UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-03479
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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: 5/31
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Date of reporting period:5/31/04
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ITEM 1. REPORTS TO STOCKHOLDERS.
MAY 31, 2004
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ANNUAL 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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FRANKLIN[R] TEMPLETON[R] INVESTMENTS
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. Founded 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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Not part of the annual report
Contents
SHAREHOLDER LETTER ............... 1
SPECIAL FEATURE:
Understanding Your
Tax-Free Income Fund ............. 4
ANNUAL REPORT
Franklin New York Tax-Free
Income Fund ...................... 7
Performance Summary .............. 12
Financial Highlights and
Statement of Investments ......... 17
Financial Statements ............. 35
Notes to Financial Statements .... 39
Report of Independent Registered
Public Accounting Firm ........... 45
Tax Designation .................. 46
Board Members and Officers ....... 47
Proxy Voting Policies and
Procedures ....................... 52
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Annual 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 federal, New York state and
New York City personal income taxes through a diversified portfolio consisting
mainly of New York municipal securities.1
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PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT GUARANTEE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU
MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY
DIFFER FROM FIGURES SHOWN. PLEASE VISIT FRANKLINTEMPLETON.COM OR CALL
1-800/342-5236 FOR MOST RECENT MONTH-END PERFORMANCE.
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This annual report for Franklin New York Tax-Free Income Fund covers the fiscal
year ended May 31, 2004.
PERFORMANCE OVERVIEW
Because bond yield and price typically move in opposite directions, as yields
rose bond prices fell for the 12-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 $11.64 on May 31, 2004. The Fund's Class A shares paid dividends
totaling 54.72 cents per share for the Fund's fiscal year.2 The Performance
Summary beginning on page 12 shows that at the end of this reporting period the
Fund's Class A shares' distribution rate was 4.44%, based on an annualization of
May's 4.50 cent ($0.0450) per share dividend and the maximum offering price of
$12.16 on May 31, 2004. An investor in the 2004 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
As the national economic rebound continued, New York experienced a slow but
gradual recovery. The state benefited from unanticipated federal aid and
temporary tax increases, with evidence of the recovery in the form of a small
surplus expected for fiscal year 2003-2004 and significant proposed reductions
in the coming years' budget gaps. Recovery extended into the deep and
diversified economic base, but in particular, improvement in the securities
industry played a critical role in this
1. For investors subject to the alternative minimum tax, a small portion of Fund
dividends may be taxable. Distributions of capital gains are generally taxable.
2. All Fund distributions will vary depending upon current market conditions,
and past distributions are not indicative of future trends.
THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND NAMES OF ALL
PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF INVESTMENTS (SOI). THE
SOI BEGINS ON PAGE 21.
Annual Report | 7
upswing. Overall wages and income were forecast to increase at respective rates
of 5.1% and 5.0% in 2004.3 The 2004 projected 0.8% employment increase is an
improvement from 2003's 0.4% decline. 3 Improved debt management in capital
planning and debt policies supported the recovery, with debt ratios now within
the range of other states. Debt service costs were manageable at 8.1% of
consolidated general and debt service fund expenditures. 3 The benefits of
fiscal conservatism and resolve practiced in recent years left the Empire State
more prepared and better able to cope with current stresses than in the past.
The legislature approved measures implementing temporary tax increases after a
difficult budget process and the efforts paid off -- New York successfully
positioned itself for a favorable fiscal-year close. Personal income tax
increased 14% from last year, while user taxes and fees increased 5.7% and
business taxes rose 9.2% largely due to the stronger economy. 4
Independent credit rating agency Standard & Poor's rated New York's debt AA.5
Its outlook for the state remained negative due to structural budget imbalances
after last year's budget adoption. New York's sound financial recovery and hence
outlook upgrade will depend on adoption of a budget that strives for structural
balance, rebuilding reserves and reduction of gaps for future years.
MUNICIPAL BOND MARKET OVERVIEW
Municipal bond prices traced an unsteady path during the year under review as
significant events affected the market. Globally, triumphs and setbacks in Iraq
and the Middle East, tension with North Korea, and worldwide terrorist activity
made headlines. Domestically, changing tax policies, burgeoning budget deficits,
dollar devaluation, national health care reform, and several financial scandals
were prominent news stories over the past 12 months. Such events seemed to be
reflected in the Lehman Brothers Municipal Bond Index's volatility. The index
fell 4.8% from June 13 through August 15, 2003, and rose 8.2% from August 15
through March 15, 2004, before falling 3.9% through fiscal year-end. 6
[BAR CHART OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
CREDIT QUALITY BREAKDOWN*
Based on Total Long-Term Investments
as of 5/31/04
AAA 61.0%
AA 24.3%
A 8.8%
BBB 5.1%
Below Investment Grade 0.8%
*Quality breakdown may include internal ratings for bonds not rated by an
independent rating agency.
3. Source: Standard & Poor's, "Summary: New York State; Tax Secured, General
Obligation," RATINGSDIRECT, 4/6/04.
4. Source: Standard & Poor's, "Public Finance Report Card: The U.S. States,"
RATINGSDIRECT, 4/12/04.
5. This does not indicate Standard & Poor's rating of the Fund.
6. Source: Lehman Brothers Inc. The Lehman Brothers Municipal Bond Index is a
market value-weighted index engineered for the long-term tax-exempt bond market.
All bonds included have a minimum credit rating of at least Baa. They must have
an outstanding par value of at least $5 million and be issued as part of a
transaction of at least $50 million. The bonds must be dated after 12/31/90, and
must be at least one year from their maturity date. Remarketed issues, taxable
municipal bonds, bonds with floating rates and derivatives are excluded from the
index. The index has four main bond sectors: general obligation, revenue,
insured and prerefunded.
8 | Annual Report
The municipal bond market, however, experienced less volatility than the 10-year
Treasury note and the Standard & Poor's 500 Composite Index (S&P 500). 7
Interest rates rose significantly over the fiscal year's final two months, as
economic data indicated continuing U.S. economic recovery. Labor market
conditions improved, and the markets expected the Federal Reserve Board to begin
raising the federal funds target rate in June. According to Municipal Market
Data, the yield for 30-year AAA bonds increased from 4.34% at the beginning of
the fiscal year under review to 4.99% at period-end.8 Despite the rise in
yields, long-term interest rates remained near four-decade lows through much of
the reporting period. The generally low interest rate environment provided some
municipalities with the opportunity to refinance their outstanding debt. During
calendar year 2003, municipalities issued $94 billion of bonds to refund their
outstanding debt. Refunding debt combined with new-issue bonds totaled $384
billion in 2003, surpassing the $358 billion record set in 2002.9 However,
recent rising rates and lack of refunding opportunities for municipalities may
account for a 19.3% decline in New York's issuance so far in 2004. 10
Another trend in the municipal bond market was greater short-term borrowing,
largely because of the need to smooth annual revenues and fill budget gaps, and
the unusually wide spread between short- and long-term rates. In 2003, municipal
note issuance reached the second-highest level of the past decade. Despite the
abundance of short-term notes, the difference between short- and long-term
rates, illustrated by the yield curve, was wider on May 31, 2004, than on May 31
for the 10 prior years. Wider spreads provided for attractive real rates of
return in the municipal bond market, as long-term distribution yields remained
more than three percentage points above short-term rates.
7. Source: Standard & Poor's Micropal. Based on the one-year annualized
volatility as of 5/31/04 of the Lehman Brothers Municipal Bond Index, the P&R
U.S. Treasury Note 10-Year Index and the S&P 500. See footnote 6 for a
description of the Lehman Brothers Municipal Bond Index. The P&R U.S. Treasury
Note 10-Year Index is a total return index based on a constant maturity
instrument. Payden & Rygel includes both accrued interest and change in market
price in its monthly total return calculations. The S&P 500 consists of 500
stocks chosen for market size, liquidity and industry group representation. Each
stock's weight in the index is proportionate to its market value. The S&P 500 is
one of the most widely used benchmarks of U.S. equity performance.
8. Source: Thomson Financial.
9. Source: THE BOND BUYER online, www.bondbuyer.com, "A Decade of Municipal Bond
Finance," 3/4/04.
10. Source: THE BOND BUYER, 6/1/04.
Annual Report | 9
PORTFOLIO BREAKDOWN
5/31/04
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% OF TOTAL
LONG-TERM INVESTMENTS
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Prerefunded 30.4%
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Subject to Government Appropriations 15.4%
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Transportation 14.4%
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Utilities 9.2%
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Hospital & Health Care 7.3%
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Tax-Supported 7.2%
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General Obligation 4.6%
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Other Revenue 3.9%
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Housing 3.8%
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Higher Education 3.8%
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Many states coped with financial challenges and budget deficits during the year
under review. According to the Center on Budget and Policy Priorities, a
nonpartisan organization that researches and analyzes a range of government
policies and programs, in January 2003 the projected budget shortfall for fiscal
year 2004 for all states totaled between $70 billion and $85 billion. However,
in January 2004, Moody's Investors Service released a report entitled, "State
Credit Cycle Approaches the Bottom; Lessons from the Early 1990s," which cited
several factors that Moody's suggests could contribute to eventual restoration
of fiscal balance. Even with large budgetary swings, overall municipal debt
credit quality remained high, which resulted in Moody's credit upgrades
surpassing downgrades by 417 to 309 for 2003.
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 may help mitigate interest rate risk. We generally stay fully
invested to maximize income distribution.
MANAGER'S DISCUSSION
The Fund was subject to bond calls during the year 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, which
tended to reduce the Fund's income and cause dividend distributions to decline,
as shown in the dividend distributions table.
The significant amount of new issuance during the Fund's fiscal year provided us
with ample opportunity to keep the portfolio fully invested, improve the
portfolio's structure or execute tax losses. The mixture of our value-oriented
philosophy of investing primarily for income, a large supply of municipal bonds,
and a steep yield curve favored the use of longer-term bonds. Consequently, we
sought to remain fully invested in bonds that ranged from 15 to 30 years in
maturity with good call features. We intend to maintain our conservative,
buy-and-hold
10 | Annual Report
DIVIDEND DISTRIBUTIONS*
6/1/03-5/31/04
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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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December 4.50 cents 3.95 cents 3.94 cents 4.58 cents
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January 4.50 cents 3.95 cents 3.94 cents 4.59 cents
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February 4.50 cents 3.95 cents 3.94 cents 4.59 cents
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March 4.50 cents 3.94 cents 3.97 cents 4.61 cents
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April 4.50 cents 3.94 cents 3.97 cents 4.59 cents
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May 4.50 cents 3.94 cents 3.97 cents 4.59 cents
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TOTAL 54.72 CENTS 48.11 CENTS 48.11 CENTS 55.80 CENTS
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*All Fund distributions will vary depending upon current market conditions, and
past distributions are not indicative of future trends.
investment strategy as we attempt to provide shareholders with high, current,
tax-free income.
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 MAY
31, 2004, 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.
Annual Report | 11
Performance Summary as of 5/31/04
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 and graphs do 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
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CLASS A CHANGE 5/31/04 5/31/03
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Net Asset Value (NAV) -$0.58 $11.64 $12.22
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DISTRIBUTIONS (6/1/03-5/31/04)
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Dividend Income $0.5472
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CLASS B CHANGE 5/31/04 5/31/03
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Net Asset Value (NAV) -$0.59 $11.61 $12.20
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DISTRIBUTIONS (6/1/03-5/31/04)
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Dividend Income $0.4811
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CLASS C CHANGE 5/31/04 5/31/03
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Net Asset Value (NAV) -$0.59 $11.63 $12.22
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DISTRIBUTIONS (6/1/03-5/31/04)
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Dividend Income $0.4811
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ADVISOR CLASS CHANGE 5/31/04 5/31/03
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Net Asset Value (NAV) -$0.59 $11.64 $12.23
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DISTRIBUTIONS (6/1/03-5/31/04)
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Dividend Income $0.5580
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12 | Past performance does not guarantee future results. | Annual Report
Performance Summary (CONTINUED)
PERFORMANCE
CLASS A: 4.25% MAXIMUM INITIAL SALES CHARGE; CLASS B: CONTINGENT DEFERRED SALES
CHARGE (CDSC) DECLINING FROM 4% TO 1% OVER SIX YEARS, AND ELIMINATED THEREAFTER;
CLASS C: 1% CDSC IN FIRST YEAR ONLY. CUMULATIVE TOTAL RETURN EXCLUDES SALES
CHARGES. AVERAGE ANNUAL TOTAL RETURNS INCLUDE MAXIMUM SALES CHARGES.
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CLASS A 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return 1 -0.27% +26.95% +75.33%
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Average Annual Total Return 2 -4.49% +3.98% +5.32%
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Avg. Ann. Total Return (6/30/04) 3 -3.97% +4.29% +5.36%
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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 3.49%
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Taxable Equivalent Yield 5 6.11%
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CLASS B 1-YEAR 5-YEAR INCEPTION (1/1/99)
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Cumulative Total Return 1 -0.91% +23.40% +24.16%
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Average Annual Total Return 2 -4.72% +3.96% +3.93%
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Avg. Ann. Total Return (6/30/04) 3 -4.08% +4.29% +3.92%
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Distribution Rate 4 4.07%
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Taxable Equivalent Distribution Rate 5 7.13%
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30-Day Standardized Yield 6 3.10%
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Taxable Equivalent Yield 5 5.43%
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CLASS C 1-YEAR 5-YEAR INCEPTION (5/1/95)
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Cumulative Total Return 1 -0.91% +23.34% +59.63%
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Average Annual Total Return 2 -1.86% +4.29% +5.28%
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Avg. Ann. Total Return (6/30/04) 3 -1.21% +4.59% +5.25%
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Distribution Rate 4 4.10%
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Taxable Equivalent Distribution Rate 5 7.18%
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30-Day Standardized Yield 6 3.09%
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Taxable Equivalent Yield 5 5.41%
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ADVISOR CLASS 7 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return 1 -0.26% +27.23% +75.71%
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Average Annual Total Return 2 -0.26% +4.93% +5.80%
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Avg. Ann. Total Return (6/30/04) 3 +0.48% +5.26% +5.86%
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Distribution Rate 4 4.73%
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Taxable Equivalent Distribution Rate 5 8.28%
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30-Day Standardized Yield 6 3.72%
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Taxable Equivalent Yield 5 6.51%
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PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT GUARANTEE
FUTURE RESULTS. 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 MOST RECENT MONTH-END PERFORMANCE, SEE "FUNDS AND PERFORMANCE" AT
FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236.
Annual Report | Past performance does not guarantee future results. | 13
Performance Summary (CONTINUED)
TOTAL RETURN INDEX COMPARISON FOR HYPOTHETICAL $10,000 INVESTMENT
Total return represents the change in value of an investment over the periods
shown. It includes any current, applicable, maximum sales charge, Fund expenses,
account fees and reinvested distributions. The unmanaged index includes
reinvested interest. It differs from the Fund in composition and does not pay
management fees or expenses. One cannot invest directly in an index. The
Consumer Price Index (CPI), calculated by the U.S. Bureau of Labor Statistics,
is a commonly used measure of the inflation rate.
AVERAGE ANNUAL TOTAL RETURN
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CLASS A 5/31/04
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1-Year -4.49%
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5-Year +3.98%
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10-Year +5.32%
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[LINE CHART OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
CLASS A (6/1/94-5/31/04)
Date Franklin New York Tax-Free Income Fund Lehman Brothers Municipal Bond Index 8 CPI 8
6/1/94 $9,575 $10,000 $10,000
6/30/94 $9,553 $9,939 $10,034
7/31/94 $9,679 $10,121 $10,061
8/31/94 $9,731 $10,156 $10,102
9/30/94 $9,617 $10,007 $10,129
10/31/94 $9,477 $9,830 $10,136
11/30/94 $9,260 $9,652 $10,149
12/31/94 $9,483 $9,864 $10,149
1/31/95 $9,682 $10,146 $10,190
2/28/95 $9,891 $10,441 $10,231
3/31/95 $9,962 $10,561 $10,264
4/30/95 $9,982 $10,574 $10,298
5/31/95 $10,255 $10,911 $10,319
6/30/95 $10,170 $10,816 $10,339
7/31/95 $10,226 $10,918 $10,339
8/31/95 $10,335 $11,057 $10,366
9/30/95 $10,386 $11,126 $10,386
10/31/95 $10,537 $11,288 $10,420
11/30/95 $10,688 $11,476 $10,414
12/31/95 $10,777 $11,586 $10,407
1/31/96 $10,820 $11,673 $10,468
2/29/96 $10,727 $11,595 $10,502
3/31/96 $10,642 $11,446 $10,556
4/30/96 $10,622 $11,414 $10,597
5/31/96 $10,629 $11,410 $10,617
6/30/96 $10,739 $11,534 $10,624
7/31/96 $10,831 $11,638 $10,644
8/31/96 $10,829 $11,636 $10,664
9/30/96 $10,987 $11,798 $10,698
10/31/96 $11,089 $11,932 $10,732
11/30/96 $11,248 $12,150 $10,753
12/31/96 $11,222 $12,099 $10,753
1/31/97 $11,249 $12,122 $10,786
2/28/97 $11,343 $12,233 $10,820
3/31/97 $11,240 $12,070 $10,847
4/30/97 $11,324 $12,171 $10,861
5/31/97 $11,496 $12,354 $10,854
6/30/97 $11,590 $12,486 $10,868
7/31/97 $11,894 $12,832 $10,881
8/31/97 $11,829 $12,711 $10,902
9/30/97 $11,965 $12,862 $10,929
10/31/97 $12,050 $12,945 $10,956
11/30/97 $12,126 $13,021 $10,949
12/31/97 $12,290 $13,211 $10,936
1/31/98 $12,418 $13,347 $10,956
2/28/98 $12,434 $13,351 $10,976
3/31/98 $12,480 $13,363 $10,997
4/30/98 $12,444 $13,303 $11,017
5/31/98 $12,627 $13,513 $11,037
6/30/98 $12,695 $13,567 $11,051
7/31/98 $12,721 $13,601 $11,064
8/31/98 $12,886 $13,811 $11,078
9/30/98 $13,028 $13,983 $11,092
10/31/98 $13,043 $13,983 $11,119
11/30/98 $13,080 $14,032 $11,119
12/31/98 $13,100 $14,067 $11,112
1/31/99 $13,223 $14,234 $11,139
2/28/99 $13,205 $14,172 $11,153
3/31/99 $13,241 $14,192 $11,186
4/30/99 $13,277 $14,227 $11,268
5/31/99 $13,224 $14,145 $11,268
6/30/99 $13,059 $13,941 $11,268
7/31/99 $13,096 $13,992 $11,302
8/31/99 $12,952 $13,880 $11,329
9/30/99 $12,944 $13,886 $11,383
10/31/99 $12,777 $13,735 $11,403
11/30/99 $12,905 $13,881 $11,410
12/31/99 $12,800 $13,778 $11,410
1/31/00 $12,745 $13,718 $11,444
2/29/00 $12,899 $13,877 $11,512
3/31/00 $13,183 $14,180 $11,607
4/30/00 $13,104 $14,097 $11,614
5/31/00 $13,059 $14,023 $11,627
6/30/00 $13,359 $14,395 $11,688
7/31/00 $13,505 $14,595 $11,715
8/31/00 $13,687 $14,820 $11,715
9/30/00 $13,642 $14,743 $11,776
10/31/00 $13,754 $14,904 $11,797
11/30/00 $13,866 $15,017 $11,803
12/31/00 $14,174 $15,388 $11,797
1/31/01 $14,262 $15,540 $11,871
2/28/01 $14,338 $15,589 $11,919
3/31/01 $14,463 $15,729 $11,946
4/30/01 $14,378 $15,559 $11,993
5/31/01 $14,492 $15,726 $12,047
6/30/01 $14,593 $15,831 $12,068
7/31/01 $14,782 $16,066 $12,034
8/31/01 $14,973 $16,331 $12,034
9/30/01 $14,885 $16,276 $12,088
10/31/01 $15,026 $16,470 $12,047
11/30/01 $14,950 $16,331 $12,027
12/31/01 $14,833 $16,176 $11,980
1/31/02 $15,051 $16,457 $12,007
2/28/02 $15,206 $16,655 $12,054
3/31/02 $14,983 $16,329 $12,122
4/30/02 $15,178 $16,648 $12,190
5/31/02 $15,296 $16,749 $12,190
6/30/02 $15,425 $16,926 $12,197
7/31/02 $15,609 $17,144 $12,210
8/31/02 $15,793 $17,350 $12,251
9/30/02 $16,138 $17,730 $12,271
10/31/02 $15,908 $17,436 $12,292
11/30/02 $15,850 $17,364 $12,292
12/31/02 $16,184 $17,730 $12,264
1/31/03 $16,139 $17,685 $12,319
2/28/03 $16,325 $17,932 $12,414
3/31/03 $16,348 $17,943 $12,488
4/30/03 $16,481 $18,062 $12,461
5/31/03 $16,834 $18,485 $12,441
6/30/03 $16,773 $18,406 $12,454
7/31/03 $16,199 $17,762 $12,468
8/31/03 $16,319 $17,894 $12,515
9/30/03 $16,720 $18,421 $12,556
10/31/03 $16,686 $18,328 $12,542
11/30/03 $16,850 $18,519 $12,508
12/31/03 $16,971 $18,672 $12,495
1/31/04 $17,077 $18,779 $12,556
2/29/04 $17,313 $19,062 $12,624
3/31/04 $17,262 $18,995 $12,705
4/30/04 $16,867 $18,545 $12,746
5/31/04 $16,788 $18,478 $12,820
AVERAGE ANNUAL TOTAL RETURN
- -------------------------------------
CLASS B 5/31/04
- -------------------------------------
1-Year -4.72%
- -------------------------------------
5-Year +3.96%
- -------------------------------------
Since Inception (1/1/99) +3.93%
- -------------------------------------
[LINE CHART OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
CLASS B (1/1/99-5/31/04)
Date Franklin New York Tax-Free Income Fund Lehman Brothers Municipal Bond Index 8 CPI 8
1/1/99 $10,000 $10,000 $10,000
1/31/99 $10,086 $10,119 $10,024
2/28/99 $10,067 $10,075 $10,037
3/31/99 $10,090 $10,089 $10,067
4/30/99 $10,106 $10,114 $10,140
5/31/99 $10,062 $10,055 $10,140
6/30/99 $9,932 $9,911 $10,140
7/31/99 $9,955 $9,947 $10,171
8/31/99 $9,841 $9,867 $10,195
9/30/99 $9,830 $9,871 $10,244
10/31/99 $9,698 $9,764 $10,262
11/30/99 $9,790 $9,868 $10,268
12/31/99 $9,706 $9,794 $10,268
1/31/00 $9,669 $9,752 $10,299
2/29/00 $9,781 $9,865 $10,360
3/31/00 $9,983 $10,081 $10,445
4/30/00 $9,927 $10,021 $10,451
5/31/00 $9,880 $9,969 $10,464
6/30/00 $10,102 $10,233 $10,519
7/31/00 $10,217 $10,375 $10,543
8/31/00 $10,350 $10,535 $10,543
9/30/00 $10,302 $10,481 $10,598
10/31/00 $10,391 $10,595 $10,616
11/30/00 $10,462 $10,675 $10,622
12/31/00 $10,690 $10,939 $10,616
1/31/01 $10,751 $11,047 $10,683
2/28/01 $10,804 $11,082 $10,726
3/31/01 $10,893 $11,182 $10,750
4/30/01 $10,824 $11,060 $10,793
5/31/01 $10,914 $11,179 $10,842
6/30/01 $10,976 $11,254 $10,860
7/31/01 $11,114 $11,421 $10,830
8/31/01 $11,252 $11,609 $10,830
9/30/01 $11,181 $11,570 $10,879
10/31/01 $11,282 $11,708 $10,842
11/30/01 $11,219 $11,609 $10,824
12/31/01 $11,126 $11,499 $10,781
1/31/02 $11,285 $11,699 $10,805
2/28/02 $11,396 $11,840 $10,848
3/31/02 $11,224 $11,608 $10,909
4/30/02 $11,365 $11,835 $10,970
5/31/02 $11,447 $11,907 $10,970
6/30/02 $11,539 $12,033 $10,976
7/31/02 $11,671 $12,187 $10,988
8/31/02 $11,803 $12,334 $11,025
9/30/02 $12,056 $12,604 $11,043
10/31/02 $11,878 $12,395 $11,062
11/30/02 $11,829 $12,343 $11,062
12/31/02 $12,073 $12,604 $11,037
1/31/03 $12,034 $12,572 $11,086
2/28/03 $12,168 $12,748 $11,171
3/31/03 $12,179 $12,755 $11,239
4/30/03 $12,272 $12,840 $11,214
5/31/03 $12,530 $13,140 $11,196
6/30/03 $12,480 $13,084 $11,208
7/31/03 $12,046 $12,627 $11,220
8/31/03 $12,130 $12,721 $11,263
9/30/03 $12,422 $13,095 $11,300
10/31/03 $12,392 $13,029 $11,287
11/30/03 $12,508 $13,165 $11,257
12/31/03 $12,591 $13,274 $11,245
1/31/04 $12,665 $13,350 $11,300
2/29/04 $12,823 $13,551 $11,361
3/31/04 $12,780 $13,503 $11,434
4/30/04 $12,491 $13,184 $11,470
5/31/04 $12,320 $13,136 $11,538
14 | Past performance does not guarantee future results. | Annual Report
Performance Summary (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN
- -------------------------------------
CLASS C 5/31/04
- -------------------------------------
1-Year -1.86%
- -------------------------------------
5-Year +4.29%
- -------------------------------------
Since Inception (5/1/95) +5.28%
- -------------------------------------
[LINE CHART OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
CLASS C (5/1/95-5/31/04)
Date Franklin New York Tax-Free Income Fund Lehman Brothers Municipal Bond Index 8 CPI 8
5/1/95 $10,000 $10,000 $10,000
5/31/95 $10,253 $10,319 $10,020
6/30/95 $10,172 $10,229 $10,039
7/31/95 $10,231 $10,326 $10,039
8/31/95 $10,326 $10,457 $10,066
9/30/95 $10,381 $10,523 $10,086
10/31/95 $10,517 $10,676 $10,118
11/30/95 $10,671 $10,853 $10,112
12/31/95 $10,745 $10,957 $10,105
1/31/96 $10,783 $11,040 $10,165
2/29/96 $10,694 $10,966 $10,197
3/31/96 $10,595 $10,825 $10,250
4/30/96 $10,570 $10,795 $10,290
5/31/96 $10,576 $10,791 $10,309
6/30/96 $10,689 $10,908 $10,316
7/31/96 $10,766 $11,007 $10,336
8/31/96 $10,759 $11,004 $10,355
9/30/96 $10,910 $11,158 $10,388
10/31/96 $11,006 $11,285 $10,421
11/30/96 $11,159 $11,491 $10,441
12/31/96 $11,128 $11,443 $10,441
1/31/97 $11,148 $11,464 $10,474
2/28/97 $11,236 $11,569 $10,507
3/31/97 $11,129 $11,415 $10,533
4/30/97 $11,216 $11,511 $10,546
5/31/97 $11,371 $11,684 $10,540
6/30/97 $11,468 $11,808 $10,553
7/31/97 $11,763 $12,136 $10,566
8/31/97 $11,684 $12,022 $10,586
9/30/97 $11,822 $12,164 $10,612
10/31/97 $11,891 $12,243 $10,639
11/30/97 $11,960 $12,315 $10,632
12/31/97 $12,126 $12,494 $10,619
1/31/98 $12,236 $12,623 $10,639
2/28/98 $12,256 $12,627 $10,658
3/31/98 $12,296 $12,638 $10,678
4/30/98 $12,254 $12,581 $10,698
5/31/98 $12,417 $12,780 $10,718
6/30/98 $12,478 $12,831 $10,731
7/31/98 $12,509 $12,863 $10,744
8/31/98 $12,664 $13,062 $10,757
9/30/98 $12,788 $13,224 $10,770
10/31/98 $12,806 $13,224 $10,797
11/30/98 $12,825 $13,270 $10,797
12/31/98 $12,849 $13,304 $10,790
1/31/99 $12,964 $13,462 $10,816
2/28/99 $12,939 $13,403 $10,829
3/31/99 $12,957 $13,422 $10,862
4/30/99 $12,997 $13,455 $10,941
5/31/99 $12,939 $13,377 $10,941
6/30/99 $12,772 $13,185 $10,941
7/31/99 $12,802 $13,233 $10,974
8/31/99 $12,655 $13,127 $11,001
9/30/99 $12,641 $13,132 $11,053
10/31/99 $12,472 $12,990 $11,073
11/30/99 $12,591 $13,128 $11,080
12/31/99 $12,483 $13,030 $11,080
1/31/00 $12,423 $12,974 $11,113
2/29/00 $12,567 $13,124 $11,178
3/31/00 $12,838 $13,411 $11,271
4/30/00 $12,754 $13,332 $11,277
5/31/00 $12,705 $13,263 $11,290
6/30/00 $12,990 $13,614 $11,350
7/31/00 $13,126 $13,803 $11,376
8/31/00 $13,297 $14,016 $11,376
9/30/00 $13,236 $13,943 $11,435
10/31/00 $13,350 $14,095 $11,455
11/30/00 $13,441 $14,202 $11,461
12/31/00 $13,732 $14,553 $11,455
1/31/01 $13,823 $14,697 $11,527
2/28/01 $13,879 $14,744 $11,573
3/31/01 $13,993 $14,876 $11,600
4/30/01 $13,916 $14,715 $11,646
5/31/01 $14,020 $14,873 $11,698
6/30/01 $14,099 $14,973 $11,718
7/31/01 $14,276 $15,194 $11,685
8/31/01 $14,466 $15,445 $11,685
9/30/01 $14,362 $15,393 $11,738
10/31/01 $14,503 $15,576 $11,698
11/30/01 $14,423 $15,445 $11,679
12/31/01 $14,303 $15,299 $11,633
1/31/02 $14,507 $15,564 $11,659
2/28/02 $14,636 $15,752 $11,705
3/31/02 $14,428 $15,443 $11,771
4/30/02 $14,609 $15,745 $11,837
5/31/02 $14,702 $15,841 $11,837
6/30/02 $14,833 $16,008 $11,843
7/31/02 $14,989 $16,214 $11,856
8/31/02 $15,172 $16,409 $11,896
9/30/02 $15,497 $16,768 $11,916
10/31/02 $15,269 $16,490 $11,935
11/30/02 $15,206 $16,422 $11,935
12/31/02 $15,506 $16,768 $11,909
1/31/03 $15,470 $16,726 $11,962
2/28/03 $15,628 $16,960 $12,054
3/31/03 $15,655 $16,970 $12,126
4/30/03 $15,775 $17,082 $12,100
5/31/03 $16,105 $17,482 $12,080
6/30/03 $16,027 $17,407 $12,093
7/31/03 $15,484 $16,798 $12,107
8/31/03 $15,591 $16,924 $12,153
9/30/03 $15,953 $17,421 $12,192
10/31/03 $15,927 $17,333 $12,179
11/30/03 $16,062 $17,514 $12,146
12/31/03 $16,183 $17,659 $12,133
1/31/04 $16,277 $17,760 $12,192
2/29/04 $16,480 $18,028 $12,258
3/31/04 $16,425 $17,965 $12,337
4/30/04 $16,056 $17,539 $12,377
5/31/04 $15,963 $17,476 $12,449
AVERAGE ANNUAL TOTAL RETURN
- -------------------------------------
ADVISOR CLASS 7 5/31/04
- -------------------------------------
1-Year -0.26%
- -------------------------------------
5-Year +4.93%
- -------------------------------------
10-Year +5.80%
- -------------------------------------
[LINE CHART OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
ADVISOR CLASS (6/1/94-5/31/04)7
Date Franklin New York Tax-Free Income Fund Lehman Brothers Municipal Bond Index 8 CPI 8
6/1/94 $10,000.00 $10,000.00 $10,000.00
6/30/94 $9,976.00 $9,939.13 $10,033.90
7/31/94 $10,108.00 $10,121.16 $10,061.02
8/31/94 $10,163.00 $10,156.24 $10,101.69
9/30/94 $10,043.00 $10,007.25 $10,128.81
10/31/94 $9,897.00 $9,829.56 $10,135.59
11/30/94 $9,671.00 $9,651.87 $10,149.15
12/31/94 $9,904.00 $9,864.05 $10,149.15
1/31/95 $10,112.00 $10,146.09 $10,189.83
2/28/95 $10,329.00 $10,441.17 $10,230.51
3/31/95 $10,404.00 $10,561.18 $10,264.41
4/30/95 $10,425.00 $10,573.64 $10,298.31
5/31/95 $10,710.00 $10,911.04 $10,318.64
6/30/95 $10,621.00 $10,815.68 $10,338.98
7/31/95 $10,679.00 $10,918.00 $10,338.98
8/31/95 $10,793.00 $11,056.55 $10,366.10
9/30/95 $10,847.00 $11,126.41 $10,386.44
10/31/95 $11,004.00 $11,288.15 $10,420.34
11/30/95 $11,162.00 $11,475.70 $10,413.56
12/31/95 $11,255.00 $11,585.84 $10,406.78
1/31/96 $11,300.00 $11,673.38 $10,467.80
2/29/96 $11,203.00 $11,594.54 $10,501.69
3/31/96 $11,114.00 $11,446.42 $10,555.93
4/30/96 $11,093.00 $11,413.95 $10,596.61
5/31/96 $11,101.00 $11,409.61 $10,616.95
6/30/96 $11,216.00 $11,533.96 $10,623.73
7/31/96 $11,312.00 $11,638.31 $10,644.07
8/31/96 $11,310.00 $11,635.70 $10,664.41
9/30/96 $11,475.00 $11,798.31 $10,698.31
10/31/96 $11,581.00 $11,931.94 $10,732.20
11/30/96 $11,747.00 $12,150.21 $10,752.54
12/31/96 $11,720.00 $12,098.90 $10,752.54
1/31/97 $11,746.96 $12,121.80 $10,786.44
2/28/97 $11,844.95 $12,233.11 $10,820.34
3/31/97 $11,737.96 $12,069.92 $10,847.46
4/30/97 $11,824.95 $12,171.08 $10,861.02
5/31/97 $12,004.93 $12,354.27 $10,854.24
6/30/97 $12,103.92 $12,485.87 $10,867.80
7/31/97 $12,419.90 $12,831.68 $10,881.36
8/31/97 $12,352.90 $12,711.38 $10,901.70
9/30/97 $12,493.89 $12,862.11 $10,928.81
10/31/97 $12,583.88 $12,945.01 $10,955.93
11/30/97 $12,662.87 $13,021.25 $10,949.15
12/31/97 $12,833.86 $13,211.11 $10,935.59
1/31/98 $12,967.85 $13,347.34 $10,955.93
2/28/98 $12,983.85 $13,351.40 $10,976.27
3/31/98 $13,032.84 $13,363.29 $10,996.61
4/30/98 $12,994.85 $13,302.99 $11,016.95
5/31/98 $13,185.83 $13,513.44 $11,037.29
6/30/98 $13,256.82 $13,566.77 $11,050.85
7/31/98 $13,284.82 $13,600.68 $11,064.41
8/31/98 $13,455.80 $13,810.84 $11,077.97
9/30/98 $13,604.79 $13,983.01 $11,091.53
10/31/98 $13,620.79 $13,982.73 $11,118.64
11/30/98 $13,658.79 $14,031.71 $11,118.64
12/31/98 $13,679.78 $14,067.07 $11,111.86
1/31/99 $13,808.77 $14,234.33 $11,138.98
2/28/99 $13,789.77 $14,172.30 $11,152.54
3/31/99 $13,826.77 $14,191.72 $11,186.44
4/30/99 $13,864.77 $14,227.08 $11,267.80
5/31/99 $13,808.77 $14,144.76 $11,267.80
6/30/99 $13,637.79 $13,941.27 $11,267.80
7/31/99 $13,675.78 $13,992.00 $11,301.70
8/31/99 $13,525.80 $13,879.82 $11,328.81
9/30/99 $13,516.80 $13,885.62 $11,383.05
10/31/99 $13,341.81 $13,735.18 $11,403.39
11/30/99 $13,476.80 $13,881.27 $11,410.17
12/31/99 $13,366.81 $13,777.79 $11,410.17
1/31/00 $13,308.82 $13,717.79 $11,444.07
2/29/00 $13,470.80 $13,877.21 $11,511.86
3/31/00 $13,766.78 $14,180.41 $11,606.78
4/30/00 $13,683.78 $14,096.64 $11,613.56
5/31/00 $13,637.79 $14,023.31 $11,627.12
6/30/00 $13,949.76 $14,394.91 $11,688.14
7/31/00 $14,102.75 $14,595.21 $11,715.25
8/31/00 $14,292.73 $14,820.14 $11,715.25
9/30/00 $14,245.73 $14,743.04 $11,776.27
10/31/00 $14,362.72 $14,903.91 $11,796.61
11/30/00 $14,479.71 $15,016.67 $11,803.39
12/31/00 $14,801.68 $15,387.69 $11,796.61
1/31/01 $14,893.68 $15,540.16 $11,871.19
2/28/01 $14,972.67 $15,589.44 $11,918.64
3/31/01 $15,103.66 $15,729.15 $11,945.76
4/30/01 $15,014.67 $15,558.71 $11,993.22
5/31/01 $15,133.66 $15,726.25 $12,047.46
6/30/01 $15,238.65 $15,831.47 $12,067.80
7/31/01 $15,436.63 $16,065.97 $12,033.90
8/31/01 $15,635.61 $16,330.62 $12,033.90
9/30/01 $15,543.62 $16,275.83 $12,088.14
10/31/01 $15,704.60 $16,469.75 $12,047.46
11/30/01 $15,625.61 $16,330.91 $12,027.12
12/31/01 $15,504.62 $16,176.41 $11,979.66
1/31/02 $15,733.60 $16,457.00 $12,006.78
2/28/02 $15,882.59 $16,655.27 $12,054.24
3/31/02 $15,665.61 $16,328.88 $12,122.03
4/30/02 $15,870.59 $16,648.02 $12,189.83
5/31/02 $15,979.58 $16,749.18 $12,189.83
6/30/02 $16,116.57 $16,926.29 $12,196.61
7/31/02 $16,309.55 $17,143.98 $12,210.17
8/31/02 $16,503.53 $17,350.07 $12,250.85
9/30/02 $16,864.50 $17,730.08 $12,271.19
10/31/02 $16,639.52 $17,436.16 $12,291.53
11/30/02 $16,580.53 $17,363.69 $12,291.53
12/31/02 $16,916.50 $17,730.08 $12,264.41
1/31/03 $16,884.50 $17,685.15 $12,318.64
2/28/03 $17,067.48 $17,932.41 $12,413.56
3/31/03 $17,106.48 $17,943.13 $12,488.14
4/30/03 $17,245.47 $18,061.68 $12,461.02
5/31/03 $17,616.43 $18,484.59 $12,440.68
6/30/03 $17,540.44 $18,406.04 $12,454.24
7/31/03 $16,954.49 $17,761.97 $12,467.80
8/31/03 $17,081.48 $17,894.43 $12,515.25
9/30/03 $17,487.45 $18,420.53 $12,555.93
10/31/03 $17,468.45 $18,327.78 $12,542.37
11/30/03 $17,626.43 $18,518.80 $12,508.47
12/31/03 $17,768.42 $18,672.14 $12,494.92
1/31/04 $17,881.41 $18,779.10 $12,555.93
2/29/04 $18,114.39 $19,061.71 $12,623.73
3/31/04 $18,063.39 $18,995.33 $12,705.08
4/30/04 $17,666.43 $18,545.47 $12,745.76
5/31/04 $17,571.00 $18,478.22 $12,820.34
Annual Report | Past performance does not guarantee future results. | 15
Performance Summary (CONTINUED)
ENDNOTES
MUNICIPAL BONDS ARE PARTICULARLY SENSITIVE TO INTEREST RATE MOVEMENTS;
THEREFORE, THE FUND'S YIELD AND SHARE PRICE WILL FLUCTUATE WITH MARKET
CONDITIONS. BOND PRICES, AND THUS THE FUND'S SHARE PRICE, GENERALLY MOVE IN THE
OPPOSITE DIRECTION FROM INTEREST RATES. SINCE THE FUND CONCENTRATES ITS
INVESTMENTS IN A SINGLE STATE, IT IS SUBJECT TO GREATER RISK OF ADVERSE ECONOMIC
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: Prior to 7/1/94, these 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: These shares have higher annual fees and expenses than Class A shares.
CLASS C: Prior to 1/1/04, these shares were offered with an initial sales
charge; thus actual total returns would have differed. These shares have higher
annual fees and expenses than Class A shares.
ADVISOR CLASS: Shares are available to certain eligible investors as described
in the prospectus.
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include a sales charge.
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.
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
current monthly dividend and the maximum offering price (NAV for Classes B, C
and Advisor) per share on 5/31/04.
5. Taxable equivalent distribution rate and yield assume the published rates as
of 5/28/04 for the maximum combined 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 5/31/04.
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 +13.03% and +4.71%.
8. Source: Standard & Poor's Micropal. The Lehman Brothers Municipal Bond Index
is a market value-weighted index engineered for the long-term tax-exempt bond
market. All bonds included have a minimum credit rating of at least Baa. They
must have an outstanding par value of at least $5 million and be issued as part
of a transaction of at least $50 million. The bonds must be dated after
12/31/90, and must be at least one year from their maturity date. Remarketed
issues, taxable municipal bonds, bonds with floating rates and derivatives are
excluded from the index. The index has four main bond sectors: general
obligation, revenue, insured and prerefunded.
16 | Past performance does not guarantee future results. | Annual Report
Franklin New York Tax-Free Income Fund
FINANCIAL HIGHLIGHTS
-------------------------------------------------------------------------
YEAR ENDED MAY 31,
CLASS A 2004 2003 2002 2001 2000
-------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .................... $12.22 $11.65 $11.62 $11.06 $11.91
Income from investment operations:
Net investment income a .............................. .55 .57 .59 .62 .64
Net realized and unrealized gains (losses) ........... (.58) .57 .04 .57 (.79)
-------------------------------------------------------------------------
Total from investment operations ...................... (.03) 1.14 .63 1.19 (.15)
-------------------------------------------------------------------------
Less distributions from:
Net investment income ................................ (.55) (.57) (.60) (.63) (.63)
Net realized gains ................................... -- -- -- -- (.07)
-------------------------------------------------------------------------
Total distributions ................................... (.55) (.57) (.60) (.63) (.70)
-------------------------------------------------------------------------
Net asset value, end of year .......................... $11.64 $12.22 $11.65 $11.62 $11.06
-------------------------------------------------------------------------
Total return b ........................................ (.27)% 10.06% 5.55% 10.97% (1.24)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ....................... $4,429,312 $4,828,889 $4,609,318 $4,483,909 $4,219,849
Ratio to average net assets:
Expenses ............................................. .60% .60% .59% .60% .60%
Net investment income ................................ 4.62% 4.81% 5.09% 5.39% 5.64%
Portfolio turnover rate ............................... 10.35% 13.44% 9.57% 7.83% 24.61%
<FN>
a Based on average daily shares outstanding.
b Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
</FN>
Annual Report | 17
Franklin New York Tax-Free Income Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
-------------------------------------------------------------------------
YEAR ENDED MAY 31,
CLASS B 2004 2003 2002 2001 2000
-------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ..................... $12.20 $11.63 $11.61 $11.04 $11.89
Income from investment operations:
Net investment income a ............................... .48 .50 .53 .55 .57
Net realized and unrealized gains (losses) ............ (.59) .57 .03 .58 (.78)
-------------------------------------------------------------------------
Total from investment operations ....................... (.11) 1.07 .56 1.13 (.21)
-------------------------------------------------------------------------
Less distributions from:
Net investment income ................................. (.48) (.50) (.54) (.56) (.57)
Net realized gains .................................... -- -- -- -- (.07)
-------------------------------------------------------------------------
Total distributions .................................... (.48) (.50) (.54) (.56) (.64)
-------------------------------------------------------------------------
Net asset value, end of year ........................... $11.61 $12.20 $11.63 $11.61 $11.04
-------------------------------------------------------------------------
Total return b ......................................... (.91)% 9.46% 4.88% 10.46% (1.80)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ........................ $231,664 $233,767 $160,194 $87,697 $40,874
Ratio to average net assets:
Expenses .............................................. 1.16% 1.17% 1.16% 1.16% 1.17%
Net investment income ................................. 4.06% 4.24% 4.53% 4.80% 5.08%
Portfolio turnover rate ................................ 10.35% 13.44% 9.57% 7.83% 24.61%
<FN>
a Based on average daily shares outstanding.
b Total return does not reflect contingent deferred sales charge, and is not
annualized for periods less than one year.
</FN>
18 | Annual Report
Franklin New York Tax-Free Income Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
-------------------------------------------------------------------------
YEAR ENDED MAY 31,
CLASS C 2004 2003 2002 2001 2000
-------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ..................... $12.22 $11.64 $11.62 $11.06 $11.91
-------------------------------------------------------------------------
Income from investment operations:
Net investment income a ............................... .48 .50 .53 .55 .57
Net realized and unrealized gains (losses) ............ (.59) .58 .03 .57 (.78)
-------------------------------------------------------------------------
Total from investment operations ....................... (.11) 1.08 .56 1.12 (.21)
-------------------------------------------------------------------------
Less distributions from:
Net investment income ................................. (.48) (.50) (.54) (.56) (.57)
Net realized gains .................................... -- -- -- -- (.07)
-------------------------------------------------------------------------
Total distributions .................................... (.48) (.50) (.54) (.56) (.64)
-------------------------------------------------------------------------
Net asset value, end of year ........................... $11.63 $12.22 $11.64 $11.62 $11.06
-------------------------------------------------------------------------
Total return b ......................................... (.91)% 9.55% 4.86% 10.35% (1.80)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ........................ $231,051 $242,965 $188,642 $146,824 $119,302
Ratio to average net assets:
Expenses .............................................. 1.16% 1.17% 1.16% 1.16% 1.17%
Net investment income ................................. 4.06% 4.24% 4.53% 4.82% 5.07%
Portfolio turnover rate ................................ 10.35% 13.44% 9.57% 7.83% 24.61%
<FN>
a Based on average daily shares outstanding.
b Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
</FN>
Annual Report | 19
Franklin New York Tax-Free Income Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
----------------------------------
YEAR ENDED MAY 31,
ADVISOR CLASS 2004 2003 2002 C
----------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .................. $12.23 $11.65 $11.68
----------------------------------
Income from investment operations:
Net investment income a ............................ .56 .58 .40
Net realized and unrealized gains (losses) ......... (.59) .58 (.08)
----------------------------------
Total from investment operations .................... (.03) 1.16 .32
----------------------------------
Less distributions from net investment income ....... (.56) (.58) (.35)
----------------------------------
Net asset value, end of year ........................ $11.64 $12.23 $11.65
----------------------------------
Total return b ...................................... (.26)% 10.24% 2.80%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ..................... $22,470 $18,278 $14,054
Ratios to average net assets:
Expenses ........................................... .51% .52% .51%d
Net investment income .............................. 4.71% 4.89% 5.16%d
Portfolio turnover rate ............................. 10.35% 13.44% 9.57%
<FN>
a Based on average daily shares outstanding.
b Total return is not annualized for periods less than one year.
c For the period October 1, 2001 (effective date) to May 31, 2002.
d Annualized.
</FN>
20 | See notes to financial statements. | Annual Report
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, MAY 31, 2004
- -----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS 99.0%
BONDS 97.1%
Albany Housing Authority Limited Obligation Revenue, Refunding, 6.25%, 10/01/12 ..... $ 5,250,000 $ 5,545,575
Albany IDA, Civic Facility Revenue,
Albany Medical Center Project, 6.00%, 5/01/19 ..................................... 1,270,000 1,233,424
Albany Medical Center Project, 6.00%, 5/01/29 ..................................... 1,460,000 1,355,172
St. Rose Project, Series A, AMBAC Insured, 5.375%, 7/01/31 ........................ 2,750,000 2,839,870
Albany Parking Authority Revenue,
Refunding, Series A, 5.625%, 7/15/25 .............................................. 1,000,000 1,023,130
Series A, 5.625%, 7/15/20 ......................................................... 1,250,000 1,308,313
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 1,471,180
Series A, AMBAC Insured, 5.25%, 8/01/31 ........................................... 5,055,000 5,116,974
Series B, AMBAC Insured, 5.625%, 8/01/20 .......................................... 1,690,000 1,827,363
Series B, AMBAC Insured, 5.75%, 8/01/25 ........................................... 3,050,000 3,256,272
Series B, AMBAC Insured, 5.75%, 8/01/30 ........................................... 3,440,000 3,653,521
Series B, AMBAC Insured, 5.25%, 8/01/31 ........................................... 1,000,000 1,012,260
Auburn IDA, MFR, Auburn Memorial Home, 6.50%, 2/01/34 ............................... 5,095,000 5,225,840
Battery Park City Authority Revenue, Series A, 5.00%,
11/01/24 .......................................................................... 9,000,000 9,087,120
11/01/25 .......................................................................... 12,000,000 12,062,160
11/01/26 .......................................................................... 14,250,000 14,270,520
Bethany Retirement Home Inc. Mortgage Loan Revenue, FHA Insured, 7.50%, 2/01/34 ..... 8,160,000 8,372,894
Clinton County COP, Correctional Facilities Project, 8.125%, 8/01/17 ................ 5,205,000 6,367,381
Dutchess County IDA, Civic Facility Revenue, Vassar College Project, 5.35%, 9/01/40 . 16,000,000 16,199,200
Franklin County COP, Court House Redevelopment Project, 8.125%, 8/01/06 ............. 2,590,000 2,669,565
Geneva IDA, Civic Facilities Revenue, Colleges of the Seneca Project, AMBAC Insured,
5.00%, 9/01/21 .................................................................... 2,835,000 2,902,104
5.125%, 9/01/31 ................................................................... 5,045,000 5,059,731
Guam Power Authority Revenue, Series A, Pre-Refunded,
6.625%, 10/01/14 .................................................................. 2,900,000 3,009,504
6.75%, 10/01/24 ................................................................... 25,500,000 26,473,335
Hamilton Elderly Housing Corp. Mortgage Revenue, Hamilton Apartments Project,
11.25%, 1/01/15 .................................................................... 1,085,000 1,088,928
Ilion Elderly Housing Corp. Mortgage Revenue, Section 8 Housing Assistance Revenue,
7.25%, 7/01/09 .................................................................... 1,225,000 1,256,519
Long Island Power Authority Electric System Revenue,
MBIA Insured, 5.75%, 12/01/24 ..................................................... 15,060,000 16,096,580
Refunding, Series A, 5.75%, 12/01/24 .............................................. 15,000,000 15,570,000
Refunding, Series A, AMBAC Insured, 5.25%, 12/01/26 ............................... 5,000,000 5,056,300
Series A, FSA Insured, 5.00%, 12/01/18 ............................................ 10,000,000 10,301,600
Series A, FSA Insured, 5.125%, 12/01/22 ........................................... 28,210,000 28,770,815
Series A, MBIA Insured, 5.25%, 12/01/26 ........................................... 9,000,000 9,101,340
Madison County IDA Civic Facility Revenue, College University Project, Series B,
5.00%, 7/01/33 .................................................................... 2,000,000 1,952,000
Middleburg Central School District GO, FGIC Insured,
4.60%, 8/15/17 .................................................................... 1,045,000 1,063,517
4.625%, 8/15/18 ................................................................... 1,155,000 1,171,066
4.625%, 8/15/19 ................................................................... 1,210,000 1,220,200
4.75%, 8/15/20 .................................................................... 1,270,000 1,285,405
Annual Report | 21
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, MAY 31, 2004 (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Middleburg Central School District GO, FGIC Insured, (cont.)
4.75%, 8/15/21 .................................................................... $ 1,330,000 $ 1,338,898
Monroe County IDAR, Civic Facilities, De Paul Community Facilities, 6.50%, 2/01/24 .. 1,285,000 1,314,696
Monroe County Water Authority Water Revenue,
5.15%, 8/01/22 .................................................................... 1,000,000 1,024,700
5.25%, 8/01/36 .................................................................... 2,250,000 2,263,185
MTA Commuter Facilities Revenue,
Series 8, Pre-Refunded, 5.50%, 7/01/21 ............................................ 5,000,000 5,643,200
Series A, FGIC Insured, Pre-Refunded, 5.25%, 7/01/28 .............................. 8,655,000 9,608,521
Series A, MBIA Insured, Pre-Refunded, 5.625%, 7/01/27 ............................. 10,000,000 11,087,300
Series A, Pre-Refunded, 6.00%, 7/01/24 ............................................ 5,575,000 6,326,231
Series A, Pre-Refunded, 6.50%, 7/01/24 ............................................ 27,620,000 28,150,304
Series A, Pre-Refunded, 5.25%, 7/01/28 ............................................ 18,300,000 20,316,111
Series A, Pre-Refunded, 6.125%, 7/01/29 ........................................... 9,625,000 10,978,083
Series C-1, FGIC Insured, Pre-Refunded, 5.375%, 7/01/27 ........................... 19,100,000 21,117,151
Series R, Pre-Refunded, 5.50%, 7/01/17 ............................................ 2,000,000 2,252,920
MTA Dedicated Tax Fund Revenue,
Refunding, Series A, 5.00%, 11/15/30 .............................................. 25,000,000 24,215,250
Refunding, Series A, FSA Insured, 5.00%, 11/15/28 ................................. 41,575,000 41,226,186
Series A, FGIC Insured, 5.00%, 11/15/31 ........................................... 39,685,000 39,216,717
Series A, FGIC Insured, Pre-Refunded, 6.00%, 4/01/30 .............................. 27,260,000 31,116,200
Series A, FSA Insured, 5.00%, 11/15/32 ............................................ 11,000,000 10,851,720
Series A, FSA Insured, Pre-Refunded, 5.00%, 4/01/29 ............................... 25,800,000 27,963,846
Series A, MBIA Insured, Pre-Refunded, 5.25%, 4/01/26 .............................. 20,500,000 22,629,540
MTA Revenue,
5.25%, 11/15/31 ................................................................... 15,000,000 15,019,800
Refunding, Series A, FGIC Insured, 5.00%, 11/15/25 ................................ 22,010,000 22,039,493
Refunding, Series A, FGIC Insured, 5.25%, 11/15/31 ................................ 34,000,000 34,392,020
Refunding, Series A, FSA Insured, 5.00%, 11/15/30 ................................. 43,130,000 42,568,016
Refunding, Series A, MBIA Insured, 5.125%, 11/15/31 ............................... 15,000,000 15,045,450
Series A, FGIC Insured, 5.00%, 11/15/32 ........................................... 10,355,000 10,215,415
Series B, 5.25%, 11/15/32 ......................................................... 28,820,000 28,861,789
Series U, FGIC Insured, 5.125%, 11/15/31 .......................................... 5,000,000 5,015,150
MTA Service Contract Revenue,
Refunding, AMBAC Insured, 5.25%, 7/01/31 .......................................... 50,000,000 50,720,500
Refunding, Series A, 5.125%, 1/01/29 .............................................. 6,000,000 5,880,600
Refunding, Series A, FGIC Insured, 5.00%, 7/01/25 ................................. 12,760,000 12,776,333
Series B, 5.375%, 1/01/30 ......................................................... 50,000,000 50,503,000
Series B, MBIA Insured, 5.00%, 1/01/31 ............................................ 22,290,000 22,030,544
MTA Transit Facilities Revenue, Series A,
FSA Insured, Pre-Refunded, 6.10%, 7/01/21 ......................................... 15,000,000 16,539,600
FSA Insured, Pre-Refunded, 5.50%, 7/01/22 ......................................... 16,170,000 17,906,658
MBIA Insured, Pre-Refunded, 5.625%, 7/01/25 ....................................... 8,000,000 8,867,360
Pre-Refunded, 6.00%, 7/01/24 ...................................................... 7,000,000 7,943,250
Pre-Refunded, 5.625%, 7/01/27 ..................................................... 14,440,000 16,059,879
Pre-Refunded, 6.125%, 7/01/29 ..................................................... 11,595,000 13,225,025
Nassau County Tobacco Settlement Corp. Revenue, Asset Backed, Series A,
6.50%, 7/15/27 .................................................................... 15,000,000 14,047,950
22 | Annual Report
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, MAY 31, 2004 (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
Nassau Health Care Corp. Health System Revenue, Nassau County Guaranteed, FSA Insured,
5.75%, 8/01/29 .................................................................... $ 36,040,000 $ 37,735,682
New York City GO,
6.125%, 8/01/25 ................................................................... 4,940,000 5,269,300
Fiscal 2003, Series I, 5.00%, 3/01/29 ............................................. 10,000,000 9,655,100
Fiscal 2003, Series I, 5.00%, 3/01/30 ............................................. 14,785,000 14,265,159
Refunding, Series A, 5.50%, 5/15/24 ............................................... 10,000,000 10,317,800
Refunding, Series A, FSA Insured, 6.00%, 5/15/30 .................................. 6,250,000 6,847,500
Series A, Pre-Refunded, 6.25%, 8/01/17 ............................................ 2,675,000 2,950,819
Series A-1, Pre-Refunded, 6.625%, 8/01/25 ......................................... 17,000,000 18,161,610
Series B, 7.00%, 2/01/18 .......................................................... 25,000 25,096
Series B, Pre-Refunded, 6.00%, 8/15/26 ............................................ 915,000 1,006,912
Series B, Sub Series B-1, Pre-Refunded, 7.00%, 8/15/16 ............................ 2,000,000 2,043,620
Series B, Sub Series B-1, Pre-Refunded, 7.50%, 8/15/20 ............................ 10,000,000 10,228,000
Series C, 7.00%, 2/01/12 .......................................................... 705,000 711,077
Series C, FSA Insured, 5.125%, 3/15/25 ............................................ 6,500,000 6,555,510
Series D, 8.00%, 8/01/17 .......................................................... 5,000 5,051
Series D, 7.50%, 2/01/18 .......................................................... 5,000 5,020
Series D, 5.125%, 8/01/19 ......................................................... 1,985,000 2,016,363
Series D, 5.25%, 8/01/21 .......................................................... 14,500,000 14,714,745
Series D, 5.25%, 10/15/23 ......................................................... 5,000,000 5,066,150
Series D, 5.50%, 6/01/24 .......................................................... 23,945,000 24,710,043
Series D, 5.00%, 10/15/29 ......................................................... 5,000,000 4,825,550
Series D, FGIC Insured, 5.25%, 8/01/21 ............................................ 5,355,000 5,557,847
Series F, 5.875%, 8/01/24 ......................................................... 3,915,000 4,095,090
Series F, 5.30%, 1/15/26 .......................................................... 45,000,000 45,306,450
Series F, Pre-Refunded, 5.875%, 8/01/24 ........................................... 3,085,000 3,378,754
Series F, Pre-Refunded, 6.625%, 2/15/25 ........................................... 11,240,000 11,748,947
Series G, 6.00%, 10/15/26 ......................................................... 8,600,000 9,053,048
Series G, Pre-Refunded, 6.00%, 10/15/26 ........................................... 1,300,000 1,454,817
Series H, 7.20%, 2/01/15 .......................................................... 5,000 5,020
Series H, FSA Insured, 5.375%, 8/01/27 ............................................ 8,510,000 8,713,049
Series H, MBIA Insured, 5.125%, 8/01/25 ........................................... 4,000,000 4,028,080
Series H, Pre-Refunded, 6.125%, 8/01/25 ........................................... 60,000 67,182
Series I, 6.25%, 4/15/27 .......................................................... 3,275,000 3,541,585
Series I, Pre-Refunded, 6.25%, 4/15/27 ............................................ 6,225,000 6,939,319
Series K, Pre-Refunded, 6.25%, 4/01/26 ............................................ 9,000,000 9,816,480
New York City HDC, MFMR,
Refunding, Series A, FHA Insured, 6.55%, 10/01/15 ................................. 19,450,000 19,618,437
Series A, FHA Insured, 6.55%, 4/01/18 ............................................. 10,000,000 10,085,000
Series A, FHA Insured, 6.60%, 4/01/30 ............................................. 51,500,000 52,072,165
New York City IDA, Civic Facility Revenue,
College of New Rochelle, 5.80%, 9/01/26 ........................................... 1,500,000 1,547,655
Institute of International Education Inc. Project, 5.25%, 9/01/21 ................. 1,530,000 1,576,313
Institute of International Education Inc. Project, 5.25%, 9/01/31 ................. 5,235,000 5,250,182
New York University Project, AMBAC Insured, 5.00%, 7/01/31 ........................ 18,000,000 17,788,680
Staten Island University Hospital Project, Series A, 6.375%, 7/01/31 .............. 3,990,000 3,661,743
New York City Municipal Water Finance Authority Revenue, Series B, 5.00%, 6/15/26 ... 25,000,000 24,671,000
Annual Report | 23
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, MAY 31, 2004 (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York City Municipal Water Finance Authority Water and Sewer System Revenue,
Refunding, Series B, 6.10%, 6/15/31 ............................................... $ 11,005,000 $ 12,509,604
Refunding, Series B, 6.00%, 6/15/33 ............................................... 6,040,000 6,833,354
Refunding, Series E, MBIA Insured, 5.125%, 6/15/31 ................................ 34,175,000 34,274,791
Series A, 5.75%, 6/15/30 .......................................................... 41,190,000 43,452,567
Series A, FGIC Insured, 5.75%, 6/15/31 ............................................ 19,315,000 20,500,941
Series A, FGIC Insured, 5.50%, 6/15/32 ............................................ 11,655,000 12,053,135
Series A, FGIC Insured, 5.25%, 6/15/33 ............................................ 7,000,000 7,086,030
Series B, 5.75%, 6/15/26 .......................................................... 24,455,000 25,842,332
Series B, FGIC Insured, 5.125%, 6/15/30 ........................................... 12,500,000 12,502,000
Series B, MBIA Insured, 5.50%, 6/15/27 ............................................ 32,620,000 33,657,316
Series B, Pre-Refunded, 6.10%, 6/15/31 ............................................ 3,995,000 4,632,802
Series B, Pre-Refunded, 6.00%, 6/15/33 ............................................ 10,260,000 11,842,297
New York City Transitional Finance Authority Revenue, Future Tax Secured,
Refunding, Series B, AMBAC Insured, 5.00%, 5/01/30 ................................ 3,000,000 2,969,760
Refunding, Series C-A, 5.50%, 11/01/24 ............................................ 16,800,000 17,472,336
Series A, 5.125%, 8/15/21 ......................................................... 6,120,000 6,238,300
Series A, 5.00%, 8/15/27 .......................................................... 770,000 757,480
Series A, 5.25%, 5/01/31 .......................................................... 26,545,000 26,696,307
Series A, 5.25%, 8/01/31 .......................................................... 30,605,000 30,824,132
Series A, FGIC Insured, 5.00%, 5/01/28 ............................................ 16,065,000 15,931,500
Series A, Pre-Refunded, 5.125%, 8/15/21 ........................................... 8,815,000 9,626,244
Series A, Pre-Refunded, 5.625%, 2/15/26 ........................................... 20,000,000 22,552,000
Series A, Pre-Refunded, 5.00%, 8/15/27 ............................................ 6,145,000 6,687,050
Series A, Pre-Refunded, 6.00%, 8/15/29 ............................................ 29,000,000 33,240,960
Series A, Pre-Refunded, 5.25%, 5/01/31 ............................................ 460,000 509,620
Series B, 5.00%, 5/01/30 .......................................................... 7,520,000 7,369,826
Series B, Pre-Refunded, 6.00%, 11/15/29 ........................................... 15,000,000 17,286,150
Series C, 5.50%, 5/01/25 .......................................................... 5,515,000 5,701,131
Series C, 5.00%, 5/01/26 .......................................................... 3,680,000 3,631,608
Series C, 5.00%, 5/01/29 .......................................................... 5,215,000 5,112,838
Series C, MBIA Insured, 5.00%, 5/01/29 ............................................ 1,365,000 1,351,500
Series C, MBIA Insured, Pre-Refunded, 5.00%, 5/01/29 .............................. 2,270,000 2,483,448
Series C, Pre-Refunded, 5.50%, 5/01/25 ............................................ 4,485,000 5,008,130
Series C, Pre-Refunded, 5.00%, 5/01/26 ............................................ 320,000 347,405
Series C, Pre-Refunded, 5.00%, 5/01/29 ............................................ 8,655,000 9,468,830
Series C, Pre-Refunded, 5.50%, 11/01/29 ........................................... 13,660,000 15,366,271
Series D, 5.00%, 2/01/27 .......................................................... 62,025,000 61,029,499
Series E, 5.00%, 2/01/24 .......................................................... 7,000,000 7,014,140
Series E, 5.00%, 2/01/25 .......................................................... 5,000,000 4,974,150
Series E, 5.00%, 2/01/27 .......................................................... 10,000,000 9,839,500
Series E, 5.00%, 2/01/33 .......................................................... 18,035,000 17,604,324
New York City Transportation Authority MTA Triborough COP, Series A, AMBAC Insured,
5.25%, 1/01/29 .................................................................... 79,840,000 80,854,766
New York City Trust Cultural Resources Revenue,
Museum of Modern Art 2001, Series D, AMBAC Insured, 5.125%, 7/01/31 ............... 15,500,000 15,545,105
Wildlife Conservation Society, FGIC Insured, 5.00%, 2/01/34 ....................... 10,500,000 10,355,415
24 | Annual Report
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, MAY 31, 2004 (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York IDA, Parking Facility Revenue, Royal Charter Presbyterian, FSA Insured,
5.25%, 12/15/32 ................................................................... $ 1,525,000 $ 1,531,786
New York State Appropriated Tobacco Corp. Revenue, Asset Backed, Series A-1, AMBAC Insured,
5.25%, 6/01/21 .................................................................... 18,000,000 18,652,500
New York State Commissioner of General Services, People of the State of New York, Certificate
of Lease Assignment,
5.70%, 3/01/29 .................................................................... 69,556,432 69,819,355
5.75%, 3/01/29 .................................................................... 35,652,969 35,874,374
New York State COP, Hanson Redevelopment Project, 8.375%, 5/01/08 ................... 12,670,000 13,942,195
New York State Dormitory Authority Lease Revenue,
Court Facilities, 6.00%, 5/15/39 .................................................. 58,245,000 61,797,363
Court Facilities, Series A, 5.375%, 5/15/23 ....................................... 4,000,000 4,109,960
Refunding, Series A, FGIC Insured, 5.00%, 7/01/33 ................................. 11,000,000 10,850,180
State University Dormitory Facilities, 5.00%, 7/01/32 ............................. 5,500,000 6,011,225
State University Dormitory Facilities, FGIC Insured, Pre-Refunded, 5.50%, 7/01/27 . 2,000,000 2,251,460
State University Dormitory Facilities, FGIC Insured, Pre-Refunded, 5.10%, 7/01/31 . 7,700,000 8,476,391
State University Dormitory Facilities, Series A, 6.00%, 7/01/30 ................... 5,750,000 6,642,170
State University Dormitory Facilities, Series B, MBIA Insured, 5.125%, 7/01/28 .... 1,365,000 1,386,390
State University Dormitory Facilities, Series B, MBIA Insured, Pre-Refunded,
5.125%, 7/01/28 .................................................................. 3,435,000 3,787,088
State University Dormitory Facilities, Series C, MBIA Insured, 5.50%, 7/01/19 ..... 2,410,000 2,585,062
State University Dormitory Facilities, Series C, MBIA Insured, Pre-Refunded,
5.50%, 7/01/19 ................................................................... 2,680,000 3,001,573
State University Dormitory Facilities, Series C, MBIA Insured, Pre-Refunded,
5.50%, 7/01/29 ................................................................... 9,250,000 10,359,908
New York State Dormitory Authority Revenue,
Bishop Henry B. Hucles Nursing Home, 6.00%, 7/01/24 ............................... 2,545,000 2,665,175
Buena Vida Nursing Home, Series A, 5.25%, 7/01/28 ................................. 4,730,000 4,773,847
City University System Consolidated, FGIC Insured, 5.25%, 7/01/25 ................. 4,100,000 4,157,277
City University System Consolidated, FGIC Insured, Pre-Refunded, 5.375%, 7/01/24 .. 14,300,000 15,798,640
City University System Consolidated, Fourth General, Series A, FGIC Insured, Pre-Refunded,
5.25%, 7/01/30 ................................................................... 20,705,000 22,899,523
City University System Consolidated, Fourth, Series A, 5.25%, 7/01/31 ............. 1,270,000 1,264,488
City University System Consolidated, Fourth, Series A, Pre-Refunded, 5.25%, 7/01/31 10,730,000 11,912,124
City University System Consolidated, FSA Insured, Pre-Refunded, 5.375%, 7/01/24 ... 5,000,000 5,524,000
City University System Consolidated, Second General, Series A, Pre-Refunded,
6.00%, 7/01/17 ................................................................... 10,215,000 10,909,007
City University System Consolidated, Series 1, MBIA Insured, Pre-Refunded,
5.125%, 7/01/27 .................................................................. 6,680,000 7,323,618
City University System Consolidated, Series C, 7.50%, 7/01/10 ..................... 14,900,000 17,052,007
City University System Consolidated, Series D, ETM, 7.00%, 7/01/09 ................ 3,430,000 3,759,143
City University System Consolidated, Third General, Pre-Refunded, 6.00%, 7/01/20 .. 13,000,000 14,308,060
City University System Consolidated, Third General, Residence 2, Pre-Refunded,
6.20%, 7/01/22 ................................................................... 28,555,000 31,512,727
City University System Consolidated, Third General, Series 1, FSA Insured, Pre-Refunded,
5.50%, 7/01/29 ................................................................... 38,375,000 42,979,616
City University System Consolidated, Third General, Series 2, Pre-Refunded,
6.00%, 7/01/26 ................................................................... 6,020,000 6,619,171
Annual Report | 25
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, MAY 31, 2004 (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York State Dormitory Authority Revenue, (cont.)
City University System Consolidated, Third General, Series A, Pre-Refunded,
6.00%, 7/01/16 ................................................................... $ 23,185,000 $ 24,760,189
Concord Nursing Home Inc., 6.50%, 7/01/29 ......................................... 2,500,000 2,691,075
Department of Health, Pre-Refunded, 6.625%, 7/01/15 ............................... 5,355,000 5,754,429
Department of Health, Pre-Refunded, 6.20%, 7/01/17 ................................ 7,650,000 7,833,294
Department of Health, Rosewell Park Cancer Center, Pre-Refunded, 6.625%, 7/01/24 .. 9,175,000 9,859,363
a Fashion Institute of Technology Student Housing Corp., FGIC Insured, 5.00%, 7/01/29 9,700,000 9,603,873
a Fashion Institute of Technology Student Housing Corp., FGIC Insured, 5.125%, 7/01/34 15,000,000 15,040,350
FGIC Insured, 5.125%, 5/15/31 ..................................................... 45,000,000 49,848,300
FHA, Insured Mortgage, St. Barnabas, Series A, AMBAC Insured, 5.125%, 2/01/22 ..... 4,000,000 4,089,360
FHA, Insured Mortgage, St. Barnabas, Series A, AMBAC Insured, 5.00%, 2/01/31 ...... 5,500,000 5,435,760
Fordham University, Refunding, MBIA Insured, 5.00%, 7/01/28 ....................... 5,000,000 4,958,300
Good Samaritan Hospital Medical Center, Series A, MBIA Insured, 5.50%, 7/01/24 .... 5,000,000 5,183,700
Heritage House Nursing Center, 7.00%, 8/01/31 ..................................... 2,180,000 2,188,349
Insured, Fordham University, FGIC Insured, 5.00%, 7/01/27 ......................... 6,020,000 5,979,004
Insured, Fordham University, FGIC Insured, 5.00%, 7/01/32 ......................... 7,735,000 7,631,274
Interfaith Medical Center, Series D, 5.40%, 2/15/28 14,000,000 14,280,560
Ithaca College, AMBAC Insured, 5.25%, 7/01/26 ..................................... 2,000,000 2,014,960
Long Island University, 5.125%, 9/01/23 ........................................... 1,800,000 1,804,716
Long Island University, 5.25%, 9/01/28 ............................................ 1,500,000 1,503,450
Long Island University, Pre-Refunded, 6.25%, 9/01/23 .............................. 5,495,000 5,921,907
Mental Health Services Facilities Improvement, Pre-Refunded, 6.00%, 8/15/21 ....... 1,600,000 1,778,768
Mental Health Services Facilities Improvement, Refunding, 6.00%, 8/15/21 .......... 185,000 199,976
Mental Health Services Facilities Improvement, Refunding, Series A, 5.75%, 2/15/27 300,000 311,202
Mental Health Services Facilities Improvement, Series A, 5.75%, 8/15/22 ........... 35,000 37,115
Mental Health Services Facilities Improvement, Series A, Pre-Refunded, 5.75%, 8/15/22 1,355,000 1,497,587
Mental Health Services Facilities Improvement, Series A, Pre-Refunded, 5.75%, 2/15/27 9,070,000 10,024,436
Mental Health Services Facilities Improvement, Series B, 5.75%, 8/15/12 ........... 2,140,000 2,322,735
Mental Health Services Facilities Improvement, Series B, 5.00%, 2/15/28 ........... 9,195,000 8,872,531
Mental Health Services Facilities Improvement, Series B, 5.00%, 2/15/33 ........... 35,000,000 33,757,500
Mental Health Services Facilities Improvement, Series B, MBIA Insured,
6.00%, 2/15/25 ................................................................... 640,000 688,410
Mental Health Services Facilities Improvement, Series B, MBIA Insured,
6.00%, 2/15/30 ................................................................... 565,000 608,324
Mental Health Services Facilities Improvement, Series B, MBIA Insured,
5.25%, 8/15/31 ................................................................... 6,025,000 6,067,597
Mental Health Services Facilities Improvement, Series B, MBIA Insured, Pre-Refunded,
5.25%, 8/15/31 ................................................................... 3,975,000 4,406,129
Mental Health Services Facilities Improvement, Series B, MBIA Insured, Pre-Refunded,
6.00%, 2/15/25 ................................................................... 5,460,000 6,216,920
Mental Health Services Facilities Improvement, Series B, MBIA Insured, Pre-Refunded,
6.00%, 2/15/30 ................................................................... 4,300,000 4,896,109
Mental Health Services Facilities Improvement, Series B, Pre-Refunded, 5.75%, 8/15/12 25,000 27,561
Mental Health Services Facilities Improvement, Series D, FSA Insured, 5.50%, 2/15/21 120,000 125,628
Mental Health Services Facilities Improvement, Series D, FSA Insured, 5.50%, 8/15/21 250,000 261,725
Mental Health Services Facilities Improvement, Series D, FSA Insured, 5.25%, 8/15/30 540,000 542,225
Mental Health Services Facilities Improvement, Series D, FSA Insured, Pre-Refunded,
5.50%, 2/15/21 ................................................................... 1,015,000 1,138,617
26 | Annual Report
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, MAY 31, 2004 (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York State Dormitory Authority Revenue, (cont.)
Mental Health Services Facilities Improvement, Series D, FSA Insured, Pre-Refunded,
5.50%, 8/15/21 ................................................................... $ 2,065,000 $ 2,316,496
Mental Health Services Facilities Improvement, Series D, FSA Insured, Pre-Refunded,
5.25%, 8/15/30 ................................................................... 4,460,000 4,941,189
Mental Health Services Facilities Improvement, Series D, MBIA Insured,
5.00%, 8/15/17 ................................................................... 22,985,000 23,752,239
Mental Health Services Facilities Improvement, Series D, MBIA Insured, Pre-Refunded,
5.00%, 8/15/17 ................................................................... 15,000 16,426
New School University, MBIA Insured, 5.00%, 7/01/31 ............................... 2,500,000 2,470,650
New York Hospital Medical Center, AMBAC Insured, 5.60%, 2/15/39 ................... 4,900,000 5,061,553
New York University, Series 2, AMBAC Insured, 5.00%, 7/01/26 ...................... 3,500,000 3,485,965
New York University, Series 2, AMBAC Insured, 5.00%, 7/01/31 ...................... 5,000,000 4,941,300
North Shore L.I. Jewish Group, 5.50%, 5/01/33 ..................................... 2,500,000 2,499,875
Nursing Home, Arden Hill, FHA Insured, Pre-Refunded, 5.85%, 8/01/26 ............... 4,335,000 4,762,734
Nursing Home, Center for Nursing, FHA Insured, 5.55%, 8/01/37 ..................... 8,435,000 8,646,297
Nursing Home, St. John's Health Care Corp., Refunding, FHA Insured, 6.25%, 2/01/36 32,150,000 34,088,967
Nursing Home, Wesley Garden, FHA Insured, 6.125%, 8/01/35 ......................... 2,000,000 2,143,180
Pace University, Refunding, MBIA Insured, 5.75%, 7/01/26 .......................... 2,000,000 2,130,940
Rockefeller University, Series A1, 5.00%, 7/01/32 ................................. 11,500,000 11,499,540
School District Financing Program, Series A, MBIA Insured, 5.00%, 4/01/31 ......... 9,500,000 9,388,660
Second Hospital, St. Clare's Hospital, Series B, 5.40%, 2/15/25 ................... 6,500,000 6,636,760
Skidmore College, FGIC Insured, 5.00%, 7/01/33 .................................... 6,565,000 6,475,585
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 1,026,460
St. Johns University, MBIA Insured, 5.25%, 7/01/25 ................................ 5,770,000 5,880,899
St. Johns University, Series A, MBIA Insured, 5.25%, 7/01/25 ...................... 5,310,000 5,404,199
St. Lukes Home Residential Health, Series A, FHA Insured, 6.375%, 8/01/35 ......... 5,200,000 5,459,064
State Rehabilitation Association, Series A, AMBAC Insured, 5.00%, 7/01/23 ......... 1,725,000 1,739,973
State University Adult Facility, Series B, Pre-Refunded, 5.375%, 5/15/23 .......... 9,500,000 10,629,550
State University Educational Facilities, 5.125%, 5/15/21 .......................... 12,090,000 12,266,272
State University Educational Facilities, Pre-Refunded, 5.125%, 5/15/21 ............ 2,910,000 3,186,217
State University Educational Facilities, Refunding, 5.00%, 5/15/17 ................ 3,600,000 3,682,188
Teachers College, MBIA Insured, 5.00%, 7/01/22 .................................... 2,885,000 2,925,073
Teachers College, MBIA Insured, 5.00%, 7/01/32 .................................... 6,000,000 5,919,540
The Highlands Living, FHA Insured, 6.60%, 2/01/34 ................................. 3,410,000 3,498,694
Upstate Community Colleges, Series A, 5.00%, 7/01/19 .............................. 7,230,000 7,363,394
Upstate Community Colleges, Series A, 5.00%, 7/01/27 .............................. 3,720,000 3,620,527
Upstate Community Colleges, Series A, 5.00%, 7/01/28 .............................. 25,675,000 24,938,898
Upstate Community Colleges, Series A, 5.00%, 7/01/31 .............................. 7,365,000 7,120,850
Upstate Community Colleges, Series A, Pre-Refunded, 6.00%, 7/01/22 ................ 7,000,000 7,868,840
Upstate Community Colleges, Series A, Pre-Refunded, 6.125%, 7/01/27 ............... 11,845,000 13,358,791
W.K. Nursing Home Corp., FHA Insured, 6.05%, 2/01/26 .............................. 6,800,000 7,227,788
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 12,412,300
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 20,129,200
New York State Environmental Facilities Corp. PCR, State Water, Series E, 6.875%,
6/15/14 ............................................................................ 1,190,000 1,213,169
Annual Report | 27
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, MAY 31, 2004 (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
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 $ 9,773,563
Series C, 5.25%, 6/15/31 .......................................................... 37,600,000 38,307,256
New York State HFA, Service Contract Obligation Revenue,
Series A, 6.50%, 3/15/24 .......................................................... 330,000 340,907
Series A, 6.50%, 3/15/25 .......................................................... 860,000 924,603
Series A, 6.00%, 3/15/26 .......................................................... 970,000 1,048,231
Series A, Pre-Refunded, 6.375%, 9/15/15 ........................................... 4,430,000 4,957,259
Series A, Pre-Refunded, 6.50%, 3/15/24 ............................................ 28,000,000 28,980,000
Series A, Pre-Refunded, 6.50%, 3/15/25 ............................................ 10,410,000 11,260,497
Series A, Pre-Refunded, 6.00%, 3/15/26 ............................................ 15,755,000 17,406,439
Series A-2003, 6.375%, 9/15/15 .................................................... 30,000 32,210
Series A-2003, Pre-Refunded, 6.375%, 9/15/15 ...................................... 540,000 583,259
Series C, 6.30%, 3/15/22 .......................................................... 1,950,000 1,976,813
Series C, 5.50%, 3/15/25 .......................................................... 17,015,000 17,367,891
New York State HFAR,
Children's Rescue Fund Housing, Series A, 7.625%, 5/01/18 ......................... 4,820,000 4,842,750
Health Facilities of New York City, Refunding, Series A, 6.00%, 11/01/08 .......... 2,400,000 2,546,808
Health Facilities of New York City, Series A, 6.00%, 5/01/07 ...................... 11,200,000 11,949,728
Housing Project Mortgage, Refunding, Series A, FSA Insured, 6.10%, 11/01/15 ....... 22,910,000 24,324,234
Housing Project Mortgage, Refunding, Series A, FSA Insured, 6.125%, 11/01/20 ...... 28,445,000 30,182,990
MFHR, Second Mortgage, Series A, 7.00%, 8/15/23 ................................... 4,215,000 4,216,349
MFHR, Second Mortgage, Series C, 6.60%, 8/15/27 ................................... 5,500,000 5,647,675
MFHR, Second Mortgage, Series D, 6.25%, 8/15/23 ................................... 2,500,000 2,503,750
MFHR, Second Mortgage, Series E, 6.75%, 8/15/25 ................................... 6,345,000 6,354,898
MFMR, Refunding, Series C, FHA Insured, 6.45%, 8/15/14 ............................ 990,000 991,337
MFMR, Series A, FHA Insured, 7.00%, 8/15/22 ....................................... 3,450,000 3,455,589
MFMR, Series B, AMBAC Insured, 6.25%, 8/15/14 ..................................... 525,000 537,511
MFMR, Series B, AMBAC Insured, 6.35%, 8/15/23 ..................................... 7,620,000 7,790,459
MFMR, Series C, FHA Insured, 6.50%, 8/15/24 ....................................... 6,765,000 6,776,568
State Personal Income Tax Revenue, Economic Development and Housing, Series A,
5.125%, 9/15/28 .................................................................. 12,425,000 12,279,379
State Personal Income Tax Revenue, Economic Development and Housing, Series A,
5.00%, 3/15/33 ................................................................... 7,000,000 6,751,150
New York State Local Government Assistance Corp. Revenue,
Refunding, Series B, MBIA Insured, 4.875%, 4/01/20 ................................ 4,080,000 4,132,387
Series A, 6.00%, 4/01/24 .......................................................... 11,200,000 11,851,392
New York State Medical Care Facilities Finance Agency Revenue,
Hospital and Nursing Home, Mortgage Revenue, Refunding, Series B, FHA Insured, 6.25%,
2/15/25 ........................................................................... 2,635,000 2,776,868
Hospital and Nursing Home, Mortgage Revenue, Refunding, Series B, FHA Insured, 6.25%,
2/15/35 .......................................................................... 4,745,000 5,002,226
Hospital and Nursing Home, Mortgage Revenue, Refunding, Series C, FHA Insured,
Pre-Refunded, 6.375%, 8/15/29 .................................................... 63,365,000 64,036,035
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.30%, 8/15/23 9,000,000 9,121,500
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.25%, 2/15/27 12,235,000 12,539,652
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.20%, 2/15/28 26,910,000 28,153,511
28 | Annual Report
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, MAY 31, 2004 (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York State Medical Care Facilities Finance Agency Revenue, (cont.)
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured,
6.375%, 8/15/33 .................................................................. $ 7,940,000 $ 8,047,428
Hospital and Nursing Home, Mortgage Revenue, Series A, FHA Insured, 6.50%, 2/15/34 9,660,000 9,908,262
Hospital and Nursing Home, Mortgage Revenue, Series C, FHA Insured, 6.20%, 8/15/23 21,540,000 22,837,354
Hospital Mortgage, Series A, AMBAC Insured, Pre-Refunded, 6.80%, 8/15/24 .......... 3,200,000 3,385,120
Hospital Mortgage, Series A, AMBAC Insured, Pre-Refunded, 6.50%, 8/15/29 .......... 5,125,000 5,410,821
Hospital Mortgage, Series A, AMBAC Insured, Pre-Refunded, 6.90%, 8/15/34 .......... 31,210,000 33,037,033
Huntington Hospital Mortgage, Project A, Refunding, Pre-Refunded, 6.50%, 11/01/14 . 5,500,000 5,727,370
Medina Memorial Hospital Project, Series A, 7.30%, 5/01/11 ........................ 1,875,000 1,880,569
Mortgage Revenue Project, Series A, FHA Insured, 6.50%, 2/15/35 ................... 3,680,000 3,848,102
Mortgage Revenue Project, Series B, FHA Insured, 6.60%, 8/15/34 ................... 23,775,000 24,388,395
Mortgage Revenue Project, Series B, FHA Insured, 6.15%, 2/15/35 ................... 2,200,000 2,283,094
Mortgage Revenue Project, Series C, FHA Insured, 6.375%, 8/15/29 .................. 10,200,000 10,564,650
Mortgage Revenue Project, Series D, FHA Insured, 6.20%, 2/15/35 ................... 6,250,000 6,579,063
Mortgage Revenue Project, Series E, FHA Insured, 6.375%, 2/15/35 .................. 13,200,000 13,934,844
Mortgage Revenue Project, Series F, FHA Insured, Pre-Refunded, 6.30%, 8/15/25 ..... 16,400,000 17,660,668
Mortgage Revenue Project, Series F, FHA Insured, Pre-Refunded, 6.375%, 8/15/34 .... 21,050,000 22,686,848
Second Mortgage, Health Care Project Revenue, Series B, 6.35%, 11/01/14 ........... 1,410,000 1,416,133
Secured Hospital Revenue, Series A, 6.25%, 2/15/24 ................................ 16,770,000 17,189,250
Security Mortgage Program Revenue, Adult Day Care, 6.375%, 11/15/20 ............... 18,930,000 19,977,586
Series A, FHA Insured, 6.125%, 2/15/15 ............................................ 5,160,000 5,361,343
Series A, FHA Insured, 7.45%, 8/15/31 ............................................. 4,660,000 4,678,826
Series A, FHA Insured, Pre-Refunded, 6.125%, 2/15/15 .............................. 1,000,000 1,079,830
The Hospital for Special Surgery Revenue, Series A, Pre-Refunded, 6.375%, 8/15/24 . 5,765,000 5,941,121
The Hospital for Special Surgery Revenue, Series A, Pre-Refunded, 6.45%, 8/15/34 .. 36,650,000 37,774,789
New York State Mortgage Agency Revenue, Homeowners Mortgage, Series 61, 5.90%,
4/01/27 ............................................................................ 4,040,000 4,124,032
New York State Municipal Bond Bank Agency Program Revenue, Buffalo, Series A, AMBAC
Insured, 5.25%, 5/15/31 ............................................................ 4,145,000 4,197,807
New York State Municipal Bond Bank Agency School Purpose Revenue, Series C,
5.25%, 6/01/21 .................................................................... 5,110,000 5,223,902
5.25%, 12/01/21 ................................................................... 8,025,000 8,203,877
5.25%, 6/01/22 .................................................................... 3,400,000 3,456,032
5.25%, 12/01/22 ................................................................... 5,000,000 5,082,400
5.00%, 6/01/23 .................................................................... 5,925,000 5,860,536
5.00%, 12/01/23 ................................................................... 3,000,000 2,966,850
New York State Power Authority Revenue, Series A, 5.25%,
11/15/30 .......................................................................... 2,000,000 2,022,820
11/15/40 .......................................................................... 9,000,000 9,043,650
New York State Thruway Authority Highway and Bridge Trust Fund Revenue, Refunding,
Series C, AMBAC Insured, 5.00%,
4/01/19 ........................................................................... 20,000,000 20,546,200
4/01/20 ........................................................................... 18,835,000 19,311,902
New York State Thruway Authority Revenue, State Personal Income Tax, Transportation,
Series A, 5.00%, 3/15/22 ........................................................... 14,270,000 14,424,829
Annual Report | 29
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, MAY 31, 2004 (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
BONDS (CONT.)
New York State Thruway Authority Service Contract Revenue, Local Highway and Bridge,
AMBAC Insured, Pre-Refunded, 5.375%, 4/01/19 ...................................... $ 10,555,000 $ 11,788,246
Pre-Refunded, 6.25%, 4/01/14 ...................................................... 23,970,000 25,413,234
Pre-Refunded, 5.75%, 4/01/19 ...................................................... 30,000,000 33,782,100
New York State Tollway Authority General Revenue,
Refunding, Series E, FGIC Insured, 5.00%, 1/01/25 ................................. 6,500,000 6,505,980
Series D, 5.25%, 1/01/21 .......................................................... 41,675,000 43,711,240
Series D, 5.375%, 1/01/27 ......................................................... 10,975,000 11,271,983
New York State Tollway Authority Highway and Bridge Trust Fund Revenue,
Series A, FGIC Insured, 5.00%, 4/01/17 ............................................ 9,000,000 9,328,860
Series A, FGIC Insured, 5.00%, 4/01/20 ............................................ 2,500,000 2,558,350
Series A, FGIC Insured, 5.00%, 4/01/21 ............................................ 2,500,000 2,548,475
Series B, MBIA Insured, 4.75%, 4/01/18 ............................................ 12,465,000 12,656,961
Series B, MBIA Insured, 4.875%, 4/01/19 ........................................... 10,290,000 10,476,558
Series B, MBIA Insured, 4.90%, 4/01/20 ............................................ 10,000,000 10,159,300
Series B-1, FGIC Insured, 5.75%, 4/01/15 .......................................... 2,000,000 2,208,160
Series B-1, FGIC Insured, 5.75%, 4/01/16 .......................................... 2,000,000 2,204,860
New York State Urban Development Corp. Revenue,
Cornell Center Project, 6.00%, 1/01/14 ............................................ 4,075,000 4,130,990
Correctional , Series A, MBIA Insured, 5.00%, 1/01/18 ............................. 8,775,000 9,054,484
Correctional Capital Facilities, Series 7, Pre-Refunded, 5.70%, 1/01/16 ........... 3,000,000 3,300,810
Correctional Capital Facilities, Series 7, Pre-Refunded, 5.70%, 1/01/27 ........... 10,000,000 11,002,700
Correctional Facilities Service Contract, Series A, Pre-Refunded, 5.00%, 1/01/28 .. 14,000,000 15,289,820
Correctional Facilities Service Contract, Series B, Pre-Refunded, 5.00%, 1/01/25 .. 21,055,000 22,923,000
Correctional Facilities Service Contract, Series C, AMBAC Insured, Pre-Refunded,
6.00%, 1/01/29 ................................................................... 34,135,000 38,609,416
Correctional Facilities Service Contract, Series D, FSA Insured, 5.25%, 1/01/30 ... 10,000,000 11,032,400
Correctional, Series A, MBIA Insured, Pre-Refunded, 5.00%, 1/01/18 ................ 3,225,000 3,522,119
Onondaga County Convention Project, Refunding, 6.25%, 1/01/20 ..................... 28,325,000 30,332,393
Personal Income Tax, Series C-1, 5.00%, 3/15/25 ................................... 3,225,000 3,171,529
Personal Income Tax, State Facilities, Series A, 5.25%, 3/15/32 ................... 20,000,000 20,023,600
State Personal Income Tax, Series B Empire State, 5.125%, 3/15/29 ................. 9,000,000 8,881,110
State Personal Income Tax, Series B Empire State, MBIA Insured, 5.00%, 3/15/33 .... 11,010,000 10,860,264
Youth Facilities, Pre-Refunded, 6.00%, 4/01/15 .................................... 8,500,000 8,994,360
Niagara Falls City School District COP, High School Facilities, 5.375%, 6/15/28 ..... 5,000,000 4,963,200
Niagara Falls Public Water Authority Revenue, Series A, MBIA Insured, 5.00%, 7/15/34 9,000,000 8,875,350
Oneida-Herkimer Solid Waste Management Authority Solid Waste Systems Revenue,
6.75%, 4/01/14 .................................................................... 655,000 663,423
Refunding, 6.65%, 4/01/05 ......................................................... 1,115,000 1,129,294
Otsego County IDA, Civic Facility Revenue, Hartwick College Project, Series A, Pre-Refunded,
5.50%, 7/01/19 ..................................................................... 3,400,000 3,790,966
Port Authority of New York and New Jersey Revenue, Delta Air Lines Special Project, Series 1,
6.95%, 6/01/08 ..................................................................... 6,500,000 6,334,770
Puerto Rico Commonwealth Highway and Transportation Authority Transportation Revenue,
Series A, 5.00%, 7/01/38 .......................................................... 12,000,000 11,380,200
Series Y, 5.00%, 7/01/36 .......................................................... 4,000,000 3,798,000
Series Y, 5.50%, 7/01/36 .......................................................... 10,000,000 10,239,100
Puerto Rico Commonwealth Urban Renewal and Housing Corp. Revenue, Commonwealth
Appropriation, Refunding, 7.875%, 10/01/04 ......................................... 805,000 807,705
30 | Annual Report
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, MAY 31, 2004 (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 $ 11,210,320
Puerto Rico Public Finance Corp. Revenue, Commonwealth Appropriation, Series A, MBIA
Insured, 5.00%, 8/01/31 ............................................................ 4,000,000 3,993,840
Rensselaer Municipal Leasing Corp. Leasehold Mortgage Revenue, Rensselaer County
Nursing Home,
Series A, 6.90%, 6/01/24 .......................................................... 10,000,000 10,263,000
Series B, 6.90%, 6/01/24 .......................................................... 3,345,000 3,432,973
Sachem Central School District Holbrook GO, Series B, MBIA Insured, 5.00%,
10/15/27 .......................................................................... 3,885,000 3,874,161
10/15/28 .......................................................................... 2,000,000 1,991,500
St. Lawrence County IDA, Civic Facility Revenue, Clarkson University Project, Series A,
5.50%, 7/01/29 ..................................................................... 6,000,000 6,108,720
Suffolk County Judicial Facilities Agency Service Agreement Revenue, John P. Cohalan Complex,
AMBAC Insured, 5.00%, 4/15/16 ...................................................... 2,720,000 2,839,870
Syracuse IDA, Civic Facility Revenue, Crouse Health Hospital Inc., Project A,
5.25%, 1/01/16 .................................................................... 4,000,000 3,080,760
5.375%, 1/01/23 ................................................................... 4,760,000 3,410,159
Tompkins County IDAR, Civic Facility, Cornell University, Pre-Refunded, 5.75%, 7/01/30 7,510,000 8,528,206
Triborough Bridge and Tunnel Authority Revenue,
AMBAC Isured, 5.00%, 11/15/28 ..................................................... 15,000,000 14,874,150
General Purpose, Refunding, Series B, 5.125%, 11/15/29 ............................ 17,175,000 17,138,074
General Purpose, Series A, 5.00%, 1/01/27 ......................................... 34,500,000 33,948,345
General Purpose, Series A, 5.125%, 1/01/31 ........................................ 24,310,000 24,221,512
General Purpose, Series A, 5.00%, 1/01/32 ......................................... 40,450,000 39,560,100
General Purpose, Series B, MBIA Insured, Pre-Refunded, 5.20%, 1/01/27 ............. 4,110,000 4,384,384
General Purpose, Series B, Pre-Refunded, 5.20%, 1/01/27 ........................... 15,000,000 16,001,400
General Purpose, Series B, Pre-Refunded, 5.50%, 1/01/30 ........................... 32,185,000 34,639,106
Refunding, MBIA Insured, 5.00%, 11/15/26 .......................................... 10,000,000 9,959,600
Refunding, MBIA Insured, 5.00%, 11/15/32 .......................................... 11,050,000 10,901,046
Refunding, Series B, 5.00%, 11/15/32 .............................................. 10,000,000 9,777,000
Refunding, Series B, MBIA Insured, 5.00%, 11/15/27 ................................ 10,000,000 9,931,500
Series A, MBIA Insured, 5.00%, 1/01/32 ............................................ 14,000,000 13,813,800
TSASC Inc. New York Revenue, Tobacco Flexible Amortization Bonds, Series 1, 6.25%,
7/15/27 ........................................................................... 35,000,000 33,001,850
7/15/34 ........................................................................... 40,000,000 37,240,800
United Nations Development Corp. Revenue, Senior Lien, Refunding, Series A, 5.25%,
7/01/23 ........................................................................... 2,500,000 2,532,375
7/01/25 ........................................................................... 2,000,000 2,020,020
Utica IDA, Civic Facility Revenue, Munson Williams Proctor Institute,
5.40%, 7/15/30 .................................................................... 1,000,000 1,023,680
Series A, 5.50%, 7/15/29 .......................................................... 9,915,000 10,166,444
Virgin Islands PFAR, Senior Lien, Fund Loan Notes, Refunding, Series A, 5.50%,
10/01/15 .......................................................................... 2,500,000 2,604,750
10/01/18 .......................................................................... 2,500,000 2,575,975
Warren and Washington Counties IDAR, Adirondack Resource Recovery Project, Refunding,
Series A, 7.90%, 12/15/07 .......................................................... 20,685,000 20,731,334
Warren and Washington IDA Civic Facility Revenue, Series A, FSA Insured,
5.00%, 12/01/27 .................................................................... 8,115,000 7,950,184
Annual Report | 31
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, MAY 31, 2004 (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 $ 14,506,350
Yonkers GO, Series A, 9.20%, 2/01/05 ................................................ 1,095,000 1,146,465
TOTAL BONDS (COST $4,555,755,758) ................................................... 4,771,432,139
ZERO COUPON BONDS 1.9%
MTA Service Contract Revenue,
Commuter Facilities, Refunding, Series 7, 7/01/10 ................................. 7,500,000 6,016,275
Commuter Facilities, Refunding, Series 7, 7/01/11 ................................. 7,590,000 5,782,517
Commuter Facilities, Refunding, Series 7, 7/01/13 ................................. 2,065,000 1,414,711
Transit Facilities, Refunding, Series 7, 7/01/09 .................................. 13,125,000 11,026,838
Transit Facilities, Refunding, Series 7, 7/01/10 .................................. 9,000,000 7,219,530
Transit Facilities, Refunding, Series 7, 7/01/12 .................................. 15,380,000 11,116,049
Transit Facilities, Refunding, Series 7, 7/01/13 .................................. 7,935,000 5,436,189
New York City GO,
Capital Appreciation, Series A-2, 8/01/10 ......................................... 2,690,000 2,092,336
Citysavers, Series B, 8/01/09 ..................................................... 8,875,000 7,278,388
Citysavers, Series B, 6/01/12 ..................................................... 1,030,000 779,432
Citysavers, Series B, 12/01/12 .................................................... 1,030,000 758,708
Citysavers, Series B, 6/01/13 ..................................................... 1,030,000 736,811
Citysavers, Series B, 12/01/13 .................................................... 1,030,000 716,983
Citysavers, Series B, 6/01/14 ..................................................... 1,030,000 695,312
Citysavers, Series B, 12/01/14 .................................................... 1,030,000 677,225
Citysavers, Series B, 6/01/15 ..................................................... 1,030,000 654,483
Citysavers, Series B, 12/01/15 .................................................... 1,030,000 639,012
Citysavers, Series B, 6/01/16 ..................................................... 1,030,000 617,372
Citysavers, Series B, 12/01/16 .................................................... 1,030,000 602,529
Citysavers, Series B, 6/01/17 ..................................................... 1,030,000 580,621
Citysavers, Series B, 12/01/17 .................................................... 1,030,000 566,376
Citysavers, Series B, 6/01/18 ..................................................... 1,030,000 546,487
Citysavers, Series B, 12/01/18 .................................................... 1,005,000 519,937
Citysavers, Series B, 6/01/19 ..................................................... 1,030,000 513,548
Citysavers, Series B, 12/01/19 .................................................... 1,030,000 500,559
Citysavers, Series B, 6/01/20 ..................................................... 10,000,000 4,351,800
Orangetown Housing Authority Housing Facilities Revenue, Senior Housing Center Project,
Refunding, MBIA Insured, 4/01/30 ................................................... 21,170,000 5,045,869
Triborough Bridge and Tunnel Authority Revenue, Convention Center Project, Series E,
1/01/12 ............................................................................ 21,625,000 15,549,672
---------------
TOTAL ZERO COUPON BONDS (COST $76,334,700) ........................................... 92,435,569
---------------
TOTAL LONG TERM INVESTMENTS (COST $4,632,090,458) .................................... 4,863,867,708
---------------
32 | Annual Report
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, MAY 31, 2004 (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------
SHORT TERM INVESTMENTS .1%
b Jay Street Development Corp. Certificate Facilities Lease Revenue, Jay Street Project,
Series A-2, AMBAC Insured, Daily VRDN and Put, .98%, 5/01/20 ...................... $ 3,430,000 $ 3,430,000
Series A-4, Daily VRDN and Put, 1.07%, 5/01/22 .................................... 1,100,000 1,100,000
b Long Island Power Authority Electric Systems Revenue, Sub Series 2, Daily VRDN and Put,
1.07%, 5/01/33 ..................................................................... 1,400,000 1,400,000
b Port Authority of New York and New Jersey Special Obligation Revenue, Versatile Structure,
Series 2, Daily VRDN and Put, 1.09%, 5/01/19 ....................................... 1,700,000 1,700,000
---------------
TOTAL SHORT TERM INVESTMENTS (COST $7,630,000) ...................................... 7,630,000
---------------
TOTAL INVESTMENTS (COST $4,639,720,458) 99.1% ....................................... 4,871,497,708
OTHER ASSETS, LESS LIABILITIES .9% .................................................. 42,999,743
---------------
NET ASSETS 100.0% ................................................................... $4,914,497,451
===============
<FN>
See Glossary of Terms on page 34.
a See Note 1(b) regarding securities purchased on a delayed delivery basis.
b Variable rate demand notes (VRDNs) are tax-exempt obligations which contain a
floating or variable interest rate adjustment formula and an unconditional
right of demand to receive payment of the principal balance plus accrued
interest at specified dates.
</FN>
Annual Report | See notes to financial statements. | 33
Franklin New York Tax-Free Income Fund
STATEMENT OF INVESTMENTS, MAY 31, 2004 (CONTINUED)
GLOSSARY OF TERMS
AMBAC - American Municipal Bond Assurance Corp.
COP - Certificate of Participation
ETM - Escrow to Maturity
FGIC - Financial Guaranty Insurance Co.
FHA - Federal Housing Authority/Agency
FSA - Financial Security Assistance
GO - General Obligation
HDC - Housing Development Corp.
HFA - Housing Finance Authority/Agency
HFAR - Housing Finance Authority/Agency Revenue
IDA - Industrial Development Authority/Agency
IDAR - Industrial Development Authority/Agency Revenue
MBIA - Municipal Bond Investors Assurance Corp.
MFHR - Multi-Family Housing Revenue
MFMR - Multi-Family Mortgage Revenue
MFR - Multi-Family Revenue
MTA - Metropolitan Transit Authority
PCR - Pollution Control Revenue
PFAR - Public Financing Authority Revenue
34| Annual Report
Franklin New York Tax-Free Income Fund
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2004
Assets:
Investments in securities:
Cost ........................................................ $4,639,720,458
---------------
Value ....................................................... 4,871,497,708
Cash ......................................................... 62,448
Receivables:
Capital shares sold ......................................... 4,236,473
Interest .................................................... 75,905,552
---------------
Total assets ............................................ 4,951,702,181
---------------
Liabilities:
Payables:
Investment securities purchased ............................. 24,357,020
Capital shares redeemed ..................................... 7,173,084
Affiliates .................................................. 2,914,785
Shareholders ................................................ 2,491,813
Other liabilities ............................................ 268,028
---------------
Total liabilities ....................................... 37,204,730
---------------
Net assets, at value .......................................... $4,914,497,451
---------------
Net assets consist of:
Undistributed net investment income .......................... $ 3,273,945
Net unrealized appreciation (depreciation) ................... 231,777,250
Accumulated net realized gain (loss) ......................... (18,863,500)
Capital shares ............................................... 4,698,309,756
---------------
Net assets, at value .......................................... $4,914,497,451
---------------
Annual Report | 35
Franklin New York Tax-Free Income Fund
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
May 31, 2004
CLASS A:
Net assets, at value .......................................................... $4,429,311,976
---------------
Shares outstanding ............................................................ 380,643,312
---------------
Net asset value per share a ................................................... $11.64
---------------
Maximum offering price per share (net asset value per share / 95.75%) ......... $12.16
---------------
CLASS B:
Net assets, at value .......................................................... $ 231,664,227
---------------
Shares outstanding ............................................................ 19,946,907
---------------
Net asset value and maximum offering price per share a ........................ $11.61
---------------
CLASS C:
Net assets, at value .......................................................... $ 231,051,469
---------------
Shares outstanding ............................................................ 19,866,025
---------------
Net asset value and maximum offering price per share a ........................ $11.63
---------------
ADVISOR CLASS:
Net assets, at value .......................................................... $ 22,469,779
---------------
Shares outstanding ............................................................ 1,930,280
---------------
Net asset value and maximum offering price per share .......................... $11.64
---------------
<FN>
a Redemption price is equal to net asset value less any applicable contingent
deferred sales charge.
</FN>
36 | See notes to financial statements. | Annual Report
Franklin New York Tax-Free Income Fund
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
for the year ended May 31, 2004
Investment income:
Interest ............................................................... $268,328,604
-------------
Expenses:
Management fees (Note 3) ............................................... 23,312,426
Distribution fees (Note 3)
Class A ............................................................... 4,193,381
Class B ............................................................... 1,536,750
Class C ............................................................... 1,569,364
Transfer agent fees (Note 3) ........................................... 2,243,320
Custodian fees ......................................................... 68,102
Reports to shareholders ................................................ 134,391
Registration and filing fees ........................................... 53,625
Professional fees (Note 3) ............................................. 116,606
Trustees' fees and expenses ............................................ 79,086
Other .................................................................. 338,384
-------------
Total expenses .................................................... 33,645,435
-------------
Net investment income ........................................... 234,683,169
-------------
Realized and unrealized gains (losses):
Net realized gain (loss) from investments .............................. 6,798,177
Net unrealized appreciation (depreciation) on investments .............. (262,029,310)
-------------
Net realized and unrealized gain (loss) ................................. (255,231,133)
-------------
Net increase (decrease) in net assets resulting from operations ......... $(20,547,964)
-------------
Annual Report | See notes to financial statements. | 37
Franklin New York Tax-Free Income Fund
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
for the years ended May 31, 2004 and 2003
----------------------------------
2004 2003
----------------------------------
Increase (decrease) in net assets:
Operations:
Net investment income .................................................... $ 234,683,169 $ 244,300,381
Net realized gain (loss) from investments ................................ 6,798,177 5,006,383
Net unrealized appreciation (depreciation) on investments ................ (262,029,310) 243,448,165
----------------------------------
Net increase (decrease) in net assets resulting from operations ...... (20,547,964) 492,754,929
Distributions to shareholders from:
Net investment income:
Class A ................................................................. (213,303,897) (225,619,458)
Class B ................................................................. (9,557,046) (8,284,786)
Class C ................................................................. (9,727,464) (9,038,590)
Advisor Class ........................................................... (918,996) (760,077)
----------------------------------
Total distributions to shareholders ....................................... (233,507,403) (243,702,911)
Capital share transactions: (Note 2)
Class A ................................................................. (170,296,090) (8,374,738)
Class B ................................................................. 9,572,486 63,785,148
Class C ................................................................. 94,846 43,777,769
Advisor Class ........................................................... 5,281,645 3,451,801
----------------------------------
Total capital share transactions .......................................... (155,347,113) 102,639,980
Net increase (decrease) in net assets ................................ (409,402,480) 351,691,998
Net assets
Beginning of year ......................................................... 5,323,899,931 4,972,207,933
----------------------------------
End of year ............................................................... $4,914,497,451 $5,323,899,931
----------------------------------
Undistributed net investment income included in net assets:
End of year ............................................................... $ 3,273,945 $ 3,138,610
----------------------------------
38 | See notes to financial statements. | Annual Report
Franklin New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS
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. The Fund utilizes
independent pricing services to perform any of the pricing functions under
procedures approved by the Board of Trustees. Tax-free bonds may be valued by
the pricing services using matrix pricing, which considers such factors as
prices of comparable quality issues, yield, maturity, coupon, and credit
ratings. If events occur that materially affect the values of securities after
the prices are determined but prior to 4:00 p.m. Eastern time or the close of
trading on the NYSE, whichever is earlier, or if market quotations are deemed
not readily available or reliable, the securities will be valued at fair value
as determined following procedures approved by the Board of Trustees. Short-term
securities are valued at amortized cost which approximates value.
B. SECURITIES PURCHASED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS
The Fund may purchase securities on a when-issued or delayed delivery basis,
with payment and delivery scheduled for a future date. These transactions are
subject to market fluctuations and are subject to the risk that the value at
delivery may be more or less than the trade date purchase price. Although the
Fund will generally purchase these securities with the intention of holding the
securities, it may sell the securities before the settlement date. Sufficient
assets have been segregated for these securities.
C. 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.
D. 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.
Annual Report | 39
Franklin New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E. 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.
F. 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 May 31, 2004, there were an unlimited number of shares authorized ($.01 par
value). Transactions in the Fund's shares were as follows:
---------------------------------------------------------------
YEAR ENDED MAY 31,
2004 2003
---------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
CLASS A SHARES:
Shares sold ......................... 22,908,833 $ 272,883,264 31,269,637 $ 371,509,962
Shares issued in reinvestment of
distributions ....................... 10,190,598 121,248,982 10,400,672 123,140,266
Shares redeemed ..................... (47,486,868) (564,428,336) (42,363,253) (503,024,966)
---------------------------------------------------------------
Net increase (decrease) ............. (14,387,437) $(170,296,090) (692,944) $ (8,374,738)
---------------------------------------------------------------
CLASS B SHARES:
Shares sold ......................... 3,077,811 $ 36,652,099 6,319,516 $ 74,942,461
Shares issued in reinvestment of
distributions ....................... 540,157 6,416,144 464,323 5,491,671
Shares redeemed ..................... (2,829,226) (33,495,757) (1,402,551) (16,648,984)
---------------------------------------------------------------
Net increase (decrease) ............. 788,742 $ 9,572,486 5,381,288 $ 63,785,148
---------------------------------------------------------------
40 | Annual Report
Franklin New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SHARES OF BENEFICIAL INTEREST (CONTINUED)
---------------------------------------------------------------
YEAR ENDED MAY 31,
2004 2003
---------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
CLASS C SHARES:
Shares sold ......................... 3,848,641 $ 45,978,578 5,843,855 $ 69,435,630
Shares issued in reinvestment of
distributions ....................... 548,293 6,523,046 506,929 6,003,538
Shares redeemed ..................... (4,415,573) (52,406,778) (2,666,311) (31,661,399)
---------------------------------------------------------------
Net increase (decrease) ............. (18,639) $ 94,846 3,684,473 $ 43,777,769
---------------------------------------------------------------
ADVISOR CLASS SHARES:
Shares sold ......................... 817,351 $ 9,819,515 504,062 $ 6,017,897
Shares issued in reinvestment of
distributions ....................... 3,451 41,210 4,150 49,255
Shares redeemed ..................... (385,284) (4,579,080) (219,616) (2,615,351)
---------------------------------------------------------------
Net increase (decrease) ............. 435,518 $ 5,281,645 288,596 $ 3,451,801
---------------------------------------------------------------
3. TRANSACTIONS WITH AFFILIATES
Certain officers and trustees of the Fund are also officers or directors of the
following entities:
- ---------------------------------------------------------------------------------------
ENTITY AFFILIATION
- ---------------------------------------------------------------------------------------
Franklin Advisers, Inc. (Advisers) Investment manager
Franklin Templeton Distributors, Inc. (Distributors) Principal underwriter
Franklin Templeton Services, LLC (FT Services) Administrative manager
Franklin/Templeton Investor Services, LLC (Investor Services) Transfer agent
The Fund pays an investment management fee to Advisers based on the month-end
net assets of the Fund as follows:
- ----------------------------------------------------------------------------
ANNUALIZED FEE RATE 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 under a Rule 12b-1 plan.
Distributors has advised the Fund it paid net commissions on sales of the Fund's
shares, and received contingent deferred sales charges for the year of
$1,045,321 and $511,695, respectively.
Annual Report | 41
Franklin New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
The Fund paid shareholder servicing fees of $2,243,320 of which $1,588,392 was
paid to Investor Services.
Included in professional fees are legal fees of $27,000 that were paid to a law
firm in which a partner is an officer of the Fund.
4. INCOME TAXES
At May 31, 2004, 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 .................................................. $ 3,039,740
2009 .................................................. 14,143,946
--------------
$17,183,686
--------------
At May 31, 2004, the cost of investments, net unrealized appreciation
(depreciation), and undistributed tax exempt income for income tax purposes were
as follows:
Investments at cost .................................... $4,639,190,167
--------------
Unrealized appreciation ................................ $ 251,434,246
Unrealized depreciation ................................ (19,126,705)
--------------
Net unrealized appreciation (depreciation) ............. $ 232,307,541
--------------
Distributable earnings - undistributed
tax exempt income ..................................... $ 1,063,843
--------------
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.
The tax character of distributions paid during the years ended May 31, 2004 and
2003, was as follows:
----------------------------
2004 2003
----------------------------
Distributions paid from:
Tax-exempt income ...................... $233,507,403 $243,702,911
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short-term securities) for the
year ended May 31, 2004 aggregated $523,467,198 and $621,551,284, respectively.
42 | Annual Report
Franklin New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. REGULATORY MATTERS
MASSACHUSETTS ADMINISTRATIVE PROCEEDING
On February 4, 2004, the Securities Division of the Office of the Secretary of
the Commonwealth of Massachusetts filed an administrative complaint against
Franklin Resources, Inc. and certain of its subsidiaries (the "Company")
claiming violations of the Massachusetts Uniform Securities Act ("Massachusetts
Act") with respect to an alleged arrangement to permit market timing (the "Mass.
Proceeding"). On February 14, 2004, the Company filed an answer denying all
violations of the Massachusetts Act.
GOVERNMENTAL INVESTIGATIONS
As part of ongoing investigations by the U.S. Securities and Exchange Commission
(SEC), the U.S. Attorney for the Northern District of California, the New York
Attorney General, the California Attorney General, the U.S. Attorney for the
District of Massachusetts, the Florida Department of Financial Services and the
Commissioner of Securities, the West Virginia Attorney General and the Vermont
Department of Banking, Insurance, Securities, and Health Care Administration,
relating to certain practices in the mutual fund industry, including late
trading, market timing and payments to securities dealers who sell Fund shares,
the Company and its subsidiaries, as well as certain current or former
executives and employees of the Company, have received requests for information
and/or subpoenas to testify or produce documents. The Company and its current
employees are providing documents and information in response to these requests
and subpoenas. In addition, the Company has responded to requests for similar
kinds of information from regulatory authorities in some of the foreign
countries where the Company conducts its global asset management business.
The staff of the SEC has informed the Company that it intends to recommend that
the SEC authorize a civil injunctive action against the Fund's investment
manager. The SEC's investigation is focused on the activities that are the
subject of the Mass. Proceeding described above and other instances of alleged
market timing by a limited number of third parties that ended in 2000. The
Company currently believes that the charges the SEC staff is contemplating are
unwarranted. There are discussions underway with the SEC staff in an effort to
resolve the issues raised in their investigation.
In response to requests for information and subpoenas from the SEC and the
California Attorney General, the Company has provided documents and testimony
has been taken relating to payments to security dealers who sell Fund shares.
Effective November 28, 2003, the Company determined not to direct any further
brokerage commissions where the allocation is based, not only on best execution,
but also on the sale of Fund shares.
Annual Report | 43
Franklin New York Tax-Free Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. REGULATORY MATTERS (CONTINUED)
OTHER LEGAL PROCEEDINGS
The Fund, in addition to other entities within Franklin Templeton Investments,
including the Company and certain of its subsidiaries, other funds, and current
and former officers, employees, and directors have been named in multiple
lawsuits in different federal courts in Nevada, California, Illinois, New York,
New Jersey, and Florida, alleging violations of various federal securities laws
and seeking, among other things, monetary damages and costs. Specifically, the
lawsuits claim breach of duty with respect to alleged arrangements to permit
market timing and/or late trading activity, or breach of duty with respect to
the valuation of the portfolio securities of certain funds managed by Company
subsidiaries, resulting in alleged market timing activity. The majority of these
lawsuits duplicate, in whole or in part, the allegations asserted in the Mass.
Proceeding detailed above. The lawsuits are styled as class actions or
derivative actions.
In addition, the Company and its subsidiaries, as well as certain current and
former officers, employees, and directors have been named in multiple lawsuits
alleging violations of various securities laws and pendent state law claims
relating to the disclosure of directed brokerage payments and payment of
allegedly excessive commissions and advisory fees. These lawsuits are styled as
class actions and derivative actions.
Management strongly believes that the claims made in each of these lawsuits are
without merit and intends to vigorously defend against them.
The Company cannot predict with certainty the eventual outcome of the foregoing
Mass. Proceeding, other governmental investigations or class actions or other
lawsuits. The impact, if any, of these matters on the Fund is uncertain at this
time. If the Company determines that it bears responsibility for any unlawful or
inappropriate conduct that caused losses to the Fund, it is committed to making
the Fund or its shareholders whole, as appropriate.
44| Annual Report
Franklin New York Tax-Free Income Fund
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF FRANKLIN NEW YORK TAX-FREE
INCOME FUND
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Franklin New York Tax-Free Income
Fund (the "Fund") at May 31, 2004, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the periods
presented, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States), which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at May 31,
2004 by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
July 9, 2004
Annual Report | 45
Franklin New York Tax-Free Income Fund
TAX DESIGNATION (UNAUDITED)
Under Section 852(b)(5)(A) of the Internal Revenue Code, the Fund hereby
designates 100% of the distributions paid from net investment income as
exempt-interest dividends for the fiscal year ended May 31, 2004. A portion of
the Fund's exempt-interest dividends may be subject to the federal alternative
minimum tax. In January 2005, shareholders will be notified of amounts for use
in preparing their 2004 income tax returns.
46 | Annual Report
Board Members and Officers
The name, age and address of the officers and board members, as well as their
affiliations, positions held with the Fund, principal occupations during the
past five years and number of portfolios overseen in the Franklin Templeton
Investments fund complex are shown below. Each board member will serve until
that person's successor is elected and qualified.
INDEPENDENT BOARD MEMBERS
- ------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------
HARRIS J. ASHTON (71) Trustee Since 1982 141 Director, Bar-S Foods (meat packing
One Franklin Parkway company).
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; and FORMERLY, Director, RBC Holdings, Inc. (bank holding company) (until 2002); and
President, Chief Executive Officer and Chairman of the Board, General Host Corporation (nursery and craft centers) (until
1998).
- ------------------------------------------------------------------------------------------------------------------------------
S. JOSEPH FORTUNATO (71) Trustee Since 1982 142 None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Attorney; and FORMERLY, member of the law firm of Pitney, Hardin, Kipp & Szuch.
- ------------------------------------------------------------------------------------------------------------------------------
EDITH E. HOLIDAY (52) Trustee Since 1998 97 Director, Amerada Hess Corporation
One Franklin Parkway (exploration and refining of oil
San Mateo, CA 94403-1906 and gas); H.J. Heinz Company
(processed foods and allied
products); RTI International
Metals, Inc. (manufacture and
distribution of titanium); and
Canadian National Railway
(railroad).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director or Trustee of various companies and trusts; and FORMERLY, Assistant to the President of the United States and
Secretary of the Cabinet (1990-1993); General Counsel to the United States Treasury Department (1989-1990); and Counselor to
the Secretary and Assistant Secretary for Public Affairs and Public Liaison-United States Treasury Department (1988-1989).
- ------------------------------------------------------------------------------------------------------------------------------
GORDON S. MACKLIN (76) Trustee Since 1992 141 Director, White Mountains
One Franklin Parkway Insurance Group, Ltd. (holding
San Mateo, CA 94403-1906 company); Martek Biosciences
Corporation; MedImmune, Inc.
(biotechnology); and Overstock.com
(Internet services); and FORMERLY,
Director, MCI Communication
Corporation (subsequently known as
MCI WorldCom, Inc. and WorldCom,
Inc.) (communications services)
(1988-2002) and Spacehab, Inc.
(aerospace services) (1994-2003).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Deputy Chairman, White Mountains Insurance Group, Ltd. (holding company); and FORMERLY, Chairman, White River Corporation
(financial services) (1993-1998) and Hambrecht & Quist Group (investment banking) (1987-1992); and President, National
Association of Securities Dealers, Inc. (1970-1987).
- ------------------------------------------------------------------------------------------------------------------------------
Annual Report | 47
INTERESTED BOARD MEMBERS AND OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------
**CHARLES B. JOHNSON (71) Trustee, Trustee since 141 None
One Franklin Parkway President and 1982, President
San Mateo, CA 94403-1906 Chief since 1983 and
Executive Chief Executive
Officer - Officer -
Investment Investment
Management Management
since 2002
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman of the Board, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President, Franklin
Templeton Distributors, Inc.; Director, Fiduciary Trust Company International; and officer and/or director or trustee, as
the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 46 of the investment companies in
Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------
**RUPERT H. JOHNSON, JR. (63) Trustee and Since 1983 124 None
One Franklin Parkway Vice President
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and Director, Franklin
Templeton Distributors, Inc.; Director, Franklin Advisers, Inc. and Franklin Investment Advisory Services, Inc.; Senior Vice
President, Franklin Advisory Services, LLC; and officer and/or director or trustee, as the case may be, of some of the other
subsidiaries of Franklin Resources, Inc. and of 49 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------
SHEILA AMOROSO (44) Vice President Since 1999 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Advisers, Inc.; and officer of eight of the investment companies in Franklin Templeton
Investments.
- ------------------------------------------------------------------------------------------------------------------------------
HARMON E. BURNS (59) Vice President Since 1987 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and Director, Franklin
Templeton Distributors, Inc.; Executive Vice President, Franklin Advisers, Inc.; Director, Franklin Investment Advisory
Services, Inc.; and officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin
Resources, Inc. and of 49 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------
RAFAEL R. COSTAS, JR. (39) Vice President Since 1999 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Advisers, Inc.; and officer of eight of the investment companies in Franklin Templeton
Investments.
- ------------------------------------------------------------------------------------------------------------------------------
48 | Annual Report
- ------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------
MARTIN L. FLANAGAN (43) Vice President Since 1995 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Co-President and Chief Executive Officer, Franklin Resources, Inc.; Senior Vice President and Chief Financial Officer,
Franklin Mutual Advisers, LLC; Executive Vice President, Chief Financial Officer and Director, Templeton Worldwide, Inc.;
Executive Vice President and Chief Operating Officer, Templeton Investment Counsel, LLC; President and Director, Franklin
Advisers, Inc.; Executive Vice President, Franklin Investment Advisory Services, Inc. and Franklin Templeton Investor
Services, LLC; Chief Financial Officer, Franklin Advisory Services, LLC; Chairman, Franklin Templeton Services, LLC; and
officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of
49 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------
JIMMY D. GAMBILL (56) Senior Vice Since 2002 Not Applicable None
500 East Broward Blvd. President and
Suite 2100 Chief
Fort Lauderdale, FL 33394-3091 Executive
Officer -
Finance and
Administration
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Templeton Services, LLC; Senior Vice President, Templeton Worldwide, Inc.; and officer of 51 of the
investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------
DAVID P. GOSS (57) Vice President Since 2000 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Associate General Counsel, Franklin Resources, Inc.; officer and director of one of the subsidiaries of Franklin Resources,
Inc.; officer of 51 of the investment companies in Franklin Templeton Investments; and FORMERLY, President, Chief Executive
Officer and Director, Property Resources Equity Trust (until 1999) and Franklin Select Realty Trust (until 2000).
- ------------------------------------------------------------------------------------------------------------------------------
BARBARA J. GREEN (56) Vice President Since 2000 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Deputy General Counsel and Secretary, Franklin Resources, Inc.; Secretary and Senior Vice President,
Templeton Worldwide, Inc.; Secretary, Franklin Advisers, Inc., Franklin Advisory Services, LLC, Franklin Investment
Advisory Services, Inc., Franklin Mutual Advisers, LLC, Franklin Templeton Alternative Strategies, Inc., Franklin
Templeton Investor Services, LLC, Franklin Templeton Services, LLC, Franklin Templeton Distributors, Inc., Templeton
Investment Counsel, LLC, and Templeton/Franklin Investment Services, Inc.; and officer of some of the other
subsidiaries of Franklin Resources, Inc. and of 51 of the investment companies in Franklin Templeton Investments; and
FORMERLY, Deputy Director, Division of Investment Management, Executive Assistant and Senior Advisor to the Chairman,
Counselor to the Chairman, Special Counsel and Attorney Fellow, U.S. Securities and Exchange Commission (1986-1995);
Attorney, Rogers & Wells (until 1986); and Judicial Clerk, U.S. District Court (District of Massachusetts) (until 1979).
- ------------------------------------------------------------------------------------------------------------------------------
Annual Report | 49
- ------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------
DIOMEDES LOO-TAM (65) Treasurer Since March 2004 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Officer of 51 of the investment companies in Franklin Templeton Investments; and Consultant, MyVest Corporation (software
development company and investment advisory services); and FORMERLY, Director and member of Audit and Valuation Committees,
Runkel Funds, Inc. (2002-2003); Treasurer/Controller of most of the investment companies in Franklin Templeton Investments
(1985-2000); and Senior Vice President, Franklin Templeton Services, LLC (1997-2000).
- ------------------------------------------------------------------------------------------------------------------------------
MICHAEL O. MAGDOL (67) Vice Since 2002 Not Applicable Director, FTI Banque, Arch
600 Fifth Avenue President - Chemicals, Inc. and Lingnan
Rockefeller Center AML Foundation.
New York, NY 10020-2302 Compliance
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Chief Banking Officer and Director, Fiduciary Trust Company International; Director, FTI Banque, Arch
Chemicals, Inc. and Lingnan Foundation; and officer and/or director, as the case may be, of some of the other subsidiaries
of Franklin Resources, Inc. and of 48 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------
MURRAY L. SIMPSON (66) Vice President Since 2000 Not Applicable None
One Franklin Parkway and Secretary
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Executive Vice President and General Counsel, Franklin Resources, Inc.; officer and/or director, as the case may be, of
some of the subsidiaries of Franklin Resources, Inc. and of 51 of the investment companies in Franklin Templeton
Investments; and FORMERLY, Chief Executive Officer and Managing Director, Templeton Franklin Investment Services (Asia)
Limited (until 2000); and Director, Templeton Asset Management Ltd. (until 1999).
- ------------------------------------------------------------------------------------------------------------------------------
GALEN G. VETTER (52) Chief Since May 2004 Not Applicable None
500 East Broward Blvd. Financial
Suite 2100 Officer
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Officer of 51 of the investment companies in Franklin Templeton Investments; Senior Vice President, Franklin Templeton
Services, LLC; and FORMERLY, Managing Director of RSM McGladrey, Inc.; and Partner of McGladrey & Pullen, LLP.
- ------------------------------------------------------------------------------------------------------------------------------
50 | Annual Report
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------
THOMAS WALSH (42) Vice President Since 1999 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Advisers, Inc.; and officer of eight of the investment companies in Franklin Templeton
Investments.
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
*We base the number of portfolios on each separate series of the U.S. registered investment companies within the Franklin
Templeton Investments fund complex. These portfolios have a common investment adviser or affiliated investment advisers.
**Charles B. Johnson and Rupert H. Johnson, Jr. are considered to be interested persons of the Fund under the federal
securities laws due to their positions as officers and directors and major shareholders of Franklin Resources, Inc., which is
the parent company of the Fund's adviser and distributor.
Note: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers.
THE SARBANES-OXLEY ACT OF 2002 AND RULES ADOPTED BY THE SECURITIES AND EXCHANGE COMMISSION REQUIRE THE FUND TO DISCLOSE
WHETHER THE FUND'S AUDIT COMMITTEE INCLUDES AT LEAST ONE MEMBER WHO IS AN AUDIT COMMITTEE FINANCIAL EXPERT WITHIN THE MEANING
OF SUCH ACT AND RULES. THE FUND'S BOARD OF TRUSTEES HAS DETERMINED THAT THERE IS AT LEAST ONE SUCH FINANCIAL EXPERT ON THE
AUDIT COMMITTEE AND HAS DESIGNATED EACH OF EDITH E. HOLIDAY AND HARRIS J. ASHTON AS AN AUDIT COMMITTEE FINANCIAL EXPERT. THE
BOARD BELIEVES THAT MS. HOLIDAY AND MR. ASHTON QUALIFY AS SUCH AN EXPERT IN VIEW OF THEIR BUSINESS BACKGROUND AND EXPERIENCE.
MS. HOLIDAY, WHO CURRENTLY SERVES AS A DIRECTOR AND TRUSTEE OF VARIOUS COMPANIES AND TRUSTS, INCLUDING H.J. HEINZ COMPANY
WHERE SHE IS AUDIT COMMITTEE CHAIRPERSON, IS CHAIRPERSON OF THE FUND'S AUDIT COMMITTEE, AND FORMERLY SERVED AS ASSISTANT TO
THE PRESIDENT OF THE UNITED STATES AND SECRETARY OF THE CABINET (1990-1993); GENERAL COUNSEL TO THE UNITED STATES TREASURY
DEPARTMENT (1989-1999); AND ASSISTANT SECRETARY FOR PUBLIC AFFAIRS AND PUBLIC LIAISON-UNITED STATES TREASURY DEPARTMENT
(1988-1989). MR. ASHTON, WHO IS CURRENTLY A DIRECTOR OF BUSINESS AND NON-PROFIT ORGANIZATIONS, SERVED AS CHIEF EXECUTIVE
OFFICER OF GENERAL HOST CORPORATION, A NEW YORK STOCK EXCHANGE LISTED COMPANY FROM 1967 TO 1998, AND WAS A DIRECTOR OF RBC
HOLDINGS, INC., A BANK HOLDING COMPANY UNTIL 2002. AS A RESULT OF SUCH BACKGROUND AND EXPERIENCE, THE BOARD OF TRUSTEES
BELIEVES THAT MS. HOLIDAY AND MR. ASHTON HAVE EACH ACQUIRED AN UNDERSTANDING OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND
FINANCIAL STATEMENTS, THE GENERAL APPLICATION OF SUCH PRINCIPLES IN CONNECTION WITH THE ACCOUNTING ESTIMATES, ACCRUALS AND
RESERVES, AND ANALYZING AND EVALUATING FINANCIAL STATEMENTS THAT PRESENT A BREADTH AND LEVEL OF COMPLEXITY OF ACCOUNTING
ISSUES GENERALLY COMPARABLE TO THOSE OF THE FUND, AS WELL AS AN UNDERSTANDING OF INTERNAL CONTROLS AND PROCEDURES FOR
FINANCIAL REPORTING AND AN UNDERSTANDING OF AUDIT COMMITTEE FUNCTIONS. MS. HOLIDAY AND MR. ASHTON ARE INDEPENDENT TRUSTEES AS
THAT TERM IS DEFINED UNDER THE APPLICABLE SECURITIES AND EXCHANGE COMMISSION RULES AND RELEASES.
THE STATEMENT OF ADDITIONAL INFORMATION (SAI) INCLUDES ADDITIONAL INFORMATION ABOUT THE BOARD MEMBERS AND IS AVAILABLE,
WITHOUT CHARGE, UPON REQUEST. SHAREHOLDERS MAY CALL 1-800/DIAL BEN (1-800/342-5236) TO REQUEST THE SAI.
</FN>
Annual Report | 51
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.
52| Annual Report
Literature Request
For a brochure and prospectus, which contains more complete information,
including charges, expenses and risks, 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 2
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Recovery Fund 3
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 4
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 5
Franklin's AGE High Income Fund
Franklin Federal Money Fund 5,6
Franklin Floating Rate Daily Access Fund
Franklin Floating Rate Trust 3
Franklin Income Fund
Franklin Money Fund 5,6
Franklin Short-Intermediate U.S. Government Securities Fund 5
Franklin Strategic Income Fund
Franklin Strategic Mortgage Portfolio
Franklin Templeton Hard Currency Fund
Franklin Total Return Fund
Franklin U.S. Government Securities Fund 5
Templeton Global Bond Fund
TAX-FREE INCOME 7
NATIONAL FUNDS
Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund 8
Tax-Exempt Money Fund 5,6
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 7
Alabama
Arizona
California 9
Colorado
Connecticut
Florida 9
Georgia
Kentucky
Louisiana
Maryland
Massachusetts 8
Michigan 8
Minnesota 8
Missouri
New Jersey
New York 9
North Carolina
Ohio 8
Oregon
Pennsylvania
Tennessee
Virginia
INSURANCE FUNDS
Franklin Templeton Variable Insurance
Products Trust 10
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. 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.
4. Upon reaching approximately $350 million in assets, the fund intends to close
to all investors.
5. An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.
6. 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.
7. For investors subject to the alternative minimum tax, a small portion of fund
dividends may be taxable. Distributions of capital gains are generally taxable.
8. Portfolio of insured municipal securities.
9. These funds are available in two or more variations, including long-term
portfolios, portfolios of insured securities, a high-yield portfolio (CA) and
limited-term, intermediate-term and money market portfolios (CA and NY).
10. The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.
02/04 Not part of the annual report
[LOGO OMITTED]
FRANKLIN[R] TEMPLETON[R] One Franklin Parkway
INVESTMENTS 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.
ANNUAL 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
Authorized for distribution only when accompanied or preceded by a prospectus.
Investors should carefully consider a fund's investment goals, risks, charges
and expenses before investing. The prospectus contains this and other
information; please read it carefully before investing.
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 A2004 07/04
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 11(A), the Registrant is attaching as an exhibit a copy of
its code of ethics that applies to its principal executive officers and
principal 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 E. 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.
(a) Audit Fees
The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant for the audit of the registrant's annual
financial statements or for services that are normally provided by the principal
accountant in connection with statutory and regulatory filings or engagements
were $61,986 for the fiscal year ended May 31, 2004 and $59,675 for the fiscal
year ended May 31, 2003.
(b) Audit-Related Fees
There were no fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant that are
reasonably related to the performance of the audit of the registrant's financial
statements and are not reported under paragraph (a) of Item 4.
The aggregate fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant's investment
adviser and any entity controlling, controlled by or under common control with
the investment adviser that provides ongoing services to the registrant that are
reasonably related to the performance of the audit of the their financial
statements were $47,910 for the fiscal year ended May 31, 2004 and $2,500 for
the fiscal year ended May 31, 2003. The services for which these fees were paid
included attestation services.
(c) Tax Fees
There were no fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant for tax compliance, tax
advice and tax planning.
There were no fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant for tax
compliance, tax advice and tax planning.
(d) All Other Fees
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant not reported in
paragraphs (a)-(c) of Item 4 were $2,577 for the fiscal year ended May 31, 2004
and $0 for the fiscal year ended May 31, 2003. The services for which these fees
were paid included review of materials provided to the fund Board in connection
with the investment management contract renewal process.
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant not reported
in paragraphs (a)-(c) of Item 4 were $97,423 for the fiscal year ended May 31,
2004 and $12,973 for the fiscal year ended May 31, 2003. The services for which
these fees were paid included review of materials provided to the fund Board in
connection with the investment management contract renewal process, subscription
fees and a review of an ICI transfer agent survey.
(e) (1) The registrant's audit committee is directly responsible for approving
the services to be provided by the auditors, including:
(i) pre-approval of all audit and audit related services;
(ii) pre-approval of all non-audit related services to be provided to the
Fund by the auditors;
(iii)pre-approval of all non-audit related services to be provided to the
Fund by the auditors to the Fund's investment adviser or to any entity that
controls, is controlled by or is under common control with the Fund's investment
adviser and that provides ongoing services to the Fund where the non-audit
services relate directly to the operations or financial reporting of the Fund;
and
(iv) establishment by the audit committee, if deemed necessary or
appropriate, as an alternative to committee pre-approval of services to be
provided by the auditors, as required by paragraphs (ii) and (iii) above, of
policies and procedures to permit such services to be pre-approved by other
means, such as through establishment of guidelines or by action of a designated
member or members of the committee; provided the policies and procedures are
detailed as to the particular service and the committee is informed of each
service and such policies and procedures do not include delegation of audit
committee responsibilities, as contemplated under the Securities Exchange Act of
1934, to management; subject, in the case of (ii) through (iv), to any waivers,
exceptions or exemptions that may be available under applicable law or rules.
(e) (2) None of the services provided to the registrant described in paragraphs
(b)-(d) of Item 4 were pre-approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of regulation S-X.
(f) No disclosures are required by this Item 4(f).
(g) The aggregate non-audit fees paid to the principal accountant for services
rendered by the principal accountant to the registrant and the registrant's
investment adviser and any entity controlling, controlled by or under common
control with the investment adviser that provides ongoing services to the
registrant were $147,910 for the fiscal year ended May 31, 2004 and $15,473 for
the fiscal year ended May 31, 2003.
(h) No disclosures are required by this Item 4(h).
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. N/A
ITEM 6. SCHEDULE OF INVESTMENTS. N/A
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES. N/A
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS. N/A
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have
been no changes to the procedures by which shareholders may recommend nominees
to the Registrant's Board of Trustees that would require disclosure herein.
ITEM 10. 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 11. EXHIBITS.
(A) Code of Ethics
(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
Galen G. Vetter, 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
Galen G. Vetter, 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 July 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 July 30, 2004
By /s/Galen G. Vetter
Chief Financial Officer
Date July 30, 2004