SEMI
ANNUAL
REPORT
December 31, 1997
Franklin California
Tax-Free Trust
Franklin California Insured Tax-Free Income Fund
Franklin California Intermediate-Term
Tax-Free Income Fund
Franklin California Tax-Exempt Money Fund
Thank you for investing with Franklin Templeton. We encourage our investors
to maintain a long-term perspective, and to expect that mixed in with the
good years can be some bad years. It's important to remember that all
securities markets move both up and down, as do mutual fund share prices. We
appreciate your past support and look forward to serving your investment
needs in the years ahead.
Charles B. Johnson
Chairman
Franklin California Tax-Free Trust
Thomas J. Kenny
Director
Franklin Municipal
Bond Department
CONTENTS
Shareholder Letter ................. 1
California Update .................. 4
Fund Reports
Franklin California Insured
Tax-Free Income Fund ............... 6
Franklin California
Intermediate-Term
Tax-Free Income Fund ............... 12
Franklin California
Tax-Exempt Money Fund .............. 16
Glossary of
Investment Terms ................... 19
Municipal Bond Ratings ............. 21
Financial Highlights &
Statement of Investments ........... 24
Financial Statements ............... 52
Notes to
Financial Statements............... 56
SHAREHOLDER LETTER
Dear Shareholder:
It's a pleasure to bring you Franklin California Tax-Free Trust's semi-annual
report for the period ended December 31, 1997.
A Glimpse at the Economy
During the six months under review, U.S. economic growth continued. Prior to
the reporting period, in March, the Federal Reserve Board (the Fed) raised
short-term interest rates from 5.25% to 5.50%. This 25 basis point increase
was the Fed's response to tightening labor markets and an overall concern
that possible wage demands could lead to increased inflationary pressures.
The rate hike had its desired effect. Economic growth slowed slightly and
interest rates stabilized, reversing their general rising trend and ending
the period down from where they began. The 30-year U.S. Treasury bond started
the six-month period yielding 6.80%, and finished at 5.93% on December 31,
1997.1
1. Source: Micropal, 1/14/98.
The Fed raised rates only once during 1997. Even with continued, strong
economic growth, there have been remarkably few signs of increased inflation.
This low inflation, combined with a balanced budget agreement between the
President and Congress, greatly contributed to a beneficial environment of
falling interest rates throughout the majority of the reporting period.
However, consumer spending strengthened toward the end of the period and the
stock market -- despite a stumble at the end of October -- remained near
all-time highs. Yet, with the recent slowdown in the economies of our Asian
trading partners, we expect a moderate U.S. growth rate. Interest rates
affect tax-free bonds directly, in addition to helping shape the economic
environment that determines the general fiscal health of the municipalities
issuing them. Higher interest rates often generate higher yields for new bond
issues, while lower rates generally translate into a decrease in yields.
Furthermore, a drop in rates usually causes the value of existing bonds to
increase, while a rise in rates often has the opposite affect on those bonds'
values.
"Much like the tortoise, sucessful investors historically have achieved good
results through setting goals, diversifying their assets and having patience."
The Tale of the Tortoise and the Hare
We can't promise that a positive economic environment will continue. It is
important to remember, then, that markets correct -- in our opinion, it is
desirable for them to do so. Consequently, investor concern about volatility
and the market's direction prompts us to comment on the importance of having
your own long-term investment strategy. And when you consider your investment
strategy, are you a tortoise or a hare?
We all know that familiar story: The tortoise won the race because he had a
plan and stuck to it, not allowing the hare's fast start to distract him.
Much like the tortoise, successful investors historically have achieved good
results through setting goals, diversifying their assets and having patience.
Wise investors think like the tortoise. They know mutual fund investments are
long term, so daily market fluctuations and short-term volatility have
minimal impact on their overall investment goals. They understand that
patience and discipline are keys to successful investing. Remember, it's time
- -- not timing -- that makes the difference.
We encourage you to discuss your financial goals with your investment
representative. He or she can address concerns about volatility and help you
diversify your investments and stay focused on the long term. Mutual funds
offer a level of diversification that is almost impossible for individual
investors to achieve on their own.
Regardless of the market's direction, Franklin Templeton's disciplined
investment strategy remains the same. All of our portfolio managers are
dedicated to providing shareholders like you with careful selection and
constant professional supervision. As always, we appreciate your support,
welcome your questions and comments, and look forward to serving your
investment needs in the years ahead.
Sincerely,
Charles B. Johnson
Chairman
Franklin California Tax-Free Trust
Thomas J. Kenny
Director
Franklin Municipal Bond Department
"California's state budget, with its heavy reliance on economically sensitive
sales and income taxes, has been one of the largest beneficiaries of the state's
growing economy."
CALIFORNIA UPDATE
The California economy performed above expectations, during the six-month
reporting period. Defense cutbacks, which negatively impacted the state and
were discussed in previous shareholder reports, largely ended, while other
sources for economic growth strengthened. Propelled by these positive
fundamentals, employment steadily increased, and in June was nearly 5%
greater than the prerecession peak, and 3.2% above calendar year 1996.
California's large and growing economy is broad-based, with services
accounting for 30% of employment, trade 23%, manufacturing 14.1%, and
high-technology 3.8%. Because of the state's underlying economic strength,
Fitch (a national rating agency) raised its rating of California general
obligation debt from A+ to AA- in October.1 However, the other two major
credit rating agencies, Moody's(R) and Standard & Poor's(R), left their ratings
unchanged over the period.
1. Source: Fitch Research, 10/6/97. This does not indicate Fitch's rating of
the fund.
California's state budget, with its heavy reliance on economically sensitive
sales and income taxes, has been one of the largest beneficiaries of the state's
growing economy. At the same time, California faces many obstacles in crafting a
balanced budget. Several ballot initiatives constrain the state's fiscal
flexibility. Increased spending pressures for education (largely to reduce
school class size), previous budget deficits and failures to receive budgeted
increases in federal aid, all helped confer a $2.1 billion general fund deficit.
Despite this, California's operating budget has been in balance for the past
five years.2 An adverse court ruling, however, mandating a one-time transfer of
$1.2 billion to the state's retirement system this year, will likely prevent
California from achieving a sixth year of budget balance. With the state's
economy expected to continue growing, California's fiscal position should remain
healthy, despite its budgetary impediments.1
2. Moody's Investors Service, 10/3/97.
You may find a complete listing of the fund's portfolio holdings including the
number of shares and dollar value beginning on page 26 of this report.
FRANKLIN CALIFORNIA INSURED
TAX-FREE INCOME FUND
"We attempted to realize the greatest gain possible on those municipal bonds we
owned that were prerefunded, by selling them before they reached their first
call date."
Your Fund's Objective: Seeks to provide high, current income exempt from
regular federal and California state personal income taxes while seeking
preservation of capital by investing primarily in a portfolio of insured
California municipal securities.1,2
1. The fund may invest as much as 100% of its assets in bonds that pay
interest subject to the federal alternative minimum tax. All or a significant
portion of the income on these obligations 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.
During the six-month reporting period, the general decline in interest rates
led to an increased number of municipal bonds being prerefunded. When a
tax-free bond is prerefunded, it is paid-off at its first call date by the
proceeds from the sale of a new municipal bond issue that usually offers a
lower interest rate. Using this refinancing method, a municipality can reduce
its interest expense, by replacing higher-yielding bond issues with
lower-yielding ones. Money derived from the sale of the refinancing issue is
normally invested in U.S. Treasuries, which will mature upon the now
prerefunded bond's first call date and be used to pay off its prior
financings. Because the prerefunded bond now will have a shorter life and is
also usually backed by U.S. Treasuries, which enjoy the highest of credit
ratings, the value of a municipal bond goes up when it is prerefunded.
However, as a prerefunded bond approaches its call date, its value decreases
as its premium falls to near its call price.
Increased prepayments had several effects on our management of Franklin
California Insured Tax-Free Income Fund. We attempted to realize the greatest
gain possible on those municipal bonds we owned that were prerefunded, by
selling them before they reached their first call date. As a result, we paid
out a 11.58 cents per share capital gain for December. Over the course of the
six-month period, with the proceeds of the prerefunded sales, we purchased
current coupon bonds with longer call protection, and consequently a longer
protected income stream. We continue to manage Franklin California Insured
Tax-Free Income Fund with the intention of protecting its share value and
maintaining its competitive yield. The current coupon bonds we purchased,
with their longer call protection, should help stabilize the fund's income
stream going forward. We believe our conservative investment approach,
avoidance of derivative investments and purchases of current coupon bonds
with long call protections, will benefit our shareholders.
Please remember, this discussion reflects our views and opinions as of
December 31, 1997, the end of the reporting period. However, market and
economic conditions are changing constantly, which may affect our strategies
and portfolio holdings. Although historic performance is no guarantee of
future results, these insights may help you understand our investment and
management philosophy.
Franklin California Insured Tax-Free Income Fund
Portfolio Breakdown on 12/31/97
% of Total
Long-Term
Sector Investments
Utilities 19.1%
Certificates of Participation 14.0%
Other Revenue 13.4%
Tax Allocation Bonds 12.0%
Education 10.1%
Prerefunded 8.9%
Transportation 5.3%
Hospitals 4.7%
Mello-Roos Bonds 2.9%
Special Assessment Bonds 2.7%
Housing 2.7%
General Obligation 2.0%
Sales Tax Revenue 1.4%
Marks-Roos Bonds 0.8%
For a complete list of portfolio holdings, please see page 26.
PERFORMANCE SUMMARY
GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Class I
Franklin California Insured Tax-Free Income Fund - Class I share price, as
measured by net asset value, increased 24 cents from $12.22 on June 30, 1997,
to $12.46 on December 31, 1997. During the six-month reporting period, the
fund paid income distributions totaling 32.4 cents ($0.324) per share.
Distributions will vary based on the earnings of the fund's portfolio, and
past distributions are not predictive of future trends.
Based on an annualization of the current monthly per share dividend of 5.3
cents ($0.053) and the maximum offering price of $13.01 on December 31, 1997,
your fund's distribution rate was 4.89%. 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 8.93% from a
taxable investment to match the fund's tax-free distribution rate.
Franklin California Insured Tax-Free Income Fund
Class I
Periods ended 12/31/97
Since
Inception
1-Year 5-Year 10-Year (9/3/85)
Cumulative Total Return1 8.21% 40.38% 121.54% 166.59%
Average Annual Total Return2 3.64% 6.10% 7.81% 7.90%
Distribution Rate3 4.89%
Taxable Equivalent
Distribution Rate4 8.93%
30-Day Standardized Yield5 4.26%
Taxable Equivalent Yield4 7.78%
1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include the sales charge.
2. Average annual total return represents the average annual change in value
of an investment over the periods indicated and includes the current maximum
4.25% initial sales charge.
3. Distribution rate is based on an annualization of the current 5.3 cents
per share monthly dividend and the maximum offering price of $13.01 on
December 31, 1997.
4. Taxable equivalent distribution rate and yield assume 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%.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended December 31, 1997.
Prior to July 1, 1994, fund shares were offered at a lower initial sales
charge with dividends reinvested at the offering price; thus, actual total
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 at net asset value. Investment
return and principal value will fluctuate with market conditions, and you may
have a gain or loss when you sell your shares.
Franklin California Insured Tax-Free Income Fund
Class I
Dividend Distributions
7/1/97 - 12/31/97*
Dividend
Month per share
July 5.5 cents
August 5.5 cents
September 5.5 cents
October 5.3 cents
November 5.3 cents
December 5.3 cents
Total 32.4 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 include all
accrued income earned by the fund during the reporting period.
GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Class II
Franklin California Insured Tax-Free Income Fund - Class II, share price, as
measured by net asset value, increased 24 cents, from $12.29 on June 30,
1997, to $12.53 on December 31, 1997. During the six-month reporting period,
the fund paid income distributions totaling 28.93 cents ($0.2893) per share.
Distributions vary based on the earnings of the fund's portfolio, and past
distributions are not necessarily predictive of future trends.
Based on an annualization of the current monthly dividend of 4.7 cents
($0.047) per share and the offering price of $12.66 on December 31, 1997,
your fund's distribution rate was 4.45%. 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 have to earn 8.12% from a
taxable investment to match the fund's tax-free distribution rate.
Franklin California Insured Tax-Free Income Fund
Class II
Periods ended 12/31/97
Since
Inception
1-Year (5/1/95)
Cumulative Total Return1 7.64% 20.92%
Average Annual Total Return2 5.61% 6.97%
Distribution Rate3 4.45%
Taxable Equivalent
Distribution Rate4 8.12%
30-Day Standardized Yield5 3.85%
Taxable Equivalent Yield4 7.03%
1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include the sales charge.
2. Average annual total return represents the average annual change in value
of an investment over the periods indicated and includes the 1.0% initial
sales charge and 1.0% contingent deferred sales charge applicable to shares
redeemed within 18 months of investment.
3. Distribution rate is based on an annualization of the current 4.7 cents
per share monthly dividend and the maximum offering price of $12.66 on
December 31, 1997.
4. Taxable equivalent distribution rate and yield assume 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%.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended December 31, 1997.
All total return calculations assume reinvestment of dividends and capital
gains at net asset value. Investment return and principal value will
fluctuate with market conditions, and you may have a gain or loss when you
sell your shares.
Franklin California Insured Tax-Free Income Fund
Class II
Dividend Distributions
7/1/97 - 12/31/97
Dividend
Month per share
July 4.99 cents
August 4.92 cents
September 4.92 cents
October 4.70 cents
November 4.70 cents
December 4.70 cents
Total 28.93 cents
You may find a complete listing of the fund's portfolio holdings including the
number of shares and dollar value beginning on page 39 of this report.
FRANKLIN CALIFORNIA
INTERMEDIATE-TERM
TAX-FREE INCOME FUND
Your Fund's Objective: Seeks to provide high, current income exempt from
regular federal and California state personal income taxes while seeking
preservation of capital by investing 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. The fund may invest as much as 100% of its assets in bonds that pay
interest subject to the federal alternative minimum tax. All or a significant
portion of the income on these obligations may be subject to such tax.
Distributions of capital gains and of ordinary income from accrued market
discount, if any, are generally taxable.
Franklin California
Intermediate-Term
Tax-Free Income Fund
Portfolio Breakdown on 12/31/97
% of Total
Long-Term
Sector Investments
Certificates of Participation 29.4%
Tax Allocation Bonds 15.2%
Utilities 11.3%
Special Assessment Bonds 10.1%
Other Revenue 7.9%
Housing 6.5%
Education 5.9%
Hospitals 4.3%
Transportation 2.9%
Marks-Roos Bonds 2.9%
Prerefunded 1.9%
Special Tax Revenue Bonds 1.3%
Mello-Roos Bonds 0.3%
Industrial Revenue Bonds 0.1%
For a complete list of portfolio holdings, please see page 39.
During the six-month reporting period, Franklin California Intermediate-Term
Tax-Free Income Fund actively participated in the California tax-free bond
market, both buying and selling municipal securities. There was a large
supply of California municipal issues, creating what we believed to be buying
opportunities for the fund. Although over 70% of the new municipal bonds
issued were high-rated insured bonds that sell for a premium, there were a
number of BBB-rated bonds issued.
Approximately half the bonds we bought, during the six-month period, for the
fund were BBB-rated, while the remainder ranged from BB to AAA. We sold bonds
from the fund that were maturing in two to five years and possessed coupons
in the 4.75% to 5.25% range, and purchased issues maturing in eight to
fifteen years, and offering coupons in the 5% to 5.5% range, keeping the
average weighted maturity below ten years. By selling the shorter-maturity
bonds, we attempted to realize the greatest gain possible on them, before
they matured and their income streams ended. With our acquisition of longer
maturity issues in the 5% to 5.5% yield range, we sought to increase, protect
and extend Franklin California Intermediate-Term Tax-Free Income Fund's
dividend yield.
Looking forward, we anticipate relatively stable interest rates, mild
inflation and continued, but slowing, economic growth. These factors should
benefit the California state municipal bond market. We believe Franklin
California Intermediate-Term Tax-Free Income Fund will continue its positive
performance, as these economic trends continue.
Please remember, this discussion reflects our views and opinions as of
December 31, 1997, the end of the reporting period. However, market and
economic conditions are changing constantly, which may affect our strategies
and portfolio holdings. Although historic performance is no guarantee of
future results, these insights may help you understand our investment and
management philosophy.
GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT
GRAPHIC MATERIAL 4 OMITTED - SEE APPENDIX AT END OF DOCUMENT
PERFORMANCE SUMMARY
The share price of Franklin California Intermediate-Term Tax-Free Income
Fund, as measured by net asset value, increased 28 cents from $10.93 on June
30 1997, to $11.21 on December 31, 1997. During the six-month reporting
period, the fund paid income distributions totaling 26.4 cents ($0.264) per
share. Distributions will vary based on the earnings of the fund's portfolio,
and past distributions are not predictive of future trends.
Based on an annualization of the current monthly per share dividend of 4.4
cents ($0.044) and the maximum offering price of $11.47 on December 31, 1997,
your fund's distribution rate was 4.60%. 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 8.40% from a
taxable investment to match the fund's tax-free distribution rate.
Franklin California Intermediate-Term Tax-Free Income Fund
Periods ended 12/31/97
Since
Inception
1-Year 5-Year (9/23/92)
Cumulative Total Return1 8.26% 40.83% 43.93%
Average Annual total Return2 5.83% 6.59% 6.69%
Distribution Rate3 4.60%
Taxable Equivalent
Distribution Rate4 8.40%
30-Day Standardized Yield5 4.34%
Taxable Equivalent Yield4 7.92%
1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include the sales charge.
2. Average annual total return represents the average annual change in value
of an investment over the periods indicated and includes the maximum 2.25%
initial sales charge.
3. Distribution rate is based on an annualization of the current 4.4 cents
per share monthly dividend and the maximum offering price of $11.47 on
December 31, 1997.
4. Taxable equivalent distribution rate and yield assume 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%.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended December 31, 1997.
All total return calculations assume reinvestment of dividends and any
capital gains 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 its management
fees, which reduces operating expenses and increases distribution rate, yield
and total return to shareholders. Without this waiver, the fund's
distribution rate and total return would have been lower, and yield for the
period would have been 4.09%. The fee waiver may be discontinued at any time
upon notice to the fund's Board of Trustees.
Franklin California
Intermediate-Term
Tax-Free Income Fund
Dividend Distributions
7/1/97 - 12/31/97*
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
Total 26.4 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 include all accrued income earned by the fund during the reporting
period.
You may find a complete listing of the fund's portfolio holdings including the
number of shares and dollar value beginning on page 47 of this report.
FRANKLIN CALIFORNIA
TAX-EXEMPT MONEY FUND
Your Fund's Objective: Seeks to provide high, current income exempt from
regular federal and California state personal income taxes while seeking
preservation of capital and liquidity by investing primarily in a portfolio
of short-term municipal debt securities issued in California. The fund is
managed to maintain a $1.00 share price.1
1. 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 guarantee that
the $1.00 per share price will be maintained.
During the six-month reporting period, Franklin California Tax-Exempt Money
Fund actively invested in high-quality, liquid securities. Although, SEC
guidelines allow tax-exempt money funds to purchase lower-rated, second tier
securities, as well as first tier securities, Franklin buys only high-rated,
first tier securities for its money market portfolios. In keeping with our
conservative investment philosophy, we participated in several first tier,
six- to twelve-month note issues. Notable purchases included: California
State RANs, Santa Clara County TANs, San Diego County TANs and Alameda County
TAN's. The fund also bought California State TECPs and Auburn Unified School
District COP Weekly VRDNs. These purchases helped to attain an average
maturity of 48 days for the fund's portfolio.
The national economy continued to perform extremely well during the reporting
period. The United State's moderate economic growth was characterized by
rising employment, low inflation, and declining interest rates. Since the
Federal Reserve Board last changed interest rates in March of this year, it
has left rates unchanged and again, in its latest meeting on December 16 did
not alter rates. Looking forward, we do not anticipate any shifts in the
underlying economy that would cause the Federal Reserve to adjust short-term
interest rates, and we expect little variation in Franklin California
Tax-Exempt Money Fund's performance, in the nearterm.
Please remember, this discussion reflects our views and opinions as of
December 31, 1997, the end of the reporting period. However, market and
economic conditions are changing constantly, which may affect our strategies
and portfolio holdings. Although historic performance is no guarantee of
future results, these insights may help you understand our investment and
management philosophy.
What is a TAN?
Like many short-term government debt instruments, a Tax Anticipation Note is
widely known by its acronym, TAN. A TAN is a short-term obligation of a state
or municipal government. As its name implies, the state or municipality
issuing a Tax Anticipation Note borrows funds against anticipated tax
payments, to finance current expenditures. As soon as the expected corporate
and individual tax payments are received, that money is used to pay off the
TAN.
Note: RANs, TECPs and VRDNs which are mentioned less freqently than TANs in
regards to purchases by the fund, are also acronyms for other types of
short-term government debt instruments.
GRAPHIC MATERIAL 5 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Franklin California Tax-Exempt Money Fund
Periods ended 12/31/97
Seven-day effective yield1 3.23%
Seven-day annualized yield 3.18%
Taxable Equivalent yield2 5.80%
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 December 31,
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.
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.
Discount: Amount by which a bond sells below its face (par) value. For
instance, a bond with a $1,000 face value that sells for $900 would have a
$100 discount.
Call Protection: The length of time during which a bond cannot be redeemed by
its issuer.
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.
Current Coupon Bond: A bond with a coupon rate that is within half a
percentage point of current market interest rates. See also Full Coupon Bond.
Full Coupon Bond: A bond with a coupon rate that is near or above current market
interest rates. See also Current Coupon Bond.
High Grade Bond/High-Quality Bond: A bond rated AAA or AA by Standard &
Poor's 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
top four rating categories assigned to bonds.
Premium: Amount by which a bond sells above its face (par) value. For
instance, a bond with a $1,000 face value that sells for a $1,100 would have
a $100 premium.
Prerefunded 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 generally are invested in U.S. Treasuries set to mature at the
original bond's first call date. When a bond is prerefunded, 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.
Yield Spread: The relative yield differential between lower- and
higher-quality issues. Normally, lower-quality issues provide higher yields
to compensate investors for added credit risk.
MUNICIPAL BOND RATINGS
Moody's
Aaa: Best quality. They carry the smallest degree of investment risk and
generally are referred to as "gilt-edged." Interest payments are protected by
a large or exceptionally stable margin, and principal is secure. Although the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of
such issues.
Aa: High quality by all standards. Together with the Aaa group, they comprise
what generally are 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: Possess many favorable investment attributes and are considered upper
medium-grade obligations. Factors giving security to principal and interest
are considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Baa: Medium-grade obligations, i.e., they are neither highly protected nor
poorly secured. Interest payments and principal security appear adequate for
the present, but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time.
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 bonds in this class.
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 elements of danger with
respect to principal or interest may be present.
Ca: Obligations that 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: 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 in 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 they normally exhibit adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.
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 likely will 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
Financial Highlights
<TABLE>
<CAPTION>
Franklin California Insured Tax-Free Income Fund
Class I
Six months Ended
December 31, 1997 Year ended June 30,
(unaudited) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period $12.22 $12.01 $11.95 $11.74 $12.30 $11.67
--------------------------------------------------------------------------
Income from investment operations:
Net investment income ............. .32 .66 .67 .68 .68 .69
Net realized and unrealized gains(losses) .36 .21 .06 .20 (.56) .64
--------------------------------------------------------------------------
Total from investment operations .. .68 .87 .73 .88 .12 1.33
--------------------------------------------------------------------------
Less distributions from:
Net investment income ............. (.32) (.66) (.67) (.67) (.68) (.70)
Net realized gains ................ (.12) -- -- -- -- --
--------------------------------------------------------------------------
Total distributions ................ (.44) (.66) (.67) (.67) (.68) (.70)
--------------------------------------------------------------------------
Net asset value, end of period ..... $12.46 $12.22 $12.01 $11.95 $11.74 $12.30
==========================================================================
Total return** ..................... 5.59% 7.41% 6.18% 7.80% .67% 11.47%
Ratios/supplemental data
Net assets, end of period (000's) .. $1,683,694 $1,635,543 $1,588,631 $1,468,080 $1,450,821 $1,363,623
Ratios to average net assets:
Expenses .......................... .60%* .60% .60% .59% .54% .53%
Net investment income ............. 5.16%* 5.41% 5.50% 5.77% 5.53% 5.82%
Portfolio turnover rate ............ 9.30% 20.40% 14.22% 11.85% 6.98% 8.28%
</TABLE>
*Annualized.
**Total return does not reflect sales commissions or the contingent sales
deferred sales charges, and is not annualized. Prior to May 1, 1994, dividends
from net investment income were reinvested at the offering price.
<TABLE>
<CAPTION>
Class II
Six months ended
December 31, 1997 Year Ended June 30,
(unaudited) 1997 1996 1995***
-----------------------------------------------
<S> <C> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period ................ $12.29 $12.07 $11.99 $11.88
--------------------------------------------------
Income from investment operations:
Net investment income .............................. .29 .59 .60 .11
Net realized and unrealized gains .................. .36 .22 .08 .10
--------------------------------------------------
Total from investment operations .................... .65 .81 .68 .21
--------------------------------------------------
Less distributions from:
Net investment income .............................. (.29) (.59) (.60) (.10)
Net realized gains ................................. (.12) -- -- --
-----------------------------------------------
Total distributions ................................. (.41) (.59) (.60) (.10)
---------------------------------------------------
Net asset value, end of period ...................... $12.53 $12.29 $12.07 $11.99
==================================================
Total return ** ..................................... 3.25% 6.86% 5.70% 1.79%
Ratios/supplemental data
Net assets, end of period (000's) ................... $43,749 $34,899 $18,458 $507
Ratios to average net assets:
Expenses ........................................... 1.16%* 1.16% 1.17% 1.17%*
Net investment income .............................. 4.50%* 4.81% 4.96% 5.03%*
Portfolio turnover rate ............................. 9.30% 20.40% 14.22% 11.85%
</TABLE>
*Annualized.
**Total return does not reflect sales commissions or the contingent sales
deferred sales charges, and is not annualized.
***For the period May 1, 1995 (effective date) to June 30, 1995.
See notes to financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Statement of Investments, December 31, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
Franklin California Insured Tax-Free Income Fund AMOUNT VALUE
<S> <C> <C>
Long Term Investments 97.8%
Bonds 97.4%
ABAG, RDA Revenue, Tax Allocation, Pool A2, FSA Insured, 6.60%, 12/15/24 ....................... $10,775,000 $ 12,103,989
Alameda County COP, Municipal Custodial Receipts, Series 1,
BIG Insured, Pre-Refunded, 7.25%, 12/01/07 ..................................................... 2,000,000 2,214,920
Alameda County Water District Revenue COP, Water System Project,
FGIC Insured, 6.00%, 6/01/20 ................................................................... 1,000,000 1,061,810
Alhambra COP, Police Facilities AD No. 91-1, AMBAC Insured, 6.75%, 9/01/23 ..................... 10,730,000 11,720,164
Anaheim Public Financing Authority Revenue, Refunding, Local Agency,
CFD, Series A MBIA Insured, 5.75%, 9/01/14 .................................................... 3,790,000 3,990,112
Arcadia GO, USD, Series B, FGIC Insured, 5.875%, 7/01/20 ....................................... 1,985,000 2,107,197
Arcata Joint Powers Financing Authority Revenue, Tax Allocation,
Community Development Project, Series A, AMBAC Insured, 6.00%, 8/01/23 ........................ 5,690,000 6,106,963
Arcata Joint Powers Financing Authority, Wastewater Revenue,
FSA Insured, 5.80%, 12/01/22 ................................................................... 1,080,000 1,152,738
Baldy Mesa Water District COP, Water System Improvement Project, AMBAC Insured,
6.40%, 8/01/17 ................................................................................. 760,000 815,556
6.45%, 8/01/24 ................................................................................. 1,170,000 1,257,188
Barstow RDA, Tax Allocation, Central Redevelopment Project,
Series A, MBIA Insured, 6.25%, 9/01/22 ......................................................... 2,000,000 2,181,720
Beaumont USD, COP, Refunding, Series A, FSA Insured, 5.80%, 1/01/21 ............................ 1,500,000 1,595,250
Benicia COP, Refunding, Water System Project, AMBAC Insured, 6.125%, 11/01/17 .................. 2,995,000 3,199,049
Benicia USD, Series A, AMBAC Insured, 6.85%, 8/01/16 ........................................... 5,900,000 6,545,932
Berkeley COP, AMBAC Insured, 7.50%, 6/01/19 .................................................... 1,270,000 1,312,520
Blythe Financing Authority, Lease Revenue, City Hall and County Courthouse Project,
MBIA Insured, 5.50%, 9/01/27 .................................................................. 3,500,000 3,609,165
Brea Public Finance Authority Revenue, Tax Allocation,
Redevelopment Project, Series A, MBIA Insured,
7.00%, 8/01/15 ................................................................................. 1,520,000 1,681,044
6.75%, 8/01/22 ................................................................................. 1,550,000 1,696,119
7.00%, 8/01/23 ................................................................................. 12,185,000 13,433,353
Buellton USD, Series A, MBIA Insured, 6.375%, 7/01/17 .......................................... 2,155,000 2,343,584
Burbank PCR, Wastewater Treatment, Series A, FGIC Insured, 5.50%, 6/01/25 ...................... 3,000,000 3,079,560
Burbank RDA, Refunding, Tax Allocation, City Center Redevelopment Project,
Series A, FSA Insured, 5.50%, 12/01/23 ........................................................ 2,000,000 2,046,160
Burbank Waste Disposal Revenue, Series B, AMBAC Insured, 6.00%, 5/01/22 ........................ 665,000 694,327
Calaveras County Water District Revenue, Refunding,
COP, Water and Sewer System Improvement Project,
AMBAC Insured, 6.00%, 5/01/16 .................................................................. 3,950,000 4,232,465
Calexico CRDA Revenue, Tax Allocation, Refunding,
Merged Central Business and Residential, FSA Insured, 5.85%, 8/01/15 .......................... 1,795,000 1,891,248
Calexico USD, CFD No. 1, Special Tax, Refunding, AMBAC Insured, 5.60%, 9/01/17 ................. 2,930,000 3,059,916
California Educational Facilities Authority Revenue, MBIA Insured,
Loyola Marymount, 5.75%, 10/01/24 .............................................................. 2,000,000 2,094,560
Refunding, Santa Clara University, 5.75%, 9/01/21 .............................................. 3,350,000 3,543,932
California Educational Facilities Authority Revenue,
Pooled Facilities Program, MBIA Insured,
7.625%, 11/01/12 ............................................................................... 335,000 345,509
7.00%, 03/01/16 ................................................................................ 1,000,000 1,073,330
California Health Facilities Financing Authority Revenue,
Adventist Health Systems West, Series A, MBIA Insured, 7.00%, 3/01/13 .......................... 3,000,000 3,275,640
Adventist Health Systems West, Series B, MBIA Insured, 6.75%, 3/01/14 .......................... 5,065,000 5,485,699
Marin General Hospital, Series A, FSA Insured, 7.00%, 8/01/15 .................................. 4,000,000 4,327,520
Refunding, Catholic Health Facility, Series A, MBIA Insured, 6.00%, 7/01/17 .................... 5,000,000 5,408,350
San Diego Hospital Association, MBIA Insured, 6.625%, 5/01/19 .................................. 11,110,000 11,543,401
San Diego Hospital Association, Series A, MBIA Insured, 6.20%, 8/01/12 ......................... 2,425,000 2,613,180
California Health Facilities Financing Authority Revenue, (cont.)
San Diego Hospital Association, Series A, MBIA Insured, 6.20%, 8/01/20 ......................... $ 4,850,000 $ 5,184,941
Scripps Memorial Hospital, Series A, MBIA Insured, 6.40%, 10/01/12 ............................. 3,500,000 3,815,245
Sharp Temecula Hospital, MBIA Insured, 7.05%, 8/01/21 .......................................... 3,000,000 3,306,990
California HFA Revenue,
Home Mortgage, Series D, MBIA Insured, 6.15%, 8/01/28 .......................................... 5,250,000 5,580,593
Series A, MBIA Insured, 7.15%, 8/01/11 ......................................................... 1,315,000 1,412,691
Series A, MBIA Insured, 8.20%, 2/01/20 ......................................................... 4,100,000 4,228,248
Series A, MBIA Insured, 7.20%, 2/01/26 ......................................................... 3,450,000 3,687,429
Series B, MBIA Insured, 6.80%, 8/01/11 ......................................................... 1,815,000 1,952,414
Series B, MBIA Insured, 8.625%, 8/01/15 ........................................................ 245,000 257,005
Series K, AMBAC Insured, 6.25%, 8/01/27 ........................................................ 5,940,000 6,299,489
California Public Capital Improvement Financing Authority Revenue,
Pooled Projects, Series B, BIG Insured, 8.10%, 3/01/18 ........................................ 9,275,000 9,529,135
California Public School District, Financing Authority Lease Revenue,
Refunding, Southern Kern USD, Series B, FSA Insured, 5.90%, 9/01/26 ........................... 1,850,000 1,987,659
California State Department of Water Resources,
Central Valley Project, Water System Revenue, MBIA Insured,
Refunding, Series L, 5.50%, 12/01/23 ........................................................... 5,000,000 5,096,850
Refunding, Series Q, 5.375%, 12/01/27 .......................................................... 18,500,000 18,781,200
Series J-3, 5.50%, 12/01/22 .................................................................... 2,500,000 2,527,625
California State GO,
AMBAC Insured, 6.30%, 9/01/06 .................................................................. 9,000,000 10,288,530
FGIC Insured, 6.00%, 8/01/19 ................................................................... 2,255,000 2,425,613
FGIC Insured, 6.00%, 5/01/20 ................................................................... 3,500,000 3,758,335
MBIA Insured, 6.00%, 8/01/16 ................................................................... 4,400,000 4,732,904
Various Purposes, MBIA Insured, 6.00%, 10/01/21 ................................................ 1,000,000 1,061,800
California State HFA Revenue, Home Mortgage,
Series L, MBIA Insured, 6.40%, 8/01/27 ......................................................... 8,375,000 9,035,369
California State Loan Purchase Authority Revenue,
Loan Contract, Series A, FSA Insured, Pre-Refunded,
7.75%, 10/01/08 ................................................................................ 2,000,000 2,098,540
7.80%, 10/01/18 ................................................................................ 3,365,000 3,532,005
California State Local Government Finance Authority Revenue,
Marin Valley Mobile Country Club Park
Acquisition, Senior Series A, FSA Insured, 5.80%, 10/01/20 ..................................... 4,275,000 4,559,801
California State University and Colleges, Student Union Revenue, MBIA Insured,
Bakersfield, Series A, 6.30%, 11/01/22 ......................................................... 1,310,000 1,423,839
San Bernardino, Series B, 6.30%, 2/01/22 ....................................................... 2,375,000 2,577,588
California State University, Fresno, Auxiliary Residence Student
Project Revenue, MBIA Insured, 6.25%, 2/01/17 .................................................. 1,500,000 1,640,685
California Statewide Communities Development Authority Revenue,
COP, John Muir/Mt. Diablo Health System, MBIA Insured,
5.125%, 8/15/22 ................................................................................ 5,000,000 4,947,950
5.25%, 8/15/27 ................................................................................. 3,750,000 3,738,600
Cambria Community Services District Revenue, MBIA Insured,
COP, Wastewater Treatment System Upgrade, 6.90%, 11/01/24 ...................................... 1,000,000 1,148,540
Water and Wastewater, Refunding, Series A, 6.00%, 5/01/15 ...................................... 1,330,000 1,434,166
bCampbell COP, Refunding, Civic Center Project, MBIA Insured, 5.25%, 10/01/28 ................... 2,000,000 1,987,740
Campbell Union School District, Series C, FGIC Insured,
5.65%, 8/01/17 ................................................................................. 1,000,000 1,056,530
5.75%, 6/01/22 ................................................................................. 1,000,000 1,065,240
Carpinteria Sanitation District, Capital Facilities Revenue, FGIC Insured, 6.25%, 7/01/14 ...... $ 2,485,000 $ 2,690,808
Central Coast Water Authority Revenue, State Water Project,
Regional Facilities, AMBAC Insured,
Pre-Refunded, 6.50%, 10/01/14 .................................................................. 2,500,000 2,791,200
Pre-Refunded, 6.60%, 10/01/22 .................................................................. 4,650,000 5,211,441
Refunding, Series B, 5.65%, 10/01/11 ........................................................... 595,000 628,516
Refunding, Series B, 5.70%, 10/01/12 ........................................................... 620,000 653,052
Refunding, Series B, 5.80%, 10/01/16 ........................................................... 1,020,000 1,077,834
Refunding, Series B, 5.85%, 10/01/22 ........................................................... 2,800,000 2,958,424
Central School District, San Bernardino County, AMBAC Insured, 5.60%, 5/01/16 .................. 3,035,000 3,135,823
Cerritos Public Financing Authority Revenue, Los Coyotes
Redevelopment Project Loan, Series A, AMBAC Insured, 5.75%, 11/01/22 .......................... 5,000,000 5,243,100
Chico Public Financing Authority Revenue, Southeast Chico
Redevelopment Project, Series A, FGIC Insured, 6.625%, 4/01/21 ................................ 815,000 869,010
Chino Basin Regional Financing Authority Revenue,
Refunding, Municipal Water District, Sewer System Project,
AMBAC Insured, 6.00%, 8/01/16 .................................................................. 2,000,000 2,146,560
Chino COP, RDA, Refunding, Water System Improvement Project,
AMBAC Insured, 6.20%, 9/01/18 .................................................................. 3,590,000 3,892,745
Chula Vista Elementary School District COP, MBIA Insured, 6.60%, 8/01/16 ....................... 2,940,000 3,032,581
Chula Vista Public Finance Authority, Local Agency Revenue,
Series 1995-A, FSA Insured, 6.125%, 9/02/14 .................................................... 3,875,000 4,270,676
Coachella Valley Recreation and Park District, 1915 Act, Refunding,
Reassessment District No. 9, MBIA Insured, 6.20%, 9/02/16 ...................................... 1,500,000 1,636,590
Colton Joint USD, CFD, Special Tax, Refunding, Southridge Village,
Phase III, FSA Insured, 5.90%, 9/01/14 ......................................................... 500,000 502,510
Contra Costa County COP,
Buildings Acquisition Project, AMBAC Insured, 6.70%, 2/01/21 ................................... 1,250,000 1,311,600
Public Facilities Corp., BIG Insured, 7.80%, 6/01/08 ........................................... 1,000,000 1,070,190
Contra Costa Mosquito Abatement District, COP, Refunding,
Public Improvements Project, FSA Insured,
6.25%, 2/01/06 ................................................................................. 2,065,000 2,190,118
Contra Costa Water District, Revenue, Series G, MBIA Insured, 5.50%, 10/01/19 .................. 3,000,000 3,074,970
Covina COP, Housing Revenue, AMBAC Insured, 7.00%, 3/01/17 ..................................... 4,500,000 4,563,540
Cupertino Union School District, Series B, FGIC Insured, 5.60%, 8/01/21 ........................ 16,250,000 16,754,238
Davis Joint USD No. 1, CFD, Special Tax, Refunding, MBIA Insured, 5.50%, 8/15/21 ............... 7,000,000 7,188,790
Delano USD, Series A, FSA Insured, 6.10%, 5/01/17 .............................................. 1,105,000 1,183,422
Dinuba GO, RDA Tax Allocation, Refunding, Redevelopment
Project No. 2, Series A, MBIA Insured, 5.40%, 9/01/27 .......................................... 3,190,000 3,233,831
Dublin-San Ramon Services District, COP, AMBAC Insured, 7.00%, 12/01/20 ........................ 4,155,000 4,573,284
East Bay MUD, Wastewater Treatment System Revenue,
AMBAC Insured, Pre-Refunded, 7.20%, 6/01/20 .................................................... 2,000,000 2,183,900
East Bay MUD, Water System Revenue,
MBIA Insured, Pre-Refunded, 7.50%, 6/01/18 ..................................................... 5,000,000 5,493,800
Refunding, FGIC Insured, 6.00%, 6/01/20 ........................................................ 6,900,000 7,325,385
Refunding, Subordinate Lien, MBIA Insured, 5.00%, 6/01/21 ...................................... 10,000,000 9,717,300
East Side Union High School District, Santa Clara County,
Series D, FGIC Insured, 5.75%, 9/01/17 ......................................................... 1,200,000 1,260,444
Eastern Municipal Water and Sewer District Revenue, COP,
Refunding, Series A, FGIC Insured, 6.30%, 7/01/20 .............................................. 1,400,000 1,488,256
El Cerrito RDA, Tax Allocation, Refunding, Redevelopment Project,
Series A, FSA Insured, 6.80%, 7/01/19.......................................................... 5,960,000 6,466,540
El Dorado County Public Agency Financing Authority Revenue,
Refunding, FGIC Insured,
5.50%, 2/15/16 ................................................................................. 2,250,000 2,322,045
5.50%, 2/15/21 ................................................................................. 3,500,000 3,598,140
Eureka Public Financing Authority Revenue, Tax Allocation,
Eureka Redevelopment Project, FSA Insured,
Pre-Refunded, 7.40%, 11/01/12 .................................................................. 6,900,000 7,240,446
Fairfield Public Financing Authority Revenue, Municipal Park,
ID No. 1, FGIC Insured, 6.30%, 7/01/23 ......................................................... 4,750,000 5,133,278
Farmersville USD, Series A, AMBAC Insured, 5.70%, 7/01/18 ...................................... $ 1,265,000 $ 1,319,711
Fillmore Public Financing Authority Revenue, Refunding,
Central City Redevelopment Project, Series A,
AMBAC Insured, 5.75%, 10/01/16 ................................................................. 2,525,000 2,664,027
Fillmore USD, Series A, FGIC Insured, 5.60%, 7/01/22 ........................................... 5,645,000 5,888,017
Folsom Public Financing Authority Revenue, Refunding, AMBAC Insured,
6.00%, 10/01/08 ................................................................................ 2,000,000 2,158,920
6.00%, 10/01/12 ................................................................................ 1,000,000 1,066,620
6.00%, 10/01/19 ................................................................................ 3,400,000 3,594,106
Fontana RDA, Tax Allocation, Refunding, Southwest Industrial Park Project,
FGIC Insured, 6.125%, 9/01/25 .................................................................. 5,850,000 6,291,617
Fresno COP, City Hall Refinancing Project, AMBAC Insured, 6.25%, 8/01/19 ....................... 1,000,000 1,057,560
Fresno GO USD, FSA Insured,
Series B, 5.875%, 8/01/20 ....................................................................... 4,000,000 4,241,360
Series C, 5.375%, 8/01/21 ...................................................................... 3,455,000 3,513,009
Fresno Water System Revenue, Water Remediation Project,
Series A, FGIC Insured, 5.875%, 6/01/20 ........................................................ 7,140,000 7,534,342
Fruitvale School District, Series B, MBIA Insured, 6.00%, 8/01/20 .............................. 1,780,000 1,887,743
Glendale Hospital Revenue, Refunding, Adventist Health,
Series A, MBIA Insured, 6.75%, 3/01/13 ......................................................... 1,000,000 1,081,520
Glendale RDA, Tax Allocation, Refunding, Central Glendale
Redevelopment Project, AMBAC Insured, 6.00%, 12/01/20 .......................................... 9,775,000 10,445,565
Glendale GO USD, Series A, FGIC Insured, 5.375%, 9/01/22 ....................................... 2,400,000 2,446,680
Hemet USD, COP, Nutrition Center Project, FSA Insured, 5.875%, 4/01/27 ......................... 1,250,000 1,341,038
Hercules COP, Refunding, Capital Improvement Projects,
AMBAC Insured, 6.00%, 6/01/15 .................................................................. 1,000,000 1,071,300
Hesperia Water District COP, Refunding, Water Facilities
Improvement Projects, FGIC Insured, 7.15%, 6/01/26 ............................................. 3,425,000 3,820,793
Imperial Irrigation District COP,
Electric System Project, MBIA Insured, 6.00%, 11/01/15 ......................................... 13,375,000 14,377,590
Water System Project, AMBAC Insured, 5.75%, 7/01/16 ............................................ 5,050,000 5,328,104
Indian Wells GO, RDA Revenue, Refunding, Tax Allocation,
Consolidated Whitewater, MBIA Insured, 5.375%, 12/01/22 ....................................... 1,300,000 1,318,369
Kern County Board of Education COP, Administration Building
Financing Project, MBIA Insured, 6.20%, 2/01/23 ................................................ 8,535,000 8,712,699
Kern County High School District, FSA Insured, ETM,
6.625%, 8/01/14 ................................................................................ 1,535,000 1,821,385
6.625%, 8/01/15 ................................................................................ 1,400,000 1,669,346
King City Joint Union High School District, Series A,
AMBAC Insured, 6.30%, 8/01/19 .................................................................. 3,460,000 3,698,429
La Mirada RDA, Industrial Commercial Redevelopment Project,
Series A, MBIA Insured, 6.60%, 8/15/21 ......................................................... 3,080,000 3,300,836
La Quinta RDA, Tax Allocation, Housing Redevelopment
Project Areas No 1 & 2, MBIA Insured, 6.00%, 9/01/25 ........................................... 6,650,000 7,158,991
Lake Arrowhead Community Services District COP, Refunding, FGIC Insured,
6.125%, 6/01/05 ................................................................................ 7,600,000 8,311,892
6.50%, 6/01/15 ................................................................................. 14,000,000 15,283,520
Lake Elsinore Public Financing Authority Revenue, Tax Allocation,
Lake Elsinore Redevelopment Projects,
FGIC Insured,
Series A, 6.25%, 2/01/19 ....................................................................... 1,255,000 1,315,930
Series C, 6.625%, 2/01/17 ...................................................................... 12,840,000 13,622,726
Lakewood Public Financing Authority, Water Revenue,
FGIC Insured, 5.70%, 4/01/16 ................................................................... 2,485,000 2,595,359
Lakewood RDA, Tax Allocation, Refunding, FSA Insured,
Redevelopment Project No. 1, Series A, 6.50%, 9/01/17 ......................................... 3,000,000 3,285,960
Lancaster RDA, Tax Allocation, Refunding, Lancaster
Redevelopment Project No. 5, MBIA Insured, 6.85%, 2/01/19 ....................................... 11,245,000 12,193,741
Lincoln RDA, Tax Allocation, Local Government Finance
Authority Revenue, AMBAC Insured, 9.00%
8/01/11 ........................................................................................ $ 1,500,000 $ 1,534,995
8/01/12 ........................................................................................ 450,000 460,553
Lincoln USD, CFD No. 1, AMBAC Insured, Pre-Refunded, 6.90%, 9/01/21 ............................ 2,425,000 2,703,584
Lodi COP,
1996 Public Improvement Financing Project, MBIA Insured, 5.90%, 10/01/16 ....................... 3,605,000 3,874,798
Refunding, Wastewater Treatment Project, AMBAC Insured, 6.70%, 8/01/26 ......................... 8,800,000 10,086,912
Loma Linda Hospital Revenue, Loma Linda University Medical
Center Project, Series B, Refunding, AMBAC Insured,
7.00%, 12/01/15 ................................................................................ 1,910,000 2,044,197
Long Beach Harbor Revenue, MBIA Insured,
5.375%, 5/15/20 ................................................................................ 10,000,000 10,054,000
5.25%, 5/15/25 ................................................................................. 18,370,000 18,158,194
Long Beach RDA, Refunding, Downtown Redevelopment Project,
Series A, AMBAC Insured, Pre-Refunded, 7.75%, 11/01/10 ......................................... 2,500,000 2,630,350
Los Angeles County Capital Assets Leasing Corp.,
Leasehold Revenue, Refunding, AMBAC Insured, 6.00%, 12/01/16 .................................. 3,000,000 3,174,930
Los Angeles County COP, Refunding, San Pedro Peninsula
Hospital Project, AMBAC Insured, 6.25%, 5/01/15 ................................................ 5,825,000 6,200,713
Los Angeles County Transport Commission Sales Tax,
Proposition C, Second Senior Series A, Senior Lien, MBIA Insured, 6.00%, 7/01/23 ............... 2,000,000 2,110,740
Series B, FGIC Insured, 6.50%, 7/01/13 ......................................................... 2,740,000 2,967,447
Series B, FGIC Insured, 6.50%, 7/01/15 ......................................................... 5,025,000 5,442,125
Los Angeles CRDA, Tax Allocation, Hollywood Redevelopment Project,
Series B, MBIA Insured, 6.10%, 7/01/22 ......................................................... 3,200,000 3,412,448
Los Angeles Department of Water and Power, Electric Plant Revenue,
FGIC Insured, 6.125%, 1/15/33 .................................................................. 17,215,000 18,382,005
MBIA Insured, 6.00%, 8/15/32 ................................................................... 2,000,000 2,122,500
Refunding, FGIC Insured, 6.00%, 2/01/28 ........................................................ 3,500,000 3,699,150
Los Angeles Department of Water and Power, Waterworks Revenue,
Second Issue, FGIC Insured, 6.40%, 11/01/31 .................................................... 6,875,000 7,434,075
Los Angeles Harbor Department Revenue, Series B,
AMBAC Insured, 6.60%, 8/01/14 .................................................................. 3,790,000 4,145,805
AMBAC Insured, 6.60%, 8/01/15 .................................................................. 2,000,000 2,187,760
MBIA Insured, 6.20%, 8/01/25 ................................................................... 2,500,000 2,716,000
Los Angeles Mortgage Revenue, Refunding, MBIA Insured,
Series I, 6.50%, 7/01/22 ........................................................................ 2,000,000 2,196,300
Los Angeles Wastewater System Revenue,
Refunding, Series A, FGIC Insured, 6.00%, 12/01/18 ............................................. 12,100,000 12,816,078
Series B, AMBAC Insured, 6.00%, 6/01/22 ........................................................ 3,250,000 3,436,940
Lucia Mar GO USD, Series A, FGIC Insured, 5.40%, 8/01/22 ....................................... 5,290,000 5,403,947
Lynwood Public Financing Authority Revenue, Series A,
AMBAC Insured, 5.75%, 9/01/18 .................................................................. 4,000,000 4,178,160
Marysville Hospital Revenue, Fremont Rideout Health Group,
AMBAC Insured, 6.30%, 1/01/22 .................................................................. 4,500,000 4,869,225
Menlo Park CDA, Tax Allocation, Las Pulgas Community
Development Project, Refunding, AMBAC Insured,
5.375%, 6/01/22 ................................................................................ 11,675,000 11,893,323
Mesa Construction Water District COP, Water Project,
FGIC Insured, 6.40%, 3/15/18 ................................................................... 5,600,000 6,063,456
Metropolitan Water District, Southern California Waterworks Revenue,
Series A, MBIA Insured, 5.50%, 7/01/25 ......................................................... 8,750,000 8,997,275
Modesto COP, Water System Improvement Project,
AMBAC Insured, 6.25%, 10/01/22 .................................................................. 5,000,000 5,463,550
Modesto Health Facilities Revenue, Memorial Hospital Association,
MBIA Insured, Refunding, Series A, 6.00%, 6/01/18 .............................................. 5,565,000 5,926,725
Series 1991, 6.875%, 6/01/21 ................................................................... 1,500,000 1,662,060
Modesto Irrigation District COP, Refunding and
Capital Improvement Projects, Series A, MBIA Insured,
6.00%, 10/01/21 ................................................................................ $ 3,000,000 $ 3,117,360
Modesto Irrigation District, Financing Authority Revenue,
Domestic Water Project, AMBAC Insured,
Series A, 6.125%, 9/01/19 ...................................................................... 2,000,000 2,129,160
Series C, 5.75%, 9/01/22 ....................................................................... 2,500,000 2,634,150
Modesto Wastewater Treatment Facility Revenue,
MBIA Insured, 5.75%, 11/01/22 .................................................................. 14,375,000 15,244,831
Montclair RDA, Tax Allocation, Refunding,
Redevelopment Project, Area No. 3, AMBAC Insured,
5.40%, 12/01/17 ................................................................................ 4,380,000 4,465,454
5.50%, 12/01/27 ................................................................................ 8,870,000 9,125,722
Montebello Community RDA, Tax Allocation
Housing, Series A, FSA Insured, 5.45%, 9/01/19 ................................................. 1,100,000 1,124,684
Refunding, Montebello Hills Redevelopment Project,
MBIA Insured, 5.60%, 3/01/19 .................................................................... 2,460,000 2,550,700
Montebello USD, COP, Series B, MBIA Insured, 7.25%, 6/01/10 .................................... 720,000 784,411
Monterey County COP, Refunding, Sheriff's Facilities Project,
FSA, Insured, 5.25%, 12/01/17 .................................................................. 3,215,000 3,229,275
Moreno Valley Public Finance Authority, Lease Revenue,
AMBAC Insured, 5.50%, 11/01/22 ................................................................. 1,285,000 1,319,759
Moulton Niguel Water District,
AMBAC Insured, Pre-Refunded, 7.25%, 4/01/16 .................................................... 1,420,000 1,545,883
Refunding, Consolidated Improvement Districts,
MBIA Insured, 5.25%, 9/01/13 ................................................................... 4,180,000 4,224,266
Mountain View COP, Improvement Financing Authority Revenue,
City Hall/Community Theatre, MBIA Insured, 6.50%, 8/01/16 ..................................... 1,500,000 1,621,365
Mountain View School District, Refunding, CFD, Special Tax,
Series A, FSA Insured, 7.25%, 10/01/11 ......................................................... 2,535,000 2,718,965
Mt. Diablo USD, CFD No. 1, Special Tax,
AMBAC Insured, 6.25%, 8/01/14 .................................................................. 500,000 539,815
FSA Insured, 6.00%, 8/01/24 .................................................................... 1,000,000 1,076,060
Refunding, AMBAC Insured, 5.75%, 8/01/15 ....................................................... 1,000,000 1,057,220
Refunding, AMBAC Insured, 5.75%, 8/01/16 ....................................................... 2,270,000 2,391,059
Refunding, AMBAC Insured, 5.375%, 8/01/19 ...................................................... 7,290,000 7,417,867
Murrieta Water, Public Financing Authority, Special Tax Revenue,
Refunding, Senior Lien, Series A, FSA Insured,
5.60%, 10/01/15 ................................................................................ 1,235,000 1,281,313
5.70%, 10/01/21 ................................................................................ 2,630,000 2,739,092
National City Joint Powers Authority, Lease Revenue,
National City Police Facilities Project, AMBAC Insured, 6.75%,10/01/17 ....................... 2,000,000 2,194,840
Natomas GO USD, Refunding, FGIC Insured, 5.20%, 9/01/19 ........................................ 5,000,000 5,013,450
Nevada Irrigation District Revenue COP, Cascade Bench Flume Project,
MBIA Insured, 5.50%, 1/01/17 ................................................................... 4,600,000 4,757,136
North City West School Facilities, Financing Authority,
Special Tax, Refunding, Series B, FSA Insured,
5.75%, 9/01/15 ................................................................................. 1,260,000 1,338,284
6.00%, 9/01/19 ................................................................................. 2,500,000 2,706,475
Northern California Power Agency Revenue, Multiple Capital Facilities,
Series A, MBIA Insured, 6.50%, 8/01/12......................................................... 5,000,000 5,503,350
Northern California Power Agency Revenue, Refunding,
Public Power Hydroelectric Project No. 1,
AMBAC Insured, Pre-Refunded, 7.50%, 7/01/23 .................................................... 3,200,000 4,188,288
Series A, MBIA Insured, 5.50%, 7/01/23 ......................................................... 4,000,000 4,049,000
Northern California Transmission Revenue, California/Oregon Transmission Project,
Series A, MBIA Insured,
6.25%, 5/01/10 ................................................................................. 2,500,000 2,705,925
6.50%, 5/01/16 ................................................................................. 4,000,000 4,386,480
5.25%, 5/01/20 ................................................................................. 31,400,000 31,435,168
6.00%, 5/01/24 ................................................................................. 18,335,000 19,153,474
Pre-Refunded, 7.00%, 5/01/10 ................................................................... 4,000,000 4,324,200
Norwalk Community Facilities Financing Authority, Lease Revenue, MBIA Insured, 6.90%, 2/01/21 .. $ 5,810,000 $ 6,213,388
Oakland Special Revenue, Refunding, Series A, FGIC Insured, 7.60%, 8/01/21 ..................... 4,000,000 4,162,960
Oceanside Community COP,
Community Development, Public Parking Project, FSA Insured, Pre-Refunded, 7.875%, 4/01/19 ...... 3,940,000 4,775,438
Corporation Yard Project, AMBAC Insured, Pre-Refunded, 7.30%, 8/01/21 .......................... 4,715,000 5,405,370
Refunding, Civic Center Project, MBIA Insured, 5.75%, 8/01/15 .................................. 1,000,000 1,057,220
Water Use Finance Association of California, Series A, AMBAC Insured, 6.50%, 10/01/17 .......... 5,000,000 5,493,800
Ontario Redevelopment Financing Authority Revenue,
Ontario Redevelopment Project No. 1, MBIA Insured, ETM,
5.80%, 8/01/23 ................................................................................. 10,000,000 10,453,700
Orange County CFD No. 8, Special Tax, Rancho Santa Margarita, Series A, FSA Insured,
7.30%, 8/15/09 ................................................................................. 5,000,000 5,344,000
Pre-Refunded, 7.625%, 7/01/18 .................................................................. 10,000,000 10,391,100
Orange County COP, Juvenile Justice Center Facilities, AMBAC Insured,
6.375%, 6/01/11 ................................................................................ 4,770,000 5,122,408
6.00%, 6/01/17 ................................................................................. 5,000,000 5,287,600
Orange County Financing Authority Revenue, Tax Allocation,
Refunding, Series A, MBIA Insured, 6.50%, 9/01/22 .............................................. 3,500,000 3,800,020
Oroville Public Finance Authority, Tax Allocation Revenue,
Oroville Redevelopment Project No. 1, AMBAC Insured,
5.90%, 9/15/21 ................................................................................. 1,245,000 1,331,117
6.10%, 9/15/23 ................................................................................. 2,890,000 3,141,806
Oxnard Financing Authority, Solid Waste Revenue, AMBAC Insured, 6.00%, 5/01/16 ................. 5,000,000 5,353,050
Oxnard Financing Authority Wastewater Revenue, FGIC Insured, 5.50%, 6/01/14 .................... 2,800,000 2,860,088
Oxnard Public Facilities Corp. COP, AMBAC Insured, Pre-Refunded, 7.50%, 9/01/06 ................ 3,040,000 3,213,280
Oxnard Union High School District, Series B, FSA Insured, 5.875%, 8/01/27 ...................... 3,615,000 3,853,084
Pajaro Valley USD, COP, School Facilities Bridge Funding Program, FSA Insured, 5.75%, 9/01/17 .. 1,250,000 1,327,400
Palm Desert Financing Authority Tax Allocation Revenue,
Project Area No. 2, Series A, MBIA Insured,
5.95%, 8/01/24 ................................................................................. 2,490,000 2,660,241
5.85%, 8/01/25 ................................................................................. 1,380,000 1,458,605
Palm Springs USD,
Series C, MBIA Insured, 6.125%, 2/01/20 ........................................................ 500,000 537,340
Series D, FGIC Insured, 5.90%, 2/01/21 ......................................................... 1,000,000 1,062,520
Paramount USD, COP, Master Lease Program, FSA Insured, 6.30%, 9/01/26 .......................... 4,750,000 5,238,538
Parlier USD, Series B, AMBAC Insured, 6.00%, 6/01/16 ........................................... 1,130,000 1,225,496
Petaluma COP, Refunding, Series A, AMBAC Insured, 5.625%, 8/01/13 .............................. 1,000,000 1,045,990
Pico Rivera Public Financing Authority Revenue, Refunding,
Water Enterprise Project, Series A, FGIC Insured, 6.00%, 12/01/17 ............................. 8,000,000 8,508,720
Pinole RDA, Tax Allocation, Pinole Vista Redevelopment Project,
Series A, MBIA Insured, 6.125%, 8/01/17 ........................................................ 1,000,000 1,061,870
Placer County COP, MBIA Insured,
Administrative and Emergency Services, 5.65%, 6/01/24 .......................................... 4,000,000 4,174,120
Jail Kitchen Project, 6.90%, 10/01/21 .......................................................... 3,745,000 4,272,745
Placer County Water Agency Revenue COP, FSA Insured, 5.90%, 7/01/25 ............................ 2,350,000 2,500,870
Pleasant Hill RDA, Tax Allocation, Refunding,
Pleasant Hill Commons Project, FSA Insured, 6.90%, 7/01/21 ..................................... 5,500,000 6,036,250
Pleasant Valley School District, Ventura County COP,
Refunding, Tierra Linda School, MBIA Insured, 5.70%,8/01/18 ................................... 1,400,000 1,421,938
Pleasanton GO USD, Series A, MBIA Insured, 5.50%, 8/01/21 ...................................... 1,000,000 1,021,670
Port Hueneme RDA, Tax Allocation, Refunding, Central Community
Redevelopment Project, AMBAC Insured, 5.50%, 5/01/23 .......................................... 2,000,000 2,043,300
Porterville COP, Refunding, AMBAC Insured,
Sewer System and Improvement Project, 6.30%, 10/01/18 .......................................... $ 4,935,000 $ 5,358,719
Sewer System Project, 6.30%, 10/01/18 .......................................................... 6,075,000 6,596,600
Sewer System Refining Project, 5.25%, 10/01/23 ................................................. 5,000,000 4,985,550
Ramona Municipal Water District COP, Refunding, AMBAC Insured, 7.20%, 10/01/10 ................. 3,000,000 3,287,700
Redding Electric System Revenue, Refunding, COP, Series A, FGIC Insured, 5.50%, 6/01/11 ........ 5,000,000 5,215,650
Redding Joint Powers Financing Authority, Lease Revenue,
Civic Center Project, Series A, MBIA Insured,
5.75%, 3/01/19 ................................................................................. 3,090,000 3,262,422
5.25%, 3/01/26 ................................................................................. 2,075,000 2,078,071
Redding Joint Powers Financing Authority, Water Revenue,
Series A, AMBAC Insured, 5.60%, 6/15/13 ........................................................ 3,230,000 3,380,034
Redding RDA, Tax Allocation, Hilltop Cypress Redevelopment,
Series C, FSA Insured, 6.00%, 9/01/22 .......................................................... 2,120,000 2,254,641
Redlands USD, Series B, FSA Insured, 6.25%, 6/01/19 ............................................ 2,115,000 2,297,821
Redwood City Public Financing Authority Revenue, Local Agency,
Series A, AMBAC Insured, 6.50%, 7/15/11........................................................ 2,745,000 2,978,380
Riverside County COP, Historic Courthouse, MBIA Insured, 5.875%, 11/01/27 ...................... 3,000,000 3,220,770
Riverside County Public Financing Authority, Lease Revenue,
AMBAC Insured, 5.375%, 10/01/22 ................................................................ 1,590,000 1,608,492
Riverside RDA, Series A,
Lease Revenue, AMBAC Insured, 6.375%, 10/01/23 ................................................. 12,540,000 13,892,314
Lease Revenue, AMBAC Insured, 6.50%, 10/01/24 .................................................. 2,000,000 2,229,940
Refunding, Tax Allocation, Merged Redevelopment Project, MBIA Insured, 5.625%, 8/01/23 ......... 2,200,000 2,258,740
Rubidoux Community Service District COP, Water System
Improvement Project, AMBAC Insured, 6.20%, 12/01/14 ............................................ 2,510,000 2,719,886
Sacramento Area Flood Control Agency, FGIC Insured,
Capital AD No. 2, 5.80%, 11/01/16 .............................................................. 1,000,000 1,067,000
Capital AD No. 2, 5.375%, 10/01/25 ............................................................. 3,675,000 3,726,119
Operation & Maintenance, 5.80%, 11/01/16 ....................................................... 1,475,000 1,573,825
Operation & Maintenance, 5.90%, 11/01/25 ....................................................... 2,690,000 2,892,530
Sacramento County Airport System Revenue, Series A, MBIA Insured, 6.00%, 7/01/17 ............... 5,920,000 6,353,522
Sacramento County COP, Public Facilities Project, MBIA Insured, 5.375%, 2/01/19 ................ 1,350,000 1,374,179
Sacramento MUD, Electric Revenue,
Refunding, Senior Lien, Series A, MBIA Insured, 5.75%, 8/15/13 ................................. 1,425,000 1,477,896
Series E, MBIA Insured, 5.75%, 5/15/22 ......................................................... 4,250,000 4,420,043
Series I, MBIA Insured, 6.00%, 1/01/24 ......................................................... 4,000,000 4,263,400
Series J, AMBAC Insured, 5.50%, 8/15/21 ........................................................ 8,485,000 8,731,829
Sacramento RDA, Tax Allocation, Merged Downtown Redevelopment Project,
Series A, MBIA Insured, 6.50%, 11/01/13 ....................................................... 2,000,000 2,148,760
Saddleback Community College District COP, 1996 Capital Improvement
Financing Project, MBIA Insured, 5.50%, 6/01/15 ................................................ 3,200,000 3,317,856
Saddleback Valley USD, Public Financing Authority, Special Tax Revenue,
Refunding, Series A, FSA Insured, 5.65%,9/01/17 ............................................... 3,500,000 3,634,225
Salida Area Public Facilities Financing Agency, CFD, Special Tax,
Refunding, No. 1988-1, FSA Insured, 5.25%, 9/01/28 ............................................ 5,000,000 4,976,950
Salinas RDA, Tax Allocation, Central City Revitalization Project,
Series A, FSA Insured, 5.50%, 11/01/23 ......................................................... 2,000,000 2,059,020
San Bernardino County COP, 1997 Public Improvement Financing Project,
MBIA Insured, 5.25%, 10/01/25 .................................................................. 7,000,000 7,017,640
San Bernardino County Mortgage Revenue, Refunding,
Don Miguel Apartments Project, MBIA Insured, 6.40%, 3/01/25 ................................... 5,680,000 6,012,450
San Bernardino Joint Powers Financing Authority Revenue,
Tax Allocation, Refunding,
Northwest Redevelopment Project, Series E, MBIA Insured,
Pre-Refunded, 7.375%, 1/01/15 .................................................................. 1,965,000 2,131,455
Series A, FSA Insured, 5.75%, 10/01/25 ......................................................... 1,950,000 2,047,656
San Bernardino Joint Powers Financing Authority Revenue,
Tax Allocation, Refunding, (cont.)
Southeast Industrial Park, Series F, MBIA Insured, Pre-Refunded, 7.375%, 3/01/14 ............... $ 3,515,000 $ 3,830,823
State College Project No. 4, AMBAC Insured, Pre-Refunded, 7.20%, 9/01/08 ....................... 4,265,000 4,571,440
San Bernardino Municipal Water and Sewer Department, COP, FGIC Insured, 6.25%, 2/01/17 ......... 5,750,000 6,103,165
San Bernardino RDA, Capital Appreciation, Series B, AMBAC Insured, 7.70%, 1/10/09 .............. 2,382,000 4,388,454
San Buenaventura COP, Water Project, AMBAC Insured, Pre-Refunded, 7.50%, 10/01/20 .............. 2,000,000 2,218,180
San Buenaventura Public Facilities, Financing Authority Lease
Revenue, Refunding, FSA Insured, 5.75%, 6/01/14 ................................................ 2,250,000 2,385,630
San Carlos RDA, Tax Allocation, Refunding, San Carlos
Redevelopment Project, Series A, MBIA Insured, 5.50%, 9/01/26 ................................. 1,785,000 1,837,068
San Diego Community College District COP, Series 1991, MBIA Insured, 6.50%, 12/01/12 ........... 2,000,000 2,179,740
San Diego IDR, San Diego Gas & Electric,
Custodial Receipts, Series A, AMBAC Insured, 6.40%, 9/01/18 .................................... 1,650,000 1,800,431
San Diego Mortgage Revenue, Refunding, University
Canyon North, Series A, MBIA Insured,
5.125%, 7/01/03 ................................................................................ 245,000 251,889
5.75%, 7/01/25 ................................................................................. 3,105,000 3,207,807
San Francisco BART District, Sales Tax Revenue, FGIC Insured,
6.60%, 7/01/12 ................................................................................. 2,580,000 2,815,554
5.50%, 7/01/15 ................................................................................. 2,000,000 2,069,840
5.50%, 7/01/20 ................................................................................. 10,000,000 10,244,900
San Francisco City and County Airports Commission,
International Airport Revenue, Second Series, FGIC Insured,
Issue 5, 6.50%, 5/01/24 ........................................................................ 6,900,000 7,598,763
Issue 8A, 6.25%, 5/01/20 ....................................................................... 3,500,000 3,761,835
Issue 9B, 6.00%, 5/01/25 ....................................................................... 6,400,000 6,835,136
Issue 11, 6.00%, 5/01/11 ....................................................................... 2,105,000 2,260,581
San Francisco City and County Sewer Revenue, Refunding,
AMBAC Insured, 6.00%, 10/01/11 ................................................................. 2,000,000 2,150,020
San Gabriel USD, COP, School Facilities Development Program,
Series A, FSA Insured, 6.00%, 9/01/15 .......................................................... 1,000,000 1,080,520
San Jacinto USD, COP, Refunding Project, AMBAC Insured,
6.50%, 10/01/23 ................................................................................ 3,000,000 3,282,810
San Joaquin Hills Transportation Corridor Agency, Toll Road Revenue,
Refunding, Series A, MBIA Insured,
5.375%, 1/15/29 ................................................................................ 8,500,000 8,559,585
5.25%, 1/15/30 ................................................................................. 5,000,000 4,992,200
San Jose Financing Authority Revenue, Convention Project,
Series C, FSA Insured, 6.40%, 9/01/17 .......................................................... 8,740,000 9,398,559
San Jose-Santa Clara Water Financing Authority, Sewer Revenue,
Series A, FGIC Insured, 5.375%, 11/15/20 ....................................................... 1,500,000 1,519,935
San Luis Water Districts Revenue COP, Refunding & Capital Improvement Project,
AMBAC Insured, 5.50%, 11/01/16 ................................................................ 1,260,000 1,302,462
San Marcos Public Facilities Authority Revenue, Tax Allocation,
Refunding, Series A, FSA Insured, 5.50%, 08/01/23 .............................................. 10,495,000 10,695,979
San Mateo County Joint Powers Financing Authority, Lease Revenue,
San Mateo County Health Care Center,
Series A, FSA Insured, 5.75%, 7/15/22 .......................................................... 2,750,000 2,874,218
San Mateo County Transit District Revenue, Sales Tax, Series A, MBIA Insured,
6.70%, 6/01/10 ................................................................................. 4,100,000 4,224,312
6.50%, 6/01/20 ................................................................................. 6,700,000 6,897,851
San Ramon COP,
Central Park Expansion Project, FSA Insured, Pre-Refunded, 7.20%, 2/01/25 ...................... 5,110,000 6,059,694
Refunding, Capital Improvement Project, AMBAC Insured, 7.05%, 3/01/21 .......................... 12,070,000 13,234,031
Sanger Public Financing Authority Revenue, Utility System Financing,
Series A, AMBAC Insured, 5.70%, 1/01/22 ........................................................ 5,935,000 6,215,607
Sanger USD, Series A, FSA Insured, 5.60%, 8/01/14 .............................................. 1,000,000 1,037,380
Santa Ana COP, Refunding, Parking Facilities Project,
Series A, AMBAC Insured, 6.125%, 6/01/16 ....................................................... 3,250,000 3,496,480
Santa Ana Financing Authority Water Revenue, MBIA Insured, 6.125%, 9/01/24 ..................... 1,000,000 1,078,070
Santa Ana HMR, Series A, FGIC Insured, 8.875%, 6/01/17 ......................................... 5,000 5,445
Santa Barbara COP, Refunding, AMBAC Insured,
Municipal Improvement Program, 6.15%, 8/01/17 .................................................. $ 3,575,000 $ 3,822,247
Water System Improvement Project, 6.70%, 4/01/27 ............................................... 6,500,000 7,155,655
Santa Clara County COP, Board of Education Partners,
Administration Building Project, Series A, MBIA Insured,
6.00%, 4/01/25 ................................................................................. 1,555,000 1,654,116
Santa Clara County COP, Refunding, Capital Project I, AMBAC Insured, 6.25%, 10/01/16 ........... 4,500,000 4,799,115
Santa Clara County Transit District, Sales Tax Revenue,
Series A, AMBAC Insured, 6.25%, 6/01/21 ........................................................ 1,000,000 1,062,450
Santa Clara Electric Revenue, Series A, MBIA Insured,
6.50%, 7/01/21 ................................................................................. 1,350,000 1,459,782
5.75%, 7/01/24 ................................................................................. 1,500,000 1,536,045
Santa Clara RDA, Tax Allocation, Refunding, Bayshore North Project,
AMBAC Insured, 7.50%, 6/01/08 .................................................................. 900,000 920,979
Santa Cruz County COP, Sub-Joint Wastewater Treatment Project,
AMBAC Insured, 6.20%, 9/01/19 .................................................................. 2,675,000 2,900,931
Santa Fe Springs RDA, Tax Allocation, Redevelopment Project,
Series A, MBIA Insured, 6.40%, 9/01/22 ......................................................... 11,830,000 13,013,237
Santa Fe Springs, Series A,
Public Financing Authority, Water Revenue, MBIA Insured, 5.90%, 5/01/21 ........................ 900,000 961,605
Public Financing Authority, Water Revenue, MBIA Insured, 5.90%, 5/01/26 ........................ 1,190,000 1,271,456
RDA Revenue, Tax Allocation, AMBAC Insured, Pre-Refunded, 7.25%, 8/01/14 ....................... 2,750,000 2,940,575
Santa Margarita/Dana Point Authority Revenue, Refunding, ID 3, 3A, 4 and 4A,
Series B, MBIA Insured, 5.75%,
8/01/20 ........................................................................................ 39,500,000 41,290,535
Santa Maria COP, Local Water System, Refunding, FGIC Insured, 5.50%, 8/01/13 ................... 3,675,000 3,789,109
Santa Monica Community College District, Series B,
AMBAC Insured, 5.75%, 7/01/20 .................................................................. 2,495,000 2,627,235
Santa Rosa High School District,
FGIC Insured, 5.90%, 5/01/16 ................................................................... 1,000,000 1,064,060
FGIC Insured, 5.50%, 5/01/20 ................................................................... 4,450,000 4,563,742
Refunding, FSA Insured, 5.75%, 5/01/18 ......................................................... 1,050,000 1,102,973
Santa Rosa Wastewater Service Facilities District, Refunding & Improvement,
AMBAC Insured, 6.00%, 7/02/15 .................................................................. 2,000,000 2,271,620
Santa Rosa Water Revenue, Series A,
FGIC Insured, Pre-Refunded, 7.00%, 9/01/16 ..................................................... 2,500,000 2,669,600
Subregional Wastewater Project, AMBAC Insured, Pre-Refunded, 6.50%, 9/01/16 .................... 2,000,000 2,163,160
Scotts Valley GO USD, Series B, FGIC Insured,
5.40%, 8/01/22 ................................................................................. 4,005,000 4,064,594
5.50%, 8/01/27 ................................................................................. 6,720,000 6,895,661
Sebastopol GO CDA, Refunding, Tax Allocation, Community
Development Project, MBIA Insured, 5.25%, 12/01/21 ............................................. 2,250,000 2,255,805
Selma Public Financing Authority Revenue, Series A, MBIA Insured,
5.80%, 9/15/11 ................................................................................. 145,000 148,608
5.80%, 9/15/12 ................................................................................. 125,000 127,984
5.875%, 9/15/22 ................................................................................ 2,400,000 2,455,704
Sequoia Union High School District, FSA Insured, 5.70%, 7/01/24 ................................ 4,885,000 5,121,923
Simi Valley Public Financing Authority Revenue, Refunding,
MBIA Insured, 5.75%, 9/01/23 ................................................................... 5,000,000 5,183,850
Sonoma CDA, COP, Refunding, Sonoma Creek Senior Housing Project,
AMBAC Insured, 6.75%, 2/01/13 ................................................................... 1,325,000 1,410,383
Sonoma Valley USD, FSA Insured, 6.00%, 7/15/21 ................................................. 2,400,000 2,598,000
South Coast Air Quality Management District Revenue,
Refunding, Building Corp., MBIA Insured, 5.50%, 8/01/14 ........................................ 9,700,000 9,973,734
South Orange County Public Financing Authority Revenue,
Refunding, Special Tax, Senior Lien, Series A, MBIA Insured,
6.20%, 9/01/13 ................................................................................. 13,500,000 14,743,890
6.00%, 9/01/18 ................................................................................. 3,250,000 3,467,068
Southern California Public Power Authority, Power Project Revenue,
San Juan Unit 3, Series A, MBIA Insured, 5.00%, 1/01/20 ....................................... $ 2,500,000 $ 2,428,550
Southern California Public Power Authority Revenue, MBIA Insured,
Sub-Crossover Refunding, Southern
Transmission Project, Subordinated Lien, 5.50%, 7/01/20 ........................................ 3,820,000 3,874,435
Southgate Public Financing Authority Revenue, Tax Allocation,
Southgate Redevelopment Project No. 1,
AMBAC Insured, 5.875%, 9/01/24 ................................................................. 5,000,000 5,262,000
Stockton COP, AMBAC Insured,
Refunding, Wastewater System Project, 5.75%, 9/01/23 ........................................... 6,500,000 6,773,130
Wastewater Facility, Pre-Refunded, 7.40%, 9/01/10 .............................................. 1,000,000 1,034,000
Stockton Port District, Port Facilities Revenue, Refunding & Improvement,
Series B, FSA Insured, 5.90%, 7/01/12 .......................................................... 4,300,000 4,658,491
Suisun City RDA, Tax Allocation, Refunding, Suisun City Redevelopment Project,
MBIA Insured, 5.625%, 10/01/13 ................................................................. 4,260,000 4,449,272
Sulphur Springs USD, COP, Series 1991, AMBAC Insured, 7.20%, 2/01/21 ........................... 800,000 882,936
Sunnyvale RDA, Parking Revenue, Refunding, AMBAC Insured, 6.50%, 10/01/22 ...................... 5,485,000 5,869,882
Sunnyvale RDA, Tax Allocation, Refunding,
Central Core Project, AMBAC Insured, 6.50%, 10/01/22 ........................................... 2,785,000 2,980,423
Susanville Public Financing Authority Revenue, Series A, AMBAC Insured, 6.30%, 9/01/17 ......... 4,000,000 4,255,160
Taft COP, Sewer Facilities Improvement Project,
FSA Insured, Pre-Refunded, 7.25%, 8/01/15 ...................................................... 1,335,000 1,388,333
Tahoe-Truckee Joint USD, FGIC Insured,
Series A, 6.00%, 9/01/17 ....................................................................... 5,000,000 5,357,200
Series B, 5.95%, 9/01/20 ....................................................................... 3,620,000 3,916,623
Tehachapi Water and Sewer Revenue, Refunding,
MBIA Insured, 6.75%, 11/01/20 .................................................................. 2,000,000 2,273,360
Thousand Oaks RDA, Tax Allocation, Refunding,
Thousand Oaks Blvd. Redevelopment, MBIA Insured,
5.375%, 12/01/25 ............................................................................... 3,390,000 2,423,771
Tracy CFD, Special Tax, Refunding, Senior Series A, FSA Insured, 5.70%, 9/01/20 ................ 5,480,000 5,616,507
Travis USD, COP, Refunding & Capital Improvement Projects, AMBAC Insured,
5.40%, 9/01/19 ................................................................................. 1,075,000 1,100,682
5.45%, 9/01/27 ................................................................................. 6,115,000 6,260,659
Tri-City Hospital District Revenue, MBIA Insured,
6.00%, 2/01/22 ................................................................................. 2,350,000 2,440,710
Refunding, Series A, 5.625%, 2/15/17 ........................................................... 2,750,000 2,864,950
Tulare Sewer Revenue, Refunding, AMBAC Insured, 5.70%, 11/15/18 ................................ 1,500,000 1,558,544
Turlock Auxiliary Organization Revenue COP, California State University,
Stanislaus Foundation, MBIA Insured, 5.875%, 6/01/22 .......................................... 2,000,000 2,133,800
Turlock Irrigation District Revenue, Refunding, Series A,
MBIA Insured, 5.75%, 1/01/18 ................................................................... 7,125,000 7,369,030
Union City CRDA, Tax Allocation Revenue, Community
Redevelopment Project, AMBAC Insured, 5.75%, 10/01/22 .......................................... 6,200,000 6,458,415
Upland COP,
Refunding, Police Building Project, AMBAC Insured, 6.60%, 8/01/16 .............................. 3,985,000 4,367,718
Water System Improvement Project, FGIC Insured, 6.60%, 8/01/16 ................................. 2,385,000 2,619,254
Vacaville Public Financing Authority Revenue, Tax Allocation,
Refunding, Vacaville Redevelopment Project,
MBIA Insured, 6.35%, 9/01/22 ................................................................... 1,355,000 1,434,348
Vallejo Revenue, Water Improvement Project, Refunding,
Series A, FSA Insured, 5.875%, 5/01/26 ......................................................... 12,500,000 13,382,750
Walnut Valley Water District COP, Badillo Grand Transmission Project,
FGIC Insured, 6.125%, 2/01/18 .................................................................. 2,200,000 2,327,335
Watsonville Solid Waste Revenue, MBIA Insured, 6.50%, 5/15/16 .................................. 1,800,000 1,910,303
Waugh School District, Special Tax, Corona/Ely CFD No. 1,
AMBAC Insured, 5.80%, 9/01/26 ................................................................... 5,640,000 5,920,025
West and Central Basin Financing Authority, California Revenue,
Refunding, Central Basin Project, Series A,
AMBAC Insured,
5.375%, 8/01/17 ................................................................................ 4,330,000 4,417,725
5.125%, 8/01/22 ................................................................................ 5,500,000 5,457,980
West Basin Municipal Water District Revenue COP, Refunding,
1992 Project, Series A, AMBAC Insured,
5.50%, 8/01/17 ................................................................................. $ 3,370,000 $ 3,489,533
5.50%, 8/01/22 ................................................................................. 2,750,000 2,835,414
West Sacramento Financing Authority Revenue,
MBIA Insured, 6.25%, 9/01/16 ................................................................... 4,185,000 4,602,913
Water System Improvement Project, FGIC Insured, 5.50%, 8/01/15 ................................. 4,500,000 4,614,344
Water System Improvement Project, FGIC Insured, 5.50%, 8/01/24 ................................. 1,685,000 1,718,380
West Sacramento RDA, Tax Allocation, West Sacramento
Redevelopment Project, MBIA Insured, 6.25%, 9/01/21 ............................................ 3,340,000 3,563,378
William S. Hart Joint School Authority, Special Tax Revenue,
Refunding, CFD, FSA Insured, 6.60%, 9/01/18 .................................................... 1,285,000 1,441,525
Windsor Joint Powers Financing Authority, Wastewater Revenue,
Refunding, Series A, AMBAC Insured,
6.125%, 12/15/12 ............................................................................... 750,000 819,307
Yuba City USD, COP, Refunding, Series A, MBIA Insured, 5.25%, 2/01/22 .......................... 2,000,000 2,004,200
Yucaipa-Sweetwater School Facilities Financing Authority,
Special Tax Revenue, Sweetwater-Ranch Del Rey Middle
School, Series A, MBIA Insured, 5.70%, 9/01/19 ................................................. 5,000,000 5,174,900
-------------
Total Bonds (Cost $1,571,000,475) .............................................................. 1,682,477,599
-------------
Zero Coupon Bonds .4%
San Bernardino County SFMR, Series A, GNMA Secured,
ETM, 05/01/22 (Cost $5,141,563)................................................................. 28,405,000 7,591,520
-------------
Total Long Term Investments (Cost $1,576,142,038) .............................................. 1,690,069,119
-------------
aShort Term Investments .7%
California PCFA Revenue, Refunding, Daily VRDN and Put,
Pacific Gas and Electric Co., Series C, 4.75%, 11/01/26 ........................................ 1,800,000 1,800,000
Shell Oil Co. Project, Series A, 4.90%, 10/01/06 ............................................... 500,000 500,000
Shell Oil Co. Project, Series A, 4.90%, 10/01/08 ............................................... 1,800,000 1,800,000
Shell Oil Co. Project, Series A, 4.90%, 10/01/09 ............................................... 200,000 200,000
Irvine Ranch Water District,
Consolidated ID GO, Daily VRDN and Put, 4.85%, 6/01/15 ......................................... 300,000 300,000
Consolidated, Refunding GO, Series A, Daily VRDN and Put, 4.85%, 5/01/09 ....................... 2,500,000 2,500,000
Consolidated, Refunding, Series B, Daily VRDN and Put, 4.75%, 8/01/09 .......................... 800,000 800,000
DATES, Series C, GO, Daily VRDN and Put, 5.00%, 10/01/10 ....................................... 900,000 900,000
District Nos. 105, 140, 240 and 250, Weekly VRDN and Put, 5.00%, 10/01/10 ...................... 1,900,000 1,900,000
Tustin GO, 1915 Act, Reassessment District No. 95-2,
Series A, Daily VRDN and Put, 5.00%, 9/02/13 ................................................... 600,000 600,000
-------------
Total Short Term Investments (Cost $11,300,000) ................................................ 11,300,000
-------------
Total Investments (Cost $1,587,442,038) 98.5% .................................................. 1,701,369,119
Other Assets, less Liabilities, 1.5% ........................................................... 26,074,107
-------------
Net Assets 100.0% .............................................................................. $1,727,443,226
=============
</TABLE>
See glossary of terms on page 51
aVariable rate demand notes (VRDNs) are tax-emempt obligations which contain a
floating or variable interest rate adjustment formula and an unconditional right
of demand to receive payment of the principal balance plus accrued interest at
specified dates.
bSufficient collateral has been segregated for securities traded on a
when-issued or delayed delivery basis.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Highlights
<TABLE>
<CAPTION>
Franklin California Intermediate-Term Tax-Free Income Fund
Class I
Six months Ended
December 31, 1997 Year ended June 30,
(unaudited) 1997 1996 1995 1994 1993***
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period . $10.93 $10.67 $10.38 $10.20 $10.55 $10.00
-----------------------------------------------------------------------
Income from investment operations:
Net investment income ............... .27 .53 .53 .54 .54 .29
Net realized and unrealized gains(losses) .28 .26 .29 .17 (.36) .55
-----------------------------------------------------------------------
Total from investment operations ..... .55 .79 .82 .71 .18 .84
-----------------------------------------------------------------------
Less distributions
from net investment income .......... (.27) (.53) (.53) (.53) (.53) (.29)
-----------------------------------------------------------------------
Net asset value, end of period ....... $11.21 $10.93 $10.67 $10.38 $10.20 $10.55
=======================================================================
Total return** ....................... 5.00% 7.58% 7.96% 7.19% 1.65% 10.95%
Ratios/supplemental data
Net assets, end of period (000's) .... $128,438 $117,666 $101,199 $88,785 $94,015 $42,831
Ratios to average net assets:
Expenses ............................ .50%* .47% .45% .33% .25% .09%*
Expenses excluding waiver and payments
by affiliate ......................... .78%* .80% .81% .83% .80% .95%*
Net investment income ............... 4.84%* 4.96% 4.99% 5.34% 5.11% 4.73%*
Portfolio turnover rate .............. 8.34% 6.29% 10.13% 10.90% 14.95% .08%
</TABLE>
*Annualized.
**Total return does not reflect sales commissions or the contingent sales
deferred sales charges, and is not annualized. Prior to May 1, 1994, dividends
from net investment income were reinvested at the offering price.
***For the period September 21, 1992 (effective date) to June 30, 1993.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Statement of Investments, December 31, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
Franklin California Intermediate-Term Tax-Free Fund AMOUNT VALUE
<S> <C> <C>
Long Term Investments 98.1%
Bonds 96.6%
ABAG 1915 Act, Windemere Ranch AD,
5.15%, 9/02/02 ................................................................................. $ 595,000 $ 594,970
5.70%, 9/02/07 ................................................................................. 1,225,000 1,225,037
ABAG Finance Authority of Nonprofit Corps. COP,
5.50%, 6/01/03 ................................................................................. 420,000 440,950
5.75%, 8/01/03 ................................................................................. 825,000 875,267
Partner North County Health Project, 5.50%, 3/01/06 ............................................ 1,255,000 1,321,390
ABAG Finance Corp. COP, ABAG XXVI,
Refunding, Series A, 5.90%, 6/01/02 ............................................................ 100,000 104,666
Series B, 6.40%, 10/01/03 ...................................................................... 100,000 108,399
Alameda County COP,
Capital Projects, Series 1992, 6.25%, 6/01/06 .................................................. 100,000 109,823
Series 1994, 5.70%, 4/01/02 .................................................................... 395,000 417,902
Series 1994, 5.80%, 4/01/03 .................................................................... 420,000 450,446
Series 1994, 5.90%, 4/01/04 .................................................................... 440,000 478,368
Auburn COP, Refunding, Civic Center Project,
5.10%, 9/01/99 ................................................................................. 65,000 65,890
5.30%, 9/01/00 ................................................................................. 65,000 66,626
5.45%, 9/01/01 ................................................................................. 70,000 72,475
5.60%, 9/01/02 ................................................................................. 75,000 78,455
5.70%, 9/01/03 ................................................................................. 80,000 84,371
5.75%, 9/01/04 ................................................................................. 80,000 84,558
Bakersfield Central District Revenue, RDA, Tax Allocation,
Refunding, Downtown Bakersfield Redevelopment,
ETM, 6.00%, 4/01/01 ............................................................................ 295,000 312,260
ETM, 6.10%, 4/01/02 ............................................................................ 310,000 332,615
ETM, 6.20%, 4/01/03 ............................................................................ 330,000 359,898
Bakersfield Hospital Revenue, Bakersfield Memorial
Hospital Project, Series A, 5.70%, 1/01/00 ..................................................... 100,000 102,464
Brentwood 1915 Act, Capital Improvement Finance Program,
No. 9, Infrastructure Financing,
5.30%, 9/02/07 ................................................................................. 100,000 100,518
5.40%, 9/02/08 ................................................................................. 110,000 110,780
5.50%, 9/02/09 ................................................................................. 115,000 115,867
5.55%, 9/02/10 ................................................................................. 100,000 100,352
California Educational Facilities Authority Revenue, Series B,
Pooled College and University Projects, 6.125%, 4/01/13 ........................................ 1,000,000 1,072,580
Refunding, Pooled College and University Financing, 5.80%, 6/01/02 ............................. 1,000,000 1,048,090
Refunding, Pooled College and University Financing, 5.90%, 6/01/03 ............................. 1,105,000 1,171,344
California Health Facilities Financing, San Diego Hospital Association,
Series B, MBIA Insured, 5.60%, 8/01/03 ......................................................... 100,000 106,936
California HFA, SFM Purchase, Series A-1, Class III, MBIA Insured, 5.70%, 8/01/11 .............. 2,460,000 2,594,218
California State Public Works, Board Lease Revenue,
Department of Corrections, Calpatria State Prison, Imperial County,
Series A, 6.125%, 9/01/04 ...................................................................... 250,000 270,065
Department of Corrections, Coalinga State Prison, Series B,
MBIA Insured, 5.50%, 12/01/08 .................................................................. 1,000,000 1,059,020
Refunding, Various Community College Projects, Series C, 5.50%, 9/01/09 ........................ 1,555,000 1,663,586
California Statewide CDA, COP, California Lutheran Homes, 5.375%, 11/15/06 ..................... 1,000,000 1,038,520
California Statewide CDA Revenue COP,
Refunding, Health Facilities, Barton Memorial Hospital, Series B, 5.70%, 12/01/00 .............. 200,000 208,830
Refunding, Health Facilities, Barton Memorial Hospital, Series B, 6.40%, 12/01/05 .............. 450,000 486,954
St. Joseph Health System Group, 6.00%, 7/01/06 ................................................. 865,000 960,583
California Statewide Communities Development Corp. COP,
Pacific Homes, Series A, 5.50%, 4/01/04 ........................................................ $ 585,000 $ 614,835
Campbell COP, Refunding, Civic Center Project, 5.60%, 10/01/03 ................................. 350,000 370,332
Carson RDA Project, Area No. 1, Refunding, 6.10%, 10/01/02 ..................................... 200,000 213,584
Clovis COP, Water System Improvement Project, AMBAC Insured, 5.90%, 3/01/03 .................... 100,000 108,085
Coalinga Public Financing Authority Revenue, Series B, 6.00%, 9/15/03 .......................... 1,405,000 1,444,284
bCoastside County Water District 1915 Act, GO, Refunding, Crystal Springs Project,
5.10%, 9/02/03 ................................................................................. 550,000 550,011
5.20%, 9/02/04 ................................................................................. 1,135,000 1,134,977
5.40%, 9/02/06 ................................................................................. 665,000 664,993
Colma 1915 Act, Refunding, Local ID No. 1,
5.00%, 9/02/01 ................................................................................ 465,000 472,882
5.10%, 9/02/02 ................................................................................ 485,000 495,229
5.20%, 9/02/03 ................................................................................ 515,000 527,880
5.30%, 9/02/04 ................................................................................ 545,000 560,642
5.40%, 9/02/05 ................................................................................ 570,000 586,302
Colton GO, Joint USD, CFD, Special Tax, Southridge Village,
Phase III, Refunding, FSA Insured,
5.65%, 9/01/09 ................................................................................. 190,000 190,857
5.75%, 9/01/10 ................................................................................. 205,000 205,968
Commerce Joint Powers Financing Authority, Water Facilities,
Lease Revenue, Refunding, Series A,
5.50%, 10/01/02 ................................................................................ 340,000 351,400
5.625%, 10/01/03 ............................................................................... 360,000 374,706
5.75%, 10/01/04 ................................................................................ 470,000 497,063
Compton COP, Refunding, Civic Center & Capital Improvement,
Series A,
5.00%, 9/01/08 ................................................................................. 4,340,000 4,314,915
5.50%, 9/01/15 ................................................................................. 1,180,000 1,188,992
Compton Sewer Revenue,
5.40%, 7/01/98 ................................................................................. 120,000 120,701
5.60%, 7/01/99 ................................................................................. 125,000 127,404
5.70%, 7/01/00 ................................................................................. 130,000 134,185
5.80%, 7/01/01 ................................................................................. 140,000 145,719
5.90%, 7/01/02 ................................................................................. 150,000 158,319
6.00%, 7/01/03 ................................................................................. 155,000 165,259
6.10%, 7/01/04 ................................................................................. 165,000 177,593
6.20%, 7/01/05 ................................................................................. 175,000 189,214
6.30%, 7/01/06 ................................................................................. 185,000 200,349
Concord RDA, Tax Allocation, Central Concord Redevelopment Project,
Refunding, Sub-Series A,
5.50%, 7/01/02 ................................................................................. 625,000 645,263
5.625%, 7/01/03 ................................................................................ 655,000 681,102
Contra Costa County MFHR, Byron Park Project, Series C, 6.00%, 7/20/03 ......................... 500,000 529,860
Danville Financing Authority Revenue, Sycamore Valley, Reassessment District No. 93-2,
5.40%, 9/02/01 ................................................................................. 290,000 298,590
5.60%, 9/02/02 ................................................................................. 450,000 464,027
5.70%, 9/02/03 ................................................................................. 220,000 226,855
5.80%, 9/02/04 ................................................................................. 885,000 912,568
Dublin COP, Refunding, Civic Center Project, AMBAC Insured, 5.625%, 2/01/10 .................... 2,000,000 2,014,840
Eden Township Hospital District, Health Facilities Revenue,
COP, Refunding, Eden Hospital Health Services Corp.,
CHFCLP Insured, 5.75%, 7/01/12 ................................................................. 1,195,000 1,235,307
Foster City Public Financing Authority Revenue,
Community Development Project, Series A, 5.60%, 9/01/03 ........................................ $1,150,000 $ 1,219,506
Fresno Joint Powers Financing Authority, Local Agency Revenue,
Refunding, Series A, 6.20%, 9/02/03 ........................................................... 1,000,000 1,043,890
Garden Grove GO, CDA, Tax Allocation, Refunding,
Garden Grove Community Project, 5.40%, 10/01/04 ............................................... 1,425,000 1,492,802
Glendale Parking Facilities, Joint Powers Authority Revenue, Series A,
5.10%, 3/01/01 ................................................................................. 215,000 216,789
5.30%, 3/01/03 ................................................................................. 125,000 126,846
Goleta Water District Revenue COP, Refunding,
Goleta Reclamation Project, FGIC Insured, 5.50%, 12/01/08 ..................................... 750,000 796,815
Hesperia Public Financing Authority Revenue, Series A, 5.80%, 10/01/03 ......................... 3,935,000 4,162,246
Hollister RDA, Tax Allocation, Hollister Community Development Project, Series 1994,
5.35%, 10/01/03 ................................................................................ 525,000 534,020
5.45%, 10/01/04 ................................................................................ 550,000 560,808
5.55%, 10/01/05 ................................................................................ 585,000 595,986
Imperial COP, Refunding,
Wastewater System Program, Series B, 5.40%, 10/15/06 ........................................... 865,000 908,354
Water System Program, Series A, 5.40%, 10/15/06 ................................................ 1,250,000 1,312,650
Imperial County Local Transportation Authority, Sales Tax Revenue, Series 1993,
5.50%, 5/01/04 ................................................................................. 490,000 508,223
5.50%, 5/01/05 ................................................................................. 515,000 530,491
Inland Empire Solid Waste Financing Authority Revenue,
Landfill Improvement Financing Project, Series B,
FSA Insured, 6.25%, 8/01/11 .................................................................... 1,000,000 1,114,170
La Palma Community Development Commission, Tax Allocation, Refunding,
La Palma Community Development Project No. 1,
5.20%, 6/01/00 ................................................................................. 125,000 127,279
5.40%, 6/01/01 ................................................................................. 130,000 133,481
5.50%, 6/01/02 ................................................................................. 135,000 139,297
5.60%, 6/01/03 ................................................................................. 145,000 151,225
5.70%, 6/01/04 ................................................................................. 150,000 157,442
5.80%, 6/01/05 ................................................................................. 160,000 168,282
La Quinta RDA, Tax Allocation, Housing Redevelopment Project,
Areas No. 1 and 2, MBIA Insured, 5.40%, 9/01/07 ................................................ 560,000 603,618
Lake Elsinore Public Financing Authority, Tax Allocation Revenue,
Lake Elsinore Redevelopment Project, Series A,
FSA Insured, 5.40%, 9/01/08 .................................................................... 1,500,000 1,561,845
Lake Elsinore School Financing Authority Revenue, Refunding, 6.00%, 9/01/11 .................... 1,000,000 1,058,840
Lancaster RDA, Tax Allocation, Refunding,
Central Business District Redevelopment, 5.00%, 8/01/98 ........................................ 35,000 35,147
Central Business District Redevelopment, 5.125%, 8/01/99 ....................................... 35,000 35,385
Central Business District Redevelopment, 5.25%, 8/01/00 ........................................ 35,000 35,586
Central Business District Redevelopment, 5.375%, 8/01/01 ....................................... 40,000 40,876
Central Business District Redevelopment, 5.50%, 8/01/02 ........................................ 40,000 41,135
Central Business District Redevelopment, 5.60%, 8/01/03 ........................................ 45,000 46,517
Central Business District Redevelopment, 5.70%, 8/01/04 ........................................ 45,000 46,743
Central Business District Redevelopment, 5.70%, 8/01/05 ........................................ 50,000 51,655
Fox Field Redevelopment Project Area, 5.00%, 8/01/98 ........................................... 50,000 50,210
Fox Field Redevelopment Project Area, 5.125%, 8/01/99 .......................................... 55,000 55,604
Fox Field Redevelopment Project Area, 5.25%, 8/01/00 ........................................... 55,000 55,921
Fox Field Redevelopment Project Area, 5.375%, 8/01/01 .......................................... 60,000 61,314
Fox Field Redevelopment Project Area, 5.50%, 8/01/02 ........................................... 65,000 66,844
Fox Field Redevelopment Project Area, 5.60%, 8/01/03 ........................................... 65,000 67,192
Lancaster RDA, Tax Allocation, Refunding, (cont.)
Fox Field Redevelopment Project Area, 5.70%, 8/01/04 ........................................... $ 70,000 $ 72,712
Fox Field Redevelopment Project Area, 5.70%, 8/01/05 ........................................... 75,000 77,482
Lancaster School District COP, Refunding, FSA Insured, 5.125%, 4/01/14 ......................... 2,000,000 1,998,740
Lemon Grove MFHR, Refunding, Hillside Terrace Apartments, 5.375%, 1/01/19 ...................... 990,000 1,024,442
Los Angeles County Transport Commission COP, Series B,
5.90%, 7/01/00 ................................................................................. 100,000 104,742
6.00%, 7/01/01 ................................................................................. 200,000 213,028
Los Angeles County Wastewater Systems Revenue, Refunding,
Series D, FGIC Insured, 5.375%, 11/01/06 ....................................................... 2,000,000 2,127,700
Los Angeles USD, COP, Refunding, Multiple Property Project,
FSA Insured, 5.00%, 11/01/04 ................................................................... 1,000,000 1,002,110
Lynwood Public Financing Authority Revenue, Water Systems
Improvement Project, 6.15%, 6/01/08 ............................................................. 565,000 600,595
Madera COP, Refunding, Madera Community Hospital, 5.10%, 3/01/03 ............................... 515,000 530,229
Mammoth Lakes COP, Refunding,
5.70%, 6/01/10 ................................................................................. 850,000 876,843
5.75%, 6/01/11 ................................................................................. 250,000 258,810
Merced Irrigation District COP, Water Facilities Project, 6.125%, 11/01/03 ..................... 540,000 581,013
Mid-Peninsula Regional Open Space District COP, Special District
Association Finance Corp., Series 1993,
5.10%, 9/01/02 ................................................................................. 510,000 530,497
5.20%, 9/01/03 ................................................................................. 530,000 555,302
Modesto Irrigation District, Financing Authority Revenue, Domestic
Water Project, Series C, AMBAC Insured,
5.50%, 9/01/08 ................................................................................. 700,000 751,436
Mojave GO, Water Agency, ID M, Morongo Basin, ETM, 6.20%, 9/01/01 .............................. 100,000 107,225
Morgan Hill RDA, Tax Allocation, Refunding, 5.70%, 3/01/01 ..................................... 100,000 101,171
Mountain View Shoreline Regional Park, Community Tax Allocation, Series A,
5.10%, 8/01/03 ................................................................................. 785,000 822,115
5.20%, 8/01/04 ................................................................................. 540,000 569,435
Mt. Diablo Hospital District Revenue, Series A, AMBAC Insured, 5.10%, 12/01/03 ................. 100,000 104,445
Murrieta COP, Road Improvement Project,
6.00%, 4/01/07 ................................................................................. 235,000 248,628
6.00%, 4/01/08 ................................................................................. 245,000 259,384
New Haven USD, COP, Refunding, 5.30%, 7/01/01 .................................................. 500,000 520,290
Newark USD, COP, Crossover Refunding, 5.75%, 9/01/02 ........................................... 300,000 310,536
North City West School Facilities Financing Authority,
Special Tax, Refunding, Series B, FSA Insured, 5.625%, 9/01/08 ................................. 500,000 538,375
Oakland USD, Alameda County COP, Refunding, 5.00%, 9/15/99 ..................................... 1,745,000 1,755,261
Ontario Redevelopment Financing Authority, Local Agency Revenue,
Community Facility, AD No.1, Senior Lien, Series A,
FSA Insured, 5.60%, 9/02/03 .................................................................... 1,000,000 1,070,280
Orange County COP, Recovery, Refunding, Series A, MBIA Insured, 6.00%, 7/01/08 ................. 1,500,000 1,686,435
Orange County Development Agency, Tax Allocation, Refunding,
Santa Ana Heights Project Area, 5.90%, 9/01/04 ................................................. 800,000 858,016
Orange County Local Transportation Authority, Sales Tax Revenues
, First Senior Measure M, 6.00%, 2/15/06 ........................................................ 500,000 552,240
Orange County MFHR, Villa Santiago Rehabilitation Project,
FNMA Secured, 5.60%, 10/01/27 .................................................................. 500,000 521,285
Oroville Hospital Revenue, Oroville Hospital, Series A,
CHFCLP Insured, 5.125%, 12/01/12 ............................................................... 1,435,000 1,434,182
Palm Desert Financing Authority, Lease Revenue,
Blythe County Administrative Project, 6.375%, 8/01/11 .......................................... 855,000 910,079
Paramount RDA, Tax Allocation, Refunding,
Redevelopment Project, Area No. 1, 6.05%, 8/01/05 .............................................. 1,515,000 1,643,745
Paso Robles Union School District COP, 5.75%, 8/01/03 .......................................... 1,635,000 1,747,913
Measure D, Capital Projects, Phase III, 5.75%, 8/01/02 ......................................... 300,000 306,447
Pismo Beach Public Financing Authority Revenue, Series 1993,
6.25%, 9/15/01 ................................................................................. $ 45,000 $ 45,577
6.40%, 9/15/02 ................................................................................. 50,000 50,651
6.50%, 9/15/03 ................................................................................. 50,000 50,656
6.55%, 9/15/04 ................................................................................. 55,000 55,715
Pleasant Hill RDA, RMR, Refunding, 5.40%, 2/01/05 .............................................. 1,285,000 1,359,903
Rialto RDA, Tax Allocation, Industrial Redevelopment,
Refunding, Sub-Areas A & B, Series A,
5.40%, 9/01/02 ................................................................................. 270,000 278,024
5.50%, 9/01/03 ................................................................................. 280,000 291,410
Richmond Joint Powers Financing Authority Revenue,
Refunding, Multiple Redevelopment Projects, Series B,
5.35%, 5/15/13 ................................................................................. 2,000,000 2,023,640
Riverside County Asset Leasing Corp., Leasehold Revenue,
Riverside County Hospital Project, Series A,
5.90%, 6/01/02 ................................................................................. 200,000 211,142
6.00%, 6/01/04 ................................................................................. 200,000 214,336
Riverside County Housing Authority, MFHR, Brandon Place Apartments,
Series B, FNMA Secured, 5.625%, 7/01/29 ....................................................... 1,000,000 1,049,640
Riverside County Public Financing Authority Revenue,
Tax Allocation, Redevelopment Projects, Series A,
4.70%, 10/01/06 ................................................................................ 700,000 701,442
Sacramento MUD, Electric Revenue, Series E, 5.25%, 5/15/03 ..................................... 1,000,000 1,044,970
San Bernardino County COP, Refunding, Medical
Center Financing Project, 6.00%, 8/01/09 ....................................................... 2,000,000 2,163,020
San Bernardino County Mortgage Revenue, Refunding,
Don Miguel Apartments Project, MBIA Insured,
6.00%, 9/01/03 ................................................................................. 130,000 138,427
San Clemente 1915 Act, Refunding, AD No. 8,
5.00%, 9/02/02 ................................................................................. 415,000 425,881
5.10%, 9/02/03 ................................................................................. 435,000 448,328
5.20%, 9/02/04 ................................................................................. 460,000 474,090
San Diego Mortgage Revenue, Refunding, Mariners Cove,
Series B-1, 5.125%, 9/01/03 .................................................................... 350,000 360,084
San Diego Port Facilities Revenue, Refunding,
National Steel & Shipbuilding Co., 6.60%, 12/01/02 ............................................. 100,000 106,161
San Francisco City and County RDA, Mortgage Revenue,
Hotel Tax Revenue, FSA Insured, 5.80%, 7/01/01 ................................................. 300,000 317,505
Hotel Tax Revenue, FSA Insured, 5.90%, 7/01/02 ................................................. 245,000 263,005
Refunding, Series A, MBIA Insured, 6.125%, 7/01/02 ............................................. 30,000 30,236
San Gorgonio Memorial Health Care District, Health Facility
Revenue, Insured, 6.375%, 6/01/08 .............................................................. 750,000 813,983
San Joaquin County COP, General Hospital Project, 5.90%, 9/01/03 ............................... 400,000 425,596
San Jose Financing Authority Revenue, Refunding,
Convention Center Project, Series C, 5.75%, 9/01/03 ............................................ 300,000 320,202
San Juan USD, COP, Gold River Elementary School Project, 5.65%, 4/01/03 ........................ 600,000 601,914
San Ramon COP, Capital Improvements Project,
5.20%, 3/01/01 ................................................................................. 85,000 87,887
5.30%, 3/01/02 ................................................................................. 90,000 93,940
5.40%, 3/01/03 ................................................................................. 95,000 100,272
5.50%, 3/01/04 ................................................................................. 100,000 106,198
5.60%, 3/01/05 ................................................................................. 105,000 112,223
Santa Barbara RDA, Tax Allocation, Central City Redevelopment Project, 6.00%, 3/01/03 .......... 985,000 1,038,771
Santa Monica Parking Authority, Lease Revenue, Refunding, 6.00%, 7/01/03 ....................... 100,000 108,839
Sebastopol COP, Refunding, Series 1994,
5.50%, 6/01/03 ................................................................................. 200,000 208,126
5.60%, 6/01/04 ................................................................................. 215,000 225,096
5.70%, 6/01/05 ................................................................................. 240,000 252,701
Selma Public Financing Authority Revenue, Series A, MBIA Insured,
5.25%, 9/15/02 ................................................................................. $ 100,000 $ 102,721
5.50%, 9/15/04 ................................................................................. 115,000 118,203
5.60%, 9/15/05 ................................................................................. 120,000 123,340
5.65%, 9/15/06 ................................................................................. 125,000 128,513
5.70%, 9/15/07 ................................................................................. 135,000 138,792
5.70%, 9/15/08 ................................................................................. 140,000 143,787
5.75%, 9/15/09 ................................................................................. 150,000 154,004
5.75%, 9/15/10 ................................................................................. 155,000 158,861
Shafter Joint Powers Financing Authority, Lease Revenue,
Community Correctional Facility Project, Series A, 5.50%, 1/01/06 ............................. 1,500,000 1,559,880
Shasta Joint Powers Financing Authority, Lease Revenue,
Courthouse Improvement Project, Series A, 5.80%, 6/01/00 ....................................... 100,000 103,408
Solana Beach COP, City Hall Project, 5.80%, 10/01/02 ........................................... 50,000 53,069
South Gate Public Financing Authority Water Revenue, Refunding,
Series A, FGIC Insured,
5.35%, 10/01/07 ................................................................................ 995,000 1,069,128
5.45%, 10/01/08 ................................................................................ 1,040,000 1,123,314
South San Francisco Capital Improvements Financing Authority Revenue, Refunding,
South San Francisco Conference Center,
5.70%, 9/01/02 ................................................................................. 195,000 203,962
5.80%, 9/01/03 ................................................................................. 205,000 216,168
5.90%, 9/01/04 ................................................................................. 215,000 228,569
Southern California Rapid Transit District Revenue, Special Benefit,
AD No. A2, 5.80%, 9/01/01 ...................................................................... 100,000 104,738
Stockton Health Faci0lities Revenue, Refunding, Dameron Hospital
Association, Series A, 5.35%, 12/01/09 .......................................................... 385,000 393,485
Stockton Port District, Port Facilities Revenue, Refunding & Improvement,
Series A, FSA Insured, 5.75%, 7/01/11 .......................................................... 1,295,000 1,379,071
Sunline Transport Agency COP, Transport Finance Corp., Series B,
5.50%, 7/01/03 ................................................................................. 450,000 476,361
5.75%, 7/01/06 ................................................................................. 445,000 474,481
Susanville Public Financing Authority Revenue, Series A, AMBAC Insured, 5.90%, 9/01/02 ......... 100,000 106,296
Tahoe City PUD, COP, Capital Facilities Project, Series B,
6.05%, 6/01/01 ................................................................................. 290,000 302,627
6.15%, 6/01/02 ................................................................................. 835,000 880,566
6.30%, 6/01/04 ................................................................................. 545,000 588,017
Tehachapi Cummings County Water District Revenue COP,
Capital Improvement Project, MBIA Insured,
5.50%, 8/01/04 ................................................................................. 280,000 299,130
5.60%, 8/01/05 ................................................................................. 300,000 320,436
5.75%, 8/01/06 ................................................................................. 320,000 343,629
Temecula RDA Revenue, Tax Allocation, Temecula
Redevelopment Project No. 1, Series A, 5.40%, 2/01/04 .......................................... 600,000 620,094
Temecula Valley USD, Series E, FSA Insured, 5.65%, 9/01/07 ..................................... 370,000 405,053
Torrance USD, COP, Series A, 5.85%, 10/01/99 ................................................... 100,000 101,536
Travis USD, COP, Foxboro Elementary School Construction Project, 6.30%, 9/01/02 ................ 200,000 217,570
Trinity County PUD, COP, Refunding, Electric District Facilities, Series 1993,
5.80%, 4/01/01 ................................................................................. 340,000 350,870
5.90%, 4/01/02 ................................................................................. 360,000 374,705
6.00%, 4/01/03 ................................................................................. 380,000 398,706
Tuolumne County COP, Multiple Facilities Project, 5.80%, 6/01/98 ............................... 100,000 100,440
Ventura USD, COP, Series A,
5.90%, 4/01/04 ................................................................................. $ 305,000 $ 322,411
6.00%, 4/01/05 ................................................................................. 320,000 337,040
6.10%, 4/01/06 ................................................................................. 340,000 358,063
6.20%, 4/01/07 ................................................................................. 365,000 384,012
6.30%, 4/01/08 ................................................................................. 385,000 405,007
6.40%, 4/01/09 ................................................................................. 410,000 431,885
Watsonville RDA, Tax Allocation, Watsonville Redevelopment Project, Series 1993, ...............
6.00%, 8/01/02 ................................................................................. 510,000 510,402
6.10%, 8/01/03 ................................................................................. 540,000 540,426
-------------
Total Bonds (Cost $118,349,251) ................................................................ 124,130,734
-------------
Zero Coupon Bonds 1.5%
San Joaquin Hills Transportation Corridor Agency, Toll Road Revenue,
Refunding, Series A, zero coupon to 1/15/07,
5.60% thereafter, 1/15/16 ...................................................................... 3,000,000 1,907,790
-------------
Total Zero Coupon Bonds (Cost $1,821,148) ...................................................... 1,907,790
-------------
Total Long Term Investments (Cost $120,170,399) ................................................ 126,038,524
-------------
aShort Term Investments 1.6%
California PCFA Revenue, Refunding, Shell Oil Co. Project, Series C,
Daily VRDN and Put, 4.90%, 11/01/00 ............................................................ 300,000 300,000
Irvine Ranch Water District, GO, Consolidated Improvement Districts,
Daily VRDN and Put, 4.85%, 6/01/15 ............................................................. 1,200,000 1,200,000
Orange County Various Sanitation Districts, COP, Nos. 1-3, 5-7, 11, 13 and 14,
Series A, Capital Improvement Program
1990-92, Daily VRDN and Put, 5.00%, 8/01/15 .................................................... 500,000 500,000
-------------
Total Short Term Investments (Cost $2,000,000) ................................................. 2,000,000
-------------
Total Investments (Cost $122,170,399) 99.7% .................................................... 128,038,524
Other Assets, less Liabilities .3% ............................................................. 399,174
-------------
Net Assets 100.0% .............................................................................. $128,437,698
=============
</TABLE>
See glossary of terms on page 51
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 at
specified dates.
bSufficient collateral has been segregated for securities traded on a
when-issued or delayed delivery basis.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Highlights
<TABLE>
<CAPTION>
Franklin California Tax-Exempt Money Fund
Class I
Six months Ended
December 31, 1997 Year ended June 30,
(unaudited) 1997 1996 1995 1994 1993
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period .... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------------------------------------------------------------------
Income from investment operations:
Net investment income .................. .01 .03 .03 .03 .02 .02
Less distributions
from net investment income.............. (.01) (.03) (.03) (.03) (.02) (.02)
-------------------------------------------------------------------
Net asset value, end of period .......... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===================================================================
Total return ............................ 1.45%** 2.85% 2.85% 2.94% 1.83% 2.08%
Ratios/supplemental data
Net assets, end of period (000's) .......$655,758 $639,791 $597,819 $642,157 $754,121 $652,864
Ratios to average net assets:
Expenses ............................... .62%* .60% .63% .64% .61% .62%
Net investment income .................. 2.90%* 2.83% 2.83% 2.88% 1.82% 2.07%
</TABLE>
*Annualized.
**Total return is not annualized.
<TABLE>
<CAPTION>
FRANKLIN CALIFORNIA TAX-FREE TRUST
Statement of Investments, December 31, 1997 (unaudited)
PRINCIPAL
Franklin California Tax-Exempt Money Fund AMOUNT VALUE
<S> <C> <C>
a Investments 99.6%
a Alameda-Contra Costa Schools Financing Authority, COP,
Capital Improvement Financing Projects, Weekly VRDN and Put, 3.85%,
Series C, 7/01/25 ............................................................................ $ 2,000,000 $ 2,000,000
Series E, 6/01/22 ............................................................................ 2,000,000 2,000,000
Alameda County TRAN, 4.50%, 7/22/98 ............................................................ 3,500,000 3,511,168
a Anaheim COP, 1993 Partnership Project, Refunding, AMBAC Insured,
Weekly VRDN and Put, 3.35%, 8/01/19 ............................................................ 4,800,000 4,800,000
a Anaheim COP, Police Facilities Refinancing Project,
Refunding, AMBAC Insured, Weekly VRDN and Put, 3.35%, 8/01/08 ................................. 5,850,000 5,850,000
a Auburn Union School District, COP, Capital Improvement Financing Project,
Weekly VRDN and Put, 3.85%, 12/01/23 .......................................................... 10,000,000 10,000,000
a Big Bear Lake Industrial Revenue, Southwest Gas Corp. Project,
Series A, Weekly VRDN and Put, 3.40%, 12/01/28 ................................................. 2,700,000 2,700,000
a Burbank RDA, MFR, Issue A, Weekly VRDN and Put, 3.35%, 11/01/10 .............................. 1,400,000 1,400,000
a Butte County Housing Authority MFR, Pine Tree Apartments Project,
Weekly VRDN and Put, 3.65%, 12/01/10 ........................................................... 2,615,000 2,615,000
California Community College Financing Authority, TRAN, Series A, 4.50%, 6/30/98 ............. 10,000,000 10,034,170
a California Health Facilities Financing Authority Revenue,
Children's Hospital, MBIA Insured, Weekly VRDN and Put, 3.85%, 11/01/21 ...................... 2,500,000 2,500,000
Floating Pool Program, Weekly VRDN and Put, 3.50%, 9/01/20 ................................... 2,500,000 2,500,000
Refunding, Catholic Healthcare, Series B, MBIA Insured,
Weekly VRDN and Put, 3.35%, 7/01/12 ............................................................. 4,900,000 4,900,000
Refunding, Catholic West Facility, Series B, MBIA Insured,
Weekly VRDN and Put, 3.90%, 7/01/05 ........................................................... 8,300,000 8,300,000
Refunding, Catholic West Facility, Series D, MBIA Insured,
Weekly VRDN and Put, 3.90%, 7/01/18 ............................................................. 2,100,000 2,100,000
Refunding, MF, Series C, FNMA Secured, Weekly VRDN and Put, 3.35%, 7/15/13 ................... 3,450,000 3,450,000
Refunding, Sutter/CHS, Series B, AMBAC Insured, Daily
VRDN and Put, 4.80%, 7/01/12 ................................................................... 2,000,000 2,000,000
Santa Barbara Cottage Hospital, Series B, Weekly VRDN and Put, 3.85%, 9/01/05 ................ 1,785,000 1,785,000
St. Francis Medical Center, Series F, MBIA Insured,
Weekly VRDN and Put, 3.85%, 7/01/10 ............................................................. 1,300,000 1,300,000
Sutter Health, Series A, Daily VRDN and Put, 5.00%, 3/01/20 .................................. 1,700,000 1,700,000
a California PCFA, Resource Recovery Revenue, Daily VRDN and Put,
Atlantic Richfield Co. Project, Series A, 5.00%, 12/01/24 .................................... 9,500,000 9,500,000
OMS Equity, Stanislaus Project, 5.05%, 12/01/17 .............................................. 4,000,000 4,000,000
California PCFA Revenue,
a Occidental Geo/Santa Fe Geothermal, Monthly VRDN and Weekly Put, 3.65%, 9/01/13................ 4,700,000 4,700,000
a Refunding, Pacific Gas & Electric, Series A, Daily VRDN and Put, 4.75%, 12/01/18 ............. 1,000,000 1,000,000
a Refunding, Pacific Gas & Electric, Series B, Daily VRDN and Put, 4.95%, 11/01/26 ............. 10,000,000 10,000,000
a Refunding, Shell Oil Co. Project, Series A, Daily VRDN and Put, 4.90%, 10/01/06 .............. 2,200,000 2,200,000
a Refunding, Shell Oil Co. Project, Series B, Daily VRDN and Put, 4.90%, 10/01/11 .............. 1,050,000 1,050,000
a Reynolds Metals Co. Project, Weekly VRDN and Put, 3.45%, 12/01/15 ............................ 1,000,000 1,000,000
a Southern California Edison Co., Series A, Daily VRDN and Put, 4.20%, 2/28/08 ................. 12,100,000 12,100,000
TECP, 3.50%, 1/14/98 ......................................................................... 3,850,000 3,850,000
a California PCFA, Solid Waste Disposal Revenue, Series A,
Colmac Energy Project, Weekly VRDN and Put, 3.40%, 12/01/16 .................................. 1,200,000 1,200,000
Shell Oil Co., Martinez Project, Weekly VRDN and Put, 4.90%, 10/01/24 ........................ 2,000,000 2,000,000
a California Public Capital Improvements Financing Authority Revenue,
Pooled Project, Series C, Quarterly VRDN and Put, 3.75%, 6/01/28 .............................. 19,500,000 19,500,000
California School Cash Reserve Program Authority, Pooled Project, Series A, 4.75%, 7/02/98 ..... 20,000,000 20,086,363
a California State Economic Development Financing Authority Revenue,
Refunding, KQED, Inc. Project, Weekly VRDN and Put, 3.45%, 4/01/20 ............................ 2,670,000 2,670,000
California State GO, TECP, 3/10/98,
3.65% ........................................................................................ 3,500,000 3,500,000
3.70% ........................................................................................ 3,500,000 3,500,000
California State RAN, 4.50%, 6/30/98 ........................................................... 15,000,000 15,048,694
a California Statewide Communities Development Authority Revenue, COP, Refunding,
Apartment Development Revenue, Subseries A-6, Weekly VRDN and Put, 3.30%, 5/15/25 ............ $12,005,000 $ 12,005,000
House Ear Institute, Daily VRDN and Put, 4.75%, 12/01/18 ..................................... 2,366,000 2,366,000
a California Statewide Communities Development Corp. Revenue, Series C,
Weekly VRDN and Put, 3.85%, 12/01/19,American Kleaner .......................................... 2,550,000 2,550,000
Karcher Property Project ..................................................................... 1,700,000 1,700,000
a Carlsbad MFHR, Refunding, La Costa Apartments Project,
Series A, Weekly VRDN and Put, 3.75%, 6/01/11 .................................................. 800,000 800,000
a Chico MFMR, Webb Homes Project, Monthly VRDN and Weekly Put, 3.75%, 1/01/10 .................. 2,370,000 2,370,000
a Chula Vista IDR, Refunding, San Diego Gas, Series A, Daily VRDN and Put, 5.00%, 7/01/21 ...... 18,050,000 18,050,000
a Concord MFMR, Weekly VRDN and Put,
Arcadian Facility, Series A, 3.35%, 7/15/18 .................................................. 8,300,000 8,300,000
Bel Air Apartments, Issue A, 3.80%, 12/01/16 ................................................. 500,000 500,000
a Contra Costa County Housing Authority, MFMR, Lakeshore Facility,
Series A, FNMA Secured, Weekly VRDN and Put, 3.35%, 11/15/12 .................................. 4,170,000 4,170,000
a Duarte RDA, COP, Weekly VRDN and Put, 3.90%, 12/01/14,
Johnson Duarte Project, Series B ............................................................. 1,000,000 1,000,000
Piken Duarte Partnership, Series A............................................................ 400,000 400,000
East Bay MUD, TECP, 3.60%, 1/12/98 ............................................................. 13,000,000 13,000,000
a Foothill/Eastern Transportation Corridor Agency, Califorinia Toll Road Revenue,
Weekly VRDN and Put, 1/02/35, Series B, 3.85% .................................................. 15,400,000 15,400,000
Series C, 3.35% .............................................................................. 5,000,000 5,000,000
Series E, 3.40% .............................................................................. 10,000,000 10,000,000
a Fresno MFHR, Refunding, Heron Pointe Apartments,
Series A, Weekly VRDN and Put, 3.65%, 6/01/07 .................................................. 1,000,000 1,000,000
a Independent Cities Lease Finance Authority Revenue,
Pooled Projects, Weekly VRDN and Put, 3.40%, 6/01/98 ........................................... 230,000 230,000
a Irvine 1915 Act, Daily VRDN and Put, 5.00%,
AD 92, Series A, 9/02/21 ..................................................................... 5,000,000 5,000,000
AD 94-13, Oak Creek Project, 9/02/22 ......................................................... 4,500,000 4,500,000
a Irvine Ranch Water District COP, Capital Improvement Project,
Daily VRDN and Put, 5.00%, 8/01/16 ............................................................. 3,300,000 3,300,000
a Irvine Ranch Water District DATES, Consolidated Bonds,
Series C, Daily VRDN and Put, 5.00%, 10/01/10 .................................................. 1,200,000 1,200,000
a Kern County COP, Kern Public Facilities Project,
Weekly VRDN and Put, 3.35%, 8/01/06, Series A .................................................. 2,000,000 2,000,000
Series C ..................................................................................... 300,000 300,000
Series D ..................................................................................... 500,000 500,000
a Lancaster RDA, MFHR, Westwood Park Apartments, Series K,
Weekly VRDN and Put, .65%, 12/01/07 ............................................................ 900,000 900,000
a Livermore MFHR, Refunding, Richards Manor, Series A,
Weekly VRDN and Put, 3.85%, 12/01/22 ........................................................... 7,170,000 7,170,000
Los Angeles County Capital Asset Leasing Corp., TECP, 3.65%, 2/09/98 ........................... 4,000,000 4,000,000
a Los Angeles County COP, ACES, Los Angeles County Museum of Art,
Series B, Weekly VRDN and Put, 3.50%, 11/01/05 ................................................. 400,000 400,000
a Los Angeles County Housing Authority, MFHR, Weekly VRDN and Put,
Sand Canyon Ranch Project, Series F, 3.35%, 11/01/06 .......................................... 4,500,000 4,500,000
a Los Angeles County Pension Obligation, Refunding,
AMBAC Insured, Weekly VRDN and Put, 3.35%, 6/30/07, Series A ................................... 2,500,000 2,500,000
Series B ..................................................................................... 6,600,000 6,600,000
Series C ..................................................................................... 3,500,000 3,500,000
Los Angeles County TRAN, Series A, 4.50%, 6/30/98 .............................................. 10,000,000 10,030,857
a Los Angeles County Transport Commission, Sales Tax Revenue,
Refunding, Series A, FGIC Insured, Weekly VRDN and Put, 3.35%, 7/01/12 ........................ 1,200,000 1,200,000
a Los Angeles CRDA, COP, Weekly VRDN and Put,
Baldwin Hill Park, 3.70%, 12/01/14 ........................................................... 1,000,000 1,000,000
Broading Spring Center Program, 3.40%, 7/01/12 ............................................... 400,000 400,000
a Los Angeles MFHR, Weekly VRDN and Put,
Casden Project, Series K, 3.85%, 7/01/10 ..................................................... $ 3,400,000 $ 3,400,000
Lucas Studios Project, Series D, 4.10%, 12/01/21 ............................................. 1,200,000 1,200,000
Masselin Manor, 3.90%, 7/01/15 ............................................................... 2,400,000 2,400,000
a Los Angeles MFHR, Housing, Mariposa Gardens Project, Series H,
Weekly VRDN and Put, 3.65%, 9/01/15 ............................................................ 600,000 600,000
Los Angeles USD, TRAN, 4.50%,
Series A, 7/01/98 ............................................................................ 4,000,000 4,013,369
Series B, 10/01/98 ........................................................................... 1,100,000 1,105,070
a Metropolitan Water District, Southern California Waterworks Revenue,
Refunding, Series A, AMBAC Insured,
Weekly VRDN and Put, 3.85%, 6/01/23 ............................................................ 17,900,000 17,900,000
a Moorpark MFR, Refunding, Le Club Apartments Project, Series A,
Weekly VRDN and Put, 3.90%, 11/01/15 ........................................................... 3,500,000 3,500,000
a M-S-R Public Power Agency Revenue, San Juan Project, Refunding,
Subordinated Lien, Series E, MBIA Insured,
Weekly VRDN and Put, 3.85%, 7/01/22 ............................................................ 10,400,000 10,400,000
a Ontario MFR, Park Centre Partners Project, Series A,
Weekly VRDN and Put, 3.7006%, 8/01/07 .......................................................... 1,900,000 1,900,000
a Orange County Apartment Development Revenue, Weekly VRDN and Put,
Issue I, Park Ridge, 3.75%, 11/01/08 ......................................................... 1,600,000 1,600,000
Jessy L. Frost Project, Issue B, 3.35%, 3/01/09 .............................................. 100,000 100,000
Refunding, The Lakes Projects, Series A, 4.00%, 12/01/06 ..................................... 9,250,000 9,250,000
Vista Verde Apartments, 4.00%, 8/01/18 ....................................................... 3,000,000 3,000,000
a Oxnard RDA, COP, Channel Islands Business Center,
Weekly VRDN and Put, 4.385%, 7/01/05 ........................................................... 390,000 390,000
a Palm Springs CRDA, COP, Weekly VRDN and Put, 3.85%, 12/01/14,
Hotel No. 2 .................................................................................. 900,000 900,000
Hotel No. 3 .................................................................................. 700,000 700,000
a Pico Rivera RDA, COP, Crossroad Plaza Project, Weekly VRDN and Put, 3.35%, 12/01/10 .......... 1,500,000 1,500,000
Puerto Rico Commonwealth TRAN, Series A, 4.50%, 7/30/98 ........................................ 25,000,000 25,105,659
a Redlands MFHR, Refunding, Parkview Terrace, Series A,
Weekly VRDN and Put, 3.90%, 2/01/16 ............................................................ 3,550,000 3,550,000
a Riverside County COP, ACES, Riverside County Public Facilities,
Series C, Weekly VRDN and Put, 3.35%, 12/01/15 ................................................. 800,000 800,000
a Riverside County IDA Revenue, Weekly VRDN and Put,
Calavo Growers, 3.65%, 9/01/05 ............................................................... 1,500,000 1,500,000
Spaulding Project, Issue B-II, 3.90%, 7/05/19 ................................................ 1,050,000 1,050,000
a Roseville Finance Authority Hospital, Lease Revenue, Series A,
Roseville Hospital, Weekly VRDN and Put, 3.40%, 10/01/14 ...................................... 9,450,000 9,450,000
a Sacramento County COP, Administration Center and Court House Project,
Weekly VRDN and Put, 3.80%, 6/01/20 ............................................................ 8,400,000 8,400,000
a Sacramento County MFR, Various Housing Projects, Smoketree,
Series A, Weekly VRDN and Put, 3.35%, 4/15/10 .................................................. 6,950,000 6,950,000
Sacramento MUD, TECP,
3.60%, 1/13/98 ............................................................................... 6,000,000 6,000,000
3.65%, 2/18/98 ............................................................................... 15,777,000 15,777,000
3.50%, 4/09/98 ............................................................................... 3,923,000 3,923,000
a San Bernardino County, MFHR, Weekly VRDN and Put,
Refunding, Quail Properties, Series A, 3.35%, 7/01/14 ........................................ 4,050,000 4,050,000
Western Properties Project I, 3.65%, 2/01/05 ................................................. 1,950,000 1,950,000
Western Properties Project III, 3.65%, 8/01/05 ............................................... 900,000 900,000
Western Properties Project IV, 3.65%, 8/01/05 ................................................ 1,600,000 1,600,000
Western Properties Project V, 3.65%, 8/01/05 ................................................. 2,550,000 2,550,000
Woodview Apartments Project, Series I, 3.85%, 4/01/07 ........................................ 2,300,000 2,300,000
a San Diego County MFHR, Nationwide, Series C, Weekly VRDN and Put, 3.35%, 4/15/05 ............. 1,300,000 1,300,000
San Diego County Regional Transportation Commission, Sales Tax Revenue,
Second Senior Series A, AMBAC Insured,
4.10%, 4/01/98 ................................................................................. 1,300,000 1,300,647
San Diego County TRAN, 4.50%, 9/30/98 .......................................................... 13,500,000 13,567,676
San Diego Gas & Electric, TECP,
3.60%, 1/08/98 ............................................................................... $ 2,000,000 $ 2,000,000
3.65%, 2/19/98 ............................................................................... 3,000,000 3,000,000
3.65%, 4/07/98 ............................................................................... 5,500,000 5,500,000
a San Diego MFHR, Country Hills Facility, Series A,
FNMA Secured, Weekly VRDN and Put, 3.35%, 8/15/13 .............................................. 890,000 890,000
a San Diego MFMR, California Housing Authority,
La Cima Apartments, Series K, Weekly VRDN and Put,
3.90%, 12/01/08 ................................................................................ 2,400,000 2,400,000
a San Diego MFMR, Refunding, University Town Center
Apartments, Weekly VRDN and Put, 3.90%, 10/01/15 ............................................... 4,900,000 4,900,000
a San Dimas RDA, Commercial Development Revenue,
San Dimas Commercial Center, Monthly VRDN and Put,
3.75%, 12/01/13 ................................................................................ 900,000 900,000
a San Francisco City and County MFHR, Winterland Project,
Series C, Weekly VRDN and Put, 3.30%, 6/01/06 .................................................. 4,600,000 4,600,000
a San Francisco City and County RDA, MFR, Refunding,
Fillmore Center, Series B-2, Weekly VRDN and Put,
3.40%, 12/01/17 ................................................................................ 1,000,000 1,000,000
a San Francisco City and County RDA, MFR, Rincon Center Project No. 8,
Series B, Weekly VRDN and Put,
3.35%, 12/01/06 ................................................................................ 4,420,000 4,420,000
a San Jose MFMR, Weekly VRDN and Put,
Fairway Glen, Series A, FGIC Insured, 3.85%, 11/01/07 ........................................ 700,000 700,000
Foxchase, Series B, FGIC Insured, 3.85%, 11/01/07 ............................................ 600,000 600,000
Somerset Park Apartment Project, 3.80%, 11/01/17 ............................................. 1,000,000 1,000,000
a San Jose-Santa Clara Water Financing Authority, Sewer Revenue,
Series B, Weekly VRDN and Put, 3.35%, 11/15/11 ................................................. 1,200,000 1,200,000
a San Mateo County Housing Authority, MFHR, Pacific Oaks Apartment Project,
Series A, Weekly VRDN and Put,
3.40%, 7/01/17 ................................................................................. 2,950,000 2,950,000
San Mateo County TRAN, 4.50%, 7/01/98 .......................................................... 2,500,000 2,508,356
a Santa Ana MFHR, Refunding, Vintage Apartments, Series A,
Weekly VRDN and Put, 3.80%, 12/01/22 ........................................................... 3,500,000 3,500,000
a Santa Clara County Housing Authority, MFHR, Refunding,
Benton Park Center Apartments, Series A, FNMA Secured,
Weekly VRDN and Put, 3.95%, 12/15/25 ........................................................... 5,000,000 5,000,000
Santa Clara County TRAN, 4.75%, 10/01/98 ....................................................... 10,000,000 10,064,375
Santa Clara Valley Water District, COP, Flood Control Project,
FGIC Insured, 7.40%, 2/01/98 ................................................................... 1,465,000 1,506,210
a South San Francisco MFR, Magnolia Plaza Apartments, Series A,
Weekly VRDN and Put, 3.40%, 5/01/17 ............................................................ 500,000 500,000
Southern California Edison PCR, TECP, 3.60%, 1/21/98 ........................................... 2,100,000 2,100,000
Southern California Metropolitan Water District, TECP, 3.70%, 3/11/98 .......................... 2,000,000 2,000,000
a Southern California Public Power Authority Revenue, Transmission Project,
Refunding, Weekly VRDN and Put, 3.35%,
AMBAC Insured, 7/01/19 ....................................................................... 27,300,000 27,300,000
Series B, FSA Insured, 7/01/23 ............................................................... 600,000 600,000
a Southern California Public Power Authority, Sub-Palo Verde Project,
Refunding, Series B, AMBAC Insured,
Weekly VRDN and Put, 3.35%, 7/01/09 ............................................................ 2,000,000 2,000,000
a Suisun City MFMR, Housing Authority, Village Green Apartments,
Series A, Weekly VRDN and Put, 3.35%, 6/15/18 .................................................. 9,000,000 9,000,000
a Tustin 1915 Act, Reassessment District No. 95-2, Series A,
Daily VRDN and Put, 5.00%, 9/02/13 ............................................................. 8,000,000 8,000,000
a West Basin Municipal Water District Revenue, COP, Phase II
Recycled Water Project, Series C, Weekly VRDN and Put,
3.50%, 8/01/27 ................................................................................. 2,000,000 2,000,000
a Western Riverside County Regional Wastewater Authority Treatment,
Daily VRDN and Put, 5.00%, 4/01/28 ............................................................. 15,000,000 15,000,000
-------------
Total Investments (Cost $653,213,614) 99.6% .................................................... 653,213,614
Other Assets, less Liabilities .4% ............................................................. 2,544,411
-------------
Net Assets 100.0%............................................................................... $ 655,758,025
=============
See glossary of terms on page 51.
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 at
specified dates.
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
Statement of Investments, December 31, 1997 (unaudited) (cont.)
Glossary of Terms
1915 Act - Improvement Bond Act of 1915
ABAG - The Association of Bay Area Governments
ACES - Adjustable Convertible Exempt Securities
AD - Assessment District
AMBAC - American Municipal Bond Assurance Corp.
BART - Bay Area Rapid Transit
BIG - Bond Investors Guaranty Insurance Co.
CDA - Community Development Agency
CFD - Community Facilities District
CHFCLP - California Health Facilities Construction Loan Program
COP - Certificate of Participation
CRDA - Community Redevelopment Agency
DATES - Demand Adjustable Tax-Exempt Securities
ETM - Escrow to Maturity
FGIC - Financial Guaranty Insurance Co.
FNMA - Federal National Mortgage Association
FSA - Financial Security Assistance (Some of the securities shown as
FSA were originally Insured by Capital Guaranty Insurance Co. (CGIC)
which was acquired by FSA in 1995 and no longer does business under
this name.)
GNMA - Government National Mortgage Association
GO - General Obligation
HFA - Housing Finance Authority/Agency
HMR - Home Mortgage Revenue
ID - Improvement District
IDA - Industrial Development Agency
IDR - Industrial Development Revenue
MBIA - Municipal Bond Investors Assurance Corp.
MF - Multi-Family
MFHR - Multi-Family Housing Revenue
MFMR - Multi-Family Mortgage Revenue
MFR - Multi-Family Revenue
MUD - Municipal Utility District
PCFA - Pollution Control Financing Authority
PCR - Pollution Control Revenue
PUD - Public Utility District
RAN - Revenue Anticipation Notes
RDA - Redevelopment Agency
RMR - Residential Mortgage Revenue
SFM - Single Family Mortgage
SFMR - Single Family Mortgage Revenue
TECP - Tax-Exempt Commercial Paper
TRAN - Tax and Revenue Anticipation Notes
USD - Unified School District
VRDN - Variable Rate Demand Notes
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Statements
<TABLE>
<CAPTION>
Statements of Assets and Liabilities
December 31, 1997 (unaudited)
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:
Cost ...................................................... $1,587,442,038 $122,170,399 $653,213,614
---------------------------------------------
Value ..................................................... 1,701,369,119 128,038,524 653,213,614
Cash ....................................................... 12,431 497,486 809,583
Receivables:
Capital shares sold ....................................... 3,758,144 661,657 3,358,246
Interest .................................................. 29,477,885 1,995,716 4,387,838
---------------------------------------------
Total assets .......................................... 1,734,617,579 131,193,383 661,769,281
---------------------------------------------
Liabilities:
Payables:
Investment securities purchased ........................... 2,007,178 2,350,000 --
Capital shares redeemed ................................... 647,313 16,639 5,127,532
Affiliates ................................................ 1,008,714 72,856 326,780
Shareholders .............................................. 1,216,358 134,392 383,959
Distributions to shareholders .............................. 2,189,202 149,525 100,899
Other liabilities .......................................... 105,588 32,273 72,086
---------------------------------------------
Total liabilities ..................................... 7,174,353 2,755,685 6,011,256
---------------------------------------------
Net assets, at value ................................. $1,727,443,226 $128,437,698 $655,758,025
---------------------------------------------
Net assets consist of:
Undistributed net investment income ........................ $ 390,420 $ 360,380 $--
Net unrealized appreciation ................................ 113,927,081 5,868,125 --
Accumulated net realized gain (loss) ....................... 515,152 (241,959) --
Capital shares ............................................. 1,612,610,573 122,451,152 655,758,025
---------------------------------------------
Net assets, at value ................................. $1,727,443,226 $128,437,698 $655,758,025
---------------------------------------------
Franklin Franklin California Franklin
California Intermediate-Term California
Insured Tax-Free Tax-Free Tax-Exempt
Income Fund Income Fund Money Fund
Class I:
<S> <C> <C> <C>
Net assets, at value ....................................... $1,683,693,891 $128,437,698 $655,758,025
Shares outstanding ......................................... 135,130,668 11,452,482 655,758,025
Net asset value per share* ................................. $12.46 $11.21 $1.00
Maximum offering price per share
(Net asset value / 95.75%, 97.75%, 100%, respectively) .... $13.01 $11.47 $1.00
Class II:
Net assets, at value ....................................... $ 43,749,335 -- --
---------------------------------------------
Shares outstanding ......................................... 3,490,532 -- --
---------------------------------------------
Net asset value per share* ................................. $12.53 -- --
---------------------------------------------
Maximum offering price per share (Net asset value / 99.00%) $12.66 -- --
---------------------------------------------
*Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Statements (continued)
Statements of Operations
for the six months ended December 31, 1997 (unaudited)
Franklin Franklin CaliforniaFranklin
California Intermediate-TermCalifornia
Insured Tax-Free Tax-Free Tax-Exempt
Income Fund Income Fund Money Fund
<S> <C> <C> <C>
Investment income:
Interest ................................................... $49,314,834 $3,284,971 $11,510,291
---------------------------------------------
Expenses:
Management fees (Note 3) ................................... 3,981,832 372,017 1,616,535
Distribution fees: (Note 3)
Class I ................................................... 726,144 62,082 --
Class II .................................................. 134,593 -- --
Transfer agent fees ........................................ 196,813 17,935 210,147
Reports to shareholders .................................... 87,881 7,365 143,160
Other ...................................................... 131,109 23,824 44,031
---------------------------------------------
Total expenses ........................................ 5,258,372 483,223 2,013,873
Expenses waived by affiliate (Note 3) ................. -- (172,195) --
---------------------------------------------
Net expenses ......................................... 5,258,372 311,028 2,013,873
---------------------------------------------
Net investment income ............................... 44,056,462 2,973,943 9,496,418
---------------------------------------------
Realized and unrealized gains:
Net realized gain from investments ......................... 5,944,062 326,851 --
Net unrealized appreciation on investment .................. 42,465,807 2,674,662 --
---------------------------------------------
Net realized and unrealized gain ............................ 48,409,869 3,001,513 --
---------------------------------------------
Net increase in net assets resulting from operations ........ $92,466,331 $5,975,456 $ 9,496,418
---------------------------------------------
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Statements (continued)
Statements of Changes in Net Assets for the six months ended December 31, 1997
(unaudited) and the year ended June 30, 1997
Franklin California InsuredFranklin California Intermediate- Franklin California
Tax-Free Income Fund Term Tax-Free Income Fund Tax-Exempt Money Fund
Six months Year ended Six months Year ended Six months Year ended
ended 12/31/97 6/30/97 ended 12/31/97 6/30/97 ended 12/31/97 6/30/97
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment
income $ 44,056,462 $ 89,121,047 $ 2,973,943 $ 5,401,684 $ 9,496,418 $ 18,084,346
Net realized gain (loss)
from investments 5,944,062 11,434,772 326,851 119,770 -- (9,957)
Net unrealized apprecia-
tion on investments 42,465,807 17,743,963 2,674,662 2,477,165 -- --
---------------------------------------------------------------------------------------
Net increase in
net assets
resulting from
operations 92,466,331 118,299,782 5,975,456 7,998,619 9,496,418 18,074,389
Distributions to
shareholders from:
Net investment
income:
Class I (42,996,807) (88,728,007) (2,893,751) (5,351,328) (9,496,418) (18,074,389)*
Class II (924,025) (1,243,155) -- -- -- --
Net realized gains:
Class I (15,480,792) -- -- -- -- --
Class II (397,099) -- -- -- -- --
---------------------------------------------------------------------------------------
Total distributions to
shareholders (59,798,723) (89,971,162) (2,893,751) (5,351,328) (9,496,418) (18,074,389)
Capital share trans-
actions (Note 2):
Class I 16,213,917 19,013,927 7,690,055 13,819,809 15,967,452 41,971,783
Class II 8,119,910 16,010,873 -- -- -- --
---------------------------------------------------------------------------------------
Total capital share
transactions 24,333,827 35,024,800 7,690,055 13,819,809 15,967,452 41,971,783
Net increase in
net assets 57,001,435 63,353,420 10,771,760 16,467,100 15,967,452 41,971,783
Net assets:
Beginning of period 1,670,441,791 1,607,088,371 117,665,938 101,198,838 639,790,573 597,818,790
---------------------------------------------------------------------------------------
End of period $1,727,443,226 $1,670,441,791 $128,437,698 $117,665,938 $655,758,025 $639,790,573
---------------------------------------------------------------------------------------
Undistributed net invest-
ment income included in
net assets
End of period $ 390,420 $ 254,790 $ 360,380 $ 280,188 $-- $--
---------------------------------------------------------------------------------------
*Distributions were decreased by net realized loss from security transactions of $9,957.
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
Notes to Financial Statements (unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Franklin California Tax-Free Trust (the Trust) is registered under the
Investment Company Act of 1940 as an open-end investment company, consisting of
three series (the Funds). All Funds are diversified except the Franklin
California Intermediate-Term Tax-Free Income Fund. The Funds and their
investment policies are to provide tax-free income. The Franklin California
Tax-Exempt Money Fund also seeks liquidity in its investments.
The following summarizes the Funds' significant accounting policies.
a. Security Valuation:
Tax-free bonds generally trade in the over-the-counter market and are valued
within the range of the latest quoted bid and asked prices. In the absence of a
sale or reported bid and asked prices, information with respect to bond and note
transactions, quotations from bond dealers, market transactions in comparable
securities, and various relationships between securities are used to determine
the value of the security. The 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. Securities for
which market quotations are not readily available are valued at fair value as
determined by management in accordance with procedures established by the Board
of Trustees.
The securities in the Franklin California Tax-Exempt Money Fund are valued at
amortized cost which approximates value.
b. Income Taxes:
No provision has been made for income taxes because each Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and
distribute all of its taxable income.
c. Security Transactions, Investment Income, Expenses and Distributions:
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income and estimated expenses are accrued daily. Bond discount and
premium are amortized on an income tax basis. For the Franklin California
Insured Tax-Free Income Fund and the Franklin California Intermediate-Term
Tax-Free Income Fund, dividends from net investment income are normally declared
daily and distributed monthly to shareholders. Other distributions are recorded
on the ex-dividend date. For the Franklin California Tax-Exempt Money Fund,
dividends from net investment income and capital gains or losses are normally
declared daily. Such distributions are reinvested in additional shares of the
Fund.
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. Other expenses are
charged to each Fund on a specific identification basis.
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class for the Franklin California
Insured Tax-Free Income Fund.
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (cont.)
d. Insurance:
The scheduled payments of interest and principal for each long-term municipal
security in the Franklin California Insured Tax-Free Income Fund is insured by
either a new issue insurance policy, a portfolio insurance policy, a secondary
insurance policy, or by collateral guaranteed by an agency of the U.S.
government.
Depending on the type of coverage, premiums for insurance are either added to
the cost basis of the security, included as an expense of the fund, or paid by a
third party.
e. Accounting Estimates:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
2. SHARES OF BENEFICIAL INTEREST
The Franklin California Insured Tax-Free Income Fund offers two classes of
shares: Class I and Class II. The shares have the same rights except for their
initial sales load, distribution fees, voting rights on matters affecting a
single class and the exchange privilege of each class.
At December 31, 1997, there were an unlimited number of shares authorized (no
par value). Transactions in the Funds' shares were as follows:
<TABLE>
<CAPTION>
Franklin
Franklin California Franklin California California
Insured Tax-Free Intermediate-Term Tax-Exempt
Income Fund Tax-Free Income Fund Money Fund
Shares Amount Shares Amount Amount
<S> <C> <C> <C> <C> <C>
Class I Shares:
Six months ended December 31, 1997
Shares sold 10,177,703 $126,179,965 2,138,639 $23,738,356 $465,695,826
Shares issued on
reinvestment of distributions 2,183,167 27,152,126 158,661 1,763,507 9,458,544
Shares redeemed (11,044,783) (137,118,174) (1,605,714) (17,811,808) (459,186,918)
----------------------------------------------------------------------
Net increase 1,316,087 $ 16,213,917 691,586 $ 7,690,055 $ 15,967,452
=====================================================================
Year ended June 30, 1997
Shares sold 22,948,118 $278,902,671 3,368,342 $36,450,937 $922,857,545
Shares issued on
reinvestment of distributions 3,057,673 37,223,689 300,873 3,255,392 17,999,484
Shares redeemed (24,432,714) (297,112,433) (2,389,859) (25,886,520) (898,885,246)
----------------------------------------------------------------------
Net increase 1,573,077 $ 19,013,927 1,279,356 $13,819,809 $ 41,971,783
=====================================================================
</TABLE>
2. SHARES OF BENEFICIAL INTEREST (cont.)
Franklin California
Insured Tax-Free
Income Fund
Shares Amount
Class II Shares:
Six months ended December 31, 1997
Shares sold 912,796 $ 11,390,912
Shares issued on
reinvestment of distributions 74,584 933,161
Shares redeemed (335,978) (4,204,163)
---------------------------
Net increase 651,402 $ 8,119,910
==========================
Year ended June 30, 1997
Shares sold 1,578,751 $ 19,284,425
Shares issued on
reinvestment of distributions 67,671 828,623
Shares redeemed (336,345) (4,102,175)
---------------------------
Net increase 1,310,077 $ 16,010,873
==========================
3. TRANSACTIONS WITH AFFILIATES
Certain officers and trustees of the Funds are also officers or trustees of
Franklin/Templeton Distributors, Inc. (Distributors), Franklin Advisers, Inc.
(Advisers), Franklin/Templeton Investor Services, Inc. (Investor Services), and
Franklin Templeton Services, Inc. (FT Services), the Funds' principal
underwriter, investment manager, transfer agent and administrative manager,
respectively.
The Franklin California Insured Tax-Free Income Fund and Franklin California
Intermediate-Term Tax-Free Income Fund pay investment management fees to
Advisers based on the net assets on the last day of the month and the Franklin
California Tax-Exempt Money Fund pay an investment management fee to Advisers
based on the average net assets of the Fund as follows:
Annualized
Fee Rate Net Assets
.625% First $100 million
.50% Over $100 million, up to and including $250 million
.45% In excess of $250 million
Under an agreement with Advisers, FT Services provides administrative services
to the Funds. The fee is paid by Advisers and computed monthly based on average
daily net assets, and is not an additional expense of the Funds.
Advisers agreed in advance to waive management fees for the Franklin California
Intermediate-Term Tax-Free Income Fund as noted in the Statement of Operations.
The Franklin California Intermediate-Term Tax-Free Income Fund reimburses
Distributors up to .10% per year of its average daily net assets, and the
Franklin California Insured Tax-Free Income Fund reimburses Distributors up to
.10% and .65% per year of the average daily net assets of class I and class II,
respectively, for costs incurred in marketing the Funds' shares.
3. TRANSACTIONS WITH AFFILIATES (cont.)
Distributors received/paid net commissions from/on sales of the Funds' shares,
and received contingent deferred sales charges for the period as follows:
Franklin Franklin California
California Intermediate-Term
Insured Tax-Free Tax-Free
Income Fund Income Fund
Net commissions
received (paid) $(114,477) $677
Contingent deferred
sales charges $ 7,891 $--
4. INCOME TAXES
The Franklin California Intermediate-Term Tax-Free Income and the Franklin
California Tax-Exempt Money Funds had tax basis capital losses which may be
carried over to offset future capital gains. Such losses expire as follows:
Franklin CaliforniaFranklin
Intermediate-TermCalifornia
Tax-Free Tax-Exempt
Income Fund Money Fund
Capital Loss
carryovers
expiring in:
2002 $103,315 $ --
2003 465,495 14,563
2005 -- 1,444
---------------------------
$568,810 $16,007
At June 30, 1997, the Franklin California Tax-Exempt Money Fund has deferred
capital losses occurring subsequent to October 31, 1996 of $9,957. For tax
purposes, such losses will be reflected in the year ending June 30, 1998.
At December 31, 1997, the net unrealized appreciation based on the cost of
investments for income tax purposes were as follows:
Franklin Franklin California
California Intermediate-Term
Insured Tax-Free Tax-Free
Income Fund Income Fund
Net investment cost $1,587,562,361 $122,170,399
Unrealized
appreciation $ 113,854,727 $ 5,868,155
Unrealized
depreciation (47,969) (30)
-------------------------------
Net unrealized
appreciation $ 113,806,758 $ 5,868,125
==============================
Net realized capital losses differ for financial statements and tax purposes
primarily due to differing treatment of wash sales.
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
period ended December 31, 1997, were as follows:
Franklin Franklin California
California Intermediate-Term
Insured Tax-Free Tax-Free
Income Fund Income Fund
Purchases $201,850,807 $17,278,453
Sales $155,757,984 $10,092,599
6. CREDIT RISK
The Funds have investments in excess of 10% of their total net assets in their
respective states. Such concentration may subject the Funds more significantly
to economic changes occurring within those states.
Franklin California Tax-Free Trust Semi-Annual Report December 31, 1997.
APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING (PURSUANT TO ITEM
304 (a) OF REGULATION S-T)
GRAPHIC MATERIAL (1)
This chart shows in bar format the comparison between the Franklin California
Insured Tax-Free Income Fund's Class I distribution rate of 4.89% and the
taxable equivalent rate of 8.93%.
GRAPHIC MATERIAL (2)
This chart shows in bar format the comparison between the Franklin California
Insured Tax-Free Income Fund's Class II distribution rate of 4.45% and the
taxable equivalent rate of 8.12%.
GRAPHIC MATERIAL (3)
This chart shows in pie format the credit quality breakdown of the Franklin
California Intermediate-Term Tax-Free Income Fund based on total long-term
investments as of 12/31/97.
AAA 27.5%
AA 2.1%
A 27.6%
BBB 42.7%
Below Investment Grade 0.1%
GRAPHIC MATERIAL (4)
This chart shows in bar format the comparison between the Franklin California
Intermediate-Term Tax-Free Income Fund's distribution rate of 4.60% and the
taxable equivalent rate of 8.40%.
GRAPHIC MATERIAL (5)
This chart shows in bar format the comparison between the Franklin California
Tax-Exempt Money Fund's seven-day annualized yield of 3.18% and the taxable
equivalent yield of 5.80%.
