Annual
Report
May 31, 1997
Franklin New York
Tax-Free Income Fund
CELEBRATING 50 YEARS
This year marks 50 years of business for Franklin Templeton. Over these years,
the mutual fund industry has experienced profound changes in technology,
regulations and customer expectations. As one of the largest mutual fund
families, we're proud to be an innovative industry leader, providing people like
you with an opportunity to invest around the globe. We thank you for your past
support and look forward to serving your investment needs in the years ahead.
Charles B. Johnson
President
Franklin New York
Tax-Free Income Fund
CONTENTS
Shareholder Letter............................................ 1
Q&A with the
Portfolio Manager............................................. 3
Performance Summary
Class I...................................................... 6
Class II..................................................... 9
Glossary of
Investment Terms.............................................. 12
Statement of
Investments................................................... 13
Financial Statements.......................................... 22
Notes to
Financial Statements.......................................... 24
Report of Independent
Accountants................................................... 29
SHAREHOLDER LETTER
Dear Shareholder:
It's a pleasure to bring you the Franklin New York Tax-Free Income Fund's annual
report for the period ended May 31, 1997.
During the year under review, the U.S. economy continued its healthy expansion.
Although inflation remained under control, a growing sense of nervousness from
market participants and the Federal Reserve Board (the Fed) overshadowed the
stock market's meteoric rise over this fiscal year. In a move termed a
"pre-emptive strike" against potential inflationary pressures, the Fed raised
the federal funds rate (the rate banks charge each other for overnight loans)
from 5.25% to 5.50% in March. Since then, long-term interest rates have steadily
declined.
Many investors expected the Fed to raise short-term rates in May. Recent data,
however, showed the economy was not overheating and inflation remained under
control. Interest rates will no doubt continue to fluctuate as the Fed looks for
signs of increasing inflationary pressures and other indicators to determine if
additional action is necessary. While further Fed action could lead to some
volatility in the financial markets, we feel that -- over the long term --
municipal bonds will continue to offer an excellent investment alternative,
especially for investors in a high federal income tax bracket.
The New York economy continues to improve: both the state of New York and New
York City ended their most recent fiscal years with a budget surplus. Although
much of the improvement is due to the continued record performance of Wall
Street, other sectors of the economy have also demonstrated improvement. In New
York City, for example, tourism has rebounded and, as a result, hotel occupancy
is near record highs. Strong tourism may also lead to heightened retail sales
activity, which increases tax revenues both at the state and local level. Though
New York has lagged the U.S. economic recovery in recent years, we feel the
outlook for the state is positive.
We continue to stress a long-term investment perspective. The financial markets
always have been -- and probably always will be -- subject to daily fluctuation.
No one can predict the future performance of the securities markets, but history
has shown that, over the long term, stocks and bonds have delivered impressive
results when income is left to compound. We encourage you to review your
investment program periodically with your investment representative, and focus
on your continuing long-term goals. If you have any questions concerning the
Franklin New York Tax-Free Income Fund, we welcome the opportunity to answer
them.
We appreciate your support, welcome new shareholders, and look forward to
serving your investment needs in the years ahead.
Sincerely,
Charles B. Johnson
President
Franklin New York Tax-Free Income Fund
Q & A
JOHN PINKHAM
Portfolio Manager
Q&A WITH JOHN PINKHAM
PORTFOLIO MANAGER,
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Your Fund's Objective: Seeks to provide high current income exempt from regular
federal, New York state and New York City personal income taxes through a
diversified portfolio consisting primarily of municipal securities.1
1. For investors subject to the federal alternative minimum tax, a small portion
of these dividends may be subject to such tax. Distributions of capital gains
and of ordinary income from accrued market discounts, if any, are generally
taxable.
Q: How did the New York municipal market perform during the fund's fiscal year?
The New York municipal market has shown relatively strong performance during the
past year. The overall state economy is improving, and the New York City economy
is thriving primarily due to increased tourism and the record performance on
Wall Street.
GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT
GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT
In addition, the supply of bonds in the New York market increased as compared to
last year, but this increased supply was more than offset by the escalated
demand for municipal bonds. As a result, the New York market has generally
outperformed the treasury market during the year under review. For example, on
May 31, 1996, the benchmark long-term 30-year U.S. Treasury bond closed at a
yield of 7.00%, while New York City General Obligation (NYC GO) bonds (30-year
bonds maturing in 2024) traded at a price that produced a yield of 6.58% --
almost 95% of the long Treasury. On May 31, 1997, the fund's fiscal-year end,
the 30-year Treasury closed virtually unchanged, yielding 6.98%. The NYC GO bond
yielded 6.05% on the same date, or 87% of the 30-year Treasury yield.
Q: In what areas of the New York municipal market are you finding attractive
investment opportunities?
As most of our shareholders are interested in income and safety, I feel our
approach of purchasing bonds at par or a slight discount offers a steady course.
In fact, most of the new issues priced this year have been insured, bringing
yield spreads to the narrowest we have seen in some time. Currently, the spread
between NYC GOs and New York insured issues is roughly 25 to 30 basis points. A
year ago, the spread was 45 to 50 basis points, meaning that the quality yield
curve has narrowed.
GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Q: In a year when many municipal managers were reducing the percentage of
pre-refunded bonds in their portfolios, the amount held by your fund has
increased (from 11.8% on May 31, 1996 to 14.1% on May 31, 1997). Is this an area
that is starting to show promise again?
This increase was due to an increased number of bonds in the portfolio being
advanced refunded by their issuers. We intend to follow our policy of
liquidating these bonds approximately five years before they are called. This
will lock in the premium and allow us to purchase a greater amount of bonds
close to par value, which should help the fund's net asset value price and
provide future income.
Q: While you don't try to predict market moves, what do you see as the future
direction of the muni market, and particularly the New York market?
We expect -- or should I say hope -- that, as we get into the latter part of
1997 and early 1998, a substantial increase in the supply of new issuance will
be coming to market. These new issues will be used to finance current
refundings. Such an environment should produce some beneficial buying
opportunities.
Thanks for sharing your thoughts, John.
Portfolio Breakdown
on 5/31/97
% Total
Long-Term
Sector Investments
Hospitals 20.0%
Housing 15.4%
Pre-Refunded 14.1%
Utilities 10.0%
Transportation 9.3%
Education 9.0%
Health Care 7.1%
Other Revenue 5.9%
General Obligations 4.7%
Sales Tax 3.3%
Certificates of Participation 0.9%
Industrial 0.3%
For a complete list of portfolio holdings, please see page 13 of this report.
PERFORMANCE SUMMARY
GRAPHIC MATERIAL 4 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Class I
The Franklin New York Tax-Free Income Fund's Class I share price, as measured by
net asset value, increased 20 cents from $11.46 on May 31, 1996, to $11.66 on
May 31, 1997.
In addition to distributing 68.1 cents ($0.681) per share in dividend income
during the reporting period, your fund also paid out long-term capital gains of
2.6 cents ($0.026) per share in December 1996. Distributions will vary depending
on income earned by the fund and any profits realized from the sale of
securities in the fund's portfolio.
At the end of the reporting period, your fund's distribution rate was 5.42%,
based on an annualization of May's monthly dividend of 5.5 cents ($0.055) per
share and the maximum offering price of $12.18 on May 31, 1997. This tax-free
rate is generally higher than the after-tax return on a comparable taxable
investment. For example, an investor in the maximum combined federal, New York
state and New York City personal income tax bracket would need to earn 10.00%
from a taxable investment to match the fund's tax-free distribution rate.
Likewise, an investor in the maximum combined federal and New York state
personal income tax bracket would need to earn 9.63% from a taxable investment
to match the fund's tax-free distribution rate.
As illustrated by the chart on page 8, your fund's performance outpaced that of
inflation, as measured by the Consumer Price Index, over the reporting period --
maintaining your purchase power, a primary goal of any investment. Although the
fund's shares have underperformed the Lehman Brothers Municipal Bond Index,
unmanaged market indices have inherent performance differentials in comparison
with any fund. They do not pay management fees to cover salaries of security
analysts or portfolio managers, nor do they pay commissions to buy and sell
bonds. Unlike unmanaged indices, mutual funds are never 100% invested since they
need to keep cash on hand to redeem shares or pay for upcoming investments. The
fund's performance figures also include the maximum initial sales charge, all
fund expenses and account fees. If operating expenses such as the fund's had
been applied to this index, the index's performance would have been lower.
Please remember that an index is simply a measure of performance, and one cannot
invest directly in an index.
Class I
Dividend Distributions
6/1/96 - 5/31/97*
Dividend
Month per Share
June 5.8 cents
July 5.8 cents
August 5.8 cents
September 5.7 cents
October 5.7 cents
November 5.7 cents
December 5.7 cents
January 5.7 cents
February 5.7 cents
March 5.5 cents
April 5.5 cents
May 5.5 cents
Total 68.1 cents
*Assumes shares were purchased and held for the entire accrual period. Since
dividends accrue daily, your actual distributions will vary depending on the
date you purchased your shares and any account activity during the month. Income
distributions and total return calculations include all accrued income earned by
the fund during the reporting period.
GRAPHIC MATERIAL 5 OMITTED - SEE APPENDIX AT END OF DOCUMENT
*Includes the initial sales charge, all fund expenses and account fees. It also
assumes that dividends and capital gains were reinvested at net asset value. The
Lehman Brothers Municipal Bond Index includes price appreciation or depreciation
and distributions as a percentage of the original investment.
Class I
Periods ended 5/31/97
Since
Inception
1-Year 5-Year 10-Year (9/13/82)
Cumulative Total Return1 8.16% 39.86% 119.57% 259.90%
Average Annual Total Return2 3.55% 6.01% 7.71% 8.78%
Distribution Rate3 5.42%
Taxable Equivalent Distribution Rate4 10.00%
30-Day Standardized Yield5 5.00%
Taxable Equivalent Yield4 9.22%
1. Cumulative total returns measure the change in value of an investment over
the periods indicated and do not include the current initial sales charge.
2. Average annual total returns measure the change in value of an investment
over the periods indicated and include the current, maximum 4.25% initial sales
charge. See Note below.
3. Based on an annualization of May's 5.5 cent per share monthly dividend and
the maximum offering price of $12.18 on May 31, 1997.
4. Taxable equivalent distribution rate and yield assume the 1997 maximum
combined federal, New York state and New York City personal income tax bracket
of 45.791%, based on the 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 May 31, 1997.
Note: Prior to July 1, 1994, shares were offered at a lower initial sales charge
with dividends reinvested at the offering price. Thus, actual total returns for
purchasers of shares during that period would have been somewhat different than
noted above. Effective May 1, 1994, the fund eliminated the sales charge on
reinvested dividends and implemented a Rule 12b-1 plan, which affects subsequent
performance. All total return calculations assume reinvestment of dividends and
capital gains at net asset value. 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.
Class II
The Franklin New York Tax-Free Income Fund's Class II share price, as measured
by net asset value, increased 20 cents from $11.45 on May 31, 1996, to $11.65 on
May 31, 1997.
In addition to distributing 61.22 cents ($0.6122) per share in dividend income
during the reporting period, your fund also paid out long-term capital gains of
2.6 cents ($0.026) per share in December 1996. Distributions will vary depending
on income earned by the fund and any profits realized from the sale of
securities in the fund's portfolio.
At the end of the reporting period, your fund's distribution rate was 5.01%,
based on an annualization of May's monthly dividend of 4.91 cents ($0.0491) per
share and the maximum offering price of $11.77 on May 31, 1997. This tax-free
rate is generally higher than the after-tax return on a comparable taxable
investment. For example, an investor in the maximum combined federal, New York
state and New York City personal income tax bracket would need to earn 9.24%
from a taxable investment to match the fund's tax-free distribution rate.
Likewise, an investor in the maximum combined federal and New York state
personal income tax bracket would need to earn 8.90% from a taxable investment
to match the fund's tax-free distribution rate.
GRAPHIC MATERIAL 6 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Class II
Dividend Distributions
6/1/96 - 5/31/97*
Dividend
Month per Share
June 5.22 cents
July 5.24 cents
August 5.24 cents
September 5.14 cents
October 5.14 cents
November 5.14 cents
December 5.14 cents
January 5.11 cents
February 5.11 cents
March 4.91 cents
April 4.92 cents
May 4.91 cents
Total 61.22 cents
*Assumes shares were purchased and held for the entire accrual period. Since
dividends accrue daily, your actual distributions will vary depending on the
date you purchased your shares and any account activity during the month. Income
distributions and total return calculations include all accrued income earned by
the fund during the reporting period.
As illustrated by the chart to the right, your fund's performance outpaced that
of inflation, as measured by the Consumer Price Index, over the reporting period
- -- maintaining your purchase power, a primary goal of any investment. Although
the fund's shares have underperformed the Lehman Brothers Municipal Bond Index,
unmanaged market indices have inherent performance differentials in comparison
with any fund. They do not pay management fees to cover salaries of security
analysts or portfolio managers, nor do they pay commissions to buy and sell
bonds. Unlike unmanaged indices, mutual funds are never 100% invested since they
need to keep cash on hand to redeem shares or pay for upcoming investments. The
fund's performance figures also include the maximum initial sales charge, all
fund expenses and account fees. If operating expenses such as the fund's had
been applied to this index, the index's performance would have been lower.
Please remember that an index is simply a measure of performance, and one cannot
invest directly in an index.
GRAPHIC MATERIAL 7 OMITTED - SEE APPENDIX AT END OF DOCUMENT
*Includes sales charges, all fund expenses and account fees. It also assumes
that dividends and capital gains were reinvested at net asset value. The Lehman
Brothers Municipal Bond Index includes price appreciation or depreciation and
distributions as a percentage of the original investment.
Class II
Periods ended 5/31/97
Since
Inception
1-Year (5/1/95)
Cumulative Total Return1 7.52% 13.71%
Average Annual Total Return2 5.41% 5.83%
Distribution Rate3 5.01%
Taxable Equivalent Distribution Rate4 9.24%
30-Day Standardized Yield5 4.60%
Taxable Equivalent Yield4 8.49%
1. Cumulative total returns measure the change in value of an investment over
the periods indicated and do not include sales charges.
2. Average annual total returns measure the change in value of an investment
over the periods indicated and include the 1.0% initial sales charge and 1.0%
Contingent Deferred Sales Charge (CDSC), applicable to shares redeemed within
the first 18 months of investment. See Note below.
3. Based on an annualization of May's 4.91 cent per share monthly dividend and
the maximum offering price of $11.77 on May 31, 1997.
4. Taxable equivalent distribution rate and yield assume the 1997 maximum
combined federal, New York state and New York City personal income tax bracket
of 45.791%, based on the 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 May 31, 1997.
Note: All total return calculations assume reinvestment of dividends and capital
gains at net asset value. 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.
GLOSSARY OF INVESTMENT TERMS
BASIS POINT: the smallest measure used in quoting yields on bonds; one basis
point is 0.01% of yield. Call Protection: the length of time during which a bond
cannot be redeemed by its issuer.
COUPON: a bond's interest rate that the issuer promises to pay until the bond
matures.
CURRENT COUPON BOND: a bond whose yield is within half a percentage point of
current market rates.
FULL-COUPON BOND: a bond with a coupon rate that is at or near current market
interest rates.
HIGH-GRADE BOND/HIGH-QUALITY BOND: a bond rated AAA or AA by Standard &
Poor's(R), or Aaa or Aa by Moody's Investors Service -- two national
credit-rating agencies.
INVESTMENT GRADE BOND: a bond with a rating of AAA to BBB, usually within the
top four rating categories assigned to bonds.
PREMIUM: amount by which a bond sells above its par (face) value. For instance,
a bond with a $1,000 face value would sell for a $100 premium when it cost
$1,100.
PRE-REFUNDED BOND: a bond that will be paid off at its first call date with
proceeds of the sale of a second bond carrying a lower interest rate. When a
bond is pre-refunded its premium rises, and then falls to par value as the
refunding date approaches.
PAR VALUE: the face value or amount at which a security will be redeemed at
maturity -- typically $1,000 for a bond.
YIELD CURVE: a graph that plots the yields of all bonds of the same quality with
maturities ranging from the shortest to the longest available. The resulting
curve shows if short-term interest rates are higher or lower than long-term
interest rates.
YIELD SPREAD: the relative yield differential between lower- and higher-quality
issues. Normally, lower-quality issues provide higher yields to compensate
investors for added credit risk.
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Statement of Investments in Securities and Net Assets, May 31, 1997
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE1)
Long Term Investments 98.4%
Bonds 96.7%
<C> <S> <C>
$ 5,250,000 Albany Housing Authority, Limited Obligation, Refunding, 6.25%, 10/01/12 ............. $ 5,431,073
1,610,000 Albany Parking Authority Revenue, Refunding, Series A, 6.85%, 11/01/12................ 1,699,371
5,990,000 Auburn, IDA, MFR, Auburn Memorial Home, 6.50%, 02/01/34............................... 6,172,515
Babylon IDA, Resource Recovery Revenue, Ogden Martin System, Inc., Pre-Refunded,
8,090,000 Series A, 8.50%, 01/01/19 ............................................................ 8,689,793
2,845,000 Series C, 8.50%, 01/01/19 ............................................................ 3,055,928
10,750,000 Babylon IDA, Waste Facilities Revenue, Community Waste Management,
Series A, Pre-Refunded, 7.875%, 07/01/06 ............................................ 11,717,178
1,000,000 Batavia Housing Authority Mortgage Revenue, Refunding, Washington Towers,
Series A, 6.50%, 01/01/23............................................................ 1,024,570
75,795,000 Battery Park City Authority Revenue, Refunding, Junior Lien, Series A, 5.80%, 11/01/22 74,798,296
8,160,000 Bethany Retirement Home, Inc., Mortgage Loan Revenue, 7.50%, 02/01/34 ................ 9,255,970
1,440,000 Cattaraugus County COP, Olean Project Facility, Series A, Pre-Refunded, 8.50%, 08/01/09 1,538,640
5,375,000 Clinton County COP, Correctional Facilities Project, 8.125%, 08/01/17................. 6,450,591
6,400,000 Cortland County IDA, Civic Facilities Revenue, Cortland Memorial
Hospital, Inc. Project, 6.25%, 07/01/24 ............................................. 6,391,296
5,205,000 Franklin County COP, Court House Redevelopment Project, 8.125%, 08/01/06 ............. 5,676,105
4,790,000 Franklin County IDA, Lease Revenue, County Correctional Facilities Project, 6.75%, 11/01/12 5,025,285
5,385,000 Guam Airport Authority Revenue, Series A, 6.50%, 10/01/23 ............................ 5,569,490
Guam Power Authority Revenue, Series A,
5,075,000 6.30%, 10/01/12 ...................................................................... 5,181,677
2,900,000 6.625%, 10/01/14 ..................................................................... 3,040,331
45,340,000 6.30%, 10/01/22 ...................................................................... 45,971,133
25,500,000 6.75%, 10/01/24 ...................................................................... 26,736,495
1,355,000 Hamilton Elderly Housing Corp. Mortgage Revenue,
Hamilton Apartments Project, 11.25%, 01/01/15 ....................................... 1,418,455
1,915,000 Ilion Elderly Housing Corp. Mortgage Revenue, Section 8,
Housing Assistance Revenue, 7.25%, 07/01/09 ......................................... 1,915,613
1,325,000 Lincoln Towers Housing Corp. Mortgage Revenue, Lincoln Towers Project, 11.25%, 01/01/15 1,389,011
35,620,000 Metropolitan Transportation Authority,
Commuter Facilities Revenue, Series A, 6.50%, 07/01/24............................... 36,976,410
Metropolitan Transportation Authority, Service Contract Revenue,
4,235,000 Commuter Facilities, Series 3, 6.00%, 07/01/19 ....................................... 4,244,148
31,605,000 Commuter Facilities, Series 5, 7.00%, 07/01/12 ....................................... 34,059,760
10,255,000 Commuter Facilities, Series 6, 6.00%, 07/01/21 ....................................... 10,283,714
24,160,000 Refunding, Commuter Facilities, Series N, 7.125%, 07/01/09 ........................... 26,423,550
17,470,000 Refunding, Commuter Facilities, Series 5, 6.50%, 07/01/16 ............................ 18,042,492
2,740,000 Refunding, Commuter Facilities, Series 5, 6.00%, 07/01/18 ............................ 2,749,617
30,935,000 Refunding, Transit Facilities, Series 5, 7.00%, 07/01/12 ............................. 33,337,721
40,495,000 Refunding, Transit Facilities, Series 5, 6.50%, 07/01/16 ............................. 41,822,021
7,725,000 Refunding, Transit Facilities, Series 5, 6.00%, 07/01/18 ............................. 7,752,115
12,625,000 Refunding, Transit Facilities, Series N, 7.125%, 07/01/09 ............................ 13,807,836
2,000,000 Transit Facilities, Series 6, 7.00%, 07/01/09 ........................................ 2,161,480
Metropolitan Transportation Authority, Transit Facilities Revenue, Series A, FSA Insured,
16,940,000 6.10%, 07/01/21 ...................................................................... 17,546,113
18,725,000 6.10%, 07/01/26 ...................................................................... 19,286,188
1,285,000 Monroe County IDA Revenue, Civic Facilities, De Paul
Community Facilities, 6.50%, 02/01/24 ............................................... 1,369,720
New York City GO,
165,000 Series 1986-D, 8.50%, 08/01/02........................................................ 168,447
60,000 Series 1986-D, 8.50%, 08/01/11........................................................ 61,297
45,000 Series 1986-D, 8.50%, 08/01/14........................................................ 45,973
10,000 Series 1986-D, 8.50%, 08/01/16........................................................ 10,209
2,115,000 Series 1987-A, Pre-Refunded, 8.75%, 11/01/14.......................................... 2,188,517
1,180,000 Series 1987-D, 8.50%, 08/01/08........................................................ 1,211,364
1,055,000 Series 1987-D, 8.50%, 08/01/09........................................................ 1,083,042
1,395,000 Series 1987-D, 8.50%, 08/01/10........................................................ 1,432,079
1,255,000 Series 1990-B, 7.00%, 06/01/15 ....................................................... 1,317,913
2,995,000 Series 1990-B, Pre-Refunded, 7.00%, 06/01/15 ......................................... 3,305,701
135,000 Series 1991-A, 7.75%, 08/15/13 ....................................................... 149,934
1,865,000 Series 1991-A, Pre-Refunded, 7.75%, 08/15/13 ......................................... 2,122,874
2,000,000 Series 1991-B, 7.75%, 02/01/10 ....................................................... 2,231,120
5,000,000 Series 1991-B, 7.75%, 02/01/11 ....................................................... 5,577,800
500,000 Series 1991-B, 7.75%, 02/01/12 ....................................................... 557,780
$ 1,875,000 Series 1991-B, 7.75%, 02/01/13 ....................................................... $ 2,091,675
10,950,000 Series 1991-B, 7.75%, 02/01/14 ....................................................... 12,215,382
22,610,000 Series 1991-B, 7.75%, 02/01/15 ....................................................... 25,173,070
1,485,000 Series 1991-B, 7.00%, 02/01/18 ....................................................... 1,604,676
110,000 Series 1991-D, 8.25%, 08/01/13 ....................................................... 124,119
65,000 Series 1991-D, 8.00%, 08/01/17........................................................ 72,741
4,710,000 Series 1991-D, Pre-Refunded, 8.25%, 08/01/13 ......................................... 5,435,199
3,615,000 Series 1991-D, Pre-Refunded, 8.00%, 08/01/17.......................................... 4,137,657
12,750,000 Series 1992, Rite 1, 7.00%, 10/01/11 ................................................. 13,606,035
1,500,000 Series 1992-B, 6.75%, 10/01/15 ....................................................... 1,619,550
4,500,000 Series 1992-C, Sub-Series C, Pre-Refunded, 7.00%, 08/01/16 ........................... 5,000,386
4,000,000 Series 1992-H, 7.20%, 02/01/14 ....................................................... 4,372,320
4,600,000 Series 1992-H, 7.20%, 02/01/15 ....................................................... 5,018,186
2,500,000 Series 1992-H, 7.00%, 02/01/16 ....................................................... 2,701,475
4,225,000 Series 1992-H, 7.00%, 02/01/18 ....................................................... 4,565,493
10,000,000 Series 1994-B, Sub-series B-1, Pre-Refunded, 7.50%, 08/15/20 ......................... 11,643,700
15,970,000 Series 1995-C, 7.25%, 08/15/24 ....................................................... 17,244,725
6,775,000 Series 1995-C, Pre-Refunded, 7.25%, 08/15/24 ......................................... 7,485,156
11,240,000 Series 1995-F, 6.625%, 02/15/25 ...................................................... 11,745,013
800,000 Series A, 7.75%, 08/15/14 ............................................................ 888,496
2,675,000 Series A, 6.25%, 08/01/17 ............................................................ 2,735,107
10,600,000 Series A, Pre-Refunded, 7.75%, 08/15/01 .............................................. 12,043,826
17,000,000 Series A-1, 6.625%, 08/01/25 ......................................................... 17,791,860
360,000 Series B, 7.00%, 06/01/13 ............................................................ 388,699
4,565,000 Series B, 7.00%, 06/01/14 ............................................................ 4,920,340
5,695,000 b Series B, 6.00%, 08/15/26 ............................................................ 5,698,987
3,640,000 Series B, Pre-Refunded, 7.00%, 06/01/13 .............................................. 4,017,614
2,160,000 Series B, Pre-Refunded, 7.00%, 06/01/14 .............................................. 2,379,910
325,000 Series B, Sub-series B-1, Pre-Refunded, 7.00%, 08/15/16 .............................. 368,661
1,675,000 Series B, Sub-series B-1, 7.00%, 08/15/16 ............................................ 1,827,559
2,840,000 Series C, 7.20%, 08/15/14 ............................................................ 3,061,378
3,690,000 Series C, Pre-Refunded, 7.00%, 02/01/12 .............................................. 3,761,180
1,160,000 Series C, Pre-Refunded, 7.20%, 08/15/14 .............................................. 1,274,747
200,000 Series D, 7.50%, 02/01/18 ............................................................ 220,632
260,000 Series D, Pre-Refunded, 8.50%, 08/01/13 .............................................. 265,424
320,000 Series D, Pre-Refunded, 8.50%, 08/01/15............................................... 326,918
2,300,000 Series D, Pre-Refunded, 7.50%, 02/01/18............................................... 2,606,590
265,000 Series F, 8.40%, 11/15/09 ............................................................ 302,455
7,500,000 Series F, Pre-Refunded, 8.40%, 11/15/08............................................... 8,749,179
3,085,000 Series F, Pre-Refunded, 8.40%, 11/15/09............................................... 3,605,594
6,255,000 Series H, 7.20%, 02/01/13 ............................................................ 6,829,021
3,225,000 Series H, 7.00%, 02/01/17 ............................................................ 3,487,676
3,745,000 Series H, Pre-Refunded, 7.20%, 02/01/13 .............................................. 4,180,843
3,275,000 Series H, Pre-Refunded, 7.00%, 02/01/17............................................... 3,629,028
9,500,000 Series I, 6.25%, 04/15/27 ............................................................ 9,706,720
9,000,000 Series K, 6.25%, 04/01/26 ............................................................ 9,183,420
New York City HDC, MFMR, Series A,
19,450,000 6.55%, 10/01/15....................................................................... 20,083,487
10,000,000 6.55%, 04/01/18....................................................................... 10,294,300
51,500,000 6.60%, 04/01/30....................................................................... 52,851,875
114,635,000 New York City Health & Hospital Authority, Local Government Revenue,
Refunding, Series A, 6.30%, 02/15/20 ................................................ 114,897,514
New York City IDA, Civic Facilities Revenue,
2,605,000 Federation Protestant Welfare, 6.95%, 11/01/11........................................ 2,666,244
4,000,000 New York Blood Center, Inc. Project, Pre-Refunded, 7.20%, 05/01/12.................... 4,538,440
7,000,000 New York Blood Center, Inc. Project, Pre-Refunded, 7.25%, 05/01/22.................... 7,962,570
2,500,000 St. Christopher Ottilie Project, 7.50%, 07/01/21...................................... 2,745,250
8,000,000 The Lighthouse, Inc. Project, 6.50%, 07/01/22......................................... 8,367,840
New York City Municipal Water Finance Authority, Water & Sewer System Revenue,
$ 1,400,000 Series 1991-A, 6.75%, 06/15/16 ....................................................... $ 1,471,120
18,100,000 Series 1991-A, 6.75%, 06/15/17 ....................................................... 18,999,389
15,700,000 Series 1991-A, Pre-Refunded, 7.10%, 06/15/12 ......................................... 17,302,028
18,750,000 Series 1991-A, Pre-Refunded, 6.75%, 06/15/17.......................................... 20,460,000
38,250,000 Series 1992-B, 6.375%, 06/15/22 ...................................................... 39,433,073
17,785,000 Series 1994-A, 7.10%, 06/15/12 ....................................................... 19,414,284
2,215,000 Series 1994-A, Pre-Refunded, 7.10%, 06/15/12 ......................................... 2,441,019
2,875,000 Series 1994-A, Pre-Refunded, 7.00%, 06/15/15 ......................................... 3,130,974
39,015,000 Series A, 6.125%, 06/15/20 ........................................................... 39,908,444
2,000,000 Series A, 6.25%, 06/15/21 ............................................................ 2,019,020
17,225,000 Series A, 6.00%, 06/15/25 ............................................................ 17,418,437
41,190,000 Series B, 6.25%, 06/15/20 ............................................................ 42,520,437
10,250,000 Series B, 5.875%, 06/15/26 ........................................................... 10,261,275
7,000,000 Series B, 5.75%, 06/15/29 ............................................................ 6,919,010
4,000,000 Series B, Pre-Refunded, 6.50%, 06/15/20 .............................................. 4,373,360
3,075,000 Series C, AMBAC Insured, 6.20%, 06/15/21 ............................................. 3,214,544
New York Housing Corp. Revenue, Series A, Pre-Refunded,
70,065,000 9.00%, 11/01/17....................................................................... 72,915,244
4,000,000 MBIA Insured, 8.625%, 11/01/06 ....................................................... 4,156,720
New York State COP,
2,500,000 Commissioner's Office Mental Health, 8.25%, 09/01/07.................................. 2,569,850
1,750,000 Commissioner's Office Mental Health, 8.30%, 09/01/12 ................................. 1,799,053
6,575,000 Hanson Redevelopment Project, 8.25%, 11/01/01 ........................................ 7,198,507
18,045,000 Hanson Redevelopment Project, 8.375%, 05/01/08 ....................................... 20,918,847
New York State Dormitory Authority Revenue,
2,545,000 Bishop Henry N. Hucles Nursing Home, 6.00%, 07/01/24 ................................. 2,586,025
13,000,000 City University System, Third General, 6.00%, 07/01/20 ............................... 13,124,930
28,555,000 City University System, Third General, 6.20%, 07/01/22 ............................... 29,242,604
14,900,000 City University System Consolidated, Series C, 7.50%, 07/01/10 ....................... 17,544,601
13,010,000 City University System Consolidated, Series C, 6.00%, 07/01/16 ....................... 13,081,555
3,430,000 City University System Consolidated, Series D, 7.00%, 07/01/09 ....................... 3,879,399
40,000,000 City University System, Series F, Pre-Refunded, 7.875%, 07/01/17 ..................... 44,617,600
2,530,000 Department of Education, Pre-Refunded, 7.75%, 07/01/21 ............................... 2,872,056
14,725,000 Department of Health, 6.20%, 07/01/17................................................. 15,031,133
5,355,000 Department of Health, Rosewell Park Cancer Center, 6.625%, 07/01/15 .................. 5,679,781
9,175,000 Department of Health, Rosewell Park Cancer Center, 6.625%, 07/01/24 .................. 9,652,926
8,480,000 Department of Health, Veterans Home, 6.25%, 07/01/20 ................................. 8,697,682
3,190,000 Department of Health, Veterans Home, Pre-Refunded, 7.25%, 07/01/11 ................... 3,556,244
9,775,000 Department of Health, Veterans Home, Pre-Refunded, 7.25%, 07/01/21 ................... 10,897,268
2,115,000 Fashion Institute of Technology, 7.50%, 07/01/20 ..................................... 2,287,584
2,355,000 Genessee Valley, Series A, 6.90%, 02/01/32 ........................................... 2,488,175
2,400,000 Heritage House Nursing Center, 7.00%, 08/01/31 ....................................... 2,602,920
14,355,000 Long Island Jewish Medical Center, Series A, 7.75%, 08/15/27 ......................... 14,949,584
12,995,000 Long Island University, 6.25%, 09/01/23 .............................................. 13,363,148
1,390,000 Mental Health Services Facilities, Series A, 5.75%, 08/15/22 ......................... 1,360,893
5,000,000 Mental Health Services Facilities, Series A, 5.75%, 02/15/27 ......................... 4,847,350
5,375,000 New York Medical College, Asset Guaranty, 6.875%, 07/01/21 ........................... 5,774,739
2,000,000 Nursing Home, Wesley Garden, 6.125%, 08/01/35 ........................................ 2,042,760
3,000,000 Nyack Hospital, 6.25%, 07/01/13 ...................................................... 3,069,600
5,835,000 Our Lady of Mercy, Mortgage Revenue, FHA Insured, 6.30%, 08/01/32 .................... 6,017,110
17,320,000 Refunding, City University, 6.00%, 07/01/26 .......................................... 17,416,299
2,000,000 Refunding, City University, Series C, 8.20%, 07/01/14 ................................ 2,111,560
2,885,000 Refunding, City University, Series U, 6.375%, 07/01/08 ............................... 3,046,704
5,405,000 Refunding, City University, Series U, 6.70%, 07/01/09................................. 5,805,456
10,215,000 Refunding, City University Systems - Consolidated, Second General,
Series A, 6.00%, 07/01/17............................................................ 10,337,580
23,185,000 Refunding, City University Systems - Consolidated,
Third General, Series A, 6.00%, 07/01/16............................................. 23,533,702
$19,390,000 Refunding, Manhattan College, 6.50%, 07/01/19 ........................................ $ 20,316,066
1,800,000 Refunding, Mental Health Services Facilities, 6.00%, 08/15/21 ........................ 1,811,826
2,165,000 Refunding, Mental Health Services Facilities, Series B, 5.75%, 08/15/12............... 2,164,784
34,265,000 Refunding, Nursing Home, St. John's Health Care Corp., 6.25%, 02/01/36................ 35,009,921
17,670,000 Refunding, State University Educational Facilities, Series A, 6.25%, 05/15/19 ........ 18,201,867
5,200,000 St. Lukes Home Residential Health, 6.375%, 08/01/35................................... 5,398,276
2,565,000 State University Athletic Facilities, 7.25%, 07/01/12 ................................ 2,773,714
4,750,000 State University Athletic Facilities, 7.25%, 07/01/21 ................................ 5,171,088
27,730,000 State University Educational Facilities, Series B, 6.25%, 05/15/14 ................... 28,688,072
7,025,000 State University Educational Facilities, Series B, 7.375%, 05/15/14 .................. 7,608,216
7,995,000 State University Educational Facilities, Series B, 7.00%, 05/15/16 ................... 8,543,297
60,795,000 State University Educational Facilities, Series B, 6.25%, 05/15/20 ................... 62,467,470
7,890,000 State University Educational Facilities, Series B, 5.75%, 05/15/24 ................... 7,730,938
2,690,000 State University Educational Facilities, Series C, 6.125%, 05/15/20 .................. 2,708,184
3,945,000 The Highlands Living, 6.60%, 02/01/34 ................................................ 4,174,994
12,910,000 Upstate Community Colleges, Series A, 6.20%, 07/01/15 ................................ 13,249,533
7,000,000 Upstate Community Colleges, Series A, 6.00%, 07/01/22 ................................ 7,053,410
42,310,000 Upstate Community Colleges, Series A, 6.25%, 07/01/25 ................................ 43,323,325
11,845,000 Upstate Community Colleges, Series A, 6.125%, 07/01/27 ............................... 12,010,830
3,250,000 Upstate Community Colleges, Series A, Pre-Refunded, 7.60%, 07/01/20 .................. 3,594,825
1,000,000 Upstate Community Colleges, Series B, Pre-Refunded, 7.20%, 07/01/21 .................. 1,114,950
6,800,000 W.K. Nursing Home Corp, 6.05%, 02/01/26 .............................................. 6,948,784
11,820,000 New York State Energy Research & Development Authority,
Facilities Revenue, Refunding, Cons Edison Co.,
Series A, 6.10%, 08/15/20 ........................................................... 12,123,892
New York State Energy Research & Development Authority, PCR,
3,300,000 Long Island Projects, 7.80%, 12/01/09 ................................................ 3,345,408
5,000,000 Long Island Projects, Series A, 7.50%, 12/01/06 ...................................... 5,061,600
38,145,000 Niagara Mohawk Power Corp. Project, Series 1, 8.875%, 11/01/25 ....................... 38,484,491
New York State Environmental Facilities Corp., Special Obligation,
3,000,000 PCR, New York City Municipal Water Finance Authority Project, Series E, 6.875%, 06/15/14 3,309,120
4,000,000 Riverbank State Park, Pre-Refunded, 7.25%, 04/01/07 .................................. 4,521,600
4,300,000 Riverbank State Park, Pre-Refunded, 7.25%, 04/01/12 .................................. 4,860,720
28,525,000 Riverbank State Park, Pre-Refunded, 7.375%, 04/01/22 ................................. 32,397,269
New York State HFA, Service Contract Obligation Revenue,
5,000,000 Refunding, Series C, 6.30%, 09/15/12 ................................................. 5,146,200
19,310,000 Refunding, Series C, 6.00%, 09/15/21 ................................................. 19,395,350
14,000,000 Series 1990-A, Pre-Refunded, 7.80%, 09/15/20 ......................................... 15,666,840
10,000,000 Series 1991-A, Pre-Refunded, 7.80%, 09/15/20 ......................................... 11,310,900
2,375,000 Series 1992-A, 7.25%, 09/15/12 ....................................................... 2,602,929
30,320,000 Series 1992-C, 6.30%, 03/15/22 ....................................................... 30,990,072
99,760,000 Series 1993-C, 6.125%, 03/15/20 ...................................................... 101,071,844
28,330,000 Series 1994-A, 6.50%, 03/15/24 ....................................................... 29,425,521
5,000,000 Series A, 6.375%, 09/15/15 ........................................................... 5,200,100
3,000,000 Series A, 5.50%, 09/15/22 ............................................................ 2,843,070
11,270,000 Series A, 6.50%, 03/15/25 ............................................................ 11,749,088
16,725,000 Series A, 6.00%, 03/15/26 ............................................................ 16,804,778
New York State HFA Revenue,
5,285,000 Children's Rescue Fund Housing, Series A, 7.625%, 05/01/18 ........................... 5,549,831
2,005,000 FHA Insured, Adult Care, Series A, 7.85%, 02/15/30 ................................... 2,139,536
4,245,000 MF Housing, Second Mortgage, Series A, 7.00%, 08/15/23 ............................... 4,487,262
2,500,000 MF Housing, Second Mortgage, Series D, 6.25%, 08/15/23 ............................... 2,553,375
5,500,000 MF Housing, Second Mortgage, Series C, 6.60%, 08/15/27 ............................... 5,731,770
7,095,000 MF Housing, Second Mortgage, Series E, 6.75%, 08/15/25 ............................... 7,380,432
34,515,000 MF Mortgage, AMBAC Insured, Series 1984-B, 6.35%, 08/15/23 ........................... 35,453,463
2,760,000 MF Mortgage, AMBAC Insured, Series B, 6.25%, 08/15/14 ................................ 2,845,284
12,575,000 MF Mortgage, Series 1985-B, FHA Insured, 8.50%, 05/15/28 ............................. 12,684,277
$ 8,630,000 MF Mortgage, Series 1991-A, FHA Insured, 7.10%, 08/15/35 ............................. $ 9,137,617
4,885,000 MF Mortgage, Series 1992-A, FHA Insured, 7.00%, 08/15/22 ............................. 5,137,408
6,870,000 MF Mortgage, Series 1992-C, FHA Insured, 6.50%, 08/15/24 ............................. 7,136,625
11,200,000 Refunding, Health Facilities of New York City, Series A, 6.00%, 05/01/07 ............. 11,408,544
2,400,000 Refunding, Health Facilities of New York City, Series A, 6.00%, 11/01/08.............. 2,428,560
80,410,000 Refunding, Health Facilities of New York City, Series A, Pre-Refunded, 8.00%, 11/01/08 90,778,870
16,240,000 Refunding, Health Facilities of New York City, Series A, 8.00%, 11/01/08 ............. 17,995,706
26,150,000 Refunding, Housing Project Mortgage, Series A, 6.10%, 11/01/15 ....................... 26,543,558
31,300,000 Refunding, Housing Project Mortgage, Series A, 6.125%, 11/01/20 ...................... 31,707,526
1,000,000 Refunding, MF Mortgage, Series 1992-C, FHA Insured, 6.45%, 08/15/14 .................. 1,038,880
New York State Local Government Assistance Corp.,
10,120,000 Series 1991-B, 6.50%, 04/01/20 ....................................................... 10,656,967
39,935,000 Series 1991-C, 6.50%, 04/01/15 ....................................................... 41,542,783
8,750,000 Series 1992-A, Pre-Refunded, 6.875%, 04/01/19 ........................................ 9,750,388
38,535,000 Series 1992-B, 6.25%, 04/01/21 ....................................................... 39,671,783
42,260,000 Series 1992-C, 6.25%, 04/01/18 ....................................................... 43,506,670
12,200,000 Series A, 6.00%, 04/01/24 ............................................................ 12,361,284
New York State Medical Care Facilities Finance Agency,
43,465,000 Albany Medical Center, Alice Hyde Project, Mortgage Revenue,
Series A, FHA Insured, 8.00%, 02/15/28 .............................................. 46,091,155
3,500,000 Buffalo General Hospital, Mortgage Revenue, Series C,
FHA Insured, Pre-Refunded, 7.70%, 02/15/22 .......................................... 3,715,075
22,150,000 Catholic Medical Center of Brooklyn & Queens, Inc., Mortgage Revenue,
Series A, FHA Insured, Pre-Refunded, 8.30%, 02/15/22................................. 23,254,178
5,500,000 Hospital & Nursing Home, Methodist Medical Center, Series A, FHA Insured, 6.70%, 08/15/23 5,813,720
6,415,000 Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.125%, 02/15/15 ... 6,591,220
8,330,000 Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.20%, 02/15/21 .... 8,605,806
9,000,000 Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.30%, 08/15/23 .... 9,213,570
12,235,000 Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.25%, 02/15/27 .... 12,647,809
26,910,000 Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.20%, 02/15/28 .... 27,656,753
28,750,000 Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 7.45%, 08/15/31 .... 31,382,063
7,940,000 Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.375%, 08/15/33 ... 8,091,098
11,565,000 Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.50%, 02/15/34 .... 12,030,491
12,130,000 Hospital & Nursing Home, Mortgage Revenue, Series B, FHA Insured, 8.875%, 08/15/27.... 12,665,540
24,000,000 Hospital & Nursing Home, Mortgage Revenue, Series B, FHA Insured, 6.95%, 02/15/32 .... 25,638,240
33,220,000 Hospital & Nursing Home, Mortgage Revenue, Series B, FHA Insured,
Pre-Refunded, 8.00%, 02/15/28 ....................................................... 35,214,861
8,000,000 Hospital & Nursing Home, Mortgage Revenue, Series C, FHA Insured, 6.50%, 08/15/21 .... 8,499,360
2,610,000 Hospital & Nursing Home, Mortgage Revenue, Series C, FHA Insured, 9.00%, 02/15/26 .... 2,634,795
86,865,000 Hospital & Nursing Home, Mortgage Revenue, Series C, FHA Insured, 6.375%, 08/15/29 ... 90,070,319
15,000,000 Hospital & Nursing Home, Mortgage Revenue, Series C, FHA Insured, 6.65%, 08/15/32 .... 15,739,800
21,540,000 Hospital & Nursing Home, Mortgage Revenue, Series C, FHA Insured,
Pre-Refunded, 6.20%, 08/15/23 ....................................................... 22,217,218
13,375,000 Hospital & Nursing Home, Mortgage Revenue, Series D, FHA Insured, 6.60%, 02/15/31 .... 14,030,241
55,500,000 Hospital & Nursing Home, Mortgage Revenue, Series D, FHA Insured, 6.45%, 02/15/32 .... 57,325,395
3,200,000 Hospital Mortgage, Series A, AMBAC Insured, 6.80%, 08/15/24 .......................... 3,538,336
5,125,000 Hospital Mortgage, Series A, AMBAC Insured, 6.50%, 08/15/29 .......................... 5,553,860
31,210,000 Hospital Mortgage, Series A, AMBAC Insured, 6.90%, 08/15/34 .......................... 34,704,584
4,000,000 Huntington Hospital Mortgage, Refunding, Project A, 6.50%, 11/01/14 .................. 4,121,600
2,670,000 Medina Memorial Hospital Project, Series A, 7.30%, 05/01/11 .......................... 2,882,452
64,110,000 Mental Health Services Facilities, Series A, 8.875%, 08/15/07 ........................ 65,981,157
3,405,000 Mental Health Services Facilities, Series A, 7.70%, 02/15/18 ......................... 3,545,831
4,000,000 Mental Health Services Facilities, Series A, Pre-Refunded, 7.70%, 02/15/18 ........... 4,183,040
3,800,000 Mortgage Revenue Project, Series A, 6.50%, 02/15/35 .................................. 3,994,750
23,775,000 Mortgage Revenue Project, Series B, 6.60%, 08/15/34 .................................. 24,957,806
10,200,000 Mortgage Revenue Project, Series C, 6.375%, 08/15/29 ................................. 10,621,566
6,250,000 Mortgage Revenue Project, Series D, FHA Insured, 6.20%, 02/15/35 ..................... 6,434,875
13,200,000 Mortgage Revenue Project, Series E, FHA Insured, 6.375%, 02/15/35 .................... 13,704,504
16,400,000 Mortgage Revenue Project, Series F, FHA Insured, 6.30%, 08/15/25 ..................... 17,138,328
21,050,000 Mortgage Revenue Project, Series F, FHA Insured, 6.375%, 08/15/34 .................... 21,870,950
$ 9,060,000 Mortgage Revenue, Series B, FHA Insured, 6.15%, 02/15/25 ............................. $ 9,271,460
2,200,000 Mortgage Revenue, Series B, FHA Insured, 6.15%, 02/15/35 ............................. 2,243,186
5,380,000 North General Hospital, Series 1989-A, 7.35%, 08/15/09................................ 5,650,775
9,145,000 Refunding, Beth Israel Medical Center Project, Series A, 7.20%, 11/01/14.............. 9,276,505
1,185,000 Refunding, Good Samaritan Hospital Project Revenue, Series A, Pre-Refunded, 8.00%, 11/01/13 1,228,217
5,050,000 Refunding, Hospital & Nursing Home, Mortgage Revenue, Series A,
FHA Insured, 6.20%, 02/15/23 ........................................................ 5,186,047
2,635,000 Refunding, Hospital & Nursing Home, Mortgage Revenue, Series B, 6.25%, 02/15/25 ...... 2,735,288
4,745,000 Refunding, Hospital & Nursing Home, Mortgage Revenue, Series B,
FHA Insured, 6.25%, 02/15/35 ........................................................ 4,870,363
30,000,000 Refunding, Hospital & Nursing Home, Series B, 6.125%, 08/15/24 ....................... 30,748,500
10,730,000 Refunding, Hospital Mortgage, Series A, FHA Insured, 7.25%, 02/15/12 ................. 11,005,761
6,400,000 Refunding, Nyack Hospital Project Revenue, Series A, Pre-Refunded, 8.30%, 11/01/13 ... 6,877,312
9,900,000 Refunding, Vassar Brothers Hospital Project Revenue, Series A, 8.25%, 11/01/13 ....... 10,207,692
1,665,000 Saranac Lake General Hospital Project Revenue, Series A, 7.875%, 11/01/10 ............ 1,821,393
1,410,000 Second Mortgage, Health Care Project Revenue, Series B, 6.35%, 11/01/14 .............. 1,460,816
61,770,000 Secured Hospital Revenue, Bronx, Lebanon and
The Jamaica Hospital, Series A, 7.10%, 02/15/27.................................... 63,106,085
72,180,000 Secured Hospital Revenue, North General Hospital, Series A, 7.40%, 02/15/19 .......... 75,459,137
22,150,000 Secured Hospital Revenue, Series A, 7.35%, 08/15/11 .................................. 23,792,866
55,225,000 Secured Hospital Revenue, Series A, 7.40%, 08/15/21 .................................. 58,699,205
16,770,000 Secured Hospital Revenue, Series A, 6.25%, 02/15/24 .................................. 16,767,988
19,700,000 Security Mortgage Program Revenue, Adult Day Care, 6.375%, 11/15/20 .................. 20,593,001
6,025,000 The Hospital for Special Surgery Revenue, Series A, 6.375%, 08/15/24 ................. 6,303,536
36,650,000 The Hospital for Special Surgery Revenue, Series A, 6.45%, 08/15/34 .................. 38,087,047
New York State Mortgage Agency, HMR,
9,670,000 8th Series C, 8.40%, 10/01/17 ........................................................ 9,907,205
1,730,000 8th Series D, 8.375%, 10/01/17 ....................................................... 1,780,810
4,885,000 8th Series E, 8.10%, 10/01/17 ........................................................ 5,044,740
3,975,000 10th Series A, 8.10%, 04/01/14 ....................................................... 4,109,196
17,250,000 29th Series B, 6.45%, 04/01/15 ....................................................... 17,722,995
6,225,000 37th Series A, 6.375%, 10/01/14 ...................................................... 6,535,254
9,000,000 37th Series A, 6.45%, 10/01/17 ....................................................... 9,431,010
9,945,000 Series 51, 6.40%, 10/01/17............................................................ 10,431,112
6,560,000 Series BB-2, 7.95%, 10/01/15 ......................................................... 6,721,835
2,835,000 Series FF, 7.95%, 10/01/14 ........................................................... 2,908,597
2,305,000 Series OO, 8.05%, 10/01/11 ........................................................... 2,393,443
14,650,000 Series RR, 7.75%, 10/01/17 ........................................................... 15,388,653
New York State Mortgage Agency Revenue,
13,685,000 8th Series A, 6.875%, 04/01/17 ....................................................... 13,838,956
5,000,000 Homeowners Mortgage, Series 27, 6.90%, 04/01/15 ...................................... 5,386,800
9,880,000 Homeowners Mortgage, Series 41-A, 6.50%, 10/01/17 .................................... 10,275,002
3,800,000 Homeowners Mortgage, Series 43, MBIA Insured, 6.45%, 10/01/17 ........................ 3,911,340
23,730,000 Homeowners Mortgage, Series 45, 7.20%, 10/01/17 ...................................... 25,365,709
26,780,000 Homeowners Mortgage, Series 47, 6.375%, 10/01/17 ..................................... 27,729,351
10,000,000 Homeowners Mortgage, Series 57, 6.25%, 10/01/15 ...................................... 10,232,000
7,330,000 Homeowners Mortgage, Series 57, 6.30%, 10/01/17 ...................................... 7,499,616
8,590,000 Homeowners Mortgage, Series 57, 6.375%, 10/01/27 ..................................... 8,791,521
4,040,000 Homeowners Mortgage, Series 61, 5.90%, 04/01/27 ...................................... 4,000,408
New York State Tollway Authority, Service Contract Revenue, Local Highway & Bridge,
12,630,000 6.20%, 04/01/10 ...................................................................... 12,956,233
18,430,000 6.00%, 01/01/11 ...................................................................... 18,528,785
21,865,000 6.375%, 04/01/12 ..................................................................... 22,433,271
23,970,000 6.25%, 04/01/14 ...................................................................... 24,496,621
1,300,000 Pre-Refunded, 7.25%, 01/01/10 ........................................................ 1,435,317
New York State Urban Development Corp. Revenue,
4,500,000 Cornell Center Project, 6.00%, 01/01/14 .............................................. 4,551,525
81,350,000 Correctional Capital Facilities, Series 5, 6.25%, 01/01/20 ........................... 83,705,083
28,325,000 Refunding, Onondaga County Convention Project, 6.25%, 01/01/20 ....................... 29,207,324
$ 1,500,000 Syracruse University Center, Pre-Refunded, 7.875%, 01/01/17 .......................... $ 1,563,015
8,500,000 Youth Facilities, 6.00%, 04/01/15 .................................................... 8,618,745
Niagara Falls GO, Public Improvement, Pre-Refunded,
1,000,000 Series A, 8.15%, 12/01/04............................................................. 1,050,430
1,000,000 Series A, 8.15%, 12/01/05............................................................. 1,050,430
1,000,000 Series A, 8.15%, 12/01/06............................................................. 1,050,430
1,000,000 Series A, 8.15%, 12/01/07............................................................. 1,050,430
1,000,000 Series A, 8.15%, 12/01/08 ............................................................ 1,050,430
1,000,000 Series A, 8.15%, 12/01/09 ............................................................ 1,050,430
1,000,000 Series A, 8.15%, 12/01/10 ............................................................ 1,050,430
1,000,000 Series A, 8.15%, 12/01/11 ............................................................ 1,050,430
11,305,000 North County Development Authority, Solid Waste Systems Revenue,
Pre-Refunded, 6.75%, 07/01/12........................................................ 11,962,687
2,155,000 Oneida Health Care Corp., Mortgage Revenue,
Oneida Health Care, Series A, 7.20%, 08/01/31........................................ 2,269,301
Oneida-Herkimer, Solid Waste Management Authority, Solid Waste Systems Revenue,
1,390,000 6.20%, 04/01/00 ...................................................................... 1,420,830
1,035,000 6.30%, 04/01/01 ...................................................................... 1,063,463
1,930,000 6.40%, 04/01/02 ...................................................................... 1,991,007
2,075,000 6.50%, 04/01/03 ...................................................................... 2,157,129
1,115,000 6.65%, 04/01/05 ...................................................................... 1,170,248
20,755,000 6.75%, 04/01/14 ...................................................................... 21,451,745
Port Authority of New York and New Jersey Revenue,
1,675,000 Consolidated 67th Series, 6.875%, 01/01/25 ........................................... 1,770,894
4,400,000 Consolidated 74th Series, 6.75%, 08/01/26 ............................................ 4,670,292
17,000,000 Port Authority of New York and New Jersey, Delta Air Lines
Special Project, Series 1, 6.95%, 06/01/08 .......................................... 18,330,250
14,645,000 Puerto Rico Commonwealth Aqueduct and Sewer Authority Revenue,
Series A, Pre-Refunded, 7.875%, 07/01/17............................................. 15,527,508
4,000,000 Puerto Rico Commonwealth Highway and Transportation Authority,
Highway Revenue, Series Y, 5.00%, 07/01/36 .......................................... 3,591,800
8,000,000 Puerto Rico Commonwealth Infrastructure Financing Authority,
Special Tax Revenue, Series A, 7.90%, 07/01/07....................................... 8,433,520
8,100,000 Puerto Rico Commonwealth Urban Renewal and Housing Corp.,
Refunding, 7.875%, 10/01/04.......................................................... 8,771,085
Puerto Rico Electric Power Authority Revenue,
7,740,000 Series 1992-R, 6.25%, 07/01/17 ....................................................... 8,048,439
15,565,000 Series 1994-T, 6.375%, 07/01/24 ...................................................... 16,538,279
5,575,000 Series T, 6.00%, 07/01/16 ............................................................ 5,672,172
Puerto Rico Industrial, Medical & Environmental Facilities, PCFA,
1,000,000 Baxter Travenol Labs, Series A, 8.00%, 09/01/12 ...................................... 1,070,210
21,015,000 Special Facilities, American Airlines Corp., Series A, 6.45%, 12/01/25 ............... 22,026,452
Puerto Rico Municipal Finance Agency, Series A,
14,760,000 Pre-Refunding, 8.25%, 07/01/08 ....................................................... 15,699,031
11,000,000 6.50%, 07/01/19 ...................................................................... 11,715,990
Rensselaer Municipal Leasing Corp., Leasehold Mortgage Revenue,
Rensselaer County Nursing Home,
10,000,000 Series A, 6.90%, 06/01/24 ............................................................ 10,323,900
3,345,000 Series B, 6.90%, 06/01/24 ............................................................ 3,453,345
4,230,000 Schenectady Municipal Housing Authority Revenue, Annie Schaffer
Senior Center, Inc. Project, 6.45%, 05/01/24 ........................................ 4,509,730
Suffolk County IDA, Civic Facilities Revenue, Dowling College,
1,870,000 6.70%, 12/01/20 ...................................................................... 1,887,877
2,000,000 6.625%, 06/01/24 ..................................................................... 2,000,640
4,635,000 Pre-Refunding, 8.25%, 12/01/20 ....................................................... 5,273,379
1,300,000 Sunnybrook Elderly Housing Corp. Mortgage Revenue,
Sunnybrook Apartments Project, 11.25%, 12/01/14 ..................................... 1,353,430
2,000,000 Syracuse IDA, Civic Facility Revenue, St. Joseph's Hospital
Health Center Project, Pre-Refunded, 7.50%, 06/01/18 ................................ 2,244,220
8,620,000 Ulster County Resource Recovery Agency, Solid Waste Systems Revenue, 6.00%, 03/01/14 . 8,414,672
United Nations Development Corp. Revenue, Refunding, Sub-Lien,
37,120,000 Series A, 6.00%, 07/01/26 ............................................................ 37,211,686
15,370,000 Series B, 6.25%, 07/01/26 ............................................................ 15,651,425
3,100,000 Virgin Islands Water and Power Authority Electric System, Series A, 7.40%, 07/01/11 .. 3,309,157
39,150,000 Warren and Washington Counties IDA Revenue, Refunding, Adirondack
Resource Recovery Project, Series A, 7.90%, 12/15/07................................. 40,155,372
Yonkers GO, Series A,
$ 500,000 9.20%, 02/01/01 ...................................................................... $ 564,370
1,090,000 9.20%, 02/01/03 ...................................................................... 1,273,883
1,095,000 9.20%, 02/01/04 ...................................................................... 1,302,065
1,095,000 9.20%, 02/01/05 ...................................................................... 1,329,253
-------------
Total Bonds (Cost $4,383,843,968)............................................... 4,619,029,031
-------------
Zero Coupon/Step-Up Bonds 1.7%
1,120,000 Erie County Water Authority, Water Revenue, Refunding,
Fourth Resolution, AMBAC Insured, (original accretion
rate 7.30%), 12/01/17................................................................ 257,701
Metropolitan Transportation Authority, Refunding,
7,500,000 Commuter Facilities Revenue, Series 7, (original accretion rate 5.80%), 07/01/10 ..... 3,592,200
7,590,000 Commuter Facilities Revenue, Series 7, (original accretion rate 5.80%), 07/01/11 ..... 3,412,844
2,065,000 Commuter Facilities Revenue, Series 7, (original accretion rate 5.85%), 07/01/13 ..... 792,155
13,125,000 Transit Facilities Revenue, Series 7, (original accretion rate 5.75%), 07/01/09....... 6,729,056
9,000,000 Transit Facilities Revenue, Series 7, (original accretion rate 5.80%), 07/01/10....... 4,310,640
21,200,000 Transit Facilities Revenue, Series 7, (original accretion rate 5.80%), 07/01/11....... 9,532,580
15,380,000 Transit Facilities Revenue, Series 7, (original accretion rate 5.85%), 07/01/12....... 6,486,207
7,935,000 Transit Facilities Revenue, Series 7, (original accretion rate 5.85%), 07/01/13....... 3,043,945
New York City GO,
8,875,000 Citysavers, Series B, (original accretion rate 8.25%), 08/01/09 ...................... 4,412,916
1,030,000 Citysavers, Series B, (original accretion rate 8.66%), 06/01/12 ...................... 423,938
1,030,000 Citysavers, Series B, (original accretion rate 8.50%), 12/01/12 ...................... 411,567
1,030,000 Citysavers, Series B, (original accretion rate 8.50%), 06/01/13 ...................... 396,468
1,030,000 Citysavers, Series B, (original accretion rate 8.50%), 12/01/13 ...................... 384,808
1,030,000 Citysavers, Series B, (original accretion rate 8.50%), 06/01/14 ...................... 370,429
1,030,000 Citysavers, Series B, (original accretion rate 8.50%), 12/01/14 ...................... 359,439
1,030,000 Citysavers, Series B, (original accretion rate 8.50%), 06/01/15 ...................... 348,789
1,030,000 Citysavers, Series B, (original accretion rate 8.50%), 12/01/15 ...................... 338,448
1,030,000 Citysavers, Series B, (original accretion rate 8.50%), 06/01/16 ...................... 328,416
1,030,000 Citysavers, Series B, (original accretion rate 8.50%), 12/01/16 ...................... 318,682
1,030,000 Citysavers, Series B, (original accretion rate 8.50%), 06/01/17 ...................... 306,250
1,030,000 Citysavers, Series B, (original accretion rate 8.50%), 12/01/17 ...................... 297,093
1,030,000 Citysavers, Series B, (original accretion rate 8.50%), 06/01/18 ...................... 287,638
1,005,000 Citysavers, Series B, (original accretion rate 8.50%), 12/01/18 ...................... 272,255
1,030,000 Citysavers, Series B, (original accretion rate 8.50%), 06/01/19 ...................... 270,674
1,030,000 Citysavers, Series B, (original accretion rate 8.50%), 12/01/19 ...................... 262,578
10,000,000 Citysavers, Series B, (original accretion rate 8.50%), 06/01/20 ...................... 2,473,000
2,500,000 M-Raes, Series 29, zero coupon to 03/15/00,
(original accretion rate 8.50%), 8.00% thereafter, 03/15/12 ......................... 2,234,250
3,875,000 M-Raes, Series 30, zero coupon to 03/15/00,
(original accretion rate 8.50%), 8.00% thereafter, 03/15/13 ......................... 3,467,776
17,400,000 M-Raes, Series 36, zero coupon to 10/01/02,
(original accretion rate 7.00%), 7.00% thereafter, 10/01/14 ......................... 12,792,480
2,690,000 Series A-2, (original accretion rate 5.95%), 08/01/10 ................................ 1,249,989
21,170,000 Orangetown New York Housing Authority Facilities Revenue,
Refunding, Orangetown Senior Housing Center Project, MBIA Insured,
(original accretion rate 6.60%), 04/01/30 ........................................... 3,040,435
21,625,000 Triborough Bridge and Tunnel Authority, Convention Center Project,
Series E, (original accretion rate 7.50%), 01/01/12 ................................. 9,358,202
-------------
Total Zero Coupon/Step-Up Bonds, (Cost $74,890,255) ............................ 82,563,848
-------------
Total Long Term Investments (Cost $4,458,734,223) .............................. 4,701,592,879
-------------
aShort Term Investments .2%
New York City Municipal Water Finance Authority, Water and Sewer
System Revenue, Daily VRDN and Put,
5,700,000 Series C, 3.50%, 06/15/22 ............................................................ 5,700,000
2,180,000 Series G, 3.45%, 06/15/24 ............................................................ 2,180,000
Total Short Term Investments (Cost $7,880,000) ....................................... 7,880,000
-------------
Total Investments (Cost $4,466,614,223) 98.6% ............................. 4,709,472,879
Other Assets and Liabilities, Net 1.4% .................................... 69,467,474
-------------
Net Assets 100.0% ......................................................... $4,778,940,353
=============
At May 31, 1997, the net unrealized appreciation based on the cost
of investments for income tax purposes
of $4,467,840,674 was as follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost ................................. $ 241,945,652
Aggregate gross unrealized depreciation for all investments
in which there was an excess of tax cost over value ................................. (313,447)
-------------
Net unrealized appreciation ........................................................ $ 241,632,205
=============
</TABLE>
PORTFOLIO ABBREVIATIONS:
AMBAC - American Municipal Bond Assurance Corp.
COP - Certificate of Participation
FHA - Federal Housing Authority/Agency
FSA - Financial Security Assistance
GO - General Obligation
HDC - Housing Development Corp.
HFA - Housing Finance Authority/Agency
HMR - Home Mortgage Revenue
IDA - Industrial Development Authority/Agency
MBIA - Municipal Bond Investors Assurance Corp.
MF - Multi-Family
MFMR - Multi-Family Mortgage Revenue
PCFA - Pollution Control Financing Authority
PCR - Pollution Control Revenue
aVariable rate demand notes (VRDN's) 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 upon
short notice prior to specified dates. The interest rate may change on specified
dates in relationship with changes in a designated rate (such as the prime
interest rate or U.S. Treasury bills rate).
bSee Note 1(e) regarding securities purchased on a when-issued basis.
The accompanying notes are an integral part of these financial statements.
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Financial Statements
Statement of Assets and Liabilities
May 31, 1997
Assets:
Investments in securities, at value
(identified cost $4,466,614,223) $4,709,472,879
Cash 117,240
Receivables:
Interest 83,263,474
Capital shares sold 2,541,298
--------------
Total assets 4,795,394,891
--------------
Liabilities:
Payables:
Investment securities purchased
on a when issued basis (Note 1) 5,727,196
Capital shares repurchased 2,338,783
Management fees 1,813,263
Distribution fees 692,627
Shareholder servicing costs 135,000
Other payables to shareholders 5,639,646
Accrued expenses and other liabilities 108,023
--------------
Total liabilities 16,454,538
--------------
Net assets, at value $4,778,940,353
==============
Net assets consist of:
Undistributed net investment income $ 2,033,498
Unrealized appreciation on investments 242,858,656
Accumulated net
realized loss from investments (4,126,335)
Class I capital shares 4,464,183,925
Class II capital shares 73,990,609
--------------
Net assets, at value $4,778,940,353
==============
Class l Shares:
Net assets, at value $4,704,745,243
==============
Shares outstanding 403,622,191
==============
Net asset value per share* $11.66
==============
Maximum offering price per share
(100/95.75 of net asset value per share) $12.18
==============
Class II Shares:
Net assets, at value $ 74,195,110
==============
Shares outstanding 6,368,559
==============
Net asset value per share* $11.65
==============
Maximum offering price per share
(100/99 of net asset value per share) $11.77
==============
*Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
Statement of Operations
for the year ended May 31, 1997
Investment income:
Interest $309,833,868
Expenses:
Management fees (Note 5) $21,846,977
Distribution fees-Class l (Note 5) 3,503,593
Distribution fees-Class ll (Note 5) 365,724
Shareholder servicing costs (Note 5) 1,399,581
Reports to shareholders 1,306,611
Custodian fees 43,051
Professional fees 120,360
Trustees' fees and expenses 61,587
Registration and filing fees 18,972
Other 122,098
--------------
Total expenses 28,788,554
--------------
Net investment income 281,045,314
--------------
Realized and unrealized gain (loss)
on investments:
Net realized loss (2,607,119)
Net unrealized appreciation 95,305,025
--------------
Net realized and unrealized
gain (loss) on investments 92,697,906
--------------
Net increase in net assets resulting
from operations $373,743,220
==============
The accompanying notes are an integral part of these financial statements.
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Financial Statements (continued)
Statements of Changes in Net Assets
for the years ended May 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
-------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C>
Net investment income $ 281,045,314 $ 286,566,316
Net realized gain (loss) from security transactions (2,607,119) 16,081,912
Net unrealized appreciation (depreciation) on investments 95,305,025 (129,808,598)
-------------------------------
Net increase in net assets resulting from operations 373,743,220 172,839,630
Distributions to shareholders:
From undistributed net investment income (Note 8):
Class l (278,715,300) (289,772,039)
Class ll (2,919,445) (1,035,919)
From realized gain/loss
Class l (10,650,658) --
Class ll (126,948) --
Net increase (decrease) in net assets from capital
share transactions (Note 3) (50,920,304) 139,529,436
-------------------------------
Net increase in net assets 30,410,565 21,561,108
Net assets:
Beginning of year $4,748,529,788 $4,726,968,680
===============================
End of year (including undistributed net investment income
of $2,033,498 - 1997 and $2,622,929 - 1996) $4,778,940,353 $4,748,529,788
===============================
</TABLE>
The accompanying notes are an integral part of these financial statements.
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Notes to Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
Franklin New York Tax-Free Income Fund (the Fund) is an open-end, diversified
management investment company (mutual fund), registered under the Investment
Company Act of 1940, as amended. On April 28, 1997, the Board of Trustees and
shareholders of the New York Tax-Free Income Fund approved an Agreement and Plan
of Reorganization whereby the Fund would become a Delaware business trust. In
connection with these changes, the Fund's name was also changed to Franklin New
York Tax-Free Income Fund. The Fund seeks to provide investors with as high a
level of income exempt from federal income taxes as is consistent with prudent
investing, while seeking preservation of shareholders' capital.
The Fund offers two classes of shares, Class I and Class II. Class I shares are
sold with a higher front-end sales charge than Class II shares. Each class of
shares may be subject to a contingent deferred sales charge and has the same
rights, except with respect to the effect of the respective sales charges, the
distribution fees borne by each class, voting rights on matters affecting a
single class and the exchange privilege of each class.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
a. Security Valuations:
Tax-free bonds generally trade in the over-the-counter market rather than on a
national securities exchange. 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 a 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 Trustees (the Board). Securities for which market quotations are
not available are valued in accordance with procedures established by the Board.
b. Income Taxes:
The Fund intends to continue to qualify for the tax treatment applicable to
regulated investment companies under the Internal Revenue Code and to make the
requisite distributions to its shareholders which will be sufficient to relieve
it from income and excise taxes.
c. Security Transactions:
Security transactions are accounted for on the date the securities are purchased
or sold (trade date). Realized gains and losses on security transactions are
determined on the basis of specific identification.
d. Investment Income, Expenses and Distributions:
Distributions to shareholders are recorded on the ex-dividend date. Interest
income and estimated expenses are accrued daily. Original issue discount and
premium are amortized as required by the Internal Revenue Code.
Realized and unrealized gains or 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.
Net realized capital gains and losses differ for financial statement and tax
purposes primarily due to differing treatment of wash sale transactions.
e. Securities Purchased on a When-Issued Basis or Delayed Delivery Basis:
The Fund may trade securities on a when-issued or delayed delivery basis, with
payment and delivery scheduled for a future date. These transactions are subject
to market fluctuations and are subject to the risk that the value at delivery
may be more or less than the trade date purchase price. Although the Fund will
generally purchase these securities with the intention of holding the
securities, it may sell the securities before the settlement date. These
securities are identified on the accompanying Statement of Investments in
Securities and Net Assets. The Fund has set aside sufficient investment
securities as collateral for these purchase commitments.
f. Accounting Estimates:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
2. DISTRIBUTIONS AND CAPITAL LOSS CARRYOVERS
At May 31, 1997, for tax purposes, the Fund had a capital loss carryover of
$2,873,500 expiring in 2005.
For tax purposes, the aggregate cost of securities is higher (and unrealized
appreciation is lower) than for financial statement purposes at May 31, 1997 by
$1,226,451.
3. CAPITAL STOCK
At May 31, 1997, there were 2,500,000,000 Class I shares and 2,500,000,000 Class
II of $0.01 par value capital stock authorized. Transactions in the Fund's
shares were as follows:
<TABLE>
<CAPTION>
Year Ended May 31,
------------------------------------------------------
1997 1996
------------------------------------------------------
Shares Amount Shares Amount
------------------------------------------------------
Class I Shares:
<S> <C> <C> <C> <C>
Shares sold 32,064,194 $370,632,540 40,645,245 $ 474,291,793
Shares issued in reinvestment of distributions 11,481,161 132,524,371 11,218,379 130,789,081
Shares redeemed (50,892,502)(588,259,939) (43,189,318) (503,461,711)
------------------------------------------------------
Net increase (decrease) (7,347,147)($85,103,028) 8,674,306 $ 101,619,163
======================================================
Year Ended May 31,
------------------------------------------------------
1997 1996
------------------------------------------------------
Shares Amount Shares Amount
------------------------------------------------------
Class II Shares:
<S> <C> <C> <C> <C>
Shares sold 3,577,561 $ 41,341,369 3,404,484 $ 39,730,816
Shares issued in reinvestment of distributions . 159,659 1,843,398 51,428 599,454
Shares redeemed (778,579) (9,002,043) (209,017) (2,419,997)
------------------------------------------------------
Net increase 2,958,641 $ 34,182,724 3,246,895 $ 37,910,273
======================================================
</TABLE>
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding purchases and sales of short-term
securities) for the year ended May 31, 1997, aggregated $530,978,172 and
$587,148,005, respectively.
5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
a. Management Agreement:
Under the terms of a management agreement, Franklin Investment Advisory
Services, Inc. (Investment Advisory), provides investment advice, administrative
services, office space and facilities to the Fund, and receives fees computed
monthly based on the net assets of the Fund on the last day of the month as
follows:
Annualized Fee Rate Month End Net Assets
- -------------------------------------------------------------------------------
0.625% First $100 million
0.50% Over $100 million up to and including $250 million
0.45% Over $250 million up to and including $10 billion
Fees are further reduced on net assets over $10 billion.
Under an agreement with Investment Advisory, Franklin Templeton Services, Inc.
(FT Services) provides administrative services and facilities for the Fund. This
fee is paid by Investment Advisory and computed monthly based on the average
daily net assets. It is not a separate expense of the fund.
b. Shareholder Services Agreement:
Under the terms of a shareholder services agreement with Franklin/Templeton
Investor Services, Inc. (Investor Services), the Fund pays costs on a per
shareholder account basis. Shareholder servicing costs incurred by the Fund for
the year ended May 31, 1997, aggregated $1,399,581, of which $1,329,236 was paid
to Investor Services.
c. Distribution Plans and Underwriting Agreement:
Under the terms of distribution plans pursuant to Rule 12b-1 of the Investment
Company Act of 1940 (the Plans), the Fund reimburses Franklin/Templeton
Distributors, Inc. (Distributors), in an amount up to a maximum of 0.10% per
annum for Class I and 0.65% per annum for Class II, of the average daily net
assets of each class for costs incurred in the promotion, offering and marketing
of the Fund's shares. The Plans do not permit nor require payments of excess
costs after termination. Fees incurred by the Fund under the Plans aggregated
$3,869,317 for the year ended May 31, 1997.
In its capacity as underwriter for the shares of the Fund, Distributors receives
commissions on sales of the Fund's capital stock. Commissions are deducted from
the gross proceeds received from the sale of the capital stock of the Fund, and
as such are not expenses of the Fund. Distributors may also make payments, out
of its own resources, to the dealers for certain sales of the Fund's shares.
Commissions received by Distributors and the amounts paid to other dealers and
any applicable contingent deferred sales charge (CDSC) for the year ended May
31, 1997, amounted to:
Class l Class ll
- ------------------------------------------------------------
Total commissions received
including CDSC ..................... $9,063,742 $465,398
Paid to other dealers ............... $8,701,972 $808,063
CDSC ................................ $-- $ 51,601
d. Other Affiliated Parties and Transactions:
During the year ended May 31, 1997, legal fees of $44,846 were incurred to a law
firm in which Brian E. Lorenz, Secretary of the Fund, is a partner.
Certain officers and trustees of the Fund are also officers and/or directors of
Distributors, Investment Advisory, FT Services and Investor Services, all
wholly-owned subsidiaries of Franklin Resources, Inc.
6. SUBSEQUENT EVENTS
On May 13, 1997 and June 17, 1997, the Board declared distributions per share as
follows:
From
Undistributed
Record PaymentNet Investment
Date Date Income
- --------------------------------------------------------------
Class I 5/30/97 6/13/97 .055
Class II 5/30/97 6/13/97 .0492
Class I 6/30/97 7/15/97 .055
Class II 6/30/97 7/15/97 .0495
7. CREDIT RISK
Although the Fund has a diversified portfolio, substantially all of its
investments are in the securities of issuers in New York, Guam, and Puerto Rico.
Such concentration may subject the Fund more significantly to economic changes
occurring within that state and territories.
8. FINANCIAL HIGHLIGHTS
Selected data for a share of capital stock outstanding throughout the period are
as follows:
<TABLE>
<CAPTION>
Year Ended May 31,
----------------------------------------------------------
1997 1996 1995 1994 1993
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class I Shares:
Per Share Operating Performance
Net asset value at beginning of period $11.46 $11.75 $11.72 $12.07 $11.45
----------------------------------------------------------
Net investment income 0.68 0.70 0.73 0.75 0.77
Net realized and unrealized gain (loss) on securities 0.227 (0.279) 0.056 (0.338) 0.630
----------------------------------------------------------
Total from investment operations 0.907 0.421 0.786 0.412 1.400
----------------------------------------------------------
Less distributions:
From net investment income (0.681) (0.711) (0.756) (0.762) (0.780)
From capital gains (0.026) -- -- -- --
----------------------------------------------------------
Total distributions (0.707) (0.711) (0.756) (0.762) (0.780)
----------------------------------------------------------
Net asset value at end of period $11.66 $11.46 $11.75 $11.72 $12.07
==========================================================
Total Return* 8.16% 3.65% 7.10% 3.18% 12.35%
Ratios/Supplemental Data
Net assets at end of period (in 000's) $4,704,745 $4,709,483 $4,725,056 $4,609,999 $4,339,249
Ratio of expenses to average net assets 0.59% 0.58% 0.57% 0.52% 0.52%
Ratio of net investment income to average net assets 5.87% 5.99% 6.39% 6.19% 6.56%
Portfolio turnover rate 11.18% 28.34% 40.56% 25.67% 12.28%
8. FINANCIAL HIGHLIGHTS (cont.)
Year Ended May 31,
---------------------------------
1997 1996 19951,2
---------------------------------
<S> <C> <C> <C>
Class II Shares:
Per Share Operating Performance
Net asset value at beginning of period $11.45 $11.73 $11.50+
---------------------------------
Net investment income 0.63 0.65 0.05
Net realized and unrealized gain (loss) on securities 0.208 (0.286) 0.243
---------------------------------
Total from investment operations 0.838 0.364 0.293
---------------------------------
Less distributions:
From net investment income (0.612) (0.644) (0.063)
From capital gains (0.026) -- --
---------------------------------
Total distributions (0.638) (0.644) (0.063)
---------------------------------
Net asset value at end of period $11.65 $11.45 $11.73
=================================
Total Return* 7.52% 3.14% 2.56%
Ratios/Supplemental Data
Net assets at end of period (in 000's) $74,195 $39,047 $1,913
Ratio of expenses to average net assets 1.17% 1.16% 1.09%**
Ratio of net investment income to average net assets 5.30% 5.43% 5.32%**
Portfolio turnover rate 11.18% 28.34% 40.56%
</TABLE>
*Total return measures the change in value of an investment over the periods
indicated. It is not annualized. It does not include the maximum front-end sales
charge or the contingent deferred sales charges, and assumes reinvestment of
dividends and capital gains at net asset value. Prior to May 1, 1994, dividends
were reinvested at the maximum offering price, and capital gains at net asset
value. Effective May 1, 1994, with the implementation of the Rule 12b-1
distribution plan for Class I shares, the sales charge on reinvested dividends
was eliminated.
**Annualized
+The Fund paid a dividend to shareholders of record on the beginning of
business, May 1, 1995 in the amount of $0.063 per share. The net asset value per
share at beginning of period includes this dividend.
1Per share amounts have been calculated using the daily average shares
outstanding during the period.
2For the period May 1, 1995 (effective date) to May 31, 1995.
The Fund hereby designates 100% of the distributions paid from net investment
income for the taxable year ended May 31, 1997, as exempt-interest dividends per
Section 852(b)(5) of the Internal Revenue Code.
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Report of Independent Accountants
To the Shareholders and Board of Trustees of
Franklin New York Tax-Free Income Fund:
We have audited the accompanying statement of assets and liabilities of the
Franklin New York Tax-Free Income Fund (the Fund), including the Fund's
statement of investments in securities and net assets, as of May 31, 1997, and
the related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the periods presented. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of May
31, 1997, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Fund as of May 31, 1997, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for the periods presented, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
San Francisco, California
July 8, 1997
Franklin New York Tax-Free Income Fund Annual Report May 31, 1997.
APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING (PURSUANT TO ITEM
304 (a)OF REGULATION S-T)
GRAPHIC MATERIAL (1)
This line graph illustrates the volatility of the funds' Class I net asset
value share price in comparison to the volatility of the Merrill Lynch (New
York) Municipal Index from 6/3/96 to 5/31/97.
Period Ending Fund Index
6/3/96 100.00 100
6/30/96 100.96 100.76
7/31/96 101.31 101.12
8/31/96 100.79 100.55
9/30/96 101.75 101.39
10/31/96 102.19 101.73
11/30/96 103.16 102.71
12/31/96 102.19 102.00
1/31/97 101.93 101.23
2/28/97 102.28 101.84
3/31/97 100.88 99.74
4/30/97 101.14 100.55
5/31/97 102.19 102.00
GRAPHIC MATERIAL (2)
This chart shows in pie format the asset allocation of the fund's securities
on May 31, 1997, based on total long-term investments.
AAA 26.3%
AA 16.0%
A 11.3%
BBB 44.5%
Below Investment Grade 1.9%
GRAPHIC MATERIAL (3)
This chart shows in bar format the percentage of insured vs. non-insured New
York municipal bonds issued: 32% vs 68% (1995); 33% vs 67% (1996); 46% vs
54% (1997 -- as of 3/31/97).
GRAPHIC MATERIAL (4)
This bar chart shows the comparison between the fund's Class I distribution
rate of 5.42%, the taxable equivalent distribution rate (New York State
residents)of 9.63%, and the taxable equivalent distribution rate (New York
City residents) of 10.00%.
GRAPHIC MATERIAL (5)
The following line graph hypothetically compares the performance of the
Franklin New York Tax-Free Income Fund Class I Shares to that of the Lehman
Brothers Municipal Bond Index and the Consumer Price Index (CPI), based on a
$10,000 investment from 6/1/87 to 5/31/97.
Period Ending NY Tax-Free LBMuni CPI
6/1/87 9,572 10,000 10,000
6/30/87 9,745 10,294 10,035
7/31/87 9,847 10,399 10,061
8/31/87 9,925 10,422 10,114
9/30/87 9,360 10,037 10,167
10/31/87 9,397 10,072 10,193
11/30/87 9,698 10,335 10,203
12/31/87 9,868 10,485 10,203
1/31/88 10,278 10,858 10,229
2/29/88 10,441 10,974 10,256
3/31/88 10,209 10,846 10,300
4/30/88 10,257 10,929 10,353
5/31/88 10,306 10,897 10,389
6/30/88 10,503 11,056 10,433
7/31/88 10,543 11,128 10,477
8/31/88 10,612 11,138 10,521
9/30/88 10,833 11,340 10,592
10/31/88 11,066 11,539 10,627
11/30/88 10,960 11,433 10,635
12/31/88 11,089 11,550 10,653
1/31/89 11,260 11,789 10,706
2/28/89 11,183 11,654 10,750
3/31/89 11,179 11,626 10,813
4/30/89 11,437 11,902 10,883
5/31/89 11,676 12,149 10,945
6/30/89 11,821 12,315 10,971
7/31/89 11,933 12,482 10,998
8/31/89 11,886 12,360 11,015
9/30/89 11,828 12,323 11,050
10/31/89 11,888 12,473 11,103
11/30/89 12,048 12,691 11,130
12/31/89 12,154 12,795 11,148
1/31/90 12,072 12,735 11,263
2/28/90 12,234 12,849 11,316
3/31/90 12,196 12,852 11,378
4/30/90 12,135 12,760 11,396
5/31/90 12,324 13,038 11,422
6/30/90 12,468 13,153 11,484
7/31/90 12,670 13,348 11,528
8/31/90 12,526 13,154 11,634
9/30/90 12,487 13,162 11,731
10/31/90 12,540 13,400 11,802
11/30/90 12,759 13,669 11,828
12/31/90 12,731 13,730 11,828
1/31/91 12,917 13,914 11,899
2/28/91 13,033 14,035 11,917
3/31/91 13,125 14,040 11,934
4/30/91 13,292 14,228 11,952
5/31/91 13,373 14,355 11,988
6/30/91 13,444 14,341 12,023
7/31/91 13,650 14,516 12,041
8/31/91 13,845 14,707 12,076
9/30/91 14,104 14,898 12,129
10/31/91 14,214 15,032 12,147
11/30/91 14,299 15,075 12,182
12/31/91 14,461 15,399 12,191
1/31/92 14,457 15,434 12,209
2/29/92 14,475 15,439 12,253
3/31/92 14,597 15,445 12,316
4/30/92 14,797 15,582 12,333
5/31/92 15,027 15,766 12,350
6/30/92 15,298 16,031 12,395
7/31/92 15,795 16,512 12,421
8/31/92 15,641 16,350 12,456
9/30/92 15,715 16,456 12,490
10/31/92 15,479 16,295 12,534
11/30/92 15,851 16,587 12,552
12/31/92 16,063 16,756 12,543
1/31/93 16,275 16,950 12,604
2/28/93 16,696 17,564 12,648
3/31/93 16,633 17,378 12,693
4/30/93 16,724 17,553 12,728
5/31/93 16,927 17,652 12,746
6/30/93 17,202 17,946 12,764
7/31/93 17,209 17,970 12,764
8/31/93 17,529 18,344 12,800
9/30/93 17,720 18,553 12,827
10/31/93 17,753 18,588 12,879
11/30/93 17,613 18,424 12,888
12/31/93 17,981 18,813 12,888
1/31/94 18,146 19,028 12,923
2/28/94 17,827 18,535 12,967
3/31/94 17,316 17,780 13,011
4/30/94 17,351 17,932 13,029
5/31/94 17,505 18,088 13,038
6/30/94 17,464 17,977 13,083
7/31/94 17,695 18,306 13,118
8/31/94 17,790 18,370 13,170
9/30/94 17,581 18,100 13,206
10/31/94 17,325 17,778 13,215
11/30/94 16,930 17,456 13,232
12/31/94 17,337 17,840 13,232
1/31/95 17,700 18,351 13,285
2/28/95 18,082 18,885 13,338
3/31/95 18,212 19,102 13,382
4/30/95 18,249 19,125 13,427
5/31/95 18,748 19,735 13,454
6/30/95 18,593 19,563 13,480
7/31/95 18,694 19,749 13,480
8/31/95 18,894 20,000 13,515
9/30/95 18,988 20,126 13,542
10/31/95 19,263 20,418 13,587
11/30/95 19,539 20,756 13,578
12/31/95 19,701 20,956 13,568
1/31/96 19,781 21,115 13,648
2/29/96 19,611 20,971 13,692
3/31/96 19,456 20,703 13,763
4/30/96 19,419 20,645 13,817
5/31/96 19,432 20,637 13,843
6/30/96 19,633 20,862 13,851
7/31/96 19,801 21,052 13,878
8/31/96 19,797 21,047 13,904
9/30/96 20,086 21,342 13,948
10/31/96 20,272 21,583 13,993
11/30/96 20,564 21,978 14,020
12/31/96 20,516 21,886 14,020
1/31/97 20,564 21,927 14,065
2/28/97 20,737 22,129 14,108
3/31/97 20,549 21,835 14,143
4/30/97 20,702 22,018 14,162
5/31/97 21,017 22,348 14,153
Total Return 110.17% 123.48% 41.53%
GRAPHIC MATERIAL (6)
This bar chart shows the comparison between the fund's Class II distribution
rate of 5.01%, the taxable equivalent distribution rate (New York State
residents)of 8.90%, and the taxable equivalent distribution rate (New York
City residents) of 9.24%.
GRAPHIC MATERIAL (7)
The following line graph hypothetically compares the performance of the
Franklin New York Tax-Free Income Fund Class II Shares to that of the Lehman
Brothers Municipal Bond Index and the Consumer Price Index (CPI), based on a
$10,000 investment from 5/1/95 to 5/31/97.
Period Ending NY Tax-Free LBMuni CPI
5/1/95 9,896 $10,000 $10,000
5/30/95 10,147 10,319 10,020
6/30/95 10,066 10,229 10,040
7/31/95 10,125 10,326 10,040
8/31/95 10,219 10,458 10,066
9/30/95 10,273 10,523 10,086
10/31/95 10,408 10,676 10,120
11/30/95 10,561 10,853 10,112
12/31/95 10,634 10,957 10,105
1/31/96 10,672 11,041 10,165
2/29/96 10,583 10,966 10,198
3/31/96 10,485 10,825 10,251
4/30/96 10,460 10,795 10,291
5/31/96 10,466 10,791 10,310
6/30/96 10,578 10,908 10,316
7/31/96 10,654 11,008 10,336
8/31/96 10,647 11,005 10,356
9/30/96 10,797 11,159 10,389
10/31/96 10,892 11,286 10,422
11/30/96 11,043 11,492 10,442
12/31/96 11,013 11,444 10,442
1/31/97 11,033 11,466 10,475
2/28/97 11,120 11,571 10,508
3/31/97 11,013 11,417 10,534
4/30/97 11,099 11,513 10,548
5/31/97 11,253 11,686 10,541
12.53% 16.86% 5.41%
