FIDELITY CALIFORNIA MUNICIPAL TRUST II, 485BPOS, 1994-04-13

FIDELITY CALIFORNIA MUNICIPAL TRUST II
485BPOS, 1994-04-13

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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT (No. 33-42890) UNDER THE
SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 9 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. [ ]
Fidelity California Municipal Trust II
(Exact Name of Registrant as Specified in Declaration of Trust)
82 Devonshire St., Boston, MA 02109
(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number (617) 570-7000
Arthur S. Loring, Esq.
82 Devonshire Street
Boston, MA 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
[ ] Immediately upon filing pursuant to paragraph (b) of Rule 485
[x] On April 18, 1994 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485
[ ] On ( ) pursuant to paragraph (a) of Rule 485
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and intends to file the notice required by
such Rule before April 30, 1994. The Registrant is suceeding to the
Registration Statement on Form N-1A of Fidelity California Municipal Trust
(File No. 2-83367) ("Predecessor Trust"), insofar as such Registration
Statement relates to the Spartan California Municipal Money Market
Portfolio. The Predecessor Trust has registered an indefinite number of
shares of its Spartan California Municipal Money Market Portfolio under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company
Act of 1940. A Rule 24f-2 Notice for the fiscal year ended February 28,
1993 was filed by the Predecessor Trust with the Commission on April 20,
1993.

FIDELITY CALIFORNIA TAX-FREE FUNDS:
FIDELITY CALIFORNIA TAX-FREE MONEY MARKET PORTFOLIO
FIDELITY CALIFORNIA TAX-FREE INSURED PORTFOLIO
FIDLEITY CALIFORNIA TAX-FREE HIGH YIELD PORTFOLIO

CROSS REFERENCE SHEET
FORM N-1A

ITEM NUMBER PROSPECTUS SECTION

<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page

2 a .............................. Expenses

b, c .............................. Contents; The Funds at a Glance; Who May Want
to Invest

3 a .............................. Financial Highlights

b .............................. *

c .............................. Performance

4 a i............................. Charter

ii........................... The Funds at a Glance; Investment Principles and
Risks; Fundamental Investment Policies and
Restrictions

b .............................. Investment Principles and Risks

c .............................. Who May Want to Invest; Investment Principles
and Risks

5 a .............................. Charter

b i............................. Doing Business with Fidelity; Charter

ii........................... Charter

iii.......................... Expenses; Breakdown of Expenses

c .............................. Charter

d .............................. Charter; Breakdown of Expenses

e .............................. Charter

f .............................. Expenses

g .............................. *

5 A .............................. Performance

6 a i............................. Charter

ii........................... How to Buy Shares; How to Sell Shares; Exchange
Restrictions; Transaction Details

iii.......................... Charter

b ............................. *

c .............................. Exchange Restrictions; Transaction Details

d .............................. *

e .............................. Doing Business with Fidelity; How to Buy Shares;
How to Sell Shares; Investor Services

f, g .............................. Dividends, Capital Gains, and Taxes

7 a .............................. Charter; Cover Page

b .............................. How to Buy Shares; Transaction Details

c .............................. *

d .............................. How to Buy Shares

e .............................. *

f .............................. Breakdown of Expenses

8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions

9 .............................. *

</TABLE>

* Not Applicable

CROSS REFERENCE SHEET
(CONTINUED)
FORM N-1A

ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION

<TABLE>
<CAPTION>
<S> <C> <C> <C>
10, 11 ............................ Cover Page

12 ............................ Description of the Trusts

13 a - c ............................ Investment Policies and Limitations

d ............................ Portfolio Transactions

14 a - c ............................ Trustees and Officers

15 a, b ............................ *

c ............................ Trustees and Officers

16 a i ............................ FMR

ii ............................ Trustees and Officers

iii ............................ Management Contracts

b ............................ Management Contracts

c, d ............................ Interest of FMR Affiliates

e ............................ Management Contracts

f ............................ Distribution and Service Plans

g ............................ *

h ............................ Description of the Trusts

i ............................ Interest of FMR Affiliates

17 a - c ............................ Portfolio Transactions

d, e ............................ *

18 a ............................ Description of the Trusts

b ............................ *

19 a ............................ Additional Purchase and Redemption Information

b ............................ Additional Purchase and Redemption Information;
Valuation of Portfolio Securities

c ............................ *

20 ............................ Distributions and Taxes

21 a, b ............................ Interest of FMR Affiliates

c ............................ *

22 ............................ Performance

23 ............................ Financial Statements

</TABLE>

* Not Applicable
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
A Statement of Additional Information dated April 18, 1994 has been filed
with the Securities and Exchange Commission, and is incorporated herein by
reference (is legally considered a part of this prospectus). The Statement
of Additional Information is available free upon request by calling
Fidelity at 1-800-544-8888.
Investments in the money market fund are neither insured nor guaranteed by
the U.S. government, and there can be no assurance that the fund
will maintain a stable $1.00 share price.
Mutual fund shares are not deposits or obligations of, or guaranteed by,
any depository institution. Shares are not insured by the FDIC, the Federal
Reserve Board, or any other agency, and are subject to investment risk,
including the possible loss of principal.
Each of these funds seeks a high level of current income free from federal
income tax and California state personal income tax. The funds have
different strategies, however, and carry varying degrees of risk.
FIDELITY
CALIFORNIA

TAX-FREE
FUNDS
FIDELITY CALIFORNIA TAX-FREE MONEY MARKET PORTFOLIO
FIDELITY CALIFORNIA TAX-FREE INSURED PORTFOLIO
FIDELITY CALIFORNIA TAX-FREE HIGH YIELD PORTFOLIO
PROSPECTUS
APRIL 18, 1994(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA
02109
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
CFR-pro-494

CONTENTS

KEY FACTS THE FUNDS AT A GLANCE

WHO MAY WANT TO INVEST

EXPENSES Each fund's yearly
operating expenses.

FINANCIAL HIGHLIGHTS A summary
of each fund's financial data.

PERFORMANCE How each fund has
done over time.

THE FUNDS IN DETAIL CHARTER How each fund is
organized.

INVESTMENT PRINCIPLES AND RISKS
Each fund's overall approach to
investing.

BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.

YOUR ACCOUNT DOING BUSINESS WITH FIDELITY

TYPES OF ACCOUNTS Different
ways to set up your account.

HOW TO BUY SHARES Opening an
account and making additional
investments.

HOW TO SELL SHARES Taking money
out and closing your account.

INVESTOR SERVICES Services to
help you manage your account.

SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS, AND
ACCOUNT POLICIES TAXES

TRANSACTION DETAILS Share price
calculations and the timing of
purchases and redemptions.

EXCHANGE RESTRICTIONS

<r>KEY FACTS</r>

These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
FINANCIAL HIGHLIGHTS
The tables that follow have been audited by Price Waterhouse, independent
accountants. Their unqualified reports are included in the funds' Annual
Report. The funds' Annual Report is incorporated by reference into (is
legally a part of) the Statement of Additional Information.
CALIFORNIA TAX-FREE MONEY MARKET

1.Selected Per-Share Data

and Ratios

2.Years 1985C 1986D 1987D 1988D 1989D 1990D 1991D 1992D 1993E 1994

e nded

February 28

3.Net asset $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00

value, 0 0 0 0 0 0 0 0 0 0

beginning of

period

4.Income .046 .048 .038 .042 .052 .054 .047 .035 .019 .020

from

Investment

Operations

Net interest

income

5. Dividend (.046) (.048) (.038) (.042) (.052) (.054) (.047) (.035) (.019) (.020)

s from net

interest

income

6.Net asset $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00

value, 0 0 0 0 0 0 0 0 0 0

end of period

7.Total 4.48% 4.95% 3.88 % 4.27% 5.36% 5.53% 4.85% 3.59% 1.92% 1.97%

r eturnB

8.Net assets, $ 21,91 $ 120,5 $ 413,4 $ 546,5 $ 735,6 $ 623,7 $ 538,7 $ 556,5 $ 568,2 $ 611,7

end of period 5 94 98 53 23 48 91 16 80 65

(000 omitted)

9.Ratio of .30%A .60% .60% .58% .53% .60% .61% .63% .62%A .64%

expenses to

average net

assetsF

10.Ratios of 1.50% .79% .67% .62% .65% .60% .61% .63% .62%A .64%

expenses to A

average net

assets before

expense

reductions F

11.Ratio of 5.62% 4.92% 3.84% 4.17% 5.31% 5.42% 4.75% 3.50% 2.29% 1.95%

net interest A A

income to

average net

assets

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
13.Years e nded 1987C 1988D 1989D 1990D 1991D 1992D 1993 E 1994
February 28

14.Net asset $ 10.00 $ 9.280 $ 9.200 $ 9.590 $ 9.370 $ 9.740 $ 10.10 $ 11.030
value, beginning of 0 0
period

15.Income from .373 .611 .610 .618 .605 .603 .492 .589
Investment
Operations
Net interest
income

16. Net realized (.720) (.080) .390 (.220) .370 .360 .930 (.090)
and unrealized
gain (loss) on
investments

17. Total from (.347) .531 1.000 .398 .975 .963 1.422 .499
investment
operations

18.Less (. 373 ) (.611) (.610) (.618) (.605) (.603) (.492) (.589)
Distributions
From net interest
income

19. From net -- -- -- -- -- -- -- (.200)
realized gain on
investments

20. Total (. 373 ) (.611) (.610) (.618) (.605) (.603) (.492) (.789)
distributions

21.Net asset $ 9.280 $ 9.200 $ 9.590 $ 9.370 $ 9.740 $ 10.10 $ 11.03 $ 10.740
value, end of 0 0
period

22.Total r eturnB (3.69) 5.97% 11.20% 4.15% 10.67% 10.14% 14.48% 4.59%
%

23.Net assets, end $ 35,24 $ 42,84 $ 69,35 $ 87,43 $ 113,7 $ 177,7 $ 274,8 $ 291,76
of period (000 7 7 0 8 11 63 72 0
omitted)

24.Ratio of .45%A .65% .83% .75% .72% .66% .63%A .48%
expenses to
average net
assets F

25.Ratio of 1.12%A .88% .83% .75% .72% .66% .63%A .60%
expenses to
average net assets
before expense
reductions F

26.Ratio of net 6.27%A 6.70% 6.54% 6.38% 6.30% 6.06% 5.72%A 5.31%
interest income to
average net assets

27.Portfolio 28%A 76% 32% 10% 14% 19% 27%A 60%
turnover rate

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
29.Years
1985 C 1986 D 1987 D 1988 D 1989 D 1990 D 1991 D 1992 D 1993 E 1994
e nded
February 28

30.Net asset
$ 10.0 $ 10.4 $ 11.51 $ 10.9 $ 10.6 $ 11.08 $ 10.9 $ 11.30 $ 11.54 $ 12.4
value,
00 30 0 50 20 0 40 0 0 30
beginning of
period

31.Income
.771 .884 .782 .760 .758 .756 .752 .744 .611 .719
from
Investment
Operations
Net interest
income

32. Net
.430 1.080 (.510) (.270) .460 (.140) .360 .240 .890 (.060)
realized and
unrealized
gain
(loss) on
investment
s

33. Total
1.201 1.964 .272 .490 1.218 .616 1.112 .984 1.501 .659
from
investment
operations

34.Less
(.771) (.884) (. 782 ) (.760) (.758) (.756) (.752) (.744) (.611) (.719)
Distributions
From net
interest
income

35. From
-- -- (.050) (.060) -- -- -- -- -- (.270)
net realized
gain on

investments

36. Total
(.771) (.884) ( .832) (.820) (.758) (.756) (.752) (.744) (.611) (.989)
distributions

37.Net asset
$ 10.4 $ 11.51 $ 10.9 $ 10.6 $ 11.08 $ 10.9 $ 11.30 $ 11.54 $ 12.4 $ 12.1
value,
30 0 50 20 0 40 0 0 30 00
end of period

38.Total
12.52 19.70 2.22% 4.72% 11.85 5.61% 10.44 8.94% 13.40 5.41%
r eturnB
% % % % %

39.Net
$ 30,2 $ 323,6 $ 460,6 $ 399,1 $ 493,9 $ 513,6 $ 523,5 $ 529,4 $ 586,7 $ 575,2
assets, end
35 32 35 86 77 82 90 45 91 89
of period (000
omitted)

40.Ratio of
1.00% .72% .68% .73% .61% .60% .58% .59% .60% A .57%
expenses to
A
average net
assets F

41.Ratio of
1.49% .72% .68% .73% .61% .60% .58% .59% .60% A .57%
expenses to
A
average net
assets before
expense
reductions F

42.Ratio of
9.53% 7.75% 6.68% 7.15% 7.05% 6.73% 6.71% 6.52% 6.17% 5.78%
net interest
A A
income to
average net
assets

43.Portfolio
14% A 16% 46% 52% 21% 34% 15% 23% 32% A 44%
turnover rate

</TABLE>

A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
C FROM JULY 7, 1984 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1985
D YEARS ENDED APRIL 30
E MAY 1, 1992 TO FEBRUARY 28, 1993
F DURING THE PERIODS SHOWN, FMR VOLUNTARILY REIMBURSED THE FUND FOR
CERTAIN EXPENSES.
PERFORMANCE
Mutual fund performance can be measured as TOTAL RETURN or YIELD. The total
returns and yields that follow are based on historical fund results.
Each fund's fiscal year runs from March 1 through February 28. The tables
below show each fund's performance over past fiscal years compared to a
measure of inflation. The charts on page 10 help you compare the
yields of these funds to those of their competitors.
AVERAGE ANNUAL TOTAL RETURNS
Fiscal periods ended Past 1 Past 5 Life of
February 28,1994 year years fund
California
Money MarketA 1.97% 3.78% 4.22%
California InsuredB 4.59% 9.32% 7.59%
California
High YieldA 5.41% 9.31% 9.72%
Consumer Price
Index 2.52% 3.82% n/a
CUMULATIVE TOTAL RETURNS
Fiscal periods ended Past 1 Past 5 Life of
February 28, 1994 year years fund
California
Money MarketA 1.97% 20.38% 49.06%
California InsuredB 4.59% 56.12% 72.51%
California
High YieldA 5.41% 56.05% 144.91%
Consumer Price
Index 2.52% 20.64% n/a
A FROM JULY 7, 1984
B FROM SEPTEMBER 18, 1986

UNDERSTANDING
PERFORMANCE
YIELD illustrates the income
earned by a fund over a
recent period. Seven-day
yields are the most common
illustration of money market
performance. 30-day yields
are usually used for bond
funds. Yields change daily,
reflecting changes in interest
rates.
TOTAL RETURN reflects both the
reinvestment of income and
capital gain distributions, and
any change in a fund's share
price.
(checkmark)
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. When a money
market fund 's yield assumes that income earned is reinvested, it is
called an EFFECTIVE YIELD. A TAX-EQUIVALENT YIELD shows what an investor
would have to earn before taxes to equal a tax-free yield. Yields for the
bond funds are calculated according to a standard that is required for all
stock and bond funds. Because this differs from other accounting methods,
the quoted yield may not equal the income actually paid to shareholders.
CALIFORNIA TAX-FREE MONEY MARKET
7-day yields
Percentage (%)
Row: 1, Col: 1, Value: 3.23
Row: 1, Col: 2, Value: 2.69
Row: 2, Col: 1, Value: 3.18
Row: 2, Col: 2, Value: 2.62
Row: 3, Col: 1, Value: 3.55
Row: 3, Col: 2, Value: 2.97
Row: 4, Col: 1, Value: 3.8
Row: 4, Col: 2, Value: 3.07
Row: 5, Col: 1, Value: 3.69
Row: 5, Col: 2, Value: 3.0
Row: 6, Col: 1, Value: 2.83
Row: 6, Col: 2, Value: 2.46
Row: 7, Col: 1, Value: 2.53
Row: 7, Col: 2, Value: 2.14
Row: 8, Col: 1, Value: 2.48
Row: 8, Col: 2, Value: 2.15
Row: 9, Col: 1, Value: 3.03
Row: 9, Col: 2, Value: 2.67
Row: 10, Col: 1, Value: 2.43
Row: 10, Col: 2, Value: 2.13
Row: 11, Col: 1, Value: 2.52
Row: 11, Col: 2, Value: 2.16
Row: 12, Col: 1, Value: 3.21
Row: 12, Col: 2, Value: 2.69
Row: 13, Col: 1, Value: 2.13
Row: 13, Col: 2, Value: 1.81
Row: 14, Col: 1, Value: 2.24
Row: 14, Col: 2, Value: 1.87
Row: 15, Col: 1, Value: 2.49
Row: 15, Col: 2, Value: 1.96
Row: 16, Col: 1, Value: 2.51
Row: 16, Col: 2, Value: 1.98
Row: 17, Col: 1, Value: 2.8
Row: 17, Col: 2, Value: 2.13
Row: 18, Col: 1, Value: 2.33
Row: 18, Col: 2, Value: 1.79
Row: 19, Col: 1, Value: 2.49
Row: 19, Col: 2, Value: 1.86
Row: 20, Col: 1, Value: 2.56
Row: 20, Col: 2, Value: 1.97
Row: 21, Col: 1, Value: 2.71
Row: 21, Col: 2, Value: 2.16
Row: 22, Col: 1, Value: 2.45
Row: 22, Col: 2, Value: 1.95
Row: 23, Col: 1, Value: 2.41
Row: 23, Col: 2, Value: 1.91
Row: 24, Col: 1, Value: 2.69
Row: 24, Col: 2, Value: 2.13
Row: 25, Col: 1, Value: 2.22
Row: 25, Col: 2, Value: 1.71
Row: 26, Col: 1, Value: 2.47
Row: 26, Col: 2, Value: 1.93
California
Tax-Free
Money Market
Competitive
funds average
1993
1992
1994

CALIFORNIA TAX-FREE INSURED
30-day yields
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 1, Col: 2, Value: nil
Row: 2, Col: 1, Value: nil
Row: 2, Col: 2, Value: nil
Row: 3, Col: 1, Value: nil
Row: 3, Col: 2, Value: nil
Row: 4, Col: 1, Value: nil
Row: 4, Col: 2, Value: nil
Row: 5, Col: 1, Value: nil
Row: 5, Col: 2, Value: nil
Row: 6, Col: 1, Value: nil
Row: 6, Col: 2, Value: nil
Row: 7, Col: 1, Value: nil
Row: 7, Col: 2, Value: nil
Row: 8, Col: 1, Value: nil
Row: 8, Col: 2, Value: nil
Row: 9, Col: 1, Value: nil
Row: 9, Col: 2, Value: nil
Row: 10, Col: 1, Value: nil
Row: 10, Col: 2, Value: nil
Row: 11, Col: 1, Value: nil
Row: 11, Col: 2, Value: nil
Row: 12, Col: 1, Value: nil
Row: 12, Col: 2, Value: nil
Row: 13, Col: 1, Value: 5.649999999999999
Row: 13, Col: 2, Value: 5.78
Row: 14, Col: 1, Value: 5.7
Row: 14, Col: 2, Value: 5.68
Row: 15, Col: 1, Value: 5.8
Row: 15, Col: 2, Value: 5.77
Row: 16, Col: 1, Value: 5.84
Row: 16, Col: 2, Value: 5.819999999999999
Row: 17, Col: 1, Value: 5.83
Row: 17, Col: 2, Value: 5.81
Row: 18, Col: 1, Value: 5.59
Row: 18, Col: 2, Value: 5.38
Row: 19, Col: 1, Value: 5.159999999999999
Row: 19, Col: 2, Value: 5.24
Row: 20, Col: 1, Value: 5.33
Row: 20, Col: 2, Value: 5.35
Row: 21, Col: 1, Value: 5.4
Row: 21, Col: 2, Value: 5.319999999999999
Row: 22, Col: 1, Value: 5.71
Row: 22, Col: 2, Value: 5.56
Row: 23, Col: 1, Value: 5.58
Row: 23, Col: 2, Value: 5.37
Row: 24, Col: 1, Value: 5.38
Row: 24, Col: 2, Value: 5.19
Row: 25, Col: 1, Value: 5.21
Row: 25, Col: 2, Value: 5.23
Row: 26, Col: 1, Value: 4.63
Row: 26, Col: 2, Value: 4.74
Row: 27, Col: 1, Value: 5.04
Row: 27, Col: 2, Value: 4.619999999999999
Row: 28, Col: 1, Value: 5.05
Row: 28, Col: 2, Value: 4.859999999999999
Row: 29, Col: 1, Value: 5.05
Row: 29, Col: 2, Value: 4.85
Row: 30, Col: 1, Value: 5.02
Row: 30, Col: 2, Value: 4.6
Row: 31, Col: 1, Value: 5.109999999999999
Row: 31, Col: 2, Value: 4.64
Row: 32, Col: 1, Value: 4.73
Row: 32, Col: 2, Value: 4.51
Row: 33, Col: 1, Value: 4.64
Row: 33, Col: 2, Value: 4.34
Row: 34, Col: 1, Value: 4.659999999999999
Row: 34, Col: 2, Value: 4.29
Row: 35, Col: 1, Value: 4.87
Row: 35, Col: 2, Value: 4.64
Row: 36, Col: 1, Value: 4.81
Row: 36, Col: 2, Value: 4.5
Row: 37, Col: 1, Value: 4.72
Row: 37, Col: 2, Value: 4.319999999999999
California
Tax-Free
Insured
Competitive
funds average
1993
1992
1994
CALIFORNIA TAX-FREE HIGH YIELD
30-day yields
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 1, Col: 2, Value: nil
Row: 2, Col: 1, Value: nil
Row: 2, Col: 2, Value: nil
Row: 3, Col: 1, Value: nil
Row: 3, Col: 2, Value: nil
Row: 4, Col: 1, Value: nil
Row: 4, Col: 2, Value: nil
Row: 5, Col: 1, Value: nil
Row: 5, Col: 2, Value: nil
Row: 6, Col: 1, Value: nil
Row: 6, Col: 2, Value: nil
Row: 7, Col: 1, Value: nil
Row: 7, Col: 2, Value: nil
Row: 8, Col: 1, Value: nil
Row: 8, Col: 2, Value: nil
Row: 9, Col: 1, Value: nil
Row: 9, Col: 2, Value: nil
Row: 10, Col: 1, Value: nil
Row: 10, Col: 2, Value: nil
Row: 11, Col: 1, Value: nil
Row: 11, Col: 2, Value: nil
Row: 12, Col: 1, Value: nil
Row: 12, Col: 2, Value: nil
Row: 13, Col: 1, Value: 5.38
Row: 13, Col: 2, Value: 5.83
Row: 14, Col: 1, Value: 5.55
Row: 14, Col: 2, Value: 5.79
Row: 15, Col: 1, Value: 5.609999999999999
Row: 15, Col: 2, Value: 5.88
Row: 16, Col: 1, Value: 5.54
Row: 16, Col: 2, Value: 5.859999999999999
Row: 17, Col: 1, Value: 5.55
Row: 17, Col: 2, Value: 5.79
Row: 18, Col: 1, Value: 5.430000000000001
Row: 18, Col: 2, Value: 5.67
Row: 19, Col: 1, Value: 4.99
Row: 19, Col: 2, Value: 5.39
Row: 20, Col: 1, Value: 5.1
Row: 20, Col: 2, Value: 5.35
Row: 21, Col: 1, Value: 5.109999999999999
Row: 21, Col: 2, Value: 5.430000000000001
Row: 22, Col: 1, Value: 5.42
Row: 22, Col: 2, Value: 5.68
Row: 23, Col: 1, Value: 5.28
Row: 23, Col: 2, Value: 5.58
Row: 24, Col: 1, Value: 5.2
Row: 24, Col: 2, Value: 5.49
Row: 25, Col: 1, Value: 5.149999999999999
Row: 25, Col: 2, Value: 5.39
Row: 26, Col: 1, Value: 4.76
Row: 26, Col: 2, Value: 5.14
Row: 27, Col: 1, Value: 4.77
Row: 27, Col: 2, Value: 4.99
Row: 28, Col: 1, Value: 4.81
Row: 28, Col: 2, Value: 4.99
Row: 29, Col: 1, Value: 4.859999999999999
Row: 29, Col: 2, Value: 4.96
Row: 30, Col: 1, Value: 4.84
Row: 30, Col: 2, Value: 4.91
Row: 31, Col: 1, Value: 5.0
Row: 31, Col: 2, Value: 4.9
Row: 32, Col: 1, Value: 4.930000000000001
Row: 32, Col: 2, Value: 4.78
Row: 33, Col: 1, Value: 4.75
Row: 33, Col: 2, Value: 4.59
Row: 34, Col: 1, Value: 4.75
Row: 34, Col: 2, Value: 4.52
Row: 35, Col: 1, Value: 4.96
Row: 35, Col: 2, Value: 4.659999999999999
Row: 36, Col: 1, Value: 4.88
Row: 36, Col: 2, Value: 4.63
Row: 37, Col: 1, Value: 4.8
Row: 37, Col: 2, Value: 4.5
California
Tax-Free
High Yield
Competitive
funds average
1993
1992
1994
THE TOP CHART SHOWS THE 7-DAY EFFECTIVE YIELD S FOR THE FUND
AND ITS
COMPETITIVE FUNDS AVERAGE AS OF THE LAST TUESDAY OF EACH MONTH FROM
JANUARY 1992 THROUGH FEBRUARY 1994. THE BOTTOM CHARTS SHOW THE
30-DAY ANNUALIZED NET YIELDS FOR THE FUNDS AND THEIR COMPETITIVE FUNDS
AVERAGE AS OF THE LAST DAY OF EACH MONTH DURING THE SAME PERIOD. YIELDS
FOR CALIFORNIA TAX-FREE INSURED WOULD HAVE BEEN LOWER IF FIDELITY HAD NOT
REIMBURSED CERTAIN FUND EXPENSES.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
THE COMPETITIVE FUNDS AVERAGES for California Tax-Free Money Market are
calculated based on the IBC Donoghue's Money Fund Averages(TRADEMARK)/All
Tax-Free /State Specifc category, which currently reflects the
performance of over 140 mutual funds with similar objectives. These
averages are published in the MONEY FUND REPORT(Registered trademark) by
IBC USA (Publications), Inc. The competitive funds averages for the bond
funds are published by Lipper Analytical Services, Inc. California Tax-Free
Insured and California Tax-Free High Yield compare their performance to the
Lipper California Insured Funds category and the Lipper California
Municipal Funds category, respectively, which currently reflects the
performance of over 1 5 and 7 0 mutual funds with similar
objectives, respectively. All of these averages assume reinvestment of
distributions.
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.

<r>THE FUNDS IN DETAIL</r>

CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. In technical terms, California
Tax-Free Money Market is currently a non-diversified fund of Fidelity
California Municipal Trust II, and California Tax-Free Insured and
California Tax-Free High Yield are currently non-diversified funds of
Fidelity California Municipal Trust. Both trusts are open-end management
investment companies. Fidelity California Municipal Trust II was organized
as a Delaware business trust on June 20, 1991. Fidelity California
Municipal Trust was organized as a Massachusetts business trust on April
28, 1983. There is a remote possibility that one fund might become liable
for a misstatement in the prospectus about another fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
Fidelity will mail proxy materials in advance, including a voting card and
information about the proposals to be voted on. For the money market fund,
you are entitled to one vote for each share you own. For the bond funds,
the number of votes you are entitled to is based upon the dollar value of
your investment.
FMR AND ITS AFFILIATES
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 200
(bullet) Assets in Fidelity mutual
funds: over $ 225 billion
(bullet) Number of shareholder
accounts: over 15 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(checkmark)
The funds are managed by FMR, which chooses their investments and handles
their business affairs. FTX has primary responsibility for providing
investment management services for California Tax-Free Money Market.
John (Jack) Haley Jr. is vice president and manager of California Tax-Free
Insured and California Tax-Free High Yield, which he has managed since 1986
and 1985, respectively. Mr. Haley also manages Advisor Limited Term
Tax-Exempt and Spartan California Municipal High Yield. He joined Fidelity
in 1981.
Fidelity Distributors Corporation( FDC ) distributes and
markets Fidelity's funds and services. Fidelity Service Co.
( FSC ) performs transfer agent servicing functions for the funds.
FMR Corp. is the parent company of these organizations. Through ownership
of voting common stock, Edward C. Johnson 3d (President and a trustee of
the trusts), Johnson family members, and various trusts for the benefit of
the Johnson family form a controlling group with respect to FMR Corp.
United Missouri Bank, N.A., is each fund's transfer agent, although it
employs FSC to perform these functions for the funds. It is located at 1010
Grand Avenue, Kansas City, Missouri.
To carry out the funds' transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that a fund
receives services and commission rates comparable to those of other
broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
CALIFORNIA TAX-FREE MONEY MARKET seeks high current income that is free
from federal income tax and California personal income tax while
maintaining a stable $1.00 share price by investing in high-quality,
short-term municipal securities of all types. As a result, when you
sell your shares, they should be worth the same amount as when you bought
them. Of course, there is no guarantee that the fund will maintain a stable
$1.00 share price. FMR normally invests at least 65% of the fund's total
assets in state tax-free securities, and normally invests so that at least
80% of the fund's income distributions are free from federal income tax.
The fund follows industry-standard guidelines on the quality and maturity
of its investments, which are designed to help maintain a stable $1.00
share price. The fund will purchase only high-quality securities that FMR
believes present minimal credit risks and will observe maturity
restrictions on securities it buys. It is possible that a major change in
interest rates or a default on the fund's investments could cause its share
price (and the value of your investment) to change.
CALIFORNIA TAX-FREE INSURED seeks high current income that is free from
federal income tax and California personal income tax by investing
primarily in municipal securities that are covered by insurance
guaranteeing the timely payment of interest and principal. It is important
to note, however, that the insurance does not guarantee the market value of
a security or of the fund's shares. The insurance coverage is either
obtained by the bond's issuer or underwriter, or purchased by the fund. FMR
reviews the credit of insurance companies. The fund pays premiums for the
insurance either directly or indirectly, which increases the credit safety
of the fund's investments, but decreases its yield.
The insurance feature provides high credit quality to the fund's portfolio,
but the fund may also invest in some uninsured securities that are judged
by FMR to be of investment-grade quality. The fund normally invests in
long-term bonds, generally maintaining a dollar-weighted average maturity
of at least 20 years, although it may invest in obligations of any
maturity. FMR normally invests so that at least 80% of the fund's income
distributions are free from federal and California personal income taxes.
CALIFORNIA TAX-FREE HIGH YIELD seeks high current income that is free from
federal income tax and California personal income tax by investing
primarily in municipal securities judged by FMR to be of investment-grade
quality, although it can also invest in lower-quality securities. The fund
normally invests in long-term bonds, generally maintaining a
dollar-weighted average maturity of at least 15 years, although it may
invest in obligations of any maturity. FMR normally invests so that at
least 80% of the fund's income distributions are free from federal and
California personal income taxes.
EACH FUND'S yield and each bond fund's share price change daily based on
changes in interest rates, market conditions, other political and
economic news, and on the quality and maturity of its investments. In
general, bond prices rise when interest rates fall, and vice versa. This
effect is usually more pronounced for longer-term securities. Lower-quality
securities offer higher yields, but also carry more risk.
Each fund's performance is closely tied to the economic and political
conditions within the state of California, which has been in a recession
since 1990. As a result, tax revenues have decreased and the state has
accumulated a significant budget deficit despite cost cutting initiatives.
Economic conditions within the state are expected to remain stagnant
throughout 1994.
If you are subject to the federal alternative minimum tax, you should note
that each fund may invest a portion of its assets in municipal
securities issued to finance private activities. The interest from these
investments is a tax-preference item for purposes of the tax.
FMR normally invests each fund's assets according to its investment
strategy. The funds do not expect to invest in federally taxable
obligations, and the bond funds also do not expect to invest in state
taxable obligations. When FMR considers it appropriate for defensive
purposes, however, it temporarily may invest substantially in short-term
instruments, may hold a substantial amount of uninvested cash, or may
invest more than normally permitted in taxable obligations.
SECURITIES AND
INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, and strategies FMR may
employ in pursuit of a fund ' s investment objective. A summary
of risks and restrictions associated with these instrument types and
investment practices is included as well. Policies and limitations are
considered at the time of purchase; the sale of instruments is not required
in the event of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
funds achieve their goals. As a shareholder, you will receive financial
reports every six months detailing fund holdings and describing recent
investment activities.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. Debt
securities have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term bonds are generally
more sensitive to interest rate changes than short-term bonds.
Lower-quality debt securities may have speculative characteristics, and
involve greater risk of default or price changes due to changes in the
issuer's creditworthiness. The market prices of these securities may
fluctuate more than higher-quality securities and may decline significantly
in periods of general or regional economic difficulty.
The table on page 16 provides a summary of ratings assigned to debt
holdings (not including money market instruments) in California Tax-Free
High Yield's portfolio. These figures are dollar-weighted averages of
month-end portfolio holdings during fiscal 1994, and are presented as a
percentage of total investments. These percentages are historical and do
not necessarily indicate the fund's current or future debt holdings.
CALIFORNIA TAX-FREE HIGH YIELD
Fiscal 1994 Debt Holdings, by Rating MOODY'S STANDARD &
POOR'S
INVESTORS SERVICE, INC. CORPORATION
Rating Average A Rating Averag
eA
INVESTMENT GRADE
Highest quality Aaa AAA
High quality Aa 61.7 % AA 73.1 %
Upper-medium grade A A
Medium grade Baa 5.2 % BBB 7.1 %
LOWER QUALITY
Moderately speculative Ba 0.0 % BB 0.0 %
Speculative B 0.0 % B 0.0 %
Highly speculative Caa 0.0 % CCC 0.0 %
Poor quality Ca 0.0 % CC 0.0 %
Lowest quality, no interest C C
In default, in arrears -- D 0.0 %
66.9 % 80.2 %
A THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED BY MOODY'S OR
S&P AMOUNTED TO 11.2 %. THIS MAY INCLUDE SECURITIES RATED BY
OTHER
NATIONALLY RECOGNIZED RATING SERVICES, AS WELL AS UNRATED SECURITIES.
FMR
HAS DETERMINED THAT UNRATED SECURITIES THAT ARE LOWER-QUALITY ACCOUNT
FOR
3.6% OF THE FUND'S TOTAL INVESTMENTS . REFER TO THE FUND'S STATEMENT
OF
ADDITIONAL INFORMATION FOR A MORE COMPLETE DISCUSSION OF THESE RATINGS.

RESTRICTIONS: California Tax-Free Insured does not currently intend to
invest more than 35% of its assets in uninsured securities, and does not
currently intend to invest in uninsured securities judged by FMR to be
of equivalent quality to those rated below Baa by Moody's or BBB by
S&P . California Tax-Free High Yield does not currently intend to
invest more than one-third of its assets in bonds judged by FMR to be of
equivalent quality to those rated Ba or lower by Moody's and BB or lower by
S&P, and does not currently intend to invest in bonds of equivalent
quality to bonds rated lower than B. The fund does not currently intend to
invest in bonds rated below Caa by Moody's or CCC by S&P.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
purposes, including general financing for state and local governments, or
financing for specific projects or public facilities. Municipal securities
may be issued in anticipation of future revenues, and may be backed by the
full taxing power of a municipality, the revenues from a specific project,
or the credit of a private organization. A security's credit may be
enhanced by a bank, insurance company, or other financial institution. A
fund may own a municipal security directly or through a participation
interest.
STATE TAX-FREE SECURITIES include municipal obligations issued by the state
of California or its counties, municipalities, authorities, or other
subdivisions. The ability of issuers to repay their debt can be affected by
many factors that impact the economic vitality of either the state or a
region within the state.
Other state tax-free securities include general obligations of U.S.
territories and possessions such as Guam, the Virgin Islands, and Puerto
Rico, and their political subdivisions and public corporations. The economy
of Puerto Rico is closely linked to the U.S. economy, and will depend on
the strength of the U.S. dollar, interest rates, the price stability of oil
imports, and the continued existence of favorable tax incentives. Recent
legislation reduced these incentives, but it is impossible to predict what
impact the changes will have.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire land,
equipment, or facilities. If the municipality stops making payments or
transfers its obligations to a private entity, the obligation could lose
value or become taxable.
PRIVATE ENTITIES may be involved in some municipal securities. For example,
industrial revenue bonds are backed by private entities, and resource
recovery bonds often involve private corporations. The viability of a
project or tax incentives could affect the value and credit quality of
these securities.
ASSET-BACKED SECURITIES may include pools of purchase contracts, financing
leases, or sales agreements entered into by municipalities. These
securities usually rely on continued payments by a municipality, and may
also be subject to prepayment risk.
VARIABLE- AND FLOATING-RATE INSTRUMENTS may have interest rates that move
in tandem with a benchmark, helping to stabilize their prices. Inverse
floaters have interest rates that move in the opposite direction from the
benchmark, making the instrument's market value more volatile.
PUT FEATURES entitle the holder to put (sell back) an instrument to the
issuer or a financial intermediary. In exchange for this benefit, a fund
may pay periodic fees or accept a lower interest rate. Demand features,
standby commitments, and tender options are types of put features.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, or other factors that affect security values. These techniques may
involve derivative transactions such as buying and selling options and
futures contracts and purchasing indexed securities.
FMR can use these practices to adjust the risk and return characteristics
of a fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with the
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of the fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect a fund's yield or the market value of its assets.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of other securities , including illiquid securities, may be
subject to legal restrictions. Difficulty in selling securities may result
in a loss or may be costly to a fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more than
10% of its assets would be invested in illiquid securities.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry or type of
project. Economic, business, or political changes can affect all securities
of a similar type. A fund that is not diversified may be more sensitive to
these changes, and also to changes in the market value of a single issuer
or industry.
RESTRICTIONS: The funds are considered non-diversified. Generally, to meet
federal tax requirements at the close of each quarter, a fund does not
invest more than 25% of its total assets in any one issuer and, with
respect to 50% of total assets, does not invest more than 5% of its total
assets in any one issuer. These limitations do not apply to U.S. government
securities. A fund may invest more than 25% of its total assets in tax-free
securities that finance similar types of projects. California Tax-Free
Insured may invest more than 25% of its assets in bonds insured by the same
insurance company.
BORROWING. A fund may borrow from banks or from other funds advised by FMR,
or through reverse repurchase agreements. If a bond fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. If the fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: A fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
CALIFORNIA TAX-FREE MONEY MARKET 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.
CALIFORNIA TAX-FREE INSURED seeks as high a level of current income, exempt
from federal and California state personal income tax, available from
investing primarily in municipal securities that are covered by insurance
guaranteeing the timely payment of principal and interest. FMR will invest
the fund's assets primarily in municipal bonds that are (1) insured under
an insurance policy obtained by the issuer or underwriter; or (2) insured
under an insurance policy purchased by the fund. Insurance will be
obtained from recognized insurers. The fund may invest in uninsured
municipal obligations judged to be of quality equivalent to the four
highest ratings assigned by Moody's and S&P (Baa, BBB, or better).
Under normal market conditions, such uninsured obligations may not exceed
35% of the fund's assets. 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 standards are not available, the
fund may temporarily invest more than 20% of its assets in obligations that
are only federally tax-exempt.
CALIFORNIA TAX-FREE HIGH YIELD 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 standards
are not available, the fund may temporarily invest more than 20% of its
assets in obligations that are only federally tax-exempt.
EACH FUND may borrow only for temporary or emergency purposes, but not in
an amount exceeding 33% of its total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its share
price or dividends; they are neither billed directly to shareholders nor
deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to an affiliate who provides
assistance with these services for California Tax-Free Money Market. Each
fund also pays OTHER EXPENSES, which are explained on page .
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 may be terminated
at any time without notice, can decrease a fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The fee is
calculated by adding a group fee rate to an individual fund fee rate, and
multiplying the result by the fund's average net assets.
The group fee rate is based on the average net assets of all the mutual
funds advised by FMR. This rate cannot rise above .37%, and it drops as
total assets under management increase.
For February 1994, the group fee rate was .1604 %. Each fund's
individual fund fee rate is .25%. However, because of a reimbursement
arrangement, the total management fee rate for fiscal 1994 was .30 %
for California Tax-Free Insured. The total management fee rate for
fiscal 1994 was .41% for both California Tax-Free Money Market and
California Tax-Free High Yield.
FMR HAS A SUB-ADVISORY AGREEMENT with FTX, which has primary responsibility
for providing investment management for California Tax-Free Money Market,
while FMR retains responsibility for providing other management services.
FMR pays FTX 50% of its management fee (before expense reimbursements) for
these services.
OTHER EXPENSES
While the management fee is a significant component of the funds' annual
operating costs, the funds have other expenses as well.
FSC performs many transaction and accounting functions. These services
include processing shareholder transactions, valuing each fund's
investments, and handling securities loans. In fiscal 1994, FSC received
fees equal to .21 %, .16 %, and .14 %, respectively, of
California Tax-Free Money Market's, California Tax-Free Insured 's, and
California Tax-Free High Yield's average net assets.
The funds also pay other expenses, such as legal, audit, and custodian
fees; proxy solicitation costs; and the compensation of trustees who are
not affiliated with Fidelity.
Each fund has adopted a Distribution and Service Plan. These plans
recognize that FMR may use its resources, including management fees, to pay
expenses associated with the sale of fund shares. This may include payments
to third parties, such as banks or broker-dealers, that provide shareholder
support services or engage in the sale of the fund's shares. It is
important to note, however, that the funds do not pay FMR any separate fees
for this service.
For fiscal 1994, the portfolio turnover rates for California Tax-Free
Insured and California Tax-Free High Yield were 60 % and 44 %,
respectively. These rates vary from year to year.
YOUR ACCOUNT

DOING BUSINESS
WITH FIDELITY
Fidelity Investments 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-sheltered
retirement plans for individuals investing on their own or through their
employer.
Fidelity is committed to providing investors with practical information to
make investment decisions. Based in Boston, Fidelity provides customers
with complete service 24 hours a day, 365 days a year, through a network of
telephone service centers around the country.
To reach Fidelity for general information, call these numbers:
(bullet) For mutual funds, 1-800-544-8888
(bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity has
over 75 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in a fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in a fund through a brokerage account. You can
choose California Tax-Free Money Market as your core account for your
Fidelity Ultra Service Account(Registered trademark) or FidelityPlusSM
brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in the fund.
The different ways to set up (register) your account with Fidelity are
listed below.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
EACH FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. California Tax-Free Money Market is managed to keep its share
price stable at $1.00. Each fund's shares are sold without a sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page . If there is no application accompanying this
prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(bullet) Mail in an application with a check, or
(bullet) Open your account by exchanging from another Fidelity fund.
If you buy shares by check or Fidelity Money Line(Registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business days to
ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For California Tax-Free Money $5,000
TO ADD TO AN ACCOUNT $250
Through automatic investment plans $100
MINIMUM BALANCE $1,000

<TABLE>
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<S> <C> <C>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT

Phone 1-800-544-777 (phone_graphic) (bullet) Exchange from another (bullet) Exchange from another
Fidelity fund account Fidelity fund account
with the same with the same
registration, including registration, including
name, address, and name, address, and
taxpayer ID number. taxpayer ID number.
(bullet) Use Fidelity Money
Line to transfer from
your bank account. Call
before your first use to
verify that this service
is in place on your
account. Maximum
Money Line: $50,000.

</TABLE>

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Mail (mail_graphic) (bullet) Complete and sign the (bullet) Make your check
application. Make your payable to the complete
check payable to the name of the fund.
complete name of the Indicate your fund
fund of your choice. account number on
Mail to the address your check and mail to
indicated on the the address printed on
application. your account statement.
(bullet) Exchange by mail: call
1-800-544-6666 for
instructions.

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In Person (hand_graphic) (bullet) Bring your application (bullet) Bring your check to a
and check to a Fidelity Fidelity Investor Center.
Investor Center. Call Call 1-800-544-9797 for
1-800-544-9797 for the the center nearest you.
center nearest you.

</TABLE>

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

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Automatically (automatic_graphic) (bullet) Not available. (bullet) Use Fidelity Automatic
Account Builder. Sign
up for this service
when opening your
account, or call
1-800-544-6666 to add
it.

</TABLE>

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(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118

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HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time.
TO SELL SHARES THROUGH YOUR FIDELITY ULTRA SERVICE OR FIDELITY PLUS
ACCOUNT, call 1-800-544-6262 to receive a handbook with instructions.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $1,000
worth of shares in the account to keep it open.
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
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:
(bullet) You wish to redeem more than $100,000 worth of shares,
(bullet) Your account registration has changed within the last 30 days,
(bullet) The check is being mailed to a different address than the one on
your account (record address),
(bullet) The check is being made payable to someone other than the account
owner, or
(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.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(bullet) Your name,
(bullet) The fund's name,
(bullet) Your fund account number,
(bullet) The dollar amount or number of shares to be redeemed, and
(bullet) Any other applicable requirements listed in the table at right.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
CHECKWRITING
If you have a checkbook for your account, you may write an unlimited number
of checks. Do not, however, try to close out your account by check.
ACCOUNT TYPE SPECIAL REQUIREMENTS

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Phone 1-800-544-777 (phone_graphic) All account types (bullet) Maximum check request:
$100,000.
(bullet) For Money Line transfers to
your bank account; minimum:
$10; maximum: $100,000.
(bullet) You may exchange to other
Fidelity funds if both
accounts are registered with
the same name(s), address,
and taxpayer ID number.

Mail or in Person (mail_graphic)(hand_graphic) Individual, Joint (bullet) The letter of instruction must
Tenant, be signed by all persons
Sole Proprietorship required to sign for
, UGMA, UTMA transactions, exactly as their
Trust names appear on the
account.
(bullet) The trustee must sign the
letter indicating capacity as
Business or trustee. If the trustee's name
Organization is not in the account
registration, provide a copy of
the trust document certified
within the last 60 days.
(bullet) At least one person
Executor, authorized by corporate
Administrator, resolution to act on the
Conservator, account must sign the letter.
Guardian (bullet) Include a corporate
resolution with corporate seal
or a signature guarantee.
(bullet) Call 1-800-544-6666 for
instructions.

Wire (wire_graphic) All account types (bullet) You must sign up for the wire
feature before using it. To
verify that it is in place, call
1-800-544-6666. Minimum
wire: $5,000.
(bullet) Your wire redemption request
must be received by Fidelity
before 4 p.m. Eastern time
for money to be wired on the
next business day.

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Check (check_graphic) All account types (bullet) Minimum check: $500.
(bullet) All account owners must sign
a signature card to receive a
checkbook.

</TABLE>

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(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118

</TABLE>

INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365 days
a year. Whenever you call, you can speak with someone equipped to provide
the information or service you need.
24-HOUR SERVICE
ACCOUNT ASSISTANCE
1-800-544-6666
ACCOUNT BALANCES
1-800-544-7544
ACCOUNT TRANSACTIONS
1-800-544-7777
PRODUCT INFORMATION
1-800-544-8888
QUOTES
1-800-544-8544
RETIREMENT ACCOUNT
ASSISTANCE
1-800-544-4774
AUTOMATED SERVICE
(checkmark)
STATEMENTS AND REPORTS that Fidelity sends to you include the following:
(bullet) Confirmation statements (after every transaction, except
reinvestments, that affects your account balance or your account
registration)
(bullet) Account statements (quarterly)
(bullet) Financial reports (every six months)

To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if you have more than one account in the fund. Call
1-800-544-6666 if you need copies of financial reports or historical
account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing.
Note that exchanges out of a fund are limited to four per calendar year
(except for California Tax-Free Money Market), and that they may have tax
consequences for you. For details on policies and restrictions governing
exchanges, including circumstances under which a shareholder's exchange
privilege may be suspended or revoked, see page .
SYSTEMATIC WITHDRAWAL PLANS let you set up periodic redemptions from your
account.
FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans 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 a
home, educational expenses, and other long-term financial goals.
REGULAR INVESTMENT PLANS

FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND

MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly or (bullet) For a new account, complete the
quarterly appropriate section on the fund
application.
(bullet) For existing accounts, call
1-800-544-6666 for an application.
(bullet) To change the amount or frequency of
your investment, call 1-800-544-6666 at
least three business days prior to your
next scheduled investment date.

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

</TABLE>

MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Every pay (bullet) Check the appropriate box on the fund
period application, or call 1-800-544-6666 for an
authorization form.
(bullet) Changes require a new authorization
form.

<TABLE>
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FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND

</TABLE>

<TABLE>
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<S> <C> <C>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, (bullet) To establish, call 1-800-544-6666 after
bimonthly, both accounts are opened.
quarterly, or (bullet) To change the amount or frequency of
annually your investment, call 1-800-544-6666.

</TABLE>

A BECAUSE BOND FUND SHARE PRICES FLUCTUATE, THOSE FUNDS MAY NOT BE
APPROPRIATE CHOICES FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
SHAREHOLDER AND ACCOUNT POLICIES

DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment income and
capital gains. if any, to shareholders each year. Income dividends are
declared daily and paid monthly. Capital gains earned by the bond funds are
normally distributed in April and December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. Each fund offers four
options (three for California Tax-Free Money Market):
1. REINVESTMENT OPTION. Your dividend and capital gain 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. Your capital gain distributions, if any, will be
automatically reinvested, but you will be sent a check for each dividend
distribution. This option is not available for California Tax-Free Money
Market.
3. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions, if any.
4. DIRECTED DIVIDENDS(Registered trademark) OPTION. Your dividend and
capital gain distributions, if any, will be automatically invested in
another identically registered Fidelity fund.
Dividends will be reinvested at the fund's NAV on the last day of the
month. Capital gain distributions, if any, will be reinvested at the NAV as
of the date the fund deducts the distribution from its NAV. The mailing of
distribution checks will begin within seven days.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. The
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
Each fund earns interest from
its investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. The fund may
realize capital gains if it sells
securities for a higher price
than it paid for them. These
are passed along as CAPITAL
GAIN DISTRIBUTIONS. Money
market funds usually don't
make capital gain
distributions.
(checkmark)
TAXES
As with any investment, you should consider how an investment in a tax-free
fund could affect you. Below are some of the funds' tax implications.
TAXES ON DISTRIBUTIONS. Interest income that a fund earns is distributed to
shareholders as income dividends. Interest that is federally tax-free
remains tax-free when it is distributed.

However, gain on the sale of tax-free bonds results in taxable
distributions. Short-term capital gains and a portion of the gain on bonds
purchased at a discount are taxed as dividends. Long-term capital gain
distributions are taxed as long-term capital gains. These distributions are
taxable when they are paid, whether you take them in cash or reinvest them.
However, distributions declared in December and paid in January are taxable
as if they were paid on December 31. Fidelity will send you and the IRS a
statement showing the tax status of the distributions paid to you in the
previous year.
The interest from some municipal securities is subject to the federal
alternative minimum tax. A fund may invest so that up to 20% of its income
is derived from these securities. The bond funds do not currently
intend to purchase these securities. Individuals who are subject to the tax
must report this interest on their tax returns.
To the extent a fund's income dividends are derived from interest on state
tax-free investments, they will be free from California state personal
income tax.
During fiscal 1994, 100% of each fund's income dividends was free from
federal income tax and California s tate personal income taxes. 18.3%
of California Tax-Free Money Market's income dividends and 0% of both
California Tax-Free Insured's and California Tax-Free High Yield's income
dividends were subject to the federal alternative minimum tax.
TAXES ON TRANSACTIONS. Your bond fund redemptions - including exchanges to
other Fidelity funds - are subject to capital gains tax. A capital gain or
loss is the difference between the cost of your shares and the price you
receive when you sell them.
Whenever you sell shares of a fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before a fund deducts a capital
gain distribution from its NAV, you will pay the full price for the shares
and then receive a portion of the price back in the form of a taxable
distribution.
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates each fund's NAV as of the close of
business of the NYSE, normally 4 p.m. Eastern time.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
The money market fund values the securities it owns on the basis of
amortized cost. This method minimizes the effect of changes in a security's
market value and helps the fund to maintain a stable $1.00 share price. For
the bond funds, assets are valued primarily on the basis of market
quotations, if available. Since market quotations are often unavailable,
assets are usually valued by a method that the Board of Trustees believes
accurately reflects fair value.
EACH FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
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.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they
would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) Each fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees a fund or its transfer agent has
incurred.
(bullet) You begin to earn dividends as of the first business day
following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUNDS THROUGH A BROKER, who may charge
you a fee for this service. If you invest through a broker or other
institution, read its program materials for any additional service features
or fees that may apply.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
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
financial institution could be held liable for resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect a
fund, it may take up to seven days to pay you.
(bullet) Shares will earn dividends through the date of redemption;
however, shares redeemed on a Friday or prior to a holiday will continue to
earn dividends until the next business day.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) Each fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(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.
(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.
IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV on the day your
account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to qualified
recipients who support the sale of shares of the funds without
reimbursement from the funds. Qualified recipients are securities dealers
who have sold fund shares or others, including banks and other financial
institutions, under special arrangements in connection with FDC's sales
activities. In some instances, these incentives may be offered only to
certain institutions whose representatives provide services in connection
with the sale or expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
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:
(bullet) The fund you are exchanging into must be registered for sale in
your state.
(bullet) You may only exchange between accounts that are registered in the
same name, address, and taxpayer identification number.
(bullet) Before exchanging into a fund, read its prospectus.
(bullet) If you exchange into a fund with a sales charge, you pay the
percentage-point difference between that fund's sales charge and any sales
charge you have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(bullet) Exchanges may have tax consequences for you.
(bullet) Because excessive trading can hurt fund performance and
shareholders, California Tax-Free Insured and California Tax-Free High
Yield reserve the right to temporarily or permanently terminate the
exchange privilege of any investor who makes more than four exchanges out
of the fund per calendar year. Accounts under common ownership or control,
including accounts with the same taxpayer identification number, will be
counted together for purposes of the four exchange limit.
(bullet) Each fund reserves the right to 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.
(bullet) Your exchanges may be restricted or refused if a fund receives or
anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.
This prospectus is printed on recycled paper using soy-based inks.

FIDELITY CALIFORNIA TAX-FREE INSURED PORTFOLIO
FIDELITY CALIFORNIA TAX-FREE HIGH YIELD PORTFOLIO
FUNDS OF FIDELITY CALIFORNIA MUNICIPAL TRUST
FIDELITY CALIFORNIA TAX-FREE MONEY MARKET PORTFOLIO
A FUND OF FIDELITY CALIFORNIA MUNICIPAL TRUST II
STATEMENT OF ADDITIONAL INFORMATION
APRIL 18, 1994
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated April 18, 1994). Please retain this
document for future reference. The Annual Report for the fiscal year
ended February 28, 1994 is incorporated herein by reference. To obtain an
additional copy of the Prospectus or the Annual Report, please call
Fidelity Distributors Corporation at 1-800-544-8888.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Special Factors Affecting California
Special Factors Affecting Puerto Rico
Portfolio Transactions
Valuation of Portfolio Securities
Performance
Additional Purchase and Redemption Information
Distribution and Taxes
FMR
Trustees and Officers
Management Contracts
Distribution and Service Plans
Interest of FMR Affiliates
Description of the Trusts
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISER (MONEY MARKET FUND ONLY)
FMR Texas Inc. (FMR Texas)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
United Missouri Bank, N.A. (United Missouri) and Fidelity Service Co. (FSC)
CFR-ptb-494

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 of a "majority of the outstanding voting securities" (as
defined in the Investment Company Act of 1940 (the 1940 Act)) of the fund.
However, with respect to the money market fund, except for the fundamental
investment limitations set forth below, the investment policies and
limitations described in this Statement of Additional Information are not
fundamental and may be changed without shareholder approval.
INVESTMENT LIMITATIONS OF FIDELITY CALIFORNIA TAX-FREE MONEY MARKET
PORTFOLIO
(MONEY MARKET FUND)
THE FOLLOWING ARE THE MONEY MARKET FUND'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities;
(2) 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);
(3) purchase any securities on margin;
(4) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not to
exceed 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 33 1/3% of the fund's total assets by reason of a decline in
net assets will be reduced within 3 business days to the extent necessary
to comply with the 33 1/3% limitation;
(5) underwrite any issue of securities, except to the extent that the
purchase of municipal bonds in accordance with the fund's investment
objective, policies, and limitations, either directly from the issuer, or
from an underwriter for an issuer, may be deemed to be underwriting;
(6) 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;
(7) 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;
(8) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments;
(9) 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); or
(10) invest in oil, gas or other mineral exploration or development
programs.
Investment limitation (4) is construed in conformity with the 1940 Act;
and, accordingly, "3 business days" means three days, exclusive of Sundays
and holidays.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(ii) The fund does not currently intend to sell securities short.
(iii) 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 (4)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. 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.
(iv) 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.
(v) The fund does not currently intend to invest more than 25% of its total
assets in industrial revenue bonds related to a single industry.
(vi) The fund does not currently intend to purchase or sell future
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(vii) 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.
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
For purposes of limitations (6) 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.
INVESTMENT LIMITATIONS OF FIDELITY CALIFORNIA TAX-FREE INSURED PORTFOLIO
(INSURED FUND)
THE FOLLOWING ARE THE INSURED FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as 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) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(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 treated as borrowings for
purposes of fundamental investment limitation (2)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. 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 invest more than 25% of its
total assets in industrial revenue bonds related to a single industry.
(vii) 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.
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) 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 limitations (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 the insured fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page 11.
INSURANCE FEATURE. Under normal market conditions, the insured fund will
invest primarily in municipal bonds that, at the time of purchase, either
(1) are insured under fund insurance issued to the fund by an insurer or
(2) are insured under an insurance policy obtained by the issuer or
underwriter of such municipal bonds at the time of original issuance
thereof (issuer insurance). If a municipal bond is already covered by
issuer insurance when acquired by the fund, then coverage will not be
duplicated by fund insurance; if a municipal bond is not covered by issuer
insurance, it may be covered by fund insurance purchased by the fund. The
fund may also purchase municipal notes that are insured, although, in
general, municipal notes are not presently issued with issuer insurance,
and the fund does not generally expect to cover municipal notes under its
fund insurance. Accordingly, the fund does not presently expect that any
significant portion of the municipal notes it purchases will be covered by
insurance. Securities other than municipal bonds and notes purchased by the
fund will not be covered by insurance. Based upon the expected composition
of the fund, FMR estimates that the annual premiums for fund insurance will
range from .10% to .35% of the fund's average net assets. During the fiscal
year March 1, 1993 to February 28, 1994, no fund insurance was
purchased. Although the insurance feature reduces certain financial risks,
the premiums for fund insurance, which are paid from the fund's assets, and
the restrictions on investments imposed by fund insurance guidelines,
reduce the fund's current yield.
Insurance will cover the timely payment of interest and principal on
municipal obligations and will be obtained from recognized insurers. In
order to be considered as eligible insurance by the fund, such insurance
policies must guarantee the timely payment of all principal and interest on
the municipal bonds as they become due. However, such insurance may provide
that in the event of non-payment of interest or principal when due, with
respect to an insured municipal bond, the insurer is not obligated to make
such payment until a specified time period (which may be thirty days or
more) after it has been notified by the fund that such non-payment has
occurred. For these purposes, a payment of principal is due only at final
maturity of the municipal bond and not at the time any earlier sinking fund
payment is due. The insurance does not guarantee the market value of the
municipal bonds or the value of the shares of the fund and, except as
described below and in the section entitled "Valuation of Portfolio
Securities," has no effect on the price or redemption value of fund shares.
Municipal bonds are generally eligible for insurance under fund insurance
if, at the time of purchase by the fund, they are identified separately or
by category in qualitative guidelines furnished by the fund insurer and are
in compliance with the aggregate limitations on amounts set forth in such
guidelines. Premium variations are based in part on the rating of the
municipal bond being insured at the time the fund purchases the bond. The
insurer may prospectively withdraw particular municipal bonds from the
classifications of bonds eligible for insurance or change the aggregate
amount limitation of each issue or category of eligible municipal bonds,
but must continue to insure the full amount of such bonds previously
acquired which the insurer has indicated are eligible so long as they
remain in the fund. The qualitative guidelines and aggregate amount
limitations established by the insurer from time to time will not
necessarily be the same as those the fund or FMR would use to govern
selection of municipal bonds for the fund's investments. Therefore, from
time to time such guidelines and limitations may affect investment
decisions.
Because coverage under the fund insurance terminates upon sale of a
municipal bond from the fund, the insurance does not have any effect on the
resale value of such a bond. Therefore, FMR may decide to retain any
insured municipal bonds which are in default or, in FMR's view, in
significant risk of default, and place a value on the insurance. This value
will be equal to the difference between the market value of the defaulted
municipal bond and the market value of similar municipal bonds that are not
in default. As a result, FMR may be limited in its ability to manage the
fund to the extent that it holds defaulted municipal bonds, which will
limit its ability in certain circumstances to purchase other municipal
bonds. While a defaulted municipal bond is held by the fund, the fund
continues to pay the insurance premium thereon but also collects interest
payments from the insurer and retains the right to collect the full amount
of principal from the insurer when the municipal bond comes due. The fund
expects that the market value of a defaulted municipal bond covered by
issuer insurance will generally be greater than the market value of an
otherwise comparable defaulted municipal bond covered by fund insurance.
PRINCIPAL BOND INSURERS. AMBAC Indemnity Corporation (AMBAC Indemnity) is a
Wisconsin-domiciled stock insurance corporation regulated by the Office of
the Commissioner of Insurance of the State of Wisconsin and licensed to do
business in 50 states, the District of Columbia, and the Commonwealth of
Puerto Rico, with admitted assets of approximately $1,936,000,000
billion (unaudited) and statutory capital of approximately
$1,096,000,000 million (unaudited) as of September 30 , 1993.
Statutory capital consists of AMBAC Indemnity's policyholders' surplus and
statutory contingency reserve. AMBAC Indemnity is a wholly owned subsidiary
of AMBAC Inc., a 100% publicly-held company. Moody's and S&P have both
assigned a triple-A claims-paying ability rating to AMBAC Indemnity.
Capital Guaranty Insurance Company is a "Aaa/AAA" rated monoline stock
insurance company incorporated in the State of Maryland, and is a wholly
owned subsidiary of Capital Guaranty Corporation, a Maryland insurance
holding company. Capital Guaranty Corporation is a publicly owned company
whose shares are traded on the New York Stock Exchange.
Capital Guaranty Insurance Company is authorized to provide insurance in
49 states, the District of Columbia and three U.S. territories. Capital
Guaranty focuses on insuring municipal securities. Their policies guarantee
the timely payment of principal and interest when due for payment on new
issue and secondary market issue municipal bond transactions. Capital
Guaranty's claims-paying ability is rated "Triple-A" by both Moody's and
Standard & Poor's. Therefore, if Capital Guaranty insures and issue
with a stand alone rating of less than "Triple-A", such issue would be
"upgraded" to "Aaa/AAA" by virtue of Capital Guaranty's insurance.
As of September 30, 1993, Capital Guaranty had $13.6 billion in net
exposure outstanding. The total statutory policyholders' surplus and
contingency reserve of Capital Guaranty was $181,383,432 (unaudited) and
the total admitted assets were $270,021,126 (unaudited) as reported to the
Insurance Department of the State of Maryland as of September 30, 1993.
FGIC Corporation, through its wholly owned subsidiary Financial Guaranty
Insurance Company, is a leading insurer of municipal bonds, including new
issues and bonds held in unit investment trusts and mutual funds. Municipal
bonds insured by Financial Guaranty are rated Aaa/AAA/AAA by Moody's,
S&P, and Fitch, respectively. In accordance with statutory accounting
principles, Financial Guaranty's capital base as of December 31, 1993
totalled $1.03 billion , comprised of capital and surplus of
$ 777 million and a contingency reserve of $253 million.
Municipal Bond Investors Assurance Corporation (MBIA) is the principal
operating subsidiary of MBIA Inc., a New York Stock Exchange listed
company. MBIA Inc. is not obligated to pay debts of, or claims against
MBIA. MBIA is a limited liability corporation rather than a several
liability association. MBIA is domiciled in the state of New York and
licensed to do business in all 50 states, the District of Columbia, and the
Commonwealth of Puerto Rico. Moody's rates all bond issues insured by
MBIA "Aaa" and short-term loans "MIG-1," both designated to be of
the highest quality; S&P rates all new issues insured by MBIA
"AAA" Prime Grade. As of September 30 , 1993, MBIA had
admitted assets of $ 13 billion (unaudited), total liabilities of
$2 billion (unaudited), and total capital and surplus of $951
million (unaudited) determined in accordance with statutory
accounting practices prescribed or permitted by insurance regulatory
authorities.
INVESTMENT LIMITATIONS OF FIDELITY CALIFORNIA TAX-FREE HIGH YIELD PORTFOLIO
(HIGH YIELD FUND)
THE FOLLOWING ARE THE HIGH YIELD FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS
SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as 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) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(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 treated as borrowings for
purposes of fundamental investment limitation (2)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. 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 invest more than 25% of its
total assets in industrial revenue bonds related to a single industry.
(vii) 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.
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) 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 limitations (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 the high yield fund's limitations on futures and options transactions,
see the section entitled "Limitations on Futures and Options Transactions"
beginning on page 11.
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 Investment Company Act of 1940. These
transactions may include 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, the Board of Trustees has established and
periodically reviews procedures applicable to transactions involving
affiliated financial institutions.
QUALITY AND MATURITY (MONEY MARKET FUND ONLY). Pursuant to procedures
adopted by the Board of Trustees, the fund may purchase only high-quality
securities that FMR believes present minimal credit risks. To be considered
high-quality, a security must be rated in accordance with applicable rules
in one of the two highest categories for short-term securities by at least
two nationally recognized rating services (or by one, if only one rating
service has rated the security) or, if unrated, judged to be of equivalent
quality by FMR. The fund must limit its investments to securities with
remaining maturities of 397 days or less and must maintain a
dollar-weighted average maturity of 90 days or less.
DELAYED-DELIVERY TRANSACTIONS. Each fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security (and more than
seven days in the future). Typically, no interest accrues to the purchaser
until the security is delivered. The insured and high yield funds may
receive fees for entering into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, each fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because a fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the fund's other investments. If a fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, the fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When a fund has sold a security on a delayed-delivery
basis, 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, the fund could miss
a favorable price or yield opportunity, or could suffer a loss.
Each fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
REFUNDING CONTRACTS. The insured and high yield funds may purchase
securities on a when-issued basis in connection with the refinancing of an
issuer's outstanding indebtedness. Refunding contracts require the issuer
to sell and the fund 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. The funds generally will not be obligated to pay the
full purchase price if they fail to perform under a refunding contract.
Instead, refunding contracts generally provide for payment of liquidated
damages to the issuer (currently 15-20% of the purchase price). A fund may
secure its obligations under a refunding contract by depositing collateral
or a letter of credit equal to the liquidated damages provisions of the
refunding contract. When required by SEC guidelines, each fund will place
liquid assets in a segregated custodial account equal in amount to its
obligations under refunding contracts.
INVERSE FLOATERS. The insured and high yield funds may invest in inverse
floaters, which are instruments whose interest rates bear an inverse
relationship to the interest rate on another security or the value of an
index. Changes in the interest rate on the other security or index
inversely affect the residual interest rate paid on the inverse floater,
with the result that the inverse floater's price will be considerably more
volatile than that of a fixed-rate bond. For example, a municipal issuer
may decide to issue two variable-rate instruments instead of a single
long-term, fixed-rate bond. The interest rate on one instrument reflects
short-term interest rates, while the interest rate on the other instrument
(the inverse floater) reflects the approximate rate the issuer would have
paid on a fixed-rate bond, multiplied by two, minus the interest rate paid
on the short-term instrument. Depending on market availability, the two
portions may be recombined to form a fixed-rate municipal bond. The market
for inverse floaters is relatively new.
VARIABLE OR FLOATING RATE OBLIGATIONS bear variable or floating interest
rates and carry rights that permit holders to demand payment of the unpaid
principal balance plus accrued interest from the issuers or certain
financial intermediaries. Floating rate instruments have interest rates
that change whenever there is a change in a designated base rate while
variable rate instruments provide for a specified periodic adjustment in
the interest rate. These formulas are designed to result in a market value
for the instrument that approximates its par value.
With respect to the money market fund, a demand instrument with a
conditional demand feature must have received both a short-term and a
long-term high-quality rating or, if unrated, have been determined to be of
comparable quality pursuant to procedures adopted by the Board of Trustees.
A demand instrument with an unconditional demand feature may be acquired
solely in reliance upon a short-term high-quality rating or, if unrated,
upon a finding of comparable short-term quality pursuant to procedures
adopted by the Board of Trustees.
The funds may invest in fixed-rate bonds that are subject to third party
puts and in participation interests in such bonds held in trust or
otherwise. These bonds and participation interests have tender options or
demand features that permit a fund to tender (or put) the bonds to an
institution at periodic intervals and to receive the principal amount
thereof. A fund considers variable rate instruments structured in this way
(Participating VRDOs) to be essentially equivalent to other VRDOs it
purchases. The IRS has not ruled whether the interest on Participating
VRDOs is tax-exempt and, accordingly, a fund intends to purchase these
instruments based on opinions of bond counsel.
The money market fund may invest in variable or floating rate instruments
that ultimately mature in more than 397 days, if the fund acquires a right
to sell the instruments that meets certain requirements set forth in Rule
2a-7. Variable rate instruments (including instruments subject to a demand
feature) that mature in 397 days or less may be deemed to have maturities
equal to the period remaining until the next readjustment of the interest
rate. Other variable rate instruments with demand features may be deemed to
have a maturity equal to the period remaining until the next adjustment of
the interest rate or the period remaining until the principal amount can be
recovered through demand. A floating rate instrument subject to a demand
feature may be deemed to have a maturity equal to the period remaining
until the principal amount can be recovered through demand.
TENDER OPTION BONDS are created by coupling an intermediate- or long-term,
fixed-rate, tax-exempt 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. Subject to applicable regulatory requirements, the money market fund
may buy tender option bonds if the agreement gives the fund the right to
tender the bond to its sponsor no less frequently than once every 397 days.
In selecting tender option bonds for the funds, 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.
ZERO COUPON BONDS do not make regular interest payments. Instead, they are
sold at a deep 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 very volatile when interest rates change. In
calculating its daily dividend, a fund takes into account as income a
portion of the difference between a zero coupon bond's purchase price and
its face value.
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. Each fund may
acquire standby commitments to enhance the liquidity of portfolio
securities, but, in the case of the money market fund, only when the
issuers of the commitments present minimal risk of default.
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. Standby commitments will
not affect the dollar-weighted average maturity of the money market fund or
the valuation of the securities underlying the commitments.
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
support 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
marketable by the funds; and the possibility that the maturities of the
underlying securities may be different from those of the commitments.
MUNICIPAL LEASE OBLIGATIONS. Each fund may invest a portion of its assets
in municipal leases and participation interests therein. These obligations,
which may take the form of a lease, an installment purchase, or a
conditional sale contract, are issued by state and local governments and
authorities to acquire land and a wide variety of equipment and facilities.
Generally, the funds will not hold such 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
a fund a specified, undivided interest in the obligation in proportion to
its purchased interest in the total amount of the obligation.
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
clauses free the issuer from debt issuance limitations.
FEDERALLY TAXABLE OBLIGATIONS. The funds do not intend to invest in
securities whose interest is federally taxable; however, from time to time,
each fund may invest a portion of its assets on a temporary basis in
fixed-income obligations whose interest is subject to federal income tax.
For example, each fund may invest in obligations whose interest is
federally taxable pending the investment or reinvestment in municipal
securities of proceeds from the sale of its shares or sales of portfolio
securities.
Should a fund invest in federally taxable obligations, it would purchase
securities that in FMR's judgment are of high quality. These would include
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities; obligations of domestic banks; and repurchase
agreements. The insured and high yield funds' standards for high quality,
taxable obligations are essentially the same as those described by Moody's
Investors Service, Inc. (Moody's) in rating corporate obligations within
its two highest ratings of Prime-1 and Prime-2, and those described by
Standard & Poor's Corporation (S&P) in rating corporate obligations
within its two highest ratings of A-1 and A-2. The money market fund will
purchase taxable obligations only if they meet its quality requirements.
Proposals to restrict or eliminate the federal income tax exemption for
interest on municipal obligations 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 the funds' distributions. If
such proposals were enacted, the availability of municipal obligations and
the value of the funds' holdings would be affected and the Trustees would
reevaluate the funds' investment objectives and policies.
Each fund anticipates being as fully invested as practicable in municipal
securities; however, there may be occasions when, as a result of maturities
of portfolio securities, sales of fund shares, or in order to meet
redemption requests, a fund may hold cash that is not earning income. In
addition, there may be occasions when, in order to raise cash to meet
redemptions, a fund may be required to sell securities at a loss.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed-upon price on an agreed-upon date within a number of days from
the date of purchase. 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. A repurchase agreement is a taxable
obligation which involves the obligation of the seller to pay the
agreed-upon price, which obligation is in effect secured by the value (at
least equal to the amount of the agreed-upon resale price and marked to
market daily) of the underlying security. Each fund may engage in
repurchase agreements with respect to any security in which it is
authorized to invest even if, with respect to the money market fund, the
underlying security matures in more than 397 days. While it does not
presently appear possible to eliminate all risks from these transactions
(particularly the possibility of a decline in the market value of the
underlying securities, as well as delays and costs to the fund in
connection with bankruptcy proceedings), it is each fund's current policy
to limit repurchase agreements to parties whose creditworthiness has been
reviewed and found satisfactory by FMR.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement. A
fund will enter into reverse repurchase agreements only with parties whose
creditworthiness has been found satisfactory by FMR. Such transactions may
increase fluctuations in the market value of a fund's assets and may be
viewed as a form of leverage.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. 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 instruments. In determining the
liquidity of a fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset a fund's rights and
obligations relating to the investment). Investments currently considered
by the money market fund to be illiquid include restricted securities and
municipal lease obligations determined by FMR to be illiquid. Investments
currently considered by the insured and high yield funds to be illiquid
include over-the-counter options. Also, FMR may determine some restricted
securities and municipal lease obligations to be illiquid. However, with
respect to over-the-counter options the insured and high yield funds write,
all or a portion of the value of the underlying instrument may be illiquid
depending on the assets held to cover the option and the nature and terms
of any agreement the fund may have to close out the option before
expiration. In the absence of market quotations, illiquid investments are
valued for purposes of monitoring amortized cost valuation (money market
fund) and priced (insured and high yield funds) at fair value as determined
in good faith by a committee appointed by the Board of Trustees. If through
a change in values, net assets, or other circumstances, a fund were in a
position where more than 10% of its net assets were invested in illiquid
securities, it would seek to take appropriate steps to protect liquidity.
RESTRICTED SECURITIES 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, a fund 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 the fund may be permitted to
sell a security under an effective registration statement. If, during such
a period, adverse market conditions were to develop, a fund might obtain a
less favorable price than prevailed when it decided to seek registration of
the security. However, in general, the money market fund anticipates
holding restricted securities to maturity or selling them in an exempt
transaction.
INDEXED SECURITIES. The insured and high yield funds may purchase
securities 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. Index 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. One example of indexed
securities is inverse floaters.
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. At the same time,
indexed securities are subject to the credit risks associated with the
issuer of the security, and their values may decline substantially if the
issuer's creditworthiness deteriorates. Indexed securities may be more
volatile than the underlying instruments.
LOWER-RATED MUNICIPAL SECURITIES. The high yield fund may invest a portion
of its assets in lower-rated municipal securities as described in the
Prospectus.
While the market for California municipals is considered to be substantial,
adverse publicity and changing investor perceptions may affect the ability
of outside pricing services used by the fund to value its portfolio
securities, and the fund's ability to dispose of lower-rated bonds. The
outside pricing services are monitored by FMR and reported to the Board to
to determine whether the services are furnishing prices that accurately
reflect fair value. The impact of changing investor perceptions may be
especially pronounced in markets where municipal securities are thinly
traded.
The fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise 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.
INTERFUND BORROWING PROGRAM. Each fund has received permission from the SEC
to lend money to and borrow money from other funds advised by FMR or its
affiliates, but will participate in the interfund borrowing program only as
a borrower. Interfund loans normally will extend overnight, but can have a
maximum duration of seven days. A fund will borrow through the program only
when the costs are equal to or lower than the costs of bank loans. Loans
may be called on one day's notice, and the fund may have to borrow from a
bank at a higher interest rate if an interfund loan is called or not
renewed.
ELECTRIC UTILITIES INDUSTRY. The electric utilities industry has been
experiencing, or may experience in the future, problems, including (a) the
effects of inflation upon construction and operating costs, (b) the
availability and cost of fuel, (c) the availability and cost of capital,
(d) the effects of conservation on energy demand, (e) the effects of
rapidly changing environmental, safety, and licensing requirements, and
other federal, state, and local regulations, (f) timely and sufficient rate
increases, (g) opposition to nuclear power, and (h) increased competition.
HEALTH CARE INDUSTRY. The health care industry is subject to regulatory
action by a number of private and governmental agencies, including federal,
state, and local governmental agencies. A major source of revenues for the
health care industry is payments from the Medicare and Medicaid programs.
As a result, the industry is sensitive to legislative changes and
reductions in governmental spending for such programs. Numerous other
factors may affect the industry, such as general and local economic
conditions; demand for services; expenses (including malpractice insurance
premiums); and competition among health care providers. In the future, the
following elements may adversely affect health care facility operations:
adoption of legislation proposing a national health insurance program;
medical and technological advances which dramatically alter the need for
health services or the way in which such services are delivered; and
efforts by employers, insurers, and governmental agencies to reduce the
costs of health insurance and healthcare services.
HOUSING. Housing revenue bonds are generally issued by a state, county,
city, local housing authority, or other public agency. They are secured by
the revenues derived from mortgages purchased with the proceeds from 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 the 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 regulations.
INVESTMENT POLICIES FOR INSURED AND HIGH YIELD FUNDS ONLY
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each 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 Act, which limits the extent to which the funds can
commit assets to initial margin deposits and option premiums.
In addition, each 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 funds' investments in futures contracts and
options, and the funds' policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, are not
fundamental policies and may be changed as regulatory agencies permit.
FUTURES CONTRACTS. When a fund purchases a futures contract, it agrees to
purchase a specified underlying instrument at a specified future date. When
a fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when the fund enters into the contract. Some
currently available futures contracts are 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.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a fund 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 fund 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 fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the fund will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. A fund 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
paid, 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. When a fund writes a put option, it takes the
opposite side of the transaction from the option's purchaser. In return for
receipt of the premium, the fund 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. When writing an option on a futures
contract, the fund will be required to make margin payments to an FCM as
described above for futures contracts. A fund may seek to terminate its
position in a put option it writes 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 the fund has written, however, the
fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer generally would 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 a fund 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.
COMBINED POSITIONS. A fund may purchase and write 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, a fund may purchase a put option and write a call option on the
same underlying instrument, in order to 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, in order 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. The funds may invest in options and
futures contracts based on securities with different issuers, maturities,
or other characteristics from the securities in which they typically
invest, which involves a risk that the options or futures position will not
track the performance of a 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.
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 for a fund 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 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
fund greater flexibility to tailor an option to their 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.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The funds will comply
with guidelines established by the Securities and Exchange Commission with
respect to coverage of options and futures strategies by mutual funds, and
if the guidelines so require will set aside appropriate liquid assets in a
segregated custodial account in the amount prescribed. Securities held in a
segregated account cannot be sold while the futures or option strategy is
outstanding, unless they are replaced with other suitable assets. As a
result, there is a possibility that segregation of a large percentage of a
fund's assets could impede portfolio management or the fund's ability to
meet redemption requests or other current obligations.
SPECIAL FACTORS AFFECTING 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 the funds. Obligations of the state or local
governments may also be affected by budgetary pressures affecting the State
and economic conditions in the State. Interest income to a fund could also
be adversely affected. The following 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 of California, its agencies, or instrumentalities,
as available on the date of this Statement of Additional Information. 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 AND APPROPRIATIONS
LIMITATION ON 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 California 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, XIIIA limits to 1% of full
cash value the rate of ad valorem property taxes on real property and
generally restricts the 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 levy of "general taxes" which
were not dedicated to a specific use. In response to these decisions, the
voters of the State in 1986 adopted an initiative statute which imposed
significant new limits on the ability of local entities to raise or levy
general taxes, except by receiving majority local voter approval.
Significant elements of this initiative, "Proposition 62," have been
overturned in recent court cases, but efforts may continue to further
restrict the ability of local government agencies to levy or raise taxes.
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 consists 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 excludes
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 more closely follow
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. I n
the mid-to-late 1980's, many entities were at or approaching their
limit , and several successfully obtained voter approval for
4-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 FY
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
199 4 -9 5 Governor's Budget proposal estimates State
appropriations will be more than $ 3.7 billion under the limit for FY
199 3 -9 4 and over $ 5.4 billion under the limit for FY
199 4 -9 5 .
OBLIGATIONS OF THE STATE OF CALIFORNIA
As of March 1, 199 4 , the State had approximately $ 17.5
billion of general obligation bonds outstanding, and $ 6.3 billion
remained authorized but unissued. In addition, at June 30, 199 3 , the
State had lease-purchase obligations, payable from the State's General
Fund, of approximately $ 4.0 billion. Of the State's outstanding
general obligation debt, approximately 28% is presently self-liquidating
(for which program revenues are anticipated to be sufficient to reimburse
the General Fund for debt service payments). In FY 199 2 -9 3 ,
debt service on general obligation bonds and lease-purchase debt was
approximately 4.1 % 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
California'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 31 million, it now represents 12.3% of the total United States
population. Total personal income in the State, at an estimated $640
billion in 1992, accounts for about 13% of all personal income in the
nation. Total employment is almost 14 million, the majority of which is in
the service, trade, and manufacturing sectors.
Reports by the State Department of Finance and the Commission on State
Finance confirm that the State's economy is suffering the worst recession
since the 1930's, with prospects for recovery slower than for the nation as
a whole. The State lost over 800,000 jobs since the start of the
recession, in mid-1990, and is expected to lose more jobs in 1994 before
a turnaround occurs . The largest job losses have been in
Southern California, led by declines in the aerospace and construction
industries. Weakness statewide occurred in manufacturing, construction,
services and trade and will be hurt in the next few years by continued
cuts in federal defense spending and base closures . Unemployment is
expected to remain well above the national average in 1994 . The
State's economy is only expected to slowly pull out of the recession
starting in 1994 or early 1995 . Delay in recovery will exacerbate
shortfalls in State revenues.
RECENT STATE FINANCIAL RESULTS
The principal sources of State General Fund revenues in
199 2 -9 3 were the California personal income tax (4 4 %
of total revenues), the sales tax (3 8 %), bank and corporation taxes
(1 2 %), and the gross premium tax on insurance (3%). 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. In recent
years (but not in the past two years, as the recession has cut
revenues) , the State has budgeted to maintain the Economic
Uncertainties Fund at around 3% of General Fund expenditures.
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 3 4 %).
Since the start of the 1990-91 Fiscal Year, the State has 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. As a result, the State entered a period of
budget imbalance, with expenditures exceeding revenues for four of the five
completed fiscal years through 1991-92.
As the State fell into a deep recession in the summer of 1990, the State
budget fell sharply out of balance in the 1990-91 and 1991-92 fiscal years,
despite significant expenditure cuts and tax increases. The State had
accumulated a $2.8 billion budget deficit by June 30, 1992. This deficit
also severely reduced the State's cash resources, so that it had to rely on
external borrowing in the short-term markets to meet its cash needs.
With the failure to enact a budget by July 1, 1992, the State had no legal
authority to pay many of its vendors until the budget was passed;
nevertheless, certain obligations (such as debt service, school
apportionments, welfare payments, and employee salaries) were payable
because of continuing or special appropriations, or court orders. However,
the State Controller did not have enough cash to pay as they came due all
of these ongoing obligations, as well as valid obligations incurred in the
prior fiscal year. Starting on July 1, 1992, the Controller was required to
issue approximately $3.8 billion of "registered warrants" in lieu of normal
warrants backed by cash to pay many State obligations (the first time this
had occurred since the 1930's). Available cash was used to pay
constitutionally mandated and priority obligations. All the registered
warrants were called for redemption by September 4, 1992 following
enactment of the 1992-93 Budget Act and issuance by the State of its normal
cash flow borrowings.
The 1992-93 Budget Act, when finally adopted, was projected to eliminate
the State's accumulated deficit, with additional expenditure cuts and a
$1.3 billion transfer of State education funding costs to local governments
by shifting local property taxes to school districts. However, as the
recession continued longer and deeper than expected, revenues once again
were far below projections, and only reached a level just equal to the
amount of expenditures. Thus, the State continued to carry its $2.8 billion
budget deficit at June 30, 1993.
The 1993-94 Budget Act was similar to the prior year, in reliance on
expenditure cuts and an additional $2.6 billion transfer of costs to local
government, particularly counties. A major feature of the budget was a
two-year plan to eliminate the accumulated deficit by borrowing into the
1994-95 fiscal year. With the recession still continuing longer than
expected, the 1994-95 Governor's Budget now projects in the 1993-94 Fiscal
Year, the General Fund will have $900 million less revenue and $800 million
higher expenditures than budgeted. As a result, revenues will only exceed
expenditures by about $400 million. If this projection is met, it will be
the first operating surplus in four years; however, some budget analysts
outside the Department of Finance project revenues in the balance of
1993-94 will not even meet the revised lower projection. In addition, the
General Fund may have some unplanned costs for relief related to the
January 17, 1994 Northridge earthquake.
The State has implemented its short-term borrowing as part of the deficit
elimination plan, and has also borrowed additional sums to cover cash flow
shortfalls in the spring of 1994, for a total of $3.2 billion, coming due
in July and December 1994. Repayment of these short-term notes will require
additional borrowing, as the State's cash position continues to be
adversely affected.
The Governor's 1994-95 Budget proposal recognizes the need to bridge a gap
of around $5 billion by June 30, 1995. Over $3.1 billion of this amount is
being requested from the federal government as increased aid, particularly
for costs associated with incarcerating, educating, and providing health
and welfare services to undocumented immigrants. However, President Clinton
has not included these costs in his proposed Fiscal 1995 Budget. The rest
of the budget gap is proposed to be closed with expenditure cuts and
projected $600 million of new revenue assuming the State wins a tax case
presently pending in U.S. Supreme Court. Thus, the State will once again
face significant uncertainties and very difficult choices in the 1994-95
budget, as tax increases are unlikely and many cuts and budget adjustments
have been made in the past three years.
The State's severe financial difficulties for the past, the current and
upcoming budget years will result in continued pressure upon almost all
local governments, especially those which depend on State aid, such as
school districts and counties. While the Governor has noted that part of
the "budget gap" was cyclical, a result of economic slowdown which has
reduced growth of revenues in the fiscal years, but a significant part is
structural, with demands for State services and caseloads in major areas of
the budget, such as corrections, welfare indigent health care, and public
schools, growing at a faster rate than the State economy and State
revenues. 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.
State general obligation bonds are currently rated "Aa" by Moody's, "AA" by
Fitch, and " A+ " by S&P. There can be no assurance that
such ratings will be maintained in the future. All three of these ratings
were reduced from "AAA" levels since late 1991.
OBLIGATIONS OF OTHER ISSUERS
STATE ASSISTANCE. Property tax revenues received by local governments
declined more than 50% following passage of Proposition 13. Subsequently,
the California 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 $31.2 billion in FY
1992-93 (about 75% of General Fund expenditures) and has been
budgeted at $29 billion for FY 1993-94 , 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
Act s caused local governments to transfer $ 3.8 billion of
property tax revenues to school districts, representing reversal of
the post-Proposition 13 "bailout" aid.
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. At
least one rural county (Butte) publicly announced that it might enter
bankruptcy proceedings in August 1990, although such plans were put off
after the Governor approved legislation to provide additional funds for the
county. Other counties have also indicated that their budgetary condition
is extremely grave. 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.
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 California 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 California entities.
OTHER CONSIDERATIONS. The repayment of Industrial Development Securities
secured by real property may be affected by California 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 California 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 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 California tax allocation
bonds after the enactment of Articles XIIIA and XIIIB, and only resumed
such ratings on a selective basis.
Proposition 87, approved by California 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 California is within an active geologic region subject
to major seismic activity. Any California Municipal Obligation in the funds
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.
On January 17, 1994 , a major earthquake with an estimated magnitude of
6.8 on the Richter scale struck the Los Angeles area, causing significant
property damage to public and private facilities, presently estimated at
$15-20 billion. While over $9.5 billion of federal aid, and a projected
$1.9 billion of State aid, plus insurance proceeds, will reimburse much of
that loss, there will be some ultimate loss of wealth and income in the
region, in addition to costs of the disruption caused by the event. These
uninsured losses are estimated to have only a small effect on the overall
state economy, with a drop of up to 0.5 percent in personal income growth.
Short-term economic projections are generally neutral, as the infusion of
aid will restore billions of dollars to the local economy within a few
months. Although the earthquake will hinder recovery from the recession in
Southern California, already hard-hit, its long-term impact is not expected
to be material in the context of the overall wealth of the region. Almost
five years after the event, there are few remaining effects of the 1989
Loma Prieta earthquake in Northern California (which, however, has caused
less severe damage than the Northridge earthquake).
Because of the complex nature of Articles XIIIA and XIIIB 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 Article XIIIA or Article XIIIB, or the
outcome of any pending litigation with respect to those provisions on
California obligations in the funds 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 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 FACTORS AFFECTING PUERTO RICO
The following only highlights some of the more significant financial trends
and problems affecting the Commonwealth of Puerto Rico (the "Commonwealth"
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
Statement of Additional Information. 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 fact which
would render such information materially inaccurate.
The economy of Puerto Rico is closely linked with that of the United
States, and in fiscal 1992 trade with the United States accounted for
approximately 88% of Puerto Rico's exports and approximately 68% of its
imports. In this regard, in fiscal 1992 Puerto Rico experienced a
$2,940,300,000 positive adjusted merchandise trade balance. Since fiscal
1987 personal income, both aggregate and per capita, have increased
consistently each fiscal year. In fiscal 1992 aggregate personal income was
$22.7 billion and personal per capita income was $6,360. Gross domestic
product in fiscal 1989, 1990, 1991 and 1992 was $19,954,000, $21,619,000,
22,857,000, and $23,620,000 respectively. For fiscal 1993, an increase in
gross domestic product of 2.9% over fiscal 1992 is forecasted. However,
actual growth in the Puerto Rico economy will depend on several factors
including the condition of the U.S. economy, the exchange rate for the U.S.
dollar, the price stability of oil imports, and interest rates. Due to
these factors there is no assurance that the economy of Puerto Rico will
continue to grow.
Puerto Rico has made marked improvements in fighting unemployment.
Unemployment is at a low level compared to that of the late 1970s, but it
still remains significantly above the United States average. Despite long
term improvements the unemployment rate rose from 15.2% to 16.5% from
fiscal 1991 to fiscal 1992. At the end of the third quarter of fiscal 1993
the unemployment rate in Puerto Rico stood at 17.3%. There is a possibility
that the unemployment rate will continue to increase.
The economy of Puerto Rico has undergone a transformation in the later half
of this century from one centered around agriculture, to one dominated by
the manufacturing and service industries. Manufacturing is the cornerstone
of Puerto Rico's economy, accounting for $13.2 billion or 38.7% of gross
domestic product in 1992. However, manufacturing has experienced a basic
change over the years as a result of the influx of higher wage, high
technology industries such as the pharmaceutical industry, electronics,
computers, micro-processors, scientific instruments and high technology
machinery. The service sector, which includes wholesale and retail trade,
finance and real estate, ranks second in its contribution to gross domestic
product and is the sector that employs the greatest number of people. In
fiscal 1992, the service sector generated $13.0 billion in gross domestic
product or 38.3% of the total and employed over 449,000 workers providing
46% of total employment. The government sector and tourism also contribute
to the island economy each accounting for $3.7 billion and $1.5 billion in
fiscal 1992, respectively.
Much of the development of the manufacturing sector of the economy of
Puerto Rico is attributable to federal and Commonwealth tax incentives,
most notably section 936 of the Internal Revenue Code of 1986, as amended
("Section 936") and the Commonwealth's Industrial Incentives Program.
Section 936 currently grants U.S. corporations that meet certain criteria
and elect its application a credit against their U.S. corporate income tax
on the portion of the tax attributable to (i) income derived from the
active conduct of a trade or business in Puerto Rico ("active income"), or
from the sale or exchange of substantially all the assets used in the
active conduct of such trade or business, and (ii) qualified possession
source investment income ("passive income"). The Industrial Incentives
Program, through the 1987 Industrial Incentives Act, grants corporations
engaged in certain qualified activities a fixed 90% exemption from
Commonwealth income and property taxes and a 60% exemption from municipal
license taxes.
On August 16, 1993, President Clinton signed a bill amending Section 936.
Under the amendments, U.S. corporations with operations in Puerto Rico can
elect to receive a federal income tax credit equal to: 40% of the credit
currently available, phased in over a five year period, starting at 60% of
the current credit, or a credit based on investment and wages. The
investment and wage credit would equal the sum of (i) 60% of qualified
compensation to employees, (ii) a specified percentage of depreciation
deductions with respect to tangible property located in Puerto Rico, and
(iii) a portion of income taxed paid to Puerto Rico, up to a 9% effective
tax rate, subject to certain requirements. It is not possible to determine
at this time whether the reductions in tax incentives for operations in
Puerto Rico will have a significant impact on the economy of Puerto Rico or
the time period in which such impact would arise.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the funds by FMR (either directly or through affiliated
sub-advisers) pursuant to authority contained in the management contracts.
FMR is also responsible for the placement of transaction orders for other
investment companies and accounts for which it or its affiliates act as
investment adviser. Securities purchased and sold by the money market fund
generally will be traded on a net basis (i.e., without commission). In
selecting broker-dealers, subject to applicable limitations of the federal
securities laws, FMR will consider 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; and the reasonableness of any commissions.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other 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; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). FMR maintains a listing of broker-dealers who
provide such services on a regular basis. However, since many transactions
on behalf of the money market fund are placed with broker-dealers
(including broker-dealers on the list) without regard to the furnishing of
such services, it is not possible to estimate the proportion of such
transactions directed to such broker-dealers solely because such services
were provided. The selection of such broker-dealers is generally made by
FMR (to the extent possible consistent with execution considerations) based
upon the quality of research and execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the funds may be useful to FMR in rendering investment management
services to the funds 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 the funds. 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.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive 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 the
funds and 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 services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the funds or shares of other Fidelity
funds, to the extent permitted by law. FMR may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI), a subsidiary of FMR Corp., if the commissions are fair,
reasonable, and comparable to commissions charged by non-affiliated,
qualified brokerage firms for similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, except if certain
requirements are satisfied. Pursuant to such regulations, the Board of
Trustees has authorized FBSI to execute fund portfolio transactions on
national securities exchanges in accordance with approved procedures and
applicable SEC rules. For fiscal periods March 1, 1993 to February 28, 1994
and May 1, 1992 to February 28, 1993 and the fiscal year ended April 30,
1992, the funds paid no brokerage commissions.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of
each fund and review the commissions paid by each fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to each fund.
For fiscal 1994 and 1993, the insured and high yield funds' turnover
rates were 44 % and 27% (annualized) and 60 % and 32%
(annualized), respectively.
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 the funds are substantially the same
as those of other funds managed by FMR, investment decisions for each fund
are made independently from those of other funds managed by FMR or 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 accounts.
Simultaneous transactions are inevitable when several funds are managed by
the same investment adviser, particularly when the same security is
suitable for the investment objective of more than one fund.
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 a formula considered by the officers of the funds involved to be
equitable to each fund. In some cases, this system could have a detrimental
effect on the price or value of the security as far as the funds are
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 Board of Trustees that the
desirability of retaining FMR as investment adviser to the funds outweighs
any disadvantages that may be said to exist from exposure to simultaneous
transactions.
VALUATION OF PORTFOLIO SECURITIES
INSURED AND HIGH YIELD FUNDS. Valuations of portfolio securities furnished
by the pricing service employed by the insured and high yield funds are
based upon a computerized matrix system or appraisals by the pricing
service, in each case in reliance upon information concerning market
transactions and quotations from recognized municipal securities dealers.
The methods used by the pricing service and the quality of valuations so
established are reviewed by officers of the funds and FSC under the general
supervision of the Board of Trustees. There are a number of pricing
services available, and the Trustees, or officers acting on behalf of the
Trustees, on the basis of on-going evaluation of these services, may use
other pricing services or discontinue the use of any pricing service in
whole or in part.
MONEY MARKET FUND. The fund values its investments on the basis of
amortized cost. This technique involves valuing an instrument at its cost
as adjusted for amortization of premium or accretion of discount rather
than its value based on current market quotations or appropriate
substitutes which reflect current market conditions. The amortized cost
value of an instrument may be higher or lower than the price the money
market fund would receive if it sold the instrument.
Valuing the fund's instruments on the basis of amortized cost and use of
the term "money market fund" are permitted by Rule 2a-7 under the 1940 Act.
The money market fund must adhere to certain conditions under Rule
2a-7 .
The Board of Trustees of the money market fund oversees FMR's adherence to
SEC rules concerning money market funds, and has established procedures
designed to stabilize the fund's NAV at $1.00. At such intervals as they
deem appropriate, the Trustees consider the extent to which NAV calculated
by using market valuations would deviate from $1.00 per share. If the
Trustees believe that a deviation from the 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.
During periods of declining interest rates, the money market fund's yield
based on amortized cost may be higher than the yield based on market
valuations. Under these circumstances, a shareholder in the money market
fund would be able to obtain a somewhat higher yield than would result if
the money market fund utilized market valuations to determine its NAV. The
converse would apply in a period of rising interest rates.
PERFORMANCE
The funds may 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 insured and high yield funds'
share price, and all of the funds' yields and total returns fluctuate in
response to market conditions and other factors. The value of the insured
and high yield funds' shares when redeemed may be more or less than their
original cost.
YIELD CALCULATIONS. To compute the MONEY MARKET FUND'S yield for a period,
the net change in value of a hypothetical account containing one share
(exclusive of capital gains) 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. The money market fund also may calculate
a compound effective yield by compounding the base period return over a
one-year period. In addition to the current yield, the money market fund
may quote yields in advertising based on any historical seven-day period.
For the INSURED AND HIGH YIELD FUND, yields used in advertising are
computed by dividing a fund's interest income for a given 30-day or
one-month period, net of expenses, by the average number of shares entitled
to receive dividends during the period, dividing this figure by the fund's
net asset value per share 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 the insured and high
yield funds' 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 the discount to daily income. Capital gains and losses generally are
excluded from the calculation.
Income calculated for the purposes of calculating the insured and high
yield funds' yields 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, a 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.
A fund's tax-equivalent yield is the rate an investor would have to earn
from a fully taxable investment after 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 stated federal or combined federal and state tax
rate. (If only a portion of the 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 the
effective yield under federal and state income tax laws for 1994. They show
the approximate yield a taxable security must provide at various income
brackets to produce after-tax yields equivalent to those of tax-exempt
obligations yielding from 2.0% to 7.0%. Of course, no assurance can be
given that the funds will achieve any specific tax-exempt yield. While each
fund invests principally in obligations whose interest is exempt from
federal and state income tax, other income received by the funds may be
taxable. The funds do not take into account local taxes, if any, payable on
fund distributions.
1994 TAX RATES AND TAX EQUIVALENT YIELDS
Combined California
Single Return Joint Return Federal and Federal Effective
Taxable Income* Taxable Income* Tax Bracket Tax Bracket
$ 22,751 - 24,228 $ 38,001 - 48,456 28.% 32.32%
24,229 - 30,620 48,457 - 61,240 28 33.76
30,621 - 55,100 61,241 - 91,850 28 34.70
55,101 - 106,190 91,851 - 140,000 31 37.42
106,191 - 115,000 -- - -- 31 37.90
-- - -- 140,001 - 212,380 36 41.95
115,001 - 212,380 212,381 - 250,000 36 42.40
212,381 - 250,000 -- - -- 36 43.04
-- - -- 250,001 - 424,760 39.6 45.64
250,001 + 424,761 + 39.6 46.24
*Net taxable income after all exemptions, adjustments, and deductions.
These are based on rates currently applicable in 1994 and assume one
exemption for single filers and two exemptions for married couples files
jointly.
Having determined your effective tax bracket above, use the following table
to determine the tax-equivalent yield for a given tax-free yield.
If your effective combined federal and state personal tax rate in
1994 is:

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
32.32% 33.76% 34.70% 37.42% 37.90% 41.95% 42.40% 43.04% 45.64% 46.24%

</TABLE>

Then your tax-equivalent yield is:
Tax-Free
Yield

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2% 2.96% 3.02% 3.06% 3.20% 3.22% 3.45% 3.47% 3.51% 3.68% 3.72%

3% 4.43% 4.53% 4.59% 4.79% 4.83% 5.17% 5.21% 5.27% 5.52% 5.58%

4% 5.91% 6.04% 6.13% 6.39% 6.44% 6.89% 6.94% 7.02% 7.36% 7.44%

5% 7.39% 7.55% 7.66% 7.99% 8.05% 8.61% 8.68% 8.78% 9.20% 9.30%

6% 8.87% 9.06% 9.19% 9.59% 9.66% 10.34% 10.42% 10.53% 11.04% 11.16%

7% 10.34% 10.57% 10.72% 11.19% 11.27% 12.06% 12.15% 12.29% 12.88% 13.02%

8% 11.82% 12.08% 12.25% 12.78% 12.88% 13.78% 13.89% 14.04% 14.72% 14.88%

</TABLE>

The fund may invest a portion of its assets in obligations that are subject
to state or federal income taxes. When the fund invests in these
obligations, its tax-equivalent yields will be lower. In the table above,
tax-equivalent yields are calculated assuming investments are 100%
federally and state tax-free.
The California income tax rates are those in effect for 1993 , which
will be the same in 1994 except that California law requires that
the brackets be adjusted annually for inflation using 100% of the
California Consumer Price Index through June of the tax year. As of the
date of this Statement of Additional Information, the California Franchise
Tax Board had not published the 1994 inflation adjusted tax
brackets. Each fund may invest a portion of its assets in obligations that
are subject to state or federal income taxes. When a fund invests in these
obligations, its tax-equivalent yields will be lower. In the table above,
tax-equivalent yields are calculated assuming investments are 100%
federally and state tax-free.
Yield information may be useful in reviewing the funds' performance and in
providing a basis for comparison with other investment alternatives.
However, each 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 the respective investment companies they have
chosen to consider.
Investors should recognize that in periods of declining interest rates the
fund's yields 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 the fund's current yields. In periods of
rising interest rates, the opposite can be expected to occur.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of a fund's returns, including the effect of reinvesting dividends
and capital gain distributions (if any), and any change in the fund's net
asset value per share (NAV) over the period. Average annual total 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 cumulative total return of 100%
over ten years would produce an average annual return of 7.18%, which is
the steady annual rate that would equal 100% growth on a compounded basis
in ten years. While average annual returns 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 annual total returns represent averaged figures as opposed to
the actual year-to-year performance of the fund.
In addition to average annual returns, a fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
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. Total returns 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 total return. An example of this type of
illustration is given below. Total 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 the insured or high yield funds'
net asset values, adjusted net asset values, and benchmark indices 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.
HISTORICAL FUND RESULTS. The following charts show the funds' yields,
tax-equivalent yields, and total returns for periods ended February 28,
1994:
MONEY MARKET FUND
Tax Equivalent Average Cumulative
7-day Yield 7-day Yield Annual Total Returns Total Returns
One Five Life One Five Life
Year Years(dagger) of Fund*(dagger) Year Years(dagger) of Fund*(dagger)
1.91% 3.35% 1.97% 3.78% 4.22% 1.97% 20.38% 49.06%
(dagger) If FMR had not reimbursed certain fund expenses during the
periods, the funds' total returns would have been lower.
* From July 7, 1984 (commencement of operations).
INSURED FUND
Tax Equivalent Average Cumulative
30-day Yield 30-day Yield Annual Total Returns (dagger) Total
Returns (dagger)
One Five Life One Five Life
Year Years of Fund* Year Years of Fund*
4.90% 8.60% 4.59% 9.32% 7.59% 4.59% 56.12% 72.51%
* From September 18, 1986 (commencement of operations).
(dagger) If FMR had not reimbursed certain fund expenses during the
periods, the funds' total returns would have been lower.
HIGH YIELD FUND
Tax Equivalent Average Cumulative
30-day Yield 30-day Yield Annual Total Returns Total Returns
One Five Life One Five Life
Year Years of Fund* Year Years of Fund*
4.99% 8.76% 5.41% 9.31% 9.72% 5.41% 56.05% 144.91%
* From July 7, 1984 (commencement of operations).
The tax-equivalent yields are based on the highest 1994 combined federal
and state income tax bracket of 46.24 %, and reflect that none of the
funds' investments on February 28, 1994 were subject to state taxes.
During the periods quoted, interest rates and bond prices fluctuated
widely; thus the tables should not be considered representative of the
dividend income or capital gain or loss that could be realized from
investment in the funds today.
MONEY MARKET FUND. During the period from July 7, 1984 (commencement of
operations) to February 28, 1994, a hypothetical investment of $10,000 in
the money market fund would have grown to $14,906 assuming all
distributions were reinvested.
MONEY MARKET FUND INDICES

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of

Period Initial Reinvested Reinvested Cost

Ended $10,000 Dividend Capital Gain Total of

February 28 Investment Distributions Distributions Value S&P DJIA Living**
500

</TABLE>

1994 $9,980 $4,926 $0 $14,906 $42,790 $47,853 $14,147
1993 $9,980 $4,638 $0 $14,618 $39,500 $40,941 $13,799
1992 $9,980 $4,293 $0 $14,273 $35,691 $38,529 $13,365
1991 $9,980 $3,775 $0 $13,755 $30,767 $32,917 $12,999
1990 $9,980 $3,113 $0 $13,093 $26,835 $28,878 $12,343
1989 $9,980 $2,403 $0 $12,383 $22,568 $23,908 $11,726
1988 $9,980 $1,814 $0 $11,794 $20,171 $21,158 $11,186
1987 $9,980 $1,336 $0 $11,316 $20,724 $22,007 $10,762
1986 $9,980 $ 904 $0 $10,884 $16,001 $16,334 $10,540
1985(dagger) $9,990 $ 378 $0 $10,368 $12,261 $11,756 $10,222
(dagger) From July 7, 1984 (commencement of operations).
** From month-end closest to initial investment date.
EXPLANATORY NOTES: With an initial investment of $10,000 made on July 7,
1984, the net amount invested in fund shares was $10,000. The cost of the
initial investment ($10,000), together with the aggregate cost of
reinvested dividends for the period covered (their cash value at the time
they were reinvested), amounted to $14,886 . If distributions had not
been reinvested, the amount of distributions earned from the fund over time
would have been smaller, and the cash payments (dividends) for the period
would have amounted to $3,975 . The fund did not distribute any
capital gain distributions during this period and does not anticipate that
it will in the future. If FMR had not reimbursed certain fund expenses
during the periods shown, the fund's returns would have been lower.
INSURED FUND. During the period from September 18, 1986 (commencement of
operations) to February 28, 1994, a hypothetical investment of $10,000 in
the insured fund would have grown to $17,251 assuming all
distributions were reinvested.
INSURED FUND INDICES

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of

Period Initial Reinvested Reinvested Cost

Ended $10,000 Dividend Capital Gain Total of

February 28 Investment Distributions Distributions Value S&P DJIA Living**
500

</TABLE>

1994 $10,740 $6,203 $307 $17,251 $25,707 $27,748 $13,312
1993 $11,030 $5,464 $0 $16,494 $23,730 $23,740 $12,985
1992 $10,090 $4,159 $0 $14,249 $21,442 $22,342 $12,577
1991 $9,710 $3,198 $0 $12,908 $18,483 $19,087 $12,232
1990 $9,640 $2,389 $0 $12,029 $16,121 $16,745 $11,615
1989 $9,440 $1,609 $0 $11,049 $13,558 $13,863 $11,034
1988 $9,640 $ 935 $0 $10,575 $12,118 $12,269 $10,526
1987(dagger) $10,320 $ 274 $0 $10,594 $12,450 $12,761 $10,127
(dagger) From September 18, 1986 (commencement of operations).
** From month-end closest to initial investment date.
EXPLANATORY NOTES: With an initial investment of $10,000 made on September
18, 1986, the net amount invested in fund shares was $10,000. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends for the period covered (their cash value at the time
they were reinvested), amounted to $16,036 . If distributions had not
been reinvested, the amount of distributions earned from the fund over time
would have been smaller, and the cash payments for the period would
have come to $4,501 for income dividends and $200 for capital gain
distributions. If FMR had not reimbursed certain fund expenses during
the periods shown above, the fund's returns would have been lower.
HIGH YIELD FUND. During the period from July 7, 1984 (commencement of
operations) to February 28, 1994, a hypothetical investment of $10,000 in
the high yield fund would have grown to $24,491 assuming all
distributions were reinvested.
HIGH YIELD FUND INDICES

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of

Period Initial Reinvested Reinvested Cost

Ended $10,000 Dividend Capital Gain Total of

February 28 Investment Distributions Distributions Value S&P DJIA Living**
500

</TABLE>

1994 $12,100 $11,722 $670 $24,491 $42,790 $47,853 $14,147
1993 $12,430 $10,651 $153 $23,234 $39,500 $40,941 $13,799
1992 $11,580 $ 8,617 $142 $20,339 $35,691 $38,529 $13,365
1991 $11,280 $ 7,150 $139 $18,568 $30,767 $32,917 $12,999
1990 $11,200 $ 5,901 $138 $17,239 $26,835 $22,878 $12,343
1989 $10,910 $ 4,650 $134 $15,694 $22,568 $23,908 $11,726
1988 $11,060 $ 3,642 $136 $14,838 $20,171 $21,158 $11,186
1987 $12,080 $ 2,872 $ 64 $15,016 $20,724 $22,007 $10,762
1986 $11,540 $ 1,807 $ 0 $13,347 $16,001 $16,334 $10,540
1985 $10,210 $ 636 $ 0 $10,846 $12,261 $11,756 $10,222
(dagger) From July 7, 1984 (commencement of operations).
** From month-end closest to initial investment date.
EXPLANATORY NOTES: With an initial investment of $10,000 made on July 7,
1984, the net amount invested in fund shares was $10,000. The cost of the
initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(their cash value at the time they were reinvested), amounted to
$21,568 . If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller, and
the cash payments for the period would have come to $7,537 for
income dividends and $380 for capital gain distributions.
A fund's performance may be compared to the performance of other mutual
funds in general, or to the performance of particular types of mutual
funds. These comparisons may be expressed as mutual fund rankings prepared
by Lipper Analytical Services, Inc. (Lipper), an independent service
located in Summit, New Jersey that monitors the performance of mutual
funds. Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. Lipper may also rank funds based on yield. In addition to
the mutual fund rankings, a fund's performance may be compared to mutual
fund performance indices prepared by Lipper.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
A fund may be compared in advertising to Certificates of Deposit (CDs)
or other investments issued by banks. Mutual funds differ from bank
investments in several respects. For example, a fund may offer greater
liquidity or higher potential returns than CDs, and a fund does not
guarantee your principal or your return.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. For
example, Fidelity's FundMatchsm Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
asset allocation funds and other Fidelity funds, products, and services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
A fund may compare its performance or the performance of securities in
which it may invest to averages published by IBC USA (Publications), Inc.
of Ashland, Massachusetts. These averages assume reinvestment of
distributions. The IBC/Donoghue's MONEY FUND AVERAGES(TRADEMARK)/All
Tax-Free, which is reported in the MONEY FUND REPORT(REGISTERED TRADEMARK),
covers over 335 tax-free money market funds. The Bond Fund Report
AverageS(TRADEMARK)/All Tax-Free, which is reported in the BOND FUND
REPORT(TRADEMARK), covers over 355 tax-free bond funds. When evaluating
comparisons to money market funds, investors should consider the relevant
differences in investment objectives and policies. Specifically, money
market funds invest in short-term, high-quality instruments and seek to
maintain a stable $1.00 share price. The insured and high yield funds,
however, invest in longer-term instruments and their share prices change
daily in response to a variety of factors.
The insured and high yield funds may compare and contrast in advertising
the relative advantages of investing in a mutual fund versus an individual
municipal bond. Unlike tax-free mutual funds, individual municipal bonds
offer a stated rate of interest and, if held to maturity, repayment of
principal. Although some individual municipal bonds might offer a higher
return, they do not offer the reduced risk of a mutual fund that invests in
many different securities. The initial investment requirements and sales
charges of many tax-free mutual funds are lower than the purchase cost of
individual municipal bonds, which are generally issued in $5,000
denominations and are subject to direct brokerage costs.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. Fidelity may also reprint, and use
as advertising and sales literature, articles from Fidelity Focus, a
quarterly magazine provided free of charge to Fidelity fund shareholders.
A fund may present its fund number, Quotron(TRADEMARK) number, and CUSIP
number, and discuss or quote its current portfolio manager.
Thee insured and high yield funds may advertise examples of the effects of
periodic investment plans, including the principle of dollar cost
averaging. In such a program, an investor invests a fixed dollar amount in
a fund at periodic intervals, thereby purchasing fewer shares when prices
are high and more shares when prices are low. While such a strategy does
not assure a profit or guard against loss in a declining market, the
investor's average cost per share can be lower than if fixed numbers of
shares are purchased at the same intervals. In evaluating such a plan,
investors should consider their ability to continue purchasing shares
during periods of low price levels.
As of February 28, 1994 FMR advised 41 tax-free funds or portfolios
with a total value of over $30 billion. According to the Investment
Company Institute, over the past ten years, assets in tax-exempt money
market funds increased from $23.8 billion in 1984 to approximately $94.8
billion at the end of 1992. The money market fund may reference the growth
and variety of money market mutual funds and the adviser's innovation and
participation in the industry.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Each fund is open for business and its net asset value per share (NAV) is
calculated each day the New York Stock Exchange (NYSE) is open for trading.
The NYSE has designated the following holiday closings for 1993:
Washington's Birthday (observed), Good Friday, Memorial Day (observed),
Independence Day (observed), Labor Day, Thanksgiving Day, and Christmas Day
(observed). Although FMR expects the same holiday schedule, with the
addition of New Years Day, to be observed in the future, the NYSE may
modify its holiday schedule at any time.
FSC normally determines each fund's NAVs as of the close 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 SEC. To the
extent that fund securities are traded in other markets on days when the
NYSE is closed, a fund's NAV may be affected on days when investors do not
have access to the fund to purchase or redeem shares.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing each fund's NAV. Shareholders receiving securities or other
property on redemption may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the 1940 Act, each fund is required to give
shareholders at least 60 days' notice prior to terminating or modifying its
exchange privilege. Under the Rule, the 60-day notification requirement may
be waived if (i) the only effect of a modification would be to reduce or
eliminate an administrative fee, redemption fee, or deferred sales charge
ordinarily payable at the time of an exchange, or (ii) the fund suspends
the redemption of the shares to be exchanged as permitted under the 1940
Act or by the SEC, or the fund to be acquired suspends the sale of its
shares because it is unable to invest amounts effectively in accordance
with its investment objective and policies.
In the Prospectus, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTION AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. To the extent that each fund's income is derived from federally
tax-exempt interest, the daily dividends declared by each fund are also
federally tax-exempt. The funds will send each shareholder a notice in
January describing the tax status of dividends and capital gain
distributions (if any) for the prior year.
Shareholders are required to report tax-exempt income on their federal tax
returns. Shareholders who earn other income such as social security
benefits, may be subject to federal income tax on up to one half of such
benefits to the extent that their income, including tax-exempt income,
exceeds certain base amounts.
The funds purchase municipal obligations based on opinions of bond counsel
regarding the federal income tax status of the obligations. These opinions
generally will be based upon covenants by the issuers regarding continuing
compliance with federal tax requirements. If the issuer of an obligation
fails to comply with its covenants at any time, interest on the obligation
could become federally taxable retroactive to the date the obligation was
issued.
As a result of the Tax Reform Act of 1986, interest on certain "private
activity" securities (referred to as "qualified bonds" in the Internal
Revenue Code) is subject to the federal alternative minimum tax (AMT),
although the interest continues to be excludable from gross income for
other purposes. Interest from private activity securities will be
considered tax-exempt for purposes of the funds' policies of investing so
that at least 80% of their income is free from federal income tax. Interest
from private activity securities is a tax preference item for the purposes
of determining whether a taxpayer is subject to the AMT and the amount of
AMT tax to be paid, if any. Private activity securities issued after August
7, 1986 to benefit a private or industrial user or to finance a private
facility are affected by this rule.
It is the current position of the Staff of the Securities and Exchange
Commission that a fund which uses the word "tax-free" in its name may not
derive more than 20% of its income from municipal obligations that pay
interest that is a preference item for purposes of the AMT. Under this
position, at least 80% of each fund's income distributions would have to be
exempt from the AMT as well as federal taxes.
Corporate investors should note that an adjustment for purposes of the
corporate AMT is 75% of the amount by which, adjusted current earnings
(which includes tax-exempt interest) exceeds the alternative minimum
taxable income of the corporation.
If a shareholder receives an exempt-interest dividend and sells shares at a
loss after holding them for a period of six months or less, the loss will
be disallowed to the extent of the amount of exempt-interest dividend.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the insured
and high yield funds on the sale of securities and distributed to
shareholders are federally taxable as long-term capital gains, regardless
of the length of time that shareholders have held their shares. If a
shareholder receives a long-term capital gain distribution on shares of a
fund and such shares are held six months or less and are sold at a loss,
the portion of the loss equal to the amount of the long-term capital gain
distribution will be considered a long-term loss for tax purposes.
A portion of the gain on bonds purchased at a discount after April 30, 1993
and short-term capital gains distributed by the funds are federally taxable
to shareholders as dividends, not as capital gains. Distributions from
short-term capital gains do not qualify for the dividends-received
deduction. Dividend distributions resulting from a recharacterization of
gain from the sale of bonds purchased at a discount after April 30, 1993
are not considered income for purposes of the funds' policy investing so
that at least 80% of their income is free from federal income tax. The
money market fund may distribute any net realized short-term capital gains
once a year or more often as necessary to maintain its net asset value at
$1.00 a share.
TAX STATUS OF THE FUNDS. Each fund has qualified and intends to continue to
qualify each year as a "regulated investment company" for tax purposes so
that it will not be liable for federal tax on income and capital gains
distributed to shareholders. In order to qualify as a regulated investment
company and avoid being subject to federal income or excise taxes at the
fund level, each fund intends to distribute all of its net investment
income and net realized capital gains (if any) within each calendar year as
well as on a fiscal year basis. Each fund intends to comply with other tax
rules applicable to regulated investment companies, including a requirement
that capital gains from the sale of securities held less than three months
constitute less than 30% of the fund's gross income for each fiscal year.
Gains from some futures contracts and options are included in this 30%
calculation, which may limit the insured and high yield funds' investments
in such instruments. Fidelity California Municipal Trust treats each of its
funds (including the insured and high yield funds) as a separate entity for
tax purposes. Fidelity California Municipal Trust II treats the money
market fund as a separate entity for tax purposes.
As of February 28, 1994, the money market fund had approximately
$105,800 in aggregate capital loss carryovers available until February 28,
2000 to offset future capital gains.
To the extent that capital loss carryovers are used to offset any future
capital gains, it is unlikely that the gains so offset will be distributed
to shareholders, since any such distributions may be taxable to
shareholders as ordinary income.
CALIFORNIA TAX MATTERS. As long as a fund continues to qualify as a
regulated investment company under the federal Internal Revenue Code, it
will incur no California income or franchise tax liability on income and
capital gains distributed to shareholders. California personal income tax
law provides that exempt-interest dividends paid by a regulated investment
company, or series thereof, from interest on obligations which are exempt
from California personal income tax are excludable from gross income. For a
fund to qualify to pay exempt-interest dividends under California law, at
least 50 percent of the value of its assets must consist of such
obligations at the close of each quarter of its fiscal year. For purposes
of California personal income taxation, distributions to individual
shareholders derived from interest on other types of obligations and
short-term capital gains will be taxed as dividends, and long-term capital
gain distributions will be taxed as long-term capital gains. California has
an alternative minimum tax similar to the federal AMT described above.
However, the California AMT does not include interest from private activity
municipal obligations as an item of tax preference. Interest on
indebtedness incurred or continued by a shareholder in connection with the
purchase of shares of a fund will not be deductible for California personal
income tax purposes.
FUTURES AND OPTIONS TRANSACTIONS (insured and high yield funds). A special
"marked-to-market" system governs the taxation of "section 1256 contracts."
These contracts generally include options on debt securities, futures
contracts, and options on interest rate futures contracts. The insured and
high yield funds may invest in section 1256 contracts. In general, gain or
loss on section 1256 contracts will be taken into account for tax purposes
when actually realized (by a closing transaction, by exercise, by taking
delivery, or by other termination). In addition, any section 1256 contracts
held at the end of a taxable year will be treated as sold at fair market
value (marked-to-market) and the resulting gain or loss will be recognized
for tax purposes. Provided that a section 1256 contract is not part of a
"mixed" straddle which a fund elects to exclude from the "marked-to-market"
rules, both the realized and the unrealized taxable year-end gain or loss
positions (including premiums on options that expire) will be treated as
60% long-term and 40% short-term capital gain or loss, regardless of the
period of time a particular position is actually held by the fund.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting the funds and their shareholders,
and no attempt has been made to discuss individual tax consequences.
Investors should consult their tax advisers to determine whether the funds
are suitable to their particular tax situations.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions as follows: FSC, which is the
transfer and shareholder servicing agent for certain of the funds advised
by FMR; Fidelity Investments Institutional Operations Company, which
performs shareholder servicing functions for certain institutional
customers; and Fidelity Investments Retail Marketing Company, which
provides marketing services to various companies within the Fidelity
organization.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. Fidelity Management & Research (U.K.) Inc.
(FMR U.K.) and Fidelity Management & Research (Far East) Inc. (FMR Far
East), both wholly owned subsidiaries of FMR formed in 1986, supply
investment research, and may supply portfolio management services to FMR in
connection with certain funds advised by FMR. Analysts employed by FMR, FMR
U.K., and FMR Far East research and visit thousands of domestic and foreign
companies each year. FMR Texas Inc., a wholly owned subsidiary of FMR
formed in 1989, supplies portfolio management and research services in
connection with certain money market funds advised by FMR.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the trusts are listed below. Except
as indicated, each individual has held the office shown or other offices in
the same company for the last five years. Trustees and officers elected or
appointed to Fidelity California Municipal Trust II prior to the
money market fund's conversion from a series of Fidelity California
Municipal Trust served Fidelity California Municipal Trust in
identical capacities. All persons named as Trustees also serve in similar
capacities for other funds advised by FMR. Unless otherwise noted, the
business address of each Trustee and officer is 82 Devonshire Street,
Boston, MA 02109, which is also the address of FMR. Those Trustees who are
"interested persons" (as defined in the 1940 Act) by virtue of their
affiliation with either trust or with FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief Executive
Officer and a Director of FMR Corp.; a Director and Chairman of the Board
and of the Executive Committee of FMR; Chairman and a Director of FMR Texas
Inc. (1989), Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of FMR;
and President and a Director of FMR Texas Inc. (1989), Fidelity Management
& Research (U.K.) Inc., and Fidelity Management & Research (Far
East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is a
consultant to Western Mining Corporation (1994). Prior to February 1994, he
was president of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Until March 1990, Mr. Cox was President and Chief
Operating Officer of Union Pacific Resources Company (exploration and
production). He is a Director of Bonneville Pacific Corporation
(independent power, 1989), Sanifill Corporation (non-hazardous waste,
1993), and CH2M Hill Companies (engineering). In addition, he served on the
Board of Directors of the Norton Company (manufacturer of industrial
devices, 1983-1990) and continues to serve on the Board of Directors of the
Texas State Chamber of Commerce, and is a member of advisory boards of
Texas A&M University and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, P.O. Box 264, Bridgehampton, NY, Trustee (1992). Prior
to her retirement in September 1991, Mrs. Davis was the Senior Vice
President of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990),
and previously served as a Director of Hallmark Cards, Inc. (1985-1991) and
Nabisco Brands, Inc. In addition, she serves as a Director of the New York
City Chapter of the National Multiple Sclerosis Society, and is a member of
the Advisory Council of the International Executive Service Corps. and the
President's Advisory Council of The University of Vermont School of
Business Administration.
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road. Chagrin Falls, OH, Trustee (1990).
Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive
Officer of LTV Steel Company. Prior to May 1990, he was Director of
National City Corporation (a bank holding company) and National City Bank
of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation (1988), Hyster-Yale Materials Handling, Inc. (1989), and
RPM, Inc. (manufacturer of chemical products, 1990). In addition, he serves
as a Trustee of First Union Real Estate Investments; Chairman of the Board
of Trustees and a member of the Executive Committee of the Cleveland Clinic
Foundation, a Trustee and a member of the Executive Committee of University
School (Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the Financial
Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance), and Valuation Research Corp. (appraisal and
valuations, 1993). In addition, he serves as Vice Chairman of the Board of
Directors of The National Arts Stabilization Fund and Vice Chairman of the
Board of Trustees of the Greenwich Hospital Association.
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior to
his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991 - 1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction). In addition, he serves as a Trustee of
Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield
(1989) and Society for the Preservation of New England Antiquities, and as
an Overseer of the Museum of Fine Arts of Boston (1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989), is
Chairman of G.M. Management Group (strategic advisory services). Prior to
his retirement in July 1988, he was Chairman and Chief Executive Officer of
Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), and York International Corp. (air conditioning and
refrigeration, 1989), Commercial Intertech Corp. (water treatment
equipment, 1992), and Associated Estates Realty Corporation (a real estate
investment trust, 1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee. Prior
to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company. He
is a Director of Allegheny Power Systems, Inc. (electric utility), General
Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer). He is also
a Trustee of Rensselaer Polytechnic Institute and of Corporate Property
Investors and a member of the Advisory Boards of Butler Capital Corporation
Funds and Warburg, Pincus Partnership Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State United
Way (1993) and is a member of the University of Alabama President's Cabinet
(1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee, is President of The Wales Group, Inc. (management and financial
advisory services). Prior to retiring in 1987, Mr. Williams served as
Chairman of the Board of First Wachovia Corporation (bank holding company),
and Chairman and Chief Executive Officer of The First National Bank of
Atlanta and First Atlanta Corporation (bank holding company). He is
currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software), Georgia Power Company (electric utility), Gerber Alley
& Associates, Inc. (computer software), National Life Insurance Company
of Vermont, American Software, Inc. (1989), and AppleSouth, Inc.
(restaurants, 1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and
Senior Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
ARTHUR S. LORING, Secretary, is Senior Vice President and General Counsel
of FMR, Vice President-Legal of FMR Corp., and Vice President and Clerk of
FDC.
THOMAS D. MAHER, Assistant Vice President (1990), is Assistant Vice
President of Fidelity's money market funds and Vice President of FMR Texas,
Inc. (1990).
JOHN F. HALEY Jr., is a Vice President of Fidelity Management Trust
Company, the insured and high yield funds ( 1987 ) and other funds
advised by FMR and an employee of FMR.
DEBORAH F. WATSON, is a Vice President of the money market fund (1992) and
other funds advised by FMR and an employee of FMR.
Under a retirement program that became effective on November 1, 1989,
Trustees, upon reaching age 72, becomes eligible to participate in a
defined benefit retirement program under which they receive payments during
their lifetime from the funds, based on their basic trustee fees and length
of service. Currently, Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham, and David L. Yunich participate in the program.
As of February 28, 1994, the Trustees and officers of each fund owned, in
the aggregate, less than 1% of the outstanding shares of each fund.
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of the fund in accordance with its investment objective,
policies, and limitations. FMR also provides the funds with all necessary
office facilities and personnel for servicing the funds' investments, and
compensates all officers of the trust, all Trustees who are "interested
persons" of the trust or of FMR, and all personnel of the trust or FMR
performing services relating to research, statistical, and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provide the management and administrative services necessary
for the operation of each fund. These services include providing facilities
for maintaining the fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with the fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining the funds'
records and the registration of the fund's shares under federal and state
law; developing management and shareholder services for the funds; and
furnishing reports, evaluations, and analyses on a variety of subjects to
the Board of Trustees.
In addition to the management fee payable to FMR and the fees payable to
United Missouri, each fund pays all of its expenses, without limitation,
that are not assumed by those parties. The fund pays for typesetting,
printing, and mailing of proxy material to shareholders, legal expenses,
and the fees of the custodian, auditor, and non-interested Trustees.
Although the fund's management contract provides that the fund will pay for
typesetting, printing, and mailing prospectuses, statements of additional
information, notices and reports to existing shareholders, United Missouri
entered into a revised sub-transfer agent agreement with FSC, pursuant to
which FSC bears the cost of providing these services to existing
shareholders. Other expenses paid by each fund include interest, taxes,
brokerage commissions, the fund's proportionate share of insurance premiums
and Investment Company Institute dues, and the costs of registering shares
under federal and state securities laws. Each fund is also liable for such
nonrecurring expenses as may arise, including costs of any litigation to
which a fund may be the party, and any obligation it may have to indemnify
the trusts' officers and Trustees with respect to litigation.
FMR is the manager of the insured and high yield funds pursuant to
management contracts dated March 1, 1994, which were approved by
shareholders on February 16, 1994, and is the manager of the money market
fund pursuant to a management contract dated December 30, 1991. The
December 30, 1991 contract was approved by Fidelity California Municipal
Trust as sole shareholder of the money market fund on December 30, 1991,
pursuant to an Agreement and Plan of Conversion approved by public
shareholders of the money market fund on October 23, 1991. (The terms of
the money market fund's current contract with FMR duplicate those of its
previous contract, which was dated November 1, 1989.) For the services of
FMR under the contracts, each fund pays FMR a monthly management fee
composed of the sum of two elements: a group fee rate and an individual
fund fee rate.
The group fee rate is based on the monthly average net assets of all of the
registered investment companies with which FMR has management contracts and
is calculated on a cumulative basis pursuant to the graduated fee rate
schedule shown on the left of the following table. On the right, the
effective fee rate schedules show the results of cumulatively applying the
annualized rates at varying asset levels. For example, the effective annual
fee rate at $250.3 billion of group net assets - their approximate
level for February 1994 - was . 1604 %, which is the weighted average
of the respective fee rates for each level of group net assets up to
that level.
GROUP FEE RATE SCHEDULE* EFFECTIVE ANNUAL
FEE RATES
Average Group Annualized Group Net Effective Annual Fee
Assets Rate Assets Rate

0 - $ 3 billion .3700% $ 0.5 billion .3700%

3 - 6 .3400 25 .2664

6 - 9 .3100 50 .2188

9 - 12 .2800 75 .1986

12 - 15 .2500 100 .1869

15 - 18 .2200 125 .1793

18 - 21 .2000 150 .1736

21 - 24 .1900 175 .1695

24 - 30 .1800 200 .1658

30 - 36 .1750 225 .1629

36 - 42 .1700 250 .1604

42 - 48 .1650 275 .1583

48 - 66 .1600 300 .1565

66 - 84 .1550 325 .1548

84 - 120 .1500 350 .1533

120 - 174 .1450

174 - 228 .1400

228 - 282 .1375

282 - 336 .1350

Over 336 .1325

* The rates shown for average group assets in excess of $174 billion were
adopted by FMR on a voluntary basis on November 1, 1993 pending shareholder
approval of a new management contract reflecting the extended schedule. The
extended schedule provides for lower management fees as total assets under
management increase. On February 16, 1994, shareholders of the insured and
high yield funds approved a new management contract which reflects the
extended schedule. The money market fund will present a new management
contract reflecting the extended schedule to shareholders at its next
meeting.
Each fund's individual fund fee rate is .25%. Based on the average net
assets of funds advised by FMR for February 1994, the annual management fee
rate for each fund would be calculated as follows:
Individual Fund Management
Group Fee Rate Fee Rate Fee Rate
.1604% + .25% = .4104 %
One-twelfth (1/12) of this annual management fee rate is then applied to
each fund's average net assets for the current month, resulting in a dollar
amount which is the fee for that month.
The schedule shown above (minus the breakpoints added November 1, 1993) was
voluntarily adopted by FMR on January 1, 1992 until shareholders could meet
to approve the amended management contract. Prior to January 1, 1992, each
fund's group fee rate was based on a schedule with breakpoints ending at
.150% for average group assets in excess of $84 billion. FMR had
voluntarily adopted the shorter schedule on August 1, 1988.
FMR may, from time to time, voluntarily reimburse all or a portion of the
funds' operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). Effective March 10, 1993, FMR
voluntarily agreed to temporarily limit the total expenses of the insured
fund to an annual rate of .35% of the fund's average net assets.
The following table outlines expense limitations (as a percentage of a
fund's average net assets) in effect from March 10, 1993 to October 1, 1993
for the insured fund.
From To Expense Limitation
March 10, 1993 July 31, 1993 .35%
August 1, 1993 August 31, 1993 .45%
September 1, 1993 September 30, 1993 .55%
Management fees paid to FMR are indicated in the following table for
the periods shown.
MANAGEMENT FEES
Fiscal Year Fiscal Period Fiscal Year
March 1, 1993 to May 1, 1992 to Ended
February 28, 1994 February 28, 1993 April 30, 1992
Money Market Fund $2,236,908 $1,921,573 $2,358,914
Insured Fund $ 888,113* $ 748,875 $ 622,304
High Yield Fund $2,434,987 $1,905,430 $2,270,343
* Net of reimbursement.
If FMR had not voluntarily limited the total expenses of the insured fund,
management fees paid to FMR for fiscal 1994 would have amounted to
$1,240,128.
To comply with the California Code of Regulations, FMR will reimburse each
fund if and to the extent that a fund's aggregate annual operating expenses
exceed specified percentages of its average net assets. The applicable
percentages for each fund are 2 1/2% of the first $30 million, 2% of the
next $70 million, and 1 1/2% of average net assets in excess of $100
million. When calculating the funds' expenses for purposes of this
regulation, a fund may exclude interest, taxes, brokerage commissions, and
extraordinary expenses, as well as a portion of its distribution plan
expenses.
SUB-ADVISER. With respect to the money market fund, FMR has entered into a
sub-advisory agreement with FMR Texas pursuant to which FMR Texas has
primary responsibility for providing portfolio investment management
services to the fund. Under the sub-advisory agreement, FMR pays FMR Texas
a fee equal to 50% of the management fee payable to FMR under its current
management contract with the fund. The fees paid to FMR Texas are not
reduced by any voluntary or mandatory expense reimbursements that may be in
effect from time to time. For the fiscal periods March 1, 1993 to February
28, 1994 and May 1, 1992 to February 28, 1994 and the fiscal year ended
April 30, 1992, FMR paid FMR Texas total fees of $ 1,102,480 ,
$897,622, and $1,123,880, respectively, pursuant to the sub-advisory
agreement.
DISTRIBUTION AND SERVICE PLANS
Each fund has adopted a distribution and service plan (the plan) under Rule
12b-1 of the Investment Company Act of 1940 (the Rule). The Rule provides
in substance that a mutual fund may not engage directly or indirectly in
financing any activity that is primarily intended to result in the sale of
shares of the fund except pursuant to a plan adopted by the fund under the
Rule. The Board of Trustees has adopted the plan to allow the fund and FMR
to incur certain expenses that might be considered to constitute indirect
payment by the fund of distribution expenses. Under the plans, if the
payment by the fund to FMR of management fees should be deemed to be
indirect financing by the fund of the distribution of its shares, such
payment is authorized by the plan.
The plans specifically recognize that FMR, either directly or through FDC,
may use its management fee revenues, past profits, or other resources,
without limitation, to pay promotional and administrative expenses in
connection with the offer and sale of shares of the funds. In addition, the
plans provide that FMR may use its resources, including its management fee
revenues, to make payments to third parties that provide assistance in
selling the funds' shares, or to third parties, including banks, that
render shareholder support services. For fiscal 1994 payments to third
parties amounted to $31,948, $4,748, and $3,519 for the money
market, insured, and high yield funds, respectively.
Each fund's plan has been approved by the Trustees. As required by the
Rule, the Trustees carefully considered all pertinent factors relating to
implementation of the plan prior to their approval, and have determined
that there is a reasonable likelihood that the plans will benefit the funds
and their shareholders. In particular, the Trustees noted that the plans do
not authorize payments by the funds other than those made to FMR under its
management contracts with the funds. To the extent that the plans give FMR
and FDC greater flexibility in connection with the distribution of shares
of the funds, additional sales of the funds' shares may result.
Additionally, certain shareholder support services may be provided more
effectively under the plans by local entities with whom shareholders have
other relationships. The insured and high yield funds' plans were approved
by shareholders on November 18, 1987 and December 30, 1985, respectively.
The plan for the money market fund was approved by Fidelity California
Municipal Trust on December 30, 1991, as the then sole shareholder of the
money market fund, pursuant to an Agreement and Plan of Conversion approved
by public shareholders of the money market fund on October 23, 1991.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services,
and servicing and recordkeeping functions. FDC intends to engage banks only
to perform such functions. However, changes in federal or state statutes
and regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the funds
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. The funds may execute portfolio
transactions with and purchase securities issued by depository institutions
that receive payments under the plans. No preference will be shown in the
selection of investments for the instruments of such depository
institutions. In addition, state securities laws on this issue may differ
from the interpretations of federal law expressed herein, and banks and
other financial institutions may be required to register as dealers
pursuant to state law.
INTEREST OF FMR AFFILIATES
United Missouri, is each fund's custodian and transfer agent. United
Missouri has entered into sub-contracts with FSC, an affiliate of FMR,
under the terms of which FSC performs the processing activities associated
with providing transfer agent and shareholder servicing functions for each
fund. Under the sub-contract, FSC bears the expense of typesetting,
printing, and mailing, prospectuses, statements of additional information,
and all other reports, notices, and statements to shareholders, except
proxy statements. FSC also pays all out-of-pocket expenses associated with
transfer agent services.
United Missouri pays FSC an annual fee of $14.04 (money market fund) and
$26.03 (insured and high yield funds) per regular account with a balance of
$5,000 or more, $10.21 (money market fund) and $15.31 (insured and high
yield funds) per regular account with a balance of less than $5,000, and a
supplemental activity charge of $2.25 for standard order transactions and
$6.11 for monetary transactions. The account fee and monetary transaction
charge for accounts set up as Core Accounts in the Fidelity Ultra Service
Account program are $12.61 and $.76, respectively. These fees and charges
are subject to annual cost escalation based on postal rate changes and
changes in wage and price levels as measured by the National Consumer Price
Index for Urban Areas. With respect to institutional client master
accounts, United Missouri pays FSC per account fees of $95 and monetary
transactions charges of $20 and $17.50, respectively, depending on the
nature of services provided.
Prior to November 15, 1991 for the money market fund and November 8, 1991
for the insured and high yield funds, Shawmut Bank N.A. (Shawmut) served as
the fund's custodian and transfer agent and also sub-contracted FSC to
perform the processing activities associated with providing transfer agent
and shareholder servicing functions for the funds. Beginning June 1, 1989,
FSC was compensated by Shawmut on the same basis as it is currently
compensated by United Missouri (although fee rates and charges were
adjusted periodically to reflect postal rate changes and changes in wage
and price levels as measured by the National Consumer Price Index for Urban
Areas).
Transfer agent fees paid to FSC for the fiscal periods shown below are
indicated in the following table.
TRANSFER AGENT FEES
Fiscal Year Fiscal Period
March 1, 1993 to May 1, 1992 to Fiscal Year Ended
February 28, 1994 February 28, 1994 April 30, 1992
Money Market Fund $1,016,834 $706,501 $809,728
Insured Fund $346,638 $206,003 $163,753
High Yield Fund $558,014 $448,116 $521,467
United Missouri has an additional sub-contract with FSC, pursuant to which
FSC performs the calculations necessary to determine each fund's net asset
value per share and dividends and maintains each fund's accounting records.
The annual fee rates for these pricing and bookkeeping services are based
on the fund's average net assets and are as follows:
$0-$500M Greater Than $500M Minimum Per Year Maximum Per Year
Money Market Fund .0175% .0075% $20,000 $750,000
Insured and High Yield Funds .04 .02 45,000 750,000
Prior to November 14, 1991 for the money market fund and November 7, 1991
for the insured and high yield funds, Shawmut sub-contracted with FSC for
pricing and bookkeeping services. Beginning July 1, 1991, FSC was
compensated for these services by Shawmut on the same basis as it is
currently compensated by United Missouri. Prior to July 1, 1991, the annual
fee paid to FSC for pricing and bookkeeping services was based on two
schedules, one pertaining to a fund's average net assets, and one
pertaining to the type and number of transactions the fund made.
Pricing and bookkeeping fees, including reimbursement for out of pocket
expenses, paid to FSC for the fiscal periods shown are indicated in the
table below.
PRICING AND BOOKKEEPING FEES
Fiscal Year Fiscal Period
March 1, 1993 to May 1, 1992 to Fiscal Year Ended
February 28, 1994 February 28, 1994 April 30, 1992
Money Market Fund $107,448 $ 94,157 $127,604
Insured Fund $134,786 $ 86,888 $ 83,746
High Yield Fund $243,183 $206,909 $244,179
All fee amounts shown include out-of-pocket expenses, if any. The transfer
agent fees and charges and pricing and bookkeeping fees described above are
paid to FSC by United Missouri, which is entitled to reimbursement from the
funds for these expenses.
FSC has entered into an agreement with Fidelity Brokerage Services, Inc.
(FBSI), a subsidiary of FMR Corp., pursuant to which FBSI performs certain
recordkeeping, communication, and other services for money market fund
shareholders participating in the Fidelity Ultra Service Account program.
FBSI directly charges each Ultra Service Account an administrative fee at a
rate of $5.00 per month for these services, which is in addition to the
transfer agency fee received by FSC. Administrative fees paid to FBSI by
money market fund shareholders participating in the Fidelity Ultra Service
Account program amounted to approximately $148,453 for fiscal 1994.
Each fund has a distribution agreement with FDC, a Massachusetts
corporation organized July 18, 1960. FDC is a broker-dealer registered
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. The distribution agreement calls
for FDC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of each fund, which are continuously
offered at net asset value. Promotional and administrative expenses in
connection with the offer and sale of shares are paid by FMR.
DESCRIPTION OF THE TRUSTS
TRUSTS' ORGANIZATION. Fidelity California Municipal Trust (the
Massachusetts trust) is an open-end management investment company organized
as a Massachusetts business trust on April 28, 1983. On February 27, 1984
the trust's name was changed from Fidelity California Tax-Exempt Money
Market Trust to Fidelity California Tax-Free Fund and on November 1, 1989
its name was changed to Fidelity California Municipal Trust. Currently,
there are four funds of the Massachusetts trust: Fidelity California
Tax-Free Insured Portfolio, Fidelity California Tax-Free High Yield
Portfolio, Spartan California Intermediate Municipal Portfolio, and Spartan
California Municipal High Yield Portfolio. The Massachusetts trust's
Declaration of Trust permits the Trustees to create additional funds.
Fidelity California Municipal Trust II (the Delaware trust) is an open-end
management investment company organized as a Delaware Business trust on
June 20, 1991. Currently, there two funds of the Delaware trust: Fidelity
California Tax-Free Money Market Fund and Spartan California Municipal
Money Market Portfolio. Fidelity California Tax-Free Money Market Fund and
Spartan California Municipal Money Market Portfolio entered into agreements
to acquire all of the assets of the Fidelity California Tax-Free Money
Market Portfolio and Spartan California Municipal Money Market Portfolio,
series of the Fidelity California Municipal Trust, on December 30, 1991 and
April 18, 1994, respectively. The Delaware trust's Trust Instrument permits
the Trustees to create additional funds.
In the event that FMR ceases to be investment adviser to a trust or any of
its funds, the right of the trust or the fund to use the identifying names
"Fidelity" and "Spartan" may be withdrawn. There is a remote possibility
that one fund might become liable for any misstatement in its prospectus or
statement of additional information about another fund.
The assets of each trust received for the issue or sale of shares of each
of its funds and all income, earnings, profits and proceeds thereof,
subject only to the rights of creditors, are especially allocated to such
fund, and constitute the underlying assets of such fund. The underlying
assets of each fund are segregated on the books of account, and are to be
charged with the liabilities with respect to such fund and with a share of
the general liabilities of their respective trusts. Expenses with respect
to each trust are to be allocated in proportion to the asset value of their
respective funds, except where allocations of direct expense can otherwise
be fairly made. The officers of the trusts, subject to the general
supervision of the Board of Trustees, have the power to determine which
expenses are allocable to a given fund, or which are general or allocable
to all of the funds of a certain trust. In the event of the dissolution or
liquidation of a trust, shareholders of each fund of that trust are
entitled to receive as a class the underlying assets of such fund available
for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY - MASSACHUSETTS TRUST. The Massachusetts
trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust may, under
certain circumstances, be held personally liable for the obligations of the
trust. The Declaration of Trust provides that the Massachusetts Trust shall
not have any claim against shareholders except for the payment of the
purchase price of shares and requires that each agreement, obligation, or
instrument entered into or executed by the trust or its Trustees shall
include a provision limiting the obligations created thereby to the
Massachusetts Trust and its assets. The Declaration of Trust provides for
indemnification out of each fund's property of any shareholders held
personally liable for the obligations of the fund. The Declaration of Trust
also provides that each fund shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the fund
and satisfy any judgment thereon. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to
circumstances in which the fund itself would be unable to meet its
obligations. FMR believes that, in view of the above, the risk of personal
liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects Trustees
against any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of their office.
SHAREHOLDER AND TRUSTEE LIABILITY - DELAWARE TRUST. The Delaware Trust is a
business trust organized under Delaware law. Delaware law provides that
shareholders shall be entitled to the same limitations of personal
liability extended to stockholders of private corporations for profit. The
courts of some states, however, may decline to apply Delaware law on this
point. The Trust Instrument contains an express disclaimer of shareholder
liability for the debts, liabilities, obligations, and expenses of the
Delaware Trust and requires that a disclaimer be given in each contract
entered into or executed by the Delaware Trust or its Trustees. The Trust
Instrument provides for indemnification out of each fund's property of any
shareholder or former shareholder held personally liable for the
obligations of the fund. The Trust Instrument also provides that each fund
shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the fund and satisfy any judgment
thereon. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which
Delaware law does not apply, no contractual limitation of liability was in
effect, and the fund is unable to meet its obligations. FMR believes that,
in view of the above, the risk of personal liability to shareholders is
extremely remote.
The Trust Instrument further provides that the Trustees shall not be
personally liable to any person other than the Delaware Trust or its
shareholders; moreover, the Trustees shall not be liable for any conduct
whatsoever, provided that Trustees are not protected against any liability
to which they would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties involved
in the conduct of their office.
VOTING RIGHTS - BOTH TRUSTS. Each fund's capital consists of shares of
beneficial interest. As a shareholder of the Massachusetts trust, you
receive one vote for each dollar value of net asset value per share you
own. The shares have no preemptive or conversion rights; voting and
dividend rights, the right of redemption, and the privilege of exchange are
described in the Prospectus. Shares are fully paid and nonassessable,
except as set forth under the respective "Shareholder and Trustee
Liability" headings above. Shareholders representing 10% or more of a trust
or one of its funds may, as set forth in the Declaration of Trust or Trust
Instrument, call meetings of the trust or fund for any purpose related to
the trust or fund, as the case may be, including, in the case of a meeting
of an entire trust, the purpose on voting on removal of one or more
Trustees.
A trust or any fund may be terminated upon the sale of its assets to (or,
in the case of the Delaware Trust and its funds, merger with) another
open-end management investment company or series thereof, or upon
liquidation and distribution of its assets. Generally such terminations
must be approved by vote of the holders of a majority of the outstanding
shares of the trust or the fund (for the Delaware Trust), or by a vote of
the holders of a majority of the trust or fund, as determined by the
current value of each shareholder's investment in the trust or fund (for
the Massachusetts Trust); however, the Trustees of the Delaware Trust may,
without prior shareholder approval, change the form of the organization of
the Delaware Trust by merger, consolidation, or incorporation. If not so
terminated or reorganized, the trusts and their funds will continue
indefinitely.
Under the Trust Instrument, the Trustees may, without shareholder vote,
cause the Delaware Trust to merge or consolidate into one or more trusts,
partnerships, or corporations, so long as the surviving entity is an
open-end management investment company that will succeed to or assume the
Delaware Trust registration statement, or cause the Delaware Trust to be
incorporated under Delaware law. Each fund of both trusts may also
invest all of its assets in another investment company.
CUSTODIAN. United Missouri Bank, N.A., 1010 Grand Avenue, Kansas City,
Missouri 64106, is custodian of the assets of the funds. The custodian is
responsible for the safekeeping of the funds' assets and the appointment of
subcustodian banks and clearing agencies. The custodian takes no part in
determining the investment policies of the funds or in deciding which
securities are purchased or sold by the funds. The funds may, however,
invest in obligations of the custodian and may purchase securities from or
sell securities to the custodian.
FMR, its officers and directors, its affiliated companies, and each trust's
Trustees may from time to time have transactions with various banks,
including banks serving as custodian for certain of the funds advised by
FMR. Transactions that have occurred to date include mortgages and personal
and general business loans. In the judgment of FMR, the terms and
conditions of those transactions were not influenced by existing or
potential custodial or other fund relationships.
AUDITOR. Price Waterhouse, 160 Federal Street, Boston, Massachusetts serves
as each trust's independent accountant. The auditor examines financial
statements for the funds and provides other audit, tax, and related
services.
FINANCIAL STATEMENTS
The funds' Annual Report for the fiscal period ended February 28, 1994 is a
separate report supplied with this Statement of Additional Information and
is incorporated herein by reference.
APPENDIX
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value of
each investment by the number of days 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 the number of days to the announced
call date of the bonds.
The descriptions that follow are examples of eligible ratings for the
insured and high yield funds. The funds may, however, consider ratings for
other types of investments and the ratings assigned by other ratings
organizations when determining the eligibility of a particular investment.
The descriptions that follow are examples of eligible ratings for the
insured and high yield funds. The funds may, however, consider the ratings
for other types of investments and the ratings assigned by other rating
organizations when determining the eligibility of a particular investment.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S RATINGS OF STATE AND
MUNICIPAL NOTES:
Moody's ratings for state and municipal and other short-term obligations
will be designated Moody's Investment Grade (MIG, or VMIG for variable rate
obligations). This distinction is in recognition of the difference between
short-term credit risk and long-term credit risk. Factors affecting the
liquidity of the borrower and short-term cyclical elements are critical in
short-term ratings, while other factors of major importance in bond risk,
long-term secular trends for example, may be less important in the short
run. Symbols used will be as follows:
MIG-1/VMIG-1 - This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG-2/VMIG-2 - This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.
MIG-3/VMIG-3 - This designation denotes favorable quality, with all
security elements accounted for but there is lacking the undeniable
strength of the preceding grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to be less well
established.
MIG-4/VMIG-4 - This designation denotes adequate quality protection
commonly regarded as required of an investment security is present and,
although not distinctly or predominantly speculative, there is specific
risk.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S RATINGS OF STATE AND
MUNICIPAL NOTES:
SP-1 - Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be
given a plus (+) designation.
SP-2 - Satisfactory capacity to pay principal and interest.
SP-3 - Speculative capacity to pay principal and interest.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S MUNICIPAL BOND RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
AA - Bonds rated Aa are judged to be of high quality by all standards.
Together with Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long term risks appear somewhat larger than
in Aaa securities.
A - Bonds rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA - Bonds rated Baa are considered as medium grade obligations, i.e, they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both good and bad times in the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of a desirable investment.
Assurance of interest and principal payments of or maintenance of other
terms of the contract over any long period of time may be small.
CAA - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
Those bonds in the Aa, A, Baa, Ba, and B groups which Moody's believes
possess the strongest investment attributes are designated by the symbols
Aa1, A1, Baa1, Ba1, and B1.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S MUNICIPAL BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal
is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest-rated debt issues only in small
degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal.
The B rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.
The ratings from AA to CCC may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.
SPARTAN CALIFORNIA MUNICIPAL FUNDS:
SPARTAN CALIFORNIA MUNICIPAL MONEY MARKET PORTFOLIO
SPARTAN CALIFORNIA INTERMEDIATE MUNICIPAL PORTFOLIO
SPARTAN CALIFORNIA MUNICIPAL HIGH YIELD PORTFOLIO

CROSS REFERENCE SHEET
FORM N-1A

ITEM NUMBER PROSPECTUS SECTION

<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page

2 a .............................. Expenses

b, c .............................. Contents; The Funds at a Glance; Who May Want
to Invest

3 a .............................. Financial Highlights

b .............................. *

c .............................. Performance

4 a i............................. Charter

ii........................... The Funds at a Glance; Investment Principles and
Risks; Fundamental Investment Policies and
Restrictions

b .............................. Investment Principles and Risks

c .............................. Who May Want to Invest; Investment Principles
and Risks

5 a .............................. Charter

b i............................. Doing Business with Fidelity; Charter

ii........................... Charter

iii.......................... Expenses; Breakdown of Expenses

c .............................. Charter

d .............................. Charter; Breakdown of Expenses

e .............................. Charter

f .............................. Expenses

g .............................. *

5 A .............................. Performance

6 a i............................. Charter

ii........................... How to Buy Shares; How to Sell Shares;
Transaction Details; Exchange Restrictions

iii.......................... Charter

b ............................. *

c .............................. Exchange Restrictions; Transaction Details

d .............................. *

e .............................. Doing Business with Fidelity; How to Buy Shares;
How to Sell Shares; Investor Services

f, g .............................. Dividends, Capital Gains, and Taxes

7 a .............................. Charter; Cover Page

b .............................. How to Buy Shares; Transaction Details

c .............................. *

d .............................. How to Buy Shares

e .............................. *

f .............................. Breakdown of Expenses

8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions

9 .............................. *

</TABLE>

* Not Applicable

CROSS REFERENCE SHEET
(CONTINUED)
FORM N-1A

ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION

<TABLE>
<CAPTION>
<S> <C> <C> <C>
10, 11 ............................ Cover Page

12 ............................ Description of the Trusts

13 a - c ............................ Investment Policies and Limitations

d ............................ Portfolio Transactions

14 a - c ............................ Trustees and Officers

15 a, b ............................ *

c ............................ Trustees and Officers

16 a i ............................ FMR

ii ............................ Trustees and Officers

iii ............................ Management Contracts

b ............................ Management Contracts

c, d ............................ Interest of FMR Affiliates

e ............................ Management Contracts

f ............................ Distribution and Service Plans

g ............................ *

h ............................ Description of the Trusts

i ............................ Interest of FMR Affiliates

17 a - c ............................ Portfolio Transactions

d, e ............................ *

18 a ............................ Description of the Trusts

b ............................ *

19 a ............................ Additional Purchase and Redemption Information

b ............................ Additional Purchase and Redemption Information;
Valuation of Portfolio Securities

c ............................ *

20 ............................. Distributions and Taxes

21 a, b ............................ Interest of FMR Affiliates

c ............................ *

22 ............................ Performance

23 ............................ Financial Statements

</TABLE>

* Not Applicable

Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
A Statement of Additional Information dated April 18, 1994 has been filed
with the Securities and Exchange Commission, and is incorporated herein by
reference (is legally considered a part of this prospectus). The Statement
of Additional Information is available free upon request by calling
Fidelity at 1-800-544-8888.
Investments in the money market fund are neither insured nor guaranteed by
the U.S. government, and there can be no assurance that the fund will
maintain a stable $1.00 share price.
Mutual fund shares are not deposits or obligations of, or guaranteed by,
any depository institution. Shares are not insured by the FDIC, the Federal
Reserve Board, or any other agency, and are subject to investment risk,
including the possible loss of principal.
Each of these funds seeks a high level of current income free from federal
income tax and California state personal income tax. The funds have
different strategies, however, and carry varying degrees of risk.
SPARTAN(Registered trademark)
CALIFORNIA
MUNICIPAL
FUNDS

SPARTAN CALIFORNIA MUNICIPAL MONEY MARKET PORTFOLIO
SPARTAN CALIFORNIA
INTERMEDIATE MUNICIPAL
PORTFOLIO
SPARTAN CALIFORNIA MUNICIPAL HIGH YIELD PORTFOLIO
PROSPECTUS
APRIL 18, 1994(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA
02109
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
SCR-pro-494
CONTENTS

KEY FACTS 3 THE FUNDS AT A GLANCE

3 WHO MAY WANT TO INVEST

EXPENSES The fund's yearly
operating expenses

FINANCIAL HIGHLIGHTS A summary
of each fund's financial data.

PERFORMANCE How each fund has
done over time.

THE FUNDS IN DETAIL CHARTER How each fund is
organized.

INVESTMENT PRINCIPLES AND RISKS
Each fund's overall approach to
investing.

BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.

YOUR ACCOUNT DOING BUSINESS WITH FIDELITY

TYPES OF ACCOUNTS Different
ways to set up your account.

HOW TO BUY SHARES Opening an
account and making additional
investments.

HOW TO SELL SHARES Taking money
out and closing your account.

INVESTOR SERVICES Services to
help you manage your account.

SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS, AND
ACCOUNT POLICIES TAXES

TRANSACTION DETAILS Share price
calculations and the timing of
purchases and redemptions.

EXCHANGE RESTRICTIONS

KEY FACTS

THE FUNDS AT A GLANCE
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946 and
is now America's largest mutual fund manager. FMR Texas Inc. (FTX), a
subsidiary of FMR, chooses investments for Spartan California Municipal
Money Market.
As with any mutual fund, there is no assurance that a fund will achieve its
goal.
SPARTAN CA MONEY MARKET
GOAL: High current tax-free income for California residents while
maintaining a stable share price.
STRATEGY: Invests in high-quality, short-term securities whose interest is
free from federal income tax and California personal income tax.
SPARTAN CA INTERMEDIATE
GOAL: High current tax-free income for California residents.
STRATEGY: Invests mainly in investment-grade securities whose interest is
free from federal income tax and California personal income tax, while
maintaining an average maturity of three to 10 years.
SPARTAN CA HIGH YIELD
GOAL: High current tax-free income for California residents.
STRATEGY: Invests mainly in long-term, investment-grade securities whose
interest is free from federal income tax and California personal income
tax.
WHO MAY WANT TO INVEST
These non-diversified funds may be appropriate for investors in higher tax
brackets who seek high current income that is free from federal and
California income taxes. Each fund's level of risk, and potential reward,
depends on the quality and maturity of its investments. Lower-quality and
longer-term investments typically carry higher risk and yield potential.
You should consider your tolerance for risk when making an investment
decision.
The value of the funds' investments and the income they generate will vary
from day to day, generally reflecting changes in interest rates, market
conditions, and other federal and state political and economic news. By
themselves, these funds do not constitute a balanced investment plan.
Spartan California Municipal Money Market is managed to keep its share
price stable at $1.00. When you sell your shares of either of the other
funds, they may be worth more or less than what you paid for them.
The Spartan family of funds is designed for cost-conscious investors
looking for higher yields through lower costs. The Spartan
Approach(Registered trademark) requires investors to make high minimum
investments and, in some cases, to pay for individual transactions.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund. See page for more information.
Maximum sales charge on purchases and
reinvested dividends None
Deferred sales charge on redemptions None
Redemption fee (on shares held less than 180 days)
for Spartan CA Money Market None
for Spartan CA Intermediate None
for Spartan CA High Yield .50%
Exchange and wire transaction fees $5.00
Checkwriting fee, per check written
(available for Spartan C A Money Market
and Spartan C A Intermediate) $2.00
Account closeout fee $5.00
THESE FEES ARE WAIVED (except for the redemption fee) if your account
balance at the time of the transaction is $50,000 or more.
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to FMR. Expenses are factored into each fund's
share price or dividends and are not charged directly to shareholder
accounts (see page ).
The following are projections based on historical expenses, and are
calculated as a percentage of average net assets.
SPARTAN CA MONEY MARKET
Management fee (after reimbursement) .25 %
12b-1 fee None
Other expenses .00 %
Total fund operating expenses .25 %
SPARTAN CA INTERMEDIATE
Management fee (after reimbursement) .00 %
12b-1 fee None
Other expenses .00 %
Total fund operating expenses .00 %
SPARTAN CA HIGH YIELD
Management fee .55 %
12b-1 fee None
Other expenses .00 %
Total fund operating expenses .55 %
EXAMPLES: Let's say, hypothetically, that each fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses after
the number of years indicated, first assuming that you leave your account
open, and then assuming that you close your account at the end of the
period:
SPARTAN CA MONEY MARKET
Account open Account closed
After 1 year $ 3 $ 8
After 3 years $ 8 $ 13
After 5 years $ 14 $ 19
After 10 years $ 32 $ 37
SPARTAN CA INTERMEDIATE
Account open Account closed
After 1 year $ 0 $ 5
After 3 years $ 0 $ 5
After 5 years $ 0 $ 5
After 10 years $ 0 $ 5
SPARTAN CA HIGH YIELD
Account open Account closed
After 1 year $ 6 $ 11
After 3 years $ 18 $ 23
After 5 years $ 31 $ 36
After 10 years $ 69 $ 74
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
FMR has voluntarily agreed to temporarily limit Spartan California
Municipal Money Market's operating expenses to .2 5 % of its average
net assets, and Spartan California Intermediate Municipal's operating
expenses to .00% of its average net assets. If these agreements were not in
effect, the management fee, other expenses, and total operating expenses
would be .50%, .00%, and .50%, respectively, for Spartan California
Municipal Money and .55%, .00%, and .55%, respectively, for Spartan
California Intermediate Municipal. Expenses eligible for reimbursement do
not include interest, taxes, brokerage commissions, or extraordinary
expenses.
FINANCIAL HIGHLIGHTS
The tables that follow have been audited by Price Waterhouse, independent
accountants. Their unqualified reports are included in each fund's Annual
Report. Each fund's Annual Report is incorporated by reference into (is
legally a part of) the Statement of Additional Information.
SPARTAN CALIFORNIA MUNICIPAL MONEY MARKET

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1.Selected Per-Share Data and
Ratios

2.Years ended February 28 1990C 1991D 1992D 1993E 1994

3.Net asset value, beginning of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period

4.Income from Investment .025 .054 .041 .022 .024
Operations
Net interest income

5. Dividends from net interest (.025) (.054) (.041) (.022) (.024)
income

6.Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000

7.Total return B 2.54% 5.52 4.15 2.24% 2.45
% % %

8.Net assets, end of period (000 $ 396,652 $ 763,95 $ 917,64 $ 855,590 $ 1,064,6
omitted) 9 0 03

9.Ratio of expenses to average net -- .07 .10 .30% .21
assets F % % A %

10.Ratio of expenses to average net .50% .50 .50 .50% .50
assets A % % A %
before expense reductions F

11.Ratio of net interest income to 5.99% 5.33 4.05 2.67% 2.42
average net assets A % % A %

</TABLE>

<TABLE>
<CAPTION>
<S> <C>
12.Selected Per-Share Data and Ratios

13.Period ended February 28 1994C

14.Net asset value, beginning of period $ 10.000

15.Income from Investment Operations
.070
Net interest income

16. Net realized and unrealized gain (loss) on investments (.240)

17. Total from investment operations (.170)

18.Less Distributions
(.070)
From net interest income

19.Net asset value, end of period $ 9.760

20.Total return B (1.71)
%

21.Net assets, end of period (000 omitted) $ 22,713

22.Ratio of expenses to average net assetsD --

23.Ratio of expenses to average net assets before expense reductionsD .55%
A

24.Ratio of net interest income to average net assets 4.66%
A

25.Portfolio turnover rate --

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
26.Selected Per-Share Data and
Ratios

27.Years ended February 28 1990C 1991D 1992D 1993E 1994

28.Net asset value, beginning of $ 10.000 $ 9.760 $ 10.240 $ 10.540 $ 11.330
period

29.Income from Investment .301 .706 .663 .543 .631
Operations
Net interest income

30. Net realized and unrealized gain (.249) .472 .297 .858 (.012)
(loss) on investments

31. Total from investment .052 1.178 .960 1.401 .619
operations

32.Less Distributions (.301) (.706) (.663) (.543) (.631)
From net interest income

33. From net realized gain on -- -- -- (.070) (.330)
investments

34. Distributions in excess of net -- -- -- -- (.060)
realized gain

35. Total distributions (.301) (.706) (.663) (.613) (1.021)

36. Redemption fees added to paid .009 .008 .003 .002 .002
in capital

37.Net asset value, end of period $ 9.760 $ 10.240 $ 10.540 $ 11.330 $ 10.930

38.Total return B .59% 12.52 9.66 13.76% 5.63
% % %

39.Net assets, end of period (000 $ 107,409 $ 281,72 $ 479,13 $ 573,871 $ 566,61
omitted) 5 7 3

40.Ratio of expenses to average net -- .19 .36 .40% .52
assets F % % A %

41.Ratio of expenses to average net .55% .55 .55 .55% .55
assets A % % A %
before expense reductions F

42.Ratio of net interest income to 7.42% 7.02 6.36 6.07% 5.58
average net assets A % % A %

43.Portfolio turnover rate 5% 15 13 26% 54
A % % A %

</TABLE>

A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS
OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS WOULD HAVE BEEN
LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C FROM NOVEMBER 27, 1989 (COMMENCEMENT OF OPERATIONS) TO APRIL 30,
1990
D YEARS ENDED APRIL 30
E MAY 1, 1992 TO FEBRUARY 28, 1993
F DURING THE PERIODS SHOWN, FMR VOLUNTARILY REIMBURSED THE FUND FOR
CERTAIN EXPENSES.
PERFORMANCE
Mutual fund performance can be measured as TOTAL RETURN or YIELD. The total
returns and yields that follow are based on historical fund results and do
not reflect the effect of any transaction fees you may have paid. The
figures would be lower if fees were taken into account.
Each fund's fiscal year runs from March 1 through February 28. The tables
below show each fund's performance over past fiscal years compared to a
measure of inflation. The charts on page 10 help you compare the
yields of these funds to those of their competitors.
AVERAGE ANNUAL TOTAL RETURNS
Fi scal periods ended Past 1 Life of
February 28, 1994 year Fund
Spartan CA Money Market 2.45% 3.97% A
Spartan CA Intermediate n/a n/a
Spartan CA High Yield 5.63% 9.84% A
Consumer Price Index 2.52% n/a
CUMULATIVE TOTAL RETURNS
F iscal periods ended Past 1 Life of
February 28, 1994 year Fund
Spartan CA Money Market 2.45% 18.04% A
Spartan CA Intermediate n/a -1.71%B
Spartan CA High Yield 5.63% 49.14% A
Consumer Price Index 2.52% n/a
A FROM NOVEMBER 27, 1989
B FROM DECEMBER 30, 1993
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results. Average annual total returns covering
periods of less than one year assume that performance will remain constant
for the rest of the year.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. When a money
market fund yield assumes that income earned is reinvested, it is called an
EFFECTIVE YIELD. A TAX-EQUIVALENT YIELD shows what an investor would have
to earn before taxes to equal a tax-free yield. Yields for the bond funds
are calculated according to a standard that is required for all stock and
bond funds. Because this differs from other accounting methods, the quoted
yield may not equal the income actually paid to shareholders.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
THE COMPETITIVE FUNDS AVERAGES for Spartan California Municipal Money
Market are calculated based on the IBC/Donoghue's MONEY FUND
AVERAGES(TRADEMARK)/All Tax-Free /State Specific category, which
currently reflects the performance of over 140 mutual funds with
similar objectives. These averages are published in the MONEY FUND
REPORT(Registered trademark) by IBC USA (Publications), Inc. The
competitive funds averages for the bond funds are published by Lipper
Analytical Services, Inc. Spartan California Municipal High Yield compares
its performance to the Lipper California Municipal Debt Fund
Average, which currently reflects the performance of over 70 mutual funds
with similar objectives. T hese average s assume reinvestment of
distributions.
SPARTAN CALIFORNIA MUNICIPAL MONEY MARKET
7-day yields
Percentage (%)
Row: 1, Col: 1, Value: 3.23
Row: 1, Col: 2, Value: 2.69
Row: 2, Col: 1, Value: 3.18
Row: 2, Col: 2, Value: 2.62
Row: 3, Col: 1, Value: 3.55
Row: 3, Col: 2, Value: 2.97
Row: 4, Col: 1, Value: 3.8
Row: 4, Col: 2, Value: 3.07
Row: 5, Col: 1, Value: 3.69
Row: 5, Col: 2, Value: 3.0
Row: 6, Col: 1, Value: 2.83
Row: 6, Col: 2, Value: 2.46
Row: 7, Col: 1, Value: 2.53
Row: 7, Col: 2, Value: 2.14
Row: 8, Col: 1, Value: 2.48
Row: 8, Col: 2, Value: 2.15
Row: 9, Col: 1, Value: 3.03
Row: 9, Col: 2, Value: 2.67
Row: 10, Col: 1, Value: 2.43
Row: 10, Col: 2, Value: 2.13
Row: 11, Col: 1, Value: 2.52
Row: 11, Col: 2, Value: 2.16
Row: 12, Col: 1, Value: 3.21
Row: 12, Col: 2, Value: 2.69
Row: 13, Col: 1, Value: 2.13
Row: 13, Col: 2, Value: 1.81
Row: 14, Col: 1, Value: 2.24
Row: 14, Col: 2, Value: 1.87
Row: 15, Col: 1, Value: 2.49
Row: 15, Col: 2, Value: 1.96
Row: 16, Col: 1, Value: 2.51
Row: 16, Col: 2, Value: 1.98
Row: 17, Col: 1, Value: 2.8
Row: 17, Col: 2, Value: 2.13
Row: 18, Col: 1, Value: 2.33
Row: 18, Col: 2, Value: 1.79
Row: 19, Col: 1, Value: 2.49
Row: 19, Col: 2, Value: 1.86
Row: 20, Col: 1, Value: 2.56
Row: 20, Col: 2, Value: 1.97
Row: 21, Col: 1, Value: 2.71
Row: 21, Col: 2, Value: 2.16
Row: 22, Col: 1, Value: 2.45
Row: 22, Col: 2, Value: 1.95
Row: 23, Col: 1, Value: 2.41
Row: 23, Col: 2, Value: 1.91
Row: 24, Col: 1, Value: 2.69
Row: 24, Col: 2, Value: 2.13
Row: 25, Col: 1, Value: 2.22
Row: 25, Col: 2, Value: 1.71
Row: 26, Col: 1, Value: 2.47
Row: 26, Col: 2, Value: 1.93
Spartan CA
Money Market
Competitive
funds average
1993
1992
1994

SPARTAN CALIFORNIA MUNICIPAL HIGH YIELD
30-day yields
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 1, Col: 2, Value: nil
Row: 2, Col: 1, Value: nil
Row: 2, Col: 2, Value: nil
Row: 3, Col: 1, Value: nil
Row: 3, Col: 2, Value: nil
Row: 4, Col: 1, Value: nil
Row: 4, Col: 2, Value: nil
Row: 5, Col: 1, Value: nil
Row: 5, Col: 2, Value: nil
Row: 6, Col: 1, Value: nil
Row: 6, Col: 2, Value: nil
Row: 7, Col: 1, Value: nil
Row: 7, Col: 2, Value: nil
Row: 8, Col: 1, Value: nil
Row: 8, Col: 2, Value: nil
Row: 9, Col: 1, Value: nil
Row: 9, Col: 2, Value: nil
Row: 10, Col: 1, Value: nil
Row: 10, Col: 2, Value: nil
Row: 11, Col: 1, Value: nil
Row: 11, Col: 2, Value: nil
Row: 12, Col: 1, Value: nil
Row: 12, Col: 2, Value: nil
Row: 13, Col: 1, Value: 6.119999999999999
Row: 13, Col: 2, Value: 5.83
Row: 14, Col: 1, Value: 6.25
Row: 14, Col: 2, Value: 5.79
Row: 15, Col: 1, Value: 6.27
Row: 15, Col: 2, Value: 5.88
Row: 16, Col: 1, Value: 6.23
Row: 16, Col: 2, Value: 5.859999999999999
Row: 17, Col: 1, Value: 6.19
Row: 17, Col: 2, Value: 5.79
Row: 18, Col: 1, Value: 6.02
Row: 18, Col: 2, Value: 5.67
Row: 19, Col: 1, Value: 5.57
Row: 19, Col: 2, Value: 5.39
Row: 20, Col: 1, Value: 5.77
Row: 20, Col: 2, Value: 5.35
Row: 21, Col: 1, Value: 5.87
Row: 21, Col: 2, Value: 5.430000000000001
Row: 22, Col: 1, Value: 6.18
Row: 22, Col: 2, Value: 5.68
Row: 23, Col: 1, Value: 6.109999999999999
Row: 23, Col: 2, Value: 5.58
Row: 24, Col: 1, Value: 5.970000000000001
Row: 24, Col: 2, Value: 5.49
Row: 25, Col: 1, Value: 5.84
Row: 25, Col: 2, Value: 5.39
Row: 26, Col: 1, Value: 5.42
Row: 26, Col: 2, Value: 5.14
Row: 27, Col: 1, Value: 5.319999999999999
Row: 27, Col: 2, Value: 4.99
Row: 28, Col: 1, Value: 5.33
Row: 28, Col: 2, Value: 4.99
Row: 29, Col: 1, Value: 5.37
Row: 29, Col: 2, Value: 4.96
Row: 30, Col: 1, Value: 5.159999999999999
Row: 30, Col: 2, Value: 4.91
Row: 31, Col: 1, Value: 5.31
Row: 31, Col: 2, Value: 4.9
Row: 32, Col: 1, Value: 5.09
Row: 32, Col: 2, Value: 4.78
Row: 33, Col: 1, Value: 4.94
Row: 33, Col: 2, Value: 4.59
Row: 34, Col: 1, Value: 4.92
Row: 34, Col: 2, Value: 4.52
Row: 35, Col: 1, Value: 5.14
Row: 35, Col: 2, Value: 4.659999999999999
Row: 36, Col: 1, Value: 5.09
Row: 36, Col: 2, Value: 4.63
Row: 37, Col: 1, Value: 5.03
Row: 37, Col: 2, Value: 4.5
Spartan CA
High Yield
Competitive
funds
average
1993
1992
1994
THE TOP CHART SHOWS THE 7-DAY EFFECTIVE YIELD FOR THE FUND AND ITS
COMPETITIVE FUNDS AVERAGE AS OF THE LAST TUESDAY OF EACH MONTH FROM
JANUARY 1992 THROUGH FEBRUARY 1994. THE BOTTOM CHART SHOWS THE
30-DAY ANNUALIZED NET YIELDS FOR THE FUND AND ITS COMPETITIVE
FUND S
AVERAGE AS OF THE LAST DAY OF EACH MONTH DURING THE SAME PERIOD. YIELDS
FOR EACH FUND WOULD HAVE BEEN LOWER IF FIDELITY HAD NOT REIMBURSED
CERTAIN FUND EXPENSES. SPARTAN CALIFORNIA INTERMEDIATE MUNICIPAL IS NOT

INCLUDED BECAUSE IT HAS NOT COMPLETED ONE FULL CALENDAR YEAR OF
OPERATIONS.
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
THE FUNDS IN DETAIL

CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. In technical terms, Spartan
California Municipal Money Market is currently a non-diversified fund of
Fidelity California Municipal Trust II, and Spartan California Intermediate
Municipal and Spartan California Municipal High Yield are currently
non-diversified funds of Fidelity California Municipal Trust. Both trusts
are open-end management investment companies. Fidelity California Municipal
Trust II was organized as a Delaware business trust on June 20, 1991.
Fidelity California Municipal Trust was organized as a Massachusetts
business trust on April 28, 1983. There is a remote possibility that one
fund might become liable for a misstatement in the prospectus about another
fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
Fidelity will mail proxy materials in advance, including a voting card and
information about the proposals to be voted on. For the money market fund,
you are entitled to one vote for each share you own. For the bond funds,
the number of votes you are entitled to is based upon the dollar value of
your investment.
FMR AND ITS AFFILIATES
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 200
(bullet) Assets in Fidelity mutual
funds: over $ 225 billion
(bullet) Number of shareholder
accounts: over 15 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(checkmark)
The funds are managed by FMR, which chooses their investments and handles
their business affairs. FTX has primary responsibility for providing
investment management services for Spartan California Municipal Money
Market.
John (Jack) Haley, Jr. is manager of Spartan California Municipal High
Yield, which he has managed since December 1989. Mr. Haley is also manager
of California Tax-Free Insured, California Tax-Free High Yield, and Advisor
Limited Term Tax-Exempt. He joined Fidelity in 1981.
David Murphy is manager of Spartan California Intermediate Municipal, which
he has managed since December 1993. Mr. Murphy also manages Limited Term
Municipals, New York Tax-Free Insured, Spartan Intermediate Municipal,
Spartan New Jersey Municipal High Yield, Spartan New York Intermediate
Municipal, and Spartan Short-Intermediate Municipal. Before joining
Fidelity in 1989, he managed municipal bond funds at Scudder, Stevens &
Clark.
Fidelity Distributors Corporation(FDC) distributes and markets
Fidelity's funds and services. Fidelity Service Co. (FSC) performs transfer
agent servicing functions for the funds.
FMR Corp. is the parent company of these organizations. Through ownership
of voting common stock, Edward C. Johnson 3d (President and a trustee of
the trusts), Johnson family members, and various trusts for the benefit of
the Johnson family form a controlling group with respect to FMR Corp.
United Missouri Bank, N.A., is each fund's transfer agent, although it
employs FSC to perform these functions for the funds. It is located at 1010
Grand Avenue, Kansas City, Missouri.
To carry out the funds' transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that a fund
receives services and commission rates comparable to those of other
broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
SPARTAN CALIFORNIA MUNICIPAL MONEY MARKET seeks high current income that is
free from federal income tax and California personal income tax while
maintaining a stable $1.00 share price by investing in high-quality,
short-term municipal securities of all types. As a result, when you sell
your shares, they should be worth the same amount as when you bought them.
Of course, there is no guarantee that the fund will maintain a stable $1.00
share price. FMR normally invests at least 65% of the fund's total assets
in state tax-free securities, and normally invests so that at least 80% of
the fund's income distributions are free from federal income tax.
The fund follows industry-standard guidelines on the quality and maturity
of its investments, which are designed to help maintain a stable $1.00
share price. The fund will purchase only high-quality securities that FMR
believes present minimal credit risks and will observe maturity
restrictions on securities it buys. It is possible that a major change in
interest rates or a default on the fund's investments could cause its share
price (and the value of your investment) to change.
SPARTAN CALIFORNIA INTERMEDIATE MUNICIPAL seeks high current income that is
free from federal income tax and California personal income tax by
investing mainly in high-quality and upper-medium-grade-quality municipal
securities , although it can also invest in some lower-quality
securities. The fund normally maintains a dollar-weighted average maturity
of three to 10 years. FMR normally invests at least 65% of the fund's total
assets in state tax-free securities, and normally invests at least 80% of
the fund's assets in municipal securities whose interest is free from
federal income tax.
SPARTAN CALIFORNIA MUNICIPAL HIGH YIELD seeks high current income that is
free from federal income tax and California personal income tax by
investing primarily in municipal securities judged by FMR to be of
investment-grade quality, although it can also invest in some lower-quality
securities. The fund normally invests in long-term bonds, generally
maintaining a dollar-weighted average maturity of at least 15 years,
although it may invest in obligations of any maturity. FMR normally invests
so that at least 80% of the fund's income distributions are free from
federal and California personal income tax.
EACH FUND'S yield and each bond fund's share price change daily based on
changes in interest rates, market conditions, other political and
economic news, and on the quality and maturity of its investments. In
general, bond prices rise when interest rates fall, and vice versa. This
effect is usually more pronounced for longer-term securities. Lower-quality
securities offer higher yields, but also carry more risk.
Each fund's performance is closely tied to the economic and political
conditions within the state of California, which has been in a recession
since 1990. As a result, tax revenues have decreased and the state has
accumulated a significant budget deficit despite cost cutting initiatives.
Economic conditions within the state are expected to remain stagnant
throughout 1994.
If you are subject to the federal alternative minimum tax, you should note
that each fund may invest all of its assets in municipal securities issued
to finance private activities. The interest from these investments is a
tax-preference item for purposes of the tax.
FMR normally invests each fund's assets according to its investment
strategy. The funds do not expect to invest in federally taxable
obligations, and the bond funds also do not expect to invest in state
taxable obligations. When FMR considers it appropriate for defensive
purposes, however, it temporarily may invest substantially in short-term
instruments, may hold a substantial amount of uninvested cash, or may
invest more than normally permitted in taxable obligations.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, and strategies FMR may employ in
pursuit of a fund's investment objective. A summary of risks and
restrictions associated with these instrument types and investment
practices is included as well. Policies and limitations are considered at
the time of purchase; the sale of instruments is not required in the event
of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
funds achieve their goals. As a shareholder, you will receive financial
reports every six months detailing fund holdings and describing recent
investment activities.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. Debt
securities have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term bonds are generally
more sensitive to interest rate changes than short-term bonds.
Lower-quality debt securities may have speculative characteristics, and
involve greater risk of default or price changes due to changes in the
issuer's creditworthiness. The market prices of these securities may
fluctuate more than higher-quality securities and may decline significantly
in periods of general or regional economic difficulty.
The table on page 15 provides a summary of ratings assigned
to debt holdings (not including money market instruments) in Spartan
California Municipal High Yield's portfolio. These figures are
dollar-weighted averages of month-end portfolio holdings during fiscal
1994, and are presented as a percentage of total investments. These
percentages are historical and do not necessarily indicate the fund's
current or future debt holdings.
SPARTAN CALIFORNIA MUNICIPAL HIGH YIELD
FISCAL 1994 DEBT HOLDINGS, BY RATING
MOODY'S STANDARD &
POOR'S
INVESTORS SERVICE, INC. CORPORATION
Rating Average A Rating Averag
eA
INVESTMENT GRADE
Highest quality Aaa AAA
High quality Aa 58.9 % AA 72.4 %
Upper-medium grade A A
Medium grade Baa 6.8 % BBB 8.0 %
LOWER QUALITY
Moderately speculative Ba 0.0 % BB 0.0 %
Speculative B 0.0 % B 0.0 %
Highly speculative Caa 0.0 % CCC 0.0 %
Poor quality Ca 0.0 % CC 0.0 %
Lowest quality, no interest C C
In default, in arrears -- D 0.0 %
65.7 % 80.4 %
A THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED BY MOODY'S OR
S&P AMOUNTED TO 9.5 %. THIS MAY INCLUDE SECURITIES RATED BY OTHER
NATIONALLY RECOGNIZED RATING SERVICES, AS WELL AS UNRATED SECURITIES.
FMR
HAS DETERMINED THAT UNRATED SECURITIES THAT ARE LOWER-QUALITY ACCOUNT
FOR
2.7% OF THE FUND'S TOTAL INVESTMENTS. REFER TO THE FUND'S STATEMENT
OF
ADDITIONAL INFORMATION FOR A MORE COMPLETE DISCUSSION OF THESE RATINGS.

RESTRICTIONS: Spartan California Intermediate Municipal does not currently
intend to invest more than 40% of its total assets in securities rated
below A by Moody's or S&P, and unrated securities judged by FMR to be
of equivalent quality. The fund does not currently intend to invest more
than 5% of its assets in securities rated Ba/BB or lower, and unrated
securities of equivalent quality. Spartan California Municipal High Yield
does not currently intend to invest more than one-third of its assets in
bonds judged by FMR to be of equivalent quality to those rated Ba or lower
by Moody's and BB or lower by S&P, and does not currently intend to
invest in bonds of equivalent quality to bonds rated lower than B. The fund
does not currently intend to invest in bonds rated below Caa by Moody's or
CCC by S&P.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
purposes, including general financing for state and local governments, or
financing for specific projects or public facilities. Municipal securities
may be issued in anticipation of future revenues, and may be backed by the
full taxing power of a municipality, the revenues from a specific project,
or the credit of a private organization. A security's credit may be
enhanced by a bank, insurance company, or other financial institution. A
fund may own a municipal security directly or through a participation
interest.
STATE TAX-FREE SECURITIES include municipal obligations issued by the state
of California or its counties, municipalities, authorities, or other
subdivisions. The ability of issuers to repay their debt can be affected by
many factors that impact the economic vitality of either the state or a
region within the state.
Other state tax-free securities include general obligations of U.S.
territories and possessions such as Guam, the Virgin Islands, and Puerto
Rico, and their political subdivisions and public corporations. The economy
of Puerto Rico is closely linked to the U.S. economy, and will depend on
the strength of the U.S. dollar, interest rates, the price stability of oil
imports, and the continued existence of favorable tax incentives. Recent
legislation reduced these incentives, but it is impossible to predict what
impact the changes will have.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire land,
equipment, or facilities. If the municipality stops making payments or
transfers its obligations to a private entity, the obligation could lose
value or become taxable.
PRIVATE ENTITIES may be involved in some municipal securities. For example,
industrial revenue bonds are backed by private entities, and resource
recovery bonds often involve private corporations. The viability of a
project or tax incentives could affect the value and credit quality of
these securities.
ASSET-BACKED SECURITIES may include pools of purchase contracts, financing
leases, or sales agreements entered into by municipalities. These
securities usually rely on continued payments by a municipality, and may
also be subject to prepayment risk.
VARIABLE- AND FLOATING-RATE INSTRUMENTS may have interest rates that move
in tandem with a benchmark, helping to stabilize their prices. Inverse
floaters have interest rates that move in the opposite direction from the
benchmark, making the instrument's market value more volatile.
PUT FEATURES entitle the holder to put (sell back) an instrument to the
issuer or a financial intermediary. In exchange for this benefit, a fund
may pay periodic fees or accept a lower interest rate. Demand features,
standby commitments, and tender options are types of put features.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, or other factors that affect security values. These techniques may
involve derivative transactions such as buying and selling options and
futures contracts and purchasing indexed securities.
FMR can use these practices to adjust the risk and return characteristics
of a fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with the
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of the fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect a fund's yield or the market value of its assets.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of other securities , including illiquid securities, may be
subject to legal restrictions. Difficulty in selling securities may result
in a loss or may be costly to a fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more than
10% of its assets would be invested in illiquid securities.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry or type of
project. Economic, business, or political changes can affect all securities
of a similar type. A fund that is not diversified may be more sensitive to
these changes, and also to changes in the market value of a single issuer
or industry.
RESTRICTIONS: The funds are considered non-diversified. Generally, to meet
federal tax requirements at the close of each quarter, a fund does not
invest more than 25% of its total assets in any one issuer and, with
respect to 50% of total assets, does not invest more than 5% of its total
assets in any one issuer. These limitations do not apply to U.S. government
securities. A fund may invest more than 25% of its total assets in tax-free
securities that finance similar types of projects.
BORROWING. A fund may borrow from banks or from other funds advised by FMR,
or through reverse repurchase agreements. If a bond fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. If the fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: A fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
SPARTAN CALIFORNIA MUNICIPAL MONEY MARKET seeks as high a level of current
income, exempt from federal income tax and California state personal income
tax, as is consistent with 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 INTERMEDIATE MUNICIPAL seeks a high level of current
income, exempt from federal income tax and California state personal income
tax. The fund will normally invest at least 80% of its assets in municipal
securities whose interest is free from federal income tax.
SPARTAN CALIFORNIA MUNICIPAL HIGH YIELD seeks the highest level of current
income, exempt from federal income tax and California state personal income
tax, available from California municipal bonds. The fund will normally
invest so that at least 80% of its income distributions are exempt from
federal and California state personal income taxes.
EACH FUND may borrow only for temporary or emergency purposes, but not in
an amount exceeding 33% of its total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its share
price or dividends; they are neither billed directly to shareholders nor
deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to an affiliate who provides
assistance with these services for Spartan California Municipal Money
Market.
FMR may, from time to time, agree to reimburse the funds for management
fees 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 may be terminated at any
time without notice, can decrease a fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. Each fund
pays a management fee at a fixed annual rate of its average net assets:
.50% for Spartan California Municipal Money Market and .55% for Spartan
California Intermediate Municipal and Spartan California Municipal High
Yield. The total management fee rate for Spartan California Municipal Money
Market , Spartan California Intermediate Municipal , and Spartan
California Municipal High Yield for fiscal 1994, after reimbursement,
was . 21 % and . 00 %, and .52%, respectively.
FMR HAS A SUB-ADVISORY AGREEMENT with FTX, which has primary responsibility
for providing investment management for Spartan California Municipal Money
Market, while FMR retains responsibility for providing other management
services. FMR pays FTX 50% of its management fee (before expense
reimbursements) for these services.
FSC performs many transaction and accounting functions for the funds. These
services include processing shareholder transactions and calculating each
fund's share price. FMR, and not the funds, pays for these services.
To offset shareholder service costs, FMR or its affiliates also collect the
funds' $5.00 exchange fee, $5.00 account closeout fee, $5.00 fee for wire
purchases and redemptions, and, for Spartan California Municipal Money
Market and Spartan California Intermediate Municipal, the $2.00
checkwriting charge. For fiscal 1994, these fees amounted to
$ 15,035 , $ 2,506 , $ 1,970 , and $ 14,645 ,
respectively , for Spartan California Municipal Money Market;
$ 85 , $ 10 , $ 0 , and $ 0 , respectively , for
Spartan California Intermediate Municipal; and, $ 9,400 ,
$ 1,520 , and $ 805 , respectively , for Spartan California
Municipal High Yield.
Each fund has adopted a Distribution and Service Plan. These plans
recognize that FMR may use its resources, including management fees, to pay
expenses associated with the sale of fund shares. This may include payments
to third parties, such as banks or broker-dealers, that provide shareholder
support services or engage in the sale of the funds' shares. It is
important to note, however, that the funds do not pay FMR any separate fees
for this service.
For fiscal 1994, the portfolio turnover rates for Spartan California
Intermediate Municipal and Spartan California Municipal High Yield were
0 % and 54 %, respectively. These rates vary from year to year.
YOUR ACCOUNT

WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
EACH FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. Spartan California Municipal Money Market is managed to keep
its share price stable at $1.00. Each fund's shares are sold without a
sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page . If there is no application accompanying this
prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(bullet) Mail in an application with a check, or
(bullet) Open your account by exchanging from another Fidelity fund.
If you buy shares by check or Fidelity Money Line(Registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business days to
ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $10,000
For Spartan CA Money Market $25,000
TO ADD TO AN ACCOUNT $1,000
Through automatic investment plans $500
MINIMUM BALANCE $5,000
For Spartan CA Money Market $10,000

UNDERSTANDING THE
SPARTAN APPROACH(Registered trademark)
Fidelity's Spartan Approach is
based on the principle that
lower fund expenses can
increase returns. The Spartan
funds keep expenses low in
two ways. First, higher
investment minimums reduce
the effect of a fund's fixed
costs, many of which are paid
on a per-account basis.
Second, unlike most mutual
funds that include transaction
costs as part of overall fund
expenses, Spartan
shareholders pay directly for
the transactions they make.
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TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT

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Wire (wire_graphic) (bullet) There may be a $5.00 (bullet) There may be a $5.00
fee for each wire fee for each wire
purchase. purchase.
(bullet) Call 1-800-544-7777 to (bullet) Wire to:
set up your account Bankers Trust
and to arrange a wire Company,
transaction. Bank Routing
(bullet) Wire within 24 hours to: #021001033,
Bankers Trust Account #00163053.
Company, Specify the complete
Bank Routing name of the fund and
#021001033, include your account
Account #00163053. number and your
Specify the complete name.
name of the fund and
include your new
account number and
your name.

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(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118

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HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $5,000
worth of shares in the account ($10,000 for Spartan California Municipal
Money Market) to keep it open.
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
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:
(bullet) You wish to redeem more than $100,000 worth of shares,
(bullet) Your account registration has changed within the last 30 days,
(bullet) The check is being mailed to a different address than the one on
your account (record address),
(bullet) The check is being made payable to someone other than the account
owner, or
(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.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(bullet) Your name,
(bullet) The fund's name,
(bullet) Your fund account number,
(bullet) The dollar amount or number of shares to be redeemed, and
(bullet) Any other applicable requirements listed in the table at right.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
CHECKWRITING
If you have a checkbook for your account in Spartan California Municipal
Money Market or Spartan California Intermediate Municipal, you may write an
unlimited number of checks. Do not, however, try to close out your account
by check.
ACCOUNT TYPE SPECIAL REQUIREMENTS

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IF YOU SELL SHARES OF SPARTAN CALIFORNIA MUNICIPAL HIGH YIELD AFTER HOLDING THEM LESS
THAN 180 DAYS, THE FUND WILL DEDUCT A REDEMPTION FEE EQUAL TO .50% OF THE VALUE OF
THOSE SHARES. IF YOUR ACCOUNT BALANCE IS LESS THAN $50,000, THERE ARE FEES FOR
INDIVIDUAL REDEMPTION TRANSACTIONS: $2.00 FOR EACH CHECK YOU WRITE AND $5.00 FOR
EACH EXCHANGE, BANK WIRE, AND ACCOUNT CLOSEOUT.

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Check (check_graphic) All account types (bullet) Minimum check: $1,000.
(bullet) All account owners must sign
a signature card to receive a
checkbook.

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(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118

</TABLE>

To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if you have more than one account in the fund. Call
1-800-544-6666 if you need copies of financial reports or historical
account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing. There may be a $5.00 fee for
each exchange out of the funds.
Note that exchanges out of a fund are limited to four per calendar year,
and that they may have tax consequences for you. For details on policies
and restrictions governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see page .
SYSTEMATIC WITHDRAWAL PLANS let you set up periodic redemptions from
your account.
FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans 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 a
home, educational expenses, and other long-term financial goals.
REGULAR INVESTMENT PLANS

FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND

MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 Monthly or (bullet) For a new account, complete the
quarterly appropriate section on the fund
application.
(bullet) For existing accounts, call
1-800-544-6666 for an application.
(bullet) To change the amount or frequency of
your investment, call 1-800-544-6666 at
least three business days prior to your
next scheduled investment date.

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

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MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 Every pay (bullet) Check the appropriate box on the fund
period application, or call 1-800-544-6666 for an
authorization form.
(bullet) Changes require a new authorization
form.

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

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MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 Monthly, (bullet) To establish, call 1-800-544-6666 after
bimonthly, both accounts are opened.
quarterly, or (bullet) To change the amount or frequency of
annually your investment, call 1-800-544-6666.

</TABLE>

A BECAUSE BOND FUND SHARE PRICES FLUCTUATE, THOSE FUNDS MAY NOT BE
APPROPRIATE CHOICES FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
SHAREHOLDER AND ACCOUNT POLICIES

DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment income and
capital gains , if any, to shareholders each year. Income dividends
are declared daily and paid monthly. Capital gains earned by the bond funds
are normally distributed in April and December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. Each fund offers four
options (three for Spartan California Municipal Money Market):
1. REINVESTMENT OPTION. Your dividend and capital gain 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. Your capital gain distributions, if any, will be
automatically reinvested, but you will be sent a check for each dividend
distribution. This option is not available for Spartan California Municipal
Money Market.
3. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions, if any.
4. DIRECTED DIVIDENDS(Registered trademark) OPTION. Your dividend and
capital gain distributions, if any, will be automatically invested in
another identically registered Fidelity fund.
Dividends will be reinvested at the fund's NAV on the last day of the
month. Capital gain distributions, if any, will be reinvested at the NAV as
of the date the fund deducts the distribution from its NAV. The mailing of
distribution checks will begin within seven days.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. The
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
Each fund earns interest from
its investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. The fund may
realize capital gains if it sells
securities for a higher price
than it paid for them. These
are passed along as CAPITAL
GAIN DISTRIBUTIONS. Money
market funds usually don't
make capital gain
distributions.
(checkmark)
TAXES
As with any investment, you should consider how an investment in a tax-free
fund could affect you. Below are some of the funds' tax implications.
TAXES ON DISTRIBUTIONS. Interest income that a fund earns is distributed to
shareholders as income dividends. Interest that is federally tax-free
remains tax-free when it is distributed.
However, gain on the sale of tax-free bonds results in taxable
distributions. Short-term capital gains and a portion of

the gain on bonds purchased at a discount are taxed as dividends.
Long-term capital gain distributions are taxed as long-term capital gains.
These distributions are taxable when they are paid, whether you take them
in cash or reinvest them. However, distributions declared in December and
paid in January are taxable as if they were paid on December 31. Fidelity
will send you and the IRS a statement showing the tax status of the
distributions paid to you in the previous year.
The interest from some municipal securities is subject to the federal
alternative minimum tax. Each fund may invest up to 100% of its assets in
these securities. Individuals who are subject to the tax must report this
interest on their tax returns.
To the extent a fund's income dividends are derived from interest on
state tax-free investments, they will be free from California state
personal income tax.
During fiscal 1994, 100 % of each fund's income dividends were free
from federal income tax, and from California state personal income
taxes. 42.8% of Spartan California Municipal Money Market's,
5.1 % of Spartan California Intermediate Municipal's, and 9.8 %
of Spartan California Municipal High Yield's income dividends were subject
to the federal alternative minimum tax.
TAXES ON TRANSACTIONS. Your bond fund redemptions - including exchanges to
other Fidelity funds - are subject to capital gains tax. A capital gain or
loss is the difference between the cost of your shares and the price you
receive when you sell them.
Whenever you sell shares of a fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before a fund deducts a capital
gain distribution from its NAV, you will pay the full price for the shares
and then receive a portion of the price back in the form of a taxable
distribution.
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates each fund's NAV and offering price as
of the close of business of the NYSE, normally 4 p.m. Eastern time.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
The money market fund values the securities it owns on the basis of
amortized cost. This method minimizes the effect of changes in a security's
market value and helps the fund to maintain a stable $1.00 share price. For
the bond funds, assets are valued primarily on the basis of market
quotations, if available. Since market quotations are often unavailable,
assets are usually valued by a method that the Board of Trustees believes
accurately reflects fair value.
THE OFFERING PRICE (price to buy one share) and REDEMPTION PRICE (price to
sell one share) is the fund's NAV.
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.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller . Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they are of
a size that would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) Each fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees a fund or its transfer agent has
incurred.
(bullet) Spartan California Municipal Money Market and Spartan California
Intermediate Municipal reserve the right to limit all accounts maintained
or controlled by any one person to a maximum total balance of $2 million.
(bullet) You begin to earn dividends as of the first business day
following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY SHARES OF THE FUNDS (AT THE OFFERING PRICE) OR SELL THEM
THROUGH A BROKER, who may charge you a fee for this service. If you invest
through a broker or other institution, read its program materials for any
additional service features or fees that may apply.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
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
financial institution could be held liable for resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect a
fund, it may take up to seven days to pay you.
(bullet) Shares will earn dividends through the date of redemption;
however, shares redeemed on a Friday or prior to a holiday will continue to
earn dividends until the next business day.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) Each fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(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.
(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.
THE REDEMPTION FEE for Spartan California Municipal High Yield, if
applicable, will be deducted from the amount of your redemption. This fee
is paid to the fund rather than FMR, and it does not apply to shares that
were acquired through reinvestment of distributions. If shares you are
redeeming were not all held for the same length of time, those shares you
held longest will be redeemed first for purposes of determining whether the
fee applies.
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:
(bullet) The $2.00 checkwriting charge will be deducted from your account.
(bullet) The $5.00 exchange fee will be deducted from the amount of your
exchange.
(bullet) The $5.00 wire fee will be deducted from the amount of your wire.
(bullet) The $5.00 account closeout fee does not apply to exchanges or
wires, but it will apply to checkwriting.
IF YOUR ACCOUNT BALANCE FALLS BELOW $5,000 ($10,000 for Spartan California
Municipal Money Market), you will be given 30 days' notice to reestablish
the minimum balance. If you do not increase your balance, Fidelity reserves
the right to close your account and send the proceeds to you. Your shares
will be redeemed at the NAV on the day your account is closed and the $5.00
account closeout fee will be charged.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
EXCHANGE RESTRICTIONS
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:
(bullet) The fund you are exchanging into must be registered for sale in
your state.
(bullet) You may only exchange between accounts that are registered in the
same name, address, and taxpayer identification number.
(bullet) Before exchanging into a fund, read its prospectus.
(bullet) If you exchange into a fund with a sales charge, you pay the
percentage-point difference between that fund's sales charge and any sales
charge you have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(bullet) Exchanges may have tax consequences for you.
(bullet) Because excessive trading can hurt fund performance and
shareholders, each fund reserves the right to temporarily or permanently
terminate the exchange privilege of any investor who makes more than four
exchanges out of the fund per calendar year. Accounts under common
ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(bullet) Each fund reserves the right to 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.
(bullet) Your exchanges may be restricted or refused if a fund receives or
anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.

This prospectus is printed on recycled paper using soy-based inks.

SPARTAN(REGISTERED TRADEMARK) CALIFORNIA MUNICIPAL MONEY MARKET PORTFOLIO
A FUND OF FIDELITY CALIFORNIA MUNICIPAL TRUST II
SPARTAN(REGISTERED TRADEMARK) CALIFORNIA MUNICIPAL HIGH YIELD PORTFOLIO
SPARTAN(REGISTERED TRADEMARK) CALIFORNIA INTERMEDIATE MUNICIPAL PORTFOLIO
FUNDS OF FIDELITY CALIFORNIA MUNICIPAL TRUST
STATEMENT OF ADDITIONAL INFORMATION
APRIL 18, 1994
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated April 18, 1994). Please retain this
document for future reference. The Annual Report for the fiscal period
ended February 28, 1994 is incorporated herein by reference. To obtain an
additional copy of the Prospectus or the Annual Report, please call
Fidelity Distributors Corporation at 1-800-544-8888.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Special Factors Affecting California
Special Factors Affecting Puerto Rico
Portfolio Transactions
Valuation of Portfolio Securities
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contracts
Distribution and Service Plans
Interest of FMR Affiliates
Description of the Trusts
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISER (MONEY MARKET FUND ONLY)
FMR Texas Inc. (FMR Texas)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
United Missouri Bank, N.A. (United Missouri) and Fidelity Service Co. (FSC)
SCR-ptb-494

INVESTMENT LIMITATIONS OF SPARTAN CALIFORNIA MUNICIPAL HIGH YIELD PORTFOLIO
(HIGH YIELD FUND)
THE FOLLOWING ARE THE HIGH YIELD FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS
SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue bonds or any other class of securities preferred over shares of
the fund in respect of the fund's assets or earnings, provided that
Fidelity California Municipal Trust may issue additional series of shares
in accordance with its Declaration of Trust;
(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 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;
(3) 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);
(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 (but this shall not prevent the fund from
purchasing and selling futures contracts); 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) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(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 fund 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
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. 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 invest more than 25% of its
total assets in industrial revenue bonds related to a single industry.
(vii) 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.
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) 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 limitations (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 the high yield fund's limitations on futures and options transactions,
see the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
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 Investment Company Act of 1940. These
transactions may include 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, the Board of Trustees has established and
periodically reviews procedures applicable to transactions involving
affiliated financial institutions.
QUALITY AND MATURITY (MONEY MARKET FUND ONLY). Pursuant to procedures
adopted by the Board of Trustees, the fund may purchase only high-quality
securities that FMR believes present minimal credit risks. To be considered
high-quality, a security must be rated in accordance with applicable rules
in one of the two highest categories for short-term securities by at least
two nationally recognized rating services (or by one, if only one rating
service has rated the security) or, if unrated, judged to be of equivalent
quality by FMR. The fund must limit its investments to securities with
remaining maturities of 397 days or less and must maintain a
dollar-weighted average maturity of 90 days or less.
DELAYED-DELIVERY TRANSACTIONS. Each fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security (and more than
seven days in the future). Typically, no interest accrues to the purchaser
until the security is delivered. The insured and high yield funds may
receive fees for entering into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, each fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because a fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the fund's other investments. If a fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, the fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When a fund has sold a security on a delayed-delivery
basis, 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, the fund could miss
a favorable price or yield opportunity, or could suffer a loss.
Each fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
REFUNDING CONTRACTS. The insured and high yield funds may purchase
securities on a when-issued basis in connection with the refinancing of an
issuer's outstanding indebtedness. Refunding contracts require the issuer
to sell and the fund 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. The funds generally will not be obligated to pay the
full purchase price if they fail to perform under a refunding contract.
Instead, refunding contracts generally provide for payment of liquidated
damages to the issuer (currently 15-20% of the purchase price). A fund may
secure its obligations under a refunding contract by depositing collateral
or a letter of credit equal to the liquidated damages provisions of the
refunding contract. When required by SEC guidelines, each fund will place
liquid assets in a segregated custodial account equal in amount to its
obligations under refunding contracts.
INVERSE FLOATERS. The insured and high yield funds may invest in inverse
floaters, which are instruments whose interest rates bear an inverse
relationship to the interest rate on another security or the value of an
index. Changes in the interest rate on the other security or index
inversely affect the residual interest rate paid on the inverse floater,
with the result that the inverse floater's price will be considerably more
volatile than that of a fixed-rate bond. For example, a municipal issuer
may decide to issue two variable-rate instruments instead of a single
long-term, fixed-rate bond. The interest rate on one instrument reflects
short-term interest rates, while the interest rate on the other instrument
(the inverse floater) reflects the approximate rate the issuer would have
paid on a fixed-rate bond, multiplied by two, minus the interest rate paid
on the short-term instrument. Depending on market availability, the two
portions may be recombined to form a fixed-rate municipal bond. The market
for inverse floaters is relatively new.
VARIABLE OR FLOATING RATE OBLIGATIONS bear variable or floating interest
rates and carry rights that permit holders to demand payment of the unpaid
principal balance plus accrued interest from the issuers or certain
financial intermediaries. Floating rate instruments have interest rates
that change whenever there is a change in a designated base rate while
variable rate instruments provide for a specified periodic adjustment in
the interest rate. These formulas are designed to result in a market value
for the instrument that approximates its par value.
With respect to the money market fund, a demand instrument with a
conditional demand feature must have received both a short-term and a
long-term high-quality rating or, if unrated, have been determined to be of
comparable quality pursuant to procedures adopted by the Board of Trustees.
A demand instrument with an unconditional demand feature may be acquired
solely in reliance upon a short-term high-quality rating or, if unrated,
upon a finding of comparable short-term quality pursuant to procedures
adopted by the Board of Trustees.
The funds may invest in fixed-rate bonds that are subject to third party
puts and in participation interests in such bonds held in trust or
otherwise. These bonds and participation interests have tender options or
demand features that permit a fund to tender (or put) the bonds to an
institution at periodic intervals and to receive the principal amount
thereof. A fund considers variable rate instruments structured in this way
(Participating VRDOs) to be essentially equivalent to other VRDOs it
purchases. The IRS has not ruled whether the interest on Participating
VRDOs is tax-exempt and, accordingly, a fund intends to purchase these
instruments based on opinions of bond counsel.
The money market fund may invest in variable or floating rate instruments
that ultimately mature in more than 397 days, if the fund acquires a right
to sell the instruments that meets certain requirements set forth in Rule
2a-7. Variable rate instruments (including instruments subject to a demand
feature) that mature in 397 days or less may be deemed to have maturities
equal to the period remaining until the next readjustment of the interest
rate. Other variable rate instruments with demand features may be deemed to
have a maturity equal to the period remaining until the next adjustment of
the interest rate or the period remaining until the principal amount can be
recovered through demand. A floating rate instrument subject to a demand
feature may be deemed to have a maturity equal to the period remaining
until the principal amount can be recovered through demand.
TENDER OPTION BONDS are created by coupling an intermediate- or long-term,
fixed-rate, tax-exempt 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. Subject to applicable regulatory requirements, the money market fund
may buy tender option bonds if the agreement gives the fund the right to
tender the bond to its sponsor no less frequently than once every 397 days.
In selecting tender option bonds for the funds, 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.
ZERO COUPON BONDS do not make regular interest payments. Instead, they are
sold at a deep 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 very volatile when interest rates change. In
calculating its daily dividend, a fund takes into account as income a
portion of the difference between a zero coupon bond's purchase price and
its face value.
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. Each fund may
acquire standby commitments to enhance the liquidity of portfolio
securities, but, in the case of the money market fund, only when the
issuers of the commitments present minimal risk of default.
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. Standby commitments will
not affect the dollar-weighted average maturity of the money market fund or
the valuation of the securities underlying the commitments.
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
support 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
marketable by the funds; and the possibility that the maturities of the
underlying securities may be different from those of the commitments.
MUNICIPAL LEASE OBLIGATIONS. Each fund may invest a portion of its assets
in municipal leases and participation interests therein. These obligations,
which may take the form of a lease, an installment purchase, or a
conditional sale contract, are issued by state and local governments and
authorities to acquire land and a wide variety of equipment and facilities.
Generally, the funds will not hold such 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
a fund a specified, undivided interest in the obligation in proportion to
its purchased interest in the total amount of the obligation.
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
clauses free the issuer from debt issuance limitations.
FEDERALLY TAXABLE OBLIGATIONS. The funds do not intend to invest in
securities whose interest is federally taxable; however, from time to time,
each fund may invest a portion of its assets on a temporary basis in
fixed-income obligations whose interest is subject to federal income tax.
For example, each fund may invest in obligations whose interest is
federally taxable pending the investment or reinvestment in municipal
securities of proceeds from the sale of its shares or sales of portfolio
securities.
Should a fund invest in federally taxable obligations, it would purchase
securities that in FMR's judgment are of high quality. These would include
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities; obligations of domestic banks; and repurchase
agreements. The insured and high yield funds' standards for high quality,
taxable obligations are essentially the same as those described by Moody's
Investors Service, Inc. (Moody's) in rating corporate obligations within
its two highest ratings of Prime-1 and Prime-2, and those described by
Standard & Poor's Corporation (S&P) in rating corporate obligations
within its two highest ratings of A-1 and A-2. The money market fund will
purchase taxable obligations only if they meet its quality requirements.
Proposals to restrict or eliminate the federal income tax exemption for
interest on municipal obligations 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 the funds' distributions. If
such proposals were enacted, the availability of municipal obligations and
the value of the funds' holdings would be affected and the Trustees would
reevaluate the funds' investment objectives and policies.
Each fund anticipates being as fully invested as practicable in municipal
securities; however, there may be occasions when, as a result of maturities
of portfolio securities, sales of fund shares, or in order to meet
redemption requests, a fund may hold cash that is not earning income. In
addition, there may be occasions when, in order to raise cash to meet
redemptions, a fund may be required to sell securities at a loss.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed-upon price on an agreed-upon date within a number of days from
the date of purchase. 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. A repurchase agreement is a taxable
obligation which involves the obligation of the seller to pay the
agreed-upon price, which obligation is in effect secured by the value (at
least equal to the amount of the agreed-upon resale price and marked to
market daily) of the underlying security. Each fund may engage in
repurchase agreements with respect to any security in which it is
authorized to invest even if, with respect to the money market fund, the
underlying security matures in more than 397 days. While it does not
presently appear possible to eliminate all risks from these transactions
(particularly the possibility of a decline in the market value of the
underlying securities, as well as delays and costs to the fund in
connection with bankruptcy proceedings), it is each fund's current policy
to limit repurchase agreements to parties whose creditworthiness has been
reviewed and found satisfactory by FMR.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement. A
fund will enter into reverse repurchase agreements only with parties whose
creditworthiness has been found satisfactory by FMR. Such transactions may
increase fluctuations in the market value of a fund's assets and may be
viewed as a form of leverage.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. 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 instruments. In determining the
liquidity of a fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset a fund's rights and
obligations relating to the investment). Investments currently considered
by the money market fund to be illiquid include restricted securities and
municipal lease obligations determined by FMR to be illiquid. Investments
currently considered by the insured and high yield funds to be illiquid
include over-the-counter options. Also, FMR may determine some restricted
securities and municipal lease obligations to be illiquid. However, with
respect to over-the-counter options the insured and high yield funds write,
all or a portion of the value of the underlying instrument may be illiquid
depending on the assets held to cover the option and the nature and terms
of any agreement the fund may have to close out the option before
expiration. In the absence of market quotations, illiquid investments are
valued for purposes of monitoring amortized cost valuation (money market
fund) or priced (insured and high yield funds) at fair value as
determined in good faith by a committee appointed by the Board of Trustees.
If through a change in values, net assets, or other circumstances, a fund
were in a position where more than 10% of its net assets were invested in
illiquid securities, it would seek to take appropriate steps to protect
liquidity.
RESTRICTED SECURITIES 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, a fund 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 the fund may be permitted to
sell a security under an effective registration statement. If, during such
a period, adverse market conditions were to develop, a fund might obtain a
less favorable price than prevailed when it decided to seek registration of
the security. However, in general, the money market fund anticipates
holding restricted securities to maturity or selling them in an exempt
transaction.
INDEXED SECURITIES. The intermediate and high yield funds may purchase
securities 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. Index securities 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. One example of indexed
securities is inverse floaters.
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. At the same time,
indexed securities are subject to the credit risks associated with the
issuer of the security, and their values may decline substantially if the
issuer's creditworthiness deteriorates. Indexed securities may be more
volatile than the underlying instruments.
LOWER-RATED MUNICIPAL SECURITIES. The intermediate and high yield funds may
invest a portion of their assets in lower-rated municipal securities as
described in the Prospectus.
While the market for California municipals is considered to be substantial,
adverse publicity and changing investor perceptions may affect the ability
of outside pricing services used by the fund to value its portfolio
securities, and the fund's ability to dispose of lower-rated bonds. The
outside pricing services are monitored by FMR and reported to the Board
to determine whether the services are furnishing prices that accurately
reflect fair value. The impact of changing investor perceptions may be
especially pronounced in markets where municipal securities are thinly
traded.
A fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise 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.
INTERFUND BORROWING PROGRAM. Each fund has received permission from the SEC
to lend money to and borrow money from other funds advised by FMR or its
affiliates, but will participate in the interfund borrowing program only as
a borrower. Interfund loans normally will extend overnight, but can have a
maximum duration of seven days. A fund will borrow through the program only
when the costs are equal to or lower than the costs of bank loans. Loans
may be called on one day's notice, and the fund may have to borrow from a
bank at a higher interest rate if an interfund loan is called or not
renewed.
ELECTRIC UTILITIES INDUSTRY. The electric utilities industry has been
experiencing, or may experience in the future, problems, including (a) the
effects of inflation upon construction and operating costs, (b) the
availability and cost of fuel, (c) the availability and cost of capital,
(d) the effects of conservation on energy demand, (e) the effects of
rapidly changing environmental, safety, and licensing requirements, and
other federal, state, and local regulations, (f) timely and sufficient rate
increases, (g) opposition to nuclear power, and (h) increased competition.
HEALTH CARE INDUSTRY. The health care industry is subject to regulatory
action by a number of private and governmental agencies, including federal,
state, and local governmental agencies. A major source of revenues for the
health care industry is payments from the Medicare and Medicaid programs.
As a result, the industry is sensitive to legislative changes and
reductions in governmental spending for such programs. Numerous other
factors may affect the industry, such as general and local economic
conditions; demand for services; expenses (including malpractice insurance
premiums); and competition among health care providers. In the future, the
following elements may adversely affect health care facility operations:
adoption of legislation proposing a national health insurance program;
medical and technological advances which dramatically alter the need for
health services or the way in which such services are delivered; and
efforts by employers, insurers, and governmental agencies to reduce the
costs of health insurance and healthcare services.
HOUSING. Housing revenue bonds are generally issued by a state, county,
city, local housing authority, or other public agency. They are secured by
the revenues derived from mortgages purchased with the proceeds from 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 the 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 regulations.
INVESTMENT POLICIES FOR INTERMEDIATE AND HIGH YIELD FUNDS ONLY
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each 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 unde r the
Commodity Exchange Act, which limits the extent to which the funds can
commit assets to initial margin deposits and option premiums.
In addition, each 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 funds' investments in futures contracts and
options, and the funds' policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, are not
fundamental policies and may be changed as regulatory agencies permit.
FUTURES CONTRACTS. When a fund purchases a futures contract, it agrees to
purchase a specified underlying instrument at a specified future date. When
a fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when the fund enters into the contract. Some
currently available futures contracts are 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.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a fund 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 fund 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 fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the fund will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. A fund 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
paid, 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. When a fund writes a put option, it takes the
opposite side of the transaction from the option's purchaser. In return for
receipt of the premium, the fund 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. When writing an option on a futures
contract, the fund will be required to make margin payments to an FCM as
described above for futures contracts. A fund may seek to terminate its
position in a put option it writes 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 the fund has written, however, the
fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer generally would 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 a fund 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.
COMBINED POSITIONS. A fund may purchase and write 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, a fund may purchase a put option and write a call option on the
same underlying instrument, in order to 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, in order 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. The funds may invest in options and
futures contracts based on securities with different issuers, maturities,
or other characteristics from the securities in which they typically
invest, which involves a risk that the options or futures position will not
track the performance of a 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.
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 for a fund 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 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
fund greater flexibility to tailor an option to their 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.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The funds will comply
with guidelines established by the Securities and Exchange Commission with
respect to coverage of options and futures strategies by mutual funds, and
if the guidelines so require will set aside appropriate liquid assets in a
segregated custodial account in the amount prescribed. Securities held in a
segregated account cannot be sold while the futures or option strategy is
outstanding, unless they are replaced with other suitable assets. As a
result, there is a possibility that segregation of a large percentage of a
fund's assets could impede portfolio management or the fund's ability to
meet redemption requests or other current obligations.
SPECIAL FACTORS AFFECTING 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 the funds. Obligations of the state or local
governments may also be affected by budgetary pressures affecting the State
and economic conditions in the State. Interest income to a fund could also
be adversely affected. The following 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 of California, its agencies, or instrumentalities,
as available on the date of this Statement of Additional Information. 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 AND APPROPRIATIONS
LIMITATION ON 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 California 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, XIIIA limits to 1% of full
cash value the rate of ad valorem property taxes on real property and
generally restricts the 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 levy of "general taxes" which
were not dedicated to a specific use. In response to these decisions, the
voters of the State in 1986 adopted an initiative statute which imposed
significant new limits on the ability of local entities to raise or levy
general taxes, except by receiving majority local voter approval.
Significant elements of this initiative, "Proposition 62," have been
overturned in recent court cases, but efforts may continue to further
restrict the ability of local government agencies to levy or raise taxes.
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 consists 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 excludes
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 more closely follow
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. I n
the mid-to-late 1980's, many entities were at or approaching their
limit , and several successfully obtained voter approval for
4-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 FY
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
199 4 -9 5 Governor's Budget proposal estimates State
appropriations will be more than $ 3.7 billion under the limit for FY
199 3 -9 4 and over $ 5.4 billion under the limit for FY
199 4 -9 5 .
OBLIGATIONS OF THE STATE OF CALIFORNIA
As of March 1, 199 4 , the State had approximately $17.5
billion of general obligation bonds outstanding, and $ 6.3 billion
remained authorized but unissued. In addition, at June 30, 199 3 , the
State had lease-purchase obligations, payable from the State's General
Fund, of approximately $ 4.0 billion. Of the State's outstanding
general obligation debt, approximately 28% is presently self-liquidating
(for which program revenues are anticipated to be sufficient to reimburse
the General Fund for debt service payments). In FY 199 2 -9 3 ,
debt service on general obligation bonds and lease-purchase debt was
approximately 4.1 % 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
California'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 31 million, it now represents 12.3% of the total United States
population. Total personal income in the State, at an estimated $640
billion in 1992, accounts for about 13% of all personal income in the
nation. Total employment is almost 14 million, the majority of which is in
the service, trade, and manufacturing sectors.
Reports by the State Department of Finance and the Commission on State
Finance confirm that the State's economy is suffering the worst recession
since the 1930's, with prospects for recovery slower than for the nation as
a whole. The State lost over 800,000 jobs since the start of the
recession, in mid-1990, and is expected to lose more jobs in 1994 before
a turnaround occurs . The largest job losses have been in
Southern California, led by declines in the aerospace and construction
industries. Weakness statewide occurred in manufacturing, construction,
services and trade and will be hurt in the next few years by continued
cuts in federal defense spending and base closures . Unemployment is
expected to remain well above the national average in 1994 . The
State's economy is only expected to slowly pull out of the recession
starting in 1994 or early 1995 . Delay in recovery will exacerbate
shortfalls in State revenues.
RECENT STATE FINANCIAL RESULTS
The principal sources of State General Fund revenues in
199 2 -9 3 were the California personal income tax (4 4 %
of total revenues), the sales tax (3 8 %), bank and corporation taxes
(1 2 %), and the gross premium tax on insurance (3%). 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. In recent
years (but not in the past two years, as the recession has cut
revenues) , the State has budgeted to maintain the Economic
Uncertainties Fund at around 3% of General Fund expenditures.
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 3 4 %).
Since the start of the 1990-91 Fiscal Year, the State has 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. As a result, the State entered a period of
budget imbalance, with expenditures exceeding revenues for four of the five
completed fiscal years through 1991-92.
As the State fell into a deep recession in the summer of 1990, the State
budget fell sharply out of balance in the 1990-91 and 1991-92 fiscal years,
despite significant expenditure cuts and tax increases. The State had
accumulated a $2.8 billion budget deficit by June 30, 1992. This deficit
also severely reduced the State's cash resources, so that it had to rely on
external borrowing in the short-term markets to meet its cash needs.
With the failure to enact a budget by July 1, 1992, the State had no legal
authority to pay many of its vendors until the budget was passed;
nevertheless, certain obligations (such as debt service, school
apportionments, welfare payments, and employee salaries) were payable
because of continuing or special appropriations, or court orders. However,
the State Controller did not have enough cash to pay as they came due all
of these ongoing obligations, as well as valid obligations incurred in the
prior fiscal year. Starting on July 1, 1992, the Controller was required to
issue approximately $3.8 billion of "registered warrants" in lieu of normal
warrants backed by cash to pay many State obligations (the first time this
had occurred since the 1930's). Available cash was used to pay
constitutionally mandated and priority obligations. All the registered
warrants were called for redemption by September 4, 1992 following
enactment of the 1992-93 Budget Act and issuance by the State of its normal
cash flow borrowings.
The 1992-93 Budget Act, when finally adopted, was projected to eliminate
the State's accumulated deficit, with additional expenditure cuts and a
$1.3 billion transfer of State education funding costs to local governments
by shifting local property taxes to school districts. However, as the
recession continued longer and deeper than expected, revenues once again
were far below projections, and only reached a level just equal to the
amount of expenditures. Thus, the State continued to carry its $2.8 billion
budget deficit at June 30, 1993.
The 1993-94 Budget Act was similar to the prior year, in reliance on
expenditure cuts and an additional $2.6 billion transfer of costs to local
government, particularly counties. A major feature of the budget was a
two-year plan to eliminate the accumulated deficit by borrowing into the
1994-95 fiscal year. With the recession still continuing longer than
expected, the 1994-95 Governor's Budget now projects in the 1993-94 Fiscal
Year, the General Fund will have $900 million less revenue and $800 million
higher expenditures than budgeted. As a result, revenues will only exceed
expenditures by about $400 million. If this projection is met, it will be
the first operating surplus in four years; however, some budget analysts
outside the Department of Finance project revenues in the balance of
1993-94 will not even meet the revised lower projection. In addition, the
General Fund may have some unplanned costs for relief related to the
January 17, 1994 Northridge earthquake.
The State has implemented its short-term borrowing as part of the deficit
elimination plan, and has also borrowed additional sums to cover cash flow
shortfalls in the spring of 1994, for a total of $3.2 billion, coming due
in July and December 1994. Repayment of these short-term notes will require
additional borrowing, as the State's cash position continues to be
adversely affected.
The Governor's 1994-95 Budget proposal recognizes the need to bridge a gap
of around $5 billion by June 30, 1995. Over $3.1 billion of this amount is
being requested from the federal government as increased aid, particularly
for costs associated with incarcerating, educating, and providing health
and welfare services to undocumented immigrants. However, President Clinton
has not included these costs in his proposed Fiscal 1995 Budget. The rest
of the budget gap is proposed to be closed with expenditure cuts and
projected $600 million of new revenue assuming the State wins a tax case
presently pending in U.S. Supreme Court. Thus, the State will once again
face significant uncertainties and very difficult choices in the 1994-95
budget, as tax increases are unlikely and many cuts and budget adjustments
have been made in the past three years.
The State's severe financial difficulties for the past, the current and
upcoming budget years will result in continued pressure upon almost all
local governments, especially those which depend on State aid, such as
school districts and counties. While the Governor has noted that part of
the "budget gap" was cyclical, a result of economic slowdown which has
reduced growth of revenues in the fiscal years, but a significant part is
structural, with demands for State services and caseloads in major areas of
the budget, such as corrections, welfare indigent health care, and public
schools, growing at a faster rate than the State economy and State
revenues. 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.
State general obligation bonds are currently rated "Aa" by Moody's, "AA" by
Fitch, and " A+ " by S&P. There can be no assurance that
such ratings will be maintained in the future. All three of these ratings
were reduced from "AAA" levels since late 1991.
OBLIGATIONS OF OTHER ISSUERS
STATE ASSISTANCE. Property tax revenues received by local governments
declined more than 50% following passage of Proposition 13. Subsequently,
the California 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 $31.2 billion in FY
1992-93 (about 75% of General Fund expenditures) and has been
budgeted at $29.0 billion for FY 1993-94, 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
Act s caused local governments to transfer $ 3.8 billion of
property tax revenues to school districts, representing reversal of
the post-Proposition 13 "bailout" aid.
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. At
least one rural county (Butte) publicly announced that it might enter
bankruptcy proceedings in August 1990, although such plans were put off
after the Governor approved legislation to provide additional funds for the
county. Other counties have also indicated that their budgetary condition
is extremely grave. 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.
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 California 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 California entities.
OTHER CONSIDERATIONS. The repayment of Industrial Development Securities
secured by real property may be affected by California 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 California 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 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 California tax allocation
bonds after the enactment of Articles XIIIA and XIIIB, and only resumed
such ratings on a selective basis.
Proposition 87, approved by California 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 California is within an active geologic region subject
to major seismic activity. Any California municipal obligation in the funds
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.
On January 17, 1994 , a major earthquake with an estimated magnitude of
6.8 on the Richter scale struck the Los Angeles area, causing significant
property damage to public and private facilities, presently estimated at
$15-20 billion. While over $9.5 billion of federal aid, and a projected
$1.9 billion of State aid, plus insurance proceeds, will reimburse much of
that loss, there will be some ultimate loss of wealth and income in the
region, in addition to costs of the disruption caused by the event. These
uninsured losses are estimated to have only a small effect on the overall
state economy, with a drop of up to 0.5 percent in personal income growth.
Short-term economic projections are generally neutral, as the infusion of
aid will restore billions of dollars to the local economy within a few
months. Although the earthquake will hinder recovery from the recession in
Southern California, already hard-hit, its long-term impact is not expected
to be material in the context of the overall wealth of the region. Almost
five years after the event, there are few remaining effects of the 1989
Loma Prieta earthquake in Northern California (which, however, has caused
less severe damage than the Northridge earthquake).
Because of the complex nature of Articles XIIIA and XIIIB 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 Article XIIIA or Article XIIIB, or the
outcome of any pending litigation with respect to those provisions on
California obligations in the funds 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 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 FACTORS AFFECTING PUERTO RICO
The following only highlights some of the more significant financial trends
and problems affecting the Commonwealth of Puerto Rico (the "Commonwealth"
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
Statement of Additional Information. 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 fact which
would render such information materially inaccurate.
The economy of Puerto Rico is closely linked with that of the United
States, and in fiscal 1992 trade with the United States accounted for
approximately 88% of Puerto Rico's exports and approximately 68% of its
imports. In this regard, in fiscal 1992 Puerto Rico experienced a
$2,940,300,000 positive adjusted merchandise trade balance. Since fiscal
1987 personal income, both aggregate and per capita, have increased
consistently each fiscal year. In fiscal 1992 aggregate personal income was
$22.7 billion and personal per capita income was $6,360. Gross domestic
product in fiscal 1989, 1990, 1991 and 1992 was $19,954,000, $21,619,000,
22,857,000, and $23,620,000, respectively. For fiscal 1993, an increase in
gross domestic product of 2.9% over fiscal 1992 is forecasted. However,
actual growth in the Puerto Rico economy will depend on several factors
including the condition of the U.S. economy, the exchange rate for the U.S.
dollar, the price stability of oil imports, and interest rates. Due to
these factors there is no assurance that the economy of Puerto Rico will
continue to grow.
Puerto Rico has made marked improvements in fighting unemployment.
Unemployment is at a low level compared to that of the late 1970s, but it
still remains significantly above the United States average. Despite long
term improvements the unemployment rate rose from 15.2% to 16.5% from
fiscal 1991 to fiscal 1992. At the end of the third quarter of fiscal 1993
the unemployment rate in Puerto Rico stood at 17.3%. There is a possibility
that the unemployment rate will continue to increase.
The economy of Puerto Rico has undergone a transformation in the later half
of this century from one centered around agriculture, to one dominated by
the manufacturing and service industries. Manufacturing is the cornerstone
of Puerto Rico's economy, accounting for $13.2 billion or 38.7% of gross
domestic product in 1992. However, manufacturing has experienced a basic
change over the years as a result of the influx of higher wage, high
technology industries such as the pharmaceutical industry, electronics,
computers, micro-processors, scientific instruments and high technology
machinery. The service sector, which includes wholesale and retail trade,
finance and real estate, ranks second in its contribution to gross domestic
product and is the sector that employs the greatest number of people. In
fiscal 1992, the service sector generated $13.0 billion in gross domestic
product or 38.3% of the total and employed over 449,000 workers providing
46% of total employment. The government sector and tourism also contribute
to the island economy each accounting for $3.7 billion and $1.5 billion in
fiscal 1992, respectively.
Much of the development of the manufacturing sector of the economy of
Puerto Rico is attributable to federal and Commonwealth tax incentives,
most notably section 936 of the Internal Revenue Code of 1986, as amended
("Section 936") and the Commonwealth's Industrial Incentives Program.
Section 936 currently grants U.S. corporations that meet certain criteria
and elect its application a credit against their U.S. corporate income tax
on the portion of the tax attributable to (i) income derived from the
active conduct of a trade or business in Puerto Rico ("active income"), or
from the sale or exchange of substantially all the assets used in the
active conduct of such trade or business, and (ii) qualified possession
source investment income ("passive income"). The Industrial Incentives
Program, through the 1987 Industrial Incentives Act, grants corporations
engaged in certain qualified activities a fixed 90% exemption from
Commonwealth income and property taxes and a 60% exemption from municipal
license taxes.
On August 16, 1993, President Clinton signed a bill amending Section 936.
Under the amendments, U.S. corporations with operations in Puerto Rico can
elect to receive a federal income tax credit equal to: 40% of the credit
currently available, phased in over a five year period, starting at 60% of
the current credit, or a credit based on investment and wages. The
investment and wage credit would equal the sum of (i) 60% of qualified
compensation to employees, (ii) a specified percentage of depreciation
deductions with respect to tangible property located in Puerto Rico, and
(iii) a portion of income taxed paid to Puerto Rico, up to a 9% effective
tax rate, subject to certain requirements. It is not possible to determine
at this time whether the reductions in tax incentives for operations in
Puerto Rico will have a significant impact on the economy of Puerto Rico or
the time period in which such impact would arise.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the funds by FMR (either directly or through affiliated
sub-advisers) pursuant to authority contained in the management contracts.
FMR is also responsible for the placement of transaction orders for other
investment companies and accounts for which it or its affiliates act as
investment adviser. Securities purchased and sold by the money market fund
generally will be traded on a net basis (i.e., without commission). In
selecting broker-dealers, subject to applicable limitations of the federal
securities laws, FMR will consider 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; and the reasonableness of any commissions.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other 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; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). FMR maintains a listing of broker-dealers who
provide such services on a regular basis. However, as many transactions on
behalf of the money market fund are placed with broker-dealers (including
broker-dealers on the list) without regard to the furnishing of such
services, it is not possible to estimate the proportion of such
transactions directed to such broker-dealers solely because such services
were provided. The selection of such broker-dealers is generally made by
FMR (to the extent possible consistent with execution considerations) based
upon the quality of research and execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the funds may be useful to FMR in rendering investment management
services to the funds 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 the funds. 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.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive 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 the
funds and 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 services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the funds or shares of other Fidelity
funds to the extent permitted by law. FMR may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI), a subsidiary of FMR Corp., if the commissions are fair,
reasonable, and comparable to commissions charged by non-affiliated,
qualified brokerage firms for similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, except if certain
requirements are satisfied. Pursuant to such requirements, the Board of
Trustees has authorized FBSI to execute fund portfolio transactions on
national securities exchanges in accordance with approved procedures and
applicable SEC rules.
For fiscal periods March 1, 1993 to February 28, 1994 and May 1, 1992 to
February 28, 1993 and the fiscal year ended April 30, 1992, the money
market and high yield funds paid no brokerage commissions. For fiscal
period December 30, 1993 (commencement of operations) to February 28, 1994,
the intermediate fund paid no brokerage commissions.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of
each fund and review the commissions paid by each fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to each fund.
For the fiscal periods March 1, 1993 to February 28, 1994 and May 1, 1992
to February 28, 1993, the high yield fund's turnover rates were 54 %
and 26% (annualized), respectively. For the fiscal period December
30, 1993 (commencement of operations) to February 28, 1994, the
intermediate fund's turnover rate was 0 % (annualized).
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 the funds are substantially the same
as those of other funds managed by FMR, investment decisions for each fund
are made independently from those of other funds managed by FMR or 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 accounts.
Simultaneous transactions are inevitable when several funds are managed by
the same investment adviser, particularly when the same security is
suitable for the investment objective of more than one fund.
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 a formula considered by the officers of the funds involved to be
equitable to each fund. In some cases, this system could have a detrimental
effect on the price or value of the security as far as the funds are
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 Board of Trustees that the
desirability of retaining FMR as investment adviser to the funds outweighs
any disadvantages that may be said to exist from exposure to simultaneous
transactions.
VALUATION OF PORTFOLIO SECURITIES
INTERMEDIATE AND HIGH YIELD FUNDS. Valuations of portfolio securities
furnished by the pricing service employed by the funds are based upon a
computerized matrix system or appraisals by the pricing service, in each
case in reliance upon information concerning market transactions and
quotations from recognized municipal securities dealers. The methods used
by the pricing service and the quality of valuations so established are
reviewed by officers of the fund and FSC under the general supervision of
the Board of Trustees. There are a number of pricing services available,
and the Trustees, or officers acting on behalf of the Trustees, on the
basis of on-going evaluation of these services, may use other pricing
services or discontinue the use of any pricing service in whole or in part.
MONEY MARKET FUND. The money market fund values its investments on the
basis of amortized cost. This technique involves valuing an instrument at
its cost as adjusted for amortization of premium or accretion of discount
rather than its value based on current market quotations or appropriate
substitutes which reflect current market conditions. The amortized cost
value of an instrument may be higher or lower than the price the fund would
receive if it sold the instrument.
Valuing the money market fund's instruments on the basis of amortized cost
and use of the term "money market fund" are permitted by Rule 2a-7 under
the 1940 Act. The fund must adhere to certain conditions under Rule
2a-7 .
The Board of Trustees oversees FMR's adherence to SEC rules concerning
money market funds, and has established procedures designed to stabilize
the fund's NAV at $1.00. At such intervals as they deem appropriate, the
Trustees consider the extent to which NAV calculated by using market
valuations would deviate from $1.00 per share. If the Trustees believe that
a deviation from the 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.
During periods of declining interest rates, the money market fund's yield
based on amortized cost may be higher than the yield based on market
valuations. Under these circumstances, a shareholder in the fund would be
able to obtain a somewhat higher yield than would result if the fund
utilized market valuations to determine its NAV. The converse would apply
in a period of rising interest rates.
PERFORMANCE
The funds may 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 intermediate and high yield funds'
share price, and all of the funds' yields and total returns fluctuate in
response to market conditions and other factors. The value of the
intermediate and high yield funds' shares when redeemed may be more or less
than their original cost.
YIELD CALCULATIONS. To compute the MONEY MARKET FUND'S yield for a period,
the net change in value of a hypothetical account containing one share
(exclusive of capital gains) 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. The money market fund also may calculate
a compound effective yield by compounding the base period return over a
one-year period. In addition to the current yield, the money market fund
may quote yields in advertising based on any historical seven-day period.
For the INTERMEDIATE AND HIGH YIELD FUNDS , yields used in
advertising are computed by dividing a fund's interest income for a given
30-day or one-month period, net of expenses, by the average number of
shares entitled to receive dividends during the period, dividing this
figure by the fund's net asset value per share at the end of the period,
and annualizing the result (assuming compounding of income) in order to
arrive at an annual percentage rate. Yields do not reflect the high yield
fund's .50% redemption fee, which applies to shares held less than 180
days. Income is calculated for purposes of the intermediate and high yield
funds' 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 the discount
to daily income. Capital gains and losses generally are excluded from the
calculation.
Income calculated for the purposes of calculating the intermediate and high
yield funds' yields 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, a 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.
A fund's tax-equivalent yield is the rate an investor would have to earn
from a fully taxable investment after 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 stated federal or combined federal and state tax
rate. (If only a portion of the 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 the
effective yield under federal and state income tax laws for 1994. They show
the approximate yield a taxable security must provide at various income
brackets to produce after-tax yields equivalent to those of tax-exempt
obligations yielding from 2.0% to 7.0%. Of course, no assurance can be
given that the funds will achieve any specific tax-exempt yield. While each
fund invests principally in obligations whose interest is exempt from
federal and state income tax, other income received by the funds may be
taxable. The funds do not take into account local taxes, if any, payable on
fund distributions.
1994 TAX RATES AND TAX EQUIVALENT YIELDS
Combined California
Single Return Joint Return Federal and Federal Effective
Taxable Income* Taxable Income* Tax Bracket Tax Bracket
$ 22,751 - 24,228 $ 38,001 - 48,456 28.% 32.32%
24,229 - 30,620 48,457 - 61,240 28 33.76
30,621 - 55,100 61,241 - 91,850 28 34.70
55,101 - 106,190 91,851 - 140,000 31 37.42
106,191 - 115,000 -- - -- 31 37.90
-- - -- 140,001 - 212,380 36 41.95
115,001 - 212,380 212,381 - 250,000 36 42.40
212,381 - 250,000 -- - -- 36 43.04
-- - -- 250,001 - 424,760 39.6 45.64
250,001 + 424,761 + 39.6 46.24

*Net taxable income after all exemptions, adjustments, and deductions.
These are based on rates currently applicable in 1994 and assume one
exemption for single filers and two exemptions for married couples files
jointly.
Having determined your effective tax bracket above, use the following table
to determine the tax-equivalent yield for a given tax-free yield.
If your effective combined federal and state personal tax rate in
1994 is:

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
32.32% 33.76% 34.70% 37.42% 37.90% 41.95% 42.40% 43.04% 45.64% 46.24%

</TABLE>

Then your tax-equivalent yield is:
Tax-Free
Yield

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2% 2.96% 3.02% 3.06% 3.20% 3.22% 3.45% 3.47% 3.51% 3.68% 3.72%

3% 4.43% 4.53% 4.59% 4.79% 4.83% 5.17% 5.21% 5.27% 5.52% 5.58%

4% 5.91% 6.04% 6.13% 6.39% 6.44% 6.89% 6.94% 7.02% 7.36% 7.44%

5% 7.39% 7.55% 7.66% 7.99% 8.05% 8.61% 8.68% 8.78% 9.20% 9.30%

6% 8.87% 9.06% 9.19% 9.59% 9.66% 10.34% 10.42% 10.53% 11.04% 11.16%

7% 10.34% 10.57% 10.72% 11.19% 11.27% 12.06% 12.15% 12.29% 12.88% 13.02%

8% 11.82% 12.08% 12.25% 12.78% 12.88% 13.78% 13.89% 14.04% 14.72% 14.88%

</TABLE>

The fund may invest a portion of its assets in obligations that are subject
to state or federal income taxes. When the fund invests in these
obligations, its tax-equivalent yields will be lower. In the table above,
tax-equivalent yields are calculated assuming investments are 100%
federally and state tax-free.
The California income tax rates are those in effect for 1993 , which
will be the same in 1994 except that California law requires that
the brackets be adjusted annually for inflation using 100% of the
California Consumer Price Index through June of the tax year. As of the
date of this Statement of Additional Information, the California Franchise
Tax Board had not published the 1994 inflation adjusted tax
brackets. Each fund may invest a portion of its assets in obligations that
are subject to state or federal income taxes. When a fund invests in these
obligations, its tax-equivalent yields will be lower. In the table above,
tax-equivalent yields are calculated assuming investments are 100%
federally and state tax-free.
Yield information may be useful in reviewing the funds' performance and in
providing a basis for comparison with other investment alternatives.
However, each 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 the respective investment companies they have
chosen to consider.
Investors should recognize that in periods of declining interest rates the
intermediate and high yield funds' yields 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 the fund's current yields. In periods of rising interest rates,
the opposite can be expected to occur.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of a fund's returns, including the effect of reinvesting dividends
and capital gain distributions (if any), and any change in the fund's net
asset value per share (NAV) over the period. Average annual total 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 cumulative total return of 100%
over ten years would produce an average annual return of 7.18%, which is
the steady annual rate that would equal 100% growth on a compounded basis
in ten years. While average annual returns 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 annual total returns represent averaged figures as opposed to
the actual year-to-year performance of the fund.
In addition to average annual returns, a fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
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. Total returns 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 total return. An example of this type of
illustration is given below. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration, and may omit or include the effects of each fund's $5.00
account closeout fee and, with respect to the high yield fund, the .50%
redemption fee, or other charges for special transactions or services.
Omitting fees and charges will cause the funds' total return figures to be
higher.
NET ASSET VALUE. Charts and graphs using the intermediate or high yield
funds' net asset values, adjusted net asset values, and benchmark indices
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.
HISTORICAL FUND RESULTS. The following charts show the funds' yields,
tax-equivalent yields, and total returns for periods ended February 28,
1994 , and for each fund, include the effect of the $5.00 account
closeout fee :
MONEY MARKET FUND
Tax Equivalent Average Cumulative
7-day Yield 7-day Yield Annual Total Returns Total Returns
One Life One Life
Year (dagger) of Fund (dagger)* Year (dagger) of Fund (dagger)*
2.44% (dagger) 4.28% (dagger) 2.45% 3.97% 2.45% 18.04%
(dagger) If FMR had not reimbursed certain fund expenses during the period,
the yield and tax-equivalent yield would have been 2.14% and 3.76%,
respectively, and total returns would have been lower.
* From November 27, 1989 (commencement of operations).
INTERMEDIATE FUND
Tax Equivalent Average Cumulative
30-day Yield 30-day Yield Annual Total Returns Total Returns
One Life One Life
Year (dagger)* of Fund (dagger)* Year (dagger)* of Fund (dagger)*
4.83% (dagger) 8.48% (dagger) N/A N/A N/A -1.72%
(dagger) If FMR had not reimbursed certain fund expenses during the period,
the yield and tax-equivalent yield would have been
4.28 % and 7.51 %, respectively, and total returns would have
been lower.
* From December 30, 1993 (commencement of operations).
HIGH YIELD FUND
Tax Equivalent Average Cumulative
30-day Yield 30-day Yield Annual Total Returns Total Returns
One Life One Life
Year (dagger) of Fund (dagger)* Year (dagger) of Fund (dagger)*
5.26% 9.23% 5.62% 9.84% 5.62% 49.13%
(dagger) The high yield fund's total returns do not include the effect of
the fund's .50% redemption fee applicable to shares held less than 180
days. If FMR had not reimbursed certain fund expenses during the period,
total returns would have been lower.
* From November 27, 1989 (commencement of operations).
The tax-equivalent yields are based on the highest 1994 combined federal
and state income tax bracket of 43.04 %, and reflect that none of the
funds' investments on February 28, 1994 were subject to state taxes.
MONEY MARKET FUND. During the period from November 27, 1989 (commencement
of operations) to February 28, 1994, a hypothetical $10,000 investment in
the money market fund would have grown to $11,804 , assuming all
distributions were reinvested. This was a period of widely fluctuating
interest rates and should not be considered representative of the dividend
income or capital gain or loss that could be realized from an investment in
the fund today.
SPARTAN CALIFORNIA MUNICIPAL MONEY MARKET PORTFOLIO INDICES

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of

Period Initial Reinvested Reinvested Cost

Ended $10,000 Dividend Capital Gain Total of

February 28 Investment Distributions Distributions Value S&P DJIA Living**
500

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1994 $10,000 $1,804 $0 $11,804 $15,528 $16,43 $ 11,652
6

1993 $10,000 1,522 0 11,522 14,334 14,062 11,366

1992 $10,000 1,206 0 11,206 12,952 13,234 11,009

1991 $10,000 738 0 10,738 11,164 11,306 10,707

1990* $10,000 154 0 10,154 9,738 9,919 10,167

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of

Period Initial Reinvested Reinvested Cost

Ended $10,000 Dividend Capital Gain Total of

February 28 Investment Distributions Distributions Value S& DJIA Living**
P 500

1994 $9,760 $69 $0 $9,829 $9,972 $10,14 $ 10,062
5

</TABLE>

(dagger) From December 30, 1993 (commencement of operations).
** From month-end closest to initial investment date.
EXPLANATORY NOTES: With an initial investment of $10,000 made on December
30, 1993, the net amount invested in fund shares was $10,000. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends for the period covered (their cash value at the time
they were reinvested), amounted to $10,070 . If distributions had not
been reinvested, the amount of distributions earned from the fund over time
would have been smaller, and the cash payments (dividends) for the period
would have come to $ 70 . There were no capital gain distributions
during this period. If FMR had not reimbursed certain fund expenses during
the periods shown above, the fund's returns would have been lower. The
figures in the table do not include the effect of the fund's $5 account
closeout fee.
HIGH YIELD FUND. During the period from November 27, 1989 (commencement of
operations) to February 28, 1994, a hypothetical $10,000 investment in the
high yield fund would have grown to $14,914 , assuming all
distributions were reinvested. This was a period of widely fluctuating
interest rates and bond prices and should not be considered representative
of the dividend income or capital gain or loss that could be realized from
an investment in the fund today.
SPARTAN CALIFORNIA MUNICIPAL HIGH YIELD PORTFOLIO INDICES

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of

Period Initial Reinvested Reinvested Cost

Ended $10,000 Dividend Capital Gain Total of

February 28 Investment Distributions Distributions Value S& DJIA Living**
P 500

1994 $10,930 $3,398 $586 $14,914 $15,528 $16,43 $ 11,652
6

1993 11,330 2,699 90 14,120 14,334 14,062 11,366

1992 10,530 1,742 0 12,272 12,952 13,234 11,009

1991 10,180 949 0 11,129 11,164 11,306 10,707

1990* 9, 990 182 0 10,172 9,738 9,919 10,167

</TABLE>

* From November 27, 1989 (commencement of operations).
** From month-end closest to initial investment date.
EXPLANATORY NOTES: With an initial investment of $10,000 made on November
27, 1989, the net amount invested in fund shares was $10,000. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested distributions for the period covered (their cash value at the
time they were reinvested), amounted to $13,873 . If the
distributions had not been reinvested, the amount of distributions earned
from the fund over time would have been smaller, and cash payments for the
period would have amounted to $2,844 for dividends and $460
for capital gains. If FMR had not reimbursed certain fund expenses, the
fund's total returns would have been lower. The figures in the table do not
include the effect of the fund's $5 account closeout fee or the .50%
redemption fee applicable to shares held less than 180 days.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
A fund may be compared in advertising to Certificates of Deposit (CDs)
or other investments issued by banks. Mutual funds differ from bank
investments in several respects. For example, a fund may offer greater
liquidity or higher potential returns than CDs, and the fund does not
guarantee your principal or your return.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. For
example, Fidelity's FundMatchsm Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
asset allocation funds and other Fidelity funds, products, and services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
A fund may compare its performance or the performance of securities in
which it may invest to averages published by IBC USA (Publications), Inc.
of Ashland, Massachusetts. These averages assume reinvestment of
distributions. The IBC/Donoghue's MONEY FUND AVERAGES(TRADEMARK)/All
Tax-Free, which is reported in the MONEY FUND REPORT(REGISTERED TRADEMARK),
covers over 335 tax-free money market funds. The Bond Fund Report
AverageS(TRADEMARK)/All Tax-Free, which is reported in the BOND FUND
REPORT(TRADEMARK), covers over 355 tax-free bond funds. When evaluating
comparisons to money market funds, investors should consider the relevant
differences in investment objectives and policies. Specifically, money
market funds invest in short-term, high-quality instruments and seek to
maintain a stable $1.00 share price. The intermediate and high yield funds,
however, invest in longer-term instruments and their share prices change
daily in response to a variety of factors.
The intermediate and high yield funds may compare and contrast in
advertising the relative advantages of investing in a mutual fund versus an
individual municipal bond. Unlike tax-free mutual funds, individual
municipal bonds offer a stated rate of interest and, if held to maturity,
repayment of principal. Although some individual municipal bonds might
offer a higher return, they do not offer the reduced risk of a mutual fund
that invests in many different securities. The initial investment
requirements and sales charges of many tax-free mutual funds are lower than
the purchase cost of individual municipal bonds, which are generally issued
in $5,000 denominations and are subject to direct brokerage costs.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. Fidelity may also reprint, and use
as advertising and sales literature, articles from Fidelity Focus, a
quarterly magazine provided free of charge to Fidelity fund shareholders.
A fund may present its fund number, Quotron(TRADEMARK) number, and CUSIP
number, and discuss or quote its current portfolio manager.
The intermediate and high yield funds may advertise examples of the effects
of periodic investment plans, including the principle of dollar cost
averaging. In such a program, an investor invests a fixed dollar amount in
a fund at periodic intervals, thereby purchasing fewer shares when prices
are high and more shares when prices are low. While such a strategy does
not assure a profit or guard against loss in a declining market, the
investor's average cost per share can be lower than if fixed numbers of
shares are purchased at the same intervals. In evaluating such a plan,
investors should consider their ability to continue purchasing shares
during periods of low price levels.
As of February 28, 1994 FMR advised 41 tax-free funds or portfolios
with a total value of over $30 billion. According to the Investment
Company Institute, over the past ten years, assets in tax-exempt money
market funds increased from $23.8 billion in 1984 to approximately $94.8
billion at the end of 1992. The money market fund may reference the growth
and variety of money market mutual funds and the adviser's innovation and
participation in the industry.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Each fund is open for business and its net asset value per share (NAV) is
calculated each day the New York Stock Exchange (NYSE) is open for trading.
The NYSE has designated the following holiday closings for 1994:
Washington's Birthday (observed), Good Friday, Memorial Day (observed),
Independence Day (observed), Labor Day, Thanksgiving Day, and Christmas Day
(observed). Although FMR expects the same holiday schedule, with the
addition of New Years Day, to be observed in the future, the NYSE may
modify its holiday schedule at any time.
FSC normally determines each fund's NAV as of the close 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 SEC. To the
extent that portfolio securities are traded in other markets on days when
the NYSE is closed, a fund's NAV may be affected on days when investors do
not have access to the fund to purchase or redeem shares.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing each fund's NAV. Shareholders receiving securities or other
property on redemption may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the 1940 Act, each fund is required to give
shareholders at least 60 days' notice prior to terminating or modifying its
exchange privilege. Under the Rule, the 60-day notification requirement may
be waived if (i) the only effect of a modification would be to reduce or
eliminate an administrative fee, redemption fee, or deferred sales charge
ordinarily payable at the time of an exchange, or (ii) the fund suspends
the redemption of the shares to be exchanged as permitted under the 1940
Act or by the SEC, or the fund to be acquired suspends the sale of its
shares because it is unable to invest amounts effectively in accordance
with its investment objective and policies.
In the Prospectus, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. To the extent that each fund's income is derived from federally
tax-exempt interest, the daily dividends declared by each fund are also
federally tax-exempt. The funds will send each shareholder a notice in
January describing the tax status of dividends and capital gain
distributions (if any) for the prior year.
Shareholders are required to report tax-exempt income on their federal tax
returns. Shareholders who earn other income, such as social security
benefits, may be subject to federal income tax on up to one half of such
benefits to the extent that their income, including tax-exempt income,
exceeds certain base amounts.
The funds purchase municipal obligations based on opinions of bond counsel
regarding the federal income tax status of the obligations. These opinions
generally will be based upon covenants by the issuers regarding continuing
compliance with federal tax requirements. If the issuer of an obligation
fails to comply with its covenants at any time, interest on the obligation
could become federally taxable retroactive to the date the obligation was
issued.
As a result of the Tax Reform Act of 1986, interest on certain "private
activity" securities (referred to as "qualified bonds" in the Internal
Revenue Code) is subject to the federal alternative minimum tax (AMT),
although the interest continues to be excludable from gross income for
other purposes. Interest from private activity securities will be
considered tax-exempt for purposes of the money market and high yield
funds' policies of investing so that at least 80% of their income
distributions are free from federal income tax. Interest from private
activity securities will be considered tax-exempt for purposes of the
intermediate fund's policies of investing so that at least 80% of its
assets are in municipal securities whose interest is free from federal
income tax. Interest from private activity securities is a tax preference
item for the purposes of determining whether a taxpayer is subject to the
AMT and the amount of AMT tax to be paid, if any. Private activity
securities issued after August 7, 1986 to benefit a private or industrial
user or to finance a private facility are affected by this rule.
Corporate investors should note that an adjustment for purposes of the
corporate AMT is 75% of the amount by which adjusted current earnings
(which includes tax-exempt interest) exceeds alternative minimum taxable
income of the corporation.
If a shareholder receives an exempt-interest dividend and sells shares at a
loss after holding them for a period of six months or less, the loss will
be disallowed to the extent of the amount of exempt-interest dividend.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the
intermediate and high yield funds on the sale of securities and distributed
to shareholders are federally taxable as long-term capital gains,
regardless of the length of time that shareholders have held their shares.
If a shareholder receives a long-term capital gain distribution on shares
of the fund and such shares are held six months or less and are sold at a
loss, the portion of the loss equal to the amount of the long-term capital
gain distribution will be considered a long-term loss for tax purposes.
A portion of the gain on bonds purchased at a discount after April 30, 1993
and short-term capital gains distributed by the funds are federally taxable
to shareholders as dividends, not as capital gains. Distributions from
short-term capital gains do not qualify for the dividends-received
deduction. Dividend distributions resulting from a recharacterization of
gain from the sale of bonds purchased at a discount after April 30, 1993
are not considered income for purposes of the money market and high yield
funds' policies of investing so that at least 80% of their income
distributions are free from federal income tax or the intermediate fund's
policies of investing so that at least 80% of its assets are in municipal
securities whose interest is free from federal income tax . The money
market fund may distribute any net realized short-term capital gains once a
year or more often as necessary to maintain its net asset value at $1.00 a
share.
TAX STATUS OF THE FUNDS. Each fund has qualified and intends to continue to
qualify each year as a "regulated investment company" for tax purposes so
that it will not be liable for federal tax on income and capital gains
distributed to shareholders. In order to qualify as a regulated investment
company and avoid being subject to federal income or excise taxes at the
fund level, each fund intends to distribute all of its net investment
income and net realized capital gains (if any) within each calendar year as
well as on a fiscal year basis. Each fund intends to comply with other tax
rules applicable to regulated investment companies, including a requirement
that capital gains from the sale of securities held less than three months
constitute less than 30% of the fund's gross income for each fiscal year.
Gains from some futures contracts and options are included in this 30%
calculation, which may limit the intermediate and high yield funds'
investments in such instruments. Each fund is treated as a separate entity
from the other funds of Fidelity California Municipal Trust and Fidelity
California Municipal Trust II for tax purposes.
As of February 28, 1994, the money market fund had approximate ly $29,000
in aggregate capital loss carryover available until February 28,
2001 to offset future capital gain s.
To the extent that capital loss carryovers are used to offset any future
capital gains, it is unlikely that the gains so offset will be distributed
to shareholders, since any such distributions may be taxable to
shareholders as ordinary income.
CALIFORNIA TAX MATTERS. As long as a fund continues to qualify as a
regulated investment company under the federal Internal Revenue Code, it
will not incur California income or franchise tax liability on income and
capital gains distributed to shareholders. California personal income tax
law provides that exempt-interest dividends paid by a regulated investment
company, or series thereof, from interest on obligations which are exempt
from California personal income tax are excludable from gross income. For a
fund to qualify to pay exempt-interest dividends under California law, at
least 50 percent of the value of its assets must consist of such
obligations at the close of each quarter of its fiscal year. For purposes
of California personal income taxation, distributions to individual
shareholders derived from interest on other types of obligations and
short-term capital gains will be taxed as dividends, and long-term capital
gain distributions will be taxed as long-term capital gains. California has
an alternative minimum tax similar to the federal AMT described above.
However, the California AMT does not include interest from private activity
municipal obligations as an item of tax preference. Interest on
indebtedness incurred or continued by a shareholder in connection with the
purchase of shares of a fund will not be deductible for California personal
income tax purposes.
FUTURES AND OPTIONS TRANSACTIONS (intermediate and high yield funds). A
special "marked-to-market" system governs the taxation of "section 1256
contracts." These contracts generally include options on debt securities,
futures contracts, and options on interest rate futures contracts. The
intermediate and high yield funds may invest in section 1256 contracts. In
general, gain or loss on section 1256 contracts will be taken into account
for tax purposes when actually realized (by a closing transaction, by
exercise, by taking delivery, or by other termination). In addition, any
section 1256 contracts held at the end of a taxable year will be treated as
sold at fair market value (marked-to-market) and the resulting gain or loss
will be recognized for tax purposes. Provided that a section 1256 contract
is not part of a "mixed" straddle which the fund elects to exclude from the
"marked-to-market" rules, both the realized and the unrealized taxable
year-end gain or loss positions (including premiums on options that expire)
will be treated as 60% long-term and 40% short-term capital gain or loss,
regardless of the period of time a particular position is actually held by
the fund.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting the funds and their shareholders,
and no attempt has been made to discuss individual tax consequences.
Investors should consult their tax advisers to determine whether the funds
are suitable to their particular tax situations.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions as follows: FSC, which is the
transfer and shareholder servicing agent for certain of the funds advised
by FMR; Fidelity Investments Institutional Operations Company, which
performs shareholder servicing functions for certain institutional
customers; and Fidelity Investments Retail Marketing Company, which
provides marketing services to various companies within the Fidelity
organization.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. Fidelity Management & Research (U.K.) Inc.
(FMR U.K.) and Fidelity Management & Research (Far East) Inc. (FMR Far
East), both wholly owned subsidiaries of FMR formed in 1986, supply
investment research, and may supply portfolio management services, to FMR
in connection with certain funds advised by FMR. Analysts employed by FMR,
FMR U.K., and FMR Far East research and visit thousands of domestic and
foreign companies each year. FMR Texas, a wholly owned subsidiary of FMR
formed in 1989, supplies portfolio management and research services in
connection with certain money market funds advised by FMR.
TRUSTEES AND OFFICERS
The Trustees and executive officers of each t rust are listed below.
Except as indicated, each individual has held the office shown or other
offices in the same company for the last five years. Trustees and
officers elected or appointed to the Fidelity California Municipal Trust II
prior to the money market fund's conversion from a series of Fidelity
California Municipal Trust served Fidelity California Municipal Trust in
identical capacities. All persons named as Trustees also serve in
similar capacities for other funds advised by FMR. Unless otherwise noted,
the business address of each Trustee and officer is 82 Devonshire Street,
Boston, Massachusetts 02109, which is also the address of FMR. Those
Trustees who are "interested persons" (as defined in the 1940 Act) by
virtue of their affiliation with either trust or FMR, are indicated by an
asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief Executive
Officer and a Director of FMR Corp.; Chairman of the Board and of the
Executive Committee of FMR; a Director of FMR, Chairman and a Director of
FMR Texas Inc. (1989), Fidelity Management & Research (U.K.) Inc., and
Fidelity Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of FMR;
and President and a Director of FMR Texas Inc. (1989), Fidelity Management
& Research (U.K.) Inc. and Fidelity Management & Research (Far
East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is a
consultant to Western Mining Corporation (1994). Prior to February 1994, he
was president of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Until March 1990, Mr. Cox was President and Chief
Operating Officer of Union Pacific Resources Company (exploration and
production). He is a Director of Bonneville Pacific Corporation
(independent power, 1989), Sanifill Corporation (non-hazardous waste,
1993), and CH2M Hill Companies (engineering). In addition, he served on the
Board of Directors of the Norton Company (manufacturer of industrial
devices, 1983-1990) and continues to serve on the Board of Directors of the
Texas State Chamber of Commerce, and is a member of advisory boards of
Texas A&M University and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, P.O. Box 264, Bridgehampton, NY, Trustee (1992). Prior
to her retirement in September 1991, Mrs. Davis was the Senior Vice
President of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990),
and previously served as a Director of Hallmark Cards, Inc. (1985-1991) and
Nabisco Brands, Inc. In addition, she serves as a Director of the New York
City Chapter of the National Multiple Sclerosis Society, and is a member of
the Advisory Council of the International Executive Service Corps. and the
President's Advisory Council of The University of Vermont School of
Business Administration.
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road. Chagrin Falls, OH, Trustee (1990).
Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive
Officer of LTV Steel Company. Prior to May 1990, he was Director of
National City Corporation (a bank holding company) and National City Bank
of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation (1988), Hyster-Yale Materials Handling, Inc. (1989), and
RPM, Inc. (manufacturer of chemical products, 1990). In addition, he serves
as a Trustee of First Union Real Estate Investments; Chairman of the Board
of Trustees and a member of the Executive Committee of the Cleveland Clinic
Foundation, a Trustee and a member of the Executive Committee of University
School (Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the Financial
Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance), and Valuation Research Corp. (appraisal and
valuations, 1993). In addition, he serves as Vice Chairman of the Board of
Directors of The National Arts Stabilization Fund and Vice Chairman of the
Board of Trustees of the Greenwich Hospital Association.
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior to
his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991 - 1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction). In addition, he serves as a Trustee of
Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield
(1989) and Society for the Preservation of New England Antiquities, and as
an Overseer of the Museum of Fine Arts of Boston (1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989), is
Chairman of G.M. Management Group (strategic advisory services). Prior to
his retirement in July 1988, he was Chairman and Chief Executive Officer of
Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), and York International Corp. (air conditioning and
refrigeration, 1989), Commercial Intertech Corp. (water treatment
equipment, 1992), and Associated Estates Realty Corporation (a real estate
investment trust, 1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee. Prior
to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company. He
is a Director of Allegheny Power Systems, Inc. (electric utility), General
Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer). He is also
a Trustee of Rensselaer Polytechnic Institute and of Corporate Property
Investors and a member of the Advisory Boards of Butler Capital Corporation
Funds and Warburg, Pincus Partnership Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State United
Way (1993) and is a member of the University of Alabama President's Cabinet
(1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee, is President of The Wales Group, Inc. (management and financial
advisory services). Prior to retiring in 1987, Mr. Williams served as
Chairman of the Board of First Wachovia Corporation (bank holding company),
and Chairman and Chief Executive Officer of The First National Bank of
Atlanta and First Atlanta Corporation (bank holding company). He is
currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software), Georgia Power Company (electric utility), Gerber Alley
& Associates, Inc. (computer software, 1987), National Life Insurance
Company of Vermont, American Software, Inc. (1989), and AppleSouth, Inc.
(restaurants, 1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and
Senior Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
ARTHUR S. LORING, Secretary, is Senior Vice President and General Counsel
of FMR, Vice President - Legal of FMR Corp., and Vice President and Clerk
of FDC.
THOMAS D. MAHER, Assistant Vice President (1990), is Assistant Vice
President of Fidelity's money market funds and Vice President of FMR Texas,
Inc. (1990).
DEBORAH F. WATSON, is a Vice President of the money market fund (1992) and
other funds advised by FMR and an employee of FMR.
Under a retirement program that became effective on November 1, 1989,
Trustees, upon reaching age 72, become eligible to participate in a defined
benefit retirement program under which they receive payments during their
lifetime from the funds, based on their basic trustee fees and length of
service. Currently, Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham, and David L. Yunich participate in the program.
As of February 28, 1994, the Trustees and officers owned in the aggregate,
less than 1 % of the outstanding shares of each fund. Also, as of
that date, William Ward Bock, 2111 Calle Guaymas, La Jolle, CA, was known
by the fund to own of record or beneficially approximately 6.49% of Spartan
California Intermediate Municipal Portfolio.
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of the fund in accordance with its investment objective,
policies, and limitations. FMR also provides the funds with all necessary
office facilities and personnel for servicing the funds' investments, and
compensates all officers of the trust, all Trustees who are "interested
persons" of the trust or of FMR, and all personnel of the trust or FMR
performing services relating to research, statistical, and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provide the management and administrative services necessary
for the operation of each fund. These services include providing facilities
for maintaining the fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with the fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining the fund's
records and the registration of the fund's shares under federal and state
law; developing management and shareholder services for the fund; and
furnishing reports, evaluations, and analyses on a variety of subjects to
the Board of Trustees.
FMR is responsible for the payment of all expenses of the funds with
certain exceptions. Specific expenses payable by FMR include, without
limitation, the fees and expenses of registering and qualifying the funds
and their shares for distribution under federal and state securities laws;
expenses of typesetting for printing the Prospectus and Statement of
Additional Information; custodian charges; audit and legal expenses;
insurance expense; association membership dues; and the expenses of mailing
reports to shareholders, shareholder meetings, and proxy solicitations. FMR
also provides for transfer agent and dividend disbursing services and
portfolio and general accounting record maintenance through FSC.
FMR pays all other expenses of each fund with the following exceptions:
fees and expenses of all Trustees who are not "interested persons" of the
trust or FMR (the non-interested Trustees); interest on borrowings; taxes;
brokerage commissions (if any); and such nonrecurring expenses as may
arise, including costs of any litigation to which the funds may be a party,
and any obligation they may have to indemnify the officers and Trustees
with respect to litigation.
FMR is the high yield fund's manager pursuant to a management contract
dated October 19, 1989, which was approved by shareholders on October 3,
1990, and is the manager of the money market fund pursuant to a management
contract dated April 18, 1994. The April 18, 1994 contract was approved by
Fidelity California Municipal Trust as sole shareholder of the money market
fund on April 18, 1994, pursuant to an Agreement and Plan of Conversion
approved by public shareholders of the money market fund on February 16,
1994. (The terms of the money market fund's current contract with FMR
duplicate those of its previous contract, which was dated October 19,
1989.) FMR is the intermediate fund's manager pursuant to a management
contract dated December 17, 1993, which was approved by FMR as sole
shareholder of the fund on December 20, 1993.
For the services of FMR under the contracts, the money market fund, the
intermediate fund, and the high yield fund pay FMR a monthly management fee
at the annual rate of .50%, .55%, and .55%, respectively, of average net
assets throughout the month. FMR reduces its fee by an amount equal to the
fees and expenses of the non-interested Trustees.
FMR may, from time to time, voluntarily reimburse all or a portion of a
fund's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses).
The following tables outline expense limitations (as a percentage of the
funds' average net assets) in effect from the money market and high yield
funds' commencement of operations (November 27, 1989) and the intermediate
fund's commencement of operations (December 30, 1993) to the date of this
Statement of Additional Information. The tables also show the amount of
management fees incurred under each contract and the amounts reimbursed by
FMR for each fiscal period from commencement of operations to the date of
this Statement of Additional Information.
MONEY MARKET FUND:
From To Expense Limitation
November 27, 1989 August 31, 1990 0%
September 1, 1990 October 31, 1990 .05%
November 1, 1990 July 11, 1991 .10%
July 12, 1991 September 18, 1991 0%
September 19, 1991 October 31, 1991 .05%
November 1, 1991 November 30, 1991 .10%
December 1, 1991 April 30, 1992 .15%
May 1, 1992 May 31, 1992 .20%
June 1, 1992 July 31, 1992 .25%
August 1, 1992 August 31, 1992 .30%
September 1, 1992 October 31, 1992 .33%
November 1, 1992 April 30, 1993 .35%
May 1, 1993 August 31, 1993 .15%
September 1, 1993 February 28, 1994 .20%
March 1, 1994 -- .25%
Management Fees Amount of
Period* Before Reimbursement Reimbursements
1994 $4,714,027 $2,767,561
1993 $3,699,983 $1,439,000
1992 $4,201,297 $3,370,581
* 1992 figures are for the fiscal year ended April 30. The 1993 fiscal
period was from May 1, 1992 to February 28, 1993. The 1994 figures are for
March 1, 1993 to February 28, 1994.
INTERMEDIATE FUND:
From To Expense Limitation
December 30, 1993 -- 0%
Management Fees Amount of
Period* Before Reimbursement Reimbursements
1994 $7,123 $7,123
* 1994 figures are from December 30, 1993 (commencement of operations).
HIGH YIELD FUND:
From To Expense Limitation
November 27, 1989 July 31, 1990 0%
August 1, 1990 September 30, 1990 .10%
October 1, 1990 January 31, 1991 .20%
February 1, 1991 February 28, 1991 .30%
March 1, 1991 March 31, 1992 .35%
April 1, 1992 March 10, 1993 .40%
March 11, 1993 May 31, 1993 .45%
June 1, 1993 July 31, 1993 .50%
Management Fees Amount of
Period* Before Reimbursement Reimbursements
1994 $ 3,287,940 $202,856
1993 $2,353,081 $642,664
1992 $2,175,298 $772,525
* 1992 figures are for the fiscal year ended April 30. The 1993 fiscal
period was from May 1, 1992 to February 28, 1993. The 1994 figures are for
March 1, 1993 to February 28, 1994.
If FMR were not temporarily reimbursing these expenses, the money market
and intermediate funds' yields would be lower and their total operating
expenses would be .50% and .55%, respectively, of each fund's average net
assets.
To defray shareholder service costs, FMR or its affiliates also collect the
funds' $5.00 exchange fees, $5.00 account closeout fees, $5.00 fees for
wire purchases and redemptions, and the money market and intermediate
funds' $2.00 checkwriting charge. Shareholder transaction fees and charges
collected for the fiscal periods ended February 28, 1994 and 1993 and
fiscal 1992 are indicated in the tables below.
MONEY MARKET FUND:
Exchange Fees Account Closeout Fees Wire Fees Checkwriting Charge
1994 $15,035 $2,506 $1,970 $14,645
1993 $27,185 $2,589 $5,400 $26,557
1992 $33,135 $2,415 $7,650 $35,468
INTERMEDIATE FUND:
Exchange Fees Account Closeout Fees Wire Fees Checkwriting Charge
1994* $85 $10 $0 $0
* From December 30, 1993 (commencement of operations).
HIGH YIELD FUND:
Exchange Fees Account Closeout Fees Wire Fees
1994 $9,400 $1,520 $805
1993 $10,705 $1,280 $1,670
1992 $11,965 $1,194 $1,900
SUB-ADVISER. With respect to the money market fund, FMR has entered into a
sub-advisory agreement with FMR Texas pursuant to which FMR Texas has
primary responsibility for providing portfolio investment management
services to the fund. Under the sub-advisory agreement, FMR pays FMR Texas
a fee equal to 50% of the management fee payable to FMR under its current
management contract with the fund. The fees paid to FMR Texas are not
reduced by any voluntary or mandatory expense reimbursements that may be in
effect from time to time. For the fiscal periods March 1, 1993 to February
28, 1994 and May 1, 1992 to February 28, 1993 and the fiscal year May 1,
1991 to April 30, 1992, FMR paid FMR Texas fees of $ 2,357,014 ,
$1,849,992, and $2,100,648, respectively, under the sub-advisory agreement.
DISTRIBUTION AND SERVICE PLANS
Each fund has adopted a distribution and service plan (the plan) under Rule
12b-1 of the Investment Company Act of 1940 (the Rule). The Rule provides
in substance that a mutual fund may not engage directly or indirectly in
financing any activity that is primarily intended to result in the sale of
shares of the fund except pursuant to a plan adopted by the fund under the
Rule. The Board of Trustees has adopted the plan to allow the fund and FMR
to incur certain expenses that might be considered to constitute indirect
payment by the fund of distribution expenses. Under the plans, if the
payment by the fund to FMR of management fees should be deemed to be
indirect financing by the fund of the distribution of its shares, such
payment is authorized by the plan.
The plans specifically recognize that FMR, either directly or through FDC,
may use its management fee revenues, past profits, or other resources,
without limitation, to pay promotional and administrative expenses in
connection with the offer and sale of shares of the funds. In addition, the
plans provide that FMR may use its resources, including its management fee
revenues, to make payments to third parties that provide assistance in
selling the funds' shares, or to third parties, including banks, that
render shareholder support services. The Trustees have not authorized third
party payments to date.
Each fund's plan has been approved by the Trustees. As required by the
Rule, the Trustees carefully considered all pertinent factors relating to
implementation of the plan prior to their approval, and have determined
that there is a reasonable likelihood that the plans will benefit the funds
and their shareholders. In particular, the Trustees noted that the plans do
not authorize payments by the funds other than those made to FMR under its
management contracts with the funds. To the extent that the plans give FMR
and FDC greater flexibility in connection with the distribution of shares
of the funds, additional sales of the funds' shares may result.
Additionally, certain shareholder support services may be provided more
effectively under the plans by local entities with whom shareholders have
other relationships. The plan for the money market fund was approved by
Fidelity California Municipal Trust on April 18, 1994, as the then sole
shareholder of the money market fund, pursuant to an Agreement and Plan of
Conversion approved by public shareholders of the money market fund on
February 16, 1993. The high yield fund's plan was approved by shareholders
on October 3, 1990. The intermediate fund's plan was approved by FMR as the
sole shareholder of the fund on December 20, 1993.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services,
and servicing and recordkeeping functions. FDC intends to engage banks only
to perform such functions. However, changes in federal or state statutes
and regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the funds
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. The funds may execute portfolio
transactions with and purchase securities issued by depository institutions
that receive payments under the Plans. No preference will be shown in the
selection of investments for the instruments of such depository
institutions. In addition, state securities laws on this issue may differ
from the interpretations of federal law expressed herein, and banks and
other financial institutions may be required to register as dealers
pursuant to state law.
INTEREST OF FMR AFFILIATES
United Missouri is each fund's custodian and transfer agent. United
Missouri has entered into sub-contracts with FSC, an affiliate of FMR,
under the terms of which FSC performs the processing activities associated
with providing transfer agent and shareholder servicing functions for each
fund. United Missouri has additional sub-contracts with FSC pursuant to
which FSC performs the calculations necessary to determine each fund's net
asset value per share and dividends and maintains the funds' accounting
records. United Missouri is entitled to reimbursement for fees paid to FSC
from FMR, who must bear these costs pursuant to its management contract
with each fund.
Each fund has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer
registered under the Securities Exchange Act of 1934 and is a member of the
National Association of Securities Dealers, Inc. The distribution agreement
calls for FDC to use all reasonable efforts, consistent with its other
business, to secure purchasers for shares of each fund, which are
continuously offered at net asset value. Promotional and administrative
expenses in connection with the offer and sale of shares are paid by FMR.
DESCRIPTION OF THE TRUSTS
TRUSTS' ORGANIZATION. Fidelity California Municipal Trust (the
Massachusetts trust) is an open-end management investment company organized
as a Massachusetts business trust on April 28, 1983. On February 27, 1984
the trust's name was changed from Fidelity California Tax-Exempt Money
Market Trust to Fidelity California Tax-Free Fund and on November 1, 1989
its name was changed to Fidelity California Municipal Trust. Currently,
there are four funds of the Massachusetts trust: Fidelity California
Tax-Free Insured Portfolio, Fidelity California Tax-Free High Yield
Portfolio, Spartan California Intermediate Municipal Portfolio, and Spartan
California Municipal High Yield Portfolio. The Massachusetts trust's
Declaration of Trust permits the Trustees to create additional funds.
Fidelity California Municipal Trust II (the Delaware trust) is an open-end
management investment company organized as a Delaware Business trust on
June 20, 1991. Currently, there two funds of the Delaware trust: Fidelity
California Tax-Free Money Market Fund and Spartan California Municipal
Money Market Portfolio. Fidelity California Tax-Free Money Market Fund and
Spartan California Municipal Money Market Portfolio entered into agreements
to acquire all of the assets of the Fidelity California Tax-Free Money
Market Portfolio and Spartan California Municipal Money Market Portfolio,
series of the Fidelity California Municipal Trust, on December 30, 1991 and
April 18, 1994, respectively. The Delaware trust's Trust Instrument permits
the Trustees to create additional funds.
In the event that FMR ceases to be investment adviser to a trust or any of
its funds, the right of the trust or the fund to use the identifying names
"Fidelity" and "Spartan" may be withdrawn. There is a remote possibility
that one fund might become liable for any misstatement in its prospectus or
statement of additional information about another fund.
The assets of each trust received for the issue or sale of shares of each
of its funds and all income, earnings, profits and proceeds thereof,
subject only to the rights of creditors, are especially allocated to such
fund, and constitute the underlying assets of such fund. The underlying
assets of each fund are segregated on the books of account, and are to be
charged with the liabilities with respect to such fund and with a share of
the general liabilities of their respective trusts. Expenses with respect
to each trust are to be allocated in proportion to the asset value of their
respective funds, except where allocations of direct expense can otherwise
be fairly made. The officers of the trusts, subject to the general
supervision of the Board of Trustees, have the power to determine which
expenses are allocable to a given fund, or which are general or allocable
to all of the funds of a certain trust. In the event of the dissolution or
liquidation of a trust, shareholders of each fund of that trust are
entitled to receive as a class the underlying assets of such fund available
for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY - MASSACHUSETTS TRUST. The Massachusetts
trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust may, under
certain circumstances, be held personally liable for the obligations of the
trust. The Declaration of Trust provides that the Massachusetts Trust shall
not have any claim against shareholders except for the payment of the
purchase price of shares and requires that each agreement, obligation, or
instrument entered into or executed by the trust or its Trustees shall
include a provision limiting the obligations created thereby to the
Massachusetts Trust and its assets. The Declaration of Trust provides for
indemnification out of each fund's property of any shareholders held
personally liable for the obligations of the fund. The Declaration of Trust
also provides that each fund shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the fund
and satisfy any judgment thereon. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to
circumstances in which the fund itself would be unable to meet its
obligations. FMR believes that, in view of the above, the risk of personal
liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects Trustees
against any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of their office.
SHAREHOLDER AND TRUSTEE LIABILITY - DELAWARE TRUST. The Delaware Trust is a
business trust organized under Delaware law. Delaware law provides that
shareholders shall be entitled to the same limitations of personal
liability extended to stockholders of private corporations for profit. The
courts of some states, however, may decline to apply Delaware law on this
point. The Trust Instrument contains an express disclaimer of shareholder
liability for the debts, liabilities, obligations, and expenses of the
Delaware Trust and requires that a disclaimer be given in each contract
entered into or executed by the Delaware Trust or its Trustees. The Trust
Instrument provides for indemnification out of each fund's property of any
shareholder or former shareholder held personally liable for the
obligations of the fund. The Trust Instrument also provides that each fund
shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the fund and satisfy any judgment
thereon. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which
Delaware law does not apply, no contractual limitation of liability was in
effect, and the fund is unable to meet its obligations. FMR believes that,
in view of the above, the risk of personal liability to shareholders is
extremely remote.
The Trust Instrument further provides that the Trustees shall not be
personally liable to any person other than the Delaware Trust or its
shareholders; moreover, the Trustees shall not be liable for any conduct
whatsoever, provided that Trustees are not protected against any liability
to which they would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties involved
in the conduct of their office.
VOTING RIGHTS - BOTH TRUSTS. Each fund's capital consists of shares of
beneficial interest. As a shareholder of the Massachusetts trust, you
receive one vote for each dollar value of net asset value per share you
own. The shares have no preemptive or conversion rights; voting and
dividend rights, the right of redemption, and the privilege of exchange are
described in the Prospectus. Shares are fully paid and nonassessable,
except as set forth under the respective "Shareholder and Trustee
Liability" headings above. Shareholders representing 10% or more of a trust
or one of its funds may, as set forth in the Declaration of Trust or Trust
Instrument, call meetings of the trust or fund for any purpose related to
the trust or fund, as the case may be, including, in the case of a meeting
of an entire trust, the purpose on voting on removal of one or more
Trustees.
A trust or any fund may be terminated upon the sale of its assets to (or,
in the case of the Delaware Trust and its funds, merger with) another
open-end management investment company or series thereof, or upon
liquidation and distribution of its assets. Generally such terminations
must be approved by vote of the holders of a majority of the outstanding
shares of the trust or the fund (for the Delaware Trust), or by a vote of
the holders of a majority of the trust or fund, as determined by the
current value of each shareholder's investment in the trust or fund (for
the Massachusetts Trust); however, the Trustees of the Delaware Trust may,
without prior shareholder approval, change the form of the organization of
the Delaware Trust by merger, consolidation, or incorporation. If not so
terminated or reorganized, the trusts and their funds will continue
indefinitely.
Under the Trust Instrument, the Trustees may, without shareholder vote,
cause the Delaware Trust to merge or consolidate into one or more trusts,
partnerships, or corporations, so long as the surviving entity is an
open-end management investment company that will succeed to or assume the
Delaware Trust registration statement, or cause the Delaware Trust to be
incorporated under Delaware law.
CUSTODIAN. United Missouri Bank, N.A., 1010 Grand Avenue, Kansas City,
Missouri 64106, is custodian of the assets of the funds. The custodian is
responsible for the safekeeping of the funds' assets and the appointment of
subcustodian banks and clearing agencies. The custodian takes no part in
determining the investment policies of the funds or in deciding which
securities are purchased or sold by the funds. The funds may, however,
invest in obligations of the custodian and may purchase securities from or
sell securities to the custodian.
FMR, its officers and directors, its affiliated companies, and the trusts'
Trustees may from time to time have transactions with various banks,
including banks serving as custodian for certain of the funds advised by
FMR. Transactions that have occurred to date include mortgages and personal
and general business loans. In the judgment of FMR, the terms and
conditions of those transactions were not influenced by existing or
potential custodial or other fund relationships.
AUDITOR. Price Waterhouse, 160 Federal Street, Boston, Massachusetts serves
as each trust's independent accountant. The auditor examines financial
statements for the funds and provides other audit, tax, and related
services.
FINANCIAL STATEMENTS
The funds' Annual Report for the fiscal year ended February 28, 1994
is a separate report supplied with this Statement of Additional Information
and is incorporated herein by reference.
APPENDIX
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value of
each investment by the number of days 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 the number of days to the announced
call date of the bonds.
The descriptions that follow are examples of eligible ratings for the
intermediate and high yield funds. The funds may, however, consider ratings
for other types of investments and the ratings assigned by other ratings
organizations when determining the eligibility of a particular investment.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S RATINGS OF STATE AND
MUNICIPAL NOTES:
Moody's ratings for state and municipal and other short-term obligations
will be designated Moody's Investment Grade (MIG, or VMIG for variable rate
obligations). This distinction is in recognition of the difference between
short-term credit risk and long-term credit risk. Factors affecting the
liquidity of the borrower and short-term cyclical elements are critical in
short-term ratings, while other factors of major importance in bond risk,
long-term secular trends for example, may be less important in the short
run. Symbols used will be as follows:
MIG-1/VMIG-1 - This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG-2/VMIG-2 - This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.
MIG-3/VMIG-3 - This designation denotes favorable quality, with all
security elements accounted for but there is lacking the undeniable
strength of the preceding grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to be less well
established.
MIG-4/VMIG-4 - This designation denotes adequate quality protection
commonly regarded as required of an investment security is present and,
although not distinctly or predominantly speculative, there is specific
risk.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S RATINGS OF STATE AND
MUNICIPAL NOTES:
SP-1 - Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be
given a plus (+) designation.
SP-2 - Satisfactory capacity to pay principal and interest.
SP-3 - Speculative capacity to pay principal and interest.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S MUNICIPAL BOND RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
AA - Bonds rated Aa are judged to be of high quality by all standards.
Together with Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long term risks appear somewhat larger than
in Aaa securities.
A - Bonds rated A possess many favorable investment attributes and are to
be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA - Bonds rated Baa are considered as medium grade obligations, i.e, they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both good and bad times in the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of a desirable investment.
Assurance of interest and principal payments of or maintenance of other
terms of the contract over any long period of time may be small.
CAA - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
Those bonds in the Aa, A, Baa, Ba, and B groups which Moody's believes
possess the strongest investment attributes are designated by the symbols
Aa1, A1, Baa1, Ba1, and B1.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S MUNICIPAL BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal
is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest-rated debt issues only in small
degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal.
The B rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.
The ratings from AA to CCC may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a)(1) Financial Statements for the Fidelity California Tax-Free Funds:
Fidelity California Municipal Money Market Portfolio, Fidelity California
Tax-Free Insured Portfolio, and Fidelity California Tax-Free High Yield
Portfolio for the fiscal year ended February 28, 1994 are incorporated by
reference into the funds' Statement of Additional Information and are filed
herein as Exhibit 24(a)(1).
(a)(2) Financial Statements for the Spartan California Municipal
Portfolios: Spartan California Municipal Money Market Portfolio, Spartan
California Intermediate Municipal Portfolio, and Spartan California
Municipal High Yield Portfolio for the fiscal year ended February 28, 1994
are incorporated by reference into the funds' Statement of Additional
Information and are filed herein as Exhibit 24(a)(2).
(b) Exhibits:
(1)(a) Trust Instrument dated June 20, 1991 is incorporated herein by
reference to Exhibit 1 to the initial Registration Statement on Form N-1A.
(2) By-laws of the Trust are incorporated herein by reference to Exhibit 2
to the initial Registration Statement on Form N-1A.
(3) Not applicable.
(4) Not applicable.
(5)(a) Management Contract dated December 30, 1991, between Fidelity
California Tax-Free Money Market Portfolio and Fidelity Management &
Research Company is incorporated herein by reference to Exhibit (5)(a) to
Post-Effective Amendment No. 7.
(b) Form of Management Contract between Spartan California Municipal Money
Market Portfolio and Fidelity Management & Research Company is filed
herein as exhibit 5(b).
(c) Sub-Advisory Agreement dated December 30, 1991 between FMR Texas Inc.
and Fidelity Management & Research Company on behalf of Fidelity
California Tax-Free Money Market Portfolio is incorporated herein by
reference to Exhibit (5)(b) to Post-Effective Amendment No. 7.
(d) Form of Sub-Advisory Agreement between FMR Texas Inc. and Fidelity
Management & Research Company on behalf of Spartan California Municipal
Money Market Portfolio is filed herein as Exhibit (5)(d).
(6)(a) Form of General Distribution Agreement between Fidelity California
Tax-Free Money Market Portfolio and Fidelity Distributors Corporation was
filed as Exhibit (6)(a) to Post Effective Amendment No. 2.
(b) Form of General Distribution Agreement between Spartan
California Municipal Money Market Portfolio and Fidelity Distributors
Corporation is filed herein as Exhibit 6(b).
(7) Retirement Plan for Non-Interested Person Trustees, Directors, or
General Partners effective November 1, 1989 is incorporated herein by
reference to Exhibit 7 to initial Registration Statement on Form N-1A.
(8)(a) Custodian Agreement dated October 17, 1991 between Fidelity
California Municipal Trust II and United Missouri Bank, N.A. is
incorporated herein by reference to Exhibit (8)(a) to Post-Effective
Amendment No. 7.
(9)(a) Transfer Agent Agreement between Fidelity California Municipal Trust
II and United Missouri Bank, N.A. is filed herein as Exhibit 9(a).
(b) Appointment of Sub-Transfer Agent and Schedule A for the Fidelity
California Tax-Free Money Market Portfolio is filed herein as Exhibit 9(b).
(c) Form of Service Agreement between Fidelity California Municipal
Trust II and United Missouri Bank, N.A. was filed as Exhibit (9)(c) to
Post-Effective Amendment No. 2.
(d) Form of Appointment of Sub-Servicing Agent and Schedules B and C
for the Fidelity California Tax-Free Money Market Portfolio was filed as
Exhibit (9)(d) to Post-Effective Amendment No. 2.
(e) Forms of Schedule A(transfer agent, Dividend and Distribution
Disbursing agent, and Shareholder Servicing Agent), Schedule B (pricing and
bookkeeping), and Schedule C (securities lending) relating to Spartan
California Municipal Money Market Portfolio are filed herein as Exhibit
9(e).
(10) Not applicable.
(11) Consent of Price Waterhouse is filed herein as Exhibit 11.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15)(a) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
California Tax-Free Money Market Portfolio is incorporated herein by
reference to Exhibit (15)(a) to Post-Effective Amendment No. 2.
(15)(b) Distribution and Service Plan pursuant to Rule 12b-1 for Spartan
California Municipal Money Market Portfolio is filed herein as Exhibit
(15)(b).
(16)(a) Schedule for the computation of performance quotations for Fidelity
California Tax-Free Money Market Portfolio is incorporated herein by
reference to Exhibit (16) to Post-Effective Amendment No. 2.
(b) Schedule for the computation of performance quotations regarding
adjusted net asset value is incorporated herein by reference to Exhibit
(16)(b) to Post-Effective Amendment No. 7.
Item 25. Persons Controlled by or under Common Control with Registrant
The Registrant's Board of Trustees is the same as the boards of other
funds managed by Fidelity Management & Research Company. In addition,
the officers of these funds are substantially identical. Nonetheless, the
Registrant takes the position that it is not under common control with
these other funds since the power residing in the respective boards and
officers arises as the result of an official position with the respective
funds.
Item 26. Number of Holders of Securities
February 28, 1994
Title of Class: Shares of Beneficial Interest
Name of Series Number of Record Holders
Fidelity California Tax-Free
Money Market Portfolio 25,742
Spartan California Municipal
Money Market Portfolio 9,648
Item 27. Indemnification
Pursuant to Del. Code Ann. title 12 (sub section) 3817, a Delaware
business trust may provide in its governing instrument for the
indemnification of its officers and trustees from and against any and all
claims and demands whatsoever. Article X, Section 10.02 of the Declaration
of Trust states that the Registrant shall indemnify any present trustee or
officer to the fullest extent permitted by law against liability, and all
expenses reasonably incurred by him or her in connection with any claim,
action, suit or proceeding in which he or she is involved by virtue of his
or her service as a trustee, officer, or both, and against any amount
incurred in settlement thereof. Indemnification will not be provided to a
person adjudged by a court or other adjudicatory body to be liable to the
Registrant or its shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of his or her duties (collectively,
"disabling conduct"), or not to have acted in good faith in the reasonable
belief that his or her action was in the best interest of the Registrant.
In the event of a settlement, no indemnification may be provided unless
there has been a determination, as specified in the Declaration of Trust,
that the officer or trustee did not engage in disabling conduct.
Pursuant to Section 11 of the Distribution Agreement, the Registrant
agrees to indemnify and hold harmless the Distributor and each of its
directors and officers and each person, if any, who controls the
Distributor within the meaning of Section 15 of the 1933 Act against any
loss, liability, claim, damages or expense arising by reason of any person
acquiring any shares, based upon the ground that the registration
statement, Prospectus, Statement of Additional Information, shareholder
reports or other information filed or made public by the Registrant
included a materially misleading statement or omission. However, the
Registrant does not agree to indemnify the Distributor or hold it harmless
to the extent that the statement or omission was made in reliance upon, and
in conformity with, information furnished to the Registrant by or on behalf
of the Distributor. The Registrant does not agree to indemnify the parties
against any liability to which they would be subject by reason of their own
disabling conduct.
Pursuant to the agreement by which Fidelity Service Company ("Service") is
appointed sub-transfer agent, the Transfer Agent agrees to indemnify
Service for its losses, claims, damages, liabilities and expenses to the
extent the Transfer Agent is entitled to and receives indemnification from
the Registrant for the same events. Under the Transfer Agency Agreement,
the Registrant agrees to indemnify and hold the Transfer Agent harmless
against any losses, claims, damages, liabilities, or expenses resulting
from:
(1) any claim, demand, action or suit brought by any person other than the
Registrant, which names the Transfer Agent and/or the Registrant as a party
and is not based on and does not result from the Transfer Agent's willful
misfeasance, bad faith, negligence or reckless disregard of its duties, and
arises out of or in connection with the Transfer Agent's performance under
the Transfer Agency Agreement; or
(2) any claim, demand, action or suit (except to the extent contributed to
by the Transfer Agent's willful misfeasance, bad faith, negligence or
reckless disregard of its duties) which results from the negligence of the
Registrant, or from the Transfer Agent's acting upon any instruction(s)
reasonably believed by it to have been executed or communicated by any
person duly authorized by the Registrant, or as a result of the Transfer
Agent's acting in reliance upon advice reasonably believed by the Transfer
Agent to have been given by counsel for the Registrant, or as a result of
the Transfer Agent's acting in reliance upon any instrument or stock
certificate reasonably believed by it to have been genuine and signed,
countersigned or executed by the proper person.

Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held, during the
past two fiscal years, the following positions of a substantial nature.

<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Executive Committee of FMR; President
and Chief Executive Officer of FMR Corp.; Chairman of
the Board and a Director of FMR, FMR Corp., FMR Texas
Inc., Fidelity Management & Research (U.K.) Inc. and
Fidelity Management & Research (Far East) Inc.;
President and Trustee of funds advised by FMR;

J. Gary Burkhead President of FMR; Managing Director of FMR Corp.;
President and a Director of FMR Texas Inc., Fidelity
Management & Research (U.K.) Inc. and Fidelity
Management & Research (Far East) Inc.; Senior Vice
President and Trustee of funds advised by FMR.

Peter S. Lynch Vice Chairman of FMR (1992).

David Breazzano Vice President of FMR (1993) and of a fund advised by
FMR.

Stephan Campbell Vice President of FMR (1993).

Rufus C. Cushman, Jr. Vice President of FMR and of funds advised by FMR;
Corporate Preferred Group Leader.

Will Danoff Vice President of FMR (1993) and of a fund advised by
FMR.

Scott DeSano Vice President of FMR (1993).

Penelope Dobkin Vice President of FMR and of a fund advised by FMR.

Larry Domash Vice President of FMR (1993).

George Domolky Vice President of FMR (1993) and of a fund advised by
FMR.

Charles F. Dornbush Senior Vice President of FMR; Chief Financial Officer of
the Fidelity funds; Treasurer of FMR Texas Inc., Fidelity
Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.

Robert K. Duby Vice President of FMR.

Margaret L. Eagle Vice President of FMR and of a fund advised by FMR.

Kathryn L. Eklund Vice President of FMR.

Richard B. Fentin Senior Vice President of FMR (1993) and of a fund advised
by FMR.

Daniel R. Frank Vice President of FMR and of funds advised by FMR.

Gary L. French Vice President of FMR and Treasurer of the funds advised
by FMR. Prior to assuming the position as Treasurer he
was Senior Vice President, Fund Accounting - Fidelity
Accounting & Custody Services Co.

Michael S. Gray Vice President of FMR and of funds advised by FMR.

Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.

William J. Hayes Senior Vice President of FMR; Income/Growth Group
Leader and International Group Leader.

Robert Haber Vice President of FMR and of funds advised by FMR.

Daniel Harmetz Vice President of FMR and of a fund advised by FMR.

Ellen S. Heller Vice President of FMR.

</TABLE>

John Hickling Vice President of FMR (1993) and of funds advised by
FMR.

Robert F. Hill Vice President of FMR; and Director of Technical
Research.

Stephan Jonas Vice President of FMR (1993).

David B. Jones Vice President of FMR (1993).

Steven Kaye Vice President of FMR (1993) and of a fund advised by
FMR.

Frank Knox Vice President of FMR (1993).

Robert A. Lawrence Senior Vice President of FMR (1993); and High Income
Group Leader.

Alan Leifer Vice President of FMR and of a fund advised by FMR.

Harris Leviton Vice President of FMR (1993) and of a fund advised by
FMR.

Bradford E. Lewis Vice President of FMR and of funds advised by FMR.

Robert H. Morrison Vice President of FMR and Director of Equity Trading.

David Murphy Vice President of FMR and of funds advised by FMR.

Jacques Perold Vice President of FMR.

Brian Posner Vice President of FMR (1993) and of a fund advised by
FMR.

Anne Punzak Vice President of FMR and of funds advised by FMR.

Richard A. Spillane Vice President of FMR and of funds advised by FMR; and
Director of Equity Research.

Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised
by FMR.

Thomas Steffanci Senior Vice President of FMR (1993); and Fixed-Income
Division Head.

Gary L. Swayze Vice President of FMR and of funds advised by FMR; and
Tax-Free Fixed-Income Group Leader.

Donald Taylor Vice President of FMR (1993) and of funds advised by
FMR.

Beth F. Terrana Senior Vice President of FMR (1993) and of funds advised
by FMR.

Joel Tillinghast Vice President of FMR (1993) and of a fund advised by
FMR.

Robert Tucket Vice President of FMR (1993).

George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR; and Growth Group Leader.

Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund advised
by FMR.

Guy E. Wickwire Vice President of FMR and of a fund advised by FMR.

Arthur S. Loring Senior Vice President (1993), Clerk and General Counsel of
FMR; Vice President, Legal of FMR Corp.; and Secretary
of funds advised by FMR.

</TABLE>

(2) FMR TEXAS INC. (FMR Texas)
FMR Texas provides investment advisory services to Fidelity Management
& Research Company. The directors and officers of the Sub-Adviser have
held the following positions of a substantial nature during the past two
fiscal years.

<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR Texas; Chairman of the
Executive Committee of FMR; President and Chief
Executive Officer of FMR Corp.; Chairman of the Board
and a Director of FMR, FMR Corp., Fidelity
Management & Research (Far East) Inc. and
Fidelity Management & Research (U.K.) Inc.;
President and Trustee of funds advised by FMR.

J. Gary Burkhead President and Director of FMR Texas; President of FMR;
Managing Director of FMR Corp.; President and a
Director of Fidelity Management & Research (Far
East) Inc. and Fidelity Management & Research
(U.K.) Inc.; Senior Vice President and Trustee of funds
advised by FMR.

Fred L. Henning Jr. Senior Vice President of FMR Texas; Money Market
Group Leader.

Leland Barron Vice President of FMR Texas and of funds advised by
FMR.

Thomas D. Maher Vice President of FMR Texas.

Burnell R. Stehman Vice President of FMR Texas and of funds advised by
FMR.

John J. Todd Vice President of FMR Texas and of funds advised by
FMR.

Sarah H. Zenoble Vice President of FMR Texas and of funds advised by
FMR.

Charles F. Dornbush Treasurer of FMR Texas; Treasurer of Fidelity
Management & Research (U.K.) Inc.; Treasurer of
Fidelity Management & Research (Far East) Inc.;
Senior Vice President and Chief Financial Officer of the
Fidelity funds.

David C. Weinstein Secretary of FMR Texas; Clerk of Fidelity Management
& Research (U.K.) Inc.; Clerk of Fidelity
Management & Research (Far East) Inc.

</TABLE>

Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR and the following other funds:
CrestFunds, Inc.
The Victory Funds
ARK Funds
(b)

Name and Principal Positions and Offices Positions and Offices

Business Address* With Underwriter With Registrant

Edward C. Johnson 3d Director Trustee and President

Nita B. Kincaid Director None

W. Humphrey Bogart Director None

Kurt A. Lange President and Treasurer None

William L. Adair Senior Vice President None

Thomas W. Littauer Senior Vice President None

Arthur S. Loring Vice President and Clerk Secretary

* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity
Service Co., 82 Devonshire Street, Boston, MA 02109, or the fund's
custodian United Missouri Bank, N.A., 1010 Grand Avenue, Kansas City, MO.

Item 31. Management Services
Not applicable.
Item 32. Undertakings
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for the effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment No. 9 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Boston and Massachusetts, on the 13th day of April 1994.
FIDELITY CALIFORNIA MUNICIPAL TRUST II
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
(Signature) (Title) (Date)

<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d(dagger) President and Trustee April 13, 1994

Edward C. Johnson 3d (Principal Executive Officer)

</TABLE>

/s/Gary L. French Treasurer April 13, 1994

Gary L. French

/s/J. Gary Burkhead Trustee April 13, 1994

J. Gary Burkhead

/s/Ralph F. Cox * Trustee April 13, 1994

Ralph F. Cox

/s/Phyllis Burke Davis * Trustee April 13, 1994

Phyllis Burke Davis

/s/Richard J. Flynn * Trustee April 13, 1994

Richard J. Flynn

/s/E. Bradley Jones * Trustee April 13, 1994

E. Bradley Jones

/s/Donald J. Kirk * Trustee April 13, 1994

Donald J. Kirk

/s/Peter S. Lynch * Trustee April 13, 1994

Peter S. Lynch

/s/Edward H. Malone * Trustee April 13, 1994

Edward H. Malone

/s/Marvin L. Mann_____* Trustee April 13, 1994

Marvin L. Mann

/s/Gerald C. McDonough* Trustee April 13, 1994

Gerald C. McDonough

/s/Thomas R. Williams * Trustee April 13, 1994

Thomas R. Williams

(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated October 20, 1993 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated October 20, 1993 and filed herewith.
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee or General Partner, as
the case may be, of the following investment companies:

<TABLE>
<CAPTION>
<S> <C>
Daily Money Fund Fidelity Institutional Tax-Exempt Cash Portfolios
Daily Tax-Exempt Money Fund Fidelity Institutional Investors Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust II
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Court Street Trust II Fidelity New York Municipal Trust II
Fidelity Hereford Street Trust Fidelity Phillips Street Trust
Fidelity Institutional Cash Portfolios Fidelity Union Street Trust II

</TABLE>

in addition to any other investment company for which Fidelity Management
& Research Company acts as investment adviser and for which the
undersigned individual serves as President and Board Member (collectively,
the "Funds"), hereby severally constitute and appoint J. Gary Burkhead, my
true and lawful attorney-in-fact, with full power of substitution, and with
full power to sign for me and in my name in the appropriate capacity any
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Pre-Effective Amendments or
Post-Effective Amendments to said Registration Statements on Form N-1A or
any successor thereto, any Registration Statements on Form N-14, and any
supplements or other instruments in connection therewith, and generally to
do all such things in my name and behalf in connection therewith as said
attorney-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and Investment Company Act of
1940, and all related requirements of the Securities and Exchange
Commission. I hereby ratify and confirm all that said attorneys-in-fact or
their substitutes may do or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d October 20, 1993

Edward C. Johnson 3d

POWER OF ATTORNEY
We, the undersigned Directors, Trustees or General Partners, as the case
may be, of the following investment companies:

</TABLE>

in addition to any other investment company for which Fidelity Management
& Research Company acts as investment adviser and for which the
undersigned individual serves as a Director, Trustee or General Partner
(collectively, the "Funds"), hereby severally constitute and appoint Arthur
J. Brown, Arthur C. Delibert, Robert C. Hacker, Richard M. Phillips, Dana
L. Platt and Stephanie Xupolos, each of them singly, my true and lawful
attorney-in-fact, with full power of substitution, and with full power to
each of them, to sign for me and my name in the appropriate capacities any
Registration Statements of the Funds on Form N-1A or any successor thereto,
any and all subsequent Pre-Effective Amendments or Post-Effective
Amendments to said Registration Statements on Form N-1A or any successor
thereto, any Registration Statements on Form N-14, and any supplements or
other instruments in connection therewith, and generally to do all such
things in my name and behalf in connection therewith as said
attorneys-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and Investment Company Act of
1940, and all related requirements of the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorney-in-fact
or their substitutes may do or cause to be done by virtue hereof.
WITNESS our hands on this twentieth day of October, 1993.
/s/Edward C. Johnson 3d /s/Donald J. Kirk

Edward C. Johnson 3d Donald J. Kirk

/s/J. Gary Burkhead /s/Peter S. Lynch

J. Gary Burkhead Peter S. Lynch

/s/Ralph F. Cox /s/Marvin L. Mann

Ralph F. Cox Marvin L. Mann

/s/Phyllis Burke Davis /s/Edward H. Malone

Phyllis Burke Davis Edward H. Malone

/s/Richard J. Flynn /s/Gerald C. McDonough

Richard J. Flynn Gerald C. McDonough

/s/E. Bradley Jones /s/Thomas R. Williams

E. Bradley Jones Thomas R. Williams

EXHIBIT (A)(1)

FIDELITY

(Registered trademark)
CALIFORNIA
TAX-FREE
FUNDS

ANNUAL REPORT
FEBRUARY 28, 1994
CONTENTS

PRESIDENT'S MESSAGE 3 NED JOHNSON ON MINIMIZING
TAXES

FIDELITY CALIFORNIA TAX-FREE
HIGH YIELD PORTFOLIO 4 PERFORMANCE

7 FUND TALK: THE MANAGER'S OVERVI
EW

10 INVESTMENT CHANGES

11 INVESTMENTS

24 FINANCIAL STATEMENTS

FIDELITY CALIFORNIA TAX-FREE
INSURED PORTFOLIO 28 PERFORMANCE

31 FUND TALK: THE MANAGER'S OVERVI
EW

34 INVESTMENT CHANGES

35 INVESTMENTS

45 FINANCIAL STATEMENTS

FIDELITY CALIFORNIA TAX-FREE
MONEY MARKET PORTFOLIO 49 PERFORMANCE

51 FUND TALK: THE MANAGER'S OVERVI
EW

53 INVESTMENT CHANGES

54 INVESTMENTS

63 FINANCIAL STATEMENTS

NOTES 67 FOOTNOTES TO THE FINANCIAL
STATEMENTS

REPORT OF INDEPENDENT
ACCOUNTANTS 71 THE AUDITOR'S OPINION

THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUNDS UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
PRESIDENT'S MESSAGE

DEAR SHAREHOLDER:
No one wants to pay more taxes than they have to. But a recent survey of
500 U.S. households, conducted by Fidelity and Yankelovich Partners, showed
that few people took steps to reduce their taxes under the new tax laws
that went into effect last year. In fact, many people were not completely
aware of the changes until they filed their 1993 tax returns.
Whether or not you're someone whose tax bill increased as a result of these
changes, it may make sense to consider ways to keep more of what you earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider adding to your tax-free investments, either municipal bonds
or municipal bond funds. Often these can provide higher after-tax yields
than comparable taxable investments. For example, if you're in the new 36%
federal income tax bracket and invest $10,000 in a taxable investment
yielding 7%, you'll pay $252 in federal taxes and receive $448 in income.
That same $10,000 invested in a tax-free bond fund yielding 5.5% would
allow you to keep $550 in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center. We look forward to
talking with you.
Best regards,
Edward C. Johnson 3d, Chairman
FIDELITY CALIFORNIA TAX-FREE HIGH YIELD PORTFOLIO

PERFORMANCE: THE BOTTOM LINE

There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells bonds
that have grown in value). You can also look at the fund's income. If
Fidelity had not reimbursed certain fund expenses during the periods shown,
the total returns, dividends and yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

California Tax-Free High Yield 5.41% 56.05% 144.91%

Lehman Brothers Municipal Bond Index 5.54% 59.02% n/a

Average California Tax-Exempt
Municipal Bond Fund 5.39% 54.72% n/a

Consumer Price Index 2.52% 20.64% 41.47%

CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, one year, five years, or since the fund started on July 7, 1984.
For example, if you invested $1,000 in a fund that had a 5% return over the
past year, you would end up with $1,050. You can compare these figures to
the performance of the Lehman Brothers Municipal Bond Index - a broad gauge
of the municipal bond market. To measure how the fund stacked up against
its peers, you can look at the average California tax-exempt municipal bond
fund, which reflects the performance of 75 California tax-exempt municipal
bond funds tracked by Lipper Analytical Services. Both benchmarks include
reinvested dividends and capital gains, if any. Comparing the fund's
performance to the consumer price index helps show how your fund did
compared to inflation. (The periods covered by the CPI numbers are the
closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

California Tax-Free High Yield 5.41% 9.31% 9.72%

Lehman Brothers Municipal Bond Index 5.54% 9.72% n/a

Average California Tax-Exempt
Municipal Bond Fund 5.39% 9.12% n/a

Consumer Price Index 2.52% 3.82% 3.65%

AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
07/31/84 10000.00 10000.00
08/31/84 10091.42 10224.30
09/30/84 9999.79 10155.59
10/31/84 10110.08 10283.05
11/30/84 10241.75 10434.41
12/31/84 10489.12 10629.95
01/31/85 10883.39 11243.62
02/28/85 10737.58 10963.09
03/31/85 10810.80 11057.70
04/30/85 11139.87 11462.41
05/31/85 11428.94 11860.39
06/30/85 11544.76 11984.81
07/31/85 11606.22 12008.30
08/31/85 11537.71 11924.48
09/30/85 11324.18 11804.88
10/31/85 11672.02 12209.43
11/30/85 11998.54 12647.38
12/31/85 12225.97 12758.55
01/31/86 12804.98 13510.03
02/28/86 13214.28 14045.84
03/31/86 13395.39 14050.33
04/30/86 13334.48 14061.01
05/31/86 13135.62 13832.10
06/30/86 13240.60 13964.06
07/31/86 13295.73 14048.82
08/31/86 13907.61 14677.78
09/30/86 13867.37 14714.62
10/31/86 14099.05 14968.75
11/30/86 14330.39 15265.28
12/31/86 14370.34 15223.14
01/31/87 14752.18 15681.51
02/28/87 14866.47 15758.67
03/31/87 14760.75 15591.62
04/30/87 13630.53 14809.24
05/31/87 13425.31 14735.78
06/30/87 13666.34 15168.43
07/31/87 13821.83 15323.14
08/31/87 13890.79 15357.62
09/30/87 13141.45 14791.38
10/31/87 13263.62 14843.75
11/30/87 13578.18 15231.32
12/31/87 13843.35 15452.32
01/31/88 14503.78 16002.73
02/29/88 14690.30 16171.88
03/31/88 14216.01 15983.48
04/30/88 14273.51 16104.96
05/31/88 14331.83 16058.41
06/30/88 14564.14 16293.35
07/31/88 14649.68 16399.58
08/31/88 14709.00 16414.01
09/30/88 15029.23 16711.10
10/31/88 15379.15 17006.06
11/30/88 15202.69 16850.28
12/31/88 15473.43 17022.66
01/31/89 15688.69 17374.69
02/28/89 15537.66 17176.44
03/31/89 15514.85 17135.39
04/30/89 15964.99 17542.18
05/31/89 16303.20 17906.54
06/30/89 16510.84 18149.71
07/31/89 16660.45 18396.72
08/31/89 16457.92 18216.62
09/30/89 16479.13 18161.97
10/31/89 16643.26 18383.55
11/30/89 16902.02 18705.26
12/31/89 16970.00 18858.64
01/31/90 16851.33 18770.01
02/28/90 17066.71 18937.06
03/31/90 17104.46 18942.74
04/30/90 16860.63 18806.35
05/31/90 17265.86 19216.33
06/30/90 17424.58 19385.43
07/31/90 17693.82 19670.40
08/31/90 17448.90 19385.18
09/30/90 17518.15 19396.81
10/31/90 17744.51 19747.89
11/30/90 18082.38 20144.83
12/31/90 18150.80 20233.46
01/31/91 18315.61 20504.59
02/28/91 18383.23 20682.98
03/31/91 18403.36 20691.25
04/30/91 18620.38 20966.45
05/31/91 18805.36 21153.05
06/30/91 18809.56 21131.90
07/31/91 19046.66 21389.71
08/31/91 19217.32 21672.05
09/30/91 19423.30 21953.79
10/31/91 19663.14 22151.37
11/30/91 19666.07 22213.39
12/31/91 19994.67 22690.98
01/31/92 20102.37 22743.17
02/29/92 20136.66 22749.99
03/31/92 20125.68 22759.09
04/30/92 20284.97 22961.65
05/31/92 20537.43 23232.60
06/30/92 20857.98 23622.91
07/31/92 21503.93 24331.59
08/31/92 21205.71 24093.14
09/30/92 21313.91 24249.75
10/31/92 20918.83 24012.10
11/30/92 21406.80 24441.92
12/31/92 21737.04 24691.22
01/31/93 21996.52 24977.64
02/28/93 23002.36 25881.83
03/31/93 22729.57 25607.49
04/30/93 22933.46 25866.12
05/31/93 23066.96 26010.97
06/30/93 23438.70 26445.36
07/31/93 23438.66 26479.73
08/31/93 24010.21 27030.51
09/30/93 24313.79 27338.66
10/31/93 24355.30 27390.60
11/30/93 24103.82 27149.57
12/31/93 24657.02 27722.42
01/31/94 24936.10 28038.46
02/28/94 24247.14 27312.26

$27,312
$24,247
'94
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
California Tax-Free High Yield Portfolio on July 31, 1984, shortly after
the fund started. As the chart shows, by February 28, 1994, the value of
your investment would have grown to $24,247 - a 142.47% increase on your
initial investment. For comparison, look at how the Lehman Brothers
Municipal Bond Index did over the same period. With dividends reinvested,
the same $10,000 would have grown to $27,312 - a 173.12% increase.

UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, move in the
opposite direction of interest
rates. In turn, the share price,
return, and yield of a fund
that invests in bonds will vary.
That means if you sell your
shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
INCOME
YEARS ENDED FEBRUARY 28, 1994 1993 1992 1991 1990

Income return 5.82% 6.89% 6.88% 7.00% 7.18%

Capital gain return 2.24% 0.00% 0.00% 0.00% 0.00%
Change in share price -2.65% 7.34% 2.66% 0.71% 2.66%
Total return 5.41% 14.23% 9.54% 7.71% 9.84%
INCOME returns, capital gain returns, and changes in share price are all
part of a bond fund's total return. An income return reflects the dividends
paid by the fund. A capital gain return reflects the amount paid by the
fund to shareholders based on the profits it has from selling bonds that
have grown in value. Both returns assume the dividends or gains are
reinvested. Changes in the fund's share price include changes in the prices
of the bonds owned by the fund.
DIVIDENDS AND YIELD
PERIODS ENDED FEBRUARY 28, 1994 PAST 30 PAST 6 PAST 1
DAYS MONTHS YEAR

Dividends per share n/a 35.64(cents) 71.93(cents)

Annualized dividend rate n/a 5.74% 5.79%

Annualized yield 4.99% n/a n/a

Tax-equivalent yield 8.76% n/a n/a

DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $12.52 over
the past six months and $12.43 over the past year, you can compare the
fund's income over these two periods. The 30-day annualized YIELD is a
standard formula for all funds based on the yields of the bonds in the
fund, averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It also
helps you compare funds from different companies on an equal basis. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the fund's tax-free yield, if you're in the 43.04%
combined effective 1994 federal and state tax bracket.
FIDELITY CALIFORNIA TAX-FREE HIGH YIELD PORTFOLIO

FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
Bond investments - including
tax-free issues - provided solid
returns for the 12 months ended
February 28, 1994, despite a
dramatic downturn in February.
Falling interest rates pushed up
bond prices steadily through
mid-October, when the yield on the
benchmark 30-year Treasury bond
reached a historic low of 5.79%. By
year-end, a strengthening economy
had fueled mild inflation fears. That
pushed up the yield on the 30-year
bond to 6.35% on December 31,
which forced investors to give back
some of their earlier profits. Inflation
jitters eased and bond yields
dropped in January. However,
when the Federal Reserve Bank
raised short-term interest rates in
an attempt to control inflation on
February 4, investors reacted
negatively. At the end of February,
the yield on the 30-year bonds was
6.66%, about 38 basis points
higher than at the beginning of the
month. Over the year, higher
federal income taxes boosted
demand for municipal bonds. But
municipal bond prices were hurt by
the Fed's action in February and by
record new issuance, which kept
supplies high and dampened
prices. The return on the Lehman
Brothers Municipal Bond Index, a
broad measure of the tax-free
market, rose 5.54%. By
comparison, the Lehman Brothers
Aggregate Bond Index, which
tracks investment-grade taxable
bonds, returned 5.40%. Globally,
falling interest rates and low
inflation drove good annual returns
in Europe, Japan, and most
emerging markets, although many
of these markets fell in February
along with the U.S. bond market.
The Salomon Brothers World
Government Bond Index - which
includes U.S. issues - returned
9.34%, while the J.P. Morgan
Emerging Markets Bond Index was
up a dramatic 29.46%.
An interview with John Haley,
Portfolio Manager of Fidelity California Tax-Free High Yield
Portfolio
Q. JOHN, HOW DID THE FUND PERFORM?
A. About average. The fund had a total return of 5.41% for the year ended
February 28, 1994. The average California tax-free bond fund posted a total
return of 5.39% during the period, according to Lipper Analytical Services.
Q. WHAT ACCOUNTED FOR THE FUND'S PERFORMANCE?
A. First, having a somewhat longer duration than that of the typical
California tax-free bond fund. A longer duration makes a fund's share price
more sensitive to interest rate changes. I extended the fund's duration
from about 7.5 years to 8.9 years during the year because I expected
interest rates would continue to decline and drive bond prices higher.
That's what happened during most of the period, although the fund gave back
some gains when interest rates rebounded in February. Second, the fund also
held several issues that were pre-refunded during the period - that is,
their issuers set aside a pool of Treasury securities to pay the remaining
interest and principal due to bondholders. As a result, the bonds' credit
ratings went from A to Aaa, causing investors to bid their prices higher.
Plus, their maturities shortened, which also helped boost their prices.
Q. WHY DID YOU INCREASE THE FUND'S INVESTMENT IN STATE GENERAL OBLIGATION
BONDS (GOS) AND STATE LEASE BONDS?
A. During the early part of the year I avoided state GOs, which are backed
by the taxing power of the issuer, as well as California lease bonds, which
are backed by leases paid by the state. The state's economy was still
struggling, and I believed prices of those issues would lag bonds with
higher ratings. That proved to be true. But last fall I increased the
fund's investment in California GOs, lease bonds and other bonds backed by
the state to around 10% because I thought the California economy had hit
bottom. Also, I increased the fund's stake in bonds rated A or lower, which
are expected to benefit from improvements in the state's economy. These
decisions reduced the average credit rating of the fund's holdings. At the
end of February, about 45% of the fund's assets are rated Aa or Aaa. As the
economy begins to improve, those state GOs and lease bonds should
outperform issues with higher credit ratings.
Q. AT THE END OF FEBRUARY, NEARLY 20% OF THE FUND'S INVESTMENTS WERE IN
HEALTH-CARE BONDS, UP FROM 17.2% A YEAR EARLIER. ARE YOU CONCERNED THAT
HEALTH-CARE REFORM WILL HURT THOSE ISSUERS?
A. We are cautious on health care because the Clinton plan could affect the
health care sector. However, the issues I choose are mainly strong
hospitals that are expected to survive and potentially benefit from any
shake-up likely to occur. In fact, a number carry ratings of Aa or Aaa.
Q. DID THE LOS ANGELES EARTHQUAKE AFFECT THE FUND'S PERFORMANCE?
A. Not much. During the past two or three years I de-emphasized issuers in
the Los Angeles area because the economy in southern California has been
especially sluggish. As a result, we only held one or two bonds of issuers
in the vicinity of the earthquake. I believe in geographic diversification,
so the fund's investments are spread across different regions of the state.
That should offer some protection against future natural disasters.
Q. WHAT'S YOUR OUTLOOK FOR THE TAX-EXEMPT BOND MARKET?
A. The economy will probably show modest growth and inflation seems likely
to remain under control, so I don't expect interest rates to rise
dramatically from here. But interest rates aren't likely to fall much more
either, so gains in the bond market won't be driven by falling rates. The
tax-exempt market will probably benefit from a lower supply of new issues.
Also, demand for tax-exempt bonds will likely increase as investors realize
that the new, higher federal income tax rates. The combination of lower
supply and higher demand should help support prices in the tax-exempt
market.
Q. WHAT ABOUT THE CALIFORNIA TAX-EXEMPT MARKET?
A. I still feel that California bonds are attractive because the state's
economy is showing signs that it is set to begin a recovery. As that
happens, state GOs and lease bonds, should be especially strong performers,
because their credit quality is closely linked to the economy. Those issues
may be volatile over the next several months as the state goes through its
budget process. But I'll probably take advantage of any price declines to
buy more.

FUND FACTS
GOAL: to provide high current
income exempt from
California state and federal
income taxes
START DATE: July 7, 1984
SIZE: as of February 28, 1994
over $575 million
MANAGER: John Haley, since
September, 1985; manager,
Spartan California Tax-Free
High Yield Portfolio, since
December 1989; Fidelity
California Tax-Free Insured
Portfolio, since September
1986; Fidelity Advisor
Tax-Exempt Portfolio, since
1985
(checkmark)

JOHN HALEY ON THE FUND'S
STRATEGY:
"The fund can invest one-third
of its holdings in securities
rated below
investment-grade. However
during recent years, there
have been few attractive
opportunities in this area. At
the same time, I expected a
more severe economic
downturn in the California
economy than most
observers. As a result, I stuck
mainly with highly-rated
issues. But during the past six
months I have begun to
identify factors that suggest
the California economy is
reaching a bottom. As a
result, I've been increasing
the fund's investment in
higher-yielding issues. As the
economy improves, they
should be strong performers."
(bullet) As of February 28, 1994
34.5%
of the funds investments were
in Aaa-rated bonds, 39.1% in
Aa- and A-rated bonds, and
15.2% in bonds rated Baa or
below.
(bullet) The fund's duration as of
February 28, 1994 was 8.9
years. That means the fund's
share price could decline
roughly 8.9% if interest rates
rose one percentage point,
and rise 8.9% if rates fell one
percentage point.
FIDELITY CALIFORNIA TAX-FREE HIGH YIELD PORTFOLIO

INVESTMENT CHANGES

TOP FIVE SECTORS AS OF FEBRUARY 28, 1994
% OF FUND'S INVESTMENT % OF FUND'S INVESTMENT
S S
IN THESE SECTORS
6 MONTHS AGO

Lease Revenue 21.8 19.7

Health Care 20.5 15.3

Special Tax 20.0 22.2

Electric Revenue 8.8 12.5

Escrowed/Pre-Refunded 6.1 4.9

AVERAGE YEARS TO MATURITY AS OF FEBRUARY 28, 1994
6 MONTHS AGO

Years 21.0 20.1

AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF FEBRUARY 28, 1994
6 MONTHS AGO

Years 8.9 8.8

DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, THE SHARE PRICE OF A FUND WITH A
FIVE-YEAR DURATION WILL FALL 5%.
QUALITY DIVERSIFICATION AS OF FEBRUARY 28, 1994
(MOODY'S RATINGS)
Row: 1, Col: 1, Value: 34.5
Row: 1, Col: 2, Value: 39.1
Row: 1, Col: 3, Value: 15.2
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 11.2
Aaa 34.5%
Aa, A 39.1%
Baa 15.2%
Ba, B 0%
Non-rated 11.2%
THIS CHART EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS.
NON-RATED SECURITIES CONSIDERED TO BE BAA OR BETTER BY FIDELITY ARE 6.9% OF
THE FUNDS LONG TERM INVESTMENTS.
FIDELITY CALIFORNIA TAX-FREE HIGH YIELD PORTFOLIO

INVESTMENTS/FEBRUARY 28, 1994
(Showing Percentage of Total Value of Investments)

MUNICIPAL BONDS - 98.3%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - 96.1%
Alameda County Ctfs. of Prtn. Rfdg.
(Santa Rita Jail Proj.) 5.375% 6/1/09,
(MBIA Insured) Aaa $ 2,250,000 $ 2,210,625 010891KG
Alameda Hsg. Auth. Multi-Family Hsg. Rev.
(Independence Apts.) Series A, 7.50%
2/20/31, (GNMA Coll.) AAA 2,650,000 2,809,000 010789AA
Anaheim Elec. Rev. 3.50% 10/1/94 Aa 2,150,000 2,160,750 032542GU
Anaheim Pub. Fing. Auth. Tax Allocation
Rev. (Reg. Rites) 10.27% 12/1/18,
(MBIA Insured)(c) Aaa 1,500,000 1,788,750 032559AV
Arcadia Hosp. Rev. (Methodist Hosp. of
Southern California) 6.625% 11/15/22 A 1,650,000 1,755,188 039060BQ
Berkeley Health Facs. Rev. Rdfg. (Alta Bates
Med. Ctr.) Series A, 6.55% 12/1/22 Baa1 3,500,000 3,513,125 084134AH
Brea & Olinda Unified School Dist.
(Brea H-O-P-E, Inc. Brea High School
Ctfs. of Prtn.) 7.70% 8/1/18 - 1,500,000 1,575,000 106331KM
Buena Park Commty. Redev. Agcy. Tax
Allocation Rfdg. (Central Business
Dist. Proj.) 7.10% 9/1/14 BBB+ 2,000,000 2,115,000 119147CN
Burbank Redev. Agcy. Tax Allocation
Series A:
6% 12/1/13 Baa1 1,750,000 1,717,188 120823DZ
6% 12/1/23 Baa1 1,975,000 1,925,625 120823EA
California Dept. Wtr. Resource Central
Valley Rev. Series G, 9.60% 12/1/12,
(Pre-Refunded to 12/1/95 @ 102)(d) Aaa 2,250,000 2,404,688 130663ND
California Edl. Facs. Auth. Rev.
(Mills College) 6.875% 9/1/22 Baa1 1,275,000 1,348,313 130174EP
California Gen. Oblig. 4.75%, 9/1/23 Aa 2,000,000 1,727,500 130627BZ
California Health Facs. Auth. Rev.
(St. Joseph Health Sys.):
Rfdg. (Alexian Brothers, San Jose)
(MBIA Insured):
7.05% 1/1/09 Aaa 4,500,000 5,000,625 13033H4M
7.125% 1/1/16 Aaa 2,510,000 2,798,650 13033H4N
Rfdg. (Catholic Healthcare West)
4.75% 7/1/19(MBIA Insured) Aaa 2,000,000 1,757,500 13033AAU
Rfdg. (Sutter Commty. Sacramento Hosp.):
9.125% 1/1/05 A1 1,250,000 1,328,125 130326VE
9.25% 1/1/13 A1 4,000,000 4,255,000 130326VJ
(Alexian Brothers San Jose, Inc.)
Series A, 9.40% 1/1/16,
(Pre-Refunded to 1/1/95 @ 102)(d) AAA 1,850,000 1,979,500 13033HBR
(Centinela Hosp. Med. Ctr.)
Series A, 9.375% 9/1/15,
(MBIA Insured) Aaa 1,850,000 2,044,250 13033HAW
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
California Health Facs. Auth. Rev. - continued
(St. Joseph Health Sys.): - continued:
(Children's Hosp.) 7% 7/1/13,
(MBIA Insured) Aaa $ 3,250,000 $ 3,623,750 13033H6L
(Daughters of Charity-Queen Angels)
Series A, 9.25% 11/1/15,
(Pre-Refunded to 5/1/96 @ 102)(d) Aaa 1,300,000 1,472,250 13033HHC
(Daughters of Charity-St. Vincents Hosp.)
Series A, 9.25% 11/1/15 Aa 1,000,000 1,117,500 13033HHD
(Gould Med. Foundation)
Series A, 7.30% 4/1/20 A+ 3,000,000 3,476,250 13033JBW
(Kaiser Permanente Health Sys.):
Series A:
0% 10/1/09 Aa2 7,140,000 2,980,950 13033H2Q
0% 10/1/10 Aa2 3,795,000 1,484,794 13033H2T
0% 10/1/12 Aa2 14,990,000 5,134,075 13033H2V
9.125% 10/1/15 Aa2 2,500,000 2,734,375 13033HCJ
(Robert F. Kennedy Med. Ctr.)
Series A, 7.75% 3/1/14 A+ 2,980,000 3,278,000 13033HUP
(Sacramento Med. Foundation)
Series F, 7.875% 6/1/18 A+ 1,000,000 1,110,000 13033HXJ
(St. Elizabeth Hosp. Proj.) 6.30%
11/15/15 A1 1,000,000 1,035,000 13033JL4
(San Diego Hosp. Assoc.)
Series A, 6.95% 10/1/21 A1 1,250,000 1,367,188 13033JTM
Series 1984 B, 9.875% 7/1/14,
(Pre-Refunded to 7/1/95 @ 101)(d) AAA 2,750,000 3,004,375 130326NC
California Hsg. Fin. Agcy. Rev. (Home Mtg.):
Series A, 8.10% 8/1/16 Aa 1,475,000 1,585,625 130329V9
Series F, 7.875% 8/1/19 Aa 1,175,000 1,249,906 13033CEC
California Poll. Cont. Fing. Solid Waste Disp.
Rev. (North County Recycling Ctr.)
Series A, 6.75% 7/1/11,
LOC Union Bank of Switzerland Aaa 2,000,000 2,185,000 130536BQ
California Pub. Cap. Impt. Fing. Auth. Rev.
(Pooled Proj.) Series B, 8.10% 3/1/18,
(MBIA Insured) Aaa 990,000 1,084,050 130552AS
California Pub. Wks. Board Lease Rev.:
Rfdg. (Dept. Corrections St. Prisons)
Series A, 5% 12/1/19,
(AMBAC Insured) Aaa 2,500,000 2,281,250 13068GPA
(California University Proj.) Series A:
6.30% 12/1/09, (AMBAC Insured) Aaa 2,000,000 2,122,500 13068GKV
5.50% 6/1/10 A1 1,915,000 1,891,063 13068GRE
5.50% 6/1/14 A1 8,550,000 8,250,750 13068GRB
5% 6/1/23 A1 2,500,000 2,190,625 13068GRD
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
California Pub. Wks. Board Lease Rev.: - continued
(Dept. Correction State Prisons, Susanville)
Series D:
5.25% 6/1/15 (CGIC Insured) Aaa $ 2,000,000 $ 1,915,000 13068GUA
5.375% 6/1/18 A1 1,500,000 1,398,750 13068GTQ
(Dept. Corrections State Prisons, Medera)
Series E, 5.50% 6/1/15 A1 1,400,000 1,351,000 13068GVV
(Univ. of California Projs.):
Series A, 5.50% 6/1/14 A1 5,000,000 4,768,750 13068GUX
Series B, 5.25% 6/1/07 A1 2,965,000 2,887,169 13068GUR
California Statewide Commty. Dev. Auth.
8.83% 7/1/13, (MBIA Insured) (c) Aaa 2,000,000 1,965,000 130909JH
California Statewide Commtys. Dev. Corp.
Ctfs. of Prtn.:
Rfdg. (Insured Health Facs.) (Eskaton, Inc.)
5.875% 5/1/20 A+ 4,000,000 3,920,000 130909GW
Rfdg. (Insured Hosp.) (Triad Healthcare):
6.25% 8/1/06 A+ 2,000,000 2,027,500 130909CM
6.50% 8/1/22 A+ 1,500,000 1,524,375 130909CR
(Childrens) 6%, 6/1/10
(MBIA Insured) Aaa 2,835,000 2,966,119 130909NH
(J. Paul Getty) 5% 10/1/23 Aaa 1,750,000 1,585,937 130907FM
(Odd Fellows) 5.375% 10/1/13 A+ 2,500,000 2,325,000 130907EP
(St. Joseph Health Sys.)
5.50% 7/1/23 Aa 3,000,000 2,835,000 130909GH
(Sisters of Charity Leavenworth)
5% 12/1/23 Aa 4,375,000 3,850,000 130909PR
(Villaview Commty. Hosp., Inc.)
Series A, 7% 9/1/09 A+ 1,000,000 1,086,250 130907AX
5.50% 10/1/23 A+ 2,000,000 1,865,000 130907EQ
California Univ. Hsg. Sys. Series A, 5%
11/1/14, (MBIA Insured) Aaa 2,435,000 2,252,374 914113RP
Campbell Ctfs. of Prtn.:
Rfdg. (Civic Center Proj.) 6% 10/1/18 A 2,400,000 2,376,000 134111BK
(Campbell Commty. Ctr.) 8.90% 8/1/05,
(Pre-Refunded to 8/1/95 @ 102)(d) Aaa 1,640,000 1,775,300 134111AB
Carson Redev. Agcy. Redev. Proj. Area #1
Tax Allocation:
6.375% 10/1/12 Baa1 1,500,000 1,486,875 145750CZ
6.375% 10/1/16 Baa1 1,000,000 985,000 145750DA
Carson Redev. Spl. Tax 6% 10/1/13 Baa 1,750,000 1,708,438 145750DP
Central California Jt. Pwrs. Health Fing.
Auth. Ctfs. of Prtn.:
Rfdg. (Commty. Hosp. of Central California
Proj.) 5% 2/1/23 A 1,500,000 1,297,500 152757AR
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Central California Jt. Pwrs. Health Fing.
Auth. Ctfs. of Prtn.: - continued
(Commty. Hosp. of Central California Proj.)
5.25% 2/1/13 A $ 4,000,000 $ 3,675,000 152757AQ
Central Valley Fing. Auth. Cogeneration Proj. Rev.
(Carson Ice Generation Proj.) 6.10%
7/1/13 BBB- 1,000,000 988,750 155689AK
Central Valley Fing. Auth. Rev.
(Cogeneration Proj.) (Carson Ice Gen. Proj.)
6% 7/1/09 BBB- 1,750,000 1,723,750 155689AG
Compton Commty. Redev. Agcy. Tax
Allocation Rfdg. (Walnut Ind. Park Proj.)
7.50% 8/1/13, (AMBAC Insured) Aaa 5,000,000 5,662,500 204712DR
Contra Costa County Ctfs. of Prtn.
(Merrithew Mem. Hosp.):
Cap. Appreciation 0%, 11/1/13 A1 6,805,000 2,143,575 21223TEJ
0% 11/1/07 A1 4,615,000 2,220,969 21223TEC
Contra Costa Home Mtg. Fin. Auth. Home
Mtg. Rev. 0% 9/1/17,
(MBIA Insured) Aaa 12,500,000 3,156,250 212216CA
Del Norte County Pub. Wks. Rev. Rfdg.
(Dept. of Corrections) 5.125%, 12/1/08 A1 1,500,000 1,438,125 13068GSY
Del Norte County Rev. Rfdg. (Department of
Corrections) 5.20%, 12/1/09 A1 4,300,000 4,122,625 13068GSZ
Desert Hosp. Rev. Ctfs. of Prtn.
(Desert Hosp. Corp.) Series 1992,
10.029% 7/28/20,
(Cap. Guaranty Insured)(c) Aaa 4,000,000 4,645,000 25041MAZ
Duarte Ctfs of Prtn. (City of Hope Nat'l.
Medical Ctr.) 6.25% 4/1/23 Baa1 2,000,000 2,025,000 263584CS
Duarte Redev. Agcy. Tax Allocation:
(Huntington Drive-PH 1 Redev. Proj.)
9.20% 11/1/01, (Pre-Refunded to
11/1/95 @ 102)(d) - 735,000 815,850 263590BN
(Huntington Drive-PH 2 Redev. Proj.)
9.25% 11/1/10, (Pre-Refunded to
11/1/95 @ 102)(d) - 1,640,000 1,822,450 263590BQ
Eastern Muni. Wtr. Dist. Wtr. & Swr. Rev.
Ctfs. of Prtn. 6.75% 7/1/12,
(FGIC Insured) Aaa 1,600,000 1,826,000 276771AR
Fontana Redev. Agcy. Tax Allocation Rfdg.
(Yurupa Hills) Series 1992 A, 7.10%
10/1/23 BBB 2,495,000 2,713,313 344619CL
Fontana Unified School Dist. Rfdg.,
(AMBAC Insured):
0% 7/1/14 Aaa 1,880,000 582,800 344640HE
0% 7/1/15 Aaa 1,880,000 549,900 344640HF
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Foster City Pub. Fing. Auth. Rev.
(Foster City Commty. Rev. Proj.) Series A:
6% 9/1/06 A- $ 1,355,000 $ 1,377,019 350057AN
6% 9/1/07 A- 1,440,000 1,450,800 350057AQ
Fountain Valley Agcy. for Commty. Dev. Tax
Allocation (Ind. Area Redev. Proj.) 9.10%
1/1/15 BBB+ 1,745,000 1,897,688 350771BD
Garden Grove Agcy. Commty. Dev. Tax
Allocation Rfdg. (Garden Grove Commty.
Proj.) 5.70% 10/1/13 A 2,000,000 1,927,500 365251CN
Industry Urban Ind. Dev. Agcy.:
Rfdg. (Civic Recreational Proj.#1)
Series A, 7.375% 5/1/12 - 11,250,000 12,164,063 456567MG
(Civic Recreational Proj.#1-B) 7.375%
5/1/15, (Unrefunded Balanced) - 245,000 264,906 456567QS
Intercommunity Hosp. Fing. Auth. Ctfs. of
Prtn. 9.75% 8/1/15, (Pre-Refunded
to 8/1/95 @ 103)(d) AAA 4,000,000 4,460,000 45853JAJ
Intermodal Container Transfer Facs. Joint Pwr.
Auth. Rev. Rfdg. Series 1989 A, 7.70%
11/1/14, LOC Industrial Bank of Japan,
(BIG Insured) Aa3 1,500,000 1,683,750 458925AK
Irvine Ranch Wtr. Dist. Joint Pwr. Agcy.
Local Pool Rev. 8.25% 8/15/23 BBB 15,675,000 17,242,500 463656BE
Kern County High School Dist. Gen. Oblig.
7% 8/1/09 A1 1,090,000 1,261,675 492246AT
La Habra Ctfs. of Prtn. (La Habra and View
Park) (Acquisition Proj.) 6.625% 11/1/22,
(FSA Insured) Aaa 1,000,000 1,102,500 503423BA
Livermore Redev. Agcy. Tax Allocation Rev.
(Livermore Redev. Proj.) Series A, 7.75%
8/1/09 - 1,000,000 1,042,500 53819TAL
Local Gov't. Fin. Auth. Rev.
(Oakland Central Dist.) 0% 9/1/08 Aaa 3,710,000 1,646,313 539558FF
Loma Linda Hosp. Rev. (Loma Linda Univ.
Med. Ctr Proj.) Series B, 9% 12/1/12 BBB 1,550,000 1,710,813 541482BV
Los Angeles Ctfs. of Prtn.:
(Health Facs. Construction Loan)
(Bay Harbor Hosp.) 7.30% 4/1/20 A+ 2,000,000 2,192,500 544358GV
(Solheim Lutheran Home, Inc.)
8.125% 11/1/17 A+ 2,000,000 2,232,500 544358EP
Los Angeles Commty. Redev. Agcy. (Central Bus.
Dist.) Series E, 8.85% 7/1/10 A- 4,000,000 4,310,000 544389HE
Los Angeles County Cap. Asset Leasing
Corp. Leasehold Rev. 4.05% 12/1/09,
(AMBAC Insured) Aaa 4,030,000 4,130,750 544900CE
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Los Angeles County Ctfs. of Prtn.:
(Cap. Appreciation):
0% 9/1/10 A $ 2,980,000 $ 1,102,600 5446634F
0% 3/1/18 A 3,000,000 675,000 5446634W
0% 9/1/19 A 9,190,000 1,883,950 5446634Z
0% 3/1/20 A 1,690,000 335,888 5446634C
(Cap. Appreciation Correctional Facs.)
0% 9/1/12, (MBIA Insured) Aaa 3,575,000 1,246,781 544663G9
(Correctional Facs.) 0%, 9/1/10,
(MBIA Insured) Aaa 3,770,000 1,479,725 544663G7
(Disney Parking):
0%, 9/1/08 A 2,030,000 898,275 5446633Y
0%, 3/1/11 A 3,950,000 1,397,313 5446634G
0% 3/1/13 A 2,835,000 885,938 5446634L
0% 9/1/15 A 3,800,000 1,007,000 5446634R
0% 9/1/17 A 3,370,000 779,313 5446634V
Los Angeles County Trans. Commission Sales Tax
Rev. 6.25% 7/1/13, (MBIA Insured) Aaa 2,250,000 2,373,750 545170JE
Los Angeles Dept. Wtr. & Pwr. Elec. Plant Rev.
9.20% 10/15/25, (Pre-Refunded to
10/15/95 @ 103) (d) Aa 1,500,000 1,676,250 544508AQ
Los Angeles Hbr. Dept. Rev. 7.60% 10/1/18 Aa 5,540,000 6,364,075
544552BQ
M-S-R Pub. Pwr. Agcy. San Juan Proj. Rev.
Series B, 6.75% 7/1/11, (MBIA Insured) Aaa 2,000,000 2,210,000 553751EV
Metropolitan Wtr. Dist. Southern Wtrwks. Rev.:
Rfdg. Series A, 5.75% 7/1/21 Aa 2,250,000 2,283,750 592663MS
8.172% 8/10/18(c) Aa 2,500,000 2,637,500 592663MN
6% 7/1/21 Aa 2,500,000 2,550,000 592663KN
8.775% 8/5/22(c) Aa 1,300,000 1,379,625 592663LP
Modesto Ctfs. of Prtn. (Golf Course Refing. Proj.)
Series B, 5% 11/1/23, (AMBAC Insured) Aaa 2,000,000 1,817,500 607715FF
Modesto Irrigation Dist. Ctfs. of Prtn.:
Rfdg. & Cap. Impts. Series A, 0%
10/1/05, (MBIA Insured) Aaa 2,140,000 1,155,600 607762DC
Rfdg. & Cap. Impts. Series A, 0%
10/1/08, (MBIA Insured) Aaa 2,270,000 1,001,638 607762DF
(Geysers Geothermal Pwr. Proj.)
Series 1986, 5% 10/1/17 A1 5,000,000 4,437,500 607762BL
Northern California Pwr. Agcy. Pub.
Pwr. Rev. Rfdg.:
Rfdg. (Combustion Turbine Proj. #1)
Series A, 6% 8/15/07,
(MBIA Insured) Aaa 1,500,000 1,545,000 664843MF
Rfdg. (Geothermal Proj. #3) Series A,
5.85% 7/1/10 A 1,000,000 1,022,500 664843SB
7.50% 7/1/23, (AMBAC Insured)
(Pre-Refunded to 7/1/21 @ 100)(d) Aaa 1,355,000 1,722,544 664843NV
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Northern California Trans. Rev. (Ore Trans. Proj.)
Series A, 7% 5/1/13, (MBIA Insured) Aaa $ 7,000,000 $ 8,128,750 664850BL
Norwalk Redev. Agcy. Tax Allocation
(Norwalk Redev. Proj. #1):
7.15% 12/1/15 - 2,500,000 2,625,000 668823CM
9.10% 12/1/15,
(Pre-Refunded to 12/1/95 @ 102)(d) - 9,285,000 10,155,469 668823CL
Oakland Ctfs. of Prtn. Rfdg. (Oakland Museum)
Series A, 0%, 4/1/07, (AMBAC Insured) Aaa 2,750,000 1,344,063 671900AR
Oakland Redev. Agcy. Rfdg. Central Dist.
Redev. (Sr. Tax Allocation) 5.50% 2/1/14,
(AMBAC Insured) Aaa 2,400,000 2,376,000 672321ET
Ontario Redev. Fing. Auth. Rev.
(Cap. Appreciation Proj. #1) (Ctr. City)
0% 8/1/10, (MBIA Insured) Aaa 3,255,000 1,293,863 68304EAW
Orange County Ctfs. of Prtn. Rfdg.
(Civic Ctr. Facs.), (AMBAC Insured):
0% 12/1/07 Aaa 1,400,000 659,750 684228FE
0% 12/1/09 Aaa 1,000,000 408,750 684228FG
Orange County Dev. Agcy. Tax Allocation
(Santa Ana Heights Proj.) 6.125% 9/1/23 Baa1 2,500,000 2,471,875
684246CB
Orange County Local Trans. Sales Tax Rev.
Ltd. Tax 6% 2/15/08 Aa 1,250,000 1,320,313 684273BP
Palm Desert Fing. Auth. Tax Allocation
RIB 9.83% 4/1/22, (MBIA Insured)(c) Aaa 3,000,000 3,416,250 696617BG
Palm Springs Ctfs. of Prtn. (Muni. Golf
Course Expansion Proj.) 7.40% 11/1/18 BBB+ 1,750,000 1,935,938 696656FK
Palomar Pomerado Health System Rev.
4.75%, 11/1/23 (MBIA Insured) Aaa 4,100,000 3,541,375 69753EAS
Pasadena Ctfs. of Prtn. Rfdg.
(Old Pasadena Pkg. Facs. Proj.)
6.25% 1/1/18 A1 3,600,000 3,739,500 702204HA
Placer County Wtr. Agcy. Middle Fork Proj.
Rev. Series A, 3.75% 7/1/12 A 8,830,000 7,384,088 726022DV
Pleasanton County Ctfs. of Prtn. (Pleasanton
Pub. Facs. Corp. Cap Proj. I & II)
8.75% 10/1/08 Baa1 1,000,000 1,112,500 728809AN
Pleasanton Jt. Pwrs. Fin. Auth. Reassessment,
Series A:
6% 9/2/05 Baa 2,000,000 2,015,000 728816AU
6.15% 9/1/12 Baa 3,000,000 3,022,500 728816AW
Port Oakland Port Rev. Series F, (MBIA Insured):
Rfdg. 0% 11/1/06 Aaa 1,990,000 1,004,950 734897RQ
Rfdg. (Cap. Appreciation)
Series F, 0% 1/1/08, (MBIA Insured) Aaa 1,770,000 778,800 734897RS
0% 11/1/07 Aaa 4,250,000 2,002,813 734897RR
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Poway Redev. Agcy. (Paguay Proj.) Tax Allocation
7.93% 12/15/14, (FGIC Insured) (c) Aaa $ 7,400,000 $ 7,446,250 738800DV
Rancho Cucamonga Redev. Agcy. Tax
Allocation (Rancho Redev. Proj.)
7.125% 9/1/19, (MBIA Insured) Aaa 7,500,000 8,437,500 752123CQ
Rancho Mirage Joint Pwrs. Fing. Auth.
Ctfs. of Prtn. (Eisenhower Mem. Hosp.)
7% 3/1/22 Baa1 1,300,000 1,399,125 75212HAM
Riverside County Asset Leasing Corp. Leasehold
Rev. (Riverside County Hosp. Proj.) Series A:
6.50% 6/1/12 A 7,000,000 7,372,500 768903AR
6.25% 6/1/19 A 2,500,000 2,553,125 768903AG
Riverside County Ctfs. of Prtn.
(Airforce Village West, Inc.) Series A :
Rfdg. 8.125% 6/15/20 A-1+ 5,850,000 6,171,750 768901FQ
8.125% 6/15/12 A-1+ 2,600,000 2,743,000 768901FT
Riverside Unified School Dist. Ctfs. of Prtn. (Cap.
Appreciation Land Acquisition Proj.) Series B,
0% 9/1/26, (FSA Insured) (g) Aaa 2,275,000 1,711,938 769062AD
Rosemead Redev. Agcy. Sub. Lien Tax
Allocation Proj. (Area 1) 0% 10/1/02 A- 1,450,000 951,563 777520BM
Sacramento Fing. Auth. (Cap. Appreciation
Tax Allocation Proj.) Series B, (MBIA Insured):
0% 11/1/13 Aaa 500,000 160,625 785849BP
0% 11/1/15 Aaa 5,695,000 1,608,838 785849BR
Sacramento Fing. Auth. Lease Rev. Rfdg.
Series A, 5.375% 11/1/14,
(AMBAC Insured) Aaa 2,225,000 2,172,155 785846BL
Sacramento Muni. Util. Dev. Index Inflows
0% 11/15/08, (FGIC Insured)(c) Aaa 7,000,000 6,938,750 7860042C
Sacramento Muni. Util. Dist. Elec. Rev.:
Rfdg. Series G, 6.5%, 9/1/13 Aaa 2,100,000 2,312,625 7860044K
9.78% 8/15/18, (FGIC Insured) (c) Aaa 1,750,000 2,021,250 786004U5
Sacramento Redev. Agcy. Tax Allocation
(Downtown Redev. Proj.) Series A,
6.75% 11/1/05, (MBIA Insured) Aaa 2,130,000 2,380,275 786059JZ
Salinas Facs. Rev. (Villa Sierra Proj.)
Series A, 7.95% 4/20/31, (GNMA Coll.) AAA 2,445,000 2,573,363 794904AD
Salinas Redev. Agcy. Tax Allocation 0%
11/1/22, (Cap. Guaranty Insured) Aaa 19,895,000 3,804,919 794891DN
San Bernadino County Ctfs. of Prtn.:
(Cap. Facs. Proj.) Series B:
6.75% 8/1/10 Baa1 2,500,000 2,862,500 796815KM
6.875% 8/1/24 Baa1 2,500,000 2,959,375 796815KR
(Equip. Fing.) (Cap. Facs. Proj.)
Series B, 6.25% 8/1/19 Baa1 2,500,000 2,746,875 796815KN
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
San Bernadino County Ctfs. of Prtn.: - continued
(Med Ctr. Fing. Proj.):
5.50% 8/1/17(e) Baa1 $ 6,500,000 $ 5,988,125 796815NL
5.50% 8/1/22(e) Baa1 4,500,000 4,095,000 796815NN
San Diego County Wtr. Auth. Wtr. Rev.
Ctfs. of Prtn. (Reg. Rites) 8.50724%,
(FGIC Insured) (c) Aaa 1,250,000 1,337,500 797415CS
San Diego Multi-Family Hsg. Rev.
(Island Gardens Apts. Proj.)
Series B, (GNMA Coll.) 9.50%
10/20/20, LOC Swiss Bank AAA 1,585,000 1,656,325 79729HBU
San Francisco Bay Area Rapid Trans. Dist.
Sales Tax Rev. Rfdg. 6.75% 7/1/10,
(AMBAC Insured) Aaa 1,500,000 1,704,375 797669DX
San Francisco City & County Redev.
Agcy. 7.75% 9/1/06 - 9,000,000 9,528,750 797712AE
San Francisco City & County Redev. Fing. Auth.
Tax Allocation Rev. (FGIC Insured):
Series A:
0% 8/1/06 Aaa 1,035,000 534,319 79771PCN
0% 8/1/07 Aaa 1,085,000 523,513 79771PCP
0% 8/1/08 Aaa 1,085,000 489,606 79771PCQ
0% 8/1/09 Aaa 1,085,000 459,769 79771PCR
0% 8/1/10 Aaa 1,085,000 431,288 79771PCS
San Francisco Port Commerce Rev. Series C,
9.50% 7/1/09, LOC Bankers Trust A1 1,000,000 1,047,500 797707CE
San Joaquin Hills Trans. Corridor Agcy.
Toll Road Rev. (Sr. Lien):
0% 1/1/05 - 2,500,000 1,528,125 798111AF
0% 1/1/07 - 3,000,000 1,890,000 798111AJ
5% 1/1/33 - 8,975,000 7,168,781 798111BJ
San Jose Redev. Agcy. Tax Allocation
(Merged Area Redev. Proj.) 4.75%
8/1/22, (MBIA Insured) A 5,000,000 4,225,000 798147KX
Santa Ana Commty. Redev. Agcy. Tax
Allocation Rev. Series B, 7.375% 9/1/09 A 5,000,000 5,537,500 801095FP
Santa Barbara Ctfs. of Prtn. (Harbor Rfdg.
Proj.) 6.75% 10/1/27 A 1,500,000 1,605,000 801242EX
Santa Clara Ctfs. of Prtn. Ref. Series A,
4.75% 2/1/14, (MBIA Insured) Aaa 1,250,000 1,131,250 801400BG
Santa Clara Elec. Rev. Series B, 0% 7/1/06,
(MBIA Insured) Aaa 2,080,000 1,079,000 801444DH
Santa Monica Family Rev. (YMCA Proj.)
9.50% 12/1/05, LOC Bank of Tokyo(f) - 2,890,000 3,150,100 802450AA
Sequoia Hosp. 5.375% 8/15/13 A 4,170,000 3,909,375 817393BZ
Sequoia Hosp. Dist. Rev. 5.375% 8/15/23 A 8,250,000 7,517,812 817393CA
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Solano County Ctfs. of Prtn. Rfdg. (Justice Facs. &
Pub. Bldg. Proj.), 5.875% 10/1/05 Baa1 $ 2,500,000 $ 2,521,874 834131BR
Southern California Pub. Pwr. Auth. Pwr. Proj. Rev.:
Rfdg. (Palo Verde Proj.) (AMBAC Insured):
Series A, 0% 7/1/14 Aaa 5,030,000 1,534,150 842475JH
Series C, 0% 7/1/16 Aaa 16,325,000 4,591,405 842475MJ
(Multiple Proj.):
6.75% 7/1/10 A 1,400,000 1,552,250 842475KK
6.75% 7/1/11 A 4,000,000 4,455,000 842475KL
6.75% 7/1/13 A 1,000,000 1,121,250 842475KN
Southern California Pub. Pwr. Auth. Southern
Transmission (Cap. Appreciation) 0%
7/1/14 Aa 5,000,000 1,506,250 842477JF
Sulphur Springs Unified School Dist. (MBIA Insured):
Series A:
0%, 9/1/07 Aaa 4,445,000 2,105,818 865480EX
0%, 9/1/09 Aaa 2,485,000 1,037,487 865480EZ
0%, 9/1/11 Aaa 1,830,000 677,100 865480FB
Unlimited Tax Series A, 0% 9/1/15 Aaa 2,280,000 664,049 865480FF
Torrance Hosp. Rev. (Little Co. of Mary Hosp.)
6.875% 7/1/15 A 925,000 1,005,937 891368CK
TriDam Pwr. Auth. California Hydro Elec. Rev.
(Sand Bar Proj.) 11.375% 1/1/17,
(FGIC Insured)(f) - 2,000,000 2,125,000 895566AA
Upland Ctfs. Partn. (San Antonio Commty.
Hosp.) 5.25% 1/1/08 A 1,850,000 1,764,437 915346DN
Upland Hosp. Ctfs. of Prtn. (San Antonio
Commtys. Hosp.) 5.25% 1/1/13 A 5,500,000 5,073,750 915346DP
Vallejo Ctfs. of Prtn. (Marine World Foundation Proj.):
7.80% 2/1/98 - 1,455,000 1,536,843 919191BE
8.10% 2/1/21 - 3,040,000 3,169,200 919191BC
West & Central Basin Fing. Auth. (West Basin Proj.)
Series A, 5% 8/1/10, (AMBAC Insured) Aaa 3,000,000 2,850,000 95122ECE
Western Placer Unified School Dist.
Series A, (FGIC Insured):
0% 8/1/12 Aaa 1,720,000 595,549 959214BR
0% 8/1/13 Aaa 1,855,000 600,555 959214BS
0% 8/1/14 Aaa 2,005,000 614,030 959214BT
0%, 8/1/15 Aaa 2,165,000 625,143 959214BU
0% 8/1/18 Aaa 2,500,000 600,000 959214BP
Unltd. Tax:
0% 8/1/16 Aaa 2,340,000 631,799 959214BV
0% 8/1/17 Aaa 2,525,000 650,187 959214BW
Yolo County Flood Cont. & Wtr. Cont. Dist.
Ctfs. of Prtn. (Tehama-Colusa Canal Wtr.
Supply) 7% 7/15/05, (FGIC Insured) Aaa 2,500,000 2,871,874 986012AB
544,189,462
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
PUERTO RICO - 1.6%
Puerto Rico Commonwealth Hwy. & Trns.
Auth. Rev. Series W, 5.50% 7/1/13 Baa1 $ 4,875,000 $ 4,783,594 745181BZ
Puerto Rico Elec. Pwr. Auth. Pwr. Rev.
Series O, 0% 7/1/17 Baa1 7,500,000 1,903,125 745268JW
Puerto Rico Tel. Auth. Rev. 6.78% 1/1/04,
(AMBAC Insured) (c) Aaa 2,250,000 2,188,125 745297HX
8,874,844
U.S. VIRGIN ISLANDS - 0.3%
Virgin Islands Pub. Fin. Auth. Rev. Rfdg.
Series A, 7.25% 10/1/18
(Escrowed to Maturity) - 1,500,000 1,650,000 927676CF
GUAM - 0.3%
Guam Arpt. Auth. Rev. 6.50% 10/1/23 BBB 1,700,000 1,776,500 400648BL
TOTAL MUNICIPAL BONDS
(Cost $520,132,086) 556,490,806
MUNICIPAL NOTES (A) - 1.7%

CALIFORNIA - 1.7%
Contra Costa TRAN,
Series A, 3.25% 7/29/94 MIG 1 3,000,000 3,002,790 212219BV
Los Angeles County Trans. Commission
Sales Tax Rev. Rfdg. Series 1992 A, 2.25%
(FGIC Insured) LOC Industrial Bank of
Japan Ltd. VRDN VMIG 1 4,800,000 4,800,000 545170HL
Santa Clara County TRAN,
Series 1993-1994, 3.25% 7/29/94 MIG 1 2,000,000 2,002,680 801546LF
TOTAL MUNICIPAL NOTES
(Cost $9,809,087) 9,805,470
OTHER SECURITIES - 0.0%
MOODY'S RATINGS VALUE
(UNAUDITED) (B) RIGHTS (NOTE 1)
CALIFORNIA - 0.0%
Riverside County Asset Leasing Corp. Leasehold Rev.
(Riverside County Hosp.) Series A (Call Rights)
6.50% 6/1/12 (Cost $59,590) - 1,100 $ 220,688
TOTAL INVESTMENTS - 100%
(Cost $530,000,763) $ 566,516,964
FUTURES CONTRACTS
AMOUNT IN THOUSANDS EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
SELL
65 U.S. Treasury Bond Futures March, 1994 $ 7,306,406 $ 4,721
THE VALUE OF FUTURES CONTRACTS SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 1.3%

SECURITY TYPE ABBREVIATIONS
TRAN - Tax & Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Standard & Poor's Corporation credit ratings are used in the
absence of a rating by Moody's Investors Service, Inc.
(c) Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate. The price will be more
volatile than the price of a comparable fixed rate security.
(d) Security collateralized by an amount sufficient to pay interest and
principal.
(e) Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
(f) Security was pledged to cover margin requirements for futures
contracts. At the period end, the value of securities pledged amounted to
$3,215,000.
(g) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 59.2% AAA, AA, A 72.7%
Baa 7.8% BBB 7.7%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 11.0%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Lease Revenue 21.8%
Health Care 20.5
Special Tax 20.0
Others (individually less
than 10%) 37.7
TOTAL 100.0%

INCOME TAX INFORMATION
At February 28, 1994 the aggregate cost of investment securities for income
tax purposes was $530,077,875. Net unrealized appreciation aggregated
$36,439,089, of which $39,960,935 related to appreciated investment
securities and $3,521,846 related to depreciated investment securities.
The fund hereby designates $1,160,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
At February 28, 1994 the fund was required to defer $6,602,000 of losses on
futures contracts and options.
FIDELITY CALIFORNIA TAX-FREE HIGH YIELD PORTFOLIO

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994

1.ASSETS 2. 3.

4.Investment in securities, at value (cost $530,000,763) 5. $ 566,516,964
(Notes 1 and 2) - See accompanying schedule

6.Cash 7. 423,114

8.Receivable for investments sold 9. 12,281,033

10.Interest receivable 11. 7,571,140

12. 13.TOTAL ASSETS 14. 586,792,251

15.LIABILITIES 16. 17.

18.Payable for investments purchased $ 10,426,032 19.
Delayed Delivery (Note 2)

20.Dividends payable 736,601 21.

22.Accrued management fee 200,912 23.

24.Payable for daily variation on futures contracts 50,781 25.

26.Other payables and accrued expenses 89,154 27.

28. 29.TOTAL LIABILITIES 30. 11,503,480

31.32.NET ASSETS 33. $ 575,288,771

34.Net Assets consist of (Note 1): 35. 36.

37.Paid in capital 38. $ 537,839,637

39.Accumulated undistributed net realized gain (loss) on 40. 928,212
investments

41.Net unrealized appreciation (depreciation) on: 42. 43.

44. Investment securities 45. 36,516,201

46. Futures contracts 47. 4,721

48.49.NET ASSETS, for 47,563,315 shares outstanding 50. $ 575,288,771

51.52.NET ASSET VALUE, offering price and redemption 53. $12.10
price per share ($575,288,771 (divided by) 47,563,315 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994

54.55.INTEREST INCOME 56. $ 37,371,692

57.EXPENSES 58. 59.

60.Management fee (Note 4) $ 2,434,987 61.

62.Transfer agent, accounting and custodian fees and 817,364 63.
expenses (Note 4)

64.Non-interested trustees' compensation 661 65.

66.Registration fees 757 67.

68.Audit 35,938 69.

70.Legal 46,575

71.Reports to shareholders 21,349

72.Miscellaneous 4,787 73.

74. 75.TOTAL EXPENSES 76. 3,362,418

77.78.NET INTEREST INCOME 79. 34,009,274

80.REALIZED AND UNREALIZED GAIN (LOSS) ON 82. 83.
INVESTMENTS
(NOTES 1 AND 3)
81.Net realized gain (loss) on:

84. Investment securities 23,219,374 85.

86. Futures contracts 1,695,300 24,914,674

87.Change in net unrealized appreciation (depreciation) 88. 89.
on:

90. Investment securities (27,257,141) 91.

92. Futures contracts (549,697) (27,806,838)

93.94.NET GAIN (LOSS) 95. (2,892,164)

96.97.NET INCREASE (DECREASE) IN NET ASSETS 98. $ 31,117,110
RESULTING FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR TEN MONTHS
ENDED ENDED
FEBRUARY 28, FEBRUARY 28, 1993
1994 (NOTE 1)

99.INCREASE (DECREASE) IN NET ASSETS

100.Operations $ 34,009,274 $ 27,948,890
Net interest income

101. Net realized gain (loss) on investments 24,914,674 8,864,729

102. Change in net unrealized appreciation (27,806,838) 32,015,891
(depreciation)
on investments

103. 31,117,110 68,829,510
104.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM
OPERATIONS

105.Distributions to shareholders (34,009,274) (27,948,890)
From net interest income

106. From net realized gain (12,686,288) -

107. 108.TOTAL DISTRIBUTIONS (46,695,562) (27,948,890)

109.Share transactions 155,444,832 135,478,517
Net proceeds from sales of shares

110. Reinvestment of distributions from: 24,320,885 20,206,099
Net interest income

111. 9,675,447 -
Net realized gain

112. Cost of shares redeemed (185,364,588) (139,220,074)

113. 4,076,576 16,464,542
Net increase (decrease) in net assets resulting from
share transactions

114. (11,501,876) 57,345,162
115.TOTAL INCREASE (DECREASE) IN NET ASSETS

116.NET ASSETS 117. 118.

119. Beginning of period 586,790,647 529,445,485

120. End of period $ 575,288,771 $ 586,790,647

121.OTHER INFORMATION 123. 124.
122.Shares

125. Sold 12,515,698 11,455,837

126. Issued in reinvestment of distributions from: 1,958,696 1,705,997
Net interest income

127. 790,478 -
Net realized gain

128. Redeemed (14,926,974) (11,797,097)

129. Net increase (decrease) 337,898 1,364,737

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
130. YEAR TEN MONTHS YEARS ENDED APRIL 30,
ENDED ENDED
FEBRUARY 28, FEBRUARY 28,
1993

131. 1994 (NOTE 1) 1992 1991 1990

132.SELECTED PER-SHARE DATA

133.Net asset value, $ 12.430 $ 11.540 $ 11.300 $ 10.940 $ 11.080
beginning of period

134.Income from .719 .611 .744 .752 .756
Investment Operations
Net interest income

135. Net realized and (.060) .890 .240 .360 (.140)
unrealized gain (loss)
on investments

136. Total from .659 1.501 .984 1.112 .616
investment operations

137.Less Distributions (.719) (.611) (.744) (.752) (.756)
From net interest
income

138. From net realized (.270) - - - -
gain on investments

139. Total distributions (.989) (.611) (.744) (.752) (.756)

140.Net asset value, $ 12.100 $ 12.430 $ 11.540 $ 11.300 $ 10.940
end of period

141.TOTAL RETURN (DAGGER) 5.41% 13.40% 8.94% 10.44% 5.61%

142.RATIOS AND SUPPLEMENTAL DATA

143.Net assets, end of $ 575,289 $ 586,791 $ 529,445 $ 523,590 $ 513,682
period (000 omitted)

144.Ratio of expenses .57% .60%* .59% .58% .60%
to average net assets

145.Ratio of net interest 5.78% 6.17%* 6.52% 6.71% 6.73%
income to average net
assets

146.Portfolio turnover 44% 32%* 23% 15% 34%
rate

</TABLE>

* ANNUALIZED
(DAGGER) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
FIDELITY CALIFORNIA TAX-FREE INSURED PORTFOLIO

PERFORMANCE: THE BOTTOM LINE

California Tax-Free Insured 4.59% 56.12% 72.51%

Lehman Brothers Municipal Bond Index 5.54% 59.02% n/a

Average California Insured
Tax-Exempt Municipal Bond Fund 4.99% 57.31% n/a

Consumer Price Index 2.52% 20.64% 33.12%

CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, one year, five years, or since the fund started on September 18,
1986. For example, if you invested $1,000 in a fund that had a 5% return
over the past year, you would end up with $1,050. You can compare these
figures to the performance of the Lehman Brothers Municipal Bond Index - a
broad gauge of the municipal bond market. To measure how the fund stacked
up against its peers, you can look at the average California insured
tax-exempt municipal bond fund, which reflects the performance of only 18
California insured tax-exempt municipal bond funds tracked by Lipper
Analytical Services. Both benchmarks include reinvested dividends and
capital gains, if any. Comparing the fund's performance to the consumer
price index helps show how your fund did compared to inflation. (The
periods covered by the CPI numbers are the closest available match to those
covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

California Tax-Free Insured 4.59% 9.32% 7.59%

Lehman Brothers Municipal Bond Index 5.54% 9.72% n/a

Average California Insured
Tax-Exempt Municipal Bond Fund 4.99% 9.48% n/a

Consumer Price Index 2.52% 3.82% 3.93%

AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
09/30/86 10000.00 10000.00
10/31/86 10123.71 10172.70
11/30/86 10256.03 10374.22
12/31/86 10317.83 10345.59
01/31/87 10603.31 10657.09
02/28/87 10604.78 10709.53
03/31/87 10513.45 10596.01
04/30/87 9640.19 10064.30
05/31/87 9517.05 10014.38
06/30/87 9640.71 10308.40
07/31/87 9744.96 10413.55
08/31/87 9799.01 10436.98
09/30/87 9216.28 10052.17
10/31/87 9475.91 10087.75
11/30/87 9702.92 10351.14
12/31/87 9855.54 10501.34
01/31/88 10443.19 10875.39
02/29/88 10585.54 10990.35
03/31/88 10158.73 10862.31
04/30/88 10215.69 10944.86
05/31/88 10227.01 10913.23
06/30/88 10391.86 11072.89
07/31/88 10423.97 11145.09
08/31/88 10491.94 11154.90
09/30/88 10696.80 11356.80
10/31/88 11006.00 11557.25
11/30/88 10859.52 11451.38
12/31/88 10999.82 11568.53
01/31/89 11198.36 11807.77
02/28/89 11060.27 11673.04
03/31/89 11063.14 11645.14
04/30/89 11360.28 11921.60
05/31/89 11588.22 12169.21
06/30/89 11709.08 12334.47
07/31/89 11830.69 12502.34
08/31/89 11663.09 12379.94
09/30/89 11677.91 12342.80
10/31/89 11761.12 12493.38
11/30/89 11946.84 12712.02
12/31/89 11963.78 12816.26
01/31/90 11852.69 12756.02
02/28/90 12041.01 12869.55
03/31/90 12032.82 12873.41
04/30/90 11831.86 12780.72
05/31/90 12136.60 13059.34
06/30/90 12251.80 13174.26
07/31/90 12443.18 13367.93
08/31/90 12238.67 13174.09
09/30/90 12279.77 13182.00
10/31/90 12475.39 13420.59
11/30/90 12762.40 13690.34
12/31/90 12803.27 13750.58
01/31/91 12895.57 13934.84
02/28/91 12920.79 14056.07
03/31/91 12921.08 14061.69
04/30/91 13094.04 14248.71
05/31/91 13228.26 14375.53
06/30/91 13201.36 14361.15
07/31/91 13390.41 14536.36
08/31/91 13525.25 14728.24
09/30/91 13718.24 14919.71
10/31/91 13911.62 15053.98
11/30/91 13925.98 15096.13
12/31/91 14206.61 15420.70
01/31/92 14265.69 15456.17
02/29/92 14263.38 15460.81
03/31/92 14280.07 15466.99
04/30/92 14421.86 15604.65
05/31/92 14609.32 15788.78
06/30/92 14865.11 16054.03
07/31/92 15355.50 16535.65
08/31/92 15067.00 16373.60
09/30/92 15167.22 16480.03
10/31/92 14817.19 16318.53
11/30/92 15241.60 16610.63
12/31/92 15507.07 16780.06
01/31/93 15684.79 16974.71
02/28/93 16510.39 17589.19
03/31/93 16288.64 17402.75
04/30/93 16454.83 17578.51
05/31/93 16533.51 17676.95
06/30/93 16851.43 17972.16
07/31/93 16807.86 17995.52
08/31/93 17235.80 18369.83
09/30/93 17447.89 18579.25
10/31/93 17462.71 18614.55
11/30/93 17209.68 18450.74
12/31/93 17650.01 18840.05
01/31/94 17870.43 19054.82
02/28/94 17267.64 18561.31

$27,312
$24,247
'94
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
California Tax-Free Insured Portfolio on September 30, 1986, shortly after
the fund started. As the chart shows, by February 28, 1994, the value of
your investment would have grown to $17,268 - a 72.68% increase on your
initial investment. For comparison, look at how the Lehman Brothers
Municipal Bond Index did over the same period. With dividends reinvested,
the same $10,000 would have grown to $18,561 - a 85.61% increase.

Income return 5.35% 6.43% 6.48% 6.58% 6.75%

Capital gain return 1.87% 0.00% 0.00% 0.00% 0.00%
Change in share price -2.63% 9.32% 3.91% 0.73% 2.12%
Total return 4.59% 15.75% 10.39% 7.31% 8.87%
INCOME returns, capital gain returns, and changes in share price are all
part of a bond fund's total return. An income return reflects the dividends
paid by the fund. A capital gain return reflects the amount paid by the
fund to shareholders based on the profits it has from selling bonds that
have grown in value. Both returns assume the dividends or gains are
reinvested. Changes in the fund's share price include changes in the prices
of the bonds owned by the fund.
DIVIDENDS AND YIELD
PERIODS ENDED FEBRUARY 28, 1994 PAST 30 PAST 6 PAST 1
DAYS MONTHS YEAR

Dividends per share n/a 28.43(cents) 58.89(cents)

Annualized dividend rate n/a 5.15% 5.33%

Annualized yield 4.90% n/a n/a

Tax-equivalent yield 8.60% n/a n/a

DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $11.14 over
the past six months and $11.05 over the past year, you can compare the
fund's income over these two periods. The 30-day annualized YIELD is a
standard formula for all funds based on the yields of the bonds in the
fund, averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It also
helps you compare funds from different companies on an equal basis. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the fund's tax-free yield, if you're in the 43.04%
combined effective 1994 federal and state tax bracket.
FIDELITY CALIFORNIA TAX-FREE INSURED PORTFOLIO

FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
Bond investments - including
tax-free issues - provided solid
returns for the 12 months ended
February 28, 1994, despite a
dramatic downturn in February.
Falling interest rates pushed up
bond prices steadily through
mid-October, when the yield on the
benchmark 30-year Treasury bond
reached a historic low of 5.79%. By
year-end, a strengthening economy
had fueled mild inflation fears. That
pushed up the yield on the 30-year
bond to 6.35% on December 31,
which forced investors to give back
some of their earlier profits. Inflation
jitters eased and bond yields
dropped in January. However,
when the Federal Reserve Bank
raised short-term interest rates in
an attempt to control inflation on
February 4, investors reacted
negatively. At the end of February,
the yield on 30-year bonds was
6.66%, about 38 basis points
higher than at the beginning of the
month. Over the year, higher
federal income taxes boosted
demand for municipal bonds. But
municipal bond prices were hurt by
the Fed's action in February and by
record new issuance, which kept
supplies high and dampened
prices. The return on the Lehman
Brothers Municipal Bond Index, a
broad measure of the tax-free
market, rose 5.54%. By
comparison, the Lehman Brothers
Aggregate Bond Index, which
tracks investment-grade taxable
bonds, returned 5.40%. Globally,
falling interest rates and low
inflation drove good annual returns
in Europe, Japan, and most
emerging markets, although many
of these markets fell in February
along with the U.S. bond market.
The Salomon Brothers World
Government Bond Index - which
includes U.S. issues - returned
9.34%, while the J.P. Morgan
Emerging Markets Bond Index was
up a dramatic 29.46%.
An interview with John Haley,
Portfolio Manager of Fidelity California Tax-Free Insured Portfolio
Q. JOHN, HOW DID THE FUND PERFORM?
A. The fund's performance slipped during the past year. The fund had a
total return of 4.59% for the year ended February 28, 1994. The average
California insured tax-free bond fund posted a total return of 4.99% during
the period, according to Lipper Analytical Services.
Q. WHY DID THE FUND LAG THE AVERAGE?
A. Mainly because its duration was somewhat longer than that of the typical
California insured tax-free bond fund. That meant its share price was more
sensitive to interest rate changes. During the year I expected interest
rates would continue to decline and drive bond prices higher, so I extended
the fund's duration from about 7.5 years to 11.3 years. This helped the
fund during most of the period. However, when interest rates rose in the
fourth quarter of '94 and then again in February, the fund gave back some
of its gains.
Q. DID YOU RE-STRUCTURE THE FUND TO INCREASE ITS DURATION?
A. Somewhat. I added to the fund's stake in non-callable coupon and
zero-coupon bonds, neither of which can be redeemed early by their issuers.
I invested heavily in bonds that are due to mature in 10 to 20 years; they
recently accounted for 41% of the fund's investments.
Q. WHY DID THE FUND HOLD SOME UNINSURED BONDS?
A. Insured bonds still accounted for 70% of the fund's investments at the
end of the period, while approximately 30% of the fund's investments were
in uninsured bonds. As the economy in the state improves, those uninsured
bonds should benefit and boost the total return of the fund. Some of the
fund's uninsured bonds were pre-refunded during the period-that is, their
issuers set aside a pool of Treasury securities to pay the remaining
interest and principal due to bondholders. As a result, the bonds' credit
ratings went from A to Aaa, causing investors to bid their prices higher.
Q. YOU INCREASED THE PERCENTAGE OF THE FUND'S ASSETS IN HEALTH-CARE BONDS.
WHY - WITH ALL THE CONTROVERSY ABOUT HEALTH-CARE REFORM?
A. It's true that in the past six months the fund's stake in health-care
has grown from 6% to 9%. That's not to say we aren't cautious on the sector
because the Clinton plan could affect these issues. However, the bonds I
choose are mainly strong hospitals that are expected to survive and
possibly benefit from any shake-up likely to occur. In fact, most are
insured.
Q. WHAT EFFECT DID THE RECENT EARTHQUAKE HAVE ON THE FUND'S PERFORMANCE?
A. The fund only held one or two bonds of issuers in the vicinity of the
earthquake, and they were insured. Fortunately, during the past two or
three years I have de-emphasized issuers in the Los Angeles area because
the economy in southern California has been especially sluggish. I've also
tried to spread the fund's investments across different regions of the
state. That helps offer some protection against natural disasters, if and
when they occur.
Q. WHAT'S YOUR OUTLOOK FOR THE TAX-EXEMPT BOND MARKET?
A. The economy will probably show modest growth and inflation seems likely
to remain under control, so I don't expect interest rates to rise
dramatically from here. But interest rates aren't likely to fall much more
either, so gains in the bond market won't be driven by falling rates. The
tax-exempt market will probably benefit from a lower supply of new issues,
which will likely amount to around $175 to $200 billion versus $290 billion
last year. Also, demand for tax-exempt bonds will likely increase as
investors realize that the new, higher federal income tax rates increase
the value of the tax exemption these issues offer. And about $35 billion in
tax-exempt bonds will mature in 1994, creating still more demand for new
bonds. The combination of lower
supply and higher demand should help support prices in the tax-exempt
market.
Q. WHAT ABOUT THE CALIFORNIA INSURED TAX-EXEMPT MARKET?
A. I still feel that California bonds are attractive because the state's
economy is showing signs that it is set to begin a recovery. As that
happens, state GOs and lease bonds, which are backed by leases held by the
state, should be especially strong performers, because their credit quality
is closely linked to the economy. Those issues may be volatile over the
next several months as the state goes through its budget process. But I'll
probably take advantage of any price declines to increase the fund's
investment in them.

FUND FACTS
GOAL: to provide high current
income exempt from
California state and federal
income taxes by investing
primarily in long-term
California municipal bonds
covered by insurance
START DATE: September 18,
1986
SIZE: as of February 28,1994,
over $291 million
MANAGER: John Haley, since
September 1986; manager,
Spartan California Municipal
High Yield Portfolio, since
December 1989; Fidelity
California Tax-Free High Yield
Portfolio, and Fidelity Advisor
Tax-Exempt Portfolio, since
September 1985
(checkmark)

JOHN HALEY ON THE FUND'S
STRATEGY:
"During the past two to three
years I expected a more
severe economic downturn in
the California economy than
most observers. As a result, I
stuck mainly with insured
issues. Recently I have begun
to identify factors that suggest
the California economy is
reaching a bottom. I expect a
gradual rebound in the state's
economy, and that should
help lower-rated
investment-grade bonds
outperform higher-rated ones.
Thus, I'm using Fidelity's
fixed-income research
analysts to identify stable and
improving investment-grade
securities that could enhance
the yield and total return of the
portfolio."
(bullet) As of February 28, 1994,
41% of the fund's investments
were in bonds with maturities
of 10 to 20 years, and 48%
were in bonds with maturities
of greater than 20 years.
(bullet) The fund's investment in
bonds rated Aaa accounted
for 75.5% its total
investments.
(bullet) About 30% of the fund's
investments were in
uninsured bonds, all rated
Baa or higher.
(bullet) About one-third of the fund
was in lease rental bonds,
which could improve with a
pickup in the California
economy.
FIDELITY CALIFORNIA TAX-FREE INSURED PORTFOLIO

INVESTMENT CHANGES

TOP FIVE SECTORS AS OF FEBRUARY 28, 1994
% OF FUND'S INVESTMENT % OF FUND'S INVESTMENT
S S
IN THESE SECTORS
6 MONTHS AGO

Lease Revenue 33.1 33.9

Special Tax 20.1 18.6

Health Care 9.2 6.0

General Obligation 8.9 10.0

Electric Revenue 8.8 11.3

AVERAGE YEARS TO MATURITY AS OF FEBRUARY 28, 1994
6 MONTHS AGO

Years 20.3 19.1

AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF FEBRUARY 28, 1994
6 MONTHS AGO

Years 11.3 10.1

DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, THE SHARE PRICE OF A FUND WITH A
FIVE-YEAR DURATION WILL FALL 5%.
QUALITY DIVERSIFICATION AS OF FEBRUARY 28, 1994
(MOODY'S RATINGS)
Row: 1, Col: 1, Value: 75.5
Row: 1, Col: 2, Value: 15.4
Row: 1, Col: 3, Value: 8.699999999999999
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 1.5
Aaa 75.5%
Aa, A 15.4%
Baa 8.7%
Ba, B 0%
Non-rated 0.4%
THIS CHART EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS.
FIDELITY CALIFORNIA TAX-FREE INSURED PORTFOLIO

INVESTMENTS/FEBRUARY 28, 1994
(Showing Percentage of Total Value of Investments)

MUNICIPAL BONDS - 97.7%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - 96.3%
Alameda County Ctfs. of Prtn. Rfdg.
(Santa Rita Jail Proj.) 5.375% 6/1/09,
(MBIA Insured) Aaa $ 2,500,000 $ 2,456,250 010891KG
Alameda Ctfs. of Prtn. Rfdg. (Santa Rita Jail
Proj.), 5% 12/1/15 (MBIA Insured) Aaa 1,000,000 921,250 010891KK
Anaheim Pub. Fing. Auth. Tax Allocation
Rev. (Reg. Rites) 10.27% 12/1/18,
(MBIA Insured) (c) Aaa 1,000,000 1,192,500 032559AV
Antioch Area Pub. Facs. Fing. Agcy.
Special Tax Commty. Facs. Dist. 5% 8/1/18,
(FGIC Insured) Aaa 8,795,000 7,981,462 037060CM
Bay Area Gov't. Assoc. Rev. (Muni. Fing.
Pool) Series A, 8.05% 9/1/10 A 1,515,000 1,658,925 07201TAB
Bonita Unified School Dist. Ctfs. of Prtn.
(Cap. Appreciation Rfdg. Proj.) 0%
5/1/20, (MBIA Insured) Aaa 6,000,000 1,297,500 098204AX
Burbank Redev. Agcy. Tax Allocation
(City Ctr. Redev. Proj.) Series A, 5%
12/1/15, (Cap. Guaranty Insured) Aaa 4,000,000 3,705,000 120823EQ
California Edl. Facs. Auth. Rev. (Pooled Facs.
Prog.) Series 1987, 7.625% 11/1/12,
(MBIA Insured) Aaa 1,000,000 1,121,250 130173R5
California Health Facs. Fing. Auth. Rev.
(MBIA Insured):
Rfdg. (Catholic Healthcare West)
4.75% 7/1/19 Aaa 1,500,000 1,318,125 13033AAU
(Children's Hosp.) Series A, 7.50%
10/1/20 Aaa 1,650,000 1,899,562 13033JAJ
(Pomona Valley Hosp. Med. Ctr.)
Series A, 6.75% 1/1/07 Aaa 1,500,000 1,638,750 13033H3W
(Scripps Health) Series A, 4.625%
10/1/13 Aaa 1,345,000 1,188,644 13033J5V
(Sharp Temecula Valley) Series A,
7.05% 8/1/21 Aaa 1,000,000 1,118,750 13033JPT
California Hsg. Fin. Agcy. Rev.:
(Home Mtg.):
Series 1983 A, 0% 2/1/15 Aa 13,699,000 1,780,870 130329QE
Series 1983 B, 0% 8/1/15 Aa 290,000 35,163 130329RG
Series B, 5.1% 2/1/04 (MBIA Insured)(e) Aaa 2,295,000 2,243,362
13033C2R
California Poll. Cont. Fing. Auth. Solid Waste
Disp. Rev. (North County Recycling Ctr.)
6.75% 7/1/17, LOC Union Bank of
Switzerland Aaa 1,500,000 1,638,750 130536BR
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
California Pub. Cap. Impt. Fing. Auth. Rev.
(Pooled Proj.) Series B, 8.10% 3/1/18
(MBIA Insured) Aaa $ 2,960,000 $ 3,241,200 130552AS
California Pub. Works Board Lease Rev.
(Dept. Correction State Prisons, Susanville)
Series A, 5% 12/1/19
(AMBAC Insured) Aaa 3,000,000 2,737,500 13068GPA
Series D, 5.25% 6/1/15
(CGIC Insured) Aaa 1,000,000 957,500 13068GUA
California Statewide Commty. Dev. Auth.
8.83% 7/1/13, (MBIA Insured) (c) Aaa 1,000,000 982,500 130909JH
California Statewide Commtys. Dev. Corp.
Ctfs. of Prtn.:
Rfdg. (Insured Health Facs.)
(Eskaton, Inc.) 5.875% 5/1/20 A+ 1,000,000 980,000 130909GW
(Childrens Hosp.) 6% 6/1/11,
(MBIA Insured) Aaa 1,700,000 1,776,500 130909NJ
(St. Joseph Health Sys.) 5.50% 7/1/23 Aa 1,000,000 945,000 130909GH
California Univ. Rev. Rfdg. (Hsg. Sys. Group A)
(MBIA Insured):
Rfdg. Issue II, 7.80% 11/1/15 Aaa 1,000,000 1,102,500 914113CK
Series A, 5% 11/1/14 Aaa 2,500,000 2,312,500 914113RP
Campbell Ctfs. of Prtn. Rfdg. (Civic Center
Proj.) 6% 10/1/18 A 2,000,000 1,980,000 134111BK
Carson Redev. Agcy. Redev. Proj. Area #1
Tax Allocation 6.375% 10/1/12 Baa1 1,000,000 991,250 145750CZ
Castaic Lake Wtr. Agcy. Ctfs. of Prtn.
(Wtr. Sys. Impt. Proj.) 7.125% 8/1/16,
(MBIA Insured) Aaa 1,000,000 1,123,750 148370AM
Central California Jt. Pwrs. Health Fing. Auth.
Ctfs. of Prtn. (Commty. Hosp. of Central
California Proj.) 5.25% 2/1/13 A 2,000,000 1,837,500 152757AQ
Concord Redev. Agcy. Tax Allocation
(Central Concord Redev. Proj.)
Series 2, 8% 7/1/18, (MBIA Insured)
(Pre-Refunded to 7/1/98 @ 102) (d) Aaa 1,000,000 1,162,500 206141FF
Contra Costa Home Mtg. Fin. Auth. Home
Mtg. Rev. 0% 9/1/17, (MBIA Insured) Aaa 7,490,000 1,891,225 212216CA
Culver City Redev. Fing. Auth. Rev. Rfdg. Tax
Allocation (AMBAC Insured):
5.50%, 11/1/14 Aaa 4,000,000 3,990,000 230341BL
4.60%, 11/1/20 Aaa 5,000,000 4,275,000 230341BM
Del Norte County Pub. Wks. Rev. Rfdg.
(Dept. of Corrections) 5.125%, 12/1/08 A1 2,000,000 1,917,500 13068GSY
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Desert Hosp. Dist. Hosp. Rev. Ctfs. of Prtn.
(Desert Hosp. Corp.) 6.35% 7/1/04,
(Cap. Guaranty Insured) AAA $ 2,140,000 $ 2,378,075 25041MBD
Desert Hosp. Rev. Ctfs. of Prtn.
(Desert Hosp. Corp.) Series 1992,
10.029% 7/28/20, (Cap. Guaranty
Insured) (c) Aaa 2,000,000 2,322,500 25041MAZ
Empire Union School Dist. Spl. Tax
(Commty. Facs. Dist. #87-1)
Series A, 7.90% 10/1/14,
(FGIC Insured) (Pre-Refunded to
10/1/96 @ 103) (d) Aaa 1,000,000 1,125,000 292109AN
Eureka Unified School Dist. Ctfs. of Prtn.
(Cap. Appreciation) (FSA Insured):
Series A, 0% 9/1/27 Aaa 4,085,000 3,727,562 298522AD
Series B, 0% 9/1/27 Aaa 1,555,000 1,387,837 298522AE
Fontana Redev. Agcy. Tax Allocation Rfdg.
(Yurupa Hills) Series 1992 A, 7.10%
10/1/23 BBB 1,000,000 1,087,500 344619CL
Fontana Unified School Dist. Rfdg.
(AMBAC Insured):
0% 7/1/12 Aaa 1,655,000 581,319 344640HC
0% 7/1/13 Aaa 1,880,000 618,050 344640HD
Foothill De Anza Commty. College Ctfs. of
Prtn. (Connie Lee Rfdg. Proj.) 5.25%
9/1/21 AAA 1,175,000 1,086,875 345104CX
Grossmont Hosp. Dist. Rev. Series A, 8%
11/15/17, (MBIA Insured), (Pre-Refunded
to 11/15/97 @ 102) (d) Aaa 1,500,000 1,725,000 399226BH
Irvine Ranch Wtr. Dist. Joint Pwr. Agcy.
Local Pool Rev.:
7.875% 2/15/23 A 3,100,000 3,351,875 463656AR
8.25% 8/15/23 BBB 3,000,000 3,300,000 463656BE
La Habra Ctfs. of Prtn. (La Habra and
View Park) (Acquisition Proj.) 6.625%
11/1/22, (FSA Insured) Aaa 1,000,000 1,102,500 503423BA
Lemon Grove Commty. Dev. Agcy. Tax
Allocation Rev. (Lemon Grove Redev.
Proj.) 6.90% 8/1/20 Baa 1,000,000 1,058,750 525638AG
Local Gov't. Fin. Auth. Rev. (Oakland Cent.
Dist.) 0% 9/1/09, (MBIA Insured) Aaa 3,565,000 1,492,844 539558FG
Los Angeles Convention Ctr. Rfdg. Series A,
5.125% 8/15/13, (MBIA Insured) Aaa 3,000,000 2,820,000 544399AK
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Los Angeles County Cap. Asset Leasing
Corp. Leasehold Rev. 4.05% 12/1/09,
(AMBAC Insured) Aaa $ 2,250,000 $ 2,306,250 544900CE
Los Angeles County Ctfs. of Prtn.:
(Cap. Appreciation Correctional Facs.)
(MBIA Insured)
0% 9/1/12 Aaa 2,700,000 941,625 544663G9
0% 9/1/13 (f) Aaa 3,380,000 1,106,950 544663H4
(Disney Parking Proj.)
(Cap. Appreciation):
0% 3/1/10 A 3,000,000 1,143,750 5446634E
0% 3/1/15 A 1,000,000 273,750 5446634Q
0% 3/1/16 A 5,615,000 1,431,825 5446634S
0% 9/1/16 A 7,985,000 1,966,306 5446634T
0% 3/1/17 A 1,835,000 438,106 5446634U
Los Angeles County Metropolitan Trans. Auth.
Sales Tax Rev. Sr. Series B 4.75% 7/1/13,
(AMBAC Insured) Aaa 5,000,000 4,512,500 544712BP
Los Angeles County Pub. Wks. Fing.
Auth. Lease Rev. (Mult. Cap. Facs. Proj. IV)
4.75% 12/1/13, (MBIA Insured) Aaa 10,000,000 8,950,000 54473EAR
M-S-R Pub. Pwr. Agcy. San Juan Proj. Rev.
(MBIA Insured):
Series B, 6.75% 7/1/11 Aaa 1,000,000 1,105,000 553751EV
Series D, 6.75% 7/1/20 Aaa 2,500,000 2,834,375 553751DN
Mesa Consolidated Wtr. Dist. Ctfs. of Prtn.
(Cap. Impt. Phase II) 7.625% 3/15/08,
(AMBAC Insured) Aaa 1,000,000 1,123,750 590589AL
Metropolitan Wtr. Dist. Southern Wtrwks.
Rev. 8.172% 8/10/18(c) Aa 2,000,000 2,110,000 592663MN
Modesto Ctfs. of Prtn. (Commty. Ctr. Refing.
Proj.) Series A, 5% 11/1/23,
(AMBAC Insured) Aaa 2,500,000 2,271,875 607715FE
Modesto Irrigation Dist. Ctfs. of Prtn. Rfdg. &
Cap. Impts. Series A, 0% 10/1/09,
(MBIA Insured) Aaa 2,270,000 944,887 607762DG
Moreno Valley Unified School Dist.
Ctfs. of Prtn.:
(Land Acquisition) 0% 9/1/11,
(FSA Insured) Aaa 4,305,000 3,293,325 616872CT
7.375% 9/1/11 Baa 160,000 162,200 616872BS
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Northern California Pwr. Agcy. Pub. Pwr. Rev.:
Rfdg. (Geothermal Proj. #3) Series A,
5.85% 7/1/10 A $ 2,500,000 $ 2,556,250 664843SB
7.50% 7/1/23 (AMBAC Insured)
(Pre-Refunded to 7/1/21 @ 100) (d) Aaa 1,300,000 1,652,625 664843NV
Norwalk Redev. Agcy. Tax Allocation
(Norwalk Redev. Proj. #1) 7.15%
12/1/15 - 1,000,000 1,050,000 668823CM
Oakland Redev. Agcy. Central Dist. Redev.
(Sub. Tax Allocation):
Rfdg. 5.50% 2/1/14,
(AMBAC Insured) Aaa 3,000,000 2,970,000 672321ET
5% 9/1/21, (MBIA Insured) Aaa 2,025,000 1,850,344 672321FF
Orange County Ctfs. of Prtn.
(Civic Ctr. Facs.):
0% 12/1/13, (AMBAC Insured) Aaa 2,500,000 790,625 684228FL
0% 12/1/18, (AMBAC &
MBIA Insured) Aaa 7,500,000 1,753,125 684228FR
Orange County Dev. Agcy. Tax Allocation
(Santa Ana Heights Proj.) 6.125%
9/1/23 Baa1 1,500,000 1,483,125 684246CB
Palm Desert Fing. Auth. Tax Allocation RIB
9.83% 4/1/22, (MBIA Insured) (c) Aaa 1,750,000 1,992,812 696617BG
Palomar Pomerado Health Sys. Rev.
(MBIA Insured):
0% 11/1/00 Aaa 3,080,000 2,221,450 69753EAT
4.75%, 11/1/23 Aaa 1,500,000 1,295,625 69753EAS
Placer County Wtr. Agcy. Wtr. Rev. Ctfs. of
Prtn. (Phase 1 Cap. Impt. Proj.) 7.75%
7/1/18, (MBIA Insured) Aaa 1,000,000 1,138,750 726030AR
Pleasanton Jt. Pwrs. Fin. Auth. Reassessment,
Series A, 6% 9/2/05 Baa 2,000,000 2,015,000 728816AU
Poway Ctfs. of Prtn. (Poway Royal Mobile
Home Park) (Cap. Impt. Proj.) 7% 7/1/20,
(FSA Insured) Aaa 1,250,000 1,354,687 738756BC
Poway Redev. Agcy. (Paguay Proj.) Tax
Allocation 7.93% 12/15/14,
(FGIC Insured) (c) Aaa 4,200,000 4,226,250 738800DV
Rancho Mirage Joint Pwrs. Fing. Auth.
Ctfs. of Prtn. (Eisenhower Mem. Hosp.)
7% 3/1/22 Baa1 1,000,000 1,076,250 75212HAM
Rancho Wtr. Dist. Fin. Auth. 4.75% 8/15/21,
(AMBAC Insured) Aaa 2,000,000 1,737,500 752111DC
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Redding Elec. Sys. Rev. Ctfs. of Prtn.:
(Cap. Appreciation) Series A, (FGIC Insured):
0% 6/1/05 Aaa $ 2,000,000 $ 1,110,000 75728MBZ
0% 6/1/06 Aaa 1,730,000 899,600 75728MCB
0% 6/1/07 Aaa 1,890,000 921,375 75728MCD
0% 6/1/08 Aaa 1,300,000 591,500 75728MCF
Series A, 0% 7/1/19, (MBIA Insured) Aaa 2,000,000 387,500 75728MAX
Redondo Beach Redev. Agcy. Tax Allocation
(South Bay Ctr.) 8.625% 5/1/14,
(FGIC Insured) Aaa 1,000,000 1,132,500 757705AB
Richmond Redev. Agcy. Tax Allocation
(Harbour Redev. Proj.) 7% 7/1/09
(Cap. Guaranty Insured) Aaa 1,750,000 1,986,250 764472BU
Riverside County Asset Leasing Corp. Leasehold
Rev. (Riverside County Hosp. Proj.) Series A:
6.375% 6/1/09
(Detachable Call Option) A 2,000,000 2,087,500 768903AW
6.50% 6/1/12 A 5,500,000 5,791,875 768903AR
6.25% 6/1/19 A 2,000,000 2,042,500 768903AG
Riverside County Trans. Commission Sales
Tax Rev. Series A, 5.75% 6/1/09,
(AMBAC Insured) Aaa 2,000,000 2,052,500 769125BC
Riverside Unified School Dist. Ctfs. of Prtn.
(Cap. Appreciation Land Acquisition Proj.)
Series B, 0% 9/1/26, (FSA Insured) (g) Aaa 2,000,000 1,505,000 769062AD
Sacramento Ctfs. of Prtn. Rfdg. (Lt. Rail
Tran. Proj.) 6% 7/1/12 A1 1,000,000 1,003,750 785845FB
Sacramento Fing. Auth. (Cap.
Appreciation Tax Allocation Proj.)
Series A, 0% 11/1/14, (MBIA Insured) Aaa 5,700,000 1,710,000 785849BQ
Sacramento Fing. Auth. Lease Rev. Rfdg.
Series A, 5.375% 11/1/14,
(AMBAC Insured) Aaa 6,500,000 6,345,625 785846BL
Sacramento Muni. Util. Dist. Elec. Rev.:
Rfdg. Series G, 6.5%, 9/1/13 Aaa 7,000,000 7,708,750 7860044K
9.78% 8/15/18, (FGIC Insured) (c) Aaa 1,000,000 1,155,000 786004U5
Sacramento Muni. Util. Dev. Index
0% 11/15/08, (FGIC Insured) (c) Aaa 3,700,000 3,667,625 7860042C
San Bernadino County Ctfs. Prtn.
(Med Ctr. Fing. Proj.):
5.50% 8/1/17 (e) Baa1 3,350,000 3,086,187 796815NL
5.50% 8/1/22 (e) Baa1 2,660,000 2,420,600 796815NN
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
San Bernadino County Trans. Auth. Sales
Tax Rev. Series A, 6% 3/1/10,
(FGIC Insured) Aaa $ 3,625,000 $ 3,765,469 796846AP
San Bernadino Redev. Agcy. Tax Allocation
Rfdg. (Southeast Ind. Park) 7.40% 3/1/14,
(AMBAC Insured) Aaa 2,100,000 2,336,250 796779KY
San Diego County Wtr. Auth. Wtr. Rev.
Ctfs. of Prtn. (Reg. Rites) 8.55% 5/1/09,
(FGIC Insured) (c) Aaa 2,500,000 2,665,625 797415DC
San Francisco Bay Area Rapid Transit Dist.
Sales Tax Series 1990, 6.75% 7/1/09,
(AMBAC Insured) Aaa 3,200,000 3,524,000 797669DW
San Francisco City & County Redev. Agcy.
Mtg. Rev. Rfdg. (Section 8) Series A,
6.65% 7/1/24, (MBIA Insured) Aaa 1,750,000 1,758,750 797714FP
San Jacinto Unified School Dist. Series B,
0% 9/1/26, (FSA Insured)
step coupon Aaa 1,585,000 1,376,969 797852BM
San Joaquin County Ctfs. of Prtn. Rfdg.:
Rfdg. (Cap. Facs. Proj.) 5% 11/15/09,
(MBIA Insured) Aaa 1,000,000 957,500 798085EQ
(Cap. Facs. Proj.) 5% 11/15/10,
(MBIA Insured) Aaa 1,110,000 1,055,888 798085ER
(Gen. Hosp. Proj.) 6.625% 9/1/20 A 2,500,000 2,640,625 798085DX
San Jose Redev. Agcy. Tax Allocation
(Merged Area Redev. Proj.) (MBIA Insured):
6% 8/1/15 Aaa 3,000,000 3,150,000 798147LE
4.75% 8/1/24 Aaa 1,000,000 863,750 798147KV
Santa Ana Commty. Redev. Agcy. Tax
Allocation (South Main St. Redev.)
5.25% 9/1/13, (MBIA Insured) Aaa 3,000,000 2,868,750 801095GW
Santa Barbara Ctfs. of Prtn. (Harbor Rfdg.
Proj.) 6.75% 10/1/27 A 1,000,000 1,070,000 801242EX
Santa Clara Redev. Agcy. Tax Allocation
Rfdg. (Bayshore North Proj.) 5.75%
7/1/14, (AMBAC Insured) Aaa 1,000,000 1,011,250 801453DP
Santa Rosa Wtr. Rev. Rfdg. Series B, 6.125%
9/1/17, (FGIC Insured) Aaa 1,000,000 1,041,250 802649GT
Sequoia Hosp. 5.375% 8/15/13 A 1,000,000 937,500 817393BZ
Solano County Ctfs. of Prtn. Rfdg.
(Justice Facs. & Pub. Bldg. Proj.)
5.875% 10/1/05 Baa1 5,000,000 5,043,750 834131BR
Southern California Pub. Pwr. Auth. Pwr.
Proj. Rev. (Multiple Proj.) 7% 7/1/09 A 1,250,000 1,357,813 842475KE
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Southern California Pub. Pwr. Auth. Rev.
Rfdg. (Palo Verde Proj.) Series A, 0%
7/1/12, (AMBAC Insured) Aaa $ 1,855,000 $ 635,338 842475JF
Southern California Rapid Transit Dist.
Ctfs. of Prtn. (Worker's Compensation
Fund) 6% 7/1/10, (MBIA Insured) Aaa 1,500,000 1,573,125 842483AM
Sulphur Springs Unified School Dist. Series A,
(MBIA Insured):
0% 9/1/08 Aaa 2,000,000 890,000 865480EY
0% 9/1/16 Aaa 3,200,000 880,000 865480FG
Tahoe-Truckee Joint Union School Dist.
(Cap. Appreciation) Series A, 0% 9/1/10 Aaa 6,625,000 2,583,750
873873EZ
Torrance Hosp. Rev. (Little Co. of Mary Hosp.)
6.875% 7/1/15 A 1,475,000 1,604,063 891368CK
Valley Ctr. Union School Dist. Series A,
0% 9/1/17, (MBIA Insured) Aaa 8,835,000 2,263,969 919439BT
Vista Unified School Dist. Ctfs. of Prtn.
Rfdg. (Cap Appreciation) Series A, 0%
11/1/13, (FSA Insured) Aaa 6,145,000 1,951,038 92834MAY
Walnut Creek Ctfs. of Prtn. Rfdg. (John Muit
Med. Ctr.) 5%, 2/15/16, (MBIA Insured) Aaa 3,250,000 2,969,688 932702CH
West & Central Basin Fing. Auth.
(West Basin Proj.) Series A, 5% 8/1/10,
(AMBAC Insured) Aaa 2,000,000 1,900,000 95122ECE
Yolo County Flood Cont. & Wtr. Cont. Dist.
Ctfs. of Prtn. (FGIC Insured):
(Tehama-Colusa Canal Wtr. Supply)
7% 7/15/05 Aaa 1,000,000 1,148,750 986012AB
7.125% 7/15/15 Aaa 5,500,000 6,153,125 986012AA
274,230,239
PUERTO RICO - 1.4%
Puerto Rico Commonwealth Hwy. & Trns.
Auth. Rev. Series W, 5.50% 7/1/13 Baa1 2,500,000 2,453,125 745181BZ
Puerto Rico Tel. Auth. Rev. 6.78% 1/1/04,
(AMBAC Insured) (c) Aaa 1,500,000 1,458,750 745297HX
3,911,875
TOTAL MUNICIPAL BONDS
(Cost $267,287,883) 278,142,114
MUNICIPAL NOTES - (A) 2.3%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - 2.3%
Los Angeles County Trans. Commission Sales
Tax Rev. Rfdg. Series 1992 A, 2.25%
(FGIC Insured) LOC Industrial Bank of
Japan Ltd. VRDN VMIG 1 $ 1,340,000 $ 1,340,000 545170HL
Orange County Various Sanitation Dist.
Ctfs. of Prtn. (Cap. Impt. Prog.)
(Dist. 1-7 & 11) 2.20%,
(FGIC Insured), VRDN VMIG 1 2,200,000 2,200,000 684285BK
Southern California Pub. Pwr. Auth. Rev.
(Transmission Proj.) Series 1991, 2.25%,
(AMBAC Insured) LOC Swiss Bank, VRDN VMIG 1 3,000,000 3,000,000
842477HH
TOTAL MUNICIPAL NOTES
(Cost $6,540,000) 6,540,000
OTHER SECURITIES - 0.0%

RIGHTS
CALIFORNIA - 0.0%
Riverside County Asset Leasing Corp.
Leasehold Rev. (Riverside County Hosp.)
Series A (Call Rights) 6.50% 6/1/12
(Cost $43,600) - 800 160,500
TOTAL INVESTMENTS
(Cost $273,871,483) $ 284,842,614
FUTURES CONTRACTS
AMOUNT IN THOUSANDS EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
SELL
30 U.S. Treasury Bond Futures June, 1994 $ 3,340,313 $ 21,290
THE VALUE OF FUTURES CONTRACTS SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 1.1%

SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Standard & Poor's Corporation credit ratings are used in the
absence of a rating by Moody's Investors Service, Inc.
(c) Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate. The price will be more
volatile than the price of a comparable fixed rate security.
(d) Security collateralized by an amount sufficient to pay interest and
principal.
(e) Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
(f) Security was pledged to cover margin requirements for futures
contracts. At the period end, the value of securities pledged amounted to
$1,106,950.
(g) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 85.5% AAA, AA, A 90.0%
Baa 7.0% BBB 2.4%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 0.4%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Lease Revenue 33.1%
Special Tax 20.1
Others (individually less
than 10%) 46.8
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994, the aggregate cost of investment securities for
income tax purposes was $273,871,483. Net unrealized appreciation
aggregated $10,971,131, of which $14,074,614 related to appreciated
investment securities and $3,103,483 related to depreciated investment
securities.
The fund hereby designates $2,359,433 as a capital gain dividend for the
purpose of the dividend paid deduction.
FIDELITY CALIFORNIA TAX-FREE INSURED PORTFOLIO

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994

147.ASSETS 148. 149.

150.Investment in securities, at value (cost 151. $ 284,842,614
$273,871,483) (Notes 1 and 2) - See accompanying
schedule

152.Cash 153. 130,026

154.Receivable for investments sold 155. 11,757,804

156.Interest receivable 157. 3,405,147

158.Receivable for daily variation on futures contracts 159. 22,500

160. 161.TOTAL ASSETS 162. 300,158,091

163.LIABILITIES 164. 165.

166.Payable for investments purchased $ 7,989,434 167.
Delayed delivery (Note 2)

168.Dividends payable 260,631 169.

170.Accrued management fee 104,568 171.

172.Other payables and accrued expenses 43,662 173.

174. 175.TOTAL LIABILITIES 176. 8,398,295

177.178.NET ASSETS 179. $ 291,759,796

180.Net Assets consist of (Note 1): 181. 182.

183.Paid in capital 184. $ 274,863,941

185.Accumulated undistributed net realized gain (loss) 186. 5,903,434
on investments

187.Net unrealized appreciation (depreciation) on: 188. 189.

190. Investment securities 191. 10,971,131

192. Futures contracts 193. 21,290

194.195.NET ASSETS, for 27,161,053 shares 196. $ 291,759,796
outstanding

197.198.NET ASSET VALUE, offering price and 199. $10.74
redemption price per share ($291,759,796 (divided by)
27,161,053 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994

200.201.INTEREST INCOME 202. $ 17,357,295

203.EXPENSES 204. 205.

206.Management fee (Note 4) $ 1,240,128 207.

208.Transfer agent, accounting and custodian fees and 489,399 209.
expenses (Note 4)

210.Non-interested trustees' compensation 1,868 211.

212.Registration fees 11,273 213.

214.Audit 34,682 215.

216.Legal 2,596 217.

218.Reports to shareholders 12,607 219.

220. Total expenses before reductions 1,792,553 221.

222. Expense reductions (Note 9) (352,015) 1,440,538

223.224.NET INTEREST INCOME 225. 15,916,757

226.REALIZED AND UNREALIZED GAIN (LOSS) ON 228. 229.
INVESTMENTS
(NOTES 1 AND 3)
227.Net realized gain (loss) on:

230. Investment securities 13,524,569 231.

232. Futures contracts 628,258 14,152,827

233.Change in net unrealized appreciation 234. 235.
(depreciation) on:

236. Investment securities (16,401,673) 237.

238. Futures contracts (139,726) (16,541,399)

239.240.NET GAIN (LOSS) 241. (2,388,572)

242.243.NET INCREASE (DECREASE) IN NET ASSETS 244. $ 13,528,185
RESULTING FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR TEN MONTHS
ENDED ENDED
FEBRUARY 28, FEBRUARY 28, 1993
1994 (NOTE 1)

245.INCREASE (DECREASE) IN NET ASSETS

246.Operations $ 15,916,757 $ 10,158,424
Net interest income

247. Net realized gain (loss) on investments 14,152,827 1,333,021

248. Change in net unrealized appreciation (16,541,399) 19,225,483
(depreciation)
on investments

249. 13,528,185 30,716,928
250.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM
OPERATIONS

251.Distributions to shareholders (15,916,757) (10,158,424)
From net interest income

252. From net realized gain (5,560,443) -

253. 254.TOTAL DISTRIBUTIONS (21,477,200) (10,158,424)

255.Share transactions 191,511,206 161,300,515
Net proceeds from sales of shares

256. Reinvestment of distributions from: 12,290,624 7,750,883
Net interest income

257. 4,540,746 -
Net realized gain

258. Cost of shares redeemed (183,505,791) (92,500,449)

259. 24,836,785 76,550,949
Net increase (decrease) in net assets resulting from
share transactions

260. 16,887,770 97,109,453
261.TOTAL INCREASE (DECREASE) IN NET ASSETS

262.NET ASSETS 263. 264.

265. Beginning of period 274,872,026 177,762,573

266. End of period $ 291,759,796 $ 274,872,026

267.OTHER INFORMATION 269. 270.
268.Shares

271. Sold 17,343,548 15,478,983

272. Issued in reinvestment of distributions from: 1,113,708 743,732
Net interest income

273. 417,348 -
Net realized gain

274. Redeemed (16,625,614) (8,911,574)

275. Net increase (decrease) 2,248,990 7,311,141

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
276. YEAR TEN MONTHS YEARS ENDED APRIL 30,
ENDED ENDED
FEBRUARY 28, FEBRUARY 28,
1993

277. 1994 (NOTE 1) 1992 1991 1990

278.SELECTED PER-SHARE DATA

279.Net asset value, $ 11.030 $ 10.100 $ 9.740 $ 9.370 $ 9.590
beginning of
period

280.Income from .589 .492 .603 .605 .618
Investment
Operations
Net interest income

281. Net realized and (.090) .930 .360 .370 (.220)
unrealized gain (loss)
on investments

282. Total from .499 1.422 .963 .975 .398
investment operations

283.Less Distributions (.589) (.492) (.603) (.605) (.618)
From net interest
income

284. From net realized (.200) - - - -
gain on investments

285. Total distributions (.789) (.492) (.603) (.605) (.618)

286.Net asset value, $ 10.740 $ 11.030 $ 10.100 $ 9.740 $ 9.370
end of period

287.TOTAL RETURN (DAGGER) 14.48% 10.14% 10.67% 4.15%
4.59%

288.RATIOS AND SUPPLEMENTAL DATA

289.Net assets, end of $ 291,760 $ 274,872 $ 177,763 $ 113,711 $ 87,438
period (000 omitted)

290.Ratio of expenses .48% .63%* .66% .72% .75%
to average net
assets (DAGGER)(DAGGER)

291.Ratio of expenses .60% .63%* .66% .72% .75%
to average net assets
before expense
reductions (DAGGER)(DAGGER)

292.Ratio of net 5.31% 5.72%* 6.06% 6.30% 6.38%
interest income to
average net assets

293.Portfolio turnover 60% 27%* 19% 14% 10%
rate

</TABLE>

* ANNUALIZED
(DAGGER) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED. TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
(DAGGER)(DAGGER) SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS.
FIDELITY CALIFORNIA TAX-FREE MONEY MARKET PORTFOLIO

PERFORMANCE: THE BOTTOM LINE

To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects the change in a fund's share price
over a given period and reinvestment of its dividends (or income). Yield
measures the income paid by a fund. Since a money market fund tries to
maintain a $1 share price, yield is an important measure of performance. If
Fidelity had not reimbursed certain fund expenses during the periods shown,
the total returns, dividends and yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

California Tax-Free Money Market 1.97% 20.38% 49.06%

Consumer Price Index 2.52% 20.64% 41.47%

Average California Tax-Free
Money Market Fund 1.96% 20.22% n/a

CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, one year, five years or since the fund started on July 7, 1984.
For example, if you invested $1,000 in a fund that had a 5% return over the
past year, you would end up with $1,050. Comparing the fund's performance
to the consumer price index (CPI) helps show how your investment did
compared to inflation. To measure how the fund stacked up against its
peers, you can compare its return to the average California tax-free money
market fund's total return. This average currently reflects the performance
of 42 California tax-free money market funds tracked by IBC/Donoghue. (The
periods covered by the CPI and IBC/Donoghue numbers are the closest
available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

California Tax-Free Money Market 1.97% 3.78% 4.22%

Consumer Price Index 2.52% 3.82% 3.65%

Average California Tax-Free
Money Market Fund 1.96% 3.76% n/a

AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
YIELDS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2/28/93 5/31/93 8/31/93 11/30/93 2/28/94

California Tax-Free 1.83% 2.29% 1.97% 1.90% 1.91%
Money Market

Average California Tax-Free 1.75% 2.22% 2.01% 1.92% 1.96%
Money Market Fund

California Tax-Free 3.21% 4.02% 3.46% 3.34% 3.35%
Money Market Tax-equivalen
t

Average All Taxable 2.71% 2.62% 2.64% 2.69% 2.79%
Money Market Fund

</TABLE>

Row: 1, Col: 1, Value: 1.83
Row: 1, Col: 2, Value: 1.75
Row: 2, Col: 1, Value: 1.97
Row: 2, Col: 2, Value: 2.22
Row: 3, Col: 1, Value: 2.32
Row: 3, Col: 2, Value: 2.01
Row: 4, Col: 1, Value: 1.9
Row: 4, Col: 2, Value: 1.92
Row: 5, Col: 1, Value: 1.91
Row: 5, Col: 2, Value: 1.96
California
Tax-Free
Money Market
Average California
Tax-Free Money
Market Fund
3% -
2% -
1% -
0%
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods, expressed as annual
percentage rates. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The chart above shows the fund's
current seven-day yield at quarterly intervals over the past year. You can
compare these yields to the average tax-free money market fund. Or you can
look at the fund's tax-equivalent yield, which is based on a combined
effective 1994 federal and state income tax rate of 43.04%. The
tax-equivalent figures are useful in seeing how the fund stacked up against
the average taxable money market fund as tracked by IBC/Donoghue.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS REFLECT PAST RESULTS RATHER
THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield - the yield you'd have to
earn on a similar taxable
investment to match the
tax-free yield - makes the
comparison more meaningful.
Keep in mind that the U.S.
government neither insures nor
guarantees a money market
fund. And there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
FIDELITY CALIFORNIA TAX-FREE MONEY MARKET PORTFOLIO

FUND TALK: THE MANAGER'S OVERVIEW

An interview with Deborah Watson, Portfolio Manager of Fidelity California
Tax-Free Money Market Portfolio
Q. DEBORAH, HOW HAS THE SHORT-TERM MARKET BEHAVED OVER THE LAST SIX MONTHS?
A. Short-term interest rates remained stable through the fall, despite a
mild uptick in November fueled by inflation fears. The Federal Reserve kept
the federal funds rate at or near 3% from August through January. Then, on
February 4, the Fed pushed the fed funds rate up to 3.25%, essentially
raising all short-term rates.
Q. WAS THE FUND WELL POSITIONED FOR HIGHER RATES?
A. For the most part, yes. I had gradually reduced the fund's average
maturity through the fall and early winter; it fell from 81 days at the end
of August to 48 days at the end of January. The fund's shorter average
maturity will allow me to capture the higher yields available following
February's rate hike. In addition, supply and demand played a role in how I
positioned the fund earlier in the year. California usually issues its
heaviest supply of new obligations during the summer months, and 1993 was
no exception. I lengthened the fund's average maturity through August, and
was able to lock in higher-yielding issues before rates fell further.
Issuance then slowed heading into fall, which caused me to gradually
shorten the average maturity.
Q. HOW DID CALIFORNIA'S RECESSION AFFECT THE FUND?
A. The state's weak economy caused the financial health of many California
issuers to deteriorate. That meant there were fewer securities available
that met Fidelity's high standards for credit quality. However, I
compensated by buying more of those that did, resulting in little effect on
the fund's yield. Rebuilding efforts after January's earthquake should
boost economic growth in 1994. However, the annual borrowing season for
state and local governments is fast approaching, and their financial
picture hasn't improved. This may further reduce the supply of high quality
issues in California this summer.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on February was 1.91%, up slightly from 1.83%
a year ago. The latest yield translates into a tax equivalent yield of
3.35% for investors in the 43.04% combined federal and state tax bracket.
The fund's total return - which assumes reinvestment of monthly dividends -
for the 12 months ended February 28 was 1.97%. The average California
tax-free money market fund tracked by IBC/Donoghue returned 1.96% during
the same period.
Q. WHAT'S YOUR VIEW GOING FORWARD?
A. I think short-term interest rates will probably rise gradually over the
next six months, while the Fed continues inching up the fed funds rate to
control inflation. That said, I'll probably keep the fund's average
maturity in a neutral 35- to 50-day range. In addition, I've increased the
fund's stake in variable rate instruments to 59% by February 28. The
coupons (stated interest rates) on these securities are reset at fixed
intervals - for example, weekly or monthly - so when rates rise, the fund
can benefit from higher coupons at these reset intervals.

FUND FACTS
GOAL: tax-free income with
share price stability by
investing in high-quality,
short-term California municipal
securities
START DATE: July 7, 1984
SIZE: as of February 28, 1994,
$611 million
MANAGER: Deborah Watson,
since July 1988; manager,
Spartan California Municipal
Money Market Portfolio, since
November 1989; Spartan
Florida Municipal Money
Market Portfolio, since August
1992; Spartan Pennsylvania
Municipal Money Market
Portfolio, since September
1989
(checkmark)

WORDS TO KNOW
COMMERCIAL PAPER: A security
issued by a municipality to
finance capital or operating
needs.
FEDERAL FUNDS RATE: The interest
rate banks charge each other
for overnight loans.
MATURITY: The time remaining
before an issuer is scheduled
to repay the principal amount
on a debt security. When the
fund's average maturity -
weighted by dollar amount -
is short, the fund manager is
anticipating a rise in interest
rates. When the average
maturity is long, the manager
is expecting rates to fall.
When the average maturity is
neutral, the manager wants
the flexibility to respond to
rising rates, while still
capturing a portion of the
higher yields available from
issues with longer maturities.
MUNICIPAL NOTE: A security
issued in advance of future
tax or other revenues and
payable from those specific
sources.
TENDER BOND: A variable-rate,
long-term security that gives
the bond holder the option to
redeem the bond at face
value before maturity.
VARIABLE RATE DEMAND NOTE
(VRDN): A tender bond that
can be redeemed on short
notice, typically one or seven
days. VRDNs are useful in
managing the fund's average
maturity and liquidity.
FIDELITY CALIFORNIA TAX-FREE MONEY MARKET PORTFOLIO

INVESTMENT CHANGES

MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
2/28/94 8/31/93 2/28/93

0 - 30 68.2 65.5 62.1

31 - 90 10.1 9.3 15.6

91 - 180 19.3 5.5 18.3

181 - 397 2.4 19.7 4.0

WEIGHTED AVERAGE MATURITY
2/28/94 8/31/93 2/28/93

California Tax-Free
Money Market 44 days 81 days 48 days

Average California
Tax-Free Money Market Fun 50 days 72 days 52 days
d*

ASSET ALLOCATION
AS OF 2/28/94 AS OF 8/31/93

Row: 1, Col: 1, Value: 59.0
Row: 1, Col: 2, Value: 14.7
Row: 1, Col: 3, Value: 3.9
Row: 1, Col: 4, Value: 22.0
Row: 1, Col: 5, Value: 2.0
Row: 1, Col: 1, Value: 54.1
Row: 1, Col: 2, Value: 11.7
Row: 1, Col: 3, Value: 5.9
Row: 1, Col: 4, Value: 27.0
Row: 1, Col: 5, Value: 3.0
Variable rate
demand notes
(VRDNs) 59.0%
Commercial
paper 14.7%
Tender bonds 3.9%
Municipal
notes 22.0%
Other 0.4%
Variable rate
demand notes
(VRDNs) 54.1%
Commercial
paper 11.7%
Tender bonds 5.9%
Municipal
notes 27.0%
Other 1.3%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(Registered trademark)
FIDELITY CALIFORNIA TAX-FREE MONEY MARKET PORTFOLIO

INVESTMENTS/FEBRUARY 28, 1994
(Showing Percentage of Total Value of Investments)

MUNICIPAL SECURITIES (A) - 100%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - 100.0%
ABAG Fin. Auth.
(L.S. Packard Children Hosp. at Stanford Proj.),
2.30%, (AMBAC Insured) (Liquidity Enhancement
Industrial Bank of Japan), VRDN $ 100,000 $ 100,000 00037EBJ
Alameda County Ind. Dev. Auth. Ind. Rev.:
(Jacobs Investment Co. Proj.) Series 1985 A, 2.60%,
LOC Bank of America, VRDN 3,800,000 3,800,000 011106AA
(Longview Fibre Co.) Series 1988, 2.45%,
LOC ABN-AMRO NV, VRDN 1,750,000 1,750,000 011106AD
Alameda County TRAN 3.25% 7/29/94 13,000,000 13,024,737 010878AB
Anaheim Ctfs. of Prtn. Series 1993, 2.25% 8/1/19,
(Liquidity Enhancement Industrial Bank of Japan Ltd.) 1,500,000
1,500,000 032540KQ
Anaheim Hsg. Auth. (Park Vista Apts) 2.50%
LOC Citibank, VRDN (b) 6,000,000 6,000,000 032557BH
Beverly Hills Pub. Fin. Auth. Lease Rev. Bonds,
Series 1993 A, 2.65 % 6/1/94 2,065,000 2,065,000 088006AA
Big Bear Lake Ind. Dev. (Southwest Gas Corp. Proj.)
Series 1993 A, 2.40%
LOC Union Bank of Switzerland, VRDN (b) 1,400,000 1,400,000 08901KAR
California Dept. of Wtr. Resources Tender Option Ctfs.
Series R-4, 2.50% (Liquidity Enhancement Svenska
Handelsbanken), VRDN (c) 17,000,000 17,000,000 130663W3
California Edl. Facs. Auth. Rev. Rfdg. Series L-1
(Stanford University) 2.50% VRDN 5,055,000 5,055,000 130174QL
California Gen. Oblig. Adj. Rate RAN, 2.55%
6/28/94 14,000,000 14,000,000 130619D5
California Gen. Oblig. RAN, Series 1993-94,
3.50% 6/28/94 17,160,000 17,192,758 130619D4
California Health. Facs. Fing. Auth. Rev.
(Kaiser Permanente)
Series A, 2.35% VRDN 3,400,000 3,400,000 13033J3L
California Hsg. Fin. Agcy. Home Mtg. Rev. Custodial Receipts:
Series 4A, 2.60%, (Liquidity Enhancement
Dai-ichi Kangyo Bank), VRDN (b) (c) 5,000,000 5,000,000 13033CQS
Series 15B, 2.60% (Liquidity Enhancement Dai-ichi
Kangyo Bank), VRDN (b) (c) 2,415,000 2,415,000 13033CWH
California Hsg. Fin. Agcy. Home Mtg. Rev.
Series 1993 F 2.40% 9/15/94, MT (b) 10,000,000 9,988,952 13033CZ5
California Hsg. Fin. Agcy. Rev. Custodial Receipts
Series 15A, 2.60%, (Liquidity Enhancement Dai-ichi
Kangyo Bank), VRDN (b) (c) 3,815,000 3,815,000 13033CWJ
California Hsg. Fin. Auth. Rev., VRDN:
(Camino Colony Apts.)
Series 1993 B, 2.50% LOC Federal Home Loan
Bank of San Francisco 2,000,000 2,000,000 13033CP8
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
California Poll. Cont. & Fin. Auth. CP mode:
(Pacific Gas & Elec. Co.):
Rfdg. Series 1988 B, 2.55% 4/25/94,
LOC Sumitomo Bank of Japan Ltd., CP mode (b) $ 2,500,000 $ 2,500,000
130995GE
Series 1988 A, LOC Swiss Bank, CP mode(b):
2.40% 4/13/94 2,000,000 2,000,000 130995FW
2.45% 4/22/94 5,000,000 5,000,000 130995GD
2.60% 5/12/94 3,000,000 3,000,000 130995GL
2.60% 5/13/94 3,500,000 3,500,000 130995GK
Series 1988 B, LOC Sumitomo Bank, CP mode (b):
2.60% 5/16/94 5,000,000 5,000,000 130995GJ
2.60% 5/20/94 2,000,000 2,000,000 130995GQ
Series 1988 D, 2.35% 3/23/94,
LOC Bank of Tokyo, CP mode 2,000,000 2,000,000 130995FX
Series 1988 E, 2.50% 5/16/94,
LOC Morgan Gauranty Trust Co., CP mode 3,000,000 3,000,000 130995GM
Series 1988 F, 2.50% 4/20/94,
LOC Banque Nationale De Paris, CP mode 2,000,000 2,000,000 130995GH
(Southern California Edison Co.)
Series 1985 D, 2.50% 4/18/94, CP mode 2,000,000 2,000,000 130995GG
California Poll. Cont. Fing. Auth. Solid Waste Disp. Rev.
(Western Waste Ind.) 2.825%, Citibank, VRDN 2,200,000 2,200,000
130536AW
California Poll. Cont. Rev. Fing. Auth. Resource Recovery Rev:
(Delano Proj.) VRDN (b):
Series 1989, 2.30%, LOC ABN-AMRO NV 600,000 600,000 130535AZ
Series 1991, 2.30%, LOC ABN-AMRO NV 500,000 500,000 130535BE
(Malaga Proj.) Series A,2.35%,
LOC Bank of America, VRDN (b) 800,000 800,000 130535AP
California Statewide Commty. Dev. Auth. Rev., VRDN:
(Covenant Retirement Commty.) 2.45% 12/1/22,
LOC Lasalle Nat'l Bank 2,300,000 2,300,000 130907CX
(Delancey Street Foundation) 2.55% 3/1/03,
LOC Bank of America 3,125,000 3,125,000 130907CY
(Florestone Prod. Co.) Series 1989, 2.45%,
LOC Bank of Tokyo (b) 1,030,000 1,030,000 130905AF
(Tri-H Foods Proj.) Series 1991, 2.90%,
LOC Bank of Tokyo(b) 2,375,000 2,375,000 130905BP
California Various Purpose Gen. Oblig.
Custodial Receipts 2.45% 10/15/93, (AMBAC Insured),
(Liquidity Enhancement Citibank) MT 8,000,000 8,000,000 130622WG
Chula Vista Ind. Dev. Rev.
(San Diego Gas & Elec. Co.) (b):
Series B, 2.45%, VRDN 1,000,000 1,000,000 17131HAB
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Chula Vista Ind. Dev. Rev. - continued 17199BBA
(San Diego Gas & Elec. Co.) (b) - continued 17199BBA
Series D, 2.30% 3/01/94, CP mode $ 2,000,000 $ 2,000,000 17199BBA
Series E, CP mode:
2.65% 3/10/94 2,500,000 2,500,000 17199BAS
2.70% 3/11/94 2,000,000 2,000,000 17199BAT
Concord Hsg. Auth. (Arcadian Apt. Proj.) First Nationwide
Grantor Trust Series 1991-1D, 2.50%, LOC Federal
Home Loan Bank of San Francisco, VRDN (c)(d) 2,800,000 2,800,000
33581FAK
Del Mar Race Track Auth. 2.60% 5/26/94
LOC Societe Generale, CP 5,000,000 5,000,000 2451259A
Duarte Single-Family Mtg. Rev Trust Ctfs.
2.70% (Liquidity Enhancement Norwest Bank)
(Escrowed to Maturity) VRDN (c) 3,100,000 3,100,000 263595AY
East Bay Muni. Util. Dist. Wtr. Sys. Rev.
2.55% 5/23/94, CP 3,000,000 3,000,000 2710149X
Escondido Commty. Dev. Commission Rev.
(Promeneade Proj.) 2.65%,
LOC Bank of America, VRDN (b) 4,000,000 4,000,000 296338AA
Fontana (Oakcrest Apt. Proj.)
First Nationwide Grantor Trust Series 1991-1G,
2.50% LOC Federal Home Loan Bank of
San Francisco, VRDN (c) 1,100,000 1,100,000 33581FAD
Fremont Bldg. and Equip. Acquisition Fing. Proj.
(Fremont Park Facs. Corp.) 3.85%,
LOC Mitshbishi Trust & Banking, VRDN 2,600,000 2,600,000 357122BA
Fresno County Unified School Dist. TRAN 3.50%
8/11/94 8,500,000 8,516,558 358232AD
Fresno TRAN 3% 6/30/94 1,500,000 1,500,535 358082FQ
Hayward Hsg. Auth. Rev. (Foothills Garden Apts.)
Series 1985 A, 2.35%, LOC Citibank, VRDN 7,650,000 7,650,000 421227AA
Huntington Beach Multi-Family Hsg. Rev.
(Seabridge Villas Proj.) 1985 A, 2.25%,
LOC Bank of America, VRDN 2,000,000 2,000,000 446196AA
Irvine Pub. Facs. & Infrastructure Auth. Lease Rev.
Series 1985, 2.40%, LOC Nat'l Westminister
Bank, VRDN 7,600,000 7,600,000 463904AA
Irvine Ranch Wtr. Dist. Rev. (Cap. Impt. Proj.) 2.20%,
LOC Morgan Gauranty, VRDN 400,000 400,000 463641AR
Kern County TRAN 3.25% 7/5/94 5,000,000 5,009,242 492248AA
Lancaster Redev. Agcy. Multi-Family Hsg. Rev.
(Westwood Park Apt.) Series 1985-K, 4.35%,
LOC Bank of America, VRDN 1,200,000 1,200,000 513795AJ
Livermore Ctfs. of Prtn. (Wtr. Reclamation Plant
Expansion Proj.) 2.40%, LOC Westminister
Nat'l. Bank, VRDN 2,000,000 2,000,000 538164CQ
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Loma Linda Multi-Family Hsg. Rev. (Loma Linda
Springs Apts.) Series 1989, 3.60%,
LOC Tokai Bank, VRDN (b) $ 1,490,000 $ 1,490,000 541905AB
Los Angeles Ctfs. of Prtn. (Baldwin Hills Public
Parking Facs.) Series 1984,2.55% 12/1/14,
LOC Wells Fargo Bank, VRDN 10,000,000 10,000,000 544391AU
Los Angeles Commty. College Dist. TRAN
Series 1993-94, 3.25% 7/6/94 4,000,000 4,007,453 54438CAA
Los Angeles Commty. Redev. Agcy.
(CMC Med. Plaza) 2.60%,
LOC Bank of America, VRDN 600,000 600,000 544391BQ
Los Angeles Commty. Redev. Agcy.
Multi-Family Hsg. Rev. (Grand Promenade Proj.)
Series 1985, 3%, LOC Tokai Bank Ltd., VRDN 1,700,000 1,700,000 544393AD
Los Angeles County Hsg. Auth. (Sand Canyon)
Series 1985F, 2.35%, LOC Citibank, VRDN 2,500,000 2,500,000 544688BC
Los Angeles County Hsg. Auth. Multi-Family Hsg. Rev.
(Malibu Meadows Proj.) Series 1991 A, 2.60%,
LOC Sumitomo Bank Ltd. VRDN 4,000,000 4,000,000 544688GD
(Sand Canyon Villas Proj.) Series 1989 A, 2.60%,
LOC Ind. Bank of Japan, VRDN 3,300,000 3,300,000 544688GC
Los Angeles County Metropolitan Trans. Auth.
Series 1993 A, 2.30%, (Liquidity Enhancement Industrial
Bank of Japan Ltd.), VRDN 13,400,000 13,400,000 544712AV
Los Angeles County Pub. Wks. Floating Rate
Trust Ctfs., Series 8, 2.55% (Liquidity
Enhancement Credit Suisse), VRDN (c) 7,695,166 7,695,166 31303KAA
Los Angeles County TRAN, Series B 93-94,
(Liquidity Enhancement Credit Suisse), CP mode 2,000,000 2,000,000
5446579L
Los Angeles County Transit Commty. Custodial Receipts,
Series 1992 B-37, 2.80%, (Liquidity Enhancement
Sakura Bank) (MBIA Insured), VRDN (c) 2,890,000 2,890,000 545170JQ
Los Angeles County Unified School Dist. TRAN 3.25%
7/15/94 10,000,000 10,017,000 544644AE
Los Angeles Custodial Receipts, Series A-2, 2.80%,
(Liquidity Enhancement Sakura Bank Ltd.)
(BIG Insured), VRDN 6,135,000 6,135,000 55377EAM
Los Angeles Dept. of Wtr. & Pwr. Elec. Plant
(Short Term Prog.) 2.55% 5/23/94, CP 1,000,000 1,000,000 5445219C
Los Angeles Dept. of Wtr. & Pwr. Elec. Plant Rev.
Issue 93, 2.65%, (Liquidity Enhancement
Banker's Trust), VRDN (c) 3,600,000 3,600,000 544506JM
Los Angeles Dept. of Wtr. & Pwr. Elec. Plant Rev. Tender
Option Ctfs. Series M, 2.70% (Liquidity Enhancement
Sanwa Bank), VRDN (c) 5,500,000 5,500,000 544506JM
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Los Angeles Hsg. Auth. Multi-Family Hsg. Rev.
(River Park Apt.) Series 1988 D, 2.70%,
LOC Dai-Ichi Kangyo Bank, VRDN $ 2,100,000 $ 2,100,000 544688GB
Los Angeles Multi-Family Hsg. Rev.:
(Beverly Park Apts.) Series 1988 A, 2.40%,
LOC Barclay's Bank, VRDN (b) 3,500,000 3,500,000 544582GV
(Channel Gateway Apts.) Series 1989 B, 2.65%,
LOC Fuji Bank, VRDN (b) 15,900,000 15,900,000 544582GX
(Studio Colony Proj.) Series 1985 C, 2.45%,
LOC Industrial Bank of Japan, VRDN 1,900,000 1,900,000 544582CC
Los Angeles Wastewtr. Sys. Rev.
(Liquidity Enhancement Sumitomo Bank), CP:
2.40% 3/14/94 3,800,000 3,800,000 544999AL
2.60% 3/16/94 4,100,000 4,100,000 544999AK
2.40% 3/17/94 2,300,000 2,300,000 544999AM
2.60% 5/18/94 2,700,000 2,700,000 544999AP
Los Angeles Wastewtr. Sys. Rev. Bonds Series B,
8.80% 6/01/94, (MBIA Insured) 550,000 558,209 544652SX
Los Angeles Variable Rate Multifamily Hsg. Rev.
(Museum Terrace Apt. Proj.) Series H, 2.40%,
LOC Bank of America, VRDN 3,800,000 3,800,000 544582AP
Madera County TRAN 3.25% 9/30/94 2,000,000 2,004,203 556903AN
Midpeninsula Regional Space Dist.
(Santa Clara & San Mateo Counties) Series A, 2.70%,
LOC Fuji Bank, VRDN 3,800,000 3,800,000 598022BE
Oceanside Multi-Family Mtg. Rev.
(Riverview Springs Apts.) Series 1990 A, 2.60%,
LOC Bank of Tokyo, VRDN (b) 900,000 900,000 675370AB
Olcese Wtr. Dist. (Rio Bravo Wtr. Delivery Sys. Proj.)
Series 1986 A, 2.40% 3/29/94,
LOC Sumitomo Bank, Ltd., CP mode (b) 2,800,000 2,800,000 6794749P
Ontario Ind. Dev. Auth. Rev. (Safari Land Proj.)
Series 1989, 3.25% 8/1/14,
LOC Tokai Bank, VRDN(b) 1,000,000 1,000,000 682908AA
Orange County Apt. Dev. Rev.:
(Bear Brands Apt.) Issue Z 1985, 2.35%,
LOC Fuji Bank, VRDN 4,800,000 4,800,000 684209JQ
(Foothill Oaks Apts. Proj.) Issue 1989 B, 2.50%,
Bank of America, VRDN (b) 3,100,000 3,100,000 684209JW
(Laguna Summit Apts.) Series 1985 X, 3%,
LOC Tokai Bank, VRDN 800,000 800,000 684209JN
(Niguel Summit II) Issue 1985, Series B, 2.50%,
LOC Bank of America, VRDN 4,740,000 4,740,000 684209JL
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Orange County Apt. Dev. Rev.: - continued
(Park Place Apts. Proj.) Series 1989 A, 3.40%,
LOC Tokai Bank, VRDN (b) $ 1,000,000 $ 1,000,000 684209JV
(Villa Marguerite Apts.) Series 1993 A, 2.40%,
LOC Wells Fargo Bank, VRDN 2,600,000 2,600,000 684209KE
(Vista Verde Apt. Proj.) Series 1988 A, 3.30%,
LOC Wells Fargo Bank, VRDN (b) 1,800,000 1,800,000 684209JU
(WLCO Partners) Series 1985 C-1, 3.20%,
LOC Tokai Bank Ltd., VRDN 1,000,000 1,000,000 684209CT
Orange County (Irvine Coast Assessment District #88-1)
2.60%, LOC Fuji Bank, Ind. Bank of Japan,
Mtsubishi Bank, VRDN 1,000,000 1,000,000 684265AV
Orange County Hsg. Auth. Apt. Dev. Rev.
(Costa Mesa Partners) Series 1985-BB, 3.25%,
LOC Tokai Bank, VRDN 17,100,000 17,100,000 684262AF
Orange County San. Dist. Rev. (#1,2,3,5,6,7, 11)
2.30%, (Liquidity Enhancement Industrial Bank of
Japan), VRDN (d) 5,000,000 5,000,000 684285BL
Orange County TRAN 3% 6/30/94 5,000,000 5,007,190 684201EF
Orange County Trans. Corridor Agcy. Rev.
(Foothill/Eastern) 2.25%
LOC Morgan Gauranty, VRDN 3,600,000 3,600,000 345105AA
Orange County Wtr. Dist. Ctfs. of Prtn. Rev.
Series 1990 B, 3.25%,
LOC Nat'l. Westminster Bank, VRDN 1,000,000 1,000,000 684420BR
Oxnard Redev. Agcy. Ctfs. of Prtn. Rev.
(Channel Islands Bus. Ctr. Proj.) 2.875%,
LOC Wells Fargo Bank, VRDN 3,195,000 3,195,000 692018AA
Paramount Hsg. Auth. Multi-Family Hsg. Rev.
Rfdg. (Centry Place Apt. Proj.) 2.55%,
LOC Dai-Ichi Kangyo Bank, VRDN 5,600,000 5,600,000 699195AB
Pleasonton (Vally Plaza II Proj.) First Nationwide
Grantor Trusty Series 1991-1L, 2.50%
LOC Federal Home Loan Bank of
San Francisco, VRDN (c) 1,000,000 1,000,000 699195AB
Rancho Wtr. Dist. Fin. Auth. Rev. Rfdg. Floating Option
Tax-Exempt Receipts Series PA-62, 2.55%, (Liquidity
Enhancement Merrill Lynch & Co. Inc.) VRDN (c) 2,600,000 2,600,000
752111DD
Redlands Multi-Family Hsg. Rev. (Parkview Terrace Proj.),
2.45%, LOC Bank of America, VRDN 1,600,000 1,600,000 757591AD
Riverside Multifamily Hsg. Rev.
(Victoria Springs Apts.) Series 1989 C, 2.70%,
LOC Bank of Amercia, VRDN (b) 1,500,000 1,500,000 76911MBS
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Sacramento (Smoketree Apt. Proj.) First Nationwide
Grantor Trust Series 1991-1K, 2.50% LOC Federal
Home Loan Bank of San Francisco, VRDN (c) $ 2,000,000 $ 2,000,000
786106DM
Sacramento County TRAN, 3% 7/29/94 7,000,000 7,010,225 786106DM
Sacramento Muni. Util. Dist. Rev.
Series H, LOC Bank of America, CP:
2.30% 3/23/94 3,000,000 3,000,000 785995MM
2.50% 4/19/94 3,800,000 3,800,000 785995MN
2.60% 5/19/94 8,000,000 8,000,000 785995MQ
San Bernardino (Quail Pte. Apt. Proj.) First Nationwide
Grantors Trust Series 1991-1N, 2.50%, LOC Federal
Home Loan Bank of San Francisco, VRDN (c) 1,500,000 1,500,000 796900BJ
San Bernadino County Mtg. Rev. Rfdg.
(Pepperwood Apts.) Series 1993 A, 2.40%,
LOC Fed Home Loan Bank of San Francisco, VRDN 4,000,000 4,000,000
796900CL
San Bernadino County Multi-Family Hsg. Rev.:
(Cedarbrook Terrace Apts. Proj.) Series 1990 A, 3.60%,
LOC Sumitrust, VRDN 2,000,000 2,000,000 796900CF
(Western Properties II) 2.40%,
LOC Bank of America, VRDN 500,000 500,000 796900BJ
(Western Properties IV) 2.40%,
LOC Bank of America, VRDN 1,500,000 1,500,000 796900BM
(Western Properties V Proj.) 2.40%,
LOC Bank of America, VRDN 800,000 800,000 796900BN
San Diego Commty. College Dist. TRAN Series,
3.15% 6/30/94 2,000,000 2,002,900 797272AA
San Diego Hsg. Auth. Multi-Family Hsg. Rev.:
(Carmel Del Mar Apr. Proj.) Series 1993-E, 2.55%,
LOC Citibank, VRDN 3,000,000 3,000,000 79728FEU
(La Cima Apts.) Issue 1985 K, 2.95% 12/1/08,
LOC Daiwa Bank, Ltd., VRDN 2,000,000 2,000,000 79728FES
(Nobel Court Apt.)Series 1985 L:
2.50%, LOC Citibank, VRDN 3,825,000 3,825,000 79728FEQ
2.95%, LOC Tokai Bank, VRDN 2,600,000 2,600,000 79728FET
San Diego Multi-Family Hsg. Rev. Rfdg.
(Coral Pointe Apt. Proj.) Series 1993 A, 2.65%
(Liquidity Enhancement Continental Casualty
Company), VRDN 3,265,000 3,265,000 79729HEQ
San Diego TAN Series 1993-94 A, 3% 6/30/94 5,000,000 5,002,121 797236SM
San Diego Unified School Dist. TRAN Series 1993-94 A,
3.50% 8/10/94 6,000,000 6,013,827 797355HH
San Francisco City & County Multi-Family Hsg. Rev. Bond
(Winterland Proj.) 2.35% LOC Citibank, VRDN 6,150,000 6,150,000
79765PCH
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
San Francisco Multi-Family Redev. Agcy. Hsg. Auth. Rev.
(Rincon Ctr.) Series 1985 B, 2.35%, LOC Citibank,
VRDN $ 13,405,000 $ 13,405,000 79765TAA
San Francisco Redev. Agcy. Rev.
(St. Francis Place Proj.) Series 1989 A, 3.25%,
LOC Mitsubishi Trust & Banking, VRDN 6,500,000 6,500,000 79771MAM
San Jose Multi-Family Hsg. Rev. (Kimberly Woods)
Series 1984, 2.40%, LOC Bank of America,
VRDN 3,100,000 3,100,000 798165AB
San Mateo County TRAN Series 1993-94,
3% 6/30/94 6,000,000 6,009,693 799034AB
Santa Ana Ind. Dev. Auth. Rev.
(Grand Partnership Proj.)
(Grand Plaza Dev. Co.) 2.875%,
LOC Wells Fargo Bank, VRDN 1,500,000 1,500,000 801082AA
(McFadden Properties Proj.) 2.55%,
LOC Bank of America, VRDN 400,000 400,000 801130AA
Santa Clara County TRAN Series 1993-94,
3.25% 7/29/94 12,750,000 12,775,081 801546LF
Santa Clara Elec. Sys. Rev. Series A, 2.30%
LOC National Westminster Bank, VRDN 1,000,000 1,000,000 801444AZ
Santa Cruz County TRAN Series 1993-94,
3.25% 8/1/94 5,000,000 5,005,473 801818CQ
Simi Valley Multi-Family Hsg. Rev. (Shadowridge Apts.)
Series 1989, 2.50%, LOC Citibank, VRDN (b) 3,800,000 3,800,000 828905BX
Solano County TRAN 3.25% 11/01/94 1,000,000 1,002,497 834127BH
Sonoma County TRAN Series 1993-94, 3.50%
8/2/94 4,000,000 4,008,126 835546BU
Southern California Pub. Pwr. Auth. Rev.
(Tran Mission Proj.) Series 1991, 2.50%,
LOC Swiss Bank, (AMBAC Insured), VRDN 8,500,000 8,500,000 842477HH
Stockton Hosp. Rev. (St. Joseph's Hosp.)
Series 1985 A, 2.45%,
LOC Dai-Ichi Kangyo Bank, VRDN 10,600,000 10,600,000 861344AY
Stockton Unified School Dist. TRAN 3% 12/14/94 2,000,000 2,006,812
861419FM
Torrance Hospital Rev.
(Little Co. of Mary Hosp.-Torrance Memorial Med Ctr.)
Series 1992, 2.45%, LOC Fuji Bank, VRDN 5,500,000 5,500,000 891368BX
Tustin, Orange County Assessment Dist. 85-1
LOC Mitsubihsi Trust, CP mode:
3.30% 3/2/94 5,000,000 5,000,000 901991MT
3.30% 3/4/94 3,700,000 3,700,000 901991MV
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Upland Commty. Redev. Agcy. Multi-Family Hsg.:
(Northwoods) 1989 B, 2.50%,
LOC Sanwa Bank, VRDN $ 3,950,000 $ 3,950,000 915354AB
(Pebble Grove Proj.) Series 1989 C, 2.55%,
LOC Sanwa Bank, VRDN 2,675,000 2,675,000 915354AD
Ventura County TRAN 3% 8/1/94 2,000,000 2,001,078 923035AG
Washington Township Hosp. Dist., Series 1985 A, 2.45%,
LOC Bank of Tokyo, VRDN 7,400,000 7,400,000 940212AR
Woodland (Crossroads Villiage Apt. Proj.) Nationwide
Grantor Trust Series 1991-1H, 2.50%, LOC Federal
Home Loan Bank of San Francisco, VRDN (c) 1,220,000 1,220,000 940212AR
TOTAL INVESTMENTS - 100% $ 605,479,836
Total Cost for Income Tax Purposes $ 605,479,143

SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
FRDN - Floating Rate Demand Notes
MT - Mandatory Tender
OT - Optional Tender
RAN - Revenue Anticipation Notes
TAN - Tax Anticipation Notes
TRAN - Tax & Revenue Anticipation Notes
VAN - Variable Rate Tax & Revenue
Anticipation Notes
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
(c) Provides evidence of ownership in one or more underlying municipal
bonds.
(d) Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
INCOME TAX INFORMATION
At February 28, 1994, the fund had a capital loss carryforward of
approximately $105,800 of which $24,500, $52,500 and $28,800 will expire on
February 28, 1996, 1997 and 2000, respectively.
FIDELITY CALIFORNIA TAX-FREE MONEY MARKET PORTFOLIO

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994

294.ASSETS 295. 296.

297.Investment in securities, at value (Note 1) - See 298. $ 605,479,836
accompanying schedule

299.Cash 300. 6,931,622

301.Interest receivable 302. 4,003,389

303. 304.TOTAL ASSETS 305. 616,414,847

306.LIABILITIES 307. 308.

309.Payable for investments purchased $ 4,308,948 310.
Delayed Delivery (Note 2)

311.Dividends payable 10,667 312.

313.Accrued management fee 203,769 314.

315.Other payables and accrued expenses 126,152 316.

317. 318.TOTAL LIABILITIES 319. 4,649,536

320.321.NET ASSETS 322. $ 611,765,311

323.Net Assets consist of (Note 1): 324. 325.

326.Paid in capital 327. $ 611,872,536

328.Accumulated net realized gain (loss) on 329. (108,676)
investments

330.Unrealized gain from accretion of market 331. 1,451
discount (Note 1)

332.333.NET ASSETS, for 611,896,376 shares 334. $ 611,765,311
outstanding

335.336.NET ASSET VALUE, offering price and 337. $1.00
redemption price per share ($611,765,311 (divided by)
611,896,376 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994

338.339.INTEREST INCOME 340. $ 14,010,724

341.EXPENSES 342. 343.

344.Management fee (Note 4) $ 2,236,908 345.

346.Transfer agent, accounting and custodian fees and 1,174,267 347.
expenses (Note 4)

348.Non-interested trustees' compensation 6,855 349.

350.Registration fees 2,752 351.

352.Audit 25,946 353.

354.Legal 5,565

355.Miscellaneous 8,969 356.

357. 358.TOTAL EXPENSES 359. 3,461,262

360.361.NET INTEREST INCOME 362. 10,549,462

363.REALIZED AND UNREALIZED GAIN (LOSS) ON 365. 26,686
INVESTMENTS
(NOTE 1)
364.Net realized gain (loss) on investment securities

366.Increase (decrease) in net unrealized gain from 367. 1,451
accretion
of market discount

368.369.NET GAIN (LOSS) 370. 28,137

371.372.NET INCREASE IN NET ASSETS RESULTING FROM 373. $ 10,577,599
OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR TEN MONTHS
ENDED ENDED
FEBRUARY 28, FEBRUARY 28, 1993
1994 (NOTE 1)

374.INCREASE (DECREASE) IN NET ASSETS

375.Operations $ 10,549,462 $ 10,446,282
Net interest income

376. Net realized gain (loss) on investments 26,686 1,934

377. Increase (decrease) in net unrealized gain from 1,451 -
accretion of market discount

378. 10,577,599 10,448,216
379.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM
OPERATIONS

380.Dividends to shareholders from net interest income (10,549,462) (10,446,282)

381.Share transactions at net asset value of $1.00 per 1,472,161,834 832,985,394
share
Proceeds from sales of shares

382. Reinvestment of dividends from net interest 10,140,028 10,024,575
income

383. Cost of shares redeemed (1,438,844,793) (831,247,780)

384. 43,457,069 11,762,189
Net increase (decrease) in net assets and shares
resulting from share transactions

385. 43,485,206 11,764,123
386.TOTAL INCREASE (DECREASE) IN NET ASSETS

387.NET ASSETS 388. 389.

390. Beginning of period 568,280,105 556,515,982

391. End of period $ 611,765,311 $ 568,280,105

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
392. YEAR TEN MONTHS YEARS ENDED APRIL 30,
ENDED ENDED
FEBRUARY 28, FEBRUARY 28,
1993

393. 1994 (NOTE 1) 1992 1991 1990

394.SELECTED PER-SHARE DATA

395.Net asset $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
value, beginning
of period

396.Income from .020 .019 .035 .047 .054
Investment
Operations
Net interest
income

397.Less (.020) (.019) (.035) (.047) (.054)
Distributions
From net interest
income

398.Net asset $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
value, end of
period

399.TOTAL 1.92% 3.59 4.85 5.53
RETURN (DAGGER) 1.97 % % %
%

400.RATIOS AND SUPPLEMENTAL DATA

401.Net assets, $ 611,765 $ 568,280 $ 556,516 $ 538,791 $ 623,748
end of period
(000 omitted)

402.Ratio of .64 .62%* .63 .61 .60
expenses to % % % %
average net
assets

403.Ratio of net 1.95 2.29%* 3.50 4.75 5.42
interest income to % % % %
average net
assets

</TABLE>

* ANNUALIZED
(DAGGER) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
NOTES TO FINANCIAL STATEMENTS
For the period ended February 28, 1994

1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity California Tax-Free High Yield Portfolio (the high yield fund) and
Fidelity California Tax-Free Insured Portfolio (the insured fund) are funds
of Fidelity California Municipal Trust. Fidelity California Tax-Free Money
Market Portfolio (the money market fund) is a fund of Fidelity California
Municipal Trust II. Each trust is registered under the Investment Company
Act of 1940, as amended (the 1940 Act), as an open-end management
investment company. Fidelity California Municipal Trust and Fidelity
California Municipal Trust II (the trusts) are organized as a Massachusetts
business trust and a Delaware business trust, respectively. On November 19,
1992, the Trustees approved a change in the fiscal year-end of the trusts
to February 28. Each fund is authorized to issue an unlimited number of
shares. The following summarizes the significant accounting policies of the
funds:
SECURITY VALUATION.
HIGH YIELD AND INSURED FUNDS. Securities are valued based upon a
computerized matrix system and/or appraisals by a pricing service, both of
which consider market transactions and dealer-supplied valuations.
Short-term securities maturing within sixty days are valued either at
amortized cost or original cost plus accrued interest, both of which
approximate current value. Securities for which quotations are not readily
available through the pricing service are valued at their fair value as
determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to income taxes to
the extent that it distributes all of its taxable income for the fiscal
year. The schedules of investments include information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. For the
money market fund, accretion of market discount represents unrealized gain
until realized at the time of a security disposition or maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income. Distributions to shareholders from
realized capital gains on investments, if any, are recorded on the
ex-dividend date.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
losses deferred due to wash sales and futures and options transactions.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective March 1,
1993 the funds adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the funds changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of February 28, 1994 have been reclassified as
follows:
HIGH YIELD FUND. Paid in capital and accumulated net realized loss on
investments decreased by $525,684.
INSURED FUND. Paid in capital and accumulated net realized loss on
investments decreased by $42,568.
MONEY MARKET FUND. Paid in capital and accumulated net realized loss on
investments increased by $2,034.
2. OPERATING POLICIES.
FUTURES CONTRACTS AND OPTIONS. The high yield and insured funds may invest
in futures contracts and write options. These investments involve to
varying degrees, elements of market risk and risks in excess of the amount
recognized in their Statements of Assets and Liabilities. The face or
contract amounts reflect the extent of the involvement the high yield and
insured funds have in the particular classes of instruments. Risks may be
caused by an imperfect correlation between movements in the price of the
instruments and the price of the underlying securities and interest rates.
Risks also may arise if there is an illiquid secondary market for the
instruments, or due to the inability of counterparties to perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
DELAYED DELIVERY TRANSACTIONS. Each fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated.
3. PURCHASES AND SALES OF
INVESTMENTS.
HIGH YIELD FUND. Purchases and sales of securities, other than short-term
securities, aggregated $251,239,277 and $251,166,205, respectively. The
gross market value of futures contracts opened and closed amounted to
$231,823,309 and $244,703,050, respectively.
INSURED FUND. Purchases and sales of securities, other than short-term
securities, aggregated $196,311,161 and $170,227,006, respectively. The
gross market value of futures contracts opened and closed amounted to
$122,485,024 and $135,616,823 respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, Fidelity Management
& Research Company (FMR) receives a monthly fee that is calculated on
the basis of a group fee rate plus a fixed individual fund fee rate applied
to the average net assets of each fund. The group fee rate is the weighted
average of a series of rates ranging from .15% to .37% and is based on the
monthly average net assets of all the mutual funds advised by FMR. The
annual individual fund fee rate is .25%. For the period, the management
fees were equivalent to an annual rate of .41% of average net assets for
the high yield, insured and money market funds, respectively.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .1325% to .3700%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee (see Note 6).
SUB-ADVISER FEE. As the money market fund's investment sub-adviser, FMR
Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR of
50% of the management fee payable to FMR. The fee is paid prior to any
voluntary expense reimbursements which may be in effect, and after reducing
the fee for any payments by FMR pursuant to the fund's Distribution and
Service Plan.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plans (the Plans), and in accordance with Rule 12b-1 of the 1940 Act, FMR
or the funds' distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of each fund's shares. Subject to
the approval of each Board of Trustees, the Plans also authorize payments
to third parties that assist in the sale of each fund's shares or render
shareholder support services. FMR or FDC has informed the funds that
payments made to third parties under the Plans amounted to $3,519, $4,748
and $31,948 for the high yield, insured and money market funds,
respectively, for the period.
TRANSFER AGENT AND ACCOUNTING FEES. United Missouri Bank, N.A. (the Bank)
is the custodian and transfer and shareholder servicing agent for the
funds. The Bank has entered into a sub-contract with Fidelity Service Co.
(FSC), an affiliate of FMR, under which FSC per
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT AND ACCOUNTING FEES
- - CONTINUED
forms the activities associated with the funds' transfer and shareholder
servicing agent and accounting functions. The funds pay transfer agent fees
based on the type, size, number of accounts and number of transactions made
by shareholders. FSC pays for typesetting, printing and mailing of all
shareholder reports, except proxy statements. The accounting fee is based
on the level of average net assets for the month plus out-of-pocket
expenses. For the period, FSC received transfer agent and accounting fees
amounting to $558,014 and $243,183 for the high yield fund, $346,638, and
$134,786 for the insured fund and $1,016,834 and $107,448 for the money
market fund, respectively.
Shareholders participating in the Fidelity Ultra Service Account(Registered
trademark) Program (the Program) pay a $5.00 monthly fee to Fidelity
Brokerage Services, Inc. (FBSI), an affiliate of FMR, for performing
services associated with the Program. For the period, fees paid to FBSI by
shareholders participating in the Program amounted to $148,453.
5. EXPENSE REDUCTIONS
INSURED FUND. For the period, FMR voluntarily agreed to reimburse the
fund's operating expenses (excluding interest, taxes, brokerage commissions
and extraordinary expenses) above a specified percentage of average net
assets. This expense limitation ranged from an annual rate of .35% to .55%
of average net assets and the reimbursement reduced expenses by $352,015.
6. SHAREHOLDER MEETING.
At a special meeting of shareholders of the high yield and insured funds
held on February 16, 1994, shareholders approved an amended management
contract and amendments to certain fundamental investment limitations of
the funds.
The new management contract , which became effective on March 1, 1994 will
reflect the new group fee rate schedule which FMR voluntarily implemented
on November 1, 1993.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees and Shareholders of Fidelity California Municipal Trust and
Fidelity California Municipal Trust II
(the Trusts):
Fidelity California Tax-Free
High Yield Portfolio
Fidelity California Tax-Free
Insured Portfolio
Fidelity California Tax-Free
Money Market Portfolio
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments (except for Moody's and Standard
& Poor's ratings), and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Fidelity California Tax-Free
High Yield Portfolio, Fidelity California Tax-Free Insured Portfolio and
Fidelity California Tax-Free Money Market Portfolio at February 28, 1994,
the results of their operations, the changes in their net assets and the
financial highlights for the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are
the responsibility of each portfolio's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities owned at February 28, 1994 by
correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
/s/Price Waterhouse
PRICE WATERHOUSE
Boston, Massachusetts
March 31, 1994
INVESTMENT ADVISER

Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER, MONEY MARKET FUND
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
John F. Haley Jr., Vice President
HIGH YIELD AND INSURED FUNDS
Deborah F. Watson, Vice President
MONEY MARKET FUND
Thomas D. Maher, Assistant
Vice President - MONEY MARKET FUND
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Marvin L. Mann*
Edward H. Malone*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
United Missouri Bank, N.A.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE

EXHIBIT 24(A)(2)
SPARTAN(Registered trademark)

(Registered trademark)
CALIFORNIA
MUNICIPAL
PORTFOLIOS

ANNUAL REPORT
FEBRUARY 28, 1994
CONTENTS

PRESIDENT'S MESSAGE 3 NED JOHNSON ON MINIMIZING
TAXES

SPARTAN CALIFORNIA MUNICIPAL
HIGH YIELD PORTFOLIO 4 PERFORMANCE

7 FUND TALK: THE MANAGER'S OVERVI
EW

10 INVESTMENT CHANGES

11 INVESTMENTS

24 FINANCIAL STATEMENTS

SPARTAN CALIFORNIA
INTERMEDIATE MUNICIPAL
PORTFOLIO 28 PERFORMANCE

30 FUND TALK: THE MANAGER'S OVERVI
EW

33 INVESTMENT SUMMARY

34 INVESTMENTS

39 FINANCIAL STATEMENTS

SPARTAN CALIFORNIA MUNICIPAL
MONEY MARKET PORTFOLIO 43 PERFORMANCE

45 FUND TALK: THE MANAGER'S OVERVI
EW

47 INVESTMENT CHANGES

48 INVESTMENTS

59 FINANCIAL STATEMENTS

NOTES 63 FOOTNOTES TO THE FINANCIAL
STATEMENTS

REPORT OF INDEPENDENT
ACCOUNTANTS 67 THE AUDITOR'S OPINION

PERFORMANCE: THE BOTTOM LINE

There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells bonds
that have grown in value), and the effect of the $5 account closeout fee.
You can also look at the fund's income. If Fidelity had not reimbursed
certain fund expenses during the periods shown, the total returns,
dividends and yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1994 PAST 1 LIFE OF
YEAR FUND

Spartan California Municipal High Yield 5.62% 49.13%

Lehman Brothers Municipal Bond Index 5.54% n/a

Average California Tax-Exempt
Municipal Bond Fund 5.39% n/a

Consumer Price Index 2.52% 16.52%

CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, one year or since the fund started on November 27, 1989. For
example, if you had invested $1,000 in a fund that had a 5% return over the
past year, you would end up with $1,050. You can compare these figures to
the performance of the Lehman Brothers Municipal Bond Index - a broad gauge
of the municipal bond market. To measure how the fund stacked up against
its peers, you can look at the average California tax-exempt municipal bond
fund, which reflects the performance of 75 California tax-exempt municipal
bond funds tracked by Lipper Analytical Services. Both benchmarks include
reinvested dividends and capital gains, if any. Comparing the fund's
performance to the consumer price index helps show how your fund did
compared to inflation. (The periods covered by the CPI numbers are the
closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1994 PAST 1 LIFE OF
YEAR FUND

Spartan California Municipal High Yield 5.62% 9.84%

Lehman Brothers Municipal Bond Index 5.54% n/a

Average California Tax-Exempt
Municipal Bond Fund 5.39% n/a

Consumer Price Index 2.52% 3.66%

$14,834
$14,601
'94
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan
California Municipal High Yield Portfolio on November 30, 1989, shortly
after the fund started. As the chart shows, by February 28, 1994, the value
of your investment would have grown to $14,834 - a 48.34% increase on your
initial investment. This assumes you still own the fund on February 28,
1994 and therefore does not include the effect of the $5 account closeout
fee. For comparison, look at how the Lehman Brothers Municipal Bond Index
did over the same period. With dividends reinvested, the same $10,000 would
have grown to $14,601 - a 46.01% increase.

Income return 5.62% 6.72% 6.84% 7.51%

Capital gain return 3.54% 0.74% 0.00% 0.00%
Change in share price -3.54% 7.59% 3.43% 1.89%
Total return 5.62% 15.05% 10.27% 9.40%
INCOME returns, capital gain returns, and changes in share price are all
part of a bond fund's total return. An income return reflects the dividends
paid by the fund. A capital gain return reflects the amount paid by the
fund to shareholders based on the profits it has from selling bonds that
have grown in value. Both returns assume the dividends or gains are
reinvested. Changes in the fund's share price include changes in the prices
of the bonds owned by the fund. Change in share price and total return
figures include the effect of the $5 account closeout fee.
DIVIDENDS AND YIELD
PERIODS ENDED FEBRUARY 28, 1994 PAST 30 PAST 6 PAST 1
DAYS MONTHS YEAR

Dividends per share n/a 31.02(cents) 63.06(cents)

Annualized dividend rate n/a 5.51% 5.59%

Annualized yield 5.26% n/a n/a

Tax-equivalent yield 9.23% n/a n/a

DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $11.35 over
the past six months and $11.28 over the past year, you can compare the
fund's income over these two periods. The 30-day annualized YIELD is a
standard formula for all funds based on the yields of the bonds in the
fund, averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It also
helps you compare funds from different companies on an equal basis. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the fund's tax-free yield, if you're in the 43.04%
combined effective 1994 federal and state income tax bracket.
SPARTAN CALIFORNIA MUNICIPAL HIGH YIELD PORTFOLIO

FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
Bond investments - including
tax-free issues - provided solid
returns for the 12 months ended
February 28, 1994, despite a
dramatic downturn in February.
Falling interest rates pushed up
bond prices steadily through
mid-October, when the yield on the
benchmark 30-year Treasury bond
reached a historic low of 5.79%. By
year-end, a strengthening economy
had fueled mild inflation fears. That
pushed up the yield on the 30-year
bond to 6.35% on December 31,
which forced investors to give back
some of their earlier profits. Inflation
jitters eased and bond yields
dropped in January. However,
when the Federal Reserve Bank
raised short-term interest rates in
an attempt to control inflation on
February 4, investors reacted
negatively. At the end of February,
the yield on the 30-year bonds was
6.66%, about 38 basis points
higher than at the beginning of the
month. Over the year, higher
federal income taxes boosted
demand for municipal bonds. But
municipal bond prices were hurt by
the Fed's action in February and by
record new issuance, which kept
supplies high and dampened
prices. The return on the Lehman
Brothers Municipal Bond Index, a
broad measure of the tax-free
market, rose 5.54%. By
comparison, the Lehman Brothers
Aggregate Bond Index, which
tracks investment-grade taxable
bonds, returned 5.40%. Globally,
falling interest rates and low
inflation drove good annual returns
in Europe, Japan, and most
emerging markets, although many
of these markets fell in February
along with the U.S. bond market.
The Salomon Brothers World
Government Bond Index - which
includes U.S. issues - returned
9.34%, while the J.P. Morgan
Emerging Markets Bond Index was
up a dramatic 29.46%.
An interview with John Haley,
Portfolio Manager of Spartan
California Municipal High Yield
Portfolio
Q. JOHN, HOW DID THE FUND PERFORM?
A. Quite well. The fund had a total return of 5.62% for the year ended
February 28, 1994. The average California tax-free bond fund posted a total
return of 5.39% during the period, according to Lipper Analytical Services.
Q. WHAT ACCOUNTED FOR THE FUND'S PERFORMANCE?
A. First, having a somewhat longer duration than that of the typical
California tax-free bond fund. A longer duration makes a fund's share price
more sensitive to interest rate changes. I extended the fund's duration
from about 7.5 years to 9.2 years during the year because I expected
interest rates would continue to decline and drive bond prices higher.
That's what happened during most of the period, although the fund gave back
some gains when interest rates rebounded in February. Second, the fund also
held several issues that were pre-refunded during the period - that is,
their issuers set aside a pool of Treasury securities to pay the remaining
interest and principal due to bondholders. As a result, the bonds' credit
ratings went from A to Aaa, causing investors to bid their prices higher.
Plus, their maturities shortened, which also helped boost their prices.
Q. WHY DID YOU INCREASE THE FUND'S INVESTMENT IN STATE GENERAL OBLIGATION
BONDS (GOS) AND STATE LEASE BONDS?
A. During the early part of the year I avoided state GOs, which are backed
by the taxing power of the issuer, as well as California lease bonds, which
are backed by leases paid by the state. The state's economy was still
struggling, and I believed prices of those issues would lag bonds with
higher ratings. That proved to be true. But last fall I increased the
fund's investment in California GOs, lease bonds and other bonds backed by
the state to around 10% because I thought the California economy had hit
bottom. Also, I increased the fund's stake in bonds rated A or lower, which
are expected to benefit from improvements in the state's economy. These
decisions reduced the average credit rating of the fund's holdings. At the
end of February, about 40% of the fund's investments were rated Aa or Aaa,
down from 80%. As the economy begins to improve, those state GOs and lease
bonds should outperform issues with higher credit ratings.
Q. AT THE END OF FEBRUARY, NEARLY 20% OF THE FUND'S INVESTMENTS WERE IN
HEALTH-CARE BONDS, UP FROM 13.5% A YEAR EARLIER. ARE YOU CONCERNED THAT
HEALTH-CARE REFORM WILL HURT THOSE ISSUERS?
A. We are cautious on health care because the Clinton plan could affect the
health care sector. However, the issues I choose are mainly strong
hospitals that are expected to survive and potentially benefit from any
shake-up likely to occur. In fact,
a number carry ratings of Aa or Aaa.
Q. DID THE LOS ANGELES EARTHQUAKE AFFECT THE FUND'S PERFORMANCE?
A. Not much. During the past two or three years I de-emphasized issuers in
the Los Angeles area because the economy in southern California has been
especially sluggish. As a result, we only held one or two bonds of issuers
in the vicinity of the earthquake. I believe in geographic diversification,
so the fund's investments are spread across different regions of the state.
That should offer some protection against future natural disasters.
Q. WHAT'S YOUR OUTLOOK FOR THE TAX-EXEMPT BOND MARKET?
A. The economy will probably show modest growth and inflation seems likely
to remain under control, so I don't expect interest rates to rise
dramatically from here. But interest rates aren't likely to fall much more
either, so gains in the bond market won't be driven by falling rates. The
tax-exempt market will probably benefit from a lower supply of new issues.
Also, demand for tax-exempt bonds will likely increase as investors realize
that the new, higher federal income tax rates. The combination of lower
supply and higher demand should help support prices in the tax-exempt
market.
Q. WHAT ABOUT THE CALIFORNIA TAX-EXEMPT MARKET?
A. I still feel that California bonds are attractive because the state's
economy is showing signs that it is set to begin a recovery. As that
happens, state GO's and lease bonds, should be especially strong
performers, because their credit quality is closely linked to the economy.
Those issues may be volatile over the next several months as the state goes
through its budget process. But I'll probably take advantage of any price
declines to buy more.

FUND FACTS
GOAL: to provide high current
income exempt from
California state and federal
income taxes
START DATE: November 27,
1989
SIZE: as of February 28, 1994
over $566 million
MANAGER: John Haley, since
December, 1989; manager,
Fidelity California Tax-Free
Insured Portfolio, since 1986;
Fidelity California Tax-Free
High Yield Portfolio, since
1985; Fidelity Advisor
Tax-Exempt Portfolio, since
1985
(checkmark)

JOHN HALEY ON THE FUND'S
STRATEGY:
"The fund can invest one-third
of its holdings in securities
rated below
investment-grade. However
during recent years, there
have been few attractive
opportunities in this area. At
the same time, I expected a
more severe economic
downturn in the California
economy than most
observers. As a result, I stuck
mainly with highly-rated
issues. But during the past six
months I have begun to
identify factors that suggest
the California economy is
reaching a bottom. As a
result, I've been increasing
the fund's investment in
higher-yielding issues. As the
economy improves, they
should be strong performers."
(bullet) The fund's duration as of
February 28, 1994 was 9.2
years. That means the fund's
share price could decline
roughly 9.2% if interest rates
rose one percentage point,
and rise 9.2% if rates fell one
percentage point.
SPARTAN CALIFORNIA MUNICIPAL HIGH YIELD PORTFOLIO

INVESTMENT CHANGES

TOP FIVE SECTORS AS OF FEBRUARY 28, 1994
% OF FUND'S % OF FUND'S INVESTMENT
INVESTMENTS S
IN THESE SECTORS
6 MONTHS AGO

Lease Revenue 26.1 23.7

Health Care 19.8 13.8

Special Tax 18.3 20.2

Electric Revenue 8.3 10.2

Housing 6.4 6.0

AVERAGE YEARS TO MATURITY AS OF FEBRUARY 28, 1994
6 MONTHS AGO

Years 22.2 22.6

AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF FEBRUARY 28, 1994
6 MONTHS AGO

Years 9.2 8.8

THIS CHART EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS.
NON-RATED SECURITIES CONSIDERED TO BE BAA OR BETTER BY FIDELITY ARE 5.8% OF
THE FUNDS LONG TERM INVESTMENTS.
SPARTAN CALIFORNIA MUNICIPAL HIGH YIELD PORTFOLIO

INVESTMENTS/FEBRUARY 28, 1994
(Showing Percentage of Total Value of Investments)

MUNICIPAL BONDS - 98.5%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - 95.3%
ABAG Fin. Auth. Nonprofit Ctfs. of Prtn.
(Peninsula Family YMCA) Series A, 6.80%
10/1/11, LOC Daiwa Bank Ltd A1 $ 1,000,000 $ 1,047,500 00037EAL
Alameda County Ctfs. of Prtn. Rfdg.
(Santa Rita Jail Proj.) 5.375% 6/1/09,
(MBIA Insured) Aaa 1,250,000 1,228,125 010891KG
Alameda Hsg. Auth. Multi-Family Hsg. Rev.
(Independence Apts.) Series A, 7.50%
2/20/31, (GNMA Coll.) AAA 1,775,000 1,881,500 010789AA
Anaheim Pub. Fing. Auth. Tax Allocation Rev.:
(Cap. Appreciation Redev. Proj.) 0%
12/1/06, (MBIA Insured) Aaa 5,000,000 2,525,000 032559AP
(Reg. Rites) 10.27% 12/1/18,
(MBIA Insured)(d) Aaa 1,500,000 1,788,750 032559AV
Azusa Redev. Agcy. Tax Allocation
(Central Bus. Dist. Redev. Proj.)
Series A, 7.875% 8/1/15 Baa 1,025,000 1,083,938 055031BD
Bakersfield Hosp. Rev. (Bakersfield Mem. Hosp.)
Series A, 6.50% 1/1/22 A 1,500,000 1,565,625 057509CM
Berkeley Health Facs. Rev. Rdfg.
(Alta Bates Med. Ctr.) Series A,
6.55% 12/1/22 Baa1 3,250,000 3,262,188 084134AH
Buena Park Commty. Redev. Agcy. Tax
Allocation Rfdg. (Central Business Dist.
Proj.) 7.10% 9/1/14 BBB+ 1,500,000 1,586,250 119147CN
Burbank Redev. Agcy. Tax Allocation
Series A, 6% 12/1/23 Baa1 1,950,000 1,901,250 120823EA
California Dept. Wtr. Resources Central
Valley Rev. (Wtr. Sys. Proj.) Series J-1,
7% 12/1/12 Aa 1,000,000 1,158,750 130663E6
California Fairs Fing. Auth. Rev. Series 1991,
6.50% 7/1/11, (Cap. Guaranty Insured) Aaa 2,000,000 2,152,500 130205BG
California Health Facs. Fing. Auth. Rev.:
Rfdg. (Catholic Healthcare West) 4.75%
7/1/19(MBIA Insured) Aaa 4,680,000 4,112,550 13033AAU
(Children's Hosp.) 7% 7/1/13,
(MBIA Insured) Aaa 2,485,000 2,770,775 13033H6L
(Children's Hosp.of San Francisco)
Series A, 7.50% 10/1/20, (MBIA Insured) Aaa 2,450,000 2,820,563
13033JAJ
(Gould Med. Foundation) Series A,
7.30% 4/1/20 A+ 1,500,000 1,738,126 13033JBW
(Kaiser Permanente Health Sys.)
Series A, 7% 12/1/10 Aa2 2,800,000 3,083,500 13033JLQ
(Los Medanos Health Care Corp.)
Series A, 7.25% 3/1/20 A+ 1,500,000 1,653,750 13033H6X
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
California Health Facs. Fing. Auth. Rev.: - continued
(Mills-Peninsula Hosp.) Series A, 7.875%
1/15/12 A- $ 2,000,000 $ 2,160,000 13033HRE
(San Diego Hosp. Assoc.) Series A:
6.70% 10/1/10, (MBIA Insured) Aaa 4,085,000 4,457,756 13033JTP
6.95% 10/1/21 A1 1,500,000 1,640,625 13033JTM
(St. Elizabeths Hosp. Proj.) 6.20%
11/15/09 A1 1,455,000 1,505,925 13033JL2
(Scripps Health) Series A, 4.625%
10/1/13 (MBIA Insured) Aaa 1,075,000 950,031 13033J5V
(Sharp Temecula Valley) Series A, 7.05%
8/1/21, (MBIA Insured) Aaa 1,100,000 1,230,625 13033JPT
(Valleycare Hosp. Corp.) Series A, 7%
5/1/20 A+ 2,000,000 2,185,000 13033H5P
California Hsg. Fin. Agcy. Rev. (Home Mtg.):
Series A, 0% 8/1/23 (b) Aa 8,080,000 858,500 13033CPJ
Series C:
8.30% 8/1/19 (b) Aa 2,450,000 2,603,124 1303296C
0% 8/1/21 (b) Aa 5,870,000 733,750 13033CTB
7.60% 8/1/30 (b) Aa 7,775,000 8,251,218 13033CPZ
Series F, 7.20% 8/1/09 Aa 1,095,000 1,145,643 13033CMW
California Poll. Cont. Fing. Auth. Poll. Cont.
Rev. (Southern California Edison Company)
Series 1988 A, 6.90% 9/1/06(b) A-1+ 1,660,000 1,823,924 130534RP
California Poll. Cont. Fing. Auth. Rev.
(Pacific Gas & Elec. Co.) Series B,
5.85% 12/1/23 (b) A1 6,000,000 5,925,000 130534VA
California Poll. Cont. Fing. Auth. Solid Waste
Disp. Rev.:
(Keller Canyon Landfill Proj.) Series 1992,
6.875% 11/1/27(b) A2 2,250,000 2,469,374 130536BT
(North County Recylcing Ctr.) Series A,
6.75% 7/1/11, LOC Union
Bank of Switzerland Aaa 1,000,000 1,092,500 130536BQ
California Pub. Cap. Impt. Fing. Auth. Rev.
(Pooled Proj.) Series B, 8.10% 3/1/18,
(MBIA Insured) Aaa 1,910,000 2,091,450 130552AS
California Pub. Wks. Board Lease Rev.:
Rfdg. (Dept. Correction State Prisons)
Series A, (AMBAC Insured):
5.25% 12/1/13 Aaa 1,355,000 1,300,800 13068GNZ
5% 12/1/19 Aaa 6,500,000 5,931,250 13068GPA
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
California Pub. Wks. Board Lease Rev.: - continued
(California University Proj.):
Series A:
5.50% 6/1/14 A1 $ 5,750,000 $ 5,548,750 13068GRB
5% 6/1/23 A1 3,500,000 3,066,874 13068GRD
(Dept. Correction State Prison)
(Medera)
Series E, 5.50% 6/1/15 (h) A1 3,300,000 3,184,500 13068GVV
(Susanville)
Series B, 5.50% 6/1/14 A1 2,000,000 1,907,500 13068GUX
Series D, 5.25% 6/1/15
(FGIC Insured) Aaa 2,000,000 1,915,000 13068GUA
5.375% 6/1/18 A1 1,500,000 1,398,750 13068GTQ
California Statewide Commty. Dev. Auth.
8.83% 7/1/13, (MBIA Insured) (d) Aaa 2,000,000 1,965,000 130909JH
California Statewide Commtys. Dev. Corp.
Ctfs. of Prtn.:
Rfdg. (Insured Health Facs.) (Eskaton, Inc.)
5.875% 5/1/20 A+ 4,000,000 3,920,000 130909GW
Rfdg. (Insured Hosp.) (Triad Healthcare):
6.25% 8/1/06 A+ 2,000,000 2,027,500 130909CM
6.50% 8/1/22 A+ 1,750,000 1,778,437 130909CR
(Children's Hosp.) 6%6/1/13
(MBIA Insured) Aaa 1,570,000 1,632,800 130909NE
(J. Paul Getty) 5% 10/1/23 Aaa 1,750,000 1,585,937 130907FM
(Odd Fellows):
5.375% 10/1/13 A+ 2,500,000 2,325,000 130907EP
5.50% 10/1/23 A+ 3,000,000 2,797,500 130907EQ
(St. Joseph Health Sys.) 5.50% 7/1/23 Aa 3,000,000 2,835,000 130909GH
(Sisters of Charity Leavenworth)
5% 12/1/23 Aa 4,375,000 3,850,000 130909PR
(Villaview Commty. Hosp., Inc.)
Series A, 7% 9/1/09 A+ 1,200,000 1,303,500 130907AX
California Urban Ind. Dev. Agcy. Rev.
(Civic Recreational Proj.#1) 7.30%
5/1/06 - 4,000,000 4,320,000 456567ME
Campbell Ctfs. of Prtn. Rfdg. (Civic Center Proj.):
6.75% 10/1/17 A 1,500,000 1,612,500 134111CR
6% 10/1/18 A 2,565,000 2,539,350 134111BK
Carson Redev. Agcy. 5.875% 10/1/09 Baa 2,000,000 1,952,500 145750DN
Carson Redev. Agcy. Redev. Proj. Area #1
Tax Allocation:
6.375% 10/1/12 Baa1 1,465,000 1,452,180 145750CZ
6.375% 10/1/16 Baa1 1,000,000 985,000 145750DA
Castaic Lake Wtr. Agcy. Ctfs. of Prtn.
(Wtr. Sys. Impt. Proj.) 7.125% 8/1/16,
(MBIA Insured) Aaa 2,750,000 3,090,312 148370AM
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Castaic Unified School Dist.
(Cap. Appreciation) Series A, 0% 5/1/18,
(FGIC Insured) Aaa $ 8,000,000 $ 1,990,000 148371AH
Central California Jt. Pwrs. Health Fing. Auth.:
Rfdg. (Commty. Hosp. of Central
California Proj.) 5% 2/1/23 A 3,500,000 3,027,500 152757AR
Ctfs. of Prtn. (Commty. Hosp. of Central
California Proj.) 5.25% 2/1/13 A 4,000,000 3,675,000 152757AQ
Central Valley Fing. Auth. Rev.
(Cogeneration Proj.) (Carson Ice Gen. Proj.):
6% 7/1/09 BBB- 2,050,000 2,019,250 155689AG
6.10% 7/1/13 BBB- 1,000,000 988,750 155689AK
6.20% 7/1/20 BBB- 1,450,000 1,440,937 155689AH
Chico Pub. Fing. Auth. Rev. 6.625% 4/1/21,
(FGIC Insured) Aaa 2,000,000 2,177,500 168505BG
Clovis Unified School Dist. (Cap. Appreciation)
Series B, 0% 8/1/03 A1 3,485,000 2,104,068 189342QG
Coalinga Ctfs. of Prtn. 7% 4/1/10 BBB+ 1,655,000 1,739,818 19021CAP
Contra Costa County Ctfs. of Prtn.
(Merrithew Mem. Hosp.) (Cap. Appreciation)
0% 11/1/14 A1 6,805,000 2,015,980 21223TEK
Contra Costa County Multi-Family Hsg. Rev.
(Del Norte Place) Series B, 7.85% 8/20/33,
(GNMA Coll.)(b) AAA 2,865,000 3,140,756 212249AA
Contra Costa Home Mtg. Fin. Auth. Home
Mtg. Rev. 0% 9/1/17, (MBIA Insured)
(Escrowed to Maturity) (e) Aaa 12,500,000 3,156,250 212216CA
Del Norte County Pub. Wks. Rev. Rfdg.:
(Dept. of Corrections):
5.125%, 12/1/08 A1 2,250,000 2,157,188 13068GSY
5.20%, 12/1/09 A1 6,110,000 5,857,963 13068GSZ
Desert Hosp. Rev. Ctfs. of Prtn.
(Desert Hosp. Corp.) Series 1992, 10.029%
7/28/20, (Cap. Guaranty Insured)(d) Aaa 4,000,000 4,645,000 25041MAZ
Duarte Ctfs of Prtn. (City of Hope Nat'l.
Medical Ctr.) 6.25% 4/1/23 Baa1 2,000,000 2,025,000 263584CS
Eastern Muni. Wtr. Dist. Wtr. & Swr. Rev.
Ctfs. of Prtn. 6.75% 7/1/12,
(FGIC Insured) Aaa 2,000,000 2,282,500 276771AR
Escondido Ctfs. of Prtn. Rfdg.
(Redwood Terrace Lutheran Home)
7% 11/15 A+ 1,600,000 1,740,000 296337CM
Escondido Joint Pwr. Fing. Auth. Rev.
(Cap. Appreciation) 0% 9/1/12,
(AMBAC Insured) Aaa 2,160,000 756,000 29634EAS
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Fairfield-Suisun Swr. Dist. Swr. Rev. Rfdg.
Series A, (MBIA Insured):
0% 5/1/07 Aaa $ 1,635,000 $ 799,106 304730CQ
0% 5/1/08 Aaa 2,085,000 953,888 304730CR
0% 5/1/09 Aaa 2,080,000 889,200 304730CS
Folsom Pub. Fing. Auth. Local Agcy. Rev.
Series A, 7.25% 10/1/10 BBB+ 1,285,000 1,370,131 344392BB
Fontana Redev. Agcy. Tax Allocation Rfdg.
(Yurupa Hills) Series 1992 A, 7.10%
10/1/23 BBB 2,000,000 2,175,000 344619CL
Foster City Pub. Fing. Auth. Foster City
Commty. Rev. (Proj. Loan) Series A,
6% 9/1/13 A- 3,000,000 2,917,500 350057AP
Fresno Swr. Rev. (AMBAC Insured):
(Fowler Ave. Proj.) Series 1991 A,
6.25% 8/1/11 Aaa 2,500,000 2,628,125 358229BQ
Series A-1, 6.25% 9/1/14 Aaa 2,250,000 2,452,500 358229CJ
Garden Grove Agcy. Commty. Dev. Tax
Allocation Rfdg. (Garden Grove Commty.
Proj.) 5.70% 10/1/13 A 2,000,000 1,927,500 365251CN
Glendale Hosp. Rev. Rfdg. (Adventist Health)
Series A, 6.50% 3/1/07, (MBIA Insured) Aaa 2,500,000 2,706,250 378432DH
Industry Urban Ind. Dev. Agcy. Rev.:
Rfdg. (Civic Recreational Proj.#1)
Series A, 7.375% 5/1/12 - 8,600,000 9,298,750 456567MG
(Civic Recreational Proj.#1-B) 7.375%
5/1/15, (Unrefunded Balanced) - 1,140,000 1,232,625 456567QS
Inglewood Ctfs. of Prtn. (Civic Center Impt.
Proj.) 7% 8/1/19 A 1,000,000 1,057,500 457079AV
Irvine Ranch Wtr. Dist. Joint Pwr. Agcy.
Local Pool Rev.:
7.80% 2/15/08 A 1,560,000 1,678,950 463656AP
7.875% 2/15/23 A 5,500,000 5,946,875 463656AR
8.25% 8/15/23 BBB 16,365,000 18,001,500 463656BE
Kaweah Delta Hosp. Dist. Rev. Rfdg.
7.25% 11/1/16 A 3,000,000 3,198,750 486380AH
King Ctfs. of Prtn. 7.50% 7/1/04 - 2,800,000 3,094,000 494688AJ
Los Angeles County Cap. Asset Leasing Corp.
Leasehold Rev. (AMBAC Insured):
4.05% 12/1/09 Aaa 2,320,000 2,378,000 544900CE
4.05% 12/1/10 Aaa 1,565,000 1,602,169 544900CF
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Los Angeles County Ctfs. of Prtn.:
(Cap. Appreciation):
0% 9/1/10 A $ 2,980,000 $ 1,102,600 5446634F
0% 3/1/17 A 3,450,000 823,688 5446634U
0% 3/1/20 A 1,000,000 198,750 5446634C
(Correctional Facs.) 0% 9/1/11,
(MBIA Insured) Aaa 6,400,000 2,368,000 544663G8
(Disney Parking Proj.):
0% 9/1/11 A 1,000,000 342,500 5446634J
0% 3/1/12 A 2,180,000 724,850 5446634J
0% 3/1/13 A 2,750,000 859,375 5446634L
0% 9/1/13 A 3,215,000 972,538 5446634M
0% 9/1/15 A 3,815,000 1,010,975 5446634R
0% 9/1/18 A 8,775,000 1,908,563 5446634X
0% 3/1/19 A 3,175,000 670,719 5446634Y
0% 9/1/20 A 5,425,000 1,044,313 5446635A
(Health Facs. Construction Loan)
(Bay Harbor Hosp.) 7.30% 4/1/20 A+ 1,000,000 1,096,250 544358GV
Los Angeles County Trans. Commission Sales
Tax Rev. Rfdg. Series B, 6.50% 7/1/13 A1 2,300,000 2,443,750 545170GM
Los Angeles Dept. Wtr. & Pwr. Wtrwks. Rev.
Rfdg. 4.50% 5/15/23 Aa 1,500,000 1,233,750 544524HJ
Los Angeles Wastewtr. Sys. Rev. Series D,
6.25% 12/1/15, (MBIA Insured) Aaa 2,000,000 2,102,500 544652NJ
M-S-R Pub. Pwr. Agcy. San Juan Proj. Rev.
Series B, 6.75% 7/1/11, (MBIA Insured) Aaa 1,750,000 1,933,750 553751EV
Manteca Ctfs. of Prtn. (St. Domenic's Hosp.)
7% 6/1/17, (MBIA Insured) Aaa 1,000,000 1,113,750 564512AK
Metropolitan Wtr. Dist. Southern Wtrwks.
Rev. 8.172% 8/10/18 (d) Aa 2,500,000 2,637,500 592663MN
Modesto Ctfs. of Prtn.:
(Commty. Ctr. Refing. Proj.) Series A,
5.60% 11/1/14, (AMBAC Insured) Aaa 1,370,000 1,370,000 607715FC
(Golf Course Refing. Proj.) Series B, 5%
11/1/23, (AMBAC Insured) Aaa 1,585,000 1,440,369 607715FF
Modesto Irrigation Dist. Ctfs. of Prtn.
Rfdg. & Cap. Impts. Series A, 0%
10/1/10, (MBIA Insured) Aaa 2,270,000 885,300 607762DH
Moreno Valley Unified School Dist. Ctfs. of
Prtn. 7.40% 9/1/16 Baa 175,000 174,344 616872BT
Mount Shasta Hosp. Rev. Ctfs. of Prtn.
(Mercy Med. Ctr.) Series A, 7.25%
7/1/19 A+ 1,435,000 1,592,850 623091AA
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Northern California Pwr. Agcy. Pub. Pwr. Rev.:
Rfdg. (Geothermal Proj. #3) Series A:
5.80% 7/1/09 A $ 3,000,000 $ 3,067,500 664843RZ
5.85% 7/1/10 A 1,875,000 1,917,188 664843SB
(Hydroelec. Proj. #1) Series E, 7.15%
7/1/24 A 1,000,000 1,090,000 664843NQ
7.50% 7/1/23, (AMBAC Insured)
(Pre-Refunded to 7/1/21 @ 100)(e) Aaa 1,170,000 1,487,363 664843NV
Norwalk Redev. Agcy. Tax Allocation
(Norwalk Redev. Proj. #1) 7.15%
12/1/15, (Pre-Refunded to
12/1/95 @ 102)(e) - 3,900,000 4,095,000 668823CM
Ontario Redev. Fing. Auth. Rev.
(Ctr. City Cimarron Proj.#1)
(MBIA Insured):
0% 8/1/08 Aaa 3,255,000 1,468,819 68304EAU
0% 8/1/09 Aaa 3,260,000 1,381,425 68304EAV
Orange County Ctfs. of Prtn.
(Civic Ctr. Facs.) 0% 12/1/18,
(AMBAC & MBIA Insured) Aaa 7,500,000 1,753,125 684228FR
Orange County Dev. Agcy. Tax Allocation
(Santa Ana Heights Proj.) 6.125%
9/1/23 Baa1 3,500,000 3,460,625 684246CB
Orange County Local Trans. Sales Tax Rev.
Ltd. Tax 6% 2/15/08 Aa 1,250,000 1,320,313 684273BP
Palm Desert Fing. Auth. Tax Allocation
9.83% 4/1/22, (MBIA Insured) (d) Aaa 2,750,000 3,131,563 696617BG
Palm Springs Ctfs. of Prtn. (Muni. Golf
Course Expansion Proj.) 7.40% 11/1/18 BBB+ 1,500,000 1,659,375 696656FK
Palomar Pomerado Health Sys. Rev.
(MBIA Insured):
0% 11/1/03 (Pre-Refunded to
5/1/96 @103) (e) Aaa 3,075,000 1,864,219 69753EAW
0% 11/1/05 Aaa 3,075,000 1,641,281 69753EAY
Pasadena Ctfs. of Prtn. Rfdg.
(Old Pasadena Pkg. Facs. Proj.)
6.25% 1/1/18 A1 3,605,000 3,744,694 702204HA
Perris Single Family Mtg. Rev. Series A,
0% 6/1/23, (GNMA Coll.)(Escrowed to
Maturity) (b)(e) Aaa 8,365,000 1,442,963 714386AT
Pleasanton Jt. Pwrs. Fin. Auth. Reassessment,
Series A, 6.15% 9/1/12 Baa 5,380,000 5,420,350 728816AW
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Port Oakland Port. Rev. Rfdg.
Series F, (MBIA Insured):
0% 11/1/06 Aaa $ 1,250,000 $ 631,250 734897RQ
0% 11/1/08 Aaa 3,500,000 1,540,000 734897RS
Poway Ctfs. of Prtn. (FSA Insured):
Rfdg. (Pointsettia Mobilehome Park)
6.375% 6/1/18 Aaa 2,800,000 2,954,000 738756CD
(Poway Royal Mobile Home Park)
(Cap. Impt. Proj.) 7% 7/1/20 Aaa 2,500,000 2,709,375 738756BC
Poway Redev. Agcy. (Paguay Proj.) Tax
Allocation 7.93% 12/15/14,
(FGIC Insured) (d) Aaa 9,365,000 9,423,531 738800DV
Rancho Cucamonga Redev. Agcy. Tax
Allocation (Rancho Redev. Proj.) 7.125%
9/1/19, (MBIA Insured) Aaa 1,000,000 1,125,000 752123CQ
Rancho Mirage Joint Pwrs. Fing. Auth.
Ctfs. of Prtn. (Eisenhower Mem. Hosp.)
7% 3/1/22 Baa1 1,000,000 1,076,250 75212HAM
Rancho Wtr. Dist. Fin. Auth. 4.75% 8/15/21,
(AMBAC Insured) Aaa 2,000,000 1,737,500 752111DC
Redlands Redev. Agcy. Tax Allocation
(Redlands Redev. Proj.) 7% 7/1/17 Baa 3,835,000 3,983,606 757593DP
Richmond Joint Pwr. Fing. Auth. Rev. Series B:
7% 5/15/07 A- 2,375,000 2,615,469 764440AH
7.25% 5/15/13 A- 2,500,000 2,775,000 764440AJ
Riverside County Asset Leasing Corp. Leasehold
Rev. (Riverside County Hosp. Proj.) Series A:
6.375% 6/1/09 (Detachable Call Option) A 3,000,000 3,131,250 768903AW
6.50% 6/1/12 A 5,500,000 5,795,625 768903AR
6.25% 6/1/19 A 4,000,000 4,085,000 768903AG
Riverside County Ctfs. of Prtn.:
Rfdg. (Air Force Village West, Inc.)
Series A, 8.125% 6/15/20 A-1+ 5,500,000 5,802,500 768901FQ
(Air Force Village West, Inc.)
Series A, 8.125% 6/15/12 A-1+ 2,690,000 2,837,950 768901FT
Riverside County Redev. Agcy. Tax Allocation
(Redev. Proj. #4) Series A:
7.50% 10/1/10 BBB 1,000,000 1,092,500 769123BN
7.50% 10/1/26 BBB 2,500,000 2,731,250 769123BP
Riverside Redev. Agcy. Multi-Family Rev.
(First & Market Proj.) Series A,
7.75% 9/1/21 (b) Baa 4,200,000 4,462,500 769046AB
Riverside Unified School Dist. Ctfs. of Prtn.
(Cap. Appreciation Land Acquisition Proj.)
Series B, 0% 9/1/26, (FSA Insured) (f) Aaa 2,150,000 1,617,875 769062AD
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Sacramento City Fing. Auth. (Cap. Appreciation
Tax Allocation Proj.)(MBIA Insured):
Series A, 0% 11/1/16 Aaa $ 5,700,000 $ 1,517,625 785849BS
Series B, 0%11/1/13 Aaa 500,000 160,625 785849BP
Sacramento County Single Family Mtg. Rev.
Series A, 7.80% 10/1/23,
(FNMA & GNMA Coll.)(b) AAA 115,000 120,606 786149EY
Sacramento Fing. Auth. Lease Rev. Rfdg.
Series A, 5.40% 11/1/20,
(AMBAC Insured) Aaa 2,500,000 2,421,875 785846BN
Sacramento Muni. Util. Dev. Index Inflows 0%
7.33%11/15/08, (FGIC Insured)(d) Aaa 7,000,000 6,938,750 7860042C
Sacramento Muni. Util Dist. Elec. Rev.
9.78% 8/15/18, (FGIC Insured) (d) Aaa 1,750,000 2,021,250 786004U5
Sacramento Redev. Agcy. Tax Allocation
(Downtown Redev. Proj.) Series A, (MBIA Insured):
6.75% 11/1/05 Aaa 2,000,000 2,235,000 786059JZ
6.50% 11/1/13 Aaa 2,000,000 2,147,500 786059KA
Salinas Facs. Rev. (Villa Sierra Proj.)
Series A, 7.95% 4/20/31, (GNMA Coll.) AAA 2,450,000 2,578,625 794904AD
San Bernardino County Ctfs. of Prtn.:
(Cap. Facs. Proj.) Series B, 6.875%
8/1/24 Baa1 2,500,000 2,959,375 796815KR
(Med Ctr. Fing. Proj.)(g):
5.50% 8/1/17 Baa1 6,500,000 5,988,125 796815NL
5.50% 8/1/22 Baa1 4,500,000 4,095,000 796815NN
San Bernardino County Trans. Auth. Sales Tax
Rev. Series A, 6% 3/1/10, (FGIC Insured) Aaa 2,000,000 2,077,500
796846AP
San Bernardino Health Care Sys. Rev.
(Sisters of Charity) Series A, 7% 7/1/11 Aa 1,410,000 1,551,000
796790CA
San Diego County Wtr. Auth. Wtr. Rev.
Ctfs. of Prtn. (Reg. Rites) 8.50724%
4/25/07, (FGIC Insured) (d) Aaa 1,250,000 1,337,500 797415CS
San Francisco City & County Redev. Agcy.
7.75% 9/1/06 - 6,000,000 6,352,500 797712AE
San Francisco City & County Redev. Agcy.
Multi-family Rev. Rfdg. Hsg.
(South Beach Proj.) 5.70% 3/1/29
(GNMA Coll.) Aaa 5,000,000 4,812,500 79765TAP
San Francisco City & County Redev. Fing.
Auth. Tax Allocation:
Rfdg. (Cap. Appreciation) (Redev. Proj.)
Series B, 0% 8/1/10, (MBIA Insured) Aaa 1,475,000 586,313 79771PDM
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
San Francisco City & County Redev. Fing.
Auth. Tax Allocation - continued:
Series B, 0% 8/1/12, (MBIA Insured) Aaa $ 1,475,000 $ 523,625 79771PDQ
San Francisco City & County Single Family
Mtg. Rev. 7.45% 1/1/24,
(FNMA & GNMA Coll.)(b) AAA 255,000 273,169 797717FP
San Joaquin County Ctfs. of Prtn.
(Gen. Hosp. Proj.) 6.25% 9/1/13 A 2,500,000 2,571,875 798085DW
San Joaquin Hills Trans. Corridor Agcy.
Toll Road Rev. (Sr. Lien):
0% 1/1/04 - 2,350,000 1,424,688 798111AE
0% 1/1/07 - 3,000,000 1,890,000 798111AJ
5% 1/1/33 - 4,975,000 3,973,781 798111BJ
San Jose Redev. Agcy. Tax Allocation
Redev. Proj. 5% 8/1/21 (MBIA Insured) A 10,000,000 8,787,500 798147LG
Santa Barbara Ctfs. of Prtn.:
(American Baptist Hosp.) 7.40% 5/15/15 A+ 2,000,000 2,227,500 801242DF
6.40% 2/1/11 A+ 2,490,000 2,570,925 801321DQ
Santa Clara Ctfs. of Prtn. Ref. Series A,
4.75% 2/1/14, (MBIA Insured) Aaa 1,250,000 1,131,250 801400BG
Selma Redev. Agcy. Tax Allocation
(Selma Redev. Proj.) 8.10% 8/1/13 (h) - 825,000 866,250 816537AN
Sequoia Hosp. Dist. Rev.:
5.375% 8/15/13 A 4,000,000 3,750,000 817393BZ
5.375% 8/15/23 A 8,275,000 7,540,594 817393CA
Solano County Ctfs. of Prtn. Rfdg.
(Justice Facs. & Pub. Bldg. Proj.)
5.875% 10/1/05 Baa1 2,500,000 2,521,875 834131BR
Southern California Home Fin. Auth. Single
Family Mtg. Rev. Series B, 7.75% 3/1/24,
(GNMA & FNMA Coll.)(b) AAA 275,000 299,406 842440DQ
Southern California Pub. Pwr. Auth. Pwr. Proj. Rev.:
Rfdg. (Palo Verde Proj.) Series A:
0% 7/1/14, (AMBAC Insured) Aaa 8,325,000 2,539,125 842475JH
5% 7/1/15 Aa 1,125,000 1,027,969 842475NF
(Multiple Proj.):
6.75% 7/1/11 A 6,500,000 7,239,375 842475KL
6.75% 7/1/12 A 1,960,000 2,190,300 842475KM
6.75% 7/1/13 A 3,000,000 3,363,750 842475KN
Southern California Pub. Pwr. Auth.
Southern Transmission (Cap. Appreciation)
0% 7/1/14 Aa 5,000,000 1,506,250 842477JF
Southern California Pub. Pwr. Auth. Transmission Proj.
Rev. Rfdg. (Sub Crossover) 0% 7/1/13
(100% GIC In Escrow until 1/1/94) Aa 1,500,000 480,000 842477JE
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Sulphur Springs Unified School Dist. (MBIA Insured):
Series A, 0% 9/1/08 Aaa $ 2,745,000 $ 1,221,525 865480EY
Unltd. Tax Series A, 0% 9/1/12 Aaa 2,750,000 948,750 865480FC
Sunnyvale Fing. Agcy. Util. Rev. (Solid Waste
Materials Recovery) Series B, 6%
10/1/17 (MBIA Insured)(b) Aaa 3,000,000 3,082,500 867549BU
Torrance Hosp. Rev. (Little Co. of Mary Hosp.)
6.875% 7/1/15 A 920,000 1,000,500 891368CK
Upland Ctfs. Partn. (San Antonio Commty.
Hosp.) 5.25% 1/1/08 A 1,850,000 1,764,438 915346DN
Upland Hosp. Ctfs. of Prtn. (San Antonio
Commtys. Hosp.) 5.25% 1/1/13 A 3,000,000 2,767,500 915346DP
Upland Hsg. Auth. Rev. Issue A, 7.85%
7/1/20 - 990,000 1,037,025 91536HAL
Vallejo Ctfs. of Prtn. (Marine World
Foundation Proj.) 8.10% 2/1/21 - 7,780,000 8,110,650 919191BC
Valley Ctr. Union School Dist. Series A,
0% 9/1/17, (MBIA Insured) Aaa 8,835,000 2,263,970 919439BT
Vista Unified School Dist. Ctfs. of Prtn. 0%
9/1/11, (MBIA Insured) Aaa 8,585,000 2,672,081 92834MAJ
Walnut Pub. Fing. Auth. Tax Allocation Rev.
Rfdg. (Walnut Impt. Proj.) 6.50%
9/1/22, (MBIA) Aaa 1,500,000 1,618,125 932660AR
West & Central Basin Fing. Auth. Rev.:
Rfdg. (West Basin Proj.) Series A, 5%
8/1/10, (AMBAC Insured) Aaa 1,155,000 1,097,250 95122ECD
(West Basin Proj.) Series A, 5% 8/1/10,
(AMBAC Insured) Aaa 1,750,000 1,662,500 95122ECE
527,930,712
GUAM - 0.7%
Guam Arpt. Auth. Rev.:
Series A, 6.60% 10/1/10(b) BBB 1,000,000 1,045,000 400648BK
Series B, 6.70% 10/1/23(b) BBB 2,850,000 2,988,938 400648BM
4,033,938
PUERTO RICO - 2.2%
Puerto Rico Commonwealth Hwy. & Trns.
Auth. Rev. Series W, 5.50% 7/1/13 Baa1 5,125,000 5,028,906 745181BZ
Puerto Rico Elec. Pwr. Auth. Pwr. Rev.
Series P, 7% 7/1/21 Baa1 4,000,000 4,440,000 745268LL
Puerto Rico Tel. Auth. Rev. 6.78% 1/1/04,
(AMBAC Insured) (d) Aaa 2,250,000 2,188,125 745297HX
11,657,031
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
U.S. VIRGIN ISLANDS - 0.3%
Virgin Islands Pub. Fin. Auth. Rev. Rfdg.
Series A, 7.25% 10/1/18 (e) - $ 1,500,000 $ 1,650,000 927676CF
TOTAL MUNICIPAL BONDS
(Cost $519,167,374) $ 545,271,681
MUNICIPAL NOTES (A) - 1.5%
CALIFORNIA - 1.5%
California Poll. Cont. Fing. Auth. Resources
Recovery Rev., VRDN:
(Delano Proj.) Series 1991, 2.30%,
LOC Algemene/ABN-AMRO Bank, (b) P-1 300,000 300,000 130535BE
(Ultra Pwr. Rocklin Proj.) Series 1988 B,
2.35%, LOC Bank of America Nat'l.
Trust & Savings - 3,000,000 3,000,000 130535AN
Contra Costa Tax and Rev. Anticipation
Notes, Series A, 3.25% 7/29/94 MIG 1 5,000,000 5,004,650 212219BV
TOTAL MUNICIPAL NOTES
(Cost $8,309,087) $ 8,304,650
OTHER SECURITIES - 0.0%

RIGHTS
CALIFORNIA - 0.0%
Riverside County Asset Leasing Corp. Leasehold Rev.
(Riverside County Hosp.) Series A (Call Rights)
6.50% 6/1/12 (Cost $59,590) - 1,100 220,688
TOTAL INVESTMENTS - 100%
(Cost $527,536,051) $ 553,797,019
FUTURES CONTRACTS
AMOUNT IN THOUSANDS EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
SELL
65 U.S. Treasury Bond Futures March, 1994 7,306,406 $ 4,721
THE VALUE OF FUTURES CONTRACTS SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 1.3%

OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 59.5% AAA, AA, A 72.1%
Baa 9.6% BBB 9.2%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 8.6%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Lease Revenue 26.1%
Health Care 19.8
Special Tax 18.3
Others (individually less
than 10%) 35.8
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994 the aggregate cost of investment securities for income
tax purposes was $527,536,051. Net unrealized appreciation aggregated
$26,260,968, of which $30,416,067 related to appreciated investment
securities and $4,155,099 related to depreciated investment securities.
The fund hereby designates $1,656,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
At February 28, 1994 the fund was required to defer $3,065,000 of losses on
futures contracts and options.
SPARTAN CALIFORNIA MUNICIPAL HIGH YIELD PORTFOLIO

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994

1.ASSETS 2. 3.

4.Investment in securities, at value (cost $527,536,051) 5. $ 553,797,019
(Notes 1 and 2) - See accompanying schedule

6.Cash 7. 33,660

8.Receivable for investments sold 9. 19,997,305

10.Interest receivable 11. 7,182,991

12.Redemption fees receivable (Note 1) 13. 1,837

14. 15.TOTAL ASSETS 16. 581,012,812

17.LIABILITIES 18. 19.

20.Payable for investments purchased $ 10,426,032 21.
Delayed delivery (Note 2)

22.Payable for fund shares redeemed 3,263,887 23.

24.Dividends payable 409,777 25.

26.Accrued management fee 249,597 27.

28.Payable for daily variation on futures contracts 50,781 29.

30. 31.TOTAL LIABILITIES 32. 14,400,074

33.34.NET ASSETS 35. $ 566,612,738

36.Net Assets consist of (Note 1): 37. 38.

39.Paid in capital 40. $ 533,683,167

41.Accumulated undistributed net realized gain (loss) on 42. 6,663,882
investments

43.Net unrealized appreciation (depreciation) on: 44. 45.

46. Investment securities 47. 26,260,968

48. Futures contracts 49. 4,721

50.51.NET ASSETS, for 51,839,522 shares outstanding 52. $ 566,612,738

53.54.NET ASSET VALUE, offering price and redemption 55. $10.93
price per share ($566,612,738 (divided by) 51,839,522 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994

56.57.INTEREST INCOME 58. $ 36,476,769

59.EXPENSES 60. 61.

62.Management fee (Note 4) $ 3,287,940 63.

64.Non-interested trustees' compensation 3,794

65. Total expenses before reductions 3,291,734

66. Expense Reductions (Note 5) (202,856) 3,088,878

67.68.NET INTEREST INCOME 69. 33,387,891

70.REALIZED AND UNREALIZED GAIN (LOSS) ON 72. 73.
INVESTMENTS
(NOTES 1 AND 3)
71.Net realized gain (loss) on:

74. Investment securities 24,834,702 75.

76. Futures contracts 1,770,838 26,605,540

77.Change in net unrealized appreciation (depreciation) 78. 79.
on:

80. Investment securities (26,250,217) 81.

82. Futures contracts (487,377) (26,737,594)

83.84.NET GAIN (LOSS) 85. (132,054)

86.87.NET INCREASE (DECREASE) IN NET ASSETS 88. $ 33,255,837
RESULTING FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR TEN MONTHS ENDE
ENDED D
FEBRUARY 28, 1994 FEBRUARY 28, 1993
(NOTE 1)

89.INCREASE (DECREASE) IN NET ASSETS

90.Operations $ 33,387,891 $ 25,995,632
Net interest income

91. Net realized gain (loss) on investments 26,605,540 3,878,795

92. Change in net unrealized appreciation (depreciation) (26,737,594) 37,174,010
on investments

93. 94.NET INCREASE (DECREASE) IN NET ASSETS 33,255,837 67,048,437
RESULTING FROM
OPERATIONS

95.Distributions to shareholders (33,387,891) (25,995,632)
From net interest income

96. From net realized gain (17,385,450) (3,291,418)

97. In excess of net realized gain (3,001,030) -

98. 99.TOTAL DISTRIBUTIONS (53,774,371) (29,287,050)

100.Share transactions 153,539,687 179,086,059
Net proceeds from sales of shares

101. 46,508,005 25,707,655
Reinvestment of distributions

102. Cost of shares redeemed (186,891,146) (147,921,333)

103. Redemption fees (Note 1) 103,560 100,581

104. 13,260,106 56,972,962
Net increase (decrease) in net assets resulting from
share transactions

105. (7,258,428) 94,734,349
106.TOTAL INCREASE (DECREASE) IN NET ASSETS

107.NET ASSETS 108. 109.

110. Beginning of period 573,871,166 479,136,817

111. End of period $ 566,612,738 $ 573,871,166

112.OTHER INFORMATION 114. 115.
113.Shares

116. Sold 13,616,855 16,578,722

117. Issued in reinvestment of distribution 4,155,944 2,379,910

118. Redeemed (16,596,175) (13,752,500)

119. Net increase (decrease) 1,176,624 5,206,132

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
120. YEAR TEN MONTHS YEARS ENDED APRIL 30, NOVEMBER 27,
ENDED ENDED 1989
FEBRUARY 28 FEBRUARY 28, (COMMENCEME
, 1993 NT
OF OPERATIONS)
TO
APRIL 30,

121. 1994 (NOTE 1) 1992 1991 1990

122.SELECTED PER-SHARE DATA

123.Net asset value, $ 11.330 $ 10.540 $ 10.240 $ 9.760 $ 10.000
beginning of period

124.Income from .631 .543 .663 .706 .301
Investment Operations
Net interest income

125. Net realized and (.012) .858 .297 .472 (.249)
unrealized gain (loss)
on investments

126. Total from .619 1.401 .960 1.178 .052
investment
operations

127.Less Distributions (.631) (.543) (.663) (.706) (.301)
From net interest
income

128. From net realized (.330) (.070) - - -
gain
on investments

129. Distributions in (.060) - - - -
excess of
net realized gain

130. Total distributions (1.021) (.613) (.663) (.706) (.301)

131.Redemption fees .002 .002 .003 .008 .009
added to paid in capital

132.Net asset value, end $ 10.930 $ 11.330 $ 10.540 $ 10.240 $ 9.760
of period

133.TOTAL RETURN (DAGGER) 5.63% 13.76% 9.66% 12.52% .59%

134.RATIOS AND SUPPLEMENTAL DATA

135.Net assets, end of $ 566,613 $ 573,871 $ 479,137 $ 281,725 $ 107,409
period (000 omitted)

136.Ratio of expenses to .52% .40%* .36% .19% -
average net assets(DAGGER)(DAGGER)

137.Ratio of expenses to .55% .55%* .55% .55% .55%*
average net assets
before expense
reductions(DAGGER)(DAGGER)

138.Ratio of net interest 5.58% 6.07%* 6.36% 7.02% 7.42%*
income to average net
assets

139.Portfolio turnover 54% 26%* 13% 15% 5%*
rate

</TABLE>

* ANNUALIZED
(DAGGER) TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS WOULD HAVE
BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
(DAGGER)(DAGGER) SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS.
SPARTAN CALIFORNIA INTERMEDIATE MUNICIPAL PORTFOLIO

PERFORMANCE: THE BOTTOM LINE

There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells bonds
that have grown in value), and the effect of the $5 account closeout fee.
You can also look at the fund's income. If Fidelity had not reimbursed
certain fund expenses during the periods shown, the total returns,
dividends and yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED FEBRUARY 28, 1994 LIFE OF
FUND

Spartan California Intermediate Municipal -1.72%

Lehman Brothers Municipal Bond Index n/a

Average California Tax-Exempt
Municipal Intermediate Bond Fund n/a

Consumer Price Index 0.62%

CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, since the fund started on December 30, 1993. For example, if you
had invested $1,000 in a fund that had a 5% return over the past year, you
would end up with $1,050. Once the fund is six months old, you can compare
the fund's results to the performance of the Lehman Brothers Municipal Bond
Index - a broad gauge of the municipal bond market. To measure how the fund
stacks up against its peers (again, once it's six months old), you can also
look at the average California tax-exempt intermediate municipal bond fund,
which reflects the performance of 22 California tax-exempt intermediate
municipal bond funds tracked by Lipper Analytical Services. Both benchmarks
include reinvested dividends and capital gains, if any. Comparing the
fund's performance to the consumer price index helps show how your fund did
compared to inflation. (The periods covered by the CPI numbers are the
closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) results
and show you what would have happened if the fund had performed at a
consistent rate each year. Average annual returns for the fund and its
benchmarks will appear in the fund's next annual report, once the fund is
older; this next report will also show the effect of investing $10,000 over
the life of the fund for both the fund and the Lehman Brothers Municipal
Bond Index.
INCOME
DECEMBER 30, 1993
(COMMENCEMENT
OF OPERATIONS) TO
FEBRUARY 28, 1994

Income return 0.69%

Change in share price -2.41%
Total return -1.72%
INCOME returns and changes in share price are both part of a bond fund's
total return. An income return reflects the dividends paid by the fund and
assumes the dividends are reinvested. Changes in the fund's share price
include changes in the prices of the bonds owned by the fund. Change in
share price and total return figures include the effect of the $5 account
closeout fee.
DIVIDENDS AND YIELD
PERIOD ENDED FEBRUARY 28, 1994 PAST 30 LIFE OF
DAYS FUND

Dividends per share n/a 7.02(cents)

Annualized dividend rate n/a 4.21%

Annualized yield 4.83% n/a

Tax-equivalent yield 8.48% n/a

DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $9.97 over
the life of the fund, you can compare the fund's income over these two
periods. The 30-day annualized YIELD is a standard formula for all funds
based on the yields of the bonds in the fund, averaged over the past 30
days. This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you compare funds from
different companies on an equal basis. The tax-equivalent yield shows what
you would have to earn on a taxable investment to equal the fund's tax-free
yield, if you're in the 43.04% combined effective 1994 federal and state
income tax bracket.
SPARTAN CALIFORNIA INTERMEDIATE MUNICIPAL PORTFOLIO

FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
Bond investments - including
tax-free issues - provided solid
returns for the 12 months ended
February 28, 1994, despite a
dramatic downturn in February.
Falling interest rates pushed up
bond prices steadily through
mid-October, when the yield on the
benchmark 30-year Treasury bond
reached a historic low of 5.79%. By
year-end, a strengthening economy
had fueled mild inflation fears. That
pushed up the yield on the 30-year
bond to 6.35% on December 31,
which forced investors to give back
some of their earlier profits. Inflation
jitters eased and bond yields
dropped in January. However,
when the Federal Reserve Bank
raised short-term interest rates in
an attempt to control inflation on
February 4, investors reacted
negatively. At the end of February,
the yield on the 30-year bonds was
6.66%, about 38 basis points
higher than at the beginning of the
month. Over the year, higher
federal income taxes boosted
demand for municipal bonds. But
municipal bond prices were hurt by
the Fed's action in February and by
record new issuance, which kept
supplies high and dampened
prices. The return on the Lehman
Brothers Municipal Bond Index, a
broad measure of the tax-free
market, rose 5.54%. By
comparison, the Lehman Brothers
Aggregate Bond Index, which
tracks investment-grade taxable
bonds, returned 5.40%. Globally,
falling interest rates and low
inflation drove good annual returns
in Europe, Japan, and most
emerging markets, although many
of these markets fell in February
along with the U.S. bond market.
The Salomon Brothers World
Government Bond Index - which
includes U.S. issues - returned
9.34%, while the J.P. Morgan
Emerging Markets Bond Index was
up a dramatic 29.46%.
Interview with David Murphy,
Portfolio Manager of Spartan California Intermediate Municipal Portfolio
Q. DAVID, HOW DID THE FUND DO?
A. The fund's total return from the start of operations on December 30,
1993 to February 28, 1994 was -1.72.%.
Q. WHAT ACCOUNTED FOR THE NEGATIVE
RETURN?
A. In February, the Federal Reserve raised short-term interest rates, which
caused short-term bond prices to fall. That also caused longer-term bond
prices to drop, which in turn hurt the fund's investments. Despite the
municipal bond market's negative reaction, I still think interest rates
will continue to stay low over the long term. My view is that the Fed is
very serious about being the inflation watchdog. Low inflation is generally
good for bonds. Historically, a pick-up in the economy - like we saw in the
fourth quarter of 1993 - means higher inflation. But this time, I don't
think that relationship will hold up.
Q. WHY IS THAT?
A. Because I think that inflation is low, lower than the market has
anticipated. We still haven't seen a broad-based increase in any of the
three basic components of higher inflation: commodity prices, labor costs,
and the cost of borrowing money. While it's true that some commodity prices
- - like gold, grains, and copper - have risen, others - like oil - haven't.
Plus, some of the hike in agricultural products was due to extraordinary
factors like last year's flood and the recent cold weather.
Q. AND THE OTHER TWO INFLATIONARY SIGNALS?
A. On the wage side, many U.S. companies now have the flexibility to move
their production overseas, where labor prices are often cheaper, and that
has kept pressure on labor costs here. Also, productivity has increased,
which means the actual cost of producing one unit of a given good has come
down. Finally, the cost of borrowing money is still low. In my view, these
all add up to continued low inflation, which in turn could lead to falling
interest rates, especially in the longer end of the maturity spectrum
between 10 and 30 years.
Q. WHAT'S YOUR VIEW OF THE CALIFORNIA ECONOMY?
A. My view is that the California economy is at a turning point. I think we
should start to see evidence of expansion soon, even though that expansion
will be modest initially. Employment in California is expected to grow in
1994, and there's been a rebound in retail sales and help-wanted
advertising. Plus, the passage of NAFTA should be a positive for the state.
Finally, federal assistance and private insurance payments stemming from
the recent Los Angeles earthquake will provide a $14 billion stimulus for
California.
Q. IS YOUR OUTLOOK FOR THE STATE'S FISCAL SITUATION ALSO POSITIVE?
A. On that front I have a few concerns. First, the state has drawn down its
budget reserves. And second, the proposed 1994 budget assumes a $2.5
billion federal government appropriation earmarked for immigration issues.
Yet it's not certain that appropriation will materialize. But, as the
economy improves, so should tax revenues. As more people get back into the
work force, income tax receipts will rise. If retail sales improve that
would translate into higher sales tax revenues. The effect of those factors
probably won't be felt for at least a year. So I think the state will
continue to face fiscal pressures for the next 12 months.
Q. IN LIGHT OF THOSE CONCERNS, WHAT HAS YOUR STRATEGY BEEN?
A. Since we haven't seen a significant rebound yet, I've mainly focused on
higher quality bonds. The fund's stake in Aaa bonds was 35.5% on February
28. As the economic rebound gains momentum, I may add some A- and Baa-rated
bonds. In terms of maturity, I've concentrated on bonds with 10- to 15-year
maturities. Out to 15 years, the yield curve -meaning the difference in
yield between different maturity bonds - is steep. That means you get more
yield buying 12-year bonds than five-year bonds. Beyond 15 years, the yield
curve is flat and you don't get rewarded much for buying a longer-term
bond.
Q. WHAT DO YOU THINK INVESTORS CAN EXPECT FOR THE NEXT SIX MONTHS?
A. Over the short term, more volatility. The municipal bond market seems to
be expecting the Fed to raise short-term interest rates to 4%. Until that
happens, the market probably will remain unsettled. But eventually, I
believe that long-term municipal rates could start to fall again, and that
intermediate rates could come down as well. Plus, the dwindling supply of
municipal bonds should help. Falling interest rates and a shrinking supply
would be positive for municipal bond prices.

FUND FACTS
GOAL: to provide current
income exempt from federal
and state
income taxes
START DATE: December 30,
1993
SIZE: as of February 28, 1994,
over $22 million
MANAGER: David Murphy,
since December, 1993;
manager,
Spartan New York
Intermediate Portfolio, since
December,1993; Spartan
Intermediate Municipal
Portfolio, since April 1993;
Spartan New Jersey Municipal
High Yield Portfolio, since April
1991; Fidelity Limited Term
Municipals, since December
1989; Spartan
Short-Intermediate Municipal
Fund, since December 1989
(checkmark)

DAVID MURPHY ON INTERMEDIATE
BONDS:
"I think that intermediate
bonds in the five- to 15- year
range will be attractive in
1994. The yield curve - or
the difference in yield
between bonds with various
maturities - is very steep up
to 15 years. At the end of the
period, a 15-year California
Aaa bond paid about 5.40%
yield, compared to a five-year
bond which paid 4.40%. But in
the 15- to 30-year range, the
curve was flat. In that longer
range, you only got rewarded
with about one-quarter of a
percentage in incremental
yield. What's more, some
institutional investors have
started to increase their
investments in intermediate
bonds. That increased
demand could be a positive
for intermediate municipal
bond prices."
(bullet) About one-fifth of the fund's
investments were in utilities
- - like water, sewer, and
electric revenue bonds - on
February 28, 1994. These
were attractive because the
utilities have a stable cash
flow, which helps insulate
them during times when the
economy is weak.
(bullet) Health-care bonds were the
fund's second largest
concentration, at 19.2% of the
total investments. They were
attractive because of their
relatively high yields.
SPARTAN CALIFORNIA INTERMEDIATE MUNICIPAL PORTFOLIO

INVESTMENT SUMMARY

TOP FIVE SECTORS AS OF FEBRUARY 28, 1994
% OF FUND'S
INVESTMENTS

Health Care 19.2

Lease Revenue 19.2

Water & Sewer 12.5

Special Tax 9.9

Electric Revenue 8.4

AVERAGE YEARS TO MATURITY AS OF FEBRUARY 28, 1994

Years 8.3

AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF FEBRUARY 28, 1994

Years 6.0

DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, THE SHARE PRICE OF A FUND WITH A
FIVE-YEAR DURATION WILL FALL 5%.
QUALITY DIVERSIFICATION AS OF FEBRUARY 28, 1994
(MOODY'S RATINGS)
Aaa 35.5%
Aa, A 46.3%
Baa 18.2%
Ba, B 0%
Non-rated 0%
Row: 1, Col: 1, Value: 35.5
Row: 1, Col: 2, Value: 46.3
Row: 1, Col: 3, Value: 18.2
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
THIS CHART EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS.
SPARTAN CALIFORNIA INTERMEDIATE MUNICIPAL PORTFOLIO

INVESTMENTS/FEBRUARY 28, 1994
(Showing Percentage of Total Value of Investments)

MUNICIPAL BONDS - 78.7%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - 76.8%
ABAG Fin. Auth. for Nonprofit Corp.
Cfts. of Prtn. (Stanford Univ. Hosp.)
5% 11/1/04 Aa $ 400,000 $ 401,500 00037EBA
California Health Facs. Fing. Auth. Rfdg.
(Catholic Healthcare West) 5% 7/1/07
(AMBAC Insured) Aaa 220,000 210,375 13033ABJ
California Pub. Wrks. Board Lease Rev.
Rfdg. Dept. State Prisons Series A,
5% 12/1/01 A1 200,000 199,500 13068GNR
California Statewide Commtys. Dev. Corp.
Auth. Rev. Ctfs. of Prtn. Rfdg. (Insured Hosp.)
(Triad Healthcare):
5.25% 8/1/97 A+ 250,000 247,812 130909CF
5.90% 8/1/01 A+ 200,000 202,250 130909CK
6.25% 8/1/06 A+ 1,000,000 1,013,750 130909CM
California University Rev. Rfdg.
(Multiple Purp. Projs.) Series C:
Rfdg. (Multiple Purp. Projs.)
Series C, 4.80% 9/1/07
(AMBAC Insured) Aaa 300,000 286,500
Series C, 9% 9/1/02
(AMBAC Insured) Aaa 100,000 128,500 914113UE
Carson Redev. Agcy. Rfdg.
(Redev. Proj. Area 2) (Tax Allocation)
5.50% 10/1/02 Baa 100,000 99,625 145750DK
Central Valley Fin. Auth. Cogeneration Proj.
Rev. (Carson Ice Proj.) 5.80% 7/1/04 BBB- 200,000 199,500 155689AJ
Clovis Unified School Dist. (Cap. Appreciation)
Series B, 0% 8/1/02 A1 300,000 192,750 189342QF
Cucamonga County Ctfs. of Prtn. Wtr. Dist.
Facs. Proj. 5% 9/1/10 (FGIC Insured) Aaa 455,000 431,112 229694CV
Fresno Swr. Rev. Series A-1, 5% 9/1/08,
(AMBAC Insured) Aaa 105,000 101,587 358229CD
Los Angeles County Ctfs. of Prtn.
(Multiple Cap. Facs. Proj.) 8.55%
11/1/01 (d) A1 200,000 220,000 544663R9
Los Angeles County Metropolitan Trans. Auth.
Sales Tax Rev. Rfdg. Series A:
5.20% 7/1/04 A1 750,000 749,063 544712AM
5.50% 7/1/09 A1 300,000 294,750 544712AA
Los Angeles Dept. of Wtr. & Pwr. Elec. Rev.:
Rfdg. 4.75% 8/15/07 Aa 800,000 756,000 544507LH
9% 10/15/01 Aa 110,000 138,875 544507JH
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Northern California Pwr. Agcy. Multiple Cap.
Facs. Rev. Series A, 6% 8/1/03,
(MBIA Insured) Aaa $ 300,000 $ 323,625 664842AH
Orange County Dev. Agcy. Tax Allocation
(Santa Ana Heights Proj.) 5.80% 9/1/03 Baa1 1,235,000 1,230,369
684246BU
Palomar Pomerado Health Sys. Rev. 5%
11/1/07 (MBIA Insured) Aaa 300,000 287,250 69753EAP
Port Oakland Port. Rev. Rfdg. Series F, 0%
11/1/05, (MBIA Insured) Aaa 300,000 161,625 734897RP
Rancho Cucamonga Redev. Agcy. Tax
Allocation (Rancho Redev. Proj.) 5% 9/1/10
(MBIA Insured) Aaa 300,000 286,125 752123DJ
Redlands Ctfs. of Prtn. Rfdg.
(Wtr. Treatment Facs. Proj.)
4.5% 9/1/15, (FGIC Insured) Aaa 930,000 942,788 757564GL
Riverside County Trans. Commtys. Sales Tax
Rev. Series A, 5.40% 6/1/03
(AMBAC Insured) Aaa 500,000 517,500 769125BB
Rosemead Redev. Agcy.
(Subordinated Lien Tax Allocation Proj.
Area 1) 0% 10/1/98 A- 1,120,000 908,600 777520BH
San Bernadino County Ctfs. of Prtn. Med.
Ctr. Fing. 5.25% 8/1/05 (f) Baa1 1,235,000 1,171,706 796815NX
San Diego County Ctfs. of Prtn. Rfdg.
5.25% 9/1/04 (AMBAC Insured) Aaa 500,000 509,375 797391HP
San Diego County Reg.'l Trans. Common
Sales Tax Rev. Rfdg. Series A, 5.20%
4/1/05 (FGIC Insured) Aaa 100,000 100,500 797400CC
San Diego Swr. Rev. Series A, 4.90%
5/15/09 (AMBAC Insured) Aaa 500,000 472,500 797304EB
San Diego Unified School Dist. Ctfs. of Prtn.
Rfdg. Cap. Proj. Series B, 5.25%
7/1/02 Aa 400,000 411,000 797358CU
San Francisco Bldg. Auth. Lease Rev. Dept.
Gen'l Svcs. Lease Series A:
5% 10/1/05 A1 400,000 388,000 79772LAM
5.10% 10/1/06 (MBIA Insured) Aaa 300,000 296,625 79772LAU
Sequoia Hosp. Dist. Rev.:
Rfdg. 5% 8/15/03 A 1,285,000 1,264,119 817393BU
4.90% 8/15/02 A 500,000 492,500 817393BT
Southern California Pub. Pwr. Auth. Pwr. Proj. Rev.:
Rfdg. (Mead Adelanto Proj.)
Series A, 4.75% 7/1/08
(AMBAC Insured) (f) Aaa 500,000 464,375 842475QZ
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Southern California Pub. Pwr. Auth. Pwr. Proj. Rev.: - continued
Rfdg. (Mead Adelanto Proj.)
Series 11, 0% 7/1/15,
(Pre-Prefunded to 7/1/00 @ 101)(e) Aaa $ 300,000 $ 224,625 842475JW
Walnut Creek Ctfs. of Prtn. Rfdg.
(John Muir Med. Ctr.) 4.95% 2/15/05
(MBIA Insured) Aaa 300,000 289,875 932702CD
16,616,531
PUERTO RICO - 1.9%
Puerto Rico Commonwealth Gen. Oblig.
5.70% 7/1/08 Baa1 300,000 303,750 745144EB
Puerto Rico Commonwealth Rfdg. Impt.
Gen. Oblig. 5.375% 7/1/06 Baa1 100,000 99,875 745144KE
403,625
TOTAL MUNICIPAL BONDS
(Cost $17,419,727) $ 17,020,156
MUNICIPAL NOTES (A) - 21.3%

CALIFORNIA - 21.3%
California Poll. Cont. Fing. Auth.
Resources Recovery Rev. VRDN (b):
(Delano Proj.) Series 1991, 2.30%,
LOC Algemene/ABN-AMRO Bank P-1 200,000 200,000 130535BE
(Malaga Proj.) Series A, 2.35%,
LOC Bank of America Nat'l.
Trust & Savings - 700,000 700,000 130535AP
(Ultra Pwr. Rocklin Proj.) Series 1988 B,
2.35%, LOC Bank of America Nat'l.
Trust & Savings - 700,000 700,000 130535AN
Los Angeles County Ind. Dev. Auth.
(Cataic & Jae Proj.) 2.45%,
LOC Union Banc Corp., VRDN (b) - 800,000 800,000 544689CX
Los Angeles County Trans. Commission Sales
Tax Rev. Rfdg. Series 1992 A, 2.25%
(Liquidity Enhancement Industrial Bank of
Japan Ltd., VRDN VMIG 1 800,000 800,000 545170HL
Orange County Various Sanitation Dist.
Ctfs. of Prtn. (Cap. Impt. Prog.)
(Dist. 1-7 & 11) 2.20%,
(FGIC Insured), VRDN VMIG 1 700,000 700,000 684285BK
MUNICIPAL NOTES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Southern California Pub. Pwr. Auth. Rev.
(Transmission Proj.) Series 1991, 2.25%,
(AMBAC Insured) LOC Swiss Bank, VRDN VMIG 1 $ 700,000 $ 700,000 842477HH
TOTAL MUNICIPAL NOTES
(Cost $4,600,000) $ 4,600,000
TOTAL INVESTMENTS - 100%
(Cost $22,019,727) $ 21,620,156

SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
(c) Standard & Poor's Corporation credit ratings are used in the
absence of a rating by Moody's Investors Service, Inc.
(d) Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate. The price will be more
volatile than the price of a comparable fixed rate security.
(e) Security collateralized by an amount sufficient to pay interest and
principal.
(f) Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 53.4% AAA, AA, A 71.7%
Baa 13.4% BBB 7.1%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 0.0%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Health Care 19.2%
Lease Revenue 19.2
Water & Sewer 12.5
Others (individually less
than 10%) 49.1
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1994 the aggregate cost of investment securities for income
tax purposes was $22,019,727. Net unrealized depreciation aggregated
$399,571, of which $125 related to appreciated investment securities and
$399,696 related to depreciated investment securities.
SPARTAN CALIFORNIA INTERMEDIATE MUNICIPAL PORTFOLIO

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 30, 1993 (COMMENCEMENT OF OPERATIONS) TO FEBRUARY 28, 1994

140.ASSETS 141. 142.

143.Investment in securities, at value (cost 144. $ 21,620,156
$22,019,727)
(Notes 1 and 2) - See accompanying schedule

145.Cash 146. 4,120,719

147.Interest receivable 148. 198,003

149.Receivable from investment adviser for expense 150. 7,123
reductions (Note 5)

151. 152.TOTAL ASSETS 153. 25,946,001

154.LIABILITIES 155. 156.

157.Payable for investments purchased $ 3,224,966 158.
Delayed delivery (Note 2)

159.Dividends payable 1,044 160.

161.Accrued management fee 7,123 162.

163. 164.TOTAL LIABILITIES 165. 3,233,133

166.167.NET ASSETS 168. $ 22,712,868

169.Net Assets consist of (Note 1): 170. 171.

172.Paid in capital 173. $ 23,112,439

174.Net unrealized appreciation (depreciation) on 175. (399,571)
investment securities

176.177.NET ASSETS, for 2,326,091 shares outstanding 178. $ 22,712,868

179.180.NET ASSET VALUE, offering price and 181. $9.76
redemption price per share ($22,712,868 (divided by) 2,326,091
shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 30, 1993 (COMMENCEMENT OF OPERATIONS) TO FEBRUARY 28, 1994

182.183.INTEREST INCOME 184. $ 60,323

185.EXPENSES 186. 187.

188.Management fee (Note 4) $ 7,123 189.

190.Non-interested trustees' compensation - 191.

192.Total expenses before reductions 7,123

193.Expense reductions (Note 5) (7,123) -

194.195.NET INTEREST INCOME 196. 60,323

197.UNREALIZED GAIN (LOSS) ON INVESTMENTS 198. 199.
(NOTES 1 AND 3)

200.Change in net unrealized appreciation 201. (399,571)
(depreciation) on investment securities

202.203.NET INCREASE (DECREASE) IN NET ASSETS 204. $ (339,248)
RESULTING FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C>
DECEMBER 30,
1993
(COMMENCEMENT
OF OPERATIONS) TO
FEBRUARY 28, 1994

205.INCREASE (DECREASE) IN NET ASSETS

206.Operations $ 60,323
Net interest income

207. Change in net unrealized appreciation (depreciation) on investments (399,571)

208. (339,248)
209.NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS

210.Dividends to shareholders from net interest income (60,323)

211.Share transactions 27,634,217
Net proceeds from sales of shares

212. Reinvestment of dividends from net interest income 49,121

213. Cost of shares redeemed (4,570,899)

214. 23,112,439
Net increase (decrease) in net assets resulting from share transactions

215. 22,712,868
216.TOTAL INCREASE (DECREASE) IN NET ASSETS

217.NET ASSETS 218.

219. Beginning of period -

220. End of period $ 22,712,868

221.OTHER INFORMATION 223.
222.Shares

224. Sold 2,780,541

225. Issued in reinvestment of dividends from net interest income 5,010

226. Redeemed (459,460)

227. Net increase (decrease) 2,326,091

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C>
228. DECEMBER 30,
1993
(COMMENCEMENT
OF OPERATIONS) TO
FEBRUARY 28, 199
4

229.SELECTED PER-SHARE DATA

230.Net asset value, beginning of period $ 10.000

231.Income from Investment Operations $ .070
Net interest income

232. Net realized and unrealized gain (loss) on investments (.240)

233. Total from investment operations (.170)

234.Less Distributions (.070)
From net interest income

235.Net asset value, end of period $ 9.760

236.TOTAL RETURN (DAGGER) -1.71%

237.RATIOS AND SUPPLEMENTAL DATA

238.Net assets, end of period (000 omitted) $ 22,713

239.Ratio of expenses to average net assets (DAGGER)(DAGGER) -

240.Ratio of expenses to average net assets before expense reductions (DAGGER) .55%*
(DAGGER)

241.Ratio of net interest income to average net assets 4.66%*

242.Portfolio turnover rate -

</TABLE>

PERFORMANCE: THE BOTTOM LINE

To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects the change in a fund's share price
over a given period, reinvestment of its dividends (or income), and the
effect of the fund's $5 account closeout fee. Yield measures the income
paid by a fund. Since a money market fund tries to maintain a $1 share
price, yield is an important measure of performance. Both the fund's
returns and yields would have been lower if Fidelity hadn't reimbursed
certain fund expenses.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1994 PAST 1 LIFE OF
YEAR FUND

Spartan California Municipal Money Market 2.45% 18.04%

Consumer Price Index 2.52% 16.52%

Average California Tax-Free
Money Market Fund 1.96% 15.40%

CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, one year or since the fund started on November 27, 1989. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, you would have $1,050. Comparing the fund's performance to the
consumer price index (CPI) helps show how your investment did compared to
inflation. To measure how the fund stacked up against its peers, you can
compare its return to the average California tax-free money market fund's
total return. This average currently reflects the performance of 42
California tax-free money market funds tracked by IBC/Donoghue. (The
periods covered by the CPI and IBC/Donoghue numbers are the closest
available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1994 PAST 1 LIFE OF
YEAR FUND

Spartan California Municipal Money Market 2.45% 3.97%

Consumer Price Index 2.52% 3.66%

Average California Tax-Free
Money Market Fund 1.96% 3.43%

AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
YIELDS
2/28/93 5/31/93 8/31/93 11/30/93 2/28/94

Spartan California 2.16% 2.79% 2.53% 2.37% 2.44%
Municipal Money Market

Average California Tax-Free 1.75% 2.22% 2.01% 1.92% 1.96%
Money Market Fund

Spartan California 3.79% 4.90% 4.44% 4.16% 4.28%
Municipal Money Market -
Tax-equivalent

Average All Taxable 2.71% 2.62% 2.64% 2.69% 2.79%
Money Market Fund

Row: 1, Col: 1, Value: 2.16
Row: 1, Col: 2, Value: 1.75
Row: 2, Col: 1, Value: 2.79
Row: 2, Col: 2, Value: 2.22
Row: 3, Col: 1, Value: 2.53
Row: 3, Col: 2, Value: 2.01
Row: 4, Col: 1, Value: 2.37
Row: 4, Col: 2, Value: 1.92
Row: 5, Col: 1, Value: 2.44
Row: 5, Col: 2, Value: 1.96
Spartan California
Municipal Money
Market
Average California
Tax-Free Money
Market Fund
3% -
2% -
1% -
0%
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods, expressed as annual
percentage rates. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The chart above shows the fund's
current seven-day yield at quarterly intervals over the past year. You can
compare these yields to the average all tax-free money market fund. Or you
can look at the fund's tax-equivalent yield, which is based on a combined
effective 1994 federal and state income tax rate of 43.04%. The
tax-equivalent figures are useful in seeing how the fund stacked up against
the average taxable money market fund as tracked by IBC/Donoghue.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS REFLECT PAST RESULTS RATHER
THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield - the yield you'd have to
earn on a similar taxable
investment to match the
tax-free yield - makes the
comparison more meaningful.
Keep in mind that the U.S.
government neither insures nor
guarantees a money market
fund. In fact, there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
SPARTAN CALIFORNIA MUNICIPAL MONEY MARKET PORTFOLIO

FUND TALK: THE MANAGER'S OVERVIEW

An interview with Deborah Watson, Portfolio Manager of Spartan California
Municipal Money Market Portfolio
Q. DEBORAH, HOW HAS THE SHORT-TERM MARKET BEHAVED OVER THE LAST SIX MONTHS?
A. Short-term interest rates remained stable through the fall, despite a
mild uptick in November fueled by inflation fears. The Federal Reserve kept
the federal funds rate at or near 3% from August through January. Then, on
February 4, the Fed pushed the fed funds rate up to 3.25%, essentially
raising all short-term rates.
Q. WAS THE FUND WELL POSITIONED FOR HIGHER RATES?
A. For the most part, yes. I had gradually reduced the fund's average
maturity through the fall and early winter; it fell from 79 days at the end
of August to 48 days at the end of January. The fund's shorter average
maturity will allow me to capture the higher yields available following
February's rate hike. In addition, supply and demand played a role in how I
positioned the fund earlier in the year. California usually issues its
heaviest supply of new obligations during the summer months, and 1993 was
no exception. I lengthened the fund's average maturity through August, and
was able to lock in higher-yielding issues before rates fell further.
Issuance then slowed heading into fall, which, combined with my growing
expectation of higher interest rates, caused me to gradually shorten the
average maturity.
Q. HOW DID CALIFORNIA'S RECESSION AFFECT THE FUND?
A. The state's weak economy caused the financial health of many California
issuers to deteriorate. That meant there were fewer securities available
that met Fidelity's high standards for credit quality. However, I
compensated by buying more of those that did, resulting in little effect on
the fund's yield. Rebuilding efforts after January's earthquake should
boost economic growth in 1994. However, the annual borrowing season for
state and local governments is fast approaching, and their financial
picture hasn't improved. This may further reduce the supply of high quality
issues in California this summer.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on February 28 was 2.44%, up from 2.16% a
year ago. The latest yield translates into a tax equivalent yield of 4.28%
for investors in the 43.04% combined federal and state tax bracket. The
fund's total return - which assumes reinvestment of monthly dividends - for
the 12 months ended February 28 was 2.45%. The average California tax-free
money market fund tracked by IBC/Donoghue returned 1.96% during
the same period.
Q. WHAT'S YOUR VIEW GOING FORWARD?
A. I think short-term interest rates will probably rise gradually over the
next six months, while the Fed continues inching up the fed funds rate to
control inflation. That said, I'll probably keep the fund's average
maturity in a neutral 35- to 50-day range. In addition, I've increased the
fund's stake in variable rate instruments to 59.3% by February 28. The
coupons (stated interest rates) on these securities are reset at fixed
intervals - for example, weekly or monthly - so when rates rise, the fund
can benefit from higher coupons at these reset intervals.

FUND FACTS
GOAL: tax-free income with
share price stability by
investing in high-quality,
short-term California
municipal securities
START DATE: November 27,
1989
SIZE: as of February 28,
1994, over $1 billion
MANAGER: Deborah Watson,
since November 1989;
manager, Fidelity California
Tax-Free Money Market
Portfolio, since July 1988;
Spartan Florida Municipal
Money Market Portfolio, since
August 1992; Spartan
Pennsylvania Municipal Money
Market Portfolio, since
September 1989
(checkmark)

WORDS TO KNOW
COMMERCIAL PAPER: A security
issued by a municipality to
finance capital or operating
needs.
FEDERAL FUNDS RATE: The interest
rate banks charge each other
for overnight loans.
MATURITY: The time remaining
before an issuer is scheduled
to repay the principal amount
on a debt security. When the
fund's average maturity -
weighted by dollar amount -
is short, the fund manager is
anticipating a rise in interest
rates. When the average
maturity is long, the manager
is expecting rates to fall.
When the average maturity is
neutral, the manager wants
the flexibility to respond to
rising rates, while still
capturing a portion of the
higher yields available from
issues with longer maturities.
MUNICIPAL NOTE: A security
issued in advance of future
tax or other revenues and
payable from those specific
sources.
TENDER BOND: A variable-rate,
long-term security that gives
the bond holder the option to
redeem the bond at face
value before maturity.
VARIABLE RATE DEMAND NOTE
(VRDN): A tender bond that
can be redeemed on short
notice, typically one or seven
days. VRDNs are useful in
managing the fund's average
maturity and liquidity.
SPARTAN CALIFORNIA MUNICIPAL MONEY MARKET PORTFOLIO

INVESTMENT CHANGES

MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
2/28/94 8/31/93 2/28/93

0 - 30 66.8 66.8 61.8

31 - 90 12.3 8.0 14.8

91 - 180 20.3 5.8 19.7

181 - 397 0.6 19.4 3.7

WEIGHTED AVERAGE MATURITY
2/28/94 8/31/93 2/28/93

Spartan California Municipal
Money Market 43 days 79 days 49 days

Average California Municipa
l 50 days 72 days 52 days
Money Market Fund*

ASSET ALLOCATION
AS OF 2/28/94 AS OF 8/31/93

Row: 1, Col: 1, Value: 59.3
Row: 1, Col: 2, Value: 15.2
Row: 1, Col: 3, Value: 3.0
Row: 1, Col: 4, Value: 23.7
Row: 1, Col: 5, Value: 2.0
Row: 1, Col: 1, Value: 55.8
Row: 1, Col: 2, Value: 11.4
Row: 1, Col: 3, Value: 4.5
Row: 1, Col: 4, Value: 27.1
Row: 1, Col: 5, Value: 2.2
Variable rate
demand notes
(VRDNs) 59.3%
Commercial
paper 15.2%
Tender bonds 1.7%
Municipal
notes 23.7%
Other 0.1%
Variable rate
demand notes
(VRDNs) 55.8%
Commercial
paper 11.4%
Tender bonds 4.5%
Municipal
notes 27.1%
Other 1.2%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(Registered trademark)
SPARTAN CALIFORNIA MUNICIPAL MONEY MARKET PORTFOLIO

INVESTMENTS/FEBRUARY 28, 1994
(Showing Percentage of Total Value of Investments)

MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - 100.0%
Alameda County TRAN 3.25% 7/29/94 $ 15,000,000 $ 15,027,910 010878AB
Anaheim Ctfs. of Prtn. Series 1993, 2.25%, (Liquidity
Enhancement Industrial Bank of Japan), VRDN 5,500,000 5,500,000
032540KQ
Anaheim Hsg. Auth. (Bel Age Apt. Proj.)
Nationwide Grantor Trust Series 1991-1Q, 2.50%,
LOC Federal Home Loan Bank of
San Francisco, VRDN (b)(c) 1,000,000 1,000,000
Anaheim Hsg. Auth. Multi-Family Hsg. Rev.
(Sage Park Proj.) Series A, 2.50%,
LOC Bank of America, VRDN (b) 1,600,000 1,600,000 032557BB
Anaheim Hsg. Auth. Rev. (Park Vista Apts) 2.50%
LOC Citibank, VRDN (b) 7,000,000 7,000,000 032557BH
City of Big Bear Lake Ind. Dev.
(Southwest Gas Corp. Proj.)
Series 1993 A, 2.40%,
LOC Union Bank of Switzerland, VRDN (b) 2,000,000 2,000,000 08901KAR
California Dept. of Wtr. Resources Tender Opt. Ctfs.:
(Central Valley Proj.) Series R-3, 2.50%
(Liquidity Enhancement Svenska
Handelsbanken), VRDN (c) 23,000,000 23,000,000 130663V8
Series R-4, 2.50% (Liquidity Enhancement Svenska
Handelsbanken), VRDN (c) 6,000,000 6,000,000 130663W3
California Gen. Oblig. Adj. Rate RAN 2.55%
6/28/94 30,500,000 30,500,000 130619D5
California Gen. Oblig. RAN, 3.5% 6/28/94 26,250,000 26,300,597 130619D4
California Hsg. Fin. Agcy. Home Mtg. Rev. Tender Option
Ctfs. Series 19B, 2.60%, (Liquidity Enhancement
Banque Nationale De Paris), VRDN (b)(c) 15,200,000 15,200,000 13033CC8
California Hsg. Fin. Agcy. Custodial Receipts, Series 15,
2.60%, (Liquidity Enhancement Daichi
Kango Bank), VRDN (b)(c) 11,590,000 11,590,000 13033CWJ
California Hsg. & Fing. Auth. Rev. (Camino Colony Apts.)
Series 1993 B, 2.50%, LOC Federal Home Loan
Bank of San Francisco, VRDN 3,600,000 3,600,000 13033CP8
California Poll. Cont. & Fing Auth. 1st Mtg. Rev. Bonds,
(Southern California Edison Co.) Series 1985 C,
2.40% 4/6/94, CP mode 4,300,000 4,300,000 130995GB
California Poll. Cont. Fing. Auth. Resource Recovery Rev.:
(Delano Proj.), LOC Algemene Bank, VRDN (b):
Series 1989, 2.30%, 3,500,000 3,500,000 130535AZ
Series 1990, 2.30% 1,000,000 1,000,000 130535BB
Series 1991, 2.30% 4,100,000 4,100,000 130535BE
(Malaga Proj.) Series A, 2.35%,
LOC Bank of America, VRDN (b) 3,400,000 3,400,000 130535AP
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
California Poll. Cont. Fing. Auth. Resource Recovery Rev. - continued:
(Ultra Pwr. Rocklin Proj.) Series 1988 B, 2.50%,
LOC Bank of America, VRDN (b) $ 900,000 $ 900,000 130535AN
California Poll. Contr. & Fing Auth. Rev.
(Pacific Gas & Elec. Co.):
Rfdg. Series 1988 B,
LOC Sumitomo Bank of Japan Ltd.,CP mode (b):
2.50% 3/22/94 2,600,000 2,600,000 130995GJ
2.55% 4/25/94 4,500,000 4,500,000 130995GJ
2.60% 5/16/94 4,400,000 4,400,000 130995GJ
2.60% 5/20/94 3,000,000 3,000,000 130995GQ
Series 1988 A, LOC Swiss Bank Corp., CP mode (b):
2.40% 4/13/94 3,000,000 3,000,000 130995FW
2.45% 4/21/94 8,500,000 8,500,000 130995GC
2.45% 4/22/94 8,500,000 8,500,000 130995GD
2.60% 5/12/94 3,000,000 3,000,000 130995GL
2.60% 5/13/94 6,500,000 6,500,000 130995GK
2.60% 5/19/94 3,000,000 3,000,000 130995GP
2.70% 5/24/94 10,000,000 10,000,000 130995GS
2.70% 5/25/94 12,000,000 12,000,000 130995GR
Series 1988 C, 2.30% 4/11/94 LOC Credit Suisse, CP mode 3,600,000
3,600,000 130995FU
Series 1988 D, LOC Bank of Tokyo, CP mode:
2.35% 3/23/94 2,655,000 2,655,000 130995FX
2.35% 4/8/94 9,500,000 9,500,000 130995FV
Series 1988 E, 2.50% 5/16/94,
LOC Morgan Guaranty Trust Co., CP mode 2,000,000 2,000,000 130995GM
(Southern California Edison Co.) 130995GG
Series 1985 D, 2.50% 4/18/94, CP mode 3,000,000 3,000,000 130995GG
California Poll. Cont. Fing. Auth. Solid Waste Disp. Rev.
(Colmac Energy Proj.) LOC Swiss Bank, VRDN:
Series A, 2.40% 4,000,000 4,000,000 130536BA
Series B, 2.40% 5,000,000 5,000,000 130536BB
California Statewide Commty. Dev. Corp. Ind. Dev. Rev., VRDN:
(AHNNN Proj.) 2.45%, LOC Bank of Tokyo 440,000 440,000 130905AM
(American Zettler, Inc. Proj.) 2.45%,
LOC Bank of Tokyo 2,500,000 2,500,000 130905AC
(Bro-Co Gen. Partnership Proj.) Series 1990, 2.45%,
LOC Union Bank 4,520,000 4,520,000 130905BL
(Charles & Loralie Harris Proj.) 2.45%,
LOC Bank of Tokyo 1,070,000 1,070,000 130905AK
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
California Statewide Commty. Dev. Corp. Ind. Dev. Rev., VRDN: - continued
(Covenant Retirement Commty.) 2.45%,
LOC Lasalle Nat'l Bank $ 4,800,000 $ 4,800,000 130907CX
(Florestone Prod. Co.) Series 1989, 2.45%,
LOC Bank of Tokyo (b) 490,000 490,000 130905AF
(Grundfos Pumps Corp. Proj.)
Series 1989, 2.45%, LOC Bank of Tokyo 5,700,000 5,700,000 130905AG
(K.U.M. LTD Proj.) Series 1992, 2.45%,
LOC Union Bank (b) 2,000,000 2,000,000 130905CA
(Merrill Packaging Proj.) 2.65%
LOC Bank of Tokyo(b) 2,095,000 2,095,000 130905CC
(Northwest Pipe & Casing Co. Proj.) Series 1990,
2.45%, LOC Bank of Tokyo 4,250,000 4,250,000 130905BA
(Rapelli of California Inc. Proj.) Series 1989, 2.45%,
LOC Bank of Tokyo 2,500,000 2,500,000 130905AX
(Santa Cruz-Wilson Entities Ltd. Proj.) 2.70%
LOC Bank of Tokyo, VRDN (b) 1,485,000 1,485,000 80174PAA
(Sierra Spring Wtr. Co.) LOC Bank of Tokyo, VRDN:
(Manteca Proj.) Series 1989, 2.45%, VRDN 695,000 695,000 130905AV
(Richmond Proj.) 2.45% 1,040,000 1,040,000 130905AU
(Sacramento Proj.) Series 1989, 2.45% 1,435,000 1,435,000 130905AP
(Staub Metals) 2.45%,
LOC Bank of Tokyo 440,000 440,000 130905AT
(Sunclipse, Inc., Alhambra Proj.) Series 1989, 2.45%,
LOC Bank of Tokyo, VRDN 2,600,000 2,600,000 130905AN
(Sunclipse, Inc., Union City Proj.) Series 1989, 2.45%,
LOC Bank of Tokyo, VRDN 2,500,000 2,500,000 130905AQ
(Upholstery Supply Proj.) Series 1990, 2.45%,
LOC Bank of Tokyo 700,000 700,000 130905BC
(Zarn Inc. Proj.) Series 1989, 2.45%,
LOC Bank of Tokyo, VRDN (b) 1,950,000 1,950,000 130905AJ
(Zieman Manufacturing Co. Proj.) Series 1990, 2.45%,
LOC Bank of Tokyo, VRDN 595,000 595,000 130905BB
California Various Purpose Gen. Oblig. Custodial Receipts,
2.45%, (AMBAC Insured),(Liquidity
Enhancement Citibank), CP mode(c) 7,925,000 7,925,000 130622WG
Chula Vista Ind. Dev. Rev.:
(San Diego Gas & Elec. Co.):
Series B, 2.45%, VRDN (b) 3,700,000 3,700,000 17131HAB
Series D, 2.30% 3/1/94, CP mode (b) 2,000,000 2,000,000 177199BA
Series E:
2.65% 3/10/94, CP mode (b) 2,500,000 2,500,000 17199BAS
2.70% 3/11/94, CP mode(b) 3,000,000 3,000,000 17199BAT
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Concord Hsg. Auth. (Crossroads Apt. Proj.) First Nationwide
Grantor Trust Series 1991-1E, 2.50%, LOC Federal
Home Loan Bank of San Francisco, VRDN (c) $ 1,100,000 $ 1,100,000
206131AA
Concord Multi-Family Hsg. Rev. (Hill Apt. Proj.) 2.50%,
LOC Citibank, VRDN(b) 9,050,000 9,050,000 206131AA
Contra Costa Multi Family Hsg. Rev.
(Park Regency) Series A, 2.45,
LOC Sumitomo Bank,VRDN (b) 6,300,000 6,300,000 212249AB
Contra Costa County TRAN Series A, 3.25% 7/29/94 12,930,000 12,951,609
212219BV
Contra Costa Transit Auth. Tax Rev. Series 1993 A,
2.40%, (FGIC Insured), VRDN 9,000,000 9,000,000 21221MBJ
Del Mar Race Track Auth. 2.60% 5/26/94
LOC Societe Generale, CP 5,500,000 5,500,000 2451259A
Duarte Single-Family Mtg. Rev. Trust Ctfs. 2.70%,
(Liquidity Enhancement Norwest Bank), VRDN (c) 5,355,000 5,355,000
263595AY
Emeryville Redev. Agcy. Multi-Family Hsg.
(Emerybay Apts. II) 2.65%,
LOC Security Pacific Nat'l. Bank, VRDN(b) 8,000,000 8,000,000 291200AA
Escondido Commty. Dev. Commission Rev.
(Promenade Proj.) 2.65%,
LOC Bank of America, VRDN (b) 1,000,000 1,000,000 296338AA
Fairfield Ind. Dev. Auth., 3.05%,
LOC Wells Fargo Bank, VRDN (b) 1,800,000 1,800,000 303900AD
Fontana (Oakcrest Apt. Proj.) First Nationwide Grantor Trust
Series 1991-1G, 2.50%, LOC Federal Home Loan Bank
of San Francisco, VRDN (c) 4,200,000 4,200,000 303900AD
Fresno County Unified School Dist. TRAN 3.50% 8/11/94 14,500,000
14,528,245 358232AD
Fresno City Hsg. Rev. (Palm Lakes Apt. Proj.)
Series 1985, 3.75%, LOC Tokai Bank, VRDN 2,000,000 2,000,000 35823HAA
Fresno TRAN 3% 6/30/94 4,080,000 4,081,865 358082FQ
Garden Grove Hsg. Auth. Multi-Family Hsg. Rev.
(Valley View Sr. Villas Proj.) Series 1990 A, 2.95%,
LOC Wells Fargo Bank, VRDN (b) 5,200,000 5,200,000 365265AB
Huntington Beach Multi-Family Hsg. Rev.:
(Five Point Seniors Proj.) Series 1991 A, 2.95%,
LOC Wells Fargo Bank, VRDN (b) 6,400,000 6,400,000 446196AQ
(Seabridge Villas Proj.) Series 1985 A, 2.25%,
LOC Bank of America, VRDN 2,700,000 2,700,000 446196AA
Kern County Ctfs. of Prtn., Series 1986 A, 2.35% ,
LOC Sanwa Bank Ltd., VRDN 1,700,000 1,700,000 49225HAA
Kern County TRAN 3.25% 7/5/94 5,000,000 5,009,242 492248AA
Livermore Ctfs. of Prtn. (Wtr. Reclamation Plant Expansion
Proj.), 2.40%, LOC Westminister Nat'l. Bank, VRDN 3,300,000 3,300,000
538164CQ
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Livermore Multi-Family Mtg. Rev. (Portola Meadows Apts.)
Series 1989 A, 2.50%,
LOC Bank of America, VRDN (b) $ 10,400,000 $ 10,400,000 537900AB
Livermore (Park Paseo Apt. Proj) First Nationwide Grantor
Trust Series 1991-1A, 2.50%,
LOC Federal Home Loan
Bank of San Francisco, VRDN (c) 2,000,000 2,000,000 537900AB
Loma Linda Multi-Family Hsg. Rev.
(Loma Linda Springs Apts.) Series 1989, 3.60%,
LOC Tokai Bank, VRDN (b) 12,205,000 12,205,000 541905AB
Los Angeles Commty. College Dist. TRAN
Series 1993-94, 3.25% 7/6/94 12,500,000 12,523,289 54438CAA
Los Angles Ctfs. of Prtn. (Baldwin Hills Public
Parking Facs.) Series 1984, 2.55%,
LOC Wells Fargo Bank, VRDN 3,700,000 3,700,000 544391AU
Los Angeles Commty. Redev. Agcy. Multi-family Hsg.
Rev. (Grand Promenade Proj.) Series 1985, 3%,
LOC Tokai Bank Ltd., VRDN 1,000,000 1,000,000 544393AD
Los Angeles Commty. Redev. Agcy. Rev. Ctfs. of Prtn.:
(CMC Med. Plaza) 2.60%, LOC Security Pacific
Nat'l. Bank, VRDN 4,700,000 4,700,000 544391BQ
Los Angeles County Hsg. Auth.(Sand Canyon)
Series 1985F, 2.35%,
LOC Citibank, VRDN 1,000,000 1,000,000
Los Angeles County Hsg. Auth. Multi-Family Hsg. Rev.:
(Malibu Meadows Proj.) Series 1991 A, 2.60%,
LOC Sumitomo Bank Ltd., VRDN 4,811,000 4,811,000 544688GD
(Park Sierra Apt.) 2.50%, LOC Citibank, VRDN (b) 39,200,000 39,200,000
544688FQ
(Sand Canyon Villas Proj.) Series 1989 A, 2.60%,
LOC Ind. Bank of Japan, VRDN (b) 8,700,000 8,700,000 544688GC
Los Angeles County Ind. Dev. Auth. Rev.
(Caitac & Jae Proj.), 2.45%, LOC Union Bank, VRDN (b) 4,200,000
4,200,000 544689CX
Los Angeles County Metropolitan Trans. Auth.
Series 1993 A, 2.30%, (Liquidity Enhancement
Industrial Bank of Japan) VRDN 2,800,000 2,800,000 544712AV
Los Angeles County Pub. Wks. Floating Rate Trust
Ctfs., Series 8, 2.55%, (Liquidity Enhancement
Credit Suisse), VRDN (c) 11,542,749 11,542,749 31303KAA
Los Angeles County TRAN, Series B 93-94,
(Liquidity Enhancement Credit Suisse), CP mode:
2.50% 4/05/94 10,000,000 10,000,000 5446579M
2.50% 4/07/94 3,000,000 3,000,000 5446579L
Los Angeles County Transit Commty., Custodial Receipts,
Series 1992B-36, 2.65%, (MBIA Insured), VRDN (c) 3,000,000 3,000,000
545170JP
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Los Angeles County Unified School Dist. TRAN
3.25% 7/15/94 $ 15,000,000 $ 15,026,067 544644AE
Los Angeles Dept. of Wtr. & Pwr. Elec. Plant Rev.
Tender Option Ctfs. 2.40%,
(Liquidity Enhancement Banker's Trust), VRDN (c) 6,430,000 6,430,000
544506JM
Los Angeles Dept. of Wtr. & Pwr. Elec. Plant
Rev. Tender Option Ctfs.
Series M, 2.70%, (Liquidity Enhancement
Sanwa Bank Ltd.), VRDN (c) 10,000,000 10,000,000 544507KC
Los Angeles Multi-Family Hsg. Rev., VRDN:
(Beverly Park Apts.) Series 1988 A, 2.40%,
LOC Barclay's Bank (b) 9,500,000 9,500,000 544582GV
(Channel Gateway Apts.) Series 1989 B, 2.65%,
LOC Fuji Bank (b) 47,700,000 47,700,000 544582GX
(Poinsettia Apts. Proj.) Series 1989 A, 2.55%,
LOC Dai-Ichi Kangyo Bank(b) 1,000,000 1,000,000 544582GW
(Studio Colony Proj.) Series 1985 C, 2.45%,
LOC Industrial Bank of Japan 3,000,000 3,000,000 544582CC
Los Angeles Variable Rate Multi-family Hsg. Rev.
(Museum Terrace Apt. Proj.) Series H, 2.40%,
LOC Bank of America, VRDN 4,500,000 4,500,000 544582AP
Los Angeles WasteWtr. Sys. Rev. (Liquidity Enhancement
Sumitomo Bank Ltd), CP:
2.40% 3/17/94 2,500,000 2,500,000 544999AM
2.60% 5/18/94 2,000,000 2,000,000 544999AP
Madera County TRAN 3.25% 9/30/94 3,000,000 3,006,305 556903AN
Marin County Hsg. Auth. Rev. (Crest Marin II Apt. Proj.)
2.50%, LOC Citibank, VRDN (b) 14,850,000 14,850,000 56785MAA
Metropolitan Wtr. Dist. of Southern California Rev.:
2.60% 3/16/94, CP 5,900,000 5,900,000 5926599K
2.55% 5/23/94, CP 3,000,000 3,000,000 5926599L
Metropolitan Wtr. Dist. of Southern California Wtrwks.
Tender Option Bonds Series MGT-19A, 2.40%,
(Liquidity Enhancement Morgan Guaranty), VRDN (c) 2,400,000 2,400,000
592659VY
Newark Ind. Dev. Auth. Rev. (Gas Tech Proj.)
Series 1989 A, 2.45%, LOC Union Bank of
Switzerland, VRDN (b) 3,000,000 3,000,000 650250AA
Oceanside Multi-Family Mtg. Rev. (Riverview Springs Apts.)
Series 1990 A, 2.60%, LOC Bank of Tokyo,
VRDN ( b) 6,700,000 6,700,000 675370AB
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Olcese Wtr. Dist. (Rio Bravo Wtr. Delivery Sys. Proj.)
Series 1986 A, 2.40% 3/29/94,
LOC Sumitomo Bank, Ltd., CP mode (b) $ 5,000,000 $ 5,000,000 6794749P
Ontario Ind. Dev. Auth. Rev. (Safari Land Proj.)
Series 1989, 3.25%, LOC Tokai Bank, VRDN (b) 3,500,000 3,500,000
682908AA
Orange County Apt. Dev. Rev., VRDN:
(Bear Brands Apt.) Issue Z 1985, 2.35%,
LOC Fuji Bank 4,700,000 4,700,000
(Foothill Oaks Apts. Proj.) Issue 1989 B, 2.50%,
LOC Bank of America (b) 12,175,000 12,175,000 684209CW
(Frost Construction) Series 1985 B, 2.35%,
LOC Wells Fargo Bank, VRDN 2,000,000 2,000,000 684209JQ
(Hon Dev. Corp.-Niguel Summit II) Issue 1985,
Series B, 2.50%, LOC Bank of America, VRDN 1,000,000 1,000,000
684209JN
(Laguna Summit Apts.) Series 1985 X, 3%,
LOC Tokai Bank, VRDN 3,000,000 3,000,000 684209JW
(Park Place Apts. Proj.) Series 1989 A, 3.40%,
LOC Tokai Bank, VRDN (b) 14,300,000 14,300,000 684209JL
(Trabuco Woods Apts.) Series 1993 B, 2.40%,
LOC Wells Fargo Bank, VRDN 2,670,000 2,670,000 684209JV
(Villa Marguerite Apts.) Series 1993 A, 2.40%,
LOC Wells Fargo Bank, VRDN 1,635,000 1,635,000 684209KE
(Vista Verde Apt. Proj.) Series 1988 A, 3.30%,
LOC Wells Fargo Bank, VRDN (b) 12,050,000 12,050,000 684209JU
(WLCO Partners) Series 1985 C-1, 3.20%,
LOC Tokai Bank Ltd., VRDN 900,000 900,000 684209CT
(Wood Canyon Villas) Issue 1991 B, 2.65%
LOC Bank of America, VRDN (b) 5,000,000 5,000,000 684209KA
Orange County Hsg. Auth. Apt. Dev. Rev.
(Costa Mesa Partners) Series 1985-BB, 3.25%,
LOC Tokai Bank, VRDN 9,500,000 9,500,000 684262AF
Orange County TRAN 3% 6/30/94 4,500,000 4,504,570 684201EF
Orange Unified School Dist. TRAN 3.25% 7/26/94 10,000,000 10,015,629
684133KA
Pleasant Hill (Quail Run Apt. Proj.) Fist Nationwide Grantor
Trust Series 1991-1A, 2.50%, LOC Federal Home Loan
Bank of San Francisco, VRDN (c) 3,200,000 3,200,000 684133KA
Rancho Wtr. Dist. Fin. Auth. Rev. Rfdg. Floating Option
Tax-Exempt Receipts, Series PA-62, 2.55%,
(Liquidity Enhancement
Merrill Lynch & Co. Inc.) VRDN (c) 5,120,000 5,120,000 752111DD
Riverside County Ind. Dev. Auth.
(Golden West Homes Proj.) 3.10%,
LOC Wells Fargo Bank, VRDN (b) 2,700,000 2,700,000 76911TAU
Sacramento County TRAN, 3% 7/29/94 7,000,000 7,007,759 786106DM
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Sacramento Muni. Util. Dist. Series H,
LOC Bank of America, CP:
2.30% 3/23/94 $ 5,843,000 $ 5,843,000 785995MM
2.55% 5/11/94 7,400,000 7,400,000 785995MP
Sacramento (Smoketree Apt. Proj.) First Nationwide Grantor
Trust Series 1991-1K, 2.50% LOC Federal Home Loan
Bank of San Francisco, VRDN (c) 1,000,000 1,000,000 796900CF
San Bernadino County Ind. Dev. Auth. Rev,
LOC Bank of Tokyo, VRDN (b):
(McCain Citrus Inc. Proj.) 2.45% 900,000 900,000 796901AL
(McElroy Metal Mill Proj.) 2.45%, 900,000 900,000 796901AM
(NRI, Inc. Proj.) Series 1989, 2.45% 1,490,000 1,490,000 796901AN
San Bernadino County Mtg. Rev. Rfdg.
(Pepperwood Apts.) Series 1993 A, 2.40%,
LOC Fed Home Loan Bank of San Francisco, VRDN 3,000,000 3,000,000
796900CL
San Bernadino County Multi Family Hsg. Rev., VRDN:
(Cedarbrook Terrace Apts. Proj.) Series 1990 A, 3.60%,
LOC Sumitrust 3,200,000 3,200,000 796900CF
(Western Properties II) 2.40%,
LOC Bank of America 1,000,000 1,000,000 796900BJ
(Western Properties IV) 2.40%,
LOC Bank of America 1,000,000 1,000,000 796900BM
(Woodview Apts.) 2.40%, LOC Bank of America 1,400,000 1,400,000
796900BK
San Diego Commty. College Dist. TRAN Series 1993,
3.15% 6/30/94 3,000,000 3,004,350 797272AA
San Diego Hsg. Auth. Multi-Family Hsg. Rev., VRDN:
Rfdg. (Coral Pointe Apt. Proj.) Series 1993 A, 2.65%,
(Liquidity Enhancement Continental Casualty Company) 5,000,000
5,000,000 79729HEQ
(La Cima Apts.) Issue 1985 K, 2.95%,
LOC Daiwa Bank, Ltd., VRDN 3,000,000 3,000,000 79728FES
(Lusk Mira Mesa Apts.) Series 1985 E, 2.40%,
LOC Bank of America, VRDN 2,200,000 2,200,000 79729HAA
San Diego Hsg. Auth. Rev. (Carmel Del Mar Apr. Proj.)
Series 1993-E, 2.55%, LOC Citibank, VRDN 5,608,000 5,608,000 79728FEU
San Diego Regional Trans. Comm. Bonds Series 1993 A,
2.60% 4/1/94, (FGIC Insured) 900,000 900,000 797400BR
San Diego TAN Series 1993-94 A, 3% 6/30/94 7,700,000 7,703,237 797236SM
San Diego Unified School Dist. TRAN
Series 1993-94 A, 3.50% 8/10/94 10,000,000 10,030,134 797355HH
San Francisco City and County Multi-Family Hsg. Rev. Bond
(Winterland Proj.) 2.35%, LOC Citibank, VRDN 3,400,000 3,400,000
79765PCH
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
San Francisco City And County Redev. Agcy. Multi-Family
Hsg. Agcy.Rev. Rfdg. (Fillmore Center B-1) 2.30%,
LOC Bank of Nova Scotia, VRDN $ 1,000,000 $ 1,000,000 79771MAU
San Francisco Redev. Agcy. Rev.
(St. Francis Place Proj.) Series 1989 A, 3.25%,
LOC Mitsubishi Trust & Banking, VRDN 14,300,000 14,300,000 79771MAM
San Jose Multi-Family Hsg. Rev. Bonds (Kimberly Woods)
Series 1984, 2.40%, LOC Bank of America, VRDN 4,700,000 4,700,000
798165AB
San Jose Multi-Family Mtg. Rev. (Somerset Park Apts.)
Series 1987 A, 2.50%, LOC Bank of America, VRDN 3,100,000 3,100,000
798163DZ
San Jose Redev. Agcy. Puttable Floating Option Tax-Exempt
Receipts Series PA-42, 2.55%, (Liquidity Enhancement
Merrill Lynch & Co. Inc.), VRDN (c) 5,080,000 5,080,000 798147MC
San Mateo County TRAN Series 1993-94, 3% 6/30/94 20,000,000 20,032,311
799034AB
Santa Anna Ind. Dev. Auth. Rev. (McFadden Properties Proj.)
2.55%, LOC Bank of America, VRDN 1,300,000 1,300,000 801130AA
Santa Clara County TRAN Series 1993-94,
3.25% 7/29/94 25,600,000 25,648,037 801546LF
Santa Cruz County TRAN Series 1993-94, 3.25% 8/1/94 7,500,000 7,508,209
801818CQ
Simi Valley Multi-Family Hsg. Rev. (Shadowridge Apts.)
Series 1989, 2.50%, LOC Citibank, VRDN 21,200,000 21,200,000 828905BX
Solano County TRAN 3.25% 11/01/94 3,000,000 3,007,492 834127BH
Sonoma County TRAN Series 1993-94, 3.50 8/2/94 11,000,000 11,022,192
835546BU
Southern California Pub. Pwr. Auth. Rev.
(Tran Mission Proj.) Series 1991, 2.50%,
LOC Swiss Bank, (AMBAC Insured), VRDN 7,500,000 7,500,000 842477HH
Stockton Hosp. Rev. (St. Joseph's Hosp.) Series 1985 A,
2.45%, LOC Dai-Ichi Kangyo Bank, VRDN 17,500,000 17,500,000 861344AY
Torrance Hospital Rev. (Little Co. Of Mary Hosp.-Torrance
Memorial Med. Ctr.) Series1992, 2.45%,
LOC Fuji Bank, VRDN 7,800,000 7,800,000 891368BX
Tustin, Orange County Assessment Dist. #85-1 Impt. Rev.
LOC Mitsubishi Trust, CP mode:
3.30% 3/3/94 6,694,000 6,694,000 901991MU
3.30% 3/4/94 2,409,000 2,409,000 901991MV
Upland Commty. Redev. Agcy. Multi-Family Hsg.
(Northwoods) 1989 B, 2.50%, LOC Sanwa Bank, VRDN 1,300,000 1,300,000
915354AB
Vacaville Hsg. Auth. (Quail Run Apt. Proj.) First Nationwide
Grantors Trust Series 1991-1B, 2.50%,
LOC Federal Home Loan Bank of
San Francisco, VRDN (c) 1,000,000 1,000,000 915354AB
Ventura County TRAN 3% 8/1/94 3,000,000 3,001,617 923035AG
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Washington Township Hosp. Dist., Series 1985 A, 2.45%,
LOC Bank of Tokyo, VRDN $ 2,700,000 $ 2,700,000 940212AR
Woodland (Crossroads Village Apt. Proj.) First Nationwide
Grantor Trust Series 1991-1H, 2.50%,
LOC Federal Home Loan Bank of
San Francisco, VRDN 1,900,000 1,900,000 940212AR
TOTAL INVESTMENTS - 100% $ 1,059,333,415
Total Cost for Income Tax Purposes $ 1,059,334,599

SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
FRDN - Floating Rate Demand Notes
MT - Mandatory Tender
OT - Optional Tender
RAN - Revenue Anticipation Notes
TAN - Tax Anticipation Notes
TRAN - Tax & Revenue Anticipation Notes
VAN - Variable Rate Tax & Revenue
Anticipation Notes
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
(c) Provides evidence of ownership in one or more underlying municipal
bonds.
INCOME TAX INFORMATION
At February 28, 1994, the fund had a capital loss carryforward of
approximately $29,000 which will expire on February 28, 2001.
SPARTAN CALIFORNIA MUNICIPAL MONEY MARKET PORTFOLIO

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1994

243.ASSETS 244. 245.

246.Investment in securities, at value (Note 1) - See 247. $ 1,059,333,415
accompanying schedule

248.Cash 249. 45,771

250.Interest receivable 251. 7,093,997

252. 253.TOTAL ASSETS 254. 1,066,473,183

255.LIABILITIES 256. 257.

258.Payable for investments purchased $ 1,001,908 259.

260.Share transactions in process 655,110 261.

262.Dividends payable 54,873 263.

264.Accrued management fee 158,071 265.

266. 267.TOTAL LIABILITIES 268. 1,869,962

269.270.NET ASSETS 271. $ 1,064,603,221

272.Net Assets consist of (Note 1): 273. 274.

275.Paid in capital 276. $ 1,064,637,582

277.Accumulated net realized gain (loss) on 278. (34,361)
investments

279.280.NET ASSETS, for 1,064,637,555 shares 281. $ 1,064,603,221
outstanding

282.283.NET ASSET VALUE, offering price and 284. $1.00
redemption price per share ($1,064,603,221 (divided by)
1,064,637,555 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1994

285.286.INTEREST INCOME 287. $ 24,829,747

288.EXPENSES 289. 290.

291.Management fee (Note 4) $ 4,714,027 292.

293.Non-interested trustees' compensation 5,983 294.

295. Total expenses before reductions 4,720,010 296.

297. Expense reductions (Note 5) (2,767,561) 1,952,449

298.299.NET INTEREST INCOME 300. 22,877,298

301.302.NET REALIZED GAIN (LOSS) ON INVESTMENTS 303. 30,247
(NOTE 1)

304.305.NET INCREASE IN NET ASSETS RESULTING FROM 306. $ 22,907,545
OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR TEN MONTHS
ENDED ENDED
FEBRUARY 28, 1994 FEBRUARY 28, 1993
(NOTE 1)

307.INCREASE (DECREASE) IN NET ASSETS

308.Operations $ 22,877,298 $ 19,896,544
Net interest income

309. Net realized gain (loss) on investments 30,247 (48,709)

310. 22,907,545 19,847,835
311.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING
FROM OPERATIONS

312.Dividends to shareholders from net interest income (22,877,298) (19,896,544)

313.Share transactions at net asset value of $1.00 per 1,234,266,731 668,146,371
share
Proceeds from sales of shares

314. Reinvestment of dividends from net interest 22,035,126 19,176,422
income

315. Cost of shares redeemed (1,047,318,874) (749,324,432)

316. 208,982,983 (62,001,639)
Net increase (decrease) in net assets and shares
resulting from share transactions

317. 209,013,230 (62,050,348)
318.TOTAL INCREASE (DECREASE) IN NET ASSETS

319.NET ASSETS 320. 321.

322. Beginning of period 855,589,991 917,640,339

323. End of period $ 1,064,603,221 $ 855,589,991

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
324. YEAR TEN MONTHS YEARS ENDED APRIL 30, NOVEMBER 27,
ENDED ENDED 1989
FEBRUARY 28, FEBRUARY 28, 199 (COMMENCEMEN
3 T
OF OPERATIONS) TO
APRIL 30,

325. 1994 (NOTE 1) 1992 1991 1990

326.SELECTED PER-SHARE DATA

327.Net asset $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
value,
beginning of
period

328.Income .024 .022 .041 .054 .025
from
Investment
Operations
Net interest
income

329.Less (.024) (.022) (.041) (.054) (.025)
Distributions
From net
interest
income

330.Net asset $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
value, end of
period

331.TOTAL 2.24% 4.15 5.52 2.54%
RETURN(DAGGER) 2.45 % %
%

332.RATIOS AND SUPPLEMENTAL DATA

333.Net $ 1,064,603 $ 855,590 $ 917,640 $ 763,959 $ 396,652
assets, end of
period (000
omitted)

334.Ratio of .21 .10 .07 -
expenses to % % %
average net
assets(DAGGER)(DAGGER) .30%*

335.Ratio of .50 .50%* .50 .50 .50%*
expenses to % % %
average net
assets before
expense
reductions(DAGGER)(DAGGER)

336.Ratio of net 2.42 2.67%* 4.05 5.33 5.99%*
interest incom % % %
e
to average
net assets

</TABLE>

* ANNUALIZED
(DAGGER) TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS WOULD HAVE
BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
(DAGGER)(DAGGER) SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
For the period ended February 28, 1994

1. SIGNIFICANT ACCOUNTING
POLICIES.
Spartan California Municipal High Yield Portfolio, Spartan California
Intermediate Municipal Portfolio and Spartan California Municipal Money
Market Portfolio (the funds) are funds of Fidelity California Municipal
Trust (the trust). The trust is registered under the Investment Company Act
of 1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust (see Note 6). On
November 19, 1992, the Trustees approved a change in the fiscal year-end of
the trust to February 28. Each fund is authorized to issue an unlimited
number of shares. The following summarizes the significant accounting
policies of the funds:
SECURITY VALUATION.
HIGH YIELD AND INTERMEDIATE FUNDS. Securities are valued based upon a
computerized matrix system and/or appraisals by a pricing service, both of
which consider market transactions and dealer-supplied valuations.
Short-term securities maturing within sixty days are valued either at
amortized cost or original cost plus accrued interest, both of which
approximate current value. Securities for which quotations are not readily
available through the pricing service are valued at their fair value as
determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
INCOME TAXES. The intermediate fund intends to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code. The
high yield and money market funds are each qualified as a regulated
investment company under Subchapter M of the Internal Revenue Code. By so
qualifying, each fund is not subject to income taxes to the extent that it
distributes all of its taxable income for the fiscal year. The schedules of
investments include information regarding income taxes under the caption
"Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. For the
money market fund, accretion of market discount represents unrealized gain
until realized at the time of a security disposition or maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income. Distributions to shareholders from
realized capital gains on investments, if any, are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
treatments for futures and options transactions, excise tax regulations and
losses deferred due to wash sales.
REDEMPTION FEES. Shares held in the high yield fund less than 180 days are
subject to a redemption fee equal to .50% of the proceeds of the redeemed
shares. The fee, which is retained by the fund is accounted for as an
addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective February
1, 1993, the money market and high yield funds adopted Statement of
Position 93-2: Determination, Disclosure, and Financial Statement
Presentation of Income, Capital Gain, and Return of Capital Distributions
by Investment Companies. As a result, the funds changed the classification
of distributions to shareholders to better disclose the differences between
financial statement amounts and distributions determined in accordance with
income tax regulations. Accordingly, amounts as of February 28, 1993 have
been restated to reflect an increase in paid in capital and a decrease in
accumulated net realized gain of $45,643 for the high yield fund. No
adjustments were necessary for the
money market fund.
2. OPERATING POLICIES.
DELAYED DELIVERY TRANSACTIONS. Each fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated.
FUTURES CONTRACTS AND OPTIONS. The high yield and intermediate funds may
invest in futures contracts and write options. These investments involve to
varying degrees, elements of market risk and risks in excess of the amount
recognized in their Statements of Assets and Liabilities. The face or
contract amounts reflect the extent of the involvement the high yield and
intermediate funds have in the particular classes of instruments. Risks may
be caused by an imperfect correlation between movements in the price of the
instruments and the price of the underlying securities and interest rates.
Risks also may arise if there is an illiquid secondary market for the
instruments, or due to the inability of counterparties to perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
3. PURCHASES AND SALES OF
INVESTMENTS.
HIGH YIELD FUND. Purchases and sales of securities, other than short-term
securities, aggregated $315,008,869 and $283,241,767, respectively. The
gross market value of futures contracts opened and closed amounted to
$237,948,678 and $258,547,360,
respectively.
INTERMEDIATE FUND. Purchases of securities, other than short-term
securities, aggregated $17,416,283; there were no sales of securities.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, Fidelity Management
& Research Company (FMR) pays all expenses except the compensation of
the non-interested Trustees and certain exceptions such as interest, taxes,
brokerage commissions and extraordinary expenses. FMR receives a fee that
is computed daily at an annual rate of .55%, .55% and .50% of average net
assets for the high yield, intermediate and money market funds,
respectively.
SUB-ADVISER FEE. As the money market fund's investment sub-adviser, FMR
Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR of
50% of the management fee payable to FMR. The fee is paid prior to any
voluntary expense reimbursements which may be in effect, and after reducing
the fee for any payments by FMR pursuant to the fund's Distribution and
Service Plan.
FMR also bears the cost of providing shareholder services to each fund. For
the period, FMR or its affiliates collected certain transaction fees from
shareholders which aggregated $11,725, $95 and $34,156 for the high yield,
intermediate and money market funds, respectively.
5. EXPENSE REDUCTIONS
HIGH YIELD FUND. For the period, FMR voluntarily agreed to reimburse the
fund's operating expenses (excluding interest, taxes, brokerage commissions
and extraordinary expenses) above a specified percentage of average net
assets. This expense limitation ranged from an annual rate of .50% to .55%
of average net assets and the reimbursement reduced expenses by $202,856.
INTERMEDIATE FUND. For the period, FMR voluntarily agreed to reimburse all
of the fund's operating expenses (excluding interest, taxes, brokerage
commissions and extraordinary expenses) and the reimbursement reduced
expenses by $7,123.
MONEY MARKET FUND. For the period, FMR voluntarily agreed to reimburse all
of the fund's operating expenses (excluding interest, taxes, brokerage
commissions and extraordinary expenses) above a specified percentage of
average net assets. This expense limitation ranged from an annual rate of
.20% to .35% of average net assets and the reimbursement reduced expenses
by $2,767,561.
6. SHAREHOLDER MEETING.
At a special meeting of shareholders of the high yield and money market
funds held on February 16, 1994, shareholders approved amendments to
certain fundamental investment limitations of the funds.
6. SHAREHOLDER MEETING - CONTINUED
In addition, shareholders of the money market fund approved an Agreement
and Plan of Conversion and Termination (the Plan of Conversion), providing
for the conversion of the money market fund (the current fund) from a
separate series of Fidelity California Municipal Trust, a Massachusetts
business trust, to a separate series (the successor fund) of Fidelity
California Municipal Trust II, a Delaware business trust, effective April
20, 1994. The individual investment objective, policies and limitations of
the successor fund will be identical to those of the current fund. In
connection with the Plan of Conversion, a new management contract, new
sub-advisory agreement and new distribution plan identical to those
currently in effect for the current fund will take effect on April 20,
1994.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity California
Municipal Trust and Shareholders of:
Spartan California Municipal
High Yield Portfolio
Spartan California
Intermediate Municipal Portfolio
Spartan California
Municipal Money Market Portfolio:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments (except for Moody's and Standard
& Poor's ratings), and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Spartan California Municipal
High Yield Portfolio, Spartan California Intermediate Municipal Portfolio
and Spartan California Municipal Money Market Portfolio at February 28,
1994, the results of their operations, the changes in their net assets and
the financial highlights for the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are
the responsibility of each portfolio's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities owned at February 28, 1994 by
correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
/s/Price Waterhouse
PRICE WATERHOUSE
Boston, Massachusetts
March 30, 1994
TO CALL FIDELITY

FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.

(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios.(Registered trademark)
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. FOR MORE
INFORMATION ON ANY
FIDELITY FUND INCLUDING MANAGEMENT FEES AND CHARGES, CALL 1-800-544-8888
FOR A FREE
PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
TO WRITE FIDELITY

Please locate the address that is closest to you. We'll give your
correspondence immediate attention and send you written confirmation upon
completion of your request. Please send ALL correspondence about retirement
accounts to Dallas.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 2269
Boston, MA 02107-2269
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30280
Salt Lake City, UT 84130-0280
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
Additional Payments
P.O. Box 2656
Boston, MA 02293-0656
Fidelity Investments
Additional Payments
P.O. Box 620024
Dallas, TX 75262-0024
Fidelity Investments
Additional Payments
P.O. Box 31455
Salt Lake City, UT 84131-0455
OVERNIGHT EXPRESS
Fidelity Investments
Additional Payments
World Trade Center
164 Northern Avenue
Boston, MA 02210
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02103-0878
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02101-0193
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 620024
Dallas, TX 75262-0024
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
TO VISIT FIDELITY

For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
2249 Galiano Street
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
32 West Central Boulevard
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
1 West Pennsylvania Ave.
Towson, MD
7401 Wisconsin Avenue
Bethesda, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
101 Cambridge Street
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
38 South Sixth Street
Minneapolis, MN
MISSOURI
700 West 47th Street
Kansas City, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
1903 East Ninth Street
Cleveland, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
1010 Lamar Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
175 East 400 South Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI

INVESTMENT ADVISER

Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Deborah F. Watson, Vice President
MONEY MARKET FUND
Thomas D. Maher, Assistant
Vice President - MONEY MARKET FUND
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
United Missouri Bank, N.A.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE

EXHIBIT 5(b)
FORM OF
MANAGEMENT CONTRACT
between
FIDELITY CALIFORNIA MUNICIPAL TRUST II:
SPARTAN CALIFORNIA MUNICIPAL MONEY MARKET PORTFOLIO
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
MODIFICATION made this 18th day of April 1994, by and between Fidelity
California Municipal Trust II, a Delaware business trust which may issue
one or more series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Spartan California Municipal Money Market Portfolio
(hereinafter called the "Portfolio"), and Fidelity Management &
Research Company, a Massachusetts corporation (hereinafter called the
"Adviser").
Required authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby
consent, pursuant to Paragraph 6 of the existing Management Contract dated
October 19, 1989, to a modification of said Contract in the manner set
forth below. The Modified Management Contract shall when executed by duly
authorized officers of the Fund and the Adviser, take effect on the later
of April 18, 1994 or the first day of the month following approval.
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio
office space and all necessary office facilities, equipment and personnel
for servicing the investments of the Portfolio; and shall pay the salaries
and fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser undertakes to pay all expenses involved in the operation
of the Portfolio, except the following, which shall be paid by the
Portfolio: (i) taxes; (ii) the fees and expenses of all Trustees of the
Fund who are not "interested persons" of the Fund or of the Adviser; (iii)
brokerage fees and commissions; (iv) interest expenses with respect to
borrowings by the Portfolio; and (v) such non-recurring and extraordinary
expenses as may arise, including actions, suits or proceedings to which the
Portfolio is or is threatened to be a party and the legal obligation that
the Portfolio may have to indemnify the Fund's Trustees and officers with
respect thereto. It is understood that service charges billed directly to
shareholders of the Portfolio, including charges for exchanges,
redemptions, or other services, shall not be payable by the Adviser, but
may be received and retained by the Adviser or its affiliates.
(d) The Adviser, at its own expense, shall place all orders for the
purchase and sale of portfolio securities for the Portfolio's account with
brokers or dealers selected by the Adviser, which may include brokers or
dealers affiliated with the Adviser. The Adviser shall use its best
efforts to seek to execute portfolio transactions at prices which are
advantageous to the Portfolio and at commission rates which are reasonable
in relation to the benefits received. In selecting brokers or dealers
qualified to execute a particular transaction, brokers or dealers may be
selected who also provide brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934) to the
Portfolio and/or the other accounts over which the Adviser or its
affiliates exercise investment discretion. The Adviser is authorized to
pay a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Portfolio which is
in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Adviser determines in good
faith that such amount of commission is reasonable in relation to the value
of the brokerage and research services provided by such broker or dealer.
This determination may be viewed in terms of either that particular
transaction or the overall responsibilities which the Adviser and its
affiliates have with respect to accounts over which they exercise
investment discretion. The Trustees of the Fund shall periodically review
the commissions paid by the Portfolio to determine if the commissions paid
over representative periods of time were reasonable in relation to the
benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. For the services and facilities to be furnished hereunder, the Adviser
shall receive a monthly management fee, payable monthly as soon as
practicable after the last day of each month, at the annual rate of .50% of
the average daily net assets of the Portfolio (computed in the manner set
forth in the Declaration of Trust or other organizational document of the
Fund) throughout the month; provided that the fee, so computed, shall be
reduced by the compensation, including reimbursement of expenses, paid by
the Portfolio to those Trustees who are not "interested persons" of the
Fund or the Adviser.
In case of initiation or termination of this Contract during any month,
the fee for that month shall be reduced proportionately on the basis of the
number of business days during which it is in effect, and the fee computed
upon the average net assets for the business days it is so in effect for
that month.
4. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
5. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 5, this Contract shall continue in force until May 31, 1994
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 5, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment of
any penalty, by action of its Trustees or Board of Directors, as the case
may be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
6. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Declaration of Trust or other
organizational document of the Fund and agrees that the obligations assumed
by the Fund pursuant to this Contract shall be limited in all cases to the
Portfolio and its assets, and the Adviser shall not seek satisfaction of
any such obligation from the shareholders or any shareholder of the
Portfolio or any other Portfolios of the Fund. In addition, the Adviser
shall not seek satisfaction of any such obligations from the Trustees or
any individual Trustee. The Adviser understands that the rights and
obligations of any Portfolio under the Declaration of Trust or other
organizational document of the Fund are separate and distinct from those of
any and all other Portfolios.
7. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
[SIGNATURE LINES OMITTED]

EXHIBIT 5(d)
Form Of
SUB-ADVISORY AGREEMENT
between
FMR Texas Inc.
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
AGREEMENT made this 18th day of April, 1994, by and between FMR Texas
Inc., a Texas corporation with principal offices at 400 East Las Colinas
Boulevard, Irving, Texas (hereinafter called the "Sub-Adviser") and
Fidelity Management & Research Company, a Massachusetts corporation
with principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Adviser").
WHEREAS the Adviser has entered into a Management Contract with Fidelity
California Municipal Trust II, a Delaware business trust which may issue
one or more series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Spartan California Municipal Money Market Portfolio
(hereinafter called the "Portfolio"), pursuant to which the Adviser is to
act as investment manager and adviser to the Portfolio, and
WHEREAS the Sub-Adviser was formed for the purpose of providing investment
management of money market mutual funds, both taxable and tax-exempt,
advising generally with respect to money market instruments, and managing
or providing advice with respect to cash management.
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Adviser and the Sub-Adviser agree as follows:
1. (a) The Sub-Adviser shall, subject to the supervision of the Adviser,
direct the investments of the Portfolio in accordance with the investment
objective, policies and limitations as provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of l940 and rules thereunder, as amended from
time to time (the "l940 Act"), and such other limitations as the Portfolio
may impose by notice in writing to the Adviser or Sub-Adviser. The
Sub-Adviser shall also furnish for the use of the Portfolio office space
and all necessary office facilities, equipment and personnel for servicing
the investments of the Portfolio; and shall pay the salaries and fees of
all personnel of the Sub-Adviser performing services for the Portfolio
relating to research, statistical and investment activities. The
Sub-Adviser is authorized, in its discretion and without prior consultation
with the Portfolio or the Adviser, to buy, sell, lend and otherwise trade
in any stocks, bonds and other securities and investment instruments on
behalf of the Portfolio. The investment policies and all other actions of
the Portfolio are and shall at all times be subject to the control and
direction of the Fund's Board of Trustees.
(b) The Sub-Adviser shall also furnish such reports, evaluations,
information or analyses to the Fund and the Adviser as the Fund's Board of
Trustees or the Adviser may request from time to time or as the Sub-Adviser
may deem to be desirable. The Sub-Adviser shall make recommendations to
the Fund's Board of Trustees with respect to Portfolio policies, and shall
carry out such policies as are adopted by the Trustees. The Sub-Adviser
shall, subject to review by the Board of Trustees, furnish such other
services as the Sub-Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Agreement and
which are not otherwise furnished by the Adviser.
(c) The Sub-Adviser, at its own expense, shall place all orders for the
purchase and sale of portfolio securities for the Portfolio's account with
brokers or dealers selected by the Sub-Adviser, which may include brokers
or dealers affiliated with the Adviser or Sub-Adviser. The Sub-Adviser
shall use its best efforts to seek to execute portfolio transactions at
prices which are advantageous to the Portfolio and at commission rates
which are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction, brokers
or dealers may be selected who also provide brokerage and research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act
of l934) to the Portfolio and/or the other accounts over which the
Sub-Adviser, Adviser or their affiliates exercise investment discretion.
The Sub-Adviser is authorized to pay a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Sub-Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination
may be viewed in terms of either that particular transaction or the overall
responsibilities which the Sub-Adviser and its affiliates have with respect
to accounts over which they exercise investment discretion. The Trustees
of the Fund shall periodically review the commissions paid by the Portfolio
to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Portfolio.
2. The Sub-Adviser will be compensated by the Adviser on the following
basis for the services to be furnished hereunder: the Adviser agrees to
pay the Sub-Adviser a monthly fee equal to 50% of the management fee which
the Portfolio is obligated to pay the Adviser under the Portfolio's
Management Contract with the Adviser. Such fee shall not be reduced to
reflect expense reimbursements or fee waivers by the Adviser, if any, in
effect from time to time.
3. It is understood that Trustees, officers, and shareholders of the Fund
are or may be or become interested in the Adviser or the Sub-Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser or the Sub-Adviser are or may be or become
similarly interested in the Fund, and that the Adviser or the Sub-Adviser
may be or become interested in the Fund as a shareholder or otherwise.
4. It is understood that the Portfolio will pay all its expenses other
than those expressly stated to be payable by the Sub-Adviser hereunder or
by the Adviser under the Management Contract with the Portfolio, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund, the Sub-Adviser or the
Adviser; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Fund and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefor;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Adviser, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Fund's Trustees and officers with respect thereto.
5. The Services of the Sub-Adviser to the Adviser are not to be deemed to
be exclusive, the Sub-Adviser being free to render services to others and
engage in other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Adviser's ability to meet all of its
obligations with respect to rendering investment advice hereunder. The
Sub-Adviser shall for all purposes be an independent contractor and not an
agent or employee of the Adviser or the Fund. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Sub-Adviser, the
Sub-Adviser shall not be subject to liability to the Adviser, the Fund or
to any shareholder of the Portfolio for any act or omission in the course
of, or connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Agreement shall continue in force until May 30, 1994
and indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Fund's Board of Trustees or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Adviser, the
Sub-Adviser and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of the Agreement
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to such Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Adviser, the Sub-Adviser or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or by vote of a majority of its outstanding voting
securities. This Agreement shall terminate automatically in the event of
its assignment.
7. The Sub-Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Declaration of Trust or other
organizational document of the Fund and agrees that any obligations of the
Fund or the Portfolio arising in connection with this Agreement shall be
limited in all cases to the Portfolio and its assets, and the Sub-Adviser
shall not seek satisfaction of any such obligation from the shareholders or
any shareholder of the Portfolio. Nor shall the Sub-Adviser seek
satisfaction of any such obligation from the Trustees or any individual
Trustee.
8. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS, WITHOUT GIVING EFFECT TO THE
CHOICE OF LAWS PROVISIONS THEREOF.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the
Investment Company Act of 1940 as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
[Signature Lines Omitted]

EXHIBIT 9(a)
FIDELITY CALIFORNIA MUNICIPAL TRUST II
TRANSFER AGENT AND SERVICE AGREEMENT WITH UNITED MISSOURI BANK, N.A.
Required authorizations and approvals having been obtained, agreement is
hereby made as of 12/30/91 by and between United Missouri Bank, N.A. (the
Bank) with its principal offices at 1010 Grand Avenue, Kansas City,
Missouri, and FIDELITY CALIFORNIA MUNICIPAL TRUST II (the Fund), a Delaware
business trust which may issue one or more series in addition to the series
set forth in Appendix A attached hereto, each of which shall represent an
interest in a separate portfolio of cash, securities and other assets (the
Portfolios) with principal offices at 82 Devonshire Street, Boston,
Massachusetts.
Reference to the Fund, when applicable to one or more Portfolios of the
Fund, shall refer to each Portfolio listed in Appendix A.
1. Appointments. The Fund hereby appoints and employs the Bank as agent
to provide those services described in the schedules attached to this
Agreement for the Fund upon notice in writing that the Fund requests such
services. The Bank shall perform the obligations and the services set
forth in the attached schedules upon the terms and conditions hereinafter
set forth.
2. Documents. The Fund has furnished the Bank copies of the Fund's
Declaration of Trust or other organizational document, Bylaws (if any),
Management Contract, Custodian Contract, current Prospectus and Statement
of Additional Information (the Prospectus), any other governing documents
and all forms relating to any plan, program or service offered by the Fund.
The Fund shall furnish promptly to the Bank a copy of any amendment or
supplement to the above-mentioned documents. The Fund shall furnish to the
Bank any additional documents requested by it as necessary for it to
perform the services required hereunder.
3. Services to be Performed. The Bank shall be responsible for
performing as agent, as of the date of this Agreement, the services
described in the following schedules attached hereto and made a part
hereof, as said schedules may be amended from time to time:
Schedule A: Transfer agent, dividend and distribution disbursing agent
and shareholder agent.
Schedule B: Agent for pricing and bookkeeping.
Schedule C: Agent for securities lending transactions.
Operating procedures and standards to be followed for each function may be
established from time to time by agreement between the Fund and the Bank.
The above schedules may be amended or deleted, or additional schedules may
be included, as deemed necessary from time to time by agreement between the
Fund and the Bank. Deletion of any schedule shall be in accordance with
the termination provisions of Paragraph 15 of this Agreement. Each
schedule and any amendments thereto shall be dated and signed by the
parties to this Agreement.
4. Record Keeping and Other Information. The Bank shall create and
maintain all records required by all applicable laws, rules and regulations
relating to the services to be performed as set forth in the schedules
attached hereto, including but not limited to records required by Section
31(a) of the Investment Company Act of 1940 and the Rules thereunder, as
the same may be amended from time to time. All records shall be the
property of the Fund and shall be available for inspection and use by the
Fund at all times. Where applicable, such records shall be maintained by
the Bank for the periods and in the places required by Rule 31a-2 under the
Investment Company Act of 1940.

5. Audits, Inspections and Visits. The Bank shall make available during
regular business hours all records and other data created and maintained
pursuant to this Agreement for reasonable audit and inspection by the Fund,
any agent or person designated by the Fund, or any regulatory agency having
authority over the Fund. Upon reasonable notice by the Fund, the Bank
shall make available during regular business hours its facilities and
premises employed in connection with its performance of this Agreement for
reasonable visits by the Fund, any agent or person designated by the Fund,
or any regulatory agency having authority over the Fund.
6. Compensation. For the performance of its obligations hereunder, the
Fund shall pay the Bank in accordance with the fee arrangements described
in each schedule attached hereto.
7. Appointment of Agents. The Bank, at its expense, may at any time or
times in its discretion appoint (and may at any time remove) one or more
other parties as Agent to perform any or all of the services specified
hereunder and carry out such provisions of this Agreement as the Bank may
from time to time direct; provided, however, that the appointment of any
such Agent (other than Fidelity Service Co.) shall not relieve the Bank of
any of its responsibilities or liabilities hereunder.
8. Use of the Bank's Name. The Fund shall not use the name of the Bank
in any Prospectus, sales literature or other material relating to the Fund
in a manner not consented to prior to use; provided, however, that the Bank
shall approve all uses of its name which merely refer in accurate terms to
its appointments, duties or fees hereunder or which are required by the
Securities and Exchange Commission or a state securities commission; and
further provided, that in no event shall such approval be unreasonably
withheld.
9. Use of Fund's Name. The Bank shall not use the name of the Fund or
material relating to the Fund on any forms (including any checks, bank
drafts or bank statements) for other than internal use in a manner not
consented to prior to use, provided, however, that the Fund shall approve
all uses of its name which merely refer in accurate terms to the
appointment of the Bank hereunder or which are required by the Securities
and Exchange Commission or a state securities commission; and further,
provided that in no event shall such approval be unreasonably withheld.
10. Security. The Bank represents and warrants that, to the best of its
knowledge, the various procedures and systems which the Bank has
implemented with regard to the safeguarding from loss or damage
attributable to fire, theft or any other cause (including provision for
twenty-four hours a day restricted access) of the Fund's blank checks,
certificates, records and other data and the Bank's records, data,
equipment, facilities and other property used in the performance of its
obligations hereunder are adequate, and that it will make such changes
therein from time to time as in its judgment are required for the secure
performance of its obligations hereunder. The Bank shall review such
systems and procedures on a periodic basis and the Fund shall have access
to review these systems and procedures.
11. Insurance. The Bank shall maintain insurance of the types and in the
amounts deemed by it to be appropriate and shall notify the Fund should any
of its insurance coverage be changed for any reason. Such notification
shall include the date of change and the reason or reasons therefor. The
Bank shall notify the Fund of any material claims against the Bank, whether
or not they may be covered by insurance, and shall notify the Fund from
time to time as may be appropriate of the total outstanding claims made by
the Bank under its insurance coverage. To the extent that policies of
insurance may provide for coverage of claims for liability or indemnity by
the parties set forth in this Agreement, the contracts of insurance shall
take precedence, and no provision of this Agreement shall be construed to
relieve an insurer of any obligation to pay claims to the Fund, the Bank or
other insured party which would otherwise be a covered claim in the absence
of any provision of this Agreement.

12. Indemnification.
A. The Fund shall indemnify and hold the Bank harmless against any losses,
claims, damages, liabilities or expenses (including reasonable counsel fees
and expenses) resulting from:
(1) any claim, demand, action or suit brought by any person other than
the Fund, including by a shareholder, which names the Bank and/or the Fund
as a party and is not based on and does not result from the Bank's willful
misfeasance, bad faith or negligence or reckless disregard of duties, and
arises out of or in connection with the Bank's performance hereunder; or
(2) any claim, demand, action or suit (except to the extent contributed
to by the Bank's willful misfeasance, bad faith or negligence or reckless
disregard of duties) which results from the negligence of the Fund, or from
the Bank's acting upon any instruction(s) reasonably believed by it to have
been executed or communicated by any person duly authorized by the Fund, or
as a result of the Bank's acting in reliance upon advice reasonably
believed by the Bank to have been given by counsel for the Fund, or as a
result of the Bank's acting in reliance upon any instrument or stock
certificate reasonably believed by it to have been genuine and signed,
countersigned or executed by the proper person.
B. The Bank shall indemnify and hold the Fund harmless against any losses,
claims, damages, liabilities or expenses (including reasonable counsel fees
and expenses) resulting from any claim, demand, action or suit brought by
any person other than the Bank, which names the Fund and/or the Bank as a
party and is based upon and arises out of the Bank's willful misfeasance,
bad faith or negligence or reckless disregard of duties in connection with
its performance hereunder.
In the event that either party requests the other to indemnify or hold it
harmless hereunder, the party requesting indemnification (the "Indemnified
Party") shall inform the other party (the "Indemnifying Party") of the
relevant facts known to Indemnified Party concerning the matter in
question. The Indemnified Party shall use reasonable care to identify and
promptly to notify the Indemnifying Party concerning any matter which
presents, or appears likely to present, a claim for indemnification. The
Indemnifying Party shall have the election of defending the Indemnified
Party against any claim which may be the subject of indemnification or of
holding the Indemnified Party harmless hereunder. In the event the
Indemnifying Party so elects, it will so notify the Indemnified Party and
thereupon the Indemnifying Party shall take over defense of the claim and,
if so requested by the Indemnifying Party, the Indemnified Party shall
incur no further legal or other expenses related thereto for which it shall
be entitled to indemnity or to being held harmless hereunder; provided,
however, that nothing herein shall prevent the Indemnified Party from
retaining counsel at its own expense to defend any claim. Except with the
Indemnifying Party's prior written consent, the Indemnified Party shall in
no event confess any claim or make any compromise in any matter in which
the Indemnifying Party will be asked to indemnify or hold Indemnified Party
harmless hereunder.
13. Acts of God, etc. The Bank shall not be liable for delays or errors
occurring by reason of circumstances beyond its control, including but not
limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot,
or failure of communication equipment of common carriers or power supply.
In the event of equipment breakdowns beyond its control, the Bank shall, at
no additional expense to the Fund, take reasonable steps to minimize
service interruptions and mitigate their effects but shall have no
liability with respect thereto. The Bank shall enter into and shall
maintain in effect with appropriate parties one or more agreements making
reasonable provision for emergency use of electronic data processing
equipment.
14. Amendments. The Bank and the Fund shall regularly consult with each
other regarding the Bank's performance of its obligations and its
compensation hereunder. In connection therewith, the Fund shall submit to
the Bank at a reasonable time in advance of filing with the Securities and
Exchange Commission copies of any amended or supplemented registration
statements (including exhibits) under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and, a
reasonable time in advance of their proposed use, copies of any amended or
supplemented forms relating to any plan, program or service offered by the
Fund. Any change in such material which would require any change in the
Bank's obligations hereunder shall be subject to the Bank's approval, which
shall not be unreasonably withheld. In the event that a change in such
documents or in the procedures contained therein materially increases the
cost to the Bank of performing its obligations hereunder, the Bank shall be
entitled to receive reasonable compensation therefor.
15. Duration, Termination, etc. Neither this Agreement nor any
provisions hereof may be changed, waived, discharged or terminated orally,
but only by written instrument which shall make specific reference to this
Agreement and which shall be signed by the party against which enforcement
of such change, waiver, discharge or termination is sought.
This Agreement shall continue in effect until December 31, 1992 and
indefinitely thereafter so long as such continuance is approved at least
annually by vote of the Fund's Board of Trustees; provided, however, that
this Agreement may be terminated at any time by six months' written notice
given by the Bank to the Fund or six months' written notice given by the
Fund to the Bank; and provided further that this Agreement may be
terminated immediately at any time for cause either by the Fund or by the
Bank in the event that such cause remains unremedied for a reasonable
period of time not to exceed ninety days after receipt of written
specification of such cause. Any such termination shall not affect the
rights and obligations of the parties under paragraph 12 hereof.
Upon the termination hereof, the Fund shall pay to the Bank such
compensation as may be due for the period prior to the date of such
termination. In the event that the Fund designates a successor to any of
the Bank's obligations hereunder, the Bank shall, at the expense and
direction of the Fund, transfer to such successor all relevant books,
records and other data established or maintained by the Bank hereunder
(including, if the Bank has been acting as Transfer Agent, a certified list
of the shareholders of the Fund with name, address, and, if provided,
taxpayer identification or Social Security number, and a complete record of
the account of each shareholder). To the extent that the Bank incurs
expenses related to a transfer of responsibilities to a successor, the Bank
shall be entitled to be reimbursed for such expenses, including any
out-of-pocket expenses reasonably incurred by the Bank in connection with
the transfer.
16. Liability. Notice is hereby given that this Agreement is not
executed on behalf of the trustees of the Fund as individuals, and the
obligations of this agreement are not binding upon any of the trustees,
officers or shareholders of the Fund individually, but are binding only
upon the assets and property of the Portfolios. The Bank agrees that no
shareholder, trustee, or officer of the Fund may be held personally liable
or responsible for any obligations of the Fund arising out of this
Agreement. With respect to any obligations of the Fund on behalf of the
Portfolios arising out of this Agreement, the Bank shall look for payment
or satisfaction of any obligation solely to the assets and property of the
Portfolio to which such obligation relates as though the Fund had
separately contracted with the Bank by separate written instrument with
respect to each Portfolio.
17. Miscellaneous. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with
and governed by the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof. The captions in
this Agreement are included for convenience of reference only and in no way
define or delimit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed simultaneously in
two counterparts, each of which taken together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties have duly executed this Agreement, and
hereunto affixed their respective seals, as of the day and year first above
written.
UNITED MISSOURI BANK, N.A.
By: /s /Duane E. Schempp
Name: Duane E. Schempp
Title: Vice President
FIDELITY CALIFORNIA MUNICIPAL TRUST II
By: /s /Gary L. French
Name: Gary L. French
Title: Treasurer
Appendix A to Transfer Agent and
Service Agreement between
FIDELITY CALIFORNIA MUNICIPAL TRUST II and United Missouri Bank, N.A.
Dated as of 12/30/91
The following is a list of Portfolios for which the Bank shall serve under
a Transfer and Service Agent Agreement dated as of 12/30/91.
Portfolio Name Effective As Of
Fidelity California Tax-Free Money Market Portfolio 12/30/91
IN WITNESS HEREOF, the parties have duly executed this Agreement, and
hereunto affixed their respective seals, as of the date and year first
above written.
United Missouri Bank, N.A.
By: /s /Duane E. Schempp
Name: Duane E. Schempp
Title: Vice President
FIDELITY CALIFORNIA MUNICIPAL TRUST II
By: /s /Gary L. French
Name: Gary L. French
Title: Treasurer

EXHIBIT 9(b)
APPOINTMENT OF SUB-TRANSFER AND SUB-SERVICE AGENT
FIDELITY CALIFORNIA MUNICIPAL TRUST II
AGREEMENT dated as of 12/30/91 between Fidelity Service Company (Service),
a division of FMR Corp., a Massachusetts corporation with principal offices
at 82 Devonshire Street, Boston, Massachusetts, United Missouri Bank, N.A.
(the Bank), with principal offices at 1010 Grand Avenue, Kansas City,
Missouri.
WHEREAS, the Bank has entered into a Transfer and Service Agent Agreement
dated as of 12/30/91 (the Agreement) with FIDELITY CALIFORNIA MUNICIPAL
TRUST II (the Fund), a Delaware business trust which may issue one or more
series, in addition to the series set forth in Appendix A attached hereto,
each of what shall represent an interest in a separate portfolio of each,
securities and other assets (the Portfolios) with principal offices at 82
Devonshire Street, Boston, Massachusetts, under which the Bank has assumed
certain responsibilities, including:
(i) receive for acceptance, orders for the purchase of Portfolio shares,
and promptly deliver payments received by it and appropriate documentation
therefor to the Portfolio's custodian;
(ii) pursuant to purchase orders, issue the appropriate number of Portfolio
shares and properly register such shares to the appropriate shareholder
account;
(iii) receive for acceptance, redemption requests and redemption
instructions (including redemptions by check transmitted to Service by any
duly appointed check processing agent) and process payments for redemption
to shareholders in accordance with the terms, conditions and rules
governing each shareholder's account as set forth in the Portfolio's
prospectus, statement of additional information and each shareholder's
account application;
(iv) effect transfers of shares by the registered owners thereof upon
receipt of appropriate instructions,
(v) prepare and mail to Portfolio shareholders such confirmations and
statements of account as may be required under applicable law and as may be
reasonably requested by the Portfolio.
(vi) accounting relating to the Portfolio and all portfolio transactions of
the Portfolio,
(vii) the determination of net asset value per share of the outstanding
shares of the Portfolio and the offering price, if any, at which shares are
to be sold, at the times and in the manner described in the Declaration of
Trust of the Fund, as amended, and the Prospectus of the Portfolio, if any,
the determination of daily net interest income, and the timely
communication of such information to the person or persons designated by
the Portfolio,
(viii) maintaining the books of account of the Portfolio and
(ix) the recognition of, in conjunction with the Custodian, all corporate
actions, including but not limited to, cash and stock distributions or
dividend, stock split and reverse stock splits, taken by companies whose
securities are held by the Portfolio; and
Further, the Bank has assumed certain service agent responsibilities in
connection with dividend and capital gain distributions by the Portfolio,
including:
(i) for each Portfolio shareholder who has elected to receive dividends
and/or distributions in cash, send payments to shareholders in accordance
with the shareholder's election; and
(ii) for each Portfolio shareholder who has elected to receive dividends
and/or distributions in shares of the Portfolio or in shares of another
mutual fund for which Service serves as transfer agent, credit the
shareholder's account(s) for the proper number of shares.
In addition to the foregoing services, the Bank has agreed to:
(i) perform all the customary administrative services related to its
transfer agent and dividend and distribution disbursing agent functions,
including, but not limited to:
(a) maintaining all shareholder accounts,
(b) preparing shareholder meeting lists, and supervising, but not paying
for, various agents and contractors employed to mail proxy materials and
receive and tabulate proxies,
(c) typesetting, printing and mailing shareholder reports and prospectuses
to current Portfolio shareholders,
(d) withholding taxes (including withholding for foreign taxes) for
shareholders for whom withholdings are required by federal or state
regulation and filing all required reports with respect thereto,
(e) preparing, distributing and filing all requisite shareholder tax
statements on appropriate forms and responding to inquiries with respect
thereto, and
(f) establishing and supervising the operation of bank accounts for the
receipt of funds for share purchases and the payment of dividends,
distributions and redemption proceeds;
(ii) furnish the Portfolio with all necessary reports of Portfolio shares
sold in each state in order to permit compliance with the state securities
laws; and
(iii) as required, respond to shareholder inquiries relating to the status
of their accounts, Portfolio performance, distributions, and share price,
and furnish shareholders with copies of account histories and make
adjustments to shareholder accounts to correct account files.
WHEREAS, the Bank wishes to retain Service, and Service is willing, to
carry out these functions on behalf of the Bank;
NOW THEREFORE, in consideration of the premises and the mutual promises
thereinafter set forth, Service and the Bank hereby agree as follows:
1. The Bank hereby designates Service as its agent pursuant to Paragraph
7 of the Agreement to carry out all of the responsibilities and functions
of the Bank under the Agreement (which is attached as Exhibit A hereto) and
Service agrees to assume all of the Bank's obligations thereunder
(including its responsibility for certain expenses, costs and other charges
allocated to the Bank). The description of all responsibilities and
functions included in the Agreement is incorporated herein as if set forth
at length herein. Service agrees to act as such and to carry out the
responsibilities set forth in the Agreement, upon the terms and conditions
therein and hereinafter set forth and in accordance with the principles of
principal and agent enunciated by the common law. The Bank agrees to
supply Service with all documents, records and other information supplied
to the Bank by the Portfolio pursuant to the Agreement.
2. In full payment for Service's performance hereunder, the Bank agrees
to pay to Service any and all compensation received from the Portfolio by
the Bank pursuant to the Agreement and any written Schedules which may
constitute attachments thereto (Schedules). The Bank shall undertake to
collect from the Portfolio all compensation appropriately due and owing to
it under the Agreement.
3. The Bank is entitled to indemnification under the Agreement in
accordance with Paragraph 12. The Bank agrees to indemnify Service for
Service's losses, claims, damages, liabilities, and expenses (including
reasonable counsel fees and expenses) (losses) to the extent that the Bank
is entitled to and receives indemnification from the Portfolio pursuant to
Paragraph 12 of the Agreement in connection with the events upon which
Service's indemnification claim is based. The Bank agrees to advise the
Portfolio of any claim of Service for indemnification arising in connection
with Service's activities in carrying out the responsibilities of the Bank
as provided in the Agreement. Otherwise, the Bank shall not be required to
indemnify Service in connection with Service's losses hereunder unless the
Bank's own negligence, willful misconduct or bad faith contributed to such
losses, and then only to the extent of the Bank's contribution thereto.
The Bank shall not be liable for any act or omission of Service in carrying
out the responsibilities assigned to Service. Service shall hold the Bank
harmless from any losses in connection with the Agreement, except to the
extent that such losses were contributed to by the Bank's own negligence,
willful misconduct, or bad faith.
4. Service represents and warrants that, to the best of its knowledge,
the various procedures and systems that Service has implemented with regard
to safeguarding from loss or damage attributable to fire, theft or any
other cause (including provision for twenty-four hour a day restricted
access) the Portfolio's blank checks, records, certificates, and other data
and Service's records, data, equipment, facilities and other property used
in the performance of its obligations hereunder are adequate and that it
will make such changes therein from time to time as in its judgment are
required for the secure performance of its obligations hereunder. Service
shall review such systems and procedures on a period basis; and the Bank
shall have no obligation to review these systems and procedures.
5. Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof. This
agreement shall be construed and enforced in accordance with and governed
by the laws of the Commonwealth of Massachusetts, without giving effect to
the choice of laws provisions thereof. This agreement may be executed
simultaneously in two counterparts, each of which taken together shall
constitute one and the same instrument.
6. The Bank shall not agree to any agreement or waiver of the provisions
of the Agreement without the written consent of Service. This Agreement
shall continue in effect until December 31, 1992 and thereafter as the
parties may mutually agree; provided, however, that this agreement may be
terminated at any time by six months' written notice given by Service to
the Bank or by the Bank to Service; and further provided that this
agreement may be terminated immediately at any time by the Bank in the
event that the Agreement between the Portfolio and the Bank is terminated.
7. Notice is hereby given that this Agreement is not executed on behalf
of the trustees of the Fund as individuals, and the obligations of this
Agreement are not binding upon any of the trustees, officers or
shareholders of the Fund individually but are binding only upon the assets
and property of the Portfolios. Both the Bank and Service agree that no
shareholder, trustee, or officer of the Fund may be held personally liable
or responsible for any obligations of the Fund arising out of this
Agreement. With respect to any and obligations of the Fund on behalf of
the Portfolios arising out of this agreement, the Bank and Service shall
look for payment or satisfaction of any obligation solely to the assets and
property of the Portfolio to which such obligation relates as though the
Fund had separately contracted with the Bank and Service by separate
written instrument with respect to each Portfolio.

IN WITNESS WHEREOF, the parties have duly executed this agreement, and
hereunto affixed their respective seals, as of the day and year first above
written.
FMR CORP.
By: /s/Dennis M. McCarthy
Name: Dennis M. McCarthy
Title: Senior Vice President
FIDELITY SERVICE CO.
By: /s/Nita B. Kincaid
Name: Nita B. Kincaid
Title: President
UNITED MISSOURI BANK, N.A.
By: /s /Duane E. Schempp
Name: Duane E. Schempp
Title: Vice President

Appendix A to the Sub-Transfer Agent
and Service Agreement between
FIDELITY CALIFORNIA MUNICIPAL TRUST II and United Missouri Bank, N.A.
Dated as of 12/30/91
The following is a list of Portfolios for which Service shall serve under a
Sub-Transfer and Service Agent Agreement dated as of 12/30/91.
Portfolio Name Effective As Of
Fidelity California Tax-Free Money Market Portfolio 12/30/91
IN WITNESS WHEREOF, the parties have duly executed this Agreement, and
hereunto affixed their respective seals, as of the date and year first
above written.
United Missouri Bank, N.A.
By: /s /Duane E. Schempp
Name: Duane E. Schempp
Title: Vice President
FIDELITY CALIFORNIA MUNICIPAL TRUST II
By: /s /Gary L. French
Name: Gary L. French
Title: Treasurer

EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectuses and
Statements of Additional Information constituting parts of this
Post-Effective Amendment No. 9 to the Registration Statement on Form N-1A
(the "Registration Statement") of Fidelity California Municipal Trust II of
our reports dated March 31, 1994 and March 30, 1994, relating to the
financial statements and financial highlights appearing in the February 28,
1994 Annual Reports to Shareholders of Fidelity California Tax-Free Funds
and Spartan California Municipal Portfolios, respectively, which are
incorporated by reference in such Registration Statement. We further
consent to the references to us under the headings "Auditor" in the
Statements of Additional Information and "Financial Highlights" in the
Prospectuses.
/s/ Price Waterhouse
Price Waterhouse
Boston, Massachusetts
April 11, 1994

Exhibit 15(b)
DISTRIBUTION AND SERVICE PLAN
of Fidelity California Municipal Trust II:
Spartan California Municipal Money Market Portfolio
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by Rule
12b-1 under the Investment Company Act of 1940 (the "Act") of Spartan
California Municipal Money Market Portfolio (the "Portfolio"), a series of
shares of Fidelity California Municipal Trust II (the "Fund").
2. The Fund has entered into a General Distribution Agreement with respect
to the Portfolio with Fidelity Distributors Corporation (the
"Distributor"), a wholly-owned subsidiary of Fidelity Management &
Research Company (the "Adviser"), under which the Distributor uses all
reasonable efforts, consistent with its other business, to secure
purchasers for the Portfolio's shares of beneficial interest ("shares").
Under the agreement, the Distributor pays the expenses of printing and
distributing any prospectuses, reports and other literature used by the
Distributor, advertising, and other promotional activities in connection
with the offering of shares of the Portfolio for sale to the public. It is
understood that the Adviser may reimburse the Distributor for these
expenses from any source available to it, including management fees paid to
it by the Portfolio.
3. The Adviser directly, or through the Distributor, may, subject to the
approval of the Trustees, make payments to securities dealers and other
third parties who engage in the sale of shares or who render shareholder
support services, including but not limited to providing office space,
equipment and telephone facilities, answering routine inquiries regarding
the Portfolio, processing shareholder transactions and providing such other
shareholder services as the fund may reasonably request.
4. The Portfolio will not make separate payments as a result of this Plan
to the Adviser, Distributor or any other party, it being recognized that
the Portfolio presently pays, and will continue to pay, a management fee to
the Adviser. To the extent that any payments made by the Portfolio to the
Adviser, including payment of management fees, should be deemed to be
indirect financing of any activity primarily intended to result in the sale
of shares of the Portfolio within the context of Rule 12b-1 under the Act,
then such payments shall be deemed to be authorized by this Plan.
5. This Plan shall become effective upon the first business day of the
month following approval by a vote of at least a "majority of the
outstanding voting securities of the Portfolio" (as defined in the Act),
the plan having been approved by a vote of a majority of the Trustees of
the Fund, including a majority of Trustees who are not "interested persons"
of the fund (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or in any agreements
related to this Plan (the "Independent Trustees"), cast in person at a
meeting called for the purpose of voting on this Plan.
6. This Plan shall, unless terminated as hereinafter provided, remain in
effect from the date specified above until May 31, 1994 and from year to
year thereafter, provided, however, that such continuance is subject to
approval annually by a vote of a majority of the Trustees of the Fund,
including a majority of the Independent Trustees, cast in person at a
meeting called for the purpose of voting on this Plan. This Plan may be
amended at any time by the Board of Trustees, provided that (a) any
amendment to authorize direct payments by the Portfolio to finance any
activity primarily intended to result in the sale of shares of the
Portfolio, to increase materially the amount spent by the Portfolio for
distribution, or any amendment of the Management Contract to increase the
amount to be paid by the Portfolio thereunder shall be effective only upon
approval by a vote of a majority of the outstanding voting securities of
the Portfolio, and (b) any material amendments of this Plan shall be
effective only upon approval in the manner provided in the first sentence
in this paragraph.
7. This Plan may be terminated at any time, without the payment of any
penalty, by vote of a majority of the Independent Trustees or by a vote of
a majority of the outstanding voting securities of the Portfolio.
8. During the existence of this Plan, the Fund shall require the Adviser
and/or Distributor to provide the Fund, for review by the Fund's Board of
Trustees, and the Trustees shall review, at least quarterly, a written
report of the amounts expended in connection with financing any activity
primarily intended to result in the sale of shares of the Portfolio (making
estimates of such costs where necessary or desirable) and the purposes for
which such expenditures were made.
9. This Plan does not require the Adviser or Distributor to perform any
specific type or level of distribution activities or to incur any specific
level of expenses for activities primarily intended to result in the sale
of shares of the Portfolio.
10. Consistent with the limitation of shareholder liability as set forth
in the Fund's Declaration of Trust or other organizational document, any
obligations assumed by the Portfolio pursuant to this Plan and any
agreements related to this Plan shall be limited in all cases to the
Portfolio and its assets, and shall not constitute obligations of any other
series of shares of the Fund.
11. If any provision of this Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not
be affected thereby.