FIDELITY CALIFORNIA MUNICIPAL TRUST II, 485BPOS, 2000-04-20

FIDELITY CALIFORNIA MUNICIPAL TRUST II
485BPOS, 2000-04-20

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT (No. 33-42890)
UNDER THE SECURITIES ACT OF 1933 [X]

Pre-Effective Amendment No. [ ]

Post-Effective Amendment No. 20 [X]

and

REGISTRATION STATEMENT (No. 811-6397)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 20 [X]

Fidelity California Municipal Trust II
(Exact Name of Registrant as Specified in Charter)

82 Devonshire St., Boston, Massachusetts 02109
(Address Of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number: 617-563-7000

Eric D. Roiter, Secretary
82 Devonshire Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)

It is proposed that this filing will become effective

( ) immediately upon filing pursuant to paragraph (b).
(X) on April 24, 2000 pursuant to paragraph (b).
( ) 60 days after filing pursuant to paragraph (a)(1).
( ) on ( ) pursuant to paragraph (a)(1) of Rule 485.
( ) 75 days after filing pursuant to paragraph (a)(2).
( ) on ( ) pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

( ) this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Fidelity California Municipal Trust II

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

FIDELITY'S
CALIFORNIA MUNICIPAL
FUNDS

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

SPARTAN(REGISTERED TRADEMARK) CALIFORNIA MUNICIPAL MONEY MARKET FUND
(fund number 457, trading symbol FSPXX)

SPARTAN C ALIFORNIA MUNICIPAL INCOME FUND
(fund number 091, trading symbol FCTFX)

PROSPECTUS
APRIL 24, 2000

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

CONTENTS

FUND SUMMARY 2 INVESTMENT SUMMARY

3 PERFORMANCE

6 FEE TABLE

FUND BASICS 8 INVESTMENT DETAILS

9 VALUING SHARES

SHAREHOLDER INFORMATION 9 BUYING AND SELLING SHARES

17 EXCHANGING SHARES

18 ACCOUNT FEATURES AND POLICIES

21 DIVIDENDS AND CAPITAL GAIN
DISTRIBUTIONS

22 TAX CONSEQUENCES

FUND SERVICES 22 FUND MANAGEMENT

23 FUND DISTRIBUTION

APPENDIX 23 FINANCIAL HIGHLIGHTS

FUND SUMMARY

INVESTMENT SUMMARY

INVESTMENT OBJECTIVE

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

PRINCIPAL INVESTMENT STRATEGIES

Fidelity Management & Research Company (FMR)'s principal investment
strategies include:

(small solid bullet) Normally investing in municipal money
market securities, including shares of a municipal money market fund
managed by an affiliate of FMR.

(small solid bullet) Normally investin g at least 65% of total
assets in municipal securities whose interest is exempt from
California personal income tax.

(small solid bullet) Normally investing so that a t least 80% of
the fund's income distributions is exempt from federal income tax.

(small solid bullet) Potentially investing more than 25% of total
assets in municipal securities that finance similar types of projects.

(small solid bullet) Investing in compliance with industry-standard
requirements for money market funds for the quality, maturity and
diversification of investments.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) MUNICIPAL MARKET VOLATILITY. The municipal market
is volatile and can be significantly affected by adverse tax,
legislative or political changes and the financial condition of the
issuers of municipal securities.

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a money market security to decrease.

(small solid bullet) FOREIGN EXPOSURE. Entities located in foreign
countries can be affected by adverse political, regulatory, market or
economic developments in those countries.

(small solid bullet) GEOGRAPHIC CONCENTRATION. Unfavorable political
or economic conditions within California can affect the credit quality
of issuers located in that state.

(small solid bullet) ISSUER-SPECIFIC CHANGES. A decline in the credit
quality of an issuer or the provider of credit support or a
maturity-shortening structure for a security can cause the price of a
money market security to decrease.

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

INVESTMENT OBJECTIVE

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(small solid bullet) Normally investing in municipal money
market securities, including shares of a municipal money market fund
managed by an affiliate of FMR.

(small solid bullet) Normally investing at least 65% of total
assets in municipal securities whose interest is exempt from
California personal income tax.

(small solid bullet) Normally investing so that at least 80% of
the fund's income distributions is exempt from federal income tax.

(small solid bullet) Potentially investing more than 25% of total
assets in municipal securities that finance similar types of projects.

(small solid bullet) Investing in compliance with industry-standard
requirements for money market funds for the quality, maturity and
diversification of investments.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a money market security to decrease.

(small solid bullet) FOREIGN EXPOSURE. Entities located in foreign
countries can be affected by adverse political, regulatory, market or
economic developments in those countries.

(small solid bullet) GEOGRAPHIC CONCENTRATION. Unfavorable political
or economic conditions within California can affect the credit quality
of issuers located in that state.

INVESTMENT OBJECTIVE

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

PRINCIPAL INVESTMENT STRATEGIES

FMR's principal investment strategies include:

(small solid bullet) Normally investing in investment-grade
municipal debt securities (those of medium and high quality).

(small solid bullet) Normally investing at least 80% of assets in
municipal securities whose interest is exempt from federal and
California personal income taxes.

(small solid bullet) Potentially investing more than 25% of total
assets in municipal securities that finance similar types of projects.

(small solid bullet) Managing the fund to have similar overall
interest rate risk to the Lehman Brothers California Municipal Bond
Index.

(small solid bullet) Allocating assets across different market sectors
and maturities.

(small solid bullet) Analyzing a security's structural features and
current p ricing , trading opportunities, and the credit quality
of its issuer to select investments.

PRINCIPAL INVESTMENT RISKS

The fund is subject to the following principal investment risks:

(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.

(small solid bullet) GEOGRAPHIC CONCENTRATION. Unfavorable political
or economic conditions within California can affect the credit quality
of issuers located in that state.

(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently from
the va lue of the market as a whole.

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

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

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

PERFORMANCE

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

YEAR-BY-YEAR RETURNS

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

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

Calendar Years 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

5.17% 3.99% 2.58% 1.99% 2.37% 3.29% 2.90% 3.06% 2.81% 2.64%

</TABLE>

Percentage (%)
Row: 1, Col: 1, Value: 5.17
Row: 2, Col: 1, Value: 3.99
Row: 3, Col: 1, Value: 2.58
Row: 4, Col: 1, Value: 1.99
Row: 5, Col: 1, Value: 2.37
Row: 6, Col: 1, Value: 3.29
Row: 7, Col: 1, Value: 2.9
Row: 8, Col: 1, Value: 3.06
Row: 9, Col: 1, Value: 2.81
Row: 10, Col: 1, Value: 2.64

DURING THE PERIODS SHOWN IN THE CHART FOR CALIFORNIA MUNICIPAL MONEY
MARKET, THE HIGHEST RETURN FOR A QUARTER WAS 1.29 % (QUARTER
ENDED JUNE 30, 1990 ) AND THE LOWEST RETURN FOR A QUARTER WAS
0.45% (QUARTER ENDED MARCH 31, 1994).

THE YEAR-TO-DATE RETURN AS OF MARCH 31, 2000 FOR CALIFORNIA
MUNICIPAL MONEY MARKET WAS 0.67%.

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

Calendar Years 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

5.89% 4.59% 3.01% 2.44% 2.78% 3.69% 3.19% 3.28% 2.94% 2.73%

</TABLE>

Percentage (%)
Row: 1, Col: 1, Value: 5.89
Row: 2, Col: 1, Value: 4.59
Row: 3, Col: 1, Value: 3.01
Row: 4, Col: 1, Value: 2.44
Row: 5, Col: 1, Value: 2.78
Row: 6, Col: 1, Value: 3.69
Row: 7, Col: 1, Value: 3.19
Row: 8, Col: 1, Value: 3.28
Row: 9, Col: 1, Value: 2.94
Row: 10, Col: 1, Value: 2.73

DURING THE PERIODS SHOWN IN THE CHART FOR SPARTAN CALIFORNIA MUNICIPAL
MONEY MARKET, THE HIGHEST RETURN FOR A QUARTER WAS 1.47% (QUARTER
ENDED JUNE 30, 1990 ) AND THE LOWEST RETURN FOR A QUARTER WAS
0.56% (QUARTER ENDED MARCH 31, 1993).

THE YEAR-TO-DATE RETURN AS OF MARCH 31, 2000 FOR SPARTAN
CALIFORNIA MUNICIPAL MONEY MARKET WAS 0.69%.

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

Calendar Years 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

6.96% 10.16% 8.71% 13.43% -8.88% 19.17% 4.76% 9.81% 6.56% -2.80%

</TABLE>

Percentage (%)
Row: 1, Col: 1, Value: 6.96
Row: 2, Col: 1, Value: 10.16
Row: 3, Col: 1, Value: 8.709999999999999
Row: 4, Col: 1, Value: 13.43
Row: 5, Col: 1, Value: -8.880000000000001
Row: 6, Col: 1, Value: 19.17
Row: 7, Col: 1, Value: 4.76
Row: 8, Col: 1, Value: 9.810000000000001
Row: 9, Col: 1, Value: 6.56
Row: 10, Col: 1, Value: -2.8

DURING THE PERIODS SHOWN IN THE CHART FOR SPARTAN CALIFORNIA MUNICIPAL
INCOME, THE HIGHEST RETURN FOR A QUARTER WAS 8.04% ( QUARTER ENDED
MARCH 31, 1995 ) AND THE LOWEST RETURN FOR A QUARTER WAS
-6.69% (QUARTER ENDED MARCH 31, 1994).

THE YEAR-TO-DATE RETURN AS OF MARCH 31, 2000 FOR SPARTAN
CALIFORNIA MUNICIPAL INCOME WAS 3.78%.

AVERAGE ANNUAL RETURNS

The returns in the following table do not include the effect of the $5
account closeout fee for Spartan California Municipal Money Market.

For the periods ended Past 1 year Past 5 years Past 10 years
December 31, 1999

CA Municipal Money 2.64% 2.94% 3.08%

Spartan CA Municipal Money 2.73% 3.17% 3.45%

Spartan CA Municipal Income -2.80% 7.26% 6.52%

Lehman Brothers Municipal -2.06% 6.91% 6.89%
Bond Index

Lehman Brothers CA Municipal -2.79% 7.22% n/a
Bond Index

Lipper CA Municipal Funds -5.16% 6.08% 6.08%
Debt Average

If FMR had not reimbursed certain fund expenses during these
periods, Spartan California Municipal Money Market's and Spartan
California Municipal Income's retu rns would have been lower.

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

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

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

FEE TABLE

The following table describes the fees and expenses that are incurred
when you buy, hold, or sell shares of a fund. The annual fund
operating expenses provided below for Spartan California Municipal
Money Market do not reflect the effect of any reduction of certain
expenses during the period. The annual fund operating expenses
provided below for California Municipal Money Market and Spart an
California Municipal Income are based on historical expenses.

SHAREHOLDER FEES (PAID BY THE INVESTOR DIRECTLY)

Sales charge (load) on None
purchases and reinvested
distributions

Deferred sales charge (load) None
on redemptions

Exchange fee

for Spartan CA Municipal $ 5.00A,B
Money Market only

Wire transaction fee

for Spartan CA Municipal $ 5.00A
Money Market only

Checkwriting fee, per check
written

for Spartan CA Municipal $ 2.00A
Money Market only

Account closeout fee

for Spartan CA Municipal $ 5.00A
Money Market only

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

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

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

ANNUAL FUND OPERATING EXPENSES (PAID FROM FUND ASSETS)

CA MUNICIPAL MONEY MARKET Management fee 0.38%

Distribution and Service None
(12b-1) fee

Other expenses 0.18%

Total annual fund operating 0.56%
expenses

SPARTAN CA MUNICIPAL MONEY Management fee 0.50%

MARKET Distribution and Service None
(12b-1) fee

Other expenses 0.00%

Total annual fund operating 0.50%
expenses

SPARTAN CA MUNICIPAL INCOME Management fee 0.38%

Distribution and Service None
(12b-1) fee

Other expenses 0.11%

Total annual fund operating 0.49%
expenses

Through arrangements with Spartan California Municipal Money Market's
custodian and transfer agent, credits realized as a result of
uninvested cash balances are used to reduce fund expenses. Including
these reductions, the total fund operating expenses would have been
0.49% for Spartan California Municipal Money Market.

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

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

Account open Account closed

CA MUNICIPAL MONEY MARKET 1 year $ 57 $ 57

3 years $ 179 $ 179

5 years $ 313 $ 313

10 years $ 701 $ 701

SPARTAN CA MUNICIPAL MONEY 1 year $ 51 $ 56

MARKET 3 years $ 160 $ 165

5 years $ 280 $ 285

10 years $ 628 $ 633

SPARTAN CA MUNICIPAL INCOME 1 year $ 50 $ 50

3 years $ 157 $ 157

5 years $ 274 $ 274

10 years $ 616 $ 616

FUND BASICS

INVESTMENT DETAILS

INVESTMENT OBJECTIVE

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

PRINCIPAL INVESTMENT STRATEGIES

FMR normally invests the fund's assets in municipal money market
securities, including shares of a municipal money market fund managed
by an affiliate of FMR.

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

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

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

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

INVESTMENT OBJECTIVE

PRINCIPAL INVESTMENT STRATEGIES

FMR normally invests the fund's assets in municipal money market
securities, including shares of a municipal money market fund managed
by an affiliate of FMR.

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

INVESTMENT OBJECTIVE

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

PRINCIPAL INVESTMENT STRATEGIES

FMR normally invests the fund's assets in investment-grade municipal
debt securities (those of medium and high quality).

FMR normally invests at least 80% of the fund's assets in municipal
securities whose interest is exemp t from federal and California
personal income taxes. Municipal securities whose interest is exempt
from federal and California income taxes include securities issued by
U.S. territories and possessions, such as Guam, the Virgin Island s,
and Puerto Rico, and their political subdivisions and public
corporations.

FMR uses the Lehman Brothers California Municipal Bond Index as a
guide in structuring the fund and selecting its investments. FMR
manages the fund to have similar overall interest rate risk to the
index. As of February 29, 2000 , the dollar-weighted average
maturity of the fund and the index was approximately 14.6 and
14.7 years, respectively.

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

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

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

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

DESCRIPTION OF PRINCIPAL SECURITY TYPES

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

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

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

PRINCIPAL INVESTMENT RISKS

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

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

The bond fund's yield and share price change daily based on changes in
interest rates and market conditions and in response to other
economic, politica l , or financial developments. The fund's
reaction to these developments will be affected by the types and
maturities of securities in whi ch the fund invests, the
financial condition, industry and economic sector, and geographic
location of an issuer, and the fund's level of investment in the
securities of that issuer. Because FMR may invest a significant
percentage of Spartan California Municipal Income's assets in a single
issuer, the fund's performance could be closely tied to the market
value of that one issuer and could be more volatile than the
performance of more diversified funds. When you sell your shares
of the fund, they could be worth more or less than what you paid for
them.

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

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

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

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

GEOGRAPHIC CONCENTRATION. Although the California economy is
strong and the state is collecting record revenues, investors will be
exposed to risks associated with the unique aspects of California's
economy, political system and government financing structures.

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

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

FUNDAMENTAL INVESTMENT POLICIES

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

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

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

SPARTAN CALIFORNIA MUNICIPAL INCOME FUND s eeks a high level of
current income, exempt from federal and California personal income
taxes .

VALUING SHARES

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

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

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

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

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

SHAREHOLDER INFORMATION

BUYING AND SELLING SHARES

GENERAL INFORMATION

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

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

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

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

(small solid bullet) For accessing account information automatically
by phone, use Fidelity Automated Service Telephone (FASTSM),
1-800-544-5555.

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

(small solid bullet) For mutual fund and brokerage information,
1-800-5 44-6666.

(small solid bullet) F or retirement information,
1-800-544-477 4.

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

Please use the following addresses:

BUYING SHARES

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

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

SELLING SHARES

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

OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75039- 5587

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

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

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

WAYS TO SET UP YOUR ACCOUNT

INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS

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

TRUST
FOR MONEY BEING INVESTED BY A TRUST

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

BUYING SHARES

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

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

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

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

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

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

(small solid bullet) Fidelity does not accept cash.

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

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

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

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

MINIMUMS

TO OPEN AN ACCOUNT

for CA Municipal Money Market $5,000

for Spartan CA Municipal Money Market $25,000

for Spartan CA Municipal Income $10,000

TO ADD TO AN ACCOUNT

for CA Municipal Money Market $250

Through regular investment plans $100

for Spartan CA Municipal Money Market $1,000

Through regular investment plans $500

for Spartan CA Municipal Income $1,000

Through regular investment plans $500

MINIMUM BALANCE

for CA Municipal Money Market $2,000

for Spartan CA Municipal Money Market $10,000

for Spartan CA Municipal Income $5,000

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

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

KEY INFORMATION

PHONE 1-800-544-6666 TO OPEN AN ACCOUNT
(small solid bullet) Exchange
from another Fidelity fund.
Call the phone number at left.

TO ADD TO AN ACCOUNT
(small solid bullet) Exchange
from another Fidelity fund.
Call the phone number at left.
(small solid bullet) Use
Fidelity Money
Line(registered trademark)
to transfer from your bank
account.

INTERNET WWW.FIDELITY.COM TO OPEN AN ACCOUNT
(small solid bullet) Complete
and sign the application.
Make your check payable to
the complete name of the
fund. Mail to the address
under "Mail" below.

TO ADD TO AN ACCOUNT
(small solid bullet) Exchange
from another Fidelity fund.
(small solid bullet) Use
Fidelity Money Line to
transfer from your bank
account.

MAIL FIDELITY INVESTMENTS TO OPEN AN ACCOUNT
P.O. BOX 770001 CINCINNATI, (small solid bullet) Complete
OH 45277-0002 and sign the application.
Make your check payable to
the complete name of the
fund. Mail to the address at
left.

TO ADD TO AN ACCOUNT
(small solid bullet) Make
your check payable to the
complete name of the fund.
Indicate your fund account
number on your check and
mail to the address at left.
(small solid bullet) Exchange
from another Fidelity fund.
Send a letter of instruction
to the address at left,
including your name, the
funds' names, the fund
account numbers, and the
dollar amount or number of
shares to be exchanged.

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

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

WIRE TO OPEN AN ACCOUNT
(small solid bullet) Call
1-800-544-6666 to set up
your account and to arrange
a wire transaction.
(small solid bullet) Wire
within 24 hours to: Bankers
Trust Company, Bank Routing
# 021001033, Account #
00163053.
(small solid bullet) Specify
the complete name of the
fund and include your new
fund account number and your
name.

TO ADD TO AN ACCOUNT
(small solid bullet) Wire to:
Bankers Trust Company, Bank
Routing # 021001033, Account
# 00163053.
(small solid bullet) Specify
the complete name of the
fund and include your fund
account number and your name.

AUTOMATICALLY TO OPEN AN ACCOUNT
(small solid bullet) Not
available.

TO ADD TO AN ACCOUNT
(small solid bullet) Use
Fidelity Automatic Account
Builder(registered
trademark) or Direct Deposit.
(small solid bullet) Use
Fidelity Automatic Exchange
Service to exchange from a
Fidelity money market fund.

SELLING SHARES

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

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

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

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

(small solid bullet) Your account registration has changed within the
last 15 or 30 days, depe ndi ng on your account;

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

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

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

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

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

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

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

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

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

(small solid bullet) Redemption proceeds may be paid in securities or
other property rather than in cas h if FMR determines it is in
the best interests of a fund.

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

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

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

KEY INFORMATION

PHONE 1-800-544-6666 (small solid bullet) Call the
phone number at left to
initiate a wire transaction
or to request a check for
your redemption.

(small solid bullet) Use
Fidelity Money Line to
transfer to your bank account.
(small solid bullet) Exchange
to another Fidelity fund.
Call the phone number at left.

INTERNET WWW.FIDELITY.COM (small solid bullet) Exchange
to another Fidelity fund.

(small solid bullet) Use
Fidelity Money Line to
transfer to your bank account.

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

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

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

(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.

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

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

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

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

(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.

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

AUTOMATICALLY (small solid bullet) Use
Fidelity Automatic Exchange
Service to exchange from
California Municipal Money
Market to another Fidelity
fund.

(small solid bullet) Use
Personal Withdrawal Service
to set up periodic
redemptions from your bond
fund account.

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

EXCHANGING SHARES

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

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

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

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

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

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

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

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

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

(small solid bullet) Spartan California Municipal Money Market and
Spartan California Municipal Income may temporarily or permanently
terminate the exchange privilege of any investor who makes more than
four exchanges out of the fund per calendar year. Accounts under
common ownership or control will be counted together for purposes of
the four exchange limit.

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

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

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

ACCOUNT FEATURES AND POLICIES

FEATURES

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

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

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

MINIMUM FREQUENCY PROCEDURES
$100 for CA Municipal Money Monthly or quarterly (small solid bullet) To set
Market. $500 for Spartan CA up for a new account,
Municipal Money Market and complete the appropriate
Spartan CA Municipal Income. section on the fund
application.

(small solid bullet) To set
up for existing accounts,
call 1-800-544-6666 or visit
Fidelity's web site for an
application.

(small solid bullet) To make
changes, call 1-800-544-6666
at least three business days
prior to your next scheduled
investment date.

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

MINIMUM FREQUENCY PROCEDURES
$100 for CA Municipal Money Every pay period (small solid bullet) To set
Market. $500 for Spartan CA up for a new account, check
Municipal Money Market and the appropriate box on the
Spartan CA Municipal Income. fund application.

(small solid bullet) To set
up for an existing account,
call 1-800-544-6666 or visit
Fidelity's web site for an
authorization form.

(small solid bullet) To make
changes you will need a new
authorization form. Call
1-800-544-6666 or visit
Fidelity's web site to
obtain one.

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

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

MINIMUM FREQUENCY PROCEDURES
$100 for CA Municipal Money Monthly, bimonthly, (small solid bullet) To set
Market. $500 for Spartan CA quarterly, or annually up, call 1-800-544-6666
Municipal Money Market and after both accounts are
Spartan CA Municipal Income. opened.

(small solid bullet) To make
changes, call 1-800-544-6666
at least three business days
prior to your next scheduled
exchange date.

</TABLE>

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

FREQUENCY PROCEDURES
Monthly (small solid bullet) To set
up, call 1-800-544-6666.

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

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

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

(small solid bullet) You must sign up for the wire feature before
using it. Complete the appropriate section on the application when
opening your account, or call 1-800-544- 6666 to add the feature
after your account is opened. Call 1-800-544- 6666 before your
first use to verify that this feature is set up on your account.

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

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

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

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

(small solid bullet) You must sign up for the Money Line feature
before using it. Complete the appropriate section on the application
and then call 1-800-544 -6666 or visit Fidelity's web site
before your first use to verify that this feature is set up on your
account.

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

(small solid bullet) Minimum purchase: $100 for California
Municipal Money Market and $500 for Spartan California Municipal Money
Market and Spartan California Municipal Income.

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

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

CALL 1-800-544- 0240 OR VISIT FIDELITY'S WEB SITE FOR MORE
INFORMATION.

(small solid bullet) For account balances and holdings;

(small solid bullet) To review recent account history;

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

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

FIDELITY ONLINE TRADING
TO ACCESS AND MANAGE YOUR ACCOUNT OVER THE INTERNET AT FIDELITY'S WEB
SITE.

(small solid bullet) For account balances and holdings;

(small solid bullet) To review recent account history;

(small solid bullet) To obtain quotes;

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

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

F AST
TO ACCES S AND MANAGE YOUR ACCOUNT AUTOMATICALLY BY PHONE
USING TOUCH TONE OR SPEECH RECO GNITION .

CALL 1-800-544-5555.

(small solid bullet) For account balances and holdings;

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

(small solid bullet) To obtain quotes;

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

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

CHECKWRITING
TO REDEEM SHARES FROM YOUR ACCOUNT.

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

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

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

(small solid bullet) Minimum check amount: $500 for California
Municipal Money Market and $1,000 for Spartan California Municipal
Money Market and Spartan California Municipal Income.

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

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

POLICIES

The following policies apply to you as a shareholder.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Fidelity may charge a FEE FOR CERTAIN SERVICES, such as providing
historical account documents.

DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS

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

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

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

EARNING DIVIDENDS

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

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

DISTRIBUTION OPTIONS

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

1. REINVESTMENT OPTION. Your dividends and capital 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. (bond fund only) Your capital gain
distributions will be automatically reinvested in additional shares of
the fund. Your dividends will be paid in cash.

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

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

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

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

TAX CONSEQUENCES

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

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

A portion of the dividends you receive may be subject to federal,
state, or local income tax or may be subject to the federal
alternative minimum tax. You may also receive taxable distributions
attributable to a fund's sale of municipal bonds.

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

For California personal income tax purposes, distributions derived
from interest on municipal securities of California issuers and from
interest on qualifying securities issued by U.S. territories and
possessions are generally exempt from tax. Distributions that are
federally taxable as ordinary income or capital gains are generally
subject to California personal income tax.

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

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

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

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

FUND SERVICES

FUND MANAGEMENT

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

FMR is each fund's manager.

A s of March 31, 2000, FMR had approxima tely $639.1 billion in
discretionary assets under management.

As the manager, FMR is responsible for choosing each fund's
investments and handling it s business affairs.

Fidelity Investments Money Management, Inc. (FIMM), in Merrimack, New
Hampshire, serves as sub-adviser for each fund. FIMM is primarily
responsible for choosing investments for each fund.

FIMM is an affiliate of FMR. As of March 31 , 2000, FIMM had
approximately $ 206.8 billion in discretionary assets under
management.

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

From time to time a manager, analyst, or other Fidelity employee
may express views regarding a particular company, security, industry,
or market sector. The views expressed by any such person are the views
of only that individual as of the time expressed and do not
necessarily represent the views of Fidelity or any other person in the
Fidelity organization. Any such views are subject to change at any
time based upon market or other conditions and Fidelity disclaims any
responsibility to update such views. These views may not be relied on
as investment advice and, because investment decisions for a Fidelity
fund are based on numerous factors, may not be relied on as an
indication of trading intent on behalf of any Fidelity fund.

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

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

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

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

For February 2000, the group fee rate was 0.1260 % for
California Municipal Money Market and Spartan California Municipal
Income. The individual fund fee rate is 0.25% for California Municipal
Money Market and Spartan California Municipal Income.

The total management fee for the fiscal year ended February 29,
2000 , was 0.38% of the fund's average net assets for
California Municipal Money Market and Spartan California Municipal
Income.

FMR pays FIMM for providing sub-advisory services.

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

FUND DISTRIBUTION

FDC distributes each fund's shares.

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

If payments made by FMR to FDC or to intermediaries under a
Distribution and Service Plan were considered to be paid out of a
fund's assets on an ongoing basis, they might increase the cost of
your investment and might cost you more than paying other types of
sales charges.

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

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

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

APPENDIX

FINANCIAL HIGHLIGHTS

The financial highlights tables are intended to help you understand
each fund's financial history for the past 5 years. Certain
information reflects financial results for a single fund share. The
total returns in the table represent the rate that an investor would
have earned (or lost) on an investment in the fund (assuming
reinvestment of all dividends and distributions).

This information has been audited by PricewaterhouseCoopers
LLP , independent accountants, whose report, along with each fund's
financial highlights and financial statements, are included in each
fund's annual r epo rt. A free copy of the annual report is
available upon request.

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

Years ended February 28, 2000 C 1999 1998 1997 1996 C

SELECTED PER-SHARE DATA

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

Income from Investment
Operations

Net interest income .027 .027 .030 .029 .032

Less Distributions

From net interest income (.027) (.027) (.030) (.029) (.032)

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

TOTAL RETURN A 2.69% 2.71% 3.07% 2.90% 3.21%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (in $ 1,847 $ 1,354 $ 976 $ 820 $ 733
millions)

Ratio of expenses to average .56% .59% .62% .62% .64%
net assets

Ratio of expenses to average .56% .59% .61% B .61% B .64%
net assets after expense
reductions

Ratio of net interest income 2.67% 2.66% 3.02% 2.86% 3.17%
to average net assets

</TABLE>

A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES.
C FOR THE YEAR ENDED FEBRUARY 29

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

Years ended February 28, 2000 E 1999 1998 1997 1996 E

SELECTED PER-SHARE DATA

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

Income from Investment
Operations

Net interest income .028 .028 .032 .031 .035

Less Distributions

From net interest income (.028) (.028) (.032) (.031) (.035)

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

TOTAL RETURN A, B 2.79% 2.84% 3.26% 3.18% 3.60%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (in $ 1,140 $ 1,229 $ 1,353 $ 1,344 $ 1,307
millions)

Ratio of expenses to average .50% .50% .45% C .35% C .31% C
net assets

Ratio of expenses to average .49% D .49% D .45% .34% D .31%
net assets after expense
reductions

Ratio of net interest income 2.75% 2.81% 3.21% 3.14% 3.55%
to average net assets

</TABLE>

A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES.
E FOR THE YEAR ENDED FEBRUARY 29

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

Years ended February 28, 2000 E 1999 1998 1997 1996 E

SELECTED PER-SHARE DATA

Net asset value, beginning of $ 12.410 $ 12.360 $ 11.810 $ 11.720 $ 11.120
period

Income from Investment
Operations

Net interest income .557 D .569 .589 .599 .625

Net realized and unrealized (.838) .154 .550 .096 .597
gain (loss)

Total from investment (.281) .723 1.139 .695 1.222
operations

Less Distributions

From net interest income (.555) (.569) (.589) (.602) (.622)

From net realized gain (.015) (.104) - (.003) -

In excess of realized gain (.039) - - - -

Total distributions (.609) (.673) (.589) (.605) (.622)

Net asset value, end of period $ 11.520 $ 12.410 $ 12.360 $ 11.810 $ 11.720

TOTAL RETURN A (2.28)% 6.00% 9.89% 6.16% 11.25%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (in $ 1,212 $ 1,359 $ 1,238 $ 486 $ 498
millions)

Ratio of expenses to average .49% .52% .54% B .57% .58%
net assets

Ratio of expenses to average .49% .52% .53% C .57% .58%
net assets after expense
reductions

Ratio of net interest income 4.69% 4.59% 4.85% 5.19% 5.44%
to average net assets

Portfolio turnover rate 35% 34% 37% 17% 37%

</TABLE>

A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES.
D NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE YEAR ENDED FEBRUARY 29

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

For a free copy of any of these documents or to request other
information or ask questions about a fund, call Fidelity at
1-800-544-8544. In addition, you may visit Fidelity's web site at
www.fidelity.com for a free copy of a prospectus or an annual or
semi-annual rep ort or to request other information.

The SAI, the funds' annual and semi-annual reports and other
related materials are available from the Electronic Data Gathering,
Analysis, and Retrieval (EDGAR) Database on the SEC's web site
(http://www.sec.gov). You can obtain copies of this information, after
paying a duplicating fee, by sending a request by e-mail to
[email protected] or by writing the Public Reference Section of the
SEC, Washington, D.C. 20549-0102. You can also review and copy
information about the funds, including the funds' SAI, at the SEC's
Public Reference Room in Washington, D.C. Call 1-202-942-8090 for
information on the operation of the SEC's Public Reference Room.

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

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

FAS T and Portfolio Advisory Services are service marks of FMR
Corp.

1.701535.102 CMS-pro-0400

FIDE LITY (registered trademark) CALIFORNIA MUNICIPAL
MONEY MARKET FUND,
SPARTAN(registered trademark) CALIFORNIA MUNICIPAL MONEY MARKET FUND
FUNDS OF FIDELITY CALIFORNIA MUNICIPAL TRUST II
AND
SPARTAN CALIFORNIA MUNICIPAL INCOME FUND
A FUND OF FIDELITY CALIFORNIA MUNICIPAL TRUST

STATEMENT OF ADDITIONAL INFORMATION
APRIL 24, 2000

This statement of additional information (SAI) is not a prospectus.
Portions of each fund's annual report are incorporated herein.
The annual report is supplied with this SAI.

To obtain a free additional copy of the prospectus, dated April 24,
2000 , or an annual report, please call Fidelity at
1-800-544-8544 or visit Fidelity's web site at www.fidelity.com.

TABLE OF CONTENTS PAGE

Investment Policies and 27
Limitations

Special Considerations 33
Regarding California

Special Considerations 36
Regarding Puerto Rico

Portfolio Transactions 39

Valuation 40

Performance 40

Additional Purchase, Exchange 53
and Redemption Information

Distributions and Taxes 53

Trustees and Officers 53

Control of Investment Advisers 58

Management Contracts 58

Distribution Services 63

Transfer and Service Agent 64
Agreements

Description of the Trusts 64

Financial Statements 65

Appendix 65

CMS -ptb -0400
1.472453. 102

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

INVESTMENT POLICIES AND LIMITATIONS

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

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

INVESTMENT LIMITATIONS OF FIDELITY CALIFORNIA MUNICIPAL MONEY MARKET
FUND

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

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

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

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

(4) purchase any securities on margin;

(5) borrow 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 business
days (not including Sundays and holidays) to the extent necessary to
comply with the 33 1/3% limitation;

(6) 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;

(7) 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;

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

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

(10) 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

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

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

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

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

(ii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (5)).

(iii) 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.

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

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

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

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

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

For the purposes of normally investing at least 65% of the fund's
total assets in municipal securities, whose interest is exempt from
California personal income tax, FMR interprets "total assets" to
exclude collateral received for securities lending transactions.

INVESTMENT LIMITATIONS OF SPARTAN CALIFORNIA MUNICIPAL MONEY MARKET
FUND

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

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

(3) 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;

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

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

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

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

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

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

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

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

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

(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)).

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

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

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

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

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

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

For the purposes of normally investing at least 65% of the fund's
total assets in municipal securities whose interest is exempt from
California personal income tax, FMR interprets "total assets" to
exclude collateral received for securities lending transactions.

INVESTMENT LIMITATIONS OF SPARTAN CALIFORNIA MUNICIPAL INCOME FUND

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

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

For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page 44.

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

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

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

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

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

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

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

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

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

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

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

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

FUTURES CONTRACTS. In purchasing a futures contract, the buyer agrees
to purchase a specified underlying instrument at a specified future
date. In selling a futures contract, the seller agrees to sell a
specified underlying instrument at a specified future date. The price
at which the purchase and sale will take place is fixed when the buyer
and seller enter into the contract. Some currently available futures
contracts 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.

LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The fund (other than
a money market fund) h as filed a notice of eligibility for
exclusion from the definition of th e term "commodity pool operator"
with the Commodity Futures Trading Commission (CFTC) and the National
Futures Association, which regulate trading in the futures markets.
The fund intends to comply with Rule 4.5 under the Commodity Exchange
Act, whic h limits the extent to which the fund can commit assets
to initial margin deposits and option premiums.

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

The above limitations on the fund's (other than a money market
fund's) investments in futures contracts and options, and the
fund ' s policies regarding futures contracts and options
discussed elsewhere in this SAI may be changed as regulatory agencies
permit.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

MONEY MARKET INSURANCE. Each money market fund participates in a
mutual insurance company solely with other funds advised by FMR or its
affiliates. This company provides insurance coverage for losses on
certain money market instruments held by a participating fund
(eligible instruments), including losses from nonpayment of principal
or interest or a bankruptcy or insolvency of the issuer or credit
support provider, if any. The insurance does not cover losses
resulting from changes in interest rates or other market developments.
Each money market fund is charged an annual premium for the insurance
coverage and may be subject to a special assessment of up to
approximately two and one-half times the fund's annual gross premium
if covered losses exceed certain levels. A participating fund may
recover no more than $100 million annually, including all other claims
of insured funds, and may only recover if the amount of the loss
exceeds 0.30% of its eligible instruments. Each money market fund may
incur losses regardless of the insurance.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ELECTRIC UTILITIES. The electric utilities industry has been
experiencing, and will continue to experience, increased competitive
pressures. Federal legislation in the last two years will open
transmission access to any electricity supplier, although it is not
presently known to what extent competition will evolve. Other risks
include: (a) the availability and cost of fuel, (b) the availability
and cost of capital, (c) the effects of conservation on energy demand,
(d) the effects of rapidly changing environmental, safety, and
licensing requirements, and other fed eral, state, and local
regulations, (e) timely and sufficient rate increases, and (f)
opposition to nuclear power.

TRANSPORTATION. Transportation debt may be issued to finance the
construction of airports, toll roads, highways, or other transit
facilities. Airport bonds are dependent on the general stability of
the airline industry and on the stability of a specific carrier who
uses the airport as a hub. Air traffic generally follows broader
economic trends and is also affected by the price and availability of
fuel. Toll road bonds are also affected by the cost and availability
of fuel as well as toll levels, the presence of competing roads and
the general economic health of an area. Fuel costs and availability
also affect other transportation-related securities, as do the
presence of alternate forms of transportation, such as public
transportation.

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

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

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

RESTRICTED SECURITIES are subject to legal restrictions on their sale.
Difficulty in selling securities may result in a loss or be costly to
a fund. 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, the holder of a registered security
may be obligated to pay all or part of the registration expense and a
considerable period may elapse between the time it decides to seek
registration and the time it may be permitted to sell a security under
an effective registration statement. If, during such a period, adverse
market conditions were to develop, the holder might obtain a less
favorable price than prevailed when it decided to seek registration of
the security.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SPECIAL CONSIDERATIONS REGARDING CALIFORNIA

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

GENERAL

During the early 1990's, California experienced significant
financial difficulties, which reduced its credit standing, but the
State's finances have improved significantly since 1994, with ratings
increases since 1996. The ratings of certain related debt of other
issuers for which California has an outstanding lease purchase,
guarantee or other contractual obligation (such as for state-insured
hospital bonds) are generally linked directly to California's rating.
Should the financial condition of California deteriorate again, its
credit ratings could be reduced, and the market value and
marketability of all outstanding notes and bonds issued by California,
its public authorities or local governments could be adversely
affected.

ECONOMIC FACTORS

California's economy is the largest among the 50 states and one of
the largest in the world. The State's population of over 34 million
represents about 12-1/2% of the total United States population and
grew by 26% in the 1980s, more than double the national rate.
Population growth slowed to less than 1% annually in 1994 and 1995,
but rose to almost 2% in the final years of the 1990's. During the
early 1990's, net population growth in the State was due to births and
foreign immigration, but in recent years, in-migration from the other
states has increased and once more represents net positive growth.

Total personal income in the State, at an estimated $964 billion in
1999, accounts for almost 13% of all personal income in the nation.
Total employment is over 15 million, the majority of which is in the
service, trade and manufacturing sectors.

From mid-1990 to late 1993, the State suffered a recession with the
worst economic, fiscal and budget conditions since the 1930s.
Construction, manufacturing (especially aerospace), and financial
services, among others, were all severely affected, particularly in
Southern California. Recovery did not begin in California until 1994,
later than the rest of the nation, but since that time California's
economy has outpaced the national average. By the end of 1999,
unemployment in the State was at its lowest level in three decades.
Economic indicators show a steady and strong recovery underway in
California since the start of 1994 particularly in high technology
manufacturing and services, including computer software, electronic
manufacturing and motion picture/television production, and other
services, entertainment and tourism, and both residential and
commercial construction. International economic problems starting in
1997 had some moderating impact on California's economy, but negative
impacts, such as a sharp drop in exports to Asia which hurt the
manufacturing and agricultural sectors, were offset by increased
exports to Latin American and other nations, and a greater strength in
services, computer software and construction. With economic conditions
in many Asian countries recovering in 1999, that year had the
strongest economic growth in the State for the entire decade. Current
forecasts predict continued strong growth of the State's economy in
2000, with slower growth predicted in 2001 and beyond. Any delay or
reversal of the recovery may create new shortfalls in State
revenues.

CONSTITUTIONAL LIMITATIONS ON TAXES, OTHER CHARGES AND
APPROPRIATIONS

LIMITATION ON PROPERTY TAXES. Certain California municipal
obligations may be obligations of issuers which 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, Article XIIIA limits to 1% of full cash value of the rate of
AD VALOREM property taxes on real property and generally restricts the
reassessment of property to 2% per year, except under 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 have
been filed challenging the acquisition-based assessment system of
Proposition 13, but it was upheld by the U.S. Supreme Court in
1992.

Article XIIIA prohibits local governments from raising revenues
through AD VALOREM taxes above the 1% limit; it also requires voters
of any governmental unit to give two-thirds approval to levy any
"special tax." Court decisions, however, allowed a non-voter approved
levy of "general taxes" which were not dedicated to a specific
use.

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

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

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

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

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

APPROPRIATIONS LIMITS. The State and its local governments
are subject to an annual "appropriations limit" imposed by Article
XIIIB of the California Constitution, enacted by the voters in 1979
and significantly amended by Propositions 98 and 111 in 1988 and 1990,
respectively. Article XIIIB prohibits the State or any covered local
government from spending "appropriations subject to limitation" in
excess of the appropriations limit imposed. "Appropriations subject to
limitation" are authorizations to spend "proceeds of taxes," which
consist of tax revenues and certain other funds, including proceeds
from regulatory licenses, user charges or other fees, to the extent
that such proceeds exceed the cost of providing the product or
service, but "proceeds of taxes" exclude most State subventions to
local governments. 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, (4) appropriations by the State of post-1989 increases in
gasoline taxes and vehicle weight fees, and (5) appropriations made in
certain cases of emergency.

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 in 1990 to follow more closely
growth in the State's economy.

"Excess" revenues are measured over a two year cycle. Local
governments must return any excess to taxpayers by rate reductions.
The State must refund 50% of any excess, with the other 50% paid to
schools and community colleges. With more liberal annual adjustment
factors since 1988, and depressed revenues since 1990 because of the
recession, few governments are currently operating near their spending
limits, but this condition may change over time. Local governments may
by voter approval exceed their spending limits for up to four years.
For at least the last ten years, appropriations subject to limitation
have been under the State's limit. State appropriations are estimated
to be $3.8 billion under the limit for fiscal year 1999-2000.

Because of the complex nature of Articles XIIIA, XIIIB, XIIIC and
XIIID of the California Constitution, the ambiguities and possible
inconsistencies in their terms, and the impossibility of predicting
future appropriations or changes in population and cost of living, and
the probability of continuing legal challenges, it is not currently
possible to determine fully the impact of these Articles on California
municipal obligations or on the ability of the State or local
governments to pay debt service on such California municipal
obligations. It is not possible, at the present time, to predict the
outcome of any pending litigation with respect to the ultimate scope,
impact or constitutionality of these Articles or the impact of any
such determinations upon State agencies or local governments, or upon
their ability to pay debt service on their obligations. Further
initiatives or legislative changes in laws or the California
Constitution may also affect the ability of the State or local issuers
to repay their obligations.

OBLIGATIONS OF THE STATE OF CALIFORNIA

Under the California Constitution, debt service on outstanding
general obligation bonds is the second charge to the General Fund
after support of the public school system and public institutions of
higher education. As of January 1, 2000, the State had outstanding
approximately $20.5 billion of long-term general obligation bonds,
plus $681 million of general obligation commercial paper which will be
refunded by long-term bonds in the future, and $6.7 billion of
lease-purchase debt supported by the State General Fund. The State
also had about $13.7 billion of authorized and unissued long-term
general obligation bonds and lease-purchase debt. In FY 1998-99, debt
service on general obligation bonds and lease purchase debt was
approximately 4.4% of General Fund revenues.

RECENT FINANCIAL RESULTS

The principal sources of General Fund revenues in 1998-1999 were
the California personal income tax (53 percent of total revenues), the
sales tax (32 percent), bank and corporation taxes (10 percent), and
the gross premium tax on insurance (2 percent). An estimated 20% of
personal income tax receipts (10% of total General Fund) is derived
from capital gains realizations and stock option income. While these
sources have been extraordinarily strong in the past few years, they
are particularly volatile; any sustained drop in stock market levels
could have a significant impact on these revenues.

The State maintains a Special Fund for Economic Uncertainties (the
"SFEU"), derived from General Fund revenues, as a reserve to meet cash
needs of the General Fund, but which is required to be replenished as
soon as sufficient revenues are available. Year-end balances in the
SFEU are included for financial reporting purposes in the General Fund
balance. Because of the recession and an accumulated budget deficit,
no reserve was budgeted in the SFEU from 1992-93 to 1995-96.

Throughout the 1980's, State spending increased rapidly as the
State population and economy also grew rapidly, including increased
spending for 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 two-thirds vote of the Legislature and the Governor) guarantees
local school districts and community college districts a minimum share
of State General Fund revenues (currently about 35 percent).

RECENT BUDGETS. As a result of the severe economic recession
from 1990-94 and other factors, during this period the State
experienced substantial revenue shortfalls, and greater than
anticipated social service costs. The State accumulated and sustained
a budget deficit in the budget reserve, the SFEU, approaching $2.8
billion at its peak at June 30, 1993. The Legislature and Governor
responded to these deficits by enacting a series of fiscal steps
between FY1991-92 and FY1994-95, including significant cuts in health
and welfare and other program expenditures, tax increases, transfers
of program responsibilities and some funding sources from the State to
local governments, and transfer of about $3.6 billion in annual local
property tax revenues primarily from cities and counties to local
school districts, thereby reducing State funding for schools. The
budget deficits also led to cash flow shortfalls which led the State
to use external cash flow borrowing over the end of the fiscal year
for several years to fund the deficit.

With the economic recovery which began in 1994, the State's
financial condition improved markedly in the years from FY1995-96
onward, with a combination of better than expected revenues, slowdown
in growth of social welfare programs, and continued spending restraint
based on the actions taken in earlier years. The State's cash position
also improved, and no external deficit borrowing has occurred over the
fiscal year since FY 1994-95.

The economy grew strongly during these fiscal years, and as a
result, the General Fund took in substantially greater tax revenues
(around $2.2 billion in 1995-96, $1.6 billion in 1996-97, $2.1 billion
in 1997-98, and $1.6 billion in 1998-99) than were initially planned
when the budgets were enacted. These additional funds were largely
directed to school spending as mandated by Proposition 98, and to make
up shortfalls from reduced federal health and welfare aid in 1995-96
and 1996-97. The accumulated budget deficit from the recession years
was finally eliminated. The Department of Finance estimates that the
State's budget reserve (the SFEU) totaled about $1.8 billion at June
30, 1998 and $3.1 billion at June 30, 1999.

The growth in General Fund revenues since the end of the recession
resulted in significant increases in State funding for local school
districts under Proposition 98. From the recession level of about
$4,300 per pupil, annual State funding has increased to over $6,000
per pupil in FY 1999-2000. A significant amount of the new moneys have
been directed to specific educational reforms, including reduction of
class sizes in many grade levels. The improved budget condition also
allowed annual increases in support for higher education in the State,
permitting increased enrollment and reduction of student fees.

Part of the 1997-98 Budget Act was completion of State welfare
reform legislation to implement the new federal law passed in 1996.
The new State program, called "CalWORKs," became effective January 1,
1998, and emphasizes programs to bring aid recipients into the
workforce. As required by federal law, new time limits are placed on
receipt of welfare aid. Generally, health and welfare costs have been
contained even during the recent period of economic recovery, with the
first real increases (after inflation) in welfare support levels
occurring in 1999-2000.

One of the most important elements of the 1998-99 Budget Act was
agreement on substantial tax cuts. The largest of these was a
phased-in cut in the Vehicle License Fee (an annual tax on the value
of cars registered in the State, the "VLF"). Starting on January 1,
1999, the VLF has been reduced by 25 percent. Under pre-existing law,
VLF funds are automatically transferred to cities and counties, so the
new legislation provided for the General Fund to make up the
reductions. If State General Fund revenues continue to grow above
certain targeted levels in future years, the cut could reach as much
as 67.5 percent by the year 2003. The initial 25 percent VLF cut will
be offset by about $500 million in General Fund money in FY 1998-99,
and $1 billion annually for future years. Other tax cuts in FY 1998-99
included an increase in the dependent credit exemption for personal
income tax filers, restoration of a renter's tax credit for taxpayers,
and a variety of business tax relief measures. The total cost of these
tax cuts was estimated at $1.4 billion for FY 1998-99.

FY 1999 - 2000 BUDGET. The 1999-00 Budget Act was
signed on June 29, 1999, only the second time in the decade the budget
was in place at the start of the fiscal year. After the Governor used
his line-item veto power to reduce expenditures by about $581 million,
the final spending plan called for about $63.7 billion of General Fund
expenditures, $16.1 billion of Special Fund expenditures, and $1.5
billion in bond funded expenditures. The Governor's final budget
actions left the SFEU with an estimated balance of $881 million at
June 30, 2000, but the Governor also reduced spending to set aside
$300 million for future appropriation for either employee pay raises
or potential litigation costs.

The final Budget Act generally provided increased funding for a
wide range of programs. Education spending under Proposition 98
received the largest increase (over $2.3 billion above 1998-99), with
other significant increases for higher education, health and welfare,
natural resources and capital outlay. The budget provides several
hundred million dollars in direct new aid to cities and counties.

The final spending plan includes several targeted tax cuts for
businesses, totaling under $100 million in 1999-00. The plan also
includes a one-time, one-year additional cut of 10 percent in the
Vehicle License Fee for calendar year 2000. This cut will cost the
General Fund about $500 million in each of 1999-00 and 2000-01 to make
up lost funds for local governments. Under the 1998 law, the VLF cut
to 35 percent would become permanent in the year 2001 if General Fund
revenues reach a certain specified level in 2000-01. Current estimates
indicate this level will be reached.

In January, 2000, the Governor released his proposed budget for
fiscal year 2000-01 (the "2000 Governor's Budget"), which also
included updated revenue and expenditure projections for 1999-2000.
Reflecting the continued strong economy in the State, the
Administration revised its revenue estimates upward by $2.1 billion to
$65.2 billion; expenditures were also projected to increase by a like
amount. The Administration's projected balance in the SFEU at June 30,
2000 increased from about $880 million to over $2.4 billion. In
February, 2000 the State Legislative Analyst's Office ("LAO") released
a report with more recent revenue estimates, based in part on actual
revenues for December, 1999 and January, 2000, which were not
available for the 2000 Governor's Budget. In the fourth quarter of
1999, personal income tax revenues were 17% higher than the
year-earlier period. The LAO Report indicated revenues in 1999-2000
could be as much as $2.1 billion higher than the 2000 Governor's
Budget estimate.

Although, as noted, the Administration projected a budget reserve
in the SFEU of about $2.4 billion on June 30, 1999, the General Fund
fund balance on that date also reflects $1.0 billion of "loans" which
the General Fund made to local schools in the recession years,
representing cash outlays above the mandatory minimum funding level.
Settlement of litigation over these transactions in July 1996 calls
for repayment of these loans over the period ending in 2001-02, about
equally split between outlays from the General Fund and from schools'
entitlements. The 1999-2000 Budget Act contained a $350 million
appropriation from the General Fund toward this settlement.

PROPOSED FY 2000 - 01 BUDGET. In the 2000 Governor's
Budget, the Administration proposed General Fund expenditures of $68.8
billion, based on expected revenues of $68.2 billion (including $390
million from the tobacco litigation settlement and sale of assets).
The proposal included a balance in the SFEU at June 30, 2001 of $1.2
billion, plus set-aside of an additional $600 million for legal
contingencies and legislative initiatives. The Governor proposed
substantial additional funding for K-12 schools, higher education,
capital outlay and other programs. The February, 2000 LAO Report
indicated General Fund revenues for 2000-01 could be as much as $2.1
billion higher than projected in the 2000 Governor's Budget (in
addition to the $2.1 billion additional revenue for 1999-2000),
assuming continued strong economic growth in the State and in the
stock market. Final decisions for the 2000-01 Budget will be made by
the Governor and Legislature by July, 2000.

Although the State's strong economy is producing record revenues to
the State government, the State's budget continues to be under stress
from mandated spending on education, a rising prison population, and
social needs of a growing population with many immigrants. These
factors which limit State spending growth also put pressure on local
governments. There can be no assurances that, if economic conditions
weaken, or other factors intercede, the State will not experience
budget gaps in the future.

BOND RATING. The ratings on California's long-term general
obligation bonds were reduced in the early 1990's from "AAA" levels
which had existed prior to the recession. After 1996, the three major
rating agencies raised their ratings of California's general
obligation bonds, which as of February, 2000 were assigned ratings of
"AA-" from Standard & Poor's, "Aa3" from Moody's and "AA" from
Fitch.

There can be no assurance that such ratings will be maintained in
the future. It should be noted that the creditworthiness of
obligations issued by local California issuers may be unrelated to
creditworthiness of obligations issued by the State of California, and
that there is no obligation on the part of the State to make payment
on such local obligations in the event of default.

LEGAL PROCEEDINGS

The State is involved in certain legal proceedings (described in
the State's recent financial statements) that, if decided against the
State, may require the State to make significant future expenditures
or may substantially impair revenues. Trial courts have recently
entered tentative decisions or injunctions which would overturn
several parts of the State's recent budget compromises. The matters
covered by these lawsuits include reductions in welfare payments and
the use of certain cigarette tax funds for health costs. All of these
cases are subject to further proceedings and appeals, and if
California eventually loses, the final remedies may not have to be
implemented in one year. The State recently lost cases involving a
smog impact fee on out-of-state automobiles (total liability of about
$560 million) and certain corporate tax credits ($100 million). The
Administration has proposed payment of the smog impact fee claims from
current revenues.

OBLIGATIONS OF OTHER ISSUERS

OTHER ISSUERS OF CALIFORNIA MUNICIPAL OBLIGATIO NS.
There are a number of State agencies, instrumentalities and political
subdivisions of the State that issue municipal obligations, some of
which may be conduit revenue obligations payable from payments from
private borrowers. These entities are subject to various economic
risks and uncertainties, and the credit quality of the securities
issued by them may vary considerably from the credit quality of
obligations backed by the full faith and credit of the State.

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 was budgeted at approximately
75% of General Fund expenditures in recent years, including the effect
of implementing reductions in certain aid programs. To reduce State
General Fund support for school districts, the 1992-93 and 1993-94
Budget Acts caused local governments to transfer $3.9 billion of
property tax revenues to school districts, representing loss of the
post-Proposition 13 "bailout" aid. Local governments have in return
received greater revenues and greater flexibility to operate health
and welfare programs.

In 1997, a new program provided for the State to substantially take
over funding for local trial courts (saving cities and counties some
$400 million annually). For the last several years, the State has also
provided $100 million annually to support local law enforcement costs.
In 1999-2000, the State provided $150 million in grants to cities and
counties, and an additional $50 million to cities for jail booking
costs. The Legislature has enacted a more comprehensive plan to
restore some funds to local governments, contained in a proposed
constitutional amendment which will be on the November, 2000 ballot
for voter approval.

To the extent the State should be constrained by its Article XIIIB
appropriations limit, or its obligation to conform to Proposition 98,
or other fiscal 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. Los Angeles County, the largest in the State,
was forced to make significant cuts in services and personnel,
particularly in the health care system, in order to balance its budget
in FY1995-96 and FY1996-97. Orange County, which emerged from Federal
Bankruptcy Court protection in June 1996, has significantly reduced
county services and personnel, and faces strict financial conditions
following large investment fund losses in 1994 which resulted in
bankruptcy.

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

ASSESSMENT BONDS. California municipal obligations which are
assessment 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. Based on a series of
court decisions, certain long-term lease obligations, though typically
payable from the general fund of the State or a municipality, are not
considered "indebtedness" requiring voter approval. Such leases,
however, 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 cases 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. Although litigation is
brought from time to time which challenges the constitutionality of
such lease arrangements, the California Supreme Court issued a ruling
in August 1998 which reconfirmed the legality of these financing
methods.

OTHER CONSIDERATIONS. The repayment of industrial
development securities secured by real property may be affected by
California laws limiting foreclosure rights of creditors. Securities
backed by health care and hospital revenues 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 (e.g., because of a major natural disaster such as an
earthquake), the tax increment revenue may be insufficient to make
principal and interest payments on these bonds. Both Moody's and S&P
suspended ratings on 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.

The effect of these various constitutional and statutory changes
upon the ability of California municipal securities issuers to pay
interest and principal on their obligations remains unclear.
Furthermore, other measures affecting the taxing or spending authority
of California or its political subdivisions may be approved or enacted
in the future. Legislation has been or may be introduced 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 possible, at present, to predict
the extent to which any such legislation will be enacted. Nor is it
possible, at present, to determine the impact of any such legislation
on California municipal obligations in which the Fund may invest,
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.

Substantially all of California is within an active geologic region
subject to major seismic activity. Northern California in 1989 and
Southern California in 1994 experienced major earthquakes causing
billions of dollars in damages. The federal government provided more
than $13 billion in aid for both earthquakes, and neither event has
had any long-term negative economic impact. Any California municipal
obligation in the Fund could be affected by an interruption of
revenues because of damaged facilities, or, consequently, income tax
deductions for casualty losses or property tax assessment reductions.
Compensatory financial assistance could be constrained by the
inability of (i) an issuer to have obtained earthquake insurance
coverage 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.

SPECIAL CONSIDERATIONS REGARDING PUERTO RICO

The fiscal year of the Government of Puerto Rico begins each July
1. The Governor is constitutionally required to submit to the
Legislature an annual balanced budget of capital improvements and
operating expenses of the central government for the ensuing fiscal
year. The annual budget is prepared by the Office of Management and
Budget ("OMB"), working with the Planning Board, the Department of the
Treasury, and other government offices and agencies. Section 7 of
Article VI of the Constitution provides that "The appropriations made
for any fiscal year shall not exceed the total revenues, including
available surplus, estimated for said fiscal year unless the
imposition of taxes sufficient to cover said appropriations is
provided by law."

The annual budget, which is developed utilizing elements of program
budgeting and zero-base budgeting, includes an estimate of revenues
and other resources for the ensuing fiscal year under: (i) laws
existing at the time the budget is submitted; and (ii) legislative
measures proposed by the Governor and submitted with the proposed
budget, as well as the Governor's recommendations as to appropriations
that in his judgment are necessary, convenient, and in conformity with
the four-year investment plan prepared by the Planning Board.

A Budgetary Fund was created by Act No. 147 of June 18, 1980, as
amended (the "Budgetary Fund Act"), to cover the appropriations
approved in any fiscal year in which the revenues available for such
fiscal year are insufficient, honor the public debt, and provide for
unforeseen circumstances in the provision of public services. The
Budgetary Fund Act was amended in 1994 to require that an annual
legislative appropriation equal to one third of one percent (.33%) of
the total budgeted appropriations for each fiscal year be deposited in
the Budgetary Fund. In 1997, the Budgetary Fund Act was further
amended to increase the annual legislative appropriation required to
be deposited in the Budgetary Fund to one percent (1%) of the total
revenues of the preceding fiscal year, beginning in fiscal year 2000.
In addition, other income (not classified as revenues) that is not
assigned by law to a specific purpose is also required to be deposited
in the Budgetary Fund. The maximum balance of the Budgetary Fund may
not exceed six percent (6%) of the total appropriations included in
the budget for the preceding fiscal year.

In Puerto Rico, the central government has many functions which in
the fifty states are the responsibility of local government, such as
providing public education and police and fire protection. The central
government also makes large annual grants to the University of Puerto
Rico and to the municipalities. Debt service on Sugar Corporation
notes paid by the Government of Puerto Rico is included in current
expenses for economic development, and debt service on Urban Renewal
and Housing Corporation bonds and notes and on Housing Bank and
Finance Agency mortgage subsidy bonds paid by the Government of Puerto
Rico is included in current expenses for housing.

Approximately 25.2% of the General Fund is committed, including
debt service on direct debt of the Commonwealth and on the debt of the
Sugar Corporation, municipal subsidies, grants to the University of
Puerto Rico, contributions to Aqueduct and Sewer Authority, and rental
payments to Public Building Authority, among other.

In the fiscal 1999 budget revenues and other resources of all
budgetary funds total $10,308,078,000 excluding balances from the
previous fiscal year and general obligation bonds authorized. The
estimated net increase in General Fund revenues in fiscal 1999 are
accounted for by increases in personal income taxes (up $258,354,000),
retained non-resident income tax (up $176,921,000), general excise tax
of 5% (up $60,259,000), motor vehicles and accessories (up
$61,569,000), federal excise taxes on off-shore shipments (up
$33,033,000), special excise tax on certain petroleum products (up
$20,282,000), corporation income taxes (up $17,347,000), registration
and document certification fees (up $13,433,000), alcoholic beverages
(up $5,347,000), licenses (up $4,681,000), electronic lottery (up
$4,965,000) and decreases in property taxes (down $3,460,000), customs
(down $11,864,000) and tollgate taxes (down $56,420,000).

Current expenses and capital improvements of all budgetary funds
total $10,687,869,000, an increase of $951,255,000 from fiscal 1998.
The major changes in General Fund expenditures by program in fiscal
1999 are: public safety and protection (up $187,444,000), education
(up $165,661,000), health (up $160,256,000), general government (up
$77,714,000), other debts (up $69,721,000), welfare (up $24, 182,000),
economic development (up $15,865,000), special pension contributions
(up $6,115,000), and decreases in transportation and communications
(down $83,000), housing (down $620,000), debt service (down
$13,849,000), and contributions to municipalities (down
$37,969,000).

The general obligation bond authorization for the fiscal 1999
budget was $475,000,000.

In the fiscal 2000 budget proposal revenues and other resources of
all budgetary funds total $10,426,475,000 excluding balances from the
previous fiscal year and general obligation bonds authorized. The
estimated net increase in General Fund revenues in fiscal 2000 are
accounted for by increases in personal income taxes (up $199,000,000),
corporation income taxes (up $102,000,000), general excise tax of 5%
(up $65,000,000), income tax withheld from non-residents (up
$44,000,000), motor vehicles and accessories (up $22,000,000),
alcoholic beverages (up $13,000,000), registration and document
certification fees (up $10,000,000), and decreases in property taxes
(down $2,000,000), special excise tax on certain petroleum products
(down $3,000,000), cigarettes (down $6,000,000), federal excise taxes
on off-shore shipments (down $24,000,000), and tollgate taxes (down
$14,000,000).

Current expenses and capital improvements of all budgetary funds
total $11,012,166,000, an increase of $324,297,000 from fiscal 1999.
The major changes in General Fund expenditures by program in fiscal
2000 are: general government (up $157,265,000), health (up
$83,310,000), debt service (up $94,550,000), contributions to
municipalities (up $66,296,000), education (up $75,035,000),
transportation and communications (up $13,636,000), special pension
contributions (up $3,792,000), housing (down $4,645,000), economic
development (down $30,201,000), public safety and protection (down
$26,999,000), and other debts service (down $106,488,000).

The general obligation bond authorization for the fiscal 2000
budget was $475,000,000.

The Government of Puerto Rico is required to contribute directly to
three retirement systems for public employees. The Government of
Puerto Rico is responsible for approximately 66% of total employer
contributions to Employees Retirement System and 100% and 99% of total
employer contributions to the Judiciary and Teachers Retirement
Systems, respectively. As of July 1, 1998 the total pension benefit
obligation for the Employees Retirement System and the Judiciary
Retirement System was $7,638,000,000 and $95,500,000, respectively,
and the unfunded pension benefit obligation for the same period was
$5,963,000,000 and $28,400,000, respectively. As of June 30, 1998, the
accrued pension liability of the Teachers Retirement System was
$3,154,678,299, the value of assets amounted to $2,135,436,000, and
the resulting unfunded accrued liability was $1,019,242,299, an
increase of $48,437,260 from the prior valuation made as of June 30,
1997.

On February 1, 1990, the Legislature of Puerto Rico enacted Act No.
1 amending the organic act of the Employees Retirement System to
reduce the future pension liabilities of the Employees Retirement
System. Also, Act No. 305 of September 24, 1999, further amends the
organic act of the Employees Retirement System to change it,
prospectively, from a defined benefit system to a defined contribution
system. Based on actuarial studies conducted by the actuary of the
Employees Retirement System, it is expected that the implementation of
the defined contribution system will allow the Government of Puerto
Rico to reduce the current actuarial deficit of the Employees
Retirement System. Also, the law approving the sale of a controlling
interest in PRTC to a consortium led by GTE International
Telecommunications Incorporated provides that any future proceeds
received by the Government from the sale of its remaining stock
ownership in PRTC will be transferred to the Employees Retirement
System to reduce its accumulated unfunded pension benefit obligation.
It is recognized that it will be necessary to further strengthen the
finances of the Teachers Retirement System in order to assure that
combined contributions and investment income continue to exceed
benefit payments, avoiding the possible future drawdown of assets.

The economy of Puerto Rico is fully integrated with that of the
United States. In fiscal 1998, trade with the United States accounted
for approximately 90% of Puerto Rico's exports and approximately 61%
of its imports. In this regard, in fiscal 1998 Puerto Rico experienced
a $8.5 billion positive adjusted merchandise trade balance.

Since fiscal 1985, personal income, both aggregate and per capita,
has increased consistently each fiscal year. In fiscal 1998, aggregate
personal income was $33.7 billion ($30.8 billion in 1992 prices) and
personal per capita income was $8,817 ($8,063 in 1992 prices). Gross
product in fiscal 1995 was $28.4 billion ($25.9 billion in 1992
prices) and gross product in fiscal 1999 was $38.1 billion ($29.7
billion in 1992 prices). This represents an increase in gross product
of 34% from fiscal 1995 to 1999 (14.5% in 1992 prices).

Puerto Rico's economic expansion, which has lasted over ten years,
continued throughout the five year period from fiscal 1995 through
fiscal 1999. Almost every sector of the economy participated, and
record levels of employment were achieved. Factors behind the
continued expansion included Government-sponsored economic development
programs, periodic declines in the exchange value of the U.S. dollar,
increases in the level of federal transfers, low oil prices and the
relatively low cost of borrowing funds during the period.

Average employment increased from 1,051,000 in fiscal 1995, to
1,147,000 in fiscal 1999. Unemployment, although at relatively low
historical levels, remains above the U.S. average. Average
unemployment decreased from 13.8% in fiscal 1995, to 12.5% in fiscal
1999.

Manufacturing is the largest sector in the economy, accounting for
$23.0 billion or 42.8% of gross domestic product in fiscal 1998. The
manufacturing sector employed 141,068 workers as of March 1999.
Manufacturing in Puerto Rico is now more diversified than during
earlier phases of industrial development. In the last two decades,
industrial development has tended to be more capital intensive and
dependent on skilled labor. This gradual shift is best exemplified by
heavy investment in pharmaceuticals, scientific instruments,
computers, microprocessors, and electrical products over the last
decade. While total employment in the manufacturing sector decreased
by 12,205 from March 1997 to March 1999, other indicators suggest that
manufacturing production did not decrease. Average weekly hours worked
increased 5.2%, industrial energy consumption increased 0.7% and
exports increased 45.7% from fiscal 1997 to fiscal 1999. Most of the
decreases in employment have been concentrated in the labor intensive
industries, particularly apparel, textile and tuna manufacturing. The
services sector, which includes wholesale and retail trade and
finance, insurance, real estate, hotels and related services, and
other services, ranks second in its contribution to gross domestic
product and it is the sector that employs the greatest number of
people. In fiscal 1998, the service sector generated $19.6 billion in
gross domestic product or 36.5% of the total. Employment in this
sector grew from 478,079 in fiscal 1994 to 572,765 in fiscal 1998, a
cumulative increase of 19.8%. This increase was greater than the 12.5%
cumulative growth in employment over the same period. The Government
sector of the Commonwealth plays an important role in the economy of
the island. In fiscal year 1998, the Government accounted for $5.2
billion of Puerto Rico's gross domestic product, or 9.8% of the total,
and provided 21.5% of the total employment. The construction industry
has experienced real growth since fiscal 1987. In fiscal 1999,
investment in construction rose to an unprecedented $6.6 billion, an
increase of 23.9% as compared to $5.4 billion for fiscal 1998. Tourism
also contributes significantly to the island economy, accounting for
6.4% of the island's gross domestic product in fiscal 1998.

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

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

The New Economic Model also seeks to identify and promote areas in
which Puerto Rico can compete more effectively in the global markets.
Tourism has been identified as one such area because of its potential
for job creation and contribution to the gross product. In 1993, a new
Tourism Incentives Act and a Tourism Development Fund were implemented
in order to provide special tax incentives and financing for the
development of new hotel projects and the tourism industry. As a
result of these initiatives, new hotels h ave been constructed or
are under construction which have increased the number of hotel rooms
on the island from 8,415 in fiscal 19 92 to 11,095 at the end of
fiscal 1999 and to a projected 12,650 by the end of fiscal 2000.

The New Economic Model also seeks to reduce the size of the
Government's direct contribution to gross domestic product. As part of
this goal, the Government has transferred certain governmental
operations and sold a number of its assets to private parties.
Am ong these are: (i) the Government sold the assets of the Puerto
Rico Maritime Authority; (ii) the Aqueducts and Sewer Authority
exec uted a construction and operating agreement with a private
consortium for the design, construction, and operation of an
approximately 75 million gallon per day water pipeline to the San Juan
metropolitan area from the Dos Bocas reservoir in Utuado; (iii) the
Electric Power Authority executed power purchase contracts with
private power producers under which two cogeneration plants (with a
to t al capacity of approximately 874 megawatts), using fuels
other than oil, will be constructed; (iv) the Corrections
Administration entered into operating agreements with two private
companies for the operation of three new correctional facilities; (v)
the Government entered into a definitive agreement to sell certain
assets of a pineapple juice processing business and sold certain mango
growing operations; (vi) the Government is in the process of
transferring to local sugar cane growers certain sugar processing
facilities; (vii) the Government sold three hotel properties and is
currently negotiating the sale of a complex consisting of two hotels
and a conventio n center; and (viii) the Government sold a
controlling interest in the Puerto Rico Telephone Company, a
subsidiary of the Telephone Authority, to a consortium led by GTE
International Telecommunications Incorporated.

One of the goals of the Rosse llo administration is to change
Puerto Rico's public health care system from one in which the
Government provides free health services to low income individuals
through public health facilities owned and administered by the
Government to one in which all medical services are provided by the
private sector and the Government provides comprehensive health
insurance coverage for qualifying (generally low income) Puerto Rico
residents. Under this new system, the Government selects, through a
bidding system, one private health insurance company in each of
several designated regions of the island and pays such insurance
company the insurance premium for each eligible beneficiary within
such region. This new health insurance system is n ow covering 77
municipalities out of a total of 78 on the island. It is expected that
the last municipality will be added in July 2000. The total cost of
this program will depend on the number of municipalities included in
the program, the number of participants receiving coverage, and the
date coverage commences. As of August 1, 1999, over 1.7 million
persons were participating in the program at an estimated annual cost
to Puerto Rico for fiscal 2000 of approximately $994 million. In
conjunction with this program, the operation of certain public health
facilities has been transferred to private entities. The Government's
current privatization plan for health facilities provides for the
transfer of ownership of all health facilities to private entities.
The Government has sold forty-four health facilities to private
companies and is currently in the process of closing the sale of
fourteen additional health facilities to such companies.

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

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

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

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

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

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

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

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

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

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

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

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

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

As a result of the 1993 Amendments and the 1996 Amendments, the
Section 936 credit is only available to companies that were
ope rating in Puerto Rico on October 13, 1995, and had elected the
percentage of income limitation and is limited in amount to 40% of the
credit allowable prior to the 1993 Amendments, subject to a five-year
phase-in period from 1994 to 1998 during which period the percentage
of the allowable credit is reduced from 60% to 40%.

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

PROPOSAL TO EXTEND THE PHASEOUT OF SECTION 30A. During 1997, the
Government of Puerto Rico proposed to Congress the enactment of a new
permanent federal incentive program similar to that provided under
Section 30A. Such a program would provide U.S. companies a tax credit
based on qualifying wages paid and other wage-related expenses, such
as fringe benefits, as well as depreciation expenses for certain
tangible assets and research and development expenses. Under the
Governor's proposal, the credit granted to qualifying companies would
continue in effect until Puerto Rico shows, among other things,
substantial economic impro vements in terms of certain economic
parameters. The fiscal 1998, fiscal 1999 and fiscal 2000 budgets
submitted by President Clinton to Congress included a proposal to
modify Section 30A to (i) extend the availability of the Section 30A
Credit indefinitely; (ii) make it available to companies establishing
operations in Puerto Rico after October 13, 1995; and (iii) eliminate
the income cap. Thi s proposal was not included in the 1998 or 1999
budgets approved by Congress. While the Government of Puerto Rico
plans to continue lobbying for this proposal, it is not possible at
this time to predict whether the Section 30A Credit will be so
modified.

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

PORTFOLIO TRANSACTIONS

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

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

Futures transactions are executed and cleared through FCMs who
receive commissions for their services.

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

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

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

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

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

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

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

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

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

For the fiscal periods ended February 29, 2000 and February 28,
1999, the portfolio turnover rates were 35 % and 34% ,
respectively, for Spartan California Municipal Income.

The following table show s the brokerage commissions paid by the
funds. Significant changes in brokerage commissions paid by a fund
from year to year may result from changing asset levels throughout the
year. A fund may pay both commissions and spreads in connection
with the placement of portfolio transactions. For the fiscal years
ended February 29, 2000, February 28, 1999, and February 28, 1998,
Spartan California Municipal Money Market and Fidelity California
Municipal Money Market paid no brokerage commissions.

The following table shows the total amount of brokerage commissions
paid by Spartan California Municipal Income.

Fiscal Year Ended Total Amount Paid

Spartan California Municipal
Income

2000 February 29 $ 0

1999 February 28 13,518

1998 February 28 16,101

For the fiscal year ended February 29, 2000 the funds paid no
brokerage commissions to firms for provid ing research
services.

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

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

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

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

VALUATION

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

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

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

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

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

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

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

PERFORMANCE

A fund 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 share price of a fund
(other than a money market fund), t he yield of a bond fund, and
return fluctuate in response to market conditions and other factors,
and the value of a fund 's (other than a money market fund's)
shares when redeemed may be more or less than their original cost.

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

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

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

YIELD CALCULATIONS (BOND FUND). Yields for the fund are
computed by dividing the fund's interest and income for a given 30-day
or one-month period, net of expenses, by the average number of shares
entitled to receive distributions during the period, dividing this
figure by the fund's NAV at the end of the period, and annualizing the
result (assuming compounding of income) in order to arrive at an
annual percentage rate. Income is calculated for purposes of yield
quotations in accordance with standardized methods applicable to all
stock and bond funds. In general, interest income is reduced with
respect to bonds trading at a premium over their par value by
subtracting a portion of the premium from income on a daily basis, and
is increased with respect to bonds trading at a discount by adding a
portion of the discount to daily income. Capital gains and losses
generally are excluded from the calculations.

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

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

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

Tax-equivalent yields are calculated by dividing that portion of a
fund's yield that is tax-exempt by the result of one minus the
applicable specified federal or combined federal and/or state income
tax rate and adding the quotient to that portion, if any, of the
fund's yield that is not tax-exempt.

The following tables show the effect of a shareholder's tax bracket
on tax-equivalent yield under federal and state income tax laws for
2000. The first table shows applicable effective income tax rates at
various income brackets for 2000. The second table shows, for
tax-exempt securities with different yields, the yield on a taxable
security that is approximately equivalent to the tax-exempt security's
yield after taking into account the effect of various effective income
tax rates on the taxable security. Of course, no assurance can be
given that a fund will have any specific yield. While each fund
invests principally in securities whose interest is exempt from
federal and applicable state income tax, some portion of the
distributions paid by the fund may be taxable.

Use the first table to find your approximate effective income
tax rate taking into account federal and state income
taxes for 2000 .

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2000 TAX RATES***,(dagger)

Taxable Income* Federal Marginal Rate California State Marginal Rate

Single Return Joint Return Federal Marginal Rate California State Marginal Rate

$ 26,251 - $ 27,337 $ 43,851 - $ 54,674 28.00% 6.00%

27,338 - 34,548 54,675 - 69,096 28.00% 8.00%

34,549 - 63,550 69,097 - 105,950 28.00% 9.30%

63,551 - 132,600 105,951 - 161,450 31.00% 9.30%

132,601 - 288,350 161,451 - 288,350 36.00% 9.30%

288,351 - and up 288,351 - and up 39.60% 9.30%

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2000 TAX RATES***,(dagger)

Taxable Income* Combined Federal and State
Effective Rate**

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

$ 26,251 - $ 27,337 $ 43,851 - $ 54,674 32.32%

27,338 - 34,548 54,675 - 69,096 33.76%

34,549 - 63,550 69,097 - 105,950 34.70%

63,551 - 132,600 105,951 - 161,450 37.42%

132,601 - 288,350 161,451 - 288,350 41.95%

288,351 - and up 288,351 - and up 45.22%

</TABLE>

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

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

*** Does not take into account local income taxes, if any, payable
on fund distributions.

(dagger) The rates on this chart are the 2000 rates, but the
brackets have not been adjusted for inflation in 2000. California
brackets are subject to annual adjustments for inflation and are
available in September of the current tax year.

Having determined your effective income tax rate , use
the following table to determine the tax-equivalent yield for a given
tax-exempt security's yield.

If your combined federal and
state effective income tax
rate in 2000 is:

32.32% 33.76% 34.70% 37.42% 41.95% 45.22%

If a tax-exempt security's The tax-equivalent yield
yield is: would be:

2% 2.96% 3.02% 3.06% 3.20% 3.45% 3.65%

3% 4.43% 4.53% 4.59% 4.79% 5.17% 5.48%

4% 5.91% 6.04% 6.13% 6.39% 6.89% 7.30%

5% 7.39% 7.55% 7.66% 7.99% 8.61% 9.13%

6% 8.87% 9.06% 9.19% 9.59% 10.34% 10.95%

7% 10.34% 10.57% 10.72% 11.19% 12.06% 12.78%

</TABLE>

A fund may invest a portion of its assets in securities that
are subject to federal and/or state income taxes. When a fund
invests in these securities , its tax-equivalent yield
may be lower. In the table above, the tax-equivalent yields are
calculated assuming securities are 100% exempt from federal
and state income taxes .

RETURN CALCULATIONS. Returns quoted in advertising reflect all aspects
of a fund's return, including the effect of reinvesting dividends and
capital gain distributions, and any change in a fund's NAV over a
stated period. A cumulative return reflects actual performance over a
stated period of time. Average annual returns are calculated by
determining the growth or decline in value of a hypothetical
historical investment in a fund over a stated period, and then
calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had
been constant over the period. For example, a cumulative return of
100% over ten years would produce an average annual return of 7.18%,
which is the steady annual rate of return that would equal 100% growth
on a compounded basis in ten years. While average 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 returns
represent averaged figures as opposed to the actual year-to-year
performance of a fund.

In addition to average annual returns, the fund may quote unaveraged
or cumulative returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative 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. Returns may be broken
down into their components of income and capital (including capital
gains and changes in share price) to illustrate the relationship of
these factors and their contributions to return. Returns may be quoted
on a before-tax or after-tax basis. After-tax returns reflect the
return of a hypothetical account after payment of federal and/or state
taxes using assumed tax rates. After-tax returns may assume that taxes
are paid at the time of distribution or once a year or are paid in
cash or by selling shares, that shares are held through the entire
period, sold on the last day of the period, or sold at a future date,
and distributions are reinvested or paid in cash. Returns may or
may not include the effect of a fund's account closeout fee or
the effect of a fund's small account fee. Excluding a fund's
small account fee or account closeout fee from a return calculation
produces a higher return figure. Returns, yields and other performance
information may be quoted numerically or in a table, graph, or similar
illustration.

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

HISTORICAL BOND FUND RE SULTS. The following table shows the fund's
yield, tax-equivalent yield, and returns for the fiscal periods ended
February 29, 2000.

HISTORICAL MONEY MA RKET FUND RESULTS. The following table shows
each fund's 7-day yield, tax-equivalent yield, and returns for the
fiscal periods ende d February 29, 2000.

The tax-equivalent yields for each fund are based on a combined
effective federal and state income tax rate of 41.95 %.

As of February 29, 2000, an estimated 26.34% of California
Municipal Money Market's income was subject to state income taxes.
Note that California Municipal Money Market may invest in securities
whose income is subject to the federal alternative minimum tax.

As of February 29, 2000, an estimated 24.71% of Spartan California
Municipal Money Market's income was subject to state income taxes.
Note that Spartan California Municipal Money Market may invest in
securities whose income is subject to the federal alternative minimum
tax.

As of February 29, 2000, an estimated 0% of Spartan California
Municipal Income's income was subject to state income taxes. Note that
Spartan California Municipal Income may invest in securities whose
income is subject to the federal alternative minimum tax.

Average Annual Returns

Seven-Day Yield Tax- Equivalent Yield One Year Five Years Ten Years

California Municipal Money 2.49% 4.28% 2.69% 2.92% 3.04%
Market

Average Annual Returns

Seven-Day Yield Tax- Equivalent Yield One Year Five Years Ten Years

Spartan California Municipal 2.65% 4.59% 2.79% 3.14% 3.40%
Money Market

Average Annual Returns

Thirty-Day Yield Tax- Equivalent Yield One Year Five Years Ten Years

Spartan California Municipal 4.96% 8.54% (2.28)% 6.10% 6.59%
Income

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Cumulative Returns

One Year Five Years Ten Years

California Municipal Money 2.69% 15.45% 34.87%
Market

Cumulative Returns

One Year Five Years Ten Years

Spartan California Municipal 2.79% 16.69% 39.73%
Money Market

Cumulative Returns

One Year Five Years Ten Years

Spartan California Municipal (2.28)% 34.43% 89.25%
Income

</TABLE>

The returns in the preceding table do not include the effect of the $5
account closeout fee for Spartan California Municipal Money
Market.

Note: If FMR had not reimbursed certain fund expenses during these
periods, Spartan California Municipal Income' s and Spartan
California Municipal Money Market's returns would have been lower.

The following tables show the income and capital elements of each
fund's cumulative return. The tables compare each fund's return to the
record of the Standard & Poor's 500SM Index (S&P 500 (registered
trademark) ), the Dow Jones Industrial Average (DJIA), and the cost
of living, as measured by the Consumer Price Index (CPI) , over
the same period. The S&P 500 and DJIA comparisons are provided to show
how each fund's return compared to the record of a market
capitalization -weighted index of common stocks and a narrower set
of stocks of major industrial companies, respectively, over the same
period. Because each fund invests in fixed-income securities, common
stocks represent a different type of investment from the funds. Common
stocks generally offer greater growth potential than the funds, but
generally experience greater price volatility, which means greater
potential for loss. In addition, common stocks generally provide lower
income than fixed-income investments such as the funds. The S&P 500
and DJIA returns are based on the prices of unmanaged groups of stocks
and, unlike each fund's returns, do not include the effect of
brokerage commissions or other costs of investing.

The following tables show the growth in value of a hypothetical
$10,000 investment in each fund during the 10-year period ended
February 29, 2000 , assuming all distributions were reinvested.
Returns are based on past results and are not an indication of future
performance. Tax consequences of different investments have not been
factored into the figures below.

During the 10-year period ended February 29, 2000 , a
hypothetical $10,000 investment in California Municipal Money Market
would have grown to $13,487 .

CALIFORNIA MUNICIPAL MONEY
MARKET

Fiscal Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions

2000 $ 10,000 $ 3,487 $ 0 $ 13,487

1999 $ 10,000 $ 3,133 $ 0 $ 13,133

1998 $ 10,000 $ 2,786 $ 0 $ 12,786

1997 $ 10,000 $ 2,406 $ 0 $ 12,406

1996 $ 10,000 $ 2,057 $ 0 $ 12,057

1995 $ 10,000 $ 1,681 $ 0 $ 11,681

1994 $ 10,000 $ 1,385 $ 0 $ 11,385

1993 $ 10,000 $ 1,165 $ 0 $ 11,165

1992 $ 10,000 $ 901 $ 0 $ 10,901

1991 $ 10,000 $ 505 $ 0 $ 10,505

</TABLE>

CALIFORNIA MUNICIPAL MONEY INDEXES
MARKET

Fiscal Year Ended S&P 500 DJIA Cost of Living

2000 $ 52,547 $ 49,417 $ 13,258

1999 $ 47,029 $ 44,732 $ 12,852

1998 $ 39,278 $ 40,389 $ 12,648

1997 $ 29,094 $ 31,953 $ 12,469

1996 $ 23,061 $ 24,957 $ 12,102

1995 $ 17,120 $ 17,825 $ 11,789

1994 $ 15,947 $ 16,574 $ 11,461

1993 $ 14,719 $ 14,177 $ 11,180

1992 $ 13,300 $ 13,342 $ 10,828

1991 $ 11,465 $ 11,399 $ 10,531

</TABLE>

Explanatory Notes: With an initial investment of $10,000 in California
Municipal Money Market on March 1, 1990, 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 $13,487. If 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 $2,995 for dividends. The fund did not
distribute any capital gains during the period.

During the 10-year period ended February 29, 2000 , a
hypothetical $10,000 investment in Spartan California Municipal Money
Market would have grown to $13,973.

SPARTAN CALIFORNIA MUNICIPAL
MONEY MARKET

Fiscal year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions

2000 $ 10,000 $ 3,973 $ 0 $ 13,973

1999 $ 10,000 $ 3,593 $ 0 $ 13,593

1998 $ 10,000 $ 3,218 $ 0 $ 13,218

1997 $ 10,000 $ 2,801 $ 0 $ 12,801

1996 $ 10,000 $ 2,406 $ 0 $ 12,406

1995 $ 10,000 $ 1,974 $ 0 $ 11,974

1994 $ 10,000 $ 1,625 $ 0 $ 11,625

1993 $ 10,000 $ 1,347 $ 0 $ 11,347

1992 $ 10,000 $ 1,036 $ 0 $ 11,036

1991 $ 10,000 $ 575 $ 0 $ 10,575

</TABLE>

SPARTAN CALIFORNIA MUNICIPAL INDEXES
MONEY MARKET

Fiscal year Ended S&P 500 DJIA Cost of Living

2000 $ 52,547 $ 49,417 $ 13,258

1999 $ 47,029 $ 44,732 $ 12,852

1998 $ 39,278 $ 40,389 $ 12,648

1997 $ 29,094 $ 31,953 $ 12,469

1996 $ 23,061 $ 24,957 $ 12,102

1995 $ 17,120 $ 17,825 $ 11,789

1994 $ 15,947 $ 16,574 $ 11,461

1993 $ 14,719 $ 14,177 $ 11,180

1992 $ 13,300 $ 13,342 $ 10,828

1991 $ 11,465 $ 11,399 $ 10,531

</TABLE>

Explanatory Notes: With an initial investment of $10,000 in Spartan
California Municipal Money Market on March 1, 1990, 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
$ 13,973 . If 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
$3,350 for dividends. The fund did not distribute any capital
gains during the period.

During the 10-year period ended February 29, 2000 , a
hypothetical $10,000 investment in Spartan California Municipal Income
would have grown to $18,925.

SPARTAN CALIFORNIA MUNICIPAL
INCOME

Fiscal Year Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions

2000 $ 10,286 $ 7,936 $ 703 $ 18,925

1999 $ 11,080 $ 7,619 $ 669 $ 19,368

1998 $ 11,036 $ 6,728 $ 508 $ 18,271

1997 $ 10,545 $ 5,596 $ 485 $ 16,626

1996 $ 10,464 $ 4,720 $ 477 $ 15,662

1995 $ 9,929 $ 3,696 $ 453 $ 14,078

1994 $ 10,804 $ 3,101 $ 302 $ 14,207

1993 $ 11,098 $ 2,380 $ 0 $ 13,478

1992 $ 10,339 $ 1,460 $ 0 $ 11,799

1991 $ 10,071 $ 700 $ 0 $ 10,771

</TABLE>

SPARTAN CALIFORNIA MUNICIPAL INDEXES
INCOME

Fiscal Year Ended S&P 500 DJIA Cost of Living

2000 $ 52,547 $ 49,417 $ 13,258

1999 $ 47,029 $ 44,732 $ 12,852

1998 $ 39,278 $ 40,389 $ 12,648

1997 $ 29,094 $ 31,953 $ 12,469

1996 $ 23,061 $ 24,957 $ 12,102

1995 $ 17,120 $ 17,825 $ 11,789

1994 $ 15,947 $ 16,574 $ 11,461

1993 $ 14,719 $ 14,177 $ 11,180

1992 $ 13,300 $ 13,342 $ 10,828

1991 $ 11,465 $ 11,399 $ 10,531

</TABLE>

Explanatory Notes: With an initial investment of $10,000 in Spartan
California Municipal Income on March 1, 1990, 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 $18,798 . If
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 $5,868 for
dividends and $519 for capital gain distributions.

PERFORMANCE COMPARISONS. 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 Inc. (Lipper), an
independent service located in Summit, New Jersey that monitors the
performance of mutual funds. Generally, Lipper rankings are based on
return, assume reinvestment of distributions, do not take sales
charges or trading fees into consideration, and are prepared without
regard to tax consequences. Lipper may also rank based on yield. In
addition to the mutual fund rankings, a fund's performance may be
compared to stock, bond, and money market mutual fund performance
indexes prepared by Lipper or other organizations. When comparing
these indexes, it is important to remember the risk and return
characteristics of each type of investment. For example, while stock
mutual funds may offer higher potential returns, they also carry the
highest degree of share price volatility. Likewise, money market funds
may offer greater stability of principal, but generally do not offer
the higher potential returns available from stock mutual funds.

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, a 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. The bond fund may advertise risk
ratings, including symbols or numbers, prepared by independent rating
agencies.

A fund's performance may also be compared to that of each benchmark
index representing the universe of securities in which the fund may
invest. The return of each index reflects reinvestment of all
dividends and capital gains paid by securities included in each index.
Unlike a fund's returns, however, each index's returns do not reflect
brokerage commissions, transaction fees, or other costs of investing
directly in the securities included in the index.

The municipal bond fund may compare its performance to the Lehman
Brothers Municipal Bond Index, a market value-weighted index for
investment-grade municipal bonds with maturities of one year or more.
Issues included in the index have been issued after December 31, 1990
and have been issued as part of an offering of at least $50 million.
After December 31, 1995, zero coupon bonds and issues subject to
the alternative minimum tax are included in the index. Issues included
in the index prior to January 1, 2000 have an outstanding par value of
at least $3 million; while issues included in the index after January
1, 2000 have an outstanding par value of at least $5 million.

Spartan California Municipal Income may also compare its
performance to that of the Lehman Brothers California Municipal Bond
Index, a market value-weighted index of California investment-grade
municipal bonds with maturities of one year or more. Issues included
in the index have been issued after December 31, 1990 and have been
issued as part of an offering of at least $50 million. After December
31, 1995, zero coupon bonds and issues subject to the alternative
minimum tax are included in the index. Issues included in the index
prior to January 1, 2000 have an outstanding par value of at least $3
million; while issues included in the index after January 1, 2000 have
an outstanding par value of at least $5 million.

A fund may be compared in advertising to Certificates of Deposit (CDs)
or other investments issued by banks or other depository institutions.
Mutual funds differ from bank investments in several respects. For
example, a fund may offer greater liquidity or higher potential
returns than CDs, a fund does not guarantee an investor's
principal or return, and fund shares are not FDIC insured.

Fidelity may provide information designed to help individuals
understand their investment goals and explore various financial
strategies. Such information may include information about current
economic, market, and political conditions; materials that describe
general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; questionnaires
designed to help create a personal financial profile; worksheets used
to project savings needs based on assumed rates of inflation and
hypothetical rates of return; and action plans offering investment
alternatives. Materials may also include discussions of Fidelity's
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 indexes.

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 returns in the
same method as the funds. The funds may also compare performance to
that of other compilations or indexes that may be developed and made
available in the future.

A money market fund may compare its performance or the performance of
securities in which it may invest to averages published by IBC
Financial Data, Inc. of Ashland, Massachusetts. These averages assume
reinvestment of distributions. IBC's MONEY FUND REPORT
AVERAGES(trademark) /California Tax Free , which is reported in
IBC's MONEY FUND REPORT(trademark), covers 44 tax- free money
market funds.

The bond fund may compare and contrast in advertising the relative
advantages of investing in a mutual fund versus an individual
municipal bond. Unlike municipal bond 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 sales
charges of many municipal bond mutual funds are lower than the
purchase cost of individual municipal bonds, which are generally
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; model
portfolios or allocations; saving for college or other goals; and
charitable giving. In addition, Fidelity may quote or reprint
financial or business publications and periodicals as they relate to
current economic and political conditions, fund management, portfolio
composition, investment philosophy, investment techniques, the
desirability of owning a particular mutual fund, and Fidelity services
and products. Fidelity may also reprint, and use as advertising and
sales literature, articles from Fidelity Focus(registered trademark),
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.

VOLATILITY. A fund (other than a money market fund) may quote
various measures of volatility and benchmark correlation in
advertising. In addition, the fund may compare these measures to those
of other funds. Measures of volatility seek to compare a fund's
historical share price fluctuations or returns to those of a
benchmark. Measures of benchmark correlation indicate how valid a
comparative benchmark may be. All measures of volatility and
correlation are calculated using averages of historical data. In
advertising, a bond fund may also discuss or illustrate examples of
interest rate sensitivity.

MOMENTUM INDICATORS indicate price movements over specific periods of
time for a fund (other than a money market fund) . Each point on
the momentum indicator represents the fund's percentage change in
price movements over that period.

A fund (other than a money market fund ) 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 29, 2000, FMR advised over $35 billion in municipal
fund assets, $141 billion in taxable fixed-income fund assets, $148
billion in money market fund assets, $638 billion in equity fund
assets, $23 billion in international fund assets, and $42 billion
in Spartan fund assets. The funds may reference the growth and
variety of money market mutual funds and the adviser's innovation and
participation in the industry. The equity funds under management
figure represents the largest amount of equity fund assets under
management by a mutual fund investment adviser in the United States,
making FMR America's leading equity (stock) fund manager. FMR, its
subsidiaries, and affiliates maintain a worldwide information and
communications network for the purpose of researching and managing
investments abroad.

In addition to performance rankings, a fund may compare its total
expense ratio to the average total expense ratio of similar funds
tracked by Lipper. A fund's total expense ratio is a significant
factor in comparing bond and money market investments because of its
effect on yield.

ADDITIONAL PURCHASE, EXCHANGE AND REDEMPTION INFORMATION

A fund may make redemption payments in whole or in part in readily
marketable securities or other property, valued for this purpose as
they are valued in computing each fund's NAV, if FMR determines it is
in the best interests of the fund. Shareholders that receive
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.

DISTRIBUTIONS AND TAXES

DIVIDENDS. To the extent that each fund's income is designated as
federally tax-exempt interest, the dividends declared by the fund are
also federally tax-exempt. Short-term capital gains are taxable as
dividends, but do not qualify for the dividends-received deduction.

Each fund purchases municipal securities whose interest FMR believes
is free from federal income tax. Generally, issuers or other parties
have entered into covenants requiring continuing compliance with
federal tax requirements to preserve the tax-free status of interest
payments over the life of the security. If at any time the covenants
are not complied with, or if the IRS otherwise determines that the
issuer did not comply with relevant tax requirements, interest
payments from a security could become federally taxable retroactive to
the date the security was issued. For certain types of structured
securities, the tax status of the pass-through of tax-free income may
also be based on the federal and state tax treatment of the structure.

Interest on certain "private activity" securities is subject to the
federal alternative minimum tax (AMT), although the interest continues
to be excludable from gross income for other tax purposes. Interest
from private activity securities will be considered tax-exempt for
purposes of California Municipal Money Market's and Spartan
California Municipal Money Market 's policies of investing so that
at least 80% of its income distributions 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 to be paid, if any.

A portion of the gain on municipal bonds purchased at market discount
after April 30, 1993 is taxable to shareholders as ordinary income,
not as capital gains. Dividends resulting from a recharacterization of
gain from the sale of bonds purchased at market discount after April
30, 1993 are not considered income for purposes of California
Municipal Money Market's and Spartan California Municipal Money
Market's policy of investing so that at least 80% of its income
distributions is free from federal income tax.

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 that 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% 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. Corporate taxpayers should
note that dividends will not be exempt from California corporate
income or franchise tax.

CAPITAL GAIN DISTRIBUTIONS. Each fund's long-term capital gain
distributions are federally taxable to shareholders generally as
capital gains. Each money market fund may distribute any net realized
capital gains once a year or more often, as necessary.

As of February 29, 2000, Spartan California Municipal Money Market
had an aggregate capital loss carryforward of approximately $462,000.
This loss carryforward, of which $422,000 and $40,000 will expire on
February 28, 2003 and 2006, respectively, is available to offset
future capital gains.

As of February 29, 2000, Fidelity California Municipal Money Market
had an aggregate capital loss carryforward of approximately $352,000.
This loss carryforward, of which $307,000, $7,000, $18,000 and $20,000
will expire on February 28, 2003, 2005, 2006 and 2007, respectively,
is available to offset future capital gains.

TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" under Subchapter M of the Internal
Revenue Code 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 substantially all of its net investment income and net
realized capital gains within each calendar year as well as on a
fiscal year basis, and intends to comply with other tax rules
applicable to regulated investment companies.

OTHER TAX INFORMATION. The information above is only a summary of some
of the tax consequences generally affecting each fund and its
shareholders, and no attempt has been made to discuss individual tax
consequences. It is up to you or your tax preparer to determine
whether the sale of shares of a fund resulted in a capital gain or
loss or other tax consequence to you. In addition to federal income
taxes, shareholders may be subject to state and local taxes on fund
distributions, and shares may be subject to state and local personal
property taxes. Investors should consult their tax advisers to
determine whether a fund is suitable to their particular tax
situation.

TRUSTEES AND OFFICERS

The Trustees, Member of the Advisory Board, and executive officers of
the trusts and funds, as applicable, are listed below. The
Board of Trustees governs each fund and is responsible for protecting
the interests of shareholders. The Trustees are experienced executives
who meet periodically throughout the year to oversee each fund's
activities, review contractual arrangements with companies that
provide services to each fund, and review each fund's performance.
Except as indicated, each individual has held the office shown or
other offices in the same company for the last five years. All persons
named as Trustees and Members of the Advisory Board also serve in
similar capacities for other funds advised by FMR or its affiliates.
The business address of each Trustee, Member of the Advisory Board,
and officer who is an "interested person" (as defined in the 1940 Act)
is 82 Devonshire Street, Boston, Massachusetts 02109, which is also
the address of FMR. The business address of all the other Trustees is
Fidelity Investments, P.O. Box 9235, Boston, Massachusetts 02205-9235.
Those Trustees who are "interested persons" by virtue of their
affiliation with either the trust s or FMR are indicated by an
asterisk (*).

*EDWARD C. JOHNSON 3d (69), Trustee, is President of California
Municipal Money Market Fund, Spartan California Municipal Money Market
Fund, and Spartan California Municipal Income Fund. Mr. Johnson also
serves as President of other Fidelity Funds. He is Chief Executive
Officer, Chairman, 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 Fidelity Management & Research (U.K.) Inc. and of
Fidelity Management & Research (Far East) Inc.; Chairman (1998) and a
Director (1997) of Fidelity Investments Money Management, Inc.;
Chairman and Representative Director of Fidelity Investments Japan
Limited (1997); and a Director of FDC and of FMR Co., Inc. (2000).
Abigail Johnson, Member of the Advisory Board of Fidelity California
Municipal Trust and Fidelity California Municipal Trust II, is Mr.
Johnson's daughter.

ABIGAIL P. JOHNSON ( 38 ), Member of the Advisory Board of
Fidelity California Municipal Trust and Fidelity California Municipal
Trust II (1999), is Vice President of certain Equity Funds (1997), and
is a Director of FMR Corp. (1994). Before assuming her current
responsibilities, Ms. Johnson managed a number of Fidelity funds.
Edward C. Johnson 3d, Trustee and President of the Funds, is Ms.
Johnson's father.

J. MICHAEL COOK (57), Member of the Advisory Board (2000). Prior to
Mr. Cook's retirement in May 1999, he served as Chairman and Chief
Executive Officer of Deloitte & Touche LLP, Chairman of the Deloitte &
Touche Foundation, and a member of the Board of Deloitte Touche
Tohmatsu. He currently serves as an Executive in Residence of the
Columbia Business School and as a Director of Dow Chemical Company
(2000), Columbia/HCA Healthcare Corporation (1999), and Children First
(1999). He is a member of the Executive Committee of the Securities
Regulation Institute, a member of the Advisory Board of Boardroom
Consultants, a Director of the National Forum for Health Care Quality,
Measurement and Reporting, past chairman and a member of the Board of
Catalyst (a leading organization for the advancement of women in
business), and is a Director of the STAR Foundation (Society to
Advance the Retarded and Handicapped). He also serves as a member of
the Board and Executive Committee and as Co-Chairman of the Audit and
Finance Committee of the Center for Strategic & International Studies,
a member of the Board of Overseers of the Columbia Business School,
and a Member of the Advisory Board of the Graduate School of Business
of the University of Florida.

RALPH F. COX ( 67 ), Trustee, is President of RABAR Enterprises
(management consulting-engineering industry, 1994). Prior to February
1994, he was President of Greenhill Petroleum Corporation (petroleum
exploration and production). Until March 1990, Mr. Cox was President
and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of Waste Management
Inc. (non-hazardous waste, 1993), CH2M Hill Companies
(engineering), and Bonneville Pacific (independent power and petroleum
production). In addition, he is a member of advisory boards of Texas
A&M University and the University of Texas at Austin.

PHYLLIS BURKE DAVIS ( 68), Trustee. Mrs. Davis is retired from Avon
Products, Inc. where she held various positions including Senior Vice
President of Corporate Affairs and Group Vice President of U.S. sales,
distribution, and manufacturing. She is currently a Director of
BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing), and the TJX Companies, Inc. (retail stores), and
previously served as a Director of Hallmark Cards, Inc., Nabisco
Brands, Inc., and Standard Brands, Inc. In addition, she is a member
of the Board of Direc tors of the Southampton Hospital in
Southampton, N.Y. (1998).

ROBERT M. GATES ( 56 ), Trustee (199 7), is a consultant,
author, and lecturer (1993). Mr. Gates was Director of the Central
Intelligence Agency (CIA) from 1991-1993. From 1989 to 1991, Mr. Gates
served as Assistant to the President of the United States and Deputy
National Security Advisor. Mr. Gates is a Director of Charles Stark
Draper Laboratory (non-profit), NACCO Industries, Inc. (mining and
manufacturing), and TRW Inc. (automotive, space, defense, and
information technology). Mr. Gates previously served as a Director of
LucasVarity PLC (automotive components and diesel engines). He is
currently serving as Dean of the George Bush School of Government and
Public Service at Texas A & M University (1999-2000). Mr. Gates also
is a Trustee of the Forum for International Policy and of the
Endowment Ass ociation of the College of William and Mary. In
addition, he is a member of the National Executive Board of the Boy
Scouts of America.

DONALD J. KIRK ( 67 ), Trustee, is Executive-in-Residence (1995)
at Columbia University Graduate School of Business. From 1987 to
January 1995, Mr. Kirk was a Professor at Columbia University Graduate
School of Business. Prior to 1987, he was Chairman of the Financial
Accounting Standards Board. Mr. Kirk previously served as a Director
of General Re Corporation (reinsurance, 1987-1998) and as a
Director of Valuation Research Corp. (appraisals and valuations,
1993-1995). He serves as Chairman of the Board of Directors of
National Arts Stabilization Inc., Chairman of the Board of Trustees of
the Greenwich Hospital Association, Director of the Yale-New Haven
Health Services Corp. (1998), Vice Chairman of the Public Oversight
Board of the American Institute of Certified Public Accountants'
SEC Practice Section (1995), and as a Public Governor of the National
Association of Securities Dealers, Inc. (1996).

NED C. LAUTENBACH (56), Trustee (2000), has been a partner of
Clayton, Dubilier & Rice, Inc. (private equity investment firm) since
September 1998. Mr. Lautenbach was Senior Vice President of IBM
Corporation from 1992 until his retirement in July 1998. From 1993 to
1995 he was Chairman of IBM World Trade Corporation. He also was a
member of IBM's Corporate Executive Committee from 1994 to July 1998.
He is a Director of PPG Industries Inc. (glass, coating and chemical
manufacturer), Dynatech Corporation (global communications equipment),
Eaton Corporation (global manufacturer of highly engineered products)
and ChoicePoint Inc. (data id entification, retrieval, storage, and
analysis).

*PETER S. LYNCH ( 57 ), Trustee, is Vice Chairman and a
Director of FMR ; and a Director of FMR Co., Inc. (2000). Prior
to May 31, 1990, he was a Director of FMR and Executive Vice President
of FMR (a position he held until March 31, 1991); Vice President of
Fidelity Magellan(registered trademark) 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). 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.

WILLIAM O. McCOY ( 71 ), T rustee (1997), is the Interim
Chancellor for the University of North Carolina at Chapel Hill.
Previously he had served from 1995 thr ough 1998 as Vice President
of Finance for the University of North Carolina (16-school system).
Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman
of the Board of BellSouth Corporation (telecommunications, 1984) and
President of BellSouth Enterprises (1986). He is currently a Director
of Liberty Corporation (holding company, 1984), Duke-Weeks Realty
Corporation (real estate, 1994), Carolina Power and Light Company
(electric utility, 1996), the Kenan Transport Company (trucking,
1996), and Dynatech Corporation (electronics, 1999). Previously,
he was a Director of First American Corporation (bank holding company,
1979-1996). In addition, Mr. McCoy served as a member of the Board
of Visitors for the University of North Carolina at Chapel Hill
(1994-1998) and currently serves on the Board of Visitors of the
Kenan-Flager Business School (University of North Carolina at Chapel
Hill, 198 8).

GERALD C. McDONOUGH ( 71 ), Trustee and Chairman of the
non-interested Trustees, is Chairman of G.M. Management Group
(strategic advisory services). Mr. McDonough is a Director and
Chairman of the Board of York International Corp. (air conditioning
and refrigeration), Commercial Intertech Corp. (hydraulic systems,
building systems, and metal products, 1992), CUNO, Inc. (liquid and
gas filtration products, 1996), and Associated Estates Realty
Corporation (a real estate investment trust, 1993). Mr. McDonough
served as a Director of ACME-Cleveland Corp. (metal working,
telecommunications, and electronic products) from 1987-1996 and
Brush-Wellman Inc. (metal refining) from 1983-1997.

MARVIN L. MANN ( 66 ), Trustee (1993), is Chairman Emeritus of
Lexmark International, Inc. (office machines, 1991) where he still
remains a m ember of the Board. 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), Imation Corp. (imaging and information storage, 1997). He is a
Board member of Dynatech Corporation (electronics, 1999).

*ROBERT C. POZEN (53), Trustee (1997), is Senior Vice President of
California Municipal Money Market Fund, Spartan California Municipal
Money Market Fund, and Spartan California Municipal Income Fund
(1997). Mr. Pozen also serves as Senior Vice President of other
Fidelity funds (1997). He is President and a Director of FMR (1997),
Fidelity Management & Research (U.K.) Inc. (1997), Fidelity Management
& Research (Far East) Inc. (1997), Fidelity Investments Money
Management, Inc. (1998), and FMR Co., Inc. (2000); and a Director of
Strategic Advisors, Inc. (1999). Previously, Mr. Pozen served as
General Counsel, Managing Director, and Senior Vice President of FMR
Corp.

THOMAS R. WILLIAMS ( 71 ), 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 National Life Insurance Company of Vermont and American
Software, Inc. Mr. Williams was previously a Director of ConAgra, Inc.
(ag ricul tural products), Georgia Power Company (electric
utility), and Avado, Inc. (restaurants).

DWIGHT D. CHURCHILL (46), is Vice President of Spartan California
Municipal Income Fund. He serves as President of the Fixed-Income
Division (2000),Vice President of Bond Funds, Group Leader of the Bond
Group, Senior Vice President of FMR (1997), and Vice President of FIMM
(1998). Mr. Churchill joined Fidelity in 1993 as Vice President and
Group Leader of Taxable Fixed-Income Investments.

BOYCE I. GREER (44), is Vice President of California Municipal
Money Market Fund and Spartan California Municipal Money Market Fund
(1997). He serves as Vice President of Money Market Funds (1997),
Group Leader of the Money Market Group (1997), Senior Vice President
of FMR (1997), and Vice President of FIMM (1998). Mr. Greer served as
the Leader of the Fixed-Income Group for Fidelity Management Trust
Company (1993-1995) and was Vice President and Group Leader of
Municipal Fixed-Income Investments (1996-1997).

DIANE M. MCLAUGHLIN ( 36 ), is Vice President of Fidelity
California Municipal Money Market Fund (1997), Spartan California
Municipal Money Market Fund (1997), and other funds advised by FMR.
Prior to her current responsibilities, Ms. McLaughlin served as a
senior trader and managed a variety of funds.

CHRISTINE JONES THOMPSON ( 41 ), is Vice President of Spartan
California Municipal Income Fund (1998) and other funds advised by
FMR. Prior to her current responsibilities, Ms. Thompson managed a
variety of Fidelity funds.

ERIC D. ROITER (51), is Secretary of California Municipal Money
Market Fund, Spartan California Municipal Money Market Fund, and
Spartan California Municipal Income Fund (1998). He also serves as
Secretary of other Fidelity funds (1998); Vice President, General
Counsel, and Clerk of FMR (1998); and Vice President and Clerk of FDC
(1998). Prior to joining Fidelity, Mr. Roiter was with the law firm of
Debevoise & Plimpton, as an associate (1981-1984) and as a partner
(1985-1997), and served as an Assistant General Counsel of the U.S.
Securities and Exchange Commission (1979-1981). Mr. Roiter was an
Adjunct Member, Faculty of Law, at Columbia University Law School
(1996-1997).

ROBERT A. DWIGHT (41), is Treasurer of California Municipal Money
Market Fund, Spartan California Municipal Money Market Fund, and
Spartan California Municipal Income Fund (2000). Mr. Dwight also
serves as Treasurer of other Fidelity funds (2000) and is an employee
of FMR. Prior to becoming Treasurer of the Fidelity funds, he served
as President of Fidelity Accounting and Custody Services (FACS).
Before joining Fidelity, Mr. Dwight was Senior Vice President of fund
accounting operations for The Boston Company.

MARIA F. DWYER (41), is Deputy Treasurer of California Municipal
Money Market Fund, Spartan California Municipal Money Market Fund, and
Spartan California Municipal Income Fund (2000). She also serves as
Deputy Treasurer of other Fidelity funds (2000) and is a Vice
President (1999) and an employee (1996) of FMR. Prior to joining
Fidelity, Ms. Dwyer served as Director of Compliance for MFS
Investment Management.

MATTHEW N. KARSTETTER (38), is Deputy Treasurer of California
Municipal Money Market Fund, Spartan California Municipal Money Market
Fund, and Spartan California Municipal Income Fund (1998). He also
serves as Deputy Treasurer of other Fidelity funds (1998) and is an
employee of FMR (1998). Before joining FMR, Mr. Karstetter served as
Vice President of Investment Accounting and Treasurer of IDS Mutual
Funds at American Express Financial Advisors (1996-1998). Prior to
1996, Mr. Karstetter was Vice President, Mutual Fund Services at State
Street Bank & Trust (1991-1996).

STANLEY N. GRIFFITH (53), is Assistant Vice President of California
Municipal Money Market Fund, Spartan California Municipal Money Market
Fund, and Spartan California Municipal Income Fund (1998). Mr.
Griffith is Assistant Vice President of Fidelity's Fixed-Income Funds
(1998) and an employee of FMR Corp.

JOHN H. COSTELLO (53), is Assistant Treasurer of California
Municipal Money Market Fund, Spartan California Municipal Money Market
Fund, and Spartan California Municipal Income Fund. Mr. Costello also
serves as Assistant Treasurer of other Fidelity funds and is an
employee of FMR.

THOMAS J. SIMPSON (41), is Assistant Treasurer of California
Municipal Money Market Fund and Spartan California Municipal Money
Market Fund (1996) and Spartan California Municipal Income Fund
(1997). Mr. Simpson is Assistant Treasurer of Fidelity's Fixed-Income
Funds (1998) and an employee of FMR (1996). Prior to joining FMR, Mr.
Simpson was Vice President and Fund Controller of Liberty Investment
Services (1987-1995).

The following table sets forth information describing the compensation
of each Trustee and Member of the Advisory Board of each fund for his
or her services for the fiscal year ended February 29, 2000, or
calendar year ended December 31, 1999, as applicable.

<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMPENSATION TABLE

Trustees and Members of the Aggregate Compensation from Aggregate Compensation from Aggregate Compensation from
Advisory Board California Municipal Money Spartan California Spartan California Municipal
MarketB Municipal Money MarketB IncomeB

Edward C. Johnson 3d** $ 0 $ 0 $ 0

Abigail P. Johnson** $ 0 $ 0 $ 0

J. Michael Cook***** $ 0 $ 0 $ 0

Ralph F. Cox $ 422 $ 339 $ 367

Phyllis Burke Davis $ 412 $ 330 $ 356

Robert M. Gates $ 419 $ 337 $ 365

E. Bradley Jones**** $ 336 $ 280 $ 306

Donald J. Kirk $ 428 $ 344 $ 371

Ned C. Lautenbach*** $ 188 $ 138 $ 144

Peter S. Lynch** $ 0 $ 0 $ 0

William O. McCoy $ 416 $ 335 $ 362

Gerald C. McDonough $ 526 $ 422 $ 456

Marvin L. Mann $ 425 $ 341 $ 369

Robert C. Pozen** $ 0 $ 0 $ 0

Thomas R. Williams $ 414 $ 332 $ 359

</TABLE>

<TABLE>
<CAPTION>
<S> <C>
COMPENSATION TABLE

Trustees and Members of the Total Compensation from the
Advisory Board Fund Complex*,A

Edward C. Johnson 3d** $ 0

Abigail P. Johnson** $ 0

J. Michael Cook***** $ 0

Ralph F. Cox $ 217,500

Phyllis Burke Davis $ 211,500

Robert M. Gates $ 217,500

E. Bradley Jones**** $ 217,500

Donald J. Kirk $ 217,500

Ned C. Lautenbach*** $ 54,000

Peter S. Lynch** $ 0

William O. McCoy $ 214,500

Gerald C. McDonough $ 269,000

Marvin L. Mann $ 217,500

Robert C. Pozen** $ 0

Thomas R. Williams $ 213,000

</TABLE>

* I nformation is fo r the calendar year ended December 31, 1999
for 236 funds in the complex.

** I nterested Trustees of the funds and Ms. Johnson are compensated
by FMR.

*** Dur in g the period from October 14, 1999 through December
31, 1999, Mr. Lautenbach served as a Member of the Advisory Board.
Effective January 1, 2000, Mr. Lautenbach serves as a Member of the
Board of Trustees.

**** Mr. Jone s served on the Board of Trustees through December
31, 1999.

***** Effective March 16, 2000, Mr. Cook serves as a Member of the
Advisory Board.

A Compensation figures include cash, amounts required to be deferred,
and may include amounts deferred at the election of Trustees. For the
calendar year ended December 31, 1999, the Trustees accrued
required deferred compensation from the funds as follows: Ralph F.
Cox, $75,000; Phyllis Burke Davis, $75,000; Robert M. Gates, $75,000;
E. Bradley Jones, $75,000; Donald J. Kirk, $75,000; William O. McCoy,
$75,000; Gerald C. McDonough, $87,500; Marvin L. Mann, $75,000; and
Thomas R. Williams, $75,000. Certain of the non-interested Trustees
elected voluntarily to defer a portion of their compensation as
follows: Ralph F. Cox, $53,735; William O. McCoy, $53,735; and Thomas
R. Williams, $62,319.

B Compensation figures include cash .

Under a deferred compensation plan adopted in September 1995 and
amended in November 1996 and January 2000 (the Plan),
non-interested Trustees must defer receipt of a portion of, and may
elect to defer receipt of an additional portion of, their annual fees.
Amounts deferred under the Plan are treated as though
equivalent dollar amounts had been invested in shares of a
cross-section of Fidelity funds including funds in each major
investment discipline and representing a majority of Fidelity's assets
under management (the Reference Funds). The amounts ultimately
received by the Trustees under the Plan will be directly linked to the
investment performance of the Reference Funds. Deferral of fees in
accordance with the Plan will have a negligible effect on a fund's
assets, liabilities, and net income per share, and will not obligate a
fund to retain the services of any Trustee or to pay any particular
level of compensation to the Trustee. A fund may invest in the
Reference Funds under the Plan without shareholder approval.

As of February 29, 2000, the Trustees, Member of the Advisory
Board, and officer s of each fund owned, in the aggregate, less
than 1% of the f und's total outstanding shares.

CONTROL OF INVESTMENT ADVISERS

FMR Corp., organized in 1972, is the ultimate parent company of FMR
and Fidelity Investments Money Management, Inc. (FIMM). The voting
common stock of FMR Corp. is divided into two classes. Class B is held
predominantly by members of the Edward C. Johnson 3d family and is
entitled to 49% of the vote on any matter acted upon by the voting
common stock. Class A is held predominantly by non-Johnson family
member employees of FMR Corp. and its affiliates and is entitled to
51% of the vote on any such matter. The Johnson family group and all
other Class B shareholders have entered into a shareholders' voting
agreement under which all Class B shares will be voted in accordance
with the majority vote of Class B shares. Under the 1940 Act, control
of a company is presumed where one individual or group of individuals
owns more than 25% of the voting stock of that company. Therefore,
through their ownership of voting common stock and the execution of
the shareholders' voting agreement, members of the Johnson family may
be deemed, under the 1940 Act, to form a controlling group with
respect to FMR Corp.

At present, the principal operating activities of FMR Corp. are those
conducted by its division, Fidelity Investments Retail Marketing
Company, which provides marketing services to various companies within
the Fidelity organization.

The funds, FMR, FIMM, and FDC have adopted a code of ethics under
Rule 17j-1 of the 1940 Act that sets forth employees' fiduciary
responsibilities regarding the funds, establishes procedures for
personal investing, and restricts certain transactions. Employees
subject to the code of ethics, including Fidelity investment
personnel, may invest in securities for their own investment accounts,
including securities that may be purchased or held by the funds.

MANAGEMENT CONTRACTS

Each fund has entered into a management contract with FMR, pursuant to
which FMR furnishes investment advisory and other services.

MANAGEMENT SERVICES. Under the terms of 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 each fund with all necessary office
facilities and personnel for servicing the fund's investments,
compensates all officers of each fund and all Trustees who are
"interested persons" of the trusts or of FMR, and all personnel of
each fund 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 each fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters and other persons dealing with each fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining each fund's records and the
registration of each fund's shares under federal securities laws and
making necessary filings under state securities laws; developing
management and shareholder services for each fund; and furnishing
reports, evaluations and analyses on a variety of subjects to the
Trustees.

MANAGEMENT-RELATED EXPENSES (CALIFORNIA MUNICIPAL MONEY MARKET AND
SPARTAN CALIFORNIA MUNICIPAL INCOME). In addition to the management
fee payable to FMR and the fees payable to the transfer, dividend
disbursing, and shareholder servicing agent and pricing and
bookkeeping agent, each fund pays all of its expenses that are not
assumed by those parties. Each fund pays for the typesetting,
printing, and mailing of its proxy materials to shareholders, legal
expenses, and the fees of the custodian, auditor, and non-interested
Trustees. Each fund's management contract further provides that the
fund will pay for typesetting, printing, and mailing prospectuses,
statements of additional information, notices, and reports to
shareholders; however, under the terms of each fund's transfer agent
agreement, the transfer agent bears the costs of providing these
services to existing shareholders. Other expenses paid by each fund
include interest, taxes, brokerage commissions, each fund's
proportionate share of insurance premiums and Investment Company
Institute dues, and the costs of registering shares under federal
securities laws and making necessary filings under state securities
laws. Each fund is also liable for such non-recurring expenses as may
arise, including costs of any litigation to which the fund may be a
party, and any obligation it may have to indemnify its officers and
Trustees with respect to litigation.

MANAGEMENT-RELATED EXPENSES (SPARTAN CALIFORNIA MUNICIPAL MONEY
MARKET). Under the terms of its management contract with the fund, FMR
is responsible for payment of all operating expenses of the fund with
certain exceptions. Specific expenses payable by FMR include expenses
for typesetting, printing, and mailing proxy materials to
shareholders, legal expenses, fees of the custodian, auditor, and
interested Trustees, the fund's proportionate share of insurance
premiums and Investment Company Institute dues, and the costs of
registering shares under federal securities laws and making necessary
filings under state securities laws. The fund's management contract
further provides that FMR will pay for typesetting, printing, and
mailing prospectuses, statements of additional information, notices,
and reports to shareholders; however, under the terms of the fund's
transfer agent agreement, the transfer agent bears the costs of
providing these services to existing shareholders. FMR also pays all
fees associated with transfer agent, dividend disbursing, and
shareholder services and pricing and bookkeeping services.

FMR pays all other expenses of Spartan California Municipal Money
Market with the following exceptions: fees and expenses of the
non-interested Trustees, interest, taxes, brokerage commissions (if
any), and such nonrecurring expenses as may arise, including costs of
any litigation to which the fund may be a party, and any obligation it
may have to indemnify its officers and Trustees with respect to
litigation.

MANAGEMENT FEES. For the services of FMR under the management
contract, Spartan California Municipal Money Market pays FMR a monthly
management fee at the annual rate of 0.50% of the fund's average net
assets throughout the month.

The management fee paid to FMR by Spartan California Municipal Money
Market is reduced by an amount equal to the fees and expenses paid by
the fund to the non-interested Trustees.

For the services of FMR under the management contract,
California Municipal Money Market and Spartan California Municipal
Income each pays FMR a monthly management fee which has two
components: 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.

<TABLE>
<CAPTION>
<S> <C> <C> <C>
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES

Average Group Assets Annualized Rate Group Net Assets Effective Annual Fee Rate

0 - $3 billion .3700% $ 1 billion .3700%

3 - 6 .3400 50 .2188

6 - 9 .3100 100 .1869

9 - 12 .2800 150 .1736

12 - 15 .2500 200 .1652

15 - 18 .2200 250 .1587

18 - 21 .2000 300 .1536

21 - 24 .1900 350 .1494

24 - 30 .1800 400 .1459

30 - 36 .1750 450 .1427

36 - 42 .1700 500 .1399

42 - 48 .1650 550 .1372

48 - 66 .1600 600 .1349

66 - 84 .1550 650 .1328

84 - 120 .1500 700 .1309

120 - 156 .1450 750 .1291

156 - 192 .1400 800 .1275

192 - 228 .1350 850 .1260

228 - 264 .1300 900 .1246

264 - 300 .1275 950 .1233

300 - 336 .1250 1,000 .1220

336 - 372 .1225 1,050 .1209

372 - 408 .1200 1,100 .1197

408 - 444 .1175 1,150 .1187

444 - 480 .1150 1,200 .1177

480 - 516 .1125 1,250 .1167

516 - 587 .1100 1,300 .1158

587 - 646 .1080 1,350 .1149

646 - 711 .1060 1,400 .1141

711 - 782 .1040

782 - 860 .1020

860 - 946 .1000

946 - 1,041 .0980

1,041 - 1,145 .0960

1,145 - 1,260 .0940

Over 1,260 .0920

</TABLE>

The group fee rate is calculated on a cumulative basis pursuant to the
graduated fee rate schedule shown above on the left. The schedule
above on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $ 852 billion of group net assets - the approximate
level for February 200 0 - was 0.1260 %, which is
the weighted average of the respective fee rates for each level of
group net assets up to $ 852 billion.

The individual fund fee rate for California Municipal Money Market and
Spartan California Municipal Income is 0.25%. Based on the average
group net assets of the funds advised by FMR for February 2000 ,
each fund's annual management fee rate would be calculated as follows:

Group Fee Rate Individual Fund Fee Rate Management Fee Rate

California Municipal Money 0.1260% + 0.25% = 0.3760%
Market

Spartan California Municipal 0.1260% + 0.25% = 0.3760%
Income

</TABLE>

One-twelfth of the management fee rate is applied to each fund's
average net assets for the month, giving a dollar amount which is the
fee for that month.

The following table shows the amount of management fees paid by each
fund to FMR for the past three fiscal years, and the amount of credits
reducing management fees for Spartan California Municipal Money
Market.

Fund Fiscal Years Ended February 28 Amount of Credits Reducing Management Fees Paid to FMR
Management Fees

California Municipal Money 2000** N/A $ 5,844,000
Market

1999 N/A $ 4,369,000

1998 N/A $ 3,355,000

Spartan California Municipal 2000** $ 73,000 $ 5,920,000*
Money Market

1999 $ 134,000 $ 6,356,000*

1998 $ 56,000 $ 6,641,000*

Spartan California Municipal 2000** N/A $ 4,887,000
Income

1999 N/A $ 4,914,000

1998 N/A $ 3,377,000

</TABLE>

* After reduction of fees and expenses paid by the fund to the
non-interested Trustees.

** Fiscal year ended February 29.

FMR may, from time to time, voluntarily reimburse all or a portion of
a fund's operating expenses (exclusive of interest, taxes, brokerage
com missions, and ex traordinary expenses), which is subject to
revision or discontinuance. FMR retains the ability to be repaid for
these expense reimbursements in the amount that expenses fall below
the limit prior to the end of the fiscal year.

Expense reimbursements by FMR will increase a fund's returns and
yield, and repayment of the reimbursement by a fund will lower its
r eturns and yield.

FMR agreed to reimburse certain of the funds if and to the extent that
the fund's aggregate operating expenses, including management fees,
were in excess of an annual rate of its average net assets. The table
below shows the periods of reimbursement and levels of expense
limitations for the applicable funds; the dollar amount of management
fees incurred under each fund's contract before reimbursement; and the
dollar amount of management fees reimbursed by FMR under the expense
reimbursement for each period.

Periods of Expense Limitation Aggregate Operating Expense
From To Limitation

Spartan California Municipal July 1, 1997 July 31, 1997 0.45%
Money Market

June 1, 1997 June 30, 1997 0.40%

March 1, 1997 May 31, 1997 0.35%

Spartan California Municipal March 1, 1999 December 31, 1999 0.53%
Income

March 1, 1998 February 28, 1999 0.53%

August 15, 1997 February 28, 1998 0.53%

April 1, 1997 August 14, 1997 0.53%

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fiscal Years Ended February 28 Management Fee Before Amount of Management Fee
Reimbursement Reimbursement

Spartan California Municipal 1998 $ 6,697,000* $ 672,000
Money Market

_ _ _

Spartan California Municipal 2000** $ 4,887,000 $ 0
Income

1999 $ 4,914,000 $ 0

1998 $ 3,377,000 $ 84,000

_ _ _

</TABLE>

* After reduction of fees and expenses paid by the fund to the
non-interested Trustees.

** Fiscal year ended February 29.

SUB-ADVISER. FMR has entered into a sub-advisory agreement with FIMM
pursuant to which FIMM has primary responsibility for choosing
investments for each fund. Prior to January 23, 1998, FMR Texas Inc.
(FMR Texas) had primary responsibility for providing investment
management services to each money market fund. On January 23, 1998,
FMR Texas was merged into FIMM, which succeeded to the operations of
FMR Texas.

Under the terms of the sub-adviso ry agreements, FMR pays FIMM
fees equal to 50% of the management fee payable to FMR under its
management contract with each fund. The fees paid to FIMM are not
reduced by any voluntary or mandatory expense reimbursements that may
be in effect from time to time.

Fees paid to FMR Texa s and FIMM by FMR on behalf of the money
market funds for the past three fiscal years are shown in the table
below.

Fund Fiscal Year Ended Fees Paid to FMR Texas Fees Paid to FIMM

California Municipal Money February 29, 2000 $ 0 $ 2,922,000
Market

February 28, 1999 $ 0 $ 2,185,000

February 28, 1998 $ 1,678,000 $ 0

Spartan California Municipal February 29, 2000 $ 0 $ 2,997,000
Money Market

February 28, 1999 $ 0 $ 3,245,000

February 28, 1998 $ 3,349,000 $ 0

</TABLE>

On behalf of Spartan California Municipal Income, for the fiscal years
ended February 29, 2000 and February 28, 1999, FMR paid FIMM fees
of $2,444,000 and $427,000, respectively.

DISTRIBUTION SERVICES

Each fund has entered into a distribution agreement with FDC, an
affiliate of FMR. FDC is a broker-dealer registered under the
Securities Exchange Act of 1934 and a member of the National
Association of Securities Dealers, Inc. The distribution agreements
call 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 NAV. Promotional and administrative
expenses in connection with the offer and sale of shares are paid by
FMR.

The Trustees have approved Distribution and Service Plans on behalf of
each fund (the Plans) pursuant to Rule 12b-1 under the 1940 Act (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 approved on behalf of the fund under the Rule. The
Plans, as approved by the Trustees, allow the funds and FMR to incur
certain expenses that might be considered to constitute indirect
payment by the funds of distribution expenses.

Under each Plan, if the payment of management fees by the fund to FMR
is deemed to be indirect financing by the fund of the distribution of
its shares, such payment is authorized by the Plan. Each Plan
specifically recognizes that FMR may use its management fee revenue,
as well as its past profits or its other resources, to pay FDC for
expenses incurred in connection with providing services intended to
result in the sale of fund shares and/or shareholder support services.
In addition, each Plan provides that FMR, directly or through FDC, may
pay significant amounts to intermediaries, such as banks,
broker-dealers and other service-providers, that provide those
services. Currently, the Board of Trustees has authorized such
payments for the funds' shares.

Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan, and
determined that there is a reasonable likelihood that the Plan will
benefit the fund and its shareholders. In particular, the Trustees
noted that each Plan does not authorize payments by the fund other
than those made to FMR under its management contract with the fund. To
the extent that each Plan gives FMR and FDC greater flexibility in
connection with the distribution of fund shares, additional sales of
fund shares or stabilization of cash flows may result. Furthermore,
certain shareholder support services may be provided more effectively
under the Plans by local entities with whom shareholders have other
relationships.

The Glass-Steagall Act generally prohibits federally and state
chartered or supervised banks from directly engaging in the
business of underwriting, selling or distributing securities.
F DC believes that the Glass-Steagall Act should not preclude a
bank from performing shareholder support services, or 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 activ ities of banks ,
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. 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.

Each fund may execute portfolio transactions with, and purchase
securities issued by, depository institutions that receive payments
under the Plans. No preference for the instruments of such depository
institutions will be shown in the selection of investments.

FDC may compensate intermediaries that satisfy certain criteria
established from time to time by FDC relating to the level or type of
serv ices provided by the intermediary, the sale or expected sale
of significant amounts of shares, or other factors.

TRANSFER AND SERVICE AGENT AGREEMENTS

Each fund has entered into a transfer agent agreement with
Citibank, N.A. (Citibank), which is located at 111 Wall Street, New
York, New York. Under the terms of the agreements, Citibank provides
transfer agency, dividend disbursing, and shareholder services for
each fund. Citibank in turn has entered into sub-transfer age nt
agreements with Fidelity Service Company (FSC), an affiliate of FMR.
Under the terms of the sub-agreements, FSC performs all processing
activities associated with providing these services for each fund and
receives all related transfer agency fees paid to Citiban k.

For providing transfer agency services, FSC receives an account fee
and an asset-based fee each paid monthly with respect to each account
in a fund. For retail accounts and certain institutional accounts,
these fees are based on account size and fund type. For certain
institutional retirement accounts, these fees are based on fund type.
For certain other institutional retirement accounts, these fees are
based on account type and fund type. The account fees are subject to
increase based on postage rate changes.

FSC also collects small account fees from certain accounts with
balances of less than $2,500.

In addition, FSC collects a $5.00 exchange fee for each exchange out
of Spartan California Municipal Money Market.

FSC also collects Spartan California Municipal Money Market's $5.00
wire transaction fee.

FSC also collects Spartan California Municipal Money Market's $5.00
account closeout fee.

FSC also collects Spartan California Municipal Money Market's $2.00
checkwriting fee.

In addition, Citibank receives the pro ra ta portion of the
transfer agency fees applicable to shareholder accounts in a qualified
state tuition pr ogram (QSTP), as defined under the Small
Business Job Protection Act of 1996, managed by FMR or an affiliate
and in each Fideli ty Freedom Fund and Fidelity Four-in-One
Index Fund, funds of funds managed by an FMR affiliate, according to
the percentage of t he QSTP's, Freedom Fund's or Fidelity
Four-in-One Index Fund's assets that is invested in a fund, subject to
certain limitations in the ca se of Fidelity Four-in-One Index
Fund.

FSC pays out-of-pocket expenses associated with providing transfer
agent services. In addition, FSC bears the expense of typesetting,
printing, and mailing prospectuses, statements of additional
information, and all other reports, notices, and statements to
existing shareholders, with the exception of proxy statements.

Each fund has also entered into a service agent agreement with
Citibank. Under the terms of the agreements, Citibank provides pricing
and bo okkeeping services for each fund. Citibank in turn has
entered into sub-service agent agreements with FSC. Under the terms of
the sub-agreements, FSC performs all processing activities associated
with providing these services, including calculating the NAV and
dividends for each fund and maintaining each fund's portfolio and
general accounting records, and receives all related pricing and
bookkeeping fees paid to Citi bank.

For providing pricing and bookkeeping services, FSC receives a monthly
fee based on each fund's average daily net assets throughout the
month.

The annual rates for pricing and bookkeeping services for d omestic
fixe d-income funds are 0.0275% of the first $500 million of
average net assets, 0.0175% of average net assets between $500 million
a nd $3 billion, 0.0021% of average net assets between $3 billion
and $25 billion, and 0.00075% of average net assets in excess of $25
billion. The fee, not including reimbursement for out-of-pocket
expenses, is limited to a minimum of $60,000 per year.

The annual rates for pricing and bookkeeping services for money market
funds are 0.0150% of the first $500 million of average net assets,
0.0075% of average net assets between $500 million and $10 billion,
0.0021% of average net assets between $10 billion and $25 billion ,
and 0.00075% of average net assets in excess of $25 billion. The fee,
not including reimbursement for out-of-pocket expenses, is limited to
a minimum of $40,000 per year.

Pricing and bookkeeping fees, including reimbursement for
out-of-pocket expenses, paid by California Municipal Money Market
and Spartan California Municipal Income to FSC for the past three
fiscal years are shown in the table below.

Fund 2000 1999 1998

California Municipal Money $ 178,000 $ 159,000 $ 145,000
Market

Spartan California Municipal $ 306,000 $ 360,000 $ 302,000
Income

For Spartan California Municipal Money Market, FMR bears the cost of
transfer agency, dividend disbursing, and shareholder services and
pricing and bookkeeping services under the terms of its management
contract with the fund.

DESCRIPTION OF THE TRUSTS

TRUST ORGANIZATION. Fidelity California Municipal Money Market Fund
and Spartan California Municipal Money Market Fund are funds of
Fidelity California Municipal Trust II, an open-end management
investment company organized as a Delaware business trust on June 20,
1991. Spartan California Municipal Income Fund is a fund of Fidelity
California Municipal Trust, an open-end management investment company
organized as a Massachusetts business trust on April 28, 1983.
Curr ently, there are two funds in Fidelity California
Munic ipal Trust II: Fidelity California Municipal Money Market
Fund and Spartan California Municipal Money Market Fund. Currently,
there is one fund in Fidelity California Municipal Trust: Spartan
California Municipal Income Fund. The Trustees are permitted to create
additional funds in the trusts.

The assets of the Massachusetts trust received for the issue or sale
of shares of each of its funds and all income, earnings, profits, and
proceeds thereof, subject to the rights of creditors, are allocated to
such fund, and constitute the underlying assets of such fund. The
underlying assets of each fund in the Massachusetts trust shall be
charged with the liabilities and expenses attributable to such fund.
Any general expenses of the Massachusetts trust shall be allocated
between or among any one or more of its funds.

The assets of the Delaware trust received for the issue or sale of
shares of each of its funds and all income, earnings, profits, and
proceeds thereof, subject to the rights of creditors, are allocated to
such fund, and constitute the underlying assets of such fund. The
underlying assets of each fund in the Delaware trust shall be charged
with the liabilities and expenses attributable to such fund. Any
general expenses of the Delaware trust shall be allocated between or
among any one or more of its funds.

SHAREHOLDER LIABILITY - MASSACHUSETTS TRUST. The Massachusetts trust
is an entity 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 contains an express disclaimer of
shareholder liability for the debts, liabilities, obligations, and
expenses of the trust or fund. 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 Massachusetts trust or the Trustees
relating to the trust or to a fund shall include a provision limiting
the obligations created thereby to the Massachusetts trust or to one
or more funds and its or their assets. The Declaration of Trust
further provides that shareholders of a fund shall not have a claim on
or right to any assets belonging to any other fund.

The Declaration of Trust provides for indemnification out of each
fund's property of any shareholder or former shareholder held
personally liable for the obligations of the fund solely by reason of
his or her being or having been a shareholder and not because of his
or her acts or omissions or for some other reason. 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 a 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.

SHAREHOLDER 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. The Trust Instrument
provides that the 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 the Trustees relating to the trust or to a
fund shall include a provision limiting the obligations created
thereby to the trust or to one or more funds and its or their assets.
The Trust Instrument further provides that shareholders of a fund
shall not have a claim on or right to any assets belonging to any
other fund.

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 solely by reason of his or her
being or having been a shareholder and not because of his or her acts
or omissions or for some other reason. 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 a 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.

VOTING RIGHTS - MASSACHUSETTS TRUST. Each fund's capital consists of
shares of beneficial interest. As a shareholder, you are entitled to
one vote for each dollar of net asset value you own. The voting rights
of shareholders can be changed only by a shareholder vote. Shares may
be voted in the aggregate, by fund , and by class.

The shares have no preemptive or conversion rights. Shares are fully
paid and nonassessable, except as set forth under the heading
"Shareholder Liability" above.

The trust or a fund or a class may be terminated upon the sale of
its assets to, or merger with, another open-end management investment
company, series, or class thereof, or upon liquidation and
distribution of its assets. Generally, the merger of the trust or a
fund or a class with another operating mutual fund or the sale of all
or a portion of the assets of the trust or a fund or a class to
another operating mutual fund requires approval by a vote of
shareholders of the trust or the fund or the class. The Trustees may,
however, reorganize or terminate the trust or a fund or a class
without prior shareholder approval. In the event of the
dissolution or liquidation of the trust, shareholders of each of its
funds are entitled to receive the underlying assets of such fund
available for distribution. In the event of the dissolution or
liquidation of a fund or a class, shareholders of that fund or that
class are entitled to receive the underlying assets of the fund or
class available for distribution.

VOTING RIGHTS - DELAWARE TRUST. Each fund's capital consists of shares
of beneficial interest. As a shareholder, you are entitled to one vote
for each dollar of net asset value you own. The voting rights of
shareholders can be changed only by a shareholder vote. Shares may be
voted in the aggregate, by fund , and by class.

The shares have no preemptive or conversion rights. Shares are fully
paid and nonassessable, except as set forth under the heading
"Shareholder Liability" above.

The trust or a fund may be terminated upon the sale of its
assets to another open-end management investment company or series
thereof, or upon liquidation and distribution of its assets. Generally
such terminations must be approved by a vote of shareholders. In the
event of the dissolution or liquidation of the trust, shareholders of
each of its funds are entitled to receive the underlying assets of
such fund available for distribution. In the event of the dissolution
or liquidation of a fund, shareholders of that fund are entitled to
receive the underlying assets of the fund available for distribution.

Under the Trust Instrument, the Trustees may, without shareholder
vote, in order to change the form of organization of the trust cause
the trust to merge or consolidate with one or more trusts,
partnerships, associations, limited liability companies , or
corporations, as long as the surviving entity is an open-end
management investment company, or is a fund thereof, that will succeed
to or assume the trust's registration statement, or cause the trust to
incorporate under Delaware law.

CUSTODIAN. Citibank, N .A., 111 Wall Street, New York, New York,
is custodian of the assets of the funds. The custodian is responsible
for the safekeeping of a fund's assets and the appointment of any
subcustodian banks and clearing agencies.

FMR, its officers and directors, its affiliated companies, and members
of the Board of Trustees may, from time to time, conduct transactions
with various banks, including banks serving as custodians for certain
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. PricewaterhouseCoopers LLP, 160 Federal Street, Boston,
Massachusetts, serves as independent accountant for each fund. The
auditor examines financial statements for the funds and provides other
audit, tax, and related services.

FINANCIAL STATEMENTS

Each fund's financial statements and financial highlights for the
fiscal year ended February 29, 2000 and report of the auditor,
are included in the fund's annual report and are incorporated herein
by reference.

APPENDIX

Fidelity, Spartan, Fidelity Investments & (Pyramid) Design, Fidelity
Focus, Fidelity Investments and Magellan are registered trademarks of
FMR Corp.

The third party marks appearing above are the marks of their
respective owners.

PART C. OTHER INFORMATION

Item 23. Exhibits

(a) Amended and Restated Trust Instrument, dated December 16, 1999, is
filed herein as Exhibit (a)(1).

(b) By-laws of the Trust, as amended and dated May 19, 1994, are
incorporated herein by reference to Exhibit 2(a) of Fidelity Union
Street Trust II's (File No. 33-43757) Post-Effective Amendment No.
10.

(d)(1) Management Contract, dated April 1, 1997, between Fidelity
California Municipal Money Market Fund and Fidelity Management
& Research Company is incorporated herein by reference to
Exhibit 5(a) of Post-Effective Amendment No. 16.

(2) Management Contract, dated April 18, 1994, between Spartan
California Municipal Money Market Portfolio (currently known as
Spartan California Municipal Money Market Fund) and Fidelity
Management & Research Company is incorporated herein by
reference to Exhibit 5(b) of Post-Effective Amendment No. 11.

(3) Sub-Advisory Agreement, dated December 30, 1991, between FMR
Texas Inc. (currently known as Fidelity Investments Money
Management, Inc.) and Fidelity Management & Research Company on
behalf of Fidelity California Tax-Free Money Market Portfolio
(currently known as Fidelity California Municipal Money Market
Fund) is incorporated herein by reference to Exhibit (5)(c) of
Post-Effective Amendment No. 11.

(4) Sub-Advisory Agreement, dated April 18, 1994, between FMR Texas
Inc. (currently known as Fidelity Investments Money Management,
Inc.) and Fidelity Management & Research Company on behalf of
Spartan California Municipal Money Market Portfolio (currently
known as Spartan California Municipal Money Market Fund) is
incorporated herein by reference to Exhibit (5)(d) of
Post-Effective Amendment No. 11.

(e)(1) General Distribution Agreement, dated December 30, 1991,
between Fidelity California Tax-Free Money Market Portfolio
(currently known as Fidelity California Municipal Money Market
Fund) and Fidelity Distributors Corporation is incorporated
herein by reference to Exhibit (6)(a) of Post-Effective
Amendment No. 11.

(2) General Distribution Agreement, dated October 19, 1989, between
Spartan California Municipal Money Market Portfolio (currently
known as Spartan California Municipal Money Market Fund) and
Fidelity Distributors Corporation is incorporated herein by
reference to Exhibit 6(b) of Post-Effective Amendment No. 11.

(3) Amendment to General Distribution Agreement, dated January 1,
1988, between Fidelity California Tax-Free Money Market
Portfolio (currently known as Fidelity California Municipal
Money Market Fund) and Fidelity Distributors Corporation is
incorporated herein by reference to Exhibit 6(c) of
Post-Effective Amendment No. 11.

(4) Amendments to the General Distribution Agreement between the
Registrant and Fidelity Distributors Corporation, dated March
14, 1996 and July 15, 1996, are incorporated herein by
reference to Exhibit 6(a) of Fidelity Court Street Trust's
(File No. 2-58774) Post-Effective Amendment No. 61.

(f) The Fee Deferral Plan for Non-Interested Person Directors and
Trustees of the Fidelity Funds, effective as of September 15,
1995 and amended through January 1, 2000, is incorporated herein
by reference to Exhibit (f)(1) of Fidelity Massachusetts
Municipal Trust's (File No. 2-75537) Post-Effective Amendment No.
39.

(g) Custodian Agreement, Appendix A, Appendix B, and Appendix C,
dated May 1, 1998, between Citibank, N.A. and the Registrant are
incorporated herein by reference to Exhibit (g)(5) of Fidelity
Union Street Trust's (File No. 2-50318) Post-Effective Amendment
No. 102.

(h) Not applicable.

(i) Legal Opinion of Kirkpatrick & Lockhart LLP for Fidelity
California Municipal Money Market Fund and Spartan California
Municipal Money Market Fund, dated April 18, 2000, is filed herein
as Exhibit (i)(1).

(j) Consent of PricewaterhouseCoopers LLP, dated April 18, 2000, is
filed herein as Exhibit (j)(1).

(k) Not applicable.

(l) Not applicable.

(m)(1) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity California Municipal Money Market Fund is filed herein
as Exhibit (m)(1).

(2) Distribution and Service Plan pursuant to Rule 12b-1 for
Spartan California Municipal Money Market Fund is filed herein
as Exhibit (m)(2).

(n) Not applicable.

(o) Not applicable.

(p) Code of Ethics, dated January 1, 2000, adopted by the funds,
Fidelity Management & Research Company, Fidelity Investments Money
Management, Inc., and Fidelity Distributors Corporation pursuant
to Rule 17j-1 is incorporated herein by reference to Exhibit
(p)(1) of Fidelity Commonwealth Trust's (File No. 2-52322)
Post-Effective Amendment No. 69.

Item 24. Trusts Controlled by or under Common Control with this Trust

The Board of Trustees of the Trust is the same as the board of other
Fidelity funds, each of which has Fidelity Management & Research
Company, or an affiliate, as its investment adviser. In addition, the
officers of the Trust are substantially identical to those of the
other Fidelity funds. Nonetheless, the Trust takes the position that
it is not under common control with other Fidelity funds because the
power residing in the respective boards and officers arises as the
result of an official position with the respective trusts.

Item 25. 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
Trust Instrument sets forth the reasonable and fair means for
determining whether indemnification shall be provided to any past or
present Trustee or officer. It states that the Trust shall indemnify
any present or past 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 or officer 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 Trust 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 Trust. In the event of a settlement, no indemnification may be
provided unless there has been a determination, as specified in the
Trust Instrument, that the officer or trustee did not engage in
disabling conduct.

Pursuant to Section 11 of the Distribution Agreement, the Trust
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 (including the
reasonable cost of investigating or defending any alleged loss,
liability, claim, damages, or expense and reasonable counsel fees
incurred in connection therewith) 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
Trust (as from time to time amended) included an untrue statement of a
material fact or omitted to state a material fact required to be
stated or necessary in order to make the statements not misleading
under the 1933 Act, or any other statute or the common law. However,
the Trust 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
Trust by or on behalf of the Distributor. In no case is the indemnity
of the Trust in favor of the Distributor or any person indemnified to
be deemed to protect the Distributor or any person against any
liability to the Issuer or its security holders to which the
Distributor or such person would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.

Pursuant to the agreement by which Fidelity Service Company, Inc.
("FSC") is appointed sub-transfer agent, the Transfer Agent agrees to
indemnify FSC for FSC's losses, claims, damages, liabilities and
expenses (including reasonable counsel fees and expenses) (losses) to
the extent that the Transfer Agent is entitled to and receives
indemnification from the Fund for the same events. Under the Transfer
Agency Agreement, the Trust agrees to indemnify and hold the Transfer
Agent 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 Trust, including by a shareholder which names the Transfer
Agent and/or the Trust as a party and is not based on and does not
result from the Transfer Agent's willful misfeasance, bad faith or
negligence or reckless disregard of 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
or negligence or reckless disregard of its duties) which results from
the negligence of the Trust, 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 Trust, 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 Trust, 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 26. Business and Other Connections of Investment Advisers

(1) FIDELITY MANAGEMENT & RESEARCH COMPANY (FMR)
82 Devonshire Street, Boston, MA 02109

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.

Edward C. Johnson 3d Chairman of the Board and
Director of FMR; Chief
Executive Officer, Chairman
of the Board, and Director
of FMR Corp., Fidelity
Investments Money
Management, Inc. (FIMM),
Fidelity Management &
Research (U.K.) Inc. (FMR
U.K.), Fidelity Management &
Research (Far East) Inc.
(FMR Far East), and Fidelity
Management & Research Co.,
Inc. (FMRC); Chairman of the
Executive Committee of FMR;
Chairman and Representative
Director of Fidelity
Investments Japan Limited
(FIJ); President and Trustee
of funds advised by FMR.

Robert C. Pozen President and Director of
FMR; Senior Vice President
and Trustee of funds advised
by FMR; President and
Director of FIMM, FMRC, FMR
U.K., and FMR Far East;
Director of Strategic
Advisers, Inc.; Previously,
General Counsel, Managing
Director, and Senior Vice
President of FMR Corp.

Peter S. Lynch Vice Chairman of the Board
and Director of FMR and FMRC.

John Avery Vice President of FMR and of
funds advised by FMR.

Robert Bertelson Vice President of FMR and of
a fund advised by FMR.

John H. Carlson Vice President of FMR and of
funds advised by FMR.

Robert C. Chow Vice President of FMR and of
a fund advised by FMR.

Dwight D. Churchill Senior Vice President of FMR
and Vice President of Bond
Funds advised by FMR; Vice
President of FIMM.

Laura B. Cronin Vice President of FMR and
Treasurer of FMR, FIMM, FMR
U.K., FMRC and FMR Far East.

Barry Coffman Vice President of FMR and of
a fund advised by FMR.

Arieh Coll Vice President of FMR.

Catherine Collins Vice President of FMR.

Frederic G. Corneel Tax Counsel of FMR.

William Danoff Senior Vice President of FMR
and Vice President of funds
advised by FMR.

Scott E. DeSano Vice President of FMR.

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

Walter C. Donovan Vice President of FMR.

Bettina Doulton Senior Vice President of FMR
and of funds advised by FMR.

Stephen DuFour Vice President of FMR and of
a fund advised by FMR.

Maria F. Dwyer Vice President of FMR and
Deputy Treasurer of the
Fidelity funds.

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

William R. Ebsworth Vice President of FMR.

David Felman Vice President of FMR and of
a fund advised by FMR.

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

Karen Firestone Vice President of FMR and of
a fund advised by FMR.

Michael B. Fox Assistant Treasurer of FMR,
FIMM, FMR U.K., and FMR Far
East; Vice President and
Treasurer of FMR Corp. and
Strategic Advisers, Inc.;
Vice President of FMR U.K.,
FMR Far East, and FIMM.

Gregory Fraser Vice President of FMR and of
funds advised by FMR.

Jay Freedman Assistant Clerk of FMR; Clerk
of FMR Corp., FMR U.K., FMR
Far East, FMRC, and
Strategic Advisers, Inc.;
Secretary of FIMM; Vice
President and Deputy General
Counsel of FMR Corp.

David L. Glancy Vice President of FMR and of
funds advised by FMR.

Barry A. Greenfield Vice President of FMR and of
funds advised by FMR.

Boyce I. Greer Senior Vice President of FMR
and Vice President of Money
Market Funds advised by FMR;
Vice President of FIMM.

Bart A. Grenier Senior Vice President of FMR
and Vice President of
High-Income Funds advised by
FMR.

Robert J. Haber Vice President of FMR.

Richard C. Habermann Senior Vice President of FMR
and Vice President of funds
advised by FMR.

Fred L. Henning Jr. Senior Vice President of FMR;
Senior Vice President of
FIMM; Vice President of
Fixed-Income Funds advised
by FMR.

Bruce T. Herring Vice President of FMR.

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

Frederick Hoff Vice President of FMR.

Abigail P. Johnson Senior Vice President of FMR
and Vice President of funds
advised by FMR; Director of
FMR Corp.; Associate
Director and Senior Vice
President of Equity Funds
advised by FMR.

David B. Jones Vice President of FMR.

Steven Kaye Senior Vice President of FMR
and of a fund advised by FMR.

Francis V. Knox Vice President of FMR;
Compliance Officer of FMR
U.K. and FMR Far East.

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

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

Richard R. Mace Jr. Vice President of FMR and of
funds advised by FMR.

Shigeki Makino Vice President of FMR.

Charles A. Mangum Vice President of FMR and of
funds advised by FMR.

Kevin McCarey Vice President of FMR and of
funds advised by FMR.

James McDowell Senior Vice President of FMR.

Neal P. Miller Vice President of FMR and of
a fund advised by FMR.

Jacques Perold Vice President of FMR.

Stephen Petersen Senior Vice President of FMR
and Vice President of funds
advised by FMR.

Alan Radlo Vice President of FMR.

Eric D. Roiter Vice President, General
Counsel, and Clerk of FMR
and Secretary of funds
advised by FMR.

Lee H. Sandwen Vice President of FMR.

Patricia A. Satterthwaite Vice President of FMR and of
funds advised by FMR.

Fergus Shiel Vice President of FMR and of
funds advised by FMR.

Richard A. Silver Vice President of FMR.

Carol A. Smith-Fachetti Vice President of FMR.

Steven J. Snider Vice President of FMR and of
funds advised by FMR.

Thomas T. Soviero Vice President of FMR and of
a fund advised by FMR.

Richard Spillane Senior Vice President of FMR;
Associate Director and
Senior Vice President of
Equity Funds advised by FMR;
Previously, Senior Vice
President and Director of
Operations and Compliance of
FMR U.K.

Thomas M. Sprague Vice President of FMR and of
a fund advised by FMR.

Robert E. Stansky Senior Vice President of FMR
and Vice President of a fund
advised by FMR.

Scott D. Stewart Vice President of FMR and of
funds advised by FMR.

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

Yoko Tilley Vice President of FMR.

Joel C. Tillinghast Vice President of FMR and of
a fund advised by FMR.

Robert Tuckett Vice President of FMR.

Jennifer Uhrig Vice President of FMR and of
funds advised by FMR.

George A. Vanderheiden Senior Vice President of FMR
and Director of FMR Corp.

Jason Weiner Vice President of FMR and of
a fund advised by FMR.

Steven S. Wymer Vice President of FMR and of
a fund advised by FMR.

(5) FIDELITY INVESTMENTS MONEY MANAGEMENT, INC. (FIMM)
1 Spartan Way, Merrimack, NH 03054

FIMM 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.

Edward C. Johnson 3d Chairman of the Board and
Director of FIMM, FMR, FMR
Corp., FMR Far East, FMRC,
and FMR U.K.; Chairman of
the Executive Committee of
FMR; President and Chief
Executive Officer of FMR
Corp.; Chairman and
Representative Director of
Fidelity Investments Japan
Limited (FIJ); President and
Trustee of funds advised by
FMR.

Robert C. Pozen President and Director of
FIMM; Senior Vice President
and Trustee of funds advised
by FMR; President and
Director of FMR, FMR U.K.,
FMRC, and FMR Far East;
Director of Strategic
Advisers, Inc.; Previously,
General Counsel, Managing
Director, and Senior Vice
President of FMR Corp.

Fred L. Henning Jr. Senior Vice President of
FIMM; Senior Vice President
of FMR and Vice President of
Fixed-Income Funds advised
by FMR.

Boyce I. Greer Vice President of FIMM;
Senior Vice President of FMR
and Vice President of Money
Market Funds advised by FMR.

Dwight D. Churchill Vice President of FIMM;
Senior Vice President of FMR
and Vice President of Bond
Funds advised by FMR.

Laura B. Cronin Treasurer of FIMM, FMR Far
East, FMR U.K., FMRC, and
FMR and Vice President of FMR.

Michael B. Fox Assistant Treasurer of FIMM,
FMR U.K., FMR Far East, and
FMR; Vice President and
Treasurer of FMR Corp. and
Strategic Advisers, Inc.;
Vice President of FIMM, FMR
U.K., and FMR Far East.

Jay Freedman Secretary of FIMM; Clerk of
FMR U.K., FMR Far East, FMR
Corp., FMRC, and Strategic
Advisers, Inc.; Assistant
Clerk of FMR; Vice President
and Deputy General Counsel
of FMR Corp.

Susan Englander Hislop Assistant Secretary of FIMM;
Assistant Clerk of FMR U.K.,
FMR Far East, and Strategic
Advisers, Inc.

Stanley N. Griffith Assistant Secretary of FIMM.

Item 27. Principal Underwriters

(a) Fidelity Distributors Corporation (FDC) acts as distributor for
all funds advised by FMR or an affiliate.
(b)

Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Fund

Edward L. McCartney Director and President None

J. Gary Burkhead Director None

Paul J. Gallagher Director None

Kevin J. Kelly Director None

Daniel T. Geraci Executive Vice President None

Eric D. Roiter Vice President and Clerk Secretary

Jane Greene Treasurer and Controller None

Gary Greenstein Assistant Treasurer None

Jay Freedman Assistant Clerk None

Linda Capps Holland Compliance Officer None

* 82 Devonshire Street, Boston, MA

Item 28. Location of Accounts and Records

All accounts, books, and other documents required to be maintained by
Section 31(a) of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company, Fidelity Service
Company, Inc. or Fidelity Investments Institutional Operations
Company, Inc., 82 Devonshire Street, Boston, MA 02109, or the funds'
custodian, Citibank, N.A., 111 Wall Street, New York, NY.

Item 29. Management Services

Not applicable.

Item 30. 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. 20 to the
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston, and Commonwealth of
Massachusetts, on the 20 day of April 2000.

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)

/s/Edward C. Johnson 3d President and Trustee April 20, 2000
(dagger)

Edward C. Johnson 3d (Principal Executive Officer)

/s/Robert A. Dwight Treasurer April 20, 2000

Robert A. Dwight

/s/Robert C. Pozen Trustee April 20, 2000

Robert C. Pozen

/s/Ralph F. Cox Trustee April 20, 2000
*

Ralph F. Cox

/s/Phyllis Burke Davis Trustee April 20, 2000
*

Phyllis Burke Davis

/s/Robert M. Gates Trustee April 20, 2000
*

Robert M. Gates

/s/Donald J. Kirk Trustee April 20, 2000
*

Donald J. Kirk

/s/Ned C. Lautenbach Trustee April 20, 2000
*

Ned C. Lautenbach

/s/Peter S. Lynch Trustee April 20, 2000
*

Peter S. Lynch

/s/Marvin L. Mann Trustee April 20, 2000
*

Marvin L. Mann

/s/William O. McCoy Trustee April 20, 2000
*

William O. McCoy

/s/Gerald C. McDonough Trustee April 20, 2000
*

Gerald C. McDonough

/s/Thomas R. Williams Trustee April 20, 2000
*

Thomas R. Williams

(dagger) Signatures affixed by Robert C. Pozen pursuant to a power of
attorney dated July 17, 1997 and filed herewith.

* Signature affixed by Robert C. Hacker pursuant to a power of
attorney dated December 16, 1999 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:

Fidelity Aberdeen Street Trust Fidelity Hereford Street Trust
Fidelity Advisor Series I Fidelity Income Fund
Fidelity Advisor Series II Fidelity Institutional Cash
Fidelity Advisor Series III Portfolios
Fidelity Advisor Series IV Fidelity Institutional
Fidelity Advisor Series V Tax-Exempt Cash Portfolios
Fidelity Advisor Series VI Fidelity Investment Trust
Fidelity Advisor Series VII Fidelity Magellan Fund
Fidelity Advisor Series VIII Fidelity Massachusetts
Fidelity Beacon Street Trust Municipal Trust
Fidelity Boston Street Trust Fidelity Money Market Trust
Fidelity California Municipal Fidelity Mt. Vernon Street
Trust Trust
Fidelity California Municipal Fidelity Municipal Trust
Trust II Fidelity Municipal Trust II
Fidelity Capital Trust Fidelity New York Municipal
Fidelity Charles Street Trust Trust
Fidelity Commonwealth Trust Fidelity New York Municipal
Fidelity Concord Street Trust Trust II
Fidelity Congress Street Fund Fidelity Phillips Street Trust
Fidelity Contrafund Fidelity Puritan Trust
Fidelity Corporate Trust Fidelity Revere Street Trust
Fidelity Court Street Trust Fidelity School Street Trust
Fidelity Court Street Trust II Fidelity Securities Fund
Fidelity Covington Trust Fidelity Select Portfolios
Fidelity Daily Money Fund Fidelity Sterling Performance
Fidelity Destiny Portfolios Portfolio, L.P.
Fidelity Deutsche Mark Fidelity Summer Street Trust
Performance Fidelity Trend Fund
Portfolio, L.P. Fidelity U.S.
Fidelity Devonshire Trust Investments-Bond Fund, L.P.
Fidelity Exchange Fund Fidelity U.S.
Fidelity Financial Trust Investments-Government
Fidelity Fixed-Income Trust Securities
Fidelity Government Fund, L.P.
Securities Fund Fidelity Union Street Trust
Fidelity Hastings Street Trust Fidelity Union Street Trust II
Fidelity Yen Performance
Portfolio, L.P.
Newbury Street Trust
Variable Insurance Products
Fund
Variable Insurance Products
Fund II
Variable Insurance Products
Fund III

in addition to any other investment company for which Fidelity
Management & Research Company or an affiliate acts as investment
adviser and for which the undersigned individual serves as President
and Director, Trustee, or General Partner (collectively, the "Funds"),
hereby constitute and appoint Robert C. Pozen my true and lawful
attorney-in-fact, with full power of substitution, and with full power
to him to sign for me and in my name in the appropriate capacity, all
Registration Statements of the Funds on Form N-1A, Form N-8A, or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A, Form N-8A, 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 on my behalf in connection therewith as said
attorney-in-fact deems necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and the Investment Company
Act of 1940, and all related requirements of the Securities and
Exchange Commission. I hereby ratify and confirm all that said
attorney-in-fact or his substitutes may do or cause to be done by
virtue hereof. This power of attorney is effective for all documents
filed on or after August 1, 1997.

WITNESS my hand on the date set forth below.

/s/Edward C. Johnson 3d July 17, 1997

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:

Colchester Street Trust Fidelity Hastings Street Trust
Fidelity Aberdeen Street Trust Fidelity Hereford Street Trust
Fidelity Advisor Series I Fidelity Income Fund
Fidelity Advisor Series II Fidelity Institutional
Fidelity Advisor Series III Tax-Exempt Cash Portfolios
Fidelity Advisor Series IV Fidelity Investment Trust
Fidelity Advisor Series V Fidelity Magellan Fund
Fidelity Advisor Series VI Fidelity Massachusetts
Fidelity Advisor Series VII Municipal Trust
Fidelity Advisor Series VIII Fidelity Money Market Trust
Fidelity Beacon Street Trust Fidelity Mt. Vernon Street
Fidelity Boston Street Trust Trust
Fidelity California Municipal Fidelity Municipal Trust
Trust Fidelity Municipal Trust II
Fidelity California Municipal Fidelity New York Municipal
Trust II Trust
Fidelity Capital Trust Fidelity New York Municipal
Fidelity Charles Street Trust Trust II
Fidelity Commonwealth Trust Fidelity Oxford Street Trust
Fidelity Concord Street Trust Fidelity Phillips Street Trust
Fidelity Congress Street Fund Fidelity Puritan Trust
Fidelity Contrafund Fidelity Revere Street Trust
Fidelity Court Street Trust Fidelity School Street Trust
Fidelity Court Street Trust II Fidelity Securities Fund
Fidelity Covington Trust Fidelity Select Portfolios
Fidelity Destiny Portfolios Fidelity Summer Street Trust
Fidelity Devonshire Trust Fidelity Trend Fund
Fidelity Exchange Fund Fidelity U.S.
Fidelity Financial Trust Investments-Bond Fund, L.P.
Fidelity Fixed-Income Trust Fidelity U.S.
Fidelity Government Investments-Government
Securities Fund Securities
Fund, L.P.
Fidelity Union Street Trust
Fidelity Union Street Trust II
Newbury Street Trust
Variable Insurance Products
Fund
Variable Insurance Products
Fund II

plus any other investment company for which Fidelity Management &
Research Company or an affiliate acts as investment adviser and for
which the undersigned individual serves as Directors, Trustees, or
General Partners (collectively, the "Funds"), hereby constitute and
appoint Arthur J. Brown, Arthur C. Delibert, Stephanie A. Djinis,
Robert C. Hacker, Thomas M. Leahey, Richard M. Phillips, and Dana L.
Platt, each of them singly, our true and lawful attorneys-in-fact,
with full power of substitution, and with full power to each of them,
to sign for us and in our names in the appropriate capacities, all
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Amendments, 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 our names
and behalf in connection therewith as said attorneys-in-fact deems
necessary or appropriate, to comply with the provisions of the
Securities Act of 1933 and the 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. This power
of attorney is effective for all documents filed on or after January
1, 2000.

WITNESS our hands on this sixteenth day of December, 1999.

/s/Edward C. Johnson 3d /s/Peter S. Lynch

Edward C. Johnson 3d Peter S. Lynch

/s/Ralph F. Cox /s/William O. McCoy

Ralph F. Cox William O. McCoy

/s/Phyllis Burke Davis /s/Gerald C. McDonough

Phyllis Burke Davis Gerald C. McDonough

/s/Ned C. Lautenbach /s/Marvin L. Mann

Ned C. Lautenbach Marvin L. Mann

/s/Donald J. Kirk /s/Thomas R. Williams

Donald J. Kirk Thomas R. Williams

/s/Robert C. Pozen /s/Robert M. Gates

Robert C. Pozen Robert M. Gates

Exhibit (a)(1)

AMENDED AND RESTATED TRUST INSTRUMENT
FIDELITY CALIFORNIA MUNICIPAL TRUST II

AMENDED AND RESTATED TRUST INSTRUMENT, made December 16, 1999 by each
of the Trustees whose signature is affixed hereto (the "Trustees").

WHEREAS, the Trustees desire to amend and restate this Trust
Instrument for the sole purpose of supplementing the Trust Instrument
to incorporate amendments duly adopted; and

WHEREAS, this Trust was initially made on June 20, 1991 by Edward C.
Johnson 3d, J. Gary Burkhead and John E. Ferris in order to establish
a trust for the investment and reinvestment of funds contributed
thereto;

NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust hereunder shall be held and managed in trust
under this Amended and Restated Trust Instrument as herein set forth
below.

_________________________________________________

ARTICLE I
NAME AND DEFINITIONS

NAME

Section 1.01. The name of the trust created hereby is the "Fidelity
California Municipal Trust II."

DEFINITIONS.

Section 1.02. Wherever used herein, unless otherwise required by the
context or specifically provided:

(a) "Bylaws" means the Bylaws referred to in Article IV, Section
4.01(e) hereof, as from time to time amended;

(b) The term "Commission" has the meaning given it in the 1940 Act.
The terms "Affiliated Person," "Assignment," "Interested Person" and
"Principal Underwriter" shall have the meanings given them in the 1940
Act, as modified by or interpreted by any applicable order or orders
of the Commission or any rules or regulations adopted or interpretive
releases of the Commission thereunder. "Majority Shareholder Vote"
shall have the same meaning as the term "vote of a majority of the
outstanding voting securities" is given in the 1940 Act, as modified
by or interpreted by any applicable order or orders of the Commission
or any rules or regulations adopted or interpretive releases of the
Commission thereunder;

(c) The "Delaware Act" refers to Chapter 38 of Title 12 of the
Delaware Code entitled "Treatment of Delaware Business Trusts," as it
may be amended from time to time;

(d) "Net Asset Value" means the net asset value of each Series of the
Trust determined in the manner provided in Article IX, Section 9.03
hereof;

(e) "Outstanding Shares" means those Shares shown from time to time
in the books of the Trust or its Transfer Agent as then issued and
outstanding, but shall not include Shares which have been redeemed or
repurchased by the Trust and which are at the time held in the
treasury of the Trust;

(f) "Series" means a series of Shares of the Trust established in
accordance with the provisions of Article II, Section 2.06 hereof;

(g) "Shareholder" means a record owner of Outstanding Shares of the
Trust;

(h) "Shares" means the equal proportionate transferable units of
beneficial interest into which the beneficial interest of each Series
of the Trust or class thereof shall be divided and may include
fractions of Shares as well as whole Shares;

(i) The "Trust" refers to Fidelity California Municipal Trust II and
reference to the Trust, when applicable to one or more Series of the
Trust, shall refer to any such Series;

(j) The "Trustees" means the person or persons who has or have signed
this Trust Instrument, so long as he or they shall continue in office
in accordance with the terms hereof, and all other persons who may
from time to time be duly qualified and serving as Trustees in
accordance with the provisions of Article III hereof and reference
herein to a Trustee or to the Trustees shall refer to the individual
Trustees in their capacity as Trustees hereunder;

(k) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account
of one or more of the Trust or any Series, or the Trustees on behalf
of the Trust or any Series; and

(l) The "1940 Act" refers to the Investment Company Act of 1940, as
amended from time to time.

ARTICLE II
BENEFICIAL INTEREST

SHARES OF BENEFICIAL INTEREST

Section 2.01. The beneficial interest in the Trust shall be divided
into such transferable Shares of one or more separate and distinct
Series or classes of a Series as the Trustees shall from time to time
create and establish. The number of Shares of each Series, and class
thereof, authorized hereunder is unlimited. Each Share shall have no
par value. All Shares issued hereunder, including without
limitation, Shares issued in connection with a dividend in Shares or a
split or reverse split of Shares, shall be fully paid and
nonassessable.

ISSUANCE OF SHARES

Section 2.02. The Trustees in their discretion may, from time to
time, without vote of the Shareholders, issue Shares, in addition to
the then issued and outstanding Shares and Shares held in the
treasury, to such party or parties and for such amount and type of
consideration, subject to applicable law, including cash or
securities, at such time or times and on such terms as the Trustees
may deem appropriate, and may in such manner acquire other assets
(including the acquisition of assets subject to, and in connection
with, the assumption of liabilities) and businesses. In connection
with any issuance of Shares, the Trustees may issue fractional Shares
and Shares held in the treasury. The Trustees may from time to time
divide or combine the Shares into a greater or lesser number without
thereby changing the proportionate beneficial interests in the Trust.
Contributions to the Trust may be accepted for, and Shares shall be
redeemed as, whole Shares and/or 1/1,000th of a Share or integral
multiples thereof.

Section 2.03. A register shall be kept at the principal office of
the Trust or an office of the Trust's transfer agent which shall
contain the names and addresses of the Shareholders of each Series,
the number of Shares of that Series (or any class or classes thereof)
held by them respectively and a record of all transfers thereof. As
to Shares for which no certificate has been issued, such register
shall be conclusive as to who are the holders of the Shares and who
shall be entitled to receive dividends or other distributions or
otherwise to exercise or enjoy the rights of Shareholders. No
Shareholder shall be entitled to receive payment of any dividend or
other distribution, nor to have notice given to him as herein or in
the Bylaws provided, until he has given his address to the transfer
agent or such other officer or agent of the Trustees as shall keep the
said register for entry thereon. The Trustees, in their discretion,
may authorize the issuance of share certificates and promulgate
appropriate rules and regulations as to their use. Such certificates
may be issuable for any purpose limited in the Trustees discretion.
In the event that one or more certificates are issued, whether in the
name of a shareholder or a nominee, such certificate or certificates
shall constitute evidence of ownership of Shares for all purposes,
including transfer, assignment or sale of such Shares, subject to such
limitations as the Trustees may, in their discretion, prescribe.

TRANSFER OF SHARES

Section 2.04. Except as otherwise provided by the Trustees, Shares
shall be transferable on the records of the Trust only by the record
holder thereof or by his agent thereunto duly authorized in writing,
upon delivery to the Trustees or the Trust's transfer agent of a duly
executed instrument of transfer, together with a Share certificate, if
one is outstanding, and such evidence of the genuineness of each such
execution and authorization and of such other matters as may be
required by the Trustees. Upon such delivery the transfer shall be
recorded on the register of the Trust. Until such record is made, the
Shareholder of record shall be deemed to be the holder of such Shares
for all purposes hereunder and neither the Trustees nor the Trust, nor
any transfer agent or registrar nor any officer, employee or agent of
the Trust shall be affected by any notice of the proposed transfer.

TREASURY SHARES

Section 2.05. Shares held in the treasury shall, until reissued
pursuant to Section 2.02 hereof, not confer any voting rights on the
Trustees, nor shall such Shares be entitled to any dividends or other
distributions declared with respect to the Shares.

ESTABLISHMENT OF SERIES

Section 2.06. The Trust created hereby shall consist of one or more
Series and separate and distinct records shall be maintained by the
Trust for each Series and the assets associated with any such Series
shall be held and accounted for separately from the assets of the
Trust or any other Series. The Trustees shall have full power and
authority, in their sole discretion, and without obtaining any prior
authorization or vote of the Shareholders of any Series of the Trust,
to establish and designate and to change in any manner any such Series
of Shares or any classes of initial or additional Series and to fix
such preferences, voting powers, rights and privileges of such Series
or classes thereof as the Trustees may from time to time determine, to
divide or combine the Shares or any Series or classes thereof into a
greater or lesser number, to classify or reclassify any issued Shares
or any Series or classes thereof into one or more Series or classes of
Shares, and to take such other action with respect to the Shares as
the Trustees may deem desirable. The establishment and designation of
any Series shall be effective upon the adoption of a resolution by a
majority of the Trustees setting forth such establishment and
designation and the relative rights and preferences of the Shares of
such Series, whether directly in such resolution or by reference to,
or approval of, another document that sets forth such relative rights
and preferences of the Shares of such Series including, without
limitation, any registration statement of the Trust, or as otherwise
provided in such resolution. A Series may issue any number of Shares
and need not issue shares. At any time that there are no Shares
outstanding of any particular Series previously established and
designated, the Trustees may by a majority vote abolish that Series
and the establishment and designation thereof.

All references to Shares in this Trust Instrument shall be deemed to
be Shares of any or all Series, or classes thereof, as the context may
require. All provisions herein relating to the Trust shall apply
equally to each Series of the Trust, and each class thereof, except as
the context otherwise requires.

Each Share of a Series of the Trust shall represent an equal
beneficial interest in the net assets of such Series. Each holder of
Shares of a Series shall be entitled to receive his pro rata share of
distributions of income and capital gains, if any, made with respect
to such Series. Upon redemption of his Shares, such Shareholder shall
be paid solely out of the funds and property of such Series of the
Trust.

INVESTMENT IN THE TRUST

Section 2.07. The Trustees shall accept investments in any Series of
the Trust from such persons and on such terms as they may from time to
time authorize. At the Trustees' discretion, such investments,
subject to applicable law, may be in the form of cash or securities in
which the affected Series is authorized to invest, valued as provided
in Article IX, Section 9.03 hereof. Investments in a Series shall be
credited to each Shareholder's account in the form of full Shares at
the Net Asset Value per Share next determined after the investment is
received; provided, however, that the Trustees may, in their sole
discretion, (a) fix the Net Asset Value per Share of the initial
capital contribution, (b) impose a sales charge or other fee upon
investments in the Trust in such manner and at such time determined by
the Trustees or (c) issue fractional Shares.

ASSETS AND LIABILITIES OF SERIES

Section 2.08. All consideration received by the Trust for the issue
or sale of Shares of a particular Series, together with all assets in
which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall be held and accounted for
separately from the other assets of the Trust and of every other
Series and may be referred to herein as "assets belonging to" that
Series. The assets belonging to a particular Series shall belong to
that Series for all purposes, and to no other Series, subject only to
the rights of creditors of that Series. In addition, any assets,
income, earnings, profits or funds, or payments and proceeds with
respect thereto, which are not readily identifiable as belonging to
any particular Series shall be allocated by the Trustees between and
among one or more of the Series in such manner as the Trustees, in
their sole discretion, deem fair and equitable. Each such allocation
shall be conclusive and binding upon the Shareholders of all Series
for all purposes, and such assets, income, earnings, profits or funds,
or payments and proceeds with respect thereto shall be assets
belonging to that Series. The assets belonging to a particular Series
shall be so recorded upon the books of the Trust, and shall be held by
the Trustees in trust for the benefit of the holders of Shares of that
Series. The assets belonging to each particular Series shall be
charged with the liabilities of that Series and all expenses, costs,
charges and reserves attributable to that Series. Any general
liabilities, expenses, costs, charges or reserves of the Trust which
are not readily identifiable as belonging to any particular Series
shall be allocated and charged by the Trustees between or among any
one or more of the Series in such manner as the Trustees in their sole
discretion deem fair and equitable. Each such allocation shall be
conclusive and binding upon the Shareholders of all Series for all
purposes. Without limitation of the foregoing provisions of this
Section 2.08, but subject to the right of the Trustees in their
discretion to allocate general liabilities, expenses, costs, charges
or reserves as herein provided, the debts, liabilities, obligations
and expenses incurred, contracted for or otherwise existing with
respect to a particular Series shall be enforceable against the assets
of such Series only, and not against the assets of the Trust
generally. Notice of this limitation on inter-Series liabilities may,
in the Trustee's sole discretion, be set forth in the certificate of
trust of the Trust (whether originally or by amendment) as filed or to
be filed in the Office of the Secretary of State of the State of
Delaware pursuant to the Delaware Act, and upon the giving of such
notice in the certificate of trust, the statutory provisions of
Section 3804 of the Delaware Act relating to limitations on
inter-Series liabilities (and the statutory effect under Section 3804
of setting forth such notice in the certificate of trust) shall become
applicable to the Trust and each Series. Any person extending credit
to, contracting with or having any claim against any Series may look
only to the assets of that Series to satisfy or enforce any debt,
liability, obligation or expense incurred, contracted for or otherwise
existing with respect to that Series. No Shareholder or former
Shareholder of any Series shall have a claim on or any right to any
assets allocated or belonging to any other Series.

NO PREEMPTIVE RIGHTS

Section 2.09. Shareholders shall have no preemptive or other right
to subscribe to any additional Shares or other securities issued by
the Trust or the Trustees, whether of the same or other Series.

PERSONAL LIABILITY OF SHAREHOLDERS

Section 2.10. Each Shareholder of the Trust and of each Series shall
not be personally liable for the debts, liabilities, obligations and
expenses incurred by, contracted for, or otherwise existing with
respect to, the Trust or by or on behalf of any Series. The Trustees
shall have no power to bind any Shareholder personally or to call upon
any Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time
personally agree to pay by way of subscription for any Shares or
otherwise. Every note, bond, contract or other undertaking issued by
or on behalf of the Trust or the Trustees relating to the Trust or to
a Series shall include a recitation limiting the obligation
represented thereby to the Trust or to one or more Series and its or
their assets (but the omission of such a recitation shall not operate
to bind any Shareholder or Trustee of the Trust).

ASSENT TO TRUST INSTRUMENT

Section 2.11. Every Shareholder, by virtue of having purchased a
Share shall become a Shareholder and shall be held to have expressly
assented and agreed to be bound by the terms hereof.

ARTICLE III
THE TRUSTEES

MANAGEMENT OF THE TRUST

Section 3.01. The Trustees shall have exclusive and absolute control
over the Trust Property and over the business of the Trust to the same
extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as
may be permitted by this Trust Instrument. The Trustees shall have
power to conduct the business of the Trust and carry on its operations
in any and all of its branches and maintain offices both within and
without the State of Delaware, in any and all states of the United
States of America, in the District of Columbia, in any and all
commonwealths, territories, dependencies, colonies, or possessions of
the United States of America, and in any foreign jurisdiction and to
do all such other things and execute all such instruments as they deem
necessary, proper or desirable in order to promote the interests of
the Trust although such things are not herein specifically mentioned.
Any determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. In construing the
provisions of this Trust Instrument, the presumption shall be in favor
of a grant of power to the Trustees.

The enumeration of any specific power in this Trust Instrument shall
not be construed as limiting the aforesaid power. The powers of the
Trustees may be exercised without order of or resort to any court.

Except for the Trustees named herein or appointed to fill vacancies
pursuant to Section 3.04 of this Article III, the Trustees shall be
elected by the Shareholders owning of record a plurality of the Shares
voting at a meeting of Shareholders. Such a meeting shall be held on
a date fixed by the Trustees. In the event that less than a majority
of the Trustees holding office have been elected by Shareholders, the
Trustees then in office will call a Shareholders' meeting for the
election of Trustees.

INITIAL TRUSTEES

Section 3.02. The initial Trustees shall be the persons named
herein. On a date fixed by the Trustees, the Shareholders shall elect
at least three but not more than twelve Trustees, as specified by the
Trustees pursuant to Section 3.06 of this Article III.

TERM OF OFFICE OF TRUSTEES

Section 3.03. The Trustees shall hold office during the lifetime of
this Trust, and until its termination as herein provided; except (a)
that any Trustee may resign his trust by written instrument signed by
him and delivered to the other Trustees, which shall take effect upon
such delivery or upon such later date as is specified therein; (b)
that any Trustee may be removed at any time by written instrument,
signed by at least two-thirds of the number of Trustees prior to such
removal, specifying the date when such removal shall become effective;
(c) that any Trustee who requests in writing to be retired or who has
died, become physically or mentally incapacitated by reason of disease
or otherwise, or is otherwise unable to serve, may be retired by
written instrument signed by a majority of the other Trustees,
specifying the date of his retirement; and (d) that a Trustee may be
removed at any meeting of the Shareholders of the Trust by a vote of
Shareholders owning at least two-thirds of the outstanding Shares.

VACANCIES AND APPOINTMENT OF TRUSTEES

Section 3.04. In case of the declination to serve, death,
resignation, retirement, removal, physical or mental incapacity by
reason of disease or otherwise, or a Trustee is otherwise unable to
serve, or an increase in the number of Trustees, a vacancy shall
occur. Whenever a vacancy in the Board of Trustees shall occur, until
such vacancy is filled, the other Trustees shall have all the powers
hereunder and the certificate of the other Trustees of such vacancy
shall be conclusive. In the case of an existing vacancy, the
remaining Trustees shall fill such vacancy by appointing such other
person as they in their discretion shall see fit consistent with the
limitations under the 1940 Act. Such appointment shall be evidenced
by a written instrument signed by a majority of the Trustees in office
or by resolution of the Trustees, duly adopted, which shall be
recorded in the minutes of a meeting of the Trustees, whereupon the
appointment shall take effect.

An appointment of a Trustee may be made by the Trustees then in office
in anticipation of a vacancy to occur by reason of retirement,
resignation or increase in number of Trustees effective at a later
date, provided that said appointment shall become effective only at or
after the effective date of said retirement, resignation or increase
in number of Trustees. As soon as any Trustee appointed pursuant to
this Section 3.04 shall have accepted this trust, or at such date as
may be specified in the acceptance whenever made, the trust estate
shall vest in the new Trustee or Trustees, together with the
continuing Trustees, without any further act or conveyance, and he
shall be deemed a Trustee hereunder. The power to appoint a Trustee
pursuant to this Section 3.04 is subject to the provisions of Section
16(a) of the 1940 Act.

TEMPORARY ABSENCE OF TRUSTEE

Section 3.05. Any Trustee may, by power of attorney, delegate his
power for a period not exceeding six months at any one time to any
other Trustee or Trustees, provided that in no case shall less than
two Trustees personally exercise the other powers hereunder except as
herein otherwise expressly provided.

NUMBER OF TRUSTEES

Section 3.06. The number of Trustees shall be at least three, and
thereafter shall be such number as shall be fixed from time to time by
a majority of the Trustees, provided, however, that the number of
Trustees shall in no event be more than twelve (12).

EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE

Section 3.07. The declination to serve, death, resignation,
retirement, removal, incapacity, or inability of the Trustees, or any
one of them, shall not operate to terminate the Trust or to revoke any
existing agency created pursuant to the terms of this Trust
Instrument.

OWNERSHIP OF ASSETS OF THE TRUST

Section 3.08. The assets of the Trust and of each Series shall be
held separate and apart from any assets now or hereafter held in any
capacity other than as Trustee hereunder by the Trustees or any
successor Trustees. Legal title in all of the assets of the Trust and
the right to conduct any business shall at all times be considered as
vested in the Trustees on behalf of the Trust, except that the
Trustees may cause legal title to any Trust Property to be held by, or
in the name of the Trust, or in the name of any person as nominee. No
Shareholder shall be deemed to have a severable ownership in any
individual asset of the Trust or of any Series or any right of
partition or possession thereof, but each Shareholder shall have,
except as otherwise provided for herein, a proportionate undivided
beneficial interest in the Trust or Series. The Shares shall be
personal property giving only the rights specifically set forth in
this Trust Instrument.

ARTICLE IV
POWERS OF THE TRUSTEES

POWERS

Section 4.01. The Trustees in all instances shall act as principals,
and are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all acts
and to make and execute any and all contracts and instruments that
they may consider necessary or appropriate in connection with the
management of the Trust. The Trustees shall not in any way be bound
or limited by present or future laws or customs in regard to trust
investments, but shall have full authority and power to make any and
all investments which they, in their sole discretion, shall deem
proper to accomplish the purpose of this Trust without recourse to any
court or other authority. Subject to any applicable limitation in
this Trust Instrument or the Bylaws of the Trust, the Trustees shall
have power and authority:

(a) To invest and reinvest cash and other property, and to hold cash
or other property uninvested, without in any event being bound or
limited by any present or future law or custom in regard to
investments by trustees, and to sell, exchange, lend, pledge,
mortgage, hypothecate, write options on and lease any or all of the
assets of the Trust;

(b) To operate as and carry on the business of an investment company,
and exercise all the powers necessary and appropriate to the conduct
of such operations;

(c) To borrow money and in this connection issue notes or other
evidence of indebtedness; to secure borrowings by mortgaging, pledging
or otherwise subjecting as security the Trust Property; to endorse,
guarantee, or undertake the performance of an obligation or engagement
of any other Person and to lend Trust Property;

(d) To provide for the distribution of interests of the Trust either
through a principal underwriter in the manner hereinafter provided for
or by the Trust itself, or both, or otherwise pursuant to a plan of
distribution of any kind;

(e) To adopt Bylaws not inconsistent with this Trust Instrument
providing for the conduct of the business of the Trust and to amend
and repeal them to the extent that they do not reserve that right to
the Shareholders; such Bylaws shall be deemed incorporated and
included in this Trust Instrument;

(f) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate;

(g) To employ one or more banks, trust companies or companies that
are members of a national securities exchange or such other entities
as the Commission may permit as custodians of any assets of the Trust
subject to any conditions set forth in this Trust Instrument or in the
Bylaws;

(h) To retain one or more transfer agents and shareholder servicing
agents, or both;

(i) To set record dates in the manner provided herein or in the
Bylaws;

(j) To delegate such authority as they consider desirable to any
officers of the Trust and to any investment adviser, manager,
custodian, underwriter or other agent or independent contractor;

(k) To sell or exchange any or all of the assets of the Trust,
subject to the provisions of Article XI, Section 11.04(b) hereof;

(l) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver powers of attorney to such person or persons as the Trustees
shall deem proper, granting to such person or persons such power and
discretion with relation to securities or property as the Trustees
shall deem proper;

(m) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities;

(n) To hold any security or property in a form not indicating any
trust, whether in bearer, book entry, unregistered or other negotiable
form; or either in the name of the Trust or in the name of a custodian
or a nominee or nominees, subject in either case to proper safeguards
according to the usual practice of Delaware business trusts or
investment companies;

(o) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article II hereof and to establish
classes of such Series having relative rights, powers and duties as
they may provide consistent with applicable law;

(p) Subject to the provisions of Section 3804 of the Delaware Act, to
allocate assets, liabilities and expenses of the Trust to a particular
Series or class thereof or to apportion the same between or among two
or more Series or classes thereof, provided that any liabilities or
expenses incurred by a particular Series or class thereof shall be
payable solely out of the assets belonging to that Series as provided
for in Article II hereof;

(q) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of
which is held in the Trust; to consent to any contract, lease,
mortgage, purchase, or sale of property by such corporation or
concern, and to pay calls or subscriptions with respect to any
security held in the Trust;

(r) To compromise, arbitrate, or otherwise adjust claims in favor of
or against the Trust or any matter in controversy including, but not
limited to, claims for taxes;

(s) To make distributions of income and of capital gains to
Shareholders in the manner hereinafter provided;

(t) To establish, from time to time, a minimum investment for
Shareholders in the Trust or in one or more Series or class, and to
require the redemption of the Shares of any Shareholders whose
investment is less than such minimum upon giving notice to such
Shareholder;

(u) To establish one or more committees, to delegate any of the
powers of the Trustees to said committees and to adopt a committee
charter providing for such responsibilities, membership (including
Trustees, officers or other agents of the Trust therein) and any other
characteristics of said committees as the Trustees may deem proper.
Notwithstanding the provisions of this Article IV, and in addition to
such provisions or any other provision of this Trust Instrument or of
the Bylaws, the Trustees may by resolution appoint a committee
consisting of less than the whole number of Trustees then in office,
which committee may be empowered to act for and bind the Trustees and
the Trust, as if the acts of such committee were the acts of all the
Trustees then in office, with respect to the institution, prosecution,
dismissal, settlement, review or investigation of any action, suit or
proceeding which shall be pending or threatened to be brought before
any court, administrative agency or other adjudicatory body;

(v) To interpret the investment policies, practices or limitations of
any Series;

(w) Notwithstanding any other provision hereof, to invest all or a
portion of the assets of any series in one or more open-end investment
companies, including investment by means of a transfer of such assets
in an exchange for an interest or interests in such investment company
or companies or by any other method approved by the Trustees;

(x) To establish a registered office and have a registered agent in
the state of Delaware; and

(y) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary,
suitable or proper for the accomplishment of any purpose or the
attainment of any object or the furtherance of any power hereinbefore
set forth, either alone or in association with others, and to do every
other act or thing incidental or appurtenant to or growing out of or
connected with the aforesaid business or purposes, objects or powers.

The foregoing clauses shall be construed both as objects and powers,
and the foregoing enumeration of specific powers shall not be held to
limit or restrict in any manner the general powers of the Trustees.
Any action by one or more of the Trustees in their capacity as such
hereunder shall be deemed an action on behalf of the Trust or the
applicable Series, and not an action in an individual capacity.

The Trustees shall not be limited to investing in obligations
maturing before the possible termination of the Trust.

No one dealing with the Trustees shall be under any obligation to
make any inquiry concerning the authority of the Trustees, or to see
to the application of any payments made or property transferred to the
Trustees or upon their order.

ISSUANCE AND REPURCHASE OF SHARES

Section 4.02. The Trustees shall have the power to issue, sell,
repurchase, redeem, retire, cancel, acquire, hold, resell, reissue,
dispose of, and otherwise deal in Shares and, subject to the
provisions set forth in Article II and Article IX, to apply to any
such repurchase, redemption, retirement, cancellation or acquisition
of Shares any funds or property of the Trust, or the particular Series
of the Trust, with respect to which such Shares are issued.

TRUSTEES AND OFFICERS AS SHAREHOLDERS

Section 4.03. Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of Shares to the same extent as if he were
not a Trustee, officer or agent; and the Trustees may issue and sell
or cause to be issued and sold Shares to and buy such Shares from any
such person or any firm or company in which he is interested, subject
only to the general limitations herein contained as to the sale and
purchase of such Shares; and all subject to any restrictions which may
be contained in the Bylaws.

ACTION BY THE TRUSTEES

Section 4.04. The Trustees shall act by majority vote at a meeting
duly called or by unanimous written consent without a meeting or by
telephone meeting provided a quorum of Trustees participate in any
such telephone meeting, unless the 1940 Act requires that a particular
action be taken only at a meeting at which the Trustees are present in
person. At any meeting of the Trustees, a majority of the Trustees
shall constitute a quorum. Meetings of the Trustees may be called
orally or in writing by the Chairman of the Board of Trustees or by
any two other Trustees. Notice of the time, date and place of all
meetings of the Trustees shall be given by the party calling the
meeting to each Trustee by telephone, telefax, or telegram sent to his
home or business address at least twenty-four hours in advance of the
meeting or by written notice mailed to his home or business address at
least seventy-two hours in advance of the meeting. Notice need not be
given to any Trustee who attends the meeting without objecting to the
lack of notice or who executes a written waiver of notice with respect
to the meeting. Any meeting conducted by telephone shall be deemed to
take place at the principal office of the Trust, as determined by the
Bylaws or by the Trustees. Subject to the requirements of the 1940
Act, the Trustees by majority vote may delegate to any one or more of
their number their authority to approve particular matters or take
particular actions on behalf of the Trust. Written consents or
waivers of the Trustees may be executed in one or more counterparts.
Execution of a written consent or waiver and delivery thereof to the
Trust may be accomplished by telefax.

CHAIRMAN OF THE TRUSTEES

Section 4.05. The Trustees shall appoint one of their number to be
Chairman of the Board of Trustees. The Chairman shall preside at all
meetings of the Trustees, shall be responsible for the execution of
policies established by the Trustees and the administration of the
Trust, and may be (but is not required to be) the chief executive,
financial and/or accounting officer of the Trust.

PRINCIPAL TRANSACTIONS

Section 4.06. Except to the extent prohibited by applicable law, the
Trustees may, on behalf of the Trust, buy any securities from or sell
any securities to, or lend any assets of the Trust to, any Trustee or
officer of the Trust or any firm of which any such Trustee or officer
is a member acting as principal, or have any such dealings with any
investment adviser, distributor or transfer agent for the Trust or
with any Interested Person of such person; and the Trust may employ
any such person, or firm or company in which such person is an
Interested Person, as broker, legal counsel, registrar, investment
adviser, distributor, transfer agent, dividend disbursing agent,
custodian or in any other capacity upon customary terms.

ARTICLE V
EXPENSES OF THE TRUST

TRUSTEE REIMBURSEMENT

Section 5.01. Subject to the provisions of Article II, Section 2.08
hereof, the Trustees shall be reimbursed from the Trust estate or the
assets belonging to the appropriate Series for their expenses and
disbursements, including, without limitation, fees and expenses of
Trustees who are not Interested Persons of the Trust, interest
expense, taxes, fees and commissions of every kind, expenses of
pricing Trust portfolio securities, expenses of issue, repurchase and
redemption of shares, including expenses attributable to a program of
periodic repurchases or redemptions, expenses of registering and
qualifying the Trust and its Shares under Federal and State laws and
regulations or under the laws of any foreign jurisdiction, charges of
third parties, including investment advisers, managers, custodians,
transfer agents, portfolio accounting and/or pricing agents, and
registrars, expenses of preparing and setting up in type prospectuses
and statements of additional information and other related Trust
documents, expenses of printing and distributing prospectuses sent to
existing Shareholders, auditing and legal expenses, reports to
Shareholders, expenses of meetings of Shareholders and proxy
solicitations therefor, insurance expenses, association membership
dues and for such non-recurring items as may arise, including
litigation to which the Trust (or a Trustee acting as such) is a
party, and for all losses and liabilities by them incurred in
administering the Trust, and for the payment of such expenses,
disbursements, losses and liabilities the Trustees shall have a lien
on the assets belonging to the appropriate Series, or in the case of
an expense allocable to more than one Series, on the assets of each
such Series, prior to any rights or interests of the Shareholders
thereto. This section shall not preclude the Trust from directly
paying any of the aforementioned fees and expenses.

ARTICLE VI
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER AND TRANSFER AGENT

INVESTMENT ADVISER

Section 6.01. The Trustees may in their discretion, from time to
time, enter into an investment advisory or management contract or
contracts with respect to the Trust or any Series whereby the other
party or parties to such contract or contracts shall undertake to
furnish the Trustees with such management, investment advisory,
statistical and research facilities and services and such other
facilities and services, if any, and all upon such terms and
conditions, as the Trustees may in their discretion determine;
provided, however, that the initial approval and entering into of such
contract or contracts shall be subject to a Majority Shareholder Vote.
Notwithstanding any other provision of this Trust Instrument, the
Trustees may authorize any investment adviser (subject to such general
or specific instructions as the Trustees may from time to time adopt)
to effect purchases, sales or exchanges of portfolio securities, other
investment instruments of the Trust, or other Trust Property on behalf
of the Trustees, or may authorize any officer, agent, or Trustee to
effect such purchases, sales or exchanges pursuant to recommendations
of the investment adviser (and all without further action by the
Trustees). Any such purchases, sales and exchanges shall be deemed to
have been authorized by all of the Trustees.

The Trustees may authorize, subject to applicable requirements of the
1940 Act, including those relating to Shareholder approval, the
investment adviser to employ, from time to time, one or more
sub-advisers to perform such of the acts and services of the
investment adviser, and upon such terms and conditions, as may be
agreed upon between the investment adviser and sub-adviser. Any
reference in this Trust Instrument to the investment adviser shall be
deemed to include such sub-advisers, unless the context otherwise
requires.

PRINCIPAL UNDERWRITER

Section 6.02. The Trustees may in their discretion from time to time
enter into an exclusive or non-exclusive underwriting contract or
contracts providing for the sale of Shares, whereby the Trust may
either agree to sell Shares to the other party to the contract or
appoint such other party its sales agent for such Shares. In either
case, the contract shall be on such terms and conditions, if any, as
may be prescribed in the Bylaws, and such further terms and conditions
as the Trustees may in their discretion determine not inconsistent
with the provisions of this Article VI, or of the Bylaws; and such
contract may also provide for the repurchase or sale of Shares by such
other party as principal or as agent of the Trust.

TRANSFER AGENT

Section 6.03. The Trustees may in their discretion from time to time
enter into one or more transfer agency and Shareholder service
contracts whereby the other party or parties shall undertake to
furnish the Trustees with transfer agency and Shareholder services.
The contract or contracts shall be on such terms and conditions as the
Trustees may in their discretion determine not inconsistent with the
provisions of this Trust Instrument or of the Bylaws.

PARTIES TO CONTRACT

Section 6.04. Any contract of the character described in Sections
6.01, 6.02 and 6.03 of this Article VI or any contract of the
character described in Article VIII hereof may be entered into with
any corporation, firm, partnership, trust or association, although one
or more of the Trustees or officers of the Trust may be an officer,
director, trustee, shareholder, or member of such other party to the
contract, and no such contract shall be invalidated or rendered void
or voidable by reason of the existence of any relationship, nor shall
any person holding such relationship be disqualified from voting on or
executing the same in his capacity as Shareholder and/or Trustee, nor
shall any person holding such relationship be liable merely by reason
of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized
directly or indirectly therefrom, provided that the contract when
entered into was not inconsistent with the provisions of this Article
VI or Article VIII hereof or of the Bylaws. The same person
(including a firm, corporation, partnership, trust, or association)
may be the other party to contracts entered into pursuant to Sections
6.01, 6.02 and 6.03 of this Article VI or pursuant to Article VIII
hereof, and any individual may be financially interested or otherwise
affiliated with persons who are parties to any or all of the contracts
mentioned in this Section 6.04.

PROVISIONS AND AMENDMENTS

Section 6.05. Any contract entered into pursuant to Sections 6.01 or
6.02 of this Article VI shall be consistent with and subject to the
requirements of Section 15 of the 1940 Act or other applicable Act of
Congress hereafter enacted with respect to its continuance in effect,
its termination, and the method of authorization and approval of such
contract or renewal thereof, and no amendment to any contract, entered
into pursuant to Section 6.01 of this Article VI shall be effective
unless assented to in a manner consistent with the requirements of
said Section 15, as modified by any applicable rule, regulation or
order of the Commission.

ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS

VOTING POWERS

Section 7.01. The Shareholders shall have power to vote only (i) for
the election of Trustees as provided in Article III, Sections 3.01 and
3.02 hereof, (ii) for the removal of Trustees as provided in Article
III, Section 3.03(d) hereof, (iii) with respect to any investment
advisory or management contract as provided in Article VI, Sections
6.01 and 6.05 hereof, and (iv) with respect to such additional matters
relating to the Trust as may be required by law, by this Trust
Instrument, or the Bylaws or any registration of the Trust with the
Commission or any State, or as the Trustees may consider desirable.

On any matter submitted to a vote of the Shareholders, all Shares
shall be voted separately by individual Series, except (i) when
required by the 1940 Act, Shares shall be voted in the aggregate and
not by individual Series; and (ii) when the Trustees have determined
that the matter affects the interests of more than one Series, then
the Shareholders of all such Series shall be entitled to vote thereon.
The Trustees may also determine that a matter affects only the
interests of one or more classes of a Series, in which case any such
matter shall be voted on by such class or classes. A shareholder of
each Series shall be entitled to one vote for each dollar of net asset
value (number of shares owned times net asset value per share) of such
Series on any matter on which such shareholder is entitled to vote and
each fractional dollar amount shall be entitled to a proportionate
fractional vote. There shall be no cumulative voting in the election
of Trustees. Shares may be voted in person or by proxy or in any
manner provided for in the Bylaws. A proxy may be given in writing.
The Bylaws may provide that proxies may also, or may instead, be given
by any electronic or telecommunications device or in any other manner.
Notwithstanding anything else herein or in the Bylaws, in the event a
proposal by anyone other than the officers or Trustees of the Trust is
submitted to a vote of the Shareholders of one or more Series or of
the Trust, or in the event of any proxy contest or proxy solicitation
or proposal in opposition to any proposal by the officers or Trustees
of the Trust, Shares may be voted only in person or by written proxy.
Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required or permitted by law,
this Trust Instrument or any of the Bylaws of the Trust to be taken by
Shareholders.

MEETINGS

Section 7.02. The first Shareholders' meeting shall be held in order
to elect Trustees as specified in Section 3.02 of Article III hereof
at the principal office of the Trust or such other place as the
Trustees may designate. Meetings may be held within or without the
State of Delaware. Special meetings of the Shareholders of any Series
may be called by the Trustees and shall be called by the Trustees upon
the written request of Shareholders owning at least one-tenth of the
Outstanding Shares entitled to vote. Whenever ten or more
Shareholders meeting the qualifications set forth in Section 16(c) of
the 1940 Act, as the same may be amended from time to time, seek the
opportunity of furnishing materials to the other Shareholders with a
view to obtaining signatures on such a request for a meeting, the
Trustees shall comply with the provisions of said Section 16(c) with
respect to providing such Shareholders access to the list of the
Shareholders of record of the Trust or the mailing of such materials
to such Shareholders of record, subject to any rights provided to the
Trust or any Trustees provided by said Section 16(c). Shareholders
shall be entitled to at least fifteen (15) days' notice of any
meeting.

QUORUM AND REQUIRED VOTE

Section 7.03. One-third of Shares entitled to vote in person or by
proxy shall be a quorum for the transaction of business at a
Shareholders' meeting, except that where any provision of law or of
this Trust Instrument permits or requires that holders of any Series
shall vote as a Series (or that holders of a class shall vote as a
class), then one-third of the aggregate number of Shares of that
Series (or that class) entitled to vote shall be necessary to
constitute a quorum for the transaction of business by that Series (or
that class). Any lesser number shall be sufficient for adjournments.
Any adjourned session or sessions may be held, within a reasonable
time after the date set for the original meeting, without the
necessity of further notice. Except when a larger vote is required by
law or by any provision of this Trust Instrument or the Bylaws, a
majority of the Shares voted in person or by proxy shall decide any
questions and a plurality shall elect a Trustee, provided that where
any provision of law or of this Trust Instrument permits or requires
that the holders of any Series shall vote as a Series (or that the
holders of any class shall vote as a class), then a majority of the
Shares present in person or by proxy of that Series or, if required by
law, a Majority Shareholder Vote of that Series (or class), voted on
the matter in person or by proxy shall decide that matter insofar as
that Series (or class) is concerned. Shareholders may act by
unanimous written consent. Actions taken by Series (or class) may be
consented to unanimously in writing by Shareholders of that Series.

DERIVATIVE ACTIONS

Section 7.04. Except as otherwise provided in Section 3816 of the
Delaware Act, all matters relating to the bringing of derivative
actions in the right of the Trust shall be governed by the General
Corporation Law of the State of Delaware relating to derivative
actions, and judicial interpretations thereunder, as if the Trust were
a Delaware corporation and the Shareholders were shareholders of a
Delaware corporation.

ARTICLE VIII
CUSTODIAN

APPOINTMENT AND DUTIES

Section 8.01. The Trustees shall at all times employ a bank, a
company that is a member of a national securities exchange, or a trust
company, each having capital, surplus and undivided profits of at
least two million dollars ($2,000,000) as custodian with authority as
its agent, but subject to such restrictions, limitations and other
requirements, if any, as may be contained in the Bylaws of the Trust:

(1) to hold the securities owned by the Trust and deliver the same
upon written order or oral order confirmed in writing, or by such
electro-mechanical or electronic devices as are agreed to by the Trust
and the custodian, if such procedures have been authorized in writing
by the Trust;

(2) to receive and receipt for any moneys due to the Trust and
deposit the same in its own banking department or elsewhere as the
Trustees may direct;

(3) to disburse such funds upon orders or vouchers;

and the Trust may also employ such custodian as its agent:

(4) to keep the books and accounts of the Trust or of any Series or
class and furnish clerical and accounting services;

and

(5) to compute, if authorized to do so by the Trustees, the Net Asset
Value of any Series, or class thereof, in accordance with the
provisions hereof;

all upon such basis of compensation as may be agreed upon between the
Trustees and the custodian.

The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and
services of the custodian, and upon such terms and conditions, as may
be agreed upon between the custodian and such sub-custodian and
approved by the Trustees, provided that in every case such
sub-custodian shall be a bank, a company that is a member of a
national securities exchange, or a trust company organized under the
laws of the United States or one of the states thereof and having
capital, surplus and undivided profits of at least two million dollars
($2,000,000) or such other person as may be permitted by the
Commission, or otherwise in accordance with the 1940 Act.

CENTRAL CERTIFICATE SYSTEM

Section 8.02. Subject to such rules, regulations and orders as the
Commission may adopt, the Trustees may direct the custodian to deposit
all or any part of the securities owned by the Trust in a system for
the central handling of securities established by a national
securities exchange or a national securities association registered
with the Commission under the Securities Exchange Act of 1934, as
amended, or such other person as may be permitted by the Commission,
or otherwise in accordance with the 1940 Act, pursuant to which system
all securities of any particular class or series of any issuer
deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery
of such securities, provided that all such deposits shall be subject
to withdrawal only upon the order of the Trust or its custodians,
subcustodians or other agents.

ARTICLE IX
DISTRIBUTIONS AND REDEMPTIONS

DISTRIBUTIONS

Section 9.01.

(a) The Trustees may from time to time declare and pay dividends or
other distributions with respect to any Series. The amount of such
dividends or distributions and the payment of them and whether they
are in cash or any other Trust Property shall be wholly in the
discretion of the Trustees.

(b) Dividends and other distributions may be paid or made to the
Shareholders of record at the time of declaring a dividend or other
distribution or among the Shareholders of record at such other date or
time or dates or times as the Trustees shall determine, which
dividends or distributions, at the election of the Trustees, may be
paid pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Trustees may determine. The
Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans or related plans as the
Trustees shall deem appropriate.

(c) Anything in this Trust Instrument to the contrary
notwithstanding, the Trustees may at any time declare and distribute a
dividend of stock or other property pro rata among the Shareholders of
a particular Series, or class thereof, as of the record date of that
Series fixed as provided in Section (b) hereof.

REDEMPTIONS

Section 9.02. In case any holder of record of Shares of a particular
Series desires to dispose of his Shares or any portion thereof, he may
deposit at the office of the transfer agent or other authorized agent
of that Series a written request or such other form of request as the
Trustees may from time to time authorize, requesting that the Series
purchase the Shares in accordance with this Section 9.02; and the
Shareholder so requesting shall be entitled to require the Series to
purchase, and the Series or the principal underwriter of the Series
shall purchase his said Shares, but only at the Net Asset Value
thereof (as described in Section 9.03 of this Article IX). The Series
shall make payment for any such Shares to be redeemed, as aforesaid,
in cash or property from the assets of that Series and payment for
such Shares less any applicable deferred sales charge and/or fees
shall be made by the Series or the principal underwriter of the Series
to the Shareholder of record within seven (7) days after the date upon
which the request is effective. Upon redemption, shares shall become
Treasury shares and may be re-issued from time to time.

DETERMINATION OF NET ASSET VALUE AND VALUATION OF PORTFOLIO ASSETS

Section 9.03. The term "Net Asset Value" of any Series shall mean
that amount by which the assets of that Series exceed its liabilities,
all as determined by or under the direction of the Trustees. Such
value shall be determined separately for each Series and shall be
determined on such days and at such times as the Trustees may
determine. Such determination shall be made with respect to
securities for which market quotations are readily available, at the
market value of such securities; and with respect to other securities
and assets, at the fair value as determined in good faith by the
Trustees; provided, however, that the Trustees, without Shareholder
approval, may alter the method of valuing portfolio securities insofar
as permitted under the 1940 Act and the rules, regulations and
interpretations thereof promulgated or issued by the Commission or
insofar as permitted by any Order of the Commission applicable to the
Series. The Trustees may delegate any of their powers and duties
under this Section 9.03 with respect to valuation of assets and
liabilities. The resulting amount, which shall represent the total
Net Asset Value of the particular Series, shall be divided by the
total number of shares of that Series outstanding at the time and the
quotient so obtained shall be the Net Asset Value per Share of that
Series. At any time, the Trustees may cause the Net Asset Value per
Share last determined to be determined again in similar manner and may
fix the time when such redetermined value shall become effective. If,
for any reason, the net income of any Series, determined at any time,
is a negative amount, the Trustees shall have the power with respect
to that Series (i) to offset each Shareholder's pro rata share of such
negative amount from the accrued dividend account of such Shareholder,
or (ii) to reduce the number of Outstanding Shares of such Series by
reducing the number of Shares in the account of each Shareholder by a
pro rata portion of that number of full and fractional Shares which
represents the amount of such excess negative net income, or (iii) to
cause to be recorded on the books of such Series an asset account in
the amount of such negative net income (provided that the same shall
thereupon become the property of such Series with respect to such
Series and shall not be paid to any Shareholder), which account may be
reduced by the amount, of dividends declared thereafter upon the
Outstanding Shares of such Series on the day such negative net income
is experienced, until such asset account is reduced to zero; (iv) to
combine the methods described in clauses (i) and (ii) and (iii) of
this sentence; or (v) to take any other action they deem appropriate,
in order to cause (or in order to assist in causing) the Net Asset
Value per Share of such Series to remain at a constant amount per
Outstanding Share immediately after each such determination and
declaration. The Trustees shall also have the power not to declare a
dividend out of net income for the purpose of causing the Net Asset
Value per Share to be increased. The Trustees shall not be required
to adopt, but may at any time adopt, discontinue or amend the practice
of maintaining the Net Asset Value per Share of the Series at a
constant amount.

SUSPENSION OF THE RIGHT OF REDEMPTION

Section 9.04. The Trustees may declare a suspension of the right of
redemption or postpone the date of payment as permitted under the 1940
Act. Such suspension shall take effect at such time as the Trustees
shall specify but not later than the close of business on the business
day next following the declaration of suspension, and thereafter there
shall be no right of redemption or payment until the Trustees shall
declare the suspension at an end. In the case of a suspension of the
right of redemption, a Shareholder may either withdraw his request for
redemption or receive payment based on the Net Asset Value per Share
next determined after the termination of the suspension. In the event
that any Series is divided into classes, the provisions of this
Section 9.04, to the extent applicable as determined in the discretion
of the Trustees and consistent with applicable law, may be equally
applied to each such class.

REDEMPTION OF SHARES

Section 9.05. The Trustees may require Shareholders to redeem Shares
for any reason under terms set by the Trustees, including, but not
limited to, (i) the determination of the Trustees that direct or
indirect ownership of Shares of any Series has or may become
concentrated in such Shareholder to an extent that would disqualify
any Series as a regulated investment company under the Internal
Revenue Code of 1986, as amended (or any successor statute thereto),
(ii) the failure of a Shareholder to supply a tax identification
number if required to do so, or (iii) the failure of a Shareholder to
pay when due for the purchase of Shares issued to him. The redemption
shall be effected at the redemption price and in the manner provided
in this Article IX.

The holders of Shares shall upon demand disclose to the Trustees in
writing such information with respect to direct and indirect ownership
of Shares as the Trustees deem necessary to comply with the provisions
of the Internal Revenue Code, or to comply with the requirements of
any other taxing authority.

ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION

LIMITATION OF LIABILITY

Section 10.01. Neither a Trustee nor an officer of the Trust when
acting in such capacity, shall be personally liable to any person
other than the Trust or a beneficial owner for any act, omission or
obligation of the Trust, any Trustee or any officer of the Trust.
Neither a Trustee nor an officer of the Trust shall be liable for any
act or omission or any conduct whatsoever in his capacity as Trustee
or officer of the Trust, provided that nothing contained herein or in
the Delaware Act shall protect any Trustee or any officer of the Trust
against any liability to the Trust or to Shareholders to which he
would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved
in the conduct of the office of Trustee or Officer hereunder.

INDEMNIFICATION

Section 10.02.

(a) Subject to the exceptions and limitations contained in Section
(b) below:

(i) every Person who is, or has been, a Trustee or officer of the
Trust (hereinafter referred to as a "Covered Person") shall be
indemnified by the Trust to the fullest extent permitted by law
against liability and against all expenses reasonably incurred or paid
by him in connection with any claim, action, suit or proceeding in
which he becomes involved as a party or otherwise by virtue of his
being or having been a Trustee or officer and against amounts paid or
incurred by him in the settlement thereof;

(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal or
other, including appeals), actual or threatened while in office or
thereafter, and the words "liability" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.

(b) No indemnification shall be provided hereunder to a Covered
Person:

(i) who shall have been adjudicated by a court or body before which
the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office or (B) not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Trust; or

(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office,

(A) by the court or other body approving the settlement;

(B) by at least a majority of those Trustees who are neither
Interested Persons of the Trust nor are parties to the matter based
upon a review of readily available facts (as opposed to a full
trial-type inquiry); or

(C) by written opinion of independent legal counsel based upon a
review of readily available facts (as opposed to a full trial-type
inquiry);

provided, however, that any Shareholder may, by appropriate legal
proceedings, challenge any such determination by the Trustees or by
independent counsel.

(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall
not be exclusive of or affect any other rights to which any Covered
Person may now or hereafter be entitled, shall continue as to a person
who has ceased to be a Covered Person and shall inure to the benefit
of the heirs, executors and administrators of such a person. Nothing
contained herein shall affect any rights to indemnification to which
Trust personnel, other than Covered Persons, and other persons may be
entitled by contract or otherwise under law.

(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character
described in paragraph (a) of this Section 10.02 may be paid by the
Trust or Series from time to time prior to final disposition thereof
upon receipt of an undertaking by or on behalf of such Covered Person
that such amount will be paid over by him to the Trust or Series if it
is ultimately determined that he is not entitled to indemnification
under this Section 10.02; provided, however, that either (a) such
Covered Person shall have provided appropriate security for such
undertaking, (b) the Trust is insured against losses arising out of
any such advance payments or (c) either a majority of the Trustees who
are neither Interested Persons of the Trust nor parties to the matter,
or independent legal counsel in a written opinion, shall have
determined, based upon a review of readily available facts (as opposed
to a trial-type inquiry or full investigation), that there is reason
to believe that such Covered Person will be found entitled to
indemnification under this Section 10.02.

SHAREHOLDERS

Section 10.03. In case any Shareholder or former Shareholder of any
Series shall be held to be personally liable solely by reason of his
being or having been a Shareholder of such Series and not because of
his acts or omissions or for some other reason, the Shareholder or
former Shareholder (or his heirs, executors, administrators or other
legal representatives, or, in the case of a corporation or other
entity, its corporate or other general successor) shall be entitled
out of the assets belonging to the applicable Series to be held
harmless from and indemnified against all loss and expense arising
from such liability. The Trust, on behalf of the affected Series,
shall, upon request by the Shareholder, assume the defense of any
claim made against the Shareholder for any act or obligation of the
Series and satisfy any judgment thereon from the assets of the Series.

ARTICLE XI
MISCELLANEOUS

TRUST NOT A PARTNERSHIP

Section 11.01. It is the intention of the Trustees to create a
business trust pursuant to the Delaware Act. It is not the intention
of the Trustees to create a general partnership, limited partnership,
joint stock association, corporation, bailment, or any form of legal
relationship other than a business trust pursuant to the Delaware Act.
No Trustee hereunder shall have any power to bind personally either
the Trust's officers or any Shareholder. All persons extending credit
to, contracting with or having any claim against the Trust or the
Trustees shall look only to the assets of the appropriate Series or
(if the Trustees shall have yet to have established Series) of the
Trust for payment under such credit, contract or claim; and neither
the Shareholders nor the Trustees, nor any of their agents, whether
past, present or future, shall be personally liable therefor. Nothing
in this Trust Instrument shall protect a Trustee against any liability
to which the Trustee would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee hereunder.

TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY

Section 11.02. The exercise by the Trustees or the officers of the
Trust of their powers and discretions hereunder in good faith and with
reasonable care under the circumstances then prevailing shall be
binding upon everyone interested. Subject to the provisions of
Article X hereof and to Section 11.01 of this Article XI, the Trustees
or the officers of the Trust shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees and the officers of
the Trust may take advice of counsel or other experts with respect to
the meaning and operation of this Trust Instrument, and subject to the
provisions of Article X hereof and Section 11.01 of this Article XI,
shall be under no liability for any act or omission in accordance with
such advice or for failing to follow such advice. The Trustees and
the officers of the Trust shall not be required to give any bond as
such, nor any surety if a bond is obtained.

ESTABLISHMENT OF RECORD DATES

Section 11.03. The Trustees may close the Share transfer books of
the Trust for a period not exceeding sixty (60) days preceding the
date of any meeting of Shareholders, or the date for the payment of
any dividends or other distributions, or the date for the allotment of
rights, or the date when any change or conversion or exchange of
Shares shall go into effect; or in lieu of closing the stock transfer
books as aforesaid, the Trustees may fix in advance a date, not
exceeding sixty (60) days preceding the date of any meeting of
Shareholders, or the date for payment of any dividend or other
distribution, or the date for the allotment of rights, or the date
when any change or conversion or exchange of Shares shall go into
effect, as a record date for the determination of the Shareholders
entitled to notice of, and to vote at, any such meeting, or entitled
to receive payment of any such dividend or other distribution, or to
any such allotment of rights, or to exercise the rights in respect of
any such change, conversion or exchange of Shares, and in such case
such Shareholders and only such Shareholders as shall be Shareholders
of record on the date so fixed shall be entitled to such notice of,
and to vote at, such meeting, or to receive payment of such dividend
or other distribution, or to receive such allotment or rights, or to
exercise such rights, as the case may be, notwithstanding any transfer
of any Shares on the books of the Trust after any such record date
fixed as aforesaid.

TERMINATION OF TRUST

Section 11.04.

(a) This Trust shall continue without limitation of time but subject
to the provisions of sub-section (b) of this Section 11.04.

(b) The Trustees may, subject to a Majority Shareholder Vote of each
Series affected by the matter or, if applicable, to a Majority
Shareholder Vote of the Trust, and subject to a vote of a majority of
the Trustees,

(i) sell and convey all or substantially all of the assets of the
Trust or any affected Series to another trust, partnership,
association or corporation, or to a separate series of shares thereof,
organized under the laws of any state which trust, partnership,
association or corporation is an open-end management investment
company as defined in the 1940 Act, or is a series thereof, for
adequate consideration which may include the assumption of all
outstanding obligations, taxes and other liabilities, accrued or
contingent, of the Trust or any affected Series, and which may include
shares of beneficial interest, stock or other ownership interests of
such trust, partnership, association or corporation or of a series
thereof; or

(ii) at any time sell and convert into money all of the assets of the
Trust or any affected Series.

Upon making reasonable provision, in the determination of the
Trustees, for the payment of all such liabilities in either (i) or
(ii), by such assumption or otherwise, the Trustees shall distribute
the remaining proceeds or assets (as the case may be) of each Series
(or class) ratably among the holders of Shares of that Series then
outstanding.

(c) Upon completion of the distribution of the remaining proceeds or
the remaining assets as provided in sub-section (b), the Trust or any
affected Series shall terminate and the Trustees and the Trust shall
be discharged of any and all further liabilities and duties hereunder
and the right, title and interest of all parties with respect to the
Trust or Series shall be cancelled and discharged.

Upon termination of the Trust, following completion of winding up of
its business, the Trustees shall cause a certificate of cancellation
of the Trust's certificate of trust to be filed in accordance with the
Delaware Act, which certificate of cancellation may be signed by any
one Trustee.

MERGERS

Section 11.05. (a) Notwithstanding anything else herein, the
Trustees, in order to change the form of organization of the Trust,
may, without prior Shareholder approval, (i) cause the Trust to merge
or consolidate with or into one or more trusts, partnerships (general
or limited), associations, limited liability companies or corporations
so long as the surviving or resulting entity is an open-end management
investment company under the 1940 Act, or is a Series thereof, that
will succeed to or assume the Trust's registration under that Act and
which is formed, organized or existing under the laws of a state,
commonwealth, possession or colony of the United States or (ii) cause
the Trust to incorporate under the laws of Delaware.

(b) The Trustees may, subject to a Majority Shareholder Vote of the
Trust, and subject to a vote of a majority of the Trustees, cause the
Trust to merge or consolidate with or into one or more trusts,
partnerships (general or limited), associations, limited liability
companies or corporations.

(c) Any agreement of merger or consolidation or certificate of merger
or consolidation may be signed by a majority of Trustees and facsimile
signatures conveyed by electronic or telecommunication means shall be
valid.

(d) Pursuant to and in accordance with the provisions of Section
3815(f) of the Delaware Act, and notwithstanding anything to the
contrary contained in this Trust Instrument, an agreement of merger or
consolidation approved by the Trustees in accordance with paragraphs
(a) or (b) of this Section 11.05 may effect any amendment to the Trust
Instrument or effect the adoption of a new Trust Instrument of the
Trust if it is the surviving or resulting trust in the merger or
consolidation.

FILING OF COPIES, REFERENCES, HEADINGS

Section 11.06. The original or a copy of this Trust Instrument and
of each amendment hereof or Trust Instrument supplemental hereto shall
be kept at the office of the Trust where it may be inspected by any
Shareholder. A supplemental trust instrument executed by any one
Trustee may be relied upon as a Supplement hereof. Anyone dealing
with the Trust may rely on a certificate by an officer or Trustee of
the Trust as to whether or not any such amendments or supplements have
been made and as to any matters in connection with the Trust
hereunder, and with the same effect as if it were the original, may
rely on a copy certified by an officer or Trustee of the Trust to be a
copy of this Trust Instrument or of any such amendment or supplemental
Trust Instrument. In this Trust Instrument or in any such amendment
or supplemental Trust Instrument, references to this Trust Instrument,
and all expressions like "herein," "hereof" and "hereunder," shall be
deemed to refer to this Trust Instrument as amended or affected by any
such supplemental Trust Instrument. All expressions like "his", "he"
and "him", shall be deemed to include the feminine and neuter, as well
as masculine, genders. Headings are placed herein for convenience of
reference only and in case of any conflict, the text of this Trust
Instrument, rather than the headings, shall control. This Trust
Instrument may be executed in any number of counterparts each of which
shall be deemed an original.

APPLICABLE LAW

Section 11.07. The trust set forth in this instrument is made in the
State of Delaware, and the Trust and this Trust Instrument, and the
rights and obligations of the Trustees and Shareholders hereunder, are
to be governed by and construed and administered according to the
Delaware Act and the laws of said State; provided, however, that there
shall not be applicable to the Trust, the Trustees or this Trust
Instrument (a) the provisions of Section 3540 of Title 12 of the
Delaware Code or (b) any provisions of the laws (statutory or common)
of the State of Delaware (other than the Delaware Act) pertaining to
trusts which relate to or regulate (i) the filing with any court or
governmental body or agency of trustee accounts or schedules of
trustee fees and charges, (ii) affirmative requirements to post bonds
for trustees, officers, agents or employees of a trust, (iii) the
necessity for obtaining court or other governmental approval
concerning the acquisition, holding or disposition of real or personal
property, (iv) fees or other sums payable to trustees, officers,
agents or employees of a trust, (v) the allocation of receipts and
expenditures to income or principal, (vi) restrictions or limitations
on the permissible nature, amount or concentration of trust
investments or requirements relating to the titling, storage or other
manner of holding of trust assets, or (vii) the establishment of
fiduciary or other standards or responsibilities or limitations on the
acts or powers of trustees, which are inconsistent with the
limitations or liabilities or authorities and powers of the Trustees
set forth or referenced in this Trust Instrument. The Trust shall be
of the type commonly called a "business trust", and without limiting
the provisions hereof, the Trust may exercise all powers which are
ordinarily exercised by such a trust under Delaware law. The Trust
specifically reserves the right to exercise any of the powers or
privileges afforded to trusts or actions that may be engaged in by
trusts under the Delaware Act, and the absence of a specific reference
herein to any such power, privilege or action shall not imply that the
Trust may not exercise such power or privilege or take such actions.

AMENDMENTS

Section 11.08. Except as specifically provided herein, the Trustees
may, without shareholder vote, amend or otherwise supplement this
Trust Instrument by making an amendment, a Trust Instrument
supplemental hereto or an amended and restated Trust Instrument.
Shareholders shall have the right to vote (i) on any amendment which
would affect their right to vote granted in Section 7.01 of Article
VII hereof, (ii) on any amendment to this Section 11.08, (iii) on any
amendment as may be required by law or by the Trust's registration
statement filed with the Commission and (iv) on any amendment
submitted to them by the Trustees. Any amendment required or
permitted to be submitted to Shareholders which, as the Trustees
determine, shall affect the Shareholders of one or more Series shall
be authorized by vote of the Shareholders of each Series affected and
no vote of shareholders of a Series not affected shall be required.
Notwithstanding anything else herein, any amendment to Article 10
hereof shall not limit the rights to indemnification or insurance
provided therein with respect to action or omission of Covered Persons
prior to such amendment.

FISCAL YEAR

Section 11.09. The fiscal year of the Trust shall end on a specified
date as set forth in the Bylaws, provided, however, that the Trustees
may, without Shareholder approval, change the fiscal year of the
Trust.

USE OF THE WORD "FIDELITY"

Section 11.10. Fidelity Management & Research Company ("FMR") has
consented to, and granted a non-exclusive license for, the use by any
Series or by the Trust of the identifying word "Fidelity" or "Spartan"
in the name of any Series or of the Trust. Such consent is subject to
revocation by FMR in its discretion, if FMR or subsidiary or affiliate
thereof is not employed as the investment adviser of each Series of
the Trust. As between the Trust and FMR, FMR controls the use of the
name of the Trust insofar as such name contains the identifying word
"Fidelity" or "Spartan." FMR may, from time to time, use the
identifying word "Fidelity" or "Spartan" in other connections and for
other purposes, including, without limitation, in the names of other
investment companies, corporations or businesses which it may manage,
advise, sponsor or own or in which it may have a financial interest.
FMR may require the Trust or any Series thereof to cease using the
identifying word "Fidelity" or "Spartan" in the name of the Trust or
any Series thereof if the Trust or any Series thereof ceases to employ
FMR or a subsidiary or affiliate thereof as investment adviser.

PROVISIONS IN CONFLICT WITH LAW

Section 11.11. The provisions of this Trust Instrument are
severable, and if the Trustees shall determine, with the advice of
counsel, that any of such provisions is in conflict with the 1940 Act,
the regulated investment company provisions of the Internal Revenue
Code or with other applicable laws and regulations, the conflicting
provision shall be deemed never to have constituted a part of this
Trust Instrument; provided, however, that such determination shall not
affect any of the remaining provisions of this Trust Instrument or
render invalid or improper any action taken or omitted prior to such
determination. If any provision of this Trust Instrument shall be
held invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provisions in any
other jurisdiction or any other provision of this Trust Instrument in
any jurisdiction.

IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust, have executed this instrument as of the date set forth above.

/s/Edward C. Johnson 3d /s/Peter S. Lynch

Edward C. Johnson 3d* Peter S. Lynch*

/s/Ralph F. Cox /s/William O. McCoy

Ralph F. Cox William O. McCoy

/s/Phyllis Burke Davis /s/Gerald C. McDonough

Phyllis Burke Davis Gerald C. McDonough

/s/Robert M. Gates /s/Marvin L. Mann

Robert M. Gates Marvin L. Mann

/s/E. Bradley Jones /s/Robert C. Pozen

E. Bradley Jones Robert C. Pozen*

/s/Donald J. Kirk /s/Thomas R. Williams

Donald J. Kirk Thomas R. Williams

*Interested Trustees

The business addresses of the
members of the Board of
Trustees are:
INTERESTED TRUSTEES (*):
82 Devonshire Street
Boston, MA 02109

NON-INTERESTED TRUSTEES:
82 Devonshire Street
Boston, MA 02109

Mailing Address:
P.O. Box 9235
Boston, MA 02205-9235

Kirkpatrick & Lockhart llp 1800 Massachusetts Avenue, NW
Second Floor
Washington, DC 20036-1800
202.778.9000
www.kl.com

April 18, 2000

Fidelity California Municipal Trust II
82 Devonshire Street
Boston, Massachusetts 02109

Ladies and Gentlemen:

You have requested our opinion, as counsel to Fidelity California
Municipal Trust II (the "Trust"), as to certain matters regarding the
issuance of Shares of the Trust. As used in this letter, the term
"Shares" means the shares of beneficial interest of Fidelity
California Municipal Money Market Fund and Spartan California
Municipal Money Market Fund, each a series of the Trust.

As such counsel, we have examined certified or other copies, believed
by us to be genuine, of the Trust's Trust Instrument and by-laws and
such resolutions and minutes of meetings of the Trust's Board of
Trustees as we have deemed relevant to our opinion, as set forth
herein. Our opinion is limited to the laws and facts in existence on
the date hereof, and it is further limited to the laws (other than the
conflict of law rules) in the State of Delaware that in our experience
are normally applicable to the issuance of shares by unincorporated
voluntary associations and to the Securities Act of 1933 ("1933 Act"),
the Investment Company Act of 1940 ("1940 Act") and the regulations of
the Securities and Exchange Commission ("SEC") thereunder.

Based on present laws and facts, we are of the opinion that the
issuance of the Shares has been duly authorized by the Trust and that,
when sold in accordance with the terms contemplated by Post-Effective
Amendment No. 20 to the Trust's Registration Statement on Form N-1A
and each subsequent Post-Effective Amendment ("PEA") to said
registration statement, including receipt by the Trust of full payment
for the Shares and compliance with the 1933 Act and the 1940 Act and
applicable state law regulating the offer and sale of securities, the
Shares will have been validly issued, fully paid and non-assessable.

The Trust is a business trust established pursuant to the Delaware
Business Trust Act ("Delaware Act"). The Delaware Act provides that a
shareholder of the Trust is entitled to the same limitation of
personal liability extended to shareholders of for-profit
corporations. To the extent that the Trust or any of its shareholders
become subject to the jurisdiction of courts in states that do not
have statutory or other authority limiting the liability of business
trust shareholders, such courts might not apply the Delaware Act and
could subject Trust shareholders to liability.

To guard against this risk, the Trust's Trust Instrument provides
that the Trustees shall have no power to bind any shareholder
personally or to call upon any shareholder for the payment of any sum
of money or assessment whatsoever other than such as the shareholder
may at any time personally agree to pay by way of subscription for any
shares or otherwise. The Trust Instrument also requires that every
note, bond, contract or other undertaking issued by or on behalf of
the Trust or the Trustees relating to the Trust or to a series shall
include a recitation limiting the obligation represented thereby to
the Trust or to one or more series and its or their assets (although
the omission of such a recitation shall not operate to bind any
shareholder of the Trust). Furthermore, the Trust Instrument provides
that: (i) in case any shareholder or former shareholder of any series
shall be held to be personally liable solely by reason of his being or
having been a shareholder of such series and not because of his acts
or omissions or for some other reason, the shareholder or former
shareholder shall be entitled out of the assets belonging to the
applicable series to be held harmless from and indemnified against all
loss and expense arising from such liability; and (ii) the Trust, on
behalf of the affected series, shall, upon request by the shareholder,
assume the defense of any claim made against the shareholder for any
act or obligation of the series and satisfy any judgment thereon from
the assets of the series.

We hereby consent to this opinion accompanying or being incorporated
by reference in the PEA when it is filed with the SEC.

Very truly yours,

KIRKPATRICK & LOCKHART LLP
/s/Kirkpatrick & Lockhart LLP

Exhibit (j)(1)

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference into the
Prospectus and Statement of Additional Information in Post-Effective
Amendment No. 20 to the Registration Statement on Form N-1A of
Fidelity California Municipal Trust II: Fidelity California Municipal
Money Market Fund and Spartan California Municipal Money Market Fund,
of our report dated April 7, 2000 on the financial statements and
financial highlights included in the February 29, 2000 Annual Report
to Shareholders of Fidelity California Municipal Money Market Fund and
Spartan California Municipal Money Market Fund .

We further consent to the references to our Firm under the headings
"Financial Highlights" in the Prospectus and "Auditor" in the
Statement of Additional Information.

/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP

Boston, Massachusetts
April 18, 2000

Exhibit (m)(1)

DISTRIBUTION AND SERVICE PLAN
of Fidelity California Municipal Trust II:
Fidelity California Municipal Money Market Fund

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
Fidelity California Municipal Money Market Fund (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 recognized that the Adviser may use its
management fee revenues as well as past profits or its resources from
any other source, to make payment to the Distributor with respect to
any expenses incurred in connection with the distribution of Portfolio
shares, including the activities referred to above.

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 April 30, 2000, 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, or to increase materially the amount
spent by the Portfolio for distribution 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 Trust Instrument, 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.

Exhibit (m)(2)

DISTRIBUTION AND SERVICE PLAN
of Fidelity California Municipal Trust II:
Spartan California Municipal Money Market Fund

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 Fund (the "Portfolio"), a
series of shares of Fidelity California Municipal Trust II (the
"Fund").

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.

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.