SHAREHOLDER LETTER
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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)
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Dear Shareholder:
This semiannual report for Franklin Federal Tax-Free Income Fund covers the
period ended October 31, 1999. During the six months under review, U.S. bond
markets continued to experience challenging times. The yield on the benchmark
30-year Treasury bond steadily increased, from 5.66% on April 30, 1999, to 6.16%
on October 29, 1999 -- reaching a high of 6.38% on October 26, 1999. Concerned
about domestic inflationary tendencies, the Federal Open Market Committee raised
the federal funds target rate to 5.00% at its June 30 meeting, and to 5.25% at
its August 24 meeting.
The economy's direction and its effect on inflationary pressures will contribute
to the level of volatility that impacts bond markets in the near future. During
the period under review, many investors reacted swiftly to new releases of
economic data or Federal Reserve Board announcements, and in many instances the
market overcorrected. Investors with short-term investment horizons may view
such instability as unfavorable. However, we prefer to take a long-term approach
toward investing, and we found that recent market conditions afforded us
opportunities not only to increase the fund's income-earning potential, but also
to enhance the portfolio's overall structure.
(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 15 of
this report.
CONTENTS
Shareholder Letter ..... 1
Performance Summary .... 6
Special Feature:
Uncovering Tax-Free
Opportunities .......... 8
Financial Highlights &
Statement of Investments 12
Financial Statements ... 50
Notes to
Financial Statements ... 53
FUND CATEGORY
[Pyramid Graphic Not Shown]
We welcome our new shareholders who joined the fund during the reporting period
as a result of mergers with Franklin Arkansas Municipal Bond Fund, Franklin
Hawaii Municipal Bond Fund, Franklin Indiana Tax-Free Income Fund, and Franklin
Washington Municipal Bond Fund.
PORTFOLIO NOTES
The general rise in interest rates during the six-month reporting period
presented challenges for the fixed-income markets, as well as the fund's share
price, as bond prices fall when interest rates rise. Because the fund's share
price is representative of the market value of the portfolio's securities, the
rising rates resulted in declining share prices. However, the fund's
diversification among municipal bonds protected its shareholders relative to
owning individual bonds. At the end of the period, the fund held 1,120
positions, and because we generally employ a buy-and-hold strategy, the fund is
well-seasoned with older, higher-coupon securities. Such holdings tend to
provide higher current income compared with more recently issued securities and
to moderate volatility. For example, the total return on the 30-year Treasury
bond during the six-month period was -5.11%, while according to Lipper
Analytical Services, Inc., the average total return for funds in the general
municipal debt funds category was -5.32%. By comparison, the fund's Class A
shares delivered a -3.82% cumulative total return for the six months under
review.(2)
DIVIDEND DISTRIBUTIONS
5/1/99 - 10/31/99
DIVIDEND PER SHARE
-----------------------------------
MONTH CLASS A CLASS B CLASS C
- ---------------------------------------------------------------
May 5.55 cents 5.07 cents 4.97 cents
June 5.50 cents 4.90 cents 4.93 cents
July 5.50 cents 4.90 cents 4.93 cents
August 5.50 cents 4.90 cents 4.93 cents
September 5.50 cents 4.92 cents 4.94 cents
October 5.50 cents 4.92 cents 4.94 cents
- ----------------------------------------------------------------
TOTAL 33.05 CENTS 29.61 CENTS 29.64 CENTS
We took advantage of the rise in interest rates to book tax losses by selling
lower-yielding securities, and we reinvested the proceeds at current, higher
rates. The losses help to offset any potential capital gains in the portfolio
and can be carried forward for several years. During the six months under
review, we purchased a broad range of securities, many of them in the insured
sector, as it continues to represent a large portion of the
new issue market. New purchases or additions to the portfolio included Mesa
Industrial Development Authority Revenue, Discovery Health System (Arizona);
Florida State Board of Education; and Houston Higher Education Finance Corp.
Higher Education Revenue, Rice University Project (Texas).
(2). Cumulative total return measures the change in value of an investment,
assuming reinvestment of all distributions and does not include the sales
charge. The value of Treasuries, if held to maturity, is fixed; principal is
guaranteed and interest is fixed. Investment return and the share price of
Franklin Federal Tax-Free Income Fund fluctuate with market conditions. Source:
Lipper Analytical Services, Inc. Lipper average includes 279 funds for the
six-month period ended 10/31/99. Lipper performance does not include sales
charges and results may have been different if such charges had been considered.
CREDIT QUALITY BREAKDOWN*
BASED ON TOTAL LONG-TERM INVESTMENTS
10/31/99
AAA 40.8%
AA 12.4%
A 20.2%
BBB 25.6%
Below Investment Grade 1.0%
*Quality breakdown may include internal ratings for bonds not rated by a
national rating agency.
PORTFOLIO BREAKDOWN
10/31/99
% OF TOTAL
LONG-TERM
SECTOR INVESTMENTS
- ---------------------------------------
Utilities ................. 21.6%
Prerefunded ............... 15.2%
Transportation ............ 13.1%
Hospital & Health Care .... 11.6%
Housing ................... 11.0%
Corporate-Backed .......... 9.0%
General Obligation Bonds .. 8.7%
Subject to Government
Appropriation ............. 5.4%
Tax-Supported Debt ........ 1.8%
Higher Education .......... 1.5%
Other Revenue Bonds ....... 1.1%
Franklin Federal Tax-Free Income Fund will purchase only investment quality
issues, meaning securities rated from AAA to BBB. At the end of the reporting
period, AAA securities represented nearly 41% of the fund's total net assets and
the average rating during the period for holdings in the fund remained
consistent at AA-.
If you had invested $10,000 in the fund's Class A shares on October 31, 1989, as
of October 31, 1999, you would have received monthly tax-free income dividend
checks totaling more than $6,468. If you had reinvested all your distributions,
including capital gains, your account would have been worth $18,598.(3) In both
cases, the fund has provided shareholders attractive returns. Of course, past
performance cannot guarantee future results.
Looking forward, Franklin Federal Tax-Free Income Fund will attempt to take
advantage of the recently higher interest rate environment. Please keep in mind
that interest rates, and therefore bond prices, rise and fall depending on
domestic and global economic factors. Such fluctuations are a normal part of
investing, and one should expect this when investing in any security,
including municipal bonds. Municipal bond funds can help lower such volatility,
as they offer a level of diversification that is difficult for individual
investors to achieve on their own.
(3). 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.
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
This discussion reflects our views, opinions and portfolio holdings as of
October 31, 1999, the end of the reporting period. Our strategies and the fund's
portfolio composition will change depending on market and economic conditions.
Although historical performance is no guarantee of future results, these
insights may help you understand our investment and management philosophy.
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.
PERFORMANCE SUMMARY AS OF 10/31/99
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
CLASS A CHANGE 10/31/99 4/30/99
- ----------------------------------------------------------------
Net Asset Value -$0.80 $11.51 $12.31
DISTRIBUTIONS (5/1/99 - 10/31/99)
---------------------------------
Dividend Income $0.3305
Long-Term Capital Gain $0.0073
TOTAL $0.3378
CLASS B CHANGE 10/31/99 4/30/99
- ---------------------------------------------------------------
Net Asset Value -$0.80 $11.50 $12.30
DISTRIBUTIONS (5/1/99 - 10/31/99)
--------------------------------
Dividend Income $0.2961
Long-Term Capital Gain $0.0073
TOTAL $0.3034
CLASS C CHANGE 10/31/99 4/30/99
- ---------------------------------------------------------------
Net Asset Value -$0.81 $11.50 $12.31
DISTRIBUTIONS (5/1/99 - 10/31/99)
--------------------------------
Dividend Income $0.2964
Long-Term Capital Gain $0.0073
TOTAL $0.3037
Past performance is not predictive of future results.
PERFORMANCE
<TABLE>
<CAPTION>
INCEPTION
CLASS A 6-MONTH 1-YEAR 5-YEAR 10-YEAR (10/7/83)
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<S> <C> <C> <C> <C> <C> <C>
Cumulative Total Return(1) -3.82% -2.05% +35.74% +94.19% +264.11%
Avg. Annual Total Return(2) -7.93% -6.20% +5.38% +6.40% +8.08%
Distribution Rate(3) 5.49%
Taxable Equivalent Distribution Rate(4) 9.09%
30-Day Standardized Yield(5) 4.89%
Taxable Equivalent Yield(4) 8.10%
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
CLASS B 6-MONTH (1/1/99)
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) -4.10% -3.18%
Aggregate Total Return(2) -7.84% -6.89%
Distribution Rate(3) 5.13%
Taxable Equivalent Distribution Rate(4) 8.49%
30-Day Standardized Yield(5) 4.54%
Taxable Equivalent Yield(4) 7.52%
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
CLASS C 6-MONTH 1-YEAR 3-YEAR (5/1/95)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return(1) -4.18% -2.69% +11.79% +24.13%
Average Annual Total Return(2) -6.03% -4.62% +3.44% +4.68%
Distribution Rate(3) 5.10%
Taxable Equivalent Distribution Rate(4) 8.44%
30-Day Standardized Yield(5) 4.50%
Taxable Equivalent Yield(4) 7.45%
</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,
applicable, maximum sales charge(s) for that class. Six-month return has not
been annualized. 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
October dividend and the maximum offering price (net asset value price for Class
B and Advisor Class) per share on October 31, 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 October 31, 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.
[Circle Graphic]
UNCOVERING TAX-FREE OPPORTUNITIES
Rafael Costas, Senior Vice President and Director of Franklin's Municipal
Research Department, discusses how research is an integral part of Franklin's
tax-free income funds' success.
Q: Could you provide an overview of Franklin's research department?
RAFAEL COSTAS: We have one of the industry's largest municipal research staffs,
allowing us to routinely analyze more than 2,000 debt issuers a year. The
research department analysts work closely with our portfolio managers, who rely
on these analysts when making buy and sell decisions. With a focus on in-depth
research and the discipline to buy when others are selling, we often are able to
find exciting opportunities, at temporarily depressed prices. Generally, we
concentrate on investment grade issues. Of course, for our high yield funds, we
also look for below investment-grade bonds that we feel offer appropriate
rewards for the increased risk.
Q: What are some advantages of Franklin's size and reputation?
RAFAEL: Today, Franklin is one of the nation's leading tax-free fund managers.
Our size, with approximately $50 billion of tax-free investments, often enables
us to purchase investments at advantageous prices, which in turn, can help keep
investment costs low. We pass on these savings to shareholders in the form of
higher tax-free yields.(1) In addition, our size often makes us a
favorite of new issuers, as many prefer to work with a minimum number of
investors.
(1). For investors subject to the federal or state alternative minimum tax, a
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.
Q: What type of tax-free bonds do you favor?
RAFAEL: We typically look for investment-grade bonds, as we try to provide our
shareholders high, current income with a relatively low level of risk. Most of
our investment grade tax-free bond funds are composed of a high percentage of
securities rated AAA or AA, the highest ratings bonds can receive from national
credit rating agencies.(2) In addition, many of our purchases are insured
because of the prevalence of insurance in the municipal bond marketplace in the
past few years. Insured securities normally are rated AAA, further improving the
quality of our funds. For our high yield funds, we look for bonds which may be
out of favor but, in our view, still have solid fundamentals and the potential
to be upgraded. In fact, we devote much of our research efforts to finding such
bonds in the low investment-grade, high yield sectors.
Q: How do you research a bond?
RAFAEL: We emphasize detailed, high-quality research, which often enables us to
uncover attractive investments that others may have overlooked. When presented
with an opportunity, our analysts carefully consider such factors as the bond's
purpose, who will repay the bond, if the projections are reasonable, the payment
schedule and the issuer's credit history. We incorporate all of the numerical
findings in our internal, proprietary databases and spreadsheets created by our
analysts. With the processed information and analysis, we meet with our
portfolio managers to discuss the merits of each individual issue. The portfolio
manager's decision to buy a security will depend largely on our analysis of the
bond's credit quality and price. We continue to monitor our investments closely
after the purchase, looking for signs of potential problems as well as
additional opportunities.
(2). Ratings can change.
WHAT IS A ROAD SHOW?
Before a new issue is brought to the public, the issuer and its investment
bankers travel around the country making presentations to potential investors
concerning the issuer's financial information and outlook.
Q: Do you feel it is important to personally meet management and municipal
officials?
RAFAEL: Very much so. Each year Franklin's analysts and portfolio managers visit
hundreds of sites to garner an understanding that can be obtained only through
personal inspection. They meet face-to-face with the project's management and
municipal officials to discuss firsthand any potential problems. Our analysts
also can use these meetings to discover new opportunities, often before they are
widely known.
Q: Do issuers and investment bankers ever come to Franklin?
RAFAEL: Our sizable presence in the municipal bond market frequently means that
issuers and their bankers come to us with new issues. In a typical day, we may
receive between 50 and 100 calls from brokers offering new and secondary issues.
Approximately three times a week, investment bankers visit our offices, usually
as part of an issue's road show. We view these as excellent opportunities not
only to buy issues at favorable prices, but also to propose changes to the
issue, enhancing its quality and appeal to our distinct standards.
Q: How can Franklin's research influence the portfolio managers' investment
decisions?
RAFAEL: Our extensive research allows us to use a contrarian approach to
investing, because we firmly believe that near-term volatility can create
opportunities for greater long-term yields. For example, when Moody's, Standard
& Poor's or Fitch, three national rating agencies, downgrade a bond, many
investors sell the issue, sometimes reducing prices to what we believe are
attractive levels. As we evaluate our investments based on our internal
assessments, we can use these valuable opportunities to purchase what we believe
are high-quality issues at temporarily depressed prices.
External events can also lead to situations where bonds become undervalued. Over
the past few years, for example, Medicare reform negatively affected the
hospital bond sector, even for those hospitals in strong financial shape. As
many hospitals' credit profiles weakened, we were able to find value selectively
through our analysts' expertise. Seeking to take advantage of this, we
recommended such bonds to our portfolio managers who purchased them at a time
when the market seemed to be shunning these issues.
Q: Could you provide an example of a successful outcome of your research?
RAFAEL: Sure. A perfect example is Tucson Electric Power (TEP). It issued $579
million in tax-exempt debt in 1997-98. However, the utility had a long, troubled
history and its debt was rated below investment grade. So, Molly Butler, our
electric utility analyst, and I flew to Tucson and spent an entire day with
TEP's top executives and division heads. We discussed their history, current
position and future plans as well as challenged and questioned many of their
projections and assumptions. At the end of the day, we were satisfied that their
management team had a clear vision and a realistic plan for the future.
Q: How is TEP doing today?
RAFAEL: Since then, the rating agencies have raised TEP's credit rating and the
bonds have seen a significant increase in value. Of course, the ratings can
change again in the future. However, the bonds are still offering above-market
yields for our shareholders, because we were able to purchase the securities
when they were unpopular. We have an excellent relationship with management and
they often call Ms. Butler to discuss the latest releases of information.
THANK YOU, RAFAEL.
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Financial Highlights
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------------
SIX MONTHS ENDED
OCTOBER 31, 1999 YEAR ENDED APRIL 30,
----------------------- --------------------------------------------
(UNAUDITED)*** 1999 1998 1997
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period .......... $ 12.31 $ 12.25 $ 11.90 $ 11.83
-----------------------------------------------------------------
Income from investment operations:
Net investment income ........................ .33 .67 .69 .71
Net realized and unrealized (losses) ......... (.79) .06 .35 .07
-----------------------------------------------------------------
Total from investment operations .............. (.46) .73 1.04 .78
-----------------------------------------------------------------
Less distributions from:
Net investment income ........................ (.33) (.67) (.69) (.71)
Net realized gains ........................... (.01) -- -- --
-----------------------------------------------------------------
Total distributions ........................... (.34) (.67) (.69) (.71)
-----------------------------------------------------------------
Net asset value, end of period ................ $ 11.51 $ 12.31 $ 12.25 $ 11.90
=================================================================
Total Return* ................................. (3.82)% 6.10% 8.92% 6.81%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ............. $6,800,173 $ 7,170,226 $ 7,022,961 $ 6,905,488
Ratios to average net assets:
Expenses ..................................... .60%** .60% .59% .58%
Net investment income ........................ 5.52%** 5.41% 5.70% 6.00%
Portfolio turnover rate ....................... 10.89% 9.90% 14.54% 16.43%
</TABLE>
<TABLE>
<CAPTION>
CLASS A
-------------------------------
YEAR ENDED APRIL 30,
-------------------------------
1996 1995
-------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period .......... $ 11.73 $ 11.81
-------------------------------
Income from investment operations:
Net investment income ........................ .74 .75
Net realized and unrealized (losses) ......... .10 (.05)
-------------------------------
Total from investment operations .............. .84 .70
-------------------------------
Less distributions from:
Net investment income ........................ (.74) (.78)
Net realized gains ........................... -- --
-------------------------------
Total distributions ........................... (.74) (.78)
-------------------------------
Net asset value, end of period ................ $ 11.83 $ 11.73
-------------------------------
Total Return* ................................. 7.33% 6.21%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ............. $7,012,601 $ 6,886,941
Ratios to average net assets:
Expenses ..................................... .57% .59%
Net investment income ........................ 6.20% 6.47%
Portfolio turnover rate ....................... 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.
**Annualized.
***Based on average shares outstanding.
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Financial Highlights (continued)
<TABLE>
<CAPTION>
CLASS B
------------------------------------------
SIX MONTHS ENDED
OCTOBER 31, 1999 YEAR ENDED
(UNAUDITED)*** APRIL 30, 1999(1)
------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ................................ $12.30 $12.39
------------------------
Income from investment operations:
Net investment income .............................................. .30 .23
Net realized and unrealized (losses) ............................... (.79) (.11)
------------------------
Total from investment operations .................................... (.49) .12
Less distributions from: ------------------------
Net investment income .............................................. (.30) (.21)
Net realized gains ................................................. (.01) --
------------------------
Total distributions ................................................. (.31) (.21)
------------------------
Net asset value, end of period ...................................... $11.50 $12.30
========================
Total Return* ....................................................... (4.10)% 0.96%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ................................... $55,723 $27,988
Ratios to average net assets:
Expenses ........................................................... 1.18%** 1.17%**
Net investment income .............................................. 4.96%** 4.86%**
Portfolio turnover rate ............................................. 10.89% 9.90%
</TABLE>
*Total return does not reflect the contingent deferred sales charge, and is not
annualized for periods less than one year.
**Annualized.
***Based on average shares outstanding.
(1)For the period January 1, 1999 (effective date) to April 30, 1999.
FRANKLIN FEDERAL TAX-FREE INCOME FUND
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
CLASS C
---------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED APRIL 30,
OCTOBER 31, 1999 ----------------------------------------
(UNAUDITED)*** 1999 1998 1997 1996(2)
-------------- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ............ $12.31 $12.24 $11.90 $11.82 $11.73
-----------------------------------------------------------
Income from investment operations:
Net investment income .......................... .30 .60 .63 .66 .68
Net realized and unrealized gains (losses) ..... (.80) .07 .33 .06 .09
-----------------------------------------------------------
Total from investment operations ................ (.50) .67 .96 .72 .77
Less distributions from: -----------------------------------------------------------
Net investment income .......................... (.30) (.60) (.62) (.64) (.68)
Net realized gains ............................. (.01) -- -- -- --
-----------------------------------------------------------
Total distributions ............................. (.31) (.60) (.62) (.64) (.68)
-----------------------------------------------------------
Net asset value, end of period .................. $11.50 $12.31 $12.24 $11.90 $11.82
===========================================================
Total Return* ................................... (4.18)% 5.58% 8.22% 6.28% 6.68%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ............... $210,665 $212,474 $135,195 $71,944 $34,110
Ratios to average net assets:
Expenses ....................................... 1.18%** 1.17% 1.17% 1.16% 1.15%
Net investment income .......................... 4.94%** 4.83% 5.12% 5.42% 5.68%
Portfolio turnover rate ......................... 10.89% 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.
**Annualized.
***Based on average shares outstanding.
(2)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.
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS 97.4%
BONDS 94.8%
ALABAMA 1.7%
Alabama HFA, SFMR, Series D-2, GNMA Secured, FNMA Insured, 5.75%, 10/01/23 ............................. $ 5,245,000 $ 5,008,923
Alabama State Docks Department Docks Facilities Revenue, Refunding, MBIA Insured, 5.50%, 10/01/22 ...... 13,000,000 12,226,240
Alabama Water Pollution Control Authority Revolving Fund Loan, Series B, Pre-Refunded, 7.75%, 8/15/12 .. 5,690,000 5,862,692
Anniston Regional Medical Center Board, Series A, AMBAC Insured, 5.125%, 6/01/28 ....................... 7,000,000 6,098,680
Citronelle IDB, PCR, Stauffer Chemical Project, Series 1982, 8.00%, 12/01/12 ........................... 1,000,000 1,032,430
Courtland IDB,
PCR, Champion International Corp. Project, Refunding, 6.15%, 6/01/19 ............................... 5,000,000 4,921,500
Solid Waste Disposal Revenue, Champion International Corp. Project, Refunding, 6.00%, 8/01/29 ...... 12,000,000 11,080,320
Courtland IDBR,
Champion International Corp., Refunding, Series A, 7.20%, 12/01/13 .................................. 12,000,000 12,792,600
(b)Solid Waste Disposal, Champion International Corp. Project, Refunding, Series A, 6.70%, 11/01/29 .... 4,000,000 4,016,320
Fairfield IDB, Environmental Improvement Revenue, USX Corp. Project, Refunding, 5.45%, 9/01/14 ......... 1,445,000 1,323,707
Jefferson County Sewer Revenue,
Capital Improvement wts., Series A, FGIC Insured, 5.375%, 2/01/36 .................................. 9,700,000 8,663,846
wts., Refunding, Series A, FGIC Insured, 5.625%, 2/01/22 ........................................... 4,000,000 3,788,560
wts., Series D, FGIC Insured, 5.75%, 2/01/22 ....................................................... 15,995,000 15,335,366
wts., Series D, FGIC Insured, 5.75%, 2/01/27 ....................................................... 19,715,000 18,751,528
Mcintosh IDB, Environmental Improvement Revenue, CIBA Specialty, Refunding, Series C, 5.375%, 6/01/28 .. 5,000,000 4,499,750
Montgomery Medical Clinic Board Health Care Facilities Revenue, Jackson Hospital and Clinic, Refunding,
AMBAC Insured, 6.00%, 3/01/26 ...................................................................... 5,385,000 5,426,518
-----------
120,828,980
-----------
ALASKA 1.8%
Alaska Industrial Development and Export Authority, Revolving Fund, Series A, 7.95%, 4/01/10 ........... 1,775,000 1,827,221
Alaska State HFC,
Collateralized Home Mortgage, Series A-1, 6.75%, 12/01/32 .......................................... 2,915,000 2,981,345
Refunding, Series A, MBIA Insured, 6.00%, 12/01/15 ................................................. 3,345,000 3,376,042
Refunding, Series A, MBIA Insured, 5.875%, 12/01/24 ................................................ 17,875,000 17,563,439
Refunding, Series A, MBIA Insured, 5.875%, 12/01/30 ................................................ 11,600,000 11,253,276
Refunding, Series A, MBIA Insured, 6.10%, 12/01/37 ................................................. 34,000,000 33,798,720
Series A, Pre-Refunded, 6.60%, 12/01/23 ............................................................ 8,000,000 8,528,720
Veterans Mortgage Program, MBIA Insured, 6.75%, 12/01/25 ........................................... 18,745,000 19,192,256
Anchorage Parking Authority Revenue, 5th Avenue Garage Lease Project, Refunding,
6.50%, 12/01/02 .................................................................................... 2,850,000 2,974,545
6.75%, 12/01/08 .................................................................................... 3,500,000 3,658,305
Valdez Marine Terminal Revenue, BP Pipelines Inc. Project, Refunding, Series A, 5.85%, 8/01/25 ......... 25,000,000 23,910,000
-----------
129,063,869
-----------
ARIZONA .9%
Gila County IDAR, Asarco Inc., Refunding, 5.55%, 1/01/27 ............................................... 3,340,000 2,789,702
Maricopa County IDA,
Health Facilities Revenue, Catholic Healthcare West Project, Refunding, Series A, 5.00%, 7/01/16 ... 23,000,000 18,612,060
Hospital Facility Revenue, Mayo Clinic Hospital, 5.25%, 11/15/37 ................................... 20,000,000 17,417,200
Mesa IDAR, Discovery Health System, Series A, MBIA Insured, 5.75%, 1/01/25 ............................. 22,500,000 21,687,525
Phoenix Civic Improvement Corp. Airport Revenue, senior lien, Series B, FSA Insured, 5.00%, 7/01/25 .... 7,000,000 6,072,290
-----------
66,578,777
-----------
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
ARKANSAS 1.6%
Arkansas GO, Waste Disposal and Pollution, Refunding, Series B, 6.25%, 7/01/20 ........................ $ 130,000 $ 131,954
Arkansas State Development Finance Authority HMR, Series B-1, GNMA Secured, FNMA Insured, 5.80%,
1/01/23 ............................................................................................. 460,000 440,215
Arkansas State Development Finance Authority Revenue, White River Medical Center Project,
5.55%, 6/01/19 ..................................................................................... 1,000,000 883,470
5.60%, 6/01/24 ..................................................................................... 1,200,000 1,039,332
Arkansas State Development Finance Authority SFMR, MBS Program,
Series B, 6.10%, 1/01/29 ........................................................................... 960,000 950,861
Series D, 6.85%, 1/01/27 ........................................................................... 95,000 97,952
Series D-A, 5.375%, 7/01/30 ........................................................................ 560,000 501,105
Arkansas State Development Finance Authority Wastewater System Revenue, Revolving Loan Fund, Series A,
5.85%, 12/01/19 ...................................................................................... 1,000,000 992,940
Arkansas State Student Loan Authority Revenue, Refunding, Sub Series B,
6.25%, 6/01/10 ..................................................................................... 500,000 516,540
5.60%, 6/01/14 ..................................................................................... 325,000 314,613
Arkansas State Water Resources Development,
Series A, 5.70%, 7/01/26 ........................................................................... 560,000 559,188
Series B, 5.75%, 7/01/25 ........................................................................... 300,000 298,380
Blytheville Solid Waste Recycling and Sewage Treatment Revenue, Nucor Corp. Project, 6.375%, 1/01/23 .. 100,000 102,211
Camden Environmental Improvement Revenue, International Paper Co. Project, Series A, 7.625%, 11/01/18 . 250,000 277,088
Conway Public Facilities Board, Capital Improvement Revenue, Hendrix College Project, 6.00%, 10/01/26 . 500,000 488,875
Conway Sales and Use Tax Revenue, Capital Improvement, Series A, FSA Insured, 5.35%, 12/01/17 ......... 1,970,000 1,886,314
Desha County Residential Housing Facilities Board SFMR, Refunding, 7.50%, 4/01/11 ..................... 1,660,000 1,709,800
Fort Smith Water and Sewer Revenue, Refunding and Construction, MBIA Insured, 6.00%, 10/01/12 ......... 130,000 136,339
Fouke School District No. 15 GO, Refunding and Construction, MBIA Insured, Pre-Refunded, 6.60%, 4/01/19 130,000 139,890
Greenland School District No. 95, Washington County, Refunding and Construction, MBIA Insured,
6.50%, 5/01/13 ....................................................................................... 115,000 116,196
Gurdon PCR, International Paper Co. Project, Refunding, Series A, 5.375%, 3/01/20 ..................... 2,160,000 1,925,726
Jefferson County PCR,
Arkansas Power and Light Co. Project, Refunding, 6.30%, 6/01/18 .................................... 1,865,000 1,868,861
Entergy Arkansas Inc. Project, Refunding, 5.60%, 10/01/17 .......................................... 7,900,000 7,302,760
Jonesboro City Water and Light Plant Public Utilities System Revenue,
MBIA Insured, 5.40%, 11/15/13 ...................................................................... 100,000 99,415
Refunding, AMBAC Insured, 5.25%, 12/01/13 .......................................................... 200,000 195,902
Jonesboro Residential Housing and Health Care Facilities Board Hospital Revenue,
St. Bernard's Regional Medical Center, Refunding, Series B, AMBAC Insured, 5.90%, 7/01/16 ............ 450,000 455,432
Little River County Revenue, Georgia-Pacific Corp. Project, Refunding, 5.60%, 10/01/26 ................ 16,000,000 14,161,280
Little Rock GO, Capital Improvement, Refunding, 6.30%, 2/01/09 ........................................ 140,000 140,554
Little Rock Municipal Airport Revenue, Refunding, MBIA Insured, 6.00%, 11/01/14 ....................... 130,000 132,094
Little Rock School District GO, Refunding,
6.25%, 12/01/07 .................................................................................... 120,000 120,164
FSA Insured, 5.60%, 1/01/20 ........................................................................ 100,000 96,481
Little Rock Waste Disposal Revenue, 5.80%, 5/01/16 .................................................... 440,000 438,152
North Little Rock Health Facilities Board Health Care Revenue, Baptist Health Facility,
Series A, MBIA Insured, 5.50%, 12/01/21 .............................................................. 800,000 764,544
Paragould Hospital Revenue, 6.375%, 10/01/17 .......................................................... 400,000 398,072
Pine Bluff Environmental Improvement Revenue, International Paper Co. Project, Series B, 5.55%,
11/01/22 ............................................................................................. 500,000 443,710
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
ARKANSAS (CONT.)
Pope County PCR,
Arkansas Power and Light Co. Project, Refunding, 6.30%, 11/01/20 .................................. $60,500,000 $ 60,515,730
Power and Light Co. Project, Refunding, 6.30%, 12/01/16 ........................................... 2,600,000 2,629,068
Pulaski County Health Facilities Board Revenue,
Catholic Health Initiatives, Series A, 5.00%, 12/01/28 ............................................ 1,500,000 1,226,025
Nazareth Sisters of Charity, St. Vincent's Infirmary, Refunding, MBIA Insured, ETM, 6.05%,
11/01/09 ......................................................................................... 125,000 133,804
Pulaski County Public Facilities Board,
College Projects, Refunding, Series A, GNMA Secured, 5.55%, 6/20/27 ............................... 1,300,000 1,206,595
Refunding, Series A, GNMA Secured, 5.45%, 12/20/18 ................................................. 1,000,000 943,260
Pulaski County Public Facilities Board MFR, South Oaks Apartments, Refunding, Series A, GNMA Secured,
6.50%, 10/20/29 ..................................................................................... 600,000 615,828
Saline County Hospital Revenue, Refunding, Connie Lee Insured, 6.00%, 9/01/19 ........................ 700,000 703,836
Saline County Retirement Housing and Healthcare Facilities Board Revenue, Refunding, AMBAC Insured,
5.80%, 6/01/11 ...................................................................................... 195,000 201,378
Sebastian County Community Junior College District GO, Refunding and Improvement, AMBAC Insured,
5.60%, 4/01/17 ...................................................................................... 600,000 587,562
Texarkana Public Facilities Board Waterworks Facilities Revenue, Refunding, FGIC Insured, 5.40%,
9/01/15.............................................................................................. 200,000 195,206
University of Central Arkansas Academic Facilities Revenue,
Series B, AMBAC Insured, 5.875%, 4/01/16 .......................................................... 250,000 253,543
Series C, AMBAC Insured, 6.00%, 4/01/21 ........................................................... 1,000,000 1,012,440
University of Central Arkansas Athletic Facilities Revenue, Series C, AMBAC Insured,
6.00%, 4/01/21 .................................................................................... 1,000,000 1,012,440
6.125%, 4/01/26 ................................................................................... 1,200,000 1,220,808
University of Central Arkansas Housing System Revenue, Refunding, Series A, AMBAC Insured, 6.00%,
4/01/21.............................................................................................. 1,000,000 1,012,440
University of Southern Arkansas Revenues, Student Fees, MBIA Insured, 6.00%, 10/01/13 ................ 125,000 125,618
-----------
113,721,991
-----------
CALIFORNIA 4.3%
Alhambra COP, Clubhouse Facility Project, 11.25%,
1/01/08 ........................................................................................... 410,000 416,613
1/01/09 ........................................................................................... 455,000 462,230
1/01/10 ........................................................................................... 500,000 507,905
Burbank RDA, Tax Allocation, Refunding, Series A, 6.25%, 12/01/24 .................................... 5,245,000 5,205,295
California Educational Facilities Authority Revenue,
National University, Connie Lee Insured, 6.00%, 5/01/09 ........................................... 3,580,000 3,784,561
Pooled College and University Projects, Series B, 6.00%, 12/01/20 ................................. 6,025,000 5,856,360
California Health Facilities Financing Authority Revenue, St. Francis Medical Center, Refunding,
Series H, AMBAC Insured, 6.30%, 10/01/15 ............................................................ 2,800,000 2,964,024
California State GO,
5.90%, 5/01/08 .................................................................................... 235,000 249,431
6.00%, 5/01/18 .................................................................................... 535,000 541,297
5.90%, 4/01/23 .................................................................................... 1,200,000 1,201,020
FGIC Insured, 6.00%, 5/01/20 ...................................................................... 850,000 857,259
Veterans Bonds, Series BC, 6.00%, 2/01/10 ......................................................... 1,000,000 1,003,680
Veterans Bonds, Series BD, BE, and BF, 6.55%, 2/01/25 ............................................. 7,840,000 7,869,086
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
CALIFORNIA (CONT.)
California State Public Works Board Lease Revenue, University of California,
Various Projects, Series A, Pre-Refunded, 6.375%,
10/01/14 ................................................................................. $ 4,000,000 $ 4,396,880
10/01/19 ................................................................................. 2,000,000 2,198,440
California Statewide CDA Revenue, COP, Sutter Health Obligated Group,
MBIA Insured, 6.00%, 8/15/25 ............................................................. 14,750,000 14,802,953
Chino USD, COP, Refunding, FSA Insured, 5.90%, 9/01/15 ...................................... 8,240,000 8,430,838
Commerce Refuse to Energy Authority Revenue, Refunding, Series 1994, 8.75%, 7/01/10 ......... 1,000,000 1,118,930
Foothill/Eastern Corridor Agency Toll Road Revenue,
Capital Appreciation, Refunding, MBIA Insured, 5.75%, 1/15/40 ............................ 20,000,000 18,154,400
senior lien, Series A, Pre-Refunded, 6.50%, 1/01/32 ...................................... 59,240,000 65,579,865
Forty-Niner Shops Inc. Auxiliary Organization, California State Long Beach Project,
Pre-Refunded, 6.875%,
4/01/07 .................................................................................. 1,090,000 1,174,039
4/01/12 .................................................................................. 1,565,000 1,685,662
Los Angeles CRDA, Housing Revenue, Refunding, Series A, AMBAC Insured, 6.55%, 1/01/27 ....... 3,180,000 3,303,161
Los Angeles Department of Water and Power Electric Plant Revenue, Refunding, MBIA Insured,
6.00%, 2/01/28 .......................................................................... 3,000,000 3,022,500
Los Angeles Regional Airports Improvement Corp. Lease Revenue, Facilities Sub-Lease,
International Airport, Refunding, 6.35%, 11/01/25 ......................................... 18,500,000 18,153,865
United Airlines, International Airport, Refunding, 6.875%, 11/15/12 ........................ 8,400,000 8,808,072
Metropolitan Water District Revenue, Southern California Waterworks, Series A, 5.00%,
7/01/26 ................................................................................. 26,420,000 22,893,458
Pomona PFA, Revenue, Series Q, MBIA Insured, 5.90%, 12/01/25 ................................ 4,000,000 4,002,320
San Francisco City and County RDA, Lease Revenue, George R. Moscone Center, FSA Insured,
6.75%, 7/01/24 .......................................................................... 7,075,000 7,607,040
San Francisco City and County Redevelopment Financing Authority Tax Allocation Revenue,
Redevelopment Projects, Pre-Refunded, 6.50%, 8/01/22 ..................................... 12,680,000 14,047,918
San Francisco City and County Sewer Revenue, Series A, FGIC Insured, 5.90%, 10/01/20 ........ 10,380,000 10,410,102
San Joaquin Hills Transportation Corridor Agency Toll Road Revenue, senior lien,
5.00%, 1/01/33 .......................................................................... 5,000,000 4,135,500
Pre-Refunded, 7.00%, 1/01/30 ............................................................ 16,785,000 18,408,613
University of California Revenues, Research Facilities, Series B, Pre-Refunded,
6.55%, 9/01/24 ........................................................................... 11,780,000 12,909,938
U.C. Davis Medical Center, AMBAC Insured, 5.75%, 7/01/24 ................................. 25,000,000 24,545,500
Windsor RDAR, Tax Allocation, Windsor Project, 7.00%, 9/01/24 ............................... 2,405,000 2,499,661
-----------
303,208,416
-----------
COLORADO 4.6%
Colorado Health Facilities Authority Revenue,
Catholic Health Initiatives, Series A,
5.00%, 12/01/28 ........................................................................... 3,035,000 2,446,817
Kaiser Permanente, Series A, 5.35%, 11/01/16 ................................................ 13,250,000 12,155,153
Kaiser Permanente, Series B, 5.35%, 8/01/15 ................................................. 20,200,000 18,697,928
Colorado HFA, GO, Series A, 7.50%, 5/01/29 .................................................. 1,595,000 1,645,641
Colorado Public Highway Authority Revenue, Highway E-470, Refunding, Senior Series A,
MBIA Insured, 5.00%, 9/01/21 ............................................................... 12,715,000 11,080,232
Denver City and County Airport Revenue, Refunding, Series E, MBIA Insured, 5.25%,
11/15/23 ................................................................................... 3,420,000 3,067,672
Series A, 8.875%, 11/15/12 ............................................................... 12,130,000 13,252,146
Series A, 7.50%, 11/15/23 ................................................................ 13,590,000 14,727,483
Series A, 8.50%, 11/15/23 ................................................................ 72,960,000 76,885,248
Series A, 8.00%, 11/15/25 ................................................................ 1,480,000 1,552,254
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
COLORADO (CONT.)
Denver City and County Airport Revenue, (cont.)
Series A, 8.00%, 11/15/25 ............................................................ $20,305,000 $ 21,292,229
Series A, Pre-Refunded, 7.50%, 11/15/12 .............................................. 11,200,000 12,365,136
Series A, Pre-Refunded, 8.875%, 11/15/12 ............................................. 4,515,000 4,989,210
Series A, Pre-Refunded, 7.50%, 11/15/23 .............................................. 2,930,000 3,323,294
Series A, Pre-Refunded, 8.50%, 11/15/23 .............................................. 6,985,000 7,430,364
Series A, Pre-Refunded, 7.25%, 11/15/25 .............................................. 8,060,000 8,841,901
Series A, Pre-Refunded, 7.25%, 11/15/25 .............................................. 16,465,000 18,062,270
Series A, Pre-Refunded, 8.00%, 11/15/25 .............................................. 520,000 556,332
Series A, Pre-Refunded, 8.00%, 11/15/25 .............................................. 2,020,000 2,138,675
Series B, 7.25%, 11/15/23 ............................................................ 2,120,000 2,247,878
Series B, Pre-Refunded, 7.25%, 11/15/23 .............................................. 530,000 579,041
Series D, 7.75%, 11/15/21 ............................................................ 8,950,000 9,488,880
Series D, 7.00%, 11/15/25 ............................................................ 7,835,000 8,044,351
Series D, Pre-Refunded, 7.75%, 11/15/21 .............................................. 2,510,000 2,719,284
Denver City and County Special Facilities Airport Revenue, United Airlines Inc.
Project, Series A, 6.875%, 10/01/32 .................................................... 47,980,000 48,025,101
Littleton MFHR, Riverpointe I, Refunding, Series A, FSA Insured, 5.95%, 4/01/29 .......... 11,400,000 11,197,422
University of Colorado Hospital Authority Revenue, Series A, AMBAC Insured,
5.00%, 11/15/29 ........................................................................ 11,000,000 9,276,410
-----------
326,088,352
-----------
CONNECTICUT
Meriden Housing Authority MFR, Connecticut Baptist Housing Project, GNMA Secured,
5.80%, 8/20/39 ......................................................................... 2,870,000 2,684,856
-----------
DELAWARE
Delaware State EDA Revenue, Water Development, Wilmington, Refunding, Series B, 6.45%,
12/01/07 ............................................................................... 1,160,000 1,249,042
Delaware State Housing Authority MFMR, Refunding, Series D, 6.75%, 7/01/06 ............... 2,000,000 2,111,680
----------
3,360,722
----------
FLORIDA 1.9%
Bay County Resource Recovery Revenue,
Series A, MBIA Insured, Pre-Refunded, 6.50%, 7/01/07 ................................. 2,100,000 2,250,150
Series B, MBIA Insured, Pre-Refunded, 6.50%, 7/01/07 ................................. 11,020,000 11,807,930
Broward County Resource Recovery Revenue, Broward Waste Energy Co., LP,
North Project, Series 1984, 7.95%, 12/01/08 ........................................... 38,940,000 40,194,257
Callaway/Bay County Wastewater Systems Revenue, Series A, FGIC Insured,
6.00%, 9/01/26 ......................................................................... 1,000,000 1,004,660
(b) Escambia County Health Facilities Authority Revenue, Ascension Health Credit,
Refunding, Series A-2, AMBAC Insured, 5.75%, 11/15/29 ................................. 14,000,000 13,515,180
Florida State Board of Education Capital Outlay,
Public Education, Refunding, Series 1992, 6.40%, 6/01/19 ............................... 22,475,000 23,379,619
(b) Public Education, Refunding, Series D, 5.75%, 6/01/22 .............................. 10,000,000 9,573,400
(b) Public Education, Refunding, Series D, 6.00%, 6/01/23 .............................. 7,500,000 7,623,225
Manatee County IDR, Manatee Hospital and Health System Inc.,
Pre-Refunded, 9.25%, 3/01/21 ............................................................ 6,500,000 7,038,395
St. Augustine Water and Sewer Revenue, Refunding, Series A, MBIA Insured, 6.20%,
10/01/00.............................................................................. 840,000 857,245
10/01/01 ............................................................................. 890,000 923,153
10/01/02 ............................................................................. 940,000 987,028
10/01/03 ............................................................................. 1,005,000 1,065,602
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
FLORIDA (CONT.)
St. Augustine Water and Sewer Revenue, Refunding, Series A, MBIA Insured,
6.20%, (cont.)
10/01/04 ................................................................... $ 1,065,000 $ 1,139,092
10/01/05 ................................................................... 1,130,000 1,215,937
10/01/06 ................................................................... 1,200,000 1,300,692
10/01/07 ................................................................... 1,275,000 1,377,574
10/01/08 ................................................................... 1,355,000 1,456,774
10/01/12 ................................................................... 6,300,000 6,729,282
-------------
133,439,195
-------------
GEORGIA 1.2%
Burke County Development Authority PCR,
Georgia Power Co. Plant Vogtle, 1st Series, 5.40%, 5/01/34 ................. 17,705,000 15,675,653
Georgia Power Co. Plant Vogtle, 7th Series, MBIA Insured, 6.625%,
10/01/24 .................................................................. 8,025,000 8,201,470
Georgia Power Co. Plant Vogtle, Refunding, 2nd Series, AMBAC Insured, 5.25%,
5/01/34 ................................................................... 14,000,000 12,330,920
Fulton County Development Authority Special Facilities Revenue,
Delta Airlines Inc. Project, Refunding,
6.85%, 11/01/07 ............................................................ 3,400,000 3,548,410
6.95%, 11/01/12 ............................................................ 5,500,000 5,753,440
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 8,034,334
Georgia Municipal Electric Authority Power Revenue,
Series B, 6.375%, 1/01/16 .................................................. 14,000,000 14,272,160
Series EE, 6.40%, 1/01/23 .................................................. 6,325,000 6,642,072
Georgia State HFAR, Homeownership Opportunity Program, Series C, 6.60%,
12/01/23 .................................................................. 3,400,000 3,498,430
Monroe County Development Authority PCR, Georgia Power Co., AMBAC
Insured, 6.25%, 7/01/19 ................................................... 4,300,000 4,391,633
-------------
82,348,522
-------------
HAWAII 1.8%
Hawaii State Airports System Revenue,
FGIC Insured, 7.00%, 7/01/20 ............................................... 1,000,000 1,058,240
Refunding, Third Series 1994, AMBAC Insured, 5.75%, 7/01/09 ................ 300,000 308,655
Second Series, 7.00%, 7/01/07 .............................................. 12,000,000 12,681,000
Second Series, 6.90%, 7/01/12 .............................................. 500,000 551,160
Second Series 1990, FGIC Insured, 7.50%, 7/01/20 ........................... 60,000 62,275
Second Series 1991, 7.00%, 7/01/18 ......................................... 4,350,000 4,546,142
Second Series 1991, MBIA Insured, 6.75%, 7/01/21 ........................... 200,000 209,474
Second Series 1992, MBIA Insured, 6.90%, 7/01/12 ........................... 400,000 442,832
Hawaii State Department of Budget and Finance Special Purpose
Mortgage Revenue,
Hawaiian Electric Co. and Subsidiaries, MBIA Insured, 6.55%, 12/01/22 ...... 3,425,000 3,602,244
Hawaiian Electric Co. Project, Series A, 7.35%, 1/01/20 .................... 1,000,000 1,022,830
Hawaiian Electric Co., Series A, MBIA Insured, 6.60%, 1/01/25 .............. 1,950,000 2,044,049
Kaiser Permanente, Refunding, Series A, 6.25%, 3/01/21 ..................... 1,000,000 994,070
Kapiolani Health Care System, Refunding, 6.40%, 7/01/13 .................... 600,000 620,316
Kapiolani Health Care System, Refunding, 6.00%, 7/01/19 .................... 2,725,000 2,648,237
St. Francis Medical Centers, Refunding, FSA Insured, 6.50%, 7/01/22 ........ 1,100,000 1,149,731
Wahiawa General Hospital Project, 7.50%, 7/01/12 ........................... 945,000 990,190
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
HAWAII (CONT.)
Hawaii State Department of Budget and Finance Special Purpose
Revenue, (cont.)
6.00%, 7/01/11 ........................................................ $ 1,000,000 $ 1,012,020
6.20%, 7/01/16 ........................................................ 2,000,000 2,006,440
Hawaiian Electric Co. Project, Series A, MBIA Insured, 5.65%, 10/01/27 20,000,000 18,647,400
Hawaiian Electric Co. Project, Series B, MBIA Insured, 5.875%, 12/01/26 500,000 484,510
Kaiser Permanente, Series A, 5.15%, 3/01/15 ........................... 4,000,000 3,591,600
Kapiolani Health Obligation, 6.25%, 7/01/21 ........................... 7,350,000 7,246,365
Queens Health System, Refunding, Series A, 6.05%, 7/01/16 ............. 1,000,000 999,900
Queens Health System, Refunding, Series A, 6.00%, 7/01/20 ............. 120,000 116,941
Queens Health System, Refunding, Series A, 5.75%, 7/01/26 ............. 7,000,000 6,496,630
Queens Health System, Series B, MBIA Insured, 5.25%, 7/01/23 .......... 5,500,000 4,911,775
Queens Health System, Series B, MBIA Insured, 5.00%, 7/01/28 .......... 3,250,000 2,718,658
Wilcox Memorial Hospital Projects, 5.25%, 7/01/13 ..................... 600,000 536,718
Wilcox Memorial Hospital Projects, 5.35%, 7/01/18 ..................... 2,040,000 1,735,428
Wilcox Memorial Hospital Projects, 5.50%, 7/01/28 ..................... 2,410,000 2,008,928
Hawaii State Department of Transportation Special Facilities Revenue,
Matson Terminals Inc., Refunding, 5.75%, 3/01/13 .................... 75,000 73,626
Hawaii State GO,
Series BW, 6.375%, 3/01/11 ............................................ 100,000 107,820
Series CA, 6.00%, 1/01/09 ............................................. 100,000 105,391
Series CT, FSA Insured, 5.875%, 9/01/19 ............................... 5,000,000 4,956,200
Hawaii State Harbor Capital Improvement Revenue,
Refunding, Series 1994, FGIC Insured, 6.25%, 7/01/15 .................. 1,000,000 1,027,250
Refunding, Series 1994, FGIC Insured, 6.375%, 7/01/24 ................. 500,000 511,220
Series 1990, MBIA Insured, 7.25%, 7/01/10 ............................. 70,000 72,720
Series 1990, MBIA Insured, 7.00%, 7/01/17 ............................. 80,000 82,921
Series 1992, FGIC Insured, 6.50%, 7/01/19 ............................. 200,000 209,042
Hawaii State Housing Finance and Development Corp. Revenue, Affordable
Rental Housing Program, Series A,
6.00%, 7/01/15 ........................................................ 1,000,000 1,006,610
6.05%, 7/01/22 ........................................................ 750,000 752,708
6.10%, 7/01/30 ........................................................ 235,000 235,846
Hawaii State Housing Finance and Development Corp. SFM Purchase Revenue,
Series A, 7.10%, 7/01/24 .............................................. 3,815,000 3,940,590
Series A, 6.00%, 7/01/26 .............................................. 255,000 249,339
Series A, FNMA Insured, 5.75%, 7/01/30 ................................ 2,500,000 2,352,725
Series B, 7.00%, 7/01/31 .............................................. 8,055,000 8,369,870
Hawaii State SFMR, HFC,
Series A, 7.00%, 7/01/11 .............................................. 230,000 239,028
Series B, 6.90%, 7/01/16 .............................................. 245,000 254,273
Honolulu City and County GO,
Refunding, Series 1992, 6.00%, 12/01/14 ............................... 150,000 155,736
Series C, FGIC Insured, 5.00%, 7/01/20 ................................ 6,250,000 5,434,875
Honolulu City and County MFHR, Waipahu Towers Project, Series A, 6.90%,
6/20/35 ................................................................. 1,205,000 1,240,873
Honolulu City and County Wastewater System Revenue, 2nd Bond Resolution,
Junior Series, FGIC Insured, 5.00%, 7/01/23 ............................ 10,000,000 8,564,200
Honolulu City and County Water Supply Board Water System Revenue,
5.80%, 7/01/21 .......................................................... 1,785,000 1,756,743
Kauai County GO, Refunding, Series C, AMBAC Insured, 5.95%, 8/01/10 ...... 220,000 231,763
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
HAWAII (CONT.)
Maui County GO,
6.05%, 9/01/07 ........................................................... $ 30,000 $ 30,685
6.10%, 9/01/08 ........................................................... 170,000 173,840
Series C, FGIC Insured, 5.20%, 3/01/17 ................................... 575,000 527,551
------------
128,108,203
------------
IDAHO .5%
Idaho Housing Agency Revenue, Refunding, Series D-1, 6.45%, 7/01/19.......... 2,000,000 2,048,620
Idaho Housing Agency SFMR, Senior Bond, Series B-1, FGIC Insured,
7.85%, 7/01/09 ........................................................... 480,000 487,421
7.90%, 1/01/21 ........................................................... 730,000 743,111
Power County Industrial Development Corp. Solid Waste Disposal Revenue, FMC
Corp. Project, 6.45%, 8/01/32 .............................................. 33,750,000 32,373,338
Power County PCR, FMC Corp. Project, Refunding, 5.625%, 10/01/14 ............ 2,200,000 2,055,614
------------
37,708,104
------------
ILLINOIS 7.0%
Bryant PCR, Central Illinois Light Co. Project, Refunding,
Series A, AMBAC Insured, 6.50%, 2/01/18 .................................. 7,200,000 7,246,656
Series C, 6.50%, 1/01/10 ................................................. 5,000,000 5,177,750
Champaign County GO, FGIC Insured, 5.40%, 1/01/29 ........................... 5,660,000 5,052,286
Chicago Board of Education GO, Chicago School Reform, MBIA Insured, 6.00%,
12/01/16 ................................................................ 9,700,000 9,753,350
Chicago COP, AMBAC Insured, 7.75%, 7/15/11 .................................. 19,000,000 21,087,150
Chicago Gas Supply Revenue, The Peoples Gas Light, Refunding,
Series A, 6.10%, 6/01/25 ................................................... 12,000,000 12,071,520
Chicago GO,
FGIC Insured, 5.25%, 1/01/27 ............................................. 5,690,000 4,970,272
Lakefront Millennium Parking Facilities, MBIA Insured, 5.75%, 1/01/23 .... 8,955,000 8,589,546
Lakefront Millennium Parking Facilities, MBIA Insured, 5.125%, 1/01/28 ... 26,345,000 22,531,298
Chicago O'Hare International Airport Special Facilities Revenue,
American Airlines Inc. Project, 8.20%, 12/01/24 .......................... 11,720,000 13,160,505
United Airlines Inc. Project, 8.45%, 5/01/07 ............................. 4,300,000 4,450,715
United Airlines Inc. Project, 8.50%, 5/01/18 ............................. 12,305,000 12,745,396
Chicago SFMR, Collateralized, Series A, GNMA Secured, FNMA Insured,
7.25%, 9/01/28 .......................................................... 3,195,000 3,409,289
Chicago Wastewater Transmission Revenue, Refunding, FGIC Insured,
5.125%, 1/01/25 ......................................................... 5,000,000 4,342,000
Cook County GO,
Capital Improvement, Refunding, FGIC Insured, 5.90%, 12/01/14 ............ 10,000,000 10,277,200
Refunding, Series A, MBIA Insured, 5.625%, 11/15/22 ...................... 20,000,000 18,762,000
Cook County Tinley Park School District No.140, Refunding, Series A,
AMBAC Insured, 6.00%, 12/01/15 .......................................... 8,750,000 9,002,263
Illinois Development Finance Authority Hospital Revenue,
Adventist Health System, Sunbelt Obligation, 5.65%, 11/15/24 ............. 6,030,000 5,169,157
Adventist Health System, Sunbelt Obligation, 5.50%, 11/15/29 ............. 20,000,000 16,800,000
Sisters of St. Francis Health Services, Refunding, MBIA Insured,
5.375%, 11/01/27 ........................................................ 5,000,000 4,510,050
Illinois Development Finance Authority PCR,
Central Illinois Public Service Co., Refunding, Series A,
6.375%, 1/01/28........................................................... 15,200,000 15,579,544
Commonwealth Edison Co. Project, Refunding, Series 1991, 7.25%, 6/01/11 .. 7,500,000 7,839,975
Illinois Power Co. Project, Refunding, Series A, 7.375%, 7/01/21 ......... 26,550,000 28,611,873
Illinois Development Finance Authority Revenue, Provena Health, Series A,
MBIA Insured, 5.50%, 5/15/21 ............................................ 13,240,000 12,264,609
Illinois Educational Facilities Authority Revenue, Midwestern University,
Series B, MBIA Insured, 5.50%, 5/15/28 .................................. 6,250,000 5,753,688
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
ILLINOIS (CONT.)
Illinois HDA,
MF Program, Lawndale Redevelopment Project, 7.10%, 12/01/34 .............. $20,000,000 $21,418,400
MF Program, Refunding, Series A, 7.10%, 7/01/26 .......................... 12,915,000 13,581,543
MF Program, Series 1, 6.625%, 9/01/12 .................................... 12,000,000 12,347,400
MF Program, Series 1, 6.75%, 9/01/21 ..................................... 7,550,000 7,735,126
MF Program, Series C, 7.35%, 7/01/11 ..................................... 2,265,000 2,332,112
RMR, Series B, 7.25%, 8/01/17 ............................................ 7,065,000 7,294,330
Illinois HDA Revenue, Homeowner Mortgage, Series A-1, 6.85%, 8/01/17 ......... 4,140,000 4,321,580
Illinois Health Facilities Authority Revenue,
Children's Memorial Hospital, Series A, AMBAC Insured, 5.75%, 8/15/25 .... 14,120,000 13,288,614
Edwards Hospital Project, Pre-Refunded, 7.00%, 2/15/22 ................... 2,000,000 2,144,660
Loyola University Health Systems, Refunding, Series A, MBIA Insured,
5.625%, 7/01/18 ......................................................... 7,090,000 6,824,054
Loyola University Health Systems, Series A, MBIA Insured, ETM,
5.625%, 7/01/18 ......................................................... 2,105,000 2,063,153
Methodist Medical Center, Refunding, MBIA Insured, 5.25%, 11/15/21 ....... 2,885,000 2,602,789
Northwestern Medical Facility Foundation, Refunding, MBIA Insured,
5.125%, 11/15/28 ........................................................ 7,500,000 6,411,375
South Suburban Hospital, ETM, 7.00%, 2/15/18 ............................. 4,200,000 4,676,910
South Suburban Hospital, Pre-Refunded, 7.00%, 2/15/18 .................... 2,800,000 3,002,524
Victory Health Services, Series A, 5.75%, 8/15/27 ........................ 8,015,000 7,133,190
Illinois State COP, Department of Central Management,
FSA Insured, Pre-Refunded, 6.875%, 7/01/07 .............................. 2,600,000 2,804,672
Illinois State Dedicated Tax Revenue, Civic Center, Series A, AMBAC Insured,
6.00%, 12/15/15 ......................................................... 2,105,000 2,116,325
Pre-Refunded, 6.00%, 12/15/15 ............................................ 845,000 863,700
Metropolitan Pier and Exposition Authority Dedicated State Tax Revenue,
McCormick Place Expansion Project, Refunding, Series A, FGIC Insured,
5.25%, 12/15/28 ............................................................. 37,000,000 32,646,950
Series A, 6.50%, 6/15/22 ................................................. 5,000 5,261
Series A, 6.50%, 6/15/27 ................................................. 555,000 582,828
Series A, FGIC Insured, 6.50%, 6/15/07 ................................... 5,000 5,382
Metropolitan Pier and Exposition Authority Hospitality Facilities Revenue,
McCormick Place Convention Center,
5.75%, 7/01/06 ........................................................... 1,645,000 1,707,066
6.25%, 7/01/17 ........................................................... 9,500,000 10,346,925
7.00%, 7/01/26 ........................................................... 12,000,000 13,552,080
Onterie Center HFC, Mortgage Revenue, Refunding, MBIA Insured, 7.05%, 7/01/27 4,350,000 4,539,443
Regional Transportation Authority Revenue, Series A, AMBAC Insured,
6.125%, 6/01/22 .......................................................... 3,970,000 4,133,048
Southwestern Illinois Development Authority IDR, Spectrulite Consortium Inc.
Project,
6.20%, 2/01/05 ........................................................... 1,825,000 1,874,804
6.625%, 2/01/10 .......................................................... 3,050,000 3,133,326
Southwestern Illinois Development Authority Private Activity Revenue,
Progressive Recovery Glenmark,
8.50%, 8/01/10 ........................................................... 2,685,000 2,796,777
Southwestern Illinois Development Authority Revenue, Anderson Hospital
Project, Series A, Pre-Refunded,
7.00%, 8/15/22 ........................................................... 6,200,000 6,715,344
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
Upper River Valley Development Authority Environmental Facilities Revenue,
General Electric Co. Project,
5.45%, 2/01/23 ........................................................... 3,600,000 3,315,132
Will County Exempt Facilities Revenue, Mobil Oil Refining Corp. Project,
6.00%, 2/01/27 ........................................................... 7,130,000 6,988,683
-----------
494,750,298
-----------
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
INDIANA 1.8%
Beech Grove EDR, Westvaco Corp., 8.75%, 7/01/10 ................................. $ 50,000 $ 50,320
Carmel EDR, Cool Creek Association, Refunding, 6.50%, 9/01/15 ................... 1,000,000 1,031,660
Carmel Industrial RDA, County Option, Income Tax Lease, Rent Revenue,
MBIA Insured, 5.25%, 1/01/18 .................................................... 1,090,000 1,004,751
Cloverdale Multi-School Building Corp. First Mortgage, MBIA Insured,
5.35%, 1/15/23 ................................................................. 1,200,000 1,097,268
Crown Point Industrial Redevelopment District Lake County Tax Increment,
8.10%, 2/01/07 ................................................................. 50,000 50,170
Duneland School Building Corp. First Mortgage, MBIA Insured, Pre-Refunded,
5.50%, 8/01/17 ................................................................. 1,000,000 1,037,210
East Chicago Industrial Solid Waste Disposal Revenue, US Gypsum Corp.
Project, 5.50%, 9/01/28 ........................................................ 5,250,000 4,467,488
Eastern Hancock Middle School Building Corp. First Mortgage, Pre-Refunded,
6.00%, 1/15/21 ................................................................. 1,000,000 1,068,190
Elkhart County Hospital Authority Revenue, Goshen Hospital Association Inc.
Project, 7.35%, 7/01/12 ........................................................ 1,750,000 1,820,158
Elwood Middle School Building Corp. First Mortgage, Refunding, 7.30%, 1/01/08 ... 500,000 522,850
Fort Wayne Hospital Authority Hospital Revenue, Parkview Memorial Hospital,
Series A, FGIC Insured, Pre-Refunded, 6.50%, 11/15/12 ......................... 1,000,000 1,020,870
Hammond Industrial Sewer and Solid Waste Disposal Revenue, American
Maize-Products Co., Project A, 8.00%, 12/01/24 ................................ 20,000,000 22,106,800
Hammond IPC Revenue, Stauffer Chemical Project, Guaranteed by Imperial Chemical,
Series 1982, 8.00%, 11/01/12 ................................................... 2,655,000 2,743,013
Hammond Multi-School Building Corp. First Mortgage, Refunding, Series A,
6.20%, 7/10/15 ................................................................. 1,500,000 1,521,030
Indiana Bond Bank Special Program,
Series A, 8.375%, 2/01/18 ................................................... 690,000 695,430
Series A, 7.50%, 2/01/20 .................................................... 250,000 256,423
Series B, 6.20%, 2/01/23 .................................................... 3,500,000 3,358,390
Series C, 8.00%, 8/01/11 .................................................... 20,000 20,261
Indiana Health Facility Financing Authority Hospital Revenue,
Hancock Memorial Hospital Health Services, 6.125%, 8/15/17 .................. 2,000,000 1,891,200
Hancock Memorial Hospital Project, Series 1990, Pre-Refunded,
8.30%, 8/15/20 ............................................................. 3,455,000 3,633,727
Jackson County Schneck Memorial Hospital, Pre-Refunded, 7.50%, 2/15/22 ...... 1,835,000 1,983,250
Jackson County Schneck Memorial Hospital, Refunding, 5.25%, 2/15/22 ......... 1,200,000 993,948
Methodist Hospital Inc., 6.75%, 9/15/09 ..................................... 1,280,000 1,346,138
Sisters of St. Francis Health, Series A, MBIA Insured, 5.00%, 11/01/29 ...... 1,000,000 832,740
St. Anthony's Medical Center/Home Inc., Series A, 7.00%, 10/01/17 ........... 1,000,000 1,073,950
Indiana Health Facility Financing Authority Revenue, Greenwood Village
South Project, Refunding, 5.625%, 5/15/28 ...................................... 1,750,000 1,480,868
Indiana State Development Financing Authority Environmental Revenue,
6.25%, 7/15/30 ................................................................. 2,000,000 1,895,600
Indiana State Educational Facilities Authority Revenue,
DePauw University Project, Refunding, 5.30%, 7/01/16 ........................ 600,000 551,940
Manchester College Project, 6.85%, 10/01/18 ................................. 3,240,000 3,269,192
Valparaiso University, AMBAC Insured, 5.125%, 10/01/23 ...................... 2,015,000 1,748,899
Indiana State HFA, SFMR,
GNMA Secured, FNMA Insured, 6.10%, 7/01/22 .................................. 930,000 927,647
Refunding, Series A, 6.75%, 1/01/10 ......................................... 2,940,000 3,072,241
Refunding, Series A, 6.80%, 1/01/17 ......................................... 12,835,000 13,356,614
Series F-2, GNMA Secured, 7.75%, 7/01/22 .................................... 275,000 284,012
Indiana State Office Building Commission Correctional Facilities
Program Revenue, Pre-Refunded, 6.375%, 7/01/16 ................................. 1,000,000 1,058,680
Indianapolis Airport Authority, Indianapolis International Airport Revenue,
6.50%, 11/15/31 ................................................................ 1,460,000 1,419,777
Indianapolis Local Public Improvement Bond, Series D, 6.75%, 2/01/20 ............ 15,375,000 16,096,241
Jasper County EDR, Georgia-Pacific Corp. Project, 5.625%, 12/01/27 .............. 3,500,000 3,086,440
Jasper County PCR, Northern Indiana Public Service Co., Refunding,
MBIA Insured, 7.10%, 7/01/17 ................................................... 500,000 523,330
Lake Central Industrial Multi-School Building Corp. First Mortgage,
Refunding, MBIA Insured, 6.50%, 1/15/14 ........................................ 2,100,000 2,214,114
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
INDIANA (CONT.)
Madison County Authority Anderson Hospital Revenue, Refunding, Series A, BIG Insured, 8.00%, 1/01/14... $ 95,000 $ 96,534
Marion County Convention and Recreational Facilities Authority Excise Tax Revenue, Lease Rental,
Series A, AMBAC Insured, 7.00%, 6/01/21 ........................................................... 250,000 261,485
sub. lien, Series A, MBIA Insured, 5.00%, 6/01/27 ................................................. 2,750,000 2,316,408
Muncies Edit Building Corp. First Mortgage, Series A, AMBAC Insured, 6.60%, 12/01/17 ................. 4,000,000 4,212,840
New Albany Floyd County School Building Corp. Revenue, First Mortgage, MBIA Insured,
5.375%, 1/15/18 .................................................................................. 1,500,000 1,411,110
New Prairie Unified School Building Corp. Revenue, First Mortgage, Refunding, FSA Insured,
5.80%, 7/05/11 ................................................................................... 1,520,000 1,557,650
Penn-Harris-Madison Multi-School Building Corp. First Mortgage, FSA Insured, Pre-Refunded,
5.90%, 7/15/14 ................................................................................... 1,000,000 1,066,530
Princeton PCR, Public Service Co. of Indiana Project, Refunding, Series C, MBIA Insured,
7.375%, 3/15/12 .................................................................................. 250,000 257,340
Rochester Community Multi-School Building Corp. Revenue, First Mortgage, AMBAC Insured,
5.20%, 1/15/18 ................................................................................... 1,000,000 918,260
Steuben County Metropolitan School District COP, 6.90%, 1/01/08 ...................................... 500,000 513,610
Sullivan Industrial PCR, Hoosier Energy, Merom Project, Refunding, 7.10%, 4/01/19 .................... 750,000 779,925
Sullivan PCR, Indiana-Michigan Power Co. Project, Refunding, Series C, 5.95%, 5/01/09 ................ 6,000,000 6,058,620
------------
126,063,142
------------
IOWA .1%
Iowa Financing Authority SFMR, Series F, GNMA Secured, 5.70%, 1/01/27 ................................ 10,705,000 10,193,729
------------
KANSAS .1%
Kansas State Development Finance Authority Hospital Revenue, Susan B. Allen Memorial Hospital,
Series Z, 5.25%, 12/15/23 ......................................................................... 2,500,000 2,221,725
Newton Hospital Revenue, Newton Healthcare Corp., Refunding, Series A,
5.70%, 11/15/18 ................................................................................... 1,875,000 1,638,506
5.75%, 11/15/24 ................................................................................... 1,500,000 1,287,795
------------
5,148,026
------------
KENTUCKY 1.9%
Ashland PCR, Ashland Oil Inc. Project, Refunding, 6.65%, 8/01/09 ..................................... 3,900,000 4,061,538
Henderson County Solid Waste Disposal Revenue, MacMillan Bloedel Project, 7.00%, 3/01/25 ............. 10,000,000 10,327,700
Jefferson County MFHR, Watterson Park Apartments Project, Series A, 6.35%, 11/15/11 .................. 4,850,000 4,959,804
Kenton County Airport Board Revenue, Special Facilities, Delta Airlines Inc. Project,
Series A, 7.80%, 12/01/15 ......................................................................... 20,000,000 20,434,200
Series A, 7.50%, 2/01/20 .......................................................................... 10,000,000 10,540,600
Series A, 7.125%, 2/01/21 ......................................................................... 9,330,000 9,757,687
Series B, 7.25%, 2/01/22 .......................................................................... 3,350,000 3,519,477
Kentucky Development Finance Authority Hospital Revenue, Claire Medical Center Project, Pre-Refunded,
7.125%, 9/01/21 ..................................................................................... 700,000 747,684
Kentucky Economic Development Finance Authority Hospital System Revenue, Appalachian Regional Health
Center Facility, Refunding and Improvement,
5.80%, 10/01/12 ................................................................................... 1,000,000 936,080
5.85%, 10/01/17 ................................................................................... 5,615,000 5,045,527
Kentucky HFC Revenue, Series B, 6.625%, 7/01/14 ...................................................... 4,910,000 5,022,685
Mount Sterling Lease Revenue, Kentucky League Cities, Series A,
6.10%, 3/01/08 .................................................................................... 20,375,000 21,284,540
6.20%, 3/01/18 .................................................................................... 11,765,000 12,025,477
Pendleton County Multi-County Lease Revenue, Kentucky Association of Counties Leasing Trust, Series A,
6.50%, 3/01/19 ....................................................................................... 27,160,000 27,893,048
------------
136,556,047
------------
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
LOUISIANA 2.0%
Bastrop PCR, International Paper Co. Project, Refunding, 6.90%, 3/01/07 ...................... $ 2,000,000 $ 2,098,580
Calcasieu Parish Inc. IDB, PCR, Gulf States Utilities Co. Project, Refunding,
6.75%, 10/01/12............................................................................. 14,285,000 14,678,552
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 4,579,504
6.50%, 12/01/18 ........................................................................... 5,530,000 5,821,929
6.65%, 12/01/21 ........................................................................... 3,145,000 3,273,536
Calcasieu Parish Public Trust Authority Mortgage Revenue, Refunding,
Series A, 7.75%, 6/01/12 .................................................................. 1,960,000 2,045,868
Series B, 6.375%, 11/01/02 ................................................................ 165,000 169,805
Series B, 6.875%, 11/01/12 ................................................................ 515,000 530,888
De Soto Parish Environmental Improvement Revenue, International Paper Co. Project, Series A,
7.70%, 11/01/18 ........................................................................... 2,500,000 2,757,025
East Baton Rouge Mortgage Finance Authority, SFM Purchase,
Series A, 6.80%, 10/01/28 ................................................................. 5,375,000 5,517,276
Series C, 7.00%, 4/01/32 .................................................................. 1,560,000 1,611,043
Series D, 7.10%, 4/01/32 .................................................................. 1,580,000 1,626,073
Hammond Tangipahoa Home Mortgage Authority Revenue, University Facilities Inc. Project,
MBIA Insured, 5.50%, 7/15/27 ................................................................ 3,250,000 3,006,803
Jefferson Parish Hospital Service District No. 2 Hospital Revenue, FSA Insured,
5.00%, 7/01/28.............................................................................. 5,000,000 4,235,300
Lafayette Public Trust Financing Authority SFMR, Refunding, Series A, 8.50%, 11/15/12 ........ 977,088 993,112
Louisiana HFA, Mortgage Revenue, Refunding, 7.375%, 9/01/13 .................................. 690,000 704,870
SF, Refunding, Series B-2, GNMA Secured, 5.75%, 12/01/28 .................................... 2,830,000 2,666,483
Louisiana Public Facilities Authority Revenue,
Alton Ochsner Medical Foundation Project, Refunding, Series B, MBIA Insured, 6.50%, 5/15/22.. 3,500,000 3,650,255
Xavier University of Louisiana Project, Refunding, MBIA Insured, 5.25%, 9/01/27 .............. 3,000,000 2,674,890
New Orleans GO, Refunding, AMBAC Insured,
6.125%, 10/01/16 .......................................................................... 10,275,000 10,568,146
6.20%, 10/01/21 ........................................................................... 8,050,000 8,244,488
Office Facility Corp. Capital Facilities Bonds, 7.75%, 12/01/10 .............................. 3,400,000 3,615,594
Ouachita Parish Hospital Service District No. 1 Revenue, Glenwood Regional Medical Center,
Pre-Refunded, 7.50%, 7/01/21 ................................................................ 4,000,000 4,275,960
Pointe Coupee Parish PCR, Gulf States Utilities Co. Project, Refunding, 6.70%, 3/01/13 ....... 2,200,000 2,237,048
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 2,310,600
West Feliciana Parish PCR, Gulf State Utility Co. Project,
7.70%, 12/01/14 ........................................................................... 2,000,000 2,133,440
7.00%, 11/01/15 ........................................................................... 3,050,000 3,196,980
Refunding, 8.00%, 12/01/24 ................................................................ 41,050,000 41,998,255
------------
141,222,303
------------
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
MAINE 1.0%
Bucksport Solid Waste Disposal Revenue, Champion International Corp. Project,
6.25%, 5/01/10 ............................................................................. $ 5,000,000 $ 5,076,050
Jay Solid Waste Disposal Revenue, International Paper Co. Project, Refunding, Series B,
6.20%, 9/01/19 ............................................................................. 8,000,000 7,812,080
Maine Financial Authority Solid Waste Recycling Facilities Revenue, Great Northern Paper Co.,
Bowater Project, 7.75%, 10/01/22 ........................................................... 29,300,000 31,328,732
Maine State Health and Higher Educational Facilities Authority Revenue, Series B,
FSA Insured, 7.00%, 7/01/24 .............................................................. 20,000 22,253
Refunding, 7.00%, 7/01/24 ................................................................ 2,425,000 2,698,128
Maine State Housing Authority Mortgage Purchase,
Series A-5, 6.20%, 11/15/16 .............................................................. 2,500,000 2,527,850
Series C, 6.55%, 11/15/12 ................................................................ 3,700,000 3,870,311
Series C, 6.65%, 11/15/24 ................................................................ 3,500,000 3,666,775
Series D, 6.45%, 11/15/07 ................................................................ 3,540,000 3,634,730
Series D, 6.70%, 11/15/15 ................................................................ 5,800,000 6,042,382
Rumford PCR, Boise Cascade Corp. Project, Refunding, 6.625%, 7/01/20 ........................ 4,800,000 4,869,840
------------
71,549,131
------------
MARYLAND 1.6%
Gaithersberg Hospital Facilities Revenue, Shady Grove Adventist Hospital, Refunding
and Improvement, Series A, Pre-Refunded, 8.25%, 9/01/21 .................................. 43,225,000 47,095,367
Series C, FSA Insured, 6.00%, 9/01/21 .................................................... 10,110,000 10,159,135
Maryland State CDA, Department of Housing and Community Development,
MFHR, Series G, Mortgage Insured, 6.55%, 5/15/19 ......................................... 5,345,000 5,503,533
SF Program, 3rd Series, 7.25%, 4/01/27 ................................................... 965,000 990,293
Maryland State Health and Higher Educational Facilities Authority Revenue, Anne Arundel
Medical Center, FSA Insured, 5.125%, 7/01/33 ............................................... 8,000,000 6,859,600
Montgomery County Housing Opportunities Commission SFMR, Refunding, Series B,
6.625%, 7/01/28 .......................................................................... 6,500,000 6,630,650
Takoma Park Hospital Facilities Revenue, Washington Adventist Hospital Project, Series A,
Sub Series 1, 8.25%, 9/01/21 ............................................................. 20,125,000 21,296,074
Sub Series 1, Pre-Refunded, 8.25%, 9/01/21 ............................................... 10,930,000 11,908,672
Sub Series 2, Pre-Refunded, 8.25%, 9/01/21 ............................................... 5,000,000 5,438,450
------------
115,881,774
------------
MASSACHUSETTS 3.6%
Massachusetts State GO,
Consolidated Loan, Series A, 7.50%, 6/01/04 .............................................. 7,500,000 8,197,125
Refunding, Series B, 6.50%, 8/01/08 ...................................................... 5,900,000 6,401,382
Massachusetts State Health and Educational Facilities Authority Revenue,
Framingham Union Hospital, Series B, Pre-Refunded, 8.50%, 7/01/20 ........................ 9,020,000 9,463,243
Melrose-Wakefield Hospital, Refunding, Series B, ETM, 6.35%, 7/01/06 ..................... 1,100,000 1,181,235
Notre Dame Health Care Center, Series A, 7.875%, 10/01/22 ................................ 2,310,000 2,429,034
Sisters Providence Health System, Series A, Pre-Refunded, 6.50%, 11/15/08 ................ 1,000,000 1,083,550
Sisters Providence Health System, Series A, Pre-Refunded, 6.625%, 11/15/22 ............... 12,050,000 13,123,776
Massachusetts State HFA,
HDA, Series D, FGIC Insured, 6.875%, 11/15/21 ............................................ 5,250,000 5,502,945
Housing Projects, Refunding, Series A, 6.30%, 10/01/13 ................................... 25,635,000 26,521,458
Housing Projects, Refunding, Series A, 6.375%, 4/01/21 ................................... 24,750,000 25,648,425
Housing Revenue, SF, Series 41, 6.30%, 12/01/14 .......................................... 6,190,000 6,358,182
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED)(CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
MASSACHUSETTS (CONT.)
Massachusetts State HFA, (cont.)
Housing Revenue, SF, Series 41, 6.35%, 6/01/17 ....................................... $ 5,695,000 $ 5,811,121
Series C, FGIC Insured, 6.90%, 11/15/21 .............................................. 9,715,000 10,288,379
Series D, FGIC Insured, 6.80%, 11/15/12 .............................................. 250,000 263,368
Massachusetts State Industrial Finance Agency Health Care Facilities Revenue, Jewish
Geriatric Services Inc., Series B,
5.375%, 5/15/17 ...................................................................... 1,965,000 1,795,067
5.50%, 5/15/27 ....................................................................... 5,000,000 4,486,000
Pre-Refunded, 7.00%, 4/01/22 ......................................................... 5,000,000 5,429,400
Massachusetts State Industrial Finance Agency Revenue, D'Youville Senior Care,
5.65%, 10/01/17 ...................................................................... 2,295,000 2,226,999
5.70%, 10/01/27 ...................................................................... 7,375,000 7,057,433
Massachusetts State Port Authority Revenue, Special Facilities, Bosfuel Project,
MBIA Insured, 5.75%, 7/01/39 ............................................................ 11,750,000 10,971,798
Massachusetts State Turnpike Authority Metropolitan Highway System Revenue,
Series A, MBIA Insured, 5.00%, 1/01/37 ............................................... 82,130,000 68,589,227
sub. lien, Refunding, Series B, MBIA Insured, 5.125%, 1/01/37 ........................ 21,350,000 18,164,580
Plymouth County COP, Series A, Pre-Refunded, 7.00%, 4/01/12 .............................. 10,000,000 10,858,800
-----------
251,852,527
-----------
MICHIGAN 1.2%
Battle Creek Tax Increment Finance Authority, Pre-Refunded, 7.40%, 5/01/16 ............... 2,000,000 2,247,220
Belding Area Schools GO, FGIC Insured,
6.10%, 5/01/26 ....................................................................... 810,000 827,747
Pre-Refunded, 6.10%, 5/01/26 ......................................................... 2,995,000 3,219,925
Detroit GO,
Refunding, Series B, 6.375%, 4/01/06 ................................................. 7,265,000 7,707,148
Refunding, Series B, 6.25%, 4/01/09 .................................................. 625,000 655,488
Self-Insurance, Series A, 5.70%, 5/01/02 ............................................. 2,250,000 2,292,300
Series A, Pre-Refunded, 6.70%, 4/01/10 ............................................... 4,550,000 4,999,495
Detroit/Wayne County Stadium Authority, FGIC Insured, 5.25%, 2/01/27 ..................... 4,235,000 3,779,822
Kalamazoo EDC Revenue, Limited Obligation, Friendship Village, Refunding, Series A,
6.25%, 5/15/27 ....................................................................... 2,000,000 1,933,740
Michigan State Building Authority Revenue, Series II, 6.25%, 10/01/20 .................... 15,650,000 16,090,235
Michigan State HDA,
Limited Obligation Revenue, Fraser Woods Project, FSA Insured, 6.625%, 9/15/19 ....... 2,500,000 2,601,475
Rental Housing Revenue, Refunding, Series A, 6.60%, 4/01/12 .......................... 4,730,000 4,972,744
SFMR, Series A, 6.45%, 12/01/14 ...................................................... 2,000,000 2,046,020
SFMR, Series A, 6.875%, 6/01/23 ...................................................... 900,000 923,112
Michigan State Hospital Finance Authority Revenue,
(b) Ascension Health Credit, Refunding, Series A, MBIA Insured, 6.125%, 11/15/23 ......... 18,000,000 18,092,700
Henry Ford Health, Refunding, Series A, 5.25%, 11/15/25 .............................. 4,000,000 3,371,760
Presbyterian Villages Obligation Group, 5.40%, 1/01/00 ............................... 310,000 310,143
Presbyterian Villages Obligation Group, 5.70%, 1/01/01 ............................... 310,000 310,939
Presbyterian Villages Obligation Group, 5.80%, 1/01/02 ............................... 355,000 356,967
Presbyterian Villages Obligation Group, 5.90%, 1/01/03 ............................... 325,000 327,574
Presbyterian Villages Obligation Group, 6.00%, 1/01/04 ............................... 390,000 393,959
Presbyterian Villages Obligation Group, 6.375%, 1/01/15 .............................. 275,000 270,130
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
MICHIGAN (CONT.)
Michigan State Hospital Finance Authority Revenue, (cont.)
Presbyterian Villages Obligation Group, 6.40%, 1/01/15 ..................................... $ 1,000,000 $ 984,660
Presbyterian Villages Obligation Group, 6.50%, 1/01/25 ..................................... 3,500,000 3,431,680
----------
82,146,983
----------
MINNESOTA 1.9%
Cloquet PCR, Potlach Corp. Projects, Refunding, 5.90%, 10/01/26 ............................... 9,100,000 8,552,180
Dakota County Housing RDA, Limited Annual Appropriation Tax and Revenue, Development Housing
Facilities Project,
7.25%, 1/01/00 ............................................................................. 645,000 646,948
7.25%, 1/01/01 ............................................................................. 695,000 700,393
7.50%, 1/01/06 ............................................................................. 3,930,000 3,988,754
8.00%, 1/01/07 ............................................................................. 1,770,000 1,789,913
Golden Valley Revenue, Covenant Retirement Communities, Series A, 5.50%, 12/01/29 ............. 6,000,000 5,232,600
International Falls PCR, Boise Cascade Corp. Project, Refunding, 5.65%, 12/01/22 .............. 3,500,000 3,074,855
Minneapolis CDA and St. Paul Housing RDA, Homeownership Mortgage Revenue, Joint
Housing Program, FGIC Insured, 9.875%, 12/01/15 .............................................. 5,000 5,001
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 24,785,085
Minnesota State HFA, SFM, Series D-1,
6.45%, 7/01/11 ............................................................................. 3,255,000 3,362,513
6.50%, 1/01/17 ............................................................................. 1,265,000 1,298,219
Minnetonka MFHR, Ridgepointe II Project, Refunding, Series A, GNMA Secured, 5.95%, 10/20/33 ... 11,075,000 10,890,712
Red Wing Housing RDA, Jordan Tower II Project, Pre-Refunded, 7.00%, 1/01/19 ................... 1,500,000 1,602,885
Rochester Health Care Facilities Revenue, Mayo Foundation, Series A, 5.50%, 11/15/27 .......... 21,500,000 20,021,875
Roseville MFHR, Rosepointe I Project, Refunding, Series A, GNMA Secured, 5.95%, 10/20/33 ...... 8,635,000 8,491,314
St. Louis Park EDA, Tax Increment Revenue, FGIC Insured, Pre-Refunded, 8.40%, 9/01/09 ......... 6,000,000 6,541,800
St. Paul Port Authority IDR,
Bandana Square, Series C, 7.70%, 12/01/00 .................................................. 230,000 227,981
Bandana Square, Series C, 7.70%, 12/01/01 .................................................. 255,000 250,502
Bandana Square, Series C, 7.70%, 12/01/02 .................................................. 270,000 264,298
Bandana Square, Series C, 7.70%, 12/01/07 .................................................. 1,690,000 1,451,879
Bandana Square, Series C, 7.80%, 12/01/12 .................................................. 3,465,000 2,792,582
Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/00 ...................................... 515,000 511,709
Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/01 ...................................... 550,000 542,971
Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/02 ...................................... 595,000 583,891
Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/03 ...................................... 640,000 624,570
Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/04 ...................................... 685,000 665,053
Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/05 ...................................... 740,000 719,051
Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/06 ...................................... 795,000 769,640
Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/07 ...................................... 855,000 824,887
Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/08 ...................................... 915,000 879,965
Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/09 ...................................... 670,000 642,014
Common Bond Fund, Fort Road Medical Center, Refunding, Series C, 7.95%, 9/01/01 ............ 140,000 137,682
Common Bond Fund, Fort Road Medical Center, Refunding, Series C, 7.95%, 9/01/02 ............ 155,000 151,810
Common Bond Fund, Fort Road Medical Center, Refunding, Series C, 7.95%, 9/01/10 ............ 1,705,000 1,420,538
Common Bond Fund, Ideal Security Hardware Corp., Refunding, Series F, 8.00%, 12/01/01 ...... 105,000 103,134
Common Bond Fund, Ideal Security Hardware Corp., Refunding, Series F, 8.00%, 12/01/02 ...... 115,000 112,553
Common Bond Fund, Ideal Security Hardware Corp., Refunding, Series F, 8.00%, 12/01/12 ...... 1,790,000 1,467,693
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
MINNESOTA (CONT.)
Washington County Housing and RDAR,
Orleans Apartments Project, Series A, 8.25%, 7/01/21 ........................................... $ 3,000,000 $ 2,928,630
Pooled Housing and Redevelopment, Refunding, 7.20%, 1/01/22 .................................... 5,885,000 6,098,920
Raymie Johnson Apartments Project, Pre-Refunded, 7.70%, 12/01/19 ............................... 5,210,000 5,656,914
------------
130,813,914
------------
MISSISSIPPI 1.1%
Claiborne County PCR, Systems Energy Resources Inc., Refunding, 6.20%, 2/01/26 ..................... 36,500,000 34,211,815
Mississippi Business Finance Corp. PCR,
System Energy Resource Inc. Project, 5.875%, 4/01/22 ........................................... 40,000,000 35,107,200
System Energy Resource Inc. Project, Refunding, 5.90%, 5/01/22 ................................. 8,250,000 7,263,135
Mississippi Home Corp. SFR, Refunding, Senior Series A, FGIC Insured, 9.25%, 3/01/12 ............... 905,000 942,784
Mississippi State Educational Facilities Authority Revenue, Private Nonprofit
Institutions of Higher Learning, Tougaloo College Project, Series A, 6.50%, 6/01/18 ............... 2,275,000 2,196,490
------------
79,721,424
------------
MISSOURI .4%
Hazelwood IDA, MFHR, Lakes Apartments Project, Refunding, Series A, GNMA Secured,
6.10%, 9/20/26 .................................................................................... 3,000,000 2,972,370
Missouri State Health and Educational Facilities Authority Health Facilities Revenue,
Health Midwest, Series B, MBIA Insured, 6.25%, 2/15/12 ............................................. 5,000,000 5,238,750
Missouri State Health and Educational Facilities Authority Revenue, SSM Health Care,
Refunding, Series A, MBIA Insured, 5.00%, 6/01/22 ................................................. 10,000,000 8,682,600
St. Louis Parking Facilities Revenue, Pre-Refunded, 6.625%, 12/15/21 ............................... 6,000,000 6,476,460
Taney County IDA, Hospital Revenue, The Skaggs Community Hospital Association,
5.40%, 5/15/28 .................................................................................... 4,000,000 3,315,880
West Plains IDA, Hospital Revenue, Ozarks Medical Center Project, Series A, Pre-Refunded,
8.625%, 9/15/20 ................................................................................... 3,465,000 3,626,746
------------
30,312,806
------------
MONTANA .7%
Forsyth County PCR,
Puget Sound Power and Light Co. Project, AMBAC Insured, 6.80%, 3/01/22 ......................... 10,000,000 10,489,300
The Montana Power Co. Colstrip Project, Refunding, Series A, 6.125%, 5/01/23 ................... 3,250,000 3,149,803
The Montana Power Co., Refunding, Series B, AMBAC Insured, 5.90%, 12/01/23 ..................... 4,225,000 4,317,654
The Montana Power Co., Refunding, Series B, MBIA Insured, 5.90%, 12/01/23 ...................... 20,385,000 20,832,043
Montana State Board of Housing SFM, Refunding,
Series A, 6.50%, 12/01/22 ...................................................................... 2,835,000 2,877,525
Series B-1, 6.25%, 12/01/21 .................................................................... 6,720,000 6,795,936
Montana State Health Facilities Authority Revenue, Montana Developmental Center Project,
6.40%, 6/01/19 .................................................................................... 2,000,000 2,031,980
------------
50,494,241
------------
NEBRASKA .1%
Lancaster County Hospital Authority Revenue, Bryan Memorial Hospital Project, Series B,
MBIA Insured, 5.375%, 6/01/22 ..................................................................... 4,250,000 3,923,600
Nebraska Investment Finance Authority Revenue, ETM, 7.00%, 11/01/09 ................................ 5,580,000 5,593,280
------------
9,516,880
------------
NEVADA 3.3%
Churchill County Health Care Facilities Revenue, Western Health Network, Series A, MBIA Insured,
6.25%, 1/01/14 .................................................................................... 2,000,000 2,083,660
Clark County HFC, MFHR, FHA Insured, 7.75%, 7/01/23 ............................................... 5,045,000 5,144,487
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Statement of Investments, October 31, 1999 (unaudited) (cont.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
NEVADA (CONT.)
Clark County IDR,
Nevada Power Co. Project, Refunding, Series B, 5.90%, 10/01/30 ..................... $ 15,000,000 $ 13,658,400
Nevada Power Co. Project, Refunding, Series C, 7.20%, 10/01/22 ..................... 12,500,000 13,298,000
Nevada Power Co. Project, Series A, 5.90%, 11/01/32 ................................ 2,600,000 2,363,036
Southwest Gas Corp., Series A, 7.30%, 9/01/27 ...................................... 18,080,000 19,068,976
Southwest Gas Corp., Series A, 6.50%, 12/01/33 ..................................... 10,000,000 10,114,100
Southwest Gas Corp., Series B, 7.50%, 9/01/32 ...................................... 62,470,000 66,124,495
Henderson Health Care Facilities Revenue, Catholic Healthcare West,
Series A, 5.25%, 7/01/18 ........................................................... 23,685,000 19,443,964
Humboldt County PCR, Sierra Pacific Power Co., Refunding, Series A,
AMBAC Insured, 6.30%, 7/01/22 ...................................................... 4,500,000 4,662,090
Nevada Housing Division,
MFHR, Series B, FNMA Insured, 6.55%, 10/01/25 ...................................... 5,405,000 5,579,744
SF Program, FI/GML, Series A, 8.30%, 10/01/19 ...................................... 1,875,000 1,943,663
SF Program, FI/GML, Series A-2, 8.375%, 10/01/19 ................................... 1,210,000 1,242,597
SF Program, Refunding, Series A-1, 6.25%, 10/01/26 ................................. 3,845,000 3,891,217
SF Program, Refunding, Series C-2, FHA Insured, 6.75%, 10/01/26 .................... 7,875,000 8,071,481
Nevada State GO,
Colorado River Commission Revenue, Series 1994, Pre-Refunded,
6.50%, 7/01/24 ..................................................................... 15,915,000 17,249,473
Municipal Bond Bank Project No. 40-41, Series A, ETM, 6.375%, 12/01/17 ............. 10,275,000 10,866,532
Reno RDA, Tax Allocation,
Downtown Redevelopment Project, Series C, Pre-Refunded, 7.75%, 9/01/05 ............. 2,695,000 2,828,429
Downtown Redevelopment Project, Series D, Pre-Refunded, 7.625%, 9/01/16 ............ 4,035,000 4,303,933
Downtown Redevelopment Project, Series D, Pre-Refunded, 7.625%, 9/01/16 ............ 4,255,000 4,542,468
Refunding, Series A, 6.20%, 6/01/18 ................................................ 3,000,000 2,931,960
Washoe County Gas and Water Facilities Revenue, Refunding, AMBAC Insured,
6.30%, 12/01/14 .................................................................... 5,000,000 5,216,750
Washoe County Hospital Facility Revenue, Washoe Medical Center Inc. Project,
Series A, AMBAC Insured,
6.25%, 6/01/13 ..................................................................... 9,295,000 9,774,250
------------
234,403,705
------------
NEW HAMPSHIRE 1.4%
Nashua Housing Authority MFR, Clocktower Project, Refunding,
GNMA Secured, 6.25%, 6/20/33 ....................................................... 6,106,000 6,140,499
New Hampshire Higher Education and Health Facilities Authority Revenue,
New Hampshire Catholic Charities, 5.80%, 8/01/22 ................................... 1,000,000 894,490
Rivier College, 5.60%, 1/01/28 ..................................................... 4,590,000 4,011,063
St. Joseph Hospital, 7.50%, 1/01/16 ................................................ 2,300,000 2,370,863
The Hitchcock Clinic, MBIA Insured, 6.00%, 7/01/27 ................................. 4,275,000 4,257,430
New Hampshire State HFA,
MFHR, Series 1, 7.10%, 1/01/14 ..................................................... 4,920,000 5,106,173
SFMR, Series E, 6.75%, 7/01/19 ..................................................... 5,015,000 5,169,111
SFMR, Series E, 6.80%, 7/01/25 ..................................................... 3,815,000 3,923,155
New Hampshire State IDAR, Pollution Control, Public Service Co. of
New Hampshire Project,
Series A, 7.65%, 5/01/21 ........................................................... 6,870,000 7,100,695
Series B, 7.50%, 5/01/21 ........................................................... 50,690,000 52,358,715
Series C, 7.65%, 5/01/21 ........................................................... 7,450,000 7,700,171
------------
99,032,365
------------
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Statement of Investments, October 31, 1999 (unaudited) (cont.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
NEW JERSEY .3%
Hudson County Improvement Authority Solid Waste Systems Revenue, Refunding,
Series 1, 6.00%, 1/01/19 ............................................................. $ 2,100,000 $ 2,032,527
Series 1, 6.00%, 1/01/29 ............................................................. 5,000,000 4,774,800
Series 2, 6.125%, 1/01/19 ............................................................ 2,000,000 1,941,700
Series 2, 6.125%, 1/01/29 ............................................................ 5,000,000 4,825,250
Mercer County Improvement Authority Revenue, Solid Waste, Refunding,
5.75%, 9/15/16 ......................................................................... 2,500,000 2,489,125
New Jersey Health Care Facilities Financing Authority Revenue,
Cathedral Health Service, Pre-Refunded, 7.25%, 2/15/21 ................................. 3,975,000 4,198,912
----------
20,262,314
----------
NEW MEXICO .5%
Farmington PCR, Public Service Co. of New Mexico, Refunding, Series A,
AMBAC Insured, 6.375%, 12/15/22 ......................................................... 10,435,000 10,869,618
Lordsburg PCR, Phelps Dodge Corp. Project, Refunding, 6.50%, 4/01/13 .................... 17,000,000 17,785,230
New Mexico Mortgage Finance Authority SFM Program, Refunding, Series A, 6.85%,
7/01/10 .............................................................................. 5,250,000 5,419,943
----------
34,074,791
----------
NEW YORK 16.4%
Long Island Power Authority Electric System Revenue, Series A,
5.50%, 12/01/29 ...................................................................... 20,165,000 18,074,091
FSA Insured, 5.125%, 12/01/22 ........................................................ 10,000,000 8,755,800
MTA Commuter Facilities Revenue, Series A,
5.25%, 7/01/28 ....................................................................... 5,000,000 4,289,450
(b) 6.125%, 7/01/29 ...................................................................... 15,040,000 14,886,291
FGIC Insured, 6.00%, 7/01/16 ......................................................... 8,950,000 9,081,834
MTA Dedicated Tax Fund Revenue, Series A, MBIA Insured, 5.25%, 4/01/26 .................. 11,125,000 9,904,588
MTA Transit Facilities Revenue,
Refunding, Series M, 6.00%, 7/01/14 .................................................. 18,210,000 18,329,640
Series A, FSA Insured, 6.00%, 7/01/16 ................................................ 3,630,000 3,683,470
Series A, FSA Insured, 5.625%, 7/01/27 ............................................... 10,800,000 9,982,332
Series A, FSA Insured, Pre-Refunded, 6.10%, 7/01/21 .................................. 6,260,000 6,802,617
Service Contract, Refunding, Series 8, 5.375%, 7/01/21 ............................... 15,000,000 13,501,500
(b) MTA Transportation Facilities Revenue, Series A, 6.00%, 7/01/24 ...................... 5,000,000 4,904,950
Nassau Health Care Corp. Health System Revenue, Nassau County Guaranty,
FSA Insurer, 5.75%, 8/01/29 ............................................................ 10,000,000 9,534,400
New Rochelle IDA, Civic Facilities Revenue, College of New Rochelle Project,
Pre-Refunded, 6.625%, 7/01/12 .......................................................... 1,245,000 1,335,275
New York City GO,
Group B, Series D, 8.25%, 8/01/12 .................................................... 30,000 32,092
Refunding, Series B, 6.20%, 8/15/06 .................................................. 1,500,000 1,598,235
Refunding, Series E, 6.00%, 8/01/26 .................................................. 2,765,000 2,717,719
Refunding, Series F, 6.00%, 8/01/13 .................................................. 14,000,000 14,323,260
Refunding, Series F, 5.25%, 8/01/15 .................................................. 20,580,000 18,980,317
Refunding, Series H, 6.25%, 8/01/15 .................................................. 13,035,000 13,406,889
Refunding, Series H, 6.125%, 8/01/25 ................................................. 65,785,000 65,801,446
Refunding, Series J, 6.00%, 8/01/21 .................................................. 28,260,000 27,918,902
Series A, 6.125%, 8/01/06 ............................................................ 14,140,000 14,952,626
Series A, 6.20%, 8/01/07 ............................................................. 20,515,000 21,713,486
Series A, 6.25%, 8/01/08 ............................................................. 4,390,000 4,646,113
Series A, 7.75%, 8/15/14 ............................................................. 40,000 42,449
Series A, 6.25%, 8/01/16 ............................................................. 3,280,000 3,323,821
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Statement of Investments, October 31, 1999 (unaudited) (cont.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
NEW YORK (CONT.)
New York City GO, (cont.)
Series A, Pre-Refunded, 6.125%, 8/01/06........ $ 360,000 $ 386,366
Series A, Pre-Refunded, 6.20%, 8/01/07......... 1,295,000 1,393,938
Series A, Pre-Refunded, 8.00%, 3/15/12......... 1,000,000 1,029,650
Series A, Pre-Refunded, 8.00%, 3/15/13......... 1,850,000 1,904,853
Series A, Pre-Refunded, 7.75%, 8/15/13......... 4,810,000 5,169,596
Series A, Pre-Refunded, 8.00%, 3/15/14......... 13,400,000 13,797,310
Series A, Pre-Refunded, 7.75%, 8/15/14......... 205,000 220,326
Series A, Pre-Refunded, 8.00%, 3/15/15......... 1,115,000 1,148,060
Series A, Pre-Refunded, 8.00%, 3/15/16......... 3,000,000 3,088,950
Series A, Pre-Refunded, 6.25%, 8/01/16......... 1,720,000 1,823,252
Series A, Pre-Refunded, 8.00%, 3/15/17......... 11,660,000 12,005,719
Series A, Pre-Refunded, 7.75%, 8/15/17......... 3,285,000 3,530,587
Series A, Pre-Refunded, 8.00%, 8/15/20......... 5,000 5,395
Series B, 8.25%, 6/01/02....................... 5,000 5,367
Series B, 7.50%, 2/01/04....................... 10,000,000 10,777,300
Series B, 8.25%, 6/01/05....................... 1,000,000 1,154,860
Series B, 6.30%, 8/15/08....................... 22,360,000 23,761,972
Series B, 6.125%, 8/01/09...................... 11,510,000 12,047,172
Series B, 6.375%, 8/15/10...................... 17,170,000 18,142,852
Series B, 7.50%, 10/01/11...................... 65,000 66,717
Series B, 7.50%, 10/01/12...................... 40,000 41,042
Series B, 7.00%, 2/01/19....................... 9,825,000 10,297,681
Series B, 6.00%, 8/15/26....................... 1,670,000 1,641,426
Series B, ETM, 8.00%, 6/01/01.................. 3,000,000 3,175,890
Series B, Pre-Refunded, 8.25%, 6/01/02......... 4,495,000 4,838,778
Series B, Pre-Refunded, 6.30%, 8/15/08......... 4,515,000 4,894,531
Series B, Pre-Refunded, 6.375%, 8/15/10........ 4,570,000 4,971,292
Series B, Pre-Refunded, 6.75%, 10/01/15........ 50,000 53,808
Series B, Pre-Refunded, 6.75%, 10/01/17........ 1,300,000 1,400,841
Series B, Pre-Refunded, 7.00%, 2/01/19......... 5,175,000 5,527,211
Series B, Pre-Refunded, 6.00%, 8/15/26......... 330,000 354,866
Series B, Sub Series B-1, Pre-Refunded,
7.00%, 8/15/16................................ 3,000,000 3,327,120
Series B-1, Pre-Refunded, 7.30%, 8/15/11....... 8,000,000 8,956,000
Series C, Pre-Refunded, 7.25%, 8/15/24......... 3,540,000 3,725,213
Series C, Sub Series C-1, 7.00%, 8/01/18....... 25,000 26,401
Series C, Sub Series C-1, Pre-Refunded,
7.00%, 8/01/17................................ 1,930,000 2,085,481
Series C, Sub Series C-1, Pre-Refunded,
7.00%, 8/01/18................................ 1,680,000 1,815,341
Series D, 7.30%, 2/01/01....................... 380,000 393,121
Series D, 8.00%, 8/01/16....................... 5,000 5,314
Series D, 6.00%, 2/15/25....................... 18,710,000 18,420,931
Series D, ETM, 7.30%, 2/01/01.................. 4,620,000 4,796,022
Series D, Pre-Refunded, 8.25%, 8/01/11......... 160,000 173,091
Series D, Pre-Refunded, 8.25%, 8/01/12......... 11,095,000 12,002,793
Series D, Pre-Refunded, 8.25%, 8/01/13......... 7,750,000 8,384,105
Series D, Pre-Refunded, 8.25%, 8/01/14......... 4,340,000 4,691,236
Series D, Pre-Refunded, 7.625%, 2/01/15........ 9,000,000 9,741,420
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Statement of Investments, October 31, 1999 (unaudited) (cont.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
NEW YORK (CONT.)
New York City GO, (cont.)
Series D, Pre-Refunded, 7.50%, 2/01/16........... $ 5,000,000 $ 5,398,700
Series D, Pre-Refunded, 8.00%, 8/01/16........... 45,000 48,495
Series D, Pre-Refunded, 7.50%, 2/01/17........... 12,000,000 12,956,880
Series D, Pre-Refunded, 8.00%, 8/01/17........... 100,000 107,766
Series D, Pre-Refunded, 8.00%, 8/01/18........... 50,000 53,883
Series D, Pre-Refunded, 8.00%, 8/01/19........... 30,000 32,330
Series D, Pre-Refunded, 8.00%, 8/15/21........... 15,000 16,185
Series D, Pre-Refunded, 6.00%, 2/15/25........... 1,920,000 2,043,955
Series E, 5.75%, 2/15/09......................... 5,295,000 5,427,322
Series E, 6.50%, 12/01/12........................ 20,000 20,027
Series E, Pre-Refunded, 5.75%, 2/15/09........... 3,205,000 3,374,897
Series E, Pre-Refunded, 6.00%, 8/01/26........... 235,000 252,639
Series F, 8.20%, 11/15/04........................ 85,000 92,364
Series F, Pre-Refunded, 8.20%, 11/15/04.......... 5,250,000 5,730,690
Series F, Pre-Refunded, 6.50%, 2/15/07........... 8,050,000 8,755,663
Series F, Pre-Refunded, 6.50%, 2/15/08........... 7,540,000 8,200,956
Series F, Pre-Refunded, 6.60%, 2/15/10........... 16,000,000 17,476,480
Series F, Pre-Refunded, 8.25%, 11/15/15.......... 2,000,000 2,185,040
Series F, Pre-Refunded, 8.25%, 11/15/17.......... 2,500,000 2,731,300
Series G, 6.00%, 10/15/26........................ 15,160,000 14,901,067
Series G, Pre-Refunded, 6.00%, 10/15/26.......... 175,000 187,898
Series H, 7.10%, 2/01/12......................... 210,000 221,775
Series H, 7.00%, 2/01/16......................... 215,000 225,623
Series H, Pre-Refunded, 7.10%, 2/01/12........... 2,790,000 2,985,774
Series H, Pre-Refunded, 7.20%, 2/01/14........... 10,000,000 10,722,800
Series H, Pre-Refunded, 7.00%, 2/01/16........... 3,785,000 4,042,607
Series H-1, 6.125%, 8/01/11...................... 4,900,000 5,106,535
Series H-1, Pre-Refunded, 6.125%, 8/01/09........ 240,000 257,578
Series H-1, Pre-Refunded, 6.125%, 8/01/11........ 100,000 107,324
Series I, 6.25%, 4/15/13......................... 18,245,000 19,068,214
Series I, 6.25%, 4/15/27......................... 3,185,000 3,211,977
Series I, Pre-Refunded, 6.25%, 4/15/13........... 18,365,000 19,940,533
Series I, Pre-Refunded, 6.25%, 4/15/27........... 3,815,000 4,142,289
New York City Health and Hospital Corp.
Revenue, Series A, Pre-Refunded, 6.00%, 2/15/07.. 5,010,000 5,324,778
New York City IDA, IDR, Brooklyn Navy Yard
Cogeneration Partners,
5.65%, 10/01/28................................. 5,000,000 4,484,450
5.75%, 10/01/36................................. 5,750,000 5,170,745
New York City Municipal Water Finance
Authority Water and Sewer System Revenue,
Series A, 7.10%, 6/15/12........................ 895,000 934,595
Series A, 5.75%, 6/15/30........................ 8,000,000 7,560,480
Series A, Pre-Refunded, 7.10%, 6/15/12.......... 1,560,000 1,645,238
Series A, Pre-Refunded, 7.00%, 6/15/15.......... 4,980,000 5,240,404
Series B, 5.875%, 6/15/26....................... 6,500,000 6,283,290
Series B, 5.75%, 6/15/29........................ 15,000,000 14,185,500
Series B, MBIA Insured, 5.75%, 6/15/26.......... 3,000,000 2,927,940
New York City Transitional Finance Authority
Revenue, Future Tax Secured, Series C,
5.00%, 5/01/29................................... 10,750,000 9,025,593
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
NEW YORK (CONT.)
New York City Transportation Authority
MTA, Triborough COP, Series A, AMBAC
Insured, 5.40%, 1/01/19 ..................... $20,000,000 $ 18,685,600
New York State Dormitory Authority Lease
Revenue, State University Dormitory
Facilities, 5.50%, 7/01/27 .................. 8,915,000 8,039,369
New York State Dormitory Authority Revenue,
City University General Resources, Series
2, MBIA Insured, Pre-Refunded, 6.25%,
7/01/19 ................................. 4,000,000 4,270,320
City University System Consolidated,
Series 1, 5.375%, 7/01/24 ............... 21,420,000 19,076,652
City University System Consolidated,
Third, Series 1, 5.25%, 7/01/25 ......... 10,000,000 8,649,000
City University System, Third General,
6.00%, 7/01/20 .......................... 16,860,000 16,584,170
City University System, Third General,
Series 2, 6.00%, 7/01/26 ................ 5,500,000 5,356,890
City University System, Third General,
Series 2, Pre-Refunded, 6.00%, 7/01/2 ... 14,150,000 15,254,549
Interfaith Medical Center, Series D,
5.40%, 2/15/28 .......................... 8,000,000 6,794,400
Mental Health Services Facilities, Series
A, 6.00%, 8/15/17 ....................... 18,000,000 17,939,700
Mental Health Services Facilities, Series
A, 5.75%, 2/15/27 ....................... 5,000,000 4,717,700
Our Lady Nursing Home, FHA Insured,
5.90%, 8/01/20 .......................... 6,750,000 6,529,950
Second Hospital, Interfaith Medical
Center, Series D, 5.30%, 2/15/19 ........ 5,000,000 4,410,250
State University Educational Facilities,
5.125%, 5/15/21 ......................... 9,000,000 7,791,210
State University Educational Facilities,
Pre-Refunded, 6.00%, 5/15/18 ............ 5,000,000 5,385,850
State University Educational Facilities,
Series B, 7.375%, 5/15/14 ............... 4,240,000 4,376,189
State University Educational Facilities,
Series B, 7.00%, 5/15/16 ................ 2,000,000 2,058,740
New York State Dormitory Authority
Revenues, Upstate Community Colleges,
Series A, 5.00%, 7/01/28 .................... 10,000,000 8,273,000
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 8,514,535
Long Island Light, Series A,
Pre-Refunded, 7.15%, 2/01/22 ............ 1,500,000 1,619,040
Series A, 7.15%, 6/01/20 ................... 12,885,000 13,661,192
Series A, Pre-Refunded, 7.15%, 6/01/20 ..... 4,615,000 4,975,293
New York State HFA, Service Contract
Obligation Revenue,
Refunding, Series C, 5.875%, 9/15/14 ....... 4,675,000 4,658,591
Refunding, Series C, 5.50%, 9/15/22 ........ 17,505,000 15,858,130
Series A, 6.375%, 9/15/14 .................. 25,000 25,788
Series A, 6.375%, 9/15/16 .................. 3,785,000 3,861,457
Series A, Pre-Refunded, 6.375%, 9/15/14 .... 3,130,000 3,416,865
Series A, Pre-Refunded, 6.50%, 3/15/25 ..... 10,000,000 11,054,300
Series C, 6.125%, 3/15/20 .................. 25,500,000 25,307,220
New York State HFAR,
Health Facilities, New York City,
Refunding, Series A, 5.90%, 5/01/05 ..... 14,070,000 14,300,467
Housing Project Mortgage, Refunding,
Series A, FSA Insured, 6.10%, 11/01/15 .. 5,475,000 5,606,017
Housing Project Mortgage, Refunding,
Series A, FSA Insured, 6.125%, 11/01/20 . 4,230,000 4,295,692
New York State Medical Care Facilities
Finance Agency Revenue,
Hospital and Nursing Home, Mortgage Revenue,
Series A, FHA Insured, 6.50%, 2/15/34 ... 6,730,000 6,938,697
Hospital and Nursing Home, Refunding, FSA
Mortgage Insured, 6.40%, 8/15/14 ........ 10,330,000 10,813,754
Hospital Mortgage, Series A, AMBAC
Insured, Pre-Refunded, 6.50%, 8/15/29 ... 7,600,000 8,344,192
The Hospital for Special Surgery Revenue,
Series A, Pre-Refunded, 6.375%, 8/15/24 . 12,500,000 13,631,750
New York State Tollway Authority Service
Contract Revenue, Local Highway and Bridge,
5.75%, 4/01/16 ............................. 13,200,000 12,844,260
Pre-Refunded, 6.25%, 4/01/14 ............... 11,600,000 12,560,480
New York State Urban Development Corp.
Revenue,
Correctional Capital Facilities, Series
5, 6.10%, 1/01/12 ....................... 7,685,000 7,917,548
Youth Facilities, 6.00%, 4/01/17 ........... 11,720,000 11,656,712
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
NEW YORK (CONT.)
Triborough Bridge and Tunnel Authority
Revenue, General Purpose, Series B, 5.50%,
1/01/30 .................................... $ 15,000,000 $ 13,822,050
Warren and Washington Counties IDAR,
Adirondack Resource Recovery Project,
Refunding, Series A, 7.90%, 12/15/07 ...... 4,190,000 4,225,657
-------------
1,156,638,595
-------------
NORTH CAROLINA 3.9%
Charlotte-Mecklenberg Hospital Authority
Health Care System Revenue,
5.90%, 1/15/16 ............................ 7,010,000 6,866,225
Pre-Refunded, 5.90%, 1/15/16 .............. 2,890,000 3,082,272
Cumberland County Hospital Facilities
Revenue, Cumberland County Hospital
Systems Inc., Refunding,
5.25%, 10/01/24 ............................ 6,000,000 5,145,960
North Carolina Eastern Municipal Power
Agency Power System Revenue,
Refunding, Series A, 6.50%, 1/01/17 ....... 25,700,000 25,670,702
Refunding, Series A, 5.75%, 1/01/26 ....... 65,350,000 57,875,921
Refunding, Series B, 6.25%, 1/01/12 ....... 6,875,000 6,898,306
Refunding, Series B, 6.00%, 1/01/14 ....... 14,000,000 13,469,540
Refunding, Series B, 6.00%, 1/01/22 ....... 1,250,000 1,171,450
Refunding, Series B, 6.25%, 1/01/23 ....... 39,030,000 37,685,026
Refunding, Series B, 5.75%, 1/01/24 ....... 35,140,000 31,244,028
Refunding, Series B, FGIC Insured, 6.25%,
1/01/23 ................................ 4,000,000 4,114,760
Refunding, Series B, MBIA Insured, 5.80%,
1/01/16 ................................ 11,175,000 11,221,265
Refunding, Series B, MBIA Insured, 5.75%,
12/01/16 ............................... 14,420,000 13,299,422
Series B, 6.00%, 1/01/05 .................. 1,355,000 1,374,648
Series B, MBIA Insured, 5.875%, 1/01/21 ... 13,325,000 13,204,409
Series D, 5.875%, 1/01/13 ................. 5,790,000 5,556,489
North Carolina Medical Care Commission
Hospital Revenue, Mission St. Joseph's
Health System Project,
MBIA Insured, 5.125%, 10/01/28 ............. 5,000,000 4,347,300
North Carolina Municipal Power Agency No.
1 Catawba Electric Revenue, Refunding,
5.75%, 1/01/15 ............................ 12,435,000 11,531,722
6.25%, 1/01/17 ............................ 9,720,000 9,618,232
University Hospital Chapel Hill Revenue,
Refunding, AMBAC Insured, 5.00%, 2/15/21 ... 5,000,000 4,408,500
Wake County Industrial Facilities and PCFA
Revenue, Carolina Power and Light Co.,
6.90%, 4/01/09 ............................. 5,000,000 5,141,450
-----------
272,927,627
-----------
NORTH DAKOTA .4%
Dickinson Health Care Facilities Revenue,
BHS Long-Term Care Inc., 7.625%, 2/15/20 ... 7,750,000 7,940,728
Ellendale MFHR, Ellendale Manor Apartments
Project, 9.75%, 7/01/16 .................... 244,000 244,351
Mercer County PCR, Basin Electric Power
Corp.,
Refunding, Second Series, AMBAC Insured,
6.05%, 1/01/19 ......................... 9,130,000 9,165,881
Series E, 7.00%, 1/01/19 .................. 11,395,000 11,752,803
Wahpeton MFHR, Evergreen Apartments
Project, 9.75%, 7/01/16 .................... 658,000 659,013
----------
29,762,776
----------
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
OHIO 1.7%
Cuyahoga County Hospital Revenue,
University Hospitals Health System Inc.,
Refunding, AMBAC Insured,
5.50%, 1/15/30................................. $ 5,000,000 $ 4,620,100
Dayton Special Facilities Revenue, Emery
Air Freight Corp., Emery Worldwide Air
Inc., Refunding,
Series A, 5.625%, 2/01/18...................... 6,000,000 5,437,140
Series E, 6.05%, 10/01/09...................... 4,000,000 4,059,280
Series F, 6.05%, 10/01/09...................... 2,750,000 2,790,755
Franklin County Convention Facilities
Authority Tax and Lease Revenue,
Anticipation Bonds, MBIA Insured,
5.00%, 12/01/27................................ 7,500,000 6,406,350
Hamilton County Hospital Facilities
Revenue, Children's Hospital Medical
Center, Series G, MBIA Insured,
5.00%, 5/15/23................................. 10,000,000 8,657,300
Medina City School District GO, FGIC
Insured, 5.25%, 12/01/28....................... 7,500,000 6,701,925
Montgomery County Health Systems Revenue,
Franciscan at Saint Leonard, Refunding,
5.50%, 7/01/18................................. 3,625,000 3,154,765
Franciscan Facility, Series B-2, 8.10%,
7/01/01........................................ 1,000,000 1,025,150
Franciscan Medical Center-Dayton,
Refunding, 5.50%, 7/01/18...................... 1,995,000 1,736,209
Series B-2, 8.10%, 7/01/18..................... 3,705,000 4,094,729
Series B-2, Pre-Refunded, 8.10%, 7/01/18....... 8,295,000 9,896,930
Montgomery County Hospital Facilities
Revenue, Grandview Hospital and Medical
Center, Refunding,
5.50%, 12/01/10................................ 1,300,000 1,210,040
5.60%, 12/01/11................................ 1,000,000 927,000
5.65%, 12/01/12................................ 925,000 854,090
Ohio State Air Quality Development
Authority Revenue,
Dayton Power and Light Co. Project,
Refunding, 6.10%, 9/01/30...................... 12,000,000 11,737,920
PCR, Toledo Edison, Series B, Refunding,
8.00%, 5/15/19................................. 6,325,000 6,516,837
Ohio State EDR, Good Samaritan Medical
Center, Series 1990-3, 7.875%, 12/01/10........ 1,440,000 1,484,626
Ohio State Solid Waste Disposal Revenue,
USG Corp. Project, 5.65%, 3/01/33.............. 5,330,000 4,637,580
Ohio State Water Development Authority
PCR, Facilities Revenue, Toledo Edison,
Series A, 8.00%, 5/15/19....................... 10,000,000 10,303,300
Ohio State Water Development Authority 3,250,000 3,336,905
Revenue, Dayton Power, Refunding, Series A,
6.40%, 8/15/27.................................
University of Akron General Receipts, FGIC
Insured, 5.75%, 1/01/29........................ 11,305,000 10,827,025
University of Cincinnati COP, University
Center Project, MBIA Insured, 5.125%,
6/01/24......................................... 10,500,000 9,388,155
---------
119,804,111
-----------
OKLAHOMA .9%
Oklahoma State Turnpike Authority
Turnpike Revenue, First Senior, 7.875%,
1/01/21......................................... 610,000 621,944
Stillwater Medical Center Authority
Revenue,
Series A, 6.10%, 5/15/09........................ 3,440,000 3,352,762
Series B, 6.35%, 5/15/12........................ 1,235,000 1,204,804
Series B, 6.50%, 5/15/19........................ 3,390,000 3,341,998
Tulsa County Home Finance Authority
Mortgage Revenue, Series D, GNMA Secured,
6.95%, 12/01/22................................. 415,000 424,894
Tulsa County Municipal Airport Revenue,
American Airlines Inc.,
7.35%, 12/01/11................................. 4,000,000 4,267,320
6.25%, 6/01/20.................................. 18,530,000 18,275,768
7.375%, 12/01/20................................ 11,000,000 11,457,490
Tulsa County Parking Authority, Series B,
6.90%, 12/01/07................................. 3,000,000 3,188,220
7.00%, 12/01/14................................. 5,500,000 5,756,465
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS(CONT.)
BONDS(CONT.)
OKLAHOMA (CONT.)
Tulsa Housing Assistance Corp. Revenue,
First Lien, Refunding, 6.80%, 7/01/11.......... $ 2,740,000 $ 2,841,517
Tulsa Industrial Authority Hospital
Revenue, St. John Medical Center Project,
Series A, 6.25%, 2/15/14....................... 2,000,000 2,147,680
Valley View Hospital Authority Revenue,
Valley View Regional Medical Center,
Refunding, 6.00%, 8/15/14...................... 4,000,000 3,764,360
----------
60,645,222
----------
OREGON .4%
Medford Hospital Facilities Authority
Revenue, Asante Health System, Series A,
MBIA Insured, 5.00%, 8/15/24................... 3,655,000 3,173,563
Oregon State Department of Administrative
Services COP, Series A, AMBAC Insured,
Pre-Refunded, 5.80%, 5/01/24................... 5,000,000 5,291,650
Oregon State EDR, Georgia Pacific Corp.
Project, Refunding, Series 183, 5.70%,
12/01/25....................................... 3,500,000 3,150,280
Series CLVII, 6.35%, 8/01/25................... 5,500,000 5,451,105
Salem-Keizer GO, School District No. 24J,
5.00%, 6/01/19................................. 15,055,000 13,477,387
----------
30,543,985
----------
PENNSYLVANIA 3.2%
Allegheny County Hospital Development
Authority Revenue, University of
Pittsburgh Health Center, Refunding,
Series A, MBIA Insured, 5.625%, 4/01/27........ 6,550,000 6,129,556
Allegheny County IDAR, Environmental
Improvement,
6.70%, 12/01/20................................ 5,250,000 5,435,483
USX Corp., Refunding, 5.50%, 12/01/29.......... 10,000,000 8,650,400
Berks County GO, AMBAC Insured, 5.00%,
11/15/25....................................... 5,000,000 4,246,650
Cambria County HDA, Hospital Revenue,
Conemaugh Valley Memorial Hospital,
Refunding, Series B,
Connie Lee Insured, Pre-Refunded, 6.30%,
7/01/08........................................ 9,600,000 10,193,664
Pre-Refunded, Connie Lee Insured, 6.375%,
7/01/18........................................ 10,740,000 11,424,138
Delaware County IDAR, Philadelphia
Electric, Refunding, Series 1991, 7.375%,
4/01/21........................................ 6,500,000 6,903,130
Delaware Valley Regional Finance Authority
Local Government Revenue, Series B, AMBAC
Insured, 5.60%, 7/01/17........................ 5,000,000 4,900,750
Lehigh County IDA, PCR, Pennsylvania Power
and Light Co. Project, Refunding, Series
A, MBIA Insured,
6.15%, 8/01/29................................. 4,000,000 4,021,520
Montgomery County Higher Education and
Health Authority Revenue, Jeanes Health
System Project, Pre-Refunded,
8.75%, 7/01/20................................. 5,500,000 5,777,310
Montgomery County IDA, Retirement
Community Revenue, Act Retirement-Life
Communities, 5.25%, 11/15/28................... 2,500,000 2,099,900
Pennsylvania EDA,
Financing Authority Revenue, Macmillan,
LP Project, Pre-Refunded, 7.60%, 12/01/20...... 5,000,000 5,742,250
Financing Resources Recovery Revenue,
Colver Project, Series D, 7.125%, 12/01/15..... 13,500,000 14,343,210
Pennsylvania HFA,
Rental Housing, Refunding, FGIC Insured,
6.40%, 7/01/12................................. 10,590,000 11,017,624
SFM, Series 1991, 7.15%, 4/01/15............... 3,635,000 3,748,412
Pennsylvania State Financial Authority
Revenue, Municipal Capital Improvements
Program, Refunding,
6.60%, 11/01/09................................ 33,280,000 35,620,250
Pennsylvania State Higher Educational
Facilities Authority Revenue, Temple
University, First Series, MBIA Insured,
5.00%, 4/01/29................................. 9,000,000 7,567,920
Philadelphia Gas Works Revenue,
1st Series A, FSA Insured, 5.00%, 7/01/26...... 5,000,000 4,239,050
13th Series, Pre-Refunded, 7.70%, 6/15/21...... 2,850,000 3,056,511
14th Series A, Pre-Refunded, 6.375%,
7/01/26........................................ 1,210,000 1,302,432
Refunding, 14th Series, 6.375%, 7/01/26........ 2,740,000 2,696,571
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Statement of Investments, October 31, 1999 (unaudited) (cont.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
PENNSYLVANIA (CONT.)
Philadelphia GO,
MBIA Insured, 5.00%, 5/15/25................... $ 5,000,000 $ 4,252,650
Refunding, Series A, 11.50%, 8/01/00........... 1,000,000 1,050,530
Philadelphia Hospitals and Higher
Education Facilities Authority Revenue,
Temple University Hospital,
5.875%, 11/15/23............................... 5,000,000 4,381,450
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 3,019,278
5.35%, 1/01/23................................. 5,780,000 5,153,737
5.375%, 1/01/28................................ 3,765,000 3,326,189
Philadelphia Parking Authority Parking
Revenue,
Airport, FSA Insured, 5.25%, 9/01/29........... 15,000,000 13,145,550
AMBAC Insured, 5.00%, 2/01/27.................. 5,000,000 4,197,950
Philadelphia Water and Sewer Revenue,
Series 10, ETM, 7.35%, 9/01/04................. 10,695,000 11,583,968
Pittsburgh and Allegheny County Public
Auditorium Hotel Room Revenue, AMBAC
Insured, 5.125%, 2/01/35....................... 15,000,000 12,644,100
South Fork Municipal Authority Hospital
Revenue, Conemaugh Valley Memorial
Hospital Project, Series A,
MBIA Insured, 5.75%, 7/01/26................... 5,000,000 4,770,450
---------
226,642,583
-----------
RHODE ISLAND 1.4%
Providence GO, Special Obligation Tax
Increment, Series A, 7.65%, 6/01/16............ 9,900,000 10,693,782
Rhode Island Clean Water Financing Agency
Revenue, Safe Drinking Water Providence,
Series A, AMBAC Insured,
6.70%, 1/01/15................................. 2,200,000 2,352,328
Rhode Island Housing and Mortgage Finance
Corp. Revenue, Homeownership Opportunity,
Series 2, 7.75%, 4/01/22....................... 1,175,000 1,204,093
Series 10-A, 6.50%, 10/01/22................... 20,200,000 20,631,270
Series 10-A, 6.50%, 4/01/27.................... 13,085,000 13,347,747
Series 13, 6.70%, 10/01/15..................... 7,400,000 7,613,268
Series 13, 6.85%, 4/01/27...................... 1,515,000 1,560,147
Series 15-A, 6.85%, 10/01/24................... 15,000,000 15,396,750
Series 17-A, 6.25%, 4/01/17.................... 2,320,000 2,347,237
Series 17-A, 6.375%, 10/01/26.................. 2,720,000 2,752,586
Rhode Island Port Authority and EDC
Revenue, Shepard Building Project, Series B,
AMBAC Insured, Pre-Refunded,
6.75%, 6/01/25................................. 3,000,000 3,296,430
Rhode Island State Health and Educational
Building Corp. Revenue,
Health Facilities, Saint Antoine, Series B,
6.125%, 11/15/29............................... 8,400,000 8,082,396
Health Facilities, Tockwotton Home,
Pre-Refunded, 7.25%, 4/15/17................... 3,000,000 3,241,620
Roger William Realty, FHA Insured, 7.50%,
8/01/29........................................ 900,000 920,673
St. Antoine Residence, 6.70%, 11/15/12......... 2,320,000 2,536,966
St. Antoine Residence, 6.75%, 11/15/18......... 2,750,000 3,012,185
---------
98,989,478
----------
SOUTH CAROLINA .8%
Berkeley County School District COP,
Berkeley School Facilities Group Inc.,
AMBAC Insured, Pre-Refunded,
6.30%, 2/01/16................................. 1,800,000 1,937,610
Piedmont Municipal Power Agency Electric
Revenue, Refunding,
6.60%, 1/01/21................................. 10,645,000 10,607,743
Series A, 5.75%, 1/01/24....................... 3,150,000 2,800,760
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Statement of Investments, October 31, 1999 (unaudited) (cont.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
SOUTH CAROLINA (CONT.)
Piedmont Municipal Power Agency Electric
Revenue, Refunding, (cont.)
Series A, AMBAC Insured, 6.55%, 1/01/16 ........ $ 7,340,000 $ 7,317,466
Series A, AMBAC Insured, 5.75%, 1/01/24 ........ 5,050,000 4,864,615
Richland County PCR, Union Camp Corp.
Project, Refunding, Series C, 6.55%,
11/01/20 ....................................... 3,000,000 3,066,420
South Carolina Housing Finance and
Development Authority Mortgage Revenue,
Series A-2, AMBAC Insured,
5.80%, 7/01/27 ................................. 6,405,000 6,308,989
South Carolina Public Service Authority
Revenue, Refunding, Series A, AMBAC
Insured, 6.375%, 7/01/21 ....................... 12,765,000 13,154,205
Spartanburg County Health Services
District Inc. Hospital Revenue, Series A,
MBIA Insured, 5.50%, 4/15/27 ................... 3,000,000 2,791,620
---------
52,849,428
----------
SOUTH DAKOTA .3%
Lawrence County PCR, Black Hills Power and
Light Co. Project, Refunding, 6.70%,
6/01/10 ........................................ 5,000,000 5,241,350
South Dakota HDA Revenue, Homeownership
Mortgage,
Series A, 6.30%, 5/01/17 ...................... 2,580,000 2,618,390
Series A, 7.15%, 5/01/27 ...................... 8,955,000 9,288,753
Series D, 6.65%, 5/01/14 ...................... 3,345,000 3,456,890
Series G, 7.125%, 5/01/14 ..................... 3,405,000 3,563,877
---------
24,169,260
----------
TENNESSEE 1.0%
Chattanooga Health Educational and Housing
Facility Board Revenue, Catholic Health
Initiatives, Refunding,
Series A, 5.00%, 12/01/18 .................... 2,150,000 1,835,735
Franklin IDB, MFHR, Landings Apartment
Project, Refunding, Series A, FSA Insured,
6.00%, 10/01/26 .............................. 2,000,000 1,994,580
Hamilton County IDB, MFHR, Patten Towers
Apartments, Series A,
6.125%, 8/01/05 .............................. 2,460,000 2,484,108
6.30%, 8/01/07 ............................... 1,000,000 1,010,910
Knox County Health, Educational and
Housing Facilities Board MFHR, East Towne
Village Project, GNMA Secured,
8.20%, 7/01/28 ............................... 4,695,000 4,817,164
Knoxville Electric Revenue, Refunding and
Improvement Systems, Series S, 5.10%,
7/01/24 ...................................... 3,840,000 3,335,616
Memphis-Shelby County Airport Authority
Special Facilities and Project Revenue,
Federal Express Corp.,
7.875%, 9/01/09 .............................. 14,690,000 15,696,853
6.75%, 9/01/12 ............................... 6,520,000 6,840,197
Metropolitan Government of Nashville and
Davidson County GO, Refunding, 5.125%,
5/15/25 ...................................... 12,100,000 10,639,288
Metropolitan Government of Nashville and
Davidson County Health and Educational
Facilities Board Revenue,
Multi-Modal Health Facility, Asset
Guaranty, 5.50%, 5/01/23 ..................... 985,000 902,556
Metropolitan Government of Nashville and
Davidson County IDBR, Osco Treatment Inc.,
Refunding and Improvement, 6.00%, 5/01/03 .... 5,000,000 5,053,200
Metropolitan Nashville Airport Authority
Revenue, Series C, FGIC Insured, 6.60%,
7/01/15 ...................................... 1,940,000 2,031,762
Mount Pleasant IDR, PCR, Stauffer Chemical
Co. Project, 8.00%, 12/01/12 ................. 1,990,000 2,054,775
Shelby County Health Educational and
Housing Facilities Board Hospital Revenue,
MBIA Insured, 5.00%, 4/01/18 ................. 5,000,000 4,376,300
Tennessee HDA, Homeownership Program,
Series 1992, 6.80%, 7/01/17 .................. 2,310,000 2,378,261
Tennessee State Local Development
Authority Revenue, Community Provider
Pooled Loan Program, Pre-Refunded,
6.45%, 10/01/14 .............................. 2,275,000 2,438,231
---------
67,889,536
----------
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
TEXAS 5.9%
Austin Utility System Revenue,
Refunding, FGIC Insured, 6.25%, 5/15/16 ....... $ 7,755,000 $ 8,113,281
Series A, Pre-Refunded, 8.00%, 11/15/16 ....... 18,100,000 19,119,030
Bexar County Health Facilities Development
Corp. Revenue, Incarnate Word Health
Services, Refunding, FSA Insured, ETM,
6.00%, 11/15/15 ............................... 4,500,000 4,730,850
6.10%, 11/15/23 ............................... 8,300,000 8,934,120
Bexar County HFC, MFHR, Sunpark Apartments
Project, 6.875%, 12/01/12 ...................... 1,695,000 1,747,257
Bexar Metropolitan Water District Water
Works Systems Revenue, Refunding, MBIA
Insured, 5.875%, 5/01/22 ...................... 2,860,000 2,816,156
Brazos River Authority PCR, Texas
Utilities Electric Co. Project,
Collateralized, Refunding, Series C,
5.55%, 6/01/30 ................................ 20,000,000 17,138,200
Dallas-Fort Worth International Airport
Facilities Improvement Corp. Revenue,
American Airlines Inc.,
8.00%, 11/01/24 .............................. 99,000,000 103,652,010
Refunding, 6.00%, 11/01/14 ................... 29,400,000 28,971,936
El Paso HFC, SFMR, Refunding, Series A,
8.75%, 10/01/11 ............................... 3,040,000 3,209,237
Fort Worth Higher Education Financial
Corp. Higher Education Revenue, Texas
Christian University Project,
5.00%, 3/15/27 ............................... 4,000,000 3,380,360
Grand Prairie Health Facilities
Development Corp., Dallas/Fort Worth
Medical Center Project, Refunding,
AMBAC Insured, 6.875%, 11/01/10 ............... 2,700,000 2,696,274
Gulf Coast Waste Disposal Authority
Environmental Improvement Revenue, UXS
Corp. Projects, Refunding,
5.50%, 9/01/17 ................................ 3,250,000 2,922,173
Harris County IDR, Marine Terminal
Revenue, Refunding, 6.95%, 2/01/22 ............ 20,250,000 21,156,998
Houston Higher Education Finance Corp.
Higher Education Revenue, Rice University
Project, Series A,
5.375%, 11/15/29 ............................. 10,000,000 9,019,400
Houston Water and Sewer System Revenue,
junior lien, Refunding, Series D, FGIC
Insured, 5.00%, 12/01/25 ..................... 9,710,000 8,245,732
Refunding, Series B, 6.375%, 12/01/14 ........ 21,000,000 22,014,300
Joshua ISD, Refunding, Series B, 6.125%,
2/15/26 ....................................... 20,000 20,031
Lower Neches Valley Authority IDC Revenue,
Mobil Oil Refunding Corp., Refunding,
5.55%, 3/01/33 ................................ 2,500,000 2,258,975
Lubbock HFC, SFMR, MBS Program, Refunding,
Series A, GNMA Secured, 6.125%, 12/01/17 ...... 1,000,000 1,008,220
Matagorda County Navigation District No. 1
PCR,
Central Power and Light Co. Project,
Refunding, Series E, MBIA Insured, 6.10%,
7/01/28 ..................................... 25,300,000 25,463,691
Central Power and Light Co. Project,
Refunding, 6.00%, 7/01/28 ................... 19,200,000 18,243,456
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 5,756,025
Mesquite HFC, SFMR, Series 1983, 10.75%,
9/01/14 ....................................... 575,000 582,165
North Central Health Facility Development
Corp. Revenue, Texas Health Resources
System, Series B, MBIA Insured,
5.125%, 2/15/22 .............................. 5,985,000 5,225,922
Nueces River Authority Environmental
Improvement Revenue, Asarco Inc. Project,
Refunding, Series A,
5.60%, 4/01/18 ............................... 4,500,000 4,037,400
Port Corpus Christi IDC Revenue, Valero,
Refunding,
Series B, 5.40%, 4/01/18 ..................... 4,000,000 3,507,960
Series C, 5.40%, 4/01/18 ..................... 6,000,000 5,320,500
Port Corpus Christi Nueces County General
Revenue, Union Pacific, Refunding, 5.65%,
12/01/22 ...................................... 18,000,000 16,382,520
Red River Authority PCR, West Texas
Utilities Co. Project, Public Service Co.
of Oklahoma, Central Power and
Light Co., Refunding, MBIA Insured,
6.00%, 6/01/20 5,000,000 5,039,700
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
TEXAS (CONT.)
Sabine River Authority PCR,
Southwestern Electric Power Co.,
Refunding, MBIA Insured, 6.10%, 4/01/18 ..... $ 4,000,000 $ 4,086,720
Texas Utilities Electric Co. Project,
Collateralized, Refunding, FGIC Insured,
6.55%, 10/01/22 ............................. 7,700,000 8,056,356
San Antonio Electric and Gas Revenue,
5.50%, 2/01/20 ............................... 9,505,000 8,887,935
Pre-Refunded, 5.50%, 2/01/20 ................. 495,000 514,226
San Antonio Water Revenue, senior lien,
MBIA Insured,
6.50%, 5/15/10 ............................... 2,795,000 2,952,470
Pre-Refunded, 6.50%, 5/15/10 ................. 1,440,000 1,536,797
Tarrant County Health Facilities
Development Corp. Health Services Revenue,
Health Resources System, Series A,
MBIA Insured, 5.00%, 2/15/26 ................. 10,000,000 8,452,500
Texas Water Development Board Revenue,
State Revolving Fund, 6.00%, 7/15/13 .......... 2,500,000 2,580,125
Travis County HFC, SFMR, Refunding, Series
A, 6.95%, 10/01/27 ............................ 3,735,000 3,872,261
Tyler Health Facilities Development Corp.
Hospital Revenue, East Texas Medical
Center Project,
Series A, MBIA Insured, 5.50%, 11/01/17 ...... 1,735,000 1,649,465
Series D, FSA Insured, 5.375%, 11/01/27 ...... 14,500,000 12,884,700
-----------
416,187,434
-----------
US TERRITORIES 1.7%
District of Columbia GO, Series E, MBIA
Insured,
6.00%, 6/01/13 ............................... 3,845,000 3,901,060
Pre-Refunded, 6.00%, 6/01/13 ................. 155,000 164,765
District of Columbia HFA, MFHR, Refunding,
Series A, FHA Insured,
7.10%, 9/01/12 ............................... 1,830,000 1,892,092
7.15%, 3/01/24 ............................... 6,575,000 6,766,004
District of Columbia Hospital Revenue,
Washington Hospital Center Corp., Series
A, Pre-Refunded, 9.00%, 1/01/08 ............... 3,660,000 3,923,410
District of Columbia Redevelopment Land
Agency Washington D.C. Sports Arena
Special Tax Revenue, 5.625%, 11/01/1 0......... 935,000 946,641
District of Columbia Revenue,
Association of American Medical Colleges,
Pre-Refunded, 7.50%, 2/15/20 ................ 5,685,000 5,852,992
Catholic University of America, Connie
Lee Insured, 6.45%, 10/01/23 ................ 5,265,000 5,699,889
Catholic University of America Project,
Refunding, AMBAC Insured, 5.625%, 10/01/29 .. 7,500,000 6,992,850
Guam Airport Authority Revenue, Series B,
6.60%, 10/01/10 ............................... 325,000 342,664
6.70%, 10/01/23 ............................... 1,000,000 1,051,060
Guam Government Limited Obligation Highway
Revenue, Refunding, Series A, FSA Insured,
6.30%, 5/01/12 ................................ 280,000 293,252
Guam Power Authority Revenue, Series A,
5.25%, 10/01/23 ............................... 200,000 177,596
Northern Mariana Islands Commonwealth
Ports Authority Seaport Revenue, Series A,
6.85%, 3/15/28 ................................ 1,000,000 985,130
Puerto Rico Commonwealth GO,
AMBAC Insured, 5.40%, 7/01/25 ................. 250,000 234,498
Pre-Refunded, 6.50%, 7/01/23 .................. 250,000 274,728
Public Improvement, Refunding, 5.75%,
7/01/17 ...................................... 250,000 248,880
Puerto Rico Commonwealth Highway and
Transportation Authority Revenue,
Series A, 5.00%, 7/01/38 ..................... 2,500,000 2,074,100
Series Y, 5.50%, 7/01/26 ..................... 1,150,000 1,070,995
Series Y, 5.00%, 7/01/36 ..................... 59,000,000 49,606,020
Series Y, 5.50%, 7/01/36 ..................... 7,000,000 6,434,610
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Statement of Investments, October 31, 1999 (unaudited) (cont.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
US TERRITORIES (CONT.)
Puerto Rico Commonwealth Urban Renewal and
Housing Corp. Commonwealth Appropriation,
Refunding, 7.875%, 10/01/04 ................. $ 3,200,000 $ 3,269,760
Puerto Rico Electric Power Authority
Revenue,
Series DD, 5.00%, 7/01/28 ................... 2,000,000 1,694,120
Series R, Pre-Refunded, 6.25%, 7/01/17 ...... 100,000 106,264
Series T, 5.50%, 7/01/20 .................... 400,000 379,632
Series X, 5.50%, 7/01/25 .................... 200,000 187,966
Puerto Rico Housing Bank and Financing
Authority SFMR, Affordable Housing
Mortgage, First Portfolio,
6.25%, 4/01/29 ............................... 130,000 132,621
Puerto Rico Industrial Medical and
Environmental PCFA Revenue, PepsiCo Inc.
Project, 6.25%, 11/15/13 ..................... 350,000 370,286
Puerto Rico Industrial Tourist Educational
Medical and Environmental Control
Facilities Financing Authority
Industrial Revenue,
Guaynabo Warehouse, Series A, 5.15%,
7/01/19 .................................... 850,000 751,069
Teacher's Retirement System
Revenue,Series B, 5.50%, 7/01/21 ........... 250,000 235,800
Puerto Rico PBA, Public Education and
Health Facilities, Refunding, Series M,
5.75%, 7/01/15 ............................... 900,000 902,934
Puerto Rico Telephone Authority Revenue,
Series L, Pre-Refunded, 6.125%, 1/01/22 ...... 500,000 524,010
University of Puerto Rico Revenues, Series
M, MBIA Insured, 5.25%, 6/01/25 .............. 285,000 261,738
Virgin Islands PFA Revenue,
senior lien, Fund Loan Notes, Refunding,
Series A, 5.50%, 10/01/18 ................. 1,400,000 1,297,534
senior lien, Fund Loan Notes, Refunding,
Series A, 5.50%, 10/01/22 ................. 6,485,000 5,940,584
senior lien, Fund Loan Notes, Refunding,
Series A, 5.625%, 10/01/25 ................ 1,900,000 1,755,296
sub. lien, Fund Loan Notes, Refunding,
Series D, 5.50%, 10/01/01 ................. 1,755,000 1,762,476
sub. lien, Fund Loan Notes, Refunding,
Series D, 5.50%, 10/01/02 ................. 1,700,000 1,707,157
sub. lien, Fund Loan Notes, Refunding,
Series D, 5.50%, 10/01/03 ................. 1,850,000 1,851,184
Virgin Islands Water and Power Authority
Electric System Revenue, Refunding, 5.30%,
7/01/18 ...................................... 500,000 452,140
-----------
122,515,807
-----------
UTAH .7%
Carbon County Solid Waste Disposal
Revenue, Laidlaw Inc. Project, Refunding,
Series A, 7.50%, 2/01/10 ..................... 5,050,000 5,415,115
Intermountain Power Agency Power Supply
Revenue, Refunding, Series A, 6.15%,
7/01/14 ...................................... 25,000,000 25,931,250
Salt Lake County College Revenue,
Westminster College Project, 5.70%,
10/01/17 ..................................... 1,000,000 924,950
Westminster College Project, 5.75%,
10/01/27 ..................................... 1,000,000 905,090
Westminster College Project, 5.625%,
10/01/28 ..................................... 3,305,000 2,922,083
Utah State HFA,
Refunding, Series A, FNMA Insured, 6.50%,
5/01/19 ...................................... 2,945,000 2,987,349
SFM, Refunding, 6.80%, 1/01/12 .............. 685,000 708,043
SFM, Series B, 6.55%, 7/01/19 ............... 1,680,000 1,723,462
SFM, Series B, 6.55%, 7/01/26 ............... 2,685,000 2,739,747
SFM, Series C-1, 6.80%, 7/01/12 ............. 130,000 134,373
SFM, Series C-1, 8.375%, 7/01/19 ............ 435,000 431,816
SFM, Series E-1, 6.65%, 7/01/20 ............. 1,120,000 1,145,816
----------
45,969,094
----------
VERMONT .1%
Vermont HFA, SFHR, Series 5, 7.00%, ............ 9,400,000 9,613,192
11/01/27 ----------
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Statement of Investments, October 31, 1999 (unaudited) (cont.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
VIRGINIA .9%
Danville IDA, Hospital Revenue,
Danville Regional Medical Center, FGIC
Insured, Pre-Refunded, 6.50%, 10/01/24 ........ $ 5,840,000 $ 6,350,474
Regional Medical Center, FGIC Insured,
Pre-Refunded, 6.50%, 10/01/19 ................. 5,885,000 6,399,408
Henrico County IDA, Public Facilities
Lease Revenue, Regional Jail Project,
6.00%, 8/01/15 ................................ 7,250,000 7,393,623
Henrico County Water and Sewer Revenue,
Refunding, 5.00%, 5/01/22 ..................... 4,875,000 4,250,269
Lynchburg IDA, Healthcare Facilities
Revenue, Centra Health, Refunding, 5.20%,
1/01/28 ....................................... 2,000,000 1,713,820
Medical College Hospital Authority
Revenue, General Revenue Bonds, MBIA
Insured, 5.125%, 7/01/18 ...................... 2,000,000 1,807,020
Newport News GO, Series B, 5.00%, 3/01/19 ...... 3,550,000 3,154,211
Portsmouth IDAR, Hotel Conference Center
and Parking, FSA Insured, 5.00%, 4/01/29 ...... 4,000,000 3,425,840
Richmond Public Utility Revenue,
Refunding, Series A,
5.125%, 1/15/28 ............................... 15,510,000 13,373,498
FGIC Insured, 5.125%, 1/15/28 ................. 4,000,000 3,506,840
Virginia State HDA, Commonwealth Mortgage,
Series C, Sub Series C-6, 6.25%, 1/01/15 ...... 5,120,000 5,214,976
Series H, Sub Series H-2, 6.55%, 1/01/17 ...... 3,305,000 3,387,989
-----------
59,977,968
-----------
WASHINGTON 2.6%
Aberdeen GO, Series A, MBIA Insured,
5.80%, 12/01/12 ............................... 100,000 102,432
Bellevue Water and Sewer Revenue,
Refunding, 5.875%, 7/01/10 .................... 100,000 101,967
Bellingham Housing Authority Revenue,
Cascade Meadows Project, Pre-Refunded,
7,10%, 11/01/23 ............................... 200,000 220,960
Pacific Rim and Cascade Meadows Project,
Refunding, MBIA Insured, 5.20%, 11/01/27 ..... 200,000 174,772
Chelan County PUD No. 1,
Cheland Hydro Consolidated System
Revenue, Series A, 5.65%, 7/01/32 ............ 5,000,000 4,545,300
Consolidated Revenue, Chelan
Hydroelectric Division I Project, Series
A, FSA Insured, 5.25%, 7/01/33 ................ 200,000 174,018
Clark County Sewer Revenue, MBIA Insured,
5.70%, 12/01/16 ............................... 200,000 197,840
Conservation and Renewable Energy System
Revenue, Washington Conservation Project,
6.50%, 10/01/14 ............................... 400,000 409,792
Douglas County PUD No. 1 Electric Systems
Revenue, MBIA Insured, 6.00%, 1/01/15 ......... 100,000 102,265
Federal Way GO, Refunding, 5.85%, 12/01/21 ..... 100,000 98,292
Grant County PUD No. 2,
Priest Rapids Hydroelectric Revenue,
Second Series, Series B, MBIA Insured,
5.875%, 1/01/26 .............................. 100,000 97,835
Wanapum Hydroelectric Revenue, Refunding,
Second Series, Series A, MBIA Insured,
5.20%, 1/01/23 ............................... 250,000 224,260
King County GO, Sewer District, 5.875%,
1/01/15 ....................................... 100,000 100,529
King County Housing Authority Revenue,
Woodridge Park Project, 6.25%, 5/01/15 ........ 175,000 177,846
King County School District No. 400,
Mercer Island, 5.90%, 12/01/15 ............... 100,000 101,024
King County School District No. 412,
Shoreline, Pre-Refunded, 6.10%, 6/01/13 ....... 100,000 106,191
King County School District No. 415, Kent,
FSA Insured, 5.875%, 6/01/16 .................. 200,000 204,082
Lewis County PUD No. 1, Cowlitz Falls
Hydroelectric Project Revenue, 6.00%, 10/01/24. 200,000 200,058
Pierce County EDC, Solid Waste Revenue,
Occidental Petroleum Corp., 5.80%,
9/01/29 ...................................... 4,375,000 3,931,113
Steilacoom, Refunding, 6.60%, 8/01/22 ......... 32,480,000 33,445,630
Pierce County Sewer Revenue, 5.70%,
2/01/17 ....................................... 100,000 97,422
Pilchuck Development Public Corp. Special
Facilities Airport Revenue, Tramco Project,
B.F. Goodrich, 6.00%, 8/01/23 ................. 800,000 749,096
Port Moses Lake Public Corp., Union
Carbide Corp.,
7.50%, 8/01/04 ................................ 2,100,000 2,102,940
7.875%, 8/01/06 ............................... 1,000,000 1,017,610
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
WASHINGTON (CONT.)
Port of Seattle Revenue, Series B,
6.00%, 11/01/17 ............................ $180,000 $ 181,615
Pre-Refunded, 6.00%, 11/01/17 .............. 20,000 20,792
Seatac GO, MBIA Insured, Pre-Refunded,
6.50%, 12/01/13 ............................ 3,210,000 3,495,144
Seattle Housing Authority Low Income
Housing Assistance Revenue, Kin On
Project, GNMA Secured, 7.40%, 11/20/36..... 99,000 109,943
Seattle Municipality Metropolitan
Sewer Revenue, Refunding, Series V,
6.20%, 1/01/32 ............................. 9,880,000 10,030,571
Seattle Special Obligation, Chinatown
International District, 5.90%,8/01/26 ...... 4,810,000 4,726,931
Seattle Water System Revenue, FGIC
Insured, 5.00%, 10/01/23 ................... 300,000 256,731
Snohomish County GO, MBIA Insured, 5.90%,
12/01/15 ................................... 100,000 102,546
Snohomish County Housing Authority
Revenue, Pooled, 6.30%, 4/01/16 ............ 200,000 203,364
Snohomish County PUD No. 1 Electric
Revenue, Generation
System, Refunding, FGIC Insured, 6.00%,
1/01/18 .................................... 200,000 201,654
Snohomish County PUD No. 1 Water Revenue,
5.85%, 11/01/17 ............................ 100,000 98,795
Snohomish County USD No. 6 GO, 6.50%,
12/01/11 ................................... 7,000,000 7,609,910
Spokane County GO, Refunding, 6.00%,
12/01/14 ................................... 130,000 132,389
Spokane County Water District No. 3
Water Revenue, Refunding, 5.90%,
1/01/14 .................................... 100,000 99,801
Stevens County Public Corp. PCR,
Water Power Co. Project, Refunding,
6.00%, 12/01/23 ............................ 300,000 286,761
Sunnyside GO, MBIA Insured, 6.10%,
12/01/14 ................................... 100,000 103,651
Tacoma Electric System Revenue,
Refunding, FGIC Insured, 6.25%,
1/01/15 .................................... 200,000 207,204
Tacoma GO, Series A, MBIA Insured,
5.625%, 12/01/22 ........................... 300,000 286,385
Tacoma Refuse Utility Revenue,
AMBAC Insured, Pre-Refunded,
7.00%, 12/01/19 ............................ 100,000 112,001
Tacoma Water Revenue, FGIC Insured,
5.25%, 12/01/16 ............................ 100,000 92,552
University of Washington Alumni
Association Lease Revenue, Medical
Center Roosevelt II, FSA Insured,
6.30%, 8/15/14 ............................. 4,500,000 4,734,224
Washington State COP, Office
Building Project, Series A, MBIA
Insured, 6.00%, 4/01/12 .................... 100,000 102,339
Washington State Health Care Facilities
Authority Revenue,
Children's Hospital and Regional Medical
Center, FSA Insured, 5.00%, 10/01/28 ...... 600,000 502,307
Multicare Health Systems, MBIA Insured,
5.00%, 8/15/22 ............................ 250,000 214,169
Providence Services, MBIA Insured, 5.50%,
12/01/26 .................................. 7,000,000 6,429,079
Swedish Health Services, Refunding, AMBAC
Insured, 5.50%, 11/15/28 .................. 7,750,000 7,150,304
Washington State Higher Education
Facilities Authority Revenue, Pacific
Lutheran University Project, Refunding,
Connie Lee Insured, 5.70%, 11/01/26 ........ 200,000 190,233
Washington State Housing Finance
Commission SF Program,
Series 1A-1, GNMA Secured, FNMA Insured,
6.25%, 6/01/16 ............................ 100,000 101,316
Series 1A-3, GNMA Secured, FMNA Insured,
6.15%, 12/01/15 ........................... 200,000 201,975
Series 2N, GNMA Secured, FNMA Insured,
6.05%, 12/01/16 ........................... 100,000 100,137
Series 3A, GNMA Secured, FNMA Insured,
5.75%, 12/01/28 ........................... 195,000 183,982
Washington State Housing Finance
Commission SFMR, MBS Program, Series A,
GNMA Secured, FNMA Insured,
7.05%, 7/01/22 ............................ 35,000 36,282
Washington State Motor Vehicle
Fuel Tax GO, Series D, 6.00%,
9/01/20 .................................... 240,000 239,128
Washington State Public Power Supply
System Revenue,
Nuclear Project No. 1, Refunding, Series
A, 6.05%, 7/01/12 ......................... 35,355,000 36,028,865
Nuclear Project No. 1, Refunding, Series
A, MBIA Insured, 6.25%, 7/01/17 ........... 19,965,000 20,382,469
Nuclear Project No. 2, Refunding, Series
A, 6.00%, 7/01/09 ......................... 18,330,000 18,949,003
Nuclear Project No. 2, Refunding, Series
A, 6.30%, 7/01/12 ......................... 7,700,000 8,197,881
Nuclear Project No. 2, Series A, 6.25%,
7/01/12 ................................... 3,200,000 3,310,495
-----------
184,096,200
-----------
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
WEST VIRGINIA .7%
Braxton County Solid Waste Disposal
Revenue, Weyerhaeuser Co. Project,
6.50%, 4/01/25 ......................... $ 3,500,000 $ 3,578,049
Refunding, 5.40%, 5/01/25 .............. 10,000,000 8,884,899
Putnam County PCR, FMC Corp.
Project, Refunding, 5.625%, 10/01/13 ..... 1,700,000 1,600,600
Taylor County PCR, Union Carbide Corp.,
7.625%, 8/01/05 .......................... 2,400,000 2,643,047
West Virginia State GO, Series A, FGIC
Insured, 5.20%, 11/01/26 ................. 10,000,000 8,936,899
West Virginia State Hospital Finance
Authority Hospital Revenue, Logan
General Hospital Project, Refunding
and Improvement, 7.25%, 7/01/20 .......... 7,000,000 6,824,999
West Virginia State Housing Development
Fund, Housing Finance, Series D,
7.00%, 5/01/17 .......................... 6,000,000 6,218,999
7.05%, 11/01/24 ......................... 9,000,000 9,317,429
----------
48,004,921
----------
WISCONSIN 1.2%
Janesville IDR, Simmons Manufacturing Co.,
7.00%, 10/15/17 .......................... 2,200,000 2,227,301
Madison Industrial IDR, Madison Gas and
Electric Co. Project, Series A, 6.75%,
4/01/27 .................................. 4,220,000 4,463,451
Wisconsin Housing and EDA, Homeownership
Revenue,
Refunding, Series A, 6.10%, 11/01/10 .... 9,190,000 9,426,825
Series 1, 6.75%, 9/01/15 ................ 10,230,000 10,566,157
Series 1, 6.75%, 9/01/17 ................ 3,000,000 3,098,579
Series A, 6.90%, 3/01/16 ................ 1,985,000 2,069,977
Series A, 6.45%, 3/01/17 ................ 5,500,000 5,625,234
Series A, 7.10%, 3/01/23 ................ 5,305,000 5,483,194
Series B, 7.05%, 11/01/22 ............... 3,000,000 3,135,659
Wisconsin State Health and Educational
Facilities Authority Revenue,
Children's Hospital of Wisconsin Inc.,
AMBAC Insured, 5.375%, 2/15/28 .......... 21,050,000 19,003,308
Franciscan Sisters Christian, Series A,
5.50%, 2/15/18 .......................... 1,500,000 1,329,014
Franciscan Sisters Christian, Series A,
5.50%, 2/15/28 .......................... 3,000,000 2,549,009
Mercy Health Systems Corp., AMBAC
Insured, 6.125%, 8/15/13 ................ 6,500,000 6,728,799
Mercy Health Systems Corp., AMBAC
Insured, 6.125%, 8/15/17 ................ 7,500,000 7,650,149
----------
83,356,656
----------
WYOMING .3%
Wyoming CDA,
Housing Revenue, Refunding, Series 6,
6.10%, 12/01/28 ......................... 11,540,000 11,611,201
MFMR, Series A, 6.95%, 6/01/24 ........... 3,460,000 3,536,015
MFMR, Series A, Pre-Refunded, 6.90%,
6/01/12 ................................. 1,395,000 1,424,587
SFMR, Series G, 7.25%, 6/01/21 ........... 975,000 1,007,554
----------
17,579,357
----------
TOTAL BONDS (COST $6,665,760,662) ....................... 6,699,299,617
-------------
ZERO COUPON BONDS 2.6%
Calcasieu Parish Memorial Hospital
Service District Revenue, Lake Charles
Parish Memorial Hospital Project,
Series A,12/01/22 ....................... 11,040,000 7,559,198
Chicago RMR, Refunding, Series B, MBIA
Insured,10/01/09......................... 5,345,000 2,689,283
Coldwater Community Schools, MBIA
Insured, Pre-Refunded,5/01/18 ........... 5,935,000 2,011,728
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
ZERO COUPON BONDS (CONT.)
Colorado Springs Airport Revenue, Series C,
1/01/03...................................... $ 1,660,000 $ 1,397,073
1/01/05...................................... 1,610,000 1,202,203
1/01/07...................................... 1,675,000 1,099,169
1/01/08...................................... 800,000 489,912
1/01/11...................................... 1,450,000 720,911
Cook County GO, Community Consolidated
School District No. 54, Schaumburg
Township, Series B, FGIC Insured,
Pre-Refunded,
1/01/07...................................... 3,505,000 2,356,306
1/01/08...................................... 4,800,000 3,019,632
1/01/09...................................... 4,380,000 2,575,966
1/01/10...................................... 5,760,000 3,174,566
Florida State Mid-Bay Bridge Authority
Revenue, Series A, senior lien, AMBAC
Insured,
10/01/23...................................... 5,000,000 1,177,500
10/01/24...................................... 3,000,000 663,420
Foothill/Eastern Corridor Agency Toll Road
Revenue,
Capital Appreciation, Refunding,
1/15/2024..................................... 65,000,000 13,284,050
Convertible Capital Appreciation,
Refunding, 1/15/2023.......................... 35,000,000 17,862,250
Harrison Community Schools GO, AMBAC
Insured, 5/01/20.............................. 6,000,000 1,715,400
Jefferson County Capital Projects Corp.
Lease Revenue, Refunding, Series A,
8/15/07...................................... 1,640,000 1,091,502
8/15/08...................................... 4,505,000 2,830,897
8/15/09...................................... 4,580,000 2,701,330
8/15/10...................................... 4,620,000 2,554,814
8/15/13...................................... 6,825,000 3,111,859
8/15/14...................................... 6,860,000 2,904,044
8/15/16...................................... 7,005,000 2,563,550
8/15/17...................................... 7,115,000 2,456,667
Metropolitan Pier and Exposition Authority
Dedicated State Tax Revenue,
Capital Appreciation, Series A, FGIC
Insured, 6/15/2009............................ 9,510,000 5,659,781
Capital Appreciation, Series A, FGIC
Insured, Pre-Refunded, ETM, 6/15/2009........ 1,490,000 889,247
McCormick Place Expansion Project, Series
A, FGIC Insured, 6/15/2010................... 8,000,000 4,450,800
McCormick Place Expansion Project, Series
A, FGIC Insured, 6/15/2011................... 9,690,000 5,044,033
McCormick Place Expansion Project, Series
A, FGIC Insured, 6/15/2012................... 250,000 220,813
McCormick Place Expansion Project, Series
A, FGIC Insured, Pre-Refunded, 6/15/2012..... 11,550,000 10,578,530
McCormick Place Exposition, Series A,
FGIC Insured, 6/15/2008...................... 7,185,000 4,555,003
McCormick Place Exposition, Series A,
FGIC Insured, 6/15/2008...................... 1,315,000 832,960
Miami-Dade County Special Obligation, sub.
lien, Series B, MBIA Insured, 10/01/34....... 5,500,000 643,775
Owensboro Electric Light and Power Revenue,
Series B, AMBAC Insured, 1/01/08............. 5,250,000 3,453,083
San Joaquin Hills Transportation Corridor
Agency Toll Road Revenue,
Refunding, Series A, 1/15/2021................ 50,000,000 30,820,000
senior lien, ETM, 1/01/2023 7,000,000 1,756,300
Shreveport Water and Sewer Revenue, Series
B, FGIC Insured,
12/01/07..................................... 490,000 303,300
12/01/08..................................... 2,530,000 1,460,316
12/01/09..................................... 4,080,000 2,187,492
12/01/10..................................... 5,630,000 2,811,397
University of Illinois Revenues, AMBAC
Insured,4/01/10............................... 14,250,000 8,018,475
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
ZERO COUPON BONDS (CONT.)
Washington State Public Power Supply System
Revenue, Nuclear Project No. 3, Refunding,
Series B,
7/01/12......................................... $ 6,400,000 $ 3,103,104
7/01/13......................................... 11,000,000 4,931,190
7/01/14......................................... 15,000,000 6,269,100
---------------
TOTAL ZERO COUPON BONDS (COST $176,861,157)....... 181,201,929
---------------
TOTAL LONG TERM INVESTMENTS(COST $6,842,621,819).. 6,880,501,546
---------------
(a) SHORT-TERM INVESTMENTS 1.5%
Farmington PCR, Arizona Public Service Co.,
Refunding, Series B, Daily VRDN and
Put, 3.45%, 9/01/24.............................. 7,100,000 7,100,000
Jackson County PCR, Chevron USA Inc. Project,
Daily VRDN and Put, 3.60%, 6/01/23............... 17,700,000 17,700,000
Long Island Power Authority Electric System
Revenue, Sub Series 5, Daily VRDN and
Put, 3.50%, 5/01/33.............................. 25,000,000 25,000,000
Maricopa County PCC, PCR, Arizona Public
Service Co., Refunding, Series A, Daily
VRDN and Put, 3.50%, 5/01/29..................... 2,900,000 2,900,000
Michigan State Strategic Fund Limited
Obligation Revenue, Refunding, Dow Chemical
Co. Project, Daily VRDN and Put, 3.50%, 2/01/09.. 5,020,000 5,020,000
New York City Municipal Water Finance Authority
Water and Sewer System Revenue,
Series C, FGIC Insured, Daily VRDN and Put,
3.20%, 6/15/23............................... 10,000,000 10,000,000
Series G, FGIC Insured, Daily VRDN and Put,
3.50%, 6/15/24................................ 500,000 500,000
New York State HFAR, Liberty View, Series A,
Weekly VRDN and Put, 3.30%, 11/15/19............ 12,800,000 12,800,000
Perry County PCR, Leaf River Forest Project,
Refunding, Daily VRDN and Put, 3.45%,
3/01/02.......................................... 7,700,000 7,700,000
Port Authority New York and New Jersey, Special
Obligation Revenue, Versatile Structure,
Series 2, Daily VRDN and Put, 3.50%, 5/01/19..... 5,000,000 5,000,000
Uinta County PCR, Chevron USA Inc. Project,
Refunding, Daily VRDN and Put, 3.60%,
8/15/20.......................................... 13,700,000 13,700,000
Washington State Health Care Facilities
Authority Revenue, Sisters of Providence,
Series C, Daily VRDN and Put, 3.15%,
10/01/05......................................... 1,200,000 1,200,000
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $108,620,000).. 108,620,000
---------------
TOTAL INVESTMENTS (COST $6,951,241,819) 98.9%..... 6,989,121,546
OTHER ASSETS, LESS LIABILITIES 1.1%............... 77,439,249
---------------
NET ASSETS 100.0%................................. $7,066,560,795
===============
</TABLE>
See glossary of terms on page 49.
(a) Variable rate demand notes (VRNDs) 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.
See notes to financial statements.
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (UNAUDITED) (CONT.)
GLOSSARY OF TERMS
- --------------------------------------------------------------------------------
AMBAC - American Municipal Bond Assurance Corp.
BIG - Bond Investors Guaranty Insurance Co.
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
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.
HMR - Home Mortgage Revenue
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.
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
PCC - Pollution Control Corp.
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
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
Assets:
Investments in securities, at value (cost $6,951,241,819) ................ $6,989,121,546
Cash ..................................................................... 2,112,783
Receivables:
Investment securities sold .............................................. 21,628,428
Capital shares sold ..................................................... 15,446,074
Interest ................................................................ 129,955,948
-------------
Total assets ......................................................... 7,158,264,779
-------------
Liabilities:
Payables:
Investment securities purchased ......................................... 72,481,924
Capital shares redeemed ................................................. 12,461,355
Affiliates .............................................................. 3,771,258
Shareholders ............................................................ 2,496,860
Other liabilities ........................................................ 492,587
--------------
Total liabilities .................................................... 91,703,984
--------------
Net assets, at value ................................................ $7,066,560,795
==============
Net assets consist of:
Undistributed net investment income ...................................... $ 2,603,214
Net unrealized appreciation .............................................. 37,879,727
Accumulated net realized loss ............................................ (19,024,679)
Capital shares ........................................................... 7,045,102,533
-------------
Net assets, at value ................................................ $7,066,560,795
==============
CLASS A:
Net asset value per share ($6,800,172,694 / 590,942,973 shares outstanding)* ... $11.51
======
Maximum offering price per share ($11.51 / 95.75%) .............................. $12.02
======
CLASS B:
Net asset value and maximum offering price per share
($55,723,297 / 4,844,385 shares outstanding)* .................................. $11.50
======
CLASS C:
Net asset value per share ($210,664,804 / 18,313,931 shares outstanding)* ....... $11.50
======
Maximum offering price per share ($11.50 / 99.00%) .............................. $11.62
======
</TABLE>
*Redemption price is equal to net asset value less any applicable contingent
deferred sales charge.
See notes to financial statements.
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED OCTOBER 31, 1999 (UNAUDITED)
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Investment income:
Interest ................................................................. $221,993,910
-------------
Expenses:
Management fees (Note 3).................................................. 16,413,479
Distribution fees (Note 3)
Class A ................................................................. 2,773,859
Class B ................................................................. 146,107
Class C ................................................................. 706,808
Transfer agent fees (Note 3) ............................................. 1,555,007
Custodian fees ........................................................... 37,584
Reports to shareholders .................................................. 341,829
Registration and filing fees ............................................. 145,679
Professional fees ........................................................ 83,241
Directors' fees and expenses ............................................. 63,637
Other .................................................................... 125,846
-------------
Total expenses ......................................................... 22,393,076
-------------
Net investment income ................................................. 199,600,834
-------------
Realized and unrealized losses:
Net realized loss from investments ....................................... (19,007,810)
Net unrealized depreciation on investments ............................... (464,544,015)
--------------
Net realized and unrealized loss .......................................... (483,551,825)
--------------
Net decrease in net assets resulting from operations ...................... $(283,950,991)
==============
</TABLE>
See notes to financial statements.
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS for the six months ended October 31, 1999
(unaudited) and the year ended April 30, 1999
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<CAPTION>
Six Months Ended Year Ended
October 31, 1999 April 30, 1999
---------------- --------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ......................... $ 199,600,834 $ 394,499,322
Net realized gain (loss) from
investments ................................... (19,007,810) 30,265,498
Net unrealized appreciation (depreciation)
on investments ................................ (464,544,015) 8,220,333
--------------------------------------------
Net increase (decrease) in net assets
resulting from operations ..................... (283,950,991) 432,985,153
Net investment income:
Distributions to shareholders from:
Class A ....................................... (194,576,448) (387,521,130)
Class B ....................................... (1,057,944) (156,270)
Class C ....................................... (5,338,281) (8,350,778)
Net realized gains:
Class A ....................................... (4,251,999) --
Class B ....................................... (20,970) --
Class C ....................................... (130,567) --
--------------------------------------------
Total distributions to shareholders ............. (205,376,209) (396,028,178)
Capital share transactions: (Note 2)
Class A ....................................... 101,758,927 110,674,594
Class B ....................................... 30,699,842 28,056,262
Class C ....................................... 12,741,153 76,844,652
--------------------------------------------
Total capital share transactions ................. 145,199,922 215,575,508
Net increase (decrease) in net assets ......... (344,127,278) 252,532,483
Net assets:
Beginning of period ............................. 7,410,688,073 7,158,155,590
--------------------------------------------
End of period ................................... $7,066,560,795 $7,410,688,073
============================================
Undistributed net investment income included in net assets:
End of period ................................... $ 2,603,214 $ 3,975,053
============================================
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See notes to financial statements.
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Notes to Financial Statements (unaudited)
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. 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.
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Notes to Financial Statements (unaudited) (continued)
2. CAPITAL STOCK
The Fund offers three classes of shares: Class A, Class B and Class C. Effective
January 1, 1999, Class I and 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.
At October 31, 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:
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SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 1999 APRIL 30, 1999
---------------- --------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
CLASS A SHARES:
Shares sold................................ 72,158,652 $856,896,551 141,557,333 $1,748,852,193
Shares issued on merger (Note 7)........... 12,219,274 145,466,596 -- --
Shares issued in reinvestment of
distributions............................ 7,064,480 84,250,157 13,019,553 160,434,527
Shares redeemed............................ (82,920,178) (984,854,377) (145,578,579) (1,798,612,126)
------------------------------- --------------------------------
Net increase............................... 8,522,228 $101,758,927 8,998,307 $ 110,674,594
=============================== ================================
CLASS B SHARES:*
Shares sold................................ 2,734,936 $ 32,629,508 2,267,562 $ 27,969,254
Shares issued in reinvestment of
distributions............................ 54,026 641,985 8,064 99,100
Shares redeemed............................ (219,222) (2,571,651) (981) (12,092)
------------------------------- --------------------------------
Net increase............................... 2,569,740 $ 30,699,842 2,274,645 $ 28,056,262
=============================== ================================
CLASS C SHARES:
Shares sold................................ 2,817,663 $ 33,651,125 7,659,630 $ 94,594,251
Shares issued in reinvestment of
distributions............................ 281,938 3,362,516 421,645 5,197,244
Shares redeemed............................ (2,050,688) (24,272,488) (1,859,163) (22,946,843)
------------------------------- --------------------------------
Net increase............................... 1,048,913 $ 12,741,153 6,222,112 $ 76,844,652
=============================== ================================
</TABLE>
*For the year ended April 30,1999, this includes the period January 1, 1999
(effective Date) to April 30,1999.
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Notes to Financial Statements (unaudited)(continued)
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 month-end
net assets of the Fund as follows:
ANNUALIZED
FEE RATE NET ASSETS
-------- ----------
.625% First $100 million
.50% Over $100 million, up to and including $250 million
.45% Over $250 million, up to and including $10 billion
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.
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 period of $1,519,836 and $179,074,
respectively.
The Fund paid transfer agent fees of $1,555,007 of which $1,364,967 was paid to
Investor Services.
4. INCOME TAXES
At October 31, 1999, the net unrealized appreciation based on the cost of
investments for income tax purposes of $6,951,248,732 was as follows:
Unrealized appreciation ...... $ 228,443,487
Unrealized depreciation ...... (190,570,673)
-------------
Net unrealized appreciation .. $ 37,872,814
=============
Net realized capital losses differ for financial statement and tax purposes
primarily due to differing treatment of wash sales.
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
period ended October 31, 1999 aggregated $781,699,742 and $916,987,105,
respectively.
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Notes to Financial Statements (unaudited)(continued)
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.
7. FUND MERGER
On June 24, 1999, the Fund acquired the net assets of the Hawaii Municipal Bond
Fund and the Indiana Tax-Free Income Fund pursuant to a plan of reorganization
approved by the Funds' shareholders. The merger was accomplished by a tax free
exchange, and the net assets acquired and shares issued were as follows:
SHARES
FUND NET ASSETS ISSUED BY
- --------------------------------------------------------------------------------
Hawaii Municipal Bond Fund ............... $39,698,063 3,316,463
Indiana Tax-Free Income Fund ............. 56,285,879 4,702,246
-----------------------------
Total .................................... $95,983,942 8,018,709
=============================
The net asset figures shown above include $859,421 and $1,790,431 of unrealized
appreciation for the Hawaii Municipal Bond Fund and the Indiana Tax-Free Income
Fund, respectively. The merger was accounted for as a pooling of interests
without restatement for financial reporting purposes. The combined net assets of
the Fund immediately after the merger were $7,332,695,346.
On August 26, 1999, the Fund acquired the net assets of the Arkansas Municipal
Bond Fund and the Washington Municipal Bond Fund pursuant to a plan of
reorganization approved by the Funds' shareholders. The merger was accomplished
by a tax free exchange, and the net assets acquired and shares issued were as
follows:
SHARES
FUND NET ASSETS ISSUED BY
- --------------------------------------------------------------------------------
Arkansas Municipal Bond Fund ............. $39,000,744 3,310,759
Washington Municipal Bond Fund ........... 10,481,910 889,806
----------------------------
Total .................................... $49,482,654 4,200,565
============================
The net asset figures shown above include ($1,177,947) and $101,148 of
unrealized (depreciation) appreciation for the Arkansas Municipal Bond Fund and
the Washington Municipal Bond Fund, respectively. The merger was accounted for
as a pooling of interests without restatement for financial reporting purposes.
The combined net assets of the Fund immediately after the merger were
$7,299,812,616.
