FRANKLIN NEW YORK TAX FREE TRUST, N-30D, 1997-03-10

FRANKLIN NEW YORK TAX FREE TRUST
N-30D, 1997-03-10

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Celebrating 50 Years

This year marks 50 years of business for Franklin Templeton. Over these years,
we have experienced profound changes in technology, regulations and customer
expectations within the mutual fund industry. As one of the largest mutual fund
families, we're proud to be an innovative industry leader, providing people like
you with an opportunity to invest in companies and governments around the globe.
We thank you for your past support and look forward to serving your investment
needs in the years ahead.

Table of Contents
Page

Message from the Chairman 2

Fund Reports

Franklin New York Tax-Exempt
Money Fund 3

Franklin New York Insured
Tax-Free Income Fund 5

Franklin New York Intermediate-Term
Tax-Free Income Fund 13

Statement of Investments 18

Financial Statements 29

Notes to Financial Statements 32

Report of Independent Auditors 39

MESSAGE FROM THE CHAIRMAN
================================================================================
February 14, 1997

Dear Shareholder:

It's a pleasure to bring you the Franklin New York Tax-Free Trust's annual
report for the period ended December 31, 1996.

The 12 months covered by this report were a reminder of how volatile the economy
can be. Over the year, interest rates, as measured by the 30-year U.S. Treasury
bond yield, bounced between 5.96% and 7.13% before closing the period at 6.65%.
Some of this movement can be attributed to speculation on the direction of
short-term interest rates. Indeed, newspaper headlines during the period
declared the economy was overheating one day and stalling the next -- the final
consensus suggesting a slow-growth trend with few, if any, inflationary fears.
We expect that the funds in the Franklin New York Tax-Free Trust should perform
well in this relatively slow growth environment.

While market volatility can be unsettling, it is important to remember that
financial markets have always been -- and always will be -- subject to
fluctuation. No one can predict the future performance of the securities
markets, but history has shown that, over the long term, stocks and bonds have
delivered impressive results when left to compound. For this reason, we
encourage you to periodically review your investment program with your
investment representative, and focus on your continuing long-term goals.

As a Franklin Templeton fund shareholder, you receive the benefits of
professional management and dedicated service. Should you have any questions
concerning the funds in the Franklin New York Tax-Free Trust, we welcome the
opportunity to answer them.

We appreciate your support, welcome new shareholders and look forward to serving
your investment needs in the years ahead.

Sincerely,

Charles B. Johnson
Chairman
Franklin New York Tax-Free Trust

FRANKLIN NEW YORK TAX-EXEMPT MONEY FUND
================================================================================

Your Fund's Objective:

Seeks to provide shareholders with a high level of current income exempt from
regular federal, New York state and New York City personal income taxes, along
with preservation of capital and liquidity, by investing primarily in a
portfolio of short-term municipal debt securities issued in New York. The fund
is managed to maintain a $1.00 share price.*

Although interest rates were somewhat volatile in the beginning of 1996, they
began to stabilize later in the year. Short-term interest rates, as measured by
the yield on the one-year U.S. Treasury bill, fluctuated between 4.90% and 5.91%
between January and December 31, 1996.

During the reporting period, we maintained our neutral position regarding
average maturity as we did not expect the Federal Reserve Board to raise or
lower short-term rates. On December 31, 1996, the fund's average maturity was
relatively short at 34 days, down slightly from 37 days on December 31, 1995. By
keeping the maturity short, we had the ability to invest in securities offering
higher rates as they became available, thereby increasing the fund's yield.

GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT

On December 31, 1996, the fund's seven-day effective yield, which assumes the
compounding of daily dividends, was 3.34% and the fund's seven-day annualized
yield was 3.29%. This tax-free rate is generally higher than the after-tax
return on a comparable taxable investment. For example, an investor in the
maximum combined federal, New York state and New York City personal income tax
bracket of 46.6% would need to earn 6.16% from a taxable investment to match the
fund's tax-free yield. Likewise, an investor in the maximum combined federal and
New York state personal income tax bracket of 43.9% would need to earn 5.86%
from a taxable investment to match the fund's tax-free yield.

*An investment in the fund is neither insured nor guaranteed by the U.S.
government. There is no assurance that the $1.00 per share price will be
maintained.

Liquidity and quality of investments drive our management approach. In keeping
with this, we purchased only the highest quality securities available to money
market portfolios during the reporting period. We will continue to manage the
fund with an emphasis on high quality securities and liquidity, as we anticipate
continued slow economic growth and subdued inflation.

Franklin New York Tax-Exempt Money Fund

Periods ended December 31, 1996

- --------------------------------------------------------------------------------
Seven-Day Effective Yield1 3.34%
Seven-Day Annualized Yield 3.29%
Taxable Equivalent Yield2 6.16%
- --------------------------------------------------------------------------------

1. The seven-day effective yield assumes the compounding of daily dividends.

2. Taxable equivalent yield assumes the 1996 maximum combined federal, New York
state and New York City personal income tax bracket of 46.6%, based on the
federal income tax rate of 39.6%.

Annualized and effective yields are for the seven days ended December 31, 1996.
Yields reflect fluctuations in interest rates on portfolio investments, as well
as fund expenses. Yields should be viewed in terms of the current, low rate of
inflation -- just as high inflation usually results in higher yields, low
inflation often results in lower yields. Past performance is not predictive of
future results.

The fund's manager agreed in advance to waive a portion of the management fees,
which reduces operating expenses and increases yield to shareholders. Without
these reductions, the fund's annualized and effective yields for the period
would have been 3.04% and 3.08%, respectively. The fee waiver may be
discontinued at any time upon notice to the fund's Board of Trustees.

FRANKLIN NEW YORK INSURED TAX-FREE INCOME FUND
================================================================================

Your Fund's Objective:

Seeks to provide shareholders with a high level of current income exempt from
regular federal, New York state and New York City personal income taxes, and
preservation of capital, consistent with prudent investment management. The fund
invests primarily in a portfolio of insured New York municipal securities.*

Over the reporting period, interest rates continued to react to changes in the
strength of the economy. Whether such changes were real or imagined is another
matter. Nevertheless, the trend seems to indicate slow to modest growth and, as
such, interest rates should remain at or near current levels. It would be very
difficult at this time to make a convincing argument for the Federal Reserve to
either raise or lower the federal funds rate.

New York's economy continued to be "good," but many question whether it is good
enough to allay some of the persistent budgetary problems. In the past, some
one-time fixes have been used to solve these problems; just how many of these
fixes are still available and how much longer needed reform can be delayed
remains to be seen.

Franklin New York Insured
Tax-Free Income Fund
Portfolio Breakdown on December 31, 1996
Based on Total Long-Term Investments

% of Total
Long-Term
Sector Investments
- --------------------------------------------------------------------------------

Utilities 34.8%

Transportation 17.1%

Education 16.3%

Hospitals 10.9%

General Obligations 7.2%

Health Care 4.4%

Pre-Refunded 3.5%

Other Revenue 3.2%

Industrial 1.5%

Certificates of Participation 1.1%

For a complete list of portfolio holdings, please see page 18 of this report.

*For investors subject to the federal alternative minimum tax, a small 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.

During the 12 months under review, we sold over 20 holdings that were initially
purchased during the fund's early years to meet diversification requirements.
These items, which ranged from $50,000 to $150,000, were reinvested in holdings
of $1 million or more, or by adding to existing holdings that are more typical
of a portfolio whose total net assets approximate $260 million. While capital
gains were realized, currently there are no taxable distributions as the gains
were offset by the portfolio's accumulated loss reserves.

Even though over half of the debt brought to market during the past year has
been insured, there is a remarkable lack of breadth in selection.
Diversification and balance in the portfolio's holdings are ongoing objectives.
Many of the recent offerings are by issuers already represented in the portfolio
and, while not constraining, the ability to update the portfolio takes a little
longer.

Performance Summary
Class I

The Franklin New York Insured Tax-Free Income Fund's share price, as measured by
net asset value, declined 12 cents from $11.41 on December 31, 1995, to $11.29
on December 31, 1996.

At the end of this reporting period, the fund's distribution rate was 4.99%,
based on an annualization of the current monthly dividend of 4.9 cents ($0.049)
per share and the maximum offering price of $11.79 on December 31, 1996. 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 New York City personal income tax bracket of 46.6% would need to earn 9.34%
from a taxable investment to match the fund's tax-free distribution rate.
Likewise, an investor in the maximum combined federal and New York state
personal income tax bracket of 43.9% would need to earn 8.90% from a taxable
investment to match the fund's tax-free distribution rate.

As illustrated by the chart on the following page, your fund's performance has
exceeded that of the Consumer Price Index (CPI) since its inception on May 1,
1991, keeping your purchasing power well ahead of inflation -- a primary goal of
any investment. Although the fund has slightly underperformed the unmanaged
Lehman Brothers Municipal Bond Index, such unmanaged market indices have
inherent performance differentials over any fund. They do not pay management
fees to cover salaries of securities analysts or portfolio managers, or pay
commissions or market spreads to buy and sell securities. Unlike unmanaged
indices, mutual funds are never fully invested because of the need to have cash
on hand to redeem shares. In addition, the performance shown for the fund
includes the maximum initial sales charge, all fund expenses and account fees.
If the fund's costs had been applied to the index, the index's performance would
have been lower. Additionally, the index includes over 25,000 municipal
securities from across the country, while your fund consists primarily of
insured New York municipal bonds. Please remember that an index is simply a
measure of performance and cannot be invested in directly.

Franklin New York Insured
Tax-Free Income Fund
Class I
Dividend Distributions 1/01/96 - 12/31/96+

Dividend
Month per Share
-----------------------------------------------

January 4.9 cents

February 4.9 cents

March 4.9 cents

April 4.9 cents

May 4.9 cents

June 4.9 cents

July 4.9 cents

August 4.9 cents

September 4.9 cents

October 4.9 cents

November 4.9 cents

December 4.9 cents

Total 58.8 cents

+Assumes shares were purchased and held for the entire accrual period. Since
dividends accrue daily, your actual distributions will vary depending on the day
you purchased your shares and any account activity during the month. Income
distributions and total return calculations include all accrued income earned by
the fund during the reporting period.

GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT

GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT

<TABLE>
<CAPTION>
Franklin New York Insured Tax-Free Income Fund - Class I
Periods ended December 31, 1996
Since
Inception
1-Year 5-Year (5/1/91)
- --------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C>
Cumulative Total Return1 4.30% 41.85% 51.55%
Average Annual Total Return2 -0.17% 6.32% 6.79%

Distribution Rate3 4.99%
Taxable Equivalent Distribution Rate4 9.34%
30-Day Standardized Yield5 4.50%
Taxable Equivalent Yield4 8.43%
- --------------------------------------------------------------------------------------------------
</TABLE>

1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include sales charges. See Note below.

2. Average annual total return measures the average annual change in value of an
investment over the periods indicated and includes the maximum 4.25% initial
sales charge. See Note below.

3. Based on an annualization of the current 4.9 cent per share dividend and the
maximum offering price of $11.79 on December 31, 1996.

4. Taxable equivalent distribution rate and yield assume the 1996 maximum
combined federal, New York state and New York City personal income tax bracket
of 46.6%, 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 December 31, 1996.

Note: Prior to July 1, 1994, fund shares were offered at a lower initial sales
charge, with dividends reinvested at the offering price. Thus, actual total
returns for purchasers of shares during that period would have been somewhat
different than noted above. Effective May 1, 1994, the fund eliminated the sales
charge on reinvested dividends and implemented a plan of distribution under Rule
12b-1, which affects subsequent performance. All total return calculations
assume reinvestment of dividends and capital gains at net asset value, and 12b-1
fees from the date of the plan's implementation. Investment return and principal
value will fluctuate with market conditions and you may have a gain or loss when
you sell your shares.

Past performance is not predictive of future results. Past expense reductions by
the fund's manager increased the fund's total return.

Performance Summary

Class II

The Franklin New York Insured Tax-Free Income Fund's share price, as measured by
net asset value, declined 9 cents from $11.46 on December 31, 1995, to $11.37 on
December 31, 1996.

At the end of this reporting period, the fund's distribution rate was 4.52%,
based on the current monthly dividend of 4.32 cents ($0.0432) per share and the
offering price of $11.48 on December 31, 1996. 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 New York City personal
income tax bracket of 46.6% would need to earn 8.46% from a taxable investment
to match the fund's tax-free distribution rate. Likewise, an investor in the
maximum combined federal and New York state personal income tax bracket of 43.9%
would need to earn 8.06% from a taxable investment to match the fund's tax-free
distribution rate.

As illustrated by the chart on page 11, your fund's performance has exceeded
that of the Consumer Price Index (CPI) since its inception on May 1, 1995,
keeping your purchasing power well ahead of inflation -- a primary goal of any
investment.

Franklin New York Insured
Tax-Free Income Fund
Class II
Dividend Distributions 1/01/96 - 12/31/96+

Dividend
Month per Share
------------------------------------------------

January 4.30 cents

February 4.35 cents

March 4.35 cents

April 4.36 cents

May 4.36 cents

June 4.36 cents

July 4.13 cents

August 4.13 cents

September 4.13 cents

October 4.32 cents

November 4.32 cents

December 4.42 cents++

Total 51.53 cents

++The December dividend includes both a regular dividend of 4.32 cents ($0.0432)
per share and an adjustment of +.10 cents to reconcile the 12b-1 fee
differential between Class I and Class II shares.

Although the fund has slightly underperformed the unmanaged Lehman Brothers
Municipal Bond Index, such unmanaged market indices have inherent performance
differentials over any fund. They do not pay management fees to cover salaries
of securities analysts or portfolio managers, or pay commissions or market
spreads to buy and sell securities. Unlike unmanaged indices, mutual funds are
never fully invested because of the need to have cash on hand to redeem shares.
In addition, the performance shown for the fund includes the maximum initial
sales charge, all fund expenses and account fees. If the fund's costs had been
applied to the index, the index's performance would have been lower.
Additionally, the index includes securities from across the country, while your
fund consists primarily of insured New York municipal bonds. Please remember
that an index is simply a measure of performance and cannot be invested in
directly.

GRAPHIC MATERIAL 4 OMITTED - SEE APPENDIX AT END OF DOCUMENT

GRAPHIC MATERIAL 5 OMITTED - SEE APPENDIX AT END OF DOCUMENT

<TABLE>
<CAPTION>
Franklin New York Insured Tax-Free Income Fund - Class II
Periods ended December 31, 1996

Since
Inception
1-Year (5/1/95)
- --------------------------------------------------------------------------------------------------

<S> <C> <C> <C>
Cumulative Total Return1 3.87% 13.03%
Average Annual Total Return2 1.81% 6.96%
Distribution Rate3 4.52%

Taxable Equivalent Distribution Rate4 8.46%
30-Day Standardized Yield5 4.08%
Taxable Equivalent Yield4 7.64%
- --------------------------------------------------------------------------------------------------
</TABLE>

1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include sales charges. See Note below.

2. Average annual total return measures the average annual change in value of an
investment over the periods indicated. It includes the 1.0% initial sales charge
and the 1.0% Contingent Deferred Sales Charge (CDSC), applicable to shares
redeemed within the first 18 months of investment. See Note below.

3. Based on an annualization of the current 4.32 cent per share dividend and the
offering price of $11.48 on December 31, 1996.

5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended December 31, 1996.

Note: All total return calculations assume reinvestment of dividends and capital
gains at net asset value. Investment return and principal value will fluctuate
with market conditions and you may have a gain or loss when you sell your
shares. Past performance is not predictive of future results.

Past expense reductions by the fund's manager increased the fund's total return.

FRANKLIN NEW YORK INTERMEDIATE-TERM TAX-FREE INCOME FUND

Your Fund's Objective:

Seeks to provide shareholders with a high level of current income exempt from
regular federal, New York state and New York City personal income taxes, along
with preservation of capital. The fund invests primarily in a portfolio of New
York municipal securities with an average weighted maturity (the time in which
debt must be repaid) between three and ten years.*

During the first half of the fund's fiscal year, the New York municipal market
experienced what we consider to be normal volatility. Our strategy at that time
was to take advantage of market swings to improve the fund's performance
potential. We purchased BBB-rated securities during that time to help maintain
the fund's income during market swings.

These moves continued into early September when the municipal market began a
rally that continued through November. Within this environment, we did little
else than fine-tune the portfolio, concentrating on AAA-rated securities (we had
been able to purchase some of these securities during a brief market dip in
July), and with good reason. By the end of November, new and secondary issues
were trading at yield levels lower than those in the fund's portfolio. A modest
market softening through December brought yields up slightly.

GRAPHIC MATERIAL 6 OMITTED - SEE APPENDIX AT END OF DOCUMENT

*For investors subject to the federal alternative minimum tax, a small portion
of these dividends may be subject to such tax. Distributions of capital gains
and of ordinary income from accrued market discount, if any, are generally
taxable.

We continue to maintain our conservative management approach by purchasing
"essential service" bonds. Unlike other general obligation bonds, essential
service bonds are backed by revenue from hospitals, utilities, and
transportation projects, and tend to generate a more reliable income stream.

Regardless of market direction, however, we feel the fund is positioned to
perform well relative to the New York municipal market. As always, we will
purchase securities based on their credit quality and yield potential.

Franklin New York Intermediate-Term
Tax-Free Income Fund
Portfolio Breakdown on December 31, 1996
Based on Total Long-Term Investments

% of Total
Long-Term
Sector Investments
-------------------------------------------------

General Obligations 26.7%

Hospitals 16.3%

Certificates of Participation 13.3%

Other Revenue 10.4%

Transportation 9.2%

Education 9.1%

Housing 7.1%

Utilities 7.0%

Industrial 0.9%

For a complete list of portfolio holdings, please see page 27 of this report.

Performance Summary

The Franklin New York Intermediate-Term Tax-Free Income Fund's share price, as
measured by net asset value, declined 12 cents from $10.40 on December 31, 1995,
to $10.28 on December 31, 1996.

At the end of this reporting period, the fund's distribution rate was 5.25%,
based on an annualization of the current monthly dividend of 4.6 cents ($0.046)
per share and the maximum offering price of $10.52 on December 31, 1996. 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 New York City personal income tax bracket of 46.6% would need to earn 9.83%
from a taxable investment to match the fund's tax-free distribution rate.
Likewise, an investor in the maximum combined federal and New York state
personal income tax bracket of 43.9% would need to earn 9.36% from a taxable
investment to match the fund's tax-free distribution rate.

As illustrated by the chart on page 16, your fund's performance has exceeded
that of the Consumer Price Index (CPI), keeping your purchasing power well ahead
of inflation -- a primary goal of any investment. Your fund's performance has
generally followed the same trends as the broad, unmanaged Lehman Brothers
10-Year Municipal Bond Index. Of course, such unmanaged market indices have
inherent performance differentials over any fund. They do not pay management
fees to cover salaries of securities analysts or portfolio managers, or pay
commissions or market spreads to buy and sell securities. Unlike unmanaged
indices, mutual funds are never fully invested because of the need to have cash
on hand to redeem shares. In addition, the perform-ance shown for the fund
includes the maximum initial sales charge, all fund expenses and account fees.
If the fund's costs had been applied to the index, the index's performance would
have been lower. Please remember that an index is simply a measure of
performance and cannot be invested in directly.

Franklin New York Intermediate-Term
Tax-Free Income Fund
Dividend Distributions 1/01/96 - 12/31/96+

Dividend
Month per Share
------------------------------------------------

January 4.6 cents

February 4.6 cents

March 4.6 cents

April 4.6 cents

May 4.6 cents

June 4.6 cents

July 4.6 cents

August 4.6 cents

September 4.6 cents

October 4.6 cents

November 4.6 cents

December 4.6 cents

Total 55.2 cents

GRAPHIC MATERIAL 7 OMITTED - SEE APPENDIX AT END OF DOCUMENT

GRAPHIC MATERIAL 8 OMITTED - SEE APPENDIX AT END OF DOCUMENT

<TABLE>
<CAPTION>
Franklin New York Intermediate-Term Tax-Free Income Fund
Periods ended December 31, 1996

Since
Inception
1-Year 3-Year (9/23/92)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return1 4.38% 12.98% 27.10%
Average Annual Total Return2 2.02% 3.35% 5.21%

Distribution Rate3 5.25%
Taxable Equivalent Distribution Rate4 9.83%
30-Day Standardized Yield5 4.79%
Taxable Equivalent Yield4 8.97%
- --------------------------------------------------------------------------------------------------
</TABLE>

1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include sales charges. See Note below.

2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the maximum 2.25% initial
sales charge. See Note below.

3. Based on an annualization of the fund's current 4.6 cent per share monthly
dividend and the maximum offering price of $10.52 on December 31, 1996.

5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended December 31, 1996.

Note: All total return calculations assume reinvestment of dividends and capital
gains at net asset value. Investment return and principal value will fluctuate
with market conditions, and you may have a gain or loss when you sell your
shares. Past performance is not predictive of future results.

The fund's manager agreed in advance to waive a portion of management expenses,
which reduces operating expenses and increases yield, distribution rate and
total return to shareholders. Without these reductions, the fund's distribution
rate would have been lower, and yield for the period would have been 4.35%. The
fee waiver may be discontinued at any time upon notification to the fund's Board
of Trustees.

<TABLE>
<CAPTION>
FRANKLIN NEW YORK TAX-FREE TRUST
================================================================================
Statement of Investments in Securities and Net Assets, December 31, 1996

Face Value
Amount Franklin New York Tax-Exempt Money Fund (Note 1)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investments 99.5%
$ 200,000 aBabylon, Town of, IDA, IDR, General Microwave Corp. Facility, Series 1984,
Weekly VRDN and Put, 4.15%, 10/01/99............................................. $ 200,000
1,000,000 Erie County RAN, Series A, 4.25%, 04/17/97....................................... 1,001,820
1,500,000 aGreat Neck North, Water Authority System Revenue, Series A, FGIC Insured,
Weekly VRDN and Put, 4.00%, 01/01/20 ............................................ 1,500,000
600,000 aNassau IDA, Research Facility Revenue, Cold Spring Harbor Laboratory Project,
Daily VRDN and Put, 4.90%, 07/01/23 ............................................. 600,000
aNew York City GO,
100,000 Series B, Sub-Series B-2, MBIA Insured, Daily VRDN and Put, 5.00%, 08/15/03 ..... 100,000
200,000 Series B, Sub-Series B-3, Daily VRDN and Put, 5.00%, 08/15/04.................... 200,000
800,000 Series B, Sub-Series B-10, Weekly VRDN and Put, 4.05%, 08/15/24.................. 800,000
1,000,000 Series D, Weekly VRDN and Put, 4.00%, 02/01/20................................... 1,000,000
300,000 Sub-Series A-4, Daily VRDN and Put, 5.00%, 08/01/22.............................. 300,000
100,000 Sub-Series A-4, Daily VRDN and Put, 5.00%, 08/01/23.............................. 100,000
100,000 Sub-Series A-5, Daily VRDN and Put, 5.00%, 08/01/16.............................. 100,000
900,000 Sub-Series A-5, Subordinated Lien, Daily VRDN and Put, 5.00%, 08/01/15 .......... 900,000
200,000 Sub-Series A-8, Daily VRDN and Put, 5.00%, 08/01/18.............................. 200,000
aNew York City HDC, Mortgage Revenue, Weekly VRDN and Put,
1,400,000 Columbus Apartments, Series A, 3.95%, 03/15/25 .................................. 1,400,000
1,235,000 Parkgate Tower No. 1, 3.00%, 12/01/07 ........................................... 1,235,000
1,000,000 aNew York City IDA, IDR, Brooklyn Navy Yard, Cogeneration Project, Series A,
Weekly VRDN and Put, 4.15%, 07/01/29............................................. 1,000,000
500,000 aNew York City IDA, Various Civic Facilities, National Audobon Society, Daily VRDN
and Put, 4.80%, 12/01/14 ........................................................ 500,000
New York City Municipal Water Finance Authority, Water and Sewer Systems Revenue,
FGIC insured,
100,000 aSeries A, Daily VRDN and Put, 4.70%, 06/15/25.................................... 100,000
400,000 Series B, 6.90%, 06/15/97........................................................ 405,769
3,100,000 aSeries C, Daily VRDN and Put, 5.00%, 06/15/22 ................................... 3,100,000
1,200,000 aNew York City Tri-Cultural Resources Revenue, American Museum of Natural History,
Series B, MBIA Insured, Weekly VRDN and Put 3.80%, 04/01/21...................... 1,200,000
aNew York Dormitory Authority Revenues,
300,000 Cornell University, Series B, Daily VRDN and Put, 4.80%, 07/01/25 ............... 300,000
2,200,000 Metropolitan Museum of Art, Series B, Weekly VRDN and Put, 4.00%, 07/01/23 ...... 2,200,000
400,000 New York Public Library, Series B, Weekly VRDN and Put, 4.00%, 07/01/22.......... 400,000
1,000,000 Oxford University Press, Inc., Daily VRDN and Put, 5.45%, 07/01/23 .............. 1,000,000
2,000,000 Oxford University Press, Inc., Weekly VRDN and Put, 4.00%, 07/01/25 ............. 2,000,000
New York State Dormitory Authority, Sloan Kettering, TECP,
500,000 3.60%, 01/08/97................................................................. 500,000
1,900,000 3.50%, 01/22/97................................................................. 1,900,000
aNew York State Energy Research and Development Authority, PCR,
$ 1,200,000 Central Hudson Gas & Electric Co. Project, Series A, Weekly VRDN and Put,
3.80%, 06/01/27 ................................................................ $ 1,200,000
100,000 Niagara Mohawk Power Corp., Series A, DATES, Daily VRDN and Put,
4.70%, 07/01/15................................................................. 100,000
500,000 Niagara Mohawk Power Corp., Series B, Daily VRDN and Put, 4.90%, 12/01/25........ 500,000
1,100,000 Refunding, Central Hudson Gas & Electric Co. Project, Series B, Weekly VRDN
and Put, 3.80%, 06/01/27........................................................ 1,100,000
1,000,000 Refunding, Orange and Rockland Project, Series A, FGIC Insured, Weekly VRDN
and Put, 3.80%, 10/01/14 ....................................................... 1,000,000
1,350,000 Refunding, Orange and Rockland Utilities, Series A, AMBAC Insured, Weekly VRDN
and Put, 3.80%, 08/01/15 ....................................................... 1,350,000
1,000,000 New York State Environmental Facility Corp., TECP, 3.55%, 01/10/97............... 1,000,000
2,800,000 New York State GO, TECP, 3.45%, 03/05/97......................................... 2,800,000
2,100,000 aNew York State HFA, Normandie Court I Project, Weekly VRDN and Put,
4.00%, 05/15/15 ................................................................ 2,100,000
aNew York State Local Government Assistance Corp., Weekly VRDN and Put,
300,000 Series B, 4.00%, 04/01/23........................................................ 300,000
500,000 Series F, 4.00%, 04/01/25........................................................ 500,000
700,000 Series G, 3.85%, 04/01/25........................................................ 700,000
2,500,000 aNew York State Medical Care Facilities, Finance Agency Revenue, Pooled Equipment
Loan Program II, Series A, Weekly VRDN and Put, 3.90%, 11/01/03.................. 2,500,000
870,000 aNiagara County IDA, IDR, Pyron Corp. Project, Weekly VRDN and Put, 4.15%, 11/01/04 870,000
North Hempstead Solid Waste Management Authority Revenue, Refunding,
300,000 aSeries A, Weekly VRDN and Put, 3.90%, 02/01/12................................... 300,000
1,000,000 Series B, MBIA Insured, 3.70%, 02/01/97.......................................... 1,000,000
800,000 aOnondaga County IDA, IDR, FRN, Pass & Seymour, Inc., Series B, Monthly VRDN
and Weekly Put, 3.40%, 11/13/98 ................................................ 800,000
1,000,000 aPuerto Rico Commonwealth, Government Development Bank, Refunding,
Weekly VRDN and Put, 3.75%, 12/01/15 ............................................ 1,000,000
3,000,000 Sayville Union Free School District TAN, 4.20%, 06/26/97......................... 3,005,612
900,000 aSeneca County IDA, Civic Facility Revenue, New York Chiropractic College,
Weekly VRDN and Put, 3.80%, 10/01/21 ............................................ 900,000
1,600,000 aSt. Lawrence IDA, Environmental Impact Revenue, Reynolds Metals Co. Project,
Weekly VRDN and Put, 4.00%, 05/01/25 ............................................ 1,600,000
1,500,000 aSuffolk County GO, Water Authority, BAN, Weekly VRDN and Put, 3.90%, 02/08/01.... 1,500,000
1,000,000 Suffolk County TRAN, 4.50%, 09/11/97............................................. 1,003,661
595,000 aSuffolk IDA, IDR, Refunding, Phototronics Corp. Facility, Daily VRDN and Weekly Put,
4.95%, 01/01/98 ................................................................ 595,000
400,000 aSyracuse IDA, Civic Facilities Revenue, Multi-Modal, Syracuse University Project,
Daily VRDN and Put, 4.80%, 03/01/23 ............................................. 400,000
$ 3,000,000 Three Villages Central School District, Brookhaven & Smithtown TAN, 4.50%, 06/30/97 $ 3,009,259
1,020,000 Triborough Bridge and Tunnel Authority Revenues, Series K, 7.80%, 01/01/97....... 1,020,000
2,500,000 aTriborough Bridge and Tunnel Authority, Special Obligation, FGIC Insured,
Weekly VRDN and Put, 4.00%, 01/01/24 ............................................ 2,500,000
-----------
Total Investments (Cost $58,896,121) 99.5% ............................ 58,896,121
Other Assets and Liabilities, Net 0.5% ................................ 281,459
-----------
Net Assets 100.0%...................................................... $59,177,580
===========

At December 31, 1996, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.

PORTFOLIO ABBREVIATIONS:
AMBAC - American Municipal Bond Assurance Corp.
BAN - Bond Anticipation Notes
DATES - Demand Adjustable Tax-Exempt Securities
FGIC - Financial Guaranty Insurance Co.
FRN - Floating Rate Notes
GO - General Obligation
HDC - Housing Development Corp.
HFA - Housing Finance Authority/Agency
IDA - Industrial Development Authority/Agency
IDR - Industrial Development Revenue
MBIA - Municipal Bond Investors Assurance Corp.
PCR - Pollution Control Revenue
RAN - Revenue Anticipation Notes
TAN - Tax Anticipation Notes
TECP - Tax-Exempt Commercial Paper
TRAN - Tax and Revenue Anticipation Notes

aVariable rate demand notes (VRDNs) are tax-exempt obligations which contain a
floating or variable interest rate adjustment formula and an unconditional right
of demand to receive payment of the principal balance plus accrued interest upon
short notice prior to specified dates. The interest rate may change on specified
dates in relationship with changes in a designated rate (such as the prime
interest rate or U.S. Treasury bills rate).

The accompanying notes are an integral part of these financial statements.
</TABLE>

<TABLE>
<CAPTION>
FRANKLIN NEW YORK TAX-FREE TRUST

Statement of Investments in Securities and Net Assets, December 31, 1996

Face Value
Amount Franklin New York Insured Tax-Free Income Fund (Note 1)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Bonds 98.6%
$ 1,000,000 Albany County GO, FGIC Insured, 5.85%, 06/01/12................................. $ 1,032,030
Albany Municipal Water Finance Authority, Water and Sewer System Revenue,
Refunding, Series A, FGIC Insured,
2,505,000 5.95%, 12/01/12 ............................................................... 2,588,692
8,990,000 5.50%, 12/01/22 ............................................................... 8,867,287
2,585,000 Amsterdam HDC, Mortgage Revenue, Refunding, MBIA Insured, 6.25%, 01/01/25....... 2,618,450
200,000 Brookhaven GO, Series B, MBIA Insured, 7.00%, 05/01/09 ......................... 231,240
1,000,000 Broome County COP, Public Safety Facilities, MBIA Insured, 5.25%, 04/01/22 ..... 954,210
Buffalo GO, AMBAC Insured,
225,000 Series A & C, Pre-Refunded, 7.25%, 04/01/08 ................................... 248,753
360,000 Series E, 6.70%, 12/01/17...................................................... 396,688
385,000 Series E, 6.70%, 12/01/18...................................................... 424,235
410,000 Series E, 6.70%, 12/01/19...................................................... 456,006
Buffalo Municipal Water Finance Authority, Water System Revenue,
1,350,000 FGIC Insured, 6.10%, 07/01/26.................................................. 1,404,270
3,600,000 FSA Insured, 5.75%, 07/01/19................................................... 3,623,940
100,000 Camden Central School District, AMBAC Insured, 7.10%, 06/15/07 ................. 116,385
Canandaigua City School District, AMBAC Insured,
625,000 6.40%, 06/01/08 ............................................................... 691,138
550,000 6.50%, 06/01/11................................................................ 606,496
Central Square School District, FGIC Insured,
900,000 6.50%, 06/15/08................................................................ 1,003,194
900,000 6.50%, 06/15/09................................................................ 1,000,917
2,000,000 Clifton Park Water Authority, Water System Revenue, Series A, FGIC Insured,
Pre-Refunded, 6.375%, 10/01/26 ................................................ 2,213,180
495,000 Deposit Central School District GO, AMBAC Insured, 6.35%, 06/15/10.............. 539,015
1,000,000 Erie County GO, Series B, FGIC Insured, 5.625%, 06/15/20........................ 995,440
200,000 Erie County Water Authority Revenue, Refunding, Series B, AMBAC Insured,
ETM, 6.75%, 12/01/14 .......................................................... 216,308
100,000 Evans-Brant Central School District, Series 1991, MBIA Insured, 6.85%, 06/15/08. 114,930
Greece Central School District No.1, Series 1992, FGIC Insured,
950,000 6.00%, 06/15/16 ............................................................... 998,089
950,000 6.00%, 06/15/17 ............................................................... 993,501
950,000 6.00%, 06/15/18 ............................................................... 994,612
1,340,000 Hempstead Town IDA, Civic Facilities Revenue, Hofstra University Project,
MBIA Insured, 5.80%, 07/01/15.................................................. 1,373,875
280,000 Lockport GO, Series B, MBIA Insured, 6.15%, 03/15/19............................ 291,530
155,000 Mahopac Central School District, AMBAC Insured, 6.80%, 06/15/08 ................ 178,058
210,000 Middle Country Central School District, New York Centereach, AMBAC Insured,
6.90%, 12/15/06 ............................................................... 242,376
Monroe County GO, Public Improvement, AMBAC Insured,
$ 985,000 6.15%, 06/01/18 ............................................................... $ 1,032,182
1,730,000 6.15%, 06/01/19 ............................................................... 1,812,867
2,000,000 Monroe County IDA Revenue, Civic Facilities, Nazareth College, MBIA Insured,
6.00%, 06/01/20 ............................................................... 2,060,700
1,055,000 Mount Sinai Union Free School District, Refunding, AMBAC Insured, 6.20%, 02/15/13 1,148,536
1,150,000 Nassau County IDA, Civic Facilities Revenue, Hofstra University Project, AMBAC
Insured, 6.75%, 08/01/11 ...................................................... 1,254,535
New Rochelle GO, Series C, MBIA Insured,
195,000 6.25%, 03/15/21................................................................ 205,134
390,000 6.25%, 03/15/22................................................................ 410,268
530,000 6.25%, 03/15/23................................................................ 557,544
555,000 6.25%, 03/15/24................................................................ 583,843
100,000 New York City Educational Construction Fund Revenue, Series A, MBIA Insured,
Pre-Refunded, 7.125%, 04/01/13................................................. 108,816
New York City Municipal Water Finance Authority, Water and Sewer System Revenue,
1,000,000 Series A, FGIC Insured, 6.75%, 06/15/16........................................ 1,079,400
20,300,000 Series C, AMBAC Insured, 6.20%, 06/15/21....................................... 21,342,811
3,830,000 Series C, AMBAC Insured, Pre-Refunded, 6.50%, 06/15/21 ........................ 3,938,887
New York City Trust, Cultural Resource Revenue,
3,000,000 New York Botanical Garden, MBIA Insured, 5.75%, 07/01/16....................... 3,037,650
250,000 Refunding, Museum of Modern Art, Series A, AMBAC Insured, Pre-Refunded,
6.625%, 01/01/11 .............................................................. 276,903
2,805,000 Refunding, Museum of Modern Art, Series A, AMBAC Insured, Pre-Refunded,
6.625%, 01/01/19 .............................................................. 3,106,846
New York State Dormitory Authority Revenues,
140,000 Associated Children's, Inc., MBIA Insured, 7.60%, 07/01/18 .................... 148,603
2,460,000 Brooklyn Law School, CGIC Insured, 6.40%, 07/01/11............................. 2,637,292
275,000 City University System, Series C, FGIC Insured, Pre-Refunded, 7.00%, 07/01/14 . 304,013
600,000 Colgate University, Series A, MBIA Insured, Pre-Refunded, 6.70%, 07/01/11 ..... 665,490
2,445,000 Comsewogue Public Library, MBIA Insured, 6.05%, 07/01/24....................... 2,531,333
750,000 Founding Charitable Corp., MBIA Insured, 6.50%, 07/01/12 ...................... 771,653
1,000,000 Hamilton College, MBIA Insured, 6.50%, 07/01/21 ............................... 1,073,950
1,000,000 Hartwick College, MBIA Insured, 6.25%, 07/01/12 ............................... 1,056,800
2,780,000 Judicial Lease Facilities, Series B, Suffolk County, MBIA Insured, 7.00%, 04/15/16 3,055,554
1,890,000 Leake and Watts Services, Inc., MBIA Insured, 6.00%, 07/01/23 ................. 1,952,049
1,500,000 Maimonides Medical Center, Series A, MBIA Insured, 5.75%, 08/01/24............. 1,506,015
1,000,000 New York Public Library, Series A, MBIA Insured, 5.875%, 07/01/22.............. 1,012,350
1,000,000 New York University, FGIC Insured, 6.25%, 07/01/09 ............................ 1,061,120
1,195,000 Oceanside Library, AMBAC Insured, 6.00%, 07/01/25.............................. 1,226,787
1,500,000 Refunding, Ithaca College, MBIA Insured, 6.25%, 07/01/21 ...................... 1,564,800
New York State Dormitory Authority Revenues, (cont.)
$ 1,000,000 Refunding, Marist College, MBIA Insured, 6.00%, 07/01/22....................... $ 1,024,170
2,500,000 Refunding, Sinai School of Medicine, MBIA Insured, 6.75%, 07/01/15 ............ 2,710,750
1,000,000 Refunding, Wildwood Programs, Inc., MBIA Insured, 5.875%, 07/01/15............. 1,019,650
1,000,000 St. John's University, AMBAC Insured, 6.875%, 07/01/11 ........................ 1,092,640
5,000,000 St. John's University, MBIA Insured, 5.70%, 07/01/26........................... 5,008,250
5,000,000 St. Vincent's Hospital and Medical Center, AMBAC Insured, 6.00%, 08/01/28...... 5,149,600
1,220,000 University of Rochester, MBIA Insured, 6.50%, 07/01/09 ........................ 1,253,550
2,355,000 University of Rochester, Strong Health Facilities, MBIA Insured, 5.90%, 07/01/17 2,404,667
New York State Energy Research and Development Authority, Electric Facilities
Revenue, Consolidated Edison Co. of New York, Inc. Project,
5,000,000 Refunding, Series A, AMBAC Insured, 6.10%, 08/15/20............................ 5,176,550
4,000,000 Refunding, Series B, MBIA Insured, 5.25%, 08/15/20 ............................ 3,777,640
4,950,000 Series A, MBIA Insured, 6.75%, 01/15/27 ....................................... 5,297,144
210,000 Series C, MBIA Insured, 7.25%, 11/01/24........................................ 221,332
New York State Energy Research and Development Authority, Gas Facilities Revenue,
Brooklyn Union Gas, MBIA Insured,
3,050,000 Series II, 7.00%, 12/01/20 .................................................... 3,111,000
2,240,000 Series A, 6.75%, 02/01/24 ..................................................... 2,439,965
New York State Energy Research and Development Authority, PCR,
4,000,000 Electric and Gas Project, Series A, MBIA Insured, 6.15%, 07/01/26 ............. 4,115,120
1,500,000 Refunding, Niagara Mohawk Power Corp., Series A, FGIC Insured,
6.625%, 10/01/13 .............................................................. 1,629,225
5,000,000 Refunding, Niagara Mohawk Power Corp., Series A, FGIC Insured,
7.20%, 07/01/29 ............................................................... 5,705,050
1,150,000 Refunding, Rochester Gas and Electric Project, Series A, MBIA Insured,
6.35%, 05/15/32 ............................................................... 1,206,270
1,000,000 Refunding, Rochester Gas and Electric Project, Series B, MBIA Insured,
6.50%, 05/15/32 ............................................................... 1,068,430
2,000,000 bNew York State Environmental Facilities Corp., Special Obligation Revenue,
Refunding, Riverbank State Park, AMBAC Insured, 5.50%, 04/01/16................ 1,978,760
New York State Environmental Facilities Corp., Water Facilities Revenue, Refunding,
Spring Valley Water Co., Inc. Project, AMBAC Insured,
2,000,000 Series A, 6.30%, 08/01/24 ..................................................... 2,090,460
3,000,000 Series B, 6.15%, 08/01/24...................................................... 3,102,810
New York State Medical Care Facilities, Finance Agency Revenue,
6,735,000 Long-Term Health Care, Series A, CGIC Insured, 6.80%, 11/01/14 ................ 7,256,963
5,355,000 Long-Term Health Care, Series B, CGIC Insured, 6.45%, 11/01/14 ................ 5,677,425
4,245,000 Long-Term Health Care, Series C, CGIC Insured, 6.40%, 11/01/14 ................ 4,487,941
1,000,000 Our Lady of Victory Hospital, Series A, AMBAC Insured, 6.625%, 11/01/16 ....... 1,082,710
5,000,000 Presbyterian Hospital, Series A, MBIA Insured, 5.375%, 02/15/25................ 4,766,600
New York State Medical Care Facilities, Finance Agency Revenue, (cont.)
$ 1,000,000 Refunding, Hospital and Nursing Home Mortgage, Series C, MBIA Insured,
6.25%, 08/15/12 ............................................................... $ 1,049,840
1,495,000 Refunding, St. Mary's Hospital Project, Series A, AMBAC Insured,
6.20%, 11/01/14 ............................................................... 1,584,356
700,000 Sisters of Charity Hospital, Series A, AMBAC Insured, 6.60%, 11/01/10 ......... 763,133
1,500,000 Sisters of Charity Hospital, Series A, AMBAC Insured, 6.625%, 11/01/18 ........ 1,624,065
New York State Power Authority Revenue and General Purpose,
2,000,000 Refunding, Series Z, FGIC Insured, 6.50%, 01/01/19 ............................ 2,159,440
3,000,000 Series AA, MBIA Insured, 6.25%, 01/01/23 ...................................... 3,143,160
3,255,000 Series Y, AMBAC Insured, 6.50%, 01/01/11 ...................................... 3,469,505
New York State Tollway Authority, General Revenue, FGIC Insured,
2,295,000 Series A, 5.75%, 01/01/19...................................................... 2,321,255
13,975,000 Series C, 6.00%, 01/01/25...................................................... 14,473,628
Niagara County GO, Public Improvement, MBIA Insured,
500,000 6.00%, 07/15/18................................................................ 519,085
510,000 6.00%, 07/15/19................................................................ 529,467
610,000 6.00%, 07/15/20................................................................ 633,284
645,000 6.00%, 07/15/21................................................................ 669,620
7,500,000 Niagara Falls Bridge Commission Toll Revenue, Refunding, Series B, FGIC Insured,
5.25%, 10/01/21 ............................................................... 7,140,450
Niagara Falls Public Improvement, MBIA Insured,
1,000,000 6.85%, 03/01/19 ............................................................... 1,125,350
500,000 6.90%, 03/01/20 ............................................................... 562,550
500,000 6.90%, 03/01/21 ............................................................... 562,550
1,200,000 Niagara Falls Water Treatment Plant, MBIA Insured, 7.00%, 11/01/12 ............. 1,315,848
Niagara Frontier Transportation Authority, Airport Revenue, Greater Buffalo
International Airport, AMBAC Insured,
1,000,000 Series A, 6.25%, 04/01/24 ..................................................... 1,044,070
1,440,000 Series C, 6.00%, 04/01/24...................................................... 1,495,670
North Hempstead GO, Refunding, FGIC Insured,
210,000 Series A, 6.40%, 02/01/11 ..................................................... 231,815
1,065,000 Series B, 6.40%, 04/01/15 ..................................................... 1,175,664
1,060,000 Series B, 6.40%, 04/01/16 ..................................................... 1,166,912
500,000 North Hempstead Solid Waste Management Revenue, Refunding, Series B,
MBIA Insured, 5.00%, 02/01/12.................................................. 469,225
100,000 Onondaga Central School District, MBIA Insured, 6.80%, 06/15/10 ................ 114,079
Port Authority of New York and New Jersey,
1,000,000 Consolidated 71st Series, AMBAC Insured, 6.50%, 01/15/26 ...................... 1,064,880
1,600,000 Consolidated 71st Series, MBIA Insured, 6.50%, 01/15/26 ....................... 1,703,808
4,230,000 Consolidated 76th Series, AMBAC Insured, 6.50%, 11/01/26 ...................... 4,516,752
$ 2,000,000 Puerto Rico Commonwealth Electric Power Authority Revenue, Water Resources,
Series R, CGIC Insured, 6.25%, 07/01/17........................................ $ 2,098,280
810,000 Rensselear County GO, AMBAC Insured, 6.70%, 02/15/11............................ 924,218
330,000 Schodack Central School District, AMBAC Insured, 6.875%, 12/15/10 .............. 380,051
100,000 Schuylerville Central School District, MBIA Insured, 6.875%, 06/15/07 .......... 115,368
100,000 South Glens Falls Central School District, Series A, MBIA Insured, 6.85%, 06/15/10 114,555
Suffolk County GO, Public Improvement, FGIC Insured,
500,000 Refunding, Series B, 6.20%, 05/01/11 .......................................... 527,270
500,000 Refunding, Series B, 6.20%, 05/01/13 .......................................... 524,180
365,000 Series 1989, Pre-Refunded, 6.50%, 07/15/13 .................................... 378,100
1,000,000 Suffolk County Water Authority, Waterworks Revenue, Refunding, AMBAC Insured,
Pre-Refunded, 7.10%, 06/01/10.................................................. 1,084,860
Sullivan County GO, Public Improvement, MBIA Insured,
520,000 5.20%, 03/15/15 ............................................................... 502,741
510,000 5.20%, 03/15/16 ............................................................... 489,620
500,000 5.20%, 03/15/17 ............................................................... 479,450
Triborough Bridge and Tunnel Authority Revenue,
1,435,000 General Purpose, Series P, FGIC Insured, 5.50%, 01/01/19....................... 1,413,403
1,500,000 Series Q, AMBAC Insured, 6.00%, 01/01/13 ...................................... 1,523,250
740,000 Series S, Secured by U.S. Government Securities, Pre-Refunded, 7.00%, 01/01/21. 817,536
1,900,000 Series T, AMBAC Insured, Pre-Refunded, 6.00%, 01/01/22 ........................ 2,006,456
1,100,000 Series T, MBIA Insured, Pre-Refunded, 7.00%, 01/01/20.......................... 1,219,866
4,475,000 Series X, AMBAC Insured, 6.50%, 01/01/19 ...................................... 4,834,834
2,750,000 Series X, MBIA Insured, 6.50%, 01/01/19 ....................................... 2,971,127
750,000 Utica IDA, Civic Facility Revenue, Munson-Williams Facility, Series A, MBIA Insured,
5.50%, 07/15/16................................................................ 731,587
-----------
Total Long Term Investments (Cost $249,000,115) .......................... 261,560,461
-----------
aShort Term Investments 0.4%
New York City GO, Daily VRDN and Put,
100,000 Series B, Sub-Series B-3, MBIA Insured, 5.00%, 08/15/04........................ 100,000
900,000 Sub-Series A-5, Subordinated Lien, 5.00%, 08/01/16............................. 900,000
100,000 Sub-Series A-8, Subordinated Lien, 5.00%, 08/01/17............................. 100,000
-----------
Total Short Term Investments (Cost $1,100,000)............................... 1,100,000
-----------
Total Investments (Cost $250,100,115) 99.0% .......................... 262,660,461
Other Assets and Liabilities, Net 1.0% ............................... 2,544,570
-----------
Net Assets 100.0%.............................................................. $265,205,031
===========

At December 31, 1996, the net unrealized appreciation based on
the cost of investments for income tax purposes of $250,100,115
was as follows:
Aggregate gross unrealized appreciation for all investments in which there was
an excess of value over tax cost............................................... $13,155,579
Aggregate gross unrealized depreciation for all investments in which there was
an excess of tax cost over value............................................... (595,233)
-----------
Net unrealized appreciation..................................................... $12,560,346
===========

PORTFOLIO ABBREVIATIONS:
AMBAC - American Municipal Bond Assurance Corp.
CGIC - Capital Guaranty Insurance Co.
COP - Certificate of Participation
ETM - Escrow to Maturity
FGIC - Financial Guaranty Insurance Corp.
FSA - Financial Security Assistance
GO - General Obligation
HDC - Housing Development Corp.
IDA - Industrial Development Authority/Agency
MBIA - Municipal Bond Investors Assurance Corp.
PCR - Pollution Control Revenue

bSee Note 1(g) regarding securities purchased on a when-issued basis.

The accompanying notes are an integral part of these financial statements.
</TABLE>

<TABLE>
<CAPTION>
FRANKLIN NEW YORK TAX-FREE TRUST

Statement of Investments in Securities and Net Assets, December 31, 1996

Face Value
Amount Franklin New York Intermediate-Term Tax-Free Income Fund (Note 1)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investments 97.2%
$ 100,000 Cortland County IDA Revenue, Civic Facility Revenue, Cortland Memorial Hospital, Inc.
Project, 6.15%, 07/01/02 ........................................................ $ 102,187
65,000 Franklin County IDA, Lease Revenue, Correctional Facility Project, 6.375%, 11/01/02 68,321
260,000 Guam Airport Authority Revenue, Refunding, Series A, 6.00%, 10/01/03 ............. 269,724
1,300,000 Guam Power Authority Revenue, Series A, 6.00%, 10/01/04........................... 1,346,163
New York City GO,
5,200,000 Refunding, Series A, 6.375%, 08/01/05............................................ 5,468,008
1,000,000 Refunding, Series B, 6.20%, 08/15/06 ............................................ 1,042,530
3,500,000 Series H, 7.00%, 02/01/06 ....................................................... 3,749,935
New York City IDA, Civic Facility Revenue,
360,000 New York Blood Center, Inc. Project, ETM, 6.80%, 05/01/02........................ 375,066
1,875,000 USTA National Tennis Center Project, FSA Insured, 6.00%, 11/15/03................ 2,024,344
1,675,000 USTA National Tennis Center Project, FSA Insured, 6.10%, 11/15/04................ 1,824,025
4,010,000 New York State COP, Commissioner of General Services Department, 6.50%, 03/01/00.. 4,208,134
New York State Dormitory Authority Revenues,
690,000 Department of Health, 6.25%, 07/01/04 ........................................... 731,372
735,000 Department of Health, 6.30%, 07/01/05 ........................................... 781,092
100,000 Refunding, City University, Series U, 6.25%, 07/01/02 ........................... 105,686
1,720,000 Refunding, City University, Series U, 6.35%, 07/01/04 ........................... 1,835,859
2,000,000 Refunding, Nyack Hospital, 6.00%, 07/01/06....................................... 2,036,140
500,000 W.K. Nursing Home Corp., FHA Insured, 5.55%, 02/01/08............................ 514,140
300,000 W.K. Nursing Home Corp., FHA Insured, 5.55%, 08/01/08............................ 308,766
3,045,000 New York State HFA Revenue, Refunding, Health Facilities, Series A, 6.00%, 11/01/08 3,082,119
New York State Medical Care Facilities, Finance Agency Revenue,
1,500,000 Hospital and Nursing Home, FHA Insured, 5.70%, 02/15/05 ......................... 1,588,665
475,000 Refunding, Huntington Hospital Mortgage Project, Series A, 5.90%, 11/01/04 ...... 489,635
1,900,000 New York State Tollway Authority, General Revenue, Series A, 5.80%, 01/01/06 ..... 1,982,992
1,500,000 New York State Urban Development Corp. Revenue, Youth Facilities, 5.875%, 04/01/10 1,509,585
Northern Mariana Islands Commonwealth Ports Authority, Seaport Revenue, Series A,
410,000 5.85%, 10/01/03 ................................................................. 411,312
430,000 5.95%, 10/01/04 ................................................................. 431,535
460,000 6.05%, 10/01/05 ................................................................. 461,803
485,000 6.15%, 10/01/06 ................................................................. 487,056
125,000 Oneida-Herkimer Solid Waste Management, Solid Waste Authority Systems Revenue,
Refunding, 6.65%, 04/01/05 ...................................................... 131,698
1,500,000 Puerto Rico Commonwealth Electric Power Authority Revenue, Water Resources,
Series T, 6.00%, 07/01/04........................................................ 1,593,660
1,000,000 Puerto Rico Commonwealth GO, 6.00%, 07/01/05 ..................................... 1,064,900
2,000,000 Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Control
Facilities Financing Authority, Hospital Revenue, Mennonite General Hospital Project,
Series A, 6.375%, 07/01/06....................................................... 2,052,160
Puerto Rico Municipal Finance Agency, Series A,
$ 300,000 5.875%, 07/01/06................................................................. $ 310,917
300,000 FSA Insured, 5.60%, 07/01/05..................................................... 315,924
Suffolk County IDA, Civic Facilities Revenue, Dowling College Facilities,
100,000 6.10%, 06/01/03.................................................................. 101,632
180,000 6.20%, 06/01/04.................................................................. 182,757
225,000 Refunding, 6.40%, 12/01/05....................................................... 229,721
350,000 United Nations Development Corp. Revenue, Refunding, Series A, 5.70%, 07/01/02.... 365,032
-----------
Total Investments (Cost $41,482,086) 97.2%........................ 43,584,595
Others Assets and Liabilities, Net 2.8% .......................... 1,237,436
-----------
Net Assets 100.0%................................................. $44,822,031
===========

At December 31, 1996, the net unrealized appreciation based on
the cost of investments for income tax purposes of $41,482,086 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was
an excess of value over tax cost................................................. $ 2,102,509
Aggregate gross unrealized depreciation for all investments in which there was
an excess of tax cost over value................................................. --

-----------
Net unrealized appreciation....................................................... $ 2,102,509
===========

PORTFOLIO ABBREVIATIONS:

COP - Certificate of Participation
ETM - Escrow to Maturity
FHA - Federal Housing Authority/Agency
FSA - Financial Security Assistance
GO - General Obligation
HFA - Housing Finance Authority/Agency
IDA - Industrial Development Authority/Agency
USTA - United States Tennis Association

The accompanying notes are an integral part of these financial statements.
</TABLE>

<TABLE>
<CAPTION>
FRANKLIN NEW YORK TAX-FREE TRUST

Financial Statements

Statements of Assets and Liabilities
December 31, 1996

Franklin New York Franklin New York Franklin New York
Tax-Exempt Insured Tax-Free Intermediate-Term
Money Fund Income Fund Tax-Free Income Fund
---------- ---------- ------------
Assets:
Investments in securities:
<S> <C> <C> <C>
At identified cost..................................... $58,896,121 $250,100,115 $41,482,086
========== ========== ============
At value............................................... 58,896,121 262,660,461 43,584,595
Cash................................................... 4,192 72,813 355,736
Receivables:
Interest.............................................. 355,460 4,847,470 964,126
Capital shares sold................................... 95,659 149,343 14,658
---------- ---------- ------------
Total assets........................................... 59,351,432 267,730,087 44,919,115
---------- ---------- ------------
Liabilities:
Payables:
Investment securities purchased:
When-issued basis (Note 1)............................ -- 1,971,602 --
Distributions to shareholders.......................... 5,031 306,292 73,040
Capital shares repurchased............................. 140,328 55,237 --
Distribution fees...................................... -- 39,054 7,456
Shareholder servicing costs............................ 5,948 5,020 1,073
Management fees........................................ 15,261 120,241 5,067
Accrued expenses and other liabilities................ 7,284 27,610 10,448
---------- ---------- ------------
Total liabilities...................................... 173,852 2,525,056 97,084
---------- ---------- ------------
Net assets, at value .................................. $59,177,580 $265,205,031 $44,822,031
========== ========== ============
Net assets consist of:
Undistributed net investment income................... $-- $ 221,551 $ 180,254
Net unrealized appreciation on investments............ -- 12,560,346 2,102,509
Net realized loss..................................... -- (2,946,167) (3,059,236)
Class I capital shares................................ 59,177,580 251,296,948 45,598,504
Class II capital shares............................... -- 4,072,353 --
---------- ---------- ------------
Net assets, at value .................................. $59,177,580 $265,205,031 $44,822,031
========== ========== ============
Class I Shares:
Net assets, at value ................................. $59,177,580 $261,068,339 $44,822,031
========== ========== ============
Shares outstanding.................................... 59,177,580 23,121,564 4,360,363
========== ========== ============
Net asset value per share*............................ $1.00 $11.29 $10.28
========== ========== ============
Maximum offering price per share (100/100, 100/95.75,
100/97.75 of net asset value per share, respectively) $1.00 $11.79 $10.52
========== ========== ============
Class II Shares:
Net assets, at value ................................. $ 4,136,692
==========
Shares outstanding.................................... 363,893
==========
Net asset value per share *........................... $11.37
==========
Maximum offering price per share (100/99 of net asset
value per share)..................................... $11.48
==========

*Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.

The accompanying notes are an integral part of these financial statements.
</TABLE>

<TABLE>
<CAPTION>
FRANKLIN NEW YORK TAX-FREE TRUST

Financial Statements (cont.)

Statements of Operations
for the year ended December 31, 1996

Franklin New York Franklin New York Franklin New York
Tax-Exempt Insured Tax-Free Intermediate-Term
Money Fund Income Fund Tax-Free Income Fund
---------- ---------- ------------
Investment income:
<S> <C> <C> <C>
Interest.............................................. $2,072,302 $15,263,715 $2,600,906
---------- ---------- ------------
Expenses:
Management fees (Note 5).............................. 387,116 1,414,871 278,912
Distribution fees - Class I (Note 5).................. -- 208,584 42,762
Distribution fees - Class II (Note 5)................. -- 17,409 --
Shareholder servicing costs (Note 5).................. 72,533 60,215 12,833
Reports to shareholders............................... 53,238 47,033 8,498
Registration and filing fees.......................... 10,007 9,702 11,500
Professional fees..................................... 5,504 25,539 4,607
Custodian fees........................................ 1,178 6,757 884
Trustees' fees and expenses........................... 1,217 5,085 874
Other................................................. 2,886 27,494 8,128
Management fees waived by manager (Note 5)............ (161,249) (131,819) (202,779)
---------- ---------- ------------
Total expenses......................................... 372,430 1,690,870 166,219
---------- ---------- ------------
Net investment income.................................. 1,699,872 13,572,845 2,434,687
---------- ---------- ------------
Realized and unrealized gain (loss) on investments:
Net realized gain (loss).............................. -- 879,382 (261,595)
Net unrealized depreciation........................... -- (3,487,660) (297,789)
---------- ---------- ------------
Net realized and unrealized loss on investments........ -- (2,608,278) (559,384)
---------- ---------- ------------
Net increase in net assets resulting from operations .. $1,699,872 $10,964,567 $1,875,303
========== ========== ============

The accompanying notes are an integral part of these financial statements.
</TABLE>

<TABLE>
<CAPTION>
FRANKLIN NEW YORK TAX-FREE TRUST

Financial Statements (cont.)

Statements of Changes in Net Assets
for the years ended December 31, 1996 and 1995

Franklin New York
Franklin New York Franklin New York Insured Intermediate-Term
Tax-Exempt Money Fund Tax-Free Income Fund Tax-Free Income Fund
----------------- ------------------- -----------------
1996 1995 1996 1995 1996 1995
-------- -------- --------- --------- -------- --------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C>
Net investment income....... $ 1,699,872 $ 1,884,587 $ 13,572,845 $ 13,066,230 $ 2,434,687 $ 2,162,631
Net realized gain (loss) from
security transactions...... -- -- 879,382 (1,681,960) (261,595) 13,479
Net unrealized appreciation
(depreciation) on
investments................ -- -- (3,487,660) 29,401,034 (297,789) 2,971,907
-------- -------- --------- --------- -------- --------
Net increase in net
assets resulting
from operations............ 1,699,872 1,884,587 10,964,567 40,785,304 1,875,303 5,148,017
Distributions to shareholders
from undistributed net
investment income:
Class I (Note 7)........... (1,699,872) (1,884,587) (13,462,392) (13,009,932) (2,429,089) (2,115,155)
Class II (Note 7).......... -- -- (122,614) (9,004) -- --
Increase (decrease) in net
assets from capital share
transactions (Note 2)...... (1,901,098) (3,756,270) 10,958,482 4,039,676 2,146,745 5,030,289
-------- -------- --------- --------- -------- --------
Net increase (decrease)
in net assets.............. (1,901,098) (3,756,270) 8,338,043 31,806,044 1,592,959 8,063,151
Net assets:
Beginning of year.......... 61,078,678 64,834,948 256,866,988 225,060,944 43,229,072 35,165,921
-------- -------- --------- --------- -------- --------
End of year................ $59,177,580 $61,078,678 $265,205,031 $256,866,988 $44,822,031 $43,229,072
======== ======== ========= ========= ======== ========
Undistributed net investment income included in net assets:
Beginning of year........... $-- $-- $ 233,712 $ 186,418 $ 174,656 $ 127,180
======== ======== ========= ========= ======== ========
End of year................. $-- $-- $ 221,551 $ 233,712 $ 180,254 $ 174,656
======== ======== ========= ========= ======== ========

The accompanying notes are an integral part of these financial statements.
</TABLE>

FRANKLIN NEW YORK TAX-FREE TRUST

Notes to Financial Statements

1. SIGNIFICANT ACCOUNTING POLICIES

Franklin New York Tax-Free Trust (the Trust) is an open-end management
investment company (mutual fund), registered under the Investment Company Act of
1940, as amended. The Trust consists of three separate non-diversified funds
(the Funds): the Franklin New York Tax-Exempt Money Fund (the Money Fund),
Franklin New York Insured Tax-Free Income Fund (the Insured Fund), and Franklin
New York Intermediate-Term Tax-Free Income Fund (the Intermediate-Term Fund).
Each of the Funds issues a separate series of the Trust's shares and maintains a
totally separate investment portfolio. Each fund seeks to provide tax-free
income. The Money Fund also seeks liquidity in its investments.

The Insured Fund offers two classes of shares, Class I and Class II. Class I
shares are sold with a higher front-end sales charge than Class II shares. Each
class of shares may be subject to a contingent deferred sales charge and has the
same rights, except with respect to the effect of the respective sales charges,
the distribution fees borne by each class, voting rights on matters affecting a
single class and the exchange privilege of each class. The offering of Class II
shares began May 1, 1995, at which time all previously outstanding shares became
Class I shares.

The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.

a. Security Valuations:

Tax-free bonds generally trade in the over-the-counter market rather than on a
national securities exchange. In the absence of a sale or reported bid and asked
prices, information with respect to bond and note transactions, quotations from
bond dealers, market transactions in comparable securities, and various
relationships between securities are used to determine the value of the
security. The Trust may utilize a pricing service, bank or broker/dealer
experienced in such matters to perform any of the pricing functions, under
procedures approved by the Board of Trustees (the Board). Securities for which
market quotations are not available are valued in accordance with procedures
established by the Board.

The securities in the Money Fund are valued at amortized cost, which
approximates value. The Money Fund must maintain a dollar weighted average
maturity of 90 days or less and only purchase instruments having remaining
maturities of 397 days or less. If the Fund's portfolio has a remaining weighted
average maturity of greater than 90 days, the portfolio will be stated at value
based on recorded closing sales on a national securities exchange or, in the
absence of a recorded sale, within the range of the most recent quoted bid and
asked prices. The Board has established procedures designed to stabilize, to the
extent reasonably possible, the Fund's price per share as computed for the
purpose of sales and redemptions at $1.00.

b. Municipal Bonds or Notes with "Puts":

The Funds have purchased municipal bonds or notes with the right to resell the
bonds or notes to the seller at an agreed upon price or yield on a specified
date or within a specified period (which will be prior to the maturity date of
the bonds or notes). Such a right to resell is commonly known as a "put". In
determining the weighted average to maturity of the Fund's portfolio, municipal
bonds and notes as to which the Fund holds a put will be deemed to mature on the
last day on which the put may be exercisable.

c. Income Taxes:

The Funds intend to continue to qualify for the tax treatment applicable to
regulated investment companies under the Internal Revenue Code and to make the
requisite distributions to shareholders which will be sufficient to relieve the
Funds from income and excise taxes. Each Fund is treated as a separate entity in
the determination of compliance with the Internal Revenue Code.

1. SIGNIFICANT ACCOUNTING POLICIES (cont.)

d. Security Transactions:

Security transactions are accounted for on the date the securities are purchased
or sold (trade date). Realized gains and losses on security transactions are
determined on the basis of specific identification.

e. Investment Income, Expenses and Distributions:

For the Insured Fund and the Intermediate-Term Fund, distributions to
shareholders are recorded on the ex-dividend date. Interest income and estimated
expenses are accrued daily. Original issue discount and premium are amortized as
required by the Internal Revenue Code. For the Insured Fund, realized and
unrealized gains or losses and net investment income, other than class specific
expenses, are allocated daily to each class of shares based upon the relative
proportion of net assets of each class. The Funds normally declare dividends
from their net investment income daily and distribute monthly. Daily allocations
of net investment income will commence on the day following the receipt of an
investor's funds. Dividends are normally declared each day the New York Stock
Exchange is open for business and are equal to an amount per day set from time
to time by the Board, and are payable to shareholders of record at the beginning
of business on the ex-dividend date. Once each month, dividends are reinvested
in additional shares of the Funds, or paid in cash as requested by the
shareholders.

For the Money Fund, net investment income includes income, calculated on an
accrual basis, and estimated expenses which are accrued daily. The total
available for distributions is computed daily and includes the net investment
income, plus or minus any gains or losses on security transactions and any
changes in unrealized portfolio appreciation or depreciation. Distributions are
normally declared for each day the New York Stock Exchange is open for business,
equal to the total available for distributions (as defined above), and are
payable to shareholders of record as of the close of business the preceding day.
Such distributions are automatically reinvested daily in additional shares of
the Fund at net asset value.

f. Expense Allocation:

Common expenses incurred by the Trust are allocated among the Funds based on the
ratio of net assets of each Fund to the combined net assets. In all other
respects, expenses are charged to each Fund as incurred on a specific
identification basis.

g. Securities Purchased on a When-Issued Basis or Delayed Delivery Basis:

The Funds may trade securities on a when-issued or delayed delivery basis, with
payment and delivery scheduled for a future date. These transactions are subject
to market fluctuations and are subject to the risk that the value at delivery
may be more or less than the trade date purchase price. Although the Funds will
generally purchase these securities with the intention of holding the
securities, they may sell the securities before the settlement date. These
securities are identified on the accompanying Statement of Investments in
Securities and Net Assets. The Funds have set aside sufficient investment
securities as collateral for these purchase commitments.

h. Insurance:

Each long-term municipal security in the Insured Fund is insured as to the
scheduled payments of interest and principal by either a mutual fund Portfolio
Insurance Policy, a Secondary Market Insurance Policy, a New Issue Insurance
Policy or collateral guaranteed by an agency of the U.S. government. The
providers of secondary market and new issue insurance are rated "AAA" by
Standard & Poor's.

Premiums for a mutual fund Portfolio Insurance Policy or a Secondary Market
Insurance Policy are paid from the Insured Fund's assets. Premiums for a mutual
fund Portfolio Insurance Policy (effective only so long as the Fund is in
existence, Financial Guaranty (the insurer) remains in business and the
municipal security insured under the policy continues to be held by the Fund)
will reduce the current income of the portfolio by the amount thereof. Premiums
paid by the Fund for a Secondary Market Insurance Policy (effective so long as
the security so insured is outstanding and the insurer remains in

1. SIGNIFICANT ACCOUNTING POLICIES (cont.)

h. Insurance: (cont.)

business) are added to the cost basis of the municipal security insured and are
not considered an expense of the Fund. Premiums for a New Issue Insurance Policy
(effective so long as the security so insured is outstanding and the insurer
remains in business) are paid in advance by the insured security issuer or by
another third party prior to acquisition of the security by the Fund and are not
considered an expense of the Fund.

i. 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.

<TABLE>
<CAPTION>
2. TRUST SHARES

At December 31, 1996, there was an unlimited number of no par value shares of
beneficial interest authorized. Transactions in each of the Funds' shares for
the years ended December 31, 1996 and 1995 were as follows:

Money Fund Insured Fund Intermediate-Term Fund
--------- ------------------ ------------------
Amount Shares Amount Shares Amount
--------- ------- --------- ------- ---------
Class I Shares:
1996
<S> <C> <C> <C> <C> <C>
Shares sold........................... $52,382,787 3,298,042 $36,886,603 1,539,727 $15,773,201
Shares issued in reinvestment
of distributions...................... 1,700,710 692,279 7,733,995 138,865 1,415,872
Shares redeemed....................... (55,984,595) (3,323,568) (37,060,385) (1,473,947) (15,042,328)
--------- ------- --------- ------- ---------
Net increase (decrease).......... $(1,901,098) 666,753 $ 7,560,213 204,645 $ 2,146,745
========= ======= ========= ======= =========
1995
Shares sold........................... $51,047,828 2,666,848 $29,243,579 1,174,610 $11,892,800
Shares issued in reinvestment
of distributions..................... 1,884,485 660,709 7,245,577 126,128 1,274,728
Shares redeemed....................... (56,688,583) (3,028,976) (33,123,564) (806,339) (8,137,239)
--------- ------- --------- ------- ---------
Net increase (decrease).......... $ (3,756,270) 298,581 $ 3,365,592 494,399 $ 5,030,289
========= ======= ========= ======= =========
</TABLE>

<TABLE>
<CAPTION>
2. TRUST SHARES (cont.)

Insured Fund
------------------
Shares Amount
------- ---------
Class II Shares:
1996
<S> <C> <C>
Shares sold.......................................... 366,427 $4,098,519
Shares issued in reinvestment
of distributions .................................... 8,021 90,093
Shares redeemed...................................... (71,226) (790,343)
------- ---------
Net increase.................................... 303,222 $3,398,269
======= =========
1995*
Shares sold.......................................... 60,638 $ 673,641
Shares issued in reinvestment
of distributions..................................... 394 4,433
Shares redeemed...................................... (361) (3,990)
------- ---------
Net increase.................................... 60,671 $ 674,084
======= =========

*For the period May 1, 1995 to December 31, 1995.
</TABLE>

<TABLE>
<CAPTION>
3. DISTRIBUTIONS AND CAPITAL LOSS CARRYOVERS

At December 31, 1996, for tax purposes, the Funds had capital loss carryovers as
follows:

Intermediate-
Insured Fund Term Fund
-------- -------
Capital loss carryovers expiring in:

For tax purposes, the aggregate cost of securities and unrealized appreciation
of the Funds are the same as for financial reporting purposes at December 31,
1996.

<TABLE>
<CAPTION>
4. PURCHASES AND SALES OF SECURITIES

Aggregate purchases and sales of securities (excluding purchases and sales of
short-term securities) for the year ended December 31, 1996 were as follows:

Intermediate-
Money Fund Insured Fund Term Fund
------- -------- --------
<S> <C> <C> <C>
Purchases............................ -- $50,094,027 $14,468,343
Sales................................ -- $38,442,727 $10,656,074
</TABLE>

5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

a. Management Agreement:

Under the terms of a management agreement, Franklin Advisers, Inc. (Advisers),
provides investment advice, administrative services, office space and facilities
to each Fund, and receives fees computed monthly based on the net assets on the
last day of the month of the Insured Fund and the Intermediate-Term Fund and
computed daily based on the net assets of the Money Fund as follows:

Annualized Fee Rate Net Assets
------------- ----------------------------------
0.625% First $100 million
0.50% Over $100 million, up to and including $250 million
0.45% In excess of $250 million

Advisers agreed in advance to waive a portion of its management fees for the
Funds, aggregating $495,847 for the year ended December 31, 1996.

Under an agreement with Advisers, Franklin Templeton Services, Inc. (FT
Services) provides administrative services and facilities for the Funds. The fee
is paid by Advisers and computed monthly based on average daily net assets. It
is not a separate expense of the Funds.

b. Shareholder Services Agreement:

Under the terms of a shareholder services agreement with Franklin/Templeton
Investor Services, Inc. (Investor Services), the Funds pay costs on a per
shareholder account basis. Shareholder servicing costs incurred by the Funds for
the year ended December 31, 1996 aggregated $145,581, of which $139,900 was paid
to Investor Services.

c. Distribution Plans and Underwriting Agreement:

Under the terms of distribution plans pursuant to Rule 12b-1 of the Investment
Company Act of 1940 (the Plans), the Insured Fund reimburses Franklin/Templeton
Distributors, Inc. (Distributors) in an amount up to a maximum of 0.10% per
annum for Class I and 0.65% per annum for Class II, of the average daily net
assets of such class of the Fund, and the Intermediate-Term Fund reimburses
Distributors up to a maximum of 0.10% per annum of the Fund's average daily net
assets, for costs incurred in the promotion, offering and marketing of the
Funds' shares. The Plans do not permit nor require payments of excess costs
after termination. Fees incurred by the Funds under the Plans aggregated
$268,755 for the year ended December 31, 1996.

In its capacity as underwriter for the shares of the Insured Fund and the
Intermediate-Term Fund, Distributors receives commissions on sales of the Funds'
shares of beneficial interest. Commissions are deducted from the gross proceeds
received from the sale of the shares of the Funds, and as such are not expenses
the Funds. Distributors may also make payments, out of its own resources, to the
dealers for certain sales of the Funds' shares. Commissions received by
Distributors, the amounts paid to other dealers, and any applicable contingent
deferred sales charges for the year ended December 31, 1996 were as follows:

Intermediate-
Insured Fund Term Fund
-------- -------
Total commissions received.................... $875,662 $160,045
Paid to other dealers......................... $925,213 $155,451
Contingent deferred sales charge.............. $ 1,590 --

5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (cont.)

d. Other Affiliates and Related Party Transaction:

Certain officers and trustees of the Trust are also officers and/or directors of
Distributors, Advisers, FT Services, and Investor Services, all wholly-owned
subsidiaries of Franklin Resources, Inc.

6. CREDIT RISK

All of the Funds' investments are in the securities of issuers in the state of
New York and U.S. territories and possessions. Such concentration may subject
the Funds more significantly to economic changes occurring within that state and
U.S. territories and possessions.

<TABLE>
<CAPTION>
7. FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout the
period by Fund are as follows:

Per Share Operating Performance Ratios/Supplemental Data
-------------------------------------------- --------------------------------
Net Distri- Ratio of Ratio of Net
Realized & butions Net Expenses Invest-
Net Unrealized Total From Asset Net to Average ment
Asset Net Gain From Net Value Assets Net Income
Year Value at Invest- (Loss) Invest- Invest- at End at End Assets to Average Portfolio
Ended Beginning ment on ment ment of Total of Period (See Net Turnover
Dec. 31, of Period Income Securities Operations Income Period Return+ (in 000's) Note 5)++ Assets Rate
- ------------------------------------------------------------------------------------------------------------------------------------
Money Fund
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1992 $ 1.00 $.021 $ -- $ .021 $(.021) $ 1.00 2.10% $ 54,122 .65% 2.12% --%
1993 1.00 .017 -- .017 (.017) 1.00 1.67 50,317 .63 1.68 --
1994 1.00 .021 -- .021 (.021) 1.00 2.11 64,835 .60 2.12 --
1995 1.00 .031 -- .031 (.031) 1.00 3.11 61,079 .60 3.06 --
1996 1.00 .028 -- .028 (.028) 1.00 2.79 59,178 .60 2.75 --

Insured Fund
Class I Shares:
1992 10.46 .620 .369 .989 (.649) 10.80 9.49 149,054 .33 5.80 3.39
1993 10.80 .600 .880 1.480 (.600) 11.68 13.79 263,647 .50 5.28 5.38
1994 11.68 .590 (1.525) (.935) (.585) 10.16 (8.19) 225,061 .56 5.48 25.66
1995 10.16 .590 1.248 1.838 (.588) 11.41 18.46 256,171 .65 5.38 22.99
1996 11.41 .590 (.121) .469 (.589) 11.29 4.30 261,068 .65 5.25 15.09

Class II Shares:
19952,3 10.85 .357 .596 .953 (.343) 11.46 8.92 696 1.23* 4.74* 22.99
19963 11.46 .5274 (.101) .426 (.516) 11.37 3.87 4,137 1.22 4.69 15.09

Intermediate-Term Fund
19921 10.00 .090 .135 .225 (.015) 10.21 2.25 3,459 -- 4.41* 20.80
1993 10.21 .480 .536 1.016 (.546) 10.68 10.18 31,162 -- 4.96 30.95
1994 10.68 .550 (1.104) (.554) (.526) 9.60 (5.42) 35,166 .05 5.57 188.38
1995 9.60 .550 .795 1.345 (.545) 10.40 14.31 43,229 .33 5.51 24.68
1996 10.40 .560 (.124) .436 (.556) 10.28 4.38 44,822 .37 5.47 24.67
</TABLE>

7. FINANCIAL HIGHLIGHTS (cont.)

*Annualized

1For the period September 21, 1992 (effective date) to December 31, 1992.

2For the period May 1, 1995 (effective date) to December 31, 1995.

3Ratio has been calculated using daily average net assets during the period.

4Ratio has been calculated using daily average outstanding shares during the
period.

+Total return measures the change in value of an investment over the periods
indicated. It is not annualized. It does not include the maximum front-end sales
charge or the contingent deferred sales charge, and assumes reinvestment of
dividends and capital gains at net asset value. Prior to May 1, 1994, dividends
were reinvested at the maximum offering price, and capital gains, at net asset
value for the Insured Fund. Effective May 1, 1994, with the implementation of
the Rule 12b-1 distribution plan for Class I shares of the Insured Fund, the
sales charge on reinvested dividends was eliminated.

++During the periods indicated, Advisers agreed in advance to waive a portion of
its management fees and to make payments of other expenses incurred by the
Funds. Had such action not been taken, the ratio of expenses to average net
assets would have been as follows:

Ratio of Expenses to
Average Net Assets
- --------------------------------------------------------------------------------
Money Fund:
1992.............. .89%
1993.............. .97
1994.............. .93
1995.............. .85
1996................ .86

Ratio of Expenses to
Average Net Assets
Insured Income Fund:
Class I:
1992.............. .74%
1993.............. .65
1994.............. .71
1995.............. .73
1996................ .70
Class II:
19952,3........... 1.30*
19963............... 1.27

Ratio of Expenses to
Average Net Assets
Intermediate-Term
Income Fund:
19921............... 1.76%*
1993.............. .73
1994.............. .80
1995.............. .83
1996................ .83

Each Fund hereby designates 100% of the distributions paid from net investment
income for the taxable year ended December 31, 1996, as exempt-interest
dividends under Section 852(b)(5) of the Internal Revenue Code.

FRANKLIN NEW YORK TAX-FREE TRUST

Report of Independent Auditors

To the Shareholders and Board of Trustees
of Franklin New York Tax-Free Trust:

We have audited the accompanying statements of assets and liabilities of the
three funds comprising the Franklin New York Tax-Free Trust (the Funds),
including each Fund's statement of investments in securities and net assets, as
of December 31, 1996, and the related statements of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
presented. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the three funds comprising the Franklin New York Tax-Free Trust as of
December 31, 1996, the results of their operations for the year then ended, the
changes in their net assets for each of the two years in the period then ended,
and the financial highlights for the periods presented, in conformity with
generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

San Francisco, California
February 4, 1997

To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded and accessed. These calls can be
determined by the presence of a regular beeping tone.

Franklin New York Tax-Free Trust Annual Report December 31, 1996.

APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING
(PURSUANT TO ITEM 304 (a) OF REGULATION S-T)

GRAPHIC MATERIAL (1)

This chart shows in bar format the comparison between the fund's seven-day
annualized yield of 3.29%, the New York state taxable equivalent yield of 5.86%,
and the New York City taxable equivalent yield of 6.16%.

GRAPHIC MATERIAL (2)

This chart shows in bar format the comparison between the fund's Class I
distribution rate of 4.99%, the New York state taxable equivalent rate of 8.90%,
and the New York City taxable equivalent rate of 9.34%.

GRAPHIC MATERIAL (3)

The following line graph hypothetically compares the performance of the fund's
Class I shares with the Lehman Brothers Municipal Bond Index and the CPI, based
on a $10,000 investment from 5/1/91 to 12/31/96.

<TABLE>
<CAPTION>
Period Ending Fund Index Index
<S> <C> <C> <C>
5/1/91 9579 10,000 10,000
5/31/91 9,588 10,089 10,030
6/30/91 9,559 10,079 10,059
7/31/91 9,722 10,202 10,074
8/31/91 9,866 10,337 10,103
9/30/91 9,976 10,471 10,148
10/31/91 10,058 10,565 10,163
11/30/91 10,043 10,595 10,193
12/31/91 10,234 10,823 10,200
1/31/92 10,307 10,847 10,215
2/29/92 10,322 10,851 10,252
3/31/92 10,347 10,855 10,304
4/30/92 10,438 10,952 10,318
5/31/92 10,590 11,081 10,333
6/30/92 10,743 11,267 10,370
7/31/92 11,149 11,605 10,392
8/31/92 10,968 11,491 10,421
9/30/92 10,981 11,566 10,450
10/31/92 10,768 11,453 10,487
11/30/92 11,058 11,658 10,501
12/31/92 11,215 11,777 10,494
1/31/93 11,362 11,913 10,545
2/28/93 11,698 12,344 10,582
3/31/93 11,700 12,214 10,619
4/30/93 11,787 12,337 10,649
5/31/93 11,828 12,406 10,664
6/30/93 12,029 12,613 10,679
7/31/93 12,060 12,630 10,679
8/31/93 12,284 12,892 10,709
9/30/93 12,531 13,039 10,731
10/31/93 12,583 13,064 10,775
11/30/93 12,496 12,949 10,783
12/31/93 12,789 13,222 10,783
1/31/94 12,920 13,373 10,812
2/28/94 12,533 13,027 10,849
3/31/94 11,912 12,496 10,886
4/30/94 12,011 12,603 10,901
5/31/94 12,155 12,712 10,909
6/30/94 12,007 12,635 10,946
7/31/94 12,254 12,866 10,975
8/31/94 12,264 12,911 11,019
9/30/94 12,036 12,721 11,049
10/31/94 11,737 12,495 11,057
11/30/94 11,382 12,269 11,071
12/31/94 11,750 12,539 11,071
1/31/95 12,189 12,897 11,115
2/28/95 12,618 13,272 11,160
3/31/95 12,769 13,425 11,197
4/30/95 12,778 13,441 11,233
5/31/95 13,178 13,870 11,256
6/30/95 13,046 13,749 11,278
7/31/95 13,105 13,880 11,278
8/31/95 13,248 14,056 11,308
9/30/95 13,318 14,145 11,330
10/30/95 13,558 14,350 11,368
11/30/95 13,775 14,588 11,360
12/31/95 13,920 14,728 11,352
1/31/96 14,017 14,840 11,419
2/29/96 13,917 14,739 11,455
3/31/96 13,744 14,550 11,515
4/30/96 13,693 14,510 11,560
5/31/96 13,704 14,504 11,582
6/30/96 13,853 14,662 11,589
7/31/96 13,952 14,795 11,611
8/31/96 13,963 14,792 11,633
9/30/96 14,176 15,000 11,670
10/31/96 14,315 15,169 11,707
11/30/96 14,582 15,447 11,730
12/31/96 14,517 15,382 11,730
- --------------------------------------------------------

Totals 45.17% 53.82% 17.30%
</TABLE>

GRAPHIC MATERIAL (4)

This chart shows in bar format the comparison between the fund's Class II
distribution rate of 4.52%, the New York state taxable equivalent rate of 8.06%,
and the New York City taxable equivalent rate of 8.46%.

GRAPHIC MATERIAL (5)

The following line graph hypothetically compares the performance of the fund's
Class II shares with the Lehman Brothers Municipal Bond Index and the CPI, based
on a $10,000 investment from 5/1/95 to 12/31/96.

<TABLE>
<CAPTION>
Period Ending Fund Index Index
<S> <C> <C> <C>
5/1/95 $9,900 10,000 10,000
5/31/95 $10,212 10,319 10,020
6/30/95 $10,114 10,229 10,040
7/31/95 $10,162 10,326 10,040
8/31/95 $10,277 10,458 10,066
9/30/95 $10,326 10,523 10,086
10/30/95 $10,505 10,676 10,120
11/30/95 $10,676 10,853 10,112
12/31/95 $10,773 10,957 10,105
1/31/96 $10,851 11,041 10,165
2/29/96 $10,770 10,966 10,198
3/31/96 $10,631 10,825 10,251
4/30/96 $10,587 10,795 10,291
5/31/96 $10,590 10,791 10,310
6/30/96 $10,699 10,908 10,316
7/31/96 $10,777 11,008 10,336
8/31/96 $10,778 11,005 10,356
9/30/96 $10,944 11,159 10,389
10/31/96 $11,035 11,286 10,422
11/30/96 $11,234 11,492 10,442
12/31/96 $11,189 11,444 10,442
- ----------------------------------------------------------

Total 11.89% 14.44% 4.42%
</TABLE>

GRAPHIC MATERIAL (6)

This chart shows in pie format the quality breakdown of the fund's securities on
December 31, 1996, based on total long-term investments.

<TABLE>
<CAPTION>
Quality Breakdown on December 31, 1996
<S> <C>
AAA 15.1%
A 8.5%
BBB 76.4%
</TABLE>

GRAPHIC MATERIAL (7)

This chart shows in bar format the comparison between the fund's distribution
rate of 5.25%, the New York state taxable equivalent rate of 9.36%, and the New
York City taxable equivalent rate of 9.83%.

GRAPHIC MATERIAL (8)

The following line graph hypothetically compares the performance of the fund's
shares with the Lehman Brothers Municipal Bond Index and the CPI, based on a
$10,000 investment from 9/23/92 to 12/31/96.

<TABLE>
<CAPTION>
Period Ending Fund Index Index
<S> <C> <C> <C>
9/23/92 9775 10,000 10,000
10/1/92 9,785 10,019 10,007
10/31/92 9,765 9,917 10,042
11/30/92 9,892 10,099 10,056
12/31/92 9,980 10,216 10,049
1/31/93 10,055 10,388 10,098
2/28/93 10,316 10,769 10,133
3/31/93 10,312 10,611 10,169
4/30/93 10,378 10,712 10,197
5/31/93 10,413 10,750 10,211
6/30/93 10,489 10,962 10,226
7/31/93 10,506 10,989 10,226
8/31/93 10,683 11,216 10,254
9/30/93 10,800 11,354 10,276
10/31/93 10,845 11,373 10,318
11/30/93 10,695 11,279 10,325
12/31/93 10,997 11,520 10,325
1/31/94 11,136 11,661 10,353
2/28/94 10,901 11,342 10,388
3/31/94 10,458 10,908 10,424
4/30/94 10,556 11,028 10,438
5/31/94 10,665 11,117 10,445
6/30/94 10,648 11,069 10,481
7/31/94 10,821 11,255 10,509
8/31/94 10,857 11,299 10,551
9/30/94 10,659 11,146 10,580
10/31/94 10,427 10,983 10,587
11/30/94 10,228 10,776 10,601
12/31/94 10,415 10,970 10,601
1/31/95 10,593 11,254 10,643
2/28/95 10,881 11,572 10,686
3/31/95 10,951 11,729 10,721
4/30/95 10,968 11,743 10,757
5/31/95 11,285 12,115 10,778
6/30/95 11,214 12,040 10,800
7/31/95 11,343 12,217 10,800
8/31/95 11,507 12,383 10,828
9/30/95 11,547 12,462 10,849
10/30/95 12,606 10,885

11/30/95 11,844 12,774 10,878
Dec-95 11,908 12,852 10,870
Jan-96 11,984 12,982 10,934
Feb-96 11,899 12,929 10,969
Mar-96 11,802 12,769 11,026
Apr-96 11,797 12,724 11,069
May-96 11,769 12,688 11,090
Jun-96 11,882 12,809 11,097
Jul-96 11,995 12,932 11,118
Aug-96 11,978 12,932 11,139
Sep-96 12,139 13,065 11,175
Oct-96 12,254 13,230 11,210
Nov-96 12,453 13,497 11,232
Dec-96 12,424 13,436 11,232
- --------------------------------------------------------

24.24% 34.36% 12.32%
</TABLE>