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. 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.