SEMI-ANNUAL REPORT
FRANKLIN NEW YORK
TAX-FREE INCOME FUND
November 30, 1998
[PHOTO OF STATUE OF LIBERTY]
[FRANKLIN TEMPLETON LOGO]
<PAGE>
[Celebrating Over 50 Years]
Thank you for investing with Franklin Templeton. We encourage our
investors to maintain a long-term perspective and remember that all securities
markets move both up and down, as do mutual fund share prices. We appreciate
your past support and look forward to serving your investment needs in the
years ahead.
[PHOTO]
CHARLES B. JOHNSON (right)
President
Franklin New York
Tax-Free Income Fund
THOMAS J. KENNY (left)
Director
Franklin Municipal
Bond Department
<PAGE>
CONTENTS
<TABLE>
<S> <C>
Shareholder Letter .................. 1
Special Update:
A Word About Municipal
Bond Insurance ...................... 5
Manager's Discussion ................ 7
Performance Summary ................. 12
Municipal Bond Ratings .............. 14
Financial Highlights &
Statement of Investments ............ 17
Financial Statements ................ 31
Notes to
Financial Statements ................ 34
</TABLE>
[FUND CATEGORY PYRAMID]
SHAREHOLDER LETTER
Dear Shareholder:
It's a pleasure to bring you Franklin New York Tax-Free Income Fund's semiannual
report for the period ended November 30, 1998.
A TALE OF TWO ECONOMIES
During the six months under review, the U.S. economy began to appear like a tale
of two economies -- a healthy and expanding domestic sector contrasted with a
fragile and ailing export-oriented sector. Despite momentary dips in leading
economic indicators, the gross domestic product grew at a 3.9% annualized rate
in the third quarter of 1998, masking much of the underlying divergence.
Consumer spending remained robust and the housing market regained its momentum,
after ebbing slightly in August and September. Consumer confidence rose in
November, after tumbling in October, signaling that consumers remained guardedly
optimistic about the economy, the stock market and their jobs. Housing starts,
which fell 2.6% in September, rose an unexpectedly strong 7.34% in October, the
biggest gain in 13 months. At the same time, existing home sales also showed
surprising strength, registering 2.13% growth for the month. Retail sales
bounced back in October as well, increasing a respectable 1.0%, compared with
September's 0.3% increase.
Meanwhile, exports were hit hard by the emerging market turmoil that prevailed
for much of the reporting period, hampering the U.S. manufacturing sector and
producing
<PAGE>
record trade deficits. The National Association of Purchasing Managers Index in
November indicated that manufacturing activity declined for the fourth time in
the last six months. Durable goods orders, which include orders for cars,
appliances and other heavy machinery, fell 2.16% in October, the first decrease
in five months. The third quarter trade deficit, $44.5 billion, was the largest
on record, and the 1998 trade deficit, $123 billion, was 50.5% above 1997's
imbalance as of September 30, 1998.
Because of the problems in the world markets, many financial institutions
curtailed their lending, creating a "credit crunch." Beginning with the Russian
debt crisis and culminating with the emergency bail-out of a major hedge fund,
capital worldwide became less available, adversely affecting many companies.
Taking note of these factors, the Federal Reserve Board's monetary policy panel,
the Federal Open Market Committee, cut the federal funds target rate three times
by 0.25%, to 4.75%, in an effort to stimulate growth. The Fed's moves attempted
to prevent a recession by providing liquidity to the financial system and making
it easier for major corporations to obtain favorable lending from banks.
The bond and stock markets reacted to the Fed's loosening of monetary policy in
two opposite ways. After the 30-year U.S. Treasury bond reached a record-low
yield of 4.70% on October 5, 1998, the U.S. bond market quickly lost ground as
investors became less enthusiastic about committing capital to fixed-income
markets. On November 30, 1998, the yield on the 30-year Treasury bond stood at
5.08%, 0.38% higher than the yield on October 5, 1998. The stock market was a
different story. After losing more than 20% of their value in the third quarter
correction, many stocks rebounded strongly. On November 23, 1998,
2
<PAGE>
the Dow Jones(R) Industrial Average reached an all-time high of 9374.27, with
many other indices registering record highs as well.
"While investment success is the primary objective of investment planning, one
important by-product of a good plan can be peace of mind."
STAYING ON COURSE
In times like these, it's easy to understand why people can become emotional
about their investments. That's why we believe investors should call their
investment representatives, and plan to cover three points in their
conversations. One, review their current financial plans, recalling their goals
and why they made their investment choices in the first place. Two, discuss the
value of diversification, which can help reduce the risk that any one type of
security will have a negative impact on an overall portfolio, and check if their
investments are still properly diversified. As shown during the reporting
period, the bond and stock markets often behave differently. In each of the five
years since 1973 that stocks posted negative annual returns, bonds posted
positive returns.* Three, review their investment timeframe to help put recent
market declines into perspective and avoid turning what could be only a
temporary paper loss into a permanent one. Maintaining a long-term outlook is
one of the keys to weathering market volatility.
An important component of a long-term approach is setting up a regular
investment plan. Investing on a scheduled basis, regardless of market
directions, can help investors take advantage of market downturns when prices
are low, and benefit from any market rallies. We encourage you to contact your
investment representative to discuss setting up a regular investment plan. While
investment success is the primary objective of investment planning, one
important by-product of a good plan can be peace of mind.
* Source: For bond market statistics based on the Lehman Brothers Government/
Corporate Bond Index - Lehman Brothers; for stock measured by the S&P 500 Index
- - Standard & Poor's(R).
3
<PAGE>
Our investment philosophy remains disciplined and focused, as we strive to offer
our shareholders high, current tax-free income and relatively low price
volatility. The outlook for the municipal bond market should remain positive,
given the relatively stable U.S. economy, low inflation environment, budget
surplus, strong dollar, and the economic and market uncertainty facing many of
the world's regions. Municipal bond funds continue to be an attractive
investment for those investors seeking tax-free income as well as providing an
opportunity to diversify risk in their portfolio.
As always, we appreciate your support, welcome your questions and comments and
look forward to serving your investment needs in the years ahead.
Sincerely,
/s/ Charles B. Johnson
Charles B. Johnson
President
Franklin New York Tax-Free Income Fund
/s/ Thomas J. Kenny
Thomas J. Kenny
Director
Franklin Municipal Bond Department
4
<PAGE>
A WORD ABOUT MUNICIPAL BOND INSURANCE
Municipal bond insurers guarantee the timely payment of interest and principal
on insured bond issues, providing bond investors with additional protection
against the potential of the issuer's payment default. Moody's and Standard &
Poor's assign the four principal municipal bond insurers - MBIA, AMBAC, FGIC and
FSA - their highest rating, AAA, based on their ability to pay claims. This is
important, as once a bond is insured it no longer carries the underlying
security's rating, but the insurer's rating. At the end of 1997, the four
primary municipal bond insurers comprised more than 99% of the market, with MBIA
controlling the largest share, 42.1%.
Municipal bond insurers often work with bond reinsurers to enhance their ability
to generate new business. By purchasing portions of insured bond portfolios from
the insurers, bond reinsurers assume a portion of the risk, freeing up the
insurers' capital and enabling them to insure additional municipal bond issues.
The added capital provided by the reinsurers, in turn, increases the overall
size of the insured municipal bond market.
5
<PAGE>
<TABLE>
<CAPTION>
INSURERS AS A % OF MARKET SHARE*
12/31/97
<S> <C>
MBIA 42.1%
AMBAC 23.9%
FGIC 18.9%
FSA 14.5%
OTHER 0.6%
</TABLE>
* Source: The Bond Buyer, 1998.
Currently, many municipal bond issuers favor the use of bond insurance. For the
first nine months of 1998, municipal bond insurers covered 51.6% of the
new-issue municipal bond market, involving 4,268 new issues valued at $110
billion. For issuers, obtaining bond insurance can often lower their borrowing
costs as it usually improves their credit rating, which more than makes up for
the cost of the insurance. In addition, the four primary, triple-A rated bond
insurers presently charge issuers comparatively inexpensive insurance premiums,
due to the extremely competitive environment for municipal bond insurance. Bond
insurance also enables issuers to market their bonds to a larger pool of
potential buyers. For example, insured municipal bond funds purchase primarily,
if not exclusively, insured bonds.
Low-cost municipal bond insurance benefits investors beyond the credit
protection it provides against payment default. As insured bonds appeal to a
wider variety of investors, insurance can lead to improved liquidity, allowing
investors to more easily buy and sell bonds.
<TABLE>
<CAPTION>
INSURED MUNICIPAL BOND ISSUES*
As a % of muni bond market
<S> <C>
1993 37.0%
1994 37.0%
1995 43.0%
1996 46.0%
1997 49.0%
1998** 51.6%
</TABLE>
* Source: Fitch IBCA.
** Through 9/30/98.
6
<PAGE>
<TABLE>
<CAPTION>
CREDIT QUALITY BREAKDOWN
Based on Total Long-Term Investments*
11/30/98
[PIE CHART]
<S> <C>
AAA 41.6%
AA 12.9%
A 22.1%
BBB 22.6%
Below Investment
Grade 0.8%
</TABLE>
* Quality Breakdown may include
internal ratings for bonds not rated by a
national rating agency.
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
Over the reporting period, New York state completed three years of record
financial performance. Fiscal 1997 and 1998 finished with surpluses of $1.4
billion and $2.0 billion, respectively, while the enacted fiscal 1999 budget
contains a $902 million built-in reserve that will likely grow higher. These
surpluses resulted chiefly from the state's buoyant financial sector in the
first half of 1998. However, New York's economy still lags the nation's. As of
the end of the reporting period, the state's total employment was below
pre-recession numbers. Since 1990, New York's annual employment declined an
average of 0.3%, while U.S. employment grew almost 2.0% annually. The financial
sector had a greater impact on personal income growth than job
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.
7
<PAGE>
creation, and the state's 4.5% personal income growth rate closely tracked the
5.5% national average. Moody's, a national credit rating agency, gave New York
general obligation debt its A2 rating as of the end of the reporting period.
This reflected the state's recent, strong economic and financial performance, as
well as its longer-term vulnerability to an economic slowdown, based on weak
employment growth and revenue dependence on the historically volatile financial
services sector(1).
BOND MARKET PERFORMANCE
After several years of strong growth, the U.S. economy showed signs of slowing
in the latter portion of the reporting period ending November 30, 1998. The
economic slowdown can be attributed to several factors, among them, the
continued uncertainty in many foreign markets. The turbulence in these markets
created a "flight to quality" to the relative safety of U.S. government-backed,
fixed-income securities. As increased demand caused the price of the 30-year
Treasury bond to rise, its yield fell to a low of 4.70% on October 5, 1998. The
popularity of higher-rated securities resulted in falling prices and rising
yields for lower-rated securities, widening credit spreads to disproportionate
levels. In an effort to reduce this credit spread between higher-
(1.) Moody's Investors Service, Municipal Credit Research, 7/8/98.
8
<PAGE>
and lower-rated securities and prevent a credit crunch, the Federal Reserve
Board lowered the federal funds rate, the rate at which banks lend each other
money, three times. Over the reporting period, the 30-year Treasury bond yield
fell from 5.78% on June 1, 1998, to 5.08% on November 30, 1998.
The Bond Buyer 40, an index published daily by the Bond Buyer, providing a
yardstick against which municipal bond yields are measured, began the period
yielding 5.33% and ended the period yielding 5.10% on November 30. New municipal
supply was extremely strong. Through the first nine months of the year, it
exceeded last year's new issuance supply by more than 36%, and supply in New
York state was 55% over last year's levels. As record supply entered the market,
the overall demand for municipals did not keep pace. Demand from nontraditional
municipal bond buyers and arbitrage buyers, lured by municipal bonds' attractive
pricing relative to Treasuries, mainly supported this supply, but demand was
still not strong enough to drive the municipal market in step with the Treasury
market. As a result, municipals underperformed Treasuries, and the yield on
AAA-rated, insured municipal securities stood at about 95.3% of Treasuries at
the end of the reporting period.
9
<PAGE>
PORTFOLIO BREAKDOWN
11/30/98
<TABLE>
<CAPTION>
% OF TOTAL
LONG-TERM
SECTOR INVESTMENTS
- -------------------------------------------
<S> <C>
Prerefunded 28.9%
Housing 15.1%
Hospitals 13.6%
Education 8.3%
Transportation 8.0%
Utilities 7.4%
Health Care 7.2%
Other Revenue 5.6%
General Obligation 4.5%
Certificates of Participation 1.0%
Sales Tax 0.3%
Industrial 0.1%
</TABLE>
FUND UPDATE
As in prior reporting periods, many issuers continue to take advantage of lower
interest rates to refund existing higher-coupon debt. Therefore, the fund's
exposure to prerefunded bonds increased slightly over the reporting period. Our
management of prerefunded bonds has not changed. We typically look to sell
prerefunded bonds with approximately five years remaining to their call date.
Such an approach generally enables the fund to capture a premium on the
prerefunded bonds and use the capital to invest in current coupon bonds. In this
way, the fund seeks to extend its call protection and preserve its
income-earning potential, while maintaining a relatively stable share value.
The fund experienced moderate cash flows during the reporting period, and sought
to invest in current coupon securities as they became available. The fund
purchased bonds in many different sectors, with a diversified allocation, as
shown by the chart to the left. Some of the fund's purchases during the period
were the Long Island Power Authority, Metropolitan Transportation Authority, New
York State Dormitory Authority and New York State Urban Development Corporation.
At the same time, insured bonds increased from 4.9% to 5.6% of the fund's
holdings.
10
<PAGE>
Going forward, we hold a positive outlook for the fund, the municipal bond
market and the state of New York. We expect the supply of New York municipal
bonds to remain stable for the remainder of 1998 and the first quarter of 1999,
and we will continue to manage Franklin New York Tax-Free Income Fund with the
intention of protecting its share value and maintaining its competitive yield.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of November 30, 1998, the end of the reporting period. However,
market and economic conditions are changing constantly, which can be expected to
affect our strategies and the fund's portfolio composition. Although historical
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy.
DIVIDEND DISTRIBUTIONS
6/1/98 - 11/30/98
<TABLE>
<CAPTION>
DIVIDEND PER SHARE
------------------
MONTH CLASS I CLASS II
- --------------------------------------------------------------------------------
<S> <C> <C>
June 5.5 cents 4.91 cents
July 5.5 cents 4.93 cents
August 5.5 cents 4.93 cents
September 5.4 cents 4.83 cents
October 5.4 cents 4.78 cents
November 5.4 cents 4.78 cents
- --------------------------------------------------------------------------------
TOTAL 32.7 CENTS 29.16 CENTS
</TABLE>
11
<PAGE>
PERFORMANCE SUMMARY AS OF 11/30/98
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 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 returns will 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 II:
Subject to 1% initial sales charge and 1% contingent deferred sales charge for
shares redeemed within 18 months of investment. These shares have higher annual
fees and expenses than Class I shares.
PRICE AND DISTRIBUTION INFORMATION (6/1/98-11/30/98)
<TABLE>
<CAPTION>
CLASS I CHANGE 11/30/98 5/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value +$0.10 $12.18 $12.08
<CAPTION>
DISTRIBUTIONS
------------------------------------
<S> <C>
Dividend Income $0.327
<CAPTION>
CLASS II CHANGE 11/30/98 5/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value +$0.10 $12.17 $12.07
<CAPTION>
DISTRIBUTIONS
------------------------------------
<S> <C>
Dividend Income $0.2916
</TABLE>
Past performance is not predictive of future results.
12
<PAGE>
PERFORMANCE
<TABLE>
<CAPTION>
INCEPTION
CLASS I 1-YEAR 5-YEAR (9/13/82)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) +7.86% +35.76% +309.46%
Average Annual Total Return(2) +3.28% +5.39% +8.79%
Distribution Rate(3) 5.09%
Taxable Equivalent Distribution Rate(4) 9.50%
30-Day Standardized Yield(5) 3.99%
Taxable Equivalent Yield(4) 7.09%
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
CLASS II 1-YEAR 3-YEAR (5/1/95)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) +7.23% +20.18% +28.25%
Average Annual Total Return(2) +5.18% +5.96% +6.88%
Distribution Rate(3) 4.67%
Taxable Equivalent Distribution Rate(4) 8.72%
30-Day Standardized Yield(5) 3.56%
Taxable Equivalent Yield(4) 6.33%
</TABLE>
- --------------------------------------------------------------------------------
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.
(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.
(3) Distribution rate is based on an annualization of the respective class's
November monthly dividend and the maximum offering price per share on November
30, 1998.
(4) Taxable equivalent distribution rate and yield assume the 1998 maximum
combined federal, New York state and New York City personal income tax bracket
of 46.4%, 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 November 30, 1998.
13
<PAGE>
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.
14
<PAGE>
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.
15
<PAGE>
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.
16
<PAGE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Financial Highlights
<TABLE>
<CAPTION>
CLASS I
------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED MAY 31,
NOVEMBER 30, 1998 ----------------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the
period)
Net asset value, beginning of period ...... $ 12.08 $ 11.66 $ 11.46 $ 11.75 $ 11.72 $ 12.07
------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .................... .32 .66 .68 .70 .73 .75
Net realized and unrealized gains (losses) .10 .45 .23 (.28) .06 (.34)
------------------------------------------------------------------------------------
Total from investment operations .......... .42 1.11 .91 .42 .79 .41
------------------------------------------------------------------------------------
Less distributions from:
Net investment income .................... (.32) (.66) (.68) (.71) (.76) (.76)
Net realized gains ....................... -- (.03) (.03) -- -- --
------------------------------------------------------------------------------------
Total distributions ....................... (.32) (.69) (.71) (.71) (.76) (.76)
------------------------------------------------------------------------------------
Net asset value, end of period ............ $ 12.18 $ 12.08 $ 11.66 $ 11.46 $ 11.75 $ 11.72
====================================================================================
Total return* ............................. 3.59% 9.83% 8.16% 3.65% 7.10% 3.18%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ......... $ 4,896,777 $ 4,824,135 $ 4,704,745 $ 4,709,483 $ 4,725,056 $ 4,609,999
Ratios to average net assets:
Expenses ................................. .58%** .58% .59% .58% .57% .52%
Net investment income .................... 5.34%** 5.57% 5.87% 5.99% 6.39% 6.19%
Portfolio turnover rate ................... 4.04% 18.51% 11.18% 28.34% 40.56% 25.67%
</TABLE>
* Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized. Prior to May 1, 1994, dividends from net
investment income were reinvested at the offering price.
** Annualized.
17
<PAGE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Financial Highlights (continued)
<TABLE>
<CAPTION>
CLASS II
---------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED MAY 31,
NOVEMBER 30, 1998 -------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995(1)(2)
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period .......... $ 12.07 $ 11.65 $ 11.45 $ 11.73 $ 11.50
---------------------------------------------------------------------
Income from investment operations:
Net investment income ........................ .29 .59 .63 .65 .05
Net realized and unrealized gains (losses) ... .10 .45 .21 (.29) .24
---------------------------------------------------------------------
Total from investment operations .............. .39 1.04 .84 .36 .29
---------------------------------------------------------------------
Less distributions from:
Net investment income ........................ (.29) (.59) (.61) (.64) (.06)
Net realized gains ........................... -- (.03) (.03) -- --
---------------------------------------------------------------------
Total distributions ........................... (.29) (.62) (.64) (.64) (.06)
---------------------------------------------------------------------
Net asset value, end of period ................ $ 12.17 $ 12.07 $ 11.65 $ 11.45 $ 11.73
=====================================================================
Total return* ................................. 3.29% 9.20% 7.52% 3.14% 2.56%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ............. $ 129,503 $ 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 ........................ 4.76%** 4.98% 5.30% 5.43% 5.32%**
Portfolio turnover rate ....................... 4.04% 18.51% 11.18% 28.34% 40.56%
</TABLE>
* Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized.
** 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 beginning of
period includes this dividend.
See notes to financial statements.
18
<PAGE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, NOVEMBER 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS 98.8%
BONDS 96.8%
Albany Housing Authority, Limited Obligation, Refunding, 6.25%, 10/01/12 $ 5,250,000 $ 5,862,045
Albany Parking Authority Revenue, Refunding, Series A, 6.85%, 11/01/12 1,610,000 1,748,911
Auburn IDA, MFR, Auburn Memorial Home, 6.50%, 2/01/34 5,825,000 6,255,060
Babylon IDA, Waste Facilities Revenue, Community Waste Management, Series A, Pre-Refunded,
7.875%, 7/01/06 9,750,000 10,211,565
Batavia Housing Authority Mortgage Revenue, Washington Towers, Refunding, Series A,
6.50%, 1/01/23 1,000,000 1,047,710
Battery Park City Authority Revenue, Refunding, Series A, 5.80%, 11/01/22 68,795,000 72,137,749
Bethany Retirement Home, Inc., Mortgage Loan Revenue, 7.50%, 2/01/34 8,160,000 9,448,709
Clinton County COP, Correctional Facilities Project, 8.125%, 8/01/17 5,375,000 7,075,650
Cortland County IDA, Civic Facilities Revenue, Cortland Memorial Hospital, Inc. Project,
6.25%, 7/01/24 5,950,000 6,181,753
Franklin County COP, Court House Redevelopment Project, 8.125%, 8/01/06 4,600,000 5,165,754
Franklin County IDA, Lease Revenue, County Correctional Facilities Project, 6.75%, 11/01/12 4,790,000 5,141,921
Guam Power Authority Revenue, Series A,
6.30%, 10/01/12 5,075,000 5,405,992
6.625%, 10/01/14 2,900,000 3,213,171
6.30%, 10/01/22 45,340,000 48,231,332
6.50%, 10/01/23 5,385,000 5,845,956
6.75%, 10/01/24 25,500,000 28,358,805
Hamilton Elderly Housing Corp. Mortgage Revenue, Hamilton Apartments Project, 11.25%, 1/01/15 1,315,000 1,361,459
Ilion Elderly Housing Corp. Mortgage Revenue, Section 8, Housing Assistance Revenue,
7.25%, 7/01/09 1,915,000 1,915,364
Long Island Power Authority Electric System Revenue, Series A,
5.25%, 12/01/26 36,550,000 36,832,532
5.50%, 12/01/29 19,325,000 19,927,360
Metropolitan Transportation Authority,
Commuter Facilities Revenue, Series 8, 5.50%, 7/01/21 5,000,000 5,141,150
Commuter Facilities Revenue, Series A, 5.625%, 7/01/27 8,000,000 8,638,960
Commuter Facilities Revenue, Series A, 5.25%, 7/01/28 23,300,000 23,419,529
Commuter Facilities Revenue, Series A, Pre-Refunded, 6.50%, 7/01/24 35,620,000 40,555,507
Commuter Facilities Revenue, Series E, AMBAC Insured, 5.00%, 7/01/21 4,850,000 4,857,712
Commuter Facilities Revenue, Series R, 5.50%, 7/01/17 2,000,000 2,074,540
Dedicated Tax Fund, Series A, MBIA Insured, 5.25%, 4/01/26 3,000,000 3,069,450
Service Contract Revenue, Commuter Facilities, Refunding, Series 5, 6.50%, 7/01/16 17,470,000 18,719,629
Service Contract Revenue, Commuter Facilities, Refunding, Series 5, 6.00%, 7/01/18 2,740,000 2,822,721
Service Contract Revenue, Commuter Facilities, Refunding, Series N, 7.125%, 7/01/09 24,160,000 27,029,000
Service Contract Revenue, Commuter Facilities, Series 5, 7.00%, 7/01/12 31,605,000 34,433,964
Service Contract Revenue, Transit Facilities, Refunding, Series 5, 7.00%, 7/01/12 30,935,000 33,703,992
Service Contract Revenue, Transit Facilities, Refunding, Series 5, 6.50%, 7/01/16 40,495,000 43,391,607
Service Contract Revenue, Transit Facilities, Refunding, Series 5, 6.00%, 7/01/18 7,725,000 7,958,218
Service Contract Revenue, Transit Facilities, Refunding, Series N, 7.125%, 7/01/09 12,625,000 14,124,219
Service Contract Revenue, Transit Facilities, Series 6, Pre-Refunded, 7.00%, 7/01/09 2,000,000 2,202,380
Transit Facilities Revenue, Series A, FSA Insured, 6.10%, 7/01/21 16,940,000 19,496,077
Transit Facilities Revenue, Series A, FSA Insured, 5.50%, 7/01/22 6,480,000 6,652,238
Transit Facilities Revenue, Series A, FSA Insured, 5.625%, 7/01/25 8,000,000 8,556,640
Transit Facilities Revenue, Series A, FSA Insured, 6.10%, 7/01/26 18,725,000 21,617,076
Transit Facilities Revenue, Series A, FSA Insured, 5.625%, 7/01/27 14,440,000 15,064,674
Transit Facilities Revenue, Service Contract, Refunding, Series 8, 5.25%, 7/01/17 3,750,000 3,804,563
Transit Facilities Revenue, Service Contract, Refunding, Series 8, 5.375%, 7/01/21 12,375,000 12,599,359
Monroe County IDA Revenue, Civic Facilities, De Paul Community Facilities, 6.50%, 2/01/24 1,285,000 1,418,139
</TABLE>
19
<PAGE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, NOVEMBER 30, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New Rochelle Municipal Housing Revenue Authority Mortgage, Series A, 5.55%, 12/01/14 $ 6,090,000 $ 6,191,581
New York City GO,
7.00%, 2/01/17 6,270,000 6,965,280
5.25%, 8/01/19 12,000,000 12,113,880
Refunding, Series F, 5.375%, 8/01/19 5,000,000 5,115,550
Refunding, Series F, 5.875%, 8/01/24 7,000,000 7,508,130
Refunding, Series F, 5.25%, 8/01/24 15,740,000 15,831,292
Refunding, Series G, 5.25%, 8/01/16 5,000,000 5,088,450
Series 1992, Rite 1, 7.00%, 10/01/11 12,750,000 14,171,880
Series A-1, 6.625%, 8/01/25 13,360,000 15,002,879
Series A-1, Pre-Refunded, 6.625%, 8/01/25 3,640,000 4,221,599
Series A, 7.75%, 8/15/13 15,000 16,594
Series A, 6.25%, 8/01/17 2,675,000 2,967,083
Series A, Pre-Refunded, 7.75%, 8/15/13 1,985,000 2,222,029
Series A, Pre-Refunded, 7.75%, 8/15/14 10,000,000 11,189,573
Series B, 7.75%, 2/01/10 240,000 268,644
Series B, 7.75%, 2/01/11 1,575,000 1,762,976
Series B, 7.00%, 6/01/13 55,000 59,518
Series B, 7.75%, 2/01/14 6,435,000 7,186,737
Series B, 7.00%, 6/01/15 650,000 702,267
Series B, 6.75%, 10/01/15 220,000 242,444
Series B, 7.00%, 2/01/18 1,485,000 1,626,773
Series B, 5.25%, 8/01/20 2,500,000 2,520,125
Series B, 6.00%, 8/15/26 6,780,000 7,350,334
Series B, Pre-Refunded, 7.75%, 2/01/10 1,760,000 1,994,186
Series B, Pre-Refunded, 7.75%, 2/01/11 3,425,000 3,880,731
Series B, Pre-Refunded, 7.75%, 2/01/12 500,000 566,530
Series B, Pre-Refunded, 7.75%, 2/01/13 1,875,000 2,124,488
Series B, Pre-Refunded, 7.75%, 2/01/14 4,515,000 5,115,766
Series B, Pre-Refunded, 7.00%, 6/01/14 6,620,000 7,251,548
Series B, Pre-Refunded, 7.75%, 2/01/15 22,610,000 25,618,487
Series B, Pre-Refunded, 7.00%, 6/01/15 3,600,000 3,943,440
Series B, Pre-Refunded, 6.75%, 10/01/15 1,280,000 1,432,307
Series B, Pre-Refunded, 6.00%, 8/15/26 915,000 1,042,039
Series B, Sub Series B-1, Pre-Refunded, 7.00%, 8/15/16 2,000,000 2,330,040
Series B, Sub Series B-1, Pre-Refunded, 7.50%, 8/15/20 10,000,000 11,875,300
Series C, 7.20%, 8/15/14 2,840,000 3,058,112
Series C, 5.50%, 11/15/37 18,545,000 19,176,643
Series C, Pre-Refunded, 7.00%, 2/01/12 705,000 712,036
Series C, Pre-Refunded, 7.20%, 8/15/14 1,160,000 1,266,442
Series C, Pre-Refunded, 7.25%, 8/15/24 22,745,000 24,861,195
Series C, Sub Series C-1, Pre-Refunded, 7.00%, 8/01/16 4,500,000 5,060,946
Series D, 8.00%, 8/01/17 5,000 5,561
Series D, 7.50%, 2/01/18 130,000 146,545
Series D, 5.25%, 8/01/21 7,000,000 7,039,270
Series D, 5.50%, 8/01/22 2,500,000 2,595,850
Series D, Pre-Refunded, 8.25%, 8/01/13 4,820,000 5,449,299
</TABLE>
20
<PAGE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, NOVEMBER 30, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York City GO, (cont.)
Series D, Pre-Refunded, 8.00%, 8/01/17 $ 3,675,000 $ 4,131,692
Series D, Pre-Refunded, 7.50%, 2/01/18 70,000 77,708
Series F, 8.40%, 11/15/08 600,000 681,120
Series F, Pre-Refunded, 8.40%, 11/15/08 6,900,000 7,912,092
Series F, Pre-Refunded, 8.40%, 11/15/09 3,350,000 3,841,378
Series F, Pre-Refunded, 6.625%, 2/15/25 11,240,000 12,933,081
Series G, 5.75%, 2/01/20 7,000,000 7,402,640
Series G, 6.00%, 10/15/26 85,000 97,492
Series G, Pre-Refunded, 6.00%, 10/15/26 9,815,000 10,691,480
Series H, 7.20%, 2/01/14 605,000 665,930
Series H, 7.00%, 2/01/18 3,895,000 4,333,110
Series H, 5.375%, 8/01/27 13,290,000 13,560,452
Series H, Pre-Refunded, 7.20%, 2/01/13 8,800,000 9,827,840
Series H, Pre-Refunded, 7.20%, 2/01/14 3,395,000 3,791,536
Series H, Pre-Refunded, 7.20%, 2/01/15 615,000 677,127
Series H, Pre-Refunded, 7.20%, 2/01/16 3,985,000 4,450,448
Series H, Pre-Refunded, 7.00%, 2/01/16 2,500,000 2,770,517
Series H, Pre-Refunded, 7.00%, 2/01/17 230,000 252,246
Series H, Pre-Refunded, 7.00%, 2/01/18 330,000 361,505
Series I, 6.25%, 4/15/27 5,985,000 6,599,660
Series I, Pre-Refunded, 6.25%, 4/15/27 3,515,000 4,070,511
Series J, 5.30%, 8/01/24 9,395,000 9,492,050
Series K, Pre-Refunded, 6.25%, 4/01/26 9,000,000 10,344,600
Unlimited, Series A, Pre-Refunded, 7.75%, 8/15/15 1,400,000 1,567,174
Unlimited, Series B, Pre-Refunded, 7.00%, 6/01/13 305,000 334,097
Unlimited, Unrefunded Balance 1997, Series B, 7.00%, 6/01/14 105,000 113,418
Unlimited, Unrefunded Balance, Series H, 7.20%, 2/01/13 1,200,000 1,321,968
New York City HDC, MFMR, Series A,
6.55%, 10/01/15 19,450,000 20,742,258
6.55%, 4/01/18 10,000,000 10,644,300
6.60%, 4/01/30 51,500,000 54,937,110
New York City Health & Hospital Authority, Local Government Revenue, Refunding, Series A,
6.30%, 2/15/20 114,635,000 121,130,219
New York City Housing Development Corp., MFHR, Series B, 5.25%, 11/01/31 3,000,000 2,999,850
New York City IDA, Civic Facilities Revenue,
College of New Rochelle, 5.75%, 9/01/17 1,500,000 1,550,895
College of New Rochelle, 5.80%, 9/01/26 1,500,000 1,552,005
Federation Protestant Welfare, 6.95%, 11/01/11 2,415,000 2,534,180
New York Blood Center, Inc. Project, Pre-Refunded, 7.20%, 5/01/12 4,000,000 4,606,560
New York Blood Center, Inc. Project, Pre-Refunded, 7.25%, 5/01/22 7,000,000 8,115,170
St. Christopher Ottilie Project, 7.50%, 7/01/21 2,500,000 2,725,725
The Lighthouse, Inc. Project, 6.50%, 7/01/22 8,000,000 8,870,000
New York City Municipal Water Finance Authority, Water and Sewer System Revenue,
Series A, 7.10%, 6/15/12 17,785,000 19,261,333
Series A, 7.00%, 6/15/15 2,185,000 2,358,423
Series A, 6.75%, 6/15/16 1,400,000 1,499,274
Series A, 6.25%, 6/15/21 990,000 1,041,193
</TABLE>
21
<PAGE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, NOVEMBER 30, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York City Municipal Water Finance Authority, Water and Sewer System Revenue, (cont.)
Series A, 5.50%, 6/15/24 $ 25,625,000 $ 26,704,325
Series A, FGIC Insured, 4.75%, 6/15/31 2,000,000 1,923,120
Series A, Pre-Refunded, 7.10%, 6/15/12 15,700,000 17,182,237
Series A, Pre-Refunded, 7.00%, 6/15/15 690,000 753,487
Series A, Pre-Refunded, 6.125%, 6/15/20 39,015,000 44,161,079
Series B, 5.875%, 6/15/26 10,250,000 11,038,123
Series B, 5.25%, 6/15/29 22,900,000 23,104,726
Series B, Pre-Refunded, 6.25%, 6/15/20 41,190,000 47,471,887
Series B, Pre-Refunded, 6.375%, 6/15/22 28,250,000 30,979,233
Unrefunded Balance, 6.75%, 6/15/17 18,100,000 19,383,471
New York City Transitional Finance Authority Revenue,
Future Tax Secured, Series C, 5.00%, 5/01/26 7,115,000 7,072,666
Future Tax Secured, Series A, 5.00%, 8/15/27 5,000,000 4,969,450
New York Housing Corp. Revenue, Series A, 5.50%, 11/01/20 2,200,000 2,231,416
New York State COP, Hanson Redevelopment Project,
8.25%, 11/01/01 5,310,000 5,740,429
8.375%, 5/01/08 18,045,000 21,978,990
New York State Dormitory Authority Lease Revenue,
Municipal Health Facilities Improvement Program, Series 1, FSA Insured, 5.00%, 1/15/23 5,000,000 4,965,100
Municipal Health Facilities Improvement Program, Series 1, FSA Insured, 4.75%, 1/15/29 5,000,000 4,776,300
State University Dormitory Facilities, 5.375%, 7/01/21 4,000,000 4,077,560
New York State Dormitory Authority Revenue,
Bishop Henry B. Hucles Nursing Home, 6.00%, 7/01/24 2,545,000 2,722,717
Bronx / Lebanon Hospital, Refunding, Series E, 5.20%, 2/15/15 4,230,000 4,251,065
Bronx / Lebanon Hospital, Refunding, Series E, 5.20%, 2/15/16 3,465,000 3,476,400
Brookdale Hospital, Refunding, Series J, 5.20%, 2/15/15 4,950,000 4,974,651
Buena Vida Nursing Home, Series A, 5.25%, 7/01/28 4,730,000 4,708,668
City University System Consolidated Third, Series 1, FGIC Insured, 5.00%, 7/01/26 5,000,000 4,992,350
City University System Consolidated, Second General, Refunding, Series A, 6.00%, 7/01/17 10,215,000 11,006,458
City University System Consolidated, Series 1, 5.375%, 7/01/24 27,920,000 28,349,689
City University System Consolidated, Series C, 7.50%, 7/01/10 14,900,000 18,365,889
City University System Consolidated, Series C, 6.00%, 7/01/16 8,900,000 9,083,073
City University System Consolidated, Series D, 7.00%, 7/01/09 3,430,000 4,018,897
City University System Consolidated, Third General, Refunding, Series A, 6.00%, 7/01/16 23,185,000 25,035,859
City University System Consolidated, Third General, Series 2, MBIA Insured, 5.00%, 7/01/28 5,000,000 4,992,150
City University System Consolidated, Third, Series 1, 5.25%, 7/01/25 20,000,000 20,102,600
City University System, Refunding, Series U, 6.375%, 7/01/08 1,140,000 1,249,166
City University System, Refunding, Series U, Pre-Refunded, 6.375%, 7/01/08 1,745,000 1,930,633
City University System, Refunding, Series U, Pre-Refunded, 6.70%, 7/01/09 5,405,000 6,028,683
City University System, Series 1, 5.625%, 7/01/19 10,000,000 10,474,200
City University System, Series F, Pre-Refunded, 7.875%, 7/01/17 40,000,000 43,484,000
City University System, Third General, 6.00%, 7/01/20 13,000,000 14,058,460
City University System, Third General, Residence 2, 6.20%, 7/01/22 8,565,000 9,369,596
City University System, Third General, Residence 2, Pre-Refunded, 6.20%, 7/01/22 19,990,000 23,064,662
City University System, Third General, Series 2, 6.00%, 7/01/26 6,020,000 6,542,115
City University System, Third General, Series 2, 5.00%, 7/01/28 11,295,000 10,988,567
</TABLE>
22
<PAGE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, NOVEMBER 30, 1998 (UNAUDITED) (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, Third General, Series 2, Pre-Refunded, 6.00%, 7/01/26 $ 11,300,000 $ 12,891,944
Department of Education, 5.00%, 7/01/27 3,355,000 3,226,638
Department of Education, Pre-Refunded, 7.75%, 7/01/21 2,530,000 2,828,970
Department of Health, 6.625%, 7/01/15 760,000 872,708
Department of Health, 5.50%, 7/01/25 61,100,000 62,977,603
Department of Health, Pre-Refunded, 6.625%, 7/01/15 4,595,000 5,357,219
Department of Health, Pre-Refunded, 6.20%, 7/01/17 14,725,000 16,275,903
Department of Health, Rosewell Park Cancer Center, Pre-Refunded, 6.625%, 7/01/24 9,175,000 10,696,949
Department of Health, Veterans Home, 5.50%, 7/01/21 7,000,000 7,197,610
Department of Health, Veterans Home, Pre-Refunded, 7.25%, 7/01/11 3,190,000 3,528,076
Department of Health, Veterans Home, Pre-Refunded, 6.25%, 7/01/20 8,480,000 9,583,842
Department of Health, Veterans Home, Pre-Refunded, 7.25%, 7/01/21 9,775,000 10,810,955
Fashion Institute of Technology, 7.50%, 7/01/20 2,115,000 2,262,690
Genessee Valley, Series A, 6.90%, 2/01/32 2,355,000 2,546,744
Heritage House Nursing Center, 7.00%, 8/01/31 2,350,000 2,534,898
Interfaith Medical Center, Series D, 5.40%, 2/15/28 16,525,000 16,675,708
Long Island University, 6.25%, 9/01/23 12,830,000 13,990,730
Manhattan College, Refunding, 6.50%, 7/01/19 19,390,000 21,176,982
Mental Health Services Facilities, Refunding, 6.00%, 8/15/21 1,800,000 1,956,438
Mental Health Services Facilities, Refunding, Series B, 5.75%, 8/15/12 2,165,000 2,363,141
Mental Health Services Facilities, Refunding, Series B, 5.625%, 2/15/21 4,780,000 4,996,630
Mental Health Services Facilities, Refunding, Series C, 5.25%, 2/15/19 13,435,000 13,535,763
Mental Health Services Facilities, Series A, 5.75%, 8/15/22 1,390,000 1,464,435
Mental Health Services Facilities, Series A, 5.75%, 2/15/27 9,370,000 10,010,346
Mental Health Services Facilities, Series B, FSA-CR Insured, 5.375%, 2/15/26 5,470,000 5,615,283
Millard Fillmore Hospital, FHA Insured, 5.375%, 2/01/32 7,995,000 8,233,171
New York Medical College, Asset Guaranty, 6.875%, 7/01/21 5,375,000 6,026,396
Niagara Insured Mortgage, Nursing Home, MBIA Insured, 5.45%, 8/01/17 2,500,000 2,608,725
Niagara Insured Mortgage, Nursing Home, MBIA Insured, 5.55%, 8/01/27 2,000,000 2,093,280
North General Hospital, Refunding, Series G, 5.20%, 2/15/14 5,000,000 5,046,100
Nursing Home, Arden Hill, FHA Insured, 5.85%, 8/01/26 4,975,000 5,220,069
Nursing Home, Center for Nursing, FHA Insured, 5.45%, 8/01/17 1,000,000 1,018,070
Nursing Home, Center for Nursing, FHA Insured, 5.55%, 8/01/37 8,435,000 8,601,338
Nursing Home, St. John's Health Care Corp., Refunding, 6.25%, 2/01/36 34,265,000 36,950,348
Nursing Home, Wesley Garden, 6.125%, 8/01/35 2,000,000 2,149,940
Nyack Hospital, 6.25%, 7/01/13 3,000,000 3,257,400
Our Lady of Mercy, Mortgage Revenue, FHA Insured, 6.30%, 8/01/32 5,835,000 6,249,810
Rochester Institute of Technology, Refunding, MBIA Insured, 5.25%, 7/01/22 3,150,000 3,229,569
Schervier, Home Asset Guaranty, 5.50%, 7/01/17 5,520,000 5,735,170
Schervier, Home Asset Guaranty, 5.50%, 7/01/27 5,250,000 5,415,480
St. Agnes Hospital, Series A, 5.40%, 2/15/25 2,000,000 2,018,240
St. Lukes Home Residential Health, Series A, 6.375%, 8/01/35 5,200,000 5,669,092
State University Athletic Facilities, 7.25%, 7/01/12 2,565,000 2,836,839
State University Athletic Facilities, 7.25%, 7/01/21 4,750,000 5,253,405
State University Educational Facilities, 5.125%, 5/15/21 35,000,000 34,883,450
State University Educational Facilities, Refunding, 5.125%, 5/15/27 14,900,000 14,756,364
</TABLE>
23
<PAGE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, NOVEMBER 30, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York State Dormitory Authority Revenue, (cont.)
State University Educational Facilities, Refunding, Series A, Pre-Refunded, 6.25%, 5/15/19 $ 17,670,000 $ 20,238,335
State University Educational Facilities, Series B, 7.375%, 5/15/14 7,025,000 7,495,464
State University Educational Facilities, Series B, 7.00%, 5/15/16 7,995,000 8,482,695
State University Educational Facilities, Series B, Pre-Refunded, 6.25%, 5/15/14 14,500,000 16,393,120
State University Educational Facilities, Series B, Pre-Refunded, 6.25%, 5/15/20 60,795,000 68,732,395
State University Educational Facilities, Series B, Pre-Refunded, 5.75%, 5/15/24 5,500,000 5,995,110
The Highlands Living, 6.60%, 2/01/34 3,815,000 4,162,203
University Educational Facilities, 5.75%, 5/15/16 3,000,000 3,207,360
University Educational Facilities, 5.50%, 5/15/26 31,750,000 32,716,153
Upstate Community Colleges, Series A, 6.20%, 7/01/15 12,910,000 14,199,967
Upstate Community Colleges, Series A, 6.00%, 7/01/22 7,000,000 7,615,790
Upstate Community Colleges, Series A, 6.25%, 7/01/25 42,310,000 46,252,446
Upstate Community Colleges, Series A, 6.125%, 7/01/27 11,845,000 13,059,823
Upstate Community Colleges, Series A, Pre-Refunded, 7.60%, 7/01/20 3,250,000 3,516,858
Upstate Community Colleges, Series B, Pre-Refunded, 7.20%, 7/01/21 1,000,000 1,104,760
W.K. Nursing Home Corp., 6.05%, 2/01/26 6,800,000 7,314,284
Wycockoff Heights, Refunding, Series H, 5.20%, 2/15/16 5,820,000 5,839,148
New York State Energy Research & Development Authority, PCR,
Long Island Projects, 7.80%, 12/01/09 3,300,000 3,355,407
Long Island Projects, Series A, 7.50%, 12/01/06 4,715,000 4,787,752
Niagara Mohawk Power Corp. Project, Series 1, 8.875%, 11/01/25 38,145,000 38,218,238
Niagara Mohawk Power Project, Refunding, Series A, AMBAC Insured, 5.15%, 11/01/25 3,700,000 3,745,880
New York State Energy Research & Development Authority, Facilities Revenue, Consolidated Edison Co.,
Refunding, Series A, 6.10%, 8/15/20 11,820,000 12,784,157
New York State Environmental Facilities Corp., Special Obligation,
PCR, New York City Municipal Water Finance Authority Project, Series E, 6.875%, 6/15/14 1,190,000 1,352,292
PCR, New York City Municipal Water Finance Authority Project, Pre-Refunded, 6.875%, 6/15/14 1,810,000 2,092,668
Riverbank State Park, Pre-Refunded, 7.25%, 4/01/07 4,000,000 4,518,040
Riverbank State Park, Pre-Refunded, 7.25%, 4/01/12 4,300,000 4,856,893
Riverbank State Park, Pre-Refunded, 7.375%, 4/01/22 5,000,000 5,666,950
New York State HFA Revenue,
Adult Care, Series A, FHA Insured, Pre-Refunded, 7.85%, 2/15/30 1,955,000 2,114,235
Children's Rescue Fund Housing, Series A, 7.625%, 5/01/18 5,285,000 5,578,106
Health Facilities of New York City, Refunding, Series A, 6.00%, 11/01/08 2,400,000 2,621,904
Health Facilities of New York City, Refunding, Series A, 8.00%, 11/01/08 16,240,000 17,771,432
Health Facilities of New York City, Refunding, Series A, Pre-Refunded, 8.00%, 11/01/08 80,410,000 88,702,683
Health Facilities of New York City, Series A, 6.00%, 5/01/07 11,200,000 12,258,400
Housing Project Mortgage, Refunding, Series A, 6.10%, 11/01/15 25,650,000 27,586,575
Housing Project Mortgage, Refunding, Series A, 6.125%, 11/01/20 31,145,000 33,433,846
MFHR, Second Mortgage, Series A, 7.00%, 8/15/23 4,245,000 4,520,840
MFHR, Second Mortgage, Series C, 6.60%, 8/15/27 5,500,000 5,933,180
MFHR, Second Mortgage, Series D, 6.25%, 8/15/23 2,500,000 2,637,100
MFHR, Second Mortgage, Series E, 6.75%, 8/15/25 6,915,000 7,448,285
MFMR, Refunding, Series C, FHA Insured, 6.45%, 8/15/14 1,000,000 1,065,350
MFMR, Series A, FHA Insured, 7.00%, 8/15/22 4,885,000 5,311,216
MFMR, Series A, FHA Insured, 7.10%, 8/15/35 8,630,000 9,257,574
MFMR, Series B, AMBAC Insured, 6.25%, 8/15/14 2,760,000 2,992,199
</TABLE>
24
<PAGE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, NOVEMBER 30, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York State HFA Revenue, (cont.)
MFMR, Series B, AMBAC Insured, 6.35%, 8/15/23 $ 34,515,000 $ 37,372,842
MFMR, Series B, FHA Insured, 8.50%, 5/15/28 12,575,000 12,585,437
MFMR, Series C, FHA Insured, 6.50%, 8/15/24 6,870,000 7,316,000
New York State HFA, Service Contract Obligation Revenue,
Refunding, Series C, 6.00%, 9/15/21 19,310,000 20,638,914
Refunding, Series C, 5.50%, 9/15/22 14,830,000 15,243,164
Series A, 7.25%, 9/15/12 225,000 250,117
Series A, 6.375%, 9/15/15 5,000,000 5,606,950
Series A, 7.80%, 9/15/20 10,000,000 11,108,000
Series A, 5.50%, 9/15/22 3,000,000 3,076,530
Series A, 6.50%, 3/15/24 330,000 367,996
Series A, 6.50%, 3/15/25 860,000 964,705
Series A, 6.00%, 3/15/26 16,725,000 18,199,978
Series A, Pre-Refunded, 7.25%, 9/15/12 2,150,000 2,425,480
Series A, Pre-Refunded, 7.80%, 9/15/20 14,000,000 15,319,780
Series A, Pre-Refunded, 6.50%, 3/15/24 28,000,000 32,182,640
Series A, Pre-Refunded, 6.50%, 3/15/25 10,410,000 12,135,041
Series C, 6.30%, 9/15/12 310,000 337,258
Series C, 6.125%, 3/15/20 99,760,000 107,286,892
Series C, 6.30%, 3/15/22 1,985,000 2,132,783
Series C, 5.50%, 3/15/25 17,015,000 17,606,782
New York State Local Government Assistance Corp., Series A, 6.00%, 4/01/24 12,200,000 13,226,386
New York State Medical Care Facilities Finance Agency,
Albany Medical Center, Alice Hyde Project, Mortgage Revenue, Series A, FHA Insured, Pre-Refunded,
8.00%, 2/15/28 2,215,000 2,277,131
Beth Israel Medical Center Project, Refunding, Series A, Pre-Refunded, 7.20%, 11/01/14 9,145,000 9,169,692
Hospital & Nursing Home, Insured Mortgage, Refunding, Series A, FHA Insured, 6.20%, 2/15/21 3,415,000 3,674,335
Hospital & Nursing Home, Insured Mortgage, Series A, FHA Insured, Pre-Refunded, 6.20%, 2/15/21 4,915,000 5,522,494
Hospital & Nursing Home, Methodist Medical Center, Series A, FHA Insured, 6.70%, 8/15/23 5,500,000 6,000,995
Hospital & Nursing Home, Mortgage Revenue, Refunding, Series A, FHA Insured, 6.20%, 2/15/23 5,050,000 5,372,493
Hospital & Nursing Home, Mortgage Revenue, Refunding, Series B, 6.25%, 2/15/25 2,635,000 2,870,780
Hospital & Nursing Home, Mortgage Revenue, Refunding, Series B, FHA Insured, 6.25%, 2/15/35 4,745,000 5,127,115
Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.125%, 2/15/15 6,415,000 6,921,721
Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.30%, 8/15/23 9,000,000 9,555,570
Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.25%, 2/15/27 12,235,000 13,162,535
Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.20%, 2/15/28 26,910,000 29,022,166
Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 7.45%, 8/15/31 28,505,000 31,222,952
Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.375%, 8/15/33 7,940,000 8,396,629
Hospital & Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.50%, 2/15/34 11,310,000 12,383,206
Hospital & Nursing Home, Mortgage Revenue, Series C, FHA Insured, 6.50%, 8/15/21 8,000,000 8,796,800
Hospital & Nursing Home, Mortgage Revenue, Series C, FHA Insured, 6.20%, 8/15/23 21,540,000 23,291,417
Hospital & Nursing Home, Mortgage Revenue, Series C, FHA Insured, 9.00%, 2/15/26 1,795,000 1,834,580
Hospital & Nursing Home, Mortgage Revenue, Series C, FHA Insured, 6.375%, 8/15/29 86,865,000 94,105,198
Hospital & Nursing Home, Mortgage Revenue, Series D, FHA Insured, 6.60%, 2/15/31 13,375,000 14,536,218
Hospital & Nursing Home, Mortgage Revenue, Series D, FHA Insured, Pre-Refunded, 6.45%, 2/15/32 55,500,000 61,988,505
Hospital & Nursing Home, Refunding, Series B, 6.125%, 8/15/24 30,000,000 32,199,000
Hospital & Nursing, Series B, Pre-Refunded, 6.95%, 2/15/32 24,000,000 26,388,977
</TABLE>
25
<PAGE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, NOVEMBER 30, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York State Medical Care Facilities Finance Agency, (cont.)
Hospital & Nursing, Series C, FHA Insured, 6.65%, 8/15/32 $ 14,310,000 $ 15,563,842
Hospital & Nursing, Series C, FHA Insured, Pre-Refunded, 6.65%, 8/15/32 690,000 770,509
Hospital Mortgage, Series A, AMBAC Insured, Pre-Refunded, 6.80%, 8/15/24 3,200,000 3,747,168
Hospital Mortgage, Series A, AMBAC Insured, Pre-Refunded, 6.50%, 8/15/29 5,125,000 5,917,530
Hospital Mortgage, Series A, AMBAC Insured, Pre-Refunded, 6.90%, 8/15/34 31,210,000 36,716,692
Huntington Hospital Mortgage, Project A, Refunding, 6.50%, 11/01/14 4,000,000 4,367,640
Medina Memorial Hospital Project, Series A, 7.30%, 5/01/11 2,670,000 2,890,382
Mental Health Services Facilities, Series A, Pre-Refunded, 8.875%, 8/15/07 25,960,000 26,573,435
Mental Health Services Facilities, Series A, Pre-Refunded, 7.70%, 2/15/18 3,405,000 3,462,885
Mortgage Revenue Project, Series A, 6.50%, 2/15/35 3,800,000 4,162,672
Mortgage Revenue Project, Series B , 6.60%, 8/15/34 23,775,000 25,923,785
Mortgage Revenue Project, Series B, FHA Insured, 6.15%, 2/15/25 9,060,000 9,742,218
Mortgage Revenue Project, Series B, FHA Insured, 6.15%, 2/15/35 2,200,000 2,355,892
Mortgage Revenue Project, Series C, 6.375%, 8/15/29 10,200,000 11,100,456
Mortgage Revenue Project, Series D, FHA Insured, 6.20%, 2/15/35 6,250,000 6,769,250
Mortgage Revenue Project, Series E, FHA Insured, 6.375%, 2/15/35 13,200,000 14,482,380
Mortgage Revenue Project, Series F, FHA Insured, 6.30%, 8/15/25 16,400,000 17,953,244
Mortgage Revenue Project, Series F, FHA Insured, 6.375%, 8/15/34 21,050,000 23,095,008
North General Hospital, Series A, Pre-Refunded, 7.35%, 8/15/09 5,380,000 5,647,870
Saranac Lake General Hospital Project Revenue, Series A, 7.875%, 11/01/10 1,425,000 1,556,870
Second Mortgage, Health Care Project Revenue, Series B, 6.35%, 11/01/14 1,410,000 1,509,306
Secured Hospital Revenue, North General Hospital, Series A, Pre-Refunded, 7.40%, 2/15/19 72,180,000 75,799,105
Secured Hospital Revenue, Series A, 6.25%, 2/15/24 16,770,000 17,961,509
Secured Hospital Revenue, Series A, Pre-Refunded, 7.35%, 8/15/11 22,150,000 24,669,563
Secured Hospital Revenue, Series A, Pre-Refunded, 7.40%, 8/15/21 55,225,000 61,577,532
Security Mortgage Program Revenue, Adult Day Care, 6.375%, 11/15/20 18,930,000 20,827,733
The Hospital for Special Surgery Revenue, Series A, 6.375%, 8/15/24 6,025,000 6,860,186
The Hospital for Special Surgery Revenue, Series A, 6.45%, 8/15/34 36,650,000 41,869,327
New York State Mortgage Agency HMR,
37th Series A, 6.375%, 10/01/14 6,225,000 6,686,273
37th Series A, 6.45%, 10/01/17 9,000,000 9,654,030
29th Series B, 6.45%, 4/01/15 17,250,000 18,269,648
8th Series E, 8.10%, 10/01/17 4,885,000 4,965,798
Series 51, 6.40%, 10/01/17 9,945,000 10,732,644
Series BB-2, 7.95%, 10/01/15 6,560,000 6,704,976
Series FF, 7.95%, 10/01/14 2,835,000 2,849,997
Series OO, 8.05%, 10/01/11 810,000 845,024
Series RR, 7.75%, 10/01/17 14,650,000 15,550,536
New York State Mortgage Agency Revenue,
8th Series A, 6.875%, 4/01/17 13,685,000 13,714,149
Homeowners Mortgage, Series 27, 6.90%, 4/01/15 5,000,000 5,402,750
Homeowners Mortgage, Series 41, 6.50%, 10/01/17 9,880,000 10,640,958
Homeowners Mortgage, Series 43, MBIA Insured, 6.45%, 10/01/17 3,800,000 4,137,022
Homeowners Mortgage, Series 45, 7.20%, 10/01/17 23,730,000 26,009,504
Homeowners Mortgage, Series 47, 6.375%, 10/01/17 26,780,000 28,781,002
Homeowners Mortgage, Series 57, 6.25%, 10/01/15 10,000,000 10,768,100
</TABLE>
26
<PAGE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, NOVEMBER 30, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York State Mortgage Agency Revenue, (cont.)
Homeowners Mortgage, Series 57, 6.30%, 10/01/17 $ 7,330,000 $ 7,919,039
Homeowners Mortgage, Series 57, 6.375%, 10/01/27 8,590,000 9,280,894
Homeowners Mortgage, Series 61, 5.90%, 4/01/27 4,040,000 4,246,525
Homeowners Mortgage, Series 72, 5.30%, 4/01/27 5,500,000 5,556,705
New York State Tollway Authority,
General Revenue, Series D, 5.375%, 1/01/27 5,975,000 6,107,705
Service Contract Revenue, Local Highway & Bridge, 6.20%, 4/01/10 7,630,000 8,570,932
Service Contract Revenue, Local Highway & Bridge, 6.25%, 4/01/14 23,970,000 27,330,354
Service Contract Revenue, Local Highway & Bridge, Pre-Refunded, 7.25%, 1/01/10 750,000 819,023
New York State Urban Development Corp. Revenue,
Cornell Center Project, 6.00%, 1/01/14 4,500,000 4,809,870
Correctional Capital Facilities, Refunding, 5.00%, 1/01/19 5,000,000 4,900,500
Correctional Capital Facilities, Series 4, 5.375%, 1/01/23 11,210,000 11,331,068
Correctional Capital Facilities, Series 5, Pre-Refunded, 6.25%, 1/01/20 81,350,000 92,415,227
Correctional Capital Facilities, Series 6, 5.625%, 1/01/17 3,255,000 3,397,016
Correctional Capital Facilities, Series 6, 5.375%, 1/01/25 14,260,000 14,397,039
Correctional Capital Facilities, Series 7, 5.70%, 1/01/16 3,000,000 3,193,860
Correctional Capital Facilities, Series 7, 5.70%, 1/01/27 56,950,000 59,889,190
Onondaga County Convention Project, Refunding, 6.25%, 1/01/20 28,325,000 31,043,350
Youth Facilities, 6.00%, 4/01/15 8,500,000 9,234,570
New York State Urban Development Corp., Refunding,
5.375%, 7/01/22 34,900,000 36,045,767
5.60%, 7/01/26 9,750,000 10,107,825
(b) New York State Urban Development Corporate Revenue, Correctional Facilities Service
Contract, Series B, 5.00%, 1/01/25 18,665,000 18,186,616
Niagara Falls, New York City School District, COP, High School Facilities, State Aid Withholding
Insured, 5.375%, 6/15/28 10,000,000 10,141,500
North County Development Authority, Solid Waste Systems Revenue, Pre-Refunded, 6.75%, 7/01/12 5,145,000 5,355,688
Oneida Health Care Corp., Mortgage Revenue, Oneida Health Care, Series A, 7.20%, 8/01/31 2,155,000 2,291,562
Oneida-Herkimer, Solid Waste Management Authority, Solid Waste Systems Revenue,
6.20%, 4/01/00 1,390,000 1,441,875
6.30%, 4/01/01 1,035,000 1,096,800
6.40%, 4/01/02 1,930,000 2,091,638
6.50%, 4/01/03 2,075,000 2,292,149
6.65%, 4/01/05 1,115,000 1,257,196
6.75%, 4/01/14 655,000 697,228
Pre-Refunded, 6.75%, 4/01/14 20,100,000 22,742,748
Oswego County IDA, Civic Facility Revenue, St. Luke Residential Health, Series A, 5.40%, 2/01/38 2,750,000 2,786,630
Port Authority of New York and New Jersey Revenue,
Consolidated 67th Series, 6.875%, 1/01/25 1,675,000 1,752,368
Consolidated 74th Series, 6.75%, 8/01/26 4,400,000 4,783,768
Port Authority of New York and New Jersey, Delta Air Lines Special Project, Series 1, 6.95%, 6/01/08 17,000,000 18,560,260
Port Jervis IDA, Mercy Community Hospital Revenue, Franciscan Health Partnership, 5.50%, 11/01/16 1,000,000 1,014,700
Puerto Rico Commonwealth Highway and Transportation Authority, Highway Revenue, Series Y,
5.00%, 7/01/36 4,000,000 4,027,800
Puerto Rico Commonwealth Urban Renewal and Housing Corp., Commonwealth Appropriation, Refunding,
7.875%, 10/01/04 8,100,000 8,507,106
</TABLE>
27
<PAGE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, NOVEMBER 30, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Puerto Rico Electric Power Authority Revenue,
Series T, 6.00%, 7/01/16 $ 5,575,000 $ 6,041,405
Pre-Refunded, 6.375%, 7/01/24 15,565,000 17,729,780
Puerto Rico Industrial,
Medical & Environmental Facilities, PCFA, Special Facilities, American Airlines Corp., Series A,
6.45%, 12/01/25 21,015,000 23,038,114
Medical & Environmental Facilities, PCFA Revenue, Baxter Travenol Labs, Inc., Series A,
8.00%, 9/01/12 1,000,000 1,033,090
Puerto Rico Municipal Finance Agency, Series A, 6.50%, 7/01/19 11,000,000 12,353,440
Rensselaer Municipal Leasing Corp., Leasehold Mortgage Revenue, Rensselaer County Nursing Home,
Series A, 6.90%, 6/01/24 10,000,000 11,081,000
Series B, 6.90%, 6/01/24 3,345,000 3,706,595
Schenectady Municipal Housing Authority Revenue, Annie Schaffer Senior Center, Inc. Project,
6.45%, 5/01/24 4,230,000 4,484,815
Suffolk County IDA, Civic Facilities Revenue, Dowling College, Pre-Refunded, 8.25%, 12/01/20 4,500,000 4,996,935
Sunnybrook Elderly Housing Corp., Mortgage Revenue, Sunnybrook Apartments Project, 11.25%, 12/01/14 1,250,000 1,291,850
Syracuse IDA, Civic Facility Revenue,
Crouse Health Hospital, Inc., Project A, 5.25%, 1/01/16 4,000,000 3,946,600
Crouse Health Hospital, Inc., Project A, 5.375%, 1/01/23 4,760,000 4,737,485
St. Joseph's Hospital Health Center Project, Pre-Refunded, 7.50%, 6/01/18 2,000,000 2,221,100
Triborough Bridge & Tunnel Authority New York Revenues, General Purpose, Refunding, Series A,
5.25%, 1/01/28 8,250,000 8,411,370
Ulster County Resource Recovery Agency, Solid Waste Systems Revenue, 6.00%, 3/01/14 8,620,000 9,053,155
Virgin Islands Public Finance Authority Revenue, Senior Lien, Fund Loan Notes, Refunding,
Series A, 5.50%, 10/01/15 2,500,000 2,556,575
10/01/18 2,500,000 2,538,925
Virgin Islands Water and Power Authority, Electric System Revenue, Series A, Pre-Refunded,
7.40%, 7/01/11 2,840,000 3,129,879
Warren and Washington Counties IDA Revenue, Refunding, Adirondack Resource Recovery Project,
Series A, 7.90%, 12/15/07 36,555,000 37,842,467
Yonkers GO, Series A,
9.20%, 2/01/01 500,000 549,455
9.20%, 2/01/03 1,090,000 1,275,562
9.20%, 2/01/04 1,095,000 1,313,387
9.20%, 2/01/05 1,095,000 1,351,208
7.10%, 6/15/12 2,215,000 2,424,118
-------------
TOTAL BONDS (COST $4,467,117,115) 4,863,338,594
-------------
ZERO COUPON BONDS 2.0%
Metropolitan Transportation Authority,
Commuter Facilities Revenue, Refunding, Series 7, 7/01/10 7,500,000 4,454,925
Commuter Facilities Revenue, Refunding, Series 7, 7/01/11 7,590,000 4,257,383
Commuter Facilities Revenue, Refunding, Series 7, 7/01/13 2,065,000 1,026,904
Transit Facilities Revenue, Refunding, Series 7, 7/01/09 13,125,000 8,239,744
Transit Facilities Revenue, Refunding, Series 7, 7/01/10 9,000,000 5,345,910
Transit Facilities Revenue, Refunding, Series 7, 7/01/11 21,200,000 11,891,504
Transit Facilities Revenue, Refunding, Series 7, 7/01/12 15,380,000 8,130,791
Transit Facilities Revenue, Refunding, Series 7, 7/01/13 7,935,000 3,945,996
New York City GO,
Citysavers, Series B, 8/01/09 8,875,000 5,476,496
Citysavers, Series B, 6/01/12 1,030,000 537,372
</TABLE>
28
<PAGE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, NOVEMBER 30, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
ZERO COUPON BONDS (CONT.)
New York City GO, (cont.)
Citysavers, Series B, 12/01/12 $ 1,030,000 $ 524,569
Citysavers, Series B, 6/01/13 1,030,000 508,470
Citysavers, Series B, 12/01/13 1,030,000 496,233
Citysavers, Series B, 6/01/14 1,030,000 478,476
Citysavers, Series B, 12/01/14 1,030,000 466,786
Citysavers, Series B, 6/01/15 1,030,000 452,458
Citysavers, Series B, 12/01/15 1,030,000 441,314
Citysavers, Series B, 6/01/16 1,030,000 429,706
Citysavers, Series B, 12/01/16 1,030,000 419,107
Citysavers, Series B, 6/01/17 1,030,000 408,024
Citysavers, Series B, 12/01/17 1,030,000 397,941
Citysavers, Series B, 6/01/18 1,030,000 385,158
Citysavers, Series B, 12/01/18 1,005,000 366,453
Citysavers, Series B, 6/01/19 1,030,000 365,475
Citysavers, Series B, 12/01/19 1,030,000 356,359
Citysavers, Series B, 6/01/20 10,000,000 3,366,300
M-Raes, Series 29, 0.00% to 3/15/00, 8.00% thereafter, 3/15/12 2,500,000 2,428,525
M-Raes, Series 30, 0.00% to 3/15/00, 8.00% thereafter, 3/15/13 3,875,000 3,764,214
M-Raes, Series 36, 0.00% to 10/01/02, 8.00% thereafter, 10/01/14 17,400,000 14,548,314
Series A-2, 8/01/10 2,690,000 1,568,458
Orangetown New York Housing Authority Facilities Revenue, Senior Housing Center Project,
Refunding, MBIA Insured, 4/01/30 21,170,000 4,049,398
Triborough Bridge and Tunnel Authority, Convention Center Project, Series E, 1/01/12 21,625,000 11,703,859
--------------
TOTAL ZERO COUPON BONDS (COST $81,458,002) 101,232,622
--------------
TOTAL LONG TERM INVESTMENTS (COST $4,548,575,117) 4,964,571,216
--------------
(a) SHORT TERM INVESTMENTS
Long Island New York Power Authority Electric System Revenue, Subordinated, Series B, Daily VRDN
and Put, 3.25%, 5/01/33 100,000 100,000
New York City Municipal Water Financing Authority, Water and Sewer System Revenue, Series C, FGIC
Insured, Daily VRDN and Put, 3.30%, 6/15/23 300,000 300,000
New York City Municipal Water Finance Authority, Water and Sewer System Revenue, Series G, Daily
VRDN and Put, 3.25%, 6/15/24 800,000 800,000
Port Authority New York and New Jersey, Special Obligation Revenue, Versatile Structure, Series 2,
Daily VRDN and Put, 3.25%, 5/01/19 900,000 900,000
--------------
TOTAL SHORT TERM INVESTMENTS (COST $2,100,000) 2,100,000
--------------
TOTAL INVESTMENTS (COST $4,550,675,117) 98.8% 4,966,671,216
OTHER ASSETS, LESS LIABILITIES 1.2% 59,608,899
--------------
NET ASSETS 100.0% $5,026,280,115
==============
</TABLE>
See glossary of terms on page 30.
(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.
29
<PAGE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, NOVEMBER 30, 1998 (UNAUDITED) (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
HMR - Home Mortgage Revenue
IDA - Industrial Development Authority/Agency
MBIA - Municipal Bond Investors Assurance Corp.
MFHR - Multi-Family Housing Revenue
MFR - Multi-Family Revenue
MFMR - Multi-Family Mortgage Revenue
PCFA - Pollution Control Financing Authority
PCR - Pollution Control Revenue
30
<PAGE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $4,550,675,117) .................. $4,966,671,216
Cash ....................................................................... 31,946
Receivables:
Investment securities sold ................................................ 611,792
Capital shares sold ....................................................... 1,270,388
Interest .................................................................. 85,016,191
--------------
Total assets ............................................................ 5,053,601,533
--------------
Liabilities:
Payables:
Investment securities purchased ........................................... 18,161,949
Capital shares redeemed ................................................... 1,477,222
Affiliates ................................................................ 2,484,791
Shareholders .............................................................. 5,139,015
Other liabilities .......................................................... 58,441
--------------
Total liabilities ....................................................... 27,321,418
--------------
Net assets, at value ................................................... $5,026,280,115
==============
Net assets consist of:
Undistributed net investment income ....................................... $ 2,708,896
Net unrealized appreciation ............................................... 415,996,099
Accumulated net realized gain ............................................. 34,828,830
Capital shares ............................................................ 4,572,746,290
--------------
Net assets, at value .................................................... $5,026,280,115
==============
CLASS I:
Net asset value per share ($4,896,776,534 / 402,189,744 shares outstanding)* $ 12.18
==============
Maximum offering price per share ($12.18 / 95.75%) ......................... $ 12.72
==============
CLASS II:
Net asset value per share ($129,503,581 / 10,640,681 shares outstanding)* .. $ 12.17
==============
Maximum offering price per share ($12.17 / 99.00%) ......................... $ 12.29
==============
</TABLE>
* Redemption price is equal to net asset value less any applicable contingent
deferred sales charge.
See notes to financial statements.
31
<PAGE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1998 (UNAUDITED)
<TABLE>
<S> <C> <C>
Investment income:
Interest .......................................... $147,404,236
Expenses:
Management fees (Note 3) .......................... $ 11,360,420
Distribution fees (Note 3)
Class I .......................................... 1,876,598
Class II ......................................... 385,484
Transfer agent fees (Note 3) ...................... 868,348
Custodian fees .................................... 27,461
Reports to shareholders ........................... 256,017
Registration and filing fees ...................... 12,119
Professional fees ................................. 51,898
Trustees' fees and expenses ....................... 37,402
Other ............................................. 7,703
------------
Total expenses .................................. 14,883,450
------------
Net investment income .......................... 132,520,786
------------
Realized and unrealized gains:
Net realized gains from investments ............... 8,023,451
Net unrealized appreciation on investments ........ 33,776,340
------------
Net realized and unrealized gains .................. 41,799,791
------------
Net increase in net assets resulting from operations $174,320,577
============
</TABLE>
See notes to financial statements.
32
<PAGE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1998 (UNAUDITED)
AND THE YEAR ENDED MAY 31, 1998
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
NOVEMBER 30, 1998 MAY 31, 1998
-----------------------------------
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income ................................... $ 132,520,786 $ 271,156,474
Net realized gain from investments ...................... 8,023,451 45,293,825
Net unrealized appreciation on investments .............. 33,776,340 139,361,103
-----------------------------------
Net increase in net assets resulting from operations .. 174,320,577 455,811,402
Distributions to shareholders from:
Net investment income:
Class I ................................................ (130,932,986) (264,830,442)
Class II ............................................... (2,813,091) (4,425,343)
Net realized gains:
Class I ................................................ -- (14,121,098)
Class II ............................................... -- (267,394)
-----------------------------------
Total distributions to shareholders ...................... (133,746,077) (283,644,277)
Capital share transactions: (Note 2)
Class I ................................................ 33,065,086 (49,693,259)
Class II ............................................... 19,819,208 31,407,102
-----------------------------------
Total capital share transactions ......................... 52,884,294 (18,286,157)
-----------------------------------
Net increase in net assets ........................... 93,458,794 153,880,968
Net assets:
Beginning of period ...................................... 4,932,821,321 4,778,940,353
-----------------------------------
End of period ............................................ $ 5,026,280,115 $ 4,932,821,321
===================================
Undistributed net investment income included in net assets:
End of period ............................................ $ 2,708,896 $ 3,934,187
===================================
</TABLE>
See notes to financial statements.
33
<PAGE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Notes to Financial Statements (unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Franklin New York Tax-Free Income (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 all of its taxable income.
c. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income and estimated expenses are accrued daily. Bond discount and
premium are amortized on an income tax basis. Distributions to shareholders are
recorded on the ex-dividend date.
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.
d. ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
2. CAPITAL STOCK
The Fund offers two classes of shares: Class I and Class II. The shares have the
same rights except for their initial sales load, distribution fees, voting
rights on matters affecting a single class and the exchange privilege of each
class. On March 19, 1998, the Board approved name changes for Class I and Class
II shares to Class A and Class C, respectively. The Board also approved the
establishment of an additional class of shares, Class B. The effective date of
the name changes and the inception date for Class B was January 1, 1999.
34
<PAGE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Notes to Financial Statements (unaudited) (continued)
2. CAPITAL STOCK (CONT.)
At November 30, 1998, there were 2,500,000,000 shares authorized ($.01 par
value) for each class.
Transactions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
NOVEMBER 30, 1998 MAY 31, 1998
-----------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS I SHARES:
Shares sold .................................. 17,351,237 $ 210,174,264 30,145,107 $ 359,395,945
Shares issued in reinvestment of distributions 4,969,495 60,068,588 10,819,907 128,475,365
Shares redeemed .............................. (19,590,898) (237,177,766) (45,127,295) (537,564,569)
-----------------------------------------------------------------
Net increase (decrease) ....................... 2,729,834 $ 33,065,086 (4,162,281) $ (49,693,259)
=================================================================
CLASS II SHARES:
Shares sold .................................. 2,218,871 $ 26,867,853 3,322,782 $ 39,628,686
Shares issued in reinvestment of distributions 142,849 1,727,499 249,898 2,969,445
Shares redeemed .............................. (724,611) (8,776,144) (937,667) (11,191,029)
-----------------------------------------------------------------
Net increase .................................. 1,637,109 $ 19,819,208 2,635,013 $ 31,407,102
=================================================================
</TABLE>
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:
<TABLE>
<CAPTION>
ANNUALIZED
FEE RATE MONTH-END NET ASSETS
- -----------------------------------------------------------------
<S> <C>
.625% First $100 million
.500% Over $100 million up to and including $250 million
.450% Over $250 million up to and including $10 billion
</TABLE>
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% and .65% per year of its average
daily net assets of Class I and Class II, respectively, for costs incurred in
marketing the Fund's shares.
Distributors paid net commissions on sales of the Fund's shares, and received
contingent deferred sales charges for the year of $286,486 and $27,866,
respectively.
35
<PAGE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Notes to Financial Statements (unaudited) (continued)
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONT.)
The Fund paid shareholder servicing fees of $868,348, of which $816,190 was paid
to Investor Services.
During the period ended November 30, 1998, legal fees of $16,229 were paid to a
law firm in which an officer of the Fund is a partner.
4. INCOME TAXES
At November 30, 1998, the net unrealized appreciation based on the cost of
investments for income tax purposes of $4,551,738,676 was as follows:
<TABLE>
<S> <C>
Unrealized appreciation ......................... $415,010,525
Unrealized depreciation ......................... (77,985)
------------
Net unrealized appreciation ..................... $414,932,540
============
</TABLE>
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
period ended November 30, 1998 aggregated $267,065,408 and $197,760,187,
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.
36
