ANNUAL
REPORT
JUNE 30, 1998
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 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
Fund Reports
Franklin California Insured
Tax-Free Income Fund................................................. 4
Franklin California
Intermediate-Term
Tax-Free Income Fund................................................. 14
Franklin California
Tax-Exempt Money Fund................................................ 20
Municipal Bond Ratings............................................... 23
Financial Highlights &
Statement of Investments............................................. 26
Financial Statements................................................. 56
Notes to
Financial Statements................................................. 60
Independent
Auditor's Report..................................................... 65
SHAREHOLDER LETTER
Dear Shareholder:
It's a pleasure to bring you Franklin California Tax-Free Trust's annual report
for the period ended June 30, 1998.
The National Economy
During much of the period under review, the U.S. economy continued its
remarkable expansion, demonstrating healthy growth with few signs of inflation.
Strong consumer demand for goods, services and housing stimulated growth.
However, by the period's end, the preliminary, second quarter, annualized Gross
Domestic Product gain of 1.4% reflected some economic slowdown due to the Asian
financial crisis. Thus far, the Asian crisis' impact on the U.S. economy has
been mixed -- it has slowed the economy through a decline in American exports,
while the resulting U.S. dollar's strength has helped keep inflation under
control through a decline in import prices. Although many Asian countries are
implementing reforms, it will likely take some time for their economies to
recover.
In May, President Clinton predicted a $39 billion federal budget surplus for the
government's fiscal year-end on September 30, 1998. This would be the first
annual surplus since the government finished $3.2 billion ahead in 1969. During
the fund's fiscal year, economic growth benefited employment without triggering
significant inflation. May's annualized, seasonally adjusted rate of 4.3% marked
a 28-year low in the nation's unemployment; at the same time, commodity prices
fell to their lowest levels since the early 1990s.
Over the year, interest rates declined. However, for the first half of 1998, the
combination of a strong economy and low inflation kept rates in a narrow range.
The healthy economy prevented a significant rate decline, while low inflation
prevented rates from rising. The bond market also benefited from the dollar's
strength relative to other currencies. The yield for the 30-year U.S. Treasury
bond stood at 5.62% on June 30, 1998, compared with 6.80% a year earlier.
California's Economy
The California municipal bond market benefited from a local economy where
employment has been growing faster than the nation's over the past three years.1
Downsizing in defense- and aerospace-related industries has all but ended, and
the construction, exports, tourism, computer services and entertainment sectors
have become the new engines of California's steady economic growth. However,
these strong job gains lured more workers into the labor force, slowing the drop
in the state's jobless rate.2 Thus, California's annualized, seasonally adjusted
5.8% unemployment rate for May was higher than the nation's.
"With projected increases in employment, personal income and homebuilding,
California's economic growth should persist."
The Asian crisis has not yet had a significant impact on the California
municipal bond market. During the year under review, growth in exports to Hong
Kong, Taiwan, and to NAFTA partners Mexico and Canada offset declines in exports
to trading partners such as Japan, Korea, Singapore and Malaysia.3 It is too
early to estimate El Nino's effects on California municipalities; however,
rating agencies do not normally reduce ratings because of natural disasters, and
it does not appear that the wet winter affected any of the portfolio's bonds.
Taking into account California's robust economy, Standard & Poor's(R) upgraded
the state's general obligation debt rating to A+. With projected increases in
employment, personal income and homebuilding, California's economic growth
should persist. Market fundamentals continue to be attractive for municipal
bonds as these securities remain one of the few investment options available for
tax-conscious investors.
1. Source: Standard & Poor's Credit Week Municipal, February 23, 1998.
2. Source: California Department of Finance, California Economic Indicators,
March/April 1998.
3. Ibid.
We encourage you to discuss your financial goals with an 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. Municipal bonds continue to be an attractive investment
for diversifying a heavily weighted stock portfolio. 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
FRANKLIN CALIFORNIA INSURED
TAX-FREE INCOME FUND
Your Fund's Objective: Franklin California Insured Tax-Free Income Fund 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
Franklin California Insured Tax-Free Income Fund was able to take advantage of
market fluctuations and higher bond issuance to perform well over the past year.
The increased bond issuance was tied to an interest-rate decline over the
reporting period, as demonstrated by the 30-year Treasury bond yield's move from
6.80% on June 30, 1997, to 5.62% on June 30, 1998. With the decline in rates, we
saw a 51% volume increase in bond offerings over the first half of 1998 compared
with the same period last year. During the reporting period, many municipalities
took advantage of the lower interest-rate environment to issue new debt and
prerefund outstanding bonds. As a result of the greater number of municipal
bonds available, their prices declined considerably relative to Treasuries, and
they traded at or above 90% of Treasury yields. The market volatility over the
past 12 months created buying opportunities for the fund to purchase bonds on
the downswings.
1. For investors subject to the federal alternative minimum tax, a small portion
of this income may be subject to such tax. Distributions of capital gains and of
ordinary income from accrued market discount, if any, are generally taxable.
2. Fund shares are not insured by any U.S. or other government agency. Insurance
relates only to the payment of principal and interest on the portfolio's
securities. It does not eliminate market risks to the fund's yield or share
price or insure the fund's yield or share value. Terms of the insurance are more
fully described in the prospectus, and no representation is made to any
insurer's ability to meet its commitments.
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 28 of
this report.
As many issuers refinanced outstanding debt, the number of the fund's
prerefunded bonds increased. When a bond is prerefunded, a new issue is brought
to market with a lower interest rate, to pay off the older issue at its first
call date. The proceeds from the new bonds are invested in U.S. Treasury
securities that mature on the first call date of the original bonds. Generally,
we look to sell prerefunded bonds as they approach five years to their call
date. At this point, their premium usually begins to decline rapidly to its
stated call price. By capturing the premium and reinvesting the proceeds in
current coupon bonds, we are able to extend a portion of the income that would
otherwise be lost at the call date.
However, because of the low interest-rate environment, it was difficult for the
fund to generate enough capital losses to offset the gains realized from
prerefunded bond sales. Thus, the fund made a capital gain distribution of 11.58
cents per share inDecember. Additionally, the interest rates available for
reinvestment were significantly lower than the coupons on the prerefunded bonds
being sold; therefore, it may be difficult for the fund to maintain its dividend
level. Regardless of the future direction of interest rates, we believe our
conservative investment approach, avoidance of derivative investments and
purchases of current coupon bonds with long call protections, will benefit our
shareholders moving forward.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of June 30, 1998, the end of the reporting period. However, market
and economic conditions are changing constantly, which can be expected to affect
our strategies and the fund's portfolio composition. Although historic
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy.
GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT
PERFORMANCE SUMMARY
GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Franklin California Insured Tax-Free Income Fund - Class I share price, as
measured by net asset value, increased 25 cents, from $12.22 on June 30, 1997,
to $12.47 on June 30, 1998. In addition to distributing 64.2 cents ($0.642) per
share in dividend income, the fund made a long-term capital gain distribution of
11.58 cents ($0.1158) per share during the 12-month reporting period.
Distributions will vary based on the fund's income and any profits realized from
the sale of securities in the fund's portfolio. 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 $13.02 on June 30, 1998, your fund's
distribution rate was 4.88%. 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 8.91% from a taxable investment to match the
fund's tax-free distribution rate.
The chart on page 8 compares your fund's Class I shares' performance with that
of the unmanaged Lehman Brothers Municipal Bond Index. The index includes over
40,000 municipal securities from across the country, while your fund consists
primarily of California municipal bonds. Of course, such market indices have
inherent performance differentials over any fund. They do not pay management
fees to cover salaries of securities analysts or portfolio managers, or pay
commissions or market spreads to buy and sell securities. Unlike an index,
mutual funds are never 100% invested because they need cash on hand to redeem
shares. In addition, the performance shown for the fund includes the maximum
initial sales charge, all fund expenses and account fees. If operating expenses
such as Franklin California Insured Tax-Free Income Fund's had been applied to
this index, the index's performance would have been lower. Please remember that
an index is simply a measure of performance and one cannot invest in it
directly.
Your fund's shares' performance exceeded the rate of inflation, as measured by
the Consumer Price Index (CPI), keeping your purchasing power well ahead of
inflation -- a primary goal of any investment.
GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT
GRAPHIC MATERIAL 4 OMITTED - SEE APPENDIX AT END OF DOCUMENT
The historical performance data shown pertains only to the fund's Class I
shares. The fund offers another share class subject to different fees and
expenses, which affect its performance. Please see the prospectus for more
details.
*Includes the sales charge and represents the change in value of an investment
over the period shown. Total return assumes reinvestment of dividends and
capital gains at net asset value. Index is unmanaged and includes reinvested
dividends. One cannot invest directly in an index.
**Source: Standard and Poor's Micropal.
Franklin California Insured Tax-Free Income Fund - Class I
Periods ended 6/30/98
Since
Inception
1-Year 5-Year 10-Year (9/3/85)
Cumulative Total Return1 8.38% 34.46% 116.25% 173.67%
Average Annual Total Return2 3.79% 5.18% 7.55% 7.81%
Distribution Rate3 4.88%
Taxable Equivalent
Distribution Rate4 8.91%
30-Day Standardized Yield5 4.13%
Taxable Equivalent Yield4 7.54%
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. See Note below.
3. Distribution rate is based on an annualization of the current 5.3 cent per
share monthly dividend and the maximum offering price of $13.02 on June 30,
1998.
4. Taxable equivalent distribution rate and yield assume the 1998 maximum
combined federal and California state personal income tax bracket of 45.2%,
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 June 30, 1998.
Note: Prior to July 1, 1994, fund shares were offered at a lower initial sales
charge with dividends reinvested at the offering price. Thus, actual 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. Since markets can go down as well as up, investment return
and principal value will fluctuate with market conditions, and you may have a
gain or loss when you sell your shares.
Franklin California Insured Tax-Free Income Fund - Class I paid distributions
derived from long-term capital gains of 11.58 cents ($0.1158) per share in
December 1997. The fund hereby designates such distributions as capital gain
dividends per Section 852(b)(3) of the Internal Revenue Code.
GRAPHIC MATERIAL 5 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 26 cents, from $12.29 on June 30, 1997,
to $12.55 on June 30, 1998. In addition to distributing 57.13 cents ($0.5713)
per share in dividend income, the fund made a long-term capital gain
distribution of 11.58 cents ($0.1158) per share during the 12-month reporting
period. Distributions will vary based on the fund's income and any profits
realized from the sale of securities in the fund's portfolio. Past distributions
are not predictive of future trends.
Based on an annualization of the current monthly per-share dividend of 4.71
cents ($0.0471) and the maximum offering price of $12.68 on June 30, 1998, your
fund's distribution rate was 4.46%. 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 8.14% from a taxable investment
to match the fund's tax-free distribution rate.
The chart on page 12 compares your fund's Class II shares' performance with that
of the unmanaged Lehman Brothers Municipal Bond Index. The index includes over
40,000 municipal securities from across the country, while your fund consists
primarily of California municipal bonds. Of course, such market indices have
inherent performance differentials over any fund.
They do not pay management fees to cover salaries of securities analysts or
portfolio managers, or pay commissions or market spreads to buy and sell
securities. Unlike an index, mutual funds are never 100% invested because they
need cash on hand to redeem shares. In addition, the performance shown for the
fund includes the sales charges, all fund expenses and account fees. If
operating expenses such as Franklin California Insured Tax-Free Income Fund's
had been applied to this index, the index's performance would have been lower.
Please remember that an index is simply a measure of performance and one cannot
invest in it directly.
Your fund's shares' performance exceeded the rate of inflation, as measured by
the Consumer Price Index (CPI), keeping your purchasing power well ahead of
inflation -- a primary goal of any investment.
GRAPHIC MATERIAL 6 OMITTED - SEE APPENDIX AT END OF DOCUMENT
GRAPHIC MATERIAL 7 OMITTED - SEE APPENDIX AT END OF DOCUMENT
The historical performance data shown pertains only to the fund's Class II
shares. The fund offers another share class subject to different fees and
expenses, which affect its performance. Please see the prospectus for more
details.
*Includes all sales charges and represents the change in value of an investment
over the period shown. The total value on 6/30/98 reflects the contingent
deferred sales charge (CDSC), assuming the account is liquidated on that date.
Purchasers who remain in the account for longer than 18 months will not be
assessed the CDSC; thus actual total return may be higher. Index is unmanaged
and includes reinvested dividends. One cannot invest directly in an index.
**Source: Standard and Poor's Micropal.
Franklin California Insured Tax-Free Income Fund - Class II
Periods ended 6/30/98
Since
Inception
1-Year 3-Year (5/1/95)
Cumulative Total Return1 7.80% 21.85% 23.86%
Average Annual Total Return2 5.77% 6.46% 6.66%
Distribution Rate3 4.46%
Taxable Equivalent
Distribution Rate4 8.14%
30-Day Standardized Yield5 3.71%
Taxable Equivalent Yield4 6.77%
1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the 1.0% initial sales
charge and 1.0% contingent deferred sales charge (CDSC), applicable to shares
redeemed within 18 months of investment.
3. Distribution rate is based on an annualization of the current 4.71 cent per
share monthly dividend and the maximum offering price of $12.68 on June 30,
1998.
4. Taxable equivalent distribution rate and yield assume the 1998 maximum
combined federal and California state personal income tax bracket of 45.2%,
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 June 30, 1998.
All total return calculations assume reinvestment of dividends and capital gains
at net asset value. Since markets can go down as well as up, investment return
and principal value will fluctuate with market conditions, and you may have a
gain or loss when you sell your shares.
Franklin California Insured Tax-Free Income Fund - Class II paid distributions
derived from long-term capital gains of 11.58 cents ($0.1158) per share in
December 1997. The fund hereby designates such distributions as capital gain
dividends per Section 852(b)(3) of the Internal Revenue Code.
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND
GRAPHIC MATERIAL 8 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Your Fund's Objective: Franklin California Intermediate-Term Tax-Free Income
Fund seeks to provide high, current income exempt from regular federal and
California state personal income taxes while seeking preservation of capital.
The fund invests primarily in a portfolio of California municipal securities
with an average weighted maturity (the time in which the debt must be repaid)
between three and 10 years.1
Issuers took advantage of the past year's declining interest rates to bring a
greater amount of new debt to market, making the supply of California municipal
bonds more than adequate to meet demand. Most of these bonds were issued to
prerefund previously issued bonds with higher interest rates. Approximately 75%
of new-issue bonds were insured; however, some BBB bonds were issued. (For an
explanation of bond ratings, please see page 23.)
1. For investors subject to the federal alternative minimum tax, a small portion
of this income may be subject to such tax. Distributions of capital gains and of
ordinary income from accrued market discount, if any, are generally taxable.
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 42 of
this report.
During the reporting period the fund sought to maintain income and increase call
protection by selling bonds paying 43/4% to 51/4% interest in the two- to
five-year maturity range at premiums and purchasing, at par or a slight
discount, bonds in the 10- to 15-year range, paying 5% to 51/2% interest. The
bonds purchased ranged in rating from BBB to AAA, with approximately 50% being
BBB. The largest purchase was $5 million in Virgin Islands Public Finance
Authority bonds rated BBB-.
Call protection is the length of time during which a security cannot be redeemed
by the issuer. Corporate and municipal issuers generally provide 10 years of
call protection. Without call protection, a bond could be called away at any
time specified in the indenture.+
+Barron's Dictionary of Finance and Investment Terms, 1995.
Because of the Asian crisis and its economic effects, it is unlikely the Federal
Reserve Board will raise short-term interest rates soon, nor does inflation
appear to be a problem. The supply of California municipal bonds should be
sufficient to meet the fund's needs. In this environment, the fund should
continue to perform well during the next year.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of June 30, 1998, the end of the reporting period. However, market
and economic conditions are changing constantly, which can be expected to affect
our strategies and the fund's portfolio composition. Although historic
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy.
PERFORMANCE SUMMARY
GRAPHIC MATERIAL 9 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Franklin California Intermediate-Term Tax-Free Income Fund's share price, as
measured by net asset value, increased 31 cents, from $10.93 on June 30, 1997,
to $11.24 on June 30, 1998. During the 12-month reporting period, shareholders
received income distributions totaling 52.8 cents ($0.528) 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 $11.50 on June 30, 1998, your fund's
distribution rate was 4.59%. 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 8.38% from a taxable investment to match the
fund's tax-free distribution rate.
The chart on page 18 compares your fund's shares' performance with that of the
unmanaged Lehman Brothers 10-Year Municipal Bond Index. The index includes over
8,000 municipal securities from across the country, while your fund consists
primarily of California municipal bonds. Of course, such market indices have
inherent performance differentials over any fund. They do not pay management
fees to cover salaries of securities analysts or portfolio managers, or pay
commissions or market spreads to buy and sell securities. Unlike an index,
mutual funds are never 100% invested because they need cash on hand to redeem
shares. In addition, the performance shown for the fund includes the maximum
initial sales charge, all fund expenses and account fees. If operating expenses
such as Franklin California Intermediate-Term Tax-Free Income Fund's had been
applied to this index, the index's performance would have been lower. Please
remember that an index is simply a measure of performance and one cannot invest
in it directly.
Your fund's shares' performance exceeded the rate of inflation, as measured by
the Consumer Price Index (CPI), keeping your purchasing power well ahead of
inflation -- a primary goal of any investment.
*Includes the sales charge and represents the change in value of an investment
over the period shown. Total return assumes reinvestment of dividends and
capital gains at net asset value. Index is unmanaged and includes reinvested
dividends. One cannot invest directly in an index.
**Source: Standard and Poor's Micropal.
GRAPHIC MATERIAL 10 OMITTED - SEE APPENDIX AT END OF DOCUMENT
GRAPHIC MATERIAL 11 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Franklin California Intermediate-Term Tax-Free Income Fund
Periods ended 6/30/98
Since
Inception
1-Year 5-Year (9/23/92)
Cumulative Total Return1 7.76% 36.39% 47.74%
Average Annual Total Return2 5.35% 5.93% 6.58%
Distribution Rate3 4.59%
Taxable Equivalent
Distribution Rate4 8.38%
30-Day Standardized Yield5 4.09%
Taxable Equivalent Yield4 7.47%
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 cent per
share monthly dividend and the maximum offering price of $11.50 on June 30,
1998.
4. Taxable equivalent distribution rate and yield assume the 1998 maximum
combined federal and California state personal income tax bracket of 45.2%,
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 June 30, 1998.
The fund's manager agreed in advance to waive a portion of the management fees,
which reduces operating expenses and increases distribution rate, yield and
total return to shareholders. Without this waiver, the fund's distribution rate
and total return would have been lower, and the yield for the period would have
been 3.95%. The fee waiver may be discontinued at any time upon notice to the
fund's Board of Trustees.
All total return calculations assume reinvestment of dividends and capital gains
at net asset value. Since markets can go down as well as up, investment return
and principal value will fluctuate with market conditions, and you may have a
gain or loss when you sell your shares.
FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND
Your Fund's Objective: Franklin California Tax-Exempt Money Fund 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
California's economic outlook at the end of the reporting period was one of the
most positive in over six years. The state has added jobs at an average annual
rate of 2% since 1993. Financially, California benefited from a strong economic
rebound, thanks to higher than anticipated revenue growth and lower cash-flow
borrowing.
The season for issuing California notes began in early June, and we participated
in several attractive deals. Notable purchases included Los Angeles County
TRANs, California School Cash Reserve Program notes and Alameda County TRANs.
During the reporting period we also purchased California State TECP, Rancho
Mirage Redevelopment Agency COP weekly VRDN, San Bernardino County MFHR weekly
VRDN and Dublin Housing Authority MFHR weekly VRDN.
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.
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 51 of
this report.
As always, Franklin California Tax-Exempt Money Fund's investment strategy
emphasizes high quality and liquidity. In an effort to provide safety and
stability of principal, we manage the fund more conservatively than required by
SEC guidelines. For example, SEC guidelines allow tax-exempt money funds to
purchase first- and second-tier securities. Franklin Templeton purchases only
first-tier securities for inclusion in its tax-exempt money market portfolios.
Also, even though SEC guidelines regulating money market funds permit it,
Franklin California Tax-Exempt Money Fund does not buy any derivatives. Instead,
the fund purchases only plain vanilla, variable-rate securities. The fund
eliminated its exposure to Japanese bank guarantees several years ago because of
the problems these banks were having. This is consistent with our philosophy of
purchasing securities only from what we believe are the most credit-worthy
institutions.
Money Market Acronyms
The report mentions the following acronyms often used in the short-term
municipal market.
COP - Certificate of Participation
MFHR - Multi-Family Housing Revenue
TECP - Tax-Exempt Commercial Paper
TRAN - Tax and Revenue
Anticipation Note
VRDN - Variable-Rate Demand Note
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of June 30, 1998, the end of the reporting period. However, market
and economic conditions are changing constantly, which can be expected to affect
our strategies and the fund's portfolio composition. Although historic
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy.
GRAPHIC MATERIAL 12 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Franklin California Tax-Exempt Money Fund
Period ended 6/30/98
Seven-day effective yield1 2.76%
Seven-day annualized yield 2.72%
Taxable equivalent yield2 4.97%
1. The seven-day effective yield assumes the compounding of daily dividends.
2. Taxable equivalent yield assumes the 1998 maximum combined federal and
California state personal income tax bracket of 45.2%, based on the federal
income tax rate of 39.6%.
Annualized and effective yields are for the seven days ended June 30, 1998.
Yields reflect fluctuations in interest rates on portfolio investments, as well
as fund expenses. Yields should be viewed in terms of the current, low rate of
inflation -- just as high inflation usually results in higher yields, low
inflation often brings the opposite.
Past performance is not predictive of future results.
MUNICIPAL BOND RATINGS
Moody's
Aaa: Best quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt-edged." Interest payments are protected by a
large or exceptionally stable margin, and principal is secure. While 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 are generally known as high-grade bonds. Aa bonds are rated lower than Aaa
because margins of protection may not be as large, fluctuation of protective
elements may be of greater amplitude, or there may be other elements which make
the long-term risks appear larger.
A: 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 will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
C: Reserved for income bonds on which no interest is being paid.
D: Debt rated "D" is in default and payment of interest and/or repayment of
principal is in arrears.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Highlights
<TABLE>
<CAPTION>
Franklin California Insured Tax-Free Income Fund
Class I
-------------------------------------------------------------
Year Ended June 30,
-------------------------------------------------------------
1998 1997 1996 1995 1994
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year ............ $12.22 $12.01 $11.95 $11.74 $12.30
-------------------------------------------------------------
Income from investment operations:
Net investment income ........................ .64 .66 .67 .68 .68
Net realized and unrealized gains (losses) ... .37 .21 .06 .20 (.56)
--------------------------------------------------------------
Total from investment operations .............. 1.01 .87 .73 .88 .12
-------------------------------------------------------------
Less distributions from:
Net investment income ........................ (.64) (.66) (.67) (.67) (.68)
Net realized gains ........................... (.12) -- -- -- --
-------------------------------------------------------------
Total distributions ........................... (.76) (.66) (.67) (.67) (.68)
-------------------------------------------------------------
Net asset value, end of year .................. $12.47 $12.22 $12.01 $11.95 $11.74
=============================================================
Total return* ................................. 8.38% 7.41% 6.18% 7.80% .67%
Ratios/supplemental data
Net assets, end of year (000's) ............... $1,717,489 $1,635,543 $1,588,631 $1,468,080 $1,450,821
Ratios to average net assets:
Expenses ..................................... .60% .60% .60% .59% .54%
Net investment income ........................ 5.11% 5.41% 5.50% 5.77% 5.53%
Portfolio turnover rate ....................... 21.66% 20.40% 14.22% 11.85% 6.98%
</TABLE>
*Total return does not reflect sales commissions or the contingent 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>
Franklin California Insured Tax-Free Income Fund (cont.)
Class II
--------------------------------------------
Year Ended June 30,
--------------------------------------------
1998 1997 1996 1995***
--------------------------------------------
<S> <C> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year ........................... $12.29 $12.07 $11.99 $11.88
--------------------------------------------
Income from investment operations:
Net investment income ....................................... .58 .59 .60 .11
Net realized and unrealized gains ........................... .37 .22 .08 .10
--------------------------------------------
Total from investment operations ............................. .95 .81 .68 .21
--------------------------------------------
Less distributions from:
Net investment income ....................................... (.57) (.59) (.60) (.10)
Net realized gains .......................................... (.12) -- -- --
--------------------------------------------
Total distributions .......................................... (.69) (.59) (.60) (.10)
--------------------------------------------
Net asset value, end of year ................................. $12.55 $12.29 $12.07 $11.99
============================================
Total return** ............................................... 7.80% 6.86% 5.70% 1.79%
Ratios/supplemental data
Net assets, end of year (000's) .............................. $55,371 $34,899 $18,458 $507
Ratios to average net assets:
Expenses .................................................... 1.16% 1.16% 1.17% 1.17%*
Net investment income ....................................... 4.55% 4.81% 4.96% 5.03%*
Portfolio turnover rate ...................................... 21.66% 20.40% 14.22% 11.85%
</TABLE>
*Annualized.
**Total return does not reflect sales commissions or the contingent 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, June 30, 1998
<TABLE>
<CAPTION>
PRINCIPAL
Franklin California Insured Tax-Free Income Fund AMOUNT VALUE
Long Term Investments 96.9%
Bonds 96.5%
<S> <C> <C>
ABAG, RDA Revenue, Tax Allocation, Pool A2, FSA Insured, 6.60%, 12/15/24 ....................... $10,775,000 $ 12,086,425
Alameda County COP, Medical Center Project, MBIA Insured, 5.00%, 6/01/28 ....................... 5,000,000 4,841,500
Alameda County COP, Municipal Custodial Receipts, Series 1,
BIG Insured, Pre-Refunded, 7.25%, 12/01/07 .................................................... 2,000,000 2,188,600
Alameda County Water District Revenue COP, Water System Project,
FGIC Insured, 6.00%, 6/01/20 .................................................................. 1,000,000 1,066,120
Alhambra COP, Police Facilities AD No. 91-1, AMBAC Insured, 6.75%, 9/01/23 ..................... 10,730,000 11,647,630
Anaheim Public Financing Authority Revenue, Refunding, Local Agency, CFD, Series A,
MBIA Insured, 5.75%, 9/01/14 .................................................................. 3,790,000 4,035,554
Arcadia GO, USD, Series B, FGIC Insured, 5.875%, 7/01/20 ....................................... 1,985,000 2,122,799
Arcata Joint Powers Financing Authority Revenue, Tax Allocation,
Community Development Project, Series A,
AMBAC Insured, 6.00%, 8/01/23 ................................................................. 5,690,000 6,127,789
Arcata Joint Powers Financing Authority, Wastewater Revenue, FSA Insured, 5.80%, 12/01/22 ...... 1,080,000 1,153,364
Barstow RDA, Tax Allocation, Central Redevelopment Project,
Series A, MBIA Insured, 6.25%, 9/01/22 ........................................................ 2,000,000 2,181,520
Beaumont USD, COP, Refunding, Series A, FSA Insured, 5.80%, 1/01/21 ............................ 1,500,000 1,595,730
Benicia COP, Refunding, Water System Project, AMBAC Insured, 6.125%, 11/01/17 .................. 2,995,000 3,192,071
Benicia USD, Series A, AMBAC Insured, 6.85%, 8/01/16 ........................................... 5,900,000 6,494,425
Blythe Financing Authority, Lease Revenue, City Hall and County Courthouse Project, MBIA Insured,
5.50%, 9/01/27 ................................................................................ 3,500,000 3,614,695
Brea Public Finance Authority Revenue, Tax Allocation, Redevelopment Project,
Series A, MBIA Insured,
7.00%, 8/01/15 ................................................................................. 1,520,000 1,668,990
6.75%, 8/01/22 ................................................................................. 1,550,000 1,684,773
7.00%, 8/01/23 ................................................................................. 12,185,000 13,331,243
Buellton USD, Series A, MBIA Insured, 6.375%, 7/01/17 .......................................... 2,155,000 2,338,671
Burbank PCR, Wastewater Treatment, Series A, FGIC Insured, 5.50%, 6/01/25 ...................... 3,000,000 3,082,680
Burbank RDA, Refunding, Tax Allocation, City Center
Redevelopment Project, Series A, FSA Insured,
5.50%, 12/01/23 ............................................................................... 2,000,000 2,047,460
Burbank Waste Disposal Revenue, Series B, AMBAC Insured, 6.00%, 5/01/22 ........................ 665,000 692,551
Calaveras County Water District Revenue, Refunding, COP,
Water and Sewer System Improvement
Project, AMBAC Insured, 6.00%, 5/01/16 ........................................................ 3,950,000 4,272,952
Calexico CRDA Revenue, Tax Allocation, Refunding, Merged Central Business and
Residential, FSA Insured, 5.85%, 8/01/15 ...................................................... 1,795,000 1,897,961
Calexico USD, CFD No. 1, Special Tax, Refunding, AMBAC Insured, 5.60%, 9/01/17 ................. 2,930,000 3,083,796
California Educational Facilities Authority Revenue, MBIA Insured,
Loyola Marymount, 5.75%, 10/01/24 .............................................................. 2,000,000 2,100,300
Refunding, Santa Clara University, 5.75%, 9/01/21 .............................................. 3,350,000 3,545,138
California Educational Facilities Authority Revenue,
Pooled Facilities Program, MBIA Insured,
7.00%, 03/01/16 ................................................................................ 1,000,000 1,063,180
Pre-Refunded 7.625%, 11/01/12 .................................................................. 335,000 342,672
California Health Facilities Financing Authority Revenue,
Adventist Health Systems West, Series A, MBIA Insured, 7.00%, 3/01/13 .......................... 3,000,000 3,255,960
Adventist Health Systems West, Series B, MBIA Insured, 6.75%, 3/01/14 .......................... 5,065,000 5,459,108
Marin General Hospital, Series A, FSA Insured, 7.00%, 8/01/15 .................................. 4,000,000 4,290,520
Refunding, Catholic Health Facility, Series A, MBIA Insured, 6.00%, 7/01/17 .................... 5,000,000 5,452,100
San Diego Hospital Association, MBIA Insured, 6.625%, 5/01/19 .................................. 11,110,000 11,490,629
San Diego Hospital Association, Series A, MBIA Insured, 6.20%, 8/01/12 ......................... 2,425,000 2,625,596
San Diego Hospital Association, Series A, MBIA Insured, 6.20%, 8/01/20 ......................... 4,850,000 5,194,835
San Fernando Health Facility, Series A, CHFCLP Insured, 5.25%, 6/01/23 ......................... 2,760,000 2,714,653
Scripps Memorial Hospital, Series A, MBIA Insured, 6.40%, 10/01/12 ............................. 3,500,000 3,828,615
California Health Facilities Financing Authority Revenue, (cont.)
Sharp Temecula Hospital, MBIA Insured, 7.05%, 8/01/21 .......................................... $ 3,000,000 $ 3,281,910
Sutter Health, Series A, FSA Insured, 5.00%, 8/15/37 ........................................... 10,000,000 9,650,300
The Help Group, CHFCLP Insured, 5.40%, 8/01/22 ................................................. 5,000,000 4,986,400
California HFA Revenue,
Home Mortgage, Series D, MBIA Insured, 6.15%, 8/01/28 .......................................... 5,250,000 5,597,183
Home Mortgage, Series J, MBIA Insured, 5.45%, 8/01/16 .......................................... 5,000,000 5,043,800
Series A, MBIA Insured, 7.15%, 8/01/11 ......................................................... 1,315,000 1,405,788
Series A, MBIA Insured, 8.20%, 2/01/20 ......................................................... 4,100,000 4,187,207
Series A, MBIA Insured, 7.20%, 2/01/26 ......................................................... 3,450,000 3,671,801
Series B, MBIA Insured, 6.80%, 8/01/11 ......................................................... 1,815,000 1,945,390
Series B, MBIA Insured, 8.625%, 8/01/15 ........................................................ 245,000 254,771
Series K, AMBAC Insured, 6.25%, 8/01/27 ........................................................ 5,920,000 6,316,166
California HFA, SFM Purchase, Series B-3, Class I, FHA Insured, 5.30%, 8/01/18 ................. 3,000,000 2,999,850
California Public Capital Improvement Financing Authority
Revenue, Pooled Projects, Series B,
BIG Insured, 8.10%, 3/01/18 ................................................................... 9,050,000 9,297,246
California Public School District, Financing Authority Lease Revenue,
Refunding, Southern Kern USD,
Series B, FSA Insured, 5.90%, 9/01/26 ......................................................... 1,850,000 1,994,911
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 5,110,750
Refunding, Series Q, 5.375%, 12/01/27 .......................................................... 18,500,000 18,741,610
California State GO,
5.125%, 10/01/27 ............................................................................... 3,000,000 2,970,570
AMBAC Insured, 6.30%, 9/01/06 .................................................................. 9,000,000 10,226,250
FGIC Insured, 6.00%, 5/01/20 ................................................................... 510,000 549,530
FGIC Insured, 6.00%, 5/01/20 ................................................................... 2,990,000 3,320,246
MBIA Insured, 6.00%, 8/01/16 ................................................................... 210,000 228,245
MBIA Insured, 6.00%, 10/01/21 .................................................................. 65,000 69,507
California State HFA Revenue, Home Mortgage, Series L,
MBIA Insured, 6.40%, 8/01/27 ................................................................... 8,375,000 9,052,286
California State Loan Purchase Authority Revenue, Loan Contract,
Series A, FSA Insured, Pre-Refunded,
7.75%, 10/01/08 ................................................................................ 2,000,000 2,059,480
7.80%, 10/01/18 ................................................................................ 3,365,000 3,465,445
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 4,581,090
California State University and Colleges, Student Union Revenue, MBIA Insured,
Bakersfield, Series A, 6.30%, 11/01/22 ......................................................... 1,310,000 1,422,608
San Bernardino, Series B, 6.30%, 2/01/22 ....................................................... 2,375,000 2,582,266
California State University, Fresno, Auxiliary Residence Student Project Revenue,
MBIA Insured, 6.25%, 2/01/17 .................................................................. 1,500,000 1,642,875
California State University, Housing System Revenue, Series AX,
FGIC Insured, 5.20%, 11/01/30 ................................................................. 3,590,000 3,556,398
California Statewide CDA, COP, MBIA Insured, 5.00%, 04/01/18 ................................... 6,000,000 5,881,500
California Statewide CDA Revenue, COP, John Muir/Mt. Diablo
Health System, MBIA Insured,
5.125%, 8/15/22 ................................................................................ 5,000,000 4,941,750
5.25%, 8/15/27 ................................................................................. 5,910,000 5,900,899
Cambria Community Services District Revenue, MBIA Insured,
COP, Wastewater Treatment System Upgrade, 6.90%, 11/01/24 ...................................... 1,000,000 1,145,150
Water and Wastewater, Refunding, Series A, 6.00%, 5/01/15 ...................................... 1,330,000 1,442,651
Campbell COP, Refunding, Civic Center Project, MBIA Insured, 5.25%, 10/01/28 ................... $ 1,600,000 $ 1,612,016
Campbell Union School District, Series C, FGIC Insured,
5.65%, 8/01/17 ................................................................................. 1,000,000 1,052,090
5.75%, 6/01/22 ................................................................................. 1,000,000 1,066,630
Carpinteria Sanitation District, Capital Facilities Revenue, FGIC Insured, 6.25%, 7/01/14 ...... 2,485,000 2,695,355
Central Coast Water Authority Revenue, State Water Project,
Regional Facilities, AMBAC Insured,
Pre-Refunded, 6.50%, 10/01/14 .................................................................. 2,500,000 2,781,325
Pre-Refunded, 6.60%, 10/01/22 .................................................................. 4,650,000 5,191,214
Refunding, Series A, 5.00%, 10/01/22 ........................................................... 3,000,000 2,933,790
Refunding, Series B, 5.65%, 10/01/11 ........................................................... 595,000 633,187
Refunding, Series B, 5.70%, 10/01/12 ........................................................... 620,000 658,403
Refunding, Series B, 5.80%, 10/01/16 ........................................................... 1,020,000 1,082,924
Refunding, Series B, 5.85%, 10/01/22 ........................................................... 2,800,000 2,966,572
Central School District, San Bernardino County, AMBAC Insured, 5.60%, 5/01/16 .................. 3,035,000 3,160,224
Cerritos Public Financing Authority Revenue, Los Coyotes
Redevelopment Project Loan, Series A, AMBAC
Insured, 5.75%, 11/01/22 ...................................................................... 5,000,000 5,255,200
Chico Public Financing Authority Revenue, Southeast Chico Redevelopment Project, Series A,
FGIC Insured, 6.625%, 4/01/21 ................................................................. 815,000 862,001
Chino Basin Regional Financing Authority Revenue, Refunding, Municipal Water District,
Sewer System Project, AMBAC Insured, 6.00%, 8/01/16 ........................................... 2,000,000 2,157,180
Chino COP, RDA, Refunding, Water System Improvement Project,
AMBAC Insured, 6.20%, 9/01/18 .................................................................. 3,590,000 3,888,401
Chula Vista Elementary School District COP, MBIA Insured, 6.60%, 8/01/16 ....................... 2,940,000 3,032,845
Chula Vista Public Finance Authority, Local Agency Revenue, Series 1995-A, FSA Insured,
6.125%, 9/02/14 ............................................................................... 3,875,000 4,295,360
Coachella Valley Recreation and Park District, 1915 Act, Refunding, Reassessment District No. 9,
MBIA Insured, 6.20%, 9/02/16 .................................................................. 1,500,000 1,638,945
Colton Joint USD, CFD, Special Tax, Refunding, Southridge Village, Phase III,
FSA Insured, 5.90%, 9/01/14 ................................................................... 500,000 502,910
Colton Public Financing Authority Revenue, Escrow Term, Tax Allocation,
Series A, MBIA Insured, 5.30%, 8/01/27 ........................................................ 4,175,000 4,138,093
Contra Costa County COP,
Buildings Acquisition Project, AMBAC Insured, 6.70%, 2/01/21 ................................... 1,250,000 1,296,463
Public Facilities Corp., BIG Insured, 7.80%, 6/01/08 ........................................... 1,000,000 1,052,600
Contra Costa Mosquito Abatement District, COP, Refunding,
Public Improvements Project, FSA
Insured, 6.25%, 2/01/06 ....................................................................... 1,885,000 1,981,286
Contra Costa Water District Revenue, Series G, MBIA Insured, 5.50%, 10/01/19 ................... 3,000,000 3,087,750
Cupertino Union School District, Series B, FGIC Insured, 5.60%, 8/01/21 ........................ 16,250,000 16,814,200
Davis Joint USD No. 1, CFD, Special Tax, Refunding, MBIA Insured, 5.50%, 8/15/21 ............... 7,000,000 7,170,800
Delano USD, Series A, FSA Insured, 6.10%, 5/01/17 .............................................. 1,105,000 1,187,113
Dinuba GO, RDA Tax Allocation, Refunding, Redevelopment Project No. 2,
Series A, MBIA Insured, 5.40%, 9/01/27 ........................................................ 3,190,000 3,227,068
Dublin-San Ramon Services District, COP, AMBAC Insured, 7.00%, 12/01/20 ........................ 4,155,000 4,523,216
East Bay MUD, Wastewater Treatment System Revenue,
AMBAC Insured, Pre-Refunded, 7.20%, 6/01/20 ................................................... 2,000,000 2,158,880
East Bay MUD, Water System Revenue,
MBIA Insured, Pre-Refunded, 7.50%, 6/01/18 ..................................................... 5,000,000 5,424,450
Refunding, FGIC Insured, 6.00%, 6/01/20 ........................................................ 6,900,000 7,405,425
Refunding, Subordinate Lien, FGIC Insured, 5.00%, 6/01/26 ...................................... 6,860,000 6,678,484
East Side Union High School District, Santa Clara County, Series D,
FGIC Insured, 5.75%, 9/01/17 .................................................................. 1,200,000 1,262,304
Eastern Municipal Water and Sewer District Revenue, COP, Refunding,
Series A, FGIC Insured, 6.30%, 7/01/20 ......................................................... 1,400,000 1,487,570
El Cerrito RDA, Tax Allocation, Refunding, Redevelopment Project,
Series A, FSA Insured, 6.80%, 7/01/19........................................................... $ 5,960,000 $ 6,403,543
El Dorado County Public Agency Financing Authority Revenue, Refunding, FGIC Insured,
5.50%, 2/15/16 ................................................................................. 2,250,000 2,329,650
5.50%, 2/15/21 ................................................................................. 3,500,000 3,589,040
bEmeryville Public Financing Authority Lease Revenue, Civic Center
Financing Project, Series A, AMBAC Insured,
5.00%, 5/01/28 ................................................................................ 1,000,000 974,220
Eureka Public Financing Authority Revenue, Tax Allocation,
Eureka Redevelopment Project,
FSA Insured, Pre-Refunded, 7.40%, 11/01/12 .................................................... 6,900,000 7,121,559
Fairfield Public Financing Authority Revenue, Municipal Park, ID No. 1,
FGIC Insured, 6.30%, 7/01/23 .................................................................. 4,750,000 5,226,235
Farmersville USD, Series A, AMBAC Insured, 5.70%, 7/01/18 ...................................... 1,265,000 1,323,481
Fillmore Public Financing Authority Revenue, Refunding,
Central City Redevelopment Project,
Series A, AMBAC Insured, 5.75%, 10/01/16 ...................................................... 2,525,000 2,670,465
Fillmore USD, Series A, FGIC Insured, 5.60%, 7/01/22 ........................................... 5,645,000 5,923,694
Folsom Public Financing Authority Revenue, Refunding, AMBAC Insured,
6.00%, 10/01/08 ................................................................................ 2,000,000 2,159,580
6.00%, 10/01/12 ................................................................................ 1,000,000 1,076,560
6.00%, 10/01/19 ................................................................................ 3,400,000 3,622,190
Folsom Special Tax, Refunding, CFD, No. 4, MBIA Insured, 5.00%, 8/01/18 ........................ 1,740,000 1,705,374
Fontana RDA, Tax Allocation, Refunding, Southwest Industrial Park Project,
FGIC Insured, 6.125%, 9/01/25 ................................................................. 5,850,000 6,288,516
Fresno COP, City Hall Refinancing Project, AMBAC Insured, 6.25%, 8/01/19 ....................... 1,000,000 1,052,200
Fresno GO USD, FSA Insured,
Series B, 5.875%, 8/01/20 ...................................................................... 1,405,000 1,494,372
Series B, ETM, 5.875%, 8/01/20 ................................................................. 2,595,000 2,841,240
Series C, 5.375%, 8/01/21 ...................................................................... 3,455,000 3,520,645
Fresno Water System Revenue, Water Remediation Project,
Series A, FGIC Insured, 5.875%, 6/01/20 ........................................................ 7,140,000 7,834,651
Fruitvale School District, Series B, MBIA Insured, 6.00%, 8/01/20 .............................. 1,780,000 1,890,111
Glendale GO USD, Series A, FGIC Insured, 5.375%, 9/01/22 ....................................... 2,400,000 2,453,376
Glendale Hospital Revenue, Refunding, Adventist Health, Series A,
MBIA Insured, 6.75%, 3/01/13 ................................................................... 1,000,000 1,076,500
Glendale RDA, Tax Allocation, Refunding, Central Glendale
Redevelopment Project, AMBAC Insured,
6.00%, 12/01/20 ............................................................................... 9,775,000 10,473,326
Hemet USD, COP, Nutrition Center Project, FSA Insured, 5.875%, 4/01/27 ......................... 1,250,000 1,344,200
Hercules COP, Refunding, Capital Improvement Projects,
AMBAC Insured, 6.00%, 6/01/15 ................................................................... 1,000,000 1,075,410
Hesperia Water District COP, Refunding, Water Facilities
Improvement Projects, FGIC Insured, 7.15%, 6/01/26 .............................................. 3,425,000 3,783,289
Imperial Irrigation District COP,
Electric System Project, MBIA Insured, 6.00%, 11/01/15 ......................................... 13,375,000 14,453,293
Water System Project, AMBAC Insured, 5.75%, 7/01/16 ............................................ 5,050,000 5,371,988
Indian Wells GO, RDA Revenue, Refunding, Tax Allocation,
Consolidated Whitewater, MBIA Insured,
5.375%, 12/01/22 .............................................................................. 1,300,000 1,315,704
Kern County Board of Education COP, Administration Building
Financing Project, MBIA Insured,
6.20%, 2/01/23 ................................................................................ 8,535,000 8,724,477
Kern County High School District, FSA Insured, ETM,
6.625%, 8/01/14 ................................................................................ 1,535,000 1,825,176
6.625%, 8/01/15 ................................................................................ 1,400,000 1,673,462
La Mirada RDA, Industrial Commercial Redevelopment Project,
Series A, MBIA Insured, 6.60%, 8/15/21 ......................................................... 3,080,000 3,276,812
La Quinta RDA, Tax Allocation, Housing Redevelopment
Project Areas No 1 & 2, MBIA Insured,
6.00%, 9/01/25 ................................................................................ 6,650,000 7,197,229
Lake Arrowhead Community Services District COP, Refunding, FGIC Insured,
6.125%, 6/01/05 ................................................................................ $ 7,600,000 $ 8,250,408
6.50%, 6/01/15 ................................................................................. 14,000,000 15,237,040
Lake Elsinore Public Financing Authority Revenue, Tax Allocation,
Lake Elsinore Redevelopment Projects, FGIC Insured,
Series A, 6.25%, 2/01/19 ....................................................................... 1,255,000 1,309,128
Series C, 6.625%, 2/01/17 ...................................................................... 12,840,000 13,521,932
Lakewood Public Financing Authority, Water Revenue, FGIC Insured, 5.70%, 4/01/16 ............... 2,485,000 2,601,298
Lakewood RDA, Tax Allocation, Refunding, FSA Insured,
Redevelopment Project No. 1, Series A, 6.50%, 9/01/17 ......................................... 3,000,000 3,276,990
Lancaster RDA, Tax Allocation, Refunding, Lancaster
Redevelopment Project No. 5, MBIA Insured, 6.85%, 2/01/19 ....................................... 11,245,000 12,105,130
Lemoore RDA, Tax Allocation, Refunding, Redevelopment Project, AMBAC Insured,
5.20%, 8/01/16 ................................................................................. 1,910,000 1,913,094
5.00%, 8/01/25 ................................................................................. 3,905,000 3,786,561
Lincoln USD, CFD No. 1, AMBAC Insured, Pre-Refunded, 6.90%, 9/01/21 ............................ 2,425,000 2,681,638
Lodi COP,
1996 Public Improvement Financing Project, MBIA Insured, 5.90%, 10/01/16 ....................... 3,605,000 3,898,159
Refunding, Wastewater Treatment Project, AMBAC Insured, 6.70%, 8/01/26 ......................... 8,800,000 10,084,800
Loma Linda Hospital Revenue, Loma Linda University Medical
Center Project, Series B, Refunding,
AMBAC Insured, 7.00%, 12/01/15 ................................................................ 1,910,000 2,022,633
Long Beach Harbor Revenue,
b5.125%, 5/15/18 ............................................................................... 3,625,000 3,564,898
MBIA Insured, 5.375%, 5/15/20 .................................................................. 10,000,000 10,079,800
MBIA Insured, 5.25%, 5/15/25 ................................................................... 18,370,000 18,342,445
Long Beach RDA, Refunding, Downtown Redevelopment Project,
Series A, AMBAC Insured,
Pre-Refunded, 7.75%, 11/01/10 ................................................................. 2,500,000 2,583,025
Los Angeles County Capital Assets Leasing Corp., Leasehold Revenue,
Refunding, AMBAC Insured,
6.00%, 12/01/16 ............................................................................... 3,000,000 3,186,180
Los Angeles County COP, Refunding, San Pedro Peninsula Hospital Project,
AMBAC Insured, 6.25%, 5/01/15 .................................................................. 5,825,000 6,181,607
Los Angeles County Transport Commission Sales Tax,
Series B, FGIC Insured, 6.50%, 7/01/13 ......................................................... 2,740,000 2,961,091
Series B, FGIC Insured, Pre-Refunded, 6.50% 7/01/15 ............................................ 5,025,000 5,423,081
Los Angeles Department of Water and Power, Electric Plant Revenue,
FGIC Insured, 6.125%, 1/15/33 .................................................................. 17,215,000 18,366,856
MBIA Insured, 6.00%, 8/15/32 ................................................................... 2,000,000 2,124,400
Refunding, FGIC Insured, 6.00%, 2/01/28 ........................................................ 3,500,000 3,699,955
Los Angeles Department of Water and Power, Waterworks Revenue, Second Issue,
FGIC Insured, 6.40%, 11/01/31 ................................................................. 6,875,000 7,400,525
Los Angeles Harbor Department Revenue, Series B,
AMBAC Insured, 6.60%, 8/01/14 .................................................................. 3,790,000 4,156,417
AMBAC Insured, 6.60%, 8/01/15 .................................................................. 2,000,000 2,189,440
MBIA Insured, 6.20%, 8/01/25 ................................................................... 2,500,000 2,720,800
Los Angeles Mortgage Revenue, Refunding, MBIA Insured, Series I, 6.50%, 7/01/22 ................ 2,000,000 2,211,120
Los Angeles Wastewater System Revenue,
Refunding, Series A, FGIC Insured, 6.00%, 12/01/18 ............................................. 12,100,000 12,830,598
Series B, AMBAC Insured, 6.00%, 6/01/22 ........................................................ 3,250,000 3,451,890
Lucia Mar GO USD, Series A, FGIC Insured, 5.40%, 8/01/22 ....................................... 5,290,000 5,418,230
Lynwood Public Financing Authority Revenue, Series A,
AMBAC Insured, 5.75%, 9/01/18 .................................................................. 4,000,000 4,188,040
Menlo Park CDA, Tax Allocation, Las Pulgas Community
Development Project, Refunding, AMBAC Insured,
5.375%, 6/01/22 ............................................................................... $11,675,000 $ 11,821,872
Mesa Construction Water District COP, Water Project, FGIC Insured, 6.40%, 3/15/18 .............. 5,600,000 6,149,304
Metropolitan Water District Revenue, Southern California Waterworks
Series A, 5.00%, 7/01/26 ....................................................................... 12,750,000 12,449,483
Series A, MBIA Insured, 5.50%, 7/01/25 ......................................................... 8,750,000 8,993,338
Series A, MBIA Insured, 5.00%, 7/01/30 ......................................................... 3,250,000 3,168,945
Series C, MBIA Insured, 5.00%, 7/01/27 ......................................................... 2,000,000 1,952,120
Modesto Health Facilities Revenue, Memorial Hospital Association, MBIA Insured,
Refunding, Series A, 6.00%, 6/01/18 ............................................................ 5,565,000 5,939,024
Series 1991, 6.875%, 6/01/21 ................................................................... 1,500,000 1,645,920
Modesto Irrigation District COP, Refunding and Capital
Improvement Projects, Series A, MBIA Insured,
6.00%, 10/01/21 ............................................................................... 3,000,000 3,114,630
Modesto Irrigation District, Financing Authority Revenue,
Domestic Water Project, AMBAC Insured,
Series C, 5.75%, 9/01/22 ...................................................................... 2,500,000 2,774,250
Modesto Public Financing Authority Lease Revenue,
Capital Improvements and Refinancing Projects, AMBAC Insured,
5.125%, 9/01/33 ............................................................................... 4,000,000 3,945,160
Modesto Wastewater Treatment Facility Revenue, MBIA Insured, 5.75%, 11/01/22 ................... 14,375,000 15,248,856
Montclair RDA, Tax Allocation, Refunding, Redevelopment Project,
Area No. 3, AMBAC Insured,
5.40%, 12/01/17 ................................................................................ 4,380,000 4,487,266
5.50%, 12/01/27 ................................................................................ 8,870,000 9,143,196
Montebello Community RDA, Tax Allocation
Housing, Series A, FSA Insured, 5.45%, 9/01/19 ................................................. 1,100,000 1,126,708
Refunding, Montebello Hills Redevelopment Project,
MBIA Insured, 5.60%, 3/01/19 .................................................................... 2,460,000 2,551,955
Montebello USD, COP, Series B, MBIA Insured, 7.25%, 6/01/10 .................................... 720,000 777,161
Monterey County COP, Refunding, Sheriff's Facilities Project,
FSA, Insured, 5.25%, 12/01/17 ................................................................... 3,215,000 3,248,179
Moreno Valley Public Finance Authority, Lease Revenue,
AMBAC Insured, 5.50%, 11/01/22 .................................................................. 1,285,000 1,321,995
Moulton Niguel Water District, AMBAC Insured, Pre-Refunded, 7.25%, 4/01/16 ..................... 1,420,000 1,527,537
Mountain View COP, Improvement Financing Authority Revenue,
City Hall/Community Theatre, MBIA
Insured, 6.50%, 8/01/16 ....................................................................... 1,500,000 1,614,360
Mountain View School District, Refunding, CFD, Special Tax,
Series A, FSA Insured, 7.25%, 10/01/11 ......................................................... 2,535,000 2,687,810
Mt. Diablo USD, CFD No. 1, Special Tax,
AMBAC Insured, 6.25%, 8/01/14 .................................................................. 500,000 539,945
FSA Insured, 6.00%, 8/01/24 .................................................................... 1,000,000 1,081,720
Refunding, AMBAC Insured, 5.75%, 8/01/15 ....................................................... 1,000,000 1,063,100
Refunding, AMBAC Insured, 5.75%, 8/01/16 ....................................................... 2,270,000 2,404,702
Refunding, AMBAC Insured, 5.375%, 8/01/19 ...................................................... 7,290,000 7,402,047
Murrieta Water, Public Financing Authority, Special Tax Revenue,
Refunding, Senior Lien, Series A, FSA Insured,
5.60%, 10/01/15 ................................................................................ 1,235,000 1,290,674
5.70%, 10/01/21 ................................................................................ 2,630,000 2,741,591
National City Joint Powers Authority, Lease Revenue,
National City Police Facilities Project, AMBAC
Insured, 6.75%, 10/01/17 ...................................................................... 2,000,000 2,182,500
Natomas GO USD, Refunding, FGIC Insured, 5.20%, 9/01/19 ........................................ 5,000,000 5,040,000
Nevada Irrigation District Revenue COP, Cascade Bench Flume Project,
MBIA Insured, 5.50%, 1/01/17 .................................................................... 4,600,000 4,774,478
North City West School Facilities, Financing Authority, Special Tax,
Refunding, Series B, FSA Insured,
5.75%, 9/01/15 ................................................................................. 1,260,000 1,346,852
6.00%, 9/01/19 ................................................................................. 2,500,000 2,723,575
Northern California Power Agency Revenue, Multiple Capital Facilities,
Series A, MBIA Insured, 6.50%, 8/01/12........................................................... $ 5,000,000 $ 5,504,350
Northern California Power Agency Revenue, Refunding,
Public Power Hydroelectric Project No. 1,
AMBAC Insured, Pre-Refunded, 7.50%, 7/01/23 .................................................... 3,200,000 4,203,264
Series A, MBIA Insured, 5.50%, 7/01/23 ......................................................... 4,000,000 4,048,400
Northern California Transmission Revenue,
California/Oregon Transmission Project, Series A,
MBIA Insured,
6.25%, 5/01/10 ................................................................................. 2,500,000 2,707,725
6.50%, 5/01/16 ................................................................................. 4,000,000 4,370,160
6.00%, 5/01/24 ................................................................................. 18,335,000 19,151,458
Pre-Refunded, 7.00%, 5/01/10 ................................................................... 4,000,000 4,277,240
Norwalk Community Facilities Financing Authority,
Lease Revenue, MBIA Insured, 6.90%, 2/01/21 ..................................................... 5,810,000 6,153,545
Oakland Special Revenue, Refunding, Series A, FGIC Insured, 7.60%, 8/01/21 ..................... 4,000,000 4,090,080
Oceanside Community COP,
Community Development, Public Parking Project,
FSA Insured, Pre-Refunded, 7.875%, 4/01/19 ..................................................... 3,940,000 4,744,193
Corporation Yard Project, AMBAC Insured, Pre-Refunded, 7.30%, 8/01/21 .......................... 4,715,000 5,370,244
Refunding, Civic Center Project, MBIA Insured, 5.75%, 8/01/15 .................................. 1,000,000 1,063,100
Water Use Finance Association of California, Series A
AMBAC Insured, 6.50%, 10/01/17 .................................................................. 5,000,000 5,562,650
Ontario Redevelopment Financing Authority Revenue,
Ontario Redevelopment Project No. 1, MBIA
Insured, ETM, 5.80%, 8/01/23 .................................................................. 10,000,000 10,458,900
Orange County CFD No. 8, Special Tax, Rancho
Santa Margarita, Series A, FSA Insured,
7.30%, 8/15/09 ................................................................................ 5,000,000 5,275,350
Orange County COP, Juvenile Justice Center Facilities,
AMBAC Insured,
6.375%, 6/01/11 ................................................................................ 4,770,000 5,157,849
6.00%, 6/01/17 ................................................................................. 5,000,000 5,297,700
Orange County Financing Authority Revenue, Tax Allocation,
Refunding, Series A, MBIA Insured,
6.50%, 9/01/22 ................................................................................ 3,500,000 3,779,230
Oroville Public Finance Authority, Tax Allocation Revenue,
Oroville Redevelopment Project No. 1,
AMBAC Insured,
5.90%, 9/15/21 ................................................................................. 1,245,000 1,335,188
6.10%, 9/15/23 ................................................................................. 2,890,000 3,155,215
Oxnard Financing Authority, Solid Waste Revenue,
AMBAC Insured, 6.00%, 5/01/16 ................................................................... 5,000,000 5,393,100
Oxnard Public Facilities Corp. COP, AMBAC Insured,
Pre-Refunded, 7.50%, 9/01/06 ................................................................... 3,040,000 3,170,720
Oxnard Union High School District, Series B,
FSA Insured, 5.875%, 8/01/27 ................................................................... 3,615,000 3,840,504
Pajaro Valley USD, COP, School Facilities Bridge Funding Program
FSA Insured, 5.75%, 9/01/17 ..................................................................... 1,250,000 1,337,038
Palm Desert Financing Authority, Tax Allocation Revenue,
Project Area No. 2, Series A, MBIA Insured,
5.95%, 8/01/24 ................................................................................. 2,490,000 2,668,184
5.85%, 8/01/25 ................................................................................. 1,380,000 1,463,600
Palm Springs Financing Authority Regional Airport Revenue, FSA Insured,
5.25%, 1/01/28 ................................................................................. 1,700,000 1,672,426
Passenger Facility Charge, 5.25%, 1/01/22 ...................................................... 1,200,000 1,190,388
Palm Springs USD,
Series C, MBIA Insured, 6.125%, 2/01/20 ........................................................ 500,000 536,845
Series D, FGIC Insured, 5.90%, 2/01/21 ......................................................... 1,000,000 1,061,910
Paramount USD, COP, Master Lease Program, FSA Insured, 6.30%, 9/01/26 .......................... 4,750,000 5,241,293
Parlier USD, Series B, AMBAC Insured, 6.00%, 6/01/16 ........................................... 1,130,000 1,231,440
Petaluma COP, Refunding, Series A, AMBAC Insured, 5.625%, 8/01/13 .............................. 1,000,000 1,047,090
Pico Rivera Public Financing Authority Revenue, Refunding,
Water Enterprise Project, Series A,
FGIC Insured, 6.00%, 12/01/17 ................................................................. $ 8,000,000 $ 8,545,840
Pinole RDA, Tax Allocation, Pinole Vista Redevelopment Project,
Series A, MBIA Insured,
6.125%, 8/01/17 ............................................................................... 1,000,000 1,078,480
Placer County COP, MBIA Insured,
Administrative and Emergency Services, 5.65%, 6/01/24 .......................................... 4,000,000 4,178,600
Jail Kitchen Project, 6.90%, 10/01/21 .......................................................... 3,745,000 4,363,412
Refunding, Juvenile Detention Facility 5.00%, 7/01/21 .......................................... 2,290,000 2,225,972
Placer County Water Agency Revenue COP, FSA Insured, 5.90%, 7/01/25 ............................ 2,350,000 2,508,578
Pleasant Hill RDA, Tax Allocation, Refunding,
Pleasant Hill Commons Project, FSA Insured,
6.90%, 7/01/21 ................................................................................ 5,500,000 5,991,920
Pleasant Valley School District, Ventura County COP,
Refunding, Tierra Linda School,
MBIA Insured, 5.70%, 8/01/18 .................................................................. 1,400,000 1,418,704
Pleasanton GO USD, Series A, MBIA Insured, 5.50%, 8/01/21 ...................................... 1,000,000 1,028,820
Pomona Public Financing Authority Revenue, Refunding,
Southwest Pomona Redevelopment
Project, Series W, MBIA Insured, 5.00%, 2/01/30 ............................................... 7,885,000 7,605,871
Port Hueneme RDA, Tax Allocation, Refunding,
Central Community Redevelopment Project,
AMBAC Insured, 5.50%, 5/01/23 ................................................................. 2,000,000 2,038,500
Porterville COP, Refunding, AMBAC Insured,
Sewer System and Improvement Project, 6.30%, 10/01/18 .......................................... 4,935,000 5,343,470
Sewer System Project, 6.30%, 10/01/18 .......................................................... 6,075,000 6,577,828
Sewer System Refining Project, 5.25%, 10/01/23 ................................................. 5,000,000 5,037,550
Ramona Municipal Water District COP, Refunding,
AMBAC Insured, 7.20%, 10/01/10 .................................................................. 3,000,000 3,254,670
Redding Electric System Revenue, Refunding, COP, Series A,
FGIC Insured, 5.50%, 6/01/11 ................................................................... 5,000,000 5,233,200
Redding Joint Powers Financing Authority, Lease Revenue,
Civic Center Project, Series A, MBIA Insured,
5.75%, 3/01/19 ................................................................................. 3,090,000 3,275,215
5.25%, 3/01/26 ................................................................................. 2,075,000 2,088,903
Redding RDA, Tax Allocation, Hilltop Cypress Redevelopment,
Series C, FSA Insured, 6.00%,9/01/22............................................................. 2,120,000 2,261,934
Redlands USD, Series B, FSA Insured, 6.25%, 6/01/19 ............................................ 2,115,000 2,308,501
Redwood City Public Financing Authority Revenue, Local Agency,
Series A, AMBAC Insured, 6.50%, 7/15/11.......................................................... 2,745,000 2,970,968
Riverside County COP, Historic Courthouse,
MBIA Insured, 5.875%, 11/01/27 ................................................................. 3,000,000 3,235,320
Riverside County Public Financing Authority,
Lease Revenue, AMBAC Insured, 5.375%, 10/01/22 ................................................. 1,590,000 1,605,216
Riverside RDA, Series A,
Lease Revenue, AMBAC Insured, 6.375%, 10/01/23 ................................................. 12,540,000 13,879,272
Lease Revenue, AMBAC Insured, 6.50%, 10/01/24 .................................................. 2,000,000 2,227,000
Refunding, Tax Allocation, Merged Redevelopment Project,
MBIA Insured, 5.625%, 8/01/23 .................................................................. 2,200,000 2,258,388
Rubidoux Community Service District COP, Water System
Improvement Project, AMBAC Insured, 6.20%, 12/01/14 ............................................. 2,510,000 2,721,944
Sacramento Area Flood Control Agency, FGIC Insured,
Capital AD No. 2, 5.80%, 11/01/16 .............................................................. 1,000,000 1,073,810
Capital AD No. 2, 5.375%, 10/01/25 ............................................................. 3,675,000 3,718,659
Operation & Maintenance, 5.80%, 11/01/16 ....................................................... 1,475,000 1,583,870
Operation & Maintenance, 5.90%, 11/01/25 ....................................................... 2,690,000 2,892,073
Sacramento County Airport System Revenue, Series A, MBIA Insured, 6.00%, 7/01/17 ............... 5,920,000 6,414,202
Sacramento County COP, Public Facilities Project, MBIA Insured, 5.375%, 2/01/19 ................ 1,350,000 1,373,355
Sacramento MUD, Electric Revenue,
Series E, MBIA Insured, 5.75%, 5/15/22 ......................................................... 4,250,000 4,455,445
Series I, MBIA Insured, 6.00%, 1/01/24 ......................................................... 4,000,000 4,278,720
Sacramento MUD, Electric Revenue, (cont.)
Series J, AMBAC Insured, 5.50%, 8/15/21 ........................................................ $ 8,485,000 $ 8,743,199
Sacramento RDA, Tax Allocation, Merged Downtown
Redevelopment Project, Series A, MBIA Insured,
6.50%, 11/01/13 ............................................................................... 2,000,000 2,142,340
Saddleback Community College District COP,
1996 Capital Improvement Financing Project, MBIA Insured,
5.50%, 6/01/15 ................................................................................ 3,200,000 3,341,376
Saddleback Valley USD, Public Financing Authority,
Special Tax Revenue, Refunding, Series A, FSA Insured,
5.65%, 9/01/17 ................................................................................ 3,500,000 3,644,305
Salida Area Public Facilities Financing Agency, CFD,
Special Tax, Refunding, No. 1988-1, FSA Insured,
5.25%, 9/01/28 ................................................................................ 5,000,000 5,016,350
Salinas RDA, Tax Allocation, Central City Revitalization Project,
Series A, FSA Insured, 5.50%, 11/01/23 .......................................................... 2,000,000 2,061,780
San Bernardino County COP, 1997 Public Improvement
Financing Project, MBIA Insured, 5.25%, 10/01/25 ................................................ 7,000,000 7,052,570
San Bernardino County Mortgage Revenue, Refunding,
Don Miguel Apartments Project, MBIA Insured,
6.40%, 3/01/25 ................................................................................ 5,680,000 6,002,510
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 2,103,611
Series A, FSA Insured, 5.75%, 10/01/25 ......................................................... 1,950,000 2,055,476
Southeast Industrial Park, Series F, MBIA Insured,
Pre-Refunded, 7.375%, 3/01/14 .................................................................. 3,515,000 3,782,035
State College Project No. 4, AMBAC Insured,
Pre-Refunded, 7.20%, 9/01/08 .................................................................... 4,265,000 4,518,426
San Bernardino Municipal Water and Sewer Department,
COP, FGIC Insured, 6.25%, 2/01/17 ............................................................... 5,750,000 6,143,185
San Bernardino RDA, Capital Appreciation, Series B,
AMBAC Insured, 7.70%, 1/10/09 ................................................................... 2,382,000 4,536,114
San Buenaventura COP, Water Project, AMBAC Insured,
Pre-Refunded, 7.50%, 10/01/20 ................................................................... 2,000,000 2,189,260
San Buenaventura Public Facilities, Financing Authority
Lease Revenue, Refunding, FSA Insured,
5.75%, 6/01/14 ................................................................................ 2,250,000 2,406,623
San Carlos RDA, Tax Allocation, Refunding, San Carlos
Redevelopment Project, Series A, MBIA Insured,
5.50%, 9/01/26 ................................................................................ 1,785,000 1,839,478
San Diego Community College District COP, MBIA Insured,
bRefunding, Financing Project, 5.00%, 12/01/21 ................................................. 3,135,000 3,046,374
Series 1991, 6.50%, 12/01/12 ................................................................... 2,000,000 2,177,060
San Diego IDR, San Diego Gas & Electric, Custodial Receipts,
Series A, AMBAC Insured, 6.40%, 9/01/18 ........................................................ 1,650,000 1,794,194
San Diego Mortgage Revenue, Refunding, University
Canyon North, Series A, MBIA Insured,
5.125%, 7/01/03 ................................................................................ 205,000 210,939
5.75%, 7/01/25 ................................................................................. 3,105,000 3,213,116
San Francisco BART District, Sales Tax Revenue, FGIC Insured,
6.60%, 7/01/12 ................................................................................. 2,580,000 2,816,689
5.50%, 7/01/15 ................................................................................. 2,000,000 2,081,180
5.50%, 7/01/20 ................................................................................. 5,440,000 5,595,584
San Francisco City and County Airports Commission,
International Airport Revenue, Second Series,
Issue 5, FGIC Insured, 6.50%, 5/01/24 .......................................................... 6,900,000 7,626,915
Issue 8A, FGIC Insured, 6.25%, 5/01/20 ......................................................... 3,500,000 3,788,680
Issue 9B, FGIC Insured, 6.00%, 5/01/25 ......................................................... 6,400,000 6,884,096
Issue 11, FGIC Insured, 6.00%, 5/01/11 ......................................................... 2,105,000 2,278,242
Issue 15A, FSA Insured, 5.00%, 5/01/28 ......................................................... 10,000,000 9,610,000
Issue 16A, FSA Insured, 5.00%, 5/01/29 ......................................................... 10,000,000 9,531,500
San Francisco City and County Sewer Revenue, Refunding,
AMBAC Insured, 6.00%, 10/01/11 ................................................................. 2,000,000 2,163,640
San Gabriel USD, COP, School Facilities Development
Program, Series A, FSA Insured, 6.00%, 9/01/15 ................................................. 1,000,000 1,087,360
San Jacinto USD, COP, Refunding Project, AMBAC Insured,
6.50%, 10/01/23 ................................................................................. 3,000,000 3,283,350
San Joaquin Hills Transportation Corridor Agency,
Toll Road Revenue, Refunding, Series A, MBIA Insured,
5.375%, 1/15/29 ................................................................................ $ 8,500,000 $ 8,633,025
5.25%, 1/15/30 ................................................................................. 5,000,000 5,003,900
San Jose Financing Authority Revenue, Convention Project,
Series C, FSA Insured, 6.40%, 9/01/17 .......................................................... 8,740,000 9,406,425
San Jose-Santa Clara Water Financing Authority,
Sewer Revenue, Series A, FGIC Insured, 5.375%, 11/15/20 ........................................ 1,500,000 1,523,595
San Luis Water Districts Revenue COP, Refunding &
Capital Improvement Project, AMBAC Insured,
5.50%, 11/01/16................................................................................ 1,260,000 1,312,265
San Marcos Public Facilities Authority Revenue,
Tax Allocation, Refunding, Series A, FSA Insured,
5.50%, 08/01/23 ............................................................................... 10,495,000 10,703,641
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 2,883,073
bSan Mateo Foster City, School District, MBIA Insured, 5.00%, 8/01/27 ........................... 2,330,000 2,274,080
San Ramon COP,
Central Park Expansion Project, FSA Insured, Pre-Refunded, 7.20%, 2/01/25 ...................... 5,110,000 6,033,224
Refunding, Capital Improvement Project, AMBAC Insured, 7.05%, 3/01/21 .......................... 12,070,000 13,105,244
Sanger Public Financing Authority Revenue, Utility System Financing,
Series A, AMBAC Insured, 5.70%, 1/01/22 ........................................................ 5,935,000 6,218,278
Sanger USD, Series A, FSA Insured, 5.60%, 8/01/14 .............................................. 1,000,000 1,042,570
Santa Ana COP, Refunding, Parking Facilities Project,
Series A, AMBAC Insured, 6.125%, 6/01/16 ........................................................ 3,250,000 3,505,255
Santa Ana Financing Authority Water Revenue, MBIA Insured, 6.125%, 9/01/24 ..................... 1,000,000 1,077,340
Santa Ana HMR, Series A, FGIC Insured, 8.875%, 6/01/17 ......................................... 5,000 5,435
Santa Barbara COP, Refunding, AMBAC Insured,
Municipal Improvement Program, 6.15%, 8/01/17 .................................................. 3,575,000 3,819,888
Water System Improvement Project, 6.70%, 4/01/27 ............................................... 6,500,000 7,117,435
Santa Clara County COP, Board of Education Partners,
Administration Building Project, Series A,
MBIA Insured, 6.00%, 4/01/25 .................................................................. 1,555,000 1,657,226
Santa Clara County COP, Refunding, Capital Project I,
AMBAC Insured, 6.25%, 10/01/16 ................................................................. 4,500,000 4,773,600
Santa Clara County Financing Authority Lease Revenue,
Refunding, Series A, AMBAC Insured, 5.00%, 11/15/17 ............................................. 10,000,000 9,901,500
Santa Clara Electric Revenue, Series A, MBIA Insured, 6.50%, 7/01/21 ........................... 1,350,000 1,470,083
Santa Clara RDA, Tax Allocation, Pre-Refunding, Bayshore North Project,
AMBAC Insured,
7.50%, 6/01/08................................................................................. 900,000 921,420
Santa Clara USD, FGIC Insured, 5.00%, 8/01/22 .................................................. 8,920,000 8,724,206
Santa Cruz County COP, Sub-Joint Wastewater Treatment Project,
AMBAC Insured, 6.20%, 9/01/19 .................................................................. 475,000 514,986
Santa Fe Springs, Series A,
Public Financing Authority, Water Revenue, MBIA Insured, 5.90%, 5/01/21 ........................ 900,000 965,061
Public Financing Authority, Water Revenue, MBIA Insured, 5.90%, 5/01/26 ........................ 1,190,000 1,276,025
RDA Consolidated, Tax Allocation, MBIA Insured, 6.40%, 9/01/22 ................................. 4,255,000 4,652,289
RDA Revenue, Tax Allocation, AMBAC Insured, Pre-Refunded, 7.25%, 8/01/14 ....................... 2,750,000 2,905,705
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 41,418,910
Santa Monica Community College District, Series B, AMBAC Insured, 5.75%, 7/01/20 ............... 2,495,000 2,636,491
Santa Rita USD, Series B, FSA Insured, 5.20%, 8/01/37 .......................................... 1,940,000 1,936,683
Santa Rosa High School District,
FGIC Insured, 5.90%, 5/01/16 ................................................................... 1,000,000 1,068,790
FGIC Insured, 5.50%, 5/01/20 ................................................................... 4,450,000 4,587,550
Refunding, FSA Insured, 5.75%, 5/01/18 ......................................................... 1,050,000 1,106,616
Santa Rosa Wastewater Service Facilities District,
Refunding & Improvement, AMBAC Insured,
6.00%, 7/02/15 ................................................................................ 2,000,000 2,251,680
Santa Rosa Water Revenue, Series A, FGIC Insured, Pre-Refunded, 7.00%, 9/01/16 ................. $ 2,500,000 $ 2,641,475
Scotts Valley GO USD, Series B, FGIC Insured,
5.40%, 8/01/22 ................................................................................. 4,005,000 4,102,882
5.50%, 8/01/27 ................................................................................. 6,720,000 6,932,621
Sebastopol GO CDA, Refunding, Tax Allocation, Community
Development Project, MBIA Insured, 5.25%, 12/01/21 ............................................. 2,250,000 2,263,298
Selma Public Financing Authority Revenue, Series A, MBIA Insured,
5.80%, 9/15/11 ................................................................................. 145,000 148,225
5.80%, 9/15/12 ................................................................................. 125,000 127,748
5.875%, 9/15/22 ................................................................................ 2,400,000 2,449,848
Sequoia Union High School District,
FGIC Insured, 5.25%, 7/01/27 ................................................................... 4,340,000 4,370,120
FSA Insured, 5.70%, 7/01/24 .................................................................... 4,885,000 5,126,417
Simi Valley Public Financing Authority Revenue, Refunding,
MBIA Insured, 5.75%, 9/01/23 ................................................................... 5,000,000 5,193,450
Soledad RDA, Tax Allocation, Refunding, Soledad
Redevelopment Project, Series A, MBIA Insured,
5.35%, 12/01/28 ............................................................................... 2,000,000 2,032,340
Sonoma CDA, COP, Refunding, Sonoma Creek Senior
Housing Project, AMBAC Insured,
6.75%, 2/01/13 ................................................................................ 1,325,000 1,399,942
Sonoma Valley USD, FSA Insured, 6.00%, 7/15/21 ................................................. 2,400,000 2,596,296
South Coast Air Quality Management District Revenue,
Refunding, Building Corp., MBIA Insured,
5.50%, 8/01/14 ................................................................................ 9,700,000 10,012,243
South Orange County Public Financing Authority Revenue,
Refunding, Special Tax, Senior Lien,
Series A, MBIA Insured,
6.20%, 9/01/13 ................................................................................. 13,500,000 14,771,700
6.00%, 9/01/18 ................................................................................. 3,250,000 3,475,290
Southern California Public Power Authority Revenue,
MBIA Insured, Sub-Crossover Refunding,
Southern Transmission Project, Subordinated Lien,
5.50%, 7/01/20 .................................................................................. 3,820,000 3,873,060
Southgate Public Financing Authority Revenue,
Tax Allocation, Southgate Redevelopment Project
No. 1, AMBAC Insured, 5.875%, 9/01/24 ......................................................... 5,000,000 5,272,250
Stockton COP,
Refunding, Wastewater System Project, AMBAC Insured, 5.75%, 9/01/23 ............................ 6,500,000 6,780,995
Refunding, Wastewater System Project, Series A, MBIA Insured, 5.00%, 9/01/23 ................... 7,500,000 7,280,025
Wastewater Facility, Pre-Refunded, AMBAC Insured, 7.40%, 9/01/10 ............................... 1,000,000 1,015,810
Stockton Port District, Port Facilities Revenue, Refunding &
Improvement, Series B, FSA Insured,
5.90%, 7/01/12 ................................................................................ 4,155,000 4,546,027
Suisun City RDA, Tax Allocation, Refunding, Suisun City
Redevelopment Project, MBIA Insured,
5.625%, 10/01/13 .............................................................................. 4,260,000 4,481,009
Sulphur Springs USD, COP, Series 1991, AMBAC Insured, 7.20%, 2/01/21 ........................... 800,000 874,432
Sunnyvale COP, Parking Facility, Refunding, Series A,
AMBAC Insured, 5.00%, 10/01/22 ................................................................. 1,250,000 1,222,413
Sunnyvale RDA, Tax Allocation, Refunding, Central Core Project,
AMBAC Insured, 6.50%, 10/01/22 .................................................................. 2,785,000 2,961,012
Susanville Public Financing Authority Revenue, Series A,
AMBAC Insured, 6.30%, 9/01/17 ................................................................... 4,000,000 4,232,960
Taft COP, Sewer Facilities Improvement Project, FSA Insured, Pre-Refunded, 7.25%, 8/01/15 ...... 1,335,000 1,365,051
Tahoe-Truckee Joint USD, FGIC Insured,
Series A, 6.00%, 9/01/17 ....................................................................... 5,000,000 5,377,500
Series B, 5.95%, 9/01/20 ....................................................................... 3,620,000 3,902,867
Tehachapi Water and Sewer Revenue, Refunding, MBIA Insured, 6.75%, 11/01/20 .................... 2,000,000 2,268,040
Thousand Oaks RDA, Tax Allocation, Refunding, Thousand Oaks Blvd. Redevelopment,
MBIA Insured, 5.375%, 12/01/25 ................................................................ 2,390,000 2,418,871
Tracy CFD, Special Tax, Refunding, Senior Series A, FSA Insured, 5.70%, 9/01/20 ................ $ 5,480,000 $ 5,609,438
Travis USD, COP, Refunding & Capital Improvement Projects, AMBAC Insured,
5.40%, 9/01/19 ................................................................................. 1,075,000 1,097,994
5.45%, 9/01/27 ................................................................................. 6,115,000 6,273,134
Tri-City Hospital District Revenue, MBIA Insured,
6.00%, 2/01/22 ................................................................................. 2,350,000 2,440,616
Refunding, Series A, 5.625%, 2/15/17 ........................................................... 2,750,000 2,883,980
Turlock Auxiliary Organization Revenue COP, California State University,
Stanislaus Foundation, MBIA Insured,
5.875%, 6/01/22 ............................................................................... 2,000,000 2,141,700
Turlock Irrigation District Revenue, Refunding, Series A,
MBIA Insured, 5.75%, 1/01/18 ................................................................... 7,125,000 7,365,255
Union City CRDA, Tax Allocation Revenue, Community
Redevelopment Project, AMBAC Insured,
5.75%, 10/01/22 ............................................................................... 6,200,000 6,513,410
University of California Revenues,
bMultiple Purpose Projects, Series F, FGIC Insured, 5.00%, 9/01/27 ............................. 5,000,000 4,843,100
Research Facilities, Series D, FSA Insured, 5.00%, 9/01/21 ..................................... 4,635,000 4,535,116
Upland COP,
Refunding, Police Building Project, AMBAC Insured, 6.60%, 8/01/16 .............................. 3,985,000 4,354,649
Water System Improvement Project, FGIC Insured, 6.60%, 8/01/16 ................................. 2,385,000 2,610,907
Vacaville Public Financing Authority Revenue, Tax Allocation,
Refunding, Vacaville Redevelopment Project,
MBIA Insured, 6.35%, 9/01/22 .................................................................. 1,355,000 1,427,249
Vallejo Revenue, Water Improvement Project, Refunding,
Series A, FSA Insured, 5.875%, 5/01/26 ......................................................... 12,500,000 13,530,500
Walnut Valley Water District COP, Badillo Grand Transmission Project,
FGIC Insured, 6.125%, 2/01/18................................................................... 2,200,000 2,318,932
Waugh School District, Special Tax, Corona/Ely CFD No. 1,
AMBAC Insured, 5.80%, 9/01/26 ................................................................... 5,640,000 5,942,304
West and Central Basin Financing Authority, California Revenue,
Refunding, Central Basin Project, Series A,
AMBAC Insured,
5.375%, 8/01/17 ................................................................................ 4,330,000 4,436,951
5.125%, 8/01/22 ................................................................................ 5,500,000 5,473,380
West Basin Municipal Water District Revenue COP, Refunding,
1992 Project, Series A, AMBAC Insured,
5.50%, 8/01/17 ................................................................................. 3,370,000 3,503,048
5.50%, 8/01/22 ................................................................................. 2,750,000 2,839,705
West Sacramento Financing Authority Revenue,
MBIA Insured, 6.25%, 9/01/16 ................................................................... 4,185,000 4,607,225
Water System Improvement Project, FGIC Insured, 5.50%, 8/01/15 ................................. 4,500,000 4,632,930
Water System Improvement Project, FGIC Insured, 5.50%, 8/01/24 ................................. 1,685,000 1,718,852
West Sacramento RDA, Tax Allocation, West Sacramento
Redevelopment Project, MBIA Insured,
6.25%, 9/01/21 ................................................................................ 3,340,000 3,551,556
Western Placer Unified School, COP, 1998 Refunding and
Capital Project, AMBAC Insured, 5.00%, 6/01/18 ................................................. 5,455,000 5,340,255
William S. Hart Joint School Financing Authority, Special Tax Revenue,
Refunding, Community Facilities,
FSA Insured, 6.60%, 9/01/18 ................................................................... 1,285,000 1,440,999
Windsor Joint Powers Financing Authority, Wastewater Revenue,
Refunding, Series A, AMBAC Insured,
6.125%, 12/15/12 .............................................................................. 750,000 827,400
Yuba City USD, COP, Refunding, Series A, MBIA Insured, 5.25%, 2/01/22 .......................... 2,000,000 2,012,260
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 5,259,600
--------------
Total Bonds (Cost $1,605,188,833) .............................................................. 1,709,704,040
--------------
Zero Coupon Bonds .4%
San Bernardino County SFMR, Series A, GNMA Secured,
ETM, 5/01/22 (Cost $5,305,142)................................................................... $28,405,000 $ 7,800,297
--------------
Total Long Term Investments (Cost $1,610,493,975)............................................... 1,717,504,337
--------------
aShort Term Investments .7%
California Health Facilities Financing Authority Revenue,
Sutter Health, Series B, Daily VRDN and Put,
3.25%, 3/01/20 ................................................................................ 5,100,000 5,100,000
Irvine 1915 Act, AD No. 94-13, Oak Creek Project,
Daily VRDN and Put, 3.30%, 9/02/22 ............................................................. 1,600,000 1,600,000
Newport Beach Revenue, Various, Hoag Memorial Presbyterian Hospital,
Daily VRDN and Put, 3.60%, 10/01/22 ............................................................ 5,100,000 5,100,000
--------------
Total Short Term Investments (Cost $11,800,000)................................................. 11,800,000
--------------
Total Investments (Cost $1,622,293,975) 97.5%................................................... 1,729,304,337
Other Assets, less Liabilities 2.5% ............................................................ 43,556,133
--------------
Net Assets 100.0% .............................................................................. $1,772,860,470
==============
</TABLE>
See glossary of terms on page 55.
a Variable 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
Year Ended June 30,
-------------------------------------------------------------
1998 1997 1996 1995 1994
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year ............ $10.93 $10.67 $10.38 $10.20 $10.55
-------------------------------------------------------------
Income from investment operations:
Net investment income ........................ .53 .53 .53 .54 .54
Net realized and unrealized gains (losses) ... .31 .26 .29 .17 (.36)
--------------------------------------------------------------
Total from investment operations .............. .84 .79 .82 .71 .18
-------------------------------------------------------------
Less distributions from net investment income . (.53) (.53) (.53) (.53) (.53)
--------------------------------------------------------------
Net asset value, end of year .................. $11.24 $10.93 $10.67 $10.38 $10.20
=============================================================
Total return *................................. 7.76% 7.58% 7.96% 7.19% 1.65%
Ratios/supplemental data
Net assets, end of year (000's) ............... $155,664 $117,666 $101,199 $88,785 $94,015
Ratios to average net assets:
Expenses ..................................... .52% .47% .45% .33% .25%
Expenses excluding waiver and payments by affiliate .78% .80% .81% .83% .80%
Net investment income ........................ 4.76% 4.96% 4.99% 5.34% 5.11%
Portfolio turnover rate ....................... 9.58% 6.29% 10.13% 10.90% 14.95%
</TABLE>
*Total return does not reflect sales commissions or the contingent deferred
sales charges, and is not annualized. Prior to May 1, 1994, dividends from net
investment income were reinvested at the offering price.
See notes to financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Statement of Investments, June 30, 1998
<TABLE>
<CAPTION>
PRINCIPAL
Franklin California Intermediate-Term Tax-Free Fund AMOUNT VALUE
aLong Term Investments (cont.)
Bonds 98.4%.
<S> <C> <C>
ABAG 1915 Act, Windemere Ranch AD,
5.15%, 9/02/02 ................................................................................. $ 595,000 $ 594,691
5.70%, 9/02/07 ................................................................................. 1,225,000 1,224,902
ABAG California Water and Wastewater Revenue, Pooled Financing Program,
Series A, FSA Insured, 5.00%, 10/01/10 ........................................................ 3,035,000 3,104,562
ABAG Finance Authority of Nonprofit Corps. COP,
5.50%, 6/01/03 ................................................................................. 360,000 377,276
5.75%, 8/01/03 ................................................................................. 825,000 873,164
Partner North County Health Project, 5.50%, 3/01/06 ............................................ 1,145,000 1,203,223
bRhoda Haas Goldman Plaza, Insured, 5.125%, 5/15/15 ............................................ 3,000,000 2,954,880
ABAG Finance Corp. COP, ABAG XXVI,
Refunding, Series A, 5.90%, 6/01/02 ............................................................ 100,000 104,358
Series B, 6.40%, 10/01/03 ...................................................................... 100,000 108,041
ABAG Revenue, Refunding, Series A-E,
b5.00%, 9/15/06 ................................................................................ 610,000 605,907
b5.05%, 9/15/07 ................................................................................ 625,000 620,419
b5.40%, 9/15/14 ................................................................................ 2,455,000 2,441,694
Alameda County COP,
Capital Projects, Series 1992, 6.25%, 6/01/06 .................................................. 100,000 109,497
Series 1994, 5.70%, 4/01/02 .................................................................... 395,000 415,260
Series 1994, 5.80%, 4/01/03 .................................................................... 420,000 447,628
Series 1994, 5.90%, 4/01/04 .................................................................... 440,000 474,258
Auburn COP, Refunding, Civic Center Project,
5.10%, 9/01/99 ................................................................................. 65,000 65,757
5.30%, 9/01/00 ................................................................................. 65,000 66,319
5.45%, 9/01/01 ................................................................................. 70,000 72,137
5.60%, 9/01/02 ................................................................................. 75,000 78,088
5.70%, 9/01/03 ................................................................................. 80,000 84,178
5.75%, 9/01/04 ................................................................................. 80,000 84,656
Bakersfield Central District Revenue, RDA, Tax Allocation, Refunding,
Downtown Bakersfield Redevelopment,
ETM, 6.00%, 4/01/01 ............................................................................ 295,000 310,125
ETM, 6.10%, 4/01/02 ............................................................................ 310,000 331,582
ETM, 6.20%, 4/01/03 ............................................................................ 330,000 358,789
Bakersfield Hospital Revenue, Bakersfield Memorial Hospital Project,
Series A, 5.70%, 1/01/00 ....................................................................... 100,000 102,008
Brentwood 1915 Act, Capital Improvement Finance Program,
No. 9, Infrastructure Financing,
5.30%, 9/02/07 ................................................................................. 100,000 100,064
5.40%, 9/02/08 ................................................................................. 110,000 109,991
5.50%, 9/02/09 ................................................................................. 115,000 114,990
5.55%, 9/02/10 ................................................................................. 100,000 99,554
California Educational Facilities Authority Revenue, Series B,
Pooled College and University Projects, 6.125%, 4/01/13 ........................................ 1,000,000 1,062,570
Refunding, Pooled College and University Financing, 5.80%, 6/01/02 ............................. 1,000,000 1,044,180
Refunding, Pooled College and University Financing, 5.90%, 6/01/03 ............................. 1,105,000 1,167,355
California Health Facilities Financing, San Diego Hospital Association,
Series B, MBIA Insured, 5.60%, 8/01/03 ......................................................... 100,000 106,564
California HFA, SFM Purchase, Series A-1, Class III,
MBIA Insured, 5.70%, 8/01/11 .................................................................... 2,460,000 2,604,082
California State Public Works, Board Lease Revenue,
Department of Corrections, Calpatria State Prison,
Imperial County, Series A, 6.125%, 9/01/04 ..................................................... 250,000 270,375
California State Public Works, Board Lease Revenue, (cont.)
Department of Corrections, Coalinga State Prison, Series B,
MBIA Insured, 5.50%, 12/01/08 ................................................................... $1,000,000 $ 1,068,140
Refunding, Various Community College Projects, Series C, 5.50%, 9/01/09 ........................ 1,555,000 1,660,896
Refunding, Regents of the University of California, Series C, 5.00%, 12/01/14 .................. 1,140,000 1,139,943
California Statewide CDA, COP, California Lutheran Homes, 5.375%, 11/15/06 ..................... 1,000,000 1,036,110
California Statewide CDA Revenue COP,
Refunding, Health Facilities, Barton Memorial Hospital, Series B, 5.70%, 12/01/00 .............. 200,000 207,614
Refunding, Health Facilities, Barton Memorial Hospital, Series B, 6.40%, 12/01/05 .............. 450,000 485,321
St. Joseph Health System Group, 6.00%, 7/01/06 ................................................. 865,000 960,133
California Statewide Communities Development Corp. COP,
Pacific Homes, Series A, 5.50%, 4/01/04 ........................................................ 585,000 612,437
Campbell COP, Refunding, Civic Center Project, 5.60%, 10/01/03 ................................. 350,000 371,945
Carson RDA Project, Area No. 1, Refunding, 6.10%, 10/01/02 ..................................... 200,000 212,200
Clovis COP, Water System Improvement Project, AMBAC Insured, 5.90%, 3/01/03 .................... 100,000 107,329
Coalinga Public Financing Authority Revenue, Series B, 6.00%, 9/15/03 .......................... 1,405,000 1,436,219
Coastside County Water District 1915 Act, GO, Refunding, Crystal Springs Project,
5.10%, 9/02/03 ................................................................................. 550,000 549,714
5.20%, 9/02/04 ................................................................................. 1,135,000 1,146,225
5.40%, 9/02/06 ................................................................................. 665,000 664,508
Colma 1915 Act, Refunding, Local ID No. 1,
5.00%, 9/02/01 ................................................................................. 465,000 470,933
5.10%, 9/02/02 ................................................................................. 485,000 492,959
5.20%, 9/02/03 ................................................................................. 515,000 525,228
5.30%, 9/02/04 ................................................................................. 545,000 557,600
5.40%, 9/02/05 ................................................................................. 570,000 583,139
Colton GO, Joint USD, CFD, Special Tax, Southridge Village, Phase III, Refunding, FSA Insured,
5.65%, 9/01/09 ................................................................................. 190,000 191,009
5.75%, 9/01/10 ................................................................................. 205,000 206,132
Commerce Joint Powers Financing Authority, Water Facilities, Lease Revenue, Refunding, Series A,
5.50%, 10/01/02 ................................................................................ 340,000 351,628
5.625%, 10/01/03 ............................................................................... 360,000 376,117
5.75%, 10/01/04 ................................................................................ 470,000 495,070
Compton COP, Refunding, Civic Center & Capital Improvement, Series A,
5.00%, 9/01/08 ................................................................................. 4,340,000 4,339,696
5.50%, 9/01/15 ................................................................................. 1,180,000 1,199,588
Compton Sewer Revenue,
5.40%, 7/01/98 ................................................................................. 120,000 120,000
5.60%, 7/01/99 ................................................................................. 125,000 126,914
5.70%, 7/01/00 ................................................................................. 130,000 133,428
5.80%, 7/01/01 ................................................................................. 140,000 145,426
5.90%, 7/01/02 ................................................................................. 150,000 157,863
6.00%, 7/01/03 ................................................................................. 155,000 165,280
6.10%, 7/01/04 ................................................................................. 165,000 177,821
6.20%, 7/01/05 ................................................................................. 175,000 189,322
6.30%, 7/01/06 ................................................................................. 185,000 200,094
5.00%, 9/01/08 ................................................................................. 1,005,000 1,004,930
Concord RDA, Tax Allocation, Central Concord Redevelopment Project, Refunding, Sub-Series A,
5.50%, 7/01/02 ................................................................................. $ 625,000 $ 646,413
5.625%, 7/01/03 ................................................................................ 655,000 684,606
Contra Costa County MFHR, Byron Park Project, Series C, 6.00%, 7/20/03 ......................... 500,000 529,080
Danville Financing Authority Revenue, Sycamore Valley, Reassessment District No. 93-2,
5.40%, 9/02/01 ................................................................................. 285,000 291,792
5.60%, 9/02/02 ................................................................................. 450,000 464,004
5.70%, 9/02/03 ................................................................................. 220,000 226,844
5.80%, 9/02/04 ................................................................................. 885,000 912,524
Dinuba California RDA, Tax Allocation, Subordinated-Notes-Merged,
City Redevelopment Project,
Subordinated Lien, 5.20%, 4/01/03 ............................................................. 2,500,000 2,503,150
Dublin COP, Refunding, Civic Center Project, AMBAC Insured,
5.625%, 2/01/10 ................................................................................ 2,000,000 2,023,600
Eden Township Hospital District, Health Facilities Revenue, COP
Refunding, Eden Hospital
Health Services Corp., CHFCLP Insured, 5.75%, 7/01/12 ......................................... 1,195,000 1,246,576
Foster City Public Financing Authority Revenue, Community
Development Project, Series A, 5.60%, 9/01/03 .................................................. 1,150,000 1,212,928
Fresno Joint Powers Financing Authority, Local Agency Revenue,
Refunding, Series A, 6.20%, 9/02/03 ............................................................ 1,000,000 1,043,710
Garden Grove GO, CDA, Tax Allocation, Refunding,
Garden Grove Community Project, 5.40%, 10/01/04 ................................................. 1,425,000 1,486,076
Glendale Parking Facilities, Joint Powers Authority Revenue, Series A,
5.10%, 3/01/01 ................................................................................. 215,000 217,107
5.30%, 3/01/03 ................................................................................. 125,000 127,309
Goleta Water District Revenue COP, Refunding, Goleta Reclamation Project,
FGIC Insured, 5.50%, 12/01/08 .................................................................. 750,000 799,170
Hesperia Public Financing Authority Revenue, Series A,
5.80%, 10/01/03 ................................................................................. 3,935,000 4,161,538
Hollister RDA, Tax Allocation, Hollister Community
Development Project, Series 1994,
5.35%, 10/01/03 ................................................................................ 525,000 541,417
5.45%, 10/01/04 ................................................................................ 550,000 567,193
5.55%, 10/01/05 ................................................................................ 585,000 603,351
Imperial COP, Refunding,
Wastewater System Program, Series B, 5.40%, 10/15/06 ........................................... 865,000 907,567
Water System Program, Series A, 5.40%, 10/15/06 ................................................ 1,250,000 1,311,513
Imperial County Local Transportation Authority,
Sales Tax Revenue, Series 1993,
5.50%, 5/01/04 ................................................................................. 490,000 506,694
5.50%, 5/01/05 ................................................................................. 515,000 531,423
Inland Empire Solid Waste Financing Authority Revenue,
Landfill Improvement Financing
Project, Series B, FSA Insured, 6.25%, 8/01/11 ................................................ 1,000,000 1,116,800
La Palma Community Development Commission, Tax Allocation,
Refunding, La Palma Community Development
Project No. 1,
5.20%, 6/01/00 ................................................................................. 125,000 126,914
5.40%, 6/01/01 ................................................................................. 130,000 133,322
5.50%, 6/01/02 ................................................................................. 135,000 139,532
5.60%, 6/01/03 ................................................................................. 145,000 151,292
5.70%, 6/01/04 ................................................................................. 150,000 157,646
5.80%, 6/01/05 ................................................................................. 160,000 168,576
La Quinta RDA, Tax Allocation, Housing Redevelopment Project, Areas No. 1 and 2,
MBIA Insured, 5.40%, 9/01/07 .................................................................. 560,000 601,782
Lake Elsinore Public Financing Authority, Tax Allocation Revenue, Lake Elsinore
Redevelopment Project, Series A, FSA Insured, 5.40%, 9/01/08 .................................. 1,500,000 1,567,680
Lake Elsinore School Financing Authority Revenue, Refunding, 6.00%, 9/01/11 .................... 1,000,000 1,062,400
Lancaster RDA, Tax Allocation, Refunding,
Central Business District Redevelopment, 5.00%, 8/01/98 ........................................ $ 35,000 $ 35,022
Central Business District Redevelopment, 5.125%, 8/01/99 ....................................... 35,000 35,352
Central Business District Redevelopment, 5.25%, 8/01/00 ........................................ 35,000 35,512
Central Business District Redevelopment, 5.375%, 8/01/01 ....................................... 40,000 40,876
Central Business District Redevelopment, 5.50%, 8/01/02 ........................................ 40,000 41,171
Central Business District Redevelopment, 5.60%, 8/01/03 ........................................ 45,000 46,601
Central Business District Redevelopment, 5.70%, 8/01/04 ........................................ 45,000 46,749
Central Business District Redevelopment, 5.70%, 8/01/05 ........................................ 50,000 51,811
Fox Field Redevelopment Project Area, 5.00%, 8/01/98 ........................................... 50,000 50,032
Fox Field Redevelopment Project Area, 5.125%, 8/01/99 .......................................... 55,000 55,553
Fox Field Redevelopment Project Area, 5.25%, 8/01/00 ........................................... 55,000 55,804
Fox Field Redevelopment Project Area, 5.375%, 8/01/01 .......................................... 60,000 61,315
Fox Field Redevelopment Project Area, 5.50%, 8/01/02 ........................................... 65,000 66,903
Fox Field Redevelopment Project Area, 5.60%, 8/01/03 ........................................... 65,000 67,313
Fox Field Redevelopment Project Area, 5.70%, 8/01/04 ........................................... 70,000 72,720
Fox Field Redevelopment Project Area, 5.70%, 8/01/05 ........................................... 75,000 77,716
Lancaster School District COP, Refunding, FSA Insured, 5.125%, 4/01/14 ......................... 2,000,000 2,025,380
Lemon Grove California CDA, Tax Allocation Revenue, 1998 Refunding,
5.00%, 8/01/06 ................................................................................. 885,000 896,691
5.10%, 8/01/07 ................................................................................. 205,000 208,717
5.20%, 8/01/08 ................................................................................. 215,000 220,070
Lemon Grove MFHR, Refunding, Hillside Terrace Apartments, 5.375%, 1/01/19 ...................... 990,000 1,021,046
Los Angeles County MTA, Sales Tax Revenue, Refunding,
Proposition C, 2nd Senior Series A,
Subordinated Lien, AMBAC Insured, 5.00%, 07/01/12 ............................................. 5,000,000 5,071,750
Los Angeles County Transport Commission COP, Series B,
5.90%, 7/01/00 ................................................................................. 100,000 103,689
6.00%, 7/01/01 ................................................................................. 200,000 210,864
Los Angeles County Wastewater Systems Revenue, Refunding, FGIC Insured,
Series A, 5.00%, 06/01/13 ...................................................................... 2,140,000 2,162,877
Series D, 5.375%, 11/01/06 ..................................................................... 2,000,000 2,127,200
Los Angeles USD, COP, Refunding, Multiple Property Project,
FSA Insured, 5.00%, 11/01/04 .................................................................... 1,000,000 1,000,160
Lynwood Public Financing Authority Revenue, Water Systems
Improvement Project, 6.15%, 6/01/08 ............................................................ 565,000 606,991
Madera COP, Refunding, Madera Community Hospital, 5.10%, 3/01/03 ............................... 515,000 529,770
Mammoth Lakes COP, Refunding,
5.70%, 6/01/10 ................................................................................. 850,000 881,816
5.75%, 6/01/11 ................................................................................. 250,000 258,605
Merced Irrigation District COP, Water Facilities Project, 6.125%, 11/01/03 ..................... 540,000 579,739
Mid-Peninsula Regional Open Space District COP,
Special District Association Finance Corp., Series 1993,
5.10%, 9/01/02 ................................................................................. 510,000 526,315
5.20%, 9/01/03 ................................................................................. 530,000 551,804
Modesto Irrigation District, Financing Authority Revenue, Domestic Water Project,
Series C, AMBAC Insured, 5.50%, 9/01/08 ....................................................... 700,000 766,073
Mojave GO, Water Agency, ID M, Morongo Basin, ETM, 6.20%, 9/01/01 .............................. 100,000 106,602
Morgan Hill RDA, Tax Allocation, Refunding, 5.70%, 3/01/01 ..................................... 100,000 101,205
Mt. Diablo Hospital District Revenue, Series A, AMBAC Insured, 5.10%, 12/01/03 ................. 100,000 104,798
Murrieta COP, Road Improvement Project,
6.00%, 4/01/07 ................................................................................. $ 235,000 $ 249,737
6.00%, 4/01/08 ................................................................................. 245,000 259,800
New Haven USD, COP, Refunding, 5.30%, 7/01/01 .................................................. 500,000 515,280
Newark USD, COP, Crossover Refunding, 5.75%, 9/01/02 ........................................... 300,000 309,501
North City West School Facilities Financing Authority, Special Tax,
Refunding, Series B, FSA Insured, 5.625%, 9/01/08 .............................................. 500,000 546,755
Oakland USD, Alameda County COP, Refunding, 5.00%, 9/15/99 ..................................... 1,745,000 1,756,901
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 1,066,610
Orange County California CFD No 86-2, Special Tax, Refunding,
Rancho Santa Margarita, Series A 5.375%, 8/15/12 ................................................ 1,500,000 1,504,875
Orange County COP, Recovery, Refunding, Series A, MBIA Insured, 6.00%, 7/01/08 ................. 1,500,000 1,672,980
Orange County Development Agency, Tax Allocation, Refunding,
Santa Ana Heights Project Area, 5.90%, 9/01/04 .................................................. 800,000 850,720
Orange County Local Transportation Authority, Sales Tax Revenues,
First Senior Measure M, 6.00%, 2/15/06 ......................................................... 500,000 551,225
Orange County MFHR, Villa Santiago Rehabilitation Project,
FNMA Secured, 5.60%, 10/01/27 ................................................................... 500,000 521,840
Oroville Hospital Revenue, Oroville Hospital, Series A,
CHFCLP Insured, 5.125%, 12/01/12 ............................................................... 1,435,000 1,436,507
Palm Desert Financing Authority, Lease Revenue,
Blythe County Administrative Project, 6.375%, 8/01/11 .......................................... 855,000 915,620
Paramount RDA, Tax Allocation, Refunding,
Redevelopment Project, Area No. 1, 6.05%, 8/01/05 ............................................... 1,515,000 1,666,258
Paso Robles Union School District COP,
5.75%, 8/01/03 ................................................................................. 1,635,000 1,741,896
Measure D, Capital Projects, Phase III, 5.75%, 8/01/02 ......................................... 300,000 303,441
Pismo Beach Public Financing Authority Revenue, Series 1993,
6.25%, 9/15/01 ................................................................................. 45,000 45,146
6.40%, 9/15/02 ................................................................................. 50,000 50,167
6.50%, 9/15/03 ................................................................................. 50,000 50,172
6.55%, 9/15/04 ................................................................................. 55,000 55,183
Pleasant Hill RDA, RMR, Refunding, 5.40%, 2/01/05 .............................................. 1,285,000 1,360,584
Rialto RDA, Tax Allocation, Industrial Redevelopment,
Refunding, Sub-Areas A & B, Series A,
5.40%, 9/01/02 ................................................................................. 270,000 278,578
5.50%, 9/01/03 ................................................................................. 280,000 291,424
Richmond Joint Powers Financing Authority Revenue,
Refunding, Multiple Redevelopment Projects,
Series B, 5.35%, 5/15/13 ...................................................................... 2,000,000 2,030,480
Riverside County Asset Leasing Corp., Leasehold Revenue,
Riverside County Hospital Project, Series A,
5.90%, 6/01/02 ................................................................................. 200,000 210,054
6.00%, 6/01/04 ................................................................................. 200,000 213,468
Riverside County Housing Authority, MFHR, Brandon Place
Apartments, Series B, FNMA Secured, 5.625%, 7/01/29 ............................................ 1,000,000 1,054,060
Sacramento MUD, Electric Revenue, Series E, 5.25%, 5/15/03 ..................................... 1,000,000 1,045,650
San Bernardino County COP, Refunding, Medical
Center Financing Project, 6.00%, 8/01/09 ....................................................... 2,000,000 2,154,240
San Bernardino County Mortgage Revenue, Refunding,
Don Miguel Apartments Project, MBIA Insured,
6.00%, 9/01/03 ................................................................................ 120,000 127,564
San Clemente 1915 Act, Refunding, AD No. 8,
5.00%, 9/02/02 ................................................................................. 415,000 423,719
5.10%, 9/02/03 ................................................................................. 435,000 446,071
5.20%, 9/02/04 ................................................................................. 460,000 473,639
San Diego Mortgage Revenue, Refunding, Mariners Cove,
Series B-1, 5.125%, 9/01/03 .................................................................... 325,000 334,682
San Diego Port Facilities Revenue, Refunding,
National Steel & Shipbuilding Co., 6.60%, 12/01/02 .............................................. 100,000 105,882
San Francisco City and County RDA, Mortgage Revenue,
Hotel Tax Revenue, FSA Insured, 5.80%, 7/01/01 ................................................. $ 300,000 $ 315,054
Hotel Tax Revenue, FSA Insured, 5.90%, 7/01/02 ................................................. 245,000 261,062
Refunding, Series A, MBIA Insured, 6.125%, 7/01/02 ............................................. 25,000 25,053
San Gorgonio Memorial Health Care District, Health Facility
Revenue, Insured, 6.375%, 6/01/08 ............................................................... 750,000 834,458
San Joaquin County COP, General Hospital Project, 5.90%, 9/01/03 ............................... 400,000 423,960
San Jose Financing Authority Revenue, Refunding, Convention
Center Project, Series C, 5.75%, 9/01/03 ....................................................... 300,000 318,381
San Juan USD, COP, Gold River Elementary School Project, 5.65%, 4/01/03 ........................ 600,000 602,046
San Ramon COP, Capital Improvements Project,
5.20%, 3/01/01 ................................................................................. 85,000 87,322
5.30%, 3/01/02 ................................................................................. 90,000 93,315
5.40%, 3/01/03 ................................................................................. 95,000 99,562
5.50%, 3/01/04 ................................................................................. 100,000 105,702
5.60%, 3/01/05 ................................................................................. 105,000 111,957
Santa Barbara RDA, Tax Allocation, Central City
Redevelopment Project, 6.00%, 3/01/03 .......................................................... 985,000 1,039,983
Santa Clara California 1915 Act, Refunding,
Reassessment District 187, Series 1, 5.25%, 9/02/11 ............................................. 1,720,000 1,692,600
Santa Monica Parking Authority, Lease Revenue,
Refunding, 6.00%, 7/01/03 ....................................................................... 100,000 108,021
Sebastopol COP, Refunding, Series 1994,
5.50%, 6/01/03 ................................................................................. 200,000 207,810
5.60%, 6/01/04 ................................................................................. 215,000 224,862
5.70%, 6/01/05 ................................................................................. 240,000 253,272
Selma Public Financing Authority Revenue, Series A, MBIA Insured,
5.25%, 9/15/02 ................................................................................. 100,000 102,190
5.50%, 9/15/04 ................................................................................. 115,000 117,538
5.60%, 9/15/05 ................................................................................. 120,000 122,659
5.65%, 9/15/06 ................................................................................. 125,000 127,770
5.70%, 9/15/07 ................................................................................. 135,000 137,990
5.70%, 9/15/08 ................................................................................. 140,000 143,101
5.75%, 9/15/09 ................................................................................. 150,000 153,338
5.75%, 9/15/10 ................................................................................. 155,000 158,449
Shafter Joint Powers Financing Authority, Lease Revenue, Community Correctional
Facility Project, Series A, 5.50%, 1/01/06 .................................................... 1,500,000 1,570,155
Shasta Joint Powers Financing Authority, Lease Revenue,
Courthouse Improvement Project, Series A, 5.80%, 6/01/00 ........................................ 100,000 103,447
Solana Beach COP, City Hall Project, 5.80%, 10/01/02 ........................................... 50,000 53,071
South Gate Public Financing Authority Water Revenue,
Refunding, Series A, FGIC Insured,
5.35%, 10/01/07 ................................................................................ 995,000 1,066,033
5.45%, 10/01/08 ................................................................................ 1,040,000 1,124,687
South San Francisco Capital Improvements
Financing Authority Revenue, Refunding,
South San Francisco Conference Center,
5.70%, 9/01/02 ................................................................................. 195,000 203,385
5.80%, 9/01/03 ................................................................................. 205,000 216,156
5.90%, 9/01/04 ................................................................................. 215,000 228,631
Southern California Rapid Transit District Revenue,
Special Benefit, AD No. A2, 5.80%, 9/01/01 ...................................................... 100,000 103,923
Stockton Health Facilities Revenue, Refunding,
Dameron Hospital Association, Series A, 5.35%, 12/01/09 ......................................... 385,000 395,233
Stockton Port District, Port Facilities Revenue, Refunding
& Improvement, Series A, FSA Insured, 5.75%, 7/01/11 ............................................ 1,295,000 1,410,631
Sunline Transport Agency COP, Transport Finance Corp., Series B,
5.50%, 7/01/03 ................................................................................. $ 450,000 $ 473,999
5.75%, 7/01/06 ................................................................................. 445,000 474,659
Susanville Public Financing Authority Revenue, Series A,
AMBAC Insured, 5.90%, 9/01/02 .................................................................. 100,000 105,499
Tahoe City PUD, COP, Capital Facilities Project, Series B,
6.05%, 6/01/01 ................................................................................. 290,000 301,687
6.15%, 6/01/02 ................................................................................. 835,000 879,188
6.30%, 6/01/04 ................................................................................. 545,000 586,556
Tehachapi Cummings County Water District Revenue COP,
Capital Improvement Project, MBIA Insured,
5.50%, 8/01/04 ................................................................................. 280,000 297,662
5.60%, 8/01/05 ................................................................................. 300,000 319,452
5.75%, 8/01/06 ................................................................................. 320,000 341,904
Temecula RDA Revenue, Tax Allocation, Temecula
Redevelopment Project No. 1, Series A, 5.40%, 2/01/04 .......................................... 600,000 620,802
Temecula Valley USD, Series E, FSA Insured, 5.65%, 9/01/07 ..................................... 370,000 403,515
Torrance USD, COP, Series A, 5.85%, 10/01/99 ................................................... 100,000 101,347
Travis USD, COP, Foxboro Elementary School Construction Project, 6.30%, 9/01/02 ................ 200,000 216,870
Trinity County PUD, COP, Refunding, Electric District Facilities, Series 1993,
5.80%, 4/01/01 ................................................................................. 340,000 349,468
5.90%, 4/01/02 ................................................................................. 360,000 372,743
6.00%, 4/01/03 ................................................................................. 380,000 397,441
Ventura USD, COP, Series A,
5.90%, 4/01/04 ................................................................................. 305,000 320,847
6.00%, 4/01/05 ................................................................................. 320,000 337,017
6.10%, 4/01/06 ................................................................................. 340,000 358,495
6.20%, 4/01/07 ................................................................................. 365,000 384,815
6.30%, 4/01/08 ................................................................................. 385,000 405,858
6.40%, 4/01/09 ................................................................................. 410,000 432,172
Virgin Islands Public Finance Authority Revenue, Refunding,
Senior Lien, Fund Loan Notes, Series A,
5.30%, 10/01/11 ................................................................................ 1,000,000 1,013,400
5.40%, 10/01/12 ................................................................................ 4,150,000 4,224,077
Watsonville RDA, Tax Allocation, Watsonville
Redevelopment Project, Series 1993,
6.00%, 8/01/02 ................................................................................. 510,000 510,468
6.10%, 8/01/03 ................................................................................. 540,000 540,512
-------------
Total Bonds (Cost $147,119,793)................................................................. 153,170,145
-------------
Zero Coupon Bonds 1.2%
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 1,961,460
-------------
Total Zero Coupon Bonds (Cost $1,872,709)....................................................... 1,961,460
-------------
Total Long Term Investments (Cost $148,992,502)................................................. 155,131,605
-------------
Irvine California 1915 Act, AD No. 94-15, Daily VRDN and Put,
3.30%, 9/02/20 .................................................................................. $ 300,000 $ 300,000
Irvine California 1915 Act, AD No. 94-13, Oak Creek Project,
Daily VRDN and Put, 3.30%, 9/02/22 ............................................................. 400,000 400,000
Irvine Ranch Water District GO, Dates-Consolidated Bonds,
Refunding, Series B, Daily VRDN and Put,
3.25%, 10/01/09 ............................................................................... 1,400,000 1,400,000
Irvine Ranch Water District GO, District Nos. 140-240-105-250,
Daily VRDN and Put, 3.30%, 4/01/33 .............................................................. 700,000 700,000
Orange County Various Sanitation District, COP,
Refunding 1-7 and 11, AMBAC Insured,
Daily VRDN and Put, 3.30%, 8/01/16 ............................................................ 100,000 100,000
-------------
Total Short Term Investments (Cost $2,900,000).................................................. 2,900,000
-------------
Total Investments (Cost $151,892,502) 101.5%.................................................... 158,031,605
Other Assets, less Liabilities (1.5%)........................................................... (2,368,046)
-------------
Net Assets 100.0%............................................................................... $155,663,559
=============
</TABLE>
See glossary of terms on page 55.
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 (continued)
<TABLE>
<CAPTION>
Franklin California Tax-Exempt Money Fund
Year Ended June 30,
-------------------------------------------------------------
1998 1997 1996 1995 1994
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year ............ $1.00 $1.00 $1.00 $1.00 $1.00
-------------------------------------------------------------
Net investment income ......................... .03 .03 .03 .03 .02
Less distributions from net investment income . (.03) (.03) (.03) (.03) (.02)
--------------------------------------------------------------
Net asset value, end of year .................. $1.00 $1.00 $1.00 $1.00 $1.00
=============================================================
Total return* ................................. 2.85% 2.85% 2.85% 2.94% 1.83%
Ratios/supplemental data
Net assets, end of year (000's) ............... $656,725 $639,791 $597,819 $642,157 $754,121
Ratios to average net assets:
Expenses ..................................... .60% .60% .63% .64% .61%
Net investment income ........................ 2.82% 2.83% 2.83% 2.88% 1.82%
</TABLE>
*Total return is not annualized.
See notes to financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Statement of Investments, June 30, 1998 (cont.)
<TABLE>
<CAPTION>
PRINCIPAL
Franklin California Tax-Exempt Money Fund AMOUNT VALUE
<S> <C> <C>
a Investments 108.6%
a Alameda-Contra Costa Schools Financing Authority, COP, Capital Improvement Financing
Projects, Weekly VRDN and Put, 3.20%,
Series C, 7/01/25 ........................................................................... $ 1,600,000 $ 1,600,000
Series E, 6/01/22 ........................................................................... 2,000,000 2,000,000
Alameda County TRAN, 4.50%, 7/22/98 ......................................................... 3,500,000 3,501,161
b Alameda County TRAN, 4.50%, 7/07/99 ......................................................... 3,000,000 3,025,980
a Anaheim COP, 1993 Partnership Project, Refunding, AMBAC Insured,
Weekly VRDN and Put, 3.10%, 8/01/19 ............................................................ 4,800,000 4,800,000
a Anaheim COP, Police Facilities Refinancing Project, Refunding,
AMBAC Insured, Weekly VRDN and Put,
3.10%, 8/01/08 ............................................................................. 5,850,000 5,850,000
a Auburn Union School District, COP, Capital Improvement Financing Project,
Weekly VRDN and Put, 3.15%, 12/01/23 ............................................................ 10,000,000 10,000,000
Bay Area Government Association Water & Wastewater Revenue, Pooled Financing Program,
Series A, FSA Insured, 4.00%, 10/01/98 ..................................................... 1,335,000 1,335,761
a Big Bear Lake Industrial Revenue, Southwest Gas Corp. Project, Series A,
Weekly VRDN and Put, 3.15%, 12/01/28 ........................................................... 2,700,000 2,700,000
a Burbank RDA, MFR, Issue A, Weekly VRDN and Put, 2.75%, 11/01/10 ............................. 1,400,000 1,400,000
a Butte County Housing Authority MFR, Pine Tree Apartments Project,
Weekly VRDN and Put, 3.45%, 12/01/10 ........................................................... 2,615,000 2,615,000
a California Health Facilities Financing Authority Revenue,
Children's Hospital, MBIA Insured, Weekly VRDN and Put, 3.00%, 11/01/21 ..................... 2,500,000 2,500,000
Floating Pool Program, Weekly VRDN and Put, 3.10%, 9/01/20 .................................. 2,500,000 2,500,000
Refunding, Catholic Healthcare, Series B, MBIA Insured,
Weekly VRDN and Put, 3.00%, 7/01/12 ............................................................. 4,900,000 4,900,000
Refunding, Catholic West Facility, Series B, MBIA Insured,
Weekly VRDN and Put, 3.00%, 7/01/05 ............................................................ 8,300,000 8,300,000
Refunding, Catholic West Facility, Series D, MBIA Insured,
Weekly VRDN and Put, 3.00%, 7/01/18 ............................................................ 2,100,000 2,100,000
Santa Barbara Cottage Hospital, Series B, Weekly VRDN and Put,
3.10%, 9/01/05 ................................................................................. 1,785,000 1,785,000
Scripps Health, Series A, MBIA Insured, Weekly VRDN and Put,
3.20%, 10/01/22 ................................................................................ 5,000,000 5,000,000
St. Francis Medical Center, Series F, MBIA Insured,
Weekly VRDN and Put, 3.15%, 7/01/10 ............................................................. 1,300,000 1,300,000
a California HFA Revenue, Refunding, MF, Series C,
FNMA Secured, Weekly VRDN and Put, 3.00%, 7/15/13 .............................................. 3,450,000 3,450,000
a California PCFA, Resource Recovery Revenue,
Daily VRDN and Put, OMS Equity, Stanislaus Project, 3.70%, 12/01/17 ............................. 4,000,000 4,000,000
a California PCFA Revenue,
Occidental Geo/Santa Fe Geothermal, Monthly VRDN
and Weekly Put, 3.65%, 9/01/13 ................................................................. 4,700,000 4,700,000
Refunding, Pacific Gas & Electric, Series A, Daily VRDN
and Put, 3.50%, 12/01/18 ........................................................................ 1,200,000 1,200,000
Refunding, Pacific Gas & Electric, Series B,
Daily VRDN and Put, 3.40%, 11/01/26 ........................................................... 10,000,000 10,000,000
Reynolds Metals Co. Project, Weekly VRDN and Put, 3.30%, 12/01/15 ........................... 1,000,000 1,000,000
a California PCFA, Solid Waste Disposal Revenue, Series A,
Colmac Energy Project, Weekly VRDN and Put, 3.15%, 12/01/16 ................................. 1,200,000 1,200,000
Shell Oil Co., Martinez Project, Daily VRDN and Put, 3.35%, 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, 3.65%, 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 20,000,475
b 4.50%, 7/02/99 .............................................................................. 25,000,000 25,183,000
a California State Economic Development Financing Authority Revenue,
Independent System Project, Series C, Daily VRDN and Put, 3.45%, 4/01/08 .................... 4,000,000 4,000,000
Refunding, KQED, Inc. Project, Weekly VRDN and Put, 3.05%, 4/01/20 .......................... 2,455,000 2,455,000
California State GO, Refunding, 4.00%, 2/01/99 .............................................. 3,650,000 3,661,382
California State GO, TECP
3.40%, 9/03/98 .............................................................................. 5,500,000 5,500,000
3.40%, 9/08/98 .............................................................................. 7,000,000 7,000,000
3.45%, 9/10/98 .............................................................................. 4,500,000 4,500,000
a California Statewide Communities Development Authority Revenue, COP,
John Muir/MT Diablo Health, AMBAC Insured, Daily VRDN and Put, 3.55%, 8/15/27 ............... $ 1,500,000 $ 1,500,000
Refunding, House Ear Institute, Daily VRDN and Put, 3.50%, 12/01/18 ......................... 2,366,000 2,366,000
a California Statewide Communities Development Corp. Revenue,
Series C, Weekly VRDN and Put, 3.25%, 12/01/19,
American Kleaner ............................................................................ 2,550,000 2,550,000
Karcher Property Project .................................................................... 1,700,000 1,700,000
a Chico MFMR, Webb Homes Project, Monthly VRDN and Weekly Put, 3.55%, 1/01/10 ................. 2,270,000 2,270,000
a Concord MFMR, Weekly VRDN and Put,
Arcadian Facility, Series A, 3.00%, 7/15/18 ................................................. 8,200,000 8,200,000
Bel Air Apartments, Issue A, 3.30%, 12/01/16 ................................................ 500,000 500,000
a Duarte RDA, COP, Johnson Duarte Project, Series B,
Weekly VRDN and Put, 3.15%, 12/01/14,........................................................... 1,000,000 1,000,000
a Dublin Housing Authority, MFHR, Park Sierra Housing, Series A,
Weekly VRDN and Put, 3.15%, 6/01/28 ............................................................ 1,100,000 1,100,000
East Bay MUD, TECP, 3.60%, 8/19/98 .......................................................... 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, 3.00% ............................................................................. 15,400,000 15,400,000
Series C, 3.10% ............................................................................. 5,000,000 5,000,000
Series E, 3.15% ............................................................................. 10,000,000 10,000,000
a Fresno MFHR, Refunding, Heron Pointe Apartments, Series A,
Weekly VRDN and Put, 3.20%, 6/01/07 ............................................................ 1,000,000 1,000,000
a Irvine 1915 Act, Daily VRDN and Put, 3.30%,
AD 94-13, Oak Creek Project, 9/02/22 ........................................................ 15,800,000 15,800,000
AD 97-16, Northwest Project, 9/02/22 ........................................................ 16,200,000 16,200,000
AD 97-17, 9/02/23 ........................................................................... 8,200,000 8,200,000
a Irvine Ranch Water District, Daily VRDN and Put,
Capital Improvement Project, 3.50%, 8/01/16 ................................................. 18,500,000 18,500,000
Consolidated District Nos 105, 250, And 290, 3.30%, 8/01/16 ................................. 5,000,000 5,000,000
Consolidated District Nos 140, 240, 105, And 250, 3.30%, 4/01/33 ............................ 2,800,000 2,800,000
a,bKern County Board Education, TRAN, 4.25%, 6/30/99 .......................................... 3,000,000 3,020,220
a Kern County COP, Kern Public Facilities Project, Series A,
Weekly VRDN and Put, 3.00%, 8/01/06 ............................................................ 2,000,000 2,000,000
a Lancaster RDA, MFHR, Westwood Park Apartments, Series K,
Weekly VRDN and Put, 3.00%, 12/01/07 ............................................................ 900,000 900,000
a Livermore MFHR, Refunding, Richards Manor, Series A,
Weekly VRDN and Put, 3.30%, 12/01/22 ........................................................... 6,870,000 6,870,000
a Los Angeles Community RDA, MFHR, Grand Promende Project,
Weekly VRDN and Put, 3.00%, 12/01/10 ............................................................ 1,300,000 1,300,000
Los Angeles County Capital Asset Leasing Corp., TECP, 3.50%, 7/16/98 ........................ 4,000,000 4,000,000
a Los Angeles County Housing Authority, MFHR, Weekly
VRDN and Put, Sand Canyon Ranch Project, Series F,
3.20%, 11/01/06 ............................................................................ 4,500,000 4,500,000
a Los Angeles County Pension Obligation, Refunding,
AMBAC Insured, Weekly VRDN and Put, 3.10%, 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
b Los Angeles County TRAN, Series A, 4.50%, 6/30/99 ........................................... 30,000,000 30,239,100
a Los Angeles CRDA, COP, Weekly VRDN and Put,
Baldwin Hill Park, 3.30%, 12/01/14 .......................................................... 1,000,000 1,000,000
Broadway Spring Center Program, 3.15%, 7/01/12 .............................................. 400,000 400,000
a Los Angeles MFHR, Weekly VRDN and Put,
Casden Project, Series K, 3.45%, 7/01/10 .................................................... 3,400,000 3,400,000
Lucas Studios Project, Series D, 3.40%, 12/01/21 ............................................ 1,200,000 1,200,000
Mariposa Gardens Project, Series H, 3.00%, 9/01/15 .......................................... 600,000 600,000
Masselin Manor, 3.05%, 7/01/15 .............................................................. 2,400,000 2,400,000
Los Angeles USD, TRAN, 4.50%,
Series A, 7/01/98 ........................................................................... $ 4,000,000 $ 4,000,000
Series B, 10/01/98 .......................................................................... 1,100,000 1,101,709
a Metropolitan Water District, Southern California Waterworks Revenue,
Refunding, Series A, AMBAC Insured,
Weekly VRDN and Put, 3.00%, 6/01/23 ........................................................ 13,865,000 13,865,000
a Moorpark MFR, Refunding, Le Club Apartments Project, Series A,
Weekly VRDN and Put, 3.05%, 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, 3.10%, 7/01/22 ................................ 10,400,000 10,400,000
a Ontario MFR, Park Centre Partners Project, Series A,
Weekly VRDN and Put, 3.0416%, 8/01/07 .......................................................... 1,900,000 1,900,000
a Orange County Apartment Development Revenue, Weekly VRDN and Put,
Issue I, Park Ridge, 3.00%, 11/01/08 ........................................................ 1,600,000 1,600,000
Jessy L. Frost Project, Issue B, 3.40%, 3/01/09 ............................................. 100,000 100,000
Refunding, The Lakes Projects, Series A, 3.40%, 12/01/06 .................................... 9,250,000 9,250,000
Vista Verde Apartments, 3.50%, 8/01/18 ...................................................... 3,000,000 3,000,000
a Oxnard RDA, COP, Channel Islands Business Center,
Weekly VRDN and Put, 3.9288%, 7/01/05 ........................................................... 390,000 390,000
a Palm Springs CRDA, COP, Weekly VRDN and Put, 3.25%, 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, 3.20%, 12/01/10 ............................................................ 1,500,000 1,500,000
a Pleasanton MFMR Var-Valley Plaza-A-Remarketing ,
Weekly VRDN and Put, 3.00%, 7/15/18 ............................................................ 3,660,000 3,660,000
Puerto Rico Commonwealth TRAN, Series A, 4.50%, 7/30/98 ..................................... 25,000,000 25,014,591
a Rancho Mirage RDA, Certificates, Participation,
Weekly VRDN and Put, 3.50%, 10/01/16 ............................................................ 4,100,000 4,100,000
a Redlands MFHR, Refunding, Parkview Terrace, Series A,
Weekly VRDN and Put, 3.05%, 2/01/16 ............................................................. 3,550,000 3,550,000
a Riverside County Housing Authority MFMR,
Emeritus Park, Series B, Weekly VRDN and Put,
3.00%, 7/15/18 ............................................................................. 3,250,000 3,250,000
a Riverside County IDA Revenue, Weekly VRDN and Put,
Calavo Growers, 3.00%, 9/01/05 .................................................................. 1,500,000 1,500,000
a Roseville Finance Authority Hospital, Lease Revenue,
Series A, Roseville Hospital, Weekly VRDN and Put,
3.05%, 10/01/14 ............................................................................ 9,450,000 9,450,000
a Sacramento County COP, Administration Center and Court
House Project, Weekly VRDN and Put, 3.15%, 6/01/20 ............................................. 8,255,000 8,255,000
a Sacramento County MFR, Various Housing Projects,
Smoketree, Series A, Weekly VRDN and Put, 3.00%, 4/15/10 ....................................... 6,950,000 6,950,000
Sacramento MUD, TECP, 3.35%, 9/17/98 ........................................................ 25,700,000 25,700,000
a San Bernardino County, MFHR, Weekly VRDN and Put,
Refunding, Quail Properties, Series A, 3.00%, 7/01/14 ....................................... 4,250,000 4,250,000
Western Properties Project I, 3.00%, 2/01/05 ................................................ 1,950,000 1,950,000
Western Properties Project III, 3.00%, 8/01/05 .............................................. 900,000 900,000
Western Properties Project IV, 3.00%, 8/01/05 ............................................... 1,600,000 1,600,000
Western Properties Project V, 3.00%, 8/01/05 ................................................ 2,550,000 2,550,000
Woodview Apartments Project, Series I, 3.15%, 4/01/07 ....................................... 2,300,000 2,300,000
a San Diego County MFHR, Nationwide, Series C, Weekly
VRDN and Put, 3.00%, 4/15/05 .................................................................... 1,300,000 1,300,000
San Diego County TRAN, 4.50%, 9/30/98 ....................................................... 13,500,000 13,522,641
San Diego Gas & Electric, TECP,
3.55%, 8/11/98 .............................................................................. 2,000,000 2,000,000
3.60%, 8/11/98 .............................................................................. 3,000,000 3,000,000
3.50%, 8/12/98 .............................................................................. 5,500,000 5,500, 000
a San Diego MFMR, California Housing Authority,
La Cima Apartments, Series K, Weekly VRDN and Put,
3.05%, 12/01/08 ............................................................................ 2,400,000 2,400,000
a San Diego MFMR, Refunding, University Town Center Apartments,
Weekly VRDN and Put, 3.05%, 10/01/15 ............................................................ 4,900,000 4,900,000
a San Dimas RDA, Commercial Development Revenue,
San Dimas Commercial Center, Monthly VRDN and Put,
3.70%, 12/01/13 ............................................................................ 900,000 900,000
San Francisco City and County Airports Commission International,
TECP, 3.60%, 7/14/98 ........................................................................... $ 3,040,000 $ 3,040,000
a San Francisco City and County MFHR, Winterland Project,
Series C, Weekly VRDN and Put, 3.20%, 6/01/06 .................................................. 4,500,000 4,500,000
a San Francisco City and County RDA, MFR, Refunding,
Fillmore Center, Series B-2, Weekly VRDN and Put,
3.45%, 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,
3.20%, 12/01/06 ............................................................................ 4,420,000 4,420,000
a San Jose MFMR, Somerset Park Apartment Project,
Weekly VRDN and Put, 3.30%, 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, 3.10%, 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 2,500,000
a Santa Ana MFHR, Refunding, Vintage Apartments, Series A,
Weekly VRDN and Put, 3.30%, 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, 3.20%, 12/15/25 ......................................... 5,000,000 5,000,000
Santa Clara County TRAN, 4.75%, 10/01/98 .................................................... 10,000,000 10,021,695
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%, 8/13/98 ........................................ 3,850,000 3,850,000
Southern California Metropolitan Water District, TECP, 3.60%, 10/07/98 ...................... 2,000,000 2,000,000
a Southern California Public Power Authority Revenue,
Transmission Project, Refunding, Weekly VRDN and Put, 3.10%,
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, 3.10%, 7/01/09 ........................................................ 2,000,000 2,000,000
a Suisun City MFMR, Housing Authority, Village Green Apartments,
Series A, Weekly VRDN and Put, 3.00%, 6/15/18 ................................................... 8,900,000 8,900,000
a Tustin 1915 Act, Reassessment District No. 95-2, Series A,
Daily VRDN and Put, 3.30%, 9/02/13.............................................................. 21,992,000 21,992,000
a Vallectos Water District, Water Revenue, COP,
Twin Oaks Reservoir Project, Weekly VRDN and Put, 3.00%, 7/01/30 ................................ 2,600,000 2,600,000
a West Basin Municipal Water District Revenue,
COP, Phase II Recycled Water Project, Series C,
Weekly VRDN and Put, 3.10%, 8/01/27 ........................................................ 2,000,000 2,000,000
a Western Riverside County Regional Wastewater Authority Treatment,
Daily VRDN and Put, 3.30%, 4/01/28 ............................................................. 18,250,000 18,250,000
--------------
Total Investments (Cost $712,910,715) 108.6% ................................................ 712,910,715
Other Assets, less Liabilities (8.6)% ....................................................... (56,186,149)
--------------
Net Assets 100.0%............................................................................ $656,724,566
==============
</TABLE>
See glossary of terms on page 55.
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.
See notes to financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Statement of Investments, June 30, 1998 (cont.)
Glossary of Terms
1915 Act- Improvement Bond Act of 1915
ABAG - The Association of Bay Area Governments (acquired by MBIA in 1989
and no longer does business under this name).
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.
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
Statements of Assets and Liabilities
June 30, 1998
<TABLE>
<CAPTION>
Franklin Franklin California Franklin
California Intermediate-Term California
Insured Tax-Free Tax-Free Tax-Exempt
Income Fund Income Fund Money Fund
---------------------------------------------
<S> <C> <C> <C>
Assets:
Investments in securities:
Cost ...................................................... $1,622,293,975 $151,892,502 $712,910,715
=============================================
Value ..................................................... 1,729,304,337 158,031,605 712,910,715
Cash ...................................................... 1,906,111 1,680,099 1,710,703
Receivables:
Investment securities sold ................................ 36,855,954 -- --
Capital shares sold ....................................... 3,790,913 751,760 10,500
Interest .................................................. 29,891,634 2,463,267 4,620,186
---------------------------------------------
Total assets ................................................ 1,801,748,949 162,926,731 719,252,104
---------------------------------------------
Liabilities:
Payables:
Investment securities purchased ........................... 14,800,339 6,674,223 61,468,300
Capital shares redeemed ................................... 7,921,377 119,703 46,243
Affiliates ................................................ 1,052,204 100,231 299,247
Shareholders .............................................. 3,097,073 190,054 559,178
Distributions to shareholders .............................. 1,879,711 151,512 92,571
Other liabilities .......................................... 137,775 27,449 61,999
---------------------------------------------
Total liabilities ........................................... 28,888,479 7,263,172 62,527,538
---------------------------------------------
Net assets, at value ....................................... $1,772,860,470 $155,663,559 $656,724,566
=============================================
Net assets consist of:
Undistributed net investment income ........................ $ 364,333 $ 393,399 $ --
Net unrealized appreciation ................................ 107,010,362 6,139,103 --
Accumulated net realized gain (loss) ....................... 9,088,374 (195,646) --
Capital shares ............................................. 1,656,397,401 149,326,703 656,724,566
---------------------------------------------
Net assets, at value ....................................... $1,772,860,470 $155,663,559 $656,724,566
=============================================
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>
Class I:
Net assets, at value ....................................... $1,717,489,229 $155,663,559 $656,724,566
=============================================
Shares outstanding ......................................... 137,714,533 13,846,749 656,724,566
=============================================
Net asset value per share* ................................. $12.47 $11.24 $1.00
=============================================
Maximum offering price per share
(net asset value per share / 95.75%,
97.75%, 100%, respectively) .............................. $13.02 $11.50 $1.00
=============================================
Class II:
Net assets, at value ........................................ $ 55,371,241 -- --
=============================================
Shares outstanding .......................................... 4,413,589 -- --
=============================================
Net asset value per share* .................................. $12.55 -- --
=============================================
Maximum offering price per share
(net asset value per share / 99.00%) ....................... $12.68 -- --
=============================================
</TABLE>
*Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See notes to financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Statements (continued)
<TABLE>
<CAPTION>
Statements of Operations
for the year ended June 30, 1998
Franklin Franklin California Franklin
California Intermediate-Term California
Insured Tax-Free Tax-Free Tax-Exempt
Income Fund Income Fund Money Fund
<S> <C> <C> <C>
Investment income:
Interest...................................................... $ 98,803,266 $6,985,988 $22,567,839
------------------------------------------
Expenses:
Management fees (Note 3) ..................................... 8,057,731 794,091 3,224,282
Distribution fees (Note 3)
Class I ..................................................... 1,487,863 133,632 --
Class II .................................................... 292,622 -- --
Transfer agent fees (Note 3) ................................. 395,677 38,748 378,115
Custodian fees ............................................... 19,480 1,525 13,134
Reports to shareholders ...................................... 176,565 21,519 228,314
Registration and filing fees ................................. 1,052 1,264 4,212
Professional fees............................................. 64,675 5,063 54,229
Trustees' fees and expenses .................................. 53,656 4,340 20,931
Insurance..................................................... 6,178 -- --
Pricing fees ................................................. 48,482 26,054 1,270
Other ........................................................ 32,939 1,802 9,694
------------------------------------------
Total expenses................................................. 10,636,920 1,028,038 3,934,181
Expenses waived/paid by affiliate (Note 3) .................... -- (339,987) --
------------------------------------------
Net expenses ................................................. 10,636,920 688,051 3,934,181
------------------------------------------
Net investment income ....................................... 88,166,346 6,297,937 18,633,658
------------------------------------------
Realized and unrealized gains (losses):
Net realized gain (loss) from investments .................... 14,517,284 373,164 (2,802)
Net unrealized appreciation on investments ................... 35,549,088 2,945,640 --
------------------------------------------
Net realized and unrealized gain (loss) ....................... 50,066,372 3,318,804 (2,802)
------------------------------------------
Net increase in net assets resulting from operations .......... $138,232,718 $9,616,741 $18,630,856
==========================================
</TABLE>
See notes to financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Statements (continued)
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
for the years ended June 30, 1998 and 1997
Franklin California Insured Franklin California Intermediate- Franklin California
Tax-Free Income Fund Term Tax-Free Income Fund Tax-Exempt Money Fund
------------------------------------------------------------------------------------------------
1998 1997 1998 1997 1998 1997
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease)
in net assets:
Operations:
Net investment
income .............. $ 88,166,346 $ 89,121,047 $ 6,297,937 $ 5,401,684 $ 18,633,658 $ 18,084,346
Net realized gain (loss)
from investments ..... 14,517,284 11,434,772 373,164 119,770 (2,802) (9,957)
Net unrealized
appreciation
on investments ...... 35,549,088 17,743,963 2,945,640 2,477,165 -- --
------------------------------------------------------------------------------------------------
Net increase
in net assets
resulting from
operations........... 138,232,718 118,299,782 9,616,741 7,998,619 18,630,856 18,074,389
Distributions to
shareholders from:
Net investment income:
Class I ............ (86,044,321) (88,728,007) (6,184,726) (5,351,328) (18,630,856)* (18,074,389)*
Class II ........... (2,012,482) (1,243,155) -- -- -- --
Net realized gains:
Class I ........... (15,480,792) -- -- -- -- --
Class II ........... (397,099) -- -- -- -- --
------------------------------------------------------------------------------------------------
Total distributions
to shareholders ..... (103,934,694) (89,971,162) (6,184,726) (5,351,328) (18,630,856) (18,074,389)
Capital share
transactions (Note 2):
Class I .......... 48,438,350 19,013,927 34,565,606 13,819,809 16,933,993 41,971,783
Class II .......... 19,682,305 16,010,873 -- -- -- --
------------------------------------------------------------------------------------------------
Total capital
share transactions . 68,120,655 35,024,800 34,565,606 13,819,809 16,933,993 41,971,783
Net increase
in net assets........ 102,418,679 63,353,420 37,997,621 16,467,100 16,933,993 41,971,783
Net assets:
Beginning of year.... 1,670,441,791 1,607,088,371 117,665,938 101,198,838 639,790,573 597,818,790
------------------------------------------------------------------------------------------------
End of year ......... $1,772,860,470 $1,670,441,791 $155,663,559 $117,665,938 $656,724,566 $639,790,573
================================================================================================
Undistributed net investment
income included in net assets:
End of year ........ $ 364,333 $ 254,790 $ 393,399 $ 280,188 $-- $--
================================================================================================
*Distributions were decreased by net realized loss from security transactions of
$2,802 in 1998 and $9,957 in 1997.
See notes to financial statements.
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
Notes to Financial Statements
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 separate series (the Funds). All Funds are diversified except the Franklin
California Intermediate-Term Tax-Free Income Fund. The Funds' investment
objectives 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 June 30, 1998, 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:
Year ended June 30, 1998
Shares sold ....................... 22,389,869 $278,357,073 6,049,630 $67,642,009 $990,707,295
Shares issued in
reinvestment of distributions ..... 3,656,134 45,526,852 336,167 3,758,425 18,601,299
Shares redeemed ................... (22,146,051) (275,445,575) (3,299,944) (36,834,828) (992,374,601)
-------------------------------------------------------------------
Net increase ...................... 3,899,952 $ 48,438,350 3,085,853 $34,565,606 $ 16,933,993
===================================================================
Year ended June 30, 1997
Shares sold ....................... 22,948,118 $278,902,671 3,368,342 $36,450,937 $922,857,545
Shares issued in
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:
Year ended June 30, 1998
Shares sold ....................... 2,210,276 $27,644,046
Shares issued in
reinvestment of distributions ..... 133,327 1,670,244
Shares redeemed ................... (769,144) (9,631,985)
----------------------
Net increase ...................... 1,574,459 $19,682,305
======================
Year ended June 30, 1997
Shares sold ...................... 1,578,751 $19,284,425
Shares issued in
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 the Franklin California
Intermediate-Term Tax-Free Income Fund pay investment management fees to
Advisers based on the month-end net assets of each Fund, and the Franklin
California Tax-Exempt Money Fund pays an investment management fee to Advisers
based on the average daily 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 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, through June 30, 1998, 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 paid net commissions on sales of the Funds' shares, and received
contingent deferred sales charges for the year as follows:
Franklin Franklin California
California Intermediate-Term
Insured Tax-Free Tax-Free
Income Fund Income Fund
-------------------------------------
Net commissions paid ...... $374,187 $54,086
Contingent deferred
sales charges ............ $ 41,527 $--
4. INCOME TAXES
At June 30, 1998, 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 California Franklin California
Intermediate-Term Tax-Exempt
Tax-Free Income Fund Money Fund
---------------------------------------------------
Capital loss carryovers expiring in:
2003................. $195,646 $14,563
2005................. -- 1,444
2006................. -- 9,957
------------------------
$195,646 $25,964
At June 30, 1998, the Franklin California Tax-Exempt Money Fund has deferred
capital losses occurring subsequent to October 31, 1997 of $2,802. For tax
purposes, such losses will be reflected in the year ending June 30, 1999.
Net realized capital gains (losses) differ for financial statements and tax
purposes primarily due to differing treatment of wash sales.
At June 30, 1998, the net unrealized appreciation based on the cost of
investments for income tax purposes was as follows:
Franklin Franklin California
California Intermediate-Term
Insured Tax-Free Tax-Free
Income Fund Income Fund
----------------------------------
Net investment cost ...$1,622,414,298 $151,892,502
==================================
Unrealized
appreciation ......... $ 107,381,449 $ 6,205,861
Unrealized
depreciation ......... (491,410) (66,758)
----------------------------------
Net unrealized
appreciation.......... $ 106,890,039 $ 6,139,103
==================================
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the year
ended June 30, 1998, was as follows:
Franklin Franklin California
California Intermediate-Term
Insured Tax-Free Tax-Free
Income Fund Income Fund
-----------------------------------
Purchases ............. $439,261,061 $48,355,055
Sales ................. $367,874,734 $12,462,570
6. CREDIT RISK
The Funds have investments in excess of 10% of their total net assets in the
state of California. Such concentration may subject the Funds more significantly
to economic changes occurring within that state.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Independent Auditor's Report
To the Shareholders and Board of Trustees
of Franklin California Tax-Free Trust:
We have audited the accompanying statements of assets and liabilities of the
Funds comprising the Franklin California Tax-Free Trust (the Funds), including
each Fund's statement of investments as of June 30, 1998, and the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the periods presented. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1998, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Funds comprising Franklin California Tax-Free Trust as of June 30, 1998,
the results of their operations for the year then ended, the changes in their
net assets for each of the two years in the period then ended, and their
financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles.
PricewaterhouseCoopers LLP
San Francisco, California
August 5, 1998
FRANKLIN CALIFORNIA TAX-FREE TRUST
Tax Information
Under Section 852(b)(3)(C) of the Internal Revenue Code, the California Insured
Tax-Free Income Fund hereby designates the following amounts as capital gain
dividends for the fiscal year ended June 30, 1998.
28% Rate Gain $ --
20% Rate Gain 13,466,332
------------
Total $13,466,332
============
Under Section 852 (b)(5)(A) of the Internal Revenue Code, the trust hereby
designates 100% of the distributions paid from net investment income as
exempt-interest dividends for the fiscal year ended June 30, 1998.
Franklin California Tax-Free Trust
Annual Report
June 30, 1998
APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING (PURSUANT TO ITEM 304
(a) OF REGULATION S-T)
GRAPHIC MATERIAL (1)
This chart shows the portfolio breakdown by sector and percent of total
long-term investments for the Franklin California Insured Tax-Free Income Fund
on 6/30/98
Utilities 19.0%
Certificates of Participation 12.9%
Prerefunded 12.1%
Tax Allocation Bonds 12.0%
Education 11.4%
Transportation 6.4%
Hospitals 5.3%
Housing 3.0%
Mello Roos Bonds 2.9%
Special Assessment 2.7%
General Obligation 1.0%
Marks-Roos Bonds 0.8%
Sales Tax Revenue 0.3%
Other Revenue 10.2%
GRAPHIC MATERIAL (2)
This chart shows in bar format the comparison between the Franklin California
Insured Tax-Free Income Fund Class I distribution rate of 4.88% and the taxable
equivalent rate of 8.91% for California state residents on 6/30/98.
GRAPHIC MATERIAL (3)
This chart shows the dividend distributions for Franklin California Insured
Tax-Free Income Fund Class I shares from 7/1/97 to 6/30/98.
July 5.5 cents
August 5.5 cents
September 5.5 cents
October 5.3 cents
November 5.3 cents
December 5.3 cents
January 5.3 cents
February 5.3 cents
March 5.3 cents
April 5.3 cents
May 5.3 cents
June 5.3 cents
Total 64.2 cents
GRAPHIC MATERIAL(4)
The following line graph compares the performance of the Franklin California
Insured Tax-Free Income Fund Class I shares to that of the Lehman Brothers
Municipal Bond Index and the Consumer Price Index based on a $10,000 investment
from 7/1/88 to 6/30/98.
COMSUMER LB MUNI
PRICE INDEX BOND INDEX
NSA $T
Jul 1988 0.42 0.65
Aug 1988 0.85 0.74
Sep 1988 1.53 2.56
Oct 1988 1.86 4.37
Nov 1988 1.95 3.42
Dec 1988 2.12 4.48
Jan 1989 2.63 6.64
Feb 1989 3.05 5.42
Mar 1989 3.64 5.17
Apr 1989 4.32 7.66
May 1989 4.92 9.90
Jun 1989 5.17 11.39
Jul 1989 5.42 12.91
Aug 1989 5.59 11.80
Sep 1989 5.93 11.47
Oct 1989 6.44 12.83
Nov 1989 6.69 14.81
Dec 1989 6.86 15.75
Jan 1990 7.97 15.20
Feb 1990 8.47 16.23
Mar 1990 9.07 16.27
Apr 1990 9.24 15.42
May 1990 9.49 17.94
Jun 1990 10.08 18.98
Jul 1990 10.51 20.74
Aug 1990 11.53 18.98
Sep 1990 12.46 19.05
Oct 1990 13.14 21.21
Nov 1990 13.39 23.65
Dec 1990 13.39 24.19
Jan 1991 14.07 25.85
Feb 1991 14.24 26.95
Mar 1991 14.41 26.99
Apr 1991 14.58 28.69
May 1991 14.92 29.83
Jun 1991 15.25 29.70
Jul 1991 15.42 31.28
Aug 1991 15.76 33.01
Sep 1991 16.27 34.74
Oct 1991 16.44 35.96
Nov 1991 16.78 36.34
Dec 1991 16.86 39.26
Jan 1992 17.03 39.58
Feb 1992 17.46 39.62
Mar 1992 18.05 39.68
Apr 1992 18.22 40.92
May 1992 18.39 42.58
Jun 1992 18.81 44.97
Jul 1992 19.07 49.32
Aug 1992 19.41 47.86
Sep 1992 19.75 48.83
Oct 1992 20.17 47.36
Nov 1992 20.34 50.00
Dec 1992 20.25 51.53
Jan 1993 20.85 53.29
Feb 1993 21.27 58.84
Mar 1993 21.69 57.16
Apr 1993 22.03 58.74
May 1993 22.20 59.63
Jun 1993 22.37 62.30
Jul 1993 22.37 62.51
Aug 1993 22.71 65.89
Sep 1993 22.97 67.78
Oct 1993 23.47 68.10
Nov 1993 23.56 66.62
Dec 1993 23.56 70.14
Jan 1994 23.90 72.07
Feb 1994 24.32 67.62
Mar 1994 24.75 60.80
Apr 1994 24.92 62.16
May 1994 25.00 63.57
Jun 1994 25.42 62.58
Jul 1994 25.76 65.55
Aug 1994 26.27 66.13
Sep 1994 26.61 63.69
Oct 1994 26.69 60.77
Nov 1994 26.86 57.86
Dec 1994 26.86 61.34
Jan 1995 27.37 65.95
Feb 1995 27.88 70.78
Mar 1995 28.31 72.74
Apr 1995 28.73 72.95
May 1995 28.98 78.47
Jun 1995 29.24 76.92
Jul 1995 29.24 78.60
Aug 1995 29.58 80.87
Sep 1995 29.83 82.01
Oct 1995 30.25 84.64
Nov 1995 30.17 87.71
Dec 1995 30.08 89.51
Jan 1996 30.85 90.95
Feb 1996 31.27 89.65
Mar 1996 31.95 87.23
Apr 1996 32.46 86.70
May 1996 32.71 86.63
Jun 1996 32.80 88.66
Jul 1996 33.05 90.38
Aug 1996 33.31 90.34
Sep 1996 33.73 93.00
Oct 1996 34.15 95.19
Nov 1996 34.41 98.76
Dec 1996 34.41 97.92
Jan 1997 34.83 98.30
Feb 1997 35.25 100.12
Mar 1997 35.59 97.45
Apr 1997 35.76 99.10
May 1997 35.68 102.10
Jun 1997 35.85 104.25
Jul 1997 36.02 109.91
Aug 1997 36.27 107.94
Sep 1997 36.61 110.41
Oct 1997 36.95 111.76
Nov 1997 36.86 113.01
Dec 1997 36.70 116.12
Jan 1998 36.95 118.35
Feb 1998 37.20 118.41
Mar 1998 37.46 118.61
Apr 1998 37.71 117.62
May 1998 37.97 121.06
JUN 1998 38.14 121.93
GRAPHIC MATERIAL (5)
This chart shows in bar format the comparison between the Franklin California
Insured Tax-Free Income Fund Class II distribution rate of 4.46% and the taxable
equivalent rate of 8.14% for California state residents on 6/30/98.
GRAPHIC MATERIAL (6)
This chart shows the dividend distributions for Franklin California Insured
Tax-Free Income Fund Class II shares from 7/1/97 to 6/30/98.
July 4.99 cents
August 4.92 cents
September 4.92 cents
October 4.70 cents
November 4.70 cents
December 4.70 cents
January 4.69 cents
February 4.69 cents
March 4.69 cents
April 4.71 cents
May 4.71 cents
June 4.71 cents
Total 57.13 cents
GRAPHIC MATERIAL (7)
The following line graph compares the performance of the Franklin California
Insured Tax-Free Income Fund Class II shares to that of the Lehman Brothers
Municipal Bond Index and the Consumer Price Index based on a $10,000 investment
from 5/1/95 to 6/30/98.
CONSUMER PRICE LB MUNI BOND INDEX $T
INDEX NSA
May 1995 0.20 3.19
Jun 1995 0.39 2.29
Jul 1995 0.40 3.26
Aug 1995 0.66 4.58
Sep 1995 0.86 5.23
Oct 1995 1.19 6.76
Nov 1995 1.12 8.53
Dec 1995 1.05 9.57
Jan 1996 1.65 10.41
Feb 1996 1.98 9.66
Mar 1996 2.50 8.25
Apr 1996 2.90 7.95
May 1996 3.09 7.91
Jun 1996 3.16 9.08
Jul 1996 3.36 10.08
Aug 1996 3.55 10.05
Sep 1996 3.88 11.59
Oct 1996 4.21 12.86
Nov 1996 4.41 14.92
Dec 1996 4.41 14.44
Jan 1997 4.74 14.65
Feb 1997 5.07 15.71
Mar 1997 5.33 14.16
Apr 1997 5.46 15.12
May 1997 5.40 16.85
Jun 1997 5.53 18.10
Jul 1997 5.66 21.37
Aug 1997 5.86 20.23
Sep 1997 6.12 21.66
Oct 1997 6.39 22.44
Nov 1997 6.32 23.16
Dec 1997 6.19 24.96
Jan 1998 6.39 26.25
Feb 1998 6.58 26.28
Mar 1998 6.78 26.40
Apr 1998 6.98 25.83
May 1998 7.18 27.82
JUN 1998 7.31 28.32
GRAPHIC MATERIAL (8)
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 6/30/98.
AAA 30.9%
AA 2.4%
A 21.5%
BBB 45.1%
Below Investment Grade 0.1%
GRAPHIC MATERIAL (9)
This chart shows in bar format the comparison between Franklin California
Intermediate-Term Tax-Free Income Fund's distribution rate of 4.59% and the
taxable equivalent rate of 8.38% for California state residents on 6/30/98.
GRAPHIC MATERIAL (10)
This chart shows the dividend distributions for Franklin California
Intermediate-Term Tax-Free Income Fund's shares from 7/1/97 to 6/30/98.
July 4.4 cents
August 4.4 cents
September 4.4 cents
October 4.4 cents
November 4.4 cents
December 4.4 cents
January 4.4 cents
February 4.4 cents
March 4.4 cents
April 4.4 cents
May 4.4 cents
June 4.4 cents
Total 52.8 cents
GRAPHIC MATERIAL (11)
The following line graph compares the performance of the Franklin California
Intermediate-Term Tax-Free Income Fund to that of the Lehman Brothers 10-Year
Municipal Bond Index and the Consumer Price Index based on a $10,000 investment
from 9/23/92 to 6/30/98.
LB MUNI 10-YR BOND CONSUMER PRICE INDEX
INX $T NSA
Oct 1992 -1.02 0.35
Nov 1992 0.79 0.50
Dec 1992 1.96 0.42
Jan 1993 3.68 0.92
Feb 1993 7.48 1.27
Mar 1993 5.91 1.63
Apr 1993 6.92 1.91
May 1993 7.29 2.05
Jun 1993 9.40 2.19
Jul 1993 9.68 2.19
Aug 1993 11.95 2.48
Sep 1993 13.33 2.69
Oct 1993 13.51 3.11
Nov 1993 12.58 3.18
Dec 1993 14.97 3.18
Jan 1994 16.39 3.47
Feb 1994 13.20 3.82
Mar 1994 8.87 4.18
Apr 1994 10.07 4.32
May 1994 10.95 4.39
Jun 1994 10.48 4.74
Jul 1994 12.33 5.02
Aug 1994 12.77 5.45
Sep 1994 11.25 5.73
Oct 1994 9.62 5.80
Nov 1994 7.55 5.94
Dec 1994 9.49 5.94
Jan 1995 12.32 6.37
Feb 1995 15.50 6.79
Mar 1995 17.06 7.15
Apr 1995 17.20 7.50
May 1995 20.92 7.71
Jun 1995 20.17 7.93
Jul 1995 21.93 7.93
Aug 1995 23.59 8.21
Sep 1995 24.38 8.42
Oct 1995 25.81 8.78
Nov 1995 27.50 8.70
Dec 1995 28.28 8.63
Jan 1996 29.57 9.27
Feb 1996 29.04 9.63
Mar 1996 27.44 10.19
Apr 1996 26.99 10.62
May 1996 26.64 10.83
Jun 1996 27.84 10.90
Jul 1996 29.07 11.11
Aug 1996 29.07 11.32
Sep 1996 30.40 11.68
Oct 1996 32.04 12.03
Nov 1996 34.71 12.24
Dec 1996 34.10 12.24
Jan 1997 34.63 12.60
Feb 1997 35.90 12.95
Mar 1997 34.08 13.23
Apr 1997 35.07 13.38
May 1997 36.98 13.31
Jun 1997 38.49 13.45
Jul 1997 42.38 13.59
Aug 1997 41.00 13.80
Sep 1997 42.79 14.08
Oct 1997 43.55 14.37
Nov 1997 44.21 14.30
Dec 1997 46.49 14.15
Jan 1998 48.11 14.37
Feb 1998 48.10 14.58
Mar 1998 48.00 14.79
Apr 1998 47.19 15.00
May 1998 49.69 15.22
Jun 1998 50.24 15.36
GRAPHIC MATERIAL (12)
This chart shows in bar format the comparison between Franklin California
Tax-Exempt Money Fund's seven-day annualized yield of 2.72% and the taxable
equivalent yield of 4.97% for California state residents on 6/30/98.
