ANNUAL REPORT
FRANKLIN CALIFORNIA TAX-FREE TRUST
JUNE 30, 1999
SHAREHOLDER LETTER
Dear Shareholder:
This annual report for Franklin California Tax-Free Trust covers the period
ended June 30, 1999.
During the 12 months under review, the municipal bond market was comparatively
stable in what could otherwise be characterized as a challenging year for global
and domestic markets. The economic stresses felt in Asia, Latin America and
Eastern Europe during third and fourth quarters 1998 caused investors to seek
safety in U.S. Treasury bonds, driving yields on the 30-year Treasury bond to an
all-time low of 4.70% on October 5, 1998. These regions had a direct impact on
the U.S. economy as foreign countries purchased fewer American goods, leading to
an overall reduction in U.S. export levels. In light of lowered export levels,
it was expected that the U.S. economy would see some slowing in the fourth
quarter of 1998.
However, it became apparent as 1999 got under way, that fourth quarter 1998
growth actually exceeded expectations, and the U.S. gross domestic product (GDP)
grew at a 6% annualized rate. The American consumer boosted the domestic economy
at much higher-than-anticipated levels, which resulted in the Federal Reserve
Board's (the Fed's) moving to a neutral position with respect to short-term
interest rates rather than its previous bias toward lowering rates that began in
1998. The change in the Fed's position caused 30-year Treasury yields to rise to
a first-quarter peak of 5.69% on March 4, 1999. However, in May the Fed moved
toward a tightening bias. At its June meeting, as widely expected, the Fed
raised the federal funds target rate 0.25% and returned to a neutral bias.
CONTENTS
Shareholder Letter .................................................... 1
Fund Reports
Franklin California Insured
Tax-Free Income Fund ................................................. 5
Franklin California
Intermediate-Term
Tax-Free Income Fund ................................................. 11
Franklin California
Tax-Exempt Money Fund ................................................ 15
Municipal Bond Ratings ................................................ 18
Financial Highlights &
Statement of Investments .............................................. 21
Financial Statements .................................................. 51
Notes to
Financial Statements .................................................. 56
Independent
Auditors' Report ...................................................... 61
Tax Information ....................................................... 62
FUND CATEGORY
[PYRAMID GRAPHIC]
The municipal bond market remained relatively calm throughout the Treasury
market volatility as demand was fundamentally answered by an increased municipal
bond supply. As interest rates declined, municipal bond issuers increased their
refinancing activity of outstanding, higher interest-rate debt. Additionally,
many municipalities were in excellent fiscal condition due to the strong
national economy, which gave them greater confidence to borrow money for new
projects. This environment led to a surge in 1998's new-issue supply with total
volume closely matching 1993's record $293 billion nationally, while supply in
California reached $25.6 billion. Although demand from individual investors was
relatively stable, at times the municipal bond market had some difficulty
absorbing the large supply of bonds.
These conditions led to attractive municipal bond yields, as municipal bond
prices lagged those of similar Treasury bonds. For example, in October 1998 an
investor could have purchased a 30-year, AAA municipal bond yielding
approximately 105% of the yield on a comparable Treasury bond, versus the
historical average of approximately 89%. Municipal market valuations have not
been this attractive since 1986. With the early 1999 rise in Treasury yields,
and the Bond Buyer 40 index showing an increase in yield to 5.37%, the
municipal-to-Treasury yield ratio declined to 93% on June 30, 1999, still above
the historical average.* This relatively high ratio has allowed municipal
investors to earn attractive yields compared with other fixed-income
opportunities.
The prevalence of bond insurance was another trend that affected the municipal
bond market. The increasingly higher percentages of AAA-insured municipal bond
issues coming to market over the past four years seems to have finally peaked at
more than 50% nationally for municipal issuers in 1998. With investors
continuing to demand higher yields in a falling interest-rate environment,
municipal bond market credit spreads, or the additional interest rate paid to
investors for BBB- versus AAA-rated bonds, were extremely narrow.
Looking forward, we anticipate supply pressures to moderate in 1999. Already,
municipal new issuance for the first quarter of the year was down about 19.3%
nationally, compared with the same period last calendar year.**
*The unmanaged Bond Buyer Municipal 40 Index is composed of the Yield to
Maturity of 40 bonds. The index attempts to track the new-issue market as
closely as possible, so it changes bonds twice a month, adding all new bonds
that meet certain requirements and deleting an equivalent number according to
their secondary market trading activity. As a result, the average par call date,
average maturity date and average coupon rate change over time. The average
maturity generally has been about 29-30 years.
**Source: The Bond Buyer, 4/1/99.
- -------------------------------------------------------------------------------
WHAT DOES "TAXABLE EQUIVALENT" MEAN FOR YOU?
For yield and distribution rate, taxable equivalent is the amount a taxable
investment would have to earn to match the income from a tax-free investment
such as a municipal bond. You can find your fund's taxable equivalent
distribution rate and yield in the Performance Summary of each fund's report.
- -------------------------------------------------------------------------------
Municipal bonds continue to be an attractive investment for those investors
seeking tax-free income as well as an opportunity to diversify risk in their
portfolio. Generally, a taxable investment would need to offer a higher yield,
called the taxable equivalent yield, to match the yield on a tax-free
investment. 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. As always, we appreciate your support, welcome your
questions and comments and look forward to serving your investment needs in the
years ahead.
Sincerely,
/s/Charles B. Johnson
Charles B. Johnson
Chairman
Franklin California Tax-Free Trust
/s/Thomas J. Kenny
Thomas J. Kenny
Director
Franklin Municipal Bond Department
FRANKLIN CALIFORNIA INSURED
TAX-FREE INCOME FUND
- --------------------------------------------------------------------------------
Your Fund's Goal: 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)
- --------------------------------------------------------------------------------
The municipal bond market experienced a significant increase in yields over the
past nine months as yields on the 30-year Treasury rose from 4.7%, on October 5,
1998, to 5.98% on June 30, 1999. The yield increase can be attributed mostly to
growing inflationary pressures due to continued strength in our domestic economy
combined with economic recovery abroad. The rise in interest rates adversely
affected municipal bond funds in general, as the value of their holdings have
decreased. Amid the volatility in government rates, though, the municipal bond
market showed remarkable stability over the past year, and Franklin's municipal
bond funds performed well during the period under review.
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 23 of
this report.
PORTFOLIO BREAKDOWN
Franklin California Insured
Tax-Free Income Fund
6/30/99
% OF TOTAL
LONG-TERM
SECTOR INVESTMENTS
- ----------------------------------------------
Utilities 18.2%
Prerefunded 14.1%
Education 12.2%
Tax Allocation 11.4%
Certificates of Participation 10.4%
Hospitals 8.8%
Transportation 5.6%
Housing 3.0%
Special Assessment 2.7%
Mello-Roos 2.6%
General Obligation 0.9%
Marks-Roos 0.7%
Sales Tax Revenue 0.3%
Health Care 0.3%
Other Revenue 8.8%
Franklin California Insured Tax-Free Income Fund performed
particularly well over the reporting period. Our buy-and-hold investment
philosophy, which seeks to provide high, tax-free income and share price
stability, proved itself during the reporting period, within an environment of
generally rising interest rates. The fund's Class A share price, as measured by
net asset value, decreased only 35 cents, from $12.47 on June 30, 1998, to
$12.12 on June 30, 1999. Total net assets increased from $1.77 billion to $1.86
billion, for the same period. Moreover, the fund held a significant percentage
of high coupon bonds, which enabled it to make solid distributions while at the
same time reducing share price volatility. The fund has consistently performed
well compared with its peers, in income distribution and total return, which
benefited our shareholders.
The fund was able to take advantage of Franklin's presence in California to
structure issues to fit the portfolio's needs. By managing over $20 billion in
California municipal assets, Franklin had a distinct advantage over its
competitors in locating value. Consequently, Franklin California Insured
Tax-Free Income Fund used the power of Franklin's substantial municipal bond
department to find and structure new issues. Furthermore, strong retail demand
in the secondary market enabled us to maintain stability in the fund's
distributions and share price.
We concentrated our purchases in education, direct revenue utility and high
essential use general obligation (GO) issues. Recent purchases included Stanford
University, and Pasadena Unified School District GO. Our investment philosophy
remains disciplined and focused, as we strive to offer our shareholders high,
current tax-free income and preservation of principal. The fund should continue
to perform well into the next reporting period as the municipal bond market
should continue to offer stable and attractive after-tax total returns.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of June 30, 1999, 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 historical
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy.
Dividend Distributions*
Franklin California Insured Tax-Free Income Fund
7/1/98 - 6/30/99
DIVIDEND PER SHARE
-----------------------
MONTH CLASS A CLASS C
- ----------------------------------------------------------------
July 5.30 cents 4.67 cents
August 5.30 cents 4.71 cents
September 5.30 cents 4.71 cents
October 5.30 cents 4.72 cents
November 5.30 cents 4.72 cents
December 5.20 cents 4.62 cents
January 5.20 cents 4.62 cents
February 5.20 cents 4.62 cents
March 5.10 cents 4.48 cents
April 5.10 cents 4.48 cents
May 5.10 cents 4.48 cents
June 5.05 cents 4.48 cents
- ----------------------------------------------------------------
TOTAL 62.45 CENTS 55.31 CENTS
*Assumes shares were purchased and held for the entire accrual period. Since
dividends accrue daily, your actual distributions will vary depending on the
date you purchased your shares and any account activity during the month. Income
distributions and total return calculations include all accrued income earned by
the fund during the reporting period. Distributions will vary based on the
earnings of the fund's portfolio, and past distributions are not predictive of
future trends.
FRANKLIN CALIFORNIA INSURED
TAX-FREE INCOME FUND
CLASS A (formerly Class I):
Subject to the current, maximum 4.25% initial sales charge. Prior
to July 1, 1994, fund shares were offered at a lower initial sales charge; thus
actual total returns may 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.
CLASS C (formerly Class II):
Subject to 1% initial sales charge and 1% contingent deferred sales charge for
shares redeemed within 18 months of investment. These shares have higher annual
fees and expenses than Class A shares.
PERFORMANCE SUMMARY AS OF 6/30/99
Distributions will vary based on earnings of the fund's portfolio and any
profits realized from the sale of the portfolio's securities. Past distributions
are not indicative of future trends. All total returns include reinvested
distributions at net asset value.
PRICE AND DISTRIBUTION INFORMATION
Class A Change 6/30/99 6/30/98
- ---------------------------------------------------------------
Net Asset Value -$0.35 $12.12 $12.47
Distributions (7/1/98 - 6/30/99)
---------------------------------
Dividend Income $0.6245
Long-Term Capital Gain $0.0597
Short-Term Capital Gain $0.0071
Total $0.6913
Class C Change 6/30/99 6/30/98
- ---------------------------------------------------------------
Net Asset Value -$0.35 $12.20 $12.55
Distributions (7/1/98 - 6/30/99)
---------------------------------
Dividend Income $0.5531
Long-Term Capital Gain $0.0597
Short-Term Capital Gain $0.0071
Total $0.6199
Franklin California Insured Tax-free Income Fund paid distributions derived from
long-term capital gains of 5.97 cents ($0.0597) per share in December 1998. The
fund hereby designates such distributions as capital gain dividends per Internal
Revenue Code Section 852 (b)(3).
Past performance is not predictive of future results.
PERFORMANCE
<TABLE>
<CAPTION>
INCEPTION
CLASS A 1-YEAR 5-YEAR 10-YEAR (9/3/85)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) +2.76% +36.96% +94.68% +181.52%
Average Annual Total Return(2) -1.58% +5.57% +6.43% +7.44%
Distribution Rate(3) 4.79%
Taxable Equivalent Distribution Rate(4) 8.74%
30-Day Standardized Yield(5) 4.04%
Taxable Equivalent Yield(4) 7.37%
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
CLASS C 1-YEAR 3-YEAR (5/1/95)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) +2.16% +17.69% +26.64%
Average Annual Total Return(2) +0.15% +5.23% +5.58%
Distribution Rate(3) 4.36%
Taxable Equivalent Distribution Rate(4) 7.96%
30-Day Standardized Yield(5) 3.62%
Taxable Equivalent Yield(4) 6.61%
</TABLE>
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the current, applicable,
maximum sales charge(s) for that class.
3. Distribution rate is based on an annualization of the respective class's
current monthly dividend and the maximum offering price per share on June 30,
1999.
4. Taxable equivalent distribution rate and yield assume the 1999 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, 1999.
- -------------------------------------------------------------------------------
Bond prices, and thus the fund's share price, generally move in the opposite
direction from interest rates. Since markets can go down as well as up,
investment return and principal value will fluctuate with market conditions, and
you may have a gain or loss when you sell your shares.
- -------------------------------------------------------------------------------
Past performance is not predictive of future results.
FRANKLIN CALIFORNIA INSURED
TAX-FREE INCOME FUND
AVERAGE ANNUAL TOTAL RETURN
6/30/99
CLASS A
- -----------------------------------
1-Year -1.58%
5-Year +5.57%
10-Year +6.43%
Since Inception (9/3/85) +7.44%
AVERAGE ANNUAL TOTAL RETURN
6/30/99
CLASS C
- ------------------------------------
1-Year +0.15%
3-Year +5.23%
Since Inception (5/1/95) +5.58%
TOTAL RETURN INDEX COMPARISON
FOR HYPOTHETICAL $10,000 INVESTMENT
Total return represents the change in value of an investment over the periods
shown. It includes the current, applicable, maximum sales charge(s), fund
expenses, account fees and reinvested distributions. The unmanaged index differs
from the fund in composition, does not pay management fees or expenses and
includes reinvested dividends. One cannot invest directly in an index.
Performance of the fund's shares exceeded the rate of inflation as measured by
the Consumer Price Index (CPI).
The following line graph compares the performance of Franklin California Insured
Tax-Free Income Fund - Class A to that of the Lehman Brothers Municipal Bond
Index, and to the Consumer Price Index based on a $10,000 investment from 7/1/89
to 6/30/99.
CA Ins. TF Class A LB Muni Index CPI
07/01/1989 $ 9,575 $ 10,000 $ 10,000
07/31/1989 $ 9,661 1.36% $ 10,136 0.24% $ 10,024
08/31/1989 $ 9,611 -0.98% $ 10,037 0.16% $ 10,040
09/30/1989 $ 9,560 -0.30% $ 10,007 0.32% $ 10,072
10/31/1989 $ 9,656 1.23% $ 10,130 0.48% $ 10,121
11/30/1989 $ 9,752 1.75% $ 10,307 0.24% $ 10,145
12/31/1989 $ 9,832 0.82% $ 10,391 0.16% $ 10,161
01/31/1990 $ 9,798 -0.47% $ 10,343 1.03% $ 10,266
02/28/1990 $ 9,905 0.89% $ 10,435 0.47% $ 10,314
03/31/1990 $ 9,888 0.03% $ 10,438 0.55% $ 10,371
04/30/1990 $ 9,810 -0.72% $ 10,363 0.16% $ 10,387
05/31/1990 $ 10,063 2.18% $ 10,589 0.23% $ 10,411
06/30/1990 $ 10,137 0.88% $ 10,682 0.54% $ 10,467
07/31/1990 $ 10,294 1.47% $ 10,839 0.38% $ 10,507
08/31/1990 $ 10,058 -1.45% $ 10,682 0.92% $ 10,604
09/30/1990 $ 10,059 0.06% $ 10,688 0.84% $ 10,693
10/31/1990 $ 10,256 1.82% $ 10,882 0.60% $ 10,757
11/30/1990 $ 10,453 2.01% $ 11,101 0.22% $ 10,781
12/31/1990 $ 10,455 0.43% $ 11,149 0.00% $ 10,781
01/31/1991 $ 10,645 1.34% $ 11,298 0.60% $ 10,845
02/28/1991 $ 10,684 0.87% $ 11,397 0.15% $ 10,862
03/31/1991 $ 10,714 0.03% $ 11,400 0.15% $ 10,878
04/30/1991 $ 10,860 1.34% $ 11,553 0.15% $ 10,894
05/31/1991 $ 10,938 0.89% $ 11,656 0.30% $ 10,927
06/30/1991 $ 10,921 -0.10% $ 11,644 0.29% $ 10,959
07/31/1991 $ 11,060 1.22% $ 11,786 0.15% $ 10,975
08/31/1991 $ 11,159 1.32% $ 11,942 0.29% $ 11,007
09/30/1991 $ 11,299 1.30% $ 12,097 0.44% $ 11,055
10/31/1991 $ 11,380 0.90% $ 12,206 0.15% $ 11,072
11/30/1991 $ 11,362 0.28% $ 12,240 0.29% $ 11,104
12/31/1991 $ 11,583 2.15% $ 12,503 0.07% $ 11,112
01/31/1992 $ 11,595 0.23% $ 12,532 0.15% $ 11,128
02/29/1992 $ 11,595 0.03% $ 12,536 0.36% $ 11,169
03/31/1992 $ 11,636 0.03% $ 12,539 0.51% $ 11,225
04/30/1992 $ 11,727 0.89% $ 12,651 0.14% $ 11,241
05/31/1992 $ 11,901 1.18% $ 12,800 0.14% $ 11,257
06/30/1992 $ 12,064 1.68% $ 13,015 0.36% $ 11,297
07/31/1992 $ 12,486 3.00% $ 13,406 0.21% $ 11,321
08/31/1992 $ 12,307 -0.97% $ 13,276 0.28% $ 11,353
09/30/1992 $ 12,326 0.65% $ 13,362 0.28% $ 11,385
10/31/1992 $ 12,082 -0.98% $ 13,231 0.35% $ 11,425
11/30/1992 $ 12,417 1.79% $ 13,468 0.14% $ 11,441
12/31/1992 $ 12,574 1.02% $ 13,605 -0.07% $ 11,433
01/31/1993 $ 12,743 1.16% $ 13,763 0.49% $ 11,489
02/28/1993 $ 13,126 3.62% $ 14,261 0.35% $ 11,529
03/31/1993 $ 13,092 -1.06% $ 14,110 0.35% $ 11,569
04/30/1993 $ 13,176 1.01% $ 14,253 0.28% $ 11,601
05/31/1993 $ 13,249 0.56% $ 14,332 0.14% $ 11,618
06/30/1993 $ 13,477 1.67% $ 14,572 0.14% $ 11,634
07/31/1993 $ 13,507 0.13% $ 14,591 0.00% $ 11,634
08/31/1993 $ 13,758 2.08% $ 14,894 0.28% $ 11,667
09/30/1993 $ 13,922 1.14% $ 15,064 0.21% $ 11,691
10/31/1993 $ 14,006 0.19% $ 15,093 0.41% $ 11,739
11/30/1993 $ 13,979 -0.88% $ 14,960 0.07% $ 11,747
12/31/1993 $ 14,210 2.11% $ 15,275 0.00% $ 11,747
01/31/1994 $ 14,353 1.14% $ 15,450 0.27% $ 11,779
02/28/1994 $ 14,065 -2.59% $ 15,049 0.34% $ 11,819
03/31/1994 $ 13,502 -4.07% $ 14,437 0.34% $ 11,859
04/30/1994 $ 13,555 0.85% $ 14,560 0.14% $ 11,876
05/31/1994 $ 13,642 0.87% $ 14,686 0.07% $ 11,884
06/30/1994 $ 13,590 -0.61% $ 14,597 0.34% $ 11,924
07/31/1994 $ 13,829 1.83% $ 14,864 0.27% $ 11,957
08/31/1994 $ 13,883 0.35% $ 14,916 0.40% $ 12,005
09/30/1994 $ 13,703 -1.47% $ 14,697 0.27% $ 12,037
10/31/1994 $ 13,450 -1.78% $ 14,435 0.07% $ 12,045
11/30/1994 $ 13,223 -1.81% $ 14,174 0.13% $ 12,061
12/31/1994 $ 13,455 2.20% $ 14,486 0.00% $ 12,061
01/31/1995 $ 13,904 2.86% $ 14,900 0.40% $ 12,109
02/28/1995 $ 14,295 2.91% $ 15,333 0.40% $ 12,158
03/31/1995 $ 14,398 1.15% $ 15,510 0.33% $ 12,198
04/30/1995 $ 14,441 0.12% $ 15,528 0.33% $ 12,238
05/31/1995 $ 14,837 3.19% $ 16,024 0.20% $ 12,263
06/30/1995 $ 14,649 -0.87% $ 15,884 0.20% $ 12,287
07/31/1995 $ 14,742 0.95% $ 16,035 0.00% $ 12,287
08/31/1995 $ 14,873 1.27% $ 16,239 0.26% $ 12,319
09/30/1995 $ 14,967 0.63% $ 16,341 0.20% $ 12,344
10/31/1995 $ 15,186 1.45% $ 16,578 0.33% $ 12,384
11/30/1995 $ 15,469 1.66% $ 16,853 -0.07% $ 12,376
12/31/1995 $ 15,652 0.96% $ 17,015 -0.07% $ 12,367
01/31/1996 $ 15,748 0.76% $ 17,144 0.59% $ 12,440
02/29/1996 $ 15,667 -0.68% $ 17,028 0.32% $ 12,480
03/31/1996 $ 15,433 -1.28% $ 16,810 0.52% $ 12,545
04/30/1996 $ 15,377 -0.28% $ 16,763 0.39% $ 12,594
05/31/1996 $ 15,384 -0.04% $ 16,756 0.19% $ 12,618
06/30/1996 $ 15,560 1.09% $ 16,939 0.06% $ 12,625
07/31/1996 $ 15,696 0.90% $ 17,091 0.19% $ 12,649
08/31/1996 $ 15,754 -0.02% $ 17,088 0.19% $ 12,673
09/30/1996 $ 15,970 1.40% $ 17,327 0.32% $ 12,714
10/31/1996 $ 16,121 1.13% $ 17,523 0.32% $ 12,754
11/30/1996 $ 16,366 1.83% $ 17,844 0.19% $ 12,779
12/31/1996 $ 16,306 -0.42% $ 17,769 0.00% $ 12,779
01/31/1997 $ 16,300 0.19% $ 17,802 0.32% $ 12,820
02/28/1997 $ 16,440 0.92% $ 17,966 0.31% $ 12,859
03/31/1997 $ 16,231 -1.33% $ 17,727 0.25% $ 12,891
04/30/1997 $ 16,373 0.84% $ 17,876 0.12% $ 12,907
05/31/1997 $ 16,583 1.51% $ 18,146 -0.06% $ 12,899
06/30/1997 $ 16,712 1.07% $ 18,340 0.12% $ 12,915
07/31/1997 $ 17,171 2.77% $ 18,848 0.12% $ 12,930
08/31/1997 $ 17,026 -0.94% $ 18,671 0.19% $ 12,955
09/30/1997 $ 17,212 1.19% $ 18,893 0.25% $ 12,987
10/31/1997 $ 17,314 0.64% $ 19,014 0.25% $ 13,020
11/30/1997 $ 17,416 0.59% $ 19,126 -0.06% $ 13,012
12/31/1997 $ 17,652 1.46% $ 19,406 -0.12% $ 12,996
01/31/1998 $ 17,826 1.03% $ 19,605 0.19% $ 13,021
02/28/1998 $ 17,844 0.03% $ 19,611 0.19% $ 13,046
03/31/1998 $ 17,862 0.09% $ 19,629 0.19% $ 13,070
04/30/1998 $ 17,780 -0.45% $ 19,541 0.18% $ 13,094
05/31/1998 $ 18,030 1.58% $ 19,849 0.18% $ 13,117
06/30/1998 $ 18,121 0.39% $ 19,927 0.12% $ 13,133
07/31/1998 $ 18,154 0.25% $ 19,977 0.12% $ 13,149
08/31/1998 $ 18,407 1.55% $ 20,286 0.12% $ 13,165
09/30/1998 $ 18,690 1.25% $ 20,540 0.12% $ 13,181
10/31/1998 $ 18,709 0.00% $ 20,540 0.24% $ 13,212
11/30/1998 $ 18,788 0.35% $ 20,612 0.00% $ 13,212
12/31/1998 $ 18,801 0.25% $ 20,663 -0.06% $ 13,204
01/31/1999 $ 18,954 1.19% $ 20,909 0.24% $ 13,236
02/28/1999 $ 18,942 -0.44% $ 20,817 0.12% $ 13,252
03/31/1999 $ 18,989 0.14% $ 20,846 0.30% $ 13,292
04/30/1999 $ 18,990 0.25% $ 20,898 0.73% $ 13,389
05/31/1999 $ 18,900 -0.58% $ 20,777 0.00% $ 13,389
06/30/1999 $ 18,641 -1.44% $ 20,478 0.00% $ 13,389
The following line graph compares the performance of Franklin California Insured
Tax-Free Income Fund - Class C to that of the Lehman Brothers Municipal Bond
Index, and to the Consumer Price Index based on a $10,000 investment from 5/1/95
to 6/30/99.
CA Ins. TF Class C LB Muni Index CPI
05/01/1995 $ 9,900 $ 10,000 $ 10,000
05/31/1995 $ 10,197 3.19% $ 10,319 0.20% $ 10,020
06/30/1995 $ 10,063 -0.87% $ 10,229 0.20% $ 10,040
07/31/1995 $ 10,122 0.95% $ 10,326 0.00% $ 10,040
08/31/1995 $ 10,215 1.27% $ 10,458 0.26% $ 10,066
09/30/1995 $ 10,265 0.63% $ 10,523 0.20% $ 10,086
10/31/1995 $ 10,418 1.45% $ 10,676 0.33% $ 10,120
11/30/1995 $ 10,606 1.66% $ 10,853 -0.07% $ 10,112
12/31/1995 $ 10,727 0.96% $ 10,957 -0.07% $ 10,105
01/31/1996 $ 10,787 0.76% $ 11,041 0.59% $ 10,165
02/29/1996 $ 10,726 -0.68% $ 10,966 0.32% $ 10,198
03/31/1996 $ 10,571 -1.28% $ 10,825 0.52% $ 10,251
04/30/1996 $ 10,528 -0.28% $ 10,795 0.39% $ 10,291
05/31/1996 $ 10,527 -0.04% $ 10,791 0.19% $ 10,310
06/30/1996 $ 10,642 1.09% $ 10,908 0.06% $ 10,316
07/31/1996 $ 10,737 0.90% $ 11,006 0.19% $ 10,336
08/31/1996 $ 10,762 -0.02% $ 11,004 0.19% $ 10,356
09/30/1996 $ 10,904 1.40% $ 11,158 0.32% $ 10,389
10/31/1996 $ 11,002 1.13% $ 11,284 0.32% $ 10,422
11/30/1996 $ 11,172 1.83% $ 11,491 0.19% $ 10,442
12/31/1996 $ 11,118 -0.42% $ 11,443 0.00% $ 10,442
01/31/1997 $ 11,108 0.19% $ 11,464 0.32% $ 10,475
02/28/1997 $ 11,207 0.92% $ 11,570 0.31% $ 10,508
03/31/1997 $ 11,060 -1.33% $ 11,416 0.25% $ 10,534
04/30/1997 $ 11,142 0.84% $ 11,512 0.12% $ 10,547
05/31/1997 $ 11,287 1.51% $ 11,686 -0.06% $ 10,540
06/30/1997 $ 11,369 1.07% $ 11,811 0.12% $ 10,553
07/31/1997 $ 11,674 2.77% $ 12,138 0.12% $ 10,565
08/31/1997 $ 11,571 -0.94% $ 12,024 0.19% $ 10,586
09/30/1997 $ 11,692 1.19% $ 12,167 0.25% $ 10,612
10/31/1997 $ 11,755 0.64% $ 12,245 0.25% $ 10,639
11/30/1997 $ 11,827 0.59% $ 12,317 -0.06% $ 10,632
12/31/1997 $ 11,971 1.46% $ 12,497 -0.12% $ 10,619
01/31/1998 $ 12,092 1.03% $ 12,626 0.19% $ 10,640
02/28/1998 $ 12,089 0.03% $ 12,629 0.19% $ 10,660
03/31/1998 $ 12,096 0.09% $ 12,641 0.19% $ 10,680
04/30/1998 $ 12,044 -0.45% $ 12,584 0.18% $ 10,699
05/31/1998 $ 12,206 1.58% $ 12,783 0.18% $ 10,719
06/30/1998 $ 12,262 0.39% $ 12,832 0.12% $ 10,731
07/31/1998 $ 12,268 0.25% $ 12,865 0.12% $ 10,744
08/31/1998 $ 12,433 1.55% $ 13,064 0.12% $ 10,757
09/30/1998 $ 12,627 1.25% $ 13,227 0.12% $ 10,770
10/31/1998 $ 12,624 0.00% $ 13,227 0.24% $ 10,796
11/30/1998 $ 12,681 0.35% $ 13,274 0.00% $ 10,796
12/31/1998 $ 12,674 0.25% $ 13,307 -0.06% $ 10,789
01/31/1999 $ 12,781 1.19% $ 13,465 0.24% $ 10,815
02/28/1999 $ 12,767 -0.44% $ 13,406 0.12% $ 10,828
03/31/1999 $ 12,792 0.14% $ 13,425 0.30% $ 10,861
04/30/1999 $ 12,786 0.25% $ 13,458 0.73% $ 10,940
05/31/1999 $ 12,720 -0.58% $ 13,380 0.00% $ 10,940
06/30/1999 $ 12,537 -1.44% $ 13,187 0.00% $ 10,940
*Source: Standard and Poor's(R) Micropal.
Past performance is not predictive of future results.
FRANKLIN CALIFORNIA INTERMEDIATE-
TERM TAX-FREE INCOME FUND
- --------------------------------------------------------------------------------
Your Fund's Goal: 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)
- --------------------------------------------------------------------------------
The California economy continued its strong performance during the reporting
period, and unemployment in California dropped more quickly than the rest of the
nation's. Interest rates declined during the first nine months of the reporting
period with short- and intermediate-term rates declining faster than long-term
rates. In April 1999 the fear of an overheated economy, inflation and Federal
Reserve Board tightening caused interest rates to rise. In the municipal bond
market, lack of institutional buying and the spread between municipal bond and
taxable bond yields caused a greater rise in municipal intermediate-term than
long-term rates. This brought yields of municipal bonds more in line with those
of taxable bonds.
[Credit Quality Breakdown*]
Franklin California Intermediate-Term
Tax-Free Income Fund
Based on Total Long-Term Investments
6/30/99
[PIE CHART]
AAA - 29.6%
AA - 4.6%
A - 20.8%
BBB - 44.9%
Below Investment
Grade - 0.1%
*Quality breakdown may include
internal ratings for bonds not rated by
a national rating agency.
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 37 of
this report.
DIVIDEND DISTRIBUTIONS*
Franklin California Intermediate-Term
Tax-Free Income Fund - Class A
7/1/98 - 6/30/99
DIVIDEND
MONTH PER SHARE
- -----------------------------
July 4.4 cents
August 4.4 cents
September 4.3 cents
October 4.3 cents
November 4.3 cents
December 4.3 cents
January 4.3 cents
February 4.3 cents
March 4.2 cents
April 4.2 cents
May 4.2 cents
June 4.2 cents
- -----------------------------
Total 51.4 cents
*Assumes shares were purchased and held for the entire accrual period. Since
dividends accrue daily, your actual distributions will vary depending on the
date you purchased your shares and any account activity during the month. Income
distributions and total return calculations include all accrued income earned by
the fund during the reporting period. Distributions will vary based on the
earnings of the fund's portfolio, and past distributions are not predictive of
future trends.
During the first six months of the year under review the fund purchased bonds
with 5.0% to 5 1/8% coupons in the 18- to 19-year maturity range to maintain
income. We sold bonds in the 5- to 6-year maturity range with 5% coupons,
increasing the fund's average weighted maturity. During the second half of the
reporting period the fund invested new money and money received from called
bonds into the 9- to 12-year maturity range, and on June 30, 1999, the fund's
average weighted maturity was 9.1 years. Two of these purchases were GALT Middle
School JT Powers and Loma Linda Hospital Revenues.
Looking forward, more attractive yields available in the market means that the
fund may be able to maintain income without having to lengthen the portfolio's
average life. We cannot attempt to guess when interest rates will stop rising.
However, intermediate-term bonds are becoming more attractive.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of June 30, 1999, 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 historical
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy.
PERFORMANCE SUMMARY AS OF 6/30/99
Distributions will vary based on earnings of the fund's portfolio and any
profits realized from the sale of the portfolio's securities. Past distributions
are not indicative of future trends. All total returns include reinvested
distributions at net asset value.
PRICE AND DISTRIBUTION INFORMATION
Class A Change 6/30/99 6/30/98
- ---------------------------------------------------------------
Net Asset Value -$0.22 $11.02 $11.24
Distributions (7/1/98 - 6/30/99)
--------------------------------
Dividend Income $0.514
PERFORMANCE
INCEPTION
CLASS A 1-YEAR 5-YEAR (9/21/92)
- ----------------------------------------------------------------------------
Cumulative Total Return(1) +2.63% +37.67% +51.77%
Average Annual Total Return(2) +0.31% +6.13% +6.00%
Distribution Rate(3) 4.47%
Taxable Equivalent
Distribution Rate(4) 8.16%
30-Day Standardized Yield(5) 4.18%
Taxable Equivalent Yield(4) 7.63%
FRANKLIN CALIFORNIA
INTERMEDIATE-TERM
TAX-FREE INCOME FUND
- -------------------------------------------------------------------------------
CLASS A (FORMERLY CLASS I):
Subject to the maximum 2.25% initial sales charge. 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 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 4.02%. The fee waiver
may be discontinued at any time upon notice to the fund's Board of Directors.
- -------------------------------------------------------------------------------
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the applicable, maximum
sales charge.
3. Distribution rate is based on an annualization of the current 4.2 cent per
share monthly dividend and the maximum offering price of $11.27 on June 30,
1999.
4. Taxable equivalent distribution rate and yield assume the 1999 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, 1999.
- -------------------------------------------------------------------------------
Bond prices, and thus the fund's share price, generally move in the opposite
direction from interest rates. Since markets can go down as well as up,
investment return and principal value will fluctuate with market conditions, and
you may have a gain or loss when you sell your shares.
- -------------------------------------------------------------------------------
Past performance is not predictive of future results.
FRANKLIN CALIFORNIA
INTERMEDIATE-TERM
TAX-FREE INCOME FUND
AVERAGE ANNUAL TOTAL RETURN
6/30/99
CLASS A
- ------------------------------------
1-Year +0.31%
5-Year +6.13%
Since Inception (9/21/92) +6.00%
TOTAL RETURN INDEX COMPARISON
FOR HYPOTHETICAL $10,000 INVESTMENT
Total return represents the change in value of an investment over the periods
shown. It includes the applicable, maximum sales charge, fund expenses, account
fees and reinvested distributions. The unmanaged index differs from the fund in
composition, does not pay management fees or expenses and includes reinvested
dividends. One cannot invest directly in an index. Performance of the fund's
shares exceeded the rate of inflation as measured by the Consumer Price Index
(CPI).
The following line graph compares the performance of Franklin California
Intermediate-Term Tax-Free Income Fund - Class A to that of the Lehman Brothers
Municipal 10-Year Bond Index, and to the Consumer Price Index based on a $10,000
investment from 9/21/92 to 6/30/99.
09/21/1992 $ 9,775 $10,000 $ 10,000
09/30/1992 $ 9,785 0.25% $10,025 0.08% $ 10,008
10/31/1992 $ 9,736 -1.02% $ 9,923 0.35% $ 10,043
11/30/1992 $ 9,922 1.83% $10,104 0.14% $ 10,057
12/31/1992 $ 9,990 1.16% $10,221 -0.07% $ 10,050
01/31/1993 $ 10,074 1.68% $10,393 0.49% $ 10,100
02/28/1993 $ 10,395 3.66% $10,774 0.35% $ 10,135
03/31/1993 $ 10,401 -1.46% $10,616 0.35% $ 10,171
04/30/1993 $ 10,436 0.95% $10,717 0.28% $ 10,199
05/31/1993 $ 10,482 0.35% $10,755 0.14% $ 10,213
06/30/1993 $ 10,588 1.97% $10,966 0.14% $ 10,228
07/31/1993 $ 10,614 0.25% $10,994 0.00% $ 10,228
08/31/1993 $ 10,759 2.07% $11,221 0.28% $ 10,256
09/30/1993 $ 10,986 1.23% $11,359 0.21% $ 10,278
10/31/1993 $ 11,031 0.16% $11,378 0.41% $ 10,320
11/30/1993 $ 10,912 -0.82% $11,284 0.07% $ 10,327
12/31/1993 $ 11,142 2.13% $11,525 0.00% $ 10,327
01/31/1994 $ 11,259 1.23% $11,666 0.27% $ 10,355
02/28/1994 $ 10,995 -2.74% $11,347 0.34% $ 10,390
03/31/1994 $ 10,645 -3.82% $10,913 0.34% $ 10,426
04/30/1994 $ 10,702 1.10% $11,033 0.14% $ 10,440
05/31/1994 $ 10,769 0.80% $11,122 0.07% $ 10,447
06/30/1994 $ 10,762 -0.43% $11,074 0.34% $ 10,483
07/31/1994 $ 10,925 1.68% $11,260 0.27% $ 10,511
08/31/1994 $ 10,972 0.39% $11,304 0.40% $ 10,553
09/30/1994 $ 10,869 -1.34% $11,152 0.27% $ 10,582
10/31/1994 $ 10,734 -1.46% $10,990 0.07% $ 10,589
11/30/1994 $ 10,578 -1.89% $10,782 0.13% $ 10,603
12/31/1994 $ 10,669 1.80% $10,976 0.00% $ 10,603
01/31/1995 $ 10,901 2.59% $11,260 0.40% $ 10,645
02/28/1995 $ 11,188 2.83% $11,579 0.40% $ 10,688
03/31/1995 $ 11,313 1.35% $11,735 0.33% $ 10,723
04/30/1995 $ 11,328 0.12% $11,749 0.33% $ 10,759
05/31/1995 $ 11,652 3.17% $12,122 0.20% $ 10,780
06/30/1995 $ 11,534 -0.62% $12,047 0.20% $ 10,802
07/31/1995 $ 11,683 1.47% $12,224 0.00% $ 10,802
08/31/1995 $ 11,867 1.36% $12,390 0.26% $ 10,830
09/30/1995 $ 11,961 0.64% $12,469 0.20% $ 10,851
10/31/1995 $ 12,146 1.15% $12,613 0.33% $ 10,887
11/30/1995 $ 12,320 1.34% $12,782 -0.07% $ 10,880
12/31/1995 $ 12,370 0.61% $12,860 -0.07% $ 10,872
01/31/1996 $ 12,477 1.01% $12,989 0.59% $ 10,936
02/29/1996 $ 12,447 -0.41% $12,936 0.32% $ 10,971
03/31/1996 $ 12,360 -1.24% $12,776 0.52% $ 11,028
04/30/1996 $ 12,330 -0.35% $12,731 0.39% $ 11,071
05/31/1996 $ 12,335 -0.28% $12,695 0.19% $ 11,092
06/30/1996 $ 12,456 0.95% $12,816 0.06% $ 11,099
07/31/1996 $ 12,554 0.96% $12,939 0.19% $ 11,120
08/31/1996 $ 12,558 0.00% $12,939 0.19% $ 11,141
09/30/1996 $ 12,681 1.03% $13,072 0.32% $ 11,177
10/31/1996 $ 12,816 1.26% $13,237 0.32% $ 11,213
11/30/1996 $ 13,034 2.02% $13,504 0.19% $ 11,234
12/31/1996 $ 12,992 -0.45% $13,444 0.00% $ 11,234
01/31/1997 $ 13,032 0.39% $13,496 0.32% $ 11,270
02/28/1997 $ 13,121 0.94% $13,623 0.31% $ 11,305
03/31/1997 $ 13,005 -1.34% $13,440 0.25% $ 11,333
04/30/1997 $ 13,107 0.74% $13,540 0.12% $ 11,347
05/31/1997 $ 13,282 1.42% $13,732 -0.06% $ 11,340
06/30/1997 $ 13,396 1.10% $13,883 0.12% $ 11,353
07/31/1997 $ 13,720 2.81% $14,273 0.12% $ 11,367
08/31/1997 $ 13,639 -0.97% $14,135 0.19% $ 11,389
09/30/1997 $ 13,767 1.27% $14,314 0.25% $ 11,417
10/31/1997 $ 13,847 0.53% $14,390 0.25% $ 11,446
11/30/1997 $ 13,914 0.46% $14,456 -0.06% $ 11,439
12/31/1997 $ 14,069 1.58% $14,685 -0.12% $ 11,425
01/31/1998 $ 14,212 1.11% $14,848 0.19% $ 11,447
02/28/1998 $ 14,230 -0.01% $14,846 0.19% $ 11,468
03/31/1998 $ 14,235 -0.07% $14,836 0.19% $ 11,490
04/30/1998 $ 14,201 -0.55% $14,754 0.18% $ 11,511
05/31/1998 $ 14,398 1.70% $15,005 0.18% $ 11,532
06/30/1998 $ 14,441 0.37% $15,061 0.12% $ 11,546
07/31/1998 $ 14,498 0.16% $15,085 0.12% $ 11,559
08/31/1998 $ 14,697 1.74% $15,347 0.12% $ 11,573
09/30/1998 $ 14,895 1.49% $15,576 0.12% $ 11,587
10/31/1998 $ 14,912 0.04% $15,582 0.24% $ 11,615
11/30/1998 $ 14,955 0.30% $15,629 0.00% $ 11,615
12/31/1998 $ 14,985 0.31% $15,677 -0.06% $ 11,608
01/31/1999 $ 15,147 1.53% $15,917 0.24% $ 11,636
02/28/1999 $ 15,098 -0.90% $15,774 0.12% $ 11,650
03/31/1999 $ 15,127 -0.05% $15,766 0.30% $ 11,685
04/30/1999 $ 15,143 0.27% $15,809 0.73% $ 11,770
05/31/1999 $ 15,039 -0.70% $15,698 0.00% $ 11,770
06/30/1999 $ 14,836 -1.86% $15,406 0.00% $ 11,770
*Source: Standard and Poor's Micropal.
Past performance is not predictive of future results.
FRANKLIN CALIFORNIA
TAX-EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
Your Fund's Goal: 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)
- --------------------------------------------------------------------------------
The fund maintained a neutral position during the period under review. The
domestic economy's recent strength combined with tentative signs of an
international recovery and the potential for higher inflation going forward have
put the Federal Reserve Board (the Fed) on alert for a possible tightening.
Indeed, the Fed raised the federal funds target rate by 0.25%, to 5.00%, at its
late-June meeting. The average maturity of securities held by Franklin
California Tax-Exempt Money Fund was 50 days on June 30, 1999, the same as one
year ago.
Tax-exempt money market funds increased assets throughout the year under review,
mainly due to increased investor wealth and international market volatility.
Total net assets in Franklin
1. There is no assurance that the fund's $1.00 per share price will be
maintained. An investment in the fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
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 46 of
this report.
California Tax-Exempt Money Fund increased 8%, to $706.9 million, on June 30,
1999, from $659.7 million on June 30, 1998. However, the domestic economy's
strength left state and local municipalities with cash surpluses and less need
for short-term financing. Also, variable-rate issuance declined since issuers
took advantage of the low interest-rate environment and issued long-term
fixed-rate bonds instead. This supply and demand imbalance put downward pressure
on short-term rates. For example, on June 30, 1998, one-year California notes
were trading around 3.70%, while on June 30, 1999, they were at approximately
3.35%.
The investment strategy driving Franklin California Tax-Exempt Money Fund's
portfolio managers continues to emphasize high quality and liquidity. We manage
the fund more conservatively than SEC guidelines require, to ensure the safety
and stability of the fund's principal. For example, SEC guidelines allow
tax-exempt money funds to purchase both first- and second-tier securities.
Franklin Templeton purchases only first-tier securities for inclusion in its
tax-exempt money market portfolios. Although also allowed by the SEC for money
market funds, we do not buy any derivative securities in our tax-exempt money
funds -- we purchase only plain vanilla, short-term securities. We eliminated
our exposure to Japanese bank guarantees several years ago because of the
problems these banks were having, and we continue to follow our philosophy of
purchasing securities only from what we believe are the most creditworthy
institutions.
During the reporting period the fund participated in several attractive deals
including California School Cash Reserve Program Pooled Notes, Los Angeles
County Tax and Revenue Anticipation Notes (TRAN), Redwood City Certificates of
Participation (COP) City Hall Project Weekly VRDN and Put, and Irvine 1915 Act
Assessment District Daily VRDN and Put.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of June 30, 1999, 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 historical
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy.
PERFORMANCE SUMMARY
6/30/99
- -----------------------------------------
Seven-day effective yield(1) 3.05%
Seven-day annualized yield 3.01%
Taxable equivalent yield(2) 5.49%
1. The seven-day effective yield assumes the compounding of daily dividends.
2. Taxable equivalent yield assumes the 1999 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, 1999.
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
generally are referred to as "gilt-edged." Interest payments are protected by a
large or exceptionally stable margin, and principal is secure. Although the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
Aa: High quality by all standards. Together with the Aaa group, they comprise
what generally are known as high-grade bonds. Aa bonds are rated lower than Aaa
because margins of protection may not be as large, fluctuation of protective
elements may be of greater amplitude, or there may be other elements which make
the long-term risks appear larger.
A: Possess many favorable investment attributes and are considered upper
medium-grade obligations. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a susceptibility
to impairment sometime in the future.
Baa: Medium-grade obligations, i.e., they are neither highly protected nor
poorly secured. Interest payments and principal security appear adequate for the
present, but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time.
Ba: Contain speculative elements. Often the protection of interest and
principal payments may be very moderate and, thereby, not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the contract
over any long period of time may be small.
Caa: Poor standing. Such issues may be in default, or elements of danger with
respect to principal or interest may be present.
Ca: Obligations that are highly speculative. Such issues are often in default or
have other marked shortcomings.
C: Lowest-rated class of bonds. Issues rated C can be regarded as having
extremely poor prospects of ever attaining any real investment standing.
S&P(R)
AAA: The highest rating assigned by S&P to a debt obligation and indicates the
ultimate degree of protection as to principal and interest.
AA: Also qualify as high-grade obligations, and, in the majority of instances,
differ from AAA issues only in a small degree.
A: Generally regarded as upper medium-grade. They have considerable investment
strength but are not entirely free from adverse effects of changes in economic
and trade conditions. Interest and principal are regarded as safe.
BBB: Regarded as having an adequate capacity to pay principal and interest.
Whereas they normally exhibit adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity to pay principal and interest for bonds in this category than for bonds
in the A category.
BB, B, CCC, CC: Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligations. BB
indicates the lowest degree of speculation and CC the highest degree of
speculation. While such bonds likely will have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
C: Reserved for income bonds on which no interest is being paid.
D: Debt rated "D" is in default and payment of interest and/or repayment of
principal is in arrears.
FRANKLIN CALIFORNIA TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
---------------------------------------------------------------------------------
1999+ 1998 1997 1996 1995
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ............ $ 12.47 $ 12.22 $ 12.01 $ 11.95 $ 11.74
------------- ------------- ------------- ------------- -------------
Income from investment operations:
Net investment income ........................ .61 .64 .66 .67 .68
Net realized and unrealized gains (losses) ... (.26) .37 .21 .06 .20
------------- ------------- ------------- ------------- -------------
Total from investment operations .............. .35 1.01 .87 .73 .88
------------- ------------- ------------- ------------- -------------
Less distributions from:
Net investment income ........................ (.62) (.64) (.66) (.67) (.67)
In excess of net investment income ........... (.01) -- -- -- --
Net realized gains ........................... (.07) (.12) -- -- --
------------- ------------- ------------- ------------- -------------
Total distributions ........................... (.70) (.76) (.66) (.67) (.67)
------------- ------------- ------------- ------------- -------------
Net asset value, end of year .................. $ 12.12 $ 12.47 $ 12.22 $ 12.01 $ 11.95
============= ============= ============= ============= =============
Total return* ................................. 2.76% 8.38% 7.41% 6.18% 7.80%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ............... $ 1,775,212 $ 1,717,489 $ 1,635,543 $ 1,588,631 $ 1,468,080
Ratios to average net assets:
Expenses ..................................... .60% .60% .60% .60% .59%
Net investment income ........................ 4.91% 5.11% 5.41% 5.50% 5.77%
Portfolio turnover rate ....................... 15.53% 21.66% 20.40% 14.22% 11.85%
</TABLE>
*Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
+Based on average shares outstanding.
FRANKLIN CALIFORNIA TAX-FREE TRUST
FINANCIAL HIGHLIGHTS (continued)
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND (CONT.)
<TABLE>
<CAPTION>
Class C
--------------------------------------------------------------------------
Year Ended June 30,
--------------------------------------------------------------------------
1999+ 1998 1997 1996 1995++
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ................ $ 12.55 $ 12.29 $ 12.07 $ 11.99 $ 11.88
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income ............................ .55 .58 .59 .60 .11
Net realized and unrealized gains (losses) ....... (.27) .37 .22 .08 .10
---------- ---------- ---------- ---------- ----------
Total from investment operations .................. .28 .95 .81 .68 .21
---------- ---------- ---------- ---------- ----------
Less distributions from:
Net investment income ............................ (.55) (.57) (.59) (.60) (.10)
In excess on net investment income ............... (.01) -- -- -- --
Net realized gains ............................... (.07) (.12) -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions ............................... (.63) (.69) (.59) (.60) (.10)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ...................... $ 12.20 $ 12.55 $ 12.29 $ 12.07 $ 11.99
========== ========== ========== ========== ==========
Total return* ..................................... 2.16% 7.80% 6.86% 5.70% 1.79%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ................... $ 80,336 $ 55,371 $ 34,899 $ 18,458 $ 507
Ratios to average net assets:
Expenses ......................................... 1.16% 1.16% 1.16% 1.17% 1.17%**
Net investment income ............................ 4.35% 4.55% 4.81% 4.96% 5.03%**
Portfolio turnover rate ........................... 15.53% 21.66% 20.40% 14.22% 11.85%
</TABLE>
*Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
**Annualized
+Based on average shares outstanding.
++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, 1999
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS 97.8%
BONDS 97.1%
<S> <C> <C>
ABAG Revenue, Tax Allocation, RDA Pool, Series A2, FSA Insured, 6.60%, 12/15/24 ................... $10,775,000 $11,854,763
Alameda Corridor Transportation Authority Revenue, senior lien, Series A,
MBIA Insured, 5.00%, 10/01/29 .................................................................. 5,000,000 4,689,050
Alameda County COP, Municipal Custodial Receipts, Series 1, BIG Insured,
Pre-Refunded, 7.25%, 12/01/07 .................................................................. 2,000,000 2,138,380
Alameda County Water District Revenue COP, Water Systems Project, FGIC Insured,
Pre-Refunded, 6.00%, 6/01/20 ................................................................... 1,000,000 1,090,620
Alhambra COP, Police Facilities AD No. 91-1, AMBAC Insured, 6.75%, 9/01/23 ........................ 10,730,000 11,425,733
Anaheim PFA Revenue, Local Agency, CFD, Refunding, Series A, MBIA Insured, 5.75%, 9/01/14 ......... 3,790,000 3,979,803
Arcadia GO, USD, Series B, FGIC Insured, 5.875%, 7/01/20 .......................................... 1,985,000 2,096,855
Arcata Joint Powers Financing Authority,
Tax Allocation Revenue, Community Development Project Loan, Series A,
AMBAC Insured, 6.00%, 8/01/23 .................................................................. 5,690,000 6,056,777
Wastewater Revenue, FSA Insured, 5.80%, 12/01/22 ............................................... 1,080,000 1,128,848
Barstow RDA, Tax Allocation, Central Redevelopment Project, Series A,
MBIA Insured, 6.25%, 9/01/22 ................................................................... 2,000,000 2,159,320
Beaumont USD, COP, Refunding, Series A, FSA Insured, 5.80%, 1/01/21 ............................... 1,500,000 1,564,425
Benicia COP, Water System Project, Refunding, AMBAC Insured, 6.125%,
11/01/17 .......................................................................................... 2,995,000 3,154,843
Benicia USD, Series A, AMBAC Insured, Pre-Refunded, 6.85%, 8/01/16 ................................. 5,900,000 6,351,527
Blythe Financing Authority Lease Revenue, City Hall and County Courthouse
Project, MBIA Insured, 5.50%, 9/01/27 .......................................................... 3,500,000 3,521,385
Brea PFA Revenue, Tax Allocation, Redevelopment Project, Series A, MBIA Insured,
7.00%, 8/01/15 ................................................................................. 1,520,000 1,629,151
6.75%, 8/01/22 ................................................................................. 1,550,000 1,648,611
7.00%, 8/01/23 ................................................................................. 12,085,000 12,920,436
Buellton USD, Series A, MBIA Insured, 6.375%, 7/01/17 ............................................. 2,155,000 2,295,097
Burbank PCR, Wastewater Treatment, Series A, FGIC Insured, 5.50%, 6/01/25 ......................... 3,000,000 3,024,690
Burbank RDA, Tax Allocation, City Center Redevelopment Project, Refunding,
Series A, FSA Insured, 5.50%, 12/01/23 ......................................................... 2,000,000 2,021,360
Burbank Waste Disposal Revenue, Series B, AMBAC Insured, 6.00%, 5/01/22 ........................... 665,000 685,821
Calabasas COP, Public Facilities Project,
5.20%, 12/01/20 ................................................................................ 1,335,000 1,276,821
5.25%, 12/01/28 ................................................................................ 2,385,000 2,245,573
Calaveras County Water District Revenue COP, Water and Sewer System Improvement
Project, Refunding, AMBAC Insured, 6.00%, 5/01/16 .............................................. 3,950,000 4,212,557
Calexico CRDA Revenue, Tax Allocation, Merged Central Business and Residential,
Refunding, FSA Insured, 5.85%, 8/01/15 ......................................................... 1,795,000 1,886,401
Calexico USD, CFD No. 1, Special Tax, Refunding, AMBAC Insured, 5.60%, 9/01/17 .................... 2,930,000 2,998,123
California Educational Facilities Authority Revenue,
Loyola Marymount University, MBIA Insured, 5.75%, 10/01/24 ..................................... 2,000,000 2,060,520
Pooled Facilities Program, MBIA Insured, 7.625%, 11/01/12 ...................................... 335,000 339,194
Pooled Facilities Program, MBIA Insured, 7.00%, 3/01/16 ........................................ 1,000,000 1,036,840
Santa Clara University, MBIA Insured, Pre-Refunded, 5.75%, 9/01/21 ............................. 2,575,000 2,807,291
Santa Clara University, Refunding, MBIA Insured, 5.75%, 9/01/21 ................................ 775,000 804,528
Stanford University, Refunding, Series M, 5.25%, 12/01/26 ...................................... 3,450,000 3,385,899
Stanford University, Refunding, Series O, 5.125%, 1/01/31 ...................................... 19,500,000 18,720,780
Stanford University, Series N, 5.20%, 12/01/27 ................................................. 6,780,000 6,593,414
Stanford University, Series P, 5.00%, 12/01/23 ................................................. 15,500,000 14,784,985
California Health Facilities Financing Authority Revenue,
Adventist Health Systems West, Series A, MBIA Insured, 7.00%, 3/01/13 .......................... 3,000,000 3,180,630
Adventist Health Systems West, Series B, MBIA Insured, 6.75%, 3/01/14 .......................... 5,065,000 5,345,804
Catholic Healthcare West, Refunding, Series A, MBIA Insured, 6.00%, 7/01/17 .................... 5,000,000 5,302,650
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
<S> <C> <C>
California Health Facilities Financing Authority Revenue, (cont)
Catholic Healthcare West, Series A, 5.00%, 7/01/28 .............................................. $25,000,000 $ 21,341,500
The Help Group, CHFCLP Insured, 5.40%, 8/01/22 .................................................. 5,000,000 4,896,500
Kaiser Permanente, Series A, 5.40%, 5/01/28 ..................................................... 15,400,000 14,602,742
Kaiser Permanente, Series B, 5.00%, 10/01/18 .................................................... 5,000,000 4,621,300
Kaiser Permanente, Series B, 5.00%, 10/01/20 .................................................... 5,500,000 5,035,140
Marin General Hospital, Series A, FSA Insured, 7.00%, 8/01/15 ................................... 4,000,000 4,187,120
Northern California Presbyterian, 5.40%, 7/01/28 ................................................ 5,000,000 4,740,950
San Diego Hospital Association, Refunding, Series A, MBIA Insured, 6.20%, 8/01/20 ............... 4,850,000 5,138,187
San Diego Hospital Association, Series A, MBIA Insured, 6.20%, 8/01/12 .......................... 2,425,000 2,579,861
San Fernando Health Facility, Series A, CHFCLP Insured, 5.25%, 6/01/23 .......................... 2,760,000 2,658,046
Scripps Memorial Hospital, Series A, MBIA Insured, 6.40%, 10/01/12 .............................. 3,500,000 3,762,885
Sharp Temecula Hospital, MBIA Insured, Pre-Refunded, 7.05%, 8/01/21 ............................. 3,000,000 3,241,410
Sutter Health, Series A, FSA Insured, 5.00%, 8/15/37 ............................................ 5,500,000 5,112,360
Sutter Health, Series A, MBIA Insured, 5.00%, 8/15/19 ........................................... 1,700,000 1,619,114
California HFA, SFM Purchase, Class I, Series B-3, FHA Insured, 5.30%, 8/01/18 ..................... 3,000,000 2,912,310
California HFAR,
Home Mortgage, Series D, MBIA Insured, 6.15%, 8/01/28 ........................................... 5,250,000 5,400,465
Home Mortgage, Series J, MBIA Insured, 5.45%, 8/01/16 ........................................... 5,000,000 4,961,400
Series A, MBIA Insured, 7.15%, 8/01/11 .......................................................... 1,315,000 1,379,277
Series A, MBIA Insured, 7.20%, 2/01/26 .......................................................... 3,450,000 3,606,768
Series B, MBIA Insured, 6.80%, 8/01/11 .......................................................... 1,815,000 1,909,217
Series B, MBIA Insured, 8.625%, 8/01/15 ......................................................... 220,000 224,178
Series K, AMBAC Insured, 6.25%, 8/01/27 ......................................................... 5,895,000 6,082,874
California Public Capital Improvement Financing Authority Revenue,
Pooled Projects, Series B, BIG Insured, 8.10%, 3/01/18 .......................................... 8,875,000 9,015,580
California Public School District Financing Authority Lease Revenue,
Southern Kern USD, Refunding, Series B, FSA Insured, 5.90%, 9/01/26 ............................. 235,000 246,492
Series B, FSA Insured, Pre-Refunded, 5.90%, 9/01/26 ............................................. 1,615,000 1,775,353
California State Department of Water Resources Central Valley Project Water
System Revenue, Refunding,
Series L, MBIA Insured, 5.50%, 12/01/23 ......................................................... 5,000,000 5,042,400
Series Q, MBIA Insured, 5.375%, 12/01/27 ........................................................ 18,500,000 18,379,010
California State GO,
5.125%, 10/01/27 ................................................................................ 3,000,000 2,893,530
AMBAC Insured, 6.30%, 9/01/06 ................................................................... 9,000,000 9,986,580
FGIC Insured, 6.00%, 5/01/20 .................................................................... 510,000 540,330
FGIC Insured, Pre-Refunded, 6.00%, 5/01/20 ...................................................... 2,990,000 3,257,635
MBIA Insured, 6.00%, 8/01/16 .................................................................... 210,000 223,438
MBIA Insured, 6.00%, 10/01/21 ................................................................... 65,000 68,381
California State HFAR, Home Mortgage, Series L, MBIA Insured, 6.40%, 8/01/27 ....................... 8,290,000 8,630,636
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 4,472,762
California State University,
Fresno, Auxiliary Residence Student Project Revenue, MBIA Insured,
6.25%, 2/01/17 .................................................................................. 1,500,000 1,605,270
Housing System Revenue, Series AX, FGIC Insured, 5.20%, 11/01/30 ................................ 3,590,000 3,471,279
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
<S> <C> <C>
California State University and Colleges Student Union Revenue,
Bakersfield, Series A, MBIA Insured, 6.30%, 11/01/22 ........................................... $ 1,310,000 $ 1,394,823
San Bernardino, Series B, MBIA Insured, 6.30%, 2/01/22 ......................................... 2,375,000 2,536,263
California Statewide CDA, COP,
Childrens Hospital Los Angeles, 5.25%, 8/15/29 ................................................. 15,000,000 14,302,200
Kaiser Permanente, 5.30%, 12/01/15 ............................................................. 10,000,000 9,743,000
MBIA Insured, 5.00%, 4/01/18 ................................................................... 6,000,000 5,739,300
California Statewide CDA Revenue, COP, John Muir/Mt. Diablo Health System,
MBIA Insured,
5.125%, 8/15/22 ................................................................................ 5,000,000 4,800,300
5.25%, 8/15/27 ................................................................................. 7,000,000 6,779,780
Cambria Community Services District Revenue,
COP, Wastewater Treatment System Upgrade, MBIA Insured, 6.90%, 11/01/24 ........................ 1,000,000 1,117,520
Water and Wastewater, Refunding, Series A, MBIA Insured, 6.00%, 5/01/15 ........................ 1,330,000 1,413,325
Campbell COP, Civic Center Project, Refunding, MBIA Insured, 5.25%, 10/01/28 ...................... 1,000,000 975,120
Campbell USD, Series C, FGIC Insured,
5.65%, 8/01/17 ................................................................................. 1,000,000 1,027,000
5.75%, 6/01/22 ................................................................................. 1,000,000 1,032,360
Carpinteria Sanitary District Capital Facilities Revenue, FGIC Insured, 6.25%, 7/01/14 ............ 2,485,000 2,655,645
Central Coast Water Authority Revenue, State Water Project Regional Facilities,
AMBAC Insured, Pre-Refunded,
6.50%, 10/01/14 ................................................................................ 2,500,000 2,726,150
6.60%, 10/01/22 ................................................................................ 4,650,000 5,084,589
Central School District GO, San Bernardino County, AMBAC Insured, 5.60%, 5/01/16 .................. 3,035,000 3,101,163
Cerritos PFA Revenue, Los Coyotes Redevelopment Project Loan, Series A,
AMBAC Insured, 5.75%, 11/01/22 ................................................................. 5,000,000 5,192,400
Chico PFA Revenue, Southeast Chico Redevelopment Project, Series A, FGIC Insured,
6.625%, 4/01/21 ................................................................................ 815,000 843,590
Chino Basin Regional Financing Authority Revenue, Municipal Water District,
Sewer System Project, Refunding, AMBAC Insured, 6.00%, 8/01/16 ................................. 2,000,000 2,137,300
Chino COP, RDA, Water System Improvement Project, Refunding,
AMBAC Insured, 6.20%, 9/01/18 .................................................................. 3,590,000 3,847,152
Chino RDA, Tax Allocation, Central City Redevelopment Project, Series A,
Refunding, AMBAC Insured, 5.00%, 9/01/18 ...................................................... 3,350,000 3,221,963
Chula Vista Elementary School District COP, MBIA Insured, 6.60%, 8/01/16 ........................... 2,940,000 3,032,669
Chula Vista PFA, Local Agency Revenue, Series 1995-A, FSA Insured,
6.125%, 9/02/14 .................................................................................. 3,875,000 4,208,444
Clovis PFA, Refuse Disposal Revenue, Landfill Improvement Project,
AMBAC Insured, 5.00%, 9/01/18 ................................................................. . 1,000,000 961,780
Coachella Valley Recreation and Park District, 1915 Act,
Reassessment District No. 94-1, Refunding, MBIA Insured, 6.20%, 9/02/16 ........................ 1,500,000 1,617,570
Colton GO, Joint USD, CFD, Special Tax, Southridge Village, Phase III, Refunding,
FSA Insured, 5.90%, 9/01/14 .................................................................... 325,000 325,767
Colton PFA Revenue, Escrow Term, Tax Allocation, Series A, MBIA Insured, 5.30%, 8/01/27 ........... 4,175,000 4,102,981
Contra Costa Mosquito Abatement District COP, Public Improvements Project, Refunding,
FSA Insured, 6.25%, 2/01/06 .................................................................... 1,695,000 1,747,681
Contra Costa Water District Revenue, Series G, MBIA Insured, 5.50%, 10/01/19 ...................... 3,000,000 3,028,230
Culver City USD,
GO, MBIA Insured, 5.20%, 8/01/38 ............................................................... 4,285,000 4,132,411
MBIA Insured, 5.125%, 8/01/37 .................................................................. 650,000 619,216
Cupertino USD, Series B, FGIC Insured, 5.60%, 8/01/21 ............................................. 16,250,000 16,524,788
Davis Joint USD, CFD, Special Tax No. 1, Refunding, MBIA Insured, 5.50%, 8/15/21 .................. 7,000,000 7,058,730
Del Norte County COPS, Capital Improvement Program, MBIA Insured, 5.40%,
(b)6/01/19 ...................................................................................... 2,150,000 2,161,137
(b)6/01/29 ...................................................................................... 3,500,000 3,489,500
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
<S> <C> <C>
Delano USD,
COP, Refinancing Project, MBIA Insured, 5.125%, 1/01/22 .......................................... $ 1,620,000 $ 1,576,762
Series A, FSA Insured, Pre-Refunded, 6.10%, 5/01/17 .............................................. 1,105,000 1,174,935
Dinuba RDA, Tax Allocation, Redevelopment Project No. 2, Refunding, Series A,
MBIA Insured, 5.40%, 9/01/27 ..................................................................... 3,190,000 3,135,387
Dublin-San Ramon Services District COP, AMBAC Insured, Pre-Refunded, 7.00%, 12/01/20 ................. 4,155,000 4,428,399
East Bay MUD,
Wastewater Treatment System Revenue, AMBAC Insured, Pre-Refunded, 7.20%, 6/01/20 ................. 2,000,000 2,107,560
Water System Revenue, MBIA Insured, Pre-Refunded, 7.50%, 6/01/18 ................................. 5,000,000 5,282,150
Water System Revenue, Subordinate Lien, Refunding, FGIC Insured, 6.00%, 6/01/20 .................. 6,900,000 7,259,076
East Side UHSD, Santa Clara County, Series D, FGIC Insured, 5.75%, 9/01/17 .......................... 1,200,000 1,253,532
Eastern Municipal Water and Sewer District Revenue COP, Refunding, Series A, FGIC Insured,
6.30%, 7/01/20 ................................................................................... 1,400,000 1,459,906
El Cerrito RDA, Tax Allocation, Redevelopment Project, Series A, FSA Insured, Pre-Refunded,
6.80%, 7/01/19 ................................................................................... 5,960,000 6,276,118
El Dorado County Public Agency Financing Authority Revenue, FGIC Insured, 5.50%,
2/15/16 .......................................................................................... 2,250,000 2,286,855
2/15/21 .......................................................................................... 3,500,000 3,530,835
Emeryville PFA Revenue, Shellmound Park Redevelopment and Housing Project,
Series B, MBIA Insured, 5.00%, 9/01/19 ........................................................... 5,500,000 5,270,485
Fairfield PFA Revenue, Municipal Park, ID No. 1, FGIC Insured, Pre-Refunded, 6.30%, 7/01/23 .......... 4,750,000 5,129,193
Farmersville USD, Series A, AMBAC Insured, 5.70%, 7/01/18 ............................................ 1,265,000 1,315,613
Fillmore USD, Series A, FGIC Insured, 5.60%, 7/01/22 ................................................. 5,645,000 5,739,949
Folsom PFA Revenue, Refunding, AMBAC Insured, 6.00%,
10/01/08 ......................................................................................... 2,000,000 2,120,140
10/01/12 ......................................................................................... 1,000,000 1,060,070
10/01/19 ......................................................................................... 3,400,000 3,590,536
Folsom Special Tax, CFD No. 4, Refunding, MBIA Insured, 5.00%, 8/01/18 ............................... 1,740,000 1,673,723
Fontana RDA, Tax Allocation, Southwest Industrial Park Project, FGIC Insured,
Pre-Refunded, 6.125%, 9/01/25 .................................................................... 5,850,000 6,373,107
Fresno COP, City Hall Refinancing Project, AMBAC Insured, 6.25%, 8/01/19 ............................. 1,000,000 1,037,210
Fresno USD, GO, Series B, FSA Insured,
5.875%, 8/01/20 .................................................................................. 1,405,000 1,485,099
ETM, 5.875%, 8/01/20 ............................................................................. 2,595,000 2,745,484
Fruitvale School District, Series B, MBIA Insured, 6.00%, 8/01/20 .................................... 1,780,000 1,873,076
Glendale Hospital Revenue, Adventist Health, Refunding, Series A, MBIA Insured,
6.75%, 3/01/13 ................................................................................... 1,000,000 1,055,440
Glendale RDA, Tax Allocation, Central Glendale Redevelopment Project, Refunding,
AMBAC Insured, 6.00%, 12/01/20 ................................................................... 9,775,000 10,389,652
Glendale USD, GO,
Series A, FGIC Insured, 5.375%, 9/01/22 .......................................................... 2,400,000 2,398,248
Series B, FSA Insured, 5.125%, 9/01/23 ........................................................... 2,600,000 2,503,956
Gustine USD, COP, FSA Insured, 5.00%, 2/01/29 ........................................................ 3,210,000 2,989,987
Hawthorne CDA, Tax Allocation, Project Area No 2, Refunding, MBIA Insured, 5.00%, 9/01/18 ............ 2,265,000 2,178,432
Hemet USD, COP, Nutrition Center Project, FSA Insured, 5.875%, 4/01/27 ............................... 1,250,000 1,302,075
Hercules COP, Capital Improvement Projects, Refunding, AMBAC Insured, 6.00%, 6/01/15 ................. 1,000,000 1,064,530
Hesperia Water District COP, Water Facilities Improvement Projects, FGIC Insured,
Pre-Refunded, 7.15%, 6/01/26 ........................................................................ 3,425,000 3,684,923
Imperial Irrigation District COP,
California Water Systems Project, AMBAC Insured, 5.75%, 7/01/16 .................................. 5,050,000 5,273,362
Electric System Project, MBIA Insured, Pre-Refunded, 6.00%, 11/01/15 ............................. 13,375,000 14,658,331
Indian Wells RDAR, Tax Allocation, Consolidated Whitewater, Refunding, MBIA Insured,
5.375%, 12/01/22 ................................................................................. 1,300,000 1,290,523
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
<S> <C> <C>
Kern County High School District, FSA Insured, ETM, 6.625%,
8/01/14 ............................................................................................ $ 1,535,000 $ 1,770,239
8/01/15 ............................................................................................ 1,400,000 1,622,110
La Mirada RDA, Industrial Commercial Redevelopment Project, Series A, MBIA Insured,
6.60%, 8/15/21 ..................................................................................... 3,080,000 3,210,346
La Quinta RDA, Tax Allocation, Housing Redevelopment Project Areas No. 1 and 2,
MBIA Insured, 6.00%, 9/01/25 ....................................................................... 6,650,000 7,104,062
Lake Arrowhead Community Services District COP,
FGIC Insured, 6.50%, 6/01/15 ....................................................................... 8,785,000 9,419,541
FGIC Insured, Pre-refunded, 6.50%, 6/01/15 ......................................................... 5,215,000 5,651,183
Refunding, FGIC Insured, 6.125%, 6/01/05 ........................................................... 7,600,000 8,117,332
Lake Elsinore PFA Revenue, Tax Allocation, Lake Elsinore Redevelopment Projects,
Series A, FGIC Insured, 6.25%, 2/01/19 ............................................................. 1,255,000 1,291,709
Series C, FGIC Insured, 6.625%, 2/01/17 ............................................................ 12,840,000 13,252,549
Lakewood PFA, Water Revenue, FGIC Insured, 5.70%, 4/01/16 ............................................. 2,485,000 2,561,488
Lakewood RDA, Tax Allocation, Redevelopment Project No.1, Refunding, Series A,
FSA Insured, 6.50%, 9/01/17 ........................................................................ 3,000,000 3,226,440
Lancaster RDA, Tax Allocation, Lancaster Redevelopment Project No.5, Refunding,
MBIA Insured, 6.85%, 2/01/19 ....................................................................... 11,245,000 11,860,889
Lemoore RDA, Tax Allocation, Redevelopment Project, Refunding, AMBAC Insured,
5.20%, 8/01/16 ..................................................................................... 1,910,000 1,886,526
Lincoln USD, CFD No. 1, AMBAC Insured, Pre-Refunded, 6.90%, 9/01/21 ................................... 2,425,000 2,618,297
Lodi COP,
1996 Public Improvement Financing Project, MBIA Insured, 5.90%, 10/01/16 ........................... 3,605,000 3,812,288
Wastewater Treatment Project, Refunding, AMBAC Insured, 6.70%, 8/01/26 ............................. 8,800,000 9,822,208
Loma Linda Hospital Revenue, Loma Linda University Medical Center, Refunding,
(b) Series A, AMBAC Insured, 5.05%, 12/01/12 ....................................................... 8,470,000 8,150,258
(b) Series A, AMBAC Insured, 5.20%, 12/01/14 ....................................................... 5,680,000 5,430,307
Series B, AMBAC Insured, 7.00%, 12/01/15 ........................................................... 1,910,000 1,977,194
Long Beach Harbor Revenue,
5.125%, 5/15/18 .................................................................................... 3,625,000 3,482,864
MBIA Insured, 5.375%, 5/15/20 ...................................................................... 10,000,000 9,784,600
MBIA Insured, 5.25%, 5/15/25 ....................................................................... 15,000,000 14,365,050
Los Angeles COP, San Pedro Peninsula Hospital Project, Refunding, AMBAC Insured, 6.25%, 5/01/15 ....... 5,825,000 6,111,299
Los Angeles County Capital Assets Leasing Corp. Leasehold Revenue, Refunding, AMBAC Insured,
6.00%, 12/01/16 .................................................................................... 3,000,000 3,176,280
Los Angeles County Transportation Commission Sales Tax Revenue, Series B, FGIC Insured,
6.50%, 7/01/15 ..................................................................................... 5,025,000 5,313,737
Series B, FGIC Insured, 6.50%, 7/01/13 ............................................................. 2,740,000 2,900,674
Los Angeles Department of Water and Power Electric Plant Revenue,
FGIC Insured, 6.125%, 1/15/33 ...................................................................... 17,215,000 18,226,209
MBIA Insured, 6.00%, 8/15/32 ....................................................................... 2,000,000 2,101,760
Refunding, FGIC Insured, 6.00%, 2/01/28 ............................................................ 3,500,000 3,669,155
Los Angeles Department of Water and Power Waterworks Revenue, Second Issue,
FGIC Insured, 6.40%, 11/01/31 ...................................................................... 6,875,000 7,328,750
Los Angeles Harbor Department Revenue, Series B,
AMBAC Insured, 6.60%, 8/01/14 ...................................................................... 3,790,000 4,081,754
AMBAC Insured, 6.60%, 8/01/15 ...................................................................... 2,000,000 2,153,380
MBIA Insured, 6.20%, 8/01/25 ....................................................................... 2,500,000 2,669,700
Los Angeles Mortgage Revenue, Refunding, Series I, MBIA Insured, 6.50%, 7/01/22 ....................... 2,000,000 2,144,660
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
- ------------------------------------------------ ----------- -----------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Los Angeles Wastewater System Revenue,
Refunding, Series A, FGIC Insured, 6.00%, 12/01/18 ................................. $12,100,000 $12,705,968
Series B, AMBAC Insured, 6.00%, 6/01/22 ............................................ 3,250,000 3,417,310
Lucia Mar GO, USD, Series A, FGIC Insured, 5.40%, 8/01/22 ............................. 5,290,000 5,269,052
Lynwood PFA Revenue, Series A, AMBAC Insured, 5.75%, 9/01/18 .......................... 4,000,000 4,163,360
Manteca Financing Authority Tax Allocation Revenue, MBIA Insured,
5.10%, 10/01/26 .................................................................... 1,000,000 947,830
Menlo Park CDA, Tax Allocation, Las Pulgas Community Development Project, Refunding,
AMBAC Insured, 5.375%, 6/01/22 ..................................................... 11,675,000 11,590,707
Mesa Construction Water District COP, Water Project, FGIC Insured, Pre-Refunded,
6.40%, 3/15/18 ..................................................................... 5,600,000 6,029,576
Metropolitan Water District Revenue, Southern California Waterworks, Series A,
5.00%, 7/01/26 ..................................................................... 43,540,000 40,962,432
MBIA Insured, 5.50%, 7/01/25 ....................................................... 8,750,000 8,822,975
MBIA Insured, 5.00%, 7/01/30 ....................................................... 31,375,000 29,407,160
Modesto Health Facilities Revenue, Memorial Hospital Association,
Refunding, Series A, MBIA Insured, 6.00%, 6/01/18 .................................. 5,565,000 5,898,455
Series 1991, MBIA Insured, Pre-Refunded, 6.875%, 6/01/21 ........................... 1,500,000 1,609,740
Modesto Irrigation District COP, Refunding and Capital Improvement Projects, Series A,
MBIA Insured, Pre-Refunded, 6.00%, 10/01/21 ........................................ 3,000,000 3,133,440
Modesto Irrigation District Financing Authority Revenue, Domestic Water Project,
Series C, AMBAC Insured, Pre-Refunded, 5.75%, 9/01/22 .............................. 2,500,000 2,718,300
Modesto Wastewater Treatment Facility Revenue, MBIA Insured, 5.75%, 11/01/22 .......... 14,375,000 14,964,088
Montclair RDA, Tax Allocation, Redevelopment Project, Area No. 3, Refunding, AMBAC
Insured,
5.40%, 12/01/17 .................................................................... 4,380,000 4,398,265
5.50%, 12/01/27 .................................................................... 8,870,000 8,929,252
Montebello Community RDA, Tax Allocation,
Housing, Series A, FSA Insured, 5.45%, 9/01/19 ..................................... 1,100,000 1,105,027
Montebello Hills Redevelopment Project, Refunding, MBIA Insured, 5.60%, 3/01/19 .... 2,460,000 2,499,557
Montebello USD, COP, Series B, MBIA Insured, Pre-Refunded, 7.25%, 6/01/10 ............. 720,000 752,954
Monterey County COP, Sheriff's Facility Project, Refunding, FSA
Insured, 5.25%, 12/01/17 ........................................................... 3,215,000 3,196,096
Moreno Valley PFA, Lease Revenue, AMBAC Insured, 5.50%, 11/01/22 ...................... 1,285,000 1,296,976
Moulton Niguel Water District, AMBAC Insured, Pre-Refunded, 7.25%, 4/01/16 ............ 1,420,000 1,488,075
Mount Diablo USD, CFD No. 1, Special Tax,
AMBAC Insured, 6.25%, 8/01/14 ...................................................... 500,000 531,895
FSA Insured, 6.00%, 8/01/24 ........................................................ 1,000,000 1,071,470
Refunding, AMBAC Insured, 5.75%, 8/01/15 ........................................... 1,000,000 1,041,180
Refunding, AMBAC Insured, 5.75%, 8/01/16 ........................................... 2,270,000 2,357,395
Refunding, AMBAC Insured, 5.375%, 8/01/19 .......................................... 7,290,000 7,306,257
Mountain View COP, Capital Improvement Financing Authority Revenue, City Hall/
Community Theatre, MBIA Insured, 6.50%, 8/01/16 ..................................... 1,500,000 1,593,315
Mountain View School District CFD, Special Tax, Series A, FSA Insured, Pre-Refunded,
7.25%, 10/01/11 ..................................................................... 2,535,000 2,609,630
Murrieta Water PFA, Special Tax Revenue, senior lien, Refunding, Series A, FSA Insured,
5.60%, 10/01/15 .................................................................... 1,235,000 1,268,938
5.70%, 10/01/21 .................................................................... 2,630,000 2,701,931
National City Joint Powers Authority Lease Revenue, National City Police Facilities
Project, AMBAC Insured, Pre-Refunded, 6.75%, 10/01/17 ............................... 2,000,000 2,135,160
Nevada Irrigation District Revenue COP, Cascade Bench Flume Project, MBIA Insured,
5.50%, 1/01/17 ...................................................................... 4,600,000 4,667,850
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
- ------------------------------------------------ ----------- -----------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
North City West School Facilities Financing Authority Special Tax, Refunding,
Series B, FSA Insured,
5.75%, 9/01/15 ..................................................................... $ 1,260,000 $ 1,317,330
6.00%, 9/01/19 ..................................................................... 2,500,000 2,645,850
Northern California Power Agency Multiple Capital Facilities Revenue, Series A,
MBIA Insured,
6.50%, 8/01/12 ..................................................................... 2,840,000 3,051,438
Pre-Refunded, 6.50%, 8/01/12 ....................................................... 2,160,000 2,348,114
Northern California Public Power Agency Revenue,
AMBAC Insured, Pre-Refunded, 7.50%, 7/01/23 ........................................ 3,200,000 4,060,704
Hydroelectric Project No. 1, Refunding, Series A, MBIA Insured, 5.50%, 7/01/23 ..... 4,000,000 4,024,000
Northern California Transmission Revenue, California/Oregon Transmission Project,
Series A, MBIA Insured,
6.25%, 5/01/10 ..................................................................... 2,500,000 2,653,750
6.50%, 5/01/16 ..................................................................... 4,000,000 4,284,280
6.00%, 5/01/24 ..................................................................... 18,335,000 18,926,854
Pre-Refunded, 7.00%, 5/01/10 ....................................................... 4,000,000 4,176,840
Norwalk Community Facilities Financing Authority Lease Revenue, MBIA Insured,
6.90%, 2/01/21 ..................................................................... 5,810,000 6,004,926
Oceanside Community Development Commission COP, Public Parking Project,
FSA Insured, Pre-Refunded, 7.875%, 4/01/19 ......................................... 3,940,000 4,601,802
Oceanside COP,
Civic Center Project, Refunding, MBIA Insured, 5.75%, 8/01/15 ...................... 1,000,000 1,047,910
Corporation Yard Project Financing, AMBAC Insured, Pre-Refunded, 7.30%, 8/01/21 .... 4,715,000 5,233,414
Waste Reuse Association Finance Project, Series A, AMBAC Insured, Pre-Refunded,
6.50%, 10/01/17 .................................................................... 5,000,000 5,452,300
Ontario Redevelopment Financing Authority Revenue, Ontario Redevelopment Project No. 1,
MBIA Insured, ETM, 5.80%, 8/01/23 .................................................. 10,000,000 10,568,300
Orange County CFD, Special Tax No. 86-1, Rancho Santa Margarita, Refunding, Series A,
FSA Insured, 7.30%, 8/15/09 ........................................................ 5,000,000 5,115,550
Orange County COP, Juvenile Justice Center Facilities, Refunding, AMBAC Insured,
6.375%, 6/01/11 .................................................................... 4,770,000 5,094,408
6.00%, 6/01/17 ..................................................................... 5,000,000 5,254,600
Orange County Financing Authority Tax Allocation Revenue, Refunding, Series A,
MBIA Insured, 6.50%, 9/01/22 ....................................................... 3,500,000 3,710,665
Oroville PFA, Tax Allocation Revenue, Oroville Redevelopment Project No. 1,
AMBAC Insured,
5.90%, 9/15/21 ..................................................................... 1,245,000 1,317,745
6.10%, 9/15/23 ..................................................................... 2,890,000 3,107,848
Oxnard COP, AMBAC Insured, 4.75%, 6/01/28 ............................................. 1,545,000 1,370,013
Oxnard Financing Authority Solid Waste Revenue, AMBAC Insured, 6.00%, 5/01/16 ......... 5,000,000 5,286,800
Oxnard Public Facilities Corp. COP, AMBAC Insured, Pre-Refunded, 7.50%, 9/01/06 ....... 2,835,000 2,853,626
Oxnard UHSD, Series B, FSA Insured, 5.875%, 8/01/27 3,615,000 3,793,400
Pajaro Valley USD, COP, School Facilities Bridge Funding Program, FSA Insured, 5.75%,
9/01/17 ............................................................................ 1,250,000 1,308,625
Palm Desert Financing Authority Tax Allocation Revenue, Project Area No. 2,
Series A, MBIA Insured,
5.95%, 8/01/24 ..................................................................... 2,490,000 2,643,683
5.85%, 8/01/25 ..................................................................... 1,380,000 1,455,169
Palm Springs USD,
Series C, MBIA Insured, 6.125%, 2/01/20 ............................................ 500,000 529,750
Series D, FGIC Insured, 5.90%, 2/01/21 ............................................. 1,000,000 1,054,400
Paramount USD, COP, Master Lease Program, FSA Insured, 6.30%, 9/01/26 ................. 4,750,000 5,151,233
Parlier USD, Series B, AMBAC Insured, 6.00%, 6/01/16 .................................. 1,130,000 1,201,156
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
--------- -----
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
(b)Pasadena USD, GO, Series B, FGIC Insured, 5.25%, 7/01/24 ............................................ $ 9,290,000 $ 9,087,571
Petaluma COP, Refunding, Series A, AMBAC Insured, 5.625%, 8/01/13 ................................... 1,000,000 1,037,100
Pico Rivera PFA Revenue, Water Enterprise Project, Refunding, Series A, FGIC Insured,
6.00%, 12/01/17 .................................................................................. 8,000,000 8,625,120
Pinole RDA, Tax Allocation, Pinole Vista Redevelopment Project, Series A, MBIA Insured,
6.125%, 8/01/17 .................................................................................. 1,000,000 1,061,220
Pismo Beach PFA, Lease Revenue, Refunding, Series A, 5.25%, 12/01/24 ................................ 3,505,000 3,427,855
Placer County COP,
Administrative and Emergency Services, MBIA Insured, 5.65%, 6/01/24 ............................ 4,000,000 4,072,640
Jail Kitchen Project, MBIA Insured, Pre-Refunded, 6.90%, 10/01/21 .............................. 3,745,000 4,256,792
Placer County Water Agency COP, FSA Insured, 5.90%, 7/01/25 ......................................... 2,350,000 2,476,759
Pleasant Hill RDA, Tax Allocation, Pleasant Hill Commons Project, Refunding, FSA Insured,
6.90%, 7/01/21 ................................................................................... 5,500,000 5,852,000
Pleasant Valley School District Ventura County COP, Tierra Linda School, Refunding, MBIA Insured,
5.70%, 8/01/18 ................................................................................... 1,400,000 1,409,128
Pleasanton USD, GO, Series A, MBIA Insured, 5.50%, 8/01/21 .......................................... 1,000,000 1,011,770
Port Hueneme RDA, Tax Allocation, Central Community Redevelopment Project, Refunding, AMBAC Insured,
5.50%, 5/01/23 ................................................................................... 2,000,000 2,019,640
Porterville COP,
Sewer System and Improvement Project, Refunding, AMBAC Insured, 6.30%, 10/01/18 ................ 4,935,000 5,266,287
Sewer System Refining Project, Refunding, AMBAC Insured, 5.25%, 10/01/23 ....................... 5,000,000 4,898,850
Water System Project, Refunding, AMBAC Insured, 6.30%, 10/01/18 ................................ 6,075,000 6,482,815
Redding Electrical System Revenue COP, Refunding, Series A, FGIC Insured, 5.50%, 6/01/11 ............ 5,000,000 5,151,900
Redding Joint Powers Financing Authority Lease Revenue, Civic Center Project, Series A, MBIA Insured,
5.75%, 3/01/19 ................................................................................. 3,090,000 3,209,150
5.25%, 3/01/26 ................................................................................. 75,000 73,208
Redding RDA, Tax Allocation, Hilltop Cypress Redevelopment Notes, Series C, FSA Insured, 6.00%,
9/01/22 .......................................................................................... 2,120,000 2,251,080
Redlands USD, Series B, FSA Insured, 6.25%, 6/01/19 ................................................. 2,115,000 2,260,385
Redwood City PFA, Local Agency Revenue, Series A, AMBAC Insured,
6.50%, 7/15/11 ................................................................................. 1,270,000 1,344,371
Pre-Refunded, 6.50%, 7/15/11 ................................................................... 1,475,000 1,576,244
Richgrove Elementary School District COP, Construction and Refinancing Project, FSA Insured,
5.30%, 12/01/28 .................................................................................. 2,355,000 2,296,643
Riverside County COP, Historic Courthouse, MBIA Insured, 5.875%, 11/01/27 ........................... 3,000,000 3,130,650
Riverside County PFA, Lease Revenue, AMBAC Insured, 5.375%, 10/01/22 ................................ 1,590,000 1,578,393
Riverside RDA,
Lease Revenue, Series A, AMBAC Insured, 6.375%, 10/01/23 ....................................... 12,540,000 13,639,382
Lease Revenue, Series A, AMBAC Insured, 6.50%, 10/01/24 ........................................ 2,000,000 2,185,820
Tax Allocation, Merged Redevelopment Project, Series A, MBIA Insured, 5.625%, 8/01/23 .......... 2,200,000 2,241,096
(b)Riverside USD, Special Tax, CFD No. 2, Refunding, FSA Insured, 5.00%, 9/01/18 ....................... 3,865,000 3,717,280
Romona Municipal Water District COP, Refunding, AMBAC Insured, 7.20%, 10/01/10 ...................... 3,000,000 3,163,290
Rubidoux Community Services District COP, Water System Improvement Project, AMBAC Insured,
Pre-Refunded, 6.20%, 12/01/14 .................................................................... 2,510,000 2,721,944
Sacramento Area Flood Control Agency Special Assessment,
Capital AD No. 2, FGIC Insured, 5.80%, 11/01/16 ................................................ 1,000,000 1,050,570
Capital AD No. 2, FGIC Insured, 5.375%, 10/01/25 ............................................... 3,675,000 3,651,664
Operation and Maintenance, FGIC Insured, 5.80%, 11/01/16 ....................................... 1,475,000 1,549,591
Operation and Maintenance, FGIC Insured, 5.90%, 11/01/25 ....................................... 2,690,000 2,827,459
Sacramento County Airport System Revenue, Series A, MBIA Insured, 6.00%, 7/01/17 .................... 5,920,000 6,256,493
Sacramento County COP, Public Facilities Project, MBIA Insured, 5.375%, 2/01/19 ..................... 1,350,000 1,353,443
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
--------- -----
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Sacramento MUD, Electric Revenue,
Series E, MBIA Insured, 5.75%, 5/15/22 .......................................................... $ 4,250,000 $ 4,414,220
Series I, MBIA Insured, 6.00%, 1/01/24 .......................................................... 4,000,000 4,237,960
Series J, AMBAC Insured, 5.50%, 8/15/21 ......................................................... 8,485,000 8,563,147
Sacramento RDA, Tax Allocation,
Merged Downtown Redevelopment Project, Series A, MBIA Insured, Pre-Refunded, 6.50% 11/01/13 ..... 1,835,000 1,939,100
Series A, MBIA Insured, 6.50%, 11/01/13 ......................................................... 165,000 172,912
Saddleback Community College District COP, 1996 Capital Improvement Financing Project,
MBIA Insured, 5.50%, 6/01/15 ...................................................................... 3,200,000 3,262,976
Saddleback Valley USD, PFA, Special Tax Revenue, Refunding, Series A, FSA Insured, 5.65%, 9/01/17 .... 3,500,000 3,579,975
Salida Area Public Facilities Financing Agency CFD, Special Tax, No. 1988-1, Refunding, FSA Insured,
5.25%, 9/01/28 .................................................................................... 3,500,000 3,413,060
Salinas RDA, Tax Allocation, Central City Revitalization Project, Series A, FSA Insured,
5.50%, 11/01/23 ................................................................................... 2,000,000 2,014,320
San Bernardino County COP, 1997 Public Improvement Financing Project, MBIA Insured, 5.25%, 10/01/25 .. 7,000,000 6,833,820
San Bernardino County Mortgage Revenue, Don Miguel Apartments Project, Refunding, MBIA Insured,
6.40%, 3/01/25 .................................................................................... 5,680,000 5,847,901
San Bernardino Joint Powers Financing Authority Revenue, Tax Allocation,
Northwest Redevelopment Project, Series E, MBIA Insured, Pre-Refunded, 7.375%, 1/01/15 .......... 1,965,000 2,040,987
Refunding, Series A, FSA Insured, 5.75%, 10/01/25 ............................................... 1,950,000 2,011,718
Southeast Industrial Park, Series F, MBIA Insured, Pre-Refunded, 7.375%, 3/01/14 ................ 3,515,000 3,675,354
State College Project No. 4, AMBAC Insured, Pre-Refunded, 7.20%, 9/01/08 ........................ 4,265,000 4,375,975
San Bernardino Municipal Water Department COP, FGIC Insured, 6.25%, 2/01/17 .......................... 5,750,000 6,032,958
San Bernardino RDA, Capital Appreciation, Series B, AMBAC Insured, 7.70%, 1/10/09 .................... 2,382,000 4,915,948
San Buenaventura COP, Water Project, AMBAC Insured, Pre-Refunded, 7.50%, 10/01/20 .................... 2,000,000 2,132,860
San Buenaventura Public Facilities Financing Authority Lease Revenue, Refunding, FSA Insured,
5.75%, 6/01/14 .................................................................................... 2,250,000 2,357,438
San Carlos RDA, Tax Allocation, San Carlos Redevelopment Project, Refunding, Series A, MBIA Insured,
5.50%, 9/01/26 .................................................................................... 1,785,000 1,795,050
San Diego Community College District COP, Series 1991, MBIA Insured, 6.50%, 12/01/12 ................. 2,000,000 2,130,220
San Diego IDR, San Diego Gas and Electric, Custodial Receipts, Series A, AMBAC Insured, 6.40%, 9/01/18 1,650,000 1,766,226
San Diego Mortgage Revenue, University Canyon North, Refunding, Series A, MBIA Insured,
5.125%, 7/01/03 ................................................................................. 180,000 182,756
5.75%, 7/01/25 .................................................................................. 3,105,000 3,150,426
San Francisco BART District Sales Tax Revenue, FGIC Insured,
5.50%, 7/01/15 .................................................................................. 2,000,000 2,032,420
5.50%, 7/01/20 .................................................................................. 5,440,000 5,499,622
Pre-Refunded, 6.60%, 7/01/12 .................................................................... 2,580,000 2,759,671
San Francisco City and County Airport Commission International Airport Revenue,
Issue 5, Second Series, FGIC insured, 6.50%, 5/01/24 ............................................ 6,900,000 7,446,549
Issue 8A, Second Series, FGIC Insured, 6.25%, 5/01/20 ........................................... 3,500,000 3,712,590
Issue 9B, Second Series, FGIC Insured, Pre-Refunded, 6.00%, 5/01/25 ............................. 6,400,000 6,969,920
Issue 11, Second Series, FGIC Insured, 6.00%, 5/01/11 ........................................... 2,105,000 2,220,228
Issue 16A, Second Series, FSA Insured, 5.00%, 5/01/29 ........................................... 10,000,000 9,256,600
San Francisco City and County RDA, MFHR, 1045 Mission Apartments, Series C, GNMA Secured,
5.35%, 12/20/40 ................................................................................... 7,715,000 7,429,236
San Francisco City and County Sewer Revenue, Refunding, AMBAC Insured, 6.00%, 10/01/11 ............... 2,000,000 2,120,760
San Gabriel USD, COP, Facilities Development Program, Series A, FSA Insured, 6.00%, 9/01/15 .......... 1,000,000 1,064,830
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
--------- -----
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
San Jacinto USD, COP, Refunding Project, AMBAC Insured, 6.50%, 10/01/23 .............................. $ 3,000,000 $ 3,271,380
San Joaquin Hills Transportation Corridor Agency Toll Road Revenue, Refunding, Series A, MBIA Insured,
5.375%, 1/15/29 ................................................................................. 8,500,000 8,502,975
5.25%, 1/15/30 .................................................................................. 5,000,000 4,873,750
San Jose Financing Authority Revenue, Convention Project, Series C, FSA Insured, 6.40%, 9/01/17 ...... 8,740,000 9,235,296
San Jose RDA, Tax Allocation, Merged Area Redevelopment Project,
5.25%, 8/01/29 .................................................................................. 4,310,000 4,140,014
AMBAC Insured, 4.75%, 8/01/23 ................................................................... 5,000,000 4,502,700
San Jose-Santa Clara Water Financing Authority Sewer Revenue, Series A, FGIC Insured, 5.375%, 11/15/20 1,500,000 1,501,395
San Luis Water Districts Revenue COP, Refunding and Capital Improvement Project, AMBAC Insured,
5.50%, 11/01/16 ................................................................................... 1,260,000 1,281,949
San Marcos Public Facilities Authority Revenue, Tax Allocation, Refunding, Series A, FSA Insured,
5.50%, 8/01/23 .................................................................................... 10,495,000 10,602,259
San Mateo County Joint Powers Financing Authority Lease Revenue, San Mateo County Health Care
Center, Series A, FSA Insured, Pre-Refunded, 5.75%, 7/15/22 ....................................... 2,750,000 2,972,860
San Mateo-Foster City School District,
FGIC Insured, 5.00%, 8/01/23 .................................................................... 1,000,000 946,430
FGIC Insured, 5.00%, 8/01/28 .................................................................... 2,330,000 2,187,497
MBIA Insured, 5.00%, 8/01/27 .................................................................... 2,330,000 2,189,594
San Ramon COP,
Capital Improvement Project, Refunding, AMBAC Insured, 7.05%, 3/01/21 ........................... 12,070,000 12,784,303
Central Park Expansion Project, FSA Insured, Pre-Refunded, 7.20%, 2/01/25 ....................... 5,110,000 5,860,710
Sanger PFA Revenue, Utility System Financing, Series A, AMBAC Insured, 5.70%, 1/01/22 ................ 5,935,000 6,103,673
Sanger USD, Series A, FSA Insured, 5.60%, 8/01/14 .................................................... 1,000,000 1,030,510
Santa Ana COP, Parking Facilities Project, Refunding, Series A, AMBAC Insured, 6.125%, 6/01/16 ....... 3,250,000 3,466,223
Santa Ana Financing Authority Water Revenue, MBIA Insured, 6.125%, 9/01/24 ........................... 1,000,000 1,063,360
Santa Ana HMR, Series A, FGIC Insured, 8.875%, 6/01/17 ............................................... 5,000 5,246
Santa Barbara COP,
Municipal Improvement Program, Refunding, AMBAC Insured, 6.15%, 8/01/17 ......................... 3,575,000 3,778,132
Water Systems Improvement Project, Refunding, AMBAC Insured, 6.70%, 4/01/27 ..................... 6,500,000 6,966,570
Santa Clara County COP,
Board of Education Partners, Administration Building Project, Series A, MBIA Insured,
6.00%, 4/01/25 .................................................................................. 1,555,000 1,642,951
Capital Project I, Refunding, AMBAC Insured, 6.25%, 10/01/16 .................................... 4,500,000 4,731,525
Santa Clara County Financing Authority Lease Revenue, Refunding, Series A, AMBAC Insured,
5.00%, 11/15/17 ................................................................................... 10,000,000 9,650,000
Santa Clara Electric Revenue, Series A, MBIA Insured, Pre-Refunded, 6.50%, 7/01/21 ................... 1,350,000 1,441,449
Santa Clara RDA, Tax Allocation, Bayshore North Project, AMBAC Insured, 7.50%, 6/01/08 ............... 900,000 916,227
Santa Clara USD, FGIC Insured, 5.00%, 8/01/22 ........................................................ 8,920,000 8,418,518
Santa Cruz County COP, Sub-Joint Wastewater Treatment Project, AMBAC Insured, 6.20%, 9/01/19 ......... 475,000 506,578
Santa Fe Springs PFA, Water Revenue, Series A, MBIA Insured, 5.90%,
5/01/21 ......................................................................................... 900,000 945,990
5/01/26 ......................................................................................... 1,190,000 1,246,513
Santa Fe Springs RDA, Consolidated, Tax Allocation, Series A, MBIA Insured, 6.40%, 9/01/22 ........... 4,255,000 4,553,403
Santa Fe Springs RDA Revenue, Series A, AMBAC Insured, Pre-Refunded, 7.25%, 8/01/14 .................. 2,750,000 2,812,618
Santa Margarita/Dana Point Authority Revenue, ID 3, 3A, 4, and 4A, Refunding,
Series B, MBIA Insured,
5.75%, 8/01/20 .................................................................................... 39,500,000 41,101,330
Santa Monica Community College District, Series B, AMBAC Insured, 5.75%, 7/01/20 ..................... 2,495,000 2,590,334
Santa Rita USD, Series B, FSA Insured, 5.20%, 8/01/37 ................................................ 1,940,000 1,871,460
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
--------- -----
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Santa Rosa High School District,
FGIC Insured, 5.90%, 5/01/16 ................................................................ $ 1,000,000 $ 1,062,220
FGIC Insured, 5.50%, 5/01/20 ................................................................ 4,450,000 4,488,982
Refunding, FSA Insured, 5.75%, 5/01/18 ...................................................... 1,050,000 1,096,799
Santa Rosa Wastewater Service Facilities District Revenue, Refunding and Improvement,
AMBAC Insured, 6.00%, 7/02/15 ................................................................. 2,000,000 2,185,960
Santa Rosa Water Revenue, Series A, FGIC Insured, Pre-Refunded, 7.00%, 9/01/16 ................... 2,500,000 2,564,300
Scotts Valley GO, USD, Series B, FGIC Insured,
5.40%, 8/01/22 .............................................................................. 4,005,000 4,015,213
5.50%, 8/01/27 .............................................................................. 6,720,000 6,754,474
Sebastopol GO, CDA, Tax Allocation, Community Development Project, Refunding, MBIA Insured,
5.25%, 12/01/21 ............................................................................... 2,250,000 2,214,945
Selma PFA Revenue, Series A, MBIA Insured,
5.80%, 9/15/11 .............................................................................. 145,000 146,259
5.80%, 9/15/12 .............................................................................. 125,000 125,991
5.875%, 9/15/22 ............................................................................. 2,400,000 2,424,000
Sequoia UHSD, GO,
FGIC Insured, 5.25%, 7/01/27 ................................................................ 4,340,000 4,234,321
FSA Insured, 5.70%, 7/01/24 ................................................................. 4,885,000 5,071,998
Simi Valley PFA Revenue, Refunding, MBIA Insured, 5.75%, 9/01/23 ................................. 5,000,000 5,156,700
Soledad RDA, Tax Allocation, Soledad Redevelopment Project, Refunding, Series A, MBIA Insured,
5.35%, 12/01/28 ............................................................................... 2,000,000 1,979,420
Sonoma CDA, COP, Sonoma Creek Senior Housing Project, Refunding, AMBAC Insured, 6.75%, 2/01/13 ... 1,325,000 1,368,805
Sonoma Valley USD, GO, FSA Insured, 6.00%, 7/15/21 ............................................... 2,400,000 2,529,456
South Coast Air Quality Management District Revenue, Building Corp., Refunding, MBIA Insured,
5.50%, 8/01/14 ................................................................................ 9,700,000 9,931,830
South Gate PFA Revenue, Tax Allocation, South Gate Redevelopment Project No. 1, AMBAC Insured,
5.875%, 9/01/24 ............................................................................... 5,000,000 5,226,200
South Orange County PFA, Special Tax Revenue, senior lien, Refunding, Series A, MBIA Insured,
6.20%, 9/01/13 .............................................................................. 13,500,000 14,498,730
6.00%, 9/01/18 .............................................................................. 3,250,000 3,458,553
South San Francisco COP, 5.00%, 4/01/29 .......................................................... 2,000,000 1,848,740
Southern California Public Power Authority Transmission Project Revenue, Refunding, MBIA Insured,
5.50%, 7/01/20 ................................................................................ 3,820,000 3,855,488
Stockton COP, Wastewater System Project, Refunding,
AMBAC Insured, 5.75%, 9/01/23 ............................................................... 6,500,000 6,720,870
Series A, MBIA Insured, 5.00%, 9/01/23 ...................................................... 6,500,000 6,151,015
Stockton Port District Port Facilities Revenue, Refunding and Improvement, Series B, FSA Insured,
5.90%, 7/01/12 ................................................................................ 4,155,000 4,412,568
Suisun City RDA, Tax Allocation, Suisun City Redevelopment Project, Refunding, MBIA Insured,
5.625%, 10/01/13 .............................................................................. 4,260,000 4,443,265
Sulphur Springs USD, COP, Series 1991, AMBAC Insured, Pre-Refunded, 7.20%, 2/01/21 ............... 800,000 851,968
Sunnyvale RDA, Tax Allocation, Central Core Project, Refunding, AMBAC Insured, 6.50%, 10/01/22 ... 2,785,000 2,906,120
Susanville PFA Revenue, Series A, AMBAC Insured, 6.30%, 9/01/17 .................................. 4,000,000 4,158,000
Tahoe-Truckee Joint USD,
Series A, FGIC Insured, Pre-Refunded, 6.00%, 9/01/17 ........................................ 5,000,000 5,423,550
Series B, FGIC Insured, 5.95%, 9/01/20 ...................................................... 3,620,000 3,826,268
Tehachapi Water and Sewer Revenue, Refunding, MBIA Insured, 6.75%, 11/01/20 ...................... 2,000,000 2,216,060
Thousand Oaks RDA, Tax Allocation, Thousand Oaks Boulevard Redevelopment, Refunding, MBIA Insured,
5.375%, 12/01/25 .............................................................................. 2,390,000 2,374,847
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
--------- -----
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Tracy CFD, Special Tax, Refunding, Senior Series A, FSA Insured, 5.70%, 9/01/20 .................. $ 5,480,000 $ 5,564,666
Travis USD, COP, Refunding and Capital Improvement Projects, AMBAC Insured,
5.40%, 9/01/19 .............................................................................. 1,075,000 1,075,806
5.45%, 9/01/27 .............................................................................. 6,115,000 6,129,737
Tri-City Hospital District Revenue,
MBIA Insured, 6.00%, 2/01/22 ................................................................ 2,350,000 2,421,323
Refunding, Series A, MBIA Insured, 5.625%, 2/15/17 .......................................... 2,750,000 2,810,968
Turlock Auxiliary Organization Revenue COP, California State University, Stanislaus Foundation,
MBIA Insured, 5.875%, 6/01/22 ................................................................. 2,000,000 2,090,760
Turlock Irrigation District Revenue, Refunding, Series A, MBIA Insured, 5.75%, 1/01/18 ........... 7,125,000 7,297,211
Union City CRDA, Tax Allocation Revenue, Community Redevelopment Project, AMBAC Insured,
5.75%, 10/01/22 ............................................................................... 6,200,000 6,435,848
Upland COP,
Police Building Project, Refunding, AMBAC Insured, 6.60%, 8/01/16 ........................... 3,985,000 4,296,547
Water System Improvement Project, FGIC Insured, 6.60%, 8/01/16 .............................. 2,385,000 2,571,459
Vacaville PFA, Tax Allocation Revenue, Vacaville Redevelopment Projects, 6.35%, 9/01/22 .......... 1,355,000 1,408,807
Vallejo Revenue, Water Improvement Project, Refunding, Series A, FSA Insured, 5.875%, 5/01/26 .... 12,500,000 13,026,875
Walnut Valley Water District COP, Badillo Grand Transmission Project, FGIC Insured,
6.125%, 2/01/18 ............................................................................... 2,200,000 2,316,204
Washington Township Hospital District Revenue, Health Care District Revenue,
5.00%, 7/01/18 .............................................................................. 2,000,000 1,849,780
5.125%, 7/01/23 ............................................................................. 1,000,000 921,640
Waugh School District Special Tax GO, Corona/Ely CFD No.1, AMBAC Insured, 5.80%, 9/01/26 ......... 5,640,000 5,854,489
West and Central Basin Financing Authority Revenue, Central Basin Project, Refunding, Series A,
AMBAC Insured, 5.375%, 8/01/17 ................................................................ 4,330,000 4,354,898
West Basin Municipal Water District Revenue COP, 1992 Project, Refunding, Series A, AMBAC Insured,
5.50%,
8/01/17 ..................................................................................... 3,370,000 3,421,932
8/01/22 ..................................................................................... 2,750,000 2,775,273
West Sacramento Financing Authority Revenue,
MBIA Insured, 6.25%, 9/01/16 ................................................................ 4,185,000 4,625,513
Water System Improvement Project, FGIC Insured, 5.50%, 8/01/15 .............................. 4,500,000 4,585,363
Water System Improvement Project, FGIC Insured, 5.50%, 8/01/24 .............................. 1,685,000 1,702,720
West Sacramento RDA, Tax Allocation, West Sacramento Redevelopment Project, MBIA Insured,
Pre-Refunded, 6.25%, 9/01/21 .................................................................. 3,340,000 3,558,230
Western Placer Unified School COP, 1998 Refunding and Capital Project, AMBAC Insured,
5.00%, 6/01/18 ................................................................................ 5,455,000 5,248,201
William S. Hart Joint School Financing Authority Special Tax Revenue, Community Facilities,
Refunding, FSA Insured, 6.60%, 9/01/18 ........................................................ 1,285,000 1,417,360
Windsor Joint Powers Financing Authority Wastewater Revenue, Refunding, Series A, AMBAC Insured,
6.125%, 12/15/12 .............................................................................. 750,000 813,920
Yuba City USD, COP, Refunding, Series A, MBIA Insured, 5.25%, 2/01/22 ............................ 2,000,000 1,966,180
Yucaipa-Sweetwater School Facilities Financing Authority Special Tax Revenue, Sweetwater,
Series A, MBIA Insured, 5.70%, 9/01/19 ........................................................ 5,000,000 5,178,600
--------------
TOTAL BONDS (COST $1,737,600,240) ................................................................ 1,800,946,511
--------------
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
--------- -----
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
ZERO COUPON BONDS .7%
Benicia USD, Capital Appreciation, Refunding, Series A, FGIC Insured, 8/01/22 ........... $ 2,220,000 $ 632,123
Carlsbad USD, GO, FGIC Insured, 5/01/22 ................................................. 3,320,000 958,285
Paramount USD, GO, Capital Appreciation, Series A,FSA Insured, 9/01/20 .................. 3,535,000 1,121,903
San Bernardino County SFMR, Series A, GNMA Secured, ETM, 5/01/22 ........................ 28,405,000 7,790,923
San Joaquin Hills Transportation Corridor Agency Toll Road Revenue, Capital Appreciation,
Refunding, Series A, MBIA Insured, 1/15/31 ........................................... 10,000,000 1,747,800
Southern Kern USD, COP, Convertible Capital Appreciation Building Program, Series B, FSA
Insured, 9/01/26 ..................................................................... 2,250,000 1,539,855
--------------
TOTAL ZERO COUPON BONDS (COST $13,772,176) .............................................. 13,790,889
TOTAL LONG TERM INVESTMENTS (COST $1,751,372,416) ....................................... 1,814,737,400
(a)SHORT TERM INVESTMENTS .4%
California State Economic Development Financing Authority Revenue,
California Independent System Project, Series C, Daily VRDN and Put, 3.30%, 4/01/08 .. 3,400,000 3,400,000
Daily VRDN and Put, 3.05%, 4/01/08 ................................................... 3,300,000 3,300,000
--------------
TOTAL SHORT TERM INVESTMENTS (COST $6,700,000) .......................................... 6,700,000
--------------
TOTAL INVESTMENTS (COST $1,758,072,416) 98.2% ........................................... 1,821,437,400
OTHER ASSETS, LESS LIABILITIES 1.8% ..................................................... 34,111,018
--------------
NET ASSETS 100.0% ....................................................................... $1,855,548,418
==============
</TABLE>
See glossary of terms on page 50.
(a) Variable rate demand notes (VRDNs) are tax-exempt obligations which contain
a floating or variable interest rate adjustment formula and an unconditional
right of demand to receive payment of the principal balance plus accrued
interest at specified dates.
(b) Sufficient 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
FINANCIAL HIGHLIGHTS
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------
1999+ 1998 1997 1996 1995
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year................... $ 11.24 $ 10.93 $ 10.67 $ 10.38 $ 10.20
-------- -------- -------- -------- -------
Income from investment operations:
Net investment income............................... .51 .53 .53 .53 .54
Net realized and unrealized gains (losses).......... (.21) .31 .26 .29 .17
-------- -------- -------- -------- -------
Total from investment operations..................... .30 .84 .79 .82 .71
Less distributions from net investment income........ (.52) (.53) (.53) (.53) (.53)
-------- -------- -------- -------- -------
Net asset value, end of year......................... $ 11.02 $ 11.24 $ 10.93 $ 10.67 $ 10.38
======== ======== ======== ======== =======
Total return*........................................ 2.63% 7.76% 7.58% 7.96% 7.19%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's)...................... $192,547 $155,664 $117,666 $101,199 $88,785
Ratios to average net assets:
Expenses............................................ .60% .52% .47% .45% .33%
Expenses excluding waiver and payments by affiliate. .75% .78% .80% .81% .83%
Net investment income............................... 4.50% 4.76% 4.96% 4.99% 5.34%
Portfolio turnover rate.............................. 5.48% 9.58% 6.29% 10.13% 10.90%
</TABLE>
*Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
+Based on average shares outstanding.
See notes to financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE FUND AMOUNT VALUE
---------- ----------
<S> <C> <C>
LONG TERM INVESTMENTS 106.5%
BONDS 105.4%
ABAG 1915 Act, Windemere Ranch AD,
5.15%, 9/02/02 ......................................................................... $ 595,000 $ 593,727
5.70%, 9/02/07 ......................................................................... 1,225,000 1,213,032
ABAG Finance Authority for Nonprofit Corps. COP, Mortgage Insurance,
5.50%, 6/01/03 ......................................................................... 295,000 305,865
5.75%, 8/01/03 ......................................................................... 705,000 735,548
North County Health Project, 5.50%, 3/01/06 ............................................ 1,025,000 1,067,158
Rhoda Haas Goldman Plaza, Insured, 5.125%, 5/15/15 ..................................... 3,000,000 2,890,980
ABAG Finance Corp. COP, ABAG XXVI,
Refunding, Series A, 5.90%, 6/01/02 .................................................... 100,000 103,150
Series B, 6.40%, 10/01/03 .............................................................. 100,000 106,808
ABAG Revenue, Refunding, Series A-E,
5.00%, 9/15/06 ......................................................................... 610,000 601,991
5.05%, 9/15/07 ......................................................................... 620,000 608,952
5.40%, 9/15/14 ......................................................................... 2,455,000 2,397,627
ABAG Water and Wastewater Revenue, Pooled Financing Program, Series A, FSA Insured,
5.00%, 10/01/10 .......................................................................... 3,035,000 3,029,598
Alameda County COP, Series 1994,
5.70%, 4/01/02 ......................................................................... 395,000 410,757
5.80%, 4/01/03 ......................................................................... 420,000 442,092
5.90%, 4/01/04 ......................................................................... 440,000 468,486
Antioch PFA, Reassessment Revenue, sub. lien, Series B,
5.00%, 9/02/03 ......................................................................... 1,915,000 1,896,501
5.20%, 9/02/05 ......................................................................... 2,115,000 2,076,676
5.40%, 9/02/07 ......................................................................... 1,175,000 1,143,957
Auburn COP, Civic Center Project, Refunding,
5.10%, 9/01/99 ......................................................................... 65,000 65,162
5.30%, 9/01/00 ......................................................................... 65,000 65,924
5.45%, 9/01/01 ......................................................................... 70,000 71,692
5.60%, 9/01/02 ......................................................................... 75,000 77,528
5.70%, 9/01/03 ......................................................................... 80,000 83,410
5.75%, 9/01/04 ......................................................................... 80,000 83,538
Bakersfield Central District Revenue RDA, Tax Allocation, Downtown Bakersfield Redevelopment,
ETM, Refunding,
6.00%, 4/01/01 ......................................................................... 295,000 304,930
6.10%, 4/01/02 ......................................................................... 310,000 325,295
6.20%, 4/01/03 ......................................................................... 330,000 351,401
Bakersfield Hospital Revenue, Bakersfield Memorial Hospital, Series A, 5.70%, 1/01/00 ....... 100,000 101,074
Brentwood Infrastructure Financing Authority Infrastructure Revenue, CIFP 94-1,
5.30%, 9/02/08 ......................................................................... 1,000,000 966,160
5.35%, 9/02/09 ......................................................................... 770,000 741,341
5.40%, 9/02/10 ......................................................................... 1,000,000 960,260
5.45%, 9/02/11 ......................................................................... 1,000,000 957,920
5.50%, 9/02/12 ......................................................................... 1,000,000 955,740
California Educational Facilities Authority Revenue,
Pooled College and University Financing, Refunding, Series B, 5.80%, 6/01/02 ........... 1,000,000 1,035,230
Pooled College and University Financing, Refunding, Series B, 5.90%, 6/01/03 ........... 1,105,000 1,155,333
Pooled College and University Projects, Series B, 6.125%, 4/01/13 ...................... 1,000,000 1,047,300
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE FUND AMOUNT VALUE
---------- ----------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
California Health Facilities Financing Authority Revenue, San Diego Hospital Association,
Series B, MBIA Insured, 5.60%, 8/01/03 ..................................................... $ 100,000 $ 105,146
California HFA, SFM Purchase, Class III, Series A-1, MBIA Insured, 5.70%, 8/01/11 ............. 2,335,000 2,383,218
California State Public Works Board Lease Revenue,
California Community Colleges, Refunding, Series A, 4.20%, 12/01/08 ...................... 2,375,000 2,257,723
Department of Corrections, Coalinga State Prison, Series B, MBIA Insured,
5.50%, 12/01/08 ......................................................................... 1,000,000 1,051,640
Department of Forestry and Fire Protection, Series A, 4.875%, 10/01/18 ................... 1,325,000 1,246,825
Regents of the University of California, Refunding, Series C, 5.00%, 12/01/14 ............ 1,140,000 1,120,723
Various Community College Projects, Refunding, Series C, 5.50%, 9/01/09 .................. 1,555,000 1,616,065
California Statewide CDA, COP, California Lutheran Homes, 5.375%, 11/15/06 .................... 1,000,000 1,030,630
California Statewide CDA Revenue, COP,
Health Facilities, Barton Memorial Hospital, Refunding, Series B, 5.70%, 12/01/00 ........ 200,000 204,310
Health Facilities, Barton Memorial Hospital, Refunding, Series B, 6.40%, 12/01/05 ........ 450,000 475,763
St. Joseph Health System Group, 6.00%, 7/01/06 ........................................... 865,000 944,355
California Statewide Communities Development Corp. COP, Pacific Homes, Series A,
5.50%, 4/01/04 .......................................................................... 585,000 609,155
Campbell COP, Civic Center Project, Refunding, 5.60%, 10/01/03 ................................ 350,000 366,597
Carson RDA, Project Area No. 1, Refunding, 6.10%, 10/01/02 .................................... 200,000 209,890
Central Valley Financing Authority Cogeneration Project Revenue, Carson Ice General Project,
Refunding, MBIA Insured, 5.00%, 7/01/17 .................................................... 2,000,000 1,930,960
Chaffey Community College District COP, 5.10%, 9/01/13 ........................................ 1,860,000 1,839,559
Clovis COP, Water System Improvement Project, AMBAC Insured, 5.90%, 3/01/03 ................... 100,000 106,008
Coastside County Water District 1915 Act GO, Crystal Springs Project, Refunding,
5.10%, 9/02/03 ........................................................................... 540,000 546,815
5.20%, 9/02/04 ........................................................................... 1,115,000 1,121,924
5.40%, 9/02/06 ........................................................................... 650,000 651,008
Colma 1915 Act, Local ID No. 1, Refunding,
5.00%, 9/02/01 ........................................................................... 465,000 469,032
5.10%, 9/02/02 ........................................................................... 485,000 490,316
5.20%, 9/02/03 ........................................................................... 515,000 522,256
5.30%, 9/02/04 ........................................................................... 545,000 552,358
5.40%, 9/02/05 ........................................................................... 570,000 575,324
Colton GO, Joint USD, CFD, Special Tax, Southridge Village, Phase III, Refunding, FSA Insured,
5.65%, 9/01/09 ........................................................................... 120,000 120,220
5.75%, 9/01/10 ........................................................................... 130,000 130,244
Commerce Joint Powers Financing Authority Water Facilities Lease Revenue, Refunding, Series A,
5.50%, 10/01/02 .......................................................................... 340,000 350,727
5.625%, 10/01/03 ......................................................................... 360,000 374,591
5.75%, 10/01/04 .......................................................................... 470,000 493,298
Compton COP, Civic Center and Capital Improvement, Refunding, Series A,
5.00%, 9/01/08 ........................................................................... 4,340,000 4,289,569
5.50%, 9/01/15 ........................................................................... 1,180,000 1,173,663
Compton Sewer Revenue,
5.60%, 7/01/99 ........................................................................... 125,000 125,000
5.70%, 7/01/00 ........................................................................... 130,000 132,874
5.80%, 7/01/01 ........................................................................... 140,000 144,764
5.90%, 7/01/02 ........................................................................... 150,000 157,215
6.00%, 7/01/03 ........................................................................... 155,000 164,557
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE FUND AMOUNT VALUE
---------- ----------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Concord RDA, Tax Allocation, Central Concord Redevelopment Project, Refunding, Sub Series A,
5.50%, 7/01/02 ............................................................................. $ 625,000 $ 642,456
5.625%, 7/01/03 ............................................................................ 655,000 678,953
Contra Costa County MFHR, Byron Park Project, Series C, 6.00%, 7/20/03 .......................... 470,000 488,410
Danville Financing Authority Revenue, Sycamore Valley, Reassessment District No. 93-2,
5.40%, 9/02/01 ............................................................................. 285,000 289,141
5.60%, 9/02/02 ............................................................................. 450,000 459,603
5.70%, 9/02/03 ............................................................................. 220,000 225,863
5.80%, 9/02/04 ............................................................................. 885,000 912,170
Dinuba RDA, Tax Allocation, subordinated notes, Merged City Redevelopment Project, sub. lien,
5.20%, 4/01/03 ............................................................................... 2,500,000 2,498,125
Duarte RDA, Tax Allocation, Merged Redevelopment Project Area, Refunding, 5.125%, 10/01/16 ...... 4,930,000 4,720,081
Eden Township Hospital District Health Facilities Revenue COP, Eden Hospital Health Services
Corp., Refunding, 5.75%, 7/01/12 ............................................................. 1,195,000 1,234,005
Foster City PFA Revenue, Community Development Project, Series A, 5.60%, 9/01/03 ................ 1,150,000 1,196,920
Fresno Joint Powers Financing Authority Local Agency Revenue, Refunding, Series A,
6.20%, 9/02/03 ............................................................................... 1,000,000 1,049,030
Galt Capital Improvements Authority Lease Revenue,Culture and Recreation Improvement Project,
5.00%, 4/01/12 ............................................................................... 2,390,000 2,237,685
Galt Middle School Joint Powers Authority Special Tax, CFD No. 1, Refunding, 5.40%, 9/01/12 ..... 1,955,000 1,855,979
Garden Grove GO, CDA, Tax Allocation, Garden Grove Community Project, Refunding,
5.40%, 10/01/04 .............................................................................. 1,425,000 1,469,375
Glendale Parking Facilities Joint Powers Authority Revenue, Series A, 5.30%, 3/01/03 ............ 125,000 127,230
Goleta Water District Revenue COP, Goleta Reclamation Project, Refunding, FGIC Insured,
5.50%, 12/01/08 .............................................................................. 750,000 788,730
Hesperia PFA Revenue, Series A, 5.80%, 10/01/03 ................................................. 3,935,000 4,120,732
Hi Desert Memorial Health Care District Revenue, Refunding,
5.10%, 10/01/06 ............................................................................ 615,000 606,187
5.125%, 10/01/07 ........................................................................... 650,000 638,612
Hollister RDA, Tax Allocation, Community Development Project, Series 1994,
5.35%, 10/01/03 ............................................................................ 525,000 541,590
5.45%, 10/01/04 ............................................................................ 550,000 567,490
5.55%, 10/01/05 ............................................................................ 585,000 603,486
Imperial COP,
Wastewater System Refining Program, Refunding, Series B, 5.40%, 10/15/06 ................... 865,000 893,805
Water System Refining Program, Refunding, Series A, 5.40%, 10/15/06 ........................ 1,250,000 1,291,625
Imperial County Local Transportation Authority Sales Tax Revenue, Series 1993, 5.50%,
5/01/04 .................................................................................... 490,000 501,461
5/01/05 .................................................................................... 515,000 525,429
Inland Empire Solid Waste Financing Authority Revenue, Landfill Improvement Financing Project,
Series B, FSA Insured, 6.25%, 8/01/11 ........................................................ 1,000,000 1,085,240
La Palma Community Development Commission Tax Allocation, La Palma Community Development
Project No. 1, Refunding,
5.20%, 6/01/00 ............................................................................. 125,000 126,679
5.40%, 6/01/01 ............................................................................. 130,000 132,556
5.50%, 6/01/02 ............................................................................. 135,000 138,667
5.60%, 6/01/03 ............................................................................. 145,000 149,544
5.70%, 6/01/04 ............................................................................. 150,000 155,696
5.80%, 6/01/05 ............................................................................. 160,000 166,581
La Quinta RDA, Tax Allocation, Redevelopment Project Areas No. 1 and 2, MBIA Insured,
5.40%, 9/01/07 ............................................................................... 560,000 589,355
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE FUND AMOUNT VALUE
---------- ----------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Lake Elsinore PFA, Tax Allocation Revenue, Lake Elsinore Redevelopment Projects,
Series A, FSA Insured, 5.40%, 9/01/08 .................................................. $1,500,000 $1,542,525
Lake Elsinore Public Financing Authority Tax Allocation Revenue,
Series A, 5.00%, 9/01/09 ............................................................... 2,680,000 2,554,549
Lake Elsinore School Financing Authority Revenue, Refunding, 6.00%, 9/01/11 ............... 1,000,000 1,039,140
Lancaster COP, School District Project, Refunding, FSA Insured, 5.125%, 4/01/14 ........... 2,000,000 1,992,680
Lancaster RDA, Tax Allocation,
Central Business District Redevelopment, Refunding, 5.125%, 8/01/99 .................. 35,000 35,041
Central Business District Redevelopment, Refunding, 5.25%, 8/01/00 ................... 35,000 35,390
Central Business District Redevelopment, Refunding, 5.375%, 8/01/01 .................. 40,000 40,714
Central Business District Redevelopment, Refunding, 5.50%, 8/01/02 ................... 40,000 40,972
Central Business District Redevelopment, Refunding, 5.60%, 8/01/03 ................... 45,000 46,298
Central Business District Redevelopment, Refunding, 5.70%, 8/01/04 ................... 45,000 46,454
Central Business District Redevelopment, Refunding, 5.70%, 8/01/05 ................... 50,000 51,413
Fox Field Redevelopment Project Area, Refunding, 5.125%, 8/01/99 ..................... 55,000 55,064
Fox Field Redevelopment Project Area, Refunding, 5.25%, 8/01/00 ...................... 55,000 55,613
Fox Field Redevelopment Project Area, Refunding, 5.375%, 8/01/01 ..................... 60,000 61,072
Fox Field Redevelopment Project Area, Refunding, 5.50%, 8/01/02 ...................... 65,000 66,580
Fox Field Redevelopment Project Area, Refunding, 5.60%, 8/01/03 ...................... 65,000 66,875
Fox Field Redevelopment Project Area, Refunding, 5.70%, 8/01/04 ...................... 70,000 72,262
Fox Field Redevelopment Project Area, Refunding, 5.70%, 8/01/05 ...................... 75,000 77,120
Lemon Grove CDA, Tax Allocation, 1998 Refunding,
5.00%, 8/01/06 ....................................................................... 885,000 889,151
5.10%, 8/01/07 ....................................................................... 205,000 206,070
5.20%, 8/01/08 ....................................................................... 215,000 215,608
Lemon Grove MFHR, Hillside Terrace Apartments, Refunding, 5.375%, 1/01/19 ................. 985,000 1,003,784
(b)Loma Linda Hospital Revenue, Loma Linda University Medical Center, Refunding, Series A,
AMBAC Insured,
4.85%, 12/01/10 ...................................................................... 8,175,000 7,889,856
4.95%, 12/01/11 ...................................................................... 8,530,000 8,193,236
Los Angeles County MTA, Sales Tax Revenue, Proposition C, sub. lien, Refunding, 2nd Senior
Series A, AMBAC Insured, 5.00%, 7/01/12 ................................................ 5,000,000 4,971,650
Los Angeles County Transport Commission COP, Series B,
5.90%, 7/01/00 ....................................................................... 100,000 102,433
6.00%, 7/01/01 ....................................................................... 200,000 207,912
Los Angeles Wastewater System Revenue, Refunding,
Series A, FGIC Insured, 5.00%, 6/01/13 ............................................... 2,140,000 2,116,674
Series D, FGIC Insured, 5.375%, 11/01/06 ............................................. 2,000,000 2,098,560
Lynwood PFA Revenue, Water System Improvement Project, 6.15%, 6/01/08 ..................... 565,000 599,013
Madera COP, Madera Community Hospital, Refunding, 5.10%, 3/01/03 .......................... 515,000 526,840
Mammoth Lakes COP, Refunding,
5.70%, 6/01/10 ....................................................................... 850,000 863,983
5.75%, 6/01/11 ....................................................................... 250,000 253,728
Merced Irrigation District COP, Water Facilities Project, 6.125%, 11/01/03 ................ 540,000 572,751
Mid-Peninsula Regional Open Space District COP, Special District Association Finance Corp.,
Series 1993,
5.10%, 9/01/02 ....................................................................... 510,000 523,546
5.20%, 9/01/03 ....................................................................... 530,000 547,729
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE FUND AMOUNT VALUE
---------- ----------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Modesto Irrigation District Financing Authority Revenue, Domestic Water Project, Series C,
AMBAC Insured, Pre-Refunded, 5.50%, 9/01/08 ....................................................... $ 700,000 $ 751,779
Mojave GO, Water Agency, ID M, Morongo Basin, ETM, 6.20%, 9/01/01 .................................... 100,000 104,699
Morgan Hill RDA, Tax Allocation, Refunding, 5.70%, 3/01/01 ........................................... 100,000 100,873
Mt. Diablo Hospital District Revenue, ETM, Series A, AMBAC Insured, 5.10%, 12/01/03 .................. 100,000 103,579
Murrieta COP, Road Improvement Project, 6.00%,
4/01/07 ......................................................................................... 235,000 247,286
4/01/08 ......................................................................................... 245,000 255,800
New Haven USD, COP, Refunding, 5.30%, 7/01/01 ........................................................ 500,000 511,715
Newark USD, COP, 5.75%, 9/01/02 ...................................................................... 300,000 306,420
North City West School Facilities Financing Authority Special Tax, Refunding, Series B,
FSA Insured, 5.625%, 9/01/08 ...................................................................... 500,000 533,665
Oakland USD, Alameda County COP, Refunding, 5.00%, 9/15/99 ........................................... 1,745,000 1,749,869
Ontario Redevelopment Financing Authority Local Agency Revenue, Community Facility, AD No.1,
senior lien, Series A, FSA Insured, 5.60%, 9/02/03 ................................................ 950,000 980,191
Orange County CFD, No. 86-2 Special Tax, Rancho Santa Margarita, Refunding, Series A, 5.375%, 8/15/12 1,500,000 1,482,555
Orange County Development Agency Tax Allocation, Santa Ana Heights Area Project, Refunding,
5.90%, 9/01/04 .................................................................................... 800,000 838,952
Orange County Local Transportation Authority Sales Tax Revenue, First Senior Measure M, 6.00%, 2/15/06 500,000 541,840
Orange County MFHR, Villa Santiago Rehabilitation Project, FNMA Insured, 5.60%, 10/01/27 ............. 500,000 512,265
Orange County Recovery COP, Series A, MBIA Insured, 6.00%, 7/01/08 ................................... 1,500,000 1,634,700
Oroville Hospital Revenue, Oroville Hospital, Series A, CHFCLP Insured, 5.125%, 12/01/12 ............. 1,435,000 1,409,701
Palm Desert Financing Authority Lease Revenue, Blythe County Administrative Project, 6.375%, 8/01/11 . 855,000 892,928
Paramount RDA, Tax Allocation, Redevelopment Project Area No. 1, Refunding, 6.05%, 8/01/05 ........... 1,515,000 1,640,806
Paso Robles Union School District COP, 5.75%, 8/01/03 ................................................ 1,635,000 1,718,843
Pleasant Hill RDA, RMR, Pre-Refunded, 5.40%, 2/01/05 ................................................. 935,000 962,096
Pomona RDA, Tax Allocation, Mountain Meadows Redevelopment Project, Refunding, Series X,
5.35%, 12/01/16 ................................................................................... 1,000,000 954,200
Poway RDA, Paguay Redevelopment Project, Tax Allocation, sub. notes, 4.75%, 12/15/03 ................. 1,950,000 1,919,327
Rialto RDA, Tax Allocation, Industrial Redevelopment, Sub Areas A and B, ETM, Series A,
5.40%, 9/01/02 .................................................................................. 270,000 279,701
5.50%, 9/01/03 .................................................................................. 280,000 292,636
Richmond Joint Powers Financing Authority Revenue, Multiple Redevelopment Projects, Refunding,
Series B, 5.35%, 5/15/13 .......................................................................... 2,000,000 2,002,660
Riverside County Asset Leasing Corp. Leasehold Revenue, Riverside County Hospital Project,
Series A,
5.90%, 6/01/02 .................................................................................. 200,000 207,972
6.00%, 6/01/04 .................................................................................. 200,000 211,976
Riverside County Housing Authority MFHR, Brandon Place Apartments, Series B, FNMA Insured,
5.625%, 7/01/29 ................................................................................... 995,000 1,022,920
Sacramento MUD, Electric Revenue, Series E, 5.25%, 5/15/03 ........................................... 1,000,000 1,033,030
San Bernardino County COP, Medical Center Financing Project, Refunding, 6.00%, 8/01/09 ............... 2,000,000 2,137,040
San Bernardino County Mortgage Revenue, Don Miguel Apartments Project, Refunding, MBIA Insured,
6.00%, 9/01/03 .................................................................................... 105,000 108,846
San Clemente 1915 Act, AD No. 8, Refunding,
5.00%, 9/02/02 .................................................................................. 415,000 421,018
5.10%, 9/02/03 .................................................................................. 435,000 443,117
5.20%, 9/02/04 .................................................................................. 460,000 469,338
San Diego Mortgage Revenue, Mariners Cove, Refunding, Series B-1, 5.125%, 9/01/03 .................... 275,000 278,209
San Diego Port Facilities Revenue, National Steel and Shipbuilding Co., Refunding, 6.60%, 12/01/02 ... 100,000 105,263
San Francisco City and County Public Utilities Commission Water Revenue, Refunding, Series A,
5.00%, 11/01/17 ................................................................................... 5,000,000 4,796,850
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE FUND AMOUNT VALUE
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
<S> <C> <C>
San Francisco City and County RDA,
Hotel Tax Revenue, FSA Insured, 5.80%, 7/01/01 $ 300,000 $ 311,022
Hotel Tax Revenue, FSA Insured, 5.90%, 7/01/02 245,000 257,696
Mortgage Revenue, Refunding, Series A, MBIA Insured, 6.125%, 7/01/02 15,000 15,032
San Gorgonio Memorial Health Care District Health Facility Revenue,
Pre-Refunded, 6.375%, 6/01/08 750,000 816,368
San Joaquin County COP, General Hospital Project, 5.90%, 9/01/03 400,000 424,860
San Jose Financing Authority Revenue, Convention Center Project, Refunding,
Series C, 5.75%, 9/01/03 300,000 314,880
San Juan USD, COP, Gold River Elementary School Project, 5.65%, 4/01/03 600,000 601,890
San Ramon COP, Capital Improvements Project,
5.20%, 3/01/01 85,000 86,666
5.30%, 3/01/02 90,000 92,592
5.40%, 3/01/03 95,000 98,622
5.50%, 3/01/04 100,000 104,277
5.60%, 3/01/05 105,000 110,381
Santa Barbara RDA, Tax Allocation, Central City Redevelopment Project,
6.00%, 3/01/03 985,000 1,028,793
Santa Clara 1915 Act, Reassessment District 187, Refunding, Series 1,
5.25%, 9/02/11 1,720,000 1,682,108
Santa Monica Parking Authority Lease Revenue, Refunding, 6.00%, 7/01/03 100,000 106,505
Sebastopol COP,
5.70%, 6/01/05 240,000 249,602
Refunding, Series 1994, 5.50%, 6/01/03 200,000 206,282
Refunding, Series 1994, 5.60%, 6/01/04 215,000 223,185
Selma PFA Revenue, Series A, MBIA Insured,
5.25%, 9/15/02 100,000 100,845
5.50%, 9/15/04 115,000 115,868
5.60%, 9/15/05 120,000 121,076
5.65%, 9/15/06 125,000 126,070
5.70%, 9/15/07 135,000 136,200
5.70%, 9/15/08 140,000 141,112
5.75%, 9/15/09 150,000 151,191
5.75%, 9/15/10 155,000 156,273
Shafter Joint Powers Financing Authority Lease Revenue, Community Correctional
Facility Project, Series A, 5.50%, 1/01/06 1,500,000 1,552,005
Shasta Joint Powers Financing Authority Lease Revenue, Courthouse Improvement
Project, ETM, Series A, 5.80%, 6/01/00 100,000 102,157
Solana Beach COP, City Hall Project, 5.80%, 10/01/02 50,000 52,564
South Gate PFA Water Revenue, Refunding, Series A, FGIC Insured,
5.35%, 10/01/07 995,000 1,047,695
5.45%, 10/01/08 1,040,000 1,097,023
South San Francisco Capital Improvements Financing Authority Revenue,
South San Francisco Conference Center, Refunding,
5.70%, 9/01/02 195,000 201,852
5.80%, 9/01/03 205,000 214,110
5.90%, 9/01/04 215,000 225,468
Southern California Rapid Transit District Revenue, Special Benefit AD A2,
5.80%, 9/01/01 100,000 103,026
Stockton Health Facilities Revenue, Dameron Hospital Association, Refunding,
Series A, 5.35%, 12/01/09 385,000 387,730
Stockton Port District Facilities Revenue, Refunding and Improvement,
Series A, FSA Insured, 5.75%, 7/01/11 1,295,000 1,375,847
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE FUND AMOUNT VALUE
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
<S> <C> <C>
Sunline Transport Agency COP, Transport Finance Corp., Series B,
5.50%, 7/01/03 $ 450,000 $ 469,418
5.75%, 7/01/06 445,000 470,530
Susanville PFA Revenue, Series A, AMBAC Insured, 5.90%, 9/01/02 100,000 104,036
Tahoe City PUD, COP, Capital Facilities Project, Series B,
6.05%, 6/01/01 290,000 298,575
6.15%, 6/01/02 835,000 869,978
6.30%, 6/01/04 545,000 578,599
Tehachapi Cummings County Water District Revenue COP, Capital Improvement Project,
MBIA Insured,
5.50%, 8/01/04 280,000 296,383
5.60%, 8/01/05 300,000 318,411
5.75%, 8/01/06 320,000 341,011
Temecula RDAR, Tax Allocation, Temecula Redevelopment Project No. 1, Series A,
5.40%, 2/01/04 600,000 614,226
Temecula Valley USD, Series E, FSA Insured, 5.65%, 9/01/07 370,000 396,803
Torrance USD, COP, Series A, 5.85%, 10/01/99 100,000 100,593
Travis USD, COP, Foxboro Elementary School Construction Project, ETM,
6.30%, 9/01/02 200,000 212,450
Trinity County PUD, COP, Electric District Facilities, Refunding, Series 1993,
5.80%, 4/01/01 340,000 346,990
5.90%, 4/01/02 360,000 370,195
6.00%, 4/01/03 380,000 394,079
Ventura USD, COP, Series A,
5.90%, 4/01/04 305,000 318,356
6.00%, 4/01/05 320,000 334,047
6.10%, 4/01/06 340,000 354,843
6.20%, 4/01/07 365,000 381,227
6.30%, 4/01/08 385,000 401,500
6.40%, 4/01/09 410,000 426,846
Virgin Islands PFA Revenue, senior lien, Fund Loan Notes, Refunding, Series A,
5.30%, 10/01/11 1,000,000 981,399
5.40%, 10/01/12 4,150,000 4,137,964
Virgin Islands Water and Power Authority Water System Revenue, Refunding,
5.00%, 7/01/03 3,540,000 3,523,573
4.875%, 7/01/06 2,000,000 1,922,679
5.00%, 7/01/09 2,000,000 1,887,219
Watsonville RDA, GO, Tax Allocation, Watsonville Redevelopment Project, Series 1993,
6.00%, 8/01/02 510,000 510,473
6.10%, 8/01/03 540,000 540,490
-----------
TOTAL BONDS (COST $201,279,952) 202,903,673
-----------
ZERO COUPON BONDS 1.1%
San Joaquin Hills Transportation Corridor Agency Toll Road Revenue, senior lien,
Refunding, Series A, 1/15/16 3,000,000 2,019,930
-----------
TOTAL ZERO COUPON BONDS (COST $1,980,318) 2,019,930
===========
TOTAL LONG TERM INVESTMENTS (COST $203,260,270) 204,923,603
-----------
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE FUND AMOUNT VALUE
(a)SHORT TERM INVESTMENTS .7%
<S> <C> <C>
California PCFA, PCR, Shell Oil Co. Project, Refunding, Series C,
Daily VRDN and Put, 2.85%, 11/01/00 $ 1,400,000 $ 1,400,000
-------------
TOTAL SHORT TERM INVESTMENTS (COST $1,400,000) 1,400,000
-------------
TOTAL INVESTMENTS (COST $204,660,270) 107.2% 206,323,603
OTHER ASSETS, LESS LIABILITIES (7.2)% (13,776,705)
-------------
NET ASSETS 100.0% $ 192,546,898
=============
</TABLE>
See glossary of terms on page 50.
(a) Variable rate demand notes (VRDNs) are tax-exempt obligations which contain
a floating or variable interest rate adjustment formula and an unconditional
right of demand to receive payment of the principal balance plus accrued
interest at specified dates.
(b) Sufficient 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
FINANCIAL HIGHLIGHTS
FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND
<TABLE>
<CAPTION>
Year Ended June 30,
-----------------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- ------- ------- -------
<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 .02 .03 .03 .03 .03
Less distributions from net investment income (.02) (.03) (.03) (.03) (.03)
-------- -------- ------- ------- -------
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- ------- ------- -------
Total return* 2.39% 2.85% 2.85% 2.85% 2.94%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $706,877 $656,725 $639,791 $597,819 $642,157
Ratios to average net assets:
Expenses .59% .60% .60% .63% .64%
Net investment income 2.36% 2.82% 2.83% 2.83% 2.88%
</TABLE>
*Total return is not annualized for periods less than one year.
See notes to financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND AMOUNT VALUE
INVESTMENTS 108.1%
<S> <C> <C>
(a)Alameda-Contra Costa Schools Financing Authority, COP,
Capital Improvement Financing Projects, Weekly VRDN and Put, 3.40%,
Series C, 7/01/25 $1,500,000 $1,500,000
Series E, 6/01/22 2,000,000 2,000,000
Alameda County TRAN, 4.50%, 7/07/99 3,000,000 3,000,428
(a)Anaheim COP, 1993 Partnership Project, Refunding, AMBAC Insured,
Weekly VRDN and Put, 3.25%, 8/01/19 4,600,000 4,600,000
(a)Anaheim COP, Police Facilities Refinancing Project,
Refunding, AMBAC Insured, Weekly VRDN and Put, 3.25%, 8/01/08 5,450,000 5,450,000
(a)Big Bear Lake Industrial Revenue, Southwest Gas Corp. Project, Series A,
Weekly VRDN and Put, 3.35%, 12/01/28 2,700,000 2,700,000
(a)Burbank RDA, MFR, Issue A, Weekly VRDN and Put, 3.40%, 11/01/10 1,400,000 1,400,000
(a)Butte County Housing Authority MFR, Pine Tree Apartments Project,
Weekly VRDN and Put, 3.30%, 12/01/10 2,452,000 2,452,000
(b)California Community Financing Authority, TRAN, Series A, 4.00%, 6/30/00 5,000,000 5,044,000
California Health Facilities Financing Authority Revenue,
(a)Children's Hospital, MBIA Insured, Weekly VRDN and Put, 3.35%, 11/01/21 2,500,000 2,500,000
(a)Refunding, Catholic Healthcare, Series B, MBIA Insured, Weekly VRDN and Put,
3.00%, 7/01/12 4,650,000 4,650,000
(a)Refunding, Catholic West Facility, Series B, MBIA Insured, Weekly VRDN and Put,
3.00%, 7/01/05 7,400,000 7,400,000
(a)Refunding, Catholic West Facility, Series D, MBIA Insured, Weekly VRDN and Put,
3.00%, 7/01/18 2,100,000 2,100,000
Refunding, Insured, Presbyterian Hospital, 5.25%, 5/01/00 2,340,000 2,384,809
(a)Refunding, MF, Series C, FNMA Secured, Weekly VRDN and Put, 3.00%, 7/15/13 4,650,000 4,650,000
(a)Santa Barbara Cottage Hospital, Series B, Weekly VRDN and Put, 3.45%, 9/01/05 1,620,000 1,620,000
(a)Scripps Health, Series A, MBIA Insured, Weekly VRDN and Put, 3.00%, 10/01/22 5,000,000 5,000,000
(a)St. Francis Medical Center, Series F, MBIA Insured, Weekly VRDN and Put, 3.25%, 7/01/10 1,300,000 1,300,000
(a)Sutter Health, Series A, Daily VRDN and Put, 2.90%, 3/01/20 3,500,000 3,500,000
(a)Sutter Health, Series C, Daily VRDN and Put, 3.75%, 7/01/22 10,000,000 10,000,000
(a)California PCFA, Residential Recovery Revenue, OMS Equity Stanislaus
Project, Daily VRDN and Put, 3.75%, 12/01/17 1,600,000 1,600,000
(a)California PCFA Revenue
Occidental Geo/Santa Fe Geothermal,
Monthly VRDN and Weekly Put, 3.15%, 9/01/13 4,700,000 4,700,000
Refunding, Pacific Gas & Electric, Series B, Daily VRDN and Put, 3.05%, 11/01/26 10,000,000 10,000,000
Reynolds Metals Co. Project, Weekly VRDN and Put, 3.40%, 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, 3.35%, 12/01/16 1,200,000 1,200,000
(a)California Public Capital Improvements Financing Authority Revenue,
Pooled Project, Series C, Quarterly VRDN and Put, 3.15%, 6/01/28 19,500,000 19,500,000
California School Cash Reserve Program, Authority, Pooled Project, Series A,
4.50%, 7/02/99 29,000,000 29,000,642
(b)4.00%, 7/03/00 30,000,000 30,262,500
(a)California State Economic Development Financing Authority Revenue,
Independent System Project, Series C, Daily VRDN and Put, 3.30%, 4/01/08 4,000,000 4,000,000
Refunding, KQED Inc. Project, Weekly VRDN and Put, 3.20%, 4/01/20 2,050,000 2,050,000
(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
Capistrano USD, Community Facilities District, Special Tax Aliso Vallejo, 7.60%, 9/01/14 4,000,000 4,111,014
(a)Chico MFMR, Webb Homes Project, Monthly VRDN and Weekly Put, 3.10%, 1/01/10 2,170,000 2,170,000
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND AMOUNT VALUE
INVESTMENTS (CONT.)
<S> <C> <C>
(a)Concord MFMR, Weekly VRDN and Put,
Arcadian Facility, Series A, 3.00%, 7/15/18 $8,000,000 $8,000,000
Bel Air Apartments, Issue A, 3.65%, 12/01/16 500,000 500,000
(a)Duarte RDA, COP, Johnson Duarte Project, Series B, Weekly VRDN and Put, 3.65%,
12/01/14 1,000,000 1,000,000
(a)Dublin Housing Authority, MFHR, Park Sierra Housing, Series A, Weekly VRDN and
Put, 3.40%, 6/01/28 1,100,000 1,100,000
East Bay MUD, TECP, 2.80%, 7/09/99 13,000,000 13,000,000
(a)Foothill/Eastern Transportation Corridor Agency, California Toll Road Revenue,
Weekly VRDN and Put, 1/02/35,
Series B, 3.35% 15,400,000 15,400,000
Series C, 3.30% 6,100,000 6,100,000
Series E, 3.35% 7,500,000 7,500,000
(a)Fresno MFHR, Refunding, Heron Pointe Apartments, Series A, Weekly VRDN and Put,
3.10%, 6/01/07 1,000,000 1,000,000
(a)Irvine 1915 Act, Daily VRDN and Put, 2.90%,
AD 87-8, 9/02/24 18,650,000 18,650,000
AD 89-10, 9/02/15 3,500,000 3,500,000
AD 94-13, Oak Creek Project, 9/02/22 22,800,000 22,800,000
AD 94-15, 9/02/20 3,600,000 3,600,000
AD 95-12, 9/02/21 4,545,000 4,545,000
AD 97-16, Northwest Project, 9/02/22 17,800,000 17,800,000
AD 97-17, 9/02/23 21,700,000 21,700,000
(a)Irvine Public Facilities Infrastructure Authority Lease Revenue,
Capital Improvement Project, Weekly VRDN and Put, 3.40%, 11/01/10 5,000,000 5,000,000
(a)Irvine Ranch Water District, COP, Daily VRDN and Put,
3.15%, 5/01/09 1,900,000 1,900,000
2.90%, 1/01/21 3,400,000 3,400,000
2.90%, 4/01/33 12,700,000 12,700,000
(a)Kern County COP, Kern Public Facilities Project, Series A, Weekly VRDN and Put, 3.00%, 8/01/06 1,800,000 1,800,000
(a)Lancaster RDA, MFHR, Westwood Park Apartments, Series K, Weekly VRDN and Put, 3.55%, 12/01/07 900,000 900,000
(a)Livermore MFHR, Refunding, Richards Manor, Series A, Weekly VRDN and Put, 3.25%, 12/01/22 6,470,000 6,470,000
(a)Los Angeles Community RDA, MFHR, Grand Promende Project, Weekly VRDN and Put, 3.55%, 12/01/10 1,300,000 1,300,000
(a)Los Angeles County Housing Authority, MFHR, Sand Canyon Ranch Project, Series F,
Weekly VRDN and Put, 3.35%, 11/01/06 4,500,000 4,500,000
(a)Los Angeles County Pension Obligation, Refunding, AMBAC Insured, Weekly VRDN and Put,
3.25%, 6/30/07,
Series A 2,500,000 2,500,000
Series B 6,600,000 6,600,000
(b)Los Angeles County School Pooled Financing Program, Series A, 4.00%, 6/30/00 5,000,000 5,042,050
(b)Los Angeles County TRAN, 4.00%, 6/30/00 13,500,000 13,588,560
(a)Los Angeles County Transportation Commission Sales Tax Revenue, Series A,
Weekly VRDN and Put, 3.25%, 7/01/12 12,000,000 12,000,000
(a)Los Angeles CRDA, COP, Weekly VRDN and Put,
Baldwin Hill Park, 3.20%, 12/01/14 1,000,000 1,000,000
Broadway Spring Center Program, 3.35%, 7/01/12 400,000 400,000
(a)Los Angeles MFHR, Weekly VRDN and Put,
Casden Project, Series K, 3.30%, 7/01/10 3,300,000 3,300,000
Lucas Studios Project, Series D, 3.80%, 12/01/21 1,200,000 1,200,000
Mariposa Gardens Project, Series H, 3.15%, 9/01/15 600,000 600,000
Masselin Manor, 3.40%, 7/01/15 2,400,000 2,400,000
(b)Los Angeles USD, TRAN, Series A, 4.00%, 6/30/00 2,500,000 2,521,750
Los Angeles Water and Power, TECP, 3.30%, 9/10/99 5,000,000 5,000,000
(a)Metropolitan Water District, Southern California Waterworks Revenue, Refunding,
Series A, AMBAC Insured, Weekly VRDN and Put, 3.35%, 6/01/23 8,160,000 8,160,000
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND AMOUNT VALUE
INVESTMENTS (CONT.)
<S> <C> <C>
(a)Moorpark MFR, Refunding, Le Club Apartments Project, Series A,
Weekly VRDN and Put, 3.40%, 11/01/15 $3,500,000 $3,500,000
M-S-R Public Power Agency Revenue, San Juan Project, 1,000,000 1,019,986
Series G, 5.25%, 7/01/00
(a)Sub. lien, Series D, Weekly VRDN and Put, 3.25%, 7/01/18 7,600,000 7,600,000
(a)Refunding, sub. lien, Series E, MBIA Insured, Weekly VRDN and Put, 3.25%, 7/01/22 15,400,000 15,400,000
Northern California Transmission Revenue, Refunding, Oregon Transmission Project,
Series A, 7.00%, 5/01/00 1,835,000 1,921,494
Oakland USD, Alameda Revenue County, TRAN, 3.25%, 11/09/99 5,000,000 5,007,846
(a)Ontario MFR, Park Centre Partners Project, Series A, Weekly VRDN and Put, 3.5993%, 8/01/07 1,900,000 1,900,000
(a)Orange County Apartment Development Revenue, Weekly VRDN and Put,
Jessy L. Frost Project, Issue B, 3.35%, 3/01/09 100,000 100,000
(a)Orange County Certificates, Daily VRDN and Put, 2.90%, 8/01/16 4,750,000 4,750,000
(a)Orange County COP, Daily VRDN and Put, 2.90%, 8/01/15 6,900,000 6,900,000
(a)Oxnard RDA, COP, Channel Islands Business Center, Weekly VRDN and Put, 3.725%, 7/01/05 390,000 390,000
(a)Palm Springs CRDA, COP, Weekly VRDN and Put, 3.25%, 12/01/14
(a)Pico Rivera RDA, COP, Crossroad Plaza Project, Weekly VRDN and Put, 3.35%, 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 4,500,000 4,560,000
Puerto Rico Commonwealth, TRAN, Series A, 3.50%, 7/30/99 25,000,000 25,012,948
(a)Redlands MFHR, Refunding, Parkview Terrace, Series A, Weekly VRDN and Put,
3.40%, 2/01/16 3,550,000 3,550,000
(a)Redwood City COP, City Hall Project, Weekly
VRDN and Put, 3.45%, 7/01/21 2,400,000 2,400,000
(a)Riverside County Housing Authority MFMR, Emeritus Park, Series B,
Weekly VRDN and Put, 3.00%, 7/15/18 3,150,000 3,150,000
(a)Riverside County IDA Revenue, Weekly VRDN and Put, Calavo Growers, 3.55%, 9/01/05 1,500,000 1,500,000
Riverside County Special Tax, 3.50%, 9/01/99 8,000,000 8,000,000
Riverside County TAN, TECP, 3.15%, 8/05/99 4,000,000 4,000,000
Riverside County Teeter Obligation, TECP, 3.05%, 7/20/99 15,000,000 15,000,000
Riverside County Teeter Plan, TECP, 3.00%, 8/17/99 9,663,000 9,663,000
(a)Roseville Finance Authority Hospital, Lease Revenue, Series A,
Roseville Hospital, Weekly VRDN and Put, 3.50%, 10/01/14 9,100,000 9,100,000
(a)Sacramento Cogeneration Authority Project Revenue, Refunding, 4.50%, 7/01/99 900,000 900,000
(a)Sacramento County COP, Administration Center and Court House Project,
Weekly VRDN and Put, 3.35%, 6/01/20 7,955,000 7,955,000
(a)Sacramento County MFR, Various Housing Projects, Smoketree, Series A,
Weekly VRDN and Put, 3.00%, 4/15/10 6,850,000 6,850,000
Sacramento MUD, TECP, 3.00%, 8/05/99 3,000,000 3,000,000
(a)San Bernardino County MFHR, Weekly VRDN and Put, Refunding, Quail Properties,
Series A, 3.00%, 7/01/14 4,350,000 4,350,000
(a)San Diego County MFHR, Nationwide, Series C, Weekly VRDN and Put, 3.00%, 4/15/05 1,400,000 1,400,000
San Diego County Water, TECP, 3.10%, 7/13/99 5,500,000 5,500,000
(b) San Diego Local Government Area COP, TRAN, 4.00%, 6/30/00 5,000,000 5,041,050
(a)San Diego MFMR, Refunding, University Town Center Apartments, Weekly VRDN and Put, 3.70%,
10/01/15 4,900,000 4,900,000
(a)San Dimas RDA, Commercial Development Revenue, San Dimas Commercial Center,
Monthly VRDN and Put,3.20%, 12/01/13 900,000 900,000
San Francisco BART, TECP
3.00%, 7/22/99 12,100,000 12,100,000
2.75%, 8/09/99 10,000,000 10,000,000
(a)San Francisco City and County MFHR, Winterland Project, Series C, Weekly VRDN
and Put, 3.25%, 6/01/06 4,400,000 4,400,000
(a)San Francisco City and County RDA, MFR, Refunding, Fillmore Center, Series B-2,
Weekly VRDN and Put, 3.05%, 12/01/17 1,000,000 1,000,000
(a)San Francisco City and County RDA, MFR, Rincon Center Project No. 8, Series B,
Weekly VRDN and Put, 3.35%, 12/01/06 4,295,000 4,295,000
(a)San Jose MFMR, Somerset Park Apartment Project, Weekly VRDN and Put, 3.65%, 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, 3.25%, 11/15/11 1,200,000 1,200,000
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND AMOUNT VALUE
INVESTMENTS (CONT.)
<S> <C> <C>
(a)San Mateo County Housing Authority, MFHR, Pacific Oaks Apartment Project,
Series A, Weekly VRDN and Put, 3.45%, 7/01/17 $2,950,000 $2,950,000
(a)Santa Ana MFHR, Refunding, Vintage Apartments, Series A, Weekly VRDN and Put,
3.65%, 12/01/22 3,450,000 3,450,000
(a)Santa Clara County Housing Authority, MFHR, Refunding, Benton Park Center Apartments,
Series A, FNMA Secured, Weekly VRDN and Put, 3.60%, 12/15/25 5,000,000 5,000,000
Santa Clara County, TRAN, 4.50%, 10/01/99 3,000,000 3,012,280
Sonoma County, TRAN, 3.50%, 2/01/00 19,000,000 19,060,333
(a)South San Francisco MFR, Magnolia Plaza Apartments, Series A,
Weekly VRDN and Put, 3.45%, 5/01/17 500,000 500,000
(a)Southern California Public Power Authority, Sub-Palo Verde Project, Refunding,
Series B, AMBAC Insured, Weekly VRDN and Put, 3.25%, 7/01/09 2,000,000 2,000,000
(a)Southern California Public Power Authority Revenue, Weekly VRDN and Put,
3.25%, 7/01/17 500,000 500,000
Transmission Project, Refunding, AMBAC Insured, 3.25%, 7/01/19 27,100,000 27,100,000
Transmission Project, Refunding, Series B, FSA Insured, 3.10% 7/01/23 6,600,000 6,600,000
Stockton East Water District COP, Refunding, 1990 Project, Series A, 7.30%,
4/01/00 4,490,000 4,715,582
(a)Suisun City MFMR, Housing Authority, Village Green Apartments,
Series A, Weekly VRDN and Put, 3.00%, 6/15/18 8,700,000 8,700,000
(a)Tustin 1915 Act, Reassessment District No. 95-2, Series A, Daily VRDN and Put,
2.90%, 9/02/13 21,234,000 21,234,000
(a)Vallectos Water District 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,
3.05%, 8/01/27 2,000,000 2,000,000
(a)Western Riverside County Regional Wastewater Authority Treatment,
Daily VRDN and Put, 2.90%, 4/01/28 8,500,000 8,500,000
------------
TOTAL INVESTMENTS (COST $764,211,272) 108.1% 764,211,272
OTHER ASSETS, LESS LIABILITIES (8.1)% (57,334,014)
------------
NET ASSETS 100.0% $706,877,258
============
</TABLE>
See glossary of terms on page 50.
(a) Variable rate demand notes (VRDNs) are tax-exempt obligations which contain
a floating or variable interest rate adjustment formula and an
unconditional right of demand to receive payment of the principal balance
plus accrued interest at specified dates.
(b) Sufficient 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, 1999 (cont.)
Glossary of Terms
1915 Act - Improvement Bond Act of 1915
ABAG - The Association of Bay Area Governments
AD - Assessment District
AMBAC - American Municipal Bond Assurance Corp.
BART - Bay Area Rapid Transit
BIG - Bond Investor Guaranty Insurance Co.
CDA - Community Development Authority/Agency
CFD - Community Facilities District
CHFCLP - California Health Facilities Construction Loan Program
COP - Certificate of Participation
CRDA - Community Redevelopment Authority/Agency
ETM - Escrow to Maturity
FGIC - Financial Guaranty Insurance Co.
FHA - Federal Housing Authority/Agency
FNMA - Federal National Mortgage Association
FSA - Financial Security Assistance
GNMA - Government National Mortgage Association
GO - General Obligation
HFA - Housing Authority/Agency
HFAR - Housing Authority/Agency Revenue
HMR - Home Mortgage Revenue
ID - Improvement District
IDA - Industrial Development Authority/Revenue
IDR - Industrial Development Revenue
MBIA - Municipal Bond Investors Assurance Corp.
MF - Multi-Family
MFHR - Multi-Family Housing Revenue
MFMR - Multi-Family Mortgage Revenue
MFR - Multi-Family Revenue
MTA - Metropolitan Transportation Authority
MUD - Municipal Utility District
PCFA - Pollution Control Financing Authority
PCR - Pollution Control Revenue
PFA - Public Financing Authority
PUD - Public Utility District
RDA - Redevelopment Agency
RDAR - Redevelopment Agency Revenue
RMR - Residential Mortgage Revenue
SFM - Single Family Mortgage
SFMR - Single Family Mortgage Revenue
TAN - Tax Anticipation Notes
TECP - Tax-Exempt Commercial Paper
TRAN - Tax and Revenue Anticipation Notes
UHSD - Unified High School District
USD - Unified School District
VRDN - Variable Rate Demand Notes
FRANKLIN CALIFORNIA TAX-FREE TRUST
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1999
<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 .............................................................. $1,758,072,416 $204,660,270 $764,211,272
=============== =============== ===============
Value ............................................................. 1,821,437,400 206,323,603 764,211,272
Cash ................................................................ 166,100 96,200 402,482
Receivables:
Investment securities sold ........................................ 39,693,788 --
Capital shares sold ............................................... 4,671,631 407,775 2,320,730
Interest .......................................................... 31,991,624 3,038,488 5,480,071
--------------- --------------- ---------------
Total assets ...................................................... 1,897,960,543 209,866,066 772,414,555
--------------- --------------- ---------------
Liabilities:
Payables:
Investment securities purchased ................................... 32,647,263 16,705,000 61,499,910
Capital shares redeemed ........................................... 4,663,972 123,315 3,277,760
Affiliates ........................................................ 1,137,049 118,072 315,244
Shareholders ...................................................... 764,777 45,892 168,957
Distributions to shareholders ....................................... 3,027,277 288,494 91,661
Other liabilities ................................................... 171,787 38,395 183,765
--------------- --------------- ---------------
Total liabilities ................................................. 42,412,125 17,319,168 65,537,297
--------------- --------------- ---------------
Net assets, at value ............................................. $1,855,548,418 $192,546,898 $706,877,258
=============== =============== ===============
Net assets consist of:
Undistributed net investment income ................................. $ -- $279,782 $ --
Accumulated distributions in excess of net investment income ........ (1,987,196) --
Net unrealized appreciation ......................................... 63,364,984 1,663,333 --
Accumulated net realized gain (loss) ................................ 117,024 (102,640) --
Capital shares ...................................................... 1,794,053,606 190,706,423 706,877,258
--------------- --------------- ---------------
Net assets, at value ............................................. $1,855,548,418 $192,546,898 $706,877,258
=============== =============== ===============
</TABLE>
See notes to financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
FINANCIAL STATEMENTS (continued)
STATEMENTS OF ASSETS AND LIABILITIES (CONT.)
JUNE 30, 1999
<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>
CLASS A:
Net assets, at value $1,775,212,449 $192,546,898 $706,877,258
============== ============ ============
Shares outstanding 146,470,422 17,475,697 706,877,258
-------------- ------------ ------------
Net asset value per share* $12.12 $11.02 $1.00
-------------- ------------ ------------
Maximum offering price per share (net asset value per share / 95.75%,
97.75%, 100%, respectively) $12.66 $11.27 $1.00
-------------- ------------ ------------
CLASS C:
Net assets, at value $80,335,969 -- --
============== ============ ============
Shares outstanding 6,584,838 --
-------------- ------------ ------------
Net asset value per share* $12.20 -- --
-------------- ------------ ------------
Maximum offering price per share (net asset value per share / 99%) $12.32 -- --
-------------- ------------ ------------
</TABLE>
* Redemption price 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)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN CALIFORNIA FRANKLIN
CALIFORNIA INTERMEDIATE-TERM CALIFORNIA
INSURED TAX-FREE TAX-FREE TAX-EXEMPT
INCOME FUND INCOME FUND MONEY FUND
---------------- ------------------- -------------
<S> <C> <C> <C>
Investment income:
Interest .......................................... $ 102,784,990 $ 9,417,200 $ 19,433,478
------------- ----------- ------------
Expenses:
Management fees (Note 3) .......................... 8,667,397 1,057,716 3,211,214
Distribution fees (Note 3)
Class A ............................................ 1,640,977 184,611 --
Class C ............................................ 451,685 --
Transfer agent fees (Note 3) ...................... 464,914 56,677 395,201
Custodian fees .................................... 17,398 1,912 2,840
Reports to shareholders ........................... 149,005 33,404 229,344
Registration and filing fees ...................... 2,680 1,741 4,856
Professional fees ................................. 62,523 8,108 20,572
Trustees' fees and expenses ....................... 47,071 4,618 16,282
Other ............................................. 76,139 40,832 16,388
------------- ----------- ------------
Total expenses .................................. 11,579,789 1,389,619 3,896,697
Expenses waived/paid by affiliate (Note 3) ...... -- (282,543) --
------------- ----------- ------------
Net expenses .................................. 11,579,789 1,107,076 3,896,697
------------- ----------- ------------
Net investment income ......................... 91,205,201 8,310,124 15,536,781
------------- ----------- ------------
Realized and unrealized gains (losses):
Net realized gain (loss) from investments ......... 954,544 93,006 (11,084)
Net unrealized depreciation from investments ...... (43,645,378) (4,475,770) --
------------- ----------- ------------
Net realized and unrealized loss ................... (42,690,834) (4,382,764) (11,084)
------------- ----------- ------------
Net increase in net assets resulting from operations $ 48,514,367 $ 3,927,360 $ 15,525,697
============= =========== ============
</TABLE>
See notes to financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
FINANCIAL STATEMENTS (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998
<TABLE>
<CAPTION>
FRANKLIN CALIFORNIA INSURED FRANKLIN CALIFORNIA INTERMEDIATE-
TAX-FREE INCOME FUND TERM TAX-FREE INCOME FUND
----------------------------------- -------------------------------
1999 1998 1999 1998
--------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ......................... $ 91,205,201 $ 88,166,346 $ 8,310,124 $ 6,297,937
Net realized gain from investments ............ 954,544 14,517,284 93,006 373,164
Net unrealized (depreciation) on investments .. (43,645,378) 35,549,088 (4,475,770) 2,945,640
--------------- --------------- ------------- -------------
Net increase in net assets resulting
from operations ........................... 48,514,367 138,232,718 3,927,360 9,616,741
Distributions to shareholders from:
Net investment income:
Class A ..................................... (88,563,323) (86,044,321) (8,423,741) (6,184,726)
Class C ..................................... (3,006,211) (2,012,482) -- --
In excess of net investment income:
Class A ..................................... (1,921,957) -- -- --
Class C ..................................... (65,239) -- -- --
Net realized gains:
Class A ..................................... (9,565,776) (15,480,792) -- --
Class C ..................................... (360,118) (397,099) -- --
--------------- --------------- ------------- -------------
Total distributions to shareholders ............. (103,482,624) (103,934,694) (8,423,741) (6,184,726)
Capital share transactions: (Note 2)
Class A .................................... 110,241,197 48,438,350 41,379,720 34,565,606
Class C .................................... 27,415,008 19,682,305 -- --
--------------- --------------- ------------- -------------
Total capital share transactions ................ 137,656,205 68,120,655 41,379,720 34,565,606
Net increase in net assets ................ 82,687,948 102,418,679 36,883,339 37,997,621
Net assets:
Beginning of year ............................... 1,772,860,470 1,670,441,791 155,663,559 117,665,938
--------------- --------------- ------------- -------------
End of year ..................................... $ 1,855,548,418 $ 1,772,860,470 $ 192,546,898 $ 155,663,559
=============== =============== ============= =============
Undistributed net investment income (accumulated
distributions in excess of net investment income)
included in net assets:
End of year ................................... $ (1,987,196) $ 364,333 $ 279,782 $ 393,399
=============== =============== ============= =============
</TABLE>
See notes to financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
FINANCIAL STATEMENTS (continued)
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998
<TABLE>
<CAPTION>
FRANKLIN CALIFORNIA
TAX-EXEMPT MONEY FUND
-----------------------------------
1999 1998
------------- -------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ......................................... $ 15,536,781 $ 18,633,658
Net realized loss from investments ............................ (11,084) (2,802)
------------- -------------
Net increase in net assets resulting from operations ..... 15,525,697 18,630,856
Distributions to shareholders from net investment income ....... (15,525,697)* (18,630,856)*
Capital share transactions (Note 2) ............................ 50,152,692 16,933,993
------------- -------------
Net increase in net assets ............................... 50,152,692 16,933,993
Net assets (there is no undistributed net investment income at
beginning or end of year):
Beginning of year .............................................. 656,724,566 639,790,573
------------- -------------
End of year .................................................... $ 706,877,258 $ 656,724,566
============= =============
</TABLE>
* Distributions were decreased by net realized loss from security transactions
of $11,084 in 1999 and $2,802 in 1998.
See notes to financial statements.
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 to provide high current income consistent with capital
preservation and liquidity.
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 to
distribute substantially 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.
FRANKLIN CALIFORNIA TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
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 classes of shares offered within each of the funds are indicated below.
Effective January 1, 1999, Class I and Class II were renamed Class A and Class
C, respectively. The shares differ by their initial sales load, distribution
fees, voting rights on matters affecting a single class and the exchange
privilege of each class.
<TABLE>
<CAPTION>
CLASS A CLASS A & CLASS C
- ------- -----------------
<S> <C>
Franklin California Intermediate-Term Tax-Free Income Fund Franklin California Insured Tax-Free Income Fund
Franklin California Tax-Exempt Money Fund
</TABLE>
At June 30, 1999, 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 A SHARES:
Year ended June 30, 1999
Shares sold ................. 29,553,520 $ 370,514,398 7,753,731 $ 88,121,907 $1,033,213,640
Shares issued in reinvestment
of distributions ......... 3,539,619 44,284,162 446,478 5,064,927 15,576,778
Shares redeemed ............. (24,337,250) (304,557,363) (4,571,261) (51,807,114) (998,637,726)
----------- ------------- ----------- ------------- --------------
Net increase ................ 8,755,889 $ 110,241,197 3,628,948 $ 41,379,720 $ 50,152,692
=========== ============= =========== ============= ==============
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
=========== ============= =========== ============= ==============
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
2. SHARES OF BENEFICIAL INTEREST (CONT.)
FRANKLIN CALIFORNIA
INSURED TAX-FREE
INCOME FUND
---------------------------
Shares Amount
------ ------
CLASS C SHARES:
Year ended June 30, 1999
Shares sold ....................... 2,862,343 $ 36,108,219
Shares issued in reinvestment
of distributions .............. 187,570 2,360,890
Shares redeemed ................... (878,664) (11,054,101)
------------ ------------
Net increase ...................... 2,171,249 $ 27,415,008
============ ============
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
============ ============
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 Fund's 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, 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 A and Class C,
respectively, for costs incurred in marketing the Fund's shares.
FRANKLIN CALIFORNIA TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
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 ............. $750,225 $ 55,412
Contingent deferred
sales charges ................... $107,014 $ 3,973
The Funds paid transfer agent fees of $916,792 of which $857,802 was paid to
Investor Services.
4. INCOME TAXES
At June 30, 1999, the Franklin California Intermediate-Term Tax-Free Income Fund
and the Franklin California Tax-Exempt Money Fund had tax basis capital losses
which may be carried over to offset future capital gains. Such losses expire as
follows:
FRANKLIN CALIFORNIA FRANKLIN
INTERMEDIATE-TERM CALIFORNIA
TAX-FREE TAX-EXEMPT
INCOME FUND MONEY FUND
----------- ----------
Capital loss carryovers
expiring in:
2003.......................... $102,640 $14,563
2005.......................... -- 1,444
2006.......................... -- 9,957
2007.......................... -- 4,593
-------- --------
$102,640 $30,557
======== ========
At June 30, 1999, the Franklin California Tax-Exempt Money Fund has deferred
capital losses occurring subsequent to October 31, 1998 of $9,293. For tax
purposes, such losses will be reflected in the year ending June 30, 2000.
Distributions of income to shareholders may not equal net investment income due
to differing treatments of dividend distributions for book and tax purposes.
Net realized capital gains differ for financial statement and tax purposes
primarily due to differing treatment of wash sales.
FRANKLIN CALIFORNIA TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
4. INCOME TAXES (cont.)
At June 30, 1999, 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
------------------------------------------
Investments at cost ........ $ 1,758,192,739 $ 204,660,270
=============== ===============
Unrealized
appreciation .............. $ 78,443,961 $ 4,113,745
Unrealized
depreciation .............. (15,199,300) (2,450,412)
--------------- ---------------
Net unrealized
appreciation .............. $ 63,244,661 $ 1,663,333
=============== ===============
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the year
ended June 30, 1999 were as follows:
FRANKLIN FRANKLIN CALIFORNIA
CALIFORNIA INTERMEDIATE-TERM
INSURED TAX-FREE TAX-FREE
INCOME FUND INCOME FUND
----------------------------------------
Purchases .............. $423,244,942 $ 63,950,232
Sales .................. $284,493,954 $ 9,919,461
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 Auditors' Report
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
OF FRANKLIN CALIFORNIA TAX-FREE TRUST
In our opinion, the accompanying statements of assets and liabilities, including
the statements of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of each of the funds included in this
report constituting the Franklin California Tax-Free Trust (hereafter referred
to as the "Funds") at June 30, 1999, the results of each of their operations for
the year then ended, the changes in each of their net assets for each of the two
years in the period then ended and the financial highlights for each of the
periods presented, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Funds' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at June
30, 1999 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
San Francisco, California
August 3, 1999
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 $954,544 as a capital gain dividend for
the fiscal year ended June 30, 1999.
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, 1999.
