SHAREHOLDER LETTER
Your Fund's Goal: Franklin California Tax-Free Income Fund seeks to provide
high, current income exempt from regular federal and California state personal
income taxes through a portfolio consisting primarily of California municipal
bonds.(1)
Dear Shareholder:
It's a pleasure to bring you Franklin California Tax-Free Income Fund's
semiannual report for the period ended September 30, 2000. During the six months
under review, the U.S. continued to experience strong economic growth, as second
quarter annualized gross domestic product (GDP) increased a vigorous 5.6%.
Concerned that this growth, combined with a historically low unemployment rate,
would lead to increased inflationary pressures, the Federal Open Market
Committee (FOMC) raised the federal funds target rate to 6.5% in May. The FOMC's
decision to hold short-term rates steady at their June and August meetings,
combined with slower GDP growth in the third quarter, suggested that the economy
could be feeling the impact of the rate increases and growth might be slowing to
a more sustainable pace.
The municipal bond market performed relatively well during the reporting period,
following a difficult year in 1999, in
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
Shareholder Letter ..................................................... 1
Performance Summary .................................................... 8
Financial Highlights & Statement of Investments ........................ 10
Financial Statements ................................................... 46
Notes to Financial Statements .......................................... 49
</TABLE>
FUND CATEGORY
[PYRAMID CHART]
1. For investors subject to the federal alternative minimum tax, a small portion
of this income may be subject to such tax. Distributions of capital gains and of
ordinary income from accrued market discount, if any, are generally taxable.
The dollar value, number of shares or principal value, and complete legal titles
of all portfolio holdings are listed in the Fund's Statement of Investments
(SOI). The SOI begins on page 13.
<PAGE>
CREDIT QUALITY BREAKDOWN*
Based on Total Long-Term Investments
9/30/00
[PIE CHART]
AAA - 56.5%
AA - 13.9%
A - 9.3%
BBB - 19.6%
- Below Investment Grade - 0.7%
*Quality breakdown may include internal ratings for bonds not rated by an
independent rating agency.
which strong economic numbers and the Fed's interest-rate increases hampered
bond prices. This relative strength largely was due to the belief that the rate
increases were beginning to achieve their desired effect of slowing the
economy's growth rate and that the Fed would not raise short-term interest rates
further in the near term. Thus, longer-term interest rates generally declined
during the six-month period, and the 10-year Treasury note's yield fell from
6.0% at the beginning of the period to 5.8% on September 30, 2000. The municipal
bond market generally followed the 10-year Treasury note and experienced falling
yields. The Bond Buyer Municipal Bond Index (Bond Buyer 40), an indicator of the
municipal bond market, decreased from a yield of 5.97% to 5.82% for the same
period.(2) Because bond yields and prices have an inverse relationship, as
yields fell, bond prices increased, leading to an increase in the value of most
bond funds.
Contributing to the favorable conditions for municipal bond funds during the
period was lower supply. The strong economy, which increased revenues for most
municipalities, reduced the need for borrowing to finance capital projects. From
January through September 30, 2000, national municipal bond issuance was down
about 19%, compared to the same period in 1999, with California issuance 18.5%
lower.(3) Reduced supply and continued high demand for municipal bonds among
insurance and mutual fund companies, as well as retail investors, contributed to
their price increase.
In February 2000, the federal government announced a plan to buy back 30-year
Treasury bonds, which increased their price and
2. The unmanaged Bond Buyer Municipal Bond Index is composed of the yield to
maturity of 40 bonds. The index attempts to track the new-issue market as
closely as possible, so it changes bonds twice a month, adding all new bonds
that meet certain requirements and deleting an equivalent number according to
their secondary market trading activity. As a result, the average par call date,
average maturity date and average coupon rate change over time. The average
maturity generally has been about 29-30 years.
3. Source: The Bond Buyer, 10/2/00.
2
<PAGE>
decreased their yield. This meant that, on a relative basis, long-term municipal
bond yields were attractive. During the six-month reporting period, municipal
bonds, as measured by the Bond Buyer 40, yielded as much as 104% of a comparable
Treasury bond's yield. Historically, this ratio is about 90%.(4) Since municipal
bonds are tax-exempt, generally they yield less than Treasuries, which are
subject to federal income tax. When municipal bond yields are nearly the same as
those of Treasuries, investors can take advantage of the tax exemption at little
extra cost.
We believe the Fed will continue to monitor inflationary tendencies closely. If
the economy slows toward the end of 2000, bond markets may continue their
positive trend. Predicting market cycles, however, is very difficult, even for
professional economists, which is why we recommend investing for the long term.
It is important to remember that, over time, the tax-free income received from
municipal bonds will ultimately drive Franklin California Tax-Free Income Fund's
total return performance.
CALIFORNIA ECONOMIC UPDATE
During the six months under review, California's robust, diversified and growing
economy benefited from an economic rebound in Asia, a key export market. State
employment growth in 2000 remained strong, following a healthy 2.4% growth in
1999. Particularly strong job growth occurred in computer-related industries, as
well as entertainment, services and agriculture, and per-capita income
stabilized at about 104% of the national average. However, while unemployment
improved substantially to a seasonally adjusted 5.1% in August 2000, it remained
higher than the nation's 4.1% level.(5)
4. Source: The Bond Buyer.
5. Source: Standard & Poor's Ratings Direct, 9/26/00. This does not indicate
Standard & Poor's rating of the Fund.
3
<PAGE>
PORTFOLIO BREAKDOWN
9/30/00
<TABLE>
<CAPTION>
% OF TOTAL
LONG-TERM
INVESTMENTS
-----------
<S> <C>
Transportation 18.1%
Utilities 16.8%
Prerefunded 13.9%
Hospital & Health Care 13.2%
Tax-Supported 12.7%
Subject to Government Appropriation 11.5%
General Obligation 5.7%
Housing 4.6%
Other Revenue 1.7%
Higher Education 1.6%
Corporate-Backed 0.2%
</TABLE>
Economic growth over the past several years has dramatically improved the
state's financial condition, driving cash and budget reserves to record levels.
California's economy continues to exceed consensus growth expectations, and the
state's increased economic diversity has positioned it well for future
expansion. Standard & Poor's and Moody's, two independent credit rating
agencies, recently upgraded California's general obligation bond rating to AA
from AA- and from AA3 to AA2, respectively, due in large part to the state's
fiscal conservatism, particularly over the past two years.(5,6) Additionally,
the state has realized a dramatic increase in revenue collections, largely
attributable to growth in capital gains tax collections, and overall revenues
for fiscal year 2000 came in approximately 13% over original budget
estimates.(6)
Economic growth higher than fiscal year 2000 budget assumptions allowed the
state to advance the scheduled phase-in of motor vehicle fee tax cuts and
increase fiscal year-end total and unreserved general fund balances. For the
first time in a number of years, the state budgeted to retain a significant
portion of its reserves. Using conservative economic assumptions, the 2001
budget projects a total general fund ending balance equal to about 3.7% of
expenditures. While not large, this budgeted reserve represents a significant
swing from 7.4% budgetary deficit at the end of fiscal year 1992.(5)
Several factors could temper California's credit strength: a relatively
inflexible budget structure, potentially volatile revenue structure during
periods of economic weakening, the lack of a formal mid-year spending
adjustment mechanism and the negative impact a stock market correction could
have on capital gains tax collection. However, California's economic diversity
and strength are the basis for its stable credit outlook.
6. Source: Moody's Investors Service, 9/7/00. This does not indicate Moody's
rating of the Fund.
4
<PAGE>
PORTFOLIO NOTES
During the six months under review, interest rates generally declined, leading
to rising prices for many municipal bonds. As a result, California Tax-Free
Income Fund's Class A share price, as measured by net asset value, increased
from $6.88 on March 31, 2000, to a high of $7.07 on August 23. Following
relatively light new supply, California bond issuance increased in September.
This, coupled with relatively high oil prices, caused interest rates to
increase, bringing the Fund's Class A share price, as measured by net asset
value, to $7.01 at the close of the period.
We made few trades in the Fund during the reporting period, but sold prerefunded
bonds to meet cash needs. We offset any gains from these sales by selling other
bonds with built-in tax losses and buying similar bonds at similar prices,
potentially reducing shareholders' future tax liabilities. The Fund continued to
emphasize high-quality securities, and AAA-rated bonds represented 56.5% of the
Fund's total long-term investments at period-end.
Your Fund offers a notable tax advantage over a comparable taxable investment.
The Performance Summary beginning on page 8 shows that at the end of this
reporting period, the Fund's Class A shares' distribution rate was 5.08%, based
on an annualization of the current 3.1 cent ($0.0310) per share dividend and the
maximum offering price of $7.32 on September 30, 2000. This tax-free rate is
generally higher than the after-tax return on a comparable taxable investment.
An investor in the maximum combined federal and California state personal income
tax bracket of 45.22% would need to earn 9.27% from a taxable investment to
match the Fund's tax-free distribution rate. The Performance Summary also shows
the distribution rates and taxable equivalent distribution rates for Class B and
C shares.
WHAT IS A PREREFUNDED BOND?
When a bond is prerefunded, a new issue is brought to market with a lower
interest rate to pay off the older issue at its first call date. In most cases,
the proceeds from the sale of the new bonds are invested in U.S. Treasury
securities that mature on the first call date of the original bonds. Because of
the U.S. Treasury backing, prerefunded bonds usually offer a substantial price
increase -- depending on their call date.
Generally, we look to sell prerefunded bonds as they approach five years to
their call date. At this point, the premium on prerefunded bonds often begins to
decline rapidly to the stated call price. Our strategy aims to capture the
bond's premium, increase the Fund's call protection and protect its share
value.
5
<PAGE>
DIVIDEND DISTRIBUTIONS
4/1/00 - 9/30/00
<TABLE>
<CAPTION>
DIVIDEND PER SHARE
---------------------------------------------
MONTH CLASS A CLASS B CLASS C
-----------------------------------------------------------------------------
<S> <C> <C> <C>
April 3.1 cents 2.78 cents 2.81 cents
May 3.1 cents 2.78 cents 2.81 cents
June 3.1 cents 2.77 cents 2.78 cents
July 3.1 cents 2.77 cents 2.78 cents
August 3.1 cents 2.77 cents 2.78 cents
September 3.1 cents 2.76 cents 2.77 cents
=============================================================================
TOTAL 18.6 CENTS 16.63 CENTS 16.73 CENTS
</TABLE>
Looking forward, we anticipate that the supply of California tax-free bonds will
increase somewhat during the last quarter of 2000. This, along with inflation
fears caused by the high cost of oil, could push up interest rates and enable
the Fund to purchase higher yielding bonds, thereby protecting the Fund's income
stream. As always, we encourage investors to maintain a long-term investment
perspective. Please keep in mind that interest rates and, therefore, bond prices
rise and fall depending on the economy. Such fluctuations are a normal part of
investing, and one should expect this when investing in any security, including
municipal bonds. Municipal bond funds can help lower such volatility, as they
offer a level of diversification that is difficult for individual investors to
achieve on their own.
6
<PAGE>
We encourage you to discuss your financial goals with an investment
representative. As always, we appreciate your support, welcome your questions
and comments and look forward to serving your investment needs in the years
ahead.
Sincerely,
/s/ C. B. Johnson
-----------------------------------
Charles B. Johnson
Chairman
Franklin California Tax-Free Income Fund
/s/ Sheila Amoroso
------------------------------------
Sheila Amoroso
/s/ Raphael R. Costas Jr.
------------------------------------
Rafael R. Costas Jr.
Senior Vice Presidents/Co-Directors
Franklin Municipal Bond Department
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This discussion reflects our views, opinions and portfolio holdings as of
September 30, 2000, the end of the reporting period. The information provided is
not a complete analysis of every aspect of any industry, security or the Fund.
Our strategies and the Fund's portfolio composition will change depending on
market and economic conditions. Although historical performance is no guarantee
of future results, these insights may help you understand our investment and
management philosophy.
-------------------------------------------------------------------------------
7
<PAGE>
CLASS A: Subject to the current, maximum 4.25% initial sales charge. Prior to
7/1/94, Fund shares were offered at a lower initial sales charge; thus actual
total returns may differ. Effective 5/1/94, the Fund eliminated the sales charge
on reinvested dividends and implemented a Rule 12b-1 plan, which affects
subsequent performance.
CLASS B: Subject to no initial sales charge, but subject to a contingent
deferred sales charge (CDSC) declining from 4% to 0% over six years. These
shares have higher annual fees and expenses than class A shares.
CLASS C: Subject to 1% initial sales charge and 1% CDSC for shares redeemed
within 18 months of investment. These shares have higher annual fees and
expenses than Class A shares.
PERFORMANCE SUMMARY AS OF 9/30/00
Six-month total return represents the change in value of an investment for the
period indicated and does not include sales charges. Distributions will vary
based on earnings of the Fund's portfolio and any profits realized from the sale
of the portfolio's securities, as well as the level of operating expenses for
each class. Past distributions are not indicative of future trends. All total
returns include reinvested distributions at net asset value.
<TABLE>
<S> <C> <C>
CLASS A
Six-Month Total Return +4.68%
Net Asset Value (NAV) $7.01 (9/30/00) $6.88 (3/31/00)
Change in NAV +$0.13
Distributions (4/1/00-9/30/00) Dividend Income $0.1860
CLASS B
Six-Month Total Return +4.54%
Net Asset Value (NAV) $7.01 (9/30/00) $6.87 (3/31/00)
Change in NAV +$0.14
Distributions (4/1/00-9/30/00) Dividend Income $0.1663
CLASS C
Six-Month Total Return +4.41%
Net Asset Value (NAV) $7.00 (9/30/00) $6.87 (3/31/00)
Change in NAV +$0.13
Distributions (4/1/00-9/30/00) Dividend Income $0.1673
</TABLE>
8 Past performance does not guarantee future results.
<PAGE>
ADDITIONAL PERFORMANCE
AS OF 9/30/00
<TABLE>
<CAPTION>
INCEPTION
CLASS A 1-YEAR 5-YEAR 10-YEAR (2/1/77)
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) +6.20% +30.82% +92.50% +303.90%
Average Annual Total Return(2) +1.68% +4.61% +6.31% +5.88%
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
CLASS B 1-YEAR (1/1/99)
--------------------------------------------------------------------------------
<S> <C> <C>
Cumulative Total Return(1) +5.60% +2.81%
Average Annual Total Return(2) +1.60% -0.56%
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
CLASS C 1-YEAR 5-YEAR (5/1/95)
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) +5.47% +27.03% +31.91%
Average Annual Total Return(2) +3.43% +4.70% +5.05%
</TABLE>
<TABLE>
<CAPTION>
SHARE CLASS A B C
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Distribution Rate(3) 5.08% 4.72% 4.70%
Taxable Equivalent Distribution Rate(4) 9.27% 8.62% 8.58%
30-Day Standardized Yield(5) 4.71% 4.34% 4.31%
Taxable Equivalent Yield(4) 8.60% 7.92% 7.87%
</TABLE>
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the current, applicable,
maximum sales charge(s) for that class.
3. Distribution rate is based on an annualization of the respective class's
September dividend and the maximum offering price per share (net asset value for
Class B) on 9/30/00.
4. Taxable equivalent distribution rate and yield assume the published rates as
of 9/27/00 for the maximum combined federal and California state personal income
tax bracket of 45.22%, based on the federal income tax rate of 39.6%.
5. Yield, calculated as required by the SEC, is based on the earnings of the
Fund's portfolio for the 30 days ended 9/30/00.
-------------------------------------------------------------------------------
Bond prices, and thus the Fund's share price, generally move in the opposite
direction from interest rates. Since markets can go down as well as up,
investment return and principal value will fluctuate with market conditions, and
you may have a gain or loss when you sell your shares.
--------------------------------------------------------------------------------
For updated performance figures, see "Prices and Performance" at
franklintempleton.com, or call Franklin Templeton Investments at 1-800/342-5236.
Past performance does not guarantee future results. 9
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
Financial Highlights
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------------------------------
SIX MONTH ENDED
SEPTEMBER 30 ,2000 YEAR ENDED MARCH 31,
------------------------------------------------------------------------
(UNAUDITED) 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout
the period)
Net asset value, beginning of period .. $6.88 $7.40 $7.35 $7.09 $7.18 $7.11
------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) ............. .19 .38 .39 .42 .43 .44
Net realized and unrealized gains
(losses) .............................. .13 (.53) .07 .27 (.04) .07
------------------------------------------------------------------------------------------
Total from investment operations ...... .32 (.15) .46 .69 .39 .51
------------------------------------------------------------------------------------------
Less distributions from:
Net investment income ................ (.19) (.36) (.39) (.42) (.43) (.44)
Net realized gains ................... -- (.01) (.02) (.01) (.05) --
------------------------------------------------------------------------------------------
Total distributions ................... (.19) (.37) (.41) (.43) (.48) (.44)
------------------------------------------------------------------------------------------
Net asset value, end of period ........ $7.01 $6.88 $7.40 $7.35 $7.09 $7.18
------------------------------------------------------------------------------------------
Total return(b) ....................... 4.68% (1.97)% 6.43% 10.10% 5.67% 7.40%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ..... $12,791,770 $12,859,577 $15,473,713 $14,767,307 $13,633,542 $13,312,666
Ratio to average net assets:
Expenses ............................. .58%(c) .57% .57% .56% .56% .55%
Net investment income ................ 5.44%(c) 5.40% 5.21% 5.71% 6.07% 6.14%
Portfolio turnover rate ............... 2.77% 12.10% 18.66% 17.29% 11.96% 19.24%
</TABLE>
(a) Based on average shares outstanding effective March 31, 2000.
(b) Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
(c) Annualized
10
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
Financial Highlights (continued)
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------
SIX MONTH ENDED
SEPTEMBER 30 ,2000 YEAR ENDED MARCH 31,
--------------------
(UNAUDITED) 2000 1999(d)
-----------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ........................... $6.87 $7.39 $7.41
-----------------------------------------------
Income from investment operations:
Net investment income(a) ...................................... .17 .34 .10
Net realized and unrealized gains (losses) .................... .14 (.52) (.03)
-----------------------------------------------
Total from investment operations ............................... .31 (.18) .07
-----------------------------------------------
Less distributions from:
Net investment income ......................................... (.17) (.33) (.09)
Net realized gains ............................................ -- (.01) --
-----------------------------------------------
Total distributions ............................................ (.17) (.34) (.09)
-----------------------------------------------
Net asset value, end of period ................................. $7.01 $6.87 $7.39
-----------------------------------------------
Total return(b) ................................................ 4.54% (2.51)% 0.88%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) .............................. $142,719 $110,933 $43,674
Ratio to average net assets:
Expenses ...................................................... 1.14%(c) 1.14% 1.14%(c)
Net investment income ......................................... 4.86%(c) 4.87% 4.59%(c)
Portfolio turnover rate ........................................ 2.77% 12.10% 18.66%
</TABLE>
(a) Based on average shares outstanding effective March 31, 2000.
(b) Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
(c) Annualized
11
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
Financial Highlights (continued)
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------------------------------------------------
SIX MONTH ENDED
SEPTEMBER 30 ,2000 YEAR ENDED MARCH 31,
------------------------------------------------------------------------
(UNAUDITED) 2000 1999 1998 1997 1996(d)
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout
the period)
Net asset value, beginning of period $6.87 $7.39 $7.35 $7.09 $7.18 $7.09
------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) .17 .34 .35 .38 .39 .38
Net realized and unrealized gains
(losses) .13 (.53) .06 .27 (.04) .08
------------------------------------------------------------------------------------------
Total from investment operations .30 (.19) .41 .65 .35 .46
------------------------------------------------------------------------------------------
Less distributions from:
Net investment income (.17) (.32) (.35) (.38) (.39) (.37)
Net realized gain -- (.01) (.02) (.01) (.05) --
------------------------------------------------------------------------------------------
Total distributions (.17) (.33) (.37) (.39) (.44) (.37)
------------------------------------------------------------------------------------------
Net asset value, end of period $7.00 $6.87 $7.39 $7.35 $7.09 $7.18
------------------------------------------------------------------------------------------
Total return(b) 4.41% (2.54)% 5.70% 9.49% 5.06% 6.62%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) $368,344 $367,874 $464,535 $295,976 $138,509 $47,685
Ratio to average net assets:
Expenses 1.14%(c) 1.14% 1.14% 1.14% 1.14% 1.14%(c)
Net investment income 4.86%(c) 4.82% 4.61% 5.13% 5.47% 5.55%(c)
Portfolio turnover rate 2.77% 12.10% 18.66% 17.29% 11.96% 19.24%
</TABLE>
(a) Based on average shares outstanding effective March 31, 2000.
(b) Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
(c) Annualized
(d) For the period May 1, 1995 (effective date) to March 31, 1996
See notes to financial statements.
12
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS 97.7%
BONDS 86.4%
ABAG Finance Authority for Nonprofit Corps. COP,
6.75%, 8/01/20 ............................................................................. $ 3,955,000 $ 4,238,178
6.125%, 3/01/21 ............................................................................ 4,245,000 4,409,621
Butte Valley-Tulelake Rural Health, 6.65%, 10/01/22 ........................................ 5,300,000 5,531,080
Episcopal Home Foundation, Refunding, 5.125%, 7/01/13 ...................................... 6,000,000 5,616,360
Episcopal Home Foundation, Refunding, 5.125%, 7/01/18 ...................................... 16,975,000 15,195,341
HFR, Palo Alto Gardens Apartments, Series A, 5.45%, 4/01/39 ................................ 5,500,000 4,986,905
Home for Jewish Parents, CAMTG Insured, 5.625%, 5/15/22 .................................... 5,000,000 4,996,550
Lytton Gardens Inc., CAMTG Insured, 6.00%, 2/15/30 ......................................... 5,000,000 5,045,900
Milestones Human Services Inc., CAMTG Insured, 5.65%, 7/01/22 .............................. 2,000,000 2,002,540
Miramonte Mental Health Services, CAMTG Insured, 6.60%, 7/01/22 ............................ 1,250,000 1,295,575
Odd Fellows Home, 6.00%, 8/15/24 ........................................................... 5,525,000 5,654,064
Peninsula Family YMCA, Series A, Pre-Refunded, 6.80%, 10/01/11 ............................. 2,325,000 2,434,717
Rehabilitation Mental Health Services Inc. Project, CAMTG Insured, 6.50%, 6/01/12 .......... 2,000,000 2,092,680
Rehabilitation Mental Health Services Inc. Project, CAMTG Insured, 6.55%, 6/01/22 .......... 2,370,000 2,452,784
Rhoda Haas Goldman Plaza, CAMTG Insured, 5.125%, 5/15/23 ................................... 5,000,000 4,727,850
United Way of Santa Clara County Project, 7.20%, 7/01/11 ................................... 2,310,000 2,385,167
ABAG Finance Corp. COP, ABAG XXV, 6.80%, 8/01/12 ............................................... 4,500,000 4,610,160
ABAG Revenue,
Mello-Roos, Refunding and Improvement, Series A, FSA Insured, 5.125%, 9/01/21 .............. 4,760,000 4,608,489
Mello-Roos, Refunding and Improvement, Series A, FSA Insured, 5.20%, 9/01/27 ............... 4,140,000 3,977,629
Tax Allocation, RDA Pool, Series A4, FSA Insured, 5.875%, 12/15/25 ......................... 5,000,000 5,117,950
Tax Allocation, RDA Pool, Series A6, FSA Insured, 5.375%, 12/15/25 ......................... 3,670,000 3,622,290
ABAG Water and Wastewater Revenue, Pooled Financing Program, Series A, FSA Insured, 5.30%,
10/01/21 ..................................................................................... 5,450,000 5,395,500
Adelanto Improvement Agency Tax Allocation, Adelanto Improvement Project, Series 1990,
Pre-Refunded, 8.25%, 8/01/20 ................................................................. 1,840,000 1,930,160
Agua Mansa Industrial Growth Association Special Tax, CFD No. 8, 8.25%, 9/01/17 ................ 15,730,000 16,392,862
Alameda-Contra Costa Transit COP, Refunding, 7.60%, 8/01/18 .................................... 23,675,000 24,276,108
Alameda Corridor Transportation Authority Revenue, senior lien, Series A, MBIA Insured,
5.00%, 10/01/29 .............................................................................. 10,000,000 9,225,100
Alameda County COP,
Alameda County Medical Center Project, MBIA Insured, 5.00%, 6/01/23 ........................ 19,195,000 17,748,465
Alameda County Medical Center Project, MBIA Insured, 5.30%, 6/01/26 ........................ 7,000,000 6,733,790
Alameda County Medical Center Project, MBIA Insured, 5.00%, 6/01/28 ........................ 8,925,000 8,129,069
Capital Projects, Series 1992, Pre-Refunded, 6.75%, 6/01/16 ................................ 10,500,000 11,125,065
Alhambra RDA, Tax Allocation, Industrial Redevelopment Project, Refunding, 6.375%, 5/01/23 ..... 2,560,000 2,601,011
Alvord USD, Series A, FGIC Insured, 5.375%, 8/01/27 ............................................ 6,100,000 6,010,025
Anaheim PFA, Lease Revenue, Public Improvements Project, Series A, FSA Insured, 5.00%,
9/01/27 .................................................................................... 8,900,000 8,243,091
3/01/37 .................................................................................... 146,010,000 132,452,972
Antioch Area Public Facilities Financing Agency Special Tax, CFD No. 1989-1, MBIA Insured,
5.50%, 8/01/22 ............................................................................... 4,870,000 4,893,230
Antioch Development Agency Tax Allocation, Project 1, Refunding, FGIC Insured, 6.40%,
9/01/17 ...................................................................................... 4,895,000 5,145,575
Antioch PFA, Reassessment Revenue, sub. lien,
Refunding, 5.60%, 9/02/09 .................................................................. 1,280,000 1,306,931
Refunding, Series B, 5.50%, 9/02/08 ........................................................ 1,220,000 1,239,471
Series B, 5.30%, 9/02/06 ................................................................... 2,180,000 2,207,446
Apple Valley Insured Health Facilities Revenue COP, 7.30%, 6/01/20 ............................. 3,500,000 3,583,090
</TABLE>
13
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Arcadia Hospital Revenue, Methodist Hospital of Southern California,
6.50%, 11/15/12 ............................................................................ $ 2,295,000 $ 2,376,587
6.625%, 11/15/22 ........................................................................... 3,750,000 3,832,650
Auburn USD, COP, Land Acquisition Program, Series A, FSA Insured, 7.00%, 9/01/28 ............... 2,770,000 2,884,955
Azusa PFA Revenue, Water Systems Acquisition Project, Refunding, Series A, FGIC Insured,
5.50%, 7/01/20 ............................................................................... 5,200,000 5,244,824
Bakersfield Hospital Revenue, Adventist Health Systems West, Refunding, MBIA Insured, 5.50%,
3/01/19 ...................................................................................... 6,085,000 6,158,142
Bakersfield PFA Revenue, Series A, 6.10%, 9/15/10 .............................................. 11,070,000 11,430,771
Baldwin Park PFA Revenue, Tax Allocation,
Refunding, Series A, 7.10%, 9/01/24 ........................................................ 2,000,000 2,110,100
Series A, 7.75%, 8/01/19 ................................................................... 5,265,000 5,382,094
Series B, 7.75%, 8/01/21 ................................................................... 5,795,000 5,922,200
Belmont RDA, Tax Allocation, Los Costanos Community Development, Series A,
6.70%, 8/01/14 ............................................................................. 1,235,000 1,361,711
6.80%, 8/01/23 ............................................................................. 2,310,000 2,555,091
Belmont-Redwood Shores School District, Series A, 5.50%, 9/01/22 ............................... 6,500,000 6,531,460
Brea and Olinda USD, COP, High School Refinancing Program, Refunding,
Series A, FSA Insured, 6.25%, 8/01/18 ...................................................... 12,645,000 13,156,364
Series B, 7.00%, 8/01/18 ................................................................... 9,120,000 9,529,670
Brea PFA Revenue, Tax Allocation, Redevelopment Project, Series A, MBIA Insured,
7.00%, 8/01/15 ............................................................................. 1,720,000 1,792,034
6.75%, 8/01/22 ............................................................................. 4,395,000 4,559,285
7.00%, 8/01/23 ............................................................................. 6,105,000 6,349,505
Brea RDA, Tax Allocation, Redevelopment Project, Refunding, MBIA Insured, 6.125%, 8/01/13 ...... 12,845,000 13,607,993
Brentwood 1915 Act, Infrastructure Financing, Reassessment, Series A, FSA Insured, 5.80%,
9/02/17 ...................................................................................... 5,285,000 5,524,199
Brentwood RDA, Tax Allocation, Brentwood Redevelopment Project, Series A, 7.70%, 11/01/08 ...... 2,000,000 2,043,440
Brisbane PFA Revenue, 8.00%, 9/02/15 ........................................................... 5,700,000 5,845,407
Buena Park CRDA, Tax Allocation, Central Business District Project, Refunding, Series A,
7.10%, 9/01/14 ............................................................................... 7,000,000 7,394,030
Burbank Parking Authority, Special Tax, CFD No. 1, 8.375%, 10/01/06 ............................ 1,245,000 1,264,982
Burbank RDA, Tax Allocation,
City Center Redevelopment Project, Refunding, Series A, FSA Insured, 5.50%, 12/01/23 ....... 5,000,000 5,010,700
Refunding, Series A, 6.00%, 12/01/23 ....................................................... 6,500,000 6,542,250
Burton Elementary School District COP, Loan Acquisition, Capital Appreciation,
Series A, FSA Insured, 6.60%, 9/01/27 ...................................................... 810,000 852,104
Series B, FSA Insured, 6.60%, 9/01/27 ...................................................... 300,000 305,751
Calexico CRDA Revenue, Tax Allocation, Merged Central Business and Residential, Refunding,
FSA Insured, 5.80%, 8/01/24 .................................................................. 5,840,000 5,935,075
California Counties Lease Financing Authority COP, CSAC Financing Corp., Amador County
Project, ETM, 7.70%, 10/01/09 ................................................................ 2,565,000 2,965,012
California Educational Facilities Authority Revenue,
Chapman College, 7.30%, 1/01/02 ............................................................ 365,000 374,501
Chapman College, Pre-Refunded, 7.30%, 1/01/02 .............................................. 385,000 395,695
Chapman College, Pre-Refunded, 7.50%, 1/01/18 .............................................. 3,000,000 3,085,140
Chapman University, Refunding, Connie Lee Insured, 5.125%, 10/01/26 ........................ 10,000,000 9,445,000
Pooled College and University, Series B, 6.75%, 6/01/30 .................................... 8,000,000 8,455,280
St. Mary's College of California Project, Pre-Refunded, 7.50%, 10/01/20 .................... 2,100,000 2,142,000
Stanford University, Refunding, Series O, 5.125%, 1/01/31 .................................. 21,250,000 20,200,038
Student Loan Program, Series A, MBIA Insured, 6.00%, 3/01/16 ............................... 6,000,000 6,110,520
</TABLE>
14
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
California Health Facilities Authority Revenue, Insured Health Facility, Help Group, Series
A, CAMTG Insured, 6.10%, 8/01/25 ............................................................. $ 12,905,000 $ 13,366,612
California Health Facilities Financing Authority Revenue,
Adventist Health Systems West, Series B, MBIA Insured, 6.25%, 3/01/21 ...................... 2,930,000 3,007,440
AIDS Health Care Foundation, Refunding, Series C, CAMTG Insured, 6.25%, 9/01/17 ............ 1,750,000 1,806,018
Association for Retarded Citizens of San Diego, CHFCLP Insured, Pre-Refunded, 7.00%,
5/01/21 .................................................................................. 3,650,000 3,765,231
California Autism Foundation Inc., Series A, CHFCLP Insured, 6.25%, 11/01/20 ............... 3,560,000 3,649,605
Catholic Healthcare West, Refunding, Series A, MBIA Insured, 5.75%, 7/01/15 ................ 12,500,000 13,084,125
Catholic Healthcare West, Refunding, Series A, MBIA Insured, 6.00%, 7/01/17 ................ 7,300,000 7,677,118
Catholic Healthcare West, Series A, 5.00%, 7/01/18 ......................................... 40,000,000 34,665,200
Catholic Healthcare West, Series A, 5.00%, 7/01/28 ......................................... 140,630,000 115,697,707
Catholic Healthcare West, Series A, MBIA Insured, 5.00%, 7/01/17 ........................... 5,000,000 4,845,250
Catholic Healthcare West, Series A, MBIA Insured, 5.125%, 7/01/24 .......................... 11,500,000 10,843,925
Cedars-Sinai Medical Center, Series A, MBIA Insured, 5.125%, 8/01/17 ....................... 8,355,000 8,256,996
Cedars-Sinai Medical Center, Series A, MBIA Insured, 5.125%, 8/01/27 ....................... 15,600,000 14,720,784
Cedars-Sinai Medical Center, Series B, MBIA Insured, 5.25%, 8/01/27 ........................ 52,500,000 50,453,025
Clinicas Del Camino, Series A, CHFCLP Insured, 6.55%, 5/01/25 .............................. 4,500,000 4,739,760
County Program, Series B, 7.20%, 1/01/12 ................................................... 2,330,000 2,342,652
El Proyecto, Series A, CHFCLP Insured, 5.50%, 12/01/22 ..................................... 3,350,000 3,294,960
Enloe Health System, Series A, FSA Insured, 5.00%, 11/15/18 ................................ 5,000,000 4,803,900
Enloe Health System, Series A, FSA Insured, 5.00%, 11/15/28 ................................ 25,390,000 23,110,486
Feedback Foundation Inc., Series A, CHFCLP Insured, 6.50%, 12/01/22 ........................ 4,240,000 4,390,520
Hospital of the Good Samaritan, Refunding, 6.90%, 9/01/07 .................................. 13,920,000 14,211,624
Hospital of the Good Samaritan, Refunding, 7.00%, 9/01/21 .................................. 71,050,000 70,275,555
Insured Health Facilities, Familiesfirst Inc., Series A, 6.00%, 12/01/25 ................... 11,365,000 11,650,602
Kaiser Permanente, Series A, 5.40%, 5/01/28 ................................................ 46,000,000 41,741,320
Kaiser Permanente, Series A, FSA Insured, 5.00%, 6/01/20 ................................... 32,295,000 30,627,286
Kaiser Permanente, Series A, FSA Insured, 5.00%, 6/01/24 ................................... 136,775,000 126,923,097
Kaiser Permanente, Series A, Pre-Refunded, 6.50%, 12/01/20 ................................. 11,000,000 11,263,010
Kaiser Permanente, Series B, 5.25%, 10/01/16 ............................................... 7,515,000 7,095,513
Kaiser Permanente, Series B, 5.00%, 10/01/18 ............................................... 16,425,000 14,746,858
Kaiser Permanente, Series B, 5.00%, 10/01/20 ............................................... 36,520,000 32,277,472
Kaiser Permanente, Series B, 5.40%, 5/01/28 ................................................ 80,000,000 72,593,600
Lodi Memorial Hospital Association, Series A, CHFCLP Insured, 7.70%, 9/01/10 ............... 4,000,000 4,133,040
Marshall Hospital, Series A, CAMTG Insured, 5.30%, 11/01/28 ................................ 5,500,000 5,237,760
Mills-Peninsula Health, Refunding, Series A, Connie Lee Insured, 5.75%, 1/15/15 ............ 11,500,000 11,908,940
Mills-Peninsula Health, Series B, Connie Lee Insured, 5.75%, 1/15/15 ....................... 5,665,000 5,866,447
Northern California Presbyterian, 5.40%, 7/01/28 ........................................... 6,340,000 5,778,530
On Lok Senior Health Services, Series A, CHFCLP Insured, 6.40%, 12/01/12 ................... 2,000,000 2,105,880
On Lok Senior Health Services, Series A, CHFCLP Insured, 6.50%, 12/01/22 ................... 7,525,000 7,792,138
Pomona Valley Hospital, Refunding, Series A, MBIA Insured, 5.625%, 7/01/19 ................. 8,500,000 8,696,435
San Diego Hospital Association, Refunding, Series A, MBIA Insured, 6.20%, 8/01/20 .......... 8,250,000 8,491,808
San Diego Hospital Association, Series A, Pre-Refunded, 6.95%, 10/01/21 .................... 21,145,000 22,173,281
Scripps Memorial Hospital, Series A, MBIA Insured, 6.375%, 10/01/22 ........................ 9,725,000 10,099,121
Small Facilities Loan, Health Facilities, Refunding, Series B, CAMTG Insured, 7.50%,
4/01/22 .................................................................................. 5,000,000 5,507,300
Small Facilities Loan, Health Facilities, Series A, CHFCLP Insured, 6.75%, 3/01/20 ......... 5,500,000 5,697,285
Southern California, Series A, CHFCLP Insured, 5.50%, 12/01/22 ............................. 3,070,000 3,019,560
</TABLE>
15
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
California Health Facilities Financing Authority Revenue, (cont.)
St. Francis Medical Center, Refunding, Series H, AMBAC Insured, 6.35%, 10/01/23 ............ $ 7,000,000 $ 7,403,830
St. Paul's Episcopal Home, CHFCLP Insured, 6.50%, 9/01/14 .................................. 2,595,000 2,726,904
Sutter Health, Refunding, Series A, MBIA Insured, 5.875%, 8/15/16 .......................... 5,750,000 6,012,603
Sutter Health, Series A, FSA Insured, 5.25%, 8/15/27 ....................................... 5,300,000 5,057,631
Sutter Health, Series A, FSA Insured, 5.00%, 8/15/37 ....................................... 61,000,000 54,533,390
Sutter Health, Series A, MBIA Insured, 5.35%, 8/15/28 ...................................... 5,500,000 5,314,265
Sutter Health, Series A, MBIA Insured, 5.375%, 8/15/30 ..................................... 9,000,000 8,758,080
Sutter Health, Series A, MBIA Insured, 5.00%, 8/15/38 ...................................... 25,860,000 23,133,580
The Help Group, CHFCLP Insured, 5.40%, 8/01/22 ............................................. 7,420,000 7,206,452
UCSF-Stanford Health Care, Refunding, Series B, 5.00%, 11/15/31 ............................ 26,920,000 24,588,190
UCSF-Stanford Health Care, Refunding, Series B, AMBAC Insured, 5.00%, 11/15/28 ............. 30,000,000 27,306,600
UCSF-Stanford Health Care, Refunding, Series A, FSA Insured, 5.00%, 11/15/31 ............... 2,150,000 1,963,767
Valleycare Hospital Corp., Refunding, 5.50%, 5/01/20 ....................................... 11,640,000 11,584,244
Walden House, State Guaranteed, 6.85%, 3/01/22 ............................................. 3,225,000 3,352,581
California HFA, SFM Purchase,
Class I, Series A-1, 6.05%, 8/01/26 ........................................................ 13,935,000 14,051,357
Refunding, Series A-2, FHA Insured, 6.45%, 8/01/25 ......................................... 8,560,000 8,813,034
California HFAR,
Home Mortgage, Series A, 6.55%, 8/01/26 .................................................... 6,975,000 7,222,752
Home Mortgage, Series D, MBIA Insured, 6.15%, 8/01/28 ...................................... 5,250,000 5,331,533
Home Mortgage, Series E, 6.70%, 8/01/25 .................................................... 5,115,000 5,325,124
Home Mortgage, Series E, 6.375%, 8/01/27 ................................................... 14,090,000 14,485,365
Home Mortgage, Series E, AMBAC Insured, 6.10%, 8/01/29 ..................................... 22,140,000 22,393,503
Home Mortgage, Series E, MBIA Insured, 6.15%, 8/01/25 ...................................... 16,260,000 16,497,233
Home Mortgage, Series F, 6.75%, 8/01/11 .................................................... 865,000 894,540
Home Mortgage, Series F-1, 6.875%, 8/01/15 ................................................. 3,350,000 3,563,127
Home Mortgage, Series F-1, 7.00%, 8/01/26 .................................................. 6,535,000 6,814,763
Home Mortgage, Series G, 7.05%, 8/01/27 .................................................... 2,675,000 2,750,114
Home Mortgage, Series H, 6.25%, 8/01/27 .................................................... 18,375,000 18,759,956
Home Mortgage, Series I, MBIA Insured, 5.75%, 2/01/29 ...................................... 8,100,000 7,965,783
Home Mortgage, Series J, MBIA Insured, 5.40%, 8/01/28 ...................................... 6,345,000 5,962,714
Home Mortgage, Series J, MBIA Insured, 5.55%, 8/01/28 ...................................... 10,000,000 9,615,900
Home Mortgage, Series M, MBIA Insured, 5.60%, 8/01/29 ...................................... 21,150,000 20,415,672
Home Mortgage, Series N, 6.375%, 2/01/27 ................................................... 6,610,000 6,799,641
Home Mortgage, Series N, FSA Insured, 5.15%, 8/01/18 ....................................... 6,000,000 5,607,660
Home Mortgage, Series R, MBIA Insured, 6.15%, 8/01/27 ...................................... 9,000,000 9,152,190
Home Mortgage, SF, Series A, 10.25%, 2/01/14 ............................................... 465,000 465,512
Home Mortgage, SF, Series B, 10.625%, 2/01/14 .............................................. 170,000 170,180
Housing Revenue, Series E, MBIA Insured, 6.625%, 8/01/14 ................................... 4,365,000 4,628,995
Housing Revenue, Series E, MBIA Insured, 6.75%, 8/01/26 .................................... 11,855,000 12,411,000
Housing Revenue, Series F, MBIA Insured, 6.90%, 8/01/26 .................................... 11,345,000 11,911,002
MFHR II, Series A, AMBAC Insured, 6.25%, 2/01/37 ........................................... 5,000,000 5,147,250
MFHR III, Series B, MBIA Insured, 5.50%, 8/01/39 ........................................... 15,000,000 13,938,000
Multi-Unit Rental Housing, Series A, 6.875%, 2/01/22 ....................................... 2,465,000 2,471,064
Series B-1, Class 1, 5.65%, 8/01/28 ........................................................ 13,190,000 12,863,811
SFM, Series C-2, Class 1, FHA Insured, 5.65%, 2/01/25 ...................................... 10,000,000 9,856,100
</TABLE>
16
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
California Mobilehome Park Financing Authority Revenue, Series A, FSA Insured,
4.65%, 10/01/00 ............................................................................ $ 45,000 $ 45,000
4.80%, 10/01/01 ............................................................................ 40,000 40,366
4.95%, 10/01/02 ............................................................................ 40,000 40,583
5.05%, 10/01/03 ............................................................................ 45,000 46,090
5.15%, 10/01/04 ............................................................................ 45,000 46,422
5.25%, 10/01/05 ............................................................................ 50,000 51,932
6.25%, 10/01/25 ............................................................................ 1,895,000 1,931,460
California PCFA,
PCR, Pacific Gas and Electric Co., Series A, 6.625%, 6/01/09 ............................... 1,750,000 1,827,385
PCR, Southern California Edison Co., Refunding, 6.90%, 12/01/17 ............................ 2,510,000 2,616,876
PCR, Southern California Edison Co., Series B, 6.40%, 12/01/24 ............................. 29,000,000 30,164,060
PCR, Southern California Edison Co., Series B, MBIA Insured, 6.40%, 12/01/24 ............... 12,120,000 12,564,925
Solid Waste Disposal Revenue, Keller Canyon Landfill Co. Project, 6.875%, 11/01/27 ......... 17,205,000 16,923,698
California Public Capital Improvement Financing Authority Revenue, Pooled Projects,
Joint Powers Agency, Series E, 8.375%, 3/01/03 ............................................. 13,225,000 13,318,104
Series A, 8.40%, 3/01/08 ................................................................... 48,250,000 48,864,705
Series A, 8.50%, 3/01/18 ................................................................... 121,300,000 122,910,864
California Resources Efficiency Financing Authority COP, Capital Improvement Program,
Refunding, AMBAC Insured,
5.625%, 4/01/22 ............................................................................ 10,365,000 10,500,989
5.75%, 4/01/27 ............................................................................. 7,885,000 8,054,764
California Rural Home Mortgage Finance Authority SFMR, GNMA Secured, 7.00%, 9/01/29 ............ 4,715,000 5,135,625
California Special Districts Association Finance Corp. COP, Series F, 8.10%, 9/01/10 ........... 150,000 152,616
California Special Districts Lease Financing Program COP,
Series C, 7.90%, 4/01/14 ................................................................... 135,000 136,758
Series E, 7.70%, 12/01/09 ................................................................. 205,000 206,878
Series E, 7.75%, 12/01/19 .................................................................. 305,000 307,455
California State Department of Veteran Affairs Home Purchase Revenue,
Chase Revenue, Series A, 5.20%, 12/01/27 ................................................... 31,000,000 28,950,280
Refunding, Series A, 5.40%, 12/01/28 ....................................................... 9,580,000 9,243,646
Refunding, Series B, 5.50%, 12/01/18 ....................................................... 2,500,000 2,463,125
Series B, 5.20%, 12/01/28 .................................................................. 63,875,000 59,841,933
California State Department of Water Resources Central Valley Project Water System Revenue,
Refunding,
Series J-1, 6.00%, 12/01/20 ................................................................ 9,580,000 9,777,252
Series J-2, 6.00%, 12/01/20 ................................................................ 22,865,000 23,335,790
Series J-3, 6.00%, 12/01/20 ................................................................ 18,945,000 19,335,078
Series L, 5.75%, 12/01/19 .................................................................. 18,000,000 18,298,260
Series L, 5.50%, 12/01/23 .................................................................. 50,000,000 49,996,000
Series L, 5.875%, 12/01/25 ................................................................. 40,070,000 40,624,569
Series O, 5.00%, 12/01/22 .................................................................. 5,500,000 5,169,945
Series O, 4.75%, 12/01/25 .................................................................. 16,000,000 14,175,520
Series Q, MBIA Insured, 5.375%, 12/01/27 ................................................... 58,000,000 57,139,860
Series S, 5.00%, 12/01/29 .................................................................. 24,595,000 22,517,460
California State GO,
6.00%, 8/01/19 ............................................................................. 905,000 942,748
5.25%, 10/01/20 ............................................................................ 10,000,000 9,866,000
</TABLE>
17
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
California State GO, (cont.)
6.00%, 5/01/24 ............................................................................. $ 2,565,000 $ 2,640,591
5.125%, 10/01/27 ........................................................................... 39,835,000 37,746,849
AMBAC Insured, 5.90%, 3/01/25 .............................................................. 210,000 215,956
AMBAC Insured, 5.125%, 10/01/27 ............................................................ 31,420,000 29,985,049
FGIC Insured, 5.625%, 10/01/26 ............................................................. 41,500,000 41,965,215
FSA Insured, 5.50%, 3/01/20 ................................................................ 5,500,000 5,579,200
FSA Insured, 5.50%, 9/01/29 ................................................................ 30,000,000 30,089,100
MBIA Insured, 6.00%, 8/01/24 ............................................................... 990,000 1,018,760
Refunding, 5.625%, 9/01/24 ................................................................. 10,650,000 10,747,448
Series BR, 5.25%, 12/01/26 ................................................................. 5,000,000 4,583,900
Series BR, 5.30%, 12/01/29 ................................................................. 13,000,000 11,961,300
Various Purposes, FSA Insured, 5.50%, 4/01/19 .............................................. 5,000,000 5,051,400
Veterans Bonds, Series BD, BE, and BF, 6.40%, 2/01/22 ...................................... 29,000,000 29,102,080
Veterans Bonds, Series BD, BE, and BF, 6.55%, 2/01/25 ...................................... 10,570,000 10,610,800
Veterans Bonds, Series BD, BE, and BF, AMBAC Insured, 6.20%, 2/01/16 ....................... 11,500,000 11,557,040
Veterans Bonds, Series BD, BE, and BF, AMBAC Insured, 6.375%, 2/01/27 ...................... 45,000,000 45,260,100
Veterans Bonds, Series BH, 5.50%, 12/01/18 ................................................. 44,250,000 43,745,993
Veterans Bonds, Series BH, 5.60%, 12/01/32 ................................................. 50,060,000 48,533,170
Veterans Bonds, Series BH, FSA Insured, 5.50%, 12/01/24 .................................... 16,440,000 16,094,596
Veterans Bonds, Series BM, 5.45%, 12/01/25 ................................................. 36,635,000 35,654,281
Veterans Bonds, Series BN, 5.375%, 12/01/21 ................................................ 24,870,000 24,299,731
Veterans Bonds, Series BN, 5.45%, 12/01/28 ................................................. 21,575,000 20,938,969
California State HFAR, Home Mortgage, Series L, MBIA Insured, 6.40%, 8/01/27 ................... 14,820,000 15,268,157
California State Local Government Finance Authority Revenue, Marin Valley, Series A, FSA
Insured, 5.85%, 10/01/27 ..................................................................... 6,735,000 6,934,087
California State Public Works Board Lease Revenue,
California Science Center, Series A, 5.25%, 10/01/22 ....................................... 8,645,000 8,392,652
California State University, Various Projects, Series A, 6.30%, 10/01/04 ................... 5,250,000 5,542,740
California State University, Various Projects, Series A, Pre-Refunded, 6.50%, 10/01/06 ..... 10,695,000 11,363,544
Department of Corrections, California State Prison at Coalinga, Series B, MBIA Insured,
5.375%, 12/01/19 ......................................................................... 15,250,000 15,306,730
Department of Corrections, Corcoran II Facility, Series A, AMBAC Insured, 5.25%, 1/01/21 ... 17,405,000 17,126,520
Department of Justice Building, Series A, FSA Insured, 5.625%, 5/01/20 ..................... 5,000,000 5,077,900
Trustees California State University, Refunding, Series A, 5.00%, 10/01/19 ................. 8,500,000 8,031,650
University of California, Various Projects, Refunding, Series A, 5.50%, 6/01/21 ............ 14,000,000 14,067,340
University of California, Various Projects, Refunding, Series A, 5.00%, 6/01/23 ............ 23,175,000 21,682,762
University of California, Various Projects, Series B, 5.50%, 6/01/19 ....................... 13,000,000 13,083,720
University of California, Various Projects, Series B, Pre-Refunded, 6.625%, 12/01/14 ....... 7,415,000 8,218,786
Various California Community Colleges, Refunding, Series A, 5.90%, 4/01/17 ................. 8,320,000 8,727,347
California Statewide CDA,
COP, California Lutheran Homes, ETM, 5.75%, 11/15/15 ....................................... 5,000,000 5,196,600
COP, Children's Hospital, Los Angeles, 5.25%, 8/15/29 ...................................... 37,685,000 34,844,305
COP, FSA Insured, 5.50%, 8/15/31 ........................................................... 9,000,000 8,880,840
COP, Kaiser Permanente, 5.30%, 12/01/15 .................................................... 32,200,000 31,123,554
COP, MBIA Insured, 5.00%, 4/01/18 .......................................................... 7,000,000 6,731,550
COP, MBIA Insured, 5.125%, 4/01/23 ......................................................... 6,000,000 5,711,640
COP, St. Joseph Health System, Refunding, 5.125%, 7/01/17 .................................. 5,000,000 4,738,500
</TABLE>
18
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
California Statewide CDA, (cont.)
COP, St. Joseph Health System, Refunding, 5.25%, 7/01/21 ................................... $ 16,250,000 $ 15,234,050
COP, The Internext Group, 5.375%, 4/01/17 .................................................. 5,000,000 4,601,900
COP, The Internext Group, 5.375%, 4/01/30 .................................................. 27,680,000 23,711,518
Lease Revenue, Oakland Convention Center Project, Refunding, AMBAC Insured, 5.50%,
10/01/14 ................................................................................. 10,000,000 10,144,700
Lease Revenue, Special Facilities, United Airlines, Los Angeles, 5.625%, 10/01/34 .......... 65,920,000 59,376,122
Lease Revenue, Special Facilities, United Airlines, Series A, 5.70%, 10/01/33 .............. 35,125,000 31,852,404
MFHR, Borregas Court Project, Series J, GNMA Secured, 6.30%, 3/20/39 ....................... 7,453,000 7,793,602
MFHR, Series E, FNMA Insured, 6.40%, 6/01/28 ............................................... 8,000,000 8,300,880
Water Revenue, Refunding, Series A, 6.10%, 7/01/21 ......................................... 4,615,000 4,685,794
California Statewide CDA Revenue, COP,
CAMTG Insured, 6.625%, 4/15/12 ............................................................. 7,000,000 7,388,920
CAMTG Insured, 6.75%, 4/15/22 .............................................................. 16,000,000 16,918,400
CAMTG Insured, ETM, 5.90%, 8/01/21 ......................................................... 4,000,000 4,115,960
Catholic Healthcare West, MBIA Insured, 5.50%, 7/01/23 ..................................... 11,240,000 11,238,988
Familiesfirst Inc., CAMTG Insured, 7.25%, 12/01/22 ......................................... 5,120,000 5,785,395
Gemological Institute, Connie Lee Insured, 6.00%, 5/01/15 .................................. 5,365,000 5,617,799
Gemological Institute, Connie Lee Insured, 6.00%, 5/01/20 .................................. 3,775,000 3,909,088
Health Facilities, Barton Memorial Hospital, Refunding, Series B, 6.40%, 12/01/05 .......... 250,000 259,880
Insured Health Facilities, AIDS Project, Series A, CAMTG Insured, 6.25%, 8/01/22 ........... 2,590,000 2,653,248
Insured Health Facilities, Children's Campus, CAMTG Insured, 6.375%, 9/01/12 ............... 2,765,000 2,884,586
Insured Health Facilities, Children's Campus, CAMTG Insured, 6.50%, 9/01/22 ................ 3,000,000 3,100,830
Insured Health Facilities, Eskaton Properties, CAMTG Insured, 6.75%, 5/01/21 ............... 9,600,000 10,160,832
Insured Health Facilities, Unihealth, Series A, AMBAC Insured, Pre-Refunded, 5.75%,
10/01/25 ................................................................................. 36,000,000 37,918,080
Insured Hospital, Triad Health Care, CAMTG Insured, Pre-Refunded, 6.50%, 8/01/22 ........... 80,230,000 85,037,382
Insured Hospital, Triad Health Care, Refunding, CAMTG Insured, ETM, 6.25%, 8/01/06 ......... 2,000,000 2,138,360
Salk Institute, Connie Lee Insured, 6.20%, 7/01/24 ......................................... 7,065,000 7,354,241
Sisters Charity Leavenworth, 5.00%, 12/01/23 ............................................... 11,375,000 10,222,599
Southern California Development Corp., 6.10%, 12/01/15 ..................................... 2,255,000 2,363,849
St. Joseph Health System Group, Pre-Refunded, 6.625%, 7/01/21 .............................. 12,500,000 13,752,375
Sutter Health Obligated Group, MBIA Insured, 5.50%, 8/15/22 ................................ 25,520,000 25,547,051
Sutter Health Obligated Group, Refunding, AMBAC Insured, 6.00%, 8/15/09 .................... 6,465,000 6,775,320
Sutter Health Obligated Group, Refunding, AMBAC Insured, 6.125%, 8/15/22 ................... 9,330,000 9,568,848
Sutter Health Obligated Group, Refunding, MBIA Insured, 5.50%, 8/15/23 ..................... 14,000,000 13,999,020
California Statewide CDA, Water and Wastewater Revenue, Pooled Financing Program, Series B,
FSA Insured, 5.65%, 10/01/26 ................................................................. 5,000,000 5,069,450
California Statewide Communities Development Authority Revenue, Los Angeles Orthopedic
Hospital Foundation, AMBAC Insured, 5.75%, 6/01/30 ........................................... 10,000,000 10,191,200
California Valley HFAR, Home Mortgage, MBIA Insured, 5.65%, 2/01/27 ............................ 20,000,000 19,516,600
Camarillo COP, Capital Improvement Corp., ETM, 7.625%, 4/01/08 ................................. 3,785,000 3,840,904
Campbell Housing Facility Revenue, San Tomas Gardens Project, Series A, 6.625%, 10/20/34 ....... 5,615,000 5,796,926
Camrosa Water District COP, Water System Improvement Projects, MBIA Insured, 6.00%, 1/15/20 .... 5,120,000 5,325,466
Capistrano Bay Park and Recreation District COP, Special Lease Finance, Series Q, 6.35%,
8/01/12 ...................................................................................... 2,800,000 2,837,184
Carson RDA, Project Area No. 1, Refunding, Series 1992, 6.375%,
10/01/12 ................................................................................... 3,965,000 4,132,838
10/01/16 ................................................................................... 1,565,000 1,616,301
</TABLE>
19
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Castaic Lake Water Agency COP, Water System Improvement Project, Refunding, Series A, MBIA
Insured,
6.125%, 8/01/15 ............................................................................ $ 11,540,000 $ 12,226,745
6.00%, 8/01/18 ............................................................................. 5,345,000 5,587,075
Cathedral City PFAR, Tax Allocation, Redevelopment Projects, Refunding, Series A, MBIA
Insured, 5.70%, 8/01/24 ...................................................................... 11,210,000 11,360,662
Central California Joint Powers Health Financing Authority COP, Community Hospitals of
Central California, 6.00%,
2/01/20 .................................................................................... 5,000,000 4,943,200
2/01/30 .................................................................................... 20,000,000 19,672,800
Central San Joaquin Water Conservation District COP, Series 1990, Pre-Refunded, 7.65%,
12/01/18 ..................................................................................... 4,630,000 4,794,226
Chaffey Community College District COP, Pre-Refunded, 7.40%, 11/01/14 .......................... 5,000,000 5,667,650
Chico PFA Revenue, Southeast Chico Redevelopment Project, Series A, FGIC Insured, 6.625%,
4/01/21 ...................................................................................... 1,955,000 2,004,325
Chico RDAR, COP, Insured Health Facilities, Sierra Sunrise Lodge,
6.80%, 2/01/11 ............................................................................. 4,110,000 4,221,545
6.75%, 2/01/21 ............................................................................. 2,800,000 2,870,896
Chino RDA, Tax Allocation, Central City Redevelopment Project, 7.00%, 9/01/22 .................. 9,980,000 10,483,790
Chino USD, COP, Land Acquisition,
Series A, FSA Insured, 9/01/14 ............................................................. 1,185,000 1,282,905
Series A, FSA Insured, 9/01/29 ............................................................. 7,105,000 7,544,089
Series D, BIG Insured, 7.45%, 9/01/24 ...................................................... 7,490,000 7,582,951
Series E, BIG Insured, 7.50%, 9/01/24 ...................................................... 485,000 491,038
Clayton 1915 Act, Limited Obligation, Contra Costa County, Oakhurst Country Club,
8.10%, 9/02/01 ............................................................................. 45,000 45,942
8.20%, 9/02/02 ............................................................................. 65,000 67,363
8.25%, 9/02/03 ............................................................................. 60,000 62,225
8.30%, 9/02/04 ............................................................................. 85,000 88,133
8.30%, 9/02/05 ............................................................................. 100,000 103,644
8.35%, 9/02/06 ............................................................................. 95,000 98,441
8.35%, 9/02/07 ............................................................................. 115,000 119,118
8.375%, 9/02/08 ............................................................................ 120,000 124,259
8.375%, 9/02/09 ............................................................................ 135,000 139,763
8.40%, 9/02/10 ............................................................................. 15,000 15,528
8.40%, 9/02/11 ............................................................................. 135,000 139,720
8.40%, 9/02/12 ............................................................................. 160,000 165,594
8.40%, 9/02/13 ............................................................................. 180,000 186,293
Clovis COP, Pre-Refunded, 7.20%, 8/01/11 ....................................................... 2,670,000 2,791,245
Coachella Valley COP, ID No. 71, Storm Water District, Flood Control Project, Pre-Refunded,
6.75%, 10/01/12 .............................................................................. 3,000,000 3,201,720
Coachella Valley USD, COP, 8.25%, 9/01/12 ...................................................... 6,165,000 6,368,877
Colton RDA, MFR, Seniors Housing Project, Series A, 7.75%, 7/01/22 ............................. 4,100,000 4,120,336
Colusa County COP, ABAG Finance Corp., Series B, 7.00%, 2/01/18 ................................ 1,555,000 1,592,211
Commerce Joint Powers Financing Authority Lease Revenue, Community Center, Series A, 6.25%,
10/01/22 ..................................................................................... 4,000,000 4,067,800
Commerce Refuse to Energy Authority Revenue, Refunding, Series 1994, 8.75%, 7/01/10 ............ 30,575,000 33,830,932
Compton COP, Civic Center and Capital Improvement, Refunding, Series A, 5.50%, 9/01/15 ......... 5,000,000 4,934,700
Compton CRDA, Tax Allocation, Series 1, FSA Insured, 6.75%, 8/01/13 ............................ 6,590,000 7,070,543
Compton Sewer Revenue, Pre-Refunded, 6.75%, 7/01/23 ............................................ 4,535,000 4,903,469
Concord RDA, Tax Allocation, Central Concord Redevelopment Project, Refunding, Sub Series A,
6.00%, 7/01/19 ............................................................................... 8,395,000 8,449,064
Contra Costa County COP, Merrithew Memorial Hospital Project, Refunding, MBIA Insured,
5.50%, 11/01/22 .............................................................................. 11,000,000 11,015,070
</TABLE>
20
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Contra Costa County MFHR, Byron Park Project, Refunding, Series C, GNMA Secured, 6.40%,
1/20/31 ...................................................................................... $ 5,930,000 $ 6,165,006
Contra Costa Transportation Authority Revenue, Sales Tax, Series A,
ETM, 6.875%, 3/01/07 ....................................................................... 13,900,000 15,444,707
FGIC Insured, ETM, 6.50%, 3/01/09 .......................................................... 1,000,000 1,100,510
Corcoran Hospital District Revenue, Series A, 6.55%, 7/01/12 ................................... 1,180,000 1,221,666
Corona 1915 Act,
AD No. 79-2, Northeast Area, Series B, 7.80%, 9/02/01 ...................................... 875,000 893,751
AD No. 79-2, Northeast Area, Series B, 7.85%, 9/02/02 ...................................... 900,000 934,389
AD No. 79-2, Northeast Area, Series B, 7.85%, 9/02/03 ...................................... 935,000 970,334
AD No. 79-2, Northeast Area, Series B, 7.85%, 9/02/04 ...................................... 1,005,000 1,042,557
AD No. 79-2 and 80-1, Refunding, 8.10%, 9/02/01 ............................................ 1,485,000 1,519,407
AD No. 79-2 and 80-1, Refunding, 8.10%, 9/02/02 ............................................ 1,445,000 1,501,658
AD No. 79-2 and 80-1, Refunding, 8.10%, 9/02/03 ............................................ 1,525,000 1,584,155
AD No. 79-2 and 80-1, Refunding, 8.10%, 9/02/04 ............................................ 1,645,000 1,708,119
Corona COP,
Corona Community Hospital Project, Pre-Refunded, 9.425%, 9/01/20 ........................... 15,000,000 20,025,750
(a)Vista Hospital System, Refunding, Series C, 7.315%, 7/01/20 ................................ 22,325,000 8,933,795
Corona RDA, Tax Allocation, Redevelopment Project Area A, Refunding, Series A, FGIC Insured,
6.25%, 9/01/16 ............................................................................... 3,000,000 3,185,340
Corona-Norco USD, Lease Revenue, Land Acquisition, Series A, FSA Insured, 6.00%, 4/15/29 ....... 18,435,000 18,922,053
CSAC Finance Corp. COP, Sutter County, Health Facilities Program, 7.80%, 1/01/21 ............... 2,100,000 2,110,395
Culver City USD, GO, MBIA Insured, 5.75%, 8/01/36 .............................................. 5,000,000 5,081,350
Cupertino COP, Refunding,
Series A, 5.75%, 1/01/16 ................................................................... 5,000,000 5,110,650
Series B, 6.25%, 7/01/10 ................................................................... 3,535,000 3,703,867
Cypress COP, Civic Center, Refunding and Improvement Project, 6.80%, 8/01/17 ................... 3,440,000 3,569,963
Desert Hot Springs RDA, Tax Allocation, Redevelopment Project No. 2, Series A, 6.625%,
9/01/20 ...................................................................................... 1,230,000 1,263,235
Duarte COP,
City Civic Center, Refunding, 7.00%, 6/15/22 ............................................... 5,370,000 5,580,182
Refunding, Series A, 5.25%, 4/01/24 ........................................................ 5,000,000 4,323,050
Series A, 5.25%, 4/01/19 ................................................................... 5,000,000 4,402,650
Series A, 5.25%, 4/01/31 ................................................................... 12,500,000 10,608,500
East Bay MUD,
Wastewater System Revenue, sub., MBIA Insured, 5.00%, 6/01/38 .............................. 23,115,000 20,979,636
Water System Revenue, sub., MBIA Insured, 5.00%, 6/01/38 ................................... 37,620,000 34,144,664
Water System Revenue, sub., Refunding, 6.00%, 6/01/20 ...................................... 15,100,000 15,426,009
East Side UHSD, Santa Clara County, Series D, FGIC Insured, 5.80%, 9/01/21 ..................... 7,100,000 7,272,814
Eastern Municipal Water District, Water and Sewer Revenue COP, Refunding, Series A, FGIC
Insured, 6.30%, 7/01/20 ...................................................................... 7,975,000 8,142,714
El Cajon RDA, Tax Allocation, Redevelopment Project, Refunding, AMBAC Insured, 5.35%,
10/01/22 ..................................................................................... 11,285,000 11,169,893
El Camino Hospital District Revenue, Refunding, Series A, ETM, 7.25%, 8/15/09 .................. 8,945,000 10,158,479
El Dorado County Board Authority Lease Revenue, Capital Facilities Project, Pre-Refunded,
7.40%, 11/01/09 .............................................................................. 5,500,000 5,623,585
El Dorado County Special Tax, Community Facilities District No 1992-1, 6.25%, 9/01/29 .......... 19,905,000 19,903,607
El Monte COP, Department of Public Social Services Facility, AMBAC Insured, 4.75%, 6/01/30 ..... 10,790,000 9,498,005
Emeryville PFA Revenue,
Housing Increment Loan, 6.20%, 9/01/25 ..................................................... 3,115,000 3,188,888
Shellmound Park Redevelopment and Housing Project, Series B, MBIA Insured, 5.00%, 9/01/28 .. 20,000,000 18,473,800
</TABLE>
21
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Empire USD COP, Garst School Supplies Financing Project, 6.75%, 12/01/17 ....................... $ 1,165,000 $ 1,209,841
Empire USD, Special Tax, CFD No. 1987-1, Refunding, Series A, MBIA Insured, 6.50%, 10/01/17 .... 2,700,000 2,857,572
Escondido COP,
Escondido Mobile Home Park, Pre-Refunded, 7.25%, 3/01/07 ................................... 1,000,000 1,033,050
Escondido Mobile Home Park, Pre-Refunded, 7.40%, 3/01/21 ................................... 4,910,000 5,075,222
Wastewater Project, Refunding, AMBAC Insured, 5.70%, 9/01/26 ............................... 13,465,000 13,652,298
Wastewater Project, Refunding, AMBAC Insured, 5.80%, 9/01/26 ............................... 400,000 409,392
Fairfield PFAR, Fairfield Redevelopment Projects, Series A, 7.80%, 8/01/19 ..................... 2,145,000 2,177,068
Fair Oaks Fire Protection District COP, 8.00%, 12/01/15 ........................................ 1,960,000 2,006,648
Fillmore COP, Water System Improvement Project, AMBAC Insured, 7.70%, 5/01/19 .................. 2,590,000 2,932,553
Folsom PFAR, Local Agency,
7.25%, 10/01/10 ............................................................................ 3,000,000 3,060,000
8.00%, 10/01/18 ............................................................................ 7,590,000 7,674,629
Fontana PFAR, Tax Allocation, North Fontana Redevelopment,
Series B, 6.30%, 1/15/24 ................................................................... 1,905,000 1,918,202
sub. lien, Series A, Pre-Refunded, 7.65%, 12/01/09 ......................................... 2,000,000 2,119,400
sub. lien, Series A, Pre-Refunded, 7.75%, 12/01/20 ......................................... 11,005,000 11,674,324
Fontana RDA, Tax Allocation, Jurupa Hills Redevelopment Project,
Refunding, Series A, 5.50%, 10/01/27 ....................................................... 12,500,000 11,312,875
Series A, Pre-Refunded, 7.10%, 10/01/23 .................................................... 10,000,000 10,728,600
Fontana USD, GO, Convertible Capital Appreciation, Series D, FGIC Insured, 5.80%, 5/01/17 ...... 5,000,000 5,270,600
Foothill/Eastern Corridor Agency Toll Road Revenue,
Refunding, MBIA Insured, 5.75%, 1/15/40 .................................................... 395,510,000 382,920,917
senior lien, Series A, 5.00%, 1/01/35 ...................................................... 15,955,000 13,893,933
senior lien, Series A, Pre-Refunded, 6.50%, 1/01/32 ........................................ 108,175,000 120,947,222
senior lien, Series A, Pre-Refunded, 6.00%, 1/01/34 ........................................ 125,995,000 137,458,025
Fort Bragg RDAR, Tax Allocation, Fort Bragg Redevelopment Project, Series A, 6.875%, 5/01/18 ... 1,960,000 2,040,301
Fortuna and Susanville Cities COP, Series B, 7.375%, 9/01/17 ................................... 2,000,000 2,060,180
Fresno County COP, American Avenue Landfill Project,
ETM, 7.90%, 11/01/00 ....................................................................... 320,000 320,925
ETM, 8.00%, 11/01/01 ....................................................................... 345,000 359,549
Pre-Refunded, 8.25%, 11/01/13 .............................................................. 7,185,000 7,709,361
Fresno County Office of Education COP, Capital Outlay Financing Program, Series C, 7.50%,
12/01/10 ..................................................................................... 2,470,000 2,503,296
Fresno Health Facilities Revenue, Holy Cross Health Systems Corp., MBIA Insured, 5.625%,
12/01/15 ..................................................................................... 5,000,000 5,110,550
Fresno RDAR, Tax Allocation, Mariposa Redevelopment Project, Series A, 6.625%, 2/01/23 ......... 1,505,000 1,538,245
Fresno USD, COP, Project Phase VI, Series A, Pre-Refunded, 7.20%, 5/01/11 ...................... 7,065,000 7,334,177
Glendale USD, COP, Series A, AMBAC Insured, 6.00%, 3/01/19 ..................................... 7,250,000 7,523,470
Grand Terrace PFA, Series A, Pre-Refunded, 7.85%, 6/01/21 ...................................... 2,945,000 3,077,054
Guam Power Authority Revenue, Refunding, Series A, 5.25%, 10/01/34 ............................. 10,000,000 9,229,100
Hawaiian Gardens RDA, Tax Allocation, Project No. 1,
Refunding, 6.35%, 12/01/33 ................................................................. 13,000,000 13,154,830
Refunding, ETM, 8.00%, 12/01/10 ............................................................ 6,545,000 7,534,539
Helix Water District COP, Installment Purchase, Series A, FSA Insured, 5.25%, 4/01/24 .......... 8,925,000 8,667,068
Hemet USD, COP, Series 1991, Pre-Refunded, 8.00%, 12/01/13 ..................................... 4,000,000 4,252,120
Hemet Valley Hospital District Revenue COP, Hemacinto Community Corp. Project, Series A,
7.75%, 5/01/19 ............................................................................... 2,460,000 2,464,403
Hesperia PFA Revenue, Highway and Street Improvement, Series A, 6.10%, 10/01/10 ................ 1,600,000 1,703,584
</TABLE>
22
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Hesperia Water District COP, Water Facilities Improvement Projects, FGIC Insured,
Pre-Refunded, 7.15%, 6/01/26 ................................................................. $ 5,000,000 $ 5,252,150
Hollister RDA, Tax Allocation, Community Development Project, Series B, FSA Insured,
6.625%, 10/01/07 ........................................................................... 1,905,000 1,989,201
6.75%, 10/01/13 ............................................................................ 1,495,000 1,562,126
Huntington Beach PFAR, Huntington Beach Redevelopment Projects, Refunding, 7.00%, 8/01/24 ...... 2,630,000 2,723,838
Huntington Park PFA, Local Agency Revenue, Refunding, Series A, MBIA Insured, 6.45%, 9/01/22 ... 10,000,000 10,589,100
Imperial COP,
Wastewater System Refining Program, Refunding, Series B, 5.85%, 10/15/16 ................... 1,820,000 1,858,329
Wastewater System Refining Program, Refunding, Series B, 5.875%, 10/15/20 .................. 3,175,000 3,236,151
Water System Refining Program, Refunding, Series A, 5.85%, 10/15/16 ........................ 2,625,000 2,680,283
Water System Refining Program, Refunding, Series A, 5.875%, 10/15/20 ....................... 4,535,000 4,622,344
Industry COP, Refunding, 6.625%, 6/01/06 ....................................................... 11,380,000 12,456,434
Industry Urban Development Agency Tax Allocation, Transportation District No. 3 Project,
Refunding, 6.90%, 11/01/07 ................................................................... 5,860,000 6,141,456
Inglewood PFAR, La Cinega Redevelopment Project, Series A, AMBAC Insured, 6.00%, 5/01/16 ....... 7,410,000 7,659,272
Inglewood USD, COP, 7.375%, 10/01/05 ........................................................... 2,990,000 3,019,900
Inland Empire Solid Waste Financing Authority Revenue, Landfill Improvement Financing
Project, Series B, FSA Insured,
6.25%, 8/01/11 ............................................................................. 5,000,000 5,447,300
Pre-Refunded, 6.00%, 8/01/16 ............................................................... 5,000,000 5,484,400
Intercommunity Hospital Financing Authority COP, Northbay Healthcare System, Refunding, ACA
Insured, 5.25%, 11/01/19 ..................................................................... 5,000,000 4,745,700
Irwindale CRDA, Tax Allocation,
Individual Development Project, Pre-Refunded, 6.60%, 8/01/18 ............................... 1,630,000 1,811,729
Individual Development Project, Pre-Refunded, 6.625%, 8/01/26 .............................. 9,100,000 10,198,461
senior lien, Refunding, FSA Insured, 5.75%, 8/01/26 ........................................ 10,220,000 10,567,582
Irwindale PFA Special Tax, CFD No.1, Pre-Refunded, 8.50%, 11/01/20 ............................. 9,985,000 10,266,377
John C. Fremont Hospital District Health Facilities Revenue, 6.75%, 6/01/23 .................... 1,760,000 1,860,707
Keppel USD, Special Tax, CFD No. 91-1, Series A, 7.40%, 9/01/16 ................................ 2,000,000 2,105,000
Kern County Board of Education COP,
Refunding, Series A, MBIA Insured, 5.20%, 5/01/28 .......................................... 13,685,000 13,123,915
Series A, MBIA Insured, 5.25%, 6/01/29 ..................................................... 5,775,000 5,575,589
Kern County Housing Authority RRMR, Series A, 9.875%, 9/01/08 .................................. 2,730,000 2,739,828
Kern County Housing Authority SFMR, Series A, GNMA Secured,
7.55%, 12/01/07 ............................................................................ 230,000 238,434
7.65%, 12/01/12 ............................................................................ 335,000 345,656
7.70%, 12/01/23 ............................................................................ 1,545,000 1,580,195
7.50%, 10/01/24 ............................................................................ 805,000 821,261
La Mirada RDA,
Special Tax, Civic Theater Project, CFD No. 89-1, Pre-Refunded, 7.90%, 10/01/01 ............ 295,000 300,900
Special Tax, Civic Theater Project, CFD No. 89-1, Pre-Refunded, 8.00%, 10/01/02 ............ 315,000 321,300
Special Tax, Civic Theater Project, CFD No. 89-1, Pre-Refunded, 8.00%, 10/01/03 ............ 340,000 346,800
Special Tax, Civic Theater Project, CFD No. 89-1, Pre-Refunded, 8.25%, 10/01/20 ............ 12,725,000 12,979,500
Tax Allocation, Housing, Refunding, Series A, FSA Insured, 5.875%, 8/15/25 ................. 7,100,000 7,282,541
La Mirada SFMR, MBS, Series A, 7.65%, 4/01/24 .................................................. 1,340,000 1,382,210
</TABLE>
23
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
La Palma Community Development Commission Tax Allocation, La Palma Community Development
Project No. 1,
7.10%, 6/01/21 ............................................................................. $ 4,945,000 $ 5,086,180
6.10%, 6/01/22 ............................................................................. 2,355,000 2,368,164
La Quinta RDA, Tax Allocation, Redevelopment Project Area No. 1, Refunding, AMBAC Insured,
5.20%, 9/01/28 ............................................................................. 8,600,000 8,245,508
5.25%, 9/01/33 ............................................................................. 4,300,000 4,111,961
Lake Arrowhead Community Services District COP, FGIC Insured, 6.50%, 6/01/15 ................... 6,430,000 6,759,666
Lake Elsinore PFA, Tax Allocation Revenue,
Lake Elsinore Redevelopment Projects, Series A, FSA Insured, 5.80%, 9/01/25 ................ 6,750,000 6,858,878
Series A, 5.50%, 9/01/30 ................................................................... 13,050,000 11,806,727
Lake Elsinore USD,
COP, Pre-Refunded, 6.90%, 2/01/20 .......................................................... 5,150,000 5,539,701
Special Tax, CFD No. 8, Pre-Refunded, 8.25%, 9/01/16 ....................................... 4,200,000 4,436,502
Lakewood RDA, Tax Allocation, Redevelopment Project No.1, Refunding, Series A, FSA Insured,
6.50%, 9/01/17 ............................................................................. 6,705,000 7,085,643
Lancaster COP, School District Project, FSA Insured, Pre-Refunded,
6.95%, 3/01/12 ............................................................................. 2,640,000 2,865,720
7.00%, 3/01/22 ............................................................................. 3,555,000 3,861,334
Lancaster RDA,
RMR, Los Angeles County, Series A, ETM, 10.125%, 9/01/16 ................................... 5,000 5,090
Tax Allocation, Amargosa Redevelopment Project, Refunding, MBIA Insured, 6.85%, 2/01/19 .... 6,055,000 6,221,089
Tax Allocation, Combined Redevelopment Project Areas, Housing Program, MBIA Insured,
5.80%, 8/01/23 ........................................................................... 9,125,000 9,296,824
Tax Allocation, Combined Redevelopment Project Areas, Sheriff's Program, MBIA Insured,
5.70%, 8/01/23 ........................................................................... 13,140,000 13,332,238
Lemon Grove CDA, Tax Allocation, 1998 Refunding, 5.75%, 8/01/28 ................................ 8,115,000 7,643,113
Lemoore Financing Authority Lease Revenue, Water and Wastewater System Improvement Project,
AMBAC Insured, 6.20%, 12/01/20 ............................................................... 4,400,000 4,631,352
Lemoore RDA, Tax Allocation, Refunding, 6.85%, 8/01/25 ......................................... 6,105,000 6,321,483
Liberty UHSD, Series A, FSA Insured, 6.20%, 8/01/19 ............................................ 2,745,000 2,889,634
Little Lake City School District COP, Refunding, Series A,
6.15%, 6/01/06 ............................................................................. 280,000 285,264
6.20%, 6/01/07 ............................................................................. 300,000 305,733
6.25%, 6/01/08 ............................................................................. 315,000 321,017
6.25%, 6/01/09 ............................................................................. 335,000 340,226
6.25%, 6/01/10 ............................................................................. 355,000 361,213
Local Medical Facilities Financing Authority COP, Insured California Health Clinic Project,
7.55%, 3/01/20 ............................................................................... 4,425,000 4,524,740
Local Medical Facilities Financing Authority II COP, Insured California Health Clinic
Project, 7.55%, 11/01/20 ..................................................................... 3,980,000 4,067,321
Local Medical Facilities Financing Authority III COP, Insured California Health Clinic
Project, 6.90%, 7/01/22 ...................................................................... 3,405,000 3,538,374
Loma Linda Hospital Revenue, Loma Linda University Medical Center, Refunding,
Series A, AMBAC Insured, 6.55%, 12/01/18 ................................................... 11,525,000 12,143,432
Series B, MBIA Insured, 5.00%, 12/01/22 .................................................... 8,000,000 7,423,040
Long Beach California Board Finance Authority Lease Revenue, Temple and Willow Facility,
Refunding, Series B, MBIA Insured, 5.00%, 10/01/27 ........................................... 14,935,000 13,831,901
Long Beach Harbor Revenue, MBIA Insured,
5.375%, 5/15/20 ............................................................................ 12,000,000 11,680,320
5.25%, 5/15/25 ............................................................................. 10,500,000 9,931,215
Long Beach HMR, Series A, 9.60%, 11/01/14 ...................................................... 1,070,000 1,083,033
Long Beach USD, COP, Los Angeles County Schools, Series A, 6.30%, 12/01/12 ..................... 3,735,000 3,956,896
</TABLE>
24
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Los Angeles Community College District COP, Series A, Refunding, FSA Insured, 6.00%, 8/15/20 ... $ 4,330,000 $ 4,481,680
Los Angeles COP,
Ararat Mission Hills Project, Series A, Pre-Refunded, 7.25%, 6/01/21 ....................... 3,120,000 3,217,126
Department of Public Social Services, Series A, AMBAC Insured, 5.50%, 8/01/24 .............. 4,000,000 4,012,600
Department of Public Social Services, Series A, AMBAC Insured, 5.50%, 8/01/31 .............. 5,000,000 4,970,150
Los Angeles County Capital Assets Leasing Corp. Leasehold Revenue, Refunding, AMBAC Insured,
6.00%, 12/01/16 .............................................................................. 6,000,000 6,231,420
Los Angeles County COP,
Disney Parking Project, Pre-Refunded, 6.50%, 3/01/23 ....................................... 12,060,000 12,886,592
Insured Health Clinic Program, Behavioral Health Service Inc., Series F, CAMTG Insured
5.875%, 1/01/21 .......................................................................... 7,520,000 7,714,166
Insured Health Clinic Program, Series A, CAMTG Insured 7.30%, 1/01/21 ...................... 15,545,000 15,926,319
Insured Health Clinic Program, Series B, 7.05%, 8/01/21 .................................... 7,175,000 7,388,743
Insured Health Clinic Program, Series C, 6.90%, 1/01/22 .................................... 1,200,000 1,228,668
Marina del Rey, Series A, 6.50%, 7/01/08 ................................................... 21,615,000 22,794,314
Retirement Housing Foundation, Refunding, 6.625%, 4/15/12 .................................. 3,400,000 3,588,904
Retirement Housing Foundation, Refunding, 6.75%, 4/15/22 ................................... 7,665,000 8,104,971
Series 1992, 6.625%, 7/01/22 ............................................................... 1,000,000 1,036,020
Los Angeles County MTA, Sales Tax Revenue,
Proposition A, First Tier, Refunding, Senior Series A, AMBAC Insured, 5.00%, 7/01/26 ....... 13,000,000 11,975,340
Proposition A, First Tier, Refunding, Senior Series A, MBIA Insured, 5.25%, 7/01/27 ........ 7,840,000 7,587,787
Proposition A, Refunding, Series A, FGIC Insured, 5.00%, 7/01/21 ........................... 118,800,000 112,195,908
Proposition A, Refunding, Series A, MBIA Insured, 5.625%, 7/01/18 .......................... 10,060,000 10,262,105
Proposition A, Second Tier, MBIA Insured, Pre-Refunded, 6.00%, 7/01/26 ..................... 12,200,000 13,372,542
Proposition C, Second Senior Series A, AMBAC Insured, 5.00%, 7/01/25 ....................... 58,000,000 53,951,600
Los Angeles County Public Works Financing Authority Revenue, Multiple Capital Facilities
Project, Series B, AMBAC Insured, 5.125%, 12/01/29 ........................................... 26,905,000 25,483,071
Los Angeles County Sanitation Districts Financing Authority Revenue, Capital Projects,
Series A, MBIA Insured,
5.25%, 10/01/19 ............................................................................ 30,000,000 29,857,200
5.00%, 10/01/23 ............................................................................ 40,050,000 37,188,212
Los Angeles County SFMR, Issue A, GNMA Secured,
7.875%, 8/01/16 ............................................................................ 1,400,000 1,444,786
8.00%, 3/01/17 ............................................................................. 1,030,000 1,044,956
Los Angeles County Transportation Commission Lease Revenue, FSA Insured, 7.375%, 12/15/06 ...... 10,669,000 10,949,275
Los Angeles County Transportation Commission Sales Tax Revenue,
Proposition C, Second Senior, Series A, MBIA Insured, Pre-Refunded, 6.625%, 7/01/09 ........ 29,590,000 31,372,206
Refunding, Series B, 6.50%, 7/01/13 ........................................................ 4,300,000 4,453,553
Refunding, Series B, FGIC Insured, 5.75%, 7/01/18 .......................................... 28,095,000 28,307,398
Refunding, Series B, MBIA Insured, 5.75%, 7/01/18 .......................................... 13,480,000 13,581,909
Series B, FGIC Insured, 6.50%, 7/01/13 ..................................................... 5,000,000 5,186,050
Los Angeles CRDA,
Financing Authority Revenue, Pooled Financing, Beacon Normandie, Series B, 6.625%,
9/01/14 .................................................................................. 7,500,000 7,923,225
MFHR, Angelus Plaza Project, Refunding, Series A, 6.40%, 7/01/23 ........................... 6,150,000 6,320,847
Tax Allocation, Bunker Hill, Refunding, Series H, FSA Insured, 5.625%, 12/01/18 ............ 20,000,000 20,433,200
Tax Allocation, Bunker Hill, Refunding, Series H, FSA Insured, 5.625%, 12/01/23 ............ 50,090,000 50,587,394
Tax Allocation, Bunker Hill, Refunding, Series H, FSA Insured, 5.60%, 12/01/28 ............. 27,900,000 27,910,044
Tax Allocation, Series G, ETM, 6.75%, 7/01/10 .............................................. 8,060,000 8,108,521
</TABLE>
25
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Los Angeles Department of Airports Revenue, Ontario International Airport, Series A, FGIC
Insured, 6.00%, 5/15/26 ...................................................................... $ 10,000,000 $ 10,206,800
Los Angeles Department of Water and Power Electric Plant Revenue,
FGIC Insured, 6.125%, 1/15/33 .............................................................. 5,000,000 5,119,150
Refunding, 5.875%, 9/01/30 ................................................................. 27,880,000 28,334,723
Refunding, MBIA Insured, 6.00%, 2/01/28 .................................................... 9,060,000 9,286,138
Refunding, MBIA Insured, 5.875%, 9/01/30 ................................................... 34,400,000 35,035,024
Refunding, Second Issue, 5.40%, 11/15/31 ................................................... 14,500,000 14,011,930
Refunding, Series 1992, 6.375%, 2/01/20 .................................................... 8,245,000 8,543,387
Refunding, Series 1992, 6.00%, 2/01/28 ..................................................... 8,290,000 8,496,918
Refunding, Series 1993, MBIA Insured, 5.375%, 9/01/23 ...................................... 62,955,000 61,933,870
Second Issue, 6.00%, 8/15/32 ............................................................... 37,600,000 38,256,496
Series 1993, 6.125%, 1/15/33 ............................................................... 101,095,000 103,504,094
Los Angeles Department of Water and Power Waterworks Revenue, Refunding,
Series 1992, 6.40%, 5/15/28 ................................................................ 21,590,000 22,233,166
Series 1993, 5.80%, 4/15/24 ................................................................ 10,520,000 10,644,767
Los Angeles Harbor Department Revenue, Series B,
6.125%, 8/01/18 ............................................................................ 24,810,000 25,966,890
6.20%, 8/01/22 ............................................................................. 59,835,000 62,572,451
5.375%, 11/01/23 ........................................................................... 7,460,000 7,187,635
MBIA Insured, 6.20%, 8/01/25 ............................................................... 35,690,000 37,341,019
Los Angeles HMR, Series 1985, 9.00%, 6/15/18 ................................................... 90,000 90,053
Los Angeles MFHR, Refunding, Senior Series G, FSA Insured, 5.75%, 1/01/24 ...................... 7,330,000 7,342,388
Los Angeles Municipal Improvement Corp. Lease Revenue, Central Library Project, Refunding,
Series A, 6.30%, 6/01/18 ..................................................................... 3,000,000 3,099,330
Los Angeles USD,
COP, Dr. Francisco Bravo Medical Facility, Refunding, 6.50%, 6/01/04 ....................... 3,040,000 3,196,347
COP, Dr. Francisco Bravo Medical Facility, Refunding, 6.60%, 6/01/05 ....................... 1,145,000 1,204,758
COP, Dr. Francisco Bravo Medical Facility, Refunding, 6.60%, 6/01/06 ....................... 3,610,000 3,799,597
COP, Dr. Francisco Bravo Medical Facility, Refunding, 6.625%, 6/01/08 ...................... 8,505,000 8,950,832
Series B, FGIC Insured, 5.00%, 7/01/23 ..................................................... 5,000,000 4,683,550
Los Angeles Wastewater System Revenue,
Refunding, Series A, FGIC Insured, 6.00%, 12/01/12 ......................................... 15,000,000 15,538,500
Refunding, Series A, FGIC Insured, 6.00%, 12/01/18 ......................................... 25,665,000 26,539,150
Refunding, Series A, MBIA Insured, 5.70%, 6/01/20 .......................................... 64,445,000 65,518,009
Refunding, Series A, MBIA Insured, 5.80%, 6/01/21 .......................................... 35,505,000 36,329,426
Refunding, Series C, MBIA Insured, 5.60%, 6/01/20 .......................................... 20,000,000 20,251,400
Refunding, Series D, FGIC Insured, 6.00%, 11/01/14 ......................................... 8,000,000 8,414,080
Series A, FGIC Insured, 5.00%, 6/01/28 ..................................................... 8,245,000 7,617,968
Series A, MBIA Insured, 5.875%, 6/01/24 .................................................... 45,400,000 46,413,328
Series B, AMBAC Insured, 6.00%, 6/01/22 .................................................... 10,650,000 10,865,769
Series B, MBIA Insured, 5.70%, 6/01/23 ..................................................... 75,720,000 76,793,710
Lynwood PFA, Tax Allocation, Project Area A, Refunding, Series A, FSA Insured, 5.90%, 9/01/28 .. 6,470,000 6,846,231
Lynwood RDA, Tax Allocation, Project Area, Series A, 6.50%, 7/01/13 ............................ 6,135,000 6,462,793
</TABLE>
26
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Madera-Chowchilla Power Authority Hydroelectric Revenue, Refunding, 8.00%, 1/01/14 ............. $ 2,235,000 $ 2,359,758
Madera County COP, Valley Children's Hospital, MBIA Insured,
5.00%, 3/15/23 ............................................................................. 14,500,000 13,500,660
5.75%, 3/15/28 ............................................................................. 27,500,000 27,808,550
Madera USD, COP, 6.50%, 12/01/07 ............................................................... 1,250,000 1,324,025
Marysville COP, Capital Improvement Financing Project, 7.125%, 2/01/13 ......................... 1,110,000 1,161,593
Marysville Hospital Revenue, Fremont Rideout Health, Refunding, Series A, AMBAC Insured,
5.00%, 1/01/22 ............................................................................... 5,000,000 4,647,200
Menlo Park CDA, MFHR, Gateway Project, Series A, FHA Insured, 8.25%, 12/01/28 .................. 3,470,000 3,523,334
Merced Irrigation District COP, Water Facilities Project, 6.40%, 11/01/10 ...................... 3,580,000 3,811,089
Metropolitan Water District Revenue, Southern California Waterworks,
5.50%, 7/01/19 ............................................................................. 75,000,000 75,522,000
5.00%, 7/01/20 ............................................................................. 7,765,000 7,363,006
Series A, 5.00%, 7/01/26 ................................................................... 40,890,000 37,562,372
Series A, 5.00%, 7/01/37 ................................................................... 26,080,000 23,688,203
Series C, 5.00%, 7/01/37 ................................................................... 26,780,000 24,324,006
Mid-Peninsula Regional Open Space District COP, Special District Association Finance Corp.,
5.75%, 9/01/20 ............................................................................... 5,200,000 5,223,920
Mill Valley Revenue COP, Pre-Refunded, 7.10%, 12/01/20 ......................................... 2,750,000 2,817,870
Milpitas RDA, Tax Allocation, Redevelopment Project Area No. 1, MBIA Insured,
5.40%, 1/15/17 ............................................................................. 12,155,000 12,332,220
5.50%, 1/15/24 ............................................................................. 11,790,000 11,804,502
Milpitas USD, FGIC Insured, 5.875%, 9/01/24 .................................................... 11,970,000 12,391,943
Modesto Irrigation District COP, Refunding and Capital Improvements, Series B, 5.30%, 7/01/22 .. 4,835,000 4,665,292
Modesto PFA Lease Revenue, Capital Improvements and Refinancing Project, AMBAC Insured,
5.125%, 9/01/33 .............................................................................. 5,535,000 5,188,730
Mojave Water Agency COP, Supplemental Water Entitlement, MBIA Insured, 5.55%, 9/01/22 .......... 10,005,000 10,088,342
Montclair RDA, Tax Allocation,
Redevelopment Project No. IV, 6.90%, 10/01/22 .............................................. 1,645,000 1,711,705
Redevelopment Project No. V, 6.90%, 10/01/22 ............................................... 4,245,000 4,417,135
Monterey County COP, Natividad Medical Center Improvement Project, Series C, MBIA Insured,
Pre-Refunded,
6.50%, 8/01/15 ............................................................................. 3,500,000 3,902,045
6.60%, 8/01/23 ............................................................................. 13,250,000 14,829,268
Monterey Park RDA, Tax Allocation, Atlantic-Garvey Redevelopment Project No. 1, Refunding,
6.85%, 9/01/14 ............................................................................... 13,680,000 14,337,324
Moreno Valley Special Tax, Towngate Community Facilities 8, Refunding, Series A, FSA Insured,
5.875%, 12/01/15 ............................................................................. 5,830,000 6,034,400
Moreno Valley USD, COP,
Land Acquisition, Series F, FSA Insured, Pre-Refunded, 6.75%, 9/01/27 ...................... 7,680,000 8,188,800
Refunding, FSA Insured, 5.60%, 3/01/17 ..................................................... 5,000,000 5,113,000
Refunding, FSA Insured, 5.70%, 3/01/27 ..................................................... 15,000,000 15,175,500
Mount Diablo USD, Special Tax, CFD No. 1, AMBAC Insured, 6.30%, 8/01/22 ........................ 5,000,000 5,245,100
Mountain View COP, Capital Improvement Financing Authority Revenue,
City Hall, MBIA Insured, 6.25%, 8/01/12 .................................................... 3,110,000 3,217,699
City Hall/Community Theatre, MBIA Insured, 6.50%, 8/01/16 .................................. 2,000,000 2,071,100
Mountain View-Los Altos UHSD, COP, Financing Project, Pre-Refunded, 7.40%, 8/01/16 ............. 2,175,000 2,278,182
Mountain View School District COP, Santa Clara County Financing Project, Pre-Refunded,
6.75%, 4/01/07 ............................................................................. 1,010,000 1,042,189
6.90%, 4/01/12 ............................................................................. 1,430,000 1,477,104
Mountain View Shoreline Regional Park, Community Tax Allocation, Series A, MBIA Insured,
5.75%, 8/01/18 ............................................................................... 9,605,000 9,855,594
</TABLE>
27
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
M-S-R Public Power Agency San Juan Project Revenue,
Refunding, Series F, AMBAC Insured, 6.00%, 7/01/20 ......................................... $ 10,750,000 $ 11,133,668
Series E, MBIA Insured, 6.00%, 7/01/22 ..................................................... 8,490,000 8,533,044
Murrieta COP, Road Improvement Project, 6.00%, 4/01/27 ......................................... 8,600,000 8,399,362
Napa Housing Facility Revenue, Napa Park Apartments, Series A, GNMA Secured, 6.35%, 6/20/35 .... 6,125,000 6,319,714
Napa Mortgage Revenue, Refunding, Creekside II Apartments Project, Series A, MBIA Insured,
6.625%, 7/01/25 .............................................................................. 2,000,000 2,072,340
Needles PFAR, Tax Allocation, Redevelopment Project, Series A, 7.50%, 8/15/22 .................. 1,580,000 1,618,900
Nevada County COP, Jail and Government Center Project, Refunding, FSA Insured, 5.875%,
10/01/19 ..................................................................................... 6,275,000 6,393,911
Nevada Power Authority Revenue, Bowman Hydroelectric Project, Refunding, 7.50%, 5/01/13 ........ 6,725,000 6,968,176
North City West School Facilities Financing Authority Special Tax, CFD No. 1, Series C, AMBAC
Insured, 5.30%,
9/01/22 .................................................................................... 10,000,000 9,834,100
9/01/27 .................................................................................... 9,900,000 9,650,223
Northern California Public Power Agency Revenue, Hydroelectric Project No. 1, Refunding,
Series A, MBIA Insured,
5.125%, 7/01/23 ............................................................................ 7,420,000 7,107,173
5.50%, 7/01/24 ............................................................................. 10,000,000 9,985,900
5.00%, 7/01/28 ............................................................................. 21,475,000 19,839,679
5.20%, 7/01/32 ............................................................................. 43,675,000 41,463,735
Oakland COP, Oakland Museum, Refunding, Series A, AMBAC Insured, 6.00%, 4/01/12 ................ 8,000,000 8,248,400
Oakland HFR,
Issue D-1, 6.95%, 1/01/01 .................................................................. 200,000 200,572
Issue D-1, 6.95%, 7/01/01 .................................................................. 60,000 60,704
Issue D-1, 7.10%, 1/01/10 .................................................................. 2,490,000 2,573,415
Issue D-2, 6.95%, 7/01/01 .................................................................. 205,000 207,405
Issue D-2, 7.10%, 1/01/10 .................................................................. 1,090,000 1,126,515
Issue D-2, 7.15%, 1/01/24 .................................................................. 5,690,000 5,842,435
Oakland Joint Powers Financing Authority Lease Revenue, Oakland Administration Buildings,
AMBAC Insured, 5.75%, 8/01/26 ................................................................ 24,895,000 25,395,141
Oakland Revenue, 1800 Harrison Foundation,
Refunding, Series A, AMBAC Insured, 6.00%, 1/01/29 ......................................... 13,825,000 14,380,212
Series B, AMBAC Insured, 6.00%, 1/01/29 .................................................... 13,470,000 14,010,955
Oceanside Building Authority Revenue, Refunding, 7.75%, 11/01/04 ............................... 3,595,000 3,945,513
Oceanside COP,
Oceanside Civic Center Project, Refunding, MBIA Insured, 5.75%, 8/01/15 .................... 5,000,000 5,220,050
Refunding, Series A, 6.375%, 4/01/12 ....................................................... 4,435,000 4,667,438
Refunding, Series A, 6.625%, 4/01/23 ....................................................... 9,000,000 9,085,320
Wastewater Systems Plan, Refunding, AMBAC Insured, 5.80%, 5/01/21 .......................... 4,500,000 4,602,960
Water System Project, Refunding, AMBAC Insured, 5.80%, 8/01/21 ............................. 4,750,000 4,863,763
Olivenhain Municipal Water District 1915 Act, AD No. 96-1, MBIA Insured, 5.45%, 9/02/27 ........ 11,105,000 11,057,804
Ontario Montclair School District COP,
Capital Projects, FSA Insured, 5.625%, 9/01/17 ............................................. 7,500,000 7,735,350
Series A, Pre-Refunded, 7.50%, 10/01/12 .................................................... 1,670,000 1,710,648
Orange County Airport Revenue, Refunding, MBIA Insured, 5.625%, 7/01/12 ........................ 5,000,000 5,247,600
Orange County COP,
Civic Center Expansion Project, AMBAC Insured, Pre-Refunded, 6.00%, 8/01/21 ................ 4,500,000 4,607,685
Juvenile Justice Center Facilities, Refunding, AMBAC Insured, 6.375%, 6/01/11 .............. 5,000,000 5,258,850
Orange County Development Agency Tax Allocation, Santa Ana Heights Area Project, Refunding,
6.125%, 9/01/23 .............................................................................. 6,500,000 6,550,115
</TABLE>
28
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Orange County Financing Authority Tax Allocation Revenue, Refunding, Series A, MBIA Insured,
6.50%,
9/01/21 .................................................................................... $ 5,110,000 $ 5,287,164
9/01/22 .................................................................................... 8,000,000 8,273,760
Orange County Recovery, Refunding, Series A, MBIA Insured, 5.75%, 6/01/15 ...................... 79,010,000 82,416,121
Orange County Recovery COP, Series A, MBIA Insured, 5.80%, 7/01/16 ............................. 10,380,000 10,866,095
Orange County Transportation District COP, Business Acquisition Project, Pre-Refunded, 6.75%,
12/01/05 ..................................................................................... 2,865,000 2,905,912
Orange County Water District COP, Refunding, Series A,
5.50%, 8/15/14 ............................................................................. 9,430,000 9,638,875
5.00%, 8/15/18 ............................................................................. 5,000,000 4,833,450
Orange RDA, Tax Allocation Revenue, Northwest Redevelopment Project, Refunding, Series B,
5.70%, 10/01/23 .............................................................................. 8,530,000 8,369,295
Oroville PFA Revenue, Series A, AMBAC Insured, 6.30%, 9/15/20 .................................. 12,150,000 12,761,024
Oroville Wyandotte Irrigation District Revenue, Hydroelectric Sly Creek Power, Refunding,
6.20%, 1/01/09 ............................................................................... 8,280,000 8,680,752
Oxnard Harbor District Revenue, ACA Insured, 5.60%, 8/01/19 .................................... 10,820,000 10,707,364
Palm Desert 1915 Act, Limited Obligation, AD No. 92-1, Pre-Refunded, 7.60%, 9/02/12 ............ 1,290,000 1,334,492
Palm Desert Financing Authority Lease Revenue, Blythe County Administrative Project, 6.625%,
8/01/26 ...................................................................................... 5,020,000 5,125,219
Palm Desert Financing Authority Tax Allocation Revenue,
Project Area No.1, Refunding, MBIA Insured, 5.625%, 4/01/23 ................................ 13,000,000 13,152,880
Project Area No.1, Series A, MBIA Insured, 6.625%, 4/01/23 ................................. 1,180,000 1,234,374
Project Area No.1, Series A, MBIA Insured, 5.95%, 4/01/24 .................................. 15,075,000 15,515,642
Project Area No.1, Series A, MBIA Insured, Pre-Refunded, 6.625%, 4/01/23 ................... 4,065,000 4,287,356
Palm Springs COP, Multiple Capital Facilities Project, Refunding, AMBAC Insured, 5.75%,
4/01/27 ...................................................................................... 11,570,000 11,819,102
Palm Springs Financing Authority Regional Airport Revenue, Tax Allocation, Series B, 6.875%,
8/01/21 ...................................................................................... 2,230,000 2,296,276
Palmdale Civic Authority Revenue, Merged Redevelopment Project Areas, Refunding, Series A,
MBIA Insured, 6.15%, 9/01/24 ................................................................. 4,730,000 4,916,835
Palmdale CRDA, Tax Allocation,
Merged Redevelopment Project, Refunding, MBIA Insured, 5.00%, 9/01/28 ...................... 17,500,000 16,164,575
Merged Redevelopment Project, Refunding, MBIA Insured, 5.00%, 9/01/34 ...................... 6,980,000 6,356,546
Series A, MBIA Insured, 5.75%, 9/01/27 ..................................................... 10,435,000 10,667,805
Palmdale School District COP, 7.40%, 8/01/20 ................................................... 495,000 496,307
Palomar Community College District COP, Building Acquisition Project, Connie Lee Insured,
Pre-Refunded, 6.75%, 10/01/19 ................................................................ 4,210,000 4,672,090
Paramount RDA, Tax Allocation, Custodial Receipts, MBIA Insured, 6.25%, 8/01/23 ................ 22,070,000 23,051,453
Pasadena COP, Art Center College of Design, Connie Lee Insured, 6.50%, 12/01/19 ................ 8,250,000 8,814,218
Pasadena Water Revenue, 6.00%, 7/01/13 ......................................................... 4,000,000 4,220,440
Perris PFAR,
Special Tax, Series A, ETM, 7.45%, 9/01/01 ................................................. 205,000 206,773
Special Tax, Series A, ETM, 7.50%, 9/01/02 ................................................. 235,000 236,746
Special Tax, Series A, ETM, 7.55%, 9/01/03 ................................................. 270,000 272,006
Special Tax, Series A, ETM, 7.60%, 9/01/04 ................................................. 305,000 307,202
Special Tax, Series A, ETM, 7.60%, 9/01/05 ................................................. 325,000 327,217
Special Tax, Series A, ETM, 7.80%, 9/01/19 ................................................. 3,555,000 3,576,294
Tax Allocation, Refunding, Series B, MBIA Insured, 6.35%, 8/15/17 .......................... 5,280,000 5,541,835
Tax Allocation, Refunding, Series C, 7.10%, 11/15/17 ....................................... 3,330,000 3,488,608
Perris RDA, Tax Allocation,
Central and North Perris Redevelopment Project, Series A, Pre-Refunded, 7.875%, 10/01/10 ... 2,935,000 3,154,274
Central and North Perris Redevelopment Project, Series B, Pre-Refunded, 7.875%, 10/01/14 ... 4,535,000 4,818,165
</TABLE>
29
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Perris RDA, Tax Allocation, (cont.)
Series 1991, 7.15%, 8/01/11 ................................................................ $ 865,000 $ 896,512
Series 1991, 7.20%, 8/01/21 ................................................................ 2,040,000 2,100,037
Perris Special Tax,
CFD No. 8, Series A, ETM, 8.10%, 9/01/01 ................................................... 85,000 88,112
CFD No. 8, Series A, ETM, 8.15%, 9/01/02 ................................................... 100,000 107,127
CFD No. 8, Series A, Pre-Refunded, 8.30%, 9/01/18 .......................................... 6,040,000 6,900,277
CFD No. 91-1, 8.75%, 9/01/21 ............................................................... 5,395,000 5,546,168
Petaluma Community Development Commission MFR, Park Lane Apartments, Series A, 6.875%, 11/20/34 4,800,000 5,045,808
Pittsburg PFA, Water Revenue, MBIA Insured, 5.50%, 6/01/27 ..................................... 2,980,000 2,983,814
Placentia COP, RDA, Refunding, Series A, 6.90%, 1/01/14 ........................................ 1,770,000 1,892,325
Placer Hills Union Elementary School District COP, Convertible Capital Appreciation, Series B,
7.125%, 3/01/19 .............................................................................. 510,000 551,647
Placer Union High School District COP, Capital Appreciation, Series A, 7.125%, 3/01/19 ......... 2,095,000 2,266,078
Pleasanton COP, Capital Improvements, 6.70%, 10/01/11 .......................................... 2,180,000 2,276,400
Pomona PFAR, Refunding, Series P, 5.75%, 10/01/15 .............................................. 6,490,000 6,501,033
Pomona RDA, Tax Allocation, Southwest Pomona Redevelopment Project, ETM, 11.45%, 1/01/07 ....... 11,405,000 14,142,314
Port Hueneme RDA, Tax Allocation, R-76 Project, Refunding, 6.50%, 5/01/23 ...................... 2,990,000 3,050,069
Port of Oakland Revenue,
Series E, MBIA Insured, 6.25%, 11/01/05 .................................................... 1,525,000 1,609,424
Series E, MBIA Insured, 6.30%, 11/01/06 .................................................... 1,050,000 1,107,435
Series E, MBIA Insured, 6.40%, 11/01/07 .................................................... 500,000 528,535
Series E, MBIA Insured, 6.40%, 11/01/22 .................................................... 11,495,000 11,941,466
Series J, MBIA Insured, 5.50%, 11/01/26 .................................................... 7,000,000 7,009,590
Port of Oakland Special Facilities Revenue, Mitsui O.S.K. Lines Ltd., Series A,
6.70%, 1/01/07 ............................................................................. 6,100,000 6,310,511
6.75%, 1/01/12 ............................................................................. 4,890,000 5,069,512
6.80%, 1/01/19 ............................................................................. 8,075,000 8,383,546
Porterville COP,
Infrastructure Financing Project, AMBAC Insured, 5.00%, 7/01/28 ............................ 10,430,000 9,635,756
Public Building Project, Refunding, AMBAC Insured, 6.30%,10/01/18 .......................... 1,950,000 2,038,881
Porterville UHSD, COP, Capital Appreciation, Land Acquisition, Series A, 6.60%, 9/01/27 ........ 1,295,000 1,362,314
Poway COP, Royal Mobile Home Park Project,
Capital Improvement, FSA Insured, Pre-Refunded, 7.00%, 7/01/20 ............................. 5,500,000 5,649,545
Refunding, FSA Insured, 5.875%, 8/01/15 .................................................... 6,250,000 6,588,313
Refunding, FSA Insured, 6.00%, 8/01/20 ..................................................... 5,400,000 5,632,470
Refunding, FSA Insured, 6.00%, 8/01/28 ..................................................... 15,000,000 15,472,200
Poway RDA, Tax Allocation, Parguay Redevelopment Project, sub notes, Refunding, FGIC Insured,
5.50%, 12/15/23 ............................................................................ 23,000,000 23,049,450
5.75%, 12/15/26 ............................................................................ 8,000,000 8,113,840
Puerto Rico Commonwealth Highway and Transportation Authority Revenue,
Series A, MBIA Insured, 5.00%, 7/01/38 ...................................................... 116,975,000 106,670,672
Series B, 6.00%, 7/01/39 .................................................................... 13,200,000 13,772,220
Series B, MBIA Insured, 6.00%, 7/01/31 ...................................................... 13,000,000 13,563,550
Series Y, 5.00%, 7/01/36 .................................................................... 63,000,000 56,559,510
Puerto Rico Commonwealth Infrastructure Financing Authority Special Tax Revenue, Series A, AMBAC
Insured, 5.00%, 7/01/28 ...................................................................... 10,000,000 9,211,900
</TABLE>
30
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Puerto Rico Electric Power Authority Revenue,
Refunding, Series EE, 4.75%, 7/10/24 ....................................................... $ 26,895,000 $ 23,527,477
Series DD, 5.00%, 7/01/28 .................................................................. 23,250,000 20,933,603
Puerto Rico Industrial Tourist Educational Medical and Environmental Control Facilities Revenue,
Cogen Facilities, 6.625%, 6/01/26 ............................................................ 6,800,000 7,108,584
Rancho Cucamonga, Palmdale, Potterville and Colton HFA, SFMR, Series 1986, GNMA Secured, 7.55%,
8/01/18 ...................................................................................... 3,670,000 3,827,406
Rancho Cucamonga RDA, Tax Allocation, Rancho Redevelopment Project, Set-Aside Housing, MBIA
Insured, 5.25%, 9/01/21 ...................................................................... 8,330,000 8,143,491
Rancho Murieta Community Services District 1915 Act, ID No. 1,
8.25%, 9/02/01 ............................................................................. 745,000 763,908
8.25%, 9/02/02 ............................................................................. 715,000 742,713
8.30%, 9/02/03 ............................................................................. 745,000 773,869
8.40%, 9/02/04 ............................................................................. 750,000 779,363
8.40%, 9/02/05 ............................................................................. 735,000 763,775
8.40%, 9/02/06 ............................................................................. 750,000 779,363
Redlands USD, COP, Series A, FSA Insured,
6.15%, 9/01/11 ............................................................................. 605,000 605,914
6.25%, 9/01/27 ............................................................................. 4,310,000 4,316,853
Redwood City MFHR, Redwood Plaza Project, Refunding, Series A, GNMA Secured, 8.25%,
9/01/26 ...................................................................................... 3,795,000 3,800,617
Redwood City PFA, Local Agency Revenue, Series B, Pre-Refunded, 7.25%, 7/15/11 ................. 3,750,000 3,918,113
Rialto COP, FSA Insured, 5.75%, 2/01/22 ........................................................ 2,715,000 2,781,463
Rialto RDA, Tax Allocation, Agua Mansa Redevelopment Project, Pre-Refunded, 6.75%, 3/01/24 ..... 3,500,000 3,829,560
Riverside County Asset Leasing Corp. Leasehold Revenue, Hospital Project,
Series A, 6.375%, 6/01/09 .................................................................. 23,000,000 24,021,430
Series A, 6.50%, 6/01/12 ................................................................... 20,125,000 21,892,579
Series B, MBIA Insured, 5.00%, 6/01/19 ..................................................... 18,865,000 18,047,391
Riverside County Board of Education COP, Capital Appreciation Financing Projects,
Series A, 6.65%, 11/01/17 .................................................................... 7,945,000 8,232,530
Riverside County CFD, Special Tax, No. 86-1, 8.75%, 9/01/16 .................................... 13,400,000 13,490,048
Riverside County COP,
Capital Projects, Series A, Pre-Refunded, 6.875%, 11/01/09 ................................. 4,975,000 5,224,596
Family Law Court Project, MBIA Insured, 5.75%, 11/01/27 .................................... 5,295,000 5,414,879
Historic Courthouse, MBIA Insured, 5.875%, 11/01/27 ........................................ 6,000,000 6,189,000
Riverside County Flood Control and Water Conservation District Elsinore Valley AD, Zone 3,
7.875%,
9/01/03 .................................................................................... 165,000 180,484
9/01/04 .................................................................................... 180,000 201,404
9/01/05 .................................................................................... 190,000 217,320
9/01/06 .................................................................................... 205,000 239,376
9/01/07 .................................................................................... 225,000 267,734
9/01/08 .................................................................................... 240,000 290,184
9/01/09 .................................................................................... 260,000 318,867
9/01/10 .................................................................................... 280,000 346,494
9/01/11 .................................................................................... 305,000 380,067
9/01/12 .................................................................................... 325,000 410,417
9/01/13 .................................................................................... 350,000 443,685
9/01/14 .................................................................................... 380,000 482,786
9/01/15 .................................................................................... 410,000 523,763
</TABLE>
31
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Riverside County Flood Control and Water Conservation District Elsinore Valley AD, Zone 3,
7.875%, (cont.)
9/01/16 .................................................................................... $ 440,000 $ 562,940
9/01/17 .................................................................................... 475,000 608,575
Riverside County Housing Authority Revenue, Breezewood Apartment Project, Refunding, Series C,
6.40%, 6/01/28 ............................................................................... 4,960,000 4,475,259
Riverside County PFA, Tax Allocation Revenue, Redevelopment Projects, Series A, 5.625%,
10/01/33 ..................................................................................... 9,225,000 8,544,195
Riverside County PFA COP,
5.75%, 5/15/19 ............................................................................. 3,500,000 3,121,685
5.80%, 5/15/29 ............................................................................. 14,230,000 12,396,891
Riverside County SFMR,
Series A, GNMA Secured, 7.20%, 10/01/24 .................................................... 925,000 961,750
Series B, GNMA Secured, 7.60%, 11/01/19 .................................................... 475,000 490,499
Riverside MFHR,
Birchwood Park Apartments, Series A, FNMA Insured, 6.50%, 1/01/18 .......................... 2,200,000 2,232,186
Palm Shadows Apartments, Series A, FNMA Insured, 6.50%, 1/01/18 ............................ 4,010,000 4,068,666
Riverside RDA, Tax Allocation, Merged Redevelopment Project, Series A, MBIA Insured, 5.625%,
8/01/23 ...................................................................................... 6,000,000 6,055,920
Riverside USD, COP, Series B, FSA Insured, 7.375%, 9/01/26 ..................................... 5,425,000 5,698,637
Rohnert Park HFAR, Rancho Feliz Mobile Home Park, FSA Insured, 5.375%, 12/01/26 ................ 8,380,000 7,967,704
Roseville 1915 Act,
North Roseville Rocklin District No. 88-3, Refunding, 8.00%, 9/02/01 ....................... 120,000 122,675
North Roseville Rocklin District No. 88-3, Refunding, 8.10%, 9/02/02 ....................... 125,000 129,549
North Roseville Rocklin District No. 88-3, Refunding, 8.15%, 9/02/03 ....................... 140,000 144,901
North Roseville Rocklin District No. 88-3, Refunding, 8.20%, 9/02/04 ....................... 150,000 155,219
North Roseville Rocklin District No. 88-3, Refunding, 8.20%, 9/02/05 ....................... 160,000 165,533
North Roseville Rocklin District No. 88-3, Refunding, 8.20%, 9/02/06 ....................... 175,000 181,052
North Roseville Rocklin District No. 88-3, Refunding, 8.25%, 9/02/07 ....................... 195,000 201,782
North Roseville Rocklin District No. 88-3, Refunding, 8.25%, 9/02/08 ....................... 205,000 212,130
North Roseville Rocklin District No. 88-3, Refunding, 8.25%, 9/02/09 ....................... 180,000 186,260
Rocky Ridge Harding District No. 88-4, Refunding, 8.00%, 9/02/01 ........................... 260,000 265,795
Rocky Ridge Harding District No. 88-4, Refunding, 8.10%, 9/02/02 ........................... 275,000 285,007
Rocky Ridge Harding District No. 88-4, Refunding, 8.15%, 9/02/03 ........................... 305,000 315,678
Rocky Ridge Harding District No. 88-4, Refunding, 8.20%, 9/02/04 ........................... 325,000 336,307
Rocky Ridge Harding District No. 88-4, Refunding, 8.20%, 9/02/05 ........................... 350,000 362,103
Roseville Special Tax, North Central CFD No. 1, Pre-Refunded,
8.00%, 11/01/02 ............................................................................ 1,725,000 1,830,829
8.10%, 11/01/03 ............................................................................ 1,860,000 1,976,045
8.40%, 11/01/10 ............................................................................ 10,000,000 10,655,100
8.60%, 11/01/17 ............................................................................ 12,000,000 12,811,200
Sacramento 1915 Act, North Natomas AD No. 88-3,
8.20%, 9/02/10 ............................................................................. 780,000 804,710
8.20%, 9/02/11 ............................................................................. 1,730,000 1,784,080
8.25%, 9/02/12 ............................................................................. 2,240,000 2,310,000
8.25%, 9/02/13 ............................................................................. 2,425,000 2,500,296
8.25%, 9/02/14 ............................................................................. 2,620,000 2,701,351
</TABLE>
32
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Sacramento City Financing Authority Revenue,
Capital Improvements, 5.625%, 6/01/30 ...................................................... $ 6,000,000 $ 6,064,200
Series 1991, 6.60%, 11/01/05 ............................................................... 1,300,000 1,353,482
Series 1991, 6.70%, 11/01/11 ............................................................... 920,000 960,692
Sacramento County Airport System Revenue, Series A, MBIA Insured, 5.90%, 7/01/24 ............... 6,875,000 7,002,463
Sacramento County COP, Public Facilities Project, Coroner/Crime Laboratory, AMBAC Insured,
6.40%,
10/01/19 ................................................................................... 11,000,000 11,990,660
10/01/24 ................................................................................... 29,500,000 32,156,770
Sacramento County Sanitation District Financing Authority Revenue, AMBAC Insured,
5.625%, 12/01/30 ............................................................................. 5,000,000 5,055,350
Sacramento County Special Tax, CFD No. 1, Improvement Area 1, Series 1990, Pre-Refunded,
8.20%, 12/01/10 ............................................................................ 2,250,000 2,309,198
8.25%, 12/01/20 ............................................................................ 7,610,000 7,810,752
Sacramento MUD, Electric Revenue,
Refunding, Series D, MBIA Insured, 5.25%, 11/15/20 ......................................... 10,000,000 9,865,000
Refunding, Series Z, FGIC Insured, 6.25%, 7/01/04 .......................................... 5,740,000 5,943,655
Refunding, Series Z, FGIC Insured, 6.35%, 7/01/05 .......................................... 3,000,000 3,108,600
Series J, AMBAC Insured, 5.60%, 8/15/24 .................................................... 10,215,000 10,304,688
sub. lien, Refunding, 8.00%, 11/15/10 ...................................................... 16,110,000 16,158,491
Sacramento RDA, Tax Allocation,
Merged Downtown Redevelopment Project, Series A, MBIA Insured, Pre-Refunded, 6.50%,
11/01/13 ................................................................................. 2,140,000 2,186,738
Series A, MBIA Insured, 6.50%, 11/01/13 .................................................... 360,000 367,841
Sacramento Regional Transit District COP, Series A, 6.375%,
3/01/04 .................................................................................... 1,000,000 1,046,990
3/01/05 .................................................................................... 1,100,000 1,150,919
Sacramento-Yolo Port District Revenue, Port Facilities, Refunding, Series A, 7.25%, 7/01/13 .... 11,645,000 12,084,482
Salida Area Public Facilities Financing Agency CFD, Special Tax, No. 1988-1, Refunding, FSA
Insured, 5.25%, 9/01/28 ...................................................................... 6,800,000 6,567,916
San Bernardino 1915 Act, AD No. 961, Refunding,
7.60%, 9/02/02 ............................................................................. 855,000 872,032
7.65%, 9/02/03 ............................................................................. 920,000 945,861
7.70%, 9/02/04 ............................................................................. 990,000 1,022,809
7.75%, 9/02/05 ............................................................................. 1,065,000 1,099,836
San Bernardino County COP,
Medical Center Financing Project, Refunding, 5.00%, 8/01/26 ................................ 15,045,000 13,045,670
Medical Center Financing Project, Refunding, MBIA Insured, 5.00%, 8/01/28 .................. 55,065,000 50,141,638
Medical Center Financing, Series A, MBIA Insured, 5.50%, 8/01/22 ........................... 40,830,000 40,872,463
Medical Center Financing, Series A, MBIA Insured, Pre-Refunded, 5.50%, 8/01/22 ............. 23,945,000 25,660,420
West Valley Detention Center Project, MBIA Insured, 6.25%, 11/01/04 ........................ 3,705,000 3,924,558
West Valley Detention Center Project, MBIA Insured, 6.35%, 11/01/05 ........................ 3,935,000 4,175,901
West Valley Detention Center Project, MBIA Insured, 6.40%, 11/01/06 ........................ 4,185,000 4,447,065
West Valley Detention Center Project, MBIA Insured, 6.50%, 11/01/12 ........................ 20,000,000 21,258,800
West Valley Detention Center Project, MBIA Insured, 6.20%, 11/01/25 ........................ 9,275,000 9,693,488
San Bernardino County Mortgage Revenue, Don Miguel Apartments Project, Refunding, MBIA Insured,
6.00%, 9/01/03 ............................................................................... 145,000 148,911
San Bernardino County SFMR,
GNMA Secured, 7.50%, 12/01/07 .............................................................. 380,000 397,670
GNMA Secured, 7.65%, 6/01/23 ............................................................... 1,810,000 1,902,165
</TABLE>
33
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
San Bernardino County SFMR, (cont.)
Series A, GNMA Secured, 6.20%, 5/01/21 ..................................................... $ 600,000 $ 610,356
Series B, 5.40%, 5/01/25 ................................................................... 7,945,000 7,521,214
San Bernardino Joint Powers Financing Authority Lease Revenue, City Hall Project, Refunding,
MBIA Insured, 5.70%, 1/01/23 ................................................................ 6,315,000 6,418,124
San Bernardino Joint Powers Financing Authority Revenue COP, Police Station Financing Project,
6.60%, 4/01/20 ............................................................................... 4,715,000 5,276,698
San Bernardino Joint Powers Financing Authority Revenue, Tax Allocation,
Central City Merged Project, Refunding, Series A, ETM, 6.75%, 11/01/00 ..................... 450,000 450,905
Central City Merged Project, Refunding, Series A, ETM, 6.90%, 11/01/01 ..................... 480,000 494,995
Central City Merged Project, Series A, Pre-Refunded, 7.00%, 11/01/02 ....................... 510,000 536,250
Central City Merged Project, Series A, Pre-Refunded, 7.00%, 11/01/03 ....................... 550,000 578,309
Central City Merged Project, Series A, Pre-Refunded, 7.00%, 11/01/04 ....................... 585,000 615,110
Central City Merged Project, Series A, Pre-Refunded, 7.05%, 11/01/05 ....................... 625,000 657,494
Central City Merged Project, Series A, Pre-Refunded, 7.05%, 11/01/06 ....................... 670,000 704,833
Central City Merged Project, Series A, Pre-Refunded, 7.05%, 11/01/07 ....................... 720,000 757,433
Central City Merged Project, Series A, Pre-Refunded, 7.10%, 11/01/20 ....................... 15,585,000 16,403,368
Central City Merged Project, Series B, Pre-Refunded, 7.50%, 11/01/20 ....................... 3,000,000 3,168,420
Refunding, Series A, FSA Insured, 5.75%, 10/01/25 .......................................... 19,915,000 20,293,186
San Bernardino Municipal Water Department COP, FGIC Insured, 6.25%, 2/01/12 .................... 905,000 928,548
San Carlos Mortgage Revenue, Elms Project, FHA Insured, 6.875%, 8/01/37 ........................ 8,465,000 8,836,360
San Diego County COP,
Central Jail, Refunding, AMBAC Insured, 5.00%, 10/01/25 .................................... 5,825,000 5,416,959
MBIA Insured, 5.00%, 8/15/28 ............................................................... 26,000,000 23,844,600
San Diego County Regional Transportation Commission Sales Tax Revenue, Series A, ETM,
6.00%, 4/01/08 ............................................................................... 1,250,000 1,284,450
San Diego IDR, San Diego Gas and Electric Co. Project, Series A, 6.40%, 9/01/18 ................ 19,800,000 20,540,322
San Diego Public Facilities Financing Authority Sewer Revenue,
FGIC Insured, 5.00%, 5/15/25 ............................................................... 17,400,000 16,188,960
Series A, FGIC Insured, 5.25%, 5/15/27 ..................................................... 21,750,000 21,052,260
Series B, FGIC Insured, 5.25%, 5/15/22 ..................................................... 5,200,000 5,074,992
San Diego RDA, Tax Allocation, Horton Project, Refunding, Series A, FSA Insured, 6.00%, 11/01/15 5,000,000 5,335,450
San Diego Special Tax, CFD No. 1, Series A, Pre-Refunded, 8.50%, 9/01/16 ....................... 28,845,000 30,546,278
San Elijo Joint Powers Authority Revenue, Water Pollution Control Facilities, Refunding, FGIC
Insured, 5.00%, 3/01/20 ...................................................................... 5,000,000 4,772,650
San Francisco BART District Sales Tax Revenue, FGIC Insured, 5.50%, 7/01/34 .................... 11,790,000 11,797,664
San Francisco City and County Airport Commission International Airport Revenue,
Issue 6, AMBAC Insured, 6.50%, 5/01/18 ..................................................... 2,500,000 2,660,625
Issue 6, AMBAC Insured, 6.60%, 5/01/24 ..................................................... 13,250,000 14,063,550
Issue 9A, FGIC Insured, 5.90%, 5/01/25 ..................................................... 46,415,000 47,049,493
Issue 12A, Second Series, 5.90%, 5/01/26 ................................................... 45,000,000 45,633,150
Issue 15A, Second Series, FSA Insured, 5.00%, 5/01/28 ...................................... 41,650,000 37,188,452
Issue 16A, Second Series, FSA Insured, 5.125%, 5/01/23 ..................................... 24,635,000 23,025,349
Issue 16A, Second Series, FSA Insured, 5.00%, 5/01/29 ...................................... 37,805,000 33,945,488
Issue 18A, Second Series, FGIC Insured, 5.00%, 5/01/29 ..................................... 8,800,000 7,901,608
Issue 22, Second Series, AMBAC Insured, 4.75%, 5/01/23 ..................................... 13,230,000 11,491,181
Issue 22, Second Series, AMBAC Insured, 4.75%, 5/01/29 ..................................... 44,130,000 37,501,233
San Francisco City and County COP, San Francisco Courthouse Project, FSA Insured,
5.875%, 4/01/21 .............................................................................. 2,810,000 2,900,875
</TABLE>
34
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
San Francisco City and County Public Utilities Commission Water Revenue,
Refunding, Series A, 6.50%, 11/01/09 ....................................................... $ 4,000,000 $ 4,247,640
Series A, 5.00%, 11/01/21 .................................................................. 5,000,000 4,643,000
San Francisco City and County RDA,
Hotel Tax Revenue, FSA Insured, 6.75%, 7/01/25 ............................................. 315,000 341,394
Hotel Tax Revenue, FSA Insured, Pre-Refunded, 6.75%, 7/01/25 ............................... 9,100,000 10,050,768
Lease Revenue, George R. Moscone Center, Refunding, Series 1992, 5.50%, 7/01/18 ............ 22,170,000 22,262,892
Mortgage Revenue, Refunding, Series A, MBIA Insured, 6.65%, 7/01/24 ........................ 5,645,000 5,653,863
San Francisco City and County Revenue, Irwin Memorial Blood Center, Series A, 6.80%, 12/01/21 .. 3,000,000 3,118,860
San Gabriel Valley Schools Financing Authority Revenue,
Oxnard Union High School, Pre-Refunded, 6.60%, 3/01/24 ..................................... 4,145,000 4,438,507
Pomona USD Financing, 5.80%, 2/01/26 ....................................................... 5,150,000 5,163,545
Series A, 7.70%, 11/01/19 .................................................................. 1,765,000 1,794,599
San Joaquin Area Flood Control Agency 1915 Act, Flood Protection and Restoration Assessment, FSA
Insured, 6.00%, 9/02/14 ...................................................................... 7,875,000 8,151,255
San Joaquin County COP, General Hospital Project, Pre-Refunded, 6.625%, 9/01/20 ................ 36,500,000 39,471,465
San Joaquin County Special Tax, CFD No. 8,
7.625%, 9/01/10 ............................................................................ 1,420,000 1,438,233
7.75%, 9/01/20 ............................................................................. 2,990,000 3,029,647
San Joaquin Hills Transportation Corridor Agency Toll Road Revenue,
Refunding, Series A, 5.50%, 1/15/28 ........................................................ 247,300,000 226,447,664
Refunding, Series A, MBIA Insured, 5.375%, 1/15/29 ......................................... 85,500,000 83,489,040
Refunding, Series A, MBIA Insured, 5.25%, 1/15/30 .......................................... 21,200,000 20,401,396
senior lien, 5.00%, 1/01/33 ................................................................ 82,040,000 71,226,308
senior lien, Pre-Refunded, 7.00%, 1/01/30 .................................................. 85,535,000 92,216,139
senior lien, Pre-Refunded, 6.75%, 1/01/32 .................................................. 64,320,000 69,003,782
San Jose Airport Revenue, Refunding, MBIA Insured, 5.75%, 3/01/16 .............................. 13,600,000 13,809,576
San Jose Financing Authority Revenue, Convention Center Project,
Refunding, Series C, 6.40%, 9/01/17 ........................................................ 16,100,000 16,658,670
Series C, 6.40%, 9/01/22 ................................................................... 55,550,000 57,452,588
San Jose RDA,
MFHR, Miraido Village, Series A, GNMA Secured, 5.75%, 7/20/38 .............................. 7,110,000 6,885,964
Tax Allocation, Housing, Set-Aside Merged Area, Series E, MBIA Insured, 5.85%, 8/01/27 ..... 7,325,000 7,440,296
Tax Allocation, Merged Area Redevelopment Project, 5.25%, 8/01/29 .......................... 7,000,000 6,565,510
Tax Allocation, Merged Area Redevelopment Project, AMBAC Insured, 5.00%, 8/01/31 ........... 4,000,000 3,656,920
Tax Allocation, Merged Area Redevelopment Project, MBIA Insured, 5.00%, 8/01/21 ............ 35,235,000 33,398,552
Tax Allocation, Merged Area Redevelopment Project, MBIA Insured, 5.625%, 8/01/28 ........... 24,135,000 24,358,490
Tax Allocation, Merged Area Redevelopment Project, Refunding, MBIA Insured, 5.00%, 8/01/20 . 35,665,000 34,022,627
San Leandro RDA, RMR, Pre-Refunded, 11.25%, 4/01/13 ............................................ 65,000 78,429
San Luis Obispo County COP, Jail Expansion Project,
6.75%, 10/01/16 ............................................................................ 1,830,000 1,866,252
6.80%, 10/01/21 ............................................................................ 1,475,000 1,502,804
San Marcos PFAR,
Capital Improvement, 8.25%, 1/01/19 ........................................................ 16,700,000 17,084,935
Civic Center, Mission Blvd. Project, Refunding and Improvement, Series A, 6.15%, 8/01/13 ... 11,670,000 11,813,074
Civic Center, Mission Blvd. Project, Refunding and Improvement, Series A, 6.20%, 8/01/22 ... 7,895,000 7,922,475
Refunding, 5.80%, 9/01/18 .................................................................. 4,750,000 4,641,178
</TABLE>
35
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
San Marcos PFAR, (cont.)
Senior Tax Increment Project Area-3-A, MBIA Insured, 5.75%, 10/01/29 ....................... $ 5,340,000 $ 5,383,521
Senior Tax Increment Project Area-3-A, MBIA Insured, 5.80%, 10/01/30 ....................... 8,035,000 8,151,829
Series A, 6.25%, 9/02/22 ................................................................... 25,000,000 26,067,500
Tax Allocation, Refunding, Series A, FSA Insured, 5.50%, 8/01/23 ........................... 13,000,000 13,026,130
San Marcos USD, School Facilities ID No. 1, AMBAC Insured, 5.80%, 11/01/14 ..................... 5,000,000 5,320,900
San Mateo County Joint Powers Authority Lease Revenue, Capital Projects, Series A, FSA Insured,
5.125%, 7/15/28 .............................................................................. 4,005,000 3,797,541
San Mateo County Joint Powers Financing Authority Lease Revenue, San Mateo County Health Care
Center, Series A, FSA Insured, Pre-Refunded, 5.75%, 7/15/22 .................................. 21,945,000 23,496,073
San Mateo Flood Control District COP, Colma Creek Flood Control Zone, MBIA Insured, 5.125%,
8/01/32 ...................................................................................... 10,145,000 9,517,735
San Mateo RDA, Tax Allocation, Merged Area, Series A, 5.70%, 8/01/27 ........................... 6,330,000 6,085,852
San Pablo RDA, Tax Allocation, Merged Project Area, FGIC Insured, 6.25%, 12/01/19 .............. 3,500,000 3,720,500
San Rafael RDA, Tax Allocation, Central San Rafael Redevelopment, Refunding, FGIC Insured,
6.45%, 12/01/17 .............................................................................. 6,740,000 7,117,979
San Rafael Sanitation District COP, Waste Water Facilities Financing, 6.80%, 8/01/11 ........... 2,200,000 2,278,562
San Ramon COP, Capital Improvement Projects, Series 1993, 6.00%, 3/01/18 ....................... 1,730,000 1,760,638
San Ramon PFA, Tax Allocation Revenue,
MBIA Insured, 5.30%, 2/01/28 ............................................................... 19,610,000 19,084,256
Pre-Refunded, 6.90%, 2/01/24 ............................................................... 6,140,000 6,812,883
Refunding, 6.90%, 2/01/24 .................................................................. 6,910,000 7,282,587
San Ramon Valley COP, Fire Protection District, Financing Corp., Refunding, 6.00%, 7/01/19 ..... 6,275,000 6,419,513
San Ramon Valley USD, COP,
Pre-Refunded, 7.70%, 2/01/10 ............................................................... 6,000,000 6,367,980
Refunding, 7.55%, 2/01/04 .................................................................. 5,385,000 5,440,627
Refunding, Series 1992, 7.00%, 2/01/22 ..................................................... 19,830,000 20,707,081
Series A, 6.35%, 10/01/01 .................................................................. 7,855,000 7,960,100
Santa Ana COP, Parking Facilities Project, Refunding, Series A, AMBAC Insured, 6.125%, 6/01/16 . 2,070,000 2,165,551
Santa Ana Financing Authority Water Revenue, MBIA Insured, 6.125%, 9/01/24 ..................... 5,000,000 5,173,750
Santa Barbara COP, Harbor Project, Refunding, 6.75%, 10/01/27 .................................. 8,090,000 8,450,005
Santa Barbara Housing Authority Revenue, Refunding and Acquisition, 6.25%, 11/15/20 ............ 5,845,000 5,392,831
Santa Barbara SFMR, GNMA Secured,
7.625%, 10/01/10 ........................................................................... 30,000 31,070
7.65%, 10/01/23 ............................................................................ 480,000 496,944
Santa Clara County COP, Terraces of Los Gatos Project, Pre-Refunded, 6.90%, 3/01/18 ............ 4,000,000 4,126,600
Santa Clara County Financing Authority Lease Revenue, Valley Medical Center Facilities
Replacement Project, Series A, AMBAC Insured, Pre-Refunded, 6.75%, 11/15/20 .................. 13,000,000 14,458,860
Santa Clara Housing Authority MFHR,
Arastradero Park Apartments Project, Series A, GNMA Secured, 6.65%, 5/20/35 ................ 6,465,000 6,817,730
Elana Gardens Apartments Project, Series A, GNMA Secured, 6.40%, 6/20/35 ................... 5,625,000 5,807,194
Sierra Vista I Apartments Project, Series A, GNMA Secured, 6.65%, 6/20/35 .................. 3,860,000 4,072,686
Santa Clarita COP, Refunding, MBIA Insured, 5.00%, 10/01/21 .................................... 5,105,000 4,838,111
Santa Cruz City School District COP, Education Center Financing Project, Pre-Refunded, 7.00%,
5/01/24 ...................................................................................... 3,150,000 3,488,562
Santa Cruz County Housing Authority MFHR, Series B, FNMA Insured, 7.75%, 7/01/23 ............... 9,230,000 9,442,936
Santa Maria Bonita School District COP, MBIA Insured,
7.00%, 3/01/16 ............................................................................. 480,000 494,760
Pre-Refunded, 7.00%, 3/01/16 ............................................................... 2,270,000 2,343,208
Santa Maria COP, Revenue, Marian Medical Center, Pre-Refunded, 6.75%, 9/01/22 .................. 3,600,000 3,835,044
</TABLE>
36
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Santa Monica RDA Tax Allocation, Earthquake Recovery Redevelopment Project, AMBAC Insured,
6.00%, 7/01/29 ............................................................................... $ 13,110,000 $ 13,658,260
Seal Beach RDA, sub. lien, Tax Allocation Revenue, Riverfront, Refunding, Series A, 6.70%,
9/01/13 ...................................................................................... 2,880,000 2,895,984
Shafter Joint Powers Financing Authority Lease Revenue, Community Correctional Facility Project,
Series A,
5.95%, 1/01/11 ............................................................................. 1,880,000 1,985,280
6.05%, 1/01/17 ............................................................................. 5,135,000 5,393,496
Shasta Joint Powers Financing Authority Lease Revenue, Courthouse County Improvement Project,
Series A, Pre-Refunded, 6.70%, 6/01/23 ....................................................... 2,500,000 2,646,850
Sierra View Local Hospital District Revenue, Insured Health Facilities, Pre-Refunded, 6.40%,
3/01/22 ...................................................................................... 15,000,000 15,724,650
Simi Valley SFRMR, Series A, GNMA Secured, 7.70%, 3/01/25 ...................................... 135,000 139,998
Snowline Joint USD, COP, Pre-Refunded, 7.25%, 4/01/18 .......................................... 1,000,000 1,062,150
Soledad RDA, Tax Allocation, Soledad Redevelopment Project, Pre-Refunded, 7.40%, 11/01/12 ...... 3,740,000 4,046,231
South Gate PFAR, Tax Allocation,
Redevelopment Project No. 1, Refunding, 6.10%, 9/01/03 ..................................... 9,830,000 9,909,820
South Gate Redevelopment Project No. 1, AMBAC Insured, 5.875%, 9/01/24 ..................... 8,505,000 8,672,974
South Napa Waste Management Authority Revenue, Solid Waste Transfer Facilities Project, 6.50%,
2/15/14 ...................................................................................... 4,500,000 4,742,370
South Orange County PFA, Special Tax Revenue,
Foothill Area, Series C, FGIC Insured, 5.75%, 8/15/18 ...................................... 5,000,000 5,152,400
senior lien, Refunding, Series A, MBIA Insured, 6.00%, 9/01/18 ............................. 18,850,000 19,627,186
South San Francisco 1915 Act, Gateway AD No. ST-82-2, 8.00%,
9/02/01 .................................................................................... 1,570,000 1,603,598
9/02/02 .................................................................................... 1,675,000 1,734,814
Southern California HFA SFMR,
GNMA Secured, 7.625%, 10/01/22 ............................................................. 2,300,000 2,336,294
Series A, GNMA Secured, 6.75%, 9/01/22 ..................................................... 555,000 571,400
Series B, GNMA Secured, 6.90%, 10/01/24 .................................................... 850,000 872,993
Southern California Public Power Authority Power Project Revenue,
6.75%, 7/01/13 ............................................................................. 10,000,000 11,602,700
Hydroelectric-Hoover Uprating, Refunding, 6.00%, 10/01/17 .................................. 7,795,000 7,882,226
Multi-Purpose Projects, 6.00%, 7/01/18 ..................................................... 29,645,000 29,685,910
Palo Verde Project, Refunding, Series A, AMBAC Insured, ETM, 5.00%, 7/01/15 ................ 8,000,000 7,771,840
San Juan Project Unit 3, Series A, MBIA Insured, 5.00%, 1/01/20 ............................ 5,790,000 5,527,829
Southern California Public Power Authority Transmission Project Revenue, Southern Transmission,
Refunding, 6.125%, 7/01/18 ................................................................... 51,035,000 52,808,977
Southern Kern USD, COP, Pre-Refunded, 7.10%, 9/01/17 ........................................... 2,250,000 2,411,213
Standard Elementary School District COP, Pre-Refunded, 7.375%, 6/01/11 ......................... 1,390,000 1,420,983
Stockton Central Parking District, Refunding, Series 1991, 7.90%, 8/01/11 ...................... 5,700,000 5,724,852
Stockton COP, Essential Services Building Parking Facility,
5.875%, 8/01/23 ............................................................................ 2,295,000 2,299,016
6.00%, 8/01/31 ............................................................................. 6,585,000 6,662,308
Stockton East Water District COP, 1990 Project,
Series A, AMBAC Insured, 6.40%, 4/01/22 .................................................... 14,095,000 14,610,172
Series B, 7.45%, 4/01/05 ................................................................... 28,575,000 65,400,174
Stockton Health Facilities Revenue, St. Joseph Medical Center, Series A, MBIA Insured, 5.50%,
6/01/23 ...................................................................................... 5,000,000 4,999,600
Stockton Port District Port Facilities Revenue, Refunding and Improvement, Series A, FSA
Insured, 5.95%, 7/01/17 ...................................................................... 5,095,000 5,385,874
Stockton Revenue COP, Wastewater System Project, Series A, MBIA Insured, 5.20%, 9/01/29 ........ 19,160,000 18,358,346
</TABLE>
37
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Stockton Special Tax, CFD No. 90-2, Series 6, 7.75%, 8/01/15 ................................... $ 3,000,000 $ 3,063,660
Suisun City COP, Civic Center Project, Refunding, 6.45%, 11/01/15 .............................. 2,105,000 2,186,064
Suisun City RDA, Tax Allocation, Suisun City Redevelopment Project, Refunding, MBIA Insured,
6.00%, 10/01/18 ............................................................................ 3,285,000 3,437,490
5.90%, 10/01/23 ............................................................................ 3,390,000 3,475,767
Sunnyvale Financing Authority Utilities Revenue, Wastewater Reuse and Sludge, Series A, 6.30%,
10/01/12 ..................................................................................... 4,735,000 4,835,856
Tahoe Forest Hospital District Revenue, Series A, 5.90%, 7/01/29 ............................... 7,990,000 6,786,067
Tehachapi USD, COP, Tompkins Elementary School Project, Pre-Refunded, 7.80%, 2/01/21 ........... 2,250,000 2,322,225
Temecula Valley USD,
Series D, FGIC Insured, 6.00%, 9/01/14 ..................................................... 1,250,000 1,301,450
Series D, FGIC Insured, 6.125%, 9/01/19 .................................................... 3,110,000 3,222,613
Series E, FSA Insured, 6.35%, 9/01/19 ...................................................... 5,460,000 5,828,222
Thousand Oaks RDA,
MFR, The Shadows Apartments, Refunding, Series A, FNMA Insured, 5.75%, 11/01/27 ............ 7,530,000 7,448,074
Tax Allocation, Thousand Oaks Boulevard Redevelopment, Refunding, MBIA Insured, 5.375%,
12/01/25 ................................................................................. 24,485,000 24,167,185
Thousand Oaks SFHMR,
Capital Appreciation, Series A, GNMA Secured, 8.00%, 9/01/23 ............................... 123,000 270,093
Refunding, Series A, GNMA Secured, 7.45%, 9/01/10 .......................................... 100,000 102,880
Refunding, Series A, GNMA Secured, 7.55%, 9/01/15 .......................................... 135,000 138,270
Refunding, Series A, GNMA Secured, 7.625%, 3/01/23 ......................................... 395,000 398,990
Torrance Hospital Revenue,
Little Co. of Mary Hospital, Pre-Refunded, 6.875%, 7/01/15 ................................. 3,480,000 3,675,019
Torrance Memorial Hospital Medical Center, Refunding, 6.75%, 1/01/12 ....................... 2,000,000 2,004,460
Trabuco Canyon PFA, Special Tax Revenue, Refunding,
Series A, FSA Insured, 6.00%, 10/01/10 ..................................................... 13,775,000 15,387,777
Series A, FSA Insured, 6.10%, 10/01/15 ..................................................... 13,220,000 14,830,593
Series C, FSA Insured, 6.00%, 7/01/12 ...................................................... 3,040,000 3,399,085
Series C, FSA Insured, 6.10%, 7/01/19 ...................................................... 5,215,000 5,785,521
Tracy Area Public Facilities Financing Agency Special Tax, CFD No. 8, Series C, Pre-Refunded,
7.80%, 10/01/16 .............................................................................. 5,000,000 5,100,000
Tracy COP, I-205 Corridor Improvement and Refinancing Project, AMBAC Insured, 5.125%, 10/01/27 . 6,695,000 6,362,058
Travis USD, COP, Foxboro Elementary School Construction Project, Pre-Refunded,
6.70%, 9/01/06 ............................................................................. 490,000 521,081
7.00%, 9/01/12 ............................................................................. 3,670,000 3,922,790
Tri-City Hospital District Revenue, Refunding, Series A, MBIA Insured, 5.625%, 2/15/17 ......... 5,000,000 5,103,750
Tri-Dam Power Authority Revenue, Hydroelectric Sand Bar Project, Refunding, 7.50%, 1/01/17 ..... 45,830,000 46,434,039
Trinity County PUD, COP, Electric District Facilities, Refunding, Series 1993,
6.60%, 4/01/11 ............................................................................. 2,565,000 2,685,658
6.75%, 4/01/23 ............................................................................. 4,000,000 4,081,960
Tulare County COP, Financing Project, Series B, Pre-Refunded, 6.875%, 11/15/12 ................. 1,100,000 1,179,706
Tulare Local Health Care District Health Facilities Revenue, 5.20%, 12/01/21 ................... 4,455,000 4,245,971
Tustin USD, Special Tax, CFD No. 97-1, 6.375%, 9/01/35 ......................................... 8,645,000 8,736,032
Union City CRDA, Tax Allocation Revenue, Community Redevelopment Project, AMBAC Insured, 5.75%,
10/01/33 ..................................................................................... 5,250,000 5,353,898
University of California COP, UCLA Center Chiller/Cogeneration Project, Refunding,
5.50%, 11/01/17 .............................................................................. 13,940,000 14,136,275
5.60%, 11/01/20 .............................................................................. 14,880,000 15,049,334
</TABLE>
38
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
University of California Revenues,
Multi-Purpose Projects, Refunding, Series C, AMBAC Insured, 5.00%, 9/01/23 ................. $ 17,545,000 $ 16,431,068
Multi-Purpose Projects, Series F, FGIC Insured, 5.00%, 9/01/22 ............................. 25,575,000 24,049,963
Multi-Purpose Projects, Series F, FGIC Insured, 5.00%, 9/01/27 ............................. 82,440,000 76,355,104
U.C. Davis Medical Center, AMBAC Insured, 5.75%, 7/01/20 ................................... 44,385,000 45,522,588
Upland COP,
Refunding, 5.50%, 1/01/07 .................................................................. 4,935,000 4,968,213
San Antonio Community Hospital, Refunding, 5.70%, 1/01/11 .................................. 11,210,000 11,321,540
Vacaville COP, Pre-Refunded, 9.40%, 10/01/15 ................................................... 11,865,000 12,118,674
Vacaville PFAR, Local Agency, 8.65%, 9/02/18 ................................................... 5,685,000 5,889,660
Val Verde USD, COP, Vista Verde Project, Pre-Refunded, 6.95%, 6/01/21 .......................... 2,785,000 2,894,729
Vallejo RDA, Tax Allocation, Waterfront Redevelopment Project, 7.90%, 5/01/19 .................. 2,450,000 2,453,798
Vallejo Revenue, Golf Course Project, Series A, 7.90%, 6/01/17 ................................. 6,000,000 6,238,140
Vallejo USD, Special Tax Revenue, CFD No. 2,
7.75%, 9/01/15 ............................................................................. 2,300,000 2,338,134
8.125%, 9/01/16 ............................................................................ 5,100,000 5,195,421
Victor Valley UHSD, COP, Pre-Refunded, 7.875%, 11/01/12 ........................................ 5,100,000 5,216,382
Victorville RDA, Tax Allocation, Bear Valley Road Redevelopment Project,
Pre-Refunded, 7.50%, 11/01/06 ............................................................... 1,200,000 1,268,016
Refunding, Series A, FSA Insured, 6.125%, 9/01/19 2,405,000 2,511,782
Refunding, Series A, FSA Insured, 6.125%, 9/01/24 3,245,000 3,357,764
Virgin Islands PFAR, senior lien,
Fund Loan Notes, Refunding, Series A, 5.50%, 10/01/22 ...................................... 7,000,000 6,396,600
Refunding, Series A, 5.50%, 10/01/14 ....................................................... 3,865,000 3,754,886
Vista Community Development Commission Tax Allocation Revenue, Vista Redevelopment Project Area,
MBIA Insured, 5.50%, 9/01/23 ............................................................... 11,810,000 11,809,291
Series B, MBIA Insured, 5.20%, 9/01/28 ..................................................... 4,000,000 3,835,120
Vista Joint Powers Financing Authority Revenue, Series A, 7.625%, 2/01/20 ...................... 3,675,000 3,756,989
Walnut PFA, Tax Allocation Revenue, MBIA Insured,
Pre-Refunded, 6.50%, 9/01/22 ............................................................... 3,220,000 3,418,706
Unrefunded Balance, MBIA Insured, 6.50%, 9/01/22 ........................................... 5,065,000 5,357,352
Washington Township Hospital District Revenue,
AMBAC Insured, 5.25%, 7/01/23 .............................................................. 5,000,000 4,807,100
Health Care District Revenue, 5.25%, 7/01/29 ............................................... 6,500,000 5,746,455
Watsonville Insured Hospital Revenue, Watsonville Community Hospital, Series A, Pre-Refunded,
6.30%, 7/01/15 ............................................................................. 3,990,000 4,399,334
6.35%, 7/01/24 ............................................................................. 5,435,000 6,004,153
Watsonville RDA, GO, Tax Allocation, Watsonville Redevelopment Project, 6.30%, 8/01/06 ......... 1,745,000 1,752,521
West Basin Municipal Water District Revenue COP, 1992 Project, Refunding, Series A, AMBAC
Insured, 5.50%, 8/01/22 ...................................................................... 4,000,000 4,019,080
West Hollywood COP, Refunding, MBIA Insured, 5.00%, 2/01/25 .................................... 6,250,000 5,817,313
Westminster RDAR, Tax Allocation, Commercial Redevelopment Project No. 1, Series A,
Pre-Refunded, 7.30%, 8/01/21 ................................................................. 6,455,000 6,758,708
William S. Hart Joint School Financing Authority Special Tax Revenue, Community Facilities,
Refunding, FSA Insured, 6.50%, 9/01/14 ....................................................... 4,000,000 4,388,760
---------------
TOTAL BONDS .................................................................................... 11,488,334,015
---------------
</TABLE>
39
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
ZERO COUPON/STEP-UP BONDS 11.3%
Anaheim PFA, Lease Revenue,
Capital Appreciation, Public Improvements Project, Series C, FSA Insured, 9/01/26 .......... $ 4,430,000 $ 984,568
Capital Appreciation, Public Improvements Project, Series C, FSA Insured, 9/01/27 .......... 17,860,000 3,745,421
Capital Appreciation, Public Improvements Project, Series C, FSA Insured, 9/01/28 .......... 8,425,000 1,662,674
Public Improvements Project, Series C, FSA Insured, 9/01/33 ................................ 37,070,000 5,452,626
Baldwin Park RDA, Tax Allocation, San Gabriel, Refunding, Series A, ETM,
2/01/01 .................................................................................... 560,000 552,546
2/01/02 .................................................................................... 565,000 533,202
2/01/03 .................................................................................... 570,000 514,322
2/01/04 .................................................................................... 575,000 495,915
2/01/05 .................................................................................... 585,000 482,169
Beaumont USD, COP, Series A, FSA Insured, 1/01/29 .............................................. 6,835,000 5,757,736
California Educational Facilities Authority Revenue,
Loyola Marymount University, MBIA Insured, 10/01/32 ........................................ 8,435,000 1,136,616
Loyola Marymount University, MBIA Insured, 10/01/33 ........................................ 8,435,000 1,065,678
Loyola Marymount University, MBIA Insured, 10/01/34 ........................................ 8,435,000 999,126
Loyola Marymount University, MBIA Insured, 10/01/35 ........................................ 8,435,000 936,791
Loyola Marymount University, MBIA Insured, 10/01/36 ........................................ 8,435,000 878,337
Loyola Marymount University, MBIA Insured, 10/01/37 ........................................ 8,435,000 823,509
Loyola Marymount University, MBIA Insured, 10/01/38 ........................................ 8,435,000 772,056
Loyola Marymount University, MBIA Insured, 10/01/39 ........................................ 8,435,000 723,892
Santa Clara University, AMBAC Insured, 9/01/26 ............................................. 5,800,000 1,289,050
California Health Facilities Financing Authority Revenue, Kaiser Permanente, Series A, ETM,
10/01/11 ..................................................................................... 13,970,000 7,531,926
California HFAR,
Capital Appreciation, Series G, MBIA Insured, 2/01/30 ...................................... 69,800,000 11,417,884
Convertible Home Mortgage, FSA Insured, zero cpn. to 2/10/10, 6.70% thereafter, 2/01/31 .... 18,995,000 11,445,627
FNMA Home Mortgage, Series B, FSA Insured, 2/01/30 ......................................... 41,270,000 5,990,341
Home Mortgage, Capital Appreciation, Series A, 8/01/16 ..................................... 615,000 113,129
Home Mortgage, Series B, MBIA Insured, 2/01/30 ............................................. 125,210,000 20,481,852
Home Mortgage, Series C, 8/01/21 ........................................................... 2,160,000 440,726
Home Mortgage, Series F, FSA Insured, 8/01/31 .............................................. 96,140,000 14,207,569
Home Mortgage, Series I, FSA Insured, 8/01/31 .............................................. 31,500,000 4,291,560
California HFR, Home Mortgage, Series N, AMBAC Insured, 8/01/31 ................................ 80,350,000 45,967,432
California Public School District Financing Authority Lease Revenue, Los Banos School,
Series A, FSA Insured, zero cpn. to 10/01/00, 6.20% thereafter, 10/01/23 ................... 455,000 464,564
Series B, FSA Insured, Pre-refunded, zero cpn. to 10/01/00, 6.20% thereafter, 10/01/23 ..... 4,535,000 4,839,072
California State GO,
Principal Eagles II, Series 3, 3/01/09 ..................................................... 7,500,000 5,020,875
Principal Eagles II, Series 4, 6/01/06 ..................................................... 10,000,000 7,709,700
Principal Eagles II, Series 6, 3/01/09 ..................................................... 5,000,000 3,347,250
Principal M-Raes, Series 8, 4/01/09 ........................................................ 9,000,000 6,001,110
California Statewide CDA Revenue, COP, Insured Hospital, Triad Health Care, Refunding, ETM,
8/01/09 .................................................................................... 6,450,000 4,196,564
8/01/10 .................................................................................... 6,745,000 4,124,230
8/01/11 .................................................................................... 3,115,000 1,790,751
</TABLE>
40
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
ZERO COUPON/STEP-UP BONDS (CONT.)
Campbell USD, Series B, FGIC Insured,
8/01/20 .................................................................................... $ 5,000,000 $ 1,625,100
8/01/21 .................................................................................... 6,280,000 1,913,076
Chino USD COP, Land Acquisition, Series B, FSA Insured, zero cpn. to 9/01/02,
6.60% thereafter, 9/01/14 .................................................................. 1,580,000 1,469,921
6.70% thereafter, 9/01/29 .................................................................. 4,780,000 4,386,654
Contra Costa County COP, Merrithew Memorial Hospital Project, ETM,11/01/15 ..................... 6,810,000 3,045,500
Contra Costa Home Mortgage Finance Authority HMR, Mandatory Sinking Fund,
3/01/07, MBIA Insured, Pre-Refunded, 9/01/17 ............................................... 10,770,000 2,465,792
3/01/08, MBIA Insured, Pre-Refunded, 9/01/17 ............................................... 9,635,000 2,347,182
9/01/08, MBIA Insured, Pre-Refunded, 9/01/17 ............................................... 8,095,000 2,036,702
3/01/09, MBIA Insured, Pre-Refunded, 9/01/17 ............................................... 8,615,000 2,231,285
9/01/09, MBIA Insured, Pre-Refunded, 9/01/17 ............................................... 7,135,000 1,908,256
3/01/10, MBIA Insured, Pre-Refunded, 9/01/17 ............................................... 7,700,000 2,105,180
9/01/10, MBIA Insured, Pre-Refunded, 9/01/17 ............................................... 6,275,000 1,770,617
Contra Costa School Financing Authority Revenue, Capital Appreciation, Antioch USD Community,
Series B, 9/01/07 ............................................................................ 1,285,000 861,053
Desert Sands USD, COP, Capital Projects, FSA Insured, zero cpn. to 3/01/01, 6.45% thereafter,
3/01/20 ...................................................................................... 6,820,000 6,860,715
El Paso de Robles GO, Capital Appreciation, Series A, FGIC Insured,
8/01/16 .................................................................................... 2,050,000 847,532
8/01/22 .................................................................................... 11,485,000 3,167,448
8/01/27 .................................................................................... 11,495,000 2,329,577
Elk Grove USD, Special Tax, Capital Appreciation, CFD 1, MBIA Insured,
12/01/19 ................................................................................... 2,775,000 919,413
12/01/20 ................................................................................... 2,765,000 856,321
12/01/21 ................................................................................... 4,195,000 1,215,795
12/01/22 ................................................................................... 4,195,000 1,134,412
12/01/23 ................................................................................... 4,195,000 1,064,565
12/01/24 ................................................................................... 4,200,000 1,002,204
12/01/25 ................................................................................... 6,355,000 1,425,617
12/01/26 ................................................................................... 6,355,000 1,340,015
12/01/27 ................................................................................... 6,355,000 1,262,611
12/01/28 ................................................................................... 6,355,000 1,170,273
Foothill/Eastern Corridor Agency Toll Road Revenue,
Capital Appreciation, Refunding, 1/15/25 ................................................... 57,000,000 12,145,560
Capital Appreciation, Refunding, 1/15/30 ................................................... 98,460,000 15,044,688
Capital Appreciation, Refunding, 1/15/31 ................................................... 14,635,000 2,091,049
Capital Appreciation, Refunding, 1/15/36 ................................................... 182,160,000 18,556,639
Capital Appreciation, Refunding, 1/15/38 ................................................... 160,560,000 14,370,120
Capital Appreciation, Refunding, MBIA Insured, 1/15/21 ..................................... 51,180,000 14,179,931
Capital Appreciation, Refunding, MBIA Insured, 1/15/37 ..................................... 170,615,000 16,290,320
Capital Appreciation, Refunding, zero cpn. to 7/15/09, 5.80% thereafter, 1/15/20 ........... 49,500,000 28,533,780
Capital Appreciation, Refunding, zero cpn. to 7/15/09, 5.875% thereafter, 1/15/27 .......... 80,835,000 45,662,075
Capital Appreciation, Refunding, zero cpn. to 7/15/09, 5.875% thereafter, 1/15/28 .......... 80,500,000 46,049,220
Capital Appreciation, Refunding, zero cpn. to 7/15/09, 5.875% thereafter, 1/15/29 .......... 112,230,000 64,019,359
Capital Appreciation, senior lien, Series A, ETM, 1/01/22 .................................. 30,835,000 9,306,311
Capital Appreciation, senior lien, Series A, ETM, 1/01/23 .................................. 5,765,000 1,640,950
</TABLE>
41
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
ZERO COUPON/STEP-UP BONDS (CONT.)
Foothill/Eastern Corridor Agency Toll Road Revenue, (cont.)
Capital Appreciation, senior lien, Series A, ETM, 1/01/24 .................................. $ 72,045,000 $ 19,336,878
Capital Appreciation, senior lien, Series A, ETM, 1/01/28 .................................. 2,000,000 423,540
Convertible Capital Appreciation, Refunding, 1/15/23 ....................................... 10,000,000 5,765,800
Convertible Capital Appreciation, Refunding, 1/15/26 ....................................... 30,000,000 17,224,500
Convertible Capital Appreciation, Refunding, 1/15/32 ....................................... 100,000,000 13,359,000
Convertible Capital Appreciation, Refunding, 1/15/33 ....................................... 132,460,000 16,540,280
Convertible Capital Appreciation, Refunding, 1/15/34 ....................................... 100,000,000 11,670,000
Convertible Capital Appreciation, Refunding, 1/15/35 ....................................... 20,000,000 2,180,800
Convertible Capital Appreciation, senior lien, Series A, ETM, zero cpn. to 1/01/05, 7.05%
thereafter, 1/01/09 ...................................................................... 10,000,000 8,819,800
Convertible Capital Appreciation, senior lien, Series A, ETM, zero cpn. to 1/01/05, 7.15%
thereafter, 1/01/14 ...................................................................... 5,500,000 5,033,545
senior lien, Series A, ETM, 1/01/25 ........................................................ 20,660,000 5,227,600
senior lien, Series A, ETM, 1/01/26 ........................................................ 23,475,000 5,598,788
senior lien, Series A, ETM, 1/01/27 ........................................................ 15,000,000 3,371,400
senior lien, Series A, ETM, 1/01/29 ........................................................ 35,310,000 7,063,412
senior lien, Series A, Pre-Refunded, 1/01/12 ............................................... 8,000,000 7,307,120
Lodi Electric Systems Revenue, COP, Capital Appreciation Bond, Series B, MBIA Insured, 1/15/19 . 6,360,000 2,193,818
Los Angeles Convention and Exhibition Center Authority COP, Series 1985, ETM, 12/01/05 ......... 26,750,000 21,241,908
Los Angeles HMR, Series A, GNMA Secured, 8/25/16................................................ 765,000 203,850
Los Banos USD, COP, Series B, MBIA Insured, 8/01/16 ............................................ 5,000,000 4,893,350
New Haven USD, GO, Capital Appreciation, Series C, FGIC Insured, 8/01/23 ....................... 14,700,000 3,804,801
Palmdale CRDA, Tax Allocation, Merged Project, sub. lien, AMBAC Insured, zero cpn. to 12/01/04,
5.50% thereafter, 12/01/29 ................................................................... 3,255,000 2,423,120
Paramount USD, COP, Land Acquisition, Series B, FSA Insured, zero cpn. to 9/01/01,
6.85% thereafter, 9/01/14 .................................................................. 1,695,000 1,709,340
7.00% thereafter, 9/01/29 .................................................................. 7,675,000 7,583,975
Pasadena Special Tax CFD, No. 1 Civic Center West, Pre-Refunded, 12/01/17 ...................... 4,090,000 1,418,126
Perris SFMR, Series A, GNMA Secured, ETM, 6/01/23 .............................................. 19,095,000 5,057,693
Rancho Water District Financing Authority Revenue, AMBAC Insured,
8/15/16 .................................................................................... 8,605,000 3,633,031
8/15/17 .................................................................................... 13,605,000 5,378,057
8/15/18 .................................................................................... 13,605,000 5,028,544
Riverside County Asset Leasing Corp. Leasehold Revenue, Riverside County Hospital Project, MBIA
Insured,
6/01/23 .................................................................................... 14,160,000 3,783,694
6/01/24 .................................................................................... 13,005,000 3,271,018
Riverside County Board of Education COP, Capital Appreciation Financing Projects, Series A,
11/01/05 ..................................................................................... 1,250,000 981,600
Riverside County SFMR, Capital Appreciation Mortgage,
Series A, GNMA Secured, ETM, 9/01/14 ....................................................... 20,220,000 9,442,942
Series A, GNMA Secured, ETM, 11/01/20 ...................................................... 25,055,000 7,751,766
Series B, GNMA Secured, ETM, 6/01/23 ....................................................... 26,160,000 6,928,999
Rocklin USD, GO, Capital Appreciation, Series A, FGIC Insured,
9/01/08 .................................................................................... 3,660,000 2,528,840
9/01/09 .................................................................................... 4,100,000 2,691,732
9/01/10 .................................................................................... 4,595,000 2,849,773
</TABLE>
42
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
ZERO COUPON/STEP-UP BONDS (CONT.)
Rocklin USD, GO, Capital Appreciation, Series A, FGIC Insured, (cont.)
9/01/11 .................................................................................... $ 5,145,000 $ 3,008,487
9/01/12 .................................................................................... 5,760,000 3,169,440
9/01/16 .................................................................................... 33,960,000 14,303,273
Roseville City School District GO, Capital Appreciation, Series A,
8/01/11 .................................................................................... 3,115,000 1,809,753
8/01/17 .................................................................................... 30,770,000 11,491,980
Roseville Joint UHSD, Capital Appreciation, Series A,
8/01/10 .................................................................................... 1,820,000 1,122,485
8/01/11 .................................................................................... 1,965,000 1,141,626
8/01/17 .................................................................................... 18,155,000 6,777,806
San Francisco City and County RDA, Lease Revenue, George R. Moscone Center, Capital
Appreciation,
7/01/05 .................................................................................... 12,820,000 10,218,950
7/01/06 .................................................................................... 11,320,000 8,587,465
7/01/07 .................................................................................... 4,570,000 3,312,702
7/01/08 .................................................................................... 7,785,000 5,359,895
Pre-Refunded, 7/01/16 ...................................................................... 16,300,000 5,137,597
Pre-Refunded, 7/01/17 ...................................................................... 16,300,000 4,727,326
Pre-Refunded, 7/01/18 ...................................................................... 16,300,000 4,349,655
zero cpn. to 7/01/02, 8.50% thereafter, 7/01/14 ............................................ 46,000,000 46,603,520
San Gabriel USD, COP, Facilities Development Program, Series B, FSA Insured, zero cpn. to
9/01/02, 6.75% thereafter, 9/01/29 ........................................................... 2,250,000 2,067,975
San Joaquin Hills Transportation Corridor Agency Toll Road Revenue, senior lien,
ETM, 1/01/25 ............................................................................... 5,700,000 1,442,271
ETM, 1/01/28 ............................................................................... 33,545,000 7,103,825
ETM, 1/01/29 ............................................................................... 37,050,000 7,411,482
Pre-Refunded, zero cpn. to 1/01/02, 7.50% thereafter, 1/01/09 .............................. 21,585,000 23,220,280
Pre-Refunded, zero cpn. to 1/01/02, 7.55% thereafter, 1/01/10 .............................. 10,745,000 11,691,742
Pre-Refunded, zero cpn. to 1/01/02, 7.60% thereafter, 1/01/11 .............................. 25,935,000 28,387,154
Pre-Refunded, zero cpn. to 1/01/02, 7.65% thereafter, 1/01/12 .............................. 25,215,000 27,660,351
Pre-Refunded, zero cpn. to 1/01/02, 7.65% thereafter, 1/01/13 .............................. 27,350,000 29,874,405
Pre-Refunded, zero cpn. to 1/01/02, 7.70% thereafter, 1/01/14 .............................. 7,470,000 8,212,667
Pre-Refunded, zero cpn. to 1/01/02, 7.70% thereafter, 1/01/15 .............................. 60,155,000 66,054,401
Refunding, Series A, 1/15/16 ............................................................... 19,500,000 12,946,050
Refunding, Series A, 1/15/17 ............................................................... 17,000,000 11,221,870
Refunding, Series A, 1/15/18 ............................................................... 60,000,000 39,503,400
Refunding, Series A, 1/15/19 ............................................................... 57,000,000 37,326,450
Refunding, Series A, 1/15/20 ............................................................... 80,000,000 52,267,200
Refunding, Series A, 1/15/23 ............................................................... 80,000,000 51,376,800
Refunding, Series A, 1/15/22 ............................................................... 90,000,000 58,383,000
Refunding, Series A, 1/15/24 ............................................................... 80,000,000 51,274,400
Santa Maria Water and Wastewater Revenue, COP, Series A, AMBAC Insured, 8/01/27 ................ 20,000,000 14,965,200
Simi Valley SFRMR, Series A, 9/01/25 ........................................................... 190,000 26,929
</TABLE>
43
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
ZERO COUPON/STEP-UP BONDS (CONT.)
Southern California Public Power Authority Power Project Revenue, Refunding, Series A, AMBAC
Insured,
7/01/11 .................................................................................... $ 12,000,000 $ 7,074,720
7/01/12 .................................................................................... 16,890,000 9,371,754
7/01/13 .................................................................................... 16,000,000 8,287,680
Stockton East Water District COP, Refunding, Series A, AMBAC Insured, 4/01/16 .................. 103,885,000 40,891,164
---------------
TOTAL ZERO COUPON/STEP-UP BONDS ................................................................ 1,501,728,784
---------------
TOTAL LONG TERM INVESTMENTS (COST $12,745,977,394) ............................................. 12,990,062,799
---------------
(b)SHORT TERM INVESTMENTS 1.0%
California Health Facilities Financing Authority Revenue, Adventist Hospital, Series A, MBIA
Insured, Daily VRDN and Put, 4.75%, 9/01/28 .................................................. 800,000 800,000
California Infrastructure and Economic Development Bank Revenue, Independent Systems Operating
Corp.Project,
Refunding, Series B, MBIA Insured, Weekly VRDN and Put, 2.50%, 4/01/08 ..................... 8,650,000 8,650,000
Series C, Weekly VRDN and Put, 4.40%, 4/01/09 .............................................. 10,000,000 10,000,000
California PCFA, PCR, Shell Oil Co. Project, Refunding, Series C, Daily VRDN and Put, 4.75%,
11/01/00 ..................................................................................... 100,000 100,000
California Statewide CDA, MFHR, Ivy Hills Apartment Project, Series I, Weekly VRDN and Put,
5.00%, 2/01/33 ............................................................................... 10,094,000 10,094,000
Hayward MFHR, Shorewood Bay Waterford Inc., Series A, FGIC Insured, Weekly VRDN and Put, 4.40%,
8/01/14 ...................................................................................... 9,150,000 9,150,000
Irvine 1915 Act,
AD No. 89-10, Daily VRDN and Put, 4.75%, 9/02/15 ........................................... 900,000 900,000
AD No. 97-13, Daily VRDN and Put, 4.75%, 9/02/23 ........................................... 5,319,000 5,319,000
Irvine Ranch Water District COP, Capital Improvement Project, Daily VRDN and Put, 5.00%, 8/01/16 9,300,000 9,300,000
Irvine Ranch Water District Revenue, Nos. 140, 105, and 250, Daily VRDN and Put, 4.75%, 4/01/33 3,000,000 3,000,000
Orange County Sanitation District COP,
Nos 1-3, 5-7, 11, 13 and 14, Daily VRDN and Put, 4.75%, 8/01/15 ............................ 1,300,000 1,300,000
Nos 1-3, 5-7 and 11, Refunding, AMBAC Insured, Daily VRDN and Put, 4.75%, 8/01/16 .......... 11,000,000 11,000,000
Series A, FGIC Insured, Daily VRDN and Put,4.75%, 8/01/29 .................................. 24,700,000 24,700,000
Series B, FGIC Insured, Daily VRDN and Put, 4.75%, 8/01/30 ................................. 5,000,000 5,000,000
Series C, FGIC Insured, Daily VRDN and Put, 5.00%, 8/01/17 ................................. 20,700,000 20,700,000
Pajaro Valley USD COP, School Facilities Bridge Funding, Program, Weekly VRDN and Put, 4.50%,
9/01/23 ...................................................................................... 4,000,000 4,000,000
Puerto Rico Commonwealth Government Development Bank, Refunding, MBIA Insured, Weekly VRDN and
Put, 4.35%, 12/01/15 ......................................................................... 1,800,000 1,800,000
Puerto Rico Commonwealth Highway and Transportation Authority Revenue, Series A, AMBAC Insured,
Weekly VRDN and Put, 4.50%, 7/01/28 .......................................................... 6,600,000 6,600,000
Tustin 1915 Act, Reassessment District No. 95-2, Series A, Daily VRDN and Put, 4.75%, 9/02/13 .. 500,000 500,000
---------------
TOTAL SHORT TERM INVESTMENTS (COST $132,913,000) ............................................... 132,913,000
---------------
TOTAL INVESTMENTS (COST $12,878,890,394) 98.7% ................................................. 13,122,975,799
OTHER ASSETS, LESS LIABILITIES 1.3% ............................................................ 179,855,912
---------------
NET ASSETS 100.0% .............................................................................. $13,302,831,711
===============
</TABLE>
See glossary of terms on page 45.
(a) See Note 6 regarding defaulted securities.
(b) Variable rate demand notes (VRDNs) are tax-exempt obligations which contain
a floating or variable interest rate adjustment formula and an unconditional
right of demand to receive payment of the principal balance plus accrued
interest at specified dates.
See notes to financial statements.
44
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
GLOSSARY OF TERMS
1915 ACT - Improvement Bond Act of 1915
ABAG - The Association of Bay Area Governments
ACA - American Capital Access
AD - Assessment District
AMBAC - American Municipal Bond Assurance Corp.
BART - Bay Area Regional Transit
BIG - Bond Investors Guaranty Insurance Co. (Acquired by MBIA in 1989 and
no longer does business under this name)
CAMTG - California Mortgage Insurance Corp.
CDA - Community Development Authority/Agency
CFD - Community Facilities District
CHFCLP - California Health Facilities Construction Loan Program
COP - Certificate of Participation
CRDA - Community Redevelopment Authority/Agency
CSAC - County Supervisors Association of California
ETM - Escrow to Maturity
FGIC - Financial Guaranty Insurance Co.
FHA - Federal Housing Authority/Agency
FNMA - Federal National Mortgage Association
FSA - Financial Security Assistance
GNMA - Government National Mortgage Association
GO - General Obligation
HFA - Housing Finance Authority/Agency
HFAR - Housing Finance Authority/Agency Revenue
HFR - Home Financial Revenue
HMR - Home Mortgage Revenue
ID - Improvement District
IDR - Industrial Development Revenue
MBIA - Municipal Bond Investors Assurance Corp.
MBS - Mortgage-Backed Securities
MFHR - Multi-Family Housing Revenue
MFR - Multi-Family Revenue
MTA - Metropolitan Transit Authority
MUD - Municipal Utility District
PCFA - Pollution Control Financing Authority
PCR - Pollution Control Revenue
PFA - Public Financing Authority
PFAR - Public Financing Authority Revenue
PUD - Public Utility District
RDA - Redevelopment Authority/Agency
RDAR - Redevelopment Agency Revenue
RMR - Residential Mortgage Revenue
RRMR - Residential Rental Mortgage Revenue
SF - Single Family
SFHMR - Single Family Home Mortgage Revenue
SFM - Single Family Mortgage
SFMR - Single Family Mortgage Revenue
SFRMR - Single Family Residential Mortgage Revenue
UHSD - Unified High School District
USD - Unified School District
VRDN - Variable Rate Demand Notes
45
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investments in securities:
Cost ........................................................................ $ 12,878,890,394
================
Value ....................................................................... 13,122,975,799
Cash .......................................................................... 132,765
Receivables:
Investment securities sold .................................................. 7,952,000
Capital shares sold ......................................................... 25,744,885
Interest .................................................................... 176,838,336
----------------
Total assets ............................................................ 13,333,643,785
----------------
Liabilities:
Payables:
Capital shares redeemed ..................................................... 14,680,784
Affiliates .................................................................. 7,387,530
Shareholders ................................................................ 8,019,285
Other liabilities ............................................................... 724,475
----------------
Total liabilities ....................................................... 30,812,074
----------------
Net assets, at value .................................................... $ 13,302,831,711
================
Net assets consist of:
Undistributed net investment income ........................................... $ 24,889,495
Net unrealized appreciation ................................................... 244,085,405
Accumulated net realized loss ................................................. (10,011,494)
Capital shares ................................................................ 13,043,868,305
----------------
Net assets, at value .................................................... $ 13,302,831,711
================
CLASS A:
Net asset value per share ($12,791,769,519 / 1,824,149,777 shares outstanding)* $ 7.01
================
Maximum offering price per share ($701 / 95.75%) .............................. $ 7.32
================
CLASS B:
Net asset value and maximum offering price per share ($142,718,592 / 20,370,650
shares outstanding)* .......................................................... $ 7.01
================
CLASS C:
Net asset value per share ($368,343,600 / 52,587,518 shares outstanding)* ..... $ 7.00
================
Maximum offering price per share ($700 / 99.00%) .............................. $ 7.07
================
</TABLE>
*Redemption price is equal to net asset value less any applicable contingent
deferred sales charge.
46 See notes to financial statements.
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest ......................................... $395,880,126
------------
Expenses:
Management fees (Note 3) ......................... 29,571,613
Distribution fees: (Note 3)
Class A ........................................ 5,032,424
Class B ........................................ 403,013
Class C ........................................ 1,174,992
Transfer agent fees (Note 3) ..................... 2,480,343
Custodian fees ................................... 60,565
Reports to shareholders .......................... 227,111
Registration and filing fees ..................... 140,770
Professional fees (Note 3) ....................... 92,551
Directors' fees and expenses ..................... 69,658
Other ............................................ 195,883
------------
Total expenses ............................. 39,448,923
------------
Net investment income ...................... 356,431,203
------------
Realized and unrealized gains:
Net realized gain from investments ............... 1,917,015
Net unrealized appreciation on investments ....... 248,647,310
------------
Net realized and unrealized gain ................... 250,564,325
------------
Net increase in net assets resulting from operations $606,995,528
============
</TABLE>
See notes to financial statements. 47
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)
AND THE YEAR ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2000 MARCH 31, 2000
---------------- ----------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ......................................... $ 356,431,203 $ 772,997,242
Net realized gain (loss) from investments ..................... 1,917,015 (11,711,553)
Net unrealized appreciation (depreciation) on investments ..... 248,647,310 (1,113,091,530)
---------------- ----------------
Net increase (decrease) in net assets resulting from operations 606,995,528 (351,805,841)
Distributions to shareholders from:
Net investment income:
Class A ................................................... (343,629,169) (726,801,344)
Class B ................................................... (2,944,841) (4,065,129)
Class C ................................................... (8,822,717) (19,682,434)
Net realized gains:
Class A ................................................... -- (10,661,233)
Class B ................................................... -- (48,352)
Class C ................................................... -- (331,896)
---------------- ----------------
Total distributions to shareholders ............................. (355,396,727) (761,590,388)
Capital share transactions: (Note 2)
Class A ................................................... (310,010,418) (1,540,197,674)
Class B ................................................... 29,199,340 72,790,394
Class C ................................................... (6,340,365) (62,734,110)
---------------- ----------------
Total capital share transactions ................................ (287,151,443) (1,530,141,390)
Net decrease in net assets .............................. (35,552,642) (2,643,537,619)
Net assets
Beginning of period ............................................. 13,338,384,353 15,981,921,972
---------------- ----------------
End of period ................................................... $ 13,302,831,711 $ 13,338,384,353
================ ================
Undistributed net investment income included in net assets:
End of period ................................................... $ 24,889,495 $ 23,855,019
================ ================
</TABLE>
48 See notes to financial statements.
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
Notes to Financial Statements (unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Franklin California Tax-Free Income Fund (the Fund) is registered under the
Investment Company Act of 1940 as a diversified, open-end investment company.
The Fund seeks to provide tax-free income. The following summarizes the Fund's
significant accounting policies.
a. SECURITY VALUATION
Tax-free bonds generally trade in the over-the-counter market and are valued
within the range of the latest quoted bid and asked prices. In the absence of a
sale or reported bid and asked prices, information with respect to bond and note
transactions, quotations from bond dealers, market transactions in comparable
securities, and various relationships between securities are used to determine
the value of the security. The Fund may utilize a pricing service, bank or
broker/dealer experienced in such matters to perform any of the pricing
functions under procedures approved by the Board of Directors. Securities for
which market quotations are not readily available are valued at fair value as
determined by management in accordance with procedures established by the Board
of Directors.
b. INCOME TAXES
No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute substantially all of its income.
c. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income and estimated expenses are accrued daily. Bond discount and
premium are amortized on an income tax basis. Distributions to shareholders are
recorded on the ex-dividend date.
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.
d. ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
2. CAPITAL STOCK
The Fund offers three classes of shares: Class A, Class B, and Class C. Each
class of shares differs by its initial sales load, distribution fees, voting
rights on matters affecting a single class and its exchange privilege.
49
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
Notes to Financial Statements (unaudited) (continued)
2. CAPITAL STOCK (CONT.)
At September 30, 2000, there were five billion shares authorized ($.01 par
value) for each class. Transactions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2000 MARCH 31, 2000
-------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------------- ------------ ---------------
<S> <C> <C> <C> <C>
CLASS A SHARES:
Shares sold ..................................... 95,029,583 $ 653,904,607 240,488,307 $ 1,679,469,285
Shares issued in reinvestment of distributions... 21,447,849 147,086,550 45,791,780 319,191,413
Shares redeemed ................................. (161,367,009) (1,111,001,575) (508,181,729) (3,538,858,372)
----------- --------------- ------------ ---------------
Net decrease .................................... (44,889,577) $ (310,010,418) (221,901,642) $(1,540,197,674)
=========== =============== ============ ===============
CLASS B SHARES:
Shares sold ..................................... 4,984,613 $ 34,362,231 12,625,622 $ 89,069,351
Shares issued in reinvestment of distributions... 261,940 1,797,008 386,322 2,666,240
Shares redeemed ................................. (1,014,506) (6,959,899) (2,780,059) (18,945,197)
----------- --------------- ------------ ---------------
Net increase .................................... 4,232,047 $ 29,199,340 10,231,885 $ 72,790,394
=========== =============== ============ ===============
CLASS C SHARES:
Shares sold ..................................... 3,634,075 $ 25,035,821 11,263,635 $ 79,161,354
Shares issued in reinvestment of distributions... 816,662 5,596,087 1,912,072 13,328,420
Shares redeemed ................................. (5,383,077) (36,972,273) (22,492,323) (155,223,884)
----------- --------------- ------------ ---------------
Net decrease .................................... (932,340) $ (6,340,365) (9,316,616) $ (62,734,110)
=========== =============== ============ ===============
</TABLE>
3. TRANSACTIONS WITH AFFILIATES
Certain officers and directors of the Fund are also officers and/or directors of
Franklin/Templeton Distributors, Inc. (Distributors), Franklin Advisers, Inc.
(Advisers), Franklin/Templeton Investor Services, Inc. (Investor Services), and
Franklin Templeton Services, Inc. (FT Services), the Fund's principal
underwriter, investment manager, transfer agent, and administrative manager,
respectively.
The Fund pays an investment management fee to Advisers based on the net assets
of the Fund as follows:
<TABLE>
<CAPTION>
ANNUALIZED
FEE RATE MONTH-END NET ASSETS
-------- --------------------
<S> <C>
.625% First $100 million
.500% Over $100 million, up to and including $250 million
.450% Over $250 million, up to and including $10 billion
.440% Over $10 billion, up to and including $12.5 billion
.420% Over $12.5 billion, up to and including $15 billion
.400% Over $15 billion, up to and including $17.5 billion
</TABLE>
Fees are further reduced on net assets over $17.5 billion.
50
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
Notes to Financial Statements (unaudited) (continued)
3. TRANSACTIONS WITH AFFILIATES (CONT.)
Under an agreement with Advisers, FT Services provides administrative services
to the Fund. The fee is paid by Advisers based on average daily net assets, and
is not an additional expense of the Fund.
The Fund reimburses Distributors up to .10%, .65%, and .65% per year of the
average daily net assets of Class A, Class B and Class C, respectively, for
costs incurred in marketing the Fund's shares.
Distributors paid net commissions on sales of the Fund shares, and received
contingent deferred sales charges for the period of $1,766,473 and $265,752,
respectively.
The Fund paid transfer agent fees of $2,480,343, of which $1,769,430 was paid to
Investor Services.
Included in professional fees are legal fees of $20,060 that were paid to a law
firm in which a partner of that law firm was an officer of the Fund.
4. INCOME TAXES
At September 30, 2000, the net unrealized depreciation based on the cost of
investments for income tax purposes of $12,879,178,327 was as follows:
<TABLE>
<S> <C>
Unrealized appreciation ... $ 514,047,008
Unrealized depreciation ... (270,249,536)
-------------
Net unrealized appreciation $ 243,797,472
=============
</TABLE>
At March 31, 2000, the Fund had tax basis capital losses of $7,003,120 which may
be carried over to offset future capital gains. Such losses expire in 2008.
At March 31, 2000, the Fund has deferred capital losses occurring subsequent to
October 31, 1999 of $4,853,911. For tax purposes, such losses will be reflected
in the year ending March 31, 2001.
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of defaulted securities.
Net realized capital losses differ for financial statement and tax purposes
primarily due to differing treatment of wash sales.
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
period ended September 30, 2000 aggregated $358,103,933 and $747,318,160,
respectively.
51
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
Notes to Financial Statements (unaudited) (continued)
6. DEFAULTED SECURITIES
At September 30, 2000, the Fund held a defaulted security with a value of
$8,933,795 representing .07% of the Fund's net assets. For information as to the
specific security, see the accompanying Statement of Investments.
For financial reporting purposes, the Fund discontinues accruing income on
defaulted bonds and provides an estimate for losses on interest receivable.
52
