ANNUAL REPORT
May 31, 1998
FRANKLIN NEW YORK TAX-FREE INCOME FUND
CONTENTS
Shareholder Letter .................................................... 1
Manager's Discussion .................................................. 3
Performance Summary
Class I .............................................................. 6
Class II ............................................................. 9
Bond Ratings .......................................................... 12
Financial Highlights &
Statement of Investments .............................................. 14
Financial Statements .................................................. 25
Notes to
Financial Statements .................................................. 28
Independent
Auditor's Report ...................................................... 30
SHAREHOLDER LETTER
Dear Shareholder:
It's a pleasure to bring you Franklin New York Tax-Free Income Fund's annual
report for the period ended May 31, 1998.
The U.S. economy remained strong over the fund's reporting period as measured by
1998's first quarter, annualized Gross Domestic Product gain of 5.4%. The
reporting period closed with President Clinton's prediction of a $39 billion
federal budget surplus for the government's fiscal year-end on September 30,
1998. This would be the first annual surplus since the government finished $3.2
billion ahead in 1969. During the fund's fiscal year, economic growth benefited
employment without triggering significant inflation. April's figure of 4.3%
marked a 28-year low in the nation's unemployment rate; in May, commodity prices
fell to their lowest levels since the early 1990s.
Over the year, interest rates declined. However, for the first quarter of 1998,
the combination of a strong economy and low inflation kept interest rates in a
narrow range. The healthy economy prevented significant rate decline, while low
inflation prevented rates from rising. The yield for the 30-year U.S. Treasury
bond stood at 5.81% on May 31, 1998, compared with 6.92% a year earlier.
Although lagging the national recovery, New York state's financial performance
has improved over the past several fiscal years as a result of a rebounding
economy, realistic budgeting and more stringent spending controls. Since the
early 1990s' recession, the greatest job growth took place in the state's
services sector, which accounts for one-third of total employment. In recent
years, New York's overall economic prosperity has increasingly depended on the
finance, insurance and real estate sectors.#1
1. Standard & Poor's Credit Week Municipal. December 1, 1997.
For the state's fiscal year ended March 31, 1998, comptroller H. Carl McCall put
the budget surplus at $2.17 billion. He attributed much of it to the "boom on
Wall Street." New York City comptroller Alan G. Hevesi also announced a record
$2.14 billion budget surplus for the city's fiscal year ending in June 1998.2#
What New York decides to do with this year's surplus, in light of an accumulated
budget deficit larger than that of most other states, will most likely affect
future ratings.
Anticipation of the state budget surplus was a contributing factor in Moody's
Investors Service's credit rating upgrade in February of this year. Moody's
upgraded New York City general obligation debt from Baa1 to A3, while Standard &
Poor's(R), which rates the debt BBB+, put it on credit watch for a possible
upgrade. Fitch IBCA currently rates the state's credit A-. (For definitions of
bond ratings, please see page 12.)
Our investment philosophy remains disciplined and focused, as we strive to offer
our shareholders high tax-free income and preservation of principal. Looking
forward, the recent economic environment should be beneficial for municipalities
and municipal bonds.
We encourage you to discuss your financial goals with an investment
representative. He or she can address concerns about volatility and help you
diversify your investments and stay focused on the long term. Mutual funds offer
a level of diversification that is almost impossible for individual investors to
achieve on their own. Municipal bonds continue to be an attractive investment
for diversifying a heavily weighted stock portfolio. As always, we appreciate
your support, welcome your questions and comments, and look forward to serving
your investment needs in the years ahead.
Sincerely,
Charles B. Johnson
President
Franklin New York Tax-Free Income Fund
Thomas J. Kenny
Director
Franklin Municipal Bond Department
2. Bond Buyer; April 4, 1998 & May 22, 1998.
MANAGER'S DISCUSSION
Your Fund's Objective: Franklin New York Tax-Free Income Fund 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.
During the fund's fiscal year ended May 31, 1998, municipal bond prices moved
generally higher as interest rates declined. The accompanying graph plots the
Bond Buyer 40 and U.S. Treasury bonds' yields-to-maturity. Both topped out in
mid-April 1997, and declined somewhat erratically to their lows in mid-January
of this year.
As yields went down, the value of the New York Tax-Free Income Fund's bonds went
up, as reflected in the fund's share value. In mid-April of 1997, just prior to
the beginning of the fund's fiscal year, its share value was $11.43, as measured
by net asset value (NAV). By mid-January of this year, it had risen just over 6%
to $12.12. Around that time, the problems with a number of Asian economies came
into clearer focus and caused uncertainties in most financial markets. Several
modest sell-offs and recoveries have taken place since then in the municipal
bond market, which, near the end of the reporting period, appeared to be moving
back toward the January high. In this relatively strong interest-rate
environment, issuers continued to prerefund higher coupon bonds. This is done by
bringing to market a new issue with a lower interest rate, to pay off the older
issue at its first call date. The proceeds from the bonds are invested in U.S.
Treasury securities that mature on the first call date of the original bonds.
Generally, we look to sell prerefunded bonds as they approach five years to
their call dates. At this point, the premium on prerefunded bonds usually begins
to decline to its stated call price. By capturing the premium and reinvesting
the proceeds in current coupon bonds, we are able to extend a portion of the
income that would otherwise be lost at the call date.
GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT
On May 31, 1997, the end of our prior fiscal year, prerefunded bonds represented
14.1% of the fund value at par value, and over 15% at market value. This was
near the normal range of prerefunded bonds for Franklin New York Tax-Free Income
Fund. During fiscal 1998, despite selling over $560 million worth of prerefunded
bonds at par value, worth $615 million at market value, we ended the period with
prerefunded bonds representing about 23% of the portfolio at par value and about
25.5% at market value. We will continue our attempts to reduce this percentage,
investing sale proceeds in long-term securities that are attractive for the
portfolio, whenever they become available.
Back in late May 1997 and early in the current fiscal year, we purchased a
substantial number of New York City general obligation (GO) bonds, with 6% or
slightly higher yields, in an effort to bring this position close to 5% of the
fund's total net asset value.
It is worth noting that the market on long-term New York City GO bonds ended the
reporting period trading at 5.30% yield. This falling yield reflects the rising
value of the securities in our portfolio. The considerable move over the fund's
fiscal year, from approximately 6% to 5.30% yield, makes these bonds among the
best performers in the New York state municipal bond marketplace, demonstrating
many investors' enhanced perception of the City's credit.
As of May 31, 1998, nearly 72.3% of the total portfolio showed holdings rated A
or better. The fund's quality emphasis is further demonstrated by the
accompanying credit-quality breakdown pie chart.
With the U.S. dollar remaining strong and inflation low, we believe that the
fund will continue to provide an attractive investment vehicle for New York
state and City residents, who are looking for tax-free income and preservation
of capital.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of May 31, 1998, the end of the reporting period. However, market
and economic conditions are changing constantly, which can be expected to affect
our strategies and the fund's portfolio composition. Although historic
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy.
GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT
GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT
The Bond Buyer 40 covers the municipal bond market and is published daily by the
"Bond Buyer" newspaper. The index comprises 40 actively traded general
obligation and revenue issues from around the country, rated
A or better, with at least 19 years remaining to maturity, a first call date
between 7 and 16 years, and at least one call at par before redemption.*
*Barron's Dictionary of Finance and Investment Terms, 1995.
Bond Quotes:
Par is equal to the nominal or face value of a security.
A bond selling at par, for instance, is worth the same dollar amount for which
it was issued, or at which it will be redeemed at maturity -- typically $1000
per bond. A bond trading at 102 is redeemable at 102% of its face value or
$1020, for a $1000 bond.
GRAPHIC MATERIAL 4 OMITTED - SEE APPENDIX AT END OF DOCUMENT
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 15 of
this report.
PERFORMANCE SUMMARY
Class I
Franklin New York Tax-Free Income Fund - Class I share price, as measured by net
asset value, increased 42 cents, from $11.66 on May 31, 1997, to $12.08 on May
31, 1998. In addition to distributing 66 cents ($0.66) per share in dividend
income, the fund made a long-term capital gain distribution of 3.53 cents
($0.0353) per share during the 12-month reporting period. Distributions will
vary based on the earnings of the fund's portfolio and any profits realized from
the sale of securities in the fund's portfolio. Past distributions are not
predictive of future trends.
Based on an annualization of May's monthly per-share dividend of 5.5 cents
($0.055) and the maximum offering price of $12.62 on May 31, 1998, your fund's
distribution rate was 5.23%. This tax-free rate is generally higher than the
after-tax return on a comparable taxable investment. As the chart to the left
illustrates, an investor in the maximum combined federal, New York state and New
York City personal income tax bracket would need to earn 9.76% 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 9.30% from a taxable investment to match the fund's tax-free
distribution rate.
The chart on page 8 compares your fund's Class I shares' performance with that
of the unmanaged Lehman Brothers Municipal Bond Index. The index includes over
40,000 municipal securities from across the country, while your fund consists
primarily of New York municipal bonds. Of course, such market indices have
inherent performance differentials over any fund. They do not pay management
fees to cover salaries of securities analysts or portfolio managers, or pay
commissions or market spreads to buy and sell securities. Unlike an index,
mutual funds are never 100% invested because they need cash on hand to redeem
shares. In addition, the performance shown for the fund includes the maximum
initial sales charge, all fund expenses and account fees. If operating expenses
such as Franklin New York Tax-Free Income 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 in it directly.
Your fund's shares' performance also has exceeded the rate of inflation, as
measured by the Consumer Price Index (CPI), keeping your purchasing power well
ahead of inflation -- a primary goal of any investment.
GRAPHIC MATERIAL 5 OMITTED - SEE APPENDIX AT END OF DOCUMENT
GRAPHIC MATERIAL 6 OMITTED - SEE APPENDIX AT END OF DOCUMENT
The historical performance data shown pertains only to the fund's Class I
shares. The fund offers another share class subject to different fees and
expenses, which affect its performance. Please see the prospectus for more
details.
*Includes the sales charge and represents the change in value of an investment
over the periods shown. Total return assumes reinvestment of dividends and
capital gains at net asset value. Index is unmanaged and includes reinvested
dividends. One cannot invest directly in an index.
**Source: Standard and Poor's Micropal.
Class I
Periods ended 5/31/98
Since
Inception
1-Year 5-Year 10-Year (9/13/82)
Cumulative Total Return1 9.83% 36.37% 123.98% 295.29%
Average Annual Total Return2 5.14% 5.47% 7.93% 8.84%
Distribution Rate3 5.23%
Taxable Equivalent Distribution Rate4 9.76%
30-Day Standardized Yield5 4.48%
Taxable Equivalent Yield4 8.36%
1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the current, maximum 4.25%
initial sales charge.
3. Distribution rate is based on an annualization of May's 5.5 cent per share
monthly dividend and the maximum offering price of $12.62 on May 31, 1998.
4. Taxable equivalent distribution rate and yield assume the 1998 maximum
combined federal, New York state and New York City personal income tax bracket
of 46.43%, 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, 1998.
Prior to July 1, 1994, fund shares were offered at a lower initial sales charge
with dividends reinvested at the offering price. Thus, actual total returns
would differ. Effective May 1, 1994, the fund eliminated the sales charge on
reinvested dividends and implemented a Rule 12b-1 plan, which affects subsequent
performance.
All total return calculations assume reinvestment of dividends and capital gains
at net asset value. Since markets can go down as well as up, investment return
and principal value will fluctuate with market conditions, and you may have a
gain or loss when you sell your shares.
Franklin New York Tax-Free Income Fund - Class I paid distributions derived from
long-term capital gains of 3.53 cents ($0.0353) in December 1997. The fund
hereby designates such distributions as capital gain dividends per Section
852(b)(3) of the Internal Revenue Code.
GRAPHIC MATERIAL 7 OMITTED - SEE APPENDIX AT END OF DOCUMENT
GRAPHIC MATERIAL 8 OMITTED - SEE APPENDIX AT END OF DOCUMENT
GRAPHIC MATERIAL 9 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Class II
Franklin New York Tax-Free Income Fund - Class II share price, as measured by
net asset value, increased 42 cents, from $11.65 on May 31, 1997, to $12.07 on
May 31, 1998. In addition to distributing 59.08 cents ($0.5908) per share in
dividend income, the fund made a long-term capital gain distribution of 3.53
cents ($0.0353) per share during the 12-month reporting period. Distributions
will vary based on the earnings of the fund's portfolio and any profits realized
from the sale of securities in the fund's portfolio. Past distributions are not
predictive of future trends.
Based on an annualization of May's monthly per-share dividend of 4.91 cents
($0.0491) and the maximum offering price of $12.19 on May 31, 1998, your fund's
distribution rate was 4.83%. This tax-free rate is generally higher than the
after-tax return on a comparable taxable investment. As the chart to the right
illustrates, an investor in the maximum combined federal, New York state and New
York City personal income tax bracket would need to earn 9.02% 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 8.58% from a taxable investment to match the fund's tax-free
distribution rate.
The chart on page 11 compares your fund's Class II shares' performance with that
of the unmanaged Lehman Brothers Municipal Bond Index. The index includes over
40,000 municipal securities from across the country, while your fund consists
primarily of New York municipal bonds. Of course, such market indices have
inherent performance differentials over any fund. They do not pay management
fees to cover salaries of securities analysts or portfolio managers, nor do they
pay commissions to buy and sell securities. Unlike an index, mutual funds are
never 100% invested because they need cash on hand to redeem shares. In
addition, the performance shown for the fund includes the sales charges, all
fund expenses and account fees. If operating expenses such as Franklin New York
Tax-Free Income 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 in it directly.
Your fund's shares' performance also has exceeded the rate of inflation, as
measured by the Consumer Price Index (CPI), keeping your purchasing power well
ahead of inflation -- a primary goal of any investment.
The historical performance data shown pertains only to the fund's Class II
shares. The fund offers another share class subject to different fees and
expenses, which affect its performance. Please see the prospectus for more
details.
*Includes the sales charges and represents the change in value of an investment
over the period shown. Total return assumes reinvestment of dividends and
capital gains at net asset value. The total value on 5/31/98 reflects the
contingent deferred sales charge (CDSC), assuming the account is liquidated on
that date. Purchasers who remain in the account for longer than 18 months will
not be assessed the CDSC; thus total return may be higher. Index is unmanaged
and includes reinvested dividends. One cannot invest directly in an index.
**Source: Standard and Poor's Micropal.
Class II
Periods ended 5/31/98
Since
Inception
1-Year 3-Year (5/1/95)
Cumulative Total Return1 9.20% 21.10% 24.17%
Average Annual Total Return2 7.10% 6.23% 6.91%
Distribution Rate3 4.83%
Taxable Equivalent Distribution Rate4 9.02%
30-Day Standardized Yield5 4.07%
Taxable Equivalent Yield4 7.60%
1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the 1.0% initial sales
charge and 1.0% contingent deferred sales charge (CDSC), applicable to shares
redeemed within 18 months of investment.
3. Distribution rate is based on an annualization of May's 4.91 cent per share
monthly dividend and the maximum offering price of $12.19 on May 31, 1998.
4. Taxable equivalent distribution rate and yield assume the 1998 maximum
combined federal, New York state and New York City personal income tax bracket
of 46.43%, 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, 1998.
All total return calculations assume reinvestment of dividends and capital gains
at net asset value. Since markets can go down as well as up, investment return
and principal value will fluctuate with market conditions, and you may have a
gain or loss when you sell your shares.
Franklin New York Tax-Free Income Fund - Class II paid distributions derived
from long-term capital gains of 3.53 cents ($0.0353) in December 1997. The fund
hereby designates such distributions as capital gain dividends per Section
852(b)(3) of the Internal Revenue Code.
Past performance is not predictive of future results.
MUNICIPAL BOND RATINGS
Moody's
Aaa: Best quality. They carry the smallest degree of investment risk and
generally are referred to as "gilt-edged." Interest payments are protected by a
large or exceptionally stable margin, and principal is secure. Although the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
Aa: High quality by all standards. Together with the Aaa group, they comprise
what generally are known as high-grade bonds. Aa bonds are rated lower than Aaa
because margins of protection may not be as large, fluctuation of protective
elements may be of greater amplitude, or there may be other elements which make
the long-term risks appear larger.
A: Possess many favorable investment attributes and are considered upper
medium-grade obligations. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a susceptibility
to impairment sometime in the future.
Baa: Medium-grade obligations, i.e., they are neither highly protected nor
poorly secured. Interest payments and principal security appear adequate for the
present, but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time.
Ba: Contain speculative elements. Often the protection of interest and principal
payments may be very moderate and, thereby, not well safeguarded during both
good and bad times over the future. Uncertainty of position characterizes bonds
in this class.
B: Generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the contract
over any long period of time may be small.
Caa: Poor standing. Such issues may be in default, or elements of danger with
respect to principal or interest may be present.
Ca: Obligations that are highly speculative. Such issues are often in default or
have other marked shortcomings.
C: Lowest-rated class of bonds. Issues rated C can be regarded as having
extremely poor prospects of ever attaining any real investment standing.
S&P(R)
AAA: The highest rating assigned by S&P to a debt obligation and indicates the
ultimate degree of protection as to principal and interest.
AA: Also qualify as high-grade obligations, and, in the majority of instances,
differ from AAA issues only in a small degree.
A: Generally regarded as upper medium-grade. They have considerable investment
strength but are not entirely free from adverse effects of changes in economic
and trade conditions. Interest and principal are regarded as safe.
BBB: Regarded as having an adequate capacity to pay principal and interest.
Whereas they normally exhibit adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity to pay principal and interest for bonds in this category than for bonds
in the A category.
BB, B, CCC, CC: Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligations. BB
indicates the lowest degree of speculation and CC the highest degree of
speculation. While such bonds likely will have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
C: Reserved for income bonds on which no interest is being paid.
D: Debt rated "D" is in default and payment of interest and/or repayment of
principal is in arrears.
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Financial Highlights
<TABLE>
<CAPTION>
Year Ended May 31,
-------------------------------------------------------------
Class I 1998 1997 1996 19951,2 1994
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year..................... $11.66 $11.46 $11.75 $11.72 $12.07
-------------------------------------------------------------
Income from investment operations:
Net investment income................................. .66 .68 .70 .73 .75
Net realized and unrealized gains (losses)............ .45 .23 (.28) .06 (.34)
-------------------------------------------------------------
Total from investment operations....................... 1.11 .91 .42 .79 .41
-------------------------------------------------------------
Less distributions from:
Net investment income................................. (.66) (.68) (.71) (.76) (.76)
Net realized gains.................................... (.03) (.03) -- -- --
-------------------------------------------------------------
Total distributions.................................... (.69) (.71) (.71) (.76) (.76)
-------------------------------------------------------------
Net asset value, end of year........................... $12.08 $11.66 $11.46 $11.75 $11.72
=============================================================
Total return*.......................................... 9.83% 8.16% 3.65% 7.10% 3.18%
Ratios/supplemental data
Net assets, end of year (000's)........................ $4,824,135 $4,704,745 $4,709,483 $4,725,056 $4,609,999
Ratios to average net assets:
Expenses.............................................. .58% .59% .58% .57% .52%
Net investment income................................. 5.57% 5.87% 5.99% 6.39% 6.19%
Portfolio turnover rate................................ 18.51% 11.18% 28.34% 40.56% 25.67%
Class II
<S> <C> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year..................... $11.65 $11.45 $11.73 $11.50
-------------------------------------------------
Income from investment operations:
Net investment income................................. .59 .63 .65 .05
Net realized and unrealized gains (losses)............ .45 .21 (.29) .24
-------------------------------------------------
Total from investment operations....................... 1.04 .84 .36 .29
-------------------------------------------------
Less distributions from:
Net investment income................................. (.59) (.61) (.64) (.06)
Net realized gains.................................... (.03) (.03) -- --
-------------------------------------------------
Total distributions.................................... (.62) (.64) (.64) (.06)
-------------------------------------------------
Net asset value, end of year........................... $12.07 $11.65 $11.45 $11.73
=================================================
Total return*.......................................... 9.20% 7.52% 3.14% 2.56%
Ratios/supplemental data
Net assets, end of year (000's)........................ $108,686 $74,195 $39,047 $1,913
Ratios to average net assets:
Expenses.............................................. 1.16% 1.17% 1.16% 1.09%**
Net investment income................................. 4.98% 5.30% 5.43% 5.32%**
Portfolio turnover rate................................ 18.51% 11.18% 28.34% 40.56%
</TABLE>
*Total return does not reflect sales commission or the contingent deferred sales
charge, and is not annualized. Prior to May 1, 1994, dividends from net
investment income were reinvested at the offering price.
**Annualized.
1Per share amounts have been calculated using the daily average shares
outstanding during the period for Class II.
2For the period May 1, 1995 (effective date) to May 31, 1995, the fund paid a
dividend to shareholders of record on the beginning of business, May 1,1995 in
the amount of $.06 per share for Class II. The net asset value per share at the
beginning of period includes this dividend.
See notes to financial statements.
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Statement of Investments, May 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
Long Term Investments 98.3%
Bonds 96.4%
Albany Housing Authority, Limited Obligation, Refunding, 6.25%, 10/01/12........................ $ 5,250,000 $ 5,687,430
Albany Parking Authority Revenue, Refunding, Series A, 6.85%, 11/01/12 ......................... 1,610,000 1,749,523
Auburn, IDA, MFR, Auburn Memorial Home, 6.50%, 2/01/34.......................................... 5,885,000 6,304,659
Babylon IDA, Waste Facilities Revenue, Community Waste Management,
Series A, Pre-Refunded, 7.875%, 7/01/06......................................................... 10,750,000 11,411,878
Batavia Housing Authority Mortgage Revenue, Refunding,
Washington Towers, Series A, 6.50%, 1/01/23..................................................... 1,000,000 1,049,180
Battery Park City Authority Revenue, Refunding, Series A, 5.80%, 11/01/22 ...................... 68,795,000 71,302,578
Bethany Retirement Home, Inc., Mortgage Loan Revenue, 7.50%, 2/01/34............................ 8,160,000 9,482,246
Cattaraugus County COP, Olean Project Facility, Series A, Pre-Refunded, 8.50%, 8/01/09.......... 1,440,000 1,479,514
Clinton County COP, Correctional Facilities Project, 8.125%, 8/01/17............................ 5,375,000 7,047,915
Cortland County IDA, Civic Facilities Revenue,
Cortland Memorial Hospital, Inc. Project, 6.25%, 7/01/24 ...................................... 6,400,000 6,631,424
Franklin County COP, Court House Redevelopment Project, 8.125%, 8/01/06......................... 4,915,000 5,430,387
Franklin County IDA, Lease Revenue, County
Correctional Facilities Project, 6.75%, 11/01/12 .............................................. 4,790,000 5,159,309
Guam Power Authority Revenue, Series A,
6.30%, 10/01/12.............................................................................. 5,075,000 5,400,206
6.625%, 10/01/14............................................................................. 2,900,000 3,205,109
6.30%, 10/01/22.............................................................................. 45,340,000 48,136,118
6.50%, 10/01/23.............................................................................. 5,385,000 5,843,640
6.75%, 10/01/24.............................................................................. 25,500,000 28,265,985
Hamilton Elderly Housing Corp. Mortgage Revenue,
Hamilton Apartments Project, 11.25%, 1/01/15 ................................................... 1,315,000 1,367,995
Ilion Elderly Housing Corp. Mortgage Revenue, Section 8,
Housing Assistance Revenue, 7.25%, 7/01/09...................................................... 1,915,000 1,915,421
Long Island Power Authority Electric System Revenue,
Series A, 5.25%, 12/01/26 ................................................................... 9,515,000 9,403,960
bSeries A, 5.50%, 12/01/29 .................................................................. 19,325,000 19,527,913
Metropolitan Transportation Authority, Commuter Facilities Revenue,
Series 8, 5.50%, 7/01/21 .................................................................... 5,000,000 5,066,000
Series A, 5.625%, 7/01/27 ................................................................... 8,000,000 8,386,240
Series A, 5.25%, 7/01/28..................................................................... 17,300,000 17,016,453
Series A, Pre-Refunded, 6.50%, 7/01/24 ...................................................... 35,620,000 40,285,151
Series R, 5.50%, 7/01/17 .................................................................... 2,000,000 2,033,460
Metropolitan Transportation Authority, Dedicated Tax Fund, Series A,
MBIA Insured, 5.25%, 4/01/26 ................................................................... 3,000,000 3,024,420
Metropolitan Transportation Authority, Service Contract Revenue,
Commuter Facilities, Series 5, 7.00%, 7/01/12 ............................................... 31,605,000 34,382,763
Refunding, Commuter Facilities, Series 5, 6.50%, 7/01/16..................................... 17,470,000 18,456,706
Refunding, Commuter Facilities, Series 5, 6.00%, 7/01/18..................................... 2,740,000 2,802,225
Refunding, Commuter Facilities, Series N, 7.125%, 7/01/09.................................... 24,160,000 26,595,811
Refunding, Transit Facilities, Series 5, 7.00%, 7/01/12...................................... 30,935,000 33,653,877
Refunding, Transit Facilities, Series 5, 6.50%, 7/01/16...................................... 40,495,000 42,782,158
Refunding, Transit Facilities, Series 5, 6.00%, 7/01/18...................................... 7,725,000 7,900,435
Refunding, Transit Facilities, Series N, 7.125%, 7/01/09..................................... 12,625,000 13,897,853
Transit Facilities, Series 6, Pre-Refunded, 7.00%, 7/01/09 .................................. 2,000,000 2,207,440
Metropolitan Transportation Authority, Transit Facilities Revenue,
Refunding, Service Contract,
Series 8, 5.25%, 7/01/17 .................................................................... 3,750,000 3,723,038
Series 8, 5.375%, 7/01/21 ................................................................... 12,375,000 12,410,269
Metropolitan Transportation Authority, Transit Facilities Revenue,
Series A, FSA Insured,
6.10%, 7/01/21............................................................................... 16,940,000 18,522,874
5.50%, 7/01/22............................................................................... 6,480,000 6,554,714
5.625%, 7/01/25.............................................................................. 18,725,000 20,474,664
6.10%, 7/01/26............................................................................... 8,000,000 8,386,240
5.625%,7/01/27 .............................................................................. 14,440,000 14,755,803
Monroe County IDA Revenue, Civic Facilities,
De Paul Community Facilities, 6.50%, 2/01/24 .................................................. 1,285,000 1,411,701
New Rochelle Municipal Housing Revenue
Authority Mortgage, Series A, 5.55%, 12/01/14 ................................................. 6,090,000 6,116,979
New York City GO,
Refunding, Series F, 5.375%, 8/01/19 ........................................................ 5,000,000 5,040,550
Refunding, Series F, 5.875%, 8/01/24 ........................................................ 7,000,000 7,408,380
Series 1992, Rite 1, 7.00%, 10/01/11 ........................................................ 12,750,000 14,158,110
Series A, 6.25%, 8/01/17..................................................................... 2,675,000 2,930,971
Series A, Pre-Refunded, 7.75%, 8/15/13....................................................... 2,000,000 2,248,124
Series A, Pre-Refunded, 7.75%, 8/15/14....................................................... $ 10,000,000 $ 11,238,148
Series A, Pre-Refunded, 7.75%, 8/15/15 ...................................................... 1,400,000 1,574,594
Series A-1, 6.625%, 8/01/25.................................................................. 13,360,000 14,848,170
Series A-1, Pre-Refunded, 6.625%, 8/01/25.................................................... 3,640,000 4,183,416
Series B, 7.75%, 2/01/10 .................................................................... 2,000,000 2,243,900
Series B, 7.75%, 2/01/11 .................................................................... 1,575,000 1,767,071
Series B, 7.00%, 6/01/13 .................................................................... 360,000 391,788
Series B, 7.75%, 2/01/14 .................................................................... 10,950,000 12,285,353
Series B, 7.00%, 6/01/15 .................................................................... 350,000 379,568
Series B, 6.75%, 10/01/15 ................................................................... 385,000 423,770
Series B, 7.00%, 2/01/18 .................................................................... 1,485,000 1,628,882
Series B, 5.25%, 8/01/20 .................................................................... 2,500,000 2,490,075
Series B, Pre-Refunded, 7.75%, 2/01/11....................................................... 3,425,000 3,883,710
Series B, Pre-Refunded, 7.75%, 2/01/12....................................................... 500,000 566,965
Series B, Pre-Refunded, 7.75%, 2/01/13....................................................... 1,875,000 2,126,119
Series B, Pre-Refunded, 7.00%, 6/01/14....................................................... 6,725,000 7,371,104
Series B, Pre-Refunded, 7.75%, 2/01/15....................................................... 22,610,000 25,638,157
Series B, Pre-Refunded, 7.00%, 6/01/15....................................................... 3,900,000 4,279,041
Series B, Pre-Refunded, 6.75%, 10/01/15...................................................... 1,115,000 1,242,679
Series B, Pre-Refunded, 6.00%, 8/15/26....................................................... 7,695,000 8,214,028
Series B, Sub-series B-1, Pre-Refunded, 7.00%, 8/15/16 ...................................... 2,000,000 2,318,180
Series B, Sub-series B-1, Pre-Refunded, 7.50%, 8/15/20 ...................................... 10,000,000 11,831,200
Series C, 7.20%, 8/15/14..................................................................... 2,840,000 3,067,654
Series C, 7.25%, 8/15/24..................................................................... 15,960,000 17,287,553
Series C, 5.50%, 11/15/37.................................................................... 18,545,000 18,811,863
Series C, Pre-Refunded, 7.00%, 2/01/12....................................................... 710,000 720,728
Series C, Pre-Refunded, 7.20%, 8/15/14....................................................... 1,160,000 1,270,362
Series C, Pre-Refunded, 7.25%, 8/15/24....................................................... 6,785,000 7,440,567
Series C, Sub-Series C-1, Pre-Refunded, 7.00%, 8/01/16....................................... 4,500,000 5,046,319
Series D, 8.25%, 8/01/13..................................................................... 110,000 124,146
Series D, 8.00%, 8/01/17..................................................................... 15,000 16,791
Series D, 5.50%, 8/01/22..................................................................... 2,500,000 2,549,950
Series D, Pre-Refunded, 8.25%, 8/01/13....................................................... 4,710,000 5,360,781
Series D, Pre-Refunded, 8.00%, 8/01/17....................................................... 3,665,000 4,144,455
Series D, Pre-Refunded, 7.50%, 2/01/18....................................................... 200,000 222,720
Series F, 8.40%, 11/15/08.................................................................... 600,000 685,218
Series F, 8.40%, 11/15/09.................................................................... 130,000 148,329
Series F, Pre-Refunded, 8.40%, 11/15/08...................................................... 6,900,000 7,959,357
Series F, Pre-Refunded, 8.40%, 11/15/09...................................................... 3,220,000 3,714,367
Series F, Pre-Refunded, 6.625%, 2/15/25...................................................... 11,240,000 12,830,797
Series G, 5.75%, 2/01/20..................................................................... 7,000,000 7,299,670
Series G, Pre-Refunded, 6.00%, 10/15/26 ..................................................... 9,900,000 10,595,079
Series H, 5.375%, 8/01/27.................................................................... 13,290,000 13,341,964
Series H, Pre-Refunded, 7.20%, 2/01/13 ...................................................... 10,000,000 11,143,500
Series H, Pre-Refunded, 7.20%, 2/01/14 ...................................................... 4,000,000 4,454,545
Series H, Pre-Refunded, 7.20%, 2/01/15 ...................................................... 4,600,000 5,123,685
Series H, Pre-Refunded, 7.00%, 2/01/16 ...................................................... 2,500,000 2,766,633
Series H, Pre-Refunded, 7.00%, 2/01/17 ...................................................... 6,500,000 7,198,782
Series H, Pre-Refunded, 7.00%, 2/01/18 ...................................................... 4,225,000 4,685,095
Series I, Pre-Refunded, 6.25%, 4/15/27....................................................... 9,500,000 10,310,255
Series K, Pre-Refunded, 6.25%, 4/01/26....................................................... 9,000,000 10,219,860
New York City HDC, MFMR, Series A,
6.55%, 10/01/15.............................................................................. 19,450,000 20,722,419
6.55%, 4/01/18............................................................................... 10,000,000 10,632,200
6.60%, 4/01/30............................................................................... 51,500,000 54,638,410
New York City Health & Hospital Authority, Local Government Revenue,
Refunding, Series A, 6.30%, 2/15/20 ........................................................... 114,635,000 120,886,047
New York City IDA, Civic Facilities Revenue,
College of New Rochelle, 5.75%, 9/01/17...................................................... $ 1,500,000 $ 1,543,665
College of New Rochelle, 5.80%, 9/01/26...................................................... 1,500,000 1,543,560
Federation Protestant Welfare, 6.95%, 11/01/11............................................... 2,520,000 2,647,084
New York Blood Center, Inc. Project, Pre-Refunded, 7.20%, 5/01/12 ........................... 4,000,000 4,588,360
New York Blood Center, Inc. Project, Pre-Refunded, 7.25%, 5/01/22 ........................... 7,000,000 8,087,100
St. Christopher Ottilie Project, 7.50%, 7/01/21.............................................. 2,500,000 2,749,950
The Lighthouse, Inc. Project, 6.50%, 7/01/22................................................. 8,000,000 8,552,800
New York City Municipal Water Finance Authority, Water & Sewer System Revenue,
Series A, 7.10%, 6/15/12..................................................................... 17,785,000 19,475,820
Series A, 7.00%, 6/15/15..................................................................... 2,185,000 2,383,289
Series A, 6.75%, 6/15/16..................................................................... 1,400,000 1,489,110
Series A, 6.75%, 6/15/17..................................................................... 18,100,000 19,252,065
Series A, 6.25%, 6/15/21..................................................................... 990,000 1,027,788
Series A, 5.50%, 6/15/24..................................................................... 25,625,000 26,433,725
Series A, Pre-Refunded, 7.10%, 6/15/12 ...................................................... 17,915,000 19,618,179
Series A, Pre-Refunded, 7.00%, 6/15/15 ...................................................... 690,000 753,646
Series A, Pre-Refunded, 6.125%, 6/15/20 ..................................................... 39,015,000 43,711,626
Series A, Pre-Refunded, 6.00%, 6/15/25 ...................................................... 3,000,000 3,338,550
Series B, 5.875%, 6/15/26 ................................................................... 10,250,000 10,918,300
Series B, 5.25%, 6/15/29 .................................................................... 21,900,000 22,069,287
Series B, Pre-Refunded, 6.25%, 6/15/20 ...................................................... 41,190,000 46,889,048
Series B, Pre-Refunded, 6.375%, 6/15/22...................................................... 28,250,000 30,800,975
New York Housing Corp. Revenue, Series A, 5.50%, 11/01/20....................................... 2,200,000 2,217,160
New York State COP, Hanson Redevelopment Project,
8.25%, 11/01/01 ............................................................................. 6,075,000 6,648,845
8.375%, 5/01/08 ............................................................................. 18,045,000 21,705,789
New York State Dormitory Authority Revenue,
Bishop Henry B. Hucles Nursing Home, 6.00%, 7/01/24 ......................................... 2,545,000 2,707,117
City University System, Series 1, 5.625%, 7/01/19 ........................................... 10,000,000 10,199,900
City University System, Series C, Pre-Refunded, 8.20%, 7/01/14 .............................. 2,000,000 2,045,760
City University System, Series F, Pre-Refunded, 7.875%, 7/01/17 ............................. 40,000,000 43,854,800
City University System, Third General, 6.00%, 7/01/20 ....................................... 13,000,000 13,765,180
City University System, Third General, Series 2, 6.00%, 7/01/26.............................. 6,020,000 6,364,705
City University System, Third General, Series 2, Pre-Refunded, 6.00%, 7/01/26 ............... 11,300,000 12,717,698
City University System, Third General, Residence 2, 6.20%, 7/01/22........................... 8,565,000 9,271,698
City University System, Third General, Residence 2, Pre-Refunded, 6.20%, 7/01/22 ............ 19,990,000 22,767,810
City University System Consolidated, Series 1, 5.375%, 7/01/24 .............................. 27,920,000 27,954,342
City University System Consolidated, Series C, 7.50%, 7/01/10 ............................... 14,900,000 18,414,612
City University System Consolidated, Series C, 6.00%, 7/01/16 ............................... 8,900,000 9,025,757
City University System Consolidated, Series C, Pre-Refunded, 6.00%, 7/01/16 ................. 4,110,000 4,273,825
City University System Consolidated, Series D, 7.00%, 7/01/09 ............................... 3,430,000 4,049,630
City University System Consolidated, Third, Series 1, 5.25%, 7/01/25......................... 10,000,000 9,843,300
Department of Education, Pre-Refunded, 7.75%, 7/01/21........................................ 2,530,000 2,842,910
Department of Health, 6.625%, 7/01/15 ....................................................... 760,000 852,249
Department of Health, 5.50%, 7/01/25......................................................... 61,100,000 61,756,214
Department of Health, Pre-Refunded, 6.625%, 7/01/15 ......................................... 4,595,000 5,308,787
Department of Health, Pre-Refunded, 6.20%, 7/01/17........................................... 14,725,000 15,715,404
Department of Health, Rosewell Park Cancer Center, Pre-Refunded, 6.625%, 7/01/24............. 9,175,000 10,600,245
Department of Health, Veterans Home, 5.50%, 7/01/21.......................................... 7,000,000 7,092,400
Department of Health, Veterans Home, Pre-Refunded, 7.25%, 7/01/11............................ 3,190,000 3,538,827
Department of Health, Veterans Home, Pre-Refunded, 6.25%, 7/01/20............................ 8,480,000 9,510,998
Department of Health, Veterans Home, Pre-Refunded, 7.25%, 7/01/21............................ 9,775,000 10,843,896
Fashion Institute of Technology, 7.50%, 7/01/20.............................................. 2,115,000 2,275,338
Genessee Valley, Series A, 6.90%, 2/01/32.................................................... 2,355,000 2,530,612
Heritage House Nursing Center, 7.00%, 8/01/31................................................ 2,355,000 2,556,470
Interfaith Medical Center, Series D, 5.40%, 2/15/28 ......................................... 16,525,000 16,426,676
Long Island Jewish Medical Center, Series A, 7.75%, 8/15/27 ................................. $ 14,355,000 $ 14,688,036
Long Island University, 6.25%, 9/01/23....................................................... 12,995,000 13,946,884
Mental Health Services Facilities, Series A, 5.75%, 8/15/22 ................................. 1,390,000 1,460,167
Mental Health Services Facilities, Series A, 5.75%, 2/15/27 ................................. 9,370,000 9,756,700
Millard Fillmore Hospital, FHA Insured, 5.375%, 2/01/32...................................... 7,995,000 8,104,931
New York Medical College, Asset Guaranty, 6.875%, 7/01/21 ................................... 5,375,000 5,892,881
Niagara Insured Mortgage, Nursing Home, MBIA Insured, 5.45%, 8/01/17......................... 2,500,000 2,569,275
Niagara Insured Mortgage, Nursing Home, MBIA Insured, 5.55%, 8/01/27......................... 2,000,000 2,055,140
Nursing Home, Arden Hill, FHA Insured, 5.85%, 8/01/26........................................ 4,975,000 5,181,562
Nursing Home, Center for Nursing, FHA Insured, 5.45%, 8/01/17 ............................... 1,000,000 1,008,770
Nursing Home, Center for Nursing, FHA Insured, 5.55%, 8/01/37 ............................... 8,435,000 8,523,483
Nursing Home, Wesley Garden, 6.125%, 8/01/35................................................. 2,000,000 2,137,900
Nyack Hospital, 6.25%, 7/01/13............................................................... 3,000,000 3,244,500
Our Lady of Mercy, Mortgage Revenue, FHA Insured, 6.30%, 8/01/32 ............................ 5,835,000 6,245,492
Refunding, Brookdale Hospital, Series J, 5.20%, 2/15/15...................................... 4,950,000 4,889,759
Refunding, Bronx / Lebanon Hospital, Series E, 5.20%, 2/15/15................................ 4,230,000 4,187,742
Refunding, Bronx / Lebanon Hospital, Series E, 5.20%, 2/15/16................................ 3,465,000 3,421,306
Refunding, City University System, Series U, 6.375%, 7/01/08................................. 1,140,000 1,232,591
Refunding, City University System, Series U, Pre-Refunded, 6.375%, 7/01/08 .................. 1,745,000 1,922,187
Refunding, City University System, Series U, Pre-Refunded, 6.70%, 7/01/09 ................... 5,405,000 6,008,360
Refunding, City University Systems Consolidated, Second General, Series A, 6.00%, 7/01/17 ... 10,215,000 10,845,368
Refunding, City University Systems Consolidated, Third General, Series A, 6.00%, 7/01/16..... 23,185,000 24,685,070
Refunding, Manhattan College, 6.50%, 7/01/19 ................................................ 19,390,000 20,766,884
Refunding, Mental Health Services Facilities, 6.00%, 8/15/21................................. 1,800,000 1,927,548
Refunding, Mental Health Services Facilities, Series B, 5.75%, 8/15/12....................... 2,165,000 2,292,583
Refunding, Mental Health Services Facilities, Series B, 5.625%, 2/15/21...................... 4,780,000 4,968,571
Refunding, Mental Health Services Facilities, Series C, 5.25%, 2/15/19....................... 13,435,000 13,168,047
Refunding, North General Hospital, Series G, 5.20%, 2/15/14 ................................. 5,000,000 4,978,350
Refunding, Nursing Home, St. John's Health Care Corp., 6.25%, 2/01/36 ....................... 34,265,000 36,698,500
Refunding, State University Educational Facilities, 5.125%, 5/15/27.......................... 10,000,000 9,771,000
Refunding, State University Educational Facilities, Series A, Pre-Refunded, 6.25%, 5/15/19 .. 17,670,000 19,983,533
Refunding, Wycockoff Heights, Series H, 5.20%, 2/15/16 ...................................... 5,820,000 5,720,420
Schervier, Home Asset Guaranty, 5.50%, 7/01/17 .............................................. 5,520,000 5,671,910
Schervier, Home Asset Guaranty, 5.50%, 7/01/27 .............................................. 5,250,000 5,336,835
St. Agnes Hospital, Series A, 5.40%, 2/15/25................................................. 2,000,000 1,988,620
St. Lukes Home Residential Health, Series A, 6.375%, 8/01/35 ................................ 5,200,000 5,655,832
State University Athletic Facilities, 7.25%, 7/01/12 ........................................ 2,565,000 2,808,675
State University Athletic Facilities, 7.25%, 7/01/21 ........................................ 4,750,000 5,244,618
State University Educational Facilities, Series B, 7.375%, 5/15/14 .......................... 7,025,000 7,562,202
State University Educational Facilities, Series B, 7.00%, 5/15/16 ........................... 7,995,000 8,529,066
State University Educational Facilities, Series B, Pre-Refunded, 6.25%, 5/15/14.............. 27,730,000 31,049,558
State University Educational Facilities, Series B, Pre-Refunded, 6.25%, 5/15/20 ............. 60,795,000 68,072,769
State University Educational Facilities, Series B, Pre-Refunded, 5.75%, 5/15/24.............. 7,890,000 8,506,209
The Highlands Living, 6.60%, 2/01/34......................................................... 3,845,000 4,166,519
Upstate Community Colleges, Series A, 6.20%, 7/01/15 ........................................ 12,910,000 14,094,363
Upstate Community Colleges, Series A, 6.00%, 7/01/22 ........................................ 7,000,000 7,503,300
Upstate Community Colleges, Series A, 6.25%, 7/01/25 ........................................ 42,310,000 45,603,410
Upstate Community Colleges, Series A, 6.125%, 7/01/27 ....................................... 11,845,000 12,747,826
Upstate Community Colleges, Series A, Pre-Refunded, 7.60%, 7/01/20 .......................... 3,250,000 3,542,110
Upstate Community Colleges, Series B, Pre-Refunded, 7.20%, 7/01/21........................... 1,000,000 1,107,920
University Educational Facilities, 5.75%, 5/15/16 ........................................... 3,000,000 3,152,970
University Educational Facilities, 5.50%, 5/15/26 ........................................... 31,750,000 32,680,275
W.K. Nursing Home Corp, 6.05%, 2/01/26....................................................... 6,800,000 7,273,348
New York State Energy Research & Development Authority,
Facilities Revenue, Refunding, Consolidated Edison Co., Series A,
6.10%, 8/15/20................................................................................. 11,820,000 12,733,922
New York State Energy Research & Development Authority, PCR,
Long Island Projects, 7.80%, 12/01/09 ....................................................... $ 3,300,000 $ 3,355,539
Long Island Projects, Series A, 7.50%, 12/01/06.............................................. 4,945,000 5,021,054
Niagara Mohawk Power Corp. Project, Series 1, 8.875%, 11/01/25............................... 38,145,000 38,926,210
New York State Environmental Facilities Corp., Special Obligation,
PCR, New York City Municipal Water Finance Authority Project, Series E, 6.875%, 6/15/14 ..... 1,190,000 1,355,565
PCR, New York City Municipal Water Finance Authority Project,
Pre-Refunded, 6.875%, 6/15/14 ................................................................. 1,810,000 2,081,536
Riverbank State Park, Pre-Refunded, 7.25%, 4/01/07 .......................................... 4,000,000 4,510,320
Riverbank State Park, Pre-Refunded, 7.25%, 4/01/12 .......................................... 4,300,000 4,848,594
Riverbank State Park, Pre-Refunded, 7.375%, 4/01/22 ......................................... 5,000,000 5,659,850
New York State HFA, Service Contract Obligation Revenue,
Refunding, Series C, 6.00%, 9/15/21.......................................................... 19,310,000 20,187,253
Refunding, Series C, 5.50%, 9/15/22.......................................................... 14,830,000 15,034,209
Series A, 7.25%, 9/15/12..................................................................... 225,000 249,089
Series A, 6.375%, 9/15/15 ................................................................... 5,000,000 5,507,300
Series A, 5.50%, 9/15/22..................................................................... 3,000,000 3,026,730
Series A, 6.50%, 3/15/24..................................................................... 330,000 360,842
Series A, 6.50%, 3/15/25..................................................................... 860,000 951,530
Series A, 6.00%, 3/15/26..................................................................... 16,725,000 17,764,961
Series A, Pre-Refunded, 7.25%, 9/15/12 ...................................................... 2,150,000 2,421,803
Series A, Pre-Refunded, 7.80%, 9/15/20 ...................................................... 24,000,000 26,596,720
Series A, Pre-Refunded, 6.50%, 3/15/24 ...................................................... 28,000,000 31,953,040
Series A, Pre-Refunded, 6.50%, 3/15/25 ...................................................... 10,410,000 12,016,367
Series C, 6.30%, 9/15/12..................................................................... 310,000 335,101
Series C, 6.125%, 3/15/20 ................................................................... 99,760,000 105,347,558
Series C, 6.30%, 3/15/22..................................................................... 1,985,000 2,128,059
Series C, 5.50%, 3/15/25..................................................................... 17,015,000 17,219,520
New York State HFA Revenue,
Adult Care, Series A, FHA Insured, Pre-Refunded, 7.85%, 2/15/30 ............................. 1,975,000 2,163,020
Children's Rescue Fund Housing, Series A, 7.625%, 5/01/18.................................... 5,285,000 5,610,450
MFHR, Second Mortgage, Series A, 7.00%, 8/15/23 ............................................. 4,245,000 4,537,863
MFHR, Second Mortgage, Series C, 6.60%, 8/15/27 ............................................. 5,500,000 5,926,030
MFHR, Second Mortgage, Series D, 6.25%, 8/15/23 ............................................. 2,500,000 2,634,650
MFHR, Second Mortgage, Series E, 6.75%, 8/15/25 ............................................. 7,005,000 7,470,132
MFMR, Series A, FHA Insured, 7.00%, 8/15/22.................................................. 4,885,000 5,245,122
MFMR, Series A, FHA Insured, 7.10%, 8/15/35.................................................. 8,630,000 9,237,293
MFMR, Series B, AMBAC Insured, 6.25%, 8/15/14 ............................................... 2,760,000 2,986,044
MFMR, Series B, AMBAC Insured, 6.35%, 8/15/23 ............................................... 34,515,000 37,266,191
MFMR, Series B, FHA Insured, 8.50%, 5/15/28.................................................. 12,575,000 12,584,306
MFMR, Series C, FHA Insured, 6.50%, 8/15/24.................................................. 6,870,000 7,321,222
Refunding, Health Facilities of New York City, Series A, 6.00%, 5/01/07...................... 11,200,000 12,021,744
Refunding, Health Facilities of New York City, Series A, 6.00%, 11/01/08..................... 2,400,000 2,568,072
Refunding, Health Facilities of New York City, Series A, 8.00%, 11/01/08 .................... 16,240,000 17,839,315
Refunding, Health Facilities of New York City, Series A, Pre-Refunded, 8.00%, 11/01/08 ...... 80,410,000 89,288,872
Refunding, Housing Project Mortgage, Series A, 6.10%, 11/01/15 .............................. 25,650,000 27,357,264
Refunding, Housing Project Mortgage, Series A, 6.125%, 11/01/20 ............................. 31,145,000 33,153,853
Refunding, MFMR, Series C, FHA Insured, 6.45%, 8/15/14 ...................................... 1,000,000 1,065,770
New York State Local Government Assistance Corp.,
Series A, 6.00%, 4/01/24..................................................................... 12,200,000 13,034,236
Series B, Pre-Refunded, 6.50%, 4/01/20 ...................................................... 10,120,000 10,970,282
Series C, Pre-Refunded, 6.50%, 4/01/15 ...................................................... 10,000,000 10,661,400
New York State Medical Care Facilities Finance Agency,
Albany Medical Center, Alice Hyde Project, Mortgage Revenue,
Series A, FHA Insured, Pre-Refunded, 8.00%, 2/15/28............................................. 43,465,000 44,669,415
Buffalo General Hospital, Mortgage Revenue, Series C, FHA Insured, Pre-Refunded, 7.70%, 2/15/22 3,500,000 3,597,265
Hospital & Nursing Home, Methodist Medical Center, Series A, FHA Insured, 6.70%, 8/15/23..... 5,500,000 5,939,120
Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.125%, 2/15/15 ........... 6,415,000 6,905,555
Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.20%, 2/15/21............. 8,330,000 8,949,752
Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.30%, 8/15/23 ............ $ 9,000,000 $ 9,552,510
Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.25%, 2/15/27............. 12,235,000 13,149,933
Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.20%, 2/15/28 ............ 26,910,000 28,953,545
Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 7.45%, 8/15/31 ............ 28,690,000 31,726,263
Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.375%, 8/15/33............ 7,940,000 8,396,947
Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.50%, 2/15/34 ............ 11,445,000 12,352,245
Hospital & Nursing Home, Mortgage Revenue, Series B, FHA Insured, 8.875%, 8/15/27............ 11,965,000 12,248,571
Hospital & Nursing Home, Mortgage Revenue, Series B, FHA Insured, 8.00%, 2/15/28............. 33,060,000 33,991,961
Hospital & Nursing Home, Mortgage Revenue, Series B, FHA Insured, Pre-Refunded, 6.95%, 2/15/32 24,000,000 26,019,840
Hospital & Nursing Home, Mortgage Revenue, Series C, FHA Insured, 6.50%, 8/15/21............. 8,000,000 8,795,040
Hospital & Nursing Home, Mortgage Revenue, Series C, FHA Insured, 9.00%, 2/15/26............. 1,795,000 1,813,776
Hospital & Nursing Home, Mortgage Revenue, Series C, FHA Insured, 6.20%, 8/15/23............. 21,540,000 23,196,641
Hospital & Nursing Home, Mortgage Revenue, Series C, FHA Insured, 6.375%, 8/15/29............ 86,865,000 92,674,531
Hospital & Nursing Home, Mortgage Revenue, Series C, FHA Insured, Pre-Refunded, 6.65%, 8/15/32 15,000,000 16,157,700
Hospital & Nursing Home, Mortgage Revenue, Series D, FHA Insured, 6.60%, 2/15/31............. 13,375,000 14,431,358
Hospital & Nursing Home, Mortgage Revenue, Series D, FHA Insured, Pre-Refunded, 6.45%, 2/15/32 55,500,000 61,684,365
Hospital Mortgage, Series A, AMBAC Insured, Pre-Refunded, 6.80%, 8/15/24..................... 3,200,000 3,719,456
Hospital Mortgage, Series A, AMBAC Insured, Pre-Refunded, 6.50%, 8/15/29..................... 5,125,000 5,868,125
Hospital Mortgage, Series A, AMBAC Insured, Pre-Refunded, 6.90%, 8/15/34..................... 31,210,000 36,456,401
Huntington Hospital Mortgage, Refunding, Project A, 6.50%, 11/01/14 ......................... 4,000,000 4,353,760
Medina Memorial Hospital Project, Series A, 7.30%, 5/01/11 .................................. 2,670,000 2,895,695
Mental Health Services Facilities, Series A, Pre-Refunded, 8.875%, 8/15/07 .................. 25,960,000 26,589,270
Mental Health Services Facilities, Series A, Pre-Refunded, 7.70%, 2/15/18 ................... 3,405,000 3,498,059
Mortgage Revenue Project, Series A, 6.50%, 2/15/35........................................... 3,800,000 4,157,124
Mortgage Revenue Project, Series B, FHA Insured, 6.15%, 2/15/25 ............................. 9,060,000 9,714,313
Mortgage Revenue Project, Series B, FHA Insured, 6.15%, 2/15/35 ............................. 2,200,000 2,350,898
Mortgage Revenue Project, Series B, 6.60%, 8/15/34........................................... 23,775,000 25,902,863
Mortgage Revenue Project, Series C, 6.375%, 8/15/29.......................................... 10,200,000 11,080,872
Mortgage Revenue Project, Series D, FHA Insured, 6.20%, 2/15/35 ............................. 6,250,000 6,750,313
Mortgage Revenue Project, Series E, FHA Insured, 6.375%, 2/15/35 ............................ 13,200,000 14,344,308
Mortgage Revenue Project, Series F, FHA Insured, 6.30%, 8/15/25.............................. 16,400,000 17,914,540
Mortgage Revenue Project, Series F, FHA Insured, 6.375%, 8/15/34............................. 21,050,000 22,888,086
North General Hospital, Series A, Pre-Refunded, 7.35%, 8/15/09............................... 5,380,000 5,706,351
Refunding, Beth Israel Medical Center Project, Series A, Pre-Refunded, 7.20%, 11/01/14....... 9,145,000 9,244,315
Refunding, Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.20%, 2/15/23 . 5,050,000 5,371,887
Refunding, Hospital & Nursing Home, Mortgage Revenue, Series B, 6.25%, 2/15/25............... 2,635,000 2,863,771
Refunding, Hospital & Nursing Home, Mortgage Revenue, Series B, FHA Insured, 6.25%, 2/15/35 . 4,745,000 5,112,121
Refunding, Hospital & Nursing Home, Series B, 6.125%, 8/15/24................................ 30,000,000 32,136,000
Refunding, Nyack Hospital Project Revenue, Series A, Pre-Refunded, 8.30%, 11/01/13 .......... 6,400,000 6,645,376
Saranac Lake General Hospital Project Revenue, Series A, 7.875%, 11/01/10 ................... 1,545,000 1,693,397
Second Mortgage, Health Care Project Revenue, Series B, 6.35%, 11/01/14...................... 1,410,000 1,501,058
Secured Hospital Revenue, North General Hospital, Series A, Pre-Refunded, 7.40%, 2/15/19 .... 72,180,000 76,600,303
Secured Hospital Revenue, Series A, 6.25%, 2/15/24........................................... 16,770,000 17,937,863
Secured Hospital Revenue, Series A, Pre-Refunded, 7.35%, 8/15/11............................. 22,150,000 24,710,762
Secured Hospital Revenue, Series A, Pre-Refunded, 7.40%, 8/15/21............................. 55,225,000 61,691,848
Security Mortgage Program Revenue, Adult Day Care, 6.375%, 11/15/20.......................... 19,315,000 21,128,099
The Hospital for Special Surgery Revenue, Series A, 6.375%, 8/15/24.......................... 6,025,000 6,550,139
The Hospital for Special Surgery Revenue, Series A, 6.45%, 8/15/34........................... 36,650,000 39,641,740
New York State Mortgage Agency, HMR,
8th Series D, 8.375%, 10/01/17............................................................... 1,730,000 1,776,537
8th Series E, 8.10%, 10/01/17................................................................ 4,885,000 5,015,234
10th Series A, 8.10%, 4/01/14................................................................ 3,975,000 4,082,683
29th Series B, 6.45%, 4/01/15................................................................ 17,250,000 18,310,013
37th Series A, 6.375%, 10/01/14 ............................................................. 6,225,000 6,725,864
37th Series A, 6.45%, 10/01/17............................................................... 9,000,000 9,710,100
Series 51, 6.40%, 10/01/17................................................................... 9,945,000 10,800,071
Series BB-2, 7.95%, 10/01/15 ................................................................ $ 6,560,000 $ 6,667,912
Series FF, 7.95%, 10/01/14................................................................... 2,835,000 2,885,832
Series OO, 8.05%, 10/01/11................................................................... 1,335,000 1,404,073
Series RR, 7.75%, 10/01/17................................................................... 14,650,000 15,433,043
New York State Mortgage Agency Revenue,
8th Series A, 6.875%, 4/01/17 ............................................................... 13,685,000 13,713,602
Homeowners Mortgage, Series 27, 6.90%, 4/01/15 .............................................. 5,000,000 5,453,100
Homeowners Mortgage, Series 41, 6.50%, 10/01/17 ............................................. 9,880,000 10,684,726
Homeowners Mortgage, Series 43, MBIA Insured, 6.45%, 10/01/17................................ 3,800,000 4,156,022
Homeowners Mortgage, Series 45, 7.20%, 10/01/17 ............................................. 23,730,000 26,136,934
Homeowners Mortgage, Series 47, 6.375%, 10/01/17............................................. 26,780,000 28,942,753
Homeowners Mortgage, Series 57, 6.25%, 10/01/15 ............................................. 10,000,000 10,823,100
Homeowners Mortgage, Series 57, 6.30%, 10/01/17 ............................................. 7,330,000 7,968,003
Homeowners Mortgage, Series 57, 6.375%, 10/01/27............................................. 8,590,000 9,320,236
Homeowners Mortgage, Series 61, 5.90%, 4/01/27............................................... 4,040,000 4,227,456
New York State Tollway Authority, General Revenue, Series D, 5.375%, 1/01/27 ................... 5,975,000 6,058,949
New York State Tollway Authority, Service Contract Revenue, Local Highway & Bridge,
6.20%, 4/01/10 .............................................................................. 12,630,000 13,643,052
6.25%, 4/01/14 .............................................................................. 23,970,000 26,098,057
Pre-Refunded, 7.25%, 1/01/10................................................................. 1,300,000 1,425,918
New York State Urban Development Corp., Refunding,
5.375%, 7/01/22.............................................................................. 34,900,000 35,400,117
5.60%, 7/01/26............................................................................... 9,750,000 10,013,933
New York State Urban Development Corp. Revenue,
Cornell Center Project, 6.00%, 1/01/14....................................................... 4,500,000 4,718,565
Correctional Capital Facilities, Series 4, 5.375%, 1/01/23................................... 11,210,000 11,233,653
Correctional Capital Facilities, Series 5, Pre-Refunded, 6.25%, 1/01/20 ..................... 81,350,000 91,581,390
Correctional Capital Facilities, Series 6, 5.625%, 1/01/17................................... 3,255,000 3,331,037
Correctional Capital Facilities, Series 6, 5.375%, 1/01/25 .................................. 14,260,000 14,275,116
Correctional Capital Facilities, Series 7, 5.70%, 1/01/16 ................................... 3,000,000 3,133,110
Correctional Capital Facilities, Series 7, 5.70%, 1/01/27 ................................... 56,950,000 58,495,054
Refunding, Onondaga County Convention Project, 6.25%, 1/01/20 ............................... 28,325,000 30,566,924
Youth Facilities, 6.00%, 4/01/15............................................................. 8,500,000 9,031,420
North County Development Authority, Solid Waste Systems Revenue,
Pre-Refunded, 6.75%, 7/01/12 ................................................................... 5,145,000 5,401,272
Oneida Health Care Corp., Mortgage Revenue, Oneida Health Care,
Series A, 7.20%, 8/01/31........................................................................ 2,155,000 2,300,592
Oneida-Herkimer, Solid Waste Management Authority,
Solid Waste Systems Revenue,
6.20%, 4/01/00............................................................................... 1,390,000 1,428,698
6.30%, 4/01/01............................................................................... 1,035,000 1,072,736
6.40%, 4/01/02............................................................................... 1,930,000 2,019,475
6.50%, 4/01/03............................................................................... 2,075,000 2,197,736
6.65%, 4/01/05............................................................................... 1,115,000 1,197,566
6.75%, 4/01/14............................................................................... 20,755,000 22,095,565
Oswego County IDA, Civic Facilities Revenue,
St. Luke Residential Health, 5.40%, 2/01/38 .................................................... 2,750,000 2,761,578
Port Authority of New York and New Jersey Revenue,
Consolidated 67th Series, 6.875%, 1/01/25.................................................... 1,675,000 1,759,638
Consolidated 74th Series, 6.75%, 8/01/26..................................................... 4,400,000 4,740,032
Port Authority of New York and New Jersey, Delta Air Lines
Special Project, Series 1, 6.95%, 6/01/08 ..................................................... 17,000,000 18,641,010
Port Jervis IDA, Mercy Community Hospital Revenue,
Franciscan Health Partnership, 5.50%, 11/01/16................................................. 1,000,000 1,005,840
Puerto Rico Commonwealth Highway and Transportation
Authority, Highway Revenue, Series Y, 5.00%, 7/01/36............................................ 4,000,000 3,919,720
Puerto Rico Commonwealth Urban Renewal and Housing Corp.
, Refunding, 7.875%, 10/01/04................................................................... 8,100,000 8,623,260
Puerto Rico Electric Power Authority Revenue,
Series T, 6.375%, 7/01/24.................................................................... 15,565,000 17,695,537
Series T, Pre-Refunded, 6.375%, 7/01/24...................................................... 5,575,000 6,031,927
Puerto Rico Industrial, Medical & Environmental Facilities, PCFA,
Baxter Travenol Labs, Series A, 8.00%, 9/01/12............................................... 1,000,000 1,039,830
Special Facilities, American Airlines Corp., Series A, 6.45%, 12/01/25 ...................... 21,015,000 22,965,192
Puerto Rico Municipal Finance Agency, Series A, 6.50%, 7/01/19 ................................. $ 11,000,000 $ 12,252,790
Rensselaer Municipal Leasing Corp., Leasehold Mortgage Revenue,
Rensselaer County Nursing Home,
Series A, 6.90%, 6/01/24..................................................................... 10,000,000 11,089,400
Series B, 6.90%, 6/01/24 .................................................................... 3,345,000 3,709,404
Schenectady Municipal Housing Authority Revenue,
Annie Schaffer Senior Center, Inc. Project, 6.45%, 5/01/24 ..................................... 4,230,000 4,656,088
Suffolk County IDA, Civic Facilities Revenue,
Dowling College, Pre-Refunded, 8.25%, 12/01/20.................................................. 4,570,000 5,109,534
Sunnybrook Elderly Housing Corp., Mortgage Revenue,
Sunnybrook Apartments Project, 11.25%, 12/01/14 ............................................... 1,275,000 1,324,037
Syracuse IDA, Civic Facility Revenue,
Crouse Health Hospital, Inc., Project A, 5.25%, 1/01/16 ..................................... 1,500,000 1,466,265
Crouse Health Hospital, Inc., Project A, 5.375%, 1/01/23..................................... 3,760,000 3,716,835
St. Joseph's Hospital Health Center Project, Pre-Refunded, 7.50%, 6/01/18.................... 2,000,000 2,228,200
Triborough Bridge & Tunnel Authority, Revenue General Purpose, Series B, 5.20%, 1/01/22......... 8,945,000 8,966,200
Ulster County Resource Recovery Agency, Solid Waste Systems Revenue, 6.00%, 3/01/14 ............ 8,620,000 9,052,207
Virgin Islands Public Finance Authority Revenue, Refunding, Series A,
5.50%, 10/01/15.............................................................................. 2,500,000 2,560,550
5.50%, 10/01/18.............................................................................. 2,500,000 2,546,900
Virgin Islands Water and Power Authority Electric System, Series A, 7.40%, 7/01/11 ............. 2,985,000 3,218,576
Warren and Washington Counties IDA Revenue, Refunding,
Adirondack Resource Recovery Project, Series A, 7.90%, 12/15/07 ............................... 36,555,000 38,020,124
Yonkers GO, Series A,
9.20%, 2/01/01............................................................................... 500,000 556,140
9.20%, 2/01/03............................................................................... 1,090,000 1,278,614
9.20%, 2/01/04............................................................................... 1,095,000 1,315,610
9.20%, 2/01/05............................................................................... 1,095,000 1,341,572
--------------
Total Bonds (Cost $4,389,229,247)............................................................... 4,754,227,662
--------------
Zero Coupon/Step-Up Bonds 1.9%
Erie County Water Authority, Water Revenue, Refunding,
Fourth Resolution, Pre-Refunded, AMBAC Insured, 0.00%, 12/01/17................................ 1,120,000 276,931
Metropolitan Transportation Authority, Refunding,
Commuter Facilities Revenue, Series 7, 0.00%, 7/01/10 ....................................... 7,500,000 4,174,650
Commuter Facilities Revenue, Series 7, 0.00%, 7/01/11 ....................................... 7,590,000 4,029,911
Commuter Facilities Revenue, Series 7, 0.00%, 7/01/13 ....................................... 2,065,000 973,503
Transit Facilities Revenue, Series 7, 0.00%, 7/01/09 ........................................ 13,125,000 7,718,681
Transit Facilities Revenue, Series 7, 0.00%, 7/01/10 ........................................ 9,000,000 5,009,580
Transit Facilities Revenue, Series 7, 0.00%, 7/01/11 ........................................ 21,200,000 11,198,688
Transit Facilities Revenue, Series 7, 0.00%, 7/01/12 ........................................ 15,380,000 7,684,463
Transit Facilities Revenue, Series 7, 0.00%, 7/01/13 ........................................ 7,935,000 3,740,797
New York City GO,
Citysavers, Series B, 0.00%, 8/01/09 ........................................................ 8,875,000 5,221,251
Citysavers, Series B, 0.00%, 6/01/12 ........................................................ 1,030,000 510,437
Citysavers, Series B, 0.00%, 12/01/12 ....................................................... 1,030,000 497,789
Citysavers, Series B, 0.00%, 6/01/13 ........................................................ 1,030,000 481,927
Citysavers, Series B, 0.00%, 12/01/13 ....................................................... 1,030,000 469,876
Citysavers, Series B, 0.00%, 6/01/14 ........................................................ 1,030,000 454,560
Citysavers, Series B, 0.00%, 12/01/14 ....................................................... 1,030,000 443,085
Citysavers, Series B, 0.00%, 6/01/15 ........................................................ 1,030,000 428,336
Citysavers, Series B, 0.00%, 12/01/15 ....................................................... 1,030,000 417,428
Citysavers, Series B, 0.00%, 6/01/16 ........................................................ 1,030,000 406,788
Citysavers, Series B, 0.00%, 12/01/16 ....................................................... 1,030,000 396,416
Citysavers, Series B, 0.00%, 6/01/17 ........................................................ 1,030,000 384,180
Citysavers, Series B, 0.00%, 12/01/17 ....................................................... 1,030,000 374,333
Citysavers, Series B, 0.00%, 6/01/18 ........................................................ 1,030,000 363,322
Citysavers, Series B, 0.00%, 12/01/18 ....................................................... 1,005,000 345,388
Citysavers, Series B, 0.00%, 6/01/19 ........................................................ 1,030,000 344,875
Citysavers, Series B, 0.00%, 12/01/19 ....................................................... 1,030,000 335,996
Citysavers, Series B, 0.00%, 6/01/20 ........................................................ 10,000,000 3,178,200
M-Raes, Series 29, 0.00% to 3/15/00, 8.00% thereafter, 3/15/12 .............................. 2,500,000 2,360,325
M-Raes, Series 30, 0.00% to 3/15/00, 8.00% thereafter, 3/15/13 .............................. 3,875,000 3,658,504
M-Raes, Series 36, 0.00% to 10/01/02, 7.00% thereafter, 10/01/14 ............................ 17,400,000 14,290,794
Series A-2, 0.00%, 8/01/10................................................................... 2,690,000 1,496,608
Orangetown New York Housing Authority Facilities Revenue,
Refunding, Senior Housing Center Project, MBIA Insured,
0.00%, 4/01/30 ................................................................................ $ 21,170,000 $ 3,895,280
Triborough Bridge and Tunnel Authority, Convention Center Project,
Series E, 0.00%, 1/01/12....................................................................... 21,625,000 11,044,952
--------------
Total Zero Coupon/Step-Up Bonds (Cost $79,386,510) ............................................. 96,607,854
--------------
Total Long Term Investments (Cost $4,468,615,757) .............................................. 4,850,835,516
--------------
aShort Term Investments .1%
New York City Municipal Water Finance Authority,
Water and Sewer System Revenue, Daily VRDN and Put,
Series C, 4.00%, 6/15/22..................................................................... 3,300,000 3,300,000
Series G, 3.95%, 6/15/24..................................................................... 100,000 100,000
New York State Energy Research and Development Authority, PCR,
Refunding, Electric and Gas, Daily VRDN and Put,
3.85%, 02/01/29................................................................................ 1,000,000 1,000,000
--------------
Total Short Term Investments (Cost $4,400,000) ................................................. 4,400,000
--------------
Total Investments (Cost $4,473,015,757) 98.4% .................................................. 4,855,235,516
--------------
Other Assets, less Liabilities 1.6% ............................................................ 77,585,805
--------------
Net Assets 100.0% .............................................................................. $4,932,821,321
==============
</TABLE>
See glossary of terms on page 24.
aVariable rate demand notes (VRDNs) are tax-exempt obligations which contain a
floating or variable interest rate adjustment formula and an unconditional right
of demand to receive payment of the principal balance plus accrued interest at
specified dates.
bSufficient collateral has been segregated for securities traded on a
when-issued or delayed delivery basis.
Glossary of Terms
AMBAC -American Municipal Bond Assurance Corp.
COP -Certificate of Participation
FHA -Federal Housing Authority/Agency
FSA -Financial Security Assistance (some of the securities shown as FSA
Insured were originally insured by Capital
Guaranty Insurance Co. (CGIC) which was acquired by FSA
in 1995 and no longer does business under this name).
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.
MFHR -Multi-Family Housing Revenue
MFR -Multi-Family Revenue
MFMR -Multi-Family Mortgage Revenue
PCFA -Pollution Control Financing Authority
PCR -Pollution Control Revenue
<TABLE>
<CAPTION>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Financial Statements
Statement of Assets and Liabilities
May 31, 1998
<S> <C>
Assets:
Investments in securities, at value (cost $4,473,015,757)............................................. $4,855,235,516
Cash ................................................................................................. 45,991
Receivables:
Investment securities sold ............................................................................ 1,704,376
Capital shares sold ................................................................................... 4,550,958
Interest .............................................................................................. 83,764,620
----------------
Total assets .......................................................................................... 4,945,301,461
----------------
Liabilities:
Payables:
Investment securities purchased ....................................................................... 1,007,736
Capital shares redeemed ............................................................................... 3,706,674
Affiliates ............................................................................................ 2,645,277
Shareholders .......................................................................................... 4,948,010
Other liabilities .................................................................................... 172,443
----------------
Total liabilities...................................................................................... 12,480,140
----------------
Net assets, at value ................................................................................. $4,932,821,321
================
Net assets consist of:
Undistributed net investment income................................................................... 3,934,187
Net unrealized appreciation........................................................................... 382,219,759
Accumulated net realized gain......................................................................... 26,805,379
Capital shares ....................................................................................... 4,519,861,996
----------------
Net assets, at value ................................................................................. $4,932,821,321
================
Class I:
Net asset value per share ($4,824,134,773 / 399,459,910 shares outstanding)*.......................... $12.08
================
Maximum offering price per share ($12.08 / 95.75%).................................................... $12.62
================
Class II:
Net asset value per share ($108,686,548 / 9,003,572 shares outstanding)*.............................. $12.07
================
Maximum offering price per share ($12.07 / 99.00%).................................................... $12.19
================
*Redemption price is equal to net asset value less any applicable contingent
deferred sales charge.
See notes to financial statements.
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Financial Statements (continued)
Statement of Operations
for the year ended May 31, 1998
<S> <C> <C>
Investment income:
Interest..................................................................................... $300,025,873
Expenses:
Management fees (Note 3)..................................................................... $ 22,245,150
Distribution fees (Note 3)
Class I .................................................................................... 3,384,405
Class II.................................................................................... 590,867
Transfer agent fees (Note 3) ................................................................ 1,703,821
Custodian fees............................................................................... 50,656
Reports to shareholders ..................................................................... 527,990
Registration and filing fees................................................................. 22,480
Professional fees ........................................................................... 146,601
Trustees' fees and expenses.................................................................. 62,641
Other........................................................................................ 134,788
-------------
Total expenses ............................................................................... 28,869,399
-----------
Net investment income ....................................................................... 271,156,474
-----------
Realized and unrealized gains:
Net realized gain from investments........................................................... 45,293,825
Net unrealized appreciation on investments .................................................. 139,361,103
-------------
Net realized and unrealized gains............................................................. 184,654,928
-----------
Net increase in net assets resulting from operations ......................................... $455,811,402
===========
See notes to financial statements.
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Financial Statements (continued)
Statements of Changes in Net Assets
for the years ended May 31, 1998 and 1997
1998 1997
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income............................................................... $ 271,156,474 $ 281,045,314
Net realized gain (loss) from investments........................................... 45,293,825 (2,607,119)
Net unrealized appreciation on investments.......................................... 139,361,103 95,305,025
-------------------------------
Net increase in net assets resulting from operations ................................. 455,811,402 373,743,220
Distributions to shareholders from:
Net investment income:
Class I.............................................................................. (264,830,442) (278,715,300)
Class II............................................................................. (4,425,343) (2,919,445)
Net realized gains:
Class I.............................................................................. (14,121,098) (10,650,658)
Class II............................................................................. (267,394) (126,948)
-------------------------------
Total distributions to shareholders ................................................. (283,644,277) (292,412,351)
Capital share transactions: (Note 2)
Class I............................................................................. (49,693,259) (85,103,028)
Class II............................................................................ 31,407,102 34,182,724
-------------------------------
Total capital share transactions .................................................... (18,286,157) (50,920,304)
Net increase in net assets ........................................................... 153,880,968 30,410,565
Net assets:
Beginning of year.................................................................... 4,778,940,353 4,748,529,788
-------------------------------
End of year.......................................................................... $4,932,821,321 $4,778,940,353
===============================
Undistributed net investment income included in net assets:
End of year.......................................................................... $ 3,934,187 $ 2,033,498
===============================
</TABLE>
See notes to financial statements.
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Franklin New York Tax-Free Income Fund (the Fund) is registered under the
Investment Company Act of 1940 as a diversified, open-end investment company.
The Fund seeks to provide 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 following summarizes the Fund's significant accounting policies.
a. Security Valuation
Tax-free bonds generally trade in the over-the-counter market and are valued
within the range of the latest quoted bid and asked prices. In the absence of a
sale or reported bid and asked prices, information with respect to bond and note
transactions, quotations from bond dealers, market transactions in comparable
securities, and various relationships between securities are used to determine
the value of the security. The Fund may utilize a pricing service, bank or
broker/dealer experienced in such matters to perform any of the pricing
functions under procedures approved by the Board of Trustees. Securities for
which market quotations are not readily available are valued at fair value as
determined by management in accordance with procedures established by the Board
of Trustees.
b. Income Taxes
No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute all of its taxable income.
c. Security Transactions, Investment Income, Expenses and Distributions
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income and estimated expenses are accrued daily. Bond discount and
premium are amortized on an income tax basis. Distributions to shareholders are
recorded on the ex-dividend date.
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.
d. Accounting Estimates
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
2. CAPITAL STOCK
The Fund offers two classes of shares: Class I and Class II. The shares have the
same rights except for their initial sales load, distribution fees, voting
rights on matters affecting a single class and the exchange privilege of each
class.
At May 31, 1998, there were 2,500,000,000 shares authorized ($.01 par value) for
each class. Transactions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
Year ended May 31,
-------------------------------------------------------------
1998 1997
-------------------------------------------------------------
Shares Amount Shares Amount
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Class I Shares:
Shares sold.............................................. 30,145,107 $359,395,945 32,064,194 $370,632,540
Shares issued in reinvestment of distributions .......... 10,819,907 128,475,365 11,481,161 132,524,371
Shares redeemed ......................................... (45,127,295) (537,564,569) (50,892,502) (588,259,939)
-------------------------------------------------------------
Net decrease ............................................ (4,162,281) $ (49,693,259) (7,347,147) $ (85,103,028)
=============================================================
Class II Shares:
Shares sold.............................................. 3,322,782 $ 39,628,686 3,577,561 $ 41,341,369
Shares issued in reinvestment of distributions .......... 249,898 2,969,445 159,659 1,843,398
Shares redeemed ......................................... (937,667) (11,191,029) (778,579) (9,002,043)
-------------------------------------------------------------
Net increase............................................. 2,635,013 $ 31,407,102 2,958,641 $ 34,182,724
=============================================================
</TABLE>
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain officers and trustees of the Fund are also officers and/or directors of
Franklin Investment Advisory Services, Inc. (Investment Advisory), Franklin
Templeton Services, Inc. (FT Services), Franklin/Templeton Distributors, Inc.
(Distributors), and Franklin/Templeton Investor Services, Inc. (Investor
Services), the Fund's investment manager, administrative manager, principal
underwriter, and transfer agent, respectively.
The Fund pays an investment management fee to Investment Advisory based on the
average net assets of the Fund as follows:
Annualized Fee Rate Month-End Net Assets
.625% First $100 million
.500% Over $100 million, up to and including $250 million
.450% 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, FT Services provides administrative
services to the Fund. The fee is paid by Investment Advisory based on average
daily net assets, and is not an additional expense of the Fund.
The Fund reimburses Distributors, up to .10% and .65% per year of its average
daily net asset of Class I and Class II, respectively, for costs incurred in
marketing the Fund's shares.
Distributors paid net commissions on sales of the Fund's shares, and received
contingent deferred sales charges for the year of $201,597 and $16,090,
respectively.
The Fund paid shareholder servicing fees of $1,703,821, of which $1,583,043 was
paid to Investor Services.
During the year ended May 31, 1998, legal fees of $29,958 were paid to a law
firm in which an officer of the Fund is a partner.
4. INCOME TAXES
At May 31, 1998, the net unrealized appreciation based on the cost of
investments for income tax purposes of $4,474,079,316 was as follows:
Unrealized appreciation................ $ 381,380,336
Unrealized depreciation................ (224,136)
--------------
Net unrealized appreciation............ $ 381,156,200
==============
Net realized capital gains differ for financial statement and tax purposes
primarily due to differing treatment of wash sales.
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the year
ended May 31, 1998 aggregated $891,480,921 and $931,906,617, respectively.
6. CREDIT RISK
The Fund has investments in excess of 10% of its total net assets in the state
of New York. Such concentration may subject the Fund more significantly to
economic changes occurring within that state.
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Independent Auditor's Report
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, as of May 31, 1998, 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, 1998, by correspondence with the
custodian and brokers. 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, 1998, 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 its financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
San Francisco, California
June 30, 1998
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Tax Information
Under Section 852(b)(3)(C) of the Internal Revenue Code, the Fund hereby
designates $42,257,432 as a 20% rate capital gain dividend for the fiscal year
ended May 31, 1998.
Under Section 852(b)(5)(A) of the Internal Revenue Code, the fund hereby
designates 100% of the distributions paid from net investment income as
exempt-interest dividends for the fiscal year ended May 31, 1998.
Franklin New York Tax-Free Income Fund
Annual Report
May 31, 1998
APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING (PURSUANT TO ITEM
304 (a) OF REGULATION S-T)
GRAPHIC MATERIAL (1)
This graph compares the Bond Buyer 40 Yield to Maturity vs. the 30-Year
Constant Maturity Treasury Bond for the 1-year period ending 5/31/98
Bond Buyer 40 Yield to Maturity
30-Year Constant Maturity Treasury Bond
6/97 5.69% 6.80%
7/97 5.40% 6.30%
8/97 5.55% 6.61%
9/97 5.47% 6.41%
10/97 5.40% 6.17%
11/97 5.36% 6.04%
12/97 5.25% 5.93%
1/98 5.19% 5.82%
2/98 5.24% 5.92%
3/98 5.27% 5.94%
4/98 5.39% 5.95%
5/98 5.22% 5.81%
GRAPHIC MATERIAL (2)
This chart shows the portfolio breakdown by sector and percent of total
long-term investments for the Franklin New York Tax-Free Income Fund on
5/31/98
Prerefunded 23.4%
Hospitals 16.1%
Housing 15.3%
Transportation 9.4%
Health Care 9.2%
Utilities 8.7%
Education 7.5%
Other Revenue 4.9%
General Obligations 4.1%
Certificates of Participation 0.8%
Industrial 0.3%
Sales Tax 0.3%
GRAPHIC MATERIAL (3)
This chart shows in pie format the credit quality breakdown of the Franklin
New York Tax-Free Income Fund based on total long-term investments as of
5/31/98.
AAA 37.3%
AA 15.0%
A 20.0%
BBB 26.9%
Below Investment
Grade 0.8%
GRAPHIC MATERIAL (4)
This chart shows in bar format the comparison between Franklin New York
Tax-Free Income Fund's Class I distribution rate of 5.23% and the taxable
equivalent rate of 9.30% for New York State Residents and 9.76% for New York
City Residents on 5/31/98.
GRAPHIC MATERIAL (5)
This chart shows the dividend distributions for Franklin New York Tax-Free
Income Fund's Class I shares from 6/1/97 to 5/31/98.
June 5.5 cents
July 5.5 cents
August 5.5 cents
September 5.5 cents
October 5.5 cents
November 5.5 cents
December 5.5 cents
January 5.5 cents
February 5.5 cents
March 5.5 cents
April 5.5 cents
May 5.5 cents
Total 66.0 cents
GRAPHIC MATERIAL (6)
The following line graph compares the performance of the Franklin New York
Tax-Free Income Fund's Class I shares to that of the Lehman Brothers
Municipal Bond Index, and to the Consumer Price Index based on a $10,000
investment from 6/1/88 to 5/31/98.
Franklin New York Lehman Brothers CPI
Date Tax-Free Municipal Bond Index
Income Fund-Class I
6/1/88 9,572 10,000 10,000
6/30/88 9,755 1.46% 10,146 0.43% 10,043
7/31/88 9,792 0.65% 10,212 0.42% 10,085
8/31/88 9,857 0.09% 10,221 0.42% 10,128
9/30/88 10,062 1.81% 10,406 0.67% 10,195
10/31/88 10,278 1.76% 10,589 0.33% 10,229
11/30/88 10,179 -0.92% 10,492 0.08% 10,237
12/31/88 10,299 1.02% 10,599 0.17% 10,255
1/31/89 10,458 2.07% 10,818 0.50% 10,306
2/28/89 10,387 -1.14% 10,695 0.41% 10,348
3/31/89 10,383 -0.24% 10,669 0.58% 10,408
4/30/89 10,623 2.37% 10,922 0.65% 10,476
5/31/89 10,845 2.08% 11,149 0.57% 10,536
6/30/89 10,979 1.36% 11,301 0.24% 10,561
7/31/89 11,084 1.36% 11,455 0.24% 10,586
8/31/89 11,040 -0.98% 11,342 0.16% 10,603
9/30/89 10,986 -0.30% 11,308 0.32% 10,637
10/31/89 11,042 1.22% 11,446 0.48% 10,688
11/30/89 11,190 1.75% 11,647 0.24% 10,714
12/31/89 11,288 0.82% 11,742 0.16% 10,731
1/31/90 11,212 -0.47% 11,687 1.03% 10,841
2/28/90 11,363 0.89% 11,791 0.47% 10,892
3/31/90 11,328 0.03% 11,795 0.55% 10,952
4/30/90 11,271 -0.72% 11,710 0.16% 10,970
5/31/90 11,446 2.18% 11,965 0.23% 10,995
6/30/90 11,580 0.88% 12,070 0.54% 11,054
7/31/90 11,768 1.48% 12,249 0.38% 11,096
8/31/90 11,635 -1.45% 12,071 0.92% 11,198
9/30/90 11,598 0.06% 12,078 0.84% 11,293
10/31/90 11,648 1.81% 12,297 0.60% 11,360
11/30/90 11,851 2.01% 12,544 0.22% 11,385
12/31/90 11,824 0.44% 12,599 0.00% 11,385
1/31/91 11,997 1.34% 12,768 0.60% 11,454
2/28/91 12,105 0.87% 12,879 0.15% 11,471
3/31/91 12,191 0.04% 12,884 0.15% 11,488
4/30/91 12,345 1.34% 13,057 0.15% 11,505
5/31/91 12,421 0.89% 13,173 0.30% 11,540
6/30/91 12,486 -0.10% 13,160 0.29% 11,573
7/31/91 12,678 1.22% 13,321 0.15% 11,591
8/31/91 12,860 1.32% 13,497 0.29% 11,624
9/30/91 13,100 1.30% 13,672 0.44% 11,675
10/31/91 13,202 0.90% 13,795 0.15% 11,693
11/30/91 13,281 0.28% 13,834 0.29% 11,727
12/31/91 13,431 2.15% 14,131 0.07% 11,735
1/31/92 13,427 0.23% 14,164 0.15% 11,753
2/29/92 13,444 0.03% 14,168 0.36% 11,795
3/31/92 13,558 0.04% 14,174 0.51% 11,855
4/30/92 13,744 0.89% 14,300 0.14% 11,872
5/31/92 13,957 1.18% 14,468 0.14% 11,888
6/30/92 14,209 1.68% 14,711 0.36% 11,931
7/31/92 14,670 3.00% 15,153 0.21% 11,956
8/31/92 14,528 -0.98% 15,004 0.28% 11,990
9/30/92 14,596 0.65% 15,102 0.28% 12,023
10/31/92 14,377 -0.98% 14,954 0.35% 12,065
11/30/92 14,723 1.79% 15,222 0.14% 12,082
12/31/92 14,919 1.02% 15,377 -0.07% 12,074
1/31/93 15,116 1.16% 15,555 0.49% 12,133
2/28/93 15,507 3.62% 16,118 0.35% 12,175
3/31/93 15,449 -1.06% 15,947 0.35% 12,218
4/30/93 15,533 1.01% 16,108 0.28% 12,252
5/31/93 15,722 0.56% 16,199 0.14% 12,269
6/30/93 15,977 1.67% 16,469 0.14% 12,286
7/31/93 15,984 0.13% 16,491 0.00% 12,286
8/31/93 16,281 2.08% 16,834 0.28% 12,321
9/30/93 16,458 1.14% 17,026 0.21% 12,347
10/31/93 16,489 0.19% 17,058 0.41% 12,397
11/30/93 16,359 -0.88% 16,908 0.07% 12,406
12/31/93 16,700 2.11% 17,264 0.00% 12,406
1/31/94 16,854 1.14% 17,461 0.27% 12,440
2/28/94 16,558 -2.59% 17,009 0.34% 12,482
3/31/94 16,083 -4.07% 16,317 0.34% 12,524
4/30/94 16,116 0.85% 16,455 0.14% 12,542
5/31/94 16,259 0.87% 16,599 0.07% 12,551
6/30/94 16,220 -0.61% 16,497 0.34% 12,593
7/31/94 16,435 1.83% 16,799 0.27% 12,627
8/31/94 16,524 0.35% 16,858 0.40% 12,678
9/30/94 16,329 -1.47% 16,610 0.27% 12,712
10/31/94 16,092 -1.78% 16,315 0.07% 12,721
11/30/94 15,724 -1.81% 16,019 0.13% 12,737
12/31/94 16,103 2.20% 16,372 0.00% 12,737
1/31/95 16,440 2.86% 16,840 0.40% 12,788
2/28/95 16,794 2.91% 17,330 0.40% 12,840
3/31/95 16,916 1.15% 17,529 0.33% 12,882
4/30/95 16,950 0.12% 17,550 0.33% 12,924
5/31/95 17,413 3.19% 18,110 0.20% 12,950
6/30/95 17,269 -0.87% 17,953 0.20% 12,976
7/31/95 17,363 0.95% 18,123 0.00% 12,976
8/31/95 17,549 1.27% 18,353 0.26% 13,010
9/30/95 17,636 0.63% 18,469 0.20% 13,036
10/31/95 17,892 1.45% 18,737 0.33% 13,079
11/30/95 18,148 1.66% 19,048 -0.07% 13,070
12/31/95 18,299 0.96% 19,231 -0.07% 13,061
1/31/96 18,373 0.76% 19,377 0.59% 13,138
2/29/96 18,215 -0.68% 19,245 0.32% 13,180
3/31/96 18,071 -1.28% 18,999 0.52% 13,248
4/30/96 18,036 -0.28% 18,946 0.39% 13,300
5/31/96 18,049 -0.04% 18,938 0.19% 13,325
6/30/96 18,236 1.09% 19,144 0.06% 13,333
7/31/96 18,391 0.91% 19,319 0.19% 13,359
8/31/96 18,388 -0.02% 19,315 0.19% 13,384
9/30/96 18,656 1.40% 19,585 0.32% 13,427
10/31/96 18,829 1.13% 19,806 0.32% 13,470
11/30/96 19,100 1.83% 20,169 0.19% 13,495
12/31/96 19,056 -0.42% 20,084 0.00% 13,495
1/31/97 19,100 0.19% 20,122 0.32% 13,538
2/28/97 19,260 0.92% 20,307 0.31% 13,580
3/31/97 19,086 -1.33% 20,037 0.25% 13,614
4/30/97 19,228 0.84% 20,206 0.12% 13,631
5/31/97 19,521 1.51% 20,511 -0.06% 13,623
6/30/97 19,681 1.07% 20,730 0.12% 13,639
7/31/97 20,196 2.77% 21,305 0.12% 13,655
8/31/97 20,085 -0.94% 21,104 0.19% 13,681
9/30/97 20,316 1.19% 21,355 0.25% 13,715
10/31/97 20,461 0.64% 21,492 0.25% 13,750
11/30/97 20,590 0.59% 21,619 -0.06% 13,741
12/31/97 20,868 1.46% 21,935 -0.12% 13,725
1/31/98 21,086 1.03% 22,160 0.19% 13,751
2/28/98 21,112 0.03% 22,167 0.19% 13,777
3/31/98 21,191 0.09% 22,187 0.19% 13,803
4/30/98 21,130 -0.45% 22,087 0.18% 13,828
5/31/98 21,440 1.47% 1.58% 22,436 0.18% 13,853
Total Return 114.40% 124.36% 38.53%
GRAPHIC MATERIAL (7)
This chart shows in bar format the comparison between Franklin New York
Tax-Free Income Fund's Class II distribution rate of 4.83% and the taxable
equivalent rate of 8.58% for New York State Residents and 9.02% for New York
City Residents on 5/31/98.
GRAPHIC MATERIAL (8)
This chart shows the dividend distributions for Franklin New York Tax-Free
Income Fund's Class II shares from 6/1/97 to 5/31/98.
June 4.92 cents
July 4.95 cents
August 4.95 cents
September 4.95 cents
October 4.92 cents
November 4.92 cents
December 4.92 cents
January 4.91 cents
February 4.91 cents
March 4.91 cents
April 4.91 cents
May 4.91 cents
Total 59.08 cents
GRAPHIC MATERIAL (9)
The following line graph compares the performance of the Franklin New York
Tax-Free Income Fund's Class II shares to that of the Lehman Brothers
Municipal Bond Index, and to the Consumer Price Index based on a $10,000
investment from 5/1/95 to 5/31/98.
Date Franklin New York Lehman Brothers CPI
Tax-Free Municipal Bond
Income Fund-Class II Index
5/1/95 9,896 10,000 10,000
5/31/95 10,147 3.19% 10,319 0.20% 10,020
6/30/95 10,066 -0.87% 10,229 0.20% 10,040
7/31/95 10,125 0.95% 10,326 0.00% 10,040
8/31/95 10,219 1.27% 10,458 0.26% 10,066
9/30/95 10,273 0.63% 10,523 0.20% 10,086
10/31/95 10,408 1.45% 10,676 0.33% 10,120
11/30/95 10,561 1.66% 10,853 -0.07% 10,112
12/31/95 10,634 0.96% 10,957 -0.07% 10,105
1/31/96 10,672 0.76% 11,041 0.59% 10,165
2/29/96 10,583 -0.68% 10,966 0.32% 10,198
3/31/96 10,485 -1.28% 10,825 0.52% 10,251
4/30/96 10,460 -0.28% 10,795 0.39% 10,291
5/31/96 10,466 -0.04% 10,791 0.19% 10,310
6/30/96 10,578 1.09% 10,908 0.06% 10,316
7/31/96 10,654 0.91% 11,008 0.19% 10,336
8/31/96 10,647 -0.02% 11,005 0.19% 10,356
9/30/96 10,797 1.40% 11,159 0.32% 10,389
10/31/96 10,892 1.13% 11,286 0.32% 10,422
11/30/96 11,043 1.83% 11,492 0.19% 10,442
12/31/96 11,013 -0.42% 11,444 0.00% 10,442
1/31/97 11,033 0.19% 11,466 0.32% 10,475
2/28/97 11,120 0.92% 11,571 0.31% 10,508
3/31/97 11,013 -1.33% 11,417 0.25% 10,534
4/30/97 11,099 0.84% 11,513 0.12% 10,547
5/31/97 11,253 1.51% 11,687 -0.06% 10,540
6/30/97 11,349 1.07% 11,812 0.12% 10,553
7/31/97 11,641 2.77% 12,139 0.12% 10,565
8/31/97 11,562 -0.94% 12,025 0.19% 10,586
9/30/97 11,699 1.19% 12,168 0.25% 10,612
10/31/97 11,767 0.64% 12,246 0.25% 10,639
11/30/97 11,836 0.59% 12,318 -0.06% 10,632
12/31/97 12,000 1.46% 12,498 -0.12% 10,619
1/31/98 12,109 1.03% 12,627 0.19% 10,640
2/28/98 12,128 0.03% 12,631 0.19% 10,660
3/31/98 12,168 0.09% 12,642 0.19% 10,680
4/30/98 12,126 -0.45% 12,585 0.18% 10,699
5/31/98 12,288 1.33% 1.58% 12,784 0.18% 10,719
Total Return 22.88% 27.84% 7.19%
