agreement contained in this
paragraph. The Issuer shall be entitled to participate at its own
expense in the defense, or, if it so elects, to assume the defense of
any suit brought to enforce any claims, but if the Issuer elects to
assume the defense, the defense shall be conducted by counsel chosen
by it and satisfactory to the Distributor or person or persons,
defendant or defendants in the suit. In the event the Issuer elects
to assume the defense of any suit and retain counsel, the Distributor,
officers or directors or controlling person or persons, defendant or
defendants in the suit, shall bear the fees and expenses of any
additional counsel retained by them. If the Issuer does not elect to
assume the defense of any suit, it will reimburse the Distributor,
officers or directors or controlling person or persons, defendant or
defendants in the suit, for the reasonable fees and expenses of any
counsel retained by them. The Issuer agrees to notify the Distributor
promptly of the commencement of any litigation or proceedings against
it or any of its officers or trustees in connection with the issuance
or sale of any of the shares.
The Distributor also covenants and agrees that it will indemnify and
hold harmless the Issuer and each of its Board members and officers
and each person, if any, who controls the Issuer within the meaning of
Section 15 of the 1933 Act, against any loss, liability, damages,
claim or expense (including the reasonable cost of investigating or
defending any alleged loss, liability, damages, claim or expense and
reasonable counsel fees incurred in connection therewith) arising by
reason of any person acquiring any shares, based upon the 1933 Act or
any other statute or common law, alleging any wrongful act of the
Distributor or any of its employees or alleging that the registration
statement, Prospectus, Statement of Additional Information,
shareholder reports or other information filed or made public by the
Issuer (as from time to time amended) included an untrue statement of
a material fact or omitted to state a material fact required to be
stated or necessary in order to make the statements not misleading,
insofar as the statement or omission was made in reliance upon, and in
conformity with information furnished to the Issuer by or on behalf of
the Distributor. In no case (i) is the indemnity of the Distributor
in favor of the Issuer or any person indemnified to be deemed to
protect the Issuer or any person against any liability to which the
Issuer or such person would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and
duties under this Agreement, or (ii) is the Distributor to be liable
under its indemnity agreement contained in this paragraph with respect
to any claim made against the Issuer or any person indemnified unless
the Issuer or person, as the case may be, shall have notified the
Distributor in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the
nature of the claim shall have been served upon the Issuer or any such
person (or after the Issuer or such person shall have received notice
of service on any designated agent). However, failure to notify the
Distributor of any claim shall not relieve the Distributor from any
liability which it may have to the Issuer or any person against whom
the action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. In the case of any notice to
the Distributor, it shall be entitled to participate, at its own
expense, in the defense or, if it so elects, to assume the defense of
any suit brought to enforce the claim, but if the Distributor elects
to assume the defense, the defense shall be conducted by counsel
chosen by it and satisfactory to the Issuer, to its officers and Board
and to any controlling person or persons, defendant or defendants in
the suit. In the event that the Distributor elects to assume the
defense of any suit and retain counsel, the Issuer or controlling
persons, defendant or defendants in the suit, shall bear the fees and
expense of any additional counsel retained by them. If the
Distributor does not elect to assume the defense of any suit, it will
reimburse the Issuer, officers and Board or controlling person or
persons, defendant or defendants in the suit, for the reasonable fees
and expenses of any counsel retained by them. The Distributor agrees
to notify the Issuer promptly of the commencement of any litigation or
proceedings against it in connection with the issue and sale of any of
the shares.
12. Effective Date - This agreement shall be effective upon its
execution, and unless terminated as provided, shall continue in force
until April 30, 1998 and thereafter from year to year, provided
continuance is approved annually by the vote of a majority of the
Board members of the Issuer, and by the vote of those Board members of
the Issuer who are not "interested persons" of the Issuer and, if a
plan under Rule 12b-1 under the Investment Company Act of 1940 is in
effect, by the vote of those Board members of the Issuer who are not
"interested persons" of the Issuer and who are not parties to the
Distribution and Service Plan or this Agreement and have no financial
interest in the operation of the Distribution and Service Plan or in
any agreements related to the Distribution and Service Plan, cast in
person at a meeting called for the purpose of voting on the approval.
This Agreement shall automatically terminate in the event of its
assignment. As used in this paragraph, the terms "assignment" and
"interested persons" shall have the respective meanings specified in
the Investment Company Act of 1940 as now in effect or as hereafter
amended. In addition to termination by failure to approve continuance
or by assignment, this Agreement may at any time be terminated by
either party upon not less than sixty days' prior written notice to
the other party.
13. Notice - Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice
to the other party at the last address furnished by the other party to
the party giving notice: if to the Issuer, at 82 Devonshire Street,
Boston, Massachusetts, and if to the Distributor, at 82 Devonshire
Street, Boston, Massachusetts.
14. Limitation of Liability - The Distributor is expressly put on
notice of the limitation of shareholder liability as set forth in the
Trust Instrument of the Issuer and agrees that the obligations assumed
by the Issuer under this contract shall be limited in all cases to the
Issuer and its assets. The Distributor shall not seek satisfaction of
any such obligation from the shareholders or any shareholder of the
Issuer. Nor shall the Distributor seek satisfaction of any such
obligation from the Trustees or any individual Trustee of the Issuer.
The Distributor understands that the rights and obligations of each
series of shares of the Issuer under the Issuer's Trust Instrument are
separate and distinct from those of any and all other series.
IN WITNESS WHEREOF, the Issuer has executed this instrument in its
name and behalf, by one of its officers duly authorized, and the
Distributor has executed this instrument in its name and behalf, and
its seal affixed, by one of its officers duly authorized, as of the
day and year first above written.
FIDELITY COURT STREET TRUST II
Spartan New Jersey Municipal Money Market Fund
Attest: By
Senior Vice Preisdent
FIDELITY DISTRIBUTORS CORPORATION
Attest: By
President
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, into the
Prospectus and Statement of Additional Information constituting part
of Post-Effective Amendment No. 19 to the Registration Statement on
Form N-1A of Fidelity Court Street Trust II: Fidelity New Jersey
Municipal Money Market Fund, of our report dated January 5, 1998 on
the financial statements and financial highlights included in the
November 30, 1997 Annual Report to Shareholders of Fidelity New Jersey
Municipal Money Market Fund.
We further consent to the references to our Firm under the headings
"Financial Highlights" in the Prospectus and "Auditor" in the
Statement of Additional Information.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
January 6, 1998
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, into the
Prospectus and Statement of Additional Information constituting parts
of Post-Effective Amendment No. 19 to the Registration Statement on
Form N-1A of Fidelity Court Street Trust II: Spartan New Jersey
Municipal Money Market Fund, of our report dated January 5, 1998 on
the financial statements and financial highlights included in the
Annual Report to Shareholders of Spartan New Jersey Municipal Money
Market Fund for the fiscal year ended October 31, 1997 and the
one-month period ended November 30, 1997.
We further consent to the references to our Firm under the headings
"Financial Highlights" in the Prospectus and "Auditor" in the
Statement of Additional Information.
/s/Price Waterhouse LLP
Price Waterhouse LLP
Boston, Massachusetts
January 5, 1998
Exbibit 15(e)
DISTRIBUTION AND SERVICE PLAN
of Fidelity Court Street Trust II:
Spartan New Jersey Municipal Money Market Fund
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Rule 12b-1 under the Investment Company Act of 1940 (the "Act") of
Spartan New Jersey Municipal Money Market Fund (the "Portfolio"), a
series of shares of Fidelity Court Street Trust II (the "Fund").
2. The Fund has entered into a General Distribution Agreement with
respect to the Portfolio with Fidelity Distributors Corporation (the
"Distributor"), a wholly owned subsidiary of Fidelity Management &
Research Company (the "Adviser"), under which the Distributor uses all
reasonable efforts, consistent with its other business, to secure
purchasers for the Portfolio's shares of beneficial interest
("shares"). Under the agreement, the Distributor pays the expenses of
printing and distributing any prospectuses, reports and other
literature used by the Distributor, advertising, and other promotional
activities in connection with the offering of shares of the Portfolio
for sale to the public. It is recognized that the Adviser may use its
management fee revenues as well as past profits or its resources from
any other source, to make payment to the Distributor with respect to
any expenses incurred in connection with the distribution of Portfolio
shares, including the activities referred to above.
3. The Adviser directly, or through the Distributor, may, subject to
the approval of the Trustees, make payments to securities dealers and
other third parties who engage in the sale of shares or who render
shareholder support services, including but not limited to providing
office space, equipment and telephone facilities, answering routine
inquiries regarding the Portfolio, processing shareholder transactions
and providing such other shareholder services as the Fund may
reasonably request.
4. The Portfolio will not make separate payments as a result of this
Plan to the Adviser, Distributor or any other party, it being
recognized that the Portfolio presently pays, and will continue to
pay, a management fee to the Adviser. To the extent that any payments
made by the Portfolio to the Adviser, including payment of management
fees, should be deemed to be indirect financing of any activity
primarily intended to result in the sale of shares of the Portfolio
within the context of Rule 12b-1 under the Act, then such payments
shall be deemed to be authorized by this Plan.
5. This Plan shall become effective upon the first business day of
the month following approval by a vote of at least a "majority of the
outstanding voting securities of the Portfolio" (as defined in the
Act), the Plan having been approved by a vote of a majority of the
Trustees of the Fund, including a majority of Trustees who are not
"interested persons" of the Fund (as defined in the Act) and who have
no direct or indirect financial interest in the operation of this Plan
or in any agreements related to this Plan (the "Independent
Trustees"), cast in person at a meeting called for the purpose of
voting on this Plan.
6. This Plan shall, unless terminated as hereinafter provided, remain
in effect from the date specified above until April 30, 1998, and from
year to year thereafter, provided, however, that such continuance is
subject to approval annually by a vote of a majority of the Trustees
of the Fund, including a majority of the Independent Trustees, cast in
person at a meeting called for the purpose of voting on this Plan.
This Plan may be amended at any time by the Board of Trustees,
provided that (a) any amendment to authorize direct payments by the
Portfolio to finance any activity primarily intended to result in the
sale of shares of the Portfolio, to increase materially the amount
spent by the Portfolio for distribution, or any amendment of the
Management Contract to increase the amount to be paid by the Portfolio
thereunder shall be effective only upon approval by a vote of a
majority of the outstanding voting securities of the Portfolio, and
(b) any material amendments of this Plan shall be effective only upon
approval in the manner provided in the first sentence in this
paragraph.
7. This Plan may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Independent Trustees or by a
vote of a majority of the outstanding voting securities of the
Portfolio.
8. During the existence of this Plan, the Fund shall require the
Adviser and/or Distributor to provide the Fund, for review by the
Fund's Board of Trustees, and the Trustees shall review, at least
quarterly, a written report of the amounts expended in connection with
financing any activity primarily intended to result in the sale of
shares of the Portfolio (making estimates of such costs where
necessary or desirable) and the purposes for which such expenditures
were made.
9. This Plan does not require the Adviser or Distributor to perform
any specific type or level of distribution activities or to incur any
specific level of expenses for activities primarily intended to result
in the sale of shares of the Portfolio.
10. Consistent with the limitation of shareholder liability as set
forth in the Fund's Trust Instrument, any obligations assumed by the
Portfolio pursuant to this Plan and any agreements related to this
Plan shall be limited in all cases to the Portfolio and its assets,
and shall not constitute obligations of any other series of shares of
the Fund.
11. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan
shall not be affected thereby.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000880709
<NAME> Fidelity Court Street Trust II
<SERIES>
<NUMBER> 11
<NAME> Fidelity New Jersey Municipal Money Market Fund
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 481,053
<INVESTMENTS-AT-VALUE> 481,053
<RECEIVABLES> 4,575
<ASSETS-OTHER> 2,297
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 487,925
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 264
<TOTAL-LIABILITIES> 264
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 487,716
<SHARES-COMMON-STOCK> 487,717
<SHARES-COMMON-PRIOR> 423,253
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (55)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 487,661
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 16,542
<OTHER-INCOME> 0
<EXPENSES-NET> 2,812
<NET-INVESTMENT-INCOME> 13,731
<REALIZED-GAINS-CURRENT> (26)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 13,704
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 13,731
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,381,762
<NUMBER-OF-SHARES-REDEEMED> 1,330,713
<SHARES-REINVESTED> 13,415
<NET-CHANGE-IN-ASSETS> 64,437
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (29)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,797
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,818
<AVERAGE-NET-ASSETS> 460,700
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> .030
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .030
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 61
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000880709
<NAME> Fidelity Court Street Trust II
<SERIES>
<NUMBER> 21
<NAME> Spartan New Jersey Municipal Money Market Fund
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 518,517
<INVESTMENTS-AT-VALUE> 518,517
<RECEIVABLES> 5,262
<ASSETS-OTHER> 847
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 524,626
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 261
<TOTAL-LIABILITIES> 261
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 524,436
<SHARES-COMMON-STOCK> 524,409
<SHARES-COMMON-PRIOR> 520,595
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (71)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 524,365
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,617
<OTHER-INCOME> 0
<EXPENSES-NET> 213
<NET-INVESTMENT-INCOME> 1,404
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,404
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,404
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 37,089
<NUMBER-OF-SHARES-REDEEMED> 34,652
<SHARES-REINVESTED> 1,377
<NET-CHANGE-IN-ASSETS> 3,814
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (71)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 214
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 214
<AVERAGE-NET-ASSETS> 520,393
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> .003
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .003
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000880709
<NAME> Fidelity Court Street Trust II
<SERIES>
<NUMBER> 31
<NAME> Spartan New Jersey Municipal Money Market Fund
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 516,345
<INVESTMENTS-AT-VALUE> 516,345
<RECEIVABLES> 4,681
<ASSETS-OTHER> 9
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 521,035
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 484
<TOTAL-LIABILITIES> 484
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 520,622
<SHARES-COMMON-STOCK> 520,595
<SHARES-COMMON-PRIOR> 504,890
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (71)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 520,551
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 18,730
<OTHER-INCOME> 0
<EXPENSES-NET> 2,091
<NET-INVESTMENT-INCOME> 16,639
<REALIZED-GAINS-CURRENT> (29)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 16,610
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 16,639
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 572,749
<NUMBER-OF-SHARES-REDEEMED> 573,322
<SHARES-REINVESTED> 16,278
<NET-CHANGE-IN-ASSETS> 15,676
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (15)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,612
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,623
<AVERAGE-NET-ASSETS> 520,393
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .032
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .032
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
