SHAREHOLDER LETTER
Dear Shareholder:
It's a pleasure to bring you Franklin California Tax-Free Trust's semiannual
report for the period ended December 31, 1998.
A TALE OF TWO ECONOMIES
During the six months under review, the U.S. economy began to appear like a tale
of two economies--a healthy and expanding domestic sector contrasted with a
fragile and ailing export-oriented sector. Despite momentary dips in many
economic indicators, the gross domestic product grew 3.9% in 1998, masking much
of the underlying divergence. Consumer spending remained robust and the housing
market regained its momentum, after ebbing slightly at the end of the summer.
Consumer confidence rose in November, after tumbling in October, as retail sales
bounced back, signaling that consumers remained guardedly optimistic about the
economy, the stock market and their jobs. Housing starts, which fell in
September, rose beyond expectations in October, registering the biggest gain in
13 months, and remained solid in November.
CONTENTS
Shareholder Letter ................. 1
Special Update:
A Word About Municipal
Bond Insurance ..................... 6
Fund Reports
Franklin California Insured
Tax-Free Income Fund .............. 8
Franklin California
Intermediate-Term
Tax-Free Income Fund .............. 14
Franklin California
Tax-Exempt Money Fund ............. 17
Municipal Bond Ratings ............. 19
Financial Highlights &
Statement of Investments ........... 22
Financial Statements ............... 52
Notes to
Financial Statements ............... 57
FUND CATEGORY
[PYRAMID CHART]
<PAGE>
Meanwhile, exports were hit hard by the emerging market turmoil that prevailed
for much of the reporting period, hampering the U.S. manufacturing sector and
producing record trade deficits. The National Association of Purchasing Managers
Index in December indicated that manufacturing activity slowed for the seventh
straight month. Durable goods orders, for cars, appliances and other heavy
machinery, fell in October, the first decrease in five months. However,
orders rose more strongly than expected in November, surprising many
economists.
Because of the problems in the world markets during much of the period, many
financial institutions curtailed their lending, creating a "credit crunch."
Beginning with the Russian debt crisis and culminating with the emergency
bailout of a major hedge fund, capital worldwide became less available,
adversely affecting many companies.
Taking note of these factors, the Federal Reserve Board's (the Fed's) monetary
policy panel, the Federal Open Market Committee, cut the federal funds target
rate three times, for a total of 0.75% since late September, to 4.75%, in an
effort to stimulate growth. The Fed's moves were aimed at providing liquidity to
the financial system and making it easier for major corporations to obtain
favorable lending from banks.
2
<PAGE>
The bond and stock markets reacted to the Fed's loosening of monetary policy in
two opposite ways. After the 30-year U.S. Treasury bond reached a record-low
yield of 4.70% on October 5, 1998, the U.S. bond market quickly lost ground, as
investors became less enthusiastic about committing capital to fixed-income
markets. On December 31, 1998, the yield on the 30-year Treasury bond stood at
5.09%, 0.39% higher than the yield on October 5, 1998. The stock market was a
different story. After losing more than 20% of their value in the third-quarter
correction, many stocks rebounded strongly. On November 23, 1998, the Dow
Jones(R) Industrial Average reached an all-time high of 9374.27, with many
other indices registering record highs as well. The Nasdaq Composite and S&P
500(R) Indices, two widely followed market indicators, continued to surge
through December, reaching all-time highs at the end of the month.
As of the end of the reporting period, the yields on 30-year, AAA-rated, insured
municipal bonds stood at more than 95.5% of the yield on a 30-year Treasury
bond. For those investors in the 39.6% tax bracket, the taxable equivalent yield
on an average municipal bond was 8.05% versus 5.09% for the Treasury bond.(1)
"As of the end of the reporting period, the yields on 30-year, AAA-rated,
insured municipal bonds stood at more than 95.5% of the yield on a 30-year
Treasury bond."
1. Source: Bloomberg.
3
<PAGE>
THE CALIFORNIA ECONOMY
During the six months under review, California's economy, while moderating
slightly from the previous year's period, remained strong. The state's
employment and personal income growth outpaced the national average. The
economic recovery also enabled the state to return to a more favorable financial
position and erase its accumulated deficit. However, California's reliance on
trade with troubled Asian countries negatively affected its export sector,
accounting for the lion's share of the economic moderation. For the first half
of 1998, exports to the region were down approximately 15% from the first six
months of 1997.(2)
After the recession of the early '90s, the California economy became broader and
more diversified, no longer heavily dependent on national defense spending. The
service sector remained the state's largest employer, accounting for 30.3% of
all jobs as of October 1998, followed by trade with 22.2%. Manufacturing
maintained its steady downward slide, comprising only 13.8% of jobs.(3)
On October 2, 1998, Moody's, a national credit rating agency, upgraded its
credit rating on the state's general obligation bonds to Aa3 from A1. This is
the first upgrade Moody's has given California in nine years and reflects the
state's continuing economic recovery and recent legislation meant to improve the
state's credit condition.(4)
2. Source: Fitch IBCA, State of California, October 1998.
3. Source: California Employment Development Department, California Labor Force
and Industry Employment, October 1998.
4. Source: Moody's Investors Service, State of California, October 1998. This
does not indicate Moody's rating of the fund.
4
<PAGE>
STAYING ON COURSE
Our investment philosophy remains disciplined and focused, as we strive to offer
our shareholders high, current tax-free income and preservation of capital. The
outlook for the municipal bond market should remain positive, given the
relatively stable U.S. economy, low inflation environment and budget surplus.
Likewise, California municipalities and municipal bonds should continue to do
well, owing to the state's sound economic condition.
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. 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/ C B Johnson
Charles B. Johnson
Chairman
Franklin California Tax-Free Trust
/s/ Thomas J. Kenny
Thomas J. Kenny
Director
Franklin Municipal Bond Department
5
<PAGE>
A WORD ABOUT
MUNICIPAL BOND INSURANCE
[SPECIAL UPDATE CIRCULAR GRAPHIC]
Municipal bond insurers guarantee the timely payment of interest and principal
on insured bond issues, providing bond investors with additional protection
against the potential of the issuer's payment default. Moody's and Standard &
Poor's assign the four principal municipal bond insurers -- MBIA, AMBAC, FGIC
and FSA -- their highest rating, AAA, based on their ability to pay claims. This
is important, as once a bond is insured it no longer carries the underlying
security's rating, but the insurer's rating. On June 30, 1998, the four primary
municipal bond insurers comprised more than 99% of the market, with MBIA
controlling the largest share, 37.5%.
Municipal bond insurers often work with bond reinsurers to enhance their ability
to generate new business. By purchasing portions of insured bond portfolios from
the insurers, bond reinsurers assume a portion of the risk, freeing up the
insurers' capital and enabling them to insure additional municipal bond issues.
The added capital provided by the reinsurers, in turn, increases the overall
size of the insured municipal bond market.
6
<PAGE>
Currently, many municipal bond issuers favor the use of bond insurance. In 1998,
municipal bond insurers covered 50.8% of the new-issue municipal bond market,
involving 5,825 new issues valued at $144 billion. For issuers, obtaining bond
insurance can often lower their borrowing costs as it often improves their
credit rating, which more than makes up for the cost of the insurance. In
addition, the four primary, AAA rated bond insurers presently charge issuers
comparatively inexpensive insurance premiums, due to the extremely competitive
environment for municipal bond insurance. Bond insurance also enables issuers to
market their bonds to a larger pool of potential buyers. For example, insured
municipal bond funds purchase primarily, if not exclusively, insured bonds.
Low-cost municipal bond insurance benefits investors beyond the credit
protection it provides against payment default. As insured bonds appeal to a
wider variety of investors, insurance can lead to improved liquidity, allowing
investors to more easily buy and sell bonds.
INSURED MUNICIPAL BOND ISSUES*
As a % of muni bond market
[BAR GRAPH]
1993 37.0%
1994 37.0%
1995 43.0%
1996 46.0%
1997 49.0%
1998 50.8%
*Source: The Bond Buyer, 1999.
INSURERS AS A % OF MARKET SHARE*
6/30/98
[PIE CHART]
MBIA - 37.5%
AMBAC - 23.3%
FSA - 21.3%
FGIC - 17.0%
Other - 0.9%
*Source: Fitch IBCA, 10/28/98.
7
<PAGE>
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 improving national and state environments favorably affected Franklin
California Insured Tax-Free Income Fund's performance over the reporting period.
The value of many of the portfolio's bonds increased, as interest rates
declined. Lower interest rates led to higher municipal supply as issuers took
advantage of the interest-rate environment to issue new debt or refund
outstanding issues. Total municipal bond issuance in 1998 was $284 billion, far
outpacing the $221 billion issued in 1997.
The increase in municipal issuance combined with foreign investor interest
principally in Treasury bonds caused municipal bonds to underperform Treasury
securities during the reporting period. However, this also increased the bonds'
yields. Where
1. For investors subject to the 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, are
subject to market risk and will fluctuate in value. Insurance relates only to
the payment of principal and interest on the portfolio's securities, and the
terms of the insurance as outlined in the prospectus. No representation is made
as to any issuer'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 24 of
this report.
8
<PAGE>
historically municipal bonds provided taxable equivalent yields between 80% to
90% of comparable Treasury bonds, municipal bonds traded with yields at or above
100% of Treasuries at the end of the reporting period. This created substantial
opportunities for California residents to purchase municipal bonds at very
attractive levels. Going forward, we expect the supply to return to more
moderate levels. This, as well as the potential stabilization of foreign stock
markets, should lead to yields more in line with traditional levels in 1999.
The overall decline in interest rates over the past five years has created an
environment in which dividend reductions and capital gains were common. In
addition, the sustained low interest-rate environment did not provide many
opportunities for tax loss carry forwards, which allow us to reduce future
capital gains and lessen tax liabilities. Capital gains are created when bonds
are called, the issuer forces us to sell the bonds, or when we sell prerefunded
securities. At the end of the reporting period, such conditions existed and the
fund made capital gain distributions in December.
Our treatment of prerefunded securities had positive and negative affects on the
fund. To protect the fund's share value from declining, we generally sold
prerefunded securities at approximately five years to their call date. This also
extended call protection, as well as the fund's long-term earning potential.
However, the proceeds from prerefunded bond sales had to be reinvested at
current, lower interest rates, resulting in a reduced December dividend.
9
<PAGE>
DIVIDEND DISTRIBUTIONS*
Franklin California Insured Tax-Free Income Fund
7/1/98 - 12/31/98
DIVIDEND PER SHARE
---------------------------
MONTH CLASS I CLASS II
- -------------------------------------------------------------------------
July 5.3 cents 4.67 cents
August 5.3 cents 4.71 cents
September 5.3 cents 4.71 cents
October 5.3 cents 4.72 cents
November 5.3 cents 4.72 cents
December 5.2 cents 4.62 cents
- -------------------------------------------------------------------------
TOTAL 31.7 CENTS 28.15 CENTS
*Assumes shares were purchased and held for the entire accrual period. Since
dividends accrue daily, your actual distributions will vary depending on the
date you purchased your shares and any account activity during the month. Income
distributions include all accrued income earned by the fund during the reporting
period.
During the reporting period, Franklin California Insured Tax-Free Income Fund
purchased high-quality, long-term bonds with good call protection. The fund
focused on purchasing essential service bonds, such as direct revenue utility
and education bonds. Together, these two sectors represented over 30% of the
fund's total long-term investments on December 31, 1998. Recent additions to the
fund included bonds issued by Stanford University and the Metropolitan Water
District of Southern California.
10
<PAGE>
The fund's net assets grew during the reporting period, increasing from $1.77
billion on June 30, 1998, to approximately $1.87 billion on December 31, 1998.
In addition, the fund's Class I share price, as measured by net asset value,
increased eight cents, from $12.47 on June 30, 1998, to $12.55 on December 31,
1998. Going forward, we will continue to follow our strategy of investing for
income, price stability and tax efficiency. The fund should perform well into
the next reporting period, aided by stable interest rates and ample supply of
new bonds.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of December 31, 1998, the end of the reporting period. However,
market and economic conditions are changing constantly, which can be expected to
affect our strategies and the fund's portfolio composition. Although historical
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy.
PORTFOLIO BREAKDOWN
Franklin California Insured
Tax-Free Income Fund
12/31/98
% OF TOTAL
LONG-TERM
SECTOR INVESTMENTS
- ----------------------------------------------------
Utilities 17.8%
Education 12.9%
Tax Allocation 12.3%
Prerefunded 11.5%
Certificates of Participation 10.5%
Other Revenue 9.8%
Hospitals 8.7%
Transportation 5.9%
Housing 3.0%
Mello-Roos 2.7%
Special Assessment 2.6%
General Obligation 1.0%
Marks-Roos 0.7%
Health Care 0.3%
Sales Tax Revenue 0.3%
11
<PAGE>
FRANKLIN CALIFORNIA
INSURED TAX-FREE
INCOME FUND
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 with dividends
reinvested at the offering price. Thus, actual total returns would differ.
Effective May 1, 1994, the fund eliminated the sales charge on reinvested
dividends and implemented a Rule 12b-1 plan, which affects subsequent
performance.
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 I shares.
PERFORMANCE SUMMARY AS OF 12/31/98
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 (7/1/98 - 12/31/98)
CLASS I CHANGE 12/31/98 6/30/98
- -------------------------------------------------------------------------------
Net Asset Value +$0.08 $12.55 $12.47
DISTRIBUTIONS
-------------------------------------
Dividend Income $0.317
Long-term Capital Gain $0.0597
Short-term Capital Gain $0.0071
TOTAL $0.3838
CLASS II CHANGE 12/31/98 6/30/98
- -------------------------------------------------------------------------------
Net Asset Value +$0.07 $12.62 $12.55
DISTRIBUTIONS
-------------------------------------
Dividend Income $0.2815
Long-term Capital Gain $0.0597
Short-term Capital Gain $0.0071
TOTAL $0.3483
12 Past performance is not predictive of future results.
<PAGE>
PERFORMANCE
<TABLE>
<CAPTION>
INCEPTION
CLASS I 1-YEAR 5-YEAR 10-YEAR (9/3/85)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) +6.51% +32.27% +110.74% +184.31%
Average Annual Total Return(2) +2.01% +4.84% +7.27% +7.81%
Distribution Rate(3) 4.76%
Taxable Equivalent Distribution Rate(4) 8.69%
30-Day Standardized Yield(5) 3.80%
Taxable Equivalent Yield(4) 6.94%
INCEPTION
CLASS II 1-YEAR 3-YEAR (5/1/95)
- -------------------------------------------------------------------------------------------------------
Cumulative Total Return(1) +5.87% +18.15% +28.16%
Average Annual Total Return(2) +3.80% +5.35% +6.70%
Distribution Rate(3) 4.35%
Taxable Equivalent Distribution Rate(4) 7.94%
30-Day Standardized Yield(5) 3.37%
Taxable Equivalent Yield(4) 6.15%
</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 December
31, 1998.
4. Taxable equivalent distribution rate and yield assume the 1998 maximum
combined federal and California state personal income tax bracket of 45.2%,
based on the federal income tax rate of 39.6%.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended December 31, 1998.
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.
13
<PAGE>
FRANKLIN CALIFORNIA INTERMEDIATE-
TERM TAX-FREE INCOME FUND
CREDIT QUALITY BREAKDOWN
Franklin California Intermediate-
Term Tax-Free Income Fund
Based on Total Long-Term Investments*
12/31/98
[PIE CHART]
AAA - 26.2%
AA - 4.6%
A - 23.2%
BBB - 45.1%
Below Investment Grade - 0.9%
* Quality breakdown may include internal ratings for bonds not rated by a
national rating agency.
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 by investing
primarily in a portfolio of California municipal securities with an average
weighted maturity (the time in which debt must be repaid) between three and 10
years.(1)
During the six months under review, interest rates continued to decline.
However, short- and intermediate-term interest rates fell faster than long-term
rates. This resulted in a steeper yield curve, a larger difference between
short- and long-term rates, and meant that shorter-term bonds, such as those in
which the fund typically invests, yielded less than long-term bonds.
The fund sold a number of bonds with 5% coupons in the five- to six-year
maturity range, as we strove to maintain a relatively steady income level. We
used the proceeds from these sales as well as new money received in the fund to
invest in bonds with coupons between 5%-5 1/8% and maturities between 18 and 19
years. As a result, the average maturity of the fund's positions
1. For investors subject to the 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 38 of
this report.
14
<PAGE>
increased from 8.8 to nine years. Significant purchases during the period
included San Francisco Public Utility and Duarte Redevelopment Agency.
The fund attempted to select securities that provided the best balance between
risk and return. We also considered other factors, including market and economic
conditions and the issuer's credit quality. To provide tax-free income, we
typically used a buy-and-hold strategy, maintaining securities to create income,
rather than trading for capital gains. However, we sold some securities, when we
believed doing so helped us meet our goals.
During the period, the fund's net asset value increased 16 cents, from $11.24 on
June 30, 1998, to $11.40 on December 31, 1998. The fund should continue to
perform well going forward. However, with short and intermediate rates at
relatively low levels, the fund probably will not be able to continue paying
dividends at its recent per-share level in the next six months. Future purchases
will most likely be in the eight- to 10-year maturity range, so as not to exceed
the stated 10-year average maturity of the fund.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of December 31, 1998, the end of the reporting period. However,
market and economic conditions are changing constantly, which can be expected to
affect our strategies and the fund's portfolio composition. Although historical
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy.
DIVIDEND DISTRIBUTIONS*
Franklin California Intermediate-Term
Tax-Free Income Fund - Class I
7/1/98 - 12/31/98
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
- --------------------------------
TOTAL 26.0 CENTS
*Assumes shares were purchased and held for the entire accrual period. Since
dividends accrue daily, your actual distributions will vary depending on the
date you purchased your shares and any account activity during the month. Income
distributions include all accrued income earned by the fund during the reporting
period.
PORTFOLIO BREAKDOWN
Franklin California Intermediate-Term
Tax-Free Income Fund
12/31/98
% OF TOTAL
LONG-TERM
SECTOR INVESTMENTS
- ------------------------------------------------
Certificates of Participation 22.9%
Utilities 16.6%
Tax Allocation 15.0%
Special Assessment 13.7%
Other Revenue 8.4%
Transportation 5.1%
Hospitals 4.9%
Housing 4.3%
Education 3.6%
Prerefunded 2.4%
Marks-Roos 2.0%
Special Tax Revenue 0.9%
Mello-Roos 0.1%
Industrial Revenue 0.1%
15
<PAGE>
FRANKLIN CALIFORNIA
INTERMEDIATE-TERM
TAX-FREE INCOME FUND
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 total return to
shareholders. Without this waiver, the fund's distribution rate and total return
would have been lower, and the yield for the period would have been 3.63%. The
fee waiver may be discontinued at any time upon notice to the fund's Board of
Trustees.
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 for that class.
3. Distribution rate is based on an annualization of the current 4.3 cent per
share monthly dividend and the maximum offering price of $11.66 on December 31,
1998.
4. Taxable equivalent distribution rate and yield assume the 1998 maximum
combined federal and California state personal income tax bracket of 45.2%,
based on the federal income tax rate of 39.6%.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended December 31, 1998.
PERFORMANCE SUMMARY AS OF 12/31/98
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 (7/1/98 - 12/31/98)
<TABLE>
<CAPTION>
CLASS I CHANGE 12/31/98 6/30/98
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value +$0.16 $11.40 $11.24
DISTRIBUTIONS
-------------------------------------------
Dividend Income $0.260
PERFORMANCE
INCEPTION
CLASS I 1-YEAR 5-YEAR (9/21/92)
- --------------------------------------------------------------------------------------------
Cumulative Total Return(1) +6.51% +34.46% +53.48%
Average Annual Total Return(2) +4.10% +5.62% +6.68%
Distribution Rate(3) 4.43%
Taxable Equivalent Distribution Rate(4) 8.08%
30-Day Standardized Yield(5) 3.78%
Taxable Equivalent Yield(4) 6.90%
</TABLE>
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.
16 Past performance is not predictive of future results.
<PAGE>
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)
During the reporting period, Franklin California Tax-Exempt Money Fund continued
to invest in high-quality, widely traded securities. Furthermore, to ensure the
fund's safety and stability, we managed the fund more conservatively than SEC
guidelines require, purchasing only highly rated securities for the portfolio.
We did not buy derivative securities, but purchased only "plain-vanilla,"
short-term securities. Seeking to lower risk, we eliminated our exposure to
Japanese bank guarantees several years ago because of the problems with these
banks, and stayed with this philosophy throughout the period.
Worldwide economic weakness and signs of financial instability increased the
risk of a U.S. economic slowdown during the six months under review, increasing
the possibility that the Federal Reserve Board will further lower short-term
interest rates. As
(1.) An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution. There is no guarantee that the
$1.00 per share price will be maintained.
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 47 of
this report.
What are RANs and TRANs?
RANs and TRANs are acronyms for short-term government debt instruments issued by
municipal agencies that are sold in anticipation of revenues (RANs) or tax
receipts and revenues (TRANs).
17
<PAGE>
PERFORMANCE SUMMARY
12/31/98
- ------------------------------------------------
Seven-day effective yield(1) 2.90%
Seven-day annualized yield 2.86%
Taxable equivalent yield(2) 5.22%
(1.) The seven-day effective yield assumes the compounding of daily dividends.
(2.) Taxable equivalent yield assumes the 1998 maximum combined federal and
California state personal income tax bracket of 45.2%, based on the federal
income tax rate of 39.6%.
"Annualized and effective yields are for the seven days ended December 31,
1998. Yields reflect fluctuations in interest rates on portfolio investments, as
well as fund expenses. Yields should be viewed in terms of the current, low rate
of inflation -- just as high inflation usually results in higher yields, low
inflation often brings the opposite.
"Past performance is not predictive of future results.
a result, we sought additional opportunities to extend the maturities of the
fund's positions, to capture the prevailing higher rates.
The volatility of the world markets caused investors to move a large amount of
assets into short-term debt instruments. In 1998, total assets of all money
funds increased by more than $290.7 billion, or 27.5%, to a record $1.35
trillion. However, the domestic economy's strength left state and local
municipalities with cash surpluses and less need for short-term financing,
lowering overall supply. Note issuance in 1998 was only $34.5 billion, down from
$42.6 billion in 1997. The largest note issues in the third quarter were $1.6
billion State of Texas TRANs and $1.7 billion State of California RANs, but each
issue was $1.3 billion less than in 1997. This supply and demand imbalance put
downward pressure on short-term interest rates. On, 1998, one-year
notes had a yield of 2.85%, approximately 0.8% below levels seen in June 1998.
During the reporting period the fund participated in several attractive deals
including California State RANs; Santa Clara County, California TRANs; Oakland,
California Unified School District TRANs; and Redwood City, California
Certificates of Participation Weekly Variable Rate Demand Notes and Puts.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of December 31, 1998, the end of the reporting period. However,
market and economic conditions are changing constantly, which can be expected to
affect our strategies and the fund's portfolio composition. Although historical
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy.
18
<PAGE>
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.
19
<PAGE>
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.
20
<PAGE>
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.
21
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Highlights
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
CLASS I
---------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JUNE 30,
DECEMBER 31, 1998 -------------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the
period)
Net asset value,beginning of period ........... $12.47 $12.22 $12.01 $11.95 $11.74 $12.30
---------------------------------------------------------------------------------
Income from investment operations:
Net investment income ........................ .31 .64 .66 .67 .68 .68
Net realized and unrealized gains (losses) ... .16 .37 .21 .06 .20 (.56)
---------------------------------------------------------------------------------
Total from investment operations .............. .47 1.01 .87 .73 .88 .12
---------------------------------------------------------------------------------
Less distributions from:
Net investment income ........................ (.31) (.64) (.66) (.67) (.67) (.68)
In excess of net investment income ........... (.01) -- -- -- -- --
Net realized gains ........................... (.07) (.12) -- -- -- --
---------------------------------------------------------------------------------
Total distributions ........................... (.39) (.76) (.66) (.67) (.67) (.68)
---------------------------------------------------------------------------------
Net asset value, end of period ................. $12.55 $12.47 $12.22 $12.01 $11.95 $11.74
=================================================================================
Total return** ................................ 3.78% 8.38% 7.41% 6.18% 7.80% .67%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ............. $1,799,653 $1,717,489 $1,635,543 $1,588,631 $1,468,080 $1,450,821
Ratios to average net assets:
Expenses ..................................... .60%* .60% .60% .60% .59% .54%
Net investment income ........................ 4.90%* 5.11% 5.41% 5.50% 5.77% 5.53%
Portfolio turnover rate ....................... 4.55% 21.66% 20.40% 14.22% 11.85% 6.98%
</TABLE>
* Annualized
** Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized. Prior to May 1, 1994, dividends from
net investment income were reinvested at the offering price.
22
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Highlights (continued)
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND (CONT.)
<TABLE>
<CAPTION>
CLASS II
-------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JUNE 30,
DECEMBER 31, 1998 -----------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995***
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ................ $12.55 $12.29 $12.07 $11.99 $11.88
-------------------------------------------------------------------------
Income from investment operations:
Net investment income .............................. .27 .58 .59 .60 .11
Net realized and unrealized gains .................. .15 .37 .22 .08 .10
-------------------------------------------------------------------------
Total from investment operations .................... .42 .95 .81 .68 .21
-------------------------------------------------------------------------
Less distributions from:
Net investment income .............................. (.27) (.57) (.59) (.60) (.10)
In excess of net investment income ................. (.01) -- -- -- --
Net realized gains ................................. (.07) (.12) -- -- --
-------------------------------------------------------------------------
Total distributions ................................. (.35) (.69) (.59) (.60) (.10)
-------------------------------------------------------------------------
Net asset value, end of period ...................... $12.62 $12.55 $12.29 $12.07 $11.99
=========================================================================
Total return** ...................................... 3.38% 7.80% 6.86% 5.70% 1.79%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ................... $69,628 $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 .............................. 4.34%* 4.55% 4.81% 4.96% 5.03%*
Portfolio turnover rate ............................. 4.55% 21.66% 20.40% 14.22% 11.85%
</TABLE>
* Annualized
** Total return does not reflect sales commissions or the contingent
deferred sales charge, and is not annualized.
*** For the period May 1, 1995 (effective date) to June 30, 1995.
See notes to financial statements. 23
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS 99.0%
BONDS 98.5%
Alameda County COP,
Medical Center Project, MBIA Insured, 5.00%, 6/01/28 ........................ $ 5,000,000 $ 4,916,550
Municipal Custodial Receipts, Series 1, BIG Insured, 7.25%, 12/01/07 ........ 2,000,000 2,182,040
Water District Revenue, Water Systems Project, FGIC Insured, 6.00%, 6/1/20 .. 1,000,000 1,120,210
Alhambra COP, Police Facilities AD No.91-1, AMBAC Insured, 6.75%, 9/01/23 ...... 10,730,000 11,649,668
Anaheim PFA Revenue, Local Agency, CFD, Refunding, Series A, MBIA Insured,5.75%,
9/01/14 ..................................................................... 3,790,000 4,118,555
Arcadia GO, USD, Series B, FGIC Insured, 5.875%, 7/01/20 ....................... 1,985,000 2,169,148
Arcata Joint Powers Financing Authority,
Tax Allocation Revenue, Community Development Project Loan, Series A, AMBAC
Insured, 6.00%, 8/01/23 ..................................................... 5,690,000 6,230,379
Wastewater Revenue, FSA Insured, 5.80%, 12/01/22 ............................ 1,080,000 1,185,656
Barstow RDA, Tax Allocation, Central Redevelopment Project, Series A, MBIA
Insured, 6.25%, 9/01/22 ..................................................... 2,000,000 2,216,660
Bay Area Government Association,
Redevelopment Agency, Tax Allocation Revenue, Pool A2, FSA Insured, 6.60%,
12/15/24 .................................................................... 10,775,000 12,211,092
Water & Wastewater Revenue, Pooled Financing Program,
Series B, FSA Insured, 5.00%, 10/01/18 ........................................ 1,380,000 1,383,547
Beaumont USD, COP, Refunding, Series A, FSA Insured, 5.80%, 1/01/21 ............ 1,500,000 1,631,595
Benicia COP, Water System Project, Refunding, AMBAC Insured, 6.125%, 11/01/17 .. 2,995,000 3,210,640
Benicia USD, Series A, AMBAC Insured, 6.85%, 8/01/16 ........................... 5,900,000 6,481,740
Blythe Financing Authority, Lease Revenue, City Hall and County Courthouse
Project, MBIA Insured, 5.50%, 9/01/27 ....................................... 3,500,000 3,693,270
Brea PFA Revenue, Tax Allocation, Redevelopment Project, Series A, MBIA Insured,
7.00%, 8/01/15 .............................................................. 1,520,000 1,665,145
6.75%, 8/01/22 .............................................................. 1,550,000 1,685,827
7.00%, 8/01/23 .............................................................. 12,085,000 13,217,123
Buellton USD, Series A, MBIA Insured, 6.375%, 7/01/17 ......................... 2,155,000 2,352,355
Burbank PCR, Wastewater Treatment, Series A, FGIC Insured, 5.50%, 6/01/25 ...... 3,000,000 3,147,900
Burbank RDA, Tax Allocation, City Center Redevelopment Project, Refunding,
Series A, FSA Insured, 5.50%, 12/01/23 ...................................... 2,000,000 2,083,720
Burbank Waste Disposal Revenue, Series B, AMBAC Insured, 6.00%, 5/01/22 ........ 665,000 692,052
Calaveras County Water District Revenue COP, Water and Sewer System Improvement
Project, Refunding, AMBAC Insured, 6.00%, 5/01/16 ........................... 3,950,000 4,336,903
Calexico CRDA Revenue, Tax Allocation, Merged Central Business and Residential,
Refunding, FSA Insured, 5.85%, 8/01/15 ...................................... 1,795,000 1,930,271
Calexico USD, CFD No 1, Special Tax, Refunding, AMBAC Insured, 5.60%, 9/01/17 .. 2,930,000 3,156,460
California Educational Facilities Authority Revenue,
Loyola Marymount, MBIA Insured, 5.75%, 10/01/24 ............................. 2,000,000 2,134,420
Point Loma Nazarene University, Refunding, MBIA Insured, 5.00%, 10/01/21 .... 11,000,000 10,984,270
Pooled Facilities Program, MBIA Insured, 7.00%, 3/01/16 ..................... 1,000,000 1,054,720
Pooled Facilities Program, MBIA Insured, Pre-Refunded, 7.625%, 11/01/12 ..... 335,000 339,640
Santa Clara University, Refunding, MBIA Insured, 5.75%, 9/01/21 ............. 3,350,000 3,636,425
Stanford University, Refunding, Series O, 5.125%, 1/01/31 ................... 12,000,000 12,135,480
California Health Facilities Financing Authority Revenue,
Adventist Health Systems West, Series A, MBIA Insured, 7.00%, 3/01/13 ....... 3,000,000 3,249,810
Adventist Health Systems West, Series B, MBIA Insured, 6.75%, 3/01/14 ....... 5,065,000 5,451,004
Catholic Health Facilities, Series A, Refunding, MBIA Insured, 6.00%, 7/01/17 5,000,000 5,570,900
Catholic Healthcare West, Series A, 5.00%, 7/01/28 .......................... 25,000,000 24,031,250
The Help Group, CHFCLP Insured, 5.40%, 8/01/22 .............................. 5,000,000 5,108,900
</TABLE>
24
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
California Health Facilities Financing Authority Revenue,(cont.)
Kaiser Permanente, Series A, 5.40%, 5/01/28 ................................. $15,400,000 $15,650,404
(b)Kaiser Permanente, Series B, 5.00%, 10/01/18 ............................. 5,000,000 4,889,200
(b)Kaiser Permanente, Series B, 5.00%, 10/01/20 ............................. 5,000,000 4,863,950
Marin General Hospital, Series A, FSA Insured, 7.00%, 8/01/15 ............... 4,000,000 4,264,680
Northern California Presbyterian, 5.40%, 7/01/28 ............................ 5,000,000 5,033,150
San Diego Hospital Association, MBIA Insured, 6.625%, 5/01/19 ............... 11,110,000 11,347,976
San Diego Hospital Association, Refunding, Series A, MBIA Insured, 6.20%,
8/01/20 ................................................................... 4,850,000 5,238,437
San Diego Hospital Association, Series A, MBIA Insured, 6.20%, 8/01/12 ...... 2,425,000 2,644,535
San Fernando Health Facility, Series A, CHFCLP Insured, 5.25%, 6/01/23 ...... 2,760,000 2,774,104
Scripps Memorial Hospital, Series A, MBIA Insured, 6.40%, 10/01/12 .......... 3,500,000 3,851,505
Sharp Temecula Hospital, MBIA Insured, 7.05%, 8/01/21 ....................... 3,000,000 3,276,960
Sutter Health, Series A, FSA Insured, 5.00%, 8/15/37 ........................ 10,000,000 9,814,900
California HFA Revenue,
Home Mortgage, Series D, MBIA Insured, 6.15%, 8/01/28 ....................... 5,250,000 5,555,025
Home Mortgage, Series J, MBIA Insured, 5.45%, 8/01/16 ....................... 5,000,000 5,090,050
Series A, MBIA Insured, 7.15%, 8/01/11 ...................................... 1,315,000 1,394,663
Series A, MBIA Insured, 7.20%, 2/01/26 ...................................... 3,450,000 3,644,339
Series B, MBIA Insured, 6.80%, 8/01/11 ...................................... 1,815,000 1,932,666
Series B, MBIA Insured, 8.625%, 8/01/15 ..................................... 245,000 252,524
Series K, AMBAC Insured, 6.25%, 8/01/27 ..................................... 5,895,000 6,238,973
California HFA, SFM Purchase, Series B-3, Class I, FHA Insured, 5.30%, 8/01/18 . 3,000,000 3,029,910
California Public Capital Improvement Financing Authority Revenue, Pooled
Projects, Series B, BIG Insured, 8.10%, 3/01/18 ............................. 9,050,000 9,225,027
California Public School District, Financing Authority Lease Revenue, Southern
Kern USD, Refunding, Series B, FSA Insured, 5.90%, 9/01/26 .................. 1,850,000 2,105,001
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 5,169,400
Series Q, MBIA Insured, 5.375%, 12/01/27 .................................... 18,500,000 19,064,805
California State GO,
5.125%, 10/01/27 ............................................................ 3,000,000 3,021,480
AMBAC Insured, 6.30%, 9/01/06 ............................................... 9,000,000 10,339,740
FGIC Insured, 6.00%, 5/01/20 ................................................ 2,990,000 3,345,182
FGIC Insured, 6.00%, 5/01/20 ................................................ 510,000 558,935
MBIA Insured, 6.00%, 8/01/16 ................................................ 210,000 231,592
MBIA Insured, 6.00%, 10/01/21 ............................................... 65,000 69,997
California State HFA Revenue, Home Mortgage, Series L, MBIA Insured, 6.40%,
8/01/27 ..................................................................... 8,375,000 8,929,593
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 4,688,008
California State University and Colleges, Student Union Revenue,
Bakersfield, Series A, MBIA Insured, 6.30%, 11/01/22 ........................ 1,310,000 1,429,380
San Bernardino, Series B, MBIA Insured, 6.30%, 2/01/22 ...................... 2,375,000 2,596,991
California State University,
Fresno, Auxiliary Residence Student Project Revenue, MBIA Insured,
6.25%, 2/01/17 .............................................................. 1,500,000 1,664,640
Housing System Revenue, Series AX, FGIC Insured, 5.20%, 11/01/30 ............ 3,590,000 3,636,562
</TABLE>
25
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
California Statewide CDA Revenue, COP, John Muir/Mt. Diablo Health System,
MBIA Insured,
5.125%, 8/15/22 .............................................................. $ 5,000,000 $ 5,018,000
5.25%, 8/15/27 ............................................................... 8,410,000 8,560,203
California Statewide CDA,COP,
Kaiser Permanente, 5.30%, 12/01/15 ........................................... 10,000,000 10,294,900
MBIA Insured, 5.00%, 4/01/18 ................................................. 6,000,000 5,984,820
Cambria Community Services District Revenue,
COP, Wastewater Treatment System Upgrade, MBIA Insured, 6.90%, 11/01/24 ...... 1,000,000 1,154,870
Water and Wastewater, Refunding, Series A, MBIA Insured, 6.00%, 5/01/15 ...... 1,330,000 1,469,504
Campbell COP, Civic Center Project, Refunding, MBIA Insured, 5.25%, 10/01/28 .... 1,600,000 1,635,456
Campbell Union School District, Series C, FGIC Insured,
5.65%, 8/01/17 ............................................................... 1,000,000 1,093,150
5.75%, 6/01/22 ............................................................... 1,000,000 1,095,690
Carpinteria Sanitary District, Capital Facilities Revenue, FGIC Insured, 6.25%,
7/01/14 ...................................................................... 2,485,000 2,728,232
Central Coast Water Authority Revenue, State Water Project Regional Facilities,
AMBAC Insured, Pre-Refunded, 6.50%, 10/01/14 ................................. 2,500,000 2,790,250
AMBAC Insured, Pre-Refunded, 6.60%, 10/01/22 ................................. 4,650,000 5,205,954
Refunding, Series A, AMBAC Insured, 5.00%, 10/01/22 .......................... 3,000,000 2,975,070
Central School District, San Bernardino County, AMBAC Insured, 5.60%, 5/01/16 ... 3,035,000 3,225,719
Cerritos PFA Revenue, Los Coyotes Redevelopment Project Loan, Series A, AMBAC
Insured, 5.75%, 11/01/22 ..................................................... 5,000,000 5,330,450
Chico PFA Revenue, Southeast Chico Redevelopment Project, Series A, FGIC
Insured, 6.625%, 4/01/21 ..................................................... 815,000 857,225
Chino Basin Regional Financing Authority Revenue, Municipal Water District,
Sewer System Project, Refunding, AMBAC Insured, 6.00%, 8/01/16 ............... 2,000,000 2,202,480
Chino COP, RDA, Water System Improvement Project, Refunding, AMBAC Insured,
6.20%, 9/01/18 ............................................................... 3,590,000 3,927,137
Chino RDA, Tax Allocation, Central City Redevelopment Project, Series A,
Refunding, AMBAC Insured, 5.00%,
9/01/18 ...................................................................... 3,350,000 3,358,576
9/01/22 ...................................................................... 2,380,000 2,360,270
Chula Visa Elementary School District COP, MBIA Insured, 6.60%, 8/01/16 ......... 2,940,000 3,033,639
Chula Vista PFA, Local Agency Revenue, Series 1995-A, FSA Insured, 6.125%,
9/02/14 ...................................................................... 3,875,000 4,375,108
Clovis PFA, Refuse Disposal Revenue, Landfill Improvement Project, AMBAC
Insured, 5.00%, 9/01/18 ...................................................... 1,000,000 1,002,480
Coachella Valley Recreation and Park District, 1915 Act, Reassessment District
No 94-1, Refunding, MBIA Insured, 6.20%, 9/02/16 ............................. 1,500,000 1,664,415
Colton Joint USD, CFD,Special Tax, Southridge Village, Phase III, Refunding,
FSA Insured, 5.90%, 9/01/14 ................................................. 325,000 325,835
Colton PFA Revenue, Escrow Term, Tax Allocation, Series A, MBIA Insured, 5.30%,
8/01/27 ..................................................................... 4,175,000 4,291,274
Contra Costa County COP,
Buildings Acquisition Project, AMBAC Insured, 6.70%, 2/01/21 ................ 1,250,000 1,278,125
Public Facilities Corp, BIG Insured, 7.80%, 6/01/08 ......................... 1,000,000 1,036,570
Contra Costa Mosquito Abatement District, COP, Public Improvements Project,
Refunding, FSA Insured, 6.25%, 2/01/06 ...................................... 1,885,000 1,973,180
Contra Costa Water District Revenue, Series G, MBIA Insured, 5.50%, 10/01/19 ... 3,000,000 3,138,090
Culver City USD, MBIA Insured, 5.125%, 8/01/37 ................................. 7,500,000 7,557,600
Cupertino Union School District, Series B, FGIC Insured, 5.60%, 8/01/21 ........ 16,250,000 17,180,638
Davis Joint USD No. 1, CFD, Special Tax, Refunding, MBIA Insured, 5.50%, 8/15/21 . 7,000,000 7,326,760
Delano USD, Series A, FSA Insured, 6.10%, 5/01/17 .............................. 1,105,000 1,204,627
Dinuba GO, RDA Tax Allocation, Redevelopment Project No. 2, Refunding, Series
A, MBIA Insured, 5.40%, 9/01/27 ............................................. 3,190,000 3,286,210
Dublin-San Ramon Services District COP, AMBAC Insured, 7.00%, 12/01/20 ......... 4,155,000 4,514,200
</TABLE>
26
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
East Bay MUD,
Wastewater Treatment System Revenue, AMBAC Insured, Pre-Refunded, 7.20%,
6/01/20 ...................................................................... $ 2,000,000 $ 2,144,180
Water System Revenue, MBIA Insured, Pre-Refunded, 7.50%, 6/01/18 ............. 5,000,000 5,380,850
Water System Revenue, Refunding, FGIC Insured, 6.00%, 6/01/20 ................ 6,900,000 7,436,889
Water System Revenue, Subordinate Lien, Refunding, FGIC Insured, 5.00%,
6/01/26 ...................................................................... 6,860,000 6,799,015
East Bay Regional Park District, Series D, 5.00%, 9/01/19 ....................... 1,000,000 998,660
East Side Union High School District, Santa Clara County, Series D, FGIC
Insured, 5.75%, 9/01/17 ...................................................... 1,200,000 1,291,476
Eastern Municipal Water and Sewer District Revenue, COP, Refunding, Series A,
FGIC Insured, 6.30%, 7/01/20 ................................................. 1,400,000 1,487,136
El Cerrito RDA, Tax Allocation, Redevelopment Project, Refunding, Series A,
FSA Insured, 6.80%, 7/01/19 .................................................. 5,960,000 6,373,624
El Dorado County Public Agency Financing Authority Revenue, FGIC Insured, 5.50%,
2/15/16 ...................................................................... 2,250,000 2,388,870
2/15/21 ...................................................................... 3,500,000 3,670,975
Emeryville PFA Lease Revenue, Civic Center Financing Project, Series A, AMBAC
Insured, 5.00%, 5/01/28 ...................................................... 1,000,000 990,810
Emeryville PFA Revenue, Shellmound Park Redevelopment & Housing Project, Series
B, MBIA Insured, 5.00%, 9/01/19 .............................................. 5,500,000 5,492,630
Fairfield PFA Revenue, Municipal Park, ID No 1, FGIC Insured, 6.30%, 7/01/23 .... 4,750,000 5,242,290
Farmersville USD, Series A, AMBAC Insured, 5.70%, 7/01/18 ....................... 1,265,000 1,347,288
Fillmore USD, Series A, FGIC Insured, 5.60%, 7/01/22 ............................ 5,645,000 6,071,480
Folsom PFA Revenue, Refunding, AMBAC Insured, 6.00%,
10/01/08...................................................................... 2,000,000 2,180,660
10/01/12 ..................................................................... 1,000,000 1,086,680
10/01/19 ..................................................................... 3,400,000 3,657,720
Folsom Special Tax, CFD No 4, Refunding, MBIA Insured, 5.00%, 8/01/18 ........... 1,740,000 1,744,489
Fontana RDA, Tax Allocation, Southwest Industrial Park Project, Refunding, FGIC
Insured, 6.125%, 9/01/25 ..................................................... 5,850,000 6,536,205
Fresno COP, City Hall Refinancing Project, AMBAC Insured, 6.25%, 8/01/19 ........ 1,000,000 1,049,840
Fresno USD GO, Series B, FSA Insured,
5.875%, 8/01/20 .............................................................. 1,405,000 1,526,195
ETM, 5.875%, 8/01/20 ......................................................... 2,595,000 2,863,349
Fruitvale School District, Series B, MBIA Insured, 6.00%, 8/01/20 ............... 1,780,000 1,913,963
Glendale USD GO, Series A, FGIC Insured, 5.375%, 9/01/22 ........................ 2,400,000 2,487,528
Glendale Hospital Revenue, Adventist Health, Refunding, Series A, MBIA Insured,
6.75%, 3/01/13 ............................................................... 1,000,000 1,075,990
Glendale RDA, Tax Allocation, Central Glendale Redevelopment Project, Refunding,
AMBAC Insured, 6.00%, 12/01/20 ............................................... 9,775,000 10,624,545
Glendale USD GO, Series B, FSA Insured, 5.125%, 9/01/23 ......................... 2,600,000 2,619,994
Hawthorne CDA, Tax Allocation, Project Area No. 2, Refunding, MBIA Insured,
5.00%,
9/01/18 ...................................................................... 2,265,000 2,270,798
9/01/24 ...................................................................... 3,590,000 3,559,018
Hemet USD, COP, Nutrition Center Project, FSA Insured, 5.875%, 4/01/27 .......... 1,250,000 1,372,613
Hercules COP, Capital Improvement Projects, Refunding, AMBAC Insured, 6.00%,
6/01/15 ...................................................................... 1,000,000 1,092,480
Hesperia Water District COP, Water Facilities Improvement Projects, Refunding,
FGIC Insured, 7.15%, 6/01/26 ................................................. 3,425,000 3,768,904
Imperial Irrigation District COP,
Electric System Project, MBIA Insured, 6.00%, 11/01/15 ....................... 13,375,000 15,074,829
Water Systems Project, AMBAC Insured, 5.75%, 7/01/16 ......................... 5,050,000 5,480,260
Indian Wells GO, RDA Revenue, Tax Allocation, Consolidated Whitewater,
Refunding, MBIA Insured, 5.375%, 12/01/22 .................................... 1,300,000 1,336,504
</TABLE>
27
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Kern County High School District, FSA Insured, ETM,6.625%,
8/01/14 ..................................................................... $ 1,535,000 $ 1,860,527
8/01/15 ..................................................................... 1,400,000 1,700,510
La Mirada RDA, Industrial Commercial Redevelopment Project, Series A, MBIA
Insured, 6.60%, 8/15/21 ..................................................... 3,080,000 3,262,182
La Quinta RDA, Tax Allocation, Housing Redevelopment Project Areas No. 1 & 2,
MBIA Insured, 6.00%, 9/01/25 ................................................ 6,650,000 7,344,859
Lake Arrowhead Community Services District COP, Refunding, FGIC Insured,
6.125%, 6/01/05 ............................................................. 7,600,000 8,318,048
6.50%, 6/01/15 .............................................................. 14,000,000 15,295,560
Lake Elsinore PFA Revenue, Tax Allocation, Lake Elsinore Redevelopment Projects,
FGIC Insured,
Series A, 6.25%, 2/01/19 .................................................... 1,255,000 1,305,187
Series C, 6.625%, 2/01/17 ................................................... 12,840,000 13,439,243
Lakewood PFA, Water Revenue, FGIC Insured, 5.70%, 4/01/16 ...................... 2,485,000 2,651,147
Lakewood RDA, Tax Allocation, Redevelopment Project No. 1, Refunding, Series A,
FSA Insured, 6.50%, 9/01/17 ................................................. 3,000,000 3,291,330
Lancaster RDA, Tax Allocation, Lancaster Redevelopment Project No. 5, Refunding,
MBIA Insured, 6.85%, 2/01/19 ................................................ 11,245,000 12,063,524
Lemoore RDA, Tax Allocation, Redevelopment Project, Refunding, AMBAC Insured,
5.20%, 8/01/16 .............................................................. 1,910,000 1,955,172
5.00%, 8/01/25 .............................................................. 3,905,000 3,870,831
Lincoln USD, CFD No. 1, AMBAC Insured, Pre-Refunded, 6.90%, 9/01/21 ............ 2,425,000 2,676,230
Lodi COP,
1996 Public Improvement Financing Project, MBIA Insured, 5.90%, 10/01/16 .... 3,605,000 3,979,956
Wastewater Treatment Project, Refunding, AMBAC Insured, 6.70%, 8/01/26 ...... 8,800,000 10,260,800
Loma Linda Hospital Revenue, Loma Linda University Medical Center Project,
Series B, Refunding, AMBAC Insured, 7.00%, 12/01/15 ......................... 1,910,000 2,003,017
Long Beach Harbor Revenue,
5.125%, 5/15/18 ............................................................. 3,625,000 3,643,524
MBIA Insured, 5.375%, 5/15/20 ............................................... 10,000,000 10,198,200
MBIA Insured, 5.25%, 5/15/25 ................................................ 18,370,000 18,579,234
Los Angeles County Capital Assets Leasing Corp, Leasehold Revenue, Refunding,
AMBAC Insured, 6.00%, 12/01/16 .............................................. 3,000,000 3,236,640
Los Angeles County COP, San Pedro Peninsula Hospital Project, Refunding, AMBAC
Insured, 6.25%, 5/01/15 ..................................................... 5,825,000 6,203,683
Los Angeles County Transport Commission Sales Tax, Series B, FGIC Insured,
6.50%, 7/01/13 .............................................................. 2,740,000 2,961,776
Pre-Refunded, 6.50%, 7/01/15 ................................................ 5,025,000 5,421,724
Los Angeles Department of Water and Power,
Electric Plant Revenue, FGIC Insured, 6.125%, 1/15/33 ....................... 17,215,000 18,535,218
Electric Plant Revenue, MBIA Insured, 6.00%, 8/15/32 ........................ 2,000,000 2,141,160
Electric Plant Revenue, Refunding, FGIC Insured, 6.00%, 2/01/28 ............. 3,500,000 3,722,355
Waterworks Revenue, Second Issue, FGIC Insured, 6.40%, 11/01/31 ............. 6,875,000 7,500,900
Los Angeles Harbor Department Revenue, Series B,
AMBAC Insured, 6.60%, 8/01/14 ............................................... 3,790,000 4,177,755
AMBAC Insured, 6.60%, 8/01/15 ............................................... 2,000,000 2,198,300
MBIA Insured, 6.20%, 8/01/25 ................................................ 2,500,000 2,774,250
Los Angeles Mortgage Revenue, Refunding, Series I, MBIA Insured, 6.50%, 7/01/22 2,000,000 2,233,560
Los Angeles Wastewater System Revenue,
Refunding, Series A, FGIC Insured, 6.00%, 12/01/18 .......................... 12,100,000 12,906,707
Series B, AMBAC Insured, 6.00%, 6/01/22 ..................................... 3,250,000 3,481,400
</TABLE>
28
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Lucia Mar GO USD, Series A, FGIC Insured, 5.40%, 8/01/22 ...................... $ 5,290,000 $ 5,492,713
Lynwood PFA Revenue, Series A, AMBAC Insured, 5.75%, 9/01/18 .................. 4,000,000 4,265,600
Manteca Financing Authority, Tax Allocation Revenue, MBIA Insured, 5.10%,
10/01/26 ................................................................... 1,750,000 1,752,923
Menlo Park CDA, Tax Allocation, Las Pulgas Community Development Project,
Refunding, AMBAC Insured, 5.375%, 6/01/22 .................................. 11,675,000 12,017,311
Mesa Construction Water District COP, Water Project, FGIC Insured, 6.40%,
3/15/18 .................................................................... 5,600,000 6,159,440
Metropolitan Water District Revenue, Southern California Waterworks,
Series A, 5.00%, 7/01/26 ................................................... 23,990,000 23,777,449
Series A, MBIA Insured, 5.50%, 7/01/25 ..................................... 8,750,000 9,185,225
Series A, MBIA Insured, 5.00%, 7/01/30 ..................................... 6,625,000 6,552,390
Series C, MBIA Insured, 5.00%, 7/01/27 ..................................... 5,030,000 4,984,680
Modesto Health Facilities Revenue, Memorial Hospital Association,
Refunding, Series A, MBIA Insured, 6.00%, 6/01/18 .......................... 5,565,000 6,011,814
Series 1991, MBIA Insured, 6.875%, 6/01/21 ................................. 1,500,000 1,641,405
Modesto Irrigation District COP, Refunding and Capital Improvement Projects,
Series A, MBIA Insured, 6.00%, 10/01/21 .................................... 3,000,000 3,131,670
Modesto Irrigation District, Financing Authority Revenue, Domestic Water
Project, AMBAC Insured, Series C, 5.75%, 9/01/22 ........................... 2,500,000 2,799,425
Modesto PFA Lease Revenue, Capital Improvements and Refinancing Projects, AMBAC
Insured, 5.125%, 9/01/33 ................................................... 4,000,000 4,030,760
Modesto Wastewater Treatment Facility Revenue, MBIA Insured, 5.75%, 11/01/22 .. 14,375,000 15,624,906
Montclair RDA, Tax Allocation, Redevelopment Project, Area No. 3, Refunding,
AMBAC Insured,
5.40%, 12/01/17 ............................................................ 4,380,000 4,587,612
5.50%, 12/01/27 ............................................................ 8,870,000 9,377,808
Montebello Community RDA, Tax Allocation,
Housing, Series A, FSA Insured, 5.45%, 9/01/19 ............................. 1,100,000 1,146,882
Montebello Hills Redevelopment Project, Refunding, MBIA Insured, 5.60%,
3/01/19 .................................................................... 2,460,000 2,594,710
Montebello USD, COP, Series B, MBIA Insured, 7.25%, 6/01/10 ................... 720,000 770,537
Monterey County COP, Sheriff's Facility Project, Refunding, FSA Insured, 5.25%,
12/01/17 ................................................................... 3,215,000 3,285,730
Moreno Valley PFA, Lease Revenue, AMBAC Insured, 5.50%, 11/01/22 .............. 1,285,000 1,356,793
Moulton Niguel Water District, AMBAC Insured, Pre-Refunded, 7.25%, 4/01/16 .... 1,420,000 1,515,467
Mount Diablo USD, CFD No. 1, Special Tax,
AMBAC Insured, 6.25%, 8/01/14 .............................................. 500,000 543,645
FSA Insured, 6.00%, 8/01/24 ................................................ 1,000,000 1,103,600
Refunding, AMBAC Insured, 5.75%, 8/01/15 ................................... 1,000,000 1,082,530
Refunding, AMBAC Insured, 5.75%, 8/01/16 ................................... 2,270,000 2,449,784
Refunding, AMBAC Insured, 5.375%, 8/01/19 .................................. 7,290,000 7,514,240
Mountain View COP, Improvement Financing Authority Revenue, City Hall/Community
Theatre, MBIA Insured, 6.50%, 8/01/16 ...................................... 1,500,000 1,615,455
Mountain View School District, CFD, Special Tax, Refunding, Series A, FSA
Insured, 7.25%, 10/01/11 ................................................... 2,535,000 2,663,246
Murrieta Water PFA, Special Tax Revenue, Senior Lien, Refunding, Series A, FSA
Insured,
5.60%, 10/01/15 ............................................................ 1,235,000 1,329,947
5.70%, 10/01/21 ............................................................ 2,630,000 2,816,388
National City Joint Powers Authority, Lease Revenue, National City Police
Facilities Project, AMBAC Insured, 6.75%, 10/01/17 ......................... 2,000,000 2,181,300
Natomas GO USD, Refunding, FGIC Insured, 5.20%, 9/01/19 ....................... 5,000,000 5,096,050
Nevada Irrigation District Revenue COP, Cascade Bench Flume Project, MBIA
Insured, 5.50%, 1/01/17 .................................................... 4,600,000 4,883,038
</TABLE>
29
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED) (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 $ 1,377,999
6.00%, 9/01/19 .............................................................. 2,500,000 2,779,350
Northern California Power Agency, Public Power, AMBAC Insured, Pre-Refunded,
7.50%, 7/01/23 .............................................................. 3,200,000 4,227,840
Northern California Power Agency Revenue,
Multiple Capital Facilities, Series A, MBIA Insured, 6.50%, 8/01/12 ......... 2,160,000 2,402,179
Multiple Capital Facilities, Series A, MBIA Insured, 6.50%, 8/01/12 ......... 2,840,000 3,145,272
Public Power Hydroelectric Project No. 1, Refunding, Series A, MBIA Insured,
5.50%, 7/01/23 ............................................................ 4,000,000 4,091,440
Northern California Transmission Revenue, California/Oregon Transmission
Project, Series A, MBIA Insured,
6.25%, 5/01/10 .............................................................. 2,500,000 2,722,625
6.50%, 5/01/16 .............................................................. 4,000,000 4,376,520
6.00%, 5/01/24 .............................................................. 18,335,000 19,299,971
Pre-Refunded, 7.00%, 5/01/10 ................................................ 4,000,000 4,249,440
Norwalk Community Facilities Financing Authority, Lease Revenue, MBIA Insured,
6.90%, 2/01/21 .............................................................. 5,810,000 6,106,542
Oceanside Community COP,
Civic Center Project, Refunding, MBIA Insured, 5.75%, 8/01/15 ............... 1,000,000 1,090,690
Community Development, Public Parking Project, FSA Insured, Pre-Refunded,
7.875%, 4/01/19 ............................................................. 3,940,000 4,749,749
Corporation Yard Project, AMBAC Insured, Pre-Refunded, 7.30%, 8/01/21 ....... 4,715,000 5,368,782
Oceanside COP, Waste Reuse Association Finance Project, Series A, AMBAC
Insured, 6.50%, 10/01/17 .................................................... 5,000,000 5,580,500
Ontario Redevelopment Financing Authority Revenue, Ontario Redevelopment Project
No. 1, MBIA Insured, ETM, 5.80%, 8/01/23 .................................... 10,000,000 10,741,700
Orange County CFD No. 8, Special Tax, Rancho Santa Margarita, Series A, FSA
Insured, 7.30%, 8/15/09 ..................................................... 5,000,000 5,210,100
Orange County COP, Juvenile Justice Center Facilities, AMBAC Insured,
6.375%, 6/01/11 ............................................................. 4,770,000 5,221,433
6.00%, 6/01/17 .............................................................. 5,000,000 5,357,650
Orange County Financing Authority Revenue, Tax Allocation, Refunding, Series A,
MBIA Insured, 6.50%, 9/01/22 ................................................ 3,500,000 3,778,180
Oroville PFA, Tax Allocation Revenue, Oroville Redevelopment Project No. 1,
AMBAC Insured,
5.90%, 9/15/21 .............................................................. 1,245,000 1,360,872
6.10%, 9/15/23 .............................................................. 2,890,000 3,209,750
Oxnard Financing Authority, Solid Waste Revenue, AMBAC Insured, 6.00%, 5/01/16 . 5,000,000 5,495,300
Oxnard Public Facilities Corp. COP, AMBAC Insured, Pre-Refunded, 7.50%, 9/01/06 2,835,000 2,917,640
Oxnard Union High School District, Series B, FSA Insured, 5.875%, 8/01/27 ...... 3,615,000 3,964,028
Pajaro Valley USD,COP, School Facilities Bridge Funding Program, FSA Insured,
5.75%, 9/01/17 .............................................................. 1,250,000 1,371,275
Palm Desert Financing Authority, Tax Allocation Revenue, Project Area No. 2,
Series A, MBIA Insured,
5.95%, 8/01/24 .............................................................. 2,490,000 2,718,532
5.85%, 8/01/25 .............................................................. 1,380,000 1,498,915
Palm Springs Financing Authority Regional Airport Revenue, FSA Insured, 5.25%,
1/01/28 ..................................................................... 1,700,000 1,724,089
Passenger Facility Charge, FSA Insured, 5.25%, 1/01/22 ...................... 1,200,000 1,217,004
Palm Springs USD,
Series C, MBIA Insured, 6.125%, 2/01/20 ..................................... 500,000 543,500
Series D, FGIC Insured, 5.90%, 2/01/21 ...................................... 1,000,000 1,082,070
Paramount USD, COP, Master Lease Program, FSA Insured, 6.30%, 9/01/26 .......... 4,750,000 5,342,278
Parlier USD, Series B, AMBAC Insured, 6.00%, 6/01/16 ........................... 1,130,000 1,262,549
Petaluma COP, Refunding, Series A, AMBAC Insured, 5.625%, 8/01/13 .............. 1,000,000 1,065,280
Pico Rivera PFA Revenue, Water Enterprise Project, Refunding, Series A, FGIC
Insured, 6.00%, 12/01/17 .................................................... 8,000,000 8,628,000
Pinole RDA, Tax Allocation, Pinole Vista Redevelopment Project, Series A, MBIA
Insured, 6.125%, 8/01/17 .................................................... 1,000,000 1,079,660
</TABLE>
30
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Placer County COP,
Administrative and Emergency Services, MBIA Insured, 5.65%, 6/01/24 ......... $ 4,000,000 $ 4,268,920
Juvenile Detention Facility, Refunding, MBIA Insured, 5.00%, 7/01/21 ........ 2,290,000 2,271,657
MBIA Insured, Jail Kitchen Project, 6.90%, 10/01/21 ......................... 3,745,000 4,387,754
Placer County Water Agency Revenue COP, FSA Insured, 5.90%, 7/01/25 ............ 2,350,000 2,550,479
Pleasant Hill RDA, Tax Allocation, Pleasant Hill Commons Project, Refunding,
FSA Insured, 6.90%, 7/01/21 ................................................. 5,500,000 5,976,300
Pleasant Valley School District, Ventura County COP, Tierra Linda School,
Refunding, MBIA Insured, 5.70%, 8/01/18 ..................................... 1,400,000 1,414,532
Pleasanton GO USD, Series A, MBIA Insured, 5.50%, 8/01/21 ...................... 1,000,000 1,045,880
Pomona PFA Revenue, Southwest Pomona Redevelopment Project, Refunding, Series
W, MBIA Insured, 5.00%, 2/01/30 ............................................. 7,885,000 7,750,324
Port Hueneme RDA, Tax Allocation, Central Community Redevelopment Project,
Refunding, AMBAC Insured, 5.50%, 5/01/23 .................................... 2,000,000 2,072,080
Porterville COP,
Sewer System and Improvement Project, Refunding, AMBAC Insured, 6.30%,
10/01/18 .................................................................. 4,935,000 5,375,794
Sewer System Project, Refunding, AMBAC Insured, 63.0%, 10/01/18 ............. 6,075,000 6,617,619
Sewer System Refining Project, Refunding, AMBAC Insured, 5.25%, 10/01/23 .... 5,000,000 5,110,800
Redding Electric System Revenue, COP, Refunding, Series A, FGIC Insured, 5.50%,
6/01/11 ..................................................................... 5,000,000 5,335,600
Redding Joint Powers Financing Authority, Lease Revenue, Civic Center Project,
Series A, MBIA Insured,
5.75%, 3/01/19 .............................................................. 3,090,000 3,343,874
5.25%, 3/01/26 .............................................................. 2,075,000 2,115,649
Redding RDA, Tax Allocation, Hilltop Cypress Redevelopment, Series C, FSA
Insured, 6.00%, 9/01/22 ..................................................... 2,120,000 2,297,677
Redlands USD, Series B, FSA insured, 6.25%, 6/01/19 ............................ 2,115,000 2,341,580
Redwood City PFA, Local Agency Revenue, Series A, AMBAC Insured,
6.50%, 7/15/11 .............................................................. 1,270,000 1,375,537
Pre-Refunded, 6.50%, 7/15/11 ................................................ 1,475,000 1,606,187
Riverside County COP, Historic Courthouse, MBIA Insured, 5.875%, 11/01/27 ...... 3,000,000 3,307,770
Riverside County PFA, Lease Revenue, AMBAC Insured, 5.375%, 10/01/22 ........... 1,590,000 1,641,611
Riverside RDA,
Lease Revenue, Series A, AMBAC Insured, 6.375%, 10/01/23 .................... 12,540,000 14,025,363
Lease Revenue, Series A, AMBAC Insured, 6.50%, 10/01/24 ..................... 2,000,000 2,249,480
Tax Allocation, Merged Redevelopment Project, Series A, MBIA Insured, 5.625%,
8/01/23 ................................................................... 2,200,000 2,289,870
Romona Municipal Water District COP, Refunding, AMBAC Insured, 7.20%, 10/01/10 . 3,000,000 3,234,750
Rubidoux Community Services District COP, Water System Improvement Project,
AMBAC Insured, 6.20%, 12/01/14 .............................................. 2,510,000 2,784,343
Sacramento Area Flood Control Agency,
Capital AD No. 2, FGIC Insured, 5.80%, 11/01/16 ............................. 1,000,000 1,098,250
Capital AD No. 2, FGIC Insured, 5.375%, 10/01/25 ............................ 3,675,000 3,776,504
Operation & Maintenance, FGIC Insured, 5.80%, 11/01/16 ...................... 1,475,000 1,619,919
Operation & Maintenance, FGIC Insured, 5.90%, 11/01/25 ...................... 2,690,000 2,949,397
Sacramento County Airport System PFC and Subordinated Revenue, Refunding, FGIC
Insured, Series B, 5.00%, 7/01/26 ........................................... 1,500,000 1,491,120
Sacramento County Airport System Revenue, Series A, MBIA Insured, 6.00%,
7/01/17 ..................................................................... 5,920,000 6,555,926
Sacramento County COP, Public Facilities Project, MBIA Insured, 5.375%, 2/01/19 1,350,000 1,397,183
Sacramento MUD, Electric Revenue,
Series E, MBIA Insured, 5.75%, 5/15/22 ...................................... 4,250,000 4,531,350
Series I, MBIA Insured, 6.00%, 1/01/24 ...................................... 4,000,000 4,342,480
Series J, AMBAC Insured, 5.50%, 8/15/21 ..................................... 8,485,000 8,950,827
</TABLE>
31
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Sacramento RDA, Tax Allocation,
Merged Downtown Redevelopment Project, Series A, MBIA Insured, 6.50%, 11/01/13 ...................... $ 1,835,000 $ 1,972,331
Series A, MBIA Insured, 6.50%, 11/01/13 ............................................................. 165,000 176,194
Saddleback Community College District COP, 1996 Capital Improvement Financing Project, MBIA Insured,
5.50%, 6/01/15 ........................................................................................ 3,200,000 3,415,168
Saddleback Valley USD, PFA, Special Tax Revenue, Refunding, Series A, FSA Insured, 5.65%, 9/01/17 ...... 3,500,000 3,728,795
Salida Area Public Facilities Financing Agency CFD, Special Tax, No. 1988-1, Refunding, FSA Insured,
5.25%, 9/01/28 ........................................................................................ 5,000,000 5,110,200
Salinas RDA, Tax Allocation, Central City Revitalization Project, Series A, FSA Insured, 5.50%, 11/01/23 2,000,000 2,111,660
San Bernardino County COP, 1997 Public Improvement Financing Project, MBIA Insured, 5.25%, 10/01/25 .... 7,000,000 7,155,120
San Bernardino County Mortgage Revenue, Don Miguel Apartments Project, Refunding, MBIA Insured,
6.40%, 3/01/25 ........................................................................................ 5,680,000 5,965,193
San Bernardino Joint Powers Financing Authority Revenue, Tax Allocation,
Northwest Redevelopment Project, Refunding, Series E, MBIA Insured, Pre-Refunded, 7.375%, 1/01/15 ... 1,965,000 2,082,094
Refunding, Series A, FSA Insured, 5.75%, 10/01/25 ................................................... 1,950,000 2,103,641
Southeast Industrial Park, Refunding, Series F, MBIA Insured, Pre-Refunded, 7.375%, 3/01/14 ......... 3,515,000 3,747,342
State College Project No.4, Refunding, AMBAC Insured, Pre-Refunded, 7.20%, 9/01/08 .................. 4,265,000 4,466,223
San Bernardino Municipal Water and Sewer Department, COP, FGIC Insured, 6.25%, 2/01/17 ................. 5,750,000 6,144,738
San Bernardino RDA, Capital Appreciation, Series B, AMBAC Insured, 7.70%, 1/10/09 ...................... 2,382,000 4,752,948
San Buenaventura COP, Water Project, AMBAC Insured, Pre-Refunded, 7.50%, 10/01/20 ...................... 2,000,000 2,178,240
San Buenaventura Public Facilities Financing Authority, Lease Revenue, Refunding, FSA Insured,
5.75%, 6/01/14 ........................................................................................ 2,250,000 2,462,423
San Carlos RDA, Tax Allocation, San Carlos Redevelopment Project, Refunding, Series A, MBIA Insured,
5.50%, 9/01/26 ........................................................................................ 1,785,000 1,876,285
San Diego Community College District COP,
Financing Project, Refunding, MBIA Insured, 5.00%, 12/01/21 ......................................... 3,135,000 3,109,512
MBIA Insured, Series 1991, 6.50%, 12/01/12 .......................................................... 2,000,000 2,181,120
San Diego IDR, San Diego Gas & Electric, Custodial Receipts, Series A, AMBAC Insured, 6.40%, 9/01/18 ... 1,650,000 1,803,516
San Diego Mortgage Revenue, University Canyon North, Refunding, Series A, MBIA Insured,
5.125%, 7/01/03 ..................................................................................... 180,000 185,555
5.75%, 7/01/25 ...................................................................................... 3,105,000 3,222,183
San Dieguito Public Facilities Authority Revenue, Series A, AMBAC Insured, 5.00%,
8/01/23 ............................................................................................. 5,000,000 4,957,900
8/01/30 ............................................................................................. 10,000,000 9,874,500
San Francisco BART District, Sales Tax Revenue, FGIC Insured,
6.60%, 7/01/12 ...................................................................................... 2,580,000 2,812,922
5.50%, 7/01/15 ...................................................................................... 2,000,000 2,118,100
5.50%, 7/01/20 ...................................................................................... 5,440,000 5,684,038
San Francisco City and County Airports Commission, International Airport Revenue,
Issue 5, Second Series, FGIC Insured, 6.50%, 5/01/24 ................................................ 6,900,000 7,696,467
Issue 8A, Second Series, FGIC Insured, 6.25%, 5/01/20 ............................................... 3,500,000 3,835,125
Issue 9B, Second Series, FGIC Insured, 6.00%, 5/01/25 ............................................... 6,400,000 7,176,960
Issue 11, Second Series, FGIC Insured, 6.00%, 5/01/11 ............................................... 2,105,000 2,319,584
Issue 15A, Second Series, FSA Insured, 5.00%, 5/01/28 ............................................... 10,000,000 9,833,000
Issue 16A, Second Series, FSA Insured, 5.00%, 5/01/29 ............................................... 10,000,000 9,830,600
San Francisco City and County RDA, MFHR, 1045 Mission Apartments, Series C, GNMA Insured,
5.35%, 12/20/40 ....................................................................................... 7,715,000 7,741,848
</TABLE>
32
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
<S> <C>
San Francisco City and County Sewer Revenue, Refunding, AMBAC Insured, 6.00%, 10/01/11 ......................... $ 2,000,000
San Gabriel USD, COP, School Facilities Development Program, Series A, FSA Insured, 6.00%, 9/01/15 ............. 1,000,000
San Jacinto USD, COP, Refunding Project, AMBAC Insured, 6.50%, 10/01/23 ........................................ 3,000,000
San Joaquin Hills Transportation Corridor Agency, Toll Road Revenue, Refunding, Series A, MBIA Insured,
5.375%, 1/15/29 ............................................................................................. 8,500,000
5.25%, 1/15/30 .............................................................................................. 5,000,000
San Jose Financing Authority Revenue, Convention Project, Series C, FSA Insured, 6.40%, 9/01/17 ................ 8,740,000
San Jose-Santa Clara Water Financing Authority, Sewer Revenue, Series A, FGIC Insured, 5.375%, 11/15/20 ........ 1,500,000
San Luis Water Districts Revenue COP, Refunding & Capital Improvement Project, AMBAC Insured,
5.50%, 11/01/16 ............................................................................................... 1,260,000
San Marcos Public Facilities Authority Revenue, Tax Allocation, Refunding, Series A, FSA Insured, 5.50%, 8/01/23 10,495,000
San Mateo County Joint Powers Financing Authority, Lease Revenue, San Mateo County Health Care Center,
Series A, FSA Insured, 5.75%, 7/15/22 ......................................................................... 2,750,000
San Mateo Foster City School District,
FGIC Insured, 5.00%, 8/01/23 ................................................................................ 1,000,000
FGIC Insured, 5.00%, 8/01/28 ................................................................................ 4,330,000
MBIA Insured, 5.00%, 8/01/27 ................................................................................ 2,330,000
San Ramon COP,
Capital Improvement Project, Refunding, AMBAC Insured, 7.05%, 3/01/21 ....................................... 12,070,000
Central Park Expansion Project, FSA Insured, Pre-Refunded, 7.20%, 2/01/25 ................................... 5,110,000
Sanger PFA Revenue, Utility System Financing, Series A, AMBAC Insured, 5.70%, 1/01/22 .......................... 5,935,000
Sanger USD, Series A, FSA Insured, 5.60%, 8/01/14 .............................................................. 1,000,000
Santa Ana COP, Parking Facilities Project, Refunding, Series A, AMBAC Insured, 6.125%, 6/01/16 ................. 3,250,000
Santa Ana Financing Authority Water Revenue, MBIA Insured, 6.125%, 9/01/24 ..................................... 1,000,000
Santa Ana HMR, Series A, FGIC Insured, 8.875%, 6/01/17 ......................................................... 5,000
Santa Barbara COP,
Municipal Improvement Program, Refunding, AMBAC Insured, 6.15%, 8/01/17 ..................................... 3,575,000
Water Systems Improvement Project, Refunding, AMBAC Insured, 6.70%, 4/01/27 ................................. 6,500,000
Santa Clara County COP,
Board of Education Partners, Administration Building Project, Series A, MBIA Insured, 6.00%, 4/01/25 ........ 1,555,000
Capital Project I, Refunding, AMBAC Insured, 6.25%, 10/01/16 ................................................ 4,500,000
Santa Clara County Financing Authority Lease Revenue, Refunding, Series A, AMBAC Insured, 5.00%, 11/15/17 ...... 10,000,000
Santa Clara Electric Revenue, Series A, MBIA Insured, 6.50%, 7/01/21 ........................................... 1,350,000
Santa Clara RDA, Tax Allocation, Bayshore North Project, Refunding, AMBAC Insured, 7.50%, 6/01/08 .............. 900,000
Santa Clara USD, FGIC Insured, 5.00%, 8/01/22 .................................................................. 8,920,000
Santa Cruz County COP, Sub-Joint Wastewater Treatment Project, AMBAC Insured, 6.20%, 9/01/19 ................... 475,000
Santa Fe Springs PFA, Water Revenue, Series A, MBIA Insured, 5.90%,
5/01/21 ..................................................................................................... 900,000
5/01/26 ..................................................................................................... 1,190,000
Santa Fe Springs RDA Consolidated, Tax Allocation, Series A, MBIA Insured, 6.40%, 9/01/22 ...................... 4,255,000
Santa Fe Springs RDA Revenue, Series A, AMBAC Insured, Pre-Refunded, 7.25%, 8/01/14 ............................ 2,750,000
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
Santa Monica Community College District, Series B, AMBAC Insured, 5.75%, 7/01/20 ............................... 2,495,000
Santa Rita USD, Series B, FSA Insured, 5.20%, 8/01/37 .......................................................... 1,940,000
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND VALUE
- ------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
<S> <C>
San Francisco City and County Sewer Revenue, Refunding, AMBAC Insured, 6.00%, 10/01/11 ......................... $ 2,180,660
San Gabriel USD, COP, School Facilities Development Program, Series A, FSA Insured, 6.00%, 9/01/15 ............. 1,108,770
San Jacinto USD, COP, Refunding Project, AMBAC Insured, 6.50%, 10/01/23 ........................................ 3,295,080
San Joaquin Hills Transportation Corridor Agency, Toll Road Revenue, Refunding, Series A, MBIA Insured,
5.375%, 1/15/29 ............................................................................................. 8,796,225
5.25%, 1/15/30 .............................................................................................. 5,105,450
San Jose Financing Authority Revenue, Convention Project, Series C, FSA Insured, 6.40%, 9/01/17 ................ 9,426,702
San Jose-Santa Clara Water Financing Authority, Sewer Revenue, Series A, FGIC Insured, 5.375%, 11/15/20 ........ 1,541,925
San Luis Water Districts Revenue COP, Refunding & Capital Improvement Project, AMBAC Insured,
5.50%, 11/01/16 ............................................................................................... 1,342,555
San Marcos Public Facilities Authority Revenue, Tax Allocation, Refunding, Series A, FSA Insured, 5.50%, 8/01/23 10,886,359
San Mateo County Joint Powers Financing Authority, Lease Revenue, San Mateo County Health Care Center,
Series A, FSA Insured, 5.75%, 7/15/22 ......................................................................... 2,941,318
San Mateo Foster City School District,
FGIC Insured, 5.00%, 8/01/23 ................................................................................ 991,580
FGIC Insured, 5.00%, 8/01/28 ................................................................................ 4,290,207
MBIA Insured, 5.00%, 8/01/27 ................................................................................ 2,308,914
San Ramon COP,
Capital Improvement Project, Refunding, AMBAC Insured, 7.05%, 3/01/21 ....................................... 13,061,188
Central Park Expansion Project, FSA Insured, Pre-Refunded, 7.20%, 2/01/25 ................................... 6,057,394
Sanger PFA Revenue, Utility System Financing, Series A, AMBAC Insured, 5.70%, 1/01/22 .......................... 6,352,409
Sanger USD, Series A, FSA Insured, 5.60%, 8/01/14 .............................................................. 1,068,980
Santa Ana COP, Parking Facilities Project, Refunding, Series A, AMBAC Insured, 6.125%, 6/01/16 ................. 3,544,840
Santa Ana Financing Authority Water Revenue, MBIA Insured, 6.125%, 9/01/24 ..................................... 1,089,020
Santa Ana HMR, Series A, FGIC Insured, 8.875%, 6/01/17 ......................................................... 5,352
Santa Barbara COP,
Municipal Improvement Program, Refunding, AMBAC Insured, 6.15%, 8/01/17 ..................................... 3,856,710
Water Systems Improvement Project, Refunding, AMBAC Insured, 6.70%, 4/01/27 ................................. 7,124,910
Santa Clara County COP,
Board of Education Partners, Administration Building Project, Series A, MBIA Insured, 6.00%, 4/01/25 ........ 1,680,349
Capital Project I, Refunding, AMBAC Insured, 6.25%, 10/01/16 ................................................ 4,806,945
Santa Clara County Financing Authority Lease Revenue, Refunding, Series A, AMBAC Insured, 5.00%, 11/15/17 ...... 10,066,100
Santa Clara Electric Revenue, Series A, MBIA Insured, 6.50%, 7/01/21 ........................................... 1,468,692
Santa Clara RDA, Tax Allocation, Bayshore North Project, Refunding, AMBAC Insured, 7.50%, 6/01/08 .............. 918,720
Santa Clara USD, FGIC Insured, 5.00%, 8/01/22 .................................................................. 8,846,499
Santa Cruz County COP, Sub-Joint Wastewater Treatment Project, AMBAC Insured, 6.20%, 9/01/19 ................... 522,495
Santa Fe Springs PFA, Water Revenue, Series A, MBIA Insured, 5.90%,
5/01/21 ..................................................................................................... 986,031
5/01/26 ..................................................................................................... 1,303,752
Santa Fe Springs RDA Consolidated, Tax Allocation, Series A, MBIA Insured, 6.40%, 9/01/22 ...................... 4,667,650
Santa Fe Springs RDA Revenue, Series A, AMBAC Insured, Pre-Refunded, 7.25%, 8/01/14 ............................ 2,870,285
Santa Margarita/Dana Point Authority Revenue, ID 3, 3A, 4, and 4A, Refunding, Series B, MBIA Insured,
5.75%, 8/01/20 ................................................................................................ 42,160,325
Santa Monica Community College District, Series B, AMBAC Insured, 5.75%, 7/01/20 ............................... 2,687,090
Santa Rita USD, Series B, FSA Insured, 5.20%, 8/01/37 .......................................................... 1,960,098
</TABLE>
33
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Santa Rosa High School District,
FGIC Insured, 5.90%, 5/01/16 ............................................................................... $ 1,000,000
FGIC Insured, 5.50%, 5/01/20 ............................................................................... 4,450,000
Refunding, FSA Insured, 5.75%, 5/01/18 ..................................................................... 1,050,000
Santa Rosa Wastewater Service Facilities District, Refunding & Improvement, AMBAC Insured, 6.00%, 7/02/15 ..... 2,000,000
Santa Rosa Water Revenue, Series A, FGIC Insured, Pre-Refunded, 7.00%, 9/01/16 ................................ 2,500,000
Scotts Valley GO, USD, Series B, FGIC Insured,
5.40%, 8/01/22 ............................................................................................. 4,005,000
5.50%, 8/01/27 ............................................................................................. 6,720,000
Sebastopol GO, CDA, Tax Allocation, Community Development Project, Refunding, MBIA Insured,
5.25%, 12/01/21 .............................................................................................. 2,250,000
Selma PFA Revenue, Series A, MBIA Insured,
5.80%, 9/15/11 ............................................................................................. 145,000
5.80%, 9/15/12 ............................................................................................. 125,000
5.875%, 9/15/22 ............................................................................................ 2,400,000
Sequoia Union High School District,
FGIC Insured, 5.25%, 7/01/27 ............................................................................... 4,340,000
FSA Insured, 5.70%, 7/01/24 ................................................................................ 4,885,000
Simi Valley PFA Revenue, Refunding, MBIA Insured, 5.75%, 9/01/23 .............................................. 5,000,000
Soledad RDA, Tax Allocation, Soledad Redevelopment Project, Refunding, Series A, MBIA Insured,
5.35%, 12/01/28 .............................................................................................. 2,000,000
Sonoma CDA, COP, Sonoma Creek Senior Housing Project, Refunding, AMBAC Insured, 6.75%, 2/01/13 ................ 1,325,000
Sonoma Valley USD, FSA Insured, 6.00%, 7/15/21 ................................................................ 2,400,000
South Coast Air Quality Management District Revenue, Building Corp., Refunding, MBIA Insured,
5.50%, 8/01/14 ............................................................................................... 9,700,000
South Gate PFA, Tax Allocation Revenue, South Gate Redevelopment Project No.1, AMBAC Insured,
5.875%, 9/01/24 .............................................................................................. 5,000,000
South Orange County PFA, Special Tax Revenue, Senior Lien, Refunding, Series A, MBIA Insured,
6.20%, 9/01/13 ............................................................................................. 13,500,000
6.00%, 9/01/18 ............................................................................................. 3,250,000
Southern California Public Power Authority Revenue, Southern Transmission Project, Subordinated Lien,
MBIA Insured, 5.50%, 7/01/20 ................................................................................. 3,820,000
Stockton COP, Wastewater System Project, Refunding,
AMBAC Insured, 5.75%, 9/01/23 .............................................................................. 6,500,000
Series A, MBIA Insured, 5.00%, 9/01/23 ..................................................................... 7,500,000
Stockton Port District, Port Facilities Revenue, Refunding & Improvement, Series B, FSA Insured, 5.90%, 7/01/12 4,155,000
Suisun City RDA, Tax Allocation, Suisin City Redevelopment Project, Refunding, MBIA Insured, 5.625%, 10/01/13 . 4,260,000
Sulphur Springs USD, COP, Series 1991, AMBAC Insured, 7.20%, 2/01/21 .......................................... 800,000
Sunnyvale COP, Parking Facility, Refunding, Series A, AMBAC Insured, 5.00%, 10/01/22 .......................... 1,250,000
Sunnyvale RDA, Tax Allocation, Central Core Project, Refunding, AMBAC Insured, 6.50%, 10/01/22 ................ 2,785,000
Susanville PFA Revenue, Series A, AMBAC Insured, 6.30%, 9/01/17 ............................................... 4,000,000
Tahoe-Truckee Joint USD,
Series A, FGIC Insured, 6.00%, 9/01/17 ..................................................................... 5,000,000
Series B, FGIC Insured, 5.95%, 9/01/20 ..................................................................... 3,620,000
Tehachapi Water and Sewer Revenue, Refunding, MBIA Insured, 6.75%, 11/01/20 ................................... 2,000,000
Thousand Oaks RDA, Tax Allocation, Thousand Oaks Blvd. Redevelopment, Refunding, MBIA Insured,
5.375%, 12/01/25 ............................................................................................. 2,390,000
Tracy CFD, Special Tax, Refunding, Senior Series A, FSA Insured, 5.70%, 9/01/20 ............................... 5,480,000
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Santa Rosa High School District,
FGIC Insured, 5.90%, 5/01/16 ............................................................................... $ 1,095,750
FGIC Insured, 5.50%, 5/01/20 ............................................................................... 4,683,091
Refunding, FSA Insured, 5.75%, 5/01/18 ..................................................................... 1,128,498
Santa Rosa Wastewater Service Facilities District, Refunding & Improvement, AMBAC Insured, 6.00%, 7/02/15 ..... 2,301,020
Santa Rosa Water Revenue, Series A, FGIC Insured, Pre-Refunded, 7.00%, 9/01/16 ................................ 2,613,900
Scotts Valley GO, USD, Series B, FGIC Insured,
5.40%, 8/01/22 ............................................................................................. 4,154,947
5.50%, 8/01/27 ............................................................................................. 7,008,691
Sebastopol GO, CDA, Tax Allocation, Community Development Project, Refunding, MBIA Insured,
5.25%, 12/01/21 .............................................................................................. 2,300,513
Selma PFA Revenue, Series A, MBIA Insured,
5.80%, 9/15/11 ............................................................................................. 148,032
5.80%, 9/15/12 ............................................................................................. 127,468
5.875%, 9/15/22 ............................................................................................ 2,446,632
Sequoia Union High School District,
FGIC Insured, 5.25%, 7/01/27 ............................................................................... 4,427,711
FSA Insured, 5.70%, 7/01/24 ................................................................................ 5,290,504
Simi Valley PFA Revenue, Refunding, MBIA Insured, 5.75%, 9/01/23 .............................................. 5,270,500
Soledad RDA, Tax Allocation, Soledad Redevelopment Project, Refunding, Series A, MBIA Insured,
5.35%, 12/01/28 .............................................................................................. 2,061,580
Sonoma CDA, COP, Sonoma Creek Senior Housing Project, Refunding, AMBAC Insured, 6.75%, 2/01/13 ................ 1,391,277
Sonoma Valley USD, FSA Insured, 6.00%, 7/15/21 ................................................................ 2,664,264
South Coast Air Quality Management District Revenue, Building Corp., Refunding, MBIA Insured,
5.50%, 8/01/14 ............................................................................................... 10,208,086
South Gate PFA, Tax Allocation Revenue, South Gate Redevelopment Project No.1, AMBAC Insured,
5.875%, 9/01/24 .............................................................................................. 5,349,250
South Orange County PFA, Special Tax Revenue, Senior Lien, Refunding, Series A, MBIA Insured,
6.20%, 9/01/13 ............................................................................................. 14,955,030
6.00%, 9/01/18 ............................................................................................. 3,520,953
Southern California Public Power Authority Revenue, Southern Transmission Project, Subordinated Lien,
MBIA Insured, 5.50%, 7/01/20 ................................................................................. 3,919,664
Stockton COP, Wastewater System Project, Refunding,
AMBAC Insured, 5.75%, 9/01/23 .............................................................................. 6,867,640
Series A, MBIA Insured, 5.00%, 9/01/23 ..................................................................... 7,436,550
Stockton Port District, Port Facilities Revenue, Refunding & Improvement, Series B, FSA Insured, 5.90%, 7/01/12 4,671,924
Suisun City RDA, Tax Allocation, Suisin City Redevelopment Project, Refunding, MBIA Insured, 5.625%, 10/01/13 . 4,544,270
Sulphur Springs USD, COP, Series 1991, AMBAC Insured, 7.20%, 2/01/21 .......................................... 871,080
Sunnyvale COP, Parking Facility, Refunding, Series A, AMBAC Insured, 5.00%, 10/01/22 .......................... 1,239,613
Sunnyvale RDA, Tax Allocation, Central Core Project, Refunding, AMBAC Insured, 6.50%, 10/01/22 ................ 2,953,409
Susanville PFA Revenue, Series A, AMBAC Insured, 6.30%, 9/01/17 ............................................... 4,223,040
Tahoe-Truckee Joint USD,
Series A, FGIC Insured, 6.00%, 9/01/17 ..................................................................... 5,443,350
Series B, FGIC Insured, 5.95%, 9/01/20 ..................................................................... 4,012,879
Tehachapi Water and Sewer Revenue, Refunding, MBIA Insured, 6.75%, 11/01/20 ................................... 2,288,780
Thousand Oaks RDA, Tax Allocation, Thousand Oaks Blvd. Redevelopment, Refunding, MBIA Insured,
5.375%, 12/01/25 ............................................................................................. 2,457,111
Tracy CFD, Special Tax, Refunding, Senior Series A, FSA Insured, 5.70%, 9/01/20 ............................... 5,656,018
</TABLE>
34
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Travis USD, COP, Refunding & Capital Improvement Projects, AMBAC Insured,
5.40%, 9/01/19 ............................................................................................ $ 1,075,000
5.45%, 9/01/27 ............................................................................................ 6,115,000
Tri-City Hospital District Revenue,
MBIA Insured, 6.00%, 2/01/22 .............................................................................. 2,350,000
Refunding, Series A, MBIA Insured, 5.625%, 2/15/17 ........................................................ 2,750,000
Turlock Auxiliary Organization Revenue COP, California State University, Stanislaus Foundation, MBIA Insured,
5.875%, 6/01/22 ............................................................................................. 2,000,000
Turlock Irrigation District Revenue, Refunding, Series A, MBIA Insured, 5.75%, 1/01/18 ....................... 7,125,000
Union City CRDA, Tax Allocation Revenue, Community Redevelopment Project, AMBAC Insured,
5.75%, 10/01/22 ............................................................................................. 6,200,000
University of California Revenues,
Multiple Purpose Projects, Series F, FGIC Insured, 5.00%, 9/01/27 ......................................... 5,000,000
Research Facilities, Series D, FSA Insured, 5.00%, 9/01/21 ................................................ 4,635,000
Upland COP,
Police Building Project, Refunding, AMBAC Insured, 6.60%, 8/01/16 ......................................... 3,985,000
Water System Improvement Project, FGIC Insured, 6.60%, 8/01/16 ............................................ 2,385,000
Vacaville PFA, Tax Allocation Revenue, Vacaville Redevelopment Projects, 6.35%, 9/01/22 ...................... 1,355,000
Vallejo Revenue, Water Improvement Project, Refunding, Series A, FSA Insured, 5.875%, 5/01/26 ................ 12,500,000
Walnut Valley Water District COP, Badillo Grand Transmission Project, FGIC Insured, 6.125%, 2/01/18 .......... 2,200,000
Waugh School District, Special Tax, Corona/Ely CFD No. 1, AMBAC Insured, 5.80%, 9/01/26 ...................... 5,640,000
West and Central Basin Financing Authority Revenue, Central Basin Project, Refunding, Series A, AMBAC Insured,
5.375%, 8/01/17 ............................................................................................. 4,330,000
West Basin Municipal Water District Revenue COP, 1992 Project, Refunding, Series A, AMBAC Insured, 5.50%,
8/01/17 ................................................................................................... 3,370,000
8/01/22 ................................................................................................... 2,750,000
West Sacramento Financing Authority Revenue,
MBIA Insured, 6.25%, 9/01/16 .............................................................................. 4,185,000
Water System Improvement Project, FGIC Insured, 5.50%, 8/01/15 ............................................ 4,500,000
Water System Improvement Project, FGIC Insured, 5.50%, 8/01/24 ............................................ 1,685,000
West Sacramento RDA, Tax Allocation, West Sacramento Redevelopment Project, MBIA Insured, 6.25%, 9/01/21 ..... 3,340,000
Western Placer Unified School COP, 1998 Refunding and Capital Project, AMBAC Insured, 5.00%, 6/01/18 ......... 5,455,000
William S.Hart Joint School Financing Authority, Special Tax Revenue, Community Facilities, Refunding,
FSA Insured, 6.60%, 9/01/18 ................................................................................. 1,285,000
Windsor Joint Powers Financing Authority, Wastewater Revenue, Refunding, Series A, AMBAC Insured,
6.125%, 12/15/12 ............................................................................................ 750,000
Yuba City USD COP, Refunding, Series A, MBIA Insured, 5.25%, 2/01/22 ......................................... 2,000,000
Yucaipa-Sweetwater School Facilities Financing Authority, Special Tax Revenue, Sweetwater-Ranch Del Rey
MiddleSchool, Series A, MBIA Insured, 5.70%, 9/01/19 ........................................................ 5,000,000
TOTAL BONDS (COST $1,715,953,589) ............................................................................
ZERO COUPON/STEP-UP BONDS .5%
San Bernardino County SFMR, Series A, GNMA Secured, ETM, 5/01/22 ............................................. 28,405,000
Southern Kern USD, COP, Convertible Capital Appreciation, Building Program, Series B, zero cpn. to 3/1/06,
5.625% thereafter, 9/01/26 .................................................................................. 2,250,000
TOTAL ZERO COUPON/STEP-UP BONDS (COST $6,962,646) ............................................................
TOTAL LONG TERM INVESTMENTS (COST $1,722,916,235) ............................................................
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Travis USD, COP, Refunding & Capital Improvement Projects, AMBAC Insured,
5.40%, 9/01/19 ............................................................................................ $ 1,119,312
5.45%, 9/01/27 ............................................................................................ 6,393,905
Tri-City Hospital District Revenue,
MBIA Insured, 6.00%, 2/01/22 .............................................................................. 2,458,146
Refunding, Series A, MBIA Insured, 5.625%, 2/15/17 ........................................................ 2,942,885
Turlock Auxiliary Organization Revenue COP, California State University, Stanislaus Foundation, MBIA Insured,
5.875%, 6/01/22 ............................................................................................. 2,182,960
Turlock Irrigation District Revenue, Refunding, Series A, MBIA Insured, 5.75%, 1/01/18 ....................... 7,423,323
Union City CRDA, Tax Allocation Revenue, Community Redevelopment Project, AMBAC Insured,
5.75%, 10/01/22 ............................................................................................. 6,605,293
University of California Revenues,
Multiple Purpose Projects, Series F, FGIC Insured, 5.00%, 9/01/27 ......................................... 4,954,550
Research Facilities, Series D, FSA Insured, 5.00%, 9/01/21 ................................................ 4,628,465
Upland COP,
Police Building Project, Refunding, AMBAC Insured, 6.60%, 8/01/16 ......................................... 4,387,086
Water System Improvement Project, FGIC Insured, 6.60%, 8/01/16 ............................................ 2,625,646
Vacaville PFA, Tax Allocation Revenue, Vacaville Redevelopment Projects, 6.35%, 9/01/22 ...................... 1,425,582
Vallejo Revenue, Water Improvement Project, Refunding, Series A, FSA Insured, 5.875%, 5/01/26 ................ 13,757,875
Walnut Valley Water District COP, Badillo Grand Transmission Project, FGIC Insured, 6.125%, 2/01/18 .......... 2,352,921
Waugh School District, Special Tax, Corona/Ely CFD No. 1, AMBAC Insured, 5.80%, 9/01/26 ...................... 6,096,952
West and Central Basin Financing Authority Revenue, Central Basin Project, Refunding, Series A, AMBAC Insured,
5.375%, 8/01/17 ............................................................................................. 4,508,828
West Basin Municipal Water District Revenue COP, 1992 Project, Refunding, Series A, AMBAC Insured, 5.50%,
8/01/17 ................................................................................................... 3,588,240
8/01/22 ................................................................................................... 2,906,117
West Sacramento Financing Authority Revenue,
MBIA Insured, 6.25%, 9/01/16 .............................................................................. 4,758,093
Water System Improvement Project, FGIC Insured, 5.50%, 8/01/15 ............................................ 4,694,580
Water System Improvement Project, FGIC Insured, 5.50%, 8/01/24 ............................................ 1,743,655
West Sacramento RDA, Tax Allocation, West Sacramento Redevelopment Project, MBIA Insured, 6.25%, 9/01/21 ..... 3,622,596
Western Placer Unified School COP, 1998 Refunding and Capital Project, AMBAC Insured, 5.00%, 6/01/18 ......... 5,467,927
William S.Hart Joint School Financing Authority, Special Tax Revenue, Community Facilities, Refunding,
FSA Insured, 6.60%, 9/01/18 ................................................................................. 1,470,476
Windsor Joint Powers Financing Authority, Wastewater Revenue, Refunding, Series A, AMBAC Insured,
6.125%, 12/15/12 ............................................................................................ 844,102
Yuba City USD COP, Refunding, Series A, MBIA Insured, 5.25%, 2/01/22 ......................................... 2,042,120
Yucaipa-Sweetwater School Facilities Financing Authority, Special Tax Revenue, Sweetwater-Ranch Del Rey
MiddleSchool, Series A, MBIA Insured, 5.70%, 9/01/19 ........................................................ 5,332,200
-------------
TOTAL BONDS (COST $1,715,953,589) ............................................................................ 1,839,745,089
ZERO COUPON/STEP-UP BONDS .5% -------------
San Bernardino County SFMR, Series A, GNMA Secured, ETM, 5/01/22 ............................................. 8,387,428
Southern Kern USD, COP, Convertible Capital Appreciation, Building Program, Series B, zero cpn. to 3/1/06,
5.625% thereafter, 9/01/26 .................................................................................. 1,550,610
-------------
TOTAL ZERO COUPON/STEP-UP BONDS (COST $6,962,646) ............................................................ 9,938,038
-------------
TOTAL LONG TERM INVESTMENTS (COST $1,722,916,235) ............................................................ 1,849,683,127
-------------
</TABLE>
35
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(a)SHORT TERM INVESTMENTS .1%
Chula Vista IDR, San Diego Gas Revenue, Refunding, Series A, Daily VRDN and Put,
5.00%, 7/01/21 ................................................................................. $ 500,000 $ 500,000
Irving Ranch Water District Consolidated Revenue Bond, Refunding, Series B, Daily VRDN and Put,
5.00%, 10/01/09 ................................................................................ 2,000,000 2,000,000
--------------
TOTAL SHORT TERM INVESTMENTS (COST $2,500,000) .................................................. 2,500,000
--------------
TOTAL INVESTMENTS (COST $1,725,416,235) 99.1% ................................................... 1,852,183,127
OTHER ASSETS, LESS LIABILITIES .9% .............................................................. 17,098,495
--------------
NET ASSETS 100.0% ............................................................................... $1,869,281,622
==============
</TABLE>
See glossary of terms on page 51
(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.
36 See notes to financial statements.
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Highlights
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31, 1998
(UNAUDITED)
----------------
<S> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ............ $ 11.24
--------
Income from investment operations:
Net investment income .......................... .25
Net realized and unrealized gains (losses) ..... .17
--------
Total from investment operations ................ .42
--------
Less distributions from net investment income ... (.26)
--------
Net asset value, end of period .................. $ 11.40
========
Total return** .................................. 3.79%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ............... $186,986
Ratios to average net assets:
Expenses ....................................... .60%*
Expenses excluding waiver and payments
by affiliate .................................. .74%*
Net investment income .......................... 4.50%*
Portfolio turnover rate ......................... 1.72%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ............ $ 10.93 $ 10.67 $ 10.38 $ 10.20 $ 10.55
------------------------------------------------------------------
Income from investment operations:
Net investment income .......................... .53 .53 .53 .54 .54
Net realized and unrealized gains (losses) ..... .31 .26 .29 .17 (.36)
------------------------------------------------------------------
Total from investment operations ................ .84 .79 .82 .71 .18
------------------------------------------------------------------
Less distributions from net investment income ... (.53) (.53) (.53) (.53) (.53)
------------------------------------------------------------------
Net asset value, end of period .................. $ 11.24 $ 10.93 $ 10.67 $ 10.38 $ 10.20
==================================================================
Total return** .................................. 7.76% 7.58% 7.96% 7.19% 1.65%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ............... $155,664 $117,666 $101,199 $88,785 $94,015
Ratios to average net assets:
Expenses ....................................... .52% .47% .45% .33% .25%
Expenses excluding waiver and payments
by affiliate .................................. .78% .80% .81% .83% .80%
Net investment income .......................... 4.76% 4.96% 4.99% 5.34% 5.11%
Portfolio turnover rate ......................... 9.58% 6.29% 10.13% 10.90% 14.95%
</TABLE>
* Annualized
** Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized. Prior to May 1, 1994, dividends from net
investment income were reinvested at the offering price.
See notes to financial statements. 37
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND AMOUNT
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
LONG TERM INVESTMENTS 96.9%
BONDS 95.8%
ABAG 1915 Act, Windemere Ranch AD,
5.15%, 9/02/02 ............................................................................................ $ 595,000
5.70%, 9/02/07 ............................................................................................ 1,225,000
ABAG California Water and Wastewater Revenue, Pooled Financing Program, Series A, FSA Insured,
5.00%, 10/01/10 ............................................................................................. 3,035,000
ABAG Finance Authority of Nonprofit Corps. COP,
5.50%, 6/01/03 ............................................................................................ 360,000
5.75%, 8/01/03 ............................................................................................ 705,000
Partner North County Health Project, 5.50%, 3/01/06 ....................................................... 1,145,000
Rhoda Haas Goldman Plaza, Insured, 5.125%, 5/15/15 ........................................................ 3,000,000
ABAG Finance Corp. COP, ABAG XXVI,
Refunding, Series A, 5.90%, 6/01/02 ....................................................................... 100,000
Series B, 6.40%, 10/01/03 ................................................................................. 100,000
ABAG Revenue, Refunding, Series A-E,
5.00%, 9/15/06 ............................................................................................ 610,000
5.05%, 9/15/07 ............................................................................................ 625,000
5.40%, 9/15/14 ............................................................................................ 2,455,000
Alameda County COP, Series 1994,
5.70%, 4/01/02 ............................................................................................ 395,000
5.80%, 4/01/03 ............................................................................................ 420,000
5.90%, 4/01/04 ............................................................................................ 440,000
Antioch PFA, Reassessment Revenue, Subordinated Lien, Series B,
5.00%, 9/02/03 ............................................................................................ 1,915,000
5.20%, 9/02/05 ............................................................................................ 2,115,000
5.40%, 9/02/07 ............................................................................................ 1,175,000
Auburn COP, Civic Center Project, Refunding,
5.10%, 9/01/99 ............................................................................................ 65,000
5.30%, 9/01/00 ............................................................................................ 65,000
5.45%, 9/01/01 ............................................................................................ 70,000
5.60%, 9/01/02 ............................................................................................ 75,000
5.70%, 9/01/03 ............................................................................................ 80,000
5.75%, 9/01/04 ............................................................................................ 80,000
Bakersfield Central District Revenue RDA, Tax Allocation, Downtown Bakersfield Redevelopment, Refunding, ETM,
6.00%, 4/01/01 ............................................................................................ 295,000
6.10%, 4/01/02 ............................................................................................ 310,000
6.20%, 4/01/03 ............................................................................................ 330,000
Bakersfield Hospital Revenue, Bakersfield Memorial Hospital Project, Series A, 5.70%, 1/01/00 ................ 100,000
Brentwood 1915 Act, Capital Improvement Finance Program, No. 9, Infrastructure Financing,
5.30%, 9/02/07 ............................................................................................ 100,000
5.40%, 9/02/08 ............................................................................................ 110,000
5.50%, 9/02/09 ............................................................................................ 115,000
5.55%, 9/02/10 ............................................................................................ 100,000
California Educational Facilities Authority Revenue,
Pooled College and University Financing, Refunding, Series B, 5.80%, 6/01/02 .............................. 1,000,000
Pooled College and University Financing, Refunding, Series B, 5.90%, 6/01/03 .............................. 1,105,000
Pooled College and University Projects, Series B, 6.125%, 4/01/13 ......................................... 1,000,000
California Health Facilities Financing, San Diego Hospital Association, Series B, MBIA Insured, 5.60%, 8/01/03 100,000
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND VALUE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
LONG TERM INVESTMENTS 96.9%
BONDS 95.8%
ABAG 1915 Act, Windemere Ranch AD,
5.15%, 9/02/02 ............................................................................................ $ 595,089
5.70%, 9/02/07 ............................................................................................ 1,225,098
ABAG California Water and Wastewater Revenue, Pooled Financing Program, Series A, FSA Insured,
5.00%, 10/01/10 ............................................................................................. 3,191,788
ABAG Finance Authority of Nonprofit Corps. COP,
5.50%, 6/01/03 ............................................................................................ 381,586
5.75%, 8/01/03 ............................................................................................ 751,488
Partner North County Health Project, 5.50%, 3/01/06 ....................................................... 1,228,768
Rhoda Haas Goldman Plaza, Insured, 5.125%, 5/15/15 ........................................................ 3,016,500
ABAG Finance Corp. COP, ABAG XXVI,
Refunding, Series A, 5.90%, 6/01/02 ....................................................................... 104,524
Series B, 6.40%, 10/01/03 ................................................................................. 109,577
ABAG Revenue, Refunding, Series A-E,
5.00%, 9/15/06 ............................................................................................ 621,657
5.05%, 9/15/07 ............................................................................................ 637,656
5.40%, 9/15/14 ............................................................................................ 2,504,198
Alameda County COP, Series 1994,
5.70%, 4/01/02 ............................................................................................ 419,482
5.80%, 4/01/03 ............................................................................................ 453,407
5.90%, 4/01/04 ............................................................................................ 482,376
Antioch PFA, Reassessment Revenue, Subordinated Lien, Series B,
5.00%, 9/02/03 ............................................................................................ 1,911,725
5.20%, 9/02/05 ............................................................................................ 2,110,136
5.40%, 9/02/07 ............................................................................................ 1,171,698
Auburn COP, Civic Center Project, Refunding,
5.10%, 9/01/99 ............................................................................................ 65,747
5.30%, 9/01/00 ............................................................................................ 66,702
5.45%, 9/01/01 ............................................................................................ 72,795
5.60%, 9/01/02 ............................................................................................ 79,167
5.70%, 9/01/03 ............................................................................................ 85,542
5.75%, 9/01/04 ............................................................................................ 86,386
Bakersfield Central District Revenue RDA, Tax Allocation, Downtown Bakersfield Redevelopment, Refunding, ETM,
6.00%, 4/01/01 ............................................................................................ 310,063
6.10%, 4/01/02 ............................................................................................ 332,475
6.20%, 4/01/03 ............................................................................................ 360,697
Bakersfield Hospital Revenue, Bakersfield Memorial Hospital Project, Series A, 5.70%, 1/01/00 ................ 101,753
Brentwood 1915 Act, Capital Improvement Finance Program, No. 9, Infrastructure Financing,
5.30%, 9/02/07 ............................................................................................ 100,821
5.40%, 9/02/08 ............................................................................................ 110,980
5.50%, 9/02/09 ............................................................................................ 116,751
5.55%, 9/02/10 ............................................................................................ 100,932
California Educational Facilities Authority Revenue,
Pooled College and University Financing, Refunding, Series B, 5.80%, 6/01/02 .............................. 1,056,690
Pooled College and University Financing, Refunding, Series B, 5.90%, 6/01/03 .............................. 1,184,328
Pooled College and University Projects, Series B, 6.125%, 4/01/13 ......................................... 1,104,880
California Health Facilities Financing, San Diego Hospital Association, Series B, MBIA Insured, 5.60%, 8/01/03 108,136
</TABLE>
38
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
California HFA, SFM Purchase, Series A-1, Class III, MBIA Insured, 5.70%, 8/01/11 ...................... $2,455,000 $2,585,581
California State Public Works Board, Lease Revenue,
Department of Corrections, Coalinga State Prison, Series B, MBIA Insured, 5.50%, 12/01/08 ........... 1,000,000 1,085,880
Department of Forestry and Fire Protection, Series A, 4.875%, 10/01/18 .............................. 1,325,000 1,305,907
Regents of the University of California, Refunding, Series C, 5.00%, 12/01/14 ....................... 1,140,000 1,168,762
Various Community College Projects, Refunding, Series C, 5.50%, 9/01/09 ............................. 1,555,000 1,705,446
California Statewide CDA, COP, California Lutheran Homes, 5.375%, 11/15/06 ............................. 1,000,000 1,057,920
California Statewide CDA Revenue, COP,
Health Facilities, Barton Memorial Hospital, Refunding, Series B, 5.70%, 12/01/00 ................... 200,000 206,570
Health Facilities, Barton Memorial Hospital, Refunding, Series B, 6.40%, 12/01/05 ................... 450,000 483,935
St. Joseph Health System Group, 6.00%, 7/01/06 ...................................................... 865,000 970,219
California Statewide Communities Development Corp. COP, Pacific Homes, Series A, 5.50%, 4/01/04 ........ 585,000 627,477
Campbell COP, Civic Center Project, Refunding, 5.60%, 10/01/03 ......................................... 350,000 377,836
Carson RDA Project, Area No. 1, Refunding, 6.10%, 10/01/02 ............................................. 200,000 214,786
Central Valley Financing Authority Cogeneration Project Revenue, Carson Ice, General Project, Refunding,
MBIA Insured, 5.00%, 7/01/17 .......................................................................... 2,000,000 2,013,900
Chaffey Community College District COP, 5.10%, 9/01/13 ................................................. 1,860,000 1,920,989
Clovis COP, Water System Improvement Project, AMBAC Insured, 5.90%, 3/01/03 ............................ 100,000 108,736
Coalinga Public Financing Authority Revenue, Series B, 6.00%, 9/15/03 .................................. 1,405,000 1,435,643
Coastside County Water District 1915 Act, GO, Crystal Springs Project, Refunding,
5.10%, 9/02/03 ...................................................................................... 540,000 553,441
5.20%, 9/02/04 ...................................................................................... 1,130,000 1,154,883
5.40%, 9/02/06 ...................................................................................... 660,000 670,322
Colma 1915 Act, Local ID No. 1, Refunding,
5.00%, 9/02/01 ...................................................................................... 465,000 472,361
5.10%, 9/02/02 ...................................................................................... 485,000 495,335
5.20%, 9/02/03 ...................................................................................... 515,000 528,653
5.30%, 9/02/04 ...................................................................................... 545,000 560,789
5.40%, 9/02/05 ...................................................................................... 570,000 583,851
Colton GO, Joint USD, CFD, Special Tax, Southridge Village, Phase III, Refunding, FSA Insured,
5.65%, 9/01/09 ...................................................................................... 120,000 120,308
5.75%, 9/01/10 ...................................................................................... 130,000 130,354
Commerce Joint Powers Financing Authority, Water Facilities, Lease Revenue, Refunding, Series A,
5.50%, 10/01/02 ..................................................................................... 340,000 358,115
5.625%, 10/01/03 .................................................................................... 360,000 384,188
5.75%, 10/01/04 ..................................................................................... 470,000 508,004
Compton COP, Civic Center & Capital Improvement, Refunding, Series A,
5.00%, 9/01/08 ...................................................................................... 4,340,000 4,463,603
5.50%, 9/01/15 ...................................................................................... 1,180,000 1,224,238
Compton Sewer Revenue,
5.60%, 7/01/99 ...................................................................................... 125,000 126,556
5.70%, 7/01/00 ...................................................................................... 130,000 134,393
5.80%, 7/01/01 ...................................................................................... 140,000 147,262
5.90%, 7/01/02 ...................................................................................... 150,000 160,700
6.00%, 7/01/03 ...................................................................................... 155,000 168,942
6.10%, 7/01/04 ...................................................................................... 165,000 183,303
6.20%, 7/01/05 ...................................................................................... 175,000 195,129
</TABLE>
39
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Compton Sewer Revenue, (cont.)
6.30%, 7/01/06 ...................................................................................... $ 185,000 $ 207,035
5.00%, 9/01/08 ...................................................................................... 1,005,000 1,037,572
Concord RDA, Tax Allocation, Central Concord Redevelopment Project, Refunding, Sub-Series A,
5.50%, 7/01/02 ...................................................................................... 625,000 655,219
5.625%, 7/01/03 ..................................................................................... 655,000 695,551
Contra Costa County MFHR, Byron Park Project, Series C, 6.00%, 7/20/03 ................................. 500,000 528,790
Danville Financing Authority Revenue, Sycamore Valley, Reassessment District No.93-2,
5.40%, 9/02/01 ...................................................................................... 285,000 292,196
5.60%, 9/02/02 ...................................................................................... 450,000 464,126
5.70%, 9/02/03 ...................................................................................... 220,000 226,904
5.80%, 9/02/04 ...................................................................................... 885,000 912,762
Dinuba RDA, Tax Allocation, Subordinated-Notes-Merged, City Redevelopment Project, Subordinated Lien,
5.20%, 4/01/03 ........................................................................................ 2,500,000 2,517,550
Duarte RDA, Tax Allocation, Merged Redevelopment Project Area, Refunding, 5.125%, 10/01/16 ............. 4,930,000 4,936,064
Dublin COP, Civic Center Project, Refunding, AMBAC Insured, 5.625%, 2/01/10 ............................ 2,000,000 2,017,540
Eden Township Hospital District, Heath Facilities Revenue, COP, Eden Hospital Health Services Corp.,
Refunding, CHFCLP Insured, 5.75%, 7/01/12 ............................................................. 1,195,000 1,273,129
Foster City PFA Revenue, Community Development Project, Series A, 5.60%, 9/01/03 ....................... 1,150,000 1,232,386
Fresno Joint Powers Financing Authority, Local Agency Revenue, Refunding, Series A, 6.20%, 9/02/03 ..... 1,000,000 1,054,300
Garden Grove GO, CDA, Tax Allocation, Garden Grove Community Project, Refunding, 5.40%, 10/01/04 ....... 1,425,000 1,518,737
Glendale Parking Facilities, Joint Powers Authority Revenue, Series A, 5.30%, 3/01/03 .................. 125,000 129,941
Goleta Water District Revenue COP, Goleta Reclamation Project, Refunding, FGIC Insured, 5.50%, 12/01/08 750,000 814,410
Hesperia PFA Revenue, Series A, 5.80%, 10/01/03 ........................................................ 3,935,000 4,228,787
Hi Desert Memorial Health Care District Revenue, Refunding,
5.10%, 10/01/06 ..................................................................................... 615,000 608,918
5.125%, 10/01/07 .................................................................................... 650,000 643,325
Hollister RDA, Tax Allocation, Community Development Project, Series 1994,
5.35%, 10/01/03 ..................................................................................... 525,000 541,506
5.45%, 10/01/04 ..................................................................................... 550,000 567,292
5.55%, 10/01/05 ..................................................................................... 585,000 603,375
Imperial COP,
Wastewater System Program, Refunding, Series B, 5.40%, 10/15/06 ..................................... 865,000 907,039
Water System Program, Refunding, Series A, 5.40%, 10/15/06 .......................................... 1,250,000 1,310,750
Imperial County Local Transportation Authority, Sales Tax Revenue, Series 1993, 5.50%,
5/01/04 ............................................................................................. 490,000 512,805
5/01/05 ............................................................................................. 515,000 537,804
Inland Empire Solid Waste Financing Authority Revenue, Landfill Improvement Financing Project, Series B,
FSA Insured, 6.25%, 8/01/11 ........................................................................... 1,000,000 1,144,210
La Palma Community Development Commission, Tax Allocation, La Palma Community Development
Project No.1, Refunding,
5.20%, 6/01/00 ...................................................................................... 125,000 127,536
5.40%, 6/01/01 ...................................................................................... 130,000 134,427
5.50%, 6/01/02 ...................................................................................... 135,000 141,377
5.60%, 6/01/03 ...................................................................................... 145,000 153,674
5.70%, 6/01/04 ...................................................................................... 150,000 159,663
5.80%, 6/01/05 ...................................................................................... 160,000 170,283
</TABLE>
40
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
La Quinta RDA, Tax Allocation, Housing Redevelopment Project, Areas No. 1 and 2, MBIA Insured, 5.40%, 9/01/07 $ 560,000 $ 613,973
Lake Elsinore PFA, Tax Allocation Revenue, Lake Elsinore Redevelopment Project, Series A, FSA Insured,
5.40%, 9/01/08 ............................................................................................ 1,500,000 1,594,740
Lake Elsinore School Financing Authority Revenue, Refunding, 6.00%, 9/01/11 ................................ 1,000,000 1,088,490
Lancaster RDA, Tax Allocation,
Central Business District Redevelopment, Refunding, 5.125%, 8/01/99 ..................................... 35,000 35,337
Central Business District Redevelopment, Refunding, 5.25%, 8/01/00 ...................................... 35,000 35,738
Central Business District Redevelopment, Refunding, 5.375%, 8/01/01 ..................................... 40,000 41,280
Central Business District Redevelopment, Refunding, 5.50%, 8/01/02 ...................................... 40,000 41,773
Central Business District Redevelopment, Refunding, 5.60%, 8/01/03 ...................................... 45,000 47,402
Central Business District Redevelopment, Refunding, 5.70%, 8/01/04 ...................................... 45,000 47,605
Central Business District Redevelopment, Refunding, 5.70%, 8/01/05 ...................................... 50,000 52,725
Fox Field Redevelopment Project Area, Refunding, 5.125%, 8/01/99 ........................................ 55,000 55,529
Fox Field Redevelopment Project Area, Refunding, 5.25%, 8/01/00 ......................................... 55,000 56,160
Fox Field Redevelopment Project Area, Refunding, 5.375%, 8/01/01 ........................................ 60,000 61,919
Fox Field Redevelopment Project Area, Refunding, 5.50%, 8/01/02 ......................................... 65,000 67,881
Fox Field Redevelopment Project Area, Refunding, 5.60%, 8/01/03 ......................................... 65,000 68,470
Fox Field Redevelopment Project Area, Refunding, 5.70%, 8/01/04 ......................................... 70,000 74,052
Fox Field Redevelopment Project Area, Refunding, 5.70%, 8/01/05 ......................................... 75,000 79,087
Lancaster School District COP, Refunding, FSA Insured, 5.125%, 4/01/14 ..................................... 2,000,000 2,069,860
Lemon Grove CDA, Tax Allocation Revenue, 1998 Refunding,
5.00%, 8/01/06 .......................................................................................... 885,000 918,842
5.10%, 8/01/07 .......................................................................................... 205,000 214,401
5.20%, 8/01/08 .......................................................................................... 215,000 226,079
Lemon Grove MFHR, Hillside Terrace Apartments, Refunding, 5.375%, 1/01/19 .................................. 985,000 1,011,625
Los Angeles County MTA, Sales Tax Revenue, Proposition C, Subordinated Lien, Refunding, 2nd Senior Series A,
AMBAC Insured, 5.00%, 7/01/12 ............................................................................. 5,000,000 5,194,400
Los Angeles County Transport Commission COP, Series B,
5.90%, 7/01/00 .......................................................................................... 100,000 103,593
6.00%, 7/01/01 .......................................................................................... 200,000 211,316
Los Angeles County Wastewater System Revenue, Refunding,
Series A, FGIC Insured, 5.00%, 6/01/13 .................................................................. 2,140,000 2,209,443
Series D, FGIC Insured, 5.375%, 11/01/06 ................................................................ 2,000,000 2,156,980
Lynwood PFA Revenue, Water Systems Improvement Project, 6.15%, 6/01/08 ..................................... 565,000 622,172
Madera COP, Madera Community Hospital, Refunding, 5.10%, 3/01/03 ........................................... 515,000 537,454
Mammoth Lakes COP, Refunding,
5.70%, 6/01/10 .......................................................................................... 850,000 895,050
5.75%, 6/01/11 .......................................................................................... 250,000 262,525
Merced Irrigation District COP, Water Facilities Project, 6.125%, 11/01/03 ................................. 540,000 588,578
Mid-Peninsula Regional Open Space District COP, Special District Association Finance Corp., Series 1993,
5.10%, 9/01/02 .......................................................................................... 510,000 534,164
5.20%, 9/01/03 .......................................................................................... 530,000 561,344
Modesto Irrigation District, Financing Authority Revenue, Domestic Water Project, Series C, AMBAC Insured,
5.50%, 9/01/08 ............................................................................................ 700,000 773,689
Mojave GO, Water Agency, ID M, Morongo Basin, ETM, 6.20%, 9/01/01 .......................................... 100,000 106,647
Morgan Hill RDA, Tax Allocation, Refunding, 5.70%, 3/01/01 ................................................. 100,000 101,211
Mount Diablo Hospital District Revenue, Series A, AMBAC Insured, 5.10%, 12/01/03 ........................... 100,000 105,991
</TABLE>
41
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Murrieta COP, Road Improvement Project, 6.00%,
4/01/07 ................................................................................................ $ 235,000 $ 256,484
4/01/08 ................................................................................................ 245,000 267,351
New Haven USD, COP, Refunding, 5.30%, 7/01/01 ............................................................. 500,000 519,435
Newark USD, COP, 5.75%, 9/01/02 ........................................................................... 300,000 309,081
North City West School Facilities Financing Authority, Special Tax, Refunding, Series B, FSA Insured,
5.625%, 9/01/08 .......................................................................................... 500,000 559,410
Oakland USD, Alameda County COP, Refunding, 5.00%, 9/15/99 ................................................ 1,745,000 1,760,862
Ontario Redevelopment Financing Authority, Local Agency Revenue, Community Facility, AD No. 1, Senior Lien,
Series A, FSA Insured, 5.60%, 9/02/03 .................................................................... 970,000 1,001,709
Orange County CFD No. 86-2, Special Tax, Rancho Santa Margarita, Refunding, Series A, 5.375%, 8/15/12 ..... 1,500,000 1,535,865
Orange County COP, Recovery, Refunding, Series A, MBIA Insured, 6.00%, 7/01/08 ............................ 1,500,000 1,711,980
Orange County Development Agency, Tax Allocation, Santa Ana Heights Project Area, Refunding, 5.90%, 9/01/04 800,000 867,752
Orange County Local Transportation Authority, Sales Tax Revenue, First Senior Measure M, 6.00%, 2/15/06 ... 500,000 559,675
Orange County MFHR, Villa Santiago Rehabilitation Project, FNMA Secured, 5.60%, 10/01/27 .................. 500,000 523,125
Oroville Hospital Revenue, Oroville Hospital, Series A, CHFCLP Insured, 5.125%, 12/01/12 .................. 1,435,000 1,470,488
Palm Desert Financing Authority, Lease Revenue, Blythe County Administrative Project, 6.375%, 8/01/11 ..... 855,000 935,524
Paramount RDA, Tax Allocation, Redevelopment Project, Area No. 1, Refunding, 6.05%, 8/01/05 ............... 1,515,000 1,688,998
Paso Robles Union School District COP, 5.75%, 8/01/03 ..................................................... 1,635,000 1,763,985
Pismo Beach PFA Revenue, Series 1993,
6.25%, 9/15/01 ......................................................................................... 45,000 45,199
6.40%, 9/15/02 ......................................................................................... 50,000 50,226
6.50%, 9/15/03 ......................................................................................... 50,000 50,226
6.55%, 9/15/04 ......................................................................................... 55,000 55,242
Pleasant Hill RDA, RMR, Refunding, 5.40%, 2/01/05 ......................................................... 935,000 985,312
Pomona RDA, Tax Allocation, Mountain Meadows Redevelopment Project, Refunding, Series X, 5.35%, 12/01/16 .. 1,000,000 1,004,530
Rialto RDA, Tax Allocation, Industrial Redevelopment, Sub-Areas A & B, Refunding, Series A,
5.40%, 9/01/02 ......................................................................................... 270,000 285,536
5.50%, 9/01/03 ......................................................................................... 280,000 300,110
Richmond Joint Powers Financing Authority Revenue, Multiple Redevelopment Projects, Refunding, Series B,
5.35%, 5/15/13 ........................................................................................... 2,000,000 2,074,380
Riverside County Asset Leasing Corp., Leasehold Revenue, Riverside County Hospital Project, Series A,
5.90%, 6/01/02 ......................................................................................... 200,000 212,034
6.00%, 6/01/04 ......................................................................................... 200,000 217,774
Riverside County Housing Authority, MFHR, Brandon Place Apartments, Series B, FNMA Secured, 5.625%, 7/01/29 1,000,000 1,061,420
Sacramento MUD, Electric Revenue, Series E, 5.25%, 5/15/03 ................................................ 1,000,000 1,057,690
San Bernardino County COP, Medical Center Financing Project, Refunding, 6.00%, 8/01/09 .................... 2,000,000 2,226,900
San Bernardino County Mortgage Revenue, Don Miguel Apartments Project, Refunding, MBIA Insured,
6.00%, 9/01/03 ........................................................................................... 110,000 116,282
San Clemente 1915 Act, AD No.8, Refunding,
5.00%, 9/02/02 ......................................................................................... 415,000 425,553
5.10%, 9/02/03 ......................................................................................... 435,000 448,424
5.20%, 9/02/04 ......................................................................................... 460,000 474,191
San Diego Mortgage Revenue, Mariners Cove, Refunding, Series B-1, 5.125%, 9/01/03 ......................... 300,000 309,426
San Diego Port Facilities Revenue, National Steel & Shipbuilding Co., Refunding, 6.60%, 12/01/02 .......... 100,000 105,242
San Francisco City and County Public Utilities Commission Water Revenue, Refunding, Series A, 5.00%,
11/01/17 ................................................................................................. 5,000,000 5,011,200
</TABLE>
42
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
San Francisco City and County RDA, Mortgage Revenue,
Hotel Tax Revenue, FSA Insured, 5.80%, 7/01/01 ......................................................... $ 300,000 $ 316,290
Hotel Tax Revenue, FSA Insured, 5.90%, 7/01/02 ......................................................... 245,000 263,306
Refunding, Series A, MBIA Insured, 6.125%, 7/01/02 ..................................................... 20,000 20,202
San Gorgonio Memorial Health Care District, Health Facility Revenue, Insured, 6.375%, 6/01/08 ............. 750,000 839,610
San Joaquin County COP, General Hospital Project, 5.90%, 9/01/03 .......................................... 400,000 428,268
San Jose Financing Authority Revenue, Convention Center Project, Refunding, Series C, 5.75%, 9/01/03 ...... 300,000 321,228
San Juan USD, COP, Gold River Elementary School Project, 5.65%, 4/01/03 ................................... 600,000 602,190
San Ramon COP, Capital Improvements Project,
5.20%, 3/01/01 ......................................................................................... 85,000 87,878
5.30%, 3/01/02 ......................................................................................... 90,000 94,380
5.40%, 3/01/03 ......................................................................................... 95,000 100,972
5.50%, 3/01/04 ......................................................................................... 100,000 107,640
5.60%, 3/01/05 ......................................................................................... 105,000 113,355
Santa Barbara RDA, Tax Allocation, Central City Redevelopment Project, 6.00%, 3/01/03 ..................... 985,000 1,053,792
Santa Clara 1915 Act, Reassessment District 187, Refunding, Series 1, 5.25%, 9/02/11 ...................... 1,720,000 1,723,027
Santa Monica Parking Authority, Lease Revenue, Refunding, 6.00%, 7/01/03 .................................. 100,000 109,390
Sebastopol COP, Refunding, Series 1994,
5.50%, 6/01/03 ......................................................................................... 200,000 211,166
5.60%, 6/01/04 ......................................................................................... 215,000 229,405
5.70%, 6/01/05 ......................................................................................... 240,000 258,622
Selma PFA Revenue, Series A, MBIA Insured,
5.25%, 9/15/02 ......................................................................................... 100,000 101,961
5.50%, 9/15/04 ......................................................................................... 115,000 117,385
5.60%, 9/15/05 ......................................................................................... 120,000 122,486
5.65%, 9/15/06 ......................................................................................... 125,000 127,515
5.70%, 9/15/07 ......................................................................................... 135,000 137,715
5.70%, 9/15/08 ......................................................................................... 140,000 142,849
5.75%, 9/15/09 ......................................................................................... 150,000 153,138
5.75%, 9/15/10 ......................................................................................... 155,000 158,243
Shafter Joint Powers Financing Authority, Lease Revenue, Community Correctional Facility Project, Series A,
5.50%, 1/01/06 ........................................................................................... 1,500,000 1,602,960
Shasta Joint Powers Financing Authority, Lease Revenue, Courthouse Improvement Project, Series A,
5.80%, 6/01/00 ........................................................................................... 100,000 103,326
Solana Beach COP, City Hall Project, 5.80%, 10/01/02 ...................................................... 50,000 53,630
South Gate PFA Water Revenue, Refunding, Series A, FGIC Insured,
5.35%, 10/01/07 ........................................................................................ 995,000 1,089,316
5.45%, 10/01/08 ........................................................................................ 1,040,000 1,149,065
San Francisco Capital Improvements Financing Authority Revenue, South San Francisco Conference Center,
Refunding,
5.70%, 9/01/02 ......................................................................................... 195,000 206,150
5.80%, 9/01/03 ......................................................................................... 205,000 219,614
5.90%, 9/01/04 ......................................................................................... 215,000 233,208
Southern California Rapid Transit District Revenue, Special Benefit, AD No. A2, 5.80%, 9/01/01 ............ 100,000 104,739
Stockton Health Facilities Revenue, Dameron Hospital Association, Refunding, Series A, 5.35%, 12/01/09 .... 385,000 403,461
Stockton Port District, Port Facilities Revenue, Refunding & Improvement, Series A, FSA Insured, 5.75%,
7/01/11 .................................................................................................. 1,295,000 1,452,278
</TABLE>
43
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Sunline Transport Agency COP, Transport Finance Corp., Series B,
5.50%, 7/01/03 ................................................................................... $ 450,000 $ 481,280
5.75%, 7/01/06 ................................................................................... 445,000 484,138
Susanville PFA Revenue, Series A, AMBAC Insured, 5.90%, 9/01/02 ..................................... 100,000 105,788
Tahoe City PUD, COP, Capital Facilities Project, Series B,
6.05%, 6/01/01 ................................................................................... 290,000 303,479
6.15%, 6/01/02 ................................................................................... 835,000 888,816
6.30%, 6/01/04 ................................................................................... 545,000 598,405
Tehachapi Cummings County Water District Revenue COP, Capital Improvement Project, MBIA Insured,
5.50%, 8/01/04 ................................................................................... 280,000 301,613
5.60%, 8/01/05 ................................................................................... 300,000 323,103
5.75%, 8/01/06 ................................................................................... 320,000 345,674
Temecula RDA Revenue, Tax Allocation, Temecula Redevelopment Project No. 1, Series A, 5.40%, 2/01/04 600,000 626,952
Temecula Valley USD, Series E, FSA Insured, 5.65%, 9/01/07 .......................................... 370,000 412,169
Torrance USD, COP, Series A, 5.85%, 10/01/99 ........................................................ 100,000 101,529
Travis USD, COP, Foxboro Elementary School Construction Project, 6.30%, 9/01/02 ..................... 200,000 217,602
Trinity County PUD, COP, Electric District Facilities, Refunding, Series 1993,
5.80%, 4/01/01 ................................................................................... 340,000 352,206
5.90%, 4/01/02 ................................................................................... 360,000 377,755
6.00%, 4/01/03 ................................................................................... 380,000 403,989
Ventura USD, COP, Series A,
5.90%, 4/01/04 ................................................................................... 305,000 324,532
6.00%, 4/01/05 ................................................................................... 320,000 340,461
6.10%, 4/01/06 ................................................................................... 340,000 361,706
6.20%, 4/01/07 ................................................................................... 365,000 388,667
6.30%, 4/01/08 ................................................................................... 385,000 410,093
6.40%, 4/01/09 ................................................................................... 410,000 435,772
Virgin Islands PFA Revenue, Senior Lien, Fund Loan Notes, Refunding, Series A,
5.30%, 10/01/11 .................................................................................. 1,000,000 1,017,420
5.40%, 10/01/12 .................................................................................. 4,150,000 4,247,525
Virgin Islands Water and Power Authority, Water System Revenue, Refunding,
(b)4.875%, 7/01/06 ............................................................................... 2,000,000 1,988,220
(b)5.00%, 7/01/09 ................................................................................ 2,000,000 1,979,100
Watsonville RDA, Tax Allocation, Watsonville Redevelopment Project, Series 1993,
6.00%, 8/01/02 ................................................................................... 510,000 510,688
6.10%, 8/01/03 ................................................................................... 540,000 540,728
------------
TOTAL BONDS (COST $170,906,983) ..................................................................... 179,108,214
------------
ZERO COUPON/STEP-UP BONDS 1.1%
San Joaquin Hills Transportation Corridor Agency, Toll Road Revenue, Refunding, Series A, zero cpn. to
1/15/07, 5.60% thereafter, 1/15/16 ................................................................. 3,000,000 2,092,800
------------
TOTAL ZERO COUPON/STEP-UP BONDS (COST $1,925,831) ................................................... 2,092,800
------------
TOTAL LONG TERM INVESTMENTS (COST $172,832,814) ..................................................... 181,201,014
------------
</TABLE>
44
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(a)SHORT TERM INVESTMENTS 4.0%
California State Economic Development Financing Authority Revenue,California
Independent Systems Project, Series B, Daily VRDN and Put, 4.90%, 4/01/08 . . . . . . . . . . . . . . . $ 500,000 $ 500,000
Chula Vista IDR, San Diego Gas Revenue, Refunding, Series A, Daily VRDN and Put, 5.00% 7/01/21 . . . . 100,000 100,000
Irvine 1915 Act, AD No.97, Daily VRDN and Put, 5.10%, 9/02/23 . . . . . . . . . . . . . . . . . . . . . 5,500,000 5,500,000
Irvine Ranch Water District, Consolidated Bonds, Refunding, Series B, Daily VRDN and Put, 5.00%, 10/01/99 400,000 400,000
Irvine Ranch Water District COP, Capital Improvement Project, Daily VRDN and Put, 5.00%, 8/01/16 . . . . 900,000 900,000
------------
TOTAL SHORT TERM INVESTMENTS (COST $7,400,000) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,400,000
------------
TOTAL INVESTMENTS (COST $180,232,814) 100.9% . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188,601,014
OTHER ASSETS, LESS LIABILITIES (.9%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,615,227)
------------
NET ASSETS 100.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $186,985,787
============
</TABLE>
See glossary of terms on page 51.
(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.
45
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Highlights
FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED JUNE 30,
DECEMBER 31,1998 -------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
---------------------------------------------------------------------
Income from investment operations -
net investment income . . . . . . . . . . . . .01 .03 .03 .03 .03 .02
Less distributions from net investment income . (.01) (.03) (.03) (.03) (.03) (.02)
---------------------------------------------------------------------
Net asset value, end of period . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======================================================================
Total return** . . . . . . . . . . . . . . . . . 1.22% 2.85% 2.85% 2.85% 2.94% 1.83%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) . . . . . . $633,036 $656,725 $639,791 $597,819 $642,157 $754,121
Ratios to average net assets:
Expenses . . . . . . . . . . . . . . . . . . .60%* .60% .60% .63% .64% .61%
Net investment income . . . . . . . . . . . . 2.42%* 2.82% 2.83% 2.83% 2.88% 1.82%
</TABLE>
*Annualized
**Total return is not annualized.
46 See notes to financial statements.
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND AMOUNT
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENTS 99.4%
(a)Alameda-Contra Costa Schools Financing Authority, COP, Capital Improvement Financing Projects, Weekly VRDN
and Put, 3.70%,
Series C, 7/01/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,500,000
Series E, 6/01/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000
Alameda County TRAN, 4.50%, 7/07/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000
(a)Anaheim COP, 1993 Partnership Project, Refunding, AMBAC Insured, Weekly VRDN and Put, 3.65%, 8/01/19 . . . . . . 4,600,000
(a)Anaheim COP, Police Facilities Refinancing Project, Refunding, AMBAC Insured, Weekly VRDN and Put,
3.65%, 8/01/08 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,450,000
(a)Big Bear Lake Industrial Revenue, Southwest Gas Corp. Project, Series A, Weekly VRDN and Put, 3.75%, 12/01/28 . . 2,700,000
(a)Burbank RDA, MFR, Issue A, Weekly VRDN and Put, 3.15%, 11/01/10 . . . . . . . . . . . . . . . . . . . . . . . . 1,400,000
(a)Butte County Housing Authority MFR, Pine Tree Apartments Project, Weekly VRDN and Put, 3.75%, 12/01/10 . . . . 2,490,000
(a)California Health Facilities Financing Authority Revenue,
Children's Hospital, MBIA Insured, Weekly VRDN and Put, 3.60%, 11/01/21 . . . . . . . . . . . . . . . . . . . 2,500,000
Floating Pool Program, Weekly VRDN and Put, 3.60%, 9/01/20 . . . . . . . . . . . . . . . . . . . . . . . . . 700,000
Refunding, Catholic Healthcare, Series B, MBIA Insured, Weekly VRDN and Put, 3.60%, 7/01/12 . . . . . . . . . 4,650,000
Refunding, Catholic West Facility, Series B, MBIA Insured, Weekly VRDN and Put, 3.60%, 7/01/05 . . . . . . . . 7,400,000
Refunding, Catholic West Facility, Series D, MBIA Insured, Weekly VRDN and Put, 3.60%, 7/01/18 . . . . . . . . 2,100,000
Refunding, MF, Series C, FNMA Secured, Weekly VRDN and Put, 3.55%, 7/15/13 . . . . . . . . . . . . . . . . . . 4,650,000
Refunding, Sutter, Series B, AMBAC Insured, Daily VRDN and Put, 5.10%, 7/01/12 . . . . . . . . . . . . . . . . 12,750,000
Santa Barbara Cottage Hospital, Series B, Weekly VRDN and Put, 3.75%, 9/01/05 . . . . . . . . . . . . . . . . 1,620,000
Scripps Health, Series A, MBIA Insured, Weekly VRDN and Put, 3.90%, 7/01/10 . . . . . . . . . . . . . . . . . 5,000,000
St. Francis Medical Center, Series F, MBIA Insured, Weekly VRDN and Put, 3.90%, 7/01/10 . . . . . . . . . . . 1,300,000
Sutter Health, Series A, Daily VRDN and Put, 5.10%, 3/01/20 . . . . . . . . . . . . . . . . . . . . . . . . . 2,900,000
(a)California PCFA Revenue,
Occidental Geo/Santa Fe Geothermal, Monthly VRDN and Weekly Put, 3.25%, 9/01/13 . . . . . . . . . . . . . . . 4,700,000
Refunding, PG&E, Series B, Daily VRDN and Put, 5.05%, 11/01/26 . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000
Reynolds Metals Co. Project, Weekly VRDN and Put, 3.35%, 12/01/15 . . . . . . . . . . . . . . . . . . . . . . 1,000,000
(a)California PCFA, Solid Waste Disposal Revenue, Series A,
Colmac Energy Project, Weekly VRDN and Put, 3.75%, 12/01/16 . . . . . . . . . . . . . . . . . . . . . . . . . 1,200,000
Shell Oil Co. Martinez Project, Weekly VRDN and Put, 5.00%, 10/01/24 . . . . . . . . . . . . . . . . . . . . 2,000,000
(a)California Public Capital Improvements Financing Authority Revenue, Pooled Project, Series C, Quarterly VRDN
and Put, 3.10%, 6/01/28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,500,000
California School Cash Reserve Program, Authority, Pooled Project, Series A, 4.50%, 7/02/99 . . . . . . . . . . . 29,000,000
California State Economic Development Financing Authority Revenue,
Independent System Project, Project B, 4.90%, 4/01/08 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,900,000
(a)Independent System Project, Series C, Daily VRDN and Put, 5.15%, 4/01/08 . . . . . . . . . . . . . . . . . 3,700,000
(a)Refunding, KQED Inc. Project, Weekly VRDN and Put, 3.40%, 4/01/20 . . . . . . . . . . . . . . . . . . . . 2,455,000
California State GO
Refunding, 4.00%, 2/01/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,650,000
TECP, 2.70%, 2/10/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500,000
Variable Purpose, Series B, C, G and H, 7.00%, 6/01/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,295,000
California State RAN, 4.00%, 6/30/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,700,000
(a)California Statewide Communities Development Corp. Revenue, Series C, Weekly VRDN and Put, 3.85%, 12/01/19,
American Kleaner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,550,000
Karcher Property Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,700,000
Capistrano USD, Community Facilities District, Special Tax Aliso Viejo, 7.60%, 9/01/99 . . . . . . . . . . . . . 4,000,000
(a)Chico MFMR, Webb Homes Project, Monthly VRDN and Weekly Put, 3.20%, 1/01/10 . . . . . . . . . . . . . . . . . 2,270,000
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND VALUE
----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENTS 99.4%
(a)Alameda-Contra Costa Schools Financing Authority, COP, Capital Improvement Financing Projects, Weekly VRDN
and Put, 3.70%,
Series C, 7/01/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,500,000
Series E, 6/01/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000
Alameda County TRAN, 4.50%, 7/07/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,013,347
(a)Anaheim COP, 1993 Partnership Project, Refunding, AMBAC Insured, Weekly VRDN and Put, 3.65%, 8/01/19 . . . . . 4,600,000
(a)Anaheim COP, Police Facilities Refinancing Project, Refunding, AMBAC Insured, Weekly VRDN and Put,
3.65%, 8/01/08 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,450,000
(a)Big Bear Lake Industrial Revenue, Southwest Gas Corp. Project, Series A, Weekly VRDN and Put, 3.75%, 12/01/28 . . 2,700,000
(a)Burbank RDA, MFR, Issue A, Weekly VRDN and Put, 3.15%, 11/01/10 . . . . . . . . . . . . . . . . . . . . . . . . 1,400,000
(a)Butte County Housing Authority MFR, Pine Tree Apartments Project, Weekly VRDN and Put, 3.75%, 12/01/10 . . . . 2,490,000
(a)California Health Facilities Financing Authority Revenue,
Children's Hospital, MBIA Insured, Weekly VRDN and Put, 3.60%, 11/01/21 . . . . . . . . . . . . . . . . . . . . 2,500,000
Floating Pool Program, Weekly VRDN and Put, 3.60%, 9/01/20 . . . . . . . . . . . . . . . . . . . . . . . . . . 700,000
Refunding, Catholic Healthcare, Series B, MBIA Insured, Weekly VRDN and Put, 3.60%, 7/01/12 . . . . . . . . . . 4,650,000
Refunding, Catholic West Facility, Series B, MBIA Insured, Weekly VRDN and Put, 3.60%, 7/01/05 . . . . . . . . 7,400,000
Refunding, Catholic West Facility, Series D, MBIA Insured, Weekly VRDN and Put, 3.60%, 7/01/18 . . . . . . . . 2,100,000
Refunding, MF, Series C, FNMA Secured, Weekly VRDN and Put, 3.55%, 7/15/13 . . . . . . . . . . . . . . . . . . 4,650,000
Refunding, Sutter, Series B, AMBAC Insured, Daily VRDN and Put, 5.10%, 7/01/12 . . . . . . . . . . . . . . . . 12,750,000
Santa Barbara Cottage Hospital, Series B, Weekly VRDN and Put, 3.75%, 9/01/05 . . . . . . . . . . . . . . . . . 1,620,000
Scripps Health, Series A, MBIA Insured, Weekly VRDN and Put, 3.90%, 7/01/10 . . . . . . . . . . . . . . . . . . 5,000,000
St. Francis Medical Center, Series F, MBIA Insured, Weekly VRDN and Put, 3.90%, 7/01/10 . . . . . . . . . . . 1,300,000
Sutter Health, Series A, Daily VRDN and Put, 5.10%, 3/01/20 . . . . . . . . . . . . . . . . . . . . . . . . . . 2,900,000
(a)California PCFA Revenue,
Occidental Geo/Santa Fe Geothermal, Monthly VRDN and Weekly Put, 3.25%, 9/01/13 . . . . . . . . . . . . . . . . 4,700,000
Refunding, PG&E, Series B, Daily VRDN and Put, 5.05%, 11/01/26 . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000
Reynolds Metals Co. Project, Weekly VRDN and Put, 3.35%, 12/01/15 . . . . . . . . . . . . . . . . . . . . . . 1,000,000
(a)California PCFA, Solid Waste Disposal Revenue, Series A,
Colmac Energy Project, Weekly VRDN and Put, 3.75%, 12/01/16 . . . . . . . . . . . . . . . . . . . . . . . . . 1,200,000
Shell Oil Co. Martinez Project, Weekly VRDN and Put, 5.00%, 10/01/24 . . . . . . . . . . . . . . . . . . . . . 2,000,000
(a)California Public Capital Improvements Financing Authority Revenue, Pooled Project, Series C, Quarterly VRDN
and Put, 3.10%, 6/01/28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,500,000
California School Cash Reserve Program, Authority, Pooled Project, Series A, 4.50%, 7/02/99 . . . . . . . . . . . 29,116,853
California State Economic Development Financing Authority Revenue,
Independent System Project, Project B, 4.90%, 4/01/08 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,900,000
(a)Independent System Project, Series C, Daily VRDN and Put, 5.15%, 4/01/08 . . . . . . . . . . . . . . . . . 3,700,000
(a)Refunding, KQED Inc. Project, Weekly VRDN and Put, 3.40%, 4/01/20 . . . . . . . . . . . . . . . . . . . . . 2,455,000
California State GO
Refunding, 4.00%, 2/01/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,651,641
TECP, 2.70%, 2/10/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500,000
Variable Purpose, Series B, C, G and H, 7.00%, 6/01/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,313,285
California State RAN, 4.00%, 6/30/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,868,463
(a)California Statewide Communities Development Corp. Revenue, Series C, Weekly VRDN and Put, 3.85%, 12/01/19,
American Kleaner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,550,000
Karcher Property Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,700,000
Capistrano USD, Community Facilities Distric, Special Tax Aliso Viejo, 7.60%, 9/01/99 . . . . . . . . . . . . . . 4,201,557
(a)Chico MFMR, Webb Homes Project, Monthly VRDN and Weekly Put, 3.20%, 1/01/10 . . . . . . . . . . . . . . . . . 2,270,000
</TABLE>
47
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND AMOUNT
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENTS (CONT.)
(a)Concord MFMR, Weekly VRDN and Put,
Arcadian Facility, Series A, 3.55%, 7/15/18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 8,100,000
Bel Air Apartments, Issue A, 3.70%, 12/01/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 500,000
(a)Duarte RDA, COP, Johnson Duarte Project, Series B, Weekly VRDN and Put, 3.70%, 12/01/14, . . . . . . . . . . .. 1,000,000
(a)Dublin Housing Authority, MFHR, Park Sierra Housing, Series A, Weekly VRDN and Put, 3.80%, 6/01/28 . . . . . . . 1,100,000
East Bay MUD, TECP, 2.75%, 2/09/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,000,000
(a)Foothill/Eastern Transportation Corridor Agency, California Toll Road Revenue, Weekly VRDN and Put, 1/02/35,
Series B, 3.75% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 15,400,000
Series C, 3.60% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000
(a)Fresno MFHR, Refunding, Heron Pointe Apartments, Series A, Weekly VRDN and Put, 3.75%, 6/01/07 . . . . . . . . . 1,000,000
Inglewood Redevelop Agency, Tax Allocation, Merged Redevelop Project, Refunding, Series A, 3.10%, 5/01/99 . . .. 850,000
(a)Irvine 1915 Act, Daily VRDN and Put, 5.10%,
AD 92, 9/02/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 4,545,000
AD 93, Oak Creek Project, 9/02/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,400,000
AD 95, 9/02/20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 3,600,000
AD 96, Northwest Project, 9/02/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,500,000
AD 97, 9/02/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 14,600,000
(a)Irvine Ranch Water District, COP, Daily VRDN and Put, 5.00%, 8/01/16 . . . . . . . . . . . . . . . . . . . . . . 1,700,000
(a)Kern County Board Education, TRAN, Weekly VRDN and Put, 6/30/99
4.25% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000
5.10% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400,000
(a)Kern County COP, Kern Public Facilities Project, Series A, Weekly VRDN and Put, 3.60%, 8/01/06 . . . . . . . . . 1,800,000
(a)Lancaster RDA, MFHR, Westwood Park Apartments, Series K, Weekly VRDN and Put, 3.40%, 12/01/07 . . . . . . . . .. 900,000
(a)Livermore MFHR, Refunding, Richards Manor, Series A, Weekly VRDN and Put, 3.05%, 12/01/22 . . . . . . . . . . .. 6,870,000
(a)Los Angeles Community RDA, MFHR, Grand Promende Project, Weekly VRDN and Put, 3.40%, 12/01/10 . . . . . . . . .. 1,300,000
(a)Los Angeles County Housing Authority, MFHR, Weekly VRDN and Put, Sand Canyon Ranch Project, Series F,
3.50%, 11/01/06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 4,500,000
(a)Los Angeles County Pension Obligation, Refunding, AMBAC Insured, Weekly VRDN and Put, 3.70%, 6/30/07,
Series A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2,500,000
Series B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 6,600,000
Los Angeles County TRAN, Series A, 4.50%, 6/30/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,400,000
(a)Los Angeles CRDA, COP, Weekly VRDN and Put,
Baldwin Hill Park, 3.80%, 12/01/14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1,000,000
Broadway Spring Center Program, 3.85%, 7/01/12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 400,000
(a)Los Angeles MFHR, Housing, Mariposa Gardens Project, Series H, Weekly VRDN and Put, 2.75%, 9/01/15 . . . . . . . 600,000
(a)Los Angeles MFHR, Weekly VRDN and Put,
Casden Project, Series K, 3.60%, 7/01/10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,300,000
Lucas Studios Project, Series D, 4.05%, 12/01/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200,000
Masselin Manor, 3.65%, 7/01/15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400,000
Los Angeles Water and Power, TECP, 2.80%, 2/16/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5,000,000
(a)Metropolitan Water District, Southern California Waterworks Revenue, Refunding, Series A, AMBAC Insured,
Weekly VRDN and Put, 3.75%, 6/01/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,365,000
(a)Moorpark MFR, Refunding, Le Club Apartments Project, Series A, Weekly VRDN and Put, 3.65%, 11/01/15 . . . . . .. 3,500,000
(a)M-S-R Public Power Agency Revenue, San Juan Project, Refunding, Subordinated Lien, Series E, MBIA Insured,
Weekly VRDN and Put, 3.80%, 7/01/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,400,000
Oakland USD, Alameda Revenue County, TRAN, 3.25%, 11/09/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000
(a)Ontario MFR, Park Centre Partners Project, Series A, Weekly VRDN and Put, 3.447%, 8/01/07 . . . . . . . . . . .. 1,900,000
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENTS (CONT.)
(a)Concord MFMR, Weekly VRDN and Put,
Arcadian Facility, Series A, 3.55%, 7/15/18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,100,000
Bel Air Apartments, Issue A, 3.70%, 12/01/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000
(a)Duarte RDA, COP, Johnson Duarte Project, Series B, Weekly VRDN and Put, 3.70%, 12/01/14, . . . . . . . . . . . . 1,000,000
(a)Dublin Housing Authority, MFHR, Park Sierra Housing, Series A, Weekly VRDN and Put, 3.80%, 6/01/28 . . . . . . .. 1,100,000
East Bay MUD, TECP, 2.75%, 2/09/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 13,000,000
(a)Foothill/Eastern Transportation Corridor Agency, California Toll Road Revenue, Weekly VRDN and Put, 1/02/35,
Series B, 3.75% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,400,000
Series C, 3.60% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5,000,000
(a)Fresno MFHR, Refunding, Heron Pointe Apartments, Series A, Weekly VRDN and Put, 3.75%, 6/01/07 . . . . . . . . .. 1,000,000
Inglewood Redevelop Agency, Tax Allocation, Merged Redevelop Project, Refunding, Series A, 3.10%, 5/01/99 . . . . 850,244
(a)Irvine 1915 Act, Daily VRDN and Put, 5.10%,
AD 92, 9/02/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,545,000
AD 93, Oak Creek Project, 9/02/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5,400,000
AD 95, 9/02/20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,600,000
AD 96, Northwest Project, 9/02/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 6,500,000
AD 97, 9/02/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,600,000
(a)Irvine Ranch Water District, COP, Daily VRDN and Put, 5.00%, 8/01/16 . . . . . . . . . . . . . . . . . . . . . .. 1,700,000
(a)Kern County Board Education, TRAN, Weekly VRDN and Put, 6/30/99
4.25% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 3,009,999
5.10% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2,400,000
(a)Kern County COP, Kern Public Facilities Project, Series A, Weekly VRDN and Put, 3.60%, 8/01/06 . . . . . . . . .. 1,800,000
(a)Lancaster RDA, MFHR, Westwood Park Apartments, Series K, Weekly VRDN and Put, 3.40%, 12/01/07 . . . . . . . . . . 900,000
(a)Livermore MFHR, Refunding, Richards Manor, Series A, Weekly VRDN and Put, 3.05%, 12/01/22 . . . . . . . . . . . . 6,870,000
(a)Los Angeles Community RDA, MFHR, Grand Promende Project, Weekly VRDN and Put, 3.40%, 12/01/10 . . . . . . . . . . 1,300,000
(a)Los Angeles County Housing Authority, MFHR, Weekly VRDN and Put, Sand Canyon Ranch Project, Series F,
3.50%, 11/01/06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500,000
(a)Los Angeles County Pension Obligation, Refunding, AMBAC Insured, Weekly VRDN and Put, 3.70%, 6/30/07,
Series A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500,000
Series B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,600,000
Los Angeles County TRAN, Series A, 4.50%, 6/30/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 34,546,309
(a)Los Angeles CRDA, COP, Weekly VRDN and Put,
Baldwin Hill Park, 3.80%, 12/01/14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000
Broadway Spring Center Program, 3.85%, 7/01/12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,000
(a)Los Angeles MFHR, Housing, Mariposa Gardens Project, Series H, Weekly VRDN and Put, 2.75%, 9/01/15 . . . . . . .. 600,000
(a)Los Angeles MFHR, Weekly VRDN and Put,
Casden Project, Series K, 3.60%, 7/01/10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,300,000
Lucas Studios Project, Series D, 4.05%, 12/01/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200,000
Masselin Manor, 3.65%, 7/01/15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400,000
Los Angeles Water and Power, TECP, 2.80%, 2/16/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5,000,000
(a)Metropolitan Water District, Southern California Waterworks Revenue, Refunding, Series A, AMBAC Insured,
Weekly VRDN and Put, 3.75%, 6/01/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,365,000
(a)Moorpark MFR, Refunding, Le Club Apartments Project, Series A, Weekly VRDN and Put, 3.65%, 11/01/15 . . . . . . . 3,500,000
(a)M-S-R Public Power Agency Revenue, San Juan Project, Refunding, Subordinated Lien, Series E, MBIA Insured,
Weekly VRDN and Put, 3.80%, 7/01/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 15,400,000
Oakland USD, Alameda Revenue County, TRAN, 3.25%, 11/09/99 . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5,018,686
(a)Ontario MFR, Park Centre Partners Project, Series A, Weekly VRDN and Put, 3.447%, 8/01/07 . . . . . . . . . . . . 1,900,000
</TABLE>
48
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
Statement of Investments, December 31, 1998 (unaudited) (cont.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND AMOUNT
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENTS (CONT.)
(a)Orange County Apartment Development Revenue, Weekly VRDN and Put,
Issue I, Park Ridge, 3.40%, 11/01/08 ...................................................................... $ 1,600,000
Jessy L. Frost Project, Issue B, 3.60%, 3/01/09 ........................................................... 100,000
Refunding, The Lakes Projects, Series A, 3.80%, 12/01/06 .................................................. 9,250,000
(a)Orange County, COP, Series 1 and 2, Weekly VRDN and Put, 5.00%, 8/01/17 .................................... 6,000,000
(a)Oxnard RDA, COP, Channel Islands Business Center, Weekly VRDN and Put, 3.928%, 7/01/05 ..................... 390,000
(a)Pico Rivera RDA, COP, Crossroad Plaza Project, Weekly VRDN and Put, 3.50%, 12/01/10 ........................ 1,500,000
(a)Pleasanton MFMR Var-Valley Plaza-A-Remarketing, Weekly VRDN and Put, 3.55%, 7/15/18 ........................ 3,660,000
Puerto Rico Commonwealth, TRAN, Series A, 3.50%, 7/30/99, .................................................... 2,000,000
(a)Rancho Mirage RDA, COP, Weekly VRDN and Put, 3.70%, 10/01/16 ............................................... 4,100,000
(a)Redlands MFHR, Refunding, Parkview Terrace, Series A, Weekly VRDN and Put, 3.75%, 2/01/16 ................. 3,550,000
(a)Redwood City, COP, City Hall Project, Weekly VRDN and Put, 3.85%, 7/01/21 .................................. 2,400,000
(a)Riverside County Housing Authority MFMR, Emeritus Park, Series B, Weekly VRDN and Put, 3.55%, 7/15/18 ....... 3,150,000
(a)Riverside County IDA Revenue, Weekly VRDN and Put, Calavo Growers, 3.50%, 9/01/05 ......................... 1,500,000
Riverside County, Special Tax, 3.50%, 9/01/99 ............................................................... 8,000,000
(a)Roseville Finance Authority Hospital, Lease Revenue, Series A, Roseville Hospital, Weekly VRDN and Put,
3.65%, 10/01/14 ............................................................................................. 9,100,000
(a)Sacramento, Cogeneration Authority, Cogeneration Project Revenue, Refunding, 4.50%, 7/01/99 ................ 900,000
(a)Sacramento County COP, Administration Center and Court House Project, Weekly VRDN and Put,
3.70%,6/01/20 .............................................................................................. 8,255,000
(a)Sacramento County MFR, Various Housing Projects, Smoketree, Series A, Weekly VRDN and Put, 3.55%, 4/15/10 .. 6,850,000
Sacramento MUD, TECP, 2.80%, 2/01/99 ........................................................................ 12,000,000
(a)San Bernardino County, MFHR, Weekly VRDN and Put,
Refunding, Quail Properties, Series A, 3.55%, 7/01/14 ..................................................... 4,350,000
Western Properties Project I, 3.20%, 2/01/05 .............................................................. 1,950,000
Western Properties Project III, 3.20%, 8/01/05 ........................................................... 900,000
Western Properties Project IV, 3.20%, 8/01/05 ............................................................. 1,600,000
Western Properties Project V, 3.20%, 8/01/05 .............................................................. 2,550,000
(a)San Diego County MFHR, Nationwide, Series C, Weekly VRDN and Put, 3.55%, 4/15/05 ........................... 1,400,000
San Diego Gas and Electric, TECP, 3.25%, 1/15/99 ............................................................ 5,500,000
(a)San Diego MFMR, California Housing Authority, La Cima Apartments, Series K, Weekly VRDN and Put,
3.65%, 12/01/08 ............................................................................................. 2,400,000
(a)San Diego MFMR, Refunding, University Town Center Apartments, Weekly VRDN and Put, 3.70%, 10/01/15 ......... 4,900,000
(a)San Dimas RDA, Commercial Development Revenue, San Dimas Commercial Center, Monthly VRDN and Put,
3.30%, 12/01/13 ............................................................................................. 900,000
San Francisco Bart, TECP, 2.75%, 4/05/99 .................................................................... 10,000,000
(a)San Francisco City and County MFHR, Winterland Project, Series C, Weekly VRDN and Put, 3.50%, 6/01/06 ...... 4,500,000
(a)San Francisco City and County RDA, MFR, Refunding, Fillmore Center, Series B-2, Weekly VRDN and Put,
3.70%, 12/01/17 ............................................................................................. 1,000,000
(a)San Francisco City and County RDA, MFR, Rincon Center Project No.8, Series B, Weekly VRDN and Put,
3.50%, 12/01/06 ............................................................................................. 4,295,000
(a)San Jose MFMR, Somerset Park Apartment Project, Weekly VRDN and Put, 3.50%, 11/01/17 ...................... 1,000,000
(a)San Jose-Santa Clara Water Financing Authority, Sewer Revenue, Series B, Weekly VRDN and Put,
3.65%, 11/15/11 ............................................................................................. 1,200,000
(a)San Mateo County Housing Authority, MFHR, Pacific Oaks Apartment Project, Series A, Weekly VRDN and Put,
3.70%, 7/01/17 ............................................................................................. 2,950,000
(a)Santa Ana MFHR, Refunding, Vintage Apartments, Series A, Weekly VRDN and Put, 3.70%, 12/01/22 ............. 3,500,000
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENTS (CONT.)
(a)Orange County Apartment Development Revenue, Weekly VRDN and Put,
Issue I, Park Ridge, 3.40%, 11/01/08 ...................................................................... $ 1,600,000
Jessy L. Frost Project, Issue B, 3.60%, 3/01/09 ........................................................... 100,000
Refunding, The Lakes Projects, Series A, 3.80%, 12/01/06 .................................................. 9,250,000
(a)Orange County, COP, Series 1 and 2, Weekly VRDN and Put, 5.00%, 8/01/17 .................................... 6,000,000
(a)Oxnard RDA, COP, Channel Islands Business Center, Weekly VRDN and Put, 3.928%, 7/01/05 ..................... 390,000
(a)Pico Rivera RDA, COP, Crossroad Plaza Project, Weekly VRDN and Put, 3.50%, 12/01/10 ........................ 1,500,000
(a)Pleasanton MFMR Var-Valley Plaza-A-Remarketing, Weekly VRDN and Put, 3.55%, 7/15/18 ........................ 3,660,000
Puerto Rico Commonwealth, TRAN, Series A, 3.50%, 7/30/99, ................................................... 2,007,381
(a)Rancho Mirage RDA, COP, Weekly VRDN and Put, 3.70%, 10/01/16 ............................................... 4,100,000
(a)Redlands MFHR, Refunding, Parkview Terrace, Series A, Weekly VRDN and Put, 3.75%, 2/01/16 ................. 3,550,000
(a)Redwood City, COP, City Hall Project, Weekly VRDN and Put, 3.85%, 7/01/21 .................................. 2,400,000
(a)Riverside County Housing Authority MFMR, Emeritus Park, Series B, Weekly VRDN and Put, 3.55%, 7/15/18 ..... 3,150,000
(a)Riverside County IDA Revenue, Weekly VRDN and Put, Calavo Growers, 3.50%, 9/01/05 ......................... 1,500,000
Riverside County, Special Tax, 3.50%, 9/01/99 ............................................................... 8,000,000
(a)Roseville Finance Authority Hospital, Lease Revenue, Series A, Roseville Hospital, Weekly VRDN and Put,
3.65%, 10/01/14 ............................................................................................. 9,100,000
(a)Sacramento, Cogeneration Authority, Cogeneration Project Revenue, Refunding, 4.50%, 7/01/99 ................ 904,353
(a)Sacramento County COP, Administration Center and Court House Project, Weekly VRDN and Put,
3.70%, 6/01/20 ............................................................................................. 8,255,000
(a)Sacramento County MFR, Various Housing Projects, Smoketree, Series A, Weekly VRDN and Put, 3.55%, 4/15/10 .. 6,850,000
Sacramento MUD, TECP, 2.80%, 2/01/99 ......................................................................... 12,000,000
(a)San Bernardino County, MFHR, Weekly VRDN and Put,
Refunding, Quail Properties, Series A, 3.55%, 7/01/14 ..................................................... 4,350,000
Western Properties Project I, 3.20%, 2/01/05 .............................................................. 1,950,000
Western Properties Project III, 3.20%, 8/01/05 ........................................................... 900,000
Western Properties Project IV, 3.20%, 8/01/05 ............................................................. 1,600,000
Western Properties Project V, 3.20%, 8/01/05 .............................................................. 2,550,000
(a)San Diego County MFHR, Nationwide, Series C, Weekly VRDN and Put, 3.55%, 4/15/05 ........................... 1,400,000
San Diego Gas and Electric, TECP, 3.25%, 1/15/99 ............................................................. 5,500,000
(a)San Diego MFMR, California Housing Authority, La Cima Apartments, Series K, Weekly VRDN and Put,
3.65%, 12/01/08 ............................................................................................. 2,400,000
(a)San Diego MFMR, Refunding, University Town Center Apartments, Weekly VRDN and Put, 3.70%, 10/01/15 ......... 4,900,000
(a)San Dimas RDA, Commercial Development Revenue, San Dimas Commercial Center, Monthly VRDN and Put,
3.30%, 12/01/13 ............................................................................................. 900,000
San Francisco Bart, TECP, 2.75%, 4/05/99 ..................................................................... 10,000,000
(a)San Francisco City and County MFHR, Winterland Project, Series C, Weekly VRDN and Put, 3.50%, 6/01/06 ...... 4,500,000
(a)San Francisco City and County RDA, MFR, Refunding, Fillmore Center, Series B-2, Weekly VRDN and Put,
3.70%, 12/01/17 ............................................................................................. 1,000,000
(a)San Francisco City and County RDA, MFR, Rincon Center Project No.8, Series B, Weekly VRDN and Put,
3.50%, 12/01/06 ............................................................................................. 4,295,000
(a)San Jose MFMR, Somerset Park Apartment Project, Weekly VRDN and Put, 3.50%, 11/01/17 ...................... 1,000,000
(a)San Jose-Santa Clara Water Financing Authority, Sewer Revenue, Series B, Weekly VRDN and Put,
3.65%, 11/15/11 ............................................................................................. 1,200,000
(a)San Mateo County Housing Authority, MFHR, Pacific Oaks Apartment Project, Series A, Weekly VRDN and Put,
3.70%, 7/01/17 ............................................................................................. 2,950,000
(a)Santa Ana MFHR, Refunding, Vintage Apartments, Series A, Weekly VRDN and Put, 3.70%, 12/01/22 ............. 3,500,000
</TABLE>
49
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND AMOUNT
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS (CONT.)
<S> <C>
(a)Santa Clara County Housing Authority, MFHR, Refunding, Benton Park Center Apartments, Series A,
FNMA Secured, Weekly VRDN and Put, 3.80%, 12/15/25 ............................................................. $ 5,000,000
Santa Clara County, TRAN, 4.50%, 10/01/99 ....................................................................... 3,000,000
(a)South San Francisco MFR, Magnolia Plaza Apartments, Series A, Weekly VRDN and Put, 3.70%, 5/01/17 ............. 500,000
(a)Southern California Public Power Authority Revenue, Weekly VRDN and Put,
3.65%, 7/01/17 ................................................................................................ 500,000
Transmission Project, Refunding, AMBAC Insured, 3.65%, 7/01/19 ............................................... 27,100,000
Transmission Project, Refunding, Series B, FSA Insured, 3.80%, 7/01/23 ....................................... 6,600,000
(a)Southern California Public Power Authority, Sub-Palo Verde Project, Refunding, Series B, AMBAC Insured,
Weekly VRDN and Put, 3.65%, 7/01/09 .......................................................................... 2,000,000
(a)Suisun City MFMR, Housing Authority, Village Green Apartments, Series A, Weekly VRDN and Put, 3.55%, 6/15/18 .. 8,800,000
(a)Tustin 1915 Act, Reassessment District No.95-2, Series A, Daily VRDN and Put, 5.10%, 9/02/13 ................. 24,734,000
Vallectos Water District, Water Revenue, COP, Twin Oaks Reservoir Project, Weekly VRDN and Put, 3.60%, 7/01/30 .. 2,600,000
(a)West Basin Municipal Water District Revenue, COP, Phase II Recycled Water Project, Series C, Weekly VRDN
and Put, 3.60%, 8/01/27 ....................................................................................... 2,000,000
(a)Western Riverside County Regional Wastewater Authority Treatment, Daily VRDN and Put, 5.10%, 4/01/28 ......... 8,750,000
TOTAL INVESTMENTS (COST $628,987,559 ) 99.4% ...................................................................
OTHER ASSETS, LESS LIABILITIES .6% ............................................................................
NET ASSETS 100.0% ..............................................................................................
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS (CONT.)
<S> <C>
(a)Santa Clara County Housing Authority, MFHR, Refunding, Benton Park Center Apartments, Series A,
FNMA Secured, Weekly VRDN and Put, 3.80%, 12/15/25 ............................................................ $ 5,000,000
Santa Clara County, TRAN, 4.50%, 10/01/99 ...................................................................... 3,036,441
(a)South San Francisco MFR, Magnolia Plaza Apartments, Series A, Weekly VRDN and Put, 3.70%, 5/01/17 ............ 500,000
(a)Southern California Public Power Authority Revenue, Weekly VRDN and Put,
3.65%, 7/01/17 ............................................................................................... 500,000
Transmission Project, Refunding, AMBAC Insured, 3.65%, 7/01/19 .............................................. 27,100,000
Transmission Project, Refunding, Series B, FSA Insured, 3.80%, 7/01/23 ...................................... 6,600,000
(a)Southern California Public Power Authority, Sub-Palo Verde Project, Refunding, Series B, AMBAC Insured,
Weekly VRDN and Put, 3.65%, 7/01/09 .......................................................................... 2,000,000
(a)Suisun City MFMR, Housing Authority, Village Green Apartments, Series A, Weekly VRDN and Put, 3.55%, 6/15/18 .. 8,800,000
(a)Tustin 1915 Act, Reassessment District No.95-2, Series A, Daily VRDN and Put, 5.10%, 9/02/13 ................. 24,734,000
Vallectos Water District, Water Revenue, COP, Twin Oaks Reservoir Project, Weekly VRDN and Put, 3.60%, 7/01/30 .. 2,600,000
(a)West Basin Municipal Water District Revenue, COP, Phase II Recycled Water Project, Series C, Weekly VRDN
and Put, 3.60%, 8/01/27 ....................................................................................... 2,000,000
(a)Western Riverside County Regional Wastewater Authority Treatment, Daily VRDN and Put, 5.10%, 4/01/28 ......... 8,750,000
------------
TOTAL INVESTMENTS (COST $628,987,559) 99.4% .................................................................... 628,987,559
OTHER ASSETS, LESS LIABILITIES .6% ............................................................................ 4,048,531
------------
NET ASSETS 100.0% .............................................................................................. $633,036,090
============
</TABLE>
See glossary of terms on page 51.
(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.
50 See notes to financial statements.
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (UNAUDITED) (CONT.)
GLOSSARY OF TERMS
1915 Act - Improvement Bond Act of 1915
ABAG - Association of Bay Area Governments
AD - Assessment District
AMBAC - American Municipal Bond Assurance Corp.
BART - Bay Area Rapid Transit
BIG - Bond Investors Guaranty Insurance Co.(Acquired by MBIA in 1989 and no
longer does business under this name)
CDA - Community Development Agency
CFD - Community Facilities District
CHFCLP - California Health Facilities Construction Loan Program
COP - Certificate of Participation
CRDA - Community Redevelopment Agency
ETM - Escrow to Maturity
FGIC - Financial Guaranty Insurance Co.
FNMA - Federal National Mortgage Association
FSA - Financial Security Assistance (Some of the securities shown as FSA
were originally Insured by Capital Guaranty Insurance Co.(CGIC)
which was acquired by FSA in 1995 and no longer does business under
this name.)
GNMA - Government National Mortgage Association
GO - General Obligation
HFA - Housing Finance Authority/Agency
HMR - Home Mortgage Revenue
ID - Improvement District
IDA - Industrial Development Authority/Agency
IDR - Industrial Development Revenue
MF - Multi-Family
MBIA - Municipal Bond Investors Assurance Corp.
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
RAN - Revenue Anticipation Notes
RDA - Redevelopment Authority/Agency
RMR - Residential Mortgage Revenue
SFM - Single Family Mortgage
SFMR - Single Family Mortgage Revenue
TECP - Tax-Exempt Commercial Paper
TRAN - Tax and Revenue Anticipation Notes
USD - Unified School District
51
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998 (UNAUDITED)
<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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,725,416,235 $180,232,814 $628,987,559
=========================================================
Value . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,852,183,127 188,601,014 628,987,559
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 89,406 67,806 623,963
Receivables:
Investment securities sold . . . . . . . . . . . . . . . . . 25,000 10,000 --
Capital shares sold . . . . . . . . . . . . . . . . . . . .. 2,614,080 603,078 152,349
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 30,760,039 2,668,820 4,075,216
---------------------------------------------------------
Total assets . . . . . . . . . . . . . . . . . . . . . . 1,885,671,652 191,950,718 633,839,087
---------------------------------------------------------
Liabilities:
Payables:
Investment securities purchased . . . . . . . . . . . . . . 9,815,056 3,985,532 --
Capital shares redeemed . . . . . . . . . . . . . . . . . . 934,654 535,681 26,644
Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . 1,096,334 93,734 297,547
Shareholders . . . . . . . . . . . . . . . . . . . . . . . . 2,018,629 106,203 269,326
Distributions to shareholders . . . . . . . . . . . . . . . . 2,395,585 217,603 86,245
Other liabilities . . . . . . . . . . . . . . . . . . . . .. 129,772 26,178 123,235
---------------------------------------------------------
Total liabilities . . . . . . . . . . . . . . . . . . .. 16,390,030 4,964,931 802,997
---------------------------------------------------------
Net assets, at value . . . . . . . . . . . . . . . ... $1,869,281,622 $186,985,787 $633,036,090
=========================================================
Net assets consist of:
Undistributed net investment income . . . . . . . . . . . . . $ -- $ 307,249 $ --
Accumulated distributions in excess of net investment income . (1,183,628) -- --
Net unrealized appreciation . . . . . . . . . . . . . . . . . 126,766,892 8,368,200 --
Accumulated net realized gain (loss) . . . . . . . . . . . . 1,400,483 (140,579) --
Capital shares . . . . . . . . . . . . . . . . . . . . . . . 1,742,297,875 178,450,917 633,036,090
---------------------------------------------------------
Net assets, at value . . . . . . . . . . . . . . . . . . $1,869,281,622 $186,985,787 $633,036,090
=========================================================
</TABLE>
52 See notes to financial statements.
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Statements (continued)
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31,1998 (UNAUDITED) (CONT.)
<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 I:
Net assets,at value . . . . . . . . . . . . . . . . . . . . $1,799,653,164 $186,985,787 $633,036,090
----------------------------------------------------------
Shares outstanding . . . . . . . . . . . . . . . . . . . . 143,434,451 16,407,841 633,036,090
----------------------------------------------------------
Net asset value per share* . . . . . . . . . . . . . . . . . $12.55 $11.40 $1.00
----------------------------------------------------------
Maximum offering price per share
(Net asset value / 95.75%, 97.75%, and 100%, respectively). $13.11 $11.66 $1.00
----------------------------------------------------------
CLASS II:
Net assets,at value . . . . . . . . . . . . . . . . . . . . $ 69,628,458 -- --
----------------------------------------------------------
Shares outstanding . . . . . . . . . . . . . . . . . . . .. 5,515,302 -- --
----------------------------------------------------------
Net asset value per share* . . . . . . . . . . . . . . . . $12.62 -- --
----------------------------------------------------------
Maximum offering price per share
(Net asset value / 99.00%) . . . . . . . . . . . . . . . . $12.75 -- --
----------------------------------------------------------
</TABLE>
* Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
See notes to financial statements. 53
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Statements (continued)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31,1998 (UNAUDITED)
<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 . . . . . . . . . . . . . . . . . . . . . . . $50,551,524 $4,395,254 $9,796,131
--------------------------------------------------------
Expenses:
Management fees (Note 3) . . . . . . . . . . . . . . . 4,269,073 501,973 1,598,486
Distribution fees (Note 3)
Class I . . . . . . . . . . . . . . . . . . . . . . . 811,048 86,975 --
Class II . . . . . . . . . . . . . . . . . . . . . . . 204,699 -- --
Transfer agent fees (Note 3) . . . . . . . . . . . . . 206,641 17,200 198,174
Custodian fees . . . . . . . . . . . . . . . . . . . . 10,042 835 5,157
Reports to shareholders . . . . . . . . . . . . . . . . 90,941 11,658 110,211
Registration and filing fees . . . . . . . . . . . . . 855 1,183 2,163
Professional fees . . . . . . . . . . . . . . . . . . . 30,866 3,346 20,580
Trustees' fees and expenses . . . . . . . . . . . . . . 28,439 2,230 10,161
Insurance . . . . . . . . . . . . . . . . . . . . . . . 3,454 -- --
Pricing fees . . . . . . . . . . . . . . . . . . . . . 25,882 16,445 514
Other . . . . . . . . . . . . . . . . . . . . . . . . . 11,705 679 15,460
-------------------------------------------------------
Total expenses . . . . . . . . . . . . . . . . . . 5,693,645 642,524 1,960,906
Expenses waived/paid by affiliate (Note 3) . . . . -- (120,914) --
-------------------------------------------------------
Net expenses . . . . . . . . . . . . . . . . . . 5,693,645 521,610 1,960,906
-------------------------------------------------------
Net investment income . . . . . . . . . . . . . 44,857,879 3,873,644 7,835,225
-------------------------------------------------------
Realized and unrealized gains (losses):
Net realized gain (loss) from investments . . . . . . . 2,238,003 55,067 (1,791)
Net unrealized appreciation on investments . . . . . . 19,756,530 2,229,097 --
-------------------------------------------------------
Net realized and unrealized gain (loss) . . . . . . . . 21,994,533 2,284,164 (1,791)
-------------------------------------------------------
Net increase in net assets resulting from operations . . $66,852,412 $6,157,808 $7,833,434
=======================================================
</TABLE>
54 See notes to financial statements.
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED DECEMBER 31,1998 (UNAUDITED)
AND THE YEAR ENDED JUNE 30,1998
<TABLE>
<CAPTION>
FRANKLIN CALIFORNIA INSURED FRANKLIN CALIFORNIA INTERMEDIATE-
TAX-FREE INCOME FUND TERM TAX-FREE INCOME FUND
--------------------------------- ---------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
DECEMBER 31 1998 JUNE 30,1998 DECEMBER 31 1998 JUNE 30,1998
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income . . . . . . . . . . . $ 44,857,879 $ 88,166,346 $ 3,873,644 $ 6,297,937
Net realized gain from investments . . . . . 2,238,003 14,517,284 55,067 373,164
Net unrealized appreciation on investments . 19,756,530 35,549,088 2,229,097 2,945,640
--------------------------------------------------------------------
Net increase in net assets
resulting from operations . . . . . . 66,852,412 138,232,718 6,157,808 9,616,741
Distributions to shareholders from:
Net investment income:
Class I . . . . . . . . . . . . . . . . . . (43,861,743) (86,044,321) (3,959,794) (6,184,726)
Class II . . . . . . . . . . . . . . . . . . (1,360,469) (2,012,482) -- --
In excess of net investment income:
Class I . . . . . . . . . . . . . . . . . .. (1,148,020) -- -- --
Class II . . . . . . . . . . . . . . . . . . (35,608) -- -- --
Net realized gains:
Class I . . . . . . . . . . . . . . . . . . (9,565,776) (15,480,792) -- --
Class II . . . . . . . . . . . . . . . . . . (360,118) (397,099) -- --
--------------------------------------------------------------------
Total distributions to shareholders . . . . . (56,331,734) (103,934,694) (3,959,794) (6,184,726)
Capital share transactions:(Note 2)
Class I . . . . . . . . . . . . . . . . . . . 71,942,759 48,438,350 29,124,214 34,565,606
Class II . . . . . . . . . . . . . . . . . . 13,957,715 19,682,305 -- --
--------------------------------------------------------------------
Total capital share transactions . . . . . . . 85,900,474 68,120,655 29,124,214 34,565,606
Net increase in net assets . . . . . . . 96,421,152 102,418,679 31,322,228 37,997,621
Net assets:
Beginning of period . . . . . . . . . . . . . 1,772,860,470 1,670,441,791 155,663,559 117,665,938
--------------------------------------------------------------------
End of period . . . . . . . . . . . . . . . $1,869,281,622 $1,772,860,470 $186,985,787 $155,663,559
--------------------------------------------------------------------
Undistributed net investment income
(accumulated distributions in excess of net
investment income) included in net assets:
End of period . . . . . . . . . . . . . . . $ (1,183,628) $ 364,333 $ 307,249 $ 393,399
--------------------------------------------------------------------
</TABLE>
See notes to financial statements. 55
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
FOR THE SIX MONTHS ENDED DECEMBER 31,1998 (UNAUDITED)
AND THE YEAR ENDED JUNE 30,1998
<TABLE>
<CAPTION>
FRANKLIN CALIFORNIA
TAX-EXEMPT MONEY FUND
--------------------------------
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31 1998 JUNE 30,1998
--------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,835,225 $ 18,633,658
Net realized loss from investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,791) (2,802)
------------------------------
Net increase in net assets resulting from operations . . . . . . . . . . . . . . . . . 7,833,434 18,630,856
Distributions to shareholders from net investment income . . . . . . . . . . . . . . . . .. (7,833,434)* (18,630,856)*
Capital share transactions (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . (23,688,476) 16,933,993
------------------------------
Net increase (decrease) in net assets . . . . . . . . . . . . . . . . . . . . . . . . . (23,688,476) 16,933,993
Net assets:(there is no undistributed net investment income at beginning or end of period)
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 656,724,566 639,790,573
------------------------------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $633,036,090 $656,724,566
------------------------------
</TABLE>
* Distributions were decreased by net realized losses from security
transactions of $1,791 for the six months ended December 31,1998 and
$2,802 for the year ended June 30,1998.
56 See notes to financial statements.
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
Notes to Financial Statements (unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Franklin California Tax-Free Trust (the Trust) is registered under the
Investment Company Act of 1940 as an open-end investment company, consisting of
three 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 a high level of current income consistent with
preservation of capital.
The following summarizes the Funds' significant accounting policies.
a. SECURITY VALUATION:
Tax-free bonds generally trade in the over-the-counter market and are valued
within the range of the latest quoted bid and asked prices. In the absence of a
sale or reported bid and asked prices, information with respect to bond and note
transactions, quotations from bond dealers, market transactions in comparable
securities, and various relationships between securities are used to determine
the value of the security. The Trust may utilize a pricing service, bank or
broker/dealer experienced in such matters to perform any of the pricing
functions under procedures approved by the Board of Trustees. Securities for
which market quotations are not readily available are valued at fair value as
determined by management in accordance with procedures established by the Board
of Trustees.
The securities in the Franklin California Tax-Exempt Money Fund are valued at
amortized cost which approximates value.
b. INCOME TAXES:
No provision has been made for income taxes because each Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and
distribute all of its taxable income.
c. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income and estimated expenses are accrued daily. Bond discount and
premium are amortized on an income tax basis. For the Franklin California
Insured Tax-Free Income Fund and the Franklin California Intermediate-Term
Tax-Free Income Fund, dividends from net investment income are normally declared
daily and distributed monthly to shareholders. Other distributions are recorded
on the ex-dividend date. For the Franklin California Tax-Exempt Money Fund,
dividends from net investment income and capital gains or losses are normally
declared daily. Such distributions are reinvested in additional shares of the
Fund.
Common expenses incurred by the Trust are allocated among the Funds based on the
ratio of net assets of each Fund to the combined net assets. Other expenses are
charged to each Fund on a specific identification basis.
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class for the Franklin California
Insured Tax-Free Income Fund.
57
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
Notes to Financial Statements (Unaudited) (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
During the period ended December 31, 1998 the Trust offered Class I shares and
the California Insured Tax-Free Income Fund also offered Class II shares.
Effective January 1, 1999, Class I and Class II were renamed Class A and 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.
At December 31, 1998, there were an unlimited number of shares authorized (no
par value). Transactions in the Funds' shares were as follows:
<TABLE>
<CAPTION>
FRANKLIN
FRANKLIN CALIFORNIA FRANKLIN CALIFORNIA CALIFORNIA
INSURED TAX-FREE INTERMEDIATE-TERM TAX-EXEMPT
INCOME FUND TAX-FREE INCOME FUND MONEY FUND
-----------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT AMOUNT
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS I SHARES:
Six months ended December 31, 1998
Shares sold . . . . . . . . . . . . . . . . . . . . . 14,521,828 $182,911,910 4,332,776 $49,236,199 $463,863,060
Shares issued in reinvestment of distributions . . .. 1,958,985 24,619,542 213,609 2,428,020 7,889,930
Shares redeemed . . . . . . . . . . . . . . . . . . . (10,760,895) (135,588,693) (1,985,293) (22,540,005) (495,441,466)
-----------------------------------------------------------------------
Net increase (decrease) . . . . . . . . . . . . . . . 5,719,918 $ 71,942,759 2,561,092 $29,124,214 $(23,688,476)
=======================================================================
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>
58
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
Notes to Financial Statements (Unaudited) (Continued)
2. SHARES OF BENEFICIAL INTEREST (CONT.)
<TABLE>
<CAPTION>
FRANKLIN CALIFORNIA
INSURED TAX-FREE
INCOME FUND
----------------------
SHARES AMOUNT
----------------------
<S> <C> <C>
Class II Shares:
Six months ended December 31, 1998
Shares sold . . . . . . . . . . . . . . . . . . . . . 1,353,028 $17,146,271
Shares issued in reinvestment of distributions . . .. 97,453 1,232,501
Shares redeemed . . . . . . . . . . . . . . . . . . . (348,768) (4,421,057)
--------------------------
Net increase . . . . . . . . . . . . . . . . . . . . 1,101,713 $13,957,715
==========================
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
===========================
</TABLE>
3. TRANSACTIONS WITH AFFILIATES
Certain officers and trustees of the Funds are also officers or directors of
Franklin/Templeton Distributors, Inc. (Distributors), Franklin Advisers, Inc.
(Advisers), Franklin/Templeton Investor Services, Inc. (Investor Services), and
Franklin Templeton Services, Inc. (FT Services), the Funds' principal
underwriter, investment manager, transfer agent and administrative manager,
respectively.
The Franklin California Insured Tax-Free Income Fund and the Franklin California
Intermediate-Term Tax-Free Income Fund pay an investment management fee 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 I and Class II,
respectively, for costs incurred in marketing the Funds' shares.
59
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
Notes to Financial Statements (Unaudited) (Continued)
3. TRANSACTIONS WITH AFFILIATES (cont.)
Distributors paid net commissions on sales of the Funds' shares, and received
contingent deferred sales charges for the period as follows:
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
CALIFORNIA CALIFORNIA
INSURED INTERMEDIATE-
TAX-FREE TERM TAX-FREE
INCOME FUND INCOME FUND
----------------------------
<S> <C> <C>
Net commissions paid . . . . . . $243,131 $50,350
Contingent deferred sales charges . $ 36,773 $ 405
</TABLE>
4. INCOME TAXES
At June 30, 1998, the Franklin California Intermediate-Term Tax-Free Income and
the Franklin California Tax-Exempt Money Funds had tax basis capital losses
which may be carried over to offset future capital gains. Such losses expire as
follows:
<TABLE>
<CAPTION>
FRANKLIN
CALIFORNIA FRANKLIN
INTERMEDIATE- CALIFORNIA
TERM TAX-FREE TAX-EXEMPT
INCOME FUND MONEY FUND
----------------------------
<S> <C> <C>
Capital Loss carryovers
expiring in:
2003 . . . . . . . . $195,646 $14,563
2005 . . . . . . . . -- 1,444
2006 . . . . . . . . -- 9,957
------------------------
$195,646 $25,964
========================
</TABLE>
At June 30, 1998, the Franklin California Tax-Exempt Money Fund had deferred
capital losses occurring subsequent to October 31, 1997 of $2,802. For tax
purposes, such losses will be reflected in the year ending June 30, 1999.
Net realized capital gains (losses) differ for financial statement and tax
purposes primarily due to differing treatment of wash sales.
At December 31, 1998, the net unrealized appreciation based on the cost of
investments for income tax purposes was as follows:
<TABLE>
<CAPTION>
FRANKLIN
FRANKLIN CALIFORNIA
CALIFORNIA INTERMEDIATE-
INSURED TAX-FREE TERM TAX-FREE
INCOME FUND INCOME FUND
---------------------------------
<S> <C> <C>
Investments at cost . . . . $1,725,536,558 $180,232,814
===============================
Unrealized appreciation . . $ 126,726,417 $ 8,400,032
Unrealized depreciation . . (79,848) (31,832)
-------------------------------
Net unrealized appreciation 126,646,569 $ 8,368,200
===============================
</TABLE>
60
<PAGE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
Notes to Financial Statements (Unaudited) (Continued)
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
period ended December 31, 1998, was as follows:
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
CALIFORNIA CALIFORNIA
INSURED INTERMEDIATE-
TAX-FREE TERM TAX-FREE
INCOME FUND INCOME FUND
----------------------------
<S> <C> <C>
Purchases . . . . . . . . . . $196,452,119 $26,535,562
Sales . . . . . . . . . . . .. $ 81,935,791 $ 2,822,252
</TABLE>
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.
61
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