<PAGE> PAGE 1
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000 C000000 0000357310
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<PAGE> PAGE 2
012 B000001 84-1036
012 C010001 SAN MATEO
012 C020001 CA
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012 C040001 7777
013 A000001 COOPERS & LYBRAND L.L.P.
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014 B000001 8-5889
015 A000001 BANK OF AMERICA NT & SA
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015 C040001 1502
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015 B000002 C
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015 C020002 NY
015 C030002 10286
015 E010002 X
015 A000003 CITIBANK DELAWARE
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015 C040003 2409
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<PAGE> PAGE 3
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022 A000006 CITICORP
022 B000006 13-3187336
022 C000006 70317
022 D000006 87220
022 A000007 LEHMAN BROTHERS, INC.
022 B000007 13-2518466
022 C000007 76336
022 D000007 74319
022 A000008 EVEREN SEC., INC
022 B000008 36-2693816
022 C000008 37020
022 D000008 60861
022 A000009 A.F. BEST SECURITIES, INC.
022 B000009 59-2325576
022 C000009 37435
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022 A000010 PRUDENTIAL BACHE SECURITIES
022 B000010 22-2347336
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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, 1997 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-30-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 6,529,429,431
<INVESTMENTS-AT-VALUE> 6,865,674,508
<RECEIVABLES> 149,006,276
<ASSETS-OTHER> 2,982,374
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,017,663,158
<PAYABLE-FOR-SECURITIES> 25,546,513
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14,685,257
<TOTAL-LIABILITIES> 40,231,770
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,707,954,969
<SHARES-COMMON-STOCK> 580,178,206
<SHARES-COMMON-PRIOR> 592,693,405
<ACCUMULATED-NII-CURRENT> 1,843,059
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (68,611,717)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 336,245,077
<NET-ASSETS> 6,977,431,388
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 463,579,641
<OTHER-INCOME> 0
<EXPENSES-NET> (41,411,161)
<NET-INVESTMENT-INCOME> 422,168,480
<REALIZED-GAINS-CURRENT> (3,427,474)
<APPREC-INCREASE-CURRENT> 44,923,895
<NET-CHANGE-FROM-OPS> 463,664,901
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (418,463,139)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 82,507,276
<NUMBER-OF-SHARES-REDEEMED> (108,778,728)
<SHARES-REINVESTED> 13,756,253
<NET-CHANGE-IN-ASSETS> (69,278,841)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (64,288,434)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 31,921,470
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 41,411,161
<AVERAGE-NET-ASSETS> 7,039,253,463
<PER-SHARE-NAV-BEGIN> 11.830
<PER-SHARE-NII> 0.710
<PER-SHARE-GAIN-APPREC> 0.073
<PER-SHARE-DIVIDEND> (0.713)
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 11.900
<EXPENSE-RATIO> 0.580
<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, 1997 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-30-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 6,529,429,431
<INVESTMENTS-AT-VALUE> 6,865,674,508
<RECEIVABLES> 149,006,276
<ASSETS-OTHER> 2,982,374
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,017,663,158
<PAYABLE-FOR-SECURITIES> 25,546,513
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14,685,257
<TOTAL-LIABILITIES> 40,231,770
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,707,954,969
<SHARES-COMMON-STOCK> 6,045,053
<SHARES-COMMON-PRIOR> 2,884,610
<ACCUMULATED-NII-CURRENT> 1,843,059
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (68,611,717)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 336,245,077
<NET-ASSETS> 6,977,431,388
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 463,579,641
<OTHER-INCOME> 0
<EXPENSES-NET> (41,411,161)
<NET-INVESTMENT-INCOME> 422,168,480
<REALIZED-GAINS-CURRENT> (3,427,474)
<APPREC-INCREASE-CURRENT> 44,923,895
<NET-CHANGE-FROM-OPS> 463,664,901
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,758,091)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,562,296
<NUMBER-OF-SHARES-REDEEMED> (546,174)
<SHARES-REINVESTED> 144,321
<NET-CHANGE-IN-ASSETS> (69,278,841)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (64,288,434)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 31,921,470
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 41,411,161
<AVERAGE-NET-ASSETS> 7,039,253,463
<PER-SHARE-NAV-BEGIN> 11.820
<PER-SHARE-NII> 0.660
<PER-SHARE-GAIN-APPREC> 0.064
<PER-SHARE-DIVIDEND> (0.644)
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 11.900
<EXPENSE-RATIO> 1.160
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors
of Franklin Federal Tax-Free Income Fund:
In planning and performing our audit of the financial
statements and financial highlights of the Franklin Federal
Tax-Free Income Fund for the year ended April 30, 1997, 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 the Franklin 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, 1997.
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 & LYBRAND L.L.P.
Coopers & Lybrand L.L.P.
San Francisco, California
May 29, 1997
