Fidelity adds to AMT tax-free funds

Fidelity Investments, the biggest U.S. mutual fund company, today announced the launch of two new share classes of Fidelity California, Massachusetts, New Jersey and New York AMT Tax-Free Money Market Funds.
MAY 14, 2007
By  Bloomberg
Fidelity Investments, the biggest U.S. mutual fund company, today announced the launch of two new share classes of Fidelity California, Massachusetts, New Jersey and New York AMT Tax-Free Money Market Funds. The new classes -- institutional class and service class -- will be available to institutional clients and high-net-worth investors either directly or through intermediaries, such as banks and broker-dealers. In addition, Fidelity said it is lowering expenses on the funds’ existing retail share classes. Established in 1970, the federal Alternative Minimum Tax, or AMT, was originally aimed at a small number of individuals and corporations perceived to be taking advantage of deductions and exemptions to pay little or no federal income tax. The Urban-Brookings Tax Policy Center however estimates that in 2010, under the current law, a third of the taxpayers will be impacted by the AMT, up from 4% in 2006. “These new share classes will provide additional investment choices for the fast-growing number of investors affected by the AMT,” John Sweeney, senior vice president at Fidelity Personal Investments, said in a statement. The funds’ new share classes will require a $1 million initial minimum investment. Total expenses for the institutional class shares of the funds will be contractually capped at 0.20%, while total expenses for the service class of shares of the funds will be contractually capped at 0.45%, the Boston-based company said. Fidelity also has reduced the total expenses on each fund’s existing retail class -- which require a $25,000 initial minimum investment – to 0.30%. That’s a 10-basis-points reduction for investors in the Massachusetts and New York funds and a five basis points reduction for investors in the California and New Jersey funds. Expenses for those share classes have been contractually limited to 35 basis points, Fidelity said.

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