UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-02790
Franklin California Tax-Free Income Fund
(Exact name of registrant as specified in charter)
_One Franklin Parkway, San Mateo, CA 94403-1906
(Address of principal executive offices) (Zip code)
_Craig S. Tyle, One Franklin Parkway, San Mateo, CA 94403-1906
(Name and address of agent for service)
Registrant's telephone number, including area code: 650 312-2000
Date of fiscal year end: _3/31
Date of reporting period: _9/30/14
Item 1. Reports to Stockholders.
Franklin Templeton Investments
Gain From Our Perspective®
At Franklin Templeton Investments, we’re dedicated to one goal: delivering exceptional asset management for our clients. By bringing together multiple, world-class investment teams in a single firm, we’re able to offer specialized expertise across styles and asset classes, all supported by the strength and resources of one of the world’s largest asset managers. This has helped us to become a trusted partner to individual and institutional investors across the globe.
Focus on Investment Excellence
At the core of our firm, you’ll find multiple independent investment teams—each with a focused area of expertise—from traditional to alternative strategies and multi-asset solutions. And because our portfolio groups operate autonomously, their strategies can be combined to deliver true style and asset class diversification.
All of our investment teams share a common commitment to excellence grounded in rigorous, fundamental research and robust, disciplined risk management. Decade after decade, our consistent, research-driven processes have helped Franklin Templeton earn an impressive record of strong, long-term results.
1. As of 12/31/13. Clients are represented by the total number of shareholder accounts.
Global Perspective Shaped by Local Expertise
In today’s complex and interconnected world, smart investing demands a global perspective. Franklin Templeton pioneered international investing over 60 years ago, and our expertise in emerging markets spans more than a quarter of a century. Today, our investment professionals are on the ground across the globe, spotting investment ideas and potential risks firsthand. These locally based teams bring in-depth understanding of local companies, economies and cultural nuances, and share their best thinking across our global research network.
Strength and Experience
Franklin Templeton is a global leader in asset management serving clients in over 150 countries.1 We run our business with the same prudence we apply to asset management, staying focused on delivering relevant investment solutions, strong long-term results and reliable, personal service. This approach, focused on putting clients first, has helped us to become one of the most trusted names in financial services.
Not FDIC Insured | May Lose Value | No Bank Guarantee
| Contents | |
| Shareholder Letter | 1 |
| Semiannual Report | |
| Franklin California | |
| Tax-Free Income Fund | 3 |
| Performance Summary | 7 |
| Your Fund’s Expenses | 10 |
| Financial Highlights and | |
| Statement of Investments | 11 |
| Financial Statements | 30 |
| Notes to Financial Statements | 33 |
| Shareholder Information | 40 |
Semiannual Report
Franklin California Tax-Free Income Fund
We are pleased to bring you Franklin California Tax-Free Income Fund’s semiannual report for the period ended September 30, 2014.
Your Fund’s Goal and Main Investments
The Fund seeks to provide as high a level of income exempt from federal and California personal income taxes (for California residents) as is consistent with prudent investment management and preservation of capital by investing at least 80% of its total assets in securities that pay interest free from such taxes.1
Performance Overview
The Fund’s Class A share price, as measured by net asset value, increased from $7.21 on March 31, 2014, to $7.46 on September 30, 2014. The Fund’s Class A shares paid dividends totaling 15.46 cents per share for the reporting period.2 The Performance Summary beginning on page 7 shows that at the end of this reporting period the Fund’s Class A shares’ distribution rate was 3.94% based on an annualization of the 2.56 cent per share September dividend and the maximum offering price of $7.79 on September 30, 2014. An investor in the 2014 maximum combined effective federal and California personal income tax bracket of 50.83% would need to earn a distribution rate of 8.01% from a taxable investment to match the Fund’s Class A tax-free distribution rate. For the Fund’s Class C and Advisor shares’ performance, please see the Performance Summary. Dividend distributions were affected by lower interest rates during the period. This and other factors resulted in reduced income for the portfolio and caused dividends to be lower at the end of the period.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. Please visit franklintempleton.com or call (800) 342-5236 for most recent month-end performance.
| Credit Quality Breakdown* | ||
| 9/30/14 | ||
| % of Total | ||
| Ratings | Long-Term Investments | |
| AAA | 8.02 | % |
| AA | 41.38 | % |
| A | 17.84 | % |
| BBB | 17.32 | % |
| Below Investment Grade | 11.02 | % |
| Refunded | 3.52 | % |
| Not Rated | 0.90 | % |
*Securities, except for those labeled Not Rated, are assigned ratings by one or more Nationally Recognized Statistical Credit Rating Organizations (NRSROs), such as Standard & Poor’s, Moody’s and Fitch, that can be considered by the investment manager as part of its independent securities analysis. When ratings from multiple agencies are available, the highest is used, consistent with the portfolio investment process. Ratings reflect an NRSRO’s opinion of an issuer’s creditworthiness and typically range from AAA or Aaa (highest) to D (lowest). The Below Investment Grade category consists of bonds rated below BBB-. The Refunded category generally consists of refunded bonds secured by U.S. government or other high-quality securities. The Not Rated category consists of ratable securities that have not been rated by an NRSRO. Cash and equivalents (defined as bonds with stated maturities, or redemption features, of seven days or less), as well as short-term bonds (defined as bonds maturing in more than seven days but less than one year), are excluded from this breakdown.
State Update
California’s large and diverse economy improved during the period under review. Employment has been growing at a higher rate than the nation’s due to continued growth in high technology employment and a recovery in the construction industry. Although the state’s 7.4% unemployment rate in August 2014 was still higher than 6.1% for the U.S., the gap has narrowed.3 The housing market in California appeared to be rebounding as median sales prices of existing single-family homes rose in the second quarter of 2014. The state has several economic advantages, such as a well-educated workforce, the ability to attract venture capital, and a leading role in the growing biotechnol-ogy and alternative energy industries. California residents also have somewhat higher income than the national average.
1. For investors subject to alternative minimum tax, a small portion of Fund dividends may be taxable. Distributions of capital gains are generally taxable. To avoid
imposition of 28% backup withholding on all Fund distributions and redemption proceeds, U.S. investors must be properly certified on Form W-9 and non-U.S. investors
on Form W-8BEN.
2. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.
3. Source: Bureau of Labor Statistics.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).
The SOI begins on page 14.
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FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
Due to stronger-than-expected revenue growth, California produced better-than-budgeted results in fiscal year 2014 (ended June 30). The state closed its 2014 fiscal year in its strongest fiscal position of the past decade. The enacted budget for fiscal year 2015 was expected to further pay down budgetary deferrals and to add to the state’s budget stabilization fund, the first time a deposit has been made to this fund in several years. California’s net tax-supported debt was $2,465 per capita and 5.3% of personal income, compared with the $1,054 and 2.6% national medians.4
Independent credit rating agency Moody’s Investors Service assigned California’s general obligation bonds an Aa3 rating with a stable outlook.5 The rating and outlook reflected Moody’s view of the state’s robust employment growth, higher revenues, improving financial governance, strong liquidity, high but declining debt ratios and adjusted net pension liability ratios that are close to the state median. However, Moody’s noted some challenges, including California’s highly volatile tax revenue structure and governance restrictions, lack of reserves to cushion the state’s finances from future downturns, and continued difficulties resulting from past reliance on deficit borrowing and other one-time solutions to resolve prior years’ budgetary gaps.
| Dividend Distributions | |||
| 4/1/14–9/30/14 | |||
| Dividend per Share (cents) | |||
| Month | Class A | Class C | Advisor Class |
| April | 2.61 | 2.28 | 2.67 |
| May | 2.61 | 2.28 | 2.67 |
| June | 2.56 | 2.23 | 2.62 |
| July | 2.56 | 2.23 | 2.62 |
| August | 2.56 | 2.23 | 2.62 |
| September | 2.56 | 2.22 | 2.61 |
| Total | 15.46 | 13.47 | 15.81 |
Municipal Bond Market Overview
For the six months ended September 30, 2014, municipal bond market performance remained strong as prices rose. The Barclays Municipal Bond Index, which tracks investment-grade municipal securities, generated a +4.12% total return for the period.6 In comparison, the Barclays U.S. Treasury Index posted a +1.70% six-month return.6
A decline in issuance contributed to municipal market strength throughout this reporting period. The decreased supply did not dampen individual or institutional investor appetite as buyers found attractive the higher relative yields offered by this asset class. Investors seeking tax-free income seemed to recognize the value municipal bonds offered despite current, low interest rates. Throughout the period, demand for tax-exempt income remained strong, and municipal bond fund inflows reversed the outflows of the prior year.
At the beginning of 2014, the Federal Reserve Board (Fed) began to modestly reduce the pace of its bond buying program. The municipal bond market showed little reaction initially. Economic data during this reporting period continued to indicate positive trends such as lower unemployment and a stronger housing market. Despite the pockets of positive news, the Fed Chair remained concerned that low wage growth and workforce participation were evidence that the labor market might be weaker than reported and therefore left interest rates low. This commitment to lower interest rates combined with lower levels of new-issue municipal bond supply compared with the previous year helped support a rise in municipal bond prices during the reporting period.
Certain credit events continued to challenge the municipal bond market during the period under review. Independent credit rating agencies Standard & Poor’s (S&P), Moody’s and Fitch Ratings downgraded Puerto Rico general obligation debt to below investment grade. The City of Detroit, Michigan, after filing for the largest municipal bankruptcy in U.S. history, remained in litigation with creditors. In addition, reports from rating agencies and research organizations mentioned under-funded pensions that could affect the fiscal stability of several
4. Source: Moody’s Investors Service, 2014 State Debt Medians: Appetite for Borrowing Remains Weak, 5/22/14.
5. This does not indicate Moody’s rating of the Fund.
6. Source: Morningstar.
See www.franklintempletondatasources.com for additional data provider information.
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FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
states and large municipalities. Bonds issued by municipalities involved in such stories have often experienced price erosion in secondary trading, but the extent of price erosion and the contagion to related issues have been unpredictable. Fallout from such headlines during the reporting period was no exception.
On June 28, 2014, Puerto Rico Governor Alejandro García-Padilla signed into law the Public Corporation Debt Enforcement and Recovery Act. By virtue of its status as a U.S. territory, Puerto Rico, as well as its public agencies, corporations and cities, cannot file for bankruptcy under the U.S. Bankruptcy Code. The governor’s stated intent for this law was to provide an organized, legal framework for Puerto Rico’s public corporations to restructure their debt should they become insolvent. With passage of the act, the market anticipated a significant likelihood that at least one of Puerto Rico’s public corporations would file under the new act. Franklin Templeton Investments joined in a lawsuit filed in Puerto Rico challenging the constitutionality of the act. At period-end, no Puerto Rico public corporation had filed to reorganize under the act. Market reaction to the new law increased volatility within this sector, but despite the negative reaction, during this reporting period, Puerto Rico bonds overall delivered a +3.33% total return, as measured by the Barclays Puerto Rico Municipal Bond Index.7
Franklin Templeton also joined a creditors committee made up of bondholders of the Puerto Rico Electric Power Authority (PREPA) with the goal of achieving a negotiated market-based, long-term solution to PREPA’s liquidity and structural issues.
At period-end, we maintained our positive view of the municipal bond market. We believe municipal bonds continue to be an attractive asset class among fixed income securities, and we intend to follow our solid discipline of investing to maximize income while seeking value in the municipal bond market.
Investment Strategy
We use a consistent, disciplined strategy in an effort to maximize tax-exempt income for our shareholders while balancing risk and return within the Fund’s range of allowable investments. We generally employ a buy-and-hold approach and invest in securities we believe should provide the most relative value in the market. We do not use leverage or derivatives, nor do we use hedging techniques that could add volatility and contribute to underperformance in adverse markets.
| Portfolio Breakdown | ||
| 9/30/14 | ||
| % of Total | ||
| Long-Term Investments* | ||
| Transportation | 22.5 | % |
| General Obligation | 18.5 | % |
| Hospital & Health Care | 16.5 | % |
| Utilities | 11.1 | % |
| Refunded | 10.7 | % |
| Subject to Government Appropriations | 8.4 | % |
| Tax-Supported | 5.3 | % |
| Higher Education | 4.0 | % |
| Other Revenue | 1.9 | % |
| Housing | 1.1 | % |
*Does not include short-term investments and other net assets.
Manager’s Discussion
Puerto Rico’s municipal bond market is widely traded because of its federal and state tax-exemption advantages. During the reporting period, some Puerto Rico issuers experienced a series of downgrades from S&P, Moody’s and Fitch Ratings. In February 2014, these credit rating firms downgraded their respective ratings of Puerto Rico’s general obligation debt to below investment grade, along with the ratings of certain related Puerto Rico issuers. Additionally, each rating agency maintained a negative outlook on certain Puerto Rico issuers. Shortly after Puerto Rico enacted legislation related to bankruptcy protection for public corporations, the rating agencies further downgraded ratings of Puerto Rico and many of its public corporations and authorities. The Fund is not required to sell securities that have been downgraded to below investment grade, but it is prohibited from making further purchases of such securities as long as the securities are not rated investment grade by at least one U.S. nationally recognized rating service. Rating actions combined with news related to the commonwealth’s financial position and future financing endeavors caused the Puerto Rico bond market to experience volatility during the reporting period.
Based on the combination of our value-oriented philosophy of investing primarily for income and a positive-sloping municipal yield curve, in which yields for longer term bonds are higher than those for shorter term bonds, we favored the use of longer
| 7. Source: Barclays. | |||
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FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
term bonds. Consistent with our strategy, we sought to purchase bonds that ranged from 15 to 30 years in maturity with good call features. We believe our conservative, buy-and-hold investment strategy can help us achieve relatively high, current, tax-free income for shareholders.
Thank you for your participation in Franklin California Tax-Free Income Fund. We look forward to serving your future investment needs.
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2014, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, state, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
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Performance Summary as of September 30, 2014
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities. The performance tables do not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses.
| Net Asset Value | ||||||
| Share Class (Symbol) | 9/30/14 | 3/31/14 | Change | |||
| A (FKTFX) | $ | 7.46 | $ | 7.21 | +$ | 0.25 |
| C (FRCTX) | $ | 7.45 | $ | 7.19 | +$ | 0.26 |
| Advisor (FCAVX) | $ | 7.45 | $ | 7.20 | +$ | 0.25 |
| Distributions (4/1/14–9/30/14) | ||||||
| Dividend | ||||||
| Share Class | Income | |||||
| A | $ | 0.1546 | ||||
| C | $ | 0.1347 | ||||
| Advisor | $ | 0.1581 | ||||
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FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
PERFORMANCE SUMMARY
Performance as of 9/30/14
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Class A: 4.25% maximum initial sales charge; Class C: 1% contingent deferred sales charge in first year only; Advisor Class: no sales charges.
| Cumulative | Average Annual | Total Annual | ||||||||
| Share Class | Total Return1 | Total Return2 | Operating Expenses3 | |||||||
| A | 0.57 | % | ||||||||
| 6-Month | + | 5.67 | % | + | 1.18 | % | ||||
| 1-Year | + | 11.74 | % | + | 6.99 | % | ||||
| 5-Year | + | 30.07 | % | + | 4.49 | % | ||||
| 10-Year | + | 63.77 | % | + | 4.60 | % | ||||
| C | 1.13 | % | ||||||||
| 6-Month | + | 5.54 | % | + | 4.54 | % | ||||
| 1-Year | + | 11.15 | % | + | 10.15 | % | ||||
| 5-Year | + | 26.56 | % | + | 4.82 | % | ||||
| 10-Year | + | 54.98 | % | + | 4.48 | % | ||||
| Advisor | 0.48 | % | ||||||||
| 6-Month | + | 5.73 | % | + | 5.73 | % | ||||
| 1-Year | + | 11.86 | % | + | 11.86 | % | ||||
| 5-Year | + | 30.73 | % | + | 5.51 | % | ||||
| 10-Year | + | 65.36 | % | + | 5.16 | % | ||||
| Distribution | Taxable Equivalent | 30 | -Day | Taxable Equivalent 30-Day | ||||||
| Share Class | Rate4 | Distribution Rate5 | Standardized Yield6 | Standardized Yield5 | ||||||
| A | 3.94 | % | 8.01 | % | 2.69 | % | 5.47 | % | ||
| C | 3.58 | % | 7.28 | % | 2.26 | % | 4.60 | % | ||
| Advisor | 4.20 | % | 8.54 | % | 2.90 | % | 5.90 | % | ||
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
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FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
PERFORMANCE SUMMARY
All investments involve risks, including possible loss of principal. Because municipal bonds are sensitive to interest rate movements, the Fund’s yield and share price will fluctuate with market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Because the Fund invests principally in a single state, it is subject to greater risk of adverse economic and regulatory changes in that state than a geographically diversified fund. The Fund holds a small portion of its assets in Puerto Rico municipal bonds that have been impacted by recent adverse economic and market changes, which may cause the Fund’s share price to decline. Changes in the credit rating of a bond, or in the credit rating or financial strength of a bond’s issuer, insurer or guarantor, may affect the bond’s value. The Fund may invest a significant part of its assets in municipal securities that finance similar types of projects, such as utilities, hospitals, higher education and transportation. A change that affects one project would likely affect all similar projects, thereby increasing market risk. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.
| Class C: | These shares have higher annual fees and expenses than Class A shares. |
| Advisor Class: | Shares are available to certain eligible investors as described in the prospectus. |
1. Cumulative total return represents the change in value of an investment over the periods indicated.
2. Average annual total return represents the average annual change in value of an investment over the periods indicated. Six-month return has not been annualized.
3. Figures are as stated in the Fund’s current prospectus. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to
be higher than the figures shown.
4. Distribution rate is based on an annualization of the respective class’s September dividend and the maximum offering price (NAV for Classes C and Advisor) per share
on 9/30/14.
5. Taxable equivalent distribution rate and yield assume the published rates as of 6/20/14 for the maximum combined effective federal and California personal income tax
rate of 50.83%, based on the federal income tax rate of 39.60% plus 3.8% Medicare tax. This combined rate does not consider the impact of California’s surcharge on
taxable income in excess of $1 million.
6. The 30-day standardized yield for the 30 days ended 9/30/14 reflects an estimated yield to maturity (assuming all portfolio securities are held to maturity). It should be
regarded as an estimate of the Fund’s rate of investment income, and it may not equal the Fund’s actual income distribution rate (which reflects the Fund’s past dividends
paid to shareholders) or the income reported in the Fund’s financial statements.
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FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs:
- Transaction costs, including sales charges (loads) on Fund purchases; and
- Ongoing Fund costs, including management fees, distribu- tion and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses.
The following table shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The first line (Actual) for each share class listed in the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of Fund expenses.
You can estimate the expenses you paid during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:
| 1. | Divide your account value by $1,000. |
| If an account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6. | |
| 2. | Multiply the result by the number under the heading “Expenses Paid During Period.” |
| If Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50. |
In this illustration, the estimated expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Information in the second line (Hypothetical) for each class in the table can help you compare ongoing costs of investing in the Fund with those of other mutual funds. This information may not be used to estimate the actual ending account balance or expenses you paid during the period. The hypothetical “Ending Account Value” is based on the actual expense ratio for each class and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Expenses Paid During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transaction costs, such as sales charges. Therefore, the second line for each class is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transaction costs were included, your total costs would have been higher. Please refer to the Fund prospectus for additional information on operating expenses.
| Beginning Account | Ending Account | Expenses Paid During | ||||
| Share Class | Value 4/1/14 | Value 9/30/14 | Period* 4/1/14–9/30/14 | |||
| A | ||||||
| Actual | $ | 1,000 | $ | 1,056.70 | $ | 2.94 |
| Hypothetical (5% return before expenses) | $ | 1,000 | $ | 1,022.21 | $ | 2.89 |
| C | ||||||
| Actual | $ | 1,000 | $ | 1,055.40 | $ | 5.82 |
| Hypothetical (5% return before expenses) | $ | 1,000 | $ | 1,019.40 | $ | 5.72 |
| Advisor | ||||||
| Actual | $ | 1,000 | $ | 1,057.30 | $ | 2.48 |
| Hypothetical (5% return before expenses) | $ | 1,000 | $ | 1,022.66 | $ | 2.43 |
*Expenses are calculated using the most recent six-month expense ratio, annualized for each class (A: 0.57%; C: 1.13%; and Advisor: 0.48%), multiplied by the average account value over the period, multiplied by 183/365 to reflect the one-half year period.
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| FRANKLIN CALIFORNIA TAX-FREE INCOME FUND | ||||||||||||||||||
| Financial Highlights | ||||||||||||||||||
| Six Months Ended | ||||||||||||||||||
| September 30, 2014 | Year Ended March 31, | |||||||||||||||||
| (unaudited) | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||
| Class A | ||||||||||||||||||
| Per share operating performance | ||||||||||||||||||
| (for a share outstanding throughout the period) | ||||||||||||||||||
| Net asset value, beginning of period | $ | 7.21 | $ | 7.50 | $ | 7.31 | $ | 6.55 | $ | 6.99 | $ | 6.42 | ||||||
| Income from investment operationsa: | ||||||||||||||||||
| Net investment incomeb | 0.15 | 0.32 | 0.31 | 0.33 | 0.33 | 0.33 | ||||||||||||
| Net realized and unrealized gains (losses) | 0.25 | (0.29 | ) | 0.19 | 0.77 | (0.44 | ) | 0.57 | ||||||||||
| Total from investment operations | 0.40 | 0.03 | 0.50 | 1.10 | (0.11 | ) | 0.90 | |||||||||||
| Less distributions from net investment | ||||||||||||||||||
| income | (0.15 | ) | (0.32 | ) | (0.31 | ) | (0.34 | ) | (0.33 | ) | (0.33 | ) | ||||||
| Net asset value, end of period | $ | 7.46 | $ | 7.21 | $ | 7.50 | $ | 7.31 | $ | 6.55 | $ | 6.99 | ||||||
| Total returnc | 5.67 | % | 0.56 | % | 6.89 | % | 17.19 | % | (1.82 | )% | 14.35 | % | ||||||
| Ratios to average net assetsd | ||||||||||||||||||
| Expenses | 0.57 | % | 0.57 | % | 0.57 | % | 0.57 | % | 0.57 | % | 0.57 | % | ||||||
| Net investment income | 4.18 | % | 4.47 | % | 4.15 | % | 4.71 | % | 4.73 | % | 4.84 | % | ||||||
| Supplemental data | ||||||||||||||||||
| Net assets, end of period (000’s) | $ | 11,362,037 | $ | 10,997,355 | $ | 12,645,406 | $ | 12,259,513 | $ | 11,238,491 | $ | 12,789,616 | ||||||
| Portfolio turnover rate | 3.65 | % | 20.33 | % | 8.92 | % | 5.96 | % | 7.41 | % | 7.20 | % | ||||||
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and
repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
dRatios are annualized for periods less than one year.
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FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
FINANCIAL HIGHLIGHTS
| Six Months Ended | ||||||||||||||||||
| September 30, 2014 | Year Ended March 31, | |||||||||||||||||
| (unaudited) | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||
| Class C | ||||||||||||||||||
| Per share operating performance | ||||||||||||||||||
| (for a share outstanding throughout the period) | ||||||||||||||||||
| Net asset value, beginning of period | $ | 7.19 | $ | 7.49 | $ | 7.30 | $ | 6.54 | $ | 6.98 | $ | 6.41 | ||||||
| Income from investment operationsa: | ||||||||||||||||||
| Net investment incomeb | 0.13 | 0.28 | 0.27 | 0.29 | 0.29 | 0.29 | ||||||||||||
| Net realized and unrealized gains (losses) | 0.26 | (0.30 | ) | 0.19 | 0.77 | (0.44 | ) | 0.57 | ||||||||||
| Total from investment operations | 0.39 | (0.02 | ) | 0.46 | 1.06 | (0.15 | ) | 0.86 | ||||||||||
| Less distributions from net investment | ||||||||||||||||||
| income | (0.13 | ) | (0.28 | ) | (0.27 | ) | (0.30 | ) | (0.29 | ) | (0.29 | ) | ||||||
| Net asset value, end of period | $ | 7.45 | $ | 7.19 | $ | 7.49 | $ | 7.30 | $ | 6.54 | $ | 6.98 | ||||||
| Total returnc | 5.54 | % | (0.14 | )% | 6.32 | % | 16.57 | % | (2.37 | )% | 13.74 | % | ||||||
| Ratios to average net assetsd | ||||||||||||||||||
| Expenses | 1.13 | % | 1.13 | % | 1.13 | % | 1.13 | % | 1.13 | % | 1.13 | % | ||||||
| Net investment income | 3.62 | % | 3.91 | % | 3.59 | % | 4.15 | % | 4.17 | % | 4.28 | % | ||||||
| Supplemental data | ||||||||||||||||||
| Net assets, end of period (000’s) | $ | 1,223,353 | $ | 1,143,138 | $ | 1,403,410 | $ | 1,219,459 | $ | 1,013,615 | $ | 1,113,728 | ||||||
| Portfolio turnover rate | 3.65 | % | 20.33 | % | 8.92 | % | 5.96 | % | 7.41 | % | 7.20 | % | ||||||
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and
repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
dRatios are annualized for periods less than one year.
12 | Semiannual Report | The accompanying notes are an integral part of these financial statements. franklintempleton.com
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
FINANCIAL HIGHLIGHTS
| Six Months Ended | ||||||||||||||||||
| September 30, 2014 | Year Ended March 31, | |||||||||||||||||
| (unaudited) | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||
| Advisor Class | ||||||||||||||||||
| Per share operating performance | ||||||||||||||||||
| (for a share outstanding throughout the period) | ||||||||||||||||||
| Net asset value, beginning of period | $ | 7.20 | $ | 7.49 | $ | 7.30 | $ | 6.54 | $ | 6.98 | $ | 6.41 | ||||||
| Income from investment operationsa: | ||||||||||||||||||
| Net investment incomeb | 0.16 | 0.32 | 0.32 | 0.34 | 0.33 | 0.34 | ||||||||||||
| Net realized and unrealized gains (losses) | 0.25 | (0.28 | ) | 0.18 | 0.77 | (0.44 | ) | 0.57 | ||||||||||
| Total from investment operations | 0.41 | 0.04 | 0.50 | 1.11 | (0.11 | ) | 0.91 | |||||||||||
| Less distributions from net investment | ||||||||||||||||||
| income | (0.16 | ) | (0.33 | ) | (0.31 | ) | (0.35 | ) | (0.33 | ) | (0.34 | ) | ||||||
| Net asset value, end of period | $ | 7.45 | $ | 7.20 | $ | 7.49 | $ | 7.30 | $ | 6.54 | $ | 6.98 | ||||||
| Total returnc | 5.73 | % | 0.65 | % | 7.00 | % | 17.32 | % | (1.73 | )% | 14.47 | % | ||||||
| Ratios to average net assetsd | ||||||||||||||||||
| Expenses | 0.48 | % | 0.48 | % | 0.48 | % | 0.48 | % | 0.48 | % | 0.48 | % | ||||||
| Net investment income | 4.27 | % | 4.56 | % | 4.24 | % | 4.80 | % | 4.82 | % | 4.93 | % | ||||||
| Supplemental data | ||||||||||||||||||
| Net assets, end of period (000’s) | $ | 814,123 | $ | 639,087 | $ | 756,542 | $ | 591,932 | $ | 446,360 | $ | 393,057 | ||||||
| Portfolio turnover rate | 3.65 | % | 20.33 | % | 8.92 | % | 5.96 | % | 7.41 | % | 7.20 | % | ||||||
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and
repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cTotal return is not annualized for periods less than one year.
dRatios are annualized for periods less than one year.
franklintempleton.com The accompanying notes are an integral part of these financial statements. | Semiannual Report | 13
| FRANKLIN CALIFORNIA TAX-FREE INCOME FUND | ||||
| Statement of Investments, September 30, 2014 (unaudited) | ||||
| Principal | ||||
| Amount | Value | |||
| Municipal Bonds 94.2% | ||||
| California 88.5% | ||||
| ABAG Finance Authority for Nonprofit Corps. COP, Butte Valley-Tulelake Rural Health Projects Inc., | ||||
| California Mortgage Insured, 6.65%, 10/01/22 | $ | 520,000 | $ | 521,378 |
| ABAG Finance Authority for Nonprofit Corps. MFHR, Palo Alto Gardens Apartments, Series A, | ||||
| 5.45%, 4/01/39 | 5,500,000 | 5,499,890 | ||
| ABAG Finance Authority for Nonprofit Corps. Revenue, | ||||
| Channing House, California Mortgage Insured, 6.125%, 5/15/40 | 17,635,000 | 20,188,901 | ||
| Eskaton Properties Inc., Refunding, 5.00%, 11/15/35 | 10,000,000 | 10,377,600 | ||
| San Diego Hospital Assn., Sharp Healthcare, Series B, 6.25%, 8/01/39 | 17,500,000 | 20,371,050 | ||
| St. Rose Hospital, Series A, California Mortgage Insured, 5.625%, 5/15/29 | 9,050,000 | 10,187,313 | ||
| St. Rose Hospital, Series A, California Mortgage Insured, 6.00%, 5/15/29 | 8,620,000 | 9,943,773 | ||
| ABAG Revenue Tax Allocation, RDA Pool, Series A6, AGMC Insured, 5.375%, 12/15/25 | 445,000 | 446,041 | ||
| ABAG Water and Wastewater Revenue, Pooled Financing Program, Refunding, Series A, | ||||
| AGMC Insured, 5.30%, 10/01/21 | 255,000 | 255,648 | ||
| Alameda Corridor Transportation Authority Revenue, Capital Appreciation, sub. lien, Refunding, | ||||
| Series A, AMBAC Insured, | ||||
| 5.30%, 10/01/22 | 81,685,000 | 87,462,580 | ||
| 5.30%, 10/01/23 | 70,015,000 | 74,884,543 | ||
| 5.40%, 10/01/24 | 43,770,000 | 46,821,644 | ||
| 5.45%, 10/01/25 | 32,960,000 | 35,305,104 | ||
| zero cpn., 10/01/29 | 20,000,000 | 10,383,200 | ||
| zero cpn., 10/01/30 | 41,665,000 | 20,225,441 | ||
| Alameda County COP, Alameda County Medical Center Project, NATL Insured, ETM, | ||||
| 5.00%, 6/01/23 | 19,195,000 | 19,257,000 | ||
| 5.30%, 6/01/26 | 7,000,000 | 7,023,310 | ||
| 5.00%, 6/01/28 | 8,925,000 | 8,951,953 | ||
| Alhambra USD, GO, Election of 2004, Series A, NATL RE, FGIC Insured, Pre-Refunded, 5.00%, | ||||
| 8/01/29 | 13,025,000 | 13,549,647 | ||
| Alvord USD, GO, Riverside County, | ||||
| Election of 2007, Series A, AGMC Insured, 5.00%, 8/01/32 | 11,625,000 | 12,603,941 | ||
| Election of 2007, Series A, AGMC Insured, zero cpn. to 8/01/26, 7.35% thereafter, 8/01/46 | 42,500,000 | 31,408,775 | ||
| Election of 2007, Series B, AGMC Insured, zero cpn., 8/01/36 | 15,000,000 | 5,372,100 | ||
| Election of 2012, Refunding, Series A, AGMC Insured, 5.00%, 8/01/42 | 20,000,000 | 21,644,200 | ||
| Anaheim PFA Lease Revenue, Capital Appreciation, Public Improvements Project, Subordinate, | ||||
| Series C, AGMC Insured, zero cpn., | ||||
| 9/01/24 | 26,855,000 | 19,077,523 | ||
| 9/01/26 | 29,430,000 | 18,686,284 | ||
| 9/01/27 | 22,860,000 | 13,691,540 | ||
| 9/01/28 | 14,425,000 | 8,101,946 | ||
| 9/01/29 | 24,810,000 | 13,117,543 | ||
| 9/01/32 | 13,665,000 | 6,072,453 | ||
| 9/01/33 | 37,070,000 | 15,599,056 | ||
| 9/01/34 | 24,970,000 | 9,843,923 | ||
| 3/01/37 | 15,080,000 | 5,095,984 | ||
| Anaheim PFAR, Distribution System, second lien, NATL Insured, 5.00%, | ||||
| 10/01/29 | 4,325,000 | 4,336,202 | ||
| 10/01/34 | 5,500,000 | 5,512,925 | ||
| Anaheim UHSD, GO, Capital Appreciation, Series A, AGMC Insured, zero cpn., 8/01/26 | 8,570,000 | 5,490,542 | ||
| Antelope Valley Community College District GO, Election of 2004, Series B, NATL Insured, 5.25%, | ||||
| 8/01/39 | 14,900,000 | 16,190,191 | ||
| Azusa RDA Tax Allocation, Series B, 7.00%, 8/01/38 | 8,420,000 | 9,556,447 | ||
| Bakersfield City School District GO, Series A, AGMC Insured, 5.00%, 11/01/31 | 8,390,000 | 9,129,662 | ||
| Baldwin Park PFAR Tax Allocation, Refunding, Series A, 7.75%, 8/01/19 | 2,690,000 | 2,701,971 | ||
| 14 | Semiannual Report | franklintempleton.com | |||
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED)
| Principal | ||||
| Amount | Value | |||
| Municipal Bonds (continued) | ||||
| California (continued) | ||||
| Baldwin Park USD, GO, | ||||
| Capital Appreciation, Election of 2006, AGMC Insured, zero cpn., 8/01/36 | $ | 11,410,000 | $ | 3,255,387 |
| Los Angeles County, Capital Appreciation, Election of 2006, BAM Insured, zero cpn., 8/01/48 | 25,000,000 | 2,936,250 | ||
| Los Angeles County, Capital Appreciation, Election of 2006, BAM Insured, zero cpn., 8/01/53 | 60,000,000 | 4,782,600 | ||
| Bay Area Toll Authority Toll Bridge Revenue, San Francisco Bay Area, | ||||
| Series F, Pre-Refunded, 5.00%, 4/01/31 | 101,435,000 | 108,633,842 | ||
| Series F-1, Pre-Refunded, 5.00%, 4/01/39 | 81,800,000 | 93,921,124 | ||
| Series F-1, Pre-Refunded, 5.50%, 4/01/43 | 18,000,000 | 20,977,380 | ||
| Series F-1, Pre-Refunded, 5.125%, 4/01/47 | 53,585,000 | 61,756,177 | ||
| Subordinate, Series S-2, 5.00%, 10/01/50 | 75,000,000 | 80,742,000 | ||
| Subordinate, Series S-4, 5.00%, 4/01/43 | 35,000,000 | 38,801,700 | ||
| Subordinate, Series S-4, 5.125%, 4/01/48 | 20,000,000 | 22,308,000 | ||
| Subordinate, Series S-4, 5.25%, 4/01/53 | 33,000,000 | 36,826,680 | ||
| Bell GO, Election of 2003, NATL Insured, 5.00%, 8/01/34 | 5,195,000 | 5,092,191 | ||
| Belmont-Redwood Shores School District GO, Election of 2005, Series A, AGMC Insured, 5.00%, | ||||
| 8/01/32 | 10,000,000 | 10,800,400 | ||
| Beverly Hills USD, GO, Election of 2002, Series B, Pre-Refunded, 5.00%, 8/01/30 | 8,590,000 | 8,936,005 | ||
| California County Tobacco Securitization Agency Tobacco Settlement Revenue, Asset-Backed, | ||||
| Alameda County Tobacco Asset Securitization Corp., 5.875%, 6/01/35 | 7,500,000 | 7,499,625 | ||
| Kern County Tobacco Funding Corp., Series A, 6.125%, 6/01/43 | 28,135,000 | 28,138,095 | ||
| Kern County Tobacco Funding Corp., Series B, 6.25%, 6/01/37 | 19,460,000 | 19,467,395 | ||
| Stanislaus County Tobacco Funding Corp., Series A, 5.875%, 6/01/43 | 8,690,000 | 8,689,565 | ||
| California Health Facilities Financing Authority Revenue, | ||||
| Catholic Healthcare West, Refunding, Series A, NATL Insured, 5.75%, 7/01/15 | 2,780,000 | 2,790,953 | ||
| Feedback Foundation Inc., Series A, California Mortgage Insured, 6.50%, 12/01/22 | 985,000 | 989,334 | ||
| Hospital of the Good Samaritan, Refunding, 7.00%, 9/01/21 | 43,780,000 | 42,996,338 | ||
| Northern California Presbyterian Homes and Services Inc., Refunding, 5.40%, 7/01/28 | 6,340,000 | 6,344,692 | ||
| Pomona Valley Hospital, Refunding, Series A, NATL Insured, 5.625%, 7/01/19 | 8,500,000 | 8,534,085 | ||
| Southern California, Series A, California Mortgage Insured, 5.50%, 12/01/22 | 1,990,000 | 1,992,010 | ||
| California HFAR, | ||||
| Home Mortgage, Series K, 4.75%, 8/01/36 | 5,000,000 | 5,006,050 | ||
| MFHR III, Series B, NATL Insured, 5.50%, 8/01/39 | 11,950,000 | 11,950,717 | ||
| California Infrastructure and Economic Development Bank Revenue, | ||||
| Bay Area Toll Bridges Seismic Retrofit, first lien, Series A, AMBAC Insured, Pre-Refunded, | ||||
| 5.00%, 7/01/33 | 5,000,000 | 6,414,850 | ||
| Bay Area Toll Bridges Seismic Retrofit, first lien, Series A, FGIC Insured, Pre-Refunded, 5.00%, | ||||
| 7/01/29 | 50,985,000 | 65,146,084 | ||
| Los Angeles County Department of Public Social Services Facility, AMBAC Insured, 5.00%, | ||||
| 9/01/35 | 7,765,000 | 7,772,299 | ||
| California State Educational Facilities Authority Revenue, | ||||
| Loyola Marymount University, Refunding, Series A, NATL Insured, zero cpn., 10/01/26 | 7,620,000 | 4,903,089 | ||
| Loyola Marymount University, Refunding, Series A, NATL Insured, zero cpn., 10/01/27 | 7,365,000 | 4,487,126 | ||
| Loyola Marymount University, Refunding, Series A, NATL Insured, zero cpn., 10/01/28 | 4,120,000 | 2,389,806 | ||
| Loyola Marymount University, Refunding, Series A, NATL Insured, zero cpn., 10/01/30 | 5,685,000 | 2,933,403 | ||
| Loyola Marymount University, Refunding, Series A, NATL Insured, zero cpn., 10/01/31 | 7,615,000 | 3,720,156 | ||
| Loyola Marymount University, Refunding, Series A, NATL Insured, zero cpn., 10/01/32 | 7,615,000 | 3,529,096 | ||
| Occidental College, Series A, NATL Insured, Pre-Refunded, 5.00%, 10/01/36 | 7,275,000 | 7,626,965 | ||
| Pepperdine University, Refunding, Series A, AMBAC Insured, 5.00%, 12/01/35 | 5,220,000 | 5,412,827 | ||
| Santa Clara University, Refunding, AMBAC Insured, zero cpn., 9/01/26 | 5,150,000 | 3,161,070 | ||
| Stanford University, Refunding, Series U-1, 5.25%, 4/01/40 | 24,960,000 | 33,306,374 | ||
| Stanford University, Refunding, Series U-3, 5.00%, 6/01/43 | 28,495,000 | 37,112,743 | ||
| Stanford University, Series U-4, 5.00%, 6/01/43 | 14,430,000 | 18,794,065 | ||
| Stanford University, Series U-6, 5.00%, 5/01/45 | 90,580,000 | 118,620,851 | ||
| franklintempleton.com | Semiannual Report | 15 | |||
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED)
| Principal | ||||
| Amount | Value | |||
| Municipal Bonds (continued) | ||||
| California (continued) | ||||
| California State GO, | ||||
| NATL RE, FGIC Insured, 5.625%, 10/01/26 | $ | 5,005,000 | $ | 5,141,637 |
| Various Purpose, 5.125%, 4/01/24 | 5,000 | 5,021 | ||
| Various Purpose, 6.00%, 5/01/24 | 2,565,000 | 2,577,774 | ||
| Various Purpose, 5.20%, 4/01/26 | 20,000 | 20,083 | ||
| Various Purpose, 5.00%, 8/01/34 | 48,000,000 | 53,347,200 | ||
| Various Purpose, 6.00%, 4/01/38 | 57,130,000 | 67,934,426 | ||
| Various Purpose, 6.00%, 11/01/39 | 100,000,000 | 120,995,000 | ||
| Various Purpose, 5.25%, 11/01/40 | 69,685,000 | 79,708,490 | ||
| Various Purpose, AGMC Insured, 5.50%, 4/01/19 | 540,000 | 554,569 | ||
| Various Purpose, AGMC Insured, 5.50%, 3/01/20 | 415,000 | 424,342 | ||
| Various Purpose, AMBAC Insured, 5.90%, 3/01/25 | 210,000 | 214,998 | ||
| Various Purpose, FGIC Insured, 6.00%, 8/01/19 | 905,000 | 923,154 | ||
| Various Purpose, NATL Insured, 6.00%, 8/01/24 | 990,000 | 1,009,384 | ||
| Various Purpose, Refunding, 5.625%, 9/01/24 | 255,000 | 260,829 | ||
| Various Purpose, Refunding, 5.00%, 6/01/32 | 26,000,000 | 28,243,540 | ||
| Various Purpose, Refunding, 6.00%, 3/01/33 | 25,000,000 | 30,825,750 | ||
| Various Purpose, Refunding, 5.25%, 3/01/38 | 59,045,000 | 64,638,333 | ||
| Various Purpose, Refunding, 5.50%, 3/01/40 | 25,000,000 | 28,569,250 | ||
| Various Purpose, Refunding, 5.00%, 10/01/41 | 15,250,000 | 16,897,610 | ||
| Various Purpose, Refunding, 5.00%, 4/01/42 | 85,000,000 | 94,108,600 | ||
| Various Purpose, Refunding, 5.00%, 4/01/43 | 44,745,000 | 49,848,615 | ||
| aVarious Purpose, Refunding, 5.00%, 10/01/44 | 25,000,000 | 28,252,250 | ||
| Various Purpose, Refunding, AGMC Insured, 5.00%, 6/01/32 | 20,000,000 | 21,725,800 | ||
| California State Health Facilities Financing Authority Revenue, | ||||
| Adventist Health System West, Series A, 5.75%, 9/01/39 | 18,000,000 | 20,305,620 | ||
| Catholic Healthcare West, Refunding, Series A, 6.00%, 7/01/34 | 10,000,000 | 11,378,600 | ||
| Catholic Healthcare West, Series A, 5.25%, 3/01/41 | 50,000,000 | 54,684,000 | ||
| Catholic Healthcare West, Series G, 5.25%, 7/01/23 | 3,000,000 | 3,005,580 | ||
| Cedars-Sinai Medical Center, 5.00%, 8/15/39 | 4,200,000 | 4,579,554 | ||
| Children’s Hospital Los Angeles, Refunding, Series A, AGMC Insured, 5.25%, 7/01/38 | 10,000,000 | 10,624,700 | ||
| Children’s Hospital of Orange County, Series A, 6.50%, 11/01/24 | 10,500,000 | 12,804,540 | ||
| Children’s Hospital of Orange County, Series A, 6.25%, 11/01/29 | 13,870,000 | 16,695,042 | ||
| Children’s Hospital of Orange County, Series A, 5.25%, 11/01/41 | 10,000,000 | 10,872,800 | ||
| Lucile Salter Packard Children’s Hospital at Stanford, Series A, 5.00%, 8/15/51 | 39,455,000 | 42,674,528 | ||
| Providence Health and Services, Refunding, Series A, 5.00%, 10/01/38 | 9,000,000 | 10,227,870 | ||
| Providence Health and Services, Series C, Pre-Refunded, 6.25%, 10/01/28 | 4,000,000 | 4,851,800 | ||
| Providence Health and Services, Series C, Pre-Refunded, 6.50%, 10/01/38 | 125,000 | 152,569 | ||
| Providence Health and Services, Series C, Pre-Refunded, 6.50%, 10/01/38 | 6,375,000 | 7,795,095 | ||
| Rady Children’s Hospital, 5.25%, 8/15/41 | 11,000,000 | 12,307,900 | ||
| Sutter Health, Series A, 5.00%, 8/15/38 | 30,300,000 | 32,438,574 | ||
| Sutter Health, Series A, 5.25%, 11/15/46 | 76,570,000 | 81,815,811 | ||
| Sutter Health, Series A, 5.00%, 8/15/52 | 76,565,000 | 83,664,107 | ||
| California State Municipal Finance Authority COP, Community Hospitals of Central California | ||||
| Obligated Group, | ||||
| 5.375%, 2/01/29 | 10,000,000 | 10,692,500 | ||
| 5.25%, 2/01/37 | 37,100,000 | 38,069,052 | ||
| 5.50%, 2/01/39 | 13,250,000 | 14,134,967 | ||
| 5.25%, 2/01/46 | 90,650,000 | 92,754,893 | ||
| California State Municipal Finance Authority Revenue, | ||||
| Eisenhower Medical Center, Series A, 5.75%, 7/01/40 | 7,000,000 | 7,694,260 | ||
| South Central Los Angeles Regional Center Project, 5.75%, 12/01/43 | 33,895,000 | 36,595,754 | ||
| 16 | Semiannual Report | franklintempleton.com | |||
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED)
| Principal | ||||
| Amount | Value | |||
| Municipal Bonds (continued) | ||||
| California (continued) | ||||
| California State Public Works Board Lease Revenue, | ||||
| California Science Center, Series A, 5.25%, 10/01/22 | $ | 8,645,000 | $ | 8,673,788 |
| Department of Corrections, Series C, 5.00%, 6/01/25 | 4,810,000 | 4,825,777 | ||
| Trustees of California State University, Refunding, Series A, 5.00%, 10/01/19 | 7,500,000 | 7,529,550 | ||
| Various California Community Colleges Projects, Refunding, Series A, 5.90%, 4/01/17 | 8,320,000 | 8,356,525 | ||
| Various Capital Projects, Refunding, Series G, 5.00%, 11/01/31 | 16,520,000 | 18,759,947 | ||
| Various Capital Projects, Series A, 5.00%, 4/01/31 | 48,070,000 | 54,170,564 | ||
| Various Capital Projects, Series A, 5.00%, 4/01/32 | 17,885,000 | 20,078,416 | ||
| Various Capital Projects, Series A, 5.00%, 4/01/37 | 29,000,000 | 31,926,100 | ||
| Various Capital Projects, Series A, Sub Series A-1, 5.50%, 3/01/25 | 8,700,000 | 10,079,907 | ||
| Various Capital Projects, Series A, Sub Series A-1, 6.00%, 3/01/35 | 10,000,000 | 11,810,800 | ||
| Various Capital Projects, Series G, Sub Series G-1, 5.75%, 10/01/30 | 100,000,000 | 116,241,000 | ||
| Various Capital Projects, Series I, 6.375%, 11/01/34 | 50,000,000 | 59,817,000 | ||
| Various Capital Projects, Series I, 5.00%, 11/01/38 | 40,000,000 | 44,630,800 | ||
| Various Judicial Council Projects, Series D, 5.00%, 12/01/31 | 15,000,000 | 16,827,300 | ||
| California State RAN, 1.50%, 6/22/15 | 50,000,000 | 50,496,000 | ||
| California State University Revenue, Systemwide, | ||||
| Refunding, Series A, 5.00%, 11/01/39 | 23,000,000 | 26,413,430 | ||
| Refunding, Series A, 5.00%, 11/01/42 | 29,645,000 | 32,940,338 | ||
| Refunding, Series A, 5.00%, 11/01/44 | 32,345,000 | 36,758,475 | ||
| Refunding, Series C, NATL Insured, 5.00%, 11/01/30 | 4,100,000 | 4,293,028 | ||
| Refunding, Series C, NATL Insured, 5.00%, 11/01/35 | 3,280,000 | 3,425,337 | ||
| Series C, NATL Insured, Pre-Refunded, 5.00%, 11/01/30 | 11,390,000 | 11,987,178 | ||
| Series C, NATL Insured, Pre-Refunded, 5.00%, 11/01/35 | 9,620,000 | 10,124,377 | ||
| California Statewide CDA, COP, | ||||
| NATL Insured, 5.00%, 4/01/18 | 5,750,000 | 5,761,615 | ||
| NATL Insured, 5.125%, 4/01/23 | 6,000,000 | 6,005,220 | ||
| The Internext Group, 5.375%, 4/01/17 | 1,700,000 | 1,705,168 | ||
| The Internext Group, 5.375%, 4/01/30 | 32,945,000 | 33,040,211 | ||
| California Statewide CDA Revenue, | ||||
| Catholic Healthcare West, Refunding, Series L, Assured Guaranty, 5.25%, 7/01/41 | 13,000,000 | 13,641,810 | ||
| Catholic Healthcare West, Series A, 5.50%, 7/01/30 | 9,770,000 | 10,892,182 | ||
| Catholic Healthcare West, Series E, 5.50%, 7/01/31 | 12,675,000 | 14,098,149 | ||
| CHF-Irvine LLC, UCI East Campus Apartments, Phase II, 5.50%, 5/15/26 | 9,500,000 | 10,448,290 | ||
| CHF-Irvine LLC, UCI East Campus Apartments, Phase II, 6.00%, 5/15/40 | 59,000,000 | 64,302,330 | ||
| Cottage Health System Obligated Group, Refunding, 5.25%, 11/01/30 | 18,500,000 | 20,873,180 | ||
| Cottage Health System Obligated Group, Refunding, 5.00%, 11/01/40 | 56,000,000 | 60,945,360 | ||
| Daughters of Charity Health, Refunding, Series A, 5.25%, 7/01/24 | 5,640,000 | 5,484,562 | ||
| Daughters of Charity Health, Refunding, Series A, 5.25%, 7/01/30 | 5,000,000 | 4,846,500 | ||
| Daughters of Charity Health, Refunding, Series A, 5.25%, 7/01/35 | 13,900,000 | 13,407,384 | ||
| Daughters of Charity Health, Refunding, Series A, 5.00%, 7/01/39 | 23,930,000 | 22,922,308 | ||
| Daughters of Charity Health, Refunding, Series H, 5.25%, 7/01/25 | 2,800,000 | 2,719,472 | ||
| Enloe Medical Center, Series B, California Mortgage Insured, 6.25%, 8/15/33 | 20,000,000 | 22,906,200 | ||
| Enloe Medical Center, Series B, California Mortgage Insured, 5.75%, 8/15/38 | 36,500,000 | 40,759,185 | ||
| Health Facility, Adventist Health, Series A, 5.00%, 3/01/30 | 6,300,000 | 6,368,481 | ||
| Henry Mayo Newhall Memorial Hospital, Series A, California Mortgage Insured, Pre-Refunded, | ||||
| 5.00%, 10/01/37 | 4,000,000 | 4,521,520 | ||
| Huntington Memorial Hospital, Refunding, 5.00%, 7/01/27 | 20,000,000 | 20,502,200 | ||
| Huntington Memorial Hospital, Refunding, 5.00%, 7/01/35 | 45,000,000 | 45,984,600 | ||
| Kaiser Permanente, Refunding, Series A, 4.75%, 4/01/33 | 10,515,000 | 10,790,914 | ||
| Kaiser Permanente, Refunding, Series A, BHAC Insured, 5.00%, 4/01/31 | 10,000,000 | 10,610,900 | ||
| Kaiser Permanente, Series A, 5.00%, 4/01/42 | 88,945,000 | 97,366,313 | ||
| franklintempleton.com | Semiannual Report | 17 | |||
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED)
| Principal | ||||
| Amount | Value | |||
| Municipal Bonds (continued) | ||||
| California (continued) | ||||
| California Statewide CDA Revenue, (continued) | ||||
| Kaiser Permanente, Series B, 5.00%, 3/01/41 | $ | 46,980,000 | $ | 48,142,755 |
| Kaiser Permanente, Series B, 5.25%, 3/01/45 | 179,945,000 | 185,442,320 | ||
| Lodi Memorial Hospital, Series A, California Mortgage Insured, 5.00%, 12/01/37 | 20,000,000 | 21,447,000 | ||
| Methodist Hospital of Southern California Project, FHA Insured, 6.25%, 8/01/24 | 12,290,000 | 14,732,023 | ||
| Methodist Hospital of Southern California Project, FHA Insured, 6.625%, 8/01/29 | 20,015,000 | 24,233,562 | ||
| Methodist Hospital of Southern California Project, FHA Insured, 6.75%, 2/01/38 | 19,690,000 | 23,482,491 | ||
| Serenity House, Refunding, California Mortgage Insured, 5.50%, 1/01/28 | 3,400,000 | 3,410,778 | ||
| St. Joseph Health System, Series B, FGIC Insured, 5.75%, 7/01/47 | 29,600,000 | 32,737,600 | ||
| St. Joseph Health System, Series C, FGIC Insured, 5.75%, 7/01/47 | 12,000,000 | 13,272,000 | ||
| St. Joseph Health System, Series E, AGMC Insured, 5.25%, 7/01/47 | 15,300,000 | 16,121,304 | ||
| Stovehaven Apartments Project, Series A, ACA Insured, 5.875%, 7/01/32 | 4,945,000 | 4,945,346 | ||
| Sutter Health, Refunding, Series A, 5.00%, 11/15/43 | 108,300,000 | 112,406,736 | ||
| Sutter Health, Series B, 5.25%, 11/15/48 | 63,255,000 | 68,164,221 | ||
| Sutter Health, Series C, 5.00%, 11/15/38 | 23,925,000 | 25,510,270 | ||
| California Statewide CDA Revenue COP, | ||||
| CHFCLP Insured Health Facilities, Unihealth, Series A, AMBAC Insured, Pre-Refunded, 5.75%, | ||||
| 10/01/25 | 24,545,000 | 28,189,932 | ||
| Southern California Development Corp., California Mortgage Insured, 6.10%, 12/01/15 | 555,000 | 557,503 | ||
| California Statewide CDA Student Housing Revenue, University of California Irvine East Campus | ||||
| Apartments Phase I, Refunding, | ||||
| 5.125%, 5/15/31 | 8,000,000 | 8,841,200 | ||
| 5.375%, 5/15/38 | 8,500,000 | 9,465,600 | ||
| California Statewide CDA Water and Wastewater Revenue, Pooled Financing Program, Series A, | ||||
| AGMC Insured, 5.25%, 10/01/24 | 275,000 | 275,971 | ||
| Camarillo Community Development Commission Tax Allocation, Camarillo Corridor Project, | ||||
| Refunding, AMBAC Insured, 5.00%, 9/01/36 | 4,800,000 | 4,800,864 | ||
| Campbell RDA Tax Allocation, Central Campbell Redevelopment Project, Series A, 6.00%, | ||||
| 10/01/33 | 5,000,000 | 5,001,300 | ||
| Campbell USD, | ||||
| GO, Series A, NATL RE, FGIC Insured, 5.00%, 8/01/28 | 5,205,000 | 5,712,488 | ||
| GO, Series E, AGMC Insured, 5.00%, 8/01/29 | 6,260,000 | 6,611,061 | ||
| Series B, NATL RE, FGIC Insured, zero cpn., 8/01/20 | 5,000,000 | 4,403,950 | ||
| Series B, NATL RE, FGIC Insured, zero cpn., 8/01/21 | 6,280,000 | 5,285,876 | ||
| Carlsbad USD, GO, | ||||
| zero cpn. to 5/01/19, 6.00% thereafter, 5/01/34 | 14,000,000 | 12,649,280 | ||
| zero cpn. to 8/01/26, 6.625% thereafter, 8/01/35 | 33,000,000 | 23,864,940 | ||
| Centinela Valley UHSD, GO, Refunding, Series A, NATL Insured, 5.50%, 8/01/33 | 15,630,000 | 19,863,229 | ||
| Cerritos Community College District GO, Election of 2004, Series B, NATL Insured, 5.00%, | ||||
| 8/01/31 | 16,580,000 | 17,415,964 | ||
| Cerritos PFAR Tax Allocation, Redevelopment Project, Refunding, Series A, AMBAC Insured, | ||||
| 5.00%, 11/01/22 | 1,675,000 | 1,798,163 | ||
| Chico RDA Tax Allocation, Chico Amended and Merged Redevelopment Project, AMBAC Insured, | ||||
| 5.00%, 4/01/32 | 4,000,000 | 4,028,000 | ||
| Chico USD, GO, Election of 2012, Series A, 5.00%, 8/01/43 | 8,000,000 | 8,720,080 | ||
| Chula Vista IDR, San Diego Gas and Electric Co., | ||||
| Refunding, Series A, 5.875%, 2/15/34 | 17,500,000 | 20,066,200 | ||
| Series A, 5.30%, 7/01/21 | 8,500,000 | 8,681,985 | ||
| Series B, 5.50%, 12/01/21 | 14,000,000 | 14,324,660 | ||
| Commerce Joint Powers Financing Authority Revenue, Redevelopment Projects, Series B, Radian | ||||
| Insured, 5.125%, 8/01/35 | 5,175,000 | 5,176,604 |
18 | Semiannual Report
franklintempleton.com
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED)
| Principal | ||||
| Amount | Value | |||
| Municipal Bonds (continued) | ||||
| California (continued) | ||||
| Compton CRDA Tax Allocation, Redevelopment Project, second lien, Series B, | ||||
| 5.70%, 8/01/30 | $ | 10,000,000 | $ | 10,207,500 |
| 6.00%, 8/01/35 | 11,160,000 | 11,422,818 | ||
| 6.00%, 8/01/42 | 10,000,000 | 10,190,700 | ||
| Compton Sewer Revenue, 6.00%, 9/01/39 | 11,775,000 | 12,188,302 | ||
| Compton USD, GO, AMBAC Insured, 5.00%, 6/01/29 | 5,660,000 | 5,910,342 | ||
| Contra Costa County COP, Merrithew Memorial Hospital Project, ETM, zero cpn., 11/01/15 | 6,810,000 | 6,796,789 | ||
| Coronado CDA Tax Allocation, Coronado Community Development Project, Refunding, | ||||
| NATL Insured, 5.00%, 9/01/34 | 6,115,000 | 6,124,234 | ||
| Cudahy RDA Tax Allocation, Refunding, Series C, 6.00%, 10/01/27 | 6,365,000 | 6,391,097 | ||
| Daly City Housing Development Finance Agency Mobile Home Park Revenue, Franciscan Mobile | ||||
| Home Park Acquisition Project, senior bond, Refunding, Series A, 5.00%, 12/15/47 | 17,870,000 | 18,115,712 | ||
| Delano UHSD, GO, Refunding, Series A, NATL Insured, 5.15%, 2/01/32 | 8,520,000 | 9,523,060 | ||
| East Bay MUD Water System Revenue, | ||||
| Alameda and Contra Costa Counties, Refunding, Series A, 5.00%, 6/01/35 | 10,000,000 | 11,804,200 | ||
| Alameda and Contra Costa Counties, Series C, 5.00%, 6/01/44 | 14,000,000 | 16,256,240 | ||
| Refunding, Series A, NATL RE, FGIC Insured, 5.00%, 6/01/37 | 99,545,000 | 108,435,364 | ||
| Series A, NATL Insured, 5.00%, 6/01/28 | 3,635,000 | 3,743,032 | ||
| Series A, NATL Insured, 5.00%, 6/01/30 | 4,510,000 | 4,641,602 | ||
| Series A, NATL Insured, 5.00%, 6/01/35 | 7,505,000 | 7,710,787 | ||
| Series A, NATL Insured, Pre-Refunded, 5.00%, 6/01/28 | 3,365,000 | 3,473,252 | ||
| Series A, NATL Insured, Pre-Refunded, 5.00%, 6/01/29 | 13,230,000 | 13,655,609 | ||
| Series A, NATL Insured, Pre-Refunded, 5.00%, 6/01/30 | 10,490,000 | 10,827,463 | ||
| Series A, NATL Insured, Pre-Refunded, 5.00%, 6/01/35 | 20,000,000 | 20,643,400 | ||
| Subordinate, Series A, NATL Insured, 5.00%, 6/01/29 | 14,265,000 | 14,684,248 | ||
| El Centro Financing Authority Hospital Revenue, El Centro Regional Medical Center Project, | ||||
| California Mortgage Insured, 5.25%, 3/01/26 | 6,790,000 | 6,807,654 | ||
| Fairfax Elementary School District GO, Election of 2010, Refunding, AGMC Insured, zero cpn., | ||||
| 11/01/48 | 10,380,000 | 1,734,394 | ||
| Fairfield COP, Fairfield Water Financing, Series A, XLCA Insured, 5.00%, 4/01/42 | 10,000,000 | 10,239,900 | ||
| Florin Resource Conservation District COP, Elk Grove Water Service, Refunding, Series A, | ||||
| NATL Insured, 5.00%, 3/01/33 | 8,215,000 | 8,242,274 | ||
| Fontana RDA Tax Allocation, Jurupa Hills Redevelopment Project, Refunding, Series A, 5.50%, | ||||
| 10/01/27 | 12,500,000 | 12,549,500 | ||
| Foothill/Eastern Transportation Corridor Agency Toll Road Revenue, Capital Appreciation, | ||||
| Refunding, Series A, 5.75%, 1/15/46 | 260,000,000 | 297,362,000 | ||
| Refunding, Series A, 6.00%, 1/15/49 | 305,000,000 | 351,893,750 | ||
| Refunding, Series A, 6.00%, 1/15/53 | 190,000,000 | 218,895,200 | ||
| Refunding, Series A, AGMC Insured, zero cpn., 1/15/37 | 41,250,000 | 15,269,100 | ||
| Refunding, Series A, AGMC Insured, zero cpn., 1/15/38 | 77,650,000 | 27,116,156 | ||
| Refunding, Series A, AGMC Insured, zero cpn., 1/15/39 | 56,100,000 | 18,373,311 | ||
| Refunding, Series A, zero cpn., 1/15/42 | 130,000,000 | 26,534,300 | ||
| Refunding, Series A, zero cpn. to 1/14/24, 6.85% thereafter, 1/15/42 | 98,000,000 | 62,340,740 | ||
| senior lien, Series A, 5.00%, 1/01/35 | 15,955,000 | 16,022,171 | ||
| senior lien, Series A, ETM, zero cpn., 1/01/22 | 30,835,000 | 26,829,533 | ||
| senior lien, Series A, ETM, zero cpn., 1/01/23 | 5,765,000 | 4,774,400 | ||
| senior lien, Series A, ETM, zero cpn., 1/01/24 | 72,045,000 | 57,785,854 | ||
| senior lien, Series A, ETM, zero cpn., 1/01/25 | 20,660,000 | 16,098,685 | ||
| senior lien, Series A, ETM, zero cpn., 1/01/26 | 23,475,000 | 17,576,671 | ||
| senior lien, Series A, ETM, zero cpn., 1/01/27 | 15,000,000 | 10,919,400 | ||
| senior lien, Series A, ETM, zero cpn., 1/01/28 | 2,000,000 | 1,391,100 | ||
| senior lien, Series A, ETM, zero cpn., 1/01/29 | 35,310,000 | 23,529,525 | ||
| franklintempleton.com | Semiannual Report | 19 | |||
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED)
| Principal | |||||
| Amount | Value | ||||
| Municipal Bonds (continued) | |||||
| California (continued) | |||||
| Fremont USD Alameda County GO, Election of 2002, Series B, AGMC Insured, Pre-Refunded, | |||||
| 5.00%, 8/01/28 | $ | 10,000,000 | $ | 10,402,800 | |
| Fresno USD, GO, | |||||
| Election of 2001, Series G, zero cpn., 8/01/41 | 47,000,000 | 8,937,990 | |||
| Election of 2010, Series B, zero cpn., 8/01/41 | 35,000,000 | 6,655,950 | |||
| Glendale Community College District GO, NATL RE, FGIC Insured, zero cpn., 8/01/28 | 15,000,000 | 8,118,000 | |||
| Golden State Tobacco Securitization Corp. Tobacco Settlement Revenue, | |||||
| Asset-Backed, Senior Series A-1, 5.125%, 6/01/47 | 5,000,000 | 3,677,150 | |||
| Asset-Backed, Senior Series A-1, 5.75%, 6/01/47 | 77,500,000 | 61,820,975 | |||
| Enhanced, Asset-Backed, Refunding, AGMC Insured, 5.00%, 6/01/45 | 30,000,000 | 30,501,600 | |||
| Enhanced, Asset-Backed, Refunding, Series A, 5.00%, 6/01/45 | 34,000,000 | 34,615,740 | |||
| Enhanced, Asset-Backed, Refunding, Series A, AMBAC Insured, 5.00%, 6/01/45 | 14,085,000 | 14,340,079 | |||
| Enhanced, Asset-Backed, Refunding, Series A, FGIC Insured, 5.00%, 6/01/45 | 20,000,000 | 20,362,200 | |||
| Enhanced, Asset-Backed, Refunding, Series A, Radian Insured, 5.00%, 6/01/45 | 30,000,000 | 30,543,300 | |||
| Enhanced, Asset-Backed, Series A, AGMC Insured, 5.00%, 6/01/35 | 50,000,000 | 51,126,000 | |||
| Grand Terrace Community RDA Tax Allocation Revenue, Community Redevelopment Project Area, | |||||
| Series A, 6.00%, 9/01/33 | 10,000,000 | 10,849,200 | |||
| Hartnell Community College District GO, Capital Appreciation, Election of 2002, zero cpn. to | |||||
| 8/01/22, 6.125% thereafter, 8/01/33 | 20,000,000 | 16,582,600 | |||
| Hawthorne School District GO, Capital Appreciation, Election of 2004, Series C, Assured Guaranty, | |||||
| zero cpn., 8/01/48 | 37,665,000 | 6,878,759 | |||
| Healdsburg RDA Tax Allocation Revenue, Sotoyome Community Development Project, 5.375%, | |||||
| 8/01/34 | 7,750,000 | 8,914,825 | |||
| Huntington Beach City School District GO, Capital Appreciation, Election of 2002, Series A, | |||||
| NATL RE, FGIC Insured, zero cpn., 8/01/28 | 10,005,000 | 6,067,332 | |||
| Inland Empire Tobacco Securitization Authority Revenue, Tobacco Settlement Asset-Backed Bonds, | |||||
| Turbo Convertible Capital Appreciation, Series B, 5.75%, 6/01/26 | 35,000,000 | 34,967,450 | |||
| Irvine USD Financing Authority Special Tax, Series A, | |||||
| 5.00%, 9/01/26 | 2,865,000 | 2,900,268 | |||
| 5.125%, 9/01/36 | 10,585,000 | 10,662,059 | |||
| Kern Community College District COP, AMBAC Insured, 5.00%, 3/01/34 | 15,000,000 | 15,487,800 | |||
| La Palma Community Development Commission Tax Allocation, La Palma Community Development | |||||
| Project No. 1, Refunding, 6.10%, 6/01/22 | 1,205,000 | 1,208,748 | |||
| Lake Elsinore PFA Tax Allocation Revenue, Series A, Assured Guaranty, 5.25%, 9/01/33 | 10,065,000 | 10,438,814 | |||
| Lancaster RDA, RMR, Los Angeles County, Series A, ETM, 10.125%, 9/01/16 | 5,000 | 5,900 | |||
| Lawndale RDA Tax Allocation, Economic Revitalization Project, Assured Guaranty, 5.50%, | |||||
| 8/01/39 | 10,280,000 | 10,936,378 | |||
| Lemon Grove School District GO, Election of 2008, Series B, AGMC Insured, zero cpn., 8/01/50 | 20,990,000 | 3,540,173 | |||
| Loma Linda Hospital Revenue, Loma Linda University Medical Center, Series A, | |||||
| 5.00%, 12/01/23 | 8,700,000 | 8,821,974 | |||
| 8.25%, 12/01/38 | 35,000,000 | 39,031,300 | |||
| Long Beach Bond Finance Authority Natural Gas Purchase Revenue, Series A, | |||||
| 5.50%, 11/15/28 | 8,000,000 | 9,690,160 | |||
| 5.00%, 11/15/29 | 17,465,000 | 20,075,144 | |||
| 5.50%, 11/15/30 | 5,000,000 | 6,071,350 | |||
| 5.00%, 11/15/35 | 69,800,000 | 79,902,154 | |||
| 5.50%, 11/15/37 | 35,000,000 | 42,509,950 | |||
| Long Beach Community College District GO, Election of 2008, Series B, 4.00%, 8/01/42 | 9,930,000 | 10,089,873 | |||
| Los Angeles Community College District GO, | |||||
| Election of 2001, Series A, NATL RE, FGIC Insured, 5.00%, 8/01/32 | 21,500,000 | 23,770,830 | |||
| Election of 2001, Series E-1, 5.00%, 8/01/33 | 25,000,000 | 27,975,250 | |||
| Election of 2003, Series F-1, 5.00%, 8/01/33 | 20,000,000 | 22,380,200 | |||
| 20 | Semiannual Report | franklintempleton.com | ||||
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED)
| Principal | |||||
| Amount | Value | ||||
| Municipal Bonds (continued) | |||||
| California (continued) | |||||
| Los Angeles County Sanitation Districts Financing Authority Revenue, Capital Projects, | |||||
| District No. 14, Series B, NATL RE, FGIC Insured, 5.00%, 10/01/30 | $ | 6,000,000 | $ | 6,238,740 | |
| District No. 20, Series A, NATL Insured, 5.00%, 10/01/34 | 215,000 | 223,073 | |||
| Los Angeles Department of Airports Revenue, Los Angeles International Airport, | |||||
| Senior, Refunding, Series A, 5.00%, 5/15/40 | 19,445,000 | 21,621,479 | |||
| Senior, Series A, 5.00%, 5/15/34 | 18,500,000 | 20,952,915 | |||
| Senior, Series A, 5.25%, 5/15/39 | 14,000,000 | 15,681,400 | |||
| Senior, Series D, 5.00%, 5/15/35 | 80,000,000 | 89,748,800 | |||
| Subordinated, Refunding, Series C, 5.125%, 5/15/33 | 16,000,000 | 17,788,960 | |||
| Los Angeles Department of Water and Power Revenue, | |||||
| Power System, Series A, Sub Series A-1, 5.25%, 7/01/38 | 10,000,000 | 11,101,600 | |||
| Power System, Series A, Sub Series A-1, AGMC Insured, 5.00%, 7/01/31 | 10,000,000 | 10,312,500 | |||
| Power System, Series A, Sub Series A-1, AGMC Insured, 5.00%, 7/01/35 | 63,435,000 | 65,166,775 | |||
| Power System, Series A, Sub Series A-1, AMBAC Insured, 5.00%, 7/01/37 | 11,345,000 | 12,280,849 | |||
| Power System, Series B, 5.00%, 7/01/43 | 62,000,000 | 70,441,920 | |||
| Water System, Refunding, Series A, 5.00%, 7/01/43 | 81,095,000 | 90,738,817 | |||
| Water System, Series A, Sub Series A-1, AMBAC Insured, 5.00%, 7/01/36 | 14,385,000 | 15,256,012 | |||
| Water System, Series A, Sub Series A-1, AMBAC Insured, 5.00%, 7/01/38 | 18,000,000 | 19,611,000 | |||
| Water System, Series A, Sub Series A-2, AMBAC Insured, 5.00%, 7/01/44 | 38,000,000 | 41,187,820 | |||
| Los Angeles Harbor Department Revenue, Refunding, Series B, 5.00%, 8/01/44 | 10,300,000 | 11,796,281 | |||
| Los Angeles USD, GO, | |||||
| Series E, AMBAC Insured, Pre-Refunded, 5.00%, 7/01/30 | 15,000,000 | 15,543,300 | |||
| Series F, 5.00%, 7/01/29 | 2,250,000 | 2,577,060 | |||
| Series I, 5.00%, 7/01/29 | 10,000,000 | 11,453,600 | |||
| Series I, 5.00%, 1/01/34 | 36,760,000 | 41,513,436 | |||
| Los Angeles Wastewater System Revenue, Refunding, Series A, 5.00%, 6/01/39 | 25,000,000 | 27,524,750 | |||
| M-S-R Energy Authority Gas Revenue, Series B, 6.50%, 11/01/39 | 25,000,000 | 33,909,750 | |||
| M-S-R Public Power Agency San Juan Project Revenue, Series E, NATL Insured, ETM, 6.00%, | |||||
| 7/01/22 | 6,330,000 | 7,679,873 | |||
| Madera County COP, Valley Children’s Hospital Project, NATL Insured, | |||||
| 5.00%, 3/15/23 | 8,500,000 | 8,510,455 | |||
| 5.75%, 3/15/28 | 27,500,000 | 27,551,700 | |||
| Milpitas RDA Tax Allocation, Redevelopment Project Area No. 1, NATL Insured, ETM, | |||||
| 5.40%, 1/15/17 | 5,165,000 | 5,365,609 | |||
| 5.50%, 1/15/24 | 11,790,000 | 13,794,182 | |||
| Modesto High School District Stanislaus County GO, Capital Appreciation, Series A, NATL RE, | |||||
| FGIC Insured, zero cpn., | |||||
| 8/01/21 | 9,660,000 | 8,114,400 | |||
| 8/01/23 | 10,815,000 | 8,250,223 | |||
| 5/01/27 | 12,770,000 | 8,213,153 | |||
| Moreno Valley USD, GO, Election of 2004, Series A, AGMC Insured, zero cpn., | |||||
| 8/01/27 | 6,315,000 | 4,359,371 | |||
| 8/01/28 | 6,625,000 | 4,383,034 | |||
| Mount San Antonio Community College District GO, Los Angeles County, Election of 2008, Series A, | |||||
| zero cpn. to 8/01/28, 6.25% thereafter, 8/01/43 | 55,000,000 | 34,905,200 | |||
| Murrieta Valley USD, COP, School Facility Bridge Funding Program, 5.75%, 5/01/41 | 12,000,000 | 12,876,480 | |||
| Natomas USD, GO, Election of 2006, BHAC Insured, 5.00%, 8/01/32 | 16,450,000 | 17,148,631 | |||
| Needles PFAR Tax Allocation, Redevelopment Project, Series A, 7.50%, 8/15/22 | 950,000 | 951,444 | |||
| Newport Mesa USD, GO, Election of 2005, Capital Appreciation, zero cpn. to 7/31/21, | |||||
| 6.30% thereafter, 8/01/42 | 20,000,000 | 16,382,800 | |||
| Oak Grove School District GO, Election of 2008, Series B-1, zero cpn., 6/01/41 | 36,240,000 | 6,619,961 |
franklintempleton.com
Semiannual Report | 21
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED)
| Principal | |||||
| Amount | Value | ||||
| Municipal Bonds (continued) | |||||
| California (continued) | |||||
| Oakland GO, Series B, 6.25%, 1/15/39 | $ | 10,045,000 | $ | 11,451,601 | |
| Oakland USD Alameda County GO, Election of 2006, Series A, 6.125%, 8/01/29 | 7,225,000 | 8,218,438 | |||
| Orange County Water District Revenue COP, Series B, NATL Insured, | |||||
| ETM, 5.00%, 8/15/28 | 13,740,000 | 17,185,442 | |||
| ETM, 5.00%, 8/15/34 | 3,305,000 | 4,180,924 | |||
| Pre-Refunded, 5.00%, 8/15/34 | 4,140,000 | 5,352,233 | |||
| Palmdale CRDA Tax Allocation, Merged Redevelopment Project Areas, Refunding, NATL Insured, | |||||
| 5.00%, 9/01/34 | 6,980,000 | 6,984,816 | |||
| Palo Verde Community College District COP, AMBAC Insured, 5.50%, 1/01/37 | 21,000,000 | 21,593,880 | |||
| Palomar Community College District GO, Convertible Capital Appreciation, Election of 2006, | |||||
| Series A, zero cpn. to 8/01/25, 6.20% thereafter, 8/01/39 | 69,410,000 | 46,022,300 | |||
| Palomar Pomerado Health Care District COP, 6.75%, 11/01/39 | 30,000,000 | 31,981,500 | |||
| Palomar Pomerado Health GO, Convertible Capital Appreciation, Election of 2004, Series A, | |||||
| Assured Guaranty, zero cpn. to 8/01/19, 7.00% thereafter, 8/01/38 | 36,000,000 | 33,670,080 | |||
| zero cpn. to 8/01/20, 6.75% thereafter, 8/01/40 | 60,000,000 | 51,400,800 | |||
| Paramount USD, GO, County of Los Angeles, Election of 2006, BAM Insured, zero cpn., | |||||
| 8/01/43 | 32,000,000 | 5,297,280 | |||
| 8/01/48 | 28,000,000 | 3,091,760 | |||
| Perris PFAR Tax Allocation, Series A, 5.75%, 10/01/31 | 5,000,000 | 5,006,650 | |||
| Perris SFMR, Series A, GNMA Secured, ETM, zero cpn., 6/01/23 | 19,095,000 | 15,398,017 | |||
| Perris Special Tax, CFD No. 91-1, 8.75%, 9/01/21 | 3,350,000 | 3,400,217 | |||
| Placentia-Yorba Linda USD, GO, Capital Appreciation, Election of 2008, Series D, zero cpn., | |||||
| 8/01/43 | 27,955,000 | 7,202,885 | |||
| 8/01/46 | 89,200,000 | 19,711,416 | |||
| 8/01/49 | 85,000,000 | 16,071,800 | |||
| Port Hueneme RDA Tax Allocation, R-76 Project, Refunding, 6.50%, 5/01/23 | 1,695,000 | 1,699,424 | |||
| Poway USD, GO, Capital Appreciation, School Facilities ID No. 2007-1, Election of 2008, Refunding, | |||||
| Series B, zero cpn., 8/01/46 | 45,000,000 | 10,354,050 | |||
| Ramona USD, COP, Convertible Capital Appreciation, Refunding, NATL RE, FGIC Insured, 5.00%, | |||||
| 5/01/32 | 16,000,000 | 16,832,480 | |||
| Rancho Mirage Joint Powers Financing Authority Revenue, Eisenhower Medical Center, | |||||
| Refunding, Series A, 5.00%, 7/01/38 | 11,200,000 | 11,505,312 | |||
| Series A, 5.00%, 7/01/47 | 58,450,000 | 60,196,486 | |||
| Rancho Water District Financing Authority Revenue, AMBAC Insured, ETM, zero cpn., | |||||
| 8/15/16 | 8,605,000 | 8,504,580 | |||
| 8/15/17 | 13,605,000 | 13,259,297 | |||
| 8/15/18 | 13,605,000 | 13,025,019 | |||
| Redding California Electricity System Revenue COP, Series A, NATL RE, FGIC Insured, 5.00%, | |||||
| 6/01/35 | 12,725,000 | 12,889,025 | |||
| Rialto RDA Tax Allocation, Series A, 6.25%, 9/01/37 | 13,525,000 | 14,309,856 | |||
| Rialto USD, GO, Capital Appreciation, | |||||
| Election of 1999, Series A, NATL RE, FGIC Insured, zero cpn., 6/01/19 | 9,370,000 | 8,345,390 | |||
| Election of 2010, Series A, AGMC Insured, zero cpn. to 8/01/26, 7.35% thereafter, 8/01/41 | 27,000,000 | 18,324,360 | |||
| Riverside Community College District GO, Election of 2004, Series C, NATL Insured, 5.00%, | |||||
| 8/01/32 | 6,930,000 | 7,609,071 | |||
| Riverside County Asset Leasing Corp. Leasehold Revenue, Riverside County Hospital Project, | |||||
| NATL Insured, zero cpn., | |||||
| 6/01/23 | 14,160,000 | 10,369,226 | |||
| 6/01/24 | 13,005,000 | 9,057,072 | |||
| Riverside County COP, Capital Improvement, Family Law, Refunding, Series A, NATL RE, | |||||
| FGIC Insured, 5.00%, | |||||
| 11/01/30 | 9,905,000 | 10,349,437 | |||
| 11/01/36 | 6,345,000 | 6,598,863 | |||
| 22 | Semiannual Report | franklintempleton.com | ||||
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED)
| Principal | ||||
| Amount | Value | |||
| Municipal Bonds (continued) | ||||
| California (continued) | ||||
| Riverside County Flood Control and Water Conservation District Special Assessment, Elsinore | ||||
| Valley AD, Zone 3, 7.875%, | ||||
| 9/01/15 | $ | 410,000 | $ | 428,954 |
| 9/01/16 | 440,000 | 480,137 | ||
| 9/01/17 | 475,000 | 533,002 | ||
| Riverside County PFA Tax Allocation Revenue, Redevelopment Projects, Refunding, Series A, | ||||
| XLCA Insured, 5.00%, 10/01/35 | 17,500,000 | 17,538,500 | ||
| Riverside County SFMR, Capital Appreciation Mortgage, | ||||
| Series A, GNMA Secured, ETM, zero cpn., 11/01/20 | 25,055,000 | 21,673,076 | ||
| Series B, GNMA Secured, ETM, zero cpn., 6/01/23 | 26,160,000 | 21,005,172 | ||
| Riverside County Transportation Commission Sales Tax Revenue, Series A, 5.25%, 6/01/39 | 11,000,000 | 12,774,850 | ||
| Riverside County Transportation Commission Toll Revenue, senior lien, Series A, 5.75%, 6/01/48 | 10,000,000 | 11,269,800 | ||
| Riverside Electric Revenue, | ||||
| Issue D, AGMC Insured, 5.00%, 10/01/33 | 10,000,000 | 11,207,500 | ||
| Refunding, Series A, 5.00%, 10/01/43 | 11,535,000 | 12,888,517 | ||
| RNR School Financing Authority Special Tax, CFD No. 92-1, Series A, AMBAC Insured, 5.00%, | ||||
| 9/01/36 | 10,090,000 | 10,342,654 | ||
| Road 17 Levee Area PFAAssessment Revenue, Road 17 Levee Improvement Project, 7.00%, | ||||
| 9/01/39 | 8,865,000 | 10,602,540 | ||
| Rocklin USD, GO, | ||||
| Capital Appreciation, Series A, NATL RE, FGIC Insured, zero cpn., 9/01/16 | 17,715,000 | 17,493,385 | ||
| Election of 2002, NATL RE, FGIC Insured, zero cpn., 8/01/25 | 8,160,000 | 5,811,062 | ||
| Election of 2002, NATL RE, FGIC Insured, zero cpn., 8/01/26 | 8,695,000 | 5,876,516 | ||
| Election of 2002, NATL RE, FGIC Insured, zero cpn., 8/01/27 | 9,080,000 | 5,840,256 | ||
| Election of 2002, NATL RE, FGIC Insured, zero cpn., 8/01/28 | 16,615,000 | 10,213,573 | ||
| Roseville City School District GO, Capital Appreciation, Series A, zero cpn., 8/01/17 | 17,900,000 | 15,535,768 | ||
| Roseville Electric System Revenue COP, AGMC Insured, 5.00%, 2/01/34 | 5,000 | 5,005 | ||
| Roseville Joint UHSD, GO, | ||||
| Capital Appreciation, Series A, zero cpn., 8/01/17 | 7,430,000 | 6,473,833 | ||
| Placer and Sacramento Counties, Election of 2004, Series B, NATL RE, FGIC Insured, | ||||
| Pre-Refunded, 5.00%, 8/01/30 | 8,375,000 | 8,712,345 | ||
| Roseville Natural Gas Financing Authority Gas Revenue, 5.00%, 2/15/26 | 5,000,000 | 5,698,150 | ||
| Rowland USD, GO, Series A, AGMC Insured, 5.00%, 8/01/31 | 17,715,000 | 19,001,640 | ||
| Sacramento Area Flood Control Agency Revenue, Consolidated, Capital AD, Series A, NATL RE, | ||||
| FGIC Insured, 5.00%, 10/01/37 | 8,715,000 | 9,295,680 | ||
| Sacramento City Financing Authority Revenue, Capital Improvement, Community Reinsurance | ||||
| Capital Program, Series A, AMBAC Insured, 5.00%, | ||||
| 12/01/31 | 16,915,000 | 17,930,915 | ||
| 12/01/36 | 5,740,000 | 6,068,500 | ||
| Sacramento County Airport System Revenue, | ||||
| PFC/Grant, Subordinate, Series C, Assured Guaranty, 5.75%, 7/01/39 | 5,000,000 | 5,385,850 | ||
| Senior, 5.00%, 7/01/40 | 9,000,000 | 9,878,130 | ||
| Senior, Series A, AGMC Insured, 5.00%, 7/01/41 | 10,000,000 | 10,475,100 | ||
| Senior, Series B, AGMC Insured, 5.25%, 7/01/39 | 20,000,000 | 21,217,200 | ||
| Sacramento County Sanitation Districts Financing Authority Revenue, | ||||
| County Sanitation District No. 1, NATL Insured, 5.00%, 8/01/30 | 11,900,000 | 12,345,774 | ||
| Refunding, Series A, 5.00%, 12/01/44 | 25,000,000 | 28,691,000 | ||
| Sacramento Regional County Sanitation District, NATL Insured, 5.00%, 12/01/36 | 13,220,000 | 14,029,989 | ||
| Sacramento Regional County Sanitation District, NATL Insured, Pre-Refunded, 5.00%, 12/01/36 | 47,875,000 | 51,575,259 | ||
| Sacramento Regional County Sanitation District, NATL RE, FGIC Insured, Pre-Refunded, 5.00%, | ||||
| 12/01/30 | 10,000,000 | 10,772,900 | ||
| Sacramento Regional County Sanitation District, Series A, AMBAC Insured, Pre-Refunded, 5.00%, | ||||
| 12/01/35 | 40,000,000 | 40,315,600 | ||
| franklintempleton.com | Semiannual Report | 23 | |||
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED)
| Principal | |||||
| Amount | Value | ||||
| Municipal Bonds (continued) | |||||
| California (continued) | |||||
| Sacramento Water Revenue, 5.00%, 9/01/38 | $ | 21,630,000 | $ | 24,165,036 | |
| San Bernardino Community College District GO, Election of 2008, Series B, zero cpn., 8/01/48 | 66,390,000 | 12,531,776 | |||
| San Bernardino County COP, Medical Center Financing Project, Refunding, 5.00%, 8/01/26 | 13,045,000 | 13,061,306 | |||
| San Bernardino Joint Powers Financing Authority Lease Revenue, City Hall Project, Refunding, | |||||
| NATL Insured, 5.70%, 1/01/23 | 6,315,000 | 5,869,793 | |||
| San Diego Community College District GO, Election of 2002, Capital Appreciation, zero cpn. to | |||||
| 8/01/19, 6.00% thereafter, 8/01/33 | 26,880,000 | 24,088,512 | |||
| San Diego County COP, The Salk Institute for Biological Studies, 5.125%, 7/01/40 | 15,000,000 | 16,249,500 | |||
| San Diego County Regional Airport Authority Revenue, | |||||
| Consolidated Rental Car Facilities, Series A, 5.00%, 7/01/44 | 5,645,000 | 6,245,346 | |||
| Refunding, Sub Series A, 5.00%, 7/01/27 | 11,565,000 | 13,195,781 | |||
| San Diego County Regional Transportation Commission Sales Tax Revenue, Series A, 5.00%, | |||||
| 4/01/44 | 54,915,000 | 63,293,382 | |||
| 4/01/48 | 20,000,000 | 22,980,600 | |||
| San Diego County Water Authority Water Revenue COP, Series A, AGMC Insured, | |||||
| 5.00%, 5/01/34 | 11,030,000 | 11,258,211 | |||
| Pre-Refunded, 5.00%, 5/01/34 | 95,675,000 | 98,371,121 | |||
| San Diego RDA Tax Allocation, Horton Plaza Redevelopment Project, Refunding, Series A, | |||||
| AGMC Insured, 6.00%, 11/01/15 | 1,640,000 | 1,647,150 | |||
| San Diego USD, GO, | |||||
| Capital Appreciation, Refunding, Series R-2, zero cpn. to 6/30/30, 6.625% thereafter, 7/01/40 | 79,500,000 | 44,893,650 | |||
| Election of 1998, Capital Appreciation, Series A, NATL RE, FGIC Insured, zero cpn., 7/01/21 | 12,160,000 | 10,181,811 | |||
| Election of 1998, Capital Appreciation, Series A, NATL RE, FGIC Insured, zero cpn., 7/01/22 | 8,440,000 | 6,742,800 | |||
| Election of 1998, Capital Appreciation, Series A, NATL RE, FGIC Insured, zero cpn., 7/01/23 | 11,120,000 | 8,482,670 | |||
| Election of 2008, Capital Appreciation, Series C, zero cpn. to 6/30/30, 6.625% thereafter, | |||||
| 7/01/48 | 29,840,000 | 16,208,193 | |||
| Election of 2008, Series A, zero cpn. to 7/01/19, 6.00% thereafter, 7/01/33 | 104,505,000 | 93,453,596 | |||
| Election of 2008, Series E, zero cpn. to 7/01/32, 5.375% thereafter, 7/01/47 | 74,270,000 | 33,965,156 | |||
| San Francisco BART District GO, Election of 2004, Series B, 5.00%, 8/01/32 | 28,000,000 | 31,031,840 | |||
| San Francisco City and County Airport Commission International Airport Revenue, | |||||
| Issue 32G, Refunding, Second Series, NATL RE, FGIC Insured, 4.50%, 5/01/28 | 7,500,000 | 7,866,300 | |||
| Series B, 5.00%, 5/01/44 | 31,000,000 | 34,836,250 | |||
| San Francisco City and County COP, 30 Van Ness Avenue Property, Series A, NATL Insured, | |||||
| 5.00%, 9/01/31 | 5,805,000 | 5,816,436 | |||
| San Francisco City and County Public Utilities Commission Water Revenue, Sub Series A, 5.00%, | |||||
| 11/01/36 | 23,490,000 | 26,432,357 | |||
| 11/01/41 | 5,800,000 | 6,468,044 | |||
| 11/01/43 | 71,735,000 | 79,901,312 | |||
| San Jacinto USD, COP, Refunding, AGMC Insured, 5.375%, 9/01/40 | 12,000,000 | 12,666,600 | |||
| San Joaquin Hills Transportation Corridor Agency Toll Road Revenue, | |||||
| Capital Appreciation, Refunding, Series A, 5.60%, 1/15/16 | 19,500,000 | 19,934,850 | |||
| Capital Appreciation, Refunding, Series A, 5.65%, 1/15/17 | 17,000,000 | 17,378,080 | |||
| Capital Appreciation, Refunding, Series A, 5.70%, 1/15/19 | 57,000,000 | 58,250,580 | |||
| Capital Appreciation, Refunding, Series A, zero cpn. to 7/15/21, 5.65% thereafter, 1/15/37 | 104,745,000 | 64,817,253 | |||
| Capital Appreciation, Refunding, Series A, zero cpn. to 7/15/21, 5.70% thereafter, 1/15/38 | 140,340,000 | 87,107,635 | |||
| Capital Appreciation, Refunding, Series A, zero cpn. to 7/15/21, 5.75% thereafter, 1/15/40 | 158,655,000 | 97,785,423 | |||
| Capital Appreciation, Refunding, Series A, zero cpn. to 7/15/21, 5.75% thereafter, 1/15/41 | 141,024,000 | 86,762,196 | |||
| Capital Appreciation, Refunding, Series A, zero cpn. to 7/15/21, 5.75% thereafter, 1/15/42 | 141,024,000 | 86,614,120 | |||
| Orange County, Capital Appreciation, senior lien, 5.00%, 1/01/33 | 82,040,000 | 81,354,966 | |||
| Refunding, Series A, 5.50%, 1/15/28 | 247,300,000 | 247,470,637 | |||
| Refunding, Series A, NATL Insured, 5.375%, 1/15/29 | 85,500,000 | 85,545,315 | |||
| Refunding, Series A, NATL Insured, 5.25%, 1/15/30 | 21,000,000 | 21,007,140 | |||
| senior lien, ETM, zero cpn., 1/01/25 | 5,700,000 | 4,486,755 | |||
| 24 | Semiannual Report | franklintempleton.com | ||||
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED)
| Principal | |||||
| Amount | Value | ||||
| Municipal Bonds (continued) | |||||
| California (continued) | |||||
| San Joaquin Hills Transportation Corridor Agency Toll Road Revenue, (continued) | |||||
| senior lien, ETM, zero cpn., 1/01/28 | $ | 33,545,000 | $ | 23,485,190 | |
| senior lien, ETM, zero cpn., 1/01/29 | 37,050,000 | 24,689,008 | |||
| San Jose Airport Revenue, | |||||
| Refunding, Series A, NATL RE, FGIC Insured, 5.00%, 3/01/31 | 9,415,000 | 9,420,084 | |||
| Refunding, Series B, AMBAC Insured, 5.00%, 3/01/37 | 25,500,000 | 27,043,770 | |||
| Series D, NATL Insured, 5.00%, 3/01/28 | 10,000,000 | 10,005,400 | |||
| San Jose Financing Authority Lease Revenue, | |||||
| Civic Center Project, Refunding, Series A, AMBAC Insured, 5.00%, 6/01/39 | 20,885,000 | 21,952,223 | |||
| Convention Center Project, Refunding, Series F, NATL Insured, 5.00%, 9/01/21 | 14,045,000 | 14,091,910 | |||
| Convention Center Project, Refunding, Series F, NATL Insured, 5.00%, 9/01/22 | 14,730,000 | 14,777,578 | |||
| San Jose Financing Authority Revenue, Fourth and San Fernando Parking Facility Project, Series A, | |||||
| AMBAC Insured, 5.00%, 9/01/24 | 5,000,000 | 5,001,650 | |||
| San Jose GO, | |||||
| Libraries, Parks and Public Safety Projects, 5.00%, 9/01/28 | 11,600,000 | 11,639,672 | |||
| Libraries, Parks and Public Safety Projects, NATL Insured, 5.00%, 9/01/34 | 15,820,000 | 15,867,776 | |||
| Libraries and Parks Projects, NATL Insured, 5.00%, 9/01/36 | 35,150,000 | 37,355,662 | |||
| San Jose RDA Tax Allocation, | |||||
| Housing Set-Aside Merged Area, Series E, NATL Insured, 5.85%, 8/01/27 | 7,325,000 | 7,331,007 | |||
| Merged Area Redevelopment Project, Refunding, NATL Insured, 5.625%, 8/01/28 | 2,030,000 | 2,034,385 | |||
| Merged Area Redevelopment Project, Series A, 6.50%, 8/01/18 | 10,000,000 | 10,993,900 | |||
| Merged Area Redevelopment Project, Series B, 7.00%, 8/01/35 | 28,565,000 | 31,996,228 | |||
| Merged Area Redevelopment Project, Series B, XLCA Insured, 5.00%, 8/01/32 | 13,395,000 | 13,662,766 | |||
| San Jose Special Hotel Tax Revenue, Convention Center Expansion and Renovation Project, | |||||
| 6.50%, | |||||
| 5/01/36 | 10,000,000 | 12,228,600 | |||
| 5/01/42 | 10,000,000 | 12,154,800 | |||
| San Jose USD, COP, AGMC Insured, ETM, zero cpn., | |||||
| 1/01/27 | 7,105,000 | 5,048,671 | |||
| 1/01/29 | 7,105,000 | 4,668,553 | |||
| San Juan USD, GO, Election of 1998, Series B, NATL Insured, zero cpn., | |||||
| 8/01/26 | 15,825,000 | 10,351,449 | |||
| 8/01/27 | 18,605,000 | 11,816,780 | |||
| 8/01/28 | 19,470,000 | 11,807,192 | |||
| San Luis Obispo County Financing Authority Revenue, Nacimiento Water Project, Series A, | |||||
| NATL Insured, 5.00%, 9/01/32 | 12,500,000 | 13,636,750 | |||
| San Marcos PFAR, Series A, ETM, 6.25%, 9/02/22 | 15,000,000 | 19,189,350 | |||
| San Mateo Flood Control District COP, Colma Creek Flood Control Zone, AMBAC Insured, 5.00%, | |||||
| 8/01/39 | 6,555,000 | 6,499,283 | |||
| San Mateo UHSD, | |||||
| COP, Phase I Projects, Capital Appreciation, Series B, AMBAC Insured, Pre-Refunded, zero cpn. | |||||
| to 12/15/19, 5.00% thereafter, 12/15/43 | 11,535,000 | 11,430,378 | |||
| GO, Capital Appreciation, Election of 2000, Series B, NATL RE, FGIC Insured, zero cpn., | |||||
| 9/01/22 | 5,000,000 | 4,075,850 | |||
| San Ramon PFA Tax Allocation Revenue, NATL Insured, 5.30%, 2/01/28 | 16,810,000 | 16,836,896 | |||
| San Ramon Valley Fire Protection District COP, XLCA Insured, 5.00%, 8/01/36 | 5,655,000 | 5,953,641 | |||
| San Ramon Valley USD, GO, Election of 2002, NATL Insured, Pre-Refunded, 5.00%, 8/01/28 | 14,770,000 | 16,025,893 | |||
| Sanger USD, GO, Election of 2006, Series A, AGMC Insured, Pre-Refunded, 5.00%, 8/01/27 | 5,000,000 | 5,524,550 | |||
| Santa Ana Community RDA Tax Allocation, Merged Project Area, Refunding, Series A, | |||||
| 6.25%, 9/01/24 | 7,005,000 | 8,414,056 | |||
| 6.75%, 9/01/28 | 13,500,000 | 16,520,355 | |||
| bSanta Barbara Housing Authority Revenue, Refunding and Acquisition, 6.25%, 11/15/20 | 3,030,000 | 2,999,488 | |||
| franklintempleton.com | Semiannual Report | 25 | ||||
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED)
| Principal | ||||
| Amount | Value | |||
| Municipal Bonds (continued) | ||||
| California (continued) | ||||
| Santa Clara County Financing Authority Revenue, El Camino Hospital, Series B, AMBAC Insured, | ||||
| 5.125%, 2/01/41 | $ | 20,000,000 | $ | 21,435,400 |
| Santa Clarita Community College District GO, Election of 2006, NATL Insured, 5.00%, 8/01/32 | 9,765,000 | 10,527,061 | ||
| Santa Cruz County RDA Tax Allocation, Live Oak/Soquel Community Improvement Project Area, | ||||
| Series A, 7.00%, 9/01/36 | 5,000,000 | 5,854,500 | ||
| Santee School District COP, Capital Improvement Project, Assured Guaranty, 5.50%, 10/01/48 | 15,460,000 | 16,192,031 | ||
| Saugus USD, GO, Series B, AGMC Insured, Pre-Refunded, 5.00%, 8/01/29 | 5,000,000 | 5,201,400 | ||
| School Facilities Financing Authority Revenue, Capital Appreciation, Grant Joint UHSD, Series A, | ||||
| AGMC Insured, zero cpn., 8/01/42 | 49,000,000 | 12,395,040 | ||
| Shafter Joint Powers Financing Authority Lease Revenue, Community Correctional Facility Project, | ||||
| Series A, 6.05%, 1/01/17 | 2,795,000 | 2,807,019 | ||
| Snowline Joint USD, CFD Special Tax, No. 2002-1, Series A, | ||||
| 5.30%, 9/01/29 | 1,615,000 | 1,615,888 | ||
| 5.40%, 9/01/34 | 2,000,000 | 2,001,000 | ||
| Sonoma CDA Tax Allocation, Redevelopment Project, 7.125%, 12/01/36 | 10,775,000 | 12,823,435 | ||
| Southern California Public Power Authority Gas Project Revenue, Project No. 1, Series A, 5.00%, | ||||
| 11/01/33 | 17,500,000 | 19,869,675 | ||
| Southern California Public Power Authority Transmission Project Revenue, Southern Transmission | ||||
| Project, 6.125%, 7/01/18 | 1,135,000 | 1,139,949 | ||
| Southern California Water Replenishment District Revenue COP, 5.00%, 8/01/41 | 12,870,000 | 13,742,586 | ||
| Stockton Revenue COP, Wastewater System Project, Refunding, Series A, NATL Insured, 5.20%, | ||||
| 9/01/29 | 19,160,000 | 19,173,412 | ||
| Stockton-East Water District COP, Capital Appreciation, 1990 Project, Series B, zero cpn., | ||||
| 4/01/16 | 103,885,000 | 98,940,074 | ||
| Suisun City PFA Tax Allocation Revenue, Capital Appreciation, Redevelopment Project, Series A, | ||||
| zero cpn., 10/01/28 | 17,855,000 | 8,470,591 | ||
| Sweetwater UHSD, GO, Election of 2006, Series A, AGMC Insured, 5.625%, 8/01/47 | 10,000,000 | 10,968,700 | ||
| Temple City USD, GO, Election of 2012, Series A, 5.00%, 8/01/43 | 10,000,000 | 10,714,000 | ||
| Torrance Hospital Revenue, Torrance Memorial Medical Center, Series A, 5.50%, 6/01/31 | 4,385,000 | 4,396,752 | ||
| Trabuco Canyon PFA, Special Tax Revenue, Refunding, | ||||
| Series A, AGMC Insured, 6.10%, 10/01/15 | 1,130,000 | 1,156,951 | ||
| Series C, AGMC Insured, 6.10%, 7/01/19 | 3,940,000 | 4,299,328 | ||
| Tulare County Board of Education COP, Capital Improvement Projects, BAM Insured, 5.50%, | ||||
| 5/01/43 | 10,855,000 | 11,780,823 | ||
| Twin Cities Police Authority CFD Special Tax, No. 2008-1, Public Safety, Police and Emergency | ||||
| Response Facilities and Services, 6.00%, 8/01/44 | 10,710,000 | 12,871,921 | ||
| University of California Regents Medical Center Pooled Revenue, | ||||
| Refunding, Series J, 5.00%, 5/15/48 | 75,000,000 | 82,367,250 | ||
| Series A, NATL Insured, 4.50%, 5/15/47 | 54,085,000 | 54,592,317 | ||
| University of California Revenues, | ||||
| Limited Project, Series D, NATL RE, FGIC Insured, 5.00%, 5/15/37 | 10,000,000 | 10,671,100 | ||
| Limited Project, Series D, NATL RE, FGIC Insured, 5.00%, 5/15/41 | 7,750,000 | 8,198,028 | ||
| UCLA Medical Center, Series A, AMBAC Insured, 5.00%, 5/15/34 | 3,710,000 | 3,712,894 | ||
| Upland COP, San Antonio Community Hospital, Refunding, 6.50%, 1/01/41 | 34,130,000 | 38,720,485 | ||
| Upland USD, GO, Capital Appreciation, Election of 2008, Series C, zero cpn., 8/01/45 | 62,900,000 | 14,100,293 | ||
| bVacaville PFAR, Local Agency, 8.65%, 9/02/18 | 2,070,000 | 2,032,988 | ||
| Vacaville USD, GO, Election of 2001, AMBAC Insured, 5.00%, 8/01/32 | 7,790,000 | 8,377,911 | ||
| Vallejo PFAR, Local Agency, Hiddenbrooke ID, Refunding, Series A, 5.80%, 9/01/31 | 4,090,000 | 4,104,233 | ||
| Vallejo RDA Tax Allocation, Waterfront Redevelopment Project, 7.90%, 5/01/19 | 1,230,000 | 1,230,898 | ||
| Victor Valley Joint UHSD, GO, Election of 2008, Series A, Assured Guaranty, 5.00%, 8/01/34 | 28,350,000 | 30,720,343 | ||
| Vista Community Development Commission Tax Allocation Revenue, Vista Redevelopment Project | ||||
| Area, 5.875%, 9/01/37 | 5,000,000 | 5,000,400 | ||
| Vista USD, GO, Election of 2002, Series C, AGMC Insured, 5.00%, 8/01/28 | 2,000,000 | 2,157,800 | ||
| 26 | Semiannual Report | franklintempleton.com | |||
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED)
| Principal | |||||
| Amount | Value | ||||
| Municipal Bonds (continued) | |||||
| California (continued) | |||||
| Washington Township Health Care District Revenue, | |||||
| Refunding, 5.25%, 7/01/29 | $ | 6,500,000 | $ | 6,507,020 | |
| Refunding, Series A, 5.00%, 7/01/37 | 7,000,000 | 7,190,820 | |||
| Series A, 5.50%, 7/01/38 | 11,000,000 | 11,676,280 | |||
| West Kern Community College District COP, AMBAC Insured, 5.625%, 11/01/34 | 11,035,000 | 12,171,715 | |||
| West Sacramento Area Flood Control Agency Assessment Revenue, 5.25%, 9/01/41 | 9,030,000 | 9,784,727 | |||
| West Sacramento Financing Authority Special Tax Revenue, Series A, XLCA Insured, 5.00%, | |||||
| 9/01/34 | 5,000,000 | 5,600,900 | |||
| Western Placer USD, COP, Refinancing Project, Series B, Assured Guaranty, 5.125%, 8/01/47 | 10,275,000 | 10,651,373 | |||
| Westlands Water District Revenue COP, Series A, NATL Insured, 5.00%, | |||||
| 9/01/30 | 6,250,000 | 6,296,813 | |||
| 9/01/31 | 7,490,000 | 7,733,575 | |||
| 9/01/35 | 5,910,000 | 5,945,342 | |||
| Westminster School District GO, Election of 2008, Series A-1, Assured Guaranty, 5.00%, 8/01/34 | 18,980,000 | 20,390,783 | |||
| Yucaipa Valley Water District Water System Revenue COP, Series A, NATL Insured, 5.00%, | |||||
| 9/01/29 | 10,100,000 | 10,108,484 | |||
| 9/01/34 | 12,765,000 | 12,772,659 | |||
| 11,849,941,647 | |||||
| U.S. Territories 5.7% | |||||
| Puerto Rico 5.6% | |||||
| Children’s Trust Fund Tobacco Settlement Revenue, Asset-Backed, Refunding, | |||||
| 5.50%, 5/15/39 | 7,210,000 | 6,757,645 | |||
| 5.625%, 5/15/43 | 25,500,000 | 23,641,305 | |||
| Puerto Rico Commonwealth GO, Public Improvement, | |||||
| Refunding, Series A, 5.50%, 7/01/32 | 30,000,000 | 22,605,000 | |||
| Refunding, Series A, 5.75%, 7/01/41 | 20,485,000 | 15,427,663 | |||
| Refunding, Series A, AGMC Insured, 5.00%, 7/01/35 | 27,145,000 | 26,794,287 | |||
| Refunding, Series A, NATL Insured, 5.50%, 7/01/20 | 10,000,000 | 10,469,600 | |||
| Refunding, Series E, 5.50%, 7/01/31 | 18,980,000 | 14,572,085 | |||
| Refunding, Sub Series C-7, NATL Insured, 6.00%, 7/01/27 | 21,000,000 | 20,886,810 | |||
| Series A, 5.125%, 7/01/28 | 10,000,000 | 7,457,700 | |||
| Series A, 5.125%, 7/01/31 | 68,780,000 | 51,608,385 | |||
| Series A, 6.00%, 7/01/38 | 10,000,000 | 7,730,600 | |||
| Series B, Pre-Refunded, 5.25%, 7/01/32 | 12,495,000 | 13,558,824 | |||
| Series B, Pre-Refunded, 5.00%, 7/01/35 | 21,200,000 | 22,912,748 | |||
| Puerto Rico Commonwealth Highways and Transportation Authority Highway Revenue, Series Y, | |||||
| Pre-Refunded, 5.00%, 7/01/36 | 63,000,000 | 68,147,730 | |||
| Puerto Rico Commonwealth Highways and Transportation Authority Transportation Revenue, | |||||
| Series K, Pre-Refunded, 5.00%, | |||||
| 7/01/40 | 30,000,000 | 31,082,100 | |||
| 7/01/45 | 30,000,000 | 31,082,100 | |||
| Puerto Rico Commonwealth Infrastructure Financing Authority Special Tax Revenue, 5.00%, | |||||
| 7/01/46 | 9,475,000 | 5,551,592 | |||
| Puerto Rico Convention Center District Authority Hotel Occupancy Tax Revenue, Series A, | |||||
| AMBAC Insured, 5.00%, 7/01/31 | 2,310,000 | 2,063,361 | |||
| Puerto Rico Electric Power Authority Power Revenue, | |||||
| Refunding, Series A, 5.00%, 7/01/29 | 20,000,000 | 11,932,200 | |||
| Refunding, Series A, 5.00%, 7/01/42 | 24,000,000 | 14,268,240 | |||
| Series A, 7.00%, 7/01/33 | 50,000,000 | 29,821,000 | |||
| Series WW, 5.00%, 7/01/28 | 12,030,000 | 7,177,700 |
franklintempleton.com
Semiannual Report | 27
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED)
| Principal | ||||
| Amount | Value | |||
| Municipal Bonds (continued) | ||||
| U.S. Territories (continued) | ||||
| Puerto Rico (continued) | ||||
| Puerto Rico Electric Power Authority Power Revenue, (continued) | ||||
| Series WW, 5.25%, 7/01/33 | $ | 32,250,000 | $ | 19,236,480 |
| Series XX, 5.25%, 7/01/40 | 14,000,000 | 8,331,400 | ||
| Puerto Rico Industrial Tourist Educational Medical and Environmental Control Facilities Financing | ||||
| Authority Revenue, Cogeneration Facility, AES Puerto Rico Project, 6.625%, 6/01/26 | 6,800,000 | 6,417,432 | ||
| Puerto Rico Infrastructure Financing Authority Revenue, Ports Authority Project, Series B, | ||||
| 5.25%, 12/15/26 | 20,000,000 | 13,850,000 | ||
| 6.00%, 12/15/26 | 16,000,000 | 11,642,080 | ||
| Puerto Rico PBA Guaranteed Revenue, Government Facilities, | ||||
| Refunding, Series D, 5.375%, 7/01/33 | 26,510,000 | 19,698,255 | ||
| Refunding, Series M-3, NATL Insured, 6.00%, 7/01/24 | 21,535,000 | 21,589,699 | ||
| Refunding, Series M-3, NATL Insured, 6.00%, 7/01/27 | 15,000,000 | 14,919,150 | ||
| Refunding, Series M-3, NATL Insured, 6.00%, 7/01/28 | 10,000,000 | 9,897,600 | ||
| Refunding, Series N, 5.00%, 7/01/37 | 10,925,000 | 8,086,685 | ||
| Series S, 6.00%, 7/01/41 | 32,840,000 | 25,223,419 | ||
| Puerto Rico Public Finance Corp. Revenue, Commonwealth Appropriation, Refunding, Series B, | ||||
| 5.50%, 8/01/31 | 21,000,000 | 11,143,650 | ||
| Puerto Rico Sales Tax FICO Sales Tax Revenue, | ||||
| Capital Appreciation, first subordinate, Series A, zero cpn. to 8/01/16, 6.75% thereafter, | ||||
| 8/01/32 | 80,000,000 | 63,157,600 | ||
| first subordinate, Series A, 5.75%, 8/01/37 | 10,000,000 | 8,193,600 | ||
| first subordinate, Series A, 5.375%, 8/01/39 | 10,000,000 | 7,657,500 | ||
| first subordinate, Series A, 5.50%, 8/01/42 | 10,000,000 | 7,666,400 | ||
| first subordinate, Series A, 6.00%, 8/01/42 | 8,000,000 | 6,440,800 | ||
| first subordinate, Series C, 5.50%, 8/01/40 | 50,000,000 | 39,074,500 | ||
| Series A, 5.25%, 8/01/57 | 10,000,000 | 7,872,100 | ||
| 755,647,025 | ||||
| U.S. Virgin Islands 0.1% | ||||
| Virgin Islands PFAR, Virgin Islands Matching Fund Loan Note, Diageo Project, Series A, 6.75%, | ||||
| 10/01/37 | 10,000,000 | 11,457,700 | ||
| Total U.S. Territories | 767,104,725 | |||
| Total Municipal Bonds before Short Term Investments | ||||
| (Cost $11,442,761,653) | 12,617,046,372 |
28 | Semiannual Report
franklintempleton.com
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED)
| Principal | ||||
| Amount | Value | |||
| Short Term Investments 1.5% | ||||
| Municipal Bonds 1.5% | ||||
| California 1.5% | ||||
| cCalifornia PCFA, PCR, Pacific Gas and Electric Co., Refunding, | ||||
| Series C, Daily VRDN and Put, 0.01%, 11/01/26 | $ | 60,700,000 | $ | 60,700,000 |
| Series F, Daily VRDN and Put, 0.02%, 11/01/26 | 31,400,000 | 31,400,000 | ||
| cCalifornia Statewide CDA Revenue, John Muir Health, Refunding, Series A, Daily VRDN and Put, | ||||
| 0.01%, 8/15/36 | 29,100,000 | 29,100,000 | ||
| cLos Angeles Department of Water and Power Revenue, | ||||
| Various, Series B, Sub Series B-3, Daily VRDN and Put, 0.01%, 7/01/34 | 58,650,000 | 58,650,000 | ||
| Water System, Series B, Sub Series B-2, Daily VRDN and Put, 0.02%, 7/01/35 | 29,200,000 | 29,200,000 | ||
| Total Short Term Investments (Cost $209,050,000) | 209,050,000 | |||
| Total Investments (Cost $11,651,811,653) 95.7% | 12,826,096,372 | |||
| Other Assets, less Liabilities 4.3% | 573,415,865 | |||
| Net Assets 100.0% | $ | 13,399,512,237 |
See Abbreviations on page 39.
aSecurity purchased on a when-issued basis. See Note 1(b).
bSecurity has been deemed illiquid because it may not be able to be sold within seven days. At September 30, 2014, the aggregate value of these securities was $5,032,476,
representing 0.04% of net assets.
cVariable 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. The coupon rate shown represents the rate at period end.
franklintempleton.com The accompanying notes are an integral part of these financial statements. | Semiannual Report | 29
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
Financial Statements
Statement of Assets and Liabilities
September 30, 2014 (unaudited)
| Assets: | |||
| Investments in securities: | |||
| Cost | $ | 11,651,811,653 | |
| Value | $ | 12,826,096,372 | |
| Cash | 460,060,367 | ||
| Receivables: | |||
| Capital shares sold | 11,371,034 | ||
| Interest | 148,263,170 | ||
| Other assets | 3,482 | ||
| Total assets | 13,445,794,425 | ||
| Liabilities: | |||
| Payables: | |||
| Investment securities purchased | 28,159,000 | ||
| Capital shares redeemed | 9,275,528 | ||
| Management fees | 4,960,363 | ||
| Distribution fees | 3,096,723 | ||
| Transfer agent fees | 778,446 | ||
| Accrued expenses and other liabilities | 12,128 | ||
| Total liabilities | 46,282,188 | ||
| Net assets, at value | $ | 13,399,512,237 | |
| Net assets consist of: | |||
| Paid-in capital | $ | 12,518,997,495 | |
| Undistributed net investment income | 20,527,544 | ||
| Net unrealized appreciation (depreciation) | 1,174,284,719 | ||
| Accumulated net realized gain (loss) | (314,297,521 | ) | |
| Net assets, at value | $ | 13,399,512,237 | |
| Class A: | |||
| Net assets, at value | $ | 11,362,036,801 | |
| Shares outstanding | 1,522,314,335 | ||
| Net asset value per sharea | $ | 7.46 | |
| Maximum offering price per share (net asset value per share ÷ 95.75%) | $ | 7.79 | |
| Class C: | |||
| Net assets, at value | $ | 1,223,352,586 | |
| Shares outstanding | 164,243,512 | ||
| Net asset value and maximum offering price per sharea | $ | 7.45 | |
| Advisor Class: | |||
| Net assets, at value | $ | 814,122,850 | |
| Shares outstanding | 109,266,652 | ||
| Net asset value and maximum offering price per share | $ | 7.45 |
| aRedemption price is equal to net asset value less contingent deferred sales charges, if applicable. | |
| 30 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
FINANCIAL STATEMENTS
Statement of Operations
for the six months ended September 30, 2014 (unaudited)
| Investment income: | |||
| Interest | $ | 312,525,894 | |
| Expenses: | |||
| Management fees (Note 3a) | 29,305,877 | ||
| Distribution fees: (Note 3c) | |||
| Class A | 5,340,161 | ||
| Class C | 3,847,634 | ||
| Transfer agent fees: (Note 3e) | |||
| Class A | 1,505,708 | ||
| Class C | 158,507 | ||
| Advisor Class | 95,069 | ||
| Custodian fees | 54,966 | ||
| Reports to shareholders | 118,080 | ||
| Registration and filing fees | 45,558 | ||
| Professional fees | 61,331 | ||
| Trustees’ fees and expenses | 68,998 | ||
| Other | 184,922 | ||
| Total expenses | 40,786,811 | ||
| Net investment income | 271,739,083 | ||
| Realized and unrealized gains (losses): | |||
| Net realized gain (loss) from investments | (1,339,219 | ) | |
| Net change in unrealized appreciation (depreciation) on investments | 458,307,926 | ||
| Net realized and unrealized gain (loss) | 456,968,707 | ||
| Net increase (decrease) in net assets resulting from operations | $ | 728,707,790 |
franklintempleton.com The accompanying notes are an integral part of these financial statements. | Semiannual Report | 31
| FRANKLIN CALIFORNIA TAX-FREE INCOME FUND | ||||||
| FINANCIAL STATEMENTS | ||||||
| Statements of Changes in Net Assets | ||||||
| Six Months Ended | ||||||
| September 30, 2014 | Year Ended | |||||
| (unaudited) | March 31, 2014 | |||||
| Increase (decrease) in net assets: | ||||||
| Operations: | ||||||
| Net investment income | $ | 271,739,083 | $ | 585,465,797 | ||
| Net realized gain (loss) from investments | (1,339,219 | ) | (146,820,511 | ) | ||
| Net change in unrealized appreciation (depreciation) on investments | 458,307,926 | (472,617,597 | ) | |||
| Net increase (decrease) in net assets resulting from operations | 728,707,790 | (33,972,311 | ) | |||
| Distributions to shareholders from: | ||||||
| Net investment income: | ||||||
| Class A | (235,944,805 | ) | (512,303,236 | ) | ||
| Class C | (21,619,335 | ) | (48,102,555 | ) | ||
| Advisor Class | (14,974,742 | ) | (30,931,338 | ) | ||
| Total distributions to shareholders | (272,538,882 | ) | (591,337,129 | ) | ||
| Capital share transactions: (Note 2) | ||||||
| Class A | (25,647,505 | ) | (1,119,826,231 | ) | ||
| Class C | 39,236,617 | (198,368,848 | ) | |||
| Advisor Class | 150,174,270 | (82,273,762 | ) | |||
| Total capital share transactions | 163,763,382 | (1,400,468,841 | ) | |||
| Net increase (decrease) in net assets | 619,932,290 | (2,025,778,281 | ) | |||
| Net assets: | ||||||
| Beginning of period | 12,779,579,947 | 14,805,358,228 | ||||
| End of period | $ | 13,399,512,237 | $ | 12,779,579,947 | ||
| Undistributed net investment income included in net assets: | ||||||
| End of period | $ | 20,527,544 | $ | 21,327,343 | ||
32 | Semiannual Report | The accompanying notes are an integral part of these financial statements. franklintempleton.com
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
Notes to Financial Statements (unaudited)
1. Organization and Significant Accounting Policies
Franklin California Tax-Free Income Fund (Fund) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Fund offers three classes of shares: Class A, Class C, and Advisor Class. Each class of shares differs by its initial sales load, contingent deferred sales charges, voting rights on matters affecting a single class, its exchange privilege and fees primarily due to differing arrangements for distribution and transfer agent fees.
The following summarizes the Fund’s significant accounting policies.
a. Financial Instrument Valuation
The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Fund’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.
Debt securities generally trade in the over-the-counter market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates,
anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value.
The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.
b. Securities Purchased on a When-Issued Basis
The Fund purchases securities on a when-issued basis, with payment and delivery scheduled for a future date. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of holding the securities, it may sell the securities before the settlement date. Sufficient assets have been segregated for these securities.
c. Income Taxes
It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.
franklintempleton.com
Semiannual Report | 33
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. Organization and Significant Accounting
Policies (continued)
c. Income Taxes (continued)
The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. As of September 30, 2014, and for all open tax years, the Fund has determined that no liability for unrecognized tax benefits is required in the Fund’s financial statements related to uncertain tax positions taken on a tax return (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction statute of limitation.
d. 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. Amortization of premium and accretion of discount on debt securities are included in interest income. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.
Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.
e. Insurance
The scheduled payments of interest and principal for each insured municipal security in the Fund are insured by either a new issue insurance policy or a secondary insurance policy. Some municipal securities in the Fund are secured 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 or paid by a third party.
Insurance companies typically insure municipal bonds that tend to be of very high quality, with the majority of underlying municipal bonds rated A or better. However, an event involving an insurer could have an adverse effect on the value of the securities insured by that insurance company. There can be no assurance the insurer will be able to fulfill its obligations under the terms of the policy.
f. Accounting Estimates
The preparation of financial statements in accordance with U.S. GAAP 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 expenses during the reporting period. Actual results could differ from those estimates.
g. Guarantees and Indemnifications
Under the Fund’s organizational documents, its officers and trustees are indemnified by the Fund against certain liabilities arising out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. Currently, the Fund expects the risk of loss to be remote.
34 | Semiannual Report
franklintempleton.com
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. Shares of Beneficial Interest
At September 30, 2014, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:
| Six Months Ended | Year Ended | |||||||||||
| September 30, 2014 | March 31, 2014 | |||||||||||
| Shares | Amount | Shares | Amount | |||||||||
| Class A Shares: | ||||||||||||
| Shares sold | 63,711,845 | $ | 467,616,663 | 127,634,165 | $ | 909,003,642 | ||||||
| Shares issued in reinvestment of distributions | 25,027,568 | 183,084,083 | 55,422,143 | 393,993,871 | ||||||||
| Shares redeemed | (92,190,299 | ) | (676,348,251 | ) | (342,649,384 | ) | (2,422,823,744 | ) | ||||
| Net increase (decrease) | (3,450,886 | ) | $ | (25,647,505 | ) | (159,593,076 | ) | $ | (1,119,826,231 | ) | ||
| Class C Shares: | ||||||||||||
| Shares sold | 13,319,310 | $ | 97,697,442 | 23,562,825 | $ | 168,703,402 | ||||||
| Shares issued in reinvestment of distributions | 2,410,313 | 17,605,108 | 5,432,044 | 38,577,495 | ||||||||
| Shares redeemed | (10,393,163 | ) | (76,065,933 | ) | (57,491,337 | ) | (405,649,745 | ) | ||||
| Net increase (decrease) | 5,336,460 | $ | 39,236,617 | (28,496,468 | ) | $ | (198,368,848 | ) | ||||
| Advisor Class Shares: | ||||||||||||
| Shares sold | 27,761,817 | $ | 203,854,295 | 35,915,039 | $ | 255,824,951 | ||||||
| Shares issued in reinvestment of distributions | 1,526,438 | 11,153,590 | 3,096,961 | 21,978,503 | ||||||||
| Shares redeemed | (8,837,627 | ) | (64,833,615 | ) | (51,188,043 | ) | (360,077,216 | ) | ||||
| Net increase (decrease) | 20,450,628 | $ | 150,174,270 | (12,176,043 | ) | $ | (82,273,762 | ) | ||||
3. Transactions with Affiliates
Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:
| Subsidiary | Affiliation | ||||
| Franklin Advisers, Inc. (Advisers) | Investment manager | ||||
| Franklin Templeton Services, LLC (FT Services) | Administrative manager | ||||
| Franklin Templeton Distributors, Inc. (Distributors) | Principal underwriter | ||||
| Franklin Templeton Investor Services, LLC (Investor Services) | Transfer agent | ||||
| a. Management Fees | |||||
| The Fund pays an investment management fee to Advisers based on the month-end net assets of the Fund as follows: | |||||
| Annualized Fee Rate | Net Assets | ||||
| 0.625% | Up to and including $100 million | ||||
| 0.500% | Over $100 million, up to and including $250 million | ||||
| 0.450% | Over $250 million, up to and including $7.5 billion | ||||
| 0.440% | Over $7.5 billion, up to and including $10 billion | ||||
| 0.430% | Over $10 billion, up to and including $12.5 billion | ||||
| 0.420% | Over $12.5 billion, up to and including $15 billion | ||||
| 0.400% | Over $15 billion, up to and including $17.5 billion | ||||
| 0.380% | Over $17.5 billion, up to and including $20 billion | ||||
| 0.360% | In excess of $20 billion | ||||
| franklintempleton.com | Semiannual Report | | | 35 | ||
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
| 3. | Transactions with Affiliates (continued) |
| b. | Administrative Fees |
Under an agreement with Advisers, FT Services provides administrative services to the Fund. The fee is paid by Advisers based on the Fund’s average daily net assets, and is not an additional expense of the Fund.
c. Distribution Fees
The Board has adopted distribution plans for each share class, with the exception of Advisor Class shares, pursuant to Rule 12b-1 under the 1940 Act. Distribution fees are not charged on shares held by affiliates. Under the Fund’s Class A reimbursement distribution plan, the Fund reimburses Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to the maximum annual plan rate. Under the Class A reimbursement distribution plan, costs exceeding the maximum for the current plan year cannot be reimbursed in subsequent periods. In addition, under the Fund’s Class C compensation distribution plan, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to the maximum annual plan rate. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.
The maximum annual plan rates, based on the average daily net assets, for each class, are as follows:
| Class A | 0.10 | % |
| Class C | 0.65 | % |
| d. Sales Charges/Underwriting Agreements | ||
Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. These charges are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. Distributors has advised the Fund of the following commission transactions related to the sales and redemptions of the Fund’s shares for the period:
| Sales charges retained net of commissions paid to unaffiliated | ||
| broker/dealers | $ | 926,442 |
| CDSC retained | $ | 73,261 |
| e. Transfer Agent Fees | ||
Each class of shares pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations and reimburses Investor Services for out of pocket expenses incurred, including shareholding servicing fees paid to third parties. These fees are allocated daily based upon their relative proportion of such classes’ aggregate net assets.
For the period ended September 30, 2014, the Fund paid transfer agent fees of $1,759,284, of which $768,145 was retained by Investor Services.
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FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
4. Income Taxes
For tax purposes, capital losses may be carried over to offset future capital gains. Capital loss carryforwards with no expiration, if any, must be fully utilized before those losses with expiration dates.
At March 31, 2014, the Fund’s capital loss carryforwards were as follows:
| Capital loss carryforwards subject to expiration: | ||
| 2018 | $ | 108,014 |
| Capital loss carryforwards not subject to expiration: | ||
| Short term | 134,229,801 | |
| Long term | 173,645,262 | |
| Total capital loss carryforwards | $ | 307,983,077 |
At September 30, 2014, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:
| Cost of investments | $ | 11,655,426,557 | |
| Unrealized appreciation | $ | 1,357,096,680 | |
| Unrealized depreciation | (186,426,865 | ) | |
| Net unrealized appreciation (depreciation) | $ | 1,170,669,815 | |
Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of bond discounts and wash sales.
5. Investment Transactions
Purchases and sales of investments (excluding short term securities) for the period ended September 30, 2014, aggregated $486,490,326 and $450,430,569, respectively.
6. Credit Risk
At September 30, 2014, the Fund had 11.02% of its portfolio invested in high yield securities rated below investment grade. These securities may be more sensitive to economic conditions causing greater price volatility and are potentially subject to a greater risk of loss due to default than higher rated securities.
7. Concentration of Risk
The Fund invests a large percentage of its total assets in obligations of issuers within California and U.S. territories. Such concentration may subject the Fund to risks associated with industrial or regional matters, and economic, political or legal developments occurring within California and U.S. territories. In addition, investments in these securities are sensitive to interest rate changes and credit risk of the issuer and may subject the funds to increased market volatility. The market for these investments may be limited, which may make them difficult to buy or sell.
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FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
8. Credit Facility
The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $1.5 billion (Global Credit Facility) which matures on February 13, 2015. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.
Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses on the Statement of Operations. During the period ended September 30, 2014, the Fund did not use the Global Credit Facility.
9. Fair Value Measurements
The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:
- Level 1 – quoted prices in active markets for identical financial instruments
- Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)
- Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)
The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.
For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.
At September 30, 2014, all of the Fund’s investments in financial instruments carried at fair value were valued using Level 2 inputs.
10. Subsequent Events
The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.
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FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
| Abbreviations | |||
| Selected Portfolio | |||
| ABAG | The Association of Bay Area Governments | HFAR | Housing Finance Authority Revenue |
| ACA | American Capital Access Holdings Inc. | ID | Improvement District |
| AD | Assessment District | IDR | Industrial Development Revenue |
| AGMC | Assured Guaranty Municipal Corp. | MFHR | Multi-Family Housing Revenue |
| AMBAC | American Municipal Bond Assurance Corp. | MUD | Municipal Utility District |
| BAM | Build America Mutual Assurance Co. | NATL | National Public Financial Guarantee Corp. |
| BART | Bay Area Rapid Transit | NATL RE | National Public Financial Guarantee Corp. Reinsured |
| BHAC | Berkshire Hathaway Assurance Corp. | PBA | Public Building Authority |
| CDA | Community Development Authority/Agency | PCFA | Pollution Control Financing Authority |
| CFD | Community Facilities District | PCR | Pollution Control Revenue |
| CHFCLP | California Health Facilities Construction Loan Program | PFA | Public Financing Authority |
| COP | Certificate of Participation | PFAR | Public Financing Authority Revenue |
| CRDA | Community Redevelopment Authority/Agency | RAN | Revenue Anticipation Note |
| ETM | Escrow to Maturity | RDA | Redevelopment Agency/Authority |
| FGIC | Financial Guaranty Insurance Co. | RMR | Residential Mortgage Revenue |
| FHA | Federal Housing Authority/Agency | SFMR | Single Family Mortgage Revenue |
| FICO | Financing Corp. | UHSD | Unified/Union High School District |
| GNMA | Government National Mortgage Association | USD | Unified/Union School District |
| GO | General Obligation | XLCA | XL Capital Assurance |
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FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
Shareholder Information
Proxy Voting Policies and Procedures
The Fund’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Fund uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Fund’s complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Fund’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.
Quarterly Statement of Investments
The Fund files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.
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Item 2. Code of Ethics.
(a) The Registrant has adopted a code of ethics that applies to its principal executive officers and principal financial and accounting officer.
(c) N/A
(d) N/A
(f) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a copy of its code of ethics that applies to its principal executive officers and principal financial and accounting officer.
Item 3. Audit Committee Financial Expert.
(a)(1) The Registrant has an audit committee financial expert serving on its audit committee.
(2) The audit committee financial expert is John B. Wilson and he is "independent" as defined under the relevant Securities and Exchange Commission Rules and Releases.
Item 4. Principal Accountant Fees and Services. N/A
Item 5. Audit Committee of Listed Registrants. N/A
Item 6. Schedule of Investments. N/A
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. N/A
Item 8. Portfolio Managers of Closed-End Management Investment Companies. N/A
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. N/A
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant's Board of Trustees that would require disclosure herein.
Item 11. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures. The Registrant maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934 and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant’s management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
Within 90 days prior to the filing date of this Shareholder Report on Form N-CSR, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant’s management, including the Registrant’s principal executive officer and the Registrant’s principal financial officer, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures. Based on such evaluation, the Registrant’s principal executive officer and principal financial officer concluded that the Registrant’s disclosure controls and procedures are effective.
(b) Changes in Internal Controls. There have been no changes in the Registrant’s internal controls or in other factors that could materially affect the internal controls over financial reporting subsequent to the date of their evaluation in connection with the preparation of this Shareholder Report on Form N-CSR.
Item 12. Exhibits.
(a) (1) Code of Ethics
(a) (2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting Officer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
By /s/ Laura F. Fergerson
Laura F. Fergerson
Chief Executive Officer - Finance and Administration
Date November 25, 2014
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By /s/ Laura F. Fergerson
Laura F. Fergerson
Chief Executive Officer - Finance and Administration
Date November 25, 2014
By /s/ Gaston Gardey
Gaston Gardey
Chief Financial Officer and Chief Accounting Officer
Date November 25, 2014