SHAREHOLDER LETTER
Dear Shareholder:
It is a pleasure to bring you Franklin New York Tax-Free Income Fund's annual
report for the period ended May 31, 1999.
During the 12 months under review, the municipal bond market was comparatively
stable in what could otherwise be characterized as a challenging year for global
and domestic markets. The economic stresses felt in Asia, Latin America and
Eastern Europe during third and fourth quarters 1998 caused investors to seek
safety in U.S. Treasury bonds, driving yields on the 30-year Treasury bond to an
all-time low of 4.70% on October 5, 1998. These regions had a direct impact on
the U.S. economy as foreign countries purchased fewer American goods, leading to
an overall reduction in U.S. export levels. In light of lowered export levels,
it was expected that the U.S. economy would see some slowing in the fourth
quarter of 1998.
However, it became apparent as 1999 got under way, that fourth quarter 1998
growth actually exceeded expectations, and the U.S. gross domestic product (GDP)
grew at a 6% annualized rate. The American consumer boosted the domestic economy
at much higher-than-anticipated levels, which resulted in the Federal Reserve
Board's (the Fed's) moving to a neutral position with respect to short-term
interest rates rather than its previous bias toward lowering rates that began in
1998. The change in the Fed's position caused 30-year Treasury yields to rise to
a first-quarter peak of 5.69% on March 4, 1999. However, near the end of the
reporting period the Fed adopted a tightening bias, which could bring higher
interest rates.
CONTENTS
Shareholder Letter 1
Manager's Discussion 5
Performance Summary 10
Municipal Bond Ratings 13
Financial Highlights &
Statement of Investments 16 [Fund Category Graph]
Financial Statements 32
Notes to
Financial Statements 35
Independent
Auditors' Report 38
Tax Information 39
The municipal bond market remained relatively calm throughout the Treasury
market volatility as demand was fundamentally supported by an increased
municipal bond supply. As interest rates declined, municipal bond issuers
increased their refinancing activity of outstanding, higher interest-rate debt.
Additionally, many municipalities were in excellent fiscal condition due to the
strong national economy, which gave them greater confidence to borrow money for
new projects. This environment led to a surge in 1998's new-issue supply with
total volume closely matching 1993's record $293 billion nationally, while
supply in New York reached $37 billion. Although demand from individual
investors was relatively stable, at times the municipal bond market had some
difficulty absorbing the large supply of bonds.
These conditions led to attractive municipal bond yields, as municipal bond
prices lagged those of similar Treasury bonds. For example, in October 1998 an
investor could have purchased a 30-year, AAA municipal bond yielding
approximately 105% of the yield on a comparable Treasury bond, versus the
historical average of approximately 85%. Municipal market valuations have not
been this attractive since 1986. With the early 1999 rise in Treasury yields,
and the Bond Buyer 40 index showing an increase in yield to 5.37%, the
municipal-to-Treasury ratio declined to 92% on May 31, 1999, still above the
historical average.*
*The unmanaged Bond Buyer Municipal 40 Index is composed of the Yield to
Maturity of 40 bonds. The index attempts to track the new-issue market as
closely as possible, so it changes bonds twice a month, adding all new bonds
that meet certain requirements and deleting an equivalent number according to
their secondary market trading activity. As a result, the average par call date,
average maturity date and average coupon rate change over time. The average
maturity generally has been about 29-30 years.
WHAT DOES
"TAXABLE EQUIVALENT"
MEAN FOR YOU?
For yield and distribution rate, taxable equivalent is the
amount a taxable investment would have to earn to match the
income from a tax-free investment such as a municipal bond.
You can find your fund's taxable equivalent distribution
rate and yield in the Performance Summary of this report.
This relatively high ratio has allowed municipal investors to earn attractive
yields compared with other fixed-income opportunities.
The prevalence of bond insurance was another trend that affected the municipal
bond market. The increasingly higher percentages of AAA-insured municipal bond
issues coming to market over the past four years seems to have finally peaked at
more than 50% nationally for municipal issuers in 1998. In New York, insured
issues comprised 45% of all new issues. With investors continuing to demand
higher yields in a falling interest-rate environment, municipal bond market
credit spreads, or the additional interest rate paid to investors for BBB-
versus AAA-rated bonds, were extremely narrow.
Looking forward, we anticipate national and New York supply pressures to
moderate in 1999. Already, municipal new issuance for the first quarter of the
year was down about 19.3% nationally, compared with the same period last
calendar year.**
Municipal bonds continue to be an attractive investment for those investors
seeking tax-free income as well as an opportunity to diversify risk in their
portfolio. Generally, a taxable investment would need to offer a higher yield,
called the taxable equivalent yield, to match the yield on a tax-free
investment. We encourage you to discuss your financial goals with an investment
representative. He or she can address concerns about volatility and help you
diversify your investments and stay focused on the long term. Mutual funds offer
a level of diversification that is almost impossible for individual investors to
achieve on their own. As always, we appreciate your support, welcome your
questions and comments and look forward to serving your investment needs in the
years ahead.
**Source: The Bond Buyer, 4/1/99.
Sincerely,
/s/ Charles B. Johnson
- ----------------------
Charles B. Johnson
Chairman
Franklin New York Tax-Free Income Fund
/s/ Thomas J. Kenny
- ----------------------
Thomas J. Kenny
Director
Franklin Municipal Bond Department
MANAGER'S DISCUSSION
Your Fund's Goal: 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.
NEW YORK UPDATE
During the 12 months under review, the New York economy followed the stock
market to higher ground, although it still had to play catch-up to the rest of
the nation. Financially, the state is in the best condition in years, after
producing large budget surpluses in the three years ended 1998. Projections for
fiscal 1999 point to a favorable budget, with a surplus of $1.79 billion.
Furthermore, the state generated these surpluses while slashing the state
personal income tax by 20% and introducing other tax cuts. Although employment
growth was a respectable 1.9% in 1998, the strongest in the `90s, it lagged the
2.5% national average. Income growth in 1998 was slightly below par, and at 4.9%
nearly matched the nation's 5.0% growth rate.(1)
Typical of late, New York City fared better than the remainder of the state,
principally fueled by a strong securities industry and prudent public spending.
The city ended 1998 with a $2.1 billion surplus, on top of 1997's $1.4 billion
surplus. Overall job growth in 1998 was the highest in more than a decade, with
unemployment falling to 8.1% in January 1999. While this is down from 9% in the
year earlier period, it still was much higher than the national average.(2)
(1). Source: Standard and Poor's(R), CreditWeek Municipal, 3/99.
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 19 of
this report.
CREDIT QUALITY BREAKDOWN*
Based on Total Long-Term Investments
5/31/99
[PIE CHART]
AAA - 43.9%
AA - 13.1%
A - 23.3%
BBB - 19.0%
Below Investment Grade 0.7%
* Quality breakdowns may include internal ratings for bonds not rated by a
national rating agency.
The future appears to be generally bullish for New York. A diverse economic
base, average income at 130% of the national average and a significantly
improved financial condition should lead to continued solid growth. In addition,
the City and the state, and their many issuing authorities, are well on their
way to being fully Y2K compliant. However, a heavy reliance on the historically
volatile financial services industry, coupled with an expanding debt burden,
somewhat clouds this rosy scenario.
PORTFOLIO NOTES
During the 12 months under review, we adhered to our strategy of managing the
fund to provide a high level of tax-free income while trying to minimize share
price volatility for our shareholders. In managing for income, the fund
typically employs a buy-and-hold strategy, which usually results in low
portfolio turnover and reduced costs. The majority of the fund's turnover during
the fund's fiscal year resulted from the sale of prerefunded securities. Despite
this, prerefunded securities increased to 28.8% of the portfolio's total
long-term investments on May 31, 1999, compared with 23.4% on May 31, 1998.
When a bond is prerefunded, a new issue is brought to market with a lower
interest rate to pay off the older issue at its first call date. In most cases,
the proceeds from the sale of the new bonds are invested in U.S. Treasury
securities that mature on the first call date of the original bonds. Because of
the U.S. Treasury backing, prerefunded bonds usually experience a substantial
price increase -- depending on their call date. Generally, we look to sell
prerefunded bonds as they approach five years to their call date. At this point,
the premium on prerefunded bonds often begins to decline rapidly to the stated
call price. Our strategy aims to capture the bond's premium, increase the fund's
call protection and protect its share value.
(2). Source: Moody's Investor Service, 4/99.
The fund maintained broad sector diversification by purchasing bonds over many
different sectors during the year under review. Some of the fund's purchases
included New York State Dormitory Authority Revenue, Metropolitan Transportation
Authority and New York City Municipal Water Finance Authority Water and Sewer
System Revenue. The majority of the bonds purchased during the period were
higher-rated or insured securities, principally because credit spreads, the
additional yield offered by lower-quality issues, remained narrow in New York.
In our opinion, lower-rated securities typically did not offer enough added
yield to compensate for the added risk during the period under review. As a
result of these purchases, AAA-rated securities increased to 43.9% of the
portfolio's total long-term investments on May 31, 1999, compared with 37.3% a
year ago.
If you had invested $10,000 in the fund's Class A shares on May 31, 1989, as of
May 31, 1999, you would have received monthly tax-free income dividend checks
totaling more than $6,390. If you had reinvested all of your distributions,
including capital gains, your account would have been worth $19,826.(3) In both
cases, the fund has provided shareholders attractive returns. Of course, this
was a period of generally declining interest rates and rising bond prices, and
past performance cannot guarantee future results.
(3). Total returns include sales charges and assume reinvestment of dividends
and capital gains at net asset value. Class A (formerly Class I): Subject to the
current, maximum 4.25% initial sales charge. Prior to July 1, 1994, fund shares
were offered at a lower initial sales charge; thus actual total returns may
differ. Effective May 1, 1994, the fund eliminated the sales charge on
reinvested dividends and implemented a Rule 12b-1 plan, which affects subsequent
performance.
PORTFOLIO BREAKDOWN
5/31/99
% OF TOTAL
LONG-TERM
SECTOR INVESTMENTS
- --------------------------------
Prerefunded 28.8%
Housing 14.3%
Hospitals 11.9%
Transportation 9.7%
Education 7.9%
Other Revenue 7.9%
Health Care 7.0%
Utilities 6.9%
General Obligation 4.2%
Certificates
of Participation 1.0%
Sales Tax 0.3%
Industrial 0.1%
Going forward, our outlook for the fund, the municipal bond market and New York
remains positive. We expect New York's municipal bond supply to remain
stable for the remainder of 1999 and this, coupled with a continued strong
demand for New York bonds, should make New York an attractive investment.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of May 31, 1999. However, market and economic conditions are
changing constantly, which can be expected to affect our strategies and the
fund's portfolio composition. Although historical performance is no guarantee of
future results, these insights may help you understand our investment and
management philosophy.
DIVIDEND DISTRIBUTIONS
6/1/98 - 5/31/99
DIVIDEND PER SHARE
------------------
MONTH CLASS A CLASS B* CLASS C
- ---------------------------------------------------------------
June 5.50 cents -- 4.91 cents
July 5.50 cents -- 4.93 cents
August 5.50 cents -- 4.93 cents
September 5.40 cents -- 4.83 cents
October 5.40 cents -- 4.78 cents
November 5.40 cents -- 4.78 cents
December 5.30 cents -- 4.68 cents
January 5.30 cents 5.30 cents 4.68 cents
February 5.30 cents 4.72 cents 4.68 cents
March 5.25 cents 4.80 cents 4.67 cents
April 5.25 cents 4.80 cents 4.67 cents
May 5.25 cents 4.80 cents 4.67 cents
- -------------------------------------------------------------------
TOTAL 64.35 CENTS 24.42 CENTS 57.21 CENTS
*January 1, 1999, the fund began offering Class B shares to investors. See the
prospectus for details.
PERFORMANCE SUMMARY AS OF 5/31/99
Distributions will vary based on earnings of the fund's portfolio and any
profits realized from the sale of the portfolio's securities. Past distributions
are not indicative of future trends. All total returns include reinvested
distributions at net asset value.
CLASS A (formerly Class I):
Subject to the current, maximum 4.25% initial sales charge. Prior to July 1,
1994, fund shares were offered at a lower initial sales charge; thus actual
total returns may differ. Effective May 1, 1994, the fund eliminated the
sales charge on reinvested dividends and implemented a Rule 12b-1 plan,
which affects subsequent performance.
CLASS B:
Subject to no initial sales charge, but subject to a contingent deferred sales
charge (CDSC) declining from 4% to 0% over six years. These shares have higher
annual fees and expenses than Class A shares.
CLASS C (formerly Class II):
Subject to 1% initial sales charge and 1% CDSC for shares redeemed within 18
months of investment. These shares have higher annual fees and expenses than
Class A shares.
PRICE AND DISTRIBUTION INFORMATION (6/1/98-5/31/99)
CLASS A CHANGE 5/31/99 5/31/98
- ---------------------------------------------------------------
Net Asset Value -$0.17 $11.91 $12.08
DISTRIBUTIONS
------------------------------
Dividend Income $0.6435
Long-Term Capital Gain $0.0858
TOTAL $0.7293
CLASS B CHANGE 5/31/99 1/1/99
- --------------------------------------------------------------
Net Asset Value -$0.17 $11.89 $12.06
DISTRIBUTIONS
------------------------------
Dividend Income $0.2442
CLASS C CHANGE 5/31/99 5/31/98
- ---------------------------------------------------------------
Net Asset Value -$0.16 $11.91 $12.07
DISTRIBUTIONS
------------------------------
Dividend Income $0.5721
Long-Term Capital Gain $0.0858
TOTAL $0.6579
Franklin New York Tax-Free Income Fund paid distributions derived from long-term
capital gains of 8.58 cents ($0.0858) per share in December 1998. The fund
hereby designates such distributions as capital gain dividends per Internal
Revenue Code Section 852 (b)(3).
Past performance is not predictive of future results.
PERFORMANCE
<TABLE>
<CAPTION>
INCEPTION
CLASS A 1-YEAR 5-YEAR 10-YEAR (9/13/82)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) +4.73% +38.10% +107.05% +313.98%
Average Annual Total Return(2) +0.25% +5.75% +7.08% +8.59%
Distribution Rate(3) 5.06%
Taxable Equivalent Distribution Rate(4) 9.33%
30-Day Standardized Yield(5) 4.03%
Taxable Equivalent Yield(4) 7.43%
</TABLE>
INCEPTION
CLASS B (1/1/99)
- ---------------------------------------------------------------
Cumulative Total Return(1) +0.62%
Aggregate Total Return(2) -3.33%
Distribution Rate(3) 4.84%
Taxable Equivalent Distribution Rate(4) 8.92%
30-Day Standardized Yield(5) 3.66%
Taxable Equivalent Yield(4) 6.75%
<TABLE>
<CAPTION>
INCEPTION
CLASS C 1-YEAR 3-YEAR (5/1/95)
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) +4.20% +22.34% +29.42%
Average Annual Total Return(2) +2.20% +6.58% +6.25%
Distribution Rate(3) 4.66%
Taxable Equivalent Distribution Rate(4) 8.65%
30-Day Standardized Yield(5) 3.61%
Taxable Equivalent Yield(4) 6.66%
</TABLE>
(1). Cumulative total return represents the change in value of an investment
over the periods indicated and does not include sales charges.
(2). Average annual total return represents the average annual change in value
of an investment over the periods indicated and includes the current,
applicable, maximum sales charge(s) for that class. Since Class B shares have
existed for less than one year, aggregate total return for that class represents
total return since inception, including the maximum sales charge.
(3). Distribution rate is based on an annualization of the respective class's
May monthly dividend and the maximum offering price per share on May 31, 1999.
(4). Taxable equivalent distribution rate and yield assume the 1999 maximum
combined federal, New York state and New York City personal income tax bracket
of 45.8%, 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, 1999.
Bond prices, and thus the fund's share price, generally move
in the opposite direction from interest rates. Since markets
can go down as well as up, investment return and principal
value will fluctuate with market conditions, and you may
have a gain or loss when you sell your shares.
Past performance is not predictive of future results.
TOTAL RETURN INDEX COMPARISON
FOR HYPOTHETICAL $10,000 INVESTMENT
Total return represents the change in value of an investment over the periods
shown. It includes the current, applicable, maximum sales charge(s), fund
expenses, account fees and reinvested distributions. The unmanaged index differs
from the fund in composition, does not pay management fees or expenses and
includes reinvested dividends. One cannot invest directly in an index.
Performance of the fund's shares exceeded the rate of inflation as measured by
the Consumer Price Index (CPI).
[CLASS A LINE GRAPH]
GRAPHIC MATERIAL (5)
This graph compares the performance of Franklin New York Tax-Free Income Fund's
Class A shares as tracked by the growth in value of a $10,000 investment, to
that of Lehman Brothers Municipal Bond Index and the Consumer Price Index (CPI)
from 6/1/89 - 5/31/99. Source: Standard and Poor's Micropal.
Date Franklin New York Tax-Free Lehman CPI
Income Fund-Class A Brothers
Municipal Bond
Index
06/01/1989 $9,575 10,000 10,000
06/30/1989 $9,694 1.36% 10,136 0.24% 10,024
07/31/1989 $9,787 1.36% 10,274 0.24% 10,048
08/31/1989 $9,748 -0.98% 10,173 0.16% 10,064
09/30/1989 $9,700 -0.30% 10,143 0.32% 10,096
10/31/1989 $9,750 1.22% 10,266 0.48% 10,145
11/30/1989 $9,881 1.75% 10,446 0.24% 10,169
12/31/1989 $9,967 0.82% 10,532 0.16% 10,185
01/31/1990 $9,900 -0.47% 10,482 1.03% 10,290
02/28/1990 $10,033 0.89% 10,575 0.47% 10,339
03/31/1990 $10,002 0.03% 10,579 0.55% 10,396
04/30/1990 $9,952 -0.72% 10,503 0.16% 10,412
05/31/1990 $10,107 2.18% 10,731 0.23% 10,436
06/30/1990 $10,225 0.88% 10,826 0.54% 10,492
07/31/1990 $10,390 1.48% 10,986 0.38% 10,532
08/31/1990 $10,273 -1.45% 10,827 0.92% 10,629
09/30/1990 $10,240 0.06% 10,833 0.84% 10,719
10/31/1990 $10,284 1.81% 11,029 0.60% 10,783
11/30/1990 $10,464 2.01% 11,251 0.22% 10,807
12/31/1990 $10,440 0.44% 11,301 0.00% 10,807
01/31/1991 $10,593 1.34% 11,452 0.60% 10,871
02/28/1991 $10,688 0.87% 11,552 0.15% 10,888
03/31/1991 $10,764 0.04% 11,556 0.15% 10,904
04/30/1991 $10,900 1.34% 11,711 0.15% 10,920
05/31/1991 $10,968 0.89% 11,815 0.30% 10,953
06/30/1991 $11,025 -0.10% 11,804 0.29% 10,985
07/31/1991 $11,194 1.22% 11,948 0.15% 11,001
08/31/1991 $11,354 1.32% 12,105 0.29% 11,033
09/30/1991 $11,567 1.30% 12,263 0.44% 11,082
10/31/1991 $11,657 0.90% 12,373 0.15% 11,098
11/30/1991 $11,726 0.28% 12,408 0.29% 11,131
12/31/1991 $11,859 2.15% 12,674 0.07% 11,138
01/31/1992 $11,856 0.23% 12,704 0.15% 11,155
02/29/1992 $11,871 0.03% 12,707 0.36% 11,195
03/31/1992 $11,971 0.04% 12,712 0.51% 11,252
04/30/1992 $12,135 0.89% 12,826 0.14% 11,268
05/31/1992 $12,324 1.18% 12,977 0.14% 11,284
06/30/1992 $12,546 1.68% 13,195 0.36% 11,325
07/31/1992 $12,953 3.00% 13,591 0.21% 11,348
08/31/1992 $12,827 -0.98% 13,458 0.28% 11,380
09/30/1992 $12,888 0.65% 13,545 0.28% 11,412
10/31/1992 $12,694 -0.98% 13,412 0.35% 11,452
11/30/1992 $13,000 1.79% 13,652 0.14% 11,468
12/31/1992 $13,173 1.02% 13,792 -0.07% 11,460
01/31/1993 $13,347 1.16% 13,952 0.49% 11,516
02/28/1993 $13,692 3.62% 14,457 0.35% 11,556
03/31/1993 $13,641 -1.06% 14,303 0.35% 11,597
04/30/1993 $13,715 1.01% 14,448 0.28% 11,629
05/31/1993 $13,882 0.56% 14,529 0.14% 11,646
06/30/1993 $14,107 1.67% 14,771 0.14% 11,662
07/31/1993 $14,113 0.13% 14,791 0.00% 11,662
08/31/1993 $14,376 2.08% 15,098 0.28% 11,695
09/30/1993 $14,532 1.14% 15,270 0.21% 11,719
10/31/1993 $14,559 0.19% 15,299 0.41% 11,767
11/30/1993 $14,444 -0.88% 15,165 0.07% 11,775
12/31/1993 $14,746 2.11% 15,485 0.00% 11,775
01/31/1994 $14,881 1.14% 15,661 0.27% 11,807
02/28/1994 $14,620 -2.59% 15,256 0.34% 11,847
03/31/1994 $14,200 -4.07% 14,635 0.34% 11,888
04/30/1994 $14,230 0.85% 14,759 0.14% 11,904
05/31/1994 $14,356 0.87% 14,888 0.07% 11,913
06/30/1994 $14,322 -0.61% 14,797 0.34% 11,953
07/31/1994 $14,511 1.83% 15,068 0.27% 11,985
08/31/1994 $14,590 0.35% 15,120 0.40% 12,033
09/30/1994 $14,418 -1.47% 14,898 0.27% 12,066
10/31/1994 $14,208 -1.78% 14,633 0.07% 12,074
11/30/1994 $13,884 -1.81% 14,368 0.13% 12,090
12/31/1994 $14,218 2.20% 14,684 0.00% 12,090
01/31/1995 $14,516 2.86% 15,104 0.40% 12,138
02/28/1995 $14,829 2.91% 15,544 0.40% 12,187
03/31/1995 $14,936 1.15% 15,722 0.33% 12,227
04/30/1995 $14,966 0.12% 15,741 0.33% 12,267
05/31/1995 $15,375 3.19% 16,243 0.20% 12,292
06/30/1995 $15,248 -0.87% 16,102 0.20% 12,317
07/31/1995 $15,331 0.95% 16,255 0.00% 12,317
08/31/1995 $15,495 1.27% 16,461 0.26% 12,349
09/30/1995 $15,572 0.63% 16,565 0.20% 12,373
10/31/1995 $15,798 1.45% 16,805 0.33% 12,414
11/30/1995 $16,024 1.66% 17,084 -0.07% 12,405
12/31/1995 $16,157 0.96% 17,248 -0.07% 12,397
01/31/1996 $16,222 0.76% 17,379 0.59% 12,470
02/29/1996 $16,083 -0.68% 17,261 0.32% 12,510
03/31/1996 $15,956 -1.28% 17,040 0.52% 12,575
04/30/1996 $15,925 -0.28% 16,993 0.39% 12,624
05/31/1996 $15,936 -0.04% 16,986 0.19% 12,648
06/30/1996 $16,101 1.09% 17,171 0.06% 12,655
07/31/1996 $16,239 0.91% 17,327 0.19% 12,679
08/31/1996 $16,236 -0.02% 17,324 0.19% 12,704
09/30/1996 $16,473 1.40% 17,566 0.32% 12,744
10/31/1996 $16,625 1.13% 17,765 0.32% 12,785
11/30/1996 $16,864 1.83% 18,090 0.19% 12,809
12/31/1996 $16,825 -0.42% 18,014 0.00% 12,809
01/31/1997 $16,865 0.19% 18,048 0.32% 12,850
02/28/1997 $17,006 0.92% 18,214 0.31% 12,890
03/31/1997 $16,852 -1.33% 17,972 0.25% 12,922
04/30/1997 $16,977 0.84% 18,123 0.12% 12,938
05/31/1997 $17,236 1.51% 18,396 -0.06% 12,930
06/30/1997 $17,377 1.07% 18,593 0.12% 12,946
07/31/1997 $17,832 2.77% 19,108 0.12% 12,961
08/31/1997 $17,735 -0.94% 18,929 0.19% 12,986
09/30/1997 $17,938 1.19% 19,154 0.25% 13,018
10/31/1997 $18,067 0.64% 19,277 0.25% 13,051
11/30/1997 $18,181 0.59% 19,390 -0.06% 13,043
12/31/1997 $18,426 1.46% 19,673 -0.12% 13,027
01/31/1998 $18,618 1.03% 19,876 0.19% 13,052
02/28/1998 $18,642 0.03% 19,882 0.19% 13,077
03/31/1998 $18,712 0.09% 19,900 0.19% 13,102
04/30/1998 $18,657 -0.45% 19,810 0.18% 13,125
05/31/1998 $18,931 1.58% 20,123 0.18% 13,149
06/30/1998 $19,033 0.39% 20,202 0.12% 13,165
07/31/1998 $19,073 0.25% 20,252 0.12% 13,180
08/31/1998 $19,319 1.55% 20,566 0.12% 13,196
09/30/1998 $19,533 1.25% 20,823 0.12% 13,212
10/31/1998 $19,555 0.00% 20,823 0.24% 13,244
11/30/1998 $19,610 0.35% 20,896 0.00% 13,244
12/31/1998 $19,641 0.25% 20,948 -0.06% 13,236
01/31/1999 $19,825 1.19% 21,198 0.24% 13,268
02/28/1999 $19,798 -0.44% 21,104 0.12% 13,284
03/31/1999 $19,851 0.14% 21,134 0.30% 13,323
04/30/1999 $19,905 0.25% 21,187 0.73% 13,421
05/31/1999 $19,826 -0.40% -0.58% 21,064 0.00% 13,421
Total 98.26% 110.64% 34.21%
Return
[CLASS C LINE GRAPH]
GRAPHIC MATERIAL (7)
This graph compares the performance of Franklin New York Tax-Free Income Fund's
Class C shares as tracked by the growth in value of a $10,000 investment, to
that of Lehman Brothers Municipal Bond Index and the Consumer Price Index (CPI)
from 5/1/95-5/31/99. Source: Standard and Poor's Micropal.
Date Franklin New York Tax- Lehman Brothers CPI
Free Income Fund-Class C Municipal Bond
Index
05/01/1995 $9,896 $10,000 $10,000
05/31/1995 $10,147 3.19% $10,319 0.20% $10,020
06/30/1995 $10,066 -0.87% $10,229 0.20% $10,040
07/31/1995 $10,125 0.95% $10,326 0.00% $10,040
08/31/1995 $10,219 1.27% $10,458 0.26% $10,066
09/30/1995 $10,273 0.63% $10,523 0.20% $10,086
10/31/1995 $10,408 1.45% $10,676 0.33% $10,120
11/30/1995 $10,561 1.66% $10,853 -0.07% $10,112
12/31/1995 $10,634 0.96% $10,957 -0.07% $10,105
01/31/1996 $10,672 0.76% $11,041 0.59% $10,165
02/29/1996 $10,583 -0.68% $10,966 0.32% $10,198
03/31/1996 $10,485 -1.28% $10,825 0.52% $10,251
04/30/1996 $10,460 -0.28% $10,795 0.39% $10,291
05/31/1996 $10,466 -0.04% $10,791 0.19% $10,310
06/30/1996 $10,578 1.09% $10,908 0.06% $10,316
07/31/1996 $10,654 0.91% $11,008 0.19% $10,336
08/31/1996 $10,647 -0.02% $11,005 0.19% $10,356
09/30/1996 $10,797 1.40% $11,159 0.32% $10,389
10/31/1996 $10,892 1.13% $11,286 0.32% $10,422
11/30/1996 $11,043 1.83% $11,492 0.19% $10,442
12/31/1996 $11,013 -0.42% $11,444 0.00% $10,442
01/31/1997 $11,033 0.19% $11,466 0.32% $10,475
02/28/1997 $11,120 0.92% $11,571 0.31% $10,508
03/31/1997 $11,013 -1.33% $11,417 0.25% $10,534
04/30/1997 $11,099 0.84% $11,513 0.12% $10,547
05/31/1997 $11,253 1.51% $11,687 -0.06% $10,540
06/30/1997 $11,349 1.07% $11,812 0.12% $10,553
07/31/1997 $11,641 2.77% $12,139 0.12% $10,565
08/31/1997 $11,562 -0.94% $12,025 0.19% $10,586
09/30/1997 $11,699 1.19% $12,168 0.25% $10,612
10/31/1997 $11,767 0.64% $12,246 0.25% $10,639
11/30/1997 $11,836 0.59% $12,318 -0.06% $10,632
12/31/1997 $12,000 1.46% $12,498 -0.12% $10,619
01/31/1998 $12,109 1.03% $12,627 0.19% $10,640
02/28/1998 $12,128 0.03% $12,631 0.19% $10,660
03/31/1998 $12,168 0.09% $12,642 0.19% $10,680
04/30/1998 $12,127 -0.45% $12,585 0.18% $10,699
05/31/1998 $12,288 1.58% $12,784 0.18% $10,719
06/30/1998 $12,349 0.39% $12,834 0.12% $10,731
07/31/1998 $12,379 0.25% $12,866 0.12% $10,744
08/31/1998 $12,533 1.55% $13,065 0.12% $10,757
09/30/1998 $12,655 1.25% $13,229 0.12% $10,770
10/31/1998 $12,674 0.00% $13,229 0.24% $10,796
11/30/1998 $12,692 0.35% $13,275 0.00% $10,796
12/31/1998 $12,716 0.25% $13,308 -0.06% $10,789
01/31/1999 $12,829 1.19% $13,466 0.24% $10,815
02/28/1999 $12,804 -0.44% $13,407 0.12% $10,828
03/31/1999 $12,822 0.14% $13,426 0.30% $10,861
04/30/1999 $12,862 0.25% $13,459 0.73% $10,940
05/31/1999 $12,808 -0.45% -0.58% $13,381 0.00% $10,940
Total 28.08% 33.81% 9.40%
Return
*Source: Standard and Poor's Micropal.
AVERAGE ANNUAL TOTAL RETURN
5/31/99
CLASS A
- --------------------------------------
1-Year +0.25%
5-Year +5.75%
10-Year +7.08%
Since Inception (9/13/82) +8.59%
AVERAGE ANNUAL TOTAL RETURN
5/31/99
CLASS C
- ------------------------------------
1-Year +2.20%
3-Year +6.58%
Since Inception (5/1/95) +6.25%
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>
CLASS A
----------------------------------------------------------------------------
YEAR ENDED MAY 31,
----------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ........ $ 12.08 $ 11.66 $ 11.46 $ 11.75 $ 11.72
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income .................... .64 .66 .68 .70 .73
Net realized and unrealized gains (losses) (.08) .45 .23 (.28) .06
---------- ---------- ---------- ---------- ----------
Total from investment operations .......... .56 1.11 .91 .42 .79
---------- ---------- ---------- ---------- ----------
Less distributions from:
Net investment income .................... (.64) (.66) (.68) (.71) (.76)
Net realized gains ....................... (.09) (.03) (.03) -- --
---------- ---------- ---------- ---------- ----------
Total distributions ....................... (.73) (.69) (.71) (.71) (.76)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year .............. $ 11.91 $ 12.08 $ 11.66 $ 11.46 $ 11.75
========== ========== ========== ========== ==========
Total return* ............................. 4.73% 9.83% 8.16% 3.65% 7.10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ........... $4,847,001 $4,824,135 $4,704,745 $4,709,483 $4,725,056
Ratios to average net assets:
Expenses ................................. .59% .58% .59% .58% .57%
Net investment income .................... 5.30% 5.57% 5.87% 5.99% 6.39%
Portfolio turnover rate ................... 13.34% 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 for periods less than one year.
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Financial Highlights (continued)
<TABLE>
<CAPTION>
CLASS B
-------
PERIOD ENDED
MAY 31,
-------
1999(1)
-------
<S> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ......................................... $12.06
-------
Income from investment operations:
Net investment income ....................................................... .77
Net realized and unrealized losses .......................................... (.70)
-------
Total from investment operations ............................................. .07
-------
Less distributions from net investment income ................................ (.24)
-------
Net asset value, end of period ............................................... $11.89
=======
Total return* ................................................................ .62%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ............................................ $19,059
Ratios to average net assets:
Expenses .................................................................... 1.16%+
Net investment income ....................................................... 4.72%+
Portfolio turnover rate ...................................................... 13.34%
</TABLE>
*Total return does not reflect sales commission or the contingent deferred sales
charge, and is not annualized for periods less than one year.
+Annualized.
(1)For the period January 1, 1999 (effective date) to May 31, 1999.
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Financial Highlights (continued)
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------------------
YEAR ENDED MAY 31,
-----------------------------------------------------------------------------
1999 1998 1997 1996 1995(1,2)
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .......... $ 12.07 $ 11.65 $ 11.45 $11.73 $11.50
-----------------------------------------------------------------------------
Income from investment operations:
Net investment income ...................... .62 .59 .63 .65 .05
Net realized and unrealized gains (losses) . (.12) .45 .21 (.29) .24
-----------------------------------------------------------------------------
Total from investment operations ............ .50 1.04 .84 .36 .29
-----------------------------------------------------------------------------
Less distributions from:
Net investment income ...................... (.57) (.59) (.61) (.64) (.06)
Net realized gains ......................... (.09) (.03) (.03) -- --
-----------------------------------------------------------------------------
Total distributions ......................... (.66) (.62) (.64) (.64) (.06)
-----------------------------------------------------------------------------
Net asset value, end of year ................ $ 11.91 $ 12.07 $ 11.65 $11.45 $11.73
-----------------------------------------------------------------------------
Total return* ............................... 4.20% 9.20% 7.52% 3.14% 2.56%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ............. $ 139,756 $ 108,686 $74,195 $39,047 $1,913
Ratios to average net assets:
Expenses ................................... 1.16% 1.16% 1.17% 1.16% 1.09%+
Net investment income ...................... 4.73% 4.98% 5.30% 5.43% 5.32%+
Portfolio turnover rate ..................... 13.34% 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 for periods less than one year.
+Annualized.
(1)Per share amounts have been calculated using the daily average shares
outstanding during the period.
(2)For 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. 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, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS 98.7%
BONDS 96.7%
Albany Housing Authority Limited Obligation, Refunding, 6.25%, 10/01/12 ................................ $ 5,250,000 $ 5,762,715
Albany Parking Authority Revenue, Refunding, Series A, 6.85%, 11/01/12 ................................. 1,610,000 1,739,734
Auburn IDA, MFR, Auburn Memorial Home, 6.50%, 2/01/34 .................................................. 5,775,000 6,126,871
Babylon IDA, Waste Facilities Revenue, Community Waste Management, Series A,
Pre-Refunded, 7.875%, 7/01/06 ........................................................................ 9,750,000 9,978,638
Batavia Housing Authority Mortgage Revenue, Washington Towers, Refunding, Series A, 6.50%, 1/01/23 ..... 1,000,000 1,041,280
Battery Park City Authority Revenue, Refunding, Series A, 5.80%, 11/01/22 .............................. 68,795,000 71,169,115
Bethany Retirement Home Inc. Mortgage Loan Revenue, 7.50%, 2/01/34 ..................................... 8,160,000 9,267,557
Clinton County COP, Correctional Facilities Project, 8.125%, 8/01/17 ................................... 5,375,000 6,938,050
Cortland County IDA, Civic Facilities Revenue, Cortland Memorial Hospital Inc. Project, 6.25%, 7/01/24 . 6,400,000 6,558,592
Franklin County COP, Court House Redevelopment Project, 8.125%, 8/01/06 ................................ 4,600,000 5,099,652
Franklin County IDA, Lease Revenue, County Correctional Facility Project, 6.75%, 11/01/12 .............. 4,790,000 5,060,922
Guam Airport Authority Revenue, Series A, 6.50%, 10/01/23 .............................................. 5,385,000 5,806,430
Guam Power Authority Revenue, Series A,
6.30%, 10/01/12 ...................................................................................... 5,075,000 5,548,954
6.625%, 10/01/14 ..................................................................................... 2,900,000 3,293,791
6.30%, 10/01/22 ...................................................................................... 45,340,000 49,574,303
6.75%, 10/01/24 ...................................................................................... 25,500,000 29,113,605
(b)5.25%, 10/01/34 .................................................................................... 15,000,000 14,691,900
Hamilton Elderly Housing Corp. Mortgage Revenue, Hamilton Apartments Project, 11.25%, 1/01/15 .......... 1,280,000 1,324,646
Illinois Elderly Housing Corp. Mortgage Revenue, Section 8 Housing Assistance Revenue, 7.25%, 7/01/09 .. 1,915,000 1,915,211
Long Island Power Authority Electric System Revenue, Series A,
5.25%, 12/01/26 ...................................................................................... 42,950,000 41,972,458
5.50%, 12/01/29 ...................................................................................... 26,825,000 27,165,946
FSA Insured, 5.125%, 12/01/22 ........................................................................ 3,945,000 3,873,635
Monroe County IDAR, Civic Facilities, De Paul Community Facilities, 6.50%, 2/01/24 ..................... 1,285,000 1,405,366
MTA Commuter Facilities Revenue,
Series 8, 5.50%, 7/01/21 ............................................................................. 5,000,000 5,108,400
Series A, 5.625%, 7/01/27 ............................................................................ 8,000,000 8,282,720
Series A, 5.25%, 7/01/28 ............................................................................. 23,300,000 22,822,583
Series A, Pre-Refunded, 6.50%, 7/01/24 ............................................................... 35,620,000 39,762,606
Series B, FGIC Insured, 4.75%, 7/01/26 ............................................................... 9,935,000 9,140,299
Series R, 5.50%, 7/01/17 ............................................................................. 2,000,000 2,056,740
MTA Commuter Facilities Revenue, Refunding, Series D, MBIA Insured, 5.125%, 7/01/22 .................... 3,000,000 2,946,090
(b)MTA Dedicated Tax Fund Revenue, Series A, FSA Insured, 5.25%, 4/01/23 ................................ 9,440,000 9,413,851
(b)MTA Dedicated Tax Fund, Series A, FSA Insured, 5.00%, 4/01/29 ........................................ 19,570,000 18,721,836
MTA Dedicated Tax Fund, Series A, MBIA Insured, 5.25%, 4/01/26 ......................................... 3,000,000 2,991,210
MTA Dedicated Tax Funding, Series A, FGIC Insured, 4.75%, 4/01/28 ...................................... 8,100,000 7,444,953
MTA Service Contract Revenue,
Commuter Facilities, Refunding, Series 5, 6.50%, 7/01/16 ............................................. 17,470,000 18,527,284
Commuter Facilities, Refunding, Series 5, 6.00%, 7/01/18 ............................................. 2,740,000 2,821,104
Commuter Facilities, Refunding, Series N, 7.125%, 7/01/09 ............................................ 24,160,000 26,523,331
Commuter Facilities, Series 5, 7.00%, 7/01/12 ........................................................ 31,605,000 33,848,007
Transit Facilities, Refunding, Series 5, 7.00%, 7/01/12 .............................................. 30,935,000 33,130,457
Transit Facilities, Refunding, Series 5, 6.50%, 7/01/16 .............................................. 40,495,000 42,945,757
Transit Facilities, Refunding, Series 5, 6.00%, 7/01/18 .............................................. 7,725,000 7,953,660
Transit Facilities, Refunding, Series N, 7.125%, 7/01/09 ............................................. 12,625,000 13,859,978
Transit Facilities, Series 6, Pre-Refunded, 7.00%, 7/01/09 ........................................... 2,000,000 2,166,140
</TABLE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 31, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
MTA Transit Facilities Revenue,
Series A, FSA Insured, 5.50%, 7/01/22 ........................................................... $ 6,480,000 $6,610,313
Series A, FSA Insured, 5.625%, 7/01/25 .......................................................... 8,000,000 8,257,360
Series A, FSA Insured, 5.625%, 7/01/27 .......................................................... 14,440,000 14,847,497
Series A, FSA Insured, Pre-Refunded, 6.10%, 7/01/21 ............................................. 16,940,000 19,000,582
Series B, FGIC Insured, 4.75%, 7/01/26 .......................................................... 19,000,000 17,480,190
Service Contract, Refunding, Series 8, 5.25%, 7/01/17 ........................................... 3,750,000 3,723,900
Service Contract, Refunding, Series 8, 5.375%, 7/01/21 .......................................... 12,375,000 12,426,975
New Rochelle Municipal Housing Authority Revenue, Series A, 5.55%, 12/01/14 ....................... 6,090,000 6,139,146
New York City GO,
Pre-Refunded, 7.00%, 2/01/17 .................................................................... 6,270,000 6,841,197
Refunding, Series F, 5.375%, 8/01/19 ............................................................ 5,000,000 5,017,750
Refunding, Series F, 5.25%, 8/01/24 ............................................................. 15,740,000 15,437,162
Refunding, Series F, 5.875%, 8/01/24 ............................................................ 7,000,000 7,442,400
Refunding, Series G, 5.25%, 8/01/16 ............................................................. 5,000,000 4,994,000
Series 1992, Rite 1, 7.00%, 10/01/11 ............................................................ 12,750,000 13,946,843
Series A, 7.75%, 8/15/13 ........................................................................ 15,000 16,299
Series A, 7.75%, 8/15/14 ........................................................................ 325,000 353,207
Series A, 6.25%, 8/01/17 ........................................................................ 2,675,000 2,920,752
Series A, Pre-Refunded, 7.75%, 8/15/13 .......................................................... 1,985,000 2,178,895
Series A, Pre-Refunded, 7.75%, 8/15/14 .......................................................... 9,675,000 10,620,054
Series A-1, 6.625%, 8/01/25 ..................................................................... 13,360,000 14,753,314
Series A-1, Pre-Refunded, 6.625%, 8/01/25 ....................................................... 3,640,000 4,125,758
Series B, 7.00%, 6/01/13 ........................................................................ 55,000 58,633
Series B, 7.00%, 6/01/14 ........................................................................ 105,000 111,851
Series B, 7.00%, 6/01/15 ........................................................................ 50,000 53,263
Series B, 6.75%, 10/01/15 ....................................................................... 100,000 108,718
Series B, 7.00%, 2/01/18 ........................................................................ 1,485,000 1,602,241
Series B, 5.25%, 8/01/20 ........................................................................ 2,500,000 2,468,375
Series B, 6.00%, 8/15/26 ........................................................................ 6,780,000 7,281,991
Series B, Pre-Refunded, 7.75%, 2/01/10 .......................................................... 2,000,000 2,219,760
Series B, Pre-Refunded, 7.75%, 2/01/11 .......................................................... 5,000,000 5,549,400
Series B, Pre-Refunded, 7.75%, 2/01/12 .......................................................... 500,000 554,940
Series B, Pre-Refunded, 7.75%, 2/01/13 .......................................................... 1,875,000 2,081,025
Series B, Pre-Refunded, 7.75%, 2/01/14 .......................................................... 10,950,000 12,153,186
Series B, Pre-Refunded, 7.00%, 6/01/14 .......................................................... 6,620,000 7,128,615
Series B, Pre-Refunded, 7.75%, 2/01/15 .......................................................... 22,610,000 25,094,387
Series B, Pre-Refunded, 7.00%, 6/01/15 .......................................................... 4,200,000 4,522,686
Series B, Pre-Refunded, 6.75%, 10/01/15 ......................................................... 1,400,000 1,541,764
Series B, Pre-Refunded, 6.00%, 8/15/26 .......................................................... 915,000 1,015,668
Series B, Sub Series B-1, Pre-Refunded, 7.00%, 8/15/16 .......................................... 2,000,000 2,285,180
Series B, Sub Series B-1, Pre-Refunded, 7.50%, 8/15/20 .......................................... 10,000,000 11,632,300
Series C, 5.50%, 11/15/37 ....................................................................... 18,545,000 19,154,760
Series C, 7.00%, 2/01/12 ........................................................................ 705,000 711,853
Series C, Pre-Refunded, 7.20%, 8/15/14 .......................................................... 4,000,000 4,289,360
Series C, Sub Series C-1, 7.00%, 8/01/16 ........................................................ 105,000 114,469
Series C, Sub Series C-1, Pre-Refunded, 7.00%, 8/01/16 .......................................... 4,395,000 4,861,485
Series D, 8.00%, 8/01/17 ........................................................................ 5,000 5,452
</TABLE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 1, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York City GO, (cont.)
Series D, 7.50%, 2/01/18 ........................................................................ $ 70,000 $ 76,397
Series D, 5.25%, 8/01/21 ........................................................................ 7,000,000 6,900,320
Series D, 5.50%, 8/01/22 ........................................................................ 2,500,000 2,594,425
Series D, Pre-Refunded, 8.25%, 8/01/13 .......................................................... 4,820,000 5,333,619
Series D, Pre-Refunded, 8.00%, 8/01/17 .......................................................... 3,675,000 4,047,719
Series D, Pre-Refunded, 7.50%, 2/01/18 .......................................................... 130,000 143,645
Series F, Pre-Refunded, 8.40%, 11/15/08 ......................................................... 7,500,000 8,413,500
Series F, Pre-Refunded, 8.40%, 11/15/09 ......................................................... 3,350,000 3,758,030
Series F, Pre-Refunded, 6.625%, 2/15/25 ......................................................... 11,240,000 12,648,035
Series G, 5.75%, 2/01/20 ........................................................................ 7,000,000 7,389,760
Series G, 6.00%, 10/15/26 ....................................................................... 9,815,000 10,585,576
Series G, Pre-Refunded, 6.00%, 10/15/26 ......................................................... 85,000 94,703
Series H, 7.20%, 2/01/13 ........................................................................ 1,200,000 1,301,340
Series H, 7.20%, 2/01/14 ........................................................................ 250,000 271,178
Series H, 7.20%, 2/01/15 ........................................................................ 615,000 667,097
Series H, 7.00%, 2/01/16 ........................................................................ 435,000 469,343
Series H, 7.00%, 2/01/17 ........................................................................ 230,000 248,278
Series H, 7.00%, 2/01/18 ........................................................................ 330,000 356,054
Series H, 5.375%, 8/01/27 ....................................................................... 13,290,000 13,305,549
Series H, 5.20%, 3/15/28 ........................................................................ 3,500,000 3,403,015
Series H, Pre-Refunded, 7.20%, 2/01/13 .......................................................... 8,800,000 9,645,768
Series H, Pre-Refunded, 7.20%, 2/01/14 .......................................................... 3,750,000 4,110,413
Series H, Pre-Refunded, 7.20%, 2/01/15 .......................................................... 3,985,000 4,367,998
Series H, Pre-Refunded, 7.00%, 2/01/16 .......................................................... 2,065,000 2,253,122
Series H, Pre-Refunded, 7.00%, 2/01/18 .......................................................... 3,895,000 4,255,015
Series I, 6.25%, 4/15/27 ........................................................................ 5,315,000 5,800,153
Series I, Pre-Refunded, 6.25%, 4/15/27 .......................................................... 4,185,000 4,709,715
Series J, 5.25%, 8/01/19 ........................................................................ 12,000,000 11,881,320
Series J, 5.30%, 8/01/24 ........................................................................ 9,395,000 9,316,928
Series K, Pre-Refunded, 6.25%, 4/01/26 .......................................................... 9,000,000 10,083,780
Unlimited, Series A, Pre-Refunded, 7.75%, 8/15/15 ............................................... 1,400,000 1,536,752
Unlimited, Series B, Pre-Refunded, 7.00%, 6/01/13 ............................................... 305,000 328,433
New York City HDC,
MFHR, Series B, 5.25%, 11/01/31 ................................................................. 3,000,000 2,949,360
MFMR, Refunding, Series A, FHA Insured, 6.55%, 10/01/15 ......................................... 19,450,000 20,587,047
MFMR, Series A, 6.55%, 4/01/18 .................................................................. 10,000,000 10,559,300
MFMR, Series A, 6.60%, 4/01/30 ................................................................. 51,500,000 54,488,545
New York City Health and Hospital Corp. Revenue,
Health System, Series A, 5.25%, 2/15/17 ......................................................... 23,825,000 23,365,654
Series A, Pre-Refunded, 6.30%, 2/15/20 .......................................................... 94,635,000 103,748,351
New York City IDA, Civic Facility Revenue,
College of New Rochelle, 5.75%, 9/01/17 ......................................................... 1,500,000 1,544,325
College of New Rochelle, 5.80%, 9/01/26 ......................................................... 1,500,000 1,539,465
Federation Protestant Welfare, 6.95%, 11/01/11 .................................................. 2,415,000 2,518,338
New York Blood Center Inc. Project, Pre-Refunded, 7.20%, 5/01/12 ................................ 4,000,000 4,517,880
New York Blood Center Inc. Project, Pre-Refunded, 7.25%, 5/01/22 ................................ 7,000,000 7,938,210
</TABLE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 31, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York City IDA, Civic Facility Revenue, (cont.)
St. Christopher Ottilie Project, 7.50%, 7/01/21 ................................................... $ 2,500,000 $ 2,689,525
The Lighthouse Inc. Project, Pre-Refunded, 6.50%, 7/01/22 ......................................... 8,000,000 8,727,280
New York City Municipal Water Finance Authority Water and Sewer System Revenue, Refunding,
6.75%, 6/15/17 .................................................................................... 18,100,000 19,131,157
Series A, 7.10%, 6/15/12 .......................................................................... 17,785,000 18,903,854
Series A, 7.00%, 6/15/15 .......................................................................... 2,185,000 2,319,115
Series A, 6.75%, 6/15/16 .......................................................................... 1,400,000 1,479,198
Series A, 6.25%, 6/15/21 .......................................................................... 990,000 1,024,066
Series A, 5.50%, 6/15/24 .......................................................................... 25,625,000 26,140,831
Series A, Pre-Refunded, 7.10%, 6/15/12 ............................................................ 15,700,000 16,881,739
Series A, Pre-Refunded, 7.10%, 6/15/12 ............................................................ 2,215,000 2,381,723
Series A, Pre-Refunded, 7.00%, 6/15/15 ............................................................ 690,000 740,598
Series A, Pre-Refunded, 6.125%, 6/15/20 ........................................................... 3,000,000 3,323,190
Series B, 5.875%, 6/15/26 ......................................................................... 10,250,000 10,768,035
Series B, 5.25%, 6/15/29 .......................................................................... 22,900,000 22,525,585
Series B, AMBAC Insured, 5.25%, 6/15/29 ........................................................... 10,000,000 9,969,800
Series B, FSA Insured, 5.00%, 6/15/29 ............................................................. 9,775,000 9,350,667
Series B, Pre-Refunded, 6.25%, 6/15/20 ............................................................ 41,190,000 46,245,249
Series B, Pre-Refunded, 6.375%, 6/15/22 ........................................................... 20,000,000 21,580,800
Series D, FGIC Insured, 4.75%, 6/15/25 ............................................................ 8,000,000 7,392,960
Series D, FSA Insured, 4.75%, 6/15/25 ............................................................. 12,000,000 11,089,440
Series D, MBIA Insured, 4.75%, 6/15/25 ............................................................ 15,650,000 14,462,478
New York City Transitional Finance Authority Revenue, Future Tax Secured, Series C, 5.00%, 5/01/29 .. 10,000,000 9,480,200
New York Housing Corp. Revenue, Series A, 5.50%, 11/01/20 ........................................... 2,200,000 2,208,118
New York State Commissioner General Services People of the State of New York
Certificate of Lease Assignment,
5.70%, 3/01/29 .................................................................................... 80,551,860 79,184,090
5.75%, 3/01/29 .................................................................................... 38,067,255 37,424,299
New York State COP, Hanson Redevelopment Project,
8.25%, 11/01/01 ................................................................................... 4,510,000 4,804,999
8.375%, 5/01/08 ................................................................................... 18,045,000 21,435,475
New York State Dormitory Authority Lease Revenue, State University Dormitory Facilities,
5.375%, 7/01/21 ................................................................................... 4,000,000 4,028,040
Series A, 5.125%, 7/01/28 ......................................................................... 1,200,000 1,155,216
Series B, 5.125%, 7/01/28 ......................................................................... 12,000,000 11,552,160
New York State Dormitory Authority Revenue,
Bishop Henry B. Hucles Nursing Home, 6.00%, 7/01/24 ............................................... 2,545,000 2,709,662
Bronx / Lebanon Hospital, Refunding, Series E, 5.20%, 2/15/15 ..................................... 4,230,000 4,198,317
Bronx / Lebanon Hospital, Refunding, Series E, 5.20%, 2/15/16 ..................................... 3,465,000 3,434,196
Brookdale Hospital, Refunding, Series J, 5.20%, 2/15/15 ........................................... 4,950,000 4,912,925
Buena Vida Nursing Home, Series A, 5.25%, 7/01/28 ................................................. 4,730,000 4,552,530
City University System Consolidated, Second General, Refunding, Series A, 6.00%, 7/01/17 .......... 10,215,000 10,945,679
City University System Consolidated, Series 1, 5.375%, 7/01/24 .................................... 27,920,000 27,974,444
City University System Consolidated, Series C, 7.50%, 7/01/10 ..................................... 14,900,000 17,590,642
City University System Consolidated, Series C, 6.00%, 7/01/16 ..................................... 8,900,000 9,062,069
City University System Consolidated, Series D, 7.00%, 7/01/09 ..................................... 3,430,000 3,893,256
City University System Consolidated, Third General, Refunding, Series A, 6.00%, 7/01/16 ........... 23,185,000 24,919,470
</TABLE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 31, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York State Dormitory Authority Revenue, (cont.)
City University System Consolidated, Third General, Series 2, MBIA Insured, 5.00%, 7/01/28 ......... $ 5,000,000 $ 4,778,600
City University System Consolidated, Third, Series 1, 5.25%, 7/01/25 ............................... 20,000,000 19,692,000
City University System, Refunding, Series U, 6.375%, 7/01/08 ....................................... 1,140,000 1,228,156
City University System, Series 1, 5.625%, 7/01/19 .................................................. 10,000,000 10,333,800
City University System, Series F, Pre-Refunded, 7.875%, 7/01/17 .................................... 40,000,000 42,701,600
City University System, Series U, Pre-Refunded, 6.375%, 7/01/08 .................................... 1,745,000 1,902,696
City University System, Series U, Pre-Refunded, 6.70%, 7/01/09 ..................................... 5,405,000 5,927,393
City University System, Third General, 6.00%, 7/01/20 .............................................. 13,000,000 14,014,390
City University System, Third General, Residence 2, 6.20%, 7/01/22 ................................. 8,565,000 9,323,859
City University System, Third General, Residence 2, Pre-Refunded, 6.20%, 7/01/22 ................... 19,990,000 22,476,956
City University System, Third General, Series 2, 6.00%, 7/01/26 .................................... 6,020,000 6,472,885
City University System, Third General, Series 2, 5.00%, 7/01/28 .................................... 11,295,000 10,619,785
City University System, Third General, Series 2, Pre-Refunded, 6.00%, 7/01/26 ...................... 11,300,000 12,569,668
Department of Education, Pre-Refunded, 7.75%, 7/01/21 .............................................. 2,530,000 2,775,056
Department of Health, 6.625%, 7/01/15 .............................................................. 760,000 849,710
Department of Health, 6.20%, 7/01/17 ............................................................... 7,650,000 8,225,892
Department of Health, 5.50%, 7/01/25 ............................................................... 61,100,000 62,144,810
Department of Health, Pre-Refunded, 6.625%, 7/01/15 ................................................ 4,595,000 5,237,151
Department of Health, Rosewell Park Cancer Center, Pre-Refunded, 6.625%, 7/01/24 ................... 9,175,000 10,430,691
Department of Health, Veterans Home, 5.50%, 7/01/21 ................................................ 7,000,000 7,151,760
Department of Health, Veterans Home, Pre-Refunded, 7.25%, 7/01/11 .................................. 3,190,000 3,467,434
Department of Health, Veterans Home, Pre-Refunded, 7.25%, 7/01/21 .................................. 9,775,000 10,625,132
Fashion Institute of Technology, 7.50%, 7/01/20 .................................................... 2,115,000 2,224,219
Genessee Valley, Series A, 6.90%, 2/01/32 .......................................................... 2,355,000 2,514,198
Heritage House Nursing Center, 7.00%, 8/01/31 ...................................................... 2,340,000 2,490,509
Interfaith Medical Center, Series D, 5.40%, 2/15/28 ................................................ 16,525,000 16,428,164
Long Island University, 6.25%, 9/01/23 ............................................................. 12,995,000 14,583,249
(b)Long Island University, Asset Guaranteed, 5.125%, 9/01/23 .......................................... 1,800,000 1,740,456
(b)Long Island University, Asset Guaranteed, 5.25%, 9/01/28 ........................................... 1,500,000 1,466,970
Manhattan College, Refunding, 6.50%, 7/01/19 ....................................................... 19,390,000 20,859,374
Mental Health Services Facilities, Refunding, 6.00%, 8/15/21 ....................................... 1,800,000 1,945,494
Mental Health Services Facilities, Refunding, Series B, 5.75%, 8/15/12 ............................. 2,165,000 2,315,901
Mental Health Services Facilities, Refunding, Series B, 5.625%, 2/15/21 ............................ 4,780,000 4,992,089
Mental Health Services Facilities, Refunding, Series C, 5.25%, 2/15/19 ............................. 13,435,000 13,255,374
Mental Health Services Facilities, Series A, 5.75%, 8/15/22 ........................................ 1,390,000 1,462,683
Mental Health Services Facilities, Series A, 5.75%, 2/15/27 ........................................ 9,370,000 9,845,340
Mental Health Services Facilities, Series B, 5.00%, 2/15/29 ........................................ 10,000,000 9,396,600
Mental Health Services Facilities, Series B, FSA Insured, 5.375%, 2/15/26 .......................... 5,470,000 5,490,294
Millard Fillmore Hospital, FHA Insured, 5.375%, 2/01/32 ............................................ 7,995,000 8,028,579
New School University, MBIA Insured, 5.00%, 7/01/33 ................................................ 5,000,000 4,719,350
New York Medical College, Asset Guaranteed, Pre-Refunded, 6.875%, 7/01/21 .......................... 5,375,000 5,921,530
Niagara Insured Mortgage, Nursing Home, MBIA Insured, 5.45%, 8/01/17 ............................... 2,500,000 2,560,550
Niagara Insured Mortgage, Nursing Home, MBIA Insured, 5.55%, 8/01/27 ............................... 2,000,000 2,043,460
North General Hospital, Refunding, Series G, 5.20%, 2/15/14 ........................................ 5,000,000 4,999,600
Nursing Home, Arden Hill, FHA Insured, 5.85%, 8/01/26 .............................................. 4,925,000 5,123,527
</TABLE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 31, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York State Dormitory Authority Revenue, (cont.)
Nursing Home, Center for Nursing, FHA Insured, 5.45%, 8/01/17 ...................................... $ 1,000,000 $ 1,007,410
Nursing Home, Center for Nursing, FHA Insured, 5.55%, 8/01/37 ...................................... 8,435,000 8,434,325
Nursing Home, St. John's Health Care Corp., Refunding, 6.25%, 2/01/36 .............................. 34,265,000 36,182,812
Nursing Home, Wesley Garden, 6.125%, 8/01/35 ....................................................... 2,000,000 2,109,440
Nyack Hospital, 6.25%, 7/01/13 ..................................................................... 3,000,000 3,198,660
Our Lady of Mercy, Mortgage Revenue, FHA Insured, 6.30%, 8/01/32 ................................... 5,835,000 6,176,523
Rochester Institute of Technology, Refunding, MBIA Insured, 5.25%, 7/01/22 ......................... 3,150,000 3,154,757
Schervier, Home Asset Guaranty, 5.50%, 7/01/17 ..................................................... 5,520,000 5,609,369
Schervier, Home Asset Guaranty, 5.50%, 7/01/27 ..................................................... 5,250,000 5,282,025
St. Agnes Hospital, Series A, 5.40%, 2/15/25 ....................................................... 2,000,000 1,988,820
St. Lukes Home Residential Health, Series A, 6.375%, 8/01/35 ....................................... 5,200,000 5,579,652
State University Athletic Facilities, Pre-Refunded, 7.25%, 7/01/12 ................................. 2,565,000 2,788,078
State University Athletic Facilities, Pre-Refunded, 7.25%, 7/01/21 ................................. 4,750,000 5,163,108
State University Educational Facilities, 5.75%, 5/15/16 ............................................ 3,000,000 3,178,440
State University Educational Facilities, 5.125%, 5/15/21 ........................................... 35,000,000 34,032,950
State University Educational Facilities, 5.50%, 5/15/26 ............................................ 31,750,000 32,355,473
State University Educational Facilities, Refunding, 5.125%, 5/15/27 ................................ 15,900,000 15,316,788
State University Educational Facilities, Series A, MBIA Insured, 4.75%, 5/15/25 .................... 10,450,000 9,658,204
State University Educational Facilities, Series B, 7.375%, 5/15/14 ................................. 7,025,000 7,366,766
State University Educational Facilities, Series B, 7.00%, 5/15/16 .................................. 7,995,000 8,357,094
State University Educational Facilities, Series B, Pre-Refunded, 6.25%, 5/15/20 .................... 25,000,000 27,794,250
State University Educational Facilities, Series B, Pre-Refunded, 5.75%, 5/15/24 .................... 5,500,000 5,902,710
The Highlands Living, 6.60%, 2/01/34 ............................................................... 3,780,000 4,062,064
Upstate Community Colleges, Series A, 5.00%, 7/01/19 ............................................... 7,230,000 6,937,763
Upstate Community Colleges, Series A, 6.00%, 7/01/22 ............................................... 7,000,000 7,583,170
Upstate Community Colleges, Series A, 6.25%, 7/01/25 ............................................... 30,000,000 33,510,300
Upstate Community Colleges, Series A, 6.125%, 7/01/27 .............................................. 11,845,000 13,344,459
Upstate Community Colleges, Series A, 5.00%, 7/01/28 ............................................... 25,675,000 24,247,727
Upstate Community Colleges, Series A, Pre-Refunded, 7.60%, 7/01/20 ................................. 3,250,000 3,460,113
Upstate Community Colleges, Series B, Pre-Refunded, 7.20%, 7/01/21 ................................. 1,000,000 1,085,980
W.K. Nursing Home Corp., 6.05%, 2/01/26 ............................................................ 6,800,000 7,165,772
Wycockoff Heights, Refunding, Series H, 5.20%, 2/15/16 ............................................. 5,820,000 5,768,260
New York State Energy Research and Development Authority Electric Facilities Revenue, Consolidated
Edison Project, Refunding, Series A, 6.10%, 8/15/20 ................................................. 11,820,000 12,596,810
New York State Energy Research and Development Authority PCR,
Long Island Lighting Co. Project, Series B, 5.15%, 3/01/16 ......................................... 10,000,000 10,004,900
Long Island Projects, 7.80%, 12/01/09 .............................................................. 3,300,000 3,353,295
Long Island Projects, Series A, 7.50%, 12/01/06 .................................................... 4,715,000 4,785,018
Niagara Mohawk Power Project, Refunding, Series A, AMBAC Insured, 5.15%, 11/01/25 .................... 3,700,000 3,626,555
New York State Environmental Facilities Corp. Special Obligation PCR, New York City
Municipal Water Finance Authority Project,
Pre-Refunded, 6.875%, 6/15/14 ...................................................................... 1,810,000 2,054,024
Series E, 6.875%, 6/15/14 .......................................................................... 1,190,000 1,331,420
New York State Environmental Facilities Corp. Special Obligation, Riverbank State Park, Pre-Refunded,
7.25%, 4/01/07 ..................................................................................... 4,000,000 4,432,600
7.25%, 4/01/12 ..................................................................................... 4,300,000 4,765,045
7.375%, 4/01/22 .................................................................................... 5,000,000 5,557,350
</TABLE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 31, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York State HFA, Service Contract Obligation Revenue,
Refunding, Series C, 6.00%, 9/15/21 ................................................................ $19,310,000 $20,495,634
Refunding, Series C, 5.50%, 9/15/22 ................................................................ 14,830,000 15,082,110
Series A, 7.25%, 9/15/12 ........................................................................... 225,000 244,847
Series A, 6.375%, 9/15/15 .......................................................................... 5,000,000 5,479,450
Series A, 5.50%, 9/15/22 ........................................................................... 3,000,000 3,038,220
Series A, 6.50%, 3/15/24 ........................................................................... 330,000 362,152
Series A, 6.50%, 3/15/25 ........................................................................... 860,000 948,219
Series A, 6.00%, 3/15/26 ........................................................................... 16,725,000 17,940,740
Series A, Pre-Refunded, 7.25%, 9/15/12 ............................................................. 2,150,000 2,379,685
Series A, Pre-Refunded, 7.80%, 9/15/20 ............................................................. 14,000,000 15,024,940
Series A, Pre-Refunded, 7.80%, 9/15/20 ............................................................. 10,000,000 10,887,800
Series A, Pre-Refunded, 6.50%, 3/15/24 ............................................................. 28,000,000 31,612,840
Series A, Pre-Refunded, 6.50%, 3/15/25 ............................................................. 10,410,000 11,861,154
Series C, 6.30%, 9/15/12 ........................................................................... 310,000 331,499
Series C, 6.125%, 3/15/20 .......................................................................... 99,760,000 106,362,117
Series C, 6.30%, 3/15/22 ........................................................................... 1,985,000 2,112,000
Series C, 5.50%, 3/15/25 ........................................................................... 17,015,000 17,276,350
New York State HFAR,
Adult Care, Series A, FHA Insured, Pre-Refunded, 7.85%, 2/15/30 .................................... 1,945,000 2,060,747
Children's Rescue Fund Housing, Series A, 7.625%, 5/01/18 .......................................... 5,285,000 5,543,912
Health Facilities of New York City, Refunding, Series A, 6.00%, 11/01/08 ........................... 2,400,000 2,589,096
Health Facilities of New York City, Refunding, Series A, 8.00%, 11/01/08 ........................... 16,240,000 17,375,338
Health Facilities of New York City, Series A, 6.00%, 5/01/07 ....................................... 11,200,000 12,090,736
Health Facilities of New York City, Series A, Pre-Refunded, 8.00%, 11/01/08 ........................ 80,410,000 86,935,272
Housing Project Mortgage, Refunding, Series A, FSA Insured, 6.10%, 11/01/15 ........................ 25,650,000 27,242,609
Housing Project Mortgage, Refunding, Series A, FSA Insured, 6.125%, 11/01/20 ....................... 31,145,000 32,928,986
MFHR, Second Mortgage, Series A, 7.00%, 8/15/23 .................................................... 4,245,000 4,481,489
MFHR, Second Mortgage, Series C, 6.60%, 8/15/27 .................................................... 5,500,000 5,868,115
MFHR, Second Mortgage, Series D, 6.25%, 8/15/23 .................................................... 2,500,000 2,621,900
MFHR, Second Mortgage, Series E, 6.75%, 8/15/25 .................................................... 6,915,000 7,382,800
MFMR, Refunding, Series C, FHA Insured, 6.45%, 8/15/14 ............................................. 1,000,000 1,058,550
MFMR, Series A, FHA Insured, 7.00%, 8/15/22 ........................................................ 4,885,000 5,258,800
MFMR, Series A, FHA Insured, 7.10%, 8/15/35 ........................................................ 8,630,000 9,162,126
MFMR, Series B, AMBAC Insured, 6.25%, 8/15/14 ...................................................... 2,715,000 2,909,448
MFMR, Series B, AMBAC Insured, 6.35%, 8/15/23 ...................................................... 33,960,000 36,352,142
MFMR, Series B, FHA Insured, 8.50%, 5/15/28 ........................................................ 12,575,000 12,598,641
MFMR, Series C, FHA Insured, 6.50%, 8/15/24 ........................................................ 6,870,000 7,265,506
New York State Local Government Assistance Corp., Series A, 6.00%, 4/01/24 ........................... 12,200,000 13,290,070
New York State Medical Care Facilities Finance Agency Revenue,
Beth Israel Medical Center Project, Refunding, Series A, 7.20%, 11/01/14 ........................... 9,145,000 9,170,240
Hospital and Nursing Home, Insured Mortgage, Refunding, Series A, FHA Insured, 6.20%, 2/15/21 ...... 3,415,000 3,623,827
Hospital and Nursing Home, Insured Mortgage, Series A, FHA Insured, Pre-Refunded, 6.20%, 2/15/21 ... 4,915,000 5,433,041
Hospital and Nursing Home, Methodist Medical Center, Series A, FHA Insured, Pre-Refunded,
6.70%, 8/15/23 .................................................................................... 5,500,000 6,055,885
Hospital and Nursing Home, Mortgage Revenue, Refunding, Series A, FHA Insured, 6.20%, 2/15/23 ...... 5,050,000 5,316,792
Hospital and Nursing Home, Mortgage Revenue, Refunding, Series B, 6.25%, 2/15/25 ................... 2,635,000 2,825,379
</TABLE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 31, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York State Medical Care Facilities Finance Agency Revenue, (cont.)
Hospital and Nursing Home, Mortgage Revenue, Refunding, Series B, FHA Insured, 6.25%, 2/15/35 .... $ 4,745,000 $ 5,041,183
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.125%, 2/15/15 .............. 6,415,000 6,812,024
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.30%, 8/15/23 ............... 9,000,000 9,454,950
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.25%, 2/15/27 ............... 12,235,000 12,982,069
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.20%, 2/15/28 ............... 26,910,000 28,562,005
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 7.45%, 8/15/31 ............... 28,290,000 30,498,883
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.375%, 8/15/33 .............. 7,940,000 8,298,888
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.50%, 2/15/34 ............... 11,200,000 12,077,408
Hospital and Nursing Home, Mortgage Revenue, Series C, FHA Insured, 6.50%, 8/15/21 ............... 8,000,000 8,658,880
Hospital and Nursing Home, Mortgage Revenue, Series C, FHA Insured, 6.20%, 8/15/23 ............... 21,540,000 22,875,265
Hospital and Nursing Home, Mortgage Revenue, Series C, FHA Insured, 9.00%, 2/15/26 ............... 1,795,000 1,825,048
Hospital and Nursing Home, Mortgage Revenue, Series C, FHA Insured, 6.375%, 8/15/29 .............. 86,865,000 92,926,440
Hospital and Nursing Home, Mortgage Revenue, Series D, FHA Insured, 6.60%, 2/15/31 ............... 13,375,000 14,353,649
Hospital and Nursing Home, Mortgage Revenue, Series D, FHA Insured, Pre-Refunded, 6.45%, 2/15/32 . 55,500,000 61,027,245
Hospital and Nursing Home, Refunding, Series B, 6.125%, 8/15/24 .................................. 30,000,000 31,701,600
Hospital and Nursing, Series B, FHA Insured, 6.95%, 2/15/32 ...................................... 19,915,000 21,483,306
Hospital and Nursing, Series B, Pre-Refunded, 6.95%, 2/15/32 ..................................... 4,085,000 4,474,668
Hospital and Nursing, Series C, FHA Insured, 6.65%, 8/15/32 ...................................... 14,310,000 15,362,214
Hospital and Nursing, Series C, FHA Insured, Pre-Refunded, 6.65%, 8/15/32 ........................ 690,000 757,613
Hospital Mortgage, Series A, AMBAC Insured, Pre-Refunded, 6.80%, 8/15/24 ......................... 3,200,000 3,662,848
Hospital Mortgage, Series A, AMBAC Insured, Pre-Refunded, 6.50%, 8/15/29 ......................... 5,125,000 5,789,098
Hospital Mortgage, Series A, AMBAC Insured, Pre-Refunded, 6.90%, 8/15/34 ......................... 31,210,000 35,880,577
Huntington Hospital Mortgage, Project A, Refunding, 6.50%, 11/01/14 .............................. 4,000,000 4,300,920
Medina Memorial Hospital Project, Series A, 7.30%, 5/01/11 ....................................... 2,670,000 2,853,856
Mental Health Services Facilities, Series A, 8.875%, 8/15/07 ..................................... 25,960,000 26,397,945
Mental Health Services Facilities, Series A, 7.70%, 2/15/18 ...................................... 3,405,000 3,462,034
Mortgage Revenue Project, Series A, 6.50%, 2/15/35 ............................................... 3,800,000 4,097,350
Mortgage Revenue Project, Series B , 6.60%, 8/15/34 .............................................. 23,775,000 25,534,826
Mortgage Revenue Project, Series B, FHA Insured, 6.15%, 2/15/25 .................................. 9,060,000 9,581,947
Mortgage Revenue Project, Series B, FHA Insured, 6.15%, 2/15/35 .................................. 2,200,000 2,315,346
Mortgage Revenue Project, Series C, 6.375%, 8/15/29 .............................................. 10,200,000 10,930,728
Mortgage Revenue Project, Series D, FHA Insured, 6.20%, 2/15/35 .................................. 6,250,000 6,658,063
Mortgage Revenue Project, Series E, FHA Insured, 6.375%, 2/15/35 ................................. 13,200,000 14,247,684
Mortgage Revenue Project, Series F, FHA Insured, 6.30%, 8/15/25 .................................. 16,400,000 17,664,276
Mortgage Revenue Project, Series F, FHA Insured, 6.375%, 8/15/34 ................................. 21,050,000 22,720,739
North General Hospital, Series A, Pre-Refunded, 7.35%, 8/15/09 ................................... 5,380,000 5,530,532
Saranac Lake General Hospital Project Revenue, Series A, 7.875%, 11/01/10 ........................ 1,425,000 1,535,081
Second Mortgage, Health Care Project Revenue, Series B, 6.35%, 11/01/14 .......................... 1,410,000 1,493,204
Secured Hospital Revenue, North General Hospital, Series A, Pre-Refunded, 7.40%, 2/15/19 ......... 32,180,000 33,083,614
Secured Hospital Revenue, Series A, 6.25%, 2/15/24 ............................................... 16,770,000 17,685,977
Secured Hospital Revenue, Series A, Pre-Refunded, 7.35%, 8/15/11 ................................. 22,150,000 24,230,328
Secured Hospital Revenue, Series A, Pre-Refunded, 7.40%, 8/15/21 ................................. 55,225,000 60,469,166
Security Mortgage Program Revenue, Adult Day Care, 6.375%, 11/15/20 .............................. 18,930,000 20,701,659
The Hospital for Special Surgery Revenue, Series A, Pre-Refunded, 6.375%, 8/15/24 ................ 6,025,000 6,743,120
The Hospital for Special Surgery Revenue, Series A, Pre-Refunded, 6.45%, 8/15/34 ................. 36,650,000 41,145,489
</TABLE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 31, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York State Mortgage Agency Revenue,
8th Series A, 6.875%, 4/01/17 ...................................................................... $13,685,000 $13,697,317
29th Series B, 6.45%, 4/01/15 ...................................................................... 17,250,000 18,071,963
Homeowners Mortgage, 37th Series A, 6.375%, 10/01/14 ............................................... 6,225,000 6,585,801
Homeowners Mortgage, 37th Series A, 6.45%, 10/01/17 ................................................ 9,000,000 9,522,990
Homeowners Mortgage, 8th Series E, 8.10%, 10/01/17 ................................................. 1,720,000 1,735,841
Homeowners Mortgage, Series 27, 6.90%, 4/01/15 ..................................................... 5,000,000 5,321,850
Homeowners Mortgage, Series 41, 6.50%, 10/01/17 .................................................... 9,880,000 10,492,659
Homeowners Mortgage, Series 43, MBIA Insured, 6.45%, 10/01/17 ...................................... 3,800,000 4,084,164
Homeowners Mortgage, Series 45, 7.20%, 10/01/17 .................................................... 23,730,000 25,520,429
Homeowners Mortgage, Series 47, 6.375%, 10/01/17 ................................................... 26,780,000 28,290,660
Homeowners Mortgage, Series 51, 6.40%, 10/01/17 .................................................... 9,945,000 10,551,148
Homeowners Mortgage, Series 57, 6.25%, 10/01/15 .................................................... 10,000,000 10,573,700
Homeowners Mortgage, Series 57, 6.30%, 10/01/17 .................................................... 7,330,000 7,776,544
Homeowners Mortgage, Series 57, 6.375%, 10/01/27 ................................................... 8,590,000 9,108,407
Homeowners Mortgage, Series 61, 5.90%, 4/01/27 ..................................................... 4,040,000 4,186,248
Homeowners Mortgage, Series 72, 5.30%, 4/01/27 ..................................................... 5,500,000 5,483,665
Homeowners Mortgage, Series OO, 8.05%, 10/01/11 .................................................... 310,000 320,590
Homeowners Mortgage, Series RR, 7.75%, 10/01/17 .................................................... 13,910,000 14,612,316
New York State Tollway Authority General Revenue,
Refunding, Series E, 5.00%, 1/01/25 ................................................................ 37,360,000 35,647,791
Series D, 5.375%, 1/01/27 .......................................................................... 5,975,000 6,016,945
New York State Tollway Authority Service Contract Revenue, Local Highway and Bridge, Pre-Refunded,
7.25%, 1/01/10 ..................................................................................... 750,000 804,570
6.25%, 4/01/14 ..................................................................................... 23,970,000 26,689,876
New York State Urban Development Corp. Revenue,
Cornell Center Project, 6.00%, 1/01/14 ............................................................. 4,500,000 4,749,795
Correctional Capital Facilities, Series 4, 5.375%, 1/01/23 ......................................... 11,210,000 11,212,578
Correctional Capital Facilities, Series 5, Pre-Refunded, 6.25%, 1/01/20 ............................ 81,350,000 90,294,433
Correctional Capital Facilities, Series 6, 5.625%, 1/01/17 ......................................... 3,255,000 3,381,554
Correctional Capital Facilities, Series 6, 5.375%, 1/01/25 ......................................... 14,260,000 14,273,832
Correctional Capital Facilities, Series 7, 5.70%, 1/01/16 .......................................... 3,000,000 3,169,830
Correctional Capital Facilities, Series 7, 5.70%, 1/01/27 .......................................... 56,950,000 59,030,384
Correctional Facilities Service Contract, Series B, 5.00%, 1/01/25 ................................. 21,055,000 19,865,814
Correctional Facilities Service Contract, Series B, AMBAC Insured, 4.75%, 1/01/28 .................. 2,000,000 1,838,920
Correctional Facilities, Refunding, 5.00%, 1/01/19 ................................................. 5,000,000 4,765,700
Onondaga County Convention Project, Refunding, 6.25%, 1/01/20 ...................................... 28,325,000 30,746,788
Youth Facilities, 6.00%, 4/01/15 ................................................................... 8,500,000 9,114,465
New York State Urban Development Corp., Corporate Purpose,
Senior lien, 5.375%, 7/01/22 ....................................................................... 34,900,000 35,260,517
Sub-lien, 5.60%, 7/01/26 ........................................................................... 9,750,000 10,021,830
Niagara Falls City School District COP, High School Facilities, 5.375%, 6/15/28 ...................... 10,000,000 9,791,100
North County Development Authority Solid Waste Systems Revenue, Pre-Refunded, 6.75%, 7/01/12 ......... 5,145,000 5,261,020
Oneida Health Care Corp. Mortgage Revenue, Oneida Health Care, Series A, FHA Insured, 7.20%, 8/01/31 . 2,155,000 2,266,801
Oneida-Herkimer Solid Waste Management Authority Solid Waste Systems Revenue,
6.20%, 4/01/00 ..................................................................................... 1,390,000 1,422,220
6.30%, 4/01/01 ..................................................................................... 1,035,000 1,080,209
</TABLE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 31, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Oneida-Herkimer Solid Waste Management Authority Solid Waste Systems Revenue, (cont.)
6.40%, 4/01/02 ..................................................................................... $ 1,930,000 $ 2,055,218
6.50%, 4/01/03 ..................................................................................... 2,075,000 2,251,147
6.65%, 4/01/05 ..................................................................................... 1,115,000 1,234,628
6.75%, 4/01/14 ..................................................................................... 655,000 685,988
Pre-Refunded, 6.75%, 4/01/14 ....................................................................... 20,100,000 22,365,069
Oswego County IDA, Civic Facility Revenue, St. Luke Residential Health, Series A, FHA Insured,
5.40%, 2/01/38 ..................................................................................... 2,750,000 2,718,953
Port Authority of New York and New Jersey Revenue,
Consolidated 67th Series, 6.875%, 1/01/25 .......................................................... 1,675,000 1,720,192
Consolidated 74th Series, 6.75%, 8/01/26 ........................................................... 4,400,000 4,690,092
Delta Air Lines Special Project, Series 1, 6.95%, 6/01/08 .......................................... 17,000,000 18,293,190
Port Jervis IDA, Mercy Community Hospital Revenue, Franciscan Health Partnership, 5.50%, 11/01/16 .... 1,000,000 993,310
Puerto Rico Commonwealth Highway and Transportation Authority Revenue, Series Y, 5.00%, 7/01/36 ...... 4,000,000 3,843,560
Puerto Rico Commonwealth Urban Renewal and Housing Corp. Commonwealth Appropriation,
Refunding, 7.875%, 10/01/04 ......................................................................... 8,100,000 8,358,390
Puerto Rico Electric Power Authority Revenue, Series T,
6.00%, 7/01/16 ..................................................................................... 5,575,000 5,968,539
Pre-Refunded, 6.375%, 7/01/24 ...................................................................... 15,565,000 17,426,107
Puerto Rico Industrial Medical and Environmental PCFA Revenue, American Airlines Inc., 6.45%, 12/01/25 21,015,000 22,677,917
Puerto Rico Municipal Finance Agency, Series A, 6.50%, 7/01/19 ....................................... 11,000,000 12,146,310
Rensselaer Municipal Leasing Corp. Leasehold Mortgage Revenue, Rensselaer County Nursing Home,
Series A, 6.90%, 6/01/24 ........................................................................... 10,000,000 10,894,100
Series B, 6.90%, 6/01/24 ........................................................................... 3,345,000 3,644,076
Suffolk County IDA Civic Facilities Revenue, Dowling College, Pre-Refunded, 8.25%, 12/01/20 .......... 4,500,000 4,894,020
Sunnybrook Elderly Housing Corp. Mortgage Revenue, Sunnybrook Apartments Project, 11.25%, 12/01/14 ... 1,250,000 1,291,375
Syracuse IDA, Civic Facility Revenue,
Crouse Health Hospital Inc., Project A, 5.25%, 1/01/16 ............................................. 4,000,000 3,845,720
Crouse Health Hospital Inc., Project A, 5.375%, 1/01/23 ............................................ 4,760,000 4,584,356
St. Joseph's Hospital Health Center Project, Pre-Refunded, 7.50%, 6/01/18 .......................... 2,000,000 2,177,940
Triborough Bridge and Tunnel Authority Revenue, General Purpose, Refunding, Series A, 5.25%, 1/01/28 . 8,250,000 8,237,543
Ulster County Resource Recovery Agency Solid Waste System Revenue, 6.00%, 3/01/14 .................... 8,620,000 8,880,238
Virgin Islands PFA Revenue, senior lien, Fund Loan Notes, Refunding, Series A, 5.50%,
10/01/15 ........................................................................................... 2,500,000 2,522,875
10/01/18 ........................................................................................... 2,500,000 2,516,550
Virgin Islands Water and Power Authority Electric System Revenue, Series A, Pre-Refunded, 7.40%, 7/01/11 2,840,000 3,062,713
Warren and Washington Counties IDAR, Adirondack Resource Recovery Project, Refunding, Series A,
7.90%, 12/15/07 ..................................................................................... 34,270,000 35,286,448
Yonkers GO, Series A, 9.20%,
2/01/01 ............................................................................................ 500,000 536,825
2/01/03 ............................................................................................ 1,090,000 1,250,731
2/01/04 ............................................................................................ 1,095,000 1,287,468
2/01/05 ............................................................................................ 1,095,000 1,320,395
-------------
TOTAL BONDS (COST $4,561,638,810) .................................................................... 4,836,021,274
-------------
</TABLE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 31, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
ZERO COUPON BONDS 2.0%
MTA Service Contract Revenue,
Commuter Facilities, Refunding, Series 7, 7/01/10 .................................................. $ 7,500,000 $ 4,368,000
Commuter Facilities, Refunding, Series 7, 7/01/11 .................................................. 7,590,000 4,160,610
Commuter Facilities, Refunding, Series 7, 7/01/13 .................................................. 2,065,000 1,002,434
Transit Facilities, Refunding, Series 7, 7/01/09 ................................................... 13,125,000 8,129,625
Transit Facilities, Refunding, Series 7, 7/01/10 ................................................... 9,000,000 5,241,600
Transit Facilities, Refunding, Series 7, 7/01/11 ................................................... 21,200,000 11,621,204
Transit Facilities, Refunding, Series 7, 7/01/12 ................................................... 15,380,000 7,939,925
Transit Facilities, Refunding, Series 7, 7/01/13 ................................................... 7,935,000 3,851,966
New York City GO,
Citysavers, Series B, 8/01/09 ...................................................................... 8,875,000 5,491,761
Citysavers, Series B, 6/01/12 ...................................................................... 1,030,000 536,022
Citysavers, Series B, 12/01/12 ..................................................................... 1,030,000 522,715
Citysavers, Series B, 6/01/13 ...................................................................... 1,030,000 506,276
Citysavers, Series B, 12/01/13 ..................................................................... 1,030,000 493,597
Citysavers, Series B, 6/01/14 ...................................................................... 1,030,000 478,425
Citysavers, Series B, 12/01/14 ..................................................................... 1,030,000 466,343
Citysavers, Series B, 6/01/15 ...................................................................... 1,030,000 451,037
Citysavers, Series B, 12/01/15 ..................................................................... 1,030,000 439,542
Citysavers, Series B, 6/01/16 ...................................................................... 1,030,000 424,813
Citysavers, Series B, 12/01/16 ..................................................................... 1,030,000 413,885
Citysavers, Series B, 6/01/17 ...................................................................... 1,030,000 401,123
Citysavers, Series B, 12/01/17 ..................................................................... 1,030,000 390,751
Citysavers, Series B, 6/01/18 ...................................................................... 1,030,000 378,535
Citysavers, Series B, 12/01/18 ..................................................................... 1,005,000 359,740
Citysavers, Series B, 6/01/19 ...................................................................... 1,030,000 358,409
Citysavers, Series B, 12/01/19 ..................................................................... 1,030,000 349,067
Citysavers, Series B, 6/01/20 ...................................................................... 10,000,000 3,287,300
M-Raes, Series 29, zero cpn. to 3/15/00, 8.00% thereafter, Pre-Refunded, 3/15/12 ................... 2,500,000 2,470,800
M-Raes, Series 30, zero cpn. to 3/15/00, 8.00% thereafter, Pre-Refunded, 3/15/13 ................... 3,875,000 3,829,740
M-Raes, Series 36, zero cpn. to 10/01/02, 8.00% thereafter, 10/01/14 ............................... 17,400,000 14,839,416
Series A-2, 8/1/2010 ............................................................................... 2,690,000 1,565,401
Orangetown Housing Authority Facilities Revenue, Senior Housing Center Project, Refunding,
MBIA Insured, 4/01/30 ............................................................................... 21,170,000 3,948,628
Triborough Bridge and Tunnel Authority Revenue, Convention Center Project, Series E, 1/01/12 ......... 21,625,000 11,449,789
-------------
TOTAL ZERO COUPON BONDS (COST $60,606,072) ........................................................... 100,168,479
-------------
TOTAL LONG TERM INVESTMENTS (COST $4,622,244,882) ................................................... 4,936,189,753
-------------
</TABLE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 31, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(a) SHORT TERM INVESTMENTS .1%
Long Island Power Authority Electric System Revenue, Sub Series 5, Daily VRDN and Put, 3.30%,
5/01/33
TOTAL SHORT TERM INVESTMENTS (COST $7,300,000) $ 7,300,000 $ 7,300,000
-------------
TOTAL INVESTMENTS (COST $4,629,544,882) 98.8% 4,943,489,753
OTHER ASSETS, LESS LIABILITIES 1.2% 62,325,418
--------------
NET ASSETS 100.0% $5,005,815,171
==============
</TABLE>
See glossary of terms on page 31.
(a)Variable rate demand notes (VRDNs) are tax-exempt obligations which contain a
floating or variable interest rate adjustment formula and an unconditional right
of demand to receive payment of the principal balance plus accrued interest at
specified dates.
(b)Sufficient collateral has been segregated for securities traded on a
when-issued or delayed delivery basis.
See notes to financial statements.
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 31, 1999 (CONT.)
GLOSSARY OF TERMS
AMBAC - American Municipal Bond Assurance Corp.
COP - Certificate of Participation
FGIC - Financial Guaranty Insurance Co.
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
HFAR - Housing Finance Authority/Agency Revenue
IDA - Industrial Development Authority/Agency
IDAR - Industrial Development Authority/Agency Revenue
MBIA - Municipal Bond Investors Assurance Corp.
MFHR - Multi-Family Housing Revenue
MFR - Multi-Family Revenue
MFMR - Multi-Family Mortgage Revenue
MTA - Metropolitan Transportation Authority
PCFA - Pollution Control Financing Authority
PCR - Pollution Control Revenue
FRANKLIN NEW YORK TAX-FREE INCOME FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1999
<TABLE>
<S> <C>
Assets:
Investments in securities:
Cost ................................................................................. $4,629,544,882
--------------
Value ................................................................................ 4,943,489,753
Cash .................................................................................. 84,779
Receivables:
Investment securities sold ........................................................... 32,543,834
Capital shares sold .................................................................. 6,599,402
Interest ............................................................................. 84,433,687
--------------
Total assets ........................................................................... 5,067,151,455
--------------
Liabilities:
Payables:
Investment securities purchased ...................................................... 46,227,962
Capital shares redeemed .............................................................. 6,273,939
Affiliates ........................................................................... 2,712,968
Shareholders ......................................................................... 5,932,234
Other liabilities ..................................................................... 189,181
--------------
Total liabilities ...................................................................... 61,336,284
--------------
Net assets, at value .................................................................. $5,005,815,171
--------------
Net assets consist of:
Undistributed net investment income ................................................... $ 2,837,217
Net unrealized appreciation ........................................................... 313,944,871
Accumulated net realized gain ......................................................... 26,140,542
Capital shares ........................................................................ 4,662,892,541
--------------
Net assets, at value ................................................................... $5,005,815,171
--------------
CLASS A:
Net assets, at value .................................................................. $4,847,000,588
--------------
Shares outstanding .................................................................... 406,979,670
--------------
Net asset value per share* ............................................................ $11.91
--------------
Maximum offering price per share (net asset value per share / 95.75%, respectively) ... $12.44
--------------
CLASS B:
Net assets, at value .................................................................. $ 19,058,927
--------------
Shares outstanding .................................................................... 1,602,304
--------------
Net asset value and maximum offering price per share .................................. $11.89
--------------
CLASS C:
Net assets, at value .................................................................. $ 139,755,656
--------------
Shares outstanding .................................................................... 11,737,272
--------------
Net asset value per share* ............................................................ $11.91
--------------
Maximum offering price per share (net asset value per share / 99.00%, respectively) ... $12.03
--------------
</TABLE>
* Redemption price is equal to net asset value less any applicable contingent
deferred sales charge.
See notes to financial statements.
32
<PAGE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1999
<TABLE>
<S> <C>
Investment income:
Interest ............................................................................... $294,609,914
------------
Expenses:
Management fees (Note 3) ............................................................... 22,815,525
Distribution fees (Note 3)
Class A ............................................................................... 3,736,786
Class B ............................................................................... 23,909
Class C ............................................................................... 823,951
Transfer agent fees (Note 3) ........................................................... 2,022,522
Custodian fees ......................................................................... 49,755
Reports to shareholders ................................................................ 400,356
Registration and filing fees ........................................................... 30,466
Professional fees (Note 3) ............................................................. 152,488
Trustees' fees and expenses ............................................................ 79,449
Other .................................................................................. 139,065
------------
Total expenses .......................................................................... 30,274,272
------------
Net investment income .................................................................. 264,335,642
------------
Realized and unrealized gains (losses):
Net realized gain from investments ..................................................... 34,770,841
Net unrealized depreciation on investments ............................................. (68,274,888)
------------
Net realized and unrealized loss ........................................................ (33,504,047)
------------
Net increase in net assets resulting from operations .................................... $230,831,595
============
</TABLE>
See notes to financial statements.
33
<PAGE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MAY 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
----------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ........................................................ $ 264,335,642 $ 271,156,474
Net realized gain from investments ........................................... 34,770,841 45,293,825
Net unrealized appreciation (depreciation) on investments .................... (68,274,888) 139,361,103
----------------------------------
Net increase in net assets resulting from operations ........................ 230,831,595 455,811,402
Distributions to shareholders from:
Net investment income:
Class A ..................................................................... (259,311,860) (264,830,442)
Class B ..................................................................... (144,441) --
Class C ..................................................................... (5,976,311) (4,425,343)
Net realized gains:
Class A ..................................................................... (34,522,709) (14,121,098)
Class C ..................................................................... (912,969) (267,394)
----------------------------------
Total distributions to shareholders ........................................... (300,868,290) (283,644,277)
Capital share transactions: (Note 2)
Class A ..................................................................... 90,794,689 (49,693,259)
Class B ..................................................................... 19,219,023 --
Class C ..................................................................... 33,016,833 31,407,102
----------------------------------
Total capital share transactions .............................................. 143,030,545 (18,286,157)
Net increase in net assets .................................................. 72,993,850 153,880,968
Net assets
Beginning of year ............................................................. 4,932,821,321 4,778,940,353
----------------------------------
End of year ................................................................... $ 5,005,815,171 $ 4,932,821,321
----------------------------------
Undistributed net investment income included in net assets:
End of year ................................................................... $ 2,837,217 $ 3,934,187
==================================
</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, New York state and New York City 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 substantially all of its taxable income.
c. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income and estimated expenses are accrued daily. Bond discount and
premium are amortized on an income tax basis. Distributions to shareholders are
recorded on the ex-dividend date.
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.
d. ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Notes to Financial Statements (continued)
2. SHARES OF BENEFICIAL INTEREST
The Fund offers three classes of shares: Class A, Class B, and Class C.
Effective January 1, 1999, Class I and Class II were renamed Class A and Class
C, respectively, and the Fund began offering a new class of shares, Class B.
Each class of shares differs by its initial sales load, distribution fees,
voting rights on matters affecting a single class and its exchange privilege.
At May 31, 1999, 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,
--------------------------------------------------------------
1999 1998
--------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A SHARES:
Shares sold ..................................... 36,317,861 $ 438,090,167 30,145,107 $ 359,395,945
Shares issued in reinvestment of distributions .. 11,562,080 139,259,975 10,819,907 128,475,365
Shares redeemed ................................. (40,360,181) (486,555,453) (45,127,295) (537,564,569)
--------------------------------------------------------------
Net increase (decrease) ......................... 7,519,760 $ 90,794,689 (4,162,281) $ (49,693,259)
==============================================================
CLASS B SHARES:*
Shares sold ..................................... 1,616,584 $ 19,388,622
Shares issued in reinvestment of distributions .. 9,201 110,109
Shares redeemed ................................. (23,481) (279,708)
----------------------------
Net increase .................................... 1,602,304 $ 19,219,023
============================
CLASS C SHARES:
Shares sold ..................................... 4,034,431 $ 48,699,164 3,322,782 $ 39,628,686
Shares issued in reinvestment of distributions .. 359,822 4,333,718 249,898 2,969,445
Shares redeemed ................................. (1,660,553) (20,016,049) (937,667) (11,191,029)
--------------------------------------------------------------
Net increase .................................... 2,733,700 $ 33,016,833 2,635,013 $ 31,407,102
==============================================================
</TABLE>
*Effective date of Class B shares was January 1, 1999.
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain officers and trustees of the Fund are also officers and/or directors of
Franklin Advisers, Inc. (Advisers), 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 Advisers 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
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Notes to Financial Statements (continued)
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (cont.)
Fees are further reduced on net assets over $10 billion.
Under an agreement with Advisers, FT Services provides administrative services
to the Fund. The fee is paid by Advisers based on average daily net assets, and
is not an additional expense of the Fund.
The Fund reimburses Distributors, up to .10%, .65%, and .65% per year of its
average daily net assets of Class A, Class B, and Class C, respectively, for
costs incurred in marketing the Fund's shares.
Distributors paid net commissions on sales of the Fund's shares, and received
contingent deferred sales charges for the year of $1,228,123 and $139,155,
respectively.
The Fund paid shareholder servicing fees of $2,022,522 of which $1,707,712 was
paid to Investor Services.
Included in professional fees are legal fees of $25,500 that were paid to a law
firm in which a partner is an officer of the Fund.
4. INCOME TAXES
At May 31, 1999, the net unrealized appreciation based on the cost of
investments for income tax purposes of $4,630,608,441 was as follows:
Unrealized appreciation $ 324,403,267
Unrealized depreciation (11,521,955)
-------------
Net unrealized appreciation $ 312,881,312
-------------
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, 1999 aggregated $771,744,301 and $658,356,804, 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 Auditors' Report
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
OF FRANKLIN NEW YORK TAX-FREE INCOME FUND
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Franklin New York Tax-Free Income
Fund (the "Fund") at May 31, 1999, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at May 31,
1999 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
San Francisco, California
July 1, 1999
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Tax Information
Under Section 852(b)(3)(C) of the Internal Revenue Code, the Fund hereby
designates $34,770,841 as a capital gain dividend for the fiscal year ended May
31, 1999.
Under Section 852(b)(5)(A) of the Internal Revenue Code, the fund hereby
designates 100% of the distributions paid from net investment income as
exempt-interest dividends for the fiscal year ended May 31, 1999.
This page intentionally left blank.
