FIDELITY CALIFORNIA MUNICIPAL TRUST, 485APOS, 1999-02-09

FIDELITY CALIFORNIA MUNICIPAL TRUST
485APOS, 1999-02-09

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (No. 2-83367)
UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 36 [X]
and
REGISTRATION STATEMENT (No. 811-3725)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 36 [X]
Fidelity California Municipal Trust
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: 617-563-7000
Eric D. Roiter, Secretary
82 Devonshire Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) immediately upon filing pursuant to paragraph (b).
( ) on ( ) pursuant to paragraph (b).
( ) 60 days after filing pursuant to paragraph (a)(1).
(X) on April 20, 1999 pursuant to paragraph (a)(1) of Rule 485.
( ) 75 days after filing pursuant to paragraph (a)(2).
( ) on ( ) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
( ) this post-effective amendment designates a new effective date
for a previously filed
post-effective amendment.

Like securities of all mutual
funds, these securities have
not been approved or
disapproved by the
Securities and Exchange
Commission, and the
Securities and Exchange
Commission has not
determined if this
prospectus is accurate or
complete. Any
representation to the
contrary is a criminal
offense.

Fidelity's
CALIFORNIA MUNICIPAL
FUNDS

FIDELITY CALIFORNIA MUNICIPAL MONEY MARKET FUND
(fund number 097, trading symbol FCFXX)

SPARTAN(registered trademark) CALIFORNIA MUNICIPAL MONEY MARKET FUND
(fund number 457, trading symbol FSPXX)

SPARTAN(registered trademark) CALIFORNIA MUNICIPAL INCOME FUND
(fund number 091, trading symbol FCTFX)

PROSPECTUS
APRIL 20, 1999

(fidelity_logo_graphic)(registered trademark)
82 Devonshire Street, Boston, MA 02109

CONTENTS

FUND SUMMARY 3 INVESTMENT SUMMARY

4 PERFORMANCE

6 FEE TABLE

FUND BASICS 11 INVESTMENT DETAILS

10 VALUING SHARES

SHAREHOLDER INFORMATION 10 BUYING AND SELLING SHARES

17 EXCHANGING SHARES

17 ACCOUNT FEATURES AND POLICIES

20 DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS

21 TAX CONSEQUENCES

FUND SERVICES 21 FUND MANAGEMENT

22 FUND DISTRIBUTION

APPENDIX 22 FINANCIAL HIGHLIGHTS

FUND SUMMARY

INVESTMENT SUMMARY

INVESTMENT OBJECTIVE. California Municipal Money Market Fund seeks as
high a level of current income, exempt from federal and California
state personal income tax, as is consistent with the preservation of
capital.

PRINCIPAL INVESTMENT STRATEGIES. Fidelity Management & Research
Company (FMR)'s principal investment strategies include:

(small solid bullet) Investing normally in municipal money market
securities.
(small solid bullet) Investing at least 65% of total assets in
municipal securities whose interest is exempt from California personal
income tax.
(small solid bullet) Investing so that at least 80% of the fund's
income distributions is exempt from federal income tax.
(small solid bullet) Potentially investing more than 25% of total
assets in municipal securities that finance similar types of projects.
(small solid bullet) Investing in compliance with industry-standard
requirements for money market funds for the quality, maturity and
diversification of investments.

PRINCIPAL INVESTMENT RISKS. The fund is subject to the following
principal investment risks:

(small solid bullet) MUNICIPAL MARKET VOLATILITY. The municipal
market is volatile and can be significantly affected by adverse tax,
legislative or political changes and the financial condition of the
issuers of municipal securities.
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a money market security to decrease.
(small solid bullet) FOREIGN EXPOSURE. Entities located in foreign
countries can be affected by adverse political, regulatory, market or
economic developments in those countries.
(small solid bullet) GEOGRAPHIC CONCENTRATION. Unfavorable political
or economic conditions within California can affect the credit quality
of issuers located in that state.
(small solid bullet) ISSUER-SPECIFIC CHANGES. A decline in the credit
quality of an issuer or the provider of credit support or a
maturity-shortening structure for a security can cause the price of a
money market security to decrease.

An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. Although the fund seeks to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in the fund.

INVESTMENT OBJECTIVE. Spartan California Municipal Money Market Fund
seeks as high a level of current income, exempt from federal income
tax and California state personal income tax, as is consistent with
the preservation of capital.

PRINCIPAL INVESTMENT STRATEGIES. FMR's principal investment
strategies include:

PRINCIPAL INVESTMENT RISKS. The fund is subject to the following
principal investment risks:

(small solid bullet) MUNICIPAL MARKET VOLATILITY. The municipal
market is volatile and can be significantly affected by adverse tax,
legislative or political changes and the financial condition of the
issuers of municipal securities.
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a money market security to decrease.
(small solid bullet) FOREIGN EXPOSURE. Entities located in foreign
countries can be affected by adverse political, regulatory, market or
economic developments in those countries.
(small solid bullet) GEOGRAPHIC CONCENTRATION. Unfavorable political
or economic conditions within California can affect the credit quality
of issuers located in that state.
(small solid bullet) ISSUER-SPECIFIC CHANGES. A decline in the
credit quality of an issuer or the provider of credit support or a
maturity-shortening structure for a security can cause the price of a
money market security to decrease.

INVESTMENT OBJECTIVE. Spartan California Municipal Income Fund seeks
a high level of current income, exempt from federal and California
state personal income tax.

PRINCIPAL INVESTMENT STRATEGIES. FMR's principal investment
strategies include:

(small solid bullet) Investing normally in investment-grade municipal
debt securities.
(small solid bullet) Investing so that at least 80% of the fund's
income distributions is exempt from federal and California personal
income taxes.
(small solid bullet) Potentially investing more than 25% of total
assets in municipal securities that finance similar types of projects.
(small solid bullet) Managing the fund to have similar overall
interest rate risk to the Lehman Brothers California Municipal Bond
Index.
(small solid bullet) Allocating assets across different market sectors
and maturities.
(small solid bullet) Analyzing a security's structural features,
current pricing and trading opportunities, and the credit quality of
its issuer in selecting investments.

PRINCIPAL INVESTMENT RISKS. The fund is subject to the following
principal investment risks:

(small solid bullet) MUNICIPAL MARKET VOLATILITY. The municipal
market is volatile and can be significantly affected by adverse tax,
legislative or political changes and the financial condition of the
issuers of municipal securities.
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.
(small solid bullet) GEOGRAPHIC CONCENTRATION. Unfavorable political
or economic conditions within California can affect the credit quality
of issuers located in that state.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.

In addition, the fund is considered non-diversified and can invest a
greater portion of assets in securities of individual issuers than a
diversified fund. As a result, changes in the market value of a single
issuer could cause greater fluctuations in share price than would
occur in a more diversified fund.

An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.

When you sell your shares of the fund, they could be worth more or
less than what you paid for them.

PERFORMANCE

The following information illustrates the changes in the funds'
performance from year to year and compares the bond fund's performance
to the performance of a market index, an additional index and an
average of the performance of similar funds over various periods of
time. Data for the index for Spartan California Municipal Income is
available only from June 30, 1993 to the present. Returns are based on
past results and are not an indication of future performance.

YEAR-BY-YEAR RETURNS

The returns in the chart do not include the effect of Spartan
California Municipal Money Market's account closeout fee. If the
effect of the fee was reflected, returns would be lower than those
shown.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL MONEY
MARKET

Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

% % % % % % % % % %

</TABLE>

Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: nil
Row: 3, Col: 1, Value: nil
Row: 4, Col: 1, Value: nil
Row: 5, Col: 1, Value: nil
Row: 6, Col: 1, Value: nil
Row: 7, Col: 1, Value: nil
Row: 8, Col: 1, Value: nil
Row: 9, Col: 1, Value: nil
Row: 10, Col: 1, Value: nil

DURING THE PERIODS SHOWN IN THE CHART FOR CALIFORNIA MUNICIPAL MONEY
MARKET, THE HIGHEST RETURN FOR A QUARTER WAS __% (QUARTER ENDING
[CALENDAR QUARTER], [MONTH] [DATE] [YEAR]) AND THE LOWEST RETURN FOR A
QUARTER WAS __% (QUARTER ENDING [CALENDAR QUARTER], [MONTH]
[DATE][YEAR]).

THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR CALIFORNIA MUNICIPAL
MONEY MARKET WAS __%.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SPARTAN CALIFORNIA MUNICIPAL
MONEY MARKET

Calendar Years 1990 1991 1992 1993 1994 1995 1996 1997 1998

% % % % % % % % %

</TABLE>

DURING THE PERIODS SHOWN IN THE CHART FOR SPARTAN CALIFORNIA MUNICIPAL
MONEY MARKET, THE HIGHEST RETURN FOR A QUARTER WAS __% (QUARTER ENDING
[CALENDAR QUARTER], [MONTH] [DATE][YEAR]) AND THE LOWEST RETURN FOR A
QUARTER WAS __% (QUARTER ENDING [CALENDAR QUARTER], [MONTH] [DATE]
[YEAR]).

THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR SPARTAN CALIFORNIA
MUNICIPAL MONEY MARKET
WAS __%.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SPARTAN CALIFORNIA MUNICIPAL
INCOME

Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

% % % % % % % % % %

</TABLE>

DURING THE PERIODS SHOWN IN THE CHART FOR SPARTAN CALIFORNIA MUNICIPAL
INCOME, THE HIGHEST RETURN FOR A QUARTER WAS __% (QUARTER ENDING
[CALENDAR QUARTER], [MONTH] [DATE][YEAR]) AND THE LOWEST RETURN FOR A
QUARTER WAS __% (QUARTER ENDING [CALENDAR QUARTER], [MONTH]
[DATE][YEAR]).

THE YEAR-TO-DATE RETURN AS OF MARCH 31, 1999 FOR SPARTAN CALIFORNIA
MUNICIPAL INCOME
WAS __%.

AVERAGE ANNUAL RETURNS

[The returns in the following table do not include the effect of the
$5 account closeout fee for Spartan California Municipal Money
Market.] [The returns in the following table include the effect of the
$5 account closeout fee based on average account size for Spartan
California Municipal Money Market.]

<TABLE>
<CAPTION>
<S> <C> <C> <C>
For the periods ended Past 1 year Past 5 years Past 10 years/Life of fund
December 31, 1998

CA Municipal Money % % %

Spartan CA Municipal Money % % %A,B

Spartan CA Municipal Income % % %

Lehman Bros. Muni. Bond Index % % %

Lehman Bros. CA Muni. Bond % % %
Index

Lipper CA Muni. Debt Funds Avg. % % %

</TABLE>

A Beginning January 1 of the first calendar year following the fund's
commencement of operations.

B From January 1, 1990.

[If FMR had not reimbursed certain fund expenses during these periods,
Spartan California Municipal Income's returns would have been lower.]

The Lehman Brothers Municipal Bond Index is a market value-weighted
index of investment-grade municipal bonds with maturities of one year
or more.

The Lehman Brothers California Municipal Bond Index is a market
value-weighted index of California investment-grade municipal bonds
with maturities of one year or more.

The Lipper Funds Average reflects the performance (excluding sales
charges) of mutual funds with similar objectives.

FEE TABLE

The following table describes the fees and expenses that are incurred
when you buy, hold or sell shares of a fund. [The annual fund
operating expenses provided below for [[the/each]fund/[Name(s) of
Fund(s)]] are based on historical expenses, adjusted to reflect
current fees.] [The annual fund operating expenses provided below for
Spartan California Municipal Income do not reflect the effect of any [
expense reimbursements] [or] reduction of certain expenses] during the
period.] [The annual fund operating expenses provided below for
[[the/each]fund/[Name(s) of Fund(s)]] are based on historical
expenses.]

SHAREHOLDER FEES (PAID BY THE INVESTOR DIRECTLY)

Sales charge (load) on None
purchases and reinvested
distributions

Deferred sales charge (load) None
on redemptions

Exchange fee for Spartan $5.00A,B
California Municipal Money
Market only

Wire transaction fee for $5.00 A
Spartan CA Municipal Money
Market only

Checkwriting fee, per check $2.00 A
written for Spartan CA
Municipal Money Market only

Account closeout fee for $5.00 A
Spartan CA Municipal Money
Market only

Annual account maintenance $12.00
fee (for accounts under
$2,500)

ATHE FEES FOR INDIVIDUAL TRANSACTIONS ARE WAIVED IF YOUR ACCOUNT
BALANCE AT THE TIME OF THE TRANSACTION IS $50,000 OR MORE.

BYOU WILL NOT PAY AN EXCHANGE FEE IF YOU EXCHANGE THROUGH ANY OF
FIDELITY'S AUTOMATED EXCHANGE SERVICES.

ANNUAL FUND OPERATING EXPENSES (PAID FROM FUND ASSETS)

CALIFORNIA MUNICIPAL MONEY Management fee %
MARKET

Distribution and Service None
(12b-1) fee

Other expenses %

Total annual fund operating %
expenses

SPARTAN CALIFORNIA MUNICIPAL Management fee %
MONEY MARKET

Distribution and Service None
(12b-1) fee

Other expenses %

Total annual fund operating %
expenses

SPARTAN CALIFORNIA MUNICIPAL Management fee %
INCOME

Distribution and Service None
(12b-1) fee

Other expenses %

Total annual fund operating %
expensesA

A Effective August 15, 1997, FMR has voluntarily agreed to reimburse
Spartan California Municipal Income to the extent that total operating
expenses (excluding interest, taxes, brokerage commissions, and
extraordinary expenses), as a percentage of its average net assets,
exceed 0.53%. This arrangement will remain in effect through December
31, 1999.

[A portion of the brokerage commissions that certain funds pay is used
to reduce each of those fund's expenses. In addition, on behalf of
Spartan California Municipal Money Market, FMR has entered into
arrangements with the fund's custodian and transfer agent whereby
credits realized as a result of uninvested cash balances are used to
reduce fund expenses. Each of California Municipal Money Market and
Spartan California Municipal Income has entered into arrangements with
its custodian and transfer agent whereby credits realized as a result
of uninvested cash balances are used to reduce custodian and transfer
agent expenses. Including [these/this] reduction[s], the total fund
operating expenses[, after reimbursement[for [Name(s) of fund(s) in
reimbursement]],] would have been __% for [Fund Name] and __% for
[Fund Name].]

This EXAMPLE helps you compare the cost of investing in the funds with
the cost of investing in other mutual funds.

Let's say, hypothetically, that each fund's annual return is 5% and
that your shareholder fees and each fund's annual operating expenses
are exactly as described in the fee table. This example illustrates
the effect of fees and expenses, but is not meant to suggest actual or
expected fees and expenses or returns, all of which may vary. For
every $10,000 you invested, here's how much you would pay in total
expenses if you close your account after the number of years indicated
and if you leave your account open:

Account open Account closed

CALIFORNIA MUNICIPAL MONEY 1 year $ $
MARKET

3 years $ $

5 years $ $

10 years $ $

SPARTAN CALIFORNIA MUNICIPAL 1 year $ $
MONEY MARKET

3 years $ $

5 years $ $

10 years $ $

SPARTAN CALIFORNIA MUNICIPAL 1 year $ $
INCOME FUND

3 years $ $

5 years $ $

10 years $ $

FUND BASICS

INVESTMENT DETAILS

INVESTMENT OBJECTIVE:

CALIFORNIA MUNICIPAL MONEY MARKET FUND seeks as high a level of
current income, exempt from federal and California state personal
income tax, as is consistent with the preservation of capital.

PRINCIPAL INVESTMENT STRATEGIES:

FMR normally invests the fund's assets in municipal money market
securities.

FMR normally invests at least 65% of the fund's total assets in
municipal securities whose interest is exempt from California personal
income tax and invests the fund's assets so that at least 80% of the
fund's income distributions is exempt from federal income tax.
Municipal securities whose interest is exempt from federal and
California income taxes include securities issued by U.S. territories
and possessions, such as Guam, the Virgin Islands and Puerto Rico, and
their political subdivisions and public corporations.

FMR may invest the fund's assets in municipal securities whose
interest is subject to California personal income tax. Although FMR
does not currently intend to invest the fund's assets in municipal
securities whose interest is subject to federal income tax, FMR may
invest all of the fund's assets in municipal securities whose interest
is subject to the federal alternative minimum tax.

FMR may invest more than 25% of the fund's total assets in municipal
securities that finance similar projects, such as those relating to
education, health care, housing, transportation and utilities.

In buying and selling securities for the fund, FMR complies with
industry-standard requirements for money market funds regarding the
quality, maturity and diversification of the fund's investments. FMR
stresses maintaining a stable $1.00 share price, liquidity and income.

INVESTMENT OBJECTIVE:

PRINCIPAL INVESTMENT STRATEGIES:

FMR normally invests the fund's assets in municipal money market
securities.

FMR may invest more than 25% of the fund's total assets in municipal
securities that finance similar projects, such as those relating to
education, health care, housing, transportation and utilities.
In buying and selling securities for the fund, FMR complies with
industry-standard requirements for money market funds regarding the
quality, maturity and diversification of the fund's investments. FMR
stresses maintaining a stable $1.00 share price, liquidity and income.

INVESTMENT OBJECTIVE:

SPARTAN CALIFORNIA MUNICIPAL INCOME FUND seeks a high level of current
income, exempt from federal and California state personal income tax.

PRINCIPAL INVESTMENT STRATEGIES:

FMR normally invests the fund's assets in investment-grade municipal
debt securities.

FMR normally invests the fund's assets so that at least 80% of the
fund's income distributions is exempt from federal and California
personal income taxes. Municipal securities whose interest is exempt
from federal and California income taxes include securities issued by
U.S. territories and possessions, such as Guam, the Virgin Islands and
Puerto Rico, and their political subdivisions and public corporations.

FMR may invest more than 25% of the fund's total assets in municipal
securities that finance similar projects, such as those relating to
education, health care, housing, transportation and utilities.

FMR uses the Lehman Brothers California Municipal Bond Index as a
guide in structuring the fund and selecting its investments. FMR
manages the fund to have similar overall interest rate risk to the
index. As of February 28, 1999, the dollar-weighted average maturity
of the fund and the index was approximately __ and __ years,
respectively.

FMR allocates the fund's assets among different market sectors (for
example, general obligation bonds of a state or bonds financing a
specific project) and different maturities based on its view of the
relative value of each sector and maturity.

Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.

In buying and selling securities for the fund, FMR analyzes a
security's structural features, current price compared to its
estimated long-term value, and any short-term trading opportunities
resulting from market inefficiencies, and the credit quality of its
issuer.

FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices, interest rates or other factors that affect security
values. If FMR's strategies do not work as intended, the fund may not
achieve its objective.

DESCRIPTION OF PRINCIPAL SECURITY TYPES:

MONEY MARKET SECURITIES are high-quality, short-term debt securities
that pay a fixed, variable or floating interest rate. Securities are
often specifically structured so that they are eligible investments
for a money market fund. For example, in order to satisfy the
maturity restrictions for a money market fund, some money market
securities have demand or put features which have the effect of
shortening the security's maturity. Municipal money market securities
include variable rate demand notes, commercial paper and municipal
notes.

DEBT SECURITIES are used by issuers to borrow money. The issuer
usually pays a fixed, variable or floating rate of interest, and must
repay the amount borrowed at the maturity of the security. Some debt
securities, such as zero coupon bonds, do not pay current interest,
but are sold at a discount from their face values. Municipal debt
securities include general obligation bonds of municipalities, local
or state governments, project or revenue-specific bonds, or
pre-refunded or escrowed bonds.

MUNICIPAL SECURITIES are issued to raise money for a variety of public
and private purposes, including general financing for state and local
governments, or financing for a specific project or public facility.
Municipal securities may be fully or partially backed by the local
government, by the credit of a private issuer, by the current or
anticipated revenues from a specific project or specific assets, or by
domestic or foreign entities providing credit support such as letters
of credit, guarantees or insurance.

PRINCIPAL INVESTMENT RISKS:

Many factors affect each fund's performance. Because FMR concentrates
each fund's investments in California the fund's performance is
expected to be closely tied to economic and political conditions
within that state and to be more volatile than the performance of a
more geographically diversified fund.

The money market funds' yields will change daily based on interest
rates and other market conditions. Although each fund is managed to
maintain a stable $1.00 share price, there is no guarantee that the
fund will be able to do so. For example, a major increase in interest
rates or a decrease in the credit quality of the issuer of one of a
fund's investments could cause the fund's share price to decrease.
While the funds will be charged premiums by a mutual insurance company
for coverage of specified types of losses related to default or
bankruptcy on certain securities, a fund may incur losses regardless
of the insurance.

The bond fund's yield and share price change daily based on changes in
interest rates and market conditions and in response to other
economic, political or financial developments. The fund's reaction to
these events will be affected by the types and maturities of the
securities in which the fund invests and the financial condition,
industry and economic sector, and geographic location of an issuer and
the fund's level of investment in the securities of that issuer. When
you sell your shares of a fund, they could be worth more or less than
what you paid for them.

The following factors may significantly affect a fund's performance:

MUNICIPAL MARKET VOLATILITY. Municipal securities can be
significantly affected by political changes as well as uncertainties
in the municipal market related to taxation, legislative changes, or
the rights of municipal security holders. Because many municipal
securities are issued to finance similar projects, especially those
relating to education, health care, transportation and utilities,
conditions in those sectors can affect the overall municipal market.
In addition, changes in the financial condition of an individual
municipal insurer can affect the overall municipal market.

INTEREST RATE CHANGES. Debt and money market securities have varying
levels of sensitivity to changes in interest rates. In general, the
price of a debt or money market security can fall when interest rates
rise and can rise when interest rates fall. Securities with longer
maturities can be more sensitive to interest rate changes. In other
words, the longer the maturity of a security, the greater the impact a
change in interest rates could have on the security's price. In
addition, short-term and long-term interest rates do not necessarily
move in the same amount or the same direction. Short-term securities
tend to react to changes in short-term interest rates, and long-term
securities tend to react to changes in long-term interest rates.

FOREIGN EXPOSURE. Entities located in foreign countries that provide
credit support or a maturity-shortening structure can involve
increased risks. Extensive public information about the issuer may not
be available and unfavorable political, economic or governmental
developments could affect the value of the security.

GEOGRAPHIC CONCENTRATION. California suffered a severe economic
recession between 1990-1993 which resulted in revenue shortfalls for
the State and many local governments.

ISSUER-SPECIFIC CHANGES. Changes in the financial condition of an
issuer, changes in specific economic or political conditions that
affect a particular type of issuer, and changes in general economic or
political conditions can affect the credit quality or value of an
issuer's securities. Lower-quality debt securities (those of less than
investment-grade quality) tend to be more sensitive to these changes
than higher-quality debt securities. Entities providing credit support
or a maturity-shortening structure also can be affected by these types
of changes. Municipal securities backed by current or anticipated
revenues from a specific project or specific assets can be negatively
affected by the discontinuance of the taxation supporting the project
or assets or the inability to collect revenues for the project or from
the assets. If the Internal Revenue Service determines an issuer of a
municipal security has not complied with applicable tax requirements,
interest from the security could become taxable and the security could
decline significantly in value. In addition, if the structure of a
security fails to function as intended, interest from the security
could become taxable or the security could decline in value.

In response to market, economic, political or other conditions, FMR
may temporarily use a different investment strategy for defensive
purposes. If FMR does so, different factors could affect a fund's
performance, and a fund may distribute income subject to federal or
California state personal income tax.

FUNDAMENTAL INVESTMENT POLICIES

The policies discussed below are fundamental, that is, subject to
change only by shareholder approval.

CALIFORNIA MUNICIPAL MONEY MARKET FUND seeks as high a level of
current income, exempt from federal and California state personal
income tax, as is consistent with the preservation of capital. The
fund will normally invest so that at least 80% of its income
distributions are free from federal income tax.

SPARTAN CALIFORNIA MUNICIPAL MONEY MARKET FUND seeks as high a level
of current income, exempt from federal income tax and California state
personal income tax, as is consistent with the preservation of capital
by investing in high-quality, short-term California municipal
obligations. The fund will normally invest so that at least 80% of its
income distributions are exempt from federal income tax.

SPARTAN CALIFORNIA MUNICIPAL INCOME FUND seeks as high a level of
current income, exempt from federal and California state personal
income tax, available from investing primarily in municipal securities
judged by FMR to be of investment-grade quality. The fund may invest
up to one-third of its assets in lower-quality bonds, but may not
purchase bonds that are judged by FMR to be equivalent quality to
those rated lower than B. The fund will normally invest so that at
least 80% of its income distributions are exempt from federal and
California state personal income taxes. During periods when FMR
believes that California municipals that meet the fund's standard are
not available, the fund may temporarily invest more than 20% of its
assets in obligations that are only federally tax-exempt.

VALUING SHARES

Each fund is open for business each day the New York Stock Exchange
(NYSE) is open.

Each fund's net asset value per share (NAV) is the value of a single
share. Fidelity(registered trademark) normally calculates each fund's
NAV as of the close of business of the NYSE, normally 4:00 p.m.
Eastern time. However, NAV may be calculated earlier if trading on the
NYSE is restricted or as permitted by the Securities and Exchange
Commission (SEC). Each fund's assets are valued as of this time for
the purpose of computing the fund's NAV.

To the extent that each fund's assets are traded in other markets on
days when the NYSE is closed, the value of the fund's assets may be
affected on days when the fund is not open for business. In addition,
trading in some of a fund's assets may not occur on days when the fund
is open for business.

Each money market fund's assets are valued on the basis of amortized
cost.

The bond fund's assets are valued primarily on the basis of
information furnished by a pricing service or market quotations. If
market quotations or information furnished by a pricing service is not
readily available for a security or if a security's value has been
materially affected by events occurring after the close of the
exchange or market on which the security is principally traded, that
security may be valued by another method that the Board of Trustees
believes accurately reflects fair value. A security's valuation may
differ depending on the method used for determining value.

SHAREHOLDER INFORMATION

BUYING AND SELLING SHARES

GENERAL INFORMATION

Fidelity Investments(registered trademark) was established in 1946 to
manage one of America's first mutual funds. Today, Fidelity is the
largest mutual fund company in the country, and is known as an
innovative provider of high-quality financial services to individuals
and institutions.

In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage
Services, Inc. (FBSI). Fidelity is also a leader in providing
tax-advantaged retirement plans for individuals investing on their own
or through their employer.

For account, product and service information, please use the following
Web site and phone numbers:

(small solid bullet) For information over the Internet, visit
Fidelity's Web site at www.fidelity.com.

(small solid bullet) For accessing account information automatically
by phone, use TouchTone Xpress(registered trademark), 1-800-544-5555.

(small solid bullet) For exchanges and redemptions, 1-800-544-7777.

(small solid bullet) For account assistance, 1-800-544-6666.

(small solid bullet) For mutual fund and retirement information,
1-800-544-8888.

(small solid bullet) For brokerage information, 1-800-544-7272.

(small solid bullet) TDD - Service for the Deaf and Hearing-Impaired,
1-800-544-0118 (9:00 a.m. - 9:00 p.m. Eastern time).

Please use the following addresses:

BUYING SHARES

Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002

OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048

SELLING SHARES

Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602

OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75039-5517

You may buy or sell shares of the funds through an investment
professional. If you invest through an investment professional, the
procedures for buying, selling and exchanging shares of a fund and the
account features and policies may differ. Additional fees may also
apply to your investment in a fund, including a transaction fee if you
buy or sell shares of the fund through a broker or other investment
professional.

Certain methods of contacting Fidelity, such as by telephone or
electronically, may be unavailable or delayed (for example, during
periods of unusual market activity). In addition, the level and type
of service available may be restricted based on criteria established
by Fidelity.

The different ways to set up (register) your account with Fidelity are
listed in the following table.

WAYS TO SET UP YOUR ACCOUNT

INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS

GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS

TRUST
FOR MONEY BEING INVESTED BY A TRUST

BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS OR
OTHER GROUPS

BUYING SHARES

The price to buy one share of each fund is the fund's NAV. Each fund's
shares are sold without a sales charge.

Your shares will be bought at the next NAV calculated after your
investment is received in proper form.

Short-term or excessive trading into and out of a fund may harm
performance by disrupting portfolio management strategies and by
increasing expenses. Accordingly, a fund may reject any purchase
orders, including exchanges, particularly from market timers or
investors who, in FMR's opinion, have a pattern of short-term or
excessive trading or whose trading has been or may be disruptive to
that fund. For these purposes, FMR may consider an investor's trading
history in that fund or other Fidelity funds, and accounts under
common ownership or control.

Each fund may stop offering shares completely or may offer shares only
on a limited basis, for a period of time or permanently.

When you place an order to buy shares, note the following:

(small solid bullet) All of your purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.

(small solid bullet) Fidelity does not accept cash.

(small solid bullet) When making a purchase with more than one check,
each check must have a value of at least $50.

(small solid bullet) Fidelity reserves the right to limit the number
of checks processed at one time.

(small solid bullet) If your check does not clear, your purchase will
be canceled and you could be liable for any losses or fees a fund or
Fidelity has incurred.

Certain financial institutions that have entered into sales agreements
with Fidelity Distributors Corporation (FDC) may enter confirmed
purchase orders on behalf of customers by phone, with payment to
follow no later than the time when a fund is priced on the following
business day. If payment is not received by that time, the order will
be canceled and the financial institution could be held liable for
resulting fees or losses.

MINIMUMS

TO OPEN AN ACCOUNT

for California Municipal Money Market $5,000

for Spartan CA Municipal Money Market $25,000

for Spartan California Municipal Income $10,00

TO ADD TO AN ACCOUNT

for California Municipal Money Market $250

Through regular investment plans $100

for Spartan CA Municipal Money Market $1,000

Through regular investment plans $500

for Spartan California Municipal Income $1,000

Through regular investment plans $500

MINIMUM BALANCE

for California Municipal Money Market $2,000

for Spartan CA Municipal Money Market $10,000

for Spartan California Municipal Income $5,000

There is no minimum account balance or initial or subsequent purchase
minimum for investments through Fidelity Portfolio Advisory ServicesSM
or a qualified state tuition program.

In addition, each fund may waive or lower purchase minimums in other
circumstances.

KEY INFORMATION

PHONE 1-800-544-7777 TO OPEN AN ACCOUNT
(small solid bullet)Exchange
from another Fidelity fund.
TO ADD TO AN ACCOUNT
(small solid bullet)Exchange
from another Fidelity fund.
(small solid bullet)Use
Fidelity Money
Line(registered trademark)
to transfer from your bank
account.

INTERNET WWW.FIDELITY.COM TO OPEN AN ACCOUNT
(small solid bullet)Complete
and sign the application.
Make your check payable to
the complete name of the
fund. Mail to the address
under "Mail" below.
TO ADD TO AN ACCOUNT
(small solid bullet)Exchange
from another Fidelity fund.
(small solid bullet)Use
Fidelity Money Line to
transfer from your bank
account.

MAIL FIDELITY INVESTMENTS TO OPEN AN ACCOUNT
P.O. BOX 770001 CINCINNATI, (small solid bullet)Complete
OH 45277-0002 and sign the application.
Make your check payable to
the complete name of the
fund. Mail to the address at
left.
TO ADD TO AN ACCOUNT
(small solid bullet)Make your
check payable to the
complete name of the fund.
Indicate your fund account
number on your check and
mail to the address at left.
(small solid bullet)Exchange
from another Fidelity fund.
Send a letter of instruction
to the address at left,
including your name, the
funds' names, the fund
account numbers, and the
dollar amount or number of
shares to be exchanged.

IN PERSON TO OPEN AN ACCOUNT
(small solid bullet)Bring
your application and check
to a Fidelity Investor
Center. Call 1-800-544-9797
for the center nearest you.
TO ADD TO AN ACCOUNT
(small solid bullet)Bring
your check to a Fidelity
Investor Center. Call
1-800-544-9797 for the
center nearest you.

WIRE TO OPEN AN ACCOUNT
(small solid bullet)Call
1-800-544-7777 to set up
your account and to arrange
a wire transaction.
(small solid bullet)Wire
within 24 hours to: Bankers
Trust Company, Bank Routing
# 021001033, Account #
00163053.
(small solid bullet)Specify
the complete name of the
fund and include your new
fund account number and your
name.
TO ADD TO AN ACCOUNT
(small solid bullet)Wire to:
Bankers Trust Company, Bank
Routing # 021001033, Account
# 00163053.
(small solid bullet)Specify
the complete name of the
fund and include your fund
account number and your name.

AUTOMATICALLY TO OPEN AN ACCOUNT
(small solid bullet)Not
available.
TO ADD TO AN ACCOUNT
(small solid bullet)Use
Fidelity Automatic Account
Builder(registered
trademark) or Direct Deposit.
(small solid bullet)Use
Fidelity Automatic Exchange
Service to exchange from a
Fidelity money market fund.

SELLING SHARES

The price to sell one share of each fund is the fund's NAV.

Your shares will be sold at the next NAV calculated after your order
is received in proper form.

Certain requests must include a signature guarantee. It is designed to
protect you and Fidelity from fraud. Your request must be made in
writing and include a signature guarantee if any of the following
situations apply:

(small solid bullet) You wish to sell more than $100,000 worth of
shares;

(small solid bullet) Your account registration has changed within the
last 30 days;

(small solid bullet) The check is being mailed to a different address
than the one on your account (record address);

(small solid bullet) The check is being made payable to someone other
than the account owner; or

(small solid bullet) The redemption proceeds are being transferred to
a Fidelity account with a different registration.

You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if
authorized under state law), securities exchange or association,
clearing agency, or savings association. A notary public cannot
provide a signature guarantee.

When you place an order to sell shares, note the following:

(small solid bullet) If you are selling some but not all of your
California Municipal Money Market shares, leave at least $2,000 worth
of shares in the account to keep it open, except accounts not subject
to account minimums. If you are selling some but not all of your
Spartan California Municipal Money Market shares, leave at least
$10,000 worth of shares in the account to keep it open, except
accounts not subject to account minimums. If you are selling some but
not all of your Spartan California Municipal Income shares, leave at
least $5,000 worth of shares in the account to keep it open, except
accounts not subject to account minimums.

(small solid bullet) Normally, Fidelity will process redemptions by
the next business day, but Fidelity may take up to seven days to
process redemptions if making immediate payment would adversely affect
a fund.

(small solid bullet) Redemption proceeds (other than exchanges) may be
delayed until money from prior purchases sufficient to cover your
redemption has been received and collected. This can take up to seven
business days after a purchase.

(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.

(small solid bullet) Redemption proceeds may be paid in securities or
other assets rather than in cash if the Board of Trustees determines
it is in the best interests of a fund.

(small solid bullet) If you sell shares by writing a check and the
amount of the check is greater than the value of your account, your
check will be returned to you and you may be subject to additional
charges.

(small solid bullet) You will not receive interest on amounts
represented by uncashed redemption checks.

(small solid bullet) Unless otherwise instructed, Fidelity will send a
check to the record address.

KEY INFORMATION

PHONE 1-800-544-7777 (small solid bullet) Call the
phone number at left to
initiate a wire transaction
or to request a check for
your redemption.
(small solid bullet) Use
Fidelity Money Line to
transfer to your bank account.
(small solid bullet) Exchange
to another Fidelity fund.
Call the phone number at left.

INTERNET WWW.FIDELITY.COM (small solid bullet)Exchange
to another Fidelity fund.
(small solid bullet)Use
Fidelity Money Line to
transfer to your bank account.

MAIL FIDELITY INVESTMENTS INDIVIDUAL, JOINT TENANT,
P.O. BOX 660602 DALLAS, TX SOLE PROPRIETORSHIP, UGMA,
75266-0602 UTMA
(small solid bullet) Send a
letter of instruction to the
address at left, including
your name, the fund's name,
your fund account number,
and the dollar amount or
number of shares to be sold.
The letter of instruction
must be signed by all
persons required to sign for
transactions, exactly as
their names appear on the
account.

TRUST
(small solid bullet) Send a
letter of instruction to the
address at left, including
the trust's name, the fund's
name, the trust's fund
account number, and the
dollar amount or number of
shares to be sold. The
trustee must sign the letter
of instruction indicating
capacity as trustee. If the
trustee's name is not in the
account registration,
provide a copy of the trust
document certified within
the last 60 days.

BUSINESS OR ORGANIZATION
(small solid bullet) Send a
letter of instruction to the
address at left, including
the firm's name, the fund's
name, the firm's fund
account number, and the
dollar amount or number of
shares to be sold. At least
one person authorized by
corporate resolution to act
on the account must sign the
letter of instruction.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.

EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid bullet) Call
1-800-544-6666 for
instructions.

IN PERSON INDIVIDUAL, JOINT TENANT,
SOLE PROPRIETORSHIP, UGMA,
UTMA
(small solid bullet) Bring a
letter of instruction to a
Fidelity Investor Center.
Call 1-800-544-9797 for the
center nearest you. The
letter of instruction must
be signed by all persons
required to sign for
transactions, exactly as
their names appear on the
account.

TRUST
(small solid bullet) Bring a
letter of instruction to a
Fidelity Investor Center.
Call 1-800-544-9797 for the
center nearest you. The
trustee must sign the letter
of instruction indicating
capacity as trustee. If the
trustee's name is not in the
account registration,
provide a copy of the trust
document certified within
the last 60 days.

BUSINESS OR ORGANIZATION
(small solid bullet) Bring a
letter of instruction to a
Fidelity Investor Center.
Call 1-800-544-9797 for the
center nearest you. At least
one person authorized by
corporate resolution to act
on the account must sign the
letter of instruction.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.

EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid bullet) Visit a
Fidelity Investor Center for
instructions. Call
1-800-544-9797 for the
center nearest you.

AUTOMATICALLY (small solid bullet) Use
Fidelity Automatic Exchange
Service to exchange from
California Municipal Money
Market to another Fidelity
fund.
(small solid bullet)Use
Personal Withdrawal Service
to set up periodic
redemptions from your bond
fund account.

CHECK (small solid bullet) Write a
check to sell shares from
your account.

EXCHANGING SHARES

An exchange involves the redemption of all or a portion of the shares
of one fund and the purchase of shares of another fund.

As a shareholder, you have the privilege of exchanging shares of a
fund for shares of other Fidelity funds.

However, you should note the following policies and restrictions
governing exchanges:

(small solid bullet) The fund you are exchanging into must be
available for sale in your state.

(small solid bullet) You may exchange only between accounts that are
registered in the same name, address, and taxpayer identification
number.

(small solid bullet) Before exchanging into a fund, read its
prospectus.

(small solid bullet) You may pay a $5.00 fee for each exchange out of
Spartan California Municipal Money Market, unless you place your
transaction through Fidelity's automated exchange services.

(small solid bullet) Exchanges may have tax consequences for you.

(small solid bullet) Currently, there is no limit on the number of
exchanges out of California Municipal Money Market.

(small solid bullet) Spartan California Municipal Money Market and
Spartan California Municipal Income may temporarily or permanently
terminate the exchange privilege of any investor who makes more than
four exchanges out of the fund per calendar year.

(small solid bullet) Each fund may refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to
invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.

The funds may terminate or modify the exchange privileges in the
future.

Other funds may have different exchange restrictions, and may impose
administrative fees of up to 1.00% and trading fees of up to 3.00% of
the amount exchanged. Check each fund's prospectus for details.

ACCOUNT FEATURES AND POLICIES

FEATURES

The following features are available to buy and sell shares of the
funds.

AUTOMATIC INVESTMENT AND WITHDRAWAL PROGRAMS. Fidelity offers
convenient services that let you automatically transfer money into
your account, between accounts or out of your account. While automatic
investment programs do not guarantee a profit and will not protect you
against loss in a declining market, they can be an excellent way to
invest for retirement, a home, educational expenses, and other
long-term financial goals. Automatic withdrawal or exchange programs
can be a convenient way to provide a consistent income flow or to move
money between your investments.

<TABLE>
<CAPTION>
<S> <C> <C>
FIDELITY AUTOMATIC ACCOUNT
BUILDER TO MOVE MONEY FROM
YOUR BANK ACCOUNT TO A
FIDELITY FUND.

MINIMUM FREQUENCY PROCEDURES
$100 for CA Municipal Money Monthly or quarterly (small solid bullet) To set
Market. $500 for Spartan CA up for a new account,
Municipal Money Market and complete the appropriate
Spartan CA Municipal Income section on the fund
application.
(small solid bullet) To set
up for existing accounts,
call 1-800-544-6666 or visit
Fidelity's Web site for an
application.
(small solid bullet) To make
changes, call 1-800-544-6666
at least three business days
prior to your next scheduled
investment date.

DIRECT DEPOSIT TO SEND ALL OR
A PORTION OF YOUR PAYCHECK
OR GOVERNMENT CHECK TO A
FIDELITY FUND.A

MINIMUM FREQUENCY PROCEDURES
$100 for CA Municipal Money Every pay period (small solid bullet) To set
Market. $500 for Spartan CA up for a new account, check
Municipal Money Market and the appropriate box on the
Spartan CA Municipal Income fund application.
(small solid bullet) To set
up for an existing account,
call 1-800-544-6666 or visit
Fidelity's Web site for an
authorization form.
(small solid bullet) To make
changes you will need a new
authorization form. Call
1-800-544-6666 or visit
Fidelity's Web site to
obtain one.

A BECAUSE BOND FUND SHARE
PRICES FLUCTUATE, THAT FUND
MAY NOT BE AN APPROPRIATE
CHOICE FOR DIRECT DEPOSIT OF
YOUR ENTIRE CHECK.

FIDELITY AUTOMATIC EXCHANGE
SERVICE TO MOVE MONEY FROM A
FIDELITY MONEY MARKET FUND
TO ANOTHER FIDELITY FUND.

MINIMUM FREQUENCY PROCEDURES
$100 for CA Municipal Money Monthly, bimonthly, (small solid bullet) To set
Market. $500 for Spartan CA quarterly, or annually up, call 1-800-544-6666
Municipal Money Market and after both accounts are
Spartan CA Municipal Income opened.
(small solid bullet) To make
changes, call 1-800-544-6666
at least three business days
prior to your next scheduled
exchange date.

</TABLE>

PERSONAL WITHDRAWAL SERVICE
TO SET UP PERIODIC
REDEMPTIONS FROM YOUR BOND
FUND ACCOUNT TO YOU OR TO
YOUR BANK ACCOUNT.

FREQUENCY PROCEDURES
Monthly (small solid bullet) To set
up, call 1-800-544-6666.
(small solid bullet) To make
changes, call Fidelity at
1-800-544-6666 at least
three business days prior to
your next scheduled
withdrawal date.

OTHER FEATURES. The following other features are also available to buy
and sell shares of the funds.

WIRE
TO PURCHASE AND SELL SHARES VIA THE FEDERAL RESERVE WIRE SYSTEM.

(small solid bullet) You must sign up for the Wire feature before
using it. Complete the appropriate section on the application when
opening your account, or call 1-800-544-7777 to add the feature after
your account is opened. Call 1-800-544-7777 before your first use to
verify that this feature is set up on your account.

(small solid bullet) To sell shares by wire, you must designate the
U.S. commercial bank account(s) into which you wish the redemption
proceeds deposited.

(small solid bullet) There may be a $5.00 fee for each wire purchase
for Spartan California Municipal Money Market.

(small solid bullet) There may be a $5.00 fee for each wire redemption
for Spartan California Municipal Money Market.

FIDELITY MONEY LINE
TO TRANSFER MONEY BY PHONE BETWEEN YOUR BANK ACCOUNT AND YOUR FUND
ACCOUNT.

(small solid bullet) You must sign up for the Money Line feature
before using it. Complete the appropriate section on the application
and then call 1-800-544-7777 or visit Fidelity's Web site before your
first use to verify that this feature is set up on your account.

(small solid bullet) Most transfers are complete within three business
days of your call.

(small solid bullet) Maximum purchase: $100,000

FIDELITY ON-LINE XPRESS+(registered trademark)
TO MANAGE YOUR INVESTMENTS THROUGH YOUR PC.

CALL 1-800-544-7272 OR VISIT FIDELITY'S WEB SITE FOR MORE INFORMATION.

(small solid bullet) For account balances and holdings;

(small solid bullet) To review recent account history;

(small solid bullet) For mutual fund and brokerage trading; and

(small solid bullet) For access to research and analysis tools.

FIDELITY WEB XPRESS(registered trademark)
TO ACCESS AND MANAGE YOUR ACCOUNT OVER THE INTERNET AT FIDELITY'S WEB
SITE.

(small solid bullet) For account balances and holdings;

(small solid bullet) To review recent account history;

(small solid bullet) To obtain quotes;

(small solid bullet) For mutual fund and brokerage trading; and

(small solid bullet) To access third-party research on companies,
stocks, mutual funds and the market.

TOUCHTONE XPRESS(registered trademark)
TO ACCESS AND MANAGE YOUR ACCOUNT AUTOMATICALLY BY PHONE.

CALL 1-800-544-5555.

(small solid bullet) For account balances and holdings;

(small solid bullet) For mutual fund and brokerage trading;

(small solid bullet) To obtain quotes;

(small solid bullet) To review orders and mutual fund activity; and

(small solid bullet) To change your personal identification number
(PIN).

CHECKWRITING
TO REDEEM SHARES FROM YOUR ACCOUNT.

(small solid bullet) To set up, complete the appropriate section on
the application.

(small solid bullet) All account owners must sign a signature card to
receive a checkbook.

(small solid bullet) You may write an unlimited number of checks.

(small solid bullet) Minimum check amount: $500.

(small solid bullet) Do not try to close out your account by check.

(small solid bullet) To obtain more checks, call Fidelity at
1-800-544-6666.

POLICIES

The following policies apply to you as a shareholder.

STATEMENTS AND REPORTS that Fidelity sends to you include the
following:

(small solid bullet) Confirmation statements (after transactions
affecting your account balance except reinvestment of distributions in
the fund or another fund and certain transactions through automatic
investment or withdrawal programs).

(small solid bullet) Monthly or quarterly account statements
(detailing account balances and all transactions completed during the
prior month or quarter).

(small solid bullet) Financial reports (every six months).

To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed to your household, even if you have more
than one account in a fund. Call Fidelity at 1-800-544-8544 if you
need additional copies of financial reports or prospectuses.

Electronic copies of most financial reports and prospectuses are
available at Fidelity's Web site. To participate in Fidelity's
electronic delivery program, call Fidelity or visit Fidelity's Web
site for more information.

You may initiate many TRANSACTIONS BY TELEPHONE OR ELECTRONICALLY.
Fidelity will not be responsible for any losses resulting from
unauthorized transactions if it follows reasonable security procedures
designed to verify the identity of the investor. Fidelity will request
personalized security codes or other information, and may also record
calls. For transactions conducted through the Internet, Fidelity
recommends the use of an Internet browser with 128-bit encryption. You
should verify the accuracy of your confirmation statements immediately
after you receive them. If you do not want the ability to sell and
exchange by telephone, call Fidelity for instructions.

When you sign your ACCOUNT APPLICATION, you will be asked to certify
that your social security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding for failing to
report income to the IRS. If you violate IRS regulations, the IRS can
require a fund to withhold 31% of your taxable distributions and
redemptions.

Fidelity may deduct an ANNUAL MAINTENANCE FEE of $12.00 from accounts
with a value of less than $2,500, subject to an annual maximum charge
of $24.00 per shareholder. It is expected that accounts will be valued
on the second Friday in November of each year. Accounts opened after
September 30 will not be subject to the fee for that year. The fee,
which is payable to Fidelity, is designed to offset in part the
relatively higher costs of servicing smaller accounts. This fee will
not be deducted from Fidelity brokerage accounts, retirement accounts
(except non-prototype retirement accounts), accounts using regular
investment plans, or if total assets with Fidelity exceed $30,000.
Eligibility for the $30,000 waiver is determined by aggregating
accounts with Fidelity maintained by Fidelity Service Company, Inc. or
FBSI which are registered under the same social security number or
which list the same social security number for the custodian of a
Uniform Gifts/Transfers to Minors Act account.

If your ACCOUNT BALANCE falls below $2,000 for California Municipal
Money Market or $10,000 for Spartan California Municipal Money Market
or $5,000 for Spartan California Municipal Income (except accounts not
subject to account minimums), you will be given 30 days' notice to
reestablish the minimum balance. If you do not increase your balance,
Fidelity may close your account and send the proceeds to you. Your
shares will be sold at the NAV on the day your account is closed and,
for Spartan California Municipal Money Market, the $5.00 account
closeout fee will be charged.

The FEES FOR INDIVIDUAL TRANSACTIONS are waived if your account
balance at the time of the transaction is $50,000 or more. Otherwise,
you should note the following:

(small solid bullet) The $2.00 checkwriting fee will be deducted from
your account.

(small solid bullet) The $5.00 exchange fee will be deducted from the
amount of your exchange.

(small solid bullet) The $5.00 wire transaction fee will be deducted
from the amount of your wire.

(small solid bullet) The $5.00 account closeout fee does not apply to
exchanges or wires.

Fidelity may charge a FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS

Each fund earns interest, dividends and other income from its
investments, and distributes this income (less expenses) to
shareholders as dividends. Each fund may also realize capital gains
from its investments, and distributes these gains (less losses), if
any, to shareholders as capital gains distributions.

The bond fund normally declares dividends daily and pays them monthly.
The bond fund normally pays capital gains distributions in April and
December.

Distributions you receive from each money market fund consist
primarily of dividends. Each money market fund normally declares
dividends daily and pays them monthly.

EARNING DIVIDENDS

Shares begin to earn dividends on the first business day following the
day of purchase.

Shares earn dividends until, but not including, the next business day
following the day of redemption.

DISTRIBUTION OPTIONS

When you open an account, specify on your application how you want to
receive your distributions. The following options may be available for
each fund's distributions:

1. REINVESTMENT OPTION. Your dividends and capital gains
distributions, if any, will be automatically reinvested in additional
shares of the fund. If you do not indicate a choice on your
application, you will be assigned this option.

2. INCOME-EARNED OPTION. (bond fund only) Your capital gains
distributions will be automatically reinvested in additional shares of
the fund. Your dividends will be paid in cash.

3. CASH OPTION. Your dividends and capital gains distributions, if
any, will be paid in cash.

4. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividends
will be automatically invested in shares of another identically
registered Fidelity fund. Your capital gains distributions, if any,
will be automatically invested in shares of another identically
registered Fidelity fund, automatically reinvested in additional
shares of the fund, or paid in cash.

Not all distribution options are available for every account. If the
option you prefer is not listed on your account application, or if you
want to change your current option, call Fidelity.

If you elect to receive distributions paid in cash by check and the
U.S. Postal Service does not deliver your checks, your distribution
option may be converted to the Reinvestment Option. You will not
receive interest on amounts represented by uncashed distribution
checks.

TAX CONSEQUENCES

As with any investment, your investment in a fund could have tax
consequences for you.

TAXES ON DISTRIBUTIONS. Each fund seeks to earn income and pay
dividends exempt from federal income tax and California personal
income tax.

A portion of each fund's income, and the dividends you receive, may be
subject to federal and state income taxes. Each fund's income may be
subject to the federal alternative minimum tax. Each fund may also
realize taxable income or gains on the sale of municipal bonds and may
make taxable distributions.

For federal tax purposes, each fund's distributions of short-term
capital gains and gains on the sale of bonds characterized as market
discount are taxable to you as ordinary income. Each fund's
distributions of long-term capital gains, if any, are taxable to you
generally as capital gains.

If a fund's distributions exceed its income and capital gains realized
in any year, all or a portion of those distributions may be treated as
a return of capital to shareholders for tax purposes. A return of
capital will generally not be taxable to you, but will reduce the cost
basis of your shares and result in a higher reported capital gain or a
lower reported capital loss when you sell your shares.

If you buy shares when a fund has realized but not yet distributed
income or capital gains, you will be "buying a dividend" by paying the
full price for the shares and then receiving a portion of the price
back in the form of a taxable distribution.

Any taxable distributions you receive from a fund will normally be
taxable to you when you receive them, regardless of your distribution
option. If you elect to receive distributions in cash or to invest
distributions automatically in shares of another Fidelity fund, you
will receive certain December distributions in January, but those
distributions will be taxable as if you received them on December 31.

TAXES ON TRANSACTIONS. Your bond fund redemptions, including
exchanges, may result in a capital gain or loss for federal tax
purposes. A capital gain or loss on your investment in a fund is the
difference between the cost of your shares and the price you receive
when you sell them.

FUND SERVICES

FUND MANAGEMENT

Each fund is a mutual fund, an investment that pools shareholders'
money and invests it toward a specified goal.

FMR is each fund's manager.

As of __, [[month] [day] [year], FMR had approximately $__ billion in
discretionary assets under management.

As the manager, FMR is responsible for choosing the funds' investments
and handling their business affairs.

Fidelity Investments Money Management, Inc. (FIMM), in Merrimack, New
Hampshire, is an affiliate of FMR and serves as sub-adviser for
California Municipal Money Market and Spartan California Municipal
Money Market. As of [month][day][year]], FIMM had approximately $____
in discretionary assets under management. FIMM is primarily
responsible for choosing investments for the money market funds.

Beginning January 1, 1999, FIMM will serve as sub-adviser and be
primarily responsible for choosing investments for Spartan California
Municipal Income. FIMM is an affiliate of FMR. As of
[month][day][year]], FIMM had approximately $____ in discretionary
assets under management.

A fund could be adversely affected if the computer systems used by FMR
and other service providers do not properly process and calculate
date-related information from and after January 1, 2000. FMR has
advised each fund that it is actively working on necessary changes to
its computer systems and expects that its systems, and those of other
major service providers, will be modified prior to January 1, 2000.
However, there can be no assurance that there will be no adverse
impact on a fund.

Christine Thompson is vice president and manager of Spartan California
Municipal Income, which she has managed since July 1998. She also
manages other Fidelity funds. Since joining Fidelity in 1985, Ms.
Thompson has worked as a senior analyst and portfolio manager.

Fidelity investment personnel may invest in securities for their own
investment accounts pursuant to a code of ethics that establishes
procedures for personal investing and restricts certain transactions.

Each fund pays a management fee to FMR.

The management fee is calculated and paid to FMR every month. FMR pays
all of the other expenses of Spartan California Municipal Money Market
with limited exceptions.

Spartan California Municipal Money Market's annual management fee rate
is 0.50% of its average net assets.

For California Municipal Money Market and Spartan California Municipal
Income, the fee is calculated by adding a group fee rate to an
individual fund fee rate, dividing by twelve, and multiplying the
result by the fund's average net assets throughout the month.

The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.37%, and it
drops as total assets under management increase.

For February 28, 1999, the group fee rate was __% for California
Municipal Money Market and Spartan California Municipal Income. The
individual fund fee rate is 0.25% for California Municipal Money
Market and 0.25% for Spartan California Municipal Income.

The total management fee for the fiscal year ended February 28, 1999,
was __% of the fund's average net assets for California Municipal
Money Market and __% [ after reimbursement,] of the fund's average net
assets for Spartan California Municipal Income.

FMR pays FIMM for providing assistance with investment advisory
services.

FMR may, from time to time, agree to reimburse the funds for
management fees and other expenses above a specified limit. FMR
retains the ability to be repaid by a fund if expenses fall below the
specified limit prior to the end of the fiscal year. Reimbursement
arrangements, which in the case of certain funds, may be terminated by
FMR at any time, can decrease a fund's expenses and boost its
performance.

[As of ____, approximately __% and __% of[name of fund]'s total
outstanding shares, respectively, were held by [FMR/FMR and [an] FMR
affiliate[s]/[an] FMR affiliate[s]].

FUND DISTRIBUTION

FDC distributes each fund's shares.

Each fund has adopted a Distribution and Service Plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 that recognizes that
FMR may use its management fee revenues, as well as its past profits
or its resources from any other source, to pay FDC for expenses
incurred in connection with providing services intended to result in
the sale of fund shares and/or shareholder support services. FMR,
directly or through FDC, may pay intermediaries, such as banks,
broker-dealers and other service-providers, that provide those
services. Currently, the Board of Trustees of each fund has authorized
such payments.

To receive payments made pursuant to a Distribution and Service Plan,
intermediaries must sign the appropriate agreement with FDC in
advance.

FMR may allocate brokerage transactions in a manner that takes into
account the sale of shares of a fund, provided that the fund receives
brokerage services and commission rates comparable to those of other
broker-dealers.

No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this Prospectus and in the related
Statement of Additional Information (SAI), in connection with the
offer contained in this Prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the funds or FDC. This Prospectus and the related SAI do
not constitute an offer by the funds or by FDC to sell or to buy
shares of the funds to any person to whom it is unlawful to make such
offer.

APPENDIX

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand each
fund's financial history for the past 5 years. Certain information
reflects financial results for a single fund share. Total returns for
each period include the reinvestment of all dividends and
distributions. This information has been audited by ______,
independent accountants, whose report, along with each fund's
financial highlights and financial statements, are included in each
fund's Annual Report. A free copy of each Annual Report is available
upon request.

[Financial Highlights to be filed by subsequent amendment.]

You can obtain additional information about the funds. The funds' SAI
includes more detailed information about each fund and its
investments. The SAI is incorporated herein by reference (legally
forms a part of the prospectus). Each fund's annual and semi-annual
reports include a discussion of the fund's holdings and recent market
conditions and the fund's investment strategies that affected
performance.

For a free copy of any of these documents or to request other
information or ask questions about a fund, call Fidelity at
1-800-544-8544 or visit Fidelity's Web site at www.fidelity.com.

The SAI, the funds' annual and semi-annual reports and other related
materials are available on the SEC's Internet Web site
(http://www.sec.gov). You can obtain copies of this information upon
paying a duplicating fee, by writing the Public Reference Section of
the SEC, Washington, D.C. 20549-6009. You can also review and copy
information about the funds, including the funds' SAI, at the SEC's
Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for
information on the operation of the SEC's Public Reference Room.

INVESTMENT COMPANY ACT OF 1940, FILE NUMBERS, 811-3725 AND 811-6397

Spartan, Fidelity Investments & (Pyramid) Design, Fidelity, Fidelity
Investments, TouchTone Xpress, Fidelity Money Line, Fidelity Automatic
Account Builder, Fidelity On-Line Express+, Fidelity Web Xpress, and
Directed Dividends are registered trademarks of FMR Corp.

Portfolio Advisory Services are service marks of FMR Corp.

____________. CMS-pro-0499

FIDELITY CALIFORNIA MUNICIPAL MONEY MARKET FUND
AND
SPARTAN(registered trademark) CALIFORNIA MUNICIPAL MONEY MARKET FUND

FUNDS OF CALIFORNIA MUNICIPAL TRUST II

SPARTAN(registered trademark) CALIFORNIA MUNICIPAL INCOME FUND

A FUND OF FIDELITY CALIFORNIA MUNICIPAL TRUST

STATEMENT OF ADDITIONAL INFORMATION
APRIL 20, 1999

This Statement of Additional Information (SAI) is not a prospectus.
Portions of the funds' Annual Report are incorporated herein. The
Annual Report is supplied with this SAI.

To obtain a free additional copy of the Prospectus, dated April 20,
1999, or an Annual Report, please call Fidelity(registered trademark)
at 1-800-544-8544 or visit Fidelity's W eb site at
www.fidelity.com.

TABLE OF CONTENTS PAGE

Investment Policies and 18
Limitations

Special Considerations 12
Regarding California

Special Considerations 27
Regarding Puerto Rico

Portfolio Transactions 28

Valuation 31

Performance 32

Additional Purchase, Exchange 42
and Redemption Information

Distributions and Taxes

Trustees and Officers 43

Control of Investment Advisers 43

Management Contracts 34

Distribution Services 51

Transfer and Service Agent 51
Agreements

Description of the Trusts 52

Financial Statements 53

Appendix 53

CMS -ptb- 0499

____________

(fidelity_logo_graphic)(registered trademark)

82 Devonshire Street, Boston, MA 02109

INVESTMENT POLICIES AND LIMITATIONS

The following policies and limitations supplement those set forth in
the Prospectus. Unless otherwise noted, whenever an investment policy
or limitation states a maximum percentage of a fund's assets that may
be invested in any security or other asset, or sets forth a policy
regarding quality standards, such standard or percentage limitation
will be determined immediately after and as a result of the fund's
acquisition of such security or other asset. Accordingly, any
subsequent change in values, net assets, or other circumstances will
not be considered when determining whether the investment complies
with the fund's investment policies and limitations.

A fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940 (the
1940 Act)) of the fund. However, except for the fundamental investment
limitations listed below, the investment policies and limitations
described in this SAI are not fundamental and may be changed without
shareholder approval.

INVESTMENT LIMITATIONS OF FIDELITY CALIFORNIA MUNICIPAL MONEY MARKET
FUND

THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:

(1) purchase the securities of any issuer, if, as a result, the
fund would not comply with any applicable diversification requirements
for a money market fund under the Investment Company Act of 1940 and
the rules thereunder, as such may be amended from time to time;

(2) issue senior securities, except in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as
otherwise permitted under the Investment Company Act of 1940;

(3 ) make short sales of securities (unless it owns or by virtue
of its ownership of other securities has the right to obtain
securities equivalent in kind and amount to the securities sold);

(4 ) purchase any securities on margin;

(5) borrow mone y, except that the fund may borrow money for
temporary or emergency purposes (not for leveraging or investment) in
an amount not exceeding 33 1/3% of its total assets (including the
amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within
three business days (not including Sundays and holidays) to the extent
necessary to comply with the 33 1/3% limitation;

(6) u nderwr ite securities issued by others, except to the
extent that the fund may be considered an underwriter within the
meaning of the Securities Act of 1933 in the disposition of restricted
securities;

(7) p urchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities, or tax-exempt obligations issued or
guaranteed by a U.S. territory or possession or a state or local
government, or a political subdivision of any of the foregoing) if, as
a result, more than 25% of the fund's total assets would be invested
in securities of companies whose principal business activities are in
the same industry;

( 8) purchase or sell real estate, but this shall not prevent
the fund from investing in municipal bonds or other obligations
secured by real estate or interests therein;

(9) purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments;

(1 0) len d any security or make any other loan if, as a result,
more than 33 1/3% of its total assets would be lent to other parties
(but this limitation does not apply to purchases of debt securities or
to repurchase agreements); or

(11 ) invest in oil, gas or other mineral exploration or
development programs.

(1 2) The fund may, notwithstanding any other fundamental
investment policy or limitation, invest all of its assets in the
securities of a single open-end management investment company managed
by Fidelity Management & Research Company or an affiliate or successor
with substantially the same fundamental investment objective,
policies, and limitations as the fund.

THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVA L.

(i) With respect to 75% of its total assets, the fund does not
currently intend to purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities, or securities of other money market
fun ds) if, as a result, more than 5% of the fund's total assets
would be invested in the securities of that issuer.

(ii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitatio n (5)) . The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.

(iii) The fu nd does not currently intend to purchase any
security if, as a result, more than 10% of its net assets would be
invested in securities that are deemed to be illiquid because they are
subject to legal or contractual restrictions on resale or because they
cannot be sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.

(iv ) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.

( v) The fund does not currently intend to invest all of its
assets in the securities of a single open-end management investment
company managed by Fidelity Management & Research Company or an
affiliate or successor with substantially the same fundamental
investment objective, policies and limitations as the fund.

For purposes of limitations:(1), (7) and (i), FMR identifies
the issuer of a security depending on its terms and conditions. In
identifying the issuer, FMR will consider the entity or entities
responsible for payment of interest and repayment of principal and the
source of such payments; the way in which assets and revenues of an
issuing political subdivision are separated from those of other
political entities; and whether a governmental body is guaranteeing
the se curit y.

Fo r purposes of limitation (i), certain securities subject to
guarantees (including insurance, letters of credit and demand
features) are not considered securities of their issuer, but are
subject to separate diversification requirements, in accordance with
industry standard requiremen ts for money market funds.

With respect to limitation (iii), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidi ty.

INVESTMENT LIMITATIONS OF SPARTAN CALIFORNIA MUNICIPAL MONEY
MARKET FUND

THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:

(1) purchase of securities of any issuer, if, as a result, the fund
would not comply with any applicable diversification requirements for
a money market fund under the Investment Company Act of 1940 and the
rules thereunder, as such may be amended from time to time;

(2) issue senior securities, except in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
permitted under the Investment Company Act of 1940;

(3) b orrow money, except that the fund may borrow money for
temporary or emergency purposes (not for leveraging or investment) in
an amount not exceeding 33 1/3% of the value of its total assets
(including the amount borrowed) less liabilities (other than
borrowings). Any borrowings that come to exceed this amount will be
reduced within three days (not including Sundays and holidays) to the
extent necessary to comply with the 33 1/3% limitation;

( 4 ) underwrite securities issued by others (except to the
extent that the fund may be deemed to be an underwriter within the
meaning of the Securities Act of 1933 in the disposition of restricted
securities);

( 5 ) purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities, or tax-exempt obligations issued or
guaranteed by a U.S. territory or possession or a state or local
government, or a political subdivision of any of the foregoing) if, as
a result, more than 25% of the fund's total assets would be invested
in securities of companies whose principal business activities are in
the same industry;

(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);

(7) purchase or sell physical commodities unless acquired as a
result of ownership of securities; or

(8) lend any security or make any other loan if, as a result,
more than 33 1/3% of its total assets would be lent to other parties,
but this limitation does not apply to purchases of debt securities or
to repurchase agreements.

(9) The fund may, notwithstanding any other fundamental
investment policy or limitation, invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.

THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.

(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.

(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.

(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are trea ted as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.

(v) The fund does not currently intend to purchase any security if, as
a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.

(vi) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.

(vii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
with substantially the same fundamental investment objective,
policies, and limitations as the fund.

For purposes of limita ti ons (1), (5) and (i), FMR identifies
the issuer of a security depending on its terms and conditions. In
identifying the issuer, FMR will consider the entity or entities
responsible for payment of interest and repayment of principal and the
source of such payments; the way in which assets and revenues of an
issuing political subdivision are separated from those of other
political entities; and whether a governmental body is guaranteeing
the sec urity.

For purposes of limitation (i) , certain securities subject to
guarantees (including insurance, letters of credit and demand
features) are not considered securities of their issuer, but are
subject to separate diversification requirements, in accordance with
industry standard requirements for money market funds.

With resp ect to limit (v), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.

INVESTMENT LIMITATIONS OF SPARTAN CALIFORNIA MUNICIPAL INCOME FUND

THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:

(1) issue senior securities, except in connection with the
insurance program established by the fund pursuant to an exemtive
order issue d by the Securities and Exchange Commission or as
otherwise permitted under the Investment Company Act of 1940;

(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;

(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;

(4 ) purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities, or tax-exempt obligations issued or
guaranteed by a U.S. territory or possession or a state or local
government, or a political subdivision of any of the foregoing) if, as
a result, more than 25% of the fund's total assets would be invested
in securities of companies whose principal business activities are in
the same industry;

(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business;

(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or

(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.

(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.

THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.

(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.

(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.

(vi) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.

For pur p oses of limitations (1), (4) and (i), FMR identifies
the issuer of a security depending on its terms and conditions. In
identifying the issuer, FMR will consider the entity or entities
responsible for payment of interest and repayment of principal and the
source of such payments; the way in which assets and revenues of an
issuing political subdivision are separated from those of other
political entities; and whether a governmental body is guaranteeing
the security.

For purposes of limitation (i), Subchapter M generally requires the
fund to invest no more than 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.

With respect to limitation (v), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.

F or the fund's limitations on futures and options transactions,
see the section entitled "Limitations on Futures and Options
Transactions" on page 7.

The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related
risks. FMR may not buy all of these instruments or u se all of
these techniques unless it believes that doing so will help a fund
achieve its goal.

AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be,
"affiliated persons" of the fund under the 1940 Act. These
transactions may involve repurchase agreements with custodian banks;
short-term obligations of, and repurchase agreements with, the 50
largest U.S. banks (measured by deposits); municipal securities; U.S.
Government securities with affiliated financial institutions that are
primary dealers in these securities; short-term currency transactions;
and short-term borrowings. In accordance with exemptive orders issued
by the Securities and Exchange Commission (SEC), the Board of Trustees
has established and periodically reviews procedures applicable to
transactions involving affiliated financial institu tions .

ASSET-BACKED SECURITIES represent interests in pools of purchase
contracts, financing leases, or sales agreements entered into by
municipalities. Payment of interest and repayment of principal may be
largely dependent upon the cash flows generated by the assets backing
the securities and, in certain cases, supported by letters of credit,
surety bonds, or other credit enhancements. Asset-backed security
values may also be affected by other factors including changes in
interest rates, the availability of information concerning the pool
and its structure, the creditworthiness of the servicing agent for the
pool, the originator of the loans or receivables, or the entities
provid ing the credit enhancement. In addition, these securities
may be subject to prepayment risk.

BORROWING. Each fund may borrow from banks or from other funds
advised by FMR or its affiliates, or through reverse repurchase
agreements. If a fund borrows money, its share price may be subject to
greater fluctuation until the borrowing is paid off. If a fund
make s additional investments while borrowings are outstanding,
this may be considered a form of leverage.

CASH MANAGEMENT. A fund can hold uninvested cash or can invest it
in cash equivalents such as money market securities, repurchase
agreements or shares of money market funds. Generally, these
securities offer less potential for gains than other types of
securities.

CENTRAL CASH FUNDS are money market funds managed by FMR or its
affiliates that seek to earn a high level of current income ( free
from federal income tax in the case of a municipal money market fund)
while maintaining a stable $1.00 share price. The funds comply with
industry-standard requirements for money market funds regarding the
quality, maturity and diversification of their investments.

DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying
the value of each investment by the time remaining to its maturity,
adding these calculations, and then dividing the total by the value of
the fund's portfolio. An obligation's maturity is typically determined
on a stated final maturity basis, although there are some exceptions
to this rule.

For example, if it is probable that the issuer of an instrument
will take advantage of a maturity-shortening device, such as a call,
refunding, or redemption provision, the date on which the instrument
will probably be called, refunded, or redeemed may be considered to be
its maturity date. When a municipal bond issuer has committed to call
an issue of bonds and has established an independent escrow account
that is sufficient to, and is pledged to, refund that issue, the
number of days to maturity for the prerefunded bond is considered to
be t he number of days to the announced call date of the bonds.

F UTU RES AND OPTIONS. The following paragraphs pertain to
futures and options: Combined Positions, Correlation of Price Changes,
Futures Contracts, Futures Margin Payments, Limitations on Futures and
Options Transactions, Liquidity of Options and Futures Contracts, OTC
Options, Purchasing Put and Call Options, and Writing Put and Call
Options.

COMBINED POSITIONS involve purchasing and writing options in
combination with each other, or in combination with futures or
forward contracts, to adjust the risk and return characteristics of
the overall position. For example, purchasing a put option and writing
a call option on the same underlying instrument would construct a
combined position whose risk and return characteristics are similar to
selling a futures contract. Another possible combined position would
involve writing a call option at one strike price and buying a call
option at a lower price, to reduce the risk of the written call option
in the event of a substantial price increase. Because combined options
positions involve multiple trades, they result in higher transaction
costs and may be more difficult to open and close out.

CORRELATION OF PRICE CHANGES. Because there are a limited number of
types of exchange-traded options and futures contracts, it is likely
that the standardized contracts available will not match a fund's
current or anticipated investments exactly. A fund may invest in
options and futures contracts based on securities with different
issuers, maturities, or other characteristics from the securities in
which the fund typically invests, which involves a risk that the
options or futures position will not track the performance of the
fund's other investments.

Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a
fund's investments well. Options and futures prices are affected by
such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument, and the time
remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation may also result
from differing levels of demand in the options and futures markets and
the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of daily price
fluctuation limits or trading halts. A fund may purchase or sell
options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to
attempt to compensate for differences in volatility between the
contract and the securities, although this may not be successful in
all cases. If price changes in a fund's options or futures positions
are poorly correlated with its other investments, the positions may
fail to produce anticipated gains or result in losses that are not
offset by gains in other investments.

FUTURES CONTRACTS. In purchasing a futures contract, the buyer agrees
to purchase a specified underlying instrument at a specified future
date. In selling a futures contract, the seller agrees to sell a
specified underlying instrument at a specified future date. The price
at which the purchase and sale will take place is fixed when the buyer
and seller enter into the contract. Some currently available futures
contracts a r e based on specific securities, such as U.S.
Treasury bonds or notes, and some are based on indices of securities
prices, such as the Bond Buyer Municipal Bond Index. Futures can be
held until their delivery dates, or can be closed out before then if a
liquid secondary market is available.

The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument. Therefore,
purchasing futures contracts will tend to increase a fund's exposure
to positive and negative price fluctuations in the underlying
instrument, much as if it had purchased the underlying instrument
directly. When a fund sells a futures contract, by contrast, the value
of its futures position will tend to move in a direction contrary to
the market. Selling futures contracts, therefore, will tend to offset
both positive and negative market price changes, much as if the
underlying instrument had been sold.

FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract
is not required to deliver or pay for the underlying instrument unless
the contract is held until the delivery date. However, both the
purchaser and seller are required to deposit "initial margin" with a
futures broker, known as a futures commission merchant (FCM), when the
contract is entered into. Initial margin deposits are typically equal
to a percentage of the contract's value. If the value of either
party's position declines, that party will be required to make
additional "variation margin" payments to settle the change in value
on a daily basis. The party that has a gain may be entitled to receive
all or a portion of this amount. Initial and variation margin payments
do not constitute purchasing securities on margin for purposes of a
fund's investment limitations. In the event of the bankruptcy of an
FCM that holds margin on behalf of a fund, the fund may be entitled to
return of margin owed to it only in proportion to the amount received
by the FCM's other customers, potentially resulting in losses to the
fund.

LIMITATIONS ON FUTURES AND OPTIONS TRANSA CTIO NS. Each bond fund
has filed a notice of eligibility for exclusion from the definition of
the term "commodity pool operator" with the Commodity Futures Trading
Commission (CFTC) and the National Futures Association, which
regulate trading in the futures markets. The funds intend to comply
with Rule 4.5 under the Commodity Exchange A ct, which limits the
extent to which the funds can commit assets to initial margin deposits
and option premiums.

In addition, the bond fund will not: (a) sell futures contracts,
purchase put options, or write call options if, as a result, more than
25% of the fund's total assets would be hedged with futures and
options under normal conditions; (b) purchase futures contracts or
write put options if, as a result, the fund's total obligations upon
settlement or exercise of purchased futures contracts and written put
options would exceed 25% of its total assets; or (c) purchase call
options if, as a result, the current value of option premiums for call
options purchased by the fund would exceed 5% of the fund's total
assets. These limitations do not apply to options attached to or
acquired or traded together with their underlying securities, and do
not apply to securities that incorporate features similar to options.

The above limitations on the bond fund's investments in futures
contracts and options, and the fund's policies regarding futures
contracts and options discussed elsewhere in this SAI, may be changed
as regulatory agencies permit.

LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or
futures contract at any particular time. Options may have relatively
low trading volume and liquidity if their strike prices are not close
to the underlying instrument's current price. In addition, exchanges
may establish daily price fluctuation limits for options and futures
contracts, and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days
when the price fluctuation limit is reached or a trading halt is
imposed, it may be impossible to enter into new positions or close out
existing positions. If the secondary market for a contract is not
liquid because of price fluctuation limits or otherwise, it could
prevent prompt liquidation of unfavorable positions, and potentially
could require a fund to continue to hold a position until delivery or
expiration regardless of changes in its value. As a result, a fund's
access to other assets held to cover its options or futures positions
could also be impaired.

OTC OPTIONS. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract
size, and strike price, the terms of over-the-counter (OTC) options
(options not traded on exchanges) generally are established through
negotiation with the other party to the option contract. While this
type of arrangement allows the purchaser or writer greater flexibility
to tailor an option to its needs, OTC options generally involve
greater credit risk than exchange-traded options, which are guaranteed
by the clearing organization of the exchanges where they are traded.

PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the
purchaser obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for
this right, the purchaser pays the current market price for the option
(known as the option premium). Options have various types of
underlying instruments, including specific securities, indices of
securities prices, and futures contracts. The purchaser may terminate
its position in a put option by allowing it to expire or by exercising
the option. If the option is allowed to expire, the purchaser will
lose the entire premium. If the option is exercised, the purchaser
completes the sale of the underlying instrument at the strike price. A
purchaser may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary
market exists.

The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying
instrument's price does not fall enough to offset the cost of
purchasing the option, a put buyer can expect to suffer a loss
(limited to the amount of the premium, plus related transaction
costs).

The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right
to purchase, rather than sell, the underlying instrument at the
option's strike price. A call buyer typically attempts to participate
in potential price increases of the underlying instrument with risk
limited to the cost of the option if security prices fall. At the same
time, the buyer can expect to suffer a loss if security prices do not
rise sufficiently to offset the cost of the option.

WRITING PUT AND CALL OPTIONS. The writer of a put or call option takes
the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the writer assumes the obligation
to pay the strike price for the option's underlying instrument if the
other party to the option chooses to exercise it. The writer may seek
to terminate a position in a put option before exercise by closing out
the option in the secondary market at its current price. If the
secondary market is not liquid for a put option, however, the writer
must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes. When writing an option on
a futures contract, a fund will be required to make margin payments to
an FCM as described above for futures contracts.

If security prices rise, a put writer would generally expect to
profit, although its gain would be limited to the amount of the
premium it received. If security prices remain the same over time, it
is likely that the writer will also profit, because it should be able
to close out the option at a lower price. If security prices fall, the
put writer would expect to suffer a loss. This loss should be less
than the loss from purchasing the underlying instrument directly,
however, because the premium received for writing the option should
mitigate the effects of the decline.

Writing a call option obligates the writer to sell or deliver the
option's underlying instrument, in return for the strike price, upon
exercise of the option. The characteristics of writing call options
are similar to those of writing put options, except that writing calls
generally is a profitable strategy if prices remain the same or fall.
Through receipt of the option premium, a call writer mitigates the
effects of a price decline. At the same time, because a call writer
must be prepared to deliver the underlying instrument in return for
the strike price, even if its current value is greater, a call writer
gives up some ability to participate in security price increases.

ILLIQUID SECURITIES cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they
are valued. Difficulty in selling securities may result in a loss or
may be costly to a fund. Under the supervision of the Board of
Trustees, FMR determines the liquidity of a fund's investments and,
through reports from FMR, the Board monitors investments in illiquid
securities. In determining the liquidity of a fund's investments, FMR
may consider various factors, including (1) the frequency and volume
of trades and quotations, (2) the number of dealers and prospective
purchasers in the marketplace, (3) dealer undertakings to make a
market and (4) the nature of the security and the market in which it
trades (including any demand, put or tender features, the mechanics
and other requirements for transfer, any letters of credit or other
credit enhancement features, any ratings, the number of holders, the
method of soliciting offers, the time required to dispose of the
security, and the ability to assign or offset the rights and
obligations of the security).

INDE XED S ECURITIES are instruments whose prices are indexed to
the prices of other securities, securities indices, or other financial
indicators. Indexed securities typically, but not always, are debt
securities or deposits whose value at maturity or coupon rate is
determined by reference to a specific instrument or statistic. Indexed
securities may have principal payments as well as coupon payments that
depend on the performance of one or more interest rates. Their coupon
rates or principal payments may change by several percentage points
for every 1% interest rate change.

The performance of indexed securities depends to a great extent on the
performance of the security or other instrument to which they are
indexed, and may also be influenced by interest rate changes. Indexed
securities may be more volatile than the underlying instruments.
Indexed securities are also subject to the credit risks associated
with the issuer of the security, and their values may decline
substantially if the issuer's creditworthiness deteriorates.

INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive
order issued by the SEC, a fund may lend money to, and borrow money
from, other funds advised by FMR or its affiliates; however, municipal
funds currently intend to participate in this program only as
borrowers. A fund will borrow through the program only when the costs
are equal to or lower than the costs of bank loans. Interfund
borrowings normally extend overnight, but can have a maximum duration
of seven days. Loans may be called on one day's notice. A fund may
have to borrow from a bank at a higher interest rate if an interfund
loan is called or not renewed.

INVERSE FLOATERS have variable interest rates that typically move in
the opposite direction from movements in prevailing short-term
interest rate levels - rising when prevailing short-term interest
rates fall, and vice versa. The prices of inverse floaters can be
considerably more volatile than the prices of bonds with comparable
maturities.

INVESTMENT-GRADE DEBT SECURITIES. Investment-grade debt securities
are medium and high-quality securities. Some may possess speculative
characteristics and may be more sensitive to economic changes and to
changes in the financial conditions of issuers. A debt security is
considered to be investment-grade if it is rated investment-grade by
Moody's Investors Service, Standard & Poor's, Duff & Phelps C redit
Rating Co., or Fitch IBCA Inc., or is unrated but considered to be of
equivalent quality by FMR.

LOWER-QUALITY DEBT SECURITIES. Lower-quality debt securities have poor
protection with respect to the payment of interest and
rep aym ent of principal, or may be in default. These securities
are often considered to be speculative and involve greater risk of
loss or price changes due to changes in the issuer's capacity to pay.
The market prices of lower-quality debt securities may fluctuate more
than those of higher-quality debt securities and may decline
significantly in periods of general economic difficulty, which may
follow periods of rising interest rat es.

The market for lower-quality debt securities may be thinner and
less active than that for higher-quality debt securities, which can
adversely affect the prices at which the former are sold. Adverse
publicity and changing investor perceptions may affect the liquidity
of lower-q uality debt securities and the ability of outside
pricing services to value lower-quality debt securities.

A fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security
holder to seek to protect the interests of security holders if it
determines this to be in the best interest of the fund's shareholders.

MON EY MARKET SECURITIES are high-quality, short-term obligations.
Money market securities may be structured to be, or may employ a
t rust or other form so that they are, eligible investments for
money market funds. For example, put features can be used to modify
the maturity of a security or interest rate adjustment features can be
used to enhance price stability. If a structure fails to
function as intended, adverse tax or investment consequences may
result. Neither the Internal Revenue Service (IRS) nor any other
regulatory authority has ruled definitively on certain legal issues
presented by cert ain structured securities. Future tax or other
regulatory determinations could adversely affect the value, liquidity,
or tax treatment of the income received from these securities or the
nature and timing of distributions made by the funds.

MUNICIPAL INSURANCE. A municipal bond may be covered by
insurance that guarantees the bond's scheduled payment of interest and
repayment of principal. This type of insurance may be obtained by
either (i) the issuer at the time the bond is issued (primary market
insurance), or (ii) another party after the bond has been issued
(secondary market insurance).

Both primary and secondary market insurance guarantee timely and
scheduled repayment of all principal and payment of all interest on a
municipal bond in the event of default by the issuer, and cover a
municipal bond to its maturity, enhancing its credit quality and
value.

Municipal bond insurance does not insure against market
fluctuations or fluctuations in a fund's share price. In addition, a
municipal bond insurance policy will not cover: (i) repayment of a
municipal bond before maturity (redemption), (ii) prepayment or
payment of an acceleration premium (except for a mandatory sinking
fund redemption) or any other provision of a bond indenture that
advances the maturity of the bond, or (iii) nonpayment of principal or
interest caused by negligence or bankruptcy of the paying agent. A
mandatory sinking fund redemption may be a provision of a municipal
bond issue whereby part of the municipal bond issue may be retired
before maturity.

Because a significant portion of the municipal securities issued
and outstanding is insured by a small number of insurance companies,
an event involving one or more of these insurance companies could have
a significant adverse effect on the value of the securities insured by
that insurance company and on the municipal markets as a whole.

FMR may decide to retain an insured municipal bond that is in
default, or, in FMR's view, in significant risk of default. While a
fund holds a defaulted, insured municipal bond, the fund collects
interest payments from the insurer and retains the right to collect
principal from the insurer when the municipal bond matures, or in
connection with a mandatory sinking fund redemption.

PRINCIPAL MUNICIPAL BOND INSURERS. The various insurance companies
providing primary and secondary market insurance policies for
municipal bonds are described below. Ratings reflect each respective
rating agency's assessment of the creditworthiness of an insurer and
the insurer's ability to pay claims on its insurance policies at the
time of the assessment.

Ambac Assurance Corp., a wholly-owned subsidiary of Ambac Financial
Group Inc., is authorized to provide bond insurance in the 50 U.S.
states, the District of Columbia, and the Commonwealth of Puerto Rico.
Bonds insured by Ambac Assurance Corp. are rated "Aaa" by Moody's
Investor Service and "AAA" by Standard & Poor's.

Connie Lee Insurance Co. is a wholly-owned subsidiary of Connie Lee
Holdings Inc., which is a wholly-owned subsidiary of Ambac Assurance
Corp. All losses incurred by Connie Lee Insurance Co. that would cause
its statutory capital to drop below $75 million would be covered by
Ambac Assurance Corp. Connie Lee Insurance Co. is authorized to
provide bond insurance in 49 U.S. states, the District of Columbia,
and the Commonwealth of Puerto Rico. Bonds insured by Connie Lee
Insurance Co. are rated "AAA" by Standard & Poor's.

Financial Guaranty Insurance Co. (FGIC), a wholly-owned subsidiary
of GE Capital Services, is authorized to provide bond insurance in the
50 U.S. states and the District of Columbia. Bonds insured by FGIC are
rated "Aaa" by Moody's Investor Service and "AAA" by Standard &
Poor's.

Financial Security Assurance Inc. (FSA), a wholly-owned subsidiary
of Financial Security Assurance Holdings Ltd., is authorized to
provide bond insurance in 49 U.S. states, the District of Columbia,
and three U.S. territories. Bonds insured by FSA are rated "Aaa" by
Moody's Investor Service and "AAA" by Standard & Poor's.

Municipal Bond Investors Assurance Corp. (MBIA Insurance Corp.), a
wholly-owned subsidiary of MBIA Inc., a publicly-owned company, is
authorized to provide bond insurance in the 50 U.S. states, the
District of Columbia, and the Commonwealth of Puerto Rico. Bonds
insured b y MBIA Insurance Corp. are rated "Aaa" by Moody's
Investor Service and "AAA" by Standard & Poor's.

MUNICIPAL LEASES and participation interests therein may take the form
of a lease, an installment purchase, or a conditional sale contract
and are issued by state and local governments and authorities to
acquire land or a wide variety of equipment and facilities. Generally,
a fund will not hold these obligations directly as a lessor of the
property, but will purchase a participation interest in a municipal
obligation from a bank or other third party. A participation interest
gives the purchaser a specified, undivided interest in the obligation
in proportion to its purchased interest in the total amount of the
issue.

Municipal leases frequently have risks distinct from those associated
with general obligation or revenue bonds. State constitutions and
statutes set forth requirements that states or municipalities must
meet to incur debt. These may include voter referenda, interest rate
limits, or public sale requirements. Leases, installment purchases, or
conditional sale contracts (which normally provide for title to the
leased asset to pass to the governmental issuer) have evolved as a
means for governmental issuers to acquire property and equipment
without meeting their constitutional and statutory requirements for
the issuance of debt. Many leases and contracts include
"non-appropriation clauses" providing that the governmental issuer has
no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis.
Non-appropriation c lauses free the issuer from debt issuance
limitations. If a municipality stops making payments or transfers its
obligations to a private entity, the obligation could lose value
or become taxable.

MUNICIPAL MARKET DISRUPTION RISK. The value of municipal securities
may be affected by uncertainties in the municipal market related to
legislation or litigation involving the taxation of municipal
securities or the rights of municipal securities holders in the event
of a bankruptcy. Proposals to restrict or eliminate the federal income
tax exemption for interest on mu nicipal securities are introduced
before Congress from time to time. Proposals also may be introduced
before the California legislature that would affect the state tax
treatment of a municipal fund's distributions. If such proposals were
enacted, the availability of municipal securities and the value of a
municipal fund's holdings would be affected and the Trustees would
reevaluate the fund's investment objectives and policies.
Municipal bankruptcies are relatively rare, and certain provisions of
the U.S. Bankruptcy Code governing such bankruptcies are unclear and
remain untested. Further, the application of state law to municipal
issuers could produce varying results among the states or among
municipal securities issuers within a state. These legal uncertainties
could affect the municipal securities market generally, certain
specific segments of the market, or the relative credit quality of
particular securities. Any of these effects could have a significant
impact on the prices of some or all of the municipal securities held
by a fund, making it more difficult for a money market fund to
maintain a stable net asset value per share ( NAV).

HOUSING. Housing revenue bonds are generally issued by
a state, county, city, local housing authority, or other public
agency. They generally are secured by the revenues derived from
mortgages purchased with the proceeds of the bond issue. It is
extremely difficult to predict the supply of available mortgages to be
purchased with the proceeds of an issue or the future cash flow from
the underlying mortgages. Consequently, there are risks that proceeds
will exceed supply, resulting in early retirement of bonds, or that
homeowner repayments will create an irregular cash flow. Many factors
may affect the financing of multi-family housing projects, including
acceptable completion of construction, proper management, occupancy
and rent levels, economic conditions, and changes to current laws and
r egulations.

P UT FEATURES entitle the holder to sell a security back to
the issuer or a third party at any time or at specified intervals. In
exchange for this be nefit, a fund may accept a lower interest
rate. Securities with put features are subject to the risk that the
put provider is unable to honor the put feature (purchase the
security). Put providers often support their ability to buy securities
on demand by obtaining letters of credit or other guarantees from
other entities. Demand features, standby commitments, and tender
options are types of put f eatures.

REFUNDING CONTRACTS. Securities may be purchased on a
when-issued basis in connection with the refinancing of an issuer's
ou tstanding indebtedness. Refunding contracts require the issuer
to sell and a purchaser to buy refunded municipal obligations at a
stated price and yield on a settlement date that may be several months
or several years in the future. A purchaser generally will not be
obligated to pay the full purchase price if the issuer fails to
perform under a refunding contract. Instead, refunding contracts
generally provide for payment of liquidated damages to th e issuer.
A purchaser may secure its obligations under a refunding contract
by depositing collateral or a letter of credit e qua l to the
liquidated damages provisions of the refunding contract.

REPURCHASE AGREEMENTS involve an agreement to purchase a security
and to sell that security back to the original seller at an
agreed-upon price. The resale price reflects the purchase price plus
an agreed-upon incremental amount which is unrelated to the coupon
rate or maturity of the purchased security. As protection against the
risk that the original seller will not fulfill its obligation, the
securities are held in a separate account at a bank, marked-to-market
daily, and maintained at a value at least equal to the sale price plus
the accrued incremental amount. The value of the security purchased
may be more or less than the price at which the counterparty has
agreed to purchase the security. In addition, delays or losses could
result if the other party to the agreement defaults or becomes
insolvent. The funds will engage in repurchase agreement transactions
with parties whose creditworthiness has been reviewed and found
satisfactory by FMR.

RESTRICTED SEC URITIES are subject to legal restrictions on their
sale. Difficulty in selling securities may result in a loss or be
costly to a fund. Restricted se curities generally can be sold in
privately negotiated transactions, pursuant to an exemption from
registration under the Securities Act of 1933, or in a registered
public offering. Where registration is required, the ho lder of
a registered security may be obligated to pay all or part of the
registration expense and a considerable period may elapse between the
time it decides to seek registration and the time it may be permitted
to sell a security under an effective registration statement. If,
during such a period, adverse market conditions were to dev elop,
the holder might obtain a less favorable price than prevailed when it
decided to seek registration of the security.

REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a
fund sells a security to another party, such as a bank or
brok er-dealer, in return for cash and agrees to repurchase that
security at an agreed-upon price and time. The funds will enter into
reverse repurchase agreements with parties whose creditworthiness has
been reviewed and found satisfactory by FMR. Such transactions
ma y increase fluctuations in the market value of fund assets
and a fund's yield and may be viewed as a form of leverage.

SOURCES OF CREDIT OR LIQUIDITY SUPPORT. Issuers may employ
various forms of credit and liquidity enhancements, including letters
of credit, guarantees, puts, and demand features, and insurance
provided by domestic or foreign entities such as banks and other
financial institutions. FMR may rely on its evaluation of the credit
of the credit or liquidity enhancement provider in determining whether
to purchase a security supported by such enhancement. In evaluating
the credit of a foreign bank or other foreign entities, FMR will
consider whether adequate public information about the entity is
available and whether the entity may be subject to unfavorable
political or economic developments, currency controls, or other
government restrictions that might affect its ability to honor its
commitment. Changes in the credit quality of the entity providing the
enhancement could affect the value of the security or a fund's share
price.

STANDBY COMMITMENTS are puts that entitle holders to same-day
settlement at an exercise price equal to the amortized cost of the
underlying security plus accrued interest, if any, at the time of
exercise. A fund may acquire standby commitments to enhance the
liquidity of portfolio securities.

Ordinarily a fund will not transfer a standby commitment to a third
party, although it could sell the underlying municipal security to a
third party at any time. A fund may purchase standby commitments
separate from or in conjunction with the purchase of securities
subject to such commitments. In the latter case, the fund would pay a
higher price for the securities acquired, thus reducing their yield to
maturity.

Issuers or financial intermediaries may obtain letters of credit or
other guarantees to support their ability to buy securities on demand.
FMR may rely upon its evaluation of a bank's credit in determining
whether to purchase an instrument supported by a letter of credit. In
evaluating a foreign bank's credit, FMR will consider whether adequate
public information about the bank is available and whether the bank
may be subject to unfavorable political or economic developments,
currency controls, or other governmental restrictions that might
affect the bank's ability to honor its credit commitment.

Standby commitments are subject to certain risks, including the
ability of issuers of standby commitments to pay for securities at the
time the commitments are exercised; the fact that standby commitments
are not generally marketable; and the possibility that the maturities
of the underlying securities may be different from those of the
commitments.

TEMPORAR Y DEFENSIVE POLICIES. Each fund reserves the right to
invest without limitation in short-term instruments, to hold a
substantial amount of uninvested cash, or to invest more than normally
permitted in taxable obligations for temporary, defensive
purposes.

TENDER OPTION BONDS are created by coupling an intermediate- or
long-term, fixed-rate, municipal bond (generally held pursuant to a
custodial arrangement) with a tender agreement that gives the holder
the option to tender the bond at its face value. As consideration for
providing the tender option, the sponsor (usually a bank,
broker-dealer, or other financial institution) receives periodic fees
equal to the difference between the bond's fixed coupon rate and the
rate (determined by a remarketing or similar agent) that would cause
the bond, coupled with the tender option, to trade at par on the date
of such determination. After payment of the tender option fee, a fund
effectively holds a demand obligation that bears interest at the
prevailing short-term tax-exempt rate. In selecting tender option
bonds, FMR will consider the creditworthiness of the issuer of the
underlying bond, the custodian, and the third party provider of the
tender option. In certain instances, a sponsor may terminate a tender
option if, for example, the issuer of the underlying bond defaults on
interest payments.

VARIABLE AND FLOATING RATE SECURITIES provide for periodic adjustments
in the interest rate paid on the security. Variable rate securities
provide for a specified periodic adjustment in the interest rate,
while floating rate securities have interest rates that change
whenever there is a change in a designated benchmark rate. Some
variable or floating rate securities are structured with put features
that permit holders to demand payment of the unpaid principal balance
plus accrued interest from the issuers or certain financial
intermediaries.

In many instances bonds and participation interests have tender
options or demand features that permit the holder to tender (or put)
the bonds to an institution at periodic intervals and to receive the
principal amount thereof. Variable rate instruments structured in this
fashion are considered to be essentially equivalent to other variable
rate securities. The IRS has not ruled whether the interest on these
instruments is tax-exempt. Fixed-rate bonds that are subject to third
party puts and participation interests in such bonds held by a bank in
trust or otherwise may have similar features.

WHEN-ISSU ED AND FORWARD PURCHASE OR SALE TRANSACTIONS involve a
commitment to purchase or sell specific securities at a predetermined
price or yield in which payment and delivery take place after the
customary settlement period for that type of security. Typically, no
interest accrues to the purchaser until the security is delivered.

When purchasing securities pursuant to one of these transactions,
the purchaser assumes the rights and risks of ownership, including the
risks of price and yield fluctuations and the risk that the security
will not be issued as anticipated. Because payment for the securities
is not required until the delivery date, these risks are in addition
to the risks associated with a fund's investments. If a fund remains
substantially fully invested at a time when a purchase is outstanding,
the purchases may result in a form of leverage. When a fund has sold a
security pursuant to one of these transactions, the fund does not
participate in further gains or losses with respect to the security.
If the other party to a delayed-delivery transaction fails to deliver
or pay for the securities, a fund could miss a favorable price or
yield opportunity or suffer a loss.

A fund may renegotiate a when-issued or forward transaction and may
sell the underlying securities before delivery, which may result in
capital gains or los ses for the fund.

ZERO COUPON BONDS do not make interest payments; instead, they are
sold at a discount from their face value and are redeemed at face
value when they mature. Because zero coupon bonds do not pay current
income, their prices can be more volatile than other types of
fixed-income securities when interest rates change. In calculating a
fund's dividend, a portion of the difference between a zero coupon
bond's purchase price and its face value is considered income.

SPECIAL CONSIDERATIONS REGARDING CALIFORNIA

Certain California constitutional amendments, legislative measures,
executive orders, administrative regulations, and voter initiatives,
as discussed below, could adversely affect the market values and
marketability of, or result in default of, existing obligations,
including obligations that may be held by a fund. Obligations of the
state or local governments may also be affected by budgetary pressures
affecting the State of California (the State) and economic conditions
in the State. Interest income to a fund could also be adversely
affected. The following discussion highlights only some of the more
significant financial trends and problems, and is based on information
drawn from official statements and prospectuses relating to securities
offerings of the State, its agencies, or instrumentalities, as
available as of the date of this SAI. FMR has not independently
verified any of the information contained in such official statements
and other publicly available documents, but is not aware of any fact
which would render such information inaccurate.

CONSTITUTIONAL LIMITATIONS ON TAXES, OTHER CHANGES AND APPROPRIATIONS

LIMITATION ON PROPERTY TAXES. Certain obligations held by the funds
may be obligations of issuers that rely in whole or in part, directly
or indirectly, on AD VALOREM property taxes as a source of revenue.
The taxing powers of local governments and districts are limited by
Article XIIIA of the California Constitution, enacted by the voters in
1978 and commonly known as "Proposition 13." Briefly, Proposition 13
limits to 1% of full cash value the rate of AD VALOREM property taxes
on real property and generally restricts the increase in taxes upon
reassessment of property to 2% per year, except upon new construction
or change of ownership (subject to a number of exemptions). Taxing
entities may, however, raise AD VALOREM taxes above the 1% limit to
pay debt service on voter-approved bonded indebtedness.

Under Article XIIIA, the basic 1% AD VALOREM tax levy is applied
against the assessed value of property as of the owner's date of
acquisition (or as of March 1, 1975 if acquired earlier), subject to
certain adjustments. This system has resulted in widely varying
amounts of tax on similarly situated properties. Several lawsuits were
filed challenging the acquisition-based assessment system of
Proposition 13, but on June 18, 1992, the U.S. Supreme Court announced
a decision upholding Proposition 13.

Article XIIIA prohibits local governments from raising revenues
through AD VALOREM property taxes above the 1% limit; it also requires
voters of any government unit to give 2/3 approval to levy any
"special tax." However, court decisions allowed non-voter-approved
levies of "general taxes" which were not dedicated to a specific use.

LIMITATIONS ON OTHER TAXES, FEES AND CHARGES. On November 5, 1996, the
voters of the State approved Proposition 218, called the "Right to
Vote on Taxes Act." Proposition 218 added Articles XIIIC and XIIID to
the State Constitution, which contain a number of provisions affecting
the ability of local agencies to levy and collect both existing and
future taxes, assessments, fees and charges.

Article XIIIC requires that all new or increased local taxes be
submitted to the electorate before they become effective. Taxes for
general governmental purposes require a majority vote and taxes for
specific purposes require a two-thirds vote. Further, any general
purpose tax which was imposed, extended or increased without voter
approval after December 31, 1994, must be approved by a majority vote
within two years.

Article XIIID contains several new provisions making it generally more
difficult for local agencies to levy and maintain "assessments" for
municipal services and programs. Article XIIID also contains several
new provisions affecting "fees" and "charges," defined for purposes of
Article XIIID to mean "any levy other than an ad valorem tax, a
special tax, or an assessment, imposed by a local government upon a
parcel or upon a person as an incident of property ownership,
including a user fee or charge for a property-related service." All
new and existing property-related fees and charges must conform to
requirements prohibiting, among other things, fees and charges which
generate revenues exceeding the funds required to provide the
property-related service or are used for unrelated purposes. There are
new notice, hearing and protest procedures for levying or increasing
property-related fees and charges, and, except for fees or charges for
sewer, water and refuse collection services (or fees for electrical
and gas service, which are not treated as "property-related" for
purposes of Article XIIID), no property-related fee or charge may be
imposed or increased without majority approval by the property owners
subject to the fee or charge or, at the option of the local agency,
two-thirds voter approval by the electorate residing in the affected
area.

In addition to the provisions described above, Article XIIIC removes
limitations on the initiative power in matters of local taxes,
assessments, fees and charges. Consequently, local voters could, by
future initiative, repeal, reduce or prohibit the future imposition or
increase of any local tax, assessment, fee or charge. It is unclear
how this right of local initiative may be used in cases where taxes or
charges have been or will be specifically pledged to secure debt
issues.

The interpretation and application of Proposition 218 will ultimately
be determined by the courts with respect to a number of matters, and
it is not possible at this time to predict with certainty the outcome
of such determinations. Proposition 218 is generally viewed as
restricting the fiscal flexibility of local governments, and for this
reason, some ratings of California cities and counties have been, and
others may be, reduced.

APPROPRIATIONS LIMITS. The State and its local governments are subject
to an annual "appropriations limit" imposed by Article XIIIB of the
California Constitution, enacted by the voters in 1979 and
significantly amended by Propositions 98 and 111 in 1988 and 1990,
respectively. Article XIIIB prohibits the State or any covered local
government from spending "appropriations subject to limitation" in
excess of the appropriations limit imposed. "Appropriations subject to
limitation" are authorizations to spend "proceeds of taxes," which
consist of tax revenues and certain other funds, including proceeds
from regulatory licenses, user charges, or other fees to the extent
that such proceeds exceed the cost of providing the product or
service; but " proceeds of taxes" for local governments exclude most
State subventions. No limit is imposed on appropriations of funds
which are not "proceeds of taxes," such as reasonable user charges or
fees and certain other non-tax funds, including bond proceeds.

Among the expenditures not included in the Article XIIIB
appropriations limit are: (1) the debt service cost of bonds issued or
authorized prior to January 1, 1979, or subsequently authorized by the
voters; (2) appropriations arising from certain emergencies declared
by the Governor; (3) appropriations for certain capital outlay
projects; and (4) appropriations by the State of post-1989 increases
in gasoline taxes and vehicle weight fees.

The appropriations limit for each year is adjusted annually to reflect
changes in cost of living and population, and any transfers of service
responsibilities between government units. The definitions for such
adjustments were liberalized by Proposition 111 to follow more closely
growth in the State's economy. For the 1990-91 fiscal year, each unit
of government has recalculated its appropriations limit by taking the
actual 1986-87 limit and applying the Proposition 111 annual
adjustments forward to 1990-91. This was expected to raise the limit
in most cases.

Under Proposition 111, "excess" revenues are measured over a two-year
cycle. With respect to local governments, excess revenues must be
returned by a revision of tax rates or fee schedules within the two
subsequent fiscal years. The appropriations limit for a local
government may be overridden by referendum under certain conditions
for up to four years at a time. With respect to the State, 50% of any
excess revenues is to be distributed to K-12 school and community
college districts (collectively, K-14 districts) and the other 50% is
to be refunded to taxpayers.

In the years immediately following enactment, very few California
governmental entities operated near their appropriations limit. In the
mid-to-late 1980's, many entities were at or approaching their limit,
and several successfully obtained voter approval for four-year waivers
of the limit. Since Proposition 111, the appropriations limit has
again ceased to be a practical limit on California governments, but
this condition may change in the future. During fiscal year 1986-87,
State receipts from proceeds of taxes exceeded its appropriations
limit by $1.138 billion, which was returned to taxpayers. Since that
time, appropriations subject to limitation were under the State limit.
The 1996-97 Budget provided for State appropriations more than $7.0
billion under the limit for fiscal year 1996-97.

OBLIGATIONS OF THE STATE OF CALIFORNIA

As of January 1, 1998, the State had approximately $18.6 billion of
general obligation bonds outstanding (including $986 million of
commercial paper notes which were intended to be refinanced by future
bond sales), and $6.9 billion remained authorized but unissued. In
addition, the State had outstanding lease-purchase obligations,
payable from the State's General Fund, of approximately $6.4 billion,
and $1.4 billion authorized and unissued. State voters approved about
$6.4 billion of new bonds in two elections in 1996. Of the State's
outstanding general obligation debt, approximately 21% is presently
self-liquidating (for which program revenues are anticipated to be
sufficient to reimburse the General Fund for debt service payments).
In fiscal year 1996-97, debt service on general obligation bonds and
lease-purchase debt was approximately 5.0% of General Fund revenues.
The State has paid the principal of and interest on its general
obligation bonds, lease-purchase debt, and short-term obligations when
due.

ECONOMY

The State's economy is the largest among the 50 states and one of the
largest in the world. The State's population grew by 27% in the 1980s
and, at over 32 million, it now represents over 12% of the total U.S.
population. Total personal income in the State, at an estimated $810
billion in 1996, accounts for more than 12% of all personal income in
the nation. Total employment in 1995 was over 14 million, the majority
of which is in the service, trade, and manufacturing sectors.

From mid-1990 to late 1993, the State suffered a recession with the
worst economic, fiscal and budget conditions since the 1930s.
Construction, manufacturing (especially aerospace), and financial
services, among others, were all severely affected, particularly in
Southern California. Job losses were the worst of any post-war
recession. Employment levels stabilized by late 1993 and steady growth
has occurred since the start of 1994; pre-recession job levels were
reached in early 1996. Unemployment, while higher than the national
average, came down significantly from the January 1994 peak of 10%.
Economic indicators show a steady recovery underway in California
since the start of 1994 particularly in export-related industries,
high technology manufacturing and services, construction,
entertainment and tourism. The Asian economic difficulties may have
some dampening effect on the state's economy. Any delay or reversal of
the economic recovery may cause a recurrence of revenue shortfalls for
the State.

RECENT STATE FINANCIAL RESULTS

The principal sources of State General Fund revenues in 1996-97 were
the California personal income tax (47% of total revenues), the sales
tax (34%), bank and corporation taxes (12%), and the gross premium tax
on insurance (2%). The State maintains a Special Fund for Economic
Uncertainties (the SFEU), derived from General Fund revenues, as a
reserve to meet cash needs of the General Fund, but which is required
to be replenished as soon as sufficient revenues are available.
Year-end balances in the SFEU are included for financial reporting
purposes in the General Fund balance. Because of the recession
starting in 1990-91, the SFEU has not had a significant positive
balance in this decade until the 1996-97 Fiscal Year. It is projected
to be less than one-half of one percent of General Fund revenues in
1997-98 and 1998-99.

Throughout the 1980s, State spending increased rapidly as the State
population and economy also grew rapidly, including many assistance
programs to local governments, which were constrained by Proposition
13 and other laws. The largest State program is assistance to local
public school districts. In 1988, an initiative (Proposition 98) was
enacted which (subject to suspension by a 2/3 vote of the Legislature
and the Governor) guarantees local school districts and community
college districts a minimum share of State General Fund revenues
(currently about 35%).

Since the start of fiscal year 1990-91 until fiscal year 1995-96, the
State faced adverse economic, fiscal, and budget conditions. The
economic recession seriously affected State tax revenues. It also
caused increased expenditures for health and welfare programs. The
State is also facing a structural imbalance in its budget with the
largest programs supported by the General Fund (education, health,
welfare and corrections) growing at rates significantly higher than
the growth rates for the principal revenue sources of the General
Fund. These structural concerns will continue in future years; in
particular, it is anticipated that there will be a need to increase
capital and operating costs of the correctional system in response to
a "Three Strikes" law enacted in 1994 which mandates life imprisonment
for certain felony offenders.

RECENT BUDGETS. As a result of these factors, among others, from the
late 1980s until 1992-93 the State had a period of nearly chronic
budget imbalance, with expenditures exceeding revenues in four out of
six years, and the State accumulated and sustained a budget deficit in
the SFEU approaching $2.8 billion at its peak at June 30, 1993. For
several years, each budget required multibillion dollar actions to
bring projected revenues and expenditures into balance and to close
large "budget gaps" which were identified. The Legislature and
Governor eventually agreed on a number of different steps to produce
Budget Acts in the years 1991-92 to 1994-95, (although not all these
actions were taken in each year):

(small solid bullet) significant cuts in health and welfare program
expenditures;

(small solid bullet) transfers of program responsibilities and some
funding sources from the State to local governments, coupled with some
reduction in mandates on local government;

(small solid bullet) transfer of about $3.6 billion in annual local
property tax revenues from cities, counties, redevelopment agencies
and some other districts to local school districts, thereby reducing
state funding for schools;

(small solid bullet) reduction in growth of support for higher
education programs, coupled with increases in student fees;

(small solid bullet) revenue increases (particularly in the fiscal
year 1991-92 budget), most of which were for a short duration;

(small solid bullet) increased reliance on aid from the federal
government to offset the costs of incarcerating, educating and
providing health and welfare services to undocumented aliens (although
these efforts have produced much less federal aid than the State
Administration had requested); and

(small solid bullet) various one-time adjustment and accounting
changes.

The combination of stringent budget actions cutting State
expenditures, and the turnaround of the economy by late 1993, finally
led to the restoration of positive financial results, with revenues
equaling or exceeding expenditures starting in fiscal year 1992-1993.
As a result, the accumulated budget deficit of about $2.8 billion was
eliminated by June 30, 1997, when the State showed a positive balance
of about $408 million, on a budgetary basis, in the SFEU.

A consequence of the accumulated budget deficits in the early 1990's,
together with other factors such as disbursement of funds to local
school districts "borrowed" from future fiscal years and hence not
shown in the annual budget, was to significantly reduce the State's
cash resources available to pay its ongoing obligations. The State's
cash condition became so serious that from late spring 1992 until
1995, the State had to rely on issuance of short term notes which
matured in a subsequent fiscal year to finance its ongoing deficit,
and pay current obligations. For a two-month period in the summer of
1992, pending adoption of the annual Budget Act, the State was forced
to issue registered warrants (IOUs) to some of its suppliers,
employees and other creditors. The last of these deficit notes was
repaid in April, 1996.

The 1995-96 and 1996-97 Budget Acts reflected significantly improved
financial conditions, as the State's economy recovered and tax
revenues soared above projections. Over the two years, revenues
averaged about $2 billion higher than initially estimated. Most of the
additional revenues were allocated to school funding, as required by
Proposition 98, and to make up shortfalls in federal aid for health
and welfare costs and costs of illegal aliens. The budgets for both
these years showed strong increases in funding for K-14 public
education, including implementation of initiatives to reduce class
sizes for lower elementary grades to not more than 20 pupils. Higher
education funding also increased. Spending for health and welfare
programs was kept in check, as previously-implemented cuts in benefit
levels were retained.

The final results for fiscal year 1996-97 showed General Fund revenues
of $49.2 billion and expenditures of $48.9 billion. The improved
revenues allowed the repayment of the last of the recession-induced
budget deficits; the SFEU had a balance of $408 million on a budgetary
basis ($281 million on a cash basis) as of June 30, 1997, the first
significant positive balance in the decade. In 1996-97, the State
implemented its regular cash flow borrowing program with the issuance
of $3.0 billion of Revenue Anticipation Notes which matured on June
30, 1997, and did not require any external borrowing over the end of
the fiscal year.

Fiscal Year 1997-98 Budget. With continued strong economic recovery
and surging tax receipts, the State entered the 1997-98 Fiscal Year in
the strongest financial position in the decade. However, in May 1997,
the California Supreme Court ruled that the State had acted illegally
in 1993 and 1994 by using a deferral of payments to the Public
Employees Retirement Fund to help balance earlier budgets. In response
to this court decision, the Governor ordered an immediate repayment to
the Retirement Fund of about $1.235 billion, which was made in late
July, 1997, and substantially "used up" the expected additional
revenues for the fiscal year.

On August 18, 1997, the Governor signed the 1997-98 Budget Act. The
Budget Act assumes General Fund revenues and transfers of $52.5
billion, and contains expenditures of $52.8 billion. As a result, the
budget reserve (SFEU) is reduced to an estimated $112 million at June
30, 1998. The Budget Act also contains $14.4 million of Special Fund
expenditures. Following enactment of the Budget Act, the State plans
to carry out its normal annual cash flow borrowing, totaling $3.0
billion to mature June 30, 1998.

The 1997-98 Budget Act provides another year of rapidly increasing
funding for K-14 public education. Total General Fund support will
reach $5,150 per pupil, more than 20% higher than the recession-period
levels which were in effect as late as fiscal year 1993-94. The $1.75
billion in new funding will be spent on class size reduction and other
initiatives, as well as fully funding growth and cost of living
increases. Support for higher education units in the State also
increased by about 6 percent. Because of the pension payment, most
other State programs were funded at levels consistent with prior
years, and several initiatives had to be dropped. These included
additional assistance to local governments, state employee raises, and
funding of a bond bank.

Part of the 1997-98 Budget Act was completion of State welfare reform
legislation to implement the new federal law passed in 1996. The new
State program, called "CalWORKs," to become effective January 1, 1998,
will emphasize programs to bring aid recipients into the workforce. As
required by federal law, new time limits will be placed on receipt of
welfare aid. Grant levels for 1997-98 remain at the reduced, prior
years' levels.

Although, as noted, the 1997-98 Budget Act projects a budget reserve
in the SFEU of $112 million on June 30, 1998, the General Fund fund
balance on that date also reflects $1.25 billion of "loans" which the
General Fund made to local schools in the recession years,
representing cash outlays above the mandatory minimum funding level.
Settlement of litigation over these transactions in July 1996 calls
for repayment of these loans over the period ending in 2001-02, about
equally split between outlays from the General Fund and from schools'
entitlements. the 1997-98 Budget Act contained a $200 million
appropriation from the General Fund toward this settlement.

Updated figures from the Department of Finance, released in early
January, 1998, project both revenues and expenditures will be higher
in 1997-98 than estimated when the Budget Act was passed, reflecting
continued strong economic activity. The Department projects the SFEU
at June 30, 1998 will be approximately $329 million.

PROPOSED 1998-99 FISCAL YEAR BUDGET. The Governor released his
proposed FY 1998-99 Budget on January 9, 1998. It projected General
Fund revenues and transfers of $55.4 billion, an increase of almost 5%
over 1997-98. Revenue losses due to tax cuts enacted in late 1997 were
expected to be offset by higher capital gains realizations. The
Governor proposed expenditures of $55.4 billion, also an almost 5%
increase from the prior year. The Governor's Budget proposes
significant additional funding for K-12 schools under Proposition 98,
as well as additional funding for higher education, with a proposed
reduction of college student fees. State and federal funds will be
used in the new CalWORKS welfare program, with projections of a fourth
consecutive year of caseload decline. The Governor has proposed a
large capital expenditure program, focusing on schools and
universities, but also including corrections, environmental and
general government projects. These proposals would require approval of
almost $10 billion of new general obligation bonds over the next six
years. All of the Governor's proposals will be reviewed by the
Legislature as part of the annual budget process.

The State's financial difficulties for the past budget years and other
factors noted above will result in continued pressure upon almost all
local governments, especially those which depend on State aid, such as
school districts and counties. While recent budgets included both
permanent tax increases and actions to reduce costs of state
government over the longer term, the Governor and other analysts have
noted that structural imbalances still exist, and there can be no
assurance that the State will not face budget gaps in the future.

The ratings on California's long-term general obligation bonds were
reduced in the early 1990's from "AAA" levels which had existed prior
to the recession. In 1996, Fitch and Standard & Poor's raised their
ratings of California's general obligation bonds, which are currently
assigned ratings of "A+" from Standard & Poor's, "A1" from Moody's and
"AA-" from Fitch. There can be no assurance that such ratings will be
maintained in the future. It should be noted that the creditworthiness
of obligations issued by local California issuers may be unrelated to
creditworthiness of obligations issued by the state of California, and
that there is no obligation on the part of the state to make payment
on such local obligations in the event of default.

OBLIGATIONS OF OTHER CALIFORNIA ISSUERS

STATE ASSISTANCE. Property tax revenues received by local governments
declined more than 50% following passage of Proposition 13.
Subsequently, the State's Legislature enacted measures to provide for
the redistribution of the State's General Fund surplus to local
agencies; the reallocation of certain State revenues to local
agencies; and the assumption of certain governmental functions by the
State to assist municipal issuers to raise revenues. Total local
assistance from the State's General Fund totaled approximately $36.6
billion in fiscal year 1996-97 (over 70% of General Fund expenditures)
and has been budgeted at $38.8 billion for fiscal year 1997-98,
including the effect of implementing reductions in certain aid
programs. To reduce State General Fund support for school districts,
the 1992-93 and 1993-94 Budget Acts caused local governments to
transfer $3.8 billion of annual property tax revenues to school
districts, representing reversal of the post-Proposition 13 "bailout"
aid.

Legislation enacted in late 1997 provides for the State to take over
financial responsibility for funding trial courts throughout the
State. This is estimated to save counties and cities a total of over
$350 million annually.

To the extent the State should be constrained by its Article XIIIB
appropriations limit, or its obligation to conform to Proposition 98,
or other considerations, the absolute level, or the rate of growth, of
State assistance to local governments may continue to be reduced. Any
such reductions in State aid could compound the serious fiscal
constraints already experienced by many local governments,
particularly counties. A number of counties both rural and urban, have
indicated that their budgetary condition is extremely serious. At the
start of fiscal year 1995-96, Los Angeles County ("L.A. County") the
largest county in the State, was forced to impose significant cuts in
services and personnel, particularly in the health care system, in
order to balance its budget. L.A. County's debt was downgraded by
Moody's and S&P in the summer of 1995. Orange County, which recently
emerged from federal bankruptcy protection, has substantially reduced
services and personnel in order to live within much reduced means. A
school district (Richmond Unified) filed for protection under
bankruptcy laws several years ago, but the petition was later
dismissed; other school districts have indicated financial stress,
although none has threatened bankruptcy.

Counties and cities may face further budgetary pressures as a result
of changes in welfare and public assistance programs, which were
enacted in August, 1997 in order to comply with the federal welfare
reform law. Generally, counties play a large role in the new system,
and are given substantial flexibility to develop and administer
programs to bring aid recipients into the workforce. Counties are also
given financial incentives if either at the county or statewide level,
the "Welfare-to-Work" programs exceed minimum targets; counties are
also subject to financial penalties for failure to meet such targets.
Counties remain responsible to provide "general assistance" for
able-bodied indigents who are ineligible for other welfare programs.
The long-term financial impact of the new CalWORKS system on local
governments is still unknown.

ASSESSMENT BONDS. Municipal obligations which are assessment bonds or
Mello-Roos bonds may be adversely affected by a general decline in
real estate values or a slowdown in real estate sales activity. In
many cases, such bonds are secured by land which is undeveloped at the
time of issuance but anticipated to be developed within a few years
after issuance. In the event of such reduction or slowdown, such
development may not occur or may be delayed, thereby increasing the
risk of a default on the bonds. Because the special assessments or
taxes securing these bonds are not the personal liability of the
owners of the property assessed, the lien on the property is the only
security for the bonds. Moreover, in most cases the issuer of these
bonds is not required to make payments on the bonds in the event of
delinquency in the payment of assessments or taxes, except from
amounts, if any, in a reserve fund established for the bonds.

CALIFORNIA LONG-TERM LEASE OBLIGATIONS. Certain State long-term lease
obligations, though typically payable from the General Fund of the
municipality, are subject to "abatement" in the event the facility
being leased is unavailable for beneficial use and occupancy by the
municipality during the term of the lease. Abatement is not a default,
and there may be no remedies available to the holders of the
certificates evidencing the lease obligation in the event abatement
occurs. The most common causes of abatement are failure to complete
construction of the facility before the end of the period during which
lease payments have been capitalized and uninsured casualty losses to
the facility (e.g., due to earthquake). In the event abatement occurs
with respect to a lease obligation, lease payments may be interrupted
(if all available insurance proceeds and reserves are exhausted) and
the certificates may not be paid when due.

Several years ago the Richmond Unified School District (District)
entered into a lease transaction in which certain existing properties
of the District were sold and leased back in order to obtain funds to
cover operating deficits. Following a fiscal crisis in which the
District's finances were taken over by a State receiver (including a
brief period under bankruptcy court protection), the District failed
to make rental payments on this lease, resulting in a lawsuit by the
Trustee for the Certificate of Participation holders. One of the
defenses raised in answer to this lawsuit was the invalidity of the
original lease transaction. The trial court upheld the validity of the
District's lease, and the case has been settled. However, any future
judgment in a similar case against the position taken by the Trustee
may have implications for lease transactions of a similar nature by
other State entities.

OTHER CONSIDERATIONS. The repayment of Industrial Development
Securities secured by real property may be affected by State laws
limiting foreclosure rights of creditors. Health Care and Hospital
Securities may be affected by changes in State regulations governing
cost reimbursements to health care providers under Medi-Cal (the
State's Medicaid program), including risks related to the policy of
awarding exclusive contracts to certain hospitals.

Limitations on AD VALOREM property taxes may particularly affect "tax
allocation" bonds issued by State redevelopment agencies. Such bonds
are secured solely by the increase in assessed valuation of a
redevelopment project area after the start of redevelopment activity.
In the event that assessed values in the redevelopment project decline
(for example, because of a major natural disaster such as an
earthquake), the tax increment revenue may be insufficient to make
principal and interest payments on these bonds. Both Moody's and S&P
suspended ratings on State tax allocation bonds after the enactment of
Articles XIIIA and XIIIB, and only resumed such ratings on a selective
basis.

Proposition 87, approved by State voters in 1988, requires that all
revenues produced by a tax rate increase go directly to the taxing
entity which increased such tax rate to repay that entity's general
obligation indebtedness. As a result, redevelopment agencies (which,
typically, are the issuers of Tax Allocation Securities) no longer
receive an increase in tax increment when taxes on property in the
project area are increased to repay voter-approved bonded
indebtedness.

Substantially all of the State is within an active geologic region
subject to major seismic activity. Any California municipal obligation
held by the fund could be affected by an interruption of revenues
because of damaged facilities or, consequently, income tax deductions
for casualty losses or property tax assessment reductions.
Compensatory financial assistance could be constrained by the
inability of (i) an issuer to have obtained earthquake insurance
coverage at reasonable rates; (ii) an insurer to perform on its
contracts of insurance in the event of widespread losses; or (iii) the
federal or State government to appropriate sufficient funds within
their respective budget limitations.

Because of the complex nature of Articles XIIIA, XIIIB, XIIIC and
XIIID of the California Constitution (described briefly above), the
ambiguities and possible inconsistencies in their terms, and the
impossibility of predicting future appropriations or changes in
population and the cost of living, and the probability of continuing
legal challenges, it is not currently possible to determine fully the
impact of these provisions, or the outcome of any pending litigation
with respect to those provisions on State obligations held by the fund
or on the ability of the State or local governments to pay debt
service on such obligations. Legislation has been or may be introduced
(either in the State Legislature or by initiative) which would modify
existing taxes or other revenue-raising measures or which either would
further limit or, alternatively, would increase the abilities of State
and local governments to impose new taxes or increase existing taxes.
It is not presently possible to predict the extent to which any such
legislation will be enacted, or if enacted, how it would affect
California municipal obligations. It is also not presently possible to
predict the extent of future allocations of State revenues to local
governments or the abilities of State or local governments to pay the
interest on, or repay the principal of, such California municipal
obligations in light of future fiscal circumstances.

SPECIAL CONSIDERATIONS REGARDING PUERTO RICO

The following highlights some of the more significant financial trends
and problems affecting the Commonwealth of Puerto Rico (the
"Commo nw ealth" or "Puerto Rico"), and is based on information
drawn from official statements and prospectuses relating to the
securities offerings of Puerto Rico, its agencies and
instrumentalities, as available on the date of this SAI. FMR has not
independently verified any of the information contained in such
official statements, prospectuses, and other publicly available
documents, but is not aware of any f act that w ould render such
information materially inaccurate.

The economy of Puerto Rico is fu lly integrated with that of the
United States. In fiscal 1997, trade with the United States accounted
for approximately 88 % of Puerto Rico's exports and
approximately 62% of its imports. In this regard, in fiscal 1997
Puerto Rico experienced a $ 2.7 billion positive adjusted
merchandise trade balance.

Since fiscal 1985, personal income, both aggregate and per capita,
has increased consistently each fiscal year. In fiscal 1997, aggregate
personal income was $32.1 billion ($30.0 billion in 1992 prices) and
personal per capita income was $8,509 ($7,957 in 1992 prices). Gross
product in fiscal 1993 was $25.1 billion ($24.5 billion in 1992
prices) and gross product in fiscal 1997 was $32.1 billion ($27.7
billion in 1992 prices). This represents an increase in gross product
of 27.7% from fiscal 1993 to 1997 (13.0% in 1992 prices).

Puerto Rico's economic expansion, which has lasted over ten years,
continued throughout the five-year period from fiscal 1993 through
fiscal 199 7. Almost every sector of the economy participated, and
record levels of employment were achieved. Factors behind the
continued expansion included Government-sponso red economic
development programs, periodic declines in the exchange value of the
U.S. dollar, i ncreases in th e level of federal transfers, and
the relatively low cost of borrowing funds during the peri od.

A v erage employment increased from 999,000 in fiscal 1993 to
1,128,300 in fiscal 1997. Unemployment, although at relatively low
historical levels, remains above the U.S. average. Average
unemployment decreased from 16.8% in fiscal 1993 to 13.1% in fiscal
199 7.

Manufacturing is the largest sector in th e economy accounting for
$19.8 billion or 41.2% of gross domestic product in fiscal 1997. The
manufacturing sector employed 153,273 workers as of March 1997.
Manufacturing in Puerto Rico is now more diversified than during
earlier phases of industrial development. In the last two decades
industrial development has tended to be more capital intensive and
dependent on skilled labor. This gradual shift is best exemplified by
heavy investment in pharmaceuticals, scientific instruments,
computers, microprocessors, and electrical products over the last
decade. The service sector, which includes wholesale and retail trade
and finance, insurance, real estate, hotels and related services, and
other services, ranks second in its contribution to gross domestic
product and is the sector that employs the greatest number of people.
In fiscal 1997, the service sector generated $18.4 billion in gross
domestic product or 38.2% of the total. Employment in this sector grew
from 467,000 in fiscal 1993 to 551,000 in fiscal 1997, a cumulative
increase of 17.8%. This increase was greater than the 12.9% cumulative
growth in employment over the same period providing 48% of total
employment. The Government sector of the Commonwealth plays an
important role in the economy of the island. In fiscal year 1997, the
Government accounted for $5.2 billion of Puerto Rico's gross domestic
product and provided 10.9% of the total employment. The construction
industry has experienced real growth since fiscal 1987. In fiscal
1997, investment in construction rose to $4.7 billion, an increase of
14.7% as compared to $4.1 billion for fiscal 1996. Tourism also
contributes significantly to the island economy, accou nting for
$2.0 billion of gross domestic product in fiscal 1997.

The present administration has developed and is implementing a new
economic development program which is based on the premise that the
private sector should provide the primary impetus for economic
development and growth. This new program, which is referred to as the
New Economic Model, promotes changing the role of the Government from
one of being a provider of most basic services to that of a
facilitator for private sector initiatives and encourages private
sector investment by reducing Government-imposed regulatory
restraints.

The Ne w Economic Model contemplates the development of initiatives
that will foster private investment in, and private management of,
sectors that are served more efficiently and effectively by the
private enterprise. One of these initiatives has been the adoption of
a new tax code intended to expand the tax base, reduce top personal
and corporate tax rates, and simplify the tax system. Another
initiative is the improvement and expansion of Puerto Rico's
infrastructure to facilitate private sector development and growth,
such as the construction of the water pipeline and cogeneration
facilities described below and the construction of a light rail system
for the San Juan m etropolitan area.

The New Economic Model also seeks to identify and promote areas in
which Puerto Rico can compete more effectively in the global markets.
Tourism has been identified as one such area because of its potential
for job creation and contribution to the gross product. In 1993, a new
Tourism Incentives Act and a Tourism Development Fund were implemented
in order to provide special tax incentives and financing for the
development of new hotel projects and the tourism industry. As a
result of these initiatives, new hotels have been constructed or are
under construction which have increased the number of hotel rooms on
the island from 8,415 in fiscal 1992 to 1 0,877 at the end of
fiscal 1997 and to a projected 11,972 by the end of fiscal 1998.

The New Economic Model also seeks to redu ce the size of the
Government's direct contribution to gross domestic product. As part of
this goal, the Government has transferred certain Governmental
operations and sold a number of its assets to private parties. Among
these are: (i) the Government sold the assets of the Puerto Rico
Maritime Authority; (ii) the Government executed a five-year
management agreement for the operation and management of the Aqueducts
and Sewer Authority by a private company; (iii) the Aqueducts and
Sewer Authority executed a construction and operating agreement with a
private consortium for the design, construction, and operation of an
approximately 75 million gallon per day water pipeline to the San Juan
metropolitan area from the Dos Bocas reservoir in Utuado; (iv) the
Electric Power Authority executed power purchase contracts with
private power producers under which two cogeneration plants (with a
total capacity of 800 megawatts) will be constructed; (v) the
Corrections Administration entered into operating agreements with two
private companies for the operation of three new correctional
facilities; (vi) the Government entered into a definitive agreement to
sell certain assets of a pineapple juice processing business and sold
certain mango growing operations; (vii) the Government is in the
process of transferring to local sugar cane growers certain sugar
processing facilities; (viii) the Government sold two hotel properties
and is currently negotiating the sale of a complex consisting of two
hotels and a convention center; and (ix) the Government has announced
its intention to sell the Puerto Rico Telephone Company and is
currently involved in the sale process.

One of the goals of the Ros sello administration is to change Puerto
Rico's public health care system from one in which the Government
provides free health services to low income individuals through public
health facilities owned and administered by the Government to one in
which all medical services are provided by the private sector and the
Government provides comprehensive health insurance coverage for
qualifying (generally low income) Puerto Rico residents. Under this
new system, the Government selects, through a bidding system, one
private health insurance company in each of several designated regions
of the island and pays such insurance company the insurance premium
for each eligible beneficiary within such region. This new health
insurance system is now covering 61 municipalities out of a total of
78 on the island. It is expected that 11 municipalities will be added
by the end of fiscal 1998 and 5 more by the end of fiscal 1999. The
total cost of this program will depend on the number of municipalities
included in the program, the number of participants receiving
coverage, and the date coverage commences. As of December 31, 1997,
over 1.1 million persons were participating in the program at an
estimated annual cost to Puerto Rico for fiscal 1998 of approximately
$672 million. In conjunction with this program, the operation of
certain public health facilities has been transferred to private
entities. The Government's current privatization plan for health
facilities provides for the transfer of ownership of all health
facilities to private entities. The Government sold six health
facilities to private companies and is currently in negotiations with
other private companies for the sale of thirteen health facilities
to such companies.

One of the factors assisting the development of the manufacturing
sector in Puerto Rico has been the federal and Commonwealth tax
incentives available, particularly those under the Puerto Rico
Industrial Incentives Program and Sections 30A and 936 of the Internal
Revenue Code 1986, as amended (the "Code").

Since 1948, Puerto Rico has promulgated various industrial
incentives laws designed to stimulate industrial investment. Under
these laws, companies engaged in manufacturing and certain other
designated activities were eligible to receive full or partial
exemption from income, property, and other taxes. The most recent of
these laws is Act No. 135 of December 2, 1997 (the "1998 Tax
Incentives Law").

The benefits provided by the 1998 Tax Incentives Law are available
to new companies as well as companies currently conducting tax-exempt
operations in Puerto Rico that choose to renegotiate their existing
tax exemption grant. Activities eligible for tax exemption include
manufacturing, certain services performed for markets outside Puerto
Rico, the production of energy from local renewable sources for
consumption in Puerto Rico, and laboratories for scientific and
industrial research. For companies qualifying thereunder, the 1998 Tax
Incentives Law imposes income tax rates ranging from 2% to 7%. In
addition, it grants 90% exemption from property taxes, 100% exemption
from municipal license taxes during the first eighteen months of
operation and between 80% and 60% thereafter, and 100% exemption from
municipal excise taxes. The 1998 Tax Incentives Law also provides
various special deductions designated to stimulate employment and
productivity, research and development, and capital investment in
Puerto Rico.

Under the 1998 Ta x Incentives Law, companies are able to repatriate
or distribute their profits free of tollgate taxes. In addition,
passive income derived from designated investments will continue to be
fully exempt from income and municipal license taxes. Individual
shareholders of an exempted business will be allowed a credit against
their Puerto Rico income taxes equal to 30% of their proportionate
share in the exempted business' income tax liability. Gain from the
sale or exchange of shares of an exempted business by its shareholders
during the exe mption period will be subject to a 4% income tax
rate.

For many years, U.S. companies operating in Puerto Rico enjoyed a
special tax credit that was available under Section 936 of the Code.
Originally, the credit provided an effective 100% federal tax
exemption for operating and qualifying investment income from Puerto
Rico sources. Amendments to Section 936 made in 1993 (the "1993
Amendments") instituted two alternative methods for calculating the
tax credit and limited the amount of the credit that a qualifying
company could claim. These limitations are based on a percentage of
qualifying income (the "percentage of income limitation") and on
qualifying expenditures on wages and other wage related benefits (the
"economic ac tivity limitation", also known as the "wage credit
limitatio n"). As a result of amendments incorporated in the Small
Business Job Protection Act of 1996 enacted by the U.S. Congress and
signed into law by President Clinton on August 20, 1996 (the "1996
Amendments"), the tax cr edit, as described belo w, is now being
phased out over a ten-year period for existing claimants and is no
longer available for corporations that established operations in
Puerto Rico after October 13, 1995 (including existing Section 936
Corporations (as defined below) to the extent substantially new
operations are establis hed in Puerto Rico). The 1996 Amendments
also moved the credit based on the economic activity limitation to
Section 30A of the Code and phased it out over 10 years. In addition,
the 1996 Amendments eliminated the credit previously available for
income derived from certain qualified investments in Puerto Rico. The
Section 30A credit and the remaining Section 936 credit are discussed
below.

SECTION 30A. The 1996 Amendments added a new Section 30A to the Code.
Section 30A permits a "qualifying domestic corporation" ("QDC") that
meets certain gross income tests (which are similar to the 80% and 75%
gross income tests of Section 936 of the Code discussed below) to
claim a credit (the "Section 30A credit") against the federal income
tax imposed on taxable income derived from sources outside the United
States from the active conduct of a trade or business in Puerto Rico
or from the sale of substantially all the assets used in such business
("possession income").

A QDC is a U.S. corporation which (i) was actively conducting a trade
or business in Puerto Rico on October 13, 1995, (ii) had a Section 936
election in effect for its taxable year that included October 13,
1995, (iii) does not have in effect an election to use the percentage
limitation of Section 936(a)(4)(B) of the Code, and (iv) does not add
a "substantial new line of business."

The Section 30A credit is limited to the sum of (i) 60% of qualified
possession wages as defined in the Code, which includes wages up to
85% of the maximum earnings subject to the OASDI portion of Social
Security taxes plus an allowance for fringe benefits of 15% of
qualified possession wages, (ii) a specified percentage of
depreciation deductions ranging between 15% and 65%, based on the
class life of tangible property, and (iii) a portion of Puerto Rico
income taxes paid by the QDC, up to a 9% effective tax rate (but only
if the QDC does not elect the profit-split method for allocating
income from intangible property).

A QDC electing Section 30A of the Code may compute the amount of its
active business income, eligible for the Section 30A Credit, by using
either the cost sharing formula, the profit-split formula, or the
cost-plus formula, under the same rules and guidelines prescribed for
such formulas as provided under Section 936 (see discussion below). To
be eligible for the first two formulas, the QDC must have a
significant presence in Puerto Rico.

In the case of taxable years beginning after December 31, 2001, the
amount of possession income that would qualify for the Section 30A
credit would be subject to a cap based on the QDC's possession income
for an average adjusted base period ending before October 14, 1995.

Section 30A applies only to taxable years beginning after December 31,
1995 and before January 1, 2006.

SECTION 936. Under Section 936 of the Code, as amended by the 1996
Amendments, and as an alternative to the Section 30A credit, U.S.
corporations that meet certain requirements and elect its application
("Section 936 Corporations") are entitled to credit against their U.S.
corporate income tax, the portion of such tax attributable to income
derived from the active conduct of a trade or business within Puerto
Rico ("active business income") and from the sale or exchange of
substantially all assets used in the active conduct of such trade or
business. To qualify under Section 936 in any given taxable year, a
corporation must derive for the three-year period immediately
preceding the end of such taxable year (i) 80% or more of its gross
income from sources within Puerto Ri co and (ii) 75% or more of
its gross income from the active conduct of a trade or business in
Puerto Rico.

Under Section 936, a Section 936 Corporation may elect to compute its
active business income, eligible for the Section 936 credit, under one
of three formulas: (A) a cost-sharing formula, whereby it is allowed
to claim all profits attributable to manufacturing intangibles, and
other functions carried out in Puerto Rico, provided it contributes to
the research and development expenses of its affiliated group or pays
certain royalties; (B) a profit-split formula, whereby it is allowed
to claim 50% of the net income of its affiliated group from the sale
of products manufactured in Puerto Rico; or (C) a cost-plus formula,
whereby it is allowed to claim a reasonable profit on the
manufacturing costs incurred in Puerto Rico. To be eligible for the
first two formulas, the Section 936 Corporation must have a
significant business presence in Puerto Rico for purposes of the
Section 936 rules.

As a result of the 1993 Amendments and the 1996 Amendments, the
Section 936 credit is only available to companies that elect the
percentage of income limitation and is limited in amount to 40% of the
credit allowable prior to the 1993 Amendments, subject to a five-year
phase-in period from 1994 to 1998 during which period the percentage
of the allowable credit is reduced from 60% to 40%.

In the case of taxable years beginning on or after 1998, the
possession income subject to the Section 936 credit will be subject to
a cap based on the Section 936 Corporation's possession income for an
average adjusted base period ending on October 14, 1995. The Section
936 credit is eliminated for taxable years beginning in 2006.

PROPOSAL TO EXTEND T HE PHASEOUT OF SECTION 30A. During 1997, the
Government of Puerto Rico proposed to Congress the enactment of a new
permanent federal incentive program similar to that provided under
Section 30A. Such a program would provide U.S. companies a tax credit
based on qualifying wages paid and other wage-related expenses, such
as fringe benefits, as well as depreciation expenses for certain
tangible assets and research and development expenses. Under the
Governor's proposal, the credit granted to qualifying companies would
continue in effect until Puerto Rico shows, among other things,
substantial economic improvements in terms of certain economic
parameters. The fiscal 1998 budget submitted by President Clinton to
Congress in February 1997 included a proposal to modify Section 30A to
(i) extend the availability of the Section 30A credit indefinitely;
(ii) make it available to companies establishing operations in Puerto
Rico after October 13, 1995; and (iii) eliminate the income cap.
Although this proposal, was not included in the final fiscal 1998
federal budget, President Clinton's fiscal 1999 budget submitted to
Congress again included these modifications to Section 30A. While the
Government of Puerto Rico plans to continue lobbying for this
proposal, it is not possible at this time to predict whethe r the
Section 30A credit will be so modified.

OUTLOOK. It i s not possible at this time to determine the long-term
effect on the Puerto Rico economy of the enactment of the 1996
Amendments. The Government of Puerto Rico does not believe there will
be short-term or medium-term material adverse effects on Puerto Rico's
economy as a result of the enactment of the 1996 Amendments. The
Government of Puerto Rico further believes that during the phase-out
period sufficient time exists to implement additional incentive
programs to safeguard Puerto Rico's competitive position.

PORTFOLIO TRANSACTIONS

All orders for the purchase or sale of portfolio securities are placed
on behalf of each fund by FMR pursuant to authority contained in the
manage ment contract. FMR is also responsible for the placement
of transaction orders for other investment companies and investment
accounts for which it or its affiliates act as investment adviser. In
selecting broker-dealers, subject to applicable limitations o f the
federal securities laws, FMR considers various relevant factors,
including, but not limited to: the size and type of the transaction;
the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability,
and financial condition of the broker-dealer firm; the broker-dealer's
execution services rendered on a continuing basis; the reasonableness
of any commissions; and, if applicable, arrangements for payment of
fund expenses.

If FMR grants investment management authority to a sub-adviser (see
the section entitled "Management Contracts"), that sub-adviser is
authorized to place orders for the purchase and sale of
portf olio securities, and will do so in accordance with the
policies described above.

Each fund may execute portfolio transactions with broker-dealers who
provide research and execution services to the fund or other
investment accounts over which FMR or its affiliates exercise
investment discretion. Such services may include advice concerning the
value of securities; the advisability of investing in, purchasing, or
selling securities; and the availability of securities or the
purchasers or sellers of securities. In addition, such broker-dealers
may furnish analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy, and
performance of investment accounts; and effect securities transactions
and perform functions incidental thereto (such as clearance and
settlement).

For transactions in fixed-income securities, FMR's selection of
broker-dealers is generally based on the availability of a security
and its price and, to a lesser extent, on the overall quality of
execution and other services, including research, provided by the
broker-dealer.

The receipt of research from broker-dealers that execute transactions
on behalf of a fund may be useful to FMR in rendering investment
management services to that fund or its other clients, and conversely,
such research provided by broker-dealers who have executed transaction
orders on behalf of other FMR clients may be useful to FMR in carrying
out its obligations to a fund. The receipt of such research has not
reduced FMR's normal independent research activities; however, it
enables FMR to avoid the additional expenses that could be incurred if
FMR tried to develop comparable information through its own efforts.

Fixed-income securities are generally purchased from an issuer or
underwriter acting as principal for the securities, on a net basis
with no brokerage co mmission p aid. However, the dealer is
compensated by a difference between the security's original purchase
price and the selling price, the so-called "bid-asked spread."
Securities may also be purchased from underwriters at prices that
include underwriting fees.

Subject to applicable limitations of the federal securities laws, a
fund may pay a broker-dealer commissions for agency transactions that
are in excess of the amount of commissions charged by other
broker-dealers in recognition of their research and execution
services. In order to cause a fund to pay such higher commissions, FMR
must determine in good faith that such commissions are reasonable in
relation to the value of the brokerage and research services provided
by such executing broker-dealers, viewed in terms of a particular
transaction or FMR's overall responsibilities to that fun d or
its other clients. In reaching this determination, FMR will not
attempt to place a specific dollar value on the brokerage and research
services provided, or to determine what portion of the compensation
should be related to those se rvices.

To the extent permit ted by a pplicable law, FMR is authorized
to allocate portfolio transactions in a manner that takes into account
assistance received in the distribution of shares of the funds or
other Fidelity funds and to use the research services of brokerage and
other firms that have provided such assistance. FMR may use research
services provided by and place agency transactions with National
Financial Services Corporation (NFSC), an indirect subsidiary of FMR
Corp., if the commissions are fair, reasonable, and comparable to
commissions charged by non-affil iated, qualified brokerage firms
for similar services.

FMR may allocate brokerage transactions to broker-dealers (including
affiliates of FMR) who have entered into arrangements with FMR under
which the broker-dealer allocates a portion of the commissions paid by
a fund toward the reduction of that fund's expenses. The transaction
quality must, however, be comparable to those of other qualified
broker-dealers.

Section 11(a) of the Securities Exchange Act of 1934 prohibits members
of national securities exchanges from executing exchange transactions
for i nvestm ent accounts which they or their affiliates manage,
unless certain requirements are satisfied. Pursuant to such
requirements, the Board of Trustees has authorized NFSC to execute
portfolio transactions on national securities exchanges in accordance
with approved procedures and applicable SEC rules.

The Trustees of each fund periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio
transactions on behalf of the fund and review the commissions paid by
the fund over representative periods of time to determine if they are
reasonable in relation to the benefits to the fund.

For the fiscal periods ended February 28, 1999 and February 28,
1998, the portfolio turnover rates were ___% and ___%, respectively,
for Spartan California Municipal Income. [Variations in turnover rate
may be due to a fluctuating volume of shareholder purchase and
redemption orders, market conditions, or changes in FMR's investment
outlook.]

[The following tables show the brokerage commissions paid by the
funds. Significant changes in brokerage commissions paid by a fund
from year to year may result from changing asset levels throughout the
year.] A fund may pay both commissions and spreads in connection with
the placement of portfolio transactions. [ For the fiscal year[s]
ended [month] [year] [[,/and] [month] [year] [[and [month] [year]]],
[the funds/[Name(s) of Fund(s)]] paid no brokerage commissions.]

[The following table sho ws the total amount of brokerage
commissions paid by each fund.

Fiscal Year Ended Total Amount Paid

CALIFORNIA MUNICIPAL MONEY [Month]
MARKET

1999 $

1998

1997

SPARTAN CALIFORNIA MUNICIPAL
MONEY MARKET

1999

1998

1997

SPARTAN CALIFORNIA MUNICIPAL
INCOME

1999

1998

1997

[ Of the following tables, the first shows the total amoun t of
brokerage commissions paid by each fund to NFSC for the past three
fiscal years. [ The second table shows the approximate percentage of
aggregate brokerage commissions paid by a fund to NFSC for
transactions involving the approximate percentage of the aggregate
dollar amount of transactions for which the fund paid brokerage
commissions for the fiscal year ended [year].] NFSC is paid on a
commission basis].]

Fiscal Year [Month] Total Amount Paid to NFSC

CALIFORNIA MUNICIPAL MONEY
MARKET

1999 $

1998

1997

SPARTAN CALIFORNIA MUNICIPAL
MONEY MARKET

1999

1998

1997

SPARTAN CALIFORNIA MUNICIPAL
INCOME

1999

1998

1997

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fiscal Year Ended 1999 % of Aggregate Commissions % of Aggregate Dollar Amount
Paid to NFSC of Transactions Effected
through NFSC

CALIFORNIA MUNICIPAL MONEY February % %
MARKET

SPARTAN CALIFORNIA MUNICIPAL February % %
MONEY MARKET

SPARTAN CALIFORNIA MUNICIPAL February % %
INCOME

</TABLE>

[: (dagger) T he difference between the percentage of aggregate
brokerage commissions paid to, and the percentage of the aggregate
dollar amount of transactions effected through, NFSC is a result of
the low commission rates charged by NFSC.]

[NFSC has used a portion of the commissions paid by [the/a] fund to
reduce that fund's [ custodian or transfer agent fees/ expenses].]

[The following table shows the dollar amount of brokerage
commissions paid to firms that provided research services and the
approximate dolla r amount of the transactions involved for the
fiscal year ended 1999].

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fiscal Year Ended 1999 $ Amount of Commissions Paid $ Amount of Brokerage
to Firms that Provided Transactions Involved*
Research Services*

CALIFORNIA MUNICIPAL MONEY February $ $
MARKET

SPARTAN CALIFORNIA MUNICIPAL February
MONEY MARKET

SPARTAN CALIFORNIA MUNICIPAL February
INCOME

</TABLE>

[*The provision of research services was not necessarily a factor
in the placement of all this business with such firms.]

[For the fiscal year ended ______, 199_ [the funds/[Name(s) of
Fund(s)]] paid no brokerage commissions to firms that provided
research services.]

T he Trustees of each fund have approved procedures in
conformity with Rule 10f-3 under the 1940 Act whereby a fund may
purchase securities that are offered in underwritings in which an
affiliate of FMR participates. These procedures prohibit the funds
from directly or indirectly benefiting an FMR affiliate in connection
with such underwritings. In addition, for underwritings where an FMR
affiliate participates as a principal underwriter, certain
restrictions may apply that could, among other things, limit the
amount of securities that the funds could purchase in the
underwriting.

From time to time the Trustees will review whether the recapture for
the benefit of the funds of some portion of the brokerage commissions
or similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at
present no other recapture arrangements are in effect. The Trustees
intend to continue to review whether recapture opportunities are
available and are legally permissible and, if so, to determine in the
exercise of their business judgment whether it would be advisable for
each fund to seek such recapture.

Although the Trustees and officers of each fund are substantially the
same as those of other funds managed by FMR or its affiliates,
investment decisions for each fund are made independently from those
of other funds managed by FMR or invest ment accounts managed by
FMR affiliates. It sometimes happens that the same security is held in
the portfolio of more than one of these funds or investment
accounts. Simultaneous transactions are inevitable when several funds
and investment accounts are managed by the same invest ment
adviser, particularly when the same security is suitable for the
investment objective of more than one fund or investment account.

When two or more funds are simultaneously engaged in the purchase or
sale of the same security, the prices and amounts are allocated in
accordance with procedures believed to be appropriate and equitable
for each fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as each fund is
concerned. In other cases, however, the ability of the funds to
participate in volume transactions will produce better executions and
prices for the funds. It is the current opinion of the Trustees that
the desirability of retaining FMR as investment adviser to each fund
outweighs any disadvantages that may be said to exist from exposure to
simultaneous transactions.

VALUATI ON

Each fund's net asset value per share (NAV) is the value of a
single share. The NAV of each fund is computed by adding the value of
the fund's investments, cash , and other assets, subtracting its
liabilities, and dividing the result by the number of shares
outstanding.

TAX-FREE BOND FUND. Portfolio securities are valued by various
methods. If quotations are not available, fixed-income securities are
usually valued on the basis of information furnished by a pricing
service that uses a valuation matrix which incorporates both
dealer-supplied valuations and electronic data processing techniques.
Use of pricing services has been approved by the Board of Trustees. A
number of pricing services are available, and the funds may use
various pricing services or discontinue the use of any pricing
service.

Futures contracts and options are valued on the basis of market
quotations, if available. Securities of other open-end investment
companies are valued at their respective NAVs.

The proc edures set forth above need not be used to determine the
value of the securities owned by a fund if, in the opinion of a
committee appointed by the Board of Trustees, some other method would
more accurately reflect the fair value of such securities. For
example, securities and other assets for which there is no readily
available market value may be valued in good faith by a committee
appointed by the Board of Trustees. In making a good faith
determination of the value of a security, the committee may review
price movements in futures contracts and American Depositary Receipts
(ADRs), market and trading trends, the bid/ask quotes of brokers and
off-exchange institutional trading.

MONEY MARKET FUNDS. Portfolio securities and other assets are valued
on the basis of amortized cost. This technique involves initially
valuing an instrument at its cost as adjusted for amortization of
premium or accretion of discount rather than its current market value.
The amortized cost value of an instrument may be higher or lower than
the price a fund would receive if it sold the instrument.

Securities of other open-end investment companies are valued at their
respective NAVs.

At such interv als as they deem appropriate, the Trustees consider
the extent to which NAV calculated by using market valuations would
deviate from the $1.00 per share calculated using amortized cost
valuation. If the Trustees believe that a deviation from a fund's
amortized cost per share may result in material dilution or other
unfair results to shareholders, the Trustees have agreed to take such
corrective action, if any, as they deem appropriate to eliminate or
reduce, to the extent reasonably practicable, the dilution or unfair
results. Such corrective action could include selling portfolio
instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; withholding dividends; redeeming
shares in kind; establishing NAV by using available market quotations;
and such other measures as the Trustees may deem appropriate.

PERFORMANCE

A fund m ay quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is
not intended to indicate future returns. The share price of a bond
fund, the yield of a fund, and return fluctuate in response to market
conditions and other factors, and the value of a bond fund's shares
when redeemed may be more or less than their original cost.

YIELD CALCULATIONS: ( MONEY MARKET FUNDS).To compute the yield for a
money market fund for a period, the net change in value of a
hypothetical account containing one share reflects the value of
additional shares purchased with dividends from the one original share
and dividends declared on both the original share and any additional
shares. The net change is then divided by the value of the account at
the beginning of the period to obtain a base period return. This base
period return is annualized to obtain a current annualized yield. A
money market fund also may calculate an effective yield by compounding
the base period return over a one-year period. In addition to the
current yield, a money market fund may quote yields in advertising
based on any historical seven-day period. Yie lds for a money market
fund are calculated on the same basis as other money market funds, as
required by applicable regulation.

Yield information may be useful in reviewing a fund's performance and
in providing a basis for comparison with other investment
alternatives. However, a fund's yield fluctuates, unlike investments
that pay a fixed interest rate over a stated period of time. When
comparing investment alternatives, investors should also note the
quality and maturity of the portfolio securities of respective
investment companies they have chosen to consider.

Investors should recognize that in periods of declining interest rates
a fund's yield will tend to be somewhat higher than prevailing market
rates, and in periods of rising interest rates a fund's yield will
tend to be somewhat lower. Also, when interest rates are falling, the
inflow of net new money to a fund from the continuous sale of its
shares will likely be invested in instruments producing lower yields
than the balance of the fund's holdings, thereby reducing a fund's
current yield. In periods of rising interest rates, the opposite can
be expected to occur.

YIELD CALCULATIONS: (BOND FUND). Yields for the fund are computed by
dividing the fund's interest and income for a given 30-day or
one-month period, net of expenses, by the average number of shares
entitled to receive distributions during the period, dividing this
figure by the f und's NAV at the end of the period, and
annualizing the result (assuming compounding of income) in order to
arrive at an annual percentage rate. Income is calculated for purposes
of yield quotations in accordance with standardized methods applicable
to all stock and bond funds. In general, interest income is reduced
with respect to bonds trading at a premium over their par value by
subtracting a portion of the premium from income on a daily basis, and
is increased with respect to bonds trading at a discount by adding a
portion of t he discount to d aily income.

Income calculated for the purposes of calculating the fund's yield
differs from income as determined for other accounting purposes.
Because of the different accounting methods used, and because of the
compounding of income assumed in yield calculations, the fund's yield
may not equal its distribution rate, the income paid to your account,
or the income reported in the fund's financial statements.

In calculating the fund's yield, a fund may from time to time use a
portfolio security's coupon rate instead of its yield to maturity in
order to reflect the risk premium on that security. This practice will
have the effect of reducing the fund's yield.

Yield information may be useful in reviewing the fund's performance
and in providing a basis for comparison with other investment
alternatives. However, the fund's yield fluctuates, unlike investments
that pay a fixed interest rate over a stated period of time. When
comparing investment alternatives, investors should also note the
quality and maturity of the portfolio securities of respective
investment companies they have chosen to consider.

Investors should recognize that in periods of declining interest rates
the fund's yield will tend to be somewhat higher than prevailing
market rates, and in periods of rising interest rates the fund's yield
will tend to be somewhat lower. Also, when interest rates are falling,
the inflow of net new money to the fund from the continuous sale of
its shares will likely be invested in instruments producing lower
yields than the balance of the fund's holdings, thereby reducing the
fund's current yield. In periods of rising interest rates, the
opposite can be expected to occur.

The tax-equivalent yield of a municipal fund is the rate an investor
would have to earn from a fully taxable investment before taxes to
equal the fund's tax-free yield. Tax-equivalent yields are calculated
by dividing a fund's yield by the result of one minus a
s pecifie d combined federal and state income tax rate. If only a
portion of a fund's yield is tax-exempt, only that portion is adjusted
in the calculation.

The following tables show the effect of a shareholder's tax status on
effective yield under federal and state income tax laws for
1999. The second table shows the approximate yield a taxable
security must provide at various income brackets to produce after-tax
yields equivalent to those of hypothetical tax-exempt obligations
yielding f rom _% to _%. Of course, no assurance can be given
that a fund will achieve any specific tax-exempt yield. While a state
municipal fund invests principally in obligations whose interest is
exempt from federal and state income tax, other income received by the
fund may be taxable. [ The tables do not take into account local
taxes, if any, payable on fund distributions.]

Use t he first table to find your approximate effective tax
bracket taking into account federal and state taxes for 1999.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1999 TAX RATES
Taxable Income* California State Marginal Rate Combined Federal and State
Effective Rate**

Single Return Joint Return Federal Marginal Rate California State Marginal Rate Combined Federal and State
Effective Rate**

$ $ $ $ % % %

% % %

</TABLE>

* Net amount subject to federal income tax after deductions and
exemptions. Assumes ordinary income only.

** Excludes the impact of the phaseout of personal exemptions,
limitations on itemized deductions, and other credits, exclusions, and
adjustments which may increase a taxpayer's marginal tax rate. An
increase in a shareholder's marginal tax rate would increase that
shareholder's tax-equivalent yield.

Having determined your effective tax bracket, use the following table
to determine the tax-equivalent yield for a given tax-free yield.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
If your combined federal and state effective tax rate in [Year] is:
% % % % %

To match these
tax-free yields: Your taxable investment would have to earn the following yield:

</TABLE>

A sta te mu nicipal fund may invest a portion of its assets in
obligations that are subject to state or federal income taxes. When a
state municipal fund invests in these obligations, its tax-equivalent
yield will be lower. In the table above, the tax-equivalent yields are
calculated assuming investments are 100% federally and state tax-free.

RETU RN C ALCULATIONS. Returns quoted in advertising reflect all
aspects of a fund's return, including the effect of reinvesting
dividends and capital gain distributions, and any change in a fund's
NAV over a stated period. A cumulative return reflects actual
performance over a stated period of time. Average annual returns are
calculated by determining the growth or decline in value of a
hypothetical historical investment in a fund over a stated period, and
then calculating the annually compounded percentage rate that would
have produced the same result if the rate of growth or decline in
value had been constant over the period. For example, a cumu lative
re turn of 100% over ten years would produce an average annual
ret urn of 7.18%, which is the steady annual rate of return that
would equal 100% growth on a compounded basis in ten years. While
average annu al ret urns are a convenient means of comparing
investment alternatives, investors should realize that a fund's
performance is not constant over time, but changes from year to year,
and that average annu al ret urns represent averaged figures as
opposed to the actual year-to-year performance of a fund.

In addition to average an nual re turns, the fund may quote
unaveraged or cumulative returns reflecting the simple change in value
of an investment over a stated period. Average annual and
cum ulative returns may be quoted as a percentage or as a dollar
amount, and may be calculated for a single investment, a series of
investments, or a series of redemptions, over any time period.
Retu rns may be broken down into their components of income and
capital (including capital gains and changes in share price) in order
to illustrate the relationship of these factors and their
contributions to return. Returns may be quoted on a before-tax or
after-tax basis. Returns may or may not include the effect of the
account closeout fee or the small account fee. Excluding a fund's
small account fee or account closeout fee from a return calculation
produces a higher return figure. Returns, yields and other performance
information may be quoted numerically or in a table, graph, or similar
illustration.

NET ASSET VALUE. Charts and graphs using a fund's NAVs, adjusted NAVs,
and benchmar k indexes may be used to exhibit performance. An
adjusted NAV includes any distributions paid by a fund and reflects
all elements of its return. Unless otherwise indicated, a fund's
adjusted NAVs are not adjusted for sales charges, if any.

CALCULA TING HIST ORICAL MONEY MARKET FUND RESULTS. The following
tables show performance for each fund.

CALCULA TING HISTOR ICAL BOND FUND RESULTS. The following table
shows performance for the fund.

HISTORICAL MONEY MARKET FUND RESULTS. The following tables show each
fund's 7-day yield, tax-equivalent yield, and retur n for the
f isc al periods ended February 28, 1999. Return figures for
Spartan California Municipal Money Market include the effect of the
$5.00 account closeo ut fee base d on an average February 28,
1999 size account.

HISTORICAL B OND FUND RESULTS. The following tables show the fund's
yield, tax-equivalent yield and return for the fiscal periods ended
February 28, 199 9.

The tax-equivale nt yields f or California Municipal Money
Market, Spartan California Municipal Money Market, and Spartan
California Munic ipal Income are based on a combined effective
federal and state income tax rate of __% [, __% and __%, respectively]
and reflects that, as of February 28, 1999 an estimated __%, __%,
and __%]] of each fund's income was subject to state taxes. Note that
each st ate municipa l fund may invest in securities whose income
is subject to the federal alternative minimum tax.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Average Annual Returns

Thirty-/Seven-Day Yield Tax- Equivalent Yield One Year Five Years