FRANKLIN NEW YORK TAX FREE TRUST, N-30D, 1998-02-19

FRANKLIN NEW YORK TAX FREE TRUST
N-30D, 1998-02-19

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CONTENTS

Shareholder Letter ........................................... 1
New York Update .............................................. 4
Fund Reports
Franklin New York
Tax-Exempt Money Fund ....................................... 6
Franklin New York Insured
Tax-Free Income Fund ......................................... 9
Franklin New York
Intermediate-Term
Tax-Free Income Fund ......................................... 18
Glossary of
Investment Terms ............................................. 24
Municipal Bond Ratings ....................................... 26
Financial Highlights &
Statement of Investments ..................................... 29
Financial Statements ......................................... 41
Notes to
Financial Statements ......................................... 45
Report of
Independent Accountants ...................................... 49

SHAREHOLDER LETTER

Dear Shareholder:

It's a pleasure to bring you Franklin New York Tax-Free Trust's annual report
for the period ended December 31, 1997.

A GLIMPSE AT THE ECONOMY

During the twelve months under review, the U.S. economy continued its expansion.
In March, the Federal Reserve Board (the Fed) raised short-term interest rates
from 5.25% to 5.50%. This 25 basis point increase was the Fed's response to
tightening labor markets and an overall concern that possible wage demands could
lead to increased inflationary pressures. The rate hike had its desired effect.
Economic growth slowed slightly and interest rates stabilized, reversing their
general rising trend and ending the period down from where they began. The
30-year U.S. Treasury bond started the one-year period yielding 6.65%, and
finished at 5.93% on December 31, 1997.1

1. Source: Micropal, 1/14/98.

The Fed raised rates only once during 1997. Even with continued, strong economic
growth, there have been remarkably few signs of increased inflation. This low
inflation, combined with a balanced budget agreement between the President and
Congress, greatly contributed to a beneficial environment of falling interest
rates throughout the majority of the reporting period. However, consumer
spending strengthened toward the end of the period and the stock market --
despite a stumble at the end of October -- remained near all-time highs. Yet,
with the recent slowdown in the economies of our Asian trading partners, we
expect a moderate U.S. growth rate. Interest rates affect tax-free bonds
directly, in addition to helping shape the economic environment that determines
the general fiscal health of the municipalities issuing them. Higher interest
rates often generate higher yields for new bond issues, while lower rates
generally translate into a decrease in yields. Furthermore, a drop in rates
usually causes the value of existing bonds to increase, while a rise in rates
often has the opposite affect on those bonds' values.

THE TALE OF THE TORTOISE AND THE HARE

We can't promise that a positive economic environment will continue. It is
important to remember, then, that markets correct -- in our opinion, it is
desirable for them to do so. Consequently, investor concern about volatility and
the market's direction prompts us to comment on the importance of having your
own long-term investment strategy. And when you consider your investment
strategy, are you a tortoise or a hare?

We all know that familiar story: The tortoise won the race because he had a plan
and stuck to it, not allowing the hare's fast start to distract him. Much like
the tortoise, successful investors historically have achieved good results
through setting goals, diversifying their assets, and having patience. Wise
investors think like the tortoise. They know mutual fund investments are long
term, so daily market fluctuations and short-term volatility have minimal impact
on their overall investment goals. They understand that patience and discipline
are keys to successful investing. Remember, it's time -- not timing -- that
makes the difference.

We encourage you to discuss your financial goals with your investment
representative. He or she can address concerns about volatility and help you
diversify your investments and stay focused on the long term. Mutual funds offer
a level of diversification that is almost impossible for individual investors to
achieve on their own.

Regardless of the market's direction, Franklin Templeton's disciplined
investment strategy remains the same. All of our portfolio managers are
dedicated to providing shareholders like you with careful selection and constant
professional supervision. As always, we appreciate your support, welcome your
questions and comments, and look forward to serving your investment needs in the
years ahead.

Sincerely,

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

Thomas J. Kenny
Director
Franklin Municipal Bond Department

"Much like the tortoise, successful investors historically have achieved good
results through setting goals, diversifying their assets, and having patience."

NEW YORK UPDATE

New York enjoyed a growing economy, during the reporting period. The state's
improved economic climate was primarily due to the strong performance of the
financial services industry that is, for the most part, located in New York
City. Largely as a result of tax revenue collected from this sector, both the
City and state are looking forward to budget surpluses in 1997, $1.3 billion for
the City and $1.4 billion for the state. In addition to the strong performance
by Wall Street that aided the economy and is projected to continue into 1998,
New York City also benefited from increased tourism.1

The state's strong economy and budget surplus contributed directly to an upgrade
of New York state's debt rating by Standard & Poor's(R), from A- to A, during
the one-year period. Also contributing to the state's rating upgrade was
improved budget monitoring and management, continued spending restraint,
year-end budget surpluses in five of the past six years, and the allocation of
$927 million to an aggregate financial reserve to be used for unforseen state
funding needs in the future.1 Despite these positive developments, several
factors preclude an even higher rating for New York state's debt: New York has
been and will continue to be among the top five states in terms of high debt
burdens; its General Fund disbursements are budgeted to increase by 5.2% in
1998, mainly due to increased state aid to education; and its cutting of
business, personal income and property gains taxes likely will result in a
decrease in state revenues.2 Yet, these factors should not overshadow the
positive developments brought about by the state's diverse and growing economy,
and its improved fiscal management.

1. Standard & Poor's Credit Week Municipal; 7/21/97, 9/8/97.
2. Merrill Lynch Municipal Bond Credit Monthly, 8/29/97..

"The state's strong economy and budget surplus contributed directly to an
upgrade of New York state's debt rating by Standard & Poor's(R), from A- to A,
during the one-year period."

FRANKLIN NEW YORK
TAX-EXEMPT MONEY FUND

Your Fund's Objective: Seeks to provide high, current income exempt from regular
federal, New York state and New York City personal income taxes while seeking
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.1

1. An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution. There is no guarantee that the
$1.00 per share price will be maintained.

During the one-year reporting period, Franklin New York Tax-Exempt Money Fund
invested in high-quality, liquid securities. Although SEC guidelines allow
tax-exempt money funds to purchase lower-rated, second tier securities as well
as first tier securities, Franklin buys only high-rated, first tier securities
for its money market portfolios. In keeping with our conservative investment
philosophy, we participated in several first tier note issues. Notable purchases
included: New York City RANs, Suffolk TANs, Erie County RANs and Buffalo RANs.
The fund also bought Monroe County TECP and New York State Energy, Research &
Development Authority for Rochester Gas & Electric Weekly VRDNs. These purchases
helped to attain a 47.4 day average maturity for the fund's portfolio.

The national economy continued to perform extremely well during the reporting
period. The United States' moderate economic growth was characterized by rising
employment, low inflation and declining interest rates. Since the Federal
Reserve Board last changed interest rates in March of this year, it has left
rates unchanged and, in its latest meeting on December 16, again did not alter
rates. Looking forward, we do not anticipate any shifts in the underlying
economy that would cause the Federal Reserve to adjust short-term interest
rates, and we expect little variation in the performance of Franklin New York
Tax-Exempt Money Fund, in the near term.

Please remember, this discussion reflects our views and opinions as of December
31, 1997, the end of the reporting period. However, market and economic
conditions are changing constantly, which may affect our strategies and
portfolio holdings. Although historic performance is no guarantee of future
results, these insights may help you understand our investment and management
philosophy.

GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Franklin New York Tax-Exempt Money Fund
Periods ended 12/31/97

Seven-day effective yield1 3.36%
Seven-day annualized yield 3.30%
Taxable Equivalent yield2 6.09%

1. The seven-day effective yield assumes the compounding of daily dividends.
2. Taxable equivalent yield assumes the 1997 maximum combined federal, New York
state and New York City personal income tax bracket of 45.791% based on the
federal income tax rate of 39.6%. Annualized and effective yields are for the
seven days ended December 31, 1997. 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 brings the opposite.
The fund's manager agreed in advance to waive a portion of its management fees,
which reduces operating expenses and increases distribution rate, yield and
total return to shareholders. Without this waiver, the fund's annualized and
effective yields for the period would have been 3.13% and 3.18%, respectively.
The fee waiver may be discontinued at any time upon notice to the fund's Board
of Trustees.

Past performance is not predictive of future results.

You may find a complete listing of the fund's portfolio holdings including the
number of shares and dollar value beginning on page 30 of this report.

What is a RAN?

Like many short-term government debt instruments, a Revenue Anticipation Note is
widely known by its acronym, RAN. A RAN is a short-term obligation of a
municipal government. As its name implies, the municipality issuing a Revenue
Anticipation Note borrows funds against anticipated revenues, such as a sales
tax, in order to finance current expenditures. As soon as the issuer receives
the expected revenues, it uses that money to pay off the RAN.

Note: TANs, TECPs and VRDNs, which are mentioned less frequently than RANs in
regard to purchases by the fund, are also acronyms for other types of short-term
government debt instruments.

FRANKLIN NEW YORK INSURED
TAX-FREE INCOME FUND

Your Fund's Objective: Seeks to provide high, current income exempt from regular
federal, New York state and New York City personal income taxes while seeking
preservation of capital by investing primarily in a portfolio of insured New
York municipal securities.1,2

1. For investors subject to the 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.
2. Fund shares are not insured by any U.S. or other government agency are
subject to market risk and will fluctuate in value. Insurance relates only to
the payment of principal and interest on the portfolio's securities, and the
terms of the insurance as outlined in the prospectus. No representation is made
as to any issuer's ability to meet its commitments.

During the one-year reporting period, the general fall in interest rates led to
a greater number of municipal bonds being prerefunded. When a tax-free bond is
prerefunded, it is paid-off at its first call date by the proceeds from the sale
of a new municipal bond issue that usually offers a lower interest rate. Using
this refinancing method, a municipality can reduce its interest expense, by
replacing higher-yielding bond issues with lower-yielding ones. Money derived
from the sale of the refinancing issue is normally invested in U.S. Treasuries,
which will mature upon the now prerefunded bond's first call date and be used to
pay off its prior financings. Because the prerefunded bond now will have a
shorter life and is also usually backed by U.S. Treasuries, which enjoy the
highest of credit ratings, the value of a municipal bond goes up when it is
prerefunded. However, as a prerefunded bond approaches its call date, its value
decreases as its premium falls to near its call price.

We attempted to realize the greatest gain possible on those municipal bonds we
owned that were prerefunded, by selling them before they reached their call
date. As a result, the fund significantly reduced its exposure to prerefunded
bonds, and at one point had reduced its position to almost zero. However with
interest rates trending downward over the reporting period, more municipalities
engaged in refinancing, and the fund ended the period with 9.2% in prerefunded
bonds. The fund holds $20 million of New York City Municipal Water 6.20s, which
were prerefunded and will be paid off in 2002. In addition to selling
prerefunded bonds, we further reduced our number of positions in different
securities, by selling bonds that had been purchased just after the fund's
inception. As a result of these sales, the fund's net positions decreased.

Using the proceeds from the securities we sold, we purchased current coupon
bonds with longer call protection and consequently an income stream with longer
protection. Because interest rates fell during the period and the new bonds
bought by the fund offered a lower interest rate than the prerefunded issues
sold, the fund likely will need to reduce its dividend in the future. However,
we continue to manage New York Insured Tax-Free Income Fund with the intention
of protecting its share value and maintaining its competitive yield. We believe
our conservative investment approach, shunning of risky derivative investments
and purchases of current coupon bonds with long call protections, will benefit
our shareholders.

Franklin New York Insured Tax-Free Income Fund
Portfolio Breakdown on 12/31/97

% of Total
Long-Term
Sector Investments
Transportation 22.6%
Utilities 22.2%
Education 19.3%
Hospitals 9.4%
Prerefunded 9.2%
Health Care 6.1%
General Obligation 5.3%
Other Revenue 5.1%
Certificates of Participation 0.8%

For a complete list of portfolio holdings, please see page 34.

"We attempted to realize the greatest gain possible on those municipal bonds we
owned that were prerefunded, by selling them before they reached their call
date."

PERFORMANCE SUMMARY

CLASS I

Franklin New York Insured Tax-Free Income Fund - Class I, share price, as
measured by net asset value, increased 37 cents, from $11.29 on December 31,
1996, to $11.66 on December 31, 1997. During the twelve-month reporting period,
the fund paid income distributions totaling 58.8 cents ($0.588) per share.
Distributions will vary based on the earnings of the fund's portfolio, and past
distributions are not predictive of future trends.

Based on an annualization of the current monthly per share dividend of 4.9 cents
($0.049) and the maximum offering price of $12.18 on December 31, 1997, your
fund's distribution rate was 4.83%. This tax-free rate is generally higher than
the after-tax return on a comparable taxable investment. For example, an
investor in the maximum combined federal, New York state and New York City
personal income tax bracket, would have to earn 8.91% from a taxable investment
to match the fund's tax-free distribution rate. Likewise, an investor in the
maximum combined federal and New York state personal income tax bracket would
need to earn 8.58% from a taxable investment to match the fund's tax-free
distribution rate.

The graph on page 12 compares the performance of Franklin New York Insured
Tax-Free Income Fund - Class I with that of the Lehman Brother's Municipal Bond
Index, and the Consumer Price Index (CPI). As you can see, the fund's
performance exceeded the increase in the CPI, which means your investment
returns have surpassed the rate of inflation, a primary goal of any investment.
Although your fund shares have underperformed the Lehman Brothers Municipal Bond
Index, an unmanaged market index has inherent performance differentials in
comparison with any fund. It does not pay management fees to cover salaries of
securities analysts or portfolio managers, or pay commissions or market spreads
to buy and sell securities. Unlike an index, mutual funds are never 100% fully
invested because they need cash on hand to redeem shares. In addition, the
fund's performance includes the maximum initial sales charge, all fund expenses
and account fees. If operating expenses such as Franklin New York Insured
Tax-Free Income Fund's had been applied to the index, its performance would have
been lower. Additionally, the index includes more than 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 one cannot invest in it directly.

GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Franklin New York Insured
Tax-Free Income Fund
Class I
Dividend Distributions

1/1/97 - 12/31/97*

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

GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Franklin New York Insured Tax-Free Income Fund - Class I
Periods ended 12/31/97

Since
Inception
1-Year 5-Year (5/1/91)
Cumulative Total Return1 8.77% 40.77% 64.82%
Average Annual Total Return2 4.16% 6.15% 7.09%
Distribution Rate3 4.83%
Taxable Equivalent
Distribution Rate4 8.91%
30-Day Standardized Yield5 4.11%
Taxable Equivalent Yield4 7.58%

1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the current, maximum 4.25%
initial sales charge.
3. Distribution rate is based on an annualization of the current 4.9 cents per
share monthly dividend and the maximum offering price of $12.18 on December 31,
1997.
4. Taxable equivalent distribution rate and yield assume the 1997 maximum
combined federal, New York state and New York City personal income tax bracket
of 45.791%, 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, 1997.
Prior to July 1, 1994, fund shares were offered at a lower initial sales charge
with dividends reinvested at the offering price; thus, actual total returns
would differ. Effective May 1, 1994, the fund eliminated the sales charge on
reinvested dividends and implemented a rule 12b-1 plan, which affects subsequent
performance. Past expense reductions by the fund's manager increased the fund's
total returns. 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.

GRAPHIC MATERIAL 4 OMITTED - SEE APPENDIX AT END OF DOCUMENT

CLASS II

Franklin New York Insured Tax-Free Income Fund - Class II, share price, as
measured by net asset value, increased 38 cents, from $11.37 on December 31,
1996, to $11.75 on December 31, 1997. During the twelve-month reporting period,
the fund paid income distributions totaling 52.19 cents ($0.5219) per share.
Distributions vary based on the earnings of the fund's portfolio, and past
distributions are not necessarily predictive of future trends.

Based on an annualization of the current monthly dividend of 4.35 cents
($0.0435) per share and the offering price of $11.87 on December 31, 1997, your
fund's distribution rate was 4.40%. 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, would have to earn 8.12% from a taxable investment to match the fund's
tax-free distribution rate. Likewise, an investor in the maximum combined
federal and New York state personal income tax bracket would need to earn 7.82%
from a taxable investment to match the fund's tax-free distribution rate.

The graph on page 16 compares the performance of Franklin New York Insured
Tax-Free Income Fund - Class II with that of the Lehman Brother's Municipal Bond
Index, and the Consumer Price Index (CPI). As you can see, the fund's
performance has exceeded the increase in the Consumer Price Index (CPI), keeping
your purchasing power well ahead of inflation -- a primary goal of any
investment. Although your fund shares have underperformed the Lehman Brothers
Municipal Bond Index, an unmanaged market index has inherent performance
differentials in comparison with any fund. It does not pay management fees to
cover salaries of securities analysts or portfolio managers, or pay commissions
or market spreads to buy and sell securities. Un-like an index, mutual funds are
never 100% invested because they need cash on hand to redeem shares. In
addition, the fund's performance includes the maximum initial sales charge all
fund expenses and account fees. If operating expenses such as Franklin New York
Insured Tax-Free Income Fund's had been applied to the index, its performance
would have been lower. Additionally, the index includes more than 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 one cannot invest in it directly.

Franklin New York Insured Tax-Free Income Fund Class II
Dividend Distributions

1/1/97 - 12/31/97*

Dividend
Month per share
January 4.33 cents
February 4.33 cents
March 4.33 cents
April 4.36 cents
May 4.36 cents
June 4.36 cents
July 4.36 cents
August 4.36 cents
September 4.35 cents
October 4.35 cents
November 4.35 cents
December 4.41 cents**
Total 52.25 cents

*Assumes shares were purchased and held for the entire accrual period. Since
dividends accrue daily, your actual distributions will vary depending on the
date you purchased your shares and any account activity during the month. Income
distributions include all accrued income earned by the fund during the reporting
period.
**The December dividend includes both a regular dividend of 4.35 cents ($0.0435)
per share and an adjustment of +.06 cents to reconcile the 12b-1 fee
differential between Class I and Class II shares.

GRAPHIC MATERIAL 5 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Franklin New York Insured Tax-Free Income Fund - Class II
Periods ended 12/31/97

Since
(5/1/95)
1-Year Inception
Cumulative Total Return1 8.17% 22.25%
Average Annual Total Return2 6.15% 7.41%
Distribution Rate3 4.40%
Taxable Equivalent Distribution Rate4 8.12%
30-Day Standardized Yield5 3.70%
Taxable Equivalent Yield4 6.83%

1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the 1.0% initial sales
charge and 1.0% contingent deferred sales charge applicable to shares redeemed
within 18 months of investment.
3. Distribution rate is based on an annualization of the current 4.35 cents per
share monthly dividend and the maximum offering price of $11.87 on December 31,
1997.
4. Taxable equivalent distribution rate and yield assume the 1997 maximum
combined federal, New York state and New York City personal income tax bracket
of 45.791%, 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, 1997.
Past expense reductions by the fund's manager increased the fund's total
returns. 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.

You may find a complete listing of the fund's portfolio holdings including the
number of shares and dollar value beginning on page 34 of this report.

Franklin New York Intermediate-Term
Tax-Free Income Fund
Portfolio Breakdown on 12/31/97

% of Total
Long-Term
Sector Investments
General Obligation 27.8%
Other Revenue 13.1%
Hospitals 12.5%
Transportation 10.5%
Education 10.1%
Housing 9.7%
Certificates of Participation 7.7%
Utilities 5.7%
Prerefunded 2.9%

For a complete list of portfolio holdings, please see page 38.

FRANKLIN NEW YORK INTERMEDIATE-TERM TAX-FREE INCOME FUND

Your Fund's Objective: Seeks to provide high, current income exempt from regular
federal, New York state and New York City personal income taxes while seeking
preservation of capital by investing 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 10 years.1

During the reporting period, the fund made several new purchases. The primary
source for funding these new purchases was an influx of money, as the fund's
assets grew from $44.8 to $58.9 million over the one-year period. In addition,
the fund also increased its pool of capital to invest with by selling bonds from
its portfolio that were prerefunded in the previous year. When a bond is
prerefunded it will be replaced at its first call date by another bond issued by
its municipality that will pay a lower yield. This refinancing method allows a
municipal government to lower its borrowing cost, and it also increases the
value of the prerefunded bond, as its debt will almost certainly be paid off
early. As the date approaches when the prerefunded bond's debt will be retired,
however, the premium people are willing to pay for it decreases because it will
soon cease producing income. As a result, we sought to sell our prerefunded
bonds before they approached their first call date, and invested the proceeds,
along with other inflows.

In an effort to protect the fund's income earning potential we bought bonds with
longer call protections than the prerefunded bonds we sold. Since a bond cannot
be prerefunded before its first call date, these purchases should help ensure a
fairly stable dividend for the Franklin New York Intermediate-Term Tax-Free
Income Fund going into the future. Among the bonds we purchased were: New York
City GOs, New York State Dormitory Authority, New York State Urban Development
Corporation, Metropolitan Transportation Authority and other New York state
credits. The fund's largest holding continues to be New York City General
Obligation bonds. In our purchases we concentrated on buying insured bonds. Many
of the new bonds entering the New York market were insured, and because of the
large number of these issues, their yields were relatively competitive with
lower-rated, non-insured bonds.

GRAPHIC MATERIAL 6 OMITTED - SEE APPENDIX AT END OF DOCUMENT

GRAPHIC MATERIAL 7 OMITTED - SEE APPENDIX AT END OF DOCUMENT

PERFORMANCE SUMMARY

The share price of Franklin New York Intermediate-Term Tax-Free Income Fund as
measured by net asset value, increased 34 cents from, $10.28 on December 31,
1996, to $10.62 on December 31, 1997. During the twelve-month reporting period,
the fund paid income distributions totaling 55.2 cents ($0.552) per share.
Distributions will vary based on the earnings of the fund's portfolio, and past
distributions are not predictive of future trends.

Based on an annualization of the current monthly per share dividend of 4.6 cents
($0.046) and the maximum offering price of $10.86 on December 31, 1997, your
fund's distribution rate was 5.08%. 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, would have to earn 9.37% from a taxable investment
to match the fund's tax-free distribution rate. Likewise an investor in the
maximum combined federal and New York state personal income tax bracket would
need to earn 9.03% from a taxable investment to match the fund's tax-free
distribution rate.

As illustrated by the chart on page 22, your fund's performance has exceeded the
increase in 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 an index,
mutual funds are never 100% invested because they need cash on hand to redeem
shares. In addition, the performance shown for the fund includes the maximum
initial sales charge, all fund expenses and account fees. If operating expenses
such as Franklin New York Intermediate-Term Tax-Free Income Fund's had been
applied to the index, its performance would have been lower. Please remember
that an index is simply a measure of performance and one cannot invest in it
directly.

Franklin New York Intermediate-Term
Tax-Free Income Fund
Dividend Distributions

1/1/97 - 12/31/97*

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 8 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Past performance is not predictive of future results.

You may find a complete listing of the Fund's portfolio holdings including the
number of shares and dollar value beginning on page 38 of this report.

Franklin New York Intermediate-Term Tax-Free Income Fund
Periods ended 12/31/97

Since
Inception
1-Year 5-Year (9/23/92)
Cumulative Total Return1 8.89% 35.60% 38.45%
Average Annual Total Return2 6.41% 5.79% 5.91%
Distribution Rate3 5.08%
Taxable Equivalent
Distribution Rate4 9.37%
30-Day Standardized Yield5 4.31%
Taxable Equivalent Yield4 7.95%

1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the maximum 2.25% initial
sales charge.
3. Distribution rate is based on an annualization of the current 4.6 cents per
share monthly dividend and the maximum offering price of $10.86 on December 31,
1997.
4. Taxable equivalent distribution rate and yield assume the 1997 maximum
combined federal, New York state and New York City personal income tax bracket
of 45.791%, 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, 1997.
The fund's manager agreed in advance to waive a portion of its management fees,
which reduces operating expenses and increases distribution rate, yield and
total return to shareholders. Without this waiver, the fund's distribution rate
and total return would have been lower, and yield for the period would have been
3.97%. The fee waiver may be discontinued at any time upon notice to the fund's
Board of Trustees.
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.

GLOSSARY OF INVESTMENT TERMS

Average Annual Total Return: The average annual change in value of an investment
over the periods indicated. Unless otherwise stated, figures shown in this
report include sales charges.

Discount: Amount by which a bond sells below its face (par) value. For instance,
a bond with a $1,000 face value that sells for $900 would have a $100 discount.

Call Protection: The length of time during which a bond cannot be redeemed by
its issuer.

Coupon: A bond's interest rate that the issuer promises to pay to the holder
until the bond matures.

Cumulative Total Return: Measures the change in value of an investment over the
periods indicated. Unless otherwise stated, figures shown in this report exclude
sales charges.

Current Coupon Bond: A bond with a coupon rate that is within half a percentage
point of current market interest rates. See also Full Coupon Bond.

Full Coupon Bond: A bond with a coupon rate that is near or above current market
interest rates. See also Current Coupon Bond.

High Grade Bond/High-Quality Bond: A bond rated AAA or AA by Standard & Poor's
or Aaa or Aa by Moody's Investors Service - two national credit-rating agencies.

Investment Grade Bond: A bond with a rating of AAA to BBB, usually within the
top four rating categories assigned to bonds.

Premium: Amount by which a bond sells above its face (par) value. For instance,
a bond with a $1,000 face value that sells for a $1,100 would have a $100
premium.

Prerefunded Bond: A bond that will be paid off at its first call date with
proceeds of the sale of a second bond carrying a lower interest rate. The
proceeds generally are invested in U.S. Treasuries set to mature at the original
bond's first call date. When a bond is prerefunded, its premium rises, and then
falls to par value as the refunding date approaches.

Par Value: The face value or amount at which a security will be redeemed at
maturity - typically $1,000 for a bond.

Yield Spread: The relative yield differential between lower- and higher-quality
issues. Normally, lower-quality issues provide higher yields to compensate
investors for added credit risk.

MUNICIPAL BOND RATINGS

Moody's

Aaa: Best quality. They carry the smallest degree of investment risk and
generally are referred to as "gilt-edged." Interest payments are protected by a
large or exceptionally stable margin, and principal is secure. Although the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.

Aa: High quality by all standards. Together with the Aaa group, they comprise
what generally are known as high-grade bonds. Aa bonds are rated lower than Aaa
because margins of protection may not be as large, fluctuation of protective
elements may be of greater amplitude, or there may be other elements which make
the long-term risks appear larger.

A: Possess many favorable investment attributes and are considered upper
medium-grade obligations. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a susceptibility
to impairment sometime in the future.

Baa: Medium-grade obligations, i.e., they are neither highly protected nor
poorly secured. Interest payments and principal security appear adequate for the
present, but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time.

Ba: Contain speculative elements. Often the protection of interest and principal
payments may be very moderate and, thereby, not well safeguarded during both
good and bad times over the future. Uncertainty of position characterizes bonds
in this class.

B: Generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the contract
over any long period of time may be small.

Caa: Poor standing. Such issues may be in default, or elements of danger with
respect to principal or interest may be present.

Ca: Obligations that are highly speculative. Such issues are often in default or
have other marked shortcomings.

C: Lowest-rated class of bonds. Issues rated C can be regarded as having
extremely poor prospects of ever attaining any real investment standing.

S&P(R)

AAA: The highest rating assigned by S&P to a debt obligation and indicates the
ultimate degree of protection as to principal and interest.

AA: Also qualify as high-grade obligations, and, in the majority of instances,
differ from AAA issues only in a small degree.

A: Generally regarded as upper medium-grade. They have considerable investment
strength but are not entirely free from adverse effects of changes in economic
and trade conditions. Interest and principal are regarded as safe.

BBB: Regarded as having an adequate capacity to pay principal and interest.
Whereas they normally exhibit adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity to pay principal and interest for bonds in this category than for bonds
in the A category.

BB, B, CCC, CC: Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligations. BB
indicates the lowest degree of speculation and CC the highest degree of
speculation. While such bonds likely will have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

C: Reserved for income bonds on which no interest is being paid.

D: Debt rated "D" is in default and payment of interest and/or repayment of
principal is in arrears.

FRANKLIN NEW YORK TAX-FREE TRUST
Financial Highlights

Franklin New York Tax-Exempt Money Fund
<TABLE>
<CAPTION>

Year Ended December 31,
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year.................... $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income................................ .03 .03 .03 .02 .02
Less distributions from:
Net investment income................................ (.03) (.03) (.03) (.02) (.02)
Net asset value, end of year.......................... $1.00 $1.00 $1.00 $1.00 $1.00

Total return ........................................ 3.01% 2.79% 3.11% 2.11% 1.67%

Ratios/supplemental data
Net assets, end of year (000's) ...................... $63,720 $59,178 $61,079 $64,835 $50,317
Ratios to average net assets:
Expenses ............................................ .60% .60% .60% .60% .63%
Expenses excluding waiver and payments by affiliate . 81% .86% .85% .93% .97%
Net investment income ............................... 2.97% 2.75% 3.06% 2.12% 1.68%

</TABLE>

See notes to financial statements.

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. 5

FRANKLIN NEW YORK TAX-FREE TRUST
Statement of Investments, December 31, 1997
<TABLE>
<CAPTION>

PRINCIPAL
Franklin New York Tax-Exempt Money Fund AMOUNT VALUE
<S> <C> <C>
Investments 104.1%

a Babylon, Town of, IDA, IDR, General Microwave Corp. Facility, Series 1984,

Weekly VRDN and Put, 3.60%, 10/01/99 ....................................................... $ 100,000 $ 100,000
Brentwood Unified Free School District TAN, 4.25%, 6/30/98 ............................... 2,000,000 2,003,225
Buffalo GO RAN, 4.40%, 8/5/98............................................................. 1,000,000 1,003,349
Erie County RAN, Series A, 4.50%, 6/25/98 ................................................ 2,000,000 2,006,461
a Great Neck North, Water Authority System Revenue, Series A,
FGIC Insured, Weekly VRDN and Put, 3.70%, 1/01/20 ......................................... 1,500,000 1,500,000
Monroe County, TECP, 3.60%, 5/15/98 ...................................................... 2,000,000 2,000,000
a Nassau IDA, Research Facility Revenue, Cold Spring Harbor Laboratory
Project,Daily VRDN and Put, 4.85%, 7/01/23 ................................................ 600,000 600,000
New York City GO,
RAN, Series A, 4.50%, 6/30/98 ............................................................ 1,000,000 1,003,607
a Sub-Series A-8, Daily VRDN and Put, 5.10%, 8/01/17 ....................................... 700,000 700,000
a New York City HDC, Mortgage Revenue, Weekly VRDN and Put,
Columbus Apartments, Series A, 3.55%, 3/15/25 ............................................ 1,600,000 1,600,000
Parkgate Tower No. 1, 3.60%, 12/01/07 .................................................... 1,195,000 1,195,000
a New York City Health & Hospital Corp., Revenue Health System,
Series D, Weekly VRDN and Put, 3.50%, 2/15/26 ............................................. 1,500,000 1,500,000
a New York City IDA, IDR, Brooklyn Navy Yard, Cogeneration Project,
Series A, Weekly VRDN and Put, 4.25%, 7/01/29 ............................................. 1,000,000 1,000,000
a New York City IDA, Various Civic Facilities,
American Civil Liberties, Weekly VRDN and Put, 3.70%, 6/01/12 ............................ 1,000,000 1,000,000
Children's Oncology Society, Weekly VRDN and Put, 3.50%, 5/01/21 ......................... 1,100,000 1,100,000
National Audubon Society, Daily VRDN and Put, 4.75%, 12/01/14 ............................ 500,000 500,000
a New York City Municipal Assistance Corp., Weekly VRDN and Put, 3.55%, 7/01/08
Sub-Series K-1............................................................................ 1,200,000 1,200,000
Sub-Series K-2............................................................................ 1,800,000 1,800,000
a New York City Municipal Water Finance Authority, Water and Sewer Systems Revenue, Series C,
FGIC Insured, Daily VRDN and Put, 5.10%, 6/15/23 ........................................ 1,500,000 1,500,000
a New York City Tri-Cultural Resources Revenue, American Museum of Natural History,
Series B, MBIA Insured, Weekly VRDN and Put 3.55%, 4/01/21 .............................. 1,200,000 1,200,000
New York Dormitory Authority Revenues,
a Cornell University, Series B, Daily VRDN and Put, 4.75%, 7/01/25 ......................... 300,000 300,000
a Metropolitan Museum of Art, Series A, MBIA Insured, Weekly VRDN and Put, 3.50%, 7/01/15 .. 1,300,000 1,300,000
a Metropolitan Museum of Art, Series B, Weekly VRDN and Put, 3.50%, 7/01/23 ................ 1,300,000 1,300,000
Millard Fillmore Hospital, AMBAC Insured, 4.25%, 2/01/98 ................................. 1,395,000 1,395,627
a New York Public Library, Series B, Weekly VRDN and Put, 3.50%, 7/01/22 ................... 400,000 400,000
a Oxford University Press, Inc., Daily VRDN and Put, 5.10%, 7/01/23 ........................ 1,000,000 1,000,000
a Oxford University Press, Inc., Weekly VRDN and Put, 3.55%, 7/01/25 ....................... 2,000,000 2,000,000
New York State Dormitory Authority, Sloan Kettering, TECP, 1/29/98
3.65%..................................................................................... 1,900,000 1,900,000
3.70%..................................................................................... 1,000,000 1,000,000
a New York State Energy, Research and Development Authority, PCR,
Central Hudson Gas & Electric Co. Project, Weekly VRDN and Put, 3.50%, 11/01/20 .......... 500,000 500,000
Niagara Mohawk Power Corp., Series A, Daily VRDN and Put, 4.50%, 7/01/15 ................. 400,000 400,000
Niagara Mohawk Power Corp., Series B, Daily VRDN and Put, 4.95%, 12/01/25 ................ 1,200,000 1,200,000
Refunding, New York Electric & Gas, Daily VRDN and Put, 5.00%, 2/01/29 ................... 1,200,000 1,200,000
Refunding, Orange and Rockland Project, Series A, FGIC Insured,
Weekly VRDN and Put, 3.55%, 10/01/14 ...................................................... 1,000,000 1,000,000
Refunding, Orange and Rockland Utilities, Series A, AMBAC Insured,
Weekly VRDN and Put, 3.55%, 8/01/15 ....................................................... 1,350,000 1,350,000
Rochester Gas & Electric Corp., Series C, MBIA Insured,
Weekly VRDN and Put, 3.55%, 8/01/32 ....................................................... 1,500,000 1,500,000
New York State Environmental Facility Corp., TECP, 3.70%, 2/20/98 ........................ 1,000,000 1,000,000
New York State Environmental Quality, TECP, 3.75%, 2/12/98 ............................... 2,000,000 2,000,000
a New York State HFA, Normandie Court I Project, Weekly VRDN and Put, 3.50%, 5/15/15 ....... 2,100,000 2,100,000
a New York State Local Government Assistance Corp., Series G,
Weekly VRDN and Put, 3.55%, 4/01/25 ..................................................... $2,100,000 $ 2,100,000
New York State Medical Care Facilities, Finance Agency Revenue,
Mental Health Services Facilities, 7.70%, 2/15/98 ........................................ 635,000 650,638
a Pooled Equipment Loan Program II, Series A, Weekly VRDN and Put, 3.65%, 11/01/03 ......... 2,130,000 2,130,000
New York State, TECP, 3.75%, 1/20/98 ..................................................... 2,000,000 2,000,000
New York State Tollway Authority, General Revenue, Series C,
FGIC Insured, 5.00%, 1/01/98 ............................................................ 1,000,000 1,000,000
a Niagara County IDA, IDR, Pyron Corp. Project, Weekly VRDN and Put, 3.75%, 11/01/04 ....... 760,000 760,000
North Country Development Authority, Solid Waste Management
System Revenue, FSA Insured, 4.25%, 5/15/98 ............................................... 330,000 330,355
Puerto Rico Commonwealth, TRAN, 4.50%, 7/30/98 ........................................... 2,000,000 2,008,453
Suffolk County, TAN, 4.25%
9/10/98 .................................................................................. 1,000,000 1,002,859
b Series RA-1, 8/13/98 ..................................................................... 2,000,000 2,007,320
a Suffolk County Water Authority BAN, Weekly VRDN and put, 3.60%, 2/8/01.................... 1,500,000 1,500,000
a Suffolk IDA, IDR, Refunding, Phototronics Corp. Facility,
Daily VRDN and Weekly Put, 4.95%, 1/01/98 ................................................. 595,000 595,000
a Syracuse IDA, Civic Facilities Revenue, Multi-Modal,
Syracuse University Project, Daily VRDN and Put, 4.75%, 3/01/23 ........................... 400,000 400,000
a Triborough Bridge and Tunnel Authority, Special Obligation,
FGIC Insured, Weekly VRDN and Put, 3.55%, 1/01/24 ............................................ 2,500,000 2,500,000
-------------
Total Investments (Cost $66,341,894) 104.1% .............................................. 66,341,894
Other Assets, less Liabilities (4.1%) .................................................... (2,622,129)
-------------
Net Assets 100.0% ........................................................................ $63,719,765
=============

</TABLE>
See glossary of terms on page 40.

aVariable rate demand notes (VRDNs) are tax-exempt obligations which contain a
floating or variable interest rate adjustment formula and an unconditional right
of demand to receive payment of the principal balance plus accrued interest at
specified dates.

bSufficient collateral has been segregated for securities traded on a
when-issued or delayed delivery basis.

FRANKLIN NEW YORK TAX-FREE TRUST
Financial Highlights

Franklin New York Insured Tax-Free Income Fund

Class I
Year Ended December 31,
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year $11.29 $ 11.41 $ 10.16 $ 11.68 $ 10.80
Income from investment operations:
Net investment income .58 .59 .59 .59 .60
Net realized and unrealized gains (losses) .38 (.12) 1.25 (1.52) .88
Total from investment operations .96 .47 1.84 (.93) 1.48
Less distributions from:
Net investment income (.59) (.59) (.59) (.59) (.60)
Net asset value, end of year $11.66 $11.29 $11.41 $10.16 $11.68

Total return* 8.77% 4.30% 18.46% (8.19%) 13.79%

Ratios/supplemental data
Net assets, end of year (000's) $260,990 $261,068 $256,171 $225,061 $263,647
Ratios to average net assets:
Expenses .71% .65% .65% .56% .50%
Expenses excluding waiver and payments by affiliate .71% .70% .73% .71% .65%
Net investment income 5.09% 5.25% 5.38% 5.48% 5.28%
Portfolio turnover rate 26.85% 15.09% 22.99% 25.66% 5.38%

</TABLE>

*Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized. Prior to May 1, 1994, dividends from net
investment income were reinvested at the offering price.
<TABLE>
<CAPTION>

Class II
Year Ended December 31,
1997 19962 19951,2
<S> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year $11.37 $11.46 $10.85
Income from investment operations:
Net investment income .52 .533 .36
Net realized and unrealized gains (losses) .38 (.10) .59
Total from investment operations .90 .43 .95
Less distributions from:
Net investment income (.52) (.52) (.34)
Net asset value, end of year $11.75 $11.37 $11.46

Total return* 8.17% 3.87% 8.92%

Ratios/supplemental data
Net assets, end of year (000's) $5,601 $4,137 $696
Ratios to average net assets:
Expenses 1.27% 1.22% 1.23%**
Expenses excluding waiver and payments by affiliate 1.27% 1.27% 1.30%**
Net investment income 4.63% 4.69% 4.74%**
Portfolio turnover rate 26.85% 15.09% 22.99%

*Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized.
**Annualized
1For the period May 1, 1995 (effective date) to December 31, 1995.
2Ratio has been calculated using average daily net assets during the period.
3Ratio has been calculated using average daily outstanding shares during the period.

</TABLE>

See notes to financial statements.

FRANKLIN NEW YORK TAX-FREE TRUST
Statement of Investments, December 31, 1997
<TABLE>
<CAPTION>

PRINCIPAL
Franklin New York Insured Tax-Free Income Fund AMOUNT VALUE

<S> <C> <C>
a,dLong Term Investments 97.8%

Albany County GO, FGIC Insured, 5.85%, 6/01/12 ........................................... $ 1,000,000 $ 1,074,870
Albany Municipal Water Finance Authority, Water and Sewer System Revenue,
Refunding, Series A, FGIC Insured,
5.95%, 12/01/12 .......................................................................... 2,505,000 2,683,932
5.50%, 12/01/22 .......................................................................... 8,990,000 9,238,663
Amsterdam HDC, Mortgage Revenue, Refunding, MBIA Insured, 6.25%, 1/01/25 ................. 2,535,000 2,643,929
Battery Park City Authority, Series A, AMBAC Insured, 5.5%, 11/01/26 ..................... 1,000,000 1,032,860
Brookhaven GO, Series B, MBIA Insured, 7.00%, 5/01/09 .................................... 200,000 243,950
Broome County COP, Public Safety Facilities, MBIA Insured, 5.25%, 4/01/22 ................ 2,000,000 1,997,100
Buffalo and Fort Erie Public Bridge Authority, Toll Bridge System Revenue,
MBIA Insured, 5.75%, 1/01/25 .............................................................. 4,000,000 4,184,080
Buffalo GO, AMBAC Insured, Series E, 6.70%,
12/01/17.................................................................................. 360,000 409,975
12/01/18.................................................................................. 385,000 437,221
12/01/19.................................................................................. 410,000 465,612
Buffalo Municipal Water Finance Authority, Water System Revenue,
FGIC Insured, 6.10%, 7/01/26 ............................................................. 1,350,000 1,469,421
FSA Insured, 5.75%, 7/01/19 .............................................................. 2,500,000 2,603,200
Central Square School District, FGIC Insured, 6.50%, 6/15/09 ............................. 900,000 1,049,895
Dutchess County IDA, Civic Facilities Revenue, Bard College Project, AMBAC Insured,
5.50%, 6/01/17 ........................................................................... 2,315,000 2,410,447
5.375%, 6/01/27 .......................................................................... 2,000,000 2,024,560
Erie County GO, Series B, FGIC Insured, 5.625%, 6/15/20 .................................. 1,000,000 1,041,960
Hempstead Town IDA, Civic Facilities Revenue, Hofstra University Project,
MBIA Insured, 5.80%, 7/01/15 ............................................................ 1,340,000 1,434,550
Monroe County IDA Revenue, Civic Facilities, Nazareth College,
MBIA Insured, 6.00%, 6/01/20 ............................................................ 2,000,000 2,150,020
Mount Sinai Union Free School District, Refunding, AMBAC Insured, 6.20%, 2/15/13 ......... 1,055,000 1,216,056
Nassau County IDA, Civic Facilities Revenue, Hofstra University Project,
AMBAC Insured, 6.75%, 8/01/11 ........................................................... 1,150,000 1,261,217
New Rochelle GO, Series C, MBIA Insured, 6.25%,
3/15/22................................................................................... 390,000 422,698
3/15/23................................................................................... 530,000 574,435
3/15/24................................................................................... 555,000 601,531
New York City Municipal Water Finance Authority, Water and Sewer Systems Revenue,
Pre-refunded, Series C, AMBAC Insured, 6.20%, 6/15/21 .................................... 20,000,000 21,854,198
Series A, FGIC Insured, 6.75%, 6/15/16 ................................................... 505,000 546,844
New York City Trust, Cultural Resource Revenue,
American Museum of National History, Series A, MBIA Insured, 5.65%, 4/01/27 .............. 5,620,000 5,901,393
New York Botanical Garden, MBIA Insured, 5.75%, 7/01/16 .................................. 3,000,000 3,163,650
New York State Dormitory Authority Revenues,
Associated Children's, Inc., MBIA Insured, 7.60%, 7/01/18 ................................ 140,000 145,250
Brooklyn Law School, FSA Insured, 6.40%, 7/01/11 ......................................... 2,460,000 2,653,012
Children's Home, Series B, AMBAC Insured, 5.25%, 7/01/17 ................................. 1,000,000 1,003,410
Comsewogue Public Library, MBIA Insured, 6.05%, 7/01/24 .................................. 2,445,000 2,643,827
Hamilton College, MBIA Insured, 6.50%, 7/01/21 ........................................... 1,000,000 1,084,360
Hartwick College, MBIA Insured, 6.25%, 7/01/12 ........................................... 1,000,000 1,079,530
Ithaca College, AMBAC Insured, 5.25%, 7/01/17 ............................................ 1,000,000 1,003,410
Judicial Lease Facilities, Series B, Suffolk County, MBIA Insured, 7.00%, 4/15/16 ........ 2,780,000 3,060,530
Leake and Watts Services, Inc., MBIA Insured, 6.00%, 7/01/23 ............................. 1,890,000 2,027,479
Maimonides Medical Center, Series A, MBIA Insured, 5.75%, 8/01/24 ........................ 1,500,000 1,577,175
New York Public Library, Series A, MBIA Insured, 5.875%, 7/01/22 ......................... 1,000,000 1,042,890
New York University, FGIC Insured, 6.25%, 7/01/09 ........................................ 1,000,000 1,074,680
New York State Dormitory Authority Revenues, (cont.)
Oceanside Library, AMBAC Insured, 6.00%, 7/01/25 ......................................... $ 1,195,000 $ 1,282,510
Refunding, Ithaca College, MBIA Insured, 6.25%, 7/01/21 .................................. 1,500,000 1,593,975
Refunding, Marist College, MBIA Insured, 6.00%, 7/01/22 .................................. 1,000,000 1,058,660
Refunding, Mount Sinai School of Medicine, MBIA Insured, 6.75%, 7/01/15 .................. 2,500,000 2,727,500
Refunding, Pace University, MBIA Insured, 5.75%, 7/01/26 ................................. 4,500,000 4,780,035
Refunding, Rochester Institute of Technology, MBIA Insured, 5.25%, 7/01/22 ............... 1,000,000 998,620
Refunding, Siena College, MBIA Insured, 5.70%, 7/01/17 ................................... 2,000,000 2,117,600
Refunding, Wildwood Programs, Inc., MBIA Insured, 5.875%, 7/01/15 ........................ 1,000,000 1,074,950
Rochester University, MBIA Insured, 6.50%, 7/01/09 ....................................... 1,220,000 1,256,893
Rosalind & Joseph Nursing Home, AMBAC Insured, 5.60%, 2/01/27 ............................ 4,000,000 4,167,400
St. John's University, AMBAC Insured, 6.875%, 7/01/11 .................................... 1,000,000 1,097,040
St. John's University, MBIA Insured, 5.70%, 7/01/26 ...................................... 5,000,000 5,245,400
St. Vincent's Hospital and Medical Center, AMBAC Insured, 6.00%, 8/01/28 ................. 5,000,000 5,345,000
University of Rochester, Strong Health Facilities, MBIA Insured, 5.90%, 7/01/17 .......... 2,355,000 2,501,764
New York State Energy Research and Development Authority,
Electric Facilities Revenue, Consolidated Edison Co.
of New York, Inc. Project,
Refunding, Series A, AMBAC Insured, 6.10%, 8/15/20 ....................................... 5,000,000 5,430,000
Series A, MBIA Insured, 6.75%, 1/15/27 ................................................... 4,950,000 5,312,142
Series C, MBIA Insured, 7.25%, 11/01/24 .................................................. 210,000 217,602
New York State Energy Research and Development Authority,
Gas Facilities Revenue, Brooklyn Union Gas, Series A,
MBIA Insured, 6.75%, 2/01/24............................................................. 2,240,000 2,467,203
New York State Energy Research and Development Authority, PCR, Refunding,
Niagara Mohawk Power Corp., Series A, FGIC Insured, 6.625%, 10/01/13 ..................... 1,500,000 1,639,185
Niagara Mohawk Power Corp., Series A, FGIC Insured, 7.20%, 7/01/29 ....................... 5,000,000 5,811,650
Rochester Gas and Electric Project, Series A, MBIA Insured, 6.35%, 5/15/32 ............... 1,150,000 1,243,645
Rochester Gas and Electric Project, Series B, MBIA Insured, 6.50%, 5/15/32 ............... 1,000,000 1,091,420
New York State Environmental Facilities Corp., Water Facilities Revenue,
Refunding, Spring Valley Water Co., Inc. Project,
AMBAC Insured, 8/01/24,
Series A, 6.30%........................................................................... 2,000,000 2,167,020
Series B, 6.15%........................................................................... 3,000,000 3,225,660
New York State Medical Care Facilities, Finance Agency Revenue,
Long-Term Health Care, Series A, FSA Insured, 6.80%, 11/01/14 ............................ 6,735,000 7,453,086
Long-Term Health Care, Series B, FSAInsured, 6.45%, 11/01/14 ............................. 5,355,000 5,868,652
Long-Term Health Care, Series C, FSAInsured, 6.40%, 11/01/14 ............................. 4,245,000 4,643,903
Our Lady of Victory Hospital, Series A, AMBAC Insured, 6.625%, 11/01/16 .................. 1,000,000 1,096,890
Refunding, Hospital and Nursing Home Mortgage, Series C, MBIA Insured, 6.25%, 8/15/12..... 1,000,000 1,092,270
Refunding, St. Mary's Hospital Project, Series A, AMBAC Insured, 6.20%, 11/01/14.......... 1,495,000 1,652,483
Sisters of Charity Hospital, Series A, AMBAC Insured, 6.60%, 11/01/10 .................... 700,000 767,732
Sisters of Charity Hospital, Series A, AMBAC Insured, 6.625%, 11/01/18 ................... 1,500,000 1,645,335
New York State Power Authority Revenue and General Purpose,
Refunding, Series Z, FGIC Insured, 6.50%,1/01/19 ......................................... 2,000,000 2,184,860
Series AA, MBIA Insured, 6.25%, 1/01/23 .................................................. 3,000,000 3,205,740
Series Y, AMBAC Insured, 6.50%, 1/01/11 .................................................. 3,255,000 3,497,660
New York State Tollway Authority, General Revenue,
Series C, FGIC Insured, 6.00%, 1/01/25 .................................................. 13,975,000 14,976,449
Niagara County GO, Public Improvement, MBIA Insured, 6.00%,
7/15/18................................................................................... 500,000 537,680
7/15/19................................................................................... 510,000 548,434
Niagara County GO, Public Improvement, MBIA Insured, 6.00%, (cont.)
7/15/20................................................................................... $ 610,000 $ 655,970
7/15/21................................................................................... 645,000 693,607
Niagara Falls Bridge Commission Toll Revenue, Refunding, Series B,
FGIC Insured, 5.25%, 10/01/21............................................................ 10,000,000 9,985,600
Niagara Falls Public Improvement, MBIA Insured,
6.85%, 3/01/19 ........................................................................... 1,000,000 1,143,110
6.90%, 3/01/20 ........................................................................... 500,000 571,435
6.90%, 3/01/21 ........................................................................... 500,000 571,435
Niagara Falls Water Treatment Plant, MBIA Insured, 7.00%, 11/01/12 ....................... 1,200,000 1,365,480
Niagara Frontier Transportation Authority, Airport Revenue,
Greater Buffalo International Airport, AMBAC Insured, 4/01/24,
Series A, 6.25%........................................................................... 1,000,000 1,080,300
Series C, 6.00%........................................................................... 1,440,000 1,550,232
North Hempstead GO, Refunding, FGIC Insured, Series B, 6.40%,
4/01/16................................................................................... 1,065,000 1,246,646
4/01/15................................................................................... 1,000,000 1,170,090
Phelps-Clifton GO, Springs Central School District, AMBAC Insured, 5.65%, 6/15/13 ........ 1,355,000 1,434,959
Port Authority of New York and New Jersey, 6.50%,
Consolidated 71st Series, AMBAC Insured,1/15/26 .......................................... 1,000,000 1,069,970
Consolidated 71st Series, MBIA Insured,1/15/26 ........................................... 1,600,000 1,711,952
Consolidated 76th Series, AMBAC Insured,11/01/26 ......................................... 4,230,000 4,563,832
Puerto Rico Electric Power Authority, Power Revenue, Series R,
FSA Insured, 6.25%, 7/01/17.............................................................. 2,000,000 2,156,840
Rensselear County GO, AMBAC Insured, 6.70%, 2/15/11 ...................................... 810,000 964,508
Suffolk County GO, Public Improvement, FGIC Insured, Refunding, Series B, 6.20%,
5/01/11................................................................................... 500,000 537,560
5/01/13................................................................................... 500,000 536,540
Suffolk County Water Authority, Waterworks Revenue, AMBAC Insured,
Pre-Refunded, 7.10%, 6/01/10............................................................. 1,000,000 1,061,450
Triborough Bridge and Tunnel Authority Revenue,
General Purpose, Series P, FGIC Insured, 5.50%, 1/01/19 .................................. 1,435,000 1,441,113
General Purpose, Series X, AMBAC Insured, 6.50%, 1/01/19 ................................. 4,475,000 4,887,013
General Purpose, Series X, MBIA Insured, 6.50%, 1/01/19 .................................. 2,750,000 3,003,193
Refunding, General Purpose, Series Q, AMBAC Insured, 6.00%, 1/01/13 ...................... 1,500,000 1,533,405
Series B, General Purpose, MBIA Insured, 5.2%, 1/01/27 ................................... 9,110,000 9,125,032
Series T, MBIA Insured, Pre-Refunded, 7.00%, 1/01/20 ..................................... 1,100,000 1,209,912
-------------
Total Long Term Investments (Cost $242,085,907) .......................................... 260,829,052
-------------
a Short Term Investments .7%
New York City Municipal Water Finance Authority, Water and
Sewer Systems Revenue, FGIC Insured, Daily VRDN and Put,
Series G, 5.00%, 6/15/24 ................................................................. 700,000 700,000
Series 93-C, 5.10%, 6/15/22 .............................................................. 200,000 200,000
New York City Sub Series A, 5.10%,Daily VRDN and Put, 8/01/15 ............................ 800,000 800,000
-------------
Total Short Term Investments (Cost $1,700,000) ........................................... 1,700,000
-------------
Total Investments (Cost $243,785,907) 98.5% .............................................. 262,529,052
Other Assets, less Liabilities 1.5% ...................................................... 4,062,310
-------------
Net Assets 100.0% ........................................................................ $266,591,362
=============
</TABLE>
See glossary of terms on page 40.

See notes to financial statements.

FRANKLIN NEW YORK TAX-FREE TRUST
Financial Highlights

Franklin New York Intermediate-Term Tax-Free Income Fund
<TABLE>
<CAPTION>

Year Ended December 31,
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year $10.28 $10.40 $9.60 $10.68 $10.21
Income from investment operations:
Net investment income .54 .56 .55 .55 .48
Net realized and unrealized gains (losses) .35 (.12) .80 (1.10) .54
Total from investment operations .89 .44 1.35 (.55) 1.02
Less distributions from:
Net investment income (.55) (.56) (.55) (.53) (.55)
Net asset value, end of year $10.62 $10.28 $10.40 $9.60 $10.68

Total return* 8.89% 4.38% 14.31% (5.42%) 10.18%

Ratios/supplemental data
Net assets, end of year (000's) $58,916 $44,822 $43,229 $35,166 $31,162
Ratios to average net assets:
Expenses .45% .37% .33% .05% --
Expenses excluding waiver and payments by affiliate .82% .83% .83% .80% .73%
Net investment income 5.26% 5.47% 5.51% 5.57% 4.96%
Portfolio turnover rate 6.87% 24.67% 24.68% 188.38% 30.95%

</TABLE>
*Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized. Prior to May 1, 1994, dividends from net
investment income were reinvested at the offering price.

See notes to financial statements.

FRANKLIN NEW YORK TAX-FREE TRUST
Statement of Investments, December 31, 1997
<TABLE>
<CAPTION>

PRINCIPAL
Franklin New York Intermediate-Term Tax-Free Income Fund AMOUNT VALUE
<S> <C> <C>
a,d Long Term Investments 93.2%
Cortland County New York IDA, Civic Facility Revenue,

Cortland Memorial Hospital, Inc. Project, 6.15%, 7/01/02 ................................ $ 100,000 $ 103,999
Franklin County IDA, Lease Revenue, County Correctional Facility Project, 6.375%, 11/01/02 55,000 58,610
Guam Airport Authority Revenue, Refunding, Series A, 6.00%, 10/01/03 ..................... 260,000 275,995
Guam Power Authority Revenue, Series A, 6.00%, 10/01/04 .................................. 1,300,000 1,384,149
Housing New York Corporate Revenue, Refunding, 5.50%, 11/01/10 ........................... 2,000,000 2,054,780
Metropolitan Transportation Authority, New York Service Contract, Transportation Facilities,
Series O, 5.75%, 7/01/07 ................................................................ 500,000 537,825
New York City, GO,
Refunding, Series A, 6.375%, 8/01/05 ..................................................... 5,200,000 5,630,664
Refunding, Series B, 6.20%, 8/15/06 ...................................................... 1,000,000 1,104,010
Refunding, Series F, 6.00%, 8/01/12 ...................................................... 700,000 746,557
Series A, 5.25%, 8/01/10 ................................................................. 600,000 604,632
Series D, 5.40%, 8/01/11 ................................................................. 4,250,000 4,300,873
Series G, 5.75%, 10/15/10 ................................................................ 1,000,000 1,057,150
Series H, 7.00%, 2/01/06 ................................................................. 340,000 374,592
Series H, Pre-Refunded,7.00%, 2/01/06 .................................................... 1,160,000 1,292,669
New York City IDA, Civic Facility Revenue,
New York Blood Center, Inc. Project, ETM, 6.80%, 5/01/02 ................................. 260,000 276,089
USTA National Tennis Center Project, FSA Insured, 6.00%, 11/15/03 ........................ 1,875,000 2,051,588
USTA National Tennis Center Project, FSA Insured, 6.10%, 11/15/04 ........................ 1,675,000 1,855,465
New York State COP, Commissioner of General Services,
Executive Department, 6.50%, 3/01/00 .................................................... 4,010,000 4,201,879
New York State Dormitory Authority Revenue,
Department of Health, 6.25%, 7/01/04 ..................................................... 690,000 757,268
Department of Health, 6.30%, 7/01/05 ..................................................... 735,000 813,373
Refunding, City University, Series U, 6.25%, 7/01/02 ..................................... 100,000 107,667
Refunding, City University, Series U, 6.35%, 7/01/04 ..................................... 1,720,000 1,897,263
Refunding, Nyack Hospital, 6.00%, 7/01/06 ................................................ 2,000,000 2,129,800
Refunding, State University Educational Facilities, Series A, 5.25%, 5/15/15 ............. 2,000,000 2,062,120
b State Service Contract, Albany County, 5.25%, 4/01/12 .................................... 500,000 497,480
W.K. Nursing Home Corp., FHA Insured, 5.55%, 8/01/08 ..................................... 300,000 322,332
New York State HFA Revenue, Refunding, Health Facilities, Series A, 6.00%, 11/01/08 ...... 3,045,000 3,247,980
New York State Medical Care Facilities, Finance Agency Revenue,
5.70%, 2/15/05 ........................................................................... 1,500,000 1,630,230
Refunding,Huntington Hospital Mortgage Project, Series A, 5.90%, 11/01/04 ................ 475,000 503,063
New York State Tollway Authority,
General Revenue, Series A, 5.80%, 1/01/06 ................................................ 1,900,000 2,024,602
Service Contract Revenue, Refunding, Local Highway & Bridge, 5.25%, 4/01/10 .............. 550,000 559,768
New York State Urban Development Corp. Revenue,
Refunding, Correctional Facilities, 5.75%, 1/01/13 ....................................... 500,000 515,340
Youth Facilities, 5.75%, 4/01/10 ......................................................... 400,000 423,396
Youth Facilities, 5.875%, 4/01/10 ........................................................ 1,500,000 1,589,175
Northern Mariana Islands Commonwealth Ports Authority, Seaport Revenue, Series A,
5.85%, 10/01/03 .......................................................................... 410,000 422,214
5.95%, 10/01/04 .......................................................................... 430,000 444,633
6.05%, 10/01/05 .......................................................................... 460,000 477,480
6.15%, 10/01/06 .......................................................................... 485,000 505,220
Oneida-Herkimer New York Solid Waste Management Authority,
Solid Waste Systems Revenue, Refunding, 6.65%, 4/01/05 .................................. 125,000 134,754
Puerto Rico Commonwealth, GO, 6.00%, 7/01/05 ............................................. 1,000,000 1,105,510
Puerto Rico Electric Power Authority Revenue, Series T, 6.00%, 7/01/04 ................... $1,500,000 $ 1,632,375
Puerto Rico Industrial, Tourist, Educational, Medical,
and Environmental Control Facilities Financing Authority,
Hospital Revenue, Mennonite General Hospital Project, Series A, 6.375%, 7/01/06 ......... 2,000,000 2,159,560
Puerto Rico Municipal Finance Agency, Series A,
5.875%, 7/01/06 .......................................................................... 300,000 320,235
FSA Insured, 5.60%, 7/01/05 .............................................................. 300,000 324,333
United Nations Development Corp. New York Revenue,
ETM, Refunding, Series A, 5.70%, 7/01/02 ................................................ 350,000 371,259
-------------
Total Long Term Investments (Cost $51,291,043)............................................ 54,889,956
-------------
a Short Term Investments 5.6%
New York City Municipal Water Finance Authority,
Water and Sewer Systems Revenue, FGIC Insured,
Series C, Daily VRDN and Put, 5.10%, 6/15/23 ............................................. 2,000,000 2,000,000
Series C-93, Daily VRDN and Put, 5.10%, 6/15/22 .......................................... 400,000 400,000
Series G, Daily VRDN and Put, 5.00%, 6/15/24 ............................................. 200,000 200,000
New York State Energy Research and Development Authority PCR,
Refunding, New York Electric & Gas, Daily VRDN and Put, 5.00%, 2/01/29 ................... 700,000 700,000
-------------
Total Short Term Investments (Cost $3,300,000) ........................................... 3,300,000
-------------
Total Investments (Cost $54,591,043) 98.8% ............................................... 58,189,956
Other Assets, less Liabilities 1.2%....................................................... 726,246
-------------
Net Assets 100.0% ........................................................................ $58,916,202
=============

</TABLE>
See glossary of terms on page 40.

See notes to financial statements.

FRANKLIN NEW YORK TAX-FREE TRUST
Statement of Investments, December 31, 1997 (cont.)

Glossary of Terms

AMBAC - American Municipal Bond Assurance Corp.
BAN - Bond Anticipation Notes
COP - Certificate of Participation
ETM - Escrow To Maturity
FGIC - Financial Guaranty Insurance Co.
FHA - Federal Housing Authority/Agency
FSA - Financial Security Assistance (some of the securities shown as FSA
Insured were originally insured by Capital Guaranty Insurance Co.
(CGIC) which was acquired by FSA in 1995 and no longer does business
under this name).
GO - General Obligation

HDC - Housing Development Corp.
HFA - Housing Finance Authority/Agency
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
USTA - United States Tennis Association

FRANKLIN NEW YORK TAX-FREE TRUST
Financial Statements

Statements of Assets and Liabilities
December 31, 1997
<TABLE>
<CAPTION>

Franklin New York Franklin New York Franklin New York
Tax-Exempt Insured Tax-Free Intermediate-Term
Money Fund Income Fund Tax-Free Income Fund
<S> <C> <C> <C>
Assets:
Investments in securities:

Cost .................................................. $66,341,894 $243,785,907 $54,591,043
Value ................................................. 66,341,894 262,529,052 58,189,956
Cash ................................................... 129,073 13,862 173,955
Receivables:
Investment securities sold ............................ -- 20,000 --
Capital shares sold ................................... 40,840 34,803 283,925
Interest............................................... 381,864 4,971,596 1,020,645
Total assets ...................................... 66,893,671 267,569,313 59,668,481
Liabilities:
Payables:
Investment securities purchased ....................... 2,007,320 -- 497,567
Capital shares redeemed ............................... 943,327 5,464 --
Affiliates ............................................ 73,194 173,484 53,511
Shareholders .......................................... 135,928 470,231 117,134
Distributions to shareholders .......................... 5,718 297,954 75,672
Other liabilities ...................................... 8,419 30,818 8,395
Total liabilities ....................................... 3,173,906 977,951 752,279
Net assets, at value ................................... $63,719,765 $266,591,362 $58,916,202
Net assets consist of:
Undistributed net investment income .................... $-- $-- $ 176,903
Accumulated distributions in
excess of net investment income .......................-- (943) --
Net unrealized appreciation ............................ -- 18,743,145 3,598,913
Accumulated net realized loss .......................... -- (502,730) (2,821,626)
Capital shares ......................................... 63,719,765 248,351,890 57,962,012
Net assets, at value ................................... $63,719,765 $266,591,362 $58,916,202
Class I Shares:
Net assets, at value ................................... $63,719,765 $260,990,199 $58,916,202
Shares outstanding ..................................... 63,719,765 22,389,356 5,547,273
Net asset value per share* ............................. $1.00 $11.66 $10.62
Maximum offering price per share
(net asset value per share O 100%, 95.75%,
97.75%, respectively) .................................. $1.00 $12.18 $10.86

</TABLE>

Redemption price is equal to net asset value less any applicable contingent
deferred sales charge

See notes to financial statements.

FRANKLIN NEW YORK TAX-FREE TRUST
Financial Statements (continued)

Statements of Assets and Liabilities (cont.)
December 31, 1997

Franklin New York Franklin New York Franklin New York
Tax-Exempt Insured Tax-Free Intermediate-Term
Money Fund Income Fund Tax-Free Income Fund
<S> <C> <C> <C>
Class II Shares:
Net assets, at value ................................... -- $5,601,163 --
Shares outstanding ..................................... -- 476,869 --
Net asset value per share* ............................. -- $11.75 --
Maximum offering price per share
(net asset value per share O 99%) ..................... -- $11.87 --

*Redemption price is equal to net asset value less any applicable contingent deferred sales charge.
</TABLE>

See notes to financial statements.

FRANKLIN NEW YORK TAX-FREE TRUST
Financial Statements (continued)

Statements of Operations
December 31, 1997

Franklin New YorkFranklin New YorkFranklin New York
Tax-Exempt Insured Tax-Free Intermediate-Term
Money Fund Income Fund Tax-Free Income Fund
<S> <C> <C> <C>
Investment income:
Interest .............................................. $2,226,010 $15,261,210 $2,869,830
Expenses:
Management fees (Note 3) ............................. 389,114 1,433,123 317,251
Distribution fees (Note 3)
Class I .............................................. -- 227,163 49,646
Class II ............................................. -- 30,488 --
Transfer agent fees (Note 3) .......................... 63,278 90,581 19,974
Custodian fees ........................................ 620 2,676 522
Reports to shareholders ............................... 34,439 41,233 9,175
Registration and filing fees .......................... 5,790 18,352 4,150
Professional fees ..................................... 5,618 25,112 4,829
Trustees' fees and expenses ........................... 1,076 4,675 862
Other ................................................. 2,147 30,344 4,318
Total expenses .......................................... 502,082 1,903,747 410,727
Expenses waived/paid by affiliate (Note 3) ............. (127,318) -- (184,378)
Net expenses .................................... 374,764 1,903,747 226,349
Net investment income .......................... 1,851,246 13,357,463 2,643,481
Realized and unrealized gains:
Net realized gain from investments .................... -- 2,443,437 237,610
Net unrealized appreciation on investments ............ -- 6,182,799 1,496,404
Net realized and unrealized gain ........................ -- 8,626,236 1,734,014
Net increase in net assets resulting from operations .... $1,851,246 $21,983,699 $4,377,495

</TABLE>
See notes to financial statements.

FRANKLIN NEW YORK TAX-FREE TRUST
Financial Statements (continued)

Statements of Changes in Net Assets
for the years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>

Franklin New York
Franklin New York Franklin New York Insured Intermediate-Term
Tax-Exempt Money Fund Tax-Free Income Fund Tax-Free Income Fund
1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:

Net investment income $ 1,851,246$ 1,699,872 $ 13,357,463$ 13,572,845 $ 2,643,481 $ 2,434,687
Net realized gain (loss)
from investments -- -- 2,443,437 879,382 237,610 (261,595)
Net unrealized
appreciation (depreciation)
on investments -- -- 6,182,799 (3,487,660) 1,496,404 (297,789)
Net increase in net
assets resulting
from operations 1,851,246 1,699,872 21,983,699 10,964,567 4,377,495 1,875,303
Distributions to
shareholders from:
Net investment income:
Class I (1,851,246) (1,699,872) (13,364,273)(13,462,392) (2,646,832) (2,429,089)
Class II -- -- (214,741) (122,614) -- --
In excess of net
investment income:
Class I -- -- (943) -- -- --
Total distributions
to shareholders (1,851,246) (1,699,872) (13,579,957)(13,585,006) (2,646,832) (2,429,089)
Capital share
transactions: (Note 2)
Class I 4,542,185 (1,901,098) (8,309,946) 7,560,213 12,363,508 2,146,745
Class II -- 1,292,535 3,398,269 --
Total capital
share transactions 4,542,185 (1,901,098) (7,017,411) 10,958,482 12,363,508 2,146,745
Net increase (decrease)
in net assets 4,542,185 (1,901,098) 1,386,331 8,338,043 14,094,171 1,592,959
Net assets:
Beginning of year 59,177,580 61,078,678 265,205,031 256,866,988 44,822,031 43,229,072
End of year $63,719,765 $59,177,580 $266,591,362 $265,205,031 $58,916,202 $44,822,031
Undistributed net
investment income (accumu-
lated distributions in excess of
net investment income)
included in net assets:
End of year $-- $-- $ (943) $ 221,551 $ 176,903 $ 180,254

See notes to financial statements.

</TABLE>

FRANKLIN NEW YORK TAX-FREE TRUST
Notes to Financial Statements

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Franklin New York Tax-Free Trust (the Trust) is registered under the Investment
Company Act of 1940 as an open-ended, non-diversified investment company,
consisting of three series (the Funds). The Funds' investment policies are to
provide tax-free income. The Franklin New York Tax-Exempt Money Fund (Money
Fund) also seeks liquidity in it's investments.

The following summarizes the Funds' significant accounting policies.

a. Security Valuation:

Tax-free bonds generally trade in the over-the-counter market and are valued
within the range of the latest quoted bid and asked prices. In the absence of a
sale or reported bid and asked prices, information with respect to bond and note
transactions, quotations from bond dealers, market transactions in comparable
securities, and various relationships between securities are used to determine
the value of the security. The Franklin New York Insured Tax-Free Income Fund
(Insured Fund) and the Franklin New York Intermediate-Term Tax-Free Income Fund
(Intermediate-Term Fund) may utilize a pricing service, bank or broker/dealer
experienced in such matters to perform any of the pricing functions under
procedures approved by the Board of Trustees. Securities for which market
quotations are not readily available are valued at fair value as determined by
management in accordance with procedures established by the Board of Trustees.

The securities in the Money Fund are valued at amortized cost, which
approximates value.

b. Income Taxes:

No provision has been made for income taxes because each Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and
distribute all of its taxable income.

c. Security Transactions, Investment Income, Expenses and Distributions:

Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income and estimated expenses are accrued daily. Dividends from net
investment income and capital gains or losses for the Money Fund are normally
declared daily. Such distributions are reinvested in additional shares of the
Funds. Distributions to shareholders for the Insured Fund and Intermediate-Term
Fund are recorded on the ex-dividend date.

Realized and unrealized gains and losses and net investment income for the
Insured Fund, other than class specific expenses, are allocated daily to each
class of shares based upon the relative proportion of net assets of each class.

d. Insurance:

The scheduled payments of interest and principal for each long-term municipal
security in the Insured Fund are insured by either a new issue insurance policy,
a portfolio insurance policy, a secondary insurance policy, or by collateral
guaranteed by an agency of the U.S. government.

Depending on the type of coverage, premiums for insurance are either added to
the cost basis of the security, included as an expense of the fund, or paid by a
third party.

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (cont.)

e. Accounting Estimates:

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.

2. CAPITAL STOCK

The Insured Fund offers two classes of shares: Class I and Class II. The shares
have the same rights except for their initial sales load, distribution fees,
voting rights on matters affecting a single class and the exchange privilege of
each class.

At December 31, 1997 there were an unlimited number of shares authorized (no par
value). Transactions in the Funds' shares ($1.00 per share for the Money Fund)
were as follows:
<TABLE>
<CAPTION>

Franklin New York Franklin New York Franklin New York
Tax-Exempt Insured Tax-Free Intermediate-Term
Money Fund Income Fund Tax-Free Income Fund
Amount Shares Amount Shares Amount
<S> <C> <C> <C> <C> <C>
Class I Shares:
Year Ended December 31, 1997
Shares sold $ 52,257,638 2,143,970 $24,240,358 2,234,707 $ 23,236,717
Shares issued in
reinvestment of distributions 1,850,557 666,814 7,568,139 154,882 1,611,794
Shares redeemed (49,566,010) (3,542,992) (40,118,443) (1,202,679) (12,485,003)
Net increase (decrease) $ 4,542,185 (732,208)$ (8,309,946) 1,186,910 $ 12,363,508
Year Ended December 31, 1996
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
Class II Shares:
Year Ended December 31, 1997
Shares sold 197,439 $ 2,247,696
Shares issued in
reinvestment of distributions 14,217 162,739
Shares redeemed (98,680) (1,117,900)
Net increase 112,976 $ 1,292,535
Year Ended December 31, 1996
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

</TABLE>
3. TRANSACTIONS WITH AFFILIATES

Certain officers and trustees of the Trust are also officers or trustees of
Franklin Advisers Inc. (Advisers), Franklin Templeton Services, Inc. (FT
Services), Franklin/Templeton Distributors, Inc. (Distributors), and
Franklin/Templeton Investor Services, Inc. (Investor Services), the Funds',
investment manager, administrative manager, principal underwriter, and transfer
agent, respectively.

The Funds pay an investment management fee to Advisers based on the month-end
net assets of the Insured and Intermediate-Term Funds and on the average daily
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 management fees for the Money Fund and the
Intermediate-Term Fund, as noted in the Statement of Operations.

Under an agreement with Advisers, 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.

The Intermediate-Term Fund reimburses Distributors up to 0.10% per year of its
average daily net assets and the Insured Fund reimburses Distributors up to
0.10% and 0.65% per year of its average daily net assets of Class I and Class
II, respectively, for costs incurred in marketing the Fund's shares.

Distributors paid net commissions on sales of the Funds shares, and received
contingent deferred sales charges for the year as follows:

Franklin New YorkFranklin New York
Insured Tax-FreeIntermediate-Term
Income Fund Tax-Free Income Fund
Net commissions
paid $13,177 $20,965
Contingent deferred
sales charges $ 6,625$ --

4. INCOME TAXES

At December 31, 1997, the Funds had tax basis capital losses which may be
carried over to offset future capital gains. Such losses expire as follows:

Franklin Franklin
New York New York
Insured Tax-FreeIntermediate-
Income Fund Term Fund
Capital loss carryovers
expiring in:
2002 . $ -- $2,560,031
2003 502,730 --
2004 -- 261,595
$502,730 $2,821,626

At December 31, 1997, the net unrealized appreciation based on the cost of
investments for income tax purposes was as follows:
<TABLE>
<CAPTION>

Franklin New YorkFranklin New YorkFranklin New York
Insured Tax-FreeInsured Tax-FreeIntermediate-Term
Money Fund Income Fund TaxfFree Money Fund
<S> <C> <C> <C>
Investments at cost $66,341,894 $243,785,907 $54,591,043
Unrealized appreciation -- $ 18,743,145 $3,598,913
Unrealized depreciation -- -- --
Net unrealized appreciation -- $ 18,743,145 $ 3,598,913

</TABLE>
5. INVESTMENT TRANSACTIONS

Purchases and sales of securities (excluding short-term securities) for the
period ended December 31, 1997, were as follows:
<TABLE>
<CAPTION>

Franklin New YorkFranklin New YorkFranklin New York
Insured Tax-FreeInsured Tax-FreeIntermediate-Term
Money Fund Income Fund TaxfFree Money Fund
<S> <C> <C> <C>
Purchases $-- $69,679,089 $12,909,963
Sales $-- $79,081,463 $ 3,352,166

</TABLE>
6. CREDIT RISK

The Funds have investments in excess of 10% of their total net assets 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.

FRANKLIN NEW YORK TAX-FREE TRUST
Report of Independent Accountants

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 each of
the three funds comprising the Franklin New York Tax-Free Trust (the
Trust)including each Fund's statement of investments, as of December 31, 1997,
and the related statements of operations, the statements of changes in net
assets, 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, 1997, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the three funds comprising Franklin New York Tax-Free Trust as of December
31, 1997, and the results of their operations, the changes in their net assets,
and their financial highlights for each of the periods presented, in conformity
with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.
San Francisco, California
February 3, 1998

Franklin New York Tax-Free Trust Annual Report December 31, 1997.

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 Franklin New York
Tax-Exempt Money Fund's seven-day annualized yield of 3.30%, the taxable
equivalent yield for New York state residents of 5.87%, and the taxable
equivalent yield for New York City residents of 6.09%.

GRAPHIC MATERIAL (2)

This chart shows in bar format the comparison between the Franklin New York
Insured Tax-Free Income Fund's Class I distribution rate of 4.83%, the taxable
equivalent rate for New York state residents of 8.58%, and the taxable
equivalent rate for New York City residents of 8.91%.

GRAPHIC MATERIAL (3)

The following line graph hypothetically compares the performance of the Franklin
New York Insured Tax-Free Income Fund Class I shares to that of the Lehman
Brothers Municipal Bond Index and the Consumer Price Index, based on a $10,000
investment from 5/1/91 to 12/31/97.

Franklin New York Insured Lehman Brothers
Tax-Free Municipal Bond Index CPI
Income Fund-Class I
-------------------------------------------------------------------
5/1/91 9579 10,000 10,000
5/31/91 9588 10,089 10,030
6/30/91 9559 10,079 10,059
7/31/91 9722 10,202 10,074
8/31/91 9866 10,337 10,103
9/30/91 9976 10,471 10,148
10/31/91 10058 10,565 10,163
11/30/91 10043 10,595 10,193
12/31/91 10234 10,823 10,200
1/31/92 10307 10,847 10,215
2/29/92 10322 10,851 10,252
3/31/92 10347 10,855 10,304
4/30/92 10438 10,952 10,318
5/31/92 10590 11,081 10,333
6/30/92 10743 11,267 10,370
7/31/92 11149 11,605 10,392
8/31/92 10968 11,491 10,421
9/30/92 10981 11,566 10,450
10/31/92 10768 11,453 10,487
11/30/92 11058 11,658 10,501
12/31/92 11215 11,777 10,494
1/31/93 11362 11,913 10,545
2/28/93 11698 12,344 10,582
3/31/93 11700 12,214 10,619
4/30/93 11787 12,337 10,649
5/31/93 11828 12,406 10,664
6/30/93 12029 12,613 10,679
7/31/93 12060 12,630 10,679
8/31/93 12284 12,892 10,709
9/30/93 12531 13,039 10,731
10/31/93 12583 13,064 10,775
11/30/93 12496 12,949 10,783
12/31/93 12789 13,222 10,783
1/31/94 12920 13,373 10,812
2/28/94 12533 13,027 10,849
3/31/94 11912 12,496 10,886
4/30/94 12011 12,603 10,901
5/31/94 12155 12,712 10,909
6/30/94 12007 12,635 10,946
7/31/94 12254 12,866 10,975
8/31/94 12264 12,911 11,019
9/30/94 12036 12,721 11,049
10/31/94 11737 12,495 11,057
11/30/94 11382 12,269 11,071
12/31/94 11750 12,539 11,071
1/31/95 12189 12,897 11,115
2/28/95 12618 13,272 11,160
3/31/95 12769 13,425 11,197
4/30/95 12778 13,441 11,233
5/31/95 13178 13,870 11,256
6/30/95 13046 13,749 11,278
7/31/95 13105 13,880 11,278
8/31/95 13248 14,056 11,308
9/30/95 13318 14,145 11,330
10/30/95 13558 14,350 11,368
11/30/95 13775 14,588 11,360
12/31/95 13920 14,728 11,352
1/31/96 14017 14,840 11,419
2/29/96 13917 14,739 11,455
3/31/96 13744 14,550 11,515
4/30/96 13693 14,510 11,560
5/31/96 13704 14,504 11,582
6/30/96 13853 14,662 11,589
7/31/96 13952 14,795 11,611
8/31/96 13962 14,792 11,633
9/30/96 14176 15,000 11,670
10/31/96 14315 15,169 11,707
11/30/96 14582 15,447 11,730
12/31/96 14517 15,382 11,730
1/31/97 14490 15,411 11,767
2/28/97 14604 15,553 11,804
3/31/97 14434 15,346 11,833
4/30/97 14563 15,475 11,847
5/31/97 14759 15,709 11,840
6/30/97 14915 15,877 11,855
7/31/97 15336 16,316 11,869
8/31/97 15162 16,163 11,891
9/30/97 15320 16,355 11,921
10/31/97 15453 16,460 11,951
11/30/97 15533 16,557 11,944
12/31/97 15788 16,799 11,929
- ------------------------------------------------------------------------------

GRAPHIC MATERIAL (4)

This chart shows in bar format the comparison between the Franklin New York
Insured Tax-Free Income Fund's Class II distribution rate of 4.40%, the taxable
equivalent rate for New York state residents of 7.82%, and the taxable
equivalent rate for New York City residents of 8.12%.

GRAPHIC MATERIAL (5)

The following line graph hypothetically compares the performance of the Franklin
New York Insured Tax-Free Income Fund Class II shares to that of the Lehman
Brothers Municipal Bond Index and the Consumer Price Index, based on a $10,000
investment from 5/1/95 to 12/31/97.

Franklin New York Insured Lehman Brothers
Tax- Municipal Bond CPI
Free Income Fund-Class II Index
----------------------------------------------------------
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
1/31/97 $11,163 11,466 10,475
2/28/97 $11,245 11,571 10,508
3/31/97 $11,109 11,417 10,534
4/30/97 $11,203 11,513 10,547
5/31/97 $11,356 11,687 10,540
6/30/97 $11,470 11,812 10,553
7/31/97 $11,786 12,139 10,565
8/31/97 $11,648 12,025 10,586
9/30/97 $11,763 12,168 10,612
10/31/97 $11,859 12,246 10,639
11/30/97 $11,913 12,318 10,632
12/31/97 $12,102 12,498 10,619
- ------------------------------------------------------------------------

GRAPHIC MATERIAL (6)

This chart shows in pie format the credit quality breakdown of the Franklin New
York Intermediate-Term Tax-Free Income Fund based on total long-term investments
as of 12/31/97.

AAA 14.2%
AA 7.4%
A 48.2%
BBB 30.2%

GRAPHIC MATERIAL (7)

This chart shows in bar format the comparison between the Franklin New York
Intermediate-Term Tax-Free Income Fund's distribution rate of 5.08%, the taxable
equivalent rate for New York state residents of 9.03%, and the taxable
equivalent rate for New York City residents of 9.37%.

GRAPHIC MATERIAL (8)

The following line graph hypothetically compares the performance of the Franklin
New York Intermediate-Term Tax-Free Income Fund to that of the Lehman Brothers
Municipal 10-Year Bond Index and the Consumer Price Index, based on a $10,000
investment from 9/23/92 to 12/31/97.

Franklin New York Lehman Brothers
Intermediate-Term Municipal
Tax-Free 10-Year CPI
Income Fund Bond Index
9/23/92 9,775 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 11,135 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 11,712 12,606 10,885
11/30/95 11,844 12,774 10,878
12/31/95 11,908 12,852 10,870
1/31/96 11,984 12,982 10,934
2/29/96 11,899 12,929 10,969
3/31/96 11,802 12,769 11,026
4/30/96 11,797 12,724 11,069
5/31/96 11,769 12,688 11,090
6/30/96 11,882 12,809 11,097
7/31/96 11,995 12,932 11,118
8/31/96 11,978 12,932 11,139
9/30/96 12,139 13,065 11,175
10/31/96 12,254 13,230 11,210
11/30/96 12,453 13,497 11,232
12/31/96 12,424 13,436 11,232
1/31/97 12,468 13,489 11,268
2/28/97 12,584 13,615 11,303
3/31/97 12,457 13,433 11,331
4/30/97 12,562 13,532 11,344
5/31/97 12,718 13,724 11,338
6/30/97 12,836 13,875 11,351
7/31/97 13,154 14,265 11,365
8/31/97 13,074 14,127 11,386
9/30/97 13,219 14,306 11,415
10/31/97 13,303 14,382 11,443
11/30/97 13,374 14,448 11,437
12/31/97 13,533 14,677 11,423
- --------------------------------------------------------------