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<PAGE> PAGE 2
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<PAGE> PAGE 3
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SIGNATURE KIMBERLEY MONASTERIO
TITLE ASSISTANT TREASURER
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FRANKLIN
FEDERAL TAX-FREE INCOME FUND APRIL 30, 1999 ANNUAL REPORT AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 011
<NAME> FRANKLIN FEDERAL TAX-FREE INCOME FUND CLASS - A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-END> APR-30-1999
<INVESTMENTS-AT-COST> 6,908,408,726
<INVESTMENTS-AT-VALUE> 7,409,259,415
<RECEIVABLES> 144,724,349
<ASSETS-OTHER> 625,357
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,554,609,121
<PAYABLE-FOR-SECURITIES> 92,025,073
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 51,895,975
<TOTAL-LIABILITIES> 143,921,048
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,901,475,664
<SHARES-COMMON-STOCK> 582,420,745
<SHARES-COMMON-PRIOR> 573,422,438
<ACCUMULATED-NII-CURRENT> 3,975,053
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,386,667
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 500,850,689
<NET-ASSETS> 7,410,688,073
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 439,038,013
<OTHER-INCOME> 0
<EXPENSES-NET> (44,538,691)
<NET-INVESTMENT-INCOME> 394,499,322
<REALIZED-GAINS-CURRENT> 30,265,498
<APPREC-INCREASE-CURRENT> 8,220,333
<NET-CHANGE-FROM-OPS> 432,985,153
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (387,521,130)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 141,557,333
<NUMBER-OF-SHARES-REDEEMED> (145,578,579)
<SHARES-REINVESTED> 13,019,553
<NET-CHANGE-IN-ASSETS> 252,532,483
<ACCUMULATED-NII-PRIOR> 5,570,212
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (25,878,831)
<GROSS-ADVISORY-FEES> (33,328,560)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (44,538,691)
<AVERAGE-NET-ASSETS> 7,316,004,570
<PER-SHARE-NAV-BEGIN> 12.250
<PER-SHARE-NII> .670
<PER-SHARE-GAIN-APPREC> .060
<PER-SHARE-DIVIDEND> (.670)
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 12.310
<EXPENSE-RATIO> .600
<FN>
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FRANKLIN
FEDERAL TAX-FREE INCOME FUND APRIL 30, 1999 ANNUAL REPORT AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 012
<NAME> FRANKLIN FEDERAL TAX-FREE INCOME FUND CLASS - C
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-END> APR-30-1999
<INVESTMENTS-AT-COST> 6,908,408,726
<INVESTMENTS-AT-VALUE> 7,409,259,415
<RECEIVABLES> 144,724,349
<ASSETS-OTHER> 625,357
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,554,609,121
<PAYABLE-FOR-SECURITIES> 92,025,073
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 51,895,975
<TOTAL-LIABILITIES> 143,921,048
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,901,475,664
<SHARES-COMMON-STOCK> 17,265,018
<SHARES-COMMON-PRIOR> 11,042,906
<ACCUMULATED-NII-CURRENT> 3,975,053
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,386,667
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 500,850,689
<NET-ASSETS> 7,410,688,073
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 439,038,013
<OTHER-INCOME> 0
<EXPENSES-NET> (44,538,691)
<NET-INVESTMENT-INCOME> 394,499,322
<REALIZED-GAINS-CURRENT> 30,265,498
<APPREC-INCREASE-CURRENT> 8,220,333
<NET-CHANGE-FROM-OPS> 432,985,153
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (8,350,778)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,659,630
<NUMBER-OF-SHARES-REDEEMED> (1,859,163)
<SHARES-REINVESTED> 421,645
<NET-CHANGE-IN-ASSETS> 252,532,483
<ACCUMULATED-NII-PRIOR> 5,570,212
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (25,878,831)
<GROSS-ADVISORY-FEES> (33,328,560)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (44,538,691)
<AVERAGE-NET-ASSETS> 7,316,004,570
<PER-SHARE-NAV-BEGIN> 12.240
<PER-SHARE-NII> .600
<PER-SHARE-GAIN-APPREC> .070
<PER-SHARE-DIVIDEND> (.600)
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 12.310
<EXPENSE-RATIO> 1.170
<FN>
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FRANKLIN
FEDERAL TAX-FREE INCOME FUND APRIL 30, 1999 ANNUAL REPORT AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 013
<NAME> FRANKLIN FEDERAL TAX-FREE INCOME FUND CLASS - B
<S> <C>
<PERIOD-TYPE> YEAR<F1>
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-END> APR-30-1999
<INVESTMENTS-AT-COST> 6,908,408,726
<INVESTMENTS-AT-VALUE> 7,409,259,415
<RECEIVABLES> 144,724,349
<ASSETS-OTHER> 625,357
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,554,609,121
<PAYABLE-FOR-SECURITIES> 92,025,073
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 51,895,975
<TOTAL-LIABILITIES> 143,921,048
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,901,475,664
<SHARES-COMMON-STOCK> 2,274,645
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 3,975,053
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,386,667
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 500,850,689
<NET-ASSETS> 7,410,688,073
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 439,038,013
<OTHER-INCOME> 0
<EXPENSES-NET> (44,538,691)
<NET-INVESTMENT-INCOME> 394,499,322
<REALIZED-GAINS-CURRENT> 30,265,498
<APPREC-INCREASE-CURRENT> 8,220,333
<NET-CHANGE-FROM-OPS> 432,985,153
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (156,270)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,267,562
<NUMBER-OF-SHARES-REDEEMED> (981)
<SHARES-REINVESTED> 8,064
<NET-CHANGE-IN-ASSETS> 252,532,483
<ACCUMULATED-NII-PRIOR> 5,570,212
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (25,878,831)
<GROSS-ADVISORY-FEES> (33,328,560)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (44,538,691)
<AVERAGE-NET-ASSETS> 7,316,004,570
<PER-SHARE-NAV-BEGIN> 12.390
<PER-SHARE-NII> .230
<PER-SHARE-GAIN-APPREC> (.110)
<PER-SHARE-DIVIDEND> (.210)
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 12.300
<EXPENSE-RATIO> 1.170<F2>
<FN>
<F1>FOR THE PERIOD JANUARY 1, 1999 THROUGH APRIL 30, 1999
<F2>ANNUALIZED
</FN>
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
Franklin Federal Tax-Free Income Fund
In planning and performing our audit of the financial
statements of Franklin Federal Tax-Free Income Fund for the
year ended April 30, 1999, we considered its internal
control, including controls over safeguarding securities, in
order to determine our auditing procedures for the purpose
of expressing our opinion on the financial statements and to
comply with the requirements of Form N-SAR, not to provide
assurance on internal control.
The management of Franklin Federal Tax-Free Income Fund is
responsible for establishing and maintaining internal
control. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected
benefits and related costs of controls. Generally, controls
that are relevant to an audit pertain to the entity's
objective of preparing financial statements for external
purposes that are fairly presented in conformity with
generally accepted accounting principles. Those controls
include the safeguarding of assets against unauthorized
acquisition, use, or disposition.
Because of inherent limitations in internal control, errors
or irregularities may occur and not be detected. Also,
projection of any evaluation of internal control to future
periods is subject to the risk that it may become inadequate
because of changes in conditions or that the effectiveness
of the design and operation may deteriorate.
Our consideration of internal control would not necessarily
disclose all matters in internal control that might be
material weaknesses under standards established by the
American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or
operation of any specific internal control component does
not reduce to a relatively low level the risk that errors or
irregularities in amounts that would be material in relation
to the financial statements being audited may occur and not
be detected within a timely period by employees in the
normal course of performing their assigned functions.
However, we noted no matters involving internal control,
including controls over safeguarding securities that we
consider to be material weaknesses as defined above as of
April 30, 1999.
This report is intended solely for the information and use
of management and Securities and Exchange Commission.
PricewaterhouseCoopers LLP
San Francisco, California
June 2, 1999
NAME OF REGISTRANT:
Franklin Federal Tax-Free Income Fund
File No. 811-3395
EXHIBIT ITEM No. 77I(b): Terms of new or amended securities
The Registrant currently offers three classes of shares, Class A,
Class B and Class C. Before January 1, 1999, Class A shares were
designated Class I and Class C shares were designated Class II.
The Registrant began offering Class B shares on January 1, 1999.
The Registrant may offer additional classes of shares in the
future. The full title of each class is:
* Franklin Federal Tax-Free Income Fund, Franklin Federal Tax-Free
Income Fund Series, Franklin Federal Tax-Free Income Fund - Class
A
* Franklin Federal Tax-Free Income Fund, Franklin Federal Tax-Free
Income Fund Series, Franklin Federal Tax-Free Income Fund - Class
B
* Franklin Federal Tax-Free Income Fund, Franklin Federal Tax-Free
Income Fund Series, Franklin Federal Tax-Free Income Fund - Class
C
Shares of each class represent proportionate interests in the
Registrant's assets. On matters that affect the Registrant as a
whole, each class has the same voting and other rights and
preferences as any other class. On matters that affect only one
class, only shareholders of that class may vote. Each class votes
separately on matters affecting only that class, or expressly
required to be voted on separately by state or federal law.
NAME OF REGISTRANT:
Franklin Federal Tax-Free Income FundFile No. 811-3395
EXHIBIT ITEM No. 77Q(1): Copies of all constituent instruments
defining the rights of the holders of any new class of securities
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Certificate of Determination of Rights, Preferences
Privileges and Restrictions of the
Franklin Federal Tax-Free Income Fund - Class B Series
of Franklin Federal Tax-Free Income Fund Series Class
BY RESOLUTION OF THE BOARD OF DIRECTORS
The undersigned, Vice President and Secretary of
Franklin Federal Tax-Free Income Fund (the "Corporation"), a
corporation organized and existing under the laws of the State of
California, does hereby certify:
1. That she is the Vice President and Secretary of the
Corporation.
2. That, pursuant to authority conferred upon the
Board of Directors by the Articles of Incorporation of the
Corporation, under the provisions of Section 401 of the
Corporations Code of the State of California, the Board of
Directors of the Corporation adopted the following resolutions
fixing and determining the rights, preferences, privileges and
restrictions of the "Franklin Federal Tax-Free Income Fund-Class
B" series of the Franklin Federal Tax-Free Income Fund Series
class of shares of the Corporation:
RESOLVED, that a third series of shares of the Franklin Federal
Tax-Free Income Fund Series class of shares of the Corporation
("Federal Tax-Free Income Fund"), no par value, is hereby
established and designated as "Franklin Federal Tax-Free Income
Fund-Class B" (each referred to herein as a "Class B share" or the
"Class B shares") and one hundred million (100,000,000) unissued
shares previously authorized but not allocated to any series are
hereby classified as and allocated to such new series; and it is
FURTHER RESOLVED, that each Class B share of the Federal Tax-Free
Income Fund, shall represent proportionate interests in the same
portfolio of investments as the shares of the existing series of
Common Stock of the Federal Tax-Free Income Fund. Each Class B
share shall have the same preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of redemption of the
existing series of shares, all as set forth in the Corporation's
charter, except for the differences hereinafter set forth:
(1) (a) Dividends and distributions paid to holders of the Class B
shares of Common Stock of a series shall be in such amounts as may
be declared from time to time by the Board of Directors, and such
dividends and distributions may vary with respect to such series
from the dividends and distributions with respect to the other
series of Common Stock of that class to reflect differing
allocations of the expenses of the Corporation among the series,
which shall include reductions for payments of fees under any 12b-
1 Plan adopted for or relating to such Class B shares, and any
resultant difference among the net asset values per share of the
series, to such extent and for such purposes as the Board of
Directors may deem appropriate; (b) Class B shares of a class
shall have exclusive voting rights with respect to any matter
submitted to a vote of shareholders that affects only holders of
Class B shares of such class, including, without limitation, the
provisions of any 12b-1 Plan adopted for and relating to the Class
B shares; and (c) Class B shares shall not have voting rights with
respect to the provisions of any distribution plan adopted
pursuant to Rule 12b-1 under the 1940 Act applicable to any other
series of the Federal Tax-Free Income Fund or with regard to any
other matter submitted to a vote of shareholders which does not
now or in the future affect the holders of the Class B shares.
(2) (a) Other than shares described in this paragraph (2)(a), each
Class B share of the Federal Tax-Free Income Fund shall be
converted automatically, and without any action or choice on the
part of the holder thereof, into the series of the Federal Tax-
Free Income Fund designated as "Franklin Federal Tax-Free Income
Fund-Class I" (a "Class I share" or "Class I shares") on the
Conversion Date. The term "Conversion Date" means the date on
which the eighth anniversary of the date of issuance of the share
occurs; provided that, subject to the provisions of the next
sentence, for any Class B shares of the Federal Tax-Free Income
Fund acquired through an exchange, or through a series of
exchanges, as permitted by the Corporation and as provided in the
prospectus relating to Class B shares, as such prospectus may be
amended from time to time ("Prospectus"), from another investment
company or another class of the Corporation (an "eligible
investment company'), the Conversion Date shall be the conversion
date applicable to the shares of the eligible investment company
originally subscribed for in lieu of the Conversion Date of any
shares acquired through exchange if such eligible investment
company issuing the share originally subscribed for had a
conversion feature, but not later than the Conversion Date
determined as set forth above. For the purpose of calculating the
holding period required for conversion, the date of issuance of a
Class B share of the Federal Tax-Free Income Fund shall mean (i)
in the case of a Class B share of the Federal Tax-Free Income Fund
obtained by the holder thereof through an original subscription to
the Federal Tax-Free Income Fund, the date of the issuance of such
Class B share of the Federal Tax-Free Income Fund, or (ii) in the
case of a Class B share of the Federal Tax-Free Income Fund
obtained by the holder thereof through an exchange, or through a
series of exchanges, from an eligible investment company, the date
of issuance of the share of the eligible investment company to
which the holder originally subscribed.
(b) Each Class B share of the Federal Tax-Free Income Fund (i)
purchased through the automatic reinvestment of a dividend or
distribution with respect to that Class B share or the
corresponding series of any other investment company or of any
other class of the Corporation issuing such series of shares, or
(ii) issued pursuant to an exchange privilege granted by the
Corporation in an exchange or series of exchanges for shares
originally purchased through the automatic reinvestment of a
dividend or distribution with respect to shares of an eligible
investment company, shall be segregated in a separate sub-account
on the share records of the Corporation for each of the holders of
record thereof. On any Conversion Date, a number of the shares
held in the separate sub-account of the holder of record of the
share or shares being converted, calculated in accordance with the
next following sentence, shall be converted automatically, and
without any action or choice on the part of the holder, into
shares of Class I of the Federal Tax-Free Income Fund. The number
of shares in the holder's separate sub-account so converted shall
(i) bear the same ratio to the total number of shares maintained
in the separate sub-account on the Conversion Date (immediately
prior to conversion) as the number of shares of the holder
converted on the Conversion Date pursuant to paragraph (2)(a)
hereof bears to the total number of Class B shares of the holder
on the Conversion Date (immediately prior to conversion) after
subtracting the shares then maintained in the holder's separate
subaccount, or (ii) be such other number as may be calculated in
such other manner as may be determined by the Board of Directors
and set forth in the Prospectus.
(c) The number of Class I shares of the Federal Tax-Free Income
Fund into which a Class B share is converted pursuant to
paragraphs 2(a) and 2(b) hereof shall equal the number (including
for this purpose fractions of a share) obtained by dividing the
net asset value per share of such Class B share for purposes of
sales and redemption thereof on the Conversion Date by the net
asset value per share of the Class I shares of the same class for
purposes of sales and redemption thereof on the Conversion Date.
(d) On the Conversion Date, the Class B shares of a class
converted into shares of Class I of the same class will no longer
be deemed outstanding and the rights of the holders thereof
(except the right to (i) receive the number of shares of Class I
into which Class B shares have been converted and (ii) receive
declared but unpaid dividends to the Conversion Date or such other
date set forth in the Prospectus and (iii) vote converting Class B
shares held as of any record date occurring on or before the
Conversion Date and theretofore set with respect to any meeting
held after the Conversion Date) will cease. Certificates
representing Class I shares of the Federal Tax-Free Income Fund
resulting from the conversion need not be issued until
certificates representing Class B shares converted, if issued,
have been received by the Corporation or its agent duly endorsed
for transfer.
(e) The automatic conversion of the Class B shares of the Federal
Tax-Free Income Fund into Class U: shares of the Federal Tax-Free
Income Fund, as set forth in paragraphs 2(a) and 2(b) hereof, may
also be suspended by action of the Board of Directors at any time
that the Board of Directors determines such suspension to be
appropriate; and in connection with, or in lieu of, any such
suspension, the Board of Directors may provide holders of the
Class B shares with alternative conversion or exchange rights into
other series of stock of the Corporation in a manner consistent
with applicable law; and it is
FURTHER RESOLVED, that the proper officers of the Corporation are
hereby authorized and directed to execute and file a Certificate
of Determination with the Secretary of State of California and to
take such additional actions as are hereby necessary to accomplish
the intent of the foregoing resolutions.
3. That the number of shares allocated to the
"Franklin Federal Tax-Free Income Fund-Class B" series is one
hundred million (100,000,000).
4. That none of the shares of such series has been issued.
The undersigned declares under penalty of perjury that
the statements contained in the foregoing certificate are true to
her own knowledge. Executed at San Mateo, California on Dec. 7,
1998.
/s/ Deborah R. Gatzek
Deborah R. Gatzek
Vice President and Secretary
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