UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-3479
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FRANKLIN NEW YORK TAX-FREE INCOME FUND
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(Exact name of registrant as specified in charter)
ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
(Address of principal executive offices) (Zip code)
MURRAY L. SIMPSON, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
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(Name and address of agent for service)
Registrant's telephone number, including area code: (650) 312-2000
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Date of fiscal year end: 05/31
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Date of reporting period: 11/30/03
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ITEM 1. REPORTS TO STOCKHOLDERS.
NOVEMBER 30, 2003
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[GRAPHIC OMITTED]
STATUE OF LIBERTY
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SEMIANNUAL REPORT AND SHAREHOLDER LETTER TAX-FREE INCOME
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Franklin New York WANT TO RECEIVE
Tax-Free Income Fund THIS DOCUMENT
FASTER VIA EMAIL?
Eligible shareholders can
sign up for eDelivery at
franklintempleton.com.
See inside for details.
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[GRAPHIC OMITTED]
FACADE ART
[GRAPHIC OMITTED]
FRANKLIN TEMPLETON LOGO ART
FRANKLIN o Templeton o Mutual Series
Franklin Templeton Investments
GAIN FROM OUR PERSPECTIVE
Franklin Templeton's distinct multi-manager
structure combines the specialized expertise of
three world-class investment management
groups--Franklin, Templeton and Mutual Series.
SPECIALIZED EXPERTISE Each of our portfolio management groups operates
autonomously, relying on its own research and
staying true to the unique investment
disciplines that underlie its success.
FRANKLIN. Founded in 1947, Franklin is a leader
in tax-free investing and a driving force in
fixed income investing around the globe. They
also bring expertise in growth- and value-style
U.S. equity investing.
TEMPLETON. Founded in 1940, Templeton pioneered
international investing and, in 1954, launched
what has become the industry's oldest global
fund. Today, with research offices in over 25
countries, they offer investors the broadest
global reach in the industry.
MUTUAL SERIES. Established in 1949, Mutual
Series is dedicated to a unique style of value
investing, searching aggressively for
opportunity among undervalued stocks, arbitrage
situations and distressed companies.
TRUE DIVERSIFICATION Because our management groups work independently
and adhere to distinctly different investment
approaches, Franklin, Templeton and Mutual
Series funds typically have a low overlap of
securities. That's why our funds can be used to
build truly diversified portfolios covering
every major asset class.
RELIABILITY YOU CAN TRUST At Franklin Templeton Investments, we seek to
consistently provide investors with exceptional
risk-adjusted returns over the long term, as
well as the reliable account services that have
helped us become one of the most trusted names
in financial services.
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MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS
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[GRAPHIC OMITTED]]
BUILDING PIC
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Not part of the semiannual report
Contents
SHAREHOLDER LETTER ....................... 1
SPECIAL FEATURE:
Understanding Your
Tax-Free Income Fund ..................... 4
SEMIANNUAL REPORT
Franklin New York Tax-Free
Income Fund .............................. 8
Performance Summary ...................... 13
Financial Highlights and
Statement of Investments ................. 16
Financial Statements ..................... 34
Notes to Financial Statements ............ 38
Proxy Voting Policies and Procedures ..... 42
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Semiannual Report
Franklin New York Tax-Free Income Fund
YOUR FUND'S GOAL AND PRIMARY INVESTMENTS: Franklin New York Tax-Free Income Fund
seeks to provide high, current income exempt from regular federal, New York
state and New York City personal income taxes through a diversified portfolio
consisting mainly of municipal securities. 1
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Credit Quality Breakdown*
Based on Total Long-Term Investments as of 11/30/03
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
AAA ...................... 61.1%
AA ....................... 24.3%
A ........................ 9.7%
BBB ...................... 3.8%
Below Investment Grade ... 1.1%
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*Quality breakdown may include internal ratings for bonds not rated by an
independent rating agency.
This semiannual report for Franklin New York Tax-Free Income Fund covers the
period ended November 30, 2003.
PERFORMANCE OVERVIEW
Because bond yield and price move in opposite directions, as yields rose bond
prices fell for the six-month reporting period. The Fund's Class A share price,
as measured by net asset value, declined from $12.22 on May 31, 2003, to $11.95
on November 30, 2003. The Fund's Class A shares paid dividends totaling 27.72
cents per share for the same period. The Performance Summary beginning on page
13 shows that at the end of this reporting period the Fund's Class A shares'
1. For investors subject to alternative minimum tax, a small portion of this
income may be taxable. Distributions of capital gains are generally taxable.
THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND COMPLETE LEGAL
TITLES OF ALL PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF
INVESTMENTS (SOI). THE SOI BEGINS ON PAGE 20.
8 | Semiannual Report
distribution rate was 4.44%. An investor in the 2003 maximum combined federal
and New York state and City personal income tax bracket of 42.90% would need to
earn a distribution rate of 7.78% from a taxable investment to match the Fund's
Class A tax-free distribution rate. For the Fund's Class B, C and Advisor
shares' performance, please see the Performance Summary.
STATE UPDATE
New York continued to experience severe budget stress throughout the six months
under review, exacerbated by a long-standing high debt burden and chronic
structural budget imbalance. With the accumulated surpluses of recent boom years
now gone, the state is facing significant shortfalls, and is resorting to
deferral of major spending obligations while employing long-term deficit
financing to pay its fiscal year 2004 (begun April 1, 2003) operating expenses
and relieve liquidity shortfalls. Additionally, New York still has to contend
with a heavy debt load of $2,045 per capita, which ranks as the nation's fifth
highest.2 Despite the political unattractiveness of tax increases, the
legislature did include personal income tax and sales tax increases in the
fiscal year 2004 budget to help close the gap. With increased taxes and
higher-than-expected revenues from a one-time federal aid package, the state is
expecting balanced operations with a possible small reserve for fiscal year
2004.
New York's precipitous revenue declines primarily resulted from the volatility
of its main revenue source, personal income tax receipts, which account for
about 70% of all general fund tax receipts. 2 State personal income tax
collections were estimated to have fallen by more than 10% in fiscal year 2003,
with projected growth of only 0.8% in fiscal year 2004. 2 The state economy,
driven largely by the New York City metropolitan area, has suffered serious
earnings and employment declines, negatively affecting tax receipts. The state
economy is also heavily dependent on the volatile financial services industry,
recently in a cycle of downsizing. However, the New York State Department of
Budget identified improvement in the labor markets, believes an emergence from
recession began in early 2003, and has slightly increased its projection for
employment growth in calendar years 2003 and 2004.
According to independent credit rating agency Standard & Poor's, New York's
credit outlook is relatively weak and its near-term credit strength will be
seriously challenged through fiscal year 2005. The state's high debt level,
combined with its now depleted reserve levels, leaves it vulnerable to potential
future economic stress
2. Source: Moody's Investors Service, "New Issue: New York (State of)," 6/12/03.
Semiannual Report | 9
DIVIDEND DISTRIBUTIONS
6/1/03-11/30/03
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DIVIDEND PER SHARE
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MONTH CLASS A CLASS B CLASS C ADVISOR CLASS
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June 4.62 cents 4.10 cents 4.07 cents 4.71 cents
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July 4.62 cents 4.10 cents 4.07 cents 4.70 cents
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August 4.62 cents 4.06 cents 4.06 cents 4.71 cents
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September 4.62 cents 4.06 cents 4.06 cents 4.71 cents
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October 4.62 cents 4.06 cents 4.06 cents 4.70 cents
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November 4.62 cents 4.06 cents 4.06 cents 4.72 cents
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TOTAL 27.72 CENTS 24.44 CENTS 24.38 CENTS 28.25 CENTS
scenarios and ongoing, difficult budget balancing decisions. Medicaid costs are
rising again and spending pressures are re-emerging to fund school aid, health
care and employer pension costs. As such, Standard & Poor's assigned New York a
AA rating but with a negative credit outlook while noting that economic
recovery, already under way across the U.S., will play a significant role in how
quickly the Empire State is able to overcome liquidity problems, achieve
structural balance and begin to rebuild its reserves. 3
ECONOMIC AND MARKET OVERVIEW
The municipal bond market, like other bond markets, was volatile over the
six-month period ended November 30, 2003. The market struggled with geopolitical
events, an accommodative Federal Reserve Board (Fed), mixed economic releases, a
strong equity market, and a record level of new bond issuance. Through mid-June,
the municipal bond market generally performed well as yields decreased to
historically low levels; the Municipal Market Data AAA 10-year yield fell from
3.10% at the beginning of the period to 2.85% on June 13, and the 30-year yield
declined from 4.34% to 4.20% over the same period. 4 Market strength was driven
by perceptions that inflation would stay low and the Fed would remain
accommodative as economic indicators seemed to show little growth. Early in the
period, the employment outlook was declining and consumer confidence remained
low.
The Municipal Market Data AAA 10-year yield increased from 2.85% on June 13 to
3.55% on November 30, and the 30-year yield rose from 4.20% to 4.72% for the
same period. 4 The yield increase was attributed to rising consumer confidence
3. Source: Standard & Poor's, "Public Finance Report Card: The U.S. States (New
York)," RATINGSDIRECT, 9/11/03. This does not indicate Standard & Poor's rating
of the Fund.
4. Source: Thomson Financial.
10 | Semiannual Report
driven by several factors that were perceived to put the economy in a stronger
posture toward growth. The Fed reduced the federal funds target rate by 25 basis
points (0.25%) rather than the widely expected 50 basis points (0.50%) at its
June meeting, bringing the yield to 1.00%. Furthermore, the Fed left the federal
funds target rate unchanged at its August, September and October meetings,
citing indications of a strengthening economy amid higher-than-expected gross
domestic product growth. With signs of economic and job growth, historically low
interest rates, passage of the president's tax plan, and diminishing concerns
around pending geopolitical risks, the market drove yields generally higher
through most of the reporting period.
INVESTMENT STRATEGY
We use a consistent, disciplined strategy to maximize income for our
shareholders by seeking to maintain our exposure to higher coupon securities. We
generally employ a buy-and-hold approach and invest in securities that we
believe should provide the most relative value in the market. As we invest
throughout different interest rate environments, our portfolios become well
diversified with a broad range of coupons, calls and maturities. This broad
diversification helps stabilize Fund share price. We generally stay fully
invested to support income distribution.
MANAGER'S DISCUSSION
Throughout the reporting period, we followed our value-oriented strategy,
investing primarily for income. We looked to remain fully invested in bonds
ranging from 20 to 30 years in maturity with good call options. We shifted our
general investment focus in July, when municipal bond market yields began to
increase significantly. As a result, we focused more on executing tax losses,
which entails selling bonds purchased in a lower interest rate environment, and
purchasing similarly structured bonds. This strategy enabled the Fund to book
losses that may be used to offset future capital gains, and allowed it to
increase the portfolio's book yield or distributable yield.
The Fund was subject to bond calls during the six months under review as many
municipal bond issuers sought to take advantage of lower interest rates and
exercised call options on their outstanding higher-coupon bonds issued several
years ago. In general, we were limited to reinvesting the proceeds from these
bond calls as well as from cash inflows at current, lower interest rates.
[BEGIN SIDEBAR]
PORTFOLIO BREAKDOWN
11/30/03
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% OF TOTAL
LONG-TERM INVESTMENTS
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Prerefunded 30.2%
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Transportation ` 15.0%
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Subject to Government Appropriations 14.3%
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Utilities 9.3%
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Hospital & Health Care 7.7%
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Tax-Supported 7.6%
- -------------------------------------------------------
General Obligation 4.8%
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Housing 4.1%
- -------------------------------------------------------
Other Revenue 3.8%
- -------------------------------------------------------
Higher Education 3.2%
[END SIDEBAR]
Semiannual Report | 11
Consistent with our income-oriented investment philosophy, we generally invest
in bonds that we believe should provide the most relative value from an income
perspective, and we are comfortable holding them unless we find an opportunity
to enhance the portfolio's structure or increase its future income-earning
potential. As a result of our strategy, the Fund is generally more weighted in
higher coupon bonds purchased in a more favorable yield environment. Such bonds
are susceptible to being called when interest rates decline. On the other hand,
many of the higher coupon bonds that we continue to hold have recently traded at
a premium, which generally makes them less price sensitive to interest rate
fluctuations and thus behave defensively through an increasing interest rate
cycle. Furthermore, our higher coupon bonds allowed us to distribute an
attractive tax-free distribution yield, which we expect ultimately to drive our
intermediate- and long-term performance.
Thank you for your participation in Franklin New York Tax-Free Income Fund. We
look forward to serving your future investment needs.
THIS DISCUSSION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS AS OF
NOVEMBER 30, 2003, THE END OF THE REPORTING PERIOD. THE WAY WE IMPLEMENT OUR
MAIN INVESTMENT STRATEGIES AND THE RESULTING PORTFOLIO HOLDINGS MAY CHANGE
DEPENDING ON FACTORS SUCH AS MARKET AND ECONOMIC CONDITIONS. THESE OPINIONS MAY
NOT BE RELIED UPON AS INVESTMENT ADVICE OR AN OFFER FOR A PARTICULAR SECURITY.
THE INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET, STATE,
INDUSTRY, SECURITY OR THE FUND. STATEMENTS OF FACT ARE FROM SOURCES CONSIDERED
RELIABLE, BUT THE ADVISOR MAKES NO REPRESENTATION OR WARRANTY AS TO THEIR
COMPLETENESS OR ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE IS NO GUARANTEE OF
FUTURE RESULTS, THESE INSIGHTS MAY HELP YOU UNDERSTAND OUR INVESTMENT MANAGEMENT
PHILOSOPHY.
12 | Semiannual Report
Performance Summary as of 11/30/03
Your dividend income will vary depending on dividends or interest paid by
securities in the Fund's portfolio, adjusted for operating expenses of each
class. Capital gain distributions are net profits realized from the sale of
portfolio securities. The performance table does not reflect any taxes due on
Fund dividends, capital gain distributions, if any, or any realized gains on the
sale of Fund shares. Total return reflects the Fund's dividend income, capital
gain distributions, if any, and any unrealized gains or losses.
PRICE AND DISTRIBUTION INFORMATION
- --------------------------------------------------------------------------------
CLASS A CHANGE 11/30/03 5/31/03
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Net Asset Value (NAV) -$0.27 $11.95 $12.22
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DISTRIBUTIONS (6/1/03-11/30/03)
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Dividend Income $0.2772
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CLASS B CHANGE 11/30/03 5/31/03
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Net Asset Value (NAV) -$0.27 $11.93 $12.20
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DISTRIBUTIONS (6/1/03-11/30/03)
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Dividend Income $0.2444
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CLASS C CHANGE 11/30/03 5/31/03
- --------------------------------------------------------------------------------
Net Asset Value (NAV) -$0.28 $11.94 $12.22
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DISTRIBUTIONS (6/1/03-11/30/03)
- --------------------------------------------------------------------------------
Dividend Income $0.2438
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ADVISOR CLASS CHANGE 11/30/03 5/31/03
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Net Asset Value (NAV) -$0.28 $11.95 $12.23
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DISTRIBUTIONS (6/1/03-11/30/03)
- --------------------------------------------------------------------------------
Dividend Income $0.2825
Semiannual Report | Past performance does not guarantee future results. | 13
Performance Summary (CONTINUED)
PERFORMANCE
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CLASS A 6-MONTH 1-YEAR 5-YEAR 10-YEAR
- -------------------------------------------------------------------------------------------------------
Cumulative Total Return 1 +0.10% +6.31% +28.83% +74.90%
- -------------------------------------------------------------------------------------------------------
Average Annual Total Return 2 -4.14% +1.82% +4.29% +5.29%
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Avg. Ann. Total Return (12/31/03) 3 +0.42% +4.40% +5.15%
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Distribution Rate 4 4.44%
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Taxable Equivalent Distribution Rate 5 7.78%
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30-Day Standardized Yield 6 3.26%
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Taxable Equivalent Yield 5 5.71%
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CLASS B 6-MONTH 1-YEAR 3-YEAR 5-YEAR INCEPTION (1/1/99)
- -------------------------------------------------------------------------------------------------------
Cumulative Total Return 1 -0.18% +5.73% +19.55% N/A +25.08%
- -------------------------------------------------------------------------------------------------------
Average Annual Total Return 2 -4.09% +1.73% +5.24% N/A +4.32%
- -------------------------------------------------------------------------------------------------------
Avg. Ann. Total Return (12/31/03) 3 +0.29% +4.70% +4.38% +4.38%
- -------------------------------------------------------------------------------------------------------
Distribution Rate 4 4.08%
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Taxable Equivalent Distribution Rate 5 7.15%
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30-Day Standardized Yield 6 2.85%
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Taxable Equivalent Yield 5 4.99%
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CLASS C 6-MONTH 1-YEAR 5-YEAR INCEPTION (5/1/95)
- -------------------------------------------------------------------------------------------------------
Cumulative Total Return 1 -0.27% +5.63% +25.24% +60.66%
- -------------------------------------------------------------------------------------------------------
Average Annual Total Return 2 -2.20% +3.57% +4.40% +5.55%
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Avg. Ann. Total Return (12/31/03) 3 +2.34% +4.51% +5.58%
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Distribution Rate 4 4.04%
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Taxable Equivalent Distribution Rate 5 7.07%
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30-Day Standardized Yield 6 2.83%
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Taxable Equivalent Yield 5 4.96%
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ADVISOR CLASS 7 6-MONTH 1-YEAR 5-YEAR 10-YEAR
- -------------------------------------------------------------------------------------------------------
Cumulative Total Return 1 +0.06% +6.31% +29.05% +75.20%
- -------------------------------------------------------------------------------------------------------
Average Annual Total Return 2 +0.06% +6.31% +5.23% +5.77%
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Avg. Ann. Total Return (12/31/03) 3 +5.04% +5.37% +5.63%
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Distribution Rate 4 4.74%
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Taxable Equivalent Distribution Rate 5 8.30%
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30-Day Standardized Yield 6 3.50%
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Taxable Equivalent Yield 5 6.13%
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ONGOING MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE; MORE
RECENT RETURNS MAY DIFFER FROM THOSE SHOWN. SINCE MARKETS CAN GO DOWN AS WELL AS
UP, INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE WITH MARKET CONDITIONS,
AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES.
FOR MORE CURRENT PERFORMANCE, SEE "FUNDS AND PERFORMANCE" AT
FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236.
14 | Past performance does not guarantee future results. | Semiannual Report
Performance Summary (CONTINUED)
ENDNOTES
BOND PRICES, AND THUS THE FUND'S SHARE PRICE, GENERALLY MOVE IN THE OPPOSITE
DIRECTION FROM INTEREST RATES. MUNICIPAL BONDS ARE PARTICULARLY SENSITIVE TO
INTEREST RATE MOVEMENTS; THEREFORE, THE FUND'S YIELD AND SHARE PRICE WILL
FLUCTUATE WITH MARKET CONDITIONS. SINCE THE FUND CONCENTRATES ITS INVESTMENTS IN
A SINGLE STATE, IT IS SUBJECT TO GREATER RISK OF ADVERSE ECONOMIC CONDITIONS AND
REGULATORY CHANGES IN THAT STATE THAN A GEOGRAPHICALLY DIVERSIFIED FUND. THE
FUND'S PROSPECTUS ALSO INCLUDES A DESCRIPTION OF THE MAIN INVESTMENT RISKS.
CLASS A: Subject to the current, maximum 4.25% initial sales charge.
Prior to 7/1/94, Fund shares were offered at a lower initial
sales charge; thus actual total returns may differ. Effective
5/1/94, the Fund implemented a Rule 12b-1 plan, which affects
subsequent performance.
CLASS B: Subject to no initial sales charge, but subject to a contingent
deferred sales charge (CDSC) declining from 4% to 0% over six
years. These shares have higher annual fees and expenses than
Class A shares.
CLASS C: Subject to 1% initial sales charge and 1% CDSC for shares
redeemed within 18 months of investment. These shares have
higher annual fees and expenses than Class A shares.
ADVISOR CLASS: No initial sales charge or Rule 12b-1 fees; shares are available
to a limited class of investors.
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes any current, applicable,
maximum sales charge(s). Six-month return has not been annualized.
3. In accordance with SEC rules, we provide standardized average annual total
return information through the latest calendar quarter.
4. Distribution rate is based on an annualization of the respective class's
November dividend and the maximum offering price (NAV for Classes B and Advisor)
per share on 11/30/03.
5. Taxable equivalent distribution rate and yield assume the published rates as
of 6/18/03 for the maximum federal and New York state and City personal income
tax bracket of 42.90%, based on the federal income tax rate of 35.00%.
6. Yield, calculated as required by the SEC, is based on the earnings of the
Fund's portfolio for the 30 days ended 11/30/03.
7. Effective 10/1/01, the Fund began offering Advisor Class shares, which do not
have sales charges or a Rule 12b-1 plan. Performance quotations for this class
reflect the following methods of calculation: (a) For periods prior to 10/1/01,
a restated figure is used based upon the Fund's Class A performance, excluding
the effect of Class A's maximum initial sales charge, but reflecting the effect
of the Class A Rule 12b-1 fees; and (b) for periods after 9/30/01, actual
Advisor Class performance is used reflecting all charges and fees applicable to
that class. Since 10/1/01 (commencement of sales), the cumulative and average
annual total returns of Advisor Class shares were +13.39% and +5.98%.
Semiannual Report | Past performance does not guarantee future results. | 15
Franklin New York Tax-Free Income Fund
FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------------------
SIX MONTHS ENDED
NOVEMBER 30, 2003 YEAR ENDED MAY 31,
CLASS A (UNAUDITED) 2003 2002 2001 2000 1999
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Per share operating performance
(for a share outstanding throughout
the period)
Net asset value, beginning of period $12.22 $11.65 $11.62 $11.06 $11.91 $12.08
------------------------------------------------------------------------------------
Income from investment operations:
Net investment income a ............ .27 .57 .59 .62 .64 .64
Net realized and unrealized
gains (losses) ..................... (.26) .57 .04 .57 (.79) (.08)
------------------------------------------------------------------------------------
Total from investment operations .... .01 1.14 .63 1.19 (.15) .56
------------------------------------------------------------------------------------
Less distributions from:
Net investment income .............. (.28) (.57) (.60) (.63) (.63) (.64)
Net realized gains ................. -- -- -- -- (.07) (.09)
------------------------------------------------------------------------------------
Total distributions ................. (.28) (.57) (.60) (.63) (.70) (.73)
------------------------------------------------------------------------------------
Net asset value, end of period ...... $11.95 $12.22 $11.65 $11.62 $11.06 $11.91
------------------------------------------------------------------------------------
Total return b ...................... .10% 10.06% 5.55% 10.97% (1.24)% 4.73%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ... $4,654,194 $4,828,889 $4,609,318 $4,483,909 $4,219,849 $4,847,001
Ratio to average net assets:
Expenses ........................... .60% c .60% .59% .60% .60% .59%
Net investment income .............. 4.62% c 4.81% 5.09% 5.39% 5.64% 5.30%
Portfolio turnover rate ............. 6.18% 13.44% 9.57% 7.83% 24.61% 13.34%
<FN>
aBased on average daily shares outstanding effective May 31, 2000.
bTotal return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
cAnnualized.
</FN>
16 | Semiannual Report
Franklin New York Tax-Free Income Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
------------------------------------------------------------------------------------
SIX MONTHS ENDED
NOVEMBER 30, 2003 YEAR ENDED MAY 31,
CLASS B (UNAUDITED) 2003 2002 2001 2000 1999 d
------------------------------------------------------------------------------------
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period $12.20 $11.63 $11.61 $11.04 $11.89 $12.06
------------------------------------------------------------------------------------
Income from investment operations:
Net investment incomea ............. .24 .50 .53 .55 .57 .77
Net realized and unrealized gains (losses) (.27) .57 .03 .58 (.78) (.70)
------------------------------------------------------------------------------------
Total from investment operations .... (.03) 1.07 .56 1.13 (.21) .07
------------------------------------------------------------------------------------
Less distributions from:
Net investment income .............. (.24) (.50) (.54) (.56) (.57) (.24)
Net realized gains ................. -- -- -- -- (.07) --
------------------------------------------------------------------------------------
Total distributions ................. (.24) (.50) (.54) (.56) (.64) (.24)
------------------------------------------------------------------------------------
Net asset value, end of period ...... $11.93 $12.20 $11.63 $11.61 $11.04 $11.89
------------------------------------------------------------------------------------
Total return b ...................... (.18)% 9.46% 4.88% 10.46% (1.80)% .62%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ... $238,551 $233,767 $160,194 $87,697 $40,874 $19,059
Ratio to average net assets:
Expenses ........................... 1.16% c 1.17% 1.16% 1.16% 1.17% 1.16% c
Net investment income .............. 4.06% c 4.24% 4.53% 4.80% 5.08% 4.72% c
Portfolio turnover rate ............. 6.18% 13.44% 9.57% 7.83% 24.61% 13.34%
<FN>
aBased on average daily shares outstanding effective May 31, 2000.
bTotal return does not reflect contingent deferred sales charge, and is not
annualized for periods less than one year.
cAnnualized.
dFor the period January 1, 1999 (effective date) to May 31, 1999.
</FN>
Semiannual Report | 17
Franklin New York Tax-Free Income Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
------------------------------------------------------------------------------------
SIX MONTHS ENDED
NOVEMBER 30, 2003 YEAR ENDED MAY 31,
CLASS C (UNAUDITED) 2003 2002 2001 2000 1999
------------------------------------------------------------------------------------
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period $12.22 $11.64 $11.62 $11.06 $11.91 $12.07
------------------------------------------------------------------------------------
Income from investment operations:
Net investment incomea ............. .24 .50 .53 .55 .57 .62
Net realized and unrealized gains (losses) (.28) .58 .03 .57 (.78) (.12)
------------------------------------------------------------------------------------
Total from investment operations .... (.04) 1.08 .56 1.12 (.21) .50
------------------------------------------------------------------------------------
Less distributions from:
Net investment income .............. (.24) (.50) (.54) (.56) (.57) (.57)
Net realized gains ................. -- -- -- -- (.07) (.09)
------------------------------------------------------------------------------------
Total distributions ................. (.24) (.50) (.54) (.56) (.64) (.66)
------------------------------------------------------------------------------------
Net asset value, end of period ...... $11.94 $12.22 $11.64 $11.62 $11.06 $11.91
------------------------------------------------------------------------------------
Total return b ...................... (.27)% 9.55% 4.86% 10.35% (1.80)% 4.20%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ... $241,464 $242,965 $188,642 $146,824 $119,302 $139,756
Ratio to average net assets:
Expenses ........................... 1.16% c 1.17% 1.16% 1.16% 1.17% 1.16%
Net investment income .............. 4.06% c 4.24% 4.53% 4.82% 5.07% 4.73%
Portfolio turnover rate ............. 6.18% 13.44% 9.57% 7.83% 24.61% 13.34%
<FN>
aBased on average daily shares outstanding effective May 31, 2000.
bTotal return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
cAnnualized.
</FN>
18 | Semiannual Report
Franklin New York Tax-Free Income Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
---------------------------------------------
SIX MONTHS ENDED YEAR ENDED
NOVEMBER 30, 2003 MAY 31,
ADVISOR CLASS (UNAUDITED) 2003 2002 D
---------------------------------------------
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period ......................... $12.23 $11.65 $11.68
---------------------------------------------
Income from investment operations:
Net investment incomea ...................................... .28 .58 .40
Net realized and unrealized gains (losses) .................. (.28) .58 (.08)
---------------------------------------------
Total from investment operations ............................. -- 1.16 .32
---------------------------------------------
Less distributions from net investment income ................ (.28) (.58) (.35)
---------------------------------------------
Net asset value, end of period ............................... $11.95 $12.23 $11.65
---------------------------------------------
Total return b ............................................... .06% 10.24% 2.80%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ............................ $18,101 $18,278 $14,054
Ratios to average net assets:
Expenses .................................................... .51% c .52% .51% c
Net investment income ....................................... 4.71% c 4.89% 5.16% c
Portfolio turnover rate ...................................... 6.18% 13.44% 9.57%
<FN>
aBased on average daily shares outstanding.
bTotal return is not annualized for periods less than one year.
cAnnualized.
dFor the period October 1, 2001 (effective date) to May 31, 2002.
</FN>
Semiannual Report | See notes to financial statements. | 19
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2003 (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
LONG TERM INVESTMENTS 96.7%
BONDS 94.9%
Albany Housing Authority Limited Obligation Revenue, Refunding, 6.25%, 10/01/12 .... $ 5,250,000 $ 5,651,415
Albany IDA, Civic Facility Revenue,
Albany Medical Center Project, 6.00%, 5/01/19 ................................... 1,270,000 1,251,115
Albany Medical Center Project, 6.00%, 5/01/29 ................................... 1,460,000 1,376,605
St. Rose Project, Series A, AMBAC Insured, 5.375%, 7/01/31 ...................... 2,750,000 2,905,540
Albany Municipal Water Finance Authority Revenue, Second Resolution, Series B,
MBIA Insured, 5.00%, 12/01/33 ..................................................... 2,500,000 2,522,000
Albany Parking Authority Revenue,
Refunding, Series A, 5.625%, 7/15/25 ............................................ 1,000,000 1,049,690
Series A, 5.625%, 7/15/20 ....................................................... 1,250,000 1,351,200
Amherst IDA, Civic Facility Revenue, University of Buffalo Foundation, Faculty Student
Housing Corp.,
Series A, AMBAC Insured, 5.125%, 8/01/20 ......................................... 1,410,000 1,506,839
Series A, AMBAC Insured, 5.25%, 8/01/31 ......................................... 5,055,000 5,280,554
Series B, AMBAC Insured, 5.625%, 8/01/20 ........................................ 1,690,000 1,875,055
Series B, AMBAC Insured, 5.75%, 8/01/25 ......................................... 3,050,000 3,342,099
Series B, AMBAC Insured, 5.75%, 8/01/30 ......................................... 3,440,000 3,754,794
Series B, AMBAC Insured, 5.25%, 8/01/31 ......................................... 1,000,000 1,044,620
Auburn IDA, MFR, Auburn Memorial Home, 6.50%, 2/01/34 .............................. 5,170,000 5,384,297
Battery Park City Authority Revenue, Series A, 5.00%,
11/01/24 ........................................................................ 9,000,000 9,283,590
11/01/25 ........................................................................ 12,000,000 12,339,600
11/01/26 ........................................................................ 14,250,000 14,630,475
Bethany Retirement Home Inc. Mortgage Loan Revenue, FHA Insured, 7.50%, 2/01/34 .... 8,160,000 8,539,277
Clinton County COP, Correctional Facilities Project, 8.125%, 8/01/17 ............... 5,205,000 6,562,568
Dutchess County IDA, Civic Facility Revenue, Vassar College Project, 5.35%, 9/01/40 16,000,000 16,731,840
Franklin County COP, Court House Redevelopment Project, 8.125%, 8/01/06 ............ 2,590,000 2,710,254
Geneva IDA, Civic Facilities Revenue, Colleges of the Seneca Project, AMBAC Insured,
5.00%, 9/01/21 .................................................................. 2,835,000 2,961,356
5.125%, 9/01/31 ................................................................. 5,045,000 5,171,478
Guam Power Authority Revenue, Series A, Pre-Refunded,
6.625%, 10/01/14 ................................................................ 2,900,000 3,090,356
6.75%, 10/01/24 ................................................................. 25,500,000 27,199,830
Hamilton Elderly Housing Corp. Mortgage Revenue, Hamilton Apartments Project, 11.25%,
1/01/15 ........................................................................... 1,135,000 1,145,783
Ilion Elderly Housing Corp. Mortgage Revenue, Section 8 Housing Assistance Revenue,
7.25%, 7/01/09 .................................................................... 1,225,000 1,264,163
Long Island Power Authority Electric System Revenue,
MBIA Insured, 5.75%, 12/01/24 ................................................... 15,060,000 16,350,943
Refunding, Series A, 5.75%, 12/01/24 ............................................ 15,000,000 16,023,150
Refunding, Series A, AMBAC Insured, 5.25%, 12/01/26 ............................. 5,000,000 5,179,600
Series A, FSA Insured, 5.00%, 12/01/18 .......................................... 10,000,000 10,516,600
Series A, FSA Insured, 5.125%, 12/01/22 ......................................... 28,210,000 29,490,734
Series A, MBIA Insured, 5.25%, 12/01/26 ......................................... 9,000,000 9,397,890
Madison County IDA Civic Facility Revenue, College University Project, Series B, 5.00%,
7/01/33 ........................................................................... 2,000,000 2,022,680
20 | Semiannual Report
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2003 (UNAUDITED) (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Middleburg Central School District GO, FGIC Insured,
4.60%, 8/15/17 .................................................................. $ 1,045,000 $ 1,086,361
4.625%, 8/15/18 ................................................................. 1,155,000 1,194,651
4.625%, 8/15/19 ................................................................. 1,210,000 1,243,529
4.75%, 8/15/20 .................................................................. 1,270,000 1,309,180
4.75%, 8/15/21 .................................................................. 1,330,000 1,363,263
Monroe County IDAR, Civic Facilities, DePaul Community Facilities, 6.50%, 2/01/24 .. 1,285,000 1,315,223
Monroe County Water Authority Water Revenue,
5.15%, 8/01/22 .................................................................. 1,000,000 1,047,600
5.25%, 8/01/36 .................................................................. 2,250,000 2,337,075
MTA Commuter Facilities Revenue,
Series 8, 5.50%, 7/01/21 ........................................................ 5,000,000 5,825,400
Series A, 6.00%, 7/01/24 ........................................................ 5,575,000 6,594,445
Series A, FGIC Insured, 5.25%, 7/01/28 .......................................... 8,655,000 9,896,646
Series A, MBIA Insured, Pre-Refunded, 5.625%, 7/01/27 ........................... 10,000,000 11,461,600
Series A, Pre-Refunded, 6.50%, 7/01/24 .......................................... 35,620,000 37,266,000
Series A, Pre-Refunded, 5.25%, 7/01/28 .......................................... 18,300,000 20,925,318
Series A, Pre-Refunded, 6.125%, 7/01/29 ......................................... 9,625,000 11,447,301
Series C-1, FGIC Insured, 5.375%, 7/01/27 ....................................... 19,100,000 21,974,168
Series R, 5.50%, 7/01/17 ........................................................ 2,000,000 2,334,420
MTA New York Dedicated Tax Fund Revenue, Series A,
FGIC Insured, 5.00%, 11/15/31 ................................................... 39,685,000 40,334,643
FGIC Insured, Pre-Refunded, 6.00%, 4/01/30 ...................................... 27,260,000 32,233,042
FSA Insured, 5.00%, 4/01/29 ..................................................... 25,800,000 28,989,396
FSA Insured, 5.00%, 11/15/32 .................................................... 11,000,000 11,174,240
MBIA Insured, Pre-Refunded, 5.25%, 4/01/26 ...................................... 20,500,000 23,491,155
Refunding, 5.00%, 11/15/30 ...................................................... 37,000,000 37,291,190
Refunding, FSA Insured, 5.00%, 11/15/28 ......................................... 41,575,000 42,354,947
MTA New York Service Contract Revenue,
Refunding, AMBAC Insured, 5.25%, 7/01/31 ........................................ 50,000,000 52,208,000
Refunding, Series A, 5.125%, 1/01/29 ............................................ 6,000,000 6,122,880
Refunding, Series A, FGIC Insured, 5.00%, 7/01/25 ............................... 12,760,000 13,036,254
Series B, 5.375%, 1/01/30 ....................................................... 50,000,000 52,035,500
Series B, MBIA Insured, 5.00%, 1/01/31 .......................................... 22,290,000 22,646,640
MTA Revenue,
5.25%, 11/15/31 ................................................................. 15,000,000 15,486,000
Refunding, Series A, FGIC Insured, 5.00%, 11/15/25 .............................. 22,010,000 22,487,397
Refunding, Series A, FGIC Insured, 5.25%, 11/15/31 .............................. 34,000,000 35,554,820
Refunding, Series A, FSA Insured, 5.00%, 11/15/30 ............................... 26,130,000 26,582,049
Refunding, Series A, MBIA Insured, 5.125%, 11/15/31 ............................. 15,000,000 15,383,850
Series A, FGIC Insured, 5.00%, 11/15/32 ......................................... 10,355,000 10,533,417
Series B, 5.25%, 11/15/32 ....................................................... 20,000,000 20,688,800
Series U, FGIC Insured, 5.125%, 11/15/31 ........................................ 5,000,000 5,127,950
Semiannual Report | 21
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2003 (UNAUDITED) (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
MTA Transit Facilities Revenue, Series A,
6.125%, 7/01/29 ................................................................. $ 11,595,000 $ 13,790,281
FSA Insured, Pre-Refunded, 6.10%, 7/01/21 ....................................... 15,000,000 17,018,550
FSA Insured, Pre-Refunded, 5.50%, 7/01/22 ....................................... 16,170,000 18,546,990
MBIA Insured, Pre-Refunded, 5.625%, 7/01/25 ..................................... 8,000,000 9,138,080
Pre-Refunded, 6.00%, 7/01/24 .................................................... 7,000,000 8,280,020
Pre-Refunded, 5.625%, 7/01/27 ................................................... 14,440,000 16,640,800
Nassau County Interim Finance Authority Revenue, Series A, AMBAC Insured, 4.75%,
11/15/23 .......................................................................... 5,000,000 5,067,200
Nassau County Tobacco Settlement Corp. Revenue, Asset Backed, Series A, 6.50%,
7/15/27 ........................................................................... 15,000,000 15,403,350
Nassau Health Care Corp. Health System Revenue, Nassau County Guaranteed, FSA Insured,
5.75%, 8/01/29 .................................................................... 36,040,000 39,415,146
New York City GO,
6.125%, 8/01/25 ................................................................. 4,940,000 5,437,754
Fiscal 2003, Series I, 5.00%, 3/01/29 ........................................... 10,000,000 10,028,600
Fiscal 2003, Series I, 5.00%, 3/01/30 ........................................... 23,785,000 23,835,662
Refunding, Series A, 5.50%, 5/15/24 ............................................. 10,000,000 10,480,400
Refunding, Series A, FSA Insured, 6.00%, 5/15/30 ................................ 6,250,000 7,101,938
Refunding, Series F, 5.875%, 8/01/24 ............................................ 7,000,000 7,477,330
Series A, 6.25%, 8/01/17 ........................................................ 445,000 496,754
Series A, Pre-Refunded, 6.25%, 8/01/17 .......................................... 2,230,000 2,532,990
Series A-1, 6.625%, 8/01/25 ..................................................... 13,360,000 14,648,706
Series A-1, Pre-Refunded, 6.625%, 8/01/25 ....................................... 3,640,000 3,994,318
Series B, 7.00%, 2/01/18 ........................................................ 25,000 25,244
Series B, Pre-Refunded, 6.00%, 8/15/26 .......................................... 915,000 1,036,183
Series B, Sub Series B-1, Pre-Refunded, 7.00%, 8/15/16 .......................... 2,000,000 2,102,580
Series B, Sub Series B-1, Pre-Refunded, 7.50%, 8/15/20 .......................... 10,000,000 10,547,700
Series C, 7.00%, 2/01/12 ........................................................ 705,000 710,781
Series C, FSA Insured, 5.125%, 3/15/25 .......................................... 6,500,000 6,705,270
Series D, 8.00%, 8/01/17 ........................................................ 5,000 5,049
Series D, 7.50%, 2/01/18 ........................................................ 5,000 5,053
Series D, 5.125%, 8/01/19 ....................................................... 1,985,000 2,047,647
Series D, 5.25%, 8/01/21 ........................................................ 14,500,000 14,881,785
Series D, 5.25%, 10/15/23 ....................................................... 5,000,000 5,166,950
Series D, 5.50%, 6/01/24 ........................................................ 23,945,000 25,085,979
Series D, 5.00%, 10/15/29 ....................................................... 5,000,000 5,015,150
Series D, FGIC Insured, 5.25%, 8/01/21 .......................................... 5,355,000 5,673,890
Series F, 5.30%, 1/15/26 ........................................................ 45,000,000 46,374,750
Series F, Pre-Refunded, 6.625%, 2/15/25 ......................................... 11,240,000 12,060,745
Series G, 6.00%, 10/15/26 ....................................................... 8,600,000 9,338,568
Series G, Pre-Refunded, 6.00%, 10/15/26 ......................................... 1,300,000 1,504,568
Series H, 7.20%, 2/01/15 ........................................................ 5,000 5,050
Series H, FSA Insured, 5.375%, 8/01/27 .......................................... 8,510,000 8,852,187
Series H, MBIA Insured, 5.125%, 8/01/25 ......................................... 4,000,000 4,116,760
Series H, Pre-Refunded, 6.125%, 8/01/25 ......................................... 60,000 69,367
Series I, 6.25%, 4/15/27 ........................................................ 3,275,000 3,635,119
Series I, Pre-Refunded, 6.25%, 4/15/27 .......................................... 6,225,000 7,162,298
Series K, Pre-Refunded, 6.25%, 4/01/26 .......................................... 9,000,000 10,100,070
22 | Semiannual Report
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2003 (UNAUDITED) (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York City HDC, MFMR,
Refunding, Series A, FHA Insured, 6.55%, 10/01/15 ............................... $ 19,450,000 $ 19,722,689
Series A, FHA Insured, 6.55%, 4/01/18 ........................................... 10,000,000 10,138,500
Series A, FHA Insured, 6.60%, 4/01/30 ........................................... 51,500,000 52,261,685
New York City IDA, Civic Facility Revenue,
College of New Rochelle, 5.80%, 9/01/26 ......................................... 1,500,000 1,584,855
Institute of International Education Inc. Project, 5.25%, 9/01/21 ............... 1,530,000 1,614,456
Institute of International Education Inc. Project, 5.25%, 9/01/31 ............... 5,235,000 5,405,975
New York Blood Center Inc. Project, Pre-Refunded, 7.20%, 5/01/12 ................ 3,800,000 3,894,772
New York Blood Center Inc. Project, Pre-Refunded, 7.25%, 5/01/22 ................ 7,000,000 7,177,450
New York University Project, AMBAC Insured, 5.00%, 7/01/31 ...................... 18,000,000 18,259,920
Staten Island University Hospital Project, Series A, 6.375%, 7/01/31 ............ 3,990,000 4,132,204
New York City Municipal Water Finance Authority Revenue, Series B, 5.00%, 6/15/26 .. 25,000,000 25,423,250
New York City Municipal Water Finance Authority Water and Sewer System Revenue,
Refunding, Series E, MBIA Insured, 5.125%, 6/15/31 .............................. 34,175,000 35,016,730
Series A, 5.75%, 6/15/30 ........................................................ 41,190,000 44,959,297
Series A, 5.25%, 6/15/33 ........................................................ 7,000,000 7,273,280
Series A, FGIC Insured, 5.75%, 6/15/31 .......................................... 19,315,000 21,082,516
Series A, FGIC Insured, 5.50%, 6/15/32 .......................................... 11,655,000 12,435,069
Series B, 5.75%, 6/15/26 ........................................................ 24,455,000 26,646,657
Series B, 6.10%, 6/15/31 ........................................................ 11,005,000 12,941,110
Series B, 6.00%, 6/15/33 ........................................................ 6,040,000 7,067,283
Series B, FGIC Insured, 5.125%, 6/15/30 ......................................... 12,500,000 12,683,875
Series B, MBIA Insured, 5.50%, 6/15/27 .......................................... 32,620,000 34,901,443
Series B, Pre-Refunded, 6.10%, 6/15/31 .......................................... 3,995,000 4,802,469
Series B, Pre-Refunded, 6.00%, 6/15/33 .......................................... 10,260,000 12,272,909
New York City Transitional Finance Authority Revenue, Future Tax Secured,
Refunding, Series B, AMBAC Insured, 5.00%, 5/01/30 .............................. 3,000,000 3,051,660
Refunding, Series C-A, 5.50%, 11/01/24 .......................................... 16,800,000 18,134,592
Refunding, Series D, 5.00%, 2/01/31 ............................................. 7,500,000 7,615,200
Series A, 5.125%, 8/15/21 ....................................................... 9,115,000 9,558,627
Series A, 5.00%, 8/15/27 ........................................................ 770,000 779,463
Series A, 6.00%, 8/15/29 ........................................................ 29,000,000 34,492,310
Series A, 5.25%, 5/01/31 ........................................................ 27,005,000 27,941,263
Series A, 5.25%, 8/01/31 ........................................................ 30,605,000 31,922,239
Series A, FGIC Insured, 5.00%, 5/01/28 .......................................... 16,065,000 16,322,843
Series A, Pre-Refunded, 5.125%, 8/15/21 ......................................... 5,820,000 6,541,680
Series A, Pre-Refunded, 5.625%, 2/15/26 ......................................... 20,000,000 23,325,400
Series A, Pre-Refunded, 5.00%, 8/15/27 .......................................... 6,145,000 6,879,635
Series B, 5.00%, 5/01/30 ........................................................ 7,520,000 7,638,590
Series B, Pre-Refunded, 6.00%, 11/15/29 ......................................... 15,000,000 17,910,300
Series C, 5.50%, 5/01/25 ........................................................ 5,570,000 5,958,730
Series C, 5.00%, 5/01/26 ........................................................ 3,680,000 3,734,243
Series C, 5.00%, 5/01/29 ........................................................ 5,215,000 5,288,897
Series C, MBIA Insured, 5.00%, 5/01/29 .......................................... 1,365,000 1,386,048
Series C, MBIA Insured, Pre-Refunded, 5.00%, 5/01/29 ............................ 2,270,000 2,579,061
Series C, Pre-Refunded, 5.50%, 5/01/25 .......................................... 4,430,000 5,120,283
Series C, Pre-Refunded, 5.00%, 5/01/26 .......................................... 320,000 358,787
Series C, Pre-Refunded, 5.00%, 5/01/29 .......................................... 8,655,000 9,786,295
Semiannual Report | 23
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2003 (UNAUDITED) (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York City Transitional Finance Authority Revenue, Future Tax Secured, (cont.)
Series C, Pre-Refunded, 5.50%, 11/01/29 ......................................... $ 13,660,000 $ 15,898,464
Series D, 5.00%, 2/01/27 ........................................................ 62,025,000 63,161,918
Series E, 5.00%, 2/01/24 ........................................................ 7,000,000 7,170,170
Series E, 5.00%, 2/01/25 ........................................................ 5,000,000 5,106,550
Series E, 5.00%, 2/01/27 ........................................................ 10,000,000 10,183,300
Series E, 5.00%, 2/01/33 ........................................................ 18,035,000 18,298,672
New York City Transportation Authority MTA, Triborough COP, Series A, AMBAC Insured,
5.25%, 1/01/29 .................................................................... 79,840,000 82,941,784
New York City Trust Cultural Resources Revenue, Museum of Modern Art 2001, Series D,
AMBAC Insured, 5.125%, 7/01/31 .................................................... 15,500,000 15,938,030
New York IDA, Parking Facility Revenue, Royal Charter Presbyterian, FSA Insured, 5.25%,
12/15/32 .......................................................................... 1,525,000 1,581,578
New York State Appropriated Tobacco Co. Revenue, Asset Backed, Series A-1, AMBAC Insured,
5.25%, 6/01/21 .................................................................... 18,000,000 19,062,360
New York State Commissioner General Services People of the State of New York Certificate of
Lease Assignment,
5.70%, 3/01/29 .................................................................. 70,826,839 72,385,030
5.75%, 3/01/29 .................................................................. 35,964,486 36,850,291
New York State COP, Hanson Redevelopment Project, 8.375%, 5/01/08 .................. 13,985,000 15,953,529
New York State Dormitory Authority Lease Revenue,
Court Facilities, 6.00%, 5/15/39 ................................................ 58,245,000 63,150,394
Court Facilities, Series A, 5.375%, 5/15/23 ..................................... 4,000,000 4,197,800
State University Dormitory Facilities, 5.00%, 7/01/32 ........................... 5,500,000 5,534,100
State University Dormitory Facilities, FGIC Insured, 5.50%, 7/01/27 ............. 2,000,000 2,143,060
State University Dormitory Facilities, FGIC Insured, 5.10%, 7/01/31 ............. 7,700,000 7,859,698
State University Dormitory Facilities, Series A, 6.00%, 7/01/30 ................. 5,750,000 6,457,020
State University Dormitory Facilities, Series B, MBIA Insured, 5.125%, 7/01/28 .. 4,800,000 4,916,304
State University Dormitory Facilities, Series C, MBIA Insured, 5.50%, 7/01/19 ... 5,090,000 5,619,055
State University Dormitory Facilities, Series C, MBIA Insured, 5.50%, 7/01/29 ... 9,250,000 9,920,255
New York State Dormitory Authority Revenue,
5.00%, 7/01/28 .................................................................. 5,000,000 5,072,550
Bishop Henry B. Hucles Nursing Home, 6.00%, 7/01/24 ............................. 2,545,000 2,660,619
Buena Vida Nursing Home, Series A, 5.25%, 7/01/28 ............................... 4,730,000 4,829,945
City University Consolidated, FGIC Insured, 5.25%, 7/01/25 ...................... 4,100,000 4,263,795
City University Consolidated, Refunding, FGIC Insured, 5.375%, 7/01/24 .......... 14,300,000 16,316,872
City University System Consolidated, Fourth General, Series A, FGIC Insured, 5.25%,
7/01/30 ........................................................................ 20,705,000 23,692,524
City University System Consolidated, Second General, Refunding, Series A, 6.00%,
7/01/17 ........................................................................ 10,215,000 11,174,291
City University System Consolidated, Series 1, MBIA Insured, 5.125%, 7/01/27 .... 6,680,000 7,557,351
City University System Consolidated, Series C, 7.50%, 7/01/10 ................... 14,900,000 17,722,358
City University System Consolidated, Series D, 7.00%, 7/01/09 ................... 3,430,000 3,882,760
City University System Consolidated, Third General, Refunding, Series A, 6.00%,
7/01/16 ........................................................................ 23,185,000 25,362,303
City University System Consolidated, Third General, Series 1, FSA Insured, 5.50%,
7/01/29 ........................................................................ 38,375,000 44,732,970
24 | Semiannual Report
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2003 (UNAUDITED) (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York State Dormitory Authority Revenue, (cont.)
City University System, FSA Insured, 5.375%, 7/01/24 ............................ $ 5,000,000 $ 5,705,200
City University System, Third General, Pre-Refunded, 6.00%, 7/01/20 ............. 13,000,000 14,716,650
City University System, Third General, Residence 2, Pre-Refunded, 6.20%, 7/01/22 28,555,000 32,430,199
City University System, Third General, Series 2, Pre-Refunded, 6.00%, 7/01/26 ... 6,020,000 6,806,694
City University, Fourth, Series A, 5.25%, 7/01/31 ............................... 1,270,000 1,305,903
City University, Fourth, Series A, Pre-Refunded, 5.25%, 7/01/31 ................. 10,730,000 12,269,326
Concord Nursing Home Inc., 6.50%, 7/01/29 ....................................... 2,500,000 2,728,900
Department of Health, 6.625%, 7/01/15 ........................................... 760,000 838,774
Department of Health, 6.20%, 7/01/17 ............................................ 7,650,000 8,028,369
Department of Health, Pre-Refunded, 6.625%, 7/01/15 ............................. 4,595,000 5,071,272
Department of Health, Rosewell Park Cancer Center, Pre-Refunded, 6.625%, 7/01/24 9,175,000 10,125,989
FGIC Insured, 5.125%, 5/15/31 ................................................... 45,000,000 51,246,450
FHA, Insured Mortgage, St. Barnabas, Series A, AMBAC Insured, 5.125%, 2/01/22 ... 4,000,000 4,174,520
FHA, Insured Mortgage, St. Barnabas, Series A, AMBAC Insured, 5.00%, 2/01/31 .... 5,500,000 5,588,550
Good Samaritan Hospital Medical Center, Series A, MBIA Insured, 5.50%, 7/01/24 .. 5,000,000 5,377,800
Heritage House Nursing Center, 7.00%, 8/01/31 ................................... 2,200,000 2,209,086
Insured, Fordham University, FGIC Insured, 5.00%, 7/01/27 ....................... 6,020,000 6,133,296
Insured, Fordham University, FGIC Insured, 5.00%, 7/01/32 ....................... 7,735,000 7,853,268
Interfaith Medical Center, Series D, 5.40%, 2/15/28 ............................. 14,000,000 14,452,340
Ithaca College, AMBAC Insured, 5.25%, 7/01/26 ................................... 2,000,000 2,067,220
Long Island University, Asset Guaranteed, 5.125%, 9/01/23 ....................... 1,800,000 1,839,672
Long Island University, Asset Guaranteed, 5.25%, 9/01/28 ........................ 1,500,000 1,544,100
Long Island University, Pre-Refunded, 6.25%, 9/01/23 ............................ 5,495,000 6,061,809
Mental Health Services Facilities Improvement, Series B, MBIA Insured, 6.00%,
2/15/25 ........................................................................ 6,100,000 7,145,815
Mental Health Services Facilities Improvement, Series B, MBIA Insured, 6.00%,
2/15/30 ........................................................................ 4,865,000 5,701,357
Mental Health Services Facilities Improvement, Series B, MBIA Insured, 5.25%,
8/15/31 ........................................................................ 10,000,000 10,767,400
Mental Health Services Facilities Improvement, Series D, FSA Insured, 5.50%, 2/15/21 1,135,000 1,309,704
Mental Health Services Facilities Improvement, Series D, FSA Insured, 5.50%, 8/15/21 2,315,000 2,670,942
Mental Health Services Facilities Improvement, Series D, FSA Insured, 5.25%, 8/15/30 5,000,000 5,641,665
Mental Health Services Facilities Improvement, Series D, MBIA Insured, 5.00%,
8/15/17 ........................................................................ 23,000,000 24,217,899
Mental Health Services Facilities, Refunding, 6.00%, 8/15/21 .................... 1,785,000 2,040,514
Mental Health Services Facilities, Series A, 5.75%, 8/15/22 ..................... 1,390,000 1,579,625
Mental Health Services, Refunding, Series A, 5.75%, 2/15/27 ..................... 300,000 321,546
Mental Health Services, Series A, Pre-Refunded, 5.75%, 2/15/27 .................. 9,070,000 10,319,665
Mental Health Services, Series B, 5.75%, 8/15/12 ................................ 2,140,000 2,387,127
Mental Health Services, Series B, Pre-Refunded, 5.75%, 8/15/12 .................. 25,000 28,360
New School University, MBIA Insured, 5.00%, 7/01/31 ............................. 2,500,000 2,536,100
New York Hospital Medical Center, AMBAC Insured, 5.60%, 2/15/39 ................. 4,900,000 5,160,533
New York University, Series 2, AMBAC Insured, 5.00%, 7/01/26 .................... 3,500,000 3,563,910
New York University, Series 2, AMBAC Insured, 5.00%, 7/01/31 .................... 5,000,000 5,072,200
North Shore L.I. Jewish Group, 5.50%, 5/01/33 ................................... 2,500,000 2,547,675
Nursing Home, Arden Hill, FHA Insured, Pre-Refunded, 5.85%, 8/01/26 ............. 4,395,000 4,950,616
Semiannual Report | 25
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2003 (UNAUDITED) (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York State Dormitory Authority Revenue, (cont.)
Nursing Home, Center for Nursing, FHA Insured, 5.55%, 8/01/37 ................... $ 8,435,000 $ 8,757,386
Nursing Home, St. John's Health Care Corp., Refunding, FHA Insured, 6.25%, 2/01/36 32,620,000 35,110,537
Nursing Home, Wesley Garden, FHA Insured, 6.125%, 8/01/35 ....................... 2,000,000 2,176,680
Our Lady of Mercy, Mortgage Revenue, FHA Insured, 6.30%, 8/01/32 ................ 5,485,000 5,560,748
Pace University, Refunding, MBIA Insured, 5.75%, 7/01/26 ........................ 2,000,000 2,182,520
Rockefeller University, Series A1, 5.00%, 7/01/32 ............................... 11,500,000 11,740,810
School District Financing Program, Series A, MBIA Insured, 5.00%, 4/01/31 ....... 9,500,000 9,655,325
Second Hospital, St. Clare's Hospital, Series B, 5.40%, 2/15/25 ................. 6,500,000 6,727,630
St. Agnes Hospital, Series A, 5.40%, 2/15/25 .................................... 2,000,000 2,000,000
St. Francis Hospital, Series A, MBIA Insured, 5.50%, 7/01/29 .................... 1,000,000 1,064,750
St. Johns University, MBIA Insured, 5.25%, 7/01/25 .............................. 5,770,000 6,008,647
St. Johns University, Series A, MBIA Insured, 5.25%, 7/01/25 .................... 5,310,000 5,575,181
St. Lukes Home Residential Health, Series A, FHA Insured, 6.375%, 8/01/35 ....... 5,200,000 5,541,484
State Rehabilitation Association, Series A, AMBAC Insured, 5.00%, 7/01/23 ....... 1,725,000 1,780,597
State University Adult Facility, Series B, 5.375%, 5/15/23 ...................... 9,500,000 10,995,395
State University Educational Facilities, 5.125%, 5/15/21 ........................ 12,090,000 12,522,218
State University Educational Facilities, Pre-Refunded, 5.125%, 5/15/21 .......... 2,910,000 3,293,975
State University Educational Facilities, Refunding, 5.00%, 5/15/17 .............. 3,600,000 3,778,236
Teachers College, MBIA Insured, 5.00%, 7/01/22 .................................. 2,885,000 2,984,532
Teachers College, MBIA Insured, 5.00%, 7/01/32 .................................. 6,000,000 6,091,740
The Highlands Living, FHA Insured, 6.60%, 2/01/34 ............................... 3,450,000 3,608,941
Upstate Community Colleges, Series A, 5.00%, 7/01/19 ............................ 7,230,000 7,546,385
Upstate Community Colleges, Series A, 6.00%, 7/01/22 ............................ 7,000,000 7,807,660
Upstate Community Colleges, Series A, 5.00%, 7/01/27 ............................ 3,720,000 3,773,605
Upstate Community Colleges, Series A, 5.00%, 7/01/28 ............................ 25,675,000 25,883,481
Upstate Community Colleges, Series A, 5.00%, 7/01/31 ............................ 7,365,000 7,448,519
Upstate Community Colleges, Series A, Pre-Refunded, 6.125%, 7/01/27 ............. 11,845,000 13,789,238
W.K. Nursing Home Corp, FHA Insured, 6.05%, 2/01/26 ............................. 6,800,000 7,328,020
New York State Energy Research and Development Authority Electric Facilities Revenue,
Consolidated Edison Project, Refunding, Series A, 6.10%, 8/15/20 .................. 11,820,000 12,609,576
New York State Energy Research and Development Authority PCR, Niagara Mohawk Power
Project, Refunding, Series A, AMBAC Insured, 5.15%, 11/01/25 ...................... 20,000,000 20,536,800
New York State Environmental Facilities Corp. PCR, State Water, Series E,
6.875%, 6/15/14 ................................................................. 1,190,000 1,242,074
Pre-Refunded, 6.875%, 6/15/14 ................................................... 1,810,000 1,892,916
New York State Environmental Facilities Corp. State Clean Water and Drinking Revenue,
Revolving Funds,
Pooled Financing, Series B, 5.25%, 5/15/31 ...................................... 9,595,000 10,002,787
Series C, 5.25%, 6/15/31 ........................................................ 37,600,000 39,213,416
New York State Government Assistance Corp., Refunding, Series B, MBIA Insured, 4.875%,
4/01/20 ........................................................................... 4,080,000 4,192,608
New York State HFA, Service Contract Obligation Revenue,
Series A, 6.50%, 3/15/24 ........................................................ 330,000 349,180
Series A, 6.50%, 3/15/25 ........................................................ 860,000 945,321
Series A, 6.00%, 3/15/26 ........................................................ 970,000 1,067,980
26 | Semiannual Report
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2003 (UNAUDITED) (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York State HFA, Service Contract Obligation Revenue, (cont.)
Series A, Pre-Refunded, 6.375%, 9/15/15 ......................................... $ 4,430,000 $ 5,132,642
Series A, Pre-Refunded, 6.50%, 3/15/24 .......................................... 28,000,000 29,742,160
Series A, Pre-Refunded, 6.50%, 3/15/25 .......................................... 10,410,000 11,558,431
Series A, Pre-Refunded, 6.00%, 3/15/26 .......................................... 15,755,000 17,917,059
Series A-2003, 6.375%, 9/15/15 .................................................. 30,000 32,911
Series A-2003, Pre-Refunded, 6.375%, 9/15/15 .................................... 540,000 598,390
Series C, 6.30%, 3/15/22 ........................................................ 1,950,000 1,979,328
Series C, 5.50%, 3/15/25 ........................................................ 17,015,000 17,695,770
New York State HFAR,
5.00%, 3/15/33 .................................................................. 7,000,000 7,045,990
Children's Rescue Fund Housing, Series A, 7.625%, 5/01/18 ....................... 4,920,000 4,928,512
Economic Development and Housing, Series A, 5.125%, 9/15/28 ..................... 12,425,000 12,705,059
Health Facilities of New York City, Refunding, Series A, 6.00%, 11/01/08 ........ 2,400,000 2,606,736
Health Facilities of New York City, Series A, 6.00%, 5/01/07 .................... 11,200,000 12,278,000
Housing Project Mortgage, Refunding, Series A, FSA Insured, 6.10%, 11/01/15 ..... 22,910,000 24,713,017
Housing Project Mortgage, Refunding, Series A, FSA Insured, 6.125%, 11/01/20 .... 28,445,000 30,612,509
MFHR, Second Mortgage, Series A, 7.00%, 8/15/23 ................................. 4,215,000 4,217,951
MFHR, Second Mortgage, Series C, 6.60%, 8/15/27 ................................. 5,500,000 5,649,820
MFHR, Second Mortgage, Series D, 6.25%, 8/15/23 ................................. 2,500,000 2,517,575
MFHR, Second Mortgage, Series E, 6.75%, 8/15/25 ................................. 6,345,000 6,390,430
MFMR, Refunding, Series C, FHA Insured, 6.45%, 8/15/14 .......................... 1,000,000 1,007,040
MFMR, Series A, FHA Insured, 7.00%, 8/15/22 ..................................... 4,190,000 4,221,635
MFMR, Series B, AMBAC Insured, 6.25%, 8/15/14 ................................... 1,675,000 1,734,412
MFMR, Series B, AMBAC Insured, 6.35%, 8/15/23 ................................... 23,185,000 23,880,782
MFMR, Series C, FHA Insured, 6.50%, 8/15/24 ..................................... 6,870,000 6,923,380
New York State Local Government Assistance Corp. Revenue Series A, 6.00%, 4/01/24 .. 11,200,000 12,141,920
New York State Medical Care Facilities Finance Agency Revenue,
Beth Israel Medical Center Project, Refunding, Series A, 7.20%, 11/01/14 ........ 9,145,000 9,204,168
Hospital and Nursing Home, Mortgage Revenue, Refunding, Series B, FHA Insured,
6.25%, 2/15/25 ................................................................. 2,635,000 2,823,561
Hospital and Nursing Home, Mortgage Revenue, Refunding, Series B, FHA Insured,
6.25%, 2/15/35 ................................................................. 4,745,000 5,084,552
Hospital and Nursing Home, Mortgage Revenue, Refunding, Series C, FHA Insured,
6.375%, 8/15/29 ................................................................ 63,365,000 65,710,772
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.30%,
8/15/23 ........................................................................ 9,000,000 9,129,600
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.25%,
2/15/27 ........................................................................ 12,235,000 12,519,464
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.20%,
2/15/28 ........................................................................ 26,910,000 28,717,814
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.375%,
8/15/33 ........................................................................ 7,940,000 8,054,971
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.50%,
2/15/34 ........................................................................ 9,820,000 10,076,498
Hospital and Nursing Home, Mortgage Revenue, Series C, FHA Insured, 6.20%,
8/15/23 ........................................................................ 21,540,000 23,197,288
Semiannual Report | 27
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2003 (UNAUDITED) (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York State Medical Care Facilities Finance Agency Revenue, (cont.)
Hospital Mortgage, Series A, AMBAC Insured, Pre-Refunded, 6.80%, 8/15/24 ........ $ 3,200,000 $ 3,479,936
Hospital Mortgage, Series A, AMBAC Insured, Pre-Refunded, 6.50%, 8/15/29 ........ 5,125,000 5,555,090
Hospital Mortgage, Series A, AMBAC Insured, Pre-Refunded, 6.90%, 8/15/34 ........ 31,210,000 33,977,391
Huntington Hospital Mortgage, Project A, Refunding, 6.50%, 11/01/14 ............. 5,500,000 5,872,075
Medina Memorial Hospital Project, Series A, 7.30%, 5/01/11 ...................... 1,975,000 1,982,959
Mortgage Revenue Project, Series A, FHA Insured, 6.50%, 2/15/35 ................. 3,800,000 4,051,712
Mortgage Revenue Project, Series B, 6.60%, 8/15/34 .............................. 23,775,000 24,769,984
Mortgage Revenue Project, Series B, FHA Insured, 6.15%, 2/15/35 ................. 2,200,000 2,315,896
Mortgage Revenue Project, Series C, FHA Insured, 6.375%, 8/15/29 ................ 10,200,000 10,620,852
Mortgage Revenue Project, Series D, FHA Insured, 6.20%, 2/15/35 ................. 6,250,000 6,683,500
Mortgage Revenue Project, Series E, FHA Insured, 6.375%, 2/15/35 ................ 13,200,000 14,171,784
Mortgage Revenue Project, Series F, FHA Insured, Pre-Refunded, 6.30%, 8/15/25 ... 16,400,000 18,115,440
Mortgage Revenue Project, Series F, FHA Insured, Pre-Refunded, 6.375%, 8/15/34 .. 21,050,000 23,278,353
Second Mortgage, Health Care Project Revenue, Series B, 6.35%, 11/01/14 ......... 1,410,000 1,434,182
Secured Hospital Revenue, Series A, 6.25%, 2/15/24 .............................. 16,770,000 17,198,809
Security Mortgage Program Revenue, Adult Day Care, 6.375%, 11/15/20 ............. 18,930,000 19,932,154
Series A, FHA Insured, Pre-Refunded, 6.125%, 2/15/15 ............................ 1,170,000 1,301,017
Series A, FHA Insured, 6.125%, 2/15/15 .......................................... 5,170,000 5,459,158
Series A, FHA Insured, 7.45%, 8/15/31 ........................................... 16,430,000 16,502,292
The Hospital for Special Surgery Revenue, Series A, Pre-Refunded, 6.375%, 8/15/24 5,765,000 6,092,913
The Hospital for Special Surgery Revenue, Series A, Pre-Refunded, 6.45%, 8/15/34 36,650,000 38,753,710
New York State Mortgage Agency Revenue, Homeowners Mortgage, Series 61, 5.90%,
4/01/27 ........................................................................... 4,040,000 4,195,580
New York State Municipal Bond Bank Agency Program Revenue, Buffalo, Series A, AMBAC
Insured, 5.25%, 5/15/31 ........................................................... 4,145,000 4,307,899
New York State Power Authority Revenue, Series A, 5.25%,
11/15/30 ........................................................................ 2,000,000 2,072,920
11/15/40 ........................................................................ 9,000,000 9,290,340
New York State Thruway Authority Highway and Bridge Trust Fund,
Refunding, Series C, AMBAC Insured, 5.00%, 4/01/19 .............................. 20,000,000 21,013,000
Refunding, Series C, AMBAC Insured, 5.00%, 4/01/20 .............................. 18,835,000 19,681,445
Revenue, Second General, Series B, FSA Insured, 4.75%, 4/01/21 .................. 4,490,000 4,598,568
New York State Thruway Authority Revenue, State Personal Income Tax, Transportation,
Series A, 5.00%, 3/15/22 .......................................................... 14,270,000 14,727,924
New York State Thruway Authority Service Contract Revenue, Local Highway and Bridge,
5.75%, 4/01/19 .................................................................. 30,000,000 35,146,200
AMBAC Insured, 5.375%, 4/01/19 .................................................. 10,555,000 12,189,231
Pre-Refunded, 6.25%, 4/01/14 .................................................... 23,970,000 26,064,738
New York State Tollway Authority General Revenue,
Refunding, Series E, FGIC Insured, 5.00%, 1/01/25 ............................... 6,500,000 6,605,235
Series D, 5.25%, 1/01/21 ........................................................ 41,675,000 44,221,759
Series D, 5.375%, 1/01/27 ....................................................... 10,975,000 11,380,965
28 | Semiannual Report
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2003 (UNAUDITED) (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York State Tollway Authority Highway and Bridge Trust Fund Revenue,
Second General, Series B, FSA Insured, 4.75%, 4/01/20 ........................... $ 5,000,000 $ 5,151,700
Series A, FGIC Insured, 5.00%, 4/01/17 .......................................... 9,000,000 9,544,860
Series A, FGIC Insured, 5.00%, 4/01/20 .......................................... 2,500,000 2,612,350
Series A, FGIC Insured, 5.00%, 4/01/21 .......................................... 2,500,000 2,598,200
Series B, MBIA Insured, 4.75%, 4/01/18 .......................................... 12,465,000 12,926,080
Series B, MBIA Insured, 4.875%, 4/01/19 ......................................... 10,290,000 10,699,954
Series B, MBIA Insured, 4.90%, 4/01/20 .......................................... 10,000,000 10,361,000
Series B-1, FGIC Insured, 5.75%, 4/01/15 ........................................ 2,000,000 2,296,400
Series B-1, FGIC Insured, 5.75%, 4/01/16 ........................................ 2,000,000 2,291,460
New York State Urban Development Corp. Revenue,
Cornell Center Project, 6.00%, 1/01/14 .......................................... 4,500,000 4,562,640
Correctional Capital Facilities, Series 7, 5.70%, 1/01/16 ....................... 3,000,000 3,395,790
Correctional Capital Facilities, Series 7, Pre-Refunded, 5.70%, 1/01/27 ......... 10,000,000 11,319,300
Correctional Facilities Service Contract, Series A, 5.00%, 1/01/28 .............. 4,905,000 5,525,433
Correctional Facilities Service Contract, Series A, 5.00%, 1/01/28 .............. 9,095,000 10,245,427
Correctional Facilities Service Contract, Series A, MBIA Insured, 5.00%, 1/01/18 12,000,000 12,516,360
Correctional Facilities Service Contract, Series B, 5.00%, 1/01/25 .............. 12,955,000 14,624,252
Correctional Facilities Service Contract, Series B, 5.00%, 1/01/25 .............. 8,100,000 9,143,685
Correctional Facilities Service Contract, Series C, AMBAC Insured, Pre-Refunded, 6.00%,
1/01/29 ........................................................................ 34,135,000 40,153,000
Correctional Facilities Service Contract, Series D, FSA Insured, 5.25%, 1/01/30 . 10,000,000 11,349,900
Onondaga County Convention Project, Refunding, 6.25%, 1/01/20 ................... 28,325,000 30,860,371
Personal Income Tax, Series C-1, 5.00%, 3/15/25 ................................. 3,225,000 3,279,890
Personal Income Tax, State Facilities, Series A, 5.25%, 3/15/32 ................. 20,000,000 20,663,000
State Personal Income Tax, Series B Empire State, 5.125%, 3/15/29 ............... 9,000,000 9,229,950
State Personal Income Tax, Series B Empire State, MBIA Insured, 5.00%, 3/15/33 .. 11,010,000 11,189,133
Youth Facilities, 6.00%, 4/01/15 ................................................ 8,500,000 9,214,850
Niagara Falls City School District COP, High School Facilities, 5.375%, 6/15/28 .... 5,000,000 5,114,500
Niagara Falls Public Water Authority Revenue, Series A, MBIA Insured, 5.00%, 7/15/34 9,000,000 9,150,750
Oneida-Herkimer Solid Waste Management Authority Solid Waste Systems Revenue,
6.75%, 4/01/14 .................................................................. 655,000 671,513
Refunding, 6.65%, 4/01/05 ....................................................... 1,115,000 1,143,042
Otsego County IDA, Civic Facility Revenue, Hartwick College Project, Series A, 5.50%,
7/01/19 ........................................................................... 3,400,000 3,944,000
Port Authority of New York and New Jersey Revenue, Delta Air Lines Special Project, Series 1,
6.95%, 6/01/08 .................................................................... 17,000,000 17,059,160
Puerto Rico Commonwealth Highway and Transportation Authority Revenue, Series Y, 5.50%,
7/01/36 ........................................................................... 10,000,000 10,586,900
Puerto Rico Commonwealth Highway and Transportation Authority Transportation Revenue,
Series A, 5.00%, 7/01/38 ........................................................ 12,000,000 12,019,560
Series Y, 5.00%, 7/01/36 ........................................................ 4,000,000 4,010,960
Puerto Rico Commonwealth Urban Renewal and Housing Corp. Revenue, Commonwealth
Appropriation, Refunding, 7.875%, 10/01/04 ........................................ 805,000 809,677
Semiannual Report | 29
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2003 (UNAUDITED) (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Puerto Rico Municipal Finance Agency Revenue, Series A, Pre-Refunded, 6.50%, 7/01/19 $ 11,000,000 $ 11,501,710
Puerto Rico Public Finance Corp. Revenue, Commonwealth Appropriation, Series A, MBIA
Insured, 5.00%, 8/01/31 ........................................................... 4,000,000 4,099,480
Rensselaer Municipal Leasing Corp. Leasehold Mortgage Revenue, Rensselaer County
Nursing Home,
Series A, 6.90%, 6/01/24 ........................................................ 10,000,000 10,274,900
Series B, 6.90%, 6/01/24 ........................................................ 3,345,000 3,436,954
Sachem Central School District Holbrook, Series B, MBIA Insured, 5.00%,
10/15/27 ........................................................................ 3,885,000 3,975,948
10/15/28 ........................................................................ 2,000,000 2,045,240
St. Lawrence County IDA, Civic Facility Revenue, Clarkson University Project, Series A,
5.50%, 7/01/29 .................................................................... 6,000,000 6,258,180
Suffolk County Judicial Facilities Agency Service Agreement Revenue, John P. Cohalan
Complex, AMBAC Insured, 5.00%, 4/15/16 ............................................ 2,720,000 2,926,774
Syracuse IDA, Civic Facility Revenue, Crouse Health Hospital Inc., Project A,
5.25%, 1/01/16 .................................................................. 4,000,000 3,100,720
5.375%, 1/01/23 ................................................................. 4,760,000 3,397,022
Tompkins County IDAR, Civic Facility, Cornell University, 5.75%, 7/01/30 ........... 7,510,000 8,879,974
Triborough Bridge and Tunnel Authority Revenue,
AMBAC Isured, 5.00%, 11/15/28 ................................................... 15,000,000 15,366,000
General Purpose, Refunding, Series B, 5.125%, 11/15/29 .......................... 17,175,000 17,677,540
General Purpose, Series A, 5.00%, 1/01/27 ....................................... 42,500,000 43,204,225
General Purpose, Series A, 5.125%, 1/01/31 ...................................... 24,310,000 24,931,120
General Purpose, Series A, 5.00%, 1/01/32 ....................................... 40,450,000 40,984,749
General Purpose, Series B, 5.20%, 1/01/27 ....................................... 15,000,000 16,544,400
General Purpose, Series B, MBIA Insured, Pre-Refunded, 5.20%, 1/01/27 ........... 4,110,000 4,533,166
General Purpose, Series B, Pre-Refunded, 5.50%, 1/01/30 ......................... 32,185,000 36,136,674
Refunding, MBIA Insured, 5.00%, 11/15/26 ........................................ 10,000,000 10,246,300
Refunding, MBIA Insured, 5.00%, 11/15/32 ........................................ 25,115,000 25,604,491
Refunding, Series B, MBIA Insured, 5.00%, 11/15/27 .............................. 10,000,000 10,231,600
Series A, MBIA Insured, 5.00%, 1/01/32 .......................................... 9,000,000 9,161,190
Subordinate Bonds, FGIC Insured, 5.00%, 11/15/32 ................................ 9,430,000 9,630,010
TSASC Inc. New York Revenue, Tobacco Flexible Amortization Bonds, Series 1, 6.25%,
7/15/27 ......................................................................... 35,000,000 35,641,200
7/15/34 ......................................................................... 40,000,000 40,710,800
Utica IDA, Civic Facility Revenue, Munson Williams Proctor Institute,
5.40%, 7/15/30 .................................................................. 1,000,000 1,054,150
Series A, 5.50%, 7/15/29 ........................................................ 9,915,000 10,541,331
Virgin Islands PFAR, senior lien, Fund Loan Notes, Refunding, Series A, 5.50%,
10/01/15 ........................................................................ 2,500,000 2,645,250
10/01/18 ........................................................................ 2,500,000 2,605,300
Warren and Washington Counties IDAR, Adirondack Resource Recovery Project, Refunding,
Series A, 7.90%, 12/15/07 ......................................................... 24,420,000 24,344,298
Warren and Washington IDA Civic Facility Revenue, Series A, FSA Insured, 5.00%,
12/01/27 .......................................................................... 8,115,000 8,223,335
30 | Semiannual Report
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2003 (UNAUDITED) (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Westchester Tobacco Asset Securitization Corp. Revenue, Capital Appreciation, 6.75%,
7/15/29 ........................................................................... $ 15,000,000 $ 15,631,950
Yonkers GO, Series A, 9.20%,
2/01/04 ......................................................................... 1,095,000 1,108,009
2/01/05 ......................................................................... 1,095,000 1,187,648
----------------
TOTAL BONDS (COST $4,543,866,126) .................................................. 4,889,704,973
----------------
ZERO COUPON BONDS 1.8%
MTA Service Contract Revenue,
Commuter Facilities, Refunding, Series 7, 7/01/10 ............................... 7,500,000 6,074,700
Commuter Facilities, Refunding, Series 7, 7/01/11 ............................... 7,590,000 5,830,790
Commuter Facilities, Refunding, Series 7, 7/01/13 ............................... 2,065,000 1,431,830
Transit Facilities, Refunding, Series 7, 7/01/09 ................................ 13,125,000 11,196,150
Transit Facilities, Refunding, Series 7, 7/01/10 ................................ 9,000,000 7,289,640
Transit Facilities, Refunding, Series 7, 7/01/12 ................................ 15,380,000 11,201,715
Transit Facilities, Refunding, Series 7, 7/01/13 ................................ 7,935,000 5,501,970
New York City GO,
Capital Appreciation, Series A-2, 8/01/10 ....................................... 2,690,000 2,104,387
Citysavers, Series B, 8/01/09 ................................................... 8,875,000 7,312,556
Citysavers, Series B, 6/01/12 ................................................... 1,030,000 776,579
Citysavers, Series B, 12/01/12 .................................................. 1,030,000 760,531
Citysavers, Series B, 6/01/13 ................................................... 1,030,000 736,553
Citysavers, Series B, 12/01/13 .................................................. 1,030,000 720,907
Citysavers, Series B, 6/01/14 ................................................... 1,030,000 695,528
Citysavers, Series B, 12/01/14 .................................................. 1,030,000 680,294
Citysavers, Series B, 6/01/15 ................................................... 1,030,000 656,470
Citysavers, Series B, 12/01/15 .................................................. 1,030,000 641,711
Citysavers, Series B, 6/01/16 ................................................... 1,030,000 618,165
Citysavers, Series B, 12/01/16 .................................................. 1,030,000 603,910
Citysavers, Series B, 6/01/17 ................................................... 1,030,000 583,794
Citysavers, Series B, 12/01/17 .................................................. 1,030,000 570,115
Citysavers, Series B, 6/01/18 ................................................... 1,030,000 550,484
Citysavers, Series B, 12/01/18 .................................................. 1,005,000 524,329
Citysavers, Series B, 6/01/19 ................................................... 1,030,000 519,048
Citysavers, Series B, 12/01/19 .................................................. 1,030,000 508,099
Citysavers, Series B, 6/01/20 ................................................... 10,000,000 4,428,200
Orangetown Housing Authority Facilities Revenue, Senior Housing Center Project, Refunding,
MBIA Insured, 4/01/30 ............................................................. 21,170,000 5,152,566
Triborough Bridge and Tunnel Authority Revenue, Convention Center Project,
Series E, 1/01/12 ................................................................. 21,625,000 15,580,380
----------------
TOTAL ZERO COUPON BONDS (COST $74,025,349) ......................................... 93,251,401
----------------
TOTAL LONG TERM INVESTMENTS (COST $4,617,891,475) .................................. 4,982,956,374
----------------
Semiannual Report | 31
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2003 (UNAUDITED) (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
SHORT TERM INVESTMENTS .8%
a Long Island Power Authority Electric Systems Revenue, Sub Series 2, Daily VRDN and Put,
1.08%, 5/01/33 .................................................................... $ 20,900,000 $ 20,900,000
a New York City GO, Refunding, Series H, FSA Insured, Daily VRDN and Put, 1.08%,
8/01/19 ........................................................................... 500,000 500,000
a New York State Dormitory Authority Revenues, Cornell University, Series A, Weekly VRDN and
Put, 1.10%, 7/01/29 ............................................................... 3,200,000 3,200,000
a Port Authority of New York and New Jersey Special Obligation Revenue, Versatile Structure,
Series 2, Daily VRDN and Put, 1.05%, 5/01/19 ...................................... 15,645,000 15,645,000
a Puerto Rico Commonwealth Government Development Bank Revenue, Refunding, MBIA
Insured, Weekly VRDN and Put, 1.01%, 12/01/15 ..................................... 2,200,000 2,200,000
a Puerto Rico Commonwealth Highway and Transportation Authority Transportation Revenue,
Series A, AMBAC Insured, Weekly VRDN and Put, 1.07%, 7/01/28 ...................... 100,000 100,000
----------------
TOTAL SHORT TERM INVESTMENTS (COST $42,545,000) .................................... 42,545,000
----------------
TOTAL INVESTMENTS (COST $4,660,436,475) 97.5% ...................................... 5,025,501,374
OTHER ASSETS, LESS LIABILITIES 2.5% ................................................ 126,808,691
----------------
NET ASSETS 100.0% .................................................................. $ 5,152,310,065
----------------
<FN>
See Glossary of Terms on page 33.
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.
</FN>
32 | See notes to financial statements. | Semiannual Report
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2003 (UNAUDITED) (CONTINUED)
GLOSSARY OF TERMS
AMBAC - American Municipal Bond Assurance Corp.
COP - Certificate of Participation
FGIC - Financial Guaranty Insurance Co.
FHA - Federal Housing Authority/Agency
FSA - Financial Security Assistance
GO - General Obligation
HDC - Housing Development Corp.
HFA - Housing Financing Authority/Agency
HFAR - Housing Financing Authority/Agency Revenue
IDA - Industrial Development Authority/Agency
IDAR - Industrial Development Authority/Agency Revenue
MBIA - Municipal Bond Investors Assurance Corp.
MFHR - Multi-Family Housing Revenue
MFMR - Multi-Family Mortgage Revenue
MFR - Multi-Family Revenue
MTA - Metropolitan Transit Authority
PCR - Pollution Control Revenue
PFAR - Public Financing Authority Revenue
VRDN - Variable Rate Demand Notes
Semiannual Report | 33
Franklin New York Tax-Free Income Fund
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
November 30, 2003 (unaudited)
Assets:
Investments in securities:
Cost ..................................................... $4,660,436,475
---------------
Value .................................................... 5,025,501,374
Cash ...................................................... 56,930,340
Receivables:
Capital shares sold ...................................... 3,444,891
Interest ................................................. 74,950,277
---------------
Total assets ......................................... 5,160,826,882
---------------
Liabilities:
Payables:
Capital shares redeemed .................................. 3,530,444
Affiliates ............................................... 2,886,052
Shareholders ............................................. 1,982,980
Other liabilities ......................................... 117,341
---------------
Total liabilities .................................... 8,516,817
---------------
Net assets, at value ....................................... $5,152,310,065
---------------
Net assets consist of:
Undistributed net investment income ....................... $ 1,951,683
Net unrealized appreciation (depreciation) ................ 365,064,899
Accumulated net realized gain (loss) ...................... (17,439,635)
Capital shares ............................................ 4,802,733,118
---------------
Net assets, at value ....................................... $5,152,310,065
---------------
34 | Semiannual Report
Franklin New York Tax-Free Income Fund
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
November 30, 2003 (unaudited)
CLASS A:
Net assets, at value ................................................ $4,654,194,129
---------------
Shares outstanding .................................................. 389,517,889
---------------
Net asset value per sharea .......................................... $ 11.95
---------------
Maximum offering price per share (Net asset value per share / 95.75%) $ 12.48
---------------
CLASS B:
Net assets, at value ................................................ $ 238,550,795
---------------
Shares outstanding .................................................. 20,002,665
---------------
Net asset value and maximum offering price per sharea ............... $ 11.93
---------------
CLASS C:
Net assets, at value ................................................ $ 241,463,824
---------------
Shares outstanding .................................................. 20,217,666
---------------
Net asset value per sharea .......................................... $ 11.94
---------------
Maximum offering price per share (Net asset value per share / 99%) .. $ 12.06
---------------
ADVISOR CLASS:
Net assets, at value ................................................ $ 18,101,317
---------------
Shares outstanding .................................................. 1,514,418
---------------
Net asset value and maximum offering price per share ................ $ 11.95
---------------
<FN>
aRedemption price is equal to net asset value less any applicable contingent
deferred sales charge.
</FN>
Semiannual Report | See notes to financial statements. | 35
Franklin New York Tax-Free Income Fund
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
for the six months ended November 30, 2003 (unaudited)
Investment income:
Interest ..................................................... $ 134,420,806
--------------
Expenses:
Management fees (Note 3) ..................................... 11,693,838
Distribution fees (Note 3)
Class A ..................................................... 2,032,714
Class B ..................................................... 759,041
Class C ..................................................... 781,902
Transfer agent fees (Note 3) ................................. 1,122,456
Custodian fees ............................................... 26,692
Reports to shareholders ...................................... 82,062
Registration and filing fees ................................. 27,819
Professional fees (Note 3) ................................... 47,224
Trustees' fees and expenses .................................. 44,882
Other ........................................................ 137,216
--------------
Total expenses .......................................... 16,755,846
--------------
Net investment income ................................. 117,664,960
--------------
Realized and unrealized gains (losses):
Net realized gain (loss) from investments .................... 9,262,473
Net unrealized appreciation (depreciation) on investments .... (128,741,661)
--------------
Net realized and unrealized gain (loss) ....................... (119,479,188)
--------------
Net increase (decrease) in net assets resulting from operations $ (1,814,228)
--------------
36 | See notes to financial statements. | Semiannual Report
Franklin New York Tax-Free Income Fund
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
for the six months ended November 30, 2003 (unaudited)
and the year ended May 31, 2003
-----------------------------------
SIX MONTHS ENDED YEAR ENDED
NOVEMBER 30, 2003 MAY 31, 2003
-----------------------------------
Increase (decrease) in net assets:
Operations:
Net investment income ............................................. $ 117,664,960 $ 244,300,381
Net realized gain (loss) from investments ......................... 9,262,473 5,006,383
Net unrealized appreciation (depreciation) on investments ......... (128,741,661) 243,448,165
-----------------------------------
Net increase (decrease) in net assets resulting from operations (1,814,228) 492,754,929
Distributions to shareholders from:
Net investment income:
Class A .......................................................... (108,739,309) (225,619,458)
Class B .......................................................... (4,790,774) (8,284,786)
Class C .......................................................... (4,908,661) (9,038,590)
Advisor Class .................................................... (413,143) (760,077)
-----------------------------------
Total distributions to shareholders ................................ (118,851,887) (243,702,911)
Capital share transactions: (Note 2)
Class A .......................................................... (65,339,846) (8,374,738)
Class B .......................................................... 10,098,491 63,785,148
Class C .......................................................... 4,099,042 43,777,769
Advisor Class .................................................... 218,562 3,451,801
-----------------------------------
Total capital share transactions ................................... (50,923,751) 102,639,980
Net increase (decrease) in net assets ......................... (171,589,866) 351,691,998
Net assets
Beginning of period ................................................ 5,323,899,931 4,972,207,933
-----------------------------------
End of period ...................................................... $ 5,152,310,065 $ 5,323,899,931
-----------------------------------
Undistributed net investment income included in net assets:
End of period ...................................................... $ 1,951,683 $ 3,138,610
-----------------------------------
Semiannual Report | See notes to financial statements. | 37
Franklin New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Franklin New York Tax-Free Income Fund (the Fund) is registered under the
Investment Company Act of 1940 as a diversified, open-end investment company.
The Fund seeks to provide investors with as high a level of income exempt from
federal, New York state and New York City income taxes as is consistent with
prudent investing, while seeking preservation of shareholders' capital.
The following summarizes the Fund's significant accounting policies.
A. SECURITY VALUATION
Tax-free bonds generally trade in the over-the-counter market and are valued
within the range of the latest quoted bid and asked prices. In the absence of a
sale or reported bid and asked prices, information with respect to bond and note
transactions, quotations from bond dealers, market transactions in comparable
securities, and various relationships between securities are used to determine
the value of the security. The Fund may utilize a pricing service, bank or
broker/dealer experienced in such matters to perform any of the pricing
functions under procedures approved by the Board of Trustees. Securities for
which market quotations are not readily available are valued at fair value as
determined by management in accordance with procedures established by the Board
of Trustees.
B. INCOME TAXES
No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute substantially all of its income.
C. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income and estimated expenses are accrued daily. Bond discount and
premium are amortized on a yield to maturity basis. Distributions to
shareholders are recorded on the ex-dividend date.
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.
D. ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America 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 expenses during the reporting period. Actual results could differ from those
estimates.
38 | Semiannual Report
Franklin New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E. GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and trustees are
indemnified against certain liability arising out of the performance of their
duties to the Fund. Additionally, in the normal course of business the Fund
enters into contracts with service providers that contain general
indemnification clauses. The Fund's maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the Fund
that have not yet occurred. However, based on experience, the Fund expects the
risk of loss to be remote.
2. SHARES OF BENEFICIAL INTEREST
The Fund offers four classes of shares: Class A, Class B, Class C, and Advisor
Class. Each class of shares differs by its initial sales load, contingent
deferred sales charges, distribution fees, voting rights on matters affecting a
single class and its exchange privilege.
At November 30, 2003, there were an unlimited number of shares authorized ($.01
par value). Transactions in the Fund's shares were as follows:
---------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
NOVEMBER 30, 2003 MAY 31, 2003
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
CLASS A SHARES:
Shares sold .................... 12,059,284 $ 143,339,953 31,269,637 $ 371,509,962
Shares issued in reinvestment of
distributions .................. 5,097,770 60,505,306 10,400,672 123,140,266
Shares redeemed ................ (22,669,914) (269,185,105) (42,363,253) (503,024,966)
---------------------------------------------------------------
Net increase (decrease) ........ (5,512,860) $ (65,339,846) (692,944) $ (8,374,738)
---------------------------------------------------------------
CLASS B SHARES:
Shares sold .................... 1,856,950 $ 22,081,591 6,319,516 $ 74,942,461
Shares issued in reinvestment of
distributions .................. 269,351 3,191,100 464,323 5,491,671
Shares redeemed ................ (1,281,801) (15,174,200) (1,402,551) (16,648,984)
---------------------------------------------------------------
Net increase (decrease) ........ 844,500 $ 10,098,491 5,381,288 $ 63,785,148
---------------------------------------------------------------
CLASS C SHARES:
Shares sold .................... 2,138,707 $ 25,488,493 5,843,855 $ 69,435,630
Shares issued in reinvestment of
distributions .................. 276,990 3,287,144 506,929 6,003,538
Shares redeemed ................ (2,082,695) (24,676,595) (2,666,311) (31,661,399)
---------------------------------------------------------------
Net increase (decrease) ........ 333,002 $ 4,099,042 3,684,473 $ 43,777,769
---------------------------------------------------------------
ADVISOR CLASS SHARES:
Shares sold .................... 210,427 $ 2,520,142 504,062 $ 6,017,897
Shares issued in reinvestment of
distributions .................. 2,115 25,248 4,150 49,255
Shares redeemed ................ (192,886) (2,326,828) (219,616) (2,615,351)
---------------------------------------------------------------
Net increase (decrease) ........ 19,656 $ 218,562 288,596 $ 3,451,801
---------------------------------------------------------------
Semiannual Report | 39
Franklin New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES
Certain officers and trustees of the Fund are also officers and/or directors of
Franklin Advisers, Inc. (Advisers), Franklin Templeton Services, LLC (FT
Services), Franklin/Templeton Distributors, Inc. (Distributors), and
Franklin/Templeton Investor Services, LLC (Investor Services), the Fund's
investment manager, administrative manager, principal underwriter, and transfer
agent respectively.
The Fund pays an investment management fee to Advisers based on the net assets
of the Fund as follows:
- ----------------------------------------------------------------------------
ANNUALIZED FEE RATE MONTH-END NET ASSETS
- ----------------------------------------------------------------------------
.625% First $100 million
.500% Over $100 million, up to and including $250 million
.450% Over $250 million, up to and including $10 billion
Fees are further reduced on net assets over $10 billion.
Under an agreement with Advisers, FT Services provides administrative services
to the Fund. The fee is paid by Advisers based on average daily net assets, and
is not an additional expense of the Fund.
The Fund reimburses Distributors up to .10%, .65%, and .65% per year of their
average daily net assets of Class A, Class B, and Class C, respectively, for
costs incurred in marketing the Fund's shares.
Distributors paid net commissions on sales of the Fund's shares, and received
contingent deferred sales charges for the period of $856,648 and $230,444,
respectively.
The Fund paid shareholder servicing fees of $1,122,456 of which $800,768 was
paid to Investor Services.
Included in professional fees are legal fees of $14,500 that were paid to a law
firm in which a partner is an officer of the Fund.
40 | Semiannual Report
Franklin New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
4. INCOME TAXES
At November 30, 2003, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:
Investments at cost ................................... $4,659,312,093
---------------
Unrealized appreciation ............................... 369,334,107
Unrealized depreciation ............................... (3,144,825)
---------------
Net unrealized appreciation (depreciation) ............ $ 366,189,281
---------------
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of bond discounts.
Net realized gains differ for financial statement and tax purposes primarily due
to differing treatments of wash sales and bond discounts.
At May 31, 2003, the Fund had deferred capital losses occuring subsequent to
October 31, 2002 of $5,134,436. For tax purposes, such losses will be reflected
in the year ending May 31, 2004.
At May 31, 2003, the Fund had tax basis capital losses which may be carried over
to offset future capital gains. Such losses expire as follows:
Capital loss carryovers expiring in:
2008 ................................................. $ 6,411,881
2009 ................................................. 14,143,946
------------
$20,555,827
------------
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
period ended November 30, 2003 aggregated $312,826,558 and $424,978,233
respectively.
Semiannual Report | 41
Franklin New York Tax-Free Income Fund
PROXY VOTING POLICIES AND PROCEDURES
The Fund has established Proxy Voting Policies and Procedures ("Policies") that
the Fund uses to determine how to vote proxies relating to portfolio securities.
Shareholders may view the Fund's complete Policies online at
franklintempleton.com. Alternatively, shareholders may request copies of the
Policies free of charge by calling the Proxy Group collect at 1-954/847-2268 or
by sending a written request to: Franklin Templeton Companies, LLC, 500 East
Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy
Group.
42 | Semiannual Report
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Literature Request
For a brochure and prospectus, which contains more complete information,
including charges and expenses, call Franklin Templeton Investments at
1-800/DIAL BEN(R) (1-800/342-5236). Please read the prospectus carefully before
investing or sending money. To ensure the highest quality of service, we may
monitor, record and access telephone calls to or from our service departments.
These calls can be identified by the presence of a regular beeping tone.
FRANKLIN TEMPLETON INVESTMENTS
INTERNATIONAL
Mutual European Fund
Templeton China World Fund
Templeton Developing Markets Trust
Templeton Foreign Fund
Templeton Foreign Smaller Companies Fund
Templeton International (Ex EM) Fund
GLOBAL
Franklin Global Aggressive Growth Fund
Franklin Global Growth Fund
Mutual Discovery Fund
Templeton Capital Accumulator Fund
Templeton Global Long-Short Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund
Templeton Growth Fund
Templeton World Fund
GROWTH
Franklin Aggressive Growth Fund
Franklin Capital Growth Fund
Franklin Flex Cap Growth Fund
Franklin Small-Mid Cap Growth Fund
Franklin Small Cap Growth Fund II 1
VALUE
Franklin Balance Sheet Investment Fund 2
Franklin Equity Income Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund 3
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Recovery Fund 4
Mutual Shares Fund
BLEND
Franklin Blue Chip Fund
Franklin Convertible Securities Fund
Franklin Growth Fund
Franklin Rising Dividends Fund
Franklin U.S. Long-Short Fund 5
SECTOR
Franklin Biotechnology Discovery Fund
Franklin DynaTech Fund
Franklin Global Communications Fund
Franklin Global Health Care Fund
Franklin Gold and Precious Metals Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Utilities Fund
Franklin Technology Fund
Mutual Financial Services Fund
ASSET ALLOCATION
Franklin Templeton Corefolio Allocation Fund
Franklin Templeton Founding Funds
Allocation Fund
TARGET FUNDS
Franklin Templeton Conservative Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund
INCOME
Franklin Adjustable U.S. Government Securities Fund 6
Franklin's AGE High Income Fund
Franklin Federal Money Fund 6, 7
Franklin Floating Rate Daily Access Fund
Franklin Floating Rate Trust 4
Franklin Income Fund Franklin Money Fund 6, 7
Franklin Short-Intermediate U.S. Government Securities Fund 6
Franklin Strategic Income Fund
Franklin Strategic Mortgage Portfolio 6
Franklin Templeton Hard Currency Fund
Franklin Total Return Fund
Franklin U.S. Government Securities Fund 6
Templeton Global Bond Fund
TAX-FREE INCOME 8
NATIONAL FUNDS
Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund 9
Tax-Exempt Money Fund 6, 7
LIMITED-TERM FUNDS
California Limited-Term Tax-Free Income Fund
Federal Limited-Term Tax-Free Income Fund
New York Limited-Term Tax-Free Income Fund
INTERMEDIATE-TERM FUNDS
California Intermediate-Term Tax-Free Income Fund
Federal Intermediate-Term Tax-Free Income Fund
New York Intermediate-Term Tax-Free Income Fund
STATE-SPECIFIC 8
Alabama
Arizona
California 10
Colorado
Connecticut
Florida 10
Georgia
Kentucky
Louisiana
Maryland
Massachusetts 9
Michigan 9
Minnesota 9
Missouri
New Jersey
New York 10
North Carolina
Ohio 9
Oregon
Pennsylvania
Tennessee
Virginia
INSURANCE FUNDS
Franklin Templeton Variable Insurance
Products Trust 11
1.The fund is closed to new investors. Existing shareholders can continue adding
to their accounts.
2.The fund is only open to existing shareholders as well as select retirement
plans.
3.Effective June 30, 2003, the fund reopened to all new investors.
4.The fund is a continuously offered, closed-end fund. Shares may be purchased
daily; there is no daily redemption. However, each quarter, pending board
approval, the fund will authorize the repurchase of 5%-25% of the outstanding
number of shares. Investors may tender all or a portion of their shares during
the tender period.
5.Upon reaching approximately $350 million in assets, the fund intends to close
to all investors.
6.An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.
7.No assurance exists that the fund's $1.00 per share price will be maintained.
It is possible to lose money by investing in the fund.
8.For investors subject to the alternative minimum tax, a small portion of these
dividends may be taxable. Distributions of capital gains are generally taxable.
9.Portfolio of insured municipal securities.
10.These funds are available in two or more variations, including long-term
portfolios, portfolios of insured securities, a high-yield portfolio (CA) and
money market portfolios (CA and NY).
11.The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.
11/03 Not part of the annual report
[GRAPHIC OMITTED]
FRANKLIN TEMPLETON LOGO ART
FRANKLIN TEMPLETON(R)
INVESTMENTS
One Franklin Parkway
San Mateo, CA 94403-1906
WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL?
Eligible shareholders can sign up for eDelivery at franklintempleton.com. See
inside for details.
SEMIANNUAL REPORT AND SHAREHOLDER LETTER
Franklin New York
Tax-Free Income Fund
INVESTMENT MANAGER
Franklin Advisers, Inc.
DISTRIBUTOR
Franklin Templeton Distributors, Inc.
1-800/DIAL BEN(R)
franklintempleton.com
SHAREHOLDER SERVICES
1-800/632-2301
This report must be preceded or accompanied by the current Franklin New York
Tax-Free Income Fund prospectus, which contains more complete information
including charges, expenses and risks.
To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded and accessed. These calls can be
identified by the presence of a regular beeping tone.
115 S2003 01/04
ITEM 2. CODE OF ETHICS.
(A) THE REGISTRANT HAS ADOPTED A CODE OF ETHICS THAT APPLIES TO ITS PRINCIPAL
EXECUTIVE OFFICERS AND PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER.
(C) N/A
(D) N/A
(F) PURSUANT TO ITEM 10(A), THE REGISTRANT IS ATTACHING AS AN EXHIBIT A COPY OF
ITS CODE OF ETHICS THAT APPLIES TO ITS PRINCIPAL EXECUTIVE OFFICERS FINANCIAL
AND ACCOUNTING OFFICER.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(A)(1) THE REGISTRANT HAS AN AUDIT COMMITTEE FINANCIAL EXPERT SERVING ON ITS
AUDIT COMMITTEE.
(2) THE AUDIT COMMITTEE FINANCIAL EXPERTS ARE EDITH HOLIDAY AND HARRIS J.
ASHTON, AND THEY ARE "INDEPENDENT" AS DEFINED UNDER THE RELEVANT SECURITIES AND
EXCHANGE COMMISSION RULES AND RELEASES.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. N/A
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. N/A
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES. N/A
ITEM 9. CONTROLS AND PROCEDURES.
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Registrant maintains
disclosure controls and procedures that are designed to ensure that information
required to be disclosed in the Registrant's filings under the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 is recorded,
processed, summarized and reported within the periods specified in the rules and
forms of the Securities and Exchange Commission. Such information is accumulated
and communicated to the Registrant's management, including its principal
executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure. The Registrant's management,
including the principal executive officer and the principal financial officer,
recognizes that any set of controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving the desired
control objectives.
Within 90 days prior to the filing date of this Shareholder Report on Form
N-CSR, the Registrant had carried out an evaluation, under the supervision and
with the participation of the Registrant's management, including the
Registrant's principal executive officer and the Registrant's principal
financial officer, of the effectiveness of the design and operation of the
Registrant's disclosure controls and procedures. Based on such evaluation, the
Registrant's principal executive officer and principal financial officer
concluded that the Registrant's disclosure controls and procedures are
effective.
(B) CHANGES IN INTERNAL CONTROLS. There have been no significant changes in the
Registrant's internal controls or in other factors that could significantly
affect the internal controls subsequent to the date of their evaluation in
connection with the preparation of this Shareholder Report on Form N-CSR.
ITEM 10. EXHIBITS.
(A) CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS.
(B)(1) CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
OF JIMMY D. GAMBILL, CHIEF EXECUTIVE OFFICER - FINANCE AND ADMINISTRATION, AND
KIMBERLEY H. MONASTERIO, CHIEF FINANCIAL OFFICER
(B)(2) CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
OF JIMMY D. GAMBILL, CHIEF EXECUTIVE OFFICER - FINANCE AND ADMINISTRATION, AND
KIMBERLEY H. MONASTERIO, CHIEF FINANCIAL OFFICER
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
FRANKLIN NEW YORK TAX-FREE INCOME FUND
By /s/Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date January 30, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date January 30, 2004
By /s/Kimberley H. Monasterio
Chief Financial Officer
Date January 30, 2004