CONTENTS
<TABLE>
<S> <C>
MESSAGE FROM THE CHAIRMAN 1
MANAGER'S DISCUSSION 3
PERFORMANCE SUMMARY 6
RESULTS OF
SHAREHOLDER MEETING 8
STATEMENT OF INVESTMENTS 9
FINANCIAL STATEMENTS 37
NOTES TO FINANCIAL
STATEMENTS 39
REPORT OF
INDEPENDENT AUDITORS 42
</TABLE>
Mutual funds, annuities, and other investment products:
- - are not FDIC insured;
- - are not deposits or obligations of, or guaranteed by, any financial
institution;
- - are subject to investment risks, including possible loss of the principal
amount invested.
Charles B. Johnson
President
<PAGE>
June 15, 1995
Fellow Shareholder,
We're pleased to bring you the annual report of the Franklin Federal Tax-Free
Income Fund for the fiscal year ended April 30, 1995.
Calendar year 1994 was the worst for fixed-income securities since the fund's
inception in 1983. In fact, the 20-year U.S. Treasury bond recorded its poorest
performance since 1967.(1) Following this disappointing year, 1995 to date has
been a welcome change. Stock and bond markets both enjoyed strong performance
through the first four months of the year. In February, the Dow Jones
Industrial Average broke the 4,000 mark for the first time, and finished the
period above 4,300. Bond prices, as measured by the Lehman Brothers Aggregate
Index, rose 3.95% from January 1, to April 30, 1995.
Of more importance to shareholders of the Franklin Federal Tax-Free Income Fund
is the recent strength of the municipal bond market. Although the rally was
momentarily sidetracked in early December by the municipal bankruptcy filing
of Orange County, California, the municipal market has recovered nicely.
Through April 30, 1995, municipal bond prices, as measured by the Bond Buyer 40
Index, had risen 6.19% since the beginning of 1995.
Of course, there's no guarantee that these markets will continue to rise as
they have recently. As you know, markets experience both ups and downs, which
is a normal part of investing. That's why we've always encouraged our
shareholders to focus on their long-term investment goals. History has shown
that, over the long term, stocks and bonds have delivered impressive results.(2)
By concentrating on long-term investment goals, you need not be unduly
concerned with short-term market fluctuations.
Furthermore, many financial experts agree that a technique known as "dollar
cost averaging" may be one of the best ways to take advantage of market
downturns and rallies. With dollar cost averaging, you invest a fixed dollar
amount at regular intervals, regardless of the market's direction. Using this
method, you automatically purchase more shares when prices are low, and fewer
shares when prices are high, which can significantly reduce your average cost
per share. Of course, no investment technique can assure a profit or protect
against loss. But, dollar cost averaging can provide you with a simple
investment strategy that can minimize the effects of market volatility and help
you make the most of your investment dollars.(3) For more information on dollar
cost averaging, please see your investment advisor. Or, call Franklin Templeton
Fund Information, toll free, at 1-800/DIAL BEN.
1. Source: Ibbotson Associates. Based on one-year total returns of long-term
government bonds from January 1926 to December 1994.
2. Past performance cannot guarantee future results.
3. When using this strategy, you should consider your financial ability to
continue purchases through periods of low price levels or changing economic
conditions.
1
<PAGE>
You can also help minimize the effects of market fluctuations by diversifying
your investments. Mutual funds offer a level of diversification that would be
almost impossible for individual investors to achieve on their own. For
example, the Franklin Federal Tax-Free Income Fund's $6.8 billion in net assets
were spread over more than 900 securities from a variety of municipalities,
which helps safeguard the fund from losses experienced by any one issuer.
Mutual funds also provide full-time, professional management, and Franklin's
Municipal Bond Research Department is one of the largest in the industry.(4)
Our analysts frequently make site visits to obtain invaluable first-hand
information about issuers and specific municipal projects.
The benefits of mutual fund investing -- diversification and professional
management -- became even more apparent during the recent crisis in Orange
County, California.(5) This event triggered declines throughout the municipal
market not only because bonds issued by Orange County were affected, but bonds
issued by municipalities that invested in the Orange County investment pool
were impacted. The problems in Orange County created ripples that were felt
throughout the municipal bond market.
Individuals who held Orange County bonds were directly affected by this event,
but the Franklin Federal Tax-Free Income Fund's diversification helped to
spread the risk. Following the news of Orange County's filing, and as details
of the county's financial woes became known, the fund's share price fell nine
cents to $11.16 on December 7, 1994. This decline was due more to the reaction
of the overall municipal bond market than to any fundamental weakness in the
fund's holdings. In fact, once additional facts and information about the
situation became known, the fund's share price recovered, rising to $11.73 by
the end of the fiscal year.
As always, we welcome your questions, appreciate your trust and support, and
look forward to serving you in the years to come.
Sincerely,
Charles B. Johnson
Chairman
4. Source: Research and Ratings Review, Vol. II. Issue 8, November 14, 1994.
Franklin's municipal research team ranks second in size out of 1,000 investment
advisory firms, in terms of municipal bond analysts, in a survey by TMS
Holdings, Inc.
5. The Orange County and related bankruptcy proceedings are ongoing, and the
funds' managers continue to monitor proceedings.
2
<PAGE>
MANAGER'S DISCUSSION
Fund Objective:
The Franklin Federal Tax-Free Income Fund seeks to provide high current
income exempt from regular federal income tax through a nationally
diversified portfolio of municipal securities.
The fund's fiscal year reminded all of us that volatility is a fundamental
market condition. Not only did we see four interest rate increases during the
period, we also witnessed the largest municipal bankruptcy filing in history by
Orange County, California.
Fortunately, 1995 to date has been a different story. U.S. economic growth has
slowed to a more sustainable level, inflation seems to be under control, and
interest rates appear to have stabilized for the time being. Both stock and
bond markets have flourished in this environment, as noted in the preceding
letter to shareholders. Of more interest to us is the municipal bond market,
which has enjoyed its own rally. From December 31, 1994, to April 30, 1995,
municipal bond prices increased 6.19%.(1)
Although the municipal bond market underwent considerable volatility in 1994,
our investment strategy remained constant. We continued to focus on a "buy and
hold" strategy, buying higher yielding, current coupon bonds whenever possible.
As always, we purchased only investment-grade bonds for the fund -- bonds whose
credit-quality ratings fell within Standard & Poor's or Moody's four highest
categories at the time of purchase -- or unrated securities that we judged to
be of comparable credit quality.
The chart below illustrates that on April 30, 1995, over 30% of the fund's
total net assets were invested in securities rated AAA -- the highest rating
possible.(2)
GRAPHIC MATERIAL (1) OMITTED - SEE APPENDIX
1. Source: Bond Buyer 40 Index.
2. The ratings, while not guaranteeing the fund's market value or signifying
approval of the shares by national ratings agencies, reflect the quality of the
bonds as described in the fund's prospectus and are subject to change. These
ratings reflect the opinions of national ratings agencies such as Standard &
Poor's and Moody's. Those bonds not rated by these agencies were judged to be
of comparable credit quality by the fund's managers.
3
<PAGE>
During the fiscal year, we focused on bonds in the 15- to 20-year range,
because the yields of longer-term bonds did not warrant the additional
interest-rate risk inherent in those bonds. For example, on April 30, 1995,
intermediate-term municipal securities offered 89% of the yield offered by
long-term municipal securities on the same date.(3)
Our conservative investment strategy helped to protect the fund from much of
the volatility during the reporting period. During the reporting period, for
example, the fund's share value was 49% LESS VOLATILE than the overall
municipal bond market, as measured by the Bond Buyer 40 Index.(4) Even so, the
fund's net asset value fell eight cents to $11.73 per share on April 30, 1995,
from $11.81 on April 30, 1994. This decline was due primarily to higher
interest rates in 1994.
The fund's conservative approach has served it well over the years.
Morningstar, Inc., a Chicago-based mutual fund research organization, recently
awarded the fund four stars for its below-average risk and above-average
return. The fund was also rated four stars for the three- and ten-year periods,
and five stars for the five-year period ended April 30, 1995.(5)
Furthermore, while our investment strategy focuses on income rather than total
return, the fund reported a cumulative total return of +6.21% during the fiscal
year, which beat the average total return of other national municipal bond
funds. According to Lipper Analytical Services, Inc., the average total return
of national municipal bond funds was +5.87% for the year ended April 30,
1995.(6)
Although interest rates rose over the past year, they declined steadily for the
preceding five years. The lower yielding municipal securities purchased during
this period continued to impact the fund's income stream, which necessitated an
adjustment of the fund's dividend to 6.2 cents from 6.5 cents per share,
effective with the April 1995 distribution. Despite this reduction, however,
the fund has maintained a very competitive yield. According to Lipper, the
average 30-day yield of national municipal bond funds was 5.03% on April 30,
1995. On the same day, the fund's yield was 5.41%.(6)
3. Source: Intermediate bonds -- Lehman Brothers 10-year Municipal Bond Index;
Long-term bonds -- Lehman Brothers Long Municipal Bond Index.
4. Volatility is measured by standard deviation as a percentage of the mean of
the past year's month-end values.
5. Source: Morningstar Mutual Funds, 5/26/95. Morningstar proprietary ratings
reflect historical risk-adjusted performance as of April 30, 1995. The ratings
are subject to change every month. Past performance is no guarantee of future
results. Morningstar ratings are calculated from the fund's three-, five-, and
ten-year average annual returns in excess of 90-day Treasury bill returns with
appropriate fee adjustments, and a risk factor that reflects fund performance
below 90-day T-bill returns. Ten percent of the funds in an investment category
receive five stars, 22.5% receive four stars, 35% receive three stars, 22.5%
receive two stars, and the bottom 10% receive one star.
6. The fund was ranked 57th out of 198 national municipal bond funds for total
return for the one-year period, 27th of 93 funds for the five-year period, and
24th of 52 funds for the ten-year period ended April 30, 1995, as measured by
Lipper Analytical Services, Inc., a nationally recognized mutual fund research
organization. In terms of yield, the fund was ranked 51st out of 223 national
municipal bond funds for the 30 days ended April 30, 1995. Lipper rankings do
not include sales charges, and may have been different if such charges had been
considered. Past performance does not guarantee future results.
4
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Sector Breakdown on April 30, 1995
As a percentage of total net assets
<TABLE>
<CAPTION>
SECTOR PERCENTAGE
- -------------------------------------------------------------------------------
<S> <C>
Utilities 27.6%
Pre-Refunded 20.6%
Housing 13.7%
Transportation 9.5%
General Obligations 7.7%
Hospitals 7.5%
Industrial 3.9%
Other Revenue 3.6%
Certificates of Participation 2.3%
Education 1.6%
Health Care 1.4%
Tax Allocation 0.5%
Sales Tax Revenue 0.1%
</TABLE>
For a complete list of portfolio holdings, please see page 9 of this report.
We also seek to reduce the fund's risk through diversification. With over $6
billion in total net assets, the Franklin Federal Tax-Free Income Fund was the
largest national municipal bond fund on April 30, 1995. The fund held over 900
issues, spanning nearly 50 states and U.S. territories and hundreds of cities
and counties throughout the U.S. Furthermore, we continue to purchase
securities from a variety of municipal investment sectors, as the table to the
left indicates.
Looking forward, we believe that municipal bonds should outperform the taxable
bond market during 1995. Significantly lower supply and continued demand for
tax-free investments should support prices of municipal bonds in the coming
months. Moreover, the quick and decisive action of the Federal Reserve Board
over the past 14 months appears to have quelled most inflationary fears. As a
result, we expect more stable interest rates through 1995 and, correspondingly,
much less volatility in the municipal bond market than we saw in 1994.
5
<PAGE>
PERFORMANCE SUMMARY
The Franklin Federal Tax-Free Income Fund's share price, as measured by net
asset value, declined slightly to $11.73 on April 30, 1995, from $11.81 on
April 30, 1994.
The fund continued to meet its investment objective of providing high current
income to its shareholders. For the one-year period ended April 30, 1995, your
fund paid income distributions totaling 77.7 cents ($0.777) per share.(7) Five
years of declining interest rates warranted a reduction of your fund's
dividend to 6.2 cents ($0.062) from 6.5 cents ($0.065) per share, effective
with the April 1995 distribution. Dividends will vary based on the earnings of
the fund's portfolio, and past distributions are not necessarily predictive of
future results.
GRAPHIC MATERIAL (2) OMITTED - SEE APPENDIX
At the end of the reporting period, your fund's distribution rate was 6.07%,
based on an annualization of the current monthly dividend of 6.2 cents
($0.062) per share and the maximum offering price of $12.25 on April 30, 1995.
This tax-free rate is generally higher than the after-tax return on a
comparable taxable investment. As the chart to the right illustrates, if you
are in the maximum federal income tax bracket of 39.6%, you would have to earn
10.05% from a taxable investment to match your fund's tax-free distribution
rate.
Based on this dividend income and change in share price, the fund posted a
one-year cumulative total return of +6.21 % for the period ended April 30,
1995. Total return measures the change in value of an investment during the
periods indicated, assuming reinvestment of dividends and capital gains, if
any. This calculation does not include the maximum initial sales charge. Past
performance is not predictive of future results.
The chart on page 7 illustrates that for the ten years ended April 30, 1995,
the Franklin Federal Tax-Free Income Fund far outperformed the Consumer Price
Index (CPI) -- keeping your purchasing power well ahead of inflation. It also
shows that the fund's performance generally followed that of the Lehman
Brothers Municipal Bond Index.
GRAPHIC MATERIAL (3) OMITTED - SEE APPENDIX
7. These dividends are generally subject to state and local income taxes, if
any. For investors subject to federal alternative minimum tax, a small portion
of these dividends may be subject to such tax. Distributions of capital gains
and of ordinary income from accrued market discount, if any, are generally
taxable.
6
<PAGE>
The Lehman Brothers index has some inherent performance differentials over any
fund, as it holds no cash in its portfolio and involves no sales charges or
management expenses. Please remember that an index is simply a measure of
performance, and cannot be invested in directly.
We maintain a long-term perspective and encourage shareholders to view their
investment in a similar manner. While the fund may experience volatility from
time to time, we believe that its performance will be rewarding over the long
term. For example, as the table to the right illustrates, the fund has provided
an average annual total return of +8.77% over the last ten years.
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Periods ended April 30, 1995
<TABLE>
<CAPTION>
SINCE
INCEPTION
1-YEAR 5-YEAR 10-YEAR (10/7/83)
<S> <C> <C> <C> <C>
Cumulative
Total Return(8) 6.21% 49.94% 141.91% 185.75%
Average Annual
Total Return(9) 1.73% 7.50% 8.77% 9.08%
Distribution Rate(10) 6.07%
Equivalent Taxable
Distribution Rate(11) 10.05%
30-Day Standardized Yield(12) 5.41%
Equivalent Taxable Yield(11) 8.96%
</TABLE>
*This performance graph assumes an initial $10,000 investment and includes the
maximum 4.25% initial sales charge, all fund expenses and account fees. It also
assumes that your dividends and capital gains were reinvested at net asset
value. The Lehman Brothers Municipal Bond Index includes price appreciation or
depreciation and distributions as a percentage of the original investment. Past
performance is not predictive of future results.
8. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include the current, maximum 4.25% initial
sales charge. See note below.
9. Average annual total return represents the average annual change in value of
an investment over the stated periods. The figures assume reinvestment of
dividends and capital gains at net asset value and have been restated to
reflect the current, maximum 4.25% initial sales charge. See note below.
10. Distribution rate is based on an annualization of the fund's 6.2 cents per
share monthly dividend and the maximum offering price of $12.25 on April 30,
1995.
11. Equivalent taxable distribution rate and yield assume the 1995 maximum
federal income tax bracket of 39.6% .
12. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio during the 30 days ended April 30, 1995.
Note: Prior to July 1, 1994, fund shares were offered at a lower initial sales
charge, with dividends reinvested at the offering price. Thus, actual total
return for purchasers of shares during that period would have been different
than noted above. Effective May 1, 1994, the fund eliminated the sales charge
on reinvested dividends and implemented a plan of distribution under Rule
12b-1, which will affect future performance. Investment return and principal
value will fluctuate with market conditions, and you may have a gain or loss
when you sell your shares. Past performance cannot guarantee future results.
The historical performance data shown above pertain only to Class I shares of
the fund. Class II shares, which the fund began offering on May 1, 1995, are
subject to different fees and expenses, which will affect their performance.
Performance data for Class II shares are not yet available. Please see the
prospectus for more details regarding Class I and Class II shares.
7
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Special Meeting of Shareholders
At a special meeting of shareholders of the Fund held on March 24, 1995,
shareholders of the Fund voted on an amendment to the Fund's Articles of
Incorporation to permit the issuance of additional classes of shares and to
make other conforming changes. The proposal was approved by shareholders and
the vote was as follows:
<TABLE>
<CAPTION>
For Against Abstain
---------------------------------------------------
<S> <C> <C>
302,304,147 20,392,490 16,201,607
</TABLE>
8
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS 97.0%
ALABAMA 1.1%
$ 5,770,000 Alabama State Docks Department Coal Revenue, Refunding, Pre-Refunded, 10.00%,
10/01/05 ............................................................................... $ 6,071,252
6,805,000 Alabama Water Pollution Control Authority, Revolving Fund, Series B, 7.75%, 08/15/12 .... 7,156,887
5,000,000 Birmingham GO, Street Improvement Warrants, Pre-Refunded, 8.00%, 07/01/13 ............... 5,528,750
1,000,000 Citronelle IDB, PCR, Stauffer Chemical Project, Guaranteed by Imperial Chemical, Plc.,
Series 1982, 8.00%, 12/01/12 ........................................................... 1,124,940
18,830,000 Columbia IDB, PCR, Refunding, Alabama Power Co. Project, AMBAC Insured, 6.50%,
09/01/23 ............................................................................... 19,287,381
12,000,000 Courtland IDB, IDR, Refunding, Champion International Corp., Series A, 7.20%, 12/01/13 .. 12,723,840
24,150,000 West Jefferson IDB, PCR, Refunding, Alabama Power Co., Miller Plant, Series C,
MBIA Insured, 6.05%, 05/01/23 .......................................................... 23,924,439
-----------
75,817,489
-----------
ALASKA .9%
1,775,000 Alaska Industrial Development and Export Authority, Revolving Fund, Series A, 7.95%,
04/01/10 ............................................................................. 1,953,778
Alaska State HFC,
350,000 CHM, Series A, 8.375%, 12/01/16 ...................................................... 364,921
4,300,000 CHM, Series A-1, 6.75%, 12/01/32 ..................................................... 4,351,944
2,955,000 CHM, Series A-3, 7.70%, 12/01/13 ..................................................... 3,052,397
8,825,000 Refunding, Mortgage Insured, Program 1, Series 1990-B, 7.80%, 12/01/30 ............... 9,239,069
8,000,000 Series A, 6.60%, 12/01/23 ............................................................ 8,567,440
21,940,000 Veterans Mortgage Program, MBIA Insured, 6.75%, 12/01/25 ............................. 22,332,068
Anchorage GO, Refunding,
1,000,000 Series A, FGIC Insured, 6.00%, 02/01/11 .............................................. 997,870
1,500,000 Series A, FGIC Insured, 6.00%, 02/01/15 .............................................. 1,479,360
Anchorage Parking Authority Revenue, Refunding,
3,360,000 5th Avenue Garage Lease Project, 6.50%, 12/01/02 ..................................... 3,477,331
3,500,000 5th Avenue Garage Lease Project, 6.75%, 12/01/08 ..................................... 3,556,420
2,000,000 Valdez Marine Terminal Revenue, Refunding, Pipeline, Inc. Project, 5.75%, 11/01/28 ...... 1,844,640
-----------
61,217,238
-----------
ARIZONA .7%
5,275,000 Coconino County PCR, Series A, 5.875%, 08/15/28 ......................................... 4,854,266
14,720,000 Glendale IDA, Hospital Revenue, Northwest Development, Inc. Project, 8.875%, 01/01/16.... 15,428,326
7,400,000 Navajo County PCR, Refunding, Arizona Public Service Co., Series A, 5.875%, 08/15/28 .... 6,809,776
11,665,000 Pima County IDA, MFHR, Fountains La Cholla Project, FHA Mortgage Insured, 8.00%,
12/01/25 ............................................................................... 11,913,813
5,750,000 Tempe IDA, Residential Care Facilities Revenue, Volunteers of America Care Facilities,
9.00%, 06/01/18 ........................................................................ 6,059,350
-----------
45,065,531
-----------
ARKANSAS .2%
3,335,000 Desha County, Residential Housing Facilities Board, SFMR, Refunding, 7.50%, 04/01/11 .... 3,548,907
3,115,000 Independence County, Public Health and Education Facilities Board Capital Revenue,
Refunding & Improvement, White River Control Project, 8.00%, 06/01/09 .................. 3,244,863
1,465,000 Jefferson County, PCR, Refunding, Arkansas Power and Light Co. Project, 6.30%,
06/01/18 ............................................................................... 1,456,093
2,600,000 Pope County, PCR, Refunding, Power and Light Co. Project, 6.30%, 12/01/16 ............... 2,563,652
-----------
10,813,515
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
CALIFORNIA 3.2%
Alhambra COP,
$ 410,000 Clubhouse Facility Project, 11.25%, 01/01/08 ......................................... $ 425,994
455,000 Clubhouse Facility Project, 11.25%, 01/01/09 ......................................... 472,768
500,000 Clubhouse Facility Project, 11.25%, 01/01/10 ......................................... 519,525
5,325,000 Burbank RDA, Refunding, Tax Allocation, Series A, 6.25%, 12/01/24 ....................... 4,928,181
2,030,000 Butte County COP, Justice Facilities Project, 5.70%, 07/01/14 ........................... 1,800,549
California State Educational Facilities Authority Revenue,
3,580,000 National University, Connie Lee Insured, 6.00%, 05/01/09 ............................. 3,539,940
1,000,000 Pooled College and University Financing, Refunding, Series B, 5.70%, 06/01/01 ........ 994,890
California State GO,
3,070,000 Series 1994, 5.90%, 05/01/08 ......................................................... 3,061,680
7,000,000 Series 1994, 6.00%, 05/01/18 ......................................................... 6,779,640
12,500,000 Series 1994, FGIC Insured, 6.00%, 05/01/20 ........................................... 12,184,250
California State Public Works Board Lease Revenue, Various University of California
Projects,
3,500,000 Series A, 6.625%, 10/01/10 ........................................................... 3,597,020
4,000,000 Series A, 6.375%, 10/01/14 ........................................................... 4,014,160
2,000,000 Series A, 6.375%, 10/01/19 ........................................................... 1,998,600
33,195,000 California State Veterans, GO, Series B, 6.55%, 02/01/25 ................................ 32,975,249
1,020,000 Coalinga Public Finance Authority Revenue, Series B, 6.25%, 09/15/07 .................... 980,893
1,000,000 Commerce, Refuse to Energy Authority Revenue, Refunding, Series 1994, 8.75%,
07/01/10 ............................................................................... 1,079,730
4,000,000 Eden Township Hospital, District Health Facilities Revenue, Refunding, COP, Eden Hospital
Health Services Corp., 5.75%, 07/01/12 ................................................. 3,634,440
Forty-Niner Shops, Inc., Auxiliary Organization,
1,090,000 California State Long Beach Project, 6.875%, 04/01/07 ................................ 1,109,849
1,565,000 California State Long Beach Project, 6.875%, 04/01/12 ................................ 1,582,998
3,180,000 Los Angeles Community RDA, Housing Revenue, Refunding, Series A, AMBAC Insured,
6.55%, 01/01/27 ........................................................................ 3,212,212
3,000,000 Los Angeles County Transportation Commission Sales Tax Revenue, Proposition C,
Series A, MBIA Insured, 6.00%, 07/01/23 ................................................ 2,931,960
Los Angeles Department of Water and Power Electric Plant Revenue,
14,925,000 Refunding, 6.40%, 11/01/31 ........................................................... 15,315,438
3,000,000 Refunding, MBIA Insured, 6.00%, 02/01/28 ............................................. 2,907,810
10,500,000 Second Issue, MBIA Insured, 6.40%, 11/01/31 .......................................... 10,768,905
6,400,000 Los Angeles Regional Airport Improvements Corp., Lease Revenue, Refunding,
United Airlines, Inc. Project, 6.875%, 11/15/12 ........................................ 6,300,672
3,820,000 M-S-R Public Power Agency, San Juan Project Revenue, Series E, MBIA Insured, 6.00%,
07/01/22 ............................................................................... 3,710,099
7,080,000 San Francisco City and County RDAR, George Moscone Convention Center, Lease
Revenue, 6.75%, 07/01/24 ............................................................... 7,435,982
12,680,000 San Francisco City and County RDAR, Tax Allocation Redevelopment Project, 6.50%,
08/01/22 ............................................................................... 12,699,527
San Joaquin Hills Transportation,
18,795,000 Corridor Agency Toll Road Revenue, 7.00%, 01/01/30 ................................... 18,870,932
41,375,000 (c)Corridor Agency Toll Road Revenue, 6.75%, 01/01/32 ................................... 40,329,868
5,000,000 Corridor Agency Toll Road Revenue, 5.00%, 01/01/33 ................................... 3,724,500
3,150,000 Santa Barbara County Revenue, COP, Refunding, Montecito Retirement, 5.80%, 04/01/18 ..... 2,803,310
2,405,000 Windsor RDAR, Tax Allocation, Windsor Project, 7.00%, 09/01/24 .......................... 2,404,663
------------
219,096,234
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
COLORADO 4.6%
$ 5,000,000 Arvada, City of, MFR Rental Housing, Arvada Manor Project, GNMA Secured, 8.25%,
12/01/25 ............................................................................... $ 5,103,750
9,000,000 Colorado Health Facilities Revenue Authority, Porter Memorial Hospital Project, Series A,
Pre-Refunded, 7.40%, 02/01/16 .......................................................... 9,900,360
Colorado HFA, GO,
1,595,000 Series A, 7.50%, 05/01/29 ............................................................ 1,669,917
2,735,000 Series A, 8.375%, 01/01/30 ........................................................... 3,025,457
Denver City and County, Airport System Revenue,
1,000,000 Series 1985, 8.375%, 08/01/96 ........................................................ 1,005,790
2,000,000 Series 1985, 8.375%, 08/01/11 ........................................................ 2,017,360
11,200,000 Series A, 7.50%, 11/15/12 ............................................................ 11,726,848
16,645,000 Series A, 8.875%, 11/15/12 ........................................................... 18,646,561
5,000,000 Series A, 8.00%, 11/15/17 ............................................................ 5,138,500
11,460,000 Series A, 7.75%, 11/15/21 ............................................................ 11,878,174
2,650,000 Series A, 7.25%, 11/15/23 ............................................................ 2,664,363
16,520,000 Series A, 7.50%, 11/15/23 ............................................................ 16,864,277
79,945,000 Series A, 8.50%, 11/15/23 ............................................................ 86,798,685
24,525,000 Series A, 7.25%, 11/15/25 ............................................................ 25,167,800
2,000,000 Series A, 8.00%, 11/15/25 ............................................................ 2,112,920
22,325,000 Series A, 8.00%, 11/15/25 ............................................................ 23,733,261
10,010,000 Series D, 7.00%, 11/15/25 ............................................................ 9,799,890
47,980,000 Denver City and County, Special Facilities Airport Revenue, United Airlines, Inc. Project,
Series A, 6.875%, 10/01/32 ............................................................. 45,548,853
3,000,000 Garfield Pitkin and Eagle County, School District No. 1, MBIA Insured, 6.60%, 12/15/14 .. 3,126,870
6,730,000 Littleton IDR, Porter Memorial Hospital Medical Office Project, Series 1982, Pre-Refunded,
8.00%, 02/01/12 ........................................................................ 7,216,512
16,500,000 Littleton MFR, Rental Housing, Riverpointe Project I, Series 1985, Mandatory Put 10/01/96,
8.00%, 12/01/22 ........................................................................ 16,559,730
6,500,000 University of Colorado, Hospital Authority Revenue, Series A, AMBAC Insured, 6.40%,
11/15/22 ............................................................................... 6,625,060
------------
316,330,938
------------
DELAWARE .1%
1,160,000 Delaware State EDA Revenue, Refunding, Water Development, Wilmington, Series B,
6.45%, 12/01/07 ........................................................................ 1,217,060
2,000,000 Delaware State Housing Authority, Refunding, MFMR, Series D, 6.75%, 07/01/06 ............ 2,097,260
------------
3,314,320
------------
DISTRICT OF COLUMBIA .6%
6,500,000 District of Columbia GO, Series A, Pre-Refunded, 8.00%, 06/01/07 ........................ 6,982,950
6,110,000 District of Columbia HFA, MFHR, FHA Insured, Mayfair Mansions Apartments, 8.85%,
02/01/31 ............................................................................... 6,390,082
District of Columbia HFA, MFHR, Refunding,
1,870,000 FHA Insured, Series A, 7.10%, 09/01/12 ............................................... 1,935,394
6,755,000 FHA Insured, Series A, 7.15%, 03/01/24 ............................................... 6,949,206
4,640,000 District of Columbia Hospital Revenue, Washington Hospital Center Corp., Series A,
Pre-Refunded, 9.00%, 01/01/08 .......................................................... 5,530,416
5,685,000 District of Columbia Revenue, Association of American Medical Colleges, 7.50%, 02/15/20.. 6,117,174
5,265,000 District of Columbia Revenue, Catholic University of America, 6.45%, 10/01/23 ........... 5,336,235
------------
39,241,457
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
FLORIDA 3.5%
Bay County Resource Recovery Revenue,
$ 2,100,000 Refunding, Series A, MBIA Insured, 6.50%, 07/01/07 ...................................... $ 2,226,020
11,020,000 Refunding, Series B, MBIA Insured, 6.50%, 07/01/07 ...................................... 11,681,310
2,620,000 Series 1984, Pre-Refunded, 8.00%, 07/01/12 .............................................. 2,826,587
44,080,000 Broward County Resource Recovery Revenue, Broward Waste Energy Co., Limited
Partnership, North Project, Series 1984, 7.95%, 12/01/08 ............................... 47,904,822
2,000,000 Dade County, HFA, SFMR, 6.55%, 10/01/27 ................................................. 1,983,880
3,800,000 Dunes Community Development District Revenue, Water and Sewer Project, Pre-Refunded,
8.25%, 10/01/18 ........................................................................ 4,255,164
22,475,000 Florida State Board of Education Capital Outlay, Refunding, Public Education, Series 1992,
6.40%, 06/01/19 ........................................................................ 22,998,892
Florida State Department of General Services, Division of Facilities Management Revenue,
16,000,000 Florida Facilities Pooled, Pre-Refunded, 7.75%, 09/01/16 ............................. 16,981,760
2,000,000 Florida Facilities Pooled, Pre-Refunded, 8.125%, 09/01/17 ............................ 2,237,240
7,125,000 Florida State Department of Transportation, Turnpike Revenue, Series A, Pre-Refunded,
7.75%, 07/01/09......................................................................... 7,995,960
20,500,000 Hillsborough County Capital Improvement Program, Water and Wastewater Facilities
Revenue, BMTF, Mode A, Sub-Series 2, Pre-Refunded, 8.30%, 08/01/16 ..................... 21,472,725
4,245,000 Lakeland Retirement Community, First Mortgage Revenue, Carpenters Home Estate Project,
9.50%, 09/01/06 ........................................................................ 4,263,466
6,500,000 Manatee County IDR, Manatee Hospital and Health Systems, Inc., 9.25%, 03/01/21 .......... 7,092,865
7,500,000 North Broward Hospital District Revenue, Pre-Refunded, 8.00%, 01/01/14 .................. 7,891,574
Orange County Health Facilities Authority Revenue,
4,795,000 Pooled Hospital Loan Program, Series B, BIG Insured, Pre-Refunded, 7.875%,
12/01/25 ............................................................................ 5,089,893
5,950,000 Refunding, Pooled Hospital Loan Program, Series 1985-A, FGIC Insured, 7.875%,
12/01/25 ............................................................................ 6,315,925
(c)St. Augustine Water and Sewer Revenue, Refunding,
840,000 Series A, MBIA Insured, 8.125%, 10/01/00 ............................................. 907,200
890,000 Series A, MBIA Insured, 8.125%, 10/01/01 ............................................. 963,425
940,000 Series A, MBIA Insured, 8.125%, 10/01/02 ............................................. 1,019,900
1,005,000 Series A, MBIA Insured, 8.125%, 10/01/03 ............................................. 1,090,425
1,065,000 Series A, MBIA Insured, 8.125%, 10/01/04 ............................................. 1,152,863
1,130,000 Series A, MBIA Insured, 8.125%, 10/01/05 ............................................. 1,224,638
1,200,000 Series A, MBIA Insured, 8.125%, 10/01/06 ............................................. 1,290,000
1,275,000 Series A, MBIA Insured, 8.125%, 10/01/07 ............................................. 1,362,656
1,355,000 Series A, MBIA Insured, 8.125%, 10/01/08 ............................................. 1,434,606
6,300,000 Series A, MBIA Insured, 8.125%, 10/01/12 ............................................. 6,528,375
2,500,000 Santa Rosa County Health Facilities Authority Revenue, Refunding, Gulf Breeze Hospital,
Inc., Pre-Refunded, 8.70%, 10/01/14 .................................................... 2,830,100
Tampa Capital Improvement Program Revenue,
11,010,000 Series A, 8.25%, 10/01/18 ............................................................ 11,616,540
37,250,000 Series B, 8.375%, 10/01/18 ........................................................... 39,442,163
------------
244,080,974
------------
GEORGIA 4.6%
Burke County Development Authority, PCR, Georgia Power Co., Plant Vogle Project,
105,000,000 Series 1984-1, MBIA Insured, 6.60%, 07/01/24 ......................................... 107,487,450
8,025,000 Series 1984-7, MBIA Insured, 6.625%, 10/01/24 ........................................ 8,232,206
4,300,000 Series 1985-1, FGIC Insured, 10.125%, 06/01/15 ....................................... 4,401,523
5,015,000 Series 1985-2, 10.60%, 10/01/15 ...................................................... 5,228,138
1,345,000 Series 1985-3, 10.50%, 11/01/15 ...................................................... 1,407,865
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
GEORGIA (CONT.)
$14,500,000 (a,b)Dekalb County Residential Care Facilities for the Elderly Authority Revenue, Refunding,
King's Bridge Retirement Center, Inc., 8.75%, 01/01/17 ................................. $ 4,350,000
Fulton County Development Authority, Special Facilities Revenue, Refunding,
3,400,000 Delta Air Lines, Inc. Project, 6.85%, 11/01/07 ....................................... 3,421,114
5,500,000 Delta Air Lines, Inc. Project, 6.95%, 11/01/12 ....................................... 5,553,075
Georgia Municipal Electric Authority Power Revenue,
19,200,000 Series A, Pre-Refunded, 7.875%, 01/01/18 ............................................. 19,991,423
14,000,000 Series B, 6.375%, 01/01/16 ........................................................... 14,063,560
6,325,000 Series EE, 6.40%, 01/01/23 ........................................................... 6,446,567
26,000,000 Series EE, AMBAC Insured, 6.65%, 01/01/21 ............................................ 26,417,040
50,000,000 Series L, Pre-Refunded, 7.75%, 01/01/18 .............................................. 53,447,500
18,500,000 Series O, 8.125%, 01/01/17 ........................................................... 19,998,130
5,505,000 Georgia State HFAR, Homeownership Opportunity Program, Series C, 6.60%, 12/01/23 ........ 5,586,474
Monroe County Development Authority, PCR, Georgia Power Co.,
16,000,000 Plant Scherer Project, 8.375%, 07/01/17 .............................................. 17,143,200
4,950,000 Plant Scherer Project, Series 1, 10.50%, 09/01/15 .................................... 5,139,239
10,000,000 Putnam County Development Authority, PCR, Refunding, Georgia Power Co., Plant Branch
Project, 8.375%, 07/01/17 .............................................................. 10,751,500
------------
319,066,004
------------
HAWAII .6%
Hawaii State Airports System Revenue,
1,000,000 FGIC Insured, 7.00%, 07/01/20 ........................................................ 1,057,700
12,000,000 Second Series, 7.00%, 07/01/07 ....................................................... 12,878,160
500,000 Second Series, 6.90%, 07/01/12 ....................................................... 528,964
2,830,000 Second Series, 7.00%, 07/01/18 ....................................................... 2,938,078
Hawaii State Department of Budget and Finance, Special Purposes Mortgage Revenue,
200,000 Hawaii Electric Light Co. Project, 7.20%, 12/01/14 ................................... 209,954
1,000,000 Hawaii Electric Light Co. Project, Series A, 7.35%, 01/01/20 ......................... 1,051,690
900,000 Kaiser Hospital, 6.25%, 03/01/21 ..................................................... 888,543
1,000,000 Wahiawa General Hospital Project, 7.50%, 07/01/12 .................................... 1,031,880
Hawaii State HFC, SFMR,
230,000 Series A, 7.00%, 07/01/11 ............................................................ 237,751
3,350,000 Series A, 7.10%, 07/01/24 ............................................................ 3,430,601
2,000,000 Series B, 5.70%, 07/01/13 ............................................................ 1,881,380
360,000 Series B, 6.90%, 07/01/16 ............................................................ 369,878
3,500,000 Series B, 5.85%, 07/01/17 ............................................................ 3,293,045
11,880,000 Series B, 7.00%, 07/01/31 ............................................................ 12,204,680
Honolulu City and County GO,
415,000 Series A, 6.30%, 03/01/08 ............................................................ 431,451
1,000,000 Series A, 6.30%, 03/01/12 ............................................................ 1,025,710
------------
43,459,465
------------
IDAHO .1%
2,260,000 Idaho Housing Agency, Refunding, Series D-1, 6.45%, 07/01/19 ............................ 2,219,070
Idaho Housing Agency, SFMR,
1,315,000 Senior Bond, Series B-1, FGIC Insured, 7.85%, 07/01/09 ............................... 1,390,350
2,070,000 Senior Bond, Series B-1, FGIC Insured, 7.90%, 01/01/21 ............................... 2,147,998
------------
5,757,418
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
ILLINOIS 5.0%
Bryant PCR, Refunding, Central Illinois Light Co. Project,
$ 7,200,000 Series A, 6.50%, 02/01/18 ............................................................ $ 7,343,136
5,000,000 Series C, 6.50%, 01/01/10 ............................................................ 5,155,850
22,700,000 Chicago COP, AMBAC Insured, 7.75%, 07/15/11 ............................................. 25,245,805
2,240,000 Chicago Metropolitan HDC, Housing Development Mortgage Revenue, Refunding, Series B,
MBIA Insured, 5.80%, 01/01/25 .......................................................... 2,095,923
Chicago-O'Hare International Airport Revenue,
11,720,000 Special Facility, American Airlines, Inc. Project, 8.20%, 12/01/24 ................... 12,930,793
4,300,000 Special Facility, United Airlines, Inc. Project, 8.45%, 05/01/07 ..................... 4,655,610
12,305,000 Special Facility, United Airlines, Inc. Project, 8.50%, 05/01/18 ..................... 13,133,003
480,000 Special Facility, United Airlines, Inc. Project, Series A, 8.40%, 05/01/18 ........... 510,345
29,330,000 Special Facility, United Airlines, Inc. Project, Series C, 8.20%, 05/01/18 ........... 31,194,215
5,000,000 Chicago School Finance Authority, GO, Refunding, Pre-Refunded, 7.75%, 06/01/09 .......... 5,111,750
Illinois Development Finance Authority, PCR,
7,500,000 Commonwealth Edison Co. Project, Series 1991, 7.25%, 06/01/11 ........................ 7,800,750
15,200,000 Refunding, Central Illinois Public Services Co., Series A, 6.375%, 01/01/28 .......... 15,233,288
25,960,000 Refunding, Illinois Power Co. Project, Series A, 7.375%, 07/01/21 .................... 27,907,519
6,000,000 Illinois Development Financial Authority Revenue, Refunding, Marriott Retirement,
Series A, 7.75%, 08/01/10 .............................................................. 6,303,900
6,000,000 Illinois Educational Facilities Authority Revenue, Shedd Aquarium Society, Series 1987-A,
8.625%, 07/01/17 ...................................................................... 6,472,080
4,250,000 Illinois HDA, Homeowner Mortgage, Series A-1, 6.85%, 08/01/17 ........................... 4,412,690
Illinois HDA, MF Program,
20,000,000 Lawndale Redevelopment Project, 7.10%, 12/01/34 ...................................... 20,264,000
12,915,000 Refunding, Series A, 7.10%, 07/01/26 ................................................. 13,325,051
12,000,000 Series 1, 6.625%, 09/01/12 ........................................................... 12,280,920
7,550,000 Series 1, 6.75%, 09/01/21 ............................................................ 7,684,466
2,265,000 Series C, 7.35%, 07/01/11 ............................................................ 2,333,131
7,065,000 Illinois HDA, RMR, Series B, 7.25%, 08/01/17 ............................................ 7,397,903
2,000,000 Illinois Health Facilities Authority Revenue, Edwards Hospital Project, 7.00%, 02/15/22.. 2,060,420
Illinois Health Facilities Authority Revenue, Refunding,
3,650,000 Galesburg Cottage Hospital, Pre-Refunded, 9.625%, 05/01/11 ........................... 4,055,514
9,345,000 Grant Hospital of Chicago, Series 1986, Pre-Refunded, 7.50%, 06/01/13 ................ 9,932,333
1,000,000 Servantcor, Series A, Pre-Refunded, 7.875%, 08/15/19 ................................. 1,123,510
3,000,000 Servantcor, Series B, Pre-Refunded, 7.875%, 08/15/19 ................................. 3,370,530
6,200,000 Westlake Community Hospital, 7.875%, 01/01/13 ........................................ 6,472,366
7,000,000 Illinois Health Facilities Authority Revenue, Refunding, South Surburban Hospital, 7.00%,
02/15/18 ............................................................................... 7,132,020
2,600,000 Illinois State COP, CGIC Insured, 6.875%, 07/01/07 ...................................... 2,803,996
3,825,000 Lombard, Village of, Revenue, Refunding, Beacon Hill Project, 9.00%, 02/15/08 ........... 3,876,217
Metropolitan Pier and Exposition Authority, State Tax Revenue,
7,760,000 Expansion, Project A, 6.50%, 06/15/22 ................................................ 7,661,914
26,115,000 Expansion, Project A, 6.50%, 06/15/27 ................................................ 25,697,682
4,350,000 Onterie Center HFC, Mortgage Revenue, Refunding, Series 1989-A, MBIA Insured, 7.05%,
07/01/27 ............................................................................... 4,526,697
3,970,000 Regional Transportation Authority, Series A, AMBAC Insured, 6.125%, 06/01/22 ............ 3,880,040
Southwestern Illinois Development Authority,
6,200,000 Anderson Hospital Project, Series A, 7.00%, 08/15/22 ................................. 5,800,410
1,825,000 IDR, Spectrulite Consortium, Inc. Project, 6.20%, 02/01/05 ........................... 1,807,717
3,050,000 IDR, Spectrulite Consortium, Inc. Project, 6.625%, 02/01/10 .......................... 3,017,121
3,030,000 Private Activity Revenue, Glenmark Recovery, 8.50%, 08/01/10 ......................... 3,341,120
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
ILLINOIS (CONT.)
Southwestern Illinois Development Authority, (cont.)
$ 5,500,000 Solid Waste Disposal Revenue, LaCede Steel Co., 8.375%, 08/01/08 ..................... $ 6,019,860
5,390,000 Solid Waste Disposal Revenue, LaCede Steel Co., 8.50%, 08/01/20 ...................... 5,906,200
------------
347,277,795
------------
INDIANA 1.4%
Frankfort Middle School Building Corp.,
605,000 First Mortgage Revenue, Pre-Refunded, 8.00%, 01/01/07 ................................ 639,455
660,000 First Mortgage Revenue, Pre-Refunded, 8.10%, 01/01/08 ................................ 698,320
720,000 First Mortgage Revenue, Pre-Refunded, 8.10%, 01/01/09 ................................ 761,803
785,000 First Mortgage Revenue, Pre-Refunded, 8.10%, 01/01/10 ................................ 830,577
860,000 First Mortgage Revenue, Pre-Refunded, 8.10%, 01/01/11 ................................ 909,932
935,000 First Mortgage Revenue, Pre-Refunded, 8.10%, 01/01/12 ................................ 989,286
2,355,000 Hammond PCR, Stauffer Chemical Project, Guaranteed by Imperial Chemical, Plc.,
Series 1982, 8.00%, 11/01/12 ........................................................... 2,646,760
17,000,000 Hammond Industrial Sewer and Solid Waste Disposal Revenue, American Maize-Products Co.
Project A, 8.00%, 12/01/24 ............................................................. 17,809,200
Indiana Bond Bank, Special Program,
6,000,000 Series 1986-A, 7.75%, 08/01/09 ....................................................... 6,218,940
1,155,000 Series 1988-A, Pre-Refunded, 8.375%, 02/01/18 ........................................ 1,242,537
3,500,000 Indiana Health Facility Financing Authority, Hospital Revenue, Hancock Memorial Hospital
Project, Series 1990, 8.30%, 08/15/20 .................................................. 3,715,705
3,240,000 Indiana State Educational Facilities Authority Revenue, Manchester College Project, 6.85%,
10/01/18 ............................................................................... 3,248,586
Indiana State Housing Financing Authority, SFMR,
3,805,000 Refunding, Series A, 6.75%, 01/01/10 ................................................. 3,893,124
16,570,000 Refunding, Series A, 6.80%, 01/01/17 ................................................. 16,895,601
Indianapolis Local Public Improvement,
4,625,000 Refunding, Series D, 6.50%, 02/01/22 ................................................. 4,606,916
13,075,000 Series D, 6.75%, 02/01/20 ............................................................ 13,278,055
Indianapolis Resource Recovery Revenue, Ogden Martin System, Inc.,
5,550,000 Series A, 7.90%, 12/01/08 ............................................................ 5,838,377
1,505,000 Series B, 7.90%, 12/01/08 ............................................................ 1,583,200
3,650,000 Lawrenceburg PCR, Refunding, Michigan Power Co. Project, Series E, 5.90%, 11/01/19 ...... 3,272,736
4,000,000 Merrillville, Multi School Building Corp., First Mortgage, Pre-Refunded, 7.50%,
07/15/09 ............................................................................... 4,513,960
2,000,000 Muncies Edit Building Corp., First Mortgage, Series A, AMBAC Insured, 6.60%, 12/01/17.... 2,050,380
------------
95,643,450
------------
IOWA .1%
2,500,000 Carroll Retirement Facility Revenue, Orchard View, Inc. Project, Pre-Refunded, 8.25%,
02/01/13 ............................................................................... 2,769,325
3,250,000 (c)Higher Education Loan Authority Revenue, Refunding, Private College/University,
Connie Lee Insured, 6.00%, 10/01/25 .................................................... 3,118,473
------------
5,887,798
------------
KANSAS .4%
Merriam Hospital Revenue,
5,815,000 Shawnee Medical Center, Inc. Project A, 7.25%, 09/01/11 .............................. 6,038,180
15,215,000 Shawnee Medical Center, Inc. Project A, 7.25%, 09/01/21 .............................. 15,700,967
1,560,000 Shawnee Medical Center, Inc. Project B, 7.25%, 09/01/11 .............................. 1,619,873
3,580,000 Shawnee Medical Center, Inc. Project B, 7.25%, 09/01/21 .............................. 3,694,344
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
KANSAS (CONT.)
$ 3,000,000 Olathe Hospital Revenue, Olathe Hospital Foundation, Inc. Project, Pre-Refunded, 10.25%,
08/01/16 ............................................................................... $ 3,100,770
------------
30,154,134
------------
KENTUCKY 2.0%
3,900,000 Ashland PCR, Refunding, Ashland Oil, Inc. Project, 6.65%, 08/01/09 ...................... 3,950,427
8,405,000 Christian County Hospital Revenue, Refunding, Jennie Stuart Medical Center Project,
7.625%, 04/01/10 ...................................................................... 8,644,290
10,000,000 Henderson County Solid Waste Disposal Revenue, MacMillan Bloedel Project, 7.00%,
03/01/25 ............................................................................... 9,998,600
Kenton County Airport Board, Airport Revenue, Special Facilities,
20,000,000 Delta Air Lines, Inc., 7.80%, 12/01/15 ............................................... 20,990,400
10,000,000 Delta Air Lines, Inc., Project A, 7.50%, 02/01/20 .................................... 10,183,900
9,330,000 Delta Air Lines, Inc., Project A, 7.125%, 02/01/21 ................................... 9,236,234
3,350,000 Delta Air Lines, Inc., Project B, 7.25%, 02/01/22 .................................... 3,358,040
Kentucky Housing Corp., Housing Revenue,
2,070,000 Series A, 6.70%, 07/01/17 ............................................................ 2,118,045
4,910,000 Series B, 6.625%, 07/01/14 ........................................................... 5,015,761
700,000 Kentucky State Development Financial Authority, Hospital Revenue, Claire Medical Center
Project, Pre-Refunded, 7.125%, 09/01/21 ................................................ 775,859
4,500,000 Kentucky State Property and Buildings Commission Revenue, Project No. 48, Pre-Refunded,
8.00%, 08/01/08 ........................................................................ 4,999,545
Mount Sterling Lease Revenue, Kentucky League Cities,
20,375,000 Series A, 6.10%, 03/01/08 ............................................................ 20,088,120
11,765,000 Series A, 6.20%, 03/01/18 ............................................................ 11,159,573
27,160,000 (c)Pendleton County, Multi-County Lease Revenue, Kentucky Association Counties Leasing
Trust, Series A, 6.50%, 3/01/19 ........................................................ 26,897,091
------------
137,415,885
------------
LOUISIANA 1.9 %
2,000,000 Bastrop PCR, Refunding, International Paper Co. Project, 6.90%, 03/01/07 ................ 2,104,900
14,285,000 Calcasieu Parish IDB, PCR, Refunding, Gulf States Utilities Co. Project, 6.75%,
10/01/12 ............................................................................... 13,816,166
Calcasieu Parish, Memorial Hospital Service District Revenue,
4,310,000 Lake Charles Parish Memorial Hospital Project, Series A, CGIC Insured, 6.375%,
12/01/12 ............................................................................ 4,413,009
5,530,000 Lake Charles Parish Memorial Hospital Project, Series A, CGIC Insured, 6.50%,
12/01/18 ............................................................................ 5,685,172
3,145,000 Lake Charles Parish Memorial Hospital Project, Series A, CGIC Insured, 6.65%,
12/01/21 ............................................................................ 3,229,821
Calcasieu Parish, Public Transportation Authority Mortgage Revenue, Refunding,
4,875,000 Series 1991-A, 7.75%, 06/01/12 ....................................................... 5,170,815
695,000 Series 1992-B, 6.375%, 11/01/02 ...................................................... 720,694
870,000 Series 1992-B, 6.875%, 11/01/12 ...................................................... 885,521
2,500,000 De Soto Parish, Environmental Improvement Revenue, International Paper Co. Project,
Series A, 7.70%, 11/01/18 .............................................................. 2,755,950
2,365,000 Denham, Spring-Livingston HFA, 6.80%, 02/01/21 .......................................... 2,387,491
East Baton Rouge Mortgage Financing Authority, SFM,
6,800,000 MBS, Series A, 6.80%, 10/01/28 ....................................................... 6,885,476
3,870,000 Series C, 7.00%, 04/01/32 ............................................................ 3,988,383
5,880,000 Series D, 7.10%, 04/01/32 ............................................................ 6,027,353
Lafayette Public Trust Finance Authority, SFMR,
2,591,034 Refunding, Series 1990-A, 8.50%, 11/15/12 ............................................ 2,775,386
5,830,000 Series 1995, 6.875%, 02/01/27 ........................................................ 5,882,878
2,250,000 Louisiana HFA, HMR, Refunding, 7.375%, 09/01/13 ......................................... 2,295,113
3,400,000 Louisiana Office Facility Corp., Capital Facility Bonds Statewide Lease, 7.75%,
12/01/10 ............................................................................... 3,708,380
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
Louisiana (cont.)
$ 3,500,000 Louisiana Public Facilities Authority Revenue, Refunding, Series B, Alton Ochsner Medical
Foundation Project, MBIA Insured, 6.50%, 05/15/22 ...................................... $ 3,564,400
2,200,000 Pointe Coupee Parish PCR, Refunding, Gulf States Utilities Co. Project, 6.70%, 03/01/13.. 2,090,220
4,000,000 Quachita Parish, Hospital Service District No. 1 Revenue, Glenwood Regional Medical
Center, 7.50%, 07/01/21 ................................................................ 4,170,000
1,900,000 St. James' Parish, COP, Pre-Refunded, 7.50%, 07/01/10 ................................... 1,961,142
West Feliciana Parish PCR,
2,000,000 Gulf Systems Utilities Co. Project, 7.70%, 12/01/14 .................................. 2,066,740
3,050,000 Gulf Systems Utilities Co. Project, 7.00%, 11/01/15 .................................. 3,007,575
41,050,000 Gulf Systems Utilities Co. Project, 8.00%, 12/01/24 .................................. 42,720,325
------------
132,312,910
------------
MAINE 1.0%
28,300,000 Financial Authority Solid Waste Recycling Facilities Revenue, Great Northern Paper Co.,
Bowater Project, 7.75%, 10/01/22 ....................................................... 29,881,404
2,445,000 Maine State Health and Higher Education Facilities Authority Revenue, Series B,
FSA Insured, 7.00%, 07/01/24 ........................................................... 2,612,751
Maine State Housing Authority, Mortgage Purchase,
3,850,000 Series A-5, 6.20%, 11/15/16 .......................................................... 3,782,625
3,700,000 Series C, 6.55%, 11/15/12 ............................................................ 3,775,591
3,500,000 Series C, 6.65%, 11/15/24 ............................................................ 3,559,185
3,540,000 Series D, 6.45%, 11/15/07 ............................................................ 3,535,681
5,800,000 Series D, 6.70%, 11/15/15 ............................................................ 5,976,088
4,500,000 Skowhegan, PCR, Refunding, Scott Paper Co. Project, Series B, 8.10%, 10/01/15 ........... 4,925,835
10,000,000 Skowhegan, Solid Waste Disposal Revenue, S.D. Warren Co. Project, Series A, 8.40%,
10/01/15 ............................................................................... 10,961,400
------------
69,010,560
------------
MARYLAND 1.8%
43,225,000 Gaithersburg Hospital Facilities Improvement Revenue, Shady Grove Hospital, Series A,
8.25%, 09/01/21 ........................................................................ 46,077,850
Maryland State Community Development Administration, Department of Housing and
Community Development,
5,810,000 MFHR, Insured Mortgage, Series G, 6.55%, 05/15/19 .................................... 5,880,766
1,000,000 SF, 7.25%, 04/01/27 .................................................................. 1,040,700
4,900,000 Maryland State Health and Higher Educational Facilities Authority Revenue, Hartford
Memorial Hospital and Fallston General Hospital, 8.50%, 07/01/14 ....................... 5,169,696
6,500,000 Montgomery County, Housing Opportunity Community, SFMR, Refunding, Series B, 6.625%,
07/01/28 ............................................................................... 6,494,865
Tokoma Park Hospital Facilities Revenue, Refunding,
31,055,000 Washington Adventist, Series A, 8.25%, 09/01/21 ...................................... 33,490,644
23,210,000 Washington Adventist, Series A, Sub-Series 2, 8.25%, 09/01/21 ........................ 25,030,360
------------
123,184,881
------------
MASSACHUSETTS 4.3%
10,900,000 Agawam Resource Recovery Revenue, Springfield Resource Recovery Project, Series 1986,
8.50%, 12/01/08 ........................................................................ 11,588,335
5,750,000 Boston Revenue, Refunding, City Hospital, Series B, 5.75%, 02/15/23 ..................... 5,246,070
3,915,000 Lowell GO, Pre-Refunded, 7.625%, 02/15/10 ............................................... 4,502,328
2,310,000 Massachusetts Health and Educational Facilities Authority Revenue, Notre Dame Health
Care Center, Series A, 7.875%, 10/01/22 ................................................ 2,368,813
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
MASSACHUSETTS (CONT.)
Massachusetts State Bay Transportation Authority,
$ 6,750,000 General Transportation System, Series A, Pre-Refunded, 7.625%, 03/01/15 .............. $ 7,622,100
12,500,000 General Transportation System, Series B, Pre-Refunded, 7.80%, 03/01/10 ............... 14,401,000
37,585,000 General Transportation System, Series B, Pre-Refunded, 7.875%, 03/01/21 .............. 43,441,495
Massachusetts State Consolidated Loan,
7,500,000 Series A, 7.50%, 06/01/04 ............................................................ 8,640,750
5,000,000 Series D, 7.00%, 07/01/07 ............................................................ 5,461,000
21,720,000 Massachusetts State Dedicated Income Tax, Fiscal Recovery Loan, Series A, 7.875%,
06/01/97 ............................................................................... 23,052,088
5,900,000 Massachusetts State GO, Refunding, Series B, 6.50%, 08/01/08 ............................ 6,333,886
Massachusetts State Health and Educational Facilities Authority Revenue,
1,865,000 (c)Berkshire Health Systems, Series D, MBIA Insured, 6.00%, 10/01/13 .................... 1,840,345
4,775,000 (c)Berkshire Health Systems, Series D, MBIA Insured, 6.00%, 10/01/19 .................... 4,637,814
9,020,000 Framingham Union Hospital, Series B, Pre-Refunded, 8.50%, 07/01/20 ................... 10,542,125
1,100,000 Melrose-Wakefield Hospital, Series B, Refunding, 6.35%, 07/01/06 ..................... 1,104,422
4,680,000 St. Elizabeth's Hospital of Boston, Series B, FHA Mortgage Insured, FGIC Insured,
Pre-Refunded, 7.75%, 08/01/27 ....................................................... 5,063,807
1,000,000 Sisters Providence Health System, Series A, 6.50%, 11/15/08 .......................... 982,360
12,050,000 Sisters Providence Health System, Series A, 6.625%, 11/15/22 ......................... 11,375,321
5,250,000 Massachusetts State HFA, HDA, Series D, FGIC Insured, 6.875%, 11/15/21 .................. 5,433,383
Massachusetts State HFA, Housing Projects, Refunding,
25,635,000 Series A, 6.30%, 10/01/13 ............................................................ 25,440,174
25,350,000 (c)Series A, 6.375%, 04/01/21 ........................................................... 25,047,321
Massachusetts State HFA, Housing Revenue,
6,250,000 (c)SF, Series 41, 6.30%, 12/01/14 ....................................................... 6,221,750
5,750,000 (c)SF, Series 41, 6.35%, 06/01/17 ....................................................... 5,722,630
2,410,000 Massachusetts State HFAR, SFMR, Series G, 8.10%, 12/01/14 ............................... 2,540,429
Massachusetts State Housing Facilities Authority,
250,000 Series C, FGIC Insured, 6.875%, 11/15/11 ............................................. 261,525
9,715,000 Series C, FGIC Insured, 6.90%, 11/15/21 .............................................. 10,070,860
250,000 Series D, FGIC Insured, 6.80%, 11/15/12 .............................................. 259,370
6,000,000 Massachusetts State Industrial Finance Agency, First Mortgage Revenue, Brookhaven at
Lexington Retirement Project, Pre-Refunded, 10.25%, 01/01/18 ........................... 6,955,920
Massachusetts State Water Resource Authority,
5,000,000 Series A, Pre-Refunded, 7.50%, 04/01/09 .............................................. 5,627,650
13,095,000 Series A, Pre-Refunded, 7.625%, 04/01/14 ............................................. 14,809,266
4,750,000 Series A, Pre-Refunded, 7.50%, 04/01/16 .............................................. 5,346,268
Plymouth County COP,
10,000,000 Series A, 7.00%, 04/01/12 ............................................................ 10,606,700
5,000,000 Series A, 7.00%, 04/01/22 ............................................................ 5,263,250
------------
297,810,555
------------
MICHIGAN 1.6%
2,000,000 Battle Creek, Tax Increment Finance Authority, 7.40%, 05/01/16 .......................... 2,080,800
2,445,000 Climax-Scotts, Community Schools, 6.35%, 05/01/23 ....................................... 2,454,560
4,960,000 Detroit GO, Unlimited Tax, Series A, 7.875%, 04/01/08 ................................... 5,221,194
Greater Detroit Resource Recovery Authority Revenue,
13,205,000 Series A, 9.25%, 12/13/08 ............................................................ 13,779,682
5,000,000 Series B, 9.25%, 12/13/08 ............................................................ 5,217,600
22,250,000 Series C, 9.25%, 12/13/08 ............................................................ 23,218,320
4,590,000 Series E, 9.25%, 12/13/08 ............................................................ 4,789,757
1,055,000 Series G, 8.25%, 12/13/96 ............................................................ 1,079,223
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
MICHIGAN (CONT.)
Greater Detroit Resource Recovery Authority Revenue, (cont.)
$ 7,200,000 Series G, 9.25%, 12/13/08 ............................................................ $ 7,513,344
5,980,000 Series H, 9.25%, 12/13/08 ............................................................ 6,240,250
Michigan State HDA,
2,500,000 Limited Obligation Revenue, Fraser Woods Project, FSA Insured, 6.625%, 09/15/19 ...... 2,551,350
5,000,000 Rental Housing Revenue, Refunding, Series A, 6.60%, 04/01/12 ......................... 5,048,350
Michigan State HFA, SFMR,
2,000,000 Series A, 6.45%, 12/01/14 ............................................................ 2,026,700
3,055,000 Series A, 6.875%, 06/01/23 ........................................................... 3,130,275
Michigan State Hospital Finance Authority Revenue,
8,450,000 McLaren Obligated Group, Series A, Pre-Refunded, 7.50%, 09/15/21 ..................... 9,686,657
5,000,000 Sisters of Mercy Hospital, Series 1991, Pre-Refunded, 7.375%, 02/15/11 ............... 5,623,850
9,420,000 Monroe County PCR, Detroit Edison Co. Project, Series 1985-A, 10.50%, 12/01/16 .......... 9,985,388
------------
109,647,300
------------
MINNESOTA 3.0%
Bloomington Port Authority, Tax Increment Revenue,
1,020,000 Stadium Site Redevelopment Project, Pre-Refunded, 8.25%, 02/01/97 .................... 1,067,267
1,255,000 Stadium Site Redevelopment Project, Pre-Refunded, 8.25%, 02/01/98 .................... 1,313,157
1,515,000 Stadium Site Redevelopment Project, Pre-Refunded, 8.25%, 02/01/99 .................... 1,585,205
1,800,000 Stadium Site Redevelopment Project, Pre-Refunded, 8.25%, 02/01/00 .................... 1,883,412
2,115,000 Stadium Site Redevelopment Project, Pre-Refunded, 8.25%, 02/01/01 .................... 2,213,009
41,800,000 Stadium Site Redevelopment Project, Pre-Refunded, 8.55%, 02/01/09 .................... 43,826,882
Dakota County Housing, RDA, Limited Annual Appropriation Tax and Revenue,
515,000 Development Housing Facilities Project, 7.25%, 01/01/97 .............................. 521,546
555,000 Development Housing Facilities Project, 7.25%, 01/01/98 .............................. 563,991
600,000 Development Housing Facilities Project, 7.25%, 01/01/99 .............................. 610,080
645,000 Development Housing Facilities Project, 7.25%, 01/01/00 .............................. 655,817
695,000 Development Housing Facilities Project, 7.25%, 01/01/01 .............................. 705,488
3,930,000 Development Housing Facilities Project, 7.50%, 01/01/06 .............................. 3,993,273
2,580,000 Development Housing Facilities Project, 8.00%, 01/01/07 .............................. 2,671,693
7,715,000 Dakota County Housing, RDA, MFHR, Walnut Trails Project, 9.00%, 12/01/11 ................ 7,851,093
6,845,000 Duluth Commercial Development Revenue, Duluth Radisson Hotel Project, 10.75%,
12/01/14 ............................................................................... 7,085,670
5,870,000 Minneapolis CDA, Commercial Development Revenue, WNB & Co. Project, 8.50%,
12/01/15 ............................................................................... 5,874,872
Minneapolis CDA, Commercial Supported Development Revenue, Refunding,
2,500,000 Limited Tax, Series 1987-3, 8.625%, 12/01/27 ......................................... 2,642,425
1,000,000 Series 1987-1, 8.625%, 12/01/12 ...................................................... 1,056,970
Minneapolis CDA and St. Paul Housing RDA,
5,000 Homeownership Mortgage Revenue, Joint Housing Program, FGIC Insured, 9.875%,
12/01/15 ............................................................................ 5,115
8,189,000 Homeownership Mortgage Revenue, Joint Housing Program, Phase II, FGIC Insured,
7.875%, 07/01/17 .................................................................... 8,429,429
Minnesota State HFA, SFM,
1,500,000 Refunding, Series B, 6.25%, 08/01/22 ................................................. 1,495,920
3,865,000 Series D-1, 6.45%, 07/01/11 .......................................................... 3,936,812
1,540,000 Series D-1, 6.50%, 01/01/17 .......................................................... 1,557,417
6,500,000 Series D-1, 6.80%, 07/01/25 .......................................................... 6,689,020
2,580,000 Series F, 6.30%, 07/01/25 ............................................................ 2,548,834
11,500,000 Minnetonka MFR, Rental Housing, Ridgepointe Housing Project, Phase II, Mandatory Put
10/01/96, 8.00%, 05/15/22 .............................................................. 11,488,040
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
MINNESOTA (CONT.)
$ 1,500,000 Red Wing Housing, RDA, Jordan Tower II Project, 7.00%, 01/01/19 ......................... $ 1,547,865
14,275,000 Roseville MFR, Rental Housing, Rosepointe No. 1 Project, Mandatory Put 10/01/96, 8.00%,
10/01/18 ............................................................................... 14,567,352
6,000,000 St. Louis Park EDA, Tax Increment Revenue, Refunding, FGIC Insured, Pre-Refunded,
8.40%, 09/01/09 ........................................................................ 7,116,480
St. Paul Port Authority,
4,125,000 Energy Park, Tax Increment Revenue, Refunding, Pre-Refunded, 8.00%, 12/01/07 ......... 4,618,680
535,000 Housing and Redevelopment, MFR Rental Housing, Series B, 7.00%, 09/01/97 ............. 410,136
980,000 Housing and Redevelopment, MFR Rental Housing, Series B, 7.25%, 09/01/01 ............. 745,633
14,835,000 Housing and Redevelopment, MFR Rental Housing, Series B, 7.50%, 09/01/22 ............. 11,321,627
2,445,000 IDR, Bandana Square, Series 1989-C, 7.70%, 12/01/07 .................................. 2,047,688
3,465,000 IDR, Bandana Square, Series 1989-C, 7.80%, 12/01/12 .................................. 2,841,300
385,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/96 ........................... 380,546
415,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/97 ........................... 407,140
445,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/98 ........................... 433,550
480,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/99 ........................... 464,645
515,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/00 ........................... 495,554
550,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/01 ........................... 526,312
595,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/02 ........................... 566,464
640,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/03 ........................... 606,426
685,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/04 ........................... 646,215
740,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/05 ........................... 695,274
795,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/06 ........................... 744,152
855,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/07 ........................... 797,535
915,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/08 ........................... 850,767
670,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/09 ........................... 621,124
2,010,000 IDR, Refunding, Common Bond Fund, 8.00%, 12/01/12 .................................... 1,680,863
2,000,000 IDR, Series 1990-C, 7.95%, 09/01/10 .................................................. 1,682,500
9,750,000 Southern Minnesota Municipal Power Agency, Supply System Revenue, Series A,
Pre-Refunded, 8.125%, 01/01/18 ......................................................... 10,738,260
Washington County Housing RDA,
3,000,000 Housing Development Revenue, Orleans Apartments, Project A, 8.25%, 07/01/21 .......... 3,007,020
5,210,000 Housing Development Revenue, Raymie Johnson Apartments, 7.70%, 12/01/19 .............. 6,017,081
10,000,000 Pooled Housing and Redevelopment, 7.20%, 01/01/22 .................................... 10,271,400
------------
209,122,026
------------
MISSISSIPPI .1%
2,585,000 Mississippi Home Corp., SFR, Refunding, Senior Series A, FGIC Insured, 9.250%,
03/01/12 ............................................................................... 2,808,628
------------
MISSOURI 1.0%
10,000,000 Kansas City School District Building Corp., Leasehold Revenue, Capital Improvement
Project, Series A, FGIC Insured, Pre-Refunded, 7.90%, 02/01/08 ......................... 10,988,400
1,695,000 Marion County Nursing Home District Revenue, Refunding, Pre-Refunded, 9.00%, 08/01/03.... 1,853,483
Missouri State Health and Educational Facilities Authority Revenue,
5,000,000 Series B, MBIA Insured, 6.25%, 02/15/12 .............................................. 5,080,350
3,750,000 Sisters of St. Mary's Health Care Project, BIG Insured, Pre-Refunded, 7.75%,
06/01/16 ............................................................................ 4,132,800
Moberly IDA, Hospital Revenue, Refunding,
4,625,000 Moberly Regional Medical Center, Inc. Project, Pre-Refunded, 8.625%, 03/01/02 ........ 5,031,260
10,460,000 Moberly Regional Medical Center, Inc. Project, Pre-Refunded, 8.75%, 03/01/16 ......... 11,482,570
5,005,000 Newton County IDA, Hospital Revenue, Refunding, Sale Hospital, Inc. Project,
Pre-Refunded, 9.00%, 01/01/05 .......................................................... 5,524,919
</TABLE>
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
MISSOURI (CONT.)
$16,250,000 St. Louis County IDA, Health Facilities Revenue, Refunding and Improvement,
First Mortgage, Normandy Osteopathic Hospitals Project, 9.125%, 08/01/13 ............... $ 17,128,800
6,000,000 St. Louis Parking Facilities Revenue, 6.625%, 12/15/21 .................................. 6,048,120
3,600,000 West Plains, IDA Hospital Revenue, Ozarks Medical Center Project, Series A, 8.625%,
09/15/20 ............................................................................... 3,883,572
------------
71,154,274
------------
MONTANA .3%
10,000,000 Forsyth County, PCR, Puget Sound Power and Light Co. Project, AMBAC Insured, 6.80%,
03/01/22 ............................................................................... 10,512,700
5,000,000 Forsyth PCR, Refunding, The Montana Power Co., Colstrip Project, Series A, 6.125%,
05/01/23 ............................................................................... 4,674,450
2,835,000 Montana State Board Housing, Refunding, SF Program, Series A, 6.50%, 12/01/22 ........... 2,838,799
3,000,000 Montana State Health Facilities Authority Revenue, Montana Developmental Center Project,
6.40%, 06/01/16 ........................................................................ 2,996,130
------------
21,022,079
------------
NEBRASKA .1%
6,635,000 Nebraska Investment Financial Authority, 7.00%, 11/01/09 ................................ 6,938,352
------------
NEVADA 3.5%
2,000,000 Churchill County Health Care Facilities Revenue, Western Health Network, Series A,
MBIA Insured, 6.25%, 01/01/14 .......................................................... 1,999,780
17,500,000 Clark County Airport System Improvement Revenue, 8.25%, 07/01/15 ........................ 18,868,150
5,130,000 Clark County HFC, MFHR, FHA Insured, 7.75%, 07/01/23 .................................... 5,250,401
Clark County IDR,
12,500,000 Refunding, Nevada Power Co. Project, Series C, 7.20%, 10/01/22 ....................... 12,763,750
18,080,000 Southwest Gas Corp., Series A, 7.30%, 09/01/27 ....................................... 18,407,067
62,470,000 Southwest Gas Corp., Series B, 7.50%, 09/01/32 ....................................... 63,631,942
8,210,000 Nevada Housing Division, Refunding, Issue C-2, 6.75%, 10/01/26 .......................... 8,234,384
Nevada Housing Division, SF Program,
4,020,000 Issue 1988-A, FI/GML, 8.30%, 10/01/19 ................................................ 4,292,435
3,785,000 Issue 1988-A2, FI/GML, 8.375%, 10/01/19 .............................................. 4,072,622
2,350,000 Refunding, Program A-1, 6.10%, 10/01/14 .............................................. 2,267,045
3,900,000 Refunding, Program A-1, 6.25%, 10/01/26 .............................................. 3,759,717
Nevada State Colorado River,
4,790,000 Series 1994, 6.50%, 07/01/19 ......................................................... 4,923,354
15,915,000 Series 1994, 6.50%, 07/01/24 ......................................................... 16,293,618
31,345,000 Series 1994, 5.50%, 07/01/27 ......................................................... 28,100,479
10,275,000 Nevada State Municipal Bond Bank Project No. 40-41-A, ETM 02/01/10, 6.375%, 12/01/17 .... 10,878,965
Reno RDA, Tax Allocation, Downtown Redevelopment Project,
785,000 Series A, Pre-Refunded, 10.65%, 09/01/01 ............................................. 819,728
865,000 Series A, Pre-Refunded, 10.65%, 09/01/02 ............................................. 903,268
950,000 Series A, Pre-Refunded, 10.65%, 09/01/03 ............................................. 992,028
1,045,000 Series A, Pre-Refunded, 10.65%, 09/01/04 ............................................. 1,091,231
1,150,000 Series A, Pre-Refunded, 10.65%, 09/01/05 ............................................. 1,200,876
2,695,000 Series C, 7.75%, 09/01/05 ............................................................ 2,878,718
8,290,000 Series D, 7.625%, 09/01/16 ........................................................... 8,685,516
5,000,000 Washoe County Gas and Water Facilities Revenue, Refunding, AMBAC Insured, 6.30%,
12/01/14 ............................................................................... 5,047,300
</TABLE>
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
NEVADA (CONT.)
Washoe County Hospital Facility Revenue, Washoe Medical Center, Inc. Project,
$ 9,295,000 Series A, AMBAC Insured, 6.25%, 06/01/13 ............................................. $ 9,346,030
5,250,000 Series A, Pre-Refunded, 7.50%, 06/01/16 .............................................. 5,510,033
------------
240,218,437
------------
NEW HAMPSHIRE 1.8%
New Hampshire Higher Education and Health Facilities Authority Revenue,
9,865,000 Kendal at Hanover Project, 8.00%, 10/01/19 ........................................... 10,185,119
2,300,000 St. Joseph Hospital, 7.50%, 01/01/16 ................................................. 2,376,544
New Hampshire State HFA,
4,920,000 MFHR, Series 1, 7.10%, 01/01/14 ...................................................... 5,066,370
4,635,000 SF Residential, Series A, 8.50%, 07/01/14 ............................................ 4,889,693
7,070,000 SFMR, Series E, 6.75%, 07/01/19 ...................................................... 7,154,416
5,295,000 SFMR, Series E, 6.80%, 07/01/25 ...................................................... 5,358,063
New Hampshire State IDA,
12,480,000 PCR, New England Power Co., 7.80%, 04/01/16 .......................................... 13,014,269
6,870,000 Pollution Control Public Service Co., Project A, 7.65%, 05/01/21 ..................... 7,112,099
50,690,000 Pollution Control Public Service Co., Project B, 7.50%, 05/01/21 ..................... 52,488,481
7,450,000 Pollution Control Public Service Co., Project C, 7.65%, 05/01/21 ..................... 7,659,047
1,820,000 Resource Recovery Revenue, SES Concord Co. Project, 8.15%, 01/01/00 .................. 1,938,682
5,000,000 Resource Recovery Revenue, SES Concord Co. Project, 8.50%, 01/01/09 .................. 5,358,150
------------
122,600,933
------------
NEW JERSEY .4%
4,425,000 New Jersey EDA, First Mortgage Gross Revenue, Mega Care, Inc. Project, Pre-Refunded,
8.625%, 08/01/07 ...................................................................... 4,866,217
3,700,000 New Jersey EDA, Natural Gas Facilities Revenue, New Jersey Natural Gas Co. Project,
8.50%, 06/01/18 ........................................................................ 3,782,140
New Jersey Health Care Facilities, Financing Authority Revenue,
3,975,000 Cathedral Health Service, 7.25%, 02/15/21 ............................................ 4,211,354
900,000 Community Memorial Hospital Association, Series C, 8.00%, 07/01/14 ................... 961,047
6,500,000 General Hospital Passaic, Series B, 10.375%, 07/01/14 ................................ 6,760,000
4,150,000 Zurbrugg Memorial Hospital Issue, Series C, 8.50%, 07/01/12 .......................... 4,323,180
------------
24,903,938
------------
NEW MEXICO 1.7%
5,000,000 Albuquerque Airport Revenue, Series A, Pre-Refunded, 9.25%, 07/01/19 .................... 5,530,650
10,435,000 Farmington PCR, Refunding, Public Service Co. of New Mexico, Series A, AMBAC Insured,
6.375%, 12/15/22 ...................................................................... 10,610,099
17,000,000 Lordsburg PCR, Refunding, Phelps Dodge Corp. Project, 6.50%, 04/01/13 ................... 17,258,910
38,705,000 Los Alamos County, Inc., Utility System Revenue, Refunding, Series 1986-A, Pre-Refunded,
7.75%, 01/01/15 ........................................................................ 41,277,334
19,310,000 New Mexico State Mortgage Financial Authority, SFM, Refunding, Series A, Pre-Refunded,
6.85%, 07/01/10 ........................................................................ 20,010,953
17,000,000 University of New Mexico, University Revenue, Series 1989, Pre-Refunded, 7.90%,
06/01/19 ............................................................................... 19,039,830
------------
113,727,776
------------
NEW YORK 11.3%
Metropolitan Transportation Authority Revenue,
3,000,000 Refunding, Transit Facilities Obligation, 7.00%, 07/01/09 ............................ 3,151,470
18,210,000 Refunding, Transportation Facilities, Series M, 6.00%, 07/01/14 ...................... 17,371,794
12,750,000 Transportation Facilities Service Contract, Series 4, Pre-Refunded, 7.875%,
07/01/17 ............................................................................ 14,607,420
</TABLE>
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
NEW YORK (CONT.)
$ 1,245,000 New Rochelle IDA, Civic Facilities Revenue, College of New Rochelle Project, 6.625%,
07/01/12 ............................................................................... $ 1,246,967
New York City GO,
2,300,000 Refunding, Series 1993-G, 5.70%, 08/01/08 ............................................ 2,118,852
95,000 Series 1986-D, Pre-Refunded, 8.50%, 08/01/16 ......................................... 99,116
1,705,000 Series 1986-D, Pre-Refunded, 8.50%, 08/01/16 ......................................... 1,818,792
1,180,000 Series 1987-A, 8.50%, 11/01/12 ....................................................... 1,301,977
3,355,000 Series 1987-A, Pre-Refunded, 8.50%, 11/01/13 ......................................... 3,701,806
2,805,000 Series 1987-A, Pre-Refunded, 8.75%, 11/01/14 ......................................... 3,104,265
2,040,000 Series 1987-D, Pre-Refunded, 8.50%, 08/01/09 ......................................... 2,240,348
11,750,000 Series 1988-A, Pre-Refunded, 8.00%, 08/15/07 ......................................... 12,423,393
7,870,000 Series 1988-A, Pre-Refunded, 8.00%, 08/15/08 ......................................... 8,321,030
5,500,000 Series 1988-A, Pre-Refunded, 8.00%, 08/15/09 ......................................... 5,815,205
6,500,000 Series 1988-A, Pre-Refunded, 8.00%, 08/15/10 ......................................... 6,872,515
6,500,000 Series 1989-A, Pre-Refunded, 8.00%, 08/15/11 ......................................... 6,872,515
2,610,000 Series 1989-E, 6.50%, 12/01/12 ....................................................... 2,551,118
2,615,000 Series 1990-B, 8.00%, 06/01/01 ....................................................... 2,887,483
7,000,000 Series 1990-B, 7.50%, 10/01/11 ....................................................... 7,279,720
10,985,000 Series 1990-B, 7.50%, 10/01/12 ....................................................... 11,423,961
385,000 Series 1990-B, ETM 06/01/01, 8.00%, 06/01/01 ......................................... 442,003
1,000,000 Series 1991-A, 8.00%, 03/15/12 ....................................................... 1,067,360
1,530,000 Series 1991-A, 8.00%, 03/15/13 ....................................................... 1,629,787
10,000,000 Series 1991-A, 7.75%, 08/15/13 ....................................................... 10,591,600
7,000,000 Series 1991-A, 7.75%, 08/15/14 ....................................................... 7,414,120
3,285,000 Series 1991-A, 7.75%, 08/15/17 ....................................................... 3,496,685
5,000 Series 1991-A, 8.00%, 08/15/20 ....................................................... 5,385
15,000 Series 1991-A, 8.00%, 08/15/21 ....................................................... 16,156
13,400,000 Series 1991-A, Pre-Refunded, 8.00%, 03/15/14 ......................................... 15,316,334
1,115,000 Series 1991-A, Pre-Refunded, 8.00%, 03/15/15 ......................................... 1,269,271
3,000,000 Series 1991-A, Pre-Refunded, 8.00%, 03/15/16 ......................................... 3,415,080
895,000 Series 1991-A, Pre-Refunded, 8.00%, 08/15/20 ......................................... 1,046,300
3,165,000 Series 1991-A, Pre-Refunded, 8.00%, 08/15/21 ......................................... 3,700,043
1,435,000 Series 1991-B, 8.00%, 06/01/98 ....................................................... 1,533,800
4,500,000 Series 1991-B, 8.25%, 06/01/02 ....................................................... 5,048,415
10,000,000 Series 1991-B, 7.50%, 02/01/04 ....................................................... 10,730,900
1,000,000 Series 1991-B, 8.25%, 06/01/05 ....................................................... 1,145,330
15,000,000 Series 1991-B, 7.00%, 02/01/19 ....................................................... 15,222,600
20,000,000 Series 1991-C, 7.00%, 08/01/18 ....................................................... 20,309,200
1,760,000 Series 1991-D, 8.00%, 08/01/99 ....................................................... 1,904,795
1,800,000 Series 1991-D, 8.25%, 08/01/11 ....................................................... 1,965,654
7,715,000 Series 1991-D, 8.25%, 08/01/12 ....................................................... 9,069,677
3,410,000 Series 1991-D, 8.25%, 08/01/12 ....................................................... 3,723,822
7,605,000 Series 1991-D, 8.25%, 08/01/13 ....................................................... 8,940,362
145,000 Series 1991-D, 8.25%, 08/01/13 ....................................................... 157,957
85,000 Series 1991-D, 8.25%, 08/01/14 ....................................................... 92,596
50,000 Series 1991-D, 8.00%, 08/01/16 ....................................................... 56,997
100,000 Series 1991-D, 8.00%, 08/01/17 ....................................................... 107,677
50,000 Series 1991-D, 8.00%, 08/01/18 ....................................................... 53,838
30,000 Series 1991-D, 8.00%, 08/01/19 ....................................................... 32,303
240,000 Series 1991-D, ETM 08/01/99, 8.00%, 08/01/99 ......................................... 267,362
4,255,000 Series 1991-D, Pre-Refunded, 8.25%, 08/01/14 ......................................... 5,002,135
2,450,000 Series 1991-D, Pre-Refunded, 8.00%, 08/01/16 ......................................... 2,847,856
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
NEW YORK (CONT.)
New York City GO, (cont.)
$ 4,600,000 Series 1991-D, Pre-Refunded, 8.00%, 08/01/17 ......................................... $ 5,346,994
3,185,000 Series 1991-D, Pre-Refunded, 8.00%, 08/01/18 ......................................... 3,720,813
1,970,000 Series 1991-D, Pre-Refunded, 8.00%, 08/01/19 ......................................... 2,301,413
5,335,000 Series 1991-F, 8.20%, 11/15/04 ....................................................... 5,945,111
160,000 Series 1991-F, 8.25%, 11/15/15 ....................................................... 174,762
200,000 Series 1991-F, 8.25%, 11/15/17 ....................................................... 218,452
1,840,000 Series 1991-F, Pre-Refunded, 8.25%, 11/15/15 ......................................... 2,186,122
2,300,000 Series 1991-F, Pre-Refunded, 8.25%, 11/15/17 ......................................... 2,732,653
9,300,000 Series 1992-B, 6.75%, 10/01/15 ....................................................... 9,278,703
1,930,000 Series 1992-C, Sub-Series C-1, 7.00%, 08/01/17 ....................................... 1,959,838
5,000,000 Series 1992-D, 7.30%, 02/01/01 ....................................................... 5,303,550
9,000,000 Series 1992-D, 7.625%, 02/01/15 ...................................................... 9,495,630
5,000,000 Series 1992-D, 7.50%, 02/01/16 ....................................................... 5,237,050
12,000,000 Series 1992-E, 7.50%, 02/01/17 ....................................................... 12,568,920
3,000,000 Series 1992-H, 7.10%, 02/01/12 ....................................................... 3,073,980
10,000,000 Series 1992-H, 7.20%, 02/01/14 ....................................................... 10,278,600
4,000,000 Series 1992-H, 7.00%, 02/01/16 ....................................................... 4,059,360
320,000 Series 1993-A, Pre-Refunded, 8.00%, 03/15/13 ......................................... 365,763
460,000 Series 1993-B, 8.50%, 08/01/09 ....................................................... 489,550
11,660,000 Series 1993-B, Pre-Refunded, 8.00%, 03/15/17 ......................................... 13,327,497
5,900,000 Series 1993-D, 6.00%, 08/01/06 ....................................................... 5,725,950
14,500,000 Series 1994-A, 6.125%, 08/01/06 ...................................................... 14,216,090
21,810,000 Series 1994-A, 6.20%, 08/01/07 ....................................................... 21,296,593
4,390,000 Series 1994-A, 6.25%, 08/01/08 ....................................................... 4,274,016
8,000,000 Series 1994-B, Sub-Series B-1, 7.30%, 08/15/11 ....................................... 8,358,640
3,000,000 Series 1994-B, Sub-Series B-1, 7.00%, 08/15/16 ....................................... 3,053,370
11,750,000 Series 1994-H, Sub-Series H-1, 6.125%, 08/01/09 ...................................... 11,165,555
5,000,000 Series 1994-H, Sub-Series H-1, 6.125%, 08/01/11 ...................................... 4,731,550
8,050,000 Series 1995-F, 6.50%, 02/15/07 ....................................................... 8,029,312
7,540,000 (c)Series 1995-F, 6.50%, 02/15/08 ....................................................... 7,474,553
12,000,000 (c)Series 1995-F, 6.60%, 02/15/10 ....................................................... 11,864,760
5,000,000 Series 1995-F, 7.25%, 08/15/24 ....................................................... 5,112,650
New York City Health and Hospital Authority Local Government Revenue,
5,010,000 Series A, 6.00%, 02/15/07 ............................................................ 4,649,781
17,735,000 Series A, 6.30%, 02/15/20 ............................................................ 16,088,837
New York City Municipal Water Finance Authority, Water and Sewer System Revenue,
11,140,000 Series 1986-B, Pre-Refunded, 7.875%, 06/15/16 ........................................ 11,772,975
8,500,000 Series 1987-A, Pre-Refunded, 9.00%, 06/15/17 ......................................... 9,401,595
2,965,000 Series 1989-B, Pre-Refunded, 7.00%, 06/15/19 ......................................... 3,198,523
40,000,000 Series 1991-C, Pre-Refunded, 7.75%, 06/15/20 ......................................... 46,171,600
2,455,000 Series 1994-A, Pre-Refunded, 7.10%, 06/15/12 ......................................... 2,616,122
4,980,000 Series 1994-A, Pre-Refunded, 7.00%, 06/15/15 ......................................... 5,252,605
New York State Dormitory Authority Revenue,
4,000,000 City University General Resources, Series 2, MBIA Insured, 6.25%, 07/01/19 ........... 4,049,600
26,930,000 City University System Consolidated, Series A, Pre-Refunded, 7.625%, 07/01/20 ........ 30,654,688
31,200,000 City University System Consolidated, Series F, Pre-Refunded, 7.875%, 07/01/17 ........ 35,712,768
22,750,000 State University Educational Facilities, Series A, Pre-Refunded, 7.70%, 05/15/12 ..... 25,914,525
4,240,000 State University Educational Facilities, Series B, Refunding, 7.375%, 05/15/14 ....... 4,518,441
3,540,000 State University Educational Facilities, Series B, Refunding, 7.375%, 05/15/14 ....... 3,964,835
2,000,000 State University Educational Facilities, Series B, Refunding, 7.00%, 05/15/16 ........ 2,079,600
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
NEW YORK (CONT.)
New York State Energy Research and Development Authority, Electric Facilities Revenue,
$ 5,000,000 Consolidated Edison Co., Inc. Project B, 9.25%, 09/15/22 ............................. $ 5,499,600
17,500,000 Long Island Light, Series A, 7.15%, 06/01/20 ......................................... 16,829,750
1,500,000 Long Island Light, Series A, 7.15%, 02/01/22 ......................................... 1,441,185
New York State Housing Finance Agency Service Contract Revenue,
12,735,000 Refunding, Pre-Refunded, 7.80%, 09/15/20 ............................................. 14,653,018
15,000,000 Refunding, Series C, 6.125%, 03/15/20 ................................................ 14,362,800
3,155,000 Series A, 6.375%, 09/15/14 ........................................................... 3,166,043
3,785,000 Series A, 6.375%, 09/15/16 ........................................................... 3,764,940
6,000,000 New York State Local Government Assistance Corp., Series A, 6.50%, 04/01/20 ............. 6,159,660
New York State Medical Care Facilities, Financial Agency Revenue,
7,215,000 Hospital and Nursing Home, FSA Mortgage Insured, 6.50%, 02/15/34 ..................... 7,291,984
11,245,000 Hospital and Nursing Home, Refunding, FSA Mortgage Insured, 6.40%, 08/15/14 .......... 11,655,105
7,600,000 Hospital Mortgage, Series A, AMBAC Insured, 6.50%, 08/15/29 .......................... 7,800,412
12,500,000 The Hospital for Special Surgery, Series A, 6.375%, 08/15/24 ......................... 12,583,375
5,000,000 New York State Tollway Authority Service Contract Revenue, Local Highway and Bridge,
7.25%, 01/01/10 ........................................................................ 5,303,050
5,000,000 Warren and Washington Counties IDAR, Refunding, Adirondack Resource Recovery Project,
Series A, 7.90%, 12/15/07 .............................................................. 5,056,850
------------
777,815,214
------------
NORTH CAROLINA 3.5%
North Carolina Eastern Municipal Power Agency, Power System Revenue,
60,480,000 Refunding, Series 1986-A, Pre-Refunded, 7.75%, 01/01/15 .............................. 63,552,989
5,705,000 Refunding, Series 1987-A, Pre-Refunded, 7.50%, 01/01/15 .............................. 6,075,882
18,645,000 Refunding, Series 1988-A, Pre-Refunded, 8.00%, 01/01/21 .............................. 20,477,244
1,355,000 Refunding, Series 1988-A, Pre-Refunded, 8.00%, 01/01/21 .............................. 1,488,156
3,250,000 Refunding, Series 1989-A, 6.50%, 01/01/24 ............................................ 3,163,258
23,700,000 Refunding, Series 1991-A, 6.50%, 01/01/17 ............................................ 23,265,579
6,875,000 Refunding, Series 1993-B, 6.25%, 01/01/12 ............................................ 6,626,538
39,030,000 Refunding, Series 1993-B, 6.25%, 01/01/23 ............................................ 37,251,793
4,000,000 Refunding, Series 1993-B, FGIC Insured, 6.25%, 01/01/23 .............................. 4,011,040
2,000,000 Series 1993-C, 5.50%, 01/01/07 ....................................................... 1,878,520
15,960,000 Series 1993-G, 5.875%, 01/01/14 ...................................................... 14,711,130
19,220,000 Series 1993-G, 5.75%, 12/01/16 ....................................................... 17,231,691
7,000,000 North Carolina Medical Care Commission Health Care Facilities, First Mortgage Revenue,
Southminster Project, Pre-Refunded, 10.375%, 10/01/15 .................................. 7,301,490
North Carolina Municipal Power Agency No. 1, Catawba Electric Revenue, Refunding,
16,120,000 Series 1982, 6.25%, 01/01/17 ......................................................... 15,836,933
10,000,000 Series 1985-B, Pre-Refunded, 8.50%, 01/01/17 ......................................... 10,456,800
5,000,000 Wake County IPC, Financing Authority Revenue, Carolina Power and Light, 6.90%,
04/01/09 ............................................................................... 5,256,700
------------
238,585,743
------------
NORTH DAKOTA .9%
7,750,000 Dickinson Health Care Facilities Revenue, BHS Long-Term Care, Inc., 7.625%, 02/15/20 .... 8,239,180
441,000 Ellendale MFHR, Ellendale Manor Apartments Project, 9.75%, 07/01/16 ..................... 454,812
Mercer County PCR,
3,665,000 Basin Electric Power Corp., Series 1984-A, 7.70%, 01/01/19 ........................... 3,808,815
14,945,000 Basin Electric Power Corp., Series 1984-B, 8.125%, 01/01/19 .......................... 15,595,257
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
North Dakota (cont.)
Mercer County PCR, cont.)
$20,090,000 Basin Electric Power Corp., Series 1984-D, 8.125%, 01/01/19 .......................... $ 20,948,245
11,910,000 Basin Electric Power Corp., Series 1984-E, 7.00%, 01/01/19 ........................... 12,408,672
875,000 Wahpeton MFHR, Evergreen Apartments Project, 9.75%, 07/01/16 ............................ 902,405
------------
62,357,386
------------
OHIO 1.1%
6,740,000 Franklin County Hospital Facility Mortgage Revenue, Refunding, Presbyterian Retirement
Services, Series 1987-A, 9.00%, 07/01/10 ............................................... 6,993,087
2,905,000 Franklin County Nursing Home, First Mortgage Revenue, Volunteers of America Care
Facilities Project, 8.75%, 11/01/18 .................................................... 3,051,354
Montgomery County Health Systems Revenue,
2,800,000 Franciscan, Series B-2, 8.10%, 07/01/01 .............................................. 2,952,908
12,000,000 Franciscan, Series B-2, 8.10%, 07/01/18 .............................................. 13,034,760
1,680,000 Muskingum County Hospital Facilities Revenue, Care One Health System, Bethesda
Hospital, 8.00%, 12/01/16 .............................................................. 1,755,550
1,500,000 Muskingum County Revenue, Refunding, Franciscan Health Advisory Service, Good
Samaritan and Holy Family Hospital Project, 7.50%, 03/01/12 ............................ 1,540,680
Ohio State Air Quality Development Authority Revenue,
6,325,000 Collateral Pollution Toledo Edison, Series B, 8.00%, 05/15/19 ........................ 6,561,302
10,000,000 Dayton Power and Light Co. Project, 9.50%, 12/01/15 .................................. 10,506,500
1,735,000 Ohio State EDR, Good Samaritan Medical Center, Series 1990-3, 7.875%, 12/01/10 .......... 1,814,637
3,250,000 Ohio State Water Development Authority Revenue, Refunding, Water Development Dayton
Power, Series A, 6.40%, 08/15/27 ....................................................... 3,278,958
Ohio State Water Development Facilities Authority, PCR,
10,000,000 Cleveland Electric Illumination Co. Project, Series A-2, 9.75%, 11/01/22 ............. 10,662,600
4,000,000 Duquesne Light Co., Perry Nuclear Station Project, Series 1985-A, 9.75%, 11/01/22 .... 4,265,040
10,000,000 Toledo Edison, Series A, 8.00%, 05/15/19 ............................................. 10,360,800
------------
76,778,176
------------
OKLAHOMA 1.4%
Canadian County HFA, SFMR,
2,015,000 Series 1990-A, 7.70%, 09/01/05 ....................................................... 2,095,600
4,205,000 Series 1990-A, 7.80%, 09/01/12 ....................................................... 4,396,958
6,000,000 Jackson County Memorial Hospital Authority Revenue, Refunding, Jackson Memorial
Hospital Project, Pre-Refunded, 9.00%, 08/01/15 ........................................ 6,659,100
Oklahoma State Municipal Power Authority, Power Supply System Revenue,
7,000,000 Series A, Pre-Refunded, 8.25%, 01/01/23 .............................................. 7,303,870
20,000,000 Series B, Pre-Refunded, 8.25%, 01/01/23 .............................................. 20,868,200
Oklahoma State Turnpike System Authority,
19,090,000 First Senior Revenue, Pre-Refunded, 7.875%, 01/01/21 ................................. 21,253,661
610,000 First Senior Revenue, Pre-Refunded, 7.875%, 01/01/21 ................................. 668,383
730,000 Tulsa County Home Financial Authority, MFHR, Breckenridge Apartments Project, Series A,
FGIC Insured, 6.45%, 10/01/34 .......................................................... 727,350
705,000 Tulsa County Home Financial Authority, Mortgage Revenue, Series D, GNMA Insured,
6.95%, 12/01/22 ........................................................................ 728,878
11,000,000 Tulsa County Municipal Airport Revenue, American Airlines, Inc., 7.375%, 12/01/20 ....... 11,122,650
Tulsa County Parking Authority,
3,000,000 Series B, 6.90%, 12/01/07 ............................................................ 3,213,810
5,500,000 Series B, 7.00%, 12/01/14 ............................................................ 5,855,685
Tulsa County Public Facilities Authority,
2,000,000 Recreation Facility Revenue, Pre-Refunded, 8.875%, 02/01/03 .......................... 2,240,060
2,000,000 Recreation Facility Revenue, Pre-Refunded, 9.00%, 02/01/08 ........................... 2,246,400
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
OKLAHOMA (CONT.)
$ 2,740,000 Tulsa Housing Assistance Corp., First Lien Revenue, Refunding, 6.80%, 07/01/11 .......... $ 2,799,513
2,000,000 Tulsa Industrial Authority Hospital Revenue, St. John Medical Center Project, Series A,
6.25%, 02/15/14 ........................................................................ 1,980,160
4,000,000 Tulsa Municipal Airport Revenue, American Airlines-AMR Corp., 7.35%, 12/01/11 ........... 4,135,560
------------
98,295,838
------------
PENNSYLVANIA 4.9%
5,000,000 Allegheny County, IDAR, Environmental Improvement, 6.70%, 12/01/20 ...................... 4,951,350
Beaver County IDA, PCR,
9,500,000 Collateralized, Cleveland Electric Co., 10.50%, 09/01/15 ............................. 9,772,555
2,850,000 Ohio Edison Co., Beaver Valley Project, Series A, 10.50%, 10/01/15 ................... 3,002,162
14,250,000 Ohio Edison Co., Beaver Valley Project, Series A, 7.75%, 09/01/24 .................... 14,778,960
Cambria County HDA, Hospital Revenue, Conemaugh Valley Memorial Hospital, Refunding,
5,000,000 Series A, Pre-Refunded, 10.125%, 07/01/18 ............................................ 5,148,600
9,600,000 Series B, 6.30%, 07/01/08 ............................................................ 9,813,216
10,740,000 Series B, 6.375%, 07/01/18 ........................................................... 10,801,648
3,000,000 Series B, Pre-Refunded, 8.875%, 07/01/18 ............................................. 3,397,800
Delaware County IDAR, Refunding,
6,500,000 Philadelphia Electric, Series 1991, 7.375%, 04/01/21 ................................. 6,830,330
41,300,000 Resource Recovery Project, Series A, 8.10%, 12/01/13 ................................. 43,692,096
3,030,000 Fayette County Hospital Authority Revenue, Uniontown Hospital Project, Pre-Refunded,
9.75%, 07/01/15 ........................................................................ 3,110,810
22,500,000 Lancaster County Solid Waste Management Authority, Resource Recovery System Revenue,
Series A, 8.50%, 12/15/10 .............................................................. 23,641,200
Montgomery County Higher Education and Health Authority, Hospital Revenue,
5,150,000 Frankford Hospital, 7.875%, 01/01/19 ................................................. 5,285,703
5,500,000 Jeanes Health System Project, Pre-Refunded, 8.75%, 07/01/20 .......................... 6,489,780
5,000,000 Montgomery County IDA, PCR, Philadelphia Electric Co., Series 1986-A, 8.875%, 06/01/16 .. 5,278,650
5,000,000 Pennsylvania EDA, Financing Authority Revenue, Macmillan, Ltd. Partnership Project,
7.60%, 12/01/20 ........................................................................ 5,263,950
13,500,000 Pennsylvania EDA, Financing Resources, Recovery Revenue Colver Project, Series D,
7.125%, 12/01/15 ...................................................................... 13,695,345
33,280,000 Pennsylvania State Financial Authority Revenue, Refunding, Municipal Capital
Improvements Program, 6.60%, 11/01/09 .................................................. 34,450,458
Pennsylvania State HFA,
10,590,000 Refunding, Rental Housing, FGIC Insured, 6.40%, 07/01/12 ............................. 10,705,643
4,200,000 SFM, Series 1991, 7.15%, 04/01/15 .................................................... 4,366,320
2,000,000 Pennsylvania State Higher Educational Facilities Authority, College and University
Revenues, Lycoming College, Pre-Refunded, 8.375%, 10/01/18 ............................. 2,247,320
4,445,000 Pennsylvania State Pooled Finance Authority, Lease Revenue, Capital Improvement,
Series B, MBIA Insured, 8.00%, 11/01/09 ................................................ 4,788,732
Philadelphia City GO, Refunding,
26,000,000 Series 1986-A, Pre-Refunded, 7.625%, 08/01/16 ........................................ 27,457,820
1,000,000 Series 1987-A, 11.50%, 08/01/97 ...................................................... 1,117,430
1,545,000 Series 1987-A, 11.50%, 08/01/98 ...................................................... 1,787,024
2,400,000 Series 1987-A, 11.50%, 08/01/99 ...................................................... 2,865,336
1,000,000 Series 1987-A, 11.50%, 08/01/00 ...................................................... 1,223,270
2,850,000 Philadelphia Gas Works Revenue, Series 13, Pre-Refunded, 7.70%, 06/15/21 ................ 3,284,682
3,950,000 Philadelphia Gas Works Revenue, Series A, 6.375%, 07/01/26 .............................. 3,812,501
Philadelphia Hospital and Higher Education Facilities Authority, Hospital Revenue,
14,240,000 Albert Einstein Medical Center, 7.50%, 04/01/99 ...................................... 15,033,453
8,000,000 Nazareth Hospital, 9.375%, 07/01/15 .................................................. 8,227,040
</TABLE>
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
PENNSYLVANIA (CONT.)
Philadelphia Housing RDAR,
$ 525,000 Sub-Series 2-A, 8.375%, 02/01/14 ..................................................... $ 532,303
4,140,000 Sub-Series 2-B, 8.625%, 08/01/26 ..................................................... 4,197,794
1,000,000 Philadelphia Municipal Authority, Gas Works Lease Revenue, 7.50%, 05/01/01 .............. 1,082,740
Philadelphia Water and Sewer Revenue,
10,915,000 Series 10, ETM 09/01/04, 7.35%, 09/01/04 ............................................. 12,413,848
20,180,000 Series 16, 7.50%, 08/01/10 ........................................................... 21,738,703
410,000 Warrington Township Municipal Authority, Water and Sewer Revenue, Bucks County,
Series A, Pre-Refunded, 10.50%, 12/01/10 ............................................... 412,284
3,000,000 Westmoreland County IDAR, Refunding, Citizens General Hospital Project, Series A, 8.25%,
07/01/13 ............................................................................... 3,180,750
------------
339,879,606
------------
PUERTO RICO .5%
15,750,000 Puerto Rico Commonwealth, Series 1994, 6.50%, 07/01/23 .................................. 16,023,105
3,200,000 Puerto Rico Commonwealth Urban Renewal and Housing Corp., Refunding, 7.875%,
10/01/04 ............................................................................... 3,550,560
Puerto Rico Electric Power Authority, Power Revenue, Refunding,
4,000,000 Series 1987-K, Pre-Refunded, 9.375%, 07/01/17 ........................................ 4,470,320
2,000,000 Series 1988-M, Pre-Refunded, 8.00%, 07/01/08 ......................................... 2,230,200
5,000,000 Puerto Rico Municipal Finance Agency, Series 1988-A, 8.25%, 07/01/08 .................... 5,484,650
------------
31,758,835
------------
RHODE ISLAND 1.5%
9,900,000 Providence Special Obligation Tax Increment, Series A, 7.65%, 06/01/16 .................. 10,262,538
2,200,000 Rhode Island Clean Water Financial Agency Revenue, Drinking Water Providence, Series A,
AMBAC Insured, 6.70%, 01/01/15 ......................................................... 2,304,984
Rhode Island Housing and Mortgage Finance Corp., Homeownership Opportunity,
1,925,000 Series 2, 7.75%, 04/01/22 ............................................................ 2,022,097
20,200,000 Series 10-A, 6.50%, 10/01/22 ......................................................... 20,212,322
13,085,000 Series 10-A, 6.50%, 04/01/27 ......................................................... 13,014,079
7,400,000 Series 13, 6.70%, 10/01/15 ........................................................... 7,553,106
4,250,000 Series 13, 6.85%, 04/01/27 ........................................................... 4,354,380
15,000,000 Series 15-A, 6.85%, 10/01/24 ......................................................... 15,416,100
3,000,000 Series 16-A, 7.35%, 04/01/17 ......................................................... 3,208,320
2,720,000 (c)Series 16-A, 6.375%, 10/01/26 ........................................................ 2,710,344
2,320,000 Series 17-A, 6.25%, 04/01/17 ......................................................... 2,273,762
3,000,000 Rhode Island Port Authority and Economic Development Corp., Refunding, Shepard Building
Project, Series B, AMBAC Insured, 6.75%, 06/01/25 ...................................... 3,137,910
Rhode Island State Health and Educational Building Corp. Revenue,
3,000,000 Health Facilities, Tockwotton Home, 7.25%, 04/15/17 .................................. 3,155,820
9,000,000 Higher Educational Facilities, Project J, 5.875%, 04/01/20 ........................... 8,393,670
965,000 Roger William Realty, FHA Insured, 7.50%, 08/01/29 ................................... 1,005,183
2,320,000 (c)St. Antoine Residence, 6.70%, 11/15/12 ............................................... 2,296,359
2,750,000 St. Antoine Residence, 6.75%, 11/15/18 ............................................... 2,717,990
------------
104,038,964
------------
SOUTH CAROLINA 1.4%
1,800,000 Berkeley County School District COP, Berkeley School Facilities Group, Inc.,
AMBAC Insured, 6.30%, 02/01/16 ......................................................... 1,836,360
24,000,000 Charleston County Resource Recovery Revenue, Foster Wheeler, Inc. Project, Series A,
9.25%, 01/01/10 ........................................................................ 26,390,640
</TABLE>
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
SOUTH CAROLINA (CONT.)
Piedmont Municipal Power Agency, South Carolina Electric Revenue,
$ 6,000,000 Refunding, 7.25%, 01/01/22 ........................................................... $ 6,186,600
5,500,000 Refunding, 6.375%, 01/01/25 .......................................................... 5,409,470
3,150,000 Refunding, Series A, 5.75%, 01/01/24 ................................................. 2,863,256
South Carolina State Public Service Authority Revenue, Refunding,
2,760,000 Electric System and Expansion, Series A, 7.875%, 07/01/21 ............................ 2,875,616
13,045,000 Electric System and Expansion, Series A, 7.875%, 07/01/21 ............................ 13,582,715
4,175,000 Electric System and Expansion, Series A, Pre-Refunded, 7.875%, 07/01/21 .............. 4,349,891
12,765,000 Series A, AMBAC Insured, 6.375%, 07/01/21 ............................................ 12,900,181
10,635,000 Series B, 6.00%, 07/01/31 ............................................................ 10,152,171
10,240,000 York County Public Facilities Corp., COP, Justice Center, Pre-Refunded, 7.50%, 06/01/11.. 11,688,653
------------
98,235,553
------------
SOUTH DAKOTA .6%
5,000,000 Lawrence County PCR, Refunding, Black Hills Power and Light Co. Project, 6.70%,
06/01/10 ............................................................................... 5,181,700
South Dakota State HDA, Homeownership Mortgage,
6,000,000 (c)Series A, 6.30%, 05/01/17 ............................................................ 5,908,740
1,250,000 Series A, 6.00%, 05/01/21 ............................................................ 1,194,650
10,580,000 Series A, 7.15%, 05/01/27 ............................................................ 10,877,298
4,650,000 Series B, 5.80%, 05/01/14 ............................................................ 4,374,953
3,250,000 Series B, 7.10%, 05/01/17 ............................................................ 3,351,628
3,480,000 Series D, 6.65%, 05/01/14 ............................................................ 3,564,390
5,000,000 Series G, 7.125%, 05/01/14 ........................................................... 5,266,750
------------
39,720,109
------------
TENNESSEE .8%
6,690,000 Gatlinburg COP, Gatlinburg Convention Center, Inc., Pre-Refunded, 9.25%, 12/01/12 ....... 7,583,048
4,850,000 Knox County Health, Educational and Housing Facilities Board, MFHR, GNMA Secured,
East Towne Village Project, 8.20%, 07/01/28 ............................................ 5,071,936
Memphis-Shelby County Airport Authority, Special Facilities and Project Revenue,
14,690,000 Federal Express Corp., 7.875%, 09/01/09 .............................................. 15,903,688
6,520,000 Federal Express Corp., 6.75%, 09/01/12 ............................................... 6,554,947
1,940,000 Metropolitan Nashville Airport Authority, Airport Revenue, Series C, FGIC Insured, 6.60%,
07/01/15 ............................................................................... 2,010,209
1,990,000 Mount Pleasant IDR, PCR, Stauffer Chemical Co. Project, 8.00%, 12/01/12 ................. 2,233,437
5,000,000 Nashville and Davidson County Revenue, IDB, Refunding and Improvement, Osco
Treatment, Inc., 6.00%, 05/01/03 ....................................................... 4,852,100
Tennessee HDA, Homeownership Program,
2,650,000 Series 1992, 6.80%, 07/01/17 ......................................................... 2,696,587
6,305,000 Series P, 7.70%, 07/01/16 ............................................................ 6,519,495
2,275,000 Tennessee State Local Development Authority Revenue, Community Provider Pooled Loan
Program, 6.45%, 10/01/14 ............................................................... 2,287,581
------------
55,713,028
------------
TEXAS 7.8%
18,100,000 Austin Combined Utility System Revenue, Series A, Pre-Refunded, 8.00%, 11/15/16 ......... 20,763,777
40,000 Austin HFC, SFMR, Series 1984, 11.25%, 02/01/09 ......................................... 41,100
11,310,000 Austin Utility System Revenue Refunding, FGIC Insured, 6.25%, 05/15/16 .................. 11,429,999
1,750,000 Bexar County HFC, MFHR, Sunpark Apartments Project, 6.875%, 12/01/12 .................... 1,803,900
6,100,000 Brazos County Health Facilities Development Corp., Hospital Revenue, St. Joseph Hospital
Project, Pre-Refunded, 10.25%, 10/01/15 ................................................ 6,962,601
</TABLE>
The accompanying notes are an integral part of these financial statements.
29
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
TEXAS (CONT.)
Brazos River Authority, Collateralized, PCR, Texas Utilities Electric Co. Project,
$ 2,500,000 Series 1987-A, 9.875%, 10/01/17 ...................................................... $ 2,742,350
17,550,000 Series 1988-A, 9.25%, 03/01/18 ....................................................... 19,113,705
15,000,000 Series 1989-A, 8.25%, 01/01/19 ....................................................... 16,112,700
Brazos River Authority, Johnson County,
445,000 Surface Water and Treatment Revenue, 8.60%, 09/01/96 ................................. 463,979
480,000 Surface Water and Treatment Revenue, 8.75%, 09/01/97 ................................. 499,818
520,000 Surface Water and Treatment Revenue, 8.90%, 09/01/98 ................................. 540,764
560,000 Surface Water and Treatment Revenue, 9.00%, 09/01/99 ................................. 581,252
605,000 Surface Water and Treatment Revenue, 9.00%, 09/01/00 ................................. 626,792
655,000 Surface Water and Treatment Revenue, 9.00%, 09/01/01 ................................. 677,755
705,000 Surface Water and Treatment Revenue, 9.10%, 09/01/02 ................................. 729,464
765,000 Surface Water and Treatment Revenue, 9.10%, 09/01/03 ................................. 790,566
825,000 Surface Water and Treatment Revenue, 9.10%, 09/01/04 ................................. 852,572
890,000 Surface Water and Treatment Revenue, 9.20%, 09/01/05 ................................. 920,287
960,000 Surface Water and Treatment Revenue, 9.20%, 09/01/06 ................................. 992,669
1,040,000 Surface Water and Treatment Revenue, 9.20%, 09/01/07 ................................. 1,074,060
1,120,000 Surface Water and Treatment Revenue, 9.20%, 09/01/08 ................................. 1,156,680
1,210,000 Surface Water and Treatment Revenue, 9.25%, 09/01/09 ................................. 1,248,829
1,310,000 Surface Water and Treatment Revenue, 9.25%, 09/01/10 ................................. 1,352,038
1,415,000 Surface Water and Treatment Revenue, 9.25%, 09/01/11 ................................. 1,459,502
1,525,000 Surface Water and Treatment Revenue, 9.25%, 09/01/12 ................................. 1,572,961
1,650,000 Surface Water and Treatment Revenue, 9.25%, 09/01/13 ................................. 1,701,893
1,780,000 Surface Water and Treatment Revenue, 9.25%, 09/01/14 ................................. 1,835,980
1,670,000 Surface Water and Treatment Revenue, 9.25%, 09/01/15 ................................. 1,722,522
3,470,000 Dallas County Flood Control District No. 1, Refunding, Pre-Refunded, 9.25%, 04/01/10 .... 3,755,616
99,000,000 Dallas-Fort Worth International Airport Facilities, Improvement Corp. Revenue, American
Airlines, Inc., 8.00%, 11/01/24 ........................................................ 102,999,600
6,315,000 El Paso HFC, SFMR, Series 1991-A, 8.75%, 10/01/11 ....................................... 6,628,161
2,700,000 Grand Prairie Health Facilities Development Corp., Hospital Revenue, Refunding,
Dallas/Ft. Worth Medical Center Project, AMBAC Insured, 6.875%, 11/01/10 ............... 2,880,198
1,590,000 Grand Prairie HFC, SFMR, 10.75%, 09/01/14 ............................................... 1,625,807
43,010,000 Harris County Hospital District, Mortgage Revenue, Refunding, Pre-Refunded, 8.50%,
04/01/05 ............................................................................... 45,351,034
20,250,000 Harris County IDR, Marine Terminal Revenue, Refunding, 6.95%, 02/01/22 .................. 20,725,470
Harris County Toll Road, Multiple Mode, Senior Lien Revenue,
2,100,000 Refunding, Series 1987, Pre-Refunded, 8.70%, 08/15/17 ................................ 2,336,838
9,000,000 Series B, Pre-Refunded, 8.625%, 08/15/07 ............................................. 10,000,620
18,710,000 Series B, Pre-Refunded, 8.70%, 08/15/17 .............................................. 20,820,114
3,500,000 Series C, Pre-Refunded, 8.125%, 08/15/17 ............................................. 3,892,840
4,000,000 Series D, Pre-Refunded, 8.25%, 08/15/07 .............................................. 4,512,280
5,000,000 Series D, Pre-Refunded, 8.30%, 08/15/17 .............................................. 5,647,850
5,655,000 Houston HFC, SFMR, Refunding, Series A, FSA Insured, 5.95%, 12/01/10 .................... 5,631,984
21,000,000 Houston Water and Sewer System Revenue, Refunding, Series B, 6.375%, 12/01/14 ........... 21,286,650
Matagorda County Navigation District No. 1, PCR, Collateralized, Refunding,
10,000,000 Houston Lighting and Power Co., 6.00%, 07/01/28 ...................................... 9,360,500
5,500,000 Houston Lighting and Power Co., Series A, AMBAC Insured, 6.70%, 03/01/27 ............. 5,661,480
40,975,000 Houston Lighting and Power Co., Series B, 7.70%, 02/01/19 ............................ 43,572,405
1,590,000 Mesquite HFC, SFMR, Series 1983, 10.75%, 09/01/14 ....................................... 1,591,511
5,000,000 Nueces County Hospital District Revenue, Refunding, Pre-Refunded, 9.00%, 07/01/16 ....... 5,364,050
10,820,000 Rio Grande Valley Health Facilities Development Corp., First Mortgage Revenue, Refunding,
Golden Palms Retirement and Health Center, Pre-Refunded, 9.25%, 08/01/15 ............... 11,584,325
</TABLE>
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
TEXAS (CONT.)
Sabine River Authority PCR,
$ 2,610,000 Texas Utility Electric Co. Project, Refunding, 7.75%, 04/01/16 ....................... $ 2,704,091
7,700,000 Texas Utility Electric Co. Project, Refunding, 6.55%, 10/01/22 ....................... 7,867,244
5,000,000 San Antonio Water Revenue, Refunding, MBIA Insured, 6.50%, 05/15/10 ..................... 5,218,200
Southland Oaks MUD,
1,525,000 Contract Revenue, Pre-Refunded, 8.50%, 11/15/01 ...................................... 1,633,550
1,700,000 Contract Revenue, Pre-Refunded, 8.50%, 11/15/02 ...................................... 1,821,005
1,850,000 Contract Revenue, Pre-Refunded, 8.50%, 11/15/03 ...................................... 1,981,683
2,050,000 Contract Revenue, Pre-Refunded, 8.55%, 11/15/04 ...................................... 2,197,416
2,250,000 Contract Revenue, Pre-Refunded, 8.55%, 11/15/05 ...................................... 2,411,798
2,475,000 Contract Revenue, Pre-Refunded, 8.60%, 11/15/06 ...................................... 2,654,784
2,725,000 Contract Revenue, Pre-Refunded, 8.60%, 11/15/07 ...................................... 2,922,944
3,000,000 Contract Revenue, Pre-Refunded, 8.60%, 11/15/08 ...................................... 3,217,920
3,300,000 Contract Revenue, Pre-Refunded, 8.60%, 11/15/09 ...................................... 3,539,712
Texas Housing Agency,
15,710,000 SFMR, Series 1986-B, 7.50%, 09/01/17 ................................................. 16,057,819
3,645,000 SFMR, Series 1988-B, 8.20%, 03/01/16 ................................................. 3,758,031
Texas Housing Agency, Residential Development Mortgage Revenue,
1,845,000 Series D, 8.35%, 01/01/08 ............................................................ 1,917,601
3,700,000 Series D, 8.35%, 07/01/08 ............................................................ 3,845,595
18,000,000 Texas National Research Lab Community, Financing Corp., Lease Revenue, 7.10%,
12/01/21 ............................................................................... 18,368,460
2,500,000 Texas Water Development Board Revenue, State Revolving Fund, 6.00%, 07/15/13 ............ 2,469,225
2,490,000 Texas Water Resources Finance Authority Revenue, 7.625%, 08/15/08 ....................... 2,651,575
5,580,000 Travis County, HFC, SFMR, Refunding, Series A, 6.95%, 10/01/27 .......................... 5,794,830
Western Oaks MUD,
1,675,000 Contract Revenue, 8.60%, 11/15/05 .................................................... 1,796,672
1,825,000 Contract Revenue, 8.60%, 11/15/06 .................................................... 1,957,568
615,000 Contract Revenue, Pre-Refunded, 8.40%, 11/15/01 ...................................... 657,878
500,000 Contract Revenue, Pre-Refunded, 8.45%, 11/15/02 ...................................... 535,225
2,025,000 Contract Revenue, Pre-Refunded, 8.60%, 11/15/07 ...................................... 2,172,096
2,225,000 Contract Revenue, Pre-Refunded, 8.60%, 11/15/08 ...................................... 2,386,624
2,450,000 Contract Revenue, Pre-Refunded, 8.60%, 11/15/09 ...................................... 2,627,968
------------
540,167,362
------------
U.S. TERRITORIES
775,000 Virgin Islands HFA, HMR, Series B, GNMA Secured, 8.10%, 12/01/18 ........................ 806,124
------------
UTAH 1.7%
5,050,000 Carbon County, Solid Waste Disposal Revenue, Refunding, Laidlaw, Inc. Project, Series A,
7.50%, 02/01/10 ........................................................................ 5,155,797
Intermountain Power Agency, Special Obligation,
13,450,000 First Crossover Series, 7.875%, 07/01/14 ............................................. 14,054,040
9,500,000 Refunding, Fifth Crossover Series, 7.20%, 07/01/19 ................................... 9,972,245
Intermountain Power Agency, Supply Revenue, Refunding,
34,805,000 Series B, 7.75%, 07/01/20 ............................................................ 37,418,159
2,000,000 Series G, 7.25%, 07/01/17 ............................................................ 2,085,200
2,945,000 Utah State HFA, Refunding, Series A, 6.50%, 05/01/19 .................................... 2,923,737
Utah State HFA, SFM,
3,380,000 Refunding, Series A-C, 6.80%, 01/01/12 ............................................... 3,469,840
1,240,000 Series A, 8.50%, 07/01/19 ............................................................ 1,272,004
5,000,000 Series B, 6.55%, 07/01/26 ............................................................ 5,030,850
470,000 Series C-1, 6.80%, 07/01/12 .......................................................... 482,493
</TABLE>
The accompanying notes are an integral part of these financial statements.
31
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
UTAH (CONT.)
Utah State HFA, SFM, (cont.)
$ 4,515,000 Series C-1, 8.375%, 07/01/19 ......................................................... $ 4,867,080
1,265,000 Series D, 8.60%, 07/01/19 ............................................................ 1,332,766
5,000,000 Series D-1, 6.55%, 07/01/19 .......................................................... 4,993,400
3,590,000 Series E-1, 6.65%, 07/01/20 .......................................................... 3,614,843
2,145,000 Series G-1, 8.10%, 07/01/16 .......................................................... 2,221,876
Utah State School District Finance Cooperative Revenue, Financing Pool,
2,450,000 Series 1988, 8.375%, 02/15/10 ........................................................ 2,627,209
1,730,000 Series 1988, 8.375%, 02/15/10 ........................................................ 1,855,131
1,435,000 Series 1988, 8.375%, 02/15/10 ........................................................ 1,541,003
1,420,000 Series 1988, 8.375%, 02/15/10 ........................................................ 1,522,709
1,340,000 Series 1988, 8.375%, 02/15/10 ........................................................ 1,436,922
1,245,000 Series 1988, 8.375%, 02/15/10 ........................................................ 1,335,051
1,195,000 Series 1988, 8.375%, 02/15/10 ........................................................ 1,281,434
1,190,000 Series 1988, 8.375%, 02/15/10 ........................................................ 1,280,845
1,210,000 Series 1988, 8.375%, 02/15/10 ........................................................ 1,297,519
1,160,000 Series 1988, 8.375%, 02/15/10 ........................................................ 1,243,903
1,065,000 Series 1988, 8.375%, 02/15/10 ........................................................ 1,142,031
1,040,000 Series 1988, 8.375%, 02/15/10 ........................................................ 1,110,938
1,030,000 Series 1988, 8.375%, 02/15/10 ........................................................ 1,104,500
635,000 Series 1988, 8.375%, 02/15/10 ........................................................ 664,553
530,000 Series 1988, 8.375%, 02/15/10 ........................................................ 541,861
------------
118,879,939
------------
VERMONT .1%
9,400,000 Vermont HFA, SF, Series 5, 7.00%, 11/01/27 .............................................. 9,555,570
------------
VIRGINIA .5%
Danville IDAR, Regional Medical Center,
5,885,000 FGIC Insured, 6.50%, 10/01/19 ........................................................ 6,080,853
5,840,000 FGIC Insured, 6.50%, 10/01/24 ........................................................ 6,010,178
7,250,000 Henrico County IDA, Public Facilities Lease Revenue, Henrico County Regional Jail Project,
6.00%, 08/01/15 ........................................................................ 7,148,935
Virginia State HDA, Commonwealth Mortgage,
5,120,000 Series 1994-C, Sub-Series C-6, 6.25%, 01/01/15 ....................................... 5,062,400
5,500,000 Series B, Sub-Series B-1, 7.20%, 07/01/17 ............................................ 5,877,025
4,755,000 Series H, Sub-Series H-2, 6.55%, 01/01/17 ............................................ 4,812,440
------------
34,991,831
------------
WASHINGTON 5.3%
5,000,000 Chelan County PUD No. 1, Cheland Hydro Consolidated System Revenue, 9.30%,
07/01/62 ............................................................................... 5,557,850
32,480,000 Pierce County EDC, Refunding, Solid Waste-Steilacoom Revenue, 6.60%, 08/01/22 ........... 32,191,577
Port Moses Lake Public Corp., Washington PCR,
2,100,000 Union Carbide Corp., 7.50%, 08/01/04 .................................................... 2,149,623
1,000,000 Union Carbide Corp., 7.875%, 08/01/06 ................................................... 1,051,850
2,760,000 Seatac GO, Series 1994, 6.50%, 12/01/13 ................................................. 2,851,439
9,680,000 Seattle Municipality, Metropolitan Seattle Sewer Revenue, Refunding, Series V, 6.20%,
01/01/32 ............................................................................... 9,274,989
9,365,000 Snohomish County PUD No. 1, Electric Revenue, Refunding, Generation System,
Series 1986-A, Pre-Refunded, 8.00%, 01/01/15 ........................................... 10,035,159
7,000,000 Snohomish County USD No. 6, 6.50%, 12/01/11 ............................................. 7,326,340
</TABLE>
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
WASHINGTON (CONT.)
$ 4,000,000 University of Washington Alumni Association Lease Revenue, Medical Center Roosevelt II,
6.30%, 08/15/14 ........................................................................ $ 4,047,760
3,615,000 Washington State Health Care Facilities Authority Revenue, Heart Institute, Spokane,
Series A, 5.80%, 08/15/18 .............................................................. 3,391,195
4,860,000 Washington State Housing Finance Commission, MFMR, Refunding, Series A, 7.90%,
07/01/30 ............................................................................... 5,056,198
19,250,000 Washington State Housing Finance Commission, SFMR, Refunding, MBS, Series B-1,
6.00%, 07/01/17 ........................................................................ 18,233,985
Washington State Public Power Supply System Revenue, Nuclear Project No. 1, Refunding,
18,330,000 Series A, 6.00%, 07/01/09 ............................................................ 17,985,946
1,500,000 Series A, 7.00%, 07/01/11 ............................................................ 1,563,930
22,400,000 Series A, 6.00%, 07/01/12 ............................................................ 21,585,536
35,355,000 Series A, 6.05%, 07/01/12 ............................................................ 34,252,277
31,070,000 Series A, 6.50%, 07/01/15 ............................................................ 31,279,101
12,705,000 Series A, 6.25%, 07/01/17 ............................................................ 12,712,369
5,900,000 Series A, 6.875%, 07/01/17 ........................................................... 6,075,230
32,000,000 Series A, Pre-Refunded, 7.625%, 07/01/08 ............................................. 36,269,120
17,000,000 Series A, Pre-Refunded, 7.375%, 07/01/12 ............................................. 19,076,890
4,000,000 Series C, Pre-Refunded, 7.625%, 07/01/10 ............................................. 4,529,440
5,000,000 Series C, Pre-Refunded, 8.00%, 07/01/17 .............................................. 5,743,900
Washington State Public Power Supply System Revenue, Nuclear Project No. 2, Refunding,
16,150,000 Series A, 6.25%, 07/01/12 ............................................................ 15,980,910
5,000,000 Series A, 6.30%, 07/01/12 ............................................................ 4,999,450
4,735,000 Series A, 7.00%, 07/01/12 ............................................................ 4,950,679
Washington State Public Power Supply System Revenue, Nuclear Project No. 3, Refunding,
6,750,000 Series 1989-B, 5.50%, 07/01/17 ....................................................... 5,998,725
13,460,000 Series 1989-B, Pre-Refunded, 7.25%, 07/01/15 ......................................... 14,857,417
1,260,000 Series 1990-B, Pre-Refunded, 7.50%, 07/01/18 ......................................... 1,414,892
13,350,000 Series A, 6.50%, 07/01/18 ............................................................ 13,390,317
12,945,000 Series B, 5.70%, 07/01/10 ............................................................ 12,252,830
------------
366,086,924
------------
WEST VIRGINIA 1.0%
3,500,000 (c)Braxton County, Solid Waste Disposal Revenue, Weyerhaeuser Co. Project, 6.50%,
04/01/25 ............................................................................... 3,445,295
New Martinsville Building Commission Revenue, City of New Martinsville Project,
2,915,000 Series A, Pre-Refunded, 8.50%, 11/01/03 .............................................. 3,228,071
4,250,000 Series A, Pre-Refunded, 8.75%, 11/01/09 .............................................. 4,768,330
2,400,000 Taylor County PCR, Union Carbide Corp., 7.625%, 08/01/05 ................................ 2,640,744
West Virginia State Housing Development Fund, Housing Finance,
6,000,000 Series D, 7.00%, 05/01/17 ............................................................ 6,164,760
9,000,000 Series D, 7.05%, 11/01/24 ............................................................ 9,240,480
11,750,000 West Virginia State School Building Authority Revenue, Capital Improvement, Series A,
MBIA Insured, 6.25%, 07/01/22 .......................................................... 12,168,300
West Virginia State Water Development Authority Revenue,
5,000,000 Loan Program II, Series 1988-A, Pre-Refunded, 8.625%, 11/01/28 ....................... 5,661,250
13,085,000 Loan Program II, Series 1990-A, Pre-Refunded, 7.70%, 11/01/29 ........................ 14,894,394
5,180,000 Loan Program II, Series 1991-A, 7.00%, 11/01/31 ...................................... 5,242,574
------------
67,454,198
------------
WISCONSIN 1.0%
2,200,000 Janesville IDR, Simmons Manufacturing Co., 7.00%, 10/15/17 .............................. 2,300,276
4,220,000 Madison Industrial Gas and Electric Co. Project, Series A, 6.75%, 04/01/27 .............. 4,333,138
</TABLE>
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
WISCONSIN (CONT.)
Wisconsin Housing and EDA, Homeownership Revenue,
$10,230,000 Series 1, 6.75%, 09/01/15 ............................................................ $ 10,431,429
3,000,000 Series 1, 6.75%, 09/01/17 ............................................................ 3,048,720
2,250,000 Series A, 6.90%, 03/01/16 ............................................................ 2,311,380
5,500,000 Series A, 6.45%, 03/01/17 ............................................................ 5,429,655
11,330,000 Series A, 7.10%, 03/01/23 ............................................................ 11,733,348
3,000,000 Series B, 7.05%, 11/01/22 ............................................................ 3,103,830
15,185,000 Wisconsin State Health and Educational Facilities Authority Revenue, Lindengrove, Inc.
Project, 10.00%, 10/01/17 .............................................................. 16,439,433
7,400,000 Wisconsin State Health Facilities Authority Revenue, Refunding, Franciscan Health
Advisory, 7.80%, 03/01/14 .............................................................. 7,604,314
--------------
66,735,523
--------------
WYOMING .1%
Wyoming CDA, MF Mortgage,
1,600,000 Series A, 6.90%, 06/01/12 ............................................................ 1,641,024
3,530,000 Series A, 6.95%, 06/01/24 ............................................................ 3,620,333
Wyoming CDA, SFM,
2,500,000 Series A, 7.25%, 06/01/21 ............................................................ 2,600,700
1,730,000 Series G, 7.375%, 06/01/17 ........................................................... 1,824,892
--------------
9,686,949
--------------
TOTAL BONDS (COST $6,384,104,719) ................................................. 6,681,645,166
--------------
(e)ZERO COUPON BONDS 1.4%
11,040,000 Calcasieu Parish, Memorial Hospital Service District Revenue, Lake Charles Parish
Memorial Hospital Project, Series A, (original accretion rate 5.59%), 12/01/22 ......... 5,683,392
16,000,000 Chicago Residential Mortgage Revenue, Refunding, Series B, MBIA Insured, (original
accretion rate 7.30%), 10/01/09 ........................................................ 5,775,360
5,935,000 Coldwater Community Schools, MBIA Insured, (original accretion rate 6.794%), 05/01/18.... 1,327,955
Colorado Springs Airport Revenue,
1,660,000 Series C, (original accretion rate 6.86%), 01/01/03 .................................. 1,048,688
1,610,000 Series C, (original accretion rate 6.966%), 01/01/05 ................................. 885,370
1,675,000 Series C, (original accretion rate 7.07%), 01/01/07 .................................. 795,625
800,000 Series C, (original accretion rate 7.07%), 01/01/08 .................................. 352,144
1,450,000 Series C, (original accretion rate 7.176%), 01/01/11 ................................. 499,830
Cook County, Community Consolidated School District, No. 54 Schaumburg Township,
3,505,000 Series B, FGIC Insured, (original accretion rate 6.50%), 01/01/07 .................... 1,705,533
4,800,000 Series B, FGIC Insured, (original accretion rate 6.55%), 01/01/08 .................... 2,177,568
4,380,000 Series B, FGIC Insured, (original accretion rate 6.60%), 01/01/09 .................... 1,833,468
5,760,000 Series B, FGIC Insured, (original accretion rate 6.60%), 01/01/10 .................... 2,248,992
Jefferson County, Capital Projects Corp., Lease Revenue, Refunding,
1,640,000 Series A, (original accretion rate 6.75%), 08/15/07 .................................. 787,972
4,505,000 Series A, (original accretion rate 6.80%), 08/15/08 .................................. 2,007,788
4,580,000 Series A, (original accretion rate 6.87%), 08/15/09 .................................. 1,918,012
4,620,000 Series A, (original accretion rate 6.85%), 08/15/10 .................................. 1,806,928
6,825,000 Series A, (original accretion rate 6.95%), 08/15/13 .................................. 2,161,682
6,860,000 Series A, (original accretion rate 6.95%), 08/15/14 .................................. 2,021,368
7,005,000 Series A, (original accretion rate 7.00%), 08/15/16 .................................. 1,781,231
7,115,000 Series A, (original accretion rate 7.00%), 08/15/17 .................................. 1,696,429
6,000,000 Harrison Community Schools, AMBAC Insured, (original accretion rate 6.90%), 05/01/20 .... 1,191,060
Metropolitan Pier and Exposition Authority Dedicated State Tax Revenue,
5,650,000 Expansion, Project A, FGIC Insured, (original accretion rate 1.97%), 06/15/07 ........ 5,122,460
</TABLE>
The accompanying notes are an integral part of these financial statements.
34
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
(e)ZERO COUPON BONDS (CONT.)
$ 8,500,000 Expansion, Project A, FGIC Insured, (original accretion rate 6.526%), 06/15/08 ....... $ 3,895,635
Metropolitan Pier and Exposition Authority Dedicated State Tax Revenue,
11,000,000 Expansion, Project A, FGIC Insured, (original accretion rate 6.677%), 06/15/09 ....... 4,698,430
8,000,000 Expansion, Project A, FGIC Insured, (original accretion rate 6.628%), 06/15/10 ....... 3,193,680
9,690,000 Expansion, Project A, FGIC Insured, (original accretion rate 6.629%), 06/15/11 ....... 3,611,948
11,800,000 Expansion, Project A, FGIC Insured, (original accretion rate 3.193%), 06/15/12 ....... 7,714,486
5,250,000 Owensboro Electric Light and Power Revenue, Series B, AMBAC Insured, (original
accretion rate 6.85%), 01/01/08 ........................................................ 2,469,233
Shreveport Water and Sewer Revenue,
490,000 Series B, FGIC Insured, (original accretion rate 7.05%), 12/01/07 .................... 230,991
2,530,000 Series B, FGIC Insured, (original accretion rate 7.05%), 12/01/08 .................... 1,116,919
4,080,000 Series B, FGIC Insured, (original accretion rate 7.05%), 12/01/09 .................... 1,634,326
5,630,000 Series B, FGIC Insured, (original accretion rate 7.05%), 12/01/10 .................... 2,096,499
7,000,000 Spring ISD, Refunding, FGIC Insured, Pre-Refunded, (original accretion rate 7.80%),
08/15/08 ............................................................................... 2,969,820
14,250,000 University of Illinois, University Revenues, AMBAC Insured, (original accretion
rate 7.187%), 04/01/10 ................................................................. 5,776,950
Virginia State HDA, Commonwealth Mortgage,
6,700,000 Series 1990-A, Sub-Series A-4, (original accretion rate 7.85%), 01/01/11 ............. 2,006,985
5,650,000 Series 1990-A, Sub-Series A-4, (original accretion rate 7.85%), 07/01/14 ............. 1,292,606
11,000,000 Washington State Public Power Supply System Revenue, Nuclear Project No. 2, Refunding,
Series A, (original accretion rate 7.33%), 07/01/13 .................................... 3,330,580
Washington State Public Power Supply System Revenue, Nuclear Project No. 3, Refunding,
6,400,000 Series 1990-B, (original accretion rate 6.751%), 07/01/12 ............................ 2,086,849
15,000,000 Series 1990-B, (original accretion rate 7.25%), 07/01/14 ............................. 4,213,200
--------------
TOTAL ZERO COUPON BONDS (COST $91,588,997) ........................................ 97,167,992
--------------
TOTAL LONG TERM INVESTMENTS (COST $6,475,693,716) ................................. 6,778,813,158
--------------
SHORT TERM INVESTMENTS .2%
795,000 Bloomington Port Authority, Minnesota, Tax Increment Revenue, Stadium Site
Redevelopment Project, ETM 02/01/96, 8.00%, 02/01/96 ................................... 817,554
410,000 Brazos River Authority, Texas, PCR, Johnson County, Surface Water and Treatment
Revenue, 8.40%, 09/01/95 ............................................................... 415,043
1,300,000 (d)California PCR, Financing Authority, Refunding, Shell Oil Co. Project, Daily VRDN
and Put, 5.00%, 10/01/06 ............................................................... 1,300,000
485,000 Dakota County Housing, Minnesota, RDA, Limited Annual Appropriation Tax and Revenue,
Development Housing Facilities Project, 7.00%, 01/01/96 ................................ 487,338
6,200,000 (d)Irving Ranch, California, Consolidated Water District, Refunding, Series A, Daily
VRDN and Put, 5.30%, 05/01/09 .......................................................... 6,200,000
New York City, GO, Refunding,
315,000 Series 1990, 8.00%, 06/01/95 ......................................................... 315,702
705,000 Series 1990, ETM 06/01/95, 8.00%, 06/01/95 ........................................... 706,812
1,000,000 (d)New York City Municipal Water Financial Authority, Water and Sewer System Revenue,
Series G, FGIC Insured, Daily VRDN and Put, 5.00%, 06/15/24 ............................ 1,000,000
--------------
TOTAL SHORT TERM INVESTMENTS (COST $11,205,900) ................................... 11,242,449
--------------
TOTAL INVESTMENTS (COST $6,486,899,616) 98.6% ................................ 6,790,055,607
OTHER ASSETS AND LIABILITIES, NET 1.4% ....................................... 96,885,139
--------------
NET ASSETS 100.0% ............................................................ $6,886,940,746
==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
35
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995 (CONT.)
<TABLE>
<CAPTION>
VALUE
(NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
At April 30, 1995, the net unrealized appreciation based on the cost of investments
for income tax purposes of $6,486,899,616 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ........................................................ $342,996,814
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ........................................................ (39,840,823)
------------
Net unrealized appreciation ........................................................... $303,155,991
============
</TABLE>
PORTFOLIO ABBREVIATIONS :
AMBAC - American Municipal Bond Assurance Corp.
BIG - Bond Investors Guaranty Insurance Co.
BMTF - Bi-Modal Multi-Term Format
CDA - Community Development Authority/Agency
CGIC - Capital Guaranty Insurance Co.
CHM - Collateralized Home Mortgage
COP - Certificate of Participation
EDA - Economic Development Authority/Agency
EDC - Economic Development Corp.
EDR - Economic Development Revenue
ETM - Escrow to Maturity
FGIC - Financial Guaranty Insurance Corp.
FHA - Federal Housing Authority
FI/GML - Federally Insured or Guaranteed Mortgage Loan
FSA - Financial Security Assistance
GNMA - Government National Mortgage Association
GO - General Obligation
HDA - Housing Development Authority
HDC - Housing Development Corp.
HFA - Housing Finance Agency
HFAR - Housing Finance Agency Revenue
HFC - Housing Finance Corp.
HMR - Home Mortgage Revenue
IDA - Industrial Development Authority/Agency
IDAR - Industrial Development Authority Revenue
IDB - Industrial Development Board
IDR - Industrial Development Revenue
IPC - Industrial Pollution Control
MBIA - Municipal Bond Investors Assurance Corp.
MBS - Mortgage Backed Securities
MF - Multi-Family
MFHR - Multi-Family Housing Revenue
MFMR - Multi-Family Mortgage Revenue
MFR - Multi-Family Revenue
MUD - Municipal Utility District
PCR - Pollution Control Revenue
PUD - Public Utility District
RDA - Redevelopment Authority/Agency
RDAR - Redevelopment Agency Revenue
RMR - Residential Mortgage Revenue
SF - Single Family
SFM - Single Family Mortgage
SFMR - Single Family Mortgage Revenue
SFR - Single Family Revenue
USD - Unified School District
(a) The bond pays interest based upon the issuer's ability to pay which may be
less than the stated interest rate.
(b) See Note 1 regarding securities valued by the Board of Directors.
(c) See Note 1 regarding securities purchased on a when-issued basis.
(d) Variable rate demand notes (VRDN's) are tax-exempt obligations which contain
a floating or variable interest rate adjustment formula and an unconditional
right of demand to receive payment of the principal balance plus accrued
interest upon short notice prior to specified dates. The interest rate may
change on specified dates in relationship with changes in a designated rate
(such as the prime interest rate or U.S. Treasury bills rate).
(e) Zero coupon bonds. The current effective yield may vary. The original
accretion rate will remain constant.
The accompanying notes are an integral part of these financial statements.
36
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES STATEMENT OF OPERATIONS
APRIL 30, 1995 FOR THE YEAR ENDED APRIL 30, 1995
<S> <C> <C> <C> <C>
Assets: Investment income:
Investments in securities, at value Interest (Note 1) $478,006,855
(identified cost $6,486,899,616) $6,790,055,607 Expenses:
Cash 85,091 Management fees (Note 5) 30,723,439
Receivables: Distribution fees (Note 5) 4,624,356
Interest 145,382,650 Shareholder servicing costs (Note 5) 1,094,223
Investment securities sold 28,123,489 Reports to shareholders 1,741,464
Capital shares sold 9,259,016 Custodian fees 656,632
-------------- Registration fees 474,347
Total assets 6,972,905,853 Directors' fees and expenses 153,393
-------------- Professional fees 78,247
Liabilities: Other 246,565
Payables: ----------
Investment securities purchased: Total expenses 39,792,666
Regular delivery 2,000,000 ------------
When-issued basis (Note 1) 76,005,889 Net investment income 438,214,189
Capital shares repurchased 3,339,925 ------------
Management fees 2,604,551 Realized and unrealized gain (loss)
Distribution fees 1,200,000 on investments:
Shareholder servicing costs 86,000 Net realized loss (52,320,273)
Accrued expenses and other liabilities 728,742 Net unrealized appreciation 20,943,713
-------------- ------------
Total liabilities 85,965,107 Net realized and unrealized loss
-------------- on investments (31,376,560)
Net assets, at value $6,886,940,746 ------------
============== Net increase in net assets resulting
from operations $406,837,629
Net assets consist of: ============
Undistributed net investment income $ 974,408
Unrealized appreciation on investments 303,155,991
Accumulated net realized loss (137,125,502)
Capital shares 6,719,935,849
--------------
Net assets, at value $6,886,940,746
==============
Computation of net asset value
and offering price per share:
Net asset value* ($6,886,940,746
divided by 587,198,388 shares
outstanding) $ 11.73
==============
Maximum offering price (100/95.75 of
$11.73) $ 12.25
==============
</TABLE>
* Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
37
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
FINANCIAL STATEMENTS (CONT.)
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED APRIL 30, 1995 AND 1994
1995 1994
-------------- --------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income................................................................. $ 438,214,189 $ 427,794,760
Net realized loss from security transactions.......................................... (52,320,273) (10,591,976)
Net unrealized appreciation (depreciation) on investments ............................ 20,943,713 (239,927,185)
-------------- --------------
Net increase in net assets resulting from operations.................................. 406,837,629 177,275,599
Distributions to shareholders from
undistributed net investment income (Note 8).......................................... (452,534,171) (433,853,432)
Increase in net assets from capital share transactions (Note 2)........................ 128,375,448 646,100,606
-------------- --------------
Net increase in net assets....................................................... 82,678,906 389,522,773
Net assets:
Beginning of year..................................................................... 6,804,261,840 6,414,739,067
-------------- --------------
End of year (including undistributed net investment income of
$974,408 - 1995 and $15,294,390 - 1994).............................................. $6,886,940,746 $6,804,261,840
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
38
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Franklin Federal Tax-Free Income Fund (the Fund) is an open-end, diversified
management investment company (mutual fund) registered under the Investment
Company Act of 1940 as amended.
The Fund will begin offering two classes of shares, Class I and Class II,
effective May 1, 1995. Class I shares will be sold with a higher front-end sales
charge. Class II shares will be sold with a lower front-end sales charge, but
may be subject to a contingent deferred sales charge. Each class of shares will
have the same rights, except with respect to the effect of the respective sales
charges, the distribution fees borne by each class, voting rights on matters
affecting a single class, and the exchange privilege of each class.
On May 1, 1995, all previously outstanding shares will become Class I shares.
Realized and unrealized gains or losses and net investment income, other than
class specific expenses, will be allocated daily to each class of shares based
upon the relative proportion of net assets of each class.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
a. SECURITY VALUATION:
Tax-free bonds generally trade in the over-the-counter market rather than on a
national securities exchange. Often there are no transactions in a particular
security on any given day. In the absence of a recorded sale or reported bid and
ask prices, information with respect to bond and note transactions, quotations
from bond dealers, market transactions in comparable securities, and various
relationships between securities are used to determine the value of the
security. The Fund may utilize a pricing service, bank or broker/dealer
experienced in such matters to perform any of the pricing functions, under
procedures approved by the Board of Directors.
b. MUNICIPAL BONDS OR NOTES WITH "PUTS":
The Fund has purchased municipal bonds or notes with the right to resell the
bonds or notes to the seller at an agreed upon price or yield on a specified
date or within a specified period (which will be prior to the maturity date of
the bonds or notes). Such a right to resell is commonly known as a "put." In
determining the weighted average maturity of the Fund's portfolio, municipal
bonds and notes as to which the Fund holds a put are deemed to mature on the
first day on which the put may be exercisable.
c. INCOME TAXES:
The Fund intends to continue to qualify for the tax treatment applicable to
regulated investment companies under the Internal Revenue Code and to make the
requisite distributions to its shareholders which will be sufficient to relieve
it from income and excise taxes. Therefore, no income tax provision is required.
d. SECURITY TRANSACTIONS:
Security transactions are accounted for on the date the securities are purchased
or sold (trade date). Realized gains and losses on security transactions are
determined on the basis of specific identification for both financial statement
and income tax purposes.
e. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:
Distributions to shareholders are recorded on the ex-dividend date. Interest
income and estimated expenses are accrued daily. Bond discount and premium, if
any, are amortized as required by the Internal Revenue Code.
f. SECURITIES PURCHASED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS:
The Fund may trade 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 Fund will
generally purchase these securities with the intention of acquiring such
securities, it may sell such securities before the settlement date. These
securities are identified on the accompanying Statement of Investments in
Securities and Net Assets. The Fund has set aside sufficient investment
securities as collateral for these purchase commitments.
39
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
NOTES TO FINANCIAL STATEMENTS (CONT.)
2. CAPITAL STOCK
At April 30, 1995, there were 10,000,000,000 shares of no par value capital
stock authorized and capital paid-in aggregated $6,719,935,849. Transactions in
the Fund's shares for the years ended April 30, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
Year Ended April 30,
-----------------------------------------------------------
1995 1994
---------------------------- -----------------------------
Shares Amount Shares Amount
------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold...................................................... 54,334,131 $ 630,492,584 83,195,814 $1,025,620,699
Shares issued in reinvestment of distributions................... 14,353,408 165,824,077 11,697,850 143,535,367
Shares redeemed.................................................. (56,590,781) (652,304,375) (39,809,631) (488,804,178)
Changes from exercise of exchange privilege:
Shares sold..................................................... 42,618,679 491,052,692 31,586,425 386,989,974
Shares redeemed................................................. (43,858,952) (506,689,530) (34,268,195) (421,241,256)
------------ ------------- ------------ ---------------
Net increase..................................................... 10,856,485 $ 128,375,448 52,402,263 $ 646,100,606
============ ============= ============ ===============
</TABLE>
3. DISTRIBUTIONS AND CAPITAL LOSS CARRYOVERS
At April 30, 1995, for tax purposes, the Fund had capital loss carryovers
expiring as follows:
<TABLE>
<CAPTION>
<S> <C>
1996................................ $ 32,151,648
1997................................ 19,946,075
1998................................ 14,050,263
2000................................ 8,032,018
2002................................ 10,591,976
2003................................ 52,353,522
------------
$137,125,502
============
</TABLE>
For income tax purposes, the aggregate cost of securities and unrealized
appreciation are the same as for financial reporting purposes at April 30, 1995.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding purchases and sales of short-term
securities) for the year ended April 30, 1995 aggregated $1,461,992,026 and
$1,325,819,578, respectively.
5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Franklin Advisers, Inc., under the terms of a management agreement, provides
investment advice, administrative services, office space and facilities to the
Fund, and receives fees computed monthly on the net assets of the Fund on the
last day of the month at an annualized rate of 5/8 of 1% of the first $100
million of net assets, 1/2 of 1% of net assets in excess of $100 million up to
and including $250 million, 45/100 of 1% of net assets in excess of $250 million
up to and including $10 billion, 44/100 of 1% of net assets in excess of $10
billion up to and including $12.5 billion, 42/100 of 1% of net assets in excess
of $12.5 billion up to and including $15 billion, 40/100 of 1% of net assets in
excess of $15 billion up to and including $17.5 billion, 38/100 of 1% of net
assets in excess of $17.5 billion up to and including $20 billion, and 36/100 of
1% of net assets in excess of $20 billion. Fees incurred by the Fund aggregated
$30,723,439 for the year ended April 30, 1995. The terms of the management
agreement provide that aggregate annual expenses of the Fund be limited to the
extent necessary to comply with the limitations set forth in the laws,
regulations and administrative interpretations of the states in which the Fund's
shares are registered. For the year ended April 30, 1995, the Fund's expenses
did not exceed these limitations.
In its capacity as underwriter for the capital stock of the Fund,
Franklin/Templeton Distributors, Inc. received commissions on sales of the
Fund's capital stock for the year ended April 30, 1995 totaling $18,753,666 of
which $17,776,850 was subsequently paid to other dealers. Commissions are
deducted from the gross proceeds received from the sale of the capital stock of
the Fund, and as such are not expenses of the Fund.
Pursuant to a shareholder service agreement with Franklin/Templeton Investor
Services, Inc., the Fund pays costs on a per shareholder account basis. Such
costs incurred for the year ended April 30, 1995 aggregated $1,094,223 of which
$980,352 was paid to Franklin/Templeton Investor Services, Inc.
40
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
NOTES TO FINANCIAL STATEMENTS (CONT.)
5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONT.)
Under the terms of a Distribution Agreement pursant to Rule 12b-1 of the
Investment Company Act of 1940, the Fund will reimburse Franklin/Templeton
Distributors, Inc. in an amount up to a maximum of 0.10% per annum of the Fund's
average daily net assets for costs incurred in the promotion, offering and
marketing of the Fund's shares. Fees incurred by the Fund under the agreement
aggregated $4,624,356 for the year ended April 30, 1995.
Certain officers and directors of the Fund are also officers and/or directors of
Franklin/Templeton Distributors, Inc., Franklin Advisers, Inc. and
Franklin/Templeton Investors Services, Inc., all wholly-owned subsidiaries of
Franklin Resources, Inc.
6. SUBSEQUENT EVENTS
On April 18, 1995 and May 16, 1995 the Board of Directors declared distributions
per share, as follows:
<TABLE>
<CAPTION>
RECORD PAYMENT FROM UNDISTRIBUTED
DATE DATE NET INVESTMENT INCOME
------ ------- ---------------------
<S> <C> <C> <C>
Class I .......................... 4/28 5/15 .062
Class II ......................... 4/28 5/15 .062
Class I .......................... 5/31 6/15 .062
Class II ......................... 5/31 6/15 .056
</TABLE>
7. CREDIT RISK
Although the Fund has a diversified portfolio, it has investments in excess of
10% of its total net assets in the state of New York. Such concentration may
subject the Fund more significantly to economic changes occurring within that
state.
The Fund has 3.24% of its portfolio invested in lower rated and comparable
quality unrated high yield securities. Investments in higher yield securities
are accompanied by a greater degree of credit risk and such lower quality
securities tend to be more sensitive to economic conditions than higher rated
securities.
8. FINANCIAL HIGHLIGHTS
Selected data for a share of capital stock outstanding throughout each year
are as follows:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
----------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value at beginning of year........................... $11.81 $12.24 $11.68 $11.40 $11.08
---------- ---------- ---------- ---------- ----------
Net investment income.......................................... .75 .77 .80 .82 .83
Net realized and unrealized gain (loss) on securities.......... (.053) (.415) .576 .302 .342
---------- ---------- ---------- ---------- ----------
Total from investment operations............................... .697 .355 1.376 1.122 1.172
Distributions from net investment income....................... (.777) (.785) (.816) (.842) (.852)
---------- ---------- ---------- ---------- ----------
Net asset value at end of year................................. $11.73 $11.81 $12.24 $11.68 $11.40
========== ========== ========== ========== ==========
TOTAL RETURN*.................................................. 6.21% 2.58% 11.89% 9.90% 10.67%
RATIOS/SUPPLEMENTAL DATA
Net assets at end of year (in 000's)........................... $6,886,941 $6,804,262 $6,414,739 $5,184,214 $4,353,043
Ratio of expenses to average net assets........................ .59% .52% .51% .51% .50%
Ratio of net investment income to average net assets........... 6.47% 6.27% 6.68% 7.07% 7.34%
Portfolio turnover rate........................................ 19.88% 24.59% 13.30% 14.94% 28.79%
</TABLE>
* Total return measures the changes in value of an investment over the periods
indicated. It is not annualized. It does not include the maximum initial sales
charge and assumes reinvestment of dividends at the offering price and capital
gains, if any, at net asset value. Effective May 1,1994, with the implementation
of the Rule 12b-1 distribution plan, as disclosed in Note 5, the existing sales
charge on reinvested dividends has been eliminated.
During this fiscal year, the Fund paid distributions from undistributed net
investment income in the amounts shown in the Statement of Changes in Net
Assets. The Fund hereby designates the total amount of these distributions as
exempt-interest dividends under Section 852(b)(5) of the Internal Revenue Code.
41
<PAGE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
================================================================================
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors of Franklin Federal Tax-Free Income
Fund:
We have audited the accompanying statements of assets and liabilities of the
Franklin Federal Tax-Free Income Fund (the Fund), including the statement of
investments in securities and net assets, as of April 30, 1995, and the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of April
30, 1995, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Franklin Federal Tax-Free Income Fund as of April 30, 1995, the results of its
operation for the year then ended, the changes in its net assets for each of the
two years in the period then ended, and the financial highlights for each of the
five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
San Francisco, California
June 02, 1995
42
<PAGE>
APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING
(PURSUANT TO ITEM 304 (a) of REGULATION S-T)
GRAPHIC MATERIAL (1)
This chart shows in pie chart format the fund's securities breakdown by
quality as a percentage of the fund's total net assets.
<TABLE>
<CAPTION>
Quality Breakdown on 4/30/95
Rating Percentage
<S> <C>
AAA 30.2
AA 15.9
A 24.2
BBB 26.4
Below Investment Grade 3.3
</TABLE>
GRAPHIC MATERIAL (2)
This bar chart shows the comparison between the fund's distribution rate of
6.07% and the taxable equivalent distribution rate of 10.05%.
GRAPHIC MATERIAL(3)
The following line graph hypothetically compares the performance of the
Franklin Federal Tax-Free Income Fund to that of the Lehman Brothers
Municipal Bond Index and the Consumer Price Index, based on a $10,000
investment from 5/1/85 to 4/30/95.
<TABLE>
<CAPTION>
4/30/95 Federal Lehman Consumer
Tax-Free Brothers Price
Income Index Index
<S> <C> <C> <C>
5/1/85 9,578 10,000 10,000
5/31/85 9,968 10,347 10,037
6/30/85 10,120 10,456 10,065
7/31/85 10,180 10,477 10,084
8/31/85 10,240 10,403 10,103
9/30/85 10,044 10,299 10,132
10/31/85 10,326 10,652 10,169
11/30/85 10,572 11,035 10,198
12/31/85 10,820 11,132 10,226
1/31/86 11,177 11,788 10,254
2/28/86 11,578 12,256 10,226
3/31/86 11,811 12,259 10,179
4/30/86 11,705 12,269 10,161
5/31/86 11,476 12,069 10,189
6/30/86 11,603 12,184 10,245
7/31/86 11,740 12,258 10,245
8/31/86 12,314 12,807 10,264
9/30/86 12,318 12,839 10,311
10/31/86 12,658 13,061 10,320
11/30/86 12,810 13,320 10,329
12/31/86 12,869 13,283 10,339
1/31/87 13,145 13,683 10,404
2/28/87 13,239 13,750 10,441
3/31/87 13,137 13,604 10,488
4/30/87 12,215 12,921 10,545
5/31/87 12,025 12,856 10,582
6/30/87 12,266 13,234 10,619
7/31/87 12,363 13,369 10,647
8/31/87 12,472 13,399 10,703
9/30/87 11,870 12,904 10,759
10/31/87 11,878 12,949 10,787
11/30/87 12,252 13,287 10,796
12/31/87 12,527 13,480 10,796
1/31/88 13,080 13,960 10,824
2/29/88 13,335 14,108 10,853
3/31/88 13,035 13,944 10,899
4/30/88 13,080 14,050 10,956
5/31/88 13,136 14,010 10,993
6/30/88 13,398 14,214 11,040
7/31/88 13,455 14,306 11,087
8/31/88 13,549 14,319 11,133
9/30/88 13,866 14,579 11,208
10/31/88 14,185 14,835 11,245
11/30/88 14,031 14,699 11,254
12/31/88 14,267 14,849 11,273
1/31/89 14,491 15,156 11,329
2/28/89 14,398 14,983 11,376
3/31/89 14,361 14,947 11,442
4/30/89 14,659 15,301 11,516
5/31/89 14,908 15,620 11,582
6/30/89 15,079 15,832 11,610
7/31/89 15,186 16,047 11,637
8/31/89 15,134 15,890 11,656
9/30/89 15,069 15,843 11,693
10/31/89 15,204 16,036 11,750
11/30/89 15,422 16,316 11,778
12/31/89 15,559 16,450 11,797
1/31/90 15,451 16,373 11,918
2/28/90 15,631 16,519 11,974
3/31/90 15,591 16,524 12,040
4/30/90 15,453 16,405 12,059
5/31/90 15,833 16,762 12,087
6/30/90 15,975 16,910 12,152
7/31/90 16,247 17,160 12,198
8/31/90 15,948 16,911 12,311
9/30/90 15,906 16,921 12,414
10/31/90 16,081 17,228 12,489
11/30/90 16,403 17,574 12,516
12/31/90 16,418 17,651 12,516
1/31/91 16,685 17,888 12,591
2/28/91 16,760 18,043 12,610
3/31/91 16,851 18,051 12,629
4/30/91 17,154 18,292 12,648
5/31/91 17,276 18,455 12,686
6/30/91 17,308 18,437 12,723
7/31/91 17,585 18,662 12,742
8/31/91 17,757 18,908 12,779
9/30/91 18,022 19,154 12,835
10/31/91 18,133 19,326 12,854
11/30/91 18,228 19,380 12,891
12/31/91 18,590 19,797 12,900
1/31/92 18,636 19,843 12,920
2/29/92 18,651 19,849 12,966
3/31/92 18,730 19,856 13,032
4/30/92 18,906 20,033 13,051
5/31/92 19,181 20,270 13,069
6/30/92 19,458 20,610 13,116
7/31/92 20,115 21,228 13,143
8/31/92 19,848 21,020 13,180
9/30/92 19,863 21,157 13,217
10/31/92 19,593 20,950 13,263
11/30/92 20,063 21,325 13,282
12/31/92 20,366 21,542 13,273
1/31/93 20,615 21,792 13,338
2/28/93 21,139 22,581 13,384
3/31/93 21,046 22,342 13,431
4/30/93 21,212 22,567 13,469
5/31/93 21,344 22,694 13,488
6/30/93 21,687 23,073 13,507
7/31/93 21,715 23,103 13,507
8/31/93 22,080 23,583 13,544
9/30/93 22,304 23,852 13,573
10/31/93 22,349 23,897 13,629
11/30/93 22,250 23,687 13,638
12/31/93 22,657 24,187 13,638
1/31/94 22,848 24,462 13,675
2/28/94 22,455 23,829 13,721
3/31/94 21,768 22,859 13,768
4/30/94 21,815 23,053 13,787
5/31/94 21,974 23,254 13,797
6/30/94 21,889 23,112 13,844
7/31/94 22,198 23,535 13,881
8/31/94 22,283 23,617 13,937
9/30/94 22,065 23,270 13,974
10/31/94 21,750 22,856 13,984
11/30/94 21,377 22,442 14,002
12/31/94 21,811 22,936 14,002
1/31/95 22,364 23,592 14,058
2/28/95 22,901 24,279 14,115
3/31/95 23,088 24,558 14,161
4/30/95 23,170 24,587 14,208
</TABLE>
