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 811-04149
Franklin Tax-Free Trust
(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: 2/28
Date of reporting period: 08/31/17
| Item 1. | Reports to Stockholders. |
| | | | |
| | | | Semiannual Report and Shareholder Letter August 31, 2017 |
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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.
Dear Shareholder:
The six months ended August 31, 2017, benefited from mostly upbeat economic data, improved US corporate earnings and generally supportive monetary policies. The US job market continued to improve as the unemployment rate declined.
The US Federal Reserve (Fed), at its March meeting, increased its target range for the federal funds rate by 25 basis points to a range of 0.75%–1.00%. The Fed once again raised its target range a quarter point to 1.00%–1.25% at its June meeting. Despite low inflation, the Fed made its most recent decision amid signs of a strengthening labor market and moderately rising economic activity.
The 10-year US Treasury yield began the period at 2.36% and declined to 2.12% at period-end. Fixed income markets, as measured by the Bloomberg Barclays US Aggregate Bond Index, had a +2.74% total return for the six months ended August 31, 2017.1 Investment-grade municipal bonds, as measured by the Bloomberg Barclays Municipal Bond Index, had a +3.79% total return for the six-month period.1
Since the end of the reporting period, the Fed has maintained its monetary policy stance. The Fed, at its September meeting, stated that although the labor market has continued to
strengthen and economic activity has been rising moderately, inflation has remained low. Additionally, the Fed believes that the recent hurricanes are unlikely to materially alter the national economy over the medium term.
Franklin Tax-Free Trust’s semiannual report includes more detail about municipal bond market conditions and discussions from the portfolio managers. On our website, franklintempleton.com, you can find updated commentary by our municipal bond experts. Municipal bonds can provide tax-free income and diversification from equities. Despite periods of volatility, municipal bonds historically have had a solid long-term record of performance, driven mostly by their income component. Please remember all securities markets fluctuate, as do mutual fund share prices.
As always, we recommend investors consult their financial advisors to help them make the best decisions for the long term. In a constantly changing market environment, we remain committed to our disciplined strategy as we manage the Fund, keeping in mind the trust you have placed in us. We appreciate your confidence in us and encourage you to contact us when
1. Source: Morningstar.
See www.franklintempletondatasources.com for additional data provider information.
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| | Not FDIC Insured | May Lose Value | No Bank Guarantee |
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you have questions about your Franklin Templeton tax-free investment.
Sincerely,
Rupert H. Johnson, Jr.
Chairman
Franklin Tax-Free Trust
Sheila Amoroso
Rafael R. Costas Jr.
Senior Vice Presidents and Co-Directors
Franklin Municipal Bond Department
This letter reflects our analysis and opinions as of August 31, 2017, unless otherwise indicated. The information is not a complete analysis of every aspect of any market, state, industry, security or fund. Statements of fact are from sources considered reliable.
Visit franklintempleton.com for fund updates, to access your account, or to find helpful financial planning tools.
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Semiannual Report
Municipal Bond Market Overview
The municipal bond market outperformed the US Treasury market but underperformed the US stock market during the six-month period ended August 31, 2017. Investment-grade municipal bonds, as measured by the Bloomberg Barclays Municipal Bond Index, posted a +3.79% total return for the period, while US Treasuries, as measured by the Bloomberg Barclays US Treasury Index, posted a +2.41% return.1 US equities, as represented by the Standard & Poor’s® 500 Index, delivered a +5.65% return for the reporting period.1
According to Barclays, municipal issuance year to date declined 16.4% from $301.1 billion in 2016 to $251.8 billion.2 Muni funds continued to report inflows. Flows totaled approximately $4 billion in August, bringing year-to-date inflows to $17 billion.2 According to data from Lipper, inflows can be primarily attributed to flows into long-term and national funds. Strong demand, combined with diminished bond supply, continued to lead to strong performance of the municipal asset class.
In general, the US bond market performed well in both municipals and Treasuries as a variety of factors continued to cause demand for fixed income to soar. Investor skepticism about the strength of the US economy, consistent low readings on the inflation front, a lack of persistent wage growth, concern over North Korea’s nuclear ambitions and questions about the Trump administration’s ability to pass fiscal legislation have all led to a robust investment environment for municipals and US-based fixed income in general.
The Federal Reserve (Fed) raised its target range for the federal funds rate twice during the reporting period in March and June. The target range stood at 1.00%–1.25% at period-end. The Fed also increased the discount rate by 0.25% to 1.75% in June. The Fed decided to raise interest rates at its June meeting due to the strength of the US jobs market and continued economic growth.
The Fed issued a Federal Open Market Committee statement on July 26, 2017. In it, the Fed indicated that the labor market has continued to strengthen and that economic activity has been rising moderately so far during the year. The Committee also stated that on a 12-month basis, overall inflation and the measure excluding food and energy prices have declined. The Fed went on to say that inflation on a 12-month basis is
expected to remain low in the near term but to stabilize around the Committee’s 2.0% objective over the medium term. Finally, the Committee stated that for the time being, it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee expects to begin implementing its balance sheet normalization program relatively soon, provided that the economy evolves broadly as anticipated.
Several developments affected Puerto Rico bonds over the reporting period. Please visit franklintempleton.com/ investor/products/fund-resources/puerto-rico for the latest Puerto Rico updates from Franklin Templeton.
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.
The foregoing information reflects our analysis, opinions and portfolio holdings as of August 31, 2017, 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.
1. Source: Morningstar. Treasuries, if held to maturity, offer a fixed rate of return and a fixed principal value; their interest payments and principal are guaranteed.
2. Source: Goldman Sachs Securities Division, Bloomberg.
See www.franklintempletondatasources.com for additional data provider information.
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Investment Strategy and Manager’s Discussion
Investment Strategy
We use a consistent, disciplined strategy with the objective of maximizing tax-free income and capital preservation by focusing on credit selection. We seek to maintain exposure to higher coupon securities, while balancing risk and return within each Fund’s range of allowable investments. We only purchase high yield securities in our high yield fund. We do not purchase high yield securities in our investment-grade funds, however if a security is downgraded we are not required to sell it. Our security selection process includes purchasing securities that we believe are undervalued in the market and which have met our credit selection criteria. We do not use leverage or derivatives, which could add volatility and contribute to underperformance in adverse markets.
Manager’s Discussion
Due to the positive sloping municipal yield curve, we found value in higher quality securities in the 15–30 year maturity range, which allowed us to achieve our objective of maximizing income for our investors. Typically, in declining rate environments, our turnover declines as we maintain exposure to securities that are producing income that exceeds their replacement value in the market. However, when rates rise, our turnover increases as opportunities to purchase securities that have the potential to increase income in the portfolios become available. We believe our consistent, disciplined strategy can help our investors achieve high, tax-free income over the long term.
We invite you to read your Fund report for more detailed performance and portfolio information. Thank you for your participation in Franklin Tax-Free Trust. We look forward to serving your future investment needs.
The foregoing information reflects our analysis, opinions and portfolio holdings as of August 31, 2017, 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 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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Franklin Arizona Tax-Free Income Fund
We are pleased to bring you Franklin Arizona Tax-Free Income Fund’s semiannual report for the period ended August 31, 2017.
Your Fund’s Goal and Main Investments
Franklin Arizona Tax-Free Income Fund seeks to provide as high a level of income exempt from federal and Arizona personal income taxes as is consistent with prudent investment management and preservation of capital by investing at least 80% of its net assets in securities that pay interest free from such taxes.1
Credit Quality Composition*
8/31/17
| | |
| Ratings | | % of Total
Investments |
| |
AAA | | 7.64% |
| |
AA | | 49.69% |
| |
A | | 16.13% |
| |
BBB | | 7.22% |
| |
Refunded | | 15.09% |
| |
Not Rated | | 4.23% |
*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 (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 and not rerated by an NRSRO. The Not Rated category consists of ratable securities that have not been rated by an NRSRO. Cash and equivalents are excluded from this composition.
Performance Overview
The Fund’s Class A share price, as measured by net asset value, increased from $10.78 on February 28, 2017, to $10.85 on August 31, 2017. The Fund’s Class A shares paid dividends totaling 19.06 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 3.29% based on an annualization of
Distributions*
3/1/17–8/31/17
| | | | | | | | | | | | | | | | |
| | | Dividend per Share (cents) | |
| | | | |
| Month | | Class A | | | Class C | | | Class R6** | | | Advisor
Class | |
March | | | 3.21 | | | | 2.70 | | | | — | | | | 3.30 | |
April | | | 3.21 | | | | 2.70 | | | | — | | | | 3.30 | |
May | | | 3.21 | | | | 2.70 | | | | — | | | | 3.30 | |
June | | | 3.21 | | | | 2.70 | | | | — | | | | 3.30 | |
July | | | 3.11 | | | | 2.60 | | | | — | | | | 3.20 | |
August | | | 3.11 | | | | 2.60 | | | | 3.12 | | | | 3.20 | |
Total | | | 19.06 | | | | 16.00 | | | | 3.12 | | | | 19.60 | |
*The distribution amount is the sum of all estimated tax-basis net investment income distributions for the period shown. A portion or all of the distribution may be reclassified as return of capital or capital gain once final tax designations are known. Assumes shares were purchased and held for the entire accrual period. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.
**Effective 8/1/17, the Fund began offering Class R6 shares. See the prospectus for details.
August’s 3.11 cent per share dividend and the maximum offering price of $11.33 on August 31, 2017. An investor in the 2017 maximum combined effective federal and Arizona personal income tax bracket of 46.14% (including 3.8% Medicare tax) would need to earn a distribution rate of 6.11% from a taxable investment to match the Fund’s Class A tax-free distribution rate. For other performance data, please see the Performance Summary. Dividend distributions were affected by low 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. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
1. For state personal income taxes, the 80% minimum is measured by total Fund assets. 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. The distribution amount is the sum of all estimated tax-basis net investment income distributions for the period shown. A portion or all of the distribution may be reclassified as return of capital or capital gain once final tax designations are known. Assumes shares were purchased and held for the entire accrual period. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.
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 50.
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FRANKLIN ARIZONA TAX-FREE INCOME FUND
State Update
Arizona’s economy continued to expand during the period under review. The state’s unemployment rate fell marginally from 5.1% in February 2017 to 5.0% in August and remained higher than the 4.4% national rate.3 In the state’s housing market, which was significantly hurt by the most recent recession, home prices rose during the period, while foreclosure rates declined.
The state concluded fiscal year (FY) 2017 on June 30 with a slight budget surplus, which exceeded expectations. Collections across the state’s major revenue categories were mixed, with sales and use tax and individual income tax collections contributing to general fund revenues. The state legislature approved higher spending in FY 2018 on K-12 and higher education, the Department of Economic Security, the Department of Child Safety and Arizona Health Care Cost Containment System compared to FY 2017. Lawmakers expect sales and use taxes and individual income tax collections to contribute significantly to revenue generation. The budget also provided a modest income-tax cut for residents. The forecasted budget is structurally balanced as ongoing revenues are projected to exceed ongoing spending in FY 2018.
Arizona does not issue general obligation bonds but instead issues appropriation-backed lease debt and revenue bonds. The state had moderate debt levels, with net tax-supported debt of $696 per capita and 1.8% of personal income, compared with the national medians of $1,006 and 2.5%, respectively.4 Independent credit rating agency Standard & Poor’s (S&P) affirmed Arizona’s AA issuer credit rating with a stable outlook.5 The rating reflected S&P’s view of Arizona’s long-term creditworthiness based on ongoing improvement in the state’s economy and continued population and job growth that are outpacing the nation’s. S&P further cited Arizona’s strong financial position, low other post-employment benefits and moderate debt burden.
Manager’s Discussion
We used various investment strategies during the six months under review as we sought to maximize tax-free income for shareholders. Please read the Investment Strategy and Manager’s Discussion on page 4 for more information.
Thank you for your continued participation in Franklin Arizona Tax-Free Income Fund. We believe our conservative,
Portfolio Composition
8/31/17
| | |
| | | % of Total
Investments* |
Refunded** | | 24.6% |
Utilities | | 16.3% |
Higher Education | | 15.6% |
Hospital & Health Care | | 10.0% |
Tax-Supported | | 8.7% |
Subject to Government Appropriations | | 7.3% |
Transportation | | 5.2% |
Housing | | 5.0% |
Other Revenue | | 4.3% |
General Obligation | | 3.0% |
*Does not include cash and cash equivalents.
**Includes all refunded bonds; the percentage may differ from that in the Credit Quality Composition.
buy-and-hold investment strategy can help us achieve high, current, tax-free income for shareholders.
The foregoing information reflects our analysis, opinions and portfolio holdings as of August 31, 2017, 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.
3. Source: Bureau of Labor Statistics.
4. Source: Moody’s Investors Service, State Government - US: Medians - Total State Debt Remains Essentially Flat in 2017, 5/3/17.
5. This does not indicate S&P’s rating of the Fund.
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FRANKLIN ARIZONA TAX-FREE INCOME FUND
Performance Summary as of August 31, 2017
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. 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.
Performance as of 8/31/17
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 4.25% and the minimum is 0%. Class A: 4.25% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| | | | |
| Share Class | | Cumulative Total Return1 | | Average Annual Total Return2 |
| | |
A | | | | |
6-Month | | +2.44% | | -1.93% |
1-Year | | -0.21% | | -4.45% |
5-Year | | +13.95% | | +1.76% |
10-Year | | +51.33% | | +3.78% |
| | |
Advisor3 | | | | |
6-Month | | +2.48% | | +2.48% |
1-Year | | -0.11% | | -0.11% |
5-Year | | +14.48% | | +2.74% |
10-Year | | +53.01% | | +4.35% |
| | | | | | | | |
| Share Class | | Distribution
Rate4 | | Taxable Equivalent Distribution Rate5 | | 30-Day Standardized Yield6 | | Taxable Equivalent 30-Day Standardized Yield5 |
| | | | |
A | | 3.29% | | 6.11% | | 1.55% | | 2.88% |
| | | | |
Advisor | | 3.53% | | 6.55% | | 1.72% | | 3.19% |
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.
See page 8 for Performance Summary footnotes.
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FRANKLIN ARIZONA TAX-FREE INCOME FUND
PERFORMANCE SUMMARY
Net Asset Value
| | | | | | | | | | | | | | | | |
| Share Class (Symbol) | | 8/31/17 | | | 8/1/17 | | | 2/28/17 | | | Change | |
A (FTAZX) | | | $10.85 | | | | N/A | | | | $10.78 | | | | +$ 0.07 | |
C (FAZIX) | | | $11.03 | | | | N/A | | | | $10.95 | | | | +$ 0.08 | |
R6 (FAZRX) | | | $10.87 | | | | $10.84 | | | | N/A | | | | +$ 0.03 | |
Advisor (FAZZX) | | | $10.88 | | | | N/A | | | | $10.81 | | | | +$ 0.07 | |
Distributions (3/1/17–8/31/17)
| | | | |
| Share Class | | Net Investment
Income | |
| |
A | | | $0.1906 | |
| |
C | | | $0.1600 | |
| |
R6 (8/1/17–8/31/17) | | | $0.0312 | |
| |
Advisor | | | $0.1960 | |
Total Annual Operating Expenses7
| | | | |
| Share Class | | | |
| |
A | | | 0.63% | |
| |
Advisor | | | 0.53% | |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
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.
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. Return for less than one year, if any, has not been annualized.
3. Effective 7/1/08, the Fund began offering Advisor Class shares, which do not have sales charges or a Rule 12b-1 plan. Performance quotations for this class reflect the following methods of calculation: (a) For periods prior to 7/1/08, a restated figure is used based upon the Fund’s Class A performance, excluding the effect of Class A’s maximum initial sales charge, but reflecting the effect of the Class A Rule 12b-1 fees; and (b) for periods after 7/1/08, actual Advisor Class performance is used reflecting all charges and fees applicable to that class. Since 7/1/08 (commencement of sales), the cumulative and average annual total returns of Advisor Class shares were +49.52% and +4.49%.
4. Distribution rate is based on an annualization of the respective class’s August dividend and the maximum offering price (NAV for Advisor class) per share on 8/31/17.
5. Taxable equivalent distribution rate and yield assume the published rates as of 6/19/17 for the maximum combined effective federal and Arizona personal income tax rate of 46.14%, based on the federal income tax rate of 39.60% plus 3.8% Medicare tax.
6. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.
7. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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FRANKLIN ARIZONA TAX-FREE INCOME FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below 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 table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. 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): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual (actual return after expenses) | | Hypothetical (5% annual return before expenses) | | |
| | | | | | | | |
Share
Class | | Beginning
Account
Value1 | | Ending
Account
Value 8/31/17 | | Expenses
Paid During
Period2,3 | | Ending
Account
Value 8/31/17 | | Expenses Paid During
Period 3/1/17–8/31/173 | | Annualized
Expense
Ratio |
| | | | | | |
A | | $1,000 | | $1,024.40 | | $3.21 | | $1,022.03 | | $3.21 | | 0.63% |
C | | $1,000 | | $1,022.10 | | $6.01 | | $1,019.26 | | $6.01 | | 1.18% |
R6 | | $1,000 | | $1,005.60 | | $0.40 | | $1,022.74 | | $2.50 | | 0.49% |
Advisor | | $1,000 | | $1,024.80 | | $2.70 | | $1,022.53 | | $2.70 | | 0.53% |
1. For Classes A, C and Advisor, 3/1/17 for Actual and Hypothetical. For Class R6, 8/1/17 for Actual and 3/1/17 for Hypothetical.
2. For Classes A, C and Advisor, 3/1/17–8/31/17. For Class R6, 8/1/17–8/31/17.
3. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 184/365 to reflect the one-half year period. The multiplier is 30/365 for Actual Class R6 expenses to reflect the number of days since inception.
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Franklin Colorado Tax-Free Income Fund
This semiannual report for Franklin Colorado Tax-Free Income Fund covers the period ended August 31, 2017.
Your Fund’s Goal and Main Investments
Franklin Colorado Tax-Free Income Fund seeks to provide as high a level of income exempt from federal and Colorado personal income taxes as is consistent with prudent investment management and preservation of capital by investing at least 80% of its net assets in securities that pay interest free from such taxes.1
Credit Quality Composition*
8/31/17
| | |
| Ratings | | % of Total
Investments |
| |
AAA | | 1.64% |
| |
AA | | 50.60% |
| |
A | | 15.47% |
| |
BBB | | 12.73% |
| |
Below Investment Grade | | 1.88% |
| |
Refunded | | 16.27% |
| |
Not Rated | | 1.41% |
*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 (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 and not rerated by an NRSRO. The Not Rated category consists of ratable securities that have not been rated by an NRSRO. Cash and equivalents are excluded from this composition.
Performance Overview
The Fund’s Class A share price, as measured by net asset value, remained the same. It began the period at $11.66 on February 28, 2017, and ended at $11.66 on August 31, 2017. The Fund’s Class A shares paid dividends totaling 20.57 cents per share for the reporting period.2 The Performance Summary beginning on page 12 shows that at the end of this reporting period the Fund’s Class A shares’ distribution rate was 3.12%
Distributions*
3/1/17–8/31/17
| | | | | | | | | | | | | | |
| | | Dividend per Share (cents) |
| | | |
| Month | | Class A | | | Class C | | | Class R6** | | | Advisor
Class |
March | | | 3.62 | | | | 3.07 | | | | — | | | 3.71 |
April | | | 3.52 | | | | 2.97 | | | | — | | | 3.61 |
May | | | 3.52 | | | | 2.97 | | | | — | | | 3.61 |
June | | | 3.37 | | | | 2.83 | | | | — | | | 3.46 |
July | | | 3.37 | | | | 2.83 | | | | — | | | 3.46 |
August | | | 3.17 | | | | 2.63 | | | | 3.18 | | | 3.26 |
Total | | | 20.57 | | | | 17.30 | | | | 3.18 | | | 21.11 |
*The distribution amount is the sum of all estimated tax-basis net investment income distributions for the period shown. A portion or all of the distribution may be reclassified as return of capital or capital gain once final tax designations are known. Assumes shares were purchased and held for the entire accrual period. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.
**Effective 8/1/17, the Fund began offering Class R6 shares. See the prospectus for details.
based on an annualization of August’s 3.17 cent per share dividend and the maximum offering price of $12.18 on August 31, 2017. An investor in the 2017 maximum combined effective federal and Colorado personal income tax bracket of 46.20% (including 3.8% Medicare tax) would need to earn a distribution rate of 5.80% from a taxable investment to match the Fund’s Class A tax-free distribution rate. For other performance data, please see the Performance Summary. Dividend distributions were affected by low 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. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
1. For state personal income taxes, the 80% minimum is measured by total Fund assets. 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. The distribution amount is the sum of all estimated tax-basis net investment income distributions for the period shown. A portion or all of the distribution may be reclassified as return of capital or capital gain once final tax designations are known. Assumes shares were purchased and held for the entire accrual period. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.
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 59.
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FRANKLIN COLORADO TAX-FREE INCOME FUND
State Update
Colorado’s economy continued to strengthen during the six months under review. The state’s economic indicators including population, workforce, housing market stability and cost of living generally improved. Colorado supported emerging industries, such as technology, telecommunications, renewable energy and legal marijuana sales with pro-business policies and low taxes. Amid these conditions, Colorado boasted one of the lowest unemployment rates in the country during the period. The local rate fell from 2.9% in February 2017 to 2.4% at period-end, which was lower than the 4.4% national rate.3
In May 2017, the governor signed into law the budget for the 2017–2018 fiscal year. Highlights of the plan include increased spending on education, affordable housing and a homeless prevention program. Lawmakers avoided cutting education and health care funding after they determined that a property tax cut scheduled for next fiscal year will not be as deep as anticipated. In June 2017, lawmakers projected that Colorado’s revenue growth could be slow in fiscal year 2017 relative to recent fiscal years. Lawmakers attributed the slower growth to taxpayers delaying income from investment gains in anticipation of possible federal tax changes.
Colorado’s debt levels were lower than those of most states, with net tax-supported debt at $353 per capita and 0.7% of personal income, compared with the national medians of $1,006 and 2.5%, respectively.4 Independent credit rating agency Moody’s Investors Service affirmed Colorado’s issuer credit rating of Aa1 with a stable outlook.5 The rating was based on Moody’s view of the state’s strong economic performance, higher-than-average income per capita and low relative debt levels, balanced against narrow reserves, above average pension liabilities and constitutional restrictions and voter initiatives that constrain its budgeting flexibility.
Manager’s Discussion
We used various investment strategies during the six months under review as we sought to maximize tax-free income for shareholders. Please read the Investment Strategy and Manager’s Discussion on page 4 for more information.
The Fund holds a small portion of its assets in Puerto Rico bonds. Puerto Rico and its municipal issuers continued to experience significant financial difficulties, which we discussed
Portfolio Composition
8/31/17
| | |
| | | % of Total
Investments* |
Refunded** | | 18.9% |
Hospital & Health Care | | 17.9% |
Tax-Supported | | 16.8% |
Higher Education | | 11.4% |
Utilities | | 11.3% |
Subject to Government Appropriations | | 10.4% |
General Obligation | | 7.9% |
Transportation | | 3.1% |
Other Revenue | | 2.3% |
*Does not include cash and cash equivalents.
**Includes all refunded bonds; the percentage may differ from that in the Credit Quality Composition.
in the Municipal Bond Market Overview beginning on page 3. We continue to closely monitor developments in Puerto Rico; however, the municipal bond market’s overall fundamentals, such as general creditworthiness and low default rates, remained stable.
Thank you for your continued participation in Franklin Colorado Tax-Free Income Fund. We believe our conservative, buy-and-hold investment strategy can help us achieve high, current, tax-free income for shareholders.
The foregoing information reflects our analysis, opinions and portfolio holdings as of August 31, 2017, 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.
3. Source: Bureau of Labor Statistics.
4. Source: Moody’s Investors Service, State Government - US: Medians - Total State Debt Remains Essentially Flat in 2017, 5/3/17.
5. This does not indicate Moody’s rating of the Fund.
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franklintempleton.com | | | | | | Semiannual Report | | 11 |
FRANKLIN COLORADO TAX-FREE INCOME FUND
Performance Summary as of August 31, 2017
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. 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.
Performance as of 8/31/17
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 4.25% and the minimum is 0%. Class A: 4.25% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| | | | |
| Share Class | | Cumulative
Total Return1 | | Average Annual
Total Return2 |
| | |
A | | | | |
6-Month | | +1.78% | | -2.56% |
1-Year | | -0.19% | | -4.45% |
5-Year | | +13.04% | | +1.60% |
10-Year | | +50.01% | | +3.69% |
| | |
Advisor3 | | | | |
6-Month | | +1.83% | | +1.83% |
1-Year | | -0.10% | | -0.10% |
5-Year | | +13.59% | | +2.58% |
10-Year | | +51.22% | | +4.22% |
| | | | | | | | |
| Share Class | | Distribution Rate4 | | Taxable Equivalent Distribution Rate5 | | 30-Day Standardized Yield6 | | Taxable Equivalent 30-Day Standardized Yield5 |
A | | 3.12% | | 5.80% | | 1.51% | | 2.81% |
Advisor | | 3.36% | | 6.24% | | 1.68% | | 3.12% |
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.
See page 13 for Performance Summary footnotes.
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FRANKLIN COLORADO TAX-FREE INCOME FUND
PERFORMANCE SUMMARY
Net Asset Value
| | | | | | | | |
| Share Class (Symbol) | | 8/31/17 | | 8/1/17 | | 2/28/17 | | Change |
A (FRCOX) | | $11.66 | | N/A | | $11.66 | | $0.00 |
C (FCOIX) | | $11.80 | | N/A | | $11.79 | | +$0.01 |
R6 (FKTLX) | | $11.66 | | $11.64 | | N/A | | +$0.02 |
Advisor (FCOZX) | | $11.66 | | N/A | | $11.66 | | $0.00 |
|
Distributions (3/1/17–8/31/17) |
| Share Class | | Net Investment
Income | | | | | | |
A | | $0.2057 | | | | | | |
C | | $0.1730 | | | | | | |
R6 (8/1/17–8/31/17) | | $0.0318 | | | | | | |
Advisor | | $0.2111 | | | | | | |
|
| Total Annual Operating Expenses7 |
| | | | |
| Share Class | | | | | | | | |
A | | 0.65% | | | | | | |
Advisor | | 0.55% | | | | | | |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
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.
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. Return for less than one year, if any, has not been annualized.
3. Effective 7/15/09, the Fund began offering Advisor Class shares, which do not have sales charges or a Rule 12b-1 plan. Performance quotations for this class reflect the following methods of calculation: (a) For periods prior to 7/15/09, a restated figure is used based upon the Fund’s Class A performance, excluding the effect of Class A’s maximum initial sales charge, but reflecting the effect of the Class A Rule 12b-1 fees; and (b) for periods after 7/15/09, actual Advisor Class performance is used reflecting all charges and fees applicable to that class. Since 7/15/09 (commencement of sales), the cumulative and average annual total returns of Advisor Class shares were +44.72% and +4.65%.
4. Distribution rate is based on an annualization of the respective class’s August dividend and the maximum offering price (NAV for Advisor Class) per share on 8/31/17.
5. Taxable equivalent distribution rate and yield assume the published rates as of 6/19/17 for the maximum combined effective federal and Colorado personal income tax rate of 46.20%, based on the federal income tax rate of 39.60% plus 3.8% Medicare tax.
6. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.
7. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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FRANKLIN COLORADO TAX-FREE INCOME FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below 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 table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. 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): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual (actual return after expenses) | | Hypothetical (5% annual return before expenses) | | |
| | | | | | | | |
Share Class | | Beginning
Account
Value1 | | Ending
Account
Value 8/31/17 | | Expenses
Paid During
Period2,3 | | Ending
Account
Value 8/31/17 | | Expenses
Paid During
Period 3/1/17–8/31/173 | | Annualized
Expense
Ratio |
| | | | | | |
A | | $1,000 | | $1,017.80 | | $3.31 | | $1,021.93 | | $3.31 | | 0.65% |
C | | $1,000 | | $1,015.70 | | $6.10 | | $1,019.16 | | $6.11 | | 1.20% |
R6 | | $1,000 | | $1,004.50 | | $0.42 | | $1,022.63 | | $2.60 | | 0.51% |
Advisor | | $1,000 | | $1,018.30 | | $2.80 | | $1,022.43 | | $2.80 | | 0.55% |
1. For Classes A, C and Advisor, 3/1/17 for Actual and Hypothetical. For Class R6, 8/1/17 for Actual and 3/1/17 for Hypothetical.
2. For Classes A, C and Advisor, 3/1/17–8/31/17. For Class R6, 8/1/17–8/31/17.
3. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 184/365 to reflect the one-half year period. The multiplier is 30/365 for Actual Class R6 expenses to reflect the number of days since inception.
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14 | | Semiannual Report | | | | franklintempleton.com |
Franklin Connecticut Tax-Free Income Fund
This semiannual report for Franklin Connecticut Tax-Free Income Fund covers the period ended August 31, 2017.
Your Fund’s Goal and Main Investments
Franklin Connecticut Tax-Free Income Fund seeks to provide as high a level of income exempt from federal and Connecticut personal income taxes as is consistent with prudent investment management and preservation of capital by investing at least 80% of its net assets in securities that pay interest free from such taxes.1
Credit Quality Composition*
8/31/17
| | |
| Ratings | | % of Total
Investments |
AAA | | 9.99% |
AA | | 36.42% |
A | | 36.10% |
Refunded | | 17.49% |
*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 (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 and not rerated by an NRSRO. The Not Rated category consists of ratable securities that have not been rated by an NRSRO. Cash and equivalents are excluded from this composition.
Performance Overview
The Fund’s Class A share price, as measured by net asset value, decreased from $10.42 on February 28, 2017, to $10.32 on August 31, 2017. The Fund’s Class A shares paid dividends totaling 17.76 cents per share for the reporting period.2 The Performance Summary beginning on page 17 shows that at the end of this reporting period the Fund’s Class A shares’ distribution rate was 3.09% based on an annualization of August’s 2.78 cent per share dividend and the maximum offering price of $10.78 on August 31, 2017. An investor in the 2017 maximum combined effective federal and Connecticut
Distributions*
3/1/17–8/31/17
| | | | | | | | |
| | | Dividend per Share (cents) |
| Month | | Class A | | Class C | | Class R6** | | Advisor
Class |
March | | 3.04 | | 2.55 | | — | | 3.12 |
April | | 3.06 | | 2.57 | | — | | 3.14 |
May | | 3.06 | | 2.57 | | — | | 3.14 |
June | | 2.91 | | 2.43 | | — | | 2.99 |
July | | 2.91 | | 2.43 | | — | | 2.99 |
August | | 2.78 | | 2.30 | | 2.79 | | 2.86 |
Total | | 17.76 | | 14.85 | | 2.79 | | 18.24 |
*The distribution amount is the sum of all estimated tax-basis net investment income distributions for the period shown. A portion or all of the distribution may be reclassified as return of capital or capital gain once final tax designations are known. Assumes shares were purchased and held for the entire accrual period. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.
**Effective 8/1/17, the Fund began offering Class R6 shares. See the prospectus for details.
personal income tax bracket of 47.62% (including 3.8% Medicare tax) would need to earn a distribution rate of 5.90% from a taxable investment to match the Fund’s Class A tax-free distribution rate. For other performance data, please see the Performance Summary. Dividend distributions were affected by low 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. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
State Update
Connecticut’s economy grew moderately during the six months under review. The state remained among the nation’s wealthiest, with strong per-capita income well above national levels. For the period under review, home prices rose and
1. For state personal income taxes, the 80% minimum is measured by total Fund assets. 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. The distribution amount is the sum of all estimated tax-basis net investment income distributions for the period shown. A portion or all of the distribution may be reclassified as return of capital or capital gain once final tax designations are known. Assumes shares were purchased and held for the entire accrual period. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.
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 page68.
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franklintempleton.com | | Semiannual Report | | 15 |
FRANKLIN CONNECTICUT TAX-FREE INCOME FUND
foreclosure rates generally declined. Connecticut’s unemployment rate slightly rose from 4.7% in February 2017 to 4.8% at period-end, which was higher than the 4.4% national rate.3
During the state’s fiscal year (FY) 2017, lawmakers anticipated weaker-than-projected revenue growth. Lower income and sales tax collections led to lower-than-expected general fund revenues. However, the state is expecting to close the FY 2017 with a small budget surplus, largely aided by volatile revenue, including inheritance and estate taxes, and program cuts. In May, the governor proposed a revised biennium budget for FY 2018–2019, which included spending cuts and various revenue enhancement measures. Connecticut has not enacted the biennium budget for FY 2018–2019. In the absence of an enacted budget, the governor signed an executive order taking over the state’s spending authority.
Connecticut’s debt levels remained among the nation’s highest, with net tax-supported debt at 9.7% of personal income and $6,505 per capita, compared with the national medians of 2.5% and $1,006, respectively.4 Independent credit rating agency Standard & Poor’s (S&P) downgraded its rating on Connecticut’s general obligation bonds from AA- to A+, with a stable outlook.5 The revision to the rating reflected S&P’s view of the state economic weakness that has resulted in successive downward revenue adjustments during a period of national economic growth. According to S&P, the size of the budget gap would create continuing budget pressure, particularly if additional revenue shortfalls occur. The rating agency believes that the state would have reduced budget flexibility due to large expenditures cuts already incurred; a large and growing portion of the budget being devoted to fixed costs for debt, pension and other post-employment benefits; and lack of plans to rebuild a meaningful budget stabilization fund (BSF). The stable outlook reflected S&P’s expectation that the state will continue to face significant budget pressure because of weak economic and revenue growth, high fixed costs, and an inability to rebuild a material BSF even in a period of national economic growth.
Manager’s Discussion
We used various investment strategies during the six months under review as we sought to maximize tax-free income for shareholders. Please read the Investment Strategy and Manager’s Discussion on page 4 for more information.
Portfolio Composition
8/31/17
| | |
| | | % of Total
Investments* |
Higher Education | | 27.1% |
Hospital & Health Care | | 22.9% |
Refunded** | | 19.0% |
Utilities | | 17.3% |
General Obligation | | 8.4% |
Transportation | | 4.4% |
Housing | | 0.7% |
Other Revenue | | 0.2% |
*Does not include cash and cash equivalents.
**Includes all refunded bonds; the percentage may differ from that in the Credit Quality Composition.
Thank you for your continued participation in Franklin Connecticut Tax-Free Income Fund. We believe our conservative, buy-and-hold investment strategy can help us achieve high, current, tax-free income for shareholders.
The foregoing information reflects our analysis, opinions and portfolio holdings as of August 31, 2017, 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.
3. Source: Bureau of Labor Statistics.
4. Source: Moody’s Investors Service, State Government - US: Medians - Total State Debt Remains Essentially Flat in 2017, 5/3/17.
5. This does not indicate S&P’s rating of the Fund.
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FRANKLIN CONNECTICUT TAX-FREE INCOME FUND
Performance Summary as of August 31, 2017
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. 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.
Performance as of 8/31/17
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 4.25% and the minimum is 0%. Class A: 4.25% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| | | | |
| Share Class | | Cumulative
Total Return1 | | Average Annual
Total Return2 |
A | | | | |
6-Month | | +0.76% | | -3.50% |
1-Year | | -1.79% | | -5.94% |
5-Year | | +7.15% | | +0.51% |
10-Year | | +40.69% | | +3.02% |
Advisor3 | | | | |
6-Month | | +0.71% | | +0.71% |
1-Year | | -1.70% | | -1.70% |
5-Year | | +7.59% | | +1.47% |
10-Year | | +41.71% | | +3.55% |
| | | | | | | | | | | | |
| Share Class | | Distribution
Rate4 | | | Taxable Equivalent
Distribution Rate5 | | | 30-Day
Standardized Yield6 | | Taxable Equivalent 30-Day
Standardized Yield5 |
A | | | 3.09% | | | | 5.90% | | | 1.32% | | 2.52% |
Advisor | | | 3.33% | | | | 6.36% | | | 1.49% | | 2.84% |
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.
See page 18 for Performance Summary footnotes.
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 17 |
FRANKLIN CONNECTICUT TAX-FREE INCOME FUND
PERFORMANCE SUMMARY
Net Asset Value
| | | | | | | | | | | | | | | | |
| Share Class (Symbol) | | 8/31/17 | | | 8/1/17 | | | 2/28/17 | | | Change | |
A (FXCTX) | | | $10.32 | | | | N/A | | | | $10.42 | | | | -$0.10 | |
C (FCTIX) | | | $10.40 | | | | N/A | | | | $10.50 | | | | -$0.10 | |
R6 (FCTQX) | | | $10.31 | | | | $10.30 | | | | N/A | | | | +$0.01 | |
Advisor (FCNZX) | | | $10.31 | | | | N/A | | | | $10.42 | | | | -$0.11 | |
Distributions (3/1/17–8/31/17)
| | | | |
| |
| Share Class | | Net Investment
Income | |
| |
A | | | $0.1776 | |
| |
C | | | $0.1485 | |
| |
R6 (8/1/17–8/31/17) | | | $0.0279 | |
| |
Advisor | | | $0.1824 | |
Total Annual Operating Expenses7
| | | | |
| Share Class | | | |
| |
A | | | 0.71% | |
| |
Advisor | | | 0.61% | |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
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.
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. Return for less than one year, if any, has not been annualized.
3. Effective 7/15/09, the Fund began offering Advisor Class shares, which do not have sales charges or a Rule 12b-1 plan. Performance quotations for this class reflect the following methods of calculation: (a) For periods prior to 7/15/09, a restated figure is used based upon the Fund’s Class A performance, excluding the effect of Class A’s maximum initial sales charge, but reflecting the effect of the Class A Rule 12b-1 fees; and (b) for periods after 7/15/09, actual Advisor Class performance is used reflecting all charges and fees applicable to that class. Since 7/15/09 (commencement of sales), the cumulative and average annual total returns of Advisor Class shares were +34.98% and +3.76%.
4. Distribution rate is based on an annualization of the respective class’s August dividend and the maximum offering price (NAV for Advisor Class) per share on 8/31/17.
5. Taxable equivalent distribution rate and yield assume the published rates as of 6/19/17 for the maximum combined effective federal and Connecticut personal income tax rate of 47.62%, based on the federal income tax rate of 39.60% plus 3.8% Medicare tax.
6. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.
7. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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18 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN CONNECTICUT TAX-FREE INCOME FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below 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 table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. 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): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual (actual return after expenses) | | Hypothetical
(5% annual return before expenses) | | |
| | | | | | | | |
Share Class | | Beginning Account Value1 | | Ending Account Value 8/31/17 | | Expenses Paid During Period2,3 | | Ending Account Value 8/31/17 | | Expenses Paid During Period 3/1/17–8/31/173 | | Annualized Expense Ratio |
| | | | | | |
A | | $1,000 | | $1,007.60 | | $3.64 | | $1,021.58 | | $3.67 | | 0.72% |
C | | $1,000 | | $1,004.70 | | $6.42 | | $1,018.80 | | $6.46 | | 1.27% |
R6 | | $1,000 | | $1,003.70 | | $0.47 | | $1,022.33 | | $2.91 | | 0.57% |
Advisor | | $1,000 | | $1,007.10 | | $3.14 | | $1,022.08 | | $3.16 | | 0.62% |
1. For Classes A, C and Advisor, 3/1/17 for Actual and Hypothetical. For Class R6, 8/1/17 for Actual and 3/1/17 for Hypothetical.
2. For Classes A, C and Advisor, 3/1/17–8/31/17. For Class R6, 8/1/17–8/31/17.
3. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 184/365 to reflect the one-half year period. The multiplier is 30/365 for Actual Class R6 expenses to reflect the number of days since inception.
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 19 |
Franklin Michigan Tax-Free Income Fund
This semiannual report for Franklin Michigan Tax-Free Income Fund covers the period ended August 31, 2017.
Your Fund’s Goal and Main Investments
Franklin Michigan Tax-Free Income Fund seeks to provide as high a level of income exempt from federal and Michigan personal income taxes 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
Credit Quality Composition*
8/31/17
| | |
| Ratings | | % of Total
Investments |
AAA | | 7.24% |
AA | | 57.68% |
A | | 16.36% |
Below Investment Grade | | 0.63% |
Refunded | | 18.09% |
*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 (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 and not rerated by an NRSRO. The Not Rated category consists of ratable securities that have not been rated by an NRSRO. Cash and equivalents are excluded from this composition.
Performance Overview
The Fund’s Class A share price, as measured by net asset value, remained the same. It began the period at $11.52 on February 28, 2017, and ended at $11.52 on August 31, 2017. The Fund’s Class A shares paid dividends totaling 18.90 cents per share for the reporting period.2 The Performance Summary beginning on page 22 shows that at the end of this reporting period the Fund’s Class A shares’ distribution rate was 3.05% based on an annualization of August’s 3.06 cent per share dividend and the maximum offering price of $12.03 on August 31, 2017. An investor in the 2017 maximum combined
Distributions*
3/1/17–8/31/17
| | | | | | | | | | | | | | |
| | | Dividend per Share (cents) |
| | | |
| Month | | Class A | | | Class C | | | Class R6** | | | Advisor
Class |
March | | | 3.24 | | | | 2.70 | | | | — | | | 3.33 |
April | | | 3.24 | | | | 2.70 | | | | — | | | 3.33 |
May | | | 3.24 | | | | 2.70 | | | | — | | | 3.33 |
June | | | 3.06 | | | | 2.52 | | | | — | | | 3.15 |
July | | | 3.06 | | | | 2.52 | | | | — | | | 3.15 |
August | | | 3.06 | | | | 2.52 | | | | 3.08 | | | 3.15 |
Total | | | 18.90 | | | | 15.66 | | | | 3.08 | | | 19.44 |
*The distribution amount is the sum of all estimated tax-basis net investment income distributions for the period shown. A portion or all of the distribution may be reclassified as return of capital or capital gain once final tax designations are known. Assumes shares were purchased and held for the entire accrual period. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.
**Effective 8/1/17, the Fund began offering Class R6 shares. See the prospectus for details.
effective federal and Michigan personal income tax bracket of 45.97% (including 3.8% Medicare tax) would need to earn a distribution rate of 5.64% from a taxable investment to match the Fund’s Class A tax-free distribution rate. For other performance data, please see the Performance Summary. Dividend distributions were affected by low 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. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
State Update
Michigan’s economy expanded for the six months under review. Although the state’s economy was diversified, the manufacturing sector continued to serve as a major employment source. Michigan’s unemployment rate fell from
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. The distribution amount is the sum of all estimated tax-basis net investment income distributions for the period shown. A portion or all of the distribution may be reclassified as return of capital or capital gain once final tax designations are known. Assumes shares were purchased and held for the entire accrual period. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.
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 85.
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20 | | Semiannual Report | | franklintempleton.com |
FRANKLIN MICHIGAN TAX-FREE INCOME FUND
5.3% in February 2017 to 3.9% at period-end, which was below the 4.4% national average.3 The housing market was positive as home prices rose and the foreclosure rate declined during the review period.
Through March 2017, Michigan’s year-to-date general fund-general purpose revenues were below fiscal year (FY) 2016 levels, while school aid funding revenues were up. In May 2017, general fund-general purpose revenue estimates were revised downwards compared to the January consensus forecast, mainly due to weaker-than-expected growth in individual income and business tax collections. School aid funding revenues, however, were revised upward. The fiscal 2018 budget prioritizes sectors such as education and health and human services. The budget included increased spending on economic development, education and infrastructure. The budget also identified additional deposits to the budget stabilization fund (BSF) in FY 2018.
Michigan maintained relatively low debt levels, with net tax-supported debt at $689 per capita and 1.6% of personal income, compared with the national medians of $1,006 and 2.5%, respectively.4 Shortly after period-end, independent credit rating agency Standard & Poor’s (S&P) affirmed its AA-rating of Michigan’s general obligation bonds and upwardly revised its outlook to positive from stable.5 The rating reflected S&P’s view of state’s cyclical but growing economy, adequate BSF balance, significantly funded pension plan and other post-employment benefit (OPEB) liabilities and structural budget balance. The revised positive outlook reflected S&P’s view of Michigan’s employment and demographic indicators, and projected growth in reserve levels.
Manager’s Discussion
We used various investment strategies during the six months under review as we sought to maximize tax-free income for shareholders. Please read the Investment Strategy and Manager’s Discussion on page 4 for more information.
The Fund holds a small portion of its assets in Puerto Rico bonds. Puerto Rico and its municipal issuers continued to experience significant financial difficulties, which we discussed in the Municipal Bond Market Overview beginning on page 3. We continue to closely monitor developments in Puerto Rico; however, the municipal bond market’s overall fundamentals,
Portfolio Composition
8/31/17
| | |
| | | % of Total
Investments* |
General Obligation | | 29.9% |
Hospital & Health Care | | 21.7% |
Refunded** | | 21.6% |
Higher Education | | 15.0% |
Utilities | | 5.2% |
Subject to Government Appropriations | | 3.9% |
Transportation | | 2.0% |
Tax-Supported | | 0.6% |
Housing | | 0.1% |
*Does not include cash and cash equivalents.
**Includes all refunded bonds; the percentage may differ from that in the Credit Quality Composition.
such as general creditworthiness and low default rates, remained stable.
Thank you for your continued participation in Franklin Michigan Tax-Free Income Fund. We believe our conservative, buy-and-hold investment strategy can help us achieve high, current, tax-free income for shareholders.
The foregoing information reflects our analysis, opinions and portfolio holdings as of August 31, 2017, 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.
3. Source: Bureau of Labor Statistics.
4. Source: Moody’s Investors Service, State Government - US: Medians - Total State Debt Remains Essentially Flat in 2017, 5/3/17.
5. This does not indicate S&P’s rating of the Fund.
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 21 |
FRANKLIN MICHIGAN TAX-FREE INCOME FUND
Performance Summary as of August 31, 2017
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. 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.
Performance as of 8/31/17
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 4.25% and the minimum is 0%. Class A: 4.25% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| | | | |
| Share Class | | Cumulative
Total Return1 | | Average Annual Total Return2 |
| | |
A | | | | |
6-Month | | +1.66% | | -2.65% |
1-Year | | -0.71% | | -4.91% |
5-Year | | +11.50% | | +1.31% |
10-Year | | +42.17% | | +3.13% |
| | |
Advisor3 | | | | |
6-Month | | +1.79% | | +1.79% |
1-Year | | -0.61% | | -0.61% |
5-Year | | +12.12% | | +2.31% |
10-Year | | +43.84% | | +3.70% |
| | | | | | | | |
| Share Class | | Distribution
Rate4 | | Taxable Equivalent Distribution Rate5 | | 30-Day Standardized Yield6 | | Taxable Equivalent 30-Day Standardized Yield5 |
| | | | |
A | | 3.05% | | 5.64% | | 1.60% | | 2.96% |
| | | | |
Advisor | | 3.27% | | 6.05% | | 1.77% | | 3.28% |
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.
See page 23 for Performance Summary footnotes.
| | | | | | |
22 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN MICHIGAN TAX-FREE INCOME FUND
PERFORMANCE SUMMARY
| | | | | | | | |
Net Asset Value |
| | | | |
| Share Class (Symbol) | | 8/31/17 | | 8/1/17 | | 2/28/17 | | Change |
| | | | |
A (FTTMX) | | $11.52 | | N/A | | $11.52 | | $0.00 |
| | | | |
C (FRMTX) | | $11.70 | | N/A | | $11.69 | | +$ 0.01 |
| | | | |
R6 (FKTNX) | | $11.56 | | $11.53 | | N/A | | +$ 0.03 |
| | | | |
Advisor (FMTFX) | | $11.56 | | N/A | | $11.55 | | +$ 0.01 |
|
| Distributions (3/1/17–8/31/17) |
| | | | |
| Share Class | | Net Investment
Income | | | | | | |
| | | | |
A | | $0.1890 | | | | | | |
| | | | |
C | | $0.1566 | | | | | | |
| | | | |
R6 (8/1/17–8/31/17) | | $0.0308 | | | | | | |
| | | | |
Advisor | | $0.1944 | | | | | | |
|
| Total Annual Operating Expenses7 |
| | | | |
| Share Class | | | | | | | | |
| | | | |
A | | 0.65% | | | | | | |
| | | | |
Advisor | | 0.55% | | | | | | |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
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.
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. Return for less than one year, if any, has not been annualized.
3. Effective 7/1/08, the Fund began offering Advisor Class shares, which do not have sales charges or a Rule 12b-1 plan. Performance quotations for this class reflect the following methods of calculation: (a) For periods prior to 7/1/08, a restated figure is used based upon the Fund’s Class A performance, excluding the effect of Class A’s maximum initial sales charge, but reflecting the effect of the Class A Rule 12b-1 fees; and (b) for periods after 7/1/08, actual Advisor Class performance is used reflecting all charges and fees applicable to that class. Since 7/1/08 (commencement of sales), the cumulative and average annual total returns of Advisor Class shares were +39.18% and +3.67%.
4. Distribution rate is based on an annualization of the respective class’s August dividend and the maximum offering price (NAV for Advisor Class) per share on 8/31/17.
5. Taxable equivalent distribution rate and yield assume the published rates as of 6/19/17 for the maximum combined effective federal and Connecticut personal income tax rate of 45.97%, based on the federal income tax rate of 39.60% plus 3.8% Medicare tax.
6. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.
7. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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franklintempleton.com | | | | | | Semiannual Report | | 23 |
FRANKLIN MICHIGAN TAX-FREE INCOME FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below 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 table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. 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): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual | | Hypothetical | | |
| | | | | (actual return after expenses) | | (5% annual return before expenses) | | |
| | | | | | | | |
Share Class | | Beginning
Account
Value1 | | Ending Account
Value 8/31/17 | | Expenses
Paid During
Period2,3 | | Ending Account
Value 8/31/17 | | Expenses Paid During Period 3/1/17–8/31/173 | | Annualized
Expense
Ratio |
| | | | | | |
A | | $1,000 | | $1,016.60 | | $3.30 | | $1,021.93 | | $3.31 | | 0.65% |
C | | $1,000 | | $1,014.40 | | $6.09 | | $1,019.16 | | $6.11 | | 1.20% |
R6 | | $1,000 | | $1,005.30 | | $0.41 | | $1,022.68 | | $2.55 | | 0.50% |
Advisor | | $1,000 | | $1,017.90 | | $2.80 | | $1,022.43 | | $2.80 | | 0.55% |
1. For Classes A, C and Advisor, 3/1/17 for Actual and Hypothetical. For Class R6, 8/1/17 for Actual and 3/1/17 for Hypothetical.
2. For Classes A, C and Advisor, 3/1/17–8/31/17. For Class R6, 8/1/17–8/31/17.
3. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 184/365 to reflect the one-half year period. The multiplier is 30/365 for Actual Class R6 expenses to reflect the number of days since inception.
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24 | | Semiannual Report | | | | franklintempleton.com |
Franklin Minnesota Tax-Free Income Fund
We are pleased to bring you Franklin Minnesota Tax-Free Income Fund’s semiannual report for the period ended August 31, 2017.
Your Fund’s Goal and Main Investments
Franklin Minnesota Tax-Free Income Fund seeks to provide as high a level of income exempt from federal and Minnesota personal income taxes 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
Credit Quality Composition*
8/31/17
| | | | |
| Ratings | | % of Total
Investments | |
AAA | | | 15.55% | |
AA | | | 64.40% | |
A | | | 14.14% | |
BBB | | | 0.15% | |
Refunded | | | 5.50% | |
Not Rated | | | 0.26% | |
*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 (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 and not rerated by an NRSRO. The Not Rated category consists of ratable securities that have not been rated by an NRSRO. Cash and equivalents are excluded from this composition.
Performance Overview
The Fund’s Class A share price, as measured by net asset value, increased from $12.27 on February 28, 2017, to $12.41 on August 31, 2017. The Fund’s Class A shares paid dividends totaling 17.90 cents per share for the reporting period.2 The Performance Summary beginning on page 27 shows that at the end of this reporting period the Fund’s Class A shares’ distribution rate was 2.69% based on an annualization of August’s 2.90 cent per share dividend and the maximum
Dividend Distributions*
3/1/17–8/31/17
| | | | | | | | | | | | | | | | |
| | | Dividend per Share (cents) | |
| | | | |
| Month | | Class A | | | Class C | | | Class R6** | | | Advisor
Class | |
March | | | 3.00 | | | | 2.43 | | | | — | | | | 3.10 | |
April | | | 3.00 | | | | 2.43 | | | | — | | | | 3.10 | |
May | | | 3.00 | | | | 2.43 | | | | — | | | | 3.10 | |
June | | | 3.00 | | | | 2.42 | | | | — | | | | 3.10 | |
July | | | 3.00 | | | | 2.42 | | | | — | | | | 3.10 | |
August | | | 2.90 | | | | 2.32 | | | | 2.95 | | | | 3.00 | |
Total | | | 17.90 | | | | 14.45 | | | | 2.95 | | | | 18.50 | |
*The distribution amount is the sum of all estimated tax-basis net investment income distributions for the period shown. A portion or all of the distribution may be reclassified as return of capital or capital gain once final tax designations are known. Assumes shares were purchased and held for the entire accrual period. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.
**Effective 8/1/17, the Fund began offering Class R6 shares. See the prospectus for details.
offering price of $12.96 on August 31, 2017. An investor in the 2017 maximum combined effective federal and Minnesota personal income tax bracket of 49.35% (including 3.8% Medicare tax) would need to earn a distribution rate of 5.31% from a taxable investment to match the Fund’s Class A tax-free distribution rate. For other performance data, please see the Performance Summary. Dividend distributions were affected by low 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. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
State Update
Minnesota’s broad-based economy expanded during the six months under review. The state’s unemployment rate declined from 4.0% in February 2017 to 3.8% at period-end, lower than
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. The distribution amount is the sum of all estimated tax-basis net investment income distributions for the period shown. A portion or all of the distribution may be reclassified as return of capital or capital gain once final tax designations are known. Assumes shares were purchased and held for the entire accrual period. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.
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 85.
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franklintempleton.com | | Semiannual Report | | 25 |
FRANKLIN MINNESOTA TAX-FREE INCOME FUND
the 4.4% national average.3 Overall, the state’s labor force participation improved during the review period. Home prices and building permits in the state rose, while foreclosure rates remained lower than the national rate.
The state ended its fiscal year 2017 on June 30, 2017, with net general fund receipts having underperformed February 2017 revenue forecasts, largely due to lower-than-expected individual income tax receipts and higher-than-expected income tax refunds. The enacted budget for the 2018–2019 biennium included increased spending in education, health and human services, transportation and public safety. Additionally, it also included increased funding to local government and county program aid. The budget outlook for 2018–2019 worsened with a revision in July 2017, as revenue forecasts were decreased, driven by reductions in both tax and transportation bills. The projected revenues were estimated to almost cover higher spending over 2018–2019.
Minnesota’s net tax-supported debt was 2.9% of personal income and $1,480 per capita, compared with the national medians of 2.5% and $1,006, respectively.4 Independent credit rating agency Standard & Poor’s (S&P) placed its AA+ rating on Minnesota’s general obligation debt on CreditWatch with negative implications in June.5 This reflected S&P’s view of the governor’s use of his veto authority, during approval of Minnesota’s 2018–2019 biennial budget, to reject appropriations to the Legislature that defunded the Legislature’s budgets. However, later in the month, S&P removed the state’s ratings from CreditWatch, and revised its outlook to stable from positive, as the situation illustrated a departure from what had been very strong budget management, and was not commensurate with higher rated credits.
Portfolio Composition
8/31/17
| | |
| | | % of Total
Investments* |
General Obligation | | 27.8% |
Hospital & Health Care | | 16.9% |
Refunded** | | 16.2% |
Utilities | | 16.1% |
Transportation | | 8.1% |
Higher Education | | 6.9% |
Subject to Government Appropriations | | 3.9% |
Housing | | 3.3% |
Tax-Supported | | 0.8% |
*Does not include cash and cash equivalents.
**Includes all refunded bonds; the percentage may differ from that in the Credit Quality Composition.
Manager’s Discussion
We used various investment strategies during the six months under review as we sought to maximize tax-free income for shareholders. Please read the Investment Strategy and Manager’s Discussion on page 4 for more information.
Thank you for your continued participation in Franklin Minnesota Tax-Free Income Fund. We believe our conservative, buy-and-hold investment strategy can help us achieve high, current, tax-free income for shareholders.
The foregoing information reflects our analysis, opinions and portfolio holdings as of August 31, 2017, 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.
3. Source: Bureau of Labor Statistics.
4. Source: Moody’s Investors Service, State Government – US: Medians – Total Debt Remains Essentially Flat in 2017, 5/3/17.
5. This does not indicate S&P’s rating of the Fund.
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FRANKLIN MINNESOTA TAX-FREE INCOME FUND
Performance Summary as of August 31, 2017
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. 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.
Performance as of 8/31/17
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 4.25% and the minimum is 0%. Class A: 4.25% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| | | | |
| Share Class | | Cumulative
Total Return1 | | Average Annual
Total Return2 |
| | |
A | | | | |
6-Month | | +2.62% | | -1.71% |
1-Year | | +0.57% | | -3.67% |
5-Year | | +11.85% | | +1.38% |
10-Year | | +48.80% | | +3.60% |
| | |
Advisor3 | | | | |
6-Month | | +2.75% | | +2.75% |
1-Year | | +0.75% | | +0.75% |
5-Year | | +12.58% | | +2.40% |
10-Year | | +50.21% | | +4.15% |
| | | | | | | | | | | | |
| Share Class | | Distribution
Rate4 | | | Taxable Equivalent
Distribution Rate5 | | | 30-Day
Standardized Yield6 | | Taxable Equivalent 30-Day
Standardized Yield5 |
A | | | 2.69% | | | | 5.31% | | | 1.23% | | 2.43% |
Advisor | | | 2.90% | | | | 5.73% | | | 1.39% | | 2.74% |
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.
See page 28 for Performance Summary footnotes.
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 27 |
FRANKLIN MINNESOTA TAX-FREE INCOME FUND
PERFORMANCE SUMMARY
Net Asset Value
| | | | | | | | | | | | | | |
| Share Class (Symbol) | | 8/31/17 | | | 8/1/17 | | | 2/28/17 | | | Change |
A (FMINX) | | | $12.41 | | | | N/A | | | | $12.27 | | | +$ 0.14 |
C (FMNIX) | | | $12.55 | | | | N/A | | | | $12.40 | | | +$ 0.15 |
R6 (FKTDX) | | | $12.43 | | | | $12.40 | | | | N/A | | | +$ 0.03 |
Advisor (FMNZX) | | | $12.43 | | | | N/A | | | | $12.28 | | | +$ 0.15 |
Distributions (3/1/17–8/31/17)
| | |
| Share Class | | Net Investment
Income |
A | | $0.1790 |
C | | $0.1445 |
R6 (8/1/17–8/31/17) | | $0.0295 |
Advisor | | $0.1850 |
Total Annual Operating Expenses7
| | |
| Share Class | | |
A | | 0.65% |
Advisor | | 0.55% |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
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. 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.
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. Return for less than one year, if any, has not been annualized.
3. Effective 7/1/09, the Fund began offering Advisor Class shares, which do not have sales charges or a Rule 12b-1 plan. Performance quotations for this class reflect the following methods of calculation: (a) For periods prior to 7/1/09, a restated figure is used based upon the Fund’s Class A performance, excluding the effect of Class A’s maximum initial sales charge, but reflecting the effect of the Class A Rule 12b-1 fees; and (b) for periods after 7/1/09, actual Advisor Class performance is used reflecting all charges and fees applicable to that class. Since 7/1/09 (commencement of sales), the cumulative and average annual total returns of Advisor Class shares were +38.26% and +4.05%.
4. Distribution rate is based on an annualization of the respective class’s August dividend and the maximum offering price (NAV for Advisor Class) per share on 8/31/17.
5. Taxable equivalent distribution rate and yield assume the published rates as of 6/19/17 for the maximum combined effective federal and Minnesota personal income tax rate of 49.35%, based on the federal income tax rate of 39.60% plus 3.8% Medicare tax.
6. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.
7. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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FRANKLIN MINNESOTA TAX-FREE INCOME FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below 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 table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. 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): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual | | Hypothetical | | |
| | | | | (actual return after expenses) | | (5% annual return before expenses) | | |
| | | | | | | | |
| | | Beginning | | Ending | | Expenses | | Ending | | Expenses Paid During | | Annualized |
| Share | | Account | | Account | | Paid During | | Account | | Period | | Expense |
| Class | | Value1 | | Value 8/31/17 | | Period2,3 | | Value 8/31/17 | | 3/1/17–8/31/173 | | Ratio |
| | | | | | |
A | | $1,000 | | $1,026.20 | | $3.32 | | $1,021.93 | | $3.31 | | 0.65% |
C | | $1,000 | | $1,023.90 | | $6.12 | | $1,019.16 | | $6.11 | | 1.20% |
R6 | | $1,000 | | $1,004.80 | | $0.40 | | $1,022.74 | | $2.50 | | 0.49% |
Advisor | | $1,000 | | $1,027.50 | | $2.81 | | $1,022.43 | | $2.80 | | 0.55% |
1. For Classes A, C and Advisor, 3/1/17 for Actual and Hypothetical. For Class R6, 8/1/17 for Actual and 3/1/17 for Hypothetical.
2. For Classes A, C and Advisor, 3/1/17–8/31/17. For Class R6, 8/1/17–8/31/17.
3. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 184/365 to reflect the one-half year period. The multiplier is 30/365 for Actual Class R6 expenses to reflect the number of days since inception.
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franklintempleton.com | | | | | | Semiannual Report | | 29 |
Franklin Ohio Tax-Free Income Fund
We are pleased to bring you Franklin Ohio Tax-Free Income Fund’s semiannual report for the period ended August 31, 2017.
Your Fund’s Goal and Main Investments
Franklin Ohio Tax-Free Income Fund seeks to provide as high a level of income exempt from federal and Ohio personal income taxes 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
Credit Quality Composition*
8/31/17
| | |
| Ratings | | % of Total
Investments |
| |
AAA | | 10.91% |
| |
AA | | 64.38% |
| |
A | | 11.57% |
| |
BBB | | 0.53% |
| |
Refunded | | 12.61% |
*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 (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 and not rerated by an NRSRO. The Not Rated category consists of ratable securities that have not been rated by an NRSRO. Cash and equivalents are excluded from this composition.
Performance Overview
The Fund’s Class A share price, as measured by net asset value, increased from $12.56 on February 28, 2017, to $12.75 on August 31, 2017. The Fund’s Class A shares paid dividends totaling 19.38 cents per share for the reporting period.2 The Performance Summary beginning on page 32 shows that at the end of this reporting period the Fund’s Class A shares’ distribution rate was 2.86% based on an annualization of August’s 3.18 cent per share dividend and the maximum offering price of $13.32 on August 31, 2017. An investor in the
Dividend Distributions*
3/1/17–8/31/17
| | | | | | | | | | | | | | |
| | | Dividend per Share (cents) | |
| | | |
| Month | | Class A | | Class C | | | Class R6** | | | Advisor
Class | |
March | | 3.28 | | | 2.69 | | | | — | | | | 3.38 | |
April | | 3.28 | | | 2.69 | | | | — | | | | 3.38 | |
May | | 3.28 | | | 2.69 | | | | — | | | | 3.38 | |
June | | 3.18 | | | 2.59 | | | | — | | | | 3.28 | |
July | | 3.18 | | | 2.59 | | | | — | | | | 3.28 | |
August | | 3.18 | | | 2.59 | | | | 3.21 | | | | 3.28 | |
Total | | 19.38 | | | 15.84 | | | | 3.21 | | | | 19.98 | |
*The distribution amount is the sum of all estimated tax-basis net investment income distributions for the period shown. A portion or all of the distribution may be reclassified as return of capital or capital gain once final tax designations are known. Assumes shares were purchased and held for the entire accrual period. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends. **Effective 8/1/17, the Fund began offering Class R6 shares. See the prospectus for details.
2017 maximum combined effective federal and Ohio personal income tax bracket of 46.42% (including 3.8% Medicare tax) would need to earn a distribution rate of 5.34% from a taxable investment to match the Fund’s Class A tax-free distribution rate. For other performance data, please see the Performance Summary. Dividend distributions were affected by low 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. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
State Update
Ohio’s broad and diverse economy continued to expand during the period under review. The state’s housing market improved as home sales increased and home prices rose. However, population growth remained slow and while employers in the
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. The distribution amount is the sum of all estimated tax-basis net investment income distributions for the period shown. A portion or all of the distribution may be reclassified as return of capital or capital gain once final tax designations are known. Assumes shares were purchased and held for the entire accrual period. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.
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 95.
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FRANKLIN OHIO TAX-FREE INCOME FUND
state have added jobs, they have been doing it at a slower pace than the U.S. economy. Ohio’s unemployment rate increased from 5.1% in February 2017 to 5.4% by period-end, which was higher than the national rate of 4.4%.3
The state ended fiscal year 2017 on June 30, 2017, with a relatively balanced budget, despite lower-than-projected income and sales tax revenues, which were offset by lower-than-expected Medicaid spending. Ohio’s enacted FY 2018–2019 biennium budget, which builds upon previously enacted tax reforms, such as providing simplification of the small-business tax filing process, reducing the number of income tax brackets, increased funding for K-12 education and support for developmental disabilities. The budget also included increased funding for higher education, health and human services and Medicaid. Ohio has a strong history of implementing budget adjustments regularly and on a timely basis.
Ohio’s net tax-supported debt was $1,087 per capita and 2.5% of personal income compared with the $1,006 and 2.5% national medians, respectively.4 Independent credit rating agency Standard & Poor’s (S&P) affirmed Ohio’s AA+ general obligation debt rating with a stable outlook.5 The rating reflected S&P’s view of Ohio’s long history of proactive financial and budget management, including frequent and prompt budget modifications to offset decreased revenue. The rating also reflected S&P’s view of the state’s commitment to funding budget reserves, improved revenue and budget performance, renewal of the budget stabilization fund, moderate debt levels, and significant pension reform changes coupled with a steady progress in funding other postem-ployment benefits. In S&P’s view, the stable outlook reflected Ohio’s improved structural budget alignment and steady economic growth that has allowed recent contributions to its budget stabilization fund.
Manager’s Discussion
We used various investment strategies during the six months under review as we sought to maximize tax-free income for shareholders. Please read the Investment Strategy and Manager’s Discussion on page 4 for more information.
Thank you for your continued participation in Franklin Ohio Tax-Free Income Fund. We believe our conservative,
Portfolio Composition
8/31/17
| | | | |
| | | % of Total
Investments* | |
General Obligation | | | 35.0% | |
Refunded** | | | 18.0% | |
Utilities | | | 12.0% | |
Hospital & Health Care | | | 11.7% | |
Higher Education | | | 11.0% | |
Transportation | | | 3.9% | |
Subject to Government Appropriations | | | 3.2% | |
Other Revenue | | | 3.0% | |
Tax-Supported | | | 1.8% | |
Housing | | | 0.4% | |
*Does not include cash and cash equivalents.
**Includes all refunded bonds; the percentage may differ from that in the Credit Quality Composition.
buy-and-hold investment strategy can help us achieve high, current, tax-free income for shareholders.
The foregoing information reflects our analysis, opinions and portfolio holdings as of August 31, 2017, 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.
3. Source: Bureau of Labor Statistics.
4. Source: Moody’s Investors Service, State Government - US: Medians - Total State Debt Remains Essentially Flat in 2017, 5/3/17
5. This does not indicate S&P’s rating of the Fund.
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franklintempleton.com | | | | | | Semiannual Report | | 31 |
FRANKLIN OHIO TAX-FREE INCOME FUND
Performance Summary as of August 31, 2017
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. 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.
Performance as of 8/31/17
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 4.25% and the minimum is 0%. Class A: 4.25% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| | | | |
| Share Class | | Cumulative Total Return1 | | Average Annual Total Return2 |
| | |
A | | | | |
6-Month | | +3.08% | | -1.32% |
1-Year | | +0.63% | | -3.64% |
5-Year | | +15.57% | | +2.05% |
10-Year | | +51.17% | | +3.76% |
| | |
Advisor3 | | | | |
6-Month | | +3.20% | | +3.20% |
1-Year | | +0.81% | | +0.81% |
5-Year | | +16.22% | | +3.05% |
10-Year | | +52.76% | | +4.33% |
| | | | | | | | |
| Share Class | | Distribution
Rate4 | | Taxable Equivalent
Distribution Rate5 | | 30-Day
Standardized Yield6 | | Taxable Equivalent 30-Day
Standardized Yield5 |
A | | 2.86% | | 5.34% | | 1.56% | | 2.91% |
Advisor | | 3.08% | | 5.75% | | 1.73% | | 3.23% |
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.
See page 33 for Performance Summary footnotes.
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32 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN OHIO TAX-FREE INCOME FUND
PERFORMANCE SUMMARY
Net Asset Value
| | | | | | | | |
| Share Class (Symbol) | | 8/31/17 | | 8/1/17 | | 2/28/17 | | Change |
A (FTOIX) | | $12.75 | | N/A | | $12.56 | | +$ 0.19 |
C (FOITX) | | $12.92 | | N/A | | $12.72 | | +$ 0.20 |
R6 (FKTOX) | | $12.76 | | $12.73 | | N/A | | +$ 0.03 |
Advisor (FROZX) | | $12.77 | | N/A | | $12.57 | | +$ 0.20 |
| | | | |
| Distributions (3/1/17–8/31/17) | | | | | | | | |
| | | | |
| Share Class | | Net Investment
Income | | | | | | |
A | | $0.1938 | | | | | | |
C | | $0.1584 | | | | | | |
R6 (8/1/17–8/31/17) | | $0.0321 | | | | | | |
Advisor | | $0.1998 | | | | | | |
| | | |
Total Annual Operating Expenses7 | | | | | | |
| Share Class | | | | | | | | |
A | | 0.63% | | | | | | |
Advisor | | 0.53% | | | | | | |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
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. 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.
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. Return for less than one year, if any, has not been annualized.
3. Effective 7/1/08, the Fund began offering Advisor Class shares, which do not have sales charges or a Rule 12b-1 plan. Performance quotations for this class reflect the following methods of calculation: (a) For periods prior to 7/1/08, a restated figure is used based upon the Fund’s Class A performance, excluding the effect of Class A’s maximum initial sales charge, but reflecting the effect of the Class A Rule 12b-1 fees; and (b) for periods after 7/1/08, actual Advisor Class performance is used reflecting all charges and fees applicable to that class. Since 7/1/08 (commencement of sales), the cumulative and average annual total returns of Advisor Class shares were +48.03% and +4.37%.
4. Distribution rate is based on an annualization of the respective class’s August dividend and the maximum offering price (NAV for Advisor Class) per share on 8/31/17.
5. Taxable equivalent distribution rate and yield assume the published rates as of 6/19/17 for the maximum combined effective federal and Ohio personal income tax rate of
46.42%, based on the federal income tax rate of 39.60% plus 3.8% Medicare tax.
6. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.
7. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Funds’ Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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franklintempleton.com | | | | | | Semiannual Report | | 33 |
FRANKLIN OHIO TAX-FREE INCOME FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below 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 table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. 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): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual (actual return after expenses) | | Hypothetical (5% annual return before expenses) | | |
| | | | | | | | |
Share Class | | Beginning
Account
Value1 | | Ending
Account
Value 8/31/17 | | Expenses
Paid During
Period2,3 | | Ending
Account
Value 8/31/17 | | Expenses
Paid During Period 3/1/17–8/31/173 | | Annualized
Expense
Ratio |
| | | | | | |
A | | $1,000 | | $1,030.80 | | $3.22 | | $1,022.03 | | $3.21 | | 0.63% |
C | | $1,000 | | $1,028.30 | | $6.03 | | $1,019.26 | | $6.01 | | 1.18% |
R6 | | $1,000 | | $1,004.90 | | $0.40 | | $1,022.79 | | $2.45 | | 0.48% |
Advisor | | $1,000 | | $1,032.00 | | $2.71 | | $1,022.53 | | $2.70 | | 0.53% |
1. For Classes A, C and Advisor, 3/1/17 for Actual and Hypothetical. For Class R6, 8/1/17 for Actual and 3/1/17 for Hypothetical.
2. For Classes A, C and Advisor, 3/1/17–8/31/17. For Class R6, 8/1/17–8/31/17.
3. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 184/365 to reflect the one-half year period. The multiplier is 30/365 for Actual Class R6 expenses to reflect the number of days since inception.
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34 | | Semiannual Report | | | | franklintempleton.com |
Franklin Oregon Tax-Free Income Fund
We are pleased to bring you Franklin Oregon Tax-Free Income Fund’s semiannual report for the period ended August 31, 2017.
Your Fund’s Goal and Main Investments
Franklin Oregon Tax-Free Income Fund seeks to provide as high a level of income exempt from federal and Oregon personal income taxes as is consistent with prudent investment management and preservation of capital by investing at least 80% of its net assets in securities that pay interest free from such taxes.1
| | |
| Credit Quality Composition* | | |
| 8/31/17 | | |
| |
| Ratings | | % of Total
Investments |
| |
AAA | | 12.75% |
| |
AA | | 55.67% |
| |
A | | 13.46% |
| |
BBB | | 5.46% |
| |
Below Investment Grade | | 1.42% |
| |
Refunded | | 11.24% |
*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 (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 and not rerated by an NRSRO. The Not Rated category consists of ratable securities that have not been rated by an NRSRO. Cash and equivalents are excluded from this composition.
Performance Overview
The Fund’s Class A share price, as measured by net asset value, increased from $11.60 on February 28, 2017, to $11.68 on August 31, 2017. The Fund’s Class A shares paid dividends totaling 19.62 cents per share for the reporting period.2 The Performance Summary beginning on page 38 shows that at the end of this reporting period the Fund’s Class A shares’ distribution rate was 3.06% based on an annualization of
| | | | | | | | | | | | | | |
| Dividend Distributions* | | | |
| 3/1/17–8/31/17 | | | | | | | | | | | |
| | | Dividend per Share (cents) |
| | | |
| Month | | Class A | | | Class C | | | Class R6** | | | Advisor
Class |
March | | | 3.31 | | | | 2.77 | | | | — | | | 3.40 |
April | | | 3.36 | | | | 2.82 | | | | — | | | 3.45 |
May | | | 3.36 | | | | 2.82 | | | | — | | | 3.45 |
June | | | 3.27 | | | | 2.73 | | | | — | | | 3.36 |
July | | | 3.21 | | | | 2.67 | | | | — | | | 3.30 |
August | | | 3.11 | | | | 2.57 | | | | 3.12 | | | 3.20 |
Total | | | 19.62 | | | | 16.38 | | | | 3.12 | | | 20.16 |
*The distribution amount is the sum of all estimated tax-basis net investment income distributions for the period shown. A portion or all of the distribution may be reclassified as return of capital or capital gain once final tax designations are known. Assumes shares were purchased and held for the entire accrual period. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.
**Effective 8/1/17, the Fund began offering Class R6 shares. See the prospectus for details.
August’s 3.11 cent per share dividend and the maximum offering price of $12.20 on August 31, 2017. An investor in the 2017 maximum combined effective federal and Oregon personal income tax bracket of 49.38% (including 3.8% Medicare tax) would need to earn a distribution rate of 6.04% from a taxable investment to match the Fund’s Class A tax-free distribution rate. For other performance data, please see the Performance Summary. Dividend distributions were affected by low 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. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
1. For state personal income taxes, the 80% minimum is measured by total Fund assets. 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. The distribution amount is the sum of all estimated tax-basis net investment income distributions for the period shown. A portion or all of the distribution may be reclassified as return of capital or capital gain once final tax designations are known. Assumes shares were purchased and held for the entire accrual period. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.
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 page106.
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franklintempleton.com | | Semiannual Report | | 35 |
FRANKLIN OREGON TAX-FREE INCOME FUND
State Update
Oregon’s economy continued to expand during the six months under review. The state’s job market grew faster than it had at the beginning of the year as the labor market continued to tighten. The labor participation rate has remained low with much of the decline due to an aging population. However, the strong economy has pulled more workers into the labor force. Oregon’s unemployment rate increased slightly from 4.0% at the beginning of the reporting period to 4.1% at period-end, slightly lower than the 4.4% national average.3 The state’s personal income growth increased along with accelerating population growth.
| | |
| Portfolio Composition | | |
8/31/17 | | |
| |
| | | % of Total
Investments* |
General Obligation | | 30.0% |
Refunded** | | 23.0% |
Hospital & Health Care | | 18.4% |
Utilities | | 8.7% |
Higher Education | | 8.2% |
Transportation | | 3.7% |
Other Revenue | | 2.5% |
Housing | | 2.1% |
Tax-Supported | | 2.0% |
Subject to Government Appropriations | | 1.4% |
*Does not include cash and cash equivalents.
**Includes all refunded bonds; the percentage may differ from that in the Credit Quality Composition.
Oregon’s largest revenue source, personal income taxes, posted strong growth, thanks to an improved labor market and wage gains. The state expects total reserves at the end of fiscal year 2017 to continue to rise from recent levels. These reserves potentially offer a fiscal cushion against revenue volatility, and Oregon’s unusually high dependence on personal income taxes. In July, the Oregon legislature adopted a 2017–2019 biennial budget that represented an increase in overall spending from the 2015–2017 biennium. The budget included increased spending in education, as well as revenue enhancement measures. In their most recent forecasts, state officials revised expectations downward for collections from personal income tax as well as corporate income tax.
Oregon’s net tax-supported debt was 4.4% of personal income and $1,842 per capita, compared with the national medians of 2.5% and $1,006, respectively.4 Independent credit rating agency, Standard & Poor’s (S&P) rated Oregon’s general obligation debt AA+ with a stable outlook.5 The rating and outlook reflected S&P’s assessment of the state’s willingness to adjust revenue and spending to correct structural imbalances that may arise, mechanisms to build up rainy day funds, strong budget reserve levels, sound financial policies and a well-funded retirement system. However, S&P cited challenges such as the state’s propensity for revenue volatility due to dependence on personal income taxes and a constitutional requirement to provide income tax rebates if certain criteria are met. Overall, S&P’s stable outlook reflected its view that Oregon’s finances were poised to remain strong and that solid reserves may mitigate potential future revenue cyclicality.
Manager’s Discussion
We used various investment strategies during the six months under review as we sought to maximize tax-free income for shareholders. Please read the Investment Strategy and Manager’s Discussion on page 4 for more information.
The Fund holds a small portion of its assets in Puerto Rico bonds. Puerto Rico and its municipal issuers continued to experience significant financial difficulties, which we discussed in the Municipal Bond Market Overview beginning on page 3. We continue to closely monitor developments in Puerto Rico; however, the municipal bond market’s overall fundamentals, such as general creditworthiness and low default rates, remained stable.
Thank you for your continued participation in Franklin Oregon Tax-Free Income Fund. We believe our conservative, buy-and-hold investment strategy can help us achieve high, current, tax-free income for shareholders.
3. Source: Bureau of Labor Statistics.
4. Source: Moody’s Investors Service, State Government - US: Medians - Total State Debt Remains Essentially Flat in 2017, 5/3/17.
5. This does not indicate S&P’s rating of the Fund.
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36 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN OREGON TAX-FREE INCOME FUND
The foregoing information reflects our analysis, opinions and portfolio holdings as of August 31, 2017, 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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franklintempleton.com | | | | | | Semiannual Report | | 37 |
FRANKLIN OREGON TAX-FREE INCOME FUND
Performance Summary as of August 31, 2017
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. 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.
Performance as of 8/31/17
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 4.25% and the minimum is 0%. Class A: 4.25% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| | | | |
| Share Class | | Cumulative Total Return1 | | Average Annual Total Return2 |
| | |
A | | | | |
6-Month | | +2.40% | | -1.91% |
1-Year | | -0.18% | | -4.45% |
5-Year | | +10.86% | | +1.20% |
10-Year | | +48.36% | | +3.57% |
| | |
Advisor3 | | | | |
6-Month | | +2.44% | | +2.44% |
1-Year | | -0.09% | | -0.09% |
5-Year | | +11.39% | | +2.18% |
10-Year | | +49.64% | | +4.11% |
| | | | | | | | |
| Share Class | | Distribution
Rate4 | | Taxable Equivalent
Distribution Rate5 | | 30-Day
Standardized Yield6
| | Taxable Equivalent 30-Day
Standardized Yield5 |
| | | | |
A | | 3.06% | | 6.04% | | 1.56% | | 3.08% |
| | | | |
Advisor | | 3.28% | | 6.48% | | 1.73% | | 3.42% |
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.
See page 39 for Performance Summary footnotes.
| | | | | | |
38 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN OREGON TAX-FREE INCOME FUND
PERFORMANCE SUMMARY
| | | | | | | | |
| Net Asset Value | | | | | | | | |
| | | | |
| Share Class (Symbol) | | 8/31/17 | | 8/1/17 | | 2/28/17 | | Change |
| | | | |
A (FRORX) | | $11.68 | | N/A | | $11.60 | | +$0.08 |
| | | | |
C (FORIX) | | $11.86 | | N/A | | $11.77 | | +$0.09 |
| | | | |
R6 (FOFRX) | | $11.69 | | $11.66 | | N/A | | +$0.03 |
| | | | |
Advisor (FOFZX) | | $11.69 | | N/A | | $11.61 | | +$0.08 |
| | |
| Distributions (3/1/17–8/31/17) | | | | |
| Share Class | | Net Investment
Income | | | | | | |
| | | | |
A | | $0.1962 | | | | | | |
| | | | |
C | | $0.1638 | | | | | | |
| | | | |
R6 (8/1/17–8/31/17) | | $0.0312 | | | | | | |
| | | | |
Advisor | | $0.2016 | | | | | | |
| | | |
| Total Annual Operating Expenses7 | | | | | | |
| | | | |
| Share Class | | | | | | | | |
| | | | |
A | | 0.63% | | | | | | |
| | | | |
Advisor | | 0.53% | | | | | | |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
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.
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. Return for less than one year, if any, has not been annualized.
3. Effective 7/15/09, the Fund began offering Advisor Class shares, which do not have sales charges or a Rule 12b-1 plan. Performance quotations for this class reflect the following methods of calculation: (a) For periods prior to 7/15/09, a restated figure is used based upon the Fund’s Class A performance, excluding the effect of Class A’s maximum initial sales charge, but reflecting the effect of the Class A Rule 12b-1 fees; and (b) for periods after 7/15/09, actual Advisor Class performance is used reflecting all charges and fees applicable to that class. Since 7/15/09 (commencement of sales), the cumulative and average annual total returns of Advisor Class shares were +40.14% and +4.24%.
4. Distribution rate is based on an annualization of the respective class’s August dividend and the maximum offering price (NAV for Advisor Class) per share on 8/31/17.
5. Taxable equivalent distribution rate and yield assume the published rates as of 6/19/17 for the maximum combined effective federal and Oregon personal income tax rate of 49.38%, based on the federal income tax rate of 39.60% plus 3.8% Medicare tax.
6. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.
7. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Funds’ Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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franklintempleton.com | | | | | | Semiannual Report | | 39 |
FRANKLIN OREGON TAX-FREE INCOME FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below 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 table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. 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): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual (actual return after expenses) | | Hypothetical (5% annual return before expenses) | | |
| | | | | | | | |
Share Class | | Beginning Account Value1 | | Ending Account Value 8/31/17 | | Expenses Paid During Period2,3 | | Ending Account Value 8/31/17 | | Expenses Paid During Period 3/1/17–8/31/173 | | Annualized Expense Ratio |
| | | | | | |
A | | $1,000 | | $1,024.00 | | $3.16 | | $1,022.08 | | $3.16 | | 0.62% |
C | | $1,000 | | $1,021.70 | | $5.96 | | $1,019.31 | | $5.96 | | 1.17% |
R6 | | $1,000 | | $1,005.20 | | $0.40 | | $1,022.79 | | $2.45 | | 0.48% |
Advisor | | $1,000 | | $1,024.40 | | $2.65 | | $1,022.58 | | $2.65 | | 0.52% |
1. For Classes A, C and Advisor, 3/1/17 for Actual and Hypothetical. For Class R6, 8/1/17 for Actual and 3/1/17 for Hypothetical.
2. For Classes A, C and Advisor, 3/1/17–8/31/17. For Class R6, 8/1/17–8/31/17.
3. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 184/365 to reflect the one-half year period. The multiplier is 30/365 for Actual Class R6 expenses to reflect the number of days since inception.
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40 | | Semiannual Report | | | | franklintempleton.com |
Franklin Pennsylvania Tax-Free Income Fund
This semiannual report for Franklin Pennsylvania Tax-Free Income Fund covers the period ended August 31, 2017.
Your Fund’s Goal and Main Investments
Franklin Pennsylvania Tax-Free Income Fund seeks to provide as high a level of income exempt from federal and Pennsylvania personal income taxes as is consistent with prudent investment management and preservation of capital by investing at least 80% of its net assets in securities that pay interest free from such taxes.1
Credit Quality Composition*
8/31/17
| | | | |
| Ratings | | % of Total Investments | |
| |
AAA | | | 0.09% | |
| |
AA | | | 39.99% | |
| |
A | | | 26.96% | |
| |
BBB | | | 5.99% | |
| |
Below Investment Grade | | | 1.48% | |
| |
Refunded | | | 25.02% | |
| |
Not Rated | | | 0.47% | |
*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 (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 and not rerated by an NRSRO. The Not Rated category consists of ratable securities that have not been rated by an NRSRO. Cash and equivalents are excluded from this composition.
Performance Overview
The Fund’s Class A share price, as measured by net asset value, decreased from $10.12 on February 28, 2017, to $10.06 on August 31, 2017. The Fund’s Class A shares paid dividends totaling 19.30 cents per share for the reporting period.2 The Performance Summary beginning on page 43 shows that at the end of this reporting period the Fund’s Class A shares’ distribution rate was 3.48% based on an annualization of
Dividend Distributions*
3/1/17–8/31/17
| | | | | | | | | | | | | | |
| | | Dividend per Share (cents) | |
| | | |
| Month | | Class A | | Class C | | | Class R6** | | | Advisor Class | |
| | | | |
March | | 3.25 | | | 2.78 | | | | — | | | | 3.33 | |
| | | | |
April | | 3.25 | | | 2.78 | | | | — | | | | 3.33 | |
| | | | |
May | | 3.25 | | | 2.78 | | | | — | | | | 3.33 | |
| | | | |
June | | 3.25 | | | 2.78 | | | | — | | | | 3.33 | |
| | | | |
July | | 3.25 | | | 2.78 | | | | — | | | | 3.33 | |
| | | | |
August | | 3.05 | | | 2.58 | | | | 3.06 | | | | 3.13 | |
Total | | 19.30 | | | 16.48 | | | | 3.06 | | | | 19.78 | |
*The distribution amount is the sum of all estimated tax-basis net investment income distributions for the period shown. A portion or all of the distribution may be reclassified as return of capital or capital gain once final tax designations are known. Assumes shares were purchased and held for the entire accrual period. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.
**Effective 8/1/17, the Fund began offering Class R6 shares. See the prospectus for details.
August’s 3.05 cent per share dividend and the maximum offering price of $10.51 on August 31, 2017. An investor in the 2017 maximum combined effective federal and Pennsylvania personal income tax bracket of 45.25% (including 3.8% Medicare tax) would need to earn a distribution rate of 6.36% from a taxable investment to match the Fund’s Class A tax-free distribution rate. For other performance data, please see the Performance Summary. Dividend distributions were affected by low 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. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
1. For state personal income taxes, the 80% minimum is measured by total Fund assets. 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. The distribution amount is the sum of all estimated tax-basis net investment income distributions for the period shown. A portion or all of the distribution may be reclassified as return of capital or capital gain once final tax designations are known. Assumes shares were purchased and held for the entire accrual period. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.
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 116.
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franklintempleton.com | | Semiannual Report | | 41 |
FRANKLIN PENNSYLVANIA TAX-FREE INCOME FUND
Commonwealth Update
Pennsylvania’s large and diverse economy exhibited slow growth over the past 6 months. Home sales were up slightly and prices have increased but supply has been lagging. The economy did experience a slight gain in jobs during the period and the commonwealth’s unemployment rate reached a nine-year low in March, the lowest it has been since the most recent recession. Although private employment has increased to its highest level in 2017, it still has not reached levels prior to 2007. Pennsylvania’s unemployment rate declined from 5.0% at the beginning of the reporting period to 4.9% at period-end, which was higher than the 4.4% national average.3
During the period under review, the fiscal year 2017 budget (ended June 30) experienced a shortfall in tax revenues. The 2018 fiscal year budget went into effect, which included increased spending but state lawmakers have yet to approve a revenue package that would balance the budget. The governor has supported a $2.2 billion increased revenue package proposed by the State Senate that would rely heavily on borrowing, additional taxes and expanded casino gambling. At period-end, there was an impasse as State House Representatives have disagreed and were still working to develop a package without borrowing or raising taxes. The 2018 budget proposal includes funding for key priorities such as education, pensions and an increase in funds to fight the opioid epidemic.
Pennsylvania’s debt levels were moderate and slightly above the national medians. Net tax-supported debt was 2.7% of personal income and $1,337 per capita, compared with the 2.5% and $1,006 national medians.4 Independent credit rating agency Standard & Poor’s (S&P) placed its AA- rating on Pennsylvania’s general obligation debt on CreditWatch with negative implications in July.5 The rating reflected S&P’s view that Pennsylvania has an established priority of general obligation debt service, even in absence of a budget, as well as a diverse economy and a moderate debt profile. However, failure to address long-term structural balance and resume stronger management practices could lead to a lower rating.
Manager’s Discussion
We used various investment strategies during the six months under review as we sought to maximize tax-free income for shareholders. Please read the Investment Strategy and Manager’s Discussion on page 4 for more information.
Portfolio Composition
8/31/17
| | | | |
| | | % of Total
Investments* | |
| |
Refunded** | | | 31.4% | |
| |
Higher Education | | | 18.5% | |
| |
Hospital & Health Care | | | 17.8% | |
| |
Utilities | | | 15.8% | |
| |
General Obligation | | | 8.0% | |
| |
Housing | | | 3.2% | |
| |
Transportation | | | 2.8% | |
| |
Subject to Government Appropriations | | | 2.4% | |
| |
Tax-Supported | | | 0.1% | |
*Does not include cash and cash equivalents.
**Includes all refunded bonds; the percentage may differ from that in the Credit Quality Composition.
The Fund holds a small portion of its assets in Puerto Rico bonds. Puerto Rico and its municipal issuers continued to experience significant financial difficulties, which we discussed in the Municipal Bond Market Overview beginning on page 3. We continue to closely monitor developments in Puerto Rico; however, the municipal bond market’s overall fundamentals, such as general creditworthiness and low default rates, remained stable.
Thank you for your continued participation in Franklin Pennsylvania Tax-Free Income Fund. We believe our conservative, buy-and-hold investment strategy can help us achieve high, current, tax-free income for shareholders.
The foregoing information reflects our analysis, opinions and portfolio holdings as of August 31, 2017, 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.
3. Source: Bureau of Labor Statistics.
4. Source: Moody’s Investors Service, State Government - US: Medians - Total State Debt Remains Essentially Flat in 2017, 5/3/17.
5. This does not indicate Moody’s rating of the Fund.
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42 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN PENNSYLVANIA TAX-FREE INCOME FUND
Performance Summary as of August 31, 2017
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. 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.
Performance as of 8/31/17
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 4.25% and the minimum is 0%. Class A: 4.25% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| | | | | | | | |
| Share Class | |
| Cumulative
Total Return |
1 | |
| Average Annual
Total Return |
2 |
| |
| | |
A | | | | | | | | |
6-Month | | | +1.33% | | | | -2.98% | |
| |
1-Year | | | -0.41% | | | | -4.68% | |
| |
5-Year | | | +11.57% | | | | +1.32% | |
| |
10-Year | | | +48.71% | | | | +3.60% | |
| |
| | |
Advisor3 | | | | | | | | |
6-Month | | | +1.38% | | | | +1.38% | |
| |
1-Year | | | -0.32% | | | | -0.32% | |
| |
5-Year | | | +12.11% | | | | +2.31% | |
| |
10-Year | | | +49.99% | | | | +4.14% | |
| |
| | | | | | | | | | | | | | | | |
| Share Class | |
| Distribution
Rate |
4 | |
| Taxable Equivalent
Distribution Rate |
5 | |
| 30-Day
Standardized Yield |
6 | |
| Taxable Equivalent 30-Day
Standardized Yield |
5 |
| |
A | | | 3.48% | | | | 6.36% | | | | 1.42% | | | | 2.59% | |
| |
Advisor | | | 3.73% | | | | 6.81% | | | | 1.57% | | | | 2.87% | |
| |
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.
See page 44 for Performance Summary footnotes.
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franklintempleton.com | | | | | | Semiannual Report | | 43 |
FRANKLIN PENNSYLVANIA TAX-FREE INCOME FUND
PERFORMANCE SUMMARY
Net Asset Value
| | | | | | | | | | | | | | | | |
| Share Class (Symbol) | | 8/31/17 | | | 8/1/17 | | | 2/28/17 | | | Change | |
| | | | |
A (FRPAX) | | | $10.06 | | | | N/A | | | | $10.12 | | | | -$0.06 | |
| | | | |
C (FRPTX) | | | $10.18 | | | | N/A | | | | $10.24 | | | | -$0.06 | |
| | | | |
R6 (FRPRX) | | | $10.07 | | | | $10.06 | | | | N/A | | | | +$0.01 | |
| | | | |
Advisor (FPFZX) | | | $10.07 | | | | N/A | | | | $10.13 | | | �� | -$0.06 | |
Distributions (3/1/17–8/31/17)
| | | | |
| Share Class | | Net Investment Income | |
A | | | $0.1930 | |
C | | | $0.1648 | |
R6 (8/1/17–8/31/17) | | | $0.0306 | |
Advisor | | | $0.1978 | |
Total Annual Operating Expenses7
| | | | |
| Share Class | | | |
A | | | 0.64% | |
Advisor | | | 0.54% | |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
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.
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. Return for less than one year, if any, has not been annualized.
3. Effective 7/15/09, the Fund began offering Advisor Class shares, which do not have sales charges or a Rule 12b-1 plan. Performance quotations for this class reflect the following methods of calculation: (a) For periods prior to 7/15/09, a restated figure is used based upon the Fund’s Class A performance, excluding the effect of Class A’s maximum initial sales charge, but reflecting the effect of the Class A Rule 12b-1 fees; and (b) for periods after 7/15/09, actual Advisor Class performance is used reflecting all charges and fees applicable to that class. Since 7/15/09 (commencement of sales), the cumulative and average annual total returns of Advisor Class shares were +41.77% and +4.39%.
4. Distribution rate is based on an annualization of the respective class’s August dividend and the maximum offering price (NAV for Advisor Class) per share on 8/31/17.
5. Taxable equivalent distribution rate and yield assume the published rates as of 6/19/17 for the maximum combined effective federal and Pennsylvania personal income tax rate of 45.25%, based on the federal income tax rate of 39.60% plus 3.8% Medicare tax.
6. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.
7. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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44 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN PENNSYLVANIA TAX-FREE INCOME FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below 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 table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. 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): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual (actual return after expenses) | | Hypothetical (5% annual return before expenses) | | |
| | | | | | | | |
Share Class | | Beginning Account Value1 | | Ending Account Value 8/31/17 | | Expenses Paid During Period2,3 | | Ending Account Value 8/31/17 | | Expenses Paid During Period 3/1/17–8/31/173 | | Annualized Expense Ratio |
| | | | | | |
A | | $1,000 | | $1,013.30 | | $3.25 | | $1,021.98 | | $3.26 | | 0.64% |
C | | $1,000 | | $1,010.30 | | $6.03 | | $1,019.21 | | $6.06 | | 1.19% |
R6 | | $1,000 | | $1,004.00 | | $0.40 | | $1,022.74 | | $2.50 | | 0.49% |
Advisor | | $1,000 | | $1,013.80 | | $2.74 | | $1,022.48 | | $2.75 | | 0.54% |
1. For Classes A, C and Advisor, 3/1/17 for Actual and Hypothetical. For Class R6, 8/1/17 for Actual and 3/1/17 for Hypothetical.
2. For Classes A, C and Advisor, 3/1/17–8/31/17. For Class R6, 8/1/17–8/31/17.
3. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 184/365 to reflect the one-half year period. The multiplier is 30/365 for Actual Class R6 expenses to reflect the number of days since inception.
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franklintempleton.com | | | | | | Semiannual Report | | 45 |
FRANKLIN TAX-FREE TRUST
Financial Highlights
Franklin Arizona Tax-Free Income Fund
| | | | | | | | | | | | |
| | | Six Months Ended August 31, 2017 | | Year Ended February 28, |
| | | (unaudited) | | 2017 | | 2016a | | 2015 | | 2014 | | 2013 |
Class A | | | | | | | | | | | | |
Per share operating performance | | | | | | | | | | | | |
(for a share outstanding throughout the period) | | | | | | | | | | | | |
Net asset value, beginning of period | | $10.78 | | $11.07 | | $11.22 | | $10.80 | | $11.52 | | $11.28 |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | |
Net investment incomec | | 0.19 | | 0.38 | | 0.41 | | 0.43 | | 0.45 | | 0.45 |
Net realized and unrealized gains (losses) | | 0.07 | | (0.29) | | (0.15) | | 0.42 | | (0.73) | | 0.23 |
| | | | | | |
Total from investment operations | | 0.26 | | 0.09 | | 0.26 | | 0.85 | | (0.28) | | 0.68 |
| | | | | | |
Less distributions from net investment income . | | (0.19) | | (0.38) | | (0.41) | | (0.43) | | (0.44) | | (0.44) |
| | | | | | |
Net asset value, end of period | | $10.85 | | $10.78 | | $11.07 | | $11.22 | | $10.80 | | $11.52 |
| | | | | | |
Total returnd | | 2.44% | | 0.77% | | 2.39% | | 7.98% | | (2.37)% | | 6.14% |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | |
Expenses. | | 0.63% | | 0.63% | | 0.62% | | 0.62% | | 0.62% | | 0.63% |
Net investment income | | 3.41% | | 3.47% | | 3.69% | | 3.93% | | 4.10% | | 3.93% |
| | | | | | |
Supplemental data | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $777,050 | | $769,835 | | $799,510 | | $815,973 | | $798,957 | | $982,621 |
Portfolio turnover rate | | 3.91% | | 13.02% | | 13.28% | | 12.31% | | 14.75% | | 6.40% |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
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46 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Arizona Tax-Free Income Fund (continued)
| | | | | | | | | | | | |
| | | Six Months Ended August 31, 2017 | | Year Ended February 28, |
| | | (unaudited) | | 2017 | | 2016a | | 2015 | | 2014 | | 2013 |
Class C | | | | | | | | | | | | |
Per share operating performance | | | | | | | | | | | | |
(for a share outstanding throughout the period) | | | | | | | | | | | | |
Net asset value, beginning of period | | $10.95 | | $11.24 | | $11.39 | | $10.96 | | $11.68 | | $11.43 |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | |
Net investment incomec | | 0.16 | | 0.33 | | 0.35 | | 0.38 | | 0.39 | | 0.39 |
Net realized and unrealized gains (losses) | | 0.08 | | (0.30) | | (0.15) | | 0.42 | | (0.73) | | 0.24 |
| | | | | | |
Total from investment operations | | 0.24 | | 0.03 | | 0.20 | | 0.80 | | (0.34) | | 0.63 |
| | | | | | |
Less distributions from net investment income . | | (0.16) | | (0.32) | | (0.35) | | (0.37) | | (0.38) | | (0.38) |
| | | | | | |
Net asset value, end of period | | $11.03 | | $10.95 | | $11.24 | | $11.39 | | $10.96 | | $11.68 |
| | | | | | |
Total returnd | | 2.21% | | 0.19% | | 1.79% | | 7.36% | | (2.87)% | | 5.56% |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | |
Expenses. | | 1.18% | | 1.18% | | 1.17% | | 1.17% | | 1.17% | | 1.18% |
Net investment income | | 2.86% | | 2.92% | | 3.14% | | 3.38% | | 3.55% | | 3.38% |
| | | | | | |
Supplemental data | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $114,645 | | $118,381 | | $113,370 | | $107,612 | | $100,188 | | $150,778 |
Portfolio turnover rate | | 3.91% | | 13.02% | | 13.28% | | 12.31% | | 14.75% | | 6.40% |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
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franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | | | Semiannual Report | | 47 |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Arizona Tax-Free Income Fund (continued)
| | |
| | | Period Ended August 31, 2017 (unaudited)a |
Class R6 | | |
Per share operating performance | | |
(for a share outstanding throughout the period) | | |
Net asset value, beginning of period | | $10.84 |
| |
Income from investment operationsb: | | |
Net investment incomec | | 0.03 |
Net realized and unrealized gains (losses) | | 0.03 |
| |
Total from investment operations | | 0.06 |
| |
Less distributions from net investment income | | (0.03) |
| |
Net asset value, end of period | | $10.87 |
| |
Total returnd | | 0.56% |
| |
Ratios to average net assetse | | |
Expenses | | 0.49% |
Net investment income | | 3.55% |
| |
Supplemental data | | |
Net assets, end of period (000’s) | | $5 |
Portfolio turnover rate | | 3.91% |
aFor the period August 1, 2017 (effective date) to August 31, 2017.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
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48 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Arizona Tax-Free Income Fund (continued)
| | | | | | | | | | | | |
| | | Six Months Ended August 31, 2017 | | Year Ended February 28, |
| | | (unaudited) | | 2017 | | 2016a | | 2015 | | 2014 | | 2013 |
Advisor Class | | | | | | | | | | | | |
Per share operating performance | | | | | | | | | | | | |
(for a share outstanding throughout the period) | | | | | | | | | | | | |
Net asset value, beginning of period | | $10.81 | | $11.10 | | $11.25 | | $10.83 | | $11.55 | | $11.30 |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | |
Net investment incomec | | 0.19 | | 0.40 | | 0.42 | | 0.45 | | 0.46 | | 0.46 |
Net realized and unrealized gains (losses) | | 0.08 | | (0.30) | | (0.15) | | 0.41 | | (0.73) | | 0.24 |
| | | | | | |
Total from investment operations | | 0.27 | | 0.10 | | 0.27 | | 0.86 | | (0.27) | | 0.70 |
| | | | | | |
Less distributions from net investment income . | | (0.20) | | (0.39) | | (0.42) | | (0.44) | | (0.45) | | (0.45) |
| | | | | | |
Net asset value, end of period | | $10.88 | | $10.81 | | $11.10 | | $11.25 | | $10.83 | | $11.55 |
| | | | | | |
Total returnd | | 2.48% | | 0.86% | | 2.48% | | 8.07% | | (2.26)% | | 6.33% |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | |
Expenses. | | 0.53% | | 0.53% | | 0.52% | | 0.52% | | 0.52% | | 0.53% |
Net investment income | | 3.51% | | 3.57% | | 3.79% | | 4.03% | | 4.20% | | 4.03% |
| | | | | | |
Supplemental data | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $99,790 | | $90,707 | | $57,674 | | $48,670 | | $29,842 | | $36,297 |
Portfolio turnover rate | | 3.91% | | 13.02% | | 13.28% | | 12.31% | | 14.75% | | 6.40% |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | | | Semiannual Report | | 49 |
FRANKLIN TAX-FREE TRUST
Statement of Investments, August 31, 2017 (unaudited)
Franklin Arizona Tax-Free Income Fund
| | | | | | |
| | | Principal
Amount | | | Value |
| Municipal Bonds 97.8% | | | | | | |
Arizona 96.5% | | | | | | |
Arizona Board of Regents Arizona State University Revenue, | | | | | | |
Stimulus Plan for Economic and Educational Development, 5.00%, 8/01/33 | | $ | 2,200,000 | | | $ 2,586,298 |
Stimulus Plan for Economic and Educational Development, 5.00%, 8/01/34 | | | 3,320,000 | | | 3,889,048 |
Stimulus Plan for Economic and Educational Development, 5.00%, 8/01/44 | | | 4,145,000 | | | 4,775,454 |
Arizona Board of Regents Arizona State University System Revenue, | | | | | | |
Green Bond, Series B, 5.00%, 7/01/42 | | | 2,000,000 | | | 2,333,160 |
Polytechnic Campus Project, Series C, Pre-Refunded, 6.00%, 7/01/26 | | | 2,500,000 | | | 2,605,725 |
Polytechnic Campus Project, Series C, Pre-Refunded, 6.00%, 7/01/27 | | | 3,000,000 | | | 3,126,870 |
Polytechnic Campus Project, Series C, Pre-Refunded, 6.00%, 7/01/28 | | | 3,350,000 | | | 3,491,671 |
Refunding, Series B, 5.00%, 7/01/41 | | | 14,070,000 | | | 16,423,207 |
Series C, 5.00%, 7/01/46 | | | 10,000,000 | | | 11,598,200 |
Series D, 5.00%, 7/01/41 | | | 5,000,000 | | | 5,836,250 |
Series D, 5.00%, 7/01/46 | | | 7,000,000 | | | 8,165,430 |
Arizona Board of Regents Northern Arizona University System Revenue, | | | | | | |
Pre-Refunded, 5.00%, 6/01/38 | | | 5,000,000 | | | 5,153,750 |
Refunding, 5.00%, 6/01/40 | | | 7,365,000 | | | 8,353,088 |
Refunding, 5.00%, 6/01/44 | | | 8,005,000 | | | 9,042,288 |
Stimulus Plan for Economic and Educational Development, 5.00%, 8/01/26 | | | 2,380,000 | | | 2,787,194 |
Stimulus Plan for Economic and Educational Development, 5.00%, 8/01/38 | | | 5,000,000 | | | 5,676,050 |
Arizona Board of Regents University of Arizona Revenue, Stimulus Plan for Economic and Educational Development, 5.00%, 8/01/38 | | | 10,150,000 | | | 11,636,264 |
Arizona Board of Regents University of Arizona System Revenue, | | | | | | |
Refunding, 5.00%, 6/01/39 | | | 2,750,000 | | | 3,232,185 |
Series A, 5.00%, 6/01/39 | | | 8,650,000 | | | 9,262,593 |
Arizona Health Facilities Authority Healthcare Education Facilities Revenue, Kirksville College of Osteopathic Medicine Inc., Arizona School of Health Sciences Project, 5.125%, 1/01/30 | | | 2,250,000 | | | 2,425,545 |
Arizona Health Facilities Authority Hospital Revenue, Phoenix Children’s Hospital, Refunding, Series A, 5.00%, 2/01/42 | | | 8,000,000 | | | 8,455,360 |
Arizona Health Facilities Authority Revenue, | | | | | | |
Banner Health, Series A, Pre-Refunded, 5.00%, 1/01/35 | | | 10,000,000 | | | 10,134,600 |
Banner Health, Series D, BHAC Insured, Pre-Refunded, 5.50%, 1/01/38 | | | 15,000,000 | | | 15,225,750 |
Banner Health, Series D, Pre-Refunded, 5.50%, 1/01/38 | | | 17,500,000 | | | 17,763,375 |
Catholic Healthcare West, Series B, AGMC Insured, 5.00%, 3/01/41 | | | 5,000,000 | | | 5,325,250 |
Catholic Healthcare West, Series B, Sub Series B-1, 5.25%, 3/01/39 | | | 10,000,000 | | | 10,954,700 |
Scottsdale Lincoln Hospital Project, Refunding, Series A, 5.00%, 12/01/39 | | | 15,000,000 | | | 17,004,600 |
Scottsdale Lincoln Hospital Project, Refunding, Series A, 5.00%, 12/01/42 | | | 9,535,000 | | | 10,799,913 |
Arizona IDA Education Revenue, | | | | | | |
Academies of Math and Science Projects, Refunding, Series A, 5.00%, 7/01/42 | | | 1,045,000 | | | 1,178,896 |
Academies of Math and Science Projects, Refunding, Series A, 5.00%, 7/01/47 | | | 1,150,000 | | | 1,291,232 |
Academies of Math and Science Projects, Refunding, Series A, 5.00%, 7/01/51 | | | 1,080,000 | | | 1,203,131 |
Arizona School Facilities Board COP, Pre-Refunded, 5.50%, 9/01/23 | | | 10,000,000 | | | 10,458,700 |
Arizona Sports and Tourism Authority Senior Revenue, Multipurpose Stadium Facility Project, Refunding, Series A, 5.00%, 7/01/36 | | | 3,160,000 | | | 3,409,103 |
Arizona State Board of Regents COP, University of Arizona, Refunding, Series C, 5.00%, 6/01/31 | | | 7,025,000 | | | 7,975,974 |
Arizona State COP, | | | | | | |
Department of Administration, Series A, AGMC Insured, 5.25%, 10/01/26 | | | 8,500,000 | | | 9,232,530 |
Department of Administration, Series A, AGMC Insured, 5.00%, 10/01/29 | | | 5,855,000 | | | 6,318,365 |
Department of Administration, Series B, AGMC Insured, 5.00%, 10/01/28 | | | 5,000,000 | | | 5,491,300 |
Department of Administration, Series B, AGMC Insured, 5.00%, 10/01/29 | | | 3,000,000 | | | 3,292,380 |
| | | | | | |
50 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Arizona Tax-Free Income Fund (continued)
| | | | | | |
| | | Principal
Amount | | | Value |
| Municipal Bonds (continued) | | | | | | |
Arizona (continued) | | | | | | |
Arizona State Lottery Revenue, | | | | | | |
Series A, AGMC Insured, 5.00%, 7/01/28 | | $ | 15,540,000 | | | $ 16,916,378 |
Series A, AGMC Insured, 5.00%, 7/01/29 | | | 7,500,000 | | | 8,155,275 |
Arizona Transportation Board Highway Revenue, | | | | | | |
Refunding, 5.00%, 7/01/31 | | | 10,000,000 | | | 11,938,500 |
Subordinated, Refunding, Series A, 5.00%, 7/01/38 | | | 5,750,000 | | | 6,607,095 |
Subordinated, Series A, Pre-Refunded, 5.00%, 7/01/36 | | | 10,000,000 | | | 11,466,800 |
Central Arizona Water Conservation District Water Delivery O and M Revenue, | | | | | | |
Central Arizona Project, 5.00%, 1/01/34 | | | 1,000,000 | | | 1,176,020 |
Central Arizona Project, 5.00%, 1/01/36 | | | 1,000,000 | | | 1,169,510 |
El Mirage GO, AGMC Insured, 5.00%, 7/01/42. | | | 2,200,000 | | | 2,479,070 |
Gilbert Public Facilities Municipal Property Corp. Revenue, 5.50%, 7/01/28. | | | 10,000,000 | | | 10,828,100 |
Gilbert Water Resources Municipal Property Corp. Water System Development Fee and Water Utility Revenue, sub. lien, NATL Insured, Pre-Refunded, 5.00%, 10/01/29 | | | 13,500,000 | | | 13,539,690 |
Glendale IDA Hospital Revenue, John C. Lincoln Health Network, Pre-Refunded, 5.00%, 12/01/42 | | | 12,870,000 | | | 12,999,858 |
Glendale IDAR, | | | | | | |
Midwestern University, 5.00%, 5/15/35 | | | 5,000,000 | | | 5,444,650 |
Midwestern University, 5.125%, 5/15/40 | | | 10,000,000 | | | 10,891,600 |
Midwestern University, Refunding, 5.00%, 5/15/31 | | | 3,455,000 | | | 3,955,215 |
Senior Living, Royal Oaks Life Care Community, Refunding, 5.00%, 5/15/39 | | | 8,500,000 | | | 9,519,320 |
Glendale Municipal Property Corp. Excise Tax Revenue, | | | | | | |
Subordinate, Refunding, Series C, 5.00%, 7/01/38. | | | 12,000,000 | | | 13,497,960 |
Subordinate, Refunding, Series C, AGMC Insured, 5.00%, 7/01/38 | | | 6,530,000 | | | 7,414,815 |
Goodyear Water and Sewer Revenue, | | | | | | |
sub. lien, Obligations, AGMC Insured, 5.00%, 7/01/45 | | | 1,000,000 | | | 1,143,930 |
sub. lien, Obligations, Refunding, AGMC Insured, 5.25%, 7/01/31 | | | 1,000,000 | | | 1,133,500 |
sub. lien, Obligations, Refunding, AGMC Insured, 5.50%, 7/01/41 | | | 1,500,000 | | | 1,709,295 |
Lake Havasu Wastewater System Revenue, | | | | | | |
senior lien, Refunding, Series B, AGMC Insured, 5.00%, 7/01/40 | | | 15,000,000 | | | 17,132,700 |
senior lien, Refunding, Series B, AGMC Insured, 5.00%, 7/01/43 | | | 9,155,000 | | | 10,415,552 |
Marana Municipal Property Corp. Municipal Facilities Revenue, Series A, Pre-Refunded, 5.00%, 7/01/28 | | | 3,000,000 | | | 3,102,420 |
Maricopa County Cartwright Elementary School District No. 83 GO, School Improvement, Project of 2010, Series A, AGMC Insured, 5.375%, 7/01/30 | | | 5,415,000 | | | 6,169,309 |
Maricopa County Hospital Revenue, Sun Health Corp., Pre-Refunded, 5.00%, 4/01/35 | | | 12,090,000 | | | 14,727,796 |
Maricopa County IDA, | | | | | | |
MFHR, Senior, National Voluntary Health Facilities II Project, Series A, AGMC Insured, ETM, 5.50%, 1/01/18 | | | 245,000 | | | 248,606 |
MFHR, Senior, Western Groves Apartments Project, Series A-1, AMBAC Insured, 5.30%, 12/01/22 | | | 1,060,000 | | | 1,060,466 |
Maricopa County IDA Education Revenue, | | | | | | |
Greathearts Projects, Refunding, Series A, 5.00%, 7/01/37. | | | 1,000,000 | | | 1,163,430 |
Greathearts Projects, Refunding, Series A, 5.00%, 7/01/52. | | | 1,000,000 | | | 1,133,470 |
Reid Traditional Schools Projects, 5.00%, 7/01/36 | | | 1,120,000 | | | 1,222,491 |
Reid Traditional Schools Projects, 5.00%, 7/01/47 | | | 2,125,000 | | | 2,233,099 |
Maricopa County IDA Health Facility Revenue, Catholic Healthcare West, Refunding, Series A, 6.00%, 7/01/39 | | | 4,860,000 | | | 5,251,862 |
Maricopa County IDA Senior Living Facilities Revenue, | | | | | | |
Christian Care Retirement Apartments Inc. Project, Refunding, Series A, 5.00%, 1/01/36 | | | 5,000,000 | | | 5,665,700 |
Christian Care Retirement Apartments Inc. Project, Refunding, Series D, 5.00%, 1/01/40 | | | 5,000,000 | | | 5,634,150 |
Maricopa County IDAR, Banner Health Obligation Group, Refunding, Series A, 5.00%, 1/01/38 | | | 20,000,000 | | | 23,354,200 |
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 51 |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Arizona Tax-Free Income Fund (continued)
| | | | | | |
| | | Principal
Amount | | | Value |
| Municipal Bonds (continued) | | | | | | |
Arizona (continued) | | | | | | |
Maricopa County PCC, | | | | | | |
PCR, El Paso Electric Co. Palo Verde Project, Refunding, Series A, 4.50%, 8/01/42 | | $ | 10,000,000 | | | $ 10,162,300 |
PCR, El Paso Electric Co. Palo Verde Project, Series A, 7.25%, 2/01/40. | | | 10,000,000 | | | 10,754,300 |
PCR, Public Service Co. of New Mexico Palo Verde Project, Refunding, Series A, 6.25%, 1/01/38 | | | 5,000,000 | | | 5,492,000 |
PCR, Southern California Edison Co., Refunding, Series B, 5.00%, 6/01/35 | | | 14,745,000 | | | 16,002,896 |
Maricopa County USD No. 11 Peoria GO, School Improvement, 5.00%, 7/01/31 | | | 5,100,000 | | | 5,884,890 |
McAllister Academic Village LLC Revenue, | | | | | | |
Arizona State University Hassayampa Academic Village Project, Assured Guaranty, Pre-Refunded, 5.25%, 7/01/33 | | | 2,525,000 | | | 2,616,355 |
Arizona State University Hassayampa Academic Village Project, Assured Guaranty, Pre-Refunded, 5.00%, 7/01/38 | | | 3,825,000 | | | 3,955,585 |
Arizona State University Hassayampa Academic Village Project, Pre-Refunded, 5.25%, 7/01/33 | | | 5,000,000 | | | 5,180,900 |
Arizona State University Hassayampa Academic Village Project, Pre-Refunded, 5.00%, 7/01/38 | | | 5,000,000 | | | 5,170,700 |
Arizona State University Hassayampa Academic Village Project, Refunding, 5.00%, 7/01/33 | | | 2,000,000 | | | 2,372,600 |
Arizona State University Hassayampa Academic Village Project, Refunding, 5.00%, 7/01/35 | | | 2,500,000 | | | 2,942,050 |
Arizona State University Hassayampa Academic Village Project, Refunding, 5.00%, 7/01/36 | | | 4,140,000 | | | 4,861,395 |
Arizona State University Hassayampa Academic Village Project, Refunding, 5.00%, 7/01/38 | | | 4,515,000 | | | 5,278,622 |
Arizona State University Hassayampa Academic Village Project, Refunding, 5.00%, 7/01/39 | | | 4,150,000 | | | 4,841,307 |
Mohave County Union High School District No. 2 Colorado River GO, School Improvement, 5.00%, 7/01/35 . | | | 1,000,000 | | | 1,173,620 |
Navajo County USD No. 6 Heber-Overgaard GO, School Improvement, Project of 2008, Assured Guaranty, Pre-Refunded, 5.50%, 7/01/28 | | | 1,045,000 | | | 1,131,735 |
Phoenix Civic Improvement Corp. Airport Revenue, | | | | | | |
junior lien, Series A, 5.00%, 7/01/40. | | | 10,000,000 | | | 10,936,300 |
senior lien, Series A, 5.00%, 7/01/38 | | | 10,000,000 | | | 10,307,100 |
Phoenix Civic Improvement Corp. Distribution Revenue, | | | | | | |
Capital Appreciation, Civic Plaza Expansion Project, Series B, NATL Insured, 5.50%, 7/01/27 | | | 3,945,000 | | | 4,977,525 |
Capital Appreciation, Civic Plaza Expansion Project, Series B, NATL Insured, 5.50%, 7/01/28 | | | 2,000,000 | | | 2,500,960 |
Capital Appreciation, Civic Plaza Expansion Project, Series B, NATL Insured, 5.50%, 7/01/29 | | | 2,000,000 | | | 2,517,120 |
Capital Appreciation, Civic Plaza Expansion Project, Series B, NATL Insured, 5.50%, 7/01/36 | | | 5,000,000 | | | 6,607,750 |
Capital Appreciation, Civic Plaza Expansion Project, Series B, NATL Insured, 5.50%, 7/01/37 | | | 7,000,000 | | | 9,299,990 |
Phoenix Civic Improvement Corp. Excise Tax Revenue, Subordinate, Refunding, Series A, 5.00%, 7/01/41 | | | 10,000,000 | | | 11,527,400 |
Phoenix Civic Improvement Corp. Wastewater System Revenue, senior lien, Refunding, 5.50%, 7/01/24 | | | 2,500,000 | | | 2,595,525 |
Phoenix Civic Improvement Corp. Water System Revenue, | | | | | | |
junior lien, 5.00%, 7/01/39 | | | 5,000,000 | | | 5,909,900 |
junior lien, Series A, 5.00%, 7/01/39. | | | 10,000,000 | | | 11,639,900 |
junior lien, Series A, Pre-Refunded, 5.00%, 7/01/39 | | | 14,780,000 | | | 15,887,761 |
Phoenix IDA Education Revenue, | | | | | | |
Facility, Great Hearts Academies Projects, Refunding, Series A, 5.00%, 7/01/36 | | | 4,065,000 | | | 4,395,363 |
Facility, Great Hearts Academies Projects, Refunding, Series A, 5.00%, 7/01/41 | | | 1,225,000 | | | 1,317,561 |
Facility, Great Hearts Academies Projects, Refunding, Series A, 5.00%, 7/01/46 | | | 1,335,000 | | | 1,423,123 |
Facility, JMF-Higley 2012 LLC Project, 5.00%, 12/01/34 | | | 1,355,000 | | | 1,538,752 |
Facility, JMF-Higley 2012 LLC Project, 5.00%, 12/01/39 | | | 5,610,000 | | | 6,259,077 |
Phoenix IDA Student Housing Revenue, | | | | | | |
Downtown Phoenix Student Housing LLC, Arizona State University Project, Series A, AMBAC Insured, 5.00%, 7/01/37 | | | 18,095,000 | | | 18,106,762 |
Downtown Phoenix Student Housing LLC, Arizona State University Project, Subordinate, Series C, AMBAC Insured, 5.00%, 7/01/37 | | | 8,735,000 | | | 8,740,241 |
Pima County IDA Lease Revenue, | | | | | | |
Clark County Detention Facility Project, 5.125%, 9/01/27 | | | 8,655,000 | | | 8,825,503 |
Clark County Detention Facility Project, 5.00%, 9/01/39 | | | 15,000,000 | | | 15,260,700 |
| | | | | | |
52 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Arizona Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| Municipal Bonds (continued) | | | | | | | | |
Arizona (continued) | | | | | | | | |
Pima County IDAR, | | | | | | | | |
Senior Living Facility, Christian Care Tucson Inc. Project, Refunding, Series A, 5.00%, 12/15/32 | | $ | 1,765,000 | | | $ | 2,013,583 | |
Senior Living Facility, Christian Care Tucson Inc. Project, Refunding, Series A, 5.00%, 6/15/37 | | | 2,240,000 | | | | 2,515,789 | |
Senior Living Facility, Christian Care Tucson Inc. Project, Series C, 5.00%, 12/15/47 | | | 3,840,000 | | | | 4,265,280 | |
Pima County USD No. 6 Marana GO, School Improvement, Project of 2014, Series C, BAM Insured, 5.00%, 7/01/36 | | | 2,385,000 | | | | 2,810,222 | |
Pima County USD No. 20 Vail GO, School Improvement and Refunding, BAM Insured, 5.00%, 7/01/36 | | | 3,305,000 | | | | 3,838,757 | |
Pima County USD No. 30 Sahuarita GO, | | | | | | | | |
School Improvement, BAM Insured, 5.00%, 7/01/33 | | | 2,665,000 | | | | 3,152,642 | |
School Improvement, BAM Insured, 5.00%, 7/01/34 | | | 2,800,000 | | | | 3,296,608 | |
Pinal County Community College District Revenue, Central Arizona College, BAM Insured, 5.00%, 7/01/34 | | | 1,065,000 | | | | 1,229,830 | |
Pinal County Electrical District No. 3 Electric System Revenue, | | | | | | | | |
Pre-Refunded, 5.25%, 7/01/33 | | | 1,500,000 | | | | 1,737,075 | |
Pre-Refunded, 5.25%, 7/01/41 | | | 6,800,000 | | | | 7,874,740 | |
Refunding, 5.00%, 7/01/35 | | | 1,195,000 | | | | 1,406,300 | |
Pinal County Electrical District No. 4 Electric System Revenue, | | | | | | | | |
Pre-Refunded, 6.00%, 12/01/23 | | | 525,000 | | | | 558,301 | |
Pre-Refunded, 6.00%, 12/01/28 | | | 740,000 | | | | 786,938 | |
Pre-Refunded, 6.00%, 12/01/38 | | | 1,150,000 | | | | 1,222,945 | |
Rio Nuevo Multipurpose Facilities District Excise Tax Revenue, sub. lien, Assured Guaranty, Pre-Refunded, 6.50%, 7/15/24 | | | 4,220,000 | | | | 4,424,923 | |
Salt River Project Agricultural Improvement and Power District Electric System Revenue, | | | | | | | | |
Refunding, Series A, 5.00%, 12/01/30 | | | 4,500,000 | | | | 5,215,140 | |
Refunding, Series A, 5.00%, 1/01/38 | | | 13,395,000 | | | | 16,015,464 | |
Refunding, Series A, 5.00%, 12/01/41 | | | 5,340,000 | | | | 6,248,975 | |
Salt River Project, Series A, 5.00%, 1/01/39 | | | 5,000,000 | | | | 5,243,150 | |
Salt River Project, Series A, Pre-Refunded, 5.00%, 1/01/38 | | | 7,000,000 | | | | 7,094,220 | |
Salt Verde Financial Corp. Senior Gas Revenue, | | | | | | | | |
5.00%, 12/01/32 | | | 10,000,000 | | | | 11,982,400 | |
5.00%, 12/01/37 | | | 5,000,000 | | | | 6,088,950 | |
Scottsdale Municipal Property Corp. Excise Tax Revenue, Water and Sewer Improvements Project, Pre-Refunded, 5.00%, 7/01/33 | | | 10,660,000 | | | | 11,864,473 | |
Student and Academic Services LLC Lease Revenue, | | | | | | | | |
Northern Arizona University Project, BAM Insured, 5.00%, 6/01/33 | | | 1,000,000 | | | | 1,134,820 | |
Northern Arizona University Project, BAM Insured, 5.00%, 6/01/39 | | | 1,400,000 | | | | 1,572,284 | |
Northern Arizona University Project, BAM Insured, 5.00%, 6/01/44 | | | 3,155,000 | | | | 3,533,032 | |
Tempe Excise Tax Revenue, Series A, Pre-Refunded, 5.00%, 7/01/31 | | | 2,325,000 | | | | 2,670,728 | |
Town of Gilbert Pledged Revenue, sub. lien, Obligations, 5.00%, 7/01/45 | | | 10,000,000 | | | | 11,250,800 | |
Tucson Airport Authority Inc. Revenue, sub. lien, AMBAC Insured, 5.35%, 6/01/31 | | | 10,000,000 | | | | 10,030,300 | |
Tucson IDA Lease Revenue, University of Arizona/Marshall Foundation Project, Series A, AMBAC Insured, 5.00%, 7/15/32 | | | 985,000 | | | | 985,591 | |
Tucson Water System Revenue, | | | | | | | | |
Pre-Refunded, 5.00%, 7/01/28 | | | 1,165,000 | | | | 1,250,115 | |
Pre-Refunded, 5.00%, 7/01/29 | | | 1,670,000 | | | | 1,792,010 | |
Pre-Refunded, 5.00%, 7/01/32 | | | 5,000,000 | | | | 5,733,400 | |
Refunding, 5.00%, 7/01/28 | | | 65,000 | | | | 69,712 | |
Refunding, 5.00%, 7/01/29 | | | 95,000 | | | | 101,833 | |
University Medical Center Corp. Hospital Revenue, | | | | | | | | |
Tucson, Pre-Refunded, 5.625%, 7/01/36 | | | 5,000,000 | | | | 6,138,900 | |
Tucson, Pre-Refunded, 6.00%, 7/01/39 | | | 5,000,000 | | | | 5,878,900 | |
Tucson, Pre-Refunded, 6.50%, 7/01/39 | | | 4,750,000 | | | | 5,216,165 | |
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 53 |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Arizona Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| |
| Municipal Bonds (continued) | | | | | | | | |
Arizona (continued) | | | | | | | | |
Yavapai County IDA Hospital Revenue, | | | | | | | | |
Yavapai Regional Medical Center, Refunding, 5.00%, 8/01/34 | | $ | 4,250,000 | | | $ | 4,761,530 | |
Yavapai Regional Medical Center, Refunding, 5.00%, 8/01/36 | | | 1,310,000 | | | | 1,459,157 | |
Yavapai Regional Medical Center, Series B, Pre-Refunded, 5.625%, 8/01/33 | | | 2,315,000 | | | | 2,412,670 | |
Yavapai Regional Medical Center, Series B, Pre-Refunded, 5.625%, 8/01/37 | | | 12,435,000 | | | | 12,959,633 | |
| | | | | | | | |
| | | | | | | 956,651,114 | |
| | | | | | | | |
| | |
U.S. Territories 1.3% | | | | | | | | |
Guam 1.3% | | | | | | | | |
Guam Power Authority Revenue, | | | | | | | | |
Series A, AGMC Insured, 5.00%, 10/01/39 | | | 6,490,000 | | | | 7,280,417 | |
Series A, AGMC Insured, 5.00%, 10/01/44 | | | 5,325,000 | | | | 5,930,506 | |
| | | | | | | | |
| | | | | | | 13,210,923 | |
| | | | | | | | |
| Total Municipal Bonds before Short Term Investments (Cost $912,848,591) | | | | | | | 969,862,037 | |
| | | | | | | | |
| | |
| Short Term Investments 1.9% | | | | | | | | |
Municipal Bonds 1.9% | | | | | | | | |
Arizona 1.9% | | | | | | | | |
aPhoenix IDA Health Care Facilities Revenue, | | | | | | | | |
Mayo Clinic, Series A, SPA Bank of America, Daily VRDN and Put, 0.76%, 11/15/52 | | | 6,200,000 | | | | 6,200,000 | |
Mayo Clinic, Series B, SPA Wells Fargo Bank, Daily VRDN and Put, 0.72%, 11/15/52 | | | 12,700,000 | | | | 12,700,000 | |
| | | | | | | | |
| Total Short Term Investments (Cost $18,900,000) | | | | | | | 18,900,000 | |
| | | | | | | | |
| | |
| Total Investments (Cost $931,748,591) 99.7% | | | | | | | 988,762,037 | |
| Other Assets, less Liabilities 0.3% | | | | | | | 2,727,842 | |
| | | | | | | | |
| | |
| Net Assets 100.0% | | | | | | $ | 991,489,879 | |
| | | | | | | | |
See Abbreviations on page 144.
aVariable rate demand notes (VRDNs) are 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. Unless otherwise noted, the coupon rate is determined based on factors including supply and demand, underlying credit, tax treatment, and current short term rates. The coupon rate shown represents the rate at period end.
| | | | | | |
54 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
Financial Highlights
Franklin Colorado Tax-Free Income Fund
| | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
August 31, 2017 | | | Year Ended February 28, |
| | | (unaudited) | | | 2017 | | | 2016a | | | 2015 | | | 2014 | | | 2013 |
| | | | | | |
| Class A | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance | | | | | | | | | | | | | | | | | | | | | | |
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, beginning of period | | | $11.66 | | | | $11.94 | | | | $12.13 | | | | $11.66 | | | | $12.44 | | | $12.24 |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | |
Net investment incomec | | | 0.19 | | | | 0.44 | | | | 0.46 | | | | 0.47 | | | | 0.47 | | | 0.47 |
Net realized and unrealized gains (losses) | | | 0.02 | | | | (0.28 | ) | | | (0.20 | ) | | | 0.47 | | | | (0.79 | ) | | 0.19 |
| | | | | | |
Total from investment operations | | | 0.21 | | | | 0.16 | | | | 0.26 | | | | 0.94 | | | | (0.32 | ) | | 0.66 |
| | | | | | |
Less distributions from net investment income | | | (0.21 | ) | | | (0.44 | ) | | | (0.45 | ) | | | (0.47 | ) | | | (0.46 | ) | | (0.46) |
| | | | | | |
Net asset value, end of period | | | $11.66 | | | | $11.66 | | | | $11.94 | | | | $12.13 | | | | $11.66 | | | $12.44 |
| | | | | | |
Total returnd | | | 1.78% | | | | 1.31% | | | | 2.26% | | | | 8.22% | | | | (2.56)% | | | 5.48% |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 0.65% | | | | 0.65% | | | | 0.65% | | | | 0.65% | | | | 0.64% | | | 0.65% |
Net investment income | | | 3.25% | | | | 3.67% | | | | 3.87% | | | | 3.94% | | | | 4.00% | | | 3.77% |
| | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | | $558,138 | | | | $553,317 | | | | $553,114 | | | | $549,134 | | | | $520,275 | | | $660,432 |
Portfolio turnover rate | | | 8.58% | | | | 13.61% | | | | 5.17% | | | | 2.20% | | | | 7.74% | | | 9.30% |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year. eRatios are annualized for periods less than one year.
| | | | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | | | Semiannual Report | | 55 |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Colorado Tax-Free Income Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
August 31, 2017 | | | Year Ended February 28, |
| | | (unaudited) | | | 2017 | | | 2016a | | | 2015 | | | 2014 | | | 2013 |
| | | | | | |
| Class C | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance | | | | | | | | | | | | | | | | | | | | | | |
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, beginning of period | | | $11.79 | | | | $12.07 | | | | $12.26 | | | | $11.78 | | | | $12.56 | | | $12.36 |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | |
Net investment incomec | | | 0.16 | | | | 0.38 | | | | 0.40 | | | | 0.41 | | | | 0.41 | | | 0.40 |
Net realized and unrealized gains (losses) | | | 0.02 | | | | (0.29 | ) | | | (0.20 | ) | | | 0.48 | | | | (0.80 | ) | | 0.19 |
| | | | | | |
Total from investment operations | | | 0.18 | | | | 0.09 | | | | 0.20 | | | | 0.89 | | | | (0.39 | ) | | 0.59 |
| | | | | | |
Less distributions from net investment income | | | (0.17 | ) | | | (0.37 | ) | | | (0.39 | ) | | | (0.41 | ) | | | (0.39 | ) | | (0.39) |
| | | | | | |
Net asset value, end of period | | | $11.80 | | | | $11.79 | | | | $12.07 | | | | $12.26 | | | | $11.78 | | | $12.56 |
| | | | | | |
Total returnd | | | 1.57% | | | | 0.73% | | | | 1.67% | | | | 7.64% | | | | (3.07)% | | | 4.84% |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 1.20% | | | | 1.20% | | | | 1.20% | | | | 1.20% | | | | 1.19% | | | 1.20% |
Net investment income | | | 2.70% | | | | 3.12% | | | | 3.32% | | | | 3.39% | | | | 3.45% | | | 3.22% |
| | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | | $111,104 | | | | $115,472 | | | | $111,450 | | | | $109,552 | | | | $107,705 | | | $160,856 |
Portfolio turnover rate | | | 8.58% | | | | 13.61% | | | | 5.17% | | | | 2.20% | | | | 7.74% | | | 9.30% |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | |
56 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Colorado Tax-Free Income Fund (continued)
| | |
| | | Period Ended
August 31, 2017
(unaudited)a |
| |
| Class R6 | | |
| |
Per share operating performance | | |
(for a share outstanding throughout the period) | | |
Net asset value, beginning of period | | $11.64 |
| |
Income from investment operationsb: | | |
Net investment incomec | | 0.03 |
Net realized and unrealized gains (losses) | | 0.02 |
| |
Total from investment operations | | 0.05 |
| |
Less distributions from net investment income | | (0.03) |
| |
Net asset value, end of period | | $11.66 |
| |
Total returnd | | 0.45% |
| |
Ratios to average net assetse | | |
Expenses | | 0.51% |
Net investment income | | 3.39% |
| |
Supplemental data | | |
Net assets, end of period (000’s) | | $5 |
Portfolio turnover rate | | 8.58% |
aFor the period August 1, 2017 (effective date) to August 31, 2017.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | | | Semiannual Report | | 57 |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Colorado Tax-Free Income Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended | | | | | | | | | | | | | | | | |
| | | August 31, 2017 | | | Year Ended February 28, | |
| | | (unaudited) | | | 2017 | | | 2016a | | | 2015 | | | 2014 | | | 2013 | |
| | | | | | |
Advisor Class | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance (for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, beginning of period | | | $11.66 | | | | $11.94 | | | | $12.13 | | | | $11.66 | | | | $12.43 | | | | $12.24 | |
| | | | |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment incomec | | | 0.20 | | | | 0.45 | | | | 0.47 | | | | 0.48 | | | | 0.48 | | | | 0.48 | |
Net realized and unrealized gains (losses) | | | 0.01 | | | | (0.28) | | | | (0.19) | | | | 0.48 | | | | (0.78) | | | | 0.18 | |
| | | | |
| | | | | | |
Total from investment operations | | | 0.21 | | | | 0.17 | | | | 0.28 | | | | 0.96 | | | | (0.30) | | | | 0.66 | |
| | | | |
| | | | | | |
Less distributions from net investment income | | | (0.21) | | | | (0.45) | | | | (0.47) | | | | (0.49) | | | | (0.47) | | | | (0.47) | |
| | | | |
| | | | | | |
Net asset value, end of period | | | $11.66 | | | | $11.66 | | | | $11.94 | | | | $12.13 | | | | $11.66 | | | | $12.43 | |
| | | | |
| | | | | | |
Total returnd | | | 1.83% | | | | 1.41% | | | | 2.36% | | | | 8.34% | | | | (2.39)% | | | | 5.50% | |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses. | | | 0.55% | | | | 0.55% | | | | 0.55% | | | | 0.55% | | | | 0.54% | | | | 0.55% | |
Net investment income | | | 3.35% | | | | 3.77% | | | | 3.97% | | | | 4.04% | | | | 4.10% | | | | 3.87% | |
| | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | | $86,227 | | | | $73,538 | | | | $50,589 | | | | $44,988 | | | | $34,393 | | | | $41,990 | |
Portfolio turnover rate | | | 8.58% | | | | 13.61% | | | | 5.17% | | | | 2.20% | | | | 7.74% | | | | 9.30% | |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | |
58 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
Statement of Investments, August 31, 2017 (unaudited)
Franklin Colorado Tax-Free Income Fund
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| Municipal Bonds 96.3% | | | | | | | | |
Colorado 93.7% | | | | | | | | |
Adams 12 Five Star Schools GO, Series B, 5.00%, 12/15/36 | | $ | 5,000,000 | | | $ | 5,888,400 | |
Adams and Weld Counties School District No. 27J Brighton GO, 5.00%, 12/01/40 | | | 7,500,000 | | | | 8,705,850 | |
Adams State College Board of Trustees Auxiliary Facilities Revenue, | | | | | | | | |
Improvement, Series A, Pre-Refunded, 5.50%, 5/15/34 | | | 2,000,000 | | | | 2,155,140 | |
Improvement, Series A, Pre-Refunded, 5.50%, 5/15/39 | | | 2,150,000 | | | | 2,316,776 | |
Adams State College Board of Trustees Institutional Enterprise Revenue, | | | | | | | | |
5.00%, 5/15/37 | | | 630,000 | | | | 721,211 | |
Pre-Refunded, 5.00%, 5/15/32 | | | 1,360,000 | | | | 1,578,185 | |
Pre-Refunded, 5.00%, 5/15/37 | | | 370,000 | | | | 428,449 | |
Anthem West Metropolitan District GO, City and County of Broomfield, Refunding, BAM Insured, 5.00%, 12/01/35 | | | 3,000,000 | | | | 3,392,760 | |
Arapahoe County School District No. 1 GO, Englewood Schools, 5.00%, 12/01/42 | | | 7,000,000 | | | | 8,245,370 | |
Auraria Higher Education Center Parking Enterprise Revenue, 5th and Walnut Parking Garage Project, Series A, AGMC Insured, 5.00%, 4/01/34 | | | 6,150,000 | | | | 7,054,850 | |
Aurora COP, Refunding, Series A, 5.00%, 12/01/30 | | | 5,680,000 | | | | 6,138,944 | |
Aurora Hospital Revenue, The Children’s Hospital Assn. Project, Series A, 5.00%, 12/01/40 | | | 2,500,000 | | | | 2,678,600 | |
Board of Trustees for Western State College Revenue, | | | | | | | | |
Pre-Refunded, 5.00%, 5/15/34 | | | 2,000,000 | | | | 2,138,380 | |
Pre-Refunded, 5.00%, 5/15/39 | | | 2,000,000 | | | | 2,138,380 | |
Board of Trustees of the Colorado School of Mines Revenue, Golden, Enterprise Improvement, Series A, Pre-Refunded, 5.25%, 12/01/37 | | | 2,000,000 | | | | 2,108,460 | |
Boulder Larimer and Weld Counties St. Vrain Valley School District No. RE-1J GO, Pre-Refunded, 5.00%, 12/15/33 | | | 5,300,000 | | | | 5,576,183 | |
Boulder Valley School District No. RE-2 Boulder GO, | | | | | | | | |
5.00%, 12/01/34 | | | 6,000,000 | | | | 6,399,060 | |
5.00%, 12/01/41 | | | 5,000,000 | | | | 5,885,650 | |
Brighton Water Activity Enterprise Revenue, Water System Project, Series A, Assured Guaranty, Pre- Refunded, 5.25%, 12/01/34 | | | 5,380,000 | | | | 5,895,619 | |
Castle Rock Sales and Use Tax Revenue, | | | | | | | | |
5.00%, 6/01/31 | | | 1,800,000 | | | | 2,108,250 | |
5.00%, 6/01/32 | | | 1,845,000 | | | | 2,156,565 | |
5.00%, 6/01/35 | | | 2,775,000 | | | | 3,220,693 | |
Colorado Educational and Cultural Facilities Authority Revenue, | | | | | | | | |
Alexander Dawson School, Colorado Project, 5.00%, 2/15/40 | | | 5,280,000 | | | | 5,676,528 | |
Student Housing, Campus Village Apartments Project, Refunding, 5.50%, 6/01/38 | | | 13,500,000 | | | | 13,876,110 | |
University of Denver Project, Refunding, NATL Insured, 5.00%, 3/01/35 | | | 5,000,000 | | | | 6,316,050 | |
University of Denver Project, Series A, 5.00%, 3/01/47. | | | 3,950,000 | | | | 4,576,786 | |
Colorado Health Facilities Authority Revenue, | | | | | | | | |
Boulder Community Hospital Project, Refunding, Series A, 6.00%, 10/01/35 | | | 5,500,000 | | | | 6,177,930 | |
Catholic Health Initiatives, Refunding, Series A, 5.00%, 7/01/39 | | | 5,000,000 | | | | 5,134,400 | |
Catholic Health Initiatives, Series D, 6.125%, 10/01/28 | | | 2,500,000 | | | | 2,622,175 | |
Catholic Health Initiatives, Series D, 6.25%, 10/01/33 | | | 2,000,000 | | | | 2,096,660 | |
Children’s Hospital Colorado Project, Series A, 5.00%, 12/01/44 | | | 5,000,000 | | | | 5,660,600 | |
Covenant Retirement Communities Inc., Refunding, Series A, 5.00%, 12/01/35 | | | 7,150,000 | | | | 7,759,967 | |
Covenant Retirement Communities Inc., Series A, 5.75%, 12/01/36 | | | 5,000,000 | | | | 5,748,900 | |
The Evangelical Lutheran Good Samaritan Society Project, 5.50%, 6/01/33 | | | 1,000,000 | | | | 1,127,420 | |
The Evangelical Lutheran Good Samaritan Society Project, 5.625%, 6/01/43 | | | 4,000,000 | | | | 4,506,680 | |
The Evangelical Lutheran Good Samaritan Society Project, Refunding, 5.25%, 6/01/31 | | | 1,155,000 | | | | 1,156,940 | |
The Evangelical Lutheran Good Samaritan Society Project, Refunding, 5.00%, 12/01/33 | | | 2,500,000 | | | | 2,712,200 | |
a The Evangelical Lutheran Good Samaritan Society Project, Refunding, 5.00%, 6/01/47 | | | 6,000,000 | | | | 6,640,560 | |
The Evangelical Lutheran Good Samaritan Society Project, Refunding, Series A, 5.00%, 6/01/40 | | | 4,000,000 | | | | 4,394,800 | |
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 59 |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Colorado Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| Municipal Bonds (continued) | | | | | | | | |
Colorado (continued) | | | | | | | | |
Colorado Health Facilities Authority Revenue, (continued) | | | | | | | | |
The Evangelical Lutheran Good Samaritan Society Project, Refunding, Series A, 5.00%, 6/01/45 | | $ | 2,750,000 | | | $ | 3,015,595 | |
Hospital, NCMC Inc. Project, Series A, AGMC Insured, Pre-Refunded, 5.50%, 5/15/30 | | | 7,900,000 | | | | 8,498,899 | |
Hospital, Parkview Medical Center Inc. Project, 5.00%, 9/01/46. | | | 5,000,000 | | | | 5,614,950 | |
Hospital, Parkview Medical Center Inc. Project, Series A, Pre-Refunded, 5.00%, 9/01/37 | | | 8,000,000 | | | | 8,000,000 | |
Hospital, Refunding, Series C, AGMC Insured, 5.25%, 3/01/40 | | | 5,000,000 | | | | 5,256,950 | |
Poudre Valley Health Care Inc. and Medical Center of the Rockies, Refunding, Series A, AGMC Insured, 5.20%, 3/01/31 | | | 9,500,000 | | | | 10,020,315 | |
Sisters of Charity of Leavenworth Health System, Refunding, Series A, 5.00%, 1/01/40 | | | 7,320,000 | | | | 7,811,684 | |
Valley View Hospital Assn. Project, 5.00%, 5/15/40 | | | 2,000,000 | | | | 2,236,420 | |
Valley View Hospital Assn. Project, 5.00%, 5/15/45 | | | 1,000,000 | | | | 1,111,730 | |
Valley View Hospital Assn. Project, Refunding, 5.75%, 5/15/36 | | | 2,000,000 | | | | 2,046,020 | |
Yampa Valley Medical Center Project, Refunding, 5.125%, 9/15/29 | | | 4,000,000 | | | | 4,008,160 | |
Colorado High Performance Transportation Enterprise Revenue, C-470 Express Lanes, 5.00%, 12/31/47 | | | 2,555,000 | | | | 2,856,413 | |
Colorado Mesa University Enterprise Revenue, Board of Trustees, Colorado Mesa University, 5.00%, 5/15/45 | | | 4,000,000 | | | | 4,614,520 | |
Colorado School of Mines Institutional Enterprise Revenue, | | | | | | | | |
Board of Trustees, Golden, Series B, 5.00%, 12/01/32 | | | 1,000,000 | | | | 1,162,450 | |
Board of Trustees, Series A, 5.00%, 12/01/42 | | | 2,450,000 | | | | 2,895,606 | |
Board of Trustees, Series A, 5.00%, 12/01/47 | | | 3,000,000 | | | | 3,525,330 | |
Colorado Springs Public Facilities Authority COP, U.S. Olympic Committee Project, Assured Guaranty, 5.00%, 11/01/39 | | | 11,305,000 | | | | 12,144,848 | |
Colorado Springs Utilities System Revenue, | | | | | | | | |
Improvement, Series B-1, 5.00%, 11/15/38 | | | 4,000,000 | | | | 4,680,200 | |
Refunding, Series A, 5.00%, 11/15/40 | | | 3,000,000 | | | | 3,453,930 | |
Refunding, Series A, 5.00%, 11/15/45 | | | 2,665,000 | | | | 3,051,532 | |
Refunding, Series A-2, 5.00%, 11/15/44 | | | 5,000,000 | | | | 5,785,850 | |
Series D-1, 5.25%, 11/15/33 | | | 5,000,000 | | | | 5,655,700 | |
Colorado State Board of Governors University Enterprise System Revenue, | | | | | | | | |
Refunding, Series B, 5.00%, 3/01/41 | | | 1,000,000 | | | | 1,173,060 | |
Series A, 5.00%, 3/01/34 | | | 20,000 | | | | 21,131 | |
Series A, 5.00%, 3/01/39 | | | 145,000 | | | | 152,916 | |
Series A, 5.00%, 3/01/40 | | | 7,000,000 | | | | 7,982,800 | |
Series A, Pre-Refunded, 5.00%, 3/01/34 | | | 2,230,000 | | | | 2,364,335 | |
Series A, Pre-Refunded, 5.00%, 3/01/39 | | | 7,055,000 | | | | 7,479,993 | |
Series C, 5.00%, 3/01/44 | | | 5,135,000 | | | | 5,764,089 | |
Colorado State Building Excellent Schools Today COP, | | | | | | | | |
Series G, 5.00%, 3/15/32 | | | 10,000,000 | | | | 11,226,600 | |
Series I, 5.00%, 3/15/36 | | | 3,000,000 | | | | 3,402,570 | |
Colorado State COP, | | | | | | | | |
UCDHSC Fitzsimons Academic Projects, Refunding, Series A, 5.00%, 11/01/28 | | | 1,500,000 | | | | 1,785,090 | |
UCDHSC Fitzsimons Academic Projects, Refunding, Series A, 5.00%, 11/01/29 | | | 3,105,000 | | | | 3,681,195 | |
Colorado State Higher Education Capital Construction Lease Purchase Financing Program COP, Pre-Refunded, 5.50%, 11/01/27 | | | 7,275,000 | | | | 7,663,922 | |
Colorado Water Resources and Power Development Authority Water Resources Revenue, | | | | | | | | |
Donala Water and Sanitation District Project, Series C, 5.00%, 9/01/36 | | | 1,900,000 | | | | 2,154,011 | |
Fountain Colorado Electric Water and Wastewater Utility Enterprise Project, Series A, AGMC Insured, 5.00%, 9/01/38 | | | 1,210,000 | | | | 1,369,768 | |
Commerce City Northern Infrastructure General Improvement District GO, Refunding and Improvement, AGMC Insured, 5.00%, 12/01/31 | | | 2,040,000 | | | | 2,365,849 | |
Commerce City Sales and Use Tax Revenue, AGMC Insured, 5.00%, 8/01/41 | | | 4,000,000 | | | | 4,587,200 | |
| | | | | | |
60 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Colorado Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Municipal Bonds (continued) | | | | | | | | |
Colorado (continued) | | | | | | | | |
Consolidated Bell Mountain Ranch Metropolitan District GO, Douglas County, Refunding, AGMC Insured, 5.00%, 12/01/39 | | $ | 3,160,000 | | | $ | 3,435,836 | |
Denver City and County Airport System Revenue, Subordinate, Series B, 5.00%, 11/15/43 | | | 5,000,000 | | | | 5,624,150 | |
Denver City and County Board of Water Commissioners Water Revenue, Green Bonds, Series A, 5.00%, 9/15/47 | | | 10,000,000 | | | | 11,940,300 | |
Denver City and County Dedicated Tax Revenue, | | | | | | | | |
Refunding and Improvement, Series A, 5.00%, 8/01/44 | | | 6,915,000 | | | | 7,988,346 | |
Refunding and Improvement, Series A, 4.00%, 8/01/46 | | | 8,040,000 | | | | 8,464,512 | |
Denver City and County School District No. 1 COP, Series C, 5.00%, 12/15/30 | | | 4,000,000 | | | | 4,670,840 | |
Denver City and County School District No. 1 GO, 5.00%, 12/01/41 | | | 12,440,000 | | | | 14,675,468 | |
Denver Convention Center Hotel Authority Revenue, Senior, Refunding, 5.00%, 12/01/40 | | | 9,775,000 | | | | 11,130,011 | |
Denver Health and Hospital Authority Healthcare Revenue, | | | | | | | | |
Recovery Zone Facility, 5.50%, 12/01/30 | | | 1,500,000 | | | | 1,618,125 | |
Recovery Zone Facility, 5.625%, 12/01/40. | | | 4,000,000 | | | | 4,258,960 | |
Refunding, Series A, 5.25%, 12/01/31 | | | 9,250,000 | | | | 9,276,270 | |
Series A, 5.25%, 12/01/45 | | | 9,250,000 | | | | 9,977,235 | |
E-470 Public Highway Authority Revenue, senior bond, Series C, 5.25%, 9/01/25 | | | 2,500,000 | | | | 2,771,225 | |
E-470 Public Highway Authority Senior Revenue, | | | | | | | | |
Capital Appreciation, Series A, NATL Insured, zero cpn., 9/01/33 | | | 3,000,000 | | | | 1,347,630 | |
Capital Appreciation, Series B, NATL Insured, zero cpn., 9/01/32 | | | 7,800,000 | | | | 3,712,566 | |
Capital Appreciation, Series B, NATL Insured, zero cpn., 9/01/34 | | | 14,075,000 | | | | 5,967,096 | |
Eagle River Water and Sanitation District Enterprise Wastewater Revenue, 5.00%, 12/01/42 | | | 3,500,000 | | | | 3,993,220 | |
Eagle River Water and Sanitation District GO, 5.00%, 12/01/45 | | | 1,360,000 | | | | 1,583,910 | |
Erie Wastewater Enterprise Revenue, | | | | | | | | |
Series A, Assured Guaranty, Pre-Refunded, 5.00%, 12/01/33 | | | 2,860,000 | | | | 3,118,315 | |
Series A, Assured Guaranty, Pre-Refunded, 5.00%, 12/01/37 | | | 5,120,000 | | | | 5,582,438 | |
Erie Water Enterprise Revenue, Series A, AGMC Insured, Pre-Refunded, 5.00%, 12/01/32 | | | 10,000,000 | | | | 10,099,700 | |
Fort Lewis College Board of Trustees Enterprise Revenue, | | | | | | | | |
Series B, NATL Insured, 5.00%, 10/01/37 | | | 1,515,000 | | | | 1,518,727 | |
Series B, NATL Insured, Pre-Refunded, 5.00%, 10/01/37 | | | 11,315,000 | | | | 11,348,266 | |
Gunnison Watershed School District No. RE-1J GO, Gunnison and Saguache Counties, Pre-Refunded, 5.25%, 12/01/33 | | | 1,240,000 | | | | 1,307,245 | |
Ignacio School District 11JT GO, La Plata and Archuleta Counties, Pre-Refunded, 5.00%, 12/01/31 | | | 1,215,000 | | | | 1,410,579 | |
Meridian Metropolitan District GO, In Douglas County, Refunding, Series A, 5.00%, 12/01/41 | | | 5,000,000 | | | | 5,586,750 | |
Mesa State College Board of Trustees Auxiliary Facilities System Enterprise Revenue, | | | | | | | | |
Pre-Refunded, 6.00%, 5/15/38 | | | 7,000,000 | | | | 7,070,000 | |
Refunding, Series A, 5.00%, 5/15/33 | | | 3,455,000 | | | | 3,664,546 | |
Metropolitan State University of Denver Institutional Enterprise Revenue, Aerospace and Engineering Sciences Building Project, 5.00%, 12/01/45 | | | 4,000,000 | | | | 4,620,840 | |
Park 70 Metropolitan District GO, | | | | | | | | |
City of Aurora, Refunding and Improvement, 5.00%, 12/01/36 | | | 1,000,000 | | | | 1,073,330 | |
City of Aurora, Refunding and Improvement, 5.00%, 12/01/46 | | | 1,500,000 | | | | 1,600,455 | |
Park Creek Metropolitan District Revenue, | | | | | | | | |
Senior Limited Property Tax Supported, Improvement, Assured Guaranty, Pre-Refunded, 6.375%, 12/01/37 | | | 7,000,000 | | | | 7,844,760 | |
Senior Limited Property Tax Supported, Refunding, Series A, 5.00%, 12/01/45 | | | 7,000,000 | | | | 7,594,020 | |
Senior Limited Property Tax Supported, Series A, AGMC Insured, Pre-Refunded, 6.00%, 12/01/38 | | | 2,500,000 | | | | 2,897,025 | |
Senior Limited Property Tax Supported, Series A, AGMC Insured, Pre-Refunded, 6.125%, 12/01/41 | | | 2,500,000 | | | | 2,906,950 | |
Platte River Power Authority Power Revenue, Series II, 5.00%, 6/01/37 | | | 12,000,000 | | | | 13,812,120 | |
Poudre Tech Metropolitan District Unlimited Property Tax Supported Revenue, Refunding and Improvement, Series A, AGMC Insured, 5.00%, 12/01/39 | | | 7,435,000 | | | | 7,975,525 | |
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 61 |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Colorado Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Municipal Bonds (continued) | | | | | | | | |
Colorado (continued) | | | | | | | | |
Public Authority for Colorado Energy Natural Gas Purchase Revenue, 6.50%, 11/15/38 | | $ | 9,900,000 | | | $ | 14,167,296 | |
Pueblo County COP, County Judicial Complex Project, AGMC Insured, 5.00%, 9/15/42 | | | 10,000,000 | | | | 11,309,800 | |
Pueblo Urban Renewal Authority Revenue, | | | | | | | | |
Refunding and Improvement, Series B, 5.25%, 12/01/28 | | | 1,000,000 | | | | 1,126,570 | |
Refunding and Improvement, Series B, 5.50%, 12/01/31 | | | 1,010,000 | | | | 1,144,067 | |
Refunding and Improvement, Series B, 5.25%, 12/01/38 | | | 3,615,000 | | | | 3,992,189 | |
Rangeview Library District COP, Rangeview Library District Projects, Assured Guaranty, Pre-Refunded, 5.00%, 12/15/30 | | | 3,840,000 | | | | 4,042,637 | |
Regional Transportation District COP, Series A, 5.375%, 6/01/31 | | | 19,000,000 | | | | 21,030,910 | |
Regional Transportation District Sales Tax Revenue, | | | | | | | | |
FasTracks Project, Series A, 5.00%, 11/01/38 | | | 10,000,000 | | | | 11,218,400 | |
FasTracks Project, Series A, 5.00%, 11/01/41 | | | 10,000,000 | | | | 11,836,000 | |
FasTracks Project, Series A, 5.00%, 11/01/46 | | | 11,000,000 | | | | 12,951,290 | |
South Timnath Metropolitan District No. 2 GO, Limited Tax, Refunding and Improvement, 5.00%, 12/01/42 | | | 5,690,000 | | | | 6,245,230 | |
a Sterling Hills West Metropolitan District GO, Arapahoe County, Refunding, 5.00%, 12/01/39 | | | 1,125,000 | | | | 1,255,669 | |
Thompson Crossing Metropolitan District No. 5 GO, Series B, AGMC Insured, 5.00%, 12/01/46 | | | 4,500,000 | | | | 5,066,370 | |
Triview Metropolitan District GO, El Paso County, Pre-Refunded, 5.00%, 11/01/34 | | | 10,855,000 | | | | 11,799,168 | |
University of Colorado Enterprise Revenue, | | | | | | | | |
Refunding, Series A, 5.00%, 6/01/38 | | | 5,655,000 | | | | 6,639,253 | |
Series A, Pre-Refunded, 5.375%, 6/01/38 | | | 3,000,000 | | | | 3,231,780 | |
University of Colorado Hospital Authority Revenue, Refunding, Series A, 6.00%, 11/15/29 | | | 5,000,000 | | | | 5,491,200 | |
University of Northern Colorado Greeley Institutional Enterprise Revenue, | | | | | | | | |
Refunding, Series A, 5.00%, 6/01/30 | | | 1,690,000 | | | | 1,900,811 | |
Series A, 5.00%, 6/01/46 | | | 4,000,000 | | | | 4,597,360 | |
Weld County School District No. Re-4 GO, 5.25%, 12/01/41 | | | 5,000,000 | | | | 5,986,150 | |
Woodmoor Water and Sanitation District No. 1 Enterprise Water and Wastewater Revenue, 5.00%, 12/01/36 | | | 5,000,000 | | | | 5,671,500 | |
| | | | | | | | |
| | | | | | | 707,909,053 | |
| | | | | | | | |
| | |
| U.S. Territories 2.6% | | | | | | | | |
Guam 0.8% | | | | | | | | |
Guam Government Limited Obligation Revenue, | | | | | | | | |
Section 30, Series A, Pre-Refunded, 5.375%, 12/01/24 | | | 2,000,000 | | | | 2,196,260 | |
Section 30, Series A, Pre-Refunded, 5.75%, 12/01/34 | | | 3,565,000 | | | | 3,944,352 | |
| | | | | | | | |
| | | | | | | 6,140,612 | |
| | | | | | | | |
Puerto Rico 1.8% | | | | | | | | |
b Puerto Rico Electric Power Authority Power Revenue, Series XX, 5.25%, 7/01/40 | | | 11,410,000 | | | | 6,747,874 | |
b Puerto Rico Sales Tax FICO Sales Tax Revenue, | | | | | | | | |
First Subordinate, Refunding, Series C, 5.375%, 8/01/38 | | | 2,370,000 | | | | 616,200 | |
First Subordinate, Series A, 6.375%, 8/01/39 | | | 10,000,000 | | | | 2,600,000 | |
First Subordinate, Series A, 5.50%, 8/01/42 | | | 3,000,000 | | | | 780,000 | |
Senior, Series C, 5.25%, 8/01/40 | | | 4,560,000 | | | | 2,897,424 | |
| | | | | | | | |
| | | | | | | 13,641,498 | |
| | | | | | | | |
Total U.S. Territories | | | | | | | 19,782,110 | |
| | | | | | | | |
| Total Municipal Bonds before Short Term Investments (Cost $701,693,004) | | | | | | | 727,691,163 | |
| | | | | | | | |
| | | | | | |
62 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Colorado Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| Short Term Investments 3.3% | | | | | | | | |
Municipal Bonds 3.3% | | | | | | | | |
Colorado 3.3% | | | | | | | | |
c Colorado Educational and Cultural Facilities Authority Revenue, National Jewish Federation Bond Program, Series B-4, LOC Toronto Dominion Bank, Daily VRDN and Put, 0.82%, 12/01/35 | | $ | 4,900,000 | | | $ | 4,900,000 | |
c Denver City and County COP, Refunding, Series A2, SPA JPMorgan Chase Bank, Daily VRDN and Put, 0.82%, 12/01/29 | | | 20,000,000 | | | | 20,000,000 | |
| | | | | | | | |
| Total Short Term Investments (Cost $24,900,000) | | | | | | | 24,900,000 | |
| | | | | | | | |
| Total Investments (Cost $726,593,004) 99.6% | | | | | | | 752,591,163 | |
| Other Assets, less Liabilities 0.4% | | | | | | | 2,882,866 | |
| | | | | | | | |
| Net Assets 100.0% | | | | | | $ | 755,474,029 | |
| | | | | | | | |
See Abbreviations on page 144.
aSecurity purchased on a when-issued basis. See Note 1(b).
bSee Note 6 regarding defaulted securities.
cVariable rate demand notes (VRDNs) are 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. Unless otherwise noted, the coupon rate is determined based on factors including supply and demand, underlying credit, tax treatment, and current short term rates. 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 | | 63 |
FRANKLIN TAX-FREE TRUST
Financial Highlights
Franklin Connecticut Tax-Free Income Fund
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended | | | | | | | | | | | | | | | | |
| | | August 31, 2017 | | | Year Ended February 28, | |
| | | | | | | | |
| | | (unaudited) | | | 2017 | | | 2016a | | | 2015 | | | 2014 | | | 2013 | |
| | | | | | |
| Class A | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance | | | | | | | | | | | | | | | | | | | | | | | | |
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, beginning of period | | | $10.42 | | | | $10.69 | | | | $10.86 | | | | $10.65 | | | | $11.43 | | | | $11.36 | |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment incomec | | | 0.16 | | | | 0.37 | | | | 0.39 | | | | 0.41 | | | | 0.40 | | | | 0.40 | |
Net realized and unrealized gains (losses) | | | (0.08) | | | | (0.28) | | | | (0.17) | | | | 0.21 | | | | (0.80) | | | | 0.08 | |
| | | | | | |
Total from investment operations | | | 0.08 | | | | 0.09 | | | | 0.22 | | | | 0.62 | | | | (0.40) | | | | 0.48 | |
| | | | | | |
Less distributions from net investment income | | | (0.18) | | | | (0.36) | | | | (0.39) | | | | (0.41) | | | | (0.38) | | | | (0.41) | |
| | | | | | |
Net asset value, end of period | | | $10.32 | | | | $10.42 | | | | $10.69 | | | | $10.86 | | | | $10.65 | | | | $11.43 | |
| | | | | | |
Total returnd | | | 0.76% | | | | 0.82% | | | | 2.09% | | | | 5.88% | | | | (3.34)% | | | | 4.25% | |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 0.72% | | | | 0.71% | | | | 0.69% | | | | 0.68% | | | | 0.67% | | | | 0.66% | |
Net investment income | | | 3.09% | | | | 3.42% | | | | 3.66% | | | | 3.76% | | | | 3.71% | | | | 3.49% | |
| | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | | $207,529 | | | | $222,705 | | | | $253,012 | | | | $282,020 | | | | $301,323 | | | | $404,713 | |
Portfolio turnover rate | | | 2.02% | | | | 12.40% | | | | 7.86% | | | | 4.63% | | | | 8.24% | | | | 20.69% | |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year. eRatios are annualized for periods less than one year.
| | | | | | |
64 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Connecticut Tax-Free Income Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended August 31, 2017 (unaudited) | | | Year Ended February 28, |
| | | | 2017 | | | 2016a | | | 2015 | | | 2014 | | | 2013 |
| |
| | | | | | |
| Class C | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance | | | | | | | | | | | | | | | | | | | | | | |
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, beginning of period | | | $10.50 | | | | $10.77 | | | | $10.93 | | | | $10.73 | | | | $11.51 | | | $11.43 |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | |
Net investment incomec | | | 0.13 | | | | 0.31 | | | | 0.33 | | | | 0.35 | | | | 0.34 | | | 0.34 |
Net realized and unrealized gains (losses) | | | (0.08 | ) | | | (0.28 | ) | | | (0.16 | ) | | | 0.20 | | | | (0.80 | ) | | 0.08 |
| | | | | | |
Total from investment operations | | | 0.05 | | | | 0.03 | | | | 0.17 | | | | 0.55 | | | | (0.46 | ) | | 0.42 |
| | | | | | |
Less distributions from net investment income | | | (0.15 | ) | | | (0.30 | ) | | | (0.33 | ) | | | (0.35 | ) | | | (0.32 | ) | | (0.34) |
| | | | | | |
Net asset value, end of period | | | $10.40 | | | | $10.50 | | | | $10.77 | | | | $10.93 | | | | $10.73 | | | $11.51 |
| | | | | | |
Total returnd | | | 0.47% | | | | 0.25% | | | | 1.62% | | | | 5.17% | | | | (3.94)% | | | 3.73% |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 1.27% | | | | 1.26% | | | | 1.24% | | | | 1.23% | | | | 1.22% | | | 1.21% |
Net investment income | | | 2.54% | | | | 2.87% | | | | 3.11% | | | | 3.21% | | | | 3.16% | | | 2.94% |
| | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | | $54,130 | | | | $61,813 | | | | $68,311 | | | | $73,569 | | | | $75,730 | | | $122,232 |
Portfolio turnover rate | | | 2.02% | | | | 12.40% | | | | 7.86% | | | | 4.63% | | | | 8.24% | | | 20.69% |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | | | Semiannual Report | | 65 |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Connecticut Tax-Free Income Fund (continued)
| | |
| | | Period Ended August 31, 2017 (unaudited)a |
| |
| Class R6 | | |
| |
Per share operating performance | | |
(for a share outstanding throughout the period) | | |
Net asset value, beginning of period | | $10.30 |
| |
Income from investment operationsb: | | |
Net investment incomec | | 0.03 |
Net realized and unrealized gains (losses) | | 0.01 |
| |
Total from investment operations | | 0.04 |
| |
Less distributions from net investment income | | (0.03) |
| |
Net asset value, end of period | | $10.31 |
| |
Total returnd | | 0.37% |
| |
Ratios to average net assetse | | |
Expenses | | 0.57% |
Net investment income | | 3.24% |
| |
Supplemental data | | |
Net assets, end of period (000’s) | | $5 |
Portfolio turnover rate | | 2.02% |
aFor the period August 1, 2017 (effective date) to August 31, 2017.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
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66 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Connecticut Tax-Free Income Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended August 31, 2017 | | | Year Ended February 28, |
| | | (unaudited) | | | 2017 | | | 2016a | | | 2015 | | | 2014 | | | 2013 |
| | | | | | |
| Advisor Class | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance | | | | | | | | | | | | | | | | | | | | | | |
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $10.42 | | | | $10.68 | | | | $10.85 | | | | $10.64 | | | | $11.42 | | | $11.35 |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomec | | | 0.17 | | | | 0.38 | | | | 0.40 | | | | 0.42 | | | | 0.41 | | | 0.41 |
Net realized and unrealized gains (losses) | | | (0.10 | ) | | | (0.27 | ) | | | (0.17 | ) | | | 0.21 | | | | (0.80 | ) | | 0.08 |
| | | | | | |
Total from investment operations | | | 0.07 | | | | 0.11 | | | | 0.23 | | | | 0.63 | | | | (0.39 | ) | | 0.49 |
| | | | | | |
Less distributions from net investment income | | | (0.18 | ) | | | (0.37 | ) | | | (0.40 | ) | | | (0.42 | ) | | | (0.39 | ) | | (0.42) |
| | | | | | |
Net asset value, end of period | | | $10.31 | | | | $10.42 | | | | $10.68 | | | | $10.85 | | | | $10.64 | | | $11.42 |
| | | | | | |
Total returnd | | | 0.71% | | | | 1.01% | | | | 2.19% | | | | 6.00% | | | | (3.34 | )% | | 4.35% |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses | | | 0.62% | | | | 0.61% | | | | 0.59% | | | | 0.58% | | | | 0.57% | | | 0.56% |
| | | | | | |
Net investment income | | | 3.19% | | | | 3.52% | | | | 3.76% | | | | 3.86% | | | | 3.81% | | | 3.59% |
| | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $27,470 | | | | $26,253 | | | | $21,254 | | | | $20,384 | | | | $15,904 | | | $30,975 |
| | | | | | |
Portfolio turnover rate | | | 2.02% | | | | 12.40% | | | | 7.86% | | | | 4.63% | | | | 8.24% | | | 20.69% |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | | | Semiannual Report | | 67 |
FRANKLIN TAX-FREE TRUST
Statement of Investments, August 31, 2017 (unaudited)
Franklin Connecticut Tax-Free Income Fund
| | | | | | | | |
| | | Principal Amount | | | Value | |
Municipal Bonds 98.7% | | | | | | | | |
Connecticut 98.7% | | | | | | | | |
City of Bridgeport GO, Series A, 5.00%, 2/15/32 | | $ | 10,000,000 | | | $ | 11,004,900 | |
Connecticut State GO, Series A, 5.00%, 2/15/29 | | | 10,000,000 | | | | 10,504,600 | |
Connecticut State Health and Educational Facilities Authority Revenue, | | | | | | | | |
Ascension Health Senior Credit Group, Series A, 5.00%, 11/15/40 | | | 18,520,000 | | | | 19,991,414 | |
Child Care Facilities Program, Series G, Assured Guaranty, Pre-Refunded, 6.00%, 7/01/28 | | | 1,830,000 | | | | 1,907,391 | |
Connecticut College Issue, Refunding, Series L-1, 4.00%, 7/01/46 | | | 5,000,000 | | | | 5,138,350 | |
Connecticut State University System Issue, Series N, 5.00%, 11/01/29 | | | 5,060,000 | | | | 5,792,637 | |
Fairfield University Issue, Refunding, Series M, 5.00%, 7/01/26 | | | 90,000 | | | | 92,930 | |
Fairfield University Issue, Refunding, Series M, 5.00%, 7/01/34 | | | 180,000 | | | | 185,227 | |
Fairfield University Issue, Series M, Pre-Refunded, 5.00%, 7/01/26 | | | 360,000 | | | | 372,290 | |
Fairfield University Issue, Series M, Pre-Refunded, 5.00%, 7/01/34 | | | 820,000 | | | | 847,995 | |
Fairfield University Issue, Series N, 5.00%, 7/01/29 | | | 7,000,000 | | | | 7,210,280 | |
Fairfield University Issues, New Money, Series O, 5.00%, 7/01/35 | | | 4,000,000 | | | | 4,358,320 | |
Fairfield University Issues, New Money, Series O, 5.00%, 7/01/40 | | | 5,000,000 | | | | 5,423,400 | |
Hartford Healthcare Issue, Refunding, Series A, 5.00%, 7/01/41 | | | 12,000,000 | | | | 13,076,760 | |
The Loomis Chafee School Issue, Series G, Pre-Refunded, 5.00%, 7/01/30 | | | 3,000,000 | | | | 3,102,420 | |
The Loomis Chafee School Issue, Series G, Pre-Refunded, 5.00%, 7/01/38 | | | 6,285,000 | | | | 6,499,570 | |
Lutheran General Health Care System, ETM, 7.375%, 7/01/19 | | | 95,000 | | | | 102,647 | |
Quinnipiac University Issue, Refunding, Series L, 5.00%, 7/01/45 | | | 8,250,000 | | | | 9,312,353 | |
Quinnipiac University Issue, Refunding, Series M, 5.00%, 7/01/36 | | | 1,400,000 | | | | 1,609,650 | |
Quinnipiac University Issue, Series J, NATL Insured, 5.00%, 7/01/37 | | | 385,000 | | | | 396,504 | |
Quinnipiac University Issue, Series J, NATL Insured, Pre-Refunded, 5.00%, 7/01/37 | | | 14,615,000 | | | | 15,120,095 | |
Sacred Heart University Issue, Series G, 5.375%, 7/01/31 | | | 1,500,000 | | | | 1,661,880 | |
Sacred Heart University Issue, Series G, 5.625%, 7/01/41 | | | 5,500,000 | | | | 5,985,980 | |
Sacred Heart University Issue, Series H, AGMC Insured, 5.00%, 7/01/27 | | | 1,190,000 | | | | 1,370,356 | |
Sacred Heart University Issue, Series H, AGMC Insured, 5.00%, 7/01/28 | | | 2,290,000 | | | | 2,629,057 | |
Salisbury School Issue, Series C, Assured Guaranty, Pre-Refunded, 5.00%, 7/01/38 | | | 1,000,000 | | | | 1,034,140 | |
Stamford Hospital Issue, Series I, 5.00%, 7/01/30 | | | 5,000,000 | | | | 5,420,550 | |
Stamford Hospital Issue, Series J, 5.00%, 7/01/42 | | | 5,000,000 | | | | 5,391,850 | |
Trinity Health Credit Group, Refunding, Series CT, 5.00%, 12/01/45 | | | 7,060,000 | | | | 8,061,955 | |
Wesleyan University Issue, Series G, Pre-Refunded, 5.00%, 7/01/39 | | | 10,000,000 | | | | 11,129,900 | |
Western Connecticut Health Network Issue, Series M, 5.375%, 7/01/41 | | | 7,000,000 | | | | 7,723,100 | |
The William W. Backus Hospital Issue, Series F, AGMC Insured, Pre-Refunded, 5.00%, 7/01/28 | | | 1,500,000 | | | | 1,551,210 | |
The William W. Backus Hospital Issue, Series F, AGMC Insured, Pre-Refunded, 5.125%, 7/01/35 | | | 4,025,000 | | | | 4,166,519 | |
a Yale University Issue, Mandatory Put, Refunding, Series A-1, 2.00%, 7/01/26 | | | 2,500,000 | | | | 2,470,000 | |
Yale University Issue, Series A-2, 5.00%, 7/01/40 | | | 9,000,000 | | | | 9,304,200 | |
Yale-New Haven Hospital Issue, Series N, 5.00%, 7/01/48 | | | 5,000,000 | | | | 5,504,900 | |
Connecticut State HFAR, | | | | | | | | |
State Supported Special Obligation, Series 10, 5.00%, 6/15/28 | | | 420,000 | | | | 447,094 | |
State Supported Special Obligation, Series 13, 5.00%, 6/15/40 | | | 1,500,000 | | | | 1,616,205 | |
Connecticut State Higher Education Supplemental Loan Authority Revenue, CHESLA Loan Program, Series A, 5.05%, 11/15/27 | | | 590,000 | | | | 619,547 | |
Connecticut State Municipal Electric Energy Cooperative Power Supply System Revenue, Refunding, Series A, 5.00%, 1/01/38 | | | 3,000,000 | | | | 3,404,880 | |
Connecticut State Revolving Fund General Revenue, | | | | | | | | |
Green Bonds, Series A, 5.00%, 3/01/34 | | | 5,000,000 | | | | 5,874,700 | |
Green Bonds, Series A, 5.00%, 3/01/35 | | | 1,000,000 | | | | 1,170,460 | |
Green Bonds, Series A, 5.00%, 5/01/35 | | | 2,000,000 | | | | 2,407,380 | |
Green Bonds, Series A, 5.00%, 5/01/37 | | | 3,000,000 | | | | 3,591,240 | |
Series A, 5.00%, 3/01/25 | | | 3,000,000 | | | | 3,566,640 | |
| | | | | | |
68 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Connecticut Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| |
Municipal Bonds (continued) | | | | | | | | |
Connecticut (continued) | | | | | | | | |
Connecticut State Special Tax Obligation Revenue, | | | | | | | | |
Transportation Infrastructure Purposes, Series A, 5.00%, 10/01/30 | | $ | 5,000,000 | | | $ | 5,717,950 | |
Transportation Infrastructure Purposes, Series A, 5.00%, 9/01/32 | | | 1,000,000 | | | | 1,165,930 | |
Transportation Infrastructure Purposes, Series A, 5.00%, 9/01/34 | | | 5,000,000 | | | | 5,703,800 | |
Connecticut Transmission Municipal Electric Energy Cooperative Transmission System Revenue, Series A, 5.00%, 1/01/42 | | | 5,000,000 | | | | 5,582,450 | |
Greater New Haven Water Pollution Control Authority Regional Wastewater System Revenue, Series A, AGMC Insured, Pre-Refunded, 5.00%, 11/15/37 | | | 3,000,000 | | | | 3,146,160 | |
Hartford County Metropolitan District Clean Water Project Revenue, | | | | | | | | |
Green Bonds, Refunding, Series A, 5.00%, 11/01/42 | | | 5,000,000 | | | | 5,577,900 | |
Refunding, Series A, 5.00%, 4/01/36 | | | 5,000,000 | | | | 5,568,500 | |
New Britain GO, Series C, AGMC Insured, 5.00%, 3/01/36 | | | 1,000,000 | | | | 1,152,450 | |
New Haven GO, | | | | | | | | |
Issue of 2002, Series C, NATL Insured, ETM, 5.00%, 11/01/22 | | | 25,000 | | | | 25,073 | |
Issue of 2009, Series A, Assured Guaranty, Pre-Refunded, 5.00%, 3/01/29 | | | 1,000,000 | | | | 1,061,000 | |
South Central Regional Water Authority Water System Revenue, | | | | | | | | |
Eighteenth Series B, NATL Insured, 5.25%, 8/01/29 | | | 1,000,000 | | | | 1,024,650 | |
Eighteenth Series B, NATL Insured, 5.25%, 8/01/32 | | | 1,000,000 | | | | 1,024,470 | |
Refunding, Thirty-Second Series B, 5.00%, 8/01/37 | | | 780,000 | | | | 908,357 | |
Refunding, Thirty-Second Series B, 5.00%, 8/01/38 | | | 3,720,000 | | | | 4,316,316 | |
Refunding, Thirty-Second Series B, 5.00%, 8/01/39 | | | 500,000 | | | | 578,880 | |
Thirtieth Series A, 5.00%, 8/01/39 | | | 1,500,000 | | | | 1,729,170 | |
Thirtieth Series A, 5.00%, 8/01/44 | | | 1,615,000 | | | | 1,855,134 | |
Twenty-Second Series, AGMC Insured, Pre-Refunded, 5.00%, 8/01/38 | | | 4,000,000 | | | | 4,150,040 | |
Stamford Water Pollution Control System and Facility Revenue, Refunding, Series A, 5.25%, 8/15/43 | | | 1,000,000 | | | | 1,164,750 | |
Stratford GO, Refunding, 5.00%, 7/01/33 | | | 1,000,000 | | | | 1,156,540 | |
University of Connecticut GO, | | | | | | | | |
Series A, 5.00%, 8/15/28 | | | 6,590,000 | | | | 7,652,242 | |
Series A, 5.00%, 2/15/31 | | | 2,000,000 | | | | 2,304,760 | |
Series A, 5.00%, 1/15/37 | | | 4,000,000 | | | | 4,546,960 | |
| | | | | | | | |
| | |
| Total Municipal Bonds before Short Term Investments (Cost $271,218,030) | | | | | | | 285,266,958 | |
| | | | | | | | |
| | |
| Short Term Investments (Cost $1,900,000) 0.6% | | | | | | | | |
Municipal Bonds 0.6% | | | | | | | | |
Connecticut 0.6% | | | | | | | | |
b Connecticut State Health and Educational Facilities Authority Revenue, Yale University Issue, Series V-2, Daily VRDN and Put, 0.59%, 7/01/36 | | | 1,900,000 | | | | 1,900,000 | |
| | | | | | | | |
| | |
| Total Investments (Cost $273,118,030) 99.3% | | | | | | | 287,166,958 | |
| Other Assets, less Liabilities 0.7% | | | | | | | 1,967,270 | |
| | | | | | | | |
| | |
| Net Assets 100.0% | | | | | | $ | 289,134,228 | |
| | | | | | | | |
See Abbreviations on page 144.
aThe maturity date shown represents the mandatory put date.
bVariable rate demand notes (VRDNs) are 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. Unless otherwise noted, the coupon rate is determined based on factors including supply and demand, underlying credit, tax treatment, and current short term rates. 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 | | 69 |
FRANKLIN TAX-FREE TRUST
Financial Highlights
Franklin Michigan Tax-Free Income Fund
| | | | | | | | | | | | |
| | | Six Months Ended | | | | | | | | | | |
| | | August 31, 2017 | | Year Ended February 28, |
| | | (unaudited) | | 2017 | | 2016a | | 2015 | | 2014 | | 2013 |
Class A | | | | | | | | | | | | |
Per share operating performance | | | | | | | | | | | | |
(for a share outstanding throughout the period) | | | | | | | | | | | | |
Net asset value, beginning of period | | $11.52 | | $11.78 | | $12.02 | | $11.67 | | $12.36 | | $12.23 |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | |
Net investment incomec | | 0.18 | | 0.40 | | 0.42 | | 0.44 | | 0.46 | | 0.43 |
Net realized and unrealized gains (losses) | | 0.01 | | (0.25) | | (0.25) | | 0.36 | | (0.70) | | 0.13 |
| | | | | | |
Total from investment operations | | 0.19 | | 0.15 | | 0.17 | | 0.80 | | (0.24) | | 0.56 |
| | | | | | |
Less distributions from net investment income | | (0.19) | | (0.41) | | (0.41) | | (0.45) | | (0.45) | | (0.43) |
| | | | | | |
Net asset value, end of period | | $11.52 | | $11.52 | | $11.78 | | $12.02 | | $11.67 | | $12.36 |
| | | | | | |
Total returnd | | 1.66% | | 1.24% | | 1.48% | | 6.96% | | (1.90)% | | 4.61% |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | |
Expenses | | 0.65% | | 0.65% | | 0.64% | | 0.65% | | 0.63% | | 0.63% |
Net investment income | | 3.08% | | 3.43% | | 3.55% | | 3.73% | | 3.91% | | 3.53% |
| | | | | | |
Supplemental data | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $843,274 | | $861,662 | | $896,978 | | $953,732 | | $951,409 | | $1,257,112 |
Portfolio turnover rate | | 8.40% | | 12.35% | | 12.04% | | 12.80% | | 9.37% | | 16.87% |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | |
70 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Michigan Tax-Free Income Fund (continued)
| | | | | | | | | | | | |
| | | Six Months Ended August 31, 2017 | | Year Ended February 28, |
| | | (unaudited) | | 2017 | | 2016a | | 2015 | | 2014 | | 2013 |
Class C | | | | | | | | | | | | |
Per share operating performance | | | | | | | | | | | | |
(for a share outstanding throughout the period) | | | | | | | | | | | | |
Net asset value, beginning of period | | $11.69 | | $11.95 | | $12.20 | | $11.83 | | $12.52 | | $12.39 |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | |
Net investment incomec | | 0.15 | | 0.35 | | 0.36 | | 0.38 | | 0.40 | | 0.37 |
Net realized and unrealized gains (losses) | | 0.02 | | (0.27) | | (0.26) | | 0.37 | | (0.71) | | 0.12 |
| | | | | | |
Total from investment operations | | 0.17 | | 0.08 | | 0.10 | | 0.75 | | (0.31) | | 0.49 |
| | | | | | |
Less distributions from net investment income | | (0.16) | | (0.34) | | (0.35) | | (0.38) | | (0.38) | | (0.36) |
| | | | | | |
Net asset value, end of period | | $11.70 | | $11.69 | | $11.95 | | $12.20 | | $11.83 | | $12.52 |
| | | | | | |
Total returnd | | 1.44% | | 0.66% | | 0.83% | | 6.45% | | (2.42)% | | 3.97% |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | |
Expenses | | 1.20% | | 1.20% | | 1.19% | | 1.20% | | 1.18% | | 1.18% |
Net investment income | | 2.53% | | 2.88% | | 3.00% | | 3.18% | | 3.36% | | 2.98% |
| | | | | | |
Supplemental data | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $135,881 | | $142,248 | | $145,491 | | $148,898 | | $148,136 | | $212,347 |
Portfolio turnover rate | | 8.40% | | 12.35% | | 12.04% | | 12.80% | | 9.37% | | 16.87% |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | | | Semiannual Report | | 71 |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Michigan Tax-Free Income Fund (continued)
| | |
| | | Period Ended August 31, 2017 (unaudited)a |
Class R6 | | |
Per share operating performance | | |
(for a share outstanding throughout the period) | | |
Net asset value, beginning of period | | $11.53 |
| |
Income from investment operationsb: | | |
Net investment incomec | | 0.03 |
Net realized and unrealized gains (losses) | | 0.03 |
| |
Total from investment operations | | 0.06 |
| |
Less distributions from net investment income | | (0.03) |
| |
Net asset value, end of period | | $11.56 |
| |
Total returnd | | 0.53% |
| |
Ratios to average net assetse | | |
Expenses | | 0.50% |
Net investment income | | 3.23% |
| |
Supplemental data | | |
Net assets, end of period (000’s) | | $5 |
Portfolio turnover rate | | 8.40% |
aFor the period August 1, 2017 (effective date) to August 31, 2017.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | |
72 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Michigan Tax-Free Income Fund (continued)
| | | | | | | | | | | | |
| | | Six Months Ended | | | | | | | | | | |
| | | August 31, 2017 | | Year Ended February 28, |
| | | (unaudited) | | 2017 | | 2016a | | 2015 | | 2014 | | 2013 |
Advisor Class | | | | | | | | | | | | |
Per share operating performance | | | | | | | | | | | | |
(for a share outstanding throughout the period) | | | | | | | | | | | | |
Net asset value, beginning of period | | $11.55 | | $11.81 | | $12.06 | | $11.70 | | $12.39 | | $12.26 |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | |
Net investment incomec | | 0.18 | | 0.42 | | 0.43 | | 0.46 | | 0.47 | | 0.45 |
Net realized and unrealized gains (losses) | | 0.02 | | (0.26) | | (0.26) | | 0.36 | | (0.70) | | 0.12 |
| | | | | | |
Total from investment operations | | 0.20 | | 0.16 | | 0.17 | | 0.82 | | (0.23) | | 0.57 |
| | | | | | |
Less distributions from net investment income | | (0.19) | | (0.42) | | (0.42) | | (0.46) | | (0.46) | | (0.44) |
| | | | | | |
Net asset value, end of period | | $11.56 | | $11.55 | | $11.81 | | $12.06 | | $11.70 | | $12.39 |
| | | | | | |
Total returnd | | 1.79% | | 1.33% | | 1.50% | | 7.13% | | (1.80)% | | 4.70% |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | |
Expenses | | 0.55% | | 0.55% | | 0.54% | | 0.55% | | 0.53% | | 0.53% |
Net investment income | | 3.18% | | 3.53% | | 3.65% | | 3.83% | | 4.01% | | 3.63% |
| | | | | | |
Supplemental data | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $70,241 | | $67,672 | | $39,846 | | $36,020 | | $26,577 | | $20,317 |
Portfolio turnover rate | | 8.40% | | 12.35% | | 12.04% | | 12.80% | | 9.37% | | 16.87% |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | | | Semiannual Report | | 73 |
FRANKLIN TAX-FREE TRUST
Statement of Investments, August 31, 2017 (unaudited)
Franklin Michigan Tax-Free Income Fund
| | | | | | | | |
| | | Principal Amount | | | Value | |
Municipal Bonds 98.7% | | | | | | | | |
Michigan 98.1% | | | | | | | | |
Ann Arbor Public School District GO, | | | | | | | | |
Refunding, 5.00%, 5/01/26 | | $ | 750,000 | | | $ | 897,143 | |
Refunding, 5.00%, 5/01/28 | | | 1,000,000 | | | | 1,176,930 | |
Refunding, 5.00%, 5/01/29 | | | 1,235,000 | | | | 1,444,110 | |
Battle Creek Water and Wastewater System Revenue, Series A, 5.00%, 6/01/36 | | | 1,300,000 | | | | 1,484,496 | |
Bloomfield Charter Township GO, | | | | | | | | |
County of Oakland, Refunding, 5.00%, 5/01/27 | | | 680,000 | | | | 837,685 | |
County of Oakland, Refunding, 5.00%, 5/01/29 | | | 470,000 | | | | 569,861 | |
County of Oakland, Refunding, 5.00%, 5/01/32 | | | 1,000,000 | | | | 1,187,420 | |
Byron Center Public Schools GO, | | | | | | | | |
School Building and Site, Series I, 5.00%, 5/01/34 | | | 1,000,000 | | | | 1,186,780 | |
School Building and Site, Series I, 5.00%, 5/01/35 | | | 1,920,000 | | | | 2,269,709 | |
School Building and Site, Series I, 5.00%, 5/01/36 | | | 650,000 | | | | 766,584 | |
School Building and Site, Series I, 5.00%, 5/01/37 | | | 1,480,000 | | | | 1,739,992 | |
School Building and Site, Series I, 5.00%, 5/01/38 | | | 1,330,000 | | | | 1,558,747 | |
School Building and Site, Series I, 5.00%, 5/01/39 | | | 2,290,000 | | | | 2,677,560 | |
School Building and Site, Series I, 5.00%, 5/01/43 | | | 2,250,000 | | | | 2,606,243 | |
School Building and Site, Series I, 5.00%, 5/01/47 | | | 4,140,000 | | | | 4,773,047 | |
Caledonia Community Schools GO, | | | | | | | | |
Counties of Kent, Allegan and Barry, Refunding, 5.00%, 5/01/25 | | | 1,000,000 | | | | 1,209,500 | |
Counties of Kent, Allegan and Barry, Refunding, 5.00%, 5/01/26 | | | 1,000,000 | | | | 1,216,850 | |
Central Michigan University Revenue, | | | | | | | | |
General, Refunding, 5.00%, 10/01/30 | | | 1,910,000 | | | | 2,247,402 | |
General, Refunding, 5.00%, 10/01/31 | | | 1,055,000 | | | | 1,236,850 | |
General, Refunding, 5.00%, 10/01/34 | | | 1,600,000 | | | | 1,855,456 | |
General, Refunding, 5.00%, 10/01/39 | | | 2,000,000 | | | | 2,295,600 | |
Chippewa Valley Schools GO, | | | | | | | | |
Refunding, 5.00%, 5/01/28 | | | 6,075,000 | | | | 7,016,260 | |
Refunding, 5.00%, 5/01/29 | | | 6,425,000 | | | | 7,383,546 | |
Refunding, 5.00%, 5/01/30 | | | 6,420,000 | | | | 7,359,374 | |
Refunding, 5.00%, 5/01/31 | | | 3,000,000 | | | | 3,425,250 | |
Refunding, 5.00%, 5/01/32 | | | 6,590,000 | | | | 7,505,417 | |
Commerce Charter Township GO, Capital Improvement, Refunding, 5.00%, 12/01/38 | | | 3,250,000 | | | | 3,780,302 | |
Detroit City School District GO, School Building and Site Improvement, Series A, AGMC Insured, 6.00%, 5/01/29 | | | 10,000,000 | | | | 12,460,300 | |
Detroit Water and Sewerage Department Sewage Disposal System Revenue, senior lien, Refunding, Series A, AGMC Insured, 5.00%, 7/01/39 | | | 5,000,000 | | | | 5,502,000 | |
Detroit Water Supply System Revenue, | | | | | | | | |
second lien, Series B, NATL Insured, 5.00%, 7/01/34 | | | 25,000 | | | | 25,069 | |
senior lien, Series A, AGMC Insured, 5.00%, 7/01/34 | | | 30,000 | | | | 30,110 | |
senior lien, Series B, BHAC Insured, Pre-Refunded, 5.25%, 7/01/35 | | | 17,500,000 | | | | 18,133,150 | |
DeWitt Public Schools GO, | | | | | | | | |
School Building and Site, 5.00%, 5/01/30 | | | 500,000 | | | | 598,070 | |
School Building and Site, 5.00%, 5/01/33 | | | 815,000 | | | | 959,671 | |
School Building and Site, 5.00%, 5/01/34 | | | 1,000,000 | | | | 1,171,990 | |
School Building and Site, 5.00%, 5/01/35 | | | 1,000,000 | | | | 1,166,500 | |
School Building and Site, 5.00%, 5/01/36 | | | 1,000,000 | | | | 1,164,680 | |
East Lansing School District GO, | | | | | | | | |
Counties of Ingham and Clinton, School Building and Site, Series I, 5.00%, 5/01/35 | | | 1,500,000 | | | | 1,763,505 | |
Counties of Ingham and Clinton, School Building and Site, Series I, 5.00%, 5/01/37 | | | 1,100,000 | | | | 1,287,176 | |
Counties of Ingham and Clinton, School Building and Site, Series I, 5.00%, 5/01/42 | | | 2,500,000 | | | | 2,895,825 | |
| | | | | | |
74 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Michigan Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Municipal Bonds (continued) | | | | | | | | |
Michigan (continued) | | | | | | | | |
Farmington Public School District GO, | | | | | | | | |
School Building and Site, Refunding, AGMC Insured, 5.00%, 5/01/27 | | | $ 1,000,000 | | | | $ 1,189,990 | |
School Building and Site, Refunding, AGMC Insured, 5.00%, 5/01/28 | | | 2,000,000 | | | | 2,361,500 | |
School Building and Site, Refunding, AGMC Insured, 5.00%, 5/01/32 | | | 4,035,000 | | | | 4,663,572 | |
School Building and Site, Refunding, AGMC Insured, 5.00%, 5/01/33 | | | 2,900,000 | | | | 3,338,799 | |
School Building and Site, Refunding, AGMC Insured, 5.00%, 5/01/34 | | | 3,000,000 | | | | 3,440,580 | |
School Building and Site, Refunding, AGMC Insured, 5.00%, 5/01/35 | | | 1,000,000 | | | | 1,143,160 | |
Grand Rapids Building Authority Revenue, Series A, AMBAC Insured, 5.00%, 10/01/28 | | | 3,590,000 | | | | 3,599,837 | |
Grand Rapids Sanitary Sewer System Revenue, | | | | | | | | |
Improvement and Refunding, 5.00%, 1/01/28 | | | 1,560,000 | | | | 1,829,412 | |
Improvement and Refunding, 5.00%, 1/01/29 | | | 1,000,000 | | | | 1,169,470 | |
Improvement and Refunding, 5.00%, 1/01/31 | | | 2,095,000 | | | | 2,432,546 | |
Improvement and Refunding, 5.00%, 1/01/32 | | | 1,175,000 | | | | 1,354,587 | |
Improvement and Refunding, 5.00%, 1/01/33 | | | 1,125,000 | | | | 1,291,264 | |
Improvement and Refunding, 5.00%, 1/01/34 | | | 1,000,000 | | | | 1,144,010 | |
Improvement and Refunding, 5.00%, 1/01/35 | | | 1,500,000 | | | | 1,711,305 | |
Improvement and Refunding, 5.00%, 1/01/39 | | | 880,000 | | | | 994,646 | |
Improvement and Refunding, 5.00%, 1/01/44 | | | 2,000,000 | | | | 2,243,300 | |
Refunding, 5.00%, 1/01/36 | | | 1,250,000 | | | | 1,450,775 | |
Refunding, 5.00%, 1/01/38 | | | 1,000,000 | | | | 1,155,800 | |
Grand Rapids Water Supply System Revenue, | | | | | | | | |
Assured Guaranty, Pre-Refunded, 5.10%, 1/01/39 | | | 3,000,000 | | | | 3,167,310 | |
Improvement and Refunding, 5.00%, 1/01/46 | | | 2,525,000 | | | | 2,896,276 | |
Grand Traverse County Hospital Finance Authority Revenue, | | | | | | | | |
Munson Healthcare Obligated Group, Series A, 5.00%, 7/01/44 | | | 2,000,000 | | | | 2,191,940 | |
Munson Healthcare Obligated Group, Series A, 5.00%, 7/01/47 | | | 2,500,000 | | | | 2,735,150 | |
Grand Valley State University Revenue, | | | | | | | | |
General, Refunding, Series A, 5.00%, 12/01/32 | | | 4,295,000 | | | | 4,990,060 | |
General, Series A, AGMC Insured, Pre-Refunded, 5.00%, 12/01/28 | | | 17,165,000 | | | | 17,692,824 | |
General, Series A, AGMC Insured, Pre-Refunded, 5.00%, 12/01/33 | | | 8,570,000 | | | | 8,833,527 | |
Grandville Public School District GO, | | | | | | | | |
School Building and Site, Series II, AGMC Insured, 5.00%, 5/01/29 | | | 750,000 | | | | 876,990 | |
School Building and Site, Series II, AGMC Insured, 5.00%, 5/01/30 | | | 1,000,000 | | | | 1,162,530 | |
School Building and Site, Series II, AGMC Insured, 5.00%, 5/01/31 | | | 1,150,000 | | | | 1,330,010 | |
School Building and Site, Series II, AGMC Insured, 5.00%, 5/01/32 | | | 1,165,000 | | | | 1,342,138 | |
School Building and Site, Series II, AGMC Insured, 5.00%, 5/01/34 | | | 1,315,000 | | | | 1,503,255 | |
School Building and Site, Series II, AGMC Insured, 5.00%, 5/01/35 | | | 1,225,000 | | | | 1,395,863 | |
School Building and Site, Series II, AGMC Insured, 5.00%, 5/01/37 | | | 2,915,000 | | | | 3,308,758 | |
School Building and Site, Series II, AGMC Insured, 5.00%, 5/01/40 | | | 6,215,000 | | | | 7,013,752 | |
Holly Area School District GO, | | | | | | | | |
County of Oakland, Refunding, 5.00%, 5/01/30 | | | 1,045,000 | | | | 1,202,095 | |
County of Oakland, Refunding, 5.00%, 5/01/32 | | | 1,040,000 | | | | 1,186,089 | |
Jackson County Hospital Finance Authority Revenue, W.A. Foote Memorial Hospital, Series C, Assured Guaranty, Pre-Refunded, 5.00%, 6/01/26 | | | 10,000,000 | | | | 11,071,100 | |
Kalamazoo Hospital Finance Authority Hospital Facility Revenue, | | | | | | | | |
Bronson Methodist Hospital, AGMC Insured, Pre-Refunded, 5.25%, 5/15/36 | | | 5,530,000 | | | | 6,143,166 | |
Bronson Methodist Hospital, Refunding, AGMC Insured, 5.25%, 5/15/36 | | | 4,470,000 | | | | 4,821,834 | |
Bronson Methodist Hospital, Refunding, Series B, AGMC Insured, 5.00%, 5/15/26 | | | 7,000,000 | | | | 7,180,110 | |
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 75 |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Michigan Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value |
Municipal Bonds (continued) | | | | | | |
Michigan (continued) | | | | | | |
Kelloggsville Public School District GO, | | | | | | |
School Building and Site, AGMC Insured, 5.00%, 5/01/33 | | | $ 1,045,000 | | | $ 1,189,220 |
School Building and Site, AGMC Insured, 5.00%, 5/01/35 | | | 1,150,000 | | | 1,299,466 |
School Building and Site, AGMC Insured, 5.00%, 5/01/38 | | | 3,815,000 | | | 4,296,987 |
Kent County GO, |
Capital Improvement, 5.00%, 6/01/32 | | | 1,305,000 | | | 1,560,702 |
Capital Improvement, 5.00%, 6/01/33 | | | 1,275,000 | | | 1,518,206 |
Kentwood Public Schools GO, | | | | | | |
School Building and Site, 5.00%, 5/01/35 | | | 1,205,000 | | | 1,402,391 |
School Building and Site, 5.00%, 5/01/36 | | | 1,205,000 | | | 1,399,379 |
School Building and Site, 5.00%, 5/01/38 | | | 1,210,000 | | | 1,399,171 |
School Building and Site, 5.00%, 5/01/41 | | | 1,120,000 | | | 1,287,709 |
School Building and Site, 5.00%, 5/01/44 | | | 1,800,000 | | | 2,062,152 |
L’Anse Creuse Public Schools GO, |
Refunding, 5.00%, 5/01/28 | | | 5,230,000 | | | 6,211,514 |
Refunding, 5.00%, 5/01/30 | | | 5,560,000 | | | 6,522,547 |
Refunding, 5.00%, 5/01/32 | | | 5,890,000 | | | 6,834,049 |
Refunding, 5.00%, 5/01/34 | | | 6,220,000 | | | 7,161,148 |
Refunding, 5.00%, 5/01/35 | | | 2,840,000 | | | 3,259,184 |
Lansing Board of Water and Light Utility System Revenue, Series A, 5.50%, 7/01/41 | | | 10,000,000 | | | 11,423,200 |
Lansing Community College GO, College Building and Site, Refunding, 5.00%, 5/01/32 | | | 3,000,000 | | | 3,420,810 |
Lansing School District GO, |
Counties of Ingham, Eaton and Clinton, School Building and Site, Series I, 5.00%, 5/01/36 | | | 1,395,000 | | | 1,594,750 |
Counties of Ingham, Eaton and Clinton, School Building and Site, Series I, 5.00%, 5/01/37 | | | 1,490,000 | | | 1,698,511 |
Counties of Ingham, Eaton and Clinton, School Building and Site, Series I, 5.00%, 5/01/39 | | | 2,125,000 | | | 2,406,881 |
Counties of Ingham, Eaton and Clinton, School Building and Site, Series I, 5.00%, 5/01/40 | | | 2,200,000 | | | 2,486,506 |
Lapeer Community Schools GO, |
School Building and Site, AGMC Insured, Pre-Refunded, 5.00%, 5/01/33 | | | 4,400,000 | | | 4,520,340 |
School Building and Site, AGMC Insured, Pre-Refunded, 5.00%, 5/01/37 | | | 4,325,000 | | | 4,443,289 |
Lenawee County Hospital Finance Authority Hospital Revenue, ProMedica Healthcare Obligated Group, Refunding, Series B, 6.00%, 11/15/35 | | | 5,000,000 | | | 5,837,450 |
Livonia Public Schools School District GO, |
School Building and Site, Series I, AGMC Insured, 5.00%, 5/01/36 | | | 5,725,000 | | | 6,369,578 |
School Building and Site, Series I, AGMC Insured, 5.00%, 5/01/38 | | | 6,000,000 | | | 6,652,380 |
School Building and Site, Series I, AGMC Insured, 5.00%, 5/01/43 | | | 16,850,000 | | | 18,525,227 |
Macomb Interceptor Drain Drainage District GO, | | | | | | |
Drain, Limited Tax, Refunding, Series A, 5.00%, 5/01/34 | | | 2,000,000 | | | 2,403,580 |
Drain, Limited Tax, Refunding, Series A, 5.00%, 5/01/42 | | | 7,500,000 | | | 8,845,200 |
Mason County CSD, |
GO, Counties of Mason, Lake and Oceana, Refunding, 5.00%, 5/01/25 | | | 1,050,000 | | | 1,261,733 |
GO, Counties of Mason, Lake and Oceana, Refunding, 5.00%, 5/01/26 | | | 1,100,000 | | | 1,306,437 |
Mattawan Consolidated School District GO, |
Counties of Van Buren and Kalamazoo, School Building and Site, Series I, 5.00%, 5/01/30 | | | 1,000,000 | | | 1,158,780 |
Counties of Van Buren and Kalamazoo, School Building and Site, Series I, 5.00%, 5/01/31 | | | 1,915,000 | | | 2,207,612 |
Counties of Van Buren and Kalamazoo, School Building and Site, Series I, 5.00%, 5/01/32 | | | 1,110,000 | | | 1,274,657 |
Counties of Van Buren and Kalamazoo, School Building and Site, Series I, 5.00%, 5/01/34 | | | 2,325,000 | | | 2,649,291 |
Counties of Van Buren and Kalamazoo, School Building and Site, Series I, 5.00%, 5/01/39 | | | 3,375,000 | | | 3,803,861 |
Meridian Public Schools District GO, |
Refunding, 5.00%, 5/01/27 | | | 735,000 | | | 869,542 |
Refunding, 5.00%, 5/01/29 | | | 775,000 | | | 903,883 |
Refunding, 5.00%, 5/01/31 | | | 1,130,000 | | | 1,303,500 |
| | | | | | |
76 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Michigan Tax-Free Income Fund (continued)
| | | | | | |
| | | Principal
Amount | | | Value |
Municipal Bonds (continued) | | | | | | |
Michigan (continued) | | | | | | |
Michigan Finance Authority Revenue, | | | | | | |
Clean Water Revolving Fund, Refunding, Series B, 4.00%, 10/01/30 | | | $ 2,750,000 | | | $ 3,056,900 |
Hospital, Henry Ford Health System, Refunding, 5.00%, 11/15/30 | | | 4,930,000 | | | 5,790,334 |
Hospital, Henry Ford Health System, Refunding, 5.00%, 11/15/32 | | | 2,725,000 | | | 3,162,254 |
Hospital, Henry Ford Health System, Refunding, 5.00%, 11/15/37 | | | 4,235,000 | | | 4,798,043 |
Hospital, Henry Ford Health System, Refunding, 5.00%, 11/15/41 | | | 27,780,000 | | | 31,238,888 |
Hospital, Oakwood Obligated Group, Refunding, 5.00%, 8/15/28 | | | 5,585,000 | | | 6,411,245 |
Hospital, Oakwood Obligated Group, Refunding, 5.00%, 8/15/29 | | | 5,865,000 | | | 6,697,654 |
Hospital, Oakwood Obligated Group, Refunding, AGMC Insured, 5.00%, 11/01/32 | | | 10,005,000 | | | 11,181,288 |
Hospital, Oakwood Obligated Group, Refunding, AGMC Insured, 5.00%, 11/01/42 | | | 12,000,000 | | | 13,125,480 |
Hospital, Sparrow Obligated Group, AGMC Insured, 5.00%, 11/15/42 | | | 8,000,000 | | | 8,840,560 |
State Revolving Fund, Clean Water, 5.00%, 10/01/28 | | | 3,000,000 | | | 3,523,500 |
State Revolving Fund, Clean Water, 5.00%, 10/01/29 | | | 3,000,000 | | | 3,517,080 |
State Revolving Fund, Clean Water, 5.00%, 10/01/32 | | | 2,000,000 | | | 2,312,940 |
Michigan Hospital Finance Authority Revenue, | | | | | | |
Ascension Health Senior Credit Group, Refunding, Series F-7, 5.00%, 11/15/46 | | | 5,000,000 | | | 5,815,350 |
Ascension Health Senior Credit Group, Refunding, Series F-8, 5.00%, 11/15/47 | | | 10,000,000 | | | 11,595,800 |
Hospital, Sparrow Obligated Group, NATL Insured, Pre-Refunded, 5.00%, 11/15/31 | | | 6,090,000 | | | 6,139,268 |
Hospital, Sparrow Obligated Group, Pre-Refunded, 5.00%, 11/15/31 | | | 7,060,000 | | | 7,117,115 |
Hospital, Sparrow Obligated Group, Refunding, 5.00%, 11/15/31 | | | 2,940,000 | | | 2,961,080 |
Hospital, Sparrow Obligated Group, Refunding, NATL Insured, 5.00%, 11/15/31 | | | 2,410,000 | | | 2,427,376 |
Hospital, Sparrow Obligated Group, Refunding, NATL Insured, 5.00%, 11/15/36 | | | 6,165,000 | | | 6,204,271 |
McLaren Healthcare, Refunding, Series A, 5.00%, 6/01/26 | | | 2,065,000 | | | 2,354,575 |
McLaren Healthcare, Refunding, Series A, 5.00%, 6/01/27 | | | 2,285,000 | | | 2,589,910 |
McLaren Healthcare, Refunding, Series A, 5.00%, 6/01/28 | | | 2,615,000 | | | 2,948,805 |
McLaren Healthcare, Refunding, Series A, 5.00%, 6/01/35 | | | 2,250,000 | | | 2,485,913 |
MidMichigan Obligated Group, Series A, Pre-Refunded, 6.125%, 6/01/39 | | | 5,000,000 | | | 5,450,750 |
Trinity Health Credit Group, Refunding, Series A-1, 6.50%, 12/01/33 | | | 915,000 | | | 976,186 |
Trinity Health Credit Group, Refunding, Series MI, 5.00%, 12/01/45 | | | 20,000,000 | | | 22,675,000 |
Trinity Health Credit Group, Series A-1, Pre-Refunded, 6.50%, 12/01/33 | | | 24,085,000 | | | 25,744,939 |
Trinity Health Credit Group, Series B, 5.00%, 12/01/48 | | | 20,000,000 | | | 21,743,600 |
Michigan State Building Authority Revenue, | | | | | | |
Facilities Program, Refunding, Series I, 6.25%, 10/15/38 | | | 555,000 | | | 586,840 |
Facilities Program, Refunding, Series I, 5.00%, 4/15/41 | | | 13,000,000 | | | 15,137,200 |
Facilities Program, Refunding, Series I, 5.00%, 10/15/46 | | | 6,500,000 | | | 7,529,210 |
Facilities Program, Refunding, Series I-A, 5.00%, 10/15/33 | | | 5,000,000 | | | 5,786,700 |
Facilities Program, Refunding, Series I-A, 5.50%, 10/15/45 | | | 2,000,000 | | | 2,267,960 |
Facilities Program, Refunding, Series I-A, 5.25%, 10/15/47 | | | 5,000,000 | | | 5,755,950 |
Facilities Program, Series I, Pre-Refunded, 6.25%, 10/15/38 | | | 14,445,000 | | | 15,298,555 |
Michigan State HDA Rental Housing Revenue, Series A, 5.25%, 10/01/46 | | | 1,270,000 | | | 1,343,597 |
Michigan State Revenue, Grant Anticipation Bonds, AGMC Insured, Pre-Refunded, 5.25%, 9/15/27 | | | 9,000,000 | | | 9,010,080 |
Michigan State Strategic Fund Limited Obligation Revenue, The Detroit Edison Co. Pollution Control Bonds Project, Refunding, Collateralized Series BB, AMBAC Insured, 7.00%, 5/01/21 | | | 3,000,000 | | | 3,576,030 |
Michigan State Technological University Revenue, General, Refunding, Series A, 5.00%, 10/01/45 | | | 2,400,000 | | | 2,725,128 |
Michigan State University Revenue, |
General, Refunding, Series C, 5.00%, 2/15/44 | | | 14,630,000 | | | 15,790,744 |
General, Series A, 5.00%, 8/15/40 | | | 8,500,000 | | | 9,862,550 |
Muskegon County GO, |
Waste Water Management System No. 1, Refunding, 5.00%, 11/01/33 | | | 1,360,000 | | | 1,590,738 |
Waste Water Management System No. 1, Refunding, 5.00%, 11/01/36 | | | 1,735,000 | | | 2,010,067 |
Northview Public Schools District GO, School Building and Site, 5.00%, 5/01/41 | | | 3,000,000 | | | 3,241,020 |
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 77 |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Michigan Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Municipal Bonds (continued) | | | | | | | | |
Michigan (continued) | | | | | | | | |
Oakland Schools Intermediate School District GO, | | | | | | | | |
Refunding, 5.00%, 5/01/35 | | | $ 1,500,000 | | | | $ 1,758,255 | |
Refunding, 5.00%, 5/01/36 | | | 1,005,000 | | | | 1,178,031 | |
Oakland University Board of Trustees Revenue, | | | | | | | | |
General, 5.00%, 3/01/47 | | | 7,230,000 | | | | 8,248,056 | |
General, Refunding, 5.00%, 3/01/27 | | | 1,000,000 | | | | 1,163,790 | |
General, Refunding, 5.00%, 3/01/30 | | | 1,010,000 | | | | 1,162,278 | |
General, Refunding, 5.00%, 3/01/31 | | | 1,260,000 | | | | 1,441,843 | |
General, Refunding, 5.00%, 3/01/32 | | | 1,000,000 | | | | 1,136,010 | |
General, Refunding, 5.00%, 3/01/33 | | | 1,285,000 | | | | 1,454,864 | |
General, Refunding, 5.00%, 3/01/34 | | | 1,000,000 | | | | 1,128,390 | |
General, Refunding, 5.00%, 3/01/39 | | | 3,000,000 | | | | 3,347,490 | |
Rochester Community School District GO, | | | | | | | | |
Counties of Oakland and Macomb, School Building and Site, Series I, 5.00%, 5/01/30 | | | 350,000 | | | | 417,393 | |
Counties of Oakland and Macomb, School Building and Site, Series I, 5.00%, 5/01/31 | | | 1,500,000 | | | | 1,773,465 | |
Counties of Oakland and Macomb, School Building and Site, Series I, 5.00%, 5/01/32 | | | 5,575,000 | | | | 6,548,952 | |
Counties of Oakland and Macomb, School Building and Site, Series I, 5.00%, 5/01/35 | | | 6,450,000 | | | | 7,463,682 | |
Counties of Oakland and Macomb, School Building and Site, Series I, 5.00%, 5/01/36 | | | 2,800,000 | | | | 3,233,104 | |
Rockford Public Schools GO, School Building and Site, AGMC Insured, Pre-Refunded, 5.00%, 5/01/33 | | | 5,000,000 | | | | 5,135,050 | |
Roseville Community Schools District GO, | | | | | | | | |
County of Macomb, Refunding, 5.00%, 5/01/26 | | | 1,400,000 | | | | 1,699,936 | |
County of Macomb, Refunding, 5.00%, 5/01/27 | | | 1,370,000 | | | | 1,648,411 | |
County of Macomb, Refunding, 5.00%, 5/01/28 | | | 3,040,000 | | | | 3,629,334 | |
County of Macomb, Refunding, 5.00%, 5/01/29 | | | 3,300,000 | | | | 3,914,229 | |
County of Macomb, Refunding, 5.00%, 5/01/30 | | | 1,620,000 | | | | 1,910,336 | |
County of Macomb, Refunding, 5.00%, 5/01/31 | | | 1,585,000 | | | | 1,859,395 | |
Royal Oak Hospital Finance Authority Hospital Revenue, | | | | | | | | |
William Beaumont Hospital Obligated Group, Refunding, Series D, 5.00%, 9/01/27 | | | 3,350,000 | | | | 3,898,696 | |
William Beaumont Hospital Obligated Group, Refunding, Series D, 5.00%, 9/01/28 | | | 2,500,000 | | | | 2,888,250 | |
William Beaumont Hospital Obligated Group, Refunding, Series D, 5.00%, 9/01/39 | | | 17,500,000 | | | | 19,494,475 | |
William Beaumont Hospital Obligated Group, Series V, Pre-Refunded, 8.25%, 9/01/39 | | | 10,000,000 | | | | 10,728,200 | |
Saginaw City School District GO, School Building and Site, AGMC Insured, Pre-Refunded, 5.00%, 5/01/38 | | | 10,555,000 | | | | 10,843,679 | |
Saginaw Valley State University Revenue, | | | | | | | | |
General, AGMC Insured, Pre-Refunded, 5.00%, 7/01/28 | | | 7,050,000 | | | | 7,290,687 | |
General, Refunding, Series A, 5.00%, 7/01/30 | | | 1,750,000 | | | | 2,047,465 | |
General, Refunding, Series A, 5.00%, 7/01/31 | | | 2,170,000 | | | | 2,525,967 | |
General, Refunding, Series A, 5.00%, 7/01/33 | | | 1,240,000 | | | | 1,430,873 | |
Saline Area Schools GO, | | | | | | | | |
County of Washtenaw, School Building and Site, 5.00%, 5/01/30 | | | 1,400,000 | | | | 1,642,228 | |
County of Washtenaw, School Building and Site, 5.00%, 5/01/31 | | | 500,000 | | | | 583,155 | |
County of Washtenaw, School Building and Site, 5.00%, 5/01/34 | | | 2,750,000 | | | | 3,166,322 | |
County of Washtenaw, School Building and Site, 5.00%, 5/01/36 | | | 2,950,000 | | | | 3,377,248 | |
South Haven Public Schools GO, | | | | | | | | |
School Building and Site, Series B, AGMC Insured, 5.00%, 5/01/33 | | | 350,000 | | | | 399,592 | |
School Building and Site, Series B, AGMC Insured, 5.00%, 5/01/35 | | | 1,575,000 | | | | 1,785,452 | |
Trenton Public Schools GO, | | | | | | | | |
School Building and Site, AGMC Insured, Pre-Refunded, 5.00%, 5/01/31 | | | 4,575,000 | | | | 4,700,126 | |
School Building and Site, AGMC Insured, Pre-Refunded, 5.00%, 5/01/38 | | | 8,150,000 | | | | 8,372,902 | |
Troy City School District GO, Refunding, 5.00%, 5/01/26 | | | 1,230,000 | | | | 1,500,354 | |
| | | | | | |
78 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Michigan Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Municipal Bonds (continued) | | | | | | | | |
Michigan (continued) | | | | | | | | |
University of Michigan Revenue, | | | | | | | | |
General, Refunding, 5.00%, 4/01/46 | | $ | 2,000,000 | | | $ | 2,339,780 | |
General, Refunding, Series A, 5.00%, 4/01/37 | | | 2,700,000 | | | | 3,245,805 | |
General, Refunding, Series A, 5.00%, 4/01/42 | | | 26,635,000 | | | | 31,696,183 | |
Refunding, Series A, 5.00%, 4/01/47 | | | 5,000,000 | | | | 5,922,350 | |
Warren Consolidated Schools District GO, Counties of Macomb and Oakland, School Building and Site, 5.00%, 5/01/32 | | | 2,500,000 | | | | 2,776,325 | |
Wayne County Airport Authority Revenue, | | | | | | | | |
Detroit Metropolitan Wayne County Airport, Refunding, NATL Insured, 5.00%, 12/01/27 | | | 9,910,000 | | | | 10,004,046 | |
Detroit Metropolitan Wayne County Airport, Refunding, NATL Insured, 5.00%, 12/01/28 | | | 10,170,000 | | | | 10,264,988 | |
Wayne State University Revenue, | | | | | | | | |
General, AGMC Insured, Pre-Refunded, 5.00%, 11/15/28 | | | 10,455,000 | | | | 10,977,227 | |
General, AGMC Insured, Pre-Refunded, 5.00%, 11/15/35 | | | 9,965,000 | | | | 10,462,752 | |
General, Refunding, AGMC Insured, 5.00%, 11/15/28 | | | 13,095,000 | | | | 13,664,240 | |
General, Refunding, AGMC Insured, 5.00%, 11/15/35 | | | 12,470,000 | | | | 12,974,287 | |
General, Refunding, Series A, 5.00%, 11/15/31 | | | 1,860,000 | | | | 2,126,110 | |
General, Refunding, Series A, 5.00%, 11/15/33 | | | 1,500,000 | | | | 1,697,895 | |
Western Michigan University Revenue, | | | | | | | | |
General, AGMC Insured, Pre-Refunded, 5.00%, 11/15/28 | | | 5,500,000 | | | | 5,657,410 | |
General, AGMC Insured, Pre-Refunded, 5.00%, 11/15/32 | | | 6,410,000 | | | | 6,593,454 | |
Refunding, Series A, 5.00%, 11/15/26 | | | 1,500,000 | | | | 1,794,480 | |
Refunding, Series A, 5.00%, 11/15/27 | | | 2,160,000 | | | | 2,563,898 | |
Refunding, Series A, 5.00%, 11/15/28 | | | 1,635,000 | | | | 1,926,864 | |
Refunding, Series A, 5.00%, 11/15/29 | | | 2,000,000 | | | | 2,341,720 | |
Refunding, Series A, 5.00%, 11/15/30 | | | 2,500,000 | | | | 2,906,300 | |
Refunding, Series A, 5.00%, 11/15/40 | | | 1,560,000 | | | | 1,756,841 | |
Refunding, Series A, 5.00%, 11/15/45 | | | 2,000,000 | | | | 2,240,760 | |
Zeeland Public Schools GO, | | | | | | | | |
School Building and Site, Series A, AGMC Insured, 5.00%, 5/01/31 | | | 1,530,000 | | | | 1,758,092 | |
School Building and Site, Series A, AGMC Insured, 5.00%, 5/01/33 | | | 2,000,000 | | | | 2,280,440 | |
School Building and Site, Series A, AGMC Insured, 5.00%, 5/01/34 | | | 2,000,000 | | | | 2,271,620 | |
School Building and Site, Series A, AGMC Insured, 5.00%, 5/01/35 | | | 2,000,000 | | | | 2,264,320 | |
| | | | | | | | |
| | | | | | | 1,029,030,938 | |
| | | | | | | | |
| | |
U.S. Territories 0.6% | | | | | | | | |
Puerto Rico 0.6% | | | | | | | | |
a Puerto Rico Sales Tax FICO Sales Tax Revenue, | | | | | | | | |
First Subordinate, Series A, 6.375%, 8/01/39 | | | 10,000,000 | | | | 2,600,000 | |
First Subordinate, Series A, 6.00%, 8/01/42 | | | 15,000,000 | | | | 3,900,000 | |
| | | | | | | | |
| | | | | | | 6,500,000 | |
| | | | | | | | |
| Total Municipal Bonds before Short Term Investments (Cost $1,007,728,133) | | | | | | | 1,035,530,938 | |
| | | | | | | | |
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 79 |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Michigan Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| |
Short Term Investments (Cost $500,000) 0.0%† | | | | | | | | |
Municipal Bonds 0.0%† | | | | | | | | |
Michigan 0.0%† | | | | | | | | |
b Green Lake Township EDC Revenue, Interlochen Center for the Arts Project, Refunding, LOC Harris Trust & Savings Bank, Daily VRDN and Put, 0.82%, 6/01/34 | | $ | 500,000 | | | $ | 500,000 | |
| | | | | | | | |
Total Investments (Cost $1,008,228,133) 98.7% | | | | | | | 1,036,030,938 | |
Other Assets, less Liabilities 1.3%. | | | | | | | 13,370,455 | |
| | | | | | | | |
Net Assets 100.0% | | | | | | $ | 1,049,401,393 | |
| | | | | | | | |
See Abbreviations on page 144.
†Rounds to less than 0.1% of net assets.
aSee Note 6 regarding defaulted securities.
bVariable rate demand notes (VRDNs) are 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. Unless otherwise noted, the coupon rate is determined based on factors including supply and demand, underlying credit, tax treatment, and current short term rates. The coupon rate shown represents the rate at period end.
| | | | | | |
80 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
Financial Highlights
Franklin Minnesota Tax-Free Income Fund
| | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended | | | | | | | | | | | | | | | |
| | | August 31, 2017 | | | Year Ended February 28, |
| | | (unaudited) | | | 2017 | | | 2016a | | | 2015 | | | 2014 | | | 2013 |
| | | | | | |
Class A | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance | | | | | | | | | | | | | | | | | | | | | | |
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, beginning of period | | | $12.27 | | | | $12.63 | | | | $12.69 | | | | $12.39 | | | | $12.98 | | | $12.80 |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | |
Net investment incomec | | | 0.18 | | | | 0.37 | | | | 0.40 | | | | 0.41 | | | | 0.41 | | | 0.42 |
Net realized and unrealized gains (losses) | | | 0.14 | | | | (0.35) | | | | (0.06) | | | | 0.30 | | | | (0.60) | | | 0.18 |
| | | | | | |
Total from investment operations | | | 0.32 | | | | 0.02 | | | | 0.34 | | | | 0.71 | | | | (0.19) | | | 0.60 |
| | | | | | |
Less distributions from net investment income | | | (0.18) | | | | (0.38) | | | | (0.40) | | | | (0.41) | | | | (0.40) | | | (0.42) |
| | | | | | |
Net asset value, end of period | | | $12.41 | | | | $12.27 | | | | $12.63 | | | | $12.69 | | | | $12.39 | | | $12.98 |
| | | | | | |
Total returnd | | | 2.62% | | | | 0.11% | | | | 2.71% | | | | 5.78% | | | | (1.45)% | | | 4.77% |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 0.65% | | | | 0.65% | | | | 0.64% | | | | 0.65% | | | | 0.64% | | | 0.64% |
Net investment income | | | 2.89% | | | | 2.99% | | | | 3.16% | | | | 3.23% | | | | 3.27% | | | 3.27% |
| | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | | $693,695 | | | | $695,040 | | | | $731,215 | | | | $719,848 | | | | $717,104 | | | $904,813 |
Portfolio turnover rate | | | 2.24% | | | | 13.80% | | | | 8.61% | | | | 6.53% | | | | 6.93% | | | 6.99% |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | | | Semiannual Report | | 81 |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Minnesota Tax-Free Income Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended | | | | | | | | | | | | | | | |
| | | August 31, 2017 | | | Year Ended February 28, |
| | | (unaudited) | | | 2017 | | | 2016a | | | 2015 | | | 2014 | | | 2013 |
| | | | | | |
Class C | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance | | | | | | | | | | | | | | | | | | | | | | |
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, beginning of period | | | $12.40 | | | | $12.76 | | | | $12.82 | | | | $12.51 | | | | $13.10 | | | $12.92 |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | |
Net investment incomec | | | 0.15 | | | | 0.31 | | | | 0.33 | | | | 0.34 | | | | 0.34 | | | 0.36 |
Net realized and unrealized gains (losses) | | | 0.14 | | | | (0.37) | | | | (0.06) | | | | 0.31 | | | | (0.60) | | | 0.17 |
| | | | | | |
Total from investment operations | | | 0.29 | | | | (0.06) | | | | 0.27 | | | | 0.65 | | | | (0.26) | | | 0.53 |
| | | | | | |
Less distributions from net investment income | | | (0.14) | | | | (0.30) | | | | (0.33) | | | | (0.34) | | | | (0.33) | | | (0.35) |
| | | | | | |
Net asset value, end of period | | | $12.55 | | | | $12.40 | | | | $12.76 | | | | $12.82 | | | | $12.51 | | | $13.10 |
| | | | | | |
Total returnd | | | 2.39% | | | | (0.45)% | | | | 2.12% | | | | 5.23% | | | | (1.97)% | | | 4.15% |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | |
Expenses | | | 1.20% | | | | 1.20% | | | | 1.19% | | | | 1.20% | | | | 1.19% | | | 1.19% |
Net investment income | | | 2.34% | | | | 2.44% | | | | 2.61% | | | | 2.68% | | | | 2.72% | | | 2.72% |
| | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | | $215,716 | | | | $223,444 | | | | $217,904 | | | | $211,768 | | | | $205,745 | | | $270,570 |
Portfolio turnover rate | | | 2.24% | | | | 13.80% | | | | 8.61% | | | | 6.53% | | | | 6.93% | | | 6.99% |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | |
82 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Minnesota Tax-Free Income Fund (continued)
| | |
| | | Period Ended |
| | | August 31, 2017 |
| | | (unaudited)a |
| |
| Class R6 | | |
| |
Per share operating performance | | |
(for a share outstanding throughout the period) | | |
Net asset value, beginning of period | | $12.40 |
| |
Income from investment operationsb: | | |
Net investment incomec | | 0.03 |
Net realized and unrealized gains (losses) | | 0.03 |
| |
Total from investment operations | | 0.06 |
| |
Less distributions from net investment income | | (0.03) |
| |
Net asset value, end of period | | $12.43 |
| |
Total returnd | | 0.48% |
| |
Ratios to average net assetse | | |
Expenses | | 0.49% |
Net investment income | | 3.05% |
| |
Supplemental data | | |
Net assets, end of period (000’s) | | $5 |
Portfolio turnover rate | | 2.24% |
aFor the period August 1, 2017 (effective date) to August 31, 2017.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | | | Semiannual Report | | 83 |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Minnesota Tax-Free Income Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended | | | | | | | | | | | | | | | |
| | | August 31, 2017 | | | Year Ended February 28, |
| | | (unaudited) | | | 2017 | | | 2016a | | | 2015 | | | 2014 | | | 2013 |
| | | | | | |
| Advisor Class | | | | | | | | | | | | | | | | | | | | | | |
Per share operating performance | | | | | | | | | | | | | | | | | | | | | | |
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, beginning of period | | | $12.28 | | | | $12.64 | | | | $12.70 | | | | $12.40 | | | | $12.99 | | | $12.81 |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | |
Net investment incomec | | | 0.19 | | | | 0.39 | | | | 0.41 | | | | 0.42 | | | | 0.42 | | | 0.44 |
Net realized and unrealized gains (losses) | | | 0.15 | | | | (0.36 | ) | | | (0.06 | ) | | | 0.30 | | | | (0.60 | ) | | 0.18 |
| | | | | | |
Total from investment operations | | | 0.34 | | | | 0.03 | | | | 0.35 | | | | 0.72 | | | | (0.18 | ) | | 0.62 |
| | | | | | |
Less distributions from net investment income . | | | (0.19 | ) | | | (0.39 | ) | | | (0.41 | ) | | | (0.42 | ) | | | (0.41 | ) | | (0.44) |
| | | | | | |
Net asset value, end of period | | | $12.43 | | | | $12.28 | | | | $12.64 | | | | $12.70 | | | | $12.40 | | | $12.99 |
| | | | | | |
Total returnd | | | 2.75% | | | | 0.20% | | | | 2.81% | | | | 5.88% | | | | (1.35 | )% | | 4.88% |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | |
Expenses. | | | 0.55% | | | | 0.55% | | | | 0.54% | | | | 0.55% | | | | 0.54% | | | 0.54% |
Net investment income | | | 2.99% | | | | 3.09% | | | | 3.26% | | | | 3.33% | | | | 3.37% | | | 3.37% |
| | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | | $170,641 | | | | $169,533 | | | | $121,685 | | | | $123,174 | | | | $98,382 | | | $49,398 |
Portfolio turnover rate | | | 2.24% | | | | 13.80% | | | | 8.61% | | | | 6.53% | | | | 6.93% | | | 6.99% |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | |
84 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
Statement of Investments, August 31, 2017 (unaudited)
Franklin Minnesota Tax-Free Income Fund
| | | | | | |
| | | Principal
Amount | | | Value |
Municipal Bonds 99.8% | | | | | | |
Minnesota 99.8% | | | | | | |
Alexandria ISD No. 206 GO, School Building, Minnesota School District Credit Enhancement Program, Series A, 5.00%, 2/01/37 | | $ | 11,700,000 | | | $ 13,065,741 |
Anoka-Hennepin ISD No. 11 GO, Anoka and Hennepin Counties, School Building, Minnesota School District Credit Enhancement Program, Refunding, Series A, Assured Guaranty, 5.00%, 2/01/20 | | | 5,870,000 | | | 6,436,338 |
Bemidji GO, Sales Tax Revenue, Refunding, 5.25%, 2/01/38 | | | 12,055,000 | | | 13,510,641 |
Big Lake ISD No. 727 GO, | | | | | | |
Refunding, Series B, 5.00%, 2/01/23 | | | 2,990,000 | | | 3,474,410 |
Refunding, Series B, 5.00%, 2/01/24 | | | 3,000,000 | | | 3,480,420 |
Refunding, Series B, 5.00%, 2/01/25 | | | 1,225,000 | | | 1,420,608 |
Blue Earth County EDA Public Project Lease Revenue, Series A, NATL Insured, 4.50%, 12/01/24 | | | 1,055,000 | | | 1,063,419 |
Brainerd ISD No. 181 GO, | | | | | | |
School Building, Refunding, Series A, 4.00%, 2/01/19 | | | 5,025,000 | | | 5,246,653 |
School Building, Refunding, Series A, 4.00%, 2/01/20 | | | 5,025,000 | | | 5,240,924 |
Cambridge ISD No. 911 GO, | | | | | | |
School Building, Minnesota School District Credit Enhancement Program, Refunding, Series A, 3.00%, 2/01/27 | | | 3,410,000 | | | 3,538,386 |
School Building, Minnesota School District Credit Enhancement Program, Refunding, Series A, 3.00%, 2/01/30 | | | 5,585,000 | | | 5,661,012 |
Center City Health Care Facilities Revenue, Hazelden Foundation Project, 5.00%, 11/01/41 | | | 1,600,000 | | | 1,654,992 |
Central Municipal Power Agency Revenue, | | | | | | |
Brookings, South East Twin Cities Transmission Project, 5.00%, 1/01/32 | | | 1,150,000 | | | 1,288,506 |
Brookings, South East Twin Cities Transmission Project, 5.00%, 1/01/42 | | | 1,615,000 | | | 1,782,766 |
Chaska ISD No. 112 GO, | | | | | | |
Alternative Facilities, Minnesota School District Credit Enhancement Program, Refunding, Series A, 5.00%, 2/01/20 | | | 4,135,000 | | | 4,531,877 |
School Building, Minnesota School District Credit Enhancement Program, Refunding, Series A, 4.00%, 2/01/20 | | | 4,475,000 | | | 4,798,453 |
Circle Pines ISD No. 12 GO, | | | | | | |
School Building, Minnesota School District Credit Enhancement Program, Capital Appreciation, Series A, zero cpn., 2/01/32 | | | 1,450,000 | | | 879,643 |
School Building, Minnesota School District Credit Enhancement Program, Capital Appreciation, Series A, zero cpn., 2/01/34 | | | 1,600,000 | | | 878,320 |
School Building, Minnesota School District Credit Enhancement Program, Capital Appreciation, Series A, zero cpn., 2/01/35 | | | 350,000 | | | 183,071 |
Cloquet Public Schools ISD No. 94 GO, School Building, Series B, 5.00%, 2/01/32 | | | 3,615,000 | | | 4,294,765 |
Dakota County CDA, SFMR, MBS Program, Series A, GNMA Secured, 4.875%, 12/01/33 | | | 975,000 | | | 1,024,208 |
Duluth ISD No. 709 COP, | | | | | | |
Full Term Certificates, Series B, AGMC Insured, Pre-Refunded, 5.00%, 2/01/28 | | | 18,890,000 | | | 19,980,709 |
Full Term Certificates, Series B, Pre-Refunded, 4.75%, 2/01/25 | | | 8,445,000 | | | 8,903,226 |
Refunding, Series A, 5.00%, 2/01/25 | | | 1,015,000 | | | 1,225,085 |
Refunding, Series A, 5.00%, 2/01/26 | | | 2,740,000 | | | 3,332,635 |
Refunding, Series A, 4.00%, 2/01/27 | | | 3,750,000 | | | 4,207,087 |
Refunding, Series A, 4.00%, 2/01/28 | | | 1,500,000 | | | 1,667,145 |
Duluth ISD No. 709 GO, | | | | | | |
Refunding, Series B, 4.00%, 2/01/25 | | | 3,450,000 | | | 3,945,523 |
Refunding, Series B, 2.50%, 2/01/26 | | | 2,840,000 | | | 2,886,178 |
Elk River ISD No. 728 GO, School Building, Elk River Area Schools, Series A, 4.00%, 2/01/32 | | | 6,130,000 | | | 6,603,052 |
Farmington ISD No. 192 GO, | | | | | | |
School Building, Refunding, Series C, 5.00%, 2/01/24 | | | 7,165,000 | | | 8,641,850 |
School Building, Series A, 4.00%, 2/01/28 | | | 5,230,000 | | | 5,850,592 |
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 85 |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Minnesota Tax-Free Income Fund (continued)
| | | | | | |
| | | Principal Amount | | | Value |
Municipal Bonds (continued) | | | | | | |
Minnesota (continued) | | | | | | |
Fergus Falls ISD No. 544 GO, School Building, Minnesota School District Credit Enhancement Program, Series A, AGMC Insured, 5.00%, 1/01/25 | | $ | 1,655,000 | | | $ 1,676,465 |
Fridley ISD No. 14 GO, School Building, Fridley Public Schools, Series A, 4.00%, 2/01/28 | | | 1,005,000 | | | 1,132,394 |
a Hennepin County GO, Series C, 5.00%, 12/01/34 | | | 6,680,000 | | | 8,098,565 |
Hennepin County Regional Railroad Authority GO, | | | | | | |
Refunding, Series A, 4.00%, 12/01/27 | | | 2,475,000 | | | 2,602,116 |
Refunding, Series A, 4.00%, 12/01/28 | | | 1,590,000 | | | 1,668,085 |
Hennepin County Sales Tax Revenue, | | | | | | |
Ballpark Project, first lien, Series A, Pre-Refunded, 4.75%, 12/15/37 | | | 25,000,000 | | | 25,276,750 |
Ballpark Project, second lien, Series B, 5.00%, 12/15/17 | | | 1,740,000 | | | 1,760,602 |
Ballpark Project, second lien, Series B, 5.00%, 12/15/21 | | | 5,000,000 | | | 5,058,050 |
Hermantown ISD No. 700 GO, School Building, Series A, 4.00%, 2/01/29 | | | 2,310,000 | | | 2,530,975 |
Hutchinson ISD No. 423 GO, School Building, Minnesota School District Credit Enhancement Program, Series A, 5.00%, 2/01/28 | | | 1,685,000 | | | 2,055,228 |
Jackson County GO, Capital Improvement Plan, Series A, 3.125%, 2/01/38 | | | 3,000,000 | | | 3,012,720 |
Jordan ISD No. 717 GO, | | | | | | |
School Building, Refunding, Series A, 5.00%, 2/01/32 | | | 1,605,000 | | | 1,880,900 |
School Building, Series A, 5.00%, 2/01/31 | | | 1,460,000 | | | 1,728,377 |
School Building, Series A, 5.00%, 2/01/33 | | | 1,700,000 | | | 2,012,494 |
School Building, Series A, 5.00%, 2/01/34 | | | 1,805,000 | | | 2,136,795 |
School Building, Series A, 5.00%, 2/01/35 | | | 1,000,000 | | | 1,183,820 |
School Building, Series A, Pre-Refunded, 5.00%, 2/01/32 | | | 395,000 | | | 467,609 |
Lakeville GO, | | | | | | |
Refunding, Series B, 4.00%, 2/01/21 | | | 1,000,000 | | | 1,098,000 |
Refunding, Series B, 3.00%, 2/01/30 | | | 4,690,000 | | | 4,773,388 |
Lakeville ISD No. 194 GO, Alternative Facilities, Series B, 3.00%, 2/01/25 | | | 3,560,000 | | | 3,753,949 |
Maple Grove GO, | | | | | | |
Improvement, Refunding, Series A, 4.00%, 2/01/21 | | | 2,100,000 | | | 2,309,496 |
Improvement, Refunding, Series A, 4.00%, 2/01/22 | | | 2,470,000 | | | 2,770,228 |
Metropolitan Council Minneapolis-St. Paul Metropolitan Area GO, Wastewater Revenue, Series C, 5.00%, 3/01/24 | | | 6,250,000 | | | 7,653,437 |
Minneapolis and St. Paul Housing and RDA Health Care Facilities Revenue, Children’s Hospitals and Clinics, Series A-1, AGMC Insured, 5.00%, 8/15/34 | | | 1,000,000 | | | 1,082,890 |
Minneapolis and St. Paul Housing and RDA Health Care System Revenue, | | | | | | |
Allina Health System, Refunding, Series A, 5.00%, 11/15/26 | | | 2,000,000 | | | 2,476,800 |
Allina Health System, Refunding, Series A, 5.00%, 11/15/27 | | | 2,000,000 | | | 2,474,500 |
Minneapolis Health Care System Revenue, | | | | | | |
Fairview Health Services, Refunding, Series A, 5.00%, 11/15/44 | | | 10,000,000 | | | 11,403,600 |
Fairview Health Services, Series B, Assured Guaranty, 6.50%, 11/15/38 | | | 29,485,000 | | | 31,397,102 |
Fairview Health Services, Series B, Assured Guaranty, Pre-Refunded, 6.50%, 11/15/38 | | | 5,515,000 | | | 5,881,527 |
Minneapolis-St. Paul Metropolitan Airports Commission Revenue, | | | | | | |
Airport, senior bond, Refunding, Series A, 5.00%, 1/01/35 | | | 9,295,000 | | | 10,064,719 |
Airport, senior bond, Refunding, Series A, 5.00%, 1/01/26 | | | 6,000,000 | | | 7,492,920 |
Airport, senior bond, Refunding, Series A, 5.00%, 1/01/30 | | | 11,750,000 | | | 14,353,095 |
Airport, senior bond, Refunding, Series C, 5.00%, 1/01/34 | | | 2,870,000 | | | 3,439,351 |
Airport, senior bond, Refunding, Series C, 5.00%, 1/01/35 | | | 4,025,000 | | | 4,805,085 |
Airport, senior bond, Refunding, Series C, 5.00%, 1/01/41 | | | 19,655,000 | | | 23,162,042 |
Airport, senior bond, Refunding, Series C, 5.00%, 1/01/46 | | | 15,500,000 | | | 18,168,480 |
Airport, sub. bond, Refunding, Series B, 5.00%, 1/01/26 | | | 1,250,000 | | | 1,435,688 |
Airport, sub. bond, Refunding, Series B, 5.00%, 1/01/27 | | | 1,500,000 | | | 1,716,045 |
Airport, sub. bond, Refunding, Series B, 5.00%, 1/01/28 | | | 2,250,000 | | | 2,566,980 |
| | | | | | |
86 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Minnesota Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Municipal Bonds (continued) | | | | | | | | |
Minnesota (continued) | | | | | | | | |
Minnesota Agricultural and Economic Development Board Revenue, | | | | | | | | |
Health Care Facilities, Essentia Health Obligated Group, Series C-1, Assured Guaranty, 5.00%, 2/15/30 | | $ | 14,600,000 | | | $ | 15,747,414 | |
Health Care Facilities, Essentia Health Obligated Group, Series E, Assured Guaranty, 5.00%, 2/15/37 | | | 20,600,000 | | | | 20,885,722 | |
Minnesota Public Facilities Authority State Revenue, | | | | | | | | |
Revolving Fund, Refunding, Series A, 5.00%, 3/01/24 | | | 17,010,000 | | | | 20,770,571 | |
Revolving Fund, Series C, Pre-Refunded, 5.00%, 3/01/26 | | | 16,530,000 | | | | 18,175,231 | |
Minnesota State 911 Revenue, | | | | | | | | |
Public Safety Radio Communications System Project, Assured Guaranty, Pre-Refunded, 4.50%, 6/01/22 | | | 1,000,000 | | | | 1,063,120 | |
Public Safety Radio Communications System Project, Assured Guaranty, Pre-Refunded, 4.50%, 6/01/24 | | | 3,745,000 | | | | 3,981,384 | |
Public Safety Radio Communications System Project, Assured Guaranty, Pre-Refunded, 5.00%, 6/01/24 | | | 3,000,000 | | | | 3,092,250 | |
Minnesota State Colleges and Universities Revenue, | | | | | | | | |
Board of Trustees, Fund, Refunding, Series A, 5.00%, 10/01/22 | | | 1,410,000 | | | | 1,662,094 | |
Board of Trustees, Fund, Series A, 4.00%, 10/01/24 | | | 1,535,000 | | | | 1,719,246 | |
Board of Trustees, Fund, Series A, 5.00%, 10/01/28 | | | 2,135,000 | | | | 2,435,245 | |
Board of Trustees, Fund, Series A, 4.625%, 10/01/29 | | | 6,615,000 | | | | 7,054,170 | |
Minnesota State COP, Legislative Office Facility Project, 5.00%, 6/01/36 | | | 4,115,000 | | | | 4,726,983 | |
Minnesota State General Fund Revenue, | | | | | | | | |
Appropriation, Refunding, Series A, 4.00%, 3/01/26 | | | 4,000,000 | | | | 4,434,120 | |
Appropriation, Refunding, Series A, 3.00%, 3/01/30 | | | 5,000,000 | | | | 5,037,650 | |
Appropriation, Refunding, Series B, 5.00%, 3/01/22 | | | 1,530,000 | | | | 1,785,372 | |
Appropriation, Series A, 5.00%, 6/01/32 | | | 7,000,000 | | | | 8,211,210 | |
Appropriation, Series A, 5.00%, 6/01/38 | | | 8,500,000 | | | | 9,736,240 | |
Minnesota State GO, | | | | | | | | |
Various Purpose, Refunding, Series F, 4.00%, 10/01/24 | | | 12,720,000 | | | | 14,502,708 | |
Various Purpose, Refunding, Series F, 4.00%, 10/01/25 | | | 15,000,000 | | | | 16,953,750 | |
Various Purpose, Series A, 5.00%, 8/01/28 | | | 5,570,000 | | | | 6,921,282 | |
Various Purpose, Series A, Pre-Refunded, 4.25%, 12/01/27 | | | 5,000,000 | | | | 5,368,750 | |
Various Purpose, Series A, Pre-Refunded, 4.50%, 12/01/28 | | | 15,540,000 | | | | 16,771,856 | |
Various Purpose, Series H, 5.00%, 11/01/27 | | | 325,000 | | | | 352,905 | |
Various Purpose, Series H, Pre-refunded, 5.00%, 11/01/27 | | | 2,175,000 | | | | 2,361,745 | |
Minnesota State HFA Homeownership Finance Revenue, | | | | | | | | |
MBS Program, Series E, GNMA Secured, 4.45%, 7/01/31 | | | 2,845,000 | | | | 2,989,042 | |
MBS Program, Series G, GNMA Secured, 4.00%, 7/01/26 | | | 1,500,000 | | | | 1,572,780 | |
MBS Program, Series G, GNMA Secured, 4.40%, 7/01/32 | | | 2,515,000 | | | | 2,636,902 | |
Minnesota State HFAR, | | | | | | | | |
Nonprofit Housing State Appropriation, 4.00%, 8/01/29 | | | 3,675,000 | | | | 3,846,659 | |
Nonprofit Housing State Appropriation, 5.00%, 8/01/31 | | | 2,225,000 | | | | 2,493,046 | |
Residential Housing Finance, Refunding, Series B, 3.10%, 7/01/35 | | | 8,690,000 | | | | 8,566,602 | |
Residential Housing Finance, Series E, 4.90%, 7/01/29 | | | 6,325,000 | | | | 6,526,325 | |
Residential Housing Finance, Series E, 5.10%, 1/01/40 | | | 5,965,000 | | | | 6,146,932 | |
Minnesota State Higher Education Facilities Authority Revenue, | | | | | | | | |
Carleton College, Series 7-D, Pre-Refunded, 5.00%, 3/01/40 | | | 4,000,000 | | | | 4,244,000 | |
College of St. Olaf, Refunding, Series 8-N, 4.00%, 10/01/33 | | | 1,500,000 | | | | 1,645,785 | |
College of St. Olaf, Refunding, Series 8-N, 4.00%, 10/01/35 | | | 500,000 | | | | 543,575 | |
Macalester College, Series 7-I, 5.00%, 6/01/35 | | | 5,000,000 | | | | 5,488,500 | |
University of St. Thomas, Refunding, Series 8-L, 5.00%, 4/01/35 | | | 750,000 | | | | 868,733 | |
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 87 |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Minnesota Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Municipal Bonds (continued) | | | | | | | | |
Minnesota (continued) | | | | | | | | |
Minnesota State Higher Education Facilities Authority Revenue, (continued) | | | | | | | | |
University of St. Thomas, Refunding, Series 8-M, 4.00%, 4/01/22 | | $ | 1,215,000 | | | $ | 1,355,490 | |
University of St. Thomas, Series 7-A, 5.00%, 10/01/29 | | | 5,420,000 | | | | 5,811,974 | |
University of St. Thomas, Series 7-A, 5.00%, 10/01/39 | | | 4,485,000 | | | | 4,782,759 | |
University of St. Thomas, Series 8-L, 4.00%, 4/01/31 | | | 4,200,000 | | | | 4,578,210 | |
Minnesota State Municipal Power Agency Electric Revenue, | | | | | | | | |
4.00%, 10/01/41 | | | 4,680,000 | | | | 5,010,689 | |
5.00%, 10/01/47 | | | 4,650,000 | | | | 5,387,583 | |
Refunding, Series A, 4.00%, 10/01/31 | | | 1,265,000 | | | | 1,376,965 | |
Refunding, Series A, 4.00%, 10/01/32 | | | 1,200,000 | | | | 1,301,376 | |
Refunding, Series A, 4.00%, 10/01/33 | | | 1,000,000 | | | | 1,080,460 | |
Refunding, Series A, 5.00%, 10/01/34 | | | 1,000,000 | | | | 1,142,260 | |
Refunding, Series A, 5.00%, 10/01/35 | | | 1,005,000 | | | | 1,144,514 | |
Series A, 5.25%, 10/01/35 | | | 12,000,000 | | | | 13,291,440 | |
New London-Spicer Schools ISD No. 345 GO, | | | | | | | | |
School Building, Series A, 4.00%, 2/01/28 | | | 1,160,000 | | | | 1,307,042 | |
School Building, Series A, 4.00%, 2/01/29 | | | 1,095,000 | | | | 1,216,140 | |
School Building, Series A, 4.00%, 2/01/31 | | | 1,300,000 | | | | 1,424,215 | |
New Prague ISD No. 721 GO, | | | | | | | | |
School Building, Minnesota School District Credit Enhancement Program, Refunding, Series A, 4.00%, 2/01/22 | | | 3,090,000 | | | | 3,381,943 | |
School Building, Minnesota School District Credit Enhancement Program, Refunding, Series A, 4.00%, 2/01/23 | | | 3,045,000 | | | | 3,315,640 | |
School Building, Minnesota School District Credit Enhancement Program, Refunding, Series A, 4.00%, 2/01/24 | | | 3,245,000 | | | | 3,519,851 | |
School Building, Minnesota School District Credit Enhancement Program, Refunding, Series A, 4.00%, 2/01/25 | | | 3,300,000 | | | | 3,562,383 | |
Northern Municipal Power Agency Electric System Revenue, | | | | | | | | |
Refunding, Series A, Assured Guaranty, 5.00%, 1/01/21 | | | 1,505,000 | | | | 1,523,000 | |
Series A, 5.00%, 1/01/30 | | | 1,190,000 | | | | 1,353,804 | |
Series A, AMBAC Insured, Pre-Refunded, 5.00%, 1/01/26 | | | 2,000,000 | | | | 2,026,580 | |
Northfield ISD No. 659 GO, School Building, Refunding, Series A, 4.00%, 2/01/20 | | | 3,420,000 | | | | 3,566,444 | |
Perham ISD No. 549 GO, | | | | | | | | |
Perham Dent Public Schools, School Building, Series A, 4.00%, 2/01/27 | | | 715,000 | | | | 798,247 | |
Perham Dent Public Schools, School Building, Series A, 4.00%, 2/01/28 | | | 1,045,000 | | | | 1,154,777 | |
Perham Dent Public Schools, School Building, Series A, 4.00%, 2/01/29 | | | 500,000 | | | | 547,830 | |
Ramsey GO, | | | | | | | | |
Capital Improvement Plan, Refunding, Series A, 3.00%, 12/15/28 | | | 1,105,000 | | | | 1,129,951 | |
Capital Improvement Plan, Refunding, Series A, 3.375%, 12/15/31 | | | 1,215,000 | | | | 1,261,826 | |
Rochester Electricity Utility Revenue, | | | | | | | | |
Refunding, Series A, 5.00%, 12/01/42 | | | 2,000,000 | | | | 2,348,720 | |
Refunding, Series A, 5.00%, 12/01/47 | | | 9,210,000 | | | | 10,742,544 | |
Series B, 5.00%, 12/01/43 | | | 1,000,000 | | | | 1,149,100 | |
Rochester Health Care Facilities Revenue, | | | | | | | | |
b Mayo Clinic, Mandatory Put, Series C, 4.50%, 11/15/21. | | | 10,190,000 | | | | 11,553,830 | |
Mayo Clinic, Refunding, Series B, 5.00%, 11/15/33 | | | 4,425,000 | | | | 5,705,329 | |
Mayo Clinic, Refunding, Series B, 5.00%, 11/15/34 | | | 10,235,000 | | | | 13,225,258 | |
Mayo Clinic, Refunding, Series B, 5.00%, 11/15/35 | | | 5,000,000 | | | | 6,476,000 | |
Mayo Clinic, Refunding, Series B, 5.00%, 11/15/36 | | | 3,200,000 | | | | 4,155,936 | |
Mayo Clinic, Series D, 5.00%, 11/15/38 | | | 5,000,000 | | | | 5,419,800 | |
Mayo Clinic, Series E, 5.00%, 11/15/38 | | | 20,000,000 | | | | 21,679,200 | |
| | | | | | |
88 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Minnesota Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal Amount | | | Value | |
Municipal Bonds (continued) | | | | | | | | |
Minnesota (continued) | | | | | | | | |
Rosemount ISD No. 196 GO, | | | | | | | | |
School Building, Refunding, Series C, 4.00%, 2/01/21 | | $ | 1,365,000 | | | $ | 1,501,172 | |
School Building, Refunding, Series C, 4.00%, 2/01/22 | | | 2,380,000 | | | | 2,674,739 | |
Sartell ISD No. 748 GO, | | | | | | | | |
Capital Appreciation, School Building, Series B, zero cpn., 2/01/36 | | | 3,000,000 | | | | 1,618,980 | |
Capital Appreciation, School Building, Series B, zero cpn., 2/01/37 | | | 2,820,000 | | | | 1,463,270 | |
Capital Appreciation, School Building, Series B, zero cpn., 2/01/38 | | | 5,220,000 | | | | 2,602,849 | |
Capital Appreciation, School Building, Series B, zero cpn., 2/01/39 | | | 2,820,000 | | | | 1,347,593 | |
School Building, Series A, 5.00%, 2/01/26 | | | 1,500,000 | | | | 1,835,910 | |
School Building, Series A, 5.00%, 2/01/27 | | | 2,075,000 | | | | 2,526,810 | |
Scott County GO, Capital Improvement Plan, Series A, AMBAC Insured, 5.00%, 12/01/27 | | | 5,590,000 | | | | 5,640,086 | |
South Washington County ISD No. 833 GO, | | | | | | | | |
School Building, Series A, 4.00%, 2/01/29 | | | 4,220,000 | | | | 4,703,781 | |
School Building, Series A, 4.00%, 2/01/30 | | | 9,640,000 | | | | 10,637,354 | |
Southern Minnesota Municipal Power Agency Power Supply System Revenue, | | | | | | | | |
Capital Appreciation, Refunding, Series A, NATL Insured, zero cpn., 1/01/19 | | | 5,875,000 | | | | 5,782,234 | |
Capital Appreciation, Refunding, Series A, NATL Insured, zero cpn., 1/01/20 | | | 14,035,000 | | | | 13,600,617 | |
Capital Appreciation, Refunding, Series A, NATL Insured, zero cpn., 1/01/23 | | | 4,000,000 | | | | 3,647,840 | |
Capital Appreciation, Refunding, Series A, NATL Insured, zero cpn., 1/01/26 | | | 5,395,000 | | | | 4,463,985 | |
Capital Appreciation, Refunding, Series A, NATL Insured, zero cpn., 1/01/27 | | | 6,600,000 | | | | 5,245,482 | |
Capital Appreciation, Refunding, Series C, AMBAC Insured, zero cpn., 1/01/18 | | | 15,935,000 | | | | 15,881,299 | |
Refunding, Series A, 5.00%, 1/01/46 | | | 9,345,000 | | | | 10,623,209 | |
Series A, Pre-Refunded, 5.00%, 1/01/21 | | | 1,000,000 | | | | 1,054,460 | |
Series A, Pre-Refunded, 5.00%, 1/01/22 | | | 2,060,000 | | | | 2,172,188 | |
Series A, Pre-Refunded, 5.50%, 1/01/24 | | | 1,000,000 | | | | 1,061,010 | |
Series A, Pre-Refunded, 5.25%, 1/01/30 | | | 2,000,000 | | | | 2,115,460 | |
St. Cloud Health Care Revenue, | | | | | | | | |
CentraCare Health System, Refunding, Series A, 5.125%, 5/01/30 | | | 750,000 | | | | 815,318 | |
CentraCare Health System, Refunding, Series A, 4.00%, 5/01/37 | | | 12,310,000 | | | | 12,972,524 | |
CentraCare Health System, Series A, Pre-Refunded, 5.125%, 5/01/30 | | | 9,250,000 | | | | 10,256,585 | |
CentraCare Health System Project, Series D, Assured Guaranty, Pre-Refunded, 5.375%, 5/01/31 | | | 1,000,000 | | | | 1,072,890 | |
CentraCare Health System Project, Series D, Assured Guaranty, Pre-Refunded, 5.50%, 5/01/39 | | | 27,400,000 | | | | 29,453,356 | |
St. Cloud Public Schools ISD No. 742 COP, 4.00%, 2/01/38 | | | 1,000,000 | | | | 1,040,280 | |
St. Cloud Public Schools ISD No. 742 GO, | | | | | | | | |
Series A, 4.00%, 2/01/28 | | | 2,080,000 | | | | 2,329,912 | |
Series A, 4.00%, 2/01/29 | | | 1,000,000 | | | | 1,112,930 | |
Series B, 4.00%, 2/01/30 | | | 4,060,000 | | | | 4,545,048 | |
Series B, 4.00%, 2/01/36 | | | 2,500,000 | | | | 2,701,775 | |
Series B, 4.00%, 2/01/37 | | | 2,250,000 | | | | 2,426,377 | |
St. Michael ISD No. 885 GO, Refunding, Series A, 4.25%, 2/01/32 | | | 10,295,000 | | | | 11,166,781 | |
St. Paul Housing and RDA Health Care System Revenue, | | | | | | | | |
Allina Health System, Refunding, Series A-1, 5.25%, 11/15/29 | | | 2,440,000 | | | | 2,656,965 | |
Allina Health System, Series A, NATL Insured, 5.00%, 11/15/22 | | | 5,000,000 | | | | 5,039,850 | |
Allina Health System, Series A-1, Pre-Refunded, 5.25%, 11/15/29 | | | 2,560,000 | | | | 2,797,594 | |
Fairview Health Services, Refunding, Series A, 3.125%, 11/15/32. | | | 2,000,000 | | | | 1,974,880 | |
Fairview Health Services, Refunding, Series A, 4.00%, 11/15/43 | | | 3,000,000 | | | | 3,140,640 | |
St. Paul ISD No. 625 GO, | | | | | | | | |
School Building, Minnesota School District Credit Enhancement Program, Refunding, Series B, 5.00%, 2/01/24 | | | 2,925,000 | | | | 3,462,673 | |
School Building, Minnesota School District Credit Enhancement Program, Series A, 3.00%, 2/01/30 | | | 1,385,000 | | | | 1,399,750 | |
School Building, Minnesota School District Credit Enhancement Program, Series A, 3.00%, 2/01/31 | | | 1,195,000 | | | | 1,203,843 | |
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 89 |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Minnesota Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| |
Municipal Bonds (continued) | | | | | | | | |
Minnesota (continued) | | | | | | | | |
St. Paul Sales Tax Revenue, | | | | | | | | |
Series G, 5.00%, 11/01/31 | | $ | 1,000,000 | | | $ | 1,166,350 | |
Series G, 5.00%, 11/01/32 | | | 1,000,000 | | | | 1,158,520 | |
sub. bond, Series A, XLCA Insured, Pre-Refunded, 5.00%, 11/01/30 | | | 7,360,000 | | | | 7,407,472 | |
University of Minnesota GO, | | | | | | | | |
Series A, 4.00%, 2/01/26 | | | 2,425,000 | | | | 2,697,133 | |
Series A, 5.25%, 4/01/29 | | | 1,000,000 | | | | 1,066,500 | |
Series A, 5.125%, 4/01/34 | | | 1,000,000 | | | | 1,061,320 | |
Series A, 5.00%, 4/01/41 | | | 5,000,000 | | | | 5,845,300 | |
Series B, 5.00%, 1/01/38 | | | 4,500,000 | | | | 5,176,395 | |
University of Minnesota Revenue, | | | | | | | | |
Special Purpose, State Supported Stadium Debt, Refunding, Series A, 5.00%, 8/01/25 | | | 5,000,000 | | | | 6,206,900 | |
Special Purpose, State Supported Stadium Debt, Refunding, Series A, 5.00%, 8/01/28 | | | 7,225,000 | | | | 8,690,808 | |
State Supported Biomedical Science Research Facilities Funding Program, Series B, 5.00%, 8/01/36 | | | 5,000,000 | | | | 5,594,300 | |
Waconia ISD No. 110 GO, School Building, Refunding, Series B, 4.125%, 2/01/22 | | | 3,000,000 | | | | 3,081,270 | |
Western Minnesota Municipal Power Agency Revenue, | | | | | | | | |
Refunding, Series A, 5.00%, 1/01/24 | | | 5,000,000 | | | | 5,891,400 | |
Refunding, Series A, 5.00%, 1/01/25 | | | 3,370,000 | | | | 3,961,368 | |
Refunding, Series A, 5.00%, 1/01/29 | | | 1,200,000 | | | | 1,397,244 | |
Refunding, Series A, 5.00%, 1/01/35 | | | 3,000,000 | | | | 3,498,780 | |
Refunding, Series A, 5.00%, 1/01/36 | | | 2,035,000 | | | | 2,358,585 | |
Series A, 5.00%, 1/01/20 | | | 3,725,000 | | | | 4,066,620 | |
Series A, 5.00%, 1/01/40 | | | 8,075,000 | | | | 9,097,053 | |
Series A, 5.00%, 1/01/46 | | | 11,870,000 | | | | 13,292,145 | |
Willmar GO, Rice Memorial Hospital Project, Refunding, Series A, 3.00%, 2/01/29 | | | 1,000,000 | | | | 1,011,950 | |
| | | | | | | | |
Total Municipal Bonds before Short Term Investments (Cost $1,027,696,892) | | | | | | | 1,077,886,223 | |
| | | | | | | | |
| | |
Short Term Investments 0.2% | | | | | | | | |
Municipal Bonds 0.2% | | | | | | | | |
Minnesota 0.2% | | | | | | | | |
c Minneapolis and St. Paul Housing and RDA Health Care System Revenue, | | | | | | | | |
Allina Health System, Refunding, Series B-1, LOC JPMorgan Chase Bank, Daily VRDN and Put, 0.81%, 11/15/35 | | | 800,000 | | | | 800,000 | |
Allina Health System, Refunding, Series B-2, LOC JPMorgan Chase Bank, Daily VRDN and Put, 0.82%, 11/15/35 | | | 1,800,000 | | | | 1,800,000 | |
| | | | | | | | |
Total Short Term Investments (Cost $2,600,000) | | | | | | | 2,600,000 | |
| | | | | | | | |
Total Investments (Cost $1,030,296,892) 100.0% | | | | | | | 1,080,486,223 | |
Other Assets, less Liabilities (0.0)%† | | | | | | | (428,490 | ) |
| | | | | | | | |
Net Assets 100.0% | | | | | | $ | 1,080,057,733 | |
| | | | | | | | |
See Abbreviations on page 144.
†Rounds to less than 0.1% of net assets.
aSecurity purchased on a delayed delivery basis. See Note 1(b).
bThe maturity date shown represents the mandatory put date.
cVariable rate demand notes (VRDNs) are 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. Unless otherwise noted, the coupon rate is determined based on factors including supply and demand, underlying credit, tax treatment, and current short term rates. The coupon rate shown represents the rate at period end.
| | | | | | |
90 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
Financial Highlights
Franklin Ohio Tax-Free Income Fund
| | | | | | | | | | | | |
| | | Six Months Ended | | | | | | | | | | |
| | | August 31, 2017 | | Year Ended February 28, |
| | | (unaudited) | | 2017 | | 2016a | | 2015 | | 2014 | | 2013 |
Class A | | | | | | | | | | | | |
Per share operating performance | | | | | | | | | | | | |
(for a share outstanding throughout the period) | | | | | | | | | | | | |
Net asset value, beginning of period | | $12.56 | | $12.90 | | $12.91 | | $12.44 | | $13.12 | | $12.96 |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | |
Net investment incomec | | 0.19 | | 0.41 | | 0.44 | | 0.46 | | 0.48 | | 0.48 |
Net realized and unrealized gains (losses) | | 0.19 | | (0.34) | | (0.01) | | 0.49 | | (0.71) | | 0.15 |
| | | | | | |
Total from investment operations | | 0.38 | | 0.07 | | 0.43 | | 0.95 | | (0.23) | | 0.63 |
| | | | | | |
Less distributions from net investment income | | (0.19) | | (0.41) | | (0.44) | | (0.48) | | (0.45) | | (0.47) |
| | | | | | |
Net asset value, end of period | | $12.75 | | $12.56 | | $12.90 | | $12.91 | | $12.44 | | $13.12 |
| | | | | | |
Total returnd | | 3.08% | | 0.52% | | 3.43% | | 7.76% | | (1.69)% | | 4.96% |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | |
Expenses | | 0.63% | | 0.63% | | 0.63% | | 0.63% | | 0.63% | | 0.63% |
Net investment income | | 3.03% | | 3.17% | | 3.41% | | 3.65% | | 3.86% | | 3.69% |
| | | | | | |
Supplemental data | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $1,128,796 | | $1,120,704 | | $1,186,318 | | $1,160,630 | | $1,144,885 | | $1,445,535 |
Portfolio turnover rate | | 6.79% | | 14.17% | | 6.53% | | 13.88% | | 8.78% | | 9.69% |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | | | Semiannual Report | | 91 |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Ohio Tax-Free Income Fund (continued)
| | | | | | | | | | | | |
| | | Six Months Ended | | | | | | | | | | |
| | | August 31, 2017 | | Year Ended February 28, |
| | | (unaudited) | | 2017 | | 2016a | | 2015 | | 2014 | | 2013 |
Class C | | | | | | | | | | | | |
Per share operating performance | | | | | | | | | | | | |
(for a share outstanding throughout the period) | | | | | | | | | | | | |
Net asset value, beginning of period | | $12.72 | | $13.06 | | $13.07 | | $12.58 | | $13.27 | | $13.10 |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | |
Net investment incomec | | 0.16 | | 0.34 | | 0.37 | | 0.40 | | 0.42 | | 0.42 |
Net realized and unrealized gains (losses) | | 0.20 | | (0.34) | | (0.01) | | 0.50 | | (0.73) | | 0.15 |
| | | | | | |
Total from investment operations | | 0.36 | | — | | 0.36 | | 0.90 | | (0.31) | | 0.57 |
| | | | | | |
Less distributions from net investment income | | (0.16) | | (0.34) | | (0.37) | | (0.41) | | (0.38) | | (0.40) |
| | | | | | |
Net asset value, end of period | | $12.92 | | $12.72 | | $13.06 | | $13.07 | | $12.58 | | $13.27 |
| | | | | | |
Total returnd | | 2.83% | | (0.05)% | | 2.82% | | 7.25% | | (2.28)% | | 4.41% |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | |
Expenses | | 1.18% | | 1.18% | | 1.18% | | 1.18% | | 1.18% | | 1.18% |
Net investment income | | 2.48% | | 2.62% | | 2.86% | | 3.10% | | 3.31% | | 3.14% |
| | | | | | |
Supplemental data | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $324,583 | | $330,566 | | $322,560 | | $312,055 | | $301,447 | | $416,262 |
Portfolio turnover rate | | 6.79% | | 14.17% | | 6.53% | | 13.88% | | 8.78% | | 9.69% |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | |
92 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Ohio Tax-Free Income Fund (continued)
| | |
| | | Period Ended August 31, 2017 (unaudited)a |
Class R6 | | |
Per share operating performance | | |
(for a share outstanding throughout the period) | | |
Net asset value, beginning of period | | $12.73 |
| |
Income from investment operationsb: | | |
Net investment incomec | | 0.03 |
Net realized and unrealized gains (losses) | | 0.03 |
| |
Total from investment operations | | 0.06 |
| |
Less distributions from net investment income | | (0.03) |
| |
Net asset value, end of period | | $12.76 |
| |
Total returnd | | 0.49% |
| |
Ratios to average net assetse | | |
Expenses | | 0.48% |
Net investment income | | 3.18% |
| |
Supplemental data | | |
Net assets, end of period (000’s) | | $5 |
Portfolio turnover rate | | 6.79% |
aFor the period August 1, 2017 (effective date) to August 31, 2017.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | | | Semiannual Report | | 93 |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Ohio Tax-Free Income Fund (continued)
| | | | | | | | | | | | |
| | | Six Months Ended | | | | | | | | | | |
| | | August 31, 2017 | | Year Ended February 28, |
| | | (unaudited) | | 2017 | | 2016a | | 2015 | | 2014 | | 2013 |
Advisor Class | | | | | | | | | | | | |
Per share operating performance | | | | | | | | | | | | |
(for a share outstanding throughout the period) | | | | | | | | | | | | |
Net asset value, beginning of period | | $12.57 | | $12.91 | | $12.92 | | $12.44 | | $13.12 | | $12.96 |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | |
Net investment incomec | | 0.20 | | 0.42 | | 0.45 | | 0.48 | | 0.49 | | 0.50 |
Net realized and unrealized gains (losses) | | 0.20 | | (0.34) | | (0.01) | | 0.49 | | (0.71) | | 0.15 |
| | | | | | |
Total from investment operations | | 0.40 | | 0.08 | | 0.44 | | 0.97 | | (0.22) | | 0.65 |
| | | | | | |
Less distributions from net investment income | | (0.20) | | (0.42) | | (0.45) | | (0.49) | | (0.46) | | (0.49) |
| | | | | | |
Net asset value, end of period | | $12.77 | | $12.57 | | $12.91 | | $12.92 | | $12.44 | | $13.12 |
| | | | | | |
Total returnd | | 3.20% | | 0.62% | | 3.53% | | 7.95% | | (1.59)% | | 5.07% |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | |
Expenses | | 0.53% | | 0.53% | | 0.53% | | 0.53% | | 0.53% | | 0.53% |
Net investment income | | 3.13% | | 3.27% | | 3.51% | | 3.75% | | 3.96% | | 3.79% |
| | | | | | |
Supplemental data | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $162,508 | | $143,603 | | $80,279 | | $73,386 | | $37,153 | | $45,364 |
Portfolio turnover rate | | 6.79% | | 14.17% | | 6.53% | | 13.88% | | 8.78% | | 9.69% |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | |
94 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
Statement of Investments, August 31, 2017 (unaudited)
Franklin Ohio Tax-Free Income Fund
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| Municipal Bonds 99.3% | | | | | | | | |
Ohio 99.3% | | | | | | | | |
Akron Income Tax Revenue, | | | | | | | | |
Community Learning Centers, 5.00%, 12/01/33 | | $ | 4,250,000 | | | $ | 4,887,585 | |
Community Learning Centers, Series A, 4.50%, 12/01/33 | | | 10,000,000 | | | | 10,717,500 | |
Allen County Hospital Facilities Revenue, | | | | | | | | |
Catholic Healthcare Partners, Refunding, Series A, 5.25%, 6/01/38 | | | 15,000,000 | | | | 16,333,200 | |
Catholic Healthcare Partners, Refunding, Series B, 5.25%, 9/01/27 | | | 7,570,000 | | | | 8,384,229 | |
American Municipal Power Inc. Revenue, | | | | | | | | |
Combined Hydroelectric Projects, Green Bonds, Refunding, Series A, 5.00%, 2/15/46 | | | 7,500,000 | | | | 8,497,575 | |
Greenup Hydroelectric Project, Series A, 4.00%, 2/15/36 | | | 1,000,000 | | | | 1,049,690 | |
Prairie State Energy Campus Project, Refunding, Series A, 5.00%, 2/15/28 | | | 5,000,000 | | | | 5,790,950 | |
Prairie State Energy Campus Project, Refunding, Series A, Assured Guaranty, 5.25%, 2/15/33 | | | 1,725,000 | | | | 1,754,498 | |
Prairie State Energy Campus Project, Refunding, Series A, BAM Insured, 5.25%, 2/15/31 | | | 10,000,000 | | | | 11,554,200 | |
Prairie State Energy Campus Project, Refunding, Series A, BHAC Insured, 5.00%, 2/15/38 | | | 1,275,000 | | | | 1,295,069 | |
Prairie State Energy Campus Project, Series A, Assured Guaranty, Pre-Refunded, 5.25%, 2/15/33 | | | 28,275,000 | | | | 28,830,886 | |
Prairie State Energy Campus Project, Series A, BHAC Insured, Pre-Refunded, 5.00%, 2/15/38 | | | 20,725,000 | | | | 21,109,656 | |
Anthony Wayne Local School District GO, Lucas Wood and Fulton Counties, School Facilities Construction and Improvement, Series A, 4.00%, 12/01/39 | | | 3,000,000 | | | | 3,139,230 | |
Ashland City School District GO, Classroom Facilities and School Improvement, Series 2, 4.00%, 11/01/49 | | | 6,685,000 | | | | 6,752,117 | |
Bath Local School District GO, | | | | | | | | |
School Improvement, AGMC Insured, 4.00%, 12/01/44 | | | 1,295,000 | | | | 1,327,362 | |
School Improvement, AGMC Insured, 5.00%, 12/01/49 | | | 5,380,000 | | | | 5,709,256 | |
Beaver Local School District GO, School Facilities, 4.00%, 12/01/40 | | | 3,000,000 | | | | 3,108,600 | |
Bowling Green State University Revenue, General Receipts, Refunding, Series B, 5.00%, 6/01/42 | | | 3,250,000 | | | | 3,768,343 | |
Brookfield Local School District GO, School Facilities Improvement, AGMC Insured, 5.25%, 1/15/36 | | | 1,300,000 | | | | 1,319,032 | |
Brooklyn City School District GO, | | | | | | | | |
School Improvement, AGMC Insured, Pre-Refunded, 5.25%, 12/01/43 | | | 3,000,000 | | | | 3,404,940 | |
School Improvement, AGMC Insured, Pre-Refunded, 5.50%, 12/01/49 | | | 7,780,000 | | | | 8,891,995 | |
School Improvement, Refunding, 5.00%, 12/01/38 | | | 1,905,000 | | | | 2,221,040 | |
School Improvement, Refunding, AGMC Insured, 5.00%, 12/01/49 | | | 9,000,000 | | | | 10,402,650 | |
Butler County Hospital Facilities Revenue, | | | | | | | | |
Cincinnati Children’s Hospital Medical Center, Refunding, Series X, 5.00%, 5/15/29 | | | 6,750,000 | | | | 8,358,592 | |
Kettering Health Network Obligated Group Project, 6.375%, 4/01/36 | | | 5,000,000 | | | | 5,777,950 | |
Kettering Health Network Obligated Group Project, 5.625%, 4/01/41 | | | 5,000,000 | | | | 5,570,150 | |
UC Health, Refunding, 5.00%, 11/15/45. | | | 20,270,000 | | | | 22,999,153 | |
Canal Winchester Local School District GO, | | | | | | | | |
Capital Appreciation, NATL Insured, zero cpn., 12/01/32 | | | 3,955,000 | | | | 2,460,287 | |
Capital Appreciation, NATL Insured, zero cpn., 12/01/33 | | | 2,000,000 | | | | 1,190,660 | |
Central Solid Waste Authority GO, | | | | | | | | |
Improvement, Solid Waste Facilities, Pre-Refunded, 4.00%, 12/01/32 | | | 1,505,000 | | | | 1,697,685 | |
Improvement and Refunding, Solid Waste Facilities, 4.00%, 12/01/32 | | | 15,440,000 | | | | 16,517,866 | |
Chillicothe City School District GO, | | | | | | | | |
Capital Appreciation, School Improvement, Refunding, NATL Insured, zero cpn., 12/01/22 | | | 1,905,000 | | | | 1,721,834 | |
Capital Appreciation, School Improvement, Refunding, NATL Insured, zero cpn., 12/01/23 | | | 1,905,000 | | | | 1,666,132 | |
Capital Appreciation, School Improvement, Refunding, NATL Insured, zero cpn., 12/01/24 | | | 1,905,000 | | | | 1,606,391 | |
Chillicothe Hospital Facilities Revenue, Adena Health System Obligated Group Project, Refunding and Improvement, 5.00%, 12/01/37 | | | 5,000,000 | | | | 5,737,700 | |
Cincinnati City School District GO, | | | | | | | | |
Classroom Facilities Construction and Improvement, Refunding, NATL Insured, 5.25%, 12/01/27 | | | 14,900,000 | | | | 18,981,706 | |
Classroom Facilities Construction and Improvement, Refunding, NATL Insured, 5.25%, 12/01/28 | | | 8,180,000 | | | | 10,473,018 | |
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 95 |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Ohio Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Municipal Bonds (continued) | | | | | | | | |
Ohio (continued) | | | | | | | | |
Cincinnati GO, | | | | | | | | |
Various Purpose, Improvement and Refunding, Series A, 5.00%, 12/01/18 | | $ | 2,000,000 | | | $ | 2,103,340 | |
Various Purpose, Improvement and Refunding, Series A, 5.00%, 12/01/19 | | | 5,925,000 | | | | 6,451,851 | |
Various Purpose, Improvement and Refunding, Series A, 5.25%, 12/01/40 | | | 6,500,000 | | | | 7,669,805 | |
City of Akron Waterworks System Mortgage Revenue, Refunding and Improvement, Assured Guaranty, 5.00%, 3/01/34 | | | 1,000,000 | | | | 1,038,480 | |
Cleveland Airport System Revenue, | | | | | | | | |
Refunding, Series A, AGMC Insured, 5.00%, 1/01/30 | | | 3,000,000 | | | | 3,365,280 | |
Refunding, Series A, AGMC Insured, 5.00%, 1/01/31 | | | 1,500,000 | | | | 1,680,660 | |
Series C, Assured Guaranty, 5.00%, 1/01/27 | | | 27,385,000 | | | | 28,672,643 | |
Cleveland GO, Various Purpose, Refunding, 5.00%, 12/01/30 | | | 3,000,000 | | | | 3,474,330 | |
Cleveland Municipal School District GO, | | | | | | | | |
School Improvement, Refunding, 5.00%, 12/01/25 | | | 3,600,000 | | | | 4,240,080 | |
School Improvement, Refunding, 5.00%, 12/01/27 | | | 1,000,000 | | | | 1,176,700 | |
Cleveland Public Power System Revenue, | | | | | | | | |
Capital Appreciation, Series B-2, NATL Insured, zero cpn., 11/15/38 | | | 10,000,000 | | | | 4,437,000 | |
Series B-1, NATL Insured, 5.00%, 11/15/28 | | | 2,000,000 | | | | 2,049,900 | |
Series B-1, NATL Insured, 5.00%, 11/15/38 | | | 10,000,000 | | | | 10,228,500 | |
Cleveland Water PCR, Green Bonds, 5.00%, 11/15/41 | | | 2,000,000 | | | | 2,286,960 | |
Columbus GO, | | | | | | | | |
Various Purpose, Refunding, Series 3, 5.00%, 2/15/27 | | | 15,000,000 | | | | 19,105,650 | |
Various Purpose, Refunding, Series 3, 5.00%, 2/15/28 | | | 5,500,000 | | | | 6,902,390 | |
Various Purpose, Series A, 5.00%, 2/15/23 | | | 14,365,000 | | | | 17,190,308 | |
Various Purpose, Series A, 5.00%, 2/15/24 | | | 12,655,000 | | | | 15,451,755 | |
Various Purpose, Series A, 5.00%, 2/15/25 | | | 5,000,000 | | | | 6,067,250 | |
Columbus Metropolitan Library Special Obligation Revenue, | | | | | | | | |
Library Fund Facilities Notes, Series 1, 4.00%, 12/01/27 | | | 3,765,000 | | | | 4,057,465 | |
Library Fund Facilities Notes, Series 1, 4.00%, 12/01/28 | | | 2,970,000 | | | | 3,185,117 | |
Library Fund Facilities Notes, Series 1, 4.00%, 12/01/29 | | | 4,125,000 | | | | 4,403,603 | |
Library Fund Facilities Notes, Series 1, 4.00%, 12/01/37 | | | 6,620,000 | | | | 6,857,658 | |
Columbus Sewerage System Revenue, | | | | | | | | |
Refunding, 5.00%, 6/01/29 | | | 5,000,000 | | | | 6,089,250 | |
Refunding, 4.00%, 6/01/31 | | | 15,000,000 | | | | 16,397,250 | |
Coventry Local School District GO, School Improvement, 5.25%, 11/01/47 | | | 5,000,000 | | | | 5,369,250 | |
Cuyahoga Community College District General Receipts Revenue, Series D, 5.00%, 8/01/32 | | | 2,310,000 | | | | 2,656,523 | |
Cuyahoga County EDR, Recovery Zone Facility, Medical Mart/Convention Center Project, Series F, 5.00%, 12/01/27 | | | 15,000,000 | | | | 16,859,700 | |
Cuyahoga County Excise Tax Revenue, | | | | | | | | |
Sports Facilities Improvement Project, 5.00%, 12/01/24 | | | 1,000,000 | | | | 1,191,190 | |
Sports Facilities Improvement Project, 5.00%, 12/01/25 | | | 500,000 | | | | 592,670 | |
Dayton City School District GO, Refunding, 5.00%, 11/01/30 | | | 5,000,000 | | | | 6,234,400 | |
Dayton Metro Library GO, Library Improvement, Series A, 4.75%, 12/01/38 | | | 20,000,000 | | | | 22,214,000 | |
Deer Park Community City School District GO, County of Hamilton, School Improvement, Refunding, Series A, 5.25%, 12/01/53 | | | 3,000,000 | | | | 3,480,750 | |
Defiance City School District GO, Various Purpose, 5.00%, 12/01/46 | | | 6,635,000 | | | | 7,598,336 | |
Delaware City School District GO, School Facilities Construction and Improvement, 5.75%, 12/01/49 | | | 6,000,000 | | | | 6,924,780 | |
Delaware General Income Tax Special Obligation, 4.75%, 12/01/37 | | | 4,000,000 | | | | 4,282,000 | |
Elyria City School District GO, Classroom Facilities and School Improvement, Series A, 5.00%, 12/01/43 | | | 5,500,000 | | | | 6,357,395 | |
Franklin County Convention Facilities Authority Revenue, Tax and Lease Revenue Anticipation, Refunding, 5.00%, 12/01/35 | | | 20,000,000 | | | | 23,232,600 | |
| | | | | | |
96 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Arizona Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| Municipal Bonds (continued) | | | | | | | | |
Ohio (continued) | | | | | | | | |
Franklin County Hospital Facilities Revenue, | | | | | | | | |
Nationwide Children’s Hospital Project, Refunding, Series C, 5.00%, 11/01/34 | | $ | 2,600,000 | | | $ | 3,049,566 | |
Nationwide Children’s Hospital Project, Refunding, Series C, 4.00%, 11/01/40 | | | 5,000,000 | | | | 5,174,050 | |
OhioHealth Corp., 5.00%, 5/15/33 | | | 6,290,000 | | | | 7,241,362 | |
Franklin County Hospital Revenue, Improvement, Nationwide Children’s Hospital Project, Pre-Refunded, 5.25%, 11/01/40 | | | 15,000,000 | | | | 16,384,500 | |
Franklin County Revenue, Trinity Health Credit Group, Series OH, 5.00%, 12/01/46 | | | 7,500,000 | | | | 8,553,975 | |
Fremont City School District GO, Sandusky County, School Facilities Construction and Improvement, Series A, 5.00%, 1/15/49 | | | 13,970,000 | | | | 15,899,676 | |
Greene County Hospital Facilities Revenue, Kettering Health Network Obligated Group Project, 5.50%, 4/01/39 | | | 12,930,000 | | | | 13,615,290 | |
Greenville City School District GO, School Improvement, 5.25%, 1/01/41 | | | 2,000,000 | | | | 2,306,160 | |
Groveport-Madison Local School District GO, School Facilities Construction and Improvement, 5.00%, 10/01/44 | | | 6,205,000 | | | | 7,075,561 | |
Hamilton County Hospital Facilities Revenue, TriHealth Inc. Obligated Group Project, Series A, 5.00%, 8/15/42 | | | 5,000,000 | | | | 5,670,000 | |
Hamilton County Sewer System Revenue, The Metropolitan Sewer District of Greater Cincinnati, | | | | | | | | |
Refunding, Series A, 5.00%, 12/01/27 | | | 6,875,000 | | | | 8,335,181 | |
Hamilton County Student Housing Revenue, | | | | | | | | |
Stratford Heights Project, University of Cincinnati, Refunding, AGMC Insured, 5.00%, 6/01/30 | | | 7,000,000 | | | | 7,575,680 | |
Stratford Heights Project, University of Cincinnati, Refunding, AGMC Insured, 4.75%, 6/01/39 | | | 7,000,000 | | | | 7,343,630 | |
Hilliard School District GO, | | | | | | | | |
Capital Appreciation, School Construction, Refunding, NATL Insured, zero cpn., 12/01/19 | | | 2,190,000 | | | | 2,133,608 | |
Capital Appreciation, School Construction, Refunding, NATL Insured, zero cpn., 12/01/20 | | | 4,525,000 | | | | 4,337,801 | |
School Improvement, 4.00%, 12/01/46 | | | 10,000,000 | | | | 10,593,900 | |
Huber Heights City School District GO, | | | | | | | | |
School Improvement, Pre-Refunded, 5.00%, 12/01/33 | | | 4,500,000 | | | | 4,906,440 | |
School Improvement, Pre-Refunded, 5.00%, 12/01/36 | | | 5,000,000 | | | | 5,451,600 | |
JobsOhio Beverage System Statewide Liquor Profits Revenue, senior lien, Series A, 5.00%, 1/01/38 | | | 26,010,000 | | | | 29,228,998 | |
Kent State University Revenues, General Receipts, Series B, Assured Guaranty, 4.25%, 5/01/31 | | | 2,395,000 | | | | 2,490,872 | |
Lakewood City School District GO, | | | | | | | | |
School Facilities Improvement, Refunding, Series A, 5.00%, 11/01/43 | | | 10,895,000 | | | | 12,510,511 | |
School Improvement, Refunding, AGMC Insured, 4.50%, 12/01/31 | | | 1,000,000 | | | | 1,007,160 | |
Lakota Local School District GO, | | | | | | | | |
Butler County, Refunding, Series A, NATL Insured, 5.25%, 12/01/26 | | | 2,000,000 | | | | 2,522,520 | |
Butler County, Refunding, Series C, 5.00%, 12/01/30 | | | 4,035,000 | | | | 4,846,600 | |
Lancaster City School District GO, Fairfield County, School Facilities Construction and Improvement, 5.00%, 10/01/49 | | | 10,000,000 | | | | 11,213,600 | |
Lorain County Hospital Revenue, | | | | | | | | |
Catholic Healthcare Partners, Refunding, Series C-1, AGMC Insured, 5.00%, 4/01/33 | | | 19,410,000 | | | | 19,833,138 | |
Catholic Healthcare Partners, Refunding, Series C-2, AGMC Insured, 5.00%, 4/01/33 | | | 8,000,000 | | | | 8,175,120 | |
Lucas County GO, Various Purpose, Pre-Refunded, 4.50%, 10/01/35 | | | 10,685,000 | | | | 11,101,608 | |
Lucas-Plaza HDC Revenue, Refunding, FHA Insured, ETM, zero cpn., 6/01/24 | | | 35,230,000 | | | | 31,265,920 | |
Madeira City School District GO, School Improvement, Refunding, AGMC Insured, 5.25%, 12/01/32 | | | 9,605,000 | | | | 12,334,741 | |
Mahoning County Career and Technical Center Board of Education COP, Series B, 4.75%, 12/01/36 | | | 3,500,000 | | | | 3,525,445 | |
Mahoning County Hospital Facilities Revenue, Western Reserve Care System Project, NATL Insured, ETM, 5.50%, 10/15/25 | | | 4,380,000 | | | | 5,111,022 | |
Marysville Exempted Village School District GO, | | | | | | | | |
Capital Appreciation, Refunding, NATL Insured, zero cpn., 12/01/20 | | | 1,000,000 | | | | 953,400 | |
Capital Appreciation, Refunding, NATL Insured, zero cpn., 12/01/21 | | | 1,000,000 | | | | 933,930 | |
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 97 |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Ohio Tax-Free Income Fund (continued)
| | | | | | |
| | | Principal
Amount | | | Value |
| Municipal Bonds (continued) | | | | | | |
Ohio (continued) | | | | | | |
Marysville Wastewater Treatment System Revenue, | | | | | | |
Assured Guaranty, Pre-Refunded, 4.25%, 12/01/27 | | $ | 1,170,000 | | | $ 1,179,606 |
Assured Guaranty, Pre-Refunded, 4.75%, 12/01/47 | | | 5,000,000 | | | 5,046,900 |
Refunding, BAM Insured, 4.00%, 12/01/40 | | | 3,015,000 | | | 3,116,364 |
Refunding, BAM Insured, 4.00%, 12/01/46 | | | 9,370,000 | | | 9,648,195 |
Refunding, BAM Insured, 5.00%, 12/01/47 | | | 5,035,000 | | | 5,633,309 |
Marysville Water System Mortgage Revenue, AMBAC Insured, Pre-Refunded, 5.00%, 12/01/32 | | | 1,250,000 | | | 1,262,463 |
Medina School District COP, School Facilities Project, Assured Guaranty, Pre-Refunded, 5.25%, 12/01/31 | | | 5,725,000 | | | 5,911,520 |
Miami University Revenue, | | | | | | |
General Receipts, Refunding, 5.00%, 9/01/31 | | | 4,000,000 | | | 4,528,120 |
General Receipts, Refunding, 5.00%, 9/01/31 | | | 2,320,000 | | | 2,709,087 |
General Receipts, Refunding, 5.00%, 9/01/34 | | | 3,500,000 | | | 4,038,300 |
General Receipts, Refunding, 5.00%, 9/01/41 | | | 5,000,000 | | | 5,791,100 |
Middletown City School District GO, | | | | | | |
Counties of Butler and Warren, School Improvement, 5.25%, 12/01/40 | | | 2,625,000 | | | 3,045,604 |
Counties of Butler and Warren, School Improvement, 5.25%, 12/01/48 | | | 15,000,000 | | | 17,067,450 |
Montgomery County Revenue, | | | | | | |
Catholic Health Initiatives, Refunding, Series A, 5.50%, 5/01/34 | | | 8,165,000 | | | 8,500,826 |
Catholic Health Initiatives, Series A, Pre-Refunded, 5.50%, 5/01/34 | | | 4,335,000 | | | 4,659,865 |
Catholic Health Initiatives, Series C-1, AGMC Insured, Pre-Refunded, 5.00%, 10/01/41 | | | 10,000,000 | | | 10,270,000 |
Napoleon City School District GO, School Facilities Construction and Improvement, 5.00%, 12/01/49 | | | 11,460,000 | | | 12,533,229 |
New Albany Plain Local School District GO, School Improvement, Refunding, 4.00%, 12/01/49 | | | 10,000,000 | | | 10,304,500 |
Northeast Regional Sewer District Revenue, | | | | | | |
Wastewater Improvement, Refunding, 5.00%, 11/15/32 | | | 5,500,000 | | | 6,498,965 |
Wastewater Improvement, Refunding, 4.00%, 11/15/49 | | | 6,000,000 | | | 6,239,400 |
Northmont City School District GO, School Improvement, Series A, 5.00%, 11/01/49 | | | 5,130,000 | | | 5,607,295 |
Northwest Local School District Hamilton and Butler Counties GO, School Improvement, 5.00%, 12/01/45 | | | 3,760,000 | | | 4,290,198 |
Norwood City School District GO, | | | | | | |
School Improvement, Series A, 5.00%, 11/01/46 | | | 5,000,000 | | | 5,703,750 |
School Improvement, Series A, 5.25%, 11/01/51 | | | 7,645,000 | | | 8,827,299 |
Ohio Center for Local Government Capital Asset Financing Program Fractionalized Interests GO, | | | | | | |
AGMC Insured, 4.875%, 12/01/18 | | | 173,264 | | | 173,754 |
AGMC Insured, 5.25%, 12/01/23 | | | 540,000 | | | 541,010 |
Ohio HFA Capital Fund Revenue, Series A, AGMC Insured, 5.00%, 4/01/27 | | | 5,545,000 | | | 5,559,084 |
Ohio State Air Quality Development Authority Revenue, Environmental Improvement, Buckeye Power Inc. Project, 6.00%, 12/01/40 | | | 6,020,000 | | | 6,917,763 |
Ohio State GO, | | | | | | |
Common School, Series A, 5.00%, 3/15/36 | | | 5,000,000 | | | 5,846,600 |
Infrastructure Improvement, Refunding, Series A, 5.00%, 9/01/28 | | | 5,465,000 | | | 7,025,039 |
Ohio State Higher Educational Facility Commission Revenue, | | | | | | |
Case Western Reserve University Project, Refunding, 5.00%, 12/01/40 | | | 6,000,000 | | | 6,945,780 |
Denison University Project, Refunding and Improvement, 5.00%, 11/01/26 | | | 1,445,000 | | | 1,664,409 |
Hospital Facilities, Summa Health System, 2010 Project, Refunding, AGMC Insured, 5.25%, 11/15/40 | | | 21,805,000 | | | 23,338,110 |
Hospital Facilities, Summa Health System, AGMC Insured, 5.75%, 11/15/40 | | | 1,665,000 | | | 1,830,534 |
Hospital Facilities, Summa Health System, AGMC Insured, Pre-Refunded, 5.75%, 11/15/40 | | | 2,835,000 | | | 3,194,932 |
Kenyon College Project, Pre-Refunded, 5.25%, 7/01/44 | | | 20,460,000 | | | 22,853,002 |
Kenyon College Project, Refunding, 5.00%, 7/01/42 | | | 10,500,000 | | | 11,847,150 |
Kenyon College Project, Refunding, 4.00%, 7/01/44 | | | 10,000,000 | | | 10,399,300 |
Kenyon College Project, Refunding, 5.25%, 7/01/44 | | | 9,540,000 | | | 10,459,942 |
Xavier University Project, 5.00%, 5/01/40 | | | 14,500,000 | | | 15,536,315 |
| | | | | | |
98 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Ohio Tax-Free Income Fund (continued)
| | | | | | |
| | | Principal
Amount | | | Value |
| Municipal Bonds (continued) | | | | | | |
Ohio (continued) | | | | | | |
Ohio State Higher Educational Facility Commission Revenue, (continued) | | | | | | |
Xavier University Project, 4.375%, 5/01/42 | | $ | 8,070,000 | | | $ 8,372,867 |
a Ohio State Hospital Revenue, Cleveland Clinic Health System Obligated Group, Refunding, Series A, 3.25%, 1/01/35 | | | 10,000,000 | | | 9,960,300 |
Ohio State Turnpike and Infrastructure Commission Revenue, Infrastructure Projects, junior lien, Series A-1, 5.25%, 2/15/33 | | | 4,200,000 | | | 4,921,728 |
Ohio State Turnpike Commission Revenue, | | | | | | |
Capital Appreciation, junior lien, Series A-2, BAM Insured, zero cpn., 2/15/38 | | | 3,665,000 | | | 1,725,262 |
Capital Appreciation, junior lien, Series A-2, zero cpn., 2/15/43 | | | 10,485,000 | | | 3,818,427 |
Ohio State Turnpike Commission Turnpike Revenue, Refunding, Series A, NATL Insured, 5.50%, 2/15/24 | | | 16,000,000 | | | 19,157,920 |
Ohio State University Revenue, General Receipts, Series A, 4.00%, 12/01/30 | | | 4,325,000 | | | 4,701,102 |
Ohio State Water Development Authority Revenue, | | | | | | |
Drinking Water Assistance Fund, 4.00%, 12/01/32 | | | 3,000,000 | | | 3,316,830 |
Drinking Water Assistance Fund, 4.00%, 12/01/33 | | | 6,000,000 | | | 6,602,700 |
Fresh Water, Series B, 5.00%, 6/01/27 | | | 4,775,000 | | | 6,037,223 |
Fresh Water, Series B, 5.00%, 12/01/27 | | | 5,000,000 | | | 6,302,350 |
Ohio State Water Development Authority Water PCR, | | | | | | |
Series A, 5.00%, 12/01/25 | | | 6,350,000 | | | 7,959,534 |
Series A, 5.00%, 6/01/26 | | | 10,000,000 | | | 12,612,700 |
Ohio University General Receipts Athens Revenue, Refunding, Series A, 5.00%, 12/01/44 | | | 7,000,000 | | | 8,097,320 |
Olentangy Local School District GO, | | | | | | |
Delaware and Franklin Counties, School Facilities Construction and Improvement, 5.00%, 12/01/41 | | | 2,125,000 | | | 2,486,781 |
School Facilities Construction and Improvement, Assured Guaranty, Pre-Refunded, 5.00%, 12/01/36 | | | 7,505,000 | | | 7,738,631 |
Perrysburg Exempted Village School GO, School Facilities Construction and Improvement, 5.00%, 12/01/38 | | | 3,225,000 | | | 3,709,460 |
Princeton City School District COP, Board of Education, School Facilities Project, 4.50%, 12/01/41 | | | 3,000,000 | | | 3,188,700 |
Princeton City School District GO, | | | | | | |
School Improvement, Capital Appreciation, Refunding, zero cpn., 12/01/40 | | | 6,000,000 | | | 2,467,980 |
School Improvement, Capital Appreciation, Refunding, zero cpn., 12/01/41 | | | 6,000,000 | | | 2,358,480 |
School Improvement, Refunding, 5.00%, 12/01/39 | | | 12,000,000 | | | 13,828,200 |
Reading Community City School District GO, Classroom Facilities, Refunding, Series A, 5.00%, 11/01/46 | | | 2,000,000 | | | 2,251,580 |
Revere Local School District GO, | | | | | | |
School Facilities Improvement, Series A, 5.00%, 12/01/42 | | | 3,025,000 | | | 3,399,525 |
School Facilities Improvement, Series A, 5.00%, 12/01/45 | | | 2,560,000 | | | 2,865,946 |
Reynoldsburg City School District GO, School Facilities Construction, AGMC Insured, Pre-Refunded, 5.00%, 12/01/32 | | | 3,000,000 | | | 3,092,250 |
Riverside Local School District GO, School Construction and Improvement, Refunding, Series A, BAM Insured, 5.00%, 10/01/47 | | | 5,000,000 | | | 5,595,300 |
Ross County Hospital Revenue, Facilities, Adena Health System, Assured Guaranty, Pre-Refunded, 5.25%, 12/01/38 | | | 15,000,000 | | | 15,813,450 |
Sandusky City School District GO, Classroom Facilities and School Improvement, Series 1, 5.00%, 11/01/50 | | | 6,000,000 | | | 6,640,920 |
Sheffield Lake City School District GO, | | | | | | |
School Improvement, Pre-Refunded, 5.00%, 12/01/37 | | | 7,715,000 | | | 8,402,792 |
School Improvement, Pre-Refunded, 5.00%, 12/01/37 | | | 1,920,000 | | | 2,093,414 |
South-Western City School District of Ohio Franklin and Pickaway Counties GO, School Facilities Construction and Improvement, 4.00%, 12/01/42 | | | 10,000,000 | | | 10,339,700 |
Springboro Community City School District GO, | | | | | | |
Refunding, AGMC Insured, 5.25%, 12/01/27 | | | 5,175,000 | | | 6,517,033 |
Refunding, AGMC Insured, 5.25%, 12/01/28 | | | 2,000,000 | | | 2,535,800 |
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 99 |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Ohio Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| |
| Municipal Bonds (continued) | | | | | | | | |
Ohio (continued) | | | | | | | | |
St. Bernard Income Tax Revenue, Various Purpose, Special Obligations, AGMC Insured, 5.00%, 12/01/43 | | $ | 3,760,000 | | | $ | 4,195,972 | |
St. Mary’s City School District GO, School Facilities Construction and Improvement, AGMC Insured, Pre-Refunded, 5.00%, 12/01/35 | | | 3,500,000 | | | | 3,608,955 | |
Strongsville City School District GO, School Improvement, 4.00%, 12/01/45 | | | 17,515,000 | | | | 17,903,833 | |
Summit County Port Authority Lease Revenue, | | | | | | | | |
The University of Akron Student Housing Project, 6.00%, 1/01/42 | | | 3,420,000 | | | | 3,879,545 | |
The University of Akron Student Housing Project, Pre-Refunded, 6.00%, 1/01/42 | | | 8,160,000 | | | | 9,500,362 | |
Switzerland of Ohio Local School District GO, Counties Monroe Belmont and Noble, School Improvement, Refunding, 4.00%, 12/01/37 | | | 5,500,000 | | | | 5,775,825 | |
Sylvania City School District GO, School Improvement, Refunding, BAM Insured, 5.00%, 12/01/36 | | | 9,700,000 | | | | 11,102,135 | |
The New Albany Community Authority Community Facilities Revenue, | | | | | | | | |
Refunding, Series C, 5.00%, 10/01/23 | | | 1,100,000 | | | | 1,284,327 | |
Refunding, Series C, 5.00%, 10/01/24 | | | 1,250,000 | | | | 1,458,125 | |
Three Rivers Local School District GO, Refunding, 5.00%, 12/01/39 | | | 5,885,000 | | | | 6,694,423 | |
Toledo City School District GO, | | | | | | | | |
School Facilities Improvement, Pre-Refunded, 5.375%, 12/01/35 | | | 4,565,000 | | | | 4,819,590 | |
School Facilities Improvement, Refunding, Series B, 5.00%, 12/01/32 | | | 7,830,000 | | | | 9,089,221 | |
Toledo GO, | | | | | | | | |
Capital Improvement, Refunding, Assured Guaranty, 5.00%, 12/01/29 | | | 2,500,000 | | | | 2,693,375 | |
Various Purpose Improvement, Refunding, AGMC Insured, 5.00%, 12/01/28 | | | 3,000,000 | | | | 3,343,500 | |
Toledo Special Obligation, Industrial Development, Vehicle Storage Project, AMBAC Insured, 5.25%, 12/01/26 | | | 1,500,000 | | | | 1,504,440 | |
Toledo Water System Revenue, | | | | | | | | |
Improvement and Refunding, 5.00%, 11/15/38 | | | 19,395,000 | | | | 21,940,788 | |
Series A, 4.00%, 11/15/36 | | | 9,125,000 | | | | 9,448,755 | |
University of Akron General Receipts Revenue, | | | | | | | | |
Refunding, Series A, 5.00%, 1/01/31 | | | 4,365,000 | | | | 5,030,706 | |
Refunding, Series A, 5.00%, 1/01/36 | | | 11,065,000 | | | | 12,694,321 | |
Refunding, Series A, 5.00%, 1/01/38 | | | 13,225,000 | | | | 15,106,521 | |
Refunding, Series A, BAM Insured, 5.00%, 1/01/34 | | | 6,000,000 | | | | 6,943,740 | |
Series A, AGMC Insured, Pre-Refunded, 5.00%, 1/01/33 | | | 5,000,000 | | | | 5,067,300 | |
Series B, AGMC Insured, Pre-Refunded, 5.00%, 1/01/38 | | | 19,000,000 | | | | 19,255,740 | |
University of Cincinnati General Receipts Revenue, | | | | | | | | |
Refunding, Series F, 5.00%, 6/01/32 | | | 5,805,000 | | | | 6,454,057 | |
Series C, 5.00%, 6/01/39 | | | 6,255,000 | | | | 7,129,261 | |
Series C, AGMC Insured, 5.00%, 6/01/31 | | | 775,000 | | | | 796,739 | |
Series C, AGMC Insured, Pre-Refunded, 5.00%, 6/01/31 | | | 7,225,000 | | | | 7,447,169 | |
Westerville City School District GO, Refunding, XLCA Insured, 5.00%, 12/01/27 | | | 3,820,000 | | | | 4,704,865 | |
Westerville Ohio Special Obligation Non-Tax Revenue, 5.00%, 12/01/30 | | | 2,765,000 | | | | 3,285,235 | |
Willoughby Eastlake City School District GO, School Improvement, 5.00%, 12/01/46 | | | 10,000,000 | | | | 11,433,800 | |
Wyoming City School District GO, School Improvement, 5.00%, 12/01/42 | | | 7,250,000 | | | | 8,259,635 | |
Xenia Community School District GO, School Facilities Construction and Improvement, Refunding, 5.00%, 12/01/40 | | | 7,285,000 | | | | 8,363,908 | |
Youngstown State University General Receipts Revenue, | | | | | | | | |
Assured Guaranty, Pre-Refunded, 5.25%, 12/15/29 | | | 4,000,000 | | | | 4,307,120 | |
Assured Guaranty, Pre-Refunded, 5.50%, 12/15/33 | | | 4,225,000 | | | | 4,567,986 | |
| | | | | | | | |
| Total Municipal Bonds before Short Term Investments (Cost $1,521,110,589) | | | | | | | 1,603,837,659 | |
| | | | | | | | |
| | | | | | |
100 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Ohio Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| |
| Short Term Investments (Cost $8,270,000) 0.5% | | | | | | | | |
Municipal Bonds 0.5% | | | | | | | | |
Ohio 0.5% | | | | | | | | |
b Ohio State Hospital Revenue, Cleveland Clinic Health System Obligated Group, Refunding, Series B, SPA Wells Fargo Bank, Daily VRDN and Put, 0.81%, 1/01/39 | | $ | 8,270,000 | | | $ | 8,270,000 | |
| | | | | | | | |
| Total Investments (Cost $1,529,380,589) 99.8% | | | | | | | 1,612,107,659 | |
| Other Assets, less Liabilities 0.2% | | | | | | | 3,784,597 | |
| | | | | | | | |
| Net Assets 100.0% | | | | | | $ | 1,615,892,256 | |
| | | | | | | | |
See Abbreviations on page 144.
aSecurity purchased on a delayed delivery basis. See Note 1(b).
bVariable rate demand notes (VRDNs) are 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. Unless otherwise noted, the coupon rate is determined based on factors including supply and demand, underlying credit, tax treatment, and current short term rates. 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 | | 101 |
FRANKLIN TAX-FREE TRUST
Financial Highlights
Franklin Oregon Tax-Free Income Fund
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
August 31, 2017 (unaudited) | | | Year Ended February 28, | |
| | | | 2017 | | | 2016a | | | 2015 | | | 2014 | | | 2013 | |
| | | | | | | |
Class A | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $11.60 | | | | $11.89 | | | | $12.02 | | | | $11.69 | | | | $12.58 | | | | $12.45 | |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomec | | | 0.19 | | | | 0.40 | | | | 0.42 | | | | 0.46 | | | | 0.46 | | | | 0.44 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 0.09 | | | | (0.29 | ) | | | (0.12 | ) | | | 0.33 | | | | (0.91 | ) | | | 0.13 | |
| | | | | | |
Total from investment operations | | | 0.28 | | | | 0.11 | | | | 0.30 | | | | 0.79 | | | | (0.45 | ) | | | 0.57 | |
| | | | | | |
Less distributions from net investment income | | | (0.20 | ) | | | (0.40 | ) | | | (0.43 | ) | | | (0.46 | ) | | | (0.44 | ) | | | (0.44 | ) |
| | | | | | |
Net asset value, end of period | | | $11.68 | | | | $11.60 | | | | $11.89 | | | | $12.02 | | | | $11.69 | | | | $12.58 | |
| | | | | | |
Total returnd | | | 2.40% | | | | 0.90% | | | | 2.54% | | | | 6.88% | | | | (3.50)% | | | | 4.64% | |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses | | | 0.62% | | | | 0.63% | | | | 0.63% | | | | 0.63% | | | | 0.62% | | | | 0.62% | |
| | | | | | |
Net investment income | | | 3.21% | | | | 3.37% | | | | 3.55% | | | | 3.84% | | | | 3.88% | | | | 3.53% | |
| | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $980,936 | | | | $962,953 | | | | $960,516 | | | | $951,107 | | | | $924,611 | | | | $1,189,801 | |
| | | | | | |
Portfolio turnover rate | | | 8.92% | | | | 16.89% | | | | 11.84% | | | | 7.87% | | | | 8.28% | | | | 7.51% | |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | |
102 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Oregon Tax-Free Income Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
August 31, 2017 (unaudited) | | | Year Ended February 28, | |
| | | | 2017 | | | 2016a | | | 2015 | | | 2014 | | | 2013 | |
| | | | | | | |
Class C | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $11.77 | | | | $12.06 | | | | $12.19 | | | | $11.84 | | | | $12.74 | | | | $12.60 | |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomec | | | 0.16 | | | | 0.34 | | | | 0.36 | | | | 0.40 | | | | 0.40 | | | | 0.38 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 0.09 | | | | (0.30 | ) | | | (0.13 | ) | | | 0.35 | | | | (0.92 | ) | | | 0.13 | |
| | | | | | |
Total from investment operations | | | 0.25 | | | | 0.04 | | | | 0.23 | | | | 0.75 | | | | (0.52 | ) | | | 0.51 | |
| | | | | | |
Less distributions from net investment income | | | (0.16 | ) | | | (0.33 | ) | | | (0.36 | ) | | | (0.40 | ) | | | (0.38 | ) | | | (0.37 | ) |
| | | | | | |
Net asset value, end of period | | | $11.86 | | | | $11.77 | | | | $12.06 | | | | $12.19 | | | | $11.84 | | | | $12.74 | |
| | | | | | |
Total returnd | | | 2.17% | | | | 0.32% | | | | 1.95% | | | | 6.38% | | | | (4.07)% | | | | 4.08% | |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses | | | 1.17% | | | | 1.18% | | | | 1.18% | | | | 1.18% | | | | 1.17% | | | | 1.17% | |
| | | | | | |
Net investment income | | | 2.66% | | | | 2.82% | | | | 3.00% | | | | 3.29% | | | | 3.33% | | | | 2.98% | |
| | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $190,382 | | | | $197,041 | | | | $190,047 | | | | $186,572 | | | | $188,147 | | | | $266,819 | |
| | | | | | |
Portfolio turnover rate | | | 8.92% | | | | 16.89% | | | | 11.84% | | | | 7.87% | | | | 8.28% | | | | 7.51% | |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | | | Semiannual Report | | 103 |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Oregon Tax-Free Income Fund (continued)
| | | | |
| | | Period Ended
August 31, 2017
(unaudited)a | |
| | |
Class R6 | | | | |
| |
Per share operating performance
(for a share outstanding throughout the period) | | | | |
| |
Net asset value, beginning of period | | | $11.66 | |
| |
Income from investment operationsb: | | | | |
| |
Net investment incomec | | | 0.03 | |
| |
Net realized and unrealized gains (losses) | | | 0.03 | |
| |
Total from investment operations | | | 0.06 | |
| |
Less distributions from net investment income | | | (0.03 | ) |
| |
Net asset value, end of period | | | $11.69 | |
| |
Total returnd | | | 0.52% | |
| |
Ratios to average net assetse | | | | |
| |
Expenses | | | 0.48% | |
| |
Net investment income | | | 3.35% | |
| |
Supplemental data | | | | |
| |
Net assets, end of period (000’s) | | | $5 | |
| |
Portfolio turnover rate | | | 8.92% | |
aFor the period August 1, 2017 (effective date) to August 31, 2017.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | |
104 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Oregon Tax-Free Income Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended August 31, 2017 (unaudited) | | | Year Ended February 28, | |
| | | | 2017 | | | 2016a | | | 2015 | | | 2014 | | | 2013 | |
| | | | | | | |
Advisor Class | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $11.61 | | | | $11.90 | | | | $12.03 | | | | $11.70 | | | | $12.59 | | | | $12.46 | |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomec | | | 0.19 | | | | 0.41 | | | | 0.43 | | | | 0.47 | | | | 0.47 | | | | 0.46 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | 0.09 | | | | (0.29 | ) | | | (0.12 | ) | | | 0.33 | | | | (0.90 | ) | | | 0.12 | |
| | | | | | |
Total from investment operations | | | 0.28 | | | | 0.12 | | | | 0.31 | | | | 0.80 | | | | (0.43 | ) | | | 0.58 | |
| | | | | | |
Less distributions from net investment income | | | (0.20 | ) | | | (0.41 | ) | | | (0.44 | ) | | | (0.47 | ) | | | (0.46 | ) | | | (0.45 | ) |
| | | | | | |
Net asset value, end of period | | | $11.69 | | | | $11.61 | | | | $11.90 | | | | $12.03 | | | | $11.70 | | | | $12.59 | |
| | | | | | |
Total returnd | | | 2.44% | | | | 0.99% | | | | 2.64% | | | | 6.99% | | | | (3.41)% | | | | 4.74% | |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses | | | 0.52% | | | | 0.53% | | | | 0.53% | | | | 0.53% | | | | 0.52% | | | | 0.52% | |
| | | | | | |
Net investment income | | | 3.31% | | | | 3.47% | | | | 3.65% | | | | 3.94% | | | | 3.98% | | | | 3.63% | |
| | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $110,517 | | | | $96,539 | | | | $51,607 | | | | $50,011 | | | | $34,225 | | | | $48,678 | |
| | | | | | |
Portfolio turnover rate | | | 8.92% | | | | 16.89% | | | | 11.84% | | | | 7.87% | | | | 8.28% | | | | 7.51% | |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | | | Semiannual Report | | 105 |
FRANKLIN TAX-FREE TRUST
Statement of Investments, August 31, 2017 (unaudited)
Franklin Oregon Tax-Free Income Fund
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Municipal Bonds 96.5% | | | | | | | | |
Oregon 94.4% | | | | | | | | |
Astoria Hospital Facilities Authority Revenue, | | | | | | | | |
Columbia Memorial Hospital, 5.00%, 8/01/41 | | $ | 4,250,000 | | | $ | 4,632,032 | |
Columbia Memorial Hospital, 4.00%, 8/01/46 | | | 1,750,000 | | | | 1,751,243 | |
Columbia Memorial Hospital, Refunding, 5.00%, 8/01/28 | | | 1,325,000 | | | | 1,447,483 | |
Beaverton School District GO, | | | | | | | | |
Washington County School District No. 48J, Assured Guaranty, Pre-Refunded, 5.00%, 6/01/31 | | | 1,280,000 | | | | 1,370,650 | |
Washington County School District No. 48J, Assured Guaranty, Pre-Refunded, 5.125%, 6/01/36 | | | 1,000,000 | | | | 1,072,960 | |
Central Lincoln People’s Utility District Electric System Revenue, 5.00%, 12/01/45 | | | 2,900,000 | | | | 3,327,199 | |
Chemeketa Community College District GO, | | | | | | | | |
Marion, Polk, Yamhill and Linn Counties, Pre-Refunded, 5.00%, 6/15/25 | | | 1,500,000 | | | | 1,548,555 | |
Marion, Polk, Yamhill and Linn Counties, Pre-Refunded, 5.00%, 6/15/26 | | | 2,615,000 | | | | 2,699,648 | |
City of Redmond Airport Revenue, 6.25%, 6/01/39 | | | 1,010,000 | | | | 1,060,601 | |
City of Redmond GO, Terminal Expansion Project, 5.00%, 6/01/39 | | | 1,000,000 | | | | 1,062,760 | |
City of Tigard Water System Revenue, | | | | | | | | |
Washington County, 5.00%, 8/01/37 | | | 11,050,000 | | | | 12,640,647 | |
Washington County, 5.00%, 8/01/42 | | | 20,915,000 | | | | 23,967,753 | |
Washington County, 5.00%, 8/01/45 | | | 23,545,000 | | | | 26,906,755 | |
Clackamas Community College District GO, | | | | | | | | |
Convertible Deferred Interest, Series A, zero cpn. to 6/14/20, 5.00% thereafter, 6/15/39 | | | 1,000,000 | | | | 1,030,780 | |
Convertible Deferred Interest, Series A, zero cpn. to 6/15/20, 5.00% thereafter, 6/15/38 | | | 760,000 | | | | 784,753 | |
Convertible Deferred Interest, Series A, zero cpn. to 6/15/20, 5.00% thereafter, 6/15/40 | | | 1,250,000 | | | | 1,285,113 | |
Clackamas County Hospital Facility Authority Revenue, Legacy Health System, Series A, Pre-Refunded, 5.50%, 7/15/35 | | | 6,525,000 | | | | 7,078,124 | |
Clackamas County School District No. 7J Lake Oswego GO, Refunding, AGMC Insured, 5.25%, 6/01/25 | | | 3,075,000 | | | | 3,878,344 | |
Clackamas County School District No. 12 North Clackamas GO, | | | | | | | | |
Capital Appreciation, Series A, zero cpn., 6/15/40 | | | 10,000,000 | | | | 3,928,600 | |
Capital Appreciation, Series A, zero cpn., 6/15/41 | | | 17,030,000 | | | | 6,369,561 | |
Capital Appreciation, Series A, zero cpn., 6/15/42 | | | 16,625,000 | | | | 5,924,485 | |
Series B, 5.00%, 6/15/34 | | | 8,000,000 | | | | 9,732,400 | |
Series B, 5.00%, 6/15/37 | | | 10,000,000 | | | | 12,011,700 | |
Clackamas County School District No. 46 Oregon Trail GO, | | | | | | | | |
Capital Appreciation, Refunding, zero cpn., 6/15/37 | | | 12,130,000 | | | | 6,155,368 | |
Capital Appreciation, Refunding, zero cpn., 6/15/38 | | | 12,495,000 | | | | 6,089,313 | |
Series A, Pre-Refunded, 5.00%, 6/15/28 | | | 2,210,000 | | | | 2,369,982 | |
Series A, Pre-Refunded, 5.00%, 6/15/29 | | | 2,655,000 | | | | 2,847,195 | |
Series A, Pre-Refunded, 5.00%, 6/15/32 | | | 6,855,000 | | | | 7,351,233 | |
Clackamas County School District No. 62C Oregon City GO, | | | | | | | | |
Refunding, MAC Insured, 5.00%, 6/01/29 | | | 1,000,000 | | | | 1,177,800 | |
Refunding, MAC Insured, 5.00%, 6/01/34 | | | 1,770,000 | | | | 2,043,890 | |
Refunding, MAC Insured, 5.00%, 6/01/39 | | | 1,250,000 | | | | 1,427,600 | |
Clackamas River Water Revenue, Clackamas County, 5.00%, 11/01/43 | | | 1,970,000 | | | | 2,253,483 | |
Columbia and Washington Counties School District No. 47J Vernonia GO, Pre-Refunded, 5.00%, 6/15/35 | | | 5,175,000 | | | | 5,744,560 | |
Crook County GO, 5.00%, 6/15/43 | | | 2,445,000 | | | | 2,865,564 | |
Crook County School District GO, | | | | | | | | |
Crook and Deschutes Counties, 5.00%, 6/15/34 | | | 4,475,000 | | | | 5,267,746 | |
Crook and Deschutes Counties, 5.00%, 6/15/37 | | | 8,090,000 | | | | 9,445,641 | |
Deschutes and Jefferson Counties School District No. 2J Redmond GO, | | | | | | | | |
Pre-Refunded, 5.50%, 6/15/34 | | | 5,000,000 | | | | 5,181,150 | |
Series A, NATL Insured, 5.00%, 6/15/21 | | | 85,000 | | | | 85,233 | |
| | | | | | |
106 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Oregon Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Municipal Bonds (continued) | | | | | | | | |
Oregon (continued) | | | | | | | | |
Deschutes County Hospital Facility Authority Hospital Revenue, | | | | | | | | |
Cascade Healthcare Community Inc., Pre-Refunded, 8.25%, 1/01/38 | | $ | 20,000,000 | | | $ | 21,898,200 | |
Cascade Healthcare Community Inc., Series B, AMBAC Insured, Pre-Refunded, 5.375%, 1/01/35 | | | 7,000,000 | | | | 7,102,550 | |
St. Charles Health System Inc., Refunding, Series A, 5.00%, 1/01/48 | | | 8,440,000 | | | | 9,365,784 | |
Eugene Electric Utility System Revenue, | | | | | | | | |
Pre-Refunded, 5.00%, 8/01/33 | | | 10,060,000 | | | | 10,437,351 | |
Series A, Pre-Refunded, 5.00%, 8/01/40 | | | 6,745,000 | | | | 7,752,703 | |
Eugene Water Utility System Revenue, Refunding, 5.00%, 8/01/40 | | | 4,425,000 | | | | 4,995,515 | |
Forest Grove Revenue, | | | | | | | | |
Campus Improvement, Pacific University Project, Refunding, Series A, 5.00%, 5/01/36 | | | 2,500,000 | | | | 2,698,875 | |
Student Housing, Oak Tree Foundation Project, Refunding, 4.00%, 3/01/37 | | | 3,500,000 | | | | 3,595,760 | |
Greater Albany School District No. 8J GO, Linn and Benton Counties, 5.00%, 6/15/37 | | | 2,375,000 | | | | 2,861,851 | |
Independence GO, | | | | | | | | |
Full Faith and Credit Obligations, City Hall Project, AGMC Insured, Pre-Refunded, 5.00%, 6/15/35 | | | 2,110,000 | | | | 2,342,227 | |
Full Faith and Credit Obligations, City Hall Project, AGMC Insured, Pre-Refunded, 5.00%, 6/15/40 | | | 3,975,000 | | | | 4,412,488 | |
Jackson County Airport Revenue, | | | | | | | | |
Series A, XLCA Insured, Pre-Refunded, 5.25%, 12/01/27 | | | 1,000,000 | | | | 1,010,440 | |
Series A, XLCA Insured, Pre-Refunded, 5.25%, 12/01/32 | | | 1,000,000 | | | | 1,010,440 | |
Series A, XLCA Insured, Pre-Refunded, 5.25%, 12/01/37 | | | 1,475,000 | | | | 1,490,399 | |
Jackson County School District No. 549C Medford GO, | | | | | | | | |
Pre-Refunded, 5.00%, 6/15/33 | | | 3,225,000 | | | | 3,329,393 | |
Pre-Refunded, 5.00%, 6/15/34 | | | 5,000,000 | | | | 5,161,850 | |
Series B, AGMC Insured, Pre-Refunded, 5.00%, 12/15/32 | | | 5,765,000 | | | | 5,831,932 | |
Jefferson County School District No. 509J GO, | | | | | | | | |
Refunding, 5.00%, 6/15/30 | | | 1,000,000 | | | | 1,180,760 | |
Refunding, 5.00%, 6/15/31 | | | 1,410,000 | | | | 1,662,320 | |
Series B, 5.00%, 6/15/30 | | | 2,000,000 | | | | 2,361,520 | |
Jefferson School District No. 14J GO, Marion and Linn Counties, Series B, 5.00%, 6/15/41 | | | 1,795,000 | | | | 2,127,201 | |
Keizer Special Assessment, Full Faith and Credit, Keizer Station Area A Local ID, 5.20%, 6/01/31 | | | 1,965,000 | | | | 2,022,398 | |
Klamath County School District GO, | | | | | | | | |
5.00%, 6/15/29 | | | 1,155,000 | | | | 1,366,573 | |
5.00%, 6/15/30 | | | 1,095,000 | | | | 1,292,932 | |
5.00%, 6/15/31 | | | 1,000,000 | | | | 1,178,950 | |
Klamath Falls Intercommunity Hospital Authority Revenue, Sky Lakes Medical Center Project, Refunding, 5.00%, 9/01/46 | | | 3,625,000 | | | | 4,070,839 | |
Lake Oswego GO, Clackamas Multnomah and Washington Counties, Full Faith and Credit Obligations, Refunding, Series A, 5.00%, 12/01/31 | | | 6,400,000 | | | | 6,827,968 | |
Lane and Douglas Counties School District No. 28J Fern Ridge GO, | | | | | | | | |
Series A, 5.00%, 6/15/26 | | | 1,265,000 | | | | 1,573,609 | |
Series A, 5.00%, 6/15/30 | | | 3,175,000 | | | | 3,799,586 | |
Series A, 5.00%, 6/15/33 | | | 2,115,000 | | | | 2,505,429 | |
Series A, 5.00%, 6/15/36 | | | 2,000,000 | | | | 2,343,540 | |
Lane County Metropolitan Wastewater Management Commission Revenue, Pre-Refunded, 5.25%, 11/01/28 | | | 5,000,000 | | | | 5,252,950 | |
Medford Hospital Facilities Authority Revenue, | | | | | | | | |
Hospital, Asante Health System, Refunding, AGMC Insured, 5.125%, 8/15/40 | | | 25,000,000 | | | | 26,886,500 | |
Hospital, Asante Health System, Series A, AGMC Insured, 5.00%, 8/15/40 | | | 10,050,000 | | | | 10,743,450 | |
Rogue Valley Manor, Refunding, 5.00%, 10/01/33 | | | 1,500,000 | | | | 1,650,450 | |
Rogue Valley Manor, Refunding, 5.00%, 10/01/42 | | | 9,420,000 | | | | 10,256,213 | |
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 107 |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Oregon Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Municipal Bonds (continued) | | | | | | | | |
Oregon (continued) | | | | | | | | |
Metro Dedicated Tax Revenue, | | | | | | | | |
Oregon Convention Center Hotel Project, 5.00%, 6/15/42 | | $ | 10,025,000 | | | $ | 11,730,854 | |
Oregon Convention Center Hotel Project, 5.00%, 6/15/47 | | | 7,450,000 | | | | 8,676,493 | |
Multnomah and Clackamas Counties School District No. 10Jt Gresham-Barlow GO, Series B, 5.00%, 6/15/37 | | | 7,885,000 | | | | 9,493,777 | |
Multnomah County David Douglas School District No. 40 GO, | | | | | | | | |
Series B, zero cpn., 6/15/24 | | | 1,640,000 | | | | 1,437,001 | |
Series B, zero cpn., 6/15/25 | | | 1,325,000 | | | | 1,118,592 | |
Series B, zero cpn., 6/15/26 | | | 2,585,000 | | | | 2,102,200 | |
Series B, zero cpn., 6/15/27 | | | 2,655,000 | | | | 2,070,502 | |
Series B, zero cpn., 6/15/28 | | | 2,495,000 | | | | 1,862,867 | |
Series B, zero cpn., 6/15/29 | | | 2,595,000 | | | | 1,853,141 | |
Series B, zero cpn., 6/15/30 | | | 1,885,000 | | | | 1,280,481 | |
Series B, zero cpn., 6/15/31 | | | 2,030,000 | | | | 1,316,252 | |
Series B, zero cpn., 6/15/32 | | | 2,000,000 | | | | 1,240,320 | |
Multnomah County Hospital Facilities Authority Revenue, | | | | | | | | |
Adventist Health System/West, Series A, 5.125%, 9/01/40 | | | 6,500,000 | | | | 6,952,725 | |
Terwilliger Plaza Inc., Refunding, 5.00%, 12/01/29 | | | 3,690,000 | | | | 4,037,487 | |
Terwilliger Plaza Inc., Refunding, 5.00%, 12/01/36 | | | 1,350,000 | | | | 1,498,433 | |
Multnomah County School District No. 1J Portland Public Schools GO, Series B, 3.00%, 6/15/33 | | | 8,635,000 | | | | 8,570,324 | |
Multnomah County School District No. 3 Park Rose GO, | | | | | | | | |
Series A, 5.00%, 6/30/35 | | | 2,000,000 | | | | 2,261,860 | |
Series A, 5.00%, 6/30/36 | | | 1,500,000 | | | | 1,694,610 | |
Multnomah County School District No. 7 Reynolds GO, Refunding, 5.00%, 6/01/35 | | | 6,605,000 | | | | 7,280,361 | |
North Bend School District No. 13 GO, Coos County, AGMC Insured, 5.00%, 6/15/22 | | | 55,000 | | | | 55,147 | |
Oregon Health and Science University Revenue, | | | | | | | | |
Capital Appreciation, Refunding, Series A, NATL Insured, zero cpn., 7/01/21 | | | 9,055,000 | | | | 8,040,840 | |
Series A, 5.00%, 7/01/42 | | | 10,000,000 | | | | 11,726,900 | |
Series A, Pre-Refunded, 5.875%, 7/01/33 | | | 2,500,000 | | | | 2,724,400 | |
Series A, Pre-Refunded, 5.75%, 7/01/39 | | | 13,175,000 | | | | 14,327,944 | |
Oregon State Department of Administrative Services COP, | | | | | | | | |
Series A, Pre-Refunded, 5.25%, 5/01/39 | | | 3,800,000 | | | | 4,072,498 | |
Series C, 5.00%, 11/01/34 | | | 4,435,000 | | | | 4,782,172 | |
Series C, Pre-Refunded, 5.00%, 11/01/34 | | | 3,565,000 | | | | 3,871,091 | |
Oregon State Department of Administrative Services Lottery Revenue, | | | | | | | | |
Series A, 5.00%, 4/01/28 | | | 5,800,000 | | | | 6,867,084 | |
Series A, 5.00%, 4/01/32 | | | 5,000,000 | | | | 5,873,200 | |
Series A, Pre-Refunded, 5.00%, 4/01/27 | | | 17,880,000 | | | | 19,031,293 | |
Series A, Pre-Refunded, 5.00%, 4/01/28 | | | 18,225,000 | | | | 19,398,508 | |
Series A, Pre-Refunded, 5.00%, 4/01/29 | | | 1,750,000 | | | | 1,862,683 | |
Oregon State Department of Transportation Highway User Tax Revenue, | | | | | | | | |
senior lien, Series A, Pre-Refunded, 5.00%, 11/15/29 | | | 3,085,000 | | | | 3,298,451 | |
senior lien, Series A, Pre-Refunded, 5.00%, 11/15/33 | | | 21,530,000 | | | | 23,019,661 | |
Oregon State Facilities Authority Revenue, | | | | | | | | |
College Housing North West Project, Series A, 4.00%, 10/01/26 | | | 1,675,000 | | | | 1,715,987 | |
College Housing North West Project, Series A, 5.00%, 10/01/36 | | | 1,670,000 | | | | 1,790,691 | |
College Housing North West Project, Series A, 5.00%, 10/01/48 | | | 4,000,000 | | | | 4,229,880 | |
Legacy Health Project, Refunding, Series A, 5.00%, 6/01/46 | | | 17,500,000 | | | | 19,883,325 | |
Legacy Health System, Refunding, Series A, 5.00%, 3/15/30 | | | 1,500,000 | | | | 1,611,030 | |
Lewis and Clark College Project, Refunding, Series A, 5.75%, 10/01/41 | | | 30,000,000 | | | | 34,821,300 | |
Limited College Project, Refunding, Series A, 5.00%, 10/01/31 | | | 2,000,000 | | | | 2,138,860 | |
| | | | | | |
108 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Oregon Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Municipal Bonds (continued) | | | | | | | | |
Oregon (continued) | | | | | | | | |
Oregon State Facilities Authority Revenue, (continued) | | | | | | | | |
Limited College Project, Refunding, Series A, 5.00%, 10/01/34 | | $ | 2,975,000 | | | $ | 3,163,466 | |
Limited College Project, Refunding, Series A, 5.25%, 10/01/40 | | | 3,750,000 | | | | 3,995,587 | |
PeaceHealth, Refunding, Series A, 5.00%, 11/01/39 | | | 32,790,000 | | | | 34,404,907 | |
Providence Health and Services, Series C, 5.00%, 10/01/45 | | | 4,000,000 | | | | 4,460,200 | |
Reed College Project, Refunding, Series A, 5.00%, 7/01/29 | | | 1,500,000 | | | | 1,650,060 | |
Reed College Project, Refunding, Series A, 4.75%, 7/01/32 | | | 2,000,000 | | | | 2,171,220 | |
Reed College Project, Refunding, Series A, 5.125%, 7/01/41 | | | 10,000,000 | | | | 10,944,500 | |
Samaritan Health Services, Refunding, Series A, 5.25%, 10/01/40 | | | 13,990,000 | | | | 14,851,224 | |
Samaritan Health Services Project, Refunding, Series A, 5.00%, 10/01/35 | | | 1,955,000 | | | | 2,215,269 | |
Samaritan Health Services Project, Refunding, Series A, 5.00%, 10/01/41 | | | 7,800,000 | | | | 8,728,044 | |
Samaritan Health Services Project, Refunding, Series A, 5.00%, 10/01/46 | | | 3,500,000 | | | | 3,902,010 | |
Student Housing, CHF Ashland LLC, Southern Oregon University Project, Assured Guaranty, 5.00%, 7/01/44 | | | 8,910,000 | | | | 9,804,564 | |
University of Portland Projects, Series A, Pre-Refunded, 5.00%, 4/01/32 | | | 8,795,000 | | | | 9,004,937 | |
Willamette University Projects, Refunding, Series B, 5.00%, 10/01/40 | | | 1,950,000 | | | | 2,250,924 | |
Oregon State GO, | | | | | | | | |
Alternative Energy Project, Series B, Pre-Refunded, 6.00%, 10/01/26 | | | 1,680,000 | | | | 1,772,266 | |
Article XI-G OHSU Project, Series H, 5.00%, 8/01/42 | | | 15,000,000 | | | | 17,922,300 | |
Article XI-Q State Projects, Series A, 5.00%, 5/01/42 | | | 10,000,000 | | | | 11,905,100 | |
Elderly and Disabled Housing, Series A, 6.00%, 8/01/21 | | | 95,000 | | | | 95,371 | |
Elderly and Disabled Housing, Series A, 5.375%, 8/01/28 | | | 605,000 | | | | 607,039 | |
Elderly and Disabled Housing, Series A, 4.70%, 8/01/42 | | | 3,050,000 | | | | 3,058,387 | |
Higher Education, Article XI-F(1), Series M, 5.00%, 8/01/45 | | | 3,315,000 | | | | 3,874,804 | |
Higher Education, Article XI-G, Series O, 5.00%, 8/01/40 | | | 7,005,000 | | | | 8,231,646 | |
Higher Education, Article XI-G University Projects, Refunding, Series L, 5.00%, 8/01/42 | | | 8,385,000 | | | | 10,018,566 | |
State Board of Higher Education, Refunding, Series B, 5.00%, 8/01/38 | | | 1,020,000 | | | | 1,054,874 | |
State Board of Higher Education, Series A, Pre-Refunded, 5.00%, 8/01/34 | | | 5,000,000 | | | | 5,187,550 | |
State Board of Higher Education, Series B, Pre-Refunded, 5.00%, 8/01/38 | | | 5,000,000 | | | | 5,187,550 | |
State Board of Higher Education, Series B, Pre-Refunded, 5.00%, 8/01/38 | | | 480,000 | | | | 497,784 | |
Various Projects, Series H, 5.00%, 5/01/36 | | | 1,000,000 | | | | 1,148,940 | |
Oregon State Housing and Community Services Department Mortgage Revenue, SFM Program, Series C, 4.75%, 7/01/42 | | | 1,335,000 | | | | 1,382,379 | |
Oregon State University General Revenue, Series A, 5.00%, 4/01/45 | | | 12,500,000 | | | | 14,245,000 | |
Philomath School District No. 17J Benton and Polk Counties GO, Series B, zero cpn., 6/15/31 | | | 1,000,000 | | | | 668,960 | |
Port of Portland International Airport Revenue, | | | | | | | | |
Series Nineteen, Pre-Refunded, 5.50%, 7/01/38 | | | 23,000,000 | | | | 23,878,830 | |
Series Twenty-Four A, 5.00%, 7/01/47 | | | 3,700,000 | | | | 4,300,843 | |
Series Twenty-Four B, 5.00%, 7/01/47 | | | 9,395,000 | | | | 10,756,148 | |
Portland Community College District GO, | | | | | | | | |
Multomah Washington Yamhill Clackamas and Columbia Counties, Refunding, 5.00%, 6/15/28 | | | 2,000,000 | | | | 2,464,340 | |
Multomah Washington Yamhill Clackamas and Columbia Counties, Refunding, 5.00%, 6/15/29 | | | 3,000,000 | | | | 3,669,570 | |
Portland EDR, Broadway Project, Series A, Pre-Refunded, 6.50%, 4/01/35 | | | 5,000,000 | | | | 5,301,200 | |
Portland GO, | | | | | | | | |
Oregon Convention Center Completion Project, Limited Tax, Capital Appreciation, Series B, zero cpn., 6/01/21 | | | 1,000,000 | | | | 948,510 | |
Oregon Convention Center Completion Project, Limited Tax, Refunding, Series A, 5.00%, 6/01/28 | | | 7,840,000 | | | | 8,934,386 | |
Oregon Convention Center Completion Project, Limited Tax, Refunding, Series A, 5.00%, 6/01/29 | | | 8,330,000 | | | | 9,482,955 | |
Oregon Convention Center Completion Project, Limited Tax, Refunding, Series A, 5.00%, 6/01/30 | | | 8,750,000 | | | | 9,950,762 | |
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 109 |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Oregon Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
��Municipal Bonds (continued) | | | | | | | | |
Oregon (continued) | | | | | | | | |
Portland River District Urban Renewal and Redevelopment Tax Allocation, | | | | | | | | |
Refunding, Series B, 5.00%, 6/15/22 | | $ | 1,035,000 | | | $ | 1,196,129 | |
Series C, 5.00%, 6/15/28 | | | 1,000,000 | | | | 1,127,190 | |
Series C, 5.00%, 6/15/30 | | | 1,000,000 | | | | 1,121,400 | |
Portland Sewer System Revenue, second lien, Series A, 5.00%, 3/01/34 | | | 25,270,000 | | | | 27,543,542 | |
Portland Urban Renewal and Redevelopment Tax Allocation, | | | | | | | | |
Interstate Corridor, Series B, 5.00%, 6/15/29 | | | 1,000,000 | | | | 1,113,930 | |
Interstate Corridor, Series B, 5.00%, 6/15/30 | | | 1,000,000 | | | | 1,113,160 | |
Interstate Corridor, Series B, 5.00%, 6/15/31 | | | 1,000,000 | | | | 1,108,910 | |
Lents Town Center, Series B, 5.00%, 6/15/27 | | | 2,500,000 | | | | 2,724,775 | |
Lents Town Center, Series B, 5.00%, 6/15/28 | | | 1,175,000 | | | | 1,278,635 | |
Lents Town Center, Series B, 4.75%, 6/15/29 | | | 1,000,000 | | | | 1,073,000 | |
Lents Town Center, Series B, 5.00%, 6/15/30 | | | 1,800,000 | | | | 1,945,008 | |
North Macadam, Series B, 5.00%, 6/15/29 | | | 4,250,000 | | | | 4,600,752 | |
North Macadam, Series B, 5.00%, 6/15/30 | | | 4,725,000 | | | | 5,105,646 | |
Salem Hospital Facility Authority Revenue, | | | | | | | | |
Salem Health Projects, Refunding, Series A, 5.00%, 5/15/46 | | | 31,000,000 | | | | 34,580,500 | |
Salem Hospital Project, Series A, Pre-Refunded, 5.75%, 8/15/23 | | | 10,000,000 | | | | 10,461,500 | |
Salem-Keizer School District No. 24J GO, Marion and Polk Counties, Series B, zero cpn., 6/15/30 | | | 8,500,000 | | | | 6,072,400 | |
Seaside School District No. 10 GO, | | | | | | | | |
Clatsop County, Series B, 5.00%, 6/15/35 | | | 2,000,000 | | | | 2,389,020 | |
Clatsop County, Series B, 5.00%, 6/15/36 | | | 2,500,000 | | | | 2,979,175 | |
Sherwood GO, Washington County, Full Faith and Credit Obligations, Refunding, AGMC Insured, 5.00%, 6/01/36 | | | 4,240,000 | | | | 4,739,430 | |
Tri-County Metropolitan Transportation District Revenue, | | | | | | | | |
Payroll Tax, senior lien, Series A, 5.00%, 9/01/40 | | | 6,000,000 | | | | 7,027,680 | |
Payroll Tax, senior lien, Series A, 5.00%, 9/01/41 | | | 18,650,000 | | | | 22,101,369 | |
Payroll Tax, senior lien, Series A, Pre-Refunded, 5.00%, 9/01/37 | | | 11,000,000 | | | | 13,052,380 | |
Umatilla County Pendleton School District No. 16R GO, Series A, 5.00%, 6/15/37 | | | 4,970,000 | | | | 5,759,932 | |
University of Oregon General Revenue, Series A, 5.00%, 4/01/45 | | | 20,000,000 | | | | 22,982,200 | |
Washington and Clackamas Counties School District No. 23J GO, | | | | | | | | |
Tigard-Tualatin, 5.00%, 6/15/36 | | | 9,400,000 | | | | 11,273,044 | |
Tigard-Tualatin, 5.00%, 6/15/37 | | | 6,000,000 | | | | 7,178,460 | |
Washington Clackamas and Yamhill Counties School District No. 88J GO, Sherwood, Series B, 5.00%, 6/15/33 | | | 2,500,000 | | | | 3,034,125 | |
Washington Counties School District No. 48J Beaverton GO, | | | | | | | | |
Series B, 5.00%, 6/15/32 | | | 10,750,000 | | | | 12,746,167 | |
Series B, 5.00%, 6/15/33 | | | 8,000,000 | | | | 9,463,280 | |
Series B, 5.00%, 6/15/34 | | | 11,000,000 | | | | 13,004,420 | |
Series D, zero cpn. to 6/15/18, 5.00% thereafter, 6/15/35 | | | 10,000,000 | | | | 11,423,800 | |
Series D, zero cpn. to 6/15/18, 5.00% thereafter, 6/15/36 | | | 10,000,000 | | | | 11,395,900 | |
Washington County School District No. 15 Forest Grove GO, | | | | | | | | |
Series B, zero cpn., 6/15/29 | | | 2,545,000 | | | | 1,838,661 | |
Series B, zero cpn., 6/15/30 | | | 2,490,000 | | | | 1,712,871 | |
Series B, zero cpn., 6/15/31 | | | 3,140,000 | | | | 2,049,823 | |
Woodburn School District No. 103 GO, | | | | | | | | |
Marion County, 5.00%, 6/15/33 | | | 2,930,000 | | | | 3,451,364 | |
Marion County, 5.00%, 6/15/34 | | | 3,200,000 | | | | 3,754,592 | |
Marion County, 5.00%, 6/15/35 | | | 2,075,000 | | | | 2,428,227 | |
Yachats Rural Fire Protection District GO, Lincoln County, AGMC Insured, 5.00%, 6/15/47 | | | 1,600,000 | | | | 1,851,680 | |
| | | | | | | | |
| | | | | | | 1,209,737,124 | |
| | | | | | | | |
| | | | | | |
110 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Oregon Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Municipal Bonds (continued) | | | | | | | | |
U.S. Territories 2.1% | | | | | | | | |
Guam 0.4% | | | | | | | | |
Guam Government Limited Obligation Revenue, | | | | | | | | |
Section 30, Series A, Pre-Refunded, 5.625%, 12/01/24 | | $ | 840,000 | | | $ | 927,066 | |
Section 30, Series A, Pre-Refunded, 5.625%, 12/01/29 | | | 3,250,000 | | | | 3,586,862 | |
| | | | | | | | |
| | | | | | | 4,513,928 | |
| | | | | | | | |
Puerto Rico 1.7% | | | | | | | | |
Children’s Trust Fund Tobacco Settlement Revenue, Asset-Backed, Refunding, 5.625%, 5/15/43 | | | 10,000,000 | | | | 10,075,100 | |
Puerto Rico Commonwealth GO, Public Improvement, Refunding, Sub-Series C-7, NATL Insured, 6.00%, 7/01/28 | | | 4,500,000 | | | | 4,628,610 | |
aPuerto Rico Electric Power Authority Power Revenue, Series WW, 5.25%, 7/01/33 | | | 9,690,000 | | | | 5,730,666 | |
aPuerto Rico Sales Tax FICO Sales Tax Revenue, Senior, Series C, 5.25%, 8/01/40 | | | 2,860,000 | | | | 1,817,244 | |
| | | | | | | | |
| | | | | | | 22,251,620 | |
| | | | | | | | |
Total U.S. Territories | | | | | | | 26,765,548 | |
| | | | | | | | |
Total Municipal Bonds before Short Term Investments (Cost $1,166,910,424) | | | | | | | 1,236,502,672 | |
| | | | | | | | |
Short Term Investments 2.3% | | | | | | | | |
Municipal Bonds 2.3% | | | | | | | | |
Oregon 2.3% | | | | | | | | |
bOregon State Facilities Authority Revenue, Providence Health and Services, Refunding, Series C, Weekly VRDN and Put, 1.79%, (MUNIPSA + 1.00%), 9/15/18 | | | 100,000 | | | | 100,437 | |
bOregon State GO, | | | | | | | | |
Veterans Welfare, Series 86, SPA US Bank National Association, Daily VRDN and Put, 0.79%, 6/01/40. | | | 14,730,000 | | | | 14,730,000 | |
Veterans Welfare, Series 88B, SPA US Bank National Association, Daily VRDN and Put, 0.79%, 12/01/41 | | | 15,100,000 | | | | 15,100,000 | |
| | | | | | | | |
Total Short Term Investments (Cost $29,930,000) | | | | | | | 29,930,437 | |
| | | | | | | | |
Total Investments (Cost $1,196,840,424) 98.8% | | | | | | | 1,266,433,109 | |
Other Assets, less Liabilities 1.2% | | | | | | | 15,406,926 | |
| | | | | | | | |
Net Assets 100.0% | | | | | | $ | 1,281,840,035 | |
| | | | | | | | |
See Abbreviations on page 144.
aSee Note 6 regarding defaulted securities.
bVariable rate demand notes (VRDNs) are 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. Unless otherwise noted, the coupon rate is determined based on factors including supply and demand, underlying credit, tax treatment, and current short term rates. 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 | | 111 |
FRANKLIN TAX-FREE TRUST
Financial Highlights
Franklin Pennsylvania Tax-Free Income Fund
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
August 31, 2017 (unaudited) | | | Year Ended February 28, | |
| | | | 2017 | | | 2016a | | | 2015 | | | 2014 | | | 2013 | |
| | | | | | | |
Class A | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $10.12 | | | | $10.33 | | | | $10.51 | | | | $10.17 | | | | $10.94 | | | | $10.79 | |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomec | | | 0.17 | | | | 0.39 | | | | 0.40 | | | | 0.43 | | | | 0.42 | | | | 0.41 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | (0.04 | ) | | | (0.22 | ) | | | (0.18 | ) | | | 0.34 | | | | (0.78 | ) | | | 0.14 | |
| | | | | | |
Total from investment operations | | | 0.13 | | | | 0.17 | | | | 0.22 | | | | 0.77 | | | | (0.36 | ) | | | 0.55 | |
| | | | | | |
Less distributions from net investment income | | | (0.19 | ) | | | (0.38 | ) | | | (0.40 | ) | | | (0.43 | ) | | | (0.41 | ) | | | (0.40 | ) |
| | | | | | |
Net asset value, end of period | | | $10.06 | | | | $10.12 | | | | $10.33 | | | | $10.51 | | | | $10.17 | | | | $10.94 | |
| | | | | | |
Total returnd | | | 1.33% | | | | 1.62% | | | | 2.15% | | | | 7.72% | | | | (3.28)% | | | | 5.21% | |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses | | | 0.64% | | | | 0.64% | | | | 0.64% | | | | 0.64% | | | | 0.63% | | | | 0.63% | |
| | | | | | |
Net investment income | | | 3.43% | | | | 3.73% | | | | 3.92% | | | | 4.15% | | | | 4.04% | | | | 3.77% | |
| | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $924,248 | | | | $942,320 | | | | $965,479 | | | | $1,001,684 | | | | $981,992 | | | | $1,310,224 | |
| | | | | | |
Portfolio turnover rate | | | 8.11% | | | | 10.88% | | | | 4.73% | | | | 6.04% | | | | 7.04% | | | | 4.99% | |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | |
112 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Pennsylvania Tax-Free Income Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
August 31, 2017 (unaudited) | | | Year Ended February 28, | |
| | | | 2017 | | | 2016a | | | 2015 | | | 2014 | | | 2013 | |
| | | | | | | |
Class C | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $10.24 | | | | $10.45 | | | | $10.63 | | | | $10.28 | | | | $11.06 | | | | $10.90 | |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomec | | | 0.15 | | | | 0.33 | | | | 0.35 | | | | 0.38 | | | | 0.36 | | | | 0.35 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | (0.05 | ) | | | (0.22 | ) | | | (0.19 | ) | | | 0.34 | | | | (0.79 | ) | | | 0.15 | |
| | | | | | |
Total from investment operations | | | 0.10 | | | | 0.11 | | | | 0.16 | | | | 0.72 | | | | (0.43 | ) | | | 0.50 | |
| | | | | | |
Less distributions from net investment income | | | (0.16 | ) | | | (0.32 | ) | | | (0.34 | ) | | | (0.37 | ) | | | (0.35 | ) | | | (0.34 | ) |
| | | | | | |
Net asset value, end of period | | | $10.18 | | | | $10.24 | | | | $10.45 | | | | $10.63 | | | | $10.28 | | | | $11.06 | |
| | | | | | |
Total returnd | | | 1.03% | | | | 1.04% | | | | 1.56% | | | | 7.15% | | | | (3.86)% | | | | 4.67% | |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses | | | 1.19% | | | | 1.19% | | | | 1.19% | | | | 1.19% | | | | 1.18% | | | | 1.18% | |
| | | | | | |
Net investment income | | | 2.88% | | | | 3.18% | | | | 3.37% | | | | 3.60% | | | | 3.49% | | | | 3.22% | |
| | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $271,026 | | | | $283,260 | | | | $282,541 | | | | $279,987 | | | | $268,291 | | | | $350,937 | |
| | | | | | |
Portfolio turnover rate | | | 8.11% | | | | 10.88% | | | | 4.73% | | | | 6.04% | | | | 7.04% | | | | 4.99% | |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | | | Semiannual Report | | 113 |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Pennsylvania Tax-Free Income Fund (continued)
| | | | |
| | | Period Ended
August 31, 2017
(unaudited)a | |
| | |
Class R6 | | | | |
| |
Per share operating performance
(for a share outstanding throughout the period) | | | | |
| |
Net asset value, beginning of period | | | $10.06 | |
| |
Income from investment operationsb: | | | | |
| |
Net investment incomec | | | 0.03 | |
| |
Net realized and unrealized gains (losses) | | | 0.01 | |
| |
Total from investment operations | | | 0.04 | |
| |
Less distributions from net investment income | | | (0.03 | ) |
| |
Net asset value, end of period | | | $10.07 | |
| |
Total returnd | | | 0.40% | |
| |
Ratios to average net assetse | | | | |
| |
Expenses | | | 0.49% | |
| |
Net investment income | | | 3.58% | |
| |
Supplemental data | | | | |
| |
Net assets, end of period (000’s) | | | $5 | |
| |
Portfolio turnover rate | | | 8.11% | |
aFor the period August 1, 2017 (effective date) to August 31, 2017.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | |
114 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
Franklin Pennsylvania Tax-Free Income Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
August 31, 2017
(unaudited) | | | Year Ended February 28, | |
| | | | 2017 | | | 2016a | | | 2015 | | | 2014 | | | 2013 | |
| | | | | | | |
Advisor Class | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance
(for a share outstanding throughout the period) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of period | | | $10.13 | | | | $10.34 | | | | $10.52 | | | | $10.18 | | | | $10.95 | | | | $10.80 | |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomec | | | 0.18 | | | | 0.40 | | | | 0.41 | | | | 0.44 | | | | 0.43 | | | | 0.42 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | (0.04 | ) | | | (0.22 | ) | | | (0.18 | ) | | | 0.34 | | | | (0.78 | ) | | | 0.15 | |
| | | | | | |
Total from investment operations | | | 0.14 | | | | 0.18 | | | | 0.23 | | | | 0.78 | | | | (0.35 | ) | | | 0.57 | |
| | | | | | |
Less distributions from net investment income | | | (0.20 | ) | | | (0.39 | ) | | | (0.41 | ) | | | (0.44 | ) | | | (0.42 | ) | | | (0.42 | ) |
| | | | | | |
Net asset value, end of period | | | $10.07 | | | | $10.13 | | | | $10.34 | | | | $10.52 | | | | $10.18 | | | | $10.95 | |
| | | | | | |
Total returnd | | | 1.38% | | | | 1.72% | | | | 2.25% | | | | 7.82% | | | | (3.18)% | | | | 5.31% | |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses | | | 0.54% | | | | 0.54% | | | | 0.54% | | | | 0.54% | | | | 0.53% | | | | 0.53% | |
| | | | | | |
Net investment income | | | 3.53% | | | | 3.83% | | | | 4.02% | | | | 4.25% | | | | 4.14% | | | | 3.87% | |
| | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of period (000’s) | | | $87,428 | | | | $85,753 | | | | $52,807 | | | | $49,301 | | | | $42,043 | | | | $57,430 | |
| | | | | | |
Portfolio turnover rate | | | 8.11% | | | | 10.88% | | | | 4.73% | | | | 6.04% | | | | 7.04% | | | | 4.99% | |
aFor the year ended February 29.
bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
| | | | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | | | Semiannual Report | | 115 |
FRANKLIN TAX-FREE TRUST
Statement of Investments, August 31, 2017 (unaudited)
Franklin Pennsylvania Tax-Free Income Fund
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Municipal Bonds 98.8% | | | | | | | | |
Pennsylvania 97.5% | | | | | | | | |
Abington School District GO, Montgomery County, Series A, 4.00%, 10/01/42 | | $ | 12,000,000 | | | $ | 12,799,320 | |
Allegheny County GO, | | | | | | | | |
Refunding, Series C-76, 5.00%, 11/01/41 | | | 5,620,000 | | | | 6,484,412 | |
Series C-61, Assured Guaranty, Pre-Refunded, 5.00%, 12/01/33 | | | 5,000,000 | | | | 5,255,800 | |
Series C-65, 5.375%, 5/01/31 | | | 2,160,000 | | | | 2,447,323 | |
Series C-65, Pre-Refunded, 5.375%, 5/01/31 | | | 2,840,000 | | | | 3,273,469 | |
Allegheny County Higher Education Building Authority University Revenue, | | | | | | | | |
Duquesne University, Pre-Refunded, 5.00%, 3/01/28 | | | 3,000,000 | | | �� | 3,061,290 | |
Duquesne University, Pre-Refunded, 5.00%, 3/01/33 | | | 1,300,000 | | | | 1,326,559 | |
Duquesne University, Series A, Pre-Refunded, 5.50%, 3/01/31 | | | 3,000,000 | | | | 3,463,620 | |
Robert Morris University, Refunding, 5.00%, 10/15/34 | | | 2,555,000 | | | | 2,728,203 | |
Robert Morris University, Refunding, 5.00%, 10/15/38 | | | 2,080,000 | | | | 2,196,709 | |
Allegheny County Hospital Development Authority Revenue, University of Pittsburgh Medical Center, Series A, 5.625%, 8/15/39 | | | 12,000,000 | | | | 13,018,440 | |
Allegheny County Sanitary Authority Sewer Revenue, | | | | | | | | |
AGMC Insured, 5.00%, 6/01/40 | | | 5,000,000 | | | | 5,489,050 | |
Refunding, AGMC Insured, 4.00%, 12/01/35 | | | 2,650,000 | | | | 2,851,215 | |
Refunding, AGMC Insured, 4.00%, 12/01/36 | | | 2,250,000 | | | | 2,409,615 | |
The Berks County Municipal Authority Revenue, The Reading Hospital and Medical Center Project, Series A, 5.00%, 11/01/44 | | | 10,000,000 | | | | 10,912,100 | |
Bethel Park School District GO, Pre-Refunded, 5.10%, 8/01/33 | | | 3,600,000 | | | | 3,888,144 | |
Bethlehem Area School District GO, AGMC Insured, Pre-Refunded, 5.25%, 1/15/26 | | | 6,605,000 | | | | 7,272,237 | |
Bethlehem GO, Refunding, Series B, AGMC Insured, 6.50%, 12/01/32 | | | 4,980,000 | | | | 5,745,725 | |
Bucks County IDAR, George School Project, 5.00%, 9/15/41 | | | 5,000,000 | | | | 5,608,200 | |
Bucks County Water and Sewer Authority Sewer System Revenue, Refunding, Series A, AGMC Insured, 5.00%, 12/01/35 | | | 2,500,000 | | | | 2,759,475 | |
Bucks County Water and Sewer Authority Water System Revenue, AGMC Insured, 5.00%, 12/01/41 | | | 10,000,000 | | | | 11,182,200 | |
Butler County Hospital Authority Hospital Revenue, | | | | | | | | |
Butler Health System Project, Refunding, Series A, 5.00%, 7/01/39 | | | 1,625,000 | | | | 1,815,076 | |
Butler Health System Project, Series B, Pre-Refunded, 7.25%, 7/01/39 | | | 4,500,000 | | | | 5,002,290 | |
Centennial School District Bucks County GO, Series A, 5.00%, 12/15/37 | | | 5,855,000 | | | | 6,521,299 | |
Central Bradford Progress Authority Revenue, Guthrie Health Issue, Refunding, 5.375%, 12/01/41 | | | 3,000,000 | | | | 3,322,860 | |
Centre County Hospital Authority Revenue, Mount Nittany Medical Center, Refunding, Series A, 5.00%, 11/15/46 | | | 6,050,000 | | | | 6,673,029 | |
Chester County Health and Education Facilities Authority Revenue, Main Line Health System, Refunding, Series A, 5.00%, 10/01/35 | | | 2,775,000 | | | | 3,283,325 | |
Chester County IDA Student Housing Revenue, | | | | | | | | |
University Student Housing LLC Project at West Chester University of Pennsylvania, Series A, 5.00%, 8/01/35 | | | 500,000 | | | | 534,225 | |
University Student Housing LLC Project at West Chester University of Pennsylvania, Series A, 5.00%, 8/01/45 | | | 1,500,000 | | | | 1,582,155 | |
Clarion County IDA Student Housing Revenue, Clarion University Foundation Inc., Student Housing Project at Clarion University, Series A, 5.00%, 7/01/45 | | | 2,335,000 | | | | 2,419,410 | |
Commonwealth Financing Authority Revenue, | | | | | | | | |
Series A, 5.00%, 6/01/34 | | | 10,000,000 | | | | 11,378,600 | |
Series B, 5.00%, 6/01/32 | | | 5,000,000 | | | | 5,446,200 | |
Cumberland County Municipal Authority College Revenue, Dickinson College Project, Assn. of Independent Colleges and Universities of Pennsylvania Financing Program, Series HH1, 5.00%, 11/01/39 | | | 1,200,000 | | | | 1,284,384 | |
Cumberland County Municipal Authority Revenue, Dickinson College Project, 5.00%, 11/01/42 | | | 4,500,000 | | | | 5,026,725 | |
| | | | | | |
116 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Pennsylvania Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Municipal Bonds (continued) | | | | | | | | |
Pennsylvania (continued) | | | | | | | | |
Dallas Area Municipal Authority University Revenue, Misericordia University Project, Refunding, 5.00%, 5/01/37 | | $ | 2,500,000 | | | $ | 2,705,325 | |
Dauphin County General Authority Health System Revenue, | | | | | | | | |
Pinnacle Health System Project, Series A, 6.00%, 6/01/36 | | | 1,610,000 | | | | 1,732,215 | |
Pinnacle Health System Project, Series A, 5.00%, 6/01/42 | | | 15,590,000 | | | | 16,891,921 | |
Pinnacle Health System Project, Series A, Pre-Refunded, 6.00%, 6/01/36 | | | 8,390,000 | | | | 9,120,769 | |
Deer Lakes School District GO, Assured Guaranty, Pre-Refunded, 5.50%, 4/01/39 | | | 7,500,000 | | | | 8,035,200 | |
Delaware County Authority Revenue, | | | | | | | | |
Haverford College, Pre-Refunded, 5.00%, 11/15/40. | | | 2,375,000 | | | | 2,625,966 | |
Haverford College, Refunding, 5.00%, 11/15/40 | | | 625,000 | | | | 676,788 | |
Delaware County Authority University Revenue, | | | | | | | | |
Neumann University, 5.00%, 10/01/25 | | | 1,250,000 | | | | 1,359,463 | |
Neumann University, 5.25%, 10/01/31 | | | 1,250,000 | | | | 1,328,088 | |
Delaware County Regional Water Quality Control Authority Revenue, Sewer, 4.00%, 11/01/36 | | | 2,005,000 | | | | 2,131,335 | |
Delaware County Vocational and Technical School Authority Lease Revenue, Intermediate No. 25 Project, BAM Insured, 5.00%, 11/01/38 | | | 1,250,000 | | | | 1,399,150 | |
East Hempfield Township IDAR, | | | | | | | | |
Student Services Inc., Student Housing Project at Millersville University of Pennsylvania, 5.00%, 7/01/45 | | | 3,250,000 | | | | 3,367,520 | |
Student Services Inc., Student Housing Project at Millersville University of Pennsylvania, 5.00%, 7/01/47 | | | 3,750,000 | | | | 3,884,700 | |
Erie Parking Authority Parking Facilities Revenue, | | | | | | | | |
Guaranteed, AGMC Insured, Pre-Refunded, 5.125%, 9/01/32 | | | 1,100,000 | | | | 1,233,507 | |
Guaranteed, Refunding, AGMC Insured, 5.125%, 9/01/32 | | | 3,150,000 | | | | 3,464,748 | |
Erie Water Authority Water Revenue, | | | | | | | | |
AGMC Insured, Pre-Refunded, 5.00%, 12/01/43 | | | 5,575,000 | | | | 5,860,217 | |
Refunding, 5.00%, 12/01/43 | | | 6,000,000 | | | | 6,811,200 | |
Refunding, AGMC Insured, 5.00%, 12/01/43 | | | 1,425,000 | | | | 1,483,853 | |
Falls Township Authority Water and Sewer Revenue, Bucks County, Guaranteed, 5.00%, 12/01/41 | | | 2,210,000 | | | | 2,515,533 | |
Franklin County IDAR, The Chambersburg Hospital Project, 5.375%, 7/01/42 | | | 10,000,000 | | | | 10,723,900 | |
Geisinger Authority Revenue, Geisinger Health System, Refunding, Series A, Sub Series A-1, 5.00%, 2/15/45 | | | 13,500,000 | | | | 15,490,170 | |
General Authority of Southcentral Pennsylvania Revenue, | | | | | | | | |
Assn. of Independent Colleges and Universities, Financing Program, York College of Pennsylvania | | | | | | | | |
Project, Series II, 5.75%, 11/01/41. | | | 9,500,000 | | | | 10,860,495 | |
WellSpan Health Obligated Group, Refunding, Series A, 6.00%, 6/01/25 | | | 4,270,000 | | | | 4,428,374 | |
WellSpan Health Obligated Group, Refunding, Series A, 5.00%, 6/01/44 | | | 11,955,000 | | | | 13,195,809 | |
WellSpan Health Obligated Group, Series A, Pre-Refunded, 6.00%, 6/01/25 | | | 5,730,000 | | | | 5,946,021 | |
Indiana County Hospital Authority Hospital Revenue, Indiana Regional Medical Center, Series A, 6.00%, 6/01/39 | | | 1,625,000 | | | | 1,803,181 | |
Lackawanna County GO, | | | | | | | | |
Refunding, Series B, AGMC Insured, 5.00%, 9/01/30 | | | 3,025,000 | | | | 3,331,191 | |
Refunding, Series B, AGMC Insured, 5.00%, 9/01/35 | | | 2,735,000 | | | | 2,999,201 | |
Series B, AGMC Insured, Pre-Refunded, 5.00%, 9/01/30 | | | 5,075,000 | | | | 5,672,327 | |
Series B, AGMC Insured, Pre-Refunded, 5.00%, 9/01/35 | | | 4,765,000 | | | | 5,325,841 | |
Lancaster County Hospital Authority Revenue, University of Pennsylvania Health System, Refunding, Series B, 5.00%, 8/15/46 | | | 4,165,000 | | | | 4,782,295 | |
Lancaster Parking Authority Parking Revenue, | | | | | | | | |
Guaranteed, Series A, AMBAC Insured, Pre-Refunded, 5.00%, 12/01/32 | | | 1,700,000 | | | | 1,716,949 | |
Guaranteed, Series A, AMBAC Insured, Pre-Refunded, 5.00%, 12/01/35 | | | 2,500,000 | | | | 2,524,925 | |
Latrobe IDA College Revenue, St. Vincent College Project, 5.00%, 5/01/43 | | | 4,120,000 | | | | 4,379,931 | |
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 117 |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Pennsylvania Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Municipal Bonds (continued) | | | | | | | | |
Pennsylvania (continued) | | | | | | | | |
Lehigh County Authority Water and Sewer Revenue, City of Allentown Concession, Series A, 5.00%, 12/01/43 | | $ | 5,240,000 | | | $ | 5,876,084 | |
Lehigh County General Purpose Authority Hospital Revenue, Lehigh Valley Health Network, Series B, AGMC Insured, Pre-Refunded, 5.00%, 7/01/35 | | | 11,250,000 | | | | 11,745,787 | |
Lehigh County General Purpose Authority Revenue, Muhlenberg College Project, Pre-Refunded, 5.25%, 2/01/34 | | | 1,500,000 | | | | 1,591,830 | |
Luzerne County IDA Water Facility Revenue, Pennsylvania American Water Co. Water Facilities, Refunding, 5.50%, 12/01/39 | | | 10,000,000 | | | | 10,901,600 | |
Lycoming County Authority Health System Revenue, Susquehanna Health System Project, Refunding, Series A, 5.75%, 7/01/39 | | | 25,000,000 | | | | 26,582,750 | |
Lycoming County Authority Revenue, | | | | | | | | |
AICUP Financing Program, Lycoming College Project, Series MM1, 5.25%, 11/01/38 | | | 1,400,000 | | | | 1,605,352 | |
AICUP Financing Program, Lycoming College Project, Series MM1, 5.25%, 11/01/43 | | | 1,495,000 | | | | 1,705,182 | |
Lycoming County Water and Sewer Authority Revenue, Guaranteed Sewer, AGMC Insured, Pre- Refunded, 5.00%, 11/15/35 | | | 5,835,000 | | | | 6,351,631 | |
Marple Newtown School District GO, Delaware County, AGMC Insured, Pre-Refunded, 5.00%, 6/01/31 | | | 11,225,000 | | | | 12,019,954 | |
McKeesport Municipal Authority Sewer Revenue, 5.75%, 12/15/39 | | | 5,000,000 | | | | 5,329,500 | |
Monroe County Hospital Authority Hospital Revenue, Pocono Medical Center, Series A, Pre-Refunded, 5.00%, 1/01/41 | | | 4,000,000 | | | | 4,654,400 | |
Montgomery County Higher Education and Health Authority Revenue, Arcadia University, 5.625%, 4/01/40 | | | 5,750,000 | | | | 6,098,450 | |
Montgomery County IDA Health System Revenue, Jefferson Health System, Series A, 5.00%, 10/01/41 | | | 9,600,000 | | | | 10,448,160 | |
Montgomery County IDAR, | | | | | | | | |
Foulkeways at Gwynedd Project, Refunding, 5.00%, 12/01/46 | | | 2,000,000 | | | | 2,158,360 | |
New Regional Medical Center Project, Mortgage, FHA Insured, Pre-Refunded, 5.375%, 8/01/38 | | | 4,995,000 | | | | 5,620,174 | |
Northampton County General Purpose Authority College Revenue, | | | | | | | | |
Lafayette College, Pre-Refunded, 5.00%, 11/01/34 | | | 20,000,000 | | | | 20,954,600 | |
Lafayette College, Refunding, 5.00%, 11/01/47 | | | 2,500,000 | | | | 2,899,125 | |
Northampton County General Purpose Authority Hospital Revenue, | | | | | | | | |
St. Luke’s Hospital Project, Series A, Pre-Refunded, 5.50%, 8/15/35 | | | 10,000,000 | | | | 10,438,100 | |
St. Luke’s Hospital Project, Series B, 5.50%, 8/15/33. | | | 2,200,000 | | | | 2,387,990 | |
St. Luke’s University Health Network Project, Refunding, Series A, 5.00%, 8/15/46 | | | 10,000,000 | | | | 11,134,800 | |
Northampton County General Purpose Authority Revenue, Higher Education, Lehigh University, Series A, Pre-Refunded, 5.00%, 11/15/39. | | | 20,000,000 | | | | 21,383,800 | |
Northeastern Hospital and Education Authority Revenue, Wilkes University Project, Series A, 5.25%, 3/01/42 | | | 2,400,000 | | | | 2,623,992 | |
Owen J. Roberts School District GO, AGMC Insured, Pre-Refunded, 5.00%, 9/01/36 | | | 2,710,000 | | | | 2,710,000 | |
Pennsylvania State Economic Development Financing Authority Revenue, | | | | | | | | |
UPMC, Series A, 5.00%, 2/01/45 | | | 5,000,000 | | | | 5,556,600 | |
Water Facilities, Aqua Pennsylvania Inc. Project, Series B, 5.00%, 12/01/43 | | | 25,000,000 | | | | 27,586,250 | |
Water Facility, Pennsylvania-American Water Co. Project, 6.20%, 4/01/39 | | | 12,000,000 | | | | 12,910,440 | |
Pennsylvania State GO, Second Series, Pre-Refunded, 5.00%, 4/15/23 | | | 10,000,000 | | | | 10,659,800 | |
Pennsylvania State Higher Educational Facilities Authority Revenue, | | | | | | | | |
AICUP Financing Program, Gwynedd Mercy College Project, Series KK1, 5.375%, 5/01/42 | | | 1,800,000 | | | | 1,893,888 | |
AICUP Financing Program, St. Francis University Project, Series JJ2, 6.25%, 11/01/41 | | | 3,840,000 | | | | 4,168,858 | |
Bryn Mawr College, Refunding, 5.00%, 12/01/44 | | | 6,365,000 | | | | 7,325,669 | |
Drexel University, Series A, NATL Insured, Pre-Refunded, 5.00%, 5/01/37 | | | 20,525,000 | | | | 20,657,386 | |
Edinboro University Foundation, Student Housing Project, Pre-Refunded, 6.00%, 7/01/43 | | | 3,500,000 | | | | 3,982,090 | |
Foundation for Indiana University, Student Housing Project, Refunding, Series B, 5.00%, 7/01/41 | | | 1,250,000 | | | | 1,353,763 | |
La Salle University, Series A, 5.00%, 5/01/37 | | | 2,500,000 | | | | 2,508,725 | |
Philadelphia University, Refunding, 5.00%, 6/01/30 | | | 2,295,000 | | | | 2,300,783 | |
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FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Pennsylvania Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Municipal Bonds (continued) | | | | | | | | |
Pennsylvania (continued) | | | | | | | | |
Pennsylvania State Higher Educational Facilities Authority Revenue, (continued) | | | | | | | | |
Shippensburg University Student Services Inc. Student Housing Project at Shippensburg University of Pennsylvania, 5.00%, 10/01/35 | | $ | 1,400,000 | | | $ | 1,476,104 | |
Shippensburg University Student Services Inc. Student Housing Project at Shippensburg University of Pennsylvania, 6.25%, 10/01/43 | | | 7,000,000 | | | | 7,676,690 | |
Shippensburg University Student Services Inc. Student Housing Project at Shippensburg University of Pennsylvania, 5.00%, 10/01/44 | | | 2,000,000 | | | | 2,088,100 | |
St. Joseph’s University, Series A, 5.00%, 11/01/40 | | | 15,000,000 | | | | 16,411,350 | |
Temple University, First Series, 5.00%, 4/01/42 | | | 15,000,000 | | | | 16,684,950 | |
Thomas Jefferson University, Pre-Refunded, 5.00%, 3/01/40 | | | 16,980,000 | | | | 18,647,945 | |
Thomas Jefferson University, Refunding, Series A, 5.00%, 9/01/45 | | | 7,465,000 | | | | 8,363,711 | |
The Trustees of the University of Pennsylvania, Series A, 5.00%, 8/15/36 | | | 2,750,000 | | | | 3,286,663 | |
The Trustees of the University of Pennsylvania, Series A, 5.00%, 8/15/46 | | | 14,000,000 | | | | 16,450,700 | |
The Trustees of the University of Pennsylvania, Series A, Pre-Refunded, 5.00%, 9/01/41 | | | 25,000,000 | | | | 28,436,000 | |
University of the Sciences in Philadelphia, 5.00%, 11/01/42 | | | 5,000,000 | | | | 5,509,100 | |
University of the Sciences in Philadelphia, Assured Guaranty, Pre-Refunded, 5.00%, 11/01/32 | | | 5,000,000 | | | | 5,238,650 | |
University of the Sciences in Philadelphia, Series A, 5.00%, 11/01/36 | | | 4,250,000 | | | | 4,808,025 | |
University of Pennsylvania Health System, 5.00%, 8/15/40 | | | 6,475,000 | | | | 7,403,644 | |
University of Pennsylvania Health System, Pre-Refunded, 5.75%, 8/15/41 | | | 3,950,000 | | | | 4,668,308 | |
University of Pennsylvania Health System, Series B, Pre-Refunded, 6.00%, 8/15/26 | | | 5,000,000 | | | | 5,242,450 | |
University of Pittsburgh Medical Center, Series E, 5.00%, 5/15/31 | | | 13,000,000 | | | | 14,077,180 | |
Pennsylvania State Higher Educational Facilities Authority Student Housing Revenue, | | | | | | | | |
University Properties Inc. Student Housing Project at East Stroudsburg University of Pennsylvania, 5.00%, 7/01/42 | | | 5,500,000 | | | | 5,705,370 | |
University Properties Inc. Student Housing Project at East Stroudsburg University of Pennsylvania, Refunding, Series A, 5.00%, 7/01/35 | | | 1,000,000 | | | | 1,091,510 | |
Pennsylvania State Public School Building Authority College Revenue, Delaware County Community College Project, AGMC Insured, Pre-Refunded, 5.00%, 10/01/32 | | | 1,000,000 | | | | 1,023,870 | |
Pennsylvania State Public School Building Authority Community College Revenue, Community College of Philadelphia Project, Pre-Refunded, 6.00%, 6/15/28 | | | 5,000,000 | | | | 5,327,100 | |
Pennsylvania State Turnpike Commission Turnpike Revenue, | | | | | | | | |
Series C, 5.00%, 12/01/43 | | | 10,000,000 | | | | 11,207,900 | |
Special, Motor License Fund Enhanced Turnpike, Series A, 5.50%, 12/01/41 | | | 5,000,000 | | | | 5,610,800 | |
Subordinate, Series C, Subseries C-1, Assured Guaranty, Pre-Refunded, 6.25%, 6/01/38 | | | 5,000,000 | | | | 5,199,550 | |
Subordinate, Series D, Pre-Refunded, 5.125%, 12/01/40 | | | 10,000,000 | | | | 10,942,400 | |
Subordinated, Series A, Assured Guaranty, Pre-Refunded, 5.00%, 6/01/39 | | | 17,200,000 | | | | 18,418,104 | |
Subseries A, Assured Guaranty, Pre-Refunded, 5.00%, 6/01/39 | | | 2,800,000 | | | | 2,998,296 | |
Pennsylvania State University Revenue, | | | | | | | | |
5.00%, 3/01/40 | | | 1,500,000 | | | | 1,634,565 | |
Refunding, Series B, 4.00%, 9/01/36 | | | 3,460,000 | | | | 3,744,931 | |
Series A, 5.00%, 9/01/40 | | | 10,490,000 | | | | 12,196,408 | |
Series A, 5.00%, 9/01/41 | | | 10,000,000 | | | | 11,780,600 | |
Series A, 5.00%, 9/01/42 | | | 15,750,000 | | | | 18,750,375 | |
Series A, 5.00%, 9/01/47 | | | 10,000,000 | | | | 11,847,500 | |
Philadelphia Airport Revenue, | | | | | | | | |
Series A, AGMC Insured, 5.00%, 6/15/35 | | | 5,000,000 | | | | 5,468,100 | |
Series A, AGMC Insured, 5.00%, 6/15/40 | | | 5,000,000 | | | | 5,452,400 | |
Philadelphia Authority for IDR, | | | | | | | | |
The Children’s Hospital of Philadelphia Project, Series A, 5.00%, 7/01/42 | | | 5,000,000 | | | | 5,681,700 | |
International Apartments at Temple University, Series A, 5.625%, 6/15/42 | | | 4,000,000 | | | | 4,202,120 | |
Temple University, First Series, 5.00%, 4/01/40 | | | 5,000,000 | | | | 5,679,800 | |
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 119 |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Pennsylvania Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Municipal Bonds (continued) | | | | | | | | |
Pennsylvania (continued) | | | | | | | | |
Philadelphia Authority for IDR, (continued) | | | | | | | | |
Temple University, Second Series, 5.00%, 4/01/36 | | $ | 5,000,000 | | | $ | 5,723,550 | |
Thomas Jefferson University, Refunding, Series A, 5.00%, 9/01/47 | | | 11,150,000 | | | | 12,605,409 | |
Philadelphia Gas Works Revenue, | | | | | | | | |
1998 General Ordinance, Refunding, Fifteenth Series, 5.00%, 8/01/42 | | | 5,000,000 | | | | 5,763,150 | |
1998 General Ordinance, Refunding, Fifteenth Series, 5.00%, 8/01/47 | | | 6,000,000 | | | | 6,888,300 | |
1998 General Ordinance, Refunding, Fourteenth Series, 5.00%, 10/01/32 | | | 2,000,000 | | | | 2,338,000 | |
Ninth Series, 1998 General Ordinance, 5.25%, 8/01/40 | | | 3,490,000 | | | | 3,835,231 | |
Ninth Series, 1998 General Ordinance, Pre-Refunded, 5.25%, 8/01/40 | | | 2,230,000 | | | | 2,497,734 | |
Twelfth Series B, NATL Insured, ETM, 7.00%, 5/15/20 | | | 295,000 | | | | 323,335 | |
Philadelphia GO, | | | | | | | | |
Refunding, Series A, Assured Guaranty, 5.125%, 8/01/25 | | | 4,480,000 | | | | 4,794,854 | |
Refunding, Series A, Assured Guaranty, 5.25%, 8/01/26 | | | 4,460,000 | | | | 4,788,211 | |
Series A, 5.25%, 7/15/33 | | | 5,000,000 | | | | 5,650,050 | |
Series A, Assured Guaranty, Pre-Refunded, 5.125%, 8/01/25 | | | 520,000 | | | | 561,350 | |
Series A, Assured Guaranty, Pre-Refunded, 5.25%, 8/01/26 | | | 540,000 | | | | 584,210 | |
Philadelphia Hospitals and Higher Education Facilities Authority Revenue, The Children’s Hospital of Philadelphia Project, Series C, 5.00%, 7/01/41 | | | 5,000,000 | | | | 5,533,250 | |
Philadelphia Housing Authority Capital Fund Program Revenue, Series A, AGMC Insured, 5.00%, 12/01/21 | | | 5,000,000 | | | | 5,068,250 | |
Philadelphia Municipal Authority Lease Revenue, | | | | | | | | |
Pre-Refunded, 6.50%, 4/01/34 | | | 3,250,000 | | | | 3,535,123 | |
Pre-Refunded, 6.50%, 4/01/39 | | | 2,500,000 | | | | 2,719,325 | |
Philadelphia School District GO, | | | | | | | | |
Series E, Pre-Refunded, 6.00%, 9/01/38 | | | 4,905,000 | | | | 5,154,027 | |
Series E, Pre-Refunded, 6.00%, 9/01/38 | | | 95,000 | | | | 99,775 | |
Philadelphia Water and Wastewater Revenue, | | | | | | | | |
Refunding, Series B, 5.00%, 11/01/34 | | | 1,200,000 | | | | 1,427,184 | |
Series A, 5.00%, 7/01/40 | | | 10,000,000 | | | | 11,450,200 | |
Series A, 5.00%, 1/01/41 | | | 13,000,000 | | | | 14,219,790 | |
Series A, 5.00%, 10/01/42 | | | 10,000,000 | | | | 11,548,100 | |
Series A, 5.125%, 1/01/43 | | | 5,000,000 | | | | 5,564,400 | |
Series A, 5.00%, 7/01/45 | | | 5,000,000 | | | | 5,695,000 | |
Series A, 5.00%, 10/01/47 | | | 5,000,000 | | | | 5,746,200 | |
Series A, Pre-Refunded, 5.25%, 1/01/36 | | | 3,000,000 | | | | 3,173,190 | |
Series C, AGMC Insured, 5.00%, 8/01/35 | | | 1,620,000 | | | | 1,768,829 | |
Series C, AGMC Insured, Pre-Refunded, 5.00%, 8/01/35 | | | 5,380,000 | | | | 6,003,972 | |
Pine-Richland School District GO, Allegheny County, Assured Guaranty, 5.00%, 3/01/39 | | | 15,130,000 | | | | 16,434,660 | |
Pocono Mountains Industrial Park Authority Hospital Revenue, St. Luke’s Hospital, Monroe Project, Series A, 5.00%, 8/15/40 | | | 5,000,000 | | | | 5,528,900 | |
Reading GO, AGMC Insured, Pre-Refunded, 6.00%, 11/01/28 | | | 2,000,000 | | | | 2,118,360 | |
Scranton School District GO, | | | | | | | | |
Series A, AGMC Insured, 5.00%, 7/15/38 | | | 5,430,000 | | | | 5,488,861 | |
Series C, AGMC Insured, 5.00%, 7/15/38 | | | 5,000,000 | | | | 5,054,200 | |
Scranton-Lackawanna Health and Welfare Authority Revenue, | | | | | | | | |
University of Scranton, Refunding, 5.00%, 11/01/37 | | | 4,000,000 | | | | 4,492,040 | |
University of Scranton, XLCA Insured, Pre-Refunded, 5.00%, 11/01/37 | | | 8,125,000 | | | | 8,177,406 | |
Snyder County Higher Education Authority University Revenue, Susquehanna University Project, Pre-Refunded, 5.00%, 1/01/38 | | | 4,000,000 | | | | 4,136,560 | |
South Fork Municipal Authority Hospital Revenue, Conemaugh Valley Memorial Hospital, Series B, Assured Guaranty, Pre-Refunded, 5.375%, 7/01/35 | | | 10,000,000 | | | | 11,174,600 | |
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FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Pennsylvania Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Municipal Bonds (continued) | | | | | | | | |
Pennsylvania (continued) | | | | | | | | |
State College Area School District GO, 5.00%, 3/15/40 | | $ | 16,400,000 | | | $ | 18,989,232 | |
State Public School Building Authority Revenue, | | | | | | | | |
Commonwealth of Pennsylvania, School Lease, The School District of Philadelphia Project, Refunding, Series A, AGMC Insured, 5.00%, 6/01/32 | | | 7,095,000 | | | | 8,207,212 | |
Commonwealth of Pennsylvania, School Lease, The School District of Philadelphia Project, Refunding, Series A, AGMC Insured, 5.00%, 6/01/33 | | | 3,000,000 | | | | 3,454,620 | |
State Public School Building Authority School Lease Revenue, The School District of the City of Harrisburg Project, Series A, Assured Guaranty, Pre-Refunded, 5.00%, 11/15/33 | | | 5,000,000 | | | | 5,345,951 | |
Susquehanna Area Regional Airport Authority Airport System Revenue, Series A, 6.50%, 1/01/38 | | | 4,000,000 | | | | 4,059,560 | |
Swarthmore Borough Authority Revenue, Swarthmore College, 5.00%, 9/15/43 | | | 1,000,000 | | | | 1,170,100 | |
Union County Higher Educational Facilities Financing Authority University Revenue, Bucknell University, Series A, 5.00%, 4/01/42 | | | 5,000,000 | | | | 5,642,500 | |
University of Pittsburgh of the Commonwealth System of Higher Education Revenue, | | | | | | | | |
University Capital Project, Series B, Pre-Refunded, 5.00%, 9/15/31 | | | 10,000,000 | | | | 10,633,700 | |
University Capital Project, Series C, Pre-Refunded, 5.00%, 9/15/35 | | | 5,000,000 | | | | 5,415,700 | |
Washington County IDA College Revenue, | | | | | | | | |
Washington and Jefferson College, Refunding, 5.25%, 11/01/30 | | | 7,525,000 | | | | 8,247,776 | |
Washington and Jefferson College, Refunding, 5.00%, 11/01/36 | | | 8,470,000 | | | | 9,152,767 | |
West Mifflin Area School District GO, Allegheny County, AGMC Insured, Pre-Refunded, 5.125%, 4/01/31 | | | 1,000,000 | | | | 1,045,630 | |
Westmoreland County Municipal Authority Revenue, Municipal Service, Refunding, BAM Insured, 5.00%, 8/15/42 | | | 7,500,000 | | | | 8,564,250 | |
Whitehall-Coplay School District GO, | | | | | | | | |
Series A, AGMC Insured, 5.375%, 11/15/34 | | | 555,000 | | | | 590,681 | |
Series A, AGMC Insured, Pre-Refunded, 5.375%, 11/15/34 | | | 5,445,000 | | | | 5,855,934 | |
| | | | | | | | |
| | | | | | | 1,250,870,833 | |
| | | | | | | | |
| | |
U.S. Territories 1.3% | | | | | | | | |
Puerto Rico 1.3% | | | | | | | | |
aPuerto Rico Electric Power Authority Power Revenue, | | | | | | | | |
Refunding, Series A, 5.00%, 7/01/42 | | | 5,000,000 | | | | 2,957,000 | |
Series TT, 5.00%, 7/01/32 | | | 5,100,000 | | | | 3,016,140 | |
Series XX, 5.25%, 7/01/40 | | | 16,020,000 | | | | 9,474,228 | |
aPuerto Rico Sales Tax FICO Sales Tax Revenue, First Subordinate, Series A, 5.375%, 8/01/39 | | | 6,000,000 | | | | 1,560,000 | |
| | | | | | | | |
| | | | | | | 17,007,368 | |
| | | | | | | | |
Total Municipal Bonds before Short Term Investments (Cost $1,205,395,410) | | | | | | | 1,267,878,201 | |
| | | | | | | | |
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 121 |
FRANKLIN TAX-FREE TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Pennsylvania Tax-Free Income Fund (continued)
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Short Term Investments (Cost $1,200,000) 0.1% | | | | | | | | |
Municipal Bonds 0.1% | | | | | | | | |
Pennsylvania 0.1% | | | | | | | | |
bEmmaus General Authority Revenue, SPA Wells Fargo Bank, Weekly VRDN and Put, 0.84%, 12/01/28 | | $ | 1,200,000 | | | $ | 1,200,000 | |
| | | | | | | | |
Total Investments (Cost $1,206,595,410) 98.9% | | | | | | | 1,269,078,201 | |
| | | | | | | | |
Other Assets, less Liabilities 1.1%. | | | | | | | 13,628,655 | |
| | | | | | | | |
Net Assets 100.0% | | | | | | $ | 1,282,706,856 | |
| | | | | | | | |
See Abbreviations on page 144.
aSee Note 6 regarding defaulted securities.
bVariable rate demand notes (VRDNs) are 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. Unless otherwise noted, the coupon rate is determined based on factors including supply and demand, underlying credit, tax treatment, and current short term rates. The coupon rate shown represents the rate at period end.
| | | | | | |
122 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
Financial Statements
Statements of Assets and Liabilities
August 31, 2017 (unaudited)
| | | | | | | | | | | | | | | | |
| | | Franklin
Arizona
Tax-Free
Income Fund | | | Franklin
Colorado
Tax-Free
Income Fund | | | Franklin
Connecticut
Tax-Free
Income Fund | | | Franklin
Michigan
Tax-Free
Income Fund | |
Assets: | | | | | | | | | | | | | | | | |
Investments in securities: | | | | | | | | | | | | | | | | |
Cost - Unaffiliated issuers | | $ | 931,748,591 | | | $ | 726,593,004 | | | $ | 273,118,030 | | | $ | 1,008,228,133 | |
Value - Unaffiliated issuers | | $ | 988,762,037 | | | $ | 752,591,163 | | | $ | 287,166,958 | | | $ | 1,036,030,938 | |
Cash | | | 45,372 | | | | 1,638,929 | | | | 36,217 | | | | 64,379 | |
Receivables: | | | | | | | | | | | | | | | | |
Capital shares sold | | | 565,492 | | | | 1,596,118 | | | | 286,615 | | | | 2,087,805 | |
Interest. | | | 9,471,466 | | | | 9,411,918 | | | | 2,561,346 | | | | 14,318,495 | |
Other assets | | | 458 | | | | 350 | | | | 147 | | | | 502 | |
Total assets. | | | 998,844,825 | | | | 765,238,478 | | | | 290,051,283 | | | | 1,052,502,119 | |
Liabilities: | | | | | | | | | | | | | | | | |
Payables: | | | | | | | | | | | | | | | | |
Investment securities purchased | | | 4,397,001 | | | | 7,814,269 | | | | — | | | | — | |
Capital shares redeemed | | | 1,958,869 | | | | 1,321,417 | | | | 549,889 | | | | 2,073,427 | |
Management fees | | | 392,115 | | | | 303,678 | | | | 129,195 | | | | 413,780 | |
Distribution fees. | | | 128,991 | | | | 108,331 | | | | 47,850 | | | | 146,501 | |
Transfer agent fees | | | 53,758 | | | | 53,074 | | | | 25,272 | | | | 74,426 | |
Distributions to shareholders | | | 405,408 | | | | 141,646 | | | | 145,057 | | | | 360,756 | |
Accrued expenses and other liabilities | | | 18,804 | | | | 22,034 | | | | 19,792 | | | | 31,836 | |
Total liabilities | | | 7,354,946 | | | | 9,764,449 | | | | 917,055 | | | | 3,100,726 | |
Net assets, at value | | $ | 991,489,879 | | | $ | 755,474,029 | | | $ | 289,134,228 | | | $ | 1,049,401,393 | |
Net assets consist of: | | | | | | | | | | | | | | | | |
Paid-in capital | | $ | 991,966,306 | | | $ | 762,216,336 | | | $ | 310,104,145 | | | $ | 1,069,878,174 | |
Undistributed net investment income | | | 1,326,023 | | | | 301,019 | | | | 442,790 | | | | 958,051 | |
Net unrealized appreciation (depreciation) | | | 57,013,446 | | | | 25,998,159 | | | | 14,048,928 | | | | 27,802,805 | |
Accumulated net realized gain (loss) | | | (58,815,896 | ) | | | (33,041,485 | ) | | | (35,461,635 | ) | | | (49,237,637 | ) |
Net assets, at value | | $ | 991,489,879 | | | $ | 755,474,029 | | | $ | 289,134,228 | | | $ | 1,049,401,393 | |
| | | | | | | | |
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FRANKLIN TAX-FREE TRUST
FINANCIAL STATEMENTS
Statements of Assets and Liabilities (continued)
August 31, 2017 (unaudited)
| | | | | | | | | | | | | | | | |
| | | Franklin
Arizona
Tax-Free
Income Fund | | | Franklin
Colorado
Tax-Free
Income Fund | | | Franklin
Connecticut
Tax-Free
Income Fund | | | Franklin
Michigan
Tax-Free
Income Fund | |
Class A: | | | | | | | | | | | | | | | | |
Net assets, at value | | $ | 777,050,343 | | | $ | 558,138,488 | | | $ | 207,528,918 | | | $ | 843,274,023 | |
Shares outstanding | | | 71,636,219 | | | | 47,872,164 | | | | 20,112,042 | | | | 73,170,045 | |
Net asset value per sharea | | $ | 10.85 | | | $ | 11.66 | | | $ | 10.32 | | | $ | 11.52 | |
Maximum offering price per share (net asset value per share ÷ 95.75%) | | $ | 11.33 | | | $ | 12.18 | | | $ | 10.78 | | | $ | 12.03 | |
Class C: | | | | | | | | | | | | | | | | |
Net assets, at value | | $ | 114,645,007 | | | $ | 111,103,839 | | | $ | 54,130,029 | | | $ | 135,881,477 | |
Shares outstanding | | | 10,397,829 | | | | 9,418,059 | | | | 5,204,764 | | | | 11,609,639 | |
Net asset value and maximum offering price per sharea | | $ | 11.03 | | | $ | 11.80 | | | $ | 10.40 | | | $ | 11.70 | |
Class R6: | | | | | | | | | | | | | | | | |
Net assets, at value | | $ | 5,016 | | | $ | 5,010 | | | $ | 5,007 | | | $ | 5,013 | |
Shares outstanding | | | 461 | | | | 430 | | | | 485 | | | | 434 | |
Net asset value and maximum offering price per shareb | | $ | 10.87 | | | $ | 11.66 | | | $ | 10.31 | | | $ | 11.56 | |
Advisor Class: | | | | | | | | | | | | | | | | |
Net assets, at value | | $ | 99,789,513 | | | $ | 86,226,692 | | | $ | 27,470,274 | | | $ | 70,240,880 | |
Shares outstanding | | | 9,173,039 | | | | 7,395,759 | | | | 2,664,001 | | | | 6,075,049 | |
Net asset value and maximum offering price per share | | $ | 10.88 | | | $ | 11.66 | | | $ | 10.31 | | | $ | 11.56 | |
a Redemption price is equal to net asset value less contingent deferred sales charges, if applicable.
b Net asset value and maximum offering price may not recalculate due to rounding of net assets and/or shares outstanding.
| | | | | | |
124 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
FINANCIAL STATEMENTS
Statements of Assets and Liabilities (continued)
August 31, 2017 (unaudited)
| | | | | | | | | | | | | | | | |
| | | Franklin
Minnesota
Tax-Free
Income Fund | | | Franklin
Ohio
Tax-Free
Income Fund | | | Franklin
Oregon
Tax-Free
Income Fund | | | Franklin
Pennsylvania
Tax-Free
Income Fund | |
Assets: | | | | | | | | | | | | | | | | |
Investments in securities: | | | | | | | | | | | | | | | | |
Cost - Unaffiliated issuers | | $ | 1,030,296,892 | | | $ | 1,529,380,589 | | | $ | 1,196,840,424 | | | $ | 1,206,595,410 | |
Value - Unaffiliated issuers | | $ | 1,080,486,223 | | | $ | 1,612,107,659 | | | $ | 1,266,433,109 | | | $ | 1,269,078,201 | |
Cash | | | 47,400 | | | | 39,892 | | | | 3,829,909 | | | | 77,015 | |
Receivables: | | | | | | | | | | | | | | | | |
Capital shares sold | | | 579,242 | | | | 1,237,413 | | | | 1,155,180 | | | | 491,716 | |
Interest | | | 9,531,784 | | | | 16,200,588 | | | | 13,844,927 | | | | 16,315,013 | |
Other assets | | | 508 | | | | 750 | | | | 584 | | | | 612 | |
Total assets | | | 1,090,645,157 | | | | 1,629,586,302 | | | | 1,285,263,709 | | | | 1,285,962,557 | |
Liabilities: | | | | | | | | | | | | | | | | |
Payables: | | | | | | | | | | | | | | | | |
Investment securities purchased | | | 8,059,940 | | | | 9,857,806 | | | | — | | | | — | |
Capital shares redeemed. | | | 1,626,248 | | | | 2,366,339 | | | | 2,350,339 | | | | 1,975,764 | |
Management fees | | | 425,266 | | | | 625,950 | | | | 500,931 | | | | 501,106 | |
Distribution fees | | | 178,068 | | | | 274,424 | | | | 188,484 | | | | 227,640 | |
Transfer agent fees | | | 103,841 | | | | 162,811 | | | | 76,930 | | | | 108,458 | |
Distributions to shareholders | | | 152,657 | | | | 319,343 | | | | 262,210 | | | | 403,562 | |
Accrued expenses and other liabilities | | | 41,404 | | | | 87,373 | | | | 44,780 | | | | 39,171 | |
Total liabilities. | | | 10,587,424 | | | | 13,694,046 | | | | 3,423,674 | | | | 3,255,701 | |
Net assets, at value | | $ | 1,080,057,733 | | | $ | 1,615,892,256 | | | $ | 1,281,840,035 | | | $ | 1,282,706,856 | |
Net assets consist of: | | | | | | | | | | | | | | | | |
Paid-in capital | | $ | 1,040,200,979 | | | $ | 1,565,821,956 | | | $ | 1,283,423,828 | | | $ | 1,310,287,068 | |
Undistributed net investment income | | | 646,681 | | | | 1,360,334 | | | | 676,530 | | | | 1,881,116 | |
Net unrealized appreciation (depreciation) | | | 50,189,331 | | | | 82,727,070 | | | | 69,592,685 | | | | 62,482,791 | |
Accumulated net realized gain (loss) | | | (10,979,258 | ) | | | (34,017,104 | ) | | | (71,853,008 | ) | | | (91,944,119 | ) |
Net assets, at value | | $ | 1,080,057,733 | | | $ | 1,615,892,256 | | | $ | 1,281,840,035 | | | $ | 1,282,706,856 | |
| | | | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | | | Semiannual Report | | 125 |
FRANKLIN TAX-FREE TRUST
FINANCIAL STATEMENTS
Statements of Assets and Liabilities (continued)
August 31, 2017 (unaudited)
| | | | | | | | | | | | | | | | |
| | | Franklin
Minnesota
Tax-Free
Income Fund | | | Franklin
Ohio
Tax-Free
Income Fund | | | Franklin
Oregon
Tax-Free
Income Fund | | | Franklin
Pennsylvania
Tax-Free
Income Fund | |
Class A: | | | | | | | | | | | | | | | | |
Net assets, at value | | $ | 693,695,174 | | | $ | 1,128,795,867 | | | $ | 980,936,159 | | | $ | 924,247,875 | |
Shares outstanding | | | 55,883,913 | | | | 88,510,254 | | | | 83,986,495 | | | | 91,906,746 | |
Net asset value per sharea | | $ | 12.41 | | | $ | 12.75 | | | $ | 11.68 | | | $ | 10.06 | |
Maximum offering price per share (net asset value per share ÷ 95.75%) | | $ | 12.96 | | | $ | 13.32 | | | $ | 12.20 | | | $ | 10.51 | |
Class C: | | | | | | | | | | | | | | | | |
Net assets, at value | | $ | 215,716,236 | | | $ | 324,583,286 | | | $ | 190,382,117 | | | $ | 271,025,761 | |
Shares outstanding | | | 17,189,046 | | | | 25,116,567 | | | | 16,055,791 | | | | 26,615,303 | |
Net asset value and maximum offering price per sharea | | $ | 12.55 | | | $ | 12.92 | | | $ | 11.86 | | | $ | 10.18 | |
Class R6: | | | | | | | | | | | | | | | | |
Net assets, at value | | $ | 5,013 | | | $ | 5,014 | | | $ | 5,012 | | | $ | 5,005 | |
Shares outstanding | | | 403 | | | | 393 | | | | 429 | | | | 497 | |
Net asset value and maximum offering price per shareb | | $ | 12.43 | | | $ | 12.76 | | | $ | 11.69 | | | $ | 10.07 | |
Advisor Class: | | | | | | | | | | | | | | | | |
Net assets, at value | | $ | 170,641,310 | | | $ | 162,508,089 | | | $ | 110,516,747 | | | $ | 87,428,215 | |
Shares outstanding | | | 13,731,310 | | | | 12,730,039 | | | | 9,450,812 | | | | 8,682,453 | |
Net asset value and maximum offering price per share | | $ | 12.43 | | | $ | 12.77 | | | $ | 11.69 | | | $ | 10.07 | |
aRedemption price is equal to net asset value less contingent deferred sales charges, if applicable.
bNet asset value and maximum offering price may not recalculate due to rounding of net assets and/or shares outstanding.
| | | | | | |
126 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
FINANCIAL STATEMENTS
Statements of Operations
for the six months ended August 31, 2017 (unaudited)
| | | | | | | | | | | | | | | | |
| | | Franklin
Arizona
Tax-Free
Income Fund | | | Franklin
Colorado
Tax-Free
Income Fund | | | Franklin
Connecticut
Tax-Free
Income Fund | | | Franklin
Michigan
Tax-Free
Income Fund | |
Investment income: | | | | | | | | | | | | | | | | |
Interest: | | | | | | | | | | | | | | | | |
Unaffiliated issuers | | $ | 19,922,471 | | | $ | 14,598,691 | | | $ | 5,733,493 | | | $ | 19,809,990 | |
Expenses: | | | | | | | | | | | | | | | | |
Management fees (Note 3a) | | | 2,327,412 | | | | 1,800,949 | | | | 793,403 | | | | 2,493,248 | |
Distribution fees: (Note 3c) | | | | | | | | | | | | | | | | |
Class A | | | 386,740 | | | | 278,047 | | | | 107,834 | | | | 427,052 | |
Class C | | | 380,138 | | | | 368,501 | | | | 188,872 | | | | 452,191 | |
Transfer agent fees: (Note 3e) | | | | | | | | | | | | | | | | |
Class A | | | 141,331 | | | | 123,663 | | | | 53,472 | | | | 210,868 | |
Class C | | | 21,382 | | | | 25,223 | | | | 14,423 | | | | 34,367 | |
Advisor Class | | | 17,273 | | | | 17,711 | | | | 6,725 | | | | 16,960 | |
Custodian fees | | | 4,148 | | | | 3,137 | | | | 1,309 | | | | 4,487 | |
Reports to shareholders | | | 18,265 | | | | 18,874 | | | | 7,934 | | | | 29,529 | |
Registration and filing fees | | | 14,961 | | | | 9,322 | | | | 6,872 | | | | 19,633 | |
Professional fees | | | 27,559 | | | | 35,231 | | | | 27,536 | | | | 46,940 | |
Trustees’ fees and expenses | | | 2,411 | | | | 1,777 | | | | 810 | | | | 2,625 | |
Other | | | 32,801 | | | | 30,577 | | | | 14,949 | | | | 46,082 | |
Total expenses | | | 3,374,421 | | | | 2,713,012 | | | | 1,224,139 | | | | 3,783,982 | |
Net investment income | | | 16,548,050 | | | | 11,885,679 | | | | 4,509,354 | | | | 16,026,008 | |
Realized and unrealized gains (losses): | | | | | | | | | | | | | | | | |
Net realized gain (loss) from: | | | | | | | | | | | | | | | | |
Investments: | | | | | | | | | | | | | | | | |
Unaffiliated issuers | | | (16,450,637 | ) | | | (8,305,940 | ) | | | (13,728,224 | ) | | | (25,819,316 | ) |
Net change in unrealized appreciation (depreciation) on: | | | | | | | | | | | | | | | | |
Investments: | | | | | | | | | | | | | | | | |
Unaffiliated issuers | | | 23,305,180 | | | | 9,433,896 | | | | 11,087,622 | | | | 27,476,478 | |
Net realized and unrealized gain (loss) | | | 6,854,543 | | | | 1,127,956 | | | | (2,640,602 | ) | | | 1,657,162 | |
Net increase (decrease) in net assets resulting from operations | | $ | 23,402,593 | | | $ | 13,013,635 | | | $ | 1,868,752 | | | $ | 17,683,170 | |
| | | | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | | | Semiannual Report | | 127 |
FRANKLIN TAX-FREE TRUST
FINANCIAL STATEMENTS
Statements of Operations (continued)
for the six months ended August 31, 2017 (unaudited)
| | | | | | | | | | | | | | | | |
| | | Franklin
Minnesota
Tax-Free
Income Fund | | | Franklin
Ohio
Tax-Free
Income Fund | | | Franklin
Oregon
Tax-Free
Income Fund | | | Franklin
Pennsylvania
Tax-Free
Income Fund | |
Investment income: | | | | | | | | | | | | | | | | |
Interest: | | | | | | | | | | | | | | | | |
Unaffiliated issuers | | $ | 19,384,721 | | | $ | 29,523,825 | | | $ | 24,454,476 | | | $ | 26,543,862 | |
Expenses: | | | | | | | | | | | | | | | | |
Management fees (Note 3a) | | | 2,567,107 | | | | 3,726,440 | | | | 2,973,520 | | | | 3,029,870 | |
Distribution fees: (Note 3c) | | | | | | | | | | | | | | | | |
Class A | | | 348,550 | | | | 564,277 | | | | 487,211 | | | | 469,179 | |
Class C | | | 716,516 | | | | 1,066,212 | | | | 633,402 | | | | 902,393 | |
Transfer agent fees: (Note 3e) | | | | | | | | | | | | | | | | |
Class A | | | 202,158 | | | | 290,429 | | | | 194,720 | | | | 234,002 | |
Class C | | | 63,973 | | | | 84,465 | | | | 38,964 | | | | 69,271 | |
Advisor Class | | | 51,446 | | | | 39,719 | | | | 20,794 | | | | 21,823 | |
Custodian fees | | | 4,708 | | | | 6,783 | | | | 5,279 | | | | 5,563 | |
Reports to shareholders | | | 31,112 | | | | 44,169 | | | | 26,550 | | | | 37,323 | |
Registration and filing fees | | | 17,445 | | | | 21,688 | | | | 8,854 | | | | 10,355 | |
Professional fees | | | 21,853 | | | | 24,315 | | | | 34,027 | | | | 47,598 | |
Trustees’ fees and expenses | | | 2,628 | | | | 3,927 | | | | 2,991 | | | | 3,201 | |
Other | | | 42,839 | | | | 48,078 | | | | 43,292 | | | | 45,249 | |
Total expenses | | | 4,070,335 | | | | 5,920,502 | | | | 4,469,604 | | | | 4,875,827 | |
Net investment income | | | 15,314,386 | | | | 23,603,323 | | | | 19,984,872 | | | | 21,668,035 | |
Realized and unrealized gains (losses): | | | | | | | | | | | | | | | | |
Net realized gain (loss) from: | | | | | | | | | | | | | | | | |
Investments: | | | | | | | | | | | | | | | | |
Unaffiliated issuers | | | 17,860 | | | | 1,483,265 | | | | (15,075,489 | ) | | | (33,780,414 | ) |
Net change in unrealized appreciation (depreciation) on: | | | | | | | | | | | | | | | | |
Investments: | | | | | | | | | | | | | | | | |
Unaffiliated issuers | | | 12,940,444 | | | | 23,030,415 | | | | 25,126,178 | | | | 28,622,868 | |
Net realized and unrealized gain (loss) | | | 12,958,304 | | | | 24,513,680 | | | | 10,050,689 | | | | (5,157,546 | ) |
Net increase (decrease) in net assets resulting from operations | | $ | 28,272,690 | | | $ | 48,117,003 | | | $ | 30,035,561 | | | $ | 16,510,489 | |
| | | | | | |
128 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
| | | | | | | | | | | | | | | | |
| | | Franklin Arizona
Tax-Free Income Fund | | | Franklin Colorado
Tax-Free Income Fund | |
| | | Six Months Ended
August 31, 2017
(unaudited) | | | Year Ended
February 28, 2017 | | | Six Months Ended
August 31, 2017
(unaudited) | | | Year Ended
February 28, 2017 | |
Increase (decrease) in net assets: | | | | | | | | | | | | | | | | |
Operations: | | | | | | | | | | | | | | | | |
Net investment income | | $ | 16,548,050 | | | $ | 34,283,523 | | | $ | 11,885,679 | | | $ | 26,807,717 | |
Net realized gain (loss) | | | (16,450,637 | ) | | | (2,425,011 | ) | | | (8,305,940 | ) | | | (4,235,549 | ) |
Net change in unrealized appreciation (depreciation) | | | 23,305,180 | | | | (26,538,485 | ) | | | 9,433,896 | | | | (14,628,581 | ) |
Net increase (decrease) in net assets resulting from operations | | | 23,402,593 | | | | 5,320,027 | | | | 13,013,635 | | | | 7,943,587 | |
Distributions to shareholders from: | | | | | | | | | | | | | | | | |
Net investment income: | | | | | | | | | | | | | | | | |
Class A | | | (13,570,278 | ) | | | (27,754,363 | ) | | | (9,768,149 | ) | | | (20,966,161 | ) |
Class C | | | (1,696,869 | ) | | | (3,399,047 | ) | | | (1,658,590 | ) | | | (3,588,003 | ) |
Class R6 | | | (14 | ) | | | — | | | | (13 | ) | | | — | |
Advisor Class | | | (1,697,830 | ) | | | (2,517,420 | ) | | | (1,430,507 | ) | | | (2,221,484 | ) |
Total distributions to shareholders | | | (16,964,991 | ) | | | (33,670,830 | ) | | | (12,857,259 | ) | | | (26,775,648 | ) |
Capital share transactions: (Note 2) | | | | | | | | | | | | | | | | |
Class A | | | 2,201,751 | | | | (7,095,706 | ) | | | 4,731,238 | | | | 14,540,649 | |
Class C | | | (4,520,632 | ) | | | 8,471,828 | | | | (4,397,098 | ) | | | 6,939,231 | |
Class R6 | | | 5,000 | | | | — | | | | 5,000 | | | | — | |
Advisor Class | | | 8,444,191 | | | | 35,343,590 | | | | 12,651,955 | | | | 24,526,227 | |
Total capital share transactions | | | 6,130,310 | | | | 36,719,712 | | | | 12,991,095 | | | | 46,006,107 | |
Net increase (decrease) in net assets | | | 12,567,912 | | | | 8,368,909 | | | | 13,147,471 | | | | 27,174,046 | |
Net assets: | | | | | | | | | | | | | | | | |
Beginning of period | | | 978,921,967 | | | | 970,553,058 | | | | 742,326,558 | | | | 715,152,512 | |
End of period | | $ | 991,489,879 | | | $ | 978,921,967 | | | $ | 755,474,029 | | | $ | 742,326,558 | |
Undistributed net investment income included in net assets: | | | | | | | | | | | | | | | | |
End of period | | $ | 1,326,023 | | | $ | 1,742,964 | | | $ | 301,019 | | | $ | 1,272,599 | |
| | | | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | | | Semiannual Report | | 129 |
FRANKLIN TAX-FREE TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets (continued)
| | | | | | | | | | | | | | | | |
| | | Franklin Connecticut
Tax-Free Income Fund | | | Franklin Michigan
Tax-Free Income Fund | |
| | | Six Months Ended
August 31, 2017
(unaudited) | | | Year Ended
February 28, 2017 | | | Six Months Ended
August 31, 2017
(unaudited) | | | Year Ended
February 28, 2017 | |
Increase (decrease) in net assets: | | | | | | | | | | | | | | | | |
Operations: | | | | | | | | | | | | | | | | |
Net investment income | | $ | 4,509,354 | | | $ | 11,031,683 | | | $ | 16,026,008 | | | $ | 36,720,476 | |
Net realized gain (loss) | | | (13,728,224 | ) | | | 18,221 | | | | (25,819,316 | ) | | | (9,548,801 | ) |
Net change in unrealized appreciation (depreciation) | | | 11,087,622 | | | | (8,567,551 | ) | | | 27,476,478 | | | | (14,769,293 | ) |
Net increase (decrease) in net assets resulting from operations | | | 1,868,752 | | | | 2,482,353 | | | | 17,683,170 | | | | 12,402,382 | |
Distributions to shareholders from: | | | | | | | | | | | | | | | | |
Net investment income: | | | | | | | | | | | | | | | | |
Class A | | | (3,685,809 | ) | | | (8,261,296 | ) | | | (13,966,633 | ) | | | (31,200,232 | ) |
Class C | | | (826,352 | ) | | | (1,857,149 | ) | | | (1,858,106 | ) | | | (4,174,362 | ) |
Class R6 | | | (14 | ) | | | — | | | | (13 | ) | | | — | |
Advisor Class | | | (475,511 | ) | | | (752,290 | ) | | | (1,151,664 | ) | | | (1,616,095 | ) |
Total distributions to shareholders | | | (4,987,686 | ) | | | (10,870,735 | ) | | | (16,976,416 | ) | | | (36,990,689 | ) |
Capital share transactions: (Note 2) | | | | | | | | | | | | | | | | |
Class A | | | (12,934,545 | ) | | | (24,113,740 | ) | | | (18,924,779 | ) | | | (14,936,884 | ) |
Class C | | | (7,076,010 | ) | | | (4,847,400 | ) | | | (6,488,919 | ) | | | 20,592 | |
Class R6 | | | 5,000 | | | | — | | | | 5,000 | | | | — | |
Advisor Class | | | 1,487,246 | | | | 5,543,976 | | | | 2,520,454 | | | | 28,771,520 | |
Total capital share transactions | | | (18,518,309 | ) | | | (23,417,164 | ) | | | (22,888,244 | ) | | | 13,855,228 | |
Net increase (decrease) in net assets | | | (21,637,243 | ) | | | (31,805,546 | ) | | | (22,181,490 | ) | | | (10,733,079 | ) |
Net assets: | | | | | | | | | | | | | | | | |
Beginning of period | | | 310,771,471 | | | | 342,577,017 | | | | 1,071,582,883 | | | | 1,082,315,962 | |
End of period | | $ | 289,134,228 | | | $ | 310,771,471 | | | $ | 1,049,401,393 | | | $ | 1,071,582,883 | |
Undistributed net investment income included in net assets: | | | | | | | | | | | | | | | | |
End of period | | $ | 442,790 | | | $ | 921,122 | | | $ | 958,051 | | | $ | 1,908,459 | |
| | | | | | |
130 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets (continued)
| | | | | | | | | | | | | | | | |
| | | Franklin Minnesota
Tax-Free Income Fund | | | Franklin Ohio
Tax-Free Income Fund | |
| | | Six Months Ended
August 31, 2017
(unaudited) | | | Year Ended
February 28, 2017 | | | Six Months Ended
August 31, 2017
(unaudited) | | | Year Ended
February 28, 2017 | |
Increase (decrease) in net assets: | | | | | | | | | | | | | | | | |
Operations: | | | | | | | | | | | | | | | | |
Net investment income | | $ | 15,314,386 | | | $ | 31,547,709 | | | $ | 23,603,323 | | | $ | 50,152,446 | |
Net realized gain (loss) | | | 17,860 | | | | 148,317 | | | | 1,483,265 | | | | 3,543,771 | |
Net change in unrealized appreciation (depreciation) | | | 12,940,444 | | | | (32,958,290 | ) | | | 23,030,415 | | | | (48,565,678 | ) |
Net increase (decrease) in net assets resulting from operations | | | 28,272,690 | | | | (1,262,264 | ) | | | 48,117,003 | | | | 5,130,539 | |
Distributions to shareholders from: | | | | | | | | | | | | | | | | |
Net investment income: | | | | | | | | | | | | | | | | |
Class A | | | (10,046,563 | ) | | | (21,864,587 | ) | | | (17,171,216 | ) | | | (38,215,219 | ) |
Class C | | | (2,540,130 | ) | | | (5,442,955 | ) | | | (4,030,512 | ) | | | (8,697,787 | ) |
Class R6 | | | (12 | ) | | | — | | | | (13 | ) | | | — | |
Advisor Class | | | (2,639,759 | ) | | | (4,322,349 | ) | | | (2,414,226 | ) | | | (3,359,379 | ) |
Total distributions to shareholders | | | (15,226,464 | ) | | | (31,629,891 | ) | | | (23,615,967 | ) | | | (50,272,385 | ) |
Capital share transactions: (Note 2) | | | | | | | | | | | | | | | | |
Class A | | | (9,639,772 | ) | | | (14,505,341 | ) | | | (9,010,307 | ) | | | (32,847,434 | ) |
Class C | | | (10,383,206 | ) | | | 12,283,388 | | | | (11,023,294 | ) | | | 17,312,799 | |
Class R6 | | | 5,000 | | | | — | | | | 5,000 | | | | — | |
Advisor Class | | | (987,848 | ) | | | 52,327,393 | | | | 16,546,246 | | | | 66,393,085 | |
Total capital share transactions | | | (21,005,826 | ) | | | 50,105,440 | | | | (3,482,355 | ) | | | 50,858,450 | |
Net increase (decrease) in net assets | | | (7,959,600 | ) | | | 17,213,285 | | | | 21,018,681 | | | | 5,716,604 | |
Net assets: | | | | | | | | | | | | | | | | |
Beginning of period | | | 1,088,017,333 | | | | 1,070,804,048 | | | | 1,594,873,575 | | | | 1,589,156,971 | |
End of period | | $ | 1,080,057,733 | | | $ | 1,088,017,333 | | | $ | 1,615,892,256 | | | $ | 1,594,873,575 | |
Undistributed net investment income included in net assets: | | | | | | | | | | | | | | | | |
End of period | | $ | 646,681 | | | $ | 558,759 | | | $ | 1,360,334 | | | $ | 1,372,978 | |
| | | | | | | | |
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FRANKLIN TAX-FREE TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets (continued)
| | | | | | | | | | | | | | | | |
| | | Franklin Oregon
Tax-Free Income Fund | | | Franklin Pennsylvania
Tax-Free Income Fund | |
| | | Six Months Ended
August 31, 2017
(unaudited) | | | Year Ended
February 28, 2017 | | | Six Months Ended
August 31, 2017
(unaudited) | | | Year Ended
February 28, 2017 | |
Increase (decrease) in net assets: | | | | | | | | | | | | | | | | |
Operations: | | | | | | | | | | | | | | | | |
Net investment income | | $ | 19,984,872 | | | $ | 41,154,735 | | | $ | 21,668,035 | | | $ | 48,256,944 | |
Net realized gain (loss) | | | (15,075,489 | ) | | | (4,282,919 | ) | | | (33,780,414 | ) | | | (5,382,806 | ) |
Net change in unrealized appreciation (depreciation) | | | 25,126,178 | | | | (29,228,138 | ) | | | 28,622,868 | | | | (23,695,785 | ) |
Net increase (decrease) in net assets resulting from operations | | | 30,035,561 | | | | 7,643,678 | | | | 16,510,489 | | | | 19,178,353 | |
Distributions to shareholders from: | | | | | | | | | | | | | | | | |
Net investment income: | | | | | | | | | | | | | | | | |
Class A | | | (16,333,297 | ) | | | (33,229,698 | ) | | | (17,885,215 | ) | | | (35,941,849 | ) |
Class C | | | (2,690,857 | ) | | | (5,480,046 | ) | | | (4,466,284 | ) | | | (8,844,832 | ) |
Class R6 | | | (13 | ) | | | — | | | | (15 | ) | | | — | |
Advisor Class | | | (1,786,450 | ) | | | (2,253,961 | ) | | | (1,706,227 | ) | | | (2,398,738 | ) |
Total distributions to shareholders | | | (20,810,617 | ) | | | (40,963,705 | ) | | | (24,057,741 | ) | | | (47,185,419 | ) |
Capital share transactions: (Note 2) | | | | | | | | | | | | | | | | |
Class A | | | 10,980,710 | | | | 28,510,410 | | | | (12,593,838 | ) | | | (2,589,605 | ) |
Class C | | | (8,116,118 | ) | | | 12,176,238 | | | | (10,662,309 | ) | | | 6,619,909 | |
Class R6 | | | 5,000 | | | | — | | | | 5,000 | | | | — | |
Advisor Class | | | 13,212,445 | | | | 46,995,666 | | | | 2,172,625 | | | | 34,481,884 | |
Total capital share transactions | | | 16,082,037 | | | | 87,682,314 | | | | (21,078,522 | ) | | | 38,512,188 | |
Net increase (decrease) in net assets | | | 25,306,981 | | | | 54,362,287 | | | | (28,625,774 | ) | | | 10,505,122 | |
Net assets: | | | | | | | | | | | | | | | | |
Beginning of period | | | 1,256,533,054 | | | | 1,202,170,767 | | | | 1,311,332,630 | | | | 1,300,827,508 | |
End of period | | $ | 1,281,840,035 | | | $ | 1,256,533,054 | | | $ | 1,282,706,856 | | | $ | 1,311,332,630 | |
Undistributed net investment income included in net assets: | | | | | | | | | | | | | | | | |
End of period | | $ | 676,530 | | | $ | 1,502,275 | | | $ | 1,881,116 | | | $ | 4,270,822 | |
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132 | | Semiannual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
Notes to Financial Statements (unaudited)
1. Organization and Significant Accounting Policies
Franklin Tax-Free Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of twenty-two separate funds, eight of which are included in this report (Funds) and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Funds offer four classes of shares: Class A, Class C, Class R6 and Advisor Class. Each class of shares may differ by its initial sales load, contingent deferred sales charges, voting rights on matters affecting a single class, its exchange privilege and fees due to differing arrangements for distribution and transfer agent fees. Effective August 1, 2017, the Funds began offering a new class of shares, Class R6.
The following summarizes the Funds’ significant accounting policies.
a. Financial Instrument Valuation
The Funds’ 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 Funds calculate the net asset value (NAV) per share as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Funds’ administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Funds’ valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Funds 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 Funds’ 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 Funds have procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VC 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 VC 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 VC 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 or Delayed Delivery Basis
Certain or all Funds purchase securities on a when-issued or delayed delivery 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 Funds will generally purchase these securities with the intention of holding the securities, they may sell the securities before the settlement date. Sufficient assets have been segregated for these securities.
| | | | | | | | |
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FRANKLIN TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. Organization and Significant Accounting Policies (continued)
c. Income Taxes
It is each Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. Each 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.
Each Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of August 31, 2017, each Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on the statute of limitations in each jurisdiction in which the Fund invests.
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. Dividends from net investment income are normally declared daily; these dividends may be reinvested or paid monthly to shareholders. Distributions from realized capital gains and other distributions, if any, are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. 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.
Common expenses incurred by the Trust are allocated among the Funds based on the ratio of net assets of each Fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the Fund that incurred the expense.
Realized and unrealized gains and losses and net investment income, excluding 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 Trust are insured by either a new issue insurance policy or a secondary insurance policy. Some municipal securities in the Funds 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 Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Funds, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.
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FRANKLIN TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. Shares of Beneficial Interest
At August 31, 2017, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:
| | | | | | | | | | | | | | | | |
| | | Franklin Arizona Tax-Free Income Fund | | | Franklin Colorado
Tax-Free Income Fund | |
| | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Class A Shares: | | | | | | | | | | | | | | | | |
Six Months ended August 31, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 4,214,576 | | | $ | 45,468,275 | | | | 3,056,227 | | | $ | 35,542,562 | |
Shares issued in reinvestment of distributions | | | 1,074,118 | | | | 11,600,030 | | | | 776,745 | | | | 9,035,650 | |
Shares redeemed | | | (5,087,066 | ) | | | (54,866,554 | ) | | | (3,426,955 | ) | | | (39,846,974 | ) |
| | | | |
Net increase (decrease) | | | 201,628 | | | $ | 2,201,751 | | | | 406,017 | | | $ | 4,731,238 | |
| | | | |
Year ended February 28, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 9,237,877 | | | $ | 102,364,427 | | | | 7,242,713 | | | $ | 86,248,755 | |
Shares issued in reinvestment of distributions | | | 2,125,764 | | | | 23,459,688 | | | | 1,627,285 | | | | 19,343,269 | |
Shares redeemed | | | (12,132,210 | ) | | | (132,919,821 | ) | | | (7,727,443 | ) | | | (91,051,375 | ) |
| | | | |
Net increase (decrease) | | | (768,569 | ) | | $ | (7,095,706 | ) | | | 1,142,555 | | | $ | 14,540,649 | |
| | | | |
Class C Shares: | | | | | | | | | | | | | | | | |
Six Months ended August 31, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 642,971 | | | $ | 7,050,923 | | | | 376,164 | | | $ | 4,426,548 | |
Shares issued in reinvestment of distributions | | | 141,923 | | | | 1,557,736 | | | | 133,966 | | | | 1,576,438 | |
Shares redeemed | | | (1,197,064 | ) | | | (13,129,291 | ) | | | (883,867 | ) | | | (10,400,084 | ) |
| | | | |
Net increase (decrease) | | | (412,170 | ) | | $ | (4,520,632 | ) | | | (373,737 | ) | | $ | (4,397,098 | ) |
| | | | |
Year ended February 28, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 2,365,215 | | | $ | 26,698,263 | | | | 1,681,407 | | | $ | 20,327,936 | |
Shares issued in reinvestment of distributions | | | 272,122 | | | | 3,049,633 | | | | 281,326 | | | | 3,381,970 | |
Shares redeemed | | | (1,909,414 | ) | | | (21,276,068 | ) | | | (1,402,403 | ) | | | (16,770,675 | ) |
| | | | |
Net increase (decrease) | | | 727,923 | | | $ | 8,471,828 | | | | 560,330 | | | $ | 6,939,231 | |
| | | | |
Class R6 Shares: | | | | | | | | | | | | | | | | |
Six Months ended August 31, 2017a | | | | | | | | | | | | | | | | |
Shares sold | | | 461 | | | $ | 5,000 | | | | 430 | | | $ | 5,000 | |
| | | | |
Advisor Class Shares: | | | | | | | | | | | | | | | | |
Six Months ended August 31, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 1,888,898 | | | $ | 20,452,565 | | | | 1,762,025 | | | $ | 20,496,870 | |
Shares issued in reinvestment of distributions | | | 121,007 | | | | 1,310,591 | | | | 114,053 | | | | 1,326,854 | |
Shares redeemed | | | (1,230,144 | ) | | | (13,318,965 | ) | | | (789,018 | ) | | | (9,171,769 | ) |
| | | | |
Net increase (decrease) | | | 779,761 | | | $ | 8,444,191 | | | | 1,087,060 | | | $ | 12,651,955 | |
| | | | |
Year ended February 28, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 4,756,945 | | | $ | 52,442,293 | | | | 3,276,844 | | | $ | 38,742,143 | |
Shares issued in reinvestment of distributions | | | 164,917 | | | | 1,820,725 | | | | 168,230 | | | | 1,996,514 | |
Shares redeemed | | | (1,723,987 | ) | | | (18,919,428 | ) | | | (1,373,600 | ) | | | (16,212,430 | ) |
| | | | |
Net increase (decrease) | | | 3,197,875 | | | $ | 35,343,590 | | | | 2,071,474 | | | $ | 24,526,227 | |
| | | | |
aFor the period August 1, 2017 (effective date) to August 31, 2017.
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 135 |
FRANKLIN TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. Shares of Beneficial Interest (continued)
| | | | | | | | | | | | | | | | |
| | | Franklin Connecticut
Tax-Free Income Fund | | | Franklin Michigan
Tax-Free Income Fund | |
| | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Class A Shares: | | | | | | | | | | | | | | | | |
Six Months ended August 31, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 731,671 | | | $ | 7,561,119 | | | | 2,235,733 | | | $ | 25,680,958 | |
Shares issued in reinvestment of distributions | | | 289,804 | | | | 2,992,930 | | | | 1,040,056 | | | | 11,950,000 | |
Shares redeemed | | | (2,274,789 | ) | | | (23,488,594 | ) | | | (4,925,155 | ) | | | (56,555,737 | ) |
| | | | |
Net increase (decrease) | | | (1,253,314 | ) | | $ | (12,934,545 | ) | | | (1,649,366 | ) | | $ | (18,924,779 | ) |
| | | | |
Year ended February 28, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 1,622,002 | | | $ | 17,341,618 | | | | 6,459,022 | | | $ | 76,066,528 | |
Shares issued in reinvestment of distributions | | | 637,140 | | | | 6,791,610 | | | | 2,251,666 | | | | 26,484,885 | |
Shares redeemed | | | (4,555,924 | ) | | | (48,246,968 | ) | | | (10,035,981 | ) | | | (117,488,297 | ) |
| | | | |
Net increase (decrease) | | | (2,296,782 | ) | | $ | (24,113,740 | ) | | | (1,325,293 | ) | | $ | (14,936,884 | ) |
| | | | |
Class C Shares: | | | | | | | | | | | | | | | | |
Six Months ended August 31, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 93,023 | | | $ | 970,073 | | | | 541,195 | | | $ | 6,307,142 | |
Shares issued in reinvestment of distributions | | | 66,773 | | | | 695,172 | | | | 142,496 | | | | 1,662,645 | |
Shares redeemed | | | (839,498 | ) | | | (8,741,255 | ) | | | (1,239,552 | ) | | | (14,458,706 | ) |
| | | | |
Net increase (decrease) | | | (679,702 | ) | | $ | (7,076,010 | ) | | | (555,861 | ) | | $ | (6,488,919 | ) |
| | | | |
Year ended February 28, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 488,307 | | | $ | 5,280,801 | | | | 1,762,233 | | | $ | 21,071,556 | |
Shares issued in reinvestment of distributions | | | 141,126 | | | | 1,515,449 | | | | 308,143 | | | | 3,678,444 | |
Shares redeemed | | | (1,086,835 | ) | | | (11,643,650 | ) | | | (2,076,800 | ) | | | (24,729,408 | ) |
| | | | |
Net increase (decrease) | | | (457,402 | ) | | $ | (4,847,400 | ) | | | (6,424 | ) | | $ | 20,592 | |
| | | | |
Class R6 Shares: | | | | | | | | | | | | | | | | |
Six Months ended August 31, 2017a | | | | | | | | | | | | | | | | |
Shares sold | | | 485 | | | $ | 5,000 | | | | 434 | | | $ | 5,000 | |
| | | | |
Advisor Class Shares: | | | | | | | | | | | | | | | | |
Six Months ended August 31, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 555,748 | | | $ | 5,742,418 | | | | 1,178,513 | | | $ | 13,577,672 | |
Shares issued in reinvestment of distributions | | | 31,829 | | | | 328,534 | | | | 90,920 | | | | 1,048,141 | |
Shares redeemed | | | (443,986 | ) | | | (4,583,706 | ) | | | (1,052,085 | ) | | | (12,105,359 | ) |
| | | | |
Net increase (decrease) | | | 143,591 | | | $ | 1,487,246 | | | | 217,348 | | | $ | 2,520,454 | |
| | | | |
Year ended February 28, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 1,126,599 | | | $ | 11,865,928 | | | | 3,745,258 | | | $ | 43,561,070 | |
Shares issued in reinvestment of distributions | | | 44,211 | | | | 470,164 | | | | 119,547 | | | | 1,407,210 | |
Shares redeemed | | | (639,735 | ) | | | (6,792,116 | ) | | | (1,380,497 | ) | | | (16,196,760 | ) |
| | | | |
Net increase (decrease) | | | 531,075 | | | $ | 5,543,976 | | | | 2,484,308 | | | $ | 28,771,520 | |
| | | | |
aFor the period August 1, 2017 (effective date) to August 31, 2017.
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FRANKLIN TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
| | | | | | | | | | | | | | | | |
| | | Franklin Minnesota
Tax-Free Income Fund | | | Franklin Ohio
Tax-Free Income Fund | |
| | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Class A Shares: | | | | | | | | | | | | | | | | |
Six Months ended August 31, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 3,227,502 | | | $ | 39,828,534 | | | | 4,099,079 | | | $ | 51,894,588 | |
Shares issued in reinvestment of distributions | | | 755,506 | | | | 9,331,031 | | | | 1,239,562 | | | | 15,703,655 | |
Shares redeemed | | | (4,764,716 | ) | | | (58,799,337 | ) | | | (6,058,468 | ) | | | (76,608,550 | ) |
| | | | |
Net increase (decrease) | | | (781,708 | ) | | $ | (9,639,772 | ) | | | (719,827 | ) | | $ | (9,010,307 | ) |
| | | | |
Year ended February 28, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 8,156,603 | | | $ | 102,076,942 | | | | 10,587,873 | | | $ | 136,479,455 | |
Shares issued in reinvestment of distributions | | | 1,626,236 | | | | 20,344,858 | | | | 2,720,099 | | | | 34,929,118 | |
Shares redeemed | | | (10,998,862 | ) | | | (136,927,141 | ) | | | (16,026,550 | ) | | | (204,256,007 | ) |
| | | | |
Net increase (decrease) | | | (1,216,023 | ) | | $ | (14,505,341 | ) | | | (2,718,578 | ) | | $ | (32,847,434 | ) |
| | | | |
Class C Shares: | | | | | | | | | | | | | | | | |
Six Months ended August 31, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 768,302 | | | $ | 9,583,051 | | | | 1,144,488 | | | $ | 14,681,739 | |
Shares issued in reinvestment of distributions | | | 192,086 | | | | 2,397,966 | | | | 293,600 | | | | 3,768,380 | |
Shares redeemed | | | (1,792,724 | ) | | | (22,364,223 | ) | | | (2,300,225 | ) | | | (29,473,413 | ) |
| | | | |
Net increase (decrease) | | | (832,336 | ) | | $ | (10,383,206 | ) | | | (862,137 | ) | | $ | (11,023,294 | ) |
| | | | |
Year ended February 28, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 3,399,245 | | | $ | 43,148,979 | | | | 4,055,318 | | | $ | 53,011,032 | |
Shares issued in reinvestment of distributions | | | 402,154 | | | | 5,082,798 | | | | 618,103 | | | | 8,036,545 | |
Shares redeemed | | | (2,851,451 | ) | | | (35,948,389 | ) | | | (3,384,895 | ) | | | (43,734,778 | ) |
| | | | |
Net increase (decrease) | | | 949,948 | | | $ | 12,283,388 | | | | 1,288,526 | | | $ | 17,312,799 | |
| | | | |
Class R6 Shares: | | | | | | | | | | | | | | | | |
Six Months ended August 31, 2017a | | | | | | | | | | | | | | | | |
Shares sold | | | 403 | | | $ | 5,000 | | | | 393 | | | $ | 5,000 | |
| | | | |
Advisor Class Shares: | | | | | | | | | | | | | | | | |
Six Months ended August 31, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 2,616,799 | | | $ | 32,322,872 | | | | 2,269,831 | | | $ | 28,729,644 | |
Shares issued in reinvestment of distributions | | | 205,232 | | | | 2,537,662 | | | | 171,854 | | | | 2,179,869 | |
Shares redeemed | | | (2,897,171 | ) | | | (35,848,382 | ) | | | (1,134,756 | ) | | | (14,363,267 | ) |
| | | | |
Net increase (decrease) | | | (75,140 | ) | | $ | (987,848 | ) | | | 1,306,929 | | | $ | 16,546,246 | |
| | | | |
Year ended February 28, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 7,033,639 | | | $ | 87,704,285 | | | | 6,898,103 | | | $ | 87,905,592 | |
Shares issued in reinvestment of distributions | | | 327,395 | | | | 4,094,145 | | | | 221,234 | | | | 2,833,912 | |
Shares redeemed | | | (3,178,413 | ) | | | (39,471,037 | ) | | | (1,914,258 | ) | | | (24,346,419 | ) |
| | | | |
Net increase (decrease) | | | 4,182,621 | | | $ | 52,327,393 | | | | 5,205,079 | | | $ | 66,393,085 | |
| | | | |
aFor the period August 1, 2017 (effective date) to August 31, 2017.
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 137 |
FRANKLIN TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. Shares of Beneficial Interest (continued)
| | | | | | | | | | | | | | | | |
| | | Franklin Oregon
Tax-Free Income Fund | | | Franklin Pennsylvania
Tax-Free Income Fund | |
| | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Class A Shares: | | | | | | | | | | | | | | | | |
Six Months ended August 31, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 5,275,325 | | | $ | 61,316,242 | | | | 3,611,850 | | | $ | 36,349,947 | |
Shares issued in reinvestment of distributions | | | 1,281,465 | | | | 14,902,759 | | | | 1,584,407 | | | | 15,941,785 | |
Shares redeemed | | | (5,616,174 | ) | | | (65,238,291 | ) | | | (6,448,712 | ) | | | (64,885,570 | ) |
| | | | |
Net increase (decrease) | | | 940,616 | | | $ | 10,980,710 | | | | (1,252,455 | ) | | $ | (12,593,838 | ) |
| | | | |
Year ended February 28, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 13,156,595 | | | $ | 156,419,128 | | | | 10,758,583 | | | $ | 110,974,434 | |
Shares issued in reinvestment of distributions | | | 2,541,956 | | | | 30,150,645 | | | | 3,111,483 | | | | 32,062,824 | |
Shares redeemed | | | (13,416,469 | ) | | | (158,059,363 | ) | | | (14,204,397 | ) | | | (145,626,863 | ) |
| | | | |
Net increase (decrease) | | | 2,282,082 | | | $ | 28,510,410 | | | | (334,331 | ) | | $ | (2,589,605 | ) |
| | | | |
Class C Shares: | | | | | | | | | | | | | | | | |
Six Months ended August 31, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 989,619 | | | $ | 11,671,961 | | | | 1,024,336 | | | $ | 10,436,253 | |
Shares issued in reinvestment of distributions | | | 216,399 | | | | 2,555,057 | | | | 392,780 | | | | 3,999,821 | |
Shares redeemed | | | (1,892,001 | ) | | | (22,343,136 | ) | | | (2,463,324 | ) | | | (25,098,383 | ) |
| | | | |
Net increase (decrease) | | | (685,983 | ) | | $ | (8,116,118 | ) | | | (1,046,208 | ) | | $ | (10,662,309 | ) |
| | | | |
Year ended February 28, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 3,068,701 | | | $ | 37,077,563 | | | | 3,576,800 | | | $ | 37,364,636 | |
Shares issued in reinvestment of distributions | | | 428,575 | | | | 5,157,276 | | | | 750,267 | | | | 7,823,427 | |
Shares redeemed | | | (2,508,529 | ) | | | (30,058,601 | ) | | | (3,706,894 | ) | | | (38,568,154 | ) |
| | | | |
Net increase (decrease) | | | 988,747 | | | $ | 12,176,238 | | | | 620,173 | | | $ | 6,619,909 | |
| | | | |
Class R6 Shares: | | | | | | | | | | | | | | | | |
Six Months ended August 31, 2017a | | | | | | | | | | | | | | | | |
Shares sold | | | 429 | | | $ | 5,000 | | | | 497 | | | $ | 5,000 | |
| | | | |
Advisor Class Shares: | | | | | | | | | | | | | | | | |
Six Months ended August 31, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 2,099,656 | | | $ | 24,431,971 | | | | 1,385,102 | | | $ | 13,959,175 | |
Shares issued in reinvestment of distributions | | | 143,314 | | | | 1,669,003 | | | | 144,483 | | | | 1,455,406 | |
Shares redeemed | | | (1,108,233 | ) | | | (12,888,529 | ) | | | (1,314,308 | ) | | | (13,241,956 | ) |
| | | | |
Net increase (decrease) | | | 1,134,737 | | | $ | 13,212,445 | | | | 215,277 | | | $ | 2,172,625 | |
| | | | |
Year ended February 28, 2017 | | | | | | | | | | | | | | | | |
Shares sold | | | 5,383,920 | | | $ | 63,458,721 | | | | 4,468,007 | | | $ | 45,826,070 | |
Shares issued in reinvestment of distributions | | | 174,059 | | | | 2,061,686 | | | | 192,811 | | | | 1,986,481 | |
Shares redeemed | | | (1,577,190 | ) | | | (18,524,741 | ) | | | (1,302,399 | ) | | | (13,330,667 | ) |
| | | | |
Net increase (decrease) | | | 3,980,789 | | | $ | 46,995,666 | | | | 3,358,419 | | | $ | 34,481,884 | |
| | | | |
aFor the period August 1, 2017 (effective date) to August 31, 2017.
| | | | | | |
138 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 Trust 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 Funds pay an investment management fee to Advisers based on the month-end net assets of each of the Funds 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 |
For the period ended August 31, 2017, each Fund’s annualized effective investment management fee rate based on average daily net assets was as follows:
| | | | | | | | | | | | | | |
Franklin
Arizona
Tax-Free
Income Fund | | | Franklin
Colorado
Tax-Free
Income Fund | | | Franklin
Connecticut
Tax-Free
Income Fund | | | Franklin
Michigan
Tax-Free
Income Fund | |
| | 0.472% | | | | 0.480% | | | | 0.527% | | | | 0.469% | |
| | | |
Franklin
Minnesota
Tax-Free
Income Fund | | | Franklin
Ohio
Tax-Free
Income Fund | | | Franklin
Oregon
Tax-Free
Income Fund | | | Franklin
Pennsylvania
Tax-Free
Income Fund | |
| | 0.468% | | | | 0.462% | | | | 0.466% | | | | 0.464% | |
b. Administrative Fees
Under an agreement with Advisers, FT Services provides administrative services to the Funds. The fee is paid by Advisers based on each of the Funds’ average daily net assets, and is not an additional expense of the Funds.
c. Distribution Fees
The Board has adopted distribution plans for each share class, with the exception of Class R6 and Advisor Class shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Funds’ Class A reimbursement distribution plans, the Funds reimburse Distributors for costs incurred in connection with the servicing, sale and distribution of each Fund’s shares up to the maximum annual plan rate.
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 139 |
FRANKLIN TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
3. Transactions with Affiliates (continued)
c. Distribution Fees (continued)
Under the Class A reimbursement distribution plans, costs exceeding the maximum for the current plan year cannot be reimbursed in subsequent periods. In addition, under the Funds’ Class C compensation distribution plans, the Funds pay Distributors for costs incurred in connection with the servicing, sale and distribution of each 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 for each Fund.
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 Funds. 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 Funds of the following commission transactions related to the sales and redemptions of the Funds’ shares for the period:
| | | | | | | | | | | | | | | | |
| | | Franklin
Arizona
Tax-Free
Income Fund | | | Franklin
Colorado
Tax-Free
Income Fund | | | Franklin
Connecticut
Tax-Free
Income Fund | | | Franklin
Michigan
Tax-Free
Income Fund | |
Sales charges retained net of commissions paid to unaffiliated brokers/dealers | | $ | 83,506 | | | $ | 67,256 | | | $ | 14,494 | | | $ | 66,919 | |
CDSC retained | | $ | 15,785 | | | $ | 917 | | | $ | 2,162 | | | $ | 13,029 | |
| | | | |
| | | Franklin
Minnesota
Tax-Free
Income Fund | | | Franklin
Ohio
Tax-Free
Income Fund | | | Franklin
Oregon
Tax-Free
Income Fund | | | Franklin
Pennsylvania
Tax-Free
Income Fund | |
Sales charges retained net of commissions paid to unaffiliated brokers/dealers | | $ | 80,614 | | | $ | 101,691 | | | $ | 163,373 | | | $ | 93,353 | |
CDSC retained | | $ | 2,492 | | | $ | 13,725 | | | $ | 9,851 | | | $ | 1,874 | |
e. Transfer Agent Fees
Each class of shares, except for Class R6, 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 shareholder servicing fees paid to third parties. These fees are allocated daily based upon their relative proportion of such classes’ aggregate net assets. Class R6 pays Investor Services transfer agent fees specific to that class.
For the period ended August 31, 2017, the Funds paid transfer agent fees as noted in the Statements of Operations of which the following amounts were retained by Investor Services:
| | | | | | | | | | | | | | | | |
| | | Franklin
Arizona
Tax-Free
Income Fund | | | Franklin
Colorado
Tax-Free
Income Fund | | | Franklin
Connecticut
Tax-Free
Income Fund | | | Franklin
Michigan
Tax-Free
Income Fund | |
Transfer agent fees | | | $55,149 | | | | $48,983 | | | | $25,226 | | | | $109,952 | |
| | | | | | |
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FRANKLIN TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
| | | | | | | | | | | | | | | | |
| | | Franklin
Minnesota
Tax-Free
Income Fund | | | Franklin
Ohio
Tax-Free
Income Fund | | | Franklin
Oregon
Tax-Free
Income Fund | | | Franklin
Pennsylvania
Tax-Free
Income Fund | |
Transfer agent fees | | | $93,435 | | | | $127,178 | | | | $78,948 | | | | $123,809 | |
f. Interfund Transactions
Certain or all Funds engaged in purchases and sales of investments with funds or other accounts that have common investment managers (or affiliated investment managers), directors, trustees or officers. These purchases and sales for the period ended August 31, 2017, were as follows:
| | | | | | | | | | | | | | | | |
| | | Franklin
Arizona
Tax-Free
Income Fund | | | Franklin
Connecticut
Tax-Free
Income Fund | | | Franklin
Michigan
Tax-Free
Income Fund | | | Franklin
Minnesota
Tax-Free
Income Fund | |
Purchases | | $ | 10,000,000 | | | $ | 2,200,000 | | | $ | 42,800,000 | | | $ | 12,270,000 | |
Sales | | $ | 12,800,000 | | | $ | — | | | $ | 48,600,000 | | | $ | 6,870,000 | |
| | | | |
| | | Franklin
Ohio
Tax-Free
Income Fund | | | Franklin
Oregon
Tax-Free
Income Fund | | | Franklin
Pennsylvania
Tax-Free
Income Fund | | | | |
Purchases | | $ | 14,100,000 | | | $ | 21,000,000 | | | $ | 14,400,000 | | | | | |
Sales | | $ | 16,900,000 | | | $ | 22,600,000 | | | $ | 19,400,000 | | | | | |
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 February 28, 2017, the capital loss carryforwards were as follows:
| | | | | | | | | | | | | | | | |
| | | | |
| | | Franklin
Arizona
Tax-Free
Income Fund | | | Franklin
Colorado
Tax-Free
Income Fund | | | Franklin
Connecticut
Tax-Free
Income Fund | | | Franklin
Michigan
Tax-Free
Income Fund | |
Capital loss carryforwards subject to expiration: | | | | | | | | | | | | | | | | |
2018 | | $ | — | | | $ | 2,700,288 | | | $ | — | | | $ | — | |
2019 | | | — | | | | 1,448,482 | | | | — | | | | — | |
Capital loss carryforwards not subject to expiration: | | | | | | | | | | | | | | | | |
Short term | | | 13,125,300 | | | | 13,203,249 | | | | 7,078,540 | | | | 11,645,731 | |
Long term | | | 28,447,793 | | | | 6,519,028 | | | | 13,842,041 | | | | 11,441,115 | |
| | | | |
Total capital loss carryforwards | | $ | 41,573,093 | | | $ | 23,871,047 | | | $ | 20,920,581 | | | $ | 23,086,846 | |
| | | | |
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 141 |
FRANKLIN TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
4. Income Taxes (continued)
| | | | | | | | | | | | | | | | |
| | | Franklin
Minnesota
Tax-Free
Income Fund | | | Franklin
Ohio
Tax-Free
Income Fund | | | Franklin
Oregon
Tax-Free
Income Fund | | | Franklin
Pennsylvania
Tax-Free
Income Fund | |
Capital loss carryforwards subject to expiration: | | | | | | | | | | | | | | | | |
2018 | | $ | 286,131 | | | $ | — | | | $ | — | | | $ | 3,499,532 | |
Capital loss carryforwards not subject to expiration: | | | | | | | | | | | | | | | | |
Short term | | | 7,440,612 | | | | 17,100,578 | | | | 17,383,130 | | | | 11,013,011 | |
Long term | | | 3,270,375 | | | | 15,281,468 | | | | 39,344,343 | | | | 40,129,291 | |
| | | | |
Total capital loss carryforwards | | $ | 10,997,118 | | | $ | 32,382,046 | | | $ | 56,727,473 | | | $ | 54,641,834 | |
| | | | |
At August 31, 2017, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:
| | | | | | | | | | | | | | | | |
| | | Franklin
Arizona
Tax-Free
Income Fund | | | Franklin
Colorado
Tax-Free
Income Fund | | | Franklin
Connecticut
Tax-Free
Income Fund | | | Franklin
Michigan
Tax-Free
Income Fund | |
Cost of investments | | $ | 932,405,524 | | | $ | 727,426,775 | | | $ | 273,931,075 | | | $ | 1,008,510,912 | |
| | | | |
| | | | |
Unrealized appreciation | | $ | 57,570,175 | | | $ | 44,301,223 | | | $ | 14,655,243 | | | $ | 46,272,218 | |
Unrealized depreciation | | | (1,213,662 | ) | | | (19,136,835 | ) | | | (1,419,360 | ) | | | (18,752,192 | ) |
| | | | |
Net unrealized appreciation (depreciation) | | $ | 56,356,513 | | | $ | 25,164,388 | | | $ | 13,235,883 | | | $ | 27,520,026 | |
| | | | |
| | | | | | | | | | | | | | | | |
| | | Franklin
Minnesota
Tax-Free
Income Fund | | | Franklin
Ohio
Tax-Free
Income Fund | | | Franklin
Oregon
Tax-Free
Income Fund | | | Franklin
Pennsylvania
Tax-Free
Income Fund | |
Cost of investments | | $ | 1,030,101,603 | | | $ | 1,532,348,141 | | | $ | 1,196,882,336 | | | $ | 1,210,198,666 | |
| | | | |
| | | | |
Unrealized appreciation | | $ | 51,903,832 | | | $ | 84,678,785 | | | $ | 75,432,249 | | | $ | 79,163,891 | |
Unrealized depreciation | | | (1,519,212 | ) | | | (4,919,267 | ) | | | (5,881,476 | ) | | | (20,284,356 | ) |
| | | | |
Net unrealized appreciation (depreciation) | | $ | 50,384,620 | | | $ | 79,759,518 | | | $ | 69,550,773 | | | $ | 58,879,535 | |
| | | | |
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, bond workout expenditures and wash sales.
5. Investment Transactions
Purchases and sales of investments (excluding short term securities) for the period ended August 31, 2017, were as follows:
| | | | | | | | | | | | | | | | |
| | | Franklin
Arizona
Tax-Free
Income Fund | | | Franklin
Colorado
Tax-Free
Income Fund | | | Franklin
Connecticut
Tax-Free
Income Fund | | | Franklin
Michigan
Tax-Free
Income Fund | |
Purchases | | $ | 40,835,039 | | | $ | 62,131,303 | | | $ | 5,951,320 | | | $ | 87,325,608 | |
Sales | | $ | 37,569,980 | | | $ | 64,039,695 | | | $ | 26,354,932 | | | $ | 93,685,726 | |
| | | | | | | | | | | | | | | | |
| | | Franklin
Minnesota
Tax-Free
Income Fund | | | Franklin
Ohio
Tax-Free
Income Fund | | | Franklin
Oregon
Tax-Free
Income Fund | | | Franklin
Pennsylvania
Tax-Free
Income Fund | |
Purchases | | $ | 24,120,603 | | | $ | 107,491,392 | | | $ | 110,257,649 | | | $ | 103,661,621 | |
Sales | | $ | 36,333,400 | | | $ | 111,612,404 | | | $ | 119,660,658 | | | $ | 117,621,116 | |
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FRANKLIN TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
6. Defaulted Securities
Certain or all Funds held defaulted securities and/or other securities for which the income has been deemed uncollectible. The Funds discontinue accruing income on securities for which income has been deemed uncollectible and provide an estimate for losses on interest receivable. The securities have been identified in the accompanying Statements of Investments. At August 31, 2017, the aggregate value of these securities was as follows:
| | | | | | | | |
| | | Value | | | Percentage of
Net Assets | |
Franklin Colorado Tax-Free Income Fund | | $ | 13,641,498 | | | | 1.8% | |
Franklin Michigan Tax-Free Income Fund | | | 6,500,000 | | | | 0.6% | |
Franklin Oregon Tax-Free Income Fund | | | 7,547,910 | | | | 0.6% | |
Franklin Pennsylvania Tax-Free Income Fund | | | 17,007,368 | | | | 1.3% | |
7. Concentration of Risk
Certain or all Funds invest a large percentage of their total assets in obligations of issuers within their respective state and U.S. territories. Such concentration may subject the Funds to risks associated with industrial or regional matters, and economic, political or legal developments occurring within those states and U.S. territories. Investing in Puerto Rico securities may expose the Funds to heightened risks due to recent adverse economic and market changes, credit downgrades and ongoing restructuring discussions. 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.
8. Credit Facility
The Funds, 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 $2 billion (Global Credit Facility) which matures on February 9, 2018. 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 Funds shall, in addition to interest charged on any borrowings made by the Funds and other costs incurred by the Funds, pay their share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon their relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.15% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses in the Statements of Operations. During the period ended August 31, 2017, the Funds did not use the Global Credit Facility.
9. Fair Value Measurements
The Funds follow a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Funds’ own market assumptions (unobservable inputs). These inputs are used in determining the value of the Funds’ 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.) |
| | | | | | | | |
franklintempleton.com | | | | | | Semiannual Report | | 143 |
FRANKLIN TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
9. Fair Value Measurements (continued)
| | • | | Level 3 – significant unobservable inputs (including the Funds’ 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 Funds have adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.
At August 31, 2017, all of the Funds’ investments in financial instruments carried at fair value were valued using Level 2 inputs.
10. New Accounting Pronouncements
In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendments in the ASU shorten the amortization period for certain callable debt securities acquired at a premium, to be amortized to the earliest call date. The ASU does not require an accounting change for securities acquired at a discount, which continues to be amortized to maturity. The ASU is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Management is currently evaluating the impact, if any, of applying this provision.
11. Subsequent Events
The Funds have evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.
Abbreviations
Selected Portfolio
| | | | | | |
AGMC | | Assured Guaranty Municipal Corp. | | ID | | Improvement District |
AMBAC | | American Municipal Bond Assurance Corp. | | IDA | | Industrial Development Authority/Agency |
BAM | | Build America Mutual Assurance Co. | | IDAR | | Industrial Development Authority Revenue |
BHAC | | Berkshire Hathaway Assurance Corp. | | IDR | | Industrial Development Revenue |
CDA | | Community Development Authority/Agency | | ISD | | Independent School District |
COP | | Certificate of Participation | | LOC | | Letter of Credit |
CSD | | Central School District | | MAC | | Municipal Assistance Corp. |
EDA | | Economic Development Authority | | MBS | | Mortgage-Backed Security |
EDC | | Economic Development Corp. | | MFHR | | Multi-Family Housing Revenue |
EDR | | Economic Development Revenue | | MUNIPSA | | SIFMA Municipal Swap Index |
ETM | | Escrow to Maturity | | NATL | | National Public Financial Guarantee Corp. |
FHA | | Federal Housing Authority/Agency | | PCC | | Pollution Control Corp. |
FICO | | Financing Corp. | | PCR | | Pollution Control Revenue |
GNMA | | Government National Mortgage Association | | RDA | | Redevelopment Agency/Authority |
GO | | General Obligation | | SFM | | Single Family Mortgage |
HDA | | Housing Development Authority/Agency | | SFMR | | Single Family Mortgage Revenue |
HDC | | Housing Development Corp. | | SPA | | Standby Purchase Agreement |
HFA | | Housing Finance Authority/Agency | | USD | | Unified/Union School District |
HFAR | | Housing Finance Authority Revenue | | XLCA | | XL Capital Assurance |
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144 | | Semiannual Report | | | | franklintempleton.com |
FRANKLIN TAX-FREE TRUST
Shareholder Information
Proxy Voting Policies and Procedures
The Trust’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Trust uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Trust’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 Trust’s proxy voting records are also made available online at franklintempleton.com and posted on the US 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 Trust files a complete statement of investments with the US 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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| | Semiannual Report and Shareholder Letter Franklin Tax-Free Trust Investment Manager Franklin Advisers, Inc. Distributor Franklin Templeton Distributors, Inc. (800) DIAL BEN® / 342-5236 franklintempleton.com Shareholder Services (800) 632-2301 |
Authorized for distribution only when accompanied or preceded by a summary prospectus and/or prospectus. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. A prospectus contains this and other information; please read it carefully before investing.
To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.
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© 2017 Franklin Templeton Investments. All rights reserved. | | TF3 S 10/17 |
(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.
(a) (1) Code of Ethics
(a) (2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, 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 Matthew T. Hinkle, 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.
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| FRANKLIN TAX-FREE TRUST |
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| By | | /s/ Matthew T. Hinkle |
| | Matthew T. Hinkle |
| | Chief Executive Officer – |
| | Finance and Administration |
| Date October 26, 2017 |
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.
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| By | | /s/ Matthew T. Hinkle |
| | Matthew T. Hinkle |
| | Chief Executive Officer – |
| | Finance and Administration |
| Date October 26, 2017 |
| | |
By | | /s/ Gaston Gardey |
| | Gaston Gardey |
| | Chief Financial Officer and |
| | Chief Accounting Officer |
Date October 26, 2017 |
