SHAREHOLDER LETTER
Dear Shareholder:
It's a pleasure to bring you Franklin Federal Tax-Free Income Fund's annual
report for the period ended April 30, 1999.
During the 12 months under review, the municipal bond market was comparatively
stable in what could otherwise be characterized as a challenging year for global
and domestic markets. The economic stress felt in Asia, Latin America and
Eastern Europe caused investors to seek safety in U.S. Treasury bonds, driving
yields on the 30-year Treasury bond to an all-time low of 4.70% on October 5,
1998. These regions had a direct impact on the U.S. economy as foreign countries
purchased fewer American goods, leading to an overall reduction in U.S. export
levels. In light of lowered export levels, it was expected that the U.S. economy
would see some slowing in the fourth quarter of 1998. However, it became
apparent as 1999 got under way, that fourth quarter 1998 growth actually
exceeded expectations, and the U.S. gross domestic product (GDP) grew at a 6%
annualized rate. The American consumer boosted the domestic economy at much
higher-than-anticipated levels, which resulted in the Federal Reserve Board's
(the Fed's) moving to a neutral position with respect
CONTENTS
Shareholder Letter ...................................................... 1
Special Feature:
A Word About Municipal
Bond Insurance .......................................................... 5
Manager's Discussion .................................................... 7
Performance Summary ..................................................... 10
Financial Highlights &
Statement of Investments ................................................ 13
Financial Statements .................................................... 48
Notes to
Financial Statements .................................................... 51
Independent
Auditors' Report ........................................................ 54
Tax Information ......................................................... 55
[PYRAMID GRAPH]
FUND CATEGORY
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to short-term interest rates rather than its previous bias toward lowering rates
that began in 1998. The change in the Fed's position caused 30-year Treasury
yields to rise to a first-quarter peak of 5.69% on March 4, 1999.
The municipal bond market remained steady throughout the Treasury market
volatility as a period of increased municipal bond supply more than met demand.
As interest rates declined, municipal bond issuers increased their refinancing
activity of outstanding, higher interest-rate debt. In addition, many
municipalities were in excellent fiscal condition due to the strong national
economy, which gave them higher confidence to borrow money for new projects.
This environment led to a surge in 1998's new-issue supply with total volume
closely matching 1993's record $293 billion. Although demand from individual
investors was relatively stable, at times, the municipal bond market had
difficulty absorbing the large supply of bonds.
These conditions led to attractive municipal bond yields, as municipal bond
prices lagged those of similar Treasury bonds. To put it in perspective, in
October 1998 an investor could purchase a 30-year, AAA municipal bond yielding
approximately 105% of the yield on a comparable Treasury bond, versus the
historical average of approximately 89%. The last time we saw such attractive
municipal market valuations was 1985 and 1986. With the first quarter 1999 rise
in Treasury yields, and the Bond Buyer 40 index showing an increase in yield to
5.27%, the municipal-to-Treasury ratio declined to 92% on March 31,
2
- -PAGE-
1999, still well above the historical average.(*) This relatively high ratio has
allowed municipal investors to earn attractive distribution rates compared with
other fixed-income opportunities.
The prevalence of bond insurance was another trend that affected the municipal
bond market. The increasingly higher percentages of AAA-insured municipal bond
issues coming to market over the past four years seems to have finally peaked at
more than 50% for municipal issuers in 1998. As so many new bonds have come to
market insured, there have been fewer and fewer uninsured bonds. With investors
continuing to demand higher yields in a falling interest-rate environment,
municipal bond market credit spreads, or the additional interest rate paid to
investors for BBB- versus AAA-rated bonds, were extremely narrow. Over the past
few years, in contrast, we focused for the most part on purchasing AAA-insured
securities because we felt we weren't getting the appropriate reward of higher
interest rates, to take on the additional credit risk of many lower-quality
bonds. As a result, Franklin Federal Tax-Free Income Fund held a record-high
41.5% of total long-term investments in AAA bonds at the fund's fiscal year-end.
Looking forward, we anticipate supply pressures to moderate in 1999. Already,
municipal new issuance for the first quarter of the year was down about 19.3%,
compared with the same period last calendar year.(**) Municipal bonds continue
to be an attractive investment for those investors seeking tax-free income as
well
(*)The unmanaged Bond Buyer Municipal 40 Index is composed of the Yield to
Maturity of 40 bonds. The index attempts to track the new-issue market as
closely as possible, so it changes bonds twice a month, adding all new bonds
that meet certain requirements and deleting an equivalent number according to
their secondary market trading activity. As a result, the average par call date,
average maturity date and average coupon rate change over time. The average
maturity generally has been about 29-30 years.
(**)Source: The Bond Buyer, 4/1/99.
3
- -PAGE-
as an opportunity to diversify risk in their portfolio. Generally, a taxable
investment would need to offer a higher yield, called the taxable equivalent
yield, to match the yield on a tax-free investment. We encourage you to discuss
your financial goals with an investment representative. He or she can address
concerns about volatility and help you diversify your investments and stay
focused on the long term. Mutual funds offer a level of diversification that is
almost impossible for individual investors to achieve on their own. As always,
we appreciate your support, welcome your questions and comments and look forward
to serving your investment needs in the years ahead.
Sincerely,
/s/ Charles B. Johnson
Charles B. Johnson
Chairman
Franklin Federal Tax-Free Income Fund
/s/ Thomas J. Kenny
Thomas J. Kenny
Director
Franklin Municipal Bond Department
WHAT DOES "TAXABLE EQUIVALENT" MEAN FOR YOU?
For yield and distribution rate, taxable equivalent is the amount a taxable
investment would have to earn to match the income from a tax-free investment
such as a municipal bond. You can find your fund's taxable equivalent
distribution rate and yield in the Performance Summary of this report.
4
- -PAGE-
A WORD ABOUT MUNICIPAL BOND INSURANCE
Municipal bond insurers guarantee the timely payment of interest and principal
on insured bond issues, providing bond investors with additional protection
against the potential of the issuer's payment default. Moody's and Standard &
Poor's((R)) assign the four principal municipal bond insurers-- MBIA, AMBAC,
FGIC and FSA-- their highest rating, AAA, based on their ability to pay claims.
This is important, as once a bond is insured it no longer carries the underlying
security's rating, but the insurer's rating. In 1998, the four primary municipal
bond insurers comprised more than 98% of the market, with MBIA controlling the
largest share, 35.4%.
Municipal bond insurers often work with bond reinsurers to enhance their ability
to generate new business. By purchasing portions of insured bond portfolios from
the insurers, bond reinsurers assume a portion of the risk, freeing up the
insurers' capital and enabling them to insure additional municipal bond issues.
The added capital provided by the reinsurers, in turn, increases the overall
size of the insured municipal bond market.
5
- -PAGE-
Currently, many municipal bond issuers favor the use of bond insurance. In 1998,
municipal bond insurers covered 50.8% of the new-issue municipal bond market,
involving 5,825 new issues valued at $145 billion. For issuers, obtaining bond
insurance can often lower their borrowing costs as it often improves their
credit rating, which more than makes up for the cost of the insurance. In
addition, the four primary, AAA-rated bond insurers presently charge issuers
comparatively inexpensive insurance premiums, due to the extremely competitive
environment for municipal bond insurance. Bond insurance also enables issuers to
market their bonds to a larger pool of potential buyers. For example, insured
municipal bond funds purchase primarily, if not exclusively, insured bonds.
Low-cost municipal bond insurance benefits investors beyond the credit
protection it provides against payment default. As insured bonds appeal to a
wider variety of investors, insurance can lead to improved liquidity, allowing
investors to buy and sell bonds more easily.
[BAR GRAPH]
INSURED MUNCIPAL BOND ISSUES(*) AS A % OF MUNICIPAL BOND MARKET
<TABLE>
<S> <C>
1993 37.0%
1994 37.0%
1995 43.0%
1996 46.0%
1997 49.0%
1998 50.8%
</TABLE>
INSURERS' MARKET SHARE(*)
12/31/98
<TABLE>
<S> <C>
MBIA 35.4%
FSA 22.0%
FGIC 21.5%
AMBAC 19.6%
Other 1.5%
</TABLE>
(*)Source: The Bond Buyer, 1999.
6
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MANAGER'S DISCUSSION
Your Fund's Goal: Franklin Federal Tax-Free Income Fund seeks to provide high,
current income exempt from regular federal income tax through a nationally
diversified portfolio consisting of municipal securities.(1)
Our strategy of managing the portfolio to maximize tax-free income, as well as
preserving capital for shareholders, drives our investment decisions. We
generally emphasize a buy-and-hold approach, which seeks to minimize capital
gain tax exposure and, in the declining interest-rate environment, enabled the
fund to maintain an above-average income stream. This strategy, employed since
the fund's inception in 1983, aims to produce a portfolio diversified not only
by credit, but also by coupon, call and maturity dates. This broad
diversification attempts to reduce portfolio volatility as well as stabilize
share price.
As discussed in past reports, we base our investment decisions on what we feel
represents value in the market. This relative value depends on factors such as a
security's quality, maturity, state and sector. Over the fund's fiscal year we
found value in the higher quality market sectors. Most purchases were in the
higher-rated AAA, AA and A categories, with very few in the
CREDIT QUALITY BREAKDOWN(*)
BASED ON TOTAL LONG-TERM INVESTMENTS
4/30/99
<TABLE>
<S> <C>
AAA 41.5%
AA 12.1%
A 19.5%
BBB 24.2%
Below Investment Grade 2.7%
</TABLE>
(*)Quality breakdown may include
internal ratings for bonds not rated by
a national rating agency.
1. These dividends are generally subject to state and local income taxes, if
any. For investors subject to federal or state alternative minimum tax, a small
portion of this income may be subject to such tax. Distributions of capital
gains and of ordinary income from accrued market discount, if any, are generally
taxable.
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 16 of
this report.
7
- -PAGE-
PORTFOLIO BREAKDOWN
4/30/99
<TABLE>
<CAPTION>
% of Total
Long-Term
Sector Investments
- --------------------------------------------------------------------------------
<S> <C>
Utilities 25.4%
Prerefunded 14.9%
Housing 12.0%
Transportation 11.8%
Hospitals 11.6%
General Obligation 7.8%
Industrial 6.2%
Other Revenue 3.8%
Education 3.0%
Certificates of Participation 1.6%
Health Care 1.3%
Tax Allocation 0.4%
Sales Tax Revenue 0.2%
</TABLE>
BBB category. As municipal bond insurance continued to dominate new market
issues, the quality spreads, or the additional interest rate paid to investors
for BBB- versus AAA-rated bonds, remained narrow. As a result, we did not feel
there was appropriate compensation for purchasing securities in the lower-rated
sectors of the market.
During the reporting period, our investments focused on states such as Arizona
and Minnesota, where we purchased securities for the Mayo Clinic. In the
utilities sector, we purchased AA-rated utility bonds for Colorado Springs
Utilities, in Colorado, and Houston Industries, in Texas. States such as
Arizona, Minnesota and Colorado issue securities less frequently than some of
the larger states. When these issues came to market their prices were attractive
relative to those of other states. Generally when large issues come to market,
the securities are priced lower than normal, due to the supply/demand imbalance
created by large issuance in a short period of time. As the supply/demand
imbalance returns to normal, the price of these securities generally tends to
increase, while providing a solid income component to the portfolio.
If you had invested $10,000 in the fund's Class A shares on April 30, 1989, as
of April 30, 1999, you would have received monthly tax-free income dividend
checks totaling more than $6,543. If you had reinvested all your distributions,
including capital gains, your account would have been worth $20,055.(2) In both
cases, the fund has provided shareholders attractive returns. Of course, this
was a period of generally declining
2. Total returns include sales charges and assume reinvestment of dividends and
capital gains at net asset value. Class A (formerly Class I): Subject to the
current, maximum 4.25% initial sales charge. Prior to July 1, 1994, fund shares
were offered at a lower initial sales charge; thus actual total returns may
differ. Effective May 1, 1994, the fund eliminated the sales charge on
reinvested dividends and implemented a Rule 12b-1 plan, which affects subsequent
performance.
8
- -PAGE-
interest rates and rising bond prices, and past performance cannot guarantee
future results.
Looking forward, we will maintain our strategy of investing in sectors and
states that we feel represent the most value in the market. We will strive to
manage the portfolio to maximize income for the shareholder, while minimizing
principal risk. This strategy has served the fund's investors well in the past
and we hope to attain similar results in the future.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of April 30, 1999, the end of the reporting period. However, market
and economic conditions are changing constantly, which can be expected to affect
our strategies and the fund's portfolio composition. Although historical
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy.
DIVIDEND DISTRIBUTIONS
5/1/98- 4/30/99
<TABLE>
<CAPTION>
Dividend per share
-------------------------------------------------
Month Class A Class B(*) Class C
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
May 5.60 cents -- 5.00 cents
June 5.60 cents -- 5.00 cents
July 5.60 cents -- 5.01 cents
August 5.60 cents -- 5.01 cents
September 5.60 cents -- 5.01 cents
October 5.60 cents -- 5.01 cents
November 5.60 cents -- 5.01 cents
December 5.60 cents -- 5.01 cents
January 5.60 cents 5.60 cents 5.01 cents
February 5.60 cents 5.01 cents 5.01 cents
March 5.55 cents 5.07 cents 4.97 cents
April 5.55 cents 5.07 cents 4.97 cents
================================================================================
Total 67.10 cents 20.75 cents 60.02 cents
</TABLE>
(*)January 1, 1999, the fund began offering Class B shares to investors. See the
prospectus for details.
9
- -PAGE-
PERFORMANCE SUMMARY AS OF 4/30/99
Distributions will vary based on earnings of the fund's portfolio and any
profits realized from the sale of the portfolio's securities. Past distributions
are not indicative of future trends. All total returns include reinvested
distributions at net asset value.
PRICE AND DISTRIBUTION INFORMATION(5/1/98 - 4/30/99)
<TABLE>
CLASS A CHANGE 4/30/99 4/30/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value +$0.06 $12.31 $12.25
DISTRIBUTIONS
-------------
Dividend Income $0.6710
CLASS B CHANGE 4/30/99 1/1/99
- --------------------------------------------------------------------------------
Net Asset Value -$0.09 $12.30 $12.39
DISTRIBUTIONS
-------------
Dividend Income $0.2075
CLASS C CHANGE 4/30/99 4/30/98
- --------------------------------------------------------------------------------
Net Asset Value +$0.07 $12.31 $12.24
DISTRIBUTIONS
-------------
Dividend Income $0.6002
</TABLE>
CLASS A (formerly Class I):
Subject to the current, maximum 4.25% initial sales charge. Prior to July 1,
1994, fund shares were offered at a lower initial sales charge; thus actual
total returns may differ. Effective May 1, 1994, the fund eliminated the sales
charge on reinvested dividends and implemented a Rule 12b-1 plan, which affects
subsequent performance.
CLASS B:
Subject to no initial sales charge, but subject to a contingent deferred sales
charge (CDSC) declining from 4% to 0% over six years. These shares have higher
annual fees and expenses than Class A shares.
Class C (formerly Class II):
Subject to 1% initial sales charge and 1% CDSC for shares redeemed within 18
months of investment. These shares have higher annual fees and expenses than
Class A shares.
10 Past performance is not predictive of future results.
- -PAGE-
PERFORMANCE
<TABLE>
<CAPTION>
Inception
CLASS A 1-Year 5-Year 10-Year (10/7/83)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) +6.10% +40.71% +109.40% +278.57%
Average Annual Total Return(2) +1.62% +6.15% +7.21% +8.62%
Distribution Rate(3) 5.18%
Taxable Equivalent Distribution Rate(4) 8.58%
30-Day Standardized Yield(5) 4.12%
Taxable Equivalent Yield(4) 6.82%
</TABLE>
<TABLE>
<CAPTION>
Inception
CLASS B (1/1/99)
- --------------------------------------------------------------------------------
<S> <C> <C>
Cumulative Total Return(1) +0.96%
Aggregate Total Return(2) -3.01%
Distribution Rate(3) 4.95%
Taxable Equivalent Distribution Rate(4) 8.20%
30-Day Standardized Yield(5) 3.74%
Taxable Equivalent Yield(4) 6.19%
</TABLE>
<TABLE>
<CAPTION>
Inception
CLASS C 1-Year 3-Year (5/1/95)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) +5.58% +21.44% +29.52%
Average Annual Total Return(2) +3.57% +6.33% +6.41%
Distribution Rate(3) 4.80%
Taxable Equivalent Distribution Rate(4) 7.95%
30-Day Standardized Yield(5) 3.70%
Taxable Equivalent Yield(4) 6.13%
</TABLE>
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the current, maximum sales
charge(s) for that class. Since Class B shares have existed for less than one
year, aggregate total return for that class represents total return since
inception, including the maximum sales charge.
3. Distribution rate is based on an annualization of the respective class's
April monthly dividend and the maximum offering price per share on April 30,
1999.
4. Taxable equivalent distribution rate and yield assume the 1999 maximum
federal income tax rate of 39.6%.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended April 30, 1999.
Bond prices, and thus the fund's share price, generally move in the opposite
direction from interest rates. Since markets can go down as well as up,
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 is not predictive of future results. 11
- -PAGE-
TOTAL RETURN INDEX COMPARISON
FOR HYPOTHETICAL $10,000 INVESTMENT
Total return represents the change in value of an investment over the periods
shown. It includes the current, applicable, maximum sales charge(s), fund
expenses, account fees and reinvested distributions. The unmanaged index differs
from the fund in composition, does not pay management fees or expenses and
includes reinvested dividends. One cannot invest directly in an index.
Performance of the fund's shares exceeded the rate of inflation as measured by
the Consumer Price Index (CPI).
Class A
(5/1/89 - 4/30/99)
The following line graph compares the performance of the Franklin Federal
Tax-Free Income Fund's Class A shares to that of the Lehman Brothers Municipal
Bond Index, and to the Consumer Price Index based on a $10,000 investment from
5/1/89 to 4/30/99.
<TABLE>
<CAPTION>
Lehman Brothers
Franklin Federal Tax-Free Municipal Bond
Date Income Fund-Class A Index CPI
<S> <C> <C> <C> <C> <C> <C>
5/1/89 9,577 10,000 10,000
5/31/89 9,740 2.08% 10,208 0.57% 10,057
6/30/89 9,852 1.36% 10,347 0.24% 10,081
7/31/89 9,921 1.36% 10,488 0.24% 10,105
8/31/89 9,888 -0.98% 10,385 0.16% 10,122
9/30/89 9,845 -0.30% 10,354 0.32% 10,154
10/31/89 9,933 1.22% 10,480 0.48% 10,203
11/30/89 10,075 1.75% 10,663 0.24% 10,227
12/31/89 10,165 0.82% 10,751 0.16% 10,243
1/31/90 10,094 -0.47% 10,700 1.03% 10,349
2/28/90 10,212 0.89% 10,795 0.47% 10,398
3/31/90 10,186 0.03% 10,799 0.55% 10,455
4/30/90 10,096 -0.72% 10,721 0.16% 10,472
5/31/90 10,344 2.18% 10,955 0.23% 10,496
6/30/90 10,437 0.88% 11,051 0.54% 10,552
7/31/90 10,614 1.48% 11,215 0.38% 10,592
8/31/90 10,419 -1.45% 11,052 0.92% 10,690
9/30/90 10,392 0.06% 11,059 0.84% 10,780
10/31/90 10,506 1.81% 11,259 0.60% 10,844
11/30/90 10,716 2.01% 11,485 0.22% 10,868
12/31/90 10,726 0.44% 11,536 0.00% 10,868
1/31/91 10,901 1.34% 11,690 0.60% 10,933
2/28/91 10,950 0.87% 11,792 0.15% 10,950
3/31/91 11,009 0.04% 11,797 0.15% 10,966
4/30/91 11,207 1.34% 11,955 0.15% 10,983
5/31/91 11,287 0.89% 12,061 0.30% 11,016
6/30/91 11,308 -0.10% 12,049 0.29% 11,048
7/31/91 11,489 1.22% 12,196 0.15% 11,064
8/31/91 11,601 1.32% 12,357 0.29% 11,096
9/30/91 11,774 1.30% 12,518 0.44% 11,145
10/31/91 11,846 0.90% 12,630 0.15% 11,162
11/30/91 11,909 0.28% 12,666 0.29% 11,194
12/31/91 12,145 2.15% 12,938 0.07% 11,202
1/31/92 12,175 0.23% 12,968 0.15% 11,219
2/29/92 12,185 0.03% 12,972 0.36% 11,259
3/31/92 12,237 0.04% 12,977 0.51% 11,317
4/30/92 12,352 0.89% 13,092 0.14% 11,332
5/31/92 12,531 1.18% 13,247 0.14% 11,348
6/30/92 12,712 1.68% 13,469 0.36% 11,389
7/31/92 13,141 3.00% 13,873 0.21% 11,413
8/31/92 12,967 -0.98% 13,738 0.28% 11,445
9/30/92 12,977 0.65% 13,827 0.28% 11,477
10/31/92 12,800 -0.98% 13,691 0.35% 11,517
11/30/92 13,107 1.79% 13,936 0.14% 11,533
12/31/92 13,306 1.02% 14,079 -0.07% 11,525
1/31/93 13,468 1.16% 14,242 0.49% 11,582
2/28/93 13,811 3.62% 14,757 0.35% 11,622
3/31/93 13,750 -1.06% 14,601 0.35% 11,663
4/30/93 13,858 1.01% 14,748 0.28% 11,696
5/31/93 13,945 0.56% 14,831 0.14% 11,712
6/30/93 14,169 1.67% 15,079 0.14% 11,728
7/31/93 14,187 0.13% 15,098 0.00% 11,728
8/31/93 14,425 2.08% 15,412 0.28% 11,761
9/30/93 14,572 1.14% 15,588 0.21% 11,786
10/31/93 14,601 0.19% 15,618 0.41% 11,834
11/30/93 14,537 -0.88% 15,480 0.07% 11,843
12/31/93 14,802 2.11% 15,807 0.00% 11,843
1/31/94 14,927 1.14% 15,987 0.27% 11,875
2/28/94 14,670 -2.59% 15,573 0.34% 11,915
3/31/94 14,221 -4.07% 14,939 0.34% 11,955
4/30/94 14,252 0.85% 15,066 0.14% 11,972
5/31/94 14,356 0.87% 15,197 0.07% 11,981
6/30/94 14,300 -0.61% 15,105 0.34% 12,021
7/31/94 14,503 1.83% 15,381 0.27% 12,054
8/31/94 14,558 0.35% 15,435 0.40% 12,102
9/30/94 14,415 -1.47% 15,208 0.27% 12,135
10/31/94 14,210 -1.78% 14,937 0.07% 12,143
11/30/94 13,966 -1.81% 14,667 0.13% 12,159
12/31/94 14,249 2.20% 14,989 0.00% 12,159
1/31/95 14,611 2.86% 15,418 0.40% 12,208
2/28/95 14,962 2.91% 15,867 0.40% 12,256
3/31/95 15,084 1.15% 16,049 0.33% 12,297
4/30/95 15,138 0.12% 16,069 0.33% 12,337
5/31/95 15,491 3.19% 16,581 0.20% 12,362
6/30/95 15,441 -0.87% 16,437 0.20% 12,387
7/31/95 15,562 0.95% 16,593 0.00% 12,387
8/31/95 15,709 1.27% 16,804 0.26% 12,419
9/30/95 15,791 0.63% 16,910 0.20% 12,444
10/31/95 15,994 1.45% 17,155 0.33% 12,485
11/30/95 16,237 1.66% 17,440 -0.07% 12,476
12/31/95 16,401 0.96% 17,607 -0.07% 12,467
1/31/96 16,471 0.76% 17,741 0.59% 12,541
2/29/96 16,406 -0.68% 17,620 0.32% 12,581
3/31/96 16,258 -1.28% 17,395 0.52% 12,647
4/30/96 16,247 -0.28% 17,346 0.39% 12,696
5/31/96 16,264 -0.04% 17,339 0.19% 12,720
6/30/96 16,433 1.09% 17,528 0.06% 12,728
7/31/96 16,557 0.91% 17,688 0.19% 12,752
8/31/96 16,569 -0.02% 17,684 0.19% 12,776
9/30/96 16,779 1.40% 17,932 0.32% 12,817
10/31/96 16,948 1.13% 18,134 0.32% 12,858
11/30/96 17,202 1.83% 18,466 0.19% 12,882
12/31/96 17,172 -0.42% 18,389 0.00% 12,882
1/31/97 17,214 0.19% 18,423 0.32% 12,924
2/28/97 17,371 0.92% 18,593 0.31% 12,964
3/31/97 17,210 -1.33% 18,346 0.25% 12,996
4/30/97 17,353 0.84% 18,500 0.12% 13,012
5/31/97 17,570 1.51% 18,779 -0.06% 13,004
6/30/97 17,744 1.07% 18,980 0.12% 13,019
7/31/97 18,155 2.77% 19,506 0.12% 13,035
8/31/97 18,048 -0.94% 19,322 0.19% 13,060
9/30/97 18,254 1.19% 19,552 0.25% 13,092
10/31/97 18,371 0.64% 19,678 0.25% 13,125
11/30/97 18,474 0.59% 19,794 -0.06% 13,117
12/31/97 18,713 1.46% 20,083 -0.12% 13,102
1/31/98 18,859 1.03% 20,289 0.19% 13,126
2/28/98 18,883 0.03% 20,296 0.19% 13,151
3/31/98 18,924 0.09% 20,314 0.19% 13,176
4/30/98 18,902 -0.45% 20,222 0.18% 13,200
5/31/98 19,144 1.58% 20,542 0.18% 13,224
6/30/98 19,231 0.39% 20,622 0.12% 13,240
7/31/98 19,287 0.25% 20,674 0.12% 13,256
8/31/98 19,516 1.55% 20,994 0.12% 13,272
9/30/98 19,700 1.25% 21,256 0.12% 13,287
10/31/98 19,693 0.00% 21,256 0.24% 13,319
11/30/98 19,766 0.35% 21,331 0.00% 13,319
12/31/98 19,824 0.25% 21,384 -0.06% 13,311
1/31/99 19,994 1.19% 21,639 0.24% 13,343
2/28/99 19,956 -0.44% 21,543 0.12% 13,359
3/31/99 20,013 0.14% 21,574 0.30% 13,399
4/30/99 0.21% 20,055 0.25% 21,628 0.73% 13,497
Total Return 100.55% 116.28% 34.97%
</TABLE>
Class C
(5/1/95 - 4/30/99)
The following line graph compares the performance of the Franklin Federal
Tax-Free Income Fund's Class C shares to that of the Lehman Brothers Municipal
Bond Index, and to the Consumer Price Index based on a $10,000 investment from
5/1/95 to 4/30/99.
<TABLE>
<CAPTION>
Lehman Brothers
Franklin Federal Tax-Free Municipal Bond
Date Income Fund-Class C Index CPI
<S> <C> <C> <C> <C> <C> <C>
5/1/95 9,898 10,000 10,000
5/31/95 10,127 3.19% 10,319 0.20% 10,020
6/30/95 10,090 -0.87% 10,229 0.20% 10,040
7/31/95 10,163 0.95% 10,326 0.00% 10,040
8/31/95 10,254 1.27% 10,458 0.26% 10,066
9/30/95 10,303 0.63% 10,523 0.20% 10,086
10/31/95 10,430 1.45% 10,676 0.33% 10,120
11/30/95 10,574 1.66% 10,853 -0.07% 10,112
12/31/95 10,685 0.96% 10,957 -0.07% 10,105
1/31/96 10,725 0.76% 11,041 0.59% 10,165
2/29/96 10,677 -0.68% 10,966 0.32% 10,198
3/31/96 10,576 -1.28% 10,825 0.52% 10,251
4/30/96 10,557 -0.28% 10,795 0.39% 10,291
5/31/96 10,563 -0.04% 10,791 0.19% 10,310
6/30/96 10,667 1.09% 10,908 0.06% 10,316
7/31/96 10,743 0.91% 11,008 0.19% 10,336
8/31/96 10,745 -0.02% 11,005 0.19% 10,356
9/30/96 10,885 1.40% 11,159 0.32% 10,389
10/31/96 10,989 1.13% 11,286 0.32% 10,422
11/30/96 11,140 1.83% 11,492 0.19% 10,442
12/31/96 11,124 -0.42% 11,444 0.00% 10,442
1/31/97 11,146 0.19% 11,466 0.32% 10,475
2/28/97 11,233 0.92% 11,571 0.31% 10,508
3/31/97 11,134 -1.33% 11,417 0.25% 10,534
4/30/97 11,220 0.84% 11,513 0.12% 10,547
5/31/97 11,355 1.51% 11,687 -0.06% 10,540
6/30/97 11,461 1.07% 11,812 0.12% 10,553
7/31/97 11,722 2.77% 12,139 0.12% 10,565
8/31/97 11,648 -0.94% 12,025 0.19% 10,586
9/30/97 11,766 1.19% 12,168 0.25% 10,612
10/31/97 11,835 0.64% 12,246 0.25% 10,639
11/30/97 11,905 0.59% 12,318 -0.06% 10,632
12/31/97 12,044 1.46% 12,498 -0.12% 10,619
1/31/98 12,142 1.03% 12,627 0.19% 10,640
2/28/98 12,151 0.03% 12,631 0.19% 10,660
3/31/98 12,171 0.09% 12,642 0.19% 10,680
4/30/98 12,143 -0.45% 12,585 0.18% 10,699
5/31/98 12,292 1.58% 12,784 0.18% 10,719
6/30/98 12,352 0.39% 12,834 0.12% 10,731
7/31/98 12,382 0.25% 12,866 0.12% 10,744
8/31/98 12,513 1.55% 13,065 0.12% 10,757
9/30/98 12,635 1.25% 13,229 0.12% 10,770
10/31/98 12,625 0.00% 13,229 0.24% 10,796
11/30/98 12,666 0.35% 13,275 0.00% 10,796
12/31/98 12,697 0.25% 13,308 -0.06% 10,789
1/31/99 12,800 1.19% 13,466 0.24% 10,815
2/28/99 12,759 -0.44% 13,407 0.12% 10,828
3/31/99 12,789 0.14% 13,426 0.30% 10,861
4/30/99 0.24% 12,820 0.25% 13,459 0.73% 10,940
Total Return 28.20% 34.59% 9.40%
</TABLE>
*Source: Standard and Poor's Micropal.
AVERAGE ANNUAL TOTAL RETURN
4/30/99
<TABLE>
CLASS A
- --------------------------------------------------------------------------------
<S> <C>
1-Year +1.62%
5-Year +6.15%
10-Year +7.21%
Since Inception (10/7/83) +8.62%
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
4/30/99
<TABLE>
CLASS C
- --------------------------------------------------------------------------------
<S> <C>
1-Year +3.57%
3-Year +6.33%
Since Inception (5/1/95) +6.41%
</TABLE>
(*)Source: Standard and Poor's Micropal.
12 Past performance is not predictive of future results.
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------------------------
Year Ended April 30,
------------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ............... $12.25 $11.90 $11.83 $11.73 $11.81
Income from investment operations:
Net investment income ............................ .67 .69 .71 .74 .75
Net realized and unrealized gains (losses) ....... .06 .35 .07 .10 (.05)
Total from investment operations ................. .73 1.04 .78 .84 .70
------------------------------------------------------------------------------
Less distributions from net investment income .... (.67) (.69) (.71) (.74) (.78)
------------------------------------------------------------------------------
Net asset value, end of year ..................... $12.31 $12.25 $11.90 $11.83 $11.73
==============================================================================
Total return(*) .................................. 6.10% 8.92% 6.81% 7.33% 6.21%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) .................. $7,170,226 $7,022,961 $6,905,488 $7,012,601 $6,886,941
Ratios to average net assets:
Expenses ......................................... .60% .59% .58% .57% .59%
Net investment income ............................ 5.41% 5.70% 6.00% 6.20% 6.47%
Portfolio turnover rate .......................... 9.90% 14.54% 16.43% 25.10% 19.88%
</TABLE>
(*)Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
13
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
Class B
-------------------
Year Ended
April 30, 1999(***)
-------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
<S> <C>
Net asset value, beginning of year ....................... $12.39
-------------------
Income from investment operations:
Net investment income .................................... .23
Net realized and unrealized losses ....................... (.11)
-------------------
Total from investment operations ......................... .12
Less distributions from net investment income ............ (.21)
-------------------
Net asset value, end of year ............................. $12.30
===================
Total return(*) .......................................... 0.96%
Ratios/supplemental data
Net assets, end of year (000's) .......................... $27,988
Ratios to average net assets:
Expenses ................................................. 1.17%(**)
Net investment income .................................... 4.86%(**)
Portfolio turnover rate .................................. 9.90%
</TABLE>
(*)Total return does not reflect contingent deferred sales charge, and is not
annualized for periods less than one year.
(**)Annualized.
(***)For the period January 1,1999 (effective date) to April 30,1999.
14
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Financial Highlights (continued)
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------
Year Ended April 30,
----------------------------------------------------
1999 1998 1997 1996(**)
----------------------------------------------------
<S> <C> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year ....................................... $12.24 $11.90 $11.82 $11.73
----------------------------------------------------
Income from investment operations:
Net investment income .................................................... .60 .63 .66 .68
Net realized and unrealized gains ........................................ .07 .33 .06 .09
----------------------------------------------------
Total from investment operations ......................................... .67 .96 .72 .77
Less distributions from net investment income ............................ (.60) (.62) (.64) (.68)
----------------------------------------------------
Net asset value, end of year ............................................. $12.31 $12.24 $11.90 $11.82
====================================================
Total return(*) .......................................................... 5.58% 8.22% 6.28% 6.68%
Ratios/supplemental data
Net assets, end of year (000's) .......................................... $212,474 $135,195 $71,944 $34,110
Ratios to average net assets:
Expenses ................................................................. 1.17% 1.17% 1.16% 1.15%
Net investment income .................................................... 4.83% 5.12% 5.42% 5.68%
Portfolio turnover rate .................................................. 9.90% 14.54% 16.43% 25.10%
</TABLE>
(*) Total return does not reflect sales commissions or the contingent
deferred sales charge, and is not annualized for periods less than
one year.
(**) The Fund paid a dividend to shareholders of record on the beginning
of business, May 1,1995 in the amount of $0.062 per share. The net
asset value per share at the beginning of the period includes this
dividend.
See notes to financial statements. 15
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS 99.2%
BONDS 97.0%
ALABAMA 1.3%
Alabama HFA, SFMR, Series D-2, GNMA Secured, 5.75%, 10/01/23 ....................................... $ 5,305,000 $ 5,459,535
Alabama Water Pollution Control Authority Revolving Fund Loan, Series B,
Pre-Refunded, 7.75%, 8/15/12 ....................................................................... 5,925,000 6,260,237
Anniston Regional Medical Center Board, Series A, AMBAC Insured, 5.125%, 6/01/28 ................... 7,000,000 6,994,470
Citronelle IDB, PCR, Stauffer Chemical Project, Series 1982, 8.00%, 12/01/12 ....................... 1,000,000 1,053,040
Courtland IDB, PCR, Champion International Corp.Project, Refunding, 6.15%, 6/01/19 ................. 5,000,000 5,259,200
Courtland IDBR, Champion International Corp., Refunding, Series A, 7.20%, 12/01/13 ................. 12,000,000 13,179,720
Fairfield IDB, Environmental Improvement Revenue, USX Corp.Project,
Refunding, 5.45%, 9/01/14 .......................................................................... 1,445,000 1,451,922
Jefferson County Sewer Revenue, wts.,
Refunding, Series A, FGIC Insured, 5.625%, 2/01/22 ............................................... 4,000,000 4,241,280
Series D, FGIC Insured, 5.75%, 2/01/22 ........................................................... 15,995,000 17,195,265
Series D, FGIC Insured, 5.75%, 2/01/27 ........................................................... 19,715,000 21,167,798
Mcintosh IDB, Environmental Improvement Revenue, CIBA Specialty, Refunding,
Series C, 5.375%, 6/01/28 .......................................................................... 5,000,000 5,030,900
Montgomery Medical Clinic Board Health Care Facilities Revenue, Jackson Hospital
and Clinic, Refunding,
AMBAC Insured, 6.00%, 3/01/26 .................................................................... 5,385,000 5,841,217
------------
93,134,584
------------
ALASKA 1.9%
Alaska Industrial Development and Export Authority, Revolving Fund, Series A, 7.95%, 4/01/10 ....... 1,775,000 1,859,313
Alaska State HFC,
Collateralized Home Mortgage, Series A-1, 6.75%, 12/01/32 ........................................ 3,310,000 3,485,198
Refunding, Series A, MBIA Insured, 6.00%, 12/01/15 ............................................... 3,585,000 3,803,470
Refunding, Series A, MBIA Insured, 5.875%, 12/01/24 .............................................. 17,875,000 18,599,831
Refunding, Series A, MBIA Insured, 5.875%, 12/01/30 .............................................. 11,600,000 12,029,896
Refunding, Series A, MBIA Insured, 6.10%, 12/01/37 ............................................... 34,000,000 35,640,160
Series A, Pre-Refunded, 6.60%, 12/01/23 .......................................................... 8,000,000 8,785,200
Veterans Mortgage Program, MBIA Insured, 6.75%, 12/01/25 ......................................... 19,325,000 20,491,457
Anchorage Parking Authority Revenue, 5th Avenue Garage Lease Project, Refunding,
6.50%, 12/01/02 .................................................................................. 2,850,000 3,047,676
6.75%, 12/01/08 .................................................................................. 3,500,000 3,751,860
Valdez Marine Terminal Revenue, BP Pipelines Inc.Project, Refunding, Series A, 5.85%, 8/01/25 ...... 25,000,000 25,975,500
------------
137,469,561
------------
ARIZONA .7%
Maricopa County IDA,
Health Facilities Revenue, Catholic Healthcare West Project, Refunding, Series A, 5.00%, 7/01/16 . 23,000,000 22,505,960
Hospital Facility Revenue, Mayo Clinic Hospital, 5.25%, 11/15/37 ................................. 20,000,000 19,836,200
Phoenix Civic Improvement Corp. Airport Revenue, senior lien, Series B, FSA Insured, 5.00%, 7/01/25 8,500,000 8,341,305
------------
50,683,465
------------
ARKANSAS 1.3%
Arkansas State Development Finance Authority Drivers License Revenue, State Police Headquarters,
Wireless Data, FGIC Insured, 5.40%, 6/01/18 ...................................................... 4,000,000 4,137,240
Desha County Residential Housing Facilities Board SFMR, Refunding, 7.50%, 4/01/11 .................. 1,800,000 1,903,734
Independence County Public Health and Education Facilities Board Capital Revenue,
White River Control Project,
Refunding and Improvement, Pre-Refunded, 8.00%, 6/01/09 ............................................ 3,115,000 3,187,580
Jefferson County PCR,
Arkansas Power and Light Co. Project, Refunding, 6.30%, 6/01/18 .................................. 1,465,000 1,571,462
Entergy Arkansas Inc. Project, Refunding, 5.60%,10/01/17 ......................................... 5,000,000 5,078,550
</TABLE>
16
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
ARKANSAS (CONT.)
<S> <C> <C>
Little River County Revenue, Georgia-Pacific Corp.Project, Refunding, 5.60%, 10/01/26 .............. $13,000,000 $13,039,910
Pope County PCR, Power and Light Co. Project, Refunding, 6.30%,
12/01/16 ........................................................................................... 2,600,000 2,786,498
11/01/20 ........................................................................................... 60,000,000 62,308,200
University of Central Arkansas Academic Facilities Revenue,
Series B, AMBAC Insured, 5.875%, 4/01/16 ........................................................... 250,000 273,405
Series C, AMBAC Insured, 6.00%, 4/01/21 ............................................................ 1,000,000 1,099,090
University of Central Arkansas Athletic Facilities Revenue, Series C, AMBAC Insured,
6.00%, 4/01/21 ..................................................................................... 1,000,000 1,099,090
6.125%, 4/01/26 .................................................................................... 825,000 902,501
University of Central Arkansas Housing System Revenue, Refunding, Series A, AMBAC
Insured, 6.00%, 4/01/21 .............................................................................. 1,000,000 1,099,090
-----------
98,486,350
-----------
CALIFORNIA 4.2%
Alhambra COP, Clubhouse Facility Project, 11.25%,
1/01/08 ............................................................................................ 410,000 418,512
1/01/09 ............................................................................................ 455,000 464,373
1/01/10 ............................................................................................ 500,000 510,315
Burbank RDA, Tax Allocation, Refunding, Series A, 6.25%, 12/01/24 ................................. 5,245,000 5,633,655
California Educational Facilities Authority Revenue,
National University, Connie Lee Insured, 6.00%, 5/01/09 ............................................ 3,580,000 3,944,265
Pooled College and University Projects, Series B, 6.00%, 12/01/20 .................................. 6,025,000 6,393,188
California Health Facilities Financing Authority Revenue, St. Francis Medical Center,
Refunding, Series H,
AMBAC Insured, 6.30%,10/01/15 ...................................................................... 2,800,000 3,153,164
California State GO,
5.90%, 5/01/08 ..................................................................................... 235,000 259,546
6.00%, 5/01/18 ..................................................................................... 535,000 585,873
5.90%,4/01/23 ...................................................................................... 1,200,000 1,289,976
FGIC Insured, 6.00%, 5/01/20 ....................................................................... 850,000 925,200
FGIC Insured, Pre-Refunded, 6.00%, 5/01/20 ......................................................... 11,650,000 13,037,515
Pre-Refunded, 5.90%, 5/01/08 ....................................................................... 2,835,000 3,152,974
Veterans Bonds, Series BC, 6.00%, 2/01/10 .......................................................... 1,000,000 1,015,540
Veterans Bonds, Series BD, BE, and BF, 6.55%, 2/01/25 .............................................. 14,700,000 14,935,935
California State Public Works Board Lease Revenue, University of California,
Various Projects, Series A, Pre-Refunded, 6.375%,
10/01/14 ........................................................................................... 4,000,000 4,568,360
10/01/19 ........................................................................................... 2,000,000 2,284,180
California Statewide CDA Revenue, COP, Sutter Health Obligated Group, MBIA Insured, 6.00%, 8/15/25 ... 14,750,000 16,221,460
Chino USD, COP, Refunding, FSA Insured, 5.90%, 9/01/15 ............................................... 8,240,000 9,040,269
Commerce Refuse to Energy Authority Revenue, Refunding, Series 1994, 8.75%, 7/01/10 .................. 1,000,000 1,173,930
Foothill/Eastern Corridor Agency Toll Road Revenue, senior lien, Series A, 6.50%, 1/01/32 ............ 59,240,000 66,109,470
Forty-Niner Shops Inc. Auxiliary Organization, California State Long Beach Project, 6.875%,
4/01/07 ............................................................................................ 1,090,000 1,206,935
4/01/12 ............................................................................................ 1,565,000 1,732,893
Los Angeles County MTA, Sales Tax Revenue, Proposition C, Refunding, Second Series A,
AMBAC Insured, 5.00%, 7/01/23 ....................................................................... 10,500,000 10,325,805
Los Angeles CRDA, Housing Revenue, Refunding, Series A, AMBAC Insured, 6.55%, 1/01/27 ................ 3,180,000 3,430,997
</TABLE>
17
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
CALIFORNIA (CONT.)
<S> <C> <C>
Los Angeles Department of Water and Power Electric Plant Revenue, Refunding,
MBIA Insured, 6.00%, 2/01/28 ....................................................................... $ 3,000,000 $ 3,204,570
Los Angeles Regional Airports Improvement Corp. Lease Revenue,
Facilities Sub-Lease, International Airport, Refunding, 6.35%, 11/01/25 .......................... 18,500,000 20,048,450
United Airlines, International Airport, Refunding, 6.875%, 11/15/12 .............................. 8,400,000 9,144,324
Pomona PFA, Revenue, Series Q, MBIA Insured, 5.90%, 12/01/25 ....................................... 4,000,000 4,341,720
San Francisco City and County RDA, Lease Revenue, George R. Moscone Center,
FSA Insured, 6.75%, 7/01/24 ........................................................................ 7,075,000 7,971,473
San Francisco City and County Redevelopment Financing Authority Tax Allocation
Revenue, Redevelopment Projects, Pre-Refunded, 6.50%, 8/01/22 ...................................... 12,680,000 14,584,156
San Francisco City and County Sewer Revenue, Series A, FGIC Insured, 5.90%, 10/01/20 ............... 10,380,000 11,246,626
San Joaquin Hills Transportation Corridor Agency Toll Road Revenue, senior lien,
5.00%, 1/01/33 ................................................................................... 5,000,000 4,795,550
Pre-Refunded, 7.00%, 1/01/30 ..................................................................... 16,785,000 19,010,859
University of California Revenues,
Research Facilities, Series B, Pre-Refunded, 6.55%, 9/01/24 ........................................ 11,780,000 13,355,575
U. C. Davis Medical Center, AMBAC Insured, 5.75%, 7/01/24 .......................................... 25,000,000 26,710,000
Windsor RDAR, Tax Allocation, Windsor Project, 7.00%, 9/01/24 ...................................... 2,405,000 2,632,152
------------
308,859,785
------------
COLORADO 4.9%
Colorado Health Facilities Authority Revenue,
Catholic Health Initiatives, Series A, 5.00%, 12/01/28 ........................................... 3,035,000 2,917,181
Kaiser Permanente, Series A, 5.35%, 11/01/16 ..................................................... 13,250,000 13,315,323
Kaiser Permanente, Series B, 5.35%, 8/01/15 ...................................................... 20,200,000 20,538,148
Colorado HFA, GO, Series A, 7.50%, 5/01/29 ......................................................... 1,595,000 1,665,435
Colorado Springs Utilities Revenue, System Improvement, sub.lien, Series A, 5.00%, 11/15/27 ........ 20,000,000 19,466,200
Denver City and County Airport Revenue,
Series A, 8.875%, 11/15/12 ....................................................................... 12,130,000 13,613,620
Series A, 7.50%, 11/15/23 ........................................................................ 13,590,000 15,476,428
Series A, 8.50%, 11/15/23 ........................................................................ 72,960,000 78,719,462
Series A, 8.00%, 11/15/25 ........................................................................ 20,305,000 21,759,447
Series A, 8.00%, 11/15/25 ........................................................................ 1,480,000 1,595,825
Series A, Pre-Refunded, 7.50%, 11/15/12 .......................................................... 11,200,000 12,808,208
Series A, Pre-Refunded, 8.875%, 11/15/12 ......................................................... 4,515,000 5,152,608
Series A, Pre-Refunded, 7.50%, 11/15/23 .......................................................... 2,930,000 3,476,269
Series A, Pre-Refunded, 8.50%, 11/15/23 .......................................................... 6,985,000 7,632,510
Series A, Pre-Refunded, 7.25%, 11/15/25 .......................................................... 8,060,000 9,151,243
Series A, Pre-Refunded, 7.25%, 11/15/25 .......................................................... 16,465,000 18,694,196
Series A, Pre-Refunded, 8.00%, 11/15/25 .......................................................... 2,020,000 2,192,367
Series A, Pre-Refunded, 8.00%, 11/15/25 .......................................................... 520,000 573,082
Series B, 7.25%, 11/15/23 ........................................................................ 2,120,000 2,320,382
Series B, Pre-Refunded, 7.25%, 11/15/23 .......................................................... 530,000 598,921
Series D, 7.75%, 11/15/21 ........................................................................ 8,950,000 9,788,436
Series D, 7.00%, 11/15/25 ........................................................................ 7,835,000 8,290,292
Series D, Pre-Refunded, 7.75%, 11/15/21 .......................................................... 2,510,000 2,796,943
Denver City and County School District No.1 GO, FGIC Insured, 5.00%, 12/01/23 ...................... 10,000,000 9,846,600
Denver City and County Special Facilities Airport Revenue, United Airlines Inc.Project, Series A,
6.875%, 10/01/32 .................................................................................. 47,980,000 51,385,620
</TABLE>
18
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
COLORADO (CONT.)
<S> <C> <C>
Littleton MFHR, Riverpointe I, Refunding, Series A, FSA Insured, 5.95%, 4/01/29 .................... $ 11,400,000 $ 12,006,252
Postsecondary Educational Facilities Authority Revenue, University of Denver
Project, Refunding and Improvement, MBIA Insured, 5.375%, 3/01/18 .................................. 6,000,000 6,149,880
University of Colorado Hospital Authority Revenue,
Refunding, Series A, AMBAC Insured, 5.25%, 11/15/22 .............................................. 5,000,000 5,024,000
(b) Series A, AMBAC Insured, 5.00%, 11/15/29 ...................................................... 5,000,000 4,825,500
------------
361,780,378
------------
CONNECTICUT .1%
Connecticut State Health and Educational Facilities Authority Revenue,
Quinnipac College, Series E, FSA Insured, 4.75%, 7/01/24 .......................................... 3,570,000 3,384,110
Meriden Housing Authority MFR, Connecticut Baptist Housing Project, GNMA Secured, 5.80%, 8/20/39 ... 2,870,000 2,984,771
------------
6,368,881
------------
DELAWARE
Delaware State EDA Revenue, Water Development, Wilmington, Refunding, Series B, 6.45%, 12/01/07 .... 1,160,000 1,319,372
Delaware State Housing Authority MFMR, Refunding, Series D, 6.75%, 7/01/06 ......................... 2,000,000 2,201,900
------------
3,521,272
------------
FLORIDA 2.0%
Bay County Resource Recovery Revenue,
Series A, MBIA Insured, Pre-Refunded, 6.50%, 7/01/07 ............................................. 2,100,000 2,313,549
Series B, MBIA Insured, Pre-Refunded, 6.50%, 7/01/07 ............................................. 11,020,000 12,140,624
Broward County Resource Recovery Revenue, Broward Waste Energy Co., LP, North Project,
Series 1984, 7.95%, 12/01/08 ....................................................................... 38,940,000 40,944,242
Callaway/Bay County Wastewater Systems Revenue, Series A, FGIC Insured, 6.00%, 9/01/26 ............. 1,000,000 1,103,750
Florida State Board of Education Capital Outlay, Public Education, Refunding,
Series 1992, 6.40%, 6/01/19 ........................................................................ 22,475,000 24,238,389
Florida State Department of Transportation GO, Right of Way, Acquisition
and Bridge, 5.375%, 7/01/26 ........................................................................ 10,000,000 10,241,200
Florida State Turnpike Authority Revenue, Department of Transportation, Series A,
Pre-Refunded, 7.75%, 7/01/09 ....................................................................... 7,125,000 7,316,021
(b) Lakeland Electric and Water Revenue, Refunding, Series A, MBIA Insured, 5.00%,
10/01/19 ......................................................................................... 4,500,000 4,471,335
10/01/36 ......................................................................................... 15,000,000 14,554,950
Manatee County IDR, Manatee Hospital and Health System Inc., Pre-Refunded, 9.25%, 3/01/21 .......... 6,500,000 7,251,075
South Miami Health Facilities Authority Hospital Revenue, Baptist Health System
Obligation Group,
MBIA Insured, 5.00%, 11/15/28 ...................................................................... 7,000,000 6,789,790
St.Augustine Water and Sewer Revenue, Refunding, Series A, MBIA Insured, 6.20%,
10/01/00 ......................................................................................... 840,000 871,634
10/01/01 ......................................................................................... 890,000 944,940
10/01/02 ......................................................................................... 940,000 1,017,635
10/01/03 ......................................................................................... 1,005,000 1,106,234
10/01/04 ......................................................................................... 1,065,000 1,186,048
10/01/05 ......................................................................................... 1,130,000 1,271,239
10/01/06 ......................................................................................... 1,200,000 1,361,340
10/01/07 ......................................................................................... 1,275,000 1,438,697
10/01/08 ......................................................................................... 1,355,000 1,524,890
10/01/12 ......................................................................................... 6,300,000 7,018,326
Sunrise Utilities System Revenue, Refunding, AMBAC Insured, 5.20%, 10/01/22 ........................ 2,000,000 2,019,440
------------
151,125,348
------------
</TABLE>
19
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FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
GEORGIA 3.1%
<S> <C> <C>
Atlanta Water and Wastewater Revenue, Refunding, Series A, FGIC Insured, 5.00%,
(b)11/01/29 .................................................................................... $ 8,850,000 $ 8,620,343
11/01/38 ....................................................................................... 21,425,000 20,570,785
Burke County Development Authority PCR,
(b) Georgia Power Co. Plant Vogtle, 1st Series, 5.40%, 5/01/34 ................................. 17,705,000 17,715,092
Georgia Power Co. Plant Vogtle, 7th Series, MBIA Insured, 6.625%, 10/01/24 ..................... 8,025,000 8,264,867
(b) Georgia Power Co. Plant Vogtle, Refunding, Second Series, AMBAC Insured, 5.25%, 5/01/34 .... 15,000,000 14,857,500
Georgia Power Co. Plant Vogtle, Series 198, MBIA Insured, 6.60%, 7/01/24 ....................... 105,000,000 107,487,450
Fulton County Development Authority Special Facilities Revenue, Delta Airlines Inc.Project,
5.45%, 5/01/23 ................................................................................. 3,000,000 2,933,250
Refunding, 6.85%, 11/01/07 ..................................................................... 3,400,000 3,661,970
Refunding, 6.95%, 11/01/12 ..................................................................... 5,500,000 5,933,895
Gainesville and Hall County Hospital Authority Revenue, Anticipation Certificates,
Northeast Georgia Health Care Project, Refunding, MBIA Insured, 6.00%, 10/01/25 .................. 7,975,000 8,633,097
Georgia Municipal Electric Authority Power Revenue,
Series B, 6.375%, 1/01/16 ...................................................................... 14,000,000 14,902,440
Series EE, 6.40%, 1/01/23 ...................................................................... 6,325,000 6,952,314
Georgia State HFAR, Homeownership Opportunity Program, Series C, 6.60%, 12/01/23 ................. 3,405,000 3,600,243
Monroe County Development Authority PCR, Georgia Power Co., AMBAC Insured, 6.25%, 7/01/19 ........ 4,300,000 4,438,761
------------
228,572,007
------------
HAWAII 1.4%
Hawaii State Airports System Revenue,
FGIC Insured, 7.00%, 7/01/20 ................................................................... 1,000,000 1,076,200
Second Series, 7.00%, 7/01/07 .................................................................. 12,000,000 12,909,240
Second Series, 6.90%, 7/01/12 .................................................................. 500,000 593,405
Second Series, 7.00%, 7/01/18 .................................................................. 2,830,000 3,020,770
Hawaii State Department of Budget and Finance Special Purpose Mortgage Revenue,
Electric Light Co. Project, 7.20%, 12/01/14 .................................................... 200,000 208,018
Hawaii Electric Light Co. Project, Series A, 7.35%, 1/01/20 .................................... 1,000,000 1,037,880
Kaiser Permanente, Refunding, Series A, 6.25%, 3/01/21 ......................................... 900,000 940,716
Kapiolani Health Care System, Refunding, 6.00%, 7/01/19 ........................................ 2,600,000 2,741,726
Wahiawa General Hospital Project, 7.50%, 7/01/12 ............................................... 1,000,000 1,081,840
Hawaii State Department of Budget and Finance Special Purpose Revenue,
6.00%, 7/01/11 ................................................................................. 1,000,000 1,084,850
6.20%, 7/01/16 ................................................................................. 2,000,000 2,154,500
Hawaiian Electric Co. Project, Series A, MBIA Insured, 5.65%, 10/01/27 ......................... 20,000,000 21,407,600
Kaiser Permanente, Series A, 5.15%, 3/01/15 .................................................... 3,000,000 2,958,300
Kapiolani Health Obligation, 6.25%, 7/01/21 .................................................... 6,250,000 6,739,625
Queens Health System, Refunding, Series A, 5.75%, 7/01/26 ...................................... 5,800,000 6,042,440
Queens Health System, Series B, MBIA Insured, 5.25%, 7/01/23 ................................... 5,000,000 5,037,450
Queens Health System, Series B, MBIA Insured, 5.00%, 7/01/28 ................................... 3,250,000 3,152,760
Hawaii State Housing Finance and Development Corp. SFM Purchase Revenue,
Series A, 7.10%, 7/01/24 ....................................................................... 3,350,000 3,537,868
Series A, 5.75%, 7/01/30 ....................................................................... 2,500,000 2,595,225
Series B, 7.00%, 7/01/31 ....................................................................... 8,055,000 8,527,506
</TABLE>
20
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FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
HAWAII (CONT.)
<S> <C> <C>
Hawaii State SFMR, HFC,
Series A, 7.00%,7/01/11 ............................................................................ $ 230,000 $ 243,163
Series B, 6.90%, 7/01/16 ........................................................................... 245,000 259,276
Honolulu City and County GO, Series C, FGIC Insured, 5.00%, 7/01/20 .................................. 6,250,000 6,137,500
Honolulu City and County Wastewater System Revenue, 2nd Bond Resolution,
Junior Series, FGIC Insured, 5.00%, 7/01/23 .......................................................... 10,000,000 9,820,500
------------
103,308,358
------------
IDAHO .1%
Idaho Housing Agency Revenue, Refunding, Series D-1, 6.45%, 7/01/19 .................................. 2,100,000 2,227,974
Idaho Housing Agency SFMR, Senior Bond, Series B-1, FGIC Insured,
7.85%, 7/01/09 ..................................................................................... 595,000 608,441
7.90%, 1/01/21 ..................................................................................... 900,000 919,719
Power County PCR, FMC Corp.Project, Refunding, 5.625%, 10/01/14 ...................................... 2,200,000 2,252,976
------------
6,009,110
------------
ILLINOIS 7.3%
Bryant PCR, Central Illinois Light Co. Project, Refunding,
Series A, AMBAC Insured, 6.50%, 2/01/18 ............................................................ 7,200,000 7,765,776
Series C, 6.50%, 1/01/10 ........................................................................... 5,000,000 5,444,100
Chicago Board of Education GO, Chicago School Reform,
MBIA Insured, 6.00%, 12/01/16 ........................................................................ 9,700,000 10,802,890
MBIA Insured, Pre-Refunded, 6.00%, 12/01/26 .......................................................... 7,600,000 8,600,768
Series A, AMBAC Insured, 5.25%, 12/01/27 ........................................................... 10,000,000 10,056,000
Series A, AMBAC Insured, 5.25%, 12/01/30 ........................................................... 8,830,000 8,843,863
Chicago COP, AMBAC Insured, 7.75%, 7/15/11 ........................................................... 19,500,000 23,204,805
Chicago Gas Supply Revenue, The Peoples Gas Light, Refunding, Series A, 6.10%, 6/01/25 ............... 12,000,000 12,972,960
Chicago GO, Lakefront Millennium Parking Facilities, MBIA Insured, 5.125%, 1/01/28 ................... 26,345,000 25,934,808
Chicago O'Hare International Airport Special Facilities Revenue,
American Airlines Inc.Project, 8.20%, 12/01/24 ..................................................... 11,720,000 13,846,360
United Airlines Inc.Project, 8.45%, 5/01/07 ........................................................ 4,300,000 4,551,249
United Airlines Inc.Project, 8.50%, 5/01/18 ........................................................ 12,305,000 13,032,349
United Airlines Inc.Project, Series A, Pre-Refunded, 8.40%, 5/01/18 ................................ 450,000 463,500
United Airlines Inc. Project, Series C, Pre-Refunded, 8.20%, 5/01/18 ............................... 27,600,000 28,428,000
Chicago SFMR, Collateralized, Series A, 7.25%, 9/01/28 ............................................... 3,630,000 4,085,964
Chicago Wastewater Transmission Revenue, Refunding, FGIC Insured, 5.125%, 1/01/25 .................... 5,000,000 4,898,300
Cook County GO,
Capital Improvement, Refunding, FGIC Insured, 5.90%, 12/01/14 ........................................ 10,000,000 11,016,000
Orland Park School District No.135, FGIC Insured, Pre-Refunded, 5.875%, 11/15/22 ..................... 10,000,000 11,158,200
Refunding, Series A, MBIA Insured, 5.625%, 11/15/22 .................................................. 20,000,000 21,175,800
Cook County Tinley Park School District No.140, Refunding, Series A, AMBAC Insured, 6.00%, 12/01/15 .. 8,750,000 9,744,875
Illinois Development Finance Authority Hospital Revenue, Adventist Health System, Sunbelt Obligation,
5.65%, 11/15/24 .................................................................................... 6,030,000 5,941,721
5.50%, 11/15/29 .................................................................................... 20,000,000 19,200,800
Illinois Development Finance Authority PCR,
Central Illinois Public Service Co., Refunding, Series A, 6.375%, 1/01/28 ............................ 15,200,000 16,309,752
Commonwealth Edison Co. Project, Refunding, Series 1991, 7.25%, 6/01/11 .............................. 7,500,000 8,021,625
Illinois Power Co. Project, Refunding, Series A, 7.375%, 7/01/21 ..................................... 26,550,000 30,414,884
</TABLE>
21
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FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
ILLINOIS (CONT.)
<S> <C> <C>
Illinois Development Finance Authority Revenue, Provena Health, Series A,
MBIA Insured, 5.50%, 5/15/21 ................................................................... $13,240,000 $13,592,316
Illinois Educational Facilities Authority Revenue, Midwestern University, Series B,
MBIA Insured, 5.50%, 5/15/28 ................................................................... 6,250,000 6,442,813
Illinois HDA Revenue, Homeowner Mortgage, Series A-1, 6.85%, 8/01/17 ........................... 4,245,000 4,570,252
Illinois HDA,
MF Program, Lawndale Redevelopment Project, 7.10%, 12/01/34 .................................. 20,000,000 22,305,800
MF Program, Refunding, Series A, 7.10%, 7/01/26 .............................................. 12,915,000 13,905,710
MF Program, Series 1, 6.625%, 9/01/12 ........................................................ 12,000,000 12,820,800
MF Program, Series 1, 6.75%, 9/01/21 ......................................................... 7,550,000 8,044,525
MF Program, Series C, 7.35%, 7/01/11 ......................................................... 2,265,000 2,374,513
RMR, Series B, 7.25%, 8/01/17 ................................................................ 7,065,000 7,415,848
Illinois Health Facilities Authority Revenue,
Edwards Hospital Project, Pre-Refunded, 7.00%, 2/15/22 ....................................... 2,000,000 2,205,320
Hospital Sisters Services Inc., Series A, MBIA Insured, 5.00%, 6/01/18 ....................... 10,000,000 9,724,100
Loyola University Health System, Refunding, Series A, MBIA Insured, 5.625%, 7/01/18 .......... 9,195,000 9,617,970
Methodist Medical Center, Refunding, MBIA Insured, 5.25%, 11/15/21 ........................... 2,885,000 2,889,587
Northwestern Medical Facility Foundation, Refunding, MBIA Insured, 5.125%, 11/15/28 .......... 7,500,000 7,272,450
Servantcor, Series A, Pre-Refunded, 7.875%, 8/15/19 .......................................... 1,000,000 1,032,250
Servantcor, Series B, Pre-Refunded, 7.875%, 8/15/19 .......................................... 3,000,000 3,096,750
South Suburban Hospital, ETM, 7.00%, 2/15/18 ................................................. 4,200,000 5,081,832
South Suburban Hospital, Pre-Refunded, 7.00%, 2/15/18 ........................................ 2,800,000 3,087,448
Victory Health Services, Series A, 5.75%, 8/15/27 ............................................ 8,015,000 8,158,308
Illinois State COP, Department Of Central Management, FSA Insured, 6.875%, 7/01/07 ............. 2,600,000 2,848,976
Illinois State Dedicated Tax Revenue, Civic Center, Series A, AMBAC Insured,
6.00%, 12/15/15 .............................................................................. 2,105,000 2,163,330
Pre-Refunded, 6.00%, 12/15/15 ................................................................ 845,000 879,130
Metropolitan Pier and Exposition Authority Dedicated State Tax Revenue,
McCormick Place Expansion Project,
Series A,
6.50%, 6/15/22 ............................................................................... 5,000 5,445
6.50%, 6/15/27 ............................................................................... 555,000 603,263
FGIC Insured, 6.50%, 6/15/07 ................................................................... 5,000 5,504
Metropolitan Pier and Exposition Authority Hospitality Facilities Revenue,
McCormick Place Convention Center,
5.75%, 7/01/06 ............................................................................... 1,645,000 1,750,971
6.25%, 7/01/17 ............................................................................... 9,500,000 10,387,775
7.00%, 7/01/26 ............................................................................... 12,000,000 14,580,360
Onterie Center HFC, Mortgage Revenue, Refunding, MBIA Insured, 7.05%, 7/01/27 .................. 4,350,000 4,641,885
Regional Transportation Authority Revenue, Series A, AMBAC Insured, 6.125%, 6/01/22 ............ 3,970,000 4,198,513
Southwestern Illinois Development Authority IDR, Spectrulite Consortium Inc.Project,
6.20%, 2/01/05 ............................................................................... 1,825,000 1,952,622
6.625%, 2/01/10 .............................................................................. 3,050,000 3,279,391
Southwestern Illinois Development Authority Private Activity Revenue, Progressive
Recovery Glenmark, 8.50%, 8/01/10 .............................................................. 2,685,000 2,862,854
Southwestern Illinois Development Authority Revenue, Anderson Hospital Project,
Series A, 7.00%, 8/15/22 ..................................................................... 6,200,000 6,644,230
Southwestern Illinois Development Authority Solid Waste Disposal Revenue,
LaCede Steel Co. Project,
8.375%, 8/01/08 .............................................................................. 4,695,000 4,788,900
8.50%, 8/01/20 ............................................................................... 5,390,000 5,497,800
</TABLE>
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FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
ILLINOIS (CONT.)
<S> <C> <C>
Upper River Valley Development Authority Environmental Facilities Revenue,
General Electric Co. Project, 5.45%, 2/01/23 .................................................... $ 3,600,000 $ 3,711,924
Will County Exempt Facilities Revenue, Mobil Oil Refining Corp.Project, 6.00%, 2/01/27 ........... 7,130,000 7,668,957
------------
538,025,771
------------
INDIANA 1.1%
Carmel Industrial RDA, County Option, Income Tax Lease, Rent Revenue, MBIA Insured,
5.25%, 1/01/18 ................................................................................... 1,090,000 1,100,965
East Chicago Industrial Solid Waste Disposal Revenue, USG Corp.Project, 5.50%, 9/01/28 ........... 5,250,000 5,050,185
Hammond Industrial Sewer and Solid Waste Disposal Revenue, American Maize-Products Co.,
Project A,
8.00%, 12/01/24 .................................................................................. 17,000,000 19,701,980
Hammond IPC Revenue, Stauffer Chemical Project, Guaranteed by Imperial Chemical, Series 1982,
8.00%, 11/01/12 .................................................................................. 2,355,000 2,474,540
Indiana Bond Bank Special Program, Series A, 8.375%, 2/01/18 ..................................... 560,000 571,200
Indiana Health Facility Financing Authority Hospital Revenue, Hancock Memorial
Hospital Project, Series 1990, Pre-Refunded, 8.30%, 8/15/20 ..................................... 3,500,000 3,777,130
Indiana State Educational Facilities Authority Revenue, Manchester College Project,
6.85%, 10/01/18 .................................................................................. 3,240,000 3,410,230
Indiana State HFA, SFMR, Refunding, Series A,
6.75%, 1/01/10 ................................................................................. 2,940,000 3,132,305
6.80%, 1/01/17 ................................................................................. 12,835,000 13,673,639
Indianapolis Local Public Improvement Bond, Series D, 6.75%, 2/01/20 ............................. 13,075,000 14,502,790
Jasper County EDR, Georgia-Pacific Corp.Project, 5.625%, 12/01/27 ................................ 2,500,000 2,491,075
Monroe County MFHR, Country View, Series A, GNMA Secured, 5.75%, 4/01/33 ......................... 2,000,000 2,027,380
Muncies Edit Building Corp. First Mortgage, Series A, AMBAC Insured, 6.60%, 12/01/17 ............. 2,000,000 2,212,720
Sullivan PCR, Indiana-Michigan Power Co. Project, Refunding, Series C, 5.95%, 5/01/09 ............ 6,000,000 6,317,160
------------
80,443,299
------------
IOWA .1%
Iowa Financing Authority SFMR, Series F, GNMA Secured, 5.70%, 1/01/27 ............................ 10,780,000 11,071,815
------------
KANSAS .1%
Kansas State Development Finance Authority Hospital Revenue, Susan B. Allen Memorial
Hospital, Series Z,
5.25%, 12/15/23 ................................................................................. 2,500,000 2,482,775
Kansas State Development Finance Authority Revenue, Sisters of Charity Leavenworth,
MBIA Insured,
5.125%,12/01/18 ................................................................................. 2,000,000 1,996,240
Newton Hospital Revenue, Newton Healthcare Corp., Refunding, Series A,
5.70%, 11/15/18 ................................................................................ 1,575,000 1,592,262
5.75%, 11/15/24 ................................................................................ 1,500,000 1,513,110
------------
7,584,387
------------
KENTUCKY 1.9%
Ashland PCR, Ashland Oil Inc.Project, Refunding, 6.65%, 8/01/09 .................................. 3,900,000 4,185,441
Henderson County Solid Waste Disposal Revenue, MacMillan Bloedel Project, 7.00%, 3/01/25 ......... 10,000,000 10,847,000
Jefferson County MFHR, Watterson Park Apartments Project, Series A, 6.35%, 11/15/11 .............. 4,850,000 5,145,171
Kenton County Airport Board Revenue, Special Facilities, Delta Airlines Inc.Project,
Series A, 7.80%, 12/01/15 ...................................................................... 20,000,000 20,767,000
Series A, 7.50%, 2/01/20 ....................................................................... 10,000,000 10,862,500
Series A, 7.125%, 2/01/21 ...................................................................... 9,330,000 10,040,946
Series B, 7.25%, 2/01/22 ....................................................................... 3,350,000 3,624,901
</TABLE>
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FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -----------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
KENTUCKY (CONT.)
<S> <C> <C>
Kentucky Development Finance Authority Hospital Revenue, Claire Medical Center Project,
Pre-Refunded,
7.125%, 9/01/21 ................................................................................. $ 700,000 $ 766,843
Kentucky Economic Development Finance Authority Hospital System Revenue, Appalachian Regional
Health Center Facility, Refunding and Improvement,
5.80%, 10/01/12 ................................................................................ 1,000,000 1,036,760
5.85%, 10/01/17 ................................................................................ 5,615,000 5,677,832
Kentucky HFC Revenue,
Series A, 6.70%, 7/01/17 ....................................................................... 210,000 221,479
Series B, 6.625%, 7/01/14 ...................................................................... 4,910,000 5,157,611
Mount Sterling Lease Revenue, Kentucky League Cities, Series A,
6.10%, 3/01/08 ................................................................................. 20,375,000 21,894,975
6.20%, 3/01/18 ................................................................................. 11,765,000 12,542,078
Pendleton County Multi-County Lease Revenue, Kentucky Association of Counties
Leasing Trust, Series A,
6.50%, 3/01/19 ................................................................................. 27,160,000 29,255,122
------------
142,025,659
------------
LOUISIANA 2.0%
Bastrop PCR, International Paper Co. Project, Refunding, 6.90%, 3/01/07 .......................... 2,000,000 2,149,380
Calcasieu Parish Inc. IDB, PCR, Gulf States Utilities Co. Project, Refunding, 6.75%, 10/01/12 .... 14,285,000 15,155,671
Calcasieu Parish Memorial Hospital Service District Revenue, Lake Charles Parish
Memorial Hospital Project,
Series A, FSA Insured,
6.375%, 12/01/12 ............................................................................... 4,310,000 4,939,260
6.50%, 12/01/18 ................................................................................ 5,530,000 6,406,007
6.65%, 12/01/21 ................................................................................ 3,145,000 3,398,739
Calcasieu Parish Public Trust Authority Mortgage Revenue, Refunding,
Series A, 7.75%, 6/01/12 ....................................................................... 2,330,000 2,462,530
Series B, 6.375%, 11/01/02 ..................................................................... 205,000 215,191
Series B, 6.875%, 11/01/12 ..................................................................... 600,000 636,888
De Soto Parish Environmental Improvement Revenue, International Paper Co. Project,
Series A, 7.70%, 11/01/18 ...................................................................... 2,500,000 2,856,050
East Baton Rouge Mortgage Finance Authority, SFM Purchase,
Series A, 6.80%, 10/01/28 ...................................................................... 5,910,000 6,292,791
Series C, 7.00%, 4/01/32 ....................................................................... 1,810,000 1,911,288
Series D, 7.10%, 4/01/32 ....................................................................... 2,290,000 2,410,317
Hammond Tangipahoa Home Mortgage Authority Revenue, University Facilities Inc. ...................
Project, MBIA Insured,
5.50%, 7/15/27 ................................................................................... 3,250,000 3,320,948
Jefferson Parish Hospital Service District No.1 Hospital Revenue, West Jefferson
Medical Center, Series A,
FSA Insured, 5.00%, 1/01/21 ...................................................................... 1,500,000 1,455,495
Jefferson Parish Hospital Service District No.2 Hospital Revenue, FSA Insured,
5.00%, 7/01/28 ................................................................................... 5,000,000 4,792,500
Lafayette Public Trust Financing Authority SFMR, Refunding, Series A, 8.50%, 11/15/12 ............ 1,142,614 1,177,669
Louisiana HFA, Mortgage Revenue,
Refunding, 7.375%, 9/01/13 ..................................................................... 920,000 956,864
SF, Refunding, Series B-2, GNMA Secured, 5.75%, 12/01/28 ....................................... 2,860,000 2,939,079
Louisiana Public Facilities Authority Revenue,
Alton Ochsner Medical Foundation Project, Refunding, Series B, MBIA Insured, 6.50%, 5/15/22 ...... 3,500,000 3,768,555
Xavier University of Louisiana Project, Refunding, MBIA Insured, 5.25%, 9/01/27 .................. 3,000,000 3,023,550
</TABLE>
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FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
LOUISIANA (CONT.)
<S> <C> <C>
New Orleans GO, Refunding, AMBAC Insured,
6.125%, 10/01/16 ................................................................................ $ 10,275,000 $ 11,206,121
6.20%, 10/01/21 ................................................................................. 8,050,000 8,854,920
Office Facility Corp. Capital Facilities Bonds, 7.75%, 12/01/10 ................................... 3,400,000 3,704,912
Ouachita Parish Hospital Service District No.1 Revenue, Glenwood Regional Medical
Center, Pre-Refunded,
7.50%, 7/01/21 ..................................................................................... 4,000,000 4,387,520
Pointe Coupee Parish PCR, Gulf States Utilities Co. Project, Refunding, 6.70%, 3/01/13 ............. 2,200,000 2,341,064
Terrebonne Parish Hospital Service District No.1 Hospital Revenue, Terrebonne General
Medical Center Project,
Refunding, AMBAC Insured, 5.375%, 4/01/23 .......................................................... 2,500,000 2,546,350
West Feliciana Parish PCR, Gulf State Utility Co. Project,
7.70%, 12/01/14 .................................................................................. 2,000,000 2,191,780
7.00%, 11/01/15 .................................................................................. 3,050,000 3,325,232
Refunding, 8.00%, 12/01/24 ....................................................................... 41,050,000 42,641,509
------------
151,468,180
------------
MAINE .9%
Bucksport Solid Waste Disposal Revenue, Champion International Corp.Project, 6.25%, 5/01/10 ........ 5,000,000 5,254,800
Maine Financial Authority Solid Waste Recycling Facilities Revenue, Great Northern Paper Co.,
Bowater Project,
7.75%, 10/01/22 .................................................................................. 29,300,000 32,531,497
Maine State Health and Higher Educational Facilities Authority Revenue, Series B, FSA Insured,
7.00%, 7/01/24 ................................................................................... 20,000 22,943
Pre-Refunded, 7.00%, 7/01/24 ..................................................................... 2,425,000 2,815,086
Maine State Housing Authority Mortgage Purchase,
Series A-5, 6.20%, 11/15/16 ...................................................................... 2,500,000 2,608,225
Series C, 6.55%, 11/15/12 ........................................................................ 3,700,000 3,903,685
Series C, 6.65%, 11/15/24 ........................................................................ 3,500,000 3,686,235
Series D, 6.45%, 11/15/07 ........................................................................ 3,540,000 3,699,477
Series D, 6.70%, 11/15/15 ........................................................................ 5,800,000 6,273,106
Rumford PCR, Boise Cascade Corp.Project, Refunding, 6.625%, 7/01/20 ................................ 4,800,000 5,199,504
------------
65,994,558
------------
MARYLAND 1.7%
Gaithersberg Hospital Facilities Revenue, Shady Grove Adventist Hospital, Refunding
and Improvement,
Series A, Pre-Refunded, 8.25%, 9/01/21 ........................................................... 43,225,000 48,477,270
Series C, FSA Insured, 6.00%, 9/01/21 ............................................................ 10,110,000 10,948,422
Maryland State CDA, Department of Housing and Community Development,
MFHR, Series G, Mortgage Insured, 6.55%, 5/15/19 ................................................. 5,475,000 5,785,871
SF Program, 3rd Series, 7.25%, 4/01/27 ........................................................... 965,000 1,006,775
Maryland State Health and Higher Educational Facilities Authority Revenue,
Anne Arundel Medical Center, FSA Insured, 5.125%, 7/01/33 ........................................ 8,000,000 7,967,440
Johns Hopkins Medicine, MBIA Insured, 5.00%, 7/01/19 ............................................. 3,000,000 2,988,480
Montgomery County Housing Opportunities Commission SFMR, Refunding, Series B, 6.625%, 7/01/28 ...... 6,500,000 6,814,275
Takoma Park Hospital Facilities Revenue, Washington Adventist Hospital Project, Series A,
Sub Series 1, 8.25%, 9/01/21 ..................................................................... 20,125,000 21,996,625
Sub Series 1, Pre-Refunded, 8.25%, 9/01/21 ....................................................... 10,930,000 12,258,104
Sub Series 2, Pre-Refunded,8.25%, 9/01/21 ........................................................ 5,000,000 5,595,600
------------
123,838,862
------------
</TABLE>
25
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FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
MASSACHUSETTS 3.1%
<S> <C> <C>
Agawam Resource Recovery Revenue, Springfield Resource Recovery Project, Series 1986,
8.50%, 12/01/08 ..................................................................................... $9,735,000 $9,858,050
Massachusetts State GO,
Consolidated Loan, Series A, 7.50%, 6/01/04 ....................................................... 7,500,000 8,530,125
Refunding, Series B, 6.50%, 8/01/08 ............................................................... 5,900,000 6,786,121
Massachusetts State Health and Educational Facilities Authority Revenue,
Framingham Union Hospital, Series B, Pre-Refunded, 8.50%, 7/01/20 ................................. 9,020,000 9,709,759
Melrose-Wakefield Hospital, ETM, Refunding, Series B, 6.35%, 7/01/06 .............................. 1,100,000 1,238,281
Notre Dame Health Care Center, Series A, 7.875%, 10/01/22 ......................................... 2,310,000 2,472,947
Sisters Providence Health System, Series A, Pre-Refunded, 6.50%, 11/15/08 ......................... 1,000,000 1,129,210
Sisters Providence Health System, Series A, Pre-Refunded, 6.625%, 11/15/22 ........................ 12,050,000 13,681,329
Massachusetts State HFA,
HDA, Series D, FGIC Insured, 6.875%, 11/15/21 ..................................................... 5,250,000 5,629,050
Housing Projects, Refunding, Series A, 6.30%, 10/01/13 ............................................ 25,635,000 27,385,871
Housing Projects, Refunding, Series A, 6.375%, 4/01/21 ............................................ 24,750,000 26,487,450
Housing Revenue, SF, Series 41, 6.30%, 12/01/14 ................................................... 6,250,000 6,681,250
Housing Revenue, SF, Series 41, 6.35%, 6/01/17 .................................................... 5,750,000 6,080,223
Series C, FGIC Insured, 6.90%, 11/15/21 ........................................................... 9,715,000 10,549,324
Series D, FGIC Insured, 6.80%, 11/15/12 ........................................................... 250,000 269,585
Massachusetts State Industrial Finance Agency Health Care Facilities Revenue,
Jewish Geriatric Services Inc., Series B,
5.375%, 5/15/17 ................................................................................... 1,965,000 1,994,632
5.50%, 5/15/27 .................................................................................... 5,000,000 5,104,200
Pre-Refunded, 7.00%, 4/01/22 ...................................................................... 5,000,000 5,618,300
Massachusetts State Industrial Finance Agency Revenue, D'Youville Senior Care,
5.65%, 10/01/17 ................................................................................... 2,295,000 2,386,433
5.70%, 10/01/27 ................................................................................... 7,375,000 7,668,083
Massachusetts State Port Authority Revenue, Special Facilities, Bosfuel Project,
MBIA Insured, 5.75%, 7/01/39 ........................................................................ 11,750,000 12,150,910
Massachusetts State Turnpike Authority Metropolitan Highway System Revenue,
Series A, MBIA Insured, 5.00%, 1/01/37 ............................................................ 30,000,000 28,536,600
Sub Series A, AMBAC Insured, 5.00%, 1/01/39 ....................................................... 9,250,000 8,806,185
sub.lien, Refunding, Series B, MBIA Insured, 5.125%, 1/01/37 ...................................... 7,530,000 7,315,470
Plymouth County COP, Series A, Pre-Refunded, 7.00%, 4/01/12 ......................................... 10,000,000 11,219,500
-----------
227,288,888
-----------
MICHIGAN 1.8%
Battle Creek Tax Increment Finance Authority, Pre-Refunded, 7.40%, 5/01/16 .......................... 2,000,000 2,344,560
Belding Area Schools GO, FGIC Insured,
6.10%, 5/01/26 .................................................................................... 810,000 893,932
Pre-Refunded, 6.10%, 5/01/26 ...................................................................... 2,995,000 3,372,520
Detroit GO,
Refunding, Series B, 6.375%, 4/01/06 .............................................................. 7,265,000 8,027,970
Refunding, Series B, 6.25%, 4/01/09 ............................................................... 625,000 686,625
Self-Insurance, Series A, 5.70%, 5/01/02 .......................................................... 2,250,000 2,349,000
Series A, Pre-Refunded, 6.70%, 4/01/10 ............................................................ 4,550,000 5,218,532
Detroit Sewage Disposal Revenue, Series A, MBIA Insured, 5.50%, 7/01/20 ............................. 29,200,000 30,302,300
Detroit/Wayne County Stadium Authority, FGIC Insured, 5.25%, 2/01/27 ................................ 4,235,000 4,244,232
Kalamazoo EDC Revenue, Limited Obligation, Friendship Village, Refunding, Series A, 6.25%, 5/15/27 .. 2,000,000 2,100,240
</TABLE>
26
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FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
MICHIGAN (CONT.)
<S> <C> <C>
Kalamazoo Hospital Finance Authority Hospital Facility Revenue, Bronson Methodist
Hospital, Refunding,
MBIA Insured, 5.50%, 5/15/28 ..................................................................... $ 4,180,000 $ 4,298,294
Michigan State Building Authority Revenue, Series II, 6.25%, 10/01/20 ............................ 15,650,000 16,533,443
Michigan State HDA,
Limited Obligation Revenue, Fraser Woods Project, FSA Insured, 6.625%, 9/15/19 ................. 2,500,000 2,677,900
Rental Housing Revenue, Refunding, Series A, 6.60%, 4/01/12 .................................... 4,730,000 5,094,920
SFMR, Series A, 6.45%, 12/01/14 ................................................................ 2,000,000 2,122,000
SFMR, Series A, 6.875%, 6/01/23 ................................................................ 1,705,000 1,797,223
Michigan State Hospital Finance Authority Revenue,
Genesys Regional Medical Center, Refunding, Series A, 5.50%, 10/01/18 .......................... 4,500,000 4,343,715
Genesys Regional Medical Center, Refunding, Series A, 5.50%, 10/01/27 .......................... 5,000,000 4,758,700
Henry Ford Health, Refunding, Series A, 5.25%, 11/15/25 ........................................ 4,000,000 3,949,160
Oakwood Obligation Group, Refunding, Series A, FSA Insured, 5.125%, 8/15/25 .................... 2,000,000 1,956,060
Presbyterian Villages Obligation Group, 5.40%, 1/01/00 ......................................... 310,000 311,903
Presbyterian Villages Obligation Group, 5.70%, 1/01/01 ........................................ 310,000 315,059
Presbyterian Villages Obligation Group, 5.80%, 1/01/02 ......................................... 355,000 364,084
Presbyterian Villages Obligation Group, 5.90%, 1/01/03 ......................................... 325,000 336,174
Presbyterian Villages Obligation Group, 6.00%,1/01/04 .......................................... 390,000 406,649
Presbyterian Villages Obligation Group, 6.375%, 1/01/15 ........................................ 275,000 295,160
Presbyterian Villages Obligation Group, 6.40%, 1/01/15 ......................................... 1,000,000 1,066,910
Presbyterian Villages Obligation Group, 6.50%, 1/01/25 ......................................... 3,500,000 3,733,205
St. John's Hospital and Medical Center, AMBAC Insured, 5.25%, 5/15/26 .......................... 22,860,000 22,924,694
------------
136,825,164
------------
MINNESOTA 2.1%
Cloquet PCR, Potlach Corp. Projects, Refunding, 5.90%, 10/01/26 .................................. 9,100,000 9,568,650
Dakota County Housing RDA, Limited Annual Appropriation Tax and Revenue, Development
Housing Facilities Project,
7.25%, 1/01/00 ................................................................................. 645,000 651,360
7.25%, 1/01/01 ................................................................................. 695,000 709,296
7.50%, 1/01/06 ................................................................................. 3,930,000 4,044,009
8.00%, 1/01/07 ................................................................................. 1,770,000 1,808,781
International Falls PCR, Boise Cascade Corp.Project, Refunding, 5.65%, 12/01/22 .................. 3,500,000 3,393,495
Minneapolis and St. Paul Metropolitan Airport Commission Airport Revenue, Series A,
AMBAC Insured,
5.00%, 1/01/30 ................................................................................... 10,000,000 9,845,100
Minneapolis CDA and St. Paul Housing RDA, Homeownership Mortgage Revenue, Joint
Housing Program,
FGIC Insured, 9.875%, 12/01/15 ................................................................... 5,000 5,004
Minnesota Agriculture and Economic Development Board Revenue, Health Care System,
Fairview Hospital,
Refunding, Series A, MBIA Insured, 5.75%, 11/15/26 ............................................... 25,810,000 27,553,466
Minnesota State HFA, SFM, Series D-1,
6.45%, 7/01/11 ................................................................................. 3,350,000 3,546,478
6.50%, 1/01/17 ................................................................................. 1,310,000 1,383,150
Minnesota State Higher Educational Facilities Authority Revenue, University St. Thomas,
Series 4-P,
5.375%, 4/01/18 ................................................................................ 525,000 528,848
5.40%, 4/01/23 ................................................................................. 580,000 583,637
Minnetonka MFHR, Ridgepointe II Project, Refunding, Series A, GNMA Secured, 5.95%, 10/20/33 ...... 11,075,000 11,661,754
Red Wing Housing RDA, Jordan Tower II Project, Pre-Refunded, 7.00%, 1/01/19 ...................... 1,500,000 1,648,815
Rochester Health Care Facilities Revenue, Mayo Foundation, Series A, 5.50%, 11/15/27 ............. 29,000,000 30,142,310
</TABLE>
27
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
MINNESOTA (CONT.)
<S> <C> <C>
Roseville MFHR, Rosepointe I Project, Refunding, Series A, GNMA Insured, 5.95%, 10/20/33 ......... $ 8,665,000 $ 9,124,072
St. Louis Park EDA, Tax Increment Revenue, FGIC Insured, Pre-Refunded, 8.40%, 9/01/09 ............ 6,000,000 6,741,780
St. Paul Port Authority IDR,
Bandana Square, Series C, 7.70%, 12/01/00 ...................................................... 230,000 229,545
Bandana Square, Series C, 7.70%, 12/01/01 ...................................................... 255,000 253,751
Bandana Square, Series C, 7.70%, 12/01/02 ...................................................... 270,000 269,479
Bandana Square, Series C, 7.70%, 12/01/07 ...................................................... 1,690,000 1,518,668
Bandana Square, Series C, 7.80%, 12/01/12 ...................................................... 3,465,000 2,971,238
Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/99 .......................................... 480,000 480,566
Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/00 .......................................... 515,000 515,824
Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/01 .......................................... 550,000 551,491
Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/02 .......................................... 595,000 597,231
Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/03 .......................................... 640,000 643,014
Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/04 .......................................... 685,000 688,843
Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/05 .......................................... 740,000 747,770
Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/06 .......................................... 795,000 803,348
Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/07 .......................................... 855,000 863,978
Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/08 .......................................... 915,000 924,608
Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/09 .......................................... 670,000 677,008
Common Bond Fund, Fort Road Medical Center, Refunding, Series C, 7.95%, 9/01/01 ................ 140,000 139,219
Common Bond Fund, Fort Road Medical Center, Refunding, Series C, 7.95%, 9/01/02 ................ 155,000 154,529
Common Bond Fund, Fort Road Medical Center, Refunding, Series C, 7.95%, 9/01/10 ................ 1,705,000 1,501,218
Common Bond Fund, Ideal Security Hardware Corp., Refunding, Series F, 8.00%, 12/01/01 .......... 105,000 104,463
Common Bond Fund, Ideal Security Hardware Corp., Refunding, Series F, 8.00%, 12/01/02 .......... 115,000 114,744
Common Bond Fund, Ideal Security Hardware Corp., Refunding, Series F, 8.00%, 12/01/12 .......... 1,790,000 1,561,596
Washington County Housing and RDAR,
Orleans Apartments Project, Series A, 8.25%, 7/01/21 ........................................... 3,000,000 3,063,630
Pooled Housing and Redevelopment, Refunding, 7.20%, 1/01/22 .................................... 5,885,000 6,281,884
Raymie Johnson Apartments Project, Pre-Refunded, 7.70%, 12/01/19 ............................... 5,210,000 5,821,029
------------
154,418,679
------------
MISSISSIPPI 1.2%
Claiborne County PCR, Systems Energy Resources Inc., Refunding,
7.30%, 5/01/25 ................................................................................. 5,700,000 5,949,831
6.20%, 2/01/26 ................................................................................. 36,500,000 37,510,320
Mississippi Business Finance Corp. PCR, Systems Energy Resources Inc.Project, 5.875%, 4/01/22 .... 40,000,000 39,972,400
Mississippi Home Corp. SFR, Refunding, Senior Series A, FGIC Insured, 9.25%, 3/01/12 ............. 1,040,000 1,096,285
Mississippi State Educational Facilities Authority Revenue, Private Nonprofit Institutions
of Higher Learning,
Tougaloo College Project, Series A, Pre-Refunded, 6.50%, 6/01/18 ............................... 2,335,000 2,409,113
------------
86,937,949
------------
MISSOURI .4%
Hazelwood IDA, MFHR, Lakes Apartments Project, Refunding, Series A, 6.10%, 9/20/26 ............... 3,000,000 3,141,450
Missouri State Health and Educational Facilities Authority Health Facilities Revenue,
Health Midwest, Series B,
MBIA Insured, 6.25%, 2/15/12 ................................................................... 5,000,000 5,348,000
Missouri State Health and Educational Facilities Authority Revenue, SSM Health Care,
Refunding, Series A,
MBIA Insured, 5.00%, 6/01/22 ................................................................... 10,000,000 9,811,700
</TABLE>
28
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
MISSOURI (CONT.)
<S> <C> <C>
St.Louis Parking Facilities Revenue, Pre-Refunded, 6.625%, 12/15/21 .............................. $ 6,000,000 $ 6,690,780
Taney County IDA, Hospital Revenue, The Skaggs Community Hospital Association, 5.40%,
5/15/28 .......................................................................................... 4,000,000 3,919,520
West Plains IDA, Hospital Revenue, Ozarks Medical Center Project, Series A, Pre-Refunded,
8.625%, 9/15/20 .................................................................................. 3,510,000 3,769,214
-----------
32,680,664
-----------
MONTANA .8%
Forsyth County PCR,
Puget Sound Power and Light Co. Project, AMBAC Insured, 6.80%, 3/01/22 ......................... 10,000,000 10,828,800
The Montana Power Co. Colstrip Project, Refunding, Series A, 6.125%, 5/01/23 ................... 3,250,000 3,431,675
The Montana Power Co., Refunding, Series B, AMBAC Insured, 5.90%, 12/01/23 ..................... 4,225,000 4,550,325
The Montana Power Co., Refunding, Series B, MBIA Insured, 5.90%, 12/01/23 ...................... 20,385,000 21,954,645
Montana State Board of Housing SFM, Refunding,
Series A, 6.50%, 12/01/22 ...................................................................... 2,835,000 2,966,572
Series B-1, 6.25%, 12/01/21 .................................................................... 6,720,000 7,069,843
Montana State Health Facilities Authority Revenue,
Montana Developmental Center Project, 6.40%, 6/01/19 ........................................... 2,000,000 2,149,520
Sisters of Charity Leavenworth, MBIA Insured, 5.125%, 12/01/18 ................................. 5,000,000 4,966,200
-----------
57,917,580
-----------
NEBRASKA .2%
Lancaster County Hospital Authority Revenue, Bryan Memorial Hospital Project,
Series B, MBIA Insured,
5.375%, 6/01/22 .................................................................................. 6,500,000 6,627,465
Nebraska Investment Finance Authority Revenue, ETM, 7.00%, 11/01/09 .............................. 5,580,000 5,658,845
-----------
12,286,310
-----------
NEVADA 3.4%
Churchill County Health Care Facilities Revenue, Western Health Network, Series A,
MBIA Insured,
6.25%, 1/01/14 ................................................................................... 2,000,000 2,192,080
Clark County HFC, MFHR, 7.75%, 7/01/23 ......................................................... 5,055,000 5,214,637
Clark County IDR,
Nevada Power Co. Project, Refunding, Series B, 5.90%, 10/01/30 ................................. 15,000,000 15,276,450
Nevada Power Co. Project, Refunding, Series C, 7.20%, 10/01/22 ................................. 12,500,000 13,635,875
Nevada Power Co. Project, Series A, 5.90%, 11/01/32 ............................................ 2,600,000 2,648,672
Southwest Gas Corp., Series A, 7.30%, 9/01/27 .................................................. 18,080,000 19,771,746
Southwest Gas Corp., Series A,6.50%,12/01/33 ................................................... 10,000,000 10,735,700
Southwest Gas Corp., Series B, 7.50%, 9/01/32 .................................................. 62,470,000 68,492,108
Henderson Health Care Facilities Revenue, Catholic Healthcare West, Series A, 5.25%,
7/01/18 .......................................................................................... 23,685,000 23,317,883
Humboldt County PCR, Sierra Pacific Power Co., Refunding, Series A, AMBAC Insured, 6.30%,
7/01/22 .......................................................................................... 4,500,000 4,819,185
Nevada Housing Division,
MFHR, Series B, FNMA Insured, 6.55%, 10/01/25 .................................................. 5,405,000 5,838,805
SF Program, FI/GML, Series A, 8.30%, 10/01/19 .................................................. 2,130,000 2,269,323
SF Program, FI/GML, Series A-2, 8.375%, 10/01/19 ............................................... 1,650,000 1,777,743
SF Program, Refunding, Series A-1, 6.25%, 10/01/26 ............................................. 3,845,000 4,035,597
SF Program, Refunding, Series C-2, 6.75%, 10/01/26 ............................................. 7,875,000 8,353,958
Nevada State GO,
Colorado River Commission Revenue, Series 1994, Pre-Refunded, 6.50%, 7/01/24 ................... 15,915,000 17,975,993
Municipal Bond Bank Project No.40-41, Series A, ETM, 6.375%, 12/01/17 .......................... 10,275,000 11,208,073
</TABLE>
29
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
NEVADA (CONT.)
<S> <C> <C>
Reno RDA, Tax Allocation,
Downtown Redevelopment Project, Series C, Pre-Refunded, 7.75%, 9/01/05 ......................... $ 2,695,000 $ 2,894,834
Downtown Redevelopment Project, Series D, Pre-Refunded, 7.625%, 9/01/16 ........................ 4,035,000 4,422,965
Downtown Redevelopment Project, Series D, Pre-Refunded, 7.625%, 9/01/16 ........................ 4,255,000 4,669,139
Refunding, Series A, 6.20%, 6/01/18 ............................................................ 3,000,000 3,099,360
Washoe County Gas and Water Facilities Revenue, Refunding, AMBAC Insured, 6.30%, 12/01/14 ........ 5,000,000 5,408,600
Washoe County Hospital Facility Revenue, Washoe Medical Center Inc.Project, Series A,
AMBAC Insured,
6.25%, 6/01/13 ................................................................................... 9,295,000 10,289,565
------------
248,348,291
------------
NEW HAMPSHIRE 1.5%
Nashua Housing Authority MFR, Clocktower Project, Refunding, GNMA Secured, 6.25%,
6/20/33 .......................................................................................... 6,130,000 6,507,302
New Hampshire Higher Education and Health Facilities Authority Revenue,
Kendal at Hanover Project, Pre-Refunded, 8.00%, 10/01/19 ....................................... 9,250,000 9,607,513
New Hampshire Catholic Charities, 5.80%, 8/01/22 ............................................... 1,000,000 1,012,220
Rivier College, 5.60%, 1/01/28 ................................................................. 4,590,000 4,544,375
St. Joseph Hospital, 7.50%, 1/01/16 ............................................................ 2,300,000 2,420,014
The Hitchcock Clinic, MBIA Insured, 6.00%, 7/01/27 ............................................. 4,275,000 4,654,364
New Hampshire State HFA,
MFHR, Series 1, 7.10%, 1/01/14 ................................................................. 4,920,000 5,194,880
SFMR, Series E, 6.75%, 7/01/19 ................................................................. 5,230,000 5,581,038
SFMR, Series E, 6.80%, 7/01/25 ................................................................. 3,965,000 4,230,655
New Hampshire State IDAR, Pollution Control, Public Service Co. of New Hampshire Project,
Series A, 7.65%, 5/01/21 ....................................................................... 6,870,000 7,242,698
Series B, 7.50%, 5/01/21 ....................................................................... 50,690,000 53,396,846
Series C, 7.65%, 5/01/21 ....................................................................... 7,450,000 7,854,163
------------
112,246,068
------------
NEW JERSEY .6%
Hudson County Improvement Authority Solid Waste Systems Revenue, Refunding,
Series 1, 6.00%, 1/01/19 ....................................................................... 2,100,000 2,122,869
Series 1, 6.00%, 1/01/29 ....................................................................... 5,000,000 5,034,750
Series 2, 6.125%, 1/01/19 ...................................................................... 2,000,000 2,033,460
Series 2, 6.125%, 1/01/29 ...................................................................... 5,000,000 5,063,900
Mercer County Improvement Authority Revenue, Solid Waste, Refunding, 5.75%, 9/15/16 .............. 2,500,000 2,675,075
New Jersey Health Care Facilities Financing Authority Revenue,
Cathedral Health Service, Pre-Refunded, 7.25%, 2/15/21 ......................................... 3,975,000 4,297,015
Cathedral Health Services, Refunding, MBIA Insured, 5.25%, 8/01/21 ............................. 7,865,000 7,967,481
Hackensack University Medical Center, Refunding, Series B, MBIA Insured, 5.20%, 1/01/28 ........ 7,000,000 7,063,000
St. Barnabas Health, Refunding, Series B, MBIA Insured, 5.00%, 7/01/24 ......................... 9,915,000 9,747,139
------------
46,004,689
------------
NEW MEXICO .8%
Farmington PCR, Public Service Co. of New Mexico, Refunding, Series A, AMBAC Insured,
6.375%, 12/15/22 ................................................................................. 10,435,000 11,304,862
Lordsburg PCR, Phelps Dodge Corp.Project, Refunding, 6.50%, 4/01/13 .............................. 17,000,000 18,394,680
New Mexico Mortgage Finance Authority SFM Program, Refunding, Series A, 6.85%, 7/01/10 ........... 8,870,000 9,355,899
University of New Mexico Revenue, Series 1989, Pre-Refunded, 7.90%, 6/01/19 ...................... 17,000,000 17,394,740
------------
56,450,181
------------
</TABLE>
30
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
NEW YORK 17.3%
<S> <C> <C>
Long Island Power Authority Electric Systems Revenue,
FSA Insured, 5.00%, 12/01/15 ............................................................... $10,000,000 $10,058,800
Series A, 5.50%, 12/01/29 .................................................................. 20,165,000 20,651,581
Series A, FSA Insured, 5.25%, 12/01/26 ..................................................... 8,095,000 8,121,633
Metropolitan Transportation Authority Commuter Facilities Revenue,
Series A, 5.25%, 7/01/28 ................................................................... 5,000,000 4,977,450
Series A, FGIC Insured, 6.00%, 7/01/16 ..................................................... 8,950,000 9,928,056
Series A, FGIC Insured, Pre-Refunded, 6.00%, 7/01/21 ....................................... 9,225,000 10,433,752
Series A, FGIC Insured, Pre-Refunded, 6.10%, 7/01/26 ....................................... 11,050,000 12,565,729
Series C-1, FGIC Insured, 5.375%, 7/01/27 .................................................. 10,000,000 10,207,200
Metropolitan Transportation Authority Dedicated Tax Fund, Series A, MBIA Insured,
5.25%, 4/01/26 ............................................................................... 11,125,000 11,244,371
Metropolitan Transportation Authority Transit Facilities Revenue,
Refunding, Series M, 6.00%, 7/01/14 ........................................................ 18,210,000 19,353,588
Series A, FSA Insured, 6.00%, 7/01/16 ...................................................... 3,630,000 3,998,409
Series A, FSA Insured, 5.625%, 7/01/27 ..................................................... 10,800,000 11,200,896
Series A, FSA Insured, Pre-Refunded, 6.10%, 7/01/21 ........................................ 6,260,000 7,118,684
Service Contract, Refunding, Series 8, 5.375%, 7/01/21 ..................................... 15,000,000 15,192,150
New Rochelle IDA, Civic Facilities Revenue, College of New Rochelle Project,
6.625%, 7/01/12 .............................................................................. 1,245,000 1,375,015
New York City GO,
8.00%, 8/01/99 ............................................................................... 65,000 65,722
ETM, Series B, 8.00%, 6/01/01 .............................................................. 3,000,000 3,265,590
ETM, Series D, 8.00%, 8/01/99 .............................................................. 1,935,000 1,956,575
ETM, Series D, 7.30%, 2/01/01 .............................................................. 4,620,000 4,910,921
Group B, Series D, 8.25%, 8/01/11 .......................................................... 15,000 16,526
Group B, Series D, 8.25%, 8/01/12 .......................................................... 30,000 33,066
Refunding, Series B, 6.20%, 8/15/06 ........................................................ 1,500,000 1,674,600
Refunding, Series E, 6.00%, 8/01/26 ........................................................ 2,765,000 2,987,997
Refunding, Series F, 6.00%, 8/01/13 ........................................................ 14,000,000 15,327,060
Refunding, Series F, 5.25%, 8/01/15 ........................................................ 20,580,000 20,950,440
Refunding, Series H, 6.25%, 8/01/15 ........................................................ 13,035,000 14,556,054
Refunding, Series H, 6.125%, 8/01/25 ....................................................... 65,785,000 71,910,241
Refunding, Series J, 6.00%, 8/01/21 ........................................................ 28,260,000 30,734,163
Series A, 6.125%, 8/01/06 .................................................................. 14,500,000 15,966,965
Series A, 6.20%, 8/01/07 ................................................................... 20,515,000 22,713,387
Series A, 6.25%, 8/01/08 ................................................................... 4,390,000 4,842,258
Series A, 7.75%, 8/15/13 ................................................................... 105,000 114,752
Series A, 7.75%, 8/15/14 ................................................................... 120,000 131,172
Series A, 6.25%, 8/01/16 ................................................................... 3,280,000 3,515,110
Series A, 7.75%, 8/15/17 ................................................................... 15,000 16,393
Series A, Pre-Refunded, 6.20%, 8/01/07 ..................................................... 1,295,000 1,450,024
Series A, Pre-Refunded, 8.00%, 3/15/12 ..................................................... 1,000,000 1,055,160
Series A, Pre-Refunded, 8.00%, 3/15/13 ..................................................... 1,850,000 1,952,046
Series A, Pre-Refunded, 7.75%, 8/15/13 ..................................................... 4,705,000 5,197,378
Series A, Pre-Refunded, 8.00%, 3/15/14 ..................................................... 13,400,000 14,139,144
Series A, Pre-Refunded, 7.75%, 8/15/14 ..................................................... 125,000 138,081
Series A, Pre-Refunded, 8.00%, 3/15/15 ..................................................... 1,115,000 1,176,503
Series A, Pre-Refunded, 8.00%, 3/15/16 ..................................................... 3,000,000 3,165,480
</TABLE>
31
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
NEW YORK (CONT.)
New York City GO, (CONT.)
<S> <C> <C>
Series A, Pre-Refunded, 6.25%, 8/01/16 ......................................... $1,720,000 $1,876,073
Series A, Pre-Refunded, 8.00%, 3/15/17 ......................................... 11,660,000 12,303,166
Series A, Pre-Refunded, 7.75%, 8/15/17 ......................................... 3,270,000 3,612,206
Series A, Pre-Refunded, 8.00%, 8/15/20 ......................................... 5,000 5,550
Series B, 8.25%, 6/01/02 ....................................................... 40,000 44,170
Series B, 7.50%, 2/01/04 ....................................................... 10,000,000 11,052,400
Series B, 8.25%, 6/01/05 ....................................................... 1,000,000 1,208,490
Series B, 6.30%, 8/15/08 ....................................................... 22,360,000 24,914,854
Series B, 6.125%, 8/01/09 ...................................................... 11,510,000 12,560,863
Series B, 6.375%, 8/15/10 ...................................................... 17,170,000 19,101,797
Series B, 7.50%, 10/01/11 ...................................................... 75,000 77,227
Series B, 7.50%, 10/01/12 ...................................................... 125,000 128,696
Series B, 6.75%, 10/01/15 ...................................................... 5,000 5,469
Series B, 6.75%, 10/01/17 ...................................................... 10,000 10,978
Series B, 7.00%, 2/01/19 ....................................................... 13,855,000 15,010,507
Series B, 6.00%, 8/15/26 ....................................................... 1,670,000 1,805,187
Series B, Pre-Refunded, 8.25%, 6/01/02 ......................................... 4,460,000 4,939,138
Series B, Pre-Refunded, 6.30%, 8/15/08 ......................................... 4,515,000 5,105,246
Series B, Pre-Refunded, 6.375%, 8/15/10 ........................................ 4,570,000 5,186,265
Series B, Pre-Refunded, 7.50%, 10/01/11 ........................................ 6,925,000 7,146,739
Series B, Pre-Refunded, 7.50%, 10/01/12 ........................................ 10,860,000 11,207,737
Series B, Pre-Refunded, 6.75%, 10/01/15 ........................................ 45,000 49,963
Series B, Pre-Refunded, 6.75%, 10/01/17 ........................................ 1,290,000 1,434,467
Series B, Pre-Refunded, 7.00%, 2/01/19 ......................................... 1,145,000 1,258,321
Series B, Pre-Refunded, 6.00%, 8/15/26 ......................................... 330,000 371,435
Series B, Sub Series B-1, Pre-Refunded, 7.00%, 8/15/16 ......................... 3,000,000 3,470,190
Series B-1, Pre-Refunded, 7.30%, 8/15/11 ....................................... 8,000,000 9,346,560
Series C, Pre-Refunded, 7.25%, 8/15/24 ......................................... 3,540,000 3,823,094
Series C, Sub Series C-1, 7.00%, 8/01/17 ....................................... 25,000 27,449
Series C, Sub Series C-1, 7.00%, 8/01/18 ....................................... 680,000 745,518
Series C, Sub Series C-1, Pre-Refunded, 7.00%, 8/01/17 ......................... 1,905,000 2,124,170
Series C, Sub Series C-1, Pre-Refunded, 7.00%, 8/01/18 ......................... 1,025,000 1,142,926
Series D, 7.30%, 2/01/01 ....................................................... 380,000 402,473
Series D, 7.50%, 2/01/16 ....................................................... 40,000 43,924
Series D, 8.00%, 8/01/16 ....................................................... 5,000 5,482
Series D, 6.00%, 2/15/25 ....................................................... 20,630,000 22,032,015
Series D, Pre-Refunded, 8.25%, 8/01/11 ......................................... 145,000 161,507
Series D, Pre-Refunded, 8.25%, 8/01/12 ......................................... 11,095,000 12,358,055
Series D, Pre-Refunded, 8.25%, 8/01/13 ......................................... 7,750,000 8,632,260
Series D, Pre-Refunded, 8.25%, 8/01/14 ......................................... 4,340,000 4,829,118
Series D, Pre-Refunded, 7.625%, 2/01/15 ........................................ 9,000,000 10,048,410
Series D, Pre-Refunded, 7.50%, 2/01/16 ......................................... 4,960,000 5,521,819
Series D, Pre-Refunded, 8.00%, 8/01/16 ......................................... 45,000 49,883
Series D, Pre-Refunded, 7.50%, 2/01/17 ......................................... 12,000,000 13,359,240
Series D, Pre-Refunded, 8.00%, 8/01/17 ......................................... 100,000 110,851
Series D, Pre-Refunded, 8.00%, 8/01/18 ......................................... 50,000 55,426
</TABLE>
32
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
NEW YORK (CONT.)
New York City GO, (CONT.)
<S> <C> <C>
Series D, Pre-Refunded, 8.00%, 8/01/19 ..................................................... $30,000 $33,255
Series D, Pre-Refunded, 8.00%, 8/15/21 ..................................................... 15,000 16,651
Series D, Pre-Refunded, 6.00%, 2/15/25 ..................................................... 10,670,000 11,810,410
Series E, 5.75%, 2/15/09 ................................................................... 5,295,000 5,680,158
Series E, 6.50%, 12/01/12 .................................................................. 20,000 20,188
Series E, Pre-Refunded, 5.75%, 2/15/09 ..................................................... 3,205,000 3,506,655
Series E, Pre-Refunded, 6.50%, 12/01/12 .................................................... 115,000 116,124
Series E, Pre-Refunded, 6.00%, 8/01/26 ..................................................... 235,000 264,389
Series F, 8.20%, 11/15/04 .................................................................. 195,000 217,998
Series F, 6.60%, 2/15/10 ................................................................... 350,000 392,742
Series F, Pre-Refunded, 8.20%, 11/15/04 .................................................... 5,140,000 5,782,089
Series F, Pre-Refunded, 6.50%, 2/15/07 ..................................................... 8,050,000 9,115,740
Series F, Pre-Refunded, 6.50%, 2/15/08 ..................................................... 7,540,000 8,538,221
Series F, Pre-Refunded, 6.60%, 2/15/10 ..................................................... 15,650,000 17,801,875
Series F, Pre-Refunded, 8.25%, 11/15/15 .................................................... 2,000,000 2,252,240
Series F, Pre-Refunded, 8.25%, 11/15/17 .................................................... 2,500,000 2,815,300
Series G, 6.00%, 10/15/26 .................................................................. 15,160,000 16,467,853
Series G, Pre-Refunded, 6.00%, 10/15/26 .................................................... 175,000 197,628
Series H, 7.10%, 2/01/12 ................................................................... 330,000 359,175
Series H, 7.20%, 2/01/14 ................................................................... 275,000 300,091
Series H, 7.00%, 2/01/16 ................................................................... 340,000 369,002
Series H, Pre-Refunded, 7.10%, 2/01/12 ..................................................... 2,670,000 2,941,139
Series H, Pre-Refunded, 7.20%, 2/01/14 ..................................................... 9,725,000 10,737,664
Series H, Pre-Refunded, 7.00%, 2/01/16 ..................................................... 3,660,000 4,022,230
Series H-1, 6.125%, 8/01/11 ................................................................ 4,900,000 5,340,167
Series H-1, Pre-Refunded, 6.125%, 8/01/09 .................................................. 240,000 267,886
Series H-1, Pre-Refunded, 6.125%, 8/01/11 .................................................. 100,000 111,619
Series I, 6.25%, 4/15/13 ................................................................... 18,245,000 20,330,221
Series I, 6.25%, 4/15/27 ................................................................... 3,550,000 3,898,575
Series I, Pre-Refunded, 6.25%, 4/15/13 ..................................................... 18,365,000 20,937,202
Series I, Pre-Refunded, 6.25%, 4/15/27 ..................................................... 3,450,000 3,933,207
New York City Health and Hospital Corp. Revenue,
Health System, Series A, AMBAC Insured, 5.00%, 2/15/20 ..................................... 20,000,000 19,618,400
Refunding, Series A, Pre-Refunded, 6.30%, 2/15/20 .......................................... 18,235,000 20,181,222
Series A, Pre-Refunded, 6.00%, 2/15/07 ..................................................... 5,010,000 5,492,213
New York City IDA, IDR, Brooklyn Navy Yard Cogeneration Partners,
5.65%, 10/01/28 ............................................................................ 5,000,000 5,092,350
5.75%, 10/01/36 ............................................................................ 5,750,000 5,904,618
New York City Municipal Water Finance Authority Water and Sewer System Revenue,
Series A, 7.10%, 6/15/12 ................................................................... 2,455,000 2,622,824
Series A, 7.00%, 6/15/15 ................................................................... 4,980,000 5,309,427
Series B, 5.875%, 6/15/26 .................................................................. 6,500,000 6,910,670
Series B, 5.75%, 6/15/29 ................................................................... 15,000,000 15,904,500
Series B, MBIA Insured, 5.75%, 6/15/26 ..................................................... 3,000,000 3,208,050
New York State Dormitory Authority Lease Revenue, State University Dormitory
Facilities, 5.50%, 7/01/27 ................................................................... 8,915,000 9,199,567
</TABLE>
33
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
NEW YORK (CONT.)
<S> <C> <C>
New York State Dormitory Authority Revenue,
City University General Resources, Series 2, MBIA Insured, Pre-Refunded, 6.25%, 7/01/19 ........ $4,000,000 $4,442,800
City University System Consolidated, Series 1, 5.375%, 7/01/24 ................................. 23,000,000 23,249,320
City University System Consolidated, Third, Series 1, 5.25%, 7/01/25 ........................... 10,000,000 9,999,300
City University System, Third General, 6.00%, 7/01/20 .......................................... 16,860,000 18,301,193
City University System, Third General, Series 2, 6.00%, 7/01/26 ................................ 5,500,000 5,956,225
City University System, Third General, Series 2, Pre-Refunded, 6.00%, 7/01/26 .................. 14,150,000 15,956,955
Interfaith Medical Center, Series D, 5.40%, 2/15/28 ............................................ 8,000,000 8,044,800
Mental Health Services Facilities, Series A, 6.00%, 8/15/17 .................................... 18,000,000 19,648,080
Mental Health Services Facilities, Series A, 5.75%, 2/15/27 .................................... 5,000,000 5,318,650
Our Lady Nursing Home, FHA Insured, 5.90%, 8/01/20 ............................................. 6,750,000 7,099,650
Saint Barnabas Hospital, AMBAC Insured, 5.35%, 8/01/17 ......................................... 5,500,000 5,636,510
Second Hospital, Interfaith Medical Center, Series D, 5.30%, 2/15/19 ........................... 5,000,000 5,032,250
State University Educational Facilities, 5.125%, 5/15/21 ....................................... 5,000,000 4,931,700
State University Educational Facilities, Pre-Refunded, 6.00%, 5/15/18 .......................... 5,000,000 5,630,450
State University Educational Facilities, Series B, 7.375%, 5/15/14 ............................. 4,240,000 4,463,151
State University Educational Facilities, Series B, 7.00%, 5/15/16 .............................. 2,000,000 2,097,360
New York State Dormitory Authority Revenues, Upstate Community Colleges,
Series A, 5.00%, 7/01/28 ........................................................................ 10,000,000 9,585,000
New York State Energy Research and Development Authority Electric Facilities Revenue,
Consolidated Edison Project, Refunding, Series A, 6.10%, 8/15/20 ............................... 8,500,000 9,117,270
Long Island Light, Series A, Pre-Refunded, 7.15%, 2/01/22 ...................................... 1,500,000 1,668,510
Series A, 7.15%, 6/01/20 ....................................................................... 12,885,000 14,216,407
Series A, Pre-Refunded, 7.15%, 6/01/20 ......................................................... 4,615,000 5,140,695
New York State Energy Research and Development Authority PCR, Niagara Mohawk Power
Project, Refunding,
Series A, AMBAC Insured, 5.15%, 11/01/25 ....................................................... 5,000,000 4,999,950
New York State HFA, Service Contract Obligation Revenue,
Refunding, Series C, 5.875%, 9/15/14 ........................................................... 4,675,000 4,934,276
Refunding, Series C, 5.50%, 9/15/22 ............................................................ 17,505,000 17,964,681
Series A, 6.375%, 9/15/14 ...................................................................... 25,000 27,352
Series A,6.375%, 9/15/16 ....................................................................... 3,785,000 4,137,346
Series A, Pre-Refunded, 6.375%, 9/15/14 ........................................................ 3,130,000 3,558,747
Series A, Pre-Refunded, 6.50%, 3/15/25 ......................................................... 10,000,000 11,540,600
Series C, 6.125%, 3/15/20 ...................................................................... 25,500,000 27,321,975
New York State HFAR,
Health Facilities, New York City, Refunding, Series A, 5.90%, 5/01/05 .......................... 14,070,000 15,178,153
Housing Project Mortgage, Refunding, Series A, FSA Insured, 6.10%, 11/01/15 .................... 5,475,000 5,861,754
Housing Project Mortgage, Refunding, Series A, FSA Insured, 6.125%, 11/01/20 ................... 4,230,000 4,508,080
New York State Medical Care Facilities Finance Agency Revenue,
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.50%, 2/15/34 ............. 6,870,000 7,447,698
Hospital and Nursing Home, Refunding, FSA Mortgage Insured, 6.40%, 8/15/14 ..................... 10,505,000 11,468,834
Hospital Mortgage, Series A, AMBAC Insured, Pre-Refunded, 6.50%, 8/15/29 ....................... 7,600,000 8,687,636
The Hospital for Special Surgery Revenue, Series A, Pre-Refunded, 6.375%, 8/15/24 .............. 12,500,000 14,159,500
New York State Tollway Authority General Revenue, Series D, 5.375%, 1/01/27 .................... 5,000,000 5,080,600
New York State Tollway Authority Service Contract Revenue, Local Highway and Bridge,
5.75%, 4/01/16 ................................................................................. 13,200,000 13,923,228
Pre-Refunded, 6.25%, 4/01/14 ................................................................... 11,600,000 13,071,808
</TABLE>
34
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
NEW YORK (CONT.)
<S> <C> <C>
New York State Urban Development Corp. Revenue,
Correctional Capital Facilities, Series 5, 6.10%, 1/01/12 ................................... $7,685,000 $8,387,716
Youth Facilities, 6.00%, 4/01/17 ............................................................ 11,720,000 12,780,426
Warren and Washington Counties IDAR, Adirondack Resource Recovery Project, Refunding,
Series A,
7.90%, 12/15/07 ............................................................................... 4,190,000 4,319,513
-------------
1,282,015,120
-------------
NORTH CAROLINA 3.0%
Charlotte-Mecklenberg Hospital Authority Health Care System Revenue,
5.90%, 1/15/16 .............................................................................. 7,010,000 7,460,042
Pre-Refunded, 5.90%, 1/15/16 ................................................................ 2,890,000 3,221,281
Series A, 5.875%, 1/15/26 ................................................................... 5,000,000 5,297,800
New Hanover County Hospital Revenue, New Hanover Regional Medical Center Project,
MBIA Insured,
5.00%, 10/01/28 ............................................................................... 11,000,000 10,621,710
North Carolina Eastern Municipal Power Agency Power System Revenue,
Refunding, Series A, 6.50%, 1/01/17 ......................................................... 25,700,000 27,188,544
Refunding, Series A, 6.50%, 1/01/24 ......................................................... 3,250,000 3,259,165
Refunding, Series B, 6.25%, 1/01/12 ......................................................... 6,875,000 7,162,719
Refunding, Series B, 6.00%, 1/01/14 ......................................................... 16,000,000 16,666,560
Refunding, Series B, 6.00%, 1/01/22 ......................................................... 1,250,000 1,338,725
Refunding, Series B, 6.25%, 1/01/23 ......................................................... 39,030,000 43,039,162
Refunding, Series B, FGIC Insured, 6.25%, 1/01/23 ........................................... 4,000,000 4,343,640
Refunding, Series B, MBIA Insured, 5.80%, 1/01/16 ........................................... 11,175,000 12,128,675
Refunding, Series B, MBIA Insured, 5.75%, 12/01/16 .......................................... 14,420,000 14,859,233
Series B, 6.00%, 1/01/05 .................................................................... 1,355,000 1,444,322
Series B, MBIA Insured, 5.875%, 1/01/21 ..................................................... 13,325,000 14,388,468
Series D, 5.875%, 1/01/13 ................................................................... 7,440,000 7,708,510
North Carolina Medical Care Commission Hospital Revenue, Mission St. Joseph Health
System Project,
MBIA Insured,
5.10%, 10/01/18 ............................................................................. 4,520,000 4,503,231
5.125%, 10/01/28 ............................................................................ 9,000,000 8,858,430
North Carolina Municipal Power Agency No.1 Catawba Electric Revenue, Refunding,
5.75%, 1/01/15 .............................................................................. 12,435,000 12,572,531
6.25%, 1/01/17 .............................................................................. 9,720,000 10,269,472
Wake County Industrial Facilities and PCFA Revenue, Carolina Power and Light Co.,
6.90%, 4/01/09 ................................................................................ 5,000,000 5,227,150
-----------
221,559,370
-----------
NORTH DAKOTA .4%
Dickinson Health Care Facilities Revenue, BHS Long-Term Care Inc., 7.625%, 2/15/20 ............ 7,750,000 8,049,150
Ellendale MFHR, Ellendale Manor Apartments Project, 9.75%, 7/01/16 ............................ 249,000 249,682
Mercer County PCR, Basin Electric Power Corp.,
Refunding, Second Series, AMBAC Insured, 6.05%, 1/01/19 ..................................... 9,130,000 10,004,654
Series E, 7.00%, 1/01/19 .................................................................... 11,395,000 11,754,170
Wahpeton MFHR, Evergreen Apartments Project, 9.75%, 7/01/16 ................................... 710,000 712,009
-----------
30,769,665
-----------
</TABLE>
35
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
OHIO 1.7%
<S> <C> <C>
Dayton Special Facilities Revenue, Emery Air Freight Corp., Emery Worldwide Air Inc.,
Refunding,
Series A, 5.625%, 2/01/18 .......................................................................... $ 6,000,000 $ 6,137,820
Series E, 6.05%, 10/01/09 .......................................................................... 4,000,000 4,320,440
Series F, 6.05%, 10/01/09 .......................................................................... 2,750,000 2,970,303
Franklin County Convention Facilities Authority Tax and Lease Revenue, Anticipation Bonds,
MBIA Insured,
5.00%, 12/01/27 ...................................................................................... 7,500,000 7,310,475
Hamilton County Hospital Facilities Revenue, Children's Hospital Medical Center, Series G,
MBIA Insured,
5.00%, 5/15/23 ....................................................................................... 10,000,000 9,780,900
Montgomery County Health Systems Revenue,
Franciscan at Saint Leonard, Refunding, 5.50%, 7/01/18 ............................................. 3,625,000 3,595,058
Franciscan Facility, Series B-2, 8.10%, 7/01/01 .................................................... 1,400,000 1,479,002
Franciscan Medical Center-Dayton, Refunding, 5.50%, 7/01/18 ........................................ 1,995,000 1,978,521
Series B-2, 8.10%, 7/01/18 ......................................................................... 3,705,000 4,374,012
Series B-2, Pre-Refunded, 8.10%, 7/01/18 ........................................................... 8,295,000 10,410,889
Montgomery County Hospital Facilities Revenue, Grandview Hospital and Medical Center,
Refunding,
5.50%, 12/01/10 .................................................................................... 1,300,000 1,266,330
5.60%, 12/01/11 .................................................................................... 1,000,000 972,720
5.65%, 12/01/12 .................................................................................... 925,000 898,517
Ohio HFA, RMR,
Series A-1, GNMA Secured, 5.40%, 9/01/29 ........................................................... 5,870,000 5,941,497
Series C, GNMA Secured, 5.75%, 9/01/28 ............................................................. 7,665,000 7,923,540
Ohio State Air Quality Development Authority Revenue,
Dayton Power and Light Co. Project, Refunding, 6.10%, 9/01/30 ...................................... 12,000,000 12,869,040
PCR, Toledo Edison, Series B, Refunding, 8.00%, 5/15/19 ............................................ 6,325,000 6,631,573
(b) Refunding, Ohio Power Co., Series C, MBIAC Insured., 5.15%, 5/01/26 ............................ 7,500,000 7,445,850
Ohio State EDR, Good Samaritan Medical Center, Series 1990-3, 7.875%, 12/01/10 ....................... 1,480,000 1,555,672
Ohio State Solid Waste Disposal Revenue, USG Corp.Project, 5.65%, 3/01/33 ............................ 5,330,000 5,305,589
Ohio State Water Development Authority PCR, Facilities Revenue, Toledo Edison,
Series A, 8.00%, 5/15/19 ............................................................................. 10,000,000 10,484,700
Ohio State Water Development Authority Revenue, Dayton Power, Refunding, Series A, 6.40%, 8/15/27 .... 3,250,000 3,525,373
University of Cincinnati COP, University Center Project, MBIA Insured, 5.125%, 6/01/24 ............... 10,500,000 10,503,045
------------
127,680,866
------------
OKLAHOMA .9%
Oklahoma State Turnpike Authority Turnpike Revenue, First Senior, 7.875%, 1/01/21 .................... 610,000 625,744
Stillwater Medical Center Authority Revenue,
Series A, 6.10%, 5/15/09 ........................................................................... 3,440,000 3,640,896
Series B, 6.35%, 5/15/12 ........................................................................... 1,235,000 1,318,992
Series B, 6.50%, 5/15/19 ........................................................................... 3,390,000 3,643,165
Tulsa County Home Finance Authority Mortgage Revenue, Series D, GNMA Secured, 6.95%, 12/01/22 ........ 445,000 467,424
Tulsa County Municipal Airport Revenue, American Airlines Inc.,
7.35%, 12/01/11 .................................................................................... 4,000,000 4,415,200
6.25%, 6/01/20 ..................................................................................... 18,530,000 19,523,949
7.375%, 12/01/20 ................................................................................... 11,000,000 11,684,640
Tulsa County Parking Authority, Series B,
6.90%, 12/01/07 .................................................................................... 3,000,000 3,293,520
7.00%, 12/01/14 .................................................................................... 5,500,000 5,942,090
Tulsa Housing Assistance Corp. Revenue, First Lien, Refunding, 6.80%, 7/01/11 ........................ 2,740,000 2,910,784
</TABLE>
36
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FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
OKLAHOMA (CONT.)
<S> <C> <C>
Tulsa Industrial Authority Hospital Revenue, St. John Medical Center Project,
Series A, 6.25%, 2/15/14 ........................................................................... $2,000,000 $2,157,780
Valley View Hospital Authority Revenue, Valley View Regional Medical Center, Refunding,
6.00%, 8/15/14 ..................................................................................... 4,000,000 4,146,360
-----------
63,770,544
-----------
OREGON .2%
Medford Hospital Facilities Authority Revenue, Asante Health System, Series A, MBIA
Insured, 5.00%, 8/15/24 ............................................................................ 3,655,000 3,562,565
Oregon State Department of Administrative Services COP, Series A, AMBAC Insured,
Pre-Refunded, 5.80%, 5/01/24 ...................................................................... 5,000,000 5,563,250
Oregon State EDR, Georgia Pacific Corp.Project,
Refunding, Series 183, 5.70%, 12/01/25 ........................................................... 3,500,000 3,516,380
Series CLVII, 6.35%, 8/01/25 ..................................................................... 5,500,000 5,800,850
-----------
18,443,045
-----------
PENNSYLVANIA 3.4%
Allegheny County Hospital Development Authority Revenue, University of Pittsburgh
Health Center, Refunding,
Series A, MBIA Insured, 5.625%, 4/01/27 ............................................................ 6,550,000 6,835,187
Allegheny County IDAR, Environmental Improvement,
6.70%, 12/01/20 .................................................................................. 5,250,000 5,712,210
USX Corp., Refunding, 5.50%, 12/01/29 ............................................................ 10,000,000 9,900,200
Beaver County IDA, PCR, Ohio Edison Project, Series A, 7.75%, 9/01/24 .............................. 14,250,000 14,675,220
Berks County GO, AMBAC Insured, 5.00%, 11/15/25 .................................................... 5,000,000 4,877,950
Cambria County HDA, Hospital Revenue, Conemaugh Valley Memorial Hospital, Refunding, Series B,
6.30%, 7/01/08 ................................................................................... 9,600,000 10,489,344
Pre-Refunded, 6.375%, 7/01/18 .................................................................... 10,740,000 11,758,689
Delaware County IDAR, Philadelphia Electric, Refunding, Series 1991, 7.375%, 4/01/21 ............... 6,500,000 6,939,400
Delaware River Port Authority Pennsylvania and New Jersey Revenue, Series 1995, FGIC Insured,
5.50%, 1/01/26 ..................................................................................... 5,000,000 5,212,800
Delaware Valley Regional Finance Authority Local Government Revenue, Series B, AMBAC Insured,
5.60%, 7/01/17 ..................................................................................... 5,000,000 5,423,600
Lehigh County IDA, PCR, Pennsylvania Power and Light Co. Project, Refunding, Series A,
MBIA Insured,
6.15%, 8/01/29 ..................................................................................... 4,000,000 4,354,120
Montgomery County Higher Education and Health Authority Revenue, Jeanes Health
System Project,
Pre-Refunded, 8.75%, 7/01/20 ....................................................................... 5,500,000 5,936,040
Montgomery County IDA, Retirement Community Revenue, Act Retirement-Life Communities,
5.25%, 11/15/28 .................................................................................... 2,500,000 2,377,750
Pennsylvania EDA,
Financing Authority Revenue, Macmillan, LP Project, 7.60%, 12/01/20 .............................. 5,000,000 6,017,750
Financing Resources Recovery Revenue, Colver Project, Series D, 7.125%, 12/01/15 ................. 13,500,000 15,077,610
Pennsylvania HFA,
Rental Housing, Refunding, FGIC Insured, 6.40%, 7/01/12 .......................................... 10,590,000 11,284,704
SFM, Series 1991, 7.15%, 4/01/15 ................................................................. 3,635,000 3,806,717
Pennsylvania State Financial Authority Revenue, Municipal Capital Improvements
Program, Refunding,
6.60%, 11/01/09 .................................................................................... 33,280,000 36,852,275
Pennsylvania State Higher Educational Facilities Authority Revenue, Temple University,
First Series,
MBIA Insured, 5.00%, 4/01/29 ....................................................................... 9,000,000 8,821,620
Pennsylvania State Pooled Finance Authority Lease Revenue, Capital Improvement, Series B,
MBIA Insured,
Pre-Refunded, 8.00%, 11/01/09 ...................................................................... 4,445,000 4,455,268
</TABLE>
37
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FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
PENNSYLVANIA (CONT.)
<S> <C> <C>
Philadelphia Gas Works Revenue,
First Series A, FSA Insured, 5.00%, 7/01/26 ...................................................... $ 5,000,000 $ 4,876,350
Series 13, Pre-Refunded, 7.70%, 6/15/21 .......................................................... 2,850,000 3,141,270
Series A, 6.375%, 7/01/26 ........................................................................ 3,950,000 4,316,876
Philadelphia GO,
MBIA Insured, 5.00%, 5/15/25 ..................................................................... 5,000,000 4,872,050
Refunding, Series A, 11.50%, 8/01/99 ............................................................. 2,400,000 2,444,880
Refunding, Series A, 11.50%, 8/01/00 ............................................................. 1,000,000 1,087,980
Philadelphia Hospitals and Higher Educational Facilities Authority Revenue, Mortgage,
North Philadelphia Health Systems, Series A, FHA Insured,
5.30%, 1/01/18 ................................................................................... 3,330,000 3,325,838
5.35%, 1/01/23 ................................................................................... 5,780,000 5,771,850
5.375%, 1/01/28 .................................................................................. 3,765,000 3,761,988
Philadelphia Hospitals and Higher Education Facilities Authority Revenue, Temple
University Hospital,
5.875%, 11/15/23 ................................................................................... 5,000,000 4,990,200
Philadelphia Municipal Authority Gas Works Lease Revenue, 7.50%, 5/01/01 ........................... 1,000,000 1,020,000
Philadelphia Parking Authority Airport Revenue, AMBAC Insured, 5.00%, 2/01/27 ...................... 5,000,000 4,867,900
Philadelphia School District, Series B, AMBAC Insured, 5.375%, 4/01/19 ............................. 7,000,000 7,137,270
Philadelphia Water and Sewer Revenue, ETM, Series 10, 7.35%, 9/01/04 ............................... 10,760,000 12,114,899
South Fork Municipal Authority Hospital Revenue, Conemaugh Valley Memorial Hospital
Project, Series A,
MBIA Insured, 5.75%, 7/01/26 ....................................................................... 5,000,000 5,298,800
------------
249,836,605
------------
RHODE ISLAND 1.3%
Providence GO, Special Obligation Tax Increment, Series A, 7.65%, 6/01/16 .......................... 9,900,000 11,117,106
Rhode Island Clean Water Financing Agency Revenue, Safe Drinking Water Providence,
Series A, AMBAC Insured,
6.70%, 1/01/15 ..................................................................................... 2,200,000 2,485,142
Rhode Island Housing and Mortgage Finance Corp. Revenue, Homeownership Opportunity,
Series 2, 7.75%, 4/01/22 ......................................................................... 1,365,000 1,411,628
Series 10-A, 6.50%, 10/01/22 ..................................................................... 20,200,000 21,263,732
Series 10-A, 6.50%, 4/01/27 ...................................................................... 13,085,000 13,757,307
Series 13, 6.70%, 10/01/15 ....................................................................... 7,400,000 7,898,760
Series 13, 6.85%, 4/01/27 ........................................................................ 2,180,000 2,327,259
Series 15-A, 6.85%, 10/01/24 ..................................................................... 15,000,000 15,916,050
Series 17-A, 6.25%, 4/01/17 ...................................................................... 2,320,000 2,431,708
Series 17-A, 6.375%, 10/01/26 .................................................................... 2,720,000 2,860,080
Rhode Island Port Authority and EDC Revenue, Shepard Building Project, Series B, AMBAC Insured,
Pre-Refunded, 6.75%, 6/01/25 ....................................................................... 3,000,000 3,434,760
Rhode Island State Health and Educational Building Corp. Revenue,
Health Facilities, Tockwotton Home, Pre-Refunded, 7.25%, 4/15/17 ................................. 3,000,000 3,342,930
Roger William Realty, FHA Insured, 7.50%, 8/01/29 ................................................ 920,000 942,761
St. Antoine Residence, 6.70%, 11/15/12 ........................................................... 2,320,000 2,424,400
St. Antoine Residence, 6.75%, 11/15/18 ........................................................... 2,750,000 2,873,558
------------
94,487,181
------------
</TABLE>
38
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FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
SOUTH CAROLINA .7%
<S> <C> <C>
Berkeley County School District COP, Berkeley School Facilities Group Inc., AMBAC
Insured, Pre-Refunded,
6.30%, 2/01/16 ....................................................................................... $ 1,800,000 $ 2,012,616
Piedmont Municipal Power Agency Electric Revenue, Refunding,
6.60%, 1/01/21 ..................................................................................... 10,645,000 10,673,103
Series A, 5.75%, 1/01/24 ........................................................................... 3,150,000 3,150,630
Series A, AMBAC Insured, 6.55%, 1/01/16 ............................................................ 7,340,000 7,359,084
Series A, AMBAC Insured, 5.75%, 1/01/24 ............................................................ 5,050,000 5,055,151
Richland County PCR, Union Camp Corp.Project, Refunding, Series C, 6.55%, 11/01/20 ................... 3,000,000 3,240,810
South Carolina Housing Finance and Development Authority Mortgage Revenue, Series
A-2, AMBAC Insured,
5.80%, 7/01/27 ....................................................................................... 6,405,000 6,726,915
South Carolina Public Service Authority Revenue, Refunding, Series A, AMBAC Insured,
6.375%, 7/01/21 ...................................................................................... 12,765,000 13,651,529
Spartanburg County Health Services District Inc. Hospital Revenue, Series A, MBIA Insured,
5.50%, 4/15/27 ....................................................................................... 3,000,000 3,099,690
-----------
54,969,528
-----------
SOUTH DAKOTA .4%
Lawrence County PCR, Black Hills Power and Light Co. Project, Refunding, 6.70%, 6/01/10 .............. 5,000,000 5,382,900
South Dakota HDA Revenue, Homeownership Mortgage,
Series A, 6.30%, 5/01/17 ........................................................................... 3,680,000 3,865,803
Series A, 7.15%, 5/01/27 ........................................................................... 10,580,000 11,162,217
Series B, 7.10%, 5/01/17 ........................................................................... 2,815,000 2,970,022
Series D, 6.65%, 5/01/14 ........................................................................... 3,445,000 3,685,495
Series G, 7.125%, 5/01/14 .......................................................................... 3,405,000 3,667,628
-----------
30,734,065
-----------
TENNESSEE 1.4%
Chattanooga Health Educational and Housing Facility Board Revenue, Catholic Health
Initiatives, Refunding,
Series A, 5.00%, 12/01/18 ............................................................................ 2,150,000 2,105,259
Franklin IDB, MFHR, Landings Apartment Project, Refunding, Series A, FSA Insured,
6.00%, 10/01/26 ...................................................................................... 2,000,000 2,107,080
Hamilton County IDB, MFHR, Patten Towers Apartments, Series A,
6.125%, 8/01/05 .................................................................................... 2,515,000 2,631,897
6.30%, 8/01/07 ..................................................................................... 1,000,000 1,056,390
Johnson City Health and Educational Revenue, Medical Center Hospital, Refunding and Improvement,
MBIA Insured,
5.125%, 7/01/25 .................................................................................... 15,375,000 15,166,823
5.25%, 7/01/28 ..................................................................................... 20,500,000 20,407,545
Knox County Health, Educational and Housing Facilities Board MFHR, East Towne Village Project,
GNMA Secured,
8.20%, 7/01/28 ....................................................................................... 4,710,000 4,836,416
Knoxville Electric Revenue, Refunding and Improvement Systems, Series S, 5.10%, 7/01/24 .............. 4,340,000 4,261,272
Memphis-Shelby County Airport Authority Special Facilities and Project Revenue,
Federal Express Corp.,
7.875%, 9/01/09 .................................................................................... 14,690,000 16,140,197
6.75%, 9/01/12 ..................................................................................... 6,520,000 7,052,554
Metropolitan Government of Nashville and Davidson County GO, Refunding, 5.125%, 5/15/25 .............. 3,500,000 3,489,955
Metropolitan Government of Nashville and Davidson County Health and Educational
Facilities Board Revenue,
Multi-Modal Health Facility, Asset Guaranty, 5.50%, 5/01/23 .......................................... 995,000 1,023,367
Metropolitan Government of Nashville and Davidson County IDBR, Osco Treatment Inc., Refunding and
Improvement, 6.00%, 5/01/03 .......................................................................... 5,000,000 5,204,400
Metropolitan Nashville Airport Authority Revenue, Series C, FGIC Insured, 6.60%, 7/01/15 ............. 1,940,000 2,090,001
</TABLE>
39
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FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
TENNESSEE (CONT.)
<S> <C> <C>
Mount Pleasant IDR, PCR, Stauffer Chemical Co. Project, 8.00%, 12/01/12 ............................ $ 1,990,000 $ 2,097,201
Shelby County Health Educational and Housing Facilities Board Hospital Revenue, MBIA Insured,
5.00%, 4/01/18 ..................................................................................... 5,000,000 4,921,700
Tennessee HDA, Homeownership Program,
Series 1992, 6.80%, 7/01/17 ...................................................................... 2,360,000 2,487,322
Series P, 7.70%, 7/01/16 ......................................................................... 3,465,000 3,565,970
Tennessee State Local Development Authority Revenue, Community Provider Pooled Loan Program,
6.45%, 10/01/14 .................................................................................... 2,275,000 2,488,077
------------
103,133,426
------------
TEXAS 6.3%
Austin Utility System Revenue,
FGIC Insured, Pre-Refunded, 6.25%, 5/15/16 ....................................................... 3,555,000 4,025,504
Refunding, FGIC Insured, 6.25%, 5/15/16 .......................................................... 7,755,000 8,598,279
Series A, Pre-Refunded, 8.00%, 11/15/16 .......................................................... 18,100,000 19,662,211
Bexar County Health Facilities Development Corp. Revenue, Incarnate Word Health Services,
ETM, Refunding, FSA Insured,
6.00%, 11/15/15 .................................................................................. 4,500,000 5,073,705
6.10%, 11/15/23 .................................................................................. 8,300,000 9,405,394
Bexar County HFC, MFHR, Sunpark Apartments Project, 6.875%, 12/01/12 ............................... 1,705,000 1,773,439
Bexar Metropolitan Water District Water Works Systems Revenue,
MBIA Insured, Pre-Refunded, 5.875%, 5/01/22 ...................................................... 2,140,000 2,381,927
Refunding, MBIA Insured, 5.875%, 5/01/22 ......................................................... 2,860,000 3,073,842
Brazos River Authority PCR, Texas Utilities Electric Co. Project,
Collateralized, Refunding, Series C, 5.55%, 6/01/30 .............................................. 20,000,000 19,338,600
Series A, AMBAC Insured, 5.55%, 5/01/33 .......................................................... 23,965,000 24,579,463
Dallas-Fort Worth International Airport Facilities Improvement Corp. Revenue,
American Airlines Inc.,
8.00%, 11/01/24 .................................................................................. 99,000,000 106,086,420
Refunding, 6.00%, 11/01/14 ....................................................................... 29,400,000 31,246,320
El Paso HFC, SFMR, Refunding, Series A, 8.75%, 10/01/11 ............................................ 3,395,000 3,641,918
Fort Worth Higher Education Financial Corp. Higher Education Revenue, Texas Christian
University Project,
5.00%, 3/15/27 ..................................................................................... 4,000,000 3,899,960
Grand Prairie Health Facilities Development Corp., Dallas/Fort Worth Medical Center Project,
Refunding, AMBAC Insured, 6.875%, 11/01/10 ......................................................... 2,700,000 2,823,768
Gulf Coast Waste Disposal Authority Environmental Improvement Revenue, UXS Corp. Projects,
Refunding, 5.50%, 9/01/17 ......................................................................... 3,250,000 3,262,870
Harris County IDR, Marine Terminal Revenue, Refunding, 6.95%, 2/01/22 .............................. 20,250,000 21,768,143
Houston Water and Sewer System Revenue, Refunding, Series B, 6.375%, 12/01/14 ...................... 21,000,000 22,810,620
Joshua ISD, Refunding, Series B, 6.125%, 2/15/26 ................................................... 20,000 20,150
Lower Neches Valley Authority IDC Revenue, Mobil Oil Refunding Corp., Refunding, 5.55%, 3/01/33 .... 2,500,000 2,556,975
Lubbock HFC, SFMR, MBS Program, Refunding, Series A, GNMA Secured, 6.125%, 12/01/17 ................ 1,000,000 1,052,140
Matagorda County Navigation District No.1 PCR,
Central Power and Light Co. Project, Refunding, 6.00%, 7/01/28 ................................... 19,200,000 20,132,544
Central Power and Light Co. Project, Refunding, Series E, MBIA Insured, 6.10%, 7/01/28 ........... 25,300,000 26,364,118
Matagorda County Navigation District No.1 Revenue, PCR, Collateralized, Houston
Lighting and Power Co.,
Refunding, Series A, AMBAC Insured, 6.70%, 3/01/27 ................................................. 5,500,000 5,945,940
Mesquite HFC, SFMR, Series 1983, 10.75%, 9/01/14 ................................................... 655,000 669,862
</TABLE>
40
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FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
TEXAS (CONT.)
<S> <C> <C>
North Central Health Facility Development Corp. Revenue, Texas Health Resources System,
Series B, 5.125%, 2/15/22 ........................................................................ $5,985,000 $5,893,609
Nueces River Authority Environmental Improvement Revenue, Asarco Inc.Project, Refunding,
5.60%, 1/01/27 .................................................................................. 4,000,000 3,895,480
Series A, 5.60%, 4/01/18 .......................................................................... 4,500,000 4,427,640
Port Corpus Christi IDC Revenue, Valero, Refunding,
Series B, 5.40%, 4/01/18 ........................................................................ 4,000,000 3,943,880
Series C, 5.40%, 4/01/18 ........................................................................ 6,000,000 5,915,820
Port Corpus Christi Nueces County General Revenue, Union Pacific, Refunding, 5.65%, 12/01/22 ...... 18,000,000 18,458,280
Red River Authority PCR, West Texas Utilities Co., Public Service Co. of Oklahoma, Central
Power and Light Co.,
Refunding, MBIA Insured, 6.00%, 6/01/20 ........................................................... 5,000,000 5,455,900
Sabine River Authority PCR,
San Antonio Electric and Gas Revenue,
5.50%, 2/01/20 .................................................................................. 9,505,000 9,852,218
Pre-Refunded, 5.50%, 2/01/20 .................................................................... 495,000 539,669
San Antonio Water Revenue, senior lien, MBIA Insured,
6.50%, 5/15/10 .................................................................................... 2,795,000 3,017,762
Pre-Refunded, 6.50%, 5/15/10 ...................................................................... 1,440,000 1,581,984
Southwestern Electric Power Co., Refunding, MBIA Insured, 6.10%, 4/01/18 .......................... 4,000,000 4,382,320
Tarrant County Health Facilities Development Corp. Health Services Revenue, Health
Resources System,
Series A, MBIA Insured, 5.00%, 2/15/26 ............................................................ 10,000,000 9,586,400
Tarrant County Health Facilities Development Corp. Hospital Revenue, Fort Worth
Osteopathic Hospital,
MBIA Insured, 5.25%, 5/15/28 ...................................................................... 5,010,000 5,017,665
Texas Housing Agency Residential Development Mortgage Revenue, Series D, 8.35%,
1/01/08 ......................................................................................... 1,150,000 1,177,600
7/01/08 ......................................................................................... 2,655,000 2,718,720
Texas Utilities Electric Co. Project, Collateralized, Refunding, FGIC Insured, 6.55%, 10/01/22 ..... 7,700,000 8,345,568
Texas Water Development Board Revenue, State Revolving Fund, 6.00%, 7/15/13 ....................... 2,500,000 2,676,050
Texas Water Resources Finance Authority Revenue, 7.625%, 8/15/08 .................................. 2,040,000 2,059,645
Travis County HFC, SFMR, Refunding, Series A, 6.95%, 10/01/27 ..................................... 3,735,000 4,008,813
Tyler Health Facilities Development Corp. Hospital Revenue, East Texas Medical Center Project,
Series A, MBIA Insured, 5.50%, 11/01/17 ......................................................... 1,735,000 1,819,581
Series D, FSA Insured, 5.375%, 11/01/27 ......................................................... 14,500,000 14,281,630
-----------
469,250,346
-----------
US TERRITORIES 1.5%
District of Columbia GO, Series E, MBIA-IBC Insured,
6.00%, 6/01/13 .................................................................................. 3,845,000 4,112,497
Pre-Refunded, 6.00%, 6/01/13 .................................................................... 155,000 170,037
District of Columbia HFA,
MFHR, Refunding, Series A, FHA Insured, 7.10%, 9/01/12 .......................................... 1,830,000 1,941,795
MFHR, Refunding, Series A, FHA Insured, 7.15%, 3/01/24 .......................................... 6,575,000 6,946,027
SFMR, Refunding, Series B, GNMA Secured, 5.85%, 12/01/18 ........................................ 2,750,000 2,834,260
District of Columbia Hospital Revenue, Washington Hospital Center Corp., Series A,
Pre-Refunded, 9.00%, 1/01/08 ..................................................................... 3,660,000 4,037,309
District of Columbia Redevelopment Land Agency Washington D. C. Sports Arena
Special Tax Revenue,
5.625%, 11/01/10 .................................................................................. 990,000 1,022,581
</TABLE>
41
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FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
US TERRITORIES (CONT.)
<S> <C> <C>
District of Columbia Revenue,
Association of American Medical Colleges, Pre-Refunded, 7.50%, 2/15/20 ........................ $5,685,000 $5,974,992
Catholic University of America, Connie Lee Insured, 6.45%, 10/01/23 ........................... 5,265,000 5,770,756
Puerto Rico Commonwealth Highway and Transportation Authority Revenue, Series Y,
5.00%, 7/01/36 ................................................................................ 59,000,000 57,920,890
5.50%, 7/01/36 ................................................................................ 7,000,000 7,407,750
Puerto Rico Commonwealth Urban Renewal and Housing Corp. Commonwealth Appropriation,
Refunding,
7.875%, 10/01/04 ................................................................................ 3,200,000 3,313,024
Virgin Islands PFA Revenue,
senior lien, Fund Loan Notes, Refunding, Series A, 5.50%, 10/01/22 ............................ 6,485,000 6,583,507
sub.lien, Fund Loan Notes, Refunding, Series D, 5.50%, 10/01/01 ............................... 1,755,000 1,795,312
sub.lien, Fund Loan Notes, Refunding, Series D, 5.50%, 10/01/02 ............................... 1,700,000 1,748,722
sub.lien, Fund Loan Notes, Refunding, Series D, 5.50%, 10/01/03 ............................... 1,850,000 1,909,681
-----------
113,489,140
-----------
UTAH .7%
Carbon County Solid Waste Disposal Revenue, Laidlaw Inc.Project, Refunding, Series A,
7.50%, 2/01/10 .................................................................................. 5,050,000 5,665,141
Intermountain Power Agency Power Supply Revenue, Refunding, Series A, 6.15%, 7/01/14 ............ 25,000,000 27,796,500
Salt Lake County College Revenue, Westminster College Project,
5.70%, 10/01/17 ............................................................................... 1,000,000 1,014,480
5.75%, 10/01/27 ............................................................................... 1,000,000 1,014,440
(b)5.625%, 10/01/28 ........................................................................... 3,305,000 3,274,264
Utah State HFA,
Refunding, Series A, FNMA Insured, 6.50%, 5/01/19 ............................................... 2,945,000 3,081,088
SFM, Refunding, 6.80%, 1/01/12 ................................................................ 980,000 1,034,919
SFM, Series A, 8.50%, 7/01/19 ................................................................. 95,000 96,203
SFM, Series B, 6.55%, 7/01/19 ................................................................. 2,390,000 2,536,579
SFM, Series B, 6.55%, 7/01/26 ................................................................. 3,015,000 3,187,126
SFM, Series C-1, 6.80%, 7/01/12 ............................................................... 160,000 168,966
SFM, Series C-1, 8.375%, 7/01/19 .............................................................. 745,000 746,952
SFM, Series D, 8.60%, 7/01/19 ................................................................. 30,000 30,017
SFM, Series E-1, 6.65%, 7/01/20 ............................................................... 1,625,000 1,718,421
SFM, Series G-1, 8.10%, 7/01/16 ............................................................... 300,000 305,223
-----------
51,670,319
-----------
VERMONT .1%
Vermont HFA, SFHR, Series 5, 7.00%, 11/01/27 .................................................... 9,400,000 9,960,334
-----------
VIRGINIA 1.0%
Danville IDA, Hospital Revenue,
Danville Regional Medical Center, FGIC Insured, Pre-Refunded, 6.50%, 10/01/24 ................. 5,840,000 6,626,882
Regional Medical Center, FGIC Insured, Pre-Refunded, 6.50%, 10/01/19 .......................... 5,885,000 6,677,945
Henrico County IDA, Public Facilities Lease Revenue, Regional Jail Project, 6.00%, 8/01/15 ...... 7,250,000 7,831,160
Henrico County Water and Sewer Revenue, Refunding, 5.00%, 5/01/22 ............................... 4,875,000 4,848,578
Lynchburg IDA, Healthcare Facilities Revenue, Centra Health, Refunding, 5.20%, 1/01/28 .......... 2,000,000 1,970,540
Medical College Hospital Authority Revenue,
General Revenue Bonds, MBIA Insured, 5.125%, 7/01/18 .......................................... 3,000,000 3,011,190
MBIA Insured, 5.125%, 7/01/23 ................................................................. 2,000,000 1,993,000
</TABLE>
42
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
VIRGINIA (CONT.)
<S> <C> <C>
Newport News GO,
Refunding, Series B, 5.00%, 3/01/18 ........................................................... $3,445,000 $3,432,288
Series B, 5.00%, 3/01/19 ...................................................................... 3,550,000 3,540,912
Portsmouth IDAR, Hotel Conference Center and Parking, FSA Insured, 5.00%, 4/01/29 ............... 5,000,000 4,900,900
Richmond Public Utility Revenue, Refunding, Series A,
5.125%, 1/15/28 ............................................................................... 15,510,000 15,313,643
FGIC Insured, 5.125%, 1/15/28 ................................................................. 4,000,000 3,996,720
Virginia State HDA, Commonwealth Mortgage,
Series C, Sub Series C-6, 6.25%, 1/01/15 ...................................................... 5,120,000 5,360,179
Series H, Sub Series H-2, 6.55%, 1/01/17 ...................................................... 4,755,000 5,047,860
-----------
74,551,797
-----------
WASHINGTON 2.5%
Chelan County PUD No.1, Cheland Hydro Consolidated System Revenue, Series A, 5.65%, 7/01/32 ..... 5,000,000 5,112,050
Pierce County EDC, Solid Waste Revenue,
Occidental Petroleum Corp., 5.80%, 9/01/29 .................................................... 4,000,000 4,024,840
Steilacoom, Refunding, 6.60%, 8/01/22 ......................................................... 32,480,000 34,416,133
Port Moses Lake Public Corp., Union Carbide Corp.,
7.50%, 8/01/04 ................................................................................ 2,100,000 2,103,150
7.875%, 8/01/06 ............................................................................... 1,000,000 1,026,400
Seatac GO, MBIA Insured, Pre-Refunded, 6.50%, 12/01/13 .......................................... 2,760,000 3,121,422
Seattle Municipality Metropolitan Sewer Revenue,
Refunding, Series V, 6.20%, 1/01/32 ........................................................... 9,680,000 10,171,647
Series W, MBIA Insured, Pre-Refunded, 6.25%, 1/01/21 .......................................... 2,500,000 2,754,250
Seattle Special Obligation, Chinatown International District, 5.90%, 8/01/26 .................... 4,810,000 5,234,098
Snohomish County USD No.6 GO, 6.50%, 12/01/11 ................................................... 7,000,000 8,200,010
University of Washington Alumni Association Lease Revenue, Medical Center Roosevelt II,
FSA Insured,
6.30%, 8/15/14 .................................................................................. 4,000,000 4,441,800
Washington State Health Care Facilities Authority Revenue, Swedish Health Services,
Refunding, AMBAC Insured,
5.50%, 11/15/28 ................................................................................. 5,000,000 5,124,400
Washington State Public Power Supply System Revenue,
Nuclear Project No.1, Refunding, Series A, 6.05%, 7/01/12 ..................................... 35,355,000 37,566,102
Nuclear Project No.1, Refunding, Series A, MBIA Insured, 6.25%, 7/01/17 ....................... 19,965,000 21,364,347
Nuclear Project No.2, Refunding, Series A, 6.00%, 7/01/09 ..................................... 18,330,000 19,693,935
Nuclear Project No.2, Refunding, Series A, 6.30%, 7/01/12 ..................................... 7,700,000 8,808,261
Nuclear Project No.2, Series A, 6.25%, 7/01/12 ................................................ 3,200,000 3,417,440
Nuclear Project No.3, Refunding, Series B, 5.50%, 7/01/18 ..................................... 10,050,000 10,063,266
-----------
186,643,551
-----------
WEST VIRGINIA .7%
Braxton County Solid Waste Disposal Revenue, Weyerhaeuser Co. Project,
6.50%, 4/01/25 ................................................................................ 3,500,000 3,821,475
Refunding, 5.40%, 5/01/25 ..................................................................... 10,000,000 9,913,000
Putnam County PCR, FMC Corp.Project, Refunding, 5.625%, 10/01/13 ................................ 1,700,000 1,747,770
Taylor County PCR, Union Carbide Corp., 7.625%, 8/01/05 ......................................... 2,400,000 2,774,136
West Virginia State GO, Series A, FGIC Insured, 5.20%, 11/01/26 ................................. 10,000,000 10,051,500
</TABLE>
43
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
WEST VIRGINIA (CONT.)
<S> <C> <C>
West Virginia State Hospital Finance Authority Hospital Revenue, Logan General
Hospital Project, Refunding
and Improvement, 7.25%, 7/01/20 ............................................................... $7,000,000 $6,825,000
West Virginia State Housing Development Fund, Housing Finance, Series D,
7.00%, 5/01/17 .............................................................................. 6,000,000 6,345,240
7.05%, 11/01/24 ............................................................................. 9,000,000 9,519,840
-------------
50,997,961
-------------
WISCONSIN 1.2%
Janesville IDR, Simmons Manufacturing Co., 7.00%, 10/15/17 .................................... 2,200,000 2,314,576
Madison Industrial IDR, Madison Gas and Electric Co. Project, Series A, 6.75%, 4/01/27 ......... 4,220,000 4,590,896
Wisconsin Housing and EDA, Homeownership Revenue,
Refunding, Series A, 6.10%, 11/01/10 ........................................................ 9,190,000 9,854,897
Series 1, 6.75%, 9/01/15 .................................................................... 10,230,000 10,825,284
Series 1, 6.75%, 9/01/17 .................................................................... 3,000,000 3,171,870
Series A, 6.90%, 3/01/16 .................................................................... 1,985,000 2,136,475
Series A, 6.45%, 3/01/17 .................................................................... 5,500,000 5,822,190
Series A, 7.10%, 3/01/23 .................................................................... 6,620,000 6,986,682
Series B, 7.05%, 11/01/22 ................................................................... 3,000,000 3,204,420
Wisconsin State Health and Educational Facilities Authority Revenue,
Children's Hospital of Wisconsin Inc., AMBAC Insured, 5.375%, 2/15/28 ....................... 21,050,000 21,279,445
Franciscan Sisters Christian, Series A, 5.50%, 2/15/18 ...................................... 1,500,000 1,499,865
Franciscan Sisters Christian, Series A, 5.50%, 2/15/28 ...................................... 3,000,000 2,974,020
Mercy Health Systems Corp., AMBAC Insured, 6.125%, 8/15/13 .................................. 6,500,000 7,177,430
Mercy Health Systems Corp., AMBAC Insured, 6.125%, 8/15/17 .................................. 7,500,000 8,221,050
-------------
90,059,100
-------------
WYOMING .3%
Wyoming CDA,
Housing Revenue, Refunding, Series 6, 6.10%, 12/01/28 ....................................... 11,540,000 12,181,278
MFMR, Series A, 6.90%, 6/01/12 .............................................................. 1,395,000 1,465,767
MFMR, Series A, 6.95%, 6/01/24 .............................................................. 3,495,000 3,677,158
SFMR, Series G, 7.25%, 6/01/21 .............................................................. 2,500,000 2,645,700
-------------
19,969,903
-------------
Total Bonds (Cost $6,746,814,217) ............................................................. 7,185,167,959
-------------
Zero Coupon Bonds 2.2%
Calcasieu Parish Memorial Hospital Service District Revenue, Lake Charles Parish
Memorial Hospital Project,
Series A, 12/01/22 ............................................................................ 11,040,000 7,753,391
Chicago RMR, Refunding, Series B, MBIA Insured, 10/01/09 ...................................... 7,060,000 3,433,206
Coldwater Community Schools, MBIA Insured, Pre-Refunded, 5/01/18 .............................. 5,935,000 2,140,694
Colorado Springs Airport Revenue, Series C,
1/01/03 ..................................................................................... 1,660,000 1,404,243
1/01/05 ..................................................................................... 1,610,000 1,225,756
1/01/07 ..................................................................................... 1,675,000 1,136,587
1/01/08 ..................................................................................... 800,000 509,551
1/01/11 ..................................................................................... 1,450,000 770,413
</TABLE>
44
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
ZERO COUPON BONDS (CONT.)
<S> <C> <C>
Cook County GO, Community Consolidated School District No.54, Schaumburg Township,
Series B, FGIC Insured, Pre-Refunded,
1/01/07 ......................................................................................... $3,505,000 $2,374,847
1/01/08 ......................................................................................... 4,800,000 3,043,391
1/01/09 ......................................................................................... 4,380,000 2,596,201
1/01/10 ......................................................................................... 5,760,000 3,199,564
Florida State Mid-Bay Bridge Authority Revenue, Series A, senior lien, AMBAC Insured,
10/01/23 ........................................................................................ 5,000,000 1,378,450
10/01/24 ........................................................................................ 3,000,000 780,330
Harrison Community Schools GO, AMBAC Insured, 5/01/20 ............................................. 6,000,000 1,799,760
Jefferson County Capital Projects Corp. Lease Revenue, Refunding, Series A,
8/15/07 ......................................................................................... 1,640,000 1,134,650
8/15/08 ......................................................................................... 4,505,000 2,978,481
8/15/09 ......................................................................................... 4,580,000 2,867,033
8/15/10 ......................................................................................... 4,620,000 2,714,896
8/15/13 ......................................................................................... 6,825,000 3,395,505
8/15/14 ......................................................................................... 6,860,000 3,240,321
8/15/16 ......................................................................................... 7,005,000 2,914,710
8/15/17 ......................................................................................... 7,115,000 2,798,970
Metropolitan Pier and Exposition Authority Dedicated State Tax Revenue,
Capital Appreciation, Series A, FGIC Insured, 6/15/09 ........................................... 9,510,000 6,046,172
Capital Appreciation, Series A, FGIC Insured, ETM, Pre-Refunded, 6/15/09 ........................ 1,490,000 942,618
McCormick Place Expansion Project, Series A, FGIC Insured, 6/15/08 .............................. 8,500,000 5,717,440
McCormick Place Expansion Project, Series A, FGIC Insured, 6/15/10 .............................. 8,000,000 4,779,520
McCormick Place Expansion Project, Series A, FGIC Insured, 6/15/11 .............................. 9,690,000 5,494,326
McCormick Place Expansion Project, Series A, FGIC Insured, 6/15/12 .............................. 250,000 225,557
McCormick Place Expansion Project, Series A, FGIC Insured, Pre-Refunded, 6/15/12 ................ 11,550,000 10,677,743
Miami-Dade County Special Obligation, sub.lien, Series B, MBIA Insured, 10/01/34 .................. 5,500,000 795,630
Owensboro Electric Light and Power Revenue, Series B, AMBAC Insured, 1/01/08 ...................... 5,250,000 3,592,942
San Joaquin Hills Transportation Corridor Agency Toll Road Revenue,
Refunding, Series A, 1/15/21 .................................................................... 50,000,000 34,951,500
senior lien, ETM, 1/01/23 ....................................................................... 7,000,000 2,131,710
Shreveport Water and Sewer Revenue, Series B, FGIC Insured,
12/01/07 ........................................................................................ 490,000 304,040
12/01/08 ........................................................................................ 2,530,000 1,463,731
12/01/09 ........................................................................................ 4,080,000 2,189,450
12/01/10 ........................................................................................ 5,630,000 2,813,085
Spring ISD, FGIC Insured, Pre-Refunded, 8/15/08 ................................................... 7,000,000 3,657,500
University of Illinois Revenues, AMBAC Insured, 4/01/10 ........................................... 14,250,000 8,641,057
Washington State Public Power Supply System Revenue, Nuclear Project No.3, Refunding, Series B,
7/01/12 ......................................................................................... 6,400,000 3,312,255
7/01/13 ......................................................................................... 11,000,000 5,392,530
7/01/14 ......................................................................................... 15,000,000 6,971,700
-------------
TOTAL ZERO COUPON BONDS (COST $103,194,509) ....................................................... 165,691,456
-------------
TOTAL LONG TERM INVESTMENTS (COST $6,850,008,726) ................................................. 7,350,859,415
-------------
</TABLE>
45
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, APRIL 30,1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(A) SHORT TERM INVESTMENTS .8%
Burke County Development Authority PCR, Georgia Power Co. Plant Vogtle,
1st Series, Daily VRDN and Put, 4.25%, 4/01/32 ................................................ $4,800,000 $4,800,000
4th Series, Daily VRDN and Put, 4.25%, 9/01/25 ................................................ 9,200,000 9,200,000
Calcasieu Parish Inc. IDB, IDR, Olin Corp.Project, Refunding, Series B, Daily VRDN and Put,
4.30%, 2/01/16 .................................................................................. 600,000 600,000
Hapeville IDAR, Hapeville Hotel Ltd., Daily VRDN and Put, 4.25%, 11/01/15 ....................... 1,000,000 1,000,000
Louisiana Public Facilities Authority Revenue, Kenner Hotel Ltd., Daily VRDN and Put,
4.25%, 12/01/15 ................................................................................. 4,300,000 4,300,000
Massachusetts State Health and Educational Facilities Authority Revenue, Capital Assets
Program, Series D, MBIA Insured, Daily VRDN and Put, 4.20%, 1/01/35 ............................ 4,900,000 4,900,000
Mcintosh IDB, Environmental Improvement Revenue, CIBC Specialty, Refunding, Series D, Daily
VRDN and Put,
3.30%, 7/01/28 .................................................................................. 18,700,000 18,700,000
New York City GO, Series B, Sub Series B-4, MBIA Insured, Daily VRDN and Put, 4.25%, 8/15/23 .... 9,900,000 9,900,000
New York City Municipal Water Finance Authority Water and Sewer System Revenue,
Series G, FGIC Insured,
Daily VRDN and Put, 4.25%, 6/15/24 .............................................................. 5,000,000 5,000,000
--------------
TOTAL SHORT TERM INVESTMENTS (COST $58,400,000) ................................................. 58,400,000
--------------
TOTAL INVESTMENTS (COST $6,908,408,726) 100.0% .................................................. 7,409,259,415
--------------
OTHER ASSETS, LESS LIABILITIES .................................................................. 1,428,658
--------------
NET ASSETS 100.0% ............................................................................... $7,410,688,073
==============
</TABLE>
See glossary of terms on page 47.
(a) Variable rate demand notes (VRDNs) are tax-exempt obligations which contain
a floating or variable interest rate adjustment formula and an unconditional
right of demand to receive payment of the principal balance plus accrued
interest at specified dates.
(b) Sufficient collateral has been segregated for securities traded on a
when-issued or delayed delivery basis.
46 See notes to financial statements.
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND Statement of Investments, April 30,1999
(CONT.)
Glossary of Terms
AMBAC - American Municipal Bond Assurance Corp.
CDA - Community Development Authority/Agency
COP - Certificate of Participation
CRDA - Community Redevelopment Authority/Agency
EDA - Economic Development Authority
EDC - Economic Development Corp.
EDR - Economic Development Revenue
ETM - Escrow to Maturity
FGIC - Financial Guaranty Insurance Co.
FHA - Federal Housing Authority/Agency
FI/GML - Federally Insured or Guaranteed Mortgage Loans
FNMA - Federal National Mortgage Association
FSA - Financial Security Assistance (Some of the securities shown as FSA
Insured were originally insured by Capital Guaranty Insurance
Co. (CGIC) which was acquired by FSA in 1995 and no longer does
business under this name.)
GNMA - Government National Mortgage Association
GO - General Obligation
HDA - Housing Development Authority
HFA - Housing Finance Authority/Agency
HFAR - Housing Finance Authority/Agency Revenue
HFC - Housing Finance Corp.
IDA - Industrial Development Authority/Agency
IDB - Industrial Development Board
IDC - Industrial Development Corp.
IDAR - Industrial Development Authority Revenue
IDBR - Industrial Development Board Revenue
IDR - Industrial Development Revenue
IPC - Industrial Pollution Control
ISD - Independent School District
LP - Limited Partnership
MBIA - Municipal Bond Investors Assurance Corp.
MBIA-IBC - Municipal Bond Investors Assurance Corp.-Insured Bond Certificates
MBS - Mortgage-Backed Securities
MF - Multi-Family
MFHR - Multi-Family Housing Revenue
MFMR - Multi-Family Mortgage Revenue
MFR - Multi-Family Revenue
MTA - Metropolitan Transit Authority
PCFA - Pollution Control Financing Authority
PCR - Pollution Control Revenue
PFA - Public Financing Authority
PUD - Public Utility District
RDA - Redevelopment Authority/Agency
RDAR - Redevelopment Authority/Agency Revenue
RMR - Residential Mortgage Revenue
SF - Single Family
SFHR - Single Family Housing Revenue
SFM - Single Family Mortgage
SFMR - Single Family Mortgage Revenue
SFR - Single Family Revenue
USD - Unified School District
VRDN - Variable Rate Demand Notes
47
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30,1999
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $6,908,408,726) ............................................... $7,409,259,415
Cash ................................................................................................... 625,357
Receivables:
Capital shares sold ................................................................................... 11,982,062
Interest .............................................................................................. 132,742,287
--------------
Total assets ...................................................................................... 7,554,609,121
--------------
Liabilities:
Payables:
Investment securities purchased ....................................................................... 92,025,073
Capital shares redeemed ............................................................................... 38,633,719
Affiliates ............................................................................................ 4,842,331
Shareholders .......................................................................................... 8,067,038
Other liabilities ...................................................................................... 352,887
Total liabilities ................................................................................. 143,921,048
--------------
Net assets, at value ............................................................................. $7,410,688,073
--------------
Net assets consist of:
Undistributed net investment income .................................................................... $3,975,053
Net unrealized appreciation ............................................................................ 500,850,689
Accumulated net realized gain .......................................................................... 4,386,667
Capital shares ......................................................................................... 6,901,475,664
--------------
Net assets, at value ............................................................................. $7,410,688,073
--------------
CLASS A:
Net assets value per share ($7,170,226,267 /582,420,745 shares outstanding)(*) ......................... $12.31
--------------
Maximum offering price per share ($12.31 /95.75%) ...................................................... $12.86
--------------
CLASS B:
Net assets value and maximum offering price per share
($27,988,089 /2,274,645 shares outstanding)(*) ......................................................... $12.30
--------------
CLASS C:
Net assets value per share ($212,473,717 /17,265,018 shares outstanding)(*) ............................ $12.31
--------------
Maximum offering price per share ($12.31 /99%) ......................................................... $12.43
--------------
</TABLE>
(*)Redemption price is equal to net asset value less any applicable contingent
deferred sales charge.
48 See notes to financial statements.
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED APRIL 30,1999
<TABLE>
<S> <C>
Investment income:
Interest .......................................................................................... $439,038,013
------------
Expenses:
Management fees (Note 3) .......................................................................... 33,328,560
Distribution fees (Note 3)
Class A .......................................................................................... 5,510,779
Class B .......................................................................................... 26,953
Class C .......................................................................................... 1,134,463
Transfer agent fees (Note 3) ...................................................................... 2,949,875
Custodian fees .................................................................................... 72,306
Reports to shareholders ........................................................................... 714,932
Registration and filing fees ...................................................................... 248,679
Professional fees ................................................................................. 207,638
Directors' fees and expenses ...................................................................... 128,765
Other ............................................................................................. 215,741
------------
Total expenses ............................................................................... 44,538,691
------------
Net investment income ...................................................................... 394,499,322
------------
Realized and unrealized gains:
Net realized gain from investments ................................................................ 30,265,498
Net unrealized appreciation on investments ........................................................ 8,220,333
------------
Net realized and unrealized gain ................................................................... 38,485,831
------------
Net increase in net assets resulting from operations ............................................... $432,985,153
============
</TABLE>
See notes to financial statements. 49
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED APRIL 30,1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ...................................................... $394,499,322 $404,855,331
Net realized gain from investments ......................................... 30,265,498 42,732,886
Net unrealized appreciation on investments ................................. 8,220,333 156,385,279
------------------------------------------
Net increase in net assets resulting from operations ................... 432,985,153 603,973,496
Distributions to shareholders from net investment income:
Class A .................................................................... (387,521,130) (396,082,048)
Class B .................................................................... (156,270) --
Class C .................................................................... (8,350,778) (5,046,130)
------------------------------------------
Total distributions to shareholders ......................................... (396,028,178) (401,128,178)
Capital share transactions: (Note 2)
Class A .................................................................... 110,674,594 (83,120,865)
Class B .................................................................... 28,056,262 --
Class C .................................................................... 76,844,652 60,999,749
------------------------------------------
Total capital share transactions ............................................ 215,575,508 (22,121,116)
Net increase in net assets ............................................. 252,532,483 180,724,202
Net assets:
Beginning of year ........................................................... 7,158,155,590 6,977,431,388
------------------------------------------
End of year ................................................................. $7,410,688,073 $7,158,155,590
------------------------------------------
Undistributed net investment income included in net assets:
End of year ................................................................. $3,975,053 $5,570,212
------------------------------------------
</TABLE>
50 See notes to financial statements.
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Franklin Federal Tax-Free Income Fund (the Fund) is registered under the
Investment Company Act of 1940 as a diversified, open-end investment company.
The Fund seeks to provide tax-free income.
On January 12, 1999, the Board of Directors for the Franklin Federal Tax-Free
Income Fund approved a proposal to merge Franklin Indiana Tax-Free Income Fund,
Franklin Hawaii Municipal Bond Fund, Franklin Arkansas Municipal Bond Fund and
Franklin Washington Municipal Bond Fund into the Franklin Federal Tax-Free
Income Fund, subject to shareholder approval.
The following summarizes the Fund's significant accounting policies.
A. SECURITY VALUATION
Tax-free bonds generally trade in the over-the-counter market and are valued
within the range of the latest quoted bid and asked prices. In the absence of a
sale or reported bid and asked 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. Securities for
which market quotations are not readily available are valued at fair value as
determined by management in accordance with procedures established by the Board
of Directors.
B. INCOME TAXES
No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute substantially all of its taxable income.
C. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income and estimated expenses are accrued daily. Bond discount and
premium are amortized on an income tax basis. Distributions to shareholders are
recorded on the ex-dividend date.
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.
D. ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
2. CAPITAL STOCK
The Fund offers three classes of shares: Class A, Class B and Class C. Effective
January 1, 1999, Class I and Class II were renamed Class A and Class C,
respectively, and the fund began offering a new class of shares, Class B. Each
class of shares differs by its initial sales load, distribution fees, voting
rights on matters affecting a single class and its exchange privilege.
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FRANKLIN FEDERAL TAX-FREE INCOME FUND
Notes to Financial Statements (continued)
2. CAPITAL STOCK (CONT.)
At April 30, 1999, there were ten billion shares of no par value stock
authorized, of which three billion each were designated as Class A and Class C,
and one hundred million were designated as Class B. Transactions in the Fund's
shares were as follows:
<TABLE>
<CAPTION>
Year ended April 30,
----------------------------------------------------------------------------
1999 1998
----------------------------------------------------------------------------
Shares Amount Shares Amount
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares:
Shares sold ................................... 141,557,333 $ 1,748,852,193 114,214,913 $ 1,390,939,797
Shares issued in reinvestment of distributions 13,019,553 160,434,527 13,093,027 159,083,079
Shares redeemed ............................... (145,578,579) (1,798,612,126) (134,063,708) (1,633,143,741)
----------------------------------------------------------------------------
Net increase (decrease) ....................... 8,998,307 $ 110,674,594 (6,755,768) $ (83,120,865)
============================================================================
Class B Shares:(*)
Shares sold ................................... 2,267,562 $ 27,969,254
Shares issued in reinvestment of distributions 8,064 99,100
Shares redeemed ............................... (981) (12,092)
----------------------------------
Net increase .................................. 2,274,645 $ 28,056,262
==================================
Class C Shares:
Shares sold ................................... 7,659,630 $ 94,594,251 5,941,310 $ 72,517,830
Shares issued in reinvestment of distributions 421,645 5,197,244 259,109 3,154,246
Shares redeemed ............................... (1,859,163) (22,946,843) (1,202,566) (14,672,327)
----------------------------------------------------------------------------
Net increase .................................. 6,222,112 $ 76,844,652 4,997,853 $ 60,999,749
============================================================================
</TABLE>
(*)For the period January 1,1999 (effective date) to April 30,1999.
3. TRANSACTIONS WITH AFFILIATES
Certain officers and directors of the Fund are also officers and/or directors of
Franklin/Templeton Distributors, Inc. (Distributors), Franklin Advisers, Inc.
(Advisers), Franklin/Templeton Investor Services, Inc. (Investor Services), and
Franklin Templeton Services, Inc. (FT Services), the Fund's principal
underwriter, investment manager, transfer agent, and administrative manager,
respectively.
The Fund pays an investment management fee to Advisers based on the net assets
of the Fund as follows:
<TABLE>
<CAPTION>
ANNUALIZED
FEE RATE MONTH-END NET ASSETS
---------------------------------------------------------------
<S> <C>
.625% First $100 million
.50% Over $100 million, up to and including $250 million
.45% Over $250 million, up to and including $10 billion
</TABLE>
Fees are further reduced on net assets over $10 billion.
Under an agreement with Advisers, FT Services provides administrative services
to the Fund. The fee is paid by Advisers based on average daily net assets, and
is not an additional expense of the Fund.
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FRANKLIN FEDERAL TAX-FREE INCOME FUND
Notes to Financial Statements (continued)
3. TRANSACTIONS WITH AFFILIATES (CONT.)
The Fund reimburses Distributors up to .10%, .65% and .65% per year of the
average daily net assets of Class A, Class B and Class C, respectively, for
costs incurred in marketing the Fund's shares.
Distributors paid net commissions on sales of the Fund shares, and received
contingent deferred sales charges for the year of $3,636,588 and $160,824,
respectively.
The Fund paid transfer agent fees of $2,949,875 of which $2,636,843 was paid to
Investor Services.
4. INCOME TAXES
At April 30, 1999, the net unrealized appreciation based on the cost of
investments for income tax purposes of $6,908,408,726 was as follows:
Unrealized appreciation ............................. $ 507,939,872
Unrealized depreciation ............................. (7,089,183)
--------------
Net unrealized appreciation ......................... $ 500,850,689
==============
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
period ended April 30, 1999 aggregated $1,039,201,292 and $710,091,228,
respectively.
6. CREDIT RISK
The Fund 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.
53
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FRANKLIN FEDERAL TAX-FREE INCOME FUND
Independent Auditors' Report
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
OF FRANKLIN FEDERAL TAX-FREE INCOME FUND
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Franklin Federal Tax-Free Income
Fund (the "Fund") at April 30, 1999, the results of its operations 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 periods
presented, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
April 30, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
San Francisco, California
June 2, 1999
54
- -PAGE-
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Tax Information
Under Section 852(b)(3)(c)of the Internal Revenue Code, the Fund hereby
designates $4,386,667, as capital gain dividend for the fiscal year ended
April 30, 1999.
Under Section 852(b)(5)(A)of the Internal Revenue Code, the Fund hereby
designates 100% of the distributions paid from net investment income as
exempt-interest dividends for the fiscal year ended April 30, 1999.
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