-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MDNIOwN51/e1s8q9pioC9eXvrnPArK1l56PqW22pRAD6ftz+f/Pi+jKXxJQDmvti LmrqnTpO6l9K1HA+FcLnQw== 0000773478-00-000004.txt : 20000313 0000773478-00-000004.hdr.sgml : 20000313 ACCESSION NUMBER: 0000773478-00-000004 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000310 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FRANKLIN CALIFORNIA TAX FREE TRUST CENTRAL INDEX KEY: 0000773478 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-04356 FILM NUMBER: 565892 BUSINESS ADDRESS: STREET 1: 777 MARINERS ISLAND BLVD CITY: SAN MATEO STATE: CA ZIP: 94404 BUSINESS PHONE: 4153122000 MAIL ADDRESS: STREET 1: 777 MARINERS ISLAND BLVD CITY: SAN MATEO STATE: CA ZIP: 94404 N-30D 1 SHAREHOLDER LETTER Dear Shareholder: This semiannual report for Franklin California Tax-Free Trust covers the period ended December 31, 1999. BOND MARKET OVERVIEW During the six months under review, U.S. bond markets continued to experience challenging times. The yield on the benchmark 30-year Treasury bond steadily increased, from 5.96% at the beginning of the reporting period, to 6.48% on December 31, 1999 -- reaching a high of 6.49% on December 23, 1999. For the same period, the 30-year Treasury bond price dropped 7.8%, as bond prices and yields move in opposite directions so that as yields rise, bond prices fall. Concerned about domestic inflationary tendencies, the Federal Reserve Board (the Fed) raised the federal funds target rate from 5.00% to 5.50% in two incremental steps during the reporting period. The economy's direction and its effect on inflationary pressures will contribute to the level of volatility that impacts bond markets in the near future. During the period under review, many investors reacted swiftly to new releases of economic data or Fed announcements, and in many instances the market overcorrected. Investors with short-term investment horizons may view such instability as unfavorable. CONTENTS Shareholder Letter ......... 1 Special Feature: Uncovering Tax-Free Opportunities .............. 4 Fund Reports Franklin California Insured Tax-Free Income Fund ...... 10 Franklin California Intermediate-Term Tax-Free Income Fund ...... 16 Franklin California Tax-Exempt Money Fund ..... 20 Municipal Bond Ratings ..... 23 Financial Highlights & Statement of Investments ... 26 Financial Statements ....... 54 Notes to Financial Statements ....... 59 [PYRAMID GRAPHIC] However, we prefer to take a long-term approach toward investing, and we find that recent market fluctuations afforded us opportunities not only to increase the funds' income-earning potential, but also to enhance the portfolios' overall structures. CALIFORNIA UPDATE In California, the six-month review period marked the state's sixth consecutive year of economic expansion and fifth straight year in which the state's economic growth and job creation exceeded the national average. Although the state's 4.8% unemployment rate still topped the 4.1% national average in October, this rate dropped faster than the national average during the reporting period.(1) California's economic expansion also translated into a record year for its housing market, with an estimated 8% increase in the median home price for 1999.(2) The state's diversified and growing economy, as well as its improved fiscal management, contributed to Moody's decision to upgrade California's debt to Aa3 on October 15.(3) 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 all viewed California's credit as double-A. California ended fiscal 1999 with $9.6 billion in available resources, due to general and special fund surpluses, the largest amount the state has had in over two decades. These sizable balances, which should help cushion the negative impacts of any future recessions, and projections for further California economic growth, albeit at a slower rate than that of the last two years, underlie the state's rosy credit outlook.(3) 1. Source: Bureau of Labor Statistics, 12/16/99. 2. Source: California Association of REALTORS, PR Newswire, 10/20/99. 3. Source: Moody's Investors Service, 10/15/99. This does not indicate Moody's rating of the fund. 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. We encourage you to discuss your financial goals with an investment representative. Mutual funds offer a level of diversification that is difficult for individual investors to achieve on their own. As always, we appreciate your support, welcome your questions and look forward to serving your investment needs in the years ahead. Sincerely, /s/ C. B. Johnson Charles B. Johnson Chairman Franklin California Tax-Free Trust /s/ 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.(4) You can find your fund's taxable equivalent distribution rate and yield in the Performance Summary that follows your fund's report. 4. For investors subject to the federal or state 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. UNCOVERING TAX-FREE OPPORTUNITIES SPECIAL FEATURE [PHOTO OF RAFAEL COSTAS] Rafael Costas, Senior Vice President and Co-Director of Franklin's Municipal Bond Department, discusses how research is an integral part of Franklin's tax-free income funds' success. Q: Could you provide an overview of Franklin's research department? RAFAEL COSTAS: We have one of the industry's largest municipal research staffs, allowing us to routinely analyze more than 2,000 debt issuers a year. The research department analysts work closely with our portfolio managers, who rely on these analysts when making buy and sell decisions. With a focus on in-depth research and the discipline to buy when others are selling, we often are able to find exciting opportunities, at temporarily depressed prices. Generally, we concentrate on investment grade issues. Of course, for our high yield funds, we also look for below investment-grade bonds that we feel offer appropriate rewards for the increased risk. Q: What are some advantages of Franklin's size and reputation? RAFAEL: Today, Franklin is one of the nation's leading tax-free fund managers. Our size, with approximately $45 billion of tax-free investments, often enables us to purchase investments at advantageous prices, which in turn, can help keep investment costs low. We pass on these savings to shareholders in the form of higher tax-free yields.(1) In addition, our size often makes us a favorite of new issuers, as many prefer to work with a minimum number of investors. This page is not part of the shareholder report. Q: What type of tax-free bonds do you favor? RAFAEL: We typically look for investment-grade bonds, as we try to provide our shareholders high, current income with a relatively low level of risk. Most of our investment grade tax-free bond funds are composed of a high percentage of securities rated AAA or AA, the highest ratings bonds can receive from independent credit rating agencies.(2) In addition, many of our purchases are insured because of the prevalence of insurance in the municipal bond marketplace in the past few years. Insured securities normally are rated AAA, further improving the quality of our funds. For our high yield funds, we look for bonds which may be out of favor but, in our view, still have solid fundamentals and the potential to be upgraded. In fact, we devote much of our research efforts to finding such bonds in the low investment-grade, high yield sectors. Q: How do you research a bond? RAFAEL: We emphasize detailed, high-quality research, which often enables us to uncover attractive investments that others may have overlooked. When presented with an opportunity, our analysts carefully consider such factors as the bond's purpose, who will repay the bond, if the projections are reasonable, the payment schedule and the issuer's credit history. We incorporate all of the numerical findings in our internal, proprietary databases and spreadsheets created by our analysts. With the processed information and analysis, we meet with our portfolio managers to discuss the merits of each individual issue. The portfolio manager's decision to buy a security will depend largely on our analysis of the bond's credit quality and price. We continue to monitor our investments closely after the purchase, looking for signs of potential problems as well as additional opportunities. 1. For investors subject to the federal or state 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. 2. Ratings can change. This page is not part of the shareholder report. Q: Do you feel it is important to personally meet management and municipal officials? RAFAEL: Very much so. Each year Franklin's analysts and portfolio managers visit hundreds of sites to garner an understanding that can be obtained only through personal inspection. They meet face-to-face with the project's management and municipal officials to discuss firsthand any potential problems. Our analysts also can use these meetings to discover new opportunities, often before they are widely known. Q: Do issuers and investment bankers ever come to Franklin? RAFAEL: Our sizable presence in the municipal bond market frequently means that issuers and their bankers come to us with new issues. In a typical day, we may receive between 50 and 100 calls from brokers offering new and secondary issues. Approximately three times a week, investment bankers visit our offices, usually as part of an issue's road show. We view these as excellent opportunities not only to buy issues at favorable prices, but also to propose changes to the issue, enhancing its quality and appeal to our distinct standards. This page is not part of the shareholder report. Q: How can Franklin's research influence the portfolio managers' investment decisions? RAFAEL: Our extensive research allows us to use a contrarian approach to investing, because we firmly believe that near-term volatility can create opportunities for greater long-term yields. For example, when Moody's, Standard & Poor's or Fitch, three independent rating agencies, downgrade a bond, many investors sell the issue, sometimes reducing prices to what we believe are attractive levels. As we evaluate our investments based on our internal assessments, we can use these valuable opportunities to purchase what we believe are high-quality issues at temporarily depressed prices. External events can also lead to situations where bonds become undervalued. Over the past few years, for example, Medicare reform negatively affected the hospital bond sector, even for those hospitals in strong financial shape. As many hospitals' credit profiles weakened, we were able to find value selectively through our analysts' expertise. Seeking to take advantage of this, we recommended such bonds to our portfolio managers who purchased them at a time when the market seemed to be shunning these issues. WHAT IS A ROAD SHOW? Before a new issue is brought to the public, the issuer and its investment bankers travel around the country making presentations to potential investors concerning the issuer's financial information and outlook. This page is not part of the shareholder report. Q: Could you provide an example of a successful outcome of your research? RAFAEL: Sure. A perfect example is Tucson Electric Power (TEP). It issued $579 million in tax-exempt debt in 1997-98. However, the utility had a long, troubled history and its debt was rated below investment grade. So, Molly Butler, our electric utility analyst, and I flew to Tucson and spent an entire day with TEP's top executives and division heads. We discussed their history, current position and future plans as well as challenged and questioned many of their projections and assumptions. At the end of the day, we were satisfied that their management team had a clear vision and a realistic plan for the future. [Photo] Municipal research analyst Molly Butler discusses a bond issue with portfolio manager Stella Wong. This page is not part of the shareholder report. Q: How is TEP doing today? RAFAEL: Since then, the rating agencies have raised TEP's credit rating and the bonds have seen a significant increase in value. Of course, the ratings can change again in the future. However, the bonds are still offering above-market yields for our shareholders, because we were able to purchase the securities when they were unpopular. We have an excellent relationship with management and they often call Ms. Butler to discuss the latest releases of information. THANK YOU, RAFAEL. This page is not part of the shareholder report. 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) Domestic economic expansion and recovery abroad contributed to rising interest rates during the six-month reporting period, even though this growth took place with only moderate inflation. As interest rates increased, bond yields rose accordingly. As of the reporting period's end, bond traders and investors feared that continued economic growth, coupled with a tight labor market and rising commodity prices, would lead to further Federal Reserve Board interest-rate hikes. These fears resulted in negative sentiment toward the bond market, which drove Treasury long-bond rates to their highest levels in two years. 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 market value of the insured security, the value of the fund's shares, or the fund's distributions. Shares of the fund are not insured. No representation is made as to the ability of any insurer to meet its obligation to the fund if called upon to do so. You will find a complete listing of the fund's portfolio holdings, including dollar value and number of shares or principal amount, beginning on page 28 of this report. Such 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 six months ended December 31, 1999, Franklin California Insured Tax-Free Income Fund's Class A share price was down 5.1%. Compared to the broader fixed-income market, however, the fund performed quite well. Over the same period, the 30-year Treasury bond price fell 7.8%, while the Bond Buyer 40, a reasonable indicator of the municipal bond market, was off 9.0%.(3) The portfolio's conservative buy-and-hold, income-oriented investment philosophy contributed to its superior performance, relative to the entire fixed- income market. The fund continued to hold a significant percentage of higher coupon bonds from previous, higher interest-rate periods. Over time, this strategy can lower share price volatility, reduce portfolio turnover and provide greater current income. During the reporting period, we were able to take advantage of the rising interest rate environment to improve the portfolio structure, enabling the fund to capture greater yields, improve call protection and book tax losses. These losses can then be carried forward to help offset any current or future taxable capital gains, possibly lowering shareholders' tax liabilities. PORTFOLIO BREAKDOWN Franklin California Insured Tax-Free Income Fund 12/31/99
% OF TOTAL LONG-TERM SECTOR INVESTMENTS - ------------------------------------- Utilities 19.9% Tax-Supported 18.5% Prerefunded 14.4% Subject to Government Appropriation 11.5% General Obligation 10.0% Hospital & Health Care 9.2% Transportation 8.1% Higher Education 4.5% Housing 2.9% Other Revenue 0.9% Corporate-Backed 0.1%
3. 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 the composition of bonds in the index changes 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. One cannot invest directly in an index. In another trend characterizing the municipal bond market, bond insurance remained prevalent, representing more than 65% of 1999's national new issuance. Given the large amount of insured bonds on the market and the relatively small difference in yields between higher- and lower-rated credits, we concentrated on buying higher-grade, essential purpose issues. As of December 31, 1999, two of the fund's largest holdings were California State General Obligation and California Educational Facilities Authority Revenue for Stanford University bonds, which represented 5.93% and 3.46% of the fund's total long-term investments, respectively. DIVIDEND DISTRIBUTIONS* Franklin California Insured Tax-Free Income Fund 7/1/99 - 12/31/99
DIVIDEND PER SHARE ------------------------------- MONTH CLASS A CLASS 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 - --------------------------------------------------------- TOTAL 30.30 CENTS 27.01 CENTS
*Assumes shares were purchased and held for the entire accrual period. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity during the month. Income distributions and total return calculations include all accrued income earned by the fund during the reporting period. Distributions will vary based on the earnings of the fund's portfolio, and past distributions are not predictive of future trends. The reporting period comes near the close of two years with very large municipal bond issuance for the U.S. In 1998, new supply nationally reached a near-record $280 billion, while 1999 issuance followed at a solid pace, possibly reaching $225 billion by year-end. Supply should stabilize looking forward, as the higher interest-rate environment significantly reduces refunding opportunities. Diminishing expectations for primary and secondary bond issuance should result in continued solid demand for institutional and retail California municipal bonds. With the California municipal bond-to-Treasury yield ratio above 91% at the reporting period's end, we believe the fund is well-positioned to perform favorably in the future. This discussion reflects our views, opinions and portfolio holdings as of December 31, 1999, the end of the reporting period. 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 (formerly Class I): Subject to the current, maximum 4.25% initial sales charge. Prior to July 1, 1994, fund shares were offered at a lower initial sales charge; thus actual total returns may differ. Effective May 1, 1994, the fund eliminated the sales charge on reinvested dividends and implemented a Rule 12b-1 plan, which affects subsequent performance. CLASS C (formerly Class II): Subject to 1% initial sales charge and 1% contingent deferred sales charge for shares redeemed within 18 months of investment. These shares have higher annual fees and expenses than Class A shares. SIX-MONTH PERFORMANCE SUMMARY AS OF 12/31/99 Six-month 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. Past distributions are not indicative of future trends. All total returns include reinvested distributions at net asset value. CLASS A Six-Month Total Return -2.61% Net Asset Value (NAV) (12/31/99) $11.50 (6/30/99) $12.12 Change in NAV -$0.62 Distributions (7/1/99-12/31/99) Dividend Income $0.3030 Long-Term Capital Gain $0.0016 ------------------------------------- Total $0.3046
CLASS C Six-Month Total Return -2.86% Net Asset Value (NAV) (12/31/99) $11.58 (6/30/99) $12.20 Change in NAV -$0.62 Distributions (7/1/99-12/31/99) Dividend Income $0.2701 Long-Term Capital Gain $0.0016 ------------------------------------- Total $0.2717
Past performance does not guarantee future results. ADDITIONAL PERFORMANCE AS OF QUARTER ENDED 12/31/99
INCEPTION CLASS A 1-YEAR 5-YEAR 10-YEAR (9/3/85) - -------------------------------------------------------------------------------- Cumulative Total Return(1) -3.56% +34.73% +84.65% +174.17% Average Annual Total Return(2) -7.68% +5.23% +5.86% +6.97%
INCEPTION CLASS C 1-YEAR 3-YEAR (5/1/95) - -------------------------------------------------------------------------------- Cumulative Total Return(1) -4.01% +9.39% +23.02% Average Annual Total Return(2) -5.90% +2.70% +4.31%
SHARE CLASS A C - ------------------------------------------------------------ Distribution Rate(3) 5.05% 4.64% Taxable Equivalent Distribution Rate(4) 9.22% 8.47% 30-Day Standardized Yield(5) 4.70% 4.30% Taxable Equivalent Yield(4) 8.58% 7.85%
1.Cumulative total return represents the change in value of an investment over the periods indicated and does not include sales charges. 2. Average annual total return represents the average annual change in value of an investment over the periods indicated and includes the current, applicable, maximum sales charge(s) for that class. 3. Distribution rate is based on an annualization of the respective class's current monthly dividend and the maximum offering price per share on December 31, 1999. 4. Taxable equivalent distribution rate and yield assume the 1999 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 December 31, 1999. Bond prices, and thus the fund's share price, generally move in the opposite direction from interest rates. Since markets can go down as well as up, investment return and principal value will fluctuate with market conditions, and you may have a gain or loss when you sell your shares For updated performance figures, see "Prices and Performance" on the Internet at www.franklintempleton.com, or call Franklin Templeton at 1-800/342-5236. Past performance does not guarantee future results. CREDIT QUALITY BREAKDOWN* Franklin California Intermediate-Term Tax-Free Income Fund Based on Total Long-Term Investments 12/31/99 [PIE CHART]
BELOW INVESTMENT AAA AA A BBB GRADE 27.2% 9.4% 17.5% 45.8% 0.1%
*Quality breakdown may include internal ratings for bonds not rated by an independent rating agency. FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND Your Fund's Goal: Franklin California Intermediate-Term Tax-Free Income Fund seeks to provide high, current income exempt from regular federal and California state personal income taxes while seeking preservation of capital. The fund invests primarily in a portfolio of California municipal securities with an average weighted maturity (the time in which the debt must be repaid) between three and 10 years.(1) Economic growth nationally revived the specter of inflation and prompted the Federal Reserve Board to raise short-term interest rates. Demand by individuals for shorter term municipal bonds, along with rising long-term interest rates brought the previously flat yield curve back to its more typical shape. The yield curve represents the difference in yield between long- and short-term bonds. Normally, the curve is sloped, representing the higher yield compensation that usually accompanies greater risk, long-term bonds. 1. For investors subject to the federal alternative minimum tax, a small portion of this income may be subject to such tax. Distributions of capital gains and of ordinary income from accrued market discount, if any, are generally taxable. You will find a complete listing of the fund's portfolio holdings, including dollar value and number of shares or principal amount, beginning on page 41 of this report. In California, your fund was subject to the generally rising interest rates that put pressure on bond prices. For the six months ended December 31, 1999, Franklin California Intermediate-Term Tax-Free Income Fund's Class A share price declined 2.6%. Compared to the broader fixed-income market, however, the fund performed reasonably well. Over the same period, the 10-year Treasury bond price fell 4.85%, while the fund's benchmark, the Lehman Brothers Muni 10-Year Bond Index was off 2.51%.(2) DIVIDEND DISTRIBUTIONS* Franklin California Intermediate-Term Tax-Free Income Fund - Class A 7/1/99 - 12/31/99
DIVIDEND MONTH PER SHARE - ----------------------------------------------- July 4.20 cents August 4.20 cents September 4.30 cents October 4.30 cents November 4.30 cents December 4.33 cents - ----------------------------------------------- TOTAL 25.63 CENTS
*Assumes shares were purchased and held for the entire accrual period. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity during the month. Income distributions and total return calculations include all accrued income earned by the fund during the reporting period. Distributions will vary based on the earnings of the fund's portfolio, and past distributions are not predictive of future trends. PORTFOLIO BREAKDOWN Franklin California Intermediate-Term Tax-Free Income Fund 12/31/99
% OF TOTAL LONG-TERM SECTOR INVESTMENTS - ------------------------------------- Tax-Supported 38.4% Subject to Government Appropriation 17.9% Utilities 14.9% Hospital & Health Care 11.9% Prerefunded 5.3% Housing 3.6% Transportation 3.2% General Obligation 2.1% Higher Education 1.8% Other Revenue 0.8% Corporate-Backed 0.1%
2. Source: Lehman Brothers(R). Index is unmanaged and includes reinvested dividends. One cannot invest directly in an index. WHAT IS A PREREFUNDED BOND? When a bond is prerefunded, a new issue is brought to market with a lower interest rate to pay off an older, original issue at its first call date. In most cases, the proceeds from the sale of the new bonds are invested in U.S. Treasury securities that mature on the first call date of the original bonds. Because of the U.S. Treasury backing, and thus lower risk, prerefunded bonds usually experience a substantial price increase -- depending on their call date. Generally, we look to sell prerefunded bonds as they approach five years to their call date. At this point, the premium on prerefunded bonds often begins to decline rapidly to the stated call price. Our strategy aims to capture the bond's premium, increase the fund's call protection and protect its share value. The reporting period was not a particularly active one for the fund. We sold prerefunded bonds seeking to capture their premium and meet cash needs. At the same time we also sold longer maturity, lower coupon bonds at a discount. In this way, we offset the gains from selling higher coupon bonds and avoided some capital gains taxes. The fund's purchases during the reporting period included San Francisco City and County bonds, which offered an attractive yield and insured status. Meanwhile, the rise in interest rates enabled the fund to increase its dividend by three-hundredths of a cent per share in December. Compared to 1998's near-record issuance, national municipal bond supply decreased in 1999 and is expected to be approximately the same next year. With reduced supply, plus institutional and retail demand that should remain strong, the outlook is positive for the municipal bond market generally and the fund in particular. This discussion reflects our views, opinions and portfolio holdings as of December 31, 1999, the end of the reporting period. 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. SIX-MONTH PERFORMANCE SUMMARY AS OF 12/31/99 Six-month 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. Past distributions are not indicative of future trends. All total returns include reinvested distributions at net asset value.
CLASS A Six-Month Total Return -0.30% Net Asset Value (NAV) (12/31/99) $10.73 (6/30/99) $11.02 Change in NAV -$0.29 Distributions (7/1/99-12/31/99) Dividend Income $0.2563
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND CLASS A: Subject to the maximum 2.25% initial sales charge. The fund's manager agreed in advance to waive a portion of the management fees, which reduces operating expenses and increases distribution rate, yield and total return to shareholders. Without this waiver, the fund's distribution rate and total return would have been lower, and the yield for the period would have been 4.42%. The fee waiver may be discontinued at any time upon notice to the fund's Board of Directors. ADDITIONAL PERFORMANCE AS OF QUARTER ENDED 12/31/99
INCEPTION CLASS A 1-YEAR 5-YEAR (9/21/92) - -------------------------------------------------------------------------------------------------- Cumulative Total Return(1) -1.40% +38.46% +51.32% Average Annual Total Return(2) -3.60% +6.23% +5.53% Distribution Rate(3) 4.73% Taxable Equivalent Distribution Rate(4) 8.63% 30-Day Standardized Yield(5) 4.55% Taxable Equivalent Yield(4) 8.31%
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 4.33 cent per share monthly dividend and the maximum offering price of $10.98 on December 31, 1999. 4. Taxable equivalent distribution rate and yield assume the 1999 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 December 31, 1999. Bond prices, and thus the fund's share price, generally move in the opposite direction from interest rates. Since markets can go down as well as up, investment return and principal value will fluctuate with market conditions, and you may have a gain or loss when you sell your shares. For updated performance figures, see "Prices and Performance" on the Internet at www.franklintempleton.com, or call Franklin Templeton at 1-800/342-5236. 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) For the six months under review, domestic economic growth accelerated well above the Federal Reserve Board's (the Fed's) targeted 3% long-term growth rate. Real gross domestic product (GDP) grew at blistering rates of 5.7% and 5.8% for the third and fourth quarters of 1999, respectively. Higher equity and real estate prices, increasing wages and a tight labor market spurred consumer spending, while a rebound in the manufacturing sector and improving international economic fundamentals also contributed to the expanding domestic economy. 1. There is no assurance that the fund's $1.00 per share price will be maintained. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. You will find a complete listing of the fund's portfolio holdings, including dollar value and number of shares or principal amount, beginning on page 49 of this report. However, this growth led to a moderate rise in inflation during the third quarter, as measured by the Consumer Price Index's (CPI's) increase from 2.00% in June to 2.60% in September. The Fed responded to this strong growth and slightly higher inflation by increasing the federal funds target rate during the reporting period from 5.00% to 5.50%. In turn, bond prices dropped, but yields increased, a positive outcome for money market fund shareholders. In this environment, Franklin California Tax-Exempt Money Fund's seven-day effective yield moved up, from 3.05% on June 30, 1999, to 3.51% on December 31, 1999. The portfolio's investment strategy continues to emphasize high quality and liquidity. We manage the fund more conservatively than SEC guidelines require, seeking to ensure the safety and stability of the fund's principal. For example, SEC guidelines allow tax-exempt money funds to purchase both first- and second-tier securities. Franklin Templeton purchases only first-tier securities for inclusion in its tax-exempt money market portfolios. Although also allowed by the SEC for money market funds, we do not buy any derivative securities in our tax-exempt money funds -- we purchase only plain vanilla, short-term securities. We eliminated our exposure to Japanese bank guarantees several years ago because of the problems these banks were having. This philosophy of purchasing securities only from what we believe are the most creditworthy institutions may result in lower returns compared to other money funds. However, the fund managers believe that the increased yield offered by lower-rated and less liquid securities does not justify the added risk to shareholders. During the reporting period, the fund participated in several attractive deals including Riverside County commercial paper, California State general obligation bonds, Los Angeles Department of Water and Power Electric Plant Revenue commercial paper and California State Economic Development Financing Authority Revenue Independent System VRDNs. This discussion reflects our views, opinions and portfolio holdings as of December 31, 1999, the end of the reporting period. 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 TAX-EXEMPT MONEY FUND PERFORMANCE SUMMARY 12/31/99 Seven-day effective yield(1) 3.51% Seven-day annualized yield 3.45% Taxable equivalent yield(2) 6.31%
(1) The seven-day effective yield assumes the compounding of daily dividends. (2) Taxable equivalent yield assumes the 1999 maximum combined federal and California state personal income tax bracket of 45.22%, based on the federal income tax rate of 39.6%. Annualized and effective yields are for the seven-day period ended December 31, 1999. The fund's average weighted maturity was 40 days. Yield reflects fluctuations in interest rates on portfolio investments, and fund expenses. Past performance does not guarantee future results. MUNICIPAL BOND RATINGS MOODY'S Aaa: Best quality. They carry the smallest degree of investment risk and generally are referred to as "gilt-edged." Interest payments are protected by a large or exceptionally stable margin, and principal is secure. Although the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Aa: High quality by all standards. Together with the Aaa group, they comprise what generally are known as high-grade bonds. Aa bonds are rated lower than Aaa because margins of protection may not be as large, fluctuation of protective elements may be of greater amplitude, or there may be other elements which make the long-term risks appear larger. A: Possess many favorable investment attributes and are considered upper medium-grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future. Baa: Medium-grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present, but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Ba: Contain speculative elements. Often the protection of interest and principal payments may be very moderate and, thereby, not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. B: Generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small. Caa: Poor standing. Such issues may be in default, or elements of danger with respect to principal or interest may be present. Ca: Obligations that are highly speculative. Such issues are often in default or have other marked shortcomings. C: Lowest-rated class of bonds. Issues rated C can be regarded as having extremely poor prospects of ever attaining any real investment standing. S&P(R) AAA: The highest rating assigned by S&P to a debt obligation and indicates the ultimate degree of protection as to principal and interest. AA: Also qualify as high-grade obligations, and, in the majority of instances, differ from AAA issues only in a small degree. A: Generally regarded as upper medium-grade. They have considerable investment strength but are not entirely free from adverse effects of changes in economic and trade conditions. Interest and principal are regarded as safe. BBB: Regarded as having an adequate capacity to pay principal and interest. Whereas they normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay principal and interest for bonds in this category than for bonds in the A category. BB, B, CCC, CC: Bonds rated BB, B, CCC and CC are regarded, on balance, as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligations. BB indicates the lowest degree of speculation and CC the highest degree of speculation. While such bonds likely will have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. C: Reserved for income bonds on which no interest is being paid. D: Debt rated D is in default and payment of interest and/or repayment of principal is in arrears. FRANKLIN CALIFORNIA TAX-FREE TRUST Financial Highlights FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND
CLASS A --------------------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, DECEMBER 31, 1999+ --------------------------- (UNAUDITED) 1999+ 1998 ----------- ----------- ---------- PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the period) Net asset value, beginning of period $ 12.12 $ 12.47 $ 12.22 ---------- ---------- ---------- Income from investment operations: Net investment income .31 .61 .64 Net realized and unrealized gains (losses) (.62) (.26) .37 ---------- ---------- ---------- Total from investment operations (.31) .35 1.01 ---------- ---------- ---------- Less distributions from: Net investment income (.31) (.62) (.64) In excess of net investment income -- (.01) -- Net realized gains -- (a) (.07) (.12) ---------- ---------- ---------- Total distributions (.31) (.70) (.76) ---------- ---------- ---------- Net asset value, end of period $ 11.50 $ 12.12 $ 12.47 ========== ========== ========== Total return* (2.61%) 2.76% 8.38% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's) $1,635,928 $1,775,212 $1,717,489 Ratios to average net assets: Expenses .60%** .60% .60% Net investment income 5.16%** 4.91% 5.11% Portfolio turnover rate 20.30% 15.53% 21.66%
CLASS A YEAR ENDED JUNE 30, -------------------------------------------- 1997 1996 1995 ---------- ---------- ---------- PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the period) Net asset value, beginning of period $ 12.01 $ 11.95 $ 11.74 Income from investment operations: Net investment income .66 .67 .68 Net realized and unrealized gains (losses) .21 .06 .20 ---------- ---------- ----------- Total from investment operations .87 .73 .88 ---------- ---------- ----------- Less distributions from: Net investment income (.66) (.67) (.67) In excess of net investment income -- -- -- Net realized gains -- -- -- ---------- ---------- ----------- Total distributions (.66) (.67) (.67) ---------- ---------- ----------- Net asset value, end of period $ 12.22 $ 12.01 $ 11.95 ========== ========== =========== Total return* 7.41% 6.18% 7.80% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's) $1,635,543 $1,588,631 $1,468,080 Ratios to average net assets: Expenses .60% .60% .59% Net investment income 5.41% 5.50% 5.77% Portfolio turnover rate 20.40% 14.22% 11.85%
*Total return does not reflect sales commissions or the contingent deferred sales charge, and is not annualized for periods less than one year. **Annualized. +Based on average shares outstanding. (a)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.)
CLASS C -------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, DECEMBER 31, 1999+ ----------------------------------------------------------- (UNAUDITED) 1999+ 1998 1997 1996 1995++ ----------- -------- -------- -------- -------- ------- PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the period) Net asset value, beginning of period $ 12.20 $ 12.55 $ 12.29 $ 12.07 $ 11.99 $ 11.88 -------- -------- -------- -------- -------- ------- Income from investment operations: Net investment income .27 .55 .58 .59 .60 .11 Net realized and unrealized gains (losses) (.62) (.27) .37 .22 .08 .10 -------- -------- -------- -------- -------- ------- Total from investment operations (.35) .28 .95 .81 .68 .21 -------- -------- -------- -------- -------- ------- Less distributions from: Net investment income (.27) (.55) (.57) (.59) (.60) (.10) In excess of net investment income -- (.01) -- -- -- -- Net realized gains --(a) (.07) (.12) -- -- -- -------- -------- -------- -------- -------- ------- Total distributions (.27) (.63) (.69) (.59) (.60) (.10) -------- -------- -------- -------- -------- ------- Net asset value, end of period $ 11.58 $ 12.20 $ 12.55 $ 12.29 $ 12.07 $ 11.99 ======== ======== ======== ======== ======== ======= Total return* (2.86%) 2.16% 7.80% 6.86% 5.70% 1.79% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's) $ 72,191 $ 80,336 $ 55,371 $ 34,899 $ 18,458 $ 507 Ratios to average net assets: Expenses 1.16%** 1.16% 1.16% 1.16% 1.17% 1.17%** Net investment income 4.60%** 4.35% 4.55% 4.81% 4.96% 5.03%** Portfolio turnover rate 20.30% 15.53% 21.66% 20.40% 14.22% 11.85%
*Total return does not reflect sales commissions or the contingent deferred sales charge, and is not annualized for periods less than one year. **Annualized. +Based on average shares outstanding. ++For the period May 1, 1995 (effective date) to June 30, 1995. (a)The fund made a capital gain distribution of $.0016 See notes to financial statements. FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED)
PRINCIPAL FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE - ------------------------------------------------ ---------- ----- LONG TERM INVESTMENTS 97.3% BONDS 95.4% ABAG Finance Authority For Nonprofit Corps. COP, Lincoln Child Center Inc., Insured, 6.125%, 11/01/24 .............................................. $ 2,055,000 $ 1,999,885 Lytton Gardens Inc., Insured, 6.00%, 2/15/30 ...................................................... 3,500,000 3,386,250 Odd Fellows Home, Insured, 6.00%, 8/15/24 ......................................................... 5,000,000 4,789,150 ABAG Revenue, Tax Allocation, RDA Pool, Series A2, FSA Insured, 6.60%, 12/15/24 ....................... 10,775,000 11,567,609 Alameda County COP, Municipal Custodial Receipts, Series 1, BIG Insured, Pre-Refunded, 7.25%, 12/01/07 ..................................................................... 2,000,000 2,097,020 Alameda County Water District Revenue COP, Water Systems Project, FGIC Insured, Pre-Refunded, 6.00%, 6/01/20 ........................................................ 1,000,000 1,068,680 Alhambra City Elementary School District, Series A, FSA Insured, 5.60%, 9/01/24 ....................... 2,065,000 1,971,972 Alhambra COP, Police Facilities AD No. 91-1, AMBAC Insured, 6.75%, 9/01/23 ............................ 10,730,000 11,232,164 Alvord USD, Series C, FSA Insured, 5.375%, 8/01/29 .................................................... 2,960,000 2,697,596 Anaheim PFA Revenue, Local Agency, CFD, Refunding, Series A, MBIA Insured, 5.75%, 9/01/14 ............. 3,790,000 3,833,471 Arcadia USD, GO, Series B, FGIC Insured, 5.875%, 7/01/20 .............................................. 1,985,000 1,976,782 Arcata Joint Powers Financing Authority Tax Allocation Revenue, Community Development Project Loan, Series A, AMBAC Insured, 6.00%, 8/01/23 ............................................................. 5,690,000 5,708,037 Arcata Joint Powers Financing Authority Wastewater Revenue, FSA Insured, 5.80%, 12/01/22 .............. 1,080,000 1,062,461 Barstow RDA, Tax Allocation, Central Redevelopment Project, Series A, MBIA Insured, 6.25%, 9/01/22 .... 2,000,000 2,040,080 Beaumont USD, COP, Refunding, Series A, FSA Insured, 5.80%, 1/01/21 ................................... 1,500,000 1,478,520 Benicia COP, Water System Project, Refunding, AMBAC Insured, 6.125%, 11/01/17 ......................... 2,995,000 3,034,804 Benicia USD, Series A, AMBAC Insured, Pre-Refunded, 6.85%, 8/01/16 .................................... 5,900,000 6,231,816 Brea Olinda USD, GO, Series A, FGIC Insured, 5.60%, 8/01/20 ........................................... 1,000,000 963,320 Brea PFA Revenue, Tax Allocation, Redevelopment Project, Series A, MBIA Insured, 7.00%, 8/01/15 ..................................................................................... 1,520,000 1,599,146 6.75%, 8/01/22 ..................................................................................... 1,550,000 1,620,820 7.00%, 8/01/23 ..................................................................................... 11,965,000 12,554,516 Buellton USD, Series A, MBIA Insured, 6.375%, 7/01/17 ................................................. 2,155,000 2,252,341 Burbank RDA, Tax Allocation, City Center Redevelopment Project, Refunding, Series A, FSA Insured, 5.50%, 12/01/23 ...................................................................................... 1,000,000 938,090 Burbank Waste Disposal Revenue, Series B, AMBAC Insured, 6.00%, 5/01/22 ............................... 665,000 665,931 Calabasas COP, Public Facilities Project, 5.20%, 12/01/20 .................................................................................... 835,000 739,635 5.25%, 12/01/28 .................................................................................... 500,000 428,155 Calaveras County Water District Revenue COP, Water and Sewer System Improvement Project, Refunding, AMBAC Insured, 6.00%, 5/01/16 ........................................................................ 3,950,000 4,015,965 Calexico CRDA Revenue, Tax Allocation, Merged Central Business and Residential, Refunding, FSA Insured, 5.85%, 8/01/15 ....................................................................................... 1,795,000 1,815,284 Calexico USD, CFD No. 1, Special Tax, Refunding, AMBAC Insured, 5.60%, 9/01/17 ........................ 2,930,000 2,871,869 California Educational Facilities Authority Revenue, Pomona College, Series B, 5.50%, 7/01/29 .......................................................... 4,455,000 4,154,466 Pooled Facilities Program, MBIA Insured, 7.00%, 3/01/16 ........................................... 1,000,000 1,023,180 Santa Clara University, MBIA Insured, Pre-Refunded, 5.75%, 9/01/21 ................................ 2,575,000 2,742,736 Stanford University, Refunding, Series O, 5.125%, 1/01/31 ......................................... 14,830,000 12,882,969 Stanford University, Series N, 5.25%, 12/01/26 .................................................... 6,450,000 5,760,431 Stanford University, Series N, 5.35%, 6/01/27 ..................................................... 21,250,000 19,428,663 Stanford University, Series N, 5.20%, 12/01/27 .................................................... 6,780,000 5,999,283 Stanford University, Series P, 5.00%, 12/01/23 .................................................... 15,500,000 13,491,355 Student Loan Program, Series A, MBIA Insured 6.00%, 3/01/16 ....................................... 4,000,000 4,016,400
FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED) (CONT.)
PRINCIPAL FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONT.) BONDS (CONT.) California Health Facilities Financing Authority Revenue, Adventist Health Systems West, Series A, MBIA Insured, 7.00%, 3/01/13 ...................................................... $ 3,000,000 $ 3,131,940 Adventist Health Systems West, Series B, MBIA Insured, 6.75%, 3/01/14 ...................................................... 5,065,000 5,267,853 Catholic Healthcare West, Refunding, Series A, MBIA Insured, 6.00%, 7/01/17 ...................................................... 5,000,000 5,056,250 Catholic Healthcare West, Series A, 5.00%, 7/01/28 .................. 25,000,000 18,308,250 Kaiser Permanente, Series A, 5.40%, 5/01/28 ......................... 15,400,000 13,060,894 Kaiser Permanente, Series B, 5.00%, 10/01/18 ........................ 5,000,000 4,184,150 Kaiser Permanente, Series B, 5.00%, 10/01/20 ........................ 5,500,000 4,534,475 Marin General Hospital, Series A, FSA Insured, Pre-Refunded, 7.00%, 8/01/15 ...................................................... 4,000,000 4,126,520 Northern California Presbyterian, 5.40%, 7/01/28 .................... 5,000,000 4,262,050 Orange County Health Facility, Series A, California Mortgage Insured, 6.20%, 11/01/24 ..................................................... 3,435,000 3,396,047 San Diego Hospital Association, Refunding, Series A, MBIA Insured, 6.20%, 8/01/20 ...................................................... 4,850,000 4,905,387 San Diego Hospital Association, Series A, MBIA Insured, 6.20%, 8/01/12 ...................................................... 2,425,000 2,547,244 San Fernando Health Facility, Series A, CHFCLP Insured, 5.25%, 6/01/23 ...................................................... 2,760,000 2,359,579 Scripps Memorial Hospital, Series A, MBIA Insured, 6.40%, 10/01/12 ..................................................... 3,500,000 3,700,480 Sharp Temecula Hospital, MBIA Insured, Pre-Refunded, 7.05%, 8/01/21 ...................................................... 3,000,000 3,177,750 Sutter Health, Series A, MBIA Insured, 5.00%, 8/15/19 ............... 1,700,000 1,496,527 Sutter Health, Series A, MBIA Insured, 5.00%, 8/15/38 ............... 4,000,000 3,318,880 The Help Group, CHFCLP Insured, 5.40%, 8/01/22 ...................... 5,000,000 4,445,100 California HFAR, Home Mortgage, Series D, MBIA Insured, 6.15%, 8/01/28 ............... 5,250,000 5,200,860 Series A, MBIA Insured, 7.15%, 8/01/11 .............................. 1,315,000 1,367,284 Series A, MBIA Insured, 7.20%, 2/01/26 .............................. 3,450,000 3,578,099 Series B, MBIA Insured, 6.80%, 8/01/11 .............................. 1,815,000 1,886,620 Series B, MBIA Insured, 8.625%, 8/01/15 ............................. 220,000 221,784 Series K, AMBAC Insured, 6.25%, 8/01/27 ............................. 5,895,000 5,905,198 California PCFA, PCR, Southern California Edison Co., Refunding, Series A, MBIA Insured, 5.45%, 9/01/29 ................... 2,480,000 2,285,419 Series C, MBIA Insured, 5.55%, 9/01/31 .............................. 4,800,000 4,393,872 California Public Capital Improvement Financing Authority Revenue, Pooled Projects, Series B, BIG Insured, 8.10%, 3/01/18 .............. 8,875,000 8,968,010 California Public School District Financing Authority Lease Revenue, Southern Kern USD, Refunding, Series B, FSA Insured, 5.90%, 9/01/26 ............................................................. 235,000 232,798 Series B, FSA Insured, Pre-Refunded, 5.90%, 9/01/26 ................. 1,615,000 1,733,832 California State Department of Water Resources Central Valley Project Water System Revenue, Refunding, Series Q, MBIA Insured, 5.375%, 12/01/27 ............................................................ 18,500,000 16,895,495 California State GO, 5.00%, 10/01/27 ..................................................... 30,790,000 26,319,908 AMBAC Insured, 6.30%, 9/01/06 ....................................... 9,000,000 9,734,040 FGIC Insured, 6.00%, 5/01/20 ........................................ 510,000 512,341 FGIC Insured, Pre-Refunded, 6.00%, 5/01/20 .......................... 2,990,000 3,192,782 FSA Insured, 5.50%, 9/01/29 ......................................... 34,500,000 32,030,145 MBIA Insured, 6.00%, 8/01/16 ........................................ 210,000 213,633 MBIA Insured, 6.00%, 10/01/21 ....................................... 65,000 65,205 MBIA Insured, 5.00%, 8/01/29 ........................................ 20,250,000 17,239,433 Refunding, FGIC Insured, 5.375%, 6/01/26 ............................ 5,000,000 4,575,850 Veterans Bonds, Series BH, FSA Insured, 5.40%, 12/01/16 ............. 5,000,000 4,739,650
FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED) (CONT.)
PRINCIPAL FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONT.) BONDS (CONT.) California State HFAR, Home Mortgage, Series L, MBIA Insured, 6.40%, 8/01/27 ..................................................... $ 7,865,000 $ 7,962,683 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 4,218,741 California State University, Fresno, Auxiliary Residence Student Project Revenue, MBIA Insured, 6.25%, 2/01/17 ...................... 1,500,000 1,547,190 California State University and Colleges Student Union Revenue, Bakersfield, Series A, MBIA Insured, 6.30%, 11/01/22 ............... 1,310,000 1,346,484 San Bernardino, Series B, MBIA Insured, 6.30%, 2/01/22 ............. 2,375,000 2,444,231 California Statewide CDA, COP, Children's Hospital, Los Angeles, 5.25%, 8/15/29 .............. 12,250,000 10,388,735 COP, FSA Insured, 5.50%, 8/15/31 ................................... 5,000,000 4,568,450 COP, Kaiser Permanente, 5.30%, 12/01/15 ............................ 10,000,000 9,059,800 COP, MBIA Insured, 5.00%, 4/01/18 .................................. 6,000,000 5,321,400 Water and Wastewater Revenue, Pooled Financing Program, Series B, FSA Insured, 5.75%, 10/01/29 ....................................... 1,465,000 1,420,244 California Statewide CDA Revenue, COP, John Muir/Mt. Diablo Health System, MBIA Insured, 5.125%, 8/15/22 .................................................... 5,000,000 4,405,900 5.25%, 8/15/27 ..................................................... 4,500,000 3,970,215 Cambria Community Services District Revenue COP, Wastewater Treatment System Upgrade, MBIA Insured, 6.90%, 11/01/24 ............... 1,000,000 1,111,220 Cambria Community Services District Water and Wastewater Revenue, Refunding, Series A, MBIA Insured, 6.00%, 5/01/15 ........ 1,330,000 1,364,686 Campbell COP, Civic Center Project, Refunding, MBIA Insured, 5.25%, 10/01/28 .................................................... 1,000,000 886,570 Campbell USD, Series C, FGIC Insured, 5.65%, 8/01/17 ..................................................... 1,000,000 985,720 5.75%, 6/01/22 ..................................................... 1,000,000 977,780 Carpinteria Sanitary District Capital Facilities Revenue, FGIC Insured, 6.25%, 7/01/14 ............................................ 2,485,000 2,604,752 Central Coast Water Authority Revenue, State Water Project Regional Facilities, AMBAC Insured, Pre-Refunded, 6.50%, 10/01/14 .................................................... 2,500,000 2,671,525 6.60%, 10/01/22 .................................................... 4,650,000 4,980,894 Chico PFA Revenue, Southeast Chico Redevelopment Project, Series A, FGIC Insured, 6.625%, 4/01/21 ............................ 815,000 834,527 Chino Basin Regional Financing Authority Revenue, Municipal Water District, Sewer System Project, Refunding, AMBAC Insured, 6.00%, 8/01/16 ..................................................... 2,000,000 2,034,600 Chino COP, RDA, Water System Improvement Project, Refunding, AMBAC Insured, 6.20%, 9/01/18 ...................................... 3,590,000 3,681,868 Chula Visa Elementary School District COP, MBIA Insured, 6.60%, 8/01/16 ..................................................... 2,940,000 3,031,699 Chula Vista PFA, Local Agency Revenue, Series 1995-A, FSA Insured, 6.125%, 9/02/14 ........................................... 3,875,000 4,069,641 Clovis PFA, Refuse Disposal Revenue, Landfill Improvement Project, AMBAC Insured, 5.00%, 9/01/18 ............................. 1,000,000 890,630 Coachella Valley Recreation and Park District 1915 Act, Reassessment District 9, Refunding, MBIA Insured, 6.20%, 9/02/16 ................ 1,500,000 1,555,215 Colton GO, Joint USD, CFD, Special Tax, Southridge Village, Phase III, Refunding, FSA Insured, 5.90%, 9/01/14 .................. 45,000 45,031 Compton Sewer Revenue, Refunding, MBIA Insured, 5.375%, 9/01/23 ....... 2,000,000 1,845,320 Contra Costa Mosquito Abatement District COP, Public Improvements Project, Refunding, FSA Insured, 6.25%, 2/01/06 .................... 1,695,000 1,730,748 Culver City USD, GO, MBIA Insured, 5.125%, 8/01/37 .................................................... 650,000 556,101 5.20%, 8/01/38 ..................................................... 4,285,000 3,709,225 Davis Joint USD, CFD, Special Tax, No. 1, Refunding, MBIA Insured, 5.50%, 8/15/21 ..................................................... 7,000,000 6,602,960 Del Norte County COP, Capital Improvement Program, MBIA Insured, 5.40%, 6/01/19 ..................................................... 2,150,000 2,007,799
FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED) (CONT.)
PRINCIPAL FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONT.) BONDS (CONT.) Delano USD, COP, Refinancing Project, MBIA Insured, 5.125%, 1/01/22 ............ $ 1,620,000 $ 1,449,949 Series A, FSA Insured, Pre-Refunded, 6.10%, 5/01/17 ................ 1,105,000 1,120,890 Dinuba RDA, Tax Allocation, Redevelopment Project No. 2, Refunding, Series A, MBIA Insured, 5.40%, 9/01/27 ............................. 3,190,000 2,885,291 Dublin-San Ramon Services District COP, AMBAC Insured, Pre-Refunded, 7.00%, 12/01/20 .................................................... 4,155,000 4,347,418 East Bay MUD, Wastewater Treatment System Revenue, AMBAC Insured, Pre-Refunded, 7.20%, 6/01/20 ....................................... 2,000,000 2,065,260 Water System Revenue, MBIA Insured, Pre-Refunded, 7.50%, 6/01/18 ............................................................ 5,000,000 5,169,150 Water System Revenue, Refunding, FGIC Insured, 6.00%, 6/01/20 ...... 6,900,000 6,923,322 East Side UHSD, Santa Clara County, Series D, FGIC Insured, 5.75%, 9/01/17 ..................................................... 1,200,000 1,195,944 Eastern Municipal Water District, Water and Sewer Revenue COP, Refunding, Series A, FGIC Insured, 6.30%, 7/01/20 .................. 1,400,000 1,431,528 El Cerrito RDA, Tax Allocation, Redevelopment Project, Series A, FSA Insured, Pre-Refunded, 6.80%, 7/01/19 ................ 5,960,000 6,158,945 El Dorado County Public Agency Financing Authority Revenue, FGIC Insured, 5.50%, 2/15/16 ............................................................ 2,250,000 2,195,888 2/15/21 ............................................................ 3,500,000 3,303,790 El Monte Water Authority Revenue, Water System Project, AMBAC Insured, 5.60%, 9/01/29 ............................................................ 3,000,000 2,846,280 9/01/34 ............................................................ 1,800,000 1,697,796 Emeryville PFA Revenue, Shellmound Park Redevelopment and Housing Project, Series B, MBIA Insured, 5.00%, 9/01/19 .................................................... 5,500,000 4,869,700 Fairfield PFA Revenue, Municipal Park, ID No. 1, FGIC Insured, Pre-Refunded, 6.30%, 7/01/23 ....................................... 4,750,000 5,034,193 Fillmore USD, Series A, FGIC Insured, 5.60%, 7/01/22 .................. 5,645,000 5,415,192 Folsom PFA Revenue, Refunding, AMBAC Insured, 6.00%, 10/01/08 ........................................................... 2,000,000 2,095,860 10/01/12 ........................................................... 1,000,000 1,047,140 10/01/19 ........................................................... 3,400,000 3,416,286 Fontana RDA, Tax Allocation, Southwest Industrial Park Project, FGIC Insured, Pre-Refunded, 6.125%, 9/01/25 ........................ 5,850,000 6,245,694 Fresno COP, City Hall Refinancing Project, AMBAC Insured, 6.25%, 8/01/19 ..................................................... 1,000,000 1,016,590 Fresno USD, GO, Refunding, Series C, MBIA Insured, 5.90%, 2/01/20 .................. 2,065,000 2,089,202 Refunding, Series C, MBIA Insured, 5.90%, 8/01/22 .................. 3,000,000 3,037,350 Series B, FSA Insured, 5.875%, 8/01/20 ............................. 1,405,000 1,399,113 Series B, FSA Insured, ETM, 5.875%, 8/01/20 ........................ 2,595,000 2,605,665 Fruitvale School District, Series B, MBIA Insured, 6.00%, 8/01/20 ..... 1,780,000 1,786,248 Glendale Hospital Revenue, Adventist Health, Refunding, Series A, MBIA Insured, 6.75%, 3/01/13 ............................. 1,000,000 1,040,630 Glendale RDA, Tax Allocation, Central Glendale Redevelopment Project, Refunding, AMBAC Insured, 6.00%, 12/01/20 .......................... 9,775,000 9,817,717 Glendale USD, Series C, FSA Insured, 5.50%, 9/01/24 ................... 2,750,000 2,573,945 Grossmont UHSD, COP, FSA Insured, 5.75%, 9/01/26 ...................... 2,250,000 2,184,165 Gustine USD, COP, FSA Insured, 5.00%, 2/01/29 ......................... 3,210,000 2,735,755 Hawthorne CDA, Tax Allocation, Project Area No 2, Refunding, MBIA Insured, 5.00%, 9/01/18 ....................................... 2,265,000 2,017,277 Hemet USD, COP, Nutrition Center Project, FSA Insured, 5.875%, 4/01/27 ............................................................ 1,250,000 1,233,975 Hercules COP, Capital Improvement Projects, Refunding, AMBAC Insured, 6.00%, 6/01/15 ............................................ 1,000,000 1,024,360 Hesperia Water District COP, Water Facilities Improvement Projects, FGIC Insured, Pre-Refunded, 7.15%, 6/01/26 ......................... 3,425,000 3,620,842 Imperial Irrigation District COP, California Water Systems Project, AMBAC Insured, 5.75%, 7/01/16 ..................................................... 5,050,000 5,056,666 Electric System Project, MBIA Insured, Pre-Refunded, 6.00%, 11/01/15 .................................................... 13,375,000 14,348,299
FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED) (CONT.)
PRINCIPAL FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONT.) BONDS (CONT.) Jurupa USD, COP, FSA Insured, 5.625%, 9/01/24 ......................... $ 1,600,000 $ 1,523,136 Kern County High School District, FSA Insured, ETM, 6.625%, 8/01/14 ............................................................ 1,535,000 1,699,966 8/01/15 ............................................................ 1,400,000 1,552,376 La Mirada RDA, Industrial Commercial Redevelopment Project, Series A, MBIA Insured, 6.60%, 8/15/21 ............................. 3,080,000 3,173,201 La Quinta RDA, Tax Allocation, Redevelopment Project Areas No. 1 and 2, MBIA Insured, 6.00%, 9/01/25 .......................... 6,650,000 6,665,561 Lake Arrowhead Community Services District COP, FGIC Insured, 6.50%, 6/01/15 ....................................... 8,785,000 9,254,119 FGIC Insured, Pre-Refunded, 6.50%, 6/01/15 ......................... 5,215,000 5,543,701 Refunding, FGIC Insured, 6.125%, 6/01/05 ........................... 7,600,000 7,989,804 Lake Elsinore PFA, Tax Allocation Revenue, Lake Elsinore Redevelopment Projects, Series A, FGIC Insured, 6.25%, 2/01/19 ............................. 1,255,000 1,282,121 Series C, FGIC Insured, 6.625%, 2/01/17 ............................ 12,840,000 13,120,939 Lakewood PFA, Water Revenue, FGIC Insured, 5.70%, 4/01/16 ............. 2,485,000 2,476,949 Lakewood RDA, Tax Allocation, Redevelopment Project No.1, Refunding, Series A, FSA Insured, 6.50%, 9/01/17 ................... 3,000,000 3,164,520 Lancaster RDA, Tax Allocation, Lancaster Redevelopment Project No.5, Refunding, MBIA Insured, 6.85%, 2/01/19 ...................... 11,245,000 11,680,744 Lincoln USD, CFD No. 1, AMBAC Insured, Pre-Refunded, 6.90%, 9/01/21 ..................................................... 2,425,000 2,567,736 Lodi COP, 1996 Public Improvement Financing Project, MBIA Insured, 5.90%, 10/01/16 .................................................... 3,605,000 3,646,313 Wastewater Treatment Project, Refunding, AMBAC Insured, 6.70%, 8/01/26 ..................................................... 8,800,000 9,539,200 Lodi Electric System Revenue COP, Series A, MBIA Insured, 5.50%, 1/15/32 ..................................................... 4,000,000 3,674,360 Long Beach Harbor Revenue, 5.125%, 5/15/18 .................................................... 3,625,000 3,226,540 MBIA Insured, 5.25%, 5/15/25 ....................................... 25,000,000 21,780,750 Los Angeles COP, Department of Public Social Services, Series B, AMBAC Insured, 5.85%, 8/01/31 ..................................................... 1,000,000 973,300 San Pedro Peninsula Hospital Project, Refunding, AMBAC Insured, 6.25%, 5/01/15 ..................................................... 5,825,000 6,032,545 Los Angeles County Capital Assets Leasing Corp. Leasehold Revenue, Refunding, AMBAC Insured, 6.00%, 12/01/16 ........................................................... 3,000,000 3,040,410 Los Angeles County MTA, Sales Tax Revenue, Proposition A, First Tier, Refunding, Senior Series A, MBIA Insured, 5.25%, 7/01/27 ..................................................... 9,370,000 8,325,901 Los Angeles County Transportation Commission Sales Tax Revenue, Series B, FGIC Insured, 6.50%, 7/01/15 ..................................................... 5,025,000 5,231,829 Series B, FGIC Insured, 6.50%, 7/01/13 ............................. 2,740,000 2,859,628 Los Angeles Department of Water and Power Electric Plant Revenue, FGIC Insured, 6.125%, 1/15/33 ...................................... 17,215,000 17,291,951 Refunding, FGIC Insured, 6.00%, 2/01/28 ............................ 3,500,000 3,507,665 Los Angeles Department of Water and Power Waterworks Revenue, Second Issue, FGIC Insured, 6.40%, 11/01/31 ............................... 6,875,000 7,245,975 Los Angeles Harbor Department Revenue, Series B, AMBAC Insured, 6.60%, 8/01/14 ...................................... 3,790,000 4,003,112 AMBAC Insured, 6.60%, 8/01/15 ...................................... 2,000,000 2,108,980 MBIA Insured, 6.20%, 8/01/25 ....................................... 2,500,000 2,516,350 Los Angeles Mortgage Revenue, Refunding, Series I, MBIA Insured, 6.50%, 7/01/22 ............................................................ 2,000,000 2,030,840 Los Angeles Wastewater System Revenue, Refunding, Series A, FGIC Insured, 6.00%, 12/01/18 ................. 12,100,000 12,170,180 Series B, AMBAC Insured, 6.00%, 6/01/22 ............................ 3,250,000 3,258,483 Lucia Mar USD, GO, Series A, FGIC Insured, 5.40%, 8/01/22 ............. 3,290,000 3,036,012
FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED) (CONT.)
PRINCIPAL FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONT.) BONDS (CONT.) Lynwood PFA, Tax Allocation, Area A Project, Series A, FSA Insured, 5.85%, 9/01/18 ............................................................ $ 1,765,000 $ 1,749,027 Water Revenue, Water System Improvement Project, MBIA Insured, 5.85%, 6/01/22 ..................................................... 665,000 650,350 Water Revenue, Water System Improvement Project, MBIA Insured, 5.90%, 6/01/29 ..................................................... 3,105,000 3,032,809 Lynwood PFA Revenue, Series A, AMBAC Insured, 5.75%, 9/01/18 .......... 4,000,000 3,963,560 Manteca Financing Authority Tax Allocation Revenue, MBIA Insured, 5.10%, 10/01/26 .................................................... 500,000 432,070 Menlo Park CDA, Tax Allocation, Las Pulgas Community Development Project, Refunding, AMBAC Insured, 5.375%, 6/01/22 ................. 10,000,000 9,200,100 Mesa Construction Water District COP, Water Project, FGIC Insured, Pre-Refunded, 6.40%, 3/15/18 ....................................... 5,600,000 5,921,104 Metropolitan Water District Revenue, Southern California Waterworks, Series A, MBIA Insured, 5.50%, 7/01/25 ..................................................... 8,750,000 8,171,538 5.00%, 7/01/30 ..................................................... 7,025,000 5,969,494 Millbrae COP, Police Department Expansion, AMBAC Insured, 5.875%, 3/01/24 .................................................... 1,025,000 1,008,672 Modesto Health Facilities Revenue, Memorial Hospital Association, Refunding, Series A, MBIA Insured, 6.00%, 6/01/18 .................. 5,565,000 5,595,162 Series 1991, MBIA Insured, Pre-Refunded, 6.875%, 6/01/21 ........... 1,500,000 1,580,310 Modesto Irrigation District COP, Refunding and Capital Improvement Projects, Series A, MBIA Insured, Pre-Refunded, 6.00%, 10/01/21 ...................................... 3,000,000 3,081,810 Modesto Irrigation District Financing Authority Revenue, Domestic Water Project, Series C, AMBAC Insured, Pre-Refunded, 5.75%, 9/01/22 ....................................... 2,500,000 2,658,325 Modesto Wastewater Treatment Facility Revenue, MBIA Insured, 5.75%, 11/01/22 .................................................... 14,375,000 14,052,281 Montclair RDA, Tax Allocation, Redevelopment Project, Area No. 3, Refunding, AMBAC Insured, 5.40%, 12/01/17 .......................... 4,380,000 4,195,602 Montebello Community RDA, Tax Allocation, Housing, Series A, FSA Insured, 5.45%, 9/01/19 ..................... 1,100,000 1,039,104 Montebello Hills Redevelopment Project, Refunding, MBIA Insured, 5.60%, 3/01/19 ..................................................... 2,460,000 2,381,255 Montebello USD, COP, Series B, MBIA Insured, Pre-Refunded, 7.25%, 6/01/10 ............................................................ 720,000 742,061 Moreno Valley PFA, Lease Revenue, AMBAC Insured, 5.50%, 11/01/22 ...... 1,000,000 940,560 Moulton Niguel Water District, AMBAC Insured, Pre-Refunded, 7.25%, 4/01/16 ............................................................ 1,420,000 1,459,391 Mount Diablo USD, CFD No. 1, Special Tax, AMBAC Insured, 6.25%, 8/01/14 ...................................... 500,000 522,580 FSA Insured, 6.00%, 8/01/24 ........................................ 1,000,000 1,002,960 Refunding, AMBAC Insured, 5.75%, 8/01/15 ........................... 1,000,000 1,005,430 Refunding, AMBAC Insured, 5.75%, 8/01/16 ........................... 2,270,000 2,272,633 Refunding, AMBAC Insured, 5.375%, 8/01/19 .......................... 7,290,000 6,864,920 Mountain View COP, Capital Improvement Financing Authority Revenue, City Hall/Community Theatre, MBIA Insured, 6.50%, 8/01/16 ....................................... 1,500,000 1,566,420 Murrieta Water PFA, Special Tax Revenue, senior lien, Refunding, Series A, FSA Insured, 5.60%, 10/01/15 .................................................... 1,235,000 1,227,232 5.70%, 10/01/21 .................................................... 2,630,000 2,559,490 National City Joint Powers Authority Lease Revenue, National City Police Facilities Project, AMBAC Insured, Pre-Refunded, 6.75%, 10/01/17 ...................................... 2,000,000 2,099,920 Nevada Irrigation District Revenue COP, Cascade Bench Flume Project, MBIA Insured, 5.50%, 1/01/17 ....................................... 4,600,000 4,461,770 North City West School Facilities Financing Authority Special Tax, Refunding, Series B, FSA Insured, 5.75%, 9/01/15 ..................................................... 1,260,000 1,267,573 6.00%, 9/01/19 ..................................................... 2,500,000 2,519,900
FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED) (CONT.)
PRINCIPAL FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONT.) BONDS (CONT.) Northern California Power Agency Multiple Capital Facilities Revenue, Series A, MBIA Insured 6.50%, 8/01/12 ..................................................... $ 2,840,000 $ 3,010,627 Pre-Refunded, 6.50%, 8/01/12 ....................................... 2,160,000 2,302,258 Northern California Public Power Agency Revenue, AMBAC Insured, Pre-Refunded, 7.50%, 7/01/23 ........................ 3,200,000 3,841,088 Hydroelectric Project No. 1, Refunding, Series A, MBIA Insured, 5.50%, 7/01/23 ..................................................... 4,000,000 3,740,240 Northern California Transmission Revenue, California/Oregon Transmission Project, Series A, MBIA Insured, 6.25%, 5/01/10 ..................................................... 2,500,000 2,622,775 6.50%, 5/01/16 ..................................................... 4,000,000 4,204,600 6.00%, 5/01/24 ..................................................... 18,335,000 18,341,051 Pre-Refunded, 7.00%, 5/01/10 ....................................... 4,000,000 4,099,040 Norwalk Community Facilities Financing Authority Lease Revenue, MBIA Insured, Pre-Refunded, 6.90%, 2/01/21 ......................... 5,810,000 5,935,728 Oakland Revenue, 1800 Harrison Foundation, Refunding, Series A, AMBAC Insured, 6.00%, 1/01/29 ...................................... 10,000,000 10,022,200 Oceanside Community Development Commission COP, Public Parking Project, FSA Insured, Pre-Refunded, 7.875%, 4/01/19 .................................................... 3,940,000 4,484,902 Oceanside COP, Corporation Yard Project Financing, AMBAC Insured, Pre-Refunded, 7.30%, 8/01/21 ....................................... 4,715,000 5,116,199 Oceanside Civic Center Project, Refunding, MBIA Insured, 5.75%, 8/01/15 ..................................................... 1,000,000 1,005,430 Waste Reuse Association Finance Project, Series A, AMBAC Insured, Pre-Refunded, 6.50%, 10/01/17 ....................... 5,000,000 5,343,050 Ontario Redevelopment Financing Authority Revenue, Ontario Redevelopment Project No. 1, MBIA Insured, ETM, 5.80%, 8/01/23 ................................................ 10,000,000 10,213,900 Orange County COP, Juvenile Justice Center Facilities, Refunding, AMBAC Insured, 6.375%, 6/01/11 .................................................... 4,770,000 5,029,202 6.00%, 6/01/17 ..................................................... 5,000,000 5,041,900 Orange County Financing Authority Tax Allocation Revenue, Refunding, Series A, MBIA Insured, 6.50%, 9/01/22 ............................. 3,500,000 3,627,925 Oroville PFA, Tax Allocation Revenue, Oroville Redevelopment Project No. 1, AMBAC Insured, 5.90%, 9/15/21 ..................................................... 1,245,000 1,241,850 6.10%, 9/15/23 ..................................................... 2,885,000 2,912,869 Oxnard COP, AMBAC Insured, 4.75%, 6/01/28 ............................. 1,545,000 1,242,134 Oxnard Financing Authority Solid Waste Revenue, AMBAC Insured, 6.00%, 5/01/16 ..................................................... 5,000,000 5,037,750 Oxnard UHSD, Series B, FSA Insured, ETM, 5.875%, 8/01/27 .............. 3,615,000 3,568,656 Pajaro Valley USD, COP, School Facilities Bridge Funding Program, FSA Insured, 5.75%, 9/01/17 ........................................ 1,250,000 1,245,775 Palm Desert Financing Authority Tax Allocation Revenue, Project Area No. 2, Series A, MBIA Insured, 5.95%, 8/01/24 ..................................................... 2,490,000 2,489,876 5.85%, 8/01/25 ..................................................... 1,380,000 1,360,128 Palm Springs USD, Series C, MBIA Insured, 6.125%, 2/01/20 ............................ 500,000 504,625 Series D, FGIC Insured, 5.90%, 2/01/21 ............................. 1,000,000 997,560 Paramount USD, COP, Master Lease Program, FSA Insured, 6.30%, 9/01/26 ..................................................... 4,750,000 4,874,070 Parlier USD, Series B, AMBAC Insured, 6.00%, 6/01/16 .................. 1,130,000 1,153,832 Pasadena USD, GO, Series B, FGIC Insured, 5.25%, 7/01/24 .............. 1,000,000 896,140 Petaluma COP, Refunding, Series A, AMBAC Insured, 5.625%, 8/01/13 ..... 1,000,000 1,008,740 Pico Rivera PFAR, Water Enterprise Project, Series A, FGIC Insured, Pre-Refunded, 6.00%, 12/01/17 ......................................... 8,000,000 8,463,600 Pinole RDA, Tax Allocation, Pinole Vista Redevelopment Project, Series A, MBIA Insured, Pre-Refunded, 6.125%, 8/01/17 .................................................... 1,000,000 1,044,570
FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED) (CONT.)
PRINCIPAL FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONT.) BONDS (CONT.) Placer County COP, Administrative and Emergency Services, MBIA Insured, 5.65%, 6/01/24 $ 4,000,000 $ 3,846,280 Jail Kitchen Project, MBIA Insured, Pre-Refunded, 6.90%, 10/01/21 .. 3,745,000 4,156,201 Placer County Water Agency COP, FSA Insured, 5.90%, 7/01/25 ........... 2,350,000 2,331,623 Pleasant Hill RDA, Tax Allocation, Pleasant Hill Commons Project, Refunding, FSA Insured, 6.90%, 7/01/21 ........................................ 5,500,000 5,756,795 Porterville COP, Refunding, AMBAC Insured, Sewer System Refining Project, 5.25%, 10/01/23 5,000,000 4,493,200 Sewer System and Improvement Project, Refunding, AMBAC Insured, 6.30%, 10/01/18 .................................................. 11,010,000 11,482,660 Rancho Cucamonga RDA, Tax Allocation, Rancho Redevelopment Project, Housing Set Aside, MBIA Insured, 5.25%, 9/01/26 .................... 2,000,000 1,767,760 Refunding, FSA Insured, 5.25%, 9/01/20 ............................. 2,500,000 2,257,550 Redding Electrical System Revenue COP, Refunding, Series A, FGIC Insured, 5.50%, 6/01/11 ..................................................... 5,000,000 5,057,900 Redding Joint Powers Financing Authority Lease Revenue, Civic Center Project, Series A, MBIA Insured, 5.75%, 3/01/19 ..................................................... 3,090,000 3,043,928 5.25%, 3/01/26 ..................................................... 75,000 66,803 Redding RDA, Tax Allocation, Hilltop Cypress Redevelopment Notes, Series C, FSA Insured, 6.00%, 9/01/22 .............................. 2,120,000 2,126,848 Redlands USD, Series B, FSA Insured, 6.25%, 6/01/19 ................... 2,115,000 2,161,784 Redwood City PFA, Local Agency Revenue, Series A, AMBAC Insured, 6.50%, 7/15/11 ..................................................... 1,270,000 1,327,925 Pre-Refunded, 6.50%, 7/15/11 ....................................... 1,475,000 1,548,986 Richgrove Elementary School District COP, Construction and Refinancing Project, FSA Insured, 5.30%, 12/01/28 ................................. 2,355,000 2,123,904 Riverside County COP, Historic Courthouse, MBIA Insured, 5.875%, 11/01/27 3,000,000 2,961,270 Riverside RDA, Lease Revenue, Series A, AMBAC Insured, 6.375%, 10/01/23 ................................................... 12,540,000 12,978,398 6.50%, 10/01/24 .................................................... 2,000,000 2,099,660 Romona Municipal Water District COP, Refunding, AMBAC Insured, 7.20%, 10/01/10 .................................................... 3,000,000 3,116,880 Rubidoux Community Services District COP, Water System Improvement Project, AMBAC Insured, Pre-Refunded, 6.20%, 12/01/14 ................................................... 2,510,000 2,668,983 Sacramento Area Flood Control Agency Special Assessment, Capital AD No. 2, FGIC Insured, 5.80%, 11/01/16 .................... 1,000,000 1,004,700 Capital AD No. 2, FGIC Insured, 5.375%, 10/01/25 ................... 1,000,000 917,260 Operation and Maintenance, FGIC Insured, 5.80%, 11/01/16 ........... 1,475,000 1,481,933 Operation and Maintenance, FGIC Insured, 5.90%, 11/01/25 ........... 2,690,000 2,668,588 Sacramento County Airport System Revenue, Series A, MBIA Insured, 6.00%, 7/01/17 ..................................................... 5,920,000 5,931,662 Sacramento MUD, Electric Revenue, Series E, MBIA Insured, 5.75%, 5/15/22 ............................. 4,250,000 4,155,565 Series I, MBIA Insured, 6.00%, 1/01/24 ............................. 4,000,000 4,009,920 Series J, AMBAC Insured, 5.50%, 8/15/21 ............................ 8,485,000 8,003,731 Sacramento RDA, Tax Allocation, Merged Downtown Redevelopment Project, Series A, MBIA Insured, Pre-Refunded, 6.50%, 11/01/13 ...................................... 1,835,000 1,908,198 Series A, MBIA Insured, 6.50%, 11/01/13 ............................ 165,000 170,679 Saddleback Community College District COP, 1996 Capital Improvement Financing Project, MBIA Insured, 5.50%, 6/01/15 .................... 3,200,000 3,147,648 Saddleback Valley USD, PFA, Special Tax Revenue, Refunding, Series A, FSA Insured, 5.65%, 9/01/17 ........................................ 3,500,000 3,449,775 San Bernardino County COP, 1997 Public Improvement Financing Project, MBIA Insured, 5.25%, 10/01/25 ...................................... 7,000,000 6,248,270
FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED) (CONT.)
PRINCIPAL FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONT.) BONDS (CONT.) San Bernardino County Mortgage Revenue, Don Miguel Apartments Project, Refunding, MBIA Insured, 6.40%, 3/01/25 ...................... $ 5,680,000 $ 5,753,045 San Bernardino Joint Powers Financing Authority Revenue, Tax Allocation, Northwest Redevelopment Project, Series E, MBIA Insured, Pre-Refunded, 7.375%, 1/01/15 .................................................. 1,965,000 2,004,300 Southeast Industrial Park, Series F, MBIA Insured, Pre-Refunded, 7.375%, 3/01/14 .................................................. 3,515,000 3,603,613 San Bernardino Municipal Water Department COP, FGIC Insured, 6.25%, 2/01/17 ..................................................... 5,750,000 5,972,813 San Bernardino RDA, Capital Appreciation, Series B, AMBAC Insured, 7.70%, 1/10/09 ..................................................... 2,382,000 5,087,571 San Buenaventura COP, Water Project, AMBAC Insured, Pre-Refunded, 7.50%, 10/01/20 .................................................... 2,000,000 2,090,180 San Buenaventura Public Facilities Financing Authority Lease Revenue, Refunding, FSA Insured, 5.75%, 6/01/14 ............................ 2,250,000 2,278,260 San Carlos School District GO, MBIA Insured, 5.50%, 10/01/24 .......... 2,110,000 1,974,686 San Diego Community College District COP, Series 1991, MBIA Insured, 6.50%, 12/01/12 .................................................... 2,000,000 2,102,140 San Diego IDR, San Diego Gas and Electric, Custodial Receipts, Series A, AMBAC Insured, 6.40%, 9/01/18 ...................................... 1,650,000 1,725,917 San Diego Mortgage Revenue, University Canyon North, Refunding, Series A, MBIA Insured, 5.125%, 7/01/03 ...................................... 155,000 155,470 San Diego Public Facilities Financing Authority Sewer Revenue, Series B, FGIC Insured, 5.25%, 5/15/27 ....................................... 2,950,000 2,621,695 San Francisco BART District Sales Tax Revenue, FGIC Insured, 5.50%, 7/01/15 ..................................................... 2,000,000 1,967,260 5.50%, 7/01/26 ..................................................... 6,500,000 6,030,895 5.50%, 7/01/34 ..................................................... 12,000,000 11,048,640 Pre-Refunded, 6.60%, 7/01/12 ....................................... 2,580,000 2,711,193 San Francisco City and County Airport Commission International Airport Revenue, Issue 5, Second Series, FGIC insured, 6.50%, 5/01/24 ............... 6,900,000 7,118,799 Issue 8A, Second Series, FGIC Insured, 6.25%, 5/01/20 .............. 3,500,000 3,531,080 Issue 9B, Second Series, FGIC Insured, Pre-Refunded, 6.00%, 5/01/25 6,400,000 6,815,488 Issue 11, Second Series, FGIC Insured, 6.00%, 5/01/11 .............. 2,105,000 2,178,528 Issue 16A, Second Series, FSA Insured, 5.00%, 5/01/29 .............. 10,000,000 8,351,500 San Francisco City and County RDA, MFHR, 1045 Mission Apartments, Series C, GNMA Secured, 5.35%, 12/20/40 ............................ 7,215,000 6,231,235 San Francisco City and County Sewer Revenue, Refunding, AMBAC Insured, 6.00%, 10/01/11 .................................................... 2,000,000 2,095,860 San Gabriel USD, COP, Facilities Development Program, Series A, FSA Insured, 6.00%, 9/01/15 ..................................................... 1,000,000 1,030,180 San Jacinto USD, COP, Refunding Project, AMBAC Insured, 6.50%, 10/01/23 ........................................................... 3,000,000 3,205,830 San Joaquin Hills Transportation Corridor Agency Toll Road Revenue, Refunding, Series A, MBIA Insured, 5.375%, 1/15/29 .................................................... 8,500,000 7,751,915 5.25%, 1/15/30 ..................................................... 9,000,000 7,940,970 San Jose Financing Authority Revenue, Convention Project, Series C, FSA Insured, 6.40%, 9/01/17 ............................................ 8,740,000 9,088,202 San Leandro COP, Library and Fire Stations Financing, AMBAC Insured, 5.75%, 11/01/29 .................................................... 5,000,000 4,847,150 San Luis Water Districts Revenue COP, Refunding and Capital Improvement Project, AMBAC Insured, 5.50%, 11/01/16 ............................ 1,260,000 1,228,865 San Mateo County Joint Powers Financing Authority Lease Revenue, San Mateo County Health Care Center, Series A, FSA Insured, Pre-Refunded, 5.75%, 7/15/22 ................ 2,750,000 2,914,533 San Mateo-Foster City School District, FGIC Insured, 5.00%, 8/01/23 ... 1,000,000 867,860 San Ramon COP, Capital Improvement Project, Refunding, AMBAC Insured, 7.05%, 3/01/21 12,070,000 12,582,492 Central Park Expansion Project, FSA Insured, Pre-Refunded, 7.20%, 2/01/25 ................................................... 5,110,000 5,719,265 Sanger PFA Revenue, Utility System Financing, Series A, AMBAC Insured, 5.70%, 1/01/22 ..................................................... 5,935,000 5,768,464 Sanger USD, Series A, FSA Insured, ETM, 5.60%, 8/01/14 ................ 1,000,000 1,013,300 Santa Ana COP, Parking Facilities Project, Refunding, Series A, AMBAC Insured, 6.125%, 6/01/16 ........................................... 3,250,000 3,316,300 Santa Ana Financing Authority Water Revenue, MBIA Insured, 6.125%, 9/01/24 1,000,000 1,008,200 Santa Ana HMR, Series A, FGIC Insured, 8.875%, 6/01/17 ................ 5,000 5,173
FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED) (CONT.)
PRINCIPAL FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONT.) BONDS (CONT.) Santa Barbara COP, Municipal Improvement Program, Refunding, AMBAC Insured, 6.15%, 8/01/17 ................................................... $ 3,575,000 $ 3,656,045 Water Systems Improvement Project, Refunding, AMBAC Insured, 6.70%, 4/01/27 ................................................... 6,500,000 6,830,070 Santa Clara County COP, Board of Education Partners, Administration Building Project, Series A, MBIA Insured, 6.00%, 4/01/25 ..................................... 1,555,000 1,557,597 Capital Project I, Refunding, AMBAC Insured, 6.25%, 10/01/16 ....... 4,500,000 4,662,405 Santa Clara Electric Revenue, Series A, MBIA Insured, Pre-Refunded, 6.50%, 7/01/21 ..................................................... 1,350,000 1,416,731 Santa Clara RDA, Tax Allocation, Bayshore North Project, AMBAC Insured, 7.50%, 6/01/08 ..................................................... 900,000 910,818 Santa Cruz County COP, Sub-Joint Wastewater Treatment Project, AMBAC Insured, 6.20%, 9/01/19 ............................................ 475,000 482,686 Santa Fe Springs PFA, Water Revenue, Series A, MBIA Insured, 5.90%, 5/01/21 ............................................................ 900,000 897,750 5/01/26 ............................................................ 1,190,000 1,178,897 Santa Fe Springs RDA, Consolidated, Tax Allocation, Series A, MBIA Insured, 6.40%, 9/01/22 ..................................................... 4,255,000 4,422,392 Santa Margarita/Dana Point Authority Revenue, ID 3, 3A, 4, and 4A, Refunding, Series B, MBIA Insured, 5.75%, 8/01/20 ............................. 38,500,000 37,770,040 Santa Monica Community College District, Series B, AMBAC Insured, 5.75%, 7/01/20 ..................................................... 1,495,000 1,466,789 Santa Rita USD, Series B, FSA Insured, 5.20%, 8/01/37 ................. 1,940,000 1,681,088 Santa Rosa High School District, FGIC Insured, 5.90%, 5/01/16 ....................................... 1,000,000 1,011,460 Refunding, FSA Insured, 5.75%, 5/01/18 ............................. 1,050,000 1,040,519 Santa Rosa Wastewater Service Facilities District Revenue, Refunding and Improvement, AMBAC Insured, 6.00%, 7/02/15 ..................... 2,000,000 2,086,340 Scotts Valley GO, USD, Series B, FGIC Insured, 5.40%, 8/01/22 ......... 3,005,000 2,797,505 Sebastopol GO, CDA, Tax Allocation, Community Development Project, Refunding, MBIA Insured, 5.25%, 12/01/21 ........................... 2,250,000 2,035,508 Selma PFA Revenue, Series A, MBIA Insured, 5.80%, 9/15/11 ..................................................... 145,000 145,819 5.80%, 9/15/12 ..................................................... 125,000 125,596 5.875%, 9/15/22 .................................................... 2,400,000 2,383,416 Sequoia UHSD, GO, FSA Insured, 5.70%, 7/01/24 ......................... 4,885,000 4,728,533 Soledad RDA, Tax Allocation, Soledad Redevelopment Project, Refunding, Series A, MBIA Insured, 5.35%, 12/01/28 ............................ 1,000,000 908,680 Sonoma CDA, COP, Sonoma Creek Senior Housing Project, Refunding, AMBAC Insured, 6.75%, 2/01/13 ............................................ 1,325,000 1,353,249 Sonoma Valley USD, GO, FSA Insured, 6.00%, 7/15/21 .................... 2,400,000 2,411,472 South Gate PFA Revenue, Tax Allocation, South Gate Redevelopment Project No. 1, AMBAC Insured, 5.875%, 9/01/24 ...................... 5,000,000 4,951,350 South Orange County PFA, Special Tax Revenue, senior lien, Refunding, Series A, MBIA Insured, 6.20%, 9/01/13 ..................................................... 13,500,000 14,217,660 6.00%, 9/01/18 ..................................................... 3,250,000 3,276,000 South San Francisco COP, 5.00%, 4/01/29 ............................... 2,000,000 1,642,960 Stanislaus County Board of Education COP, FSA Insured, 5.70%, 9/01/24 . 2,000,000 1,935,580 Stockton COP, Wastewater System Project, Refunding, AMBAC Insured, 5.75%, 9/01/23 ..................................................... 6,500,000 6,343,545 Stockton Port District Port Facilities Revenue, Refunding and Improvement, Series B, FSA Insured, 5.90%, 7/01/12 .............................. 3,955,000 4,064,830 Stockton Revenue COP, Wastewater System Project, Refunding, Series A, MBIA Insured, 5.00%, 9/01/23 ....................................... 6,500,000 5,639,465 Suisun City RDA, Tax Allocation, Suisun City Redevelopment Project, Refunding, MBIA Insured, 5.625%, 10/01/13 ..................................... 4,260,000 4,303,580 Sulfur Springs USD, COP, Series 1991, AMBAC Insured, Pre-Refunded, 7.20%, 2/01/21 ..................................................... 800,000 834,248 Sunnyvale RDA, Tax Allocation, Central Core Project, Refunding, AMBAC Insured, 6.50%, 10/01/22 ........................................... 2,785,000 2,861,588 Susanville PFA Revenue, Series A, AMBAC Insured, 6.30%, 9/01/17 ....... 4,000,000 4,110,760 Tahoe Truckee USD, GO, Improvement District No. 2, Series A, FGIC Insured, 5.75%, 8/01/20 ..................................................... 4,340,000 4,257,714
FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED) (CONT.)
PRINCIPAL FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONT.) BONDS (CONT.) Tahoe-Truckee Joint USD, Series A, FGIC Insured, Pre-Refunded, 6.00%, 9/01/17 ................ $ 5,000,000 $ 5,317,400 Series B, FGIC Insured, 5.95%, 9/01/20 .............................. 3,620,000 3,629,376 Tehachapi Water and Sewer Revenue, Refunding, MBIA Insured, 6.75%, 11/01/20 ..................................................... 2,000,000 2,165,320 Thousand Oaks RDA, Tax Allocation, Thousand Oaks Boulevard Redevelopment, Refunding, MBIA Insured, 5.375%, 12/01/25 ............ 2,390,000 2,191,797 Tri-City Hospital District Revenue, MBIA Insured, 6.00%, 2/01/22 ........................................ 2,350,000 2,350,776 Refunding, Series A, MBIA Insured, 5.625%, 2/15/17 .................. 2,750,000 2,689,280 Turlock Auxiliary Organization Revenue COP, California State University, Stanislaus Foundation, MBIA Insured, 5.875%, 6/01/22 ................ 2,000,000 1,986,320 Turlock PFA, Sewer Revenue, FGIC Insured, 5.50%, 9/15/29 ............... 6,855,000 6,363,975 Union City CRDA, Tax Allocation, Community Redevelopment Project, AMBAC Insured, 5.75% 10/01/22 ............................................................ 6,200,000 6,060,995 10/01/32 ............................................................ 14,100,000 13,615,382 University of California Revenues, Multi Purpose Projects, Series H, FGIC Insured, 5.375%, 9/01/25 ..................................................... 2,480,000 2,275,101 5.50%, 9/01/28 ...................................................... 2,500,000 2,323,300 Upland COP, Police Building Project, Refunding, AMBAC Insured, 6.60%, 8/01/16 ... 3,985,000 4,214,057 Water System Improvement Project, FGIC Insured, 6.60%, 8/01/16 ...... 2,385,000 2,522,090 Vacaville PFA, Tax Allocation Revenue, Vacaville Redevelopment Projects, MBIA Insured, 6.35%, 9/01/22 ........................................ 1,355,000 1,388,684 Vallejo Revenue, Water Improvement Project, Refunding, Series A, FSA Insured, 5.875%, 5/01/26 ..................................................... 12,500,000 12,342,124 Walnut Valley Water District COP, Badillo Grand Transmission Project, FGIC Insured, Pre-Refunded, 6.125%, 2/01/18 .............................. 2,200,000 2,283,577 Washington Township Hospital District Revenue, HealthCare District Revenue, 5.00%, 7/01/18 ...................................................... 2,000,000 1,679,880 5.125%, 7/01/23 ..................................................... 1,000,000 827,200 Waugh School District Special Tax GO, Corona/Ely CFD No. 1, AMBAC Insured, 5.80%, 9/01/26 ............................................. 5,640,000 5,512,366 West and Central Basin Financing Authority Revenue, Central Basin Project, Refunding, Series A, AMBAC Insured, 5.375%, 8/01/17 ..................................... 4,330,000 4,137,877 West Basin Municipal Water District Revenue COP, 1992 Project, Refunding, Series A, AMBAC Insured, 5.50%, 8/01/17 ............................. 3,370,000 3,266,574 West Sacramento Financing Authority Revenue, MBIA Insured, Pre-Refunded, 6.25%, 9/01/16 .......................... 4,185,000 4,525,993 Water System Improvement Project, FGIC Insured, 5.50%, 8/01/15 ...... 4,500,000 4,425,929 West Sacramento RDA, Tax Allocation, West Sacramento Redevelopment Project, MBIA Insured, Pre-Refunded, 6.25%, 9/01/21 ................ 3,340,000 3,499,551 Western Placer Unified School COP, 1998 Refunding and Capital Project, AMBAC Insured, 5.00%, 6/01/18 ....................................... 5,455,000 4,862,968 William S. Hart Joint School Financing Authority Special Tax Revenue, Community Facilities, Refunding, FSA Insured, 6.60%, 9/01/18 ....... 1,285,000 1,386,026 William S. Hart USD, COP, School Project, MBIA Insured, 6.00%, 9/01/30 . 7,015,000 6,927,101 Windsor Joint Powers Financing Authority Wastewater Revenue, Refunding, Series A, AMBAC Insured, 6.125%, 12/15/12 ........................... 750,000 800,670 Yucaipa-Sweetwater School Facilities Financing Authority Special Tax Revenue, Sweetwater, Series A, MBIA Insured, 5.70%, 9/01/19 ................. 5,000,000 4,895,500 -------------- TOTAL BONDS (COST $1,640,975,538) ..................................... 1,629,543,293 --------------
FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED) (CONT.)
PRINCIPAL FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONT.) ZERO COUPON BONDS 1.9% California Housing Finance Revenue, Home Mortgage, Series N, AMBAC Insured, 8/01/31 ............................................. $ 5,000,000 $ 2,586,850 Foothill/Eastern Corridor Agency Toll Road Revenue, Capital Appreciation, Refunding, MBIA Insured, 1/15/17 ............................................................ 20,000,000 7,071,200 1/15/18 ............................................................ 25,000,000 8,243,250 1/15/19 ............................................................ 5,970,000 1,833,984 Neward USD, GO, Capital Appreciation, Series B, FGIC Insured, 8/01/24 . 9,905,000 2,096,591 San Bernardino County SFMR, Series A, GNMA Secured, ETM, 5/01/22 ...... 28,405,000 6,856,399 San Joaquin Hills Transportation Corridor Agency Toll Road Revenue, Capital Appreciation, Refunding, Series A, MBIA Insured, 1/15/26 .............................................. 8,675,000 1,730,663 Southern Kern USD, COP, Convertible Capital Appreciation Building Program, Series B, FSA Insured, 9/01/26 ............................ 2,250,000 1,419,975 Union Elementary School District GO, Capital Appreciation, Series A, FGIC Insured, 9/01/24 .............................................. 2,000,000 436,480 -------------- TOTAL ZERO COUPON BONDS (COST $33,573,442) ............................ 32,275,392 -------------- TOTAL LONG TERM INVESTMENTS (COST $1,674,548,980) ..................... 1,661,818,685 -------------- (a)SHORT-TERM INVESTMENTS 1.4% California PCFA, PCR Southern California Edison Co., Series C, Daily VRDN and Put, 4.10%, 2/28/08 ................................. 6,050,000 6,050,000 California State Economic Development Financing Authority Revenue, Independent System B, Weekly VRDN and Put, 4.80%, 4/01/08 ................................................ 5,000,000 5,000,000 Irvine 1915 Act, AD No. 87-8, Daily VRDN and Put, 4.20%, 9/02/24 .................... 5,534,000 5,534,000 AD No. 94-13, Daily VRDN and Put, 4.20%, 9/02/22 ................... 1,385,000 1,385,000 AD No. 97-16, Daily VRDN and Put, 4.20%, 9/02/22 ................... 308,000 308,000 Irvine Ranch Water District GO, No. 105, 140, 240 and 250, Daily VRDN and Put, 4.30%, 1/01/21 ....................................... 1,100,000 1,100,000 Irvine Ranch Water District Revenue, Joint Powers Agency, Consolidated Bonds, DATES, Series C, Daily VRDN and Put, 4.20%, 10/01/10 ...................................... 700,000 700,000 No. 102, 103, 105, and 106, Refunding, Daily VRDN and Put, 4.20%, 9/01/06 ..................................................... 800,000 800,000 No. 140, 105, 240, and 250, Daily VRDN and Put, 4.20%, 4/01/33 ..... 200,000 200,000 Orange County Apartment Development Revenue, Aliso Creek Project B, Weekly VRDN and Put, 4.85%, 11/01/22 ..................... 3,300,000 3,300,000 -------------- TOTAL SHORT-TERM INVESTMENTS (COST $24,377,000) ....................... 24,377,000 -------------- TOTAL INVESTMENTS (COST $1,698,925,980) 98.7% ......................... 1,686,195,685 OTHER ASSETS, LESS LIABILITIES 1.3% ................................... 21,923,452 -------------- NET ASSETS 100.0% ..................................................... $1,708,119,137 --------------
See glossary of terms on page 53. (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 INTERMEDIATE-TERM TAX-FREE INCOME FUND
SIX MONTHS ENDED YEAR ENDED JUNE 30, DECEMBER 31, 1999+ ---------------------------------------------------------------------- (UNAUDITED) 1999+ 1998 1997 1996 1995 -------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the period) Net asset value, beginning of period . $ 11.02 $ 11.24 $ 10.93 $ 10.67 $ 10.38 $ 10.20 -------------------------------------------------------------------------------------------- Income from investment operations: Net investment income ............... .26 .51 .53 .53 .53 .54 Net realized and unrealized gains (losses) ........................... (.29) (.21) .31 .26 .29 .17 -------------------------------------------------------------------------------------------- Total from investment operations ..... (.03) .30 .84 .79 .82 .71 -------------------------------------------------------------------------------------------- Less distributions from net investment income ............................. (.26) (.52) (.53) (.53) (.53) (.53) -------------------------------------------------------------------------------------------- Net asset value, end of period ....... $ 10.73 $ 11.02 $ 11.24 $ 10.93 $ 10.67 $ 10.38 ============================================================================================ Total return* ........................ (.30%) 2.63% 7.76% 7.58% 7.96% 7.19% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's) .... $186,406 $192,547 $155,664 $117,666 $101,199 $88,785 Ratios to average net assets: Expenses ............................ .60%** .60% .52% .47% .45% .33% Expenses excluding waiver and payments by affiliate .............. .74%** .75% .78% .80% .81% .83% Net investment income ............... 4.74%** 4.50% 4.76% 4.96% 4.99% 5.34% Portfolio turnover rate .............. 5.23% 5.48% 9.58% 6.29% 10.13% 10.90%
*Total return does not reflect sales commissions or the contingent deferred sales charge, and is not annualized for periods less than one year. **Annualized. +Based on average shares outstanding. See notes to financial statements. FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED)
PRINCIPAL FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS 98.7% BONDS 97.7% ABAG Finance Authority for Nonprofit Corps. COP, 5.75%, 8/01/03 ..................................................... $ 580,000 $ 594,425 Easter Seal Society for the Redwood Coast, Insured, 5.50%, 6/01/03 . 295,000 300,661 North County Health Project, 5.50%, 3/01/06 ........................ 1,025,000 1,039,330 Rhoda Haas Goldman Plaza, Insured, 5.125%, 5/15/15 ................. 3,000,000 2,708,010 ABAG Finance Corp. COP, ABAG XXVI, Refunding, Series A, 5.90%, 6/01/02 ................................ 100,000 102,170 Series B, 6.40%, 10/01/03 .......................................... 100,000 104,780 ABAG Revenue, Refunding, Series A-E, 5.00%, 9/15/06 ..................................................... 610,000 587,113 5.05%, 9/15/07 ..................................................... 620,000 591,412 5.40%, 9/15/14 ..................................................... 2,455,000 2,242,814 ABAG Water and Wastewater Revenue, Pooled Financing Program, Series A, FSA Insured, 5.00%, 10/01/10 ................................ 3,035,000 2,970,628 Alameda County COP, Series 1994, 5.70%, 4/01/02 ..................................................... 395,000 403,019 5.80%, 4/01/03 ..................................................... 420,000 432,680 5.90%, 4/01/04 ..................................................... 440,000 456,790 Antioch PFA, Reassessment Revenue, sub. lien, Series B, 5.00%, 9/02/03 ..................................................... 1,900,000 1,865,078 5.20%, 9/02/05 ..................................................... 2,100,000 2,043,720 5.40%, 9/02/07 ..................................................... 1,170,000 1,126,605 Auburn COP, Civic Center Project, Refunding, 5.30%, 9/01/00 ..................................................... 65,000 65,491 5.45%, 9/01/01 ..................................................... 70,000 70,744 5.60%, 9/01/02 ..................................................... 75,000 76,287 5.70%, 9/01/03 ..................................................... 80,000 81,898 5.75%, 9/01/04 ..................................................... 80,000 82,158 Bakersfield Central District Revenue RDA, Tax Allocation, Downtown Bakersfield Redevelopment, ETM, 6.00%, 4/01/01 ..................................................... 295,000 300,608 6.10%, 4/01/02 ..................................................... 310,000 319,759 6.20%, 4/01/03 ..................................................... 330,000 344,682 Bakersfield Hospital Revenue, Bakersfield Memorial Hospital, Series A, 5.70%, 1/01/00 .............................................. 100,000 100,000 Brentwood Infrastructure Financing Authority Infrastructure Revenue, CIFP 94-1, 5.30%, 9/02/08 ..................................................... 990,000 937,886 5.35%, 9/02/09 ..................................................... 765,000 718,733 5.40%, 9/02/10 ..................................................... 990,000 922,225 5.45%, 9/02/11 ..................................................... 995,000 910,425 5.50%, 9/02/12 ..................................................... 990,000 901,395 California Educational Facilities Authority Revenue, Pooled College and University Financing, Refunding, Series B, 5.80%, 6/01/02 ........................................... 1,000,000 1,018,320 Pooled College and University Financing, Refunding, Series B, 5.90%, 6/01/03 ........................................... 1,105,000 1,134,680 Pooled College and University Projects, Series B, 6.125%, 4/01/13 .. 1,000,000 1,010,770 California Health Facilities Financing Authority Revenue, San Diego Hospital Association, Series B, MBIA Insured, 5.60%, 8/01/03 ....................................................... 100,000 103,322 California HFA, SFM Purchase, Class III, Series A-1, MBIA Insured, 5.70%, 8/01/11 ........................................................ 2,175,000 2,188,659 California State Department of Water Resources Central Valley Project Revenue, Water Systems, Refunding, Series T, 5.125%, 12/01/12 ........................................... 1,250,000 1,226,238
FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED) (CONT.)
PRINCIPAL FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ 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 $ 1,025,240 Department of Forestry and Fire Protection, Series A, 4.875%, 10/01/18 1,325,000 1,134,518 Various Community College Projects, Refunding, Series C, 5.50%, 9/01/09 1,555,000 1,588,153 California Statewide CDA Revenue, COP, Health Facilities, Barton Memorial Hospital, Refunding, Series B, 5.70%, 12/01/00 .................................................... 200,000 202,080 6.40%, 12/01/05 .................................................... 450,000 467,177 California Statewide CDA, COP, California Lutheran Homes, ETM, 5.375%, 11/15/06 ...................................................... 1,000,000 1,008,220 California Statewide Communities Development Corp. COP, Pacific Homes, Series A, Pre-Refunded, 5.50%, 4/01/04 ......................... 585,000 595,109 Campbell COP, Civic Center Project, Refunding, 5.60%, 10/01/03 ........ 350,000 359,692 Carson RDA, Project Area No. 1, Refunding, 6.10%, 10/01/02 ............ 200,000 206,064 Central Valley Financing Authority Cogeneration Project Revenue, Carson Ice General Project, Refunding, MBIA Insured, 5.00%, 7/01/17 ......................................... 2,000,000 1,799,200 Chaffey Community College District COP, 5.10%, 9/01/13 ................ 1,860,000 1,751,581 Clovis COP, Water System Improvement Project, AMBAC Insured, 5.90%, 3/01/03 ........................................................ 100,000 104,129 Coastside County Water District 1915 Act GO, Crystal Springs Project, Refunding, 5.10%, 9/02/03 ..................................................... 530,000 526,825 5.20%, 9/02/04 ..................................................... 1,090,000 1,081,923 5.40%, 9/02/06 ..................................................... 635,000 628,663 Colma 1915 Act, Local ID No. 1, Refunding, 5.00%, 9/02/01 ..................................................... 465,000 464,312 5.10%, 9/02/02 ..................................................... 485,000 483,303 5.20%, 9/02/03 ..................................................... 515,000 512,595 5.30%, 9/02/04 ..................................................... 545,000 540,754 5.40%, 9/02/05 ..................................................... 570,000 562,049 Colton GO, Joint USD, CFD, Special Tax, Southridge Village, Phase III, Refunding, FSA Insured, 5.65%, 9/01/09 ..................................................... 15,000 15,008 5.75%, 9/01/10 ..................................................... 20,000 20,012 Commerce Joint Powers Financing Authority Water Facilities Lease Revenue, Refunding, Series A, 5.50%, 10/01/02 .................................................... 340,000 345,314 5.625%, 10/01/03 ................................................... 360,000 367,801 5.75%, 10/01/04 .................................................... 470,000 482,873 Compton COP, Civic Center and Capital Improvement, Refunding, Series A, 5.00%, 9/01/08 ..................................................... 4,340,000 4,177,380 5.50%, 9/01/15 ..................................................... 1,180,000 1,078,024 Compton Sewer Revenue, ETM, 5.70%, 7/01/00 ..................................................... 130,000 131,039 5.80%, 7/01/01 ..................................................... 140,000 142,694 5.90%, 7/01/02 ..................................................... 150,000 154,536 6.00%, 7/01/03 ..................................................... 155,000 161,414 Concord RDA, Tax Allocation, Central Concord Redevelopment Project, Refunding, Sub Series A, 5.50%, 7/01/02 ..................................................... 625,000 633,244 5.625%, 7/01/03 .................................................... 655,000 667,327 Contra Costa County MFHR, Byron Park Project, Series C, GNMA Secured, 6.00%, 7/20/03 ............................................... 425,000 Danville Financing Authority Revenue, Sycamore Valley, Reassessment District No. 93-2, 5.40%, 9/02/01 ..................................................... 285,000 286,368 5.60%, 9/02/02 ..................................................... 450,000 454,379
FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED) (CONT.)
PRINCIPAL FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONT.) BONDS (CONT.) Danville Financing Authority Revenue, Sycamore Valley, Reassessment District No. 93-2, (cont.) 5.70%, 9/02/03 ..................................................... $ 215,000 $ 217,453 5.80%, 9/02/04 ..................................................... 880,000 892,082 Dinuba RDA, Tax Allocation, subordinated notes, Merged City, sub. lien, Refunding, Series A, 6.10%, 12/01/04 ....... 1,500,000 1,489,335 Merged City Redevelopment Project, sub. lien, 5.20%, 4/01/03 ....... 2,500,000 2,460,375 Duarte RDA, Tax Allocation, Merged Redevelopment Project Area, Refunding, 5.125%, 10/01/16 ........................................... 4,930,000 4,330,956 Eden Township Hospital District Health Facilities Revenue COP, Eden Hospital Health Services Corp., Refunding, 5.75%, 7/01/12 ....................................................... 1,195,000 1,196,099 Foster City PFA Revenue, Community Development Project, Series A, 5.60%, 9/01/03 ........................................................ 1,150,000 1,177,336 Fresno Joint Powers Financing Authority Local Agency Revenue, Refunding, Series A, 6.20%, 9/02/03 .............................................. 1,000,000 1,021,830 Galt Capital Improvements Authority Lease Revenue, Culture and Recreation Improvement Project, 5.00%, 4/01/12 ................................... 2,390,000 2,196,338 Galt Middle School Joint Powers Authority Special Tax, CFD No. 1, Refunding, 5.40%, 9/01/12 ........................................................ 1,955,000 1,846,889 Garden Grove GO, CDA, Tax Allocation, Garden Grove Community Project, Refunding, 5.40%, 10/01/04 ............................................ 1,425,000 1,443,269 Glendale Parking Facilities Joint Powers Authority Revenue, Series A, 5.30%, 3/01/03 ........................................................ 125,000 125,603 Goleta Water District Revenue COP, Goleta Reclamation Project, Refunding, FGIC Insured, 5.50%, 12/01/08 ......................................... 750,000 768,930 Hayward RDA, Tax Allocation, Downtown Hayward Redevelopment Project, Refunding, 5.70%, 3/01/14 ............................................. 1,500,000 1,486,950 Hesperia PFA Revenue, Series A, 5.80%, 10/01/03 ....................... 3,275,000 3,365,292 Hi Desert Memorial Health Care District Revenue, Refunding, 5.10%, 10/01/06 .................................................... 615,000 573,641 5.125%, 10/01/07 ................................................... 650,000 600,340 Hollister RDA, Tax Allocation, Community Development Project, Series 1994, 5.35%, 10/01/03 .................................................... 525,000 540,824 5.45%, 10/01/04 .................................................... 550,000 566,764 5.55%, 10/01/05 .................................................... 585,000 602,714 Imperial COP, Wastewater System Refining Program, Refunding, Series B, 5.40%, 10/15/06 865,000 873,226 Water System Refining Program, Refunding, Series A, 5.40%, 10/15/06 1,250,000 1,261,888 Imperial County Local Transportation Authority Sales Tax Revenue, Series 1993, 5.50%, 5/01/04 ............................................................ 490,000 495,287 5/01/05 ............................................................ 515,000 518,991 Inland Empire Solid Waste Financing Authority Revenue, Landfill Improvement Financing Project, Series B, FSA Insured, 6.25%, 8/01/11 .......................................... 1,000,000 1,066,000 La Palma Community Development Commission Tax Allocation, La Palma Community Development Project No. 1, Refunding, 5.20%, 6/01/00 ..................................................... 125,000 125,519 5.40%, 6/01/01 ..................................................... 130,000 131,095 5.50%, 6/01/02 ..................................................... 135,000 136,719 5.60%, 6/01/03 ..................................................... 145,000 147,549 5.70%, 6/01/04 ..................................................... 150,000 153,266 5.80%, 6/01/05 ..................................................... 160,000 164,162 La Quinta RDA, Tax Allocation, Redevelopment Project Areas No. 1 and 2, MBIA Insured, 5.40%, 9/01/07 .......................................... 560,000 575,859 Lake Elsinore PFA, Tax Allocation Revenue, Lake Elsinore Redevelopment Projects, Series A, FSA Insured, 5.40%, 9/01/08 .............................................................. 1,500,000 1,521,765 Lake Elsinore Public Financing Authority Tax Allocation Revenue, Series A, 5.00%, 9/01/09 .............................................. 2,680,000 2,485,512 Lake Elsinore School Financing Authority Revenue, Refunding, 6.00%, 9/01/11 ........................................................ 1,000,000 1,009,980 Lancaster COP, School District Project, Refunding, FSA Insured, 5.125%, 4/01/14 ....................................................... 2,000,000 1,903,680
FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED) (CONT.)
PRINCIPAL FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONT.) BONDS (CONT.) Lancaster RDA, Tax Allocation, Central Business District Redevelopment, Refunding, 5.25%, 8/01/00 . $ 35,000 $ 35,224 Central Business District Redevelopment, Refunding, 5.375%, 8/01/01 40,000 40,301 Central Business District Redevelopment, Refunding, 5.50%, 8/01/02 . 40,000 40,447 Central Business District Redevelopment, Refunding, 5.60%, 8/01/03 . 45,000 45,607 Central Business District Redevelopment, Refunding, 5.70%, 8/01/04 . 45,000 45,648 Central Business District Redevelopment, Refunding, 5.70%, 8/01/05 . 50,000 50,518 Fox Field Redevelopment Project Area, Refunding, 5.25%, 8/01/00 .... 55,000 55,353 Fox Field Redevelopment Project Area, Refunding, 5.375%, 8/01/01 ... 60,000 60,451 Fox Field Redevelopment Project Area, Refunding, 5.50%, 8/01/02 .... 65,000 65,726 Fox Field Redevelopment Project Area, Refunding, 5.60%, 8/01/03 .... 65,000 65,877 Fox Field Redevelopment Project Area, Refunding, 5.70%, 8/01/04 .... 70,000 71,007 Fox Field Redevelopment Project Area, Refunding, 5.70%, 8/01/05 .... 75,000 75,776 Lemon Grove CDA, Tax Allocation, 1998 Refunding, 5.00%, 8/01/06 ..................................................... 885,000 866,548 5.10%, 8/01/07 ..................................................... 205,000 200,588 5.20%, 8/01/08 ..................................................... 215,000 209,913 Lemon Grove MFHR, Hillside Terrace Apartments, Refunding, 5.375%, 1/01/19 970,000 977,779 Loma Linda Hospital Revenue, Loma Linda University Medical Center, Refunding, Series A, AMBAC Insured, 4.85%, 12/01/10 .................................................... 5,000,000 4,803,200 4.95%, 12/01/11 .................................................... 7,000,000 6,737,500 Los Angeles County Transport Commission COP, Series B, 5.90%, 7/01/00 ..................................................... 100,000 100,920 6.00%, 7/01/01 ..................................................... 200,000 204,590 Lynwood PFA Revenue, Water System Improvement Project, 6.15%, 6/01/08 . 565,000 585,323 Madera COP, Madera Community Hospital, Refunding, 5.10%, 3/01/03 ...... 515,000 517,498 Mammoth Lakes COP, Refunding, 5.70%, 6/01/10 ..................................................... 850,000 849,286 5.75%, 6/01/11 ..................................................... 250,000 248,953 Merced Irrigation District COP, Water Facilities Project, 6.125%, 11/01/03 540,000 560,282 Mid-Peninsula Regional Open Space District COP, Special District Association Finance Corp., Series 1993, 5.20%, 9/01/03 .............................................................. 530,000 535,581 Mojave GO, Water Agency, ID M, Morongo Basin, ETM, 6.20%, 9/01/01 ..... 100,000 102,917 Morgan Hill RDA, Tax Allocation, Refunding, 5.70%, 3/01/01 ............ 100,000 100,484 Mt. Diablo Hospital District Revenue, Series A, AMBAC Insured, ETM, 5.10%, 12/01/03 ....................................................... 100,000 101,764 Murrieta COP, Road Improvement Project, 6.00%, 4/01/07 ............................................................ 235,000 241,916 4/01/08 ............................................................ 245,000 250,562 New Haven USD, COP, Refunding, 5.30%, 7/01/01 ......................... 500,000 505,195 Newark USD, COP, 5.75%, 9/01/02 ....................................... 300,000 306,168 North City West School Facilities Financing Authority Special Tax, Refunding, Series B, FSA Insured, 5.625%, 9/01/08 ................................ 500,000 521,700 Ontario Redevelopment Financing Authority Local Agency Revenue, Community Facility, AD No.1, senior lien, Series A, FSA Insured, 5.60%, 9/02/03 ................................ 950,000 979,640 Orange County CFD, No. 86-2 Special Tax, Rancho Santa Margarita, Refunding, Series A, 5.375%, 8/15/12 ............................................. 1,500,000 1,415,250 Orange County Development Agency Tax Allocation, Santa Ana Heights Area Project, Refunding, 5.90%, 9/01/04 .................................... 800,000 824,824 Orange County Local Transportation Authority Sales Tax Revenue, First Senior Measure M, 6.00%, 2/15/06 ............................................. 500,000 530,610 Orange County MFHR, Villa Santiago Rehabilitation Project, FNMA Insured, 5.60%, 10/01/27 ....................................................... 500,000 503,275
FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED) (CONT.)
PRINCIPAL FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONT.) BONDS (CONT.) Orange County Recovery COP, Series A, MBIA Insured, 6.00%, 7/01/08 .... $ 1,500,000 $ 1,602,720 Oroville Hospital Revenue, Oroville Hospital, Series A, CHFCLP Insured, 5.125%, 12/01/12 ...................................................... 1,435,000 1,356,491 Palm Desert Financing Authority Lease Revenue, Blythe County Administrative Project, 6.375%, 8/01/11 .............................................. 855,000 873,896 Paramount RDA, Tax Allocation, Redevelopment Project Area No. 1, Refunding, 6.05%, 8/01/05 ........................................................ 1,515,000 1,610,233 Paso Robles Union School District COP, 5.75%, 8/01/03 ................. 1,635,000 1,689,151 Pleasant Hill RDA, RMR, Pre-Refunded, 5.40%, 2/01/05 .................. 670,000 682,147 Pomona RDA, Tax Allocation, Mountain Meadows Redevelopment Project, Refunding, Series X, 5.35%, 12/01/16 .................................. 1,000,000 907,780 Poway RDA, Tax Allocation, Paguay Redevelopment Project, sub. notes, 4.75%, 12/15/03 ....................................................... 1,950,000 1,900,061 Rialto RDA, Tax Allocation, Industrial Redevelopment, Sub Areas A and B, Series A, ETM, 5.40%, 9/01/02 ..................................................... 270,000 275,324 5.50%, 9/01/03 ..................................................... 280,000 287,426 Richmond Joint Powers Financing Authority Revenue, Multiple Redevelopment Projects, Refunding, Series B, 5.35%, 5/15/13 ......................... 2,000,000 1,924,140 Riverside County Asset Leasing Corp. Leasehold Revenue, Riverside County Hospital Project, Series A, 5.90%, 6/01/02 ..................................................... 200,000 204,340 6.00%, 6/01/04 ..................................................... 200,000 206,772 Riverside County Housing Authority MFHR, Brandon Place Apartments, Series B, FNMA Insured, 5.625%, 7/01/29 ............................... 995,000 1,004,821 Sacramento MUD, Electric Revenue, Series E, 5.25%, 5/15/03 ............ 1,000,000 1,014,370 San Bernardino County COP, Medical Center Financing Project, Refunding, 6.00%, 8/01/09 ........................................................ 2,000,000 2,054,080 San Bernardino County Mortgage Revenue, Don Miguel Apartments Project, Refunding, MBIA Insured, 6.00%, 9/01/03 ............................... 100,000 102,157 San Clemente 1915 Act, AD No. 8, Refunding, 5.00%, 9/02/02 ..................................................... 415,000 414,768 5.10%, 9/02/03 ..................................................... 435,000 434,682 5.20%, 9/02/04 ..................................................... 460,000 458,652 San Diego Mortgage Revenue, Mariners Cove, Refunding, Series B-1, 5.125%, 9/01/03 ....................................................... 275,000 276,664 San Diego Port Facilities Revenue, National Steel and Shipbuilding Co., Refunding, 6.60%, 12/01/02 ............................................ 100,000 102,775 San Francisco City and County Public Utilities Commission Water Revenue, Refunding, Series A, 5.00%, 11/01/17 .................................. 5,000,000 4,431,750 San Francisco City and County RDA, Hotel Tax Revenue, FSA Insured, 5.80%, 7/01/01 ..................... 300,000 306,552 Hotel Tax Revenue, FSA Insured, 5.90%, 7/01/02 ..................... 245,000 253,399 Mortgage Revenue, Refunding, Series A, MBIA Insured, 6.125%, 7/01/02 5,000 5,002 San Francisco City and County, Refunding, Series 1, FGIC Insured, 5.00%, 6/15/12 ............................................................... 3,650,000 3,525,243 San Gorgonio Memorial Health Care District Health Facility Revenue, Pre- Refunded, 6.375%, 6/01/08 ............................................. 750,000 800,348 San Joaquin County COP, General Hospital Project, ETM, 5.90%, 9/01/03 . 400,000 416,604 San Jose Financing Authority Revenue, Convention Center Project, Refunding, Series C, 5.75%, 9/01/03 .............................................. 300,000 311,325 San Juan USD, COP, Gold River Elementary School Project, 5.65%, 4/01/03 600,000 601,206 San Ramon COP, Capital Improvements Project, 5.20%, 3/01/01 ..................................................... 85,000 85,591 5.30%, 3/01/02 ..................................................... 90,000 91,034 5.40%, 3/01/03 ..................................................... 95,000 96,700 5.50%, 3/01/04 ..................................................... 100,000 102,074 5.60%, 3/01/05 ..................................................... 105,000 107,632 Santa Barbara RDA, Tax Allocation, Central City Redevelopment Project, 6.00%, 3/01/03 ........................................................ 985,000 1,012,482 Santa Clara 1915 Act, Reassessment District 187, Refunding, Series 1, 5.25%, 9/02/11 ..................................................... 1,720,000 1,610,040 Santa Monica Parking Authority Lease Revenue, Refunding, 6.00%, 7/01/03 100,000 104,530
FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED) (CONT.)
PRINCIPAL FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONT.) BONDS (CONT.) Sebastopol COP, 5.70%, 6/01/05 .................................................... $ 240,000 $ 245,693 Refunding, Series 1994, 5.50%, 6/01/03 ............................ 200,000 203,210 Refunding, Series 1994, 5.60%, 6/01/04 ............................ 215,000 219,268 Selma PFA Revenue, Series A, MBIA Insured, 5.25%, 9/15/02 .................................................... 100,000 100,548 5.50%, 9/15/04 .................................................... 115,000 115,582 5.60%, 9/15/05 .................................................... 120,000 120,769 5.65%, 9/15/06 .................................................... 125,000 125,809 5.70%, 9/15/07 .................................................... 135,000 135,902 5.70%, 9/15/08 .................................................... 140,000 140,745 5.75%, 9/15/09 .................................................... 150,000 150,777 5.75%, 9/15/10 .................................................... 155,000 155,708 Shafter Joint Powers Financing Authority Lease Revenue, Community Correctional Facility Project, Series A, 5.50%, 1/01/06 ............................................................ 1,500,000 1,520,580 Shasta Joint Powers Financing Authority Lease Revenue, Courthouse Improvement Project, Series A, ETM, 5.80%, 6/01/00 .................. 100,000 100,718 Solana Beach COP, City Hall Project, 5.80%, 10/01/02 ................ 50,000 51,589 South Gate PFA Water Revenue, Refunding, Series A, FGIC Insured, 5.35%, 10/01/07 ................................................... 995,000 1,023,467 5.45%, 10/01/08 ................................................... 1,040,000 1,072,718 b South Gate PFAR, Tax Allocation, Redevelopment Project No. 1, Refunding, 6.10%, 9/01/03 ........................................... 1,000,000 994,200 South San Francisco Capital Improvements Financing Authority Revenue, South San Francisco Conference Center, Refunding, 5.70%, 9/01/02 .................................................... 195,000 198,438 5.80%, 9/01/03 .................................................... 205,000 210,195 5.90%, 9/01/04 .................................................... 215,000 221,671 Southern California Rapid Transit District Revenue, Special Benefit AD A2, 5.80%, 9/01/01 ............................................... 100,000 101,534 Stockton Health Facilities Revenue, Dameron Hospital Association, Refunding, Series A, 5.35%, 12/01/09 ................................ 385,000 367,044 Stockton Port District Port Facilities Revenue, Refunding and Improvement, Series A, FSA Insured, 5.75%, 7/01/11 .................. 1,295,000 1,347,810 Sunline Transport Agency COP, Transport Finance Corp., Series B, 5.50%, 7/01/03 .................................................... 450,000 460,296 5.75%, 7/01/06 .................................................... 445,000 459,124 Susanville PFA Revenue, Series A, AMBAC Insured, 5.90%, 9/01/02 ..... 100,000 102,909 Tahoe City PUD, COP, Capital Facilities Project, Series B, 6.05%, 6/01/01 .................................................... 290,000 294,776 6.15%, 6/01/02 .................................................... 835,000 856,844 6.30%, 6/01/04 .................................................... 545,000 567,432 Tehachapi Cummings County Water District Revenue COP, Capital Improvement Project, MBIA Insured, Pre-Refunded, 5.50%, 8/01/04 .................................................... 280,000 291,712 5.60%, 8/01/05 .................................................... 300,000 313,272 5.75%, 8/01/06 .................................................... 320,000 335,309 Temecula RDAR, Tax Allocation, Temecula Redevelopment Project No. 1, Series A, 5.40%, 2/01/04 ............................................ 600,000 606,054 Temecula Valley USD, Series E, FSA Insured, 5.65%, 9/01/07 .......... 370,000 387,512 Travis USD, COP, Foxboro Elementary School Construction Project, ETM, 6.30%, 9/01/02 ................................................. 200,000 208,394
FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED) (CONT.)
PRINCIPAL FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ LONG TERM INVESTMENTS (CONT.) BONDS (CONT.) Trinity County PUD, COP, Electric District Facilities, Refunding, Series 1993, 5.80%, 4/01/01 .................................................... $ 340,000 $ 342,955 5.90%, 4/01/02 .................................................... 360,000 365,075 6.00%, 4/01/03 .................................................... 380,000 387,557 Ventura USD, COP, Series A, 5.90%, 4/01/04 .................................................... 305,000 314,097 6.00%, 4/01/05 .................................................... 320,000 329,525 6.10%, 4/01/06 .................................................... 340,000 350,886 6.20%, 4/01/07 .................................................... 365,000 377,029 6.30%, 4/01/08 .................................................... 385,000 397,908 6.40%, 4/01/09 .................................................... 410,000 423,381 Virgin Islands PFA Revenue, senior lien, Refunding, Series A, 5.30%, 10/01/11 ................................................... 1,000,000 943,930 5.40%, 10/01/12 ................................................... 4,150,000 3,905,358 Virgin Islands Water and Power Authority Water System Revenue, Refunding, 5.00%, 7/01/03 .................................................... 3,540,000 3,484,457 4.875%, 7/01/06 ................................................... 2,000,000 1,890,780 5.00%, 7/01/09 .................................................... 2,000,000 1,845,960 Watsonville RDA, GO, Tax Allocation, Watsonville Redevelopment Project, Series 1993, 6.00%, 8/01/02 .................................................... 510,000 510,346 6.10%, 8/01/03 .................................................... 540,000 540,366 ------------ TOTAL BONDS ($185,155,706) .......................................... 182,047,335 ------------ ZERO COUPON BONDS 1.0% San Joaquin Hills Transportation Corridor Agency Toll Road Revenue, senior lien, Refunding, Series A,1/15/16 ............................ 3,000,000 1,870,800 ------------ TOTAL ZERO COUPON BONDS ($2,036,494) ................................ 1,870,800 ------------ TOTAL LONG TERM INVESTMENTS ($187,192,200) .......................... 183,918,135 ------------ (a) SHORT-TERM INVESTMENTS .1% California PCFA, PCR, Southern California Edison, Series D, Daily VRDN and Put, 4.10%, 2/28/08 ........................................ 100,000 100,000 Irvine 1915 Act, AD No. 87-8, Daily VRDN and Put, 4.20%, 9/02/24 .... 200,000 200,000 ------------ TOTAL SHORT-TERM INVESTMENTS ($300,000) ............................. 300,000 ------------ TOTAL INVESTMENTS (COST $187,492,200) 98.8% ......................... 184,218,135 OTHER ASSETS, LESS LIABILITIES 1.2% ................................. 2,187,753 ------------ NET ASSETS 100.0% ................................................... $186,405,888 ============
See glossary of terms on page 53. (a) Variable rate demand notes (VRDNs) are tax-exempt obligations which contain a floating or variable interest rate adjustment formula and an unconditional right of demand to receive payment of the principal balance plus accrued interest at specified dates. (b) Sufficient collateral has been segregated for securities traded on a when-issued or delayed delivery basis. See notes to financial statements. FRANKLIN CALIFORNIA TAX-FREE TRUST Financial Highlights FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND
SIX MONTHS ENDED YEAR ENDED JUNE 30, DECEMBER 31, 1999 ------------------------------------------------------------------- (UNAUDITED) 1999 1998 1997 1996 1995 --------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the period) Net asset value, beginning of period . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 --------------------------------------------------------------------------------------- Income from investment operations - net investment income ............... .01 .02 .03 .03 .03 .03 Less distributions from net investment income .................. (.01) (.02) (.03) (.03) (.03) (.03) --------------------------------------------------------------------------------------- Net asset value, end of period ....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======================================================================================= Total return* ........................ 1.24% 2.39% 2.85% 2.85% 2.85% 2.94% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's) .... $795,086 $706,877 $656,725 $639,791 $597,819 $642,157 Ratios to average net assets: Expenses ............................ .58%** .59% .60% .60% .63% .64% Net investment income ............... 2.48%** 2.36% 2.82% 2.83% 2.83% 2.88%
*Total return is not annualized for periods less than one year. **Annualized. See notes to financial statements. FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED)
PRINCIPAL FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND AMOUNT VALUE - ----------------------------------------------------------------------------------------------------------------------------------- INVESTMENTS 99.1% a Alameda-Contra Costa School Financing Authority COP, Capital Improvement Financing Projects, Series A, Weekly VRDN and Put, 4.70%, 6/01/22 ............................................. $ 2,000,000 $ 2,000,000 Series C, Weekly VRDN and Put, 4.70%, 7/01/25 ............................................. 1,400,000 1,400,000 a Anaheim COP, 1993 Partnership Project, Refunding, AMBAC Insured, Weekly VRDN and Put, 4.85%, 8/01/19 ....................................................................... 4,400,000 4,400,000 Police Facilities Refinancing Project, AMBAC Insured, Weekly VRDN and Put, 4.85%, 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, 5.00%, 12/01/28 ....................................................... 2,700,000 2,700,000 a Butte County Housing Authority MFR, Pine Tree Apartment Project, Weekly VRDN and Put, 5.00%, 12/01/10 .............................................................. 2,382,000 2,382,000 a California Community College Financing Authority TRAN, Series A, 4.00%, 6/30/00 ............................................................................. 5,000,000 5,021,819 California Health Facilities Financing Authority Revenue, a Children's Hospital, MBIA Insured, Weekly VRDN and Put, 4.90%, 11/01/21 .................................................................................. 2,500,000 2,500,000 a Scripps Health, Series A, MBIA Insured, Weekly VRDN and Put, 4.95%, 10/01/22 .................................................................................. 5,000,000 5,000,000 a Sutter Health, Series B, AMBAC Insured, Daily VRDN and Put, 4.20%, 7/01/12 ................................................................................... 1,400,000 1,400,000 Valley Presbyterian Hospital, Refunding, MBIA Insured, 5.25%, 5/01/00 ..................... 2,340,000 2,357,777 a California PCFA Revenue, Occidental Geo/Santa Fe Geothermal, Monthly VRDN and Put, 3.50%, 9/01/13 ................................................................................... 4,700,000 4,700,000 Pacific Gas and Electric Co., Refunding, Series B, Daily VRDN and Put, 4.45%, 11/01/26 .................................................................................. 10,000,000 10,000,000 Reynolds Metals Co. Project, Weekly VRDN and Put, 4.50%, 12/01/15 ......................... 1,000,000 1,000,000 Southern California Edison, Series D, Daily VRDN and Put, 4.10%, 2/28/08 .................. 1,500,000 1,500,000 Solid Waste Disposal Revenue, Colmac Energy Project, Series A, Weekly VRDN and Put, 4.95%, 12/01/16 ............................................................. 900,000 900,000 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, AMBAC Insured, 4.00%, 7/03/00 .............................................................. 45,000,000 45,172,510 a California School Facilities Financing Corp. COP, Capital Improvement Financing Projects, Series A, Weekly VRDN and Put, 5.05%, 7/01/22 ............................................. 2,050,000 2,050,000 Refunding, Series C, Weekly VRDN and Put, 5.05%, 7/01/22 .................................. 12,095,000 12,095,000 a California State Economic Development Financing Authority Revenue, Independent System B, Weekly VRDN and Put, 4.80%, 4/01/08 ................................. 24,400,000 24,400,000 Independent System C, Weekly VRDN and Put, 4.70%, 4/01/08 ................................. 11,025,000 11,025,000 KQED Inc. Project, Refunding, Weekly VRDN and Put, 4.45%, 4/01/20 ......................... 2,050,000 2,050,000 California State GO, 6.00%, 9/01/00 ........................................................ 14,200,000 14,442,434 California State RAN, Series A, 4.00%, 6/30/00 ............................................. 17,000,000 17,057,482 a California Statewide Communities Development Corp. Revenue, Industrial Development, American Kleaner Manufacturing Co., Series C, Weekly VRDN and Put, 5.50%, 12/01/19 ...................................................... 2,550,000 2,550,000 Industrial Development, Karcher Property Project, Series C, Weekly VRDN and Put, 4.85%, 12/01/19 .................................................................. 1,700,000 1,700,000 COP, Sutter Health Obligated Group, AMBAC Insured, Daily VRDN and Put, 4.20%, 7/01/15 ....................................................................... 1,000,000 1,000,000 COP, North California Retired Officers, Daily VRDN and Put, 4.35%, 6/01/26 ................ 8,000,000 8,000,000 a Chico MFMR, Webb Homes Project, Weekly VRDN and Put, 3.70%, 1/01/10 ............................................................................. 2,170,000 2,170,000 a Concord MFMR, Arcadian Facility, Series A, Weekly VRDN and Put, 5.00%, 7/15/18 .......................... 7,900,000 7,900,000 Bel Air Apartments, Issue A, Weekly VRDN and Put, 4.50%, 12/01/16 ......................... 500,000 500,000 a Duarte RDA, Johnson Duarte Project, Weekly VRDN and Put, 4.90%, 12/01/14 ................................................................................... 900,000 900,000 a Dublin Housing Authority MFHR, Park Sierra Housing, Series A, Weekly VRDN and Put, 5.00%, 6/01/28 ............................................................... 1,100,000 1,100,000 a Fresno MFHR, Heron Pointe Apartments, Series A, Weekly VRDN and Put, 4.90%, 6/01/07 ........................................................................ 1,000,000 1,000,000 a Irvine 1915 Act, AD No. 94-13, Daily VRDN and Put, 4.20%, 9/02/22 .......................................... 9,500,000 9,500,000 AD No. 94-15, Daily VRDN and Put, 4.20%, 9/02/20 .......................................... 6,400,000 6,400,000 AD No. 97-16, Daily VRDN and Put, 4.20%, 9/02/22 .......................................... 21,176,000 21,176,000 AD No. 97-17, Daily VRDN and Put, 4.20%, 9/02/23 .......................................... 22,747,000 22,747,000
FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED) (CONT.)
PRINCIPAL FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND AMOUNT VALUE - ----------------------------------------------------------------------------------------------------------------------------------- INVESTMENTS (CONT.) a Irvine Ranch Public Facilities and Infrastructure Authority Lease Revenue, Capital Improvement Project, Weekly VRDN and Put, 5.10%, 11/01/10 ....................................................... $ 4,700,000 $ 4,700,000 a Irvine Ranch Water District, Construction Bonds , Refunding, Series B, Daily VRDN and Put, 4.00%, 8/01/09 ............................................................... 2,400,000 2,400,000 a Irvine Ranch Water District COP, Capital Improvement Project, Daily VRDN and Put, 4.30%, 8/01/16 ............................................................... 13,500,000 13,500,000 a Irvine Ranch Water District GO, No. 105, 140, 240 and 250, Daily VRDN and Put, 4.30%, 1/01/21 ............................................................... 9,500,000 9,500,000 a Irvine Ranch Water District Revenue, Consolidated District Nos.105, 250 and 290, Daily VRDN and Put, 4.20%, 8/01/16 ............................................................................ 3,400,000 3,400,000 Construction Bonds, Daily VRDN and Put, 4.20%, 10/01/05 ................................... 1,500,000 1,500,000 ID No.182, Series A, Daily VRDN and Put, 4.30%, 11/15/13 .................................. 3,000,000 3,000,000 ID No. 284, Series A, Daily VRDN and Put, 4.30%, 11/15/13 ................................. 4,200,000 4,200,000 ID Nos.102, 103, 105, 106, Refunding, Daily VRDN and Put, 4.20%, 9/01/06 .................. 3,000,000 3,000,000 ID Nos. 140, 105, 240 and 250, Daily VRDN and Put, 4.20%, 4/01/33 ......................... 11,000,000 11,000,000 a Kern County COP, Kern Public Facilities Project, Series A, Weekly VRDN and Put, 5.00%, 8/01/06 ............................................................... 1,700,000 1,700,000 a Lancaster RDA, MFHR, Westwood Park Apartments, Series 1985-K, Weekly VRDN and Put, 4.40%, 12/01/07 .............................................................. 900,000 900,000 a Livermore Housing Authority MFR, Richards Manor, Refunding, Series A, Weekly VRDN and Put, 4.30%, 12/01/22 ....................................................... 6,070,000 6,070,000 Los Angeles County GO, TRAN, 4.00%, 6/30/00 ................................................ 13,500,000 13,543,916 a Los Angeles County Housing Authority MFHR, Sand Canyon Ranch Project, Series F, Weekly VRDN and Put, 4.75%, 11/01/06 ............................................. 4,500,000 4,500,000 Los Angeles County MTA Revenue TECP, 3.55%, 2/22/00 ........................................ 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, 4.90%, 7/01/20 ......................... 6,000,000 6,000,000 a Los Angeles County Pension Obligation, Refunding, Series 96A, AMBAC Insured, Weekly VRDN and Put, 4.85%, 6/30/07 ............................ 2,500,000 2,500,000 Series B, Weekly VRDN and Put, 4.85%, 6/30/07 ............................................. 6,600,000 6,600,000 Los Angeles County Schools Pooled Financing Program COP, Pooled Transportation, Series A, FSA Insured, 4.00%, 6/30/00 ...................................... 5,000,000 5,020,852 a Los Angeles County Transportation Commission Sales Tax Revenue, Refunding, Weekly VRDN and Put, 4.85%, 7/01/12 ............................................ 12,000,000 12,000,000 a Los Angeles CRDA, COP, Baldwin Hill Park, Weekly VRDN and Put, 4.95%, 12/01/14 ............................ 1,000,000 1,000,000 MFHR, Grand Promenade Project, Weekly VRDN and Put, 4.40%, 12/01/10 ..................... 1,300,000 1,300,000 Los Angeles Department of Water and Power Electric Plant Revenue TECP 3.35%, 1/18/00 .......................................................................... 10,100,000 10,100,000 3.15%, 2/24/00 .......................................................................... 5,000,000 5,000,000 a Los Angeles MFR, Casden Project, Series K, Weekly VRDN and Put, 3.75%, 7/01/10 ........................... 3,300,000 3,300,000 Lucas Studios Project, Series D, Weekly VRDN and Put, 5.30%, 12/01/21 ................... 1,200,000 1,200,000 Masselin Manor, Weekly VRDN and Put, 4.95%, 7/01/15 ..................................... 2,400,000 2,400,000 Los Angeles USD, TRAN, Series A, 4.00%, 6/30/00 ............................................ 2,500,000 2,510,786 Los Angeles Wastewater Systems Revenue, Series D, Pre-Refunded, 6.70%, 12/01/00 ............ 4,350,000 4,547,016 a Metropolitan Water District Revenue, Southern California Waterworks, Refunding, Series A, AMBAC Insured, Weekly VRDN and Put, 4.90%, 6/01/23 .................... 8,160,000 8,160,000 a Monterey County IDA, VPS Company Inc. Project, Series A, Weekly VRDN and Put, 5.40%, 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 1,009,938 a Sub.lien, Refunding, Series D, Weekly VRDN and Put, 5.10%, 7/01/18 ...................... 7,600,000 7,600,000 a Sub.lien, Series E, MBIA Insured, Weekly VRDN and Put, 4.80%, 7/01/22 ................... 20,200,000 20,200,000
FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED) (CONT.)
PRINCIPAL FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND AMOUNT VALUE - ----------------------------------------------------------------------------------------------------------------------------------- INVESTMENTS (CONT.) Northern California Transmission Revenue, Oregon Transmission Project, Series A, MBIA Insured, Pre-Refunded, 7.00%, 5/01/00 ........................................................................... $ 1,835,000 $ 1,885,919 TECP, 3.55%, 2/08/00 ..................................................................... 10,000,000 10,000,000 a Oakland COP, Capital Equipment Project, Weekly VRDN and Put, 5.15%, 12/01/15 ............................................................................. 7,500,000 7,500,000 a Orange County Apartment Development Revenue, Frost Project, Issue B, Weekly VRDN and Put, 4.95%, 3/01/09 ......................................................... 100,000 100,000 a Orange County Sanitation District COP, Nos. 1-3, 5-7, 11, 13 and 14, Daily VRDN and Put, 4.20%, 8/01/15 ......................... 23,000,000 23,000,000 Nos. 1-3, 5-7 and 11, Refunding, AMBAC Insured, Daily VRDN and Put, 4.20%, 8/01/16 ...................................................................... 14,900,000 14,900,000 a Oxnard RDA, COP, Channel Islands Business Center, Weekly VRDN and Put, 5.1961%, 7/01/05 ....................................................................... 390,000 390,000 a Pico Rivera RDA, COP, Weekly VRDN and Put, 4.75%, 12/01/10 .................................. 1,500,000 1,500,000 a Pleasanton MFMR, Valley Plaza, Series A, Weekly VRDN and Put, 5.00%, 7/15/18 .............................................................................. 4,660,000 4,660,000 Puerto Rico Commonwealth Government Development Bank, a Refunding, MBIA Insured, Weekly VRDN and Put, 4.95%, 12/01/15 ............................ 700,000 700,000 TECP, 3.50%, 1/19/00 ..................................................................... 9,338,000 9,338,000 TECP, 3.65%, 1/19/00 ..................................................................... 7,900,000 7,900,000 TECP, 3.50%, 1/24/00 ..................................................................... 4,500,000 4,500,000 a Redwood City COP, City Hall Project, Weekly VRDN and Put, 4.75%, 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, 5.10%, 9/01/28 ................................................ 8,000,000 8,000,000 a Riverside County Housing Authority MFMR, Emeritus Park, Series B, FNMA Insured, Weekly VRDN and Put, 5.00%, 7/15/18 ......................................................................... 3,050,000 3,050,000 a Riverside County IDA Revenue, Calavo Growers, Weekly VRDN and Put, 4.40%, 9/01/05 ......................................................................... 1,500,000 1,500,000 Riverside County Teeter Plan TECP, 3.50%, 1/24/00 ............................................................................ 7,608,000 7,608,000 3.50%, 1/27/00 ............................................................................ 15,000,000 15,000,000 a Sacramento County COP, Administration Center and Courthouse Project, Weekly VRDN and Put, 4.70%, 6/01/20 ......................................................... 7,955,000 7,955,000 a Sacramento MFHR, Smoketree, Series A, Weekly VRDN and Put, 5.00%, 4/15/10 .............................................................................. 6,750,000 6,750,000 a San Bernardino County MFHR, Refunding, Quality A, FNMA Insured, Weekly VRDN and Put, 5.00%, 7/01/14 ......................................................... 4,350,000 4,350,000 San Diego Area Local Government COP, TRAN, Series A, 4.00%, 6/30/00 ......................... 5,000,000 5,020,356 a San Diego County MFHR, Nationwide, Series C, Weekly VRDN and Put, 5.00%, 4/15/05 .............................................................................. 1,400,000 1,400,000 San Diego Gas and Electric TECP, 3.55%, 2/09/00 ............................................. 5,500,000 5,500,000 a San Diego MFHR, University Town Center Apartments, Refunding, Weekly VRDN and Put, 4.30%, 10/01/15 ........................................................ 4,900,000 4,900,000 a San Dimas RDA, Commercial Development Revenue, San Dimas Commercial Center, Monthly VRDN and Put, 3.55%, 12/01/13 ................................... 900,000 900,000 a San Francisco City and County MFHR, Weekly VRDN and Put, 4.75%, 6/01/06 .............................................................................. 4,400,000 4,400,000 a San Francisco City and County RDA, MFR, Refunding, Fillmore Center, Series B-2, Weekly VRDN and Put, 5.00%, 12/01/17 .......................................................................... 1,000,000 1,000,000 3rd and Mission, Series C, Weekly VRDN and Put, 5.05%, 7/01/34 .............................. 11,000,000 11,000,000 San Joaquin County Transportation Authority Sales Tax Revenue TECP, 3.45%, 3/13/00 .............................................................................. 12,600,000 12,600,000 a San Jose MFMR, Somerset Park Apartment Project, Series A, Weekly VRDN and Put, 4.50%, 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, 4.85%, 11/15/11 ........................................................................ 1,200,000 1,200,000 a San Mateo County MFHR, Pacific Oaks Apartment Project, Series A, Weekly VRDN and Put, 5.05%, 7/01/17 ......................................................... 2,950,000 2,950,000 a Santa Ana Housing Authority MFHR, Vintage Apartments, Refunding, Series A, Weekly VRDN and Put, 4.50%, 12/01/22 ............................................................................. 3,450,000 3,450,000 a Santa Clara County Financing Authority, Lease Revenue, VMC Facility Replacement Project, Series B, Weekly VRDN and Put, 5.05%, 11/15/25 ........................................................ 5,125,000 5,125,000 Santa Clara County Housing Authority MFHR, Benton Park Central Apartments, Refunding, Series A, a Weekly VRDN and Put, 4.90%, 12/15/25 ................................................... 5,000,000 5,000,000 Sonoma County TRAN, 3.50%, 2/01/00 ....................................................... 19,000,000 19,008,699
FRANKLIN CALIFORNIA TAX-FREE TRUST STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED) (CONT.)
PRINCIPAL FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND AMOUNT VALUE - ----------------------------------------------------------------------------------------------------------------------------------- INVESTMENTS (CONT.) a South San Francisco MFHR, Magnolia Plaza Apartments, Series A, Weekly VRDN and Put, 5.05%, 5/01/17 ......................................................... $ 500,000 $ 500,000 a Southern California Public Power Authority Power Project Revenue, Palo Verde Project, Refunding, Series B, AMBAC Insured, Weekly VRDN and Put, 4.85%, 7/01/09 .............................. 2,000,000 2,000,000 Series C, AMBAC Insured, Weekly VRDN and Put, 4.85%, 7/01/17 .............................. 500,000 500,000 a Southern California Public Power Authority Transmission Project Revenue, Southern Transmission, Refunding, AMBAC Insured, Weekly VRDN and Put, 4.85%, 7/01/19 ........................................ 27,000,000 27,000,000 Series B, FSA Insured, Weekly VRDN and Put, 5.00%, 7/01/23 ................................ 6,600,000 6,600,000 Stockton East Water District COP, Project 1990, Series A, AMBAC Insured, Pre-Refunded, 7.30%, 4/01/00 ................................................................ 4,490,000 4,624,732 a Suisun City Housing Authority MFR, Village Green, Series A, Weekly VRDN and Put, 5.00%, 6/15/18 ..................................................................... 8,600,000 8,600,000 a Tustin 1915 Act, Reassessment District No 95-2, Series A, Daily VRDN and Put, 4.20%, 9/02/13 ......................................................................... 15,322,000 15,322,000 a Vallecitos Water District Revenue COP, Twin Oaks Reservoir Project, Weekly VRDN and Put, 5.00%, 7/01/30 ................................................................ 2,600,000 2,600,000 a Vallejo City USD, COP, Capital Improvement Financing Projects, Series E, Weekly VRDN and Put, 3.60%, 7/01/25 ......................................................... 2,500,000 2,500,000 a West Basin Municipal Water District Revenue COP, Recycled Water Project, Series C, Weekly VRDN and Put, 4.80%, 8/01/27 ......................................................................... 1,900,000 1,900,000 a Western Riverside County Regional Wastewater Treatment Authority Revenue, Daily VRDN and Put, 4.20%, 4/01/28 .......................................................... 7,000,000 7,000,000 ------------ TOTAL INVESTMENTS (COST $787,877,236) 99.1% ................................................. 787,877,236 OTHER ASSETS, LESS LIABILITIES .9% .......................................................... 7,208,857 ------------ NET ASSETS 100.0% ........................................................................... $795,086,093 ============
See glossary of terms on page 53. (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 STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED) (CONT.)
GLOSSARY OF TERMS - ------------------------------------------------------------------------------------------- 1915 ACT - Improvement Bond Act of 1915 ABAG - The Association of Bay Area Governments AD - Assessment District AMBAC - American Municipal Bond Assurance Corp. BART - Bay Area Rapid Transit BIG - Bond Investor Guaranty Insurance Co. CDA - Community Development Authority/Agency CFD - Community Facilities District CHFCLP - California Health Facilities Construction Loan Program 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 Authority/Agency HFAR - Housing Authority/Agency Revenue HMR - Home Mortgage Revenue 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 RAN - Revenue Anticipation Notes 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 DECEMBER 31, 1999 (UNAUDITED)
FRANKLIN FRANKLIN CALIFORNIA FRANKLIN CALIFORNIA INTERMEDIATE-TERM CALIFORNIA INSURED TAX-FREE TAX-FREE TAX-EXEMPT INCOME FUND INCOME FUND MONEY FUND ------------------------------------------------------------ Assets: Investments in securities: Cost ...................................................... $ 1,698,925,980 $ 187,492,200 $787,877,236 ============================================================ Value ..................................................... 1,686,195,685 184,218,135 787,877,236 Cash ....................................................... 25,513 16,829 2,686,112 Receivables: Capital shares sold ....................................... 896,979 1,394,762 4,099,953 Interest .................................................. 29,333,325 2,785,263 4,837,780 ------------------------------------------------------------ Total assets .......................................... 1,716,451,502 188,414,989 799,501,081 ------------------------------------------------------------ Liabilities: Payables: Investment securities purchased ........................... -- 999,541 -- Capital shares redeemed ................................... 3,292,930 498,618 3,648,991 Affiliates ................................................ 1,053,904 109,756 348,307 Shareholders .............................................. 474,357 22,298 84,158 Distributions to shareholders ............................... 3,318,320 327,420 102,072 Other liabilities ........................................... 192,854 51,468 231,460 ------------------------------------------------------------ Total liabilities ..................................... 8,332,365 2,009,101 4,414,988 ------------------------------------------------------------ Net assets, at value ................................. $ 1,708,119,137 $ 186,405,888 $795,086,093 ============================================================ Net assets consist of: Undistributed net investment income ........................ $ -- $ 274,897 $ -- Accumulated distributions in excess of net investment income (2,157,298) -- -- Net unrealized depreciation ................................ (12,730,295) (3,274,065) -- Accumulated net realized loss .............................. (17,461,056) (257,039) -- Capital shares ............................................. 1,740,467,786 189,662,095 795,086,093 ------------------------------------------------------------ Net assets, at value .................................. $ 1,708,119,137 $ 186,405,888 $795,086,093 ============================================================
See notes to financial statements. FRANKLIN CALIFORNIA TAX-FREE TRUST Financial Statements (continued) STATEMENTS OF ASSETS AND LIABILITIES (CONT.) DECEMBER 31, 1999
FRANKLIN FRANKLIN CALIFORNIA FRANKLIN CALIFORNIA INTERMEDIATE-TERM CALIFORNIA INSURED TAX-FREE TAX-FREE TAX-EXEMPT INCOME FUND INCOME FUND MONEY FUND ---------------------------------------------------------- CLASS A: Net assets, at value ....................................... $ 1,635,927,793 $ 186,405,888 $795,086,093 ========================================================== Shares outstanding ......................................... 142,248,886 17,379,134 795,086,093 ========================================================== Net asset value per share* ................................. $11.50 $10.73 $1.00 ========================================================== Maximum offering price per share (net asset value per share / 95.75%, 97.75%, 100%, respectively) ........... $12.01 $10.98 $1.00 ========================================================== CLASS C: Net assets, at value ....................................... $ 72,191,344 -- -- ========================================================== Shares outstanding ......................................... 6,235,141 -- -- ========================================================== Net asset value per share* ................................. $11.58 -- -- ========================================================== Maximum offering price per share (net asset value per share / 99%) .......................................... $11.70 -- -- ==========================================================
*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 SIX MONTHS ENDED DECEMBER 31, 1999 (UNAUDITED)
FRANKLIN FRANKLIN CALIFORNIA FRANKLIN CALIFORNIA INTERMEDIATE-TERM CALIFORNIA INSURED TAX-FREE TAX-FREE TAX-EXEMPT INCOME FUND INCOME FUND MONEY FUND ---------------------------------------------------------- Investment income: Interest ................................................... $ 51,436,063 $ 5,069,168 $ 11,292,638 ---------------------------------------------------------- Expenses: Management fees (Note 3) ................................... 4,112,508 535,172 1,803,425 Distribution fees (Note 3) Class A ................................................... 799,717 95,756 -- Class C ................................................... 249,363 -- -- Transfer agent fees (Note 3) ............................... 245,608 32,387 192,804 Custodian fees ............................................. 9,921 1,164 6,272 Reports to shareholders .................................... 75,962 14,301 54,837 Registration and filing fees ............................... 1,289 845 2,427 Professional fees .......................................... 30,319 3,836 11,137 Trustees' fees and expenses ................................ 22,809 2,419 8,741 Other ...................................................... 41,794 18,885 52,332 ---------------------------------------------------------- Total expenses ........................................ 5,589,290 704,765 2,131,975 Expenses waived/paid by affiliate (Note 3) ............ -- (131,399) -- ---------------------------------------------------------- Net expenses ......................................... 5,589,290 573,366 2,131,975 ---------------------------------------------------------- Net investment income ............................... 45,846,773 4,495,802 9,160,663 ---------------------------------------------------------- Realized and unrealized losses: Net realized loss from investments ......................... (17,337,496) (154,399) -- Net unrealized depreciation on investments ................. (76,095,279) (4,937,398) -- ---------------------------------------------------------- Net realized and unrealized loss ............................ (93,432,775) (5,091,797) -- ---------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $ (47,586,002) $ (595,995) $ 9,160,663 ==========================================================
See notes to financial statements. FRANKLIN CALIFORNIA TAX-FREE TRUST Financial Statements (continued) STATEMENTS OF CHANGES IN NET ASSETS FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (UNAUDITED) AND THE YEAR ENDED JUNE 30, 1999
FRANKLIN CALIFORNIA INSURED FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND TAX-FREE INCOME FUND ------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED DECEMBER 31, 1999 JUNE 30, 1999 DECEMBER 31, 1999 JUNE 30, 1999 ------------------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Net investment income .................... $ 45,846,773 $ 91,205,201 $ 4,495,802 $ 8,310,124 Net realized gain (loss) from investments (17,337,496) 954,544 (154,399) 93,006 Net unrealized depreciation on investments (76,095,279) (43,645,378) (4,937,398) (4,475,770) ------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations ........... (47,586,002) 48,514,367 (595,995) 3,927,360 Distributions to shareholders from: Net investment income: Class A ................................. (44,106,600) (88,563,323) (4,500,687) (8,423,741) Class C ................................. (1,740,173) (3,006,211) -- -- In excess of net investment income: Class A ................................. (163,646) (1,921,957) -- -- Class C ................................. (6,456) (65,239) -- -- Net realized gains: Class A ................................. (230,555) (9,565,776) -- -- Class C ................................. (10,029) (360,118) -- -- ------------------------------------------------------------------------- Total distributions to shareholders ....... (46,257,459) (103,482,624) (4,500,687) (8,423,741) Capital share transactions: (Note 2) Class A .................................. (49,458,057) 110,241,197 (1,044,328) 41,379,720 Class C .................................. (4,127,763) 27,415,008 -- -- ------------------------------------------------------------------------- Total capital share transactions .......... (53,585,820) 137,656,205 (1,044,328) 41,379,720 Net increase (decrease) in net assets ............................ (147,429,281) 82,687,948 (6,141,010) 36,883,339 Net assets Beginning of period ....................... 1,855,548,418 1,772,860,470 192,546,898 155,663,559 ------------------------------------------------------------------------- End of period ............................. $ 1,708,119,137 $ 1,855,548,418 $ 186,405,888 $ 192,546,898 ========================================================================= Undistributed net investment income (accumulated distributions in excess of net investment income) included in net assets: End of period ............................ $ (2,157,298) $ (1,987,196) $ 274,897 $ 279,782 =========================================================================
See notes to financial statements. FRANKLIN CALIFORNIA TAX-FREE TRUST Financial Statements (continued) STATEMENTS OF CHANGES IN NET ASSETS (CONT.) FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (UNAUDITED) AND THE YEAR ENDED JUNE 30, 1999
FRANKLIN CALIFORNIA TAX-EXEMPT MONEY FUND ----------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, 1999 JUNE 30, 1999 ----------------------------------- Increase (decrease) in net assets: Operations: Net investment income .................................. $ 9,160,663 $ 15,536,781 Net realized loss from investments ..................... -- (11,084) ----------------------------------- Net increase in net assets resulting from operations 9,160,663 15,525,697 Distributions to shareholders from net investment income: (9,160,663) (15,525,697)* Capital share transactions: (Note 2) .................... 88,208,835 50,152,692 ----------------------------------- Net increase in net assets ......................... 88,208,835 50,152,692 Net assets (there is no undistributed net investment income at beginning or end of period): Beginning of period ................................... 706,877,258 656,724,566 ----------------------------------- End of period ......................................... $ 795,086,093 $ 706,877,258 ===================================
*Distributions were decreased by net realized loss from security transactions of $11,084 in year ended June 1999. See notes to financial statements. FRANKLIN CALIFORNIA TAX-FREE TRUST Notes to Financial Statements (unaudited) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Franklin California Tax-Free Trust (the Trust) is registered under the Investment Company Act of 1940 as an open-end investment company, consisting of three series (the Funds). All Funds are diversified except the Franklin California Intermediate-Term Tax-Free Income Fund (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 (unaudited) (continued) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.) d. INSURANCE The scheduled payments of interest and principal for each long-term municipal security in the Insured Fund is insured by either a new issue insurance policy, a portfolio insurance policy, a secondary insurance policy, or by collateral guaranteed by an agency of the U.S. government. Depending on the type of coverage, premiums for insurance are either added to the cost basis of the security, included as an expense of the fund, or paid by a third party. e. ACCOUNTING ESTIMATES The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expense during the reporting period. Actual results could differ from those estimates. 2. SHARES OF BENEFICIAL INTEREST The classes of shares offered within each of the funds are indicated below. Effective January 1, 1999, Class I and Class II were renamed Class A and Class C, respectively. Each class of shares differs by its initial sales load, distribution fees, voting rights on matters affecting a single class and the exchange privilege. CLASS A CLASS A & CLASS C - -------------------------------------------------------------------------------------------------------------- Franklin California Intermediate-Term Tax-Free Income Fund Franklin California Insured Tax-Free Income Fund Franklin California Tax-Exempt Money Fund
At December 31, 1999, there were an unlimited number of shares authorized (no par value). Transactions in the Funds' shares were as follows:
FRANKLIN FRANKLIN CALIFORNIA FRANKLIN CALIFORNIA CALIFORNIA INSURED TAX-FREE INTERMEDIATE-TERM TAX-EXEMPT INCOME FUND TAX-FREE INCOME FUND MONEY FUND ------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT AMOUNT ------------------------------------------------------------------------------- CLASS A SHARES: Six months ended December 31, 1999 Shares sold ........................ 13,220,350 $154,983,872 2,948,159 $32,169,304 $ 603,832,747 Shares issued in reinvestment of distributions .................... 1,680,321 19,798,509 240,581 2,627,301 9,152,980 Shares redeemed .................... (19,122,207) (224,240,438) (3,285,303) (35,840,933) (524,776,892) ------------------------------------------------------------------------------- Net increase (decrease) ............ (4,221,536) $(49,458,057) (96,563) $(1,044,328) $ 88,208,835 =============================================================================== 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 ===============================================================================
FRANKLIN CALIFORNIA TAX-FREE TRUST Notes to Financial Statements (unaudited) (continued) 2. SHARES OF BENEFICIAL INTEREST (CONT.)
FRANKLIN CALIFORNIA INSURED TAX-FREE INCOME FUND ------------------------------------- SHARES AMOUNT ------------------------------------- CLASS C SHARES: Six months ended December 31, 1999 Shares sold ........................... 797,852 $ 9,466,367 Shares issued in reinvestment of distributions ....................... 99,670 1,182,959 Shares redeemed ....................... (1,247,219) (14,777,089) ------------------------------------- Net decrease .......................... (349,697) $ (4,127,763) 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 =====================================
3. TRANSACTIONS WITH AFFILIATES Certain officers and trustees of the Funds are also officers 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' principal 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:
ANNUALIZED FEE RATE NET ASSETS -------------------------------------------------------------- .625% First $100 million .50% Over $100 million, up to and including $250 million .45% In excess of $250 million
Under an agreement with Advisers, FT Services provides administrative services to the Funds. The fee is paid by Advisers based on average daily net assets, and is not an additional expense of the Funds. Advisers agreed in advance to waive management fees for the 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% and .65% per year of the average daily net assets of Class A and Class C, respectively, for costs incurred in marketing the Funds' shares. FRANKLIN CALIFORNIA TAX-FREE TRUST Notes to Financial Statements (unaudited) (continued) 3. TRANSACTIONS WITH AFFILIATES (CONT.) Distributors paid net commissions on sales of the Funds' shares, and received contingent deferred sales charges for the period as follows:
FRANKLIN FRANKLIN CALIFORNIA CALIFORNIA INSURED INTERMEDIATE- TAX-FREE TERM TAX-FREE INCOME FUND INCOME FUND --------------------------------- Net commissions paid ............... $122,875 $15,861 Contingent deferred sales charges... $ 66,309 $ 1,644
The Funds paid transfer agent fees of $470,799 of which $416,227 was paid to Investor Services. 4. INCOME TAXES At June 30, 1999, the Intermediate-Term Fund and the Money Fund had tax basis capital losses which may be carried over to offset future capital gains. Such losses expire as follows:
FRANKLIN CALIFORNIA FRANKLIN INTERMEDIATE- CALIFORNIA TERM TAX-FREE TAX-EXEMPT INCOME FUND MONEY FUND --------------------------- Capital loss carryovers expiring in: 2003 ................................... $102,640 $14,563 2005 ................................... -- 1,444 2006 ................................... -- 9,957 2007 ................................... -- 4,593 --------------------------- $102,640 $30,557 ===========================
At June 30, 1999, the Money Fund had deferred capital losses occurring subsequent to October 31, 1998 of $9,293. For tax purposes, such losses will be reflected in the year ending June 30, 2000. Distributions of income to shareholders may not equal net investment income due to differing treatments of dividend distributions for book and tax purposes. Net realized capital gains differ for financial statement and tax purposes primarily due to differing treatment of wash sales. 62 FRANKLIN CALIFORNIA TAX-FREE TRUST Notes to Financial Statements (unaudited) (continued) 4. INCOME TAXES (CONT.) At December 31, 1999, the net unrealized depreciation based on the cost of investments for income tax purposes was as follows:
FRANKLIN FRANKLIN CALIFORNIA CALIFORNIA INSURED INTERMEDIATE- TAX-FREE TERM TAX-FREE INCOME FUND INCOME FUND -------------------------------------- Investments at cost ....... $ 1,699,305,381 $ 187,492,200 ====================================== Unrealized appreciation ... $ 37,602,317 $ 2,060,841 Unrealized depreciation ... (50,712,013) (5,334,906) ====================================== Net unrealized depreciation $ (13,109,696) $ (3,274,065) ======================================
5. INVESTMENT TRANSACTIONS Purchases and sales of securities (excluding short-term securities) for the period ended December 31, 1999 were as follows:
FRANKLIN FRANKLIN CALIFORNIA CALIFORNIA INSURED INTERMEDIATE- TAX-FREE TERM TAX-FREE INCOME FUND INCOME FUND ------------------------------------- Purchases... $352,718,018 $10,009,907 Sales ...... $411,792,276 $26,000,669
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. 7. CREDIT FACILITY Certain Franklin Templeton Funds, including Insured Fund and Intermediate-Term Fund, are participants in a $750 million senior unsecured credit agreement for temporary or emergency purposes. The termination date of the agreement is March 1, 2000. Interest is calculated on the Funds' borrowing at market rates. At December 31, 1999, the Funds had not utilized this credit facility. This page intentionally left blank. -----END PRIVACY-ENHANCED MESSAGE-----