MESSAGE FROM THE CHAIRMAN
Table of Contents Page
Message from the Chairman 1
Manager's Discussion 4
Fund Reports
Franklin Arizona Insured Tax-Free
Income Fund 8
Franklin Florida Insured Tax-Free
Income Fund 11
Franklin Insured Tax-Free
Income Fund 14
Franklin Massachusetts Insured
Tax-Free Income Fund 18
Franklin Michigan Insured Tax-Free
Income Fund 22
Franklin Minnesota Insured Tax-Free
Income Fund 26
Franklin Ohio Insured Tax-Free
Income Fund 30
Statement of Investments 34
Financial Statements 88
Notes to Financial Statements 95
October 16, 1995
Dear Shareholders:
It's a pleasure to bring you the semi-annual report of the Franklin Tax-Free
Trust for the period ended August 31, 1995.
To date, 1995 has been a welcome change from the economic uncertainty of 1994,
with the stock and bond markets enjoying strong performances. In February, the
Dow Jones Industrial Average(R) broke the 4,000 mark for the first time, and
finished the period above 4,600. As of August 31, 1995, the bond market, as
measured by the Lehman Brothers Aggregate Bond Index, rose 7.44% to $103.78 from
$96.59 on December 30, 1994.
Of more importance to Franklin Tax-Free Trust shareholders is the strength of
the municipal bond market in 1995. Although a municipal bond price rally was
sidetracked in early December by the municipal bankruptcy filing of Orange
County, California, the municipal market has strengthened in 1995. Of course,
there's no guarantee that this market will continue to rise.
At this time, we think yields from municipal securities are currently very
attractive relative to yields available from U.S. Treasuries and other
high-quality, taxable fixed-income securities. For instance, municipal bonds --
as represented by the Bond Buyer 40 -- demonstrated an average yield of 6.11% on
August 31, 1995. For investors in the maximum federal income tax bracket of
39.6%, this tax-free yield equals a taxable yield of 10.12%, whereas the average
30-year U.S. Treasury bond offered a taxable yield of 6.65% on August 31, 1995.1
We maintain a very conservative approach in seeking to achieve each fund's
objective. We strive to maximize shareholders' current tax-free income while
attempting to minimize risk. Our strategy is simple: we purchase securities
based on their income producing potential and avoid short-term trading in an
effort to capture taxable capital gains. In addition, we also purchase bonds as
close to par, or face value, as possible in the current marketplace. This
strategy has a number of beneficial side effects, including fairly low portfolio
turnover rates resulting in lower expenses. This approach also tends to protect
the funds from extreme price volatility. And while our investment strategy
focuses on income rather than capital growth, we feel that the positive
performance of the municipal bond market in 1995 has enabled the funds to report
impressive total returns for the six-month reporting period.
There has been a tremendous amount of discussion in the press regarding tax
reform issues, including a flat tax proposal, a consumption tax, a national
sales tax, and a "Super" IRA. Each of these proposals pose underlying questions
- -- Will there be any allowed deductions? Will I lose the benefit of investing in
tax-free municipal bonds? As you can imagine, a number of details need to be
fully considered. While it is probably too early to draw any conclusions on how
any of the proposed tax reform plans could impact the municipal bond market, we
understand that this topic raises important concerns. Our interview with Tom
Kenny, Director of Franklin's Municipal Bond Department, on page 4 should answer
some of your questions.
As you know, investment markets experience volatility, which is a normal part of
investing. That's why we've always encouraged our shareholders to focus on their
long-term investment goals. History has shown that, over the long term, stocks
and bonds have delivered impressive results.2 By concentrating on long-term
investment goals, you need not be unduly concerned with short-term market
fluctuations.
1. Source: Micropal.
You can also help minimize the effects of market fluctuations by diversifying
your investments. Mutual funds offer a level of diversification that would be
almost impossible for individual investors to achieve on their own. They also
provide full-time, professional management, and Franklin's Municipal Bond
Research Department is one of the largest in the industry.3 Our analysts
frequently make site visits to obtain invaluable first-hand information about
issuers and specific municipal projects. If you have questions, we would welcome
a chance to answer them.
As always, we appreciate your trust and support, and look forward to serving you
in the years to come.
Sincerely,
Charles B. Johnson
Chairman
2. Past performance cannot guarantee future results.
3. Source: Research and Ratings Review, Vol. II. Issue 8, November 14, 1994.
Franklin's municipal research team ranks second out of 1,000 investment advisory
firms, in terms of municipal bond analysts, in a survey by TMS Holdings, Inc.
The Highest Quality Rating
The insured bonds in each fund's portfolio are insured by private municipal bond
insurance companies as to the scheduled payment of principal and interest on the
portfolio's securities. Because of this insurance, each fund continues to enjoy
an "AAAf" rating -- the highest mutual fund rating possible -- from Standard &
Poor's Corporation. The rating reflects Standard & Poor's assessment of the
overall credit quality of a fund's portfolio, based primarily on the fund's
stated investment objectives and policies. For example, it considers not only
the credit quality of portfolio investments, but the experience and stability of
management. The rating does not reflect the yield or the market price of the
fund's shares, nor does it imply approval by Standard & Poor's and is subject to
change.
+Fund shares are not insured by any U.S. Government agency. Insurance relates
only to the payment of principal and interest on the portfolio's securities. It
does not eliminate market risks to the fund's share price or insure the value of
the shares. Terms of the insurance are more fully described in the prospectus,
and no representation is made as to any insurer's ability to meet its
commitments.
MANAGER'S DISCUSSION
Tom Kenny, director of Franklin's Municipal Bond Department, discusses a number
of current topics, including tax reform, interest rates, and his outlook for the
municipal bond market.
Tom Kenny, Senior Vice President
Director, Franklin Municipal
Bond Department
Tom, there's been a lot of press lately on the possibility of tax reform -- in
particular, a flat tax. What proposals are being considered?
There are three different flat tax proposals being discussed. And, these are in
addition to a number of other tax reform proposals, such as a consumption tax, a
national sales tax and a "Super" IRA. Basically, tax reform is a hot topic right
now -- ever since President Clinton appeared on national TV in April after
filling out his tax forms and said, "You know, a flat tax doesn't sound so bad."
With numerous tax reform proposals being considered, do you think that one of
them is going to pass?
The support for tax reform seems to be waning in recent weeks as more details of
some of these proposals are released. Ten out of ten tax payers will tell you
that taxes are too high and the current system is too complicated. There is
tremendous support for simplification. But when people realize that they would
lose their mortgage deduction -- which could cause their home value to decline
by 15 - 20% -- or that the wealthy would receive a large tax cut while the
middle class would have to pay more taxes under a flat tax system, their opinion
may change. So, I feel there is support for simplification but not necessarily
for radical reform.
However, I think something will happen. There's such a movement behind change
that it's not just going to disappear. With the election coming up, you're going
to continue hearing about tax reform, you're going to read about it, you're
going to see it on TV through next year and into 1997. But I don't think
anything will actually happen until '97, at the earliest.
Has the possibility of tax reform affected the municipal bond market at all?
The possibility of major tax reform has depressed municipal bond prices relative
to other fixed-income investments during the past few months; however, since we
have experienced a strong bond market, it hasn't been that noticeable. The
market has already somewhat priced the potential impact of tax reform, which
makes municipal yields very attractive today.
Depending on the state you live in and your tax bracket, the after-tax
equivalent yield available can be a very attractive 10%. Also, supply is down
25% in 1995 from 1994, and over 50% versus 1993. At the same time, we are
experiencing a record amount of bonds that are being called or redeemed and for
the second consecutive year, more bonds will be taken out of the muni market
than issued.
What is that in dollar terms?
The market may see about $130 to $140 billion in new issuance this year,
compared to $162 billion last year and $290 billion the year before. So new
issuance is down dramatically.
Did rising interest rates have anything to do with that?
Sure, but there are other reasons as well. One, voters simply aren't approving
as many bond issues today. Two, many governors that were elected last fall are
trying to implement tax cuts; in effect, they're reducing budgets and there's
just not a lot of debt capacity for increased debt service. And three, a big
reason we saw such high issuance in 1993 was because lower interest rates
resulted in an increase in refunding and pre-refunding issues -- just as many
homeowners refinanced their mortgages in '93 to take advantage of lower rates.
But because of tax code changes in 1986, issuers of municipal bonds can only
refund or prerefund their bonds once. Those that could refund, did. As a result,
the potential inventory of refundable bonds is much lower than a few years ago.
How will these factors affect prices of muni bonds?
It should be positive. The supply/demand fundamentals of the municipal market
are, in my opinion, promising, and the market has already partially discounted
the threat of tax reform. Over the long term, muni prices should improve on a
relative basis. From a historical perspective, munis are cheap today. Investors
can take advantage of this by dollar-cost averaging.
Another topic that's been a concern during the past year has been the bankruptcy
of Orange County. What's been the long-term impact on the municipal bond market?
The biggest impact has been in investor perception. Historically, general
obligation bonds (those that are backed by the full faith and credit of the
issuer) have been perceived as the safest kind of municipal bond. But in a
bankruptcy situation, like in Orange County, the investments that are most
affected are general obligations. Revenue bonds, backed by dedicated revenue
streams -- such as those from airport authority, solid waste authority,
transportation and the like -- haven't really been impacted. Investors in
general have re-thought how they look at revenue bonds and general obligation
bonds.
We have also seen an increase in the use of bond insurance, especially in
California. This year, the percentage of insured bonds for the entire market is
approximately 44% of total issuance while in California, 52% of all issues
obtained insurance.
Is that a big increase?
For the muni industry overall, it has increased from 37%; in California, it has
increased from 32%. In my opinion, that's a big jump. As a result, insured bonds
have become less expensive to purchase relative to uninsured bonds simply
because of the increased supply. And we have taken advantage of that by buying
more insured bonds this year.
What about interest rates? Have changes in interest rates affected your buying
decisions?
No. We don't try to second guess the market in terms of where we think rates are
headed, or alter our fundamental approach because of economic changes. Many
portfolio managers attempt this in an effort to capture capital growth.
Our approach is very straight-forward. We seek safety and income. I don't think
shareholders want the volatility you might generate by chasing capital growth.
We don't want to be number one in total return one year, and number 100 the
next. We use a consistent, conservative, "plain vanilla" approach. We manage our
funds for tax-free income, and take a long-term approach. Over time, income will
drive total return. For example, as measured by the Lehman Brothers 20-Year
Municipal Bond Index, income has been responsible for over 99% of total return
of municipal bonds over the last five years.1 So, by investing for income, you
should generate good total return performance. We think our shareholders are
better served by using this consistent approach. Investors in the tax-free funds
want to maximize tax-free income.
1. Source: Lehman Brothers 20-Year Municipal Bond Index.
How much research do you do before you buy a bond?
It really depends on the quality and type of bond. Lower-rated and non-rated
bonds will typically require more credit analysis than higher-rated bonds. Since
we purchase over 95% of our portfolio holdings in the new issue market, we spend
a lot of time up front performing site visits, addressing legal issues, and
structuring the issue to meet our credit and portfolio requirements. We have 23
analysts who spend much of their time on new issues, but also monitoring these
issues after purchase.
What are Franklin's total holdings in municipal bonds?
We currently have approximately $41 billion in municipal bonds in 42 tax-free
funds. Franklin is the largest buyer of municipal bonds in the country.
Does that size give you any advantages?
Sure. We get the attention of issuers and underwriters and we try to capitalize
on that by encouraging them to visit us in San Mateo to discuss their issue.
This allows us to give our input on structuring a deal. They, of course, hope
that we buy their deal.
When you say input, does that commit you to purchasing?
No. You can have input from a structuring standpoint, the actual bond structure,
or you can have input from a pricing standpoint, in terms of coupons and
maturities, and all of that input can go to the underwriter of the issue without
any commitment on our part. But if they make those changes to meet our needs,
then we're more likely to buy it than if they don't. So it can be to everyone's
advantage. We end up with an issue that meets our needs in terms of credit,
price, coupon and maturity, and the issuer ends up with a marketable product.
Where do you see the municipal bond market going through the end of the year,
and through the first six months of 1996?
I'd say the muni market is going to remain stable. We're going to see more of
the same, probably through the election. I think uncertainty surrounding tax
reform is going to continue to hold down munis for a while longer. No matter
what happens to the bond market, the economy or interest rates, we'll do what
we've always done -- we'll do our homework, maximize tax-free income for our
shareholders, and maintain a long-term investment horizon.
Thanks, Tom.
It's been my pleasure.
FRANKLIN ARIZONA INSURED TAX-FREE INCOME FUND
Fund Objective:
Seeks to provide high current income exempt from regular federal and Arizona
state personal income taxes through a portfolio consisting primarily of insured
Arizona municipal bonds.*
During the first half of 1995, the education sector represented more than half
of the primary market issuance of Arizona municipal bonds. Over the reporting
period, we participated in Glendale, Phoenix and Mesa school district issues.
Overall, municipal supply in Arizona declined 35.2% to $1.098 billion in the
first half of 1995 from $3.199 billion in the first half of 1994. Supply for the
remainder of the calendar year is likely to remain low, making Arizona municipal
bonds attractive investments.
Franklin Arizona Insured Tax-Free Income Fund
Portfolio Breakdown on August 31, 1995
As a percentage of total net assets
% of total
Sector net assets
Utilities 36.2%
Education 33.7%
General Obligations 8.0%
Hospitals 7.3%
Sales Tax 3.5%
Certificates of Participation 3.5%
Housing 3.3%
Transportation 1.7%
Pre-Refunded 1.5%
Industrial 1.3%
For a complete list of portfolio holdings, please see page 34 of this report.
*For investors subject to the federal alternative minimum tax, a small portion
of these dividends may be subject to such tax. Distributions of capital gains
and of ordinary income from accrued market discount, if any, are generally
taxable.
Performance Summary
The Franklin Arizona Insured Tax-Free Income Fund's share price, as measured by
net asset value, increased to $10.07 on August 31, 1995, from $9.80 on February
28, 1995.
The fund continued to meet its investment objective of providing high current
income to shareholders. For the six-month period ended August 31, 1995, your
fund paid monthly income distributions totaling 27.6 cents ($0.276) per share.**
Dividends will vary based on the earnings of the fund's portfolio, and past
distributions are not necessarily predictive of future results.
At the end of the reporting period, your fund's distribution rate was 5.25%,
based on an annualization of the current monthly dividend of 4.6 cents ($0.046)
per share and the maximum offering price of $10.52 on August 31, 1995. This
double tax-free rate is generally higher than the after-tax return on a
comparable taxable investment. For example, if you are in the maximum combined
federal and Arizona state personal income tax bracket of 43.8%, you would have
to earn 9.34% from a taxable investment to match your fund's tax-free
distribution rate.
GRAPHIC MATERIAL 1 OMMITTED - SEE APPENDIX AT END OF DOCUMENT
**Assumes shares were purchased and held for the entire accrual period. Since
dividends accrue daily, your actual distributions will vary depending on the
date you purchased your shares and any account activity during the month. Income
distributions and total return calculations include all accrued income earned by
the fund during the reporting period.
Franklin Arizona Insured Tax-Free Income Fund
Periods ended August 31, 1995
Since
Inception
1-Year (04/30/93)
CumulativeTotal Return1 9.67% 12.93%
Average Annual Total Return2 5.03% 3.41%
Distribution Rate3 5.25%
Taxable Equivalent Distribution Rate4 9.34%
30-Day Standardized Yield5 5.40%
Taxable Equivalent Yield4 9.61%
1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include the maximum 4.25% initial sales
charge stated in the prospectus. See note below.
2. Average annual total returns represent the average annual change in value of
an investment over the specified periods. The figures reflect the maximum 4.25%
initial sales charge. See note below.
3. Based on an annualization of the fund's current 4.6 cents per share
monthly dividend and the maximum offering price of $10.52 on August 31, 1995.
4. Taxable equivalent distribution rate and yield assume the 1995 maximum
combined federal and Arizona state personal income tax bracket of 43.8%, 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 August 31, 1995.
Note: Prior to July 1, 1994, fund shares were offered at a higher initial sales
charge. Thus, actual total returns for purchasers of shares during that period
would have been somewhat different than noted above. All total return
calculations assume reinvestment of dividends and capital gains at net asset
value. Investment return and principal value will fluctuate with market
conditions, and you may have a gain or loss when you sell your shares. Past
performance is not predictive of future results.
The fund's manager has agreed in advance to waive a portion of the management
fees, which reduces operating expenses and increases distribution rate, yield
and total return to shareholders. Without these reductions, the fund's
distribution rate would have been lower, and yield for the period would have
been 4.61%. The fee waiver may be discontinued at any time upon notification of
the fund's Board of Trustees.
FRANKLIN FLORIDA INSURED TAX-FREE INCOME FUND
Fund Objective:
Seeks to provide high current income exempt from regular federal income taxes
through a portfolio consisting primarily of insured Florida municipal bonds.*
In addition, the fund's shares are free from Florida's annual intangibles tax.
Florida remains one of the fastest growing states in the country, which has
positively affected its economic and employment situation. The state's economic
recovery has been among the healthiest in the region, with employment growth
throughout 1994 ending at a strong 5.8%.
Florida's population increase, ranked ninth in national population growth
between 1989 and 1994, has also impacted the state on a financial level. The
state's higher new bond issuance volume of $4.8 billion during the first half of
1995, compared with a total issuance of $7.7 billion in 1994, is in part due to
its rapid growth. Debt issuance is above average as it continues to meet the
demands of school construction, correctional facilities, highways and
environmental protection. Additional borrowing to support economic growth is
expected. Florida's well-managed financial program and steady economic
performance have all contributed to an AA rating from Standard & Poor's, a
national rating agency. We believe that the outlook for Florida's financial
future is stable.**
Franklin Florida Insured Tax-Free Income Fund
Portfolio Breakdown on August 31, 1995
As a percentage of total net assets
% of total
Sector net assets
Utilities 45.2%
Other Revenue 12.2%
Certificates of Participation 12.0%
Hospitals 11.7%
Transportation 11.5%
General Obligations 2.5%
Education 2.2%
Pre-Refunded 1.8%
Sales Tax 0.9%
For a complete list of portfolio holdings, please see page 34 of this report.
*For investors subject to the federal alternative minimum tax, a small portion
of these dividends may be subject to such tax. Distributions of capital gains
and of ordinary income from accrued market discount, if any, are generally
taxable.
**Source: Standard &Poor's Creditweek Municipal, May 22, 1995.
Performance Summary
The Franklin Florida Insured Tax-Free Income Fund's share price, as measured by
net asset value, increased to $9.76 on August 31, 1995, from $9.53 on February
28, 1995.
The fund continued to meet its investment objective of providing high current
income to shareholders. For the six-month period ended August 31, 1995, your
fund paid monthly income distributions totaling 26.4 cents ($0.264) per share.
Dividends will vary based on the earnings of the fund's portfolio, and past
distributions are not necessarily predictive of future results.
At the end of the reporting period, your fund's distribution rate was 5.18%,
based on an annualization of the current monthly dividend of 4.4 cents ($0.044)
per share and the maximum offering price of $10.19 on August 31, 1995. This
tax-free rate is generally higher than the after-tax return on a comparable
taxable investment. For example, if you are in the maximum federal income tax
bracket of 39.6%, you would have to earn 8.58% from a taxable investment to
match your fund's tax-free distribution rate.
GRAPHIC MATERIAL 2 OMMITTED - SEE APPENDIX AT END OF DOCUMENT
+Assumes shares were purchased and held for the entire accrual period. Since
dividends accrue daily, your actual distributions will vary depending on the
date you purchased your shares and any account activity during the month. Income
distributions and total returns include all accrued income earned by the fund
during the reporting period.
Franklin Florida Insured Tax-Free Income Fund
Periods ended August 31, 1995
Since
Inception
1-Year (04/30/93)
CumulativeTotal Return1 9.64% 9.53%
Average Annual Total Return2 4.96% 2.07%
Distribution Rate3 5.18%
Taxable Equivalent Distribution Rate4 8.58%
30-Day Standardized Yield5 5.17%
Taxable Equivalent Yield4 8.56%
1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include the maximum 4.25% initial sales
charge stated in the prospectus. See note below.
2. Average annual total returns represent the average annual change in value of
an investment over the specified periods. The figures reflect the maximum 4.25%
initial sales charge. See note below.
3. Based on an annualization of the fund's current 4.4 cents per share
monthly dividend and the maximum offering price of $10.19 on August 31, 1995.
4. Taxable equivalent distribution rate and yield assume the 1995 maximum
federal income tax bracket 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 August 31, 1995.
Note: Prior to July 1, 1994, fund shares were offered at a higher initial
sales charge. Thus, actual total returns for purchasers of shares during that
period would have been somewhat different than noted above. All total return
calculations assume reinvestment of dividends and capital gains at net asset
value. Investment return and principal value will fluctuate with market
conditions, and you may have a gain or loss when you sell your shares. Past
performance is not predictive of future results.
The fund's manager has agreed in advance to waive a portion of the management
fees, and to make certain payments to reduce expenses, which increases
distribution rate, yield and total return to shareholders. Without these
reductions, the fund's distribution rate and total return would have been lower,
and yield for the period would have been 4.66%. The fee waiver may be
discontinued at any time upon notification of the fund's Board of Trustees.
FRANKLIN INSURED TAX-FREE INCOME FUND
Fund Objective:
Seeks to provide high current income exempt from regular federal income taxes
through a portfolio consisting primarily of insured municipal bonds.*
Franklin maintains a very conservative approach in seeking to achieve the fund's
objectives. We strive to maximize shareholders' current tax-free income, while
attempting to minimize risk. Our strategy is simple: we purchase securities
based on their income-producing potential and avoid short-term trading to
capture capital gains. In addition, we also purchase bonds as close to par (face
value) as possible in the current marketplace. Please keep in mind, however,
that the principal value of the fund's holdings -- as well as the price of its
shares -- will fluctuate with market conditions.
We also seek to reduce the fund's risk by investing its assets in a broad range
of municipalities. On August 31, 1995, the fund's assets spanned states, cities
and counties throughout the nation. Furthermore, we purchased, and continue to
purchase, securities from a variety of municipal sectors, as the table to the
right illustrates.
Franklin Insured Tax-Free Income Fund Portfolio Breakdown on August 31, 1995
As a percentage of total net assets
% of total
Sector net assets
Pre-refunded 26.5%
Utilities 24.5%
Hospitals 15.4%
Education 9.1%
Housing 6.0%
Transportation 5.1%
General Obligations 4.6%
Certificates of Participation 3.7%
Other Revenue 2.6%
Industrial 1.0%
Sales Tax 0.6%
Miscellaneous 0.5%
Tax Allocation Bonds 0.3%
Mark-Roos Bonds 0.1%
For a complete list of portfolio holdings, please see page 34 of this report.
*For investors subject to the federal alternative minimum tax, a small portion
of these dividends may be subject to such tax. Distributions of capital gains
and of ordinary income from accrued market discount, if any, are generally
taxable.
Performance Summary
Class I Shares
The Franklin Insured Tax-Free Income Fund's Class I share price, as measured by
net asset value, increased to $12.12 on August 31, 1995, from $11.97 on February
28, 1995.
The fund continued to meet its investment objective of providing high current
income to shareholders. For the six-month period ended August 31, 1995, your
fund paid monthly income distributions totaling 35.4 cents ($0.354) per share.**
We are pleased to report that your fund's monthly dividend was increased to 5.9
cents ($0.059) per share from 5.8 cents ($0.058) per share, effective with the
March 1995 distribution. Dividends will vary based on the earnings of the fund's
portfolio, and past distributions are not necessarily predictive of future
results.
At the end of the reporting period, your fund's distribution rate was 5.59%,
based on an annualization of the current monthly dividend of 5.9 cents ($0.059)
per share and the maximum offering price of $12.66 on August 31, 1995. This
tax-free rate is generally higher than the after-tax return on a comparable
taxable investment. For example, if you are in the maximum federal income tax
bracket of 39.6%, you would have to earn 9.25% from a taxable investment to
match your fund's tax-free distribution rate.
GRAPHIC MATERIAL 3 OMMITTED - SEE APPENDIX AT END OF DOCUMENT
Please see the table on page 17 for more information regarding the fund's
performance.
**Assumes shares were purchased and held for the entire accrual period. Since
dividends accrue daily, your actual distribution will vary, depending on the
date you purchased your shares and any account activity during the month. Income
distributions and total return calculations include all income earned by the
fund during the reporting period.
Class II Shares
The Franklin Insured Tax-Free Income Fund's Class II share price, as measured by
net asset value, increased to $12.15 on August 31, 1995, from $11.98 on its May
1, 1995 inception date.
The fund continued to meet its investment objective of providing high current
income to shareholders. For the abbreviated four-month period ended August 31,
1995, your fund paid monthly income distributions totaling 19.7 cents ($0.197)
per share.** Dividends will vary based on the earnings of the fund's portfolio,
and past distributions are not necessarily predictive of future results.
At the end of the reporting period, your fund's distribution rate was 5.18%,
based on an annualization of the current monthly dividend of 5.3 cents ($0.053)
per share and the maximum offering price of $12.27 on August 31, 1995. This
tax-free rate is generally higher than the after-tax return on a comparable
taxable investment. For example, if you are in the maximum federal income tax
bracket of 39.6%, you would have to earn 8.58% from a taxable investment to
match your fund's tax-free distribution rate.
GRAPHIC MATERIAL 4 OMMITTED - SEE APPENDIX AT END OF DOCUMENT
Please see the table on page 17 for more information regarding the fund's
performance.
**Assumes shares were purchased and held for the entire accrual period. Since
dividends accrue daily, your actual distribution will vary, depending on the
date you purchased your shares and any account activity during the month. Income
distributions and total return calculations include all income earned by the
fund during the reporting period.
Franklin Insured Tax-Free Income Fund
Periods ended August 31, 1995
<TABLE>
<CAPTION>
Since
Inception
1-Year 5-Year 10-Year (05/01/95)
Cumulative Total Return1
<S> <C> <C> <C> <C>
Class I Shares 7.15% 49.96% 134.83% --
Class II Shares -- -- -- 3.08%
Average Annual Total Return2
Class I Shares 2.62% 7.50% 8.44% --
<S> <C> <C> <C>
Distribution Rate3 Taxable Equivalent Distribution Rate4
Class I Shares 5.59% Class I Shares 9.25%
Class II Shares 5.18% Class II Shares 8.58%
30-Day Standardized Yield5 Taxable Equivalent Yield4
Class I Shares 4.68% Class I Shares 7.75%
Class II Shares 4.32% Class II Shares 7.15%
</TABLE>
1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include the maximum 4.25% initial sales
charge for Class I shares, or the maximum 1.00% initial sales charge and 1.00%
Contingent Deferred Sales Charge (CDSC) for Class II shares, applicable to
shares redeemed within the first 18 months of investment. See note below.
2. Average annual total return represents the average annual change in value of
an investment over the specified periods. The figures reflect the maximum 4.25%
initial sales charge for Class I shares. See note below.
3. Class I shares distribution rate is based on an annualization of the fund's
current 5.9 cents per share monthly dividend and the maximum offering price of
$12.66 on August 31, 1995. Class II shares distribution rate is based on an
annualization of the fund's current 5.3 cents per share monthly dividend and the
maximum offering price of $12.27 on August 31, 1995.
4. Taxable equivalent distribution rate and yield assume the 1995 maximum
federal income tax bracket 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 August 31, 1995.
Note: Prior to July 1, 1994, fund shares were offered at a lower initial sales
charge, with dividends reinvested at the public offering price. Thus, actual
total returns for purchasers of shares during that period would have been
somewhat different than noted above. Effective May 1, 1994, the fund eliminated
the sales charge on reinvested dividends and implemented a plan of distribution
under Rule 12b-1, which will affect future performance. Class II shares, which
the fund began offering on May 1, 1995, are subject to different fees and
expenses, which will affect their performance. Please see the prospectus for
more details regarding Class I and Class II shares.
All total return calculations assume reinvestment of dividends and capital gains
at net asset value. Investment return and principal value will fluctuate with
market conditions, and you may have a gain or loss when you sell your shares.
Past performance cannot guarantee future results. Past expense reductions by the
fund's manager increased the fund's Class I total returns.
FRANKLIN MASSACHUSETTS INSURED TAX-FREE INCOME FUND
Fund Objective:
Seeks to provide high current income exempt from regular federal and
Massachusetts state personal income taxes through a portfolio consisting
primarily of Massachusetts insured municipal bonds.*
In May of 1995, Standard & Poor's confirmed Massachusetts' "A+" general
obligation bond rating, which reflects the state's continuing economic recovery
that began in 1992. We believe that the long-term outlook for Massachusetts is
positive, with a credit quality rating upgrade dependent upon the state's
economic performance meeting or exceeding the national average, and continued
sound financial performance.**
Franklin Massachusetts Insured
Tax-Free Income Fund
Portfolio Breakdown on August 31, 1995
As a percentage of total net assets
% of total
Sector net assets
Hospitals 29.1%
Pre-refunded 21.2%
Education 16.5%
General Obligations 13.5%
Housing 6.2%
Health Care 5.4%
Utilities 3.9%
Transportation 2.8%
Certificates of Participation 1.4%
For a complete list of portfolio holdings, please see page 34 of this report.
*For investors subject to the federal alternative minimum tax, a small portion
of these dividends may be subject to such tax. Distributions of capital gains
and of ordinary income from accrued market discount, if any, are generally
taxable.
**Source: Standard & Poor's Creditweek Municipal, June 12, 1995.
Performance Summary
Class I Shares
The Franklin Massachusetts Insured Tax-Free Income Fund's Class I share price,
as measured by net asset value, increased to $11.49 on August 31, 1995, from
$11.34 on February 28, 1995.
The fund continued to meet its investment objective of providing high current
income to shareholders. For the six-month period ended August 31, 1995, your
fund paid monthly income distributions totaling 33 cents ($0.33) per share.
Dividends will vary based on the earnings of the fund's portfolio, and past
distributions are not necessarily predictive of future results.
At the end of the reporting period, your fund's distribution rate was 5.50%,
based on an annualization of the current monthly dividend of 5.5 cents ($0.055)
per share and the maximum offering price of $12.00 on August 31, 1995. This
double tax-free rate is generally higher than the after-tax return on a
comparable taxable investment. For example, if you are in the maximum combined
federal and Massachusetts state personal income tax bracket of 46.8%, you would
have to earn 10.34% from a taxable investment to match your fund's tax-free
distribution rate.
GRAPHIC MATERIAL 5 OMMITTED - SEE APPENDIX AT END OF DOCUMENT
+Assumes shares were purchased and held for the entire accrual period. Since
dividends accrue daily, your actual distribution will vary, depending on the
date you purchased your shares and any account activity during the month. Income
distributions and total return calculations include all income earned by the
fund during the reporting period.
Please see the table on page 21 for more information regarding the fund's
performance.
Class II Shares
The Franklin Massachusetts Insured Tax-Free Income Fund's Class II share price,
as measured by net asset value, increased to $11.53 on August 31, 1995, from
$11.36 on its May 1, 1995 inception date.
The fund continued to meet its investment objective of providing high current
income to shareholders. For the abbreviated four-month period ended August 31,
1995, your fund paid monthly income distributions totaling 18.2 cents ($0.182)
per share. Dividends will vary based on the earnings of the fund's portfolio,
and past distributions are not necessarily predictive of future results.
At the end of the reporting period, your fund's distribution rate was 5.05%,
based on an annualization of the current monthly dividend of 4.9 cents ($0.049)
per share and the maximum offering price of $11.65 on August 31, 1995. This
double tax-free rate is generally higher than the after-tax return on a
comparable taxable investment. For example, if you are in the maximum combined
federal and Massachusetts state personal income tax bracket of 46.8%, you would
have to earn 9.49% from a taxable investment to match your fund's tax-free
distribution rate.
GRAPHIC MATERIAL 6 OMMITTED - SEE APPENDIX AT END OF DOCUMENT
Please see the table on page 21 for more information regarding the fund's
performance.
Franklin Massachusetts Insured Tax-Free Income Fund
Periods ended August 31, 1995
<TABLE>
<CAPTION>
Since
Inception
1-Year 5-Year 10-Year (05/01/95)
Cumulative Total Return1
<S> <C> <C> <C> <C>
Class I Shares 7.45% 47.98% 118.51% --
Class II Shares -- -- -- 3.12%
Average Annual Total Return2
Class I Shares 2.92% 7.21% 7.66% --
<S> <C> <C> <C>
Distribution Rate3 Taxable Equivalent Distribution Rate4
Class I Shares 5.50% Class I Shares 10.34%
Class II Shares 5.05% Class II Shares 9.49%
30-Day Standardized Yield5 Taxable Equivalent Yield4
Class I Shares 4.57% Class I Shares 8.59%
Class II Shares 4.18% Class II Shares 7.86%
</TABLE>
1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include the maximum 4.25% initial sales
charge for Class I shares, or the maximum 1.00% initial sales charge and 1.00%
Contingent Deferred Sales Charge (CDSC) for Class II shares, applicable to
shares redeemed within the first 18 months of investment. See note below.
2. Average annual total return represents the average annual change in value of
an investment over the specified periods. The figures reflect the maximum 4.25%
initial sales charge for Class I shares. See note below.
3. Class I shares distribution rate is based on an annualization of the fund's
current 5.5 cents per share monthly dividend and the maximum offering price of
$12.00 on August 31, 1995. Class II shares distribution rate is based on an
annualization of the fund's current 4.9 cents per share monthly dividend and the
maximum offering price of $11.65 on August 31, 1995.
4. Taxable equivalent distribution rate and yield assume the 1995 maximum
combined federal and Massachusetts state personal income tax bracket of 46.8%,
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 August 31, 1995.
Note: Prior to July 1, 1994, fund shares were offered at a lower initial sales
charge, with dividends reinvested at the public offering price. Thus, actual
total returns for purchasers of shares during that period would have been
somewhat different than noted above. Effective May 1, 1994, the fund eliminated
the sales charge on reinvested dividends and implemented a plan of distribution
under Rule 12b-1, which will affect future performance. Class II shares, which
the fund began offering on May 1, 1995, are subject to different fees and
expenses, which will affect their performance. Please see the prospectus for
more details regarding Class I and Class II shares.
All total return calculations assume reinvestment of dividends and capital gains
at net asset value. Investment return and principal value will fluctuate with
market conditions, and you may have a gain or loss when you sell your shares.
Past performance cannot guarantee future results.
Past expense reductions by the fund's manager increased the fund's Class I total
returns.
FRANKLIN MICHIGAN INSURED TAX-FREE INCOME FUND
Fund Objective:
Seeks to provide high current income exempt from regular federal and Michigan
state personal income taxes through a portfolio consisting primarily of Michigan
insured municipal bonds.*
Michigan's economy and financial operations continued to benefit from a strong
recovery in the durable goods sector and other related sectors. However, the
state's concentration in manufacturing lends to more volatile economic movements
than those occurring in more diverse states. While manufacturing has improved
Michigan's competitive position, employment growth may be unlikely within this
sector, but could continue to be generated by service-related industries.**
Franklin Michigan Insured Tax-Free Income Fund
Portfolio Breakdown on August 31, 1995
As a percentage of total net assets
% of total
Sector net assets
Pre-refunded 32.2%
Education 25.1%
Utilities 15.0%
Hospitals 12.0%
General Obligations 4.9%
Other Revenue 3.7%
Transportation 3.6%
Housing 2.5%
Industrial 0.9%
Health Care 0.1%
For a complete list of portfolio holdings, please see page 34 of this report.
*For investors subject to federal alternative minimum tax, a small portion of
these dividends may be subject to such tax. Distributions of capital gains and
of ordinary income from accrued market discount, if any, are generally taxable.
**Source: Standard & Poor's Creditweek Municipal, June 5, 1995.
Performance Summary
Class I Shares
The Franklin Michigan Insured Tax-Free Income Fund's Class I share price, as
measured by net asset value, increased to $11.92 on August 31, 1995, from $11.76
on February 28, 1995.
The fund continued to meet its investment objective of providing high current
income to shareholders. For the six-month period ended August 31, 1995, your
fund paid monthly income distributions totaling 34.2 cents ($0.342) per share.
Dividends will vary based on the earnings of the fund's portfolio, and past
distributions are not necessarily predictive of future results.
At the end of the reporting period, your fund's distribution rate was 5.49%,
based on an annualization of the current monthly dividend of 5.7 cents ($0.057)
per share and the maximum offering price of $12.45 on August 31, 1995. This
double tax-free rate is generally higher than the after-tax return on a
comparable taxable investment. For example, if you are in the maximum combined
federal and Michigan state personal income tax bracket of 42.3%, you would have
to earn 9.51% from a taxable investment to match your fund's tax-free
distribution rate.
GRAPHIC MATERIAL 7 OMMITTED - SEE APPENDIX AT END OF DOCUMENT
Please see the table on page 25 for more information regarding the fund's
performance.
+Assumes shares were purchased and held for the entire accrual period. Since
dividends accrue daily, your actual distribution will vary, depending on the
date you purchased your shares and any account activity during the month. Income
distributions and total return calculations include all income earned by the
fund during the reporting period.
Class II Shares
The Franklin Michigan Insured Tax-Free Income Fund's Class II share price, as
measured by net asset value, increased to $11.96 on August 31, 1995, from $11.77
on its May 1, 1995 inception date.
The fund continued to meet its investment objective of providing high current
income to shareholders. For the abbreviated four-month period ended August 31,
1995, your fund paid monthly income distributions totaling 19 cents ($0.19) per
share. Dividends will vary based on the earnings of the fund's portfolio, and
past distributions are not necessarily predictive of future results.
At the end of the reporting period, your fund's distribution rate was 5.07%,
based on an annualization of the current monthly dividend of 5.1 cents ($0.051)
per share and the maximum offering price of $12.08 on August 31, 1995. This
double tax-free rate is generally higher than the after-tax return on a
comparable taxable investment. For example, if you are in the maximum combined
federal and Michigan state personal income tax bracket of 42.3%, you would have
to earn 8.78% from a taxable investment to match your fund's tax-free
distribution rate.
GRAPHIC MATERIAL 8 OMMITTED - SEE APPENDIX AT END OF DOCUMENT
Please see the table on page 25 for more information regarding the fund's
performance.
+Assumes shares were purchased and held for the entire accrual period. Since
dividends accue daily, your actual distribution will vary, depending on the date
your purchased your shares and any account activity during the month. Income
distributions and total return calculations include all income earned by the
fund during the reporting period.
Franklin Michigan Insured Tax-Free Income Fund
Periods ended August 31, 1995
<TABLE>
<CAPTION>
Since Inception
1-Year 5-Year 10-Year (05/01/95)
Cumulative Total Return1
<S> <C> <C> <C> <C>
Class I Shares 7.12% 48.19% 118.51% --
Class II Shares -- -- -- 3.25%
Average Annual Total Return2
Class I Shares 2.60% 7.26% 8.24% --
<S> <C> <C> <C>
Distribution Rate3 Taxable Equivalent Distribution Rate4
Class I Shares 5.49% Class I Shares 9.51%
Class II Shares 5.07% Class II Shares 8.78%
30-Day Standardized Yield5 Taxable Equivalent Yield4
Class I Shares 4.57% Class I Shares 7.92%
Class II Shares 4.18% Class II Shares 7.24%
</TABLE>
1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include the maximum 4.25% initial sales
charge for Class I shares, or the maximum 1.00% initial sales charge and 1.00%
Contingent Deferred Sales Charge (CDSC) for Class II shares, applicable to
shares redeemed within the first 18 months of investment. See note below.
2. Average annual total return represents the average annual change in value of
an investment over the specified periods. The figures reflect the maximum 4.25%
initial sales charge for Class I shares. See note below.
3. Class I shares distribution rate is based on an annualization of the fund's
current 5.7 cents per share monthly dividend and the maximum offering price of
$12.45 on August 31, 1995. Class II shares distribution rate is based on an
annualization of the fund's current 5.1 cents per share monthly dividend and the
maximum offering price of $12.08 on August 31, 1995.
4. Taxable equivalent distribution rate and yield assume the 1995 maximum
combined federal and Michigan state personal income tax bracket of 42.3%, 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
August 31, 1995.
Note: Prior to July 1, 1994, fund shares were offered at a lower initial sales
charge, with dividends reinvested at the public offering price. Thus, actual
total returns for purchasers of shares during that period would have been
somewhat different than noted above. Effective May 1, 1994, the fund eliminated
the sales charge on reinvested dividends and implemented a plan of distribution
under Rule 12b-1, which will affect future performance. Class II shares, which
the fund began offering on May 1, 1995, are subject to different fees and
expenses, which will affect their performance. Please see the prospectus for
more details regarding Class I and Class II shares.
All total return calculations assume reinvestment of dividends and capital gains
at net asset value. Investment return and principal value will fluctuate with
market conditions, and you may have a gain or loss when you sell your shares.
Past performance cannot guarantee future results.
Past expense reductions by the fund's manager increased the fund's Class I total
returns.
FRANKLIN MINNESOTA INSURED TAX-FREE INCOME FUND
Fund Objective:
Seeks to provide high current income exempt from regular federal and Minnesota
state personal income taxes through a portfolio consisting primarily of
Minnesota insured municipal bonds.*
Minnesota's increasingly diverse economy has contributed to its bond credit
strength. Over the long term, the state's economy has outperformed the region
and nation in income and employment, and its unemployment figures remain well
below the national average. The outlook for Minnesota is positive, with on-going
financial reforms and the state's budgetary reserves playing important roles in
Minnesota's plan to protect against future economic uncertainty.
Franklin Minnesota Insured Tax-Free Income Fund
Portfolio Breakdown on August 31, 1995
As a percentage of total net assets
% of total
Sector net assets
Pre-refunded 27.3%
Utilities 18.3%
Housing 16.5%
Hospitals 13.4%
Education 12.3%
General Obligations 5.2%
Other Revenue 2.7%
Tax Allocation Bonds 1.8%
Certificates of Participation 1.3%
Health Care 0.7%
Transportation 0.3%
Special Assessment Bonds 0.2%
For a complete list of portfolio holdings, please see page 34 of this report.
*For investors subject to federal or state alternative minimum tax, a small
portion of these dividends may be subject to such tax. Distributions of capital
gains and of ordinary income from accrued market discount, if any, are generally
taxable. The fund seeks to comply with state requirements for the pass-through
of tax-exempt income dividends, including that at least 95% of the Fund's
tax-exempt income dividends are derived from Minnesota obligations.
Performance Summary
Class I Shares
The Franklin Minnesota Insured Tax-Free Income Fund's Class I share price, as
measured by net asset value, increased to $12.02 on August 31, 1995, from $11.88
on February 28, 1995.
The fund continued to meet its investment objective of providing high current
income to shareholders. For the six-month period ended August 31, 1995, your
fund paid monthly income distributions totaling 33.6 cents ($0.336) per share.
Dividends will vary based on the earnings of the fund's portfolio, and past
distributions are not necessarily predictive of future results.
At the end of the reporting period, your fund's distribution rate was 5.35%,
based on an annualization of the current monthly dividend of 5.6 cents ($0.056)
per share and the maximum offering price of $12.55 on August 31, 1995. This
double tax-free rate is generally higher than the after-tax return on a
comparable taxable investment. For example, if you are in the maximum combined
federal and Minnesota state personal income tax bracket of 44.7%, you would have
to earn 9.67% from a taxable investment to match your fund's tax-free
distribution rate.
GRAPHIC MATERIAL 9 OMMITTED - SEE APPENDIX AT END OF DOCUMENT
Please see the table on page 29 for more information regarding the fund's
performance.
+Assumes shares were purchased and held for the entire accrual period. Since
dividends accrue daily, your actual distribution will vary, depending on the
date your purchased your shares and any account activity during the month.
Income distributions and total return calculations include all income earned by
the fund during the reporting period.
Class II Shares
The Franklin Minnesota Insured Tax-Free Income Fund's Class II share price, as
measured by net asset value, increased to $12.05 on August 31, 1995, from $11.89
on its May 1, 1995 inception date.
The fund continued to meet its investment objective of providing high current
income to shareholders. For the abbreviated four-month period ended August 31,
1995, your fund paid monthly income distributions totaling 18.6 cents ($0.186)
per share. Dividends will vary based on the earnings of the fund's portfolio,
and past distributions are not necessarily predictive of future results.
At the end of the reporting period, your fund's distribution rate was 4.93%,
based on an annualization of the current monthly dividend of 5.0 cents ($0.05)
per share and the maximum offering price of $12.17 on August 31, 1995. This
double tax-free rate is generally higher than the after-tax return on a
comparable taxable investment. For example, if you are in the maximum combined
federal and Minnesota state personal income tax bracket of 44.7%, you would have
to earn 8.92% from a taxable investment to match your fund's tax-free
distribution rate.
GRAPHIC MATERIAL 10 OMMITTED - SEE APPENDIX AT END OF DOCUMENT
Please see the table on page 29 for more information regarding the fund's
performance.
+Assumes shares were purchased and held for the entire accrual period. Since
dividends accrue daily, your actual distribution will vary, depending on the
date your purchased your shares and any account activity during the month.
Income distributions and total return calculations include all income earned by
the fund during the reporting period.
Franklin Minnesota Insured Tax-Free Income Fund
Periods ended August 31, 1995
<TABLE>
<CAPTION>
Since
Inception
1-Year 5-Year 10-Year (05/01/95)
Cumulative Total Return1
<S> <C> <C> <C>
Class I Shares 6.76% 44.84% 123.53% --
Class II Shares -- -- -- 2.93%
Average Annual Total Return2
Class I Shares 2.21% 6.76% 7.91% --
<S> <C> <C> <C>
Distribution Rate3 Taxable Equivalent Distribution Rate4
Class I Shares 5.35% Class I Shares 9.67%
Class II Shares 4.93% Class II Shares 8.92%
30-Day Standardized Yield5 Taxable Equivalent Yield4
Class I Shares 4.68% Class I Shares 8.46%
Class II Shares 4.33% Class II Shares 7.83%
</TABLE>
1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include the maximum 4.25% initial sales
charge for Class I shares, or the maximum 1.00% initial sales charge and 1.00%
Contingent Deferred Sales Charge (CDSC) for Class II shares, applicable to
shares redeemed within the first 18 months of investment. See note below.
2. Average annual total return represents the average annual change in value of
an investment over the specified periods. The figures reflect the maximum 4.25%
initial sales charge for Class I shares. See note below.
3. Class I shares distribution rate is based on an annualization of the fund's
current 5.6 cents per share monthly dividend and the maximum offering price of
$12.55 on August 31, 1995. Class II shares distribution rate is based on an
annualization of the fund's current 5.0 cents per share monthly dividend and the
maximum offering price of $12.17 on August 31, 1995.
4. Taxable equivalent distribution rate and yield assume the 1995 maximum
combined federal and Minnesota state personal income tax bracket of 44.7%, 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 August 31, 1995.
Note: Prior to July 1, 1994, fund shares were offered at a lower initial sales
charge, with dividends reinvested at the public offering price. Thus, actual
total returns for purchasers of shares during that period would have been
somewhat different than noted above. Effective May 1, 1994, the fund eliminated
the sales charge on reinvested dividends and implemented a plan of distribution
under Rule 12b-1, which will affect future performance. Class II shares, which
the fund began offering on May 1, 1995, are subject to different fees and
expenses, which will affect their performance. Please see the prospectus for
more details regarding Class I and Class II shares.
All total return calculations assume reinvestment of dividends and capital gains
at net asset value. Investment return and principal value will fluctuate with
market conditions, and you may have a gain or loss when you sell your shares.
Past performance cannot guarantee future results.
Past expense reductions by the fund's manager increased the fund's Class I total
returns.
FRANKLIN OHIO INSURED TAX-FREE INCOME FUND
Fund Objective:
Seeks to provide high current income exempt from regular federal and Ohio state
personal income taxes through a portfolio consisting primarily of Ohio insured
municipal bonds.*
Since the early 1980s, economic diversification has brought Ohio's employment
mix to an almost equal level with the nation's. However, manufacturing is still
above the national average, at 21.4% of the state's total employment. The
services and trade sectors have grown, diversifying Ohio's overall economy and
contributing to greater economic stability. Improved economic performance within
the state has enabled Ohio to restore depleted financial reserves, allowing the
state to address the potential for future spending pressures and economic
downturns.**
Franklin Ohio Insured Tax-Free Income Fund
Portfolio Breakdown on August 31, 1995
As a percentage of total net assets
% of total
Sector net assets
Pre-refunded 22.8%
Utilities 20.5%
Education 16.9%
Hospitals 14.0%
General Obligations 11.2%
Housing 6.3%
Transportation 3.2%
Industrial 2.6%
Certificates of Participation 2.5%
For a complete list of portfolio holdings, please see page 34 of this report.
*For investors subject to the federal alternative minimum tax, a small portion
of these dividends may be subject to such tax. Distributions of capital gains
and of ordinary income from accrued market discount, if any, are generally
taxable.
** Source:Standard & Poor's Creditweek Municipal, June 12, 1995.
Performance Summary
Class I Shares
The Franklin Ohio Insured Tax-Free Income Fund's Class I share price, as
measured by net asset value, increased to $12.07 on August 31, 1995, from $11.90
on February 28, 1995.
The fund continued to meet its investment objective of providing high current
income to shareholders. For the six-month period ended August 31, 1995, your
fund paid monthly income distributions totaling 34.2 cents ($0.342) per share.
Dividends will vary based on the earnings of the fund's portfolio, and past
distributions are not necessarily predictive of future results.
At the end of the reporting period, your fund's distribution rate was 5.42%,
based on an annualization of the current monthly dividend of 5.7 cents ($0.057)
per share and the maximum offering price of $12.61 on August 31, 1995. This
double tax-free rate is generally higher than the after-tax return on a
comparable taxable investment. For example, if you are in the maximum combined
federal and Ohio state personal income tax bracket of 44.1%, you would have to
earn 9.70% from a taxable investment to match your fund's tax-free distribution
rate.
GRAPHIC MATERIAL 11 OMMITTED - SEE APPENDIX AT END OF DOCUMENT
Please see the table on page 33 for more information regarding the fund's
performance.
+Assumes shares were purchased and held for the entire accrual period. Since
dividends accrue daily, your actual distribution will vary, depending on the
date your purchased your shares and any account activity during the month.
Income distributions and total return calculations include all income earned by
the fund during the reporting period.
Class II Shares
The Franklin Ohio Insured Tax-Free Income Fund's Class II share price, as
measured by net asset value, increased to $12.09 on August 31, 1995, from $11.90
on its May 1, 1995 inception date.
The fund continued to meet its investment objective of providing high current
income to shareholders. For the abbreviated four-month period ended August 31,
1995, your fund paid monthly income distributions totaling 19 cents ($0.19) per
share. Dividends will vary based on the earnings of the fund's portfolio, and
past distributions are not necessarily predictive of future results.
At the end of the reporting period, your fund's distribution rate was 5.01%,
based on an annualization of the current monthly dividend of 5.1 cents ($0.051)
per share and the maximum offering price of $12.21 on August 31, 1995. This
double tax-free rate is generally higher than the after-tax return on a
comparable taxable investment. For example, if you are in the maximum combined
federal and Ohio state personal income tax bracket of 44.1%, you would have to
earn 8.96% from a taxable investment to match your fund's tax-free distribution
rate.
GRAPHIC MATERIAL 12 OMMITTED - SEE APPENDIX AT END OF DOCUMENT
Please see the table on page 33 for more information regarding the fund's
performance.
+Assumes shares were purchased and held for the entire accrual period. Since
dividends accrue daily, your actuasl distribution will vary, depending on the
date your purchased your shares and any account activity during the month.
Income distributions and total return calculations include all income earned by
the fund during the reporting period.
Franklin Ohio Insured Tax-Free Income Fund
Periods ended August 31, 1995
<TABLE>
<CAPTION>
Since
Inception
1-Year 5-Year 10-Year (05/01/95)
Cumulative Total Return1
<S> <C> <C> <C> <C>
Class I Shares 7.18% 47.69% 128.81% --
Class II Shares -- -- -- 3.21%
Average Annual Total Return2
Class I Shares 2.62% 4.92% 8.16% --
<S> <C> <C> <C>
Distribution Rate3 Taxable Equivalent Distribution Rate4
Class I Shares 5.42% Class I Shares 9.70%
Class II Shares 5.01% Class II Shares 8.96%
30-Day Standardized Yield5 Taxable Equivalent Yield4
Class I Shares 4.61% Class I Shares 8.25%
Class II Shares 4.26% Class II Shares 7.62%
</TABLE>
1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include the maximum 4.25% initial sales
charge for Class I shares, or the maximum 1.00% initial sales charge and 1.00%
Contingent Deferred Sales Charge (CDSC) for Class II shares, applicable to
shares redeemed within the first 18 months of investment. See note below.
2. Average annual total return represents the average annual change in value of
an investment over the specified periods. The figures reflect the maximum 4.25%
initial sales charge for Class I shares. See note below.
3. Class I shares distribution rate is based on an annualization of the fund's
current 5.7 cents per share monthly dividend and the maximum offering price of
$12.61 on August 31, 1995. Class II shares distribution rate is based on an
annualization of the fund's current 5.1 cents per share monthly dividend and the
maximum offering price of $12.21 on August 31, 1995.
4. Taxable equivalent distribution rate and yield assume the 1995 maximum
combined federal and Ohio state personal income tax bracket of 44.1%, 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
August 31, 1995.
Note: Prior to July 1, 1994, fund shares were offered at a lower initial sales
charge, with dividends reinvested at the public offering price. Thus, actual
total returns for purchasers of shares during that period would have been
somewhat different than noted above. Effective May 1, 1994, the fund eliminated
the sales charge on reinvested dividends and implemented a plan of distribution
under Rule 12b-1, which will affect future performance. Class II shares, which
the fund began offering on May 1, 1995, are subject to different fees and
expenses, which will affect their performance. Please see the prospectus for
more details regarding Class I and Class II shares.
All total return calculations assume reinvestment of dividends and capital gains
at net asset value. Investment return and principal value will fluctuate with
market conditions, and you may have a gain or loss when you sell your shares.
Past performance cannot guarantee future results.
Past expense reductions by the fund's manager increased the fund's Class I total
returns.
FRANKLIN TAX-FREE TRUST
Statement of Investments in Securities and Net Assets, August 31, 1995
(unaudited)
<TABLE>
<CAPTION>
Face Value
Amount Franklin Arizona Insured Tax-Free Income Fund (Note 1)
Long Term Investments 97.6%
<S> <C> <C>
Arizona State Power Authority, Power Resources Revenue,
$ 600,000 Refunding, Hoover Uprating Project, MBIA Insured, 5.375%, 10/01/13 .......................... $ 571,650
100,000 Refunding, Hoover Uprating Project, MBIA Insured, 5.25%, 10/01/17 ........................... 92,147
750,000 Arizona State Wastewater Management Authority, Wastewater Treatment Financial Assistance
Revenue, AMBAC Insured, 5.75%, 07/01/15 ....................................................... 746,415
400,000 Casa Grande Excise Tax Revenue, FGIC Insured, 6.00%, 04/01/10 .................................. 409,656
100,000 Flagstaff Street & Highway User Revenue, Junior Lien, FGIC Insured, 5.90%, 07/01/10 ............ 103,905
500,000 Maricopa County, IDA, Health Facilities Revenue, Refunding, Evangelist Lutheran Samaritan
Project, AMBAC Insured, 5.35%, 12/01/18 ....................................................... 467,205
700,000 Maricopa County School District No. 3, Tempe Elementary, Refunding, AMBAC Insured, 6.00%,
07/01/13 ...................................................................................... 713,881
700,000 Maricopa County School District No. 11, Peoria Unified, Refunding, AMBAC Insured, 6.10%, 07/01/10 738,339
15,000 Maricopa County School District No. 28, Kyrene Elementary, Series D, FGIC Insured, 6.00%, 07/01/13 15,182
570,000 Maricopa County School District No. 31, Series A, AMBAC Insured, 6.20%, 07/01/13 ............... 590,395
175,000 Maricopa County School District No. 41, Series A, FGIC Insured, Pre-Refunded, 5.40%, 07/01/13 .. 185,952
Maricopa County School District No. 68, Alhambra Elementary,
500,000 Refunding & Improvement, AMBAC Insured, 5.125%, 07/01/13 .................................... 465,395
100,000 Refunding & Improvement, AMBAC Insured, 5.625%, 07/01/13 .................................... 99,712
Maricopa County School District No. 98, Fountain Hills,
500,000 AMBAC Insured, 5.75%, 07/01/12 .............................................................. 499,950
235,000 MBIA Insured, 6.20%, 07/01/10 ............................................................... 249,502
500,000 Maricopa County UHSD No. 216, 1988 Project, FGIC Insured, 5.30%, 07/01/11 ...................... 481,810
700,000 Maricopa County USD No. 80, Chandler, Refunding, FGIC Insured, 5.85%, 07/01/13 ................. 705,509
400,000 Maricopa County USD No. 95, Queens Creek, Series A, AMBAC Insured, 5.70%, 07/01/14 ............ 397,680
100,000 Mesa GO, Refunding, MBIA Insured, 5.00%, 07/01/03 .............................................. 102,398
610,000 Mohave County Hospital District No. 1, Refunding, Kingman Regional Medical Center Project,
FGIC Insured, 6.50%, 06/01/15 ................................................................. 638,999
2,490,000 Navajo County PCR, Refunding, Arizona Public Services Co., Series A, AMBAC Insured,
5.50%, 08/15/28 ............................................................................... 2,328,872
100,000 Northern Arizona University Revenues, Refunding, Series A, AMBAC Insured, 5.75%, 06/01/07 ...... 103,246
100,000 Peoria GO, Projects of 1990, AMBAC Insured, 6.25%, 07/01/12 .................................... 103,687
1,000,000 Phoenix Civic Improvement Corporation, Municipal Facilities Excise Tax Revenue, MBIA Insured,
6.90%, 07/01/21 ............................................................................... 1,081,520
1,000,000 Phoenix Civic Improvement Corporation, Water Systems Revenue, Junior Lien, FGIC Insured,
5.50%, 07/01/24 ............................................................................... 938,230
110,000 Phoenix GO, Refunding, Series B, MBIA Insured, 5.50%, 07/01/16 ................................. 105,135
925,000 Pima County IDA, SFMR, GNMA Secured, 6.625%, 11/01/14 .......................................... 945,091
300,000 Pima County USD No. 1, Tucson Project, Series E, FGIC Insured, 5.40%, 07/01/13 ................. 287,715
100,000 Pima County USD No. 6, Marana School, Series A, FGIC Insured, 5.75%, 07/01/12 .................. 99,777
Puerto Rico Commonwealth GO,
845,000 MBIA Insured, 6.45%, 07/01/17 ............................................................... 901,547
450,000 Refunding, MBIA Insured, 5.25%, 07/01/18 .................................................... 421,020
800,000 Puerto Rico Electric Power Authority Revenue, Series R, FSA Insured, 6.25%, 07/01/17 ........... 821,720
840,000 Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Control Facilities, Financing
Authority Hospital Revenue, Hospital Auxilio Mutuo, Series A, MBIA Insured, 6.25%, 07/01/24 ... 864,637
Salt River Project, Agricultural Improvement and Power District, Electric System Revenue,
350,000 Refunding, Series A, FGIC Insured, 5.50%, 01/01/19 .......................................... 331,083
1,000,000 Refunding, Series D, FGIC Insured, 5.50%, 01/01/25 .......................................... 939,140
1,500,000 Refunding, Series D, FGIC Insured, 6.25%, 01/01/27 .......................................... 1,530,015
120,000 Series C, MBIA Insured, 5.75%, 01/01/20 ..................................................... 117,376
1,000,000 Series C, MBIA Insured, 5.50%, 01/01/28 ..................................................... 930,240
250,000 Santa Cruz County USD, No. 1, Nogales, Series B, AMBAC Insured, Pre-Refunded, 6.10%, 07/01/24 .. 276,915
360,000 Sierra Vista Municipal Property Corporation Facilities Revenue, AMBAC Insured, 6.15%, 01/01/15 . 367,913
$ 375,000 Tucson Airport, Inc., Authority Revenue, Refunding, MBIA Insured, 5.70%, 06/01/13 .............. $ 373,305
650,000 Tucson GO, Series G, 1984, FGIC Insured, 6.25%, 07/01/18 ....................................... 671,086
100,000 Tucson Water Revenue, Refunding, Series A, FGIC Insured, 5.75%, 07/01/18 ....................... 98,245
University of Arizona COP, Administrative & Packaging Facility,
500,000 MBIA Insured, 6.00%, 07/15/16 ............................................................... 506,320
1,625,000 MBIA Insured, 6.00%, 07/15/23 ............................................................... 1,658,638
1,000,000 University of Arizona COP, Residence Life Project, Series A, CGIC Insured, 5.80%, 09/01/13 ..... 1,003,210
120,000 University of Arizona Medical Center Corp., Hospital Revenue, Refunding, MBIA Insured, 5.00%,
07/01/21 ...................................................................................... 105,763
200,000 Yavapai County Community College District, Refunding, FGIC Insured, 5.40%, 07/01/10 ............ 197,774
250,000 Yavapai County, Elementary School District No. 6, Cottonwood-Oak Creek, 1993 Project,
AMBAC Insured, Series B, 6.70%, 07/01/09 ...................................................... 273,923
775,000 Yavapai County, Elementary School District No. 028, Refunding, Camp Verde, FGIC Insured,
6.00%, 07/01/09 ............................................................................... 812,013
300,000 Yavapai County USD No. 22, Humboldt, Series A, FGIC Insured, 5.95%, 07/01/14 ................... 303,524
425,000 Yuma and La Paz Counties Community College District, Refunding, Arizona Western College,
AMBAC Insured, 5.40%, 07/01/10 ................................................................ 415,641
--------------
Total Long Term Investments (Cost $27,611,734) ........................................... 28,190,003
--------------
eShort Term Investments 1.0%
300,000 Maricopa County IDA, Hospital Facilities Revenue, Samaritan Health Services, Daily VRDN and
Put, 3.45%, 12/01/08 (Cost $300,000) .......................................................... 300,000
--------------
Total Investments (Cost $27,911,734) 98.6% .......................................... 28,490,003
Other Assets and Liabilities, Net 1.4 % ............................................. 388,772
--------------
Net Assets 100.0% ................................................................... $28,878,775
==============
At August 31, 1995, the net unrealized appreciation based on the
cost of investments for income tax purposes of $27,911,734 was
as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ................................................................. $ 750,928
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ................................................................. (172,659)
--------------
Net unrealized appreciation .................................................................. $ 578,269
==============
</TABLE>
PORTFOLIO ABBREVIATIONS:
AMBAC - American Municipal Bond Assurance Corp.
CGIC - Capital Guaranty Insurance Co.
COP - Certificate of Participation
FGIC - Financial Guaranty Insurance Co.
FSA - Financial Security Assistance
GNMA - Government National Mortgage Association
GO - General Obligation
IDA - Industrial Development Authority
MBIA - Municipal Bond Investors Assurance Corp.
PCR - Pollution Control Revenue
SFMR - Single Family Mortgage Revenue
UHSD - Unified High School District
USD - Unified School District
eVariable 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 upon
short notice prior to specified dates. The interest rate may change on specified
dates in relationship with changes in a designated rate (such as the prime
interest rate or U.S. Treasury bills rate).
The accompanying notes are an integral part of these financial statements.
FRANKLIN TAX-FREE TRUST
Statement of Investments in Securities and Net Assets, August 31, 1995
(unaudited)
<TABLE>
<CAPTION>
Face Value
Amount Franklin Florida Insured Tax-Free Income Fund (Note 1)
Investments 98.1%
<S> <C> <C>
$ 500,000 Alachua Utilities Revenue, Refunding, AMBAC Insured, 5.75%, 4/01/20 ............................ $ 492,860
100,000 Apopka Utility System Revenue, Refunding, FGIC Insured, 6.00%, 12/01/13 ........................ 101,334
2,435,000 Citrus County PCR, Refunding, Florida Power Co., MBIA Insured, 6.625%, 01/01/27 ................ 2,623,372
1,000,000 Clay County Utilities System Revenue, Series B, FGIC Insured, 5.25%, 11/01/13 .................. 945,110
1,000,000 Florida State Board of Education GO, Capital Outlay, Series E, MBIA Insured, 5.80%, 06/01/24 ... 982,050
1,000,000 Florida State Correctional Privatization Community COP, Correctional Facilities, Bay County, MBIA
Insured, 6.00%, 08/01/15 ...................................................................... 1,013,500
600,000 Florida State Department of General Services Division, Facilities Management Revenue,
Facilities Pool, Series A, FSA Insured, 5.80%, 09/01/24 ....................................... 591,708
850,000 Fort Pierce Utilities Authority Revenue, Refunding, AMBAC Insured, 5.25%, 10/01/12 ............. 808,563
2,000,000 Hernando County Water and Sewer Revenue, Refunding & Improvement, FGIC Insured, 6.00%,
06/01/19 ...................................................................................... 2,014,640
1,500,000 Hillsborough County IDA, IDR, University Community Hospital, MBIA Insured, 5.80%, 08/15/24 ..... 1,477,185
1,500,000 Hillsborough County IDA, PCR, Refunding, Tampa Electric Company Project, MBIA Insured,
6.25%, 12/01/34 ............................................................................... 1,533,840
280,000 Hillsborough County, Port District Revenue, Refunding, Tampa Port Authority, Series B, FSA Insured,
5.70%, 06/01/12 ............................................................................... 277,883
2,000,000 Hillsborough County, Port District Special Reference Revenue, Refunding, Tampa Port Authority,
FSA Insured, 6.00%, 06/01/20 .................................................................. 1,992,100
1,000,000 Jacksonville Water & Sewer Revenue, United Water Project, AMBAC Insured, 6.35%, 08/01/25 ....... 1,028,540
350,000 Kissimmee Utility Authority Electric System Revenue, Refunding & Improvement, FGIC Insured,
5.50%, 10/01/15 ............................................................................... 337,624
1,415,000 Lake Clarke Shores, Utility Systems Revenue, Refunding & Improvement, FGIC Insured, 5.80%,
10/01/18 ...................................................................................... 1,411,349
500,000 Lakeland Utility Tax Revenue, Refunding & Improvement, Series A, FGIC Insured, 6.00%, 10/01/17 . 506,835
1,770,000 Lee County Capital and Transportation Facilities Revenue, Refunding, Series A, MBIA Insured,
5.55%, 10/01/18 ............................................................................... 1,711,838
500,000 Lee County Transportation Facilities Revenue, MBIA Insured, 5.75%, 10/01/27 .................... 490,640
1,000,000 Martin County Consolidated Utilities Systems Revenue, Refunding & Improvement, FGIC Insured,
6.00%, 10/01/24 ............................................................................... 1,010,420
1,000,000 Martin County Improvement Revenue, Refunding, AMBAC Insured, 6.00%, 10/01/14 ................... 1,016,110
Martin County Water and Waste Water System Revenue,
500,000 Martin Downs System, FGIC Insured, 5.625%, 10/01/13 ......................................... 496,890
900,000 Refunding, Series A, FGIC Insured, 5.70%, 10/01/23 .......................................... 886,329
2,000,000 Miramar Wastewater Improvement Assessment Revenue, FGIC Insured, 6.75%, 10/01/25 ............... 2,185,760
450,000 Naples Hospital Revenue, Refunding, Naples Community Hospital, Inc. Project, MBIA Insured,
5.25%, 10/01/09 ............................................................................... 441,212
1,300,000 Orange County Capital Improvement Revenue, Refunding, AMBAC Insured, 6.00%, 10/01/22 ........... 1,305,330
Orange County Health Facilities Authority Revenue,
2,400,000 Refunding, Orlando Regional Healthcare Hospital, Series A, MBIA Insured, 6.00%, 11/01/24 .... 2,406,456
1,000,000 Sunbelt Adventist Health, Series B, CGIC Insured, 6.75%, 11/15/21 ........................... 1,080,670
1,000,000 Orange County Public Services Tax Revenue, FGIC Insured, 6.00%, 10/01/24 ....................... 1,005,060
500,000 Orange County Sales Tax Revenue, FGIC Insured, 6.125%, 01/01/19 ................................ 504,760
1,875,000 Orlando and Orange County Expressway Authority Revenue, Refunding, Senior Lien, FGIC Insured,
5.50%, 07/01/18 ............................................................................... 1,781,419
1,520,000 Orlando Utilities Commission, Water and Electric Revenue, Series A, MBIA Insured, 5.50%, 10/01/26 1,423,556
1,900,000 Osceola County School Board COP, Series A, AMBAC Insured, 6.00%, 06/01/19 ...................... 1,913,243
1,225,000 Osceola County Transportation Revenue, Osceola Parkway Project, MBIA Insured, 6.10%, 04/01/17 .. 1,247,822
1,000,000 Palm Beach County, Criminal Justice Facilities Revenue, FGIC Insured, 6.00%, 06/01/15 .......... 1,013,310
1,000,000 Pinellas County Sewer Revenue, FGIC Insured, 6.00%, 10/01/24 ................................... 1,009,680
1,000,000 Puerto Rico Commonwealth GO, FSA Insured, 6.00%, 07/01/22 ...................................... 1,009,430
1,000,000 Puerto Rico Electric Power Authority Revenue, Series P, CGIC Insured, 7.00%, 07/01/21 .......... 1,077,930
545,000 Sanford Water and Sewer Revenue, Refunding, AMBAC Insured, 5.25%, 10/01/14 ..................... 513,657
Sarasota County Utility System Revenue,
$ 500,000 FGIC Insured, 6.50%, 10/01/14 ............................................................... $ 543,180
100,000 Refunding, FGIC Insured, 5.50%, 10/01/22 .................................................... 95,791
500,000 Sarasota-Manatee Airport Authority Revenue, Refunding, MBIA Insured, 5.625%, 08/01/14 .......... 495,090
555,000 Sebring Water and Waste Water Revenue, AMBAC Insured, 5.50%, 01/01/23 .......................... 531,529
Seminole County School Board COP,
1,000,000 Series A, MBIA Insured, 6.125%, 07/01/14 .................................................... 1,021,710
1,000,000 Series A, MBIA Insured, 6.125%, 07/01/19 .................................................... 1,016,100
1,000,000 St. Lucie County Utilities System Revenue, Refunding, FGIC Insured, ETM, 5.50%, 10/01/15 ....... 976,220
410,000 St. Petersburg Beach GO, AMBAC Insured, 5.25%, 10/01/13 ........................................ 385,371
Stuart Utilities Revenue,
500,000 FGIC Insured, 6.70%, 10/01/14 ............................................................... 541,355
500,000 FGIC Insured, 6.80%, 10/01/24 ............................................................... 544,590
1,710,000 Sumter County Capital Improvement Revenue, Refunding, MBIA Insured, 5.375%, 06/01/19 ........... 1,610,478
490,000 Titusville, Water and Sewer Revenue, MBIA Insured, 6.20%, 10/01/14 ............................. 507,439
200,000 University of Florida, University Housing Revenues, MBIA Insured, 5.50%, 07/01/23 .............. 191,744
1,000,000 Vero Beach Electric Revenue, Refunding, Series A, MBIA Insured, 5.375%, 12/01/21 ............... 927,760
1,000,000 Volusia County, Health Facilities Authority Revenue, Hospital Facilities, Memorial Health,
Refunding & Improvement, AMBAC Insured, 5.75%, 11/15/20 ....................................... 981,630
500,000 West Melbourne Water and Sewer Revenue, Refunding & Improvement, FGIC Insured, 6.75%, 10/01/14 . 553,234
--------------
Total Investments (Cost $53,903,775) 98.1% ........................................... 54,593,236
Other Assets and Liabilities, Net 1.9% ............................................... 1,033,902
--------------
Net Assets 100.0% .................................................................... $55,627,138
==============
At August 31, 1995, the net unrealized appreciation based on the
cost of investments for income tax purposes of $53,903,775 was
as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost .................................................................. $ 1,343,067
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value .................................................................. (653,606)
--------------
Net unrealized appreciation .................................................................. $ 689,461
==============
PORTFOLIO ABBREVIATIONS:
AMBAC - American Municipal Bond Assurance Corp.
CGIC - Capital Guaranty Insurance Co.
COP - Certificate of Participation
ETM - Escrow to Maturity
FGIC - Financial Guaranty Insurance Corp.
FSA - Financial Security Assistance
GO - General Obligation
IDA - Industrial Development Authority
IDR - Industrial Development Revenue
MBIA - Municipal Bond Investors Assurance Corp.
PCR - Pollution Control Revenue
The accompanying notes are an integral part of these financial statements.
FRANKLIN TAX-FREE TRUST
Statement of Investments in Securities and Net Assets, August 31, 1995 (unaudited)
Face Value
Amount Franklin Insured Tax-Free Income Fund (Note 1)
Long Term Investments 97.6%
<S> <C> <C>
Alabama 2.4%
Alabama HFA, SFMR,
$ 4,600,000 HMR Program, Series A-1, GNMA Secured, 7.80%, 10/01/20 ................................... $ 4,797,018
1,340,000 Series 1986-A, MBIA Insured, 7.125%, 10/01/14 ............................................ 1,374,304
1,000,000 Alabama State Board Educational Revenue, Southern Union State Junior College,
MBIA Insured, 6.50%, 07/01/12 ............................................................... 1,064,640
100,000 Alabama Water Authority, PCR, AMBAC Insured, 6.25%, 08/15/14 ................................. 102,330
2,000,000 Alabama Water PCA, Series A, AMBAC Insured, 5.60%, 08/15/16 .................................. 1,932,960
1,715,000 Auburn Governmental Utility Services Corp., Waste Water Revenue,
Merscot-Auburn L.P., FGIC Insured, 7.30%, 01/01/12 .......................................... 1,841,790
Daphne Utilities Board, Water, Gas and Sewer Revenue,
4,030,000 Refunding, Series 1990-B, FGIC Insured, 7.30%, 06/01/10 .................................. 4,355,584
2,000,000 Series B, Capital Improvement Bonds, FGIC Insured, 7.35%, 06/01/20 ....................... 2,157,020
1,100,000 Druit Community Hospital Health Care Authority, Facilities Revenue, MBIA Insured, Pre-Refunded,
7.875%, 06/01/07 ............................................................................ 1,191,234
2,285,000 Houston County, Health Care Authority, Hospital Revenue, Refunding, Alabama Medical Center,
MBIA Insured, 5.50%, 10/01/19 ............................................................... 2,154,207
300,000 Huntsville Health Care Facilities Authority Revenue, Series A, MBIA Insured, 6.375%, 06/01/22 308,700
1,500,000 Marshall County Limited Obligation, AMBAC Insured, Pre-Refunded, 7.00%, 02/01/12 ............. 1,701,585
500,000 Mobile, Board of Water and Sewer Commissioners, Water and Sewer Utilities Revenue, Series A,
FGIC Insured, Pre-Refunded, 9.375%, 01/01/12 ................................................ 557,385
5,000,000 Morgan County, Decatur Health Care Authority, Hospital Revenue, Refunding,
Decatur General Hospital, Connie Lee Insured, 6.375%, 03/01/24 .............................. 5,105,300
1,960,000 Phenix City GO, Refunding, AMBAC Insured, 5.75%, 03/01/13 .................................... 1,955,688
1,000,000 Saraland Water and Sewer Utilities Revenue, FGIC Insured, Pre-Refunded, 8.75%, 12/01/07 ...... 1,031,610
4,000,000 University of Alabama, University Hospital Revenues, Refunding, Huntsville, Series A,
MBIA Insured, 5.50%, 05/01/18 ............................................................... 3,782,040
5,000,000 West Jefferson IDB, PCR, Refunding, Alabama Power Co., Miller Plant Co., Series C, MBIA Insured,
6.05%, 05/01/23 ............................................................................. 5,011,550
--------------
40,424,945
--------------
Alaska 4.0%
Alaska Energy Authority Power Revenue, Bradley Lake Hydro Project,
5,795,000 MBIA Insured, 7.25%, 07/01/21 ............................................................ 6,238,781
5,000,000 Series 1, BIG Insured, 7.25%, 07/01/09 ................................................... 5,394,650
4,765,000 Series 1, BIG Insured, 7.25%, 07/01/16 ................................................... 5,096,739
3,205,000 Series 1, BIG Insured, 6.25%, 07/01/21 ................................................... 3,256,729
18,500,000 Alaska Energy Utilities Revenue, City and Boro of Sitka, Refunding, CGIC Insured, 6.75%, 07/01/20 19,697,875
5,000,000 Anchorage Electric Utility Revenue, Refunding, Senior Lien, Series A, MBIA Insured, 7.125%,
06/01/06 .................................................................................... 5,476,500
Anchorage GO,
2,765,000 General Purpose, AMBAC Insured, Pre-Refunded, 7.30%, 08/01/10 ............................ 3,114,994
5,000,000 Refunding, AMBAC Insured, 7.20%, 06/01/17 ................................................ 5,285,800
3,505,000 Refunding, AMBAC Insured, 6.25%, 06/01/23 ................................................ 3,525,399
1,500,000 Series A, FGIC Insured, Pre-Refunded, 7.75%, 05/01/06 .................................... 1,567,500
2,000,000 Anchorage School District, Series A, MBIA Insured, 6.30%, 02/01/12 ........................... 2,050,580
5,100,000 Anchorage Water Revenue, Refunding, Senior Lien, MBIA Insured, 7.25%, 08/01/14 ............... 5,488,773
1,035,000 Ketchikan GO, AMBAC Insured, 5.50%, 11/15/13 ................................................. 986,873
500,000 University of Alaska, COP, Series 1990, CGIC Insured, 7.375%, 10/01/07 ....................... 555,600
250,000 University of Alaska Revenues, Series B, AMBAC Insured, 6.50%, 10/01/17 ...................... 258,118
--------------
67,994,911
--------------
Arizona 2.5%
Arizona State Municipal Financing Program, COP,
$ 2,250,000 Phoenix Water, Series 10, BIG Insured, Pre-Refunded, 7.90%, 08/01/17 ..................... $ 2,432,115
6,000,000 Series 1986-20, BIG Insured, ETM 08/01/07, 7.70%, 08/01/10 ............................... 7,068,300
10,000,000 Series 1986-26, BIG Insured, 7.70%, 08/01/05 ............................................. 10,917,500
2,200,000 Chandler Water and Sewer Revenue, Refunding, FGIC Insured, 7.00%, 07/01/12 ................... 2,401,190
Cochise County USD No. 68, Sierra Vista,
500,000 Refunding, FGIC Insured, 7.50%, 07/01/10 ................................................. 596,450
3,000,000 Series B, FGIC Insured, Pre-Refunded, 7.625%, 07/01/10 ................................... 3,447,120
300,000 Maricopa County IDA, Hospital Facility Revenue, Samaritan Health Services, Series A, Refunding,
MBIA Insured, 7.00%, 12/01/16 ............................................................... 346,017
Maricopa County USD No. 80, Chandler,
775,000 FGIC Insured, Pre-Refunded, 7.20%, 07/01/07 .............................................. 876,331
825,000 FGIC Insured, Pre-Refunded, 7.20%, 07/01/08 .............................................. 932,869
500,000 FGIC Insured, Pre-Refunded, 7.25%, 07/01/09 .............................................. 566,450
1,000,000 Maricopa County USD No. 98, Fountain Hills, Series A, FGIC Insured, Pre-Refunded, 7.10%,
07/01/10 .................................................................................... 1,107,930
1,000,000 Maricopa UHSD No. 216, Refunding & Improvement, FGIC Insured, 6.70%, 07/01/11 ................ 1,109,230
1,000,000 Mesa IDA, Health Care Facilities Revenue, Refunding, Western Health Network, Inc.,
Series B-2, BIG Insured, 7.50%, 01/01/08 .................................................... 1,087,330
500,000 Mohave County USD No. 1, Lake Havasu Project, Series 1991-B, AMBAC Insured, 5.375%, 07/01/11 . 484,680
890,000 Phoenix GO, Refunding, Series B, MBIA Insured, 5.50%, 07/01/16 ............................... 850,635
Pima County Sewer Revenue,
230,000 FGIC Insured, Pre-Refunded, 6.75%, 07/01/15 .............................................. 258,621
270,000 FGIC Insured, 6.75%, 07/01/15 ............................................................ 287,307
Salt River Project, Agricultural Improvement and Power District, Electric System Revenue,
1,150,000 Refunding, Series A, FGIC Insured, 5.50%, 01/01/19 ....................................... 1,087,843
300,000 Series A, MBIA Insured, 6.50%, 01/01/22 .................................................. 310,182
5,000,000 Tucson Local Development Corp., Leasehold Revenue, Series F, FGIC Insured, Pre-Refunded,
7.30%, 07/01/10 ............................................................................. 5,447,000
--------------
41,615,100
--------------
Arkansas .3%
Arkansas State Development Finance Authority Water Revenue,
2,000,000 Refunding, Series A, MBIA Insured, 6.50%, 07/01/10 ....................................... 2,175,200
1,400,000 Series A, MBIA Insured, Pre-Refunded, 7.00%, 06/01/14 .................................... 1,589,728
25,000 Pulaski County Health Facilities Board Hospital Revenue, St. Vincent's Infirmary, MBIA Insured,
Pre-Refunded, 10.00%, 09/01/12 .............................................................. 30,169
500,000 Saline County Hospital Revenue, Connie Lee Insured, 6.00%, 09/01/19........................... 504,675
--------------
4,299,772
--------------
California 2.1%
3,750,000 California State Public Works, Board Lease Revenue, University of California Projects, Series A,
AMBAC Insured, 6.40%, 12/01/16 .............................................................. 3,860,100
15,000,000 gCorona COP, Corona Community Hospital Project, Pre-Refunded, 9.425%, 09/01/20 ................ 20,394,900
1,515,000 Lancaster RDA, Refunding, Residential Redevelopment, MBIA Insured, 6.10%, 08/01/19 ........... 1,522,711
250,000 Oakland RDA, Refunding, Central District Redevelopment, AMBAC Insured, 5.50%, 02/01/14 ....... 239,388
1,000,000 San Diego, Regional Building Authority Lease Revenue, Refunding, San Miguel Fire Protection,
Series A, MBIA Insured, 5.65%, 01/01/20 ..................................................... 951,740
70,000 San Jose RDA, Merged Area Redevelopment Project, Series A, AMBAC Insured, Pre-Refunded,
6.90%, 08/01/11 ............................................................................. 75,112
1,000,000 Santee, Public Financing Authority Revenue, Redevelopment, Refinancing, City Hall Project,
MBIA Insured, 5.45%, 02/01/14 ............................................................... 941,270
California (cont.)
$ 2,250,000 Stockton, East Water District, 1992 Project, Series A, AMBAC Insured, 6.40%, 04/01/22 ........ $ 2,314,238
4,630,000 Suisun-Solano Water Authority Revenue, Refunding, CGIC Insured, 5.55%, 05/01/17 .............. 4,336,273
--------------
34,635,732
--------------
Colorado 4.9%
3,500,000 Adams and Weld Counties GO, Brighton School District No. 27-J, MBIA Insured, 6.30%, 12/01/12 . 3,654,490
1,000,000 Arapahoe County Building Finance Corp., COP, CGIC Insured, 7.50%, 12/01/10 ................... 1,083,660
8,695,000 Arapahoe County COP, Refunding, CGIC Insured, 6.625%, 12/01/16 ............................... 9,340,952
1,500,000 Castle Pines Metropolitan District, Refunding & Improvement, Series 1990, CGIC Insured, 7.625%,
12/01/15 .................................................................................... 1,675,230
Colorado Health Facilities Authority Revenue,
1,174,000 Community Provider Project, Series 1991-A, CGIC Insured, 7.25%, 07/15/17 ................. 1,269,329
1,750,000 Refunding, Sisters of Charity Health Care, Series A, AMBAC Insured, 6.00%, 05/15/22 ...... 1,750,875
3,000,000 Rose Medical Center, MBIA Insured, Pre-Refunded, 7.00%, 08/15/21 ......................... 3,433,170
Colorado Post Secondary Educational Facilities Authority Revenue,
1,000,000 Connie Lee Insured, 6.625%, 06/01/13 ..................................................... 1,046,330
1,000,000 Refunding, University of Denver Project, Connie Lee Insured, 6.00%, 03/01/10 ............. 1,018,070
2,700,000 University of Denver Project, Connie Lee Insured, 6.25%, 03/01/12 ........................ 2,778,651
2,700,000 University of Denver Project, Connie Lee Insured, 6.25%, 03/01/18 ........................ 2,751,516
1,000,000 Colorado Springs, Utilities Revenue, Refunding & Improvement, Series A, MBIA Insured, 5.125%,
11/15/18 .................................................................................... 900,320
Colorado State Board of Agriculture Revenue, University of Aux Facilities,
800,000 Refunding & Improvement, MBIA Insured, 6.40%, 03/01/11 ................................... 839,544
1,000,000 Refunding & Improvement, MBIA Insured, 6.40%, 03/01/17 ................................... 1,042,790
2,000,000 Colorado Water Resources and Power Development Authority Revenue, Series A, FGIC Insured,
6.70%, 11/01/12 ............................................................................. 2,134,060
4,000,000 Denver City and County Airport Revenue, Series B, MBIA Insured, 5.75%, 11/15/17 .............. 3,825,880
1,500,000 Denver City and County Board, Water Commissioner, COP, FGIC Insured, 6.625%, 11/15/11 ........ 1,610,340
3,000,000 Denver City and County Hospital Revenue, Children's Hospital Association Project, FGIC Insured,
6.00%, 10/01/15 ............................................................................. 3,049,680
2,000,000 Denver City and County Revenue, Mercy Medical Center Project, MBIA Insured, Pre-Refunded,
7.75%, 05/01/14 ............................................................................. 2,214,800
1,445,000 Denver City and County SFMR, GNMA Secured, Series A, 8.125%, 12/01/20 ........................ 1,501,557
2,000,000 Douglas County School District No. 1, Douglas and Elbert Counties COP, Series D, FGIC Insured,
6.80%, 12/01/11 ............................................................................. 2,143,200
970,000 El Paso County SFMR, Series 1990-A, GNMA Secured, 8.00%, 09/01/22 ............................ 1,017,462
3,600,000 Garfield, Pitkin and Eagle Counties, Reorganized School District No. 1, MBIA Insured, 6.60%, 12/15/14 3,799,512
2,000,000 Goldsmith Metropolitan District, Refunding, MBIA Insured, 6.125%, 12/01/12 ................... 2,051,980
1,000,000 Havana Water and Sanitary District Sewer Revenue, CGIC Insured, Pre-Refunded, 7.375%,
09/15/14 .................................................................................... 1,095,830
2,000,000 Inverness Water and Sanitation District GO, Arapahoe and Douglas Counties,
Refunding and Improvement, BIG Insured, Pre-Refunded, 8.125%, 12/01/05 ...................... 2,121,640
Jefferson County COP,
2,000,000 MBIA Insured, Pre-Refunded, 7.125%, 12/01/10 ............................................. 2,297,680
5,000,000 Refunding, MBIA Insured, 6.65%, 12/01/08 ................................................. 5,447,150
5,000,000 Jefferson County, School District No. R-1, AMBAC Insured, 6.25%, 12/15/12 .................... 5,170,000
510,000 Jefferson County SFMR, Refunding, Series A, MBIA Insured, 8.875%, 10/01/13 ................... 551,555
3,000,000 La Plata County, School District No. R-9, Durango City, FGIC Insured, 6.55%, 11/01/12 ........ 3,173,310
1,000,000 Morgan County PCR, Refunding, First Mortgage, Public Service Co., Series A, MBIA Insured,
5.50%, 06/01/12 ............................................................................. 977,460
1,600,000 Parker Water and Sanitation District, Water and Sewer Revenue, Refunding, FGIC Insured,
6.20%, 10/01/15 ............................................................................. 1,652,128
Colorado (cont.)
$ 2,400,000 Pueblo School District No. 60 Project-A, COP, MBIA Insured, 7.25%, 12/01/09................... $ 2,579,328
2,500,000 Regional Transportation District, Sales Tax Revenue, Refunding & Improvement, FGIC Insured,
6.25%, 11/01/12 ............................................................................. 2,602,300
--------------
83,601,779
--------------
Connecticut .6%
Connecticut Health and Educational Facilities Authority Revenue,
2,000,000 Danbury Hospital, Series E, MBIA Insured, 6.50%, 07/01/14 ................................ 2,098,320
2,000,000 Trinity College, Series D, FGIC Insured, 6.125%, 07/01/24 ................................ 2,041,820
2,900,000 Yale-New Haven Hospital, Issue I, MBIA Insured, 7.10%, 07/01/25 .......................... 3,196,815
2,000,000 New Haven Air Rights Parking Facility Revenue, Refunding, MBIA Insured, 6.50%, 12/01/15 ...... 2,102,440
--------------
9,439,395
--------------
Delaware .3%
1,000,000 Delaware State EDA, PCR, Refunding, Series B, AMBAC Insured, 6.75%, 05/01/19 ................. 1,065,910
2,900,000 Delaware State Health Facilities Authority Revenue, Refunding, Medical Center, MBIA Insured,
7.00%, 10/01/15 ............................................................................. 3,115,122
250,000 Delaware Transportation Authority System Revenue, MBIA Insured, Pre-Refunded, 7.75%, 07/01/08 277,385
--------------
4,458,417
--------------
District of Columbia .2%
965,000 District of Columbia HFA, RMR, Series 1986-1, FGIC Insured, 7.75%, 09/01/16 .................. 1,003,031
2,000,000 District of Columbia Revenue, Howard University, Series A, MBIA Insured, 8.00%, 10/01/17 ..... 2,152,560
--------------
3,155,591
--------------
Florida 2.9%
1,800,000 Cape Coral, Franchise Fees Revenue, AMBAC Insured, 5.40%, 12/01/13 ........................... 1,723,338
2,750,000 Dade County Health Facilities Authority, Hospital Revenue, Mt. Sinai Medical Center Project,
CGIC Insured, Pre-Refunded, 8.40%, 12/01/17 ................................................. 3,057,670
200,000 Dade County Seaport Revenue, Refunding, Series E, MBIA Insured, 8.00%, 10/01/08 .............. 250,662
15,000 Dade County, Series DD, MBIA Insured, 7.75%, 10/01/18 ........................................ 15,741
725,000 Florida HFA, SFMR, Series 1, FGIC Insured, 8.00%, 12/15/13 ................................... 754,123
2,000,000 Florida North Port Utility Revenue, FGIC Insured, 6.20%, 10/01/12 ............................ 2,071,380
200,000 Florida State Municipal Power Agency Revenue, Refunding, Stanton Project, MBIA Insured,
6.00%, 10/01/15 ............................................................................. 201,492
Florida Turnpike Authority Revenue,
3,000,000 Series A, AMBAC Insured, Pre-Refunded, 7.20%, 07/01/11 ................................... 3,473,460
710,000 Series A, FGIC Insured, 6.35%, 07/01/22 .................................................. 737,811
1,290,000 Series A, FGIC Insured, Pre-Refunded, 6.35%, 07/01/22 .................................... 1,438,221
25,000 Fort Myers Utility Revenue, Refunding, Series A, BIG Insured, 6.00%, 10/01/19 ................ 25,079
1,000,000 Hillsborough County IDAR, PCR, Refunding, MBIA Insured, 6.25%, 12/01/34 ...................... 1,022,560
3,000,000 Hillsborough County IDAR, University Community Hospital, MBIA Insured, 5.80%, 08/15/24 ....... 2,954,370
3,865,000 Hillsborough County Port, District Special Revenue, Refunding, FSA Insured, 6.00%, 06/01/20 .. 3,849,733
100,000 Miami, Refunding, MBIA Insured, Pre-Refunded, 7.40%, 04/01/05 ................................ 112,224
2,800,000 Naples Hospital Revenue, Refunding, Naples Community Hospital, Inc. Project, MBIA Insured,
5.25%, 10/01/09 ............................................................................. 2,745,316
1,000,000 Opa-Locka Capital Improvement Revenue, Refunding, FGIC Insured, 6.125%, 01/01/24 ............. 1,014,010
960,000 Orange City Utilities System Revenue, Refunding & Improvement, AMBAC Insured, 7.20%, 10/01/17 1,027,344
100,000 Orange County Capital Improvement Revenue, Series B, MBIA Insured, Pre-Refunded,
7.70%, 10/01/18 ............................................................................. 112,045
1,000,000 Orange County Health Facilities Authority, Hospital Revenue, Orlando Regional Health Care,
Series A, Refunding, MBIA Insured, 6.00%, 11/01/24 .......................................... 1,002,690
Florida (cont.)
Orlando and Orange County Expressway Authority Revenue,
$ 100,000 Junior Lien, FGIC Insured, 6.50%, 07/01/10 ............................................... $ 109,821
225,000 Junior Lien, FGIC Insured, 6.50%, 07/01/12 ............................................... 244,796
2,765,000 Refunding, Senior Lien, FGIC Insured, 5.25%, 07/01/23 .................................... 2,503,099
15,000 Orlando Waste Water System Revenue, Refunding, Series A, AMBAC Insured, Pre-Refunded,
7.375%, 10/01/11 ............................................................................ 15,861
1,000,000 Osceola County Transportation Revenue, Parkway Project, MBIA Insured, 6.10%, 04/01/17 ........ 1,018,630
4,000,000 Palm Beach County Solid Waste Authority Revenue, BIG Insured, 8.375%, 07/01/10 ............... 4,384,800
1,000,000 Panama City Water and Sewer Revenue, Refunding & Improvement, AMBAC Insured,
5.625%, 06/01/19 ............................................................................ 972,470
1,000,000 Polk County IDAR, Winter Haven Hospital, Series 2, MBIA Insured, 6.25%, 09/01/15 ............. 1,032,970
Port Orange Water and Sewer Revenue,
635,000 Refunding, Junior Lien, AMBAC Insured, 5.375%, 10/01/12 .................................. 615,328
2,700,000 Refunding, Junior Lien, AMBAC Insured, 5.25%, 10/01/21 ................................... 2,474,442
1,970,000 Royal Palm Beach Utilities System Revenue, Series B, AMBAC Insured, Pre-Refunded,
8.875%, 10/15/15 ............................................................................ 2,199,288
2,010,000 Sarasota-Manatee Airport Authority Revenue, Refunding, MBIA Insured, 5.625%, 08/01/14 ........ 1,990,262
250,000 Sumter County School District Revenue, Multi-District Loan Program, CGIC Insured, 7.15%, 11/01/15 292,415
2,000,000 Tamarac Water and Sewer Utility Revenue, AMBAC Insured, Pre-Refunded, 8.25%, 10/01/11 ........ 2,132,260
1,200,000 Temple Terrace Water and Sewer Revenue, FGIC Insured, 6.25%, 10/01/12 ........................ 1,244,244
--------------
48,819,955
--------------
Georgia 1.2%
2,860,000 Bartow County Water and Sewage Revenue, Refunding, AMBAC Insured, Pre-Refunded,
8.00%, 09/01/15 ............................................................................. 3,218,558
1,535,000 Brunswick Water and Sewer Revenue, Refunding & Improvement, MBIA Insured, 6.10%, 10/01/14 .... 1,609,401
2,000,000 Burke County Development Authority PCR, Georgia Power Co., Vogtle Plant, Seventh Series,
MBIA Insured, 6.625%, 10/01/24 .............................................................. 2,075,020
1,000,000 Cherokee County Water and Sewage Revenue, Refunding, MBIA Insured, 6.90%, 08/01/18 ........... 1,118,600
1,500,000 Columbia County Water and Sewage Revenue, Refunding, AMBAC Insured, 6.25%, 06/01/12 .......... 1,545,510
1,060,000 Fitzgerald Housing Authority Mortgage Revenue, Refunding, Bridge Creek, Series A,
MBIA Insured, 6.50%, 07/01/24 ............................................................... 1,069,551
Fulton de Kalb Hospital Authority Revenue, COP,
200,000 Grady Memorial Hospital Project, AMBAC Insured, Pre-Refunded, 6.90%, 01/01/15 ............ 226,130
300,000 Refunding, MBIA Insured, 5.50%, 01/01/20 ................................................. 284,208
5,000,000 Georgia Municipal Electric Authority, Power Revenue, Series EE, AMBAC Insured, 6.65%, 01/01/21 5,171,900
3,250,000 Macon-Bibb County Hospital Authority Revenue, Medical Center, FGIC Insured, Pre-Refunded,
7.00%, 08/01/14 ............................................................................. 3,623,263
1,000,000 Marietta, City Development Authority Revenue, Life College, Inc. Project, CGIC Insured,
7.20%, 12/01/09 ............................................................................. 1,078,450
10,000 Metropolitan Atlanta Rapid Transit Authority, Sales Tax Revenue, Series J, FGIC Insured,
Pre-Refunded, 8.00%, 07/01/18 ............................................................... 11,197
--------------
21,031,788
--------------
Hawaii 1.1%
Hawaii County GO,
1,000,000 Refunding & Improvement, Series A, FGIC Insured, 5.60%, 05/01/12 ......................... 999,910
1,000,000 Refunding & Improvement, Series A, FGIC Insured, 5.60%, 05/01/13 ......................... 1,005,490
5,000,000 Hawaii State Airports System Revenue, Second Series, FGIC Insured, 7.50%, 07/01/20 ........... 5,553,400
Hawaii State Department of Budget and Finance, Special Purposes Mortgage Revenue,
3,000,000 Hawaii Electric Co., MBIA Insured, 6.55%, 12/01/22 ....................................... 3,106,740
335,000 Refunding, Queens Medical Center Project, FGIC Insured, 6.50%, 07/01/12 .................. 345,023
4,000,000 Refunding, St. Francis Medical Centers, CGIC Insured, 6.50%, 07/01/22 .................... 4,165,560
Hawaii (cont.)
Hawaii State Harbor Capital Improvement Revenue,
$ 535,000 FGIC Insured, 6.40%, 07/01/05 ............................................................ $ 580,898
605,000 FGIC Insured, 6.40%, 07/01/06 ............................................................ 651,458
610,000 FGIC Insured, 6.40%, 07/01/07 ............................................................ 650,541
820,000 Honolulu, City and County, MFHR, Hale Pauahi Project, Series A, FHA Mortgage Insured,
MBIA Insured, 8.70%, 12/01/28 ............................................................... 854,153
Kauai County GO,
385,000 Refunding, MBIA Insured, Pre-Refunded, 7.40%, 08/01/06 ................................... 419,966
415,000 Refunding, MBIA Insured, Pre-Refunded, 7.45%, 08/01/07 ................................... 453,251
445,000 Refunding, MBIA Insured, Pre-Refunded, 7.45%, 08/01/08 ................................... 486,016
--------------
19,272,406
--------------
Idaho .1%
1,000,000 Idaho State University at Boise Revenues, Student Fee, MBIA Insured, 6.50%, 04/01/19 ......... 1,088,130
--------------
Illinois 5.4%
500,000 Aurora Hospital Facilities Revenue, Refunding, Mercy Center for Health Care Services,
Series 1985-A, AMBAC Insured, 9.625%, 10/01/09 .............................................. 511,885
40,000 Aurora, Series B, MBIA Insured, Pre-Refunded, 7.25%, 01/01/19 ................................ 44,023
615,000 Aurora SFMR, GNMA Secured, AMBAC Insured, 7.80%, 12/01/15 .................................... 633,985
270,000 Bloomingdale Waterworks and Sewer Revenue, MBIA Insured, 7.80%, 05/01/06 ..................... 279,477
1,350,000 Cary Waterworks and Sewerage Revenue, Series A, MBIA Insured, 6.40%, 05/01/17 ................ 1,380,605
100,000 Central Lake County Joint Action Water Agency Interim Revenue, Series A, AMBAC Insured,
Pre-Refunded, 7.00%, 05/01/19 ............................................................... 112,457
320,000 Chicago Board Education Lease, Series A, Refunding, MBIA Insured, 6.25%, 01/01/09 ............ 341,798
Chicago Central Public Library,
2,000,000 Refunding, Series 1987, MBIA Insured, Pre-Refunded, 8.00%, 01/01/11 ...................... 2,141,480
3,500,000 Series 1989, AMBAC Insured, Pre-Refunded, 7.60%, 01/01/08 ................................ 3,920,000
1,800,000 Series B, AMBAC Insured, 6.70%, 01/01/06 ................................................. 1,997,694
1,800,000 Series B, AMBAC Insured, 6.75%, 01/01/07 ................................................. 1,997,316
100,000 Chicago Heights, MBIA Insured, Pre-Refunded, 7.40%, 12/01/03 ................................. 115,020
Chicago Public Building Commission Revenue,
1,600,000 Community College District No. 508, Series A, MBIA Insured, ETM 01/01/04, 7.70%, 01/01/08 1,743,984
4,000,000 Community College District No. 508, Series B, BIG Insured, ETM 01/01/03, 8.75%, 01/01/07 . 4,309,240
100,000 Chicago Waste Water Transmission Revenue, AMBAC Insured, Pre-Refunded, 7.20%, 11/15/19 ....... 112,679
1,500,000 Cicero GO, CGIC Insured, 6.90%, 12/01/12 ..................................................... 1,622,550
Cook County Community College District No. 508, COP,
7,470,000 FGIC Insured, 8.50%, 01/01/02 ............................................................ 8,956,530
5,000,000 FGIC Insured, 8.75%, 01/01/05 ............................................................ 6,335,800
225,000 Cook County, Series B, FGIC Insured, 5.50%, 11/15/22 ......................................... 208,004
4,935,000 Decatur Hospital Revenue, Decatur Memorial Hospital, Series B, MBIA Insured, 6.85%, 10/01/16 . 5,206,376
750,000 Des Plains Hospital Facility Revenue, Refunding, Holy Family Hospital, AMBAC Insured,
9.25%, 01/01/14 ............................................................................. 776,250
2,000,000 Evergreen Park, Village of, Hospital Facility Revenue, Refunding, Little Co. of Mary Hospital, Inc.,
MBIA Insured, 7.75%, 02/15/09 ............................................................... 2,157,420
500,000 Franklin Park Alternate Revenue, AMBAC Insured, Pre-Refunded, 6.85%, 07/01/22 ................ 576,170
Illinois Health Facilities Authority Revenue,
4,452,000 Community Provider Pooled Loan, Series A, CGIC Insured, 7.35%, 08/15/10 .................. 4,818,088
4,050,000 Franciscan Sisters Health Care Corp., MBIA Insured, Pre-Refunded, 7.875%, 09/01/18 ....... 4,421,588
2,660,000 Methodist Health Services Corp., Series G, BIG Insured, 8.00%, 08/01/15 .................. 2,929,937
4,280,000 Michael Reese Hospital, Series A, CGIC Insured, ETM 02/15/00, 7.60%, 02/15/05 ............ 4,941,688
Illinois (cont.)
Illinois Health Facilities Authority Revenue,
$ 384,000 Refunding, Series B, MBIA Insured, ETM 08/15/01, 7.90%, 08/15/03 ......................... $ 452,924
47,000 Series 1990, CGIC Insured, 7.75%, 08/15/10 ............................................... 57,950
2,444,000 Series B, MBIA Insured, 7.90%, 08/15/03 .................................................. 2,522,966
1,000,000 Silver Cross Hospital, MBIA Insured, 7.00%, 08/15/21 ..................................... 1,064,340
7,000,000 University of Chicago Hospital Project, BIG Insured, Pre-Refunded, 8.10%, 08/01/14 ....... 7,646,100
2,583,000 Unrefunded, Series 1990, CGIC Insured, ETM 08/15/10, 7.75%, 08/15/10 ..................... 2,847,267
5,750,000 Illinois State COP, CGIC Insured, 6.95%, 07/01/13 ............................................ 6,225,755
Joliet GO,
560,000 Series 1987, BIG Insured, Pre-Refunded, 8.00%, 01/01/09 .................................. 608,989
605,000 Series 1987, BIG Insured, Pre-Refunded, 8.00%, 01/01/10 .................................. 657,925
650,000 Series 1987, BIG Insured, Pre-Refunded, 8.00%, 01/01/11 .................................. 706,862
200,000 Kane County Public Building Commission, Community College Facilities Revenue,
Elgin Community College District No. 509, FGIC Insured, Pre-Refunded, 7.00%, 12/01/10 ....... 220,690
300,000 Macon County and Decatur COP, Decatur Public Building Commission, FGIC Insured, 6.50%, 01/01/06 332,079
2,000,000 Onterie Center Project, HFC, Mortgage Revenue, Refunding, Series A, MBIA Insured, 7.05%,
07/01/27 .................................................................................... 2,088,820
300,000 Regional Transportation Authority, Series A, AMBAC Insured, 7.20%, 11/01/20 .................. 351,195
2,040,000 Southwestern Development Authority, Capital Improvement Revenue, McKendre College Project,
CGIC Insured, 7.375%, 02/01/11 .............................................................. 2,166,154
1,500,000 St. Clair County Public Building Commission Revenue, MBIA Insured, ETM 12/01/01, 8.00%, 12/01/05 1,562,820
--------------
92,104,880
--------------
Indiana 2.4%
1,000,000 Carroll County Consolidated School Building Corp., Refunding, First Mortgage, AMBAC Insured,
7.625%, 01/01/04 ............................................................................ 1,084,190
Fort Wayne Hospital Authority Revenue, Ancillary System, Inc.,
250,000 Parkview Memorial Hospital Project, Series A, FGIC Insured, 7.50%, 11/15/11 .............. 270,780
2,000,000 Refunding, Series C, BIG Insured, Pre-Refunded, 8.125%, 07/01/18 ......................... 2,287,540
Indiana Health Facility Financing Authority Hospital Revenue,
10,000,000 Bartholomew County Hospital Project, CGIC Insured, Pre-Refunded, 7.75%, 08/15/20 ......... 11,634,200
3,500,000 Community Hospitals of Indiana, MBIA Insured, 7.00%, 07/01/21 ............................ 3,719,975
250,000 Refunding & Improvement, Community Hospital Project, MBIA Insured, 6.40%, 05/01/12 ....... 257,838
100,000 Indiana Municipal Power Agency, Power Supply System Revenue, Refunding, Series A,
AMBAC Insured, Pre-Refunded, 7.25%, 01/01/15 ................................................ 103,082
10,000,000 Indianapolis Airport Authority, International Airport Revenue, BIG Insured, 8.30%, 07/01/18 .. 10,969,600
500,000 Indianapolis Gas Utility Revenue, Refunding, Series B, FGIC Insured, 4.00%, 06/01/15 ......... 381,360
500,000 Jasper County PCR, Refunding, Northern Indiana Public Service, MBIA Insured, 7.10%, 07/01/17 . 535,495
1,000,000 Marion County Convention and Recreational Facilities Authority, Excise Tax Revenue,
Lease Rental Series B, AMBAC Insured, Pre-Refunded, 7.00%, 06/01/21 ......................... 1,140,550
6,000,000 Monroe County Hospital Authority Revenue, Refunding, Bloomington Hospital Project, BIG Insured,
7.125%, 05/01/11 ............................................................................ 6,330,660
1,500,000 Patoka Lake Regional Water and Sewer District, Waterworks Revenue, Series A, AMBAC Insured,
6.45%, 01/01/15 ............................................................................. 1,544,250
185,000 Rockport PCR, Refunding, Michigan Power Co., Series B, FGIC Insured, 7.60%, 03/01/16 ......... 207,331
--------------
40,466,851
--------------
Iowa .8%
4,040,000 Davenport Hospital Facility Revenue, Mercy Hospital Project, MBIA Insured, 6.625%, 07/01/14 .. 4,264,260
200,000 Davenport Hospital Revenue, St. Lukes Hospital, Series A, AMBAC Insured, 7.40%, 07/01/20 ..... 220,204
5,025,000 Des Moines Urban Renewal and Tax Increment Revenue, Refunding, FGIC Insured,
7.90%, 06/01/14.............................................................................. 5,246,301
Iowa (cont.)
$ 2,150,000 Greater Iowa, Housing Assistance Corp., Mortgage Revenue, Refunding, Logan Park Project,
Series B, MBIA Insured, 6.50%, 01/01/24 ..................................................... $ 2,175,972
1,000,000 Iowa Finance Authority Revenue, Correctional Facility Program, Series A, AMBAC Insured,
5.50%, 06/15/15 ............................................................................. 989,210
--------------
12,895,947
--------------
Kansas .5%
3,350,000 Burlington PCR, Refunding, Kansas Gas & Electric Co. Project, MBIA Insured, 7.00%, 06/01/31 .. 3,665,570
1,525,000 Cowley and Shawnee Counties, SFMR, GNMA Secured, AMBAC Insured, 7.35%, 12/01/11 .............. 1,603,553
2,000,000 Wichita Hospital Revenue, Refunding & Improvement, St. Francis, MBIA Insured, 6.25%, 10/01/10 2,071,220
1,000,000 Wichita Water and Sewer Utility Revenue, Refunding & Improvement, Series B, FGIC Insured,
6.00%, 10/01/12 ............................................................................. 1,011,990
--------------
8,352,333
--------------
Kentucky .7%
2,000,000 Danville Multi-City Lease Revenue, Sewer and Drain System, MBIA Insured, Pre-Refunded,
6.75%, 03/01/11 ............................................................................. 2,268,540
1,000,000 Jefferson County Health Facilities Revenue, Jewish Hospital Services, Inc., AMBAC Insured,
6.55%, 05/01/22 ............................................................................. 1,047,590
665,000 Kenton County Hospital Facility Revenue, St. Elizabeth Medical Center Project, AMBAC Insured,
Pre-Refunded, 9.30%, 11/01/10 ............................................................... 683,833
2,375,000 Kentucky EDA Finance, Hospital Facilities Revenue, St. Elizabeth Medical Center Project, Series A,
FGIC Insured, 6.00%, 12/01/22 ............................................................... 2,388,229
1,000,000 Kentucky EDA Finance, Medical Center Revenue, Refunding & Improvement, Ashland Hospital Corp.,
Series A, CGIC Insured, 6.125%, 02/01/12 .................................................... 1,021,050
115,000 Kentucky HFC, MFMR, Series A, BIG Insured, 8.875%, 07/01/19 .................................. 117,460
Louisville and Jefferson County, Metropolitan Sewer District Revenue,
2,000,000 AMBAC Insured, 6.75%, 05/15/25 ........................................................... 2,149,480
100,000 FGIC Insured, Pre-Refunded, 7.35%, 05/01/19 .............................................. 113,915
2,000,000 Northern Kentucky University, COP, Student Housing Facilities, CGIC Insured, 7.25%, 01/01/12 . 2,168,040
--------------
11,958,137
--------------
Louisiana .7%
100,000 Alexandria Utilities Revenue, FGIC Insured, Pre-Refunded, 8.15%, 05/01/06 .................... 109,239
Calcasieu Parish Memorial Hospital Service District Revenue,
1,000,000 Lake Charles Memorial Hospital Project, BIG Insured, Pre-Refunded, 8.40%, 12/01/12 ....... 1,108,460
850,000 Lake Charles Memorial Hospital Project, BIG Insured, Pre-Refunded, 7.50%, 12/01/18 ....... 911,073
15,000 East Baton Rouge Parish, Sales and Use Tax Public Improvement, MBIA Insured, 7.25%, 02/01/12 . 15,923
200,000 Greater New Orleans Expressway Commission Revenue, Refunding & Improvement, BIG Insured,
Pre-Refunded, 7.80%, 11/01/12 ............................................................... 214,550
1,500,000 Jefferson Parish Hospital Service Revenue, District No. 2, Refunding, East Jefferson General Hospital,
MBIA Insured, Pre-Refunded, 8.00%, 07/01/16 ................................................. 1,578,930
1,700,000 Jefferson Sales Tax District, Special Sales Tax Revenue, Refunding, Series A, BIG Insured,
Pre-Refunded, 8.00%, 07/01/05 ............................................................... 1,914,115
300,000 Lafayette Public Improvement, Sales Tax Revenue, Refunding, FGIC Insured, Pre-Refunded, 8.00%,
03/01/08 .................................................................................... 332,205
225,000 Louisiana HFA, SFMR, Series 1985-A, FGIC Insured, 9.375%, 02/01/15 ........................... 233,021
3,000,000 Louisiana Public Facilities Authority Revenue, College and University of Loyola, FGIC Insured,
Pre-Refunded, 8.50%, 12/01/09 ............................................................... 3,222,600
150,000 Louisiana Regional Transit Authority Revenue, Refunding, FGIC Insured, 8.00%, 12/01/13 ....... 166,212
Louisiana (cont.)
$ 1,500,000 Louisiana State GO, Series A, CGIC Insured, Pre-Refunded, 7.375%, 05/01/05 ................... $ 1,563,405
400,000 Louisiana State, Refunding, Series B, MBIA Insured, 5.625%, 08/01/13 ......................... 394,868
500,000 New Orleans Public Improvement, FGIC Insured, Pre-Refunded, 7.50%, 09/01/21 .................. 589,060
--------------
12,353,661
--------------
Maine .7%
Ellsworth GO,
635,000 MBIA Insured, 5.25%, 11/01/12 ............................................................ 592,734
655,000 MBIA Insured, 5.25%, 11/01/13 ............................................................ 609,962
2,000,000 Maine Health and Higher Educational Facilities Authority Hospital Revenue,
Eastern Maine Health Care, FGIC Insured, 6.625%, 10/01/11 ................................... 2,116,900
2,000,000 Maine Health and Higher Educational Facilities Authority Revenue, Series B, FSA Insured,
7.00%, 07/01/24 ............................................................................. 2,174,740
2,015,000 d Maine Health and Higher Educational Facilities Authority Revenue, Series C, FSA Insured,
6.20%, 07/01/25 ............................................................................. 2,033,256
Maine State Turnpike Authority Revenue,
525,000 MBIA Insured, 6.00%, 07/01/14 ............................................................ 532,875
2,500,000 MBIA Insured, 6.00%, 07/01/18 ............................................................ 2,527,500
Old Orchard Beach,
1,180,000 MBIA Insured, 6.65%, 09/01/11 ............................................................ 1,277,043
535,000 MBIA Insured, 6.65%, 09/01/12 ............................................................. 578,998
--------------
12,444,008
--------------
Maryland .4%
Maryland State Health and Higher Educational Facilities Authority Revenue,
2,000,000 Montgomery General Hospital, Connie Lee Insured, 5.625%, 07/01/18 ........................ 1,890,640
200,000 University of Maryland Medical System, Series B, FGIC Insured, ETM 07/01/12, 7.00%, 07/01/22 233,338
Maryland State Housing and Community Development Administration Department,
Infrastructure Financing,
2,000,000 Series A, AMBAC Insured, 6.625%, 06/01/12 ................................................ 2,048,300
820,000 Series A, AMBAC Insured, 6.70%, 06/01/22 ................................................. 837,261
1,600,000 Morgan State University Revenue, Series A, MBIA Insured, Pre-Refunded, 7.00%, 07/01/20 ....... 1,808,432
--------------
6,817,971
--------------
Massachusetts 5.8%
3,700,000 Boston Water and Sewer Commission Revenue, Series A, FGIC Insured, 6.00%, 11/01/21 ........... 3,680,279
250,000 Groton-Dunstable Regional School District, AMBAC Insured, Pre-Refunded, 6.60%, 02/01/07 ...... 278,848
100,000 Massachusetts Bay Transportation Authority, Series A, MBIA Insured, Pre-Refunded, 7.625%,
03/01/15 .................................................................................... 114,644
4,455,000 Massachusetts Municipal Wholesale Electric Co., Power Supply System Revenue, Refunding,
Series A, AMBAC Insured, 6.00%, 07/01/18 .................................................... 4,466,850
1,000,000 Massachusetts State College Building Authority Project Revenue, Refunding, Series A, MBIA Insured,
Pre-Refunded, 7.25%, 05/01/16 ............................................................... 1,041,810
60,000 Massachusetts State Consolidated Loan, Series C, AMBAC Insured, Pre-Refunded, 7.00%, 06/01/09 66,554
Massachusetts State Health and Educational Facilities Authority Revenue,
1,500,000 Berkshire Health Systems, Series A, MBIA Insured, Pre-Refunded, 6.75%, 10/01/19 .......... 1,609,020
1,500,000 Beverly Hospital, Series E, MBIA Insured, Pre-Refunded, 7.70%, 07/01/20 .................. 1,737,045
5,000,000 Brandeis University, Series C, MBIA Insured, 6.80%, 10/01/19 ............................. 5,295,250
1,100,000 Capital Asset Program F-1, MBIA Insured, 7.30%, 10/01/18 ................................. 1,206,447
12,555,000 Fallon Health Care System, Series A, CGIC Insured, 6.75%, 06/01/20 ....................... 13,256,448
2,000,000 Lahey Clinic Medical Center, Series B, MBIA Insured, 5.375%, 07/01/23 .................... 1,841,820
9,220,000 Massachusetts General Hospital, Series F, AMBAC Insured, 6.25%, 07/01/20 ................. 9,408,733
Massachusetts (cont.)
Massachusetts State Health and Educational Facilities Authority Revenue,
$ 1,000,000 Massachusetts Medical Center, Series A, AMBAC Insured, 7.10%, 07/01/21 ................... $ 1,100,070
1,085,000 Mclean Hospital, Series C, FGIC Insured, 6.625%, 07/01/15 ................................ 1,150,610
100,000 Mt. Auburn Hospital, Series A, MBIA Insured, Pre-Refunded, 7.875%, 07/01/18 .............. 111,162
15,400,000 New England Medical Center Hospital, Series F, FGIC Insured, 6.625%, 07/01/25 ............ 16,125,032
8,500,000 North Eastern University, Series E, MBIA Insured, 6.55%, 10/01/22 ........................ 8,968,690
2,000,000 Refunding, Stonehill College, Series E, MBIA Insured, 6.60%, 07/01/20 .................... 2,109,020
5,250,000 Refunding, Valley Regional Health Systems, Series C, Connie Lee Insured, 6.375%, 07/01/14 5,408,655
2,000,000 Refunding, Youville Hospital, Series B, MBIA Insured, 6.00%, 02/15/25 .................... 2,009,140
Massachusetts State Industrial Finance Agency Revenue,
3,000,000 Babson College, Series A, MBIA Insured, 6.50%, 10/01/22 .................................. 3,137,700
5,000,000 Jewish Philanthropies, Series A, AMBAC Insured, 6.375%, 02/01/15 ......................... 5,213,900
4,000,000 Massachusetts State Port Authority Revenue, Refunding, Series A, FGIC Insured, 6.00%, 07/01/23 3,978,120
2,000,000 Monson GO, School District, Series 1990, MBIA Insured, Pre-Refunded, 7.70%, 10/15/10 ......... 2,330,900
2,300,000 Palmer GO, Series B, AMBAC Insured, Pre-Refunded, 7.70%, 10/01/10 ............................ 2,678,304
--------------
98,325,051
--------------
Michigan .6%
100,000 Chippewa Valley School Building and Site, FGIC Insured, Pre-Refunded, 6.375%, 05/01/06 ....... 110,690
4,000,000 Detroit Sewerage Disposal Revenue, FGIC Insured, 6.625%, 07/01/21 ............................ 4,186,760
2,000,000 Kalamazoo Hospital Finance Authority, Hospital Facilities Revenue, Refunding & Improvement,
Bronson Methodist Church, Series A, MBIA Insured, 6.375%, 05/15/17 .......................... 2,063,180
1,000,000 Michigan State HDA, Rental Housing Revenue, Series A, Refunding, AMBAC Insured, 5.90%, 04/01/23 958,000
470,000 Michigan State HDA, SFMR, Series 1986-A, FGIC Insured, 8.00%, 10/01/06 ....................... 482,793
2,500,000 Michigan State Hospital Finance Authority Revenue, Refunding, St. John Hospital, Series A,
AMBAC Insured, 6.00%, 05/15/13 .............................................................. 2,529,025
Michigan State Strategic Fund Limited Obligation Revenue,
200,000 Refunding, Detroit Edison Co. Project, FGIC Insured, 6.875%, 12/01/21 .................... 214,110
250,000 Refunding, Detroit Edison Co. Project, Series BB, AMBAC Insured, 7.00%, 05/01/21 .......... 288,288
--------------
10,832,846
--------------
Minnesota 1.1%
2,000,000 Eden Prairie, Olympic Ridge Project, Series A, GNMA Secured, 6.25%, 01/20/31 ................. 2,000,000
4,000,000 Minneapolis-St. Paul Housing Finance Board, MFMR, GNMA Secured, Mortgage Loan,
Riverside Plaza, Project, 8.20%, 12/20/18 ................................................... 4,191,040
200,000 Northern Municipal Power Agency, Minnesota Electric System Revenue, Refunding, Series B,
AMBAC Insured, 5.50%, 01/01/18 .............................................................. 191,558
1,200,000 Washington County Governmental Housing, Scandia II, Series B, FGIC Insured, 6.30%, 07/01/24 .. 1,237,440
2,415,000 Washington County, Raymie Johnson Apartments, Series C, Refunding, FGIC Insured, 6.30%,
01/01/20 .................................................................................... 2,490,348
8,775,000 Western Minnesota Municipal Power Agency, Power Supply Revenue, Series A, MBIA Insured,
6.125%, 01/01/16 ............................................................................ 8,781,581
--------------
18,891,967
--------------
Mississippi .2%
Harrison County Correctional Facilities Finance Authority, Special Obligation Revenue,
1,000,000 FGIC Insured, Pre-Refunded, 8.30%, 09/01/05 .............................................. 1,100,200
1,000,000 FGIC Insured, Pre-Refunded, 8.30%, 09/01/06 .............................................. 1,100,200
200,000 Harrison County Waste Water Management District Revenue, Refunding, Wastewater Treatment
Facilities, Series A, FGIC Insured, 8.50%, 02/01/13 ......................................... 265,554
20,000 Mississippi HFC, SFMR, Refunding, Series A, FGIC Insured, 7.70%, 10/15/08 .................... 20,684
--------------
2,486,638
--------------
Missouri 2.7%
$ 2,000,000 Branson Reorganization School District No. R-4, Refunding & Improvement, CGIC Insured,
6.20%, 03/01/06 ............................................................................. $ 2,064,320
1,000,000 Cape Girardeau County IDA, Health Care Facilities Revenue, Refunding, Southeast Missouri Hospital
Association, MBIA Insured, 5.25%, 06/01/16 .................................................. 909,380
200,000 Jackson County Consolidated School District No. 2, Series A, AMBAC Insured, Pre-Refunded, 6.65%,
03/15/11 .................................................................................... 211,988
4,000,000 Kansas City School District Building Corp., Leasehold Revenue, Capital Improvement Project,
Series A, FGIC Insured, Pre-Refunded, 7.90%, 02/01/08 ....................................... 4,421,640
2,000,000 Missouri Economic Development, Export and Infrastructure Board Lease Revenue,
Mental Health Office, Building Division, CGIC Insured, 6.30%, 12/01/08 ...................... 2,143,160
1,520,000 Missouri HDC, Series 1990-B, GNMA Secured, 7.75%, 06/01/22 ................................... 1,586,014
1,000,000 Missouri Health and Educational Facilities Authority, Health Facilities Revenue, Heartland Health
System, Project, AMBAC Insured, 6.35%, 11/15/17 ............................................. 1,036,490
7,500,000 Missouri Health and Educational Facilities Authority Health Revenue, Sisters of St. Mary's Health Care
Project, BIG Insured, Pre-Refunded, 7.75%, 06/01/16 ......................................... 8,335,200
1,000,000 Missouri School Board Lease Association, COP, Series R-III, School District Project, MBIA Insured,
6.875%, 03/01/11 ............................................................................ 1,055,160
8,575,000 Sikeston Electric Revenue, Refunding, MBIA Insured, 6.25%, 06/01/22 .......................... 8,811,927
2,850,000 St. Charles County Public Facilities Authority Leasehold Revenue, FGIC Insured, 6.375%, 03/15/07 3,057,594
2,000,000 St. Louis Airport Revenue, Refunding & Improvement, Lambert-St. Louis International Airport,
FGIC Insured, 6.125%, 07/01/15 .............................................................. 2,041,400
680,000 St. Louis County Mortgage Revenue, GNMA Secured, 8.125%, 09/01/19 ............................ 719,481
2,025,000 St. Louis Municipal Finance Corp., Leasehold Revenue, Refunding & Improvement, FGIC Insured,
6.25%, 02/15/12 ............................................................................. 2,106,851
2,000,000 St. Louis Public School District Building Corp., Leasehold Revenue, Series A, FGIC Insured,
7.40%, 04/01/09 ............................................................................. 2,073,440
2,950,000 St. Louis School District GO, Refunding, FGIC Insured, 6.00%, 04/01/12 ....................... 3,018,204
1,250,000 Washington GO, Pauwels Transformers Project, Series A, FGIC Insured, 7.60%, 12/01/09 ......... 1,329,225
--------------
44,921,474
--------------
Montana 1.5%
Forsyth PCR,
4,475,000 Refunding, Puget Sound Power and Light Project, AMBAC Insured, 6.80%, 03/01/22 ........... 4,774,601
5,000,000 Refunding, Washington Water Co., Series A, MBIA Insured, 7.125%, 12/01/13 ................ 5,358,650
750,000 Helena Water Revenue, Series C, FGIC Insured, 6.65%, 11/01/12 ................................ 804,990
Montana State Board Investment Workers Compensation Program,
6,105,000 MBIA Insured, 6.875%, 06/01/20 .......................................................... 6,623,925
2,395,000 MBIA Insured, ETM 06/01/20, 6.875%, 06/01/20 ............................................ 2,690,711
1,000,000 Montana State University Revenue, Higher Education Facilities, Acquisition and Improvement,
Series C, MBIA Insured, 6.00%, 11/15/14 ..................................................... 1,000,330
3,000,000 Montana Water System Revenue, Butte-Silver Bow Project, FGIC Insured, 6.50%, 11/01/14 ........ 3,193,230
--------------
24,446,437
--------------
Nebraska .9%
2,500,000 Cass County School District No. 001, Plattsmouth Community Schools, FGIC Insured, 6.35%, 12/01/19 2,572,900
2,500,000 Lancaster County Hospital, Authority No. 1 Revenue, Bryan Memorial Hospital Project, MBIA Insured,
6.70%, 06/01/22 ............................................................................. 2,694,050
2,000,000 Lincoln Hospital Revenue, Refunding, Lincoln General Hospital, Series A, CGIC Insured, 6.20%,
12/01/14 .................................................................................... 2,042,020
Municipal Energy Agency of Nebraska, Power Supply System Revenue,
2,000,000 Refunding, Series A, AMBAC Insured, 6.00%, 04/01/15 ...................................... 2,023,100
1,350,000 Refunding, Series A, AMBAC Insured, 6.00%, 04/01/17 ...................................... 1,359,801
Nebraska (cont.)
Nebraska Investment Finance Authority, SFMR,
$ 610,000 Refunding, Series 1, GNMA Secured, MBIA Insured, 8.125%, 08/15/38 ........................ $ 637,078
3,470,000 Refunding, Series B, FGIC Insured, 8.00%, 07/15/17 ....................................... 3,680,907
365,000 Refunding, Series R1-A, FGIC Insured, 8.00%, 07/15/17 ..................................... 380,023
--------------
15,389,879
--------------
Nevada 1.0%
5,000,000 Clark County Passenger Facility Charge Revenue, Macarren International Airport, Series A,
MBIA Insured, 6.00%, 07/01/17 ............................................................... 4,939,600
4,000,000 Clark County School District, Series A, MBIA Insured, 7.00%, 06/01/10 ........................ 4,573,840
250,000 Clark County, Series A, AMBAC Insured, 6.50%, 06/01/17 ....................................... 268,210
1,250,000
North Las Vegas, FGIC Insured, Pre-Refunded, 7.125%, 04/01/11 ................................ 1,419,763
Reno Hospital Revenue,
25,000 Refunding, St. Mary's Regional Medical Center, Series A, MBIA Insured, Pre-Refunded,
7.75%, 07/01/07 ......................................................................... 27,588
4,000,000
Refunding, St. Mary's Regional Medical Center, Series A, MBIA Insured, Pre-Refunded,
7.80%, 07/01/12 ......................................................................... 4,455,600
1,695,000 Sparks Public Safety, GO, AMBAC Insured, 7.50%, 10/01/09 ..................................... 1,875,687
--------------
17,560,288
--------------
New Hampshire .6%
New Hampshire Higher Educational and Health Facilities Authority Revenue,
2,000,000 Concord Hospital, FGIC Insured, 7.00%, 10/01/12 .......................................... 2,163,280
4,000,000 Refunding, University System, MBIA Insured, 6.25%, 07/01/20 .............................. 4,083,720
4,000,000 University System, MBIA Insured, Pre-Refunded, 7.50%, 07/01/09 ............................ 4,514,080
--------------
10,761,080
--------------
New Jersey 2.7%
6,000,000 Camden County Municipal Utilities Authority, Sewer Revenue, FGIC Insured, 8.25%, 12/01/17 .... 6,569,340
3,000,000 Essex County Improvement Authority Lease, Jail and Youth House Projects, AMBAC Insured,
7.00%, 12/01/24 ............................................................................. 3,303,270
2,525,000
Essex County Improvement Authority Revenue, Garden State Cancer Center Project, AMBAC Insured,
6.00%, 12/01/20 ............................................................................. 2,550,881
90,000
Hoboken Union City, Weehawken Sewer Authority Revenue, MBIA Insured, Pre-Refunded,
7.25%, 08/01/19 ............................................................................. 101,138
5,000,000
Hudson County Correctional Facility, COP, BIG Insured, Pre-Refunded, 7.60%, 12/01/21 ......... 5,604,400
Lacey Municipal Utilities Authority Water Revenue,
2,500,000 MBIA Insured, 6.10%, 12/01/23 ............................................................ 2,545,425
3,255,000 MBIA Insured, 6.25%, 12/01/24 ............................................................ 3,347,247
1,500,000 Refunding, Series A, MBIA Insured, 5.50%, 12/01/19 ....................................... 1,419,300
1,700,000 Mantua Township, New Jersey School District, COP, MBIA Insured, Pre-Refunded, 7.25%, 06/30/10 1,951,668
2,000,000 Mount Laurel Township Municipal Utilities Authority System Revenue, Refunding, Series A,
MBIA Insured, 6.00%, 07/01/15 ............................................................... 2,060,500
New Jersey Health Care Facilities Financing Authority Revenue,
1,350,000 Burdette Tomlin Memorial Hospital, Series C, FGIC Insured, Pre-Refunded, 8.125%, 07/01/12 1,472,283
2,000,000 Community Medical Center, Series D, MBIA Insured, 6.00%, 07/01/19 ........................ 2,013,320
2,860,000 Jersey Shore Memorial Hospital, Series B, AMBAC Insured, Pre-Refunded, 8.00%, 07/01/18 ... 3,202,428
2,600,000 Jersey Shore Memorial Hospital, Series C, MBIA Insured, Pre-Refunded, 7.875%, 07/01/12 ... 2,825,654
3,000,000 Muhlenberg Regional Medical Center, Series B, AMBAC Insured, 8.00%, 07/01/18 ............. 3,314,250
485,000 New Jersey HFA, Home Buyer Revenue, Series C, MBIA Insured, 7.375%, 10/01/17 ................. 505,229
300,000 New Jersey State Turnpike Authority Revenue, Refunding, Series C, AMBAC Insured, 6.50%, 01/01/16 329,400
New Jersey (cont.)
$ 100,000 North Bergen Township Municipal Utilities Authority Sewer Revenue, FGIC Insured, Pre-Refunded,
7.625%, 12/15/19 ............................................................................ $ 109,626
2,235,000 Ocean County Utilities Authority, Waste Water Revenue, Refunding, FGIC Insured, Pre-Refunded,
8.70%, 01/01/11 ............................................................................. 2,314,186
--------------
45,539,545
--------------
New Mexico .7%
3,600,000 Albuquerque Airport Revenue, Series B, AMBAC Insured, 7.00%, 07/01/16 ........................ 3,660,552
5,000,000 Farmington PCR, Refunding, Public Service Co. of New Mexico, Series A, AMBAC Insured,
6.375%, 12/15/22 ............................................................................ 5,160,000
2,000,000 Gallup PCR, Refunding, Plains Electric Generation, MBIA Insured, 6.65%, 08/15/17 ............. 2,107,220
New Mexico Mortgage Finance Authority, SFMR,
95,000 Series 1985-A, FGIC Insured, 9.25%, 07/01/12 ............................................. 97,893
1,515,000 Series 1987-C, FGIC Insured, 8.625%, 07/01/17 ............................................. 1,575,555
--------------
12,601,220
--------------
New York 6.2%
900,000 Central Square School District, FGIC Insured, 6.50%, 06/15/10 ................................ 987,255
2,900,000 MAC for the City of New York, Series 61, MBIA Insured, 6.875%, 07/01/07 ...................... 3,057,615
Metropolitan Transportation Authority Service Contract,
10,000 Refunding, Commuter Facilities, Series M, AMBAC Insured, Pre-Refunded, 7.50%, 07/01/17 ... 11,088
1,585,000 Refunding, Series K, AMBAC Insured, Pre-Refunded, 7.50%, 07/01/17 ........................ 1,757,496
New York City GO,
1,000,000 Series B, FGIC Insured, Pre-Refunded, 7.25%, 08/01/11 .................................... 1,087,330
105,000 Series C, Subseries C-1, MBIA Insured, 6.625%, 08/01/12 .................................. 113,350
New York City Municipal Water Finance Authority, Water and Sewer System Revenue,
2,500,000 Refunding, Series B, AMBAC Insured, 5.375%, 06/15/19 ..................................... 2,318,075
430,000 Series A, FGIC Insured, 6.75%, 06/15/14 .................................................. 451,655
895,000 Series A, FGIC Insured, Pre-Refunded, 6.75%, 06/15/14 .................................... 985,306
2,000,000 Series A, MBIA Insured, Pre-Refunded, 7.25%, 06/15/15 .................................... 2,276,540
5,000,000 Series B, FGIC Insured, Pre-Refunded, 7.625%, 06/15/17 ................................... 5,531,350
5,000,000 Series C, AMBAC Insured, 6.20%, 06/15/21 ................................................. 5,105,900
10,000,000 Series C, AMBAC Insured, 6.50%, 06/15/21 ................................................. 10,240,600
4,030,000 Series F, MBIA Insured, 5.75%, 06/15/20 .................................................. 3,925,784
New York State Dormitory Authority Revenues,
4,000,000 Brooklyn Law School, CGIC Insured, 6.40%, 07/01/11 ....................................... 4,153,840
8,655,000 City University System, Series C, FGIC Insured, 7.00%, 07/01/14 .......................... 9,414,909
6,105,000 Pooled Capital Program, FGIC Insured, 7.80%, 12/01/05 .................................... 6,595,048
1,500,000 Refunding, Mt. Sinai School of Medicine, MBIA Insured, 6.75%, 07/01/15 ................... 1,610,130
3,500,000 New York State Energy Research and Development Authority Facilities Revenue, Refunding,
Series B, MBIA Insured, 5.25%, 08/15/20 ..................................................... 3,170,860
1,000,000 New York State Energy Research and Development Authority Gas Facilities Revenue,
Brooklyn Union Gas, Series II, MBIA Insured, 7.00%, 12/01/20 ................................ 1,044,610
New York State Energy Research and Development Authority, PCR,
2,000,000 Central Hudson Gas, Series A, FGIC Insured, 7.375%, 10/01/14 ............................. 2,259,200
3,500,000 Refunding, Niagara Mohawk Power Corp., Series A, FGIC Insured, 6.625%, 10/01/13 .......... 3,690,680
5,000,000 Refunding, Rochester Gas & Electric Project, Series B, MBIA Insured, 6.75%, 01/15/27 ..... 5,191,650
5,000,000 Refunding, Rochester Gas & Electric Project, Series B, MBIA Insured, 6.50%, 05/15/32 ..... 5,142,950
New York State Medical Care Facilities Financing Agency Revenue,
3,000,000 North Shore University Hospital, Mortgage Project, Series A, MBIA Insured, 7.20%, 11/01/20. 3,302,460
5,000,000 St. Lukes Hospital, Series B, MBIA Insured, Pre-Refunded, 7.45%, 02/15/29 ................ 5,713,250
New York (cont.)
New York State Urban Development Corp. Revenue, Correctional Facilities,
$ 3,400,000 Series D, AMBAC Insured, Pre-Refunded, 7.50%, 01/01/12 ................................... $ 3,722,830
15,000 Series D, AMBAC Insured, Pre-Refunded, 7.75%, 01/01/13 ................................... 16,506
9,000,000 Niagara Frontier Transportation Authority, Airport Revenue, Greater Buffalo International Airport,
Series A, AMBAC Insured, 6.25%, 04/01/24 .................................................... 9,166,680
1,000,000 Suffolk County Water Authority Waterworks Revenue, AMBAC Insured, Pre-Refunded, 7.00%, 06/01/16 1,130,840
1,560,000 gTriborough Bridge and Tunnel Authority Revenues, Series T, Pre-Refunded, 7.00%, 01/01/20 ..... 1,775,124
--------------
104,950,911
--------------
North Carolina
North Carolina Municipal Power Agency No. 1, Catawba Electric Revenue,
80,000 MBIA Insured, 6.50%, 01/01/10 ............................................................ 82,834
20,000 MBIA Insured, ETM 01/01/07, 6.50%, 01/01/10 .............................................. 22,215
500,000 Refunding, MBIA Insured, 5.75%, 01/01/20 .................................................. 481,590
--------------
586,639
--------------
North Dakota
150,000 North Dakota State Building Authority Lease Revenue, Series B, Department of Corrections and
Rehabilitation, AMBAC Insured, Pre-Refunded, 7.40%, 06/01/10 ................................ 169,035
300,000 North Dakota State Building Authority Revenue, Refunding, Series A, AMBAC Insured, 6.75%, 06/01/11 317,295
--------------
486,330
--------------
Ohio 2.2%
2,000,000 Akron Waterworks Mortgage Revenue, AMBAC Insured, 6.55%, 03/01/12 ............................ 2,111,120
5,000,000 Clermont County, Refunding, Building and Road Improvement, AMBAC Insured, 5.60%, 09/01/14 .... 4,874,500
Cleveland Waterworks First Mortgage Revenue,
3,000,000 Series 1992-F, AMBAC Insured, 6.50%, 01/01/11 ............................................ 3,165,060
2,750,000 Series 1992-F, AMBAC Insured, Pre-Refunded, 6.50%, 01/01/21 .............................. 3,082,805
1,080,000 Cuyahoga County Hospital Revenue, Metrohealth Systems Project, MBIA Insured, 6.00%, 02/15/19 . 1,084,946
3,000,000 Lucas County Hospital Revenue, St. Vincent Medical Center, MBIA Insured, 6.625%, 08/15/22 .... 3,306,810
12,720,000 Montgomery County Hospital Facilities Revenue, Refunding, Kettering Medical Center Facilities,
MBIA Insured, 7.50%, 04/01/14 ............................................................... 13,627,572
4,255,000 Ohio HFA, SFMR, Series D, GNMA Secured, 7.05%, 09/01/16 ...................................... 4,367,034
1,750,000 Ohio Waterworks Mortgage Revenue, Series A, MBIA Insured, 6.30%, 10/15/21 .................... 1,812,685
--------------
37,432,532
--------------
Oklahoma 2.0%
855,000 Grady County Home Finance Authority, SFMR, Refunding, Series A, FGIC Insured, 6.70%, 01/01/12 884,198
3,300,000 Jenks Public Works Authority Revenue, Refunding, AMBAC Insured, 7.80%, 07/01/11 .............. 3,608,220
300,000 McGee Creek Authority Water Revenue, MBIA Insured, 6.00%, 01/01/23 ........................... 308,562
5,000,000 Moore Public Works Authority Revenue, Refunding, AMBAC Insured, 7.60%, 07/01/06 .............. 5,540,250
1,210,000 Muskogee, SFMR, HFA, FGIC Insured, 7.60%, 12/01/10 ........................................... 1,250,886
30,000 Oklahoma Baptist University Authority Revenue, Refunding, Series A, FGIC Insured, Pre-Refunded,
8.00%, 12/01/05 ............................................................................. 33,957
2,000,000 Oklahoma State Turnpike Authority Revenue, Series A, AMBAC Insured, 6.00%, 01/01/12 .......... 2,049,300
1,255,000 Owasso Public Works Authority, Public Improvement Revenue, CGIC Insured, 7.40%, 11/01/07 ..... 1,352,087
Pottawatomie County Development Authority Water Revenue,
5,000,000 North Deer Creek Reservoir Project, AMBAC Insured, 5.90%, 07/01/26 ....................... 4,854,500
250,000 North Deer Creek Reservoir Project, AMBAC Insured, Pre-Refunded, 7.375%, 07/01/26 ........ 286,603
3,275,000 Tulsa Airport Improvements Trust, General Revenue Consolidated, MBIA Insured,
Pre-Refunded, 7.50%, 06/01/08 ............................................................... 3,553,113
Tulsa County HFAR,
5,115,000 Series A, GNMA Secured, 8.30%, 12/01/19 .................................................. 5,438,882
360,000 Series D, GNMA Secured, 6.95%, 12/01/22 .................................................. 372,071
Oklahoma (cont.)
$ 3,270,000 Tulsa Industrial Authority Revenue, Holland Hall School Project, CGIC Insured, 6.75%, 12/01/14 $ 3,476,206
--------------
33,008,835
--------------
Oregon 1.0%
1,500,000 Deschutes and Jefferson Counties School District No. 2-J, Redmond, MBIA Insured, 5.60%, 06/01/09 1,512,960
5,000,000 Josephine County School District No. 7, FGIC Insured, 5.70%, 06/01/13 ........................ 4,960,900
6,025,000 Portland Hospital Facilities Authority Revenue, Legacy Health System, Series A, AMBAC Insured,
6.70%, 05/01/21 ............................................................................. 6,466,392
Washington County, Unified Sewer Agency Revenue,
1,000,000 Senior Lien, Series A, AMBAC Insured, 6.125%, 10/01/12 ................................... 1,038,320
1,000,000 Series 1, AMBAC Insured, 6.125%, 10/01/12 ................................................ 1,038,320
3,000,000 Western Lane Hospital District, Hospital Facilities Authority Revenue, Refunding, Sisters of
St. Joseph of Peace, MBIA Insured, 5.875%, 08/01/12 ......................................... 3,076,290
--------------
18,093,182
--------------
Pennsylvania 2.9%
1,000,000 Allegheny County Hospital Development Authority Revenue, St. Francis Medical Center Project,
Refunding, AMBAC Insured, Pre-Refunded, 8.125%, 06/01/13 .................................... 1,050,990
3,000,000 Bristol Township, Bucks County GO, FGIC Insured, Pre-Refunded, 7.875%, 09/01/16 .............. 3,120,150
3,900,000 Butler County Hospital Authority Revenue, North Hills Passavant Hospital, CGIC Insured,
7.00%, 06/01/22 ............................................................................. 4,191,213
5,000,000 Cambria County Hospital Development Authority Revenue, Refunding & Improvement, Conemaugh
Valley Hospital, Series B, Connie Lee Insured, 6.375%, 07/01/18 ............................. 5,095,550
3,000,000 Dauphin County Hospital Authority Revenue, Refunding, Harrisburg Hospital, MBIA Insured,
8.25%, 07/01/14 ............................................................................. 3,223,680
1,500,000 Delaware River Port Authority, Pennsylvania and New Jersey River Bridges Revenue,
Refunding, AMBAC Insured, 7.375%, 01/01/07 .................................................. 1,665,705
200,000 Exeter Township School District, FGIC Insured, 6.50%, 05/15/06 ............................... 214,170
1,200,000 Harrisburg RDAR, Capital Improvement, Series A, FGIC Insured, 7.875%, 11/02/16 ............... 1,261,644
100,000 Lehigh County General Purpose Authority Revenues, Hospital Healtheast, Inc., Series A,
Refunding, MBIA Insured, 7.00%, 07/01/15 .................................................... 106,794
8,000,000 Montgomery County IDAR, PCR, Refunding, Series B, MBIA Insured, 6.70%, 12/01/21 .............. 8,502,880
500,000 Pennslyvania Convention Center Authority Revenue, Series A, FGIC Insured, ETM 09/01/17,
6.00%, 09/01/19 ............................................................................. 509,595
100,000 Pennsylvania State Higher Educational Facilities Authority, College and University Revenues,
Hahnemann, University Project, MBIA Insured, 7.20%, 07/01/19 ................................ 107,650
2,740,000 Pennsylvania State Pooled Finance Authority, Lease Revenue, Capital Improvement, Series B,
MBIA Insured, 8.00%, 11/01/09 ............................................................... 2,801,787
Pennsylvania State Turnpike Commission Revenue,
500,000 Refunding, Series P, AMBAC Insured, 6.00%, 12/01/17 ...................................... 502,050
300,000 Series E, MBIA Insured, Pre-Refunded, 7.55%, 12/01/17 .................................... 343,002
2,500,000 Series K, MBIA Insured, Pre-Refunded, 7.50%, 12/01/12 .................................... 2,853,550
2,000,000 Philadelphia City GO, Refunding, Series 1986, FGIC Insured, Pre-Refunded, 8.25%, 02/15/09 .... 2,078,920
5,000,000 Philadelphia Municipal Authority Revenue, Justice Lease, Series B, FGIC Insured, Pre-Refunded,
7.125%, 11/15/18 ............................................................................ 5,792,600
1,000,000 Philadelphia Water and Wastewater Revenue, Refunding, CGIC Insured, 5.50%, 06/15/15 .......... 945,770
90,000 Pittsburg Water and Sewer Authority System Revenue, Refunding, FGIC Insured, ETM 09/01/05,
7.25%, 09/01/14 ............................................................................. 102,979
2,000,000 Quaker Valley School District, FGIC Insured, 5.70%, 01/15/19 ................................. 1,949,460
10,000 Scranton-Lackawanna Health and Welfare Authority Revenue, Community Medical Center Project,
BIG Insured, 7.875%, 07/01/10 ............................................................... 10,901
1,500,000 York County Hospital Authority Revenue, Series 1991, AMBAC Insured, Pre-Refunded, 7.00%, 07/01/21 1,703,010
--------------
48,134,050
--------------
Rhode Island 1.3%
$ 2,100,000 Kent County Water Authority, General Revenue, Series A, MBIA Insured, 6.35%, 07/15/14 ........ $ 2,185,029
620,000 Newport GO, Refunding, Series B, FGIC Insured, 5.125%, 05/15/10 .............................. 588,926
5,000,000 Providence PBA General Revenue, Series A, CGIC Insured, 7.25%, 12/15/10 ...................... 5,497,000
350,000 Rhode Island Convention Center Authority Revenue, Series A, MBIA Insured, Pre-Refunded,
6.65%, 05/15/12 ............................................................................. 392,819
3,335,000 Rhode Island Health and Education Building Authority, Series A, CGIC Insured, Pre-Refunded,
7.50%, 09/15/19 ............................................................................. 3,781,723
Rhode Island Health and Educational Building Corp. Revenue, Higher Educational Facilities,
3,000,000 Connie Lee Insured, 6.30%, 03/15/20 ...................................................... 3,023,400
2,000,000 Roger Williams Facility, Connie Lee Insured, 7.25%, 11/15/24 ............................. 2,172,440
2,000,000 Rhode Island Port Authority and Economic Development Corp. Revenue, Shepard Building Project,
Series B, AMBAC Insured, 6.75%, 06/01/25 .................................................... 2,130,260
250,000 Rhode Island State, Refunding, Series A, FGIC Insured, 6.25%, 06/15/07 ....................... 267,560
2,000,000 West Warwick GO, MBIA Insured, Pre-Refunded, 7.25%, 09/01/11 ................................. 2,331,760
--------------
22,370,917
--------------
South Carolina .7%
250,000 Charleston Waterworks and Sewer Revenue, Refunding & Improvement, AMBAC Insured,
6.00%, 01/01/16 ............................................................................. 252,745
2,910,000 Cherokee County COP, Peachtree Centre Project, CGIC Insured, 7.05%, 09/01/11 ................. 3,185,693
250,000 Edgefield County School District, Refunding, FSA Insured, 8.50%, 02/01/01 .................... 293,175
50,000 Greenville Hospital System Facilities Revenue, Series A, FGIC Insured, 7.50%, 05/01/16 ....... 51,642
200,000 North Charleston Sewer District Revenue, MBIA Insured, Pre-Refunded, 7.75%, 08/01/18 ......... 223,330
Piedmont Municipal Power Agency, South Carolina Electric Revenue,
990,000 Refunding, AMBAC Insured, Pre-Refunded, 9.25%, 01/01/19 .................................. 1,036,570
200,000 Refunding, FGIC Insured, 6.25%, 01/01/21 ................................................. 210,206
2,000,000 Refunding, Series A, AMBAC Insured, Pre-Refunded, 7.60%, 01/01/18 ........................ 2,191,940
3,000,000 Richland County Hospital Facilities Revenue, Community Provider, Pooled Loan Program, Series A,
CGIC Insured, 7.125%, 07/01/17 .............................................................. 3,267,720
South Carolina Public Service Authority Electric Revenue, Electric System Expansion,
150,000 Refunding, Series A, MBIA Insured, Pre-Refunded, 7.75%, 07/01/15 ......................... 154,883
100,000 Refunding, Series C, AMBAC Insured, Pre-Refunded, 7.30%, 07/01/21 ......................... 104,770
--------------
10,972,674
--------------
South Dakota .7%
1,355,000 Heartland Consumer Power District, Electric System Revenue, Refunding, MBIA Insured,
Pre-Refunded, 7.625%, 01/01/16 .............................................................. 1,444,931
2,000,000 Lawrence County, COP, Courthouse, CGIC Insured, 7.65%, 07/01/10 .............................. 2,224,840
2,450,000 Sioux Falls Medical Clinic Revenue, AMBAC Insured, 8.00%, 09/01/08 ........................... 2,494,443
2,720,000 South Dakota State Lease Revenue, Series A, CGIC Insured, 6.75%, 12/15/16 .................... 2,987,294
2,220,000 South Dakota State University Revenue, Housing and Auxiliary Facilities, Refunding, Series A,
MBIA Insured, 5.50%, 04/01/17 ............................................................... 2,076,388
--------------
11,227,896
--------------
Tennessee .4%
1,470,000 Greater Tennessee Housing Assistance Corp., Mortgage Revenue, Refunding, Series A,
MBIA Insured, 6.00%, 07/01/24 ............................................................... 1,407,790
1,000,000 Memphis-Shelby County Airport Authority Revenue, Refunding, MBIA Insured, 5.65%, 09/01/15 .... 978,900
200,000 Metropolitan Nashville Airport Authority Revenue, Series C, FGIC Insured, 6.60%, 07/01/15 .... 210,178
3,450,000 Trenton Special School District, AMBAC Insured, 5.75%, 11/01/20 .............................. 3,351,468
--------------
5,948,336
--------------
Texas 9.7%
Austin Combined Utility System Revenue,
$ 1,000,000 BIG Insured, Pre-Refunded, 8.625%, 11/15/17 .............................................. $ 1,227,520
50,000 Refunding, Series A, FGIC Insured, 6.00%, 05/15/15 ....................................... 50,299
3,000,000 Series A, BIG Insured, Pre-Refunded, 8.00%, 11/15/16 ..................................... 3,516,840
4,080,000 Bexar County HFC Revenue, GNMA Secured, Series A, 8.20%, 04/01/22 ............................ 4,288,080
3,450,000 Brazos River Authority PCR, Texas Utilities Electric Co. Project, Series A, AMBAC Insured,
6.05%, 04/01/25 ............................................................................. 3,445,067
Brazos River Authority Revenue, Refunding, Houston Light and Power Co. Project,
2,000,000 Series A, AMBAC Insured, 6.70%, 03/01/17 ................................................. 2,104,220
3,360,000 Series D, FGIC Insured, 7.75%, 10/01/15 .................................................. 3,666,398
1,000,000 Brownsville Utility System Priority Revenue, Series B, FGIC Insured, Pre-Refunded,
7.50%, 09/01/09 ............................................................................. 1,055,240
12,230,000 Coastal Bend Health Facilities Development Corp., Series B, AMBAC Insured, 6.30%, 01/01/17 ... 12,513,981
7,000,000 Coastal Water Authority, Water Conveyance System Revenue, Series 1987, MBIA Insured,
Pre-Refunded, 8.125%, 12/15/17 .............................................................. 7,608,510
1,010,000 Dallas HFC, SFMR, GNMA Secured, 7.85%, 12/01/10 .............................................. 1,057,985
965,000 East Texas HFC, SFMR, Series 1990, GNMA Secured, 7.85%, 12/01/10 ............................. 1,023,238
1,520,000 Faulkey Gully MUD, Refunding, Waterworks and Sewerage System, AMBAC Insured,
6.625%, 03/01/07 ............................................................................ 1,631,082
200,000 Fort Bend County, Permanent Improvement, FGIC Insured, Pre-Refunded, 6.60%, 09/01/07 ......... 223,666
2,700,000 Grand Prairie Health Facilities, Refunding, Dallas/Fort Worth Medical Center Project, AMBAC Insured,
6.875%, 11/01/10 ............................................................................ 2,933,334
Harris County Hospital District Mortgage Revenue,
2,350,000 Refunding, AMBAC Insured, 7.40%, 02/15/10 ................................................ 2,711,736
3,000,000 Refunding, BIG Insured, Pre-Refunded, 8.50%, 04/01/15 .................................... 3,137,610
3,000,000 Harris County Public Facilities Corp., Detention Facility Mortgage Revenue, MBIA Insured,
Pre-Refunded, 7.80%, 12/15/11 ............................................................... 3,379,320
Harris County Toll Road,
35,000 Series A, FGIC Insured, 6.50%, 08/15/11 .................................................. 36,863
165,000 Series A, FGIC Insured, Pre-Refunded, 6.50%, 08/15/11 .................................... 185,849
1,580,000 Series A, Senior Lien, AMBAC Insured, 6.50%, 08/15/17 .................................... 1,642,837
240,000 Series B, Senior Lien, AMBAC Insured, 6.625%, 08/15/17 ................................... 249,583
1,250,000 Series B, Senior Lien, AMBAC Insured, Pre-Refunded, 6.625%, 08/15/17 ..................... 1,333,825
Houston Airport System Revenue,
2,500,000 Sub Lien, Series A, FGIC Insured, 6.75%, 07/01/21 ........................................ 2,618,550
1,000,000 Sub Lien, Series B, FGIC Insured, 6.625%, 07/01/22 ....................................... 1,058,250
Houston Water and Sewer System Revenue,
6,000,000 gPrior Lien, Pre-Refunded, 8.125%, 12/01/17 ............................................... 6,622,680
1,450,000 Refunding, Junior Lien, FGIC Insured, Pre-Refunded, 9.375%, 12/01/13 ..................... 1,497,937
1,000,000 Refunding, Junior Lien, Series C, AMBAC Insured, 6.375%, 12/01/17 ........................ 1,031,830
500,000 Refunding, Junior Lien, Series C, MBIA Insured, 5.75%, 12/01/15 .......................... 484,840
8,000,000 Refunding, Junior Lien, Series C, MBIA Insured, 6.375%, 12/01/22 ......................... 8,278,160
2,300,000 Irving Hospital Authority Revenue, Irving Health Care System, Series 1990, FGIC Insured,
Pre-Refunded, 7.25%, 07/01/15 ............................................................... 2,538,372
Lower Colorado River Authority Priority Revenue,
2,000,000 BIG Insured, Pre-Refunded, 7.75%, 01/01/10 ............................................... 2,064,760
1,600,000 MBIA Insured, Pre-Refunded, 7.625%, 01/01/16 ............................................. 1,752,560
1,550,000 Lubbock HFC, SFMR, Refunding, Mortgage Extension Program, Series B, BIG Insured, 8.875%,
12/01/12 .................................................................................... 1,598,345
Texas (cont.)
Matagorda County Navigation District No. 1 Revenue,
$ 200,000 PCR, Central P & L Co. Project, AMBAC Insured, 7.50%, 12/15/14 ........................... $ 221,652
2,000,000 PCR, Central P & L Co. Project, AMBAC Insured, 7.125%, 07/01/19 .......................... 2,159,420
100,000 Refunding, Houston Light & Power Co., Series E, FGIC Insured, 7.20%, 12/01/18 ............ 108,835
2,000,000 Refunding, Houston Light & Power Co., Series E, FGIC Insured, 6.10%, 07/01/28 ............ 2,006,400
2,000,000 Metro Health Facilities Development Corp., Hospital Revenue, The Wilson N. Jones Memorial
Hospital, Refunding, Connie Lee Insured, 5.60%, 01/01/17 .................................... 1,899,660
North Central Health Facility Development Corp. Revenue,
200,000 Refunding, Methodist Hospital of Dallas, Series A, BIG Insured, 9.50%, 10/01/15 .......... 204,754
2,000,000 Refunding, Presbyterian Health Care Project, Series A, BIG Insured, Pre-Refunded,
8.875%, 12/01/15 ........................................................................ 2,239,300
6,000,000 Palo Duro River Authority, Refunding, CGIC Insured, 6.375%, 08/01/08 ......................... 6,186,120
105,000 Park Ten MUD, Waterworks & Sewer System, FGIC Insured, Pre-Refunded, 9.25%, 03/01/09 ......... 107,765
Sabine River Authority, PCR,
3,250,000 Refunding, Collateralized, Texas Utilities Electric Co. Project, FGIC Insured, 6.55%, 10/01/22 3,375,743
2,000,000 Texas Utility Co. Project, Collateralized, FGIC Insured, 7.75%, 04/01/16 ................. 2,072,040
9,900,000 San Antonio Electric & Gas System Revenue, Series A, FGIC Insured, Pre-Refunded, 8.00%, 02/01/16 10,946,628
5,200,000 San Antonio Water Revenue, Refunding, MBIA Insured, 6.50%, 05/15/10 .......................... 5,488,756
2,500,000 San Patricio County COP, MBIA Insured, 6.60%, 04/01/07 ....................................... 2,681,125
1,110,000 Smithville HDC Mortgage Revenue, Smithville Retirement, Refunding,
Series A, MBIA Insured, 6.40%, 01/01/22 ..................................................... 1,098,722
1,170,000 Southeast HDC Mortgage Revenue, Stonegate Retirement, MBIA Insured,
6.40%, 01/01/24 ............................................................................. 1,183,408
10,115,000 Tarrant County HFC, SFMR, GNMA Secured, Series A, 8.00%, 07/01/21 ............................ 10,720,484
Texas Health Facilities Development Corp. Hospital Revenue,
2,500,000 Refunding, All Saints Episcopal Hospitals, Series B, MBIA Insured, 6.25%, 08/15/22 ....... 2,555,550
4,885,000 Refunding, All Saints Episcopal Hospitals, Series B, MBIA Insured, 6.375%, 08/15/23 ...... 5,024,125
2,000,000 Refunding, Cook-Fort Worth Medical Center Project, FGIC Insured, Pre-Refunded,
8.125%, 06/01/18 ........................................................................ 2,237,500
Texas State Turnpike Authority Revenue,
100,000 Dallas North Tollway, AMBAC Insured, Pre-Refunded, 7.125%, 01/01/15 ...................... 110,544
50,000 Dallas North Tollway, FGIC Insured, 7.125%, 01/01/15 ..................................... 53,096
5,995,000 Texas Water Resources Financial Authority Revenue, AMBAC Insured, 7.50%, 08/15/13 ............ 6,428,019
4,245,000 Travis County HFC, SFMR, GNMA Secured, 8.20%, 04/01/22 ....................................... 4,394,297
100,000 Trinity River Authority, Waste Water System Revenue, AMBAC Insured, Pre-Refunded,
7.10%, 08/01/16 ............................................................................. 111,785
1,965,000 Webb County, Limited Tax GO, CGIC Insured, Pre-Refunded, 7.25%, 02/15/09 ..................... 2,151,813
--------------
164,336,908
--------------
Utah 3.0%
6,250,000 Emery County PCR, Refunding, Series A, AMBAC Insured, 5.65%, 11/01/23 ........................ 5,929,500
Intermountain Power Agency, Special Obligation,
7,500,000 Refunding, Second Crossover Series 1986-C, FGIC Insured, 7.25%, 07/01/17 ................. 7,825,425
6,230,000 Refunding, Fifth Crossover Series, FGIC Insured, 7.00%, 07/01/15 ......................... 6,549,599
Intermountain Power Agency, Power Supply Revenue,
4,000,000 Refunding, Series 1985, AMBAC Insured, 6.00%, 07/01/21 ................................... 3,999,400
2,000,000 Refunding, Series 1987-C, AMBAC Insured, Pre-Refunded, 8.375%, 07/01/12 .................. 2,187,980
6,300,000 Refunding, Series 1987-D, AMBAC Insured, 8.375%, 07/01/12 ................................ 6,840,918
3,350,000 Layton City Municipal Building Facilities Authority Revenue, BIG Insured, Pre-Refunded,
7.25%, 08/01/10 ............................................................................. 3,609,525
5,000,000 Provo City Energy System Revenue, Series A, FGIC Insured, Pre-Refunded, 7.625%, 11/01/12 ..... 5,625,700
Utah (cont.)
$ 40,000 Provo Electric System Revenue, Refunding, Series 1984-A, AMBAC Insured, ETM 09/15/00, 10.375%,
09/15/15 .................................................................................... $ 57,459
5,000 Salt Lake County Water Conservancy District Revenue, Series A, MBIA Insured,
ETM 10/01/02, 10.875%, 10/01/02 ............................................................. 6,069
1,080,000 Utah State Board of Regents, Student Loan Revenue, Series H, AMBAC Insured, 6.70%, 11/01/15 .. 1,114,128
660,000 Utah State Municipal Finance Corp., Local Government Revenue, St. George Water, FGIC Insured,
Pre-Refunded, 6.90%, 06/01/08 ............................................................... 744,348
2,935,000 Washington County Water Conservancy District, MBIA Insured, 8.20%, 02/01/18 .................. 3,178,370
Weber County Municipal Building Authority, Lease Revenue,
825,000 CGIC Insured, Pre-Refunded, 7.20%, 06/01/05 .............................................. 906,683
875,000 CGIC Insured, Pre-Refunded, 7.20%, 06/01/06 .............................................. 961,634
950,000 CGIC Insured, Pre-Refunded, 7.20%, 06/01/07 ............................................... 1,044,060
--------------
50,580,798
--------------
Vermont 1.0%
Burlington Electric System Revenue,
1,000,000 Series 1986-A, MBIA Insured, 7.25%, 07/01/06 ............................................. 1,042,480
6,000,000 Series 1986-A, MBIA Insured, 7.375%, 07/01/12 ............................................ 6,221,220
2,205,000 State of Vermont, COP, MBIA Insured, 7.25%, 06/15/11 ......................................... 2,382,458
6,630,000 Vermont Home Mortgage, Series 1989-B, MBIA Insured, 7.60%, 12/01/24 .......................... 6,976,285
1,000,000 Vermont Municipal Bond Bank, Series 2, FSA Insured, 6.25%, 12/01/19 .......................... 1,023,110
--------------
17,645,553
--------------
Virginia .6%
4,500,000 Chesapeake Bay Bridge and Tunnel Commission, District Revenue, Refunding, General Resolution,
MBIA Insured, 5.75%, 07/01/25 ............................................................... 4,374,630
5,000,000 Chesapeake IDA, Public Facilities, Lease Revenue, Chesapeake Jail Project, MBIA Insured,
6.00%, 06/01/12 ............................................................................. 5,118,650
1,000,000 Danville IDA, Danville Regional Medical Center, FGIC Insured, 6.50%, 10/01/24 ................ 1,048,240
85,000 Southeastern Public Service Authority Revenue, Refunding, Senior Regional Waste System,
BIG Insured, Pre-Refunded, 7.00%, 07/01/13 .................................................. 94,602
--------------
10,636,122
--------------
Washington 9.6%
Benton County PUD No. 1, Electric Revenue,
5,700,000 Refunding, AMBAC Insured, 6.75%, 11/01/11 ................................................ 6,039,662
400,000 Refunding, AMBAC Insured, Pre-Refunded, 9.375%, 11/01/04 ................................. 407,395
1,600,000 Benton County School District No. 400, Richland, AMBAC Insured, Pre-Refunded, 7.875%, 12/01/00 1,677,855
2,000,000 Clallam County PUD No. 1, Revenue, Refunding, AMBAC Insured, 6.50%, 01/01/08 ................. 2,160,979
900,000 Douglas County Public Utility, MBIA Insured, 6.00%, 01/01/15 ................................. 908,000
850,000 Everett COP, Series A, AMBAC Insured, 7.25%, 04/01/09 ........................................ 920,898
2,000,000 Grant County PUD No. 2, Wanapum Hydro-Electric Revenue, Series B, AMBAC Insured,
6.75%, 01/01/23 ............................................................................. 2,099,559
2,245,000 Grays Harbor County PUD No. 001, Electric Revenue, Refunding, AMBAC Insured, 7.10%, 01/01/06 . 2,378,172
1,500,000 King County Public Hospital District No. 001, Hospital Facilities Revenue, Valley Medical Center,
AMBAC Insured, 7.25%, 09/01/15 .............................................................. 1,649,100
3,375,000 King County School District No. 411, Issaquah, Refunding, AMBAC Insured, 6.50%, 12/01/09 ..... 3,580,132
1,015,000 Kitsap County School District No. 100-C, Refunding, MBIA Insured, 6.60%, 12/01/08 ............ 1,101,619
2,105,000 Kittitas County School District No. 404, AMBAC Insured, 6.80%, 12/01/11 ...................... 2,276,451
1,040,000 Mason County School District No. 402, Pioneer, MBIA Insured, 6.60%, 12/01/11 ................. 1,124,229
Washington (cont.)
Seatac Storm Water Revenue,
$ 490,000 MBIA Insured, 5.40%, 12/01/00 ............................................................ $ 502,969
570,000 MBIA Insured, 5.75%, 12/01/03 ............................................................ 596,561
2,890,000 MBIA Insured, 6.50%, 12/01/13 ............................................................ 3,039,614
Seattle Metropolitan Sewer System Revenue,
3,000,000 Series S, AMBAC Insured, Pre-Refunded, 7.375%, 01/01/30 .................................. 3,269,609
6,000,000 Series W, MBIA Insured, 6.30%, 01/01/33 .................................................. 6,113,519
Snohomish County PUD No. 1, Electric Revenue,
4,250,000 Generation System, FGIC Insured, ETM 01/01/13, 6.65%, 01/01/16 ........................... 4,682,819
15,950,000 Generation System, Series 1986-A, BIG Insured, Pre-Refunded, 7.375%, 01/01/19 ............ 16,957,881
9,000,000 Refunding, BIG Insured, Pre-Refunded, 8.00%, 01/01/15 .................................... 9,636,660
5,000,000 Spokane Public Facilities District, Hotel, Motel and Sales Use Tax Revenue, Multi-Purpose Arena
Project, AMBAC Insured, 6.50%, 01/01/18 ..................................................... 5,197,800
14,000,000 Spokane Regional Solid Waste Management System Revenue, Series B, AMBAC Insured,
Pre-Refunded, 7.625%, 01/01/11 .............................................................. 15,690,640
Tacoma Electric System Revenue,
6,000,000 AMBAC Insured, Pre-Refunded, 8.00%, 01/01/11 ............................................. 6,617,160
500,000 Refunding, AMBAC Insured, 6.25%, 01/01/11 ................................................ 516,630
6,190,000 Refunding, FGIC Insured, 6.25%, 01/01/15 ................................................. 6,359,854
1,305,000 Thurston and Pierce Counties, Community Schools, Series B, AMBAC Insured, 6.65%, 12/01/09 .... 1,395,841
Washington Public Power Supply System, Nuclear Project No. 1 Revenue,
500,000 Refunding, Series A, MBIA Insured, 6.25%, 07/01/17 ....................................... 503,310
4,420,000 Refunding, Series B, FGIC Insured, 7.25%, 07/01/12 ....................................... 4,836,718
2,500,000 Refunding, Series C, FGIC Insured, 7.75%, 07/01/08 ....................................... 2,839,575
3,665,000 Series A, MBIA Insured, Pre-Refunded, 7.50%, 07/01/15 .................................... 4,065,823
5,000,000 Washington Public Power Supply System Revenue, Nuclear Project No. 2, Refunding, Series B,
FGIC Insured, Pre-Refunded, 7.375%, 07/01/12 ................................................ 5,720,300
100,000 Washington Public Power Supply System Revenue, Nuclear Project No. 3, Refunding, Series A,
BIG Insured, Pre-Refunded, 7.25%, 07/01/16 .................................................. 111,980
2,915,000 Washington State, HFA, Series A, GNMA Secured, 7.70%, 07/01/32 ............................... 3,032,387
Washington State Health Care Facilities Authority Revenue,
250,000 Empire Health Services, Spokane, MBIA Insured, 5.80%, 11/01/10 ........................... 250,978
1,000,000 Franciscan Health System, BIG Insured, Pre-Refunded, 7.70%, 01/01/13 ..................... 1,087,890
1,000,000 Harrison Memorial Hospital, AMBAC Insured, 5.40%, 08/15/23 ............................... 909,090
5,000,000 Mason Medical Center, MBIA Insured, 8.00%, 07/01/15 ...................................... 5,361,300
6,000,000 Refunding, Franciscan Health System, BIG Insured, Pre-Refunded, 7.60%, 01/01/08 .......... 6,514,200
3,250,000 Swedish Hospital Medical Center, AMBAC Insured, 6.30%, 11/15/22 .......................... 3,303,983
Western Washington University Revenue,
3,000,000 Housing and Dining System, MBIA Insured, 6.375%, 10/01/22 ................................ 3,083,970
1,050,000 Refunding, Housing and Dining System, MBIA Insured, 6.70%, 10/01/11 ...................... 1,099,350
3,500,000 Refunding, Housing and Dining System, MBIA Insured, 6.375%, 10/01/21 ..................... 3,571,085
6,130,000 Refunding, Housing and Dining System, MBIA Insured, 6.40%, 10/01/24 ...................... 6,340,933
2,000,000 Whatcom County School District No. 501, Bellingham, FGIC Insured, 6.125%, 12/01/13 ........... 2,042,900
350,000 Yakima-Tieton Irrigation District Revenue, Refunding, FSA Insured, 6.20%, 06/01/19 ........... 357,133
--------------
161,934,513
--------------
West Virginia 2.3%
11,560,000 Harrison County, Community Solid Waste Disposal Revenue, Potomac Edison Co., Series C,
AMBAC Insured, 6.75%, 08/01/24 .............................................................. 12,132,220
1,000,000 Monongalia County Building Community Hospital Revenue, Refunding, Monongalia General Hospital,
Series B, MBIA Insured, 6.50%, 07/01/17 ..................................................... 1,032,040
West Virginia (cont.)
Parkersburg Waterworks Revenue,
$ 1,370,000 Refunding, MBIA Insured, 6.30%, 09/01/14 ................................................. $ 1,417,183
1,880,000 Refunding, MBIA Insured, 6.375%, 09/01/19 ................................................ 1,948,338
1,000,000 Refunding, MBIA Insured, Pre-Refunded, 7.60%, 09/01/19 ................................... 1,038,250
South Charleston Hospital Revenue,
3,060,000 Refunding, Herbert J. Thomas Memorial Hospital, BIG Insured, Pre-Refunded, 8.00%, 10/01/04 3,442,469
2,400,000 Refunding, Herbert J. Thomas Memorial Hospital, BIG Insured, Pre-Refunded, 8.00%, 10/01/10 2,699,976
1,000,000 West Virginia Resource & Recovery, Solid Waste Disposal System Authority Revenue, BIG Insured,
Pre-Refunded, 8.25%, 06/01/09 ............................................................... 1,051,510
West Virginia School Building Authority Revenue,
300,000 Capital Improvement, Series B, MBIA Insured, 6.75%, 07/01/17 ............................. 313,770
100,000 Series A, MBIA Insured, Pre-Refunded, 7.25%, 07/01/15 .................................... 113,868
2,000,000 West Virginia State HDA, SFMR, MBIA Insured, 7.40%, 11/01/11 ................................. 2,081,260
West Virginia State Hospital Finance Authority Revenue,
2,000,000 Monongalia General Hospital Project, BIG Insured, Pre-Refunded, 8.60%, 07/01/17 .......... 2,158,600
1,000,000 West Virginia University Hospitals, Inc., MBIA Insured, Pre-Refunded, 7.20%, 06/01/16 .... 1,044,190
2,250,000 West Virginia State University Revenue, Refunding, AMBAC Insured, 6.00%, 04/01/12 ............ 2,285,865
West Virginia State Water Development Authority Revenue,
3,000,000 Loan Program II, Series B, CGIC Insured, Pre-Refunded, 7.50%, 11/01/29 ................... 3,411,570
2,750,000 Refunding, Loan Program, Series A, CGIC Insured, 7.00%, 11/01/25 .......................... 2,958,615
--------------
39,129,724
--------------
Wisconsin 1.1%
500,000 Holmen School District, Series A, AMBAC Insured, 6.25%, 10/01/10 ............................. 531,005
Lake County School District GO,
850,000 Refunding, AMBAC Insured, 6.35%, 04/01/11 ................................................ 874,608
900,000 Refunding, AMBAC Insured, 6.35%, 04/01/12 ................................................ 926,055
1,970,000 Sturgeon Bay, Combined Utilities Mortgage Revenue, Refunding, AMBAC Insured, 5.20%, 01/01/10 . 1,876,149
3,000,000 Superior Limited Obligation Revenue, Refunding, Midwest Energy Resources, Series E, FGIC Insured,
6.90%, 08/01/21 ............................................................................. 3,391,110
Wisconsin Health Educational Revenue,
1,965,000 Community Provider Program, Series A, CGIC Insured, 7.50%, 01/15/04 ...................... 2,158,513
2,000,000 Series A, CGIC Insured, 7.50%, 01/15/09 .................................................. 2,158,100
Wisconsin Health Facilities Authority Revenue,
105,000 Franciscan Health Care, Inc., MBIA Insured, Pre-Refunded, 8.875%, 12/01/10 ............... 108,350
2,000,000 Meriter Hospital, Inc., FGIC Insured, Pre-Refunded, 8.375%, 12/01/09 ..................... 2,218,140
4,000,000 Milwaukee Psychiatric Hospital, MBIA Insured, 7.30%, 04/01/12 ............................ 4,199,240
100,000 Wisconsin Public Power, Inc., Power Supply System Revenue, Series A, AMBAC Insured,
Pre-Refunded, 7.40%, 07/01/20 ............................................................... 114,513
500,000 Wisconsin State Health and Educational Facilities Authority Revenue, Refunding, Series AA,
MBIA Insured, 6.25%, 06/01/20 ............................................................... 505,295
--------------
19,061,078
--------------
Wyoming .9%
500,000 Gillette Health Facilities Revenue, Lutheran Hospital and Home Society, Refunding, MBIA Insured,
5.90%, 01/01/16 ............................................................................. 500,305
835,000 Lincoln City, PCR, Refunding, Pacificorp Projects, AMBAC Insured, 5.625%, 11/01/21 ........... 775,197
1,735,000 Natrona County Hospital Revenue, Wyoming Medical Center Projects, Refunding, AMBAC Insured,
6.00%, 09/15/24 ............................................................................. 1,713,816
2,245,000 University Facilities Revenues, MBIA Insured, 7.10%, 06/01/10 ................................ 2,434,478
1,525,000 Worland GO, Refunding, AMBAC Insured, 5.30%, 06/01/12 ........................................ 1,432,982
Wyoming (cont.)
$ 6,750,000 Wyoming CDA, AMBAC Insured, 6.00%, 06/01/23 .................................................. $ 6,485,265
2,000,000 Wyoming Municipal Power Agency, Power Supply System Revenue, Refunding, Series A,
MBIA Insured, 6.125%, 01/01/16 .............................................................. 2,025,979
--------------
15,368,022
--------------
Total Long Term Investments (Cost $1,547,022,828) ...................................... 1,650,893,154
--------------
eShort Term Investments 1.2%
1,000,000 California PCFA, PCR, Southern California Edison, Series A,
Daily VRDN and Put, 3.45%, 02/28/08 1,000,000
2,500,000 Grand Rapids, Michigan Water Supply System Revenue, Daily VRDN and Put, 3.35%, 01/01/20 ...... 2,500,000
9,400,000 Jacksonville PCR, Florida Power and Light Co. Project, Daily VRDN and Put, 3.35%, 05/01/29 ... 9,400,000
1,000,000 Maricopa County IDA, Samaritan Health Service Hospital, Series B, Daily VRDN and Put,
3.45%, 12/01/08 ............................................................................. 1,000,000
300,000 Massachusetts State GO, Series B, Daily VRDN and Put, 3.20%, 12/01/97 ........................ 300,000
900,000 New York City Municipal Water Finance Authority, Water and Sewer System Revenue, Series G,
Daily VRDN and Put, 3.35%, 06/15/24 ......................................................... 900,000
2,500,000 New York GO, Subseries A-5, Daily VRDN and Put, 3.35%, 08/01/15 .............................. 2,500,000
2,700,000 New York State Energy Research and Development Authority, PCR, Niagara Mohawk Power,
Series A, Daily VRDN and Put, 3.50%, 07/1/15 ................................................ 2,700,000
--------------
Total Short Term Investments (Cost $20,300,000) ........................................ 20,300,000
--------------
Total Investments (Cost $1,567,322,828) 98.8% ..................................... 1,671,193,154
Other Assets and Liabilities, Net 1.2% ............................................ 20,386,217
--------------
Net Assets 100.0% ................................................................. $1,691,579,371
==============
At August 31, 1995, the net unrealized appreciation based on the
cost of investments for income tax purposes of $1,567,322,828
was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ............................................................... $ 107,493,388
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ............................................................... (3,623,062)
--------------
Net unrealized appreciation ................................................................ $ 103,870,326
==============
</TABLE>
PORTFOLIO ABBREVIATIONS:
AMBAC - American Municipal Bond Assurance Corp.
BIG - Bond Investors Guaranty Insurance Co.
CDA - Community Development Agency
CGIC - Capital Guaranty Insurance Co.
COP - Certificate of Participation
EDA - Economic Development Authority
ETM - Escrow to Maturity
FGIC - Financial Guaranty Insurance Co.
FHA - Federal Housing Agency
FSA - Financial Security Assistance
GNMA - Government National Mortgage Association
GO - General Obligation
HDA - Housing Development Authority
HDC - Housing Development Corp.
HFA - Housing Finance Agency/Authority
HFAR - Housing Finance Agency Revenue
HFC - Housing Finance Corp.
HMR - Housing Mortgage Revenue
IDA - Industrial Development Authority
IDAR - Industrial Development Authority Revenue
MBIA - Municipal Bond Investors Assurance Corp.
MFHR - Multi-Family Housing Revenue
MFMR - Multi-Family Mortgage Revenue
MUD - Municipal Utility District
PBA - Public Building Authority
PCFA - Pollution Control Financing Authority
PCR - Pollution Control Revenue
PUD - Public Utility District
RDA - Redevelopment Agency
RDAR - Redevelopment Agency Revenue
RMR - Residential Mortgage Revenue
SFMR - Single Family Mortgage Revenue
dSee Note 1(g) regarding securities issued on a when-issued basis.
eVariable 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 upon
short notice prior to specified dates. The interest rate may change on specified
dates in relationship with changes in a designated rate (such as the prime
interest rate or U.S. Treasury bills rate).
gSee Note 1(c) regarding uninsured securities collateralized by U.S. government
securities.
FRANKLIN TAX-FREE TRUST
Statement of Investments in Securities and Net Assets, August 31, 1995
(unaudited)
<TABLE>
<CAPTION>
Face Value
Amount Franklin Massachusetts Insured Tax-Free Income Fund (Note 1)
Long Term Investments 98.5%...................................................................
<S> <C> <C>
$2,700,000 Ashburnham & Westminister, Regional School District, MBIA Insured, 6.00%, 12/15/13 ............ $ 2,716,146
Attleboro Municipal Purpose GO,
1,045,000 AMBAC Insured, 6.00%, 07/01/11 ............................................................ 1,072,504
1,045,000 AMBAC Insured, 6.00%, 07/01/12 ............................................................ 1,064,040
685,000 AMBAC Insured, 6.00%, 07/01/13 ............................................................ 694,727
755,000 AMBAC Insured, 6.00%, 07/01/14 ............................................................ 762,701
Blackstone-Milville School District,
705,000 AMBAC Insured, 6.50%, 05/01/08 ............................................................ 758,524
750,000 AMBAC Insured, 6.50%, 05/01/09 ............................................................ 802,095
795,000 AMBAC Insured, 6.50%, 05/01/10 ............................................................ 842,350
6,000,000 Boston GO, AMBAC Insured, Pre-Refunded, 7.375%, 08/01/04 ...................................... 6,365,040
Boston Water and Sewage Commission, General Revenue,
3,000,000 Series 1988-A, BIG Insured, 7.25%, 11/01/06 ............................................... 3,281,640
1,400,000 gSeries 1989-A, Pre-Refunded, 7.10%, 11/01/19 .............................................. 1,568,140
1,095,000 Central Berkshire GO, School District, MBIA Insured, 7.25%, 06/01/08 .......................... 1,203,799
2,000,000 Fall River School Project, MBIA Insured, 7.20%, 06/01/10 ...................................... 2,207,980
1,650,000 Framingham Housing Authority Mortgage Revenue, Beaver Terrace Apartments, Series A, GNMA
Secured, 6.65%, 02/20/32 ..................................................................... 1,662,062
Greenfield GO,
500,000 MBIA Insured, 6.50%, 10/15/08 ............................................................. 537,385
500,000 MBIA Insured, 6.50%, 10/15/09 ............................................................. 537,655
1,000,000 Holyoke GO, School Project Loans, MBIA Insured, 8.05%, 06/15/04 ............................... 1,205,830
Hudson GO,
250,000 MBIA Insured, 6.00%, 05/15/13 ............................................................. 253,718
240,000 MBIA Insured, 6.00%, 05/15/14 ............................................................. 242,616
Lenox GO, Refunding,
1,000,000 AMBAC Insured, 6.60%, 10/15/11 ............................................................ 1,063,060
500,000 AMBAC Insured, 6.625%, 10/15/15 ........................................................... 527,340
450,000 Leominster GO, Series 1990, MBIA Insured, Pre-Refunded, 7.50%, 04/01/09 ....................... 514,530
Ludlow GO,
210,000 School Project, Limited Tax, MBIA Insured, 7.30%, 11/01/07 ................................ 247,678
210,000 School Project, Limited Tax, MBIA Insured, 7.30%, 11/01/08 ................................ 247,647
210,000 School Project, Limited Tax, MBIA Insured, 7.40%, 11/01/09 ................................ 248,409
4,000,000 Lynn Water and Sewer General Revenue, Series 1990-A, MBIA Insured, Pre-Refunded, 7.25%,
12/01/10 ..................................................................................... 4,591,280
2,000,000 Mansfield GO, AMBAC Insured, 6.70%, 01/15/11 .................................................. 2,121,800
Martha's Vineyard, Regional High School District No. 100,
830,000 AMBAC Insured, 6.55%, 12/15/10 ............................................................ 897,346
725,000 AMBAC Insured, 6.60%, 12/15/11 ............................................................ 780,528
880,000 AMBAC Insured, 6.65%, 12/15/12 ............................................................ 947,232
210,000 AMBAC Insured, 6.70%, 12/15/14 ............................................................ 226,002
500,000 Mashpee Water District GO, MBIA Insured, 6.40%, 10/15/12 ...................................... 524,795
Massachusetts Bay Transportation Authority,
2,500,000 COP, BIG Insured, 7.75%, 01/15/06 ......................................................... 2,328,575
3,000,000 gGeneral Transportation System, Series 1988-A, Pre-Refunded, 7.75%, 03/01/13 ............... 3,310,530
2,500,000 Refunding, Series B, CGIC Insured, 5.50%, 03/01/21 ........................................ 2,992,125
2,535,000 Massachusetts Education Loan Authority Revenue, Issue D, Series A, MBIA Insured, 7.25%, 01/01/09 2,642,509
Massachusetts GO,
1,000,000 Commonwealth, Series A, FGIC Insured, Pre-Refunded, 7.25%, 03/01/09 ....................... 1,131,320
800,000 Commonwealth, Series C, AMBAC Insured, 6.75%, 08/01/09 .................................... 866,464
1,000,000 Commonwealth, Series C, CGIC Insured, Pre-Refunded, 7.00%, 12/01/10 ....................... 1,120,320
4,000,000 Refunding, Series A, AMBAC Insured, 6.50%, 08/01/11 ....................................... 4,219,320
2,000,000 Refunding, Series B, MBIA Insured, 6.50%, 08/01/11 ........................................ 2,109,660
Massachusetts Health & Educational Facilities Authority Revenue,
$1,500,000 Bay State Medical Center, Refunding, Series D, FGIC Insured, 6.00%, 07/01/15 .............. $ 1,518,705
2,000,000 Berkshire Health System, Series A, MBIA Insured, Pre-Refunded, 7.50%, 10/01/08 ............ 2,223,320
1,500,000 Berkshire Health System, Series A, MBIA Insured, Pre-Refunded, 6.75%, 10/01/19 ............ 1,609,020
5,500,000 Berkshire Health System, Series D, MBIA Insured, 6.00%, 10/01/19 .......................... 5,504,345
1,900,000 Beverly Hospital, Lot 1, Refunding, Series D, MBIA Insured, 7.30%, 07/01/13 ............... 2,061,443
4,000,000 Beverly Hospital, Lot 2, Series D, MBIA Insured, Pre-Refunded, 7.30%, 07/01/19 ............ 4,486,160
2,250,000 Boston College, Series J, FGIC Insured, 6.625%, 07/01/21 .................................. 2,368,013
500,000 Brigham & Women's Hospital, Series C, MBIA Insured, 7.00%, 06/01/18 ....................... 537,520
2,500,000 Cape Cod Health System, Series A, Connie Lee Insured, 5.625%, 11/15/23 .................... 2,353,625
2,200,000 Children's Hospital, Refunding, Series E, AMBAC Insured, 6.20%, 10/01/16 .................. 2,248,818
1,000,000 Community College Program, Series A, Connie Lee Insured, 6.50%, 10/01/09 .................. 1,054,540
3,250,000 Community College Program, Series A, Connie Lee Insured, 6.60%, 10/01/22 .................. 3,377,758
5,250,000 Fallon Healthcare System, Series A, CGIC Insured, 6.875%, 06/01/11 ........................ 5,682,705
7,550,000 Fallon Healthcare System, Series A, CGIC Insured, 6.75%, 06/01/20 ......................... 7,971,819
600,000 Fallon Healthcare System, Series A, CGIC Insured, 6.00%, 06/01/21 ......................... 600,300
3,490,000 Lahey Clinic Medical Center, Series A, MBIA Insured, Pre-Refunded, 7.625%, 07/01/18 ....... 3,871,422
8,965,000 Massachusetts General Hospital, AMBAC Insured, 6.25%, 07/01/20 ............................ 9,148,514
2,500,000 Massachusetts General Hospital, Refunding, Series F, AMBAC Insured, 6.00%, 07/01/15 ....... 2,523,725
1,280,000 McLean Hospital, Series C, FGIC Insured, 6.625%, 07/01/15 ................................. 1,357,402
3,000,000 Metro West Health, Inc., Series C, AMBAC Insured, 6.40%, 11/15/11 ......................... 3,159,270
3,500,000 Metro West Health, Inc., Series C, AMBAC Insured, 6.50%, 11/15/18 ......................... 3,669,715
550,000 Metro West Health, Inc., Refunding, Series C, AMBAC Insured, 6.30%, 11/15/12 .............. 571,302
5,400,000 Milton Hospital, Series B, MBIA Insured, 7.00%, 07/01/16 .................................. 5,881,356
6,000,000 Mt. Auburn Hospital, Series 1988-A, MBIA Insured, Pre-Refunded, 7.875%, 07/01/18 .......... 6,669,720
6,500,000 Mt. Auburn Hospital, Series B-1, MBIA Insured, 6.30%, 08/15/24 ............................ 6,649,240
1,895,000 New England Medical Center Hospitals, Series D, AMBAC Insured, 6.875%, 04/01/22 ........... 2,034,112
1,000,000 New England Medical Center Hospitals, Series D, BIG Insured, Pre-Refunded, 7.20%, 07/01/10 1,046,910
1,000,000 New England Medical Center Hospitals, Series F, FGIC Insured, 6.50%, 07/01/12 ............. 1,049,090
8,925,000 New England Medical Center Hospitals, Series F, FGIC Insured, 6.625%, 07/01/25 ............ 9,345,189
5,000,000 Newton-Wellesley Hospital, Series C, BIG Insured, 8.00%, 07/01/18 ......................... 5,525,150
4,030,000 Newton-Wellesley Hospital, Series D, MBIA Insured, 7.00%, 07/01/15 ........................ 4,396,448
250,000 dNewton-Wellesley Hospital, Series E, MBIA Insured, 6.00%, 07/01/25 ........................ 248,940
1,250,000 Northeastern University, Series D, AMBAC Insured, 7.125%, 10/01/10 ........................ 1,374,638
3,900,000 Northeastern University, Series E, MBIA Insured, 6.55%, 10/01/22 .......................... 4,115,046
5,750,000 Salem Hospital, Series 1987-A, MBIA Insured, Pre-Refunded, 7.25%, 07/01/09 ................ 6,074,300
4,000,000 gSt. Elizabeth's Hospital of Boston, Series B, FHA Mortgage Insured, Pre-Refunded, 7.75%,
08/01/27 ................................................................................. 4,342,280
6,200,000 St. Luke's Hospital, New Bedford, Series B, AMBAC Insured, Pre-Refunded, 7.75%, 07/01/13 .. 6,718,940
890,000 Stonehill College, Refunding, Series E, MBIA Insured, 6.55%, 07/01/12 ..................... 945,572
3,000,000 Stonehill College, Refunding, Series E, MBIA Insured, 6.60%, 07/01/20 ..................... 3,163,530
1,025,000 Stonehill College, Series D, AMBAC Insured, Pre-Refunded, 7.65%, 07/01/10 ................. 1,184,777
515,000 Stonehill College, Series D, AMBAC Insured, Pre-Refunded, 7.70%, 07/01/20 ................. 596,385
3,250,000 Suffolk University, Series B, Connie Lee Insured, 6.35%, 07/01/22 ......................... 3,291,178
1,500,000 University Hospital, Series C, MBIA Insured, Pre-Refunded, 7.25%, 07/01/19 ................ 1,652,190
1,820,000 Wentworth Institute of Technology, Series A, AMBAC Insured, Pre-Refunded, 7.40%, 04/01/10 . 2,073,526
3,000,000 Wheaton College, Series B, CGIC Insured, 7.25%, 07/01/19 .................................. 3,359,400
2,750,000 Worcester Polytech Institute, MBIA Insured, 6.625%, 09/01/17 .............................. 2,918,960
4,395,000 Massachusetts Municipal Wholesale Electric Co., Power Supply System Revenue, Series D,
MBIA Insured, 6.125%, 07/01/19 ............................................................... 4,431,742
430,000 Massachusetts State HFA, MFHR, Section 8 Assisted, Series
1979-A, ETM 04/01/19, 7.00%, 04/01/21 485,831
Massachusetts State HFA, Housing Revenue,
$2,700,000 MFHR, Series 1985-A, MBIA Insured, 9.25%, 12/01/14 ........................................ $ 2,796,174
110,000 Series 1985-A, FGIC Insured, 9.50%, 12/01/16 .............................................. 113,599
1,735,000 Series 1986-A, MBIA Insured, 7.50%, 12/01/06 .............................................. 1,803,133
1,975,000 Series 1988-8, BIG Insured, 7.70%, 06/01/17 ............................................... 2,071,439
105,000 SFHR, Series 1985-1, FGIC Insured, 9.375%, 06/01/12 ....................................... 107,973
1,300,000 SFHR, Series 1986-2, FGIC Insured, 8.25%, 06/01/14 ........................................ 1,337,167
1,500,000 SFMR, Series 18, MBIA Insured, 7.35%, 12/01/16 ............................................ 1,566,150
Massachusetts State Industrial Finance Agency Revenue,
750,000 Babson College, Series A, MBIA Insured, 6.375%, 10/01/09 .................................. 789,765
3,105,000 Babson College, Series A, MBIA Insured, 6.50%, 10/01/22 ................................... 3,247,520
7,075,000 Brandeis University, Series C, MBIA Insured, 6.80%, 10/01/19 .............................. 7,492,779
2,010,000 Combined Jewish Philanthropies, AMBAC Insured, Series A, 6.375%, 02/01/15 ................. 2,095,988
1,000,000 Milton Academy, Series A, MBIA Insured, Pre-Refunded, 7.25%, 09/01/19 ..................... 1,123,880
5,200,000 Massachusetts State Port Authority Revenue, Series A, FGIC Insured, 7.50%, 07/01/20 ........... 5,726,136
Melrose Municipal Purpose GO,
200,000 MBIA Insured, 6.00%, 08/15/11 ............................................................. 204,500
200,000 MBIA Insured, 6.05%, 08/15/12 ............................................................. 204,488
200,000 MBIA Insured, 6.10%, 08/15/13 ............................................................. 204,476
200,000 MBIA Insured, 6.10%, 08/15/14 ............................................................. 204,476
Millis School Project, GO,
270,000 Unlimited Tax, AMBAC Insured, 7.40%, 05/01/06 ............................................. 299,336
270,000 Unlimited Tax, AMBAC Insured, 7.40%, 05/01/07 ............................................. 298,744
270,000 Unlimited Tax, AMBAC Insured, 7.40%, 05/01/08 ............................................. 298,153
270,000 Unlimited Tax, AMBAC Insured, 7.40%, 05/01/09 ............................................. 301,242
Norfolk GO,
450,000 AMBAC Insured, 6.00%, 01/15/10 ............................................................ 458,996
425,000 AMBAC Insured, 6.00%, 01/15/11 ............................................................ 431,957
375,000 AMBAC Insured, 6.00%, 01/15/12 ............................................................ 379,785
300,000 AMBAC Insured, 6.00%, 01/15/13 ............................................................ 303,828
300,000 North Andover Municipal Purpose, Limited Tax, MBIA Insured, 7.40%, 09/15/09 ................... 337,671
North Attleborough GO,
125,000 Limited Tax, AMBAC Insured, Pre-Refunded, 7.05%, 06/01/06 ................................. 141,045
125,000 Limited Tax, AMBAC Insured, Pre-Refunded, 7.10%, 06/01/07 ................................. 141,310
125,000 Limited Tax, AMBAC Insured, Pre-Refunded, 7.15%, 06/01/08 ................................. 141,574
125,000 Limited Tax, AMBAC Insured, Pre-Refunded, 7.20%, 06/01/09 ................................. 141,839
1,500,000 Palmer GO, Refunding, MBIA Insured, 5.50%, 10/01/10 ........................................... 1,466,880
Peabody GO,
500,000 Electric Light, AMBAC Insured, 6.75%, 08/01/05 ............................................ 549,545
750,000 Electric Light, AMBAC Insured, 6.85%, 08/01/06 ............................................ 824,063
500,000 Electric Light, AMBAC Insured, 6.90%, 08/01/07 ............................................ 547,955
555,000 Electric Light, AMBAC Insured, 6.95%, 08/01/08 ............................................ 608,136
1,000,000 Puerto Rico Commonwealth, Public Improvement, MBIA Insured, Pre-Refunded, 6.50%, 07/01/09 ..... 1,127,320
Puerto Rico HFC, SFMR,
2,565,000 Portfolio No. 1, Series 1988-A, GNMA Secured, 7.80%, 10/15/21 ............................. 2,681,708
860,000 Portfolio No. 1, Series 1988-B, GNMA Secured, 7.65%, 10/15/22 ............................. 908,607
Quabbin Regional School District, GO,
275,000 AMBAC Insured, 7.00%, 06/15/04 ............................................................ 302,682
275,000 AMBAC Insured, 7.00%, 06/15/05 ............................................................ 301,447
275,000 AMBAC Insured, 7.00%, 06/15/06 ............................................................ 300,834
275,000 AMBAC Insured, 7.00%, 06/15/07 ............................................................ 300,220
275,000 AMBAC Insured, 7.00%, 06/15/08 ............................................................ 300,220
250,000 AMBAC Insured, 7.00%, 06/15/09 ............................................................ 275,838
Quincy Revenue, Quincy City Hospital, FHA Mortgage Insured,
$1,500,000 Series A, Pre-Refunded, 7.75%, 01/15/06 ................................................... $ 1,579,155
3,475,000 Series A, Pre-Refunded, 7.875%, 01/15/16 .................................................. 3,662,025
Rochester School GO,
150,000 Lot B, MBIA Insured, 7.30%, 04/01/04 ...................................................... 165,065
150,000 Lot B, MBIA Insured, 7.30%, 04/01/05 ...................................................... 164,544
150,000 Lot B, MBIA Insured, 7.30%, 04/01/06 ...................................................... 164,286
150,000 Lot B, MBIA Insured, 7.30%, 04/01/07 ...................................................... 164,027
150,000 Lot B, MBIA Insured, 7.30%, 04/01/08 ...................................................... 163,769
120,000 Lot B, MBIA Insured, 7.30%, 04/01/09 ...................................................... 132,094
Salem GO,
425,000 AMBAC Insured, 6.70%, 08/15/05 ............................................................ 463,943
500,000 AMBAC Insured, 6.80%, 08/15/07 ............................................................ 547,000
470,000 MBIA Insured, 5.20%, 07/15/11 ............................................................. 442,369
470,000 MBIA Insured, 5.20%, 07/15/12 ............................................................. 438,924
3,000,000 Somerville Housing Authority Revenue, Clarendon Hill, GNMA Secured, 7.95%, 11/20/30 ........... 3,222,930
South Essex Sewer District,
330,000 AMBAC Insured, 6.25%, 11/01/11 ............................................................ 345,002
2,800,000 Series B, MBIA Insured, 7.00%, 06/01/24 ................................................... 3,043,292
2,375,000 Southbridge GO, AMBAC Insured, 6.375%, 01/01/12 ............................................... 2,452,805
Tyngsborough GO,
600,000 School Project Loan, AMBAC Insured, 6.90%, 05/15/09 ....................................... 657,773
600,000 School Project Loan, AMBAC Insured, 6.90%, 05/15/10 ....................................... 656,219
2,000,000 Westfield School District GO, AMBAC Insured, Pre-Refunded, 7.10%, 12/15/08 .................... 2,283,359
Westford GO,
800,000 FGIC Insured, Pre-Refunded, 7.60%, 10/15/10 ............................................... 928,735
2,000,000 Refunding, AMBAC Insured, 5.45%, 10/15/10 ................................................. 1,955,599
Whately GO,
215,000 AMBAC Insured, 6.20%, 01/15/07 ............................................................ 228,037
215,000 AMBAC Insured, 6.30%, 01/15/08 ............................................................ 228,585
200,000 AMBAC Insured, 6.40%, 01/15/10 ............................................................ 212,143
Whitman GO, Various Purpose Loan,
250,000 MBIA Insured, Pre-Refunded, 7.60%, 06/15/04 ............................................... 263,334
250,000 MBIA Insured, Pre-Refunded, 7.60%, 06/15/05 ............................................... 263,334
150,000 MBIA Insured, Pre-Refunded, 7.60%, 06/15/06 ............................................... 158,000
1,335,000 Worcester GO, Refunding, Series E, MBIA Insured, 6.00%, 10/01/15 .............................. 1,349,777
--------------
Total Long Term Investments (Cost $271,349,599) ......................................... 290,508,016
--------------
eShort Term Investments .3%
600,000 Massachusetts State Updates, Series B, National Westminster Bank Plc., Daily VRDN and Put,
3.20%, 12/01/97 .............................................................................. 600,000
200,000 Massachusetts State Updates, Series E, ABN AMRO Bank N. V., Daily VRDN and Put, 3.20%,
12/01/97 ..................................................................................... 200,000
--------------
Total Short Term Investments (Cost $800,000).............................................. 800,000
--------------
Total Investments (Cost $272,149,599) 98.8% ......................................... 291,308,016
Other Assets and Liabilities, Net 1.2% .............................................. 3,667,335
--------------
Net Assets 100.0% ................................................................... $294,975,351
==============
At August 31, 1995, the net unrealized appreciation based on the
cost of investments for income tax purposes of $272,171,713 was
as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ................................................................ $ 19,430,606
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ................................................................ (294,302)
--------------
Net unrealized appreciation .................................................................. $ 19,136,304
==============
</TABLE>
PORTFOLIO ABBREVIATIONS:
AMBAC - American Municipal Bond Assurance Corp.
BIG - Bond Investors Guaranty Insurance Co.
CGIC - Capital Guaranty Insurance Co.
COP - Certificate of Participation
ETM - Escrow to Maturity
FGIC - Financial Guaranty Insurance Co.
FHA - Federal Housing Agency
GNMA - Government National Mortgage Association
GO - General Obligation
HFA - Housing Finance Agency/Authority
HFC - Housing Finance Corp.
MBIA - Municipal Bond Investors Assurance Corp.
MFHR - Multi-Family Housing Revenue
SFHR - Single Family Housing Revenue
SFMR - Single Family Mortgage Revenue
dSee Note 1(g) regarding securities purchased on a when-issued basis.
eVariable 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 puls accrued interest upon
short notice prior to specified dates. The interest rate may change on specified
dates in relationship with changes in a designated rate (such as the prime
interest rate or U.S. Treasury bills rate).
gSee Note 1(c) regarding uninsured securities collateralized by U.S. government
securities.
The accompanying notes are an integral part of these financial statements.
FRANKLIN TAX-FREE TRUST
Statement of Investments in Securities and Net Assets, August 31, 1995
(unaudited)
<TABLE>
<CAPTION>
Face Value
Amount Franklin Michigan Insured Tax-Free Income Fund (Note 1)
Investments 97.8%
<S> <C> <C>
$ 1,325,000 Allegan Public School District GO, School Building and Site, AMBAC Insured, 5.875%, 05/01/18 . $ 1,325,464
3,750,000 Allendale Public School District, MBIA Insured, 6.00%, 05/01/24 .............................. 3,758,400
5,000,000 Anchor Bay School District GO, FGIC Insured, 5.55%, 05/01/19 ................................. 4,705,150
Bay City Electric Utility Revenue,
3,100,000 AMBAC Insured, 6.60%, 01/01/12 ........................................................... 3,297,129
2,000,000 Refunding, AMBAC Insured, Pre-Refunded, 7.30%, 01/01/05 .................................. 2,125,820
1,135,000 Bay City GO, Refunding, AMBAC Insured, 5.20%, 09/01/12 ....................................... 1,053,916
Belding Area School,
375,000 Series B, AMBAC Insured, 6.15%, 05/01/13 ................................................. 382,009
675,000 Series B, AMBAC Insured, 6.15%, 05/01/14 ................................................. 685,328
2,125,000 Berkley City School District, FGIC Insured, 6.00%, 01/01/19 .................................. 2,142,149
1,450,000 Breckenridge Community School District, AMBAC Insured, 5.75%, 05/01/23 ....................... 1,397,438
Breitung Township School District,
7,500,000 CGIC Insured, Pre-Refunded, 7.20%, 05/01/19 .............................................. 8,391,000
2,935,000 MBIA Insured, 6.30%, 05/01/15 ............................................................ 2,993,465
5,250,000 Byron Center Public Schools, Refunding, MBIA Insured, 5.875%, 05/01/24 ....................... 5,167,260
Caledonia Community Schools,
3,750,000 Refunding, AMBAC Insured, 6.625%, 05/01/14 ............................................... 3,939,600
10,000,000 Refunding, AMBAC Insured, 5.50%, 05/01/22 ................................................ 9,313,000
1,290,000 Calhoun County, Western Calhoun County Sanitary Sewer System No. 1, Township of Emmett,
Refunding, AMBAC Insured, Pre-Refunded, 7.75%, 11/01/18 ..................................... 1,425,811
875,000 Calumet School District GO, Laurium and Keweenah Public Schools, CGIC Insured, 5.875%,
05/01/20 .................................................................................... 864,255
3,875,000 Cedar Springs Public School District, MBIA Insured, 5.875%, 05/01/24 ......................... 3,813,930
5,000,000 Central Michigan University Revenue, MBIA Insured, Pre-Refunded, 7.90%, 10/01/15 ............. 5,475,500
2,250,000 Chelsea School District, FGIC Insured, 5.875%, 05/01/25 ...................................... 2,207,970
Chippewa Valley School District,
500,000 BIG Insured, Pre-Refunded, 7.40%, 05/01/07 ............................................... 559,160
500,000 BIG Insured, Pre-Refunded, 7.40%, 05/01/08 ............................................... 559,160
500,000 BIG Insured, Pre-Refunded, 7.40%, 05/01/09 ............................................... 559,160
500,000 BIG Insured, Pre-Refunded, 7.40%, 05/01/10 ............................................... 559,160
1,225,000 Clinton Township Building Authority, Macomb County, Series A, AMBAC Insured, 5.875%, 11/01/17 1,210,680
Coldwater Community Schools,
1,100,000 MBIA Insured, 6.20%, 05/01/15 ............................................................ 1,132,736
1,700,000 MBIA Insured, 6.30%, 05/01/23 ............................................................ 1,750,337
3,000,000 Comstock Park Public Schools, Refunding, School Building and Site, FGIC Insured, 5.25%, 05/01/15 2,758,290
65,000 Coopersville Area Public Schools, Counties of Ottawa and Muskegon, MBIA Insured, Pre-Refunded,
8.60%, 05/01/04 ............................................................................. 68,921
3,000,000 Dearborn EDC Revenue, Oakwood Hospital, Refunding, Series A, MBIA Insured, 5.25%, 08/15/14 ... 2,744,070
4,400,000 Dearborn EDC Revenue, Oakwood Obligation Group, Series A, FGIC Insured, 5.875%, 11/15/25 ..... 4,293,300
13,050,000 Detroit City Water Supply System Revenue, MBIA Insured, Pre-Refunded, 7.875%, 07/01/19 ....... 14,580,635
Detroit Sewage Disposal System Revenue,
1,000,000 FGIC Insured, 6.625%, 07/01/21 ........................................................... 1,046,690
10,300,000 FGIC Insured, Pre-Refunded, 7.125%, 07/01/19 ............................................. 11,464,518
3,500,000 FGIC Insured, Pre-Refunded, 7.25%, 07/01/20 .............................................. 3,993,605
4,000,000 Refunding, BIG Insured, 7.00%, 07/01/09 .................................................. 4,172,440
500,000 Refunding, BIG Insured, Pre-Refunded, 8.00%, 07/01/08 .................................... 544,205
6,000,000 Detroit State Aid GO, AMBAC Insured, Pre-Refunded, 7.20%, 05/01/09 ........................... 6,695,460
Detroit Water Supply System Revenue,
5,000,000 FGIC Insured, 6.25%, 07/01/12 ............................................................ 5,174,000
4,960,000 FGIC Insured, Pre-Refunded, 7.125%, 07/01/10 ............................................. 5,632,824
DeWitt Public Schools Building and Site,
$ 350,000 AMBAC Insured, Pre-Refunded, 6.60%, 05/01/15 ............................................. $ 391,311
350,000 AMBAC Insured, Pre-Refunded, 6.60%, 05/01/16 ............................................. 391,311
1,050,000 Dexter Community Schools, Refunding, AMBAC Insured, 5.70%, 05/01/14 .......................... 1,024,023
1,250,000 East Lansing Building Authority, GO, Refunding, AMBAC Insured, 7.00%, 10/01/16 ............... 1,325,775
Eastern Michigan University Revenue,
1,000,000 Refunding, AMBAC Insured, 6.375%, 06/01/14 ............................................... 1,034,700
2,105,000 Refunding, Residence Hall, FGIC Insured, 7.875%, 10/01/10 ................................ 2,188,211
4,500,000 gRefunding, Special Project, Student Fee, Pre-Refunded, 7.875%, 10/01/14 .................. 4,733,415
10,140,000 Farmington Hills Hospital Finance Authority Revenue, Refunding, Botsford General Hospital,
Series A, MBIA Insured, 7.10%, 02/15/14 ..................................................... 10,885,797
Ferris State College Revenue,
1,000,000 AMBAC Insured, 6.15%, 10/01/14 ........................................................... 1,024,820
1,000,000 AMBAC Insured, 6.25%, 10/01/19 ........................................................... 1,028,520
6,665,000 Flint Hospital Building Authority Revenue, Refunding, Hurley Medical Center, Series A,
BIG Insured, 7.75%, 07/01/00 ................................................................ 6,977,389
Fowlerville Community School District,
645,000 Refunding, FGIC Insured, 5.50%, 05/01/13 ................................................. 620,297
2,150,000 Refunding, FGIC Insured, 5.75%, 05/01/20 ................................................. 2,094,552
4,425,000 Gaylord Community Schools, Refunding, MBIA Insured, 5.625%, 05/01/21 ......................... 4,225,388
Gerrish and Higgins School District, Building and Site,
3,000,000 CGIC Insured, 6.40%, 05/01/12 ............................................................ 3,129,810
2,500,000 CGIC Insured, 6.50%, 05/01/17 ............................................................ 2,613,925
4,000,000 Gibraltar School District GO, CGIC Insured, Pre-Refunded, 7.00%, 05/01/15 .................... 4,368,240
Gogebic - Iron Wastewater Authority, Wastewater Treatment System Revenue,
1,015,000 Refunding, MBIA Insured, 5.95%, 01/01/15 ................................................. 1,015,609
500,000 Refunding, MBIA Insured, 6.05%, 01/01/25 ................................................. 500,300
6,250,000 Grand Haven Area Public Schools, Refunding, MBIA Insured, 6.05%, 05/01/14 .................... 6,331,438
10,000,000 Grand Ledge Public School District, MBIA Insured, 6.60%, 05/01/24 ............................ 10,506,500
610,000 Grand Rapids Community College, MBIA Insured, 5.90%, 05/01/19 ................................ 608,396
7,500,000 Grand Rapids, Downtown, Devauth Tax Increment Revenue, MBIA Insured, 6.875%, 06/01/24 ........ 8,118,000
3,850,000 Grand Rapids Sewer System Revenue Improvement, Refunding, MBIA Insured, 6.00%, 01/01/20 ...... 3,839,836
Grand Rapids Water Supply System Revenue,
2,500,000 FGIC Insured, 5.75%, 01/01/18 ............................................................ 2,456,600
5,375,000 FGIC Insured, Pre-Refunded, 7.25%, 01/01/20 .............................................. 6,071,600
4,500,000 MBIA Insured, Pre-Refunded, 7.875%, 01/01/18 ............................................. 4,959,000
Grand Traverse County Hospital Finance Authority Revenue,
5,500,000 gMunson Medical Center, Series A, Pre-Refunded, 7.625%, 12/01/15 .......................... 5,859,645
2,500,000 Refunding, Munson Healthcare, Series A, AMBAC Insured, 6.25%, 07/01/12 ................... 2,594,025
7,900,000 Refunding, Munson Healthcare, Series A, AMBAC Insured, 6.25%, 07/01/22 ................... 8,065,347
3,000,000 Gratiot County EDC, EDR, Masonic Home Project, AMBAC Insured, Pre-Refunded, 7.375%,
04/01/20 .................................................................................... 3,421,560
1,850,000 Greenville Public Schools Building, MBIA Insured, 5.75%, 05/01/19 ............................ 1,814,684
2,750,000 Gull Lake Community School District, FGIC Insured, Pre-Refunded, 6.80%, 05/01/21 ............. 3,112,533
4,715,000 Harrison Community Schools GO, AMBAC Insured, 6.25%, 05/01/13 ................................ 4,847,444
Haslett Public School District,
4,000,000 CGIC Insured, Pre-Refunded, 7.50%, 05/01/20 .............................................. 4,557,960
3,875,000 Refunding, CGIC Insured, 6.625%, 05/01/19 ................................................ 4,084,366
2,000,000 Holland School District GO, Refunding, AMBAC Insured, 6.375%, 05/01/10 ....................... 2,081,340
Holt Public Schools Building and Site,
$ 1,000,000 MBIA Insured, 6.25%, 05/01/16 ............................................................ $ 1,025,400
3,060,000 MBIA Insured, 6.25%, 05/01/18 ............................................................ 3,137,724
2,525,000 MBIA Insured, 6.30%, 05/01/20 ............................................................ 2,589,009
1,425,000 MBIA Insured, 6.50%, 05/01/21 ............................................................ 1,479,449
Houghton-Portage Township School District,
2,000,000 Refunding, AMBAC Insured, 6.00%, 05/01/14 ................................................ 2,033,520
2,700,000 Refunding, CGIC Insured, Pre-Refunded, 7.00%, 05/01/17 ................................... 2,948,562
5,695,000 Howell Public Schools, Refunding, AMBAC Insured, 5.375%, 05/01/20 ............................ 5,239,343
750,000 Hudsonville Building Authority, Refunding, AMBAC Insured, 6.60%, 10/01/17 .................... 781,080
Hudsonville Public Schools GO,
2,000,000 Refunding, Series B, FGIC Insured, 6.05%, 05/01/19 ....................................... 2,035,960
2,000,000 Refunding, Series B, FGIC Insured, 6.10%, 05/01/24 ....................................... 2,035,860
9,800,000 Huron Valley School District, Refunding, FGIC Insured, 6.125%, 05/01/20 ...................... 9,981,202
6,800,000 Imlay City Community School District, Refunding, CGIC Insured, Pre-Refunded, 6.70%, 05/01/21 . 7,216,432
Ingham County Medical Center Revenue,
475,000 gRefunding, Pre-Refunded, 8.25%, 05/01/00 ................................................. 487,706
500,000 gRefunding, Pre-Refunded, 8.25%, 11/01/00 ................................................. 513,375
Inkster Michigan School District,
450,000 Series 1990, AMBAC Insured, Pre-Refunded, 7.00%, 05/01/14 ................................ 505,229
450,000 Series 1990, AMBAC Insured, Pre-Refunded, 7.00%, 05/01/16 ................................ 505,229
2,250,000 Iron Mountain School District, Building and Site, AMBAC Insured, 6.30%, 05/01/21 ............. 2,307,038
1,350,000 Ithaca Public Schools GO, AMBAC Insured, 5.75%, 05/01/21 ..................................... 1,319,787
Jackson County GO,
3,000,000 Refunding, AMBAC Insured, 5.50%, 04/01/13 ................................................ 2,895,090
400,000 gSeries 1985, Pre-Refunded, 8.60%, 04/01/12 ............................................... 452,148
Kalamazoo Hospital Finance Authority, Hospital Facility Revenue,
5,000,000 Refunding & Improvement, Bronson Methodist, Series A, MBIA Insured, 6.25%, 05/15/12 ...... 5,168,250
2,460,000 Refunding & Improvement, Bronson Methodist, Series A, MBIA Insured, 6.375%, 05/15/17...... 2,537,711
1,000,000 Kelloggsville Public School District GO, FGIC Insured, 5.75%, 05/01/13 ....................... 992,250
2,100,000 Kent County Hospital Finance Authority Revenue, Pine Rest Christian Hospital Association,
FGIC Insured, Pre-Refunded, 9.00%, 11/01/10 ................................................. 2,158,695
Lake City Area School District GO,
2,500,000 AMBAC Insured, Pre-Refunded, 6.95%, 05/01/13 ............................................. 2,699,625
2,955,000 Refunding, AMBAC Insured, 5.625%, 05/01/13 ............................................... 2,914,103
Lake Superior State University Revenue,
1,500,000 AMBAC Insured, 6.375%, 11/15/15 .......................................................... 1,573,905
2,135,000 MBIA Insured, 6.50%, 11/15/11 ............................................................ 2,255,051
1,500,000 Lakeview Community School District GO, Refunding, MBIA Insured, 6.75%, 05/01/13 .............. 1,607,460
12,500,000 Lansing Sewage Disposal System Revenue, Refunding, Series 1988, MBIA Insured, 7.625%,
05/01/06 .................................................................................... 13,178,750
Livonia Public School District,
10,000,000 Refunding, FGIC Insured, 5.50%, 05/01/16 ................................................. 9,525,100
3,625,000 Refunding, FGIC Insured, 5.50%, 05/01/21 ................................................. 3,411,415
1,000,000 Marquette Area Public School Building and Site, Series B, FGIC Insured, Pre-Refunded, 6.65%,
05/01/12 .................................................................................... 1,124,400
5,000,000 Marquette City Hospital Finance Authority Revenue, Refunding, Marquette General Hospital,
Series C, AMBAC Insured, 7.50%, 04/01/07..................................................... 5,461,800
1,100,000 Marysville Public School District, MBIA Insured, 5.75%, 05/01/22 ............................. 1,067,814
Mattawan Consolidated School District, Counties of Van Buren and Kalamazoo, School Building
and Site, GO,
$ 775,000 Unlimited Tax, AMBAC Insured, Pre-Refunded, 7.50%, 05/01/13 .............................. $ 854,453
775,000 Unlimited Tax, AMBAC Insured, Pre-Refunded, 7.55%, 05/01/16 .............................. 855,414
800,000 Unlimited Tax, AMBAC Insured, Pre-Refunded, 7.55%, 05/01/17............................... 883,008
800,000 Unlimited Tax, AMBAC Insured, Pre-Refunded, 7.55%, 05/01/18 .............................. 883,008
2,675,000 Menominee Area Public School District, Refunding, AMBAC Insured, 6.00%, 05/01/20 ............. 2,700,092
Michigan Higher Education Student Loan Authority Revenue,
2,000,000 Series 13-A, MBIA Insured, 7.40%, 10/01/04 ............................................... 2,119,140
2,000,000 Series 13-A, MBIA Insured, 7.55%, 10/01/08 ............................................... 2,105,820
Michigan Municipal Bond Authority Revenue,
1,400,000 Local Government Loan Program, Group 2, BIG Insured, Pre-Refunded, 7.30%, 05/01/16 ....... 1,459,444
850,000 Local Government Loan Program, Series A, Group 15, AMBAC Insured, 7.60%, 05/01/09 ........ 931,065
3,790,000 Local Government Loan Program, Series C, MBIA Insured, 6.00%, 11/01/10 ................... 3,895,248
6,490,000 Local Government Loan Program, Series G, AMBAC Insured, 6.75%, 11/01/14 .................. 6,973,894
1,650,000 Local Government Loan Program, Series G, AMBAC Insured, 6.80%, 11/01/14 .................. 1,779,723
825,000 Local Government Loan Program, Series G, AMBAC Insured, 6.80%, 11/01/23 .................. 882,866
1,000,000 Local Government Loan Program, Wayne County Project, Series A, FGIC Insured, Pre-Refunded,
7.00%, 12/01/09 ......................................................................... 1,128,540
1,900,000 Michigan Public Power Agency Revenue, Refunding, Campbell Project, AMBAC Insured, 6.125%,
01/01/10 .................................................................................... 1,927,341
Michigan State Building Authority Revenue,
10,000,000 Detroit Regional Prisons, Series I, MBIA Insured, Pre-Refunded, 7.25%, 10/01/08 .......... 11,109,800
1,500,000 Refunding, Series I, AMBAC Insured, 6.25%, 10/01/20 ...................................... 1,519,800
1,000,000 Refunding, University of Michigan, Adult General Hospital, AMBAC Insured, Pre-Refunded,
7.375%, 12/01/00 ........................................................................ 1,062,400
5,625,000 Refunding, University of Michigan, Adult General Hospital, BIG Insured, Pre-Refunded, 7.875%,
12/01/04 ................................................................................ 6,009,638
4,645,000 Series II, MBIA Insured, 6.25%, 10/01/20 ..................................................... 4,735,996
5,000,000 Series II, MBIA Insured, ETM 04/01/96, 7.40%, 04/01/01 ....................................... 5,437,650
Michigan State Comprehensive Transportation Revenue,
1,000,000 gRefunding, Series 1986-II, Pre-Refunded, 7.75%, 08/01/11 ................................. 1,035,660
1,750,000 Refunding, Series 1988-II, FGIC Insured, 7.625%, 05/01/11 ................................ 1,903,370
Michigan State HDA, Limited Obligation Revenue,
3,200,000 Mercy Bellbrook Project, MBIA Insured, Pre-Refunded, 8.00%, 04/01/07 ..................... 3,453,856
1,200,000 Mercy Bellbrook Project, MBIA Insured, Pre-Refunded, 8.125%, 04/01/18 .................... 1,297,452
Michigan State HDA, MFHR,
5,750,000 Series 1987-A, FGIC Insured, 8.375%, 07/01/19 ............................................ 6,113,515
4,415,000 Series 1988-A, FGIC Insured, 7.70%, 07/01/18 ............................................. 4,622,593
2,880,000 Series 1989-A, FGIC Insured, 7.55%, 07/01/09 ............................................. 3,029,530
2,945,000 Series 1989-A, FGIC Insured, 7.65%, 07/01/15 ............................................. 3,076,141
1,800,000 Michigan State HDA, SFMR, Series 1978, FGIC Insured, 6.30%, 04/01/11 ......................... 1,800,072
5,815,000 Michigan State HDA, SFMR, Series 1986-A, FGIC Insured, 8.00%, 10/01/06 ....................... 5,973,284
Michigan State Hospital Finance Authority Revenue,
1,750,000 Crittenton Hospital, FGIC Insured, 6.75%, 03/01/20 ....................................... 1,826,318
2,000,000 Crittenton Hospital, Series A, FGIC Insured, 7.125%, 12/01/06 ............................ 2,095,140
4,295,000 gCrittenton Hospital, Series A, Pre-Refunded, 7.25%, 12/01/13 ............................. 4,553,903
1,785,000 Daughters Charity, St. Mary's Hospital, FGIC Insured, 10.00%, 11/01/15 ................... 1,837,086
1,000,000 gHenry Ford Hospital, Series 1985-A, Pre-Refunded, 7.50%, 07/01/13 ........................ 1,065,450
3,500,000 MidMichigan Hospital, MBIA Insured, 6.625%, 06/01/10 ..................................... 3,670,730
8,750,000 Mt. Sinai Hospital of Detroit, FGIC Insured, 7.00%, 01/01/09 ............................. 9,068,850
9,020,000 Oakland General Hospital, AMBAC Insured, 7.00%, 07/01/15 ................................. 9,733,031
Michigan State Hospital Finance Authority Revenue,
$ 2,200,000 Oakwood Hospital, FGIC Insured, Pre-Refunded, 7.00%, 07/01/10 ............................ $ 2,486,594
10,000,000 Oakwood Hospital, FGIC Insured, Pre-Refunded, 7.20%, 11/01/15 ............................ 11,407,500
13,250,000 Oakwood Hospital, FGIC Insured, Pre-Refunded, 7.10%, 07/01/18 ............................ 15,033,053
7,635,000 Pontiac Osteopathic, Series B, AMBAC Insured, Pre-Refunded, 7.75%, 02/01/05 .............. 8,182,124
4,500,000 Refunding, Oakwood Hospital, Group A, FGIC Insured, 5.625%, 11/01/18 ..................... 4,349,925
2,000,000 Refunding, Sisters of Mercy Health Corp., Series H, MBIA Insured, 7.50%, 08/15/07......... 2,155,160
3,445,000 Refunding, St. John's Hospital, Series A, AMBAC Insured, 6.00%, 05/15/13 ................. 3,484,996
9,545,000 Refunding, St. John's Hospital, Series A, AMBAC Insured, 6.25%, 05/15/14 ................. 9,802,047
4,900,000 Sisters of Mercy Health Corp., Series H, MBIA Insured, 7.50%, 08/15/13 ................... 5,260,150
1,500,000 Sparrow Obligation Group, MBIA Insured, 6.50%, 11/15/11 .................................. 1,564,545
4,500,000 St. Joseph's Hospital Corp., Series A, FGIC Insured, Pre-Refunded, 8.125%, 07/01/05 ...... 4,650,570
3,000,000 Michigan State South Central Power Agency, Power Supply System Revenue, Refunding,
AMBAC Insured, Pre-Refunded, 7.25%, 11/01/06 ................................................ 3,174,630
Michigan State Strategic Fund, Limited Obligation Revenue,
3,000,000 Refunding, Detroit Edison Co., AMBAC Insured, 7.00%, 05/01/21 ............................ 3,459,450
5,000,000 Refunding, Detroit Edison Co., FGIC Insured, 6.95%, 05/01/11 ............................. 5,646,600
20,000,000 Refunding, Detroit Edison Co., FGIC Insured, 6.875%, 12/01/21 ............................ 21,411,000
1,285,000 Refunding, Detroit Edison Co., Series BB, MBIA Insured, 6.05%, 10/01/23 .................. 1,300,381
10,000,000 Refunding, Detroit Edison Co., Series BB, MBIA Insured, 6.20%,08/15/25 ................... 10,219,600
5,540,000 Refunding, Detroit Edison Co., Series CC, FGIC Insured, 6.95%, 09/01/21 .................. 5,942,758
5,825,000 Refunding, Detroit Edison Co., Series CC, MBIA Insured, 6.05%, 10/01/23 .................. 5,894,725
1,800,000 St. John-Bon Secours Care Center, FGIC Insured, 7.90%, 11/15/16 .......................... 1,934,244
Michigan State Trunk Line GO,
6,000,000 Refunding, Series B-2, MBIA Insured, 5.50%, 10/01/21 ..................................... 5,621,700
10,000,000 Series A, FGIC Insured, 5.80%, 11/15/24 .................................................. 9,684,800
2,500,000 Monroe County EDC, Limited Obligation Revenue, Monroe Community Health Services,
MBIA Insured, Pre-Refunded, 7.00%, 09/01/21 ................................................. 2,870,175
Monroe County PCR,
4,000,000 Detroit Edison Co., Series 1, MBIA Insured, 6.875%, 09/01/22 ............................. 4,231,800
4,000,000 Detroit Edison Co., Series 1-B, MBIA Insured, 6.55%, 09/01/24 ............................ 4,136,080
9,420,000 Detroit Edison Co., Series A, AMBAC Insured, 9.625%, 12/01/15 ............................ 9,817,147
10,000,000 Detroit Edison Co., Series C, AMBAC Insured, 7.50%, 12/01/19 ............................. 11,060,100
1,150,000 Detroit Edison Co., Series CC, MBIA Insured, 6.55%, 06/01/24 ............................. 1,188,284
Mount Clemens Community School District,
10,000 AMBAC Insured, 9.30%, 05/01/99 ........................................................... 10,088
2,040,000 Refunding, MBIA Insured, 5.50%, 05/01/19 ................................................. 1,911,806
3,200,000 North Branch Area Schools, Lapeer County Building and Site, Refunding, CGIC Insured,
Pre-Refunded, 6.60%, 05/01/21 ............................................................... 3,620,128
Northern Michigan University Revenue,
1,715,000 AMBAC Insured, 5.60%, 12/01/13 ........................................................... 1,684,096
1,000,000 AMBAC Insured, 6.55%, 12/01/14 ........................................................... 1,053,520
1,000,000 Norway Electric Utilities System Revenue, Refunding, AMBAC Insured, 5.375%, 02/01/12 ......... 931,320
4,750,000 Novi Community School District, FGIC Insured, 6.125%, 05/01/18 ............................... 4,827,330
4,750,000 Oak Park GO, Refunding, AMBAC Insured, 5.50%, 05/01/12 ....................................... 4,588,833
3,500,000 Oakland Community College District, Washtenaw County, AMBAC Insured, Pre-Refunded, 6.65%,
05/01/11 .................................................................................... 3,790,570
6,875,000 Oakland County EDC, EDR, FHA Mortgage Insured, Series A, FGIC Insured, 8.00%, 08/01/18 ....... 7,092,456
Okemos Public School District,
5,390,000 Refunding, MBIA Insured, 5.50%, 05/01/11 ................................................. 5,187,120
3,000,000 Series I, MBIA Insured, Pre-Refunded, 6.90%, 05/01/11 .................................... 3,410,310
1,800,000 Olivet Community School District, Refunding, MBIA Insured, 5.50%, 05/01/20 ................... 1,684,746
2,270,000 Otsego Public School District, Building and Site, CGIC Insured, 6.625%, 05/01/16 ............. 2,405,564
$ 3,755,000 Perry Public School Building and Site, Refunding, FGIC Insured 5.45%, 05/01/22 ............... $ 3,519,486
Petoskey Hospital Finance Authority Facilities Revenue,
4,500,000 Refunding, Northern Michigan Hospital, MBIA Insured, 7.00%, 11/15/07 ..................... 4,918,230
1,000,000 Refunding, Northern Michigan Hospital, MBIA Insured, 6.75%, 11/15/19 ..................... 1,044,490
Plymouth-Canton Community School District,
4,000,000 Refunding, AMBAC Insured, 5.50%, 05/01/13 ................................................ 3,859,600
1,875,000 Refunding, AMBAC Insured, 5.50%, 05/01/17 ................................................ 1,790,400
3,000,000 Series C, MBIA Insured, 6.50%, 05/01/16 .................................................. 3,157,710
3,500,000 Series C, FGIC Insured, 6.50%, 05/01/16 .................................................. 3,683,995
1,305,000 Pontiac General Building Authority, Series 1991, Refunding, AMBAC Insured, 6.875%, 04/01/06 .. 1,421,236
Port Huron School District,
5,500,000 CGIC Insured, Pre-Refunded, 7.25%, 05/01/15 .............................................. 6,254,875
4,500,000 Refunding, AMBAC Insured, 6.00%, 05/01/12 ................................................ 4,514,625
Portage Lake Water and Sewer Authority GO,
770,000 Refunding, AMBAC Insured, 6.10%, 10/01/14 ................................................ 785,115
670,000 Refunding, AMBAC Insured, 6.20%, 10/01/20 ................................................ 685,980
Portage Public Schools GO,
4,750,000 MBIA Insured, 5.70%, 05/01/12 ............................................................ 4,689,295
2,750,000 MBIA Insured, 5.625%, 05/01/19 ........................................................... 2,630,348
Puerto Rico Commonwealth Aqueduct and Sewer Authority Revenue,
500,000 Series 1985-A, FSA Insured, ETM 07/01/00, 8.75%, 07/01/00 ................................ 595,150
2,500,000 Series 1985-A, FSA Insured, Pre-Refunded, 9.00%, 07/01/09 ................................ 3,256,825
Puerto Rico Commonwealth Public Improvement GO,
825,000 MBIA Insured, 7.125%, 07/01/02 ........................................................... 875,919
175,000 MBIA Insured, Pre-Refunded, 7.125%, 07/01/02 ............................................. 188,069
10,875,000 MBIA Insured, Pre-Refunded, 6.60%, 07/01/13 .............................................. 12,322,789
8,500,000 Series 1987, MBIA Insured, 6.75%, 07/01/06 ............................................... 8,946,760
Puerto Rico Electric Power Authority Revenue,
3,400,000 Refunding, Series U, CGIC Insured, 6.00%, 07/01/14 ....................................... 3,440,120
7,000,000 Series P, CGIC Insured, 7.00%, 07/01/21 .................................................. 7,545,510
2,000,000 Puerto Rico HFC, SFMR, Portfolio No. 1, Series 1988-C, GNMA Secured, 6.85%, 10/15/23 ......... 2,075,260
8,700,000 Puerto Rico Port Authority Revenue, Series D, FGIC Insured, 7.00%, 07/01/14 .................. 9,377,991
Reeths-Puffer Schools,
2,985,000 Pre-Refunded, MBIA Insured, 6.625%, 05/01/12 ............................................. 3,381,139
1,000,000 Pre-Refunded, MBIA Insured, 6.625%, 05/01/12 ............................................. 1,132,710
2,000,000 Riverview Community School District, Refunding, AMBAC Insured, 5.25%, 05/01/21 ............... 1,804,680
Rockford Public Schools GO,
3,900,000 Refunding, AMBAC Insured, 5.875%, 05/01/19 ............................................... 3,853,005
3,150,000 Refunding, CGIC Insured, 5.875%, 05/01/19 ................................................ 3,112,043
9,750,000 Refunding, CGIC Insured, Pre-Refunded, 7.375%, 05/01/19 .................................. 11,059,230
1,850,000 Refunding, MBIA Insured, 5.875%, 05/01/12 ................................................ 1,856,660
1,925,000 Refunding, MBIA Insured, 5.875%, 05/01/19 ................................................ 1,901,804
Romulus Community Schools,
690,000 Refunding, FGIC Insured, 5.75%, 05/01/13 ................................................. 676,455
1,200,000 Refunding, FGIC Insured, 5.75%, 05/01/17 ................................................. 1,166,616
5,435,000 Refunding, FGIC Insured, 5.75%, 05/01/22 ................................................. 5,240,862
2,220,000 Refunding, Series II, FGIC Insured, 6.40%, 05/01/17 ...................................... 2,282,049
5,000,000 Royal Oak Hospital Finance Authority Revenue, William Beaumont Hospital, Refunding,
MBIA Insured, 6.25%, 01/01/19 ............................................................... 5,083,650
25,000 Saginaw City School District, Unlimited Tax, MBIA Insured, Pre-Refunded, 11.00%, 06/01/03 .... 28,371
Saginaw Hospital Finance Authority Revenue,
$ 5,325,000 Refunding, St. Luke's Hospital Project, Series C, MBIA Insured, 6.875%, 07/01/14 ......... $ 5,615,213
2,000,000 Refunding, St. Luke's Hospital Project, Series C, MBIA Insured, 6.75%, 07/01/17 .......... 2,093,560
1,000,000 Refunding, St. Luke's Hospital Project, Series D, MBIA Insured, 6.50%, 07/01/11 .......... 1,049,800
2,185,000 St. Luke's Hospital Project, Series B, AMBAC Insured, Pre-Refunded, 7.625%, 07/01/06 ..... 2,407,389
3,540,000 St. Luke's Hospital Project, Series B, AMBAC Insured, Pre-Refunded, 7.75%, 07/01/13 ...... 3,911,983
3,875,000 St. Luke's Hospital Project, Series B, MBIA Insured, 6.00%, 07/01/21 ..................... 3,891,546
1,000,000 Saginaw Valley State University Revenue, MBIA Insured, 5.375%, 07/01/16 ...................... 932,910
Sandusky Community School District,
3,425,000 CGIC Insured, Pre-Refunded, 6.50%, 05/01/21 .............................................. 3,812,299
3,340,000 Refunding, AMBAC Insured, 5.40%, 05/01/14 ................................................ 3,145,111
2,000,000 Sault Ste. Marie GO, Series 1990, AMBAC Insured, Pre-Refunded, 7.50%, 09/01/10 ............... 2,269,840
Shelby Charter Township Authority,
750,000 AMBAC Insured, 5.75%, 11/01/11 ........................................................... 755,438
750,000 AMBAC Insured, 5.75%, 11/01/12 ........................................................... 755,640
South Haven Public Schools,
1,640,000 Refunding, FGIC Insured, 5.50%, 05/01/13 ................................................. 1,559,870
1,725,000 Refunding, FGIC Insured, 5.50%, 05/01/17 ................................................. 1,621,052
7,745,000 St. Clair County EDC, PCR, Refunding, Detroit Edison Co., Series DD, AMBAC Insured, 6.05%,
08/01/24 .................................................................................... 7,829,343
1,000,000 Sturgis Public School District, MBIA Insured, 6.10%, 05/01/18 ................................ 1,017,930
375,000 Three Rivers City Revenue, GO, Refunding, Unlimited Tax, MBIA Insured, Pre-Refunded, 8.60%,
11/01/01 .................................................................................... 385,256
Tri County Area School District,
1,850,000 School Building and Site, MBIA Insured, Pre-Refunded, 6.875%, 05/01/11 ................... 2,093,534
2,325,000 School Building and Site, MBIA Insured, Pre-Refunded, 6.875%, 05/01/16 ................... 2,631,063
1,395,000 University of Michigan Construction Project, Student Fee Revenue, FGIC Insured, Pre-Refunded,
7.25%, 04/01/12 ............................................................................. 1,449,906
10,635,000 g University of Michigan Hospital Revenue, Refunding, Series 1986-A, Pre-Refunded, 7.75%, 12/01/12 11,339,675
1,500,000 University of Puerto Rico, University Revenues, Series M, MBIA Insured, 4.75%, 06/01/01 ...... 1,520,940
2,365,000 University Revenues Medical Service Plan, MBIA Insured, 6.50%, 12/01/21 ...................... 2,448,436
Vicksburg Community School District,
2,175,000 Refunding, MBIA Insured, 5.625%, 05/01/12 ................................................ 2,118,645
1,000,000 Refunding, MBIA Insured, 5.625%, 05/01/20 ................................................ 955,670
Warren Consolidated School District,
6,500,000 Refunding, CGIC Insured, Pre-Refunded, 6.70%, 05/01/16 ................................... 7,324,720
3,735,000 Refunding, MBIA Insured, 5.50%, 05/01/14 ................................................. 3,579,251
1,030,000 Refunding, MBIA Insured, 5.50%, 05/01/21 ................................................. 973,185
1,225,000 Refunding, Series II, FGIC Insured, 5.375%, 05/01/14 ..................................... 1,156,694
3,405,000 Refunding, Series II, FGIC Insured, 5.50%, 05/01/16 ...................................... 3,255,044
2,000,000 Wayland Union School District, FGIC Insured, 6.75%, 05/01/24 ................................. 2,162,460
Wayne Charter County Airport Revenue,
2,900,000 Detroit Metro Airport, MBIA Insured, Pre-Refunded, 6.75%, 12/01/19 ....................... 3,303,564
6,635,000 Detroit Metro Airport, MBIA Insured, Pre-Refunded, 7.00%, 12/01/21 ....................... 7,647,765
300,000 Detroit Metro Airport, Series B, MBIA Insured, 6.875%, 12/01/11 .......................... 320,642
2,000,000 Detroit Metro Airport, Series B, MBIA Insured, 6.75%, 12/01/21 ........................... 2,088,180
10,585,000 Wayne County Airport Revenue, Series B, AMBAC Insured, 6.00%, 12/01/20 ....................... 10,630,938
Wayne County, Ecorse Creek Drain District, Pollution Abatement No. 1,
500,000 AMBAC Insured, 7.40%, 11/01/04 ........................................................... 541,110
500,000 AMBAC Insured, 7.50%, 11/01/05 ........................................................... 541,580
490,000 AMBAC Insured, 7.50%, 11/01/06 ........................................................... 530,747
450,000 AMBAC Insured, 7.50%, 11/01/07 ........................................................... 487,421
2,275,000 Wayne-Westland Community School, Refunding, FGIC Insured, 6.10%, 05/01/13 .................... 2,328,485
$ 6,205,000 West Ottawa Public School District, Refunding, FGIC Insured, 6.00%, 05/01/20 ................. $ 6,216,851
Western Michigan University Revenues,
5,000,000 FGIC Insured, 6.25%, 11/15/12 ............................................................ 5,176,000
4,290,000 Special Projects, Student Fees, BIG Insured, Pre-Refunded, 7.375%, 10/01/11 .............. 4,533,801
Western Townships Utilities Authority, Sewer Disposal System,
18,710,000 Refunding, CGIC Insured, 6.75%, 01/01/15 ................................................. 19,536,981
6,115,000 Refunding, CGIC Insured, 6.50%, 01/01/19 ................................................. 6,305,605
1,800,000 Williamston County GO, Refunding, AMBAC Insured, 6.90%, 11/01/17.............................. 1,970,531
6,210,000 Willow Run Community School, CGIC Insured, 6.375%, 05/01/18 .................................. 6,377,421
Wyandotte Electric Revenue,
16,060,000 Refunding, AMBAC Insured, Pre-Refunded, 7.875%, 10/01/17.................................. 17,579,436
9,980,000 Refunding, MBIA Insured, 6.25%, 10/01/17.................................................. 10,229,101
Yale Public School District, School Building and Site,
2,000,000 AMBAC Insured, 5.375%, 05/01/17........................................................... 1,860,840
1,500,000 AMBAC Insured, 5.50%, 05/01/19 ........................................................... 1,414,755
Zeeland Public Schools GO,
2,000,000 Refunding, Series B, MBIA Insured, 6.05%, 05/01/19 ....................................... 2,016,980
4,000,000 Refunding, Series B, MBIA Insured, 6.10%, 05/01/24 ....................................... 4,033,880
--------------
Total Investments (Cost $996,455,157) 97.8% ....................................... 1,051,506,499
Other Assets and Liabilities, Net 2.2% ............................................ 24,148,197
--------------
Net Assets 100.0% ................................................................. $1,075,654,696
==============
At August 31, 1995, the net unrealized appreciation based on the
cost of investments for income tax purposes of $996,455,157 was
as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ............................................................... $ 60,718,153
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ............................................................... (5,666,811)
--------------
Net unrealized appreciation ................................................................ $ 55,051,342
==============
</TABLE>
PORTFOLIO ABBREVIATIONS:
AMBAC - American Municipal Bond Assurance Corp.
BIG - Bond Investors Guaranty Insurance Co.
CGIC - Capital Guaranty Insurance Co.
EDC - Economic Development Corp.
EDR - Economic Development Revenue
ETM - Escrow to Maturity
FGIC - Financial Guaranty Insurance Co.
FHA - Federal Housing Authority
FSA - Financial Security Assurance
GNMA - Government National Mortgage Association
GO - General Obligation
HDA - Housing Development Authority
HFC - Housing Finance Corp.
MBIA - Municipal Bond Investors Assurance Corp.
MFHR - Multi-Family Housing Revenue
PCR - Pollution Control Revenue
SFMR - Single Family Mortgage Revenue
gSee Note 1(c) regarding uninsured securities collateralized by U.S. government
securities.
The accompanying notes are an integral part of these financial statements.
FRANKLIN TAX-FREE TRUST
Statement of Investments in Securities and Net Assets, August 31, 1995
(unaudited)
<TABLE>
<CAPTION>
Face Value
Amount Franklin Minnesota Insured Tax-Free Income Fund (Note 1)
Long Term Investments 98.8%
<S> <C> <C>
$ 2,295,000 Albany ISD No. 745, Series A, CGIC Insured, 6.00%, 02/01/16 ................................... $ 2,320,475
2,100,000 Anoka County Resource Recovery Revenue, Northern, AMBAC Insured, 7.15%, 12/01/08 .............. 2,272,431
4,870,000 Becker GO, Refunding, Tax Increment, Series D, MBIA Insured, 6.25%, 08/01/15 .................. 4,979,624
Becker Wastewater Treatment Facility,
625,000 Series A, MBIA Insured, 5.90%, 02/01/12 ................................................... 634,463
610,000 Series A, MBIA Insured, 5.95%, 02/01/15 ................................................... 617,192
290,000 Benson ISD No. 777 GO, CGIC Insured, 6.00%, 02/01/15 .......................................... 293,039
3,500,000 Brainerd Health Care Facilities Revenue, Refunding, Benedictine Health-St. Joseph,
Series D, MBIA Insured, 5.875%, 02/15/13 ..................................................... 3,526,285
935,000 Brainerd Hospital Facilities Revenue, Benedictine Health System, St. Joseph's Medical
Center, MBIA Insured, Pre-Refunded, 9.625%, 10/01/12 ......................................... 957,468
2,800,000 Buffalo ISD No. 877, CGIC Insured, 6.15%, 02/01/18 ............................................ 2,861,488
2,105,000 Burnsville ISD, Series A, CGIC Insured, 6.20%, 02/01/17 ....................................... 2,177,559
625,000 Byron ISD No. 531 GO, AMBAC Insured, 6.90%, 06/01/14 .......................................... 674,463
Cannon Falls ISD No. 252 GO, School Building,
610,000 Series 1987-A, AMBAC Insured, 8.00%, 02/01/05 ............................................. 639,518
655,000 Series 1987-A, AMBAC Insured, 8.10%, 02/01/06 ............................................. 687,573
705,000 Series 1987-A, AMBAC Insured, 8.20%, 02/01/07 ............................................. 741,011
760,000 Series 1987-A, AMBAC Insured, 8.20%, 02/01/08 ............................................. 798,821
2,975,000 Chanhassen Apartments Project GO, Series B, AMBAC Insured, 6.20%, 01/01/25 .................... 3,073,056
3,500,000 Cold Spring ISD No. 750, Series A, FGIC Insured, 6.15%, 02/01/11 .............................. 3,570,140
Crystal GO, Tax Increment,
475,000 Refunding, Series 1986-A, MBIA Insured, 7.80%, 02/01/06 ................................... 481,712
460,000 Refunding, Series 1986-A, MBIA Insured, 7.80%, 02/01/07 ................................... 466,500
445,000 Refunding, Series 1986-A, MBIA Insured, 7.80%, 02/01/08 ................................... 451,288
Dakota County Housing and Redevelopment Authority,
15,000 City of South St. Paul, SFMR, Burnsville and Inver Grove Heights, FGIC Insured, 9.375%,
05/01/18 ................................................................................. 15,960
1,080,000 Refunding, SFMR, GNMA Secured, 8.10%, 03/01/16 ................................................ 1,141,582
Dakota, Washington and Stearns County SFMR,
1,140,000 Series 1990, GNMA Secured, 7.80%, 12/01/10 ................................................ 1,223,003
4,040,000 Series 1990, GNMA Secured, 7.85%, 12/01/30 ................................................ 4,316,619
Delano ISD No. 879,
810,000 Refunding, Series A, AMBAC Insured, 5.55%, 02/01/09 ....................................... 808,437
700,000 Refunding, Series A, AMBAC Insured, 5.60%, 02/01/10 ....................................... 695,177
1,040,000 Dilworth ISD No. 147, MBIA Insured, 6.00%, 02/01/15 ........................................... 1,049,818
1,940,000 Dover and Eyota ISD No. 533 GO, AMBAC Insured, 7.25%, 02/01/20 ................................ 2,053,296
Duluth EDA Health Care Facilities Revenue,
1,145,000 Benedictine Health System, Series B, Connie Lee Insured, 6.00%, 02/15/17 .................. 1,150,679
4,000,000 The Duluth Clinic, Ltd., AMBAC Insured, 6.20%, 11/01/12 ................................... 4,120,600
7,530,000 The Duluth Clinic, Ltd., AMBAC Insured, 6.30%, 11/01/22 ................................... 7,729,169
3,000,000 Duluth EDA Hospital Facilities Revenue, St. Lukes Hospital, Series A, Connie Lee Insured, 6.40%,
05/01/12 ..................................................................................... 3,081,030
3,500,000 Duluth EDA Tax Increment Revenue, Refunding, MBIA Insured, 7.25%, 08/01/08 .................... 3,793,895
Duluth ISD No. 709 GO,
600,000 gSchool Building, Series 1986, Pre-Refunded, 7.80%, 02/01/00 ............................... 609,696
4,350,000 Series A, FGIC Insured, 5.25%, 02/01/14 ................................................... 4,095,308
4,420,000 Eagan MFMR, Refunding, Forest Ridge Apartments, BIG Insured, 7.50%, 03/01/27 .................. 4,625,132
Eden Prairie ISD No. 272,
4,980,000 Series A, CGIC Insured, 5.75%, 02/01/15 ................................................... 4,968,148
1,000,000 Series A, FGIC Insured, 5.45%, 02/01/08 ................................................... 1,006,920
2,000,000 Eden Prairie MFHR, GNMA Secured, 6.25%, 01/20/31 .............................................. 2,000,000
500,000 Eden Valley ISD No. 463, CGIC Insured, 6.60%, 02/01/16 ........................................ 539,085
Elk River ISD No. 728 GO, .
$ 950,000 CGIC Insured, 6.35%, 02/01/18 ............................................................. $ 1,011,446
4,000,000 CGIC Insured, 6.40%, 02/01/22 ............................................................. 4,269,520
4,610,000 Refunding, Series B, CGIC Insured, 5.25%, 02/01/22 ........................................ 4,194,040
650,000 Series A, CGIC Insured, 7.00%, 02/01/11 ................................................... 703,424
4,290,000 Farmington ISD No. 192 GO, School Building, AMBAC Insured, 5.125%, 02/01/15 ................... 3,969,194
Forest Lake ISD No. 831 GO, School Building,
675,000 Series A, FGIC Insured, 7.30%, 02/01/05 ................................................... 699,908
1,055,000 Series A, FGIC Insured, 7.35%, 02/01/06 ................................................... 1,094,636
Golden Valley GO, Tax Increment,
335,000 Series C, FGIC Insured, 8.00%, 02/01/04 ................................................... 339,794
535,000 Series C, FGIC Insured, 8.00%, 02/01/05 ................................................... 542,656
Lake of the Woods, ISD No. 390, School Building,
325,000 AMBAC Insured, Pre-Refunded, 7.40%, 02/01/18 .............................................. 352,277
350,000 AMBAC Insured, Pre-Refunded, 7.40%, 02/01/19 .............................................. 379,376
375,000 AMBAC Insured, Pre-Refunded, 7.40%, 02/01/20 .............................................. 406,474
Lakeview ISD No. 194,
1,000,000 FGIC Insured, 5.40%, 02/01/13 ............................................................. 964,960
500,000 Series A, FGIC Insured, 7.00%, 02/01/14 ................................................... 543,930
2,105,000 Series C, FGIC Insured, 6.70%, 02/01/12 ................................................... 2,270,137
Marshall County Utility Revenue,
750,000 CGIC Insured, 5.375%, 01/01/14 ............................................................ 713,445
825,000 CGIC Insured, 5.375%, 01/01/15 ............................................................ 783,585
1,565,000 Menahga ISD No. 821 GO, AMBAC Insured, 6.25%, 02/01/18 ........................................ 1,675,379
Minneapolis CDA, MFHR, Rental, Laurel Village,
9,000,000 Project No. 9, Mandatory Put 12/01/99, CGIC Insured, 7.50%, 12/01/31 ...................... 9,140,400
1,645,000 Project No. 10, Mandatory Put 12/01/99, CGIC Insured, 7.50%, 12/01/31 ..................... 1,670,662
900,000 Minneapolis CDA and St. Paul Housing and Redevelopment Authority, Health Care Facilities Revenue,
Carondelet Community Hospitals, Inc., Series B, BIG Insured, Pre-Refunded, 8.875%, 11/01/15 .. 1,216,377
4,436,000 Minneapolis CDA and St. Paul Housing and Redevelopment Authority, Homeownership Mortgage
Revenue, Joint Housing Program, Phase II, FGIC Insured, 7.875%, 07/01/17 ..................... 4,554,663
2,100,000 Minneapolis CDA, Tax Increment Revenue, Series 1990, MBIA Insured, 7.00%, 03/01/01 ............ 2,342,970
Minneapolis Convention Center, Sales Tax Revenue,
2,000,000 AMBAC Insured, Pre-Refunded, 7.625%, 04/01/04 ............................................. 2,084,660
10,000,000 AMBAC Insured, Pre-Refunded, 7.75%, 04/01/11 .............................................. 10,421,500
Minneapolis Hospital Facilities Revenue,
1,475,000 gLifeSpan, Inc., Series 1987-A, Pre-Refunded, 8.125%, 04/01/07 ............................. 1,594,785
4,450,000 gLifeSpan, Inc., Series 1987-A, Pre-Refunded, 8.125%, 04/01/17 ............................. 4,811,385
600,000 Refunding, Fairview Hospital and Healthcare, Series A, MBIA Insured, 6.50%, 01/01/11 ...... 632,196
7,815,000 Refunding, Fairview Hospital and Healthcare, Series B, MBIA Insured, 6.70%, 01/01/17 ...... 8,283,744
700,000 gRefunding, LifeSpan, Inc., Series 1987-B, Pre-Refunded, 9.125%, 12/01/14 .................. 788,263
915,000 gRefunding, LifeSpan, Inc., Series 1988-A, Pre-Refunded, 7.875%, 12/01/14 .................. 1,006,784
1,385,000 Minneapolis Housing and Redevelopment Authority, Home Ownership Mortgage Program,
BIG Insured, 7.10%, 12/01/10 ................................................................. 1,389,792
Minneapolis-St. Paul Housing Finance Board, SFMR,
3,915,000 Phase VI, Series A, GNMA Secured, 8.30%, 08/01/21 ......................................... 4,042,668
1,020,000 Series A, GNMA Secured, 8.375%, 11/01/17 .................................................. 1,074,774
605,000 Series C, GNMA Secured, 8.875%, 11/01/18 .................................................. 635,946
Minneapolis-St. Paul Housing and Redevelopment Authority, Health Care System Revenue,
10,390,000 Series A, MBIA Insured, 7.40%, 08/15/11 ................................................... 11,569,265
3,950,000 Series A, MBIA Insured, 6.75%, 08/15/14 ................................................... 4,226,658
3,000,000 Minnesota State GO, Refunding, MBIA Insured, 5.40%, 08/01/09 .................................. 2,979,540
Minnesota State HFA, Housing Development,
$ 185,000 FGIC Insured, 7.25%, 02/01/19 ............................................................. $ 187,377
845,000 MF Program, Series 1978-A, FGIC Insured, 7.125%, 02/01/20 ................................. 855,444
3,170,000 MF Program, Series 1978-B, FGIC Insured, 7.10%, 02/01/21 .................................. 3,208,864
485,000 MF Program, Series 1980-A, FGIC Insured, 7.00%, 02/01/22 .................................. 493,216
230,000 MF Program, Series 1985-B, FGIC Insured, 9.375%, 02/01/18 ................................. 237,965
2,000,000 MFMR, Series 1988-A, FGIC Insured, 7.80%, 08/01/18 ........................................ 2,050,420
1,000,000 Minnesota State HFA, MFHR, Series 1977-A, FGIC Insured, 6.375%, 02/01/20 ...................... 1,000,140
Minnesota State HFA, SFMR,
2,580,000 Series 1986-B, FGIC Insured, 7.25%, 07/01/06 .............................................. 2,659,593
770,000 Series 1986-B, FGIC Insured, 7.25%, 07/01/16 .............................................. 785,747
425,000 Series 1986-C, FGIC Insured, 7.00%, 07/01/16 .............................................. 431,435
710,000 Series 1987-A, FGIC Insured, 8.50%, 02/01/17 .............................................. 737,314
205,000 Series 1987-D, FGIC Insured, 8.80%, 07/01/16 .............................................. 213,565
3,135,000 Series 1989-A, FGIC Insured, 8.00%, 07/01/29 .............................................. 3,253,503
4,585,000 Series 1989-D, AMBAC Insured, 7.30%, 07/01/09 ............................................. 4,820,807
1,500,000 Series 1992-I, MBIA Insured, 6.25%, 01/01/15 .............................................. 1,511,415
1,500,000 Series 1994-F, MBIA Insured, 6.30%, 07/01/25 .............................................. 1,512,270
3,940,000 Minnesota State Higher Educational Facilities Authority Revenue, Series 3, Connie Lee Insured,
6.50%, 01/01/17 .............................................................................. 4,071,163
Minnetonka MFHR,
350,000 Cedar Hills East Project, FGIC Insured, 7.40%, 12/01/07 ................................... 369,058
1,000,000 Cedar Hills East Project, FGIC Insured, 7.50%, 12/01/27 ................................... 1,063,480
2,720,000 Refunding, Brier Creek Project, Series A, GNMA Secured, 6.45%, 06/20/24 ................... 2,719,646
Monticello ISD No. 882 GO,
750,000 Series 1991, CGIC Insured, Pre-Refunded, 6.80%, 02/01/06 .................................. 811,193
1,310,000 Series 1991, CGIC Insured, Pre-Refunded, 6.80%, 02/01/07 .................................. 1,416,883
2,000,000 North St. Paul ISD No. 622, Maplewood, Series A, MBIA Insured, 7.10%, 02/01/19 ................ 2,218,440
5,475,000 Northeast Metropolitan ISD No. 916, CGIC Insured, 5.800%, 01/01/16 ............................ 5,486,169
Northern Municipal Power Agency, Electric System Revenue,
11,900,000 Refunding, Series A, AMBAC Insured, 6.00%, 01/01/19 ....................................... 11,959,024
4,200,000 Refunding, Series A, AMBAC Insured, 6.00%, 01/01/20 ....................................... 4,220,832
3,500,000 Refunding, Series A, AMBAC Insured, Pre-Refunded, 7.25%, 01/01/17 ......................... 3,888,220
9,500,000 Refunding, Series A, AMBAC Insured, Pre-Refunded, 7.40%, 01/01/18 ......................... 10,597,440
4,000,000 Refunding, Series A, MBIA Insured, 6.00%, 01/01/20 ........................................ 4,019,840
5,000,000 Refunding, Series B, AMBAC Insured, 5.50%, 01/01/18 ....................................... 4,788,950
1,500,000 Series B, AMBAC Insured, Pre-Refunded, 7.40%, 01/01/18 .................................... 1,673,280
8,090,000 Series C, AMBAC Insured, 6.125%, 01/01/20 ................................................. 8,288,124
2,000,000 Northfield College Facility Revenue, St. Olaf College Project, BIG Insured, Pre-Refunded, 8.00%,
10/01/18 ..................................................................................... 2,217,840
3,350,000 Owatonna Public Utilities Commission, Public Utilities Revenue, Refunding, Series A, AMBAC Insured,
5.45%, 01/01/16 .............................................................................. 3,195,431
2,835,000 Perham ISD No. 549, CGIC Insured, 5.375%, 02/01/14 ............................................ 2,708,871
Plymouth Health Facilities Revenue, Westhealth Project,
1,600,000 Series A, CGIC Insured, 6.25%, 06/01/16 ................................................... 1,652,880
1,815,000 Series A, CGIC Insured, 6.125%, 06/01/24 .................................................. 1,842,606
7,205,000 Princeton Hospital Revenue, Fairview Hospital and Healthcare, Series C, MBIA Insured, 6.25%,
01/01/21 ..................................................................................... 7,439,811
Princeton ISD No. 477, Mille Lacs County,
1,000,000 Refunding, FGIC Insured, 6.30%, 02/01/17 .................................................. 1,050,740
2,540,000 Series A, CGIC Insured, 5.375%, 02/01/17 .................................................. 2,402,510
Puerto Rico Commonwealth Public Improvement GO,
$ 3,000,000 MBIA Insured, 6.50%, 07/01/23 ............................................................. $ 3,189,000
10,000,000 Series 1989-A, FGIC Insured, Pre-Refunded, 7.375%, 07/01/04 ............................... 11,236,700
Puerto Rico HFC, SFMR,
1,835,000 Portfolio No. 1, Series B, GNMA Secured, 7.65%, 10/15/22 .................................. 1,938,714
1,150,000 Portfolio No. 1, Series D, GNMA Secured, 6.75%, 10/15/14 .................................. 1,193,447
520,000 Portfolio No. 1, Series D, GNMA Secured, 6.85%, 10/15/24 .................................. 539,568
1,145,000 Puerto Rico PBA, Public Education and Health Facilities, Refunding, Series M, CGIC Insured, 5.50%,
07/01/21 ..................................................................................... 1,081,670
1,300,000 Puerto Rico Port Authority Revenue, Series D, FGIC Insured, 7.00%, 07/01/14 ................... 1,401,309
Robbinsdale Hospital Revenue,
1,400,000 North Memorial Medical Center Project, Series B, AMBAC Insured, 5.45%, 05/15/13 ........... 1,344,616
6,450,000 Refunding, North Memorial Medical Center Project, AMBAC Insured, Pre-Refunded, 7.375%,
01/01/19 ................................................................................. 7,190,138
2,000,000 Refunding, North Memorial Medical Center Project, Series A, AMBAC Insured, 5.45%, 05/15/13 1,920,880
4,000,000 Refunding, North Memorial Medical Center Project, Series A, AMBAC Insured, 5.55%, 05/15/19 3,812,360
400,000 Rochester Hospital Facilities Revenue, Rochester Methodist Hospital Project, Refunding,
FGIC Insured, Pre-Refunded, 8.75%, 06/01/05 .................................................. 431,656
Roseville ISD No. 623,
1,200,000 Series A, CGIC Insured, 5.80%, 02/01/19 ................................................... 1,196,868
2,470,000 Series A, CGIC Insured, 5.85%, 02/01/24 ................................................... 2,463,035
4,260,000 Series A, CGIC Insured, 6.00%, 02/01/25 ................................................... 4,284,026
1,250,000 Series A, FGIC Insured, 6.00%, 02/01/23 ................................................... 1,255,175
1,750,000 Shakopee Public Utilities Commission Revenue, AMBAC Insured, 5.60%, 08/01/18................... 1,699,355
2,080,000 South Washington County ISD No. 833, Refunding, Series A, FGIC Insured, 6.125%, 06/01/10 ...... 2,110,347
Southern Minnesota Municipal Power Agency, Power Supply System Revenue,
5,000,000 Refunding, Series B, AMBAC Insured, 6.00%, 01/01/16 ....................................... 5,103,150
2,500,000 Series A, AMBAC Insured, 6.00%, 01/01/13 .................................................. 2,525,150
300,000 Series A, BIG Insured, Pre-Refunded, 9.50%, 01/01/17 ...................................... 311,382
5,975,000 Series A, MBIA Insured, 5.00%, 01/01/12 ................................................... 5,551,970
12,500,000 Series A, MBIA Insured, 6.00%, 01/01/13 ................................................... 12,625,750
3,730,000 Series A, MBIA Insured, 5.75%, 01/01/18 ................................................... 3,692,625
1,370,000 Series A, MBIA Insured, Pre-Refunded, 5.75%, 01/01/18 ..................................... 1,386,728
St. Cloud Hospital Facilities Revenue,
2,000,000 Refunding, St. Cloud Hospital, Series 1990-C, AMBAC Insured, 7.00%, 07/01/07 .............. 2,205,060
1,350,000 Refunding, St. Cloud Hospital, Series 1990-C, AMBAC Insured, 6.75%, 07/01/15 .............. 1,443,542
695,000 gSt. Cloud Hospital, Series 1985-A, Pre-Refunded, 9.40%, 12/01/15 .......................... 718,109
8,000,000 St. Cloud Hospital, Series 1990-B, AMBAC Insured, Pre-Refunded, 7.00%, 07/01/20 ........... 9,158,960
St. Francis ISD No. 015,
1,500,000 Series A, CGIC Insured, 6.35%, 02/01/13 ................................................... 1,573,230
5,465,000 Series A, CGIC Insured, 6.375%, 02/01/16 .................................................. 5,720,598
St. Louis Park Hospital Facilities Revenue,
1,000,000 Refunding, Methodist Hospital Project, Series 1985-A, AMBAC Insured, 7.25%, 07/01/15 ...... 1,110,970
4,500,000 Refunding, Methodist Hospital Project, Series 1985-C, AMBAC Insured, Pre-Refunded, 7.25%,
07/01/18 ................................................................................. 5,134,635
440,000 Refunding, Methodist Hospital Project, Series 1990-A, AMBAC Insured, 7.20%, 07/01/03 ...... 487,894
920,000 Refunding, Methodist Hospital Project, Series 1990-A, AMBAC Insured, 7.25%, 07/01/04 ...... 1,022,092
500,000 Refunding, Methodist Hospital Project, Series 1990-A, AMBAC Insured, 7.30%, 07/01/05 ...... 571,590
4,115,000 Refunding, Methodist Hospital Project, Series 1990-A, AMBAC Insured, 7.25%, 07/01/08 ...... 4,571,642
1,350,000 Refunding, Methodist Hospital Project, Series 1990-C, AMBAC Insured, Pre-Refunded, 7.25%,
07/01/08 ................................................................................. 1,540,391
3,840,000 St. Louis Park MFHR, Rental Community Housing and Service Corp. Project, FHA Mortgage Insured,
FGIC Insured, 7.375%, 12/01/28 ............................................................... 3,954,509
$ 1,200,000 St. Paul Housing and Redevelopment Authority Hospital Revenue, St. Paul-Ramsey Medical Center
Project, AMBAC Insured, 5.50%, 05/15/13 ...................................................... $ 1,164,252
5,105,000 St. Paul Housing and Redevelopment Authority Parking Revenue, Series A, CGIC Insured,
5.750%, 08/01/13 ............................................................................. 5,031,794
St. Paul Housing and Redevelopment Authority Revenue, Tax Increment,
355,000 AMBAC Insured, Pre-Refunded, 7.20%, 09/01/01 .............................................. 374,301
380,000 AMBAC Insured, Pre-Refunded, 7.25%, 09/01/02 .............................................. 400,843
405,000 AMBAC Insured, Pre-Refunded, 7.30%, 09/01/03 .............................................. 427,409
St. Paul ISD No. 625,
1,075,000 Series C, MBIA Insured, 6.10%, 02/01/14 ................................................... 1,099,714
500,000 Series C, MBIA Insured, 6.10%, 02/01/15 ................................................... 509,165
200,000 St. Paul Port Authority, IDR, Series 1985-K, FGIC Insured, 9.50%, 12/01/14 .................... 206,427
8,000,000 St. Paul Sewer Revenue, Series A, AMBAC Insured, 8.00%, 12/01/08 .............................. 8,864,640
3,645,000 Stearns County Housing and Redevelopment Authority Lease Revenue, Refunding, Administration
Building Project, AMBAC Insured, 7.00%, 02/01/11 ............................................. 3,793,824
2,990,000 Stillwater ISD No. 834 GO, MBIA Insured, 5.75%, 02/01/15 ...................................... 2,982,883
University of Minnesota GO,
2,100,000 gRefunding, Series 1986-A, Pre-Refunded, 7.625%, 02/01/05 .................................. 2,174,297
2,300,000 gRefunding, Series 1986-A, Pre-Refunded, 7.75%, 02/01/10 ................................... 2,382,501
1,400,000 Vadnais Heights Housing Development Revenue, Riverwood Housing Project, FGIC Insured, 7.50%,
08/01/09 ..................................................................................... 1,405,963
375,000 Wabasha ISD No. 811, Refunding, Series A, CGIC Insured, 5.20%, 02/01/12 ....................... 352,500
Waconia ISD No. 110, Carver County,
630,000 Refunding, Series A, CGIC Insured, 5.25%, 02/01/10 ........................................ 607,150
1,500,000 Series A, FGIC Insured, 6.35%, 02/01/11 ................................................... 1,618,950
3,150,000 Wadena ISD No. 819, Refunding, AMBAC Insured, 5.60%, 02/01/20 ................................. 3,040,191
Washington County Housing and Redevelopment Authority, Jail Facility Revenue,
3,500,000 Refunding, MBIA Insured, 5.40%, 02/01/08 .................................................. 3,471,720
3,000,000 Unlimited Tax, MBIA Insured, Pre-Refunded, 7.00%, 02/01/12 ................................ 3,404,100
190,000 Washington County SFRMR, Housing and Redevelopment Authority, City of Cottage Grove,
GNMA Secured, Series 1986, FGIC Insured, 7.60%, 12/01/11 ..................................... 190,246
Western Minnesota Municipal Power Agency, Power Supply Revenue,
1,090,000 Refunding, Series A, AMBAC Insured, 7.00%, 01/01/13 ....................................... 1,142,112
7,000,000 Refunding, Series A, MBIA Insured, 6.875%, 01/01/09 ....................................... 7,319,900
5,425,000 Refunding, Series A, MBIA Insured, 5.50%, 01/01/15 ........................................ 5,273,642
1,875,000 Refunding, Series A, MBIA Insured, Pre-Refunded, 9.10%, 01/01/15 .......................... 1,943,774
Western Minnesota Municipal Power Agency, Transmission Project Revenue,
2,000,000 Refunding, AMBAC Insured, 6.75%, 01/01/16 ................................................. 2,177,560
200,000 Series A, AMBAC Insured, Pre-Refunded, 8.00%, 01/01/06 .................................... 206,645
1,000,000 Series A, AMBAC Insured, Pre-Refunded, 8.125%, 01/01/16 ................................... 1,033,630
--------------
Total Long Term Investments (Cost $454,520,541) ......................................... 475,989,353
--------------
eShort Term Investments .1%
100,000 Duluth Tax Increment Revenue, Lake Superior Paper, Weekly VRDN and Put, 3.650%, 09/01/10 ...... 100,000
300,000 Minnetonka MFHR, Cliffs at Ridgedale, Weekly VRDN and Put, 3.650%, 03/01/09 ................... 300,000
100,000 Puerto Rico Commonwealth, Government Development Bank, Refunding, Weekly VRDN and Put,
3.20%, 12/01/15 .............................................................................. 100,000
--------------
Total Short Term Investments (Cost $500,000) ............................................ 500,000
--------------
Total Investments (Cost $455,020,541) 98.9% ........................................ 476,489,353
Other Assets and Liabilities, Net 1.1% ............................................. 5,043,726
--------------
Net Assets 100.0%................................................................... $481,533,079
==============
At August 31, 1995, the net unrealized appreciation based on the
cost of investments for income tax purposes of $455,021,535 was
as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost................................................................. $ 23,287,982
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value................................................................. (1,820,164)
--------------
Net unrealized appreciation.................................................................. $ 21,467,818
==============
</TABLE>
PORTFOLIO ABBREVIATIONS:
AMBAC - American Municipal Bond Assurance Corp.
BIG - Bond Investors Guaranty Insurance Co.
CDA - Community Development Agency
CGIC - Capital Guaranty Insurance Co.
EDA - Economic Development Authority
FGIC - Financial Guaranty Insurance Co.
FHA - Federal Housing Authority
GNMA - Government National Mortgage Association
GO - General Obligation
HFA - Housing Finance Agency/Authority
HFC - Housing Finance Corp.
ISD - Independent School District
MBIA - Municipal Bond Investors Assurance Corp.
MF - Multi-Family
MFHR - Multi-Family Housing Revenue
MFMR - Multi-Family Mortgage Revenue
PBA - Public Building Authority
SFMR - Single Family Mortgage Revenue
SFRMR - Single Family Residential Mortgage Revenue
eVariable 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 upon
short notice prior to specified dates. The interest rate may change on specified
dates in relationship with changes in a designated rate (such as the prime
interest rate or U.S. Treasury bills rate).
gSee note 1(c) regarding uninsured securities collateralized by U.S. govenment
securities.
The accompanying notes are an integral part of these financial statements.
FRANKLIN TAX-FREE TRUST
<TABLE>
<CAPTION>
Statement of Investments in Securities and Net Assets, August 31, 1995 (unaudited)
Face Value
Amount Franklin Ohio Insured Tax-Free Income Fund (Note 1)
Long Term Investments 98.0%
Akron Bath Copley Joint Township Hospital District Revenue,
<S> <C> <C>
$ 1,000,000 Akron General Medical Center Project, AMBAC Insured, 6.50%, 01/01/11 ...................... $ 1,045,400
5,000,000 Akron General Medical Center Project, AMBAC Insured, 6.50%, 01/01/19 ...................... 5,211,850
2,000,000 Children's Hospital Medical Center, AMBAC Insured, Pre-Refunded, 7.45%, 11/15/20 .......... 2,317,160
500,000 Akron GO, Limited Tax, FGIC Insured, 7.50%, 09/01/05 .......................................... 587,415
1,000,000 Akron Waterworks System First Mortgage Revenue, FGIC Insured, 6.00%, 03/01/14 ................. 1,017,100
1,250,000 Allen County, Refunding, AMBAC Insured, 5.30%, 12/01/15 ....................................... 1,166,138
1,200,000 Allen County Sewer Revenue, MBIA Insured, 5.70%, 12/01/13 ..................................... 1,201,584
600,000 Archbold Area Local School District GO, Refunding, MBIA Insured, 5.90%, 12/01/11 .............. 603,972
1,075,000 Aurora City School District GO, Refunding & Improvement, FGIC Insured, 5.80%, 12/01/16 ........ 1,063,240
Bedford Sewer System Mortgage Revenue,
310,000 AMBAC Insured, Pre-Refunded, 7.75%, 07/01/02 .............................................. 329,040
335,000 AMBAC Insured, Pre-Refunded, 7.75%, 07/01/03 .............................................. 355,576
360,000 AMBAC Insured, Pre-Refunded, 7.75%, 07/01/04 .............................................. 382,111
2,000,000 Bellefontaine School District GO, Unlimited Tax, AMBAC Insured, Pre-Refunded, 7.125%, 12/01/11 2,321,340
430,000 Belmont County, AMBAC Insured, 5.20%, 12/01/13 ................................................ 400,240
Berne and Union Local School District,
640,000 Series A, AMBAC Insured, 5.40%, 12/01/11 .................................................. 618,458
370,000 Series A, AMBAC Insured, 5.50%, 12/01/14 .................................................. 356,366
1,450,000 Big Walnut Local School District, Delaware County Construction and Improvement, AMBAC Insured,
6.625%, 12/01/15 ............................................................................. 1,535,086
2,295,000 Brunswick City School District, AMBAC Insured, 6.90%, 12/01/12 ................................ 2,480,000
Butler County Hospital Facilities Revenue,
2,150,000 Refunding & Improvement, Middletown Regional Hospital, FGIC Insured, 6.75%, 11/15/10 ...... 2,311,680
1,400,000 Series 1985-A, FGIC Insured, Pre-Refunded, 9.30%, 11/01/15 ................................ 1,550,542
Butler County Waterworks Revenue,
790,000 AMBAC Insured, 6.35%, 12/01/08 ............................................................ 841,445
500,000 AMBAC Insured, 6.40%, 12/01/12 ............................................................ 527,395
400,000 Cardington and Lincoln Local School District, MBIA Insured, 6.60%, 12/01/14 ................... 420,144
1,200,000 Celina Wastewater System Mortgage Revenue, FGIC Insured, 6.55%, 11/01/16 ...................... 1,259,112
675,000 Chillicothe GO, Limited Tax, AMBAC Insured, 6.05%, 12/01/12 ................................... 687,623
1,000,000 Chillicothe Sanitary Sewer System First Mortgage Revenue, BIG Insured, Pre-Refunded, 7.65%,
12/01/08 ..................................................................................... 1,130,440
Clermont County Hospital Facilities Revenue, Mercy Health System,
2,000,000 Refunding, Province of Cincinnati, Series 1988-A, MBIA Insured, Pre-Refunded, 7.625%, 01/01/15 2,193,040
515,000 Refunding, Province of Cincinnati, Series A, AMBAC Insured, Pre-Refunded, 7.50%, 09/01/19 . 596,746
1,735,000 Refunding, Province of Cincinnati, Series A, AMBAC Insured, Pre-Refunded, 7.50%, 09/01/19 . 1,969,086
1,500,000 Clermont County Road Improvement GO, AMBAC Insured, Pre-Refunded, 7.125%, 09/01/11 ............ 1,708,965
Clermont County Sewer System Revenue,
4,280,000 Refunding, AMBAC Insured, Pre-Refunded, 7.10%, 12/01/15 ................................... 4,819,580
5,500,000 Series 1991, AMBAC Insured, Pre-Refunded, 7.10%, 12/01/21 ................................. 6,369,165
11,000,000 Clermont County Waterworks Revenue, Refunding, AMBAC Insured, 5.80%, 12/01/18 ................. 10,915,630
Cleveland Airport Systems Revenue,
3,000,000 Series A, FGIC Insured, 6.25%, 01/01/20 ................................................... 3,059,070
1,450,000 Series B, FGIC Insured, 6.10%, 01/01/24 ................................................... 1,473,142
2,000,000 Cleveland GO, Series 1994, MBIA Insured, 6.70%, 11/15/18 ...................................... 2,149,880
Cleveland Waterworks First Mortgage Revenue,
3,000,000 Refunding, Series D, AMBAC Insured, Pre-Refunded, 7.25%, 01/01/12 ......................... 3,186,810
2,000,000 Refunding, Series F, AMBAC Insured, 6.25%, 01/01/16 ....................................... 2,063,840
5,000,000 Series F, AMBAC Insured, Pre-Refunded, 6.50%, 01/01/21 .................................... 5,605,100
1,000,000 Series F-92, AMBAC Insured, 6.25%, 01/01/15 ............................................... 1,031,920
1,000,000 Clinton-Massie Local School District, Refunding, Issue I, AMBAC Insured, 7.50%, 12/01/11 ...... 1,139,640
$ 1,360,000 Columbus City School District GO, Renovation & Improvement, FGIC Insured, Pre-Refunded,
6.65%, 12/01/12 .............................................................................. $ 1,553,922
975,000 Columbus GO, Limited Tax, FGIC Insured, 9.50%, 04/15/03 ....................................... 1,270,649
2,500,000 gColumbus Sewer System Revenue, Series A, Pre-Refunded, 8.00%, 06/01/08 ........................ 2,624,275
1,530,000 Coshocton Sewer System GO, AMBAC Insured, 6.50%, 12/01/12 ..................................... 1,614,548
1,650,000 Crestview Local School District GO, Construction and Improvement, AMBAC Insured, 6.65%, 12/01/14 1,764,857
100,000 Cuyahoga County GO, Limited Tax, MBIA Insured, 9.375%, 10/01/04 ............................... 130,905
Cuyahoga County Hospital Revenue,
1,490,000 Deaconess Hospital of Cleveland, Series A, FGIC Insured, Pre-Refunded, 9.25%, 10/01/09 .... 1,525,417
10,200,000 Metro Health System Project, MBIA Insured, 6.00%, 02/15/19 ................................ 10,246,716
2,685,000 Mt. Sinai Medical Center, AMBAC Insured, 6.625%, 11/15/21 ................................. 2,820,378
2,000,000 Refunding, Fairview General Hospital Project, AMBAC Insured, 5.50%, 08/15/19 .............. 1,895,560
5,360,000 Refunding, University Hospital Health System, Series A, BIG Insured, 6.875%, 01/15/19 ..... 5,626,499
Cuyahoga County Utility System Revenue,
1,000,000 Refunding, Medical Center Company Project, Series B, MBIA insured, 5.85%, 08/15/10 ........ 991,120
2,945,000 Refunding, Medical Center Company Project, Series B, MBIA insured, 6.10%, 08/15/15 ........ 2,947,327
5,200,000 Dayton Airport Revenue, James M. Cox Dayton International Airport, AMBAC Insured, 8.25%, 01/01/16 5,383,820
1,395,000 Dayton Water System Mortgage Revenue, Refunding, MBIA Insured, 6.75%, 12/01/10 ................ 1,471,795
Defiance GO,
1,000,000 MBIA Insured, 6.10%, 12/01/14 ............................................................. 1,022,750
750,000 MBIA Insured, 6.20%, 12/01/20 ............................................................. 766,973
Delphos Sewer System Revenue,
450,000 CGIC Insured, 7.20%, 09/01/10 ............................................................. 486,347
1,100,000 CGIC Insured, 7.25%, 09/01/20 ............................................................. 1,185,723
2,000,000 Dover City School District, AMBAC Insured, 6.25%, 12/01/16 .................................... 2,062,020
1,625,000 Dover Municipal Electric System Revenue, FGIC Insured, 6.00%, 12/01/19 ........................ 1,646,028
1,100,000 Dover Waterworks Systems Revenue, AMBAC Insured, 6.00%, 12/01/13 .............................. 1,124,233
5,735,000 Dublin City School District, AMBAC Insured, 6.20%, 12/01/19 ................................... 5,867,823
800,000 Dublin Local School District GO, Franklin, Delaware and Union Counties, Unlimited Tax for School
Buildings, Construction and Improvement, Series 1988, AMBAC Insured, Pre-Refunded, 7.30%,
12/01/05 ..................................................................................... 889,512
1,390,000 Fairborn GO, Limited Tax, Series 1991, MBIA Insured, 7.00%, 10/01/11 .......................... 1,532,239
1,000,000 Fairfield City School District GO, FGIC Insured, 6.00%, 12/01/20 .............................. 1,008,160
5,915,000 Fairfield County Hospital Improvement Revenue, Lancaster-Fairfield Community Hospital, Series A,
MBIA Insured, Pre-Refunded, 7.10%, 06/15/21 ................................................. 6,796,690
Findlay Waterworks System Revenue,
1,000,000 Refunding, BIG Insured, 7.20%, 11/01/04 ................................................... 1,024,640
3,500,000 Refunding, BIG Insured, 7.30%, 11/01/09 ................................................... 3,582,495
2,500,000 Fostoria City School District GO, AMBAC Insured, 6.70%, 12/01/16 .............................. 2,682,900
5,000,000 Franklin County Convention Facility Authority, Tax and Lease Revenue, Anticipation Bonds,
MBIA Insured, Pre-Refunded, 7.00%, 12/01/19 .................................................. 5,693,850
2,000,000 Franklin County Hospital Revenue, Refunding & Improvement, Riverside United Hospital,
MBIA Insured, 7.25%, 05/15/20 ................................................................ 2,150,540
5,150,000 Granville Exempted Village School District, Unlimited Tax, AMBAC Insured,
Pre-Refunded, 7.15%, 12/01/15 ................................................................ 6,041,568
Green Local School District GO, Summit County,
2,800,000 FGIC Insured, 5.875%, 12/01/14 ............................................................ 2,812,264
5,150,000 FGIC Insured, 5.90%, 12/01/19 ............................................................. 5,162,000
2,000,000 Hamilton County Health Care System Revenue, Refunding, Sisters of Charity, Good Samaritan Hospital,
MBIA Insured, Pre-Refunded, 7.625%, 08/01/12 ................................................. 2,220,700
Hamilton County Hospital Facilities Revenue,
$ 2,000,000 Children's Hospital Medical Center, FGIC Insured, Pre-Refunded, 7.125%, 05/15/09 .......... $ 2,188,380
990,000 Christ Hospital, Series 1987, FGIC Insured, Pre-Refunded, 8.375%, 01/01/07 ................ 1,101,128
3,650,000 Refunding, Bethesda Hospital, Series A, AMBAC Insured, 6.25%, 01/01/12 .................... 3,779,867
Hamilton County Sewer System Revenue,
4,410,000 gMetropolitan Sewer District of Greater Cincinnati, Series A, Pre-Refunded, 7.50%, 12/01/10 4,616,035
3,010,000 Refunding, Series A, FGIC Insured, 6.05%, 12/01/15 ........................................ 3,077,605
Hamilton Electric System Mortgage Revenue,
12,000,000 Refunding, Series A, FGIC Insured, 6.00%, 10/15/23 ........................................ 12,091,080
2,340,000 Refunding, Series B, FGIC Insured, 6.30%, 10/15/25 ........................................ 2,406,690
9,500,000 Refunding, Series B, FGIC Insured, Pre-Refunded, 8.00%, 10/15/22 .......................... 10,713,910
4,665,000 Hamilton Waterworks Mortgage Revenue, Series A, MBIA Insured, 6.30%, 10/15/21 ................. 4,832,100
500,000 Hillard School District, Refunding, FGIC Insured, 6.55%, 12/01/05 ............................. 564,460
Hudson Local School District,
2,750,000 Refunding, FGIC Insured, 5.60%, 12/15/14 .................................................. 2,680,150
3,350,000 Series A, FGIC Insured, Pre-Refunded, 7.10%, 12/15/13 ..................................... 3,833,137
1,000,000 Indian Valley Local School District GO, AMBAC Insured, 5.75%, 12/01/19 ........................ 985,750
Jackson Local School District, Stark and Summit Counties School Building,
2,750,000 Construction and Improvement, MBIA Insured, 5.40%, 12/01/13 ............................... 2,591,518
4,060,000 Construction and Improvement, MBIA Insured, 5.50%, 12/01/21 ............................... 3,782,824
500,000 Jackson Waterworks Revenue, AMBAC Insured, 5.60%, 12/01/18 .................................... 486,030
225,000 Kent Sewer System Mortgage Revenue, Series 1985, AMBAC Insured, Pre-Refunded, 8.875%,
12/01/05 ..................................................................................... 234,437
1,195,000 Kent State University, University Revenues, AMBAC Insured, 6.45%, 05/01/12 .................... 1,257,104
Kettering City School District,
1,000,000 FGIC Insured, 5.30%, 12/01/14 ............................................................. 940,180
1,000,000 FGIC Insured, 5.25%, 12/01/22 ............................................................. 903,590
Lake County Hospital Improvement Revenue, Lake Hospital System, Inc.,
1,940,000 Series B and C, AMBAC Insured, 7.875%, 01/01/05 ........................................... 2,062,977
2,185,000 Series B and C, AMBAC Insured, 8.00%, 01/01/13 ............................................ 2,313,587
2,560,000 Series B and C, AMBAC Insured, Pre-Refunded, 7.875%, 01/01/05 ............................. 2,739,789
2,815,000 Series B and C, AMBAC Insured, Pre-Refunded, 8.00%, 01/01/13 .............................. 3,016,047
1,000,000 Lake Local School District, Stark County, AMBAC Insured, 6.25%, 12/01/09 ...................... 1,062,840
3,200,000 Lakota Local District GO, AMBAC Insured, 6.125%, 12/01/17 ..................................... 3,261,760
Liberty Benton Local School District,
2,000,000 AMBAC Insured, 6.00%, 12/01/15 ............................................................ 2,029,180
2,045,000 AMBAC Insured, 6.10%, 12/01/19 ............................................................ 2,083,078
Lucas County GO,
120,000 Limited Tax, FGIC Insured, 8.00%, 12/01/06 ................................................ 141,557
110,000 Limited Tax, FGIC Insured, 8.00%, 12/01/08 ................................................ 130,552
120,000 Limited Tax, FGIC Insured, 8.00%, 12/01/09 ................................................ 143,382
220,000 Limited Tax, FGIC Insured, 8.00%, 12/01/10 ................................................ 262,280
3,200,000 Lucas County Hospital Revenue, The Toledo Hospital, MBIA Insured, Pre-Refunded, 7.50%, 11/15/14 3,573,216
Mahoning County GO,
1,500,000 Limited Tax, Bridge Improvement, AMBAC Insured, 7.20%, 12/01/09 ........................... 1,665,870
1,500,000 Unlimited Tax, Bridge Improvement, AMBAC Insured, 7.15%, 12/01/04 ......................... 1,650,225
2,000,000 Mahoning County Hospital Facilities Revenue, YHA, Inc. Project, Series B, MBIA Insured, 7.00%,
10/15/08 ..................................................................................... 2,179,940
2,500,000 Mansfield Hospital Improvement Revenue, Mansfield General Hospital Project, AMBAC Insured,
6.70%, 12/01/09 .............................................................................. 2,696,050
1,000,000 Marietta City School District, Series B, AMBAC Insured, 5.75%, 12/01/07 ....................... 1,035,400
500,000 Marietta Sewer System Mortgage Revenue, BIG Insured, 7.50%, 11/01/07 ......................... 540,565
Marysville Water Systems,
$ 1,000,000 Refunding, AMBAC Insured, 5.40%, 12/01/13 ................................................. $ 940,250
1,500,000 Refunding, AMBAC Insured, 5.50%, 12/01/18 ................................................. 1,408,275
1,935,000 Mason Sewer Systems Revenue, FGIC Insured, 6.00%, 12/01/19 .................................... 1,959,865
Massillon City School District GO,
1,500,000 Series 1, AMBAC Insured, Pre-Refunded, 7.10%, 12/01/11 .................................... 1,689,105
1,000,000 Unlimited Tax, AMBAC Insured, Pre-Refunded, 7.20%, 12/01/11 ............................... 1,148,040
2,755,000 Maumee Hospital Revenue, Refunding, Saint Luke's Hospital Project, AMBAC Insured, 5.80%,
12/01/14 ..................................................................................... 2,765,992
3,000,000 Medina City School District, FGIC Insured, 6.20%, 12/01/18 .................................... 3,069,480
Mentor Exempted Village School District,
1,000,000 MBIA Insured, 5.375%, 12/01/11 ............................................................ 963,720
2,000,000 MBIA Insured, 6.625%, 12/01/13 ............................................................ 2,149,060
2,040,000 MBIA Insured, Pre-Refunded, 7.40%, 12/01/11 ............................................... 2,320,663
Miami County Hospital Facilities Revenue, Upper Valley Medical Center, Nursing Care, Inc.,
525,000 Series A, BIG Insured, 8.375%, 05/01/13 ................................................... 563,960
1,340,000 Series B, MBIA Insured, 6.50%, 05/01/21 ................................................... 1,394,659
Montgomery County Greater Moraine-Beaver Creek Sewer Revenue,
500,000 Series A, FGIC Insured, Pre-Refunded, 7.45%, 09/01/00 ..................................... 527,630
500,000 Series A, FGIC Insured, Pre-Refunded, 7.50%, 09/01/01 ..................................... 527,870
3,800,000 Series A, FGIC Insured, Pre-Refunded, 7.75%, 09/01/11 ..................................... 4,020,932
Montgomery County Hospital Facilities Revenue,
300,000 Miami Valley Hospital, Series 1985-A, FGIC Insured, 9.25%, 12/01/00 ....................... 309,447
250,000 Miami Valley Hospital, Series 1985-A, FGIC Insured, 9.375%, 12/01/05 ...................... 257,945
15,000,000 Refunding, Kettering Medical Center Project, MBIA Insured, 7.40%, 04/01/09 ................ 16,173,750
5,000,000 Refunding, Kettering Medical Center Project, MBIA Insured, 7.50%, 04/01/14 ................ 5,356,750
Montgomery County Revenue,
1,600,000 Refunding, Miami Valley Hospital, Series A, AMBAC Insured, 6.25%, 11/15/12 ................ 1,654,016
3,250,000 Refunding, Miami Valley Hospital, Series A, AMBAC Insured, 6.25%, 11/15/16 ................ 3,348,053
1,780,000 Sisters of Charity Health Care, Series A, AMBAC Insured, 6.25%, 05/15/14 .................. 1,835,892
1,565,000 Sisters of Charity Health Care, Series A, MBIA Insured, 6.625%, 05/15/21 .................. 1,636,129
Muskingum County,
1,000,000 Ohio County Office Building Improvement, AMBAC Insured, 7.20%, 12/01/10 ................... 1,112,200
1,695,000 Ohio Justice Center Improvement, AMBAC Insured, 6.375%, 12/01/17 .......................... 1,755,173
2,000,000 New Philadelphia City School District, School and Improvement, AMBAC Insured, 6.25%, 12/01/17 . 2,067,300
1,500,000 New Richmond Exempted Village School District GO, AMBAC Insured, 7.125%, 09/01/09 ............. 1,622,325
1,000,000 Newark Water System, AMBAC Insured, 6.00%, 12/01/18 ........................................... 1,009,790
3,800,000 North Olmsted GO, AMBAC Insured, 6.25%, 12/15/12 .............................................. 3,915,444
1,000,000 North Ridgeville, AMBAC Insured, 5.125%, 12/01/13 ............................................. 922,430
2,900,000 North Ridgeville GO, City School District, AMBAC Insured, 6.30%, 12/01/17 ..................... 2,998,049
455,000 Northeast Regional Sewer District Wastewater Revenue, AMBAC Insured, 6.50%, 11/15/16 .......... 475,962
25,000 Northeast Regional Sewer District Water Resource Revenue, Junior Lien, MBIA Insured, ETM
10/01/96, 9.80%, 10/01/96 .................................................................... 25,853
2,000,000 Northwest Local School District, Scioto County, AMBAC Insured, 7.05%, 12/01/14 ................ 2,182,360
1,000,000 Norwalk Waterworks System Revenue, Series 1990, AMBAC Insured, 7.20%, 04/01/15 ................ 1,072,080
Ohio Capital Corp. for Housing Mortgage Revenue,
2,000,000 Refunding, MBIA Insured, 6.35%, 07/01/22 .................................................. 2,004,700
4,215,000 Refunding, MBIA Insured, 6.90%, 07/01/24 .................................................. 4,306,170
3,500,000 Refunding, Series J, MBIA Insured, 6.50%, 01/01/25 ........................................ 3,551,275
1,625,000 Refunding, Westview Apartments, Series A, MBIA Insured, 6.125%, 01/01/15 .................. 1,625,471
2,565,000 Refunding, Westview Apartments, Series A, MBIA Insured, 6.25%, 01/01/23 ................... 2,564,692
780,000 Ohio HFA, MFHR, Northridge Apartments, FGIC Insured, 10.35%, 12/01/25 ......................... 838,461
Ohio HFA, SFMR,
$ 3,035,000 Series 1988-C, GNMA Secured, 8.00%, 09/01/08 .............................................. $ 3,245,811
2,850,000 Series 1988-C, GNMA Secured, 8.125%, 03/01/20 ............................................. 3,005,724
4,250,000 Series 1989-A, GNMA Secured, 7.65%, 03/01/29 .............................................. 4,521,958
1,175,000 Series 1990-B, GNMA Secured, 7.40%, 09/01/15 .............................................. 1,229,591
2,725,000 Series 1990-C, GNMA Secured, 7.85%, 09/01/21 .............................................. 2,891,252
1,470,000 Series 1990-D, GNMA Secured, 7.50%, 09/01/13 .............................................. 1,550,630
4,190,000 Series 1990-I, GNMA Secured, 7.60%, 09/01/16 .............................................. 4,364,430
4,935,000 Series 1991-D, GNMA Secured, 7.05%, 09/01/16 .............................................. 5,064,939
13,000,000 Ohio Municipal Electric Generation Agency, Joint Venture, AMBAC Insured, 5.625%, 02/15/16 ..... 12,744,290
Ohio State Air Quality Development Authority Revenue,
4,000,000 Columbus Southern Power, Series A, FGIC Insured, 6.375%, 12/01/20 ......................... 4,153,520
1,000,000 PCR, Refunding, FGIC Insured, 7.45%, 03/01/16 ............................................. 1,113,810
7,000,000 PCR, Refunding, Pennsylvania Power Co., AMBAC Insured, 6.45%, 05/01/27 .................... 7,295,750
5,000,000 Refunding, Cincinnati Gas & Electric, MBIA Insured, 5.45%, 01/01/24 ....................... 4,704,700
1,230,000 Refunding, JMG Funding, L.P., AMBAC Insured, 6.375%, 01/01/29 ............................. 1,261,845
15,245,000 Refunding, JMG Funding, L.P., AMBAC Insured, 6.375%, 04/01/29 ............................. 15,639,693
13,000,000 Ohio State Building Authority, Adult Correctional Facility, Series A, MBIA Insured, 6.125%, 10/01/13 13,426,660
1,100,000 Ohio State Department of Transportation, COP, Panhandle Rail Line Project, Series A, CGIC Insured,
6.50%, 04/15/12 .............................................................................. 1,162,194
Ohio State Higher Educational Facility Commission Revenue,
2,500,000 Dayton University Project, FGIC Insured, 7.25%, 12/01/12 .................................. 2,741,225
1,300,000 Dayton University Project, FGIC Insured, 5.80%, 12/01/14 .................................. 1,300,923
1,725,000 Dayton University Project, FGIC Insured, 6.75%, 12/01/15 .................................. 1,852,184
1,135,000 Northern University Project, FGIC Insured, Pre-Refunded, 7.30%, 05/15/10 .................. 1,275,615
1,000,000 Wittenberg University Project, FGIC Insured, 7.85%, 06/01/07 .............................. 1,075,850
1,500,000 Xavier University Project, MBIA Insured, Pre-Refunded, 7.625%, 11/01/08 ................... 1,652,430
2,420,000 Ohio State Water Development Authority, PCR Facilities, Refunding, PA Power Co. Project, AMBAC
Insured, 6.15%, 08/01/23 ..................................................................... 2,469,925
Ohio State Water Development Authority Revenue,
380,000 AMBAC Insured, 9.375%, 12/01/18 ........................................................... 394,440
3,500,000 Fresh Water Service, AMBAC Insured, 5.90%, 12/01/21 ....................................... 3,502,555
5,000,000 Refunding, Dayton Power, Series A, AMBAC Insured, 6.40%, 08/15/27 ......................... 5,185,600
1,000,000 Refunding & Improvement, AMBAC Insured, 5.50%, 12/01/11 ................................... 982,010
2,000,000 Series I, AMBAC Insured, ETM 06/01/00, 7.00%, 12/01/09 .................................... 2,325,680
Olentangy Local School District GO,
375,000 BIG Insured, 7.75%, 12/01/08 .............................................................. 456,341
375,000 BIG Insured, 7.75%, 12/01/09 .............................................................. 456,671
375,000 BIG Insured, 7.75%, 12/01/10 .............................................................. 456,000
1,000,000 MBIA Insured, 6.35%, 12/01/17 ............................................................. 1,040,820
1,000,000 Olmsted Falls Local School District, FGIC Insured, 7.05%, 12/15/11 ............................ 1,119,820
2,500,000 Orrville Electric System Mortgage Revenue, Refunding, Series A & B, AMBAC Insured, 7.50%,
12/01/10 ..................................................................................... 2,729,300
4,100,000 Orrville Sewer System Revenue, Improvement Mortgage, MBIA Insured, 7.875%, 12/01/12 ........... 4,443,047
1,150,000 Orrville Water Systems Improvement Revenue, MBIA Insured, 6.125%, 12/01/18 .................... 1,177,554
Ottawa County GO,
400,000 AMBAC Insured, 5.75%, 12/01/14 ............................................................ 392,208
1,500,000 Catawba Isle, AMBAC Insured, 7.00%, 09/01/11 .............................................. 1,633,500
1,950,000 Ottawa County Sewer System Revenue, Refunding, Danbury Project, AMBAC Insured, 5.50%,
10/01/14 ..................................................................................... 1,896,083
3,225,000 Oxford Water Supply System Mortgage Revenue, AMBAC Insured, Pre-Refunded, 7.625%, 12/01/14 .... 3,617,257
Painesville Township Local School District GO,
$ 3,240,000 Lake County, FGIC Insured, 5.625%, 12/01/09 ............................................... $ 3,240,907
4,490,000 Lake County, FGIC Insured, 5.65%, 12/01/15 ................................................ 4,425,658
2,000,000 Perrysburg Exempted Village School District, AMBAC Insured, 6.00%, 12/01/15 ................... 2,027,260
Pickerington Local School District GO,
1,000,000 Construction and Improvement, FGIC Insured, 5.375%, 12/01/19 .............................. 930,220
1,000,000 Refunding, AMBAC Insured, 5.55%, 12/01/07 ................................................. 1,025,030
Puerto Rico Commonwealth Public Improvement,
1,000,000 MBIA Insured, Pre-Refunded, 6.50%, 07/01/09 ............................................... 1,127,320
2,000,000 Refunding, MBIA Insured, 5.75%, 07/01/24 .................................................. 1,961,180
11,000,000 Puerto Rico Port Authority Revenue, Series D, FGIC Insured, 6.00%, 07/01/21 ................... 11,025,520
Revere Local School District,
2,000,000 AMBAC Insured, 5.25%, 12/01/16 ............................................................ 1,839,000
1,600,000 AMBAC Insured, 6.00%, 12/01/16 ............................................................ 1,621,808
1,300,000 Reynoldsburg City School District, FGIC Insured, 6.55%, 12/01/17 .............................. 1,366,924
1,000,000 Richland County Hospital Improvement Mortgage Revenue, Refunding, Mansfield General Hospital
Project, AMBAC Insured, 9.375%, 12/01/09 ..................................................... 1,031,880
1,200,000 Rural Lorain County Water Authority, Water Resource Revenue, Refunding, AMBAC Insured,
Pre-Refunded, 7.70%, 10/01/08 ................................................................ 1,342,692
600,000 Saint Mary's Electric System Mortgage Revenue, AMBAC Insured, 6.65%, 12/01/11 ................. 647,472
750,000 Saint Mary's Waterworks Revenue, AMBAC Insured, 6.65%, 12/01/11 ............................... 809,340
2,000,000 Salem GO, AMBAC Insured, 6.50%, 12/01/06 ...................................................... 2,213,580
1,000,000 South Euclid Lyndhurst City School District, FGIC Insured, 5.30%, 12/01/14 .................... 934,700
700,000 South Range Local School District, MBIA Insured, 6.15%, 12/01/18 .............................. 714,847
South-Western City School District of Ohio, Franklin and Pickway Counties,
490,000 FGIC Insured, ETM 12/01/03, 7.875%, 12/01/03 .............................................. 595,179
550,000 FGIC Insured, ETM 12/01/04, 7.875%, 12/01/04 .............................................. 674,922
600,000 FGIC Insured, ETM 12/01/06, 7.875%, 12/01/06 .............................................. 743,916
600,000 FGIC Insured, ETM 12/01/07, 7.875%, 12/01/07 .............................................. 721,440
SouthWest Regional Water District, Water Revenue,
1,000,000 MBIA Insured, 6.00%, 12/01/15 ............................................................. 1,012,110
700,000 MBIA Insured, 6.00%, 12/01/20 ............................................................. 705,614
1,125,000 Springboro Water Systems Revenue, Refunding, AMBAC Insured, 5.45%, 12/01/18 ................... 1,062,653
Springfield City School District,
1,220,000 Clark County, AMBAC Insured, 6.40%, 12/01/12 .............................................. 1,283,220
1,000,000 Clark County, AMBAC Insured, 6.60%, 12/01/12 .............................................. 1,060,420
2,500,000 Stark County GO, Refunding, AMBAC Insured, 5.70%, 11/15/17 .................................... 2,447,400
3,830,000 gStark County Hospital Facilities Revenue, Refunding, Timken Mercy Medical Center, Series A,
Pre-Refunded, 7.50%, 12/01/07 ................................................................ 4,074,737
8,500,000 Stark County Sanitary Sewer System Revenue, Series A, MBIA Insured, Pre-Refunded, 7.75%,
11/15/18 ..................................................................................... 9,554,255
2,075,000 Steubenville City School District, Series A, AMBAC Insured, 6.20%, 12/01/17 ................... 2,126,896
1,750,000 Struthers City School District, AMBAC Insured, 6.50%, 12/01/14 ................................ 1,853,145
Summit County GO,
660,000 Limited Tax, Building Improvement, AMBAC Insured, Pre-Refunded, 8.00%, 12/01/07 ........... 727,498
355,000 Limited Tax, Capital Improvement, AMBAC Insured, Pre-Refunded, 8.00%, 12/01/07 ............ 391,306
3,530,000 Limited Tax, County Jail Improvement, AMBAC Insured, Pre-Refunded, 7.85%, 12/01/08 ........ 3,983,181
795,000 Limited Tax, Justice Facilities, AMBAC Insured, Pre-Refunded, 8.00%, 12/01/07 ............. 876,305
1,000,000 Limited Tax, Refunding, Series B, AMBAC Insured, 6.95%, 08/01/08 .......................... 1,101,630
690,000 Limited Tax, Sewer System Improvement, AMBAC Insured, Pre-Refunded, 8.00%, 12/01/07 ....... 760,566
500,000 Limited Tax, Water System Improvement, AMBAC Insured, Pre-Refunded, 8.00%, 12/01/07 ....... 551,135
Toledo GO,
$ 3,715,000 AMBAC Insured, 5.95%, 12/01/15 ............................................................ $ 3,753,190
500,000 Limited Tax, FGIC Insured, 7.375%, 12/01/00 ............................................... 558,200
400,000 Limited Tax, FGIC Insured, 7.375%, 12/01/02 ............................................... 449,556
650,000 Limited Tax, FGIC Insured, 7.375%, 12/01/03 ............................................... 733,441
650,000 Limited Tax, FGIC Insured, 7.375%, 12/01/04 ............................................... 742,827
650,000 Limited Tax, FGIC Insured, 7.375%, 12/01/05 ............................................... 746,545
625,000 Limited Tax, FGIC Insured, 7.375%, 12/01/06 ............................................... 718,206
4,500,000 Limited Tax, MBIA Insured, 6.50%, 12/01/11 ................................................ 4,765,230
Toledo Sewerage System Mortgage Revenue,
2,320,000 Series 1988-B, MBIA Insured, 7.75%, 11/15/17 .............................................. 2,547,592
3,680,000 Series 1988-B, MBIA Insured, Pre-Refunded, 7.75%, 11/15/17 ................................ 4,136,430
Trumbull County GO,
3,000,000 Hillside Hospital Project, Series 1990, CGIC Insured, Pre-Refunded, 7.125%, 12/01/14 ...... 3,478,140
1,500,000 Refunding, AMBAC Insured, 5.30%, 12/01/14 ................................................. 1,393,890
Trumbull County Hospital Revenue,
1,000,000 Refunding & Improvement, Series A, FGIC Insured, 6.25%, 11/15/12 .......................... 1,040,140
2,000,000 Refunding, Series B, FGIC Insured, 6.90%, 11/15/12 ........................................ 2,161,560
4,000,000 Twinsburg City School District, CGIC Insured, 6.70%, 12/01/11 ................................. 4,280,840
1,600,000 University of Cincinnati, COP, MBIA Insured, 6.75%, 12/01/09 .................................. 1,733,200
University of Toledo General Receipt,
2,535,000 FGIC Insured, 5.30%, 06/01/18 ............................................................. 2,345,686
2,350,000 MBIA Insured, Pre-Refunded, 7.65%, 06/01/08 ............................................... 2,605,680
3,450,000 MBIA Insured, Pre-Refunded, 7.70%, 06/01/18 ............................................... 3,829,776
4,000,000 Refunding, FGIC Insured, Series A, 5.90%, 06/01/20 ........................................ 4,005,200
1,000,000 Urbana Wastewater Treatment Plant GO, AMBAC Insured, 7.05%, 12/01/11 .......................... 1,097,360
1,400,000 Valley Local School District, AMBAC Insured, 7.00%, 12/01/13 .................................. 1,538,712
1,250,000 Warren County, Ohio Sewer Revenue, Series A, FGIC Insured, Pre-Refunded, 7.20%, 12/01/15 ...... 1,435,050
2,000,000 Warren County Waterworks District Revenue, Refunding, FGIC Insured, 5.45%, 12/01/15 ........... 1,930,900
Warren GO,
2,415,000 MBIA Insured, 6.65%, 11/01/12 ............................................................. 2,585,958
1,015,000 Refunding, AMBAC Insured, 5.50%, 11/15/13 ................................................. 978,744
1,150,000 Washington City Water System Revenue, AMBAC Insured, 5.30%, 12/01/13 .......................... 1,083,231
500,000 Washington County Hospital Revenue, Refunding, Marietta Memorial Hospital, AMBAC Insured,
Pre-Refunded, 9.00%, 06/01/98 ................................................................ 528,635
5,000,000 Westerville, Minerva Park and Blendon Joint Township Hospital District Revenue, Refunding, St. Ann's
Hospital, Series B, AMBAC Insured, 7.00%, 09/15/12 ........................................... 5,457,600
2,000,000 Wilmington City School District, FGIC Insured, 6.30%, 12/01/14 ................................ 2,061,900
500,000 Woodmore Local School District, Refunding, AMBAC Insured, 5.65%, 12/01/08 ..................... 510,475
8,700,000 Wooster City School District, AMBAC Insured, 6.50%, 12/01/17 .................................. 9,431,670
2,350,000 Worthington City School District, Refunding, FGIC Insured, 6.375%, 12/01/12 ................... 2,446,233
2,250,000 Youngstown State University, General Receipts, AMBAC Insured, 6.00%, 12/15/16 ................. 2,290,330
--------------
Total Long Term Investments (Cost $613,550,193) ......................................... 648,903,630
--------------
Short Term Investments .1%
420,000 Franklin County Hospital Revenue, Refunding & Improvement, Grant Medical Center Project, Series A,
MBIA Insured, ETM 12/01/95, 8.50%, 12/01/95 .................................................. 424,759
500,000 eMontgomery County Hospital Facilities Revenue, Sisters of Charity Maria Joseph, Weekly VRDN and
put, 4.00%, 02/01/99 ......................................................................... 500,000
--------------
Total Short Term Investments (Cost $920,884) ............................................ 924,759
--------------
Total Investments (Cost $614,471,077) 98.1% ........................................ 649,828,389
Other Assets and Liabilities, Net 1.9% ............................................. 12,627,119
--------------
Net Assets 100.0% .................................................................. $662,455,508
==============
At August 31, 1995, the net unrealized appreciation based on the
cost of investments for income tax purposes of $614,535,869 was
as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost................................................................. $ 37,673,615
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ................................................................ (2,381,095)
--------------
Net unrealized appreciation ................................................................. $ 35,292,520
==============
</TABLE>
PORTFOLIO ABBREVIATIONS:
AMBAC - American Municipal Bond Assurance Corp.
BIG - Bond Investors Guaranty Insurance Co.
CGIC - Capital Guaranty Insurance Co.
COP - Certificate of Participation
ETM - Escrow to Maturity
FGIC - Financial Guaranty Insurance Co.
GNMA - Government National Mortgage Association
GO - General Obligation
HFA - Housing Finance Authority/Agency
L.P. - Limited Partnership
MBIA - Municipal Bond Investors Assurance Corp.
MFHR - Multi-Family Housing Revenue
PCR - Pollution Control Revenue
SFMR - Single Family Mortgage Revenue
YHA - Young's Town Hospital
eVariable 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 upon
short notice prior to specified dates. The interest rate may change on specified
dates in relationship with changes in a designated rate (such as the prime
interest rate or U.S. Treasury bills rate).
gSee Note 1(c) regarding uninsured securities collateralized by U.S. government
securities.
The accompanying notes are an integral part of these financial statements.
FRANKLIN TAX-FREE TRUST
Financial Statements (unaudited)
Statements of Assets and Liabilities
August 31, 1995 (unaudited)
<TABLE>
<CAPTION>
Franklin Franklin Franklin
Arizona InsuredFlorida Insured Franklin Massachusetts
Tax-Free Tax-Free Insured Tax-Free Insured Tax-Free
Income Fund Income Fund Income Fund Income Fund
--------- --------- ----------- ----------
Assets:
Investments in securities:
<S> <C> <C> <C> <C>
At identified cost........................................... $27,911,734 $53,903,775 $1,567,322,828 $272,149,599
========= ========= =========== ==========
At value..................................................... 28,490,003 54,593,236 1,671,193,154 291,308,016
Cash.......................................................... 35,718 87,012 250 64,348
Receivables:
Interest..................................................... 319,163 974,881 25,800,678 4,480,893
Capital shares sold.......................................... 82,967 341,191 1,960,877 72,850
Investment securities sold................................... -- -- 1,825,818 --
--------- --------- ----------- ----------
Total assets............................................. 28,927,851 55,996,320 1,700,780,777 295,926,107
--------- --------- ----------- ----------
Liabilities:
Payables:
Investment securities purchased:
Regular delivery............................................ -- -- 2,001,736 --
When-issued basis (Note 1).................................. -- -- 1,984,950 241,984
Distributions payable to shareholders........................ 43,146 83,356 2,736,573 470,168
Capital shares repurchased................................... -- 270,117 1,402,372 41,161
Management fees.............................................. -- 5,239 655,384 131,445
Distribution fees............................................ 3,926 5,102 321,064 39,263
Shareholder servicing costs.................................. 2,004 455 23,076 3,688
Accrued expenses and other liabilities........................ -- 4,913 76,251 23,047
--------- --------- ----------- ----------
Total liabilities........................................ 49,076 369,182 9,201,406 950,756
--------- --------- ----------- ----------
Net assets, at value........................................... $28,878,775 $55,627,138 $1,691,579,371 $294,975,351
========= ========= =========== ==========
Net assets consist of:
Undistributed net investment income........................... $ 60,139 $ 10,448 $ 1,082,785 $ 216,397
Unrealized appreciation on investments........................ 578,269 689,461 103,870,326 19,158,418
Accumulated net realized loss................................. (423,506) (1,339,660) (11,708,028) (3,933,590)
Class I capital shares........................................ 28,663,873 56,266,889 1,596,394,689 278,293,453
Class II capital shares....................................... -- -- 1,939,599 1,240,673
--------- --------- ----------- ----------
Net assets, at value........................................... $28,878,775 $55,627,138 $1,691,579,371 $294,975,351
========= ========= =========== ==========
Class I Shares:
Net assets, at value.......................................... $28,878,775 $55,627,138 $1,689,632,008 $293,729,401
========= ========= =========== ==========
Shares outstanding............................................ 2,866,818 5,699,548 139,395,665 25,553,390
========= ========= =========== ==========
Net asset value per share*.................................... $10.07 $9.76 $12.12 $11.49
========= ========= =========== ==========
Class II Shares:
Net assets, at value.......................................... -- -- $ 1,947,363 $ 1,245,950
========= ========= =========== ==========
Shares outstanding............................................ -- -- 160,257 108,103
========= ========= =========== ==========
Net asset value per share*.................................... -- -- $12.15 $11.53
========= ========= =========== ==========
*Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
FRANKLIN TAX-FREE TRUST
Financial Statements (unaudited) (cont.)
Statements of Assets and Liabilities (cont.)
August 31, 1995 (unaudited)
Franklin Franklin Franklin
Michigan Insured Minnesota Insured Ohio Insured
Tax-Free Tax-Free Tax-Free
Income Fund Income Fund Income Fund
----------- ----------- ----------
Assets:
Investments in securities:
<S> <C> <C> <C>
At identified cost........................................................ $ 996,455,157 $455,020,541 $614,471,077
=========== =========== ==========
At value.................................................................. 1,051,506,499 476,489,353 649,828,389
Cash....................................................................... 343,670 2,191,938 496,154
Receivables:
Interest.................................................................. 18,968,416 5,657,881 11,446,232
Capital shares sold....................................................... 759,509 267,886 668,874
Investment securities sold................................................ 6,660,281 30,095 1,516,500
----------- ----------- ----------
Total assets.......................................................... 1,078,238,375 484,637,153 663,956,149
----------- ----------- ----------
Liabilities:
Payables:
Investment securities purchased:
Regular delivery.......................................................... -- 2,001,736 --
Distributions payable to shareholders..................................... 1,712,845 746,136 1,041,169
Capital shares repurchased................................................ 232,817 53,540 40,492
Management fees........................................................... 424,200 201,411 269,265
Distribution fees......................................................... 139,686 66,987 88,240
Shareholder servicing costs............................................... 15,063 9,050 9,877
Accrued expenses and other liabilities..................................... 59,068 25,214 51,598
----------- ----------- ----------
Total liabilities..................................................... 2,583,679 3,104,074 1,500,641
----------- ----------- ----------
Net assets, at value........................................................ $1,075,654,696 $481,533,079 $662,455,508
=========== =========== ==========
Net assets consist of:
Undistributed net investment income........................................ $ 262,662 $ 509,842 $ 159,622
Unrealized appreciation on investments..................................... 55,051,342 21,468,812 35,357,312
Accumulated net realized loss.............................................. (623,066) (58,609) (7,348,434)
Class I capital shares..................................................... 1,019,523,427 459,249,276 632,909,921
Class II capital shares.................................................... 1,440,331 363,758 1,377,087
----------- ----------- ----------
Net assets, at value........................................................ $1,075,654,696 $481,533,079 $662,455,508
=========== =========== ==========
Class I Shares:
Net assets, at value....................................................... $1,074,210,981 $481,167,032 $661,070,797
=========== =========== ==========
Shares outstanding......................................................... 90,121,356 40,019,575 54,786,828
=========== =========== ==========
Net asset value per share*................................................. $11.92 $12.02 $12.07
=========== =========== ==========
Class II Shares:
Net assets, at value....................................................... $ 1,443,715 $ 366,047 $ 1,384,711
=========== =========== ==========
Shares outstanding......................................................... 120,667 30,382 114,543
=========== =========== ==========
Net asset value per share*................................................. $11.96 $12.05 $12.09
=========== =========== ==========
*Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
FRANKLIN TAX-FREE TRUST Financial Statements (cont.)
Statements of Operations (cont.)
for the six months ended August 31, 1995 (unaudited)
Franklin Franklin Franklin
Arizona InsuredFlorida Insured Franklin Massachusetts
Tax-Free Tax-Free Insured Tax-Free Insured Tax-Free
Income Fund Income Fund Income Fund Income Fund
--------- --------- ----------- ----------
Investment income:
<S> <C> <C> <C> <C>
Interest (Note 1)............................................. $ 737,252 $1,500,301 $54,483,039 $9,357,368
--------- --------- ----------- ----------
Expenses:
Management fees, net (Note 5)................................. -- 31,731 3,903,317 780,829
Distribution fees - Class I (Note 5).......................... 12,604 25,137 744,753 114,701
Distribution fees - Class II (Note 5)......................... -- -- 1,636 1,531
Shareholder servicing costs (Note 5).......................... -- 4,812 143,892 27,411
Reports to shareholders....................................... -- 12,069 169,056 38,531
Custodian fees................................................ -- 2,475 68,154 12,589
Registration and filing fees.................................. -- 5,255 86,205 4,426
Professional fees............................................. -- 1,158 22,020 4,354
Trustees' fees and expenses................................... -- 254 13,014 2,278
Insurance (Note 1)............................................ -- 304 1,725 1,917
Other......................................................... -- 7,071 74,425 18,851
--------- --------- ----------- ----------
Total expenses, net...................................... 12,604 90,266 5,228,197 1,007,418
--------- --------- ----------- ----------
Net investment income ............................... 724,648 1,410,035 49,254,842 8,349,950
--------- --------- ----------- ----------
Realized and unrealized gain (loss) on investments:
Net realized gain (loss)...................................... 12,552 (19,645) 1,221,838 (249,594)
Net unrealized appreciation................................... 646,830 1,228,628 20,977,958 4,358,329
--------- --------- ----------- ----------
Net realized and unrealized gain on investments............... 659,382 1,208,983 22,199,796 4,108,735
--------- --------- ----------- ----------
Net increase in net assets resulting from operations.......... $1,384,030 $2,619,018 $71,454,638 $12,458,685
========= ========= =========== ==========
The accompanying notes are an integral part of these financial statements.
FRANKLIN TAX-FREE TRUST Financial Statements (cont.)
Statements of Operations (cont.)
for the six months ended August 31, 1995 (unaudited)
Franklin Franklin Franklin
Michigan Insured Minnesota Insured Ohio Insured
Tax-Free Tax-Free Tax-Free
Income Fund Income Fund Income Fund
----------- ----------- ----------
Investment income:
<S> <C> <C> <C>
Interest (Note 1).......................................................... $33,714,671 $15,242,490 $20,807,711
----------- ----------- ----------
Expenses:
Management fees (Note 5)................................................... 2,514,435 1,206,271 1,607,780
Distribution fees - Class I (Note 5)....................................... 417,978 192,014 260,407
Distribution fees - Class II (Note 5)...................................... 1,302 233 919
Shareholder servicing costs (Note 5)....................................... 114,909 53,493 71,484
Reports to shareholders.................................................... 107,431 55,638 75,817
Custodian fees............................................................. 45,151 21,422 28,438
Registration and filing fees............................................... 20,730 7,739 15,011
Professional fees.......................................................... 14,080 7,198 8,567
Trustees' fees and expenses................................................ 8,143 3,777 5,128
Insurance (Note 1)......................................................... 22,208 34,162 16,388
Other...................................................................... 37,064 19,296 32,254
----------- ----------- ----------
Total expenses........................................................ 3,303,431 1,601,243 2,122,193
----------- ----------- ----------
Net investment income ............................................ 30,411,240 13,641,247 18,685,518
----------- ----------- ----------
Realized and unrealized gain on investments:
Net realized gain ......................................................... 1,780,456 541,518 1,153,485
Net unrealized appreciation................................................ 12,729,077 5,099,387 8,304,447
----------- ----------- ----------
Net realized and unrealized gain on investments............................ 14,509,533 5,640,905 9,457,932
----------- ----------- ----------
Net increase in net assets resulting from operations ...................... $44,920,773 $19,282,152 $28,143,450
=========== =========== ==========
The accompanying notes are an integral part of these financial statements.
FRANKLIN TAX-FREE TRUST Financial Statements (cont.)
Statements of Changes in Net Assets for the six months ended August 31, 1995
(unaudited) and the year ended February 28, 1995
Franklin Arizona Insured Franklin Florida Insured
Tax-Free Income Fund Tax-Free Income Fund
-------------------- --------------------
Six months Year Six months Year
ended ended ended ended
08/31/95 02/28/95 08/31/95 02/28/95
--------- --------- --------- ---------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Net investment income............................................ $ 724,648 $ 938,235 $ 1,410,035 $ 2,127,044
Net realized gain (loss) from security transactions.............. 12,552 (394,263) (19,645) (1,225,446)
Net unrealized appreciation on investments....................... 646,830 20,907 1,228,628 97,973
--------- --------- --------- ---------
Net increase in net assets resulting from operations......... 1,384,030 564,879 2,619,018 999,571
Distributions to shareholders from undistributed net investment income:
Class I ......................................................... (709,369) (915,004) (1,413,560) (2,149,615)
Class II ........................................................ -- -- -- --
Increase in net assets from capital share transactions (Note 2)... 7,409,655 8,249,140 7,575,176 15,846,220
--------- --------- --------- ---------
Net increase in net assets................................... 8,084,316 7,899,015 8,780,634 14,696,176
Net assets:
Beginning of period............................................... 20,794,459 12,895,444 46,846,504 32,150,328
--------- --------- --------- ---------
End of period..................................................... $28,878,775 $20,794,459 $55,627,138 $46,846,504
========= ========= ========= =========
Undistributed net investment income included in net assets:
Beginning of period............................................... $ 44,860 $ 21,629 $ 13,973 $ 36,544
========= ========= ========= =========
End of period..................................................... $ 60,139 $ 44,860 $ 10,448 $ 13,973
========= ========= ========= =========
The accompanying notes are an integral part of these financial statements.
FRANKLIN TAX-FREE TRUST Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
for the six months ended August 31, 1995 (unaudited)
and the year ended February 28, 1995
Franklin Insured Franklin Massachusetts Insured
Tax-Free Income Fund Tax-Free Income Fund
------------------------ ----------------------
Six months Year Six months Year
ended ended ended ended
08/31/95 02/28/95 08/31/95 02/28/95
----------- ----------- ---------- ----------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Net investment income..................................... $ 49,254,842 $ 102,450,006 $ 8,349,950 $ 16,981,078
Net realized gain (loss) from security transactions....... 1,221,838 (8,535,568) (249,594) (1,669,981)
Net unrealized appreciation (depreciation) on investments. 20,977,958 (63,668,654) 4,358,329 (10,866,463)
----------- ----------- ---------- ----------
Net increase in net assets resulting from operations.. 71,454,638 30,245,784 12,458,685 4,444,634
Distributions to shareholders from undistributed net
investment income:
Class I ................................................. (49,894,461) (102,152,086) (8,497,606) (16,987,060)
Class II ................................................ (13,328) -- (11,893) --
Increase (decrease) in net assets from capital share transactions
(Note 2)................................................... (13,201,642) (47,407,145) 2,695,249 (6,139,716)
----------- ----------- ---------- ----------
Net increase (decrease) in net assets................. 8,345,207 (119,313,447) 6,644,435 (18,682,142)
Net assets:
Beginning of period........................................ 1,683,234,164 1,802,547,611 288,330,916 307,013,058
----------- ----------- ---------- ----------
End of period.............................................. $1,691,579,371 $1,683,234,164 $294,975,351 $288,330,916
=========== =========== ========== ==========
Undistributed net investment income included in net assets:
Beginning of period........................................ $ 1,735,732 $ 1,437,812 $ 375,946 $ 381,928
=========== =========== ========== ==========
End of period.............................................. $ 1,082,785 $ 1,735,732 $ 216,397 $ 375,946
=========== =========== ========== ==========
The accompanying notes are an integral part of these financial statements.
FRANKLIN TAX-FREE TRUST Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
for the six months ended August 31, 1995 (unaudited)
and the year ended February 28, 1995
Franklin Michigan Insured Franklin Minnesota Insured Franklin Ohio Insured
Tax-Free Income Fund Tax-Free Income Fund Tax-Free Income Fund
----------------------- --------------------- ----------------------
Six months Year Six months Year Six months Year
ended ended ended ended ended ended
08/31/95 02/28/95 08/31/95 02/28/95 08/31/95 02/28/95
----------- ----------- ---------- --------- ---------- ----------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C>
Net investment income............. $ 30,411,240 $ 60,143,574 $ 13,641,247 $ 27,876,364 $ 18,685,518 $ 38,121,995
Net realized gain (loss) from security
transactions....................... 1,780,456 (146,409) 541,518 (599,133) 1,153,485 (2,762,910)
Net unrealized appreciation
(depreciation) on investments...... 12,729,077 (41,854,681) 5,099,387 (18,084,434) 8,304,447 (25,721,132)
----------- ----------- ---------- --------- ---------- ----------
Net increase in net assets
resulting from operations.......... 44,920,773 18,142,484 19,282,152 9,192,797 28,143,450 9,637,953
Distributions to shareholders from
undistributed net investment income:
Class I ......................... (30,919,793) (60,164,972) (13,676,702) (27,874,417) (19,000,471) (38,353,594)
Class II ........................ (9,970) -- (1,779) -- (7,107) --
From net realized gain:
Class I.......................... -- -- -- (146,496) -- --
Increase (decrease) in net assets from
capital share transactions (Note 2) 23,946,755 24,287,690 (4,004,822) (856,282) 775,032 (5,138,221)
----------- ----------- ---------- --------- ---------- ----------
Net increase (decrease) in
net assets......................... 37,937,765 (17,734,798) 1,598,849 (19,684,398) 9,910,904 (33,853,862)
Net assets:
Beginning of period................ 1,037,716,931 1,055,451,729 479,934,230 499,618,628 652,544,604 686,398,466
----------- ----------- ---------- --------- ---------- ----------
End of period...................... $1,075,654,696 $1,037,716,931 $481,533,079 $479,934,230 $662,455,508 $652,544,604
=========== =========== ========== ========= ========== ==========
Undistributed net investment income
included in net assets:
Beginning of period................ $ 781,185 $ 802,583 $ 547,076 $ 545,129 $ 481,682 $ 713,281
=========== =========== ========== ========= ========== ==========
End of period...................... $ 262,662 $ 781,185 $ 509,842 $ 547,076 $ 159,622 $ 481,682
=========== =========== ========== ========= ========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
FRANKLIN TAX-FREE TRUST
Notes to Financial Statements (unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Franklin Tax-Free Trust (the Trust) is an open-end, diversified management
investment company (mutual fund), registered under the Investment Company Act of
1940 as amended. The Trust currently consists of twenty-seven separate funds
(the Funds). This report pertains only to the seven Funds included in the
accompanying financial statements. Each of the Funds issues a separate series of
the Trust's shares and maintains a totally separate investment portfolio.
All of the funds within this report except the Franklin Arizona Insured Tax-Free
Income Fund and the Franklin Florida Insured Tax-Free Income Fund, offer two
classes of shares, Class I and Class II. Class I shares are sold with a higher
front-end sales charge than Class II shares. Each class of shares may be subject
to a contingent deferred sales charge and has the same rights, except with
respect to the effect of the respective sales charges, the distribution fees
borne by each class, voting rights on matters affecting a single class and the
exchange privilege of each class.
The offering of Class II shares began May 1, 1995, at which time all previously
outstanding shares became Class I shares. Realized and Unrealized gains or
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.
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
a. Security Valuations:
Tax-free bonds generally trade in the over-the-counter market rather than on a
national securities exchange. Often there are no transactions in a particular
security on any given day. In the absence of a recorded 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 Trust 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 Trustees. Other securities for which market
quotations are not available, if any, are valued in accordance with procedures
established by the Board of Trustees.
b. Municipal Bonds or Notes with "Puts":
The Trust has purchased municipal bonds or notes with the right to resell the
bonds or notes to the seller at an agreed upon price or yield on a specified
date or within a specified period (which will be prior to the maturity date of
the bonds or notes). Such a right to resell is commonly known as a "put". In
determining the weighted average maturity of the Fund's portfolio, municipal
bonds and notes as to which the Fund holds a put will be deemed to mature on the
first day on which the put may be exercisable.
c. Insurance:
Each long-term municipal security in the Trust is insured as to the scheduled
payments of interest and principal by either a mutual fund Portfolio Insurance
Policy, a Secondary Market Insurance Policy, a New Issue Insurance Policy or has
collateral guaranteed by an agency of the U.S. government. The providers of
secondary market and new issue insurance are rated "AAA" by Standard & Poor's.
Premiums for a mutual fund Portfolio Insurance Policy or a Secondary Market
Insurance Policy are paid from the Trust's assets. Premiums for a mutual fund
Portfolio Insurance Policy (effective only so long as the Trust is in existence,
Financial Guaranty (the insurer) remains in business and the municipal security
insured under the policy continues to be held by the Trust) will reduce the
current income of the portfolio by the amount thereof. Premiums paid by the
Trust for a Secondary Market Insurance Policy (effective so long as the security
so insured is outstanding and the insurer remains in business) are added to the
cost basis of the municipal security insured and are not considered an expense
of the Trust. Premiums for a New Issue Insurance Policy (effective so long as
the security so insured is outstanding and the insurer remains in business) are
paid in advance by the insured security issuer or by another third party prior
to acquisition of the security by the Trust and are not considered an expense of
the Trust.
d. Income Taxes:
The Trust intends to continue to qualify for the tax treatment applicable to
regulated investment companies under the Internal Revenue Code and to make the
requisite distributions to its shareholders which will be sufficient to relieve
it from income and excise taxes. Therefore, no income tax provision is required.
Each Fund is treated as a separate entity in the determination of compliance
with the Internal Revenue Code.
e. Security Transactions:
Security transactions are accounted for on the date the securities are purchased
or sold (trade date). Realized gains and losses on security transactions are
determined on the basis of specific identification for both financial statement
and income tax purposes.
f. Investment Income, Expenses and Distributions:
Distributions to shareholders are recorded on the ex-dividend date. Interest
income and estimated expenses are accrued daily. Bond discount and premium, if
any, are amortized as required by the Internal Revenue Code. The Funds normally
declare dividends from their net investment income daily and distribute monthly.
Daily allocations of net investment income will commence on the date following
receipt of an investor's funds. Dividends are normally declared each day the New
York Stock Exchange is open for business and are equal to an amount per day set
from time to time by the Board of Trustees, and are payable to shareholders of
record at the beginning of business on the ex-date. Once each month, dividends
are reinvested in additional shares of the Funds or paid in cash as requested by
the shareholders.
Net realized capital gains and losses differ for financial statement and tax
purposes primarily due to differing treatment of wash sale transactions.
g. Securities Purchased on a When-Issued or Delayed Delivery Basis:
The Funds may trade securities on a when-issued or delayed delivery basis, with
payment and delivery scheduled for a future date. These transactions are subject
to market fluctuations and are subject to the risk that the value at delivery
may be more or less than the trade date purchase price. Although the Funds will
generally purchase these securities with the intention of acquiring such
securities, they may sell such securities before the settlement date. These
securities are identified on the accompanying statement of investments in
securities and net assets. The Funds have set aside sufficient investment
securities as collateral for these purchase commitments.
h. Expense Allocation:
Common expenses incurred by the Trust are allocated among the Funds based on the
ratio of net assets of each Fund to the combined net assets. In all other
respects, expenses are charged to each Fund as incurred on a specific
identification basis.
2. TRUST SHARES
At August 31, 1995, there was an unlimited number of no par value shares of
beneficial interest authorized. Transactions in each of the Fund's shares were
as follows:
<TABLE>
<CAPTION>
Class I Shares:
Franklin Arizona Insured Franklin Florida Insured Franklin Insured
Tax-Free Income Fund Tax-Free Income Fund Tax-Free Income Fund
-------------------- --------------------- --------------------
Shares Amount Shares Amount Shares Amount
-------- --------- --------- ---------- -------- ----------
Six months ended August 31, 1995
<S> <C> <C> <C> <C> <C> <C>
Shares sold........................ 625,270 $ 6,234,639 805,990 $ 7,806,948 4,604,875 $ 55,606,057
Shares issued in reinvestment of
distributions...................... 32,940 328,221 47,846 462,017 1,698,207 20,485,519
Shares redeemed.................... (156,112) (1,561,006) (333,500) (3,247,228) (6,595,579) (79,634,649)
Changes from exercise of
exchange privilege:
Shares sold...................... 276,213 2,752,154 304,282 2,812,134 5,038,581 52,452,553
Shares redeemed.................. (34,415) (344,353) (40,036) (258,695) (5,999,603) (64,050,721)
-------- --------- --------- ----------- --------- ----------
Net increase/(decrease)............ 743,896 $ 7,409,655 784,582 $ 7,575,176 (1,253,519) $(15,141,241)
======== ========= ========= =========== ========= ==========
Year ended February 28, 1995
Shares sold........................ 720,312 $ 6,864,816 1,400,121 $13,019,430 10,709,574 $127,758,145
Shares issued in reinvestment of
distributions...................... 46,351 439,728 74,928 689,499 3,460,173 40,968,219
Shares redeemed.................... (171,115) (1,597,343) (561,546) (5,079,480) (16,808,196) (198,025,835)
Changes from exercise of
exchange privilege:
Shares sold...................... 404,530 3,767,372 1,024,661 9,214,606 14,126,885 166,515,862
Shares redeemed.................. (132,005) (1,225,433) (217,134) (1,997,835) (15,627,091) (184,623,536)
-------- --------- --------- ----------- -------- ----------
Net increase/(decrease)............ 868,073 $ 8,249,140 1,721,030 $15,846,220 (4,138,655) $(47,407,145)
======= =========== ========= =========== ========== ============
2. TRUST SHARES (cont.)
Class I Shares:
Franklin Massachusetts Franklin Michigan Insured
Insured Tax-Free Income Fund Tax-Free Income Fund
-------------------- ---------------------
Shares Amount Shares Amount
-------- --------- -------- ----------
Six months ended August 31, 1995
<S> <C> <C> <C> <C>
Shares sold........................................................ 1,051,959 $ 12,045,722 4,213,320 $ 50,002,632
Shares issued in reinvestment of distributions..................... 306,790 3,507,545 1,235,378 14,645,173
Shares redeemed.................................................... (1,236,144) (14,130,563) (3,359,153) (39,876,047)
Changes from exercise of exchange privilege:
Shares sold....................................................... 381,593 4,379,286 398,023 4,725,580
Shares redeemed................................................... (380,593) (4,347,414) (588,968) (6,990,914)
-------- --------- -------- ----------
Net increase/(decrease)............................................ 123,605 $ 1,454,576 1,898,600 $ 22,506,424
======== ========= ======== ==========
Year ended February 28, 1995
Shares sold........................................................ 2,136,833 $ 24,013,694 8,411,532 $ 98,364,535
Shares issued in reinvestment of distributions..................... 611,950 6,849,369 2,368,629 27,539,473
Shares redeemed.................................................... (3,436,289) (38,407,049) (8,097,706) (93,942,160)
Changes from exercise of exchange privilege:
Shares sold....................................................... 1,622,193 18,251,780 1,232,418 14,413,187
Shares redeemed................................................... (1,500,057) (16,847,510) (1,905,019) (22,087,345)
-------- --------- -------- ----------
Net increase/(decrease)............................................ (565,370) $ (6,139,716) 2,009,854 $ 24,287,690
======== ========= ======== ==========
Franklin Minnesota Franklin Ohio Insured
Insured Tax-Free Income Fund Tax-Free Income Fund
-------------------- ---------------------
Shares Amount Shares Amount
-------- --------- -------- ----------
Six months ended August 31, 1995
Shares sold........................................................ 1,358,898 $16,267,582 2,138,941 $ 25,684,366
Shares issued in reinvestment of distributions..................... 574,147 6,868,680 733,575 8,799,089
Shares redeemed.................................................... (2,201,468) (26,365,904) (2,876,076) (34,530,654)
Changes from exercise of exchange privilege:
Shares sold....................................................... 260,656 3,119,769 347,654 4,167,156
Shares redeemed................................................... (356,360) (4,258,707) (393,425) (4,722,012)
-------- --------- -------- ----------
Net decrease....................................................... (364,127) $ (4,368,580) (49,331) $ (602,055)
======== ========= ======== ==========
Year ended February 28, 1995
Shares sold........................................................ 3,174,540 $37,475,651 4,851,598 $ 57,392,071
Shares issued in reinvestment of distributions..................... 1,183,229 13,910,099 1,494,660 17,553,487
Shares redeemed.................................................... (4,116,746) (48,145,194) (6,250,075) (73,187,665)
Changes from exercise of exchange privilege:
Shares sold....................................................... 989,975 11,620,432 880,783 10,306,806
Shares redeemed................................................... (1,353,664) (15,717,270) (1,475,603) (17,202,920)
-------- --------- -------- ----------
Net decrease....................................................... (122,666) $ (856,282) (498,637) $ (5,138,221)
======== ========= ======== ==========
2. TRUST SHARES (cont.)
Class II Shares:
Franklin Massachusetts Franklin Michigan
Franklin Insured Insured Tax-Free Insured Tax-Free
Tax-Free Income Fund Income Fund Income Fund
---------------- ---------------- -----------------
Shares Amount Shares Amount Shares Amount
------ -------- ------ -------- ------ --------
Period ended August 31, 1995*
<S> <C> <C> <C> <C> <C> <C>
Shares sold......................................... 160,296 $1,939,989 107,272 $1,231,153 120,189 $1,434,657
Shares issued in reinvestment of distributions...... 388 4,686 839 9,619 482 5,722
Shares redeemed..................................... -- -- (8) (99) (4) (48)
Changes from exercise of exchange privilege:
Shares sold........................................ 2,025 24,396 -- -- -- --
Shares redeemed.................................... (2,452) (29,472) -- -- -- --
------ -------- ------ -------- ------ --------
Net increase........................................ 160,257 $1,939,599 108,103 $1,240,673 120,667 $1,440,331
====== ======== ====== ======== ====== ========
Franklin Minnesota Franklin Ohio
Insured Tax-Free Insured Tax-Free
Income Fund Income Fund
---------------- ----------------
Shares Amount Shares Amount
------ -------- ------ --------
Period ended August 31, 1995*
<S> <C> <C> <C> <C>
Shares sold......................................... 30,282 $ 362,565 114,272 $1,373,848
Shares issued in reinvestment of distributions...... 100 1,193 287 3,438
Shares redeemed..................................... -- -- (16) (199)
------ -------- ------ --------
Net increase........................................ 30,382 $ 363,758 114,543 $1,377,087
====== ======== ====== ========
*For the period May 1, 1995 to August 31, 1995.
3. DISTRIBUTION AND CAPITAL LOSS CARRYOVERS
At February 28, 1995, for tax purposes, the Funds had accumulated net capital
loss carryovers as follows:
Franklin Franklin
Franklin ArizonaFranklin Florida Franklin Massachusetts Franklin Michigan Minnesota Franklin Ohio
Insured Tax-FreeInsured Tax-FreeInsured Tax-FreeInsured Tax-FreeInsured Tax-FreeInsured Tax-FreeInsured Tax-Free
Income Fund Income Fund Income Fund Income Fund Income Fund Income Fund Income Fund
--------- --------- --------- --------- ---------- --------- ---------
Capital loss carryovers
Expiring in:
<S> <C> <C> <C> <C> <C> <C> <C>
1996............. $ -- $ -- $ -- $ 162,016 $ -- $-- $1,606,253
1997............. -- -- 1,780,770 1,463,422 2,257,113 -- 3,975,739
1998............. -- -- 280,975 359,586 -- -- --
2000............. -- -- -- -- -- -- 2,000
2001............. -- -- 2,150,831 6,640 -- -- 90,225
2002............. 41,544 94,569 133,317 -- -- -- --
2003............. 394,514 1,225,446 8,584,573 1,670,219 146,409 599,133 2,762,910
--------- --------- --------- --------- ---------- --------- ---------
$436,058 $1,320,015 $12,930,466 $3,661,883 $2,403,522 $599,133 $8,437,127
========= ========= ========= ========= ========== ========= =========
For tax purposes, the aggregate cost of securities is higher (and unrealized
appreciation is lower) than for financial reporting purposes at August 31, 1995
by $22,114 in the Franklin Massachusetts Insured Tax-Free Income Fund, $994 in
the Franklin Minnesota Insured Tax-Free Income Fund, and $64,792 in the Franklin
Ohio Insured Tax-Free Income Fund.
4. PURCHASES AND SALES OF SECURITIES
Aggregate purchases and sales of securities (excluding purchases and sales of
short-term securities) for the six months ended August 31, 1995 were as follows:
Franklin Franklin
Franklin Arizona Franklin Florida Franklin Massachusetts Franklin Michigan Minnesota Franklin Ohio
Insured Tax-Free Insured Tax-Free Insured Tax-FreeInsured Tax-FreeInsured Tax-FreeInsured Tax-FreeInsured Tax-Free
Income Fund Income Fund Income Fund Income Fund Income Fund Income Fund Income Fund
--------- --------- --------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Purchases.......... $7,626,905 $10,822,889 $61,373,759 $19,427,606 $76,285,476 $23,017,499 $42,298,447
========= ========= ========= ========= ========== ========= =========
Sales.............. $ 692,282 $ 2,883,124 $87,346,507 $16,287,289 $57,174,943 $27,016,180 $45,800,187
========= ========= ========= ========= ========== ========= =========
</TABLE>
5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Franklin Advisers, Inc., under the terms of a management agreement, provides
investment advice, administrative services, office space and facilities to each
Fund, and receives fees computed monthly based on the net assets of each Fund on
the last day of the month at an annualized rate of 5/8 of 1% of the first $100
million of net assets, 1/2 of 1% of net assets in excess of $100 million up to
and including $250 million, and 45/100 of 1% of net assets in excess of $250
million. The terms of the management agreement provide that aggregate annual
expenses of the Funds be limited to the extent necessary to comply with the
limitations set forth in the laws, regulations and administrative
interpretations of the states in which the Funds' shares are registered. The
Funds' expenses did not exceed these limitations; however, for the six months
ended August 31, 1995, Franklin Advisers, Inc. agreed in advance to waive
$81,813 and $130,790 of the management fees for the Franklin Arizona Insured
Tax-Free Income Fund and the Franklin Florida Insured Tax-Free Income Fund,
respectively, and made payments for certain operating expenses of $19,925 for
the Franklin Arizona Insured Tax-Free Income Fund which are not reflected in the
Statement of Operations.
In its capacity as underwriter for the shares of the Funds, Franklin/Templeton
Distributors, Inc. receives commissions on sales of the Funds' shares.
Commissions are deducted from the gross proceeds received from the sale of the
Funds' shares and as such are not expenses of the Funds. Franklin/Templeton
Distributors, Inc. may also make payments, out of its own resources, to the
dealers for certain sales of Class I and Class IIshares. Commissions received by
Franklin/Templeton Distributors, Inc. and the amounts paid to other dealers for
the six months ended August 31, 1995 were as follows:
<TABLE>
<CAPTION>
Franklin Franklin Franklin
Arizona Florida Franklin Massachusetts
Insured Insured Insured Tax-Free Insured Tax-Free
Tax-Free Tax-Free Income Fund Income Fund
---------------- ---------------
Income Fund Income Fund Class I Class II Class I Class II
-------- -------- -------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Total commissions received........................... $133,722 $262,490 $1,856,315 $19,233 $422,330 $12,864
======== ======== ======== ====== ======= ======
Paid to other dealers................................ $144,283 $244,747 $1,757,184 $38,811 $398,566 $24,874
======== ======== ======== ====== ======= ======
Franklin
Franklin Michigan Minnesota Franklin Ohio
Insured Tax-Free Insured Tax-Free Insured Tax-Free
Income Fund Income Fund Income Fund
------------------ ---------------- ---------------
Class I Class II Class I Class II Class I Class II
-------- -------- -------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Total commissions received........................... $1,819,054 $14,415 $574,064 $3,633 $960,498 $13,699
======== ======== ======== ====== ======= ======
Paid to other dealers................................ $1,708,929 $28,967 $539,113 $7,322 $902,205 $27,519
======== ======== ======== ====== ======= ======
</TABLE>
Under the terms of a shareholder servicing agreement with Franklin/Templeton
Investor Services, Inc., the Trust pays costs on a per shareholder account
basis. Shareholder servicing costs incurred by the Funds for the six months
ended August 31, 1995 aggregated $416,001, of which $378,906 was paid to
Franklin/Templeton Investor Services, Inc. and $1,953 was waived by Franklin
Advisers, Inc.
Under the terms of a Distribution Plan pursuant to Rule 12b-1 of the Investment
Company Act of 1940, the Franklin Arizona Insured Tax-Free Income Fund and the
Franklin Florida Insured Tax-Free Income Fund reimburse Franklin/Templeton
Distributors, Inc. in an amount up to 0.15% per annum of the funds' average
daily net assets for costs incurred in the promotion, offering and marketing of
the funds' shares. Fees incurred by the Franklin Arizona Insured Tax-Free Income
Fund and the Franklin Florida Insured Tax-Free Income Fund under the agreement
aggregated $37,741 for the six months ended August 31, 1995.
Under the terms of a Distribution Plan pursuant to Rule 12b-1 of the Investment
Company Act of 1940, which was effective May 1, 1994 for ClassI shares and May
1, 1995 for Class II shares, the Funds except the Franklin Arizona Insured
Tax-Free Income Fund and the Franklin Florida Insured Tax-Free Income Fund will
reimburse Franklin/Templeton Distributors, Inc. in an amount up to a maximum of
0.10% and 0.65% per annum, respectively, of the average daily net assets of each
class for costs incurred in the promotion, offering and marketing of the Class I
and II shares. Fees incurred by these funds under the agreement aggregated
$1,735,474 for the six months ended August 31, 1995.
Certain officers and trustees of the Trust are also officers and/or directors of
Franklin/Templeton Distributors, Inc., Franklin Advisers, Inc., and
Franklin/Templeton Investor Services, Inc., all wholly owned subsidiaries of
Franklin Resources, Inc.
6. CREDIT RISK
Although each of the Funds has a diversified investment portfolio, all of their
investments are in the securities of issuers within their respective states and
Puerto Rico, except for the Franklin Insured Tax-Free Income Fund. Such
concentration may subject the Funds more significantly to economic changes
occurring within those states and Puerto Rico.
Each of the insurance policies covering securities held by the Funds is issued
by an insurer rated "AAA" by Standard & Poor's. Only eight insurers provide
coverage to the Funds. As a result, the Funds may face the risk of loss if
changes in the solvency of an insurer occur.
7. FINANCIAL HIGHLIGHTS
Selected data for each share of beneficial interest outstanding throughout the
years, by Fund, are as follows:
<TABLE>
<CAPTION>
Per Share Operating Performance Ratios/Supplemental Data
Net Distri- Distri- Ratio of Net
Net Asset Net Realized & butions butions Net Asset Ratio of Investment
Year Value at Invest- Unrealized Total From From Net From Total Value Net Assets at Expenses Income Portfolio
Ended Beginning ment Gain (Loss) Investment InvestmentCapital Distri- at End Total End of Year to Average to Average Turnover
Feb.28 of Year Income on SecuritiesOperations Income Gains butions of Year Return**(in 000's) Net Assets Net Assets+ Rate
Franklin Arizona Insured Tax-Free Income Fund:
Class I Shares:
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
19941 $10.00 $.34 $ .265 $ .605 $(.325) $-- $(.325) $10.28 6.04%1 $ 12,895 .03%* 4.85%* 62.88%
1995 10.28 .55 (.485) .065 (.545) -- (.545) 9.80 .94 20,794 .10 5.80 44.61
19952 9.80 .28 .270 .550 (.280) -- (.280) 10.07 5.67 28,879 .10* 5.70* 2.81
Franklin Florida Insured Tax-Free Income Fund:
Class I Shares:
19941 10.00 .34 .060 .400 (.330) -- (.330) 10.07 3.97 32.150 --* 4.97* 28.72
1995 10.07 .52 (.531) (.011) (.529) -- (.529) 9.53 .21 46,847 .35 5.61 43.71
19952 9.53 .27 .228 .498 (.268) -- (.268) 9.76 5.28 55,627 .35* 5.50* 5.72
Franklin Insured Tax-Free Income Fund:
Class I Shares:
1991 11.26 .78 .156 .936 (.786) -- (.786) 11.41 8.38 850,089 .53 6.95 9.76
1992 11.41 .74 .298 1.038 (.768) -- (.768) 11.68 9.29 1,130,592 .53 6.55 6.35
1993 11.68 .74 .751 1.491 (.741) -- (.741) 12.43 12.93 1,539,186 .53 6.22 7.95
1994 12.43 .73 .020 .750 (.730) -- (.730) 12.45 5.93 1,802,548 .52 5.79 6.85
1995 12.45 .71 (.481) .229 (.709) -- (.709) 11.97 2.03 1,683,234 .59 6.00 14.42
19952 11.97 .35 .159 .509 (.359) -- (.359) 12.12 4.30 1,689,632 .62* 5.86* 3.72
Class II Shares:++
19953 11.98 .22 .165 .385 (.215) -- (.215) 12.15 3.23 1,947 1.11* 5.21* 3.72
Franklin Massachusetts Insured Tax-Free Income Fund:
Class I Shares:
1991 10.72 .72 .040 .760 (.720) -- (.720) 10.76 7.10 152,622 .70 6.72 11.47
1992 10.76 .68 .307 .987 (.717) -- (.717) 11.03 9.34 218,336 .67 6.40 7.49
1993 11.03 .69 .685 1.375 (.675) -- (.675) 11.73 12.61 278,510 .64 6.09 9.65
1994 11.73 .67 .092 .762 (.682) -- (.682) 11.81 6.39 307,013 .60 5.69 13.82
1995 11.81 .66 (.468) .192 (.662) -- (.662) 11.34 1.83 288,331 .67 5.89 16.90
19952 11.34 .33 .155 .485 (.335) -- (.335) 11.49 4.32 293,729 .69* 5.74* 5.71
Class II Shares:++
19953 11.36 .20 .168 .368 (.198) -- (.198) 11.53 3.26 1,246 1.23* 5.08* 5.71
Franklin Michigan Insured Tax-Free Income Fund:
Class I Shares:
1991 11.06 .75 .124 .874 (.744) -- (.744) 11.19 7.93 515,313 .61 6.72 4.17
1992 11.19 .71 .254 .964 (.744) -- (.744) 11.41 8.78 665,914 .59 6.45 10.80
1993 11.41 .71 .766 1.476 (.706) -- (.706) 12.18 13.23 882,361 .58 6.09 2.04
1994 12.18 .70 .066 .766 (.706) -- (.706) 12.24 6.18 1,055,452 .54 5.66 3.21
1995 12.24 .69 (.484) .206 (.686) -- (.686) 11.76 1.87 1,037,717 .61 5.87 9.12
19952 11.76 .34 .167 .507 (.347) -- (.347) 11.92 4.36 1,074,211 .62* 5.75* 5.51
Class II Shares:++
19953 11.77 .21 .187 .397 (.207) -- (.207) 11.96 3.39 1,444 1.12* 5.10* 5.51
Franklin Minnesota Insured Tax-Free Income Fund:
Class I Shares:
1991 11.40 .76 .072 .832 (.792) -- (.792) 11.44 7.29 284,779 .67 6.62 9.12
1992 11.44 .73 .275 1.005 (.765) -- (.765) 11.68 8.95 357,279 .65 6.43 3.14
1993 11.68 .73 .667 1.397 (.727) -- (.727) 12.35 12.23 445,767 .63 6.12 5.58
1994 12.35 .70 (.014) .686 (.706) -- (.706) 12.33 5.42 499,619 .60 5.67 13.42
1995 12.33 .69 (.451) .239 (.685) (.004) (.689) 11.88 2.12 479,934 .66 5.81 17.59
19952 11.88 .34 .141 .481 (.341) -- (3.41) 12.02 4.10 481,167 .67* 5.68* 4.88
Class II Shares:++
19953 11.89 .21 .153 .363 (.203) -- (.203) 12.05 3.07 366 1.15* 5.09* 4.88
Franklin Ohio Insured Tax-Free Income Fund:
Class I Shares:
1991 $11.17 $.75 $.172 $.922 $(.762) $-- $(.762) $11.33 8.28% $273,119 .65% 6.67% 4.44%
1992 11.33 .71 .275 .985 (.765) -- (.765) 11.55 8.86 409,044 .62 6.36 1.16
1993 11.55 .72 .776 1.496 (.706) -- (.706) 12.34 13.26 564,758 .59 6.05 2.87
1994 12.34 .70 .066 .766 (.706) -- (.706) 12.40 6.08 686,398 .56 5.59 7.29
1995 12.40 .69 (.499) .191 (.691) -- (.691) 11.90 1.74 652,545 .63 5.83 11.76
19952 11.90 .34 .177 .517 (.347) -- (.347) 12.07 4.40 661,071 .64* 5.68* 6.53
Class II Shares:++
19953 11.90 .21 .187 .397 (.207) -- (.207) 12.09 3.36 1,385 1.14* 5.02* 6.53
1For the period April 30, 1993 (effective date of registration) to February 28,
1994.
2For the six months ended August 31, 1995.
3For the period May 1, 1995 to August 31, 1995.
*Annualized
**Total return measures the change in value of an investment over the periods
indicated. It is not annualized. It does not include the maximum initial sales
charge, or the deferred contingent sales charge and assumes reinvestment of
dividends and capital gains, if any, at net asset value. Prior to May 1, 1994,
dividends were reinvested at the maximum offering price for all Funds except for
the Franklin Arizona Insured Tax-Free Income Fund and the Franklin Florida
Insured Tax-Free Income Fund.
+During the periods indicated below, Franklin
Advisers, Inc., the investment manager, agreed in advance to waive a portion of
its management fees and made payments of other expenses of the Franklin Arizona
Insured Tax-Free Income Fund and the Franklin Florida Insured Tax-Free Income
Fund. Had such action not been taken, the ratios of expenses to average net
assets would have been as follows:
++Ratios have been calculated using the daily
net assets during the period.
Ratio of Expenses Ratio of Expenses
to Average Net Assets to Average Net Assets
------------ ------------
Franklin Arizona Insured Tax-Free Income Fund: Franklin Florida Insured Tax-Free Income Fund:
<S> <C> <C> <C>
19941 0.83%* 19941.................................. 0.83%*
1995...................................... 0.96 1995................................... 0.88
19952..................................... 0.90* 19952.................................. 0.86*
</TABLE>
To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded and accessed. These calls can be
determined by the presence of a regular beeping tone.
Franklin Tax-Free Trust #1 Semi-Annual Report 8/31/95.
APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING
(PURSUANT TO ITEM 304 (a) OF REGULATION S-T)
GRAPHIC MATERIAL (1)
This bar chart shows the comparison between the fund's distribution rate of
5.25% and the taxable equivalent distribution rate of 9.34%.
GRAPHIC MATERIAL (2)
This bar chart shows the comparison between the fund's distribution rate of
5.18% and the taxable equivalent distribution rate of 8.58%.
GRAPHIC MATERIAL (3)
This bar chart shows the comparison between the fund's distribution rate of
5.59% and the taxable equivalent distribution rate of 9.25%, for Class I shares.
GRAPHIC MATERIAL (4)
This bar chart shows the comparison between the fund's distribution rate of
5.18% and the taxable equivalent distribution rate of 8.58%, for Class II
shares.
GRAPHIC MATERIAL (5)
This bar chart shows the comparison between the fund's distribution rate of
5.50% and the taxable equivalent distribution rate of 10.34%, for Class I
shares.
GRAPHIC MATERIAL (6)
This bar chart shows the comparison between the fund's distribution rate of
5.05% and the taxable equivalent distribution rate of 9.49%, for Class II
shares.
GRAPHIC MATERIAL (7)
This bar chart shows the comparison between the fund's distribution rate of
5.49% and the taxable equivalent distribution rate of 9.51%, for Class I shares.
GRAPHIC MATERIAL (8)
This bar chart shows the comparison between the fund's distribution rate of
5.07% and the taxable equivalent distribution rate of 8.78%, for Class II
shares.
GRAPHIC MATERIAL (9)
This bar chart shows the comparison between the fund's distribution rate of
5.35% and the taxable equivalent distribution rate of 9.67%, for Class I shares.
GRAPHIC MATERIAL (10)
This bar chart shows the comparison between the fund's distribution rate of
4.93% and the taxable equivalent distribution rate of 8.92%, for Class II
shares.
GRAPHIC MATERIAL (11)
This bar chart shows the comparison between the fund's distribution rate of
5.42% and the taxable equivalent distribution rate of 9.70%, for Class I shares.
GRAPHIC MATERIAL (12)
This bar chart shows the comparison between the fund's distribution rate of
5.01% and the taxable equivalent distribution rate of 8.96%, for Class II
shares.
