<PAGE> PAGE 1
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000 C000000 0000357310
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002 A000000 777 MARINERS ISLAND BOULEVARD
002 B000000 SAN MATEO
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011 A000001 FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
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011 C040001 7777
012 A000001 FRANKLIN/TEMPLETON INVESTOR SERVICES, INC.
012 B000001 84-1036
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012 C020001 CA
012 C030001 94403
<PAGE> PAGE 2
012 C040001 7777
013 A000001 COOPERS & LYBRAND L.L.P.
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013 B030001 94105
013 B040001 2119
014 A000001 FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
014 B000001 8-5889
015 A000001 BANK OF AMERICA NT & SA
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015 C030001 94104
015 C040001 1502
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015 C020002 NY
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015 E010002 X
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015 C040003 2409
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022 B000001 13-2638166
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022 C000002 309668
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<PAGE> PAGE 3
022 A000003 SMITH BARNEY SHEARSON
022 B000003 13-1912900
022 C000003 201905
022 D000003 133231
022 A000004 EVEREN SEC., INC
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022 C000004 150156
022 D000004 120806
022 A000005 LEHMAN BROTHERS SEC
022 B000005 13-2518466
022 C000005 80742
022 D000005 159180
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022 B000006 13-3224016
022 C000006 118559
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022 A000007 GOLDMAN SACHS & CO
022 B000007 13-5108880
022 C000007 126053
022 D000007 17841
022 A000008 HOUGH (WILLIAM R.) & CO
022 B000008 59-2246010
022 C000008 47247
022 D000008 96032
022 A000009 PRUDENTIAL BACHE SECURITIES
022 B000009 22-2347336
022 C000009 58341
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022 C000010 61671
022 D000010 46315
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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<PAGE> PAGE 8
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SIGNATURE DIOMEDES LOO-TAM
TITLE TREASURER
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FRANKLIN FEDERAL TAX-FREE INCOME FUND APRIL 30, 1996 ANNUAL REPORT
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 011
<NAME> FRANKLIN FEDERAL TAX-FREE INCOME FUND - CLASS I
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 6,664,081,081
<INVESTMENTS-AT-VALUE> 6,955,402,263
<RECEIVABLES> 148,746,066
<ASSETS-OTHER> 351,176
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,104,499,505
<PAYABLE-FOR-SECURITIES> 40,277,760
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 17,511,516
<TOTAL-LIABILITIES> 57,789,276
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,819,677,481
<SHARES-COMMON-STOCK> 592,693,405
<SHARES-COMMON-PRIOR> 587,198,388
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (64,288,434)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 291,321,182
<NET-ASSETS> 7,046,710,229
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 478,741,417
<OTHER-INCOME> 0
<EXPENSES-NET> (40,144,414)
<NET-INVESTMENT-INCOME> 438,597,003
<REALIZED-GAINS-CURRENT> 72,837,068
<APPREC-INCREASE-CURRENT> (11,834,809)
<NET-CHANGE-FROM-OPS> 499,599,262
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (438,791,296)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 70,993,778
<NUMBER-OF-SHARES-REDEEMED> (79,499,754)
<SHARES-REINVESTED> 14,001,002
<NET-CHANGE-IN-ASSETS> 159,769,483
<ACCUMULATED-NII-PRIOR> 974,408
<ACCUMULATED-GAINS-PRIOR> (137,125,502)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 32,164,702
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 40,144,414
<AVERAGE-NET-ASSETS> 7,076,599,609
<PER-SHARE-NAV-BEGIN> 11.730
<PER-SHARE-NII> 0.740
<PER-SHARE-GAIN-APPREC> 0.104
<PER-SHARE-DIVIDEND> (0.744)
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 11.830
<EXPENSE-RATIO> 0.570
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FRANKLIN FEDERAL TAX-FREE INCOME FUND APRIL 30, 1996 ANNUAL REPORT
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 012
<NAME> FRANKLIN FEDERAL TAX-FREE INCOME FUND - CLASS II
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 6,664,081,081
<INVESTMENTS-AT-VALUE> 6,955,402,263
<RECEIVABLES> 148,746,066
<ASSETS-OTHER> 351,176
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,104,499,505
<PAYABLE-FOR-SECURITIES> 40,277,760
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 17,511,516
<TOTAL-LIABILITIES> 57,789,276
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,819,677,481
<SHARES-COMMON-STOCK> 2,884,610
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (64,288,434)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 291,321,182
<NET-ASSETS> 7,046,710,229
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 478,741,417
<OTHER-INCOME> 0
<EXPENSES-NET> (40,144,414)
<NET-INVESTMENT-INCOME> 438,597,003
<REALIZED-GAINS-CURRENT> 72,837,068
<APPREC-INCREASE-CURRENT> (11,834,809)
<NET-CHANGE-FROM-OPS> 499,599,262
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (780,115)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,046,996
<NUMBER-OF-SHARES-REDEEMED> (200,657)
<SHARES-REINVESTED> 38,262
<NET-CHANGE-IN-ASSETS> 159,769,483
<ACCUMULATED-NII-PRIOR> 974,408
<ACCUMULATED-GAINS-PRIOR> (137,125,502)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 32,164,702
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 40,144,414
<AVERAGE-NET-ASSETS> 7,076,599,609
<PER-SHARE-NAV-BEGIN> 11.730
<PER-SHARE-NII> 0.680
<PER-SHARE-GAIN-APPREC> 0.091
<PER-SHARE-DIVIDEND> (0.681)
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 11.820
<EXPENSE-RATIO> 1.150
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees
of Franklin Federal Tax-Free Income Fund:
In planning and performing our audit of the financial statements
and financial highlights of Franklin Federal Tax-Free Income
Fund for the year ended April 30, 1996, we considered
its internal control structure, including procedures for safeguarding
securities, in order to determine our auditing procedures for the
purpose of expressing our opinion on the financial statements and
financial highlights and to comply with the requirements of Form
N-SAR, not to provide assurance on the internal control structure.
The management of Franklin Federal Tax-Free Income Fund is
responsible for establishing and maintaining an internal control structure.
In fulfilling this responsibility, estimates and judgements by
management are required to assess the expected benefits and related
costs of internal control structure policies and procedures. Two
of the objectives of an internal control structure are to provide
management with reasonable, but not absolute, assurance that assets
are safeguarded against loss from unauthorized use or disposition
and that transactions are executed in accordance with management's
authorization and recorded properly to permit preparation of
financial statements in conformity with generally accepted accounting
principles.
Because of inherent limitations in any internal control structure,
errors or irregularities may occur and not be detected. Also,
projection of any evaluation of the structure to future periods
is subject to the risk that it may become inadequate because of
changes in conditions or that the effectiveness of the design and
operation may deteriorate.
Our consideration of the internal control structure would not
necessarily disclose all matters in the internal control structure
that might be material weaknesses under standards established by
the American Institute of Certified Public Accountants. A material
weakness is a condition in which the design or operation of the
specific internal control structure elements does not reduce to a
relatively low level the risk that errors or irregularities in
amounts that would be material in relation to the financial statements
and financial highlights being audited may occur and not be detected
within a timely period by employees in the normal course of
performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for
safeguarding securities, that we consider to be material weaknesses,
as defined above, as of April 30, 1996.
This report is intended solely for the information and use of
management of Franklin Federal Tax-Free Income Fund and the
Securities and Exchange Commission.
S\COOPERS AND LYBRAND L.L.P.
Coopers and Lybrand L.L.P.
San Francisco, California
June 1, 1996
