SUPPLEMENT TO THE SPARTAN(registered trademark) MUNICIPAL FU N DS
OCTOBER 18, 1996 PROSPECTUS
PROPOSED REORGANIZATION. The Board of Trustees of Spartan Municipal Income
Fund has unanimously approved an Agreement and Plan of Reorganization
("Agreement") between Spartan Municipal Income Fund and Fidelity Municipal
Income Fund, a fund of Fidelity Court Street Trust.
The Agreement provides for transfer of all of the assets and the assumption
of all of the liabilities of Spartan Municipal Income Fund solely in
exchange for the number of shares of Fidelity Municipal Income Fund equal
in value to the relative net asset value of the outstanding shares of
Spartan Municipal Income Fund. Following such exchange, Spartan Municipal
Income Fund will distribute the Fidelity Municipal Income Fund shares to
its shareholders pro rata, in liquidation of Spartan Municipal Income Fund
as provided in the Agreement (the transactions contemplated by the
Agreement referred to as the "Reorganization").
The Reorganization can be consummated only if, among other things, it is
approved by a majority vote of shareholders. A Special Meeting (the
"Meeting") of the Shareholders of Spartan Municipal Income Fund will be
held on October 6, 1997, and approval of the Agreement will be voted on at
that time. In connection with the Meeting, Spartan Municipal Income Fund
will be filing with the Securities and Exchange Commission and delivering
to its shareholders of record a Proxy Statement describing the
Reorganization and a Prospectus for Fidelity Municipal Income Fund.
If the Agreement is approved at the Meeting and certain conditions required
by the Agreement are satisfied, the Reorganization is expected to become
effective on or about October 23, 1997. If shareholder approval of the
Agreement is delayed due to failure to meet a quorum or otherwise, the
Reorganization will become effective, if approved, as soon as practicable
thereafter.
In the event Spartan Municipal Income Fund shareholders fail to approve the
Agreement, Spartan Municipal Income Fund will continue to engage in
business as a registered investment company and the Board of Trustees will
consider other proposals for the reorganization or liquidation of Spartan
Municipal Income Fund.
Effective April 1, 1997, Spartan Municipal Income Fund was closed to new
accounts, except for investments through Fidelity Portfolio Advisory
Services.
Effective April 15, 1997, the following information replaces the similar
information found in "Charter" on page 16:
David Murphy is manager of Spartan Aggressive Municipal, which he has
managed since April 1997. He also manages several other Fidelity funds. Mr.
Murphy joined Fidelity as a portfolio manager in 1989.
The following changes are effective April 1, 1997:
FMR anticipates presenting a proposal in 1997 to the Board of Trustees of
Spartan Intermediate Municipal Income Fund requesting their approval to
present shareholders of the fund a proposal to merge the fund into Fidelity
Limited Term Municipal Income Fund. As a result, Spartan Intermediate
Municipal Income Fund is closed to new accounts.
With respect to Spartan Short-Intermediate Municipal Income Fund, Spartan
Intermediate Municipal Income Fund, Spartan Municipal Income Fund and
Spartan Aggressive Municipal Fund, the following fees for individual
transactions have been eliminated: the $5.00 exchange fee, the $5.00 wire
fee, the $5.00 account closeout fee, and the $2.00 checkwriting fee.
References to these fees throughout the prospectus are no longer in effect
with respect to these funds.
The following information replaces similar information found in "Expenses"
on page 5:
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy, sell or
exchange shares of a fund. In addition, you may be charged an annual
account maintenance fee if your balance falls below $2,500. See
"Transaction Details," page 37 for an explanation of how and when these
charges apply.
Maximum sales charge on purchases None
and reinvested distributions
Deferred sales charge on redemptions None
Redemption fee (as a % of amount redeemed on shares held less
than 180 days)
for Spartan Municipal Income .50
%
for Spartan Aggressive Municipal 1.00
%
for all other funds Non
e
Exchange and wire transaction fees $5.00
(for Spartan Municipal Money only)
Checkwriting fee, per check written $2.00
(available for Spartan Municipal Money, Spartan Short-Intermediate
Municipal Income, and Spartan Intermediate Municipal Income)
Account closeout fee (for Spartan $5.00
Municipal Money only)
Annual account maintenance fee $12.0
(for accounts under $2,500) 0
THESE FEES ARE WAIVED (except for the redemption fee) if your account
balance at the time of the transaction is $50,000 or more.
The following information replaces similar information found in "Expenses"
on page 6.
SPARTAN AGGRESSIVE MUNICIPAL
Operating Expenses
Management fee .55%A
12b-1 fee None
Other expenses .00%
Total fund operating expenses .55%
A EFFECTIVE MARCH 1, 1997, FMR HAS VOLUNTARILY AGREED TO IMPLEMENT A
MANAGEMENT FEE REDUCTION FROM .60% TO .5 5%. IF THE AGREEMENT WERE NOT IN
EFFECT, THE MANAGEMENT FEE AND TOTAL OPERATING EXPENSES WOULD BE . 60%
AND .60%, RESPECTIVELY.
EXAMPLES: Let's say, hypothetically, that each fund's annual return is 5%
and that its operating expenses are exactly as described on page 6. For
every $1,000 you invested, the examples on page 6 show you how much you
would pay in total expenses after the number of years indicated. Figures
for Spartan Municipal Money Fund assume that you leave your account open,
and then assume that you close your account at the end of the period.
SPARTAN SHORT-INTERMEDIATE MUNICIPAL INCOME
Examples
After 1 year $6
After 3 $18
years
After 5 $31
years
After 10 $69
years
SPARTAN INTERMEDIATE MUNICIPAL INCOME
Examples
After 1 year $6
After 3 $18
years
After 5 $31
years
After 10 $69
years
SPARTAN MUNICIPAL INCOME
Examples
After 1 year $6
After 3 $18
years
After 5 $31
years
After 10 $69
years
SPARTAN AGGRESSIVE MUNICIPAL
Examples
After 1 year $6
After 3 $18
years
After 5 $31
years
After 10 $69
years
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
PROPOSED REORGANIZATION. The Board of Trustees of Spartan Aggressive
Municipal Fund has unanimously approved an Agreement and Plan of
Reorganization ("Agreement") between Spartan Aggressive Municipal Fund and
Fidelity Aggressive Municipal Fund, a fund of Fidelity Municipal Trust.
The Agreement provides for transfer of all of the assets and the assumption
of all of the liabilities of Spartan Aggressive Municipal Fund solely in
exchange for the number of shares of Fidelity Aggressive Municipal Fund
equal in value to the relative net asset value of the outstanding shares of
Spartan Aggressive Municipal Fund. Following such exchange, Spartan
Aggressive Municipal Fund will distribute the Fidelity Aggressive Municipal
Fund shares to its shareholders pro rata, in liquidation of Spartan
Aggressive Municipal Fund as provided in the Agreement (the transactions
contemplated by the Agreement referred to as the "Reorganization").
The Reorganization can be consummated only if, among other things, it is
approved by a majority vote of shareholders. A Special Meeting (the
"Meeting") of the Shareholders of Spartan Aggressive Municipal Fund will be
held on July 16, 1997, and approval of the Agreement will be voted on at
that time. In connection with the Meeting, Spartan Aggressive Municipal
Fund will be filing with the Securities and Exchange Commission and
delivering to its shareholders of record a Proxy Statement describing the
Reorganization and a Prospectus for Fidelity Aggressive Municipal Fund.
If the Agreement is approved at the Meeting and certain conditions required
by the Agreement are satisfied, the Reorganization is expected to become
effective on or about July 31, 1997. If shareholder approval of the
Agreement is delayed due to failure to meet a quorum or otherwise, the
Reorganization will become effective, if approved, as soon as practicable
thereafter.
In the event Spartan Aggressive Municipal Fund shareholders fail to approve
the Agreement, Spartan Aggressive Municipal Fund will continue to engage in
business as a registered investment company and the Board of Trustees will
consider other proposals for the reorganization or liquidation of Spartan
Aggressive Municipal Fund.
The following paragraph on the cover page has been removed:
Spartan Aggressive Municipal may invest without limitation in lower-quality
debt securities, sometimes called "municipal junk bonds." Investors should
consider that these securities carry greater risks, such as the risk of
default, than other debt securities. Refer to "Investment Principles and
Risks" on page 17 for further information.
The following information supplements similar information found in "Who May
Want to Invest" beginning on page 3.
Effective January 20, 1997, Spartan Aggressive Municipal was closed to new
accounts. Effective April 1, 1997, Spartan Intermediate Municipal Income
was closed to new accounts. Effective April 1, 1997, Spartan Municipal
Income Fund was closed to new accounts, except for investments through
Fidelity Portfolio Advisory Services.
Effective March 17, 1997, the following information replaces similar
information found in "Investment Principles and Risks" on page 18.
SPARTAN AGGRESSIVE MUNICIPAL invests primarily in investment grade
municipal securities. The fund may also invest up to 35% of its assets in
below investment-grade securities. Although the fund can invest in
securities of any maturity, 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 August 31, 1996, the
fund's dollar-weighted average maturity was approximately 15 years. The
fund normally invests so that at least 80% of its assets are invested in
municipal securities whose interest is free from federal income tax.
The following information replaces similar information found in "Securities
and Investment Practices" on page 20.
RESTRICTIONS: Spartan Short-Intermediate Municipal Income, Spartan
Intermediate Municipal Income, and Spartan Municipal Income normally invest
in investment-grade securities, but reserve the right to invest up to 5% of
their assets in below investment-grade securities (sometimes called
"municipal junk bonds"). Spartan Aggressive Municipal currently intends to
limit its investments in below investment-grade securities to less than 35%
of its assets and does not currently intend to invest more than 10% of its
total assets in bonds that are in default. A security is considered to be
investment-grade if it is rated investment grade by Moody's Investors
Service, Standard and Poor's, Duff & Phelps Credit Rating Co., or Fitch
Investors Service, L.P. or is unrated but judged by FMR to be of equivalent
quality.
The following information replaces similar information found in "Breakdown
of Expenses" on page 25.
FMR has voluntarily agreed to limit Spartan Municipal Money's total
operating expenses to an annual rate of .40% of average net assets for the
fiscal year ended 1996. Effective March 1, 1997, FMR has voluntarily agreed
to reduce Spartan Aggressive Municipal's management fee rate from .60% to
.55%. If this reductio n were in effect, the total management fee
rate would have been .55%.
The following information replaces similar information found in "How to Buy
Shares" on page 28.
These minimums may vary for investments through Fidelity Portfolio Advisory
Services. Refer to the program materials for details. Effective January 20,
1997, Spartan Aggressive Municipal was closed to new accounts. Effective
April 1, 1997, Spartan Intermediate Municipal Income was closed to new
accounts. Effective April 1, 1997, Spartan Municipal Income Fund was closed
to new accounts, except for investments through Fidelity Portfolio Advisory
Services.
The following information replaces similar information found in
"Transaction Details" on page 38.
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 in 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.
The following information replaces similar
information found in "Key Facts" on page 4.
Spartan Allowed to invest in With its ability to invest in
Aggressi lower-quality municipal lower-quality securities
ve securities. Although the fund with longer-term
Municipa can invest in securities of any maturities, this is the
l maturity, FMR seeks to most aggressive fund in
manage the fund so that it the family.
generally reacts to changes in
interest rates similarly to
municipal bonds with maturities
between 8 and 18 years.
(high risk graphic)
(low to medium risk graphic)
