FIDELITY
(REGISTERED TRADEMARK)
CALIFORNIA
TAX-FREE
FUNDS
SEMIANNUAL REPORT
AUGUST 31, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING
STRATEGIES
FIDELITY CALIFORNIA TAX-FREE
HIGH YIELD PORTFOLIO 4 PERFORMANCE
7 FUND TALK: THE MANAGER'S OVERVI
EW
10 INVESTMENT CHANGES
11 INVESTMENTS
22 FINANCIAL STATEMENTS
FIDELITY CALIFORNIA TAX-FREE
INSURED PORTFOLIO 26 PERFORMANCE
29 FUND TALK: THE MANAGER'S OVERVI
EW
32 INVESTMENT CHANGES
33 INVESTMENTS
41 FINANCIAL STATEMENTS
FIDELITY CALIFORNIA TAX-FREE
MONEY MARKET PORTFOLIO 45 PERFORMANCE
47 FUND TALK: THE MANAGER'S OVERVI
EW
49 INVESTMENT CHANGES
50 INVESTMENTS
59 FINANCIAL STATEMENTS
NOTES 63 NOTES TO THE FINANCIAL STATEMENTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUNDS UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL
RESERVE BOARD OR
ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF
PRINCIPAL. NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A
BANK. FOR MORE
INFORMATION ON ANY FIDELITY FUND INCLUDING CHARGES AND EXPENSES, CALL
1-800-544-8888
FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
The year so far has been an unsettling time for bond investors. The bond
market declined after the Federal Reserve Board raised short-term interest
rates from February through May. These rate hikes caused bond yields to
rise and bond prices to fall. The board raised the rate again in August,
and while nobody knows whether rates will continue to go up, this may be a
good time to review the effect rising rates have on your bond fund
investment, and consider how well your current bond fund holdings match
your investment goals.
Most investors choose bond funds to generate income and to help diversify
their investment portfolios. Despite the recent market downturn, bond
mutual funds can still satisfy these needs. Where investors have felt the
negative effect of rising rates is in the market value of their investment,
which has eroded as bond prices have fallen. It's important to remember,
however, that this loss in principal is only "on paper" until you sell your
shares. That's why your investing time horizon is key.
If your time horizon is short - one year or less - you may want to consider
shifting all or part of your bond fund investment into short-term
investments.
If you don't need your money within the next year, staying in your bond
fund may be the appropriate strategy for you. The longer your investing
time frame, the better your chances of retaining your principal investment
through periods of rising AND falling rates. For example, if you plan to
use your money in one to two years, a short-term bond fund may be the right
choice. If your time frame is two to four years, a fund with an
intermediate length average maturity may be best. If you have a longer-term
goal - say a child's college education that's 10 years away - you may be
willing to ride out the bond market's peaks and valleys in exchange for the
higher potential returns of a longer-term fund.
If you have questions, please call us at 1-800-544-8888. We would be happy
to send you a Fidelity FundMatch kit, which can help you determine the mix
of investments that is right for you. You might also find it convenient to
set up
a regular investment plan using the Fidelity Automatic Account Builder.SM
Periodic investment plans do not, of course, assure a profit, nor do they
protect against a loss in a declining market.
We look forward to hearing from you.
Best regards,
Edward C. Johnson 3d
FIDELITY CALIFORNIA TAX-FREE HIGH YIELD PORTFOLIO
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells bonds
that have grown in value). You can also look at the fund's income. If
Fidelity had not reimbursed certain fund expenses during the periods shown,
the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1994 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
California Tax-Free High Yield -2.77% -1.81% 43.25% 133.62%
Lehman Brothers Municipal Bond Index -0.90% 0.14% 48.59% 164.75%
Average California Tax-Exempt
Municipal Bond Fund -2.18% -1.37% 43.72% 144.27%
Consumer Price Index 1.57% 2.90% 19.58% 42.58%
CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period
- - in this case, six months, one year, five years, or ten years. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, you would end up with $1,050. You can compare these figures to
the performance of the Lehman Brothers Municipal Bond index - a broad gauge
of the municipal bond market. To measure how the fund stacked up against
its peers, you can look at the average California tax-exempt municipal bond
fund, which reflects the performance of 86 California tax-exempt municipal
bond funds tracked by Lipper Analytical Services. Both benchmarks include
reinvested dividends and capital gains, if any. Comparing the fund's
performance to the consumer price index helps show how your fund did
compared to inflation.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1994 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
California Tax-Free High Yield -1.81% 7.45% 8.86%
Lehman Brothers Municipal Bond Index 0.14% 8.24% 10.23%
Average California Tax-Exempt
Municipal Bond Fund -1.37% 7.52% 9.33%
Consumer Price Index 2.90% 3.64% 3.61%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had achieved that return
by performing at a constant rate each year.
$10,000 OVER LIFE OF FUND
$26,475
$23,362
$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity
California Tax-Free High Yield Portfolio on August 31, 1984. As the chart
shows, by August 31, 1994, the value of your investment would have grown to
$23,362 - a 133.62% increase on your initial investment. For comparison,
look at how the Lehman Brothers Municipal Bond Index did over the same
period. With dividends reinvested, the same $10,000 would have grown to
$26,475 - a 164.75% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, move in the
opposite direction of interest
rates. In turn, the share price,
return, and yield of a fund
that invests in bonds will vary.
That means if you sell your
shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
SIX MONT
HS
ENDED YEARS ENDED FEBRUARY 28,
AUGUST 3
1,
1994 1994 1993 1992 1991 1990
Dividend returns 2.92% 5.82% 6.89% 6.88% 7.00% 7.18%
Capital appreciation
returns -5.69% -0.41% 7.34% 2.66% 0.71% 2.66%
Total returns -2.77% 5.41% 14.23% 9.54% 7.71% 9.84%
DIVIDEND returns and capital appreciation returns are both part of a bond
fund's total return. A dividend return reflects the actual dividends paid
by the fund. A capital appreciation return reflects both the amount paid by
the fund to shareholders as capital gain distributions and changes in the
fund's share price. Both returns assume the dividends or gains are
reinvested.
DIVIDENDS AND YIELD
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED AUGUST 31, 1994 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 5.88(cents) 34.57(cents) 70.21(cents)
Annualized dividend rate 6.16% 6.05% 5.89%
30-day annualized yield 5.73% - -
30-day annualized tax-equivalent yield 10.06% - -
</TABLE>
DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $11.23 over
the past month, $11.34 over the past six months and $11.92 over the past
year, you can compare the fund's income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis. The tax-equivalent yield shows what you would have to
earn on a taxable investment to equal the fund's tax-free yield, if you're
in the 43.04% combined effective 1994 federal and state tax bracket.
FIDELITY CALIFORNIA TAX-FREE HIGH YIELD PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with John Haley,
Portfolio Manager of Fidelity California Tax-Free High Yield
Portfolio
Q. JOHN, HOW HAS THE FUND PERFORMED?
A. It has been a difficult period for both the municipal bond market and
the fund. For the six months ended August 31, 1994, the fund had a total
return of -2.77%. That compares to the average California municipal bond
fund, which returned -2.18% for the same period, according to Lipper
Analytical Services. For the year ended August 31, 1994, the fund returned
- -1.81%, compared to the average fund's return
of -1.37%, again according to Lipper.
Q. WHY HAS THE MUNICIPAL MARKET DONE SO POORLY RECENTLY?
A. Short-term interest rates - which move in the opposite direction of bond
prices - have risen by 1.75% since the beginning of 1994 to 4.75% at the
end of August. The Federal Reserve first raised short-term interest rates
in February, because of concerns that strong economic growth in the fourth
quarter of 1993 would ignite inflation. Since then, the Fed has continued
raising interest rates. In the early stages of this tightening process, the
municipal market reacted quite negatively as investors seemed to fear
further interest rate hikes. Most of the market's - and the fund's - losses
came in February and March, when these fears were greatest. But by May, the
market had settled somewhat, as investors became convinced that economic
growth was more moderate and that inflation would remain in check. The
falling dollar hurt the market in June, but by mid-summer the market
rallied somewhat, based on a sense that higher interest rates were actually
slowing the economy down and easing inflationary pressures.
Q. WHY DID THE FUND UNDER-PERFORM THE AVERAGE CALIFORNIA FUND?
A. Mostly because it had a longer duration - which is a measure of the
fund's sensitivity to changes in interest rates - than other similar funds.
The longer the fund's duration, the more sensitive it is to changes in
interest rates. At the beginning of this year, I thought that economic
growth would be moderate and inflation would stay low. So far, that
assumption has been correct. But in my opinion, slow growth and low
inflation should have eliminated the need for the Fed to raise interest
rates. I was surprised by how quickly and how much the Fed acted. Also, I
believed that supply and demand factors would benefit municipal bonds this
year. The rate of California municipal bonds issued in 1994 by the end of
August was down more than 27% from last year. Demand was expected to remain
strong based upon higher federal and state income taxes. Also, a large
volume of tax-exempt securities matured, during the period. However, the
negative effects of higher interest rates outweighed any positive effects
from lower supply and higher demand.
Q. ONCE INTEREST RATES STARTED TO RISE, DID YOU SHORTEN THE FUND'S
DURATION?
A. Not significantly since I believe that long-term interest rates won't
rise much from their current levels. If I am correct, a fund with a
relatively long duration could benefit more than a fund with a shorter
duration. When interest rates were rising I could have shortened the fund's
duration, and then lengthened it again if and when rates started to fall.
Since there is a diminished supply of California bonds available, I wanted
to keep the fund's current core structure in place. However, to generally
help offset some of the fund's price declines that accompanied having a
longer duration, I used bond futures contracts to hedge or shorten the
portfolio's duration.
Q. THERE'S BEEN A LOT OF TALK LATELY ABOUT DERIVATIVES. AREN'T FUTURES ONE
OF THE FINANCIAL ARRANGEMENTS KNOWN AS A DERIVATIVE, AND DO YOU USE OTHERS?
A. Yes, a futures contract is one type of financial derivative - meaning
its market value is derived from a security or market index. We've used
futures and options in our municipal bond funds for many years. Over the
past couple of years, I've also used what's known as an inverse floater -
whose yield rises as short-term rates fall, and vice versa. These inverse
floaters act like longer-term bonds, effectively increasing a fund's
duration, which is good in a falling interest rate environment, but can
hurt the fund when interest rates rise. At the end of August, inverse
floaters made up less than 5% of the fund's total investments. By using
these various derivatives, I achieve increased flexibility in managing the
fund's overall sensitivity to changes in interest rates, and hopefully, can
achieve higher levels of income.
Q. HOW HAVE YOU ALLOCATED THE FUND IN TERMS OF CREDIT QUALITY?
A. AAA-rated bonds, which are the highest-rated bonds, made up 34.5% of the
fund's investments at the end of August, while A-rated bonds made up 36.2%
at the end of the period. That's about where they stood six months ago. As
I become more constructive about the California economy, I'll most likely
add to the fund's stake in bonds rated A or lower. Improvements in the
state's economy should help the credit quality of many of the A-rated
bonds. That, in turn, could attract more investors, and could boost the
prices of A-rated bonds. A-rated bonds are investment grade, but carry
slightly more risk than higher-rated bonds. What's more, A-rated bonds can
pay as much as a half percent more in yield than AAA-rated bonds.
Q. WAS THE FUND AFFECTED BY THE RECENT DOWNGRADE OF CALIFORNIA BONDS?
A. Not really. The bonds that were affected by the downgrade were
California state general obligation bonds and other bonds backed by the
state, which made up less than 10% of the fund's investments at the end of
August. I had anticipated the downgrade, and the action was factored into
the prices of the affected California bonds well before the actual
downgrade. As a result, there wasn't much of an impact. In fact, the prices
of the affected bonds actually firmed up after being downgraded. Even after
the downgrade, the bonds still carry an investment-grade rating of A.
Q. WHAT'S YOUR OUTLOOK FOR THE CALIFORNIA MUNICIPAL MARKET?
A. I think that the worst is behind the market, although there could be
some continued volatility. Lower interest rates helped stimulate economic
growth in 1993. Conversely, we're beginning to see some signs that higher
interest rates will keep the rate of economic growth more moderate than it
was in the fourth quarter of this 1993. Despite some jitters over the
California gubernatorial race, I think the outlook for the state's
municipals is improving.
FUND FACTS
GOAL: to provide high current
income exempt from California
state and federal income taxes
by investing primarily in
investment-grade securities
START DATE: July 7, 1984
SIZE: as of August 31, 1994,
more than $516 million
MANAGER: John Haley, since
September, 1985; manager,
Spartan California Municipal
High Yield Portfolio, since
December 1989; Fidelity
California Tax-Free Insured
Portfolio, since September
1986; Fidelity Advisor
Tax-Exempt Portfolio, since
1985; joined Fidelity in 1981
(checkmark)
JOHN HALEY'S STRATEGY:
"After a long period of
contraction, the California
economy finally seems to be
basing - meaning it looks
like it has reached a bottom.
Early indicators - like retail
sales and housing sales -
are showing signs of
improving. While it's true that
California has lagged the
nation in coming out of the
recession, there are some
other bright spots. First, the
state is well positioned to
benefit from improving
economic conditions in Pacific
Rim countries. Second,
despite its recent problems,
California is one of the world's
largest economies, with some
very vibrant industries like
entertainment and
technology."
(solid bullet) Health care bonds made up
the fund's largest sector
concentration at 23.1% of the
fund's total investments as of
August 31, 1994. These
bonds are attractive, in part,
because of their relatively
high yields. The fund targets
health care organizations that
are well managed and could
not only survive but could do
well in a new health care
environment.
FIDELITY CALIFORNIA TAX-FREE HIGH YIELD PORTFOLIO
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF AUGUST 31, 1994
% OF FUND'S INVESTMENT % OF FUND'S INVESTMENT
S S
IN THESE SECTORS
6 MONTHS AGO
Health Care 23.1 20.5
Special Tax 20.9 20.0
Lease Revenue 16.3 21.8
Electric Revenue 9.5 8.8
General Obligation 6.8 4.9
AVERAGE YEARS TO MATURITY AS OF AUGUST 31, 1994
6 MONTHS AGO
Years 20.2 21.0
AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF AUGUST 31, 1994
6 MONTHS AGO
Years 10.2 9.4
DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, THE SHARE PRICE OF A FUND WITH A
FIVE-YEAR DURATION WILL FALL ABOUT 5%.
QUALITY DIVERSIFICATION AS OF AUGUST 31, 1994
(MOODY'S RATINGS) % OF FUND'S INVESTMENTS
Aaa 34.5%
Aa, A 36.2%
Baa 15.1%
Non-rated 13.3%
Short-term and other
investments 0.9%
Row: 1, Col: 1, Value: 34.5
Row: 1, Col: 2, Value: 36.1
Row: 1, Col: 3, Value: 15.1
Row: 1, Col: 4, Value: 13.3
Row: 1, Col: 5, Value: 1.5
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS. UNRATED
DEBT SECURITIES THAT ARE EQUIVALENT TO BA AND BELOW AT AUGUST 31, 1994
ACCOUNT FOR 5.7% OF THE FUND'S INVESTMENTS
FIDELITY CALIFORNIA TAX-FREE HIGH YIELD PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 99.1%
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - 97.2%
Alameda County Ctfs. of Prtn. Rfdg.
(Santa Rita Jail Proj.) 5.375% 6/1/09,
(MBIA Insured) Aaa $ 2,250,000 $ 2,134,688
Alameda Hsg. Auth. Multi-Family Hsg. Rev.
(Independence Apts.) Series A, 7.50%
2/20/31, (GNMA Coll.) - 2,645,000 2,780,556
Anaheim Elec. Rev. 3.50% 10/1/94 Aa 2,150,000 2,150,000
Anaheim Pub. Fing. Auth. Tax Allocation
Rev. (Reg. Rites) 9.37% 12/1/18,
(MBIA Insured) INFL (c) Aaa 1,500,000 1,565,625
Buena Park Commty. Redev. Agcy. Tax
Allocation Rfdg. (Central Business Dist.
Proj.) 7.10% 9/1/14 BBB+ 2,000,000 2,032,500
Burbank Redev. Agcy. Tax Allocation
Series A:
5.75% 12/1/08 Baa1 2,300,000 2,162,000
6% 12/1/13 Baa1 1,750,000 1,647,188
6% 12/1/23 Baa1 1,975,000 1,812,063
California Dept. Wtr. Resource Central
Valley Rev. Series G, 9.60% 12/1/12
(Pre-Refunded to 12/1/95 @ 102) (d) Aaa 2,250,000 2,329,583
California Edl. Facs. Auth. Rev.
(Mills College) 6.875% 9/1/22 Baa1 1,275,000 1,271,813
California Health Facs. Auth. Rev.:
Rfdg. (Alexian Brothers, San Jose)
7.05% 1/1/09, (MBIA Insured) Aaa 4,500,000 4,770,000
7.125% 1/1/16, (MBIA Insured) Aaa 2,510,000 2,641,775
Rfdg. (Catholic Healthcare West)
4.75% 7/1/19, (MBIA Insured) Aaa 2,000,000 1,600,000
Rfdg. (Insured Health Facs) (Catholic B)
5% 7/1/21, (AMBAC Insured) Aaa 2,200,000 1,804,000
Rfdg. (Sutter Commty. Sacramento
Hosp.):
9.125% 1/1/05 A1 1,250,000 1,293,750
9.25% 1/1/13 A1 4,000,000 4,140,000
(Children's Hosp.) 7% 7/1/13,
(MBIA Insured) Aaa 3,250,000 3,416,563
(Daughters of Charity-St. Vincents Hosp.)
Series A, 9.25% 11/1/15 Aa 1,000,000 1,085,000
(Gould Med. Foundation)
Series A, 7.30% 4/1/20 A 3,000,000 3,345,000
(Kaiser Permanente Health Sys.) Series A:
0% 10/1/09 Aa2 7,140,000 2,784,600
0% 10/1/10 Aa2 3,795,000 1,380,431
0% 10/1/12 Aa2 14,990,000 4,721,850
9.125% 10/1/15 Aa2 2,500,000 2,653,125
(Robert F. Kennedy Med. Ctr.)
Series A, 7.75% 3/1/14 A 2,980,000 3,196,050
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
California Health Facs. Auth. Rev. - continued
(Sacramento Med. Foundation)
Series F, 7.875% 6/1/18 A+ $ 1,000,000 $ 1,080,000
(St. Elizabeth Hosp. Proj.)
6.30% 11/15/15 A1 1,000,000 988,750
(San Diego Hosp. Assoc.)
Series A, 6.95% 10/1/21 A1 1,250,000 1,320,313
California Hsg. Fin. Agcy. Rev. (Home Mtg.):
Series A, 8.10% 8/1/16 Aa 1,475,000 1,548,750
Series F, 7.875% 8/1/19 Aa 915,000 953,888
California Poll. Cont. Fing. Auth. Poll. Cont.
Rev. (General Motors Corp.) 5.50%
4/1/08 Baa1 1,500,000 1,389,375
California Pub. Cap. Impt. Fing. Auth. Rev.
(Pooled Proj.) Series B, 8.10% 3/1/18,
(MBIA Insured) Aaa 980,000 1,058,400
California Pub. Wrks. Board Lease Rev.:
Rfdg. (Dept. Corrections St. Prisons)
Series A, 5% 12/1/19,
(AMBAC Insured) Aaa 2,500,000 2,087,500
(California University Proj.)
Series A:
5.50% 6/1/10 A 1,915,000 1,747,438
5.50% 6/1/14 A 9,275,000 8,254,750
5.50%12/1/18 A 2,500,000 2,200,000
(Dept. Correction, Del Norte) Series S,
5.125% 12/1/08 (MBIA Insured) Aaa 775,000 710,094
(Dept. Correction, State Prisons, Medera)
5 1/2% 6/1/15 (MBIA Insured) Aaa 1,400,000 1,277,500
(Dept. Correction State Prisons, Susanville)
Series D, 5.25% 6/1/15
(CGIC Insured) Aaa 2,000,000 1,755,000
(Univ. of California Projs.)
Series B:
5.25% 6/1/07 A 2,965,000 2,709,269
5.50% 6/1/14 A 5,000,000 4,450,000
California Statewide Commty. Dev. Auth.
8.80% 7/1/13, (MBIA Insured)
INFL (c) Aaa 2,000,000 1,757,500
California Statewide Commtys. Dev. Corp.
Ctfs. of Prtn.:
Rfdg. (Insured Health Facs.) (Eskaton, Inc.)
5.875% 5/1/20 A 4,000,000 3,665,000
Rfdg. (Insured Hosp.) (Triad Healthcare)(g):
6.25% 8/1/06 A+ 2,000,000 1,975,000
6.50% 8/1/22 A+ 1,500,000 1,473,750
Rfdg. (St. Joseph Health Sys.)
5.50% 7/1/23 Aa 3,000,000 2,617,500
(Childrens) 6%, 6/1/10 (MBIA Insured) Aaa 2,835,000 2,838,544
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
California Statewide Commtys. Dev. Corp.
Ctfs. of Prtn. - continued
(J. Paul Getty Trust) 5% 10/1/13 Aaa $ 1,450,000 $ 1,250,625
(Odd Fellows) 5.375% 10/1/13 A+ 2,500,000 2,228,125
(Sisters of Charity Leavenworth)
5% 12/1/23 Aa 6,375,000 5,115,938
(Villaview Commty. Hosp., Inc.)
Series A, 7% 9/1/09 A+ 1,000,000 1,040,000
5.50% 10/1/23 A+ 2,000,000 1,750,000
California Univ. Hsg. Sys. Series A, 5%
11/1/14, (MBIA Insured) Aaa 2,435,000 2,094,100
Campbell Ctfs. of Prtn. Rfdg. (Civic Center
Proj.) 6% 10/1/18 A 2,400,000 2,244,000
Carson Redev. Agcy. Redev. Proj. Area #1
Tax Allocation:
6.375% 10/1/12 Baa1 1,500,000 1,458,750
6.375% 10/1/16 Baa1 1,000,000 958,750
Carson Redev. Spl. Tax 6% 10/1/13 Baa 1,750,000 1,631,875
Castaic Lake Wtr. Agcy. Ctfs. of Prtn. Rfdg.
(Wtr. Sys. Impt. Prog.) Series A, 7.25%
8/1/08, (MBIA Insured) Aaa 1,500,000 1,713,750
Central California Jt. Pwrs. Health Fing.
Auth. Ctfs. of Prtn. (Commty. Hosp. of
Central California Proj.):
5.25% 2/1/13 A 4,000,000 3,355,000
5% 2/1/23 A 5,950,000 4,551,750
Central Valley Fing. Auth. Rev. Cogeneration
Proj. (Carson Ice Generation Proj.):
6% 7/1/09 BBB- 1,750,000 1,645,000
6.10% 7/1/13 BBB- 1,000,000 937,500
Compton Commty. Redev. Agcy. Tax
Allocation Rfdg. (Walnut Ind. Park Proj.)
7.50% 8/1/13, (AMBAC Insured) Aaa 3,900,000 4,294,875
Contra Costa County Ctfs. of Prtn.
(Merrithew Mem. Hosp.):
Cap. Appreciation 0% 11/1/13 A1 6,805,000 2,032,994
0% 11/1/07 A1 4,615,000 2,076,750
Contra Costa Home Mtg. Fin. Auth. Home
Mtg. Rev. 0% 9/1/17,
(MBIA Insured) Aaa 12,500,000 2,718,750
Desert Hosp. Rev. Ctfs. of Prtn.
(Desert Hosp. Corp.)
Series 1992, 9.38% 7/28/20,
(Cap. Guaranty Insured) INFL (c) Aaa 4,000,000 4,065,000
Duarte Ctfs of Prtn. (City of Hope Nat'l.
Medical Ctr.) 6.25% 4/1/23 Baa1 2,000,000 1,890,000
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Duarte Redev. Agcy. Tax Allocation:
(Huntington Drive-PH 1 Redev. Proj.)
9.20% 11/1/01, (Pre-Refunded to
11/1/95 @ 102) (d) - $ 735,000 $ 791,044
(Huntington Drive-PH 2 Redev. Proj.)
9.25% 11/1/10, (Pre-Refunded to
11/1/95 @ 102) (d) - 1,640,000 1,765,050
Eastern Muni. Wtr. Dist. Wtr. & Swr. Rev.
Ctfs. of Prtn. 6.75% 7/1/12,
(FGIC Insured) Aaa 1,600,000 1,740,000
Fontana Unified School Dist. Rfdg.:
0% 7/1/14, (AMBAC Insured) Aaa 1,880,000 526,400
0% 7/1/15, (AMBAC Insured) Aaa 1,880,000 493,500
Fontana Redev. Agcy. Tax Allocation Rfdg.
(Yurupa Hills) Series 1992 A, 7.10%
10/1/23 BBB 2,495,000 2,529,306
Foster City Pub. Fing. Auth. Rev. (Foster City
Commty. Rev. Proj.) Series A:
6% 9/1/06 A- 1,355,000 1,331,288
6% 9/1/07 A- 1,440,000 1,393,200
6% 9/1/13 A- 3,925,000 3,689,500
Fountain Valley Agcy. for Commty. Dev.
Tax Allocation (Ind. Area Redev. Proj.)
9.10% 1/1/15 BBB+ 1,745,000 1,854,063
Industry Urban Ind. Dev. Agcy. Rev.:
Rfdg. (Civic Recreational Proj.#1)
Series A, 7.375% 5/1/12 - 11,250,000 11,953,125
(Civic Recreational Proj.#1-B) 7.375%
5/1/15, (Unrefunded Balanced) - 245,000 260,313
Intercommunity Hosp. Fing. Auth. Ctfs. of Prtn.
9.75% 8/1/15, (Pre-Refunded to
8/1/95 @ 103) (d) AAA 4,000,000 4,320,000
Intermodal Container Transfer Facs. Joint Pwr.
Auth. Rev. Rfdg. Series 1989 A, 7.70%
11/1/14, LOC Industrial Bank of Japan,
(BIG Insured) Aa3 1,500,000 1,618,125
Irvine Ranch Wtr. Dist. Joint Pwr. Agcy.
Local Pool Rev. 8.25% 8/15/23 BBB 15,675,000 16,889,813
Kern County High School Dist. Gen. Oblig.
7% 8/1/09 A1 1,090,000 1,189,463
Livermore Redev. Agcy. Tax Allocation Rev.
(Livermore Redev. Proj.) Series A, 7.75%
8/1/09 - 1,000,000 1,031,250
Local Gov't. Fin. Auth. Rev. (Oakland
Central Dist.) 0% 9/1/08 Aaa 3,710,000 1,595,300
Loma Linda Hosp. Rev. (Loma Linda Univ.
Med. Ctr Proj.) Series B, 9% 12/1/12 BBB 1,550,000 1,666,250
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Los Angeles Ctfs. of Prtn.:
(Health Facs. Construction Loan)
(Bay Harbor Hosp.) 7.30% 4/1/20 A+ $ 2,000,000 $ 2,117,500
(Solheim Lutheran Home, Inc.)
8.125% 11/1/17 A 2,000,000 2,242,500
Los Angeles Commty. Redev. Agcy.
(Central Busi. Dist.) Series E, 8.85%
7/1/10 A- 4,000,000 4,210,000
Los Angeles County Ctf. of Prtn.:
(Cap. Appreciation):
0% 9/1/10 A 2,980,000 1,039,275
0% 3/1/18 A 3,000,000 603,750
0% 9/1/19 A 9,190,000 1,677,175
0% 3/1/20 A 1,690,000 293,638
(Cap. Appreciation Correctional Facs.)
0% 9/1/12, (MBIA Insured) Aaa 3,575,000 1,166,344
(Correctional Facs.)
0%, 9/1/10, (MBIA Insured) Aaa 3,770,000 1,413,750
(Disney Parking):
0% 9/1/08 A 2,030,000 857,675
0% 3/1/11 A 3,950,000 1,313,375
0% 3/1/13 A 2,835,000 825,694
0% 9/1/15 A 3,800,000 926,250
0% 9/1/17 A 3,370,000 703,488
0% 9/1/20 A 2,500,000 418,750
Los Angeles County Metropolitan Trans. Auth.
Sales Tax Rev. Rfdg. Series A, 5% 7/1/21,
(FGIC Insured) Aaa 5,500,000 4,558,125
Los Angeles Hbr. Dept. Rev. 7.60%
10/1/18 Aa 5,540,000 6,184,025
Los Angeles Wastewtr. Sys. Rev. Rfdg.
Series D, 5.20% 11/1/21, (FGIC Insured) Aaa 1,935,000 1,652,006
Metropolitan Wtr. Dist. Southern Wtrwks. Rev.:
Rfdg. Series A, 5.75% 7/1/21 Aa 2,250,000 2,140,313
5 3/4% 8/12/18 Aa 5,000,000 4,787,500
7.811% 8/5/22 INFL (c) Aa 1,300,000 1,202,500
Modesto Ctfs. of Prtn. (Golf Course Refing.
Proj.) Series B, 5% 11/1/23,
(AMBAC Insured) Aaa 2,000,000 1,647,500
Modesto Irrigation Dist. Ctfs. of Prtn.
Rfdg. & Cap. Impts. Series A:
0% 10/1/05, (MBIA Insured) Aaa 2,140,000 1,139,550
0% 10/1/08, (MBIA Insured) Aaa 2,270,000 976,100
(Geysers Geothermal Pwr. Proj.)
Series 1986, 5% 10/1/17 A1 5,000,000 4,043,750
Northern California Pwr. Agcy. Pub. Pwr. Rev.:
Rfdg. (Geothermal Proj. #3)
Series A, 5.85% 7/1/10 A 1,000,000 961,250
7.50% 7/1/23, (AMBAC Insured)
(Pre-Refunded to 7/1/21 @
100) (d) Aaa 1,355,000 1,602,288
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Northern California Trans. Rev.
(Ore Trans. Proj.) Series A, 7% 5/1/13,
(MBIA Insured) Aaa $ 7,000,000 $ 7,743,750
Norwalk Redev. Agcy. Tax Allocation
(Norwalk Redev. Area #1):
7.15% 12/1/15 - 2,500,000 2,590,625
9.10% 12/1/15,
(Pre-Refunded to 12/1/95 @
102) (d) - 9,285,000 9,911,738
Oakland Ctfs. of Prtn. Rfdg.
(Oakland Museum) Series A, 0%, 4/1/07,
(AMBAC Insured) Aaa 2,750,000 1,299,375
Oakland Redev. Agcy. Rfdg. Central Dist.
Redev. (Sr. Tax Allocation) 5.50% 2/1/14,
(AMBAC Insured) Aaa 2,400,000 2,232,000
Ontario Redev. Fing. Auth. Rev.
(Cap. Appreciation Proj. #1) (Ctr. City)
0% 8/1/10, (MBIA Insured) Aaa 3,255,000 1,228,763
Orange County Ctfs. of Prtn. Rfdg.
(Civic Ctr. Facs.):
0% 12/1/07, (AMBAC Insured) Aaa 1,400,000 640,500
0% 12/1/09, (AMBAC Insured) Aaa 1,000,000 396,250
Orange County Dev. Agcy. Tax Allocation
(Santa Ana Heights Proj.)
6.125% 9/1/23 Baa1 2,500,000 2,300,000
Orange County Local Trans. Sales Tax Rev.
Ltd. Tax 6% 2/15/08 Aa 1,250,000 1,278,125
Palm Desert Fing. Auth. Tax Allocation
9.255% 4/1/22, (MBIA Insured)
INFL (c) Aaa 3,000,000 3,093,750
Palm Springs Ctfs. of Prtn.
(Muni. Golf Course Expansion Proj.)
7.40% 11/1/18 BBB+ 1,750,000 1,855,000
Palomar Pomerado Health System Rev.
4.75%, 11/1/23 (MBIA Insured) Aaa 4,100,000 3,213,375
Pasadena Ctfs. of Prtn. Rfdg. (Old Pasadena
Pkg. Facs. Proj.) 6.25% 1/1/18 A1 3,600,000 3,550,500
Placer County Wtr. Agcy. Rev.(Middle Fork
Proj.) Series A, 3.75% 7/1/12 A 8,830,000 6,931,550
Pleasanton Jt. Pwrs. Fin. Auth. Reassessment,
Series A:
6% 9/2/05 Baa 1,980,000 1,940,400
6.15% 9/1/12 Baa 2,940,000 2,811,375
Port Oakland Port. Rev.:
Rfdg. (Cap. Appreciation) Series F, 0%
11/1/08, (MBIA Insured) Aaa 1,770,000 756,675
Rfdg. Series F, 0% 11/1/06,
(MBIA Insured) Aaa 1,990,000 982,563
(Cap. Appreciation), Series F, 0%
11/1/07, (MBIA Insured) Aaa 4,250,000 1,955,000
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Poway Ctfs. of Prtn. (Poway Royal Mobile
Home Park) (Cap. Impt. Proj.) 7% 7/1/20,
(FSA Insured) Aaa $ 1,375,000 $ 1,438,594
Poway Redev. Agcy.:
(Paguay Proj.) Tax Allocation
6.59% 12/15/14, (FGIC Insured)
INFL (c) Aaa 5,400,000 4,603,500
5.67% 12/15/14 (FGIC Insured) Aaa 2,000,000 1,885,000
Rancho Mirage Joint Pwrs. Fing. Auth.
Ctfs. of Prtn. (Eisenhower Mem. Hosp.)
7% 3/1/22 A 3,300,000 3,361,875
Rancho Wtr. Dist. Fin. Auth. 4.75% 8/15/21,
(AMBAC Insured) Aaa 1,000,000 790,000
Riverside County Asset Leasing Corp.
Leasehold Rev. (Riverside County Hosp.
Proj.) Series A:
6.50% 6/1/12 A 5,500,000 5,451,875
6.50% 6/1/12 A 1,500,000 1,509,375
Riverside County Ctfs. of Prtn.
(Air Force Village West, Inc.) Series A:
Rfdg. 8.125% 6/15/20 - 5,850,000 5,988,938
8.125% 6/15/12 - 2,600,000 2,661,750
Riverside Unified School Dist. Ctfs. of Prtn.
(Cap. Appreciation Land Acquisition Proj.)
Series B, 0% 9/1/26, (FSA Insured) (f) Aaa 2,275,000 1,765,969
Rosemead Redev. Agcy. Sub. Lien Tax
Allocation Proj. (Area 1) 0% 10/1/02 A- 1,450,000 929,813
Sacramento Fing. Auth.
(Cap. Appreciation Tax Allocation Proj.)
Series B:
0% 11/1/13, (MBIA Insured) Aaa 500,000 151,250
0% 11/1/15, (MBIA Insured) Aaa 5,695,000 1,502,056
Sacramento Fing. Auth. Lease Rev. Rfdg.
Series A, 5.375% 11/1/14,
(AMBAC Insured) Aaa 2,225,000 2,024,750
Sacramento Muni. Util. Dist. Elec. Rev.:
Rfdg. Series G, 6.5%, 9/1/13 Aaa 2,100,000 2,210,250
9.224% 8/15/18, (FGIC Insured) INFL(c) Aaa 1,750,000 1,780,625
Sacramento Muni. Util. Dev. Index
5.87% 11/15/08, (FGIC Insured) INFL (c) Aaa 7,000,000 6,046,250
Salinas Facs. Rev. (Villa Sierra Proj.)
Series A, 7.95% 4/20/31, (GNMA Coll.) AAA 2,445,000 2,445,000
Salinas Redev. Agcy. Tax Allocation 0%
11/1/22, (Cap. Guaranty Insured) Aaa 19,895,000 3,332,413
San Bernadino County Ctfs. of Prtn.
(Cap. Facs. Proj.):
(Equip. Fing.) (Cap. Facs. Proj.)
Series B, 6.875% 8/1/24 (e) Baa1 2,500,000 2,743,750
(Med. Ctr. Fing. Proj.):
5.50% 8/1/17 Baa1 6,500,000 5,630,625
5.50% 8/1/22 Baa1 5,500,000 4,647,500
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
San Diego County Wtr. Auth. 5.632%
4/25/07 (FGIC Insured) Aaa $ 2,500,000 $ 2,490,625
San Diego Multi-Family Hsg. Rev.
(Island Gardens Apts. Proj.) Series B,
(GNMA Coll.) 9.50% 10/20/20,
LOC Swiss Bank Corp. AAA 1,585,000 1,644,438
San Francisco Bay Area Rapid Transition Dist.
Sales Tax Rev. Rfdg. 6.75% 7/1/10,
(AMBAC Insured) Aaa 1,500,000 1,648,125
San Francisco City & County Redev. Agcy.
7.75% 9/1/06 - 9,000,000 9,371,250
San Francisco City & County Redev. Fing. Auth.
Tax Allocation Rev.:
Rfdg. (San Francisco Redev. Proj.)
Series B, 5% 8/1/15,
(MBIA Insured) Aaa 2,000,000 1,710,000
0% 8/1/06, (FGIC Insured) Aaa 1,035,000 517,500
Series A:
0% 8/1/07, (FGIC Insured) Aaa 1,085,000 505,881
0% 8/1/08, (FGIC Insured) Aaa 1,085,000 470,619
0% 8/1/09, (FGIC Insured) Aaa 1,085,000 438,069
0% 8/1/10, (FGIC Insured) Aaa 1,085,000 409,588
San Joaquin Hills Trans. Corridor Agcy.
Toll Road Rev. (Sr. Lien):
0% 1/1/05 - 2,500,000 1,546,875
0% 1/1/07 - 3,000,000 1,755,000
5% 1/1/33 - 8,950,000 6,511,125
San Jose Redev. Agcy. Tax Allocation
(Merged Area Redev. Proj.):
5% 8/1/20 (MBIA Insured) Aaa 6,530,000 5,419,900
4.75% 8/1/22, (MBIA Insured) A 5,000,000 3,881,250
Santa Ana Commty. Redev. Agcy.
Tax Allocation Rev. Series B,
7.375% 9/1/09 BBB+ 5,000,000 5,381,250
Santa Clara Ctfs. of Prtn. Ref. Series A,
4.75% 2/1/14, (MBIA Insured) Aaa 1,250,000 1,037,500
Santa Clara Elec. Rev. Series B, 0% 7/1/06,
(MBIA Insured) Aaa 2,080,000 1,050,400
Santa Margarita Dana Point Auth. Rev.:
(Impt. Dists. 1-2-2A 8, Series A, 7.25%
8/1/07, (MBIA Insured) Aaa 2,200,000 2,519,000
7.25% 8/1/12, (MBIA Insured) Aaa 1,865,000 2,126,100
Santa Monica Family Rev. (YMCA Proj.)
9.50% 12/1/05, LOC Bank of Tokyo (e) - 2,890,000 3,067,013
Sequoia Hosp. 5.375% 8/15/13 A 4,170,000 3,638,325
Sequoia Hosp. Dist. Rev.
5.375% 8/15/23 A 8,250,000 6,899,063
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
South Orange County Pub. Fin. Auth. Spl.
Tax Rev. (Sr. Lien) Series A, 7% 9/1/09,
(MBIA Insured) Aaa $ 3,000,000 $ 3,322,500
Southern California Pub. Pwr. Auth. Pwr. Proj. Rev.:
Rfdg. (Mead Adelanto Proj.) Series A,
4.75% 7/1/16, (AMBAC Insured) Aaa 2,000,000 1,627,500
Rfdg. (Palo Verde Proj.):
Series A, 0% 7/1/14, (AMBAC Insured) Aaa 5,030,000 1,446,125
Series C, 0% 7/1/16, (AMBAC Insured) Aaa 16,325,000 4,203,688
(Multiple Proj.):
6.75% 7/1/10 A 1,400,000 1,485,750
6.75% 7/1/11 A 4,000,000 4,250,000
(San Juan Proj. Unit #3) Series A, 5%
1/1/20, (MBIA Insured) Aaa 3,060,000 2,547,450
Southern California Pub. Pwr. Auth. Southern
Trans. (Cap. Appreciation) 0% 7/1/14 Aa 5,000,000 1,400,000
Southern California Pub. Pwr. Auth. Trans. Proj.
Rev. Rfdg. Series A, 5% 7/1/22,
(MBIA Insured) Aaa 3,375,000 2,788,594
Sulphur Springs Unified School Dist.
Series A:
0%, 9/1/07, (MBIA Insured) Aaa 4,445,000 2,050,256
0% 9/1/09, (MBIA Insured) Aaa 2,485,000 975,363
0% 9/1/11, (MBIA Insured) Aaa 1,830,000 624,488
Unltd. Tax Series A, 0% 9/1/15,
(MBIA Insured) Aaa 2,280,000 589,950
Univ. of California Rev. Rfdg. Series C, 5%
9/1/23, (AMBAC Insured) Aaa 2,500,000 2,059,375
Univ. Rev. Rfdg. Multiple Purp. Projs.
Series B, 4.75% 9/1/21, (MBIA Insured) Aaa 2,670,000 2,109,300
Upland Ctfs. of Prtn. (San Antonio Commty. Hosp.):
5.25% 1/1/08 A 1,850,000 1,676,563
5.25% 1/1/13 A 5,500,000 4,675,000
5% 1/1/18 A 2,000,000 1,595,000
Vallejo Ctfs. of Prtn.
(Marine World Foundation Proj.):
7.80% 2/1/98 - 1,455,000 1,513,200
8.10% 2/1/21 - 3,040,000 3,154,000
West & Central Basin Fing. Auth. (West Basin Proj.)
Series A, 5% 8/1/10, (AMBAC Insured) Aaa 3,000,000 2,677,500
West Covina COP (Queen of the Valley
Hosp.) 6.50% 8/15/24 A 1,100,000 1,061,500
Western Placer Unified School Dist. Series A:
0% 8/1/12 (FGIC Insured) Aaa 1,720,000 559,000
0% 8/1/13 (FGIC Insured) Aaa 1,855,000 561,138
0% 8/1/14 (FGIC Insured) Aaa 2,005,000 568,919
0% 8/1/15 (FGIC Insured) Aaa 2,165,000 576,431
0% 8/1/18 (FGIC Insured) Aaa 2,500,000 543,750
Unltd. Tax 0% 8/1/16 (FGIC Insured) Aaa 2,340,000 579,150
Unltd. Tax 0% 8/1/17 (FGIC Insured) Aaa 2,525,000 587,044
498,430,976
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
PUERTO RICO - 1.3%
Puerto Rico Commonwealth Hwy. & Trans.
Auth. Rev. Rfdg. Series W, 5.50% 7/1/13 Baa1 $ 2,875,000 $ 2,645,000
Puerto Rico Elec. Pwr. Auth. Pwr. Rev.
Series O, 0% 7/1/17 Baa1 7,500,000 1,762,500
Puerto Rico Bldgs. Auth. Pub.
Ed. & Health Facs. Rfdg. Series M,
5.75% 7/1/15 Baa1 2,500,000 2,346,875
6,754,375
U.S. VIRGIN ISLANDS - 0.3%
Virgin Islands Pub. Fin. Auth. Rev. Series A,
7.25% 10/1/18 - 1,500,000 1,567,500
GUAM - 0.3%
Guam Arpt. Auth. Rev. Series A,
6.50% 10/1/23 BBB 1,700,000 1,693,625
TOTAL MUNICIPAL BONDS
(Cost $504,281,115) 508,446,476
MUNICIPAL NOTES (A) - 0.9%
CALIFORNIA - 0.9%
Orange County Sanitation Dist. Ctfs. of
Prtn. (Cap. Impt. Prog.) (Dist. 1-7 & 11)
2.80%, (FGIC Insured), VRDN VMIG 1 1,400,000 1,400,000
San Bernadino County TRAN, 4.5%
7/31/95 SP-1+ 3,000,000 2,996,970
TOTAL MUNICIPAL NOTES
(Cost $4,418,407) 4,396,970
OTHER SECURITIES - 0.0%
RIGHTS
CALIFORNIA - 0.0%
Riverside County Asset Leasing Corp. Leasehold
Rev.(Riverside County Hosp.) Series A
(Call Rights) 6.50% 6/1/12
(Cost $59,950) - 1,100 160,875
TOTAL INVESTMENTS - 100%
(Cost $508,759,472) $ 513,004,321
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
30 U.S. Treasury Bond Dec. 1994 $ 3,087,188 $ (2,147)
70 30-Year Bond Sept. 1994 7,260,313 (22,823)
$ (24,970)
THE VALUE OF FUTURES CONTRACTS PURCHASED AS A PERCENTAGE OF TOTAL
INVESTMENT IN SECURITIES - 2.0%
SECURITY TYPE ABBREVIATIONS
TRAN - Tax & Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
(c) Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate. The price will be more
volatile than the price of a comparable fixed rate security.
(d) Security collateralized by an amount sufficient to pay interest and
principal.
(e) Security was pledged to cover margin requirements for futures
contracts. At the period end, the value of securities pledged amounted to
$3,256,250.
(f) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
(g) Issuer filed for protection under the Federal Bankruptcy Code or is in
default of interest payment. The state of California has assumed the
interest payments.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 59.2% AAA, AA, A 72.6%
Baa 8.0% BBB 8.6%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 12.8%. FMR
has determined that unrated debt securities that are lower quality account
for 5.7% of the total value of investment in securities.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Health Care 23.1%
Special Tax 20.9
Lease Revenue 16.3
Others (individually less
than 10%) 39.7
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1994 the aggregate cost of investment securities for income
tax purposes was $508,836,532. Net unrealized appreciation aggregated
$4,167,789, of which $19,416,065 related to appreciated investment
securities and $15,248,276 related to depreciated investment securities.
At February 28, 1994 the fund was required to defer $6,602,000 of losses on
futures contracts and options.
FIDELITY CALIFORNIA TAX-FREE HIGH YIELD PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
1.ASSETS 2. 3.
4.Investment in securities, at value (cost $508,759,472) 5. $ 513,004,321
- -
See accompanying schedule
6.Cash 7. 52,423
8.Receivable for investments sold 9. 2,149,031
10.Interest receivable 11. 6,960,885
12. 13.TOTAL ASSETS 14. 522,166,660
15.LIABILITIES 16. 17.
18.Payable for investments purchased $ 4,495,084 19.
20.Payable for fund shares redeemed 198,096 21.
22.Dividends payable 888,688 23.
24.Accrued management fee 174,523 25.
26.Payable for daily variation on futures contracts 19,647 27.
28.Other payables and accrued expenses 153,910 29.
30. 31.TOTAL LIABILITIES 32. 5,929,948
33.34.NET ASSETS 35. $ 516,236,712
36.Net Assets consist of: 37. 38.
39.Paid in capital 40. $ 519,014,724
41.Accumulated undistributed net realized gain (loss) on 42. (6,997,891)
investments and foreign currency transactions
43.Net unrealized appreciation (depreciation) on 44. 4,219,879
investments
45.46.NET ASSETS, for 45,838,993 shares outstanding 47. $ 516,236,712
48.49.NET ASSET VALUE, offering price and redemption 50. $11.26
price per share ($516,236,712 (divided by)
shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
51.52.INTEREST INCOME 53. $ 17,577,654
54.EXPENSES 55. 56.
57.Management fee $ 1,073,127 58.
59.Transfer agent, accounting and custodian fees 366,246 60.
and expenses
61.Non-interested trustees' compensation 1,551 62.
63.Registration fees 761 64.
65.Audit 23,195 66.
67.Legal 913 68.
69.Reports to shareholders 6,309
70.Miscellaneous 271 71.
72. 73.TOTAL EXPENSES 74. 1,472,373
75.76.NET INTEREST INCOME 77. 16,105,281
78.REALIZED AND UNREALIZED GAIN (LOSS) 80. 81.
79.Net realized gain (loss) on:
82. Investment securities 930,858 83.
84. Futures contracts (791,496) 139,362
85.Change in net unrealized appreciation (depreciation) 86. 87.
on:
88. Investment securities (32,271,352) 89.
90. Futures contracts (29,691) (32,301,043)
91.92.NET GAIN (LOSS) 93. (32,161,681)
94.95.NET INCREASE (DECREASE) IN NET ASSETS 96. $ (16,056,400)
RESULTING FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR
ENDED ENDED
AUGUST 31, 1994 FEBRUARY 28,
(UNAUDITED) 1994
97.INCREASE (DECREASE) IN NET ASSETS
98.Operations $ 16,105,281 $ 34,009,274
Net interest income
99. Net realized gain (loss) 139,362 24,914,674
100. Change in net unrealized appreciation (depreciation) (32,301,043) (27,806,838)
101. (16,056,400) 31,117,110
102.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
103.Distributions to shareholders: (16,105,281) (34,009,274)
From net interest income
104. From net realized gain (6,907,583) (12,686,288)
105. 106.TOTAL DISTRIBUTIONS (23,012,864) (46,695,562)
107.Share transactions 49,081,147 155,444,832
Net proceeds from sales of shares
108. Reinvestment of distributions 16,763,955 33,996,332
109. Cost of shares redeemed (85,827,897) (185,364,588)
110. (19,982,795) 4,076,576
Net increase (decrease) in net assets resulting from
share transactions
111. (59,052,059) (11,501,876)
112.TOTAL INCREASE (DECREASE) IN NET ASSETS
113.NET ASSETS 114. 115.
116. Beginning of period 575,288,771 586,790,647
117. End of period $ 516,236,712 $ 575,288,771
118.OTHER INFORMATION 120. 121.
119.Shares
122. Sold 4,354,354 12,515,698
123. Issued in reinvestment of distributions 1,488,514 2,749,174
124. Redeemed (7,567,190) (14,926,974)
125. Net increase (decrease) (1,724,322) 337,898
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
126. SIX MONTHS YEAR TEN MONTHS YEARS ENDED APRIL 30,
ENDED ENDED ENDED
AUGUST 31, 19 FEBRUARY 28, FEBRUARY 28,
94
127. (UNAUDITED) 1994 1993 1992 1991 1990
128.SELECTED PER-SHARE DATA
129.Net asset value, beginning of period $ 12.100 $ 12.430 $ 11.540 $ 11.300 $ 10.940 $ 11.080
130.Income from Investment Operations .346 .719 .611 .744 .752 .756
Net interest income
131. Net realized and unrealized gain
(loss) (.690) (.060) .890 .240 .360 (.140)
132. Total from investment operations (.344) .659 1.501 .984 1.112 .616
133.Less Distributions (.346) (.719) (.611) (.744) (.752) (.756)
From net interest income
134. From net realized gain on
investments (.150) (.270) - - - -
135. Total distributions (.496) (.989) (.611) (.744) (.752) (.756)
136.Net asset value, end of period $ 11.260 $ 12.100 $ 12.430 $ 11.540 $ 11.300 $ 10.940
137.TOTAL RETURN B -2.77% 5.41% 13.40% 8.94% 10.44% 5.61%
138.RATIOS AND SUPPLEMENTAL DATA
139.Net assets, end of period (000
omitted) $ 516,236 $ 575,289 $ 586,791 $ 529,445 $ 523,590 $ 513,682
140.Ratio of expenses to average net
assets .56%A .57% .60%A .59% .58% .60%
141.Ratio of net interest income to
average net assets 6.10%A 5.78% 6.17%A 6.52% 6.71% 6.73%
142.Portfolio turnover rate 32%A 44% 32%A 23% 15% 34%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FINANCIAL HIGHLIGHTS
FIDELITY CALIFORNIA TAX-FREE INSURED PORTFOLIO
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells bonds
that have grown in value). You can also look at the fund's income. If
Fidelity had not reimbursed certain fund expenses during the periods shown,
the total returns and dividends would have been lower.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED AUGUST 31, 1994 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
California Tax-Free Insured -3.36% -3.18% 43.08% 66.71%
Lehman Brothers Municipal Bond Index -0.90% 0.14% 48.59% n/a
Average California Insured Tax-Exempt
Municipal Bond Fund -2.58% -2.50% 44.97% 72.66%
Consumer Price Index 1.57% 2.90% 19.58% 35.21%
</TABLE>
CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period
- - in this case, six months, one year, five years, or since the fund started
on September 18, 1986. For example, if you invested $1,000 in a fund that
had a 5% return over the past year, you would end up with $1,050. You can
compare these figures to the performance of the Lehman Brothers Municipal
Bond index - a broad gauge of the municipal bond market. To measure how the
fund stacked up against its peers, you can look at the average California
insured tax-exempt municipal bond fund, which reflects the performance of
21 California insured tax-exempt municipal bond funds tracked by Lipper
Analytical Services. Both benchmarks include reinvested dividends and
capital gains, if any. Comparing the fund's performance to the consumer
price index (CPI) helps show how your fund did compared to inflation. (The
periods covered by the CPI numbers are the closest available match to those
covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
California Tax-Free Insured -3.18% 7.43% 6.63%
Lehman Brothers Municipal Bond Index 0.14% 8.24% n/a
Average California Insured Tax-Exempt
Municipal Bond Fund -2.50% 7.71% 7.14%
Consumer Price Index 2.90% 3.64% 3.88%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had achieved that return
by performing at a constant rate each year.
$10,000 OVER LIFE OF FUND
$26,475
$23,362
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
California Tax-Free Insured Portfolio on September 30, 1986, shortly after
the fund started. As the chart shows, by August 31, 1994, the value of your
investment would have grown to $16,688 - a 66.88% increase on your initial
investment. For comparison, look at how the Lehman Brothers Municipal Bond
Index did over the same period. With dividends reinvested, the same $10,000
would have grown to $18,402- a 84.02% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, move in the
opposite direction of interest
rates. In turn, the share price,
return, and yield of a fund
that invests in bonds will vary.
That means if you sell your
shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
SIX MONT
HS
ENDED YEARS ENDED FEBRUARY 28,
AUGUST 3
1,
1994 1994 1993 1992 1991 1990
Dividend returns 2.69% 5.35% 6.43% 6.48% 6.58% 6.75%
Capital appreciation
returns -6.05% -0.76% 9.32% 3.91% 0.73% 2.12%
Total returns -3.36% 4.59% 15.75% 10.39% 7.31% 8.87%
DIVIDEND returns and capital appreciation returns are both part of a bond
fund's total return. A dividend return reflects the actual dividends paid
by the fund. A capital appreciation return reflects both the amount paid by
the fund to shareholders as capital gain distributions and changes in the
fund's share price. Both returns assume the dividends or gains are
reinvested.
DIVIDENDS AND YIELD
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED AUGUST 31, 1994 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 4.68(cents) 28.14(cents) 56.57(cents)
Annualized dividend rate 5.57% 5.58% 5.36%
30-day annualized yield 5.66% - -
30-day annualized tax-equivalent yield 9.94% - -
</TABLE>
DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $9.90 over
the past month, $10.00 over the past six months and $10.56 over the past
year, you can compare the fund's income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis. The tax-equivalent yield shows what you would have to
earn on a taxable investment to equal the fund's tax-free yield, if you're
in the 43.04% combined effective 1994 federal and state tax bracket.
FIDELITY CALIFORNIA TAX-FREE INSURED PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with John Haley,
Portfolio Manager of Fidelity
California Tax-Free Insured Portfolio
Q. JOHN, WHAT KIND OF RESULTS HAVE YOU ACHIEVED OVER THE PAST SIX MONTHS?
A. Higher interest rates caused a sharp downturn in all fixed-income
markets over the past six months, making it a rough time for municipal
bonds. For the six months ended August 31, 1994, the fund had a total
return of -3.36%. That compares to the average California insured tax-free
bond fund, which returned -2.58% for the same period, according to Lipper
Analytical Services. For the year ended August 31, 1994, the fund returned
- -3.18%, compared to the average fund's return of -2.50%, again according to
Lipper.
Q. LET'S START WITH THE INSURED MUNICIPAL MARKET. HOW DID IT FARE DURING
THE LAST SIX MONTHS?
A. First, it's important to remember that insurance doesn't insulate a bond
from a decline in value when interest rates rise. Insurance guarantees
timely interest and principal payments by the issuer and protects investors
from losses in the event of an issuer's default. This guarantee makes
insured bonds highly desirable among investors, and the insured municipal
bond market is very liquid, meaning there is a lot of trading activity in
this category. When the bond market fell in February and March, many
investors sold their most liquid insured bonds first, causing insured bonds
to post deeper and more rapid declines than other types of bonds.
Q. TURNING TO THE FUND, WHY DID ITS RETURNS LAG THE AVERAGE CALIFORNIA
INSURED TAX-FREE FUND?
A. Primarily because it had a longer duration, which is an indication of
how sensitive the fund is to changes in interest rates. Funds with longer
durations usually enjoy better returns when interest rates are flat or
falling. Conversely, they tend to suffer more when interest rates are
rising. The obvious question is "Why didn't you just shorten duration once
interest rates started rising?"And the answer is two-fold. First, I was
frankly surprised by how high and how quickly the Federal Reserve raised
interest rates. My view was that economic growth wasn't enough to ignite
inflation, and cause the Fed to raise rates on a continual basis. I still
believe that inflation won't be a long-term problem, and that higher
interest rates will actually slow the economy down. Second, the supply of
California municipal bonds is 27% less than what it was in 1993. And,
a large number of municipal bonds matured recently, which also was expected
to increase demand. So instead of changing the core structure of the fund,
I used bond futures contracts to help shorten duration.
Q. AREN'T FUTURES ONE TYPE OF THE FINANCIAL ARRANGEMENTS KNOWN AS
DERIVATIVES? DO YOU USE OTHERS?
A. Yes, a futures contract is one type of financial derivative - meaning
its market value is derived from a security or market index. We've used
bond futures and options in our municipal bond funds for years. Over the
past two years, I've used what's known as an inverse floater - whose yield
rises as short-term rates fall, and vice versa. These inverse floaters act
like longer-term bonds, effectively increasing a fund's duration, which is
good in a falling interest rate environment, but can hurt the fund when
interest rates rise. At the end of August, inverse floaters made up less
than 5% of the fund's total investments. By using these various
derivatives, I achieve increased flexibility in managing the fund's overall
sensitivity to changes in interest rates, and hopefully, can achieve higher
levels of income.
Q. ABOUT ONE QUARTER OF THE FUND IS INVESTED IN UNINSURED BONDS. WHAT ROLE
DO THESE BONDS HAVE IN AN INSURED FUND?
A. They generally provide more income, up to a half percent more than
insured bonds, but with the added risk of not being insured. Of the fund's
25% stake in uninsured bonds, all are rated investment grade quality - or
Baa or better -by Moody's Investors Service. Not only do these bonds offer
a higher yield, they also offer the opportunity for price appreciation. In
my view, the California economy has stopped deteriorating and could
actually show signs of improvement over the next 12-18 months. If that
happens, the credit quality of uninsured bonds could improve. That
improvement, in turn, could help boost the prices of uninsured bonds.
Q. RECENTLY, THE MUNICIPAL BOND RATING AGENCIES LOWERED THE CREDIT QUALITY
OF SOME CALIFORNIA BONDS. DID THAT HURT THE FUND'S PERFORMANCE?
A. No. The bonds that were affected by the downgrade were California state
general obligation bonds and other bonds backed by the state, which made up
only 2.7% of the fund's investments at the end of August. Of those, only
about 0.5% were uninsured. I had anticipated the downgrade, and the
downgrade was already factored into the prices of the affected California
bonds well before the action took place. As a result, there wasn't much of
an impact. Even after the downgrade, the bonds still carry an
investment-grade rating of A.
Q. DO YOU THINK YOUR STRATEGY WILL CHANGE MUCH OVER THE NEXT SIX MONTHS?
A. Not markedly. In my view, the fund is well positioned to take advantage
of what I expect to be a more positive environment for municipal bonds.
Although there may be some continued volatility in the municipal bond
market, I'm cautiously optimistic that things will begin to improve by the
end of the year. We're beginning to see signs that the Federal Reserve's
interest rate hikes are doing their job and slowing the economy. More
moderate growth should keep inflation in check. And eventually, the
positive supply and demand factors I mentioned earlier should help the
California municipal market.
FUND FACTS
GOAL: to provide high current
income exempt from
California state and federal
income taxes by investing
primarily in long-term
California municipal bonds
covered by insurance
START DATE: September 18,
1986
SIZE: as of August 31, 1994,
more than $238 million
MANAGER: John Haley, since
September, 1986; manager,
Fidelity California Tax-Free
High Yield Portfolio since
September, 1986; Spartan
California Municipal High
Yield
Portfolio, since December
1989;
Fidelity Advisor Tax-Exempt
Portfolio, since 1985; joined
Fidelity in 1981
(checkmark)
JOHN HALEY ON THE CALIFORNIA
ECONOMY:
"After a long period of
contraction, the California
economy finally seems to be
basing - meaning it looks
like it has reached a bottom.
Early indicators - like retail
sales and housing sales -
are showing signs of
improving. While it's true that
California has lagged the
nation in coming out of the
recession, there are some
other bright spots. First, the
state is well positioned to
benefit from improving
economic conditions in the
Pacific Rim. Second, despite
its recent problems, California
is one of the world's largest
economies, with some very
vibrant industries like
entertainment and
technology."
(solid bullet) Uninsured bonds
accounted for 25% of the
fund's total investments as of
August 31, 1994. These
bonds are attractive because
they generally provide higher
income than insured bonds,
and also offer the potential for
price appreciation.
(solid bullet) Lease revenue bonds
made up the fund's largest
sector concentration at 29.0%
of investments on August 31,
1994. Special tax bonds were
the second largest
concentration at 25.3% of
investments at the end of
August.
FIDELITY CALIFORNIA TAX-FREE INSURED PORTFOLIO
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF AUGUST 31, 1994
% OF FUND'S INVESTMENT % OF FUND'S INVESTMENT
S S
IN THESE SECTORS
6 MONTHS AGO
Lease Revenue 29.0 33.1
Special Tax 25.3 20.1
Health Care 11.1 9.2
Electric Revenue 9.6 8.8
General Obligation 9.5 8.9
AVERAGE YEARS TO MATURITY AS OF AUGUST 31, 1994
6 MONTHS AGO
Years 20.6 20.3
AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF AUGUST 31, 1994
6 MONTHS AGO
Years 11.3 10.5
DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, THE SHARE PRICE OF A FUND WITH A
FIVE-YEAR DURATION WILL FALL ABOUT 5%.
QUALITY DIVERSIFICATION AS OF AUGUST 31, 1994
(MOODY'S RATINGS) % OF FUND'S INVESTMENTS
Aaa 73.9%
Aa, A 15.5%
Baa 7.2%
Non-rated 0.4%
Short-term and other
investments 3.0%
Row: 1, Col: 1, Value: 73.90000000000001
Row: 1, Col: 2, Value: 15.5
Row: 1, Col: 3, Value: 7.2
Row: 1, Col: 4, Value: 1.0
Row: 1, Col: 5, Value: 3.0
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS.
FIDELITY CALIFORNIA TAX-FREE INSURED PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 97.1%
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - 96.5%
Alameda County Ctfs. of Prtn. Rfdg.
(Santa Rita Jail Proj.):
5.375% 6/1/09 (MBIA Insured) Aaa $ 2,500,000 $ 2,371,875
5% 12/1/15 (MBIA Insured) Aaa 1,000,000 855,000
Anaheim Pub. Fing. Auth. Tax Allocation Rev.
(Reg. Rites) 9.37% 12/1/18,
(MBIA Insured) INFL (c) Aaa 1,000,000 1,043,750
Antioch Area Pub. Facs. Fing. Agcy. Tax
Allocation Rev. (Commty. Facs. Dist #1989-1)
5% 8/1/18 (FGIC Insured) Aaa 8,795,000 7,442,769
Bay Area Gov't. Assoc. Rev.
(Muni. Fing. Pool) Series A, 8.05% 9/1/10 A 1,515,000 1,630,519
Bonita Unified School Dist. Ctfs. of Prtn.
(Cap. Appreciation Rfdg. Proj.)
0% 5/1/20, (MBIA Insured) Aaa 6,000,000 1,125,000
Burbank Redev. Agcy. Tax Allocation
(City Ctr. Redev. Proj.) Series A, 5% 12/1/15
(Cap. Guaranty Insured) Aaa 4,000,000 3,400,000
California Edl. Facs. Auth. Rev.
(Pooled Facs. Prog.) Series 1987,
7.625% 11/1/12, (MBIA Insured) Aaa 1,000,000 1,091,250
California Hsg. Fin. Agcy. Rev. (Home Mtg.):
Series 1983 A, 0% 2/1/15 Aa 10,461,000 1,386,083
Series 1983 B, 0% 8/1/15 Aa 215,000 27,144
California Health Facs. Fing. Auth.:
Rfdg. (Insured Health Facs.):
(Catholic Healthcare West) 4.75%
7/1/19 (MBIA Insured) Aaa 1,500,000 1,200,000
(Catholic B)
5% 7/1/21, (AMBAC Insured) Aaa 1,250,000 1,025,000
(Children's Hosp. of San Francisco) Series A,
7.50% 10/1/20, (MBIA Insured) Aaa 1,650,000 1,827,375
(Scripps Health) Series A, 4.625%
10/1/13 (MBIA Insured) Aaa 1,345,000 1,097,856
(Sharp Temecula Valley) Series A, 7.05%
8/1/21, (MBIA Insured) Aaa 1,000,000 1,060,000
California Pub. Cap. Impt. Fing. Auth. Rev.
(Pooled Proj.) Series B, 8.10% 3/1/18,
(MBIA Insured) Aaa 2,920,000 3,153,600
California Pub. Works Board Lease Rev.:
Rfdg. (Dept. Corrections State Prisons)
Series A, 5% 12/1/19,
(AMBAC Insured) Aaa 3,000,000 2,505,000
(Dept. Correction State Prisons, Susanville)
Series D, 5.25% 6/1/15
(CGIC Insured) Aaa 1,000,000 877,500
California Statewide Commty. Dev. Auth.
8.80% 7/1/13, (MBIA Insured) INFL (c) Aaa 1,000,000 878,750
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
California Statewide Commty. Dev. Corp.
Ctfs. of Prtn.:
Rfdg. (Insured Health Facs.)
(Eskaton, Inc.) 5.875% 5/1/20 A $ 1,000,000 $ 916,250
(Childrens Hosp.) 6% 6/1/11,
(MBIA Insured) Aaa 1,700,000 1,693,625
(Sisters of Charity Leavenworth)
5% 12/1/23 Aa 1,000,000 802,500
(St. Joseph Health Sys.) 5.50%
7/1/23 Aa 1,000,000 872,500
Carson Redev. Agcy. Redev. Proj. Area #1
Tax Allocation 6.375% 10/1/12 Baa1 1,000,000 972,500
Castaic Lake Wtr. Agcy. Ctfs. of Prtn.:
Rfdg. (Wtr. Sys. Impt. Proj.)
Series A, 7% 8/1/12,
(MBIA Insured) Aaa 1,000,000 1,112,500
(Wtr. Sys. Impt. Proj.)
7.125% 8/1/16, (MBIA Insured) Aaa 1,000,000 1,127,500
Central California Jt. Pwrs. Health Fing. Auth.
Ctfs. of Prtn. (Commty. Hosp. of Central
California Proj.) 5.25% 2/1/13 A 2,000,000 1,677,500
Contra Costa Home Mtg. Fin. Auth. Home
Mtg. Rev. 0% 9/1/17, (MBIA Insured) Aaa 7,490,000 1,629,075
Culver City Redev. Fing. Auth. Rev. Rfdg.
Tax Allocation:
5.50%, 11/1/14 (AMBAC Insured) Aaa 4,000,000 3,710,000
4.60%, 11/1/20 (AMBAC Insured) Aaa 5,720,000 4,425,850
Del Norte Pub. Wrks. Rev. Rfdg. (Dept.
Corrections) Series S, 5.125% 12/1/08
(MBIA Insured) Aaa 2,000,000 1,832,500
Desert Hosp. Dist. Hosp. Rev. Ctfs. of Prtn.
(Desert Hosp. Corp.) 6.35% 7/1/04,
(Cap. Guaranty Insured) AAA 2,140,000 2,271,075
Desert Hosp. Rev. Ctfs. of Prtn. (Desert Hosp.
Corp.) Series 1992, 9.38% 7/28/20,
(Cap. Guaranty Insured) INFL (c) Aaa 2,000,000 2,032,500
Eureka Unified School Dist. Ctfs. of Prtn.
(Cap. Appreciation):
Series A, 0% 9/1/27, (FSA Insured) (f) Aaa 4,085,000 3,707,138
Series B, 0% 9/1/27, (FSA Insured) (f) Aaa 1,555,000 1,391,725
Fontana Redev. Agcy. Tax Allocation Rfdg.
(Yurupa Hills) Series 1992 A,
7.10% 10/1/23 BBB 1,000,000 1,013,750
Fontana Unified School Dist. Rfdg.:
0% 7/1/12, (AMBAC Insured) Aaa 1,655,000 531,669
0% 7/1/13, (AMBAC Insured) Aaa 1,880,000 561,650
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Foothill De Anza Commty. College Ctfs. of Prtn.
(Rfdg. Proj.) 5.25% 9/1/21,
(Connie Lee Insured) AAA $ 1,175,000 $ 995,813
Fresno Swr. Rev. Series A-1, 4.75% 9/1/21,
(AMBAC Insured) Aaa 2,000,000 1,582,500
Grossmont Hosp. Dist. Rev. Series A, 8%
11/15/17, (MBIA Insured), (Pre-Refunded
to 11/15/97@ 102) (d) Aaa 1,500,000 1,681,875
Irvine Ranch Wtr. Dist. Joint Pwr. Agcy.
Local Pool Rev.:
7.875% 2/15/23 A 3,100,000 3,289,875
8.25% 8/15/23 BBB 3,000,000 3,232,500
Lemon Grove Commty. Dev. Agcy. Tax
Allocation Rev. (Lemon Grove Redev. Proj.)
6.90% 8/120 Baa 1,000,000 1,020,000
Local Gov't. Fin. Auth. Rev. (Oakland Cent.
Dist.) 0% 9/1/09, (MBIA Insured) Aaa 3,565,000 1,439,369
Los Angeles Convention Ctr. Rfdg. Series A,
5.125% 8/15/13, (MBIA Insured) Aaa 3,000,000 2,625,000
Los Angeles County Ctfs. of Prtn.:
(Cap. Appreciation Correctional Facs.):
0% 9/1/12, (MBIA Insured) Aaa 2,700,000 880,875
0% 9/1/13, (MBIA Insured) (e) Aaa 3,380,000 1,026,675
(Disney Parking Proj.) (Cap. Appreciation):
0% 3/1/10 A 3,000,000 1,083,750
0% 3/1/15 A 1,000,000 252,500
0% 3/1/16 A 5,615,000 1,312,506
0% 9/1/16 A 7,985,000 1,806,606
0% 3/1/17 A 1,835,000 396,819
Los Angeles County Metropolitan Trans. Auth.
Sales Tax Rev. Rfdg. Series A, 5% 7/1/21,
(FGIC Insured) Aaa 1,000,000 828,750
Los Angeles County Pub. Wks. Fing.
Auth. Lease Rev. (Mult. Cap. Facs. Proj. IV)
4.75% 12/1/13, (MBIA Insured) Aaa 10,000,000 8,312,500
M-S-R Pub. Pwr. Agcy. San Juan Proj. Rev.
Series D, 6.75% 7/1/20, (MBIA Insured) Aaa 2,500,000 2,706,250
Mesa Consolidated Wtr. Dist. Ctfs. of Prtn.
(Cap. Impt. Phase II) 7.625% 3/15/08,
(AMBAC Insured) Aaa 1,000,000 1,098,750
Metropolitan Wtr. Dist. Southern Wtrwks. Rev.
5.75% 8/12/18 INFL (c) Aa 4,000,000 3,830,000
Modesto Ctfs. of Prtn. (Commty. Ctr. Refing.
Proj.) Series A, 5% 11/1/23,
(AMBAC Insured) Aaa 2,500,000 2,059,375
Modesto Irrigation Dist. Ctfs. of Prtn.
Rfdg. & Cap. Impts. Series A, 0%
10/1/09, (MBIA Insured) Aaa 2,270,000 908,000
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Moreno Valley Unified School Dist. Ctfs. of Prtn.:
(Land Acquisition) 0% 9/1/11,
(FSA Insured) (f) Aaa $ 2,580,000 $ 2,038,200
7.375% 9/1/11 Baa 65,000 65,325
Northern California Pwr. Agcy. Pub. Pwr. Rev.:
Rfdg. (Geothermal Proj. #3) Series A,
5.85% 7/1/10 A 2,500,000 2,403,125
7.50% 7/1/23, (AMBAC Insured)
(Pre-Refunded to 7/1/21 @ 100) (d) Aaa 1,300,000 1,537,250
Norwalk Redev. Agcy. Tax Allocation
(Norwalk Redev. Proj. #1) 7.15% 12/1/15 - 1,000,000 1,036,250
Oakland Redev. Agcy. Central Dist. Redev.
(Sub. Tax Allocation):
Rfdg. (Sr. Tax Allocation) 5.50% 2/1/14,
(AMBAC Insured) Aaa 3,000,000 2,790,000
5% 9/1/21, (MBIA Insured) Aaa 2,025,000 1,690,875
Orange County Ctfs. of Prtn. (Civic Ctr. Facs.):
0% 12/1/13, (AMBAC Insured) Aaa 2,500,000 753,125
0% 12/1/18, (AMBAC & MBIA
Insured) Aaa 7,500,000 1,631,250
Orange County Dev. Agcy. Tax Allocation
(Santa Ana Heights Proj.) 6.125% 9/1/23 Baa1 1,500,000 1,380,000
Palm Desert Fing. Auth. Tax Allocation
9.255% 4/1/22, (MBIA Insured) INFL (c) Aaa 1,750,000 1,804,688
Palomar Pomerado Health System Rev. 4.75%,
11/1/23 (MBIA Insured) Aaa 1,500,000 1,175,625
Placer County Wtr. Agcy. Wtr. Rev. Ctfs. of
Prtn. (Phase 1 Cap. Impt. Proj.) 7.75%
7/1/18, (MBIA Insured) Aaa 1,000,000 1,123,750
Pleasanton Jt. Pwrs. Fin. Auth. Reassessment,
Series A, 6% 9/2/05 Baa 1,980,000 1,940,400
Poway Ctfs. of Prtn. (Poway Royal Mobile
Home Park) (Cap. Impt. Proj.) 7% 7/1/20,
(FSA Insured) Aaa 2,625,000 2,746,406
Poway Redev. Agcy.:
(Paguay Proj.) Tax Allocation 6.59%
12/15/14, (FGIC Insured) INFL (c) Aaa 1,200,000 1,023,000
5.67% 12/15/14 (FGIC Insured) Aaa 3,000,000 2,827,500
Rancho Mirage Joint Pwrs. Fing. Auth.
Ctfs. of Prtn. (Eisenhower Mem. Hosp.)
7% 3/1/22 A 1,000,000 1,018,750
Redding Elec. Sys. Rev. Ctfs. of Prtn.
(Cap. Appreciation) Series A:
0% 6/1/05, (FGIC Insured) Aaa 2,000,000 1,085,000
0% 6/1/06, (FGIC Insured) Aaa 1,730,000 877,975
0% 6/1/07, (FGIC Insured) Aaa 1,890,000 893,025
0% 6/1/08, (FGIC Insured) Aaa 1,300,000 572,000
Series A, 0% 7/1/19, (MBIA Insured) Aaa 2,000,000 390,000
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Redondo Beach Redev. Agcy. Tax Allocation
(South Bay Ctr.) 8.625% 5/1/14,
(FGIC Insured) Aaa $ 1,000,000 $ 1,097,500
Richmond Redev. Agcy. Tax Allocation
(Harbour Redev. Proj.) 7% 7/1/09
(Cap. Guaranty Insured) Aaa 1,750,000 1,898,750
Riverside County Asset Leasing Corp. Leasehold
Rev. (Riverside County Hosp. Proj.) Series A:
6.375% 6/1/09 (Detachable Call
Option) A 2,000,000 1,977,500
6.50% 6/1/12 A 4,000,000 3,965,000
6.50% 6/1/12 A 1,500,000 1,509,375
Riverside County Trans. Commission Sales Tax
Rev. Series A, 5.75% 6/1/09,
(AMBAC Insured) Aaa 2,000,000 1,980,000
Riverside Unified School Dist. Ctfs. of Prtn.
(Cap. Appreciation Land Acquisition Proj.)
Series B, 0% 9/1/26, (FSA Insured) (f) Aaa 2,000,000 1,552,500
Sacramento Fing. Auth. (Cap. Appreciation
Tax Allocation Proj.) Series A, 0% 11/1/14,
(MBIA Insured) Aaa 5,700,000 1,617,375
Sacramento Fing. Auth. Lease Rev. Rfdg.
Series A, 5.375% 11/1/14,
(AMBAC Insured) Aaa 6,500,000 5,915,000
Sacramento Muni. Util. Dev. Index
5.87% 11/15/08, (FGIC Insured) INFL (c) Aaa 3,700,000 3,195,875
Sacramento Muni. Util. Dist. Elec. Rev.:
Rfdg. Series G, 6.5%, 9/1/13 Aaa 7,000,000 7,367,500
9.224% 8/15/18, (FGIC Insured)
INFL (c) Aaa 1,000,000 1,017,500
San Bernadino County Ctfs. Prtn.
(Med. Ctr. Fing. Proj.):
5.50% 8/1/17 Baa1 3,350,000 2,901,938
5.50% 8/1/22 Baa1 3,660,000 3,092,700
San Bernadino Redev. Agcy. Tax Allocation Rfdg.
(Southeast Ind. Park) 7.40% 3/1/14,
(AMBAC Insured) Aaa 2,100,000 2,273,250
San Francisco Bay Area Rapid Transit Dist.
Sales Tax Series 1990, 6.75% 7/1/09,
(AMBAC Insured) Aaa 3,200,000 3,408,000
San Jacinto Unified School Dist. Series B,
0% 9/1/26, (FSA Insured) (f) Aaa 1,585,000 1,420,556
San Joaquin County Ctfs. of Prtn.:
Rfdg. (Cap. Facs. Proj.)
5% 11/15/09, (MBIA Insured) Aaa 1,000,000 900,000
(Cap. Facs. Proj.) 5% 11/15/10,
(MBIA Insured) Aaa 1,110,000 989,288
(Gen. Hosp. Proj.) 6.625% 9/1/20 A 2,500,000 2,493,750
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
San Jose Redev. Agcy. Tax Allocation
(Merged Area Redev. Proj.):
6% 8/1/15 (MBIA Insured) Aaa $ 3,000,000 $ 2,955,000
5% 8/1/20 (MBIA Insured) Aaa 2,500,000 2,075,000
4.75% 8/1/24, (MBIA Insured) Aaa 1,500,000 1,171,875
Santa Ana Commty. Redev. Agcy. Tax
Allocation (South Main St. Redev.) 5.25%
9/1/13, (MBIA Insured) Aaa 3,000,000 2,685,000
Santa Ana Fing. Auth. (Police Administration &
Holding Fac. 6 1/4% 7/1/19
(MBIA Insured) Aaa 2,000,000 2,032,500
Sequoia Hosp. 5.375% 8/15/13 A 1,000,000 872,500
South Orange County Pub. Fin. Auth. Spl. Tax
Rev. (Sr. Lien) Series A, 7% 9/1/09,
(MBIA Insured) Aaa 2,000,000 2,215,000
South Orange County Special Tax Revenue
(Foothill Area) Series C, 7.50% 8/15/07
(FGIC Insured) Aaa 2,290,000 2,650,675
Southern California Pub. Pwr. Auth. Rev. Rfdg.
(Palo Verde Proj.) Series A, 0% 7/1/12,
(AMBAC Insured) Aaa 1,855,000 614,469
Sulphur Springs Unified School Dist. Series A:
0% 9/1/08, (MBIA Insured) Aaa 2,000,000 865,000
0% 9/1/16, (MBIA Insured) Aaa 3,200,000 776,000
Tahoe-Truckee Joint Union School Dist.
(Cap. Appreciation) Series A, 0% 9/1/10 Aaa 6,625,000 2,401,560
Torrance Hosp. Rev. (Little Co. of Mary Hosp.)
6.875% 7/1/15 A 1,445,000 1,461,255
California Univ. Hsg. Sys. Series A, 5%
11/1/14, (MBIA Insured) Aaa 2,500,000 2,150,000
Univ. of California Rev. Rfdg. Series C, 5%
9/1/23, (AMBAC Insured) Aaa 2,000,000 1,647,500
Upland Ctfs. of Prtn. (San Antonio Commty.
Hosp.) 5% 1/1/18 A 1,000,000 797,500
Valley Ctr. Union School Dist. Series A, 0%
9/1/17, (MBIA Insured) Aaa 8,835,000 2,009,963
Vista Unified School Dist. Ctfs. of Prtn. Rfdg.
(Cap Appreciation) Series A, 0% 11/1/13,
(FSA Insured) Aaa 6,145,000 1,782,050
Walnut Creek Ctfs. of Prtn. Rfdg. (John Muir
Med. Ctr.) 5%, 2/15/16, (MBIA Insured) Aaa 3,250,000 2,746,250
West & Central Basin Fing. Auth.
(West Basin Proj.) Series A, 5% 8/1/10,
(AMBAC Insured) Aaa 2,000,000 1,785,000
West Covina COP (Queen of the Valley Hosp.)
6.50% 8/15/24 A 1,000,000 965,000
228,686,539
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
PUERTO RICO - 0.6%
Puerto Rico Commonwealth Hwy. & Trans. Auth.
Rev. Series W, 5.50% 7/1/13 Baa1 $ 1,500,000 $ 1,380,000
TOTAL MUNICIPAL BONDS
(Cost $236,210,846) 230,066,539
MUNICIPAL NOTES (A) - 2.9%
CALIFORNIA - 2.9%
Orange County Sanitation Dist.
Ctfs. of Prtn. (Cap. Impt. Prog.)
(Dist. 1-7 & 11) 2.80%,
(FGIC Insured), VRDN VMIG 1 700,000 700,000
San Bernadino County TRAN, 4.5%
7/31/95 SP-1+ 5,000,000 4,994,950
Southern California Pub. Pwr. Auth. Rev.
(Transmission Proj.) Series 1991, 3%,
(AMBAC Insured) LOC Swiss Bank,
VRDN VMIG 1 1,200,000 1,200,000
TOTAL MUNICIPAL NOTES
(Cost $6,930,588) 6,894,950
OTHER SECURITIES - 0.0%
RIGHTS
CALIFORNIA - 0.0%
Riverside County Asset Leasing Corp. Leasehold
Rev. (Riverside County Hosp.) Series A
(Call Rights) 6.50% 6/1/12
(Cost $43,600) - 800 117,000
TOTAL INVESTMENTS - 100%
(Cost $243,185,034) $ 237,078,489
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
20 U.S. Treasury Bond Dec. 1994 $ 2,058,125 $ (1,432)
30 30-Year Bond Sept. 1994 3,111,563 (11,678)
$ (13,110)
THE VALUE OF FUTURES CONTRACTS PURCHASED AS A PERCENTAGE OF TOTAL
INVESTMENT IN SECURITIES - 2.2%
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
TRAN - Tax & Revenue Anticipation Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
(c) Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate. The price will be more
volatile than the price of a comparable fixed rate security.
(d) Security collateralized by an amount sufficient to pay interest and
principal.
(e) Security was pledged to cover margin requirements for futures
contracts. At the period end, the value of securities pledged amounted to
$1,026,675.
(f) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 85.4% AAA, AA, A 90.4%
Baa 5.4% BBB 2.8%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 0.4%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Lease Revenue 29.0%
Special Tax 25.3
Health Care 11.1
Others (individually less
than 10%) 34.6
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $243,185,034. Net unrealized depreciation
aggregated $6,106,545, of which $5,218,094 related to appreciated
investment securities and $11,324,639 related to depreciated investment
securities.
FIDELITY CALIFORNIA TAX-FREE INSURED PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
143.ASSETS 144. 145.
146.Investment in securities, at value (cost 147. $ 237,078,489
$243,185,034) -
See accompanying schedule
148.Interest receivable 149. 2,910,569
150. 151.TOTAL ASSETS 152. 239,989,058
153.LIABILITIES 154. 155.
156.Payable to custodian bank $ 31,479 157.
158.Payable for investments purchased 1,100,311 159.
160.Payable for fund shares redeemed 55,706 161.
162.Dividends payable 260,591 163.
164.Accrued management fee 110,390 165.
166.Payable for daily variation on futures contracts 8,932 167.
168.Other payables and accrued expenses 79,247 169.
170. 171.TOTAL LIABILITIES 172. 1,646,656
173.174.NET ASSETS 175. $ 238,342,402
176.Net Assets consist of: 177. 178.
179.Paid in capital 180. $ 245,288,984
181.Accumulated undistributed net realized gain (loss) 182. (826,927)
on investments
183.Net unrealized appreciation (depreciation) on 184. (6,119,655)
investments
185.186.NET ASSETS, for 24,026,479 shares 187. $ 238,342,402
outstanding
188.189.NET ASSET VALUE, offering price and 190. $9.92
redemption price per share ($238,342,402 (divided by)
shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
191.192.INTEREST INCOME 193. $ 7,723,365
194.EXPENSES 195. 196.
197.Management fee $ 537,831 198.
199.Transfer agent, accounting and custodian fees and 203,567 200.
expenses
201.Non-interested trustees' compensation 753 202.
203.Registration fees 683 204.
205.Audit 20,174 206.
207.Legal 1,172 208.
209.Reports to shareholders 1,148
210.Miscellaneous 662 211.
212. 213.TOTAL EXPENSES 214. 765,990
215.216.NET INTEREST INCOME 217. 6,957,375
218.REALIZED AND UNREALIZED GAIN (LOSS) 220. 221.
219.Net realized gain (loss) on:
222. Investment securities 376,411 223.
224. Futures contracts (514,914) (138,503)
225.Change in net unrealized appreciation 226. 227.
(depreciation) on:
228. Investment securities (17,077,676) 229.
230. Futures contracts (34,400) (17,112,076)
231.232.NET GAIN (LOSS) 233. (17,250,579)
234.235.NET INCREASE (DECREASE) IN NET ASSETS 236. $ (10,293,204)
RESULTING FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR
ENDED ENDED
AUGUST 31, 1994 FEBRUARY 28,
(UNAUDITED) 1994
237.INCREASE (DECREASE) IN NET ASSETS
238.Operations $ 6,957,375 $ 15,916,757
Net interest income
239. Net realized gain (loss) (138,503) 14,152,827
240. Change in net unrealized appreciation (depreciation) (17,112,076) (16,541,399)
241. (10,293,204) 13,528,185
242.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
243.Distributions to shareholders: (6,957,375) (15,916,757)
From net interest income
244. From net realized gain (4,232,425) (5,560,443)
245. 246.TOTAL DISTRIBUTIONS (11,189,800) (21,477,200)
247.Share transactions 52,153,351 191,511,206
Net proceeds from sales of shares
248. Reinvestment of distributions 8,603,322 16,831,370
249. Cost of shares redeemed (92,691,063) (183,505,791)
250. (31,934,390) 24,836,785
Net increase (decrease) in net assets resulting from
share transactions
251. (53,417,394) 16,887,770
252.TOTAL INCREASE (DECREASE) IN NET ASSETS
253.NET ASSETS 254. 255.
256. Beginning of period 291,759,796 274,872,026
257. End of period $ 238,342,402 $ 291,759,796
258.OTHER INFORMATION 260. 261.
259.Shares
262. Sold 5,205,325 17,343,548
263. Issued in reinvestment of distributions 866,909 1,531,056
264. Redeemed (9,206,808) (16,625,614)
265. Net increase (decrease) (3,134,574) 2,248,990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
266. SIX MONTHS YEAR TEN MONTHS YEARS ENDED APRIL 30,
ENDED ENDED ENDED
AUGUST 31, 199 FEBRUARY 28, FEBRUARY 28,
4
267. (UNAUDITED) 1994 1993 1992 1991 1990
268.SELECTED PER-SHARE DATA
269.Net asset value, beginning
of period $ 10.740 $ 11.030 $ 10.100 $ 9.740 $ 9.370 $ 9.590
270.Income from Investment
Operations .281 .589 .492 .603 .605 .618
Net interest income
271. Net realized and unrealized
gain (loss) (.650) (.090) .930 .360 .370 (.220)
272. Total from investment
operations (.369) .499 1.422 .963 .975 .398
273.Less Distributions (.281) (.589) (.492) (.603) (.605) (.618)
From net interest income
274. From net realized gain
on investments (.170) (.200) - - - -
275. Total distributions (.451) (.789) (.492) (.603) (.605) (.618)
276.Net asset value, end of period $ 9.920 $ 10.740 $ 11.030 $ 10.100 $ 9.740 $ 9.370
277.TOTAL RETURN B -3.36% 4.59% 14.48% 10.14% 10.67% 4.15%
278.RATIOS AND SUPPLEMENTAL DATA
279.Net assets, end of period
(000 omitted) $ 238,342 $ 291,760 $ 274,872 $ 177,763 $ 113,711 $ 87,438
280.Ratio of expenses to average
net assets .61%A .48% .63%A .66% .72% .75%
281.Ratio of expenses to average net
assets before .61%A .60% .63%A .66% .72% .75%
expense reductions
282.Ratio of net interest income to
average net assets 5.56%A 5.31% 5.72%A 6.06% 6.30% 6.38%
283.Portfolio turnover rate 28%A 60% 27%A 19% 14% 10%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE
TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
FINANCIAL HIGHLIGHTS
FIDELITY CALIFORNIA TAX-FREE MONEY MARKET PORTFOLIO
PERFORMANCE: THE BOTTOM LINE
To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects the change in a fund's share price
over a given period and reinvestment of its dividends (or income). Yield
measures the income paid by a fund. Since a money market fund tries to
maintain a $1 share price, yield is an important measure of performance. If
Fidelity had not reimbursed certain fund expenses during the periods shown,
the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1994 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
California Tax-Free Money Market 1.06% 2.03% 18.10% 50.40%
Consumer Price Index 1.57% 2.90% 19.58% 42.58%
Average California Tax-Free
Money Market Fund 1.07% 2.04% 18.17% n/a
CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period
- - in this case, six months, one year, five years or ten years. For example,
if you invested $1,000 in a fund that had a 5% return over the past year,
you would end up with $1,050. Comparing the fund's performance to the
consumer price index helps show how your investment did compared to
inflation. To measure how the fund stacked up against its peers, you can
compare its return to the average California tax-free money market fund's
total return. This average currently reflects the performance of 43
California tax-free money market funds tracked by IBC/Donoghue.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1994 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
California Tax-Free Money Market 2.03% 3.38% 4.17%
Consumer Price Index 2.90% 3.64% 3.61%
Average California Tax-Free
Money Market Fund 2.04% 3.40% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had achieved that return
by performing at a constant rate each year.
YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
8/31/93 11/30/93 2/28/94 5/31/94 8/31/94
California Tax-Free 1.97% 1.90% 1.91% 2.30% 2.62%
Money Market
Average California Tax-Free 2.01% 1.92% 1.96% 2.31% 2.56%
Money Market Fund
California Tax-Free 3.46% 3.34% 3.35% 4.04% 4.60%
Money Market Tax-equivalen
t
Average All Taxable 2.64% 2.69% 2.79% 3.51% 4.08%
Money Market Fund
</TABLE>
Row: 1, Col: 1, Value: 1.97
Row: 1, Col: 2, Value: 2.01
Row: 2, Col: 1, Value: 1.9
Row: 2, Col: 2, Value: 1.92
Row: 3, Col: 1, Value: 1.91
Row: 3, Col: 2, Value: 1.96
Row: 4, Col: 1, Value: 2.3
Row: 4, Col: 2, Value: 2.31
Row: 5, Col: 1, Value: 2.62
Row: 5, Col: 2, Value: 2.56
California
Tax-Free
Money Market
Average California
Tax-Free Money
Market Fund
3% -
2% -
1% -
0%
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods, expressed as annual
percentage rates. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The chart above shows the fund's
current seven-day yield at quarterly intervals over the past year. You can
compare these yields to the average tax-free money market fund. Or you can
look at the fund's tax-equivalent yield, which is based on a combined
effective 1994 federal and state income tax rate of 43.04%. The
tax-equivalent figures are useful in seeing how the fund stacked up against
the average taxable money market fund as tracked by IBC/Donoghue.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT PAST
RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield - the yield you'd have to
earn on a similar taxable
investment to match the
tax-free yield - makes the
comparison more meaningful.
Keep in mind that the U.S.
government neither insures nor
guarantees a money market
fund. And there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
FIDELITY CALIFORNIA TAX-FREE MONEY MARKET PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Deborah Watson,
Portfolio Manager of Fidelity California Tax-Free Money Market Portfolio
Q. DEBORAH, SHORT-TERM INTEREST RATES HAVE CONTINUED TO RISE DURING THE
LAST SIX MONTHS. CAN YOU BRING US UP TO DATE?
A. Sure. So far in 1994, there have been five separate increases in the
federal funds rate, the rate banks charge each other for overnight loans.
The first occurred before the period started, on February 4, when the
Federal Reserve bumped the rate up from 3% - where it had stood since
September 1992 - to 3.25%. That was the first increase in five years, and
it signaled the start of a new direction in monetary policy. Subsequent
increases brought the federal funds rate up a full point and a half to
4.75% through August. The Fed's action signaled a determination to moderate
growth and restrain inflation.
Q. HOW DID RISING RATES AFFECT YOUR STRATEGY?
A. Generally, my goal has been to maintain a low average maturity for the
fund in order to keep pace with rising rates. The fund's average maturity
was already quite low at the end of February - 44 days, compared to 81 days
a year ago - and it dropped as low as 22 days in May. Fed policy is the
main determinant, but there are also technical factors to consider.
California state and local governments come to market with their annual new
issuance beginning in June, and the abundant supply tends to boost rates.
So by shortening the fund in May, I was able to lock in those higher rates
as they became available. Doing so brought the fund's average maturity back
out around 40 days, where it stood at the end of August.
Q. HOW DID THE FUND PERFORM?
A. Fairly well. Investors who've grown weary of low money-market rates in
recent years will be encouraged by recent trends. The fund's seven-day
yield on August 31, 1994, was 2.62%, up from 1.91% six months ago. The
latest yield is the equivalent of a 4.60% yield on a taxable investment for
investors in California's 43.04% combined federal and state tax bracket.
The fund's total return for the six months through the end of August was
1.06%. The average California tax-free money market fund returned 1.07%
during the same period, according to IBC/Donoghue.
Q. ARE INTEREST RATES LIKELY TO CONTINUE RISING?
A. I think so, even though I'm not particularly worried about inflation. I
think we'll continue to see some pressure on prices, but I do not
anticipate the increases to be enough to result in inflation spiraling out
of control anytime soon. That said, I do expect the Fed to continue
boosting rates, but in an orderly fashion.
Q. HOW MIGHT THAT AFFECT THE WAY YOU MANAGE THE FUND?
A. I'll probably continue executing the same strategy I've had for the past
six months. That means maintaining a low average maturity of around 40 days
so that I can keep pace with rising rates. One way I've done that is by
increasing the fund's percentage of variable rate instruments. Those are
notes whose rates reset monthly, weekly or even daily, keeping them in line
with prevailing rates. Lately, variable rate instruments have reached as
high as 70% of the fund's investments.
FUND FACTS
GOAL: tax-free income with
share price stability by
investing in high-quality,
short-term California municipal
securities
START DATE: July 7, 1984
SIZE: as of August 31, 1994,
more than $655 million
MANAGER: Deborah Watson,
since July 1988; manager,
Spartan California Municipal
Money Market Portfolio, since
November 1989; Spartan
Florida Municipal Money
Market Portfolio, since August
1992; Spartan Pennsylvania
Municipal Money Market
Portfolio, since September
1989;
joined Fidelity in 1982
(checkmark)
MONEY MARKETS AND
DERIVATIVES:
The word "derivatives" covers
a wide range of financial
agreements, of varying
degrees of complexity, that
have market values based on
security or market indices. All
"derivative" securities in
Fidelity's money market funds
are designed to have the price
characteristics of typical
money market securities.
During the recent Federal
Reserve Board interest rate
increases, all Fidelity money
market holdings performed as
designed and the funds
maintained a stable share
price of $1.00.
The more complex of these
instruments, such as floating
rate notes with unusual and
complex floating rate
formulas, frequently have too
much price volatility to be
appropriate investments for
money market funds. Many of
them do not offer the degree
of price stability Fidelity
believes is required in order
for its funds to maintain a
stable $1.00 share price.
Therefore, despite their
frequent higher yields at the
time they are sold, Fidelity
money market funds have not
purchased these volatile
securities. While this may
sometimes have caused
Fidelity money market funds
to have lower gross yields
than certain other funds,
Fidelity believes its investors
value prudence as well as
performance.
FIDELITY CALIFORNIA TAX-FREE MONEY MARKET PORTFOLIO
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
8/31/94 2/28/94 8/31/93
0 - 30 82 68 66
31 - 90 9 10 9
91 - 180 0 19 5
181 - 397 9 3 20
WEIGHTED AVERAGE MATURITY
8/31/94 2/28/94 8/31/93
California Tax-Free
Money Market 39 days 44 days 81 days
Average California
Tax-Free Money Market Fun 53 days 50 days 72 days
d*
ASSET ALLOCATION
AS OF AUGUST 31, 1994 AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 66.0
Row: 1, Col: 2, Value: 15.0
Row: 1, Col: 3, Value: 3.0
Row: 1, Col: 4, Value: 16.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 1, Value: 59.0
Row: 1, Col: 2, Value: 15.0
Row: 1, Col: 3, Value: 5.0
Row: 1, Col: 4, Value: 22.0
Row: 1, Col: 5, Value: 0.0
Variable rate
demand notes
(VRDNs) 66%
Commercial
paper 15%
Tender bonds 3%
Municipal
notes 16%
Other -
Variable rate
demand notes
(VRDNs) 59%
Commercial
paper 15%
Tender bonds 4%
Municipal
notes 22%
Other -
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(registered trademark)
FIDELITY CALIFORNIA TAX-FREE MONEY MARKET PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - 100.0%
Alameda County Ind. Dev. Auth. Rev.:
Rfdg. (Longview Fibre Co.) Series 1988, 3.15%
LOC Algemene Bank, VRDN $ 1,750,000 $ 1,750,000
(Jacobs Investment Co. Proj.) Series 1985 A, 3.25%,
LOC Bank of America, VRDN 3,800,000 3,800,000
Alameda Rev. (KQED Inc. Proj.) 4%
(LOC Long Term Credit Bank of Japan), VRDN 3,000,000 3,000,000
Anaheim Ctfs. of Prtn. Series 1993, 3,
(Liquidity Facility Industrial Bank of Japan)
(AMBAC Insured), VRDN 5,800,000 5,800,000
Anaheim Hsg. Auth. Multi-Family Hsg. Rev.
(Park Vista Apts) Series 1993 A,
3.20% LOC Citibank, VRDN (b) 4,000,000 4,000,000
Assoc. of Bay Area Gov't. Lease Rev. (Pooled Proj.)
Series 1987, 3.10%, LOC Nat'l. Westminster
Bank, VRDN 5,105,000 5,105,000
Big Bear Lake Ind. Dev. (Southwest Gas Corp. Proj.)
Series 1993 A, 3.10%,
LOC Union Bank of Switzerland, VRDN (b) 400,000 400,000
California Dept. of Wtr. Resources Tender Option Ctfs.
Series R-4, 3.20%, (Liquidity Facility
Svenska Handelsbanken), VRDN (c) 17,000,000 17,000,000
California Edl. Facs. Auth. Rev. Rfdg. (Stanford University)
Series L-1 3.05% VRDN 5,055,000 5,055,000
California Hsg. & Fin. Auth. Rev. Rfdg. (Camino Colony Apts.)
Series 1993 B, 3.10% LOC Federal Home Loan
Bank of San Francisco, VRDN 2,000,000 2,000,000
California Hsg. Fin. Agcy. Participating VRDN(c):
Series 4 A, 3.15% (Liquidity Facility Dai-Ichi Kangyo) (b) 5,000,000
5,000,000
Series 15 A, 3.15% (Liquidity Facility
Dai-Ichi Kangyo) (b) 3,700,000 3,700,000
Series 15 B, 3.15%
(Liquidity Facility Dai-ichi Kangyo Bank) (b) 2,345,000 2,345,000
Series PA-58, 3.30% (Liquidity Facility Merrill Lynch & Co.) 1,550,000
1,550,000
Series PT-14, 3.30% (Liquidity Facility Dai-Ichi Kangyo) 3,200,000
3,200,000
California Health Facs. Fin. Auth. Rev.:
(Children's Hospital of Orange County) Series 1994,
2.85% (MBIA Insured), VRDN 4,200,000 4,200,000
(Kaiser Permanente):
Series 1993 A, 3%, VRDN 5,400,000 5,400,000
Series 1993 B, 3%, VRDN 5,000,000 5,000,000
California Gen. Oblig. Adj. Rate RAN
Series 1994-95 B, 3.24% 6/28/95 26,500,000 26,499,400
California Gen. Oblig. Bonds
3.10% tender 9/1/94 (AMBAC Insured)
(Liquidity Facility Citibank) (c) 8,000,000 8,000,000
3.10% tender 9/15/94 (AMBAC Insured)
(Liquidity Facility Citibank) (c) 8,000,000 8,000,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
California Gen. Oblig. Floating Rate RAN
Series 1994-95 B, 3.24% 6/28/95 $ 10,000,000 $ 10,000,000
California Gen. Oblig. RAN Series A, 5% 6/28/95 6,000,000 6,042,457
California Gen. Oblig. Tender Option Ctfs.
Series FF, 3.20% (Liquidity Facility CIBC) VRDN(c) 5,500,000 5,500,000
California Poll. Cont. & Fin. Auth. Bonds:
(Pacific Gas & Elec. Co. Proj.):
Series 1988 A:
2.90% tender 9/9/94 LOC Swiss Bank Corp. (b) 4,000,000 4,000,000
3.10% tender 10/19/94 LOC Swiss Bank Corp. (b) 5,000,000 5,000,000
3.15% tender 10/19/94 LOC Swiss Bank Corp. (b) 2,500,000 2,500,000
3.10% tender 10/21/94 LOC Swiss Bank Corp. (b) 5,475,000 5,475,000
Series 1988 C, 3.05% tender 10/18/94
LOC Credit Suisse 3,600,000 3,600,000
Series 1988 D:
3.05% tender 9/13/94 LOC Bank of Tokyo 6,000,000 6,000,000
3.10% tender 10/7/94, LOC Bank of Tokyo 1,500,000 1,500,000
3.15% tender 10/17/94, LOC Bank of Tokyo 4,600,000 4,600,000
Series 1988 E, 2.95% tender 9/21/94,
LOC Morgan Guaranty Trust 7,400,000 7,400,000
(Southern California Edison Co. 1st Mtg. Rev.)
Series 1985 C, 3.15% tender 10/20/94 1,550,000 1,550,000
California Poll. Cont. Fin. Auth. Bonds (Southern California
Edison Co. 1st Mtg. Rev.) Series 1985 C, 3.15%
tender 10/20/94 1,000,000 1,000,000
California Poll. Cont. Fin. Auth. Rfdg. Rev. Bonds
(Pacific Gas & Elec. Co. Proj.) Series 1988 B:
3.15% tender 10/18/94 LOC Sumitomo Bank Ltd. (b) 2,000,000 2,000,000
3.15% tender 10/21/94, LOC Sumitomo Bank Ltd. (b) 2,000,000 2,000,000
3.20% tender 10/24/94, LOC Sumitomo Bank Ltd. (b) 2,400,000 2,400,000
3.35% tender 11/17/94 LOC Sumitomo Bank Ltd. (b) 1,500,000 1,500,000
California Poll. Cont. Fin. Auth. Resource Recovery Rev.
(Ultra Pwr. Rocklin Proj.) Series 1988 B, 3.30%,
LOC Bank of America (b) 3,200,000 3,200,000
California Poll. Cont. Fin. Auth. Solid Waste Disp. Rev.
(Western Waste Ind.) 3.175%, LOC Citibank, VRDN 2,200,000 2,200,000
California Poll. Cont. Rev. 2.90% 2,000,000 2,000,000
California Statewide Commty. Dev. Corp. Rev.:
(Covenant Retirement Commty.)
3.15% LOC Lasalle Nat'l Bank, VRDN 2,300,000 2,300,000
(Delancey Street Foundation) 3.15%
LOC Bank of America, VRDN 2,825,000 2,825,000
(Florestone Prod. Co.) Series 1989, 3.20%,
LOC Bank of Tokyo, VRDN (b) 925,000 925,000
(Triple H Foods Proj.) Series 1991, 3.20%,
LOC Union Bank, VRDN (b) 2,220,000 2,220,000
California TRAN (Cash Reserve Prog. Auth.)
Series A, 4.50% 7/5/95 10,000,000 10,060,727
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Chula Vista Ind. Dev. Rev. Bonds (San Diego Gas & Elec.):
Series B, 3.15%, VRDN (b) $ 1,000,000 $ 1,000,000
Series C, 3% tender 9/8/94 (b) 2,100,000 2,100,000
Series E:
3.40% tender 10/12/94 (b) 2,500,000 2,500,000
3.30% tender 10/14/94 (b) 2,000,000 2,000,000
Concord Participating VRDN, Series 1991-1D, 3.25%
LOC Federal Home Loan Bank of San Francisco (c) 2,800,000 2,800,000
Contra Costa County Multi-Family Hsg. Rev.
(Del Norte Place Apts.) Series 1994 A, 3.35%
LOC Sumitomo Bank Ltd., VRDN (b) 3,500,000 3,500,000
Daly Hsg. Dev. Fin. Agcy. (Serramonte Del Rey Apts.)
Series 1985 A, 3.15% LOC Dai-Ichi
Kangyo, VRDN 7,400,000 7,400,000
Duarte Single Family Mtg. Rev. Participating VRDN,
Series A-1, 3.35% (Liquidity Facility
Norwest Bank) (c) 3,100,000 3,100,000
Eastern Muni. Wtr. Dist. Wtr. & Swr. Rev.
(Riverside County) Series 1993, 2.85%,
(FGIC Insured), VRDN 3,280,000 3,280,000
El Cerrito TRAN Series 1994, 4.25% 7/5/95 2,000,000 2,009,733
Escondido Commty. Dev. Commission Rev.
(Escondido Promeneade Proj.) 3.40%,
LOC Bank of America, VRDN (b) 4,000,000 4,000,000
Fontana Apt. Dev. Rev. Rfdg. (Citrus Ave. Apt. Proj.)
Series 1992 A, 2.90% LOC Bank of
America, VRDN 1,800,000 1,800,000
Fontana Participating VRDN, Series 1991-G, 3.25%
LOC Federal Home Loan Bank of San
Francisco (c) 1,100,000 1,100,000
Fontana Unified School Dist. TRAN 4.50% 7/7/95 3,500,000 3,519,966
Fremont Bldg. and Equip. Acquisition Fing. Proj.
(Fremont Park Facs. Corp.), 3.20%,
LOC Sumitomom Bank Ltd., VRDN 2,575,000 2,575,000
Fremont TRAN 4.25% 7/5/95 5,600,000 5,628,622
Hayward Hsg. Auth. Multi-Family Rev.
(Foothills Garden Apts.) Series 1985 A,
3.15%, LOC Citibank, VRDN 7,650,000 7,650,000
Huntington Beach Multi-Family Hsg. Rev.
(Seabridge Villas Proj.) 1985 A, 2.90%,
LOC Bank of America, VRDN 2,000,000 2,000,000
Irvine Pub. Facs. & Infrastructure Auth. Lease Rev.
Series 1985, 3.05%, LOC Nat'l Westminister
Bank, VRDN 7,600,000 7,600,000
Lancaster Redev. Agcy. Multi-Family Hsg. Rev.
(Westwood Park Apt.) Series 1985 K, 3%,
LOC Bank of America, VRDN 1,200,000 1,200,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Livermore Ctfs. of Prtn. (Wtr. Reclamation Plant Expansion
Proj.) 3.10%, LOC Westminister Nat'l. Bank, VRDN $ 565,000 $ 565,000
Livermore Participating VRDN, Series 1991-1 C, 3.25%
LOC Federal Home Loan Bank of San Francisco (c) 4,500,000 4,500,000
Loma Linda Multi-Family Hsg. Rev.
(Loma Linda Springs Apts.) Series 1989, 3.95%,
LOC Tokai Bank, VRDN (b) 1,465,000 1,465,000
Long Beach Auth. Rev. 3.60% 11/1/94 1,200,000 1,201,163
Long Beach Hbr. Dept. Rev. Series A, CP:
3% 9/12/94 (Liquidity Facility CIBC) (b) 3,000,000 3,000,000
3.15% 10/17/94 (Liquidity Facility CIBC) (b) 5,500,000 5,500,000
Long Beach TRAN 3.25% 9/21/94 1,000,000 1,000,108
Los Angeles Ctfs. of Prtn. (Baldwin Hills Public Parking
Facs.) Series 1984, 3.20%,
LOC Wells Fargo Bank, VRDN 10,000,000 10,000,000
Los Angeles Commty. College Dist. TRAN 4.50%
7/7/95 5,000,000 5,025,440
Los Angeles Commty. Redev. Agcy. (CMC Med. Plaza)
3.25%, LOC Security Pacific Nat'l. Bank, VRDN 600,000 600,000
Los Angeles Commty. Redev. Agcy. Multi-Family Hsg. Rev.
(Grand Promenade Proj.) Series 1985, 3.55%,
LOC Tokai Bank, VRDN 800,000 800,000
Los Angeles County Metropolitan Transp. Auth.
Series 1993 A, 2.85%, (MBIA Insured),
VRDN 23,300,000 23,300,000
Los Angeles County Hsg. Auth. Multi-Family Hsg. Rev.
(River Park Apt.) Series 1988 D, 3.40%,
LOC Dai-Ichi Kangyo Bank, VRDN (b) 2,100,000 2,100,000
(Sand Canyon Villas Proj.) Series 1989 A, 3.40%,
LOC Ind. Bank of Japan, VRDN (b) 3,300,000 3,300,000
Los Angeles County Pub. Works Fin. Auth.
Participating VRDN, Series 8, 3.35% (MBIA Insured)
(Liquidity Facility Credit Suisse) (c) 7,638,468 7,638,468
Los Angeles County TRAN 4.50% 6/30/95 12,700,000 12,764,905
Los Angeles County Transit Commty. Sales Tax Rev. Rfdg.
Series 1992 A, 3% (Liquidity Facility Industrial
Bank of Japan), VRDN 3,000,000 3,000,000
Los Angeles County Transit Commty. Participating VRDN,
Series 1992 B-37, 3.25%,
(Liquidity Facility Sakura Bank) (c) 2,890,000 2,890,000
Los Angeles Dept. of Wtr. & Pwr. Participating VRDN:
Series BTP-51, 3.40% (Liquidity Facility
Banker's Trust Co.) (c) 3,600,000 3,600,000
Series GS-M, 3.20%, (Liquidity Facility
Sanwa Bank) (c) 5,500,000 5,500,000
Series PT-24, 3.25% Liquidity Facility
Dai-Ichi Kangyo Bank) (c) 2,300,000 2,300,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Los Angeles Local Ed. Agcys. Pooled TRAN
Series 1994-95 A, 4.50% 7/6/95 $ 4,000,000 $ 4,024,369
Los Angeles Multi-Family Hsg. Rev.:
(Beverly Park Apts.) Series 1988 A, 3%,
LOC Barclay's Bank, VRDN (b) 3,500,000 3,500,000
(Channel Gateway Apts.) Series 1989 B, 3.20%,
LOC Fuji Bank, VRDN (b) 15,900,000 15,900,000
(Malibu Meadows II Proj.) Series 1991 B, 3.20%,
LOC Sumitomo Trust Ltd., VRDN 5,500,000 5,500,000
(Museum Terrace Apt. Proj.) Series H, 3%,
LOC Bank of America, VRDN 3,800,000 3,800,000
(Studio Colony Proj.) Series 1985 C, 3.10%,
LOC Industrial Bank of Japan, VRDN 1,887,000 1,887,000
Series 1985 K, 2.95%, LOC Federal Home Loan
Bank, VRDN 6,300,000 6,300,000
Los Angeles Redev. & Convention Center Participating
VRDN, Series 1991 A-2, 3.25%,
(Liquidity Facility Sakura Bank) (c) 6,135,000 6,135,000
Madera County TRAN 3.25% 9/30/94 2,000,000 2,000,572
Midpeninsula Regional Open Space Dist.
(Santa Clara & San Mateo Counties) Series A, 3.35%,
LOC Fuji Bank, VRDN 3,570,000 3,570,000
Mt. Diablo Unified School Dist. TRAN 3.25%
10/14/94 2,000,000 2,000,480
Northern California Transmission Agcy.
Participating VRDN,
Series PA-1007, 3.25%,
(Liquidity Facility Merrill Lynch & Co.) (c) 1,860,000 1,860,000
Oakland County Variable Rate Rev.
(Children's Hosp. Med. Center) Series 1994 B,
3.10%, LOC Banque Nationale De
Paris, VRDN 7,000,000 7,000,000
Oceanside Multi-Family Mtg. Rev.
(Riverview Springs Apts.) Series 1990 A, 3.35%,
LOC Bank of Tokyo, VRDN (b) 900,000 900,000
Olcese Wtr. Dist. Rev. Bonds (Rio Bravo Wtr. Delivery Proj.)
Series 1986 A, 3.15% tender 9/22/94
LOC Sumitomo Bank Ltd. (b) 2,800,000 2,800,000
Ontario Ind. Dev. Auth. Rev. (Safari Land Proj.) Series 1989,
4.05%, LOC Tokai Bank, VRDN (b) 1,000,000 1,000,000
Orange County Apt. Dev. Rev. Bonds:
(The Irvine Co.) Issue 1, Series 1985:
3% tender 9/13/94 LOC Dai-Ichi Kangyo Ltd. 4,000,000 4,000,000
3.20% tender 10/13/94
LOC Dai-Ichi Kangyo Bank Ltd 3,000,000 3,000,000
(The Irvine Co. II) Series 1985 V,
3% tender 9/13/94 LOC Citibank 6,500,000 6,500,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Orange County Apt. Dev. Rev.:
(Bear Brands Apt.) Issue Z 1985, 3.10%,
LOC Fuji Bank, VRDN $ 4,800,000 $ 4,800,000
(Foothill Oaks Apts. Proj.) Issue 1989 B, 3.15%,
LOC Bank of America, VRDN (b) 3,100,000 3,100,000
(Laguna Summit Apts.) Series 1985 X, 3.90%
11/1/08 LOC Tokai Bank, VRDN 3,400,000 3,400,000
(Niguel Summit II) Issue 1985 U, Series B, 3%,
LOC Bank of America, VRDN 2,740,000 2,740,000
(Park Place Apts. Proj.) Series 1989 A, 3.95%,
LOC Tokai Bank, VRDN (b) 1,000,000 1,000,000
(Villa Marguerite Apts.), Series 1993 A, 3.05%,
LOC Wells Fargo Bank, VRDN 2,600,000 2,600,000
(Vista Verde Apt. Proj.) Series 1988 A, 3.20%,
LOC Wells Fargo Bank, VRDN (b) 1,800,000 1,800,000
(WLCO Partners) Series 1985 C-1, 3.40%,
LOC Tokai Bank Ltd., VRDN 1,000,000 1,000,000
Orange County Hsg. Auth. Apt. Dev. Rev.
(Costa Mesa Partners) Series 1985-BB, 3.45%,
LOC Tokai Bank, VRDN 17,100,000 17,100,000
Orange County San. Dist. Rev. (#1,2,3,5,6,7, 11)
2.85% (Liquidity Facility Industrial Bank of
Japan), VRDN 4,895,000 4,895,000
Orange County Trans. Corridor Agcy. Rev. (Foothill/Eastern)
2.85% LOC Morgan Guaranty, VRDN 3,600,000 3,600,000
Oxnard Redev. Agcy. Ctfs. of Prtn. Rev. (Channel Islands
Bus. Ctr. Proj.) 3.525%, LOC Wells Fargo Bank,
VRDN 3,195,000 3,195,000
Palm Springs Community Redev. Ctfs. of Prtn.
(Headquarters Hotel Proj.) (Community Redev.
Agcy.-II 1984) 3.15%, LOC Citibank, 800,000 800,000
Panama-Buena Vista Unified School Dist. Capital Impt.
Fing. Rev. Series 1994, 3.25%
LOC Bank Of California, VRDN 3,000,000 3,000,000
Paramount Hsg. Auth. Multi-Family Hsg. Rev.
(Centry Place Apt. Proj.) 3.25%,
LOC Dai-Ichi Kangyo Bank, VRDN (b) 5,600,000 5,600,000
Pleasonton Participating VRDN, Series 1991 1L, 3.25%
LOC Federal Home Loan Bank of
San Francisco (c) 1,000,000 1,000,000
Redlands Multi-Family Hsg. Rev. (Parkview Terrace Proj.),
2.90%, LOC Bank of America, VRDN 1,600,000 1,600,000
Realto Unified School Dist. TRAN 4.50% 7/7/95 3,665,000 3,682,890
Riverside Multifamily Hsg. Rev. (Victoria Springs Apts.)
Series 1989 C, 3.35%,
LOC Bank of America, VRDN (b) 1,500,000 1,500,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Sacramento County San. Dist. Fin. Auth. Rev. Bonds
Series 1993, 3% 12/1/94 $ 1,000,000 $ 1,000,231
Sacramento Muni. Util. Dist. Rev. CP, Series H,
2.90% 9/12/94 LOC Morgan Guaranty Trust 6,000,000 6,000,000
Sacramento Participating VRDN, Series 1991-1K, 3.25%,
LOC Federal Home Loan Bank of San Francisco (c) 2,000,000 2,000,000
San Bernardino County Multi-Family Hsg. Rev.:
(Western Prop II), 3%, LOC Bank of America, VRDN 500,000 500,000
(Western Properties IV), 3%,
LOC Bank of America, VRDN 1,500,000 1,500,000
(Western Properties V) 3%,
LOC Bank of America, VRDN 800,000 800,000
San Bernadino County Mtg. Rev. Rfdg.
(Pepperwood Apts.) Series 1993 A, 3%,
LOC Fed Home Loan Bank, VRDN 4,000,000 4,000,000
San Bernadino Participating VRDN, Series 1991-1N,
3.15%, LOC Federal Home Loan Bank
of San Francisco 1,500,000 1,500,000
San Diego Area Local Gov. TRAN 4.50%
6/30/95 7,675,000 7,724,764
San Diego Hsg. Auth. Multi-Family Hsg. Rev., VRDN:
(Carmel Del Mar Apt. Proj.) Series 1993-E, 3%
LOC Citibank 3,000,000 3,000,000
(Nobel Court Apts.) Series 1985 L, 3.05%,
LOC Citibank 3,825,000 3,825,000
(La Cima Apts.) Issue 1985 K, 3.55% 12/1/08,
LOC Daiwa Bank, Ltd. 2,000,000 2,000,000
(Paseo Point Apts.) Series 1994 A, 3.10%
LOC Bank of Tokyo 3,600,000 3,600,000
San Diego Multi-Family Hsg. Rev. Rfdg.
(Coral Pointe Apt. Proj.) Series 1993 A, 3.25%
(Liquidity Facility Continental Casualty
Company), VRDN 3,265,000 3,265,000
San Francisco City & County Multi-Family Hsg. Rev. Bond
(Winterland Proj.) 3.15% LOC Citibank, VRDN 6,100,000 6,100,000
San Francisco City & County Multi-Family Redev. Agcy.
Rev. (St. Francis Place Proj.) Series 1989 A, 3.60%,
LOC Mitsubishi Bank Ltd., VRDN 6,500,000 6,500,000
San Francisco City & County Redev. Agcy.
(South Harbor Proj.) 2.675%
LOC Mitsubishi Bank Ltd., VRDN 2,120,000 2,120,000
San Francisco Multi-Family Redev. Agcy. Hsg. Auth. Rev.
(Rincon Ctr.) Series 1985 B, 3.15%,
LOC Citibank, VRDN 9,405,000 9,405,000
San Jose Multi-Family Hsg. Rev. Bonds (Kimberly Woods)
Series 1984, 3%, LOC Bank of America,
VRDN 3,100,000 3,100,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Santa Ana Ind. Dev. Auth. Rev. (Mcfadden Properties Proj.)
3.182%, LOC Bank of America, VRDN $ 400,000 $ 400,000
Santa Clara Elec. Sys. Rev. Series A, 3.05%
LOC National Westminster Bank, VRDN 1,000,000 1,000,000
Simi Valley Multi-Family Hsg. Rev. (Shadowridge Apts.)
Series 1989, 3.30%, LOC Citibank, VRDN 3,800,000 3,800,000
Solano County TRAN 3.25% 11/01/94 1,000,000 1,000,622
Southern California Metropolitan Wtr. Dist.
Participating VRDN, Series BTP-98, 3.30%
(Liquidity Facility Banker's Trust) (c) 2,475,000 2,475,000
Southern California Pub. Pwr. Auth. Rev.
(Tran Mission Proj.) Series 1991, 3%,
LOC Swiss Bank Corp., (AMBAC Insured), VRDN 5,700,000 5,700,000
Stockton Hosp. Rev. (St. Joseph's Hosp.)
Series 1985 A, 3.20%,
LOC Dai-Ichi Kangyo Bank, VRDN 10,365,000 10,365,000
Torrance Hospital Rev. (Little Co. Of Mary Hosp.-Torrance
Memorial Med. Ctr.) Series1992, 3.25%,
LOC Fuji Bank, VRDN 5,500,000 5,500,000
Tustin Assessment Dist. #85-1 Bonds:
3.15% tender 9/8/94 LOC Mitsubishi Trust 3,700,000 3,700,000
3.20% tender 10/25/94
LOC Mitsubishi Trust & Banking 5,000,000 5,000,000
Upland Commty. Redev. Agcy. Multi-Family Hsg.
(Northwoods) 1989 B, 3.25%,
LOC Sanwa Bank, VRDN 3,850,000 3,850,000
Upland Redev. Agcy. Multi-Family Hsg. Rev.
(Pebble Grove Proj.) Series 1989 C, 3.25%,
LOC Sanwa Bank, VRDN 4,475,000 4,475,000
Washington Township Hosp. Dist., Series 1985 A, 3.10%,
LOC Bank of Tokyo, VRDN 7,400,000 7,400,000
Woodland Participating VRDN, Series 1991-1, 3.25%,
LOC Federal Home Loan Bank of San Francisco (c) 1,220,000 1,220,000
TOTAL INVESTMENTS - 100% $ 657,331,917
Total Cost for Income Tax Purposes $ 657,331,899
SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
RAN - Revenue Anticipation Notes
TAN - Tax Anticipation Notes
TRAN - Tax & Revenue Anticipation Notes
VAN - Variable Rate Tax & Revenue
Anticipation Notes
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
(c) Provides evidence of ownership in one or more underlying municipal
bonds.
INCOME TAX INFORMATION
At February 28, 1994, the fund had a capital loss carryforward of
approximately $108,700 of which $27,400, $52,500 and $28,800 will expire on
February 28, 1996, 1997 and 1998, respectively.
FIDELITY CALIFORNIA TAX-FREE MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
284.ASSETS 285. 286.
287.Investment in securities, at value - See 288. $ 657,331,917
accompanying schedule
289.Interest receivable 290. 2,827,814
291. 292.TOTAL ASSETS 293. 660,159,731
294.LIABILITIES 295. 296.
297.Payable to custodian bank $ 154,973 298.
299.Share transactions in process 3,740,929 300.
301.Dividends payable 44,383 302.
303.Accrued management fee 226,601 304.
305.Other payables and accrued expenses 254,756 306.
307. 308.TOTAL LIABILITIES 309. 4,421,642
310.311.NET ASSETS 312. $ 655,738,089
313.Net Assets consist of: 314. 315.
316.Paid in capital 317. $ 656,037,725
318.Accumulated net realized gain (loss) on 319. (299,653)
investments
320.Unrealized gain from accretion of market discount 321. 17
322.323.NET ASSETS, for 656,061,565 shares 324. $ 655,738,089
outstanding
325.326.NET ASSET VALUE, offering price and 327. $1.00
redemption price per share ($655,738,089 (divided by)
shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
328.329.INTEREST INCOME 330. $ 9,105,280
331.EXPENSES 332. 333.
334.Management fee $ 1,358,852 335.
336.Transfer agent, accounting and custodian fees 675,231 337.
and expenses
338.Non-interested trustees' compensation 3,554 339.
340.Registration fees 1,500 341.
342.Audit 16,648 343.
344.Legal 1,750
345.Miscellaneous 1,048 346.
347. 348.TOTAL EXPENSES 349. 2,058,583
350.351.NET INTEREST INCOME 352. 7,046,697
353.REALIZED AND UNREALIZED GAIN (LOSS) 355. (190,977)
354.Net realized gain (loss) on investment securities
356.Increase (decrease) in net unrealized gain from 357. (1,434)
accretion
of market discount
358.359.NET GAIN (LOSS) 360. (192,411)
361.362.NET INCREASE IN NET ASSETS RESULTING FROM 363. $ 6,854,286
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR
ENDED ENDED
AUGUST 31, 1994 FEBRUARY 28,
(UNAUDITED) 1994
364.INCREASE (DECREASE) IN NET ASSETS
365.Operations $ 7,046,697 $ 10,549,462
Net interest income
366. Net realized gain (loss) (190,977) 26,686
367. Increase (decrease) in net unrealized gain from (1,434) 1,451
accretion
of market discount
368. 6,854,286 10,577,599
369.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
370.Dividends to shareholders from net interest income (7,046,697) (10,549,462)
371.Share transactions at net asset value of $1.00 per 909,502,689 1,472,161,834
share
Proceeds from sales of shares
372. Reinvestment of dividends from net interest 6,788,744 10,140,028
income
373. Cost of shares redeemed (872,126,244) (1,438,844,793)
374. 44,165,189 43,457,069
Net increase (decrease) in net assets resulting from
share transactions
375. 43,972,778 43,485,206
376.TOTAL INCREASE (DECREASE) IN NET ASSETS
377.NET ASSETS 378. 379.
380. Beginning of period 611,765,311 568,280,105
381. End of period $ 655,738,089 $ 611,765,311
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
382. SIX MONTHS YEAR TEN MONTHS YEARS ENDED APRIL 30,
ENDED ENDED ENDED
AUGUST 31, 19 FEBRUARY 28, FEBRUARY 28,
94
383. (UNAUDITED) 1994 1993 1992 1991 1990
384.SELECTED PER-SHARE DATA
385.Net asset value, beginning of
period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
386.Income from Investment Operations .011 .020 .019 .035 .047 .054
Net interest income
387.Less Distributions (.011) (.020) (.019) (.035) (.047) (.054)
From net interest income
388.Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
389.TOTAL RETURN B 1.06% 1.97% 1.92% 3.59% 4.85% 5.53%
390.RATIOS AND SUPPLEMENTAL DATA
391.Net assets, end of period
(000 omitted) $ 655,738 $ 611,765 $ 568,280 $ 556,516 $ 538,791 $ 623,748
392.Ratio of expenses to average
net assets .62%A .64% .62%A .63% .61% .60%
393.Ratio of net interest income to
average net assets 2.11%A 1.95% 2.29%A 3.50% 4.75% 5.42%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FINANCIAL HIGHLIGHTS
NOTES TO FINANCIAL STATEMENTS
For the period ended August 31, 1994 (Unaudited)
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity California Tax-Free High Yield Portfolio (the high yield fund) and
Fidelity California Tax-Free Insured Portfolio (the insured fund) are funds
of Fidelity California Municipal Trust. Fidelity California Tax-Free Money
Market Portfolio (the money market fund) is a fund of Fidelity California
Municipal Trust II. Each trust is registered under the Investment Company
Act of 1940, as amended (the 1940 Act), as an open-end management
investment company. Fidelity California Municipal Trust and Fidelity
California Municipal Trust II (the trusts) are organized as a Massachusetts
business trust and a Delaware business trust, respectively. Each fund is
authorized to issue an unlimited number of shares. The following summarizes
the significant accounting policies of the funds:
SECURITY VALUATION.
HIGH YIELD AND INSURED FUNDS. Securities are valued based upon a
computerized matrix system and/or appraisals by a pricing service, both of
which consider market transactions and dealer-supplied valuations.
Short-term securities maturing within sixty days are valued either at
amortized cost or original cost plus accrued interest, both of which
approximate current value. Securities for which quotations are not readily
available through the pricing service are valued at their fair value as
determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to income taxes to
the extent that it distributes all of its taxable income for the fiscal
year. The schedules of investments include information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. For the
money market fund, accretion of market discount represents unrealized gain
until realized at the time of a security disposition or maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income. Distributions to shareholders from
realized capital gains on investments, if any, are recorded on the
ex-dividend date.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
losses deferred due to wash sales and futures and options transactions. The
high yield and insured fund also utilized earnings and profits distributed
to shareholders on redemption of shares as part of the dividends paid
deduction for income tax purposes.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FUTURES CONTRACTS AND OPTIONS. The high yield and insured funds may invest
in futures contracts and write options. These investments involve to
varying degrees, elements of market risk and risks in excess of the amount
recognized in their Statements of Assets and Liabilities. The face or
contract amounts reflect the extent of the involvement the high yield and
insured funds have in the particular classes of instruments. Risks may be
caused by an imperfect correlation between movements in the price of the
instruments and the price of the underlying securities and interest rates.
Risks also may arise if there is an illiquid secondary market for the
instruments, or due to the inability of counterparties to perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
3. PURCHASES AND SALES OF
INVESTMENTS.
HIGH YIELD FUND. Purchases and sales of securities, other than short-term
securities, aggregated $82,380,485 and $100,539,523, respectively. The
gross market value of futures contracts opened and closed amounted to
$413,547,006 and $409,102,615, respectively.
INSURED FUND. Purchases and sales of securities, other than short-term
securities, aggregated $34,574,252 and $66,974,778, respectively. The gross
market value of futures contracts opened and closed amounted to
$169,941,380 and $159,549,096 respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, Fidelity Management &
Research Company (FMR) receives a monthly fee that is calculated on the
basis of a group fee rate plus a fixed individual fund fee rate applied to
the average net assets of each fund. The group fee rate is the weighted
average of
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
MANAGEMENT FEE - CONTINUED
a series of rates ranging from .15% to .37% and is based on the monthly
average net assets of all the mutual funds advised by FMR. The annual
individual fund fee rate is .25%. For the period, the management fees were
equivalent to an annual rate of .41% of average net assets for the high
yield, insured and money market funds, respectively.
The Board of Trustees has approved a new group fee rate schedule with rates
ranging from .12% to .37%. Effective August 1, 1994, FMR voluntarily agreed
to implement this new group fee rate schedule as it results in the same or
a lower management fee.
SUB-ADVISER FEE. As the money market fund's investment sub-adviser, FMR
Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR of
50% of the management fee payable to FMR. The fee is paid prior to any
voluntary expense reimbursements which may be in effect, and after reducing
the fee for any payments by FMR pursuant to the fund's Distribution and
Service Plan.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plans (the Plans), and in accordance with Rule 12b-1 of the 1940 Act, FMR
or the funds' distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of each fund's shares. Subject to
the approval of each Board of Trustees, the Plans also authorize payments
to third parties that assist in the sale of each fund's shares or render
shareholder support services. FMR or FDC has informed the funds that
payments made to third parties under the Plans amounted to $1,149, $1,158
and $14,052 for the high yield, insured and money market funds,
respectively, for the period.
TRANSFER AGENT AND ACCOUNTING FEES. United Missouri Bank, N.A. (the Bank)
is the custodian and transfer and shareholder servicing agent for the
funds. The Bank has entered into a sub-contract with Fidelity Service Co.
(FSC), an affiliate of FMR, under which FSC performs the activities
associated with the funds' transfer and shareholder servicing agent and
accounting functions. The funds pay transfer agent fees based on the type,
size, number of accounts and number of transactions made by shareholders.
FSC pays for typesetting, printing and mailing of all shareholder reports,
except proxy statements. The accounting fee is based on the level of
average net assets for the month plus out-of-pocket expenses. For the
period, FSC received transfer agent and accounting fees amounting to
$246,755 and $111,475 for the high yield fund, $145,711, and $54,588 for
the insured fund and $593,453 and $57,952 for the money market fund,
respectively.
Shareholders participating in the Fidelity Ultra Service Account(registered
trademark) Program (the Program) pay a $5.00 monthly fee to Fidelity
Brokerage Services, Inc. (FBSI), an affiliate of FMR, for performing
services associated with the Program. For the period, fees paid to FBSI by
shareholders participating in the Program amounted to $73,625.
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call -
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND
QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios(registered trademark).
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND
ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and send
you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
100 Crosby Parkway - KP2C
Covington, KY 41015-4399
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
1907 West State Road 434
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
1 West Pennsylvania Ave.
Towson, MD
7401 Wisconsin Avenue
Bethesda, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
101 Cambridge Street
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
38 South Sixth Street
Minneapolis, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
2200 West Main Street
Durham, NC
4611 Sharon Road
Charlotte, NC
OHIO
600 Vine Street
Cincinnati, OH
1903 East Ninth Street
Cleveland, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
1010 Lamar Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
215 South State Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI
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Do NOT strip-in this type
Page 71 = BLANK
Do NOT strip-in this type
INVESTMENT ADVISER
(registered trademark)
Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER, MONEY MARKET FUND
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr. , Vice President -
MONEY MARKET FUND
Thomas J. Steffanci, Vice President -
HIGH YIELD AND INSURED FUNDS
John F. Haley Jr., Vice President -
HIGH YIELD AND INSURED FUNDS
Deborah F. Watson, Vice President -
MONEY MARKET FUND
Thomas D. Maher, Assistant
Vice President - MONEY MARKET FUND
Gary L. French, Treasurer
Leonard M. Rush, Assistant Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Marvin L. Mann*
Edward H. Malone*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
United Missouri Bank, N.A.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
SPARTAN(registered trademark)
(registered trademark)
CALIFORNIA
MUNICIPAL
PORTFOLIOS
SEMIANNUAL REPORT
AUGUST 31, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING
STRATEGIES
SPARTAN CALIFORNIA MUNICIPAL
HIGH YIELD PORTFOLIO 4 PERFORMANCE
7 FUND TALK: THE MANAGER'S OVERVI
EW
10 INVESTMENT CHANGES
11 INVESTMENTS
22 FINANCIAL STATEMENTS
SPARTAN CALIFORNIA
INTERMEDIATE MUNICIPAL
PORTFOLIO 26 PERFORMANCE
28 FUND TALK: THE MANAGER'S OVERVI
EW
31 INVESTMENT CHANGES
32 INVESTMENTS
36 FINANCIAL STATEMENTS
SPARTAN CALIFORNIA MUNICIPAL
MONEY MARKET PORTFOLIO 40 PERFORMANCE
42 FUND TALK: THE MANAGER'S OVERVI
EW
44 INVESTMENT CHANGES
45 INVESTMENTS
54 FINANCIAL STATEMENTS
NOTES 58 NOTES TO THE FINANCIAL STATEMENTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUNDS UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL
RESERVE BOARD OR
ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF
PRINCIPAL. NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A
BANK. FOR MORE
INFORMATION ON ANY FIDELITY FUND INCLUDING CHARGES AND EXPENSES, CALL
1-800-544-8888
FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
The year so far has been an unsettling time for bond investors. The bond
market declined after the Federal Reserve Board raised short-term interest
rates from February through May. These rate hikes caused bond yields to
rise and bond prices to fall. The board raised the rate again in August,
and while nobody knows whether rates will continue to go up, this may be a
good time to review the effect rising rates have on your bond fund
investment, and consider how well your current bond fund holdings match
your investment goals.
Most investors choose bond funds to generate income and to help diversify
their investment portfolios. Despite the recent market downturn, bond
mutual funds can still satisfy these needs. Where investors have felt the
negative effect of rising rates is in the market value of their investment,
which has eroded as bond prices have fallen. It's important to remember,
however, that this loss in principal is only "on paper" until you sell your
shares. That's why your investing time horizon is key.
If your time horizon is short - one year or less - you may want to consider
shifting all or part of your bond fund investment into short-term
investments.
If you don't need your money within the next year, staying in your bond
fund may be the appropriate strategy for you. The longer your investing
time frame, the better your chances of retaining your principal investment
through periods of rising AND falling rates. For example, if you plan to
use your money in one to two years, a short-term bond fund may be the right
choice. If your time frame is two to four years, a fund with an
intermediate length average maturity may be best. If you have a longer-term
goal - say a child's college education that's 10 years away - you may be
willing to ride out the bond market's peaks and valleys in exchange for the
higher potential returns of a longer-term fund.
If you have questions, please call us at 1-800-544-8888. We would be happy
to send you a Fidelity FundMatch kit, which can help you determine the mix
of investments that is right for you. You might also find it convenient to
set up
a regular investment plan using the Fidelity Automatic Account Builder.SM
Periodic investment plans do not, of course, assure a profit, nor do they
protect against a loss in a declining market.
We look forward to hearing from you.
Best regards,
Edward C. Johnson 3d
SPARTAN CALIFORNIA MUNICIPAL HIGH YIELD PORTFOLIO
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells bonds
that have grown in value), and the effect of the $5 account closeout fee.
You can also look at the fund's income. If Fidelity had not reimbursed
certain fund expenses during the periods shown, the total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1994 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Spartan California Municipal High Yield -2.80% -2.06% 44.96%
Lehman Brothers Municipal Bond Index -0.90% 0.14% n/a
Average California Tax-Exempt
Municipal Bond Fund -2.18% -1.37% n/a
Consumer Price Index 1.57% 2.90% 18.35%
CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period
- - in this case, six months, one year, or since the fund started on November
27, 1989. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, you would end up with $1,050. You can compare
these figures to the performance of the Lehman Brothers Municipal Bond
Index - a broad gauge of the municipal bond market. To measure how the fund
stacked up against its peers, you can look at the average California
tax-exempt municipal bond fund, which reflects the performance of 86
California tax-exempt municipal bond funds tracked by Lipper Analytical
Services. Both benchmarks include reinvested dividends and capital gains,
if any. Comparing the fund's performance to the consumer price index
(CPI)helps show how your fund did compared to inflation. (The periods
covered by the CPI numbers are the closest available match to those covered
by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1994 PAST 1 LIFE OF
YEAR FUND
Spartan California Municipal High Yield -2.06% 8.10%
Lehman Brothers Municipal Bond Index 0.14% n/a
Average California Tax-Exempt
Municipal Bond Fund -1.37% n/a
Consumer Price Index 2.90% 3.61%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
$26,475
$23,362
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan
California Municipal High Yield Portfolio on November 30, 1989, shortly
after the fund started. As the chart shows, by August 31, 1994, the value
of your investment would have grown to $14,419 - a 44.19% increase on your
initial investment. This assumes you still own the fund on August 31, 1994
and therefore does not include the effect of the $5 account closeout fee.
For comparison, look at how the Lehman Brothers Municipal Bond Index did
over the same period. With dividends reinvested, the same $10,000 would
have grown to $14,476 - a 44.76% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, move in the
opposite direction of interest
rates. In turn, the share price,
return, and yield of a fund
that invests in bonds will vary.
That means if you sell your
shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
SIX MONT
HS
ENDED YEARS ENDED FEBRUARY 28,
AUGUST 3
1,
1994 1994 1993 1992 1991
Dividend returns 2.87% 5.62% 6.72% 6.83% 7.51%
Capital appreciation
returns -5.67% 0.00% 8.32% 3.43% 1.89%
Total returns -2.80% 5.62% 15.04% 10.26% 9.40%
DIVIDEND returns and capital appreciation returns are both part of a bond
fund's total return. A dividend return reflects the actual dividends paid
by the fund. A capital appreciation return reflects both the amount paid by
the fund to shareholders as capital gain distributions and changes in the
fund's share price. Both returns assume the dividends or gains are
reinvested. Capital appreciation and total returns include the effect of
the $5 account closeout fee.
DIVIDENDS AND YIELD
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED AUGUST 31, 1994 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 5.07(cents) 30.54(cents) 61.55(cents)
Annualized dividend rate 5.91% 5.93% 5.71%
30-day annualized yield 5.94% - -
30-day annualized tax-equivalent yield 10.43% - -
</TABLE>
DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $10.10 over
the past month, $10.21 over the past six months and $10.77 over the past
year, you can compare the fund's income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis. The tax-equivalent yield shows what you would have to
earn on a taxable investment to equal the fund's tax-free yield, if you're
in the 43.04% combined effective 1994 federal and state income tax bracket.
SPARTAN CALIFORNIA MUNICIPAL HIGH YIELD PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with John Haley,
Portfolio Manager of Spartan
California Municipal High Yield
Portfolio
Q. JOHN, HOW HAS THE FUND PERFORMED?
A. It has been a difficult period for both the municipal bond market and
the fund. For the six months ended August 31, 1994, the fund had a total
return of -2.80%. That compares to the average California municipal bond
fund, which returned -2.18% for the same period, according to Lipper
Analytical Services. For the year ended August 31, 1994, the fund returned
- -2.06%, compared to the average fund's return of -1.37%, again according to
Lipper.
Q. WHY HAS THE MUNICIPAL MARKET DONE SO POORLY RECENTLY?
A. Short-term interest rates - which move in the opposite direction of bond
prices - have risen by 1.75% since the beginning of 1994, to 4.75% at the
end of August. The Federal Reserve first raised short-term interest rates
in February, because of concerns that strong economic growth in the fourth
quarter of 1993 would ignite inflation. Since then, the Fed has continued
raising interest rates. In the early stages of this tightening process, the
municipal market reacted quite negatively as investors seemed to fear
further interest rate hikes. Most of the market's - and the fund's - losses
came in February and March, when these fears were greatest. But by May, the
market had settled somewhat, as investors became convinced that economic
growth was more moderate and that inflation would remain in check. The
falling dollar hurt the market in June, but by mid-summer the market
rallied somewhat, based on a sense that higher interest rates were actually
slowing the economy down and easing inflationary pressures.
Q. WHY DID THE FUND UNDER-PERFORM THE AVERAGE CALIFORNIA FUND?
A. Mostly because it had a longer duration - which is a measure of the
fund's sensitivity to changes in interest rates - than other similar funds.
The longer the fund's duration, the more sensitive it is to changes in
interest rates. At the beginning of this year, I thought that economic
growth would be moderate and inflation would stay low. So far, that
assumption has been correct. But in my opinion, slow growth and low
inflation should have eliminated the need for the Fed to raise interest
rates. I was surprised by how quickly and how much the Fed acted. Also, I
believed that supply and demand factors would benefit municipal bonds this
year. The rate of California municipal bonds issued in 1994 by the end of
August was down more than 27% from last year. Demand was expected to remain
strong based upon higher federal and state taxes. Also, a large volume of
tax-exempt securities matured during this period, which was also expected
to increase demand. However, negative effects of higher interest rates
outweighed any positive effects from lower supply and higher demand.
Q. ONCE INTEREST RATES STARTED TO RISE, DID YOU SHORTEN THE FUND'S
DURATION?
A. Not significantly since I believe that long-term interest rates won't
rise much from their current levels. If I am correct, a fund with a
relatively long duration could benefit more than a fund with a shorter
duration. Since there is a diminished supply of California bonds available,
I wanted to keep the fund's current core structure in place. However, to
generally temper the fund's duration when interest rates were rising, I
used bond futures and options contracts to help or shorten the fund's
duration.
Q. THERE'S BEEN A LOT OF TALK LATELY ABOUT DERIVATIVES. AREN'T FUTURES ONE
OF THE FINANCIAL ARRANGEMENTS KNOWN AS A DERIVATIVE, AND DO YOU USE OTHERS?
A. Yes, futures and options are one type of financial derivative - meaning
their market value is derived from a security or market index. We've used
futures and options in our municipal bond funds for many years. Over the
past couple of years, I've also used what's known as an inverse floater -
whose yield rises as short-term rates fall, and vice versa. These inverse
floaters act like longer-term bonds, effectively increasing a fund's
duration, which is good in a falling interest rate environment, but can
hurt the fund when interest rates rise. At the end of August, inverse
floaters made up less than 5% of the fund's total investments. By using
these various derivatives, I achieve increased flexibility in managing the
fund's overall sensitivity to changes in interest rates, and hopefully, can
achieve higher levels of income.
Q. HOW HAVE YOU ALLOCATED THE FUND IN TERMS OF CREDIT QUALITY?
A. AAA-rated bonds, which are the highest-rated bonds, made up 31.6% of the
fund's investments at the end of August, while A-rated bonds made up 28% at
the end of the period. That's about where they stood six months ago. As I
become more confident about the California economy, I'll most likely add to
the fund's stake in bonds rated A or lower. Improvements in the state's
economy should help the credit quality of many of the A-rated bonds. That,
in turn, could attract more investors, and could boost the prices of
A-rated bonds. A-rated bonds are investment grade, but carry slightly more
risk than higher rated bonds. What's more, A-rated bonds can pay as much as
a half percent more in yield than AAA-rated bonds.
Q. WAS THE FUND AFFECTED BY THE RECENT DOWNGRADE OF CALIFORNIA BONDS?
A. Not really. The bonds that were affected by the downgrade were
California state general obligation bonds and other bonds backed by the
state, which made up less than 10% of the fund's investments at the end of
August. I had anticipated the downgrade, and the action was factored into
the prices of the affected California bonds well before the actual
downgrade. As a result, there wasn't much of an impact. In fact, the prices
of the affected bonds actually firmed up after being downgraded. Even after
the downgrade, the bonds still carry an investment-grade rating of A.
Q. WHAT'S YOUR OUTLOOK FOR THE CALIFORNIA MUNICIPAL MARKET OVER THE NEXT
YEAR?
A. I think that the worst is behind the municipal bond market, although
there could be some continued uncertainty and volatility. Lower interest
rates helped stimulate economic growth in 1993. Conversely, we're beginning
to see some signs that higher interest rates will keep the rate of economic
growth more moderate than it was in the fourth quarter. Despite some
jitters over the California gubernatorial race, I think the outlook for the
state's municipals is improving.
FUND FACTS
GOAL: to provide high current
income exempt from
California state and federal
income taxes, by investing
primarily in investment-grade
municipal securities
START DATE: November 27,
1989
SIZE: as of August 31, 1994,
more than $460 million
MANAGER: John Haley, since
December, 1989; manager,
Fidelity California Tax-Free
High Yield Portfolio, since
September 1985; Fidelity
California Tax-Free Insured
Portfolio, since September
1986; Fidelity Advisor
Tax-Exempt Portfolio, since
1985; joined Fidelity in 1981
(checkmark)
JOHN HALEY'S STRATEGY:
"After a long period of
contraction, the California
economy finally seems to be
basing - meaning it looks
like it has reached a bottom.
Early indicators - like retail
sales and housing sales -
are showing signs of
improving. While it's true that
California has lagged the
nation in coming out of the
recession, there are some
other bright spots. First, the
state is well positioned to
benefit from improving
economic conditions in Pacific
Rim countries. Second,
despite
its recent problems, California
is one of the world's largest
economies, with some very
vibrant industries like
entertainment and
technology."
(solid bullet) Health care bonds made up
the fund's largest sector
concentration at 20.7% of the
fund's total investments as of
August 31, 1994. These
bonds are attractive, in part,
because of their relatively
high yields. The fund targets
health care organizations that
are well managed and could
not only survive but could do
well in a new health care
environment.
SPARTAN CALIFORNIA MUNICIPAL HIGH YIELD PORTFOLIO
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF AUGUST 31, 1994
% OF FUND'S INVESTMENT % OF FUND'S INVESTMENT
S S
IN THESE SECTORS
6 MONTHS AGO
Health Care 20.7 19.8
Lease Revenue 20.6 26.1
Special Tax 19.8 18.3
Electric Revenue 8.3 8.3
General Obligation 7.6 5.1
AVERAGE YEARS TO MATURITY AS OF AUGUST 31, 1994
6 MONTHS AGO
Years 21.5 22.2
AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF AUGUST 31, 1994
6 MONTHS AGO
Years 10.3 9.8
DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, THE SHARE PRICE OF A FUND WITH A
FIVE-YEAR DURATION WILL FALL ABOUT 5%.
QUALITY DIVERSIFICATION AS OF AUGUST 31, 1994
(MOODY'S RATINGS) % OF FUND'S INVESTMENTS
Aaa 31.6%
Aa, A 36.6%
Baa 18.4%
Ba or B -
Non-rated 11.6%
Short-term and other
investments 1.8%
Row: 1, Col: 1, Value: 31.6
Row: 1, Col: 2, Value: 36.6
Row: 1, Col: 3, Value: 18.4
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 11.6
Row: 1, Col: 6, Value: 1.8
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS. UNRATED
DEBT SECURITIES THAT ARE EQUIVALENT TO BA AND BELOW AT AUGUST 31, 1994
ACCOUNT FOR 4.3% OF THE FUND'S INVESTMENTS
SPARTAN CALIFORNIA MUNICIPAL HIGH YIELD PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 98.2%
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - 95.5%
Alameda County Ctfs. of Prtn. Rfdg. (Santa Rita
Jail Proj.) 5.375% 6/1/09, (MBIA Insured) Aaa $ 1,250,000 $ 1,185,937
Alameda Hsg. Auth. Multi-Family Hsg. Rev.
(Independence Apts.) Series A, 7.50%
2/20/31, (GNMA Coll.) - 1,775,000 1,865,969
Anaheim Pub. Fing. Auth. Tax Allocation Rev.:
(Cap. Appreciation Redev. Proj.)
0% 12/1/06, (MBIA Insured) Aaa 5,000,000 2,443,750
(Reg. Rites) 9.37% 12/1/18,
(MBIA Insured) INFL (e) Aaa 1,500,000 1,565,625
Buena Park Commty. Redev. Agcy. Tax
Allocation Rfdg. Rev. (Central Business
Dist. Proj.) 7.10% 9/1/14 BBB+ 1,500,000 1,524,375
Burbank Redev. Agcy. Tax Allocation Rev.:
Rfdg. Series A, 5.75% 12/1/08 Baa1 2,355,000 2,213,700
Series A, 6% 12/1/23 Baa1 1,950,000 1,789,125
California Dept. Wtr. Resources Wtr. Sys.
Rev. (Central Valley Proj.) Series J-1,
7% 12/1/12 Aa 1,000,000 1,105,000
California Health Facs. Fing. Auth. Rev.:
Rfdg. (Catholic Healthcare West)
4.75% 7/1/19 (MBIA Insured) Aaa 4,680,000 3,744,000
(Children's Hosp.):
Series A, 7.50% 10/1/20, (MBIA Insured) Aaa 2,450,000 2,713,375
7% 7/1/13, (MBIA Insured) Aaa 2,485,000 2,612,356
(Gould Med. Foundation)
Series A, 7.30% 4/1/20 A 1,500,000 1,672,500
(Kaiser Permanente Health Sys.)
Series A, 7% 12/1/10 Aa2 2,800,000 2,961,000
(Los Medanos Health Care Corp.)
Series A, 7.25% 3/1/20 A 1,500,000 1,539,375
(Mills-Peninsula Hosp.) Series A,
7.875% 1/15/12 A- 2,000,000 2,112,500
(San Diego Hosp. Assoc.)
Series A, 6.95% 10/1/21 A1 1,500,000 1,584,375
(Scripps Health) Series A, 4.625%
10/1/13 (MBIA Insured) Aaa 1,075,000 877,469
(Sharp Temecula Valley) Series A, 7.05%
8/1/21, (MBIA Insured) Aaa 1,100,000 1,166,000
(Valleycare Hosp. Corp.) Series A, 7%
5/1/20 A 2,000,000 2,107,500
California Hsg. Fin. Agcy. Rev. (Home Mtg.):
Series A, 0% 8/1/23 (c) Aa 3,650,000 406,062
Series C: (c)
8.30% 8/1/19 Aa 1,910,000 1,991,175
0% 8/1/21 Aa 5,870,000 755,762
7.60% 8/1/30 Aa 6,580,000 6,802,075
Series F, 7.20% 8/1/09 Aa 1,025,000 1,053,187
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
California Poll. Cont. Fing. Auth. Solid Waste
Rev. (Keller Canyon Landfill Proj.)
(Browning Ferris) Series 1992, 6.875%
11/1/27 (c) A2 $ 2,250,000 $ 2,286,562
California Pub. Cap. Impt. Fing. Auth. Rev.
(Pooled Proj.) Series B, 8.10% 3/1/18,
(MBIA Insured) Aaa 1,885,000 2,035,800
California Pub. Works Board Lease Rev.:
(California University Proj.)
Series A, 5.50% 6/1/14 (h) A 6,475,000 5,762,750
(Dept. of Corrections State Prisons):
Rfdg. Series A:
5.25% 12/1/13, (AMBAC
Insured) Aaa 1,355,000 1,209,337
5% 12/1/19, (AMBAC Insured) Aaa 6,500,000 5,427,500
(Del Norte) Series S, 5.125% 12/1/08
(MBIA Insured) Aaa 1,525,000 1,397,281
(Medera) Series E, 5.50% 6/1/15
(MBIA Insured) Aaa 3,300,000 3,011,250
(Susanville) Series D, 5.25% 6/1/15
(CGIC Insured) Aaa 2,000,000 1,755,000
California Statewide Commty. Dev. Auth. Rev.
8.80% 7/1/13, (MBIA Insured) INFL (e) Aaa 2,000,000 1,757,500
California Statewide Commty. Dev. Corp.
Ctfs. of Prtn.:
Rfdg. (Insured Health Facs. - Eskaton, Inc.)
5.875% 5/1/20 A 4,000,000 3,665,000
Rfdg. (Insured Hosp. - Triad
Healthcare): (f)
6.25% 8/1/06 A+ 2,000,000 1,975,000
6.50% 8/1/22 A+ 1,750,000 1,719,375
(Children's Hosp.) 6% 6/1/13
(MBIA Insured) Aaa 1,570,000 1,546,450
(Odd Fellows):
5.375% 10/1/13 A+ 2,500,000 2,228,125
5.50% 10/1/23 A+ 3,000,000 2,625,000
(Sister of Charity Leavenworth Sys.):
5% 12/1/14 Aa 1,315,000 1,107,887
5% 12/1/23 Aa 8,875,000 7,122,187
(St. Joseph Health Sys.) 5.50% 7/1/23 Aa 3,000,000 2,617,500
(Villaview Commty. Hosp., Inc.)
Series A, 7% 9/1/09 A+ 1,200,000 1,248,000
California Urban Ind. Dev. Agcy. Rev.
(Civic Recreational Proj.#1)
7.30% 5/1/06 - 4,000,000 4,245,000
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Campbell Ctfs. of Prtn. Rfdg.
(Civic Center Proj.) 6% 10/1/18 A $ 2,565,000 $ 2,398,275
Carson Redev. Agcy. 5.875% 10/1/09 Baa 2,000,000 1,877,500
Carson Redev. Agcy. Redev. Proj. Area #1
Tax Allocation:
6.375% 10/1/12 Baa1 1,465,000 1,424,712
6.375% 10/1/16 Baa1 1,000,000 958,750
Castaic Lake Wtr. Agcy. Ctfs. of Prtn.
(Wtr. Sys. Impt. Proj.):
7% 8/1/11, (MBIA Insured) Aaa 1,500,000 1,670,625
7.125% 8/1/16, (MBIA Insured) Aaa 2,750,000 3,100,625
Castaic Unified School Dist. (Cap. Appreciation)
Series A, 0% 5/1/18, (FGIC Insured) Aaa 8,000,000 1,760,000
Central California Jt. Pwrs. Health Fing. Auth.
Rfdg. (Commty. Hosp. of Central
California Proj.) 5% 2/1/23 A 7,920,000 6,058,800
Central California Jt. Pwrs. Health Fing. Auth.
Ctfs. of Prtn. (Commty. Hosp. of Central
California Proj.) 5.25% 2/1/13 A 4,000,000 3,355,000
Central Valley Fing. Auth. Cogeneration Proj. Rev.
(Carson Ice Generation Proj.):
6% 7/1/09 BBB- 2,050,000 1,927,000
6.10% 7/1/13 BBB- 1,000,000 937,500
6.20% 7/1/20 BBB- 1,450,000 1,337,625
Clovis Unified School Dist. (Cap. Appreciation)
Series B, 0% 8/1/03 A1 3,485,000 2,125,850
Coalinga Ctfs. of Prtn. 7% 4/1/10 BBB+ 1,655,000 1,671,550
Contra Costa County Ctfs. of Prtn.
(Merrithew Mem. Hosp.)
(Cap. Appreciation) 0% 11/1/14 A1 6,805,000 1,896,894
Contra Costa Home Mtg. Fin. Auth. Home
Mtg. Rev. 0% 9/1/17, (MBIA Insured) Aaa 12,500,000 2,718,750
Desert Hosp. Rev. Ctfs. of Prtn. (Desert Hosp.
Corp.) Series 1992, 9.38% 7/28/20,
(Cap. Guaranty Insured) INFL (e) Aaa 4,000,000 4,065,000
Duarte Ctfs of Prtn. (City of Hope Nat'l.
Medical Ctr.) 6.25% 4/1/23 Baa1 2,000,000 1,890,000
East Bay Muni. Util. Dist. Untld. Tax Rfdg.
(Spl. Dist. #1) Series E, 5% 4/1/15 Aa 2,000,000 1,705,000
Eastern Muni. Wtr. Dist. Wtr. & Swr. Rev.
Ctfs. of Prtn. 6.75% 7/1/12,
(FGIC Insured) Aaa 2,000,000 2,175,000
Escondido Ctfs. of Prtn. Rfdg. (Redwood
Terrace Lutheran Home) 7% 11/15 A+ 1,600,000 1,666,000
Escondido Joint Pwr. Fing. Auth. Rev.
(Cap. Appreciation) 0% 9/1/12,
(AMBAC Insured) Aaa 2,160,000 707,400
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Fairfield-Suison Swr. Dist. Swr. Rev. Rfdg.
Series A:
0% 5/1/07, (MBIA Insured) Aaa $ 1,635,000 $ 776,625
0% 5/1/08, (MBIA Insured) Aaa 2,085,000 920,006
0% 5/1/09, (MBIA Insured) Aaa 2,080,000 858,000
Folsom Pub. Fing. Auth. Local Agcy. Rev.
Series A, 7.25% 10/1/10 BBB+ 1,285,000 1,321,944
Fontana Redev. Agcy. Tax Allocation Rfdg.
(Yurupa Hills) Series 1992 A, 7.10%
10/1/23 BBB 2,000,000 2,027,500
Fresno Swr. Rev. Series A-1, 4.75% 9/1/21,
(AMBAC Insured) Aaa 2,000,000 1,582,500
Industry Urban Ind. Dev. Agcy. Rev.:
Rfdg. (Civic Recreational Proj.#1) Series A,
7.375% 5/1/12 - 8,600,000 9,137,500
(Civic Recreational Proj. #1-B) 7.375%
5/1/15, (Unrefunded Balanced) - 1,140,000 1,211,250
Inglewood Ctfs. of Prtn. (Civic Center Impt.
Proj.) 7% 8/1/19 A 1,000,000 1,017,500
Irvine Ranch Wtr. Dist. Joint Pwr. Agcy.
Local Pool Rev.:
7.80% 2/15/08 A 1,560,000 1,649,700
7.875% 2/15/23 A 5,500,000 5,836,875
8.25% 8/15/23 BBB 16,365,000 17,633,288
King Ctfs. of Prtn. 7.50% 7/1/04 - 2,800,000 3,017,000
Los Angeles County Ctfs. of Prtn.:
(Correctional Facs.) (Cap. Appreciation)
0% 9/1/11, (MBIA Insured) Aaa 6,400,000 2,240,000
(Disney Parking Proj.):
0% 9/1/11 A 6,270,000 2,014,237
0% 3/1/12 A 2,180,000 678,525
0% 3/1/13 A 2,750,000 800,937
0% 9/1/13 A 3,215,000 904,219
0% 9/1/15 A 3,815,000 929,906
0% 3/1/17 A 3,450,000 746,062
0% 9/1/18 A 8,775,000 1,711,125
0% 3/1/19 A 3,175,000 599,281
0% 9/1/20 A 5,425,000 908,687
(Cap. Appreciation):
0% 9/1/10 A 2,980,000 1,039,275
0% 3/1/20 A 1,000,000 173,750
Los Angeles County Metropolitan Trans. Auth.
Sales Tax Rev. Rfdg. Series A, 5% 7/1/21,
(FGIC Insured) Aaa 3,500,000 2,900,625
Los Angeles Ctfs. of Prtn. (Health Facs.
Construction Loan) (Bay Harbor Hosp.)
7.30% 4/1/20 A+ 1,000,000 1,058,750
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Los Angeles Dept. Wtr. & Pwr. Wtrwks. Rev.
Rfdg. 4.50% 5/15/23 Aa $ 1,500,000 $ 1,115,625
Manteca Ctfs. of Prtn. (St. Domenic's Hosp.)
7% 6/1/17, (MBIA Insured) Aaa 1,000,000 1,058,750
Metropolitan Wtr. Dist. Southern Wtrwks.
Rev. 5 3/4% 8/12/18 Aa 5,000,000 4,787,500
Modesto Ctfs. of Prtn.:
(Commty. Ctr. Refing. Proj.) Series A,
5.60% 11/1/14, (AMBAC Insured) Aaa 1,370,000 1,286,087
(Golf Course Refing. Proj.) Series B, 5%
11/1/23, (AMBAC Insured) Aaa 1,585,000 1,305,644
Modesto Irrigation Dist. Ctfs. of Prtn.
Rfdg. & Cap. Impts. Series A, 0% 10/1/10,
(MBIA Insured) Aaa 2,270,000 848,412
Moreno Valley Unified School Dist. Ctfs. of
Prtn. 7.40% 9/1/16 Baa 70,000 70,262
Moulton-Niguel Wtr. Dist. Ctfs. Partn. 4.8%
9/1/17 (AMBAC Insured) Aaa 2,000,000 1,627,500
Northern California Pwr. Agcy. Pub. Pwr. Rev.:
Rfdg. (Geothermal Proj. #3) Series A:
5.80% 7/1/09 A 3,000,000 2,887,500
5.85% 7/1/10 A 1,875,000 1,802,344
(Hydroelec. Proj. #1) Series E, 7.15%
7/1/24 A 995,000 1,031,069
7.50% 7/1/23, (AMBAC Insured)
(Pre-Refunded to 7/1/21 @ 100) (d) Aaa 1,170,000 1,383,525
Norwalk Redev. Agcy. Tax Allocation (Norwalk
Redev. Proj. #1) 7.15% 12/1/15 - 3,900,000 4,041,375
Ontario Redev. Fing. Auth. Rev.
(Ctr. City Cimarron Proj.#1):
0% 8/1/08, (MBIA Insured) Aaa 3,255,000 1,415,925
0% 8/1/09, (MBIA Insured) Aaa 3,260,000 1,316,225
Orange County Ctfs. of Prtn. (Civic Ctr. Facs.)
0% 12/1/18, (AMBAC & MBIA Insured) Aaa 7,500,000 1,631,250
Orange County Dev. Agcy. Tax Allocation
(Santa Ana Heights Proj.) 6.125%
9/1/23 Baa1 3,500,000 3,220,000
Orange County Local Trans. Sales Tax Rev.
Ltd. Tax 6% 2/15/08 Aa 1,250,000 1,278,125
Palm Desert Fing. Auth. Tax Allocation
9.455% 4/1/22, (MBIA Insured) INFL (e) Aaa 2,750,000 2,835,938
Palm Springs Ctfs. of Prtn. (Muni. Golf Course
Expansion Proj.) 7.40% 11/1/18 BBB+ 1,500,000 1,590,000
Palomar Pomerado Health Sys. Rev. 0%
11/1/05 (MBIA Insured) Aaa 3,075,000 1,614,375
Pasadena Ctfs. of Prtn. Rfdg. (Old Pasadena
Pkg. Facs. Proj.) 6.25% 1/1/18 A1 3,605,000 3,555,431
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Perris Single Family Mtg. Rev. Series A, 0%
6/1/23, (GNMA Coll.) Escrowed to
Maturity (c) (d) Aaa $ 8,365,000 $ 1,212,925
Pleasanton Jt. Pwrs. Fin. Auth. Reassessment,
Series A, 6.15% 9/1/12 Baa 5,270,000 5,039,437
Port Oakland Port Rev. Rfdg., Series F:
(Cap. Appreciation) 0% 11/1/08,
(MBIA Insured) Aaa 3,500,000 1,496,250
0% 11/1/06, (MBIA Insured) Aaa 1,250,000 617,187
Poway Ctfs. of Prtn. (Poway Royal Mobile
Home Park) (Cap. Impt. Proj.) 7% 7/1/20,
(FSA Insured) Aaa 2,500,000 2,615,625
Poway Redev. Agcy.
5.67% 12/15/14 (FGIC Insured) Aaa 5,000,000 4,712,500
(Paguay Proj.) Tax Allocation 7.93%
12/15/14, (FGIC Insured) INFL (e) Aaa 4,365,000 3,721,163
Rancho Mirage Joint Pwrs. Fing. Auth.
Ctfs. of Prtn. (Eisenhower Mem. Hosp.)
7% 3/1/22 A 1,000,000 1,018,750
Rancho Wtr. Dist. Fin. Auth. 4.75% 8/15/21,
(AMBAC Insured) Aaa 1,000,000 790,000
Redlands Redev. Agcy. Tax Allocation
(Redlands Redev. Proj.) 7% 7/1/17 Baa 3,835,000 4,089,069
Richmond Joint Pwr. Fing. Auth. Rev.:
Series B, 7% 5/15/07 A- 2,375,000 2,484,844
Series B, 7.25% 5/15/13 A- 2,500,000 2,575,000
Riverside County Asset Leasing Corp.
Leasehold Rev. (Riverside County Hosp. Proj.)
Series A:
6.375% 6/1/09 (Detachable Call
Option) A 3,000,000 2,966,250
6.50% 6/1/12 A 5,500,000 5,451,875
Riverside County Ctfs. of Prtn.
(Air Force Village West, Inc.) Series A:
Rfdg. 8.125% 6/15/20 - 5,500,000 5,630,625
8.125% 6/15/12 - 2,690,000 2,753,888
Riverside County Redev. Agcy. Tax Allocation
(Redev. Proj. #4) Series A:
7.50% 10/1/10 BBB 1,000,000 1,042,500
7.50% 10/1/26 BBB 2,500,000 2,606,250
Riverside Redev. Agcy. Multi-Family Rev.
(First & Market Proj.) Series A, 7.75%
9/1/21 (c) Baa 4,200,000 4,200,000
Riverside Unified School Dist. Ctfs. of Prtn.
(Cap. Appreciation Land Acquisition Proj.)
Series B, 0% 9/1/26, (FSA Insured) (g) Aaa 2,150,000 1,668,938
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Sacramento Fing. Auth.
(Cap. Appreciation Tax Allocation Proj.):
Series A, 0% 11/1/16 (MBIA Insured) Aaa $ 5,700,000 $ 1,410,750
Series B, 0%11/1/13, (MBIA Insured) Aaa 500,000 151,250
Sacramento Fing. Auth. Lease Rev. Rfdg.
Series A, 5.40% 11/1/20, (AMBAC
Insured) Aaa 2,500,000 2,225,000
Sacramento Muni. Util Dist. Elec. Rev.:
6.37% 11/15/08, (FGIC Insured) INFL (e) Aaa 7,000,000 6,046,250
9.78% 8/15/18, (FGIC Insured) INFL (e) Aaa 1,750,000 1,780,625
Salinas Facs. Rev. (Villa Sierra Proj.) Series A,
7.95% 4/20/31, (GNMA Coll.) AAA 2,450,000 2,450,000
San Bernardino County Ctfs. of Prtn.:
(Cap. Facs. Proj.) Series B, 6.875%
8/1/24 Baa1 2,500,000 2,743,750
(Med. Ctr. Fing. Proj.):
5.50% 8/1/17 Baa1 6,500,000 5,630,625
5.50% 8/1/22 Baa1 4,500,000 3,802,500
San Bernardino Health Care Sys. Rev.
(Sisters of Charity) Series A, 7% 7/1/11 Aa 1,410,000 1,498,125
San Diego County Wtr. Auth. 5.632%
4/25/07 (FGIC Insured) Aaa 2,500,000 2,490,625
San Francisco City & County Redev.
Agcy. 7.75% 9/1/06 - 6,000,000 6,247,500
San Francisco City & County Redev. Fing.
Auth. Tax Allocation (Cap. Appreciation)
(Redev. Proj.):
Rfdg. Series B, 0% 8/1/10,
(MBIA Insured) Aaa 1,475,000 556,813
Series B, 0% 8/1/12, (MBIA Insured) Aaa 1,475,000 486,750
San Francisco City & County Single Family
Mtg. Rev. 7.45% 1/1/24, (FNMA &
GNMA Coll.) (c) AAA 255,000 266,475
San Joaquin County Ctfs. of Prtn. (Gen. Hosp.
Proj.) 6.25% 9/1/13 A 2,500,000 2,418,750
San Joaquin Hills Trans. Corridor Acgy.
Toll Road Rev. (Sr. Lien):
0% 1/1/04 - 2,350,000 1,448,188
0% 1/1/07 - 3,000,000 1,755,000
San Jose Redev. Agcy. Tax Allocation
(Merged Area Redev. Proj.):
5% 8/1/21 (MBIA Insured) A 10,000,000 8,100,000
4.75% 8/1/24, (MBIA Insured) Aaa 3,500,000 2,734,375
Santa Ana Fing. Auth. Police Administration &
Holding Fac. 6.25% 7/1/19
(MBIA Insured) Aaa 2,000,000 2,032,500
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Santa Barbara Ctfs. of Prtn. (American
Baptist Hosp.) 7.40% 5/15/15 A+ $ 2,000,000 $ 2,150,000
Santa Clara Ctfs. of Prtn. Ref. Series A,
4.75% 2/1/14, (MBIA Insured) Aaa 1,250,000 1,037,500
Santa Margarita/Dana Point Auth. Rev.
Ctfs. of Prtn. (Impt. Dists. 1-2-2A & 8)
7 1/4% 8/1/08 (MBIA Insured) Aaa 1,780,000 2,033,650
Selma Redev. Agcy. Tax Allocation
(Selma Redev. Proj.) 8.10% 8/1/13 (h) - 825,000 855,938
Sequoia Hosp. Dist. Rev. Rfdg.:
5.375% 8/15/13 A 4,000,000 3,490,000
5.375% 8/15/23 A 8,275,000 6,919,969
South Orange County Pub. Fin. Auth. Spl. Tax Rev.:
(Foothill Area C) 8% 8/15/09
(FGIC Insured) Aaa 3,650,000 4,380,000
(Sr. Lien) 7% 9/1/10 (MBIA Insured) Aaa 3,300,000 3,650,625
Southern California Home Fin. Auth. Single
Family Mtg. Rev. Series B, 7.75% 3/1/24,
(GNMA & FNMA Coll.) (c) AAA 220,000 233,750
Southern California Pub. Pwr. Auth. Pwr. Proj. Rev.:
Rfdg. (Palo Verde Proj.):
Series A, 0% 7/1/14, (AMBAC Insured) Aaa 8,325,000 2,393,438
Series A, 5% 7/1/15 Aa 1,125,000 953,438
(Multiple Proj.) 6.75% 7/1/11 A 6,500,000 6,906,250
Southern California Pub. Pwr. Auth. Transmission
Proj. Rev. Rfdg.:
(Cap. Appreciation) 0% 7/1/14 Aa 5,000,000 1,400,000
(Sub Crossover) 0% 7/1/13 Aa 1,500,000 448,125
Series A, 5% 7/1/22, (MBIA Insured) Aaa 3,375,000 2,788,594
Sulpher Springs Unified School Dist. Series A:
Unltd. Tax 0% 9/1/12, (MBIA Insured) Aaa 2,750,000 873,125
0% 9/1/08, (MBIA Insured) Aaa 2,745,000 1,187,213
Univ. of California Rev. Rfdg. Series C, 5%
9/1/23, (AMBAC Insured) Aaa 2,000,000 1,647,500
Upland Ctfs. of Prtn.
(San Antonio Commty. Hosp.):
5.25% 1/1/08 A 1,850,000 1,676,563
5.25% 1/1/13 A 3,000,000 2,550,000
Upland Hsg. Auth. Rev. Issue A, 7.85%
7/1/20 - 990,000 1,030,838
Vallejo Ctfs. of Prtn. (Marine World
Foundation Proj.) 8.10% 2/1/21 - 7,780,000 8,071,750
Valley Ctr. Union School Dist. Series A, 0%
9/1/17, (MBIA Insured) Aaa 8,835,000 2,009,963
Vista Unified School Dist. Ctfs. of Prtn. 0%
9/1/11, (MBIA Insured) Aaa 8,585,000 2,704,275
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
West Covina Cfts. of Prtn. (Queen of the
Valley Hosp.) 6.50% 8/15/24 A $ 1,100,000 $ 1,061,500
West & Central Basin Fing. Auth. Rev. Rfdg.
(West Basin Proj.) Series A:
5% 8/1/10, (FGIC Insured) Aaa 1,155,000 1,030,837
5% 8/1/10, (AMBAC Insured) Aaa 1,750,000 1,561,875
433,376,124
PUERTO RICO - 1.6%
Puerto Rico Commonwealth Hwy. & Trns. Auth.
Rev. Series W, 5.50% 7/1/13 Baa1 3,125,000 2,875,000
Puerto Rico Elec. Pwr. Auth. Pwr. Rev.
Series P, 7% 7/1/21 Baa1 4,000,000 4,245,000
7,120,000
U.S. VIRGIN ISLANDS - 0.3%
Virgin Islands Pub. Fin. Auth. Rev. Rfdg.
Series A, 7.25% 10/1/18
(Escrowed to Maturity) (d) - 1,500,000 1,567,500
GUAM - 0.8%
Guam Arpt. Auth. Rev.:
Series A, 6.60% 10/1/10 BBB 1,000,000 1,005,000
Series B, 6.70% 10/1/23 BBB 2,850,000 2,853,563
3,858,563
TOTAL MUNICIPAL BONDS
(Cost $449,034,730) 445,922,187
MUNICIPAL NOTES (A) - 1.8%
CALIFORNIA - 1.8%
California Gen. Oblig. RAN, Series A,
5% 6/28/95 MIG 1 3,000,000 3,024,390
San Bernadino County TRAN, Series 1994-95,
4.5% 7/31/95 SP-1+ 5,000,000 4,994,950
TOTAL MUNICIPAL NOTES
(Cost $8,049,928) 8,019,340
OTHER SECURITIES - 0.0%
VALUE
RIGHTS (NOTE 1)
Riverside County Asset Leasing Corp. Leasehold
Rev. (Riverside County Hosp.) Series A
(Call Rights) 6.50% 6/1/12
(Cost $59,950) 1,100 $ 160,875
TOTAL INVESTMENTS - 100%
(Cost $457,144,608) $ 454,102,402
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
SELL
30 U.S. Treasury Bond Futures Dec. 1994 $3,087,188 $ (2,147)
70 30 yr. Bond Futures Sept. 1994 7,260,313 (22,823)
$ (24,970)
THE VALUE OF FUTURES CONTRACTS SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.3%
SECURITY TYPE ABBREVIATIONS
RAN - Revenue Anticipation Notes
TRAN - Tax and Revenue Anticipation Notes
LEGEND
5. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
6. Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
7. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
8. Security collateralized by an amount sufficient to pay interest and
principal.
9. Coupon is inversely indexed to a floating interest rate. The price will
be more volatile than the price of a comparable fixed rate security. The
rate shown is the rate at period end.
10. Issuer filed for protection under the Federal Bankruptcy Code or is in
default of interest payment. The state of California has assumed the
interest payments.
11. Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
12. A portion of the security was pledged to cover margin requirements for
futures contracts. At the period end, the value of securities pledged
amounted to $1,720,000.
OTHER INFORMATION
The composition of long-term debt holdings as
a percentage of total value of investment in securities, is as follows
(ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 58.2% AAA, AA, A 69.4%
Baa 10.2% BBB 10.1%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 11.6%. FMR
has determined that unrated debt securities that are lower quality account
for 4.3% of the total value of investment in securities.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Health Care 20.7%
Lease Revenue 20.6
Special Tax 19.8
Others
(individually less than 10%) 38.9
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1994 the aggregate cost of investment securities for income
tax purposes was $457,144,608. Net unrealized depreciation aggregated
$3,042,206, of which $12,846,807 related to appreciated investment
securities and $15,889,013 related to depreciated investment securities.
At February 28, 1994 the fund was required to defer $3,065,000 of losses on
futures contracts and options.
SPARTAN CALIFORNIA MUNICIPAL HIGH YIELD PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
13.ASSETS 14. 15.
16.Investment in securities, at value (cost 17. $ 454,102,402
$457,144,608) -
See accompanying schedule
18.Receivable for investments sold 19. 4,009,150
20.Interest receivable 21. 5,726,819
22. 23.TOTAL ASSETS 24. 463,838,371
25.LIABILITIES 26. 27.
28.Payable to custodian bank $ 260,501 29.
30.Payable for investments purchased 2,308,397 31.
32.Dividends payable 409,856 33.
34.Accrued management fee 214,474 35.
36.Payable for daily variation on futures contracts 19,647 37.
38. 39.TOTAL LIABILITIES 40. 3,212,875
41.42.NET ASSETS 43. $ 460,625,496
44.Net Assets consist of: 45. 46.
47.Paid in capital 48. $ 468,869,814
49.Accumulated undistributed net realized gain (loss) on 50. (5,177,142)
investments
51.Net unrealized appreciation (depreciation) on 52. (3,067,176)
investments
53.54.NET ASSETS, for 45,453,625 shares outstanding 55. $ 460,625,496
56.57.NET ASSET VALUE, offering price and redemption 58. $10.13
price per share ($460,625,496 (divided by) shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
59.60.INTEREST INCOME 61. $ 15,651,023
62.EXPENSES 63. 64.
65.Management fee $ 1,328,789 66.
67.Non-interested trustess' compensation 1,500 68.
69. 70.TOTAL EXPENSES 71. 1,330,289
72.73.NET INTEREST INCOME 74. 14,320,734
75.REALIZED AND UNREALIZED GAIN (LOSS) 77. 78.
76.Net realized gain (loss) on:
79. Investment securities (1,029,014) 80.
81. Futures contracts (643,942) (1,672,956)
82.Change in net unrealized appreciation (depreciation) 83. 84.
on:
85. Investment securities (29,303,174) 86.
87. Futures contracts (29,691) (29,332,865)
88.89.NET GAIN (LOSS) 90. (31,005,821)
91.92.NET INCREASE (DECREASE) IN NET ASSETS 93. $ (16,685,087)
RESULTING FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR
ENDED ENDED
AUGUST 31, 1994 FEBRUARY 28,
(UNAUDITED) 1994
94.INCREASE (DECREASE) IN NET ASSETS
95.Operations $ 14,320,734 $ 33,387,891
Net interest income
96. Net realized gain (loss) (1,672,956) 26,605,540
97. Change in net unrealized appreciation (depreciation) (29,332,865) (26,737,594)
98. 99.NET INCREASE (DECREASE) IN NET ASSETS (16,685,087) 33,255,837
RESULTING FROM OPERATIONS
100.Distributions to shareholders: (14,320,734) (33,387,891)
From net interest income
101. From net realized gain (8,512,355) (17,385,450)
102. In excess of net realized gain - (3,001,030)
103. 104.TOTAL DISTRIBUTIONS (22,833,089) (53,774,371)
105.Share transactions 42,382,956 153,539,687
Net proceeds from sales of shares
106. Reinvestment of distributions 18,791,627 46,508,005
107. Cost of shares redeemed (127,691,225) (186,891,146)
108. Redemption fees 47,576 103,560
109. (66,469,066) 13,260,106
Net increase (decrease) in net assets resulting from
share transactions
110. (105,987,242) (7,258,428)
111.TOTAL INCREASE (DECREASE) IN NET ASSETS
112.NET ASSETS 113. 114.
115. Beginning of period 566,612,738 573,871,166
116. End of period $ 460,625,496 $ 566,612,738
117.OTHER INFORMATION 119. 120.
118.Shares
121. Sold 4,149,132 13,616,855
122. Issued in reinvestment of distributions 1,852,636 4,155,944
123. Redeemed (12,387,665) (16,596,175)
124. Net increase (decrease) (6,385,897) 1,176,624
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
125. SIX MONTHS YEAR TEN MONTHS YEARS ENDED APRIL 30, NOVEMBER 27, 19
ENDED ENDED ENDED 89
AUGUST 31, 19 FEBRUARY 28, FEBRUARY 28, (COMMENCEMENT
94 OF OPERATIONS) TO
APRIL 30,
126.SELECTED PER-SHARE DATA (UNAUDITED) 1994 1993 1992 1991 1990
127.Net asset value,
beginning of period $ 10.930 $ 11.330 $ 10.540 $ 10.240 $ 9.760 $ 10.000
128.Income from Investment
Operations .305 .631 .543 .663 .706 .301
Net interest income
129. Net realized and
unrealized gain (loss) (.621) (.012) .858 .297 .472 (.249)
130. Total from investment
operations (.316) .619 1.401 .960 1.178 .052
131.Less Distributions (.305) (.631) (.543) (.663) (.706) (.301)
From net interest income
132. From net realized gain
on investments (.180) (.330) (.070) - - -
133. In excess of net realized
gain on investments - (.060) - - - -
134. Total distributions (.485) (1.021) (.613) (.663) (.706) (.301)
135.Redemption fees added to
paid in capital .001 .002 .002 .003 .008 .009
136.Net asset value, end of
period $ 10.130 $ 10.930 $ 11.330 $ 10.540 $ 10.240 $ 9.760
137.TOTAL RETURN B (2.80)% 5.63% 13.76% 9.66% 12.52% .59%
138.RATIOS AND SUPPLEMENTAL DATA
139.Net assets, end of period
(000 omitted) $ 460,625 $ 566,613 $ 573,871 $ 479,137 $ 281,725 $ 107,409
140.Ratio of expenses to
average net assets .55%A .52% .40%A .36% .19% -
141.Ratio of expenses to
average net assets before .55%A .55% .55%A .55% .55% .55%A
expense reductions
142.Ratio of net interest
income to average net assets 5.92%A 5.58% 6.07%A 6.36% 7.02% 7.42%A
143.Portfolio turnover rate 29%A 54% 26%A 13% 15% 5%A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
FINANCIAL HIGHLIGHTS
SPARTAN CALIFORNIA INTERMEDIATE MUNICIPAL PORTFOLIO
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells bonds
that have grown in value), and the effect of the $5 account closeout fee.
You can also look at the fund's income. If Fidelity had not reimbursed
certain fund expenses during the periods shown, the total returns and
dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1994 PAST 6 LIFE OF
MONTHS FUND
Spartan California Intermediate Municipal -0.13% -1.83%
Lehman Brothers Municipal Bond Index -0.90% n/a
Average California Tax-Exempt
Intermediate Municipal Bond Fund -0.28% n/a
Consumer Price Index 1.57% 2.19%
CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period
- - in this case, six months or since the fund started on December 30, 1993.
For example, if you had invested $1,000 in a fund that had a 5% return over
the past year, you would end up with $1,050. You can compare the fund's
results to the performance of the Lehman Brothers Municipal Bond Index - a
broad gauge of the municipal bond market. To measure how the fund stacks up
against its peers, you can also look at the average California tax-exempt
intermediate municipal bond fund, which reflects the performance of 23
California tax-exempt intermediate municipal bond funds tracked by Lipper
Analytical Services. Both benchmarks include reinvested dividends and
capital gains, if any. Comparing the fund's performance to the consumer
price index (CPI) helps show how your fund did compared to inflation. (The
periods covered by the CPI numbers are the closest available match to those
covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year. Average annual returns for the fund and its
benchmarks will appear in the fund's next annual report, once the fund is
older; this next report will also show the effect of investing $10,000 over
the life of the fund for both the fund and the Lehman Brothers Municipal
Bond Index.
TOTAL RETURN COMPONENTS
DECEMBER 30, 1993
SIX MONT (COMMENCEMENT
HS OF OPERATIONS) TO
ENDED FEBRUARY 28,
AUGUST 3
1,
1994 1994
Dividend returns 2.45% .69%
Capital appreciation
returns -2.58% -2.41%
Total returns -0.13% -1.72%
DIVIDEND returns and capital appreciation returns are both part of a bond
fund's total return. A dividend return reflects the actual dividends paid
by the fund. A capital appreciation return reflects both the amount paid by
the fund to shareholders as capital gain distributions and changes in the
fund's share price. Both returns assume the dividends or gains are
reinvested. Capital appreciation and total returns include the effect of
the $5 account closeout fee.
DIVIDENDS AND YIELD
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED AUGUST 31, 1994 PAST PAST 6 LIFE OF
MONTH MONTHS FUND
Dividends per share 4.21(cents) 23.50(cents) 30.53(cents)
Annualized dividend rate 5.22% 4.91% 4.74%
30-day annualized yield 5.48% - -
30-day annualized tax-equivalent yield 9.62% - -
</TABLE>
DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $9.49 over
the past month, $9.49 over the past six months, and $9.60 over the life of
fund, you can compare the fund's income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis. The tax-equivalent yield shows what you would have to
earn on a taxable investment to equal the fund's tax-free yield, if you're
in the 43.04% combined effective 1994 federal and state income tax bracket.
If the advisor had not reimbursed certain portfolio expenses during the
period shown, the yield and tax-equivalent yield would have been 4.93% and
8.66%, respectively.
SPARTAN CALIFORNIA INTERMEDIATE MUNICIPAL PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with David Murphy,
Portfolio Manager of Spartan
California Intermediate Portfolio
Q. DAVID, HOW HAS THE FUND PERFORMED OVER THE PAST SIX MONTHS?
A. About average. For the six months ended August 31, 1994, the fund had a
total return of -0.13%. That compares to the average California
intermediate tax-free bond fund, which returned -0.28% for the same period,
according to Lipper Analytical Services. From the start of operations on
December 30, 1993, the fund returned -1.83%.
Q. LET'S START WITH THE MUNICIPAL MARKET IN GENERAL. WHAT CAUSED IT TO FALL
OVER THE PAST SIX MONTHS?
A. In February, the Federal Reserve Board began raising short-term interest
rates. The Fed was acting on evidence that the economy had grown at a
fairly strong pace in the fourth quarter of 1993. That was in spite of the
fact that there wasn't any solid evidence that this growth had caused
higher inflation. Since the bond market dislikes inflation, a preemptive
Fed move against the threat of future inflation is sometimes greeted
enthusiastically by investors. But this time, the market reacted negatively
because investors expected more Fed hikes to come later. As a result, many
investors started to sell municipal bonds, and the market dropped. Most of
the market's and the fund's losses came in early February and March, when
the selling was at its peak. By the end of August, the Fed had raised
short-term interest rates by 1.75% to 4.75%. In the summer, the market
retraced some of its early-year losses as investors began to believe that
higher interest rates were actually slowing down the economy and inflation
was less of a threat.
Q. TURNING TO THE FUND, WHAT WAS YOUR STRATEGY?
A. I kept the fund's duration relatively neutral throughout much of the
period, which means it wasn't really longer or shorter than other funds of
its type. Duration is a measure of the fund's volatility when interest
rates move up or down. The shorter the duration, the less sensitive the
fund's share price to changing interest rates.
Q. WHAT WAS THE THINKING BEHIND THAT STRATEGY?
A. My long-term view is that inflation will stay low and we'll see a return
to lower long-term interest rates within the next 18 months. However, until
the market settles down, I wanted to keep the fund's duration neutral. I
also used futures contracts to maintain the fund's neutral duration. A
futures contract is a type of financial derivative - meaning its market
value is derived from a security or market index. We've used futures and
options in our municipal bond funds for years.
Q. ASIDE FROM FUTURES, WHAT OTHER DERIVATIVES DID YOU USE?
A. I've also used what's known as an inverse floater - whose yield rises as
short-term rates fall, and vice versa. This inverse floater acts like a
longer-term bond, effectively increasing a fund's duration, which is good
in a falling interest rate-environment, but can hurt the fund when interest
rates rise. At the end of August, the inverse floater in the fund made up
less than 1% of the fund's total investments. By using this derivative and
the futures, I achieve increased flexibility in managing the fund's overall
sensitivity to changes in interest rates, and hopefully, can achieve higher
levels of income.
Q. HOW HAVE YOU STRUCTURED THE FUND?
A. As the fund grew earlier in the year, I invested in water and sewer
revenue bonds, which make up the fund's largest sector concentration at
28.1% of investments at the end of August and have been relatively
insulated from the economic downturn in California. More recently, however,
I've added bonds that I believe will benefit from the economic recovery
that the state is beginning to experience. Examples include lease rental
bonds and transportation bonds. If this recovery gathers steam, these bonds
could perform better than other types of bonds.
Q. IN LIGHT OF POSSIBLE HEALTH CARE REFORM, WHY HAVE YOU CONCENTRATED 20%
OF THE FUND'S INVESTMENTS IN HEALTH CARE BONDS?
A. They are attractive, in part, because of their relatively high yields.
With all the concern about how health care reform will affect hospitals,
I've concentrated on organizations that are well-managed, and have a track
record of keeping costs low. One example is Queen of the Valley Hospital,
which is located east of Los Angeles. The hospital's management has cut
costs, increased its share of the market and developed strong HMO
relationships. What's more, the hospital expects to enjoy further cost
savings when it merges with a nearby hospital later this year. Health care
bonds were the fund's second largest sector concentration at the end of
August.
Q. WHAT'S AHEAD FOR INVESTORS?
A. I think the worst is over for the municipal market, but I expect to see
a high level of market volatility over the short term. Long term, there are
some positives working in municipal bonds' favor. The municipal market is
very dependent on supply and demand. In 1993, a record amount of municipals
was issued, in part due to the fact that many municipalities refinanced
older, more expensive debt at lower yields. But most of the debt that could
by law be refinanced had already been done by the start of this year.
What's more, the incentive to refinance any remaining debt was largely
eliminated once interest rates rose. The net result is that in 1994,
municipal debt issuance in California is 27% less than it was last year. I
believe that demand for municipal bonds could increase over the next year
or so once the market settles. But even if demand remains fairly constant
and supply is lower, municipal bond prices could rise.
FUND FACTS
GOAL: to provide high current
income exempt from
California state and federal
income taxes by investing
primarily in investment-grade
intermediate California
municipal securities
START DATE: December 30,
1993
SIZE: as of August 31, 1994,
more than $39 million
MANAGER: David Murphy,
since December 1993;
manager, Spartan New York
Intermediate Portfolio, since
December 1993; Spartan
Intermediate Municipal
Portfolio, since April 1993;
Spartan New Jersey
Municipal High-Yield Portfolio,
since April 1991; Fidelity
Limited Term Municipals,
since December 1989;
Spartan Short-Intermediate
Municipal Fund, since
December 1989; joined
Fidelity in 1989
(checkmark)
DAVID MURPHY'S STRATEGY:
"One of my primary goals is to
generate a fairly high level of
income for the fund. One way
I do that is by investing in
bonds in the lower end of the
investment grade range, rated
Baa or A by Moody's
Investors Service. These
bonds can often provide
significantly higher yields than
the highest quality Aaa-rated
bonds. But I'm not just
chasing after yield. When I
buy a municipal bond, my
goal is always to find the
highest yield possible, while
attempting to
keep risk in check."
(solid bullet) Water and sewer revenue
bonds made up the fund's
largest sector concentration
at 28.1% of investments at
the end of August. These
bonds were relatively
insulated from California's
economic downturn. Health
care bonds made
up the fund's second largest
sector concentration at 20%
of investments at the end of
August.
These bonds are attractive,
mostly, because of their
relatively high yields.
SPARTAN CALIFORNIA INTERMEDIATE MUNICIPAL PORTFOLIO
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF AUGUST 31, 1994
% OF FUND'S INVESTMENT % OF FUND'S INVESTMENT
S S
IN THESE SECTORS
6 MONTHS AGO
Water & Sewer 28.1 12.5
Health Care 20.0 19.2
Lease Revenue 13.8 19.2
Special Tax 10.9 9.9
Escrowed/Prerefunded 8.4 5.2
AVERAGE YEARS TO MATURITY AS OF AUGUST 31, 1994
6 MONTHS AGO
Years 9.3 8.3
AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF AUGUST 31, 1994
6 MONTHS AGO
Years 6.9 7.0
DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, THE SHARE PRICE OF A FUND WITH A
FIVE-YEAR DURATION WILL FALL ABOUT 5%.
QUALITY DIVERSIFICATION AS OF AUGUST 31, 1994
(MOODY'S RATINGS) % OF FUND'S INVESTMENTS
Aaa 39.1%
Aa, A 44.5%
Baa 8.0%
Ba or B -
Non-rated -
Short-term investments 8.4%
Row: 1, Col: 1, Value: 39.1
Row: 1, Col: 2, Value: 44.5
Row: 1, Col: 3, Value: 8.0
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 8.4
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS.
SPARTAN CALIFORNIA INTERMEDIATE MUNICIPAL PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 91.6%
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - 91.4%
California Poll. Cont. Fing. Auth. Poll. Cont. Rev.
(General Motors Corp.) 5.50% 4/1/08 Baa1 $ 490,000 $ 453,863
California Pub. Wrks. Board Lease Rev.:
Rfdg. (Dept. of State Prisons) Series A, 5%
12/1/01 A 200,000 191,750
(California University Proj.) Series A,
6.10% 10/1/06 A 1,210,000 1,216,050
California Trans. Commission San Francisco Bay
Toll Bridge Rev. (Northern Bridge)
Series A, 4.60% 12/1/05 Aa 1,160,000 1,038,200
California Statewide Commty. Dev. Corp.
Ctfs. of Prtn. Rfdg. (Insured Hosp.)
(Triad Healthcare): (f)
5.25% 8/1/97 A+ 250,000 248,750
5.90% 8/1/01 A+ 200,000 198,250
6.25% 8/1/06 A+ 1,000,000 987,500
Carson Redev. Agcy. Rfdg. (Redev. Proj.
Area 2) (Tax Allocation) 5.50% 10/1/02 Baa 100,000 96,500
Castaic Lake Wtr. Agcy. Ctfs. of Prtn. (Wtr. Sys.
Impt. Proj.) 7.25% 8/1/07, (MBIA Insured) Aaa 1,755,000 2,009,475
Central Valley Fin. Auth. Cogeneration Proj.
Rev. (Carson Ice Proj.) 5.80% 7/1/04 BBB- 200,000 195,750
Chino Basin Fing. Auth. Rev. Rfdg.
(Muni. Wtr. Dist. Swr. Sys. Proj.):
7% 8/1/05, (AMBAC Insured) Aaa 1,185,000 1,325,719
7% 8/1/06, (AMBAC Insured) Aaa 1,145,000 1,279,538
Clovis Unified School Dist. (Cap. Appreciation)
Series B, 0% 8/1/02 A1 300,000 194,625
Inglewood California (Daniel Freeman
Hosp. Inc.) 6.5% 5/1/01 A 1,000,000 1,026,250
La Quinta Redev. Agcy. (Redev. Proj. Area #1):
7.30% 9/1/06, (MBIA Insured) Aaa 620,000 710,675
7.30% 9/1/11, (MBIA Insured) Aaa 555,000 635,475
Los Angeles Convention & Exhibition Ctr.
Auth. Ctfs. of Prtn. Rfdg. Series A,
7.375% 8/15/18 (Pre-refunded to
8/15/99 @ 101.50) (d) Aaa 2,020,000 2,269,975
Los Angeles County Ctfs. of Prtn. 7.85%
11/1/01 INFL (e) A 200,000 209,500
Los Angeles Dept. of Wtr. & Pwr. Elec. Rev.:
Rfdg. 4.75% 8/15/07 Aa 800,000 715,000
9% 10/15/01 Aa 110,000 133,100
Los Angeles Wastewtr. Sys. Rev. Series A,
5.50% 6/1/08, (MBIA Insured) Aaa 1,630,000 1,572,950
Northern California Pwr. Agcy. Multiple Cap.
Facs. Rev. Series A, 6% 8/1/03,
(MBIA Insured) Aaa 500,000 524,375
Orange County Dev. Agcy. Tax Allocation
(Santa Ana Heights Proj.) 5.80% 9/1/03 Baa1 1,235,000 1,221,106
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Orange County Wtr. Dist. Ctfs. of Prtn.,
Series A, 5.50% 8/15/09 Aa $ 1,000,000 $ 951,250
Palomar Pomerado Health Sys. Rev. 5%
11/1/07 (MBIA Insured) Aaa 300,000 275,625
Port Oakland Port. Rev. Rfdg. Series F, 0%
11/1/05, (MBIA Insured) Aaa 300,000 158,625
Redlands Ctfs. of Prtn. Rfdg. (Wtr. Treatment
Facs. Proj.) 4.5% 9/1/15, (FGIC Insured) Aaa 930,000 932,325
Rosemead Redev. Agcy. (Subordinated Lien
Tax Allocation Proj. Area 1) 0% 10/1/98
(Escrowed to Maturity) (d) A- 1,120,000 910,000
San Bernardino County Ctfs. of Prtn. Med.
Ctr. Fing. 5.25% 8/1/05 Baa1 1,235,000 1,157,812
San Diego County Wtr. Auth. Wtr. Rev.
Ctfs. of Prtn. Series A, 6.0% 5/1/01 Aa 1,000,000 1,041,250
San Diego-Metropolitan Transit Dist. Auth.
Lease Rev. Rfdg. 5.625% 9/1/09 Aa 1,500,000 1,458,750
San Francisco Bldg. Auth. Lease Rev. Dept.
Gen'l Svcs. Lease Series A, 5% 10/1/05 A1 400,000 373,500
San Francisco City & County Swr. Rev. Rfdg.
5.70% 10/1/04, (AMBAC Insured) Aaa 1,500,000 1,524,375
San Francisco Port. Comm. Rev. Rfdg.
5.50% 7/1/04 A 1,000,000 990,000
Santa Barbara Ctfs. of Prtn. Rfdg. 5.10%
3/1/03 A1 1,000,000 963,750
Santa Margarita/Dana Point Auth. Rev.
(Impt. Dist.s 1-2-2a & 8) Series A, 7.25%
8/1/06, (MBIA Insured) Aaa 1,500,000 1,719,375
Sequoia Hosp. Dist. Rev.:
Rfdg. 5% 8/15/03 A 1,285,000 1,206,294
4.90% 8/15/02 A 1,225,000 1,156,094
Southern California Pub. Pwr. Auth. Pwr. Proj.
Rev. Series 11, 0% 7/1/15, (Pre-refunded
to 7/1/00 @ 101) (d) Aaa 300,000 226,125
Univ. of California Rev. Rfdg.:
(Multiple Purp. Projs.) Series C, 9% 9/1/02
(AMBAC Insured) Aaa 100,000 122,250
(UCLA Med. Ctr. Hosp.) 8% 12/1/95,
(MBIA Insured) Aaa 200,000 209,750
Walnut Creek Ctfs. of Prtn. Rfdg.
(John Muir Med. Ctr.) 4.95% 2/15/05
(MBIA Insured) Aaa 300,000 276,000
West Covina Ctfs. of Prtn.
(Queen of the Valley Hosp.):
5.90% 8/15/02 A 875,000 859,687
6% 8/15/03 A 925,000 913,437
6.125% 8/15/04 A 980,000 965,300
36,845,950
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
PUERTO RICO - 0.2 %
Puerto Rico Commonwealth Rfdg. Impt.
Gen. Oblig. 5.375% 7/1/06 Baa1 $ 100,000 $ 96,000
TOTAL MUNICIPAL BONDS
(Cost $37,503,329) 36,941,950
MUNICIPAL NOTES (A) - 8.4%
CALIFORNIA - 8.4%
California Poll. Cont. Fing. Auth. Resources
Recovery Rev., VRDN: (c)
(Malaga Proj.) Series B, 3.30%,
LOC Bank of America Nat'l.
Trust & Savings Assoc. P-1 1,000,000 1,000,000
(Ultra Pwr. Rocklin Proj.) Series 1988 B,
3.30%, LOC Bank of America Nat'l.
Trust & Savings Assoc. P-1 700,000 700,000
California Poll. Cont. Fing. Auth. Resources
Recovery Rev., VRDN (c):
(Delano Proj.) Series 1990, 3.25%,
LOC Algemene Bank P-1 1,300,000 1,300,000
(Ultra Pwr. Rocklin Proj.) Series 1988 A,
3.30%, LOC Security Pacific
Nat'l. Bank - 400,000 400,000
TOTAL MUNICIPAL NOTES
(Cost $3,400,000) 3,400,000
TOTAL INVESTMENTS - 100%
(Cost $40,903,329) $ 40,341,950
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
2. Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
3. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
4. Security collateralized by an amount sufficient to pay interest and
principal.
5. Coupon is inversely indexed to a floating interest rate. The price will
be more volatile than the price of a comparable fixed rate security. The
rate shown is the rate at period end.
6. Issuer filed for protection under the Federal Bankruptcy Code or is in
default of interest payment. The state of California has assumed the
interest payments.
OTHER INFORMATION
The composition of long-term debt holdings as
a percentage of total value of investment in securities, is as follows
(ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 75.2% AAA, AA, A 84.2%
Baa 7.5% BBB 7.3%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 0.0%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Water & Sewer 28.1%
Health Care 20.0
Lease Revenue 13.8
Special Tax 10.9
Others
(individually less than 10%) 27.2
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1994 the aggregate cost of investment securities for income
tax purposes was $40,903,329. Net unrealized depreciation aggregated
$561,379, of which $107,436 related to appreciated investment securities
and $668,815 related to depreciated investment securities.
SPARTAN CALIFORNIA INTERMEDIATE MUNICIPAL PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
7.ASSETS 8. 9.
10.Investment in securities, at value (cost $40,903,329) 11. $ 40,341,950
- -
See accompanying schedule
12.Cash 13. 751,094
14.Interest receivable 15. 450,571
16.Receivable from investment adviser for expense 17. 17,565
reductions
18. 19.TOTAL ASSETS 20. 41,561,180
21.LIABILITIES 22. 23.
24.Payable for investments purchased $ 1,998,247 25.
26.Dividends payable 17,263 27.
28.Accrued management fee 17,565 29.
30. 31.TOTAL LIABILITIES 32. 2,033,075
33.34.NET ASSETS 35. $ 39,528,105
36.Net Assets consist of: 37. 38.
39.Paid in capital 40. $ 40,495,280
41.Accumulated undistributed net realized gain (loss) on 42. (405,796)
investments
43.Net unrealized appreciation (depreciation) on 44. (561,379)
investments
45.46.NET ASSETS, for 4,158,363 shares outstanding 47. $ 39,528,105
48.49.NET ASSET VALUE, offering price and redemption 50. $9.51
price per share ($39,528,105 (divided by) shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
51.52.INTEREST INCOME 53. $ 794,044
54.EXPENSES 55. 56.
57.Management fee $ 87,836 58.
59.Non-interested trustees' compensation - 60.
61. Total expenses before reductions 87,836 62.
63. Expense reductions (87,836)
64.65.NET INTEREST INCOME 66. 794,044
67.REALIZED AND UNREALIZED GAIN (LOSS) 69. 70.
68.Net realized gain (loss) on:
71. Investment securities (438,065) 72.
73. Futures contracts 32,269 (405,796)
74.Change in net unrealized appreciation (depreciation) 75. (161,808)
on investment securities
76.77.NET GAIN (LOSS) 78. (567,604)
79.80.NET INCREASE (DECREASE) IN NET ASSETS 81. $ 226,440
RESULTING FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS DECEMBER 30, 199
ENDED 3
AUGUST 31, 1994 (COMMENCEMENT
(UNAUDITED) OF OPERATIONS) TO
FEBRUARY 28,
1994
82.INCREASE (DECREASE) IN NET ASSETS
83.Operations $ 794,044 $ 60,323
Net interest income
84. Net realized gain (loss) (405,796) -
85. Change in net unrealized appreciation (depreciation) (161,808) (399,571)
86. 87.NET INCREASE (DECREASE) IN NET ASSETS 226,440 (339,248)
RESULTING FROM OPERATIONS
88.Dividends to shareholders from net interest income (794,044) (60,323)
89.Share transactions 26,152,939 27,634,217
Net proceeds from sales of shares
90. Reinvestment of dividends from net interest income 698,099 49,121
91. Cost of shares redeemed (9,468,197) (4,570,899)
92. Net increase (decrease) in net assets resulting 17,382,841 23,112,439
from
share transactions
93. 94.TOTAL INCREASE (DECREASE) IN NET ASSETS 16,815,237 22,712,868
95.NET ASSETS 96. 97.
98. Beginning of period 22,712,868 -
99. End of period $ 39,528,105 $ 22,712,868
100.OTHER INFORMATION 102. 103.
101.Shares
104. Sold 2,756,414 2,780,541
105. Issued in reinvestment of distributions 73,748 5,010
106. Redeemed (997,890) (459,460)
107. Net increase (decrease) 1,832,272 2,326,091
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C>
108. SIX MONTHS DECEMBER 30, 19
ENDED 93
AUGUST 31, 19 (COMMENCEMENT
94 OF OPERATIONS) TO
FEBRUARY 28,
109. (UNAUDITED) 1994
110.SELECTED PER-SHARE DATA
111.Net asset value, beginning of period $ 9.760 $ 10.000
112.Income from Investment Operations .235 .070
Net interest income
113. Net realized and unrealized gain (loss) (.250) (.240)
114. Total from investment operations (.015) (.170)
115.Less Distributions (.235) (.070)
From net interest income
116.Net asset value, end of period $ 9.510 $ 9.760
117.TOTAL RETURN B (0.12)% (1.71)%
118.RATIOS AND SUPPLEMENTAL DATA
119.Net assets, end of period (000 omitted) $ 39,528 $ 22,713
120.Ratio of expenses to average net assets C - -
121.Ratio of expenses to average net assets before .55% .55%A
expense reductions C A
122.Ratio of net interest income to average net assets 4.97% 4.66%A
A
123.Portfolio turnover rate 44% -
A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS.
SPARTAN CALIFORNIA MUNICIPAL MONEY MARKET PORTFOLIO
PERFORMANCE: THE BOTTOM LINE
To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects the change in a fund's share price
over a given period, reinvestment of its dividends (or income), and the
effect of the fund's $5 account closeout fee. Yield measures the income
paid by a fund. Since a money market fund tries to maintain a $1 share
price, yield is an important measure of performance. If Fidelity had not
reimbursed certain fund expenses during the periods shown, the total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1994 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Spartan California Municipal Money Market 1.26% 2.48% 19.54%
Consumer Price Index 1.57% 2.90% 18.35%
Average California Tax-Free
Money Market Fund 1.07% 2.04% 16.65%
CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period
- - in this case, six months, one year or since the fund started on November
27, 1989. For example, if you invested $1,000 in a fund that had a 5%
return over the past year, you would have $1,050. Comparing the fund's
performance to the consumer price index (CPI) helps show how your
investment did compared to inflation. To measure how the fund stacked up
against its peers, you can compare its return to the average California
tax-free money market fund's total return. This average currently reflects
the performance of 43 California tax-free money market funds tracked by
IBC/Donoghue. (The periods covered by the CPI and IBC/Donoghue numbers are
the closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1994 PAST 1 LIFE OF
YEAR FUND
Spartan California Municipal Money Market 2.48% 3.82%
Consumer Price Index 2.90% 3.61%
Average California Tax-Free
Money Market Fund 2.04% 3.29%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
YIELDS
8/31/93 11/30/93 2/28/94 5/31/94 8/31/94
Spartan California 2.53% 2.37% 2.44% 2.71% 2.96%
Municipal Money Market
If Fidelity had not reimburs 2.18% 2.07% 2.14% 2.46% 2.76%
ed
certain fund expenses
Average California Tax-Free 2.01% 1.92% 1.96% 2.31% 2.56%
Money Market Fund
Spartan California 4.44% 4.16% 4.28% 4.76% 5.20%
Municipal Money Market -
Tax-equivalent
If Fidelity had not reimburs 3.83% 3.63% 3.76% 4.32% 4.85%
ed
certain fund expenses
Average All Taxable 2.64% 2.69% 2.79% 3.51% 4.08%
Money Market Fund
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods, expressed as annual
percentage rates. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The chart above shows the fund's
current seven-day yield at quarterly intervals over the past year. If the
advisor had not reimbursed certain fund expenses during the periods shown,
the yields would have been lower. You can compare these yields to the
average California tax-free money market fund. Or you can look at the
fund's tax-equivalent yield, which is based on a combined effective 1994
federal and state income tax rate of 43.04%. The tax-equivalent figures are
useful in seeing how the fund stacked up against the average taxable money
market fund as tracked by IBC/Donoghue.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT PAST
RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield - the yield you'd have to
earn on a similar taxable
investment to match the
tax-free yield - makes the
comparison more meaningful.
Keep in mind that the U.S.
government neither insures nor
guarantees a money market
fund. In fact, there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
SPARTAN CALIFORNIA MUNICIPAL MONEY MARKET PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Deborah Watson,
Portfolio Manager of Spartan California Municipal Money Market Portfolio
Q. DEBORAH, SHORT-TERM INTEREST RATES HAVE CONTINUED TO RISE DURING THE
LAST SIX MONTHS. CAN YOU BRING US UP TO DATE?
A. Sure. So far in 1994, there have been five separate increases in the
federal funds rate, the rate banks charge each other for overnight loans.
The first occurred before the period started, on February 4, when the
Federal Reserve bumped the rate up from 3% - where it had stood since
September 1992 - to 3.25%. That was the first increase in five years, and
it signaled the start of a new direction in monetary policy. Subsequent
increases brought the federal funds rate up a full point and a half to
4.75% through August. The Fed's action signaled a determination to moderate
growth and restrain inflation.
Q. HOW DID RISING RATES AFFECT YOUR STRATEGY?
A. Generally, my goal has been to maintain a low average maturity for the
fund in order to keep pace with rising rates. The fund's average maturity
was already quite low at the end of February - 43 days, compared to 79 days
a year ago - and it dropped as low as 22 days in May. Fed policy is the
main determinant, but there are also technical factors to consider.
California state and local governments come to market with their annual new
issuance beginning in June, and the abundant supply tends to boost rates.
So by shortening the fund in May, I was able to lock in those higher rates
as they became available. Doing so brought the fund's average maturity back
out around 40 days, where it stood at the end of August.
Q. HOW DID THE FUND PERFORM?
A. Quite well. Investors who've grown weary of low money-market rates in
recent years will be encouraged by recent trends. The fund's seven-day
yield on August 31, 1994, was 2.96%, up from 2.44% six months ago. The
latest yield is the equivalent of a 5.20% yield on a taxable investment for
investors in California's 43.04% combined federal and state tax bracket.
The fund's total return for the six months through the end of August was
1.26%. The average California tax-free money market fund returned 1.07%
during the same period, according to IBC/Donoghue.
Q. ARE INTEREST RATES LIKELY TO CONTINUE RISING?
A. I think so, even though I'm not particularly worried about inflation. I
think we'll continue to see some pressure on prices, but I do not
anticipate the increases to be enough to result in inflation spiraling out
of control anytime soon. That said, I do expect the Fed to continue
boosting rates, but in an orderly fashion.
Q. HOW MIGHT THAT AFFECT THE WAY YOU MANAGE THE FUND?
A. I'll probably continue executing the same strategy I've had for the past
six months. That means maintaining a low average maturity of around 40 days
so that I can keep pace with rising rates. One way I've done that is by
increasing the fund's percentage of variable rate instruments. Those are
notes whose rates reset monthly, weekly or even daily, keeping them in line
with prevailing rates. Lately, variable rate instruments have reached as
high as 70% of the fund's investments.
FUND FACTS
GOAL: tax-free income with
share price stability by
investing in high-quality,
short-term California
municipal securities
START DATE: November 27,
1989
SIZE: as of August 31, 1994,
more than $1 billion
MANAGER: Deborah Watson,
since November 1989;
manager, Fidelity California
Tax-Free Money Market
Portfolio, since July 1988;
Spartan Florida Municipal
Money Market Portfolio, since
August 1992; Spartan
Pennsylvania Municipal Money
Market Portfolio, since
September 1989; joined
Fidelity in 1982
(checkmark)
MONEY MARKETS AND
DERIVATIVES:
The word "derivatives" covers
a wide range of financial
agreements, of varying
degrees of complexity, that
have market values based on
security or market indices. All
"derivative" securities in
Fidelity's money market funds
are designed to have the price
characteristics of typical
money market securities.
During the recent Federal
Reserve Board interest rate
increases, all Fidelity money
market holdings performed as
designed and the funds
maintained a stable share
price of $1.00.
The more complex of these
instruments, such as floating
rate notes with unusual and
complex floating rate
formulas, frequently have too
much price volatility to be
appropriate investments for
money market funds. Many of
them do not offer the degree
of price stability Fidelity
believes is required in order
for its funds to maintain a
stable $1.00 share price.
Therefore, despite their
frequent higher yields at the
time they are sold, Fidelity
money market funds have not
purchased these volatile
securities. While this may
sometimes have caused
Fidelity money market funds
to have lower gross yields
than certain other funds,
Fidelity believes its investors
value prudence as well as
performance.
SPARTAN CALIFORNIA MUNICIPAL MONEY MARKET PORTFOLIO
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
8/31/94 2/28/94 8/31/93
0 - 30 80 67 67
31 - 90 10 12 8
91 - 180 0 20 6
181 - 397 10 1 19
WEIGHTED AVERAGE MATURITY
8/31/94 2/28/94 8/31/93
Spartan California Municipal
Money Market 41 days 43 days 79 days
Average California Municipa
l 53 days 50 days 72 days
Money Market Fund*
ASSET ALLOCATION
AS OF AUGUST 31, 1994 AS OF FEBRUARY 28, 1994
Row: 1, Col: 1, Value: 69.0
Row: 1, Col: 2, Value: 14.0
Row: 1, Col: 3, Value: 2.0
Row: 1, Col: 4, Value: 15.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 1, Value: 59.0
Row: 1, Col: 2, Value: 15.0
Row: 1, Col: 3, Value: 2.0
Row: 1, Col: 4, Value: 24.0
Row: 1, Col: 5, Value: 0.0
Variable rate
demand notes
(VRDNs) 69%
Commercial
paper 14%
Tender bonds 2%
Municipal
notes 15%
Other -
Variable rate
demand notes
(VRDNs) 59%
Commercial
paper 15%
Tender bonds 2%
Municipal
notes 24%
Other -
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(registered trademark)
SPARTAN CALIFORNIA MUNICIPAL MONEY MARKET PORTFOLIO
INVESTMENTS AUGUST 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - 100.0%
Alameda Rev. (KQED Inc. Proj.), 4%, LOC Long Term Credit
Bank of Japan, VRDN $ 5,400,000 $ 5,400,000
Anaheim Ctfs. of Prtn. Series 1993, 3%,
(Liquidity Facility Ind. Bank of Japan), VRDN 12,200,000 12,200,000
Anaheim Hsg. Auth. Multi-Family Hsg. Rev, VRDN: (b)
(Park Vista Apts) Series 1993 A, 3.20%,
LOC Citibank 6,000,000 6,000,000
(Sage Park Proj.) Series A, 3.15%,
LOC Bank of America 1,600,000 1,600,000
Anaheim Multi-Family Hsg. Participating VRDN
(Bel Age Apt. Proj.) Series 1991-1 Q, 3.30%,
LOC Federal Home Loan Bank (b) (c) 1,000,000 1,000,000
Big Bear Lake Ind. Dev. Rev. (Southwest Gas Corp. Proj.)
Series 1993 A, 3.10%, LOC Union Bank of
Switzerland, VRDN (b) 7,300,000 7,300,000
California Dept. of Wtr. Resources Rev. Bonds
(Central Valley Proj.) Series G, 9.60% 12/1/94 2,000,000 2,070,233
California Dept. of Wtr. Resources Tender Option Ctfs.
(Central Valley Proj.): (c)
Series R-3, 3.20%, (Liquidity Facility Svenska
Handelsbanken) 23,000,000 23,000,000
Series R-4, 3.20%, (Liquidity Facility Svenska
Handelsbanken) 6,000,000 6,000,000
California Gen. Oblig. Adj. Rate RAN Series 1994-95 B,
3.24% 6/28/95 53,000,000 52,999,418
California Gen. Oblig. Bonds: (c)
Series CR-26I, 3.10% tender 9/15/94, (AMBAC Insured),
(Liquidity Facility Citibank) 7,925,000 7,925,000
Series 1993 N, 3.10% tender 9/1/94, (AMBAC Insured)
(Liquidity Facility Citibank) 14,000,000 14,000,000
California Gen. Oblig. RAN Series A, 5% 6/28/95 13,000,000 13,091,991
California Gen. Oblig. Tender Option Ctfs. Series FF,
3.20%, (Liquidity Facility CIBC), VRDN (c) 9,000,000 9,000,000
California Health Facs. Fin. Auth. Rev. (Kaiser Permanente):
Series 1993 A, 3%, VRDN 6,700,000 6,700,000
Series 1993 B, 3%, VRDN 5,000,000 5,000,000
California Hsg. Fin. Agcy. Participating VRDN: (c)
Series ML-15A, 3.15%, (Liquidity Facility Dai-ichi
Kangyo Bank) (b) 11,230,000 11,230,000
Series PA-58, 3.30%, (Liquidity Facility Merrill Lynch) 3,005,000
3,005,000
Series PT-14, 3.30%, (Liquidity Facility Dai-Ichi
Kangyo Bank) 5,940,000 5,940,000
Series 19 B, 3.15%, (Liquidity Facility Banque Nationale
de Paris) (b) 14,300,000 14,300,000
Series 1991 F, 3.15%, (Liquidity Facility Banque Nationale
de Paris) 4,800,000 4,800,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
California Hsg. Fin. Agcy. Rev. Rfdg. (Camino Colony Apts.)
Series 1993 B, 3.10% LOC Federal Home Loan
Bank of San Francisco, VRDN $ 3,600,000 $ 3,600,000
California Poll. Cont. & Fing. Auth. Rev. Bonds
(Pacific Gas & Elec. Co.):
Rfdg. Series 1988 B: (b)
2.80% tender 9/7/94, LOC Sumitomo Bank 4,700,000 4,700,000
3.15% tender 10/18/94, LOC Sumitomo Bank 3,000,000 3,000,000
3.15% tender 10/21/94, LOC Sumitomo Bank 2,100,000 2,100,000
3.20% tender 10/24/94, LOC Sumitomo Bank 2,600,000 2,600,000
Series 1988 A: (b)
2.90% tender 9/9/94, LOC Swiss Bank Corp. 6,000,000 6,000,000
3.10% tender 10/11/94, LOC Swiss Bank Corp. 8,500,000 8,500,000
3.10% tender 10/14/94, LOC Swiss Bank Corp. 8,500,000 8,500,000
3.10% tender 10/18/94, LOC Swiss Bank Corp. 3,000,000 3,000,000
3.15% tender 10/18/94, LOC Swiss Bank Corp. 1,000,000 1,000,000
3.20% tender 10/24/94, LOC Swiss Bank Corp. 3,000,000 3,000,000
3.20% tender 10/25/94, LOC Swiss Bank Corp. 10,000,000 10,000,000
3.30% tender 10/26/94, LOC Swiss Bank Corp. 12,000,000 12,000,000
Series 1988 D:
2.95% tender 9/12/94, LOC Bank of Tokyo 3,300,000 3,300,000
3.15% tender 10/20/94, LOC Bank of Tokyo 2,750,000 2,750,000
3.05% tender 10/21/94, LOC Bank of Tokyo 5,400,000 5,400,000
3.15% tender 10/21/94, LOC Bank of Tokyo 1,400,000 1,400,000
Series 1988 E, 2.95 % tender 9/23/94,
LOC Morgan Guaranty Trust 8,900,000 8,900,000
California Poll. Cont. Fing. Auth. Solid Waste Disp. Rev.
(Colmac Energy Proj.), VRDN: (b)
Series A, 3.10%, LOC Swiss Bank 4,000,000 4,000,000
Series B, 3.10%, LOC Swiss Bank 5,000,000 5,000,000
California Poll. Cont. Rev. Bonds (San Diego Gas & Elec.)
Series 1984 A, 2.90% tender 9/1/94 3,000,000 3,000,000
California Statewide Commty. Dev. Corp. Rev.:
(AHNN Proj.) Series 1989, 3.20%,
LOC Bank of Tokyo, VRDN (b) 440,000 440,000
(Alameda Staub Metals), 3.20%,
LOC Bank of Tokyo, VRDN (b) 440,000 440,000
(American Zettler, Inc. Proj.) Series 1989, 3.20%,
LOC Bank of Tokyo, VRDN (b) 2,390,000 2,390,000
(Bro-Co Gen. Partnership Proj.) Series 1990, 3.20%,
LOC Union Bank, VRDN (b) 4,520,000 4,520,000
(Charles & Loralie Harris Proj.) Series 1989, 3.20%,
LOC Bank of Tokyo, VRDN (b) 975,000 975,000
(Covenant Retirement Commty.), 3.15%,
LOC Lasalle Nat'l. Bank, VRDN 4,800,000 4,800,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
California Statewide Commty. Dev. Corp. Rev. - continued
(Florestone Prod. Co.) Series 1989, 3.20%,
LOC Bank of Tokyo, VRDN (b) $ 440,000 $ 440,000
(K.U.M. LTD Proj.) Series 1992, 3.20%,
LOC Union Bank, VRDN (b) 2,000,000 2,000,000
(Merrill Packaging Proj.) 3.20%
LOC Bank of Tokyo, VRDN (b) 2,095,000 2,095,000
(Northwest Pipe & Casing Co. Proj.) Series 1990, 3.20%,
LOC Bank of Tokyo, VRDN (b) 4,000,000 4,000,000
(Rapelli of California Proj.) Series 1989, 3.20%,
LOC Bank of Tokyo, VRDN (b) 2,500,000 2,500,000
(Reliance Upholstery Supply Co., Inc. Proj.) Series 1990,
3.20%, LOC Bank of Tokyo, VRDN (b) 600,000 600,000
(San Bernadino County - Grundfos Pumps) Series 1989,
3.20%, LOC Bank of Tokyo, VRDN (b) 5,700,000 5,700,000
(Santa Cruz - Wilson Entities Ltd. Proj.) Series 1993,
3.20%, LOC Bank of Tokyo, VRDN (b) 1,485,000 1,485,000
(Sierra Spring Wtr. Co.) LOC Bank of Tokyo, VRDN: (b)
(Manteca Proj.) Series 1989, 3.20% 695,000 695,000
(Richmond Proj.) Series 1989, 3.20% 1,040,000 1,040,000
(Sacramento Proj.) Series 1989, 3.20% 1,435,000 1,435,000
(Sunclipse, Inc.), LOC Bank of Tokyo, VRDN: (b)
(Alhambra Proj.) Series 1989, 3.20% 2,600,000 2,600,000
(Union City Proj.) Series 1989, 3.20% 2,500,000 2,500,000
(Zarn Inc. Proj.) Series 1989, 3.20%,
LOC Bank of Tokyo, VRDN (b) 1,680,000 1,680,000
(Zieman Manufacturing Co. Proj.) Series 1990, 3.20%,
LOC Bank of Tokyo, VRDN (b) 560,000 560,000
California TRAN (Cash Reserve Prog. Auth.)
Series A, 4.50% 7/5/95 18,000,000 18,109,309
Chula Vista Ind. Dev. Rev. Bonds (San Diego Gas & Elec.):
Series B, 3.15%, VRDN (b) 3,700,000 3,700,000
Series E:
3.40% tender 10/12/94 (b) 2,500,000 2,500,000
3.30% tender 10/14/94 (b) 3,000,000 3,000,000
Concord Participating VRDN, Series 1991-1 E, 3.25%,
LOC Federal Home Loan Bank (c) 1,100,000 1,100,000
Concord Multi-Family Hsg. Rev. (Hill Apt. Proj.) 3.30%,
LOC Citibank, VRDN (b) 9,050,000 9,050,000
Contra Costa County Multi-Family Hsg. Rev. (Park Regency)
Series A, 3.15%, LOC Sumitomo Bank, VRDN (b) 7,900,000 7,900,000
Contra Costa Transit Auth. Tax Rev. Series 1993 A, 2.85%,
(FGIC Insured), VRDN 12,300,000 12,300,000
Duarte Single-Family Mtg. Rev. Participating VRDN,
Series A-1 1994 A, 3.35%, (Liquidity Facility
Norwest Bank) (c) 5,355,000 5,355,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Emeryville Redev. Agcy. Multi-Family Hsg.
(Emerybay Apts. II) 3.45%, LOC Bank of America,
VRDN (b) $ 8,000,000 $ 8,000,000
Escondido Commty. Dev. Commission Rev.
(Escondido Promeneade Proj.) 3.40%,
LOC Bank of America, VRDN (b) 1,000,000 1,000,000
Fairfield Ind. Dev. Auth. Ind. Dev. Rev.
(Medical Design Concepts Proj.) Series 1990 A, 4.05%,
LOC Tokai Bank (b) 1,300,000 1,300,000
Fairfield Ind. Dev. Auth. Variable Rate Ind. Dev. Rev.,
3.40%, LOC Wells Fargo Bank, VRDN (b) 1,800,000 1,800,000
Fontana Apt. Dev. Rev. Rfdg. (Citrus Ave. Apt. Proj.)
Series 1992 A, 2.90%, LOC Bank of America,
VRDN 3,700,000 3,700,000
Fontana Participating VRDN, Series 1991-1G, 3.25%,
LOC Federal Home Loan Bank of San Francisco (c) 4,200,000 4,200,000
Fontana Unified School Dist. TRAN 4.50% 7/7/95 6,500,000 6,537,080
Freemont TRAN 4.25% 7/5/95 10,000,000 10,051,111
Fresno Hsg. Rev. (Palm Lakes Apt. Proj.) Series 1985,
4.40%, LOC Tokai Bank, VRDN (b) 2,000,000 2,000,000
Garden Grove Hsg. Auth. Multi-Family Hsg. Rev.
(Valley View Sr. Villas Proj.) Series 1990 A, 3.55%,
LOC Wells Fargo Bank, VRDN (b) 7,200,000 7,200,000
Goleta Unified School Dist. TRAN 4.50% 7/10/95 3,300,000 3,316,264
Huntington Beach Multi-Family Hsg. (Five Point Seniors Proj.)
Series 1991 A, 3.55%, LOC Wells Fargo Bank,
VRDN (b) 6,400,000 6,400,000
Huntington Park Multi-Family Rev. (Casa Rita Apts.)
Series 1994 A, 3.35%, LOC Tokai Bank, VRDN (b) 1,700,000 1,700,000
Irvine Impt. Board Dist. No. 89-10, 2.80%,
LOC Nat'l. Westminster Bank, VRDN 100,000 100,000
Kern County Ctfs. of Prtn., Series 1986 A, 3.10%,
LOC Sanwa Bank, VRDN 1,700,000 1,700,000
La Verne Ind. Dev. Auth. Rev. (Paper-Pak Products Inc.
Proj.), 3.30%, LOC First Union Nat'l Bank of
North Carolina, VRDN (b) 8,000,000 8,000,000
Livermore Ctfs. of Prtn. (Wtr. Reclamation Plant Expansion
Proj.), 3.10%, LOC Nat'l. Westminister, VRDN 960,000 960,000
Livermore Participating VRDN, Series 1991-1 C, 3.25%,
LOC Federal Home Loan Bank of San Francisco (c) 4,000,000 4,000,000
Livermore Multi-Family Mtg. Rev.
(Portola Meadows Apts.) Series 1989 A, 3.15%,
LOC Security Pacific Nat'l Bank, VRDN (b) 10,400,000 10,400,000
Loma Linda Multi-Family Hsg. Rev.
(Loma Linda Springs Apts.) Series 1989, 3.95%,
LOC Tokai Bank, VRDN (b) 12,120,000 12,120,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Long Beach Hbr. Dept. Rev., Series A, CP: (b)
3% 9/12/94, (Liquidity Facility CIBC) $ 7,000,000 $ 7,000,000
3.15% 10/17/94, (Liquidity Facility CIBC) 9,500,000 9,500,000
3.20% 10/17/94, (Liquidity Facility CIBC) 11,000,000 11,000,000
3.20% 10/19/94, (Liquidity Facility CIBC) 7,500,000 7,500,000
Long Beach TRAN 3.25% 9/21/94 2,100,000 2,100,228
Los Angeles Commty. College Dist. TRAN 4.50%
7/7/95 10,000,000 10,050,879
Los Angeles Commty. Redev. Agcy. Ctfs. of Prtn., VRDN:
(Baldwin Hills Pub. Parking Facs.) Series 1984, 3.20%,
LOC Wells Fargo Bank 3,700,000 3,700,000
(CMC Med. Plaza) 3.25%, LOC Bank of America 4,700,000 4,700,000
Los Angeles Convention & Exhibit Ctr. Auth. Participating
VRDN, Series PA-1006, 3.25%, (MBIA Insured),
(Liquidity Facility Merrill Lynch) (c) 9,960,000 9,960,000
Los Angeles County Hsg. Auth. Multi-Family Hsg.
Rev.,VRDN:
(Malibu Meadows Proj.) Series 1991 A, 3.20%,
LOC Sumitomo Bank 4,811,000 4,811,000
(Malibu Meadows II Proj.) Series 1991 B, 3.20%,
LOC Sumitomo Trust Ltd. 5,000,000 5,000,000
(Park Sierra Apt.) 3.30%, LOC Citibank (b) 39,200,000 39,200,000
(Sand Canyon Villas Proj.) Series 1989 A, 3.40%,
LOC Ind. Bank of Japan (b) 8,700,000 8,700,000
Los Angeles County Ind. Dev. Auth. (Caitac & Jae Proj.),
3.20%, LOC Union Bank, VRDN (b) 4,200,000 4,200,000
Los Angeles County Local Edl. Agcys. Pooled TRAN
Series 1994-95 A, 4.50% 7/6/95 8,000,000 8,048,739
Los Angeles County Pub. Wks. Fin. Auth. Participating VRDN,
Series 8, 3.35%, (Liquidity Facility Credit Suisse) (c) 11,457,702
11,457,703
Los Angeles County TRAN 4.50% 6/30/94 22,375,000 22,489,415
Los Angeles County Transit Commty. Participating
VRDN, Series 1992 B-36, 3.25%, (MBIA Insured),
(Liquidity Facility Sakura Bank) (c) 3,000,000 3,000,000
Los Angeles County Transit Commty. Sales Tax Rev.
Rfdg., Series 1992 A, 3%, (FGIC Insured),
(Liquidity Facility Ind. Bank of Japan), VRDN 6,000,000 6,000,000
Los Angeles Dept. of Wtr. & Pwr. Participating VRDN,
Series BTP-51, 3.40%, (Liquidity Facility
Banker's Trust Co.) (c) 6,430,000 6,430,000
Los Angeles Dept. of Wtr. & Pwr. Tender Option Ctfs.,
Series GS-M, 3.20%, (Liquidity Facility Sanwa Bank),
VRDN (c) 11,900,000 11,900,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Los Angeles Multi-Family Hsg. Rev.:
(Beverly Park Apts.) Series 1988 A, 3%,
LOC Barclay's Bank, VRDN (b) $ 9,500,000 $ 9,500,000
(Channel Gateway Apts.) Series 1989 B, 3.20%,
LOC Fuji Bank, VRDN (b) 47,700,000 47,700,000
(Museum Terrace Apt. Proj.) Series H, 3%,
LOC Bank of America, VRDN 4,500,000 4,500,000
(Poinsettia Apts. Proj.) Series 1989 A, 3.20%,
LOC Dai-Ichi Kangyo Bank, VRDN (b) 1,000,000 1,000,000
(Studio Colony Proj.) Series 1985 C, 3.10%,
LOC Ind. Bank of Japan, VRDN 2,970,000 2,970,000
Series 1985 K, 2.95%, LOC Federal Home Loan
Bank, VRDN 6,000,000 6,000,000
Madera County TRAN 3.25% 9/30/94 3,000,000 3,000,858
Marin County Hsg. Auth. Rev. (Crest Marin II Apt. Proj.),
3.30%, LOC Dai-ichi, VRDN (b) 14,750,000 14,750,000
Metropolitan Wtr. Dist. of Southern California Wtrwks.
Participating VRDN, Series BTP-98, 3.30%,
(Liquidity Facility Banker's Trust) (c) 5,000,000 5,000,000
Metropolitan Wtr. Dist. of Southern California Wtrwks.
Tender Option Bonds, Series MGT-19A, 3%,
(Liquidity Facility Morgan Guaranty) (c) 5,400,000 5,400,000
Millbrae Elementary School Dist. TRAN 4.50% 7/10/95 1,900,000 1,909,364
Morgan Hill Unified School Dist. TRAN 4.25% 7/5/95 5,590,000 5,614,893
Mt. Diablo Unified School Dist. TRAN 3.25% 10/14/94 3,300,000 3,300,793
Newark Ind. Dev. Auth. Rev. (Gas Tech Proj.) Series 1989 A,
3.20%, LOC UnionBank of Switzerland, VRDN (b) 3,000,000 3,000,000
Oakland County Rev. (Children's Hosp. Med. Ctr.) 3.10%,
LOC Banque Nationale De Paris, VRDN 12,800,000 12,800,000
Oceanside Multi-Family Mtg. Rev. (Riverview Springs Apts.)
Series 1990 A, 3.35%, LOC Bank of Tokyo, VRDN (b) 7,580,000 7,580,000
Olcese Wtr. Dist. Rev. Bonds (Rio Bravo Wtr. Delivery Proj.)
Series 1986 A, 3.15% tender 9/22/94
LOC Sumitomo Bank (b) 6,000,000 6,000,000
Ontario Ind. Dev. Auth. Rev. (Safari Land Proj.)
Series 1989, 4.05%, LOC Tokai Bank, VRDN (b) 3,700,000 3,700,000
Orange County Apt. Dev. Rev.:
(Bear Brands Apt.) Issue Z 1985, 3.10%,
LOC Fuji Bank, VRDN 7,700,000 7,700,000
(Foothill Oaks Apts. Proj.) Issue 1989 B, 3.15%,
LOC Security Pacific Nat'l. Bank, VRDN (b) 12,175,000 12,175,000
(Frost Construction Proj.) Series 1985 B, 3.15%,
LOC Wells Fargo Bank, VRDN 2,000,000 2,000,000
(Niguel Summit II) Issue 1985, Series B, 3%,
LOC Bank of America, VRDN 8,000,000 8,000,000
(Park Place Apts. Proj.) Series 1989 A, 3.95%,
LOC Tokai Bank, VRDN (b) 14,300,000 14,300,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Orange County Apt. Dev. Rev. - continued
(Seaside Meadows Proj.) 3.10%, LOC Fuji Bank, VRDN $ 11,000,000 $
11,000,000
(The Irvine Co.) Issue #1 Series 1985, 3.20% tender
10/13/94, LOC Dai-Ichi Kangyo Bank Ltd 3,100,000 3,100,000
(The Irving Co. II) Series 1985 V, 3% tender 9/13/94,
LOC Citibank 5,000,000 5,000,000
(Trabuco Woods Apts.) Series 1993 B, 3.05%,
LOC Wells Fargo Bank, VRDN 2,670,000 2,670,000
(Villa Marguerite Apts.), Series 1993 A, 3.05%,
LOC Wells Fargo Bank, VRDN 1,635,000 1,635,000
(Vista Verde Apt. Proj.) Series 1988 A, 3.20%,
LOC Wells Fargo Bank, VRDN (b) 12,050,000 12,050,000
(Wood Canyon Villas) Issue 1991 B, 3.25%,
LOC Security Pacific Nat'l Bank, VRDN (b) 8,400,000 8,400,000
Orange County Hsg. Auth. Apt. Dev. Rev.:
(Costa Mesa Partners) Series 1985-BB, 3.45%,
LOC Tokai Bank, VRDN 9,500,000 9,500,000
(Lantern Pines Proj.-Frost Group) 3.20%,
LOC Bank of Tokyo, VRDN 5,000,000 5,000,000
Orange County San. Dist. Rev. (#1,2,3,5,6,7, 11) 2.85%,
(Liquidity Facility Ind. Bank of Japan), VRDN 14,160,000 14,160,000
Orange County Trans. Corridor Agcy. Rev.
(Foothill/Eastern), 2.85%, LOC Morgan
Guaranty, VRDN 1,000,000 1,000,000
Palm Springs Comm. Redev. Agcy. (Headquarters Hotel
Proj.), 3.15%, LOC Citibank, VRDN 1,000,000 1,000,000
Panama-Buena Vista Unified School Dist. Capital Impt.
Fing. Rev. Series 1994, 3.25%, LOC Bank of
California, VRDN 5,000,000 5,000,000
Pleasant Hill Participating VRDN, Series 1991-1A, 3.25%,
LOC Federal Home Loan Bank of
San Francisco (c) 3,500,000 3,500,000
Riverside County Ind. Dev. Auth. (Golden West Homes Proj.)
3.65%, LOC Wells Fargo Bank, VRDN (b) 2,700,000 2,700,000
Sacramento Muni. Util. Dist., Series H, 3.05% 10/7/94,
LOC Morgan Guaranty, CP 1,500,000 1,500,000
Sacramento Participating VRDN, Series 1991-1 K, 3.25%,
LOC Federal Home Loan Bank of
San Francisco (c) 1,000,000 1,000,000
San Bernardino County Ind. Dev. Auth. Rev.:
(McClain Citrus Inc. Proj.) 3.20%,
LOC Bank of Tokyo, VRDN (b) 900,000 900,000
(McElroy Metal Mill Proj.) 3.20%,
LOC Bank of Tokyo, VRDN (b) 800,000 800,000
(NRI Inc. Proj.) Series 1989, 3.20%,
LOC Bank of Tokyo, VRDN (b) 1,440,000 1,440,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
San Bernardino County Multi-Family Hsg. Mtg. Rev. Rfdg.
(Pepperwood Apts.) Series 1993 A, 3%,
LOC Fed Home Loan Bank, VRDN $ 3,000,000 $ 3,000,000
San Bernardino County Multi-Family Hsg. Rev., VRDN:
(Western Prop. II Proj.), 3%, LOC Bank of America 1,000,000 1,000,000
(Western Prop. IV Proj.), 3%, LOC Bank of America 1,000,000 1,000,000
(Woodview Apts. Proj.), 3%, LOC Bank of America 1,400,000 1,400,000
San Diego Area Local Gov. TRAN 4.50% 6/30/95 12,500,000 12,582,078
San Diego Hsg. Auth. Multi-Family Hsg. Rev., VRDN:
(Carmel Del Mar Apr. Proj.) Series 1993-E, 3%,
LOC Citibank 9,608,000 9,608,000
(La Cima Apts.) Series 1985 K:
3.05%, LOC Citibank 5,200,000 5,200,000
3.55%, LOC Daiwa Bank 3,000,000 3,000,000
(Paseo Point Apts.) Series 1994 A, 3.10%,
LOC Bank of Tokyo 3,000,000 3,000,000
San Diego Multi-Family Hsg. Rev., VRDN:
Rfdg. (Coral Pointe Apt. Proj.) Series 1993 A, 3.25%,
(Liquidity Facility Continental Casualty Company) 5,000,000 5,000,000
(Lusk Mira Mesa Apts.) Series 1985 E, 3%,
LOC Bank of America 2,200,000 2,200,000
San Francisco City & County Redev. Agcy. Rev., VRDN:
(South Harbor Proj.) 2.675%, LOC Mitsubishi
Bank 3,000,000 3,000,000
(St. Francis Place Proj.) Series 1989 A, 3.60%,
LOC Mitsubishi Trust & Banking 14,300,000 14,300,000
San Jose Multi-Family Hsg. Rev.
(Kimberly Woods) Series 1984, 3%,
LOC Bank of America, VRDN 4,700,000 4,700,000
San Jose Multi-Family Mtg. Rev.
(Somerset Park Apts.) Series 1987 A, 3.15%,
LOC Bank of America, VRDN (b) 3,100,000 3,100,000
San Jose Redev. Agcy. Participating VRDN
(Merged Area Redev. Proj.), Series PA-42I, 3.25%,
(MBIA Insured) (Liquidity Facility Merrill Lynch) (c) 4,660,000
4,660,000
San Mateo Unified School Dist. TRAN 4.50% 7/10/95 2,750,000 2,763,554
Santa Ana Ind. Dev. Auth. Rev. (McFadden Properties Proj.)
3.182%, LOC Bank of America, VRDN 1,300,000 1,300,000
Santa Clara County Apartment Dev. Rev. (Lincoln Pajaro
Proj.) 3.20%, LOC Sumitomo Trust, VRDN 5,300,000 5,300,000
Santa Clara Elec. Rev. Series B, 3.05%,
LOC Nat'l. Westminster, VRDN 2,800,000 2,800,000
Simi Valley Multi-Family Hsg. Rev. (Shadowridge Apts.)
Series 1989, 3.30%, LOC Citibank, VRDN (b) 20,200,000 20,200,000
Solano County TRAN 3.25% 11/01/94 3,000,000 3,001,865
Southern California Pub. Pwr. Auth. Rev.
(Tran Mission Proj.) Series 1991, 3%,
LOC Swiss Bank, (AMBAC Insured), VRDN 13,800,000 13,800,000
Stockton Hosp. Rev. (St. Joseph's Hosp.) Series 1985 A,
3.20%, LOC Dai-Ichi Kangyo Bank, VRDN 17,135,000 17,135,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Stockton Unified School Dist. TRAN 3% 12/14/94 $ 2,500,000 $ 2,499,825
Torrance Hospital Rev. (Little Co. of Mary Hosp.-Torrance
Memorial Med. Ctr.) Series 1992, 3.25%,
LOC Fuji Bank, VRDN 7,800,000 7,800,000
Tustin Assessment Dist. #85-1 Impt. Rev. Bonds:
3.15% tender 9/8/94, LOC Mitsubishi Trust & Banking 2,409,000 2,409,000
3.20% tender 10/20/94, LOC Mitsubishi Trust & Banking 4,100,000
4,100,000
3.15% tender 10/21/94, LOC Mitsubishi Trust & Banking 6,694,000
6,694,000
Tustin Assessment Dist. #86-2 Impt. Rev. Bonds:
3.50% tender 9/2/94, LOC Tokai Bank 3,300,000 3,300,000
3.50% tender 9/7/94, LOC Tokai Bank 2,204,666 2,204,666
Upland Commty. Redev. Agcy. Multi-Family Hsg.
(Northwoods) Series 1989 B, 3.25%,
LOC Sanwa Bank, VRDN 1,300,000 1,300,000
Vacaville Multi-Family Hsg. Participating VRDN
(Quail Run Apt. Proj.) Series 1991-1B, 3.25%,
LOC Federal Home Loan Bank (c) 8,000,000 8,000,000
Washington Township Hosp. Dist., Series 1985 A, 3.10%,
LOC Bank of Tokyo, VRDN 2,700,000 2,700,000
Woodland Participating VRDN, Series 1991-1 H,
3.25%, LOC Federal Home Loan Bank of
San Francisco (c) 1,900,000 1,900,000
TOTAL INVESTMENTS $ 1,176,667,266
Total Cost for Income Tax Purposes $ 1,176,666,972
SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
RAN - Revenue Anticipation Notes
TAN - Tax Anticipation Notes
TRAN - Tax and Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
LEGEND
7. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
8. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
9. Provides evidence of ownership in one or more underlying municipal
bonds.
INCOME TAX INFORMATION
At February 28, 1994, the fund had a capital loss carryforward of
approximately $34,400 which will expire on February 28, 2001.
SPARTAN CALIFORNIA MUNICIPAL MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1994 (UNAUDITED)
127.ASSETS 128. 129.
130.Investment in securities, at value - See 131. $ 1,176,667,266
accompanying schedule
132.Cash 133. 361,502
134.Receivable for investments sold 135. 50,000
136.Interest receivable 137. 4,926,258
138. 139.TOTAL ASSETS 140. 1,182,005,026
141.LIABILITIES 142. 143.
144.Dividends payable $ 67,780 145.
146.Accrued management fee 304,192 147.
148. 149.TOTAL LIABILITIES 150. 371,972
151.152.NET ASSETS 153. $ 1,181,633,054
154.Net Assets consist of: 155. 156.
157.Paid in capital 158. $ 1,182,006,533
159.Accumulated net realized gain (loss) on 160. (373,773)
investments
161.Unrealized gain from accretion of market discount 162. 294
163.164.NET ASSETS, for 1,182,006,506 shares 165. $ 1,181,633,054
outstanding
166.167.NET ASSET VALUE, offering price and 168. $1.00
redemption price per share ($1,181,633,054 (divided by)
shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
169.170.INTEREST INCOME 171. $ 16,781,785
172.EXPENSES 173. 174.
175.Management fee $ 3,028,654 176.
177.Non-interested trustees' compensation 3,440 178.
179. Total expenses before reductions 3,032,094 180.
181. Expense reductions (1,465,348) 1,566,746
182.183.NET INTEREST INCOME 184. 15,215,039
185.REALIZED AND UNREALIZED GAIN (LOSS) 187. (339,412)
186.Net realized gain (loss) on investment securities
188.Increase (decrease) in net unrealized gain from 189. 294
accretion
of market discount
190.191.NET GAIN (LOSS) 192. (339,118)
193.194.NET INCREASE IN NET ASSETS RESULTING FROM 195. $ 14,875,921
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR
ENDED ENDED
AUGUST 31, 1994 FEBRUARY 28,
(UNAUDITED) 1994
196.INCREASE (DECREASE) IN NET ASSETS
197.Operations $ 15,215,039 $ 22,877,298
Net interest income
198. Net realized gain (loss) (339,412) 30,247
199. Increase (decrease) in net unrealized gain from 294 -
accretion of market discount
200. 14,875,921 22,907,545
201.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
202.Dividends to shareholders from net interest income (15,215,039) (22,877,298)
203.Share transactions at net asset value of $1.00 per 903,680,075 1,234,266,731
share
Proceeds from sales of shares
204. Reinvestment of dividends from net interest 14,683,509 22,035,126
income
205. Cost of shares redeemed (800,994,633) (1,047,318,874)
206. 117,368,951 208,982,983
Net increase (decrease) in net assets resulting from
share transactions
207. 117,029,833 209,013,230
208.TOTAL INCREASE (DECREASE) IN NET ASSETS
209.NET ASSETS 210. 211.
212. Beginning of period 1,064,603,221 855,589,991
213. End of period $ 1,181,633,054 $ 1,064,603,221
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
214. SIX MONTHS YEAR TEN MONTHS YEARS ENDED APRIL 30, NOVEMBER 27,
ENDED ENDED ENDED 1989
AUGUST 31, FEBRUARY 28, FEBRUARY 28, (COMMENCEME
NT
OF OPERATIONS)
TO
APRIL 30,
215. 1994 1994 1993 1992 1991 1990
216.SELECTED PER-SHARE DATA
217.Net asset value,
beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
218.Income from Investment
Operations .013 .024 .022 .041 .054 .025
Net interest income
219.Less Distributions (.013) (.024) (.022) (.041) (.054) (.025)
From net interest income
220.Net asset value, end of
period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
221.TOTAL RETURN B 1.27% 2.45% 2.24% 4.15% 5.52% 2.54%
222.RATIOS AND SUPPLEMENTAL DATA
223.Net assets, end of period
(000 omitted) $ 1,181,633 $ 1,064,603 $ 855,590 $ 917,640 $ 763,959 $ 396,652
224.Ratio of expenses to
average net assets C .26% .21% .30% .10% .07% -
A A
225.Ratio of expenses to average
net assets before .50% .50% .50% .50% .50% .50%A
expense reductions C A A
226.Ratio of net interest income
to average net assets 2.51% 2.42% 2.67% 4.05% 5.33% 5.99%A
A A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
NOTES TO FINANCIAL STATEMENTS
For the period ended August 31, 1994 (Unaudited)
1. SIGNIFICANT ACCOUNTING
POLICIES.
Spartan California Municipal High Yield Portfolio (the high yield fund),
and Spartan California Intermediate Municipal Portfolio (the intermediate
fund) are funds of Fidelity California Municipal Trust. Spartan California
Municipal Money Market Portfolio (the money market fund) is a fund of
Fidelity California Municipal Trust II. Each trust is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an open-end
management investment company. Fidelity California Municipal Trust and
Fidelity California Municipal Trust II (the trusts) are organized as a
Massachusetts business trust and a Delaware business trust, respectively.
At a special meeting of the shareholders of the money market fund held on
February 16, 1994, shareholders approved an Agreement and Plan of
Conversion and Termination (the Plan of Conversion), providing for the
conversion of the money market fund from a separate series of the
Massachusetts trust, to a separate series of the Delaware trust, effective
April 18, 1994. The individual investment objective, policies and
limitations of the money market fund remain the same.
Each fund is authorized to issue an unlimited number of shares. The
following summarizes the significant accounting policies of the high yield
fund, the intermediate fund, and the money market fund:
SECURITY VALUATION.
HIGH YIELD AND INTERMEDIATE FUNDS. Securities are valued based upon a
computerized matrix system and/or appraisals by a pricing service, both of
which consider market transactions and dealer-supplied valuations.
Short-term securities maturing within sixty days of their purchase date are
valued either at amortized cost or original cost plus accrued interest,
both of which approximate current value. Securities for which quotations
are not readily available through the pricing service are valued at their
fair value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to income taxes to
the extent that it distributes all of its taxable income for the fiscal
year. The schedules of investments include information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. For the
money market fund, accretion of market discount represents unrealized gain
until realized at the time of a security disposition or maturity.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
EXPENSES. Most expenses of each trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income. Distributions to shareholders from
realized capital gains on investments, if any, are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
futures and options transactions, excise tax regulations and losses
deferred due to wash sales.
REDEMPTION FEES. Shares held in the high yield fund less than 180 days are
subject to a redemption fee equal to .50% of the proceeds of the redeemed
shares. The fee, which is retained by the fund, is accounted for as an
addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
DELAYED DELIVERY TRANSACTIONS. Each fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. Each fund
identifies securities as segregated in its custodial records with a value
at least equal to the amount of the purchase commitment.
FUTURES CONTRACTS AND OPTIONS. The high yield and intermediate funds may
invest in futures and options contracts, and may also write options. These
investments involve, to varying degrees, elements of market risk and risks
in excess of the amount recognized in their Statements of Assets and
Liabilities. The face or contract amounts, as reflected in the schedule of
investments under the caption "Futures Contracts," reflect the extent of
the involvement the high yield and intermediate funds have in the
particular classes of instruments. Risks may be caused by an imperfect
correlation between movements in the price of the instruments and the price
of the underlying securities and interest rates. Risks also may arise if
there is an illiquid secondary market for the instruments, or due to the
inability of counterparties to perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
3. PURCHASES AND SALES OF
INVESTMENTS.
HIGH YIELD FUND. Purchases and sales of securities, other than short-term
securities, aggregated $67,431,196 and $137,496,035, respectively. The
market value of futures contracts opened and closed during the period
amounted to $401,538,072 and $397,262,361, respectively.
INTERMEDIATE FUND. Purchases and sales of securities, other than short-term
securities, aggregated $27,142,034 and $6,611,760, respectively. The market
value of futures contracts opened and closed during the period amounted to
$8,667,840 and $8,671,068, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, Fidelity Management &
Research Company (FMR) pays all expenses except the compensation of the
non-interested Trustees and certain exceptions such as interest, taxes,
brokerage commissions and extraordinary expenses. FMR receives a fee that
is computed daily at an annual rate of .55%, .55%, and .50% of average net
assets for the high yield, intermediate, and money market funds,
respectively.
SUB-ADVISER FEE. As the money market fund's investment sub-adviser, FMR
Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR of
50% of the management fee payable to FMR. The fee is paid prior to any
voluntary expense reimbursements which may be in effect, and after reducing
the fee for any payments by FMR pursuant to the fund's Distribution and
Service Plan.
FMR also bears the cost of providing shareholder services to each fund. For
the period, FMR or its affiliates collected certain transaction fees from
shareholders which aggregated $5,735, $557 and $12,894 for the high yield,
intermediate, and money market funds, respectively.
5. EXPENSE REDUCTIONS.
INTERMEDIATE FUND. For the period, FMR voluntarily agreed to reimburse all
of the fund's operating expenses (excluding interest, taxes, brokerage
commissions and extraordinary expenses) and the reimbursement reduced
expenses by $87,836.
MONEY MARKET FUND. For the period, FMR voluntarily agreed to reimburse all
of the fund's operating expenses (excluding interest, taxes, brokerage
commissions and extraordinary expenses) above a specified percentage of
average net assets. This expense limitation ranged from an annual rate of
.25% to .30% of average net assets and the reimbursement reduced expenses
by $1,465,348.
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call -
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND
QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios(registered trademark).
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND
ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
1907 West State Road 434
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
1 West Pennsylvania Ave.
Towson, MD
7401 Wisconsin Avenue
Bethesda, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
101 Cambridge Street
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
38 South Sixth Street
Minneapolis, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
2200 West Main Street
Durham, NC
4611 Sharon Road
Charlotte, NC
OHIO
600 Vine Street
Cincinnati, OH
1903 East Ninth Street
Cleveland, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
1010 Lamar Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
215 South State Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI
INVESTMENT ADVISER
(registered trademark)
Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER, MONEY MARKET FUND
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr., Vice President -
MONEY MARKET FUND
Thomas J. Steffanci, Vice President -
HIGH YIELD AND INTERMEDIATE FUNDS
Deborah F. Watson, Vice President -
MONEY MARKET FUND
Thomas D. Maher, Assistant
Vice President - MONEY MARKET FUND
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
United Missouri Bank, N.A.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
