SHAREHOLDER LETTER
Dear Shareholder:
This annual report for Franklin California Tax-Free Trust covers the period
ended June 30, 2000. The reporting period was marked by economic strength, as
U.S. gross domestic product (GDP) rose appreciably, consumer confidence remained
strong, unemployment hit a 30-year low and domestic stock markets surged to
all-time highs. In the face of such economic expansion, inflation as measured by
the Consumer Price Index was a modest 3.7% for the year under review.
BOND MARKET OVERVIEW
Bond markets started the period in what looked to be a potentially positive year
due to interest-rate expectations. However, the Federal Reserve Board (the Fed)
proceeded to raise the federal funds target rate on five separate occasions
because of inflation fears. This made the second half of 1999 and early 2000 one
of the worst periods that bond markets have ever experienced. In February, the
government announced it would sponsor 30-year Treasury buybacks and reduce
future issuance of long-term Treasuries. This, coupled with several signs that
U.S. economic growth might be slowing, caused a supply/demand imbalance. These
circumstances caused long-term Treasury bond prices to rise sharply, resulting
in an inverted yield curve. That is, rates on long-term bonds declined below
those of short-term bonds. None of the other domestic fixed-income markets,
including municipal bonds, experienced such an inversion.
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Shareholder Letter .................................................... 1
Fund Reports
Franklin California Insured
Tax-Free Income Fund ................................................. 6
Franklin California
Intermediate-Term
Tax-Free Income Fund .................................................. 13
Franklin California
Tax-Exempt Money Fund ................................................ 18
Municipal Bond Ratings ................................................ 21
Financial Highlights &
Statements of Investments ............................................. 24
Financial Statements .................................................. 52
Notes to
Financial Statements .................................................. 57
Independent
Auditors' Report ...................................................... 62
Tax Designation ....................................................... 63
</TABLE>
[FUND CATEGORY PYRAMID GRAPHIC]
The yield on the 30-year Treasury declined from 5.96% at the beginning of the
Fund's fiscal year, to 5.89% on June 30, 2000, reaching a high of 6.75% on
January 20, 2000. The yield on the Bond Buyer Municipal Bond Index (Bond Buyer
40), an indicator of the municipal bond market, rose from 5.55% to 5.91% for the
same period, while its price declined 5.09%.(1) As interest rates and yields
increased, the dollar value of bonds decreased, meaning bond funds in general
declined in value.
Municipal bond supply in 1999 and first quarter 2000 added pressure to the
already volatile municipal bond market. Although less than in 1998, the $227
billion issuance in 1999 was the fourth-highest on record. We anticipate
decreased new issuance for the remainder of 2000. The near-record volume did
have some benefit, as it helped municipal bonds remain cheap relative to
Treasuries. During the year under review, municipal bonds, as measured by the
Bond Buyer 40, yielded as much as 103% of a comparable Treasury bond's yield.
Historically, this ratio is about 90%.(2) Because municipal bonds are
tax-exempt, they generally yield less than Treasuries, which are subject to
federal income tax.(3) When municipals are yielding nearly the same as
Treasuries, investors are able to take advantage of the tax exemption at little
extra cost.
Looking forward, we anticipate that the Fed will monitor inflationary tendencies
closely. If they succeed in keeping inflation in check and the economy slows
toward the end of 2000, the bond markets could begin to experience less
volatility.
1. Source: The Bond Buyer. The unmanaged Bond Buyer Municipal Bond Index is
composed of the yield to maturity of 40 bonds. The index attempts to track the
new-issue market as closely as possible, so it changes bonds twice a month,
adding all new bonds that meet certain requirements and deleting an equivalent
number according to their secondary market trading activity. As a result, the
average par call date, average maturity date and average coupon rate change over
time. The average maturity generally has been about 29-30 years.
2. Source: The Bond Buyer, 3/00.
3. Treasuries, if held to maturity, offer a fixed rate of return and fixed
principal value; their interest payments and principal are guaranteed.
The last few times municipal bonds lost ground, they enjoyed sharp rebounds in
the following year. For example, in 1994, when the Fed raised interest rates six
times, the average general municipal bond fund lost 6.5% in total return. In the
following year, rates declined, and the average municipal bond fund gained
nearly 17%. Although there is no guarantee that bond markets and municipal bond
funds will repeat past behavior, markets do go through cycles. Predicting these
cycles is very difficult, even for professional economists -- which is why we
recommend investing for the long term. It is important to remember that over
time, the tax-free income received from municipal bond funds will ultimately
drive the funds' total return performance.
CALIFORNIA UPDATE
The year under review marked California's sixth consecutive year of economic
expansion and fifth straight year in which economic growth and job creation
exceeded the national average. Although the state's low 5.2% unemployment rate
still topped the 4.0% national average in June, this rate dropped faster than
the national average during the reporting period.(4)
The largest employment gains during the reporting period occurred in
construction and services, due particularly to the explosion of Internet-related
firms; tourism and entertainment-related jobs also grew significantly.(4) These
new jobs reflected a decade-long shift in the state's key industries, with
computers, software and entertainment overtaking traditional manufacturing
sectors such as cars, airplanes and steel in importance. Encouraging employment
figures factored into the state's projections for 5.4% personal income growth in
2000, which was conservative compared with most outside forecasters' projections
and followed a 6.6% increase in 1999. Per-capita income stabilized at about 104%
of the national average after a long period of relative decline.(5)
4. Source: Bureau of Labor Statistics, 7/21/00.
The state's diversified, growing economy demonstrated resilience despite
weakness in Asia, which is one of California's key export markets. Losses on
state exports to the Pacific Rim during 1998 and 1999 were offset by
NAFTA-induced export growth, which had increased substantially. By year-end
1999, exports to Mexico were 12.7% of total state exports, and to Canada,
12.1%.(5) California's economic expansion also translated into a record year for
its housing market, with an 11.8% increase in the median home price for May 2000
compared with one year earlier.(6)
California's economy, as well as its improved fiscal management, contributed to
Moody's(R) and Fitch's(R) decisions to upgrade California's debt to Aa3 and AA,
respectively, during the reporting period.(7) This marked the first time in
eight years that Standard & Poor's(R), Moody's Investors Service and Fitch IBCA
Inc., three independent credit rating agencies, have viewed California's credit
as double-A.(8)
California's total net tax-supported debt was slightly higher than $21.6 billion
in 1999, approximately $729 per capita, or 2.4% of personal income, higher than
the national median of $540 and 2.2%, respectively. California entered fiscal
year 2000 with $9.6 billion in general and special fund surpluses, the largest
amount the state has had in more than two decades.(9) These sizable balances,
which should help cushion the negative impact of any future recessions, and
projections for further California economic growth, albeit at a slower rate than
that of the past two years, underlie the state's favorable credit outlook.
5. Source: Moody's Investors Service, 1/15/00.
6. Source: California Association of REALTORS, C.A.R. News Releases, 6/26/00.
7. Sources: Moody's Investors Service, 10/15/99, and Fitch IBCA, State of
California, 2/16/00.
8. Source: Standard & Poor's, Ratings Direct, 2/17/00.
9. Source: The Bond Buyer, 1/3/00.
We encourage you to discuss your financial goals with an investment
representative. Municipal bond funds provide an opportunity to diversify risk in
investors' portfolios and continue to be an attractive investment for those
seeking tax-free income. Such a tax-free investment offers a taxable equivalent
yield that can be hard to match for a taxable investment with the same relative
level of risk.
As always, we appreciate your support, welcome your questions and look forward
to serving your investment needs in the years ahead.
Sincerely,
/s/ Charles B. Johnson
Charles B. Johnson
Chairman
Franklin California Tax-Free Trust
/s/ Sheila Amoroso
Sheila Amoroso
/s/ Rafael R. Costas Jr.
Rafael R. Costas Jr.
Senior Vice Presidents/Co-Directors
Franklin Municipal Bond Department
WHAT DOES "TAXABLE EQUIVALENT" MEAN FOR YOU?
For yield and distribution rate, the taxable equivalent is the amount a taxable
investment would have to earn to match a tax-free investment such as municipal
bonds.(10) You can find your Fund's taxable equivalent distribution rate and
yield in the Performance Summary that follows your Fund's report.
10. For investors subject to the federal alternative minimum tax, a 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.
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)
--------------------------------------------------------------------------------
Unabated economic growth in California and the nation as a whole led to
inflationary fears during the one-year reporting period. This, in turn, prompted
a round of Federal Reserve Board (Fed) tightening, as the Fed raised short-term
interest rates five times during the Fund's fiscal year to curtail inflation and
slow economic growth.
Generally rising interest rates presented challenges for the municipal bond
market during the reporting period, as bond prices fall when interest rates
rise. For the 12 months ended June 30, 2000, Franklin California Insured
Tax-Free Income Fund's Class A share price was down 3%. In comparison, the Bond
Buyer 40, an indicator of the municipal bond market, had a 5.09% price decline,
and the Fund's benchmark, the Lehman Brothers Municipal Bond Index, was off
3.19%.(3)
1. For investors subject to the federal alternative minimum tax, a small portion
of this income may be subject to such tax. Distributions of capital gains and of
ordinary income from accrued market discount, if any, are generally taxable.
2. The insurance guarantees the scheduled payment of principal and interest on
the insured securities in the Fund's portfolio, but does not guarantee the
insured security's market value, the value of the Fund's shares, or the Fund's
distributions. Fund shares are not insured. No representation is made as to any
insurer's ability to meet its obligation to the Fund if called upon to do so.
The dollar value, number of shares or principal value, and complete legal titles
of all portfolio holdings are listed in the Fund's Statement of Investments
(SOI). The SOI begins on page 27.
On the upside, rising interest rates helped the Fund book tax losses, which can
be carried forward to offset any future capital gains, and improve its
structure, as we sold securities with relatively short call protection, such as
Campbell COP, Dinuba RDA Tax Allocation - Redevelopment Project No. 2, Montclair
RDA Tax Allocation - Redevelopment Project Area No. 3 and a portion of our
Metropolitan Water District Revenue - Southern California Waterworks bonds. As
part of our strategy to improve call protection, we also sold prerefunded bonds,
lowering the Fund's exposure to this type of security from 14.1% on June 30,
1999, to 12.0% on June 30, 2000. We reinvested the proceeds from such sales in
current coupon bonds with longer call protection. Such purchases included San
Marcos Public Facilities Authority Revenue; California Statewide Community
Development Authority Revenue; Jefferson San Mateo County - UHSD Refunding;
Alameda Power & Telecommunication Electric System Revenue and Poway
Redevelopment Agency Tax Allocation bonds.
PORTFOLIO BREAKDOWN
Franklin California Insured
Tax-Free Income Fund
6/30/00
<TABLE>
<CAPTION>
% OF TOTAL
LONG-TERM
INVESTMENTS
--------------------------------------------------------------------------------
<S> <C>
Utilities 17.2%
Tax-Supported 16.8%
Transportation 13.5%
Prerefunded 12.0%
Hospital & Health Care 11.0%
Subject to Government
Appropriation 10.8%
General Obligation 9.6%
Higher Education 5.1%
Housing 2.6%
Other Revenue 1.3%
Corporate-Backed 0.1%
</TABLE>
3. Sources: Lehman Brothers; The Bond Buyer. The unmanaged indexes include
reinvested interest; one cannot invest directly in an index.
DIVIDEND DISTRIBUTIONS*
Franklin California Insured Tax-Free Income Fund
7/1/99 - 6/30/00
<TABLE>
<CAPTION>
DIVIDEND PER SHARE
---------------------------------------------------
MONTH CLASS A CLASS B** CLASS C
--------------------------------------------------------------------------------
<S> <C> <C> <C>
July 5.05 cents -- 4.48 cents
August 5.05 cents -- 4.48 cents
September 5.05 cents -- 4.51 cents
October 5.05 cents -- 4.51 cents
November 5.05 cents -- 4.51 cents
December 5.05 cents -- 4.52 cents
January 5.05 cents -- 4.52 cents
February 5.05 cents 2.88 cents 4.52 cents
March 5.07 cents 4.54 cents 4.55 cents
April 5.07 cents 4.54 cents 4.55 cents
May 5.07 cents 4.54 cents 4.55 cents
June 5.07 cents 4.51 cents 4.53 cents
--------------------------------------------------------------------------------
TOTAL 60.68 CENTS 21.01 CENTS 54.23 CENTS
</TABLE>
*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.
**Effective February 1, 2000, the Fund began offering Class B shares to
investors. See the prospectus for details.
Your Fund offers a notable tax advantage over a comparable taxable investment.
The Performance Summary on page 11 shows that at the end of this reporting
period, the Fund's Class A distribution rate was 4.95%, based on an
annualization of the current 5.07 cent ($0.0507) per share dividend and the
maximum offering price of $12.28 on June 30, 2000. This tax-free rate is
generally higher than the after-tax return on a comparable taxable investment.
An investor in the maximum combined federal and California state personal income
tax bracket of 45.22% would need to earn 9.04% from a taxable investment to
match the Fund's tax-free distribution rate.
Looking forward, we believe the Fund's conservative buy-and-hold,
income-oriented philosophy, as well as its reserve of higher coupon bonds from
previous, higher interest-rate periods, should help moderate its share-price
volatility, reduce portfolio turnover and protect its income stream.
This discussion reflects our views, opinions and portfolio holdings as of June
30, 2000, the end of the reporting period. The information provided is not a
complete analysis of every aspect of any industry, security or the Fund. Our
strategies and the Fund's portfolio composition will change depending on market
and economic conditions. Although historical performance is no guarantee of
future results, these insights may help you understand our investment and
management philosophy.
FRANKLIN CALIFORNIA
INSURED TAX-FREE
INCOME FUND
CLASS A: Subject to the current, maximum 4.25% initial sales charge. Prior to
7/1/94, Fund shares were offered at a lower initial sales charge; thus actual
total returns may differ. Effective 5/1/94, the Fund eliminated the sales charge
on reinvested dividends and implemented a Rule 12b-1 plan, which affects
subsequent performance.
CLASS B: Subject to no initial sales charge, but subject to a contingent
deferred sales charge (CDSC) declining from 4% to 0% over six years. These
shares have higher annual fees and expenses than Class A shares.
CLASS C: Subject to 1% initial sales charge and 1% CDSC for shares redeemed
within 18 months of investment. These shares have higher annual fees and
expenses than Class A shares.
ONE-YEAR PERFORMANCE SUMMARY
AS OF 6/30/00
One-year and aggregate total returns do not include sales charges. Distributions
will vary based on earnings of the Fund's portfolio and any profits realized
from the sale of the portfolio's securities, as well as the level of operating
expenses for each class. Past distributions are not indicative of future trends.
All total returns include reinvested distributions at net asset value.
<TABLE>
<CAPTION>
CLASS A
<S> <C> <C>
One-Year Total Return +2.24%
Net Asset Value (NAV) (6/30/00) $11.76 (6/30/99) $12.12
Change in NAV -$0.36
Distributions (7/1/99-6/30/00) Dividend Income $0.6068
Long-Term Capital Gain $0.0016
--------------------------------
Total $0.6084
</TABLE>
<TABLE>
CLASS B
<S> <C> <C>
Aggregate Total Return +5.76%
Net Asset Value (NAV) (6/30/00) $11.78 (2/1/00) $11.36
Change in NAV +$0.42
Distributions (2/1/00-6/30/00) Dividend Income $0.2101
</TABLE>
<TABLE>
<CAPTION>
CLASS C
<S> <C> <C>
One-Year Total Return +1.66%
Net Asset Value (NAV) (6/30/00) $11.84 (6/30/99) $12.20
Change in NAV -$0.36
Distributions (7/1/99-6/30/00) Dividend Income $0.5423
Long-Term Capital Gain $0.0016
--------------------------------
Total $0.5439
</TABLE>
Franklin California Insured Tax-Free Income Fund paid distributions derived from
long-term capital gains of 0.16 cents ($0.0016) per share in December 1999. The
Fund hereby designates such distributions as capital gain dividends per Internal
Revenue Code Section 852 (b)(3).
Past performance does not guarantee future results.
ADDITIONAL PERFORMANCE
AS OF 6/30/00
<TABLE>
<CAPTION>
INCEPTION
CLASS A 1-YEAR 5-YEAR 10-YEAR (9/3/85)
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) +2.24% +29.89% +88.00% +187.81%
Average Annual Total Return(2) -2.12% +4.46% +6.05% +7.08%
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
CLASS B (2/1/00)
--------------------------------------------------------------------------------
<S> <C>
Cumulative Total Return(1) +5.76%
Aggregate Total Return(2) +1.76%
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
CLASS C 1-YEAR 5-YEAR (5/1/95)
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) +1.66% +26.48% +28.75%
Average Annual Total Return(2) -0.29% +4.60% +4.81%
</TABLE>
<TABLE>
<CAPTION>
SHARE CLASS A B C
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Distribution Rate(3) 4.95% 4.59% 4.55%
Taxable Equivalent Distribution Rate(4) 9.04% 8.38% 8.31%
30-Day Standardized Yield(5) 4.77% 4.45% 4.39%
Taxable Equivalent Yield(4) 8.71% 8.12% 8.01%
</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. Since Class B shares have existed for
less than one year, aggregate total return represents total return since
inception, including the maximum sales charge.
3. Distribution rate is based on an annualization of the respective class's
current monthly dividend and the maximum offering price per share (net asset
value for Class B) on 6/30/00.
4. Taxable equivalent distribution rate and yield assume the published rates as
of 6/16/00 for the maximum combined federal and California state personal income
tax bracket of 45.22%, 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 6/30/00.
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.
For updated performance figures, see "Prices and Performance" at
franklintempleton.com, or call Franklin Templeton at 1-800/342-5236.
Past performance does not guarantee future results.
FRANKLIN CALIFORNIA INSURED TAX-FREE
INCOME FUND
AVERAGE ANNUAL TOTAL RETURN
6/30/00
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------------------
<S> <C>
1-Year -2.12%
5-Year +4.46%
10-Year +6.05%
Since Inception (9/3/85) +7.08%
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
6/30/00
<TABLE>
<CAPTION>
CLASS C
--------------------------------------------------------------------------------
<S> <C>
1-Year -0.29%
5-Year +4.60%
Since Inception (5/1/95) +4.81%
</TABLE>
TOTAL RETURN INDEX COMPARISON
FOR HYPOTHETICAL $10,000 INVESTMENT
Total return represents the change in value of an investment over the periods
shown. It includes the current, applicable, maximum sales charge(s), fund
expenses, account fees and reinvested distributions. The unmanaged index, which
includes approximately 38,000 municipal securities from across the country,
differs from the Fund in composition, does not pay management fees or expenses
and includes reinvested interest. One cannot invest directly in an index. For
the periods shown, performance of the Fund's shares exceeded the rate of
inflation as measured by the Consumer Price Index (CPI).
CLASS A (7/1/90 - 6/30/00)
[CLASS A LINE GRAPH]
The following line graph compares the performance of Franklin California Insured
Tax-Free Income Fund - Class A to that of the Lehman Brothers Municipal Bond
Index, and to the Consumer Price Index based on a $10,000 investment from 7/1/90
to 6/30/00.
<TABLE>
<CAPTION>
CA Ins. TF Class A LB Muni Index* CPI*
<S> <C> <C> <C> <C> <C>
07/01/1990 $ 9,572 $ 10,000 $ 10,000
07/31/1990 $ 9,719 1.47% $ 10,147 0.38% $ 10,038
08/31/1990 $ 9,497 -1.45% $ 10,000 0.92% $ 10,130
09/30/1990 $ 9,498 0.06% $ 10,006 0.84% $ 10,215
10/31/1990 $ 9,684 1.82% $ 10,188 0.60% $ 10,277
11/30/1990 $ 9,870 2.01% $ 10,393 0.22% $ 10,299
12/31/1990 $ 9,871 0.43% $ 10,437 0.00% $ 10,299
01/31/1991 $10,051 1.34% $ 10,577 0.60% $ 10,361
02/28/1991 $10,088 0.87% $ 10,669 0.15% $ 10,377
03/31/1991 $10,117 0.03% $ 10,673 0.15% $ 10,392
04/30/1991 $10,254 1.34% $ 10,816 0.15% $ 10,408
05/31/1991 $10,328 0.89% $ 10,912 0.30% $ 10,439
06/30/1991 $10,312 -0.10% $ 10,901 0.29% $ 10,469
07/31/1991 $10,442 1.22% $ 11,034 0.15% $ 10,485
08/31/1991 $10,537 1.32% $ 11,180 0.29% $ 10,515
09/30/1991 $10,668 1.30% $ 11,325 0.44% $ 10,562
10/31/1991 $10,745 0.90% $ 11,427 0.15% $ 10,578
11/30/1991 $10,728 0.28% $ 11,459 0.29% $ 10,608
12/31/1991 $10,937 2.15% $ 11,705 0.07% $ 10,616
01/31/1992 $10,948 0.23% $ 11,732 0.15% $ 10,632
02/29/1992 $10,948 0.03% $ 11,736 0.36% $ 10,670
03/31/1992 $10,987 0.03% $ 11,739 0.51% $ 10,724
04/30/1992 $11,073 0.89% $ 11,844 0.14% $ 10,739
05/31/1992 $11,237 1.18% $ 11,983 0.14% $ 10,754
06/30/1992 $11,391 1.68% $ 12,185 0.36% $ 10,793
07/31/1992 $11,789 3.00% $ 12,550 0.21% $ 10,816
08/31/1992 $11,621 -0.97% $ 12,428 0.28% $ 10,846
09/30/1992 $11,638 0.65% $ 12,509 0.28% $ 10,876
10/31/1992 $11,408 -0.98% $ 12,387 0.35% $ 10,914
11/30/1992 $11,725 1.79% $ 12,608 0.14% $ 10,930
12/31/1992 $11,873 1.02% $ 12,737 -0.07% $ 10,922
01/31/1993 $12,032 1.16% $ 12,885 0.49% $ 10,976
02/28/1993 $12,394 3.62% $ 13,351 0.35% $ 11,014
03/31/1993 $12,361 -1.06% $ 13,210 0.35% $ 11,053
04/30/1993 $12,441 1.01% $ 13,343 0.28% $ 11,083
05/31/1993 $12,510 0.56% $ 13,418 0.14% $ 11,099
06/30/1993 $12,725 1.67% $ 13,642 0.14% $ 11,115
07/31/1993 $12,754 0.13% $ 13,660 0.00% $ 11,115
08/31/1993 $12,991 2.08% $ 13,944 0.28% $ 11,146
09/30/1993 $13,145 1.14% $ 14,103 0.21% $ 11,169
10/31/1993 $13,224 0.19% $ 14,129 0.41% $ 11,215
11/30/1993 $13,199 -0.88% $ 14,005 0.07% $ 11,223
12/31/1993 $13,418 2.11% $ 14,301 0.00% $ 11,223
01/31/1994 $13,552 1.14% $ 14,464 0.27% $ 11,253
02/28/1994 $13,280 -2.59% $ 14,089 0.34% $ 11,291
03/31/1994 $12,749 -4.07% $ 13,516 0.34% $ 11,330
04/30/1994 $12,799 0.85% $ 13,630 0.14% $ 11,346
05/31/1994 $12,881 0.87% $ 13,749 0.07% $ 11,353
06/30/1994 $12,832 -0.61% $ 13,665 0.34% $ 11,392
07/31/1994 $13,058 1.83% $ 13,915 0.27% $ 11,423
08/31/1994 $13,108 0.35% $ 13,964 0.40% $ 11,469
09/30/1994 $12,938 -1.47% $ 13,759 0.27% $ 11,499
10/31/1994 $12,700 -1.78% $ 13,514 0.07% $ 11,508
11/30/1994 $12,485 -1.81% $ 13,269 0.13% $ 11,522
12/31/1994 $12,704 2.20% $ 13,561 0.00% $ 11,522
01/31/1995 $13,128 2.86% $ 13,949 0.40% $ 11,569
02/28/1995 $13,497 2.91% $ 14,355 0.40% $ 11,615
03/31/1995 $13,595 1.15% $ 14,520 0.33% $ 11,653
04/30/1995 $13,635 0.12% $ 14,537 0.33% $ 11,692
05/31/1995 $14,009 3.19% $ 15,001 0.20% $ 11,715
06/30/1995 $13,832 -0.87% $ 14,871 0.20% $ 11,738
07/31/1995 $13,919 0.95% $ 15,012 0.00% $ 11,738
08/31/1995 $14,044 1.27% $ 15,203 0.26% $ 11,769
09/30/1995 $14,132 0.63% $ 15,298 0.20% $ 11,793
10/31/1995 $14,339 1.45% $ 15,520 0.33% $ 11,831
11/30/1995 $14,606 1.66% $ 15,778 -0.07% $ 11,823
12/31/1995 $14,779 0.96% $ 15,929 -0.07% $ 11,815
01/31/1996 $14,870 0.76% $ 16,050 0.59% $ 11,885
02/29/1996 $14,793 -0.68% $ 15,941 0.32% $ 11,923
03/31/1996 $14,572 -1.28% $ 15,737 0.52% $ 11,985
04/30/1996 $14,519 -0.28% $ 15,693 0.39% $ 12,031
05/31/1996 $14,526 -0.04% $ 15,687 0.19% $ 12,054
06/30/1996 $14,692 1.09% $ 15,858 0.06% $ 12,061
07/31/1996 $14,821 0.90% $ 16,001 0.19% $ 12,084
08/31/1996 $14,875 -0.02% $ 15,997 0.19% $ 12,107
09/30/1996 $15,079 1.40% $ 16,221 0.32% $ 12,146
10/31/1996 $15,222 1.13% $ 16,405 0.32% $ 12,185
11/30/1996 $15,453 1.83% $ 16,705 0.19% $ 12,208
12/31/1996 $15,397 -0.42% $ 16,635 0.00% $ 12,208
01/31/1997 $15,391 0.19% $ 16,666 0.32% $ 12,247
02/28/1997 $15,523 0.92% $ 16,820 0.31% $ 12,285
03/31/1997 $15,326 -1.33% $ 16,596 0.25% $ 12,316
04/30/1997 $15,460 0.84% $ 16,735 0.12% $ 12,331
05/31/1997 $15,658 1.51% $ 16,988 -0.06% $ 12,323
06/30/1997 $15,780 1.07% $ 17,170 0.12% $ 12,338
07/31/1997 $16,213 2.77% $ 17,645 0.12% $ 12,353
08/31/1997 $16,076 -0.94% $ 17,479 0.19% $ 12,376
09/30/1997 $16,252 1.19% $ 17,687 0.25% $ 12,407
10/31/1997 $16,348 0.64% $ 17,801 0.25% $ 12,438
11/30/1997 $16,444 0.59% $ 17,906 -0.06% $ 12,431
12/31/1997 $16,667 1.46% $ 18,167 -0.12% $ 12,416
01/31/1998 $16,831 1.03% $ 18,354 0.19% $ 12,439
02/28/1998 $16,848 0.03% $ 18,360 0.19% $ 12,463
03/31/1998 $16,866 0.09% $ 18,376 0.19% $ 12,487
04/30/1998 $16,788 -0.45% $ 18,294 0.18% $ 12,509
05/31/1998 $17,024 1.58% $ 18,583 0.18% $ 12,532
06/30/1998 $17,110 0.39% $ 18,655 0.12% $ 12,547
07/31/1998 $17,141 0.25% $ 18,702 0.12% $ 12,562
08/31/1998 $17,380 1.55% $ 18,992 0.12% $ 12,577
09/30/1998 $17,648 1.25% $ 19,229 0.12% $ 12,592
10/31/1998 $17,666 0.00% $ 19,229 0.24% $ 12,622
11/30/1998 $17,740 0.35% $ 19,296 0.00% $ 12,622
12/31/1998 $17,752 0.25% $ 19,345 -0.06% $ 12,615
01/31/1999 $17,897 1.19% $ 19,575 0.24% $ 12,645
02/28/1999 $17,885 -0.44% $ 19,489 0.12% $ 12,660
03/31/1999 $17,930 0.14% $ 19,516 0.30% $ 12,698
04/30/1999 $17,931 0.25% $ 19,565 0.73% $ 12,791
05/31/1999 $17,846 -0.58% $ 19,451 0.00% $ 12,791
06/30/1999 $17,572 -1.44% $ 19,171 0.00% $ 12,791
07/31/1999 $17,587 0.36% $ 19,240 0.30% $ 12,829
08/31/1999 $17,354 -0.80% $ 19,086 0.24% $ 12,860
09/30/1999 $17,370 0.04% $ 19,094 0.48% $ 12,922
10/31/1999 $17,106 -1.08% $ 18,888 0.18% $ 12,945
11/30/1999 $17,239 1.06% $ 19,088 0.06% $ 12,953
12/31/1999 $17,109 -0.75% $ 18,945 0.00% $ 12,953
01/31/2000 $16,975 -0.44% $ 18,861 0.24% $ 12,984
02/29/2000 $17,276 1.16% $ 19,080 0.59% $ 13,060
03/31/2000 $17,697 2.18% $ 19,496 0.82% $ 13,167
04/30/2000 $17,547 -0.59% $ 19,381 0.06% $ 13,175
05/31/2000 $17,473 -0.52% $ 19,280 0.06% $ 13,183
06/30/2000 $17,995 2.65% $ 19,791 0.58% $ 13,260
Total Return 79.95% 97.91% 32.60%
</TABLE>
CLASS C (5/1/95 - 6/30/00)
[CLASS C LINE GRAPH]
The following line graph compares the performance of Franklin California Insured
Tax-Free Income Fund - Class C to that of the Lehman Brothers Municipal Bond
Index, and to the Consumer Price Index based on a $10,000 investment from 5/1/95
to 6/30/00.
<TABLE>
<CAPTION>
CA Ins. TF Class C LB Muni Index* CPI*
<S> <C> <C> <C> <C> <C>
05/01/1995 $ 9,900 $ 10,000 $ 10,000
05/31/1995 $ 10,197 3.19% $ 10,319 0.20% $ 10,020
06/30/1995 $ 10,063 -0.87% $ 10,229 0.20% $ 10,040
07/31/1995 $ 10,122 0.95% $ 10,326 0.00% $ 10,040
08/31/1995 $ 10,215 1.27% $ 10,458 0.26% $ 10,066
09/30/1995 $ 10,265 0.63% $ 10,523 0.20% $ 10,086
10/31/1995 $ 10,418 1.45% $ 10,676 0.33% $ 10,120
11/30/1995 $ 10,606 1.66% $ 10,853 -0.07% $ 10,112
12/31/1995 $ 10,727 0.96% $ 10,957 -0.07% $ 10,105
01/31/1996 $ 10,787 0.76% $ 11,041 0.59% $ 10,165
02/29/1996 $ 10,726 -0.68% $ 10,966 0.32% $ 10,198
03/31/1996 $ 10,571 -1.28% $ 10,825 0.52% $ 10,251
04/30/1996 $ 10,528 -0.28% $ 10,795 0.39% $ 10,291
05/31/1996 $ 10,527 -0.04% $ 10,791 0.19% $ 10,310
06/30/1996 $ 10,642 1.09% $ 10,908 0.06% $ 10,316
07/31/1996 $ 10,737 0.90% $ 11,006 0.19% $ 10,336
08/31/1996 $ 10,762 -0.02% $ 11,004 0.19% $ 10,356
09/30/1996 $ 10,904 1.40% $ 11,158 0.32% $ 10,389
10/31/1996 $ 11,002 1.13% $ 11,284 0.32% $ 10,422
11/30/1996 $ 11,172 1.83% $ 11,491 0.19% $ 10,442
12/31/1996 $ 11,118 -0.42% $ 11,443 0.00% $ 10,442
01/31/1997 $ 11,108 0.19% $ 11,464 0.32% $ 10,475
02/28/1997 $ 11,207 0.92% $ 11,570 0.31% $ 10,508
03/31/1997 $ 11,060 -1.33% $ 11,416 0.25% $ 10,534
04/30/1997 $ 11,142 0.84% $ 11,512 0.12% $ 10,547
05/31/1997 $ 11,287 1.51% $ 11,686 -0.06% $ 10,540
06/30/1997 $ 11,369 1.07% $ 11,811 0.12% $ 10,553
07/31/1997 $ 11,674 2.77% $ 12,138 0.12% $ 10,565
08/31/1997 $ 11,571 -0.94% $ 12,024 0.19% $ 10,586
09/30/1997 $ 11,692 1.19% $ 12,167 0.25% $ 10,612
10/31/1997 $ 11,755 0.64% $ 12,245 0.25% $ 10,639
11/30/1997 $ 11,827 0.59% $ 12,317 -0.06% $ 10,632
12/31/1997 $ 11,971 1.46% $ 12,497 -0.12% $ 10,619
01/31/1998 $ 12,092 1.03% $ 12,626 0.19% $ 10,640
02/28/1998 $ 12,089 0.03% $ 12,629 0.19% $ 10,660
03/31/1998 $ 12,096 0.09% $ 12,641 0.19% $ 10,680
04/30/1998 $ 12,044 -0.45% $ 12,584 0.18% $ 10,699
05/31/1998 $ 12,206 1.58% $ 12,783 0.18% $ 10,719
06/30/1998 $ 12,262 0.39% $ 12,832 0.12% $ 10,731
07/31/1998 $ 12,268 0.25% $ 12,865 0.12% $ 10,744
08/31/1998 $ 12,433 1.55% $ 13,064 0.12% $ 10,757
09/30/1998 $ 12,627 1.25% $ 13,227 0.12% $ 10,770
10/31/1998 $ 12,624 0.00% $ 13,227 0.24% $ 10,796
11/30/1998 $ 12,681 0.35% $ 13,274 0.00% $ 10,796
12/31/1998 $ 12,674 0.25% $ 13,307 -0.06% $ 10,789
01/31/1999 $ 12,781 1.19% $ 13,465 0.24% $ 10,815
02/28/1999 $ 12,767 -0.44% $ 13,406 0.12% $ 10,828
03/31/1999 $ 12,792 0.14% $ 13,425 0.30% $ 10,861
04/30/1999 $ 12,786 0.25% $ 13,458 0.73% $ 10,940
05/31/1999 $ 12,720 -0.58% $ 13,380 0.00% $ 10,940
06/30/1999 $ 12,520 -1.44% $ 13,187 0.00% $ 10,940
07/31/1999 $ 12,525 0.36% $ 13,235 0.30% $ 10,973
08/31/1999 $ 12,355 -0.80% $ 13,129 0.24% $ 10,999
09/30/1999 $ 12,360 0.04% $ 13,134 0.48% $ 11,052
10/31/1999 $ 12,168 -1.08% $ 12,992 0.18% $ 11,072
11/30/1999 $ 12,256 1.06% $ 13,130 0.06% $ 11,079
12/31/1999 $ 12,159 -0.75% $ 13,032 0.00% $ 11,079
01/31/2000 $ 12,048 -0.44% $ 12,974 0.24% $ 11,105
02/29/2000 $ 12,254 1.16% $ 13,125 0.59% $ 11,171
03/31/2000 $ 12,557 2.18% $ 13,411 0.82% $ 11,262
04/30/2000 $ 12,445 -0.59% $ 13,332 0.06% $ 11,269
05/31/2000 $ 12,388 -0.52% $ 13,263 0.06% $ 11,276
06/30/2000 $ 12,746 2.65% $ 13,614 0.58% $ 11,341
</TABLE>
*Source: Standard and Poor's Micropal.
Past performance does not guarantee future results.
FRANKLIN CALIFORNIA
INTERMEDIATE-TERM
TAX-FREE INCOME FUND
--------------------------------------------------------------------------------
Your Fund's Goal: Franklin California Intermediate-Term Tax-Free Income Fund
seeks to provide high, current income exempt from regular federal and California
state personal income taxes while seeking preservation of capital. The Fund
invests primarily in a portfolio of California municipal securities with an
average weighted maturity (the time at which the debt must be repaid) between 3
and 10 years.(1)
--------------------------------------------------------------------------------
Strong economic growth in California and the nation as a whole led to
inflationary fears during the one-year reporting period. This, in turn, prompted
several rounds of Federal Reserve Board (Fed) tightening, as the Fed raised
short-term interest rates five times during the Fund's fiscal year to curtail
inflation and slow economic growth.
Generally rising interest rates put pressure on bond prices. For the 12 months
ended June 30, 2000, Franklin California Intermediate-Term Tax-Free Income
Fund's Class A share price declined 0.9%. In comparison, the Bond Buyer 40, an
indicator of the municipal bond market, had a 5.09% price decline, and the
Fund's benchmark, the Lehman Brothers Municipal Bond Index, was off 3.19%.(2)
CREDIT QUALITY BREAKDOWN*
Franklin California Intermediate-Term Tax-Free Income Fund
Based on Total Long-Term Investments
6/30/00
[CREDIT QUALITY BREAKDOWN PIE CHART]
<TABLE>
<CAPTION>
<S> <C>
AAA 26.1%
AA 8.9%
A 18.0%
BBB 46.9%
Below Investment Grade 0.1%
</TABLE>
*Quality breakdowns may include internal ratings for bonds not rated by an
independent rating agency.
1. For investors subject to the federal alternative minimum tax, a small portion
of this income may be subject to such tax. Distributions of capital gains and of
ordinary income from accrued market discount, if any, are generally taxable.
2. Sources: Lehman Brothers; The Bond Buyer. The unmanaged indexes include
reinvested interest; one cannot invest directly in an index.
The dollar value, number of shares or principal value, and complete legal titles
of all portfolio holdings are listed in the Fund's Statement of Investments
(SOI). The SOI begins on page 39.
PORTFOLIO BREAKDOWN
Franklin California
Intermediate-Term
Tax-Free Income Fund
6/30/00
<TABLE>
<CAPTION>
% OF TOTAL
LONG-TERM
INVESTMENTS
--------------------------------------------------------------------------------
<S> <C>
Tax-Supported 40.4%
Subject to Government
Appropriation 18.4%
Utilities 14.7%
Hospital & Health Care 7.7%
Prerefunded 5.5%
General Obligation 3.6%
Housing 3.6%
Transportation 3.4%
Higher Education 1.8%
Other Revenue 0.8%
Corporate-Backed 0.1%
</TABLE>
On the upside, rising interest rates helped the Fund book tax losses, which can
be carried forward to offset any future capital gains, and improve its
structure, as we sold securities with relatively short call protection such as
Loma Linda Hospital Revenue and California State Department of Water Resources
Central Valley Project Revenue - Water Systems Refunding bonds. We then
reinvested the proceeds from such sales in current coupon bonds with longer call
protection. Such purchases included Puerto Rico Commonwealth Public Improvement
GO; San Marcos Public Facilities Authority Revenue and California Health
Facilities Financing Authority Revenue - Sutter Health bonds. Another positive
factor influencing your fund was the strong demand for California
intermediate-term bonds, resulting in strong performance for bonds in that
portion of the yield curve.
Your Fund offers a notable tax advantage over a comparable taxable investment.
The Performance Summary on page 16 shows that at the end of this reporting
period, the Fund's distribution rate was 4.68%, based on an annualization of the
current 4.36 cent ($0.0436) per share dividend and the maximum offering price of
$11.17 on June 30, 2000. This tax-free rate is generally higher than the
after-tax return on a comparable taxable investment. An investor in the maximum
combined federal and California state personal income tax bracket of 45.22%
would need to earn 8.54% from a taxable investment to match the Fund's tax-free
distribution rate.
Looking forward, we believe the Fund's conservative buy-and-hold,
income-oriented philosophy, as well as its reserve of higher coupon bonds from
previous, higher interest-rate periods, should help moderate its share-price
volatility, reduce portfolio turnover and protect its income stream.
DIVIDEND DISTRIBUTIONS*
Franklin California
Intermediate-Term Tax-Free
Income Fund - Class A
7/1/99 - 6/30/00
<TABLE>
<CAPTION>
DIVIDEND
MONTH PER SHARE
--------------------------------------------------------------------------------
<S> <C>
July 4.20 cents
August 4.20 cents
September 4.30 cents
October 4.30 cents
November 4.30 cents
December 4.33 cents
January 4.33 cents
February 4.33 cents
March 4.36 cents
April 4.36 cents
May 4.36 cents
June 4.36 cents
--------------------------------------------------------------------------------
TOTAL 51.73 CENTS
</TABLE>
*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.
This discussion reflects our views, opinions and portfolio holdings as of June
30, 2000, the end of the reporting period. The information provided is not a
complete analysis of every aspect of any industry, security or the Fund. Our
strategies and the Fund's portfolio composition will change depending on market
and economic conditions. Although historical performance is no guarantee of
future results, these insights may help you understand our investment and
management philosophy.
FRANKLIN CALIFORNIA
INTERMEDIATE-TERM
TAX-FREE INCOME FUND
--------------------------------------------------------------------------------
CLASS A: Subject to the maximum 2.25% initial sales charge. The Fund's manager
has agreed in advance to waive a portion of its management fees. If the manager
had not taken this action, the Fund's distribution rate and total return would
have been lower, and the yield for the period would have been 4.46%. 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 the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the applicable, maximum
sales charge.
3. Distribution rate is based on an annualization of the current 4.36 cent per
share monthly dividend and the maximum offering price of $11.17 on 6/30/00.
4. Taxable equivalent distribution rate and yield assume the published rates as
of 6/16/00 for the maximum combined federal and California state personal income
tax bracket of 45.22%, 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 6/30/00.
ONE-YEAR PERFORMANCE SUMMARY
AS OF 6/30/00
One-year total return does not include sales charges. Distributions will vary
based on earnings of the Fund's portfolio and any profits realized from the sale
of the portfolio's securities, as well as the level of the Fund's operating
expenses. Past distributions are not indicative of future trends. All total
returns include reinvested distributions at net asset value.
<TABLE>
<CAPTION>
CLASS A
<S> <C> <C>
One-Year Total Return +3.95%
Net Asset Value (NAV) (6/30/00) $10.92 (6/30/99) $11.02
Change in NAV -$0.10
Distributions (7/1/99-6/30/00) Dividend Income $0.5173
</TABLE>
ADDITIONAL PERFORMANCE
<TABLE>
<CAPTION>
INCEPTION
CLASS A 1-YEAR 5-YEAR (9/21/92)
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) +3.95% +33.51% +57.76%
Average Annual Total Return(2) +1.64% +5.47% +5.73%
Distribution Rate(3) 4.68%
Taxable Equivalent Distribution Rate(4) 8.54%
30-Day Standardized Yield(5) 4.58%
Taxable Equivalent Yield(4) 8.36%
</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.
--------------------------------------------------------------------------------
For updated performance figures, see "Prices and Performance" at
franklintempleton.com, or call Franklin Templeton at 1-800/342-5236.
Past performance does not guarantee future results.
TOTAL RETURN INDEX COMPARISON
FOR HYPOTHETICAL $10,000 INVESTMENT
Total return represents the change in value of an investment over the periods
shown. It includes the applicable, maximum sales charge, Fund expenses, account
fees and reinvested distributions. The unmanaged index, which includes
approximately 38,000 municipal securities from across the country, differs from
the Fund in composition, does not pay management fees or expenses and includes
reinvested interest. One cannot invest directly in an index. For the periods
shown, performance of the Fund exceeded the rate of inflation as measured by the
Consumer Price Index (CPI).
[LINE GRAPH OF CLASS A]
The following line graph compares the performance of Franklin California
Intermediate-Term Tax-Free Income Fund - Class A to that of the Lehman Brothers
Municipal 10-Year Bond Index, and to the Consumer Price Index based on a $10,000
investment from 9/21/92 to 6/30/00.
<TABLE>
<CAPTION>
CA Int. TF LB 10 Yr. Muni CPI*
Index*
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
09/21/1992 $ 9,775 $10,000 $ 10,000
09/30/1992 $ 9,785 0.25% $10,025 0.08% $ 10,008
10/31/1992 $ 9,736 -1.02% $ 9,923 0.35% $ 10,043
11/30/1992 $ 9,922 1.83% $10,104 0.14% $ 10,057
12/31/1992 $ 9,990 1.16% $10,221 -0.07% $ 10,050
01/31/1993 $ 10,074 1.68% $10,393 0.49% $ 10,100
02/28/1993 $ 10,395 3.66% $10,774 0.35% $ 10,135
03/31/1993 $ 10,401 -1.46% $10,616 0.35% $ 10,171
04/30/1993 $ 10,436 0.95% $10,717 0.28% $ 10,199
05/31/1993 $ 10,482 0.35% $10,755 0.14% $ 10,213
06/30/1993 $ 10,588 1.97% $10,966 0.14% $ 10,228
07/31/1993 $ 10,614 0.25% $10,994 0.00% $ 10,228
08/31/1993 $ 10,759 2.07% $11,221 0.28% $ 10,256
09/30/1993 $ 10,986 1.23% $11,359 0.21% $ 10,278
10/31/1993 $ 11,031 0.16% $11,378 0.41% $ 10,320
11/30/1993 $ 10,912 -0.82% $11,284 0.07% $ 10,327
12/31/1993 $ 11,142 2.13% $11,525 0.00% $ 10,327
01/31/1994 $ 11,259 1.23% $11,666 0.27% $ 10,355
02/28/1994 $ 10,995 -2.74% $11,347 0.34% $ 10,390
03/31/1994 $ 10,645 -3.82% $10,913 0.34% $ 10,426
04/30/1994 $ 10,702 1.10% $11,033 0.14% $ 10,440
05/31/1994 $ 10,769 0.80% $11,122 0.07% $ 10,447
06/30/1994 $ 10,762 -0.43% $11,074 0.34% $ 10,483
07/31/1994 $ 10,925 1.68% $11,260 0.27% $ 10,511
08/31/1994 $ 10,972 0.39% $11,304 0.40% $ 10,553
09/30/1994 $ 10,869 -1.34% $11,152 0.27% $ 10,582
10/31/1994 $ 10,734 -1.46% $10,990 0.07% $ 10,589
11/30/1994 $ 10,578 -1.89% $10,782 0.13% $ 10,603
12/31/1994 $ 10,669 1.80% $10,976 0.00% $ 10,603
01/31/1995 $ 10,901 2.59% $11,260 0.40% $ 10,645
02/28/1995 $ 11,188 2.83% $11,579 0.40% $ 10,688
03/31/1995 $ 11,313 1.35% $11,735 0.33% $ 10,723
04/30/1995 $ 11,328 0.12% $11,749 0.33% $ 10,759
05/31/1995 $ 11,652 3.17% $12,122 0.20% $ 10,780
06/30/1995 $ 11,534 -0.62% $12,047 0.20% $ 10,802
07/31/1995 $ 11,683 1.47% $12,224 0.00% $ 10,802
08/31/1995 $ 11,867 1.36% $12,390 0.26% $ 10,830
09/30/1995 $ 11,961 0.64% $12,469 0.20% $ 10,851
10/31/1995 $ 12,146 1.15% $12,613 0.33% $ 10,887
11/30/1995 $ 12,320 1.34% $12,782 -0.07% $ 10,880
12/31/1995 $ 12,370 0.61% $12,860 -0.07% $ 10,872
01/31/1996 $ 12,477 1.01% $12,989 0.59% $ 10,936
02/29/1996 $ 12,447 -0.41% $12,936 0.32% $ 10,971
03/31/1996 $ 12,360 -1.24% $12,776 0.52% $ 11,028
04/30/1996 $ 12,330 -0.35% $12,731 0.39% $ 11,071
05/31/1996 $ 12,335 -0.28% $12,695 0.19% $ 11,092
06/30/1996 $ 12,456 0.95% $12,816 0.06% $ 11,099
07/31/1996 $ 12,554 0.96% $12,939 0.19% $ 11,120
08/31/1996 $ 12,558 0.00% $12,939 0.19% $ 11,141
09/30/1996 $ 12,681 1.03% $13,072 0.32% $ 11,177
10/31/1996 $ 12,816 1.26% $13,237 0.32% $ 11,213
11/30/1996 $ 13,034 2.02% $13,504 0.19% $ 11,234
12/31/1996 $ 12,992 -0.45% $13,444 0.00% $ 11,234
01/31/1997 $ 13,032 0.39% $13,496 0.32% $ 11,270
02/28/1997 $ 13,121 0.94% $13,623 0.31% $ 11,305
03/31/1997 $ 13,005 -1.34% $13,440 0.25% $ 11,333
04/30/1997 $ 13,107 0.74% $13,540 0.12% $ 11,347
05/31/1997 $ 13,282 1.42% $13,732 -0.06% $ 11,340
06/30/1997 $ 13,396 1.10% $13,883 0.12% $ 11,353
07/31/1997 $ 13,720 2.81% $14,273 0.12% $ 11,367
08/31/1997 $ 13,639 -0.97% $14,135 0.19% $ 11,389
09/30/1997 $ 13,767 1.27% $14,314 0.25% $ 11,417
10/31/1997 $ 13,847 0.53% $14,390 0.25% $ 11,446
11/30/1997 $ 13,914 0.46% $14,456 -0.06% $ 11,439
12/31/1997 $ 14,069 1.58% $14,685 -0.12% $ 11,425
01/31/1998 $ 14,212 1.11% $14,848 0.19% $ 11,447
02/28/1998 $ 14,230 -0.01% $14,846 0.19% $ 11,468
03/31/1998 $ 14,235 -0.07% $14,836 0.19% $ 11,490
04/30/1998 $ 14,201 -0.55% $14,754 0.18% $ 11,511
05/31/1998 $ 14,398 1.70% $15,005 0.18% $ 11,532
06/30/1998 $ 14,441 0.37% $15,061 0.12% $ 11,546
07/31/1998 $ 14,498 0.16% $15,085 0.12% $ 11,559
08/31/1998 $ 14,697 1.74% $15,347 0.12% $ 11,573
09/30/1998 $ 14,895 1.49% $15,576 0.12% $ 11,587
10/31/1998 $ 14,912 0.04% $15,582 0.24% $ 11,615
11/30/1998 $ 14,955 0.30% $15,629 0.00% $ 11,615
12/31/1998 $ 14,985 0.31% $15,677 -0.06% $ 11,608
01/31/1999 $ 15,147 1.53% $15,917 0.24% $ 11,636
02/28/1999 $ 15,098 -0.90% $15,774 0.12% $ 11,650
03/31/1999 $ 15,127 -0.05% $15,766 0.30% $ 11,685
04/30/1999 $ 15,143 0.27% $15,809 0.73% $ 11,770
05/31/1999 $ 15,039 -0.70% $15,698 0.00% $ 11,770
06/30/1999 $ 14,814 -1.86% $15,406 0.00% $ 11,770
07/31/1999 $ 14,910 0.67% $15,509 0.30% $ 11,805
08/31/1999 $ 14,859 -0.37% $15,452 0.24% $ 11,834
09/30/1999 $ 14,918 0.34% $15,504 0.48% $ 11,890
10/31/1999 $ 14,786 -0.71% $15,394 0.18% $ 11,912
11/30/1999 $ 14,912 1.09% $15,562 0.06% $ 11,919
12/31/1999 $ 14,766 -0.52% $15,481 0.00% $ 11,919
01/31/2000 $ 14,784 -0.41% $15,418 0.24% $ 11,948
02/29/2000 $ 14,899 0.79% $15,539 0.59% $ 12,018
03/31/2000 $ 15,168 1.95% $15,842 0.82% $ 12,117
04/30/2000 $ 15,075 -0.50% $15,763 0.06% $ 12,124
05/31/2000 $ 15,067 -0.59% $15,670 0.06% $ 12,131
06/30/2000 $ 15,422 2.72% $16,097 0.58% $ 12,202
</TABLE>
*Source: Standard and Poor's Micropal.
FRANKLIN CALIFORNIA
INTERMEDIATE-TERM
TAX-FREE INCOME FUND
AVERAGE ANNUAL TOTAL RETURN
6/30/00
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------
<S> <C>
1-Year +1.64%
5-Year +5.47%
Since Inception (9/21/92) +5.73%
</TABLE>
Past performance does not guarantee future results.
FRANKLIN CALIFORNIA
TAX-EXEMPT MONEY FUND
-------------------------------------------------------------------------------
Your Fund's Goal: Franklin California Tax-Exempt Money Fund seeks to provide
high, current income exempt from regular federal and California state personal
income taxes while seeking preservation of capital and liquidity by investing
primarily in a portfolio of short-term municipal debt securities issued in
California. The Fund is managed to maintain a $1.00 share price.(1)
-------------------------------------------------------------------------------
In 1999 the U.S. economy entered its ninth year of economic expansion. Consumer
spending, which represents two-thirds of the nation's gross domestic product
(GDP), increased dramatically over the past year to its highest rate in almost
17 years. Wage gains, record unemployment and the wealth effect, or consumers'
greater willingness to spend in a time of rising equity markets, contributed
significantly to this increase. As a result, real GDP grew at a 4.8% annualized
pace in the first quarter of 2000 -- well above the Federal Reserve Board's (the
Fed's) long-term sustainable target growth rate of 3.0%.
(1.) There is no assurance that the Fund's $1.00 per share price will be
maintained. An investment in the Fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
The dollar value, number of shares or principal value, and complete legal titles
of all portfolio holdings are listed in the Fund's Statement of Investments
(SOI). The SOI begins on page 47.
Seeking to curb growth and combat signs of rising inflation, the Fed raised the
federal funds target rate five times during the Fund's fiscal year beginning in
July 1999, for a total 1.50% increase. Reflecting the short-term interest rate
increase over the past year, the Fund's seven-day effective yield rose from
3.05% on June 30, 1999, to 3.52% on June 30, 2000.
The past three months' economic data, supported by slower consumer spending,
lower housing starts and somewhat tamer Consumer Price Index numbers, displayed
some signs of a slowing economy. However, we believe it is too early to tell if
the economy is headed for a soft landing. Numerous Fed governors have warned not
to jump to any conclusions, and wait for more data that would confirm the
slowdown or spark further interest-rate tightening.
The investment strategy driving Franklin California Tax-Exempt Money Fund's
management continues to emphasize high quality and liquidity. We manage the Fund
more conservatively than SEC guidelines require, to ensure the safety and
stability of the Fund's principal. For example, SEC guidelines allow tax-exempt
money funds to purchase both first- and second-tier securities.
FRANKLIN CALIFORNIA
TAX-EXEMPT MONEY FUND
<TABLE>
<CAPTION>
PERFORMANCE SUMMARY
6/30/00
------------------------------------------
<S> <C>
Seven-day effective yield(1) 3.52%
Seven-day annualized yield 3.46%
Taxable equivalent yield(2) 6.32%
</TABLE>
1. The seven-day effective yield assumes the compounding of daily dividends.
2. Taxable equivalent yield assumes the published rates as of 6/16/00 for the
maximum combined federal and California state personal income tax bracket of
45.22%, based on the federal income tax rate of 39.6%.
Annualized and effective yields are for the seven-day period ended 6/30/00. The
Fund's average weighted maturity was 53 days. Yield reflects fluctuations in
interest rates on portfolio investments, as well as Fund expenses.
Past performance does not guarantee future results.
Franklin Templeton purchases only first-tier securities for inclusion in its
tax-exempt money market portfolios. Although allowed by the SEC for money market
funds, we do not buy any derivative securities in our tax-exempt money funds --
we purchase only plain vanilla, short-term securities, from what we believe to
be creditworthy institutions. We eliminated our exposure to Japanese bank
guarantees several years ago because of the problems these banks were having. We
choose not to purchase second-tier securities, Japanese bank letters of credit
(LOCs) and derivative products that may offer higher yields, because we do not
believe that the higher return offered by lower-rated and illiquid securities
justifies their increased risk.
During the reporting period, the Fund participated in several attractive deals
including Riverside County commercial paper, California State GO bonds, Los
Angeles Department of Water and Power commercial paper and California State
Economic Development Financing Authority Revenue VRDNs.
--------------------------------------------------------------------------------
This discussion reflects our views, opinions and portfolio holdings as of June
30, 2000, the end of the reporting period. The information provided is not a
complete analysis of every aspect of any industry, security or the Fund. Our
strategies and the Fund's portfolio composition will change depending on market
and economic conditions. Although historical performance is no guarantee of
future results, these insights may help you understand our investment and
management philosophy.
--------------------------------------------------------------------------------
MUNICIPAL BOND RATINGS
MOODY'S
Aaa: Best quality. They carry the smallest degree of investment risk and
generally are referred to as "gilt-edged." Interest payments are protected by a
large or exceptionally stable margin, and principal is secure. Although the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
Aa: High quality by all standards. Together with the Aaa group, they comprise
what generally are known as high-grade bonds. Aa bonds are rated lower than Aaa
because margins of protection may not be as large, fluctuation of protective
elements may be of greater amplitude, or there may be other elements which make
the long-term risks appear larger.
A: Possess many favorable investment attributes and are considered upper
medium-grade obligations. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a susceptibility
to impairment sometime in the future.
Baa: Medium-grade obligations, i.e., they are neither highly protected nor
poorly secured. Interest payments and principal security appear adequate for the
present, but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time.
Ba: Contain speculative elements. Often the protection of interest and principal
payments may be very moderate and, thereby, not well safeguarded during both
good and bad times over the future. Uncertainty of position characterizes bonds
in this class.
B: Generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the contract
over any long period of time may be small.
Caa: Poor standing. Such issues may be in default, or elements of danger with
respect to principal or interest may be present.
Ca: Obligations that are highly speculative. Such issues are often in default or
have other marked shortcomings.
C: Lowest-rated class of bonds. Issues rated C can be regarded as having
extremely poor prospects of ever attaining any real investment standing.
S&P(R)
AAA: The highest rating assigned by S&P to a debt obligation and indicates the
ultimate degree of protection as to principal and interest.
AA: Also qualify as high-grade obligations, and, in the majority of instances,
differ from AAA issues only in a small degree.
A: Generally regarded as upper medium-grade. They have considerable investment
strength but are not entirely free from adverse effects of changes in economic
and trade conditions. Interest and principal are regarded as safe.
BBB: Regarded as having an adequate capacity to pay principal and interest.
Whereas they normally exhibit adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity to pay principal and interest for bonds in this category than for bonds
in the A category.
BB, B, CCC, CC: 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: In default and payment of interest and/or repayment of principal is in
arrears.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Highlights
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------------------------------------------------
2000 1999 1998 1997 1996
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .......... $ 12.12 $ 12.47 $ 12.22 $ 12.01 $ 11.95
-------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) ................... .61 .61 .64 .66 .67
Net realized and unrealized gains (losses) . (.36) (.26) .37 .21 .06
-------------------------------------------------------------------------------
Total from investment operations ............ .25 .35 1.01 .87 .73
-------------------------------------------------------------------------------
Less distributions from:
Net investment income ...................... (.61) (.62) (.64) (.66) (.67)
In excess of net investment income ......... -- (.01) -- -- --
Net realized gains ......................... -- (c) (.07) (.12) -- --
-------------------------------------------------------------------------------
Total distributions ......................... (.61) (.70) (.76) (.66) (.67)
-------------------------------------------------------------------------------
Net asset value, end of year ................ $ 11.76 $ 12.12 $ 12.47 $ 12.22 $ 12.01
===============================================================================
Total return(b) ............................. 2.24% 2.76% 8.38% 7.41% 6.18%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ............. $ 1,558,857 $ 1,775,212 $ 1,717,489 $ 1,635,543 $ 1,588,631
Ratios to average net assets:
Expenses ................................... .60% .60% .60% .60% .60%
Net investment income ...................... 5.24% 4.91% 5.11% 5.41% 5.50%
Portfolio turnover rate ..................... 29.40% 15.53% 21.66% 20.40% 14.22%
</TABLE>
(a)Based on average shares outstanding effective year ended June 30, 1999.
(b)Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
(c)The fund made a capital gain distribution of $.0016.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Highlights (continued)
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND (CONT.)
<TABLE>
<CAPTION>
CLASS B
----------------
YEAR ENDED
JUNE 30, 2000(d)
----------------
<S> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ......................................... $ 11.36
---------
Income from investment operations:
Net investment income(a) .................................................. .23
Net realized and unrealized gains ......................................... .42
---------
Total from investment operations ........................................... .65
Less distributions from net investment income .............................. (.23)
---------
Net asset value, end of year ............................................... $ 11.78
=========
Total return(b) ............................................................ 5.76%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's)............................................. $1,884
Ratios to average net assets:
Expenses .................................................................. 1.16%(c)
Net investment income ..................................................... 4.82%(c)
Portfolio turnover rate .................................................... 29.40%
</TABLE>
(a)Based on average shares outstanding.
(b)Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
(c)Annualized.
(d)For the period February 1, 2000 (effective date) to June 30, 2000.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Highlights (continued)
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND (CONT.)
<TABLE>
<CAPTION>
CLASS C
---------------------------------------------------------------
YEAR ENDED JUNE 30,
---------------------------------------------------------------
2000 1999 1998 1997 1996
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .......... $ 12.20 $ 12.55 $ 12.29 $ 12.07 $ 11.99
---------------------------------------------------------------
Income from investment operations:
Net investment income(a) ................... .55 .55 .58 .59 .60
Net realized and unrealized gains (losses) . (.36) (.27) .37 .22 .08
---------------------------------------------------------------
Total from investment operations ............ .19 .28 .95 .81 .68
---------------------------------------------------------------
Less distributions from:
Net investment income ...................... (.55) (.55) (.57) (.59) (.60)
In excess of net investment income ......... -- (.01) -- -- --
Net realized gains ......................... -- (c) (.07) (.12) -- --
---------------------------------------------------------------
Total distributions ......................... (.55) (.63) (.69) (.59) (.60)
---------------------------------------------------------------
Net asset value, end of year ................ $ 11.84 $ 12.20 $ 12.55 $ 12.29 $ 12.07
===============================================================
Total return(b) ............................. 1.66% 2.16% 7.80% 6.86% 5.70%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ............. $ 67,395 $ 80,336 $ 55,371 $ 34,899 $ 18,458
Ratios to average net assets:
Expenses ................................... 1.16% 1.16% 1.16% 1.16% 1.17%
Net investment income ...................... 4.68% 4.35% 4.55% 4.81% 4.96%
Portfolio turnover rate ..................... 29.40% 15.53% 21.66% 20.40% 14.22%
</TABLE>
(a)Based on average shares outstanding effective year ended June 30, 1999.
(b)Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
(c)The fund made a capital gain distribution of $.0016.
See notes to financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
--------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS 98.0%
BONDS 95.7%
<S> <C> <C>
ABAG Finance Authority for Nonprofit Corps. COP,
Lincoln Child Center Inc., Insured, 6.125%, 11/01/24 ..................................... $ 2,055,000 $ 2,083,174
Lytton Gardens Inc., Insured, 6.00%, 2/15/30 ............................................. 3,500,000 3,461,500
Odd Fellows Home, 6.00%, 8/15/24 ......................................................... 5,000,000 5,034,450
ABAG Revenue, Tax Allocation, RDA Pool, Series A2, FSA Insured, 6.60%, 12/15/24 .............. 10,775,000 11,559,743
Alameda County COP, Municipal Custodial Receipts, Series 1, BIG Insured, Pre-Refunded, 7.25%,
12/01/07 .................................................................................... 2,000,000 2,064,660
Alameda County Water District Revenue COP, Water Systems Project, FGIC Insured, Pre-Refunded,
6.00%, 6/01/20 .............................................................................. 1,000,000 1,075,880
Alameda Power and Telecommunication Electric System Revenue COP, MBIA Insured, 5.75%, 7/01/30 3,305,000 3,322,021
Alhambra City Elementary School District, Series A, FSA Insured, 5.60%, 9/01/24 .............. 2,065,000 2,051,309
Alhambra COP, Police Facilities AD No. 91-1, AMBAC Insured, 6.75%, 9/01/23 ................... 10,730,000 11,153,084
Anaheim PFAR, Local Agency, CFD, Refunding, Series A, MBIA Insured, 5.75%, 9/01/14 ........... 3,790,000 3,912,341
Arcata Joint Powers Financing Authority Wastewater Revenue, FSA Insured, 5.80%, 12/01/22 ..... 1,080,000 1,093,198
Barstow RDA, Tax Allocation, Central Redevelopment Project, Series A, MBIA Insured, 6.25%,
9/01/22 ..................................................................................... 2,000,000 2,074,060
Beaumont USD, COP, Refunding, Series A, FSA Insured, 5.80%, 1/01/21 .......................... 1,500,000 1,516,995
Benicia COP, Water System Project, Refunding, AMBAC Insured, 6.125%, 11/01/17 ................ 2,995,000 3,069,036
Benicia USD, Series A, AMBAC Insured, Pre-Refunded, 6.85%, 8/01/16 ........................... 5,900,000 6,174,468
Brea Olinda USD, GO, Series A, FGIC Insured, 5.60%, 8/01/20 .................................. 1,000,000 999,950
Brea PFAR, Tax Allocation, Redevelopment Project, Series A, MBIA Insured,
7.00%, 8/01/15 ........................................................................... 1,520,000 1,588,491
6.75%, 8/01/22 ........................................................................... 1,550,000 1,611,690
7.00%, 8/01/23 ........................................................................... 11,965,000 12,483,563
Buellton USD, Series A, MBIA Insured, 6.375%, 7/01/17 ........................................ 2,155,000 2,241,092
Burbank Waste Disposal Revenue, Series B, AMBAC Insured, 6.00%, 5/01/22 ...................... 665,000 669,136
Calaveras County Water District Revenue COP, Water and Sewer System Improvement Project,
Refunding, AMBAC Insured, 6.00%, 5/01/16 .................................................... 3,950,000 4,086,552
Calexico CRDA Revenue, Tax Allocation, Merged Central Business and Residential, Refunding, FSA
Insured, 5.85%, 8/01/15 ..................................................................... 1,795,000 1,843,914
Calexico USD, CFD No. 1, Special Tax, Refunding, AMBAC Insured, 5.60%, 9/01/17 ............... 2,930,000 2,961,117
California Educational Facilities Authority Revenue,
Pomona College, Series B, 5.50%, 7/01/29 ................................................. 4,455,000 4,335,428
Pooled Facilities Program, MBIA Insured, 7.00%, 3/01/16 .................................. 330,000 337,778
Santa Clara University, MBIA Insured, Pre-Refunded, 5.75%, 9/01/21 ....................... 2,575,000 2,798,381
Stanford University, Refunding, Series O, 5.125%, 1/01/31 ................................ 14,830,000 13,583,539
Stanford University, Series N, 5.25%, 12/01/26 ........................................... 6,450,000 6,106,344
Stanford University, Series N, 5.35%, 6/01/27 ............................................ 21,250,000 20,372,375
Stanford University, Series N, 5.20%, 12/01/27 ........................................... 6,780,000 6,356,928
Stanford University, Series P, 5.00%, 12/01/23 ........................................... 15,500,000 14,071,830
Student Loan Program, Series A, MBIA Insured, 6.00%, 3/01/16 ............................. 4,000,000 4,042,640
California Health Facilities Financing Authority Revenue,
Adventist Health Systems West, Series A, MBIA Insured, 7.00%, 3/01/13 .................... 3,000,000 3,109,110
Adventist Health Systems West, Series B, MBIA Insured, 6.75%, 3/01/14 .................... 5,065,000 5,234,526
Catholic Healthcare West, Refunding, Series A, MBIA Insured, 6.00%, 7/01/17 .............. 5,000,000 5,143,500
Catholic Healthcare West, Series A, 5.00%, 7/01/28 ....................................... 25,000,000 18,861,500
Kaiser Permanente, Series A, 5.40%, 5/01/28 .............................................. 15,400,000 13,687,674
Kaiser Permanente, Series B, 5.00%, 10/01/18 ............................................. 5,000,000 4,318,150
Kaiser Permanente, Series B, 5.00%, 10/01/20 ............................................. 5,500,000 4,670,160
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
--------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
<S> <C> <C>
California Health Facilities Financing Authority Revenue, (cont.)
Marin General Hospital, Series A, FSA Insured, Pre-Refunded, 7.00%, 8/01/15 .............. $ 4,000,000 $ 4,086,360
Northern California Presbyterian, 5.40%, 7/01/28 ......................................... 5,000,000 4,418,900
Orange County Health Facility, Series A, California Mortgage Insured, 6.20%, 11/01/24 .... 3,435,000 3,495,387
San Diego Hospital Association, Refunding, Series A, MBIA Insured, 6.20%, 8/01/20 ........ 4,850,000 4,954,372
San Diego Hospital Association, Series A, MBIA Insured, 6.20%, 8/01/12 ................... 2,425,000 2,541,352
Scripps Memorial Hospital, Series A, MBIA Insured, 6.40%, 10/01/12 ....................... 3,500,000 3,697,645
Sharp Temecula Hospital, MBIA Insured, Pre-Refunded, 7.05%, 8/01/21 ...................... 3,000,000 3,145,770
Sutter Health, Series A, MBIA Insured, 5.00%, 8/15/19 .................................... 1,700,000 1,554,752
Sutter Health, Series A, MBIA Insured, 5.00%, 8/15/38 .................................... 4,000,000 3,454,800
The Help Group, CHFCLP Insured, 5.40%, 8/01/22 ........................................... 5,000,000 4,734,750
California HFAR,
Home Mortgage, Series D, MBIA Insured, 6.15%, 8/01/28 .................................... 5,250,000 5,289,585
Series A, MBIA Insured, 7.15%, 8/01/11 ................................................... 1,315,000 1,359,473
Series A, MBIA Insured, 7.20%, 2/01/26 ................................................... 3,450,000 3,560,469
Series B, MBIA Insured, 6.80%, 8/01/11 ................................................... 1,815,000 1,878,670
Series B, MBIA Insured, 8.625%, 8/01/15 .................................................. 220,000 220,169
Series K, AMBAC Insured, 6.25%, 8/01/27 .................................................. 5,290,000 5,352,845
California PCFA, PCR, Southern California Edison Co., Series C, MBIA Insured, 5.55%, 9/01/31 . 4,800,000 4,574,496
California Public Capital Improvement Financing Authority Revenue, Pooled Projects, Series B,
BIG Insured, 8.10%, 3/01/18 ................................................................. 8,625,000 8,713,320
California Public School District Financing Authority Lease Revenue, Southern Kern USD,
Series B, FSA Insured,
Pre-Refunded, 5.90%, 9/01/26 ............................................................. 1,615,000 1,768,021
Refunding, 5.90%, 9/01/26 ................................................................ 235,000 238,469
California State Department of Water Resources Central Valley Project Water System Revenue,
Refunding, Series Q, MBIA Insured, 5.375%, 12/01/27 ......................................... 1,000,000 957,820
California State GO,
5.00%, 10/01/27 .......................................................................... 30,790,000 27,824,307
AMBAC Insured, 6.30%, 9/01/06 ............................................................ 9,000,000 9,871,740
FGIC Insured, Pre-Refunded, 6.00%, 5/01/20 ............................................... 2,990,000 3,213,503
FSA Insured, 5.50%, 9/01/29 .............................................................. 34,500,000 33,569,535
MBIA Insured, 6.00%, 8/01/16 ............................................................. 210,000 217,535
MBIA Insured, 6.00%, 10/01/21 ............................................................ 65,000 65,913
MBIA Insured, 5.00%, 8/01/29 ............................................................. 20,250,000 18,023,715
Refunding, FGIC Insured, 5.375%, 6/01/26 ................................................. 5,000,000 4,800,700
California State HFAR, Home Mortgage, Series L, MBIA Insured, 6.40%, 8/01/27 ................. 7,660,000 7,833,652
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 4,335,577
California State University, Fresno, Auxiliary Residence Student Project Revenue, MBIA
Insured, 6.25%, 2/01/17 ..................................................................... 1,500,000 1,567,875
California State University and Colleges Student Union Revenue,
Bakersfield, Series A, MBIA Insured, 6.30%, 11/01/22 ..................................... 1,310,000 1,364,824
San Bernardino, Series B, MBIA Insured, 6.30%, 2/01/22 ................................... 2,375,000 2,479,761
California Statewide CDA,
COP, Children's Hospital, Los Angeles, 5.25%, 8/15/29 .................................... 12,250,000 10,818,833
COP, FSA Insured, 5.50%, 8/15/31 ......................................................... 7,000,000 6,660,010
COP, Kaiser Permanente, 5.30%, 12/01/15 .................................................. 10,000,000 9,203,100
COP, MBIA Insured, 5.00%, 4/01/18 ........................................................ 6,000,000 5,566,140
Water and Wastewater Revenue, Pooled Financing Program, Series B, FSA Insured, 5.75%,
10/01/29 ................................................................................ 1,465,000 1,471,607
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
--------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
<S> <C> <C>
California Statewide CDA Revenue, COP, John Muir/Mt. Diablo Health System, MBIA Insured,
5.125%, 8/15/22 .......................................................................... $ 5,000,000 $ 4,605,550
5.25%, 8/15/27 ........................................................................... 4,500,000 4,163,580
California Statewide Communities Development Authority COP, 5.75%, 8/01/21 ................... 9,585,000 9,492,217
Cambria Community Services District Revenue COP, Wastewater Treatment System Upgrade, MBIA
Insured, Pre-Refunded, 6.90%, 11/01/24 ...................................................... 1,000,000 1,116,380
Cambria Community Services District Water and Wastewater Revenue, Refunding, Series A, MBIA
Insured, 6.00%, 5/01/15 ..................................................................... 1,330,000 1,384,131
Carpinteria Sanitary District Capital Facilities Revenue, FGIC Insured, 6.25%, 7/01/14 ....... 2,485,000 2,604,578
Central Coast Water Authority Revenue, State Water Project Regional Facilities, AMBAC Insured,
Pre-Refunded,
6.50%, 10/01/14 .......................................................................... 2,500,000 2,662,425
6.60%, 10/01/22 .......................................................................... 4,650,000 4,961,922
Chico PFAR, Southeast Chico Redevelopment Project, Series A, FGIC Insured, 6.625%, 4/01/21 ... 815,000 834,593
Chino Basin Regional Financing Authority Revenue, Municipal Water District, Sewer System
Project, Refunding, AMBAC Insured, 6.00%, 8/01/16 ........................................... 2,000,000 2,071,760
Chino COP, RDA, Water System Improvement Project, Refunding, AMBAC Insured, 6.20%, 9/01/18 ... 3,590,000 3,743,257
Chula Vista Elementary School District COP, MBIA Insured, 6.60%, 8/01/16 ..................... 2,940,000 3,031,934
Chula Vista PFA, Local Agency Revenue, Series 1995-A, FSA Insured, 6.125%, 9/02/14 ........... 3,875,000 4,155,279
Clovis PFA, Refuse Disposal Revenue, Landfill Improvement Project, AMBAC Insured, 5.00%,
9/01/18 ..................................................................................... 1,000,000 937,510
Coachella Valley Recreation and Park District 1915 Act, Reassessment District 9, Refunding,
MBIA Insured, 6.20%, 9/02/16 ................................................................ 1,500,000 1,574,010
Compton Sewer Revenue, Refunding, MBIA Insured, 5.375%, 9/01/23 .............................. 1,500,000 1,448,850
Contra Costa Mosquito Abatement District COP, Public Improvements Project, Refunding, FSA
Insured, 6.25%, 2/01/06 ..................................................................... 1,495,000 1,526,963
Culver City USD, GO, MBIA Insured,
5.125%, 8/01/37 .......................................................................... 650,000 586,131
5.20%, 8/01/38 ........................................................................... 3,285,000 3,002,260
Del Norte County COP, Capital Improvement Program, MBIA Insured, 5.40%, 6/01/19 .............. 2,150,000 2,112,418
Delano USD,
COP, Refinancing Project, MBIA Insured, 5.125%, 1/01/22 .................................. 1,620,000 1,499,780
Series A, FSA Insured, Pre-Refunded, 6.10%, 5/01/17 ...................................... 1,105,000 1,142,062
Dublin-San Ramon Services District COP, AMBAC Insured, Pre-Refunded, 7.00%, 12/01/20 ......... 4,155,000 4,285,218
East Bay MUD, Water System Revenue, Refunding, FGIC Insured, 6.00%, 6/01/20 .................. 2,900,000 2,939,991
East Side UHSD, Santa Clara County, Series D, FGIC Insured, 5.75%, 9/01/17 ................... 1,200,000 1,215,888
Eastern Municipal Water District, Water and Sewer Revenue COP, Refunding, Series A, FGIC
Insured, 6.30%, 7/01/20 ..................................................................... 1,400,000 1,430,618
El Cerrito RDA, Tax Allocation, Redevelopment Project, Series A, FSA Insured, Pre-Refunded,
6.80%, 7/01/19 .............................................................................. 5,960,000 6,079,200
El Dorado County Public Agency Financing Authority Revenue, FGIC Insured, 5.50%,
2/15/16 .................................................................................. 2,250,000 2,270,723
2/15/21 .................................................................................. 3,500,000 3,444,700
El Monte Water Authority Revenue, Water System Project, AMBAC Insured, 5.60%, 9/01/34 ........ 1,800,000 1,762,308
Emeryville PFAR, Shellmound Park Redevelopment and Housing Project, Series B, MBIA Insured,
5.00%, 9/01/19 .............................................................................. 5,500,000 5,114,945
Fairfield PFAR, Municipal Park, ID No. 1, FGIC Insured, Pre-Refunded, 6.30%, 7/01/23 ......... 4,750,000 5,018,138
Folsom PFAR, Refunding, AMBAC Insured, 6.00%,
10/01/08 ................................................................................. 2,000,000 2,101,820
10/01/12 ................................................................................. 1,000,000 1,044,800
10/01/19 ................................................................................. 3,400,000 3,463,138
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
--------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
<S> <C> <C>
Fontana RDA, Tax Allocation, Southwest Industrial Park Project, FGIC Insured, Pre-Refunded,
6.125%, 9/01/25 ............................................................................. $ 5,850,000 $ 6,261,782
Foothill/Eastern Corridor Agency Toll Road Revenue, senior lien, Refunding, Series A, MBIA
Insured, 5.00%, 1/01/35 ..................................................................... 54,700,000 48,426,457
Fresno COP, City Hall Refinancing Project, AMBAC Insured, 6.25%, 8/01/19 ..................... 1,000,000 1,020,490
Fresno USD, GO,
Refunding, Series C, MBIA Insured, 5.90%, 2/01/20 ........................................ 2,065,000 2,165,689
Refunding, Series C, MBIA Insured, 5.90%, 8/01/22 ........................................ 3,000,000 3,144,270
Series B, FSA Insured, ETM, 5.875%, 8/01/20 .............................................. 1,190,000 1,226,188
Fullerton University Foundation Auxiliary Organization Revenue, Series A, MBIA Insured, 5.75%,
7/01/25 .................................................................................. 1,250,000 1,259,688
7/01/30 .................................................................................. 1,000,000 1,005,150
Glendale Hospital Revenue, Adventist Health, Refunding, Series A, MBIA Insured, 6.75%, 3/01/13 1,000,000 1,034,120
Glendale RDA, Tax Allocation, Central Glendale Redevelopment Project, Refunding, AMBAC
Insured, 6.00%, 12/01/20 .................................................................... 4,775,000 4,862,669
Glendale USD, Series C, FSA Insured, 5.50%, 9/01/24 .......................................... 2,750,000 2,695,770
Grossmont UHSD, COP, FSA Insured, 5.75%, 9/01/26 ............................................. 2,250,000 2,263,568
Gustine USD, COP, FSA Insured, 5.00%, 2/01/29 ................................................ 3,210,000 2,864,861
Hawthorne CDA, Tax Allocation, Project Area No 2, Refunding, MBIA Insured, 5.00%, 9/01/18 .... 2,265,000 2,123,460
Hemet USD, COP, Nutrition Center Project, FSA Insured, 5.875%, 4/01/27 ....................... 1,250,000 1,266,475
Hercules COP, Capital Improvement Projects, Refunding, AMBAC Insured, 6.00%, 6/01/15 ......... 1,000,000 1,038,160
Hesperia Water District COP, Water Facilities Improvement Projects, FGIC Insured,
Pre-Refunded, 7.15%, 6/01/26 ................................................................ 3,425,000 3,612,348
Huntington Beach City School District COP, MBIA Insured, Pre-Refunded, 5.25%, 7/01/29 ........ 1,795,000 1,678,648
Imperial Irrigation District COP, California Water Systems Project, AMBAC Insured, 5.75%,
7/01/16 ..................................................................................... 5,050,000 5,179,836
Jefferson San Mateo County UHSD, Refunding, Series A, MBIA Insured, 6.45%,
8/01/25 .................................................................................. 3,045,000 3,413,445
8/01/29 .................................................................................. 3,075,000 3,424,043
Jurupa USD, COP, FSA Insured, 5.625%, 9/01/24 ................................................ 1,600,000 1,594,624
Kern County High School District, FSA Insured, ETM, 6.625%,
8/01/14 .................................................................................. 1,535,000 1,741,396
8/01/15 .................................................................................. 1,400,000 1,587,684
La Mirada RDA, Industrial Commercial Redevelopment Project, Series A, MBIA Insured, 6.60%,
8/15/21 ..................................................................................... 3,080,000 3,147,113
Lake Arrowhead Community Services District COP, FGIC Insured,
6.50%, 6/01/15 ........................................................................... 8,785,000 9,225,041
Pre-Refunded, 6.50%, 6/01/15 ............................................................. 5,215,000 5,520,338
Refunding, 6.125%, 6/01/05 ............................................................... 7,600,000 7,993,452
Lakewood PFA, Water Revenue, FGIC Insured, 5.70%, 4/01/16 .................................... 2,485,000 2,533,433
Lakewood RDA, Tax Allocation, Redevelopment Project No.1, Refunding, Series A, FSA Insured,
6.50%, 9/01/17 .............................................................................. 3,000,000 3,153,900
Lancaster RDA, Tax Allocation, Lancaster Redevelopment Project No.5, Refunding, MBIA Insured,
6.85%, 2/01/19 .............................................................................. 11,245,000 11,591,346
Lincoln USD, CFD No. 1, AMBAC Insured, Pre-Refunded, 6.90%, 9/01/21 .......................... 2,425,000 2,542,855
Lodi COP,
1996 Public Improvement Financing Project, MBIA Insured, 5.90%, 10/01/16 ................. 3,605,000 3,735,321
Wastewater Treatment Project, Refunding, AMBAC Insured, 6.70%, 8/01/26 ................... 8,800,000 9,622,448
Lodi Electric System Revenue COP, Series A, MBIA Insured, 5.50%, 1/15/32 ..................... 4,000,000 3,860,760
Long Beach Harbor Revenue,
5.125%, 5/15/18 .......................................................................... 3,625,000 3,361,571
MBIA Insured, 5.25%, 5/15/25 ............................................................. 25,000,000 22,984,250
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
--------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
<S> <C> <C>
Los Angeles COP, San Pedro Peninsula Hospital Project, Refunding, AMBAC Insured, 6.25%,
5/01/15 ..................................................................................... $ 5,825,000 $ 5,999,808
Los Angeles County Capital Assets Leasing Corp. Leasehold Revenue, Refunding, AMBAC Insured,
6.00%, 12/01/16 ............................................................................. 3,000,000 3,087,240
Los Angeles County MTA, Sales Tax Revenue, Proposition A, First Tier, Refunding, Senior
Series A, MBIA Insured, 5.25%, 7/01/27 ...................................................... 27,870,000 26,152,372
Los Angeles County Transportation Commission Sales Tax Revenue, Series B, FGIC Insured, 6.50%,
7/01/13 .................................................................................. 2,740,000 2,849,299
7/01/15 .................................................................................. 5,025,000 5,210,573
Los Angeles Department of Water and Power Electric Plant Revenue, FGIC Insured, 6.125%,
1/15/33 ..................................................................................... 17,215,000 17,475,463
Los Angeles Department of Water and Power Waterworks Revenue, Second Issue, FGIC Insured,
6.40%, 11/01/31 ............................................................................. 6,875,000 7,166,913
Los Angeles Harbor Department Revenue, Series B,
AMBAC Insured, 6.60%, 8/01/14 ............................................................ 3,790,000 3,997,578
AMBAC Insured, 6.60%, 8/01/15 ............................................................ 2,000,000 2,107,500
MBIA Insured, 6.20%, 8/01/25 ............................................................. 2,500,000 2,587,525
Los Angeles Mortgage Revenue, Refunding, Series I, MBIA Insured, 6.50%, 7/01/22 .............. 2,000,000 2,066,580
Los Angeles Wastewater System Revenue,
Refunding, Series A, FGIC Insured, 6.00%, 12/01/18 ....................................... 12,100,000 12,303,401
Series B, AMBAC Insured, 6.00%, 6/01/22 .................................................. 3,250,000 3,291,405
Lucia Mar USD, GO, Series A, FGIC Insured, 5.40%, 8/01/22 .................................... 3,290,000 3,194,919
Lynwood PFA,
Tax Allocation, Area A Project, Series A, FSA Insured, 5.85%, 9/01/18 .................... 1,765,000 1,835,229
Water Revenue, Water System Improvement Project, MBIA Insured, 5.85%, 6/01/22 ............ 665,000 671,364
Water Revenue, Water System Improvement Project, MBIA Insured, 5.90%, 6/01/29 ............ 3,105,000 3,144,651
Lynwood PFAR, Series A, AMBAC Insured, 5.75%, 9/01/18 ........................................ 4,000,000 4,044,000
Manteca Financing Authority Tax Allocation Revenue, MBIA Insured, 5.10%, 10/01/26 ............ 500,000 453,265
Menlo Park CDA, Tax Allocation, Las Pulgas Community Development Project, Refunding, AMBAC
Insured, 5.375%, 6/01/22 .................................................................... 10,000,000 9,680,700
Mesa Construction Water District COP, Water Project, FGIC Insured, Pre-Refunded, 6.40%,
3/15/18 ..................................................................................... 5,600,000 5,895,568
Metropolitan Water District Revenue, Southern California Waterworks, Series A, MBIA Insured,
5.50%, 7/01/25 ........................................................................... 5,000,000 4,893,650
5.00%, 7/01/30 ........................................................................... 7,025,000 6,303,673
Millbrae COP, Police Department Expansion, AMBAC Insured, 5.875%, 3/01/24 .................... 1,025,000 1,043,184
Modesto Health Facilities Revenue, Memorial Hospital Association, MBIA Insured,
Refunding, Series A, 6.00%, 6/01/18 ...................................................... 5,565,000 5,670,846
Series 1991, Pre-Refunded, 6.875%, 6/01/21 ............................................... 1,500,000 1,563,990
Modesto Irrigation District COP, Refunding and Capital Improvement Projects, Series A, MBIA
Insured, Pre-Refunded, 6.00%, 10/01/21 ...................................................... 3,000,000 3,062,700
Modesto Irrigation District Financing Authority Revenue, Domestic Water Project, Series C,
AMBAC Insured, Pre-Refunded, 5.75%, 9/01/22 ................................................. 2,500,000 2,696,300
Modesto Wastewater Treatment Facility Revenue, MBIA Insured, 5.75%, 11/01/22 ................. 14,375,000 14,497,475
Montebello Community RDA, Tax Allocation,
Housing, Series A, FSA Insured, 5.45%, 9/01/19 ........................................... 1,100,000 1,087,042
Montebello Hills Redevelopment Project, Refunding, MBIA Insured, 5.60%, 3/01/19 .......... 2,460,000 2,466,568
Mount Diablo USD, CFD No. 1, Special Tax,
AMBAC Insured, 6.25%, 8/01/14 ............................................................ 500,000 523,365
FSA Insured, 6.00%, 8/01/24 .............................................................. 1,000,000 1,020,120
Refunding, AMBAC Insured, 5.75%, 8/01/15 ................................................. 1,000,000 1,027,390
Refunding, AMBAC Insured, 5.75%, 8/01/16 ................................................. 2,270,000 2,322,755
Refunding, AMBAC Insured, 5.375%, 8/01/19 ................................................ 7,290,000 7,140,774
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
--------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
<S> <C> <C>
Mountain View COP, Capital Improvement Financing Authority Revenue, City Hall/Community
Theatre, MBIA Insured, 6.50%, 8/01/16 ....................................................... $ 1,500,000 $ 1,555,515
National City Joint Powers Authority Lease Revenue, National City Police Facilities Project,
AMBAC Insured, Pre-Refunded, 6.75%, 10/01/17 ................................................ 2,000,000 2,083,800
Nevada Irrigation District Revenue COP, Cascade Bench Flume Project, MBIA Insured, 5.50%,
1/01/17 ..................................................................................... 4,600,000 4,615,410
Norco RDA Tax Allocation, Redevelopment Project Area No. 1, MBIA Insured, 5.625%, 3/01/30 .... 1,000,000 990,660
North City West School Facilities Financing Authority Special Tax, Refunding, Series B, FSA
Insured,
5.75%, 9/01/15 ........................................................................... 1,260,000 1,298,720
6.00%, 9/01/19 ........................................................................... 2,500,000 2,572,750
Northern California Power Agency Multiple Capital Facilities Revenue, Series A, MBIA Insured,
6.50%, 8/01/12 ........................................................................... 2,840,000 3,010,854
Pre-Refunded, 6.50%, 8/01/12 ............................................................. 2,160,000 2,293,488
Northern California Public Power Agency Revenue, AMBAC Insured, Pre-Refunded, 7.50%, 7/01/23 . 3,200,000 3,904,288
Northern California Transmission Revenue, California/Oregon Transmission Project, Series A,
MBIA Insured,
6.25%, 5/01/10 ........................................................................... 2,500,000 2,620,625
6.50%, 5/01/16 ........................................................................... 4,000,000 4,190,160
6.00%, 5/01/24 ........................................................................... 16,335,000 16,417,002
Norwalk Community Facilities Financing Authority Lease Revenue, MBIA Insured, Pre-Refunded,
6.90%, 2/01/21 .............................................................................. 5,700,000 5,814,000
Oakland Revenue, 1800 Harrison Foundation, Refunding, Series A, AMBAC Insured, 6.00%, 1/01/29 10,000,000 10,224,700
Oceanside Community Development Commission COP, Public Parking Project, FSA Insured,
Pre-Refunded, 7.875%, 4/01/19 ............................................................... 3,940,000 4,482,341
Oceanside COP,
Corporation Yard Project Financing, AMBAC Insured, Pre-Refunded, 7.30%, 8/01/21 .......... 4,715,000 5,080,318
Oceanside Civic Center Project, Refunding, MBIA Insured, 5.75%, 8/01/15 .................. 1,000,000 1,027,390
Waste Reuse Association Finance Project, Series A, AMBAC Insured, Pre-Refunded, 6.50%,
10/01/17 ............................................................................... 5,000,000 5,324,850
Orange County COP, Juvenile Justice Center Facilities, Refunding, AMBAC Insured,
6.375%, 6/01/11 .......................................................................... 4,770,000 5,016,943
6.00%, 6/01/17 ........................................................................... 5,000,000 5,112,800
Orange County Financing Authority Tax Allocation Revenue, Refunding, Series A, MBIA Insured,
6.50%, 9/01/22 ........................................................................... 3,500,000 3,622,745
Oroville PFA, Tax Allocation Revenue, Oroville Redevelopment Project No. 1, AMBAC Insured,
5.90%, 9/15/21 ........................................................................... 1,245,000 1,264,534
6.10%, 9/15/23 ........................................................................... 2,885,000 2,970,858
Oxnard COP, AMBAC Insured, 4.75%, 6/01/28 .................................................... 1,545,000 1,320,620
Oxnard Financing Authority Solid Waste Revenue, AMBAC Insured, 6.00%, 5/01/16 ................ 5,000,000 5,142,950
Oxnard UHSD, Series B, FSA Insured, ETM, 5.875%, 8/01/27 ..................................... 3,615,000 3,655,416
Pajaro Valley USD, COP, School Facilities Bridge Funding Program, FSA Insured, 5.75%, 9/01/17 1,250,000 1,276,638
Palm Springs USD, Series C, MBIA Insured, 6.125%, 2/01/20 .................................... 500,000 512,450
Paramount USD, COP, Master Lease Program, FSA Insured, 6.30%, 9/01/26 ........................ 4,750,000 4,951,875
Parlier USD, Series B, AMBAC Insured, 6.00%, 6/01/16 ......................................... 1,130,000 1,180,466
Pasadena USD, GO, Series B, FGIC Insured, 5.25%, 7/01/24 ..................................... 1,000,000 945,290
Petaluma COP, Refunding, Series A, AMBAC Insured, 5.625%, 8/01/13 ............................ 1,000,000 1,026,290
Pico Rivera PFAR, Water Enterprise Project, Series A, FGIC Insured, Pre-Refunded, 6.00%,
12/01/17 .................................................................................... 8,000,000 8,455,200
Pinole RDA, Tax Allocation, Pinole Vista Redevelopment Project, Series A, MBIA Insured,
Pre-Refunded, 6.125%, 8/01/17 ............................................................... 1,000,000 1,039,020
Placer County COP,
Administrative and Emergency Services, MBIA Insured, 5.65%, 6/01/24 ...................... 4,000,000 3,999,760
Jail Kitchen Project, MBIA Insured, Pre-Refunded, 6.90%, 10/01/21 ........................ 3,745,000 4,174,477
Placer County Water Agency COP, FSA Insured, 5.90%, 7/01/25 .................................. 2,350,000 2,382,148
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
--------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
<S> <C> <C>
Pleasant Hill RDA, Tax Allocation, Pleasant Hill Commons Project, Refunding, FSA Insured,
6.90%, 7/01/21 ........................................................................... $ 5,500,000 $ 5,713,785
Porterville COP, AMBAC Insured,
Sewer System and Improvement Project, Refunding, 6.30%, 10/01/18 ......................... 11,010,000 11,445,886
Sewer System Refining Project, Refunding, 5.25%, 10/01/23 ................................ 3,000,000 2,841,810
Poway RDA, Tax Allocation, Refunding, MBIA Insured, 5.75%, 6/15/33 ........................... 11,475,000 11,576,439
Rancho Cucamonga RDA, Tax Allocation, Rancho Redevelopment Project,
Housing Set Aside, MBIA Insured, 5.25%, 9/01/26 .......................................... 2,000,000 1,867,980
Refunding, FSA Insured, 5.25%, 9/01/20 ................................................... 2,500,000 2,374,625
Redding Joint Powers Financing Authority Lease Revenue, Civic Center Project, Series A, MBIA
Insured,
5.75%, 3/01/19 ........................................................................... 3,090,000 3,127,853
5.25%, 3/01/26 ........................................................................... 75,000 70,570
Redding RDA, Tax Allocation, Hilltop Cypress Redevelopment Notes, Series C, FSA Insured,
6.00%, 9/01/22 .............................................................................. 2,120,000 2,154,471
Redlands USD, Series B, FSA Insured, 6.25%, 6/01/19 .......................................... 2,115,000 2,190,780
Redwood City PFA, Local Agency Revenue, Series A, AMBAC Insured,
6.50%, 7/15/11 ........................................................................... 1,270,000 1,322,413
Pre-Refunded, 6.50%, 7/15/11 ............................................................. 1,475,000 1,536,935
Richgrove Elementary School District COP, Construction and Refinancing Project, FSA Insured,
5.30%, 12/01/28 .......................................................................... 2,355,000 2,226,252
Ripon RDA Tax Allocation, Community Redevelopment Project, MBIA Insured, 5.85%, 11/01/30 ..... 3,975,000 4,012,882
Riverside County COP, Historic Courthouse, MBIA Insured, 5.875%, 11/01/27 .................... 3,000,000 3,041,610
Riverside RDA, Lease Revenue, Series A, AMBAC Insured,
6.375%, 10/01/23 ......................................................................... 12,540,000 13,084,487
6.50%, 10/01/24 .......................................................................... 2,000,000 2,133,640
Romona Municipal Water District COP, Refunding, AMBAC Insured, 7.20%, 10/01/10 ............... 3,000,000 3,080,850
Rubidoux Community Services District COP, Water System Improvement Project, AMBAC Insured,
Pre-Refunded, 6.20%, 12/01/14 ............................................................... 2,510,000 2,664,139
Sacramento Area Flood Control Agency Special Assessment, FGIC Insured,
Capital AD No. 2, 5.80%, 11/01/16 ........................................................ 1,000,000 1,029,810
Operation and Maintenance, 5.80%, 11/01/16 ............................................... 1,475,000 1,518,970
Operation and Maintenance, 5.90%, 11/01/25 ............................................... 2,690,000 2,732,125
Sacramento County Airport System Revenue, Series A, MBIA Insured, 6.00%, 7/01/17 ............. 5,920,000 6,055,450
Sacramento MUD, Electric Revenue, Series J, AMBAC Insured, 5.50%, 8/15/21 .................... 8,485,000 8,349,240
Sacramento RDA, Tax Allocation,
Merged Downtown Redevelopment Project, Series A, MBIA Insured, Pre-Refunded, 6.50%,
11/01/13 ................................................................................ 1,835,000 1,885,261
Series A, MBIA Insured, 6.50%, 11/01/13 .................................................. 165,000 169,410
Salida Area Public Facilities Financing Agency, Community Facilities District, Special Tax
No. 1988-1, FSA Insured, 5.75%, 9/01/30 .................................................. 3,435,000 3,451,557
San Bernardino County COP, 1997 Public Improvement Financing Project, MBIA Insured, 5.25%,
10/01/25 ................................................................................. 7,000,000 6,598,340
San Bernardino County Mortgage Revenue, Don Miguel Apartments Project, Refunding, MBIA
Insured, 6.40%, 3/01/25 .................................................................. 5,680,000 5,750,318
San Bernardino Municipal Water Department COP, FGIC Insured, 6.25%, 2/01/17 .................. 5,750,000 5,923,765
San Bernardino RDA, Capital Appreciation, Series B, AMBAC Insured, 7.70%, 1/10/09 ............ 2,382,000 4,697,614
San Buenaventura COP, Water Project, AMBAC Insured, Pre-Refunded, 7.50%, 10/01/20 ............ 2,000,000 2,055,480
San Buenaventura Public Facilities Financing Authority Lease Revenue, Refunding, FSA Insured,
5.75%, 6/01/14 ........................................................................... 2,250,000 2,323,508
San Carlos School District GO, MBIA Insured, 5.50%, 10/01/24 ................................. 2,110,000 2,068,306
San Diego Community College District COP, Series 1991, MBIA Insured, 6.50%, 12/01/12 ......... 2,000,000 2,096,300
San Diego IDR, San Diego Gas and Electric, Custodial Receipts, Series A, AMBAC Insured, 6.40%,
9/01/18 .................................................................................. 1,650,000 1,717,518
San Diego Mortgage Revenue, University Canyon North, Refunding, Series A, MBIA Insured,
5.125%, 7/01/03 .......................................................................... 130,000 130,091
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
--------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
<S> <C> <C>
San Diego Public Facilities Financing Authority Sewer Revenue, Series B, FGIC Insured, 5.25%,
5/15/27 ..................................................................................... $ 2,950,000 $ 2,768,369
San Francisco BART District Sales Tax Revenue, FGIC Insured,
5.50%, 7/01/26 ........................................................................... 6,500,000 6,350,630
5.50%, 7/01/34 ........................................................................... 12,000,000 11,658,720
Pre-Refunded, 6.60%, 7/01/12 ............................................................. 2,580,000 2,688,721
San Francisco City and County Airport Commission International Airport Revenue,
Issue 5, Second Series, FGIC insured, 6.50%, 5/01/24 ..................................... 6,900,000 7,221,540
Issue 8A, Second Series, FGIC Insured, 6.25%, 5/01/20 .................................... 3,500,000 3,581,270
Issue 9B, Second Series, FGIC Insured, Pre-Refunded, 6.00%, 5/01/25 ...................... 6,400,000 6,897,536
Issue 11, Second Series, FGIC Insured, 6.00%, 5/01/11 .................................... 2,105,000 2,214,271
Issue 16A, Second Series, FSA Insured, 5.00%, 5/01/29 .................................... 10,000,000 8,686,500
San Francisco City and County Sewer Revenue, Refunding, AMBAC Insured, 6.00%, 10/01/11 ....... 2,000,000 2,091,760
San Gabriel USD, COP, Facilities Development Program, Series A, FSA Insured, 6.00%, 9/01/15 .. 1,000,000 1,042,350
San Jacinto USD, COP, Refunding Project, AMBAC Insured, Pre-Refunded, 6.50%, 10/01/23 ........ 3,000,000 3,194,910
San Joaquin Hills Transportation Corridor Agency Toll Road Revenue,
Refunding, Series A, MBIA Insured, 5.375%, 1/15/29 ....................................... 10,570,000 10,102,700
Refunding, Series A, MBIA Insured, 5.25%, 1/15/30 ........................................ 9,000,000 8,412,390
Senior lien, MBIA Insured, 5.00%, 1/01/33 ................................................ 10,035,000 8,906,765
San Jose Financing Authority Revenue, Convention Project, Series C, FSA Insured, 6.40%,
9/01/17 ..................................................................................... 8,740,000 9,049,833
San Leandro COP, Library and Fire Stations Financing, AMBAC Insured, 5.75%, 11/01/29 ......... 5,000,000 5,024,300
San Marcos Public Facilities Authority Revenue, Senior Tax Increment Project Area-3-A,
MBIA Insured,
5.75%, 10/01/29 .......................................................................... 5,340,000 5,341,228
5.80%, 10/01/30 .......................................................................... 7,800,000 7,816,614
San Ramon COP,
Capital Improvement Project, Refunding, AMBAC Insured, 7.05%, 3/01/21 .................... 12,070,000 12,493,778
Central Park Expansion Project, FSA Insured, Pre-Refunded, 7.20%, 2/01/25 ................ 5,110,000 5,735,413
Sanger PFA Revenue, Utility System Financing, Series A, AMBAC Insured, 5.70%, 1/01/22 ........ 5,935,000 5,960,046
Santa Ana COP, Parking Facilities Project, Refunding, Series A, AMBAC Insured, 6.125%, 6/01/16 3,250,000 3,371,323
Santa Ana Financing Authority Water Revenue, MBIA Insured, 6.125%, 9/01/24 ................... 1,000,000 1,025,380
Santa Barbara COP, AMBAC Insured,
Municipal Improvement Program, Refunding, 6.15%, 8/01/17 ................................. 3,575,000 3,691,366
Water Systems Improvement Project, Refunding, 6.70%, 4/01/27 ............................. 6,500,000 6,808,035
Santa Clara County COP, Capital Project I, Refunding, AMBAC Insured, 6.25%, 10/01/16 ......... 4,500,000 4,611,825
Santa Clara Electric Revenue, Series A, MBIA Insured, Pre-Refunded, 6.50%, 7/01/21 ........... 1,350,000 1,405,593
Santa Clara RDA, Tax Allocation, Bayshore North Project, AMBAC Insured, 7.50%, 6/01/08 ....... 570,000 577,632
Santa Cruz County COP, Sub-Joint Wastewater Treatment Project, AMBAC Insured, 6.20%, 9/01/19 . 475,000 490,409
Santa Fe Springs PFA, Water Revenue, Series A, MBIA Insured, 5.90%,
5/01/21 .................................................................................. 900,000 915,120
5/01/26 .................................................................................. 1,190,000 1,206,981
Santa Fe Springs RDA, Consolidated, Tax Allocation, Series A, MBIA Insured, 6.40%, 9/01/22 ... 4,255,000 4,414,222
Santa Margarita/Dana Point Authority Revenue, ID 3, 3A, 4, and 4A, Refunding, Series B, MBIA
Insured, 5.75%, 8/01/20 ..................................................................... 23,000,000 23,174,340
Santa Monica Community College District, Series B, AMBAC Insured, 5.75%, 7/01/20 ............. 1,495,000 1,507,797
Santa Rita USD, Series B, FSA Insured, 5.20%, 8/01/37 ........................................ 1,940,000 1,774,285
Santa Rosa High School District,
FGIC Insured, 5.90%, 5/01/16 ............................................................. 1,000,000 1,029,620
Refunding, FSA Insured, 5.75%, 5/01/18 ................................................... 1,050,000 1,062,831
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
--------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
<S> <C> <C>
Santa Rosa Wastewater Service Facilities District Revenue, Refunding and Improvement, AMBAC
Insured, 6.00%, 7/02/15 ..................................................................... $ 2,000,000 $ 2,167,300
Scotts Valley GO, USD, Series B, FGIC Insured, 5.40%, 8/01/22 ................................ 3,005,000 2,918,156
Sebastopol GO, CDA, Tax Allocation, Community Development Project, Refunding, MBIA Insured,
5.25%, 12/01/21 ............................................................................. 2,250,000 2,141,595
Selma PFAR, Series A, MBIA Insured, 5.80%,
9/15/11 .................................................................................. 145,000 145,260
9/15/12 .................................................................................. 125,000 125,224
Sequoia UHSD, GO, FSA Insured, 5.70%, 7/01/24 ................................................ 2,000,000 1,999,980
Soledad RDA, Tax Allocation, Soledad Redevelopment Project, Refunding, Series A, MBIA Insured,
5.35%, 12/01/28 ............................................................................. 1,000,000 952,330
Sonoma CDA, COP, Sonoma Creek Senior Housing Project, Refunding, AMBAC Insured, 6.75%, 2/01/13 1,325,000 1,353,527
Sonoma CDA, Tax Allocation, Redevelopment Project, MBIA Insured, 5.70%, 12/01/30 ............. 3,455,000 3,457,557
Sonoma Valley USD, GO, FSA Insured, 6.00%, 7/15/21 ........................................... 2,400,000 2,452,295
South Gate PFAR, Tax Allocation, South Gate Redevelopment Project No. 1, AMBAC Insured,
5.875%, 9/01/24 ............................................................................. 2,500,000 2,524,625
South Orange County PFA, Special Tax Revenue, senior lien, Refunding, Series A, MBIA Insured,
6.20%, 9/01/13 ........................................................................... 13,500,000 14,266,125
6.00%, 9/01/18 ........................................................................... 3,250,000 3,321,793
South San Francisco COP, 5.00%, 4/01/29 ...................................................... 2,000,000 1,722,640
Stanislaus County Board of Education COP, FSA Insured, 5.70%, 9/01/24 ........................ 2,000,000 2,007,480
Stockton COP, Wastewater System Project, Refunding, AMBAC Insured, 5.75%, 9/01/23 ............ 6,500,000 6,531,070
Stockton Port District Port Facilities Revenue, Refunding and Improvement, Series B, FSA
Insured, 5.90%, 7/01/12 ..................................................................... 3,955,000 4,177,862
Stockton Revenue COP, Wastewater System Project, Refunding, Series A, MBIA Insured, 5.00%,
9/01/23 ..................................................................................... 6,500,000 5,889,910
Suisun City RDA, Tax Allocation, Suisun City Redevelopment Project, Refunding, MBIA Insured,
5.625%, 10/01/13 ............................................................................ 4,260,000 4,393,892
Sulfur Springs USD, COP, Series 1991, AMBAC Insured, Pre-Refunded, 7.20%, 2/01/21 ............ 800,000 824,808
Sunnyvale RDA, Tax Allocation, Central Core Project, Refunding, AMBAC Insured, 6.50%, 10/01/22 2,785,000 2,848,357
Susanville PFAR, Series A, AMBAC Insured, 6.30%, 9/01/17 ..................................... 4,000,000 4,086,600
Tahoe Truckee USD, GO, Improvement District No. 2, Series A, FGIC Insured, 5.75%, 8/01/20 .... 4,340,000 4,389,389
Tahoe-Truckee Joint USD,
Series A, FGIC Insured, Pre-Refunded, 6.00%, 9/01/17 ..................................... 5,000,000 5,333,700
Series B, FGIC Insured, 5.95%, 9/01/20 ................................................... 3,620,000 3,701,703
Tehachapi Water and Sewer Revenue, Refunding, MBIA Insured, 6.75%, 11/01/20 .................. 2,000,000 2,170,660
Thousand Oaks RDA, Tax Allocation, Thousand Oaks Boulevard Redevelopment, Refunding, MBIA
Insured, 5.375%, 12/01/25 ................................................................... 2,390,000 2,298,678
Tri-City Hospital District Revenue,
MBIA Insured, 6.00%, 2/01/22 ............................................................. 2,350,000 2,359,281
Refunding, Series A, MBIA Insured, 5.625%, 2/15/17 ....................................... 2,750,000 2,762,485
Truckee Public Financing Authority Lease Revenue, Series A, AMBAC, 6.00%, 11/01/30 ........... 1,990,000 2,078,436
Turlock Auxiliary Organization Revenue COP, California State University, Stanislaus
Foundation, MBIA Insured, 5.875%, 6/01/22 ................................................... 2,000,000 2,030,780
Turlock PFA, Sewer Revenue, FGIC Insured, 5.50%, 9/15/29 ..................................... 6,855,000 6,669,984
Union City CRDA, Tax Allocation Revenue, Community Redevelopment Project, AMBAC Insured,
5.75%,
10/01/22 ................................................................................. 6,200,000 6,232,734
10/01/32 ................................................................................. 14,100,000 14,109,306
University of California Revenues, Multi Purpose Projects, Series H, FGIC Insured, 5.50%,
9/01/28 ..................................................................................... 2,500,000 2,433,525
Upland COP,
Police Building Project, Refunding, AMBAC Insured, 6.60%, 8/01/16 ........................ 3,985,000 4,208,917
Water System Improvement Project, FGIC Insured, 6.60%, 8/01/16 ........................... 2,385,000 2,519,013
Vacaville PFA, Tax Allocation Revenue, Vacaville Redevelopment Projects, MBIA Insured, 6.35%,
9/01/22 ..................................................................................... 1,355,000 1,384,268
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
--------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
<S> <C> <C>
Vallejo Revenue, Water Improvement Project, Refunding, Series A, FSA Insured, 5.875%, 5/01/26 $ 12,500,000 $ 12,658,875
Walnut Valley Water District COP, Badillo Grand Transmission Project, FGIC Insured,
Pre-Refunded, 6.125%, 2/01/18 ............................................................... 2,200,000 2,266,460
Washington Township Hospital District Revenue, Health Care District Revenue,
5.00%, 7/01/18 ........................................................................... 2,000,000 1,743,520
5.125%, 7/01/23 .......................................................................... 1,000,000 866,010
Waugh School District Special Tax GO, Corona/Ely CFD No.1, AMBAC Insured, 5.80%, 9/01/26 ..... 5,640,000 5,682,131
West Basin Municipal Water District Revenue COP, 1992 Project, Refunding, Series A, AMBAC
Insured, 5.50%, 8/01/17 ..................................................................... 3,370,000 3,381,795
West Sacramento Financing Authority Revenue, MBIA Insured, Pre-Refunded, 6.25%, 9/01/16 ...... 4,185,000 4,555,498
West Sacramento RDA, Tax Allocation, West Sacramento Redevelopment Project, MBIA Insured,
Pre-Refunded, 6.25%, 9/01/21 ................................................................ 3,340,000 3,478,174
Western Placer Unified School COP, 1998 Refunding and Capital Project, AMBAC Insured, 5.00%,
6/01/18 ..................................................................................... 5,455,000 5,117,008
William S. Hart Joint School Financing Authority Special Tax Revenue, Community Facilities,
Refunding, FSA Insured, 6.60%, 9/01/18 ...................................................... 1,285,000 1,394,148
William S. Hart USD, COP, School Project, MBIA Insured, 6.00%, 9/01/30 ....................... 7,015,000 7,134,185
Windsor Joint Powers Financing Authority Wastewater Revenue, Refunding, Series A, AMBAC
Insured, 6.125%, 12/15/12 ................................................................... 750,000 805,515
Yucaipa-Sweetwater School Facilities Financing Authority Special Tax Revenue, Sweetwater,
Series A, MBIA Insured, 5.70%, 9/01/19 ...................................................... 4,000,000 4,069,880
--------------
TOTAL BONDS (COST $1,540,936,912) ............................................................ 1,558,602,618
--------------
ZERO COUPON BONDS 2.3%
California HFR, Home Mortgage, Series N, AMBAC Insured, 8/01/31 .............................. 5,000,000 2,721,100
(b)Corona-Norco California USD Capital Appreciation, FSA Insured,
9/01/23 .................................................................................. 2,320,000 586,241
9/01/24 .................................................................................. 2,620,000 623,796
3/01/25 .................................................................................. 1,400,000 323,554
Foothill/Eastern Corridor Agency Toll Road Revenue, Capital Appreciation, Refunding, MBIA
Insured,
01/15/2017 ............................................................................... 20,000,000 7,614,400
01/15/2018 ............................................................................... 25,000,000 8,901,750
01/15/2019 ............................................................................... 5,970,000 1,986,159
Newark USD GO, Capital Appreciation, Series B, FGIC Insured, 8/01/24 ......................... 9,905,000 2,304,993
San Bernardino County SFMR, Series A, GNMA Secured, ETM, 5/01/22 ............................. 28,405,000 7,559,139
San Joaquin Hills Transportation Corridor Agency Toll Road Revenue, Capital Appreciation,
Refunding, Series A, MBIA Insured, 1/15/26 .................................................. 7,675,000 1,684,663
Southern Kern USD, COP, Convertible Capital Appreciation Building Program, Series B, FSA
Insured, 9/01/26 ............................................................................ 2,250,000 1,532,138
Union Elementary School District GO, Capital Appreciation, Series A, FGIC Insured, 9/01/24 ... 2,000,000 479,640
--------------
TOTAL ZERO COUPON BONDS (COST $26,600,716) ................................................... 36,317,573
--------------
TOTAL LONG TERM INVESTMENTS (COST $1,567,537,628) ............................................ 1,594,920,191
--------------
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(a)SHORT-TERM INVESTMENTS .8%
Irvine 1915 Act, AD No. 97-13, Daily VRDN and Put, 4.15%, 9/02/23 ...................... $ 2,200,000 $ 2,200,000
Irvine Ranch, Water District GO, Refunding, Series B, Daily VRDN and Put, 4.30%, 8/01/09 6,800,000 6,800,000
Orange County Sanitation District COP,
Nos 1-3, 5-7 and 11, Refunding, AMBAC Insured, Daily VRDN and Put, 4.15%, 8/01/16 .. 3,000,000 3,000,000
Nos 1-3, 5-7, 11, 13 and 14, Daily VRDN and Put, 4.15%, 8/01/15 .................... 600,000 600,000
Western Riverside County Regional Wastewater Authority Revenue, Regional Wastewater
Treatment, Daily VRDN and Put, 4.15%, 4/01/28 ......................................... 1,000,000 1,000,000
--------------
TOTAL SHORT-TERM INVESTMENTS (COST $13,600,000) ........................................ 13,600,000
--------------
TOTAL INVESTMENTS (COST $1,581,137,628) 98.8% .......................................... 1,608,520,191
OTHER ASSETS, LESS LIABILITIES 1.2% .................................................... 19,615,686
--------------
NET ASSETS 100.0% ...................................................................... $1,628,135,877
==============
</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 unconditional right of
demand to receive payment of principal balance plus accrued interest at
specified dates.
(b)Sufficient collateral has been segregated for securities traded on a
when-issued or delayed delivery basis.
See notes to financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Highlights
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------------------------------------
2000 1999 1998 1997 1996
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ................. $ 11.02 $ 11.24 $ 10.93 $ 10.67 $ 10.38
-------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) .......................... .52 .51 .53 .53 .53
Net realized and unrealized gains (losses) ........ (.10) (.21) .31 .26 .29
-------------------------------------------------------------------------
Total from investment operations ................... .42 .30 .84 .79 .82
Less distributions from net investment income ...... (.52) (.52) (.53) (.53) (.53)
-------------------------------------------------------------------------
Net asset value, end of year ....................... $ 10.92 $ 11.02 $ 11.24 $ 10.93 $ 10.67
=========================================================================
Total return(b) .................................... 3.95% 2.63% 7.76% 7.58% 7.96%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) .................... $ 186,880 $ 192,547 $ 155,664 $ 117,666 $ 101,199
Ratios to average net assets:
Expenses .......................................... .60% .60% .52% .47% .45%
Expenses excluding waiver and payments by affiliate .74% .75% .78% .80% .81%
Net investment income ............................. 4.79% 4.50% 4.76% 4.96% 4.99%
Portfolio turnover rate ............................ 10.29% 5.48% 9.58% 6.29% 10.13%
</TABLE>
(a)Based on average shares outstanding effective year ended June 30, 1999.
(b)Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
See notes to financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND AMOUNT VALUE
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS 97.3%
BONDS 96.3%
ABAG Finance Authority for Nonprofit Corps. COP,
5.75%, 8/01/03 .................................................................................. $ 580,000 $ 591,884
Easter Seal Society for the Redwood Coast, Insured, 5.50%, 6/01/03 .............................. 225,000 230,864
North County Health Project, 5.50%, 3/01/06 ..................................................... 900,000 930,357
Rhoda Haas Goldman Plaza, Insured, 5.125%, 5/15/15 .............................................. 3,000,000 2,798,250
ABAG Finance Corp. COP, ABAG XXVI,
Refunding, Series A, 5.90%, 6/01/02 ............................................................. 65,000 66,424
Series B, 6.40%, 10/01/03 ....................................................................... 100,000 104,673
ABAG Revenue, Refunding, Series A-E,
5.00%, 9/15/06 .................................................................................. 610,000 610,275
5.05%, 9/15/07 .................................................................................. 620,000 616,999
5.40%, 9/15/14 .................................................................................. 2,455,000 2,346,047
ABAG Water and Wastewater Revenue, Pooled Financing Program, Series A, FSA Insured, 5.00%, 10/01/10 3,035,000 3,090,783
Alameda County COP, Series 1994,
5.70%, 4/01/02 .................................................................................. 395,000 402,667
5.80%, 4/01/03 .................................................................................. 420,000 432,566
5.90%, 4/01/04 .................................................................................. 440,000 458,322
Antioch PFA, Reassessment Revenue, sub. lien, Series B,
5.00%, 9/02/03 .................................................................................. 1,890,000 1,877,375
5.20%, 9/02/05 .................................................................................. 2,090,000 2,077,732
5.40%, 9/02/07 .................................................................................. 1,165,000 1,156,053
Auburn COP, Civic Center Project, Refunding,
5.30%, 9/01/00 .................................................................................. 65,000 65,086
5.45%, 9/01/01 .................................................................................. 70,000 70,664
5.60%, 9/01/02 .................................................................................. 75,000 76,439
5.70%, 9/01/03 .................................................................................. 80,000 82,384
5.75%, 9/01/04 .................................................................................. 80,000 83,069
Bakersfield Central District Revenue RDA, Tax Allocation, Downtown Bakersfield Redevelopment, ETM,
6.00%, 4/01/01 .................................................................................. 295,000 298,572
6.10%, 4/01/02 .................................................................................. 310,000 318,795
6.20%, 4/01/03 .................................................................................. 330,000 345,041
Brentwood Infrastructure Financing Authority Infrastructure Revenue, CIFP 94-1,
5.30%, 9/02/08 .................................................................................. 990,000 939,936
5.35%, 9/02/09 .................................................................................. 765,000 720,875
5.40%, 9/02/10 .................................................................................. 990,000 937,659
5.45%, 9/02/11 .................................................................................. 995,000 921,649
5.50%, 9/02/12 .................................................................................. 990,000 911,008
California Educational Facilities Authority Revenue,
Pooled College and University Financing, Refunding, Series B, 5.80%, 6/01/02 .................... 1,000,000 1,020,110
Pooled College and University Financing, Refunding, Series B, 5.90%, 6/01/03 .................... 1,105,000 1,139,631
Pooled College and University Projects, Series B, 6.125%, 4/01/13 ............................... 1,000,000 1,040,680
California Health Facilities Financing Authority Revenue, MBIA Insured,
San Diego Hospital Association, Series B, 5.60%, 8/01/03 ........................................ 100,000 103,465
Sutter Health, Refunding, Series A, 5.875%, 8/15/16 ............................................. 3,750,000 3,853,088
California HFA, SFM Purchase, Class III, Series A-1, MBIA Insured, 5.70%, 8/01/11 ................. 2,035,000 2,084,756
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND AMOUNT VALUE
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
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 $1,040,630
Department of Forestry and Fire Protection, Series A, 4.875%, 10/01/18 .......................... 1,325,000 1,193,070
Various Community College Projects, Refunding, Series C, 5.50%, 9/01/09 ......................... 1,555,000 1,623,358
California Statewide CDA, COP, California Lutheran Homes, ETM, 5.375%, 11/15/06 ................... 1,000,000 1,023,890
California Statewide CDA Revenue, COP, Health Facilities, Barton Memorial Hospital, Refunding,
Series B,
5.70%, 12/01/00 ................................................................................. 200,000 200,770
6.40%, 12/01/05 ................................................................................. 450,000 466,682
California Statewide Communities Development Corp. COP, Pacific Homes, Series A, Pre-Refunded,
5.50%, 4/01/04 .................................................................................. 585,000 613,156
Campbell COP, Civic Center Project, Refunding, 5.60%, 10/01/03 .................................... 350,000 361,130
Carson RDA, Project Area No. 1, Refunding, 6.10%, 10/01/02 ........................................ 200,000 205,860
Central Valley Financing Authority Cogeneration Project Revenue, Carson Ice General Project,
Refunding, MBIA Insured, 5.00%, 7/01/17 ......................................................... 2,000,000 1,898,960
Chaffey Community College District COP, 5.10%, 9/01/13 ............................................ 1,860,000 1,819,787
Clovis COP, Water System Improvement Project, AMBAC Insured, 5.90%, 3/01/03 ....................... 100,000 104,143
Coastside County Water District 1915 Act GO, Crystal Springs Project, Refunding,
5.10%, 9/02/03 .................................................................................. 525,000 525,420
5.20%, 9/02/04 .................................................................................. 1,080,000 1,078,726
5.40%, 9/02/06 .................................................................................. 630,000 628,973
Colma 1915 Act, Local ID No. 1, Refunding,
5.00%, 9/02/01 .................................................................................. 465,000 465,432
5.10%, 9/02/02 .................................................................................. 485,000 485,063
5.20%, 9/02/03 .................................................................................. 515,000 515,113
5.30%, 9/02/04 .................................................................................. 545,000 544,155
5.40%, 9/02/05 .................................................................................. 570,000 567,680
Commerce Joint Powers Financing Authority Water Facilities Lease Revenue, Refunding, Series A,
5.50%, 10/01/02 ................................................................................. 340,000 346,188
5.625%, 10/01/03 ................................................................................ 360,000 370,188
5.75%, 10/01/04 ................................................................................. 470,000 488,354
Compton COP, Civic Center and Capital Improvement, Refunding, Series A,
5.00%, 9/01/08 .................................................................................. 4,340,000 4,282,625
5.50%, 9/01/15 .................................................................................. 1,180,000 1,133,048
Compton Sewer Revenue, ETM,
5.70%, 7/01/00 .................................................................................. 130,000 130,000
5.80%, 7/01/01 .................................................................................. 140,000 142,005
5.90%, 7/01/02 .................................................................................. 150,000 154,292
6.00%, 7/01/03 .................................................................................. 155,000 161,823
Concord RDA, Tax Allocation, Central Concord Redevelopment Project, Refunding, Sub Series A,
5.50%, 7/01/02 .................................................................................. 625,000 634,606
5.625%, 7/01/03 ................................................................................. 655,000 671,323
Contra Costa County MFHR, Byron Park Project, Series C, GNMA Secured, 6.00%, 7/20/03 .............. 375,000 382,268
Danville Financing Authority Revenue, Sycamore Valley, Reassessment District No. 93-2,
5.40%, 9/02/01 .................................................................................. 285,000 286,753
5.60%, 9/02/02 .................................................................................. 450,000 455,877
5.70%, 9/02/03 .................................................................................. 215,000 219,076
5.80%, 9/02/04 .................................................................................. 880,000 903,074
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND AMOUNT VALUE
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Dinuba RDA, Tax Allocation, sub. note
Merged City, sub. lien, Refunding, Series A, 6.10%, 12/01/04 ................................... $1,500,000 $1,498,755
Merged City Redevelopment Project, sub. lien, 5.20%, 4/01/03 ................................... 2,500,000 2,528,075
Duarte RDA, Tax Allocation, Merged Redevelopment Project Area, Refunding, 5.125%, 10/01/16 ....... 4,930,000 4,593,035
Eden Township Hospital District Health Facilities Revenue COP, Eden Hospital Health Services Corp.
Refunding, 5.75%, 7/01/12 ...................................................................... 1,195,000 1,217,239
Foster City PFAR, Community Development Project, Series A, 5.60%, 9/01/03 ........................ 1,150,000 1,182,637
Fresno Joint Powers Financing Authority Local Agency Revenue, Refunding, Series A, 6.20%, 9/02/03 1,000,000 1,018,490
Galt Capital Improvements Authority Lease Revenue, Culture and Recreation Improvement Project,
5.00%, 4/01/12 ................................................................................. 2,390,000 2,295,452
Galt Middle School Joint Powers Authority Special Tax, CFD No. 1, Refunding, 5.40%, 9/01/12 ...... 1,955,000 1,919,028
Garden Grove GO, CDA, Tax Allocation, Garden Grove Community Project, Refunding, 5.40%, 10/01/04 . 1,425,000 1,448,028
Glendale Parking Facilities Joint Powers Authority Revenue, Series A, 5.30%, 3/01/03 ............. 125,000 126,314
Goleta Water District Revenue COP, Goleta Reclamation Project, Refunding, FGIC Insured,
5.50%, 12/01/08 ................................................................................ 750,000 780,473
Hayward RDA, Tax Allocation, Downtown Hayward Redevelopment Project, Refunding, 5.70%, 3/01/14 ... 1,500,000 1,516,455
Hesperia PFAR, Series A, 5.80%, 10/01/03 ......................................................... 3,275,000 3,384,680
Hi Desert Memorial Health Care District Revenue, Refunding,
5.10%, 10/01/06 ................................................................................ 615,000 571,366
5.125%, 10/01/07 ............................................................................... 650,000 591,630
Hollister RDA, Tax Allocation, Community Development Project, Series 1994,
5.35%, 10/01/03 ................................................................................ 525,000 538,272
5.45%, 10/01/04 ................................................................................ 550,000 565,252
5.55%, 10/01/05 ................................................................................ 585,000 601,111
Imperial COP,
Wastewater System Refining Program, Refunding, Series B, 5.40%, 10/15/06 ....................... 865,000 871,323
Water System Refining Program, Refunding, Series A, 5.40%, 10/15/06 ............................ 1,235,000 1,244,028
Imperial County Local Transportation Authority Sales Tax Revenue, Series 1993, 5.50%,
5/01/04 ........................................................................................ 490,000 499,295
5/01/05 ........................................................................................ 515,000 524,090
Inland Empire Solid Waste Financing Authority Revenue, Landfill Improvement Financing Project,
Series B, FSA Insured, 6.25%, 8/01/11 .......................................................... 1,000,000 1,077,870
La Palma Community Development Commission Tax Allocation, La Palma Community Development Project
No. 1, Refunding,
5.40%, 6/01/01 ................................................................................. 130,000 130,732
5.50%, 6/01/02 ................................................................................. 135,000 136,986
5.60%, 6/01/03 ................................................................................. 145,000 148,416
5.70%, 6/01/04 ................................................................................. 150,000 154,907
5.80%, 6/01/05 ................................................................................. 160,000 165,733
La Quinta RDA, Tax Allocation, Redevelopment Project Areas No. 1 and 2, MBIA Insured, 5.40%, 9/01/07 560,000 585,620
Lake Elsinore PFA, Tax Allocation Revenue,
Lake Elsinore Redevelopment Projects, Series A, FSA Insured, 5.40%, 9/01/08 .................... 1,500,000 1,544,700
Series A, 5.00%, 9/01/09 ....................................................................... 2,680,000 2,623,988
Lake Elsinore School Financing Authority Revenue, Refunding, 6.00%, 9/01/11 ...................... 1,000,000 1,025,150
Lancaster COP, School District Project, Refunding, FSA Insured, 5.125%, 4/01/14 .................. 2,000,000 1,989,120
Lancaster RDA, Tax Allocation,
Central Business District Redevelopment, Refunding, 5.25%, 8/01/00 ............................. 35,000 35,018
Central Business District Redevelopment, Refunding, 5.375%, 8/01/01 ............................ 40,000 40,277
Central Business District Redevelopment, Refunding, 5.50%, 8/01/02 ............................. 40,000 40,520
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND AMOUNT VALUE
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Lancaster RDA, Tax Allocation, (cont.)
Central Business District Redevelopment, Refunding, 5.60%, 8/01/03 ............................. $ 45,000 $ 45,924
Central Business District Redevelopment, Refunding, 5.70%, 8/01/04 ............................. 45,000 46,195
Central Business District Redevelopment, Refunding, 5.70%, 8/01/05 ............................. 50,000 51,236
Fox Field Redevelopment Project Area, Refunding, 5.25%, 8/01/00 ................................ 55,000 55,029
Fox Field Redevelopment Project Area, Refunding, 5.375%, 8/01/01 ............................... 60,000 60,415
Fox Field Redevelopment Project Area, Refunding, 5.50%, 8/01/02 ................................ 65,000 65,846
Fox Field Redevelopment Project Area, Refunding, 5.60%, 8/01/03 ................................ 65,000 66,335
Fox Field Redevelopment Project Area, Refunding, 5.70%, 8/01/04 ................................ 70,000 71,859
Fox Field Redevelopment Project Area, Refunding, 5.70%, 8/01/05 ................................ 75,000 76,853
Lemon Grove CDA, Tax Allocation, 1998 Refunding,
5.00%, 8/01/06 ................................................................................. 885,000 885,425
5.10%, 8/01/07 ................................................................................. 205,000 204,032
5.20%, 8/01/08 ................................................................................. 215,000 214,572
Lemon Grove MFHR, Hillside Terrace Apartments, Refunding, 5.375%, 1/01/19 ........................ 965,000 969,545
Los Angeles County Transport Commission COP, Series B,
5.90%, 7/01/00 ................................................................................. 100,000 100,000
6.00%, 7/01/01 ................................................................................. 200,000 203,344
Lynwood PFAR, Water System Improvement Project, 6.15%, 6/01/08 ................................... 565,000 590,103
Madera COP, Madera Community Hospital, Refunding, 5.10%, 3/01/03 ................................. 515,000 520,943
Mammoth Lakes COP, Refunding,
5.70%, 6/01/10 ................................................................................. 850,000 854,267
5.75%, 6/01/11 ................................................................................. 250,000 251,468
Merced Irrigation District COP, Water Facilities Project, 6.125%, 11/01/03 ....................... 540,000 563,015
Mid-Peninsula Regional Open Space District COP, Special District Association Finance Corp.,
Series 1993, 5.20%, 9/01/03 .................................................................... 530,000 538,888
Mojave GO, Water Agency, ID M, Morongo Basin, ETM, 6.20%, 9/01/01 ................................ 100,000 102,176
Mt. Diablo Hospital District Revenue, Series A, AMBAC Insured, ETM, 5.10%, 12/01/03 .............. 100,000 102,471
Murrieta COP, Road Improvement Project, 6.00%,
4/01/07 ........................................................................................ 235,000 245,819
4/01/08 ........................................................................................ 245,000 256,853
New Haven USD, COP, Refunding, 5.30%, 7/01/01 .................................................... 500,000 504,775
Newark USD, COP, 5.75%, 9/01/02 .................................................................. 300,000 303,624
North City West School Facilities Financing Authority Special Tax, Refunding, Series B, FSA
Insured, 5.625%, 9/01/08 ....................................................................... 500,000 533,080
Ontario Redevelopment Financing Authority Local Agency Revenue, Community Facility, AD No.1,
senior lien, Series FSA Insured, 5.60%, 9/02/03 ................................................ 950,000 980,049
Orange County CFD, No. 86-2 Special Tax, Rancho Santa Margarita, Refunding, Series A,
5.375%, 8/15/12 ................................................................................ 1,500,000 1,440,765
Orange County Development Agency Tax Allocation, Santa Ana Heights Area Project, Refunding,
5.90%, 9/01/04 ................................................................................. 800,000 833,632
Orange County Local Transportation Authority Sales Tax Revenue, First Senior Measure M,
6.00%, 2/15/06 ................................................................................. 500,000 536,525
Orange County MFHR, Villa Santiago Rehabilitation Project, FNMA Insured, 5.60%, 10/01/27 ......... 500,000 510,520
Orange County Recovery COP, Series A, MBIA Insured, 6.00%, 7/01/08 ............................... 1,500,000 1,629,630
Oroville Hospital Revenue, Oroville Hospital, Series A, CHFCLP Insured, 5.125%, 12/01/12 ......... 1,435,000 1,413,590
Palm Desert Financing Authority Lease Revenue, Blythe County Administrative Project, 6.375%, 8/01/11 855,000 896,938
Paramount RDA, Tax Allocation, Redevelopment Project Area No. 1, Refunding, 6.05%, 8/01/05 ....... 1,515,000 1,620,186
Paso Robles Union School District COP, 5.75%, 8/01/03 ............................................ 1,635,000 1,693,876
Pleasant Hill RDA, RMR, Pre-Refunded, 5.40%, 2/01/05 ............................................. 645,000 658,829
Pomona RDA, Tax Allocation, Mountain Meadows Redevelopment Project, Refunding, Series X,
5.35%, 12/01/16 ................................................................................ 1,000,000 956,800
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND AMOUNT VALUE
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Poway RDA, Tax Allocation, Paguay Redevelopment Project, sub. notes, 4.75%, 12/15/03 ............. $1,950,000 $1,932,879
Puerto Rico Commonwealth Public Improvement GO, FSA Insured, 5.25%, 7/01/16 ...................... 2,500,000 2,497,300
Rialto RDA, Tax Allocation, Industrial Redevelopment, Sub Areas A and B, Series A, ETM,
5.40%, 9/01/02 ................................................................................. 270,000 275,584
5.50%, 9/01/03 ................................................................................. 280,000 288,873
Richmond Joint Powers Financing Authority Revenue, Multiple Redevelopment Projects,
Refunding, Series B, 5.35%, 5/15/13 ........................................................... 2,000,000 1,983,360
Riverside County Asset Leasing Corp. Leasehold Revenue, Riverside County Hospital Project,
Series A,
5.90%, 6/01/02 ................................................................................. 200,000 202,314
6.00%, 6/01/04 ................................................................................. 200,000 204,372
Riverside County Housing Authority MFHR, Brandon Place Apartments, Series B, FNMA Insured,
5.625%, 7/01/29 ................................................................................ 995,000 1,010,761
Sacramento MUD, Electric Revenue, Series E, 5.25%, 5/15/03 ....................................... 1,000,000 1,019,040
San Bernardino County COP, Medical Center Financing Project, Refunding, 6.00%, 8/01/09 ........... 2,000,000 2,039,100
San Bernardino County Mortgage Revenue, Don Miguel Apartments Project, Refunding, MBIA Insured,
6.00%, 9/01/03 ................................................................................. 85,000 86,429
San Clemente 1915 Act, AD No. 8, Refunding,
5.00%, 9/02/02 ................................................................................. 415,000 416,067
5.10%, 9/02/03 ................................................................................. 435,000 436,605
5.20%, 9/02/04 ................................................................................. 460,000 461,329
San Diego Mortgage Revenue, Mariners Cove, Refunding, Series B-1, 5.125%, 9/01/03 ................ 220,000 221,736
San Diego Port Facilities Revenue, National Steel and Shipbuilding Co., Refunding, 6.60%, 12/01/02 100,000 102,280
San Francisco City and County Public Utilities Commission Water Revenue, Refunding, Series A,
5.00%, 11/01/17 ................................................................................ 5,000,000 4,669,700
San Francisco City and County RDA,
Hotel Tax Revenue, FSA Insured, 5.80%, 7/01/01 ................................................. 300,000 304,731
Hotel Tax Revenue, FSA Insured, 5.90%, 7/01/02 ................................................. 245,000 252,715
Mortgage Revenue, Refunding, Series A, MBIA Insured, 6.125%, 7/01/02 ........................... 5,000 5,006
San Francisco City and County, Refunding, Series 1, FGIC Insured, 5.00%, 6/15/12 ................. 3,650,000 3,657,702
San Gorgonio Memorial Health Care District Health Facility Revenue, Pre-Refunded, 6.375%, 6/01/08 750,000 804,218
San Joaquin County COP, General Hospital Project, ETM, 5.90%, 9/01/03 ............................ 400,000 417,336
San Jose Financing Authority Revenue, Convention Center Project, Refunding, Series C, 5.75%, 9/01/03 300,000 310,950
San Juan USD, COP, Gold River Elementary School Project, 5.65%, 4/01/03 .......................... 600,000 601,476
San Marcos Public Facilities Authority Revenue, MBIA Insured,
Senior Tax Increment Project Area-3-A, 4.50%, 10/01/04 ......................................... 495,000 498,198
Senior Tax Increment Project Area-3-A, 5.30%, 10/01/11 ......................................... 350,000 355,058
Tax Increment Project Area 3-A, 4.40%, 10/01/03 ................................................ 405,000 406,430
Tax Increment Project Area 3-A, 4.70%, 10/01/05 ................................................ 595,000 601,462
Tax Increment Project Area-3-A, 5.10%, 10/01/09 ................................................ 515,000 521,592
San Ramon COP, Capital Improvements Project,
5.20%, 3/01/01 ................................................................................. 85,000 85,455
5.30%, 3/01/02 ................................................................................. 90,000 91,101
5.40%, 3/01/03 ................................................................................. 95,000 96,824
5.50%, 3/01/04 ................................................................................. 100,000 103,090
5.60%, 3/01/05 ................................................................................. 105,000 109,034
Santa Barbara RDA, Tax Allocation, Central City Redevelopment Project, 6.00%, 3/01/03 ............ 985,000 1,012,314
Santa Clara 1915 Act, Reassessment District 187, Refunding, Series 1, 5.25%, 9/02/11 ............. 1,720,000 1,641,327
Santa Monica Parking Authority Lease Revenue, Refunding, 6.00%, 7/01/03 .......................... 100,000 104,630
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND AMOUNT VALUE
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Sebastopol COP,
5.70%, 6/01/05 ................................................................................. $ 240,000 $ 249,643
Refunding, Series 1994, 5.50%, 6/01/03 ......................................................... 200,000 204,448
Refunding, Series 1994, 5.60%, 6/01/04 ......................................................... 215,000 221,661
Selma PFAR, Series A, MBIA Insured,
5.25%, 9/15/02 ................................................................................. 100,000 100,181
5.50%, 9/15/04 ................................................................................. 115,000 115,217
5.60%, 9/15/05 ................................................................................. 120,000 120,284
5.65%, 9/15/06 ................................................................................. 125,000 125,300
5.70%, 9/15/07 ................................................................................. 135,000 135,329
5.70%, 9/15/08 ................................................................................. 140,000 140,287
5.75%, 9/15/09 ................................................................................. 150,000 150,299
5.75%, 9/15/10 ................................................................................. 155,000 155,279
Shafter Joint Powers Financing Authority Lease Revenue, Community Correctional Facility Project,
Series A, 5.50%, 1/01/06 ....................................................................... 1,500,000 1,545,735
Solana Beach COP, City Hall Project, 5.80%, 10/01/02 ............................................. 50,000 51,515
South Gate PFA Water Revenue, Refunding, Series A, FGIC Insured,
5.35%, 10/01/07 ................................................................................ 995,000 1,044,163
5.45%, 10/01/08 ................................................................................ 1,040,000 1,097,044
South Gate PFAR, Tax Allocation, Redevelopment Project No. 1, Refunding, 6.10%, 9/01/03 .......... 1,000,000 999,050
South San Francisco Capital Improvements Financing Authority Revenue, South San Francisco
Conference Center, Refunding,
5.70%, 9/01/02 ................................................................................. 195,000 198,814
5.80%, 9/01/03 ................................................................................. 205,000 211,400
5.90%, 9/01/04 ................................................................................. 215,000 224,039
Southern California Rapid Transit District Revenue, Special Benefit AD A2, 5.80%, 9/01/01 ........ 100,000 101,281
Stockton Health Facilities Revenue, Dameron Hospital Association, Refunding,
Series A, 5.35%, 12/01/09 ...................................................................... 385,000 364,753
Stockton Port District Port Facilities Revenue, Refunding and Improvement, Series A, FSA
Insured, 5.75%, 7/01/11 ........................................................................ 1,295,000 1,381,985
Sunline Transport Agency COP, Transport Finance Corp., Series B,
5.50%, 7/01/03 ................................................................................. 450,000 462,060
5.75%, 7/01/06 ................................................................................. 445,000 465,350
Susanville PFAR, Series A, AMBAC Insured, 5.90%, 9/01/02 ......................................... 100,000 102,243
Tahoe City PUD, COP, Capital Facilities Project, Series B,
6.05%, 6/01/01 ................................................................................. 290,000 293,277
6.15%, 6/01/02 ................................................................................. 835,000 854,764
6.30%, 6/01/04 ................................................................................. 545,000 570,397
Tehachapi Cummings County Water District Revenue COP, Capital Improvement Project, MBIA Insured,
Pre-Refunded,
5.50%, 8/01/04 ................................................................................. 280,000 291,816
5.60%, 8/01/05 ................................................................................. 300,000 313,248
5.75%, 8/01/06 ................................................................................. 320,000 335,072
Temecula RDAR, Tax Allocation, Temecula Redevelopment Project No. 1, Series A, 5.40%, 2/01/04 .... 600,000 609,744
Temecula Valley USD, Series E, FSA Insured, 5.65%, 9/01/07 ....................................... 370,000 394,527
Travis USD, COP, Foxboro Elementary School Construction Project, ETM, 6.30%, 9/01/02 ............. 200,000 207,794
Trinity County PUD, COP, Electric District Facilities, Refunding, Series 1993,
5.80%, 4/01/01 ................................................................................. 340,000 342,033
5.90%, 4/01/02 ................................................................................. 360,000 365,472
6.00%, 4/01/03 ................................................................................. 380,000 389,865
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND AMOUNT VALUE
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Ventura USD, COP, Series A,
5.90%, 4/01/04 .............................................................................. $ 305,000 $ 313,757
6.00%, 4/01/05 .............................................................................. 320,000 329,298
6.10%, 4/01/06 .............................................................................. 340,000 350,172
6.20%, 4/01/07 .............................................................................. 365,000 376,099
6.30%, 4/01/08 .............................................................................. 385,000 396,838
6.40%, 4/01/09 .............................................................................. 410,000 422,356
Virgin Islands PFAR, senior lien, Refunding, Series A,
5.30%, 10/01/11 ............................................................................. 1,000,000 958,249
5.40%, 10/01/12 ............................................................................. 4,150,000 3,961,714
Virgin Islands Water and Power Authority Water System Revenue, Refunding,
5.00%, 7/01/03 .............................................................................. 3,540,000 3,480,279
4.875%, 7/01/06 ............................................................................. 2,000,000 1,907,979
5.00%, 7/01/09 .............................................................................. 2,000,000 1,867,799
Watsonville RDA, GO, Tax Allocation, Watsonville Redevelopment Project, Series 1993,
6.00%, 8/01/02 .............................................................................. 510,000 510,366
6.10%, 8/01/03 .............................................................................. 540,000 540,409
------------
TOTAL BONDS (COST $179,527,641) ............................................................... 179,976,235
------------
ZERO COUPON BONDS 1.0%
San Joaquin Hills Transportation Corridor Agency Toll Road Revenue, senior lien, Refunding,
Series A,1/15/16 (COST $2,094,139) ........................................................... 3,000,000 1,921,530
------------
TOTAL LONG TERM INVESTMENTS (COST $181,621,780) ............................................... 181,897,765
------------
(a) SHORT-TERM INVESTMENTS 1.3%
California PCFA, PCR, Shell Oil Co. Project, Refunding, Series B, Daily VRDN and Put, 4.10%,
10/01/11 .................................................................................... 1,000,000 1,000,000
Irvine 1915 Act,
AD No. 87-8, Daily VRDN and Put, 4.15%, 9/02/24 ............................................. 300,000 300,000
AD No. 97-13, Daily VRDN and Put, 4.15%, 9/02/23 ............................................ 200,000 200,000
AD No. 97-16, Daily VRDN and Put, 4.15%, 9/02/22 ............................................ 700,000 700,000
Orange County Sanitation District COP, Nos 1-3, 5-7, 11, 13 and 14, Daily VRDN and Put,
4.15%, 8/01/15 .............................................................................. 100,000 100,000
Puerto Rico Commonwealth Highway and Transportation Authority Revenue, Series A, AMBAC Insured,
Weekly VRDN and Put, 4.25%, 7/01/28 ......................................................... 100,000 100,000
------------
TOTAL SHORT-TERM INVESTMENTS (COST $2,400,000) ................................................ 2,400,000
------------
TOTAL INVESTMENTS (COST $184,021,780) 98.6% ................................................... 184,297,765
OTHER ASSETS, LESS LIABILITIES 1.4% ........................................................... 2,581,803
------------
NET ASSETS 100.0% ............................................................................. $186,879,568
============
</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.
See notes to financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Highlights
FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------------------------
2000 1999 1998 1997 1996
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------------------------------------------------------------------
Income from investment operations - net investment income .03 .02 .03 .03 .03
Less distributions from net investment income ........... (.03) (.02) (.03) (.03) (.03)
---------------------------------------------------------------------
Net asset value, end of year ............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======================================================================
Total return(a).......................................... 2.64% 2.39% 2.85% 2.85% 2.85%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ......................... $ 696,803 $ 706,877 $ 656,725 $ 639,791 $ 597,819
Ratios to average net assets:
Expenses ............................................... .56% .59% .60% .60% .63%
Net investment income .................................. 2.61% 2.36% 2.82% 2.83% 2.83%
</TABLE>
(a) Total return is not annualized for periods less than one year.
See notes to financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND AMOUNT VALUE
----------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS 109.5%
<S> <C> <C>
(a) Anaheim COP, Weekly VRDN and Put,
1993 Partnership Project Refunding, AMBAC Insured, 4.30%, 8/01/19 ................................ $ 4,400,000 $ 4,400,000
Police Facilities Refinancing Project, AMBAC Insured, 4.30%, 8/01/08 ............................. 5,050,000 5,050,000
(a) Big Bear Lake Industrial Revenue, Southwest Gas Corp. Project, Series A, Weekly VRDN and Put,
4.45%, 12/01/28 .................................................................................. 2,700,000 2,700,000
(a) Butte County Housing Authority MFR, Pine Tree Apartment Project, Weekly VRDN and Put,
4.40%, 12/01/10 .................................................................................. 2,312,000 2,312,000
(b) California Community College Financing Authority TRAN, Series A, 5.00%, 6/29/01 .................... 7,000,000 7,050,190
California Health Facilities Financing Authority Revenue,
(a) Children's Hospital, MBIA Insured, Weekly VRDN and Put, 4.25%, 11/01/21 ........................ 2,500,000 2,500,000
Children's Hospital of Los Angeles, Series A, Pre-Refunded on 6/01/01, 7.125%, 6/01/21 ......... 6,840,000 7,148,892
Children's Hospital of San Francisco, Series A, MBIA Insured, Pre-Refunded on 10/01/00, 7.50%,
10/01/20 ....................................................................................... 4,000,000 4,116,349
(a) Scripps Health, Series A, MBIA Insured, Weekly VRDN and Put, 4.65%, 10/01/22 ................... 5,000,000 5,000,000
(a) California HFAR, MFHR, Series III-D, Weekly VRDN and Put, 4.50%, 8/01/33 ........................... 6,500,000 6,500,000
(a) California PCFA, Revenue,
PCR, Monthly VRDN and Put, 4.35%, 9/01/13 ........................................................ 4,700,000 4,700,000
PCR, Pacific Gas and Electric Co., Refunding, Series B, Daily VRDN and Put, 4.15%, 11/01/26 ...... 10,000,000 10,000,000
PCR, Pacific Gas and Electric Co., Refunding, Series E, Daily VRDN and Put, 4.35%, 11/01/26 ...... 22,700,000 22,700,000
PCR, Shell Oil Co., Project, Refunding, Series B, Daily VRDN and Put, 4.10%, 10/01/11 ............ 4,300,000 4,300,000
Solid Waste Disposal Revenue, Colmac Energy Project, Series A, Weekly VRDN and Put,
4.40%, 12/01/16 ................................................................................ 600,000 600,000
Solid Waste Disposal Revenue, Shell Martinez Refining, Series A, Daily VRDN and Put, 4.10%, 10/01/31 11,000,000 11,000,000
(a) California Public Capital Improvement Financing Authority Revenue, Pooled Projects, Series C,
Quarterly VRDN and Put, 3.70%, 6/01/28 ........................................................... 19,500,000 19,500,000
California School Cash Reserve Program Authority Revenue, Series A,
(b) 5.25%, 7/03/01 ............................................................................... 42,500,000 42,899,075
AMBAC Insured, 4.00%, 7/03/00 .................................................................... 20,000,000 20,000,683
(a) California School Facilities Financing Corp. COP, Capital Improvement Financing Projects, Weekly
VRDN and Put, Refunding, Series C, 4.40%, 7/01/22 ................................................ 12,095,000 12,095,000
Series A, 4.40%, 7/01/22 ......................................................................... 2,050,000 2,050,000
(a) California State Economic Development Financing Authority Revenue, KQED Inc. Project, Refunding,
Weekly VRDN and Put, 4.55%, 4/01/20 ............................................................. 1,750,000 1,750,000
California State GO
6.00%, 9/01/00 ................................................................................... 14,200,000 14,261,602
TECP, 3.25%, 7/07/00 ............................................................................. 12,785,000 12,785,000
(a) California Statewide CDA Revenue, COP, Sutter Health Obligated Group, AMBAC Insured, Daily VRDN
and Put, 4.15%, 7/01/15 ........................................................................ 8,400,000 8,400,000
(a) California Statewide CDA, COP, North California Retired Officers, Daily VRDN and Put, 4.20%, 6/01/26 7,500,000 7,500,000
California Statewide Communities Development Corp. Revenue,
(a) Industrial Development, American Kleaner Manufacturing Co., Series C, Weekly VRDN and Put,
4.65%, 12/01/19 ................................................................................. 2,550,000 2,550,000
(a) Industrial Development, Karcher Property Project, Series C, Weekly VRDN and Put, 4.65%,
12/01/19......................................................................................... 1,700,000 1,700,000
(b) Tax and Revenue Anticipation Bonds, Series A, FSA Insured, 5.25%, 6/29/01 ................... 9,000,000 9,083,160
(a) Chico MFMR, Webb Homes Project, Weekly VRDN and Put, 4.10%, 1/01/10 ................................ 2,070,000 2,070,000
(a) Concord MFMR, Weekly VRDN and Put,
4.25%, 7/15/18 ................................................................................... 7,800,000 7,800,000
Bel Air Apartments, Issue A, 4.40%, 12/01/16 ..................................................... 500,000 500,000
(a) Duarte RDA, Johnson Duarte Project, Weekly VRDN and Put, 4.35%, 12/01/14 ........................... 900,000 900,000
(a) Dublin Housing Authority MFHR, Park Sierra Housing, Series A, Weekly VRDN and Put, 4.45%, 6/01/28 .. 1,100,000 1,100,000
(a) Elsinore Valley Municipal Water District COP, Series A, FGIC Insured, Weekly VRDN and Put,
4.25%, 7/01/29 ................................................................................... 10,000,000 10,000,000
(a) Fresno MFHR, Heron Pointe Apartments, Series A, Weekly VRDN and Put, 4.30%, 6/01/07 ................ 1,000,000 1,000,000
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND AMOUNT VALUE
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENTS (CONT.)
(a) Irvine 1915 Act, Daily VRDN and Put,
AD No. 87-8, 4.15%, 9/02/24 .................................................................. $6,000,000 $6,000,000
AD No. 89-10, 4.15%, 9/02/15 ................................................................. 2,000,000 2,000,000
AD No. 97-16, 4.15%, 9/02/22 ................................................................. 1,100,000 1,100,000
(a) Irvine Ranch Public Facilities and Infrastructure Authority Lease Revenue, Capital Improvement
Project, Weekly VRDN and Put, 4.25%, 11/01/10 ................................................ 4,700,000 4,700,000
(a) Irvine Ranch Water District COP, Capital Improvement Project, Daily VRDN and Put, 3.50%, 8/01/16 6,500,000 6,500,000
(a) Irvine Ranch Water District GO, No. 105, 140, 240 and 250, Daily VRDN and Put, 3.50%, 1/01/21 .. 1,300,000 1,300,000
(a) Irvine Ranch Water District Revenue, Daily VRDN and Put,
Consolidated Bonds, Refunding, Series B, 4.30%, 10/01/09 ..................................... 2,300,000 2,300,000
Consolidated District Nos. 105, 250 and 290, 4.15%, 8/01/16 .................................. 7,200,000 7,200,000
Consolidated Refunding, Series A, 4.30%, 5/01/09 ............................................. 1,500,000 1,500,000
Construction Bonds, 4.15%, 10/01/05 .......................................................... 3,000,000 3,000,000
Nos. 140, 105, 240 and 250, 4.15%, 4/01/33 ................................................... 1,000,000 1,000,000
(a) Kern County COP, Kern Public Facilities Project, Series A, Weekly VRDN and Put, 4.25%, 8/01/06 . 1,700,000 1,700,000
(a) Lancaster RDA, MFHR, Westwood Park Apartments, Series 1985-K, Weekly VRDN and Put, 4.30%, 12/01/07 900,000 900,000
(a) Livermore Housing Authority MFR, Richards Manor, Refunding, Series A, Weekly VRDN and Put,
4.40%, 12/01/22 .............................................................................. 5,770,000 5,770,000
Los Angeles County Capital Asset Leasing Corp., TECP, 4.00%, 8/10/00 ........................... 9,000,000 9,000,000
(b) Los Angeles County GO, TRAN, Series A, 5.00%, 6/29/01 .......................................... 5,750,000 5,796,403
(a) Los Angeles County Housing Authority MFHR, Sand Canyon Ranch Project, Series F, Weekly VRDN and
Put, 4.70%, 11/01/06 ......................................................................... 4,500,000 4,500,000
Los Angeles County MTA Revenue, TECP, 4.05%, 9/07/00 ........................................... 7,000,000 7,000,000
(a) Los Angeles County MTA, Sales Tax Revenue, Proposition C, Refunding, Second Series A, MBIA
Insured, Weekly VRDN and Put, 4.25%, 7/01/20 ................................................ 6,000,000 6,000,000
(a) Los Angeles County Pension Obligation, Refunding, Weekly VRDN and Put,
Series A, AMBAC Insured, 4.30%, 6/30/07 ...................................................... 2,500,000 2,500,000
Series B, AMBAC Insured, 4.30%, 6/30/07 ...................................................... 6,600,000 6,600,000
(b) Los Angeles County Schools GO, Pooled Financing Program Participation Certificates, Series A,
5.00%, 7/02/01 ............................................................................... 7,000,000 7,048,860
(a) Los Angeles County Transportation Commission Sales Tax Revenue, Refunding, Weekly VRDN and Put,
4.30%, 7/01/12 ............................................................................... 12,000,000 12,000,000
(a) Los Angeles CRDA, Weekly VRDN and Put,
COP, Baldwin Hill Park, 4.65%, 12/01/14 ...................................................... 1,000,000 1,000,000
MFHR, Grand Promenade Project, 4.30%, 12/01/10 ............................................... 1,300,000 1,300,000
Los Angeles Department of Water and Power Electric Plant Revenue, TECP, 4.15%, 8/07/00 ......... 5,000,000 5,000,000
Los Angeles Department of Water and Power Waterworks Revenue, TECP, 3.75%, 7/11/00 ............. 10,100,000 10,100,000
(a) Los Angeles MFR, Weekly VRDN and Put,
Casden Project, Series K, 4.40%, 7/01/10 ..................................................... 3,200,000 3,200,000
Masselin Manor, 4.30%, 7/01/15 ............................................................... 2,400,000 2,400,000
Los Angeles Wastewater Systems Revenue, Series D, MBIA Insured, Pre-Refunded, 6.70%, 12/01/21....... 4,350,000 4,487,246
Metropolitan Water District Revenue,
Southern California, 3.95%, 9/05/00, ......................................................... 4,000,000 4,000,000
(a) Southern California Waterworks, Refunding, Series A, AMBAC Insured, Weekly VRDN and Put,
4.25%, 6/01/23 ......................................................................... 7,865,000 7,865,000
(a) Monterey County IDA, IDR, VPS Company Inc. Project, Series A, Weekly VRDN and Put, 4.55%, 9/01/20 4,180,000 4,180,000
M-S-R Public Power Agency, San Juan Project Revenue,
Refunding, Series G, MBIA Insured, 5.25%, 7/01/00 ............................................ 1,000,000 1,000,000
(a) Sub. lien, Refunding, Series D, Weekly VRDN and Put, 4.25%, 7/01/18 ...................... 7,600,000 7,600,000
(a) Sub. lien, Series E, MBIA Insured, Weekly VRDN and Put, 4.30%, 7/01/22.................... 20,200,000 20,200,000
(a) Oakland COP, Capital Equipment Project, Weekly VRDN and Put, 4.25%, 12/01/15 ................... 7,500,000 7,500,000
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND AMOUNT VALUE
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENTS (CONT.)
(a) Orange County Apartment Development Revenue, Frost Project, Issue B, Weekly VRDN and Put,
4.40%, 3/01/09 .................................................................................. $ 100,000 $ 100,000
(a) Orange County Sanitation District COP,
Nos. 1-3, 5-7 and 11, Refunding, AMBAC Insured, Daily VRDN and Put, 4.15%, 8/01/16 .............. 10,000,000 10,000,000
Nos. 1-3, 5-7 and 11, Refunding, Weekly VRDN and Put, 3.50%, 8/01/13 ............................ 8,000,000 8,000,000
Nos. 1-3, 5-7, 11, 13 and 14, Daily VRDN and Put, 4.15%, 8/01/15 ................................ 1,900,000 1,900,000
(a) Oxnard RDA, COP, Channel Islands Business Center, Weekly VRDN and Put, 5.095%, 7/01/05 ............ 390,000 390,000
(a) Pico Rivera RDA, COP, Weekly VRDN and Put, 4.70%, 12/01/10 ........................................ 1,500,000 1,500,000
(a) Pleasanton MFMR, Valley Plaza, Series A, Weekly VRDN and Put, 4.25%, 7/15/18 ...................... 4,660,000 4,660,000
Puerto Rico Commonwealth Government Development Bank,
(a) Refunding, MBIA Insured, Weekly VRDN and Put, 4.60%, 12/01/15 ............................... 1,300,000 1,300,000
TECP, 3.50%, 9/12/00 ............................................................................ 17,388,000 17,388,000
(a) Puerto Rico Commonwealth Highway and Transportation Authority Revenue, Series A, AMBAC Insured,
Weekly VRDN and Put, 4.25%, 7/01/28 ............................................................ 3,800,000 3,800,000
Puerto Rico Commonwealth Highway Authority Highway Revenue, Series Q, Pre-Refunded on 7/01/00,
8.00%, 7/01/18 .................................................................................. 8,000,000 8,160,000
(a) Redwood City COP, City Hall Project, Weekly VRDN and Put, 4.45%, 7/01/21 .......................... 2,400,000 2,400,000
(a) Riverside County CFD, Special Tax, No 89-5, Refunding, AMBAC Insured, Weekly VRDN and Put,
4.35%, 9/01/28 .................................................................................. 8,000,000 8,000,000
(a) Riverside County COP, Riverside County Public Facility, ACES, Series C, Weekly VRDN and Put,
3.25%, 12/01/15 ................................................................................. 4,000,000 4,000,000
(a) Riverside County Housing Authority MFMR, Emeritus Park, Series B, FNMA Insured, Weekly VRDN
and Put, 4.25%, 7/15/18 ......................................................................... 3,250,000 3,250,000
(a) Riverside County IDA, IDR, Calavo Growers, Weekly VRDN and Put, 4.30%, 9/01/05 .................... 1,500,000 1,500,000
Riverside County Teeter Plan TECP,
3.25%, 7/26/00 .................................................................................. 15,000,000 15,000,000
3.90%, 10/05/00 ................................................................................. 7,608,000 7,608,000
(a) Sacramento County COP, Administration Center and Courthouse Project, Weekly VRDN and Put,
4.35%, 6/01/20 .................................................................................. 7,655,000 7,655,000
(a) Sacramento County Sanitation District Financing Authority Revenue, Series C, Weekly VRDN and Put,
4.25%, 12/01/30 ................................................................................. 25,000,000 25,000,000
(a) Sacramento MFHR, Smoketree, Series A, Weekly VRDN and Put, 4.25%, 4/15/10 ......................... 6,650,000 6,650,000
(a) San Bernardino County MFHR, Refunding, Quality A, FNMA Insured, Weekly VRDN and Put, 4.25%, 7/01/14 4,350,000 4,350,000
(a) San Diego County MFHR, Weekly VRDN and Put,
Country Hills, Series A, 4.25%, 8/15/13 ......................................................... 3,175,000 3,175,000
Nationwide, Series C, 4.25%, 4/15/05 ............................................................ 1,400,000 1,400,000
San Diego Gas and Electric Co., 3.95%, 9/08/00 .................................................... 5,500,000 5,500,000
(a) San Diego Housing Authority MFHR, La Cima Apartments, Series K, Weekly VRDN and Put,
4.20%, 12/01/22 ................................................................................ 5,000,000 5,000,000
(a) San Diego MFHR, University Town Center Apartments, Refunding, Weekly VRDN and Put, 4.50%, 10/01/15 4,900,000 4,900,000
(a) San Dimas RDA, Commercial Development Revenue, San Dimas Commercial Center, Monthly VRDN and Put,
4.40%, 12/01/13 ................................................................................ 900,000 900,000
San Francisco BART, TECP, 3.85%, 8/21/00 .......................................................... 10,500,000 10,500,000
(a) San Francisco City and County RDA, MFR, Weekly VRDN and Put,
3rd and Mission, Series C, 4.30%, 7/01/34 ....................................................... 11,000,000 11,000,000
Refunding, Fillmore Center, Series B-2, 4.70%, 12/01/17 ......................................... 1,000,000 1,000,000
San Joaquin County Transportation Authority Sales Tax Revenue, TECP, 3.35%, 7/11/00 ............... 12,600,000 12,600,000
(a) San Jose MFMR, Somerset Park Apartment Project, Series A, Weekly VRDN and Put, 4.55%, 11/01/17 .... 1,000,000 1,000,000
(a) San Jose-Santa Clara Water Financing Authority Sewer Revenue, Series B, FGIC Insured, Weekly VRDN
and Put, 4.30%, 11/15/11 ........................................................................ 1,200,000 1,200,000
(a) San Mateo County MFHR, Pacific Oaks Apartment Project, Series A, Weekly VRDN and Put,
4.50%, 7/01/17 .................................................................................. 2,950,000 2,950,000
(a) Santa Ana Housing Authority MFHR, Vintage Apartments, Refunding, Series A, Weekly VRDN and Put,
4.30%, 12/01/22 ................................................................................. 4,650,000 4,650,000
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000 (cont.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND AMOUNT VALUE
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENTS (CONT.)
(a) Santa Clara County Financing Authority, Lease Revenue, VMC Facility Replacement Project, Series B,
Weekly VRDN and Put, 4.30%, 11/15/25 ........................................................... $ 5,125,000 $ 5,125,000
(a) Santa Clara County Housing Authority MFHR, Benton Park Central Apartments, Refunding, Series A,
Weekly VRDN and Put, 4.25%, 12/15/25 ............................................................ 5,000,000 5,000,000
(a) South San Francisco MFHR, Magnolia Plaza Apartments, Series A, Weekly VRDN and Put, 4.50%, 5/01/17 500,000 500,000
(a) Southern California Public Power Authority Power Project Revenue, Palo Verde Project, Refunding,
Weekly VRDN and Put,
Series B, AMBAC Insured, 4.30%, 7/01/09 ......................................................... 2,000,000 2,000,000
Series C, AMBAC Insured, 4.30%, 7/01/17 ......................................................... 500,000 500,000
(a) Southern California Public Power Authority Transmission Project Revenue, Southern Transmission,
Refunding, Weekly VRDN and Put,
AMBAC Insured, 4.30%, 7/01/19 ................................................................... 27,000,000 27,000,000
Series B, FSA Insured, 4.30%, 7/01/23 ........................................................... 6,600,000 6,600,000
(a) Suisun City Housing Authority MFR, Village Green, Series A, Weekly VRDN and Put, 3.40%, 6/15/18 ... 8,500,000 8,500,000
(a) Tustin 1915 Act, Reassessment District No 95-2, Series A, Daily VRDN and Put, 4.15%, 9/02/13 ...... 15,700,000 15,700,000
(a) Upland CRDA, MFHR, Weekly VRDN and Put, 4.40%, 2/15/30 ............................................ 1,000,000 1,000,000
(a) Vallecitos Water District Revenue COP, Twin Oaks Reservoir Project, Weekly VRDN and Put,
4.25%, 7/01/30 .................................................................................. 2,600,000 2,600,000
(a) Vallejo City USD, COP, Capital Improvement Financing Projects, Series E, Weekly VRDN and Put,
4.30%, 7/01/25 .................................................................................. 2,500,000 2,500,000
(a) West Basin Municipal Water District Revenue COP, Weekly VRDN and Put,
Phase III Recycled Water Project, Series A, 4.25%, 8/01/29 ...................................... 4,300,000 4,300,000
Recycled Water Project, Series C, 4.20%, 8/01/27 ................................................ 1,900,000 1,900,000
(a) Western Riverside County Regional Wastewater Authority Revenue, Regional Wastewater Treatment,
Daily VRDN and Put, 4.15%, 4/01/28 .............................................................. 8,400,000 8,400,000
-------------
TOTAL INVESTMENTS (COST $763,280,460) 109.5% ...................................................... 763,280,460
OTHER ASSETS, LESS LIABILITIES (9.5)% ............................................................. (66,477,161)
-------------
NET ASSETS 100.0% ................................................................................. $ 696,803,299
=============
</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.
FRANKLIN CALIFORNIA TAX-FREE TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000 (CONT.)
GLOSSARY OF TERMS
--------------------------------------------------------------------------------
1915 ACT - Improvement Bond Act of 1915
ABAG - The Association of Bay Area Governments
ACES - Adjustable Convertible Exempt Securities
AD - Assessment District
AMBAC - American Municipal Bond Assurance Corp.
BART - Bay Area Rapid Transit
BIG - Bond Investor Guaranty Insurance Co.
CDA - Community Development Authority/Agency
CFD - Community Facilities District
CHFCLP - California Health Facilities Construction Loan Program
CIFP - Capital Improvement Financing Program
COP - Certificate of Participation
CRDA - Community Redevelopment Authority/Agency
ETM - Escrow to Maturity
FGIC - Financial Guaranty Insurance Co.
FNMA - Federal National Mortgage Association
FSA - Financial Security Assistance
GNMA - Government National Mortgage Association
GO - General Obligation
HFA - Housing Finance Authority/Agency
HFAR - Housing Finance Authority/Agency Revenue
HFR - Housing Finance Revenue
ID - Improvement District
IDA - Industrial Development Authority/Agency
IDR - Industrial Development Revenue
MBIA - Municipal Bond Investors Assurance Corp.
MFHR - Multi-Family Housing Revenue
MFMR - Multi-Family Mortgage Revenue
MFR - Multi-Family Revenue
MTA - Metropolitan Transportation Authority
MUD - Municipal Utility District
PCFA - Pollution Control Financing Authority
PCR - Pollution Control Revenue
PFA - Public Financing Authority
PFAR - Public Financing Authority Revenue
PUD - Public Utility District
RDA - Redevelopment Agency
RDAR - Redevelopment Agency Revenue
RMR - Residential Mortgage Revenue
SFM - Single Family Mortgage
SFMR - Single Family Mortgage Revenue
TECP - Tax-Exempt Commercial Paper
TRAN - Tax and Revenue Anticipation Notes
UHSD - Unified High School District
USD - Unified School District
VRDN - Variable Rate Demand Notes
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2000
<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 ...................................................... $ 1,581,137,628 $ 184,021,780 $ 763,280,460
=============================================================
Value ..................................................... 1,608,520,191 184,297,765 763,280,460
Cash ....................................................... 142,279 136,362 11,110
Receivables:
Capital shares sold ....................................... 407,412 230,807 5,387,376
Interest .................................................. 28,560,817 2,915,242 4,715,112
-------------------------------------------------------------
Total assets .......................................... 1,637,630,699 187,580,176 773,394,058
-------------------------------------------------------------
Liabilities:
Payables:
Investment securities purchased ........................... 1,533,591 -- 71,877,688
Capital shares redeemed ................................... 2,362,568 111,314 3,951,885
Affiliates ................................................ 985,654 90,929 308,464
Shareholders .............................................. 1,401,161 129,175 225,352
Distributions to shareholders .............................. 3,072,820 321,912 103,162
Other liabilities .......................................... 139,028 47,278 124,208
-------------------------------------------------------------
Total liabilities ..................................... 9,494,822 700,608 76,590,759
-------------------------------------------------------------
Net assets, at value .................................. $ 1,628,135,877 $ 186,879,568 $ 696,803,299
=============================================================
Net assets consist of:
Undistributed net investment income ........................ -- 279,843 --
Accumulated distributions in excess of net investment income (1,623,935) -- --
Net unrealized appreciation ................................ 27,382,563 275,985 --
Accumulated net realized loss .............................. (22,108,464) (513,302) --
Capital shares ............................................. 1,624,485,713 186,837,042 696,803,299
-------------------------------------------------------------
Net assets, at value .................................. $ 1,628,135,877 $ 186,879,568 $ 696,803,299
=============================================================
</TABLE>
See notes to financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Statements (continued)
STATEMENTS OF ASSETS AND LIABILITIES (CONT.)
JUNE 30, 2000
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN CALIFORNIA FRANKLIN
CALIFORNIA INTERMEDIATE-TERM CALIFORNIA
INSURED TAX-FREE TAX-FREE TAX-EXEMPT
INCOME FUND INCOME FUND MONEY FUND
<S> <C> <C> <C>
CLASS A:
Net assets, at value ................................................ $1,558,856,784 $ 186,879,568 $ 696,803,299
=====================================================
Shares outstanding .................................................. 132,577,058 17,117,091 696,803,299
=====================================================
Net asset value per share* .......................................... $ 11.76 $ 10.92 $ 1.00
=====================================================
Maximum offering price per share (net asset value per share/95.75%,
97.75%, 100%, respectively) ......................................... $ 12.28 $ 11.17 $ 1.00
=====================================================
CLASS B:
Net assets, at value ................................................ $ 1,883,960
==============
Shares outstanding .................................................. 159,961
==============
Net asset value and maximum offering price per share* ............... $ 11.78
==============
CLASS C:
Net assets, at value ................................................ $ 67,395,133
==============
Shares outstanding .................................................. 5,692,547
==============
Net asset value per share* .......................................... $ 11.84
==============
Maximum offering price per share (net asset value per share/99.00%).. $ 11.96
==============
</TABLE>
*Redemption price is equal to net asset value less any applicable contingent
deferred sales charge.
See notes to financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Statements (continued)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2000
<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 .......................................... $ 100,236,755 $ 10,124,118 $ 23,471,931
------------------------------------------------------
Expenses:
Management fees (Note 3) .......................... 7,925,952 1,061,797 3,594,965
Distribution fees: (Note 3)
Class A .......................................... 1,548,522 187,839 --
Class B .......................................... 1,705 -- --
Class C .......................................... 469,203 -- --
Transfer agent fees (Note 3) ...................... 525,232 65,072 452,421
Custodian fees .................................... 17,100 1,764 7,582
Reports to shareholders ........................... 51,986 7,978 19,578
Registration and filing fees ...................... 2,677 1,429 3,156
Professional fees (Note 3) ........................ 34,475 16,171 6,951
Trustees' fees and expenses ....................... 43,942 4,831 19,427
Other ............................................. 85,830 34,871 32,377
------------------------------------------------------
Total expenses ................................. 10,706,624 1,381,752 4,136,457
Expenses waived/paid by affiliate (Note 3) ..... -- (253,430) --
------------------------------------------------------
Net expenses ................................. 10,706,624 1,128,322 4,136,457
------------------------------------------------------
Net investment income ...................... 89,530,131 8,995,796 19,335,474
------------------------------------------------------
Realized and unrealized losses:
Net realized loss from investments ............... (21,988,141) (410,662) (25,675)
Net unrealized depreciation on investments ....... (35,982,421) (1,387,348) --
------------------------------------------------------
Net realized and unrealized loss ................... (57,970,562) (1,798,010) (25,675)
------------------------------------------------------
Net increase in net assets resulting from operations $ 31,559,569 $ 7,197,786 $ 19,309,799
======================================================
</TABLE>
See notes to financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
<TABLE>
<CAPTION>
FRANKLIN CALIFORNIA INSURED FRANKLIN CALIFORNIA INTERMEDIATE-
TAX-FREE INCOME FUND TERM TAX-FREE INCOME FUND
2000 1999 2000 1999
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ............................... $ 89,530,131 $ 91,205,201 $ 8,995,796 $ 8,310,124
Net realized gain (loss) from investments ........... (21,988,141) 954,544 (410,662) 93,006
Net unrealized depreciation on investments .......... (35,982,421) (43,645,378) (1,387,348) (4,475,770)
------------------------------------------------------------------------
Net increase in net assets resulting
from operations ................................ 31,559,569 48,514,367 7,197,786 3,927,360
Distributions to shareholders from:
Net investment income:
Class A ............................................ (85,810,255) (88,563,323) (8,995,735) (8,423,741)
Class B ............................................ (11,715) -- -- --
Class C ............................................ (3,344,900) (3,006,211) -- --
In excess of net investment income:
Class A ............................................ -- (1,921,957) -- --
Class C ............................................ -- (65,239) -- --
Net realized gains:
Class A ............................................ (230,555) (9,565,776) -- --
Class C ............................................ (10,029) (360,118) -- --
------------------------------------------------------------------------
Total distributions to shareholders .................. (89,407,454) (103,482,624) (8,995,735) (8,423,741)
Capital share transactions: (Note 2)
Class A ............................................. (160,998,579) 110,241,197 (3,869,381) 41,379,720
Class B ............................................. 1,855,986 -- -- --
Class C ............................................. (10,422,063) 27,415,008 -- --
------------------------------------------------------------------------
Total capital share transactions ..................... (169,564,656) 137,656,205 (3,869,381) 41,379,720
Net increase (decrease) in net assets ........... (227,412,541) 82,687,948 (5,667,330) 36,883,339
Net assets:
Beginning of year .................................... $ 1,855,548,418 $ 1,772,860,470 $ 192,546,898 $ 155,663,559
------------------------------------------------------------------------
End of year .......................................... $ 1,628,135,877 $ 1,855,548,418 $ 186,879,568 $ 192,546,898
========================================================================
Undistributed net investment income
(accumulated distributions in excess of net investment
income) included in net assets:
End of year ......................................... $ (1,623,935) $ (1,987,196) $ 279,843 $ 279,782
========================================================================
</TABLE>
See notes to financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
<TABLE>
<CAPTION>
FRANKLIN CALIFORNIA
TAX-EXEMPT MONEY FUND
2000 1999
-------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ................................................................. $ 19,335,474 $ 15,536,781
Net realized loss from investments .................................................... (25,675) (11,084)
-------------------------------
Net increase in net assets resulting from operations ............................. 19,309,799 15,525,697
Distributions to shareholders from net investment income ............................... (19,309,799)* (15,525,697)*
Capital share transactions (Note 2) .................................................... (10,073,959) 50,152,692
-------------------------------
Net increase (decrease) in net assets ............................................ (10,073,959) 50,152,692
Net assets (there is no undistributed net investment income at beginning or end of year):
Beginning of year ...................................................................... 706,877,258 656,724,566
-------------------------------
End of year ............................................................................ $ 696,803,299 $ 706,877,258
===============================
</TABLE>
*Distributions were decreased by net realized loss from security transactions of
$25,675 in 2000 and $11,084 in 1999.
See notes to financial statements.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Franklin California Tax-Free Trust (the Trust) is registered under the
Investment Company Act of 1940 as an open-end investment company, consisting of
three series (the Funds). All Funds are diversified except the Franklin
California Intermediate-Term Tax-Free Income Fund (Intermediate-Term Fund). The
Funds' investment objectives are to provide tax-free income. The Franklin
California Tax-Exempt Money Fund (Money Fund) also seeks to provide high current
income consistent with capital preservation and liquidity.
The following summarizes the Funds' significant accounting policies.
a. SECURITY VALUATION
Tax-free bonds generally trade in the over-the-counter market and are valued
within the range of the latest quoted bid and asked prices. In the absence of a
sale or reported bid and asked prices, information with respect to bond and note
transactions, quotations from bond dealers, market transactions in comparable
securities, and various relationships between securities are used to determine
the value of the security. The Trust may utilize a pricing service, bank or
broker/dealer experienced in such matters to perform any of the pricing
functions under procedures approved by the Board of Trustees. Securities for
which market quotations are not readily available are valued at fair value as
determined by management in accordance with procedures established by the Board
of Trustees.
Securities in the Money Fund are valued at amortized cost which approximates
value.
b. INCOME TAXES
No provision has been made for income taxes because each fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute substantially all of its taxable income.
c. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income and estimated expenses are accrued daily. Bond discount and
premium are amortized on an income tax basis. For the Franklin California
Insured Tax-Free Income Fund (Insured Fund) and the Intermediate-Term 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 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 Insured Fund.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Notes to Financial Statements (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
d. INSURANCE
The scheduled payments of interest and principal for each long-term municipal
security in the Insured Fund are insured by either a new issue insurance policy,
a portfolio insurance policy, a secondary insurance policy, or by collateral
guaranteed by an agency of the U.S. government.
Depending on the type of coverage, premiums for insurance are either added to
the cost basis of the security, included as an expense of the fund, or paid by a
third party.
e. ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
2. SHARES OF BENEFICIAL INTEREST
The classes of shares offered within each of the funds are indicated below.
Effective February 1, 2000, the Insured Fund began offering a new class of
shares, Class B. Each class of shares differs by its initial sales load,
distribution fees, voting rights on matters affecting a single class and its
exchange privilege.
<TABLE>
<CAPTION>
CLASS A CLASS A, CLASS B & CLASS C
----------------------------------------------------------------
<S> <C>
Intermediate-Term Fund Insured Fund
Money Fund
</TABLE>
At June 30, 2000, there were an unlimited number of shares authorized (no par
value). Transactions in the funds' shares were as follows:
<TABLE>
<CAPTION>
INSURED FUND INTERMEDIATE-TERM FUND MONEY FUND
-------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT AMOUNT
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES:
Year ended June 30, 2000
Shares sold .................................. 23,256,442 $ 270,668,689 5,271,846 $ 57,176,503 $ 1,094,130,676
Shares issued in reinvestment of distributions 3,254,614 37,976,179 475,155 5,154,865 19,301,458
Shares redeemed .............................. (40,404,420) (469,643,447) (6,105,607) (66,200,749) (1,123,506,093)
-------------------------------------------------------------------------------
Net decrease ................................. (13,893,364) $ (160,998,579) (358,606) $ (3,869,381) $ (10,073,959)
===============================================================================
Year ended June 30, 1999
Shares sold .................................. 29,553,520 $ 370,514,398 7,753,731 $ 88,121,907 $ 1,033,213,640
Shares issued in reinvestment of distributions 3,539,619 44,284,162 446,478 5,064,927 15,576,778
Shares redeemed .............................. (24,337,250) (304,557,363) (4,571,261) (51,807,114) (998,637,726)
-------------------------------------------------------------------------------
Net increase ................................. 8,755,889 $ 110,241,197 3,628,948 $ 41,379,720 $ 50,152,692
===============================================================================
</TABLE>
FRANKLIN CALIFORNIA TAX-FREE TRUST
Notes to Financial Statements (continued)
2. SHARES OF BENEFICIAL INTEREST (CONT.)
<TABLE>
<CAPTION>
INSURED FUND
----------------------------
SHARES AMOUNT
----------------------------
<S> <C> <C>
CLASS B SHARES:
Year ended June 30, 2000(a)
Shares sold .................................. 159,424 $ 1,849,738
Shares issued in reinvestment of distributions 537 6,248
----------------------------
Net increase ................................. 159,961 $ 1,855,986
============================
CLASS C SHARES:
Year ended June 30, 2000
Shares sold .................................. 1,270,677 $ 14,960,202
Shares issued in reinvestment of distributions 185,479 2,180,509
Shares redeemed .............................. (2,348,447) (27,562,774)
----------------------------
Net decrease ................................. (892,291) $(10,422,063)
============================
Year ended June 30, 1999
Shares sold .................................. 2,862,343 $ 36,108,219
Shares issued in reinvestment of distributions 187,570 2,360,890
Shares redeemed .............................. (878,664) (11,054,101)
----------------------------
Net increase ................................. 2,171,249 $ 27,415,008
----------------------------
</TABLE>
(a)For the period February 1, 2000 (effective date) to June 30, 2000.
3. TRANSACTIONS WITH AFFILIATES
Certain officers and trustees of the Funds are also officers and/or trustees of
Franklin Advisers, Inc. (Advisers), Franklin Templeton Services, Inc. (FT
Services), Franklin/Templeton Distributors, Inc. (Distributors), and
Franklin/Templeton Investor Services, Inc. (Investor Services), the Funds'
investment manager, administrative manager, principal underwriter, and transfer
agent, respectively.
The Insured Fund and the Intermediate-Term Fund pay investment management fees
to Advisers based on the month-end net assets of each fund, and the Money Fund
pays an investment management fee to Advisers based on the average daily net
assets of the fund as follows:
<TABLE>
<CAPTION>
ANNUALIZED
FEE RATE NET ASSETS
-----------------------------------------------------------------
<S> <C>
.625% First $100 million
.500% Over $100 million, up to and including $250 million
.450% In excess of $250 million
</TABLE>
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.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Notes to Financial Statements (continued)
3. TRANSACTIONS WITH AFFILIATES (CONT.)
Advisers agreed in advance to waive management fees for the Intermediate-Term
Fund, as noted in the Statement of Operations.
The Intermediate-Term Fund reimburses Distributors up to .10% per year of its
average daily net assets, and the Insured Fund reimburses Distributors up to
.10%, .65% and .65% per year of the average daily net assets of Class A, Class B
and Class C, respectively, for costs incurred in marketing the Funds' shares.
Distributors paid net commissions on sales of the funds' shares, and received
contingent deferred sales charges for the year as follows:
<TABLE>
<CAPTION>
INSURED INTERMEDIATE- MONEY
FUND TERM FUND FUND
------------------------------------
<S> <C> <C> <C>
Net commissions
paid $316,660 $16,819 --
Contingent deferred
sales charges $104,049 $ 1,648 $23,920
</TABLE>
The Funds paid transfer agent fees of $1,042,725 of which $841,607 was paid to
Investor Services.
Included in professional fees are legal fees of $13,552 that were paid to a law
firm in which a partner of that firm was an officer of the Funds.
4. INCOME TAXES
At June 30, 2000, the Funds had tax basis capital losses which may be carried
over to offset future capital gains. Such losses expire as follows:
<TABLE>
<CAPTION>
INSURED INTERMEDIATE- MONEY
FUND TERM FUND FUND
---------------------------------------
<S> <C> <C> <C>
Capital loss carryovers
expiring in:
2003 $ -- $102,640 $14,563
2005 -- -- 1,444
2006 -- -- 9,957
2007 -- -- 4,593
2008 13,879,097 90,667 9,293
---------------------------------------
$13,879,097 $193,307 $39,850
=======================================
</TABLE>
At June 30, 2000, the Insured Fund, the Intermediate-Term Fund and the Money
Fund have deferred capital losses occurring subsequent to October 31, 1999 of
$7,910,125, $319,995 and $25,675, respectively. For tax purposes, such losses
will be reflected in the year ending June 30, 2001.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Notes to Financial Statements (continued)
4. INCOME TAXES (CONT.)
Distributions of income to shareholders may not equal net investment income due
to differing treatments of dividend distributions for book and tax purposes.
Net realized capital gains differ for financial statement and tax purposes
primarily due to differing treatment of wash sales.
At June 30, 2000, the net unrealized appreciation based on the cost of
investments for income tax purposes was as follows:
<TABLE>
<CAPTION>
INSURED INTERMEDIATE-
FUND TERM FUND
--------------------------------
<S> <C> <C>
Investments at cost $1,581,456,870 $184,021,780
================================
Unrealized appreciation $ 48,829,289 $ 2,948,337
Unrealized depreciation (21,765,968) (2,672,352)
--------------------------------
Net unrealized appreciation $ 27,063,321 $ 275,985
================================
</TABLE>
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the year
ended June 30, 2000 were as follows:
<TABLE>
<CAPTION>
INSURED INTERMEDIATE-
FUND TERM FUND
------------------------------
<S> <C> <C>
Purchases $490,476,346 $19,256,158
Sales $653,752,520 $40,640,646
</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.
FRANKLIN CALIFORNIA TAX-FREE TRUST
Independent Auditors' Report
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
OF FRANKLIN CALIFORNIA TAX-FREE TRUST
In our opinion, the accompanying statements of assets and liabilities, including
the statements of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of each of the funds included in this
report constituting the Franklin California Tax-Free Trust (hereafter referred
to as the "Funds") at June 30, 2000, the results of each of their operations for
the year then ended, the changes in each of their net assets for each of the two
years in the period then ended and the financial highlights for each of the
periods presented, in conformity with accounting principles generally accepted
in the United States. These financial statements and financial highlights
(hereafter referred to as financial statements) are the responsibility of the
Funds' management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at June 30, 2000 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
San Francisco, California
August 4, 2000
FRANKLIN CALIFORNIA TAX-FREE TRUST
Tax Designation
Under Section 852(b)(5)(A) of the Internal Revenue Code, the Trust hereby
designates 100% of the distributions paid from net investment income as
exempt-interest dividends for the fiscal year ended June 30, 2000.
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