SHAREHOLDER LETTER
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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.(1)
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Dear Shareholder:
This annual report for Franklin New York Tax-Free Income Fund covers the period
ended May 31, 2000. The 12 months under review were marked by economic strength,
as U.S. gross domestic product (GDP) rose appreciably, consumer confidence
remained strong, unemployment hit a 30-year low, and domestic stock markets
surged to all-time highs. In the face of such economic expansion, inflation as
measured by the Consumer Price Index was a modest 3.1% for the year under
review.
Bond markets started the period in what looked to be a potentially positive year
due to interest-rate expectations. However, the Federal Reserve Board (the Fed)
proceeded to raise the federal funds target rate on six separate occasions
because of inflation fears. This made 1999 and early 2000 one of the worst
periods that bond markets have ever experienced. In February, the government
announced it would sponsor 30-year Treasury buybacks and reduce future issuance
1. For investors subject to the federal alternative minimum tax, a portion of
this income may be subject to such tax. Distributions of capital gains and of
ordinary income from accrued market discount, if any, are generally taxable.
All portfolio holdings mentioned in the report are listed by their complete
legal titles in the fund's Statement of Investments (SOI), which is a complete
listing of the fund's portfolio holdings, including dollar value and number of
shares or principal amount. The SOI begins on page 22.
CONTENTS
Shareholder Letter .................. 1
Performance Summary ................. 12
Municipal Bond Ratings .............. 16
Financial Highlights &
Statement of Investments ............ 19
Financial Statements ................ 34
Notes to
Financial Statements ................ 37
Independent
Auditors' Report .................... 40
Tax Designation ..................... 41
[FUND CATEGORY PYRAMID GRAPHIC]
"When municipals are yielding nearly the same as Treasuries, investors are able
to take advantage of the tax exemption at little extra cost."
of long-term Treasuries. This, coupled with several signs that U.S. economic
growth might be slowing, created a supply/ demand imbalance. These circumstances
caused long-term Treasury bond prices to rise sharply, resulting in an inverted
yield curve. That is, rates on long-term bonds declined below those of
short-term bonds. No other domestic fixed-income market, including municipal
bonds, experienced such an inversion.
The yield on the 30-year Treasury rose from 5.83% at the beginning of the fund's
fiscal year to 6.01% on May 31, 2000, reaching a high of 6.75% on January 20,
2000. The yield on the Bond Buyer Municipal Bond Index (Bond Buyer 40), an
indicator of the municipal bond market, rose from 5.37% to 6.13% for the same
period, while its price declined 10.24%.(2) As interest rates and yields
increased, the dollar value of bonds decreased, meaning bond funds in general
declined in value.
Municipal bond supply in 1999 and first quarter 2000 added pressure to the
already volatile municipal bond market. Although less than in 1998, the $225
billion issuance in 1999 was the fourth-highest on record. We anticipate
decreased new issuance for the remainder of 2000. The near-record volume did
have some benefit, as it helped municipal bonds remain cheap relative to
Treasuries. During the year under review, municipal bonds, as measured by the
Bond Buyer 40, yielded as much as 103% of a comparable Treasury bond's yield.
Historically, this ratio is about 90%.(3) Because municipal bonds are
tax-exempt, they generally yield less than Treasuries, which are subject to
federal income tax. When municipals are yielding nearly the same as Treasuries,
investors are able to take advantage of the tax exemption at little extra
cost.(4)
2. Source: The Bond Buyer. The unmanaged Bond Buyer Municipal Bond 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.
3. Source: The Bond Buyer, 3/00.
Looking forward, we anticipate that the Fed will monitor inflationary tendencies
closely, possibly raising interest rates again. If, as a result, the economy
slows toward the end of 2000, the bond markets could begin to experience less
volatility.
The last few times municipal bonds lost ground, they enjoyed sharp rebounds in
the following year. For example, in 1994, when the Fed raised interest rates six
times, the average general municipal bond fund lost 6.5% in total return. In the
following year, rates declined, and the average municipal bond fund gained
nearly 17%. Although there is no guarantee that bond markets and municipal bond
funds will repeat past behavior, markets do go through cycles. Predicting these
cycles is very difficult, even for professional economists -- which is why we
recommend investing for the long term. It is important to remember that over
time, the tax-free income received from municipal bond funds will ultimately
drive the fund's total return performance.
NEW YORK ECONOMIC UPDATE
During the 12 months under review, Standard & Poor's(R), an independent credit
rating agency, raised New York state's $4.8 billion in general obligation and
$32.2 billion in appropriation-backed bond ratings to A+.(5) As in the past
several years, New York's financial performance improved again during the
12-month reporting period, a result of a rebounding state economy, realistic
budgeting, tighter spending controls and slow but steady economic growth through
which the state has now regained pre-recession employment levels. These factors
contributed to the credit rating upgrade. Besides reversing a long history of
marginally balanced budgets and large accumulated deficits, the Empire State
operated well within its budget and expected to finish fiscal year 2000 with an
extra $2.9 billion in the coffers. This came on the heels of previous budget
surpluses ranging from $1.4 billion to $2.1 billion in fiscal years 1997 through
1999.(6) Moreover, the state generated these surpluses while slashing personal
income tax by 20% and introducing 31 tax cuts overall since 1995, more than any
other state in the nation.(7) Although unemployment fell from 5.2% to 4.6%
during the reporting period through April 2000 -- the lowest jobless rate since
March 1989 -- it remains chronically higher than the national unemployment rate,
which fell to a 30-year low of 3.9% during the same time.(8) New York's personal
income growth, however, tracked the national average closely as it approached 5%
in fiscal 1999 and was expected to grow 5.5% in 2000.(5)
4. Treasuries, if held to maturity, offer a fixed rate of return and fixed
principal value; their interest payments and principal are guaranteed.
5. Source: Standard & Poor's, Ratings Direct, 11/9/99. This does not indicate
Standard & Poor's rating of the fund.
New York City fared better than the remainder of the state, fueled largely by
the remarkable performance and employment levels within the business and
financial services sectors. The improving economy in New York City not only
mirrored the nation's strong economic growth, but also resulted from effective
cost containment of social services and other expenses. Every industry in New
York City and state except manufacturing, which has seen gradual declines in
recent years, experienced employment growth.
6. Source: Moody's Investors Service, 5/5/00.
7. Source: State of New York Executive Press Release, 5/5/00; www.state.ny.us.
8. Source: Bureau of Labor Statistics, 5/31/00.
The outlook appears generally bullish for New York. The state's economic base is
deep, diverse, and wealthy, although reliance on the financial services sector
continues to be a potential vulnerability. New Yorkers' average personal income
in fiscal 1999 was $31,734, or approximately 120% of the national average.(9)
This, coupled with significantly improved financial conditions, should keep
solid economic growth on track. Long-term risks for the state economy include
its debt levels and infrastructure needs, both of which are high by all
measures. New York's debt structure is complex and the burden on fiscal
resources remains moderate, although at $2,045 per capita and 6.4% of personal
income this burden is above the national average. Domestic consumption, which
has been a driving force behind the state's economic performance in recent
years, is expected to slow in the remainder of 2000 as consumer confidence
retreats from historic highs and the stock market ceases to provide added
stimulus to consumer spending.
To rein in debt while balancing the high magnitude of New York's capital needs,
the current administration is enacting the most sweeping and fundamental debt
reform in its history. Simultaneously, it is employing a fiscally responsible
budget that aims to cut $6.8 billion in taxes over the next five years, while
tripling the debt reduction reserve fund and setting aside substantial resources
for future needs. Fiscal year 2000 budget goal highlights include investments to
improve transportation infrastructure, senior citizen programs, tuition
assistance, and the fourth consecutive record increase in school aid, which
would total $13.6 billion. Meanwhile, in another move seen as typical of the
prudent fiscal management exercised by Governor Pataki over the past five years,
more than $3 billion of the 2000 budget is to be left unspent to strengthen
reserves and protect New York's long-term fiscal stability.(7)
"... the current administration is enacting the most sweeping and fundamental
debt reform in its history."
9. Source: Fitch IBCA, State of New York, 10/15/99. This does not indicate
Fitch's rating of the fund.
CREDIT QUALITY BREAKDOWN*
Based on Total Long-Term Investments
5/31/00
AAA 45.2%
AA 19.1%
A 27.5%
BBB 7.5%
Below Investment Grade 0.7%
*Quality breakdown includes internal ratings for bonds not rated by an
independent rating agency.
PORTFOLIO NOTES
Generally rising interest rates during the year under review presented
challenges for the municipal bond market, as bond prices fall when interest
rates rise. For the 12 months ended May 31, 2000, the price on the 30-year
Treasury bond fell 5.52%, the Lehman Brothers Municipal Bond Index was off
7.09%, and the Bond Buyer 40 was down 10.24%. By comparison, Franklin New York
Tax-Free Income Fund's Class A share price declined only 1.24%, as measured by
net asset value.(10) The Lehman Brothers Municipal Bond Index comprises short-
and long-term bonds, while the Bond Buyer 40 generally tracks bonds in the 25-
to 40-year range, has an average maturity of 30 years, and more closely reflects
recent municipal bond market performance. The fund's overall composition and
broad diversification, with 412 positions on May 31, 2000, provided shareholders
with some stability during this wave of interest-rate increases, which helped to
maintain the fund's share price during the reporting period.
In addition, your fund offers a notable tax advantage over a comparable taxable
investment. The Performance Summary on page 13 shows that at the end of this
reporting period, the fund's Class A shares' distribution rate was 5.45%, based
on an annualization of May's 5.25 cent ($0.0525) per share dividend and the
maximum offering price of $11.55 on May 31, 2000. This tax-free rate is
generally higher than the after-tax return on a comparable taxable investment.
An investor in the maximum combined federal, New York state and City personal
income tax bracket would need to earn 10.10% from a taxable investment to match
the fund's tax-free distribution rate. The Performance Summary also shows the
distribution rates and taxable equivalent distribution rates for Class B and C
shares.
10. Sources: Lehman Brothers; The Bond Buyer. Treasuries, if held to maturity,
offer a fixed rate of return and fixed principal value; their interest payments
and principal are guaranteed. The fund's investment return and share price
fluctuate with market conditions. The indexes are unmanaged and include
reinvested interest. One cannot invest directly in an index, nor is an index
representative of the fund's portfolio.
New York's $20.1 billion bond supply for 1999 was somewhat light, a 44% decrease
from 1998 issuance. New York municipalities that had rushed to finance new
projects while interest rates were low tabled plans for new issues as rates rose
in 1999 and the first five months of 2000, diminishing supply throughout the
reporting period. The lack of supply and favorable reaction to the Fed's moves
to tighten credit and control inflation rallied the long-term municipal bond
market in the middle of the reporting period, allowing it to move off its
January lows. Accordingly, the fund's Class A share price, as measured by net
asset value, recovered from $10.95 on February 1, to $11.27 by March 31, 2000,
an increase of 2.92%. However, the rally was short-lived, as the Fed continued
to raise the federal funds target rate in response to the economy's persistent
strength; by May 31, 2000, the fund's net asset value stood at $11.06.
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.
PORTFOLIO BREAKDOWN
5/31/00
% OF TOTAL
LONG-TERM
INVESTMENTS
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Prerefunded 26.9%
Subject to Government Appropriation 22.7%
Hospital & Health Care 11.8%
Housing 9.7%
Transportation 9.5%
Utilities 7.2%
Other Revenue Bonds 5.6%
General Obligation 2.6%
Higher Education 2.2%
Tax-Supported Debt 1.8%
The fixed income market's volatility during the year under review presented
challenges and opportunities for the fund. In light of rising interest rates, we
attempted to implement a balanced approach of reducing prerefunded bonds in the
portfolio while taking opportunities to book tax losses. This strategy enabled
us to extend the portfolio's income-earning potential, improve call protection,
and carry tax losses forward to help reduce taxable capital gains to
shareholders in the future.
In managing our prerefunded bond exposure, we typically looked to sell such
holdings with approximately five years remaining to their call date. In doing
so, the fund sought to capture a premium on the prerefunded bonds and use this
capital to invest in current coupon bonds, thus extending the fund's call
protection, preserving its income stream, and stabilizing its share price. 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. We generally sell prerefunded bonds as
they approach five years to their call date because at that point, the premium
on the bond often begins to decline rapidly to the stated call price.
The fund's portfolio remained broadly diversified during the period, as we
purchased bonds from many different sectors despite the reduction in the state's
bond supply. In general, we purchased securities with more attractive yields.
For example, we purchased bonds issued by the following entities: Metropolitan
Transportation Authority, New York State University Dorm Authority, Long Island
Power & Electric Authority, and New York City TFA. The majority of the bonds
purchased were higher-rated or insured securities, mainly because the additional
yield offered by New York's lower-rated securities was small compared to
high-quality issues, small enough that we believed investors typically were not
compensated for taking on the additional risk associated with lower-rated
securities. The fund continues to emphasize high-quality securities, and
AAA-rated bonds represented 45.2% of the fund's total long-term investments at
the end of the reporting period.
Going forward, our outlook for the fund, the municipal bond market and New York
remains positive. We believe the fund will continue to provide investors with
attractive, monthly tax-free income as we seek to provide a high level of
current income with a relatively stable share price. We will look to take
advantage of the recently higher interest-rate environment, as well as what we
believe is the municipal bond market's undervalued position. Municipal bonds
recently have been priced inexpensively on a historical basis relative to other
fixed income securities, especially Treasuries. With the new, higher
interest-rate environment firmly in place, we anticipate a continued reduction
in New York bond supply. This, coupled with a continued strong demand for the
state's and City's bonds, should keep New York an attractive place to invest.
DIVIDEND DISTRIBUTIONS
6/1/99 - 5/31/00
DIVIDEND PER SHARE
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MONTH CLASS A CLASS B CLASS C
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June 5.25 cents 4.70 cents 4.70 cents
July 5.25 cents 4.70 cents 4.70 cents
August 5.25 cents 4.70 cents 4.70 cents
September 5.25 cents 4.70 cents 4.71 cents
October 5.25 cents 4.70 cents 4.71 cents
November 5.25 cents 4.70 cents 4.71 cents
December 5.25 cents 4.74 cents 4.72 cents
January 5.25 cents 4.74 cents 4.72 cents
February 5.25 cents 4.74 cents 4.72 cents
March 5.25 cents 4.74 cents 4.72 cents
April 5.25 cents 4.74 cents 4.72 cents
May 5.25 cents 4.74 cents 4.72 cents
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TOTAL 63.00 CENTS 56.64 CENTS 56.55 CENTS
We believe that fixed income markets may continue to see volatility over the
short term. We feel that in market environments like this, it is important to
revisit your investment goals and maintain a long-term outlook. As such,
providing our shareholders with a comparatively high level of tax-free income,
while minimizing share price movement, continues to be our goal. As always, we
appreciate your support, welcome your questions or comments and look forward to
serving your investment needs in the future.
Sincerely,
/s/ C. B. Johnson
Charles B. Johnson
Chairman
Franklin New York Tax-Free Income Fund
/s/ Sheila Amoroso
Sheila Amoroso
/s/ Rafael R. Costas Jr.
Rafael R. Costas Jr.
Senior Vice Presidents and Co-Directors
Franklin Municipal Bond Department
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This discussion reflects our views, opinions, and portfolio holdings as of May
31, 2000, the end of the reporting period. The information provided is not a
complete analysis of every aspect of any industry, security or the fund. Our
strategies and the fund's portfolio composition will change depending on
market and economic conditions. Although historical performance is no
guarantee of future results, these insights may help you understand our
investment and management philosophy.
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CLASS A: 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: 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.
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ONE-YEAR PERFORMANCE SUMMARY
AS OF 5/31/00
One-year total return does not include sales charges. 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
One-Year Total Return -1.24%
Net Asset Value (NAV) (5/31/00) $11.06 (5/31/99) $11.91
Change in NAV -$0.85
Distributions (6/1/99-5/31/00) Dividend Income $0.6300
Long-Term Capital Gain $0.0664
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Total $0.6964
CLASS B
One-Year Total Return -1.80%
Net Asset Value (NAV) (5/31/00) $11.04 (5/31/99) $11.89
Change in NAV -$0.85
Distributions (6/1/99-5/31/00) Dividend Income $0.5664
Long-Term Capital Gain $0.0664
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Total $0.6328
CLASS C
One-Year Total Return -1.80%
Net Asset Value (NAV) (5/31/00) $11.06 (5/31/99) $11.91
Change in NAV -$0.85
Distributions (6/1/99-5/31/00) Dividend Income $0.5655
Long-Term Capital Gain $0.0664
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Total $0.6319
Franklin New York Tax-Free Income Fund paid distributions derived from long-term
capital gains of 6.64 cents ($0.0644) per share in December 1999. The fund
hereby designates such distributions as capital gain dividends per Internal
Revenue Code Section 852 (b)(3).
Past performance does not guarantee future rresults.
ADDITIONAL PERFORMANCE
AS OF 6/30/00
SINCE
INCEPTION
CLASS A 1-YEAR 5-YEAR 10-YEAR (9/13/82)
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Cumulative Total Return(1) +2.29% +31.35% +95.88% +318.20%
Average Annual Total Return(2) -2.06% +4.70% +6.50% +8.11%
SINCE
INCEPTION
CLASS B 1-YEAR (1/1/99)
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Cumulative Total Return(1) +1.72% +1.02%
Average Annual Total Return(2) -2.13% -1.82%
SINCE
INCEPTION
CLASS C 1-YEAR 5-YEAR (5/1/95)
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Cumulative Total Return(1) +1.71% +27.71% +29.93%
Average Annual Total Return(2) -0.27% +4.80% +4.99%
AS OF 5/31/00
SHARE CLASS A B C
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Distribution Rate(3) 5.45% 5.15% 5.07%
Taxable Equivalent Distribution Rate(4) 10.10% 9.54% 9.39%
30-Day Standardized Yield(5) 5.00% 4.68% 4.64%
Taxable Equivalent Yield(4) 9.26% 8.67% 8.60%
For updated performance figures, see "Prices and Performance" at
franklintempleton.com, or call Franklin Templeton at 1-800/342-5236.
Past performance does not guarantee 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
current monthly dividend and the maximum offering price per share on May 31,
2000.
4. Taxable equivalent distribution rate and yield assume the published rates as
of June 16, 2000, for the maximum combined federal and New York state and City
personal income tax bracket of 46.02%, 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, 2000.
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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.
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AVERAGE ANNUAL TOTAL RETURN
5/31/00
CLASS A
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1-Year -5.45%
5-Year +4.05%
10-Year +6.37%
Since Inception (9/13/82) +8.01%
AVERAGE ANNUAL TOTAL RETURN
5/31/00
CLASS B
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1-Year -5.52%
Since Inception (1/1/99) -3.46%
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 charges, fund
expenses, account fees and reinvested distributions. The unmanaged index, which
includes approximately 38,000 municipal securities from across the country,
differs from the fund in composition, does not pay management fees or expenses
and includes reinvested interest. One cannot invest directly in an index.
CLASS A (6/1/90 - 5/31/00)
The following line graph compares the performance of the Franklin New York
Tax-Free Income Fund's Class A shares to that of the Lehman Brothers Municipal
Bond Index, and to the Consumer Price Index based on a $10,000 investment from
6/1/90 to 5/31/00.
<TABLE>
<CAPTION>
Date Franklin New York Tax-Free Lehman Brothers Municipal CPI
Income Fund-Class A Bond Index*
<S> <C> <C> <C> <C> <C> <C>
06/01/1990 $ 9,576 10,000 10,000
06/30/1990 $ 9,688 0.88% 10,088 0.54% 10,054
07/31/1990 $ 9,845 1.47% 10,236 0.38% 10,092
08/31/1990 $ 9,734 -1.45% 10,088 0.92% 10,185
09/30/1990 $ 9,703 0.06% 10,094 0.84% 10,271
10/31/1990 $ 9,745 1.82% 10,278 0.60% 10,332
11/30/1990 $ 9,915 2.01% 10,484 0.22% 10,355
12/31/1990 $ 9,893 0.43% 10,529 0.00% 10,355
01/31/1991 $10,037 1.34% 10,670 0.60% 10,417
02/28/1991 $10,127 0.87% 10,763 0.15% 10,433
03/31/1991 $10,199 0.03% 10,766 0.15% 10,448
04/30/1991 $10,328 1.34% 10,911 0.15% 10,464
05/31/1991 $10,392 0.89% 11,008 0.30% 10,495
06/30/1991 $10,446 -0.10% 10,997 0.29% 10,526
07/31/1991 $10,607 1.22% 11,131 0.15% 10,542
08/31/1991 $10,759 1.32% 11,278 0.29% 10,572
09/30/1991 $10,960 1.30% 11,425 0.44% 10,619
10/31/1991 $11,045 0.90% 11,527 0.15% 10,635
11/30/1991 $11,111 0.28% 11,560 0.29% 10,666
12/31/1991 $11,237 2.15% 11,808 0.07% 10,673
01/31/1992 $11,234 0.23% 11,835 0.15% 10,689
02/29/1992 $11,248 0.03% 11,839 0.36% 10,727
03/31/1992 $11,343 0.03% 11,842 0.51% 10,782
04/30/1992 $11,498 0.89% 11,948 0.14% 10,797
05/31/1992 $11,677 1.18% 12,089 0.14% 10,812
06/30/1992 $11,887 1.68% 12,292 0.36% 10,851
07/31/1992 $12,274 3.00% 12,661 0.21% 10,874
08/31/1992 $12,154 -0.97% 12,538 0.28% 10,905
09/30/1992 $12,211 0.65% 12,619 0.28% 10,935
10/31/1992 $12,028 -0.98% 12,496 0.35% 10,973
11/30/1992 $12,317 1.79% 12,719 0.14% 10,989
12/31/1992 $12,482 1.02% 12,849 -0.07% 10,981
01/31/1993 $12,647 1.16% 12,998 0.49% 11,035
02/28/1993 $12,974 3.62% 13,469 0.35% 11,073
03/31/1993 $12,925 -1.06% 13,326 0.35% 11,112
04/30/1993 $12,995 1.01% 13,460 0.28% 11,143
05/31/1993 $13,153 0.56% 13,536 0.14% 11,159
06/30/1993 $13,367 1.67% 13,762 0.14% 11,175
07/31/1993 $13,372 0.13% 13,780 0.00% 11,175
08/31/1993 $13,621 2.08% 14,066 0.28% 11,206
09/30/1993 $13,769 1.14% 14,227 0.21% 11,229
10/31/1993 $13,795 0.19% 14,254 0.41% 11,275
11/30/1993 $13,686 -0.88% 14,128 0.07% 11,283
12/31/1993 $13,972 2.11% 14,426 0.00% 11,283
01/31/1994 $14,100 1.14% 14,591 0.27% 11,314
02/28/1994 $13,853 -2.59% 14,213 0.34% 11,352
03/31/1994 $13,455 -4.07% 13,635 0.34% 11,391
04/30/1994 $13,483 0.85% 13,750 0.14% 11,407
05/31/1994 $13,602 0.87% 13,870 0.07% 11,415
06/30/1994 $13,570 -0.61% 13,785 0.34% 11,454
07/31/1994 $13,750 1.83% 14,038 0.27% 11,485
08/31/1994 $13,824 0.35% 14,087 0.40% 11,530
09/30/1994 $13,662 -1.47% 13,880 0.27% 11,562
10/31/1994 $13,463 -1.78% 13,633 0.07% 11,570
11/30/1994 $13,155 -1.81% 13,386 0.13% 11,585
12/31/1994 $13,472 2.20% 13,680 0.00% 11,585
01/31/1995 $13,754 2.86% 14,072 0.40% 11,631
02/28/1995 $14,051 2.91% 14,481 0.40% 11,678
03/31/1995 $14,152 1.15% 14,648 0.33% 11,716
04/30/1995 $14,180 0.12% 14,665 0.33% 11,755
05/31/1995 $14,568 3.19% 15,133 0.20% 11,778
06/30/1995 $14,447 -0.87% 15,002 0.20% 11,802
07/31/1995 $14,526 0.95% 15,144 0.00% 11,802
08/31/1995 $14,682 1.27% 15,336 0.26% 11,833
09/30/1995 $14,755 0.63% 15,433 0.20% 11,856
10/31/1995 $14,969 1.45% 15,657 0.33% 11,895
11/30/1995 $15,183 1.66% 15,917 -0.07% 11,887
12/31/1995 $15,309 0.96% 16,069 -0.07% 11,879
01/31/1996 $15,371 0.76% 16,192 0.59% 11,949
02/29/1996 $15,239 -0.68% 16,081 0.32% 11,987
03/31/1996 $15,118 -1.28% 15,876 0.52% 12,049
04/30/1996 $15,089 -0.28% 15,831 0.39% 12,096
05/31/1996 $15,100 -0.04% 15,825 0.19% 12,119
06/30/1996 $15,256 1.09% 15,997 0.06% 12,127
07/31/1996 $15,387 0.90% 16,141 0.19% 12,150
08/31/1996 $15,384 -0.02% 16,138 0.19% 12,173
09/30/1996 $15,608 1.40% 16,364 0.32% 12,212
10/31/1996 $15,753 1.13% 16,549 0.32% 12,251
11/30/1996 $15,979 1.83% 16,852 0.19% 12,274
12/31/1996 $15,942 -0.42% 16,781 0.00% 12,274
01/31/1997 $15,980 0.19% 16,813 0.32% 12,313
02/28/1997 $16,114 0.92% 16,968 0.31% 12,351
03/31/1997 $15,968 -1.33% 16,742 0.25% 12,382
04/30/1997 $16,087 0.84% 16,883 0.12% 12,397
05/31/1997 $16,332 1.51% 17,137 -0.06% 12,390
06/30/1997 $16,465 1.07% 17,321 0.12% 12,405
07/31/1997 $16,896 2.77% 17,801 0.12% 12,419
08/31/1997 $16,804 -0.94% 17,633 0.19% 12,443
09/30/1997 $16,997 1.19% 17,843 0.25% 12,474
10/31/1997 $17,118 0.64% 17,957 0.25% 12,505
11/30/1997 $17,227 0.59% 18,063 -0.06% 12,498
12/31/1997 $17,459 1.46% 18,327 -0.12% 12,483
01/31/1998 $17,641 1.03% 18,516 0.19% 12,507
02/28/1998 $17,663 0.03% 18,521 0.19% 12,530
03/31/1998 $17,730 0.09% 18,538 0.19% 12,554
04/30/1998 $17,678 -0.45% 18,455 0.18% 12,577
05/31/1998 $17,937 1.58% 18,746 0.18% 12,599
06/30/1998 $18,034 0.39% 18,819 0.12% 12,615
07/31/1998 $18,072 0.25% 18,866 0.12% 12,630
08/31/1998 $18,305 1.55% 19,159 0.12% 12,645
09/30/1998 $18,508 1.25% 19,398 0.12% 12,660
10/31/1998 $18,529 0.00% 19,398 0.24% 12,690
11/30/1998 $18,581 0.35% 19,466 0.00% 12,690
12/31/1998 $18,610 0.25% 19,515 -0.06% 12,683
01/31/1999 $18,785 1.19% 19,747 0.24% 12,713
02/28/1999 $18,759 -0.44% 19,660 0.12% 12,728
03/31/1999 $18,809 0.14% 19,688 0.30% 12,767
04/30/1999 $18,861 0.25% 19,737 0.73% 12,860
05/31/1999 $18,786 -0.58% 19,622 0.00% 12,860
06/30/1999 $18,552 -1.44% 19,340 0.00% 12,860
07/31/1999 $18,604 0.36% 19,409 0.30% 12,898
08/31/1999 $18,400 -0.80% 19,254 0.24% 12,929
09/30/1999 $18,388 0.04% 19,262 0.48% 12,991
10/31/1999 $18,150 -1.08% 19,054 0.18% 13,015
11/30/1999 $18,333 1.06% 19,256 0.06% 13,023
12/31/1999 $18,184 -0.75% 19,111 0.00% 13,023
01/31/2000 $18,106 -0.44% 19,027 0.24% 13,054
02/29/2000 $18,325 1.16% 19,248 0.59% 13,131
03/31/2000 $18,728 2.18% 19,668 0.82% 13,239
04/30/2000 $18,615 -0.59% 19,552 0.06% 13,247
05/31/2000 $18,552 -0.34% -0.52% 19,450 0.06% 13,254
Total Return 85.52% 94.50% 32.54%
</TABLE>
*Source: Standard & Poor's Micropal.
CLASS B (1/1/99 - 5/31/00)
The following line graph compares the performance of the Franklin New York
Tax-Free Income Fund's Class B shares to that of the Lehman Brothers Municipal
Bond Index, and to the Consumer Price Index based on a $10,000 investment from
1/1/99 to 5/31/00.
<TABLE>
<CAPTION>
Date Franklin New York Tax-Free Lehman Brothers CPI
Income Fund-Class B Municipal Bond Index*
<S> <C> <C> <C> <C> <C>
01/01/1999 $10,000 $10,000 $10,000
01/31/1999 $10,086 1.19% $10,119 0.24% $10,024
02/28/1999 $10,067 -0.44% $10,074 0.12% $10,036
03/31/1999 $10,090 0.14% $10,089 0.30% $10,066
04/30/1999 $10,106 0.25% $10,114 0.73% $10,140
05/31/1999 $10,062 -0.58% $10,055 0.00% $10,140
06/30/1999 $ 9,932 -1.44% $ 9,910 0.00% $10,140
07/31/1999 $ 9,955 0.36% $ 9,946 0.30% $10,170
08/31/1999 $ 9,841 -0.80% $ 9,866 0.24% $10,194
09/30/1999 $ 9,830 0.04% $ 9,870 0.48% $10,243
10/31/1999 $ 9,698 -1.08% $ 9,764 0.18% $10,262
11/30/1999 $ 9,790 1.06% $ 9,867 0.06% $10,268
12/31/1999 $ 9,706 -0.75% $ 9,793 0.00% $10,268
01/31/2000 $ 9,669 -0.44% $ 9,750 0.24% $10,293
02/29/2000 $ 9,781 1.16% $ 9,863 0.59% $10,353
03/31/2000 $ 9,983 2.18% $10,078 0.82% $10,438
04/30/2000 $ 9,927 -0.59% $10,019 0.06% $10,445
05/31/2000 $ 9,514 -0.52% $ 9,967 0.06% $10,451
Total Return -4.86% -0.33% 4.51%
</TABLE>
*Source: Standard & Poor's Micropal.
Past performance does not guarantee future results.
CLASS C (5/1/95 - 5/31/00)
The following line graph compares the performance of the Franklin New York
Tax-Free Income Fund's Class C shares to that of the Lehman Brothers Municipal
Bond Index, and to the Consumer Price Index based on a $10,000 investment from
5/1/95 to 5/31/00.
<TABLE>
<CAPTION>
Date Franklin New York Tax-Free Lehman Brothers Municipal CPI*
Income Fund-Class C Bond Index*
<S> <C> <C> <C> <C> <C> <C>
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 0.90% $11,006 0.19% $10,336
08/31/1996 $10,647 -0.02% $11,004 0.19% $10,356
09/30/1996 $10,797 1.40% $11,158 0.32% $10,389
10/31/1996 $10,892 1.13% $11,284 0.32% $10,422
11/30/1996 $11,043 1.83% $11,491 0.19% $10,442
12/31/1996 $11,013 -0.42% $11,443 0.00% $10,442
01/31/1997 $11,033 0.19% $11,464 0.32% $10,475
02/28/1997 $11,120 0.92% $11,570 0.31% $10,508
03/31/1997 $11,013 -1.33% $11,416 0.25% $10,534
04/30/1997 $11,099 0.84% $11,512 0.12% $10,547
05/31/1997 $11,253 1.51% $11,686 -0.06% $10,540
06/30/1997 $11,349 1.07% $11,811 0.12% $10,553
07/31/1997 $11,641 2.77% $12,138 0.12% $10,565
08/31/1997 $11,562 -0.94% $12,024 0.19% $10,586
09/30/1997 $11,699 1.19% $12,167 0.25% $10,612
10/31/1997 $11,767 0.64% $12,245 0.25% $10,639
11/30/1997 $11,836 0.59% $12,317 -0.06% $10,632
12/31/1997 $12,000 1.46% $12,497 -0.12% $10,619
01/31/1998 $12,109 1.03% $12,626 0.19% $10,640
02/28/1998 $12,128 0.03% $12,629 0.19% $10,660
03/31/1998 $12,168 0.09% $12,641 0.19% $10,680
04/30/1998 $12,127 -0.45% $12,584 0.18% $10,699
05/31/1998 $12,288 1.58% $12,783 0.18% $10,719
06/30/1998 $12,349 0.39% $12,832 0.12% $10,731
07/31/1998 $12,379 0.25% $12,865 0.12% $10,744
08/31/1998 $12,533 1.55% $13,064 0.12% $10,757
09/30/1998 $12,655 1.25% $13,227 0.12% $10,770
10/31/1998 $12,674 0.00% $13,227 0.24% $10,796
11/30/1998 $12,692 0.35% $13,274 0.00% $10,796
12/31/1998 $12,716 0.25% $13,307 -0.06% $10,789
01/31/1999 $12,829 1.19% $13,465 0.24% $10,815
02/28/1999 $12,804 -0.44% $13,406 0.12% $10,828
03/31/1999 $12,822 0.14% $13,425 0.30% $10,861
04/30/1999 $12,862 0.25% $13,458 0.73% $10,940
05/31/1999 $12,804 -0.58% $13,380 0.00% $10,940
06/30/1999 $12,639 -1.44% $13,187 0.00% $10,940
07/31/1999 $12,669 0.36% $13,235 0.30% $10,973
08/31/1999 $12,524 -0.80% $13,129 0.24% $10,999
09/30/1999 $12,510 0.04% $13,134 0.48% $11,052
10/31/1999 $12,342 -1.08% $12,992 0.18% $11,072
11/30/1999 $12,460 1.06% $13,130 0.06% $11,079
12/31/1999 $12,353 -0.75% $13,032 0.00% $11,079
01/31/2000 $12,294 -0.44% $12,974 0.24% $11,105
02/29/2000 $12,437 1.16% $13,125 0.59% $11,171
03/31/2000 $12,704 2.18% $13,411 0.82% $11,262
04/30/2000 $12,622 -0.59% $13,332 0.06% $11,269
05/31/2000 $12,577 -0.39% -0.52% $13,263 0.06% $11,276
Total Return 25.77% 32.63% 12.76%
</TABLE>
*Source: Standard & Poor's Micropal.
AVERAGE ANNUAL TOTAL RETURN
5/31/00
CLASS C
----------------------------------------
1-Year -3.70%
5-Year +4.17%
Since Inception (5/1/95) +4.61%
Past performance does not guarantee 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: 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,
---------------------------------------------------------------------------------
2000 1999 1998 1997 1996
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ............. $11.91 $12.08 $11.66 $11.46 $11.75
Income from investment operations: ---------------------------------------------------------------------------------
Net investment income(a) ...................... .64 .64 .66 .68 .70
Net realized and unrealized gains (losses) .... (.79) (.08) .45 .23 (.28)
---------------------------------------------------------------------------------
Total from investment operations ............... (.15) .56 1.11 .91 .42
---------------------------------------------------------------------------------
Less distributions from:
Net investment income ......................... (.63) (.64) (.66) (.68) (.71)
Net realized gains ............................ (.07) (.09) (.03) (.03) --
---------------------------------------------------------------------------------
Total distributions ............................ (.70) (.73) (.69) (.71) (.71)
---------------------------------------------------------------------------------
Net asset value, end of year ................... $11.06 $11.91 $12.08 $11.66 $11.46
=================================================================================
Total return(b) ................................ (1.24)% 4.73% 9.83% 8.16% 3.65%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ................ $4,219,849 $4,847,001 $4,824,135 $4,704,745 $4,709,483
Ratios to average net assets:
Expenses ...................................... .60% .59% .58% .59% .58%
Net investment income ......................... 5.64% 5.30% 5.57% 5.87% 5.99%
Portfolio turnover rate ........................ 24.61% 13.34% 18.51% 11.18% 28.34%
</TABLE>
(a) Based on average shares outstanding effective year ended May 2000.
(b) Total return does not reflect sales commissions 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)
CLASS B
--------------------------
YEAR ENDED MAY 31,
--------------------------
2000 1999(d)
--------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .......... $11.89 $12.06
--------------------------
Income from investment operations:
Net investment income(a) ................... .57 .77
Net realized and unrealized losses ......... (.78) (.70)
--------------------------
Total from investment operations ............ (.21) .07
--------------------------
Less distributions from:
Net investment income ...................... (.57) (.24)
Net realized gain .......................... (.07) --
--------------------------
Total distributions ......................... (.64) (.24)
--------------------------
Net asset value, end of year ................ $11.04 $11.89
==========================
Total return(b) ............................. (1.80)% .62%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ............. $40,874 $19,059
Ratios to average net assets:
Expenses ................................... 1.17% 1.16%(c)
Net investment income ...................... 5.08% 4.72%(c)
Portfolio turnover rate ..................... 24.61% 13.34%
(a) Based on average shares outstanding effective year ended May 2000.
(b) Total return does not reflect contingent deferred sales charge, and is not
annualized for periods less than one year.
(c) Annualized
(d) 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,
---------------------------------------------------------------------------
2000 1999 1998 1997 1996
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .............. $11.91 $12.07 $11.65 $11.45 $11.73
---------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) ....................... .57 .62 .59 .63 .65
Net realized and unrealized gains (losses) ..... (.78) (.12) .45 .21 (.29)
---------------------------------------------------------------------------
Total from investment operations ................ (.21) .50 1.04 .84 .36
---------------------------------------------------------------------------
Less distributions from:
Net investment income .......................... (.57) (.57) (.59) (.61) (.64)
Net realized gains ............................. (.07) (.09) (.03) (.03) --
---------------------------------------------------------------------------
Total distributions ............................. (.64) (.66) (.62) (.64) (.64)
---------------------------------------------------------------------------
Net asset value, end of year .................... $11.06 $11.91 $12.07 $11.65 $11.45
===========================================================================
Total return(b) ................................. (1.80)% 4.20% 9.20% 7.52% 3.14%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ................. $119,302 $139,756 $108,686 $74,195 $39,047
Ratios to average net assets:
Expenses ....................................... 1.17% 1.16% 1.16% 1.17% 1.16%
Net investment income .......................... 5.07% 4.73% 4.98% 5.30% 5.43%
Portfolio turnover rate ......................... 24.61% 13.34% 18.51% 11.18% 28.34%
</TABLE>
(a) Based on average shares outstanding effective year ended May 2000.
(b) Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
See notes to financial statements.
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS 97.9%
BONDS 95.6%
Albany Housing Authority Limited Obligation, Refunding, 6.25%, 10/01/12 ...................... $5,250,000 $5,417,213
Albany IDA, Civic Facility Revenue, Albany Medical Center Project, 6.00%,
5/01/19 ................................................................................... 1,270,000 1,095,070
5/01/29 ................................................................................... 1,460,000 1,201,171
Albany Parking Authority Revenue, Refunding, Series A, 6.85%, 11/01/12 ....................... 1,610,000 1,665,948
Auburn IDA, MFR, Auburn Memorial Home, 6.50%, 2/01/34 ........................................ 5,655,000 5,725,744
Batavia Housing Authority Mortgage Revenue, Washington Towers,
Refunding, Series A, 6.50%, 1/01/23 ........................................................ 1,000,000 1,009,600
Battery Park City Authority Revenue, Refunding, Series A, 5.80%, 11/01/22 .................... 68,795,000 65,963,398
Bethany Retirement Home Inc. Mortgage Loan Revenue,
FHA Insured, 7.50%, 2/01/34 ................................................................ 8,160,000 8,796,643
Clinton County COP, Correctional Facilities Project, 8.125%, 8/01/17 ......................... 5,375,000 6,312,723
Cortland County IDA, Civic Facility Revenue,
Cortland Memorial Hospital Inc. Project, 6.25%, 7/01/24 .................................... 6,400,000 5,707,072
Franklin County COP, Court House Redevelopment Project, 8.125%, 8/01/06 ...................... 4,260,000 4,552,705
Franklin County IDA, Lease Revenue, County Correctional Facility Project,
6.75%, 11/01/12 ........................................................................... 4,790,000 4,876,939
Guam Airport Authority Revenue, Series A, 6.50%, 10/01/23 .................................... 5,385,000 5,584,837
Guam Power Authority Revenue, Series A, Pre-Refunded,
6.625%, 10/01/14 .......................................................................... 2,900,000 3,135,973
6.75%, 10/01/24 ........................................................................... 25,500,000 27,697,845
Hamilton Elderly Housing Corp. Mortgage Revenue,
Hamilton Apartments Project, 11.25%, 1/01/15 .............................................. 1,250,000 1,282,000
Ilion Elderly Housing Corp. Mortgage Revenue,
Section 8 Housing Assistance Revenue, 7.25%, 7/01/09 ...................................... 1,795,000 1,735,998
Long Island Power Authority Electric System Revenue, Refunding, Series A,
5.75%, 12/01/24 ........................................................................... 15,000,000 14,173,200
5.50%, 12/01/29 ........................................................................... 17,065,000 15,133,925
MBIA Insured, 5.75%, 12/01/24 ............................................................. 15,060,000 14,523,864
Monroe County IDAR, Civic Facilities, De Paul Community Facilities, 6.50%, 2/01/24 ........... 1,285,000 1,333,984
MTA Commuter Facilities Revenue,
Series 8, 5.50%, 7/01/21 .................................................................. 5,000,000 4,576,650
Series A, 6.00%, 7/01/24 .................................................................. 5,575,000 5,463,500
Series A, 5.25%, 7/01/28 .................................................................. 18,300,000 15,758,313
Series A, 6.125%, 7/01/29 ................................................................. 9,625,000 9,566,288
Series A, FGIC Insured, 5.25%, 7/01/28 .................................................... 8,655,000 7,607,139
Series A, MBIA Insured, 5.625%, 7/01/27 ................................................... 10,000,000 9,436,900
Series A, Pre-Refunded, 6.50%, 7/01/24 .................................................... 35,620,000 37,961,303
Series C-1, FGIC Insured, 5.375%, 7/01/27 ................................................. 19,100,000 17,063,176
Series R, 5.50%, 7/01/17 .................................................................. 2,000,000 1,885,840
MTA Dedicated Tax Fund Revenue, Series A,
FGIC Insured, 6.00%, 4/01/30 .............................................................. 27,260,000 27,219,655
FSA Insured, 5.00%, 4/01/29 ............................................................... 25,800,000 21,907,038
MBIA Insured, 5.25%, 4/01/26 .............................................................. 17,000,000 15,091,410
MTA Service Contract, Revenue,
Commuter Facilities, Refunding, Series 5, 6.50%, 7/01/16 .................................. 17,470,000 17,793,894
Commuter Facilities, Refunding, Series 5, 6.00%, 7/01/18 .................................. 2,740,000 2,718,984
Commuter Facilities, Refunding, Series N, 7.125%, 7/01/09 ................................. 24,160,000 25,564,179
Commuter Facilities, Series 5, 7.00%, 7/01/12 ............................................. 31,605,000 32,834,435
Transit Facilities, Refunding, Series 5, 7.00%, 7/01/12 ................................... 30,935,000 32,138,372
Transit Facilities, Refunding, Series 5, 6.50%, 7/01/16 ................................... 40,495,000 41,245,777
Transit Facilities, Refunding, Series 5, 6.00%, 7/01/18 ................................... 7,725,000 7,665,749
Transit Facilities, Refunding, Series N, 7.125%, 7/01/09 .................................. 12,625,000 13,358,765
Transit Facilities, Series 6, Pre-Refunded, 7.00%, 7/01/09 ................................ 2,000,000 2,086,580
</TABLE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 31, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
MTA Transit Facilities Revenue, Series A,
6.00%, 7/01/24 .......................................................................... $ 7,000,000 $ 6,860,000
6.125%, 7/01/29 ......................................................................... 11,595,000 11,524,271
FSA Insured, 5.50%, 7/01/22 ............................................................. 16,170,000 14,769,193
FSA Insured, 5.625%, 7/01/27 ............................................................ 14,440,000 13,338,661
FSA Insured, Pre-Refunded, 6.10%, 7/01/21 ............................................... 15,000,000 15,970,800
MBIA Insured, 5.625%, 7/01/25 ........................................................... 8,000,000 7,573,520
Nassau County Tobacco Settlement Corp., Asset Backed, Series A, 6.50%, 7/15/27 ............. 25,000,000 24,437,500
Nassau Health Care Corp. Health System Revenue, Nassau County Guaranteed,
FSA Insured, 5.75%, 8/01/29 .............................................................. 36,040,000 34,046,988
New Rochelle Municipal Housing Authority Revenue, Series A, 5.55%, 12/01/14 ................ 6,090,000 5,641,776
New York City GO,
Pre-Refunded, 7.00%, 2/01/17 ............................................................ 6,500,000 6,803,940
(b) Refunding, Series A, FSA Insured, 6.00%, 5/15/30 ..................................... 6,250,000 6,206,750
Refunding, Series F, 5.875%, 8/01/24 .................................................... 7,000,000 6,775,860
Refunding, Series H, 6.125%, 8/01/25 .................................................... 5,000,000 4,989,950
Series 1992, Rite 1, 7.00%, 10/01/11 .................................................... 12,750,000 13,428,810
Series A, 7.75%, 8/15/14 ................................................................ 135,000 141,244
Series A, 6.25%, 8/01/17 ................................................................ 2,675,000 2,726,012
Series A, Pre-Refunded, 7.75%, 8/15/13 .................................................. 2,000,000 2,096,540
Series A, Pre-Refunded, 7.75%, 8/15/14 .................................................. 9,865,000 10,341,184
Series A-1, 6.625%, 8/01/25 ............................................................. 13,360,000 13,768,148
Series A-1, Pre-Refunded, 6.625%, 8/01/25 ............................................... 3,640,000 3,913,218
Series B, 7.00%, 6/01/13 ................................................................ 10,000 10,335
Series B, 7.00%, 6/01/14 ................................................................ 20,000 20,669
Series B, 7.00%, 6/01/15 ................................................................ 10,000 10,329
Series B, 6.75%, 10/01/15 ............................................................... 15,000 15,584
Series B, 7.00%, 2/01/18 ................................................................ 1,245,000 1,295,335
Series B, Pre-Refunded, 7.75%, 2/01/10 .................................................. 2,000,000 2,117,080
Series B, Pre-Refunded, 7.75%, 2/01/11 .................................................. 5,000,000 5,292,700
Series B, Pre-Refunded, 7.75%, 2/01/12 .................................................. 500,000 529,270
Series B, Pre-Refunded, 7.75%, 2/01/13 .................................................. 1,875,000 1,984,763
Series B, Pre-Refunded, 7.75%, 2/01/14 .................................................. 10,950,000 11,591,013
Series B, Pre-Refunded, 7.00%, 6/01/14 .................................................. 6,705,000 6,951,610
Series B, Pre-Refunded, 7.75%, 2/01/15 .................................................. 22,610,000 23,933,589
Series B, Pre-Refunded, 7.00%, 6/01/15 .................................................. 4,240,000 4,395,947
Series B, Pre-Refunded, 6.75%, 10/01/15 ................................................. 1,485,000 1,563,378
Series B, Pre-Refunded, 7.00%, 2/01/18 .................................................. 240,000 251,222
Series B, Pre-Refunded, 6.00%, 8/15/26 .................................................. 915,000 964,245
Series B, Sub Series B-1, Pre-Refunded, 7.00%, 8/15/16 .................................. 2,000,000 2,163,360
Series B, Sub Series B-1, Pre-Refunded, 7.50%, 8/15/20 .................................. 10,000,000 10,983,800
Series C, 7.00%, 2/01/12 ................................................................ 705,000 707,305
Series C, Pre-Refunded, 7.20%, 8/15/14 .................................................. 4,000,000 4,111,160
Series C, Sub Series C-1, 7.00%, 8/01/16 ................................................ 10,000 10,486
Series C, Sub Series C-1, Pre-Refunded, 7.00%, 8/01/16 .................................. 4,490,000 4,742,832
Series D, 8.00%, 8/01/17 ................................................................ 5,000 5,237
Series D, 7.50%, 2/01/18 ................................................................ 40,000 42,028
Series D, 5.25%, 8/01/21 ................................................................ 14,500,000 12,965,900
Series D, Pre-Refunded, 8.25%, 8/01/13 .................................................. 4,820,000 5,071,604
</TABLE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 31, 2000 (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 $ 3,856,619
Series D, Pre-Refunded, 7.50%, 2/01/18 ...................................................... 160,000 168,869
Series F, Pre-Refunded, 8.40%, 11/15/08 ..................................................... 7,500,000 7,966,350
Series F, Pre-Refunded, 8.40%, 11/15/09 ..................................................... 3,350,000 3,558,303
Series F, Pre-Refunded, 6.625%, 2/15/25 ..................................................... 11,240,000 12,025,564
Series G, 6.00%, 10/15/26 ................................................................... 9,815,000 9,635,778
Series G, Pre-Refunded, 6.00%, 10/15/26 ..................................................... 85,000 89,478
Series H, 7.20%, 2/01/13 .................................................................... 800,000 836,920
Series H, 7.20%, 2/01/15 .................................................................... 430,000 449,359
Series H, 7.00%, 2/01/16 .................................................................... 300,000 312,324
Series H, 7.00%, 2/01/18 .................................................................... 160,000 166,469
Series H, Pre-Refunded, 7.20%, 2/01/13 ...................................................... 9,200,000 9,659,080
Series H, Pre-Refunded, 7.20%, 2/01/14 ...................................................... 4,000,000 4,199,600
Series H, Pre-Refunded, 7.20%, 2/01/15 ...................................................... 4,170,000 4,378,083
Series H, Pre-Refunded, 7.00%, 2/01/16 ...................................................... 2,200,000 2,302,872
Series H, Pre-Refunded, 7.00%, 2/01/18 ...................................................... 4,065,000 4,258,413
Series I, 6.25%, 4/15/27 .................................................................... 4,940,000 4,972,900
Series I, Pre-Refunded, 6.25%, 4/15/27 ...................................................... 4,560,000 4,854,211
Series K, Pre-Refunded, 6.25%, 4/01/26 ...................................................... 9,000,000 9,578,160
Unlimited, Series A, Pre-Refunded, 7.75%, 8/15/15 ........................................... 1,400,000 1,467,578
Unlimited, Series B, Pre-Refunded, 7.00%, 6/01/13 ........................................... 350,000 362,873
New York City HDC, MFMR,
Refunding, Series A, FHA Insured, 6.55%, 10/01/15 ........................................... 19,450,000 19,849,309
Series A, FHA Insured, 6.55%, 4/01/18 ....................................................... 10,000,000 10,163,600
Series A, FHA Insured, 6.60%, 4/01/30 ....................................................... 51,500,000 52,213,275
New York City Health and Hospital Corp. Revenue, Series A, Pre-Refunded, 6.30%, 2/15/20 ........ 34,635,000 36,324,149
New York City IDA, Civic Facility Revenue,
College of New Rochelle, 5.80%, 9/01/26 ..................................................... 1,500,000 1,379,520
Federation Protestant Welfare, 6.95%, 11/01/11 .............................................. 2,300,000 2,320,240
The Lighthouse Inc. Project, Pre-Refunded, 6.50%, 7/01/22 ................................... 8,000,000 8,396,880
New York Blood Center Inc. Project, Pre-Refunded, 7.20%, 5/01/12 ............................ 4,000,000 4,282,120
New York Blood Center Inc. Project, Pre-Refunded, 7.25%, 5/01/22 ............................ 7,000,000 7,518,700
St. Christopher Ottilie Project, 7.50%, 7/01/21 ............................................. 2,500,000 2,602,125
New York City Municipal Water Finance Authority Water and Sewer System Revenue,
Refunding, 6.75%, 6/15/17 ................................................................... 18,100,000 18,490,236
Refunding, Series A, 7.10%, 6/15/12 ......................................................... 5,700,000 5,862,108
Refunding, Series A, 6.75%, 6/15/16 ......................................................... 1,400,000 1,432,298
Refunding, Series A, 6.25%, 6/15/21 ......................................................... 990,000 993,188
Refunding, Series A, 5.75%, 6/15/30 ......................................................... 41,190,000 39,487,617
Refunding, Series B, FGIC Insured, 5.125%, 6/15/30 .......................................... 4,000,000 3,405,000
Refunding, Series B, FSA Insured, 5.00%, 6/15/29 ............................................ 25,875,000 21,754,924
Refunding, Series D, MBIA Insured, 4.75%, 6/15/25 ........................................... 21,500,000 17,484,445
Series A, FGIC Insured, 5.75%, 6/15/31 ...................................................... 19,315,000 18,455,483
Series A, FGIC Insured, 5.50%, 6/15/32 ...................................................... 8,025,000 7,288,145
Series A, Pre-Refunded, 7.10%, 6/15/12 ...................................................... 27,785,000 28,724,967
Series A, Pre-Refunded, 7.10%, 6/15/12 ...................................................... 2,215,000 2,289,933
</TABLE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 31, 2000 (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, Pre-Refunded, 7.00%, 6/15/15 ....................................................... $ 2,875,000 $ 2,969,415
Series B, 5.75%, 6/15/26 ..................................................................... 24,455,000 23,560,925
Series B, 5.875%, 6/15/26 .................................................................... 10,250,000 10,042,438
Series B, MBIA Insured, 5.50%, 6/15/27 ....................................................... 29,420,000 27,132,301
Series B, Pre-Refunded, 6.375%, 6/15/22 ...................................................... 20,000,000 20,751,600
New York City Transitional Finance Authority Revenue, Future Tax Secured,
Refunding, Series C-A, 5.50%, 11/01/24 ....................................................... 8,300,000 7,711,115
Series A, 5.00%, 8/15/27 ..................................................................... 26,915,000 22,834,417
Series A, 6.00%, 8/15/29 ..................................................................... 29,000,000 28,996,810
Series B, 6.00%, 11/15/29 .................................................................... 15,000,000 14,999,400
New York City Transportation Authority MTA, Triborough COP, Series A,
AMBAC Insured, 5.25%, 1/01/29 ................................................................. 75,565,000 66,312,066
New York Housing Corp. Revenue, Series A, 5.50%, 11/01/20 ....................................... 2,200,000 2,020,260
New York State Commissioner General Services People of the State of New York
Certificate of Lease Assignment,
5.70%, 3/01/29 ............................................................................... 78,786,777 67,634,509
5.75%, 3/01/29 ............................................................................... 37,634,998 32,542,983
New York State COP, Hanson Redevelopment Project,
8.25%, 11/01/01 .............................................................................. 2,815,000 2,878,366
8.375%, 5/01/08 .............................................................................. 18,045,000 20,038,612
New York State Dormitory Authority Lease Revenue GO, Court Facilities, 6.00%, 5/15/39 ........... 58,245,000 56,454,549
New York State Dormitory Authority Lease Revenue,
Municipal Health Facilities Improvement Program, Series 1, FSA Insured, 4.75%, 1/15/29 ....... 6,500,000 5,140,330
State University Dormitory Facilities, Series A, 6.00%, 7/01/30 .............................. 5,750,000 5,639,830
State University Dormitory Facilities, Series B, MBIA Insured, 5.125%, 7/01/28 ............... 4,800,000 4,124,304
State University Dormitory Facilities, Series C, MBIA Insured, 5.50%, 7/01/29 ................ 4,250,000 3,877,785
New York State Dormitory Authority Revenue,
Bishop Henry B. Hucles Nursing Home, 6.00%, 7/01/24 .......................................... 2,545,000 2,447,857
Buena Vida Nursing Home, Series A, 5.25%, 7/01/28 ............................................ 4,730,000 4,022,061
City University System Consolidated, Second General, Refunding, Series A, 6.00%, 7/01/17 ..... 10,215,000 10,192,833
City University System Consolidated, Series 1, MBIA Insured, 5.125%, 7/01/27 ................. 6,680,000 5,772,054
City University System Consolidated, Series C, 7.50%, 7/01/10 ................................ 14,900,000 16,604,411
City University System Consolidated, Series C, 6.00%, 7/01/16 ................................ 8,900,000 8,899,110
City University System Consolidated, Series D, 7.00%, 7/01/09 ................................ 3,430,000 3,696,134
City University System Consolidated, Third General, Refunding, Series A, 6.00%, 7/01/16 ...... 23,185,000 23,210,040
City University System Consolidated, Third General, Series 1, 5.50%, 7/01/29 ................. 38,375,000 35,014,118
City University System, Refunding, Series U, 6.375%, 7/01/08 ................................. 1,140,000 1,186,900
City University System, Series F, Pre-Refunded, 7.875%, 7/01/17 .............................. 40,000,000 40,888,800
City University System, Series U, Pre-Refunded, 6.375%, 7/01/08 .............................. 1,745,000 1,823,804
City University System, Series U, Pre-Refunded, 6.70%, 7/01/09 ............................... 5,405,000 5,683,249
City University System, Third General, 6.00%, 7/01/20 ........................................ 13,000,000 12,820,340
City University System, Third General, Residence 2, 6.20%, 7/01/22 ........................... 8,565,000 8,602,258
City University System, Third General, Residence 2, Pre-Refunded, 6.20%, 7/01/22 ............. 19,990,000 21,278,955
City University System, Third General, Series 2, 6.00%, 7/01/26 .............................. 6,020,000 5,887,801
City University System, Third General, Series 2, Pre-Refunded, 6.00%, 7/01/26 ................ 11,300,000 11,912,347
Concord Nursing Home Inc., 6.50%, 7/01/29 .................................................... 2,500,000 2,480,475
Department of Education, Pre-Refunded, 7.75%, 7/01/21 ........................................ 2,530,000 2,657,765
Department of Health, 6.625%, 7/01/15 ........................................................ 760,000 794,565
</TABLE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 31, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York State Dormitory Authority Revenue, (cont.)
Department of Health, 6.20%, 7/01/17 ......................................................... $ 7,650,000 $ 7,625,673
Department of Health, Pre-Refunded, 6.625%, 7/01/15 .......................................... 4,595,000 4,960,670
Department of Health, Rosewell Park Cancer Center, Pre-Refunded, 6.625%, 7/01/24 ............. 9,175,000 9,926,524
Department of Health, Veterans Home, Pre-Refunded, 7.25%, 7/01/11 ............................ 3,190,000 3,334,635
Department of Health, Veterans Home, Pre-Refunded, 7.25%, 7/01/21 ............................ 9,775,000 10,218,199
Fashion Institute of Technology, 7.50%, 7/01/20 .............................................. 2,115,000 2,160,282
Genessee Valley, Series A, FHA Insured, 6.90%, 2/01/32 ....................................... 2,355,000 2,417,973
Good Samaritan Hospital Medical Center, Series A, MBIA Insured, 5.50%, 7/01/24 ............... 5,000,000 4,582,550
Heritage House Nursing Center, 7.00%, 8/01/31 ................................................ 2,315,000 2,385,561
The Highlands Living, FHA Insured, 6.60%, 2/01/34 ............................................ 3,715,000 3,787,777
Interfaith Medical Center, Series D, 5.40%, 2/15/28 .......................................... 14,000,000 12,358,500
Long Island University, Asset Guaranteed, 5.125%, 9/01/23 .................................... 1,800,000 1,526,778
Long Island University, Asset Guaranteed, 5.25%, 9/01/28 ..................................... 1,500,000 1,278,120
Long Island University, Pre-Refunded, 6.25%, 9/01/23 ......................................... 5,495,000 5,860,967
Manhattan College, Refunding, 6.50%, 7/01/19 ................................................. 19,390,000 19,896,079
Mental Health Services Facilities Improvement, Series B, MBIA Insured, 6.00%, 2/15/25 ........ 6,100,000 6,083,774
Mental Health Services Facilities Improvement, Series B, MBIA Insured, 6.00%, 2/15/30 ........ 4,865,000 4,837,756
Mental Health Services Facilities, Refunding, 6.00%, 8/15/21 ................................. 1,800,000 1,776,456
Mental Health Services Facilities, Refunding, Series B, 5.75%, 8/15/12 ....................... 2,165,000 2,167,728
Mental Health Services Facilities, Series A, 5.75%, 8/15/22 .................................. 1,390,000 1,327,867
Mental Health Services Facilities, Series A, 5.75%, 2/15/27 .................................. 9,370,000 8,868,892
New York Hospital Medical Center, AMBAC Insured, 5.60%, 2/15/39 .............................. 5,000,000 4,547,700
New York Medical College, Asset Guaranteed, Pre-Refunded, 6.875%, 7/01/21 .................... 5,375,000 5,670,034
Nursing Home, Arden Hill, FHA Insured, 5.85%, 8/01/26 ........................................ 4,765,000 4,514,695
Nursing Home, Center for Nursing, FHA Insured, 5.55%, 8/01/37 ................................ 8,435,000 7,460,504
Nursing Home, St. John's Health Care Corp., Refunding, FHA Insured, 6.25%, 2/01/36 ........... 34,265,000 33,732,179
Nursing Home, Wesley Garden, FHA Insured, 6.125%, 8/01/35 .................................... 2,000,000 1,920,540
Nyack Hospital, 6.25%, 7/01/13 ............................................................... 3,000,000 2,885,970
Our Lady of Mercy, Mortgage Revenue, FHA Insured, 6.30%, 8/01/32 ............................. 5,835,000 5,962,378
Second Hospital, St. Clare's Hospital, Series B, 5.40%, 2/15/25 .............................. 6,500,000 5,760,950
St. Agnes Hospital, Series A, 5.40%, 2/15/25 ................................................. 2,000,000 1,772,600
St. Francis Hospital, Series A, MBIA Insured, 5.50%, 7/01/29 ................................. 1,000,000 900,000
St. Lukes Home Residential Health, Series A, FHA Insured, 6.375%, 8/01/35 .................... 5,200,000 5,275,400
State University Athletic Facilities, Pre-Refunded, 7.25%, 7/01/12 ........................... 2,565,000 2,681,297
State University Athletic Facilities, Pre-Refunded, 7.25%, 7/01/21 ........................... 4,750,000 4,965,365
State University Educational Facilities, 5.75%, 5/15/16 ...................................... 3,000,000 2,938,620
State University Educational Facilities, 5.125%, 5/15/21 ..................................... 15,000,000 13,055,550
State University Educational Facilities, Series A, MBIA Insured, 4.75%, 5/15/25 .............. 20,450,000 16,649,981
State University Educational Facilities, Series B, 4.75%, 5/15/28 ............................ 8,050,000 6,434,124
State University Educational Facilities, Series B, MBIA Insured, 4.75%, 5/15/28 .............. 8,100,000 6,532,164
Upstate Community Colleges, Series A, 5.00%, 7/01/19 ......................................... 7,230,000 6,251,347
Upstate Community Colleges, Series A, 6.00%, 7/01/22 ......................................... 7,000,000 6,890,310
Upstate Community Colleges, Series A, 5.00%, 7/01/28 ......................................... 25,675,000 21,171,605
Upstate Community Colleges, Series A, Pre-Refunded, 7.60%, 7/01/20 ........................... 3,250,000 3,321,468
Upstate Community Colleges, Series A, Pre-Refunded, 6.125%, 7/01/27 .......................... 11,845,000 12,585,431
</TABLE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 31, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York State Dormitory Authority Revenue, (cont.)
Upstate Community Colleges, Series B, Pre-Refunded, 7.20%, 7/01/21 ......................... $ 1,000,000 $ 1,044,820
W.K. Nursing Home Corp., FHA Insured, 6.05%, 2/01/26 ....................................... 6,800,000 6,567,644
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 11,643,527
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 1,952,574
Series E, 6.875%, 6/15/14 .................................................................. 1,190,000 1,270,277
New York State Environmental Facilities Corp. Special Obligation,
Riverbank State Park, Pre-Refunded,
7.25%, 4/01/07 ............................................................................. 4,000,000 4,238,440
7.25%, 4/01/12 ............................................................................. 4,300,000 4,556,323
7.375%, 4/01/22 ............................................................................ 5,000,000 5,308,800
New York State HFA, Service Contract Obligation Revenue,
Refunding, Series C, 6.00%, 9/15/21 ........................................................ 19,310,000 18,766,037
Series A, 7.25%, 9/15/12 ................................................................... 225,000 236,189
Series A, 6.375%, 9/15/15 .................................................................. 5,000,000 5,129,400
Series A, 5.50%, 9/15/22 ................................................................... 3,000,000 2,724,390
Series A, 6.50%, 3/15/24 ................................................................... 330,000 334,019
Series A, 6.50%, 3/15/25 ................................................................... 860,000 871,816
Series A, 6.00%, 3/15/26 ................................................................... 16,725,000 16,149,493
Series A, Pre-Refunded, 7.25%, 9/15/12 ..................................................... 2,150,000 2,276,141
Series A, Pre-Refunded, 7.80%, 9/15/20 ..................................................... 24,000,000 24,832,000
Series A, Pre-Refunded, 6.50%, 3/15/24 ..................................................... 28,000,000 30,016,560
Series A, Pre-Refunded, 6.50%, 3/15/25 ..................................................... 10,410,000 11,250,608
Series C, 6.30%, 9/15/12 ................................................................... 310,000 316,823
Series C, 6.125%, 3/15/20 .................................................................. 99,760,000 98,678,602
Series C, 6.30%, 3/15/22 ................................................................... 1,985,000 1,989,903
Series C, 5.50%, 3/15/25 ................................................................... 17,015,000 15,194,735
New York State HFAR,
Adult Care, Series A, FHA Insured, Pre-Refunded, 7.85%, 2/15/30 ............................ 1,920,000 1,969,363
Children's Rescue Fund Housing, Series A, 7.625%, 5/01/18 .................................. 5,285,000 5,393,448
Health Facilities of New York City, Refunding, Series A, 6.00%, 11/01/08 ................... 2,400,000 2,465,112
Health Facilities of New York City, Refunding, Series A, 8.00%, 11/01/08 ................... 12,410,000 12,803,025
Health Facilities of New York City, Series A, 6.00%, 5/01/07 ............................... 11,200,000 11,498,032
Health Facilities of New York City, Series A, Pre-Refunded, 8.00%, 11/01/08 ................ 70,410,000 72,735,642
Housing Project Mortgage, Refunding, Series A, FSA Insured, 6.10%, 11/01/15 ................ 25,650,000 25,888,032
Housing Project Mortgage, Refunding, Series A, FSA Insured, 6.125%, 11/01/20 ............... 31,145,000 31,249,024
MFHR, Second Mortgage, Series A, 7.00%, 8/15/23 ............................................ 4,245,000 4,358,808
MFHR, Second Mortgage, Series C, 6.60%, 8/15/27 ............................................ 5,500,000 5,608,845
MFHR, Second Mortgage, Series D, 6.25%, 8/15/23 ............................................ 2,500,000 2,523,525
MFHR, Second Mortgage, Series E, 6.75%, 8/15/25 ............................................ 6,820,000 7,039,536
MFMR, Refunding, Series C, FHA Insured, 6.45%, 8/15/14 ..................................... 1,000,000 1,024,910
MFMR, Series A, FHA Insured, 7.00%, 8/15/22 ................................................ 4,885,000 5,093,883
MFMR, Series A, FHA Insured, 7.10%, 8/15/35 ................................................ 8,630,000 8,906,678
MFMR, Series B, AMBAC Insured, 6.25%, 8/15/14 .............................................. 2,715,000 2,769,056
MFMR, Series B, AMBAC Insured, 6.35%, 8/15/23 .............................................. 33,960,000 34,598,788
</TABLE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 31, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York State HFAR, (cont.)
MFMR, Series B, FHA Insured, 8.50%, 5/15/28 ....................................................... $12,575,000 $12,601,030
MFMR, Series C, FHA Insured, 6.50%, 8/15/24 ....................................................... 6,870,000 7,007,675
New York State Local Government Assistance Corp., Series A, 6.00%, 4/01/24 ............................ 11,200,000 11,142,656
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 9,155,791
Hospital and Nursing Home, Methodist Medical Center, Series A, FHA Insured,
Pre-Refunded, 6.70%, 8/15/23 ..................................................................... 5,500,000 5,798,485
Hospital and Nursing Home, Mortgage Revenue, Refunding, Series A, FHA Insured, 6.20%, 2/15/23 ..... 5,050,000 5,067,726
Hospital and Nursing Home, Mortgage Revenue, Refunding, Series B, FHA Insured, 6.25%, 2/15/25 ..... 2,635,000 2,658,979
Hospital and Nursing Home, Mortgage Revenue, Refunding, Series B, FHA Insured, 6.25%, 2/15/35 ..... 4,745,000 4,763,506
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.125%, 2/15/15 ............... 6,415,000 6,443,996
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.30%, 8/15/23 ................ 9,000,000 8,988,030
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.25%, 2/15/27 ................ 12,235,000 12,326,640
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.20%, 2/15/28 ................ 26,910,000 26,950,634
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.375%, 8/15/33 ............... 7,940,000 7,943,811
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.50%, 2/15/34 ................ 10,780,000 10,999,157
Hospital and Nursing Home, Mortgage Revenue, Series C, FHA Insured, 6.50%, 8/15/21 ................ 8,000,000 8,220,160
Hospital and Nursing Home, Mortgage Revenue, Series C, FHA Insured, 6.20%, 8/15/23 ................ 21,540,000 21,458,794
Hospital and Nursing Home, Mortgage Revenue, Series C, FHA Insured, 9.00%, 2/15/26 ................ 1,795,000 1,826,413
Hospital and Nursing Home, Mortgage Revenue, Series C, FHA Insured, 6.375%, 8/15/29 ............... 86,865,000 89,309,381
Hospital and Nursing Home, Mortgage Revenue, Series D, FHA Insured, Pre-Refunded, 6.45%, 2/15/32 .. 55,500,000 58,485,900
Hospital and Nursing, Series B, FHA Insured, 6.95%, 2/15/32 ....................................... 19,915,000 20,584,343
Hospital and Nursing, Series B, Pre-Refunded, 6.95%, 2/15/32 ...................................... 4,085,000 4,297,869
Hospital and Nursing, Series C, FHA Insured, 6.65%, 8/15/32 ....................................... 14,310,000 14,712,683
Hospital and Nursing, Series C, FHA Insured, Pre-Refunded, 6.65%, 8/15/32 ......................... 690,000 727,474
The Hospital for Special Surgery Revenue, Series A, Pre-Refunded, 6.375%, 8/15/24 ................. 6,025,000 6,425,301
The Hospital for Special Surgery Revenue, Series A, Pre-Refunded, 6.45%, 8/15/34 .................. 36,650,000 39,187,646
Hospital Mortgage, Series A, AMBAC Insured, Pre-Refunded, 6.80%, 8/15/24 .......................... 3,200,000 3,478,976
Hospital Mortgage, Series A, AMBAC Insured, Pre-Refunded, 6.50%, 8/15/29 .......................... 5,125,000 5,508,299
Hospital Mortgage, Series A, AMBAC Insured, Pre-Refunded, 6.90%, 8/15/34 .......................... 31,210,000 34,059,785
Huntington Hospital Mortgage, Project A, Refunding, 6.50%, 11/01/14 ............................... 5,500,000 5,513,805
Medina Memorial Hospital Project, Series A, 7.30%, 5/01/11 ........................................ 2,595,000 2,680,972
Mental Health Services Facilities, Series A, 8.875%, 8/15/07 ...................................... 24,835,000 24,955,450
Mental Health Services Facilities, Series A, 7.70%, 2/15/18 ....................................... 3,360,000 3,375,322
Mortgage Revenue Project, Series A, FHA Insured, 6.50%, 2/15/35 ................................... 3,800,000 3,873,720
Mortgage Revenue Project, Series B, 6.60%, 8/15/34 ................................................ 23,775,000 24,218,642
Mortgage Revenue Project, Series B, FHA Insured, 6.15%, 2/15/35 ................................... 2,200,000 2,135,386
Mortgage Revenue Project, Series C, FHA Insured, 6.375%, 8/15/29 .................................. 10,200,000 10,256,610
Mortgage Revenue Project, Series D, FHA Insured, 6.20%, 2/15/35 ................................... 6,250,000 6,196,438
Mortgage Revenue Project, Series E, FHA Insured, 6.375%, 2/15/35 .................................. 13,200,000 13,277,748
Mortgage Revenue Project, Series F, FHA Insured, 6.30%, 8/15/25 ................................... 16,400,000 17,562,432
Mortgage Revenue Project, Series F, FHA Insured, 6.375%, 8/15/34 .................................. 21,050,000 22,613,384
Saranac Lake General Hospital Project Revenue, Series A, Pre-Refunded, 7.875%, 11/01/10 ........... 1,305,000 1,354,786
Second Mortgage, Health Care Project Revenue, Series B, 6.35%, 11/01/14 ........................... 1,410,000 1,442,092
Secured Hospital Revenue, Series A, 6.25%, 2/15/24 ................................................ 16,770,000 16,584,188
Secured Hospital Revenue, Series A, Pre-Refunded, 7.35%, 8/15/11 .................................. 22,150,000 23,222,503
</TABLE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 31, 2000 (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.)
Secured Hospital Revenue, Series A, Pre-Refunded, 7.40%, 8/15/21 ............................... $55,225,000 $57,930,473
Security Mortgage Program Revenue, Adult Day Care, 6.375%, 11/15/20 ............................ 18,930,000 19,418,773
Series A, FHA Insured, 7.45%, 8/15/31 .......................................................... 19,995,000 20,985,952
Series A, FHA Insured, Pre-Refunded, 7.45%, 8/15/31 ............................................ 7,830,000 8,218,055
Series D, FHA Insured, Pre-Refunded, 6.60%, 2/15/31 ............................................ 13,375,000 14,144,598
New York State Mortgage Agency Revenue,
8th Series A, 6.875%, 4/01/17 .................................................................. 11,465,000 11,479,675
29th Series B, 6.45%, 4/01/15 .................................................................. 17,250,000 17,599,658
Homeowners Mortgage, 37th Series A, 6.375%, 10/01/14 ........................................... 6,225,000 6,375,458
Homeowners Mortgage, 37th Series A, 6.45%, 10/01/17 ............................................ 9,000,000 9,201,150
Homeowners Mortgage, Series 27, 6.90%, 4/01/15 ................................................. 5,000,000 5,190,400
Homeowners Mortgage, Series 41, 6.50%, 10/01/17 ................................................ 9,880,000 10,125,419
Homeowners Mortgage, Series 43, MBIA Insured, 6.45%, 10/01/17 .................................. 3,800,000 3,929,352
Homeowners Mortgage, Series 45, 7.20%, 10/01/17 ................................................ 23,730,000 24,928,602
Homeowners Mortgage, Series 47, 6.375%, 10/01/17 ............................................... 26,780,000 27,326,848
Homeowners Mortgage, Series 51, 6.40%, 10/01/17 ................................................ 9,945,000 10,174,630
Homeowners Mortgage, Series 57, 6.25%, 10/01/15 ................................................ 10,000,000 10,221,700
Homeowners Mortgage, Series 57, 6.30%, 10/01/17 ................................................ 7,330,000 7,496,831
Homeowners Mortgage, Series 57, 6.375%, 10/01/27 ............................................... 8,590,000 8,716,445
Homeowners Mortgage, Series 61, 5.90%, 4/01/27 ................................................. 4,040,000 3,928,375
New York State Tollway Authority General Revenue, Series D, 5.375%, 1/01/27 ........................ 10,975,000 9,934,241
New York State Tollway Authority Service Contract Revenue, Local Highway and Bridge,
5.75%, 4/01/19 ................................................................................. 30,000,000 28,057,200
Pre-Refunded, 7.25%, 1/01/10 ................................................................... 750,000 775,673
Pre-Refunded, 6.25%, 4/01/14 ................................................................... 23,970,000 25,488,020
New York State Urban Development Corp. Revenue,
Cornell Center Project, 6.00%, 1/01/14 ......................................................... 4,500,000 4,522,905
Correctional Capital Facilities, Series 5, Pre-Refunded, 6.25%, 1/01/20 ........................ 46,350,000 49,292,298
Correctional Capital Facilities, Series 7, 5.70%, 1/01/16 ...................................... 3,000,000 2,915,490
Correctional Capital Facilities, Series 7, 5.70%, 1/01/27 ...................................... 10,000,000 9,364,500
Correctional Facilities Service Contract, Series A, 5.00%, 1/01/28 ............................. 14,000,000 11,571,560
Correctional Facilities Service Contract, Series B, 5.00%, 1/01/25 ............................. 21,055,000 17,523,655
Correctional Facilities Service Contract, Series C, AMBAC Insured, 6.00%, 1/01/29 .............. 34,135,000 34,040,446
Onondaga County Convention Project, Refunding, 6.25%, 1/01/20 .................................. 28,325,000 28,543,952
Youth Facilities, 6.00%, 4/01/15 ............................................................... 8,500,000 8,532,130
Niagara Falls City School District COP, High School Facilities, 5.375%, 6/15/28 ................... 10,000,000 8,519,700
Oneida Health Care Corp. Mortgage Revenue, Oneida Health Care,
Series A, FHA Insured, 7.20%, 8/01/31 .......................................................... 2,155,000 2,189,803
Oneida-Herkimer Solid Waste Management Authority Solid Waste Systems Revenue, Refunding
6.30%, 4/01/01 ................................................................................. 1,035,000 1,048,113
6.40%, 4/01/02 ................................................................................. 1,930,000 1,978,018
6.50%, 4/01/03 ................................................................................. 2,075,000 2,150,821
6.65%, 4/01/05 ................................................................................. 1,115,000 1,179,436
6.75%, 4/01/14 ................................................................................. 655,000 662,683
Pre-Refunded, 6.75%, 4/01/14 ................................................................... 20,100,000 21,341,175
Otsego County IDA, Civic Facility Revenue, Hartwick College Project, Series A, 5.50%, 7/01/19 ..... 3,400,000 3,053,778
</TABLE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 31, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Port Authority of New York and New Jersey Revenue,
Consolidated 74th Series, 6.75%, 8/01/26 ................................................. $ 4,400,000 $ 4,495,216
Delta Air Lines Special Project, Series 1, 6.95%, 6/01/08 .............................. 17,000,000 17,396,270
Puerto Rico Commonwealth Highway and Transportation Authority Revenue,
Series A, 5.00%, 7/01/38 ............................................................... 12,000,000 9,904,680
Series Y, 5.00%, 7/01/36 ............................................................... 4,000,000 3,299,920
Series Y, 5.50%, 7/01/36 ............................................................... 10,000,000 9,115,000
Puerto Rico Commonwealth Urban Renewal and Housing Corp. Commonwealth Appropriation,
Refunding, 7.875%, 10/01/04 .............................................................. 8,100,000 8,274,960
Puerto Rico Electric Power Authority Revenue, Series T, 6.00%, 7/01/16 ..................... 5,575,000 5,614,081
Puerto Rico Industrial Medical and Environmental Pollution Control Facilities
Financing Authority Revenue, 6.45%, 12/01/25 ............................................. 21,015,000 20,807,372
Puerto Rico Municipal Finance Agency, Series A, Pre-Refunded, 6.50%, 7/01/19 ............... 11,000,000 11,743,930
Rensselaer Municipal Leasing Corp. Leasehold Mortgage Revenue,
Rensselaer County Nursing Home,
Series A, 6.90%, 6/01/24 ............................................................... 10,000,000 10,092,300
Series B, 6.90%, 6/01/24 ............................................................... 3,345,000 3,375,874
St. Lawrence County IDA, Civic Facility Revenue, Clarkson University Project,
Series A, 5.50%, 7/01/29 ................................................................. 6,000,000 5,221,800
Suffolk County IDA Civic Facilities Revenue, Dowling College,
Pre-Refunded, 8.25%, 12/01/20 ............................................................ 4,420,000 4,581,330
Suffolk County Judicial Facilities Agency Service Agreement Revenue,
John P Cohalan Complex, AMBAC Insured, 5.00%, 4/15/16 .................................... 2,720,000 2,472,480
Sunnybrook Elderly Housing Corp. Mortgage Revenue,
Sunnybrook Apartments Project, 11.25%, 12/01/14 .......................................... 1,215,000 1,237,757
Syracuse IDA, Civic Facility Revenue,
Crouse Health Hospital Inc., Project A, 5.25%, 1/01/16 ................................. 4,000,000 3,229,080
Crouse Health Hospital Inc., Project A, 5.375%, 1/01/23 ................................ 4,760,000 3,647,302
St. Joseph's Hospital Health Center Project, Pre-Refunded, 7.50%, 6/01/18 .............. 2,000,000 2,090,700
Tompkins County IDA Revenue, Civic Facility, Cornell University, 5.75%, 7/01/30 ............ 7,510,000 7,249,553
Triborough Bridge and Tunnel Authority Revenue, General Purpose, Series B,
5.20%, 1/01/27 ......................................................................... 15,000,000 13,234,500
5.50%, 1/01/30 ......................................................................... 32,185,000 29,594,108
MBIA Insured, 5.20%, 1/01/27 ........................................................... 4,110,000 3,546,683
TSASC Inc. New York, TFABS, Series 1, 6.25%,
7/15/27 ................................................................................ 35,000,000 34,105,750
7/15/34 ................................................................................ 40,000,000 38,898,400
Ulster County Resource Recovery Agency Solid Waste System Revenue, 6.00%, 3/01/14 .......... 8,620,000 8,453,289
Utica IDA, Civic Facility Revenue, Munson Williams Proctor Institute,
Series A, 5.50%, 7/15/29 ................................................................. 9,915,000 9,062,310
Virgin Islands PFA Revenue, senior lien, Fund Loan Notes, Refunding, Series A, 5.50%,
10/01/15 ............................................................................... 2,500,000 2,259,175
10/01/18 ............................................................................... 2,500,000 2,197,650
Virgin Islands Water and Power Authority Electric System Revenue, Series A,
Pre-Refunded, 7.40%, 7/01/11 ............................................................. 2,750,000 2,873,998
Warren and Washington Counties IDAR, Adirondack Resource Recovery Project,
Refunding, Series A, 7.90%, 12/15/07 ..................................................... 31,945,000 32,026,140
Yonkers GO, Series A, 9.20%,
2/01/01 ................................................................................ 500,000 512,665
2/01/03 ................................................................................ 1,090,000 1,182,083
2/01/04 ................................................................................ 1,095,000 1,217,049
2/01/05 ................................................................................ 1,095,000 1,244,380
-------------
TOTAL BONDS (COST $4,183,946,737) .......................................................... 4,186,579,097
=============
</TABLE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 31, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
ZERO COUPON/STEP-UP BONDS 2.3%
MTA Service Contract Revenue,
<S> <C> <C>
Commuter Facilities, Refunding, Series 7, 7/01/10 ...................................... $ 7,500,000 $ 4,204,200
Commuter Facilities, Refunding, Series 7, 7/01/11 ...................................... 7,590,000 3,986,951
Commuter Facilities, Refunding, Series 7, 7/01/13 ...................................... 2,065,000 951,036
Transit Facilities, Refunding, Series 7, 7/01/09 ....................................... 13,125,000 7,840,875
Transit Facilities, Refunding, Series 7, 7/01/10 ....................................... 9,000,000 5,045,040
Transit Facilities, Refunding, Series 7, 7/01/12 ....................................... 15,380,000 7,560,193
Transit Facilities, Refunding, Series 7, 7/01/13 ....................................... 7,935,000 3,654,464
New York City GO,
Citysavers, Series B, 8/01/09 .......................................................... 8,875,000 5,276,809
Citysavers, Series B, 6/01/12 .......................................................... 1,030,000 512,961
Citysavers, Series B, 12/01/12 ......................................................... 1,030,000 498,263
Citysavers, Series B, 6/01/13 .......................................................... 1,030,000 480,938
Citysavers, Series B, 12/01/13 ......................................................... 1,030,000 467,043
Citysavers, Series B, 6/01/14 .......................................................... 1,030,000 451,099
Citysavers, Series B, 12/01/14 ......................................................... 1,030,000 437,977
Citysavers, Series B, 6/01/15 .......................................................... 1,030,000 422,156
Citysavers, Series B, 12/01/15 ......................................................... 1,030,000 409,786
Citysavers, Series B, 6/01/16 .......................................................... 1,030,000 395,314
Citysavers, Series B, 12/01/16 ......................................................... 1,030,000 383,644
Citysavers, Series B, 6/01/17 .......................................................... 1,030,000 369,276
Citysavers, Series B, 12/01/17 ......................................................... 1,030,000 358,296
Citysavers, Series B, 6/01/18 .......................................................... 1,030,000 344,617
Citysavers, Series B, 12/01/18 ......................................................... 1,005,000 326,173
Citysavers, Series B, 6/01/19 .......................................................... 1,030,000 321,298
Citysavers, Series B, 12/01/19 ......................................................... 1,030,000 311,585
Citysavers, Series B, 6/01/20 .......................................................... 10,000,000 2,916,700
M-Raes, Series 36, zero cpn. to 10/01/02, 8.00% thereafter, 10/01/14 ................... 17,400,000 15,340,014
Series A-2, 8/01/10 .................................................................... 2,690,000 1,505,163
Orangetown Housing Authority Facilities Revenue, Senior Housing Center Project, Refunding,
MBIA Insured, 4/01/30 .................................................................. 21,170,000 3,253,194
Triborough Bridge and Tunnel Authority Revenue, Convention Center Project, Series E, 1/01/12 21,625,000 10,947,440
Westchester Tobacco Asset Securitization Corp. Revenue, Capital Appreciation,
zero cpn. to 7/15/02, 6.75% thereafter, 7/15/29 ........................................ 15,000,000 12,834,300
zero cpn. to 6/15/09, 6.95% thereafter, 7/15/39 ........................................ 18,000,000 9,435,584
--------------
TOTAL ZERO COUPON/STEP-UP BONDS (COST $71,465,995) ........................................ 101,242,389
--------------
TOTAL LONG TERM INVESTMENTS (COST $4,255,412,732) ......................................... 4,287,821,486
--------------
</TABLE>
FRANKLIN NEW YORK TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, MAY 31, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(a)SHORT TERM INVESTMENTS .5%
Long Island Power Authority Electric System Revenue, Sub Series 5, Daily VRDN
and Put, 4.30%, 5/01/33 ............................................................ $ 8,700,000 $ 8,700,000
New York City Municipal Water Finance Authority Water and Sewer System Revenue,
Series C, FGIC Insured, Daily VRDN and Put, 4.40%, 6/15/23 ......................... 400,000 400,000
Series G, FGIC Insured, Daily VRDN and Put, 4.30%, 6/15/24 ......................... 4,000,000 4,000,000
Port Authority of New York and New Jersey Special Obligation Revenue,
Versatile Structure, Series 2, Daily VRDN
and Put, 4.35%, 5/01/19 ............................................................... 10,200,000 10,200,000
--------------
TOTAL SHORT TERM INVESTMENTS (COST $23,300,000) ....................................... 23,300,000
--------------
TOTAL INVESTMENTS (COST $4,278,712,732) 98.4% ......................................... 4,311,121,486
OTHER ASSETS, LESS LIABILITIES 1.6% ................................................... 68,904,144
--------------
NET ASSETS 100.0% ..................................................................... $4,380,025,630
==============
</TABLE>
See glossary of terms on page 33.
(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, 2000 (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
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
MFMR -Multi-Family Mortgage Revenue
MFR -Multi-Family Revenue
MTA -Metropolitan Transportation Authority
PFA -Public Financing Authority
PCR -Pollution Control Revenue
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2000
<TABLE>
<S> <C>
Assets:
Investments in securities:
Cost ............................................................... $ 4,278,712,732
---------------
Value .............................................................. 4,311,121,486
Cash ................................................................ 30,492
Receivables:
Capital shares sold ................................................ 2,815,998
Interest ........................................................... 83,788,606
---------------
Total assets ......................................................... 4,397,756,582
Liabilities:
Payables:
Investment securities purchased .................................... 6,134,725
Capital shares redeemed ............................................ 5,363,513
Affiliates ......................................................... 2,354,163
Shareholders ....................................................... 3,732,116
Other liabilities ................................................... 146,435
---------------
Total liabilities .................................................... 17,730,952
---------------
Net assets, at value ................................................ $ 4,380,025,630
---------------
Net assets consist of:
Undistributed net investment income ................................. $ 5,551,451
Net unrealized appreciation ......................................... 32,408,754
Accumulated net realized loss ....................................... (48,521,617)
Capital shares ...................................................... 4,390,587,042
---------------
Net assets, at value ................................................ $ 4,380,025,630
---------------
CLASS A:
Net assets, at value ................................................ $ 4,219,849,265
---------------
Shares outstanding .................................................. 381,502,302
---------------
Net asset value per share* .......................................... $ 11.06
---------------
Maximum offering price per share (net asset value per share / 95.75%) $ 11.55
---------------
CLASS B:
Net assets, at value ................................................ $ 40,874,249
---------------
Shares outstanding .................................................. 3,700,715
---------------
Net asset value and maximum offering price per share* ............... $ 11.04
---------------
CLASS C:
Net assets, at value ................................................ $ 119,302,116
---------------
Shares outstanding .................................................. 10,788,524
---------------
Net asset value per share* .......................................... $ 11.06
---------------
Maximum offering price per share (net asset value per share / 99.00%) $ 11.17
---------------
</TABLE>
*Redemption price is equal to net asset value less any applicable contingent
deferred sales charge.
See notes to financial statements.
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 2000
Investment income:
Interest ................................................ $ 289,508,690
-------------
Expenses:
Management fees (Note 3) ................................ 21,061,316
Distribution fees (Note 3)
Class A ................................................ 3,537,056
Class B ................................................ 204,151
Class C ................................................ 846,577
Transfer agent fees (Note 3) ............................ 2,135,478
Custodian fees .......................................... 46,868
Reports to shareholders ................................. 357,338
Registration and filing fees ............................ 49,804
Professional fees (Note 3) .............................. 119,780
Trustees' fees and expenses ............................. 80,636
Other ................................................... 174,049
-------------
Total expenses ........................................... 28,613,053
-------------
Net investment income ................................... 260,895,637
Realized and unrealized losses: -------------
Net realized loss from investments ...................... (47,319,511)
Net unrealized depreciation on investments .............. (281,536,117)
-------------
Net realized and unrealized loss ......................... (328,855,628)
Net decrease in net assets resulting from operations ..... -------------
$ (67,959,991)
-------------
See notes to financial statements.
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MAY 31, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C>
Net investment income ...................................................... $ 260,895,637 $ 264,335,642
Net realized gain (loss) from investments .................................. (47,319,511) 34,770,841
Net unrealized depreciation on investments ................................. (281,536,117) (68,274,888)
------------------------------------------
Net increase (decrease) in net assets resulting from operations .............. (67,959,991) 230,831,595
Distributions to shareholders from:
Net investment income:
Class A ................................................................... (250,118,739) (259,311,860)
Class B ................................................................... (1,533,076) (144,441)
Class C ................................................................... (6,503,868) (5,976,311)
Net realized gains:
Class A ................................................................... (26,398,259) (34,522,709)
Class B ................................................................... (188,951) --
Class C ................................................................... (781,158) (912,969)
------------------------------------------
Total distributions to shareholders ......................................... (285,524,051) (300,868,290)
Capital share transactions: (Note 2)
Class A .................................................................... (285,636,085) 90,794,689
Class B .................................................................... 23,809,545 19,219,023
Class C .................................................................... (10,478,959) 33,016,833
------------------------------------------
Total capital share transactions ............................................ (272,305,499) 143,030,545
Net increase (decrease) in net assets ........................................ (625,789,541) 72,993,850
Net assets:
Beginning of year ........................................................... 5,005,815,171 4,932,821,321
------------------------------------------
End of year ................................................................. $ 4,380,025,630 $ 5,005,815,171
------------------------------------------
Undistributed net investment income included in net assets:
End of year ................................................................. $ 5,551,451 $ 2,837,217
------------------------------------------
</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 (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 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, 2000, there were an unlimited number of shares authorized ($.01 par
value). Transactions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
--------------------------------------------------------------------------
2000 1999
--------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A SHARES:
Shares sold ........................................ 30,449,079 $ 344,700,673 36,317,861 $ 438,090,167
Shares issues in reinvestment of distributions ..... 11,700,428 132,087,599 11,562,080 139,259,975
Shares redeemed .................................... (67,626,875) (762,424,357) (40,360,181) (486,555,453)
--------------------------------------------------------------------------
Net increase (decrease) ............................ (25,477,368) $(285,636,085) 7,519,760 $ 90,794,689
--------------------------------------------------------------------------
CLASS B SHARES:*
Shares sold ........................................ 2,368,489 $ 26,829,657 1,616,584 $ 19,388,622
Shares issues in reinvestment of distributions ..... 102,854 1,155,325 9,201 110,109
Shares redeemed .................................... (372,932) (4,175,437) (23,481) (279,708)
--------------------------------------------------------------------------
Net increase ....................................... 2,098,411 $ 23,809,545 1,602,304 $ 19,219,023
--------------------------------------------------------------------------
CLASS C SHARES:
Shares sold ........................................ 2,061,852 $ 23,348,323 4,034,431 $ 48,699,164
Shares issues in reinvestment of distributions ..... 395,807 4,470,100 359,822 4,333,718
Shares redeemed .................................... (3,406,407) (38,297,382) (1,660,553) (20,016,049)
--------------------------------------------------------------------------
Net increase (decrease) ............................ (948,748) $ (10,478,959) 2,733,700 $ 33,016,833
--------------------------------------------------------------------------
</TABLE>
*For the period January 1, 1999 (effective date) to May 31, 1999.
3. TRANSACTIONS WITH AFFILIATES
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 (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 the
average daily net assets of Class A, Class B, and Class C, respectively, for
costs incurred in marketing the Fund's shares.
Distributors paid net commissions on sales of the Fund's shares, and received
contingent deferred sales charges for the year of $875,389 and $196,589,
respectively.
The Fund paid shareholder servicing fees of $2,135,478, of which $1,698,036 was
paid to Investor Services.
Included in professional fees are legal fees of $40,137 that were paid to two
law firms in which a partner in each law firm is an officer of the Fund.
4. INCOME TAXES
At May 31, 2000, the Fund had tax basis capital losses of $29,572,038 which may
be carried over to offset future capital gains. Such losses expire in 2008.
At May 31, 2000, the Fund has deferred capital losses of $17,748,019 occurring
subsequent to October 31, 1999. For tax purposes, such losses will be reflected
in the year ending May 31, 2001.
At May 31, 2000, the net unrealized appreciation based on the cost of
investments for income tax purposes of $4,279,914,290 was as follows:
Unrealized appreciation $118,549,740
Unrealized depreciation (87,342,544)
------------
Net unrealized appreciation $ 31,207,196
============
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, 2000 aggregated $1,129,386,373 and $1,458,752,003, 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, 2000, 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 accounting principles generally accepted in the
United States. 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 audited standards generally accepted in the United
States 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, 2000 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
San Francisco, California
July 6, 2000
FRANKLIN NEW YORK TAX-FREE INCOME FUND
Tax Designation
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, 2000.
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