CONTENTS
Shareholder Letter 1
California Update--
A Year in Review 3
Fund Reports
Franklin California Insured
Tax-Free Income Fund 5
Franklin California
Intermediate-Term Tax-Free
Income Fund 16
Franklin California
Tax-Exempt Money Fund 22
Glossary of
Investment Terms 25
Bond Ratings 27
Statement of Investments 30
Financial Statements 55
Notes to
Financial Statements 59
Report of
Independent Auditors 66
SHAREHOLDER LETTER
Dear Shareholder:
It's a pleasure to bring you the Franklin California Tax-Free Trust's annual
report for the period ended June 30, 1997.
The U.S. economy continued its healthy expansion during the year under review.
Although inflation remained under control, a growing sense of nervousness from
market participants and the Federal Reserve Board (the Fed) overshadowed the
stock market's meteoric rise during this fiscal year. In a move termed a
"pre-emptive strike" against potential inflationary pressures, the Fed raised
the federal funds rate (the rate banks charge each other for overnight loans)
from 5.25% to 5.50% in March. Since then, long-term interest rates have steadily
declined.
Many investors expected the Fed to raise short-term rates in May, but recent
data showed the economy was not overheating. Even though the Fed chose not to
raise rates, they are likely to continue looking for signs of increasing
inflationary pressures and other indicators to determine if additional action is
necessary. While further Fed action could lead to some volatility in the
financial markets, we feel that -- over the long term -- municipal bonds should
remain an excellent investment alternative, especially for investors in higher,
federal income tax brackets.
We continue to stress a long-term investment perspective. The financial markets
always have been -- and probably always will be -- subject to daily fluctuation.
No one can predict the future performance of the securities markets, but history
has shown that, over the long term, stocks and bonds have delivered impressive
results when income is left to compound. We encourage you to review your
investment program periodically with your investment representative, and focus
on your long-term goals.
In the following pages, you will find detailed information regarding the
performance of the funds in the Franklin California Tax-Free Trust. If you have
any questions concerning your investment, we welcome the opportunity to answer
them. We appreciate your support, welcome new shareholders, and look forward to
serving your investment needs in the years ahead.
Sincerely,
Charles B. Johnson
Chairman
Thomas J. Kenny
Director, Municipal Bond Department
CALIFORNIA UPDATE -
A YEAR IN REVIEW
The California economy sustained strong, consistent growth throughout the
reporting period.
California's job creation rate exceeded national levels, enabling it to restore
jobs lost during the recession earlier in the decade. Furthermore, its economic
base is now more diversified and significantly less reliant on aerospace and
defense-related manufacturing. California should reach an important milestone
during 1997 -- the first state to produce more than $1 trillion in gross state
product.
Although taxpayer initiatives may delay certain capital programs, they will not
reduce the need for essential general government projects or those that enhance
the quality of life. The impacts of anti-tax sentiment, including Proposition
218, which California voters passed last November, remain unclear. However, we
do expect this important measure to undergo much legal interpretation in the
years ahead.
Based in part on California's improving economic position, two of the three
major credit-rating agencies upgraded California's debt rating during 1996.
Standard & Poor's(R) Corporation, for example, raised its rating of the state's
general obligation debt, from A to A+, in July 1996.1 Future rating changes
appear contingent on the state's ability to exercise fiscal discipline during a
period of strong revenue growth.
1. See Bond Ratings, page 27, for ratings descriptions. This is not S&P's(R)
rating of the fund.
Going forward, we expect continued low inflation, and this should bode well for
the bond market. In California, with defense cutbacks largely completed and the
severe real estate declines essentially behind it, the picture is bright. Based
on the growing strength of the high-technology and entertainment industries, as
well as on increased trade, we believe California's economic expansion should
continue.
Proposition 218
On November 6, 1996, California voters passed Proposition 218, a ballot
initiative that requires voter approval for all tax and fee increases. It also
curtails benefit assessments to fund certain property-related services. Although
its full impact on municipal credits remains unclear, the amendment has caused
some issuers to postpone new bond sales until they can study the issue further.
So far, one major credit-rating agency downgraded a few California credits on
the rationale of diminished revenue-raising capabilities. It remains to be seen
whether other revisions will follow.
FRANKLIN CALIFORNIA INSURED
TAX-FREE INCOME FUND
Your Fund's Objective: Seeks to provide shareholders with a high level of
current income exempt from regular federal and California state personal income
taxes, and preservation of capital, consistent with prudent investment
management. The fund invests primarily in a portfolio of insured California
municipal securities1,2
1. For investors subject to the federal alternative minimum tax, a small portion
of this income may be subject to such tax. Distributions of capital gains and of
ordinary income from accrued market discount, if any, are generally taxable.
2. Fund shares are not insured by any U.S. or other 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 yield or share
price or insure the fund's yield or share value. 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.
We are pleased to report that the Franklin California Insured Tax-Free Income
Fund - Class I share price appreciated significantly (21.0 cents) during the
12-month period, helping the fund to generate a cumulative total return of
+7.41%, as discussed in the Performance Summary on page 8.
During the reporting period, we sold pre-refunded issues and reinvested the
proceeds in securities with longer call protection. Such sales were necessary to
keep the portfolio within its stated objective of providing long-term income to
shareholders.
Many issuers took advantage of the lower interest rates in the 1990s to
refinance ("pre-refund") their debt. In the mid- to late-'80s, high-quality
securities were issued with yields ranging from 7.5% to 9.0%. In comparison, for
most of the 1990s, insured and high-quality bonds came to the market at or below
6.0%.
When an outstanding bond becomes pre-refunded, it will be called at its first
call date. In most cases, pre-refunded bonds are backed by an escrow of U.S.
Treasuries, and thus have a substantial rise in price, depending on their call
dates. To extend the fund's income-earning potential and protect the net asset
value, we generally sell pre-refunded bonds whose call dates are approximately
five years away, and replace them with bonds that have 10 years of call
protection.
As you can see from the table to the left, we also maintained diversification in
the portfolio's holdings. Such diversification in a broad range of sectors can
help us reduce the fund's exposure to risk and volatility that affects any one
sector.
At this point, we are closely monitoring the supply of California insured
municipal bonds. On the one hand, California's growing need for new
infrastructure -- including highways and transportation projects, schools and
affordable housing -- as well as for repairs and upgrading of existing
resources, should increase the requirement for new borrowing. Another possible
source of new supply could be refunding issues resulting from lower borrowing
costs available to issuers. On the other hand, borrowing limitations such as the
recent passage of Proposition 218, and even those going back to Proposition 13,
may restrict the supply of tax-exempt bonds. If issuance continues to decline as
a result of taxpayer initiatives, future demand may be stronger than supply, and
that could put downward pressure on tax-exempt bond yields.
Looking forward, we intend to maintain our conservative management style by
avoiding interest-rate speculation and the use of derivatives.
This discussion reflects our strategies for the fund and includes our opinions
at the close of the reporting period. Since economic and market conditions are
constantly changing, our strategies, evaluations, conclusions and decisions
regarding the portfolio holdings discussed in this report may change as new
circumstances arise. Although past performance of a specific investment or
sector cannot guarantee future performance, such information can help illustrate
how we analyze the securities we purchase for the fund.
Franklin California Insured Tax-Free Income Fund
Portfolio Breakdown on 6/30/97
% of Total
Long-Term
Sector Investments
Utilities 19.8%
Certificates of Participation 13.7%
Other Revenue 13.7%
Pre-Refunded 11.9%
Tax Allocation Bonds 11.8%
Education 8.4%
Hospitals 4.6%
Transportation 3.3%
Mello-Roos Bonds 3.0%
Housing 2.7%
General Obligation 2.6%
Special Assessment 2.2%
Sales Tax Revenue 1.5%
Marks-Roos Bonds 0.8%
For a complete list of portfolio holdings, please see page 30 of this report.
GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT
PERFORMANCE SUMMARY
Class I
The Franklin California Insured Tax-Free Income Fund's Class I share price, as
measured by net asset value, increased 21.0 cents during the reporting period,
from $12.01 on June 30, 1996, to $12.22 on June 30, 1997.
At the end of this reporting period, your fund's distribution rate was 5.17%,
based on an annualization of June's monthly dividend of 5.50 cents ($0.055) per
share and the maximum offering price of $12.76 on June 30, 1997. 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
California state personal income tax bracket, you would have to earn 9.44% from
a taxable investment to match your fund's tax-free distribution rate.
The fund posted a cumulative total return of +7.41% for the 12-month period
ended June 30, 1997. Total return measures the change in value of an investment,
assuming reinvestment of all distributions, and does not include the initial
sales charge.
The chart on the next page illustrates that since 1989, the fund's Class I
shares have outpaced the rate of inflation, as measured by the Consumer Price
Index, increasing your purchasing power -- a primary goal of any investment.
Although the fund's shares have underperformed the Lehman Brothers Municipal
Bond Index, unmanaged market indices have inherent performance differentials in
comparison with any fund. They do not pay management fees to cover salaries of
security analysts or portfolio managers, nor do they pay commissions to buy and
sell bonds. Unlike indices, mutual funds are never 100% invested since they need
to keep cash on hand to redeem shares or pay for upcoming investments. The
fund's performance figures also include the maximum initial sales charge, all
fund expenses and account fees. If operating expenses such as the fund's had
been applied to this index, the index's performance would have been lower.
Please remember that an index is simply a measure of performance, and one cannot
invest directly in an index.
Past performance is not predictive of future results.
Franklin California Insured Tax-Free Income Fund
Class I
Dividend Distributions
(7/1/96 - 6/30/97)*
Dividend
Month per Share
July 5.5 cents
August 5.5 cents
September 5.5 cents
October 5.5 cents
November 5.5 cents
December 5.5 cents
January 5.5 cents
February 5.5 cents
March 5.5 cents
April 5.5 cents
May 5.5 cents
June 5.5 cents
Total 66.0 cents
*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. Distributions will vary based on the
earnings of the fund's portfolio.
GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Franklin California Insured Tax-Free Income Fund - Class I
Periods ended 6/30/97
Since
Inception
1-Year 5-Year 10-Year (9/3/85)
Cumulative Total Return1 7.41% 38.53% 112.13% 152.40%
Average Annual Total Return2 2.87% 5.81% 7.35% 7.75%
Distribution Rate3 5.17%
Equivalent Taxable Distribution Rate4 9.44%
30-Day Standardized Yield5 4.59%
Equivalent Taxable Yield4 8.38%
1. Cumulative total returns measure the change in value of an investment over
the periods indicated and do not include the sales charge.
2. Average annual total returns represent the average annual change in value of
an investment over the specified periods and reflect the current, maximum 4.25%
initial sales charge. See Note below.
3. Distribution rate is based on an annualization of June's 5.50 cents per share
monthly dividend and the maximum offering price of $12.76 on June 30, 1997.
4. Equivalent taxable distribution rate and yield assume the 1997 maximum
combined federal and California state personal income tax bracket of 45.217%,
based on the 39.6% federal income tax rate.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended June 30, 1997.
Note: Prior to July 1, 1994, fund shares were offered at a lower initial sales
charge with dividends reinvested at the offering price. Thus, actual returns
would differ. Effective May 1, 1994, the fund eliminated the sales charge on
reinvested dividends and implemented a Rule 12b-1 plan, which affects subsequent
performance. All total return calculations assume reinvestment of dividends and
capital gains, if any, at net asset value. Your investment return and principal
value will fluctuate with market conditions, and you may have a gain or loss
when you sell your shares.
GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Class II
The Franklin California Insured Tax-Free Income Fund's Class II share price, as
measured by net asset value, increased 22.0 cents during the reporting period,
from $12.07 on June 30, 1996, to $12.29 on June 30, 1997.
At the end of this reporting period, your fund's distribution rate was 4.72%,
based on an annualization of the current monthly dividend of 4.88 cents
($0.0488) per share, plus an annual dividend adjustment of +.07 cent, and the
offering price of $12.41 on June 30, 1997. 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 California state
personal income tax bracket, you would have to earn 8.62% from a taxable
investment to match your fund's tax-free distribution rate.
The fund posted a cumulative total return of +6.86% for the 12-month period
ended June 30, 1997. Total return measures the change in value of an investment,
assuming reinvestment of all distributions, and does not include sales charges.
The chart on the next page illustrates that since inception, your fund's Class
II shares have outpaced the rate of inflation, as measured by the Consumer Price
Index, increasing your purchasing power -- a primary goal of any investment.
Although the fund's shares have underperformed the Lehman Brothers Municipal
Bond Index, unmanaged market indices have inherent performance differentials in
comparison with any fund. They do not pay management fees to cover salaries of
security analysts or portfolio managers, nor do they pay commissions to buy and
sell bonds. Unlike unmanaged indices, mutual funds are never 100% invested since
they need to keep cash on hand to redeem shares or pay for upcoming investments.
The fund's performance figures also include the sales charges, all fund expenses
and account fees. If operating expenses such as the fund's had been applied to
this index, the index's performance would have been lower. Please remember that
an index is simply a measure of performance, and one cannot invest directly in
an index.
Past performance is not predictive of future results.
Franklin California Insured Tax-Free Income Fund
Class II
Dividend Distributions
(7/1/96 - 6/30/97)*
Dividend
Month per Share
July 4.76 cents
August 4.93 cents
September 4.93 cents
October 4.96 cents
November 4.96 cents
December 4.96 cents
January 4.91 cents
February 4.91 cents
March 4.91 cents
April 4.88 cents
May 4.88 cents
June 4.88 cents
Total 58.87 cents
*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. Distributions will vary based on the
earnings of the fund's portfolio.
GRAPHIC MATERIAL 4 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Franklin California Insured Tax-Free Income Fund - Class II
Periods ended 6/30/97
Since
Inception
1-Year (5/1/95)
Cumulative Total Return1 6.86% 14.84%
Average Annual Total Return2 4.82% 6.10%
Distribution Rate3 4.72%
Equivalent Taxable Distribution Rate48.62%
30-Day Standardized Yield5 4.25%
Equivalent Taxable Yield4 7.76%
1. Cumulative total returns measure the change in value of an investment over
the periods indicated and do not include the sales charges.
2. Average annual total returns represent the average annual change in value of
an investment over the specified periods and include the 1.0% initial sales
charge and 1.0% contingent deferred sales charge, applicable to shares redeemed
within the first 18 months of investment.
3. Distribution rate is based on an annualization of June's 4.88 cents per share
monthly dividend, plus an annual dividend adjustment of +.07 cent, and the
offering price of $12.41 on June 30, 1997.
4. Equivalent taxable distribution rate and yield assume the 1997 maximum
combined federal and California state personal income tax bracket of 45.217%,
based on the 39.6% federal income tax rate.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended June 30, 1997.
All total return calculations assume reinvestment of dividends and capital
gains, if any, at net asset value. Your investment return and principal value
will fluctuate with market conditions, and you may have a gain or loss when you
sell your shares.
FRANKLIN CALIFORNIA
INTERMEDIATE-TERM
TAX-FREE INCOME FUND
Your Fund's Objective: Seeks to provide shareholders with a high level of
current income exempt from regular federal and California state personal income
taxes, along with preservation of capital. The fund invests primarily in a
portfolio of California municipal securities with an average weighted maturity
(the time in which debt must be repaid) between three and 10 years.1
1. For investors subject to the federal alternative minimum tax, a small portion
of this income may be subject to such tax. Distributions of capital gains and of
ordinary income from accrued market discount, if any, are generally taxable.
We are pleased to report that the Franklin California Intermediate-Term Tax-Free
Income Fund's share price appreciated significantly (26.0 cents) during the
12-month period, helping the fund to generate a cumulative total return of
+7.58%, as discussed in the Performance Summary on page 19.
During the reporting period, both the national and California economies
continued to improve. Reacting to reduced unemployment, an improving economy,
strong stock-market performance and increasing wage pressures, the Federal
Reserve Board (the Fed) raised short-term interest rates a quarter-percent in
March, from 5.25% to 5.50%.
This move made many investors nervous, since historically, one interest-rate
hike begets another. Many investors responded by selling longer-term bonds,
depressing these bonds' prices and causing an increase in long-term yields.
(Typically, a bond's price moves in the opposite direction of its yield.) Some
of these investors also bought intermediate-term bonds, while many
intermediate-term investors bought bonds featuring higher credit qualities.
Contrary to many investors' expectations, the Fed did not raise rates again in
May. Economic indicators were mixed, while the economy appeared healthy and
without any serious inflationary pressures. Since then, interest rates have
declined steadily.
Portfolio Update
The fund's trading activity was fairly light during the fiscal year. Very few
bonds matured or were called. We did sell some lower-coupon bonds (below 5%) in
the seven- to eight-year maturity range. Using the proceeds of these sales, as
well as new money coming into the fund, we invested in bonds in the 10- to
15-year range. Investing in bonds of these maturities helped us keep the fund's
average life at approximately eight years. Furthermore, these bonds' credit
qualities were concentrated in the BBB to A+ range, which in our opinion,
offered attractive yields.
Franklin California Intermediate-Term
Tax-Free Income Fund
Portfolio Breakdown on 6/30/97
% of Total
Long-Term
Sector Investments
Certificates of Participation 27.9%
Tax Allocation Bonds 16.6%
Utilities 12.0%
Other Revenue 9.5%
Education 8.4%
Housing 7.5%
Marks-Roos Bonds 5.7%
Hospitals 3.8%
Special Assessment Bonds 3.8%
Pre-Refunded 1.7%
Transportation 1.4%
Special Tax Revenue Bonds 1.3%
Mello-Roos Bonds 0.3%
Industrial 0.1%
For a complete list of portfolio holdings, please see page 43 of this report.
GRAPHIC MATERIAL 5 OMITTED - SEE APPENDIX AT END OF DOCUMENT
As you can see from the table on the previous page, we remained invested in a
broad range of municipal sectors and maintained our conservative management
approach by purchasing "essential service" bonds. Essential service bonds are
backed by revenues from hospitals, utilities, educational institutions and
transportation projects, and tend to generate stable income.
Looking forward, we believe California's economy should continue to expand and
that the Fed will stay actively involved in keeping inflation under control. If
these expectations hold true, the fund's diversified portfolio should perform
well during the next fiscal year.
This discussion reflects our strategies for the fund and includes our opinions
at the close of the reporting period. Since economic and market conditions are
constantly changing, our strategies, evaluations, conclusions and decisions
regarding the portfolio holdings discussed in this report may change as new
circumstances arise. Although past performance of a specific investment or
sector cannot guarantee future performance, such information can help illustrate
how we analyze the securities we purchase for the fund.
PERFORMANCE SUMMARY
The Franklin California Intermediate-Term Tax-Free Income Fund's share price, as
measured by net asset value, increased 26.0 cents during the reporting period,
from $10.67 on June 30, 1996, to $10.93 on June 30, 1997.
At the end of this reporting period, your fund's distribution rate was 4.72%,
based on an annualization of June's monthly dividend of 4.4 cents ($0.044) per
share and the maximum offering price of $11.18 on June 30, 1997. 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
California state personal income tax bracket, you would have to earn 8.62% from
a taxable investment to match your fund's tax-free distribution rate.
The fund posted a cumulative total return of +7.58% for the 12-month period
ended June 30, 1997. Total return measures the change in value of an investment,
assuming reinvestment of all distributions, and does not include the initial
sales charge.
The chart on the next page illustrates that since 1993, your fund's shares have
outpaced the rate of inflation, as measured by the Consumer Price Index,
increasing your purchasing power -- a primary goal of any investment. Although
the fund's shares have underperformed the Lehman Brothers Municipal Bond Index,
unmanaged market indices have inherent performance differentials in comparison
with any fund. They do not pay management fees to cover salaries of security
analysts or portfolio managers, nor do they pay commissions to buy and sell
bonds. Unlike indices, mutual funds are never 100% invested since they need to
keep cash on hand to redeem shares or pay for upcoming investments. The fund's
performance figures also include the maximum initial sales charge, all fund
expenses and account fees. If operating expenses such as the fund's had been
applied to this index, the index's performance would have been lower. Please
remember that an index is simply a measure of performance, and one cannot invest
directly in an index.
GRAPHIC MATERIAL 6 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Past performance is not predictive of future results.
Franklin California Intermediate-Term
Tax-Free Income Fund
Dividend Distributions
(7/1/96 - 6/30/97)*
Dividend
Month per Share
July 4.4 cents
August 4.4 cents
September 4.4 cents
October 4.4 cents
November 4.4 cents
December 4.4 cents
January 4.4 cents
February 4.4 cents
March 4.4 cents
April 4.4 cents
May 4.4 cents
June 4.4 cents
Total 52.8 cents
*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. Distributions will vary based on the
earnings of the fund's portfolio.
GRAPHIC MATERIAL 7 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Franklin California Intermediate-Term Tax-Free Income Fund
Periods ended 6/30/97
From
Inception
1-Year 3-Year (9/23/92)
Cumulative Total Return1 7.58% 24.48% 37.05%
Average Annual Total Return2 5.12% 6.78% 6.33%
Distribution Rate3 4.72%
Equivalent Taxable Distribution Rate4 8.62%
30-Day Standardized Yield5 4.65%
Equivalent Taxable Yield4 8.49%
1. Cumulative total returns measure the change in value of an investment over
the periods indicated and do not include the sales charge.
2. Average annual total returns represent the average annual change in value of
an investment over the specified periods and reflect the maximum 2.25% initial
sales charge. See Note below.
3. Distribution rate is based on an annualization of June's 4.4 cents per share
monthly dividend and the maximum offering price of $11.18 on June 30, 1997.
4. Equivalent taxable distribution rate and yield assume the 1997 maximum
combined federal and California state personal income tax bracket of 45.217%,
based on the 39.6% federal income tax rate.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended June 30, 1997.
Note: All total return calculations assume reinvestment of dividends and capital
gains, if any, at net asset value. Your investment return and principal value
will fluctuate with market conditions, and you may have a gain or loss when you
sell your shares.
The fund's manager 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 this waiver, the fund's distribution rate
would have been lower, and yield for the period would have been 4.38%. The fee
waiver may be discontinued at any time upon notice to the fund's Board of
Trustees.
FRANKLIN CALIFORNIA
TAX-EXEMPT MONEY FUND
Your Fund's Objective: Seeks to provide shareholders with a high level of
current income, exempt from regular federal and California state personal income
taxes, along with preservation of capital and liquidity, by investing in a
portfolio of short-term municipal debt securities issued in California. The fund
is managed to maintain a $1.00 share price.*
*An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution. There is no assurance that the
$1.00 per share price will be maintained.
Fearing the economy was overheating and likely to foster higher inflation, the
Federal Reserve Board raised the federal funds rate (the rate banks charge each
other for overnight loans) from 5.25% to 5.50% in late March. Although many
investors expected the Fed to hike rates a second time at their May 20th
meeting, they instead left short-term interest rates unchanged. We believe the
economy will continue to do well in the near term, while short-term rates should
remain close to current levels.
On June 30, 1997, the fund's seven-day effective yield, which assumes
compounding of daily dividends, was 3.47%, and the fund's seven-day annualized
yield was 3.41%. This double tax-free rate is generally higher than the
after-tax return on a comparable taxable investment. For example, an investor in
the maximum combined federal and California state personal income tax bracket
would need to earn 6.22% from a taxable investment to match the fund's tax-free
yield.
Looking forward, our investment strategy will continue to emphasize quality and
liquidity. Even though Securities and Exchange Commission guidelines allow
tax-exempt money funds to purchase first- and second-tier securities (those
within the top two credit-quality categories), we purchase only the
highest-rated securities for this fund.
This discussion reflects our strategies for the fund and includes our opinions
at the close of the reporting period. Since economic and market conditions are
constantly changing, our strategies, evaluations, conclusions and decisions
regarding the portfolio holdings discussed in this report may change as new
circumstances arise. Although past performance of a specific investment or
sector cannot guarantee future performance, such information can help illustrate
how we analyze the securities we purchase for the fund.
GRAPHIC MATERIAL 8 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Franklin California Tax-Exempt Money Fund
Periods ended 6/30/97
Seven-day effective yield1 3.47%
Seven-day annualized yield 3.41%
Taxable Equivalent yield2 6.22%
1. The seven-day effective yield assumes the compounding of daily dividends.
2. Taxable equivalent yield assumes the 1997 maximum combined federal and
California state personal income tax bracket of 45.217%, based on the federal
income tax rate of 39.6%.
Annualized and effective yields are for the seven days ended June 30, 1997.
Yields reflect fluctuations in interest rates on portfolio investments, as well
as fund expenses. Yields should be viewed in terms of the current, low rate of
inflation -- just as high inflation usually results in higher yields, low
inflation often brings the opposite.
Past performance is not predictive of future results.
GLOSSARY OF INVESTMENT TERMS
Average Annual Total Return: The average annual change in value of an investment
over the periods indicated. Unless otherwise stated, figures shown in this
report include sales charges.
Call Date: Date on which a bond may be redeemed before maturity. If called, the
bond may be redeemed at par value or at a slight premium to par. For example, a
bond may be scheduled to mature in 20 years, but may have a provision that
allows it to be called in 10 years if it is advantageous for the issuer to
refinance it.
Coupon: A bond's interest rate that the issuer promises to pay to the holder
until the bond matures.
Cumulative Total Return: Measures the change in value of an investment over the
periods indicated. Unless otherwise stated, figures shown in this report exclude
sales charges.
Derivative: A financial product whose value can be based on the performance on
an underlying financial asset, index or other investment. Although derivatives
can be useful tools in portfolio management, they have caused large losses to
some mutual funds, municipalities, corporations and commercial banks when
unexpected movement in interest rates adversely affected their values.
Federal Open Market Committee: The committee that sets interest rates and credit
policies for the Federal Reserve System, the United States' central bank. The
Committee decides whether to increase or decrease interest rates through
open-market operations of buying or selling government securities.
High-Grade Bond/High-Quality Bond: A bond rated AAA or AA by Standard &
Poor's(R) or Aaa or Aa by Moody's Investors Service -- two national
credit-rating agencies.
Investment-Grade Bond: A bond with a rating of AAA to BBB-, usually within the
four highest rating categories assigned to bonds.
Maturity: The time at which a debt instrument is due and payable. If a bond is
due to mature on January 1, 2010, it will return the bondholder's principal and
make the final interest payment on that date.
Premium: Amount by which a bond sells above its face (par) value. For instance,
a bond with a $1,000 face value would sell for a $100 premium when it cost
$1,100.
Pre-Refunded Bond: A bond that will be paid off at its first call date with
proceeds of the sale of a second bond carrying a lower interest rate. The
proceeds of the second bond's sale are usually invested in U.S. Treasury
securities that will mature at the first bond's call date. When a bond is
pre-refunded its premium rises, and then falls to par value as the refunding
date approaches.
Par Value: The face value or amount at which a security will be redeemed at
maturity -- typically $1,000 for a bond.
Securities and Exchange Commission: The federal agency charged with
administering the rules that regulate securities markets.
MUNICIPAL BOND RATINGS
Moody's
Aaa: Best quality. They carry the smallest degree of investment risk. Interest
payments are protected by a large or exceptionally stable margin, and principal
is secure. While various protective elements may change, such changes are most
unlikely to impair the fundamentally strong position of these issues.
Aa: High quality by all standards. Together with the Aaa group, they comprise
what are generally known as high-grade bonds. Aa bonds are rated lower than Aaa
because margins of protection may not be as large, fluctuation of protective
elements may be of greater amplitude, or there may be other elements which make
the long-term risks appear larger.
A: Considered upper-medium-grade obligations that possess many favorable
investment attributes. Security provisions are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa: Medium-grade obligations, i.e., they are neither highly protected nor
poorly secured. Interest payments and principal security appear adequate for the
present, but certain protective elements may be unreliable or lacking over any
great length of time.
Ba: Contain speculative elements. Often the protection of interest and principal
payments may be very moderate and, thereby, not well safeguarded during both
good and bad times over the future. Uncertainty of position characterizes these
bonds.
B: Generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the contract
over any long period of time may be small.
Caa: Poor standing. Such issues may be in default or there may be present
elements of danger with respect to principal or interest.
Ca: Obligations which are highly speculative. Such issues are often in default
or have other marked shortcomings.
C: Lowest-rated class of bonds. Issues rated C can be regarded as having
extremely poor prospects of ever attaining any real investment standing.
S&P(R)
AAA: This is the highest rating assigned by S&P to a debt obligation and
indicates the ultimate degree of protection as to principal and interest.
AA: Also qualify as high-grade obligations, and, in the majority of instances,
differ from AAA issues only to a small degree.
A: Generally regarded as upper-medium grade. They have considerable investment
strength but are not entirely free from adverse effects of changes in economic
and trade conditions. Interest and principal are regarded as safe.
BBB: Regarded as having an adequate capacity to pay principal and interest.
Whereas BBB-rated issues normally exhibit adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to weaken
the capacity to pay principal and interest for these bonds than those rated A.
BB, B, CCC, CC: Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligations. BB
indicates the lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
C: Reserved for income bonds on which no interest is being paid.
D: Debt rated D is in default and payment of interest and/or repayment of
principal is in arrears.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Statement of Investments in Securities and Net Assets, June 30, 1997
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT Franklin California Insured Tax-Free Income Fund (NOTE1)
<S> <C> <C>
Long Term Investments 95.5%
Bonds 94.9%
$10,775,000 ABAG, RDA Revenue, Tax Allocation, Pool A2, CGIC Insured, 6.60%, 12/15/24.................. $ 11,773,519
1,000,000 Alameda COP, Police Building and Equipment Financing Project,
MBIA Insured, Pre-Refunded, 7.25%, 08/01/15 .............................................. 1,091,550
2,000,000 Alameda County COP, Municipal Custodial Receipts, Series 1,
BIG Insured, Pre-Refunded, 7.25%, 12/01/07................................................ 2,222,520
1,000,000 Alameda County Water District Revenue COP, Water System
Project, FGIC Insured, 6.00%, 06/01/20.................................................... 1,025,220
10,730,000 Alhambra COP, Police Facilities AD No. 91-1, AMBAC Insured, 6.75%, 09/01/23................ 11,580,245
1,000,000 Anaheim COP, AMBAC Insured, Pre-Refunded, 6.75%, 10/01/10.................................. 1,092,060
3,790,000 Anaheim Public Financing Authority Revenue, Refunding,
Local Agency, CFD, Series A, MBIA Insured,
5.75%, 09/01/14........................................................................... 3,829,947
1,985,000 Arcadia GO, USD, Series B, FGIC Insured, 5.875%, 07/01/20.................................. 2,014,199
5,690,000 Arcata Joint Powers Financing Authority Revenue,
Tax Allocation, Community Development Project, Series A,
AMBAC Insured, 6.00%, 08/01/23............................................................ 5,870,316
1,080,000 Arcata Joint Powers Financing Authority, Wastewater Revenue,
FSA Insured, 5.80%, 12/01/22.............................................................. 1,089,450
Baldy Mesa Water District COP, Water System Improvement Project,
AMBAC Insured,
760,000 6.40%, 08/01/17 .......................................................................... 802,036
1,170,000 6.45%, 08/01/24 .......................................................................... 1,236,596
2,000,000 Barstow RDA, Tax Allocation, Central Redevelopment Project,
Series A, MBIA Insured, 6.25%, 09/01/22................................................... 2,106,620
1,500,000 Beaumont USD, COP, Refunding, Series A, FSA Insured, 5.80%, 01/01/21....................... 1,518,825
2,995,000 Benicia COP, Refunding, Water System Project,
AMBAC Insured, 6.125%, 11/01/17........................................................... 3,109,798
5,900,000 Benicia USD, Series A, AMBAC Insured, 6.85%, 08/01/16...................................... 6,410,291
1,270,000 Berkeley COP, AMBAC Insured, 7.50%, 06/01/19............................................... 1,327,366
Brea Public Finance Authority Revenue, Tax Allocation,
Redevelopment Project, Series A, MBIA Insured,
1,520,000 7.00%, 08/01/15........................................................................... 1,664,522
1,550,000 6.75%, 08/01/22........................................................................... 1,680,185
12,310,000 7.00%, 08/01/23........................................................................... 13,456,430
3,480,000 Pre-Refunded, 7.00%, 08/01/15............................................................. 3,884,968
7,390,000 Pre-Refunded, 7.00%, 08/01/23............................................................. 8,249,974
2,155,000 Buellton USD, Series A, MBIA Insured, 6.375%, 07/01/17..................................... 2,290,614
3,000,000 Burbank PCR, Wastewater Treatment, Series A,
FGIC Insured, 5.50%, 06/01/25............................................................. 2,937,000
2,000,000 Burbank RDA, Refunding, Tax Allocation, City Center
Redevelopment Project, Series A, CGIC Insured, 5.50%, 12/01/23............................ 1,958,980
665,000 Burbank Waste Disposal Revenue, Series B, AMBAC Insured, 6.00%, 05/01/22................... 676,052
3,950,000 Calaveras County Water District Revenue, Refunding, COP,
Water and Sewer System Improvement Project,
AMBAC Insured, 6.00%, 05/01/16............................................................ 4,072,371
1,795,000 Calexico CRDA Revenue, Tax Allocation, Refunding, Merged
Central Business and Residential, CGIC Insured,
5.85%, 08/01/15........................................................................... 1,823,738
2,930,000 Calexico USD, CFD No. 1, Special Tax, Refunding,
AMBAC Insured, 5.60%, 09/01/17............................................................ 2,929,736
California Educational Facilities Authority Revenue, MBIA Insured,
2,000,000 Loyola Marymount, 5.75%, 10/01/24......................................................... 2,013,440
3,350,000 Refunding, Santa Clara University, 5.75%, 09/01/21........................................ 3,377,135
California Educational Facilities Authority Revenue,
Pooled Facilities Program, MBIA Insured,
1,761,000 6.70%, 11/01/09........................................................................... 1,793,314
1,800,000 7.625%, 11/01/12.......................................................................... 1,854,198
1,000,000 7.00%, 03/01/16........................................................................... 1,071,880
California Health Facilities Financing Authority Revenue,
3,000,000 Adventist Health Systems West, Series A, MBIA Insured, 7.00%, 03/01/13.................... 3,258,780
5,065,000 Adventist Health Systems West, Series B, MBIA Insured, 6.75%, 03/01/14.................... 5,442,292
3,900,000 Catholic Health Care, Series A, AMBAC Insured, Pre-Refunded, 7.00%, 07/01/06.............. 4,189,497
California Health Facilities Financing Authority Revenue, (cont.)
$ 4,000,000 Marin General Hospital, Series A, CGIC Insured, 7.00%, 08/01/15........................... $ 4,306,000
5,000,000 Refunding, Catholic Health Facility, Series A, MBIA Insured, 6.00%, 07/01/17.............. 5,162,500
11,110,000 San Diego Hospital Association, MBIA Insured, 6.625%, 05/01/19............................ 11,522,070
2,425,000 San Diego Hospital Association, Series A, MBIA Insured, 6.20%, 08/01/12................... 2,544,989
4,850,000 San Diego Hospital Association, Series A, MBIA Insured, 6.20%, 08/01/20................... 5,046,522
3,500,000 Scripps Memorial Hospital, Series A, MBIA Insured, 6.40%, 10/01/12........................ 3,727,115
3,000,000 Sharp Temecula Hospital, MBIA Insured, 7.05%, 08/01/21.................................... 3,273,210
California HFA Revenue,
5,250,000 Home Mortgage, Series D, MBIA Insured, 6.15%, 08/01/28.................................... 5,352,795
1,315,000 Series A, MBIA Insured, 7.15%, 08/01/11................................................... 1,397,411
4,100,000 Series A, MBIA Insured, 8.20%, 02/01/20................................................... 4,250,224
3,450,000 Series A, MBIA Insured, 7.20%, 02/01/26................................................... 3,645,339
1,815,000 Series B, MBIA Insured, 6.80%, 08/01/11................................................... 1,926,169
245,000 Series B, MBIA Insured, 8.625%, 08/01/15.................................................. 256,248
6,080,000 Series K, AMBAC Insured, 6.25%, 08/01/27.................................................. 6,230,237
9,275,000 California Public Capital Improvement Financing Authority Revenue,
Pooled Projects, Series B, BIG Insured, 8.10%, 03/01/18..................................... 9,638,395
1,850,000 California Public School District, Financing Authority Lease Revenue,
Refunding, Southern Kern USD, Series B, FSA Insured, 5.90%, 09/01/26...................... 1,895,436
California State Department of Water Resources, Central Valley Project,
Water System Revenue, MBIA Insured,
5,000,000 Refunding, Series L, 5.50%, 12/01/23...................................................... 4,931,200
5,000,000 bRefunding, Series Q, 5.375%, 12/01/27....................................................... 4,836,250
2,500,000 Series J-3, 5.50%, 12/01/22............................................................... 2,466,175
California State GO,
9,000,000 AMBAC Insured, 6.30%, 09/01/06............................................................ 10,075,410
2,255,000 FGIC Insured, 6.00%, 08/01/19............................................................. 2,329,708
3,500,000 FGIC Insured, 6.00%, 05/01/20............................................................. 3,613,330
4,400,000 MBIA Insured, 6.00%, 08/01/16............................................................. 4,545,772
1,000,000 Various Purposes, MBIA Insured, 6.00%, 10/01/21........................................... 1,027,640
8,375,000 California State HFA Revenue, Home Mortgage, Series L,
MBIA Insured, 6.40%, 08/01/27............................................................. 8,697,689
California State Loan Purchase Authority Revenue, Loan Contract,
Series A, CGIC Insured, Pre-Refunded,
2,000,000 7.75%, 10/01/08........................................................................... 2,129,060
3,365,000 7.80%, 10/01/18........................................................................... 3,584,162
4,275,000 California State Local Government Finance Authority Revenue,
Marin Valley Mobile Country Club Park
Acquisition, Senior Series A, FSA Insured, 5.80%, 10/01/20................................ 4,330,661
California State University and Colleges, Student Union Revenue, MBIA Insured,
1,310,000 Bakersfield, Series A, 6.30%, 11/01/22.................................................... 1,380,452
2,375,000 San Bernardino, Series B, 6.30%, 02/01/22................................................. 2,506,361
1,500,000 California State University, Fresno, Auxiliary Residence
Student Project Revenue, MBIA Insured, 6.25%, 02/01/17................................... 1,586,535
6,750,000 Calleguas-Las Virgines Public Financing Authority, Installment
Purchase Revenue, Calleguas Municipal
Water District Project, Refunding, FGIC Insured, 5.125%, 07/01/21......................... 6,245,775
Cambria Community Services District Revenue, MBIA Insured,
1,000,000 COP, Wastewater Treatment System Upgrade, 6.90%, 11/01/24................................. 1,119,380
1,330,000 Water and Wastewater, Refunding, Series A, 6.00%, 05/01/15................................ 1,379,848
Campbell Union School District, Series C, FGIC Insured,
$ 1,000,000 5.65%, 08/01/17........................................................................... $ 1,008,660
1,000,000 5.75%, 06/01/22........................................................................... 1,008,610
2,485,000 Carpinteria Sanitation District, Capital Facilities Revenue,
FGIC Insured, 6.25%, 07/01/14............................................................. 2,623,290
Central Coast Water Authority Revenue,
State Water Project, Regional Facilities, AMBAC Insured,
2,500,000 Pre-Refunded, 6.50%, 10/01/14............................................................. 2,781,825
4,650,000 Pre-Refunded, 6.60%, 10/01/22............................................................. 5,195,724
595,000 Refunding, Series B, 5.65%, 10/01/11...................................................... 606,525
620,000 Refunding, Series B, 5.70%, 10/01/12...................................................... 624,365
1,020,000 Refunding, Series B, 5.80%, 10/01/16...................................................... 1,027,140
2,800,000 Refunding, Series B, 5.85%, 10/01/22...................................................... 2,819,572
3,035,000 Central School District, San Bernardino County, AMBAC Insured, 5.60%, 05/01/16............. 3,038,521
5,000,000 Cerritos Public Financing Authority Revenue, Los Coyotes Redevelopment
Project Loan, Series A, AMBAC Insured, 5.75%, 11/01/22................................... 5,048,900
815,000 Chico Public Financing Authority Revenue, Southeast Chico
Redevelopment Project, Series A, FGIC Insured, 6.625%, 04/01/21.......................... 865,962
2,000,000 Chino Basin Regional Financing Authority Revenue, Refunding,
Municipal Water District, Sewer System Project, AMBAC Insured, 6.00%, 08/01/16........... 2,070,600
3,590,000 Chino COP, RDA, Refunding, Water System Improvement Project,
AMBAC Insured, 6.20%, 09/01/18............................................................. 3,780,521
5,795,000 Chino, Ontario, Upland, etc., Water Facilities Authority, COP, Refunding,
Agua de Lejos Projects, Series A, FGIC Insured, 6.75%, 10/01/11........................... 5,910,668
2,940,000 Chula Vista Elementary School District COP, MBIA Insured, 6.60%, 08/01/16.................. 3,031,904
3,945,000 Chula Vista Public Finance Authority, Local Agency Revenue,
Series 1995-A, CGIC Insured, 6.125%, 09/02/14............................................. 4,182,095
1,500,000 Coachella Valley Recreation and Park District, 1915 Act, Refunding,
Reassessment District No. 9, MBIA Insured, 6.20%, 09/02/16............................... 1,585,710
500,000 Colton Joint USD, CFD, Special Tax, Refunding, Southridge Village,
Phase III, CGIC Insured, 5.90%, 09/01/14.................................................. 505,340
Contra Costa County COP,
1,250,000 Buildings Acquisition Project, AMBAC Insured, 6.70%, 02/01/21............................. 1,307,825
1,000,000 Public Facilities Corp., BIG Insured, 7.80%, 06/01/08..................................... 1,080,390
2,065,000 Contra Costa Mosquito Abatement District, COP, Refunding,
Public Improvements Project, CGIC Insured, 6.25%, 02/01/06............................... 2,184,605
4,500,000 Covina COP, Housing Revenue, AMBAC Insured, 7.00%, 03/01/17................................ 4,605,030
16,250,000 Cupertino Union School District, Series B, FGIC Insured, 5.60%, 08/01/21................... 16,079,700
7,000,000 Davis Joint USD No. 1, CFD, Special Tax, Refunding, MBIA Insured, 5.50%, 08/15/21.......... 6,862,100
1,105,000 Delano USD, Series A, CGIC Insured, 6.10%, 05/01/17........................................ 1,144,471
4,155,000 Dublin-San Ramon Services District, COP, AMBAC Insured, 7.00%, 12/01/20.................... 4,509,920
East Bay MUD, Wastewater Treatment System Revenue, AMBAC Insured, Pre-Refunded,
1,000,000 7.125%, 06/01/17.......................................................................... 1,096,740
2,000,000 7.20%, 06/01/20........................................................................... 2,197,560
East Bay MUD, Water System Revenue,
5,000,000 MBIA Insured, Pre-Refunded, 7.50%, 06/01/18............................................... 5,534,550
6,900,000 Refunding, FGIC Insured, 6.00%, 06/01/20.................................................. 7,055,940
1,200,000 East Side Union High School District, Santa Clara County, Series D,
FGIC Insured, 5.75%, 09/01/17............................................................. 1,209,204
1,400,000 Eastern Municipal Water and Sewer District Revenue, COP,
Refunding, Series A, FGIC Insured, 6.30%, 07/01/20........................................ 1,453,480
1,000,000 El Centro COP, AMBAC Insured, 6.875%, 06/01/09............................................. 1,028,150
5,960,000 El Cerrito RDA, Tax Allocation, Refunding, Redevelopment Project,
Series A, CGIC Insured, 6.80%, 07/01/19................................................... 6,374,935
El Dorado County Public Agency Financing Authority Revenue, Refunding, FGIC Insured,
$ 2,250,000 5.50%, 02/15/16........................................................................... $ 2,224,035
3,500,000 5.50%, 02/15/21........................................................................... 3,431,750
6,900,000 Eureka Public Financing Authority Revenue, Tax Allocation,
Eureka Redevelopment Project, CGIC Insured, Pre-Refunded, 7.40%, 11/01/12 ................ 7,334,493
4,750,000 Fairfield Public Financing Authority Revenue, Municipal Park,
ID No. 1, FGIC Insured, 6.30%, 07/01/23.................................................... 4,982,180
1,265,000 Farmersville USD, Series A, AMBAC Insured, 5.70%, 07/01/18................................. 1,278,738
2,525,000 Fillmore Public Financing Authority Revenue, Refunding,
Central City Redevelopment Project, Series A, AMBAC Insured, 5.75%, 10/01/16............. 2,583,605
5,645,000 bFillmore USD, Series A, FGIC Insured, 5.60%, 07/01/22....................................... 5,622,364
Folsom Public Financing Authority Revenue, Refunding, AMBAC Insured,
2,000,000 6.00%, 10/01/08........................................................................... 2,128,640
1,000,000 6.00%, 10/01/12........................................................................... 1,035,480
3,400,000 6.00%, 10/01/19........................................................................... 3,479,730
5,850,000 Fontana RDA, Tax Allocation, Refunding, Southwest Industrial
Park Project, FGIC Insured, 6.125%, 09/01/25............................................... 6,087,276
1,000,000 Fresno COP, City Hall Refinancing Project, AMBAC Insured, 6.25%, 08/01/19.................. 1,039,280
4,000,000 Fresno USD, Series B, FSA Insured, 5.875%, 08/01/20........................................ 4,054,480
7,140,000 Fresno Water System Revenue, Water Remediation Project,
Series A, FGIC Insured, 5.875%, 06/01/20................................................... 7,250,813
1,780,000 Fruitvale School District, Series B, MBIA Insured, 6.00%, 08/01/20......................... 1,823,112
1,000,000 Glendale Hospital Revenue, Refunding, Adventist Health, Series A,
MBIA Insured, 6.75%, 03/01/13............................................................. 1,072,750
9,775,000 Glendale RDA, Tax Allocation, Refunding, Central Glendale
Redevelopment Project, AMBAC Insured, 6.00%, 12/01/20.................................... 10,033,842
2,000,000 Grossmont Hospital District Revenue, La Mesa, Series A, MBIA Insured,
Pre-Refunded, 8.00%, 11/15/17............................................................. 2,070,960
1,250,000 Hemet USD, COP, Nutrition Center Project, FSA Insured, 5.875%, 04/01/27.................... 1,265,600
1,000,000 Hercules COP, Refunding, Capital Improvement Projects, AMBAC Insured, 6.00%, 06/01/15...... 1,033,250
3,425,000 Hesperia Water District COP, Refunding, Water Facilities
Improvement Projects, FGIC Insured, 7.15%, 06/01/26....................................... 3,807,093
Imperial Irrigation District COP,
13,375,000 Electric System Project, MBIA Insured, 6.00%, 11/01/15.................................... 13,807,414
5,050,000 Water System Project, AMBAC Insured, 5.75%, 07/01/16...................................... 5,111,509
2,260,000 Industry, City of, Public Works and Capital Improvement, FGIC Insured,
Pre-Refunded, 6.80%, 07/01/15............................................................. 2,419,194
8,535,000 Kern County Board of Education COP, Administration Building
Financing Project, MBIA Insured, 6.20%, 02/01/23......................................... 8,738,389
Kern County High School District, CGIC Insured, ETM,
1,535,000 6.625%, 08/01/14.......................................................................... 1,739,247
1,400,000 6.625%, 08/01/15.......................................................................... 1,584,086
3,460,000 King City Joint Union High School District, Series A, AMBAC Insured, 6.30%, 08/01/19....... 3,622,966
3,080,000 La Mirada RDA, Industrial Commercial Redevelopment
Project, Series A, MBIA Insured, 6.60%, 08/15/21.......................................... 3,273,178
6,650,000 La Quinta RDA, Tax Allocation, Housing Redevelopment
Project Areas No 1 & 2, MBIA Insured, 6.00%, 09/01/25.................................... 6,853,357
Lake Arrowhead Community Services District COP, Refunding, FGIC Insured,
7,600,000 6.125%, 06/01/05.......................................................................... 8,214,992
14,000,000 6.50%, 06/01/15........................................................................... 14,902,440
Lake Elsinore Public Financing Authority Revenue, Tax Allocation,
Lake Elsinore Redevelopment Projects, FGIC Insured,
1,255,000 Series A, 6.25%, 02/01/19................................................................. 1,295,122
12,840,000 Series C, 6.625%, 02/01/17................................................................ 13,500,361
2,485,000 Lakewood Public Financing Authority, Water Revenue, FGIC Insured, 5.70%, 04/01/16.......... 2,503,215
Lakewood RDA, Tax Allocation, Refunding, CGIC Insured,
$ 3,000,000 Redevelopment Project No. 1, Series A, 6.50%, 09/01/17.................................. $ 3,213,270
2,500,000 Town Center Redevelopment Project, Subordinated Lien, Pre-Refunded, 8.50%, 09/01/13..... 2,568,875
11,245,000 Lancaster RDA, Tax Allocation, Refunding, Lancaster
Redevelopment Project No. 5, MBIA Insured, 6.85%, 02/01/19................................ 12,087,475
Lincoln RDA, Tax Allocation, Local Government Finance Authority Revenue, AMBAC Insured,
1,500,000 9.00%, 08/01/11........................................................................... 1,570,050
460,000 9.00%, 08/01/12........................................................................... 481,155
2,425,000 Lincoln USD, CFD No. 1, AMBAC Insured, Pre-Refunded, 6.90%, 09/01/21....................... 2,707,270
1,250,000 Livermore Public Building COP, AMBAC Insured, 7.05%, 04/01/17.............................. 1,320,488
1,000,000 Local Government Finance Authority Revenue, Refunding,
Bunker Hill Project, AMBAC Insured, Pre-Refunded, 6.75%, 12/01/14........................ 1,078,090
Lodi COP,
3,605,000 1996 Public Improvement Financing Project, MBIA Insured, 5.90%, 10/01/16.................. 3,693,971
8,800,000 Refunding, Wastewater Treatment Project, AMBAC Insured, 6.70%, 08/01/26................... 9,753,920
Loma Linda Hospital Revenue, Loma Linda University Medical Center Project, Series B,
2,500,000 MBIA Insured, Pre-Refunded, 7.00%, 12/01/10............................................... 2,758,500
1,910,000 Refunding, AMBAC Insured, 7.00%, 12/01/15................................................. 2,038,543
Long Beach Harbor Revenue, MBIA Insured,
1,500,000 5.375%, 05/15/20.......................................................................... 1,428,810
5,000,000 5.25%, 05/15/25........................................................................... 4,654,400
2,500,000 Long Beach RDA, Refunding, Downtown Redevelopment Project,
Series A, AMBAC Insured, Pre-Refunded, 7.75%, 11/01/10................................... 2,668,625
3,000,000 Los Angeles County Capital Asset Leasing Corp.,
Leasehold Revenue, Refunding, AMBAC Insured, 6.00%, 12/01/16............................. 3,080,940
5,825,000 Los Angeles County COP, Refunding, San Pedro Peninsula Hospital
Project, AMBAC Insured, 6.25%, 05/01/15................................................... 6,054,447
Los Angeles County Transport Commission Sales Tax,
2,000,000 Proposition C, Second Senior Series A, Senior Lien, MBIA Insured, 6.00%, 07/01/23......... 2,045,760
2,740,000 Series B, FGIC Insured, 6.50%, 07/01/13................................................... 2,926,978
5,025,000 Series B, FGIC Insured, 6.50%, 07/01/15................................................... 5,358,509
3,200,000 Los Angeles CRDA, Tax Allocation, Hollywood Redevelopment Project,
Series B, MBIA Insured, 6.10%, 07/01/22................................................... 3,319,616
Los Angeles Department of Water and Power, Electric Plant Revenue,
17,215,000 FGIC Insured, 6.125%, 01/15/33............................................................ 17,817,181
2,000,000 MBIA Insured, 6.00%, 08/15/32............................................................. 2,046,280
3,500,000 Refunding, FGIC Insured, 6.00%, 02/01/28.................................................. 3,610,005
6,875,000 Los Angeles Department of Water and Power, Waterworks Revenue,
Second Issue, FGIC Insured, 6.40%, 11/01/31.............................................. 7,300,494
Los Angeles Harbor Department Revenue, Series B,
3,790,000 AMBAC Insured, 6.60%, 08/01/14............................................................ 4,082,323
2,000,000 AMBAC Insured, 6.60%, 08/01/15............................................................ 2,149,620
2,500,000 MBIA Insured, 6.20%, 08/01/25............................................................. 2,611,525
2,000,000 Los Angeles Mortgage Revenue, Refunding, MBIA Insured, Series I, 6.50%, 07/01/22........... 2,147,600
Los Angeles Wastewater System Revenue,
12,100,000 Refunding, Series A, FGIC Insured, 6.00%, 12/01/18........................................ 12,356,883
3,250,000 Series B, AMBAC Insured, 6.00%, 06/01/22.................................................. 3,314,123
4,000,000 Lynwood Public Financing Authority Revenue, Series A, AMBAC Insured, 5.75%, 09/01/18....... 4,038,520
$ 4,500,000 Marysville Hospital Revenue, Fremont Rideout Health Group,
AMBAC Insured, 6.30%, 01/01/22............................................................ $ 4,718,655
11,675,000 Menlo Park CDA, Tax Allocation, Las Pulgas Community Development
Project, Refunding, AMBAC Insured, 5.375%, 06/01/22...................................... 11,323,699
5,600,000 Mesa Construction Water District COP, Water Project, FGIC Insured, 6.40%, 03/15/18......... 5,952,352
8,750,000 Metropolitan Water District, Southern California Waterworks Revenue,
Series A, MBIA Insured, 5.50%, 07/01/25................................................... 8,566,425
5,000,000 Modesto COP, Water System Improvement Project, AMBAC Insured, 6.25%, 10/01/22.............. 5,208,800
Modesto Health Facilities Revenue, Memorial Hospital Association, MBIA Insured,
5,565,000 Refunding, Series A, 6.00%, 06/01/18...................................................... 5,723,213
1,500,000 Series 1991, 6.875%, 06/01/21............................................................. 1,617,870
Modesto Irrigation District COP,
6,745,000 Crossover Refunding, Geysers Geothermal Power Project, BIG Insured, 5.00%, 10/01/17....... 6,219,565
3,000,000 Refunding and Capital Improvements Projects, Series A, MBIA Insured, 6.00%, 10/01/21 ..... 3,044,460
Modesto Irrigation District, Financing Authority Revenue,
Domestic Water Project, AMBAC Insured,
2,000,000 Series A, 6.125%, 09/01/19................................................................ 2,067,000
2,500,000 Series C, 5.75%, 09/01/22................................................................. 2,518,900
14,375,000 Modesto Wastewater Treatment Facility Revenue, MBIA Insured, 5.75%, 11/01/22............... 14,500,063
2,460,000 Montebello Community RDA, Tax Allocation, Refunding,
Montebello Hills Redevelopment Project,
MBIA Insured, 5.60%, 03/01/19............................................................. 2,459,779
720,000 Montebello USD, COP, Series B, MBIA Insured, 7.25%, 06/01/10............................... 785,448
3,215,000 Monterey County COP, Refunding, Sheriff's Facilities Project,
CGIC Insured, 5.25%, 12/01/17............................................................. 3,060,198
Moulton Niguel Water District,
1,420,000 AMBAC Insured, Pre-Refunded, 7.25%, 04/01/16.............................................. 1,555,979
4,180,000 Refunding, Consolidated Improvement Districts, MBIA Insured, 5.25%, 09/01/13 ............. 4,068,728
1,500,000 Mountain View COP, Improvement Financing Authority Revenue,
City Hall/Community Theatre, MBIA Insured, 6.50%, 08/01/16............................... 1,592,220
2,535,000 Mountain View School District, Refunding, CFD, Special Tax,
Series A, CGIC Insured, 7.25%, 10/01/11 .................................................. 2,731,843
1,000,000 Mt. Diablo Hospital District Revenue, Series A, AMBAC Insured,
Pre-Refunded, 7.00%, 12/01/17............................................................. 1,103,400
Mt. Diablo USD, CFD No. 1, Special Tax,
500,000 AMBAC Insured, 6.25%, 08/01/14............................................................ 526,195
1,000,000 CGIC Insured, 6.00%, 08/01/24............................................................. 1,030,430
1,000,000 FGIC Insured, Pre-Refunded, 7.05%, 08/01/20............................................... 1,097,200
1,000,000 Refunding, AMBAC Insured, 5.75%, 08/01/15................................................. 1,015,220
2,270,000 Refunding, AMBAC Insured, 5.75%, 08/01/16................................................. 2,295,833
7,290,000 Refunding, AMBAC Insured, 5.375%, 08/01/19................................................ 7,128,381
Murrieta Water, Public Financing Authority, Special Tax Revenue,
Refunding, Senior Lien, Series A, FSA Insured,
1,235,000 5.60%, 10/01/15........................................................................... 1,220,983
2,630,000 5.70%, 10/01/21........................................................................... 2,612,642
2,000,000 National City Joint Powers Authority, Lease Revenue,
National City Police Facilities Project, AMBAC Insured, 6.75%, 10/01/17.................. 2,172,600
4,600,000 Nevada Irrigation District Revenue COP, Cascade Bench Flume
Project, MBIA Insured, 5.50%, 01/01/17.................................................... 4,519,040
North City West School Facilities, Financing Authority, Special Tax,
Refunding, Series B, CGIC Insured,
1,260,000 5.75%, 09/01/15 .......................................................................... 1,275,410
2,500,000 6.00%, 09/01/19........................................................................... 2,581,925
5,000,000 Northern California Power Agency Revenue, Multiple Capital Facilities,
Series A, MBIA Insured, 6.50%, 08/01/12................................................... 5,398,500
Northern California Power Agency Revenue, Refunding,
Public Power Hydroelectric Project No. 1,
3,200,000 AMBAC Insured, Pre-Refunded, 7.50%, 07/01/23.............................................. 3,987,296
4,000,000 Series A, MBIA Insured, 5.50%, 07/01/23................................................... 3,892,160
Northern California Transmission Revenue, California/Oregon
Transmission Project, Series A, MBIA Insured,
$ 2,500,000 6.25%, 05/01/10........................................................................... $ 2,668,400
4,000,000 6.50%, 05/01/16........................................................................... 4,326,160
31,900,000 5.25%, 05/01/20........................................................................... 30,076,915
18,335,000 6.00%, 05/01/24........................................................................... 18,639,728
4,000,000 Pre-Refunded, 7.00%, 05/01/10............................................................. 4,347,600
5,810,000 Norwalk Community Facilities Financing Authority,
Lease Revenue, MBIA Insured, 6.90%, 02/01/21.............................................. 6,197,701
4,000,000 Oakland Special Revenue, Refunding, Series A, FGIC Insured, 7.60%, 08/01/21................ 4,222,480
Oceanside COP,
3,940,000 Community Development, Public Parking Project,
CGIC Insured, Pre-Refunded, 7.875%, 04/01/19.............................................. 4,735,959
4,715,000 Corporation Yard Project, AMBAC Insured, Pre-Refunded, 7.30%, 08/01/21.................... 5,404,192
1,000,000 Refunding, Civic Center Project, MBIA Insured, 5.75%, 08/01/15............................ 1,011,380
5,000,000 Water Use Finance Association of California, Series A, AMBAC Insured, 6.50%, 10/01/17..... 5,370,900
10,000,000 Ontario Redevelopment Financing Authority Revenue,
Ontario Redevelopment Project No. 1, MBIA Insured,
ETM, 5.80%, 08/01/23...................................................................... 10,082,700
Orange County CFD No. 8, Special Tax, Rancho Santa Margarita, Series A, FSA Insured,
5,000,000 7.30%, 08/15/09........................................................................... 5,372,400
10,000,000 Pre-Refunded, 7.625%, 07/01/18............................................................ 10,571,500
Orange County COP, Juvenile Justice Center Facilities, AMBAC Insured,
4,770,000 6.375%, 06/01/11.......................................................................... 5,012,555
5,000,000 6.00%, 06/01/17........................................................................... 5,127,400
3,500,000 Orange County Financing Authority Revenue, Tax Allocation,
Refunding, Series A, MBIA Insured, 6.50%, 09/01/22....................................... 3,731,280
Oroville Public Finance Authority, Tax Allocation Revenue,
Oroville Redevelopment Project No. 1, AMBAC Insured,
1,245,000 5.90%, 09/15/21........................................................................... 1,268,755
2,890,000 6.10%, 09/15/23........................................................................... 3,012,247
5,000,000 Oxnard Financing Authority, Solid Waste Revenue, AMBAC Insured, 6.00%, 05/01/16............ 5,149,100
2,800,000 Oxnard Financing Authority Wastewater Revenue, FGIC Insured, 5.50%, 06/01/14............... 2,784,600
3,315,000 Oxnard Public Facilities Corp. COP, AMBAC Insured, Pre-Refunded, 7.50%, 09/01/06........... 3,548,376
3,615,000 Oxnard Union High School District, Series B, FSA Insured, 5.875%, 08/01/27................. 3,682,203
1,250,000 Pajaro Valley USD, COP, School Facilities Bridge Funding Program,
FSA Insured, 5.75%, 09/01/17.............................................................. 1,256,400
Palm Desert Financing Authority, Tax Allocation Revenue,
Project Area No. 2, Series A, MBIA Insured,
2,490,000 5.95%, 08/01/24 .......................................................................... 2,546,648
1,380,000 5.85%, 08/01/25 .......................................................................... 1,395,622
Palm Springs USD,
500,000 Series C, MBIA Insured, 6.125%, 02/01/20.................................................. 521,325
1,000,000 Series D, FGIC Insured, 5.90%, 02/01/21................................................... 1,018,110
4,750,000 Paramount USD, COP, Master Lease Program, FSA Insured, 6.30%, 09/01/26 .................... 5,023,410
1,130,000 Parlier USD, Series B, AMBAC Insured, 6.00%, 06/01/16...................................... 1,173,008
1,000,000 Petaluma COP, Refunding, Series A, AMBAC Insured, 5.625%, 08/01/13......................... 1,014,520
8,000,000 Pico Rivera Public Financing Authority Revenue, Refunding,
Water Enterprise Project, Series A, FGIC Insured, 6.00%, 12/01/17........................ 8,215,840
1,000,000 Pinole RDA, Tax Allocation, Pinole Vista Redevelopment Project,
Series A, MBIA Insured, 6.125%, 08/01/17.................................................. 1,037,080
Placer County COP, MBIA Insured,
4,000,000 Administrative and Emergency Services, 5.65%, 06/01/24.................................... 3,999,760
3,745,000 Jail Kitchen Project, 6.90%, 10/01/21..................................................... 4,164,440
2,350,000 Placer County Water Agency Revenue COP, CGIC Insured, 5.90%, 07/01/25...................... 2,394,368
$ 5,500,000 Pleasant Hill RDA, Tax Allocation, Refunding, Pleasant Hill Commons Project,
CGIC Insured, 6.90%, 07/01/21............................................................. $ 5,974,870
1,400,000 Pleasant Valley School District, Ventura County COP, Refunding,
Tierra Linda School, MBIA Insured, 5.70%, 08/01/18......................................... 1,391,432
2,000,000 Port Hueneme RDA, Tax Allocation, Refunding, Central Community
Redevelopment Project, AMBAC Insured, 5.50%, 05/01/23.................................... 1,946,080
Porterville COP, Refunding, AMBAC Insured,
4,935,000 Sewer System and Improvement Project, 6.30%, 10/01/18..................................... 5,221,230
6,075,000 Sewer System Project, 6.30%, 10/01/18..................................................... 6,427,350
3,000,000 Ramona Municipal Water District COP, Refunding, AMBAC Insured, 7.20%, 10/01/10............. 3,285,960
9,690,000 Rancho Cucamonga RDA, Tax Allocation, Refunding, Rancho
Redevelopment Project, Series A, FGIC Insured, Pre-Refunded, 7.70%, 05/01/16............. 10,001,534
5,000,000 Redding Electric System Revenue, Refunding, COP, Series A,
FGIC Insured, 5.50%, 06/01/11............................................................. 5,070,100
3,090,000 Redding Joint Powers Financing Authority, Lease Revenue,
Civic Center Project, Series A, MBIA Insured, 5.75%, 03/01/19............................ 3,114,195
3,230,000 Redding Joint Powers Financing Authority, Water Revenue,
Series A, AMBAC Insured, 5.60%, 06/15/13.................................................. 3,266,725
2,120,000 Redding RDA, Tax Allocation, Hilltop Cypress Redevelopment, Series C,
CGIC Insured, 6.00%, 09/01/22............................................................. 2,174,738
2,115,000 Redlands USD, Series B, CGIC Insured, 6.25%, 06/01/19...................................... 2,222,061
2,745,000 Redwood City Public Financing Authority Revenue, Local Agency,
Series A, AMBAC Insured, 6.50%, 07/15/11.................................................. 2,925,127
3,000,000 Riverside County COP, Historic Courthouse, MBIA Insured, 5.875%, 11/01/27.................. 3,059,070
Riverside RDA, Series A,
12,540,000 Lease Revenue, AMBAC Insured, 6.375%, 10/01/23............................................ 13,419,305
2,000,000 Lease Revenue, AMBAC Insured, 6.50%, 10/01/24............................................. 2,157,440
2,200,000 Refunding, Tax Allocation, Merged Redevelopment Project,
MBIA Insured, 5.625%, 08/01/23............................................................ 2,177,604
2,510,000 Rubidoux Community Service District COP, Water System
Improvement Project, AMBAC Insured, 6.20%, 12/01/14....................................... 2,631,158
Sacramento Area Flood Control Agency, Subordinated Lien, FGIC Insured,
1,000,000 Capital AD No. 2, 5.80%, 11/01/16......................................................... 1,016,510
1,475,000 Operation & Maintenance, 5.80%, 11/01/16.................................................. 1,499,352
2,690,000 Operation & Maintenance, 5.90%, 11/01/25.................................................. 2,745,441
5,920,000 Sacramento County Airport System Revenue, Series A, MBIA Insured, 6.00%, 07/01/17.......... 6,063,560
Sacramento MUD, Electric Revenue,
1,425,000 Refunding, Senior Lien, Series A, MBIA Insured, 5.75%, 08/15/13 .......................... 1,443,767
4,250,000 Series E, MBIA Insured, 5.75%, 05/15/22................................................... 4,276,350
4,000,000 Series I, MBIA Insured, 6.00%, 01/01/24................................................... 4,106,960
6,545,000 Series J, AMBAC Insured, 5.50%, 08/15/21.................................................. 6,458,475
2,000,000 Sacramento RDA, Tax Allocation, Merged Downtown
Redevelopment Project, Series A, MBIA Insured, 6.50%, 11/01/13.......................... 2,131,020
3,200,000 Saddleback Community College District COP, 1996 Capital
Improvement Financing Project, MBIA Insured, 5.50%, 06/01/15............................. 3,199,808
3,500,000 Saddleback Valley USD, Public Financing Authority,
Special Tax Revenue, Refunding, Series A, FSA Insured, 5.65%, 09/01/17.................... 3,499,685
5,680,000 San Bernardino County Mortgage Revenue, Refunding,
Don Miguel Apartments Project, MBIA Insured, 6.40%, 03/01/25 ............................ 5,889,535
San Bernardino Joint Powers Financing Authority Revenue, Tax Allocation, Refunding,
1,965,000 Northwest Redevelopment Project, Series E, MBIA Insured,
Pre-Refunded, 7.375%, 01/01/15 ........................................................... 2,148,669
1,950,000 Series A, CGIC Insured, 5.75%, 10/01/25 .................................................. 1,964,801
3,515,000 Southeast Industrial Park, Series F, MBIA Insured, Pre-Refunded, 7.375%, 03/01/14 ........ 3,859,611
4,265,000 State College Project No. 4, AMBAC Insured, Pre-Refunded, 7.20%, 09/01/08 ................ 4,621,895
$ 5,750,000 San Bernardino Municipal Water and Sewer Department, COP,
FGIC Insured, 6.25%, 02/01/17 ............................................................ $ 5,996,388
2,382,000 San Bernardino RDA, Capital Appreciation, Series B, AMBAC Insured, 7.70%, 01/10/09 ........ 4,230,765
2,000,000 San Buenaventura COP, Water Project, AMBAC Insured, Pre-Refunded, 7.50%, 10/01/20 ......... 2,229,120
2,250,000 San Buenaventura Public Facilities, Financing Authority Lease
Revenue, Refunding, CGIC Insured, 5.75%, 06/01/14........................................ 2,283,818
1,785,000 San Carlos RDA, Tax Allocation, Refunding, San Carlos
Redevelopment Project, Series A, MBIA Insured, 5.50%, 09/01/26........................... 1,746,783
2,000,000 San Diego Community College District COP, Series 1991, MBIA Insured, 6.50%, 12/01/12 ...... 2,133,080
2,375,000 San Diego County COP, Inmate Reception Center and Cooling,
MBIA Insured, 6.25%, 08/01/24............................................................. 2,509,496
1,650,000 San Diego IDR, San Diego Gas & Electric, Custodial Receipts,
Series A, AMBAC Insured, 6.40%, 09/01/18.................................................. 1,746,756
San Diego Mortgage Revenue, Refunding, University Canyon North, Series A, MBIA Insured,
245,000 5.125%, 07/01/03.......................................................................... 246,191
3,105,000 5.75%, 07/01/25........................................................................... 3,114,843
San Francisco BART District, Sales Tax Revenue, FGIC Insured,
2,580,000 6.60%, 07/01/12........................................................................... 2,794,579
2,000,000 5.50%, 07/01/15........................................................................... 1,988,700
10,000,000 b5.50%, 07/01/20............................................................................. 9,783,000
San Francisco City and County Airports Commission, International
Airport Revenue, Second Series, FGIC Insured,
6,900,000 Issue 5, 6.50%, 05/01/24.................................................................. 7,351,881
3,500,000 Issue 8A, 6.25%, 05/01/20................................................................. 3,631,005
6,400,000 Issue 9B, 6.00%, 05/01/25................................................................. 6,598,272
2,105,000 Issue 11, 6.00%, 05/01/11................................................................. 2,188,063
2,000,000 San Francisco City and County Sewer Revenue, Refunding,
AMBAC Insured, 6.00%, 10/01/11............................................................ 2,091,680
1,000,000 San Gabriel USD, COP, School Facilities Development Program,
Series A, FSA Insured, 6.00%, 09/01/15.................................................... 1,034,500
3,000,000 San Jacinto USD, COP, Refunding Project, AMBAC Insured, 6.50%, 10/01/23 ................... 3,208,230
8,740,000 San Jose Financing Authority Revenue, Convention Project,
Series C, CGIC Insured, 6.40%, 09/01/17 .................................................. 9,215,456
3,235,000 San Jose RDA, Tax Allocation, Merged Area Redevelopment Project,
Series B, MBIA Insured, Pre-Refunded, 6.625%, 08/01/11.................................... 3,458,118
1,260,000 San Luis Water Districts Revenue COP, Refunding & Capital
Improvement Project, AMBAC Insured, 5.50%, 11/01/16...................................... 1,245,119
10,495,000 San Marcos Public Facilities Authority Revenue,
Tax Allocation, Refunding, Series A, CGIC Insured, 5.50%, 08/01/23 ...................... 10,142,158
2,750,000 San Mateo County Joint Powers Financing Authority, Lease Revenue,
San Mateo County Health Care Center, Series A, FSA Insured, 5.75%, 07/15/22.............. 2,759,515
San Mateo County Transit District Revenue, Sales Tax, Series A, MBIA Insured,
4,100,000 6.70%, 06/01/10........................................................................... 4,266,788
6,700,000 6.50%, 06/01/20........................................................................... 6,960,697
San Ramon COP,
5,110,000 Central Park Expansion Project, CGIC Insured,
Pre-Refunded, 7.20%, 02/01/25 ............................................................ 5,992,242
12,070,000 Refunding, Capital Improvement Project, AMBAC Insured, 7.05%, 03/01/21 ................... 13,173,681
5,935,000 Sanger Public Financing Authority Revenue, Utility System
Financing, Series A, AMBAC Insured, 5.70%, 01/01/22...................................... 5,958,206
1,000,000 Sanger USD, Series A, CGIC Insured, 5.60%, 08/01/14 ....................................... 1,004,460
3,250,000 Santa Ana COP, Refunding, Parking Facilities Project,
Series A, AMBAC Insured, 6.125%, 06/01/16 ................................................ 3,399,890
1,000,000 Santa Ana Financing Authority Water Revenue,
MBIA Insured, 6.125%, 09/01/24 ........................................................... 1,043,900
5,000 Santa Ana HMR, Series A, FGIC Insured, 8.875%, 06/01/17 ................................... 5,235
Santa Barbara COP, Refunding, AMBAC Insured,
$ 3,575,000 Municipal Improvement Program, 6.15%, 08/01/17 ........................................... $ 3,720,145
6,500,000 Water System Improvement Project, 6.70%, 04/01/27 ........................................ 7,020,780
1,555,000 Santa Clara County COP, Board of Education Partners, Administration
Building Project, Series A, MBIA Insured, 6.00%, 04/01/25 ............................... 1,598,400
4,500,000 Santa Clara County COP, Refunding, Capital Project I,
AMBAC Insured, 6.25%, 10/01/16 ........................................................... 4,682,610
1,000,000 Santa Clara County Transit District, Sales Tax Revenue,
Series A, AMBAC Insured, 6.25%, 06/01/21 ................................................. 1,024,530
Santa Clara Electric Revenue, Series A, MBIA Insured,
1,350,000 6.50%, 07/01/21........................................................................... 1,437,075
1,500,000 5.75%, 07/01/24........................................................................... 1,505,280
900,000 Santa Clara RDA, Tax Allocation, Refunding, Bayshore North Project,
AMBAC Insured, 7.50%, 06/01/08............................................................ 928,458
2,675,000 Santa Cruz County COP, Sub-Joint Wastewater Treatment
Project, AMBAC Insured, 6.20%, 09/01/19................................................... 2,807,573
3,600,000 Santa Cruz Hospital Revenue, Dominican Santa Cruz,
Series A, MBIA Insured, 7.00%, 12/01/13 .................................................. 3,706,596
11,830,000 Santa Fe Springs RDA, Tax Allocation, Redevelopment Project,
Series A, MBIA Insured, 6.40%, 09/01/22................................................... 12,757,590
Santa Fe Springs, Series A,
900,000 Public Financing Authority, Water Revenue, MBIA Insured, 5.90%, 05/01/21.................. 917,955
1,190,000 Public Financing Authority, Water Revenue, MBIA Insured, 5.90%, 05/01/26.................. 1,213,741
2,750,000 RDA Revenue, Tax Allocation, AMBAC Insured, Pre-Refunded, 7.25%, 08/01/14................. 2,973,575
39,500,000 Santa Margarita/Dana Point Authority Revenue, Refunding,
ID 3, 3A, 4 and 4A, Series B, MBIA Insured, 5.75%, 08/01/20.............................. 39,775,315
3,675,000 Santa Maria COP, Local Water System, Refunding,
FGIC Insured, 5.50%, 08/01/13............................................................. 3,685,474
2,495,000 Santa Monica Community College District, Series B,
AMBAC Insured, 5.75%, 07/01/20............................................................ 2,513,837
Santa Rosa High School District,
1,000,000 FGIC Insured, 5.90%, 05/01/16 ............................................................ 1,021,970
4,450,000 FGIC Insured, 5.50%, 05/01/20............................................................. 4,403,943
1,050,000 Refunding, CGIC Insured, 5.75%, 05/01/18 ................................................. 1,062,212
2,000,000 Santa Rosa Wastewater Service Facilities District, Refunding & Improvement,
AMBAC Insured, 6.00%, 07/02/15 ........................................................... 2,137,040
Santa Rosa Water Revenue, Series A,
2,500,000 FGIC Insured, Pre-Refunded, 7.00%, 09/01/16............................................... 2,696,250
1,115,000 Refunding, FGIC Insured, 5.25%, 09/01/12 ................................................. 1,097,740
2,000,000 Subregional Wastewater Project, AMBAC Insured,
Pre-Refunded, 6.50%, 09/01/16 ............................................................ 2,169,140
3,450,000 Sebastopol CDA, Tax Allocation, Community Development Project,
CGIC Insured, 6.85%, 12/01/20 ............................................................ 3,747,321
Selma Public Financing Authority Revenue, Series A, MBIA Insured,
145,000 5.80%, 09/15/11 .......................................................................... 147,179
125,000 5.80%, 09/15/12 .......................................................................... 126,439
2,400,000 5.875%, 09/15/22 ......................................................................... 2,415,360
4,885,000 Sequoia Union High School District, FSA Insured, 5.70%, 07/01/24........................... 4,929,405
5,000,000 Simi Valley Public Financing Authority Revenue, Refunding,
MBIA Insured, 5.75%, 09/01/23 ............................................................ 5,028,650
1,325,000 Sonoma CDA, COP, Refunding, Sonoma Creek Senior
Housing Project, AMBAC Insured, 6.75%, 02/01/13 .......................................... 1,407,004
2,400,000 Sonoma Valley USD, FSA Insured, 6.00%, 07/15/21............................................ 2,485,896
9,700,000 South Coast Air Quality Management District Revenue,
Refunding, Building Corp., MBIA Insured, 5.50%, 08/01/14 ................................ 9,646,359
South Orange County Public Financing Authority Revenue,
Refunding, Special Tax, Senior Lien, Series A, MBIA Insured,
13,500,000 6.20%, 09/01/13........................................................................... 14,158,665
3,250,000 6.00%, 09/01/18........................................................................... 3,333,915
$ 2,500,000 Southern California Public Power Authority, Power Project Revenue,
San Juan Unit 3, Series A, MBIA Insured, 5.00%, 01/01/20.................................. $ 2,294,500
Southern California Public Power Authority Revenue, MBIA Insured,
10,000,000 Refunding, Transmission Project, Sub-Series A,
Subordinated Lien, 5.25%, 07/01/20........................................................ 9,488,600
3,820,000 Sub-Crossover Refunding, Southern Transmission Project,
Subordinated Lien, 5.50%, 07/01/20 ....................................................... 3,746,732
13,750,000 Sub-Crossover Refunding, Transmission Project, 5.75%, 07/01/21 ........................... 13,828,375
5,000,000 Southgate Public Financing Authority Revenue, Tax Allocation,
Southgate Redevelopment Project No. 1, AMBAC Insured,
5.875%, 09/01/24 ......................................................................... 5,072,300
3,750,000 Stanton RDA, Tax Allocation, Refunding, Stanton Community
Development Project, AMBAC Insured, 5.45%, 12/01/17 ..................................... 3,681,863
Stockton COP, AMBAC Insured,
6,500,000 Refunding, Wastewater System Project, 5.75%, 09/01/23..................................... 6,541,405
1,000,000 Wastewater Facility, Pre-Refunded, 7.40%, 09/01/10........................................ 1,048,720
1,640,000 Stockton-East Water District COP, Series A, AMBAC Insured,
Pre-Refunded, 7.30%, 04/01/20 ............................................................ 1,799,146
4,300,000 Stockton Port District, Port Facilities Revenue, Refunding
& Improvement, Series B, FSA Insured, 5.90%, 07/01/12.................................... 4,411,542
4,260,000 Suisun City RDA, Tax Allocation, Refunding, Suisun
City Redevelopment Project, MBIA Insured, 5.625%, 10/01/13 .............................. 4,297,744
800,000 Sulphur Springs USD, COP, Series 1991,
AMBAC Insured, 7.20%, 02/01/21 ........................................................... 846,336
5,485,000 Sunnyvale RDA, Parking Revenue, Refunding,
AMBAC Insured, 6.50%, 10/01/22 ........................................................... 5,779,215
2,785,000 Sunnyvale RDA, Tax Allocation, Refunding, Central Core Project,
AMBAC Insured, 6.50%, 10/01/22 ........................................................... 2,934,387
4,000,000 Susanville Public Financing Authority Revenue, Series A,
AMBAC Insured, 6.30%, 09/01/17 ........................................................... 4,187,360
1,335,000 Taft COP, Sewer Facilities Improvement Project, CGIC Insured,
Pre-Refunded, 7.25%, 08/01/15 ............................................................ 1,407,157
Tahoe-Truckee Joint USD, FGIC Insured,
5,000,000 Series A, 6.00%, 09/01/17................................................................. 5,168,800
3,620,000 Series B, 5.95%, 09/01/20................................................................. 3,729,831
2,000,000 Tehachapi Water and Sewer Revenue, Refunding,
MBIA Insured, 6.75%, 11/01/20 ............................................................ 2,214,160
3,390,000 Thousand Oaks RDA, Tax Allocation, Refunding, Thousand
Oaks Blvd. Redevelopment, MBIA Insured, 5.375%, 12/01/25................................. 3,258,671
5,480,000 Tracy CFD, Special Tax, Refunding, Senior Series A,
CGIC Insured, 5.70%, 09/01/20............................................................. 5,479,507
Tri-City Hospital District Revenue, MBIA Insured,
2,350,000 6.00%, 02/01/22 .......................................................................... 2,382,642
5,000,000 Pre-Refunded, 7.90%, 02/01/18 ............................................................ 5,216,300
2,750,000 Refunding, Series A, 5.625%, 02/15/17..................................................... 2,741,695
4,000,000 Tulare County COP, Capital Improvement Project, Refunding,
Public Facilities Corp., BIG Insured,
Pre-Refunded, 8.10%, 11/01/07 ............................................................ 4,136,560
1,500,000 Tulare Sewer Revenue, Refunding, AMBAC Insured, 5.70%, 11/15/18 ........................... 1,509,795
2,000,000 Turlock Auxiliary Organization Revenue COP, California State
University, Stanislaus Foundation, MBIA Insured, 5.875%, 06/01/22 ....................... 2,036,160
7,125,000 Turlock Irrigation District Revenue, Refunding, Series A,
MBIA Insured, 5.75%, 01/01/18............................................................. 7,186,345
6,200,000 Union City CRDA, Tax Allocation Revenue, Community
Redevelopment Project, AMBAC Insured, 5.75%, 10/01/22 .................................... 6,239,742
3,750,000 University of California Revenue, Multi-Purpose Project,
Series A, AMBAC Insured, Pre-Refunded, 6.75%, 09/01/23................................... 4,025,175
Upland COP,
3,985,000 Refunding, Police Building Project, AMBAC Insured, 6.60%, 08/01/16 ....................... 4,301,648
2,385,000 Water System Improvement Project, FGIC Insured, 6.60%, 08/01/16 .......................... 2,574,512
$ 1,355,000 Vacaville Public Financing Authority Revenue, Tax Allocation,
Refunding, Vacaville Redevelopment Project, MBIA Insured, 6.35%, 09/01/22 ................ $ 1,407,859
12,500,000 Vallejo Revenue, Water Improvement Project, Refunding,
Series A, FSA Insured, 5.875%, 05/01/26................................................... 12,775,124
2,200,000 Walnut Valley Water District COP, Badillo Grand Transmission
Project, FGIC Insured, 6.125%, 02/01/18................................................... 2,270,465
1,800,000 Watsonville Solid Waste Revenue, MBIA Insured, 6.50%, 05/15/16 ............................ 1,897,433
5,640,000 Waugh School District, Special Tax, Corona/Ely CFD No. 1,
AMBAC Insured, 5.80%, 09/01/26............................................................ 5,682,525
3,370,000 West Basin Municipal Water District Revenue COP, Refunding,
1992 Project, Series A, AMBAC Insured, 5.50%, 08/01/17................................... 3,329,492
West Sacramento Financing Authority Revenue,
4,185,000 MBIA Insured, 6.25%, 09/01/16............................................................. 4,454,597
4,500,000 Water System Improvement Project, FGIC Insured, 5.50%, 08/01/15........................... 4,449,014
1,685,000 Water System Improvement Project, FGIC Insured, 5.50%, 08/01/24........................... 1,650,070
3,340,000 West Sacramento RDA, Tax Allocation, West Sacramento
Redevelopment Project, MBIA Insured, 6.25%, 09/01/21 .................................... 3,477,941
1,285,000 William S. Hart Joint School Authority, Special Tax Revenue,
Refunding, CFD, CGIC Insured, 6.60%, 09/01/18............................................. 1,397,758
750,000 Windsor Joint Powers Financing Authority, Wastewater Revenue,
Refunding, Series A, AMBAC Insured, 6.125%, 12/15/12 .................................... 792,644
5,000,000 Yucaipa-Sweetwater School Facilities Financing Authority,
Special Tax Revenue, Sweetwater-Ranch Del Rey
Middle School, Series A, MBIA Insured, 5.70%, 09/01/19.................................... 5,015,700
-------------
Total Bonds (Cost $1,515,957,582) ......................................................... 1,585,667,927
-------------
Zero Coupon Bonds 0.6%
3,210,000 Fontana USD, Series D, FGIC Insured, zero coupon to 05/01/00,
(original accretion rate 5.85%), 5.85% thereafter, 05/01/22.............................. 2,709,817
28,405,000 San Bernardino County SFMR, Series A, GNMA Secured, ETM,
(original accretion rate 7.90%), 05/01/22................................................. 6,705,283
-------------
Total Zero Coupon Bonds (Cost $7,664,171).................................................. 9,415,100
-------------
Total Long Term Investments (Cost $1,523,621,753).......................................... 1,595,083,027
-------------
aShort Term Investments0.9%
California Health Facilities Financing Authority Revenue,
Refunding, Daily VRDN and Put,
9,125,000 St. Joseph Health System, Series B, 3.75%, 07/01/13....................................... 9,125,000
6,400,000 Sutter/CHS, Series C, FSA Insured, 3.75%, 07/01/22........................................ 6,400,000
-------------
Total Short Term Investments (Cost $15,525,000)............................................ 15,525,000
-------------
Total Investments (Cost $1,539,146,753)96.4%............................................... 1,610,608,027
Other Assets and Liabilities, Net3.6% ..................................................... 59,833,764
-------------
Net Assets100.0%........................................................................... $1,670,441,791
=============
At June 30, 1997, the net unrealized appreciation based on the cost of
investments for income tax purposes of $1,539,267,076 was as follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost...................................... $ 72,852,918
Aggregate gross unrealized depreciation for all investments................................
in which there was an excess of tax cost over value...................................... (1,511,967)
-------------
Net unrealized appreciation................................................................ $ 71,340,951
=============
</TABLE>
PORTFOLIO ABBREVIATIONS:
1915 Act -Improvement Bond Act of 1915
ABAG -The Association of Bay Area Governments
AD -Assessment District
AMBAC -American Municipal Bond Assurance Corp.
BART -Bay Area Rapid Transit
BIG -Bond Investors Guaranty Insurance Co.
(Acquired by MBIA in 1989 and no longer does business under this name)
CDA -Community Development Agency
CFD -Community Facilities District
CGIC -Capital Guaranty Insurance Co.
(Acquired by FSA in 1995 and no longer does business under this name)
COP -Certificate of Participation
CRDA -Community Redevelopment Agency
ETM -Escrow to Maturity
FGIC -Financial Guaranty Insurance Co.
FSA -Financial Security Assistance
GNMA -Government National Mortgage Association
GO -General Obligation
HFA -Housing Finance Authority/Agency
HMR -Home Mortgage Revenue
ID -Improvement District
IDR -Industrial Development Revenue
MBIA -Municipal Bond Investors Assurance Corp.
MUD -Municipal Utility District
PCR -Pollution Control Revenue
RDA -Redevelopment Agency
SFMR -Single Family Mortgage Revenue
USD -Unified School District
aVariable 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).
bSee Note 1(h) regarding securities purchased on a when-issued basis.
The accompanying notes are an integral part of these financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Statement of Investments in Securities and Net Assets, June 30, 1997
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT Franklin California Intermediate-Term Tax-Free Income Fund (NOTE1)
<S> <C> <C>
Investments 98.4%
ABAG Finance Authority of Nonprofit Corps. COP,
$ 420,000 5.50%, 06/01/03........................................................................... $ 434,083
940,000 5.75%, 08/01/03 .......................................................................... 975,015
1,255,000 Partner North County Health Project, 5.50%, 03/01/06...................................... 1,286,162
ABAG Finance Corp. COP, ABAG XXVI,
100,000 Refunding, Series A, 5.90%, 06/01/02 ..................................................... 103,256
100,000 Series B, 6.40%, 10/01/03 ................................................................ 106,154
Alameda County COP,
100,000 Capital Projects, Series 1992, 6.25%, 06/01/06 ........................................... 106,137
395,000 Series 1994, 5.70%, 04/01/02.............................................................. 411,420
420,000 Series 1994, 5.80%, 04/01/03 ............................................................. 441,693
440,000 Series 1994, 5.90%, 04/01/04 ............................................................. 467,306
Atascadero USD, COP, Measure B, Capital Project, Series B, ETM,
220,000 5.20%, 08/01/03........................................................................... 227,392
200,000 5.30%, 08/01/04 .......................................................................... 207,634
Auburn COP, Refunding, Civic Center Project,
65,000 5.10%, 09/01/99........................................................................... 65,179
65,000 5.30%, 09/01/00 .......................................................................... 65,540
70,000 5.45%, 09/01/01 .......................................................................... 71,007
75,000 5.60%, 09/01/02 .......................................................................... 76,439
80,000 5.70%, 09/01/03 .......................................................................... 81,994
80,000 5.75%, 09/01/04 .......................................................................... 82,307
Bakersfield Central District Revenue, RDA, Tax Allocation, Refunding,
Downtown Bakersfield Redevelopment,
295,000 ETM, 6.00%, 04/01/01 ..................................................................... 311,004
310,000 ETM, 6.10%, 04/01/02 ..................................................................... 330,813
330,000 ETM, 6.20%, 04/01/03 ..................................................................... 356,186
350,000 Pre-Refunded, 6.30%, 04/01/04 ............................................................ 384,909
100,000 Bakersfield Hospital Revenue, Bakersfield Memorial
Hospital Project, Series A, 5.70%, 01/01/00............................................... 101,974
California Educational Facilities Authority Revenue, Series B,
1,000,000 Pooled College and University Projects, 6.125%, 04/01/13.................................. 1,015,870
1,000,000 Refunding, Pooled College and University Financing, 5.80%, 06/01/02 ...................... 1,030,450
1,105,000 Refunding, Pooled College and University Financing, 5.90%, 06/01/03 ...................... 1,147,277
100,000 California Health Facilities Financing, San Diego Hospital Association,
Series B, MBIA Insured, 5.60%, 08/01/03................................................... 105,354
2,460,000 California HFA, SFM Purchase, Series A-1, Class III, MBIA Insured, 5.70%, 08/01/11......... 2,488,979
California State Public Works, Board Lease Revenue,
250,000 Department of Corrections, Calpatria State Prison, Imperial County,
Series A, 6.125%, 09/01/04 ............................................................... 267,423
1,000,000 Department of Corrections, Coalinga State Prison,
Series B, MBIA Insured, 5.50%, 12/01/08................................................... 1,031,860
1,555,000 Refunding, Various Community College Projects, Series C, 5.50%, 09/01/09.................. 1,596,658
1,000,000 California Statewide CDA, COP, California Lutheran Homes, 5.375%, 11/15/06................. 1,014,190
California Statewide CDA Revenue COP,
200,000 Refunding, Health Facilities, Barton Memorial Hospital, Series B, 5.70%, 12/01/00 ........ 206,206
450,000 Refunding, Health Facilities, Barton Memorial Hospital, Series B, 6.40%, 12/01/05 ........ 477,666
865,000 St. Joseph Health System Group, 6.00%, 07/01/06 .......................................... 925,749
585,000 California Statewide Communities Development Corp. COP,
Pacific Homes, Series A, 5.50%, 04/01/04.................................................. 603,545
350,000 Campbell COP, Refunding, Civic Center Project, 5.60%, 10/01/03 ............................ 362,250
200,000 Carson RDA Project, Area No. 1, Refunding, 6.10%, 10/01/02 ................................ 208,708
100,000 Clovis COP, Water System Improvement Project, AMBAC Insured, 5.90%, 03/01/03 .............. 106,766
Coalinga Public Financing Authority Revenue,
$ 455,000 Series A, MBIA Insured, 5.10%, 08/01/04................................................... $ 466,380
1,405,000 Series B, 6.00%, 09/15/03 ................................................................ 1,436,360
b Colma 1915 Act, Refunding, Local ID No. 1,
465,000 5.00%, 09/02/01........................................................................... 464,103
485,000 5.10%, 09/02/02........................................................................... 483,875
515,000 5.20%, 09/02/03........................................................................... 513,620
545,000 5.30%, 09/02/04........................................................................... 543,349
570,000 5.40%, 09/02/05........................................................................... 568,096
Colton GO, Joint USD, CFD, Special Tax, Southridge Village,
Phase III, Refunding, FSA Insured,
190,000 5.65%, 09/01/09 .......................................................................... 193,331
205,000 5.75%, 09/01/10 .......................................................................... 208,774
Commerce Joint Powers Financing Authority, Water Facilities,
Lease Revenue, Refunding, Series A,
340,000 5.50%, 10/01/02 .......................................................................... 345,688
360,000 5.625%, 10/01/03 ......................................................................... 366,307
470,000 5.75%, 10/01/04 .......................................................................... 476,336
Compton Sewer Revenue,
120,000 5.40%, 07/01/98 .......................................................................... 120,678
125,000 5.60%, 07/01/99 .......................................................................... 126,643
130,000 5.70%, 07/01/00 .......................................................................... 132,826
140,000 5.80%, 07/01/01 .......................................................................... 144,060
150,000 5.90%, 07/01/02 .......................................................................... 155,298
155,000 6.00%, 07/01/03 .......................................................................... 161,315
165,000 6.10%, 07/01/04 .......................................................................... 172,433
175,000 6.20%, 07/01/05 .......................................................................... 183,759
185,000 6.30%, 07/01/06........................................................................... 194,224
Concord RDA, Tax Allocation, Central Concord Redevelopment Project,
Refunding, Sub-Series A,
625,000 5.50%, 07/01/02 .......................................................................... 631,506
655,000 5.625%, 07/01/03 ......................................................................... 663,790
500,000 Contra Costa County MFHR, Byron Park Project, Series C, 6.00%, 07/20/03 ................... 519,195
Danville Financing Authority Revenue, Sycamore Valley,
Reassessment District No. 93-2,
295,000 5.40%, 09/02/01 .......................................................................... 298,590
460,000 5.60%, 09/02/02 .......................................................................... 468,827
225,000 5.70%, 09/02/03 .......................................................................... 230,018
905,000 5.80%, 09/02/04 .......................................................................... 927,806
100,000 Desert Hospital District Revenue COP, Desert Hospital Corp.,
FSA Insured, 6.25%, 07/01/03.............................................................. 109,776
2,000,000 Dublin COP, Refunding, Civic Center Project, AMBAC Insured, 5.625%, 02/01/10............... 2,008,700
1,195,000 Eden Township Hospital District, Health Facilities Revenue, COP,
Refunding, Eden Hospital Health Services Corp.,
CHFCLP Insured, 5.75%, 07/01/12........................................................... 1,203,353
920,000 Encinitas Union School District COP, Measure B, Capital Projects, 5.20%, 09/01/03 ......... 935,438
Fontana COP, Refunding, Police Facilities Project, Series 1993,
330,000 5.00%, 04/01/01 .......................................................................... 328,416
350,000 5.00%, 04/01/02 .......................................................................... 346,483
365,000 5.10%, 04/01/03........................................................................... 360,682
1,150,000 Foster City Public Financing Authority Revenue, Community
Development Project, Series A, 5.60%, 09/01/03............................................ 1,192,274
1,000,000 Fresno Joint Powers Financing Authority, Local Agency Revenue,
Refunding, Series A, 6.20%, 09/02/03...................................................... 1,022,460
300,000 Garden Grove COP, Bahia Village/Emerald Isle Project,
FSA Insured, 5.20%, 08/01/03 ............................................................. 309,759
Garden Grove GO, CDA, Tax Allocation, Refunding,
Garden Grove Community Project,
$ 1,000,000 5.00%, 10/01/99 .......................................................................... $ 1,006,030
1,425,000 5.40%, 10/01/04 .......................................................................... 1,451,363
Glendale Parking Facilities, Joint Powers Authority Revenue, Series A,
215,000 5.10%, 03/01/01 .......................................................................... 213,357
255,000 5.20%, 03/01/02 .......................................................................... 252,488
125,000 5.30%, 03/01/03 .......................................................................... 123,848
750,000 Goleta Water District Revenue COP, Refunding, Goleta
Reclamation Project, FGIC Insured, 5.50%, 12/01/08........................................ 776,498
3,935,000 Hesperia Public Financing Authority Revenue, Series A, 5.80%, 10/01/03 .................... 4,044,354
Hollister RDA, Tax Allocation, Hollister Community Development Project, Series 1994,
525,000 5.35%, 10/01/03 .......................................................................... 520,291
550,000 5.45%, 10/01/04 .......................................................................... 544,445
585,000 5.55%, 10/01/05 .......................................................................... 576,588
Imperial COP, Refunding,
865,000 Wastewater System Program, Series B, 5.40%, 10/15/06...................................... 878,174
1,250,000 Water System Program, Series A, 5.40%, 10/15/06........................................... 1,269,038
Imperial County Local Transportation Authority, Sales Tax Revenue, Series 1993,
490,000 5.50%, 05/01/04 .......................................................................... 496,777
515,000 5.50%, 05/01/05 .......................................................................... 518,265
1,000,000 Inland Empire Solid Waste Financing Authority Revenue,
Landfill Improvement Financing Project, Series B,
FSA Insured, 6.25%, 08/01/11.............................................................. 1,071,840
La Palma Community Development Commission, Tax Allocation,
Refunding, La Palma Community Development Project No. 1,
125,000 5.20%, 06/01/00 .......................................................................... 126,304
130,000 5.40%, 06/01/01 .......................................................................... 132,005
135,000 5.50%, 06/01/02 .......................................................................... 137,255
145,000 5.60%, 06/01/03 .......................................................................... 147,838
150,000 5.70%, 06/01/04 .......................................................................... 153,339
160,000 5.80%, 06/01/05 .......................................................................... 163,963
560,000 La Quinta RDA, Tax Allocation, Housing Redevelopment Project,
Areas No. 1 and 2, MBIA Insured, 5.40%, 09/01/07 ......................................... 583,072
1,500,000 Lake Elsinore Public Financing Authority, Tax Allocation Revenue,
Lake Elsinore Redevelopment Project, Series A,
FSA Insured, 5.40%, 09/01/08.............................................................. 1,521,615
1,000,000 Lake Elsinore School Financing Authority Revenue, Refunding, 6.00%, 09/01/11............... 1,010,440
Lancaster RDA, Tax Allocation, Refunding,
35,000 Central Business District Redevelopment, 5.00%, 08/01/98 ................................. 35,031
35,000 Central Business District Redevelopment, 5.125%, 08/01/99 ................................ 35,015
35,000 Central Business District Redevelopment, 5.25%, 08/01/00 ................................. 35,048
40,000 Central Business District Redevelopment, 5.375%, 08/01/01 ................................ 40,034
40,000 Central Business District Redevelopment, 5.50%, 08/01/02 ................................. 40,086
45,000 Central Business District Redevelopment, 5.60%, 08/01/03 ................................. 45,089
45,000 Central Business District Redevelopment, 5.70%, 08/01/04.................................. 45,127
50,000 Central Business District Redevelopment, 5.70%, 08/01/05 ................................. 49,838
50,000 Fox Field Redevelopment Project Area, 5.00%, 08/01/98 .................................... 50,045
55,000 Fox Field Redevelopment Project Area, 5.125%, 08/01/99 ................................... 55,024
55,000 Fox Field Redevelopment Project Area, 5.25%, 08/01/00 .................................... 55,075
60,000 Fox Field Redevelopment Project Area, 5.375%, 08/01/01 ................................... 60,160
65,000 Fox Field Redevelopment Project Area, 5.50%, 08/01/02 .................................... 65,282
Lancaster RDA, Tax Allocation, Refunding, (cont)
$ 65,000 Fox Field Redevelopment Project Area, 5.60%, 08/01/03 .................................... $ 65,328
70,000 Fox Field Redevelopment Project Area, 5.70%, 08/01/04 .................................... 70,400
75,000 Fox Field Redevelopment Project Area, 5.70%, 08/01/05 .................................... 74,756
990,000 Lemon Grove MFHR, Refunding, Hillside Terrace Apartments, 5.375%, 01/01/19................. 1,011,909
Los Angeles County Transport Commission COP, Series B,
100,000 5.90%, 07/01/00 .......................................................................... 103,541
200,000 6.00%, 07/01/01 .......................................................................... 209,220
2,000,000 Los Angeles County Wastewater Systems Revenue,
Refunding, Series D, FGIC Insured, 5.375%, 11/01/06 ...................................... 2,073,860
Los Angeles MFHR, Refunding, Series G, FSA Insured,
245,000 5.00%, 07/01/03........................................................................... 249,697
220,000 5.10%, 01/01/04........................................................................... 224,503
260,000 5.10%, 07/01/04........................................................................... 265,827
1,000,000 Los Angeles USD, COP, Refunding, Multiple Property Project,
FSA Insured, 5.00%, 11/01/04.............................................................. 1,000,740
565,000 Lynwood Public Financing Authority Revenue, Water Systems
Improvement Project, 6.15%, 06/01/08 ..................................................... 579,283
515,000 Madera COP, Refunding, Madera Community Hospital, 5.10%, 03/01/03 ......................... 521,525
Madera RDA, Tax Revenue, Refunding, Madera Redevelopment Project, FSA Insured,
175,000 5.15%, 09/01/02 .......................................................................... 179,932
185,000 5.25%, 09/01/03 .......................................................................... 191,075
195,000 5.35%, 09/01/04 .......................................................................... 202,859
Mammoth Lakes COP, Refunding,
850,000 5.70%, 06/01/10........................................................................... 848,411
250,000 5.75%, 06/01/11........................................................................... 249,510
540,000 Merced Irrigation District COP, Water Facilities Project, 6.125%, 11/01/03 ................ 570,764
715,000 Merced Public Financing Authority, Local Agency Revenue,
Tax Allocation, Series A, 5.00%, 12/01/04................................................. 705,398
Mid-Peninsula Regional Open Space District COP, Special District
Association Finance Corp., Series 1993,
510,000 5.10%, 09/01/02........................................................................... 516,885
530,000 5.20%, 09/01/03 .......................................................................... 539,741
700,000 Modesto Irrigation District, Financing Authority Revenue,
Domestic Water Project, Series C, AMBAC Insured, 5.50%, 09/01/08 ........................ 728,700
100,000 Mojave GO, Water Agency, ID M, Morongo Basin, ETM, 6.20%, 09/01/01......................... 107,122
100,000 Morgan Hill RDA, Tax Allocation, Refunding, 5.70%, 03/01/01 ............................... 101,449
Mountain View Shoreline Regional Park, Community Tax Allocation, Series A,
785,000 5.10%, 08/01/03 .......................................................................... 803,903
540,000 5.20%, 08/01/04 .......................................................................... 554,764
100,000 Mt. Diablo Hospital District Revenue, Series A, AMBAC Insured, 5.10%, 12/01/03............. 102,577
Murrieta COP, Road Improvement Project,
235,000 6.00%, 04/01/07........................................................................... 239,486
245,000 6.00%, 04/01/08........................................................................... 249,045
500,000 New Haven USD, COP, Refunding, 5.30%, 07/01/01............................................. 513,000
300,000 Newark USD, COP, Crossover Refunding, 5.75%, 09/01/02 ..................................... 305,964
500,000 North City West School Facilities Financing Authority,
Special Tax, Refunding, Series B, FSA Insured, 5.625%, 09/01/08 ......................... 520,795
1,745,000 Oakland USD, Alameda County COP, Refunding, 5.00%, 09/15/99................................ 1,743,779
1,000,000 Ontario Redevelopment Financing Authority, Local Agency Revenue,
Community Facility, AD No.1, Senior Lien,
Series A, FSA Insured, 5.60%, 09/02/03.................................................... 1,054,170
1,500,000 Orange County COP, Recovery, Refunding, Series A, MBIA Insured, 6.00%, 07/01/08............ 1,634,955
$ 800,000 Orange County Development Agency, Tax Allocation, Refunding,
Santa Ana Heights Project Area, 5.90%, 09/01/04 .......................................... $ 835,976
500,000 Orange County Local Transportation Authority, Sales Tax Revenues,
First Senior Measure M, 6.00%, 02/15/06................................................... 541,905
500,000 Orange County MFHR, Villa Santiago Rehabilitation Project,
FNMA Secured, 5.60%, 10/01/27 ............................................................ 507,675
855,000 Palm Desert Financing Authority, Lease Revenue, Blythe
County Administrative Project, 6.375%, 08/01/11........................................... 869,544
1,515,000 Paramount RDA, Tax Allocation, Refunding, Redevelopment Project,
Area No. 1, 6.05%, 08/01/05............................................................... 1,605,127
Paso Robles Union School District COP,
1,635,000 5.75%, 08/01/03 .......................................................................... 1,712,450
300,000 Measure D, Capital Projects, Phase III, 5.75%, 08/01/02 .................................. 311,871
Pismo Beach Public Financing Authority Revenue, Series 1993,
45,000 6.25%, 09/15/01 .......................................................................... 45,535
50,000 6.40%, 09/15/02 .......................................................................... 50,598
50,000 6.50%, 09/15/03 .......................................................................... 50,608
55,000 6.55%, 09/15/04 .......................................................................... 55,663
1,285,000 Pleasant Hill RDA, RMR, Refunding, 5.40%, 02/01/05 ........................................ 1,323,563
Rialto RDA, Tax Allocation, Industrial Redevelopment, Refunding, Sub-Areas A & B, Series A,
270,000 5.40%, 09/01/02........................................................................... 272,395
280,000 5.50%, 09/01/03 .......................................................................... 284,505
1,000,000 Richmond Joint Powers Financing Authority Revenue, Refunding,
Multiple Redevelopment Projects, Series B, 5.35%, 05/15/13............................... 965,710
Riverside County Asset Leasing Corp., Leasehold Revenue,
Riverside County Hospital Project, Series A,
200,000 5.90%, 06/01/02 .......................................................................... 208,182
200,000 6.00%, 06/01/04........................................................................... 209,768
1,000,000 Riverside County Housing Authority, MFHR, Brandon Place Apartments,
Series B, FNMA Secured, 5.625%, 07/01/29................................................... 1,007,370
1,000,000 Sacramento MUD, Electric Revenue, Series E, 5.25%, 05/15/03 ............................... 1,019,120
San Bernardino City USD, COP, Refunding, Series 1994,
1,030,000 4.625%, 05/01/02 ......................................................................... 1,007,505
1,185,000 4.75%, 05/01/03 .......................................................................... 1,156,074
2,000,000 San Bernardino County COP, Refunding, Medical Center Financing Project, 6.00%, 08/01/09.... 2,080,120
140,000 San Bernardino County Mortgage Revenue, Refunding, Don Miguel
Apartments Project, MBIA Insured, 6.00%, 09/01/03........................................ 146,052
San Clemente 1915 Act, Refunding, AD No. 8,
415,000 5.00%, 09/02/02........................................................................... 416,282
435,000 5.10%, 09/02/03........................................................................... 436,566
460,000 5.20%, 09/02/04........................................................................... 461,872
San Diego County COP, Children's Center Project,
100,000 5.50%, 04/01/99 .......................................................................... 100,928
100,000 6.00%, 10/01/02 .......................................................................... 101,048
375,000 San Diego Mortgage Revenue, Refunding, Mariners Cove, Series
B-1, 5.125%, 09/01/03 .................................................................... 376,841
100,000 San Diego Port Facilities Revenue, Refunding,
National Steel & Shipbuilding Co., 6.60%, 12/01/02........................................ 104,464
San Francisco City and County RDA, Mortgage Revenue,
300,000 Hotel Tax Revenue, FSA Insured, 5.80%, 07/01/01 .......................................... 316,014
245,000 Hotel Tax Revenue, FSA Insured, 5.90%, 07/01/02........................................... 260,413
30,000 Refunding, Series A, MBIA Insured, 6.125%, 07/01/02....................................... 30,168
750,000 San Gorgonio Memorial Health Care District, Health Facility Revenue,
Insured, 6.375%, 06/01/08 ................................................................ 798,780
400,000 San Joaquin County COP, General Hospital Project, 5.90%, 09/01/03 ......................... 417,564
300,000 San Jose Financing Authority Revenue, Refunding, Convention
Center Project, Series C, 5.75%, 09/01/03 ................................................ 314,535
600,000 San Juan USD, COP, Gold River Elementary School Project, 5.65%, 04/01/03 .................. 601,290
San Ramon COP, Capital Improvements Project,
$ 85,000 5.20%, 03/01/01 .......................................................................... $ 86,666
90,000 5.30%, 03/01/02........................................................................... 92,155
95,000 5.40%, 03/01/03 .......................................................................... 98,218
100,000 5.50%, 03/01/04 .......................................................................... 103,885
105,000 5.60%, 03/01/05........................................................................... 109,232
985,000 Santa Barbara RDA, Tax Allocation, Central City Redevelopment
Project, 6.00%, 03/01/03 ................................................................. 1,017,771
100,000 Santa Monica Parking Authority, Lease Revenue, Refunding, 6.00%, 07/01/03.................. 105,230
Sebastopol COP, Refunding, Series 1994,
200,000 5.50%, 06/01/03 .......................................................................... 203,926
215,000 5.60%, 06/01/04........................................................................... 219,803
240,000 5.70%, 06/01/05 .......................................................................... 245,191
Selma Public Financing Authority Revenue, Series A, MBIA Insured,
100,000 5.25%, 09/15/02 .......................................................................... 102,264
115,000 5.50%, 09/15/04 .......................................................................... 117,935
120,000 5.60%, 09/15/05........................................................................... 123,056
125,000 5.65%, 09/15/06 .......................................................................... 128,181
135,000 5.70%, 09/15/07 .......................................................................... 138,232
140,000 5.70%, 09/15/08 .......................................................................... 142,936
150,000 5.75%, 09/15/09 .......................................................................... 152,921
155,000 5.75%, 09/15/10 .......................................................................... 157,561
1,500,000 Shafter Joint Powers Financing Authority, Lease Revenue,
Community Correctional Facility Project, Series A, 5.50%, 01/01/06....................... 1,513,155
100,000 Shasta Joint Powers Financing Authority, Lease Revenue,
Courthouse Improvement Project, Series A, 5.80%, 06/01/00................................. 102,654
50,000 Solana Beach COP, City Hall Project, 5.80%, 10/01/02 ...................................... 52,172
20,000 Solano County COP, Justice Facility and Public Building Project,
Refunding, 5.10%, 10/01/99................................................................ 20,205
South Gate Public Financing Authority Water Revenue,
Refunding, Series A, FGIC Insured,
995,000 5.35%, 10/01/07........................................................................... 1,032,263
1,040,000 5.45%, 10/01/08........................................................................... 1,081,610
South San Francisco Capital Improvements Financing Authority Revenue,
Refunding, South San Francisco Conference Center,
195,000 5.70%, 09/01/02 .......................................................................... 199,259
205,000 5.80%, 09/01/03 .......................................................................... 211,396
215,000 5.90%, 09/01/04........................................................................... 222,585
100,000 Southern California Rapid Transit District Revenue, Special Benefit,
AD No. A2, 5.80%, 09/01/01................................................................ 103,685
1,295,000 Stockton Port District, Port Facilities Revenue, Refunding & Improvement,
Series A, FSA Insured, 5.75%, 07/01/11.................................................... 1,325,433
Sunline Transport Agency COP, Transport Finance Corp., Series B,
450,000 5.50%, 07/01/03 .......................................................................... 466,475
445,000 5.75%, 07/01/06........................................................................... 461,136
100,000 Susanville Public Financing Authority Revenue, Series A,
AMBAC Insured, 5.90%, 09/01/02............................................................ 105,721
Tahoe City PUD, COP, Capital Facilities Project, Series B,
290,000 6.05%, 06/01/01 .......................................................................... 298,915
835,000 6.15%, 06/01/02 .......................................................................... 866,012
545,000 6.30%, 06/01/04 .......................................................................... 573,907
Tehachapi Cummings County Water District Revenue COP,
Capital Improvement Project, MBIA Insured,
280,000 5.50%, 08/01/04 .......................................................................... 294,546
300,000 5.60%, 08/01/05 .......................................................................... 315,531
320,000 5.75%, 08/01/06 .......................................................................... 338,438
$ 600,000 Temecula RDA Revenue, Tax Allocation, Temecula Redevelopment
Project No. 1, Series A, 5.40%, 02/01/04.................................................. $ 606,581
370,000 Temecula Valley USD, Series E, FSA Insured, 5.65%, 09/01/07 ............................... 391,063
375,000 Templeton USD, COP, Measure C, Capital Projects, Series A, Phase III, 5.00%, 03/01/03...... 377,358
100,000 Torrance USD, COP, Series A, 5.85%, 10/01/99 .............................................. 101,117
200,000 Travis USD, COP, Foxboro Elementary School Construction Project, 6.30%, 09/01/02 .......... 212,427
Trinity County PUD, COP, Refunding, Electric District Facilities, Series 1993,
340,000 5.80%, 04/01/01 .......................................................................... 346,364
360,000 5.90%, 04/01/02........................................................................... 368,315
380,000 6.00%, 04/01/03 .......................................................................... 390,340
100,000 Tuolumne County COP, Multiple Facilities Project, 5.80%, 06/01/98 ......................... 100,556
Ventura USD, COP, Series A,
305,000 5.90%, 04/01/04 .......................................................................... 315,760
320,000 6.00%, 04/01/05 .......................................................................... 331,257
340,000 6.10%, 04/01/06 .......................................................................... 351,923
365,000 6.20%, 04/01/07 .......................................................................... 376,854
385,000 6.30%, 04/01/08 .......................................................................... 397,465
410,000 6.40%, 04/01/09 .......................................................................... 424,251
Watsonville RDA, Tax Allocation, Watsonville Redevelopment Project, Series 1993,
510,000 6.00%, 08/01/02 .......................................................................... 510,240
540,000 6.10%, 08/01/03 .......................................................................... 540,253
-------------
Total Investments (Cost $112,625,000)98.4% ................................................ 115,818,463
Other Assets and Liabilities, Net1.6% ..................................................... 1,847,475
-------------
Net Assets100.0%........................................................................... $117,665,938
=============
At June 30, 1997, the net unrealized appreciation based on the
cost of investments for income tax purposes of $112,625,000 was as follows:
Aggregate gross unrealized appreciation for all investments in
which there was an excess of value over tax cost.......................................... $ 3,232,363
Aggregate gross unrealized depreciation for all investments in
which there was an excess of tax cost over value.......................................... (38,900)
-------------
Net unrealized appreciation................................................................ $ 3,193,463
=============
</TABLE>
PORTFOLIO ABBREVIATIONS:
1915 Act - Improvement Bond Act of 1915
ABAG -The Association of Bay Area Governments
AD -Assessment District
AMBAC -American Municipal Bond Assurance Corp.
CDA -Community Development Authority/Agency
CFD -Community Facilities District
CHFCLP -California Health Facilities Construction Loan Program
COP -Certificate of Participation
ETM -Escrow to Maturity
FGIC -Financial Guaranty Insurance Co.
FNMA -Federal National Mortgage Association
FSA -Financial Security Assistance
GO -General Obligation
HFA -Housing Finance Authority/Agency
ID -Improvement District
MBIA -Municipal Bond Investors Assurance Corp.
MFHR -Multi-Family Housing Revenue
MUD -Municipal Utility District
PUD -Public Utility District
RDA -Redevelopment Agency
RMR -Residential Mortgage Revenue
SFM -Single Family Mortgage
USD -Unified School District
bSee Note 1(h) regarding securities purchased on a when-issued basis.
The accompanying notes are an integral part of these financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Statement of Investments in Securities and Net Assets, June 30, 1997
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT Franklin California Tax-Exempt Money Fund (NOTE1)
<S> <C> <C>
Investments 102.0%
$ 2,000,000 a Alameda-Contra Costa Schools Financing Authority, COP,
Capital Improvement Financing Projects, Series C,
Weekly VRDN and Put, 4.00%, 07/01/25..................................................... $ 2,000,000
4,300,000 a Anaheim COP, 1993 Partnership Project, Refunding, AMBAC Insured,
Weekly VRDN and Put, 3.90%, 08/01/19...................................................... 4,300,000
6,250,000 a Anaheim COP, Police Facilities Refinancing Project, Refunding,
AMBAC Insured, Weekly VRDN and Put, 3.90%, 08/01/08...................................... 6,250,000
2,700,000 a Big Bear Lake Industrial Revenue, Southwest Gas Corp. Project,
Series A, Weekly VRDN and Put, 3.95%, 12/01/28 ........................................... 2,700,000
1,400,000 a Burbank RDA, MFR, Issue A, Weekly VRDN and Put, 3.65%, 11/01/10 ........................... 1,400,000
2,670,000 a Butte County Housing Authority MFR, Pine Tree Apartments Project,
Weekly VRDN and Put, 3.95%, 12/01/10 ..................................................... 2,670,000
California Community College Financing Authority, TRAN, Series A,
6,000,000 4.75%, 07/02/97........................................................................... 6,000,183
10,000,000 b4.50%, 06/30/98........................................................................... 10,069,100
a California Health Facilities Financing Authority Revenue,
3,600,000 Catholic Health Care, Series B, MBIA Insured, Weekly VRDN and Put, 4.05%, 07/01/16........ 3,600,000
4,650,000 Catholic Health Care, Series C, MBIA Insured, Weekly VRDN and Put, 4.05%, 07/01/20........ 4,650,000
1,500,000 Catholic Health Care, Series D, MBIA Insured, Weekly VRDN and Put, 4.05%, 07/01/21........ 1,500,000
2,500,000 Children's Hospital, MBIA Insured, Weekly VRDN and Put, 4.00%, 11/01/21 .................. 2,500,000
2,600,000 Pooled Program, Weekly VRDN and Put, 4.05%, 09/01/20 ..................................... 2,600,000
9,200,000 Refunding, Catholic West Facility, Series B, MBIA Insured,
Weekly VRDN and Put, 4.05%, 07/01/05...................................................... 9,200,000
3,300,000 Refunding, Catholic West Facility, Series C, MBIA Insured,
Weekly VRDN and Put, 4.05%, 07/01/11...................................................... 3,300,000
2,100,000 Refunding, Catholic West Facility, Series D, MBIA Insured,
Weekly VRDN and Put, 4.05%, 07/01/18...................................................... 2,100,000
8,600,000 Refunding, Sutter Health, Series C, FSA Insured, Daily VRDN and Put, 3.75%, 07/01/22...... 8,600,000
1,955,000 Santa Barbara Cottage Hospital, Series B, Weekly VRDN and Put, 3.95%, 09/01/05............ 1,955,000
1,300,000 St. Francis Medical Center, Series F, MBIA Insured,
Weekly VRDN and Put, 3.90%, 07/01/10 ..................................................... 1,300,000
700,000 Sutter Health, Series A, Daily VRDN and Put, 3.75%, 03/01/20 ............................. 700,000
a California PCFA, Resource Recovery Revenue, Daily VRDN and Put,
9,500,000 Atlantic Richfield Co. Project, Series A, 4.05%, 12/01/24 ................................ 9,500,000
1,200,000 OMS Equity, Stanislaus Project, 3.85%, 12/01/17 .......................................... 1,200,000
a California PCFA Revenue,
4,700,000 Occidental Geo/Santa Fe Geothermal, Monthly VRDN and Weekly Put, 3.65%, 09/01/13.......... 4,700,000
2,500,000 Refunding, Shell Oil Co. Project, Series A, Daily VRDN and Put, 3.70%, 10/01/06 .......... 2,500,000
900,000 Refunding, Shell Oil Co. Project, Series A, Daily VRDN and Put, 3.70%, 10/01/07 .......... 900,000
1,300,000 Refunding, Shell Oil Co. Project, Series A, Daily VRDN and Put, 3.70%, 10/01/08........... 1,300,000
1,000,000 Refunding, Shell Oil Co. Project, Series A, Daily VRDN and Put, 3.70%, 10/01/09 .......... 1,000,000
2,500,000 Refunding, Shell Oil Co. Project, Series A, Daily VRDN and Put, 3.70%, 10/01/10 .......... 2,500,000
9,850,000 Refunding, Shell Oil Co. Project, Series B, Daily VRDN and Put, 3.70%, 10/01/11 .......... 9,850,000
4,000,000 Refunding, Shell Oil Co. Project, Series C, Daily VRDN and Put, 3.70%, 11/01/00 .......... 4,000,000
1,000,000 Reynolds Metals Co. Project, Weekly VRDN and Put, 3.60%, 12/01/15 ........................ 1,000,000
12,700,000 Southern California Edison Co., Series A, Daily VRDN and Put, 5.20%, 02/28/08 ............ 12,700,000
1,700,000 Southern California Edison Co., Series B, Daily VRDN and Put, 5.20%, 02/28/08............. 1,700,000
700,000 Southern California Edison Co., Series C, Daily VRDN and Put, 5.20%, 02/28/08............. 700,000
a California PCFA, Solid Waste Disposal Revenue, Series A,
1,200,000 Colmac Energy Project, Weekly VRDN and Put, 3.95%, 12/01/16 .............................. 1,200,000
11,200,000 Shell Oil Co., Martinez Project, Daily VRDN and Put, 3.75%, 10/01/31...................... 11,200,000
2,000,000 Shell Oil Co., Martinez Project, Weekly VRDN and Put, 3.85%, 10/01/24 .................... 2,000,000
19,500,000 a California Public Capital Improvements Financing Authority Revenue,
Pooled Project, Series C, Quarterly VRDN and Put, 3.55%, 06/01/28........................ 19,500,000
California School Cash Reserve Program Authority, Pooled Project, Series A,
$10,500,000 4.75%, 07/02/97........................................................................... $ 10,500,291
20,000,000 b4.75%, 07/02/98........................................................................... 20,173,200
2,670,000 a California State Economic Development Financing Authority Revenue,
Refunding, KQED, Inc. Project, Weekly VRDN and Put, 3.90%, 04/01/20 ..................... 2,670,000
a California Statewide Communities Development Authority Revenue, COP, Refunding,
12,005,000 Apartment Development Revenue, Subseries A-6, Weekly VRDN and Put, 4.00%, 05/15/25 ....... 12,005,000
2,366,000 House Ear Institution, Daily VRDN and Put, 3.85%, 12/01/18 ............................... 2,366,000
3,500,000 St. Joseph Health Systems, Weekly VRDN and Put, 3.90%, 07/01/08........................... 3,500,000
a California Statewide Communities Development Corp. Revenue,
Series C, Weekly VRDN and Put,
2,550,000 American Kleaner, 4.05%, 12/01/19 ........................................................ 2,550,000
1,700,000 Karcher Property Project, 4.05%, 12/01/19 ................................................ 1,700,000
800,000 a Carlsbad MFHR, Refunding, La Costa Apartments Project, Series A,
Weekly VRDN and Put, 4.05%, 06/01/11 ..................................................... 800,000
2,370,000 a Chico MFMR, Webb Homes Project, Monthly VRDN and Weekly Put, 3.75%, 01/01/10 .............. 2,370,000
a Concord MFMR, Weekly VRDN and Put,
8,400,000 Arcadian Facility, Series A, 4.00%, 07/15/18 ............................................. 8,400,000
500,000 Bel Air Apartments, Issue A, 3.85%, 12/01/16.............................................. 500,000
4,170,000 a Contra Costa County Housing Authority, MFMR, Lakeshore Facility,
Series A, FNMA Secured, Weekly VRDN and Put, 4.00%, 11/15/12 ............................ 4,170,000
a Duarte RDA, COP, Weekly VRDN and Put,
1,000,000 Johnson Duarte Project, Series B, 3.95%, 12/01/14 ........................................ 1,000,000
400,000 Piken Duarte Partnership, Series A, 3.95%, 12/01/14....................................... 400,000
East Bay MUD, TECP,
13,000,000 3.50%, 07/09/97........................................................................... 13,000,000
800,000 3.45%, 08/08/97........................................................................... 800,000
a Foothill/Eastern Transportation Corridor Agency, California Toll
Road Revenue, Weekly VRDN and Put,
15,400,000 Series B, 4.00%, 01/02/35 ................................................................ 15,400,000
5,000,000 Series C, 3.90%, 01/02/35 ................................................................ 5,000,000
10,000,000 Series E, 3.95%, 01/02/35 ................................................................ 10,000,000
1,000,000 a Fresno MFHR, Refunding, Heron Pointe Apartments,
Series A, Weekly VRDN and Put, 3.95%, 06/01/07............................................ 1,000,000
830,000 a Independent Cities Lease Finance Authority Revenue,
Pooled Projects, Weekly VRDN and Put, 4.00%, 06/01/98 .................................... 830,000
5,888,000 a Irvine 1915 Act, AD 92, Series A, Daily VRDN and Put, 3.75%, 09/02/21...................... 5,888,000
a Irvine Ranch Water District, Daily VRDN and Put,
2,400,000 Consolidated District Nos. 105, 140, 240, and 250, 3.75%, 01/01/21........................ 2,400,000
6,100,000 Consolidated District Nos. 105, 140, 240, and 250, 3.75%, 04/01/33........................ 6,100,000
800,000 Consolidated Improvement Districts, 3.80%, 06/01/15....................................... 800,000
1,300,000 ID No. 282, Series A, 3.80%, 11/15/13..................................................... 1,300,000
10,000,000 Refunding, Consolidated District Nos. 102, 103, 105 and 106, 3.75%, 09/01/06.............. 10,000,000
7,700,000 Refunding, DATES, Consolidated Bonds, Series B, 3.80%, 10/01/09........................... 7,700,000
5,400,000 Refunding, Series A, 3.80%, 05/01/09...................................................... 5,400,000
a Kern County COP, Kern Public Facilities Project, Weekly VRDN and Put,
2,200,000 Series A, 4.00%, 08/01/06 ................................................................ 2,200,000
400,000 Series C, 4.00%, 08/01/06 ................................................................ 400,000
500,000 Series D, 4.00%, 08/01/06 ................................................................ 500,000
900,000 a Lancaster RDA, MFHR, Westwood Park Apartments,
Series 1985-K, Weekly VRDN and Put, 3.75%, 12/01/07....................................... 900,000
7,270,000 a Livermore MFHR, Refunding, Richards Manor, Series A,
Weekly VRDN and Put, 4.00%, 12/01/22...................................................... 7,270,000
400,000 a Los Angeles County COP, ACES, Los Angeles County Museum
of Art, Series B, Weekly VRDN and Put, 4.00%, 11/01/05 .................................. 400,000
a Los Angeles County Housing Authority, MFHR, Weekly VRDN and Put,
$ 1,400,000 Harbor Cove Project, Series E, 4.00%, 10/01/06 ........................................... $ 1,400,000
4,500,000 Sand Canyon Ranch Project, Series F, 4.00%, 11/01/06...................................... 4,500,000
a Los Angeles County Pension Obligation, Refunding, AMBAC Insured, Weekly VRDN and Put,
2,500,000 Series A, 3.90%, 06/30/07................................................................. 2,500,000
6,600,000 Series B, 3.90%, 06/30/07................................................................. 6,600,000
3,500,000 Series C, 3.90%, 06/30/07................................................................. 3,500,000
10,000,000 b Los Angeles County TRAN, Series A, 4.50%, 06/30/98......................................... 10,062,400
Los Angeles County Transport Commission, Sales Tax Revenue, Refunding, Series A,
600,000 8.00%, 07/01/97............................................................................ 612,000
1,200,000 a FGIC Insured, Weekly VRDN and Put, 3.90%, 07/01/12......................................... 1,200,000
a Los Angeles CRDA, COP, Weekly VRDN and Put,
1,000,000 Baldwin Hill Park, 3.90%, 12/01/14 ....................................................... 1,000,000
400,000 Broading Spring Center Program, 3.95%, 07/01/12 .......................................... 400,000
a Los Angeles MFHR, Weekly VRDN and Put,
3,400,000 Casden Project, Series K, 3.875%, 07/01/10................................................ 3,400,000
1,200,000 Lucas Studios Project, Series D, 4.15%, 12/01/21 ......................................... 1,200,000
2,400,000 Masselin Manor, 4.05%, 07/01/15 .......................................................... 2,400,000
4,000,000 b Los Angeles USD, TRAN, Series A, 4.50%, 07/01/98........................................... 4,026,960
17,900,000 a Metropolitan Water District, Southern California Waterworks Revenue,
Refunding, Series A, AMBAC Insured,
Weekly VRDN and Put, 4.00%, 06/01/23...................................................... 17,900,000
3,500,000 a Moorpark MFR, Refunding, Le Club Apartments Project, Series A,
Weekly VRDN and Put, 4.05%, 11/01/15...................................................... 3,500,000
Mountain View COP, Revitalization Authority,
1,000,000 7.90%, 12/01/97........................................................................... 1,036,618
10,000,000 8.00%, 12/01/97........................................................................... 10,374,675
10,400,000 a M-S-R Public Power Agency Revenue, San Juan Project, Refunding,
Subordinated Lien, Series E, MBIA Insured,
Weekly VRDN and Put, 3.90%, 07/01/22...................................................... 10,400,000
1,900,000 a Ontario MFR, Park Centre Partners Project, Series A,
Weekly VRDN and Put, 3.802%, 08/01/07 .................................................... 1,900,000
a Orange County Apartment Development Revenue, Weekly VRDN and Put,
1,600,000 Issue I, Park Ridge, 3.85%, 11/01/08...................................................... 1,600,000
100,000 Jessy L. Frost Project, Issue B, 4.10%, 03/01/09 ......................................... 100,000
9,250,000 Refunding, The Lakes Projects, Series A, 4.05%, 12/01/06.................................. 9,250,000
3,000,000 Vista Verde Apartments, 4.15%, 08/01/18 .................................................. 3,000,000
390,000 a Oxnard RDA, COP, Channel Islands Business Center,
Weekly VRDN and Put, 4.5625%, 07/01/05.................................................... 390,000
a Palm Springs CRDA, COP, Weekly VRDN and Put,
1,000,000 Hotel No. 2, 3.90%, 12/01/14 ............................................................. 1,000,000
800,000 Hotel No. 3, 3.90%, 12/01/14 ............................................................. 800,000
1,500,000 a Pico Rivera RDA, COP, Crossroad Plaza Project,
Weekly VRDN and Put, 4.00%, 12/01/10 ..................................................... 1,500,000
3,550,000 a Redlands MFHR, Refunding, Parkview Terrace, Series A,
Weekly VRDN and Put, 4.05%, 02/01/16 ..................................................... 3,550,000
800,000 a Riverside County COP, ACES, Riverside County Public Facilities, Series C,
Weekly VRDN and Put, 4.00%, 12/01/15..................................................... 800,000
a Riverside County IDA Revenue, Weekly VRDN and Put,
1,500,000 Calavo Growers, 3.75%, 09/01/05 .......................................................... 1,500,000
1,050,000 Spaulding Project, Issue B-II, 4.15%, 07/05/19 ........................................... 1,050,000
9,800,000 a Roseville Finance Authority Hospital, Lease Revenue, Series A,
Roseville Hospital, Weekly VRDN and Put,
4.05%, 10/01/14 .......................................................................... 9,800,000
8,400,000 a Sacramento County COP, Administration Center and Court
House Project, Weekly VRDN and Put, 3.90%, 06/01/20 ..................................... 8,400,000
$ 3,400,000 a Sacramento County MFHR, Stone Creek Apartments Project, Series L,
Weekly VRDN and Put, 4.20%, 11/15/08...................................................... $ 3,400,000
6,950,000 a Sacramento County MFR, Various Housing Projects, Smoketree,
Series A, Weekly VRDN and Put, 4.00%, 04/15/10 ........................................... 6,950,000
Sacramento MUD, TECP,
8,000,000 3.40%, 07/02/97........................................................................... 8,000,000
14,077,000 3.60%, 09/15/97........................................................................... 14,077,000
3,923,000 3.50%, 09/19/97........................................................................... 3,923,000
4,300,000 3.65%, 09/24/97........................................................................... 4,300,000
2,600,000 a Salinas City Apartment Development Revenue, Brentwood Gardens,
Series 1985-A, Weekly VRDN and Put, 3.75%, 03/01/05 ..................................... 2,600,000
a San Bernardino County, MFHR, Weekly VRDN and Put,
4,050,000 Refunding, Quail Properties, Series A, 4.00%, 07/01/14.................................... 4,050,000
1,950,000 Western Properties Project I, 4.00%, 02/01/05 ............................................ 1,950,000
900,000 Western Properties Project III, 4.00%, 08/01/05 .......................................... 900,000
1,600,000 Western Properties Project IV, 4.00%, 08/01/05 ........................................... 1,600,000
2,550,000 Western Properties Project V, 4.00%, 08/01/05 ............................................ 2,550,000
2,300,000 Woodview Apartments Project, Series I, 3.95%, 04/01/07 ................................... 2,300,000
1,300,000 a San Diego County MFHR, Nationwide, Series C, Weekly VRDN and Put, 4.00%, 04/15/05.......... 1,300,000
1,300,000 San Diego County Regional Transportation Commission,
Sales Tax Revenue, Second Senior Series A,
AMBAC Insured, 4.10%, 04/01/98............................................................ 1,301,969
5,500,000 San Diego County Regional Transportation Commission, TECP, 3.70%, 08/14/97................. 5,500,000
San Diego Gas and Electric, TECP,
2,000,000 3.60%, 08/11/97........................................................................... 2,000,000
3,000,000 3.40%, 08/22/97........................................................................... 3,000,000
890,000 a San Diego MFHR, Country Hills Facility, Series A, FNMA Secured,
Weekly VRDN and Put, 4.00%, 08/15/13 ..................................................... 890,000
2,400,000 a San Diego MFMR, California Housing Authority, La Cima Apartments,
Series K, Weekly VRDN and Put, 4.05%, 12/01/08 .......................................... 2,400,000
4,900,000 a San Diego MFMR, Refunding, University Town Center Apartments,
Weekly VRDN and Put, 4.05%, 10/01/15 ..................................................... 4,900,000
900,000 a San Dimas RDA, Commercial Development Revenue, San Dimas Commercial Center,
Monthly VRDN and Put, 3.70%, 12/01/13 ................................................... 900,000
6,000,000 San Francisco City and County GO, TRAN, 4.50%, 10/08/97 ................................... 6,014,318
4,600,000 a San Francisco City and County MFHR, Winterland Project,
Series C, Weekly VRDN and Put, 4.00%, 06/01/06 ........................................... 4,600,000
1,000,000 a San Francisco City and County RDA, MFR, Refunding,
Fillmore Center, Series B-2, Weekly VRDN and Put, 4.05%, 12/01/17........................ 1,000,000
4,515,000 a San Francisco City and County RDA, MFR, Rincon Center Project No. 8,
Series B, Weekly VRDN and Put, 4.00%, 12/01/06 .......................................... 4,515,000
a San Jose MFMR, Weekly VRDN and Put,
700,000 Fairway Glen, Series A, FGIC Insured, 4.00%, 11/01/07 .................................... 700,000
600,000 Foxchase, Series B, FGIC Insured, 4.00%, 11/01/07 ........................................ 600,000
1,000,000 Somerset Park Apartment Project, 4.10%, 11/01/17 ......................................... 1,000,000
1,200,000 a San Jose-Santa Clara Water Financing Authority, Sewer Revenue,
Series B Weekly VRDN and Put, 3.90%, 11/15/11............................................. 1,200,000
2,950,000 a San Mateo County Housing Authority, MFHR, Pacific Oaks
Apartment Project, Series A, Weekly VRDN and Put, 4.05%, 07/01/17 ....................... 2,950,000
San Mateo County TRAN,
2,000,000 4.50%, 07/01/97........................................................................... 2,000,000
2,500,000 b4.50%, 07/01/98........................................................................... 2,516,850
3,500,000 a Santa Ana MFHR, Refunding, Vintage Apartments, Series A,
Weekly VRDN and Put, 3.85%, 12/01/22...................................................... 3,500,000
1,500,000 a Santa Clara County Housing Authority, MFHR, Refunding,
Benton Park Center Apartments, Series A,
FNMA Secured, Weekly VRDN and Put, 4.00%, 12/15/25........................................ 1,500,000
$ 1,465,000 Santa Clara Valley Water District, COP, Flood Control Project,
FGIC Insured, 7.40%, 02/01/98............................................................. $ 1,533,423
500,000 a South San Francisco MFR, Magnolia Plaza Apartments, Series A,
Weekly VRDN and Put, 4.05%, 05/01/17 ..................................................... 500,000
Southern California Edison, TECP,
3,850,000 3.80%, 07/07/97........................................................................... 3,850,000
2,000,000 3.60%, 08/12/97........................................................................... 2,000,000
a Southern California Public Power Authority Revenue, Transmission Project,
Refunding, Weekly VRDN and Put,
27,300,000 AMBAC Insured, 3.90%, 07/01/19 ........................................................... 27,300,000
600,000 Series B, FSA Insured, 3.90%, 07/01/23.................................................... 600,000
2,000,000 a Southern California Public Power Authority, Sub-Palo Verde Project,
Refunding, Series B, AMBAC Insured, Weekly VRDN and Put, 3.90%, 07/01/09................. 2,000,000
900,000 a Stockton MFHR, Mariners Pointe Association, Series A,
Weekly VRDN and Put, 3.90%, 09/01/18...................................................... 900,000
9,100,000 a Suisun City MFMR, Housing Authority, Village Green Apartments,
Series A, Weekly VRDN and Put, 4.00%, 06/15/18 ........................................... 9,100,000
9,900,000 a Tustin 1915 Act, Reassessment District No. 95-2, Series A,
Daily VRDN and Put, 3.75%, 09/02/13....................................................... 9,900,000
-------------
West Basin Municipal Water, TECP,
3,000,000 3.45%, 07/17/97........................................................................... 3,000,000
5,000,000 3.70%, 07/24/97........................................................................... 5,000,000
9,900,000 a Western Riverside County Regional Wastewater Authority Revenue,
Regional Wastewater Treatment, Daily VRDN and Put, 3.75%, 04/01/28....................... 9,900,000
Total Investments (Cost $652,360,987)102.0% ............................................... 652,360,987
Liabilities in Excess of Other Assets(2.0)%................................................ (12,570,414)
-------------
Net Assets100.0%........................................................................... $639,790,573
=============
</TABLE>
At June 30, 1997, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.
PORTFOLIO ABBREVIATIONS:
1915 Act -Improvement Bond Act of 1915
ACES -Adjustable Convertible Exempt Securities
AD -Assessment District
AMBAC -American Municipal Bond Assurance Corp.
COP -Certificate of Participation
CRDA -Community Redevelopment Agency
DATES -Demand Adjustable Tax-Exempt Securities
FGIC -Financial Guaranty Insurance Co.
FNMA -Federal National Mortgage Association
FSA -Financial Security Assistance
GO -General Obligation
ID -Improvement District
IDA -Industrial Development Agency
MBIA -Municipal Bond Investors Assurance Corp.
MFHR -Multi-Family Housing Revenue
MFMR -Multi-Family Mortgage Revenue
MFR -Multi-Family Revenue
MUD -Municipal Utility District
PCFA -Pollution Control Financing Authority
RDA -Redevelopment Agency
TECP -Tax-Exempt Commercial Paper
TRAN -Tax and Revenue Anticipation Notes
USD -Unified School District
aVariable 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).
bSee Note 1(h) regarding securities purchased on a when-issued basis.
The accompanying notes are an integral part of these financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Statements
Statements of Assets and Liabilities
June 30, 1997
<TABLE>
<CAPTION>
Franklin Franklin California Franklin
California Intermediate-Term California
Insured Tax-Free Tax-Free Tax-Exempt
Income Fund Income Fund Money Fund
------------------------------------------------
<S> <C> <C> <C>
Assets:
Investments in securities:
At identified cost $1,539,146,753 $112,625,000 $652,360,987
================================================
At value 1,610,608,027 115,818,463 652,360,987
Cash 17,739,760 1,220,855 30,547,056
Receivables:
Interest 28,318,073 1,889,655 4,593,065
Investment securities sold 39,897,124 1,936,191 --
Capital shares sold 1,196,439 22,016 --
------------------------------------------------
Total assets 1,697,759,423 120,887,180 687,501,108
------------------------------------------------
Liabilities:
Payables:
Investment securities purchased:
When-issued basis (Note 1) 20,504,395 2,580,000 46,848,510
Distributions to shareholders 2,655,880 167,777 60,191
Capital shares repurchased 798,586 313,431 4,000
Management fees 649,420 47,408 257,389
Distribution fees 279,971 19,535 --
Shareholder servicing costs 32,659 2,904 34,506
Other payables to shareholders 2,314,657 75,124 463,736
Accrued expenses and other liabilities 82,064 15,063 42,203
------------------------------------------------
Total liabilities 27,317,632 3,221,242 47,710,535
------------------------------------------------
Net assets, at value $1,670,441,791 $117,665,938 $639,790,573
================================================
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
June 30, 1997
<TABLE>
<CAPTION>
Franklin Franklin California Franklin
California Intermediate-Term California
Insured Tax-Free Tax-Free Tax-Exempt
Income Fund Income Fund Money Fund
---------------------------------------------------
<S> <C> <C> <C>
Net assets consist of:
Undistributed net investment income $ 254,790 $ 280,188 $--
Net unrealized appreciation on investments 71,461,274 3,193,463 --
Accumulated net realized gain (loss) from investments 10,448,981 (568,810) --
Class I capital shares 1,553,641,340 114,761,097 639,790,573
Class II capital shares 34,635,406 -- --
---------------------------------------------------
Net assets, at value $1,670,441,791 $117,665,938 $639,790,573
===================================================
Class I shares:
Net assets, at value $1,635,542,605 $117,665,938 $639,790,573
===================================================
Shares outstanding 133,814,581 10,760,896 639,790,573
===================================================
Net asset value per share* $12.22 $10.93 $1.00
===================================================
Maximum offering price per share (100/95.75, 100/97.75,
100/100 of net asset value per share, respectively) $12.76 $11.18 $1.00
===================================================
Class II shares:
Net assets, at value $ 34,899,186 -- --
===================================================
Shares outstanding 2,839,130 -- --
===================================================
Net asset value per share* $12.29 -- --
===================================================
Maximum offering price per share (100/99 of net asset value per share)$12.41 -- --
===================================================
*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.
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Statements (continued)
Statements of Operations
for the year ended June 30, 1997
<TABLE>
<CAPTION>
Franklin Franklin California Franklin
California Intermediate-Term California
Insured Tax-Free Tax-Free Tax-Exempt
Income Fund Income Fund Money Fund
--------------------------------------------
<S> <C> <C> <C>
Investment income:
Interest $ 99,138,636 $5,912,396 $21,948,943
--------------------------------------------
Expenses:
Management fees (Note 5) 7,686,324 673,288 3,127,809
Distribution fees - Class I (Note 5) 1,399,923 102,089 --
Distribution fees - Class II (Note 5) 168,002 -- --
Shareholder servicing costs (Note 5) 315,525 27,242 412,188
Reports to shareholders 177,824 20,325 255,416
Professional fees 60,539 3,457 24,380
Trustees' fees and expenses 60,439 4,459 23,981
Pricing fees 59,108 34,530 221
Registration and filing fees 35,782 2,270 5,473
Custodian fees 16,374 1,096 6,392
Insurance 6,178 -- --
Other 31,571 3,902 8,737
Management fees waived by manager (Note 5) -- (361,946) --
--------------------------------------------
Total expenses 10,017,589 510,712 3,864,597
--------------------------------------------
Net investment income 89,121,047 5,401,684 18,084,346
--------------------------------------------
Realized and unrealized gain (loss) on investments:
Net realized gain (loss) 11,434,772 119,770 (9,957)
Net unrealized appreciation 17,743,963 2,477,165 --
--------------------------------------------
Net realized and unrealized gain (loss) on investments 29,178,735 2,596,935 (9,957)
--------------------------------------------
Net increase in net assets resulting from operations $118,299,782 $7,998,619 $18,074,389
============================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Statements (continued)
Statements of Changes in Net Assets
for the year ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
Franklin California InsuredFranklin California Intermediate- Franklin California
Tax-Free Income Fund Term Tax-Free Income Fund Tax-Exempt Money Fund
----------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets:
Operations:
Net investment income $ 89,121,047 $ 85,550,001 $ 5,401,684 $ 4,828,347 $ 18,084,346 $ 17,736,788
Net realized gain (loss)
from security
transactions 11,434,772 7,736,583 119,770 108,711 (9,957)* (1,444)*
Net unrealized appre-
ciation (depreciation)
on investments 17,743,963 (2,001,089) 2,477,165 2,273,517 -- --
----------------------------------------------------------------------------------
Net increase in
net assets
resulting from
operations 118,299,782 91,285,495 7,998,619 7,210,575 18,074,389 17,735,344
Distributions to share-
holders from undistributed
net investment income:
Class I (88,728,007) (85,122,188) (5,351,328) (4,734,070) (18,074,389)*(17,735,344)*
Class II (1,243,155) (483,443) -- -- -- --
Increase (decrease) in net
assets from capital share
transactions (Note 3) 35,024,800 132,821,653 13,819,809 9,937,573 41,971,783 (44,338,544)
----------------------------------------------------------------------------------
Net increase
(decrease) in
net assets 63,353,420 138,501,517 16,467,100 12,414,078 41,971,783 (44,338,544)
Net assets:
Beginning of year 1,607,088,371 1,468,586,854 101,198,838 88,784,760 597,818,790 642,157,334
----------------------------------------------------------------------------------
End of year $1,670,441,791$1,607,088,371 $117,665,938 $101,198,838 $639,790,573 $597,818,790
==================================================================================
Undistributed net
investment income
included in net assets:
Beginning of year $ 1,104,905 $ 1,160,535 $ 229,832 $ 135,555 $-- $--
==================================================================================
End of year $ 254,790 $ 1,104,905 $ 280,188 $ 229,832 $-- $--
==================================================================================
</TABLE>
*Distributions were decreased by net realized loss from security transactions of
$9,957 in 1997 and $1,444 in 1996.
The accompanying notes are an integral part of these financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Notes to Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
Franklin California Tax-Free Trust (the Trust) is an open-end management
investment company (mutual fund), registered under the Investment Company Act of
1940, as amended. The Trust consists of three separate funds: Franklin
California Insured Tax-Free Income Fund (the Insured Fund), Franklin California
Intermediate-Term Tax-Free Income Fund (the Intermediate Fund) and Franklin
California Tax-Exempt Money Fund (the Money Fund). Each of the Funds issues a
separate series of the Trust's shares and maintains a totally separate
investment portfolio. Each Fund seeks to provide tax-free income. The Money Fund
also seeks liquidity in its investments. The Trust's Intermediate Fund is
non-diversified, while the other Funds are diversified.
The Insured Fund offers 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 following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
a. Security Valuation:
Tax-free bonds generally trade in the over-the-counter market rather than on a
national securities exchange. In the absence of a sale or reported bid and asked
prices, information with respect to bond and note transactions, quotations from
bond dealers, market transactions in comparable securities, and various
relationships between securities are used to determine the value of the
security. The 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 (the Board). Securities for which
market quotations are not available are valued in accordance with procedures
established by the Board.
The securities in the Money Fund are valued at amortized cost, which
approximates value. The Money Fund must maintain a dollar weighted average
maturity of 90 days or less and only purchases instruments having remaining
maturities of 397 days or less. If the Fund has a remaining weighted average
maturity of greater than 90 days, the portfolio will be stated at value based on
recorded closing sales on a national securities exchange or, in the absence of a
recorded sale, within the range of the most recent quoted bid and asked prices.
The Board has established procedures designed to stabilize, to the extent
reasonably possible, the Fund's price per share as computed for the purpose of
sales and redemptions at $1.00.
b. Municipal Bonds or Notes with "Puts":
The Funds have 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 dates of
the bonds or notes). Such a right to resell is commonly known as a "put". In
determining the weighted average to 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
last day on which the put may be exercisable.
c. Income Taxes:
The Funds intend 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 shareholders which will be sufficient to relieve the
Funds from income and excise taxes. Each Fund is treated as a separate entity in
the determination of compliance with the Internal Revenue Code.
d. 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.
e. Investment Income, Expenses and Distributions:
For the Insured Fund and the Intermediate Fund, distributions to shareholders
are recorded on the ex-dividend date. Interest income and estimated expenses are
accrued daily. Original issue discount and premium 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 day following the 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, and are payable to shareholders of record at the beginning
of business on the ex-dividend date. Once each month, dividends are reinvested
in additional shares of the Funds or paid in cash as requested by the
shareholders.
For the Insured Fund, 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.
For the Money Fund, net investment income includes income, calculated on an
accrual basis, and estimated expenses which are accrued daily. The total
available for distributions is computed daily and includes net investment
income, plus or minus any gains or losses on security transactions and any
changes in unrealized portfolio appreciation or depreciation. Distributions are
normally declared for each day the New York Stock Exchange is open for business,
equal to the total available for distributions (as defined above), and are
payable to shareholders of record as of the close of business on the preceding
day. Such distributions are automatically reinvested daily in additional shares
of Fund at net asset value.
Net realized capital gains and losses differ for financial statement and tax
purposes primarily due to differing treatment of wash sale transactions.
f. Accounting Estimates:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
g. 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.
h. Securities Purchased on a When-Issued Basis or Delayed Delivery Basis:
The Funds may purchase 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 holding the
securities, they may sell the securities before the settlement date. These
securities are identified on the accompanying Statements of Investments in
Securities and Net Assets. The Funds have set aside sufficient investment
securities as collateral for these purchase commitments.
i. Insurance:
Each long-term municipal security in the Insured Fund 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 collateral guaranteed by an agency of the U.S. government. The
providers of secondary market and new issue insurance are rated "AAA" by
Standard and Poor's.
Premiums for a mutual fund Portfolio Insurance Policy of a Secondary Market
Insurance Policy are paid from the Insured Fund's assets. Premiums for a mutual
fund Portfolio Insurance Policy (effective only so long as the Fund is in
existence, Financial Guaranty (the insurer) remains in business and the
municipal security insured under the policy continues to be held by the Fund)
will reduce the current income of the portfolio by the amount thereof. Premiums
paid by the Fund 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 Fund. 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 Fund and are not considered an expense of the Fund.
2. DISTRIBUTIONS AND CAPITAL LOSS CARRYOVERS
At June 30, 1997, for tax purposes, the Insured Fund had accumulated net
realized gains of $10,569,304. The Intermediate and Money Funds had capital loss
carryovers as follows:
Intermediate Money
Fund Fund
Capital loss carryovers
Expiring in: 2002 $103,315 $ --
2003 465,495 14,563
2005 -- 1,444
$568,810 $16,007
For tax purposes, the aggregate cost of securities is higher (and unrealized
appreciation is lower) than for financial reporting purposes at June 30, 1997 by
$120,323 in the Insured Fund.
From November 1, 1996 through June 30, 1997, the Money Fund incurred $9,957 of
net realized capital losses. As permitted by tax regulations, the Fund intends
to elect to defer these losses and treat them as having arisen in the year ended
June 30, 1998.
3. TRUST SHARES
At June 30, 1997, there was an unlimited number of no par value shares of
beneficial interest authorized. Transactions in each of the Fund's shares for
the years ended June 30, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
Class I Shares: Insured Fund
--------------------------------------------------------
1997 1996
--------------------------------------------------------
Shares Amount Shares Amount
--------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 22,948,118 $278,902,671 26,797,375 $325,025,207
Shares issued in reinvestment of distributions 3,057,673 37,223,689 2,876,043 34,838,739
Shares redeemed (24,432,714) (297,112,433) (20,236,111)(245,153,955)
--------------------------------------------------------
Net increase 1,573,077 $ 19,013,927 9,437,307 $114,709,991
========================================================
Class I Shares: Intermediate Fund
--------------------------------------------------------
1997 1996
--------------------------------------------------------
Shares Amount Shares Amount
--------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 3,368,342 $36,450,937 2,515,969 $27,007,213
Shares issued in reinvestment of distributions 300,873 3,255,392 267,330 2,856,178
Shares redeemed (2,389,859) (25,886,520) (1,858,277) (19,925,818)
--------------------------------------------------------
Net increase 1,279,356 $13,819,809 925,022 $ 9,937,573
========================================================
</TABLE>
Class I Shares: Money Fund
-----------------------
1997 1996
-----------------------
Amount Amount
-----------------------
Transactions in capital stock at $1.00 per share were as follows:
Shares sold $922,857,545 $828,692,328
Shares issued in reinvestment of distributions 17,999,484 17,679,523
Shares redeemed (898,885,246)(890,710,395)
-----------------------
Net increase (decrease) $ 41,971,783 ($44,338,544)
=======================
<TABLE>
<CAPTION>
Class II Shares: Insured Fund
-------------------------------------------------------
1997 1996
-------------------------------------------------------
Shares Amount Shares Amount
-------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,578,751 $19,284,425 1,610,542 $19,608,155
Shares issued in reinvestment of distributions 67,671 828,623 26,614 323,905
Shares redeemed (336,345) (4,102,175) (150,363) (1,820,398)
-------------------------------------------------------
Net increase 1,310,077 $16,010,873 1,486,793 $18,111,662
=======================================================
</TABLE>
4. PURCHASES AND SALES OF SECURITIES
Aggregate purchases and sales of securities (excluding purchases and sales of
short-term securities) for the year ended June 30, 1997 were as follows:
Insured Intermediate
Fund Fund
-----------------------------
Purchases $331,053,075 $23,095,947
Sales $349,280,866 $ 6,661,129
5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
a. Management Agreement:
Under the terms of a management agreement, Franklin Advisers, Inc. (Advisers),
provides investment advice, administrative services, office space and facilities
to each Fund, and receives fees computed monthly based on the net assets of the
Insured Fund and the Intermediate Fund, and receives fees computed daily based
on the net assets of the Money Fund as follows:
Annualized Fee Rate Net Assets
- -------------------------------------------------------------------------------
0.625% First $100 million
0.500% Over $100 million, up to and including $250 million
0.450% In excess of $250 million
Advisers agreed in advance to waive management fees for the Intermediate Fund,
as noted in the Statements of Operations for the year ended June 30, 1997.
Under an agreement with Advisers, Franklin Templeton Services, Inc. (FT
Services) provides administrative services and facilities for the Funds. The fee
is paid by Advisers and computed monthly based on average daily net assets. It
is not a separate expense of the Funds.
b. Shareholder Services Agreement:
Under the terms of a shareholder services agreement with Franklin/Templeton
Investor Services, Inc. (Investor Services), the Funds pay costs on a per
shareholder account basis. Shareholder servicing cost incurred by the Funds for
the year ended June 30, 1997 aggregated $754,955, of which $734,987 was paid to
Investor Services.
c. Distribution Plans and Underwriting Agreement:
Under the terms of distribution plans pursuant to Rule 12b-1 of the Investment
Company Act of 1940 (the Plans), the Intermediate Fund reimburses
Franklin/Templeton Distributors, Inc. (Distributors), in an amount up to a
maximum of 0.10% per annum of the Fund's average daily net assets, while the
Insured Fund reimburses Distributors up to a maximum of 0.10% per annum for
Class I and 0.65% per annum for Class II, of the average daily net assets of
such class of the Fund, for costs incurred in the promotion, offering and
marketing of the Funds' shares. The Plans do not permit nor require payments of
excess costs after termination. Fees incurred by the Funds under the Plans
aggregated $1,670,014 for the year ended June 30, 1997.
In its capacity as underwriter for the shares of the Insured Fund and the
Intermediate Fund, Distributors receives commissions on sales of the Funds'
shares of beneficial interest. Commissions are deducted from the gross proceeds
received from the sale of the shares of the Funds, and as such are not expenses
of the Funds. Distributors may also make payments, out of its own resources, to
dealers for certain sales of the Funds' shares. Commissions received by
Distributors, the amounts paid to other dealers, and any applicable contingent
deferred sales charges (CDSC) for the year ended June 30, 1997 were as follows:
Insured Intermediate
Fund Fund
---------------------------
Total commissions received,
including CDSC $4,562,364 $298,929
Paid to other dealers 4,703,952 279,078
CDSC 19,125 --
d. Other Affiliates and Related Party Transactions:
Certain officers and trustees of the Trust are also officers and/or directors of
Distributors, Advisers, FT Services, and Investor Services, all wholly-owned
subsidiaries of Franklin Resources, Inc.
6. CREDIT RISK
All of the Funds' investments are in the securities of issuers in the state of
California. Such concentration may subject the Funds more significantly to
economic changes occurring within that state.
7. FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
period, by Fund, are as follows:
<TABLE>
<CAPTION>
Per Share Operating Performance Ratios/Supplemental Data
Ratio of Ratio of Net
Net Asset Net Realized DistributionsNet Asset Net Assets Expenses Investment
Year Value at Net & Unrealized Total From From Net Value at End to Average Income Portfolio
Ended BeginningInvestment Gain (Loss) Investment Investment at End Total of Period Net Assets to Average Turnover
June 30,of Period Income on SecuritiesOperations Income of PeriodReturn+ (in 000's)(See Note 5)++Net Assets Rate
Insured Fund:
Class I Shares:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1993 $11.67 $.69 $.64 $1.33 $(.70) $12.30 11.47% $1,363,623 .53% 5.82% 8.28%
1994 12.30 .68 (.56) .12 (.68) 11.74 .67 1,450,821 .54 5.53 6.98
1995 11.74 .68 .20 .88 (.67) 11.95 7.80 1,468,080 .59 5.77 11.85
1996 11.95 .67 .06 .73 (.67) 12.01 6.18 1,588,631 .60 5.50 14.22
1997 12.01 .66 .21 .87 (.66) 12.22 7.41 1,635,543 .60 5.41 20.40
Class II Shares:
1995*** 11.88 .11 .10 .21 (.10) 11.99 1.79 507 1.17* 5.03* 11.85
1996 11.99 .60 .08 .68 (.60) 12.07 5.70 18,458 1.17 4.96 14.22
1997 12.07 .59 .22 .81 (.59) 12.29 6.86 34,899 1.16 4.81 20.40
Intermediate Fund:
1993** 10.00 .29 .55 .84 (.29) 10.55 10.95 42,831 .09* 4.73* .08
1994 10.55 .54 (.36) .18 (.53) 10.20 1.65 94,015 .25 5.11 14.95
1995 10.20 .54 .17 .71 (.53) 10.38 7.19 88,785 .33 5.34 10.90
1996 10.38 .53 .29 .82 (.53) 10.67 7.96 101,199 .45 4.99 10.13
1997 10.67 .53 .26 .79 (.53) 10.93 7.58 117,666 .47 4.96 6.29
Money Fund:
1993 1.00 .02 -- .02 (.02) 1.00 2.08 652,864 .62 2.07 --
1994 1.00 .02 -- .02 (.02) 1.00 1.83 754,121 .61 1.82 --
1995 1.00 .03 -- .03 (.03) 1.00 2.94 642,157 .64 2.88 --
1996 1.00 .03 -- .03 (.03) 1.00 2.85 597,819 .63 2.83 --
1997 1.00 .03 -- .03 (.03) 1.00 2.85 639,791 .60 2.83 --
</TABLE>
*Annualized.
**For the period September 21, 1992 (effective date) to June 30, 1993.
***For the period May 1, 1995 (effective date) to June 30, 1995.
+Total return measures the change in value of an investment over the periods
indicated. It is not annualized. It does not include the maximum front-end sales
charge or the contingent deferred sales charge and assumes reinvestment of
dividends and capital gains at net asset value. Prior to May 1, 1994, for the
Insured Fund, dividends were reinvested at the maximum offering price and
capital gains at net asset value. Effective May 1, 1994, with the implementation
of the Rule 12b-1 distribution plan for Class I shares, the sales charge on
reinvested dividends was eliminated.
++During the periods indicated, Advisers agreed in advance to waive a portion of
its management fees and made payments of other expenses of the Intermediate
Fund. Had such action not been taken, the ratio of expenses to average net
assets would have been .95% (annualized), .80%, .83%, .81% and .80%,
respectively.
The Funds hereby designate 100% of the distributions paid from net investment
income for the taxable year ended June 30, 1997, as exempt-interest dividends
per Section 852(b)(5) of the Internal Revenue Code.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Report of Independent Auditors
To the Shareholders and Board of Trustees
of Franklin California Tax-Free Trust:
We have audited the accompanying statements of assets and liabilities of the
three funds comprising the Franklin California Tax-Free Trust, including each
Fund's statement of investments in securities and net assets, as of June 30,
1997, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods presented. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1997, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the funds comprising the Franklin California Tax-Free Trust as of June 30,
1997, the results of their operations for the year then ended, the changes in
their net assets for each of the two years in the period then ended, and their
financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
San Francisco, California
August 4, 1997
Franklin California Tax-Free Trust Annual Report June 30, 1997.
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 Class I distribution
rate of 5.17%, and the taxable equivalent distribution rate of 9.44%.
GRAPHIC MATERIAL (2)
The following line graph hypothetically compares the performance of the
Franklin California Insured Tax-Free Income Fund Class I Shares to that of
the Lehman Brothers Municipal Bond Index and the Consumer Price Index (CPI),
based on a $10,000 investment from 7/1/87 to 6/30/97.
Period Ending CA Ins LBMuni CPI
7/1/87 9,577 10,000 10,000
7/31/87 9,698 10,102 10,026
8/31/87 9,712 10,124 10,079
9/30/87 9,132 9,751 10,132
10/31/87 9,185 9,785 10,158
11/30/87 9,503 10,040 10,167
12/31/87 9,685 10,186 10,167
1/31/88 10,178 10,548 10,193
2/29/88 10,309 10,660 10,220
3/31/88 9,939 10,536 10,264
4/30/88 10,014 10,617 10,317
5/31/88 9,994 10,586 10,352
6/30/88 10,186 10,740 10,397
7/31/88 10,244 10,810 10,441
8/31/88 10,282 10,820 10,484
9/30/88 10,535 11,016 10,555
10/31/88 10,830 11,210 10,589
11/30/88 10,711 11,106 10,598
12/31/88 10,859 11,220 10,616
1/31/89 11,088 11,452 10,669
2/28/89 10,967 11,321 10,713
3/31/89 10,935 11,294 10,775
4/30/89 11,229 11,562 10,845
5/31/89 11,464 11,802 10,907
6/30/89 11,640 11,963 10,933
7/31/89 11,744 12,126 10,959
8/31/89 11,683 12,007 10,977
9/30/89 11,621 11,971 11,012
10/31/89 11,738 12,117 11,065
11/30/89 11,855 12,329 11,091
12/31/89 11,952 12,430 11,109
1/31/90 11,910 12,372 11,223
2/28/90 12,040 12,482 11,276
3/31/90 12,021 12,485 11,338
4/30/90 11,924 12,396 11,356
5/31/90 12,232 12,666 11,382
6/30/90 12,323 12,777 11,444
7/31/90 12,513 12,966 11,487
8/31/90 12,226 12,778 11,593
9/30/90 12,228 12,786 11,690
10/31/90 12,467 13,017 11,761
11/30/90 12,707 13,279 11,786
12/31/90 12,709 13,337 11,786
1/31/91 12,940 13,516 11,857
2/28/91 12,988 13,634 11,875
3/31/91 13,025 13,639 11,893
4/30/91 13,201 13,822 11,911
5/31/91 13,297 13,945 11,946
6/30/91 13,276 13,931 11,981
7/31/91 13,444 14,101 11,999
8/31/91 13,565 14,287 12,034
9/30/91 13,735 14,473 12,087
10/31/91 13,833 14,603 12,105
11/30/91 13,811 14,644 12,140
12/31/91 14,081 14,959 12,148
1/31/92 14,095 14,993 12,167
2/29/92 14,095 14,998 12,211
3/31/92 14,145 15,004 12,273
4/30/92 14,256 15,137 12,290
5/31/92 14,467 15,316 12,307
6/30/92 14,665 15,573 12,351
7/31/92 15,178 16,040 12,377
8/31/92 14,961 15,883 12,412
9/30/92 14,984 15,986 12,447
10/31/92 14,687 15,830 12,490
11/30/92 15,095 16,113 12,508
12/31/92 15,285 16,278 12,499
1/31/93 15,490 16,466 12,560
2/28/93 15,956 17,062 12,604
3/31/93 15,914 16,882 12,648
4/30/93 16,016 17,052 12,684
5/31/93 16,106 17,148 12,702
6/30/93 16,382 17,434 12,719
7/31/93 16,419 17,457 12,719
8/31/93 16,725 17,820 12,755
9/30/93 16,924 18,023 12,782
10/31/93 17,026 18,057 12,834
11/30/93 16,993 17,898 12,843
12/31/93 17,274 18,276 12,843
1/31/94 17,447 18,484 12,878
2/28/94 17,097 18,005 12,922
3/31/94 16,413 17,273 12,966
4/30/94 16,477 17,419 12,984
5/31/94 16,583 17,571 12,993
6/30/94 16,520 17,464 13,037
7/31/94 16,811 17,783 13,072
8/31/94 16,876 17,846 13,124
9/30/94 16,657 17,583 13,160
10/31/94 16,350 17,270 13,169
11/30/94 16,073 16,958 13,186
12/31/94 16,356 17,331 13,186
1/31/95 16,901 17,826 13,239
2/28/95 17,377 18,345 13,292
3/31/95 17,502 18,556 13,336
4/30/95 17,554 18,578 13,380
5/31/95 18,036 19,171 13,407
6/30/95 17,807 19,004 13,433
7/31/95 17,920 19,185 13,433
8/31/95 18,080 19,428 13,468
9/30/95 18,194 19,551 13,495
10/31/95 18,460 19,834 13,540
11/30/95 18,804 20,164 13,530
12/31/95 19,027 20,357 13,521
1/31/96 19,144 20,512 13,601
2/29/96 19,045 20,372 13,644
3/31/96 18,761 20,112 13,715
4/30/96 18,692 20,055 13,769
5/31/96 18,701 20,047 13,795
6/30/96 18,915 20,266 13,803
7/31/96 19,081 20,450 13,829
8/31/96 19,151 20,446 13,856
9/30/96 19,413 20,732 13,900
10/31/96 19,597 20,967 13,944
11/30/96 19,894 21,350 13,971
12/31/96 19,822 21,261 13,971
1/31/97 19,814 21,301 14,016
2/28/97 19,984 21,497 14,059
3/31/97 19,731 21,211 14,094
4/30/97 19,903 21,389 14,112
5/31/97 20,159 21,710 14,104
6/30/97 20,315 21,942 14,121
103.15% 119.42% 41.21%
GRAPHIC MATERIAL (3)
This bar chart shows the comparison between the fund's Class II distribution
rate of 4.72%,and the taxable equivalent distribution rate of 8.62%.
GRAPHIC MATERIAL (4)
The following line graph hypothetically compares the performance of the
Franklin California Insured Tax-Free Income Fund Class II Shares to that of
the Lehman Brothers Municipal Bond Index and the Consumer Price Index (CPI),
based on a $10,000 investment from 5/1/95 to 6/30/97.
Period Ending CA Ins LBMuni CPI
5/1/95 9900 $10,000 $10,000
5/31/95 10,197 10,319 10,020
6/30/95 10,063 10,229 10,040
7/31/95 10,122 10,326 10,040
8/31/95 10,215 10,458 10,066
9/30/95 10,265 10,523 10,086
10/31/95 10,418 10,676 10,120
11/30/95 10,606 10,853 10,112
12/31/95 10,727 10,957 10,105
1/31/96 10,787 11,041 10,165
2/29/96 10,726 10,966 10,198
3/31/96 10,571 10,825 10,251
4/30/96 10,528 10,795 10,291
5/31/96 10527 10,791 10,310
6/30/96 10642 10,908 10,316
7/31/96 10,737 11,008 10,336
8/31/96 10,762 11,005 10,356
9/30/96 10,904 11,159 10,389
10/31/96 11,002 11,286 10,422
11/30/96 11,172 11,492 10,442
12/31/96 11,118 11,444 10,442
1/31/97 11,108 11,466 10,475
2/28/97 11,207 11,571 10,508
3/31/97 11,060 11,417 10,534
4/30/97 11,142 11,513 10,548
5/31/97 11,287 11,686 10,541
6/30/97 11,369 11,811 10,554
13.69% 18.11% 5.54%
GRAPHIC MATERIAL (5)
This chart shows in pie format the credit quality breakdown of the fund's
holdings on 6/30/97, based on total long-term investments.
Credit Quality Breakdown
AAA 30.3%
AA 3.0%
A 32.2%
BBB 34.4%
Below Investment Grade 0.1%
GRAPHIC MATERIAL (6)
This bar chart shows the comparison between the fund's distribution rate of
4.72%, and the taxable equivalent distribution rate of 8.62%.
GRAPHIC MATERIAL (7)
The following line graph hypothetically compares the performance of the
Franklin California Intermediate-Term Tax-Free Income Fund to that of the
Lehman Brothers Municipal Bond Index and the Consumer Price Index (CPI),
based on a $10,000 investment from 9/23/92 to 6/30/97.
Period Ending CA Int LBMuni CPI
9/23/92 9775 10,000 10,000
9/30/92 9,785 10,019 10,007
10/31/92 9,736 9,917 10,042
11/30/92 9,922 10,099 10,056
12/31/92 9,990 10,216 10,049
1/31/93 10,074 10,388 10,098
2/28/93 10,395 10,769 10,133
3/31/93 10,401 10,611 10,169
4/30/93 10,436 10,712 10,197
5/31/93 10,482 10,750 10,211
6/30/93 10,588 10,962 10,226
7/31/93 10,614 10,989 10,226
8/31/93 10,759 11,216 10,254
9/30/93 10,986 11,354 10,276
10/31/93 11,031 11,373 10,318
11/30/93 10,912 11,279 10,325
12/31/93 11,142 11,520 10,325
1/31/94 11,259 11,661 10,353
2/28/94 10,995 11,342 10,388
3/31/94 10,645 10,908 10,424
4/30/94 10,702 11,028 10,438
5/31/94 10,769 11,117 10,445
6/30/94 10,762 11,069 10,481
7/31/94 10,925 11,255 10,509
8/31/94 10,972 11,299 10,551
9/30/94 10,869 11,146 10,580
10/31/94 10,734 10,983 10,587
11/30/94 10,578 10,776 10,601
12/31/94 10,669 10,970 10,601
1/31/95 10,901 11,254 10,643
2/28/95 11,188 11,572 10,686
3/31/95 11,313 11,729 10,721
4/30/95 11,328 11,743 10,757
5/31/95 11,652 12,115 10,778
6/30/95 11,534 12,040 10,800
7/31/95 11,683 12,217 10,800
8/31/95 11,867 12,383 10,828
9/30/95 11,961 12,462 10,849
10/31/95 12,146 12,606 10,885
11/30/95 12,320 12,774 10,878
12/31/95 12,370 12,852 10,870
1/31/96 12,477 12,982 10,934
2/29/96 12,447 12,929 10,969
3/31/96 12,360 12,769 11,026
4/30/96 12,330 12,724 11,069
5/31/96 12,335 12,688 11,090
6/30/96 12,456 12,809 11,097
7/31/96 12,554 12,932 11,118
8/31/96 12,558 12,932 11,139
9/30/96 12,681 13,065 11,175
10/31/96 12,816 13,230 11,210
11/30/96 13,034 13,497 11,232
12/31/96 12,992 13,436 11,232
1/31/97 13,032 13,489 11,268
2/28/97 13,121 13,615 11,303
3/31/97 13,005 13,433 11,331
4/30/97 13,107 13,532 11,346
5/31/97 13,282 13,724 11,339
6/30/97 13,396 13,871 11,352
Total Return 13.52%
GRAPHIC MATERIAL (8)
This bar chart shows the comparison between the fund's Seven-Day annualized
yield of 3.41%, and the taxable equivalent yield of 6.22%.
