N-CSRS 1 ncsrs.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSRS CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-04787 --------- FRANKLIN NEW YORK TAX-FREE TRUST -------------------------------- (Exact name of registrant as specified in charter) ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906 ----------------------------------------------- (Address of principal executive offices) (Zip code) CRAIG S. TYLE, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906 ------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 650 312-2000 ------------ Date of fiscal year end: 9/30 ---- Date of reporting period: 3/31/08 ------- ITEM 1. REPORTS TO STOCKHOLDERS. [PHOTO] MARCH 31, 2008 Franklin New York Insured Tax-Free Income Fund Franklin New York Intermediate-Term Tax-Free Income Fund Franklin New York Limited-Term Tax-Free Income Fund Franklin New York Tax-Exempt Money Fund SEMIANNUAL REPORT AND SHAREHOLDER LETTER TAX-FREE INCOME FRANKLIN WANT TO RECEIVE NEW YORK TAX-FREE TRUST THIS DOCUMENT FASTER VIA EMAIL? Eligible shareholders can sign up for eDelivery at franklintempleton.com. See inside for details. [FRANKLIN TEMPLETON INVESTMENTS LOGO] FRANKLIN. Templeton. Mutual Series Semiannual Report State Update and Municipal Bond Market Overview New York's economic performance and state revenues weakened in tandem with the national economic slowdown. Although well diversified, the Empire State depends upon the crucial financial services and insurance industries, which accounted for 6% of employment while providing more than 20% of total state wages. (1) Both industries faced significant challenges through 2008's first quarter. Another fundamental vulnerability is the disparity between upstate and downstate economic performance. Since 1996, the state's employment base grew by 8.3% overall, dominated by downstate growth of 11.1% against just 2.5% for overall upstate employment growth. (1) While property tax revenue held up, due in part to a more buoyant regional and New York City real estate market when compared with nearly all other U.S. regions or cities, other fees slowed and the state's unemployment rate rose. By March 2008, New York's unemployment rate rose to 4.8% from 4.4% a year earlier, but remained below the 5.1% national average. (2) Employment weakness was evident in the construction, manufacturing, retail services, and professional and business services sectors as well as financial services. Given these conditions, state legislators expect employment and wage growth to decelerate in 2008. On the upside, the state expects continued strong growth within its large education and health sectors, and could benefit from increased international tourism and trade due to the weak-dollar environment. The governor's executive budget for the 2008-2009 fiscal years captures the risks of recent economic conditions but is not premised on a recession even though tax revenues are slated to fall from 2007 levels. Thus far in fiscal year 2008, declining projected revenues have coincided with lower-than-expected expenditures, and the state anticipates closing the year without significantly drawing down reserves. However, the executive budget also addresses a looming $4.4 billion gap for fiscal year 2009. (3) As required, the budget must be balanced, and the governor's most recent proposal seeks to close the projected deficit through a mixture of spending cuts, recurring tax revenue increases and one-time savings measures. 1. Source: Standard & Poor's, "State Review: New York State," RATINGSDIRECT, 2/6/08. 2. Source: Bureau of Labor Statistics. 3. Source: Standard & Poor's, "Summary: New York State; General Obligation," RATINGSDIRECT, 3/12/08. Semiannual Report | 7 New York is a wealthy state with per capita personal income at approximately 117% of the national average. (3) The state ranks fifth in the nation with respect to net tax-supported debt per capita, and its debt burden as a percentage of personal income was 6.3%. (4) The numbers reflect bonding for state and New York City budget relief purposes, as well as capital financing for transportation and other areas. During the period under review, independent credit rating agency Moody's Investors Service rated New York's general obligation bonds Aa3 with a stable outlook. (5) Despite its high tax burden, economically cyclical nature and revenue underperformance in the current fiscal year, the state's credit strengths include improved finances in recent years and a long track record of legislative flexibility in raising funds necessary to close annual budget gaps. The six months ended March 31, 2008, proved challenging for the municipal bond market. A measured pullback in the municipal market was exacerbated during the reporting period, as all financial markets felt the impact of subprime loan defaults. Many major financial institutions tightened credit and reassessed the risk of their direct and indirect exposure to subprime loans. A lack of liquidity across most markets contributed to an increase in overall volatility and declining values in most asset classes. The municipal bond insurance industry, which includes seven companies that had AAA ratings -- MBIA, AMBAC, FSA, FGIC, XLCA, CIFG and Assured Guaranty -- faced particular difficulties. Rising levels of subprime mortgage defaults during the reporting period, combined with the bond insurers' exposure to subprime mortgages, prompted the three major independent credit rating agencies, Standard & Poor's (S&P), Moody's Investors Service and Fitch Ratings, to undertake in-depth evaluations of the bond insurance companies in December 2007. As a result, the rating agencies downgraded several municipal bond insurers and lowered the outlook for some to negative. So far in 2008, FGIC was downgraded to BB by S&P, A3 by Moody's, and BBB by Fitch with a negative outlook. XLCA was downgraded to A-, A3 and BB, respectively, with a negative outlook. CIFG was downgraded to A+ by S&P and AA- by Fitch with a negative outlook, while Moody's downgraded the company to A1 with a stable outlook. MBIA and AMBAC successfully raised the required capital to maintain their AAA ratings by S&P and Moody's. Fitch lowered AMBAC's rating from AAA to AA in early 2008. The rating agencies assigned negative outlooks to MBIA and AMBAC, pending further analysis and performance of the subprime mortgage loans they hold, as well 4. Source: Moody's Investors Service, "Special Comment: U.S. Public Debt Finance, 2008 State Debt Medians," March 2008. 5. This does not indicate Moody's rating of the Fund. 8 | Semiannual Report EXPLANATION OF RATINGS
S&P* Moody's** Highest quality, "gilt edged;" strongest creditworthiness AAA Aaa High quality; very strong creditworthiness AA Aa Upper medium grade; above average creditworthiness A A Medium grade; average creditworthiness BBB Baa Predominantly speculative; below average creditworthiness BB Ba Speculative, low grade; weak creditworthiness B B Poor to default; very weak creditworthiness CCC Caa Highest speculation; extremely weak creditworthiness CC Ca Lowest quality; weakest creditworthiness C C
* May use + or - to modify some ratings ** Uses numerical modifiers 1, 2 and 3 in the range from Aa through Caa as the soundness of their business models going forward. The rating agencies affirmed FSA's and Assured Guaranty's AAA ratings, with stable outlooks. Illiquidity plagued the financial markets as they felt the impact of the perceived weakness in the bond insurance industry. This was especially notable in the municipal bond market, with yields over the past 20 years averaging 88% of 30-year U.S Treasury yields. (6) In a marked shift amid recent volatility, high grade municipal yields were well in excess of Treasury yields on a nominal basis. Insured bonds generally underperformed during the six months under review as evidenced by the +0.75% return of the Lehman Brothers Municipal Bond Index compared with the -0.13% return of the Lehman Brothers Insured Municipal Bond Index. (7) During the fourth quarter of 2007, the market appeared to develop a three-tier perception of the bond insurance companies, which affected the traditional trading spreads of the "Big Four" insurers -- MBIA, AMBAC, FGIC and FSA. FSA and Assured Guaranty became more desirable than MBIA and AMBAC; MBIA and AMBAC were more desirable than FGIC, XLCA and CIFG. Historically, the market perceived MBIA, AMBAC, FSA and FGIC as having extremely adequate claims-paying ability and therefore required no extra yield for securities carrying their insurance. Assured Guaranty, XLCA and CIFG are newer entrants to the industry and were still developing their businesses, so the market generally required more yield from them. 6. Source: Lehman Brothers. 7. Sources: Standard & Poor's Micropal; Lehman Brothers. 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 Baa3/BBB-. They must have an outstanding par value of at least $7 million and be issued as part of a transaction of at least $75 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. The Lehman Brothers Insured Municipal Bond Index is an unmanaged index composed of all the insured bonds in the Lehman Brothers Municipal Bond Index with a maturity of at least one year and ratings of Aaa/AAA. Semiannual Report | 9 Investors should be aware that insurance companies insure bonds that tend to be of very high quality. Many municipal bond issuers use insurance to appeal to a wider audience of potential buyers. The majority of issuers whose bonds are insured carry underlying ratings of A or better, and the historical average default rate for such bonds is less than 1%. (8) Ultimately, the underlying credit quality of state and local governments and their agencies supports the municipal market, and the underlying credit quality of an insured bond is not affected by an insurance company's credit quality. Bond insurers' problems pressured the short-term municipal market beginning in January 2008. Money market funds began to eliminate holdings of variable rate debt with credit providers they deemed to be at risk of downgrade. This caused dealers to boost yields substantially on some variable rate demand notes (VRDNs), hoping to entice buyers to hold them rather than put them back to the remarketing agents who were already struggling with too much inventory on their balance sheets. Within a few weeks, this lack of liquidity disrupted the auction rate securities (ARS) market as well. Inventory in the ARS market, primarily for those with insurance backing, increased dramatically. Auctions have recently failed due to dealers' liquidity constraints. It is important to note that this is a liquidity issue and a supply and demand imbalance, not a credit or default scenario. Over the six-month reporting period, municipal bond market returns lagged those of the U.S. Treasury market as uncertainty regarding the impact of problems associated with subprime securities drove global investors to the relative safety of U.S. Treasuries. Furthermore, investors began to require additional compensation for taking on risk, leading to wider spreads for credit-driven securities. For the six months ended March 31, 2008, the Lehman Brothers Municipal Bond Index had a +0.75% total return and the Lehman Brothers U.S. Treasury Index returned +8.56%. (9) High yield municipal bonds, as measured by the Lehman Brothers Municipal Bond Index: Non-Investment Grade, had a -5.66% return for the same period. (10) 8. Source: Standard & Poor's, RATINGSDIRECT, 5/3/2007; Moody's Investors Service, March 2007. 9. Source: Standard & Poor's Micropal. See footnote 7 for a description of the Lehman Brothers Municipal Bond Index. The Lehman Brothers U.S. Treasury Index includes public obligations of the U.S. Treasury with a remaining maturity of one year or more. All issues must have at least one year to final maturity regardless of call features, have at least $250 million par amount outstanding and be rated investment grade (Baa3 or better). They must also be dollar denominated, nonconvertible and publicly issued. 10. Source: Lehman Brothers. The Lehman Brothers Municipal Bond Index: Non-Investment Grade includes bonds with a maximum credit rating of Ba1. All bonds included must have an outstanding par value of at least $3 million and be issued as part of a transaction of at least $20 million. The bonds must be dated after 12/31/90, and must be at least one year from their maturity date. Taxable municipal bonds, bonds with floating rates and derivatives are excluded from the index. 10 | Semiannual Report The recent environment contributed to dramatically steeper Treasury and municipal bond yield curves (spread between short and longer-term yields). On March 31, 2008, two-year, 10-year and 30-year Treasury yields were 1.62%, 3.45% and 4.29%, respectively. The yields on two-year, 10-year and 30-year Treasuries fell 235, 114 and 55 basis points (100 basis points equal one percentage point), respectively, over the period. Because of the increasing shortage of eligible tax-exempt money fund securities, the two-year municipal bond yield decreased from 3.41% to 2.22% during the reporting period.11 The 10-year municipal note yield fell from 3.81% to 3.73%, while the 30-year municipal bond yield rose from 4.44% to 4.89% during the reporting period.11 The difference between one- and 30-year municipal yields increased 221 basis points, from 103 on September 30, 2007, to 324 basis points at period-end, resulting in a much steeper municipal yield curve. (11) 11. Source: Thomson Financial. THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS AND OPINIONS AS OF MARCH 31, 2008, THE END OF THE REPORTING PERIOD. THE INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET, COUNTRY, INDUSTRY, SECURITY OR FUND. STATEMENTS OF FACT ARE FROM SOURCES CONSIDERED RELIABLE. Semiannual Report | 11 Franklin New York Insured Tax-Free Income Fund YOUR FUND'S GOAL AND MAIN INVESTMENTS: Franklin New York Insured Tax-Free Income Fund seeks to provide as high a level of income exempt from federal, New York state and New York City personal income taxes as is consistent with prudent investment management and preservation of capital by investing at least 80% of its total assets in securities that pay interest free from federal income taxes and New York state personal income taxes. (1) As a non-fundamental policy, the Fund also normally invests at least 80% of its total assets in securities that pay interest free from the personal income taxes of New York City. The Fund invests at least 80% of its net assets in insured municipal securities. (2) CREDIT QUALITY BREAKDOWN* Franklin New York Insured Tax-Free Income Fund Based on Total Long-Term Investments as of 3/31/08** (PIE CHART) AAA 65.9% AA 8.7% A 7.3% BBB 3.4% Not Rated by S&P 14.7%
* Standard & Poor's (S&P) is the primary independent rating agency; Moody's is the secondary rating agency. Ratings for securities not rated by S&P are in the table below. ** Does not include short-term investments and other net assets.
RATINGS MOODY'S AAA or Aaa 9.3% AA or Aa 0.4% A 5.0% Total 14.7%
This semiannual report for Franklin New York Insured Tax-Free Income Fund covers the period ended March 31, 2008. 1. For investors subject to alternative minimum tax, a small portion of Fund dividends may be taxable. Distributions of capital gains are generally taxable. To avoid imposition of 28% backup withholding on all Fund distributions and redemption proceeds, U.S. investors must be properly certified on Form W-9 and non-U.S. investors on Form W-8BEN. 2. Fund shares are not insured by any U.S. or other government agency. They are subject to market risks and will fluctuate in value. 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 39. 12 | Semiannual Report DIVIDEND DISTRIBUTIONS* Franklin New York Insured Tax-Free Income Fund
DIVIDEND PER SHERE --------------------------- MONTH CLASS A CLASS C ---------------- ---------- ---------- October 2007 3.76 cents 3.24 cents November 2007 3.76 cents 3.24 cents December 2007 3.85 cents 3.32 cents January 2008 3.85 cents 3.32 cents February 2008 3.85 cents 3.32 cents March 2008 3.85 cents 3.32 cents
* Assumes shares were purchased and held for the entire accrual period, which differs from the calendar month. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends. PERFORMANCE OVERVIEW The Fund's Class A share price, as measured by net asset value, declined from $11.37 on September 30, 2007, to $10.96 on March 31, 2008. The Fund's Class A shares paid dividends totaling 23.00 cents per share for the same period. (3) The Performance Summary beginning on page 15 shows that at the end of this reporting period the Fund's Class A shares' distribution rate was 4.03%, based on an annualization of the current 3.85 cent per share dividend and the maximum offering price of $11.45 on March 31, 2008. An investor in the 2008 maximum combined effective federal and New York state and City personal income tax bracket of 41.82% would need to earn a distribution rate of 6.93% from a taxable investment to match the Fund's Class A tax-free distribution rate. For the Fund's Class C shares' performance, please see the Performance Summary. 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, the Fund's portfolio becomes well diversified with a broad range of securities. This broad diversification may help mitigate interest rate risk. We do not use leverage or exotic derivatives, nor do we use hedging techniques that could add volatility and contribute to underperformance in adverse markets. We generally stay fully invested to maximize income distribution. PERFORMANCE DATA REPRESENT 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. 3. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends. Semiannual Report | 13 PORTFOLIO BREAKDOWN Franklin New York Insured Tax-Free Income Fund 3/31/08
% OF TOTAL LONG-TERM INVESTMENTS* ---------------------- Higher Education 20.3% Other Revenue 16.1% Subject to Government Appropriations 13.8% Prerefunded 13.4% Tax-Supported 9.1% Hospital & Health Care 7.6% Transportation 6.3% General Obligation 5.7% Utilities 5.4% Corporate-Backed 1.8% Housing 0.5%
* Does not include short-term investments and other net assets. MANAGER'S DISCUSSION Consistent with our strategy, we sought to remain fully invested in bonds that maintain an average weighted maturity of 15 to 30 years with good call features. The combination of our value-oriented philosophy of investing primarily for income and a relatively steep municipal yield curve compared to Treasuries favored the use of longer-term bonds. We also maintained our conservative, buy-and-hold investment strategy as we attempted to provide our shareholders with high, current, tax-free income. Thank you for your participation in Franklin New York Insured Tax-Free Income Fund. We look forward to serving your future investment needs. THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS AS OF MARCH 31, 2008, 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 INVESTMENT MANAGER 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. 14 | Semiannual Report Performance Summary as of 3/31/08 FRANKLIN NEW YORK INSURED TAX-FREE INCOME FUND Your dividend income will vary depending on dividends or interest paid by securities in the Fund's portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities. The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund's dividends and capital gain distributions, if any, and any unrealized gains or losses. PRICE AND DISTRIBUTION INFORMATION
CLASS A (SYMBOL: FRNYX) CHANGE 3/31/08 9/30/07 ------------------------------- ---------- ---------- -------- Net Asset Value (NAV) -$ 0.41 $ 10.96 $ 11.37 DISTRIBUTIONS (10/1/07-3/31/08) Dividend Income $ 0.2300
CLASS C (SYMBOL: FNYKX) CHANGE 3/31/08 9/30/07 ------------------------------- ---------- ---------- -------- Net Asset Value (NAV) -$ 0.41 $ 11.14 $ 11.55 DISTRIBUTIONS (10/1/07-3/31/08) Dividend Income $ 0.1983
PERFORMANCE CUMULATIVE TOTAL RETURN EXCLUDES SALES CHARGES. AVERAGE ANNUAL TOTAL RETURN INCLUDES MAXIMUM SALES CHARGES. CLASS A: 4.25% MAXIMUM INITIAL SALES CHARGE; CLASS C: 1% CONTINGENT DEFERRED SALES CHARGE IN FIRST YEAR ONLY. THE FUND MAY CHARGE A 2% FEE ON REDEMPTIONS MADE WITHIN SEVEN DAYS OF PURCHASE.
CLASS A 6-MONTH 1-YEAR 5-YEAR 10-YEAR ------------------------------------------- -------- -------- -------- -------- Cumulative Total Return (1) -1.62% -1.13% +15.90% +49.58% Average Annual Total Return (2) -5.76% -5.32% +2.10% +3.65% Distribution Rate (3) 4.03% Taxable Equivalent Distribution Rate (4) 6.93% 30-Day Standardized Yield (5) 3.98% Taxable Equivalent Yield (4) 6.84% Total Annual Operating Expenses (6) 0.68%
CLASS C 6-MONTH 1-YEAR 5-YEAR 10-YEAR ------------------------------------------- ------- -------- -------- -------- Cumulative Total Return (1) -1.86% -1.66% +12.80% +41.77% Average Annual Total Return (2) -2.83% -2.61% +2.44% +3.55% Distribution Rate (3) 3.58% Taxable Equivalent Distribution Rate (4) 6.15% 30-Day Standardized Yield (5) 3.60% Taxable Equivalent Yield (4) 6.19% Total Annual Operating Expenses (6) 1.23%
PERFORMANCE DATA REPRESENT 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. FOR MOST RECENT MONTH-END PERFORMANCE, SEE "FUNDS AND PERFORMANCE" AT FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236. Semiannual Report | 15 Performance Summary (CONTINUED) ENDNOTES BECAUSE MUNICIPAL BONDS ARE PARTICULARLY SENSITIVE TO INTEREST RATE MOVEMENTS, THE FUND'S YIELD AND SHARE PRICE WILL FLUCTUATE WITH MARKET CONDITIONS. BOND PRICES GENERALLY MOVE IN THE OPPOSITE DIRECTION OF INTEREST RATES. THUS, AS PRICES OF BONDS IN THE FUND ADJUST TO A RISE IN INTEREST RATES, THE FUND'S SHARE PRICE MAY DECLINE. 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 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. 1. Cumulative total return represents the change in value of an investment over the periods indicated. 2. Average annual total return represents the average annual change in value of an investment over the periods indicated. Six-month return has not been annualized. 3. Distribution rate is based on an annualization of the respective class's current monthly dividend and the maximum offering price (NAV for Class C) per share on 3/31/08. 4. Taxable equivalent distribution rate and yield assume the published rates as of 12/24/07 for the maximum combined effective federal and New York state and City personal income tax rate of 41.82%, based on the federal income tax rate of 35.00%. 5. Yield, calculated as required by the SEC, is based on the earnings of the Fund's portfolio for the 30 days ended 3/31/08. 6. Figures are as stated in the Fund's prospectus current as of the date of this report. 16 | Semiannual Report Your Fund's Expenses FRANKLIN NEW YORK INSURED TAX-FREE INCOME FUND As a Fund shareholder, you can incur two types of costs: - Transaction costs, including sales charges (loads) on Fund purchases and redemption fees; and - Ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The following table shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated. ACTUAL FUND EXPENSES The first line (Actual) for each share class listed in the table provides actual account values and expenses. The "Ending Account Value" is derived from the Fund's actual return, which includes the effect of Fund expenses. You can estimate the expenses you paid during the period by following these steps. OF COURSE, YOUR ACCOUNT VALUE AND EXPENSES WILL DIFFER FROM THOSE IN THIS ILLUSTRATION: 1. Divide your account value by $1,000. IF AN ACCOUNT HAD AN $8,600 VALUE, THEN $8,600 / $1,000 = 8.6. 2. Multiply the result by the number under the heading "Expenses Paid During Period." IF EXPENSES PAID DURING PERIOD WERE $7.50, THEN 8.6 X $7.50 = $64.50. In this illustration, the estimated expenses paid this period are $64.50. HYPOTHETICAL EXAMPLE FOR COMPARISON WITH OTHER FUNDS Information in the second line (Hypothetical) for each class in the table can help you compare ongoing costs of investing in the Fund with those of other mutual funds. This information may not be used to estimate the actual ending account balance or expenses you paid during the period. The hypothetical "Ending Account Value" is based on the actual expense ratio for each class and an assumed 5% annual rate of return before expenses, which does not represent the Fund's actual return. The figure under the heading "Expenses Paid During Period" shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds. Semiannual Report | 17 Your Fund's Expenses (CONTINUED) PLEASE NOTE THAT EXPENSES SHOWN IN THE TABLE ARE MEANT TO HIGHLIGHT ONGOING COSTS AND DO NOT REFLECT ANY TRANSACTION COSTS, SUCH AS SALES CHARGES OR REDEMPTION FEES. Therefore, the second line for each class is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transaction costs were included, your total costs would have been higher. Please refer to the Fund prospectus for additional information on operating expenses.
BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING CLASS A VALUE 10/1/07 VALUE 3/31/08 PERIOD* 10/1/07-3/31/08 ------------------------------ ----------------- --------------- ----------------------- Actual $ 1,000 $ 983.80 $ 3.22 Hypothetical (5% return before $ 1,000 $ 1,021.75 $ 3.29 expenses) CLASS C Actual $ 1,000 $ 981.40 $ 5.94 Hypothetical (5% return before $ 1,000 $ 1,019.00 $ 6.06 expenses)
* Expenses are calculated using the most recent six-month expense ratio, annualized for each class (A: 0.65% and C: 1.20%), multiplied by the average account value over the period, multiplied by 183/366 to reflect the one-half year period. 18 | Semiannual Report Franklin New York Intermediate-Term Tax-Free Income Fund YOUR FUND'S GOAL AND MAIN INVESTMENTS: Franklin New York Intermediate-Term Tax-Free Income Fund seeks to provide as high a level of income exempt from federal, New York state and New York City personal income taxes as is consistent with prudent investment management and preservation of capital by investing at least 80% of its total assets in securities that pay interest free from federal income taxes and New York state personal income taxes. (1) As a non-fundamental policy, the Fund also normally invests at least 80% of its total assets in securities that pay interest free from the personal income taxes of New York City. The Fund maintains a dollar-weighted average portfolio maturity (the time at which the debt must be repaid) of three to 10 years. CREDIT QUALITY BREAKDOWN* Franklin New York Intermediate-Term Tax-Free Income Fund Based on Total Long-Term Investments as of 3/31/08** [PIE CHART] AAA 42.5% AA 23.0% A 7.9% BBB 5.6% Not Rated by S&P 21.0%
* Standard & Poor's (S&P) is the primary independent rating agency; Moody's is the secondary rating agency. Securities not rated by an independent rating agency are assigned comparable internal ratings. Ratings for securities not rated by S&P are in the table below. ** Does not include short-term investments and other net assets.
RATINGS MOODY'S INTERNAL AAA or Aaa 11.4% -- AA or Aa 3.1% -- A 5.6% -- BBB or Baa 0.1% 0.8% Total 20.2% 0.8%
This semiannual report for Franklin New York Intermediate-Term Tax-Free Income Fund covers the period ended March 31, 2008. 1. For investors subject to alternative minimum tax, a small portion of Fund dividends may be taxable. Distributions of capital gains are generally taxable. To avoid imposition of 28% backup withholding on all Fund distributions and redemption proceeds, U.S. investors must be properly certified on Form W-9 and non-U.S. investors on Form W-8BEN. 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 46. Semiannual Report | 19 PERFORMANCE DATA REPRESENT 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. PORTFOLIO BREAKDOWN Franklin New York Intermediate-Term Tax-Free Income Fund 3/31/08
% OF TOTAL LONG-TERM INVESTMENTS* ---------------------- General Obligation 17.7% Subject to Government Appropriations 16.2% Higher Education 15.3% Transportation 9.9% Hospital & Health Care 9.5% Utilities 9.1% Prerefunded 8.7% Tax-Supported 7.1% Other Revenue 3.8% Corporate-Backed 2.4% Housing 0.3%
* Does not include short-term investments and other net assets. PERFORMANCE OVERVIEW The Fund's Class A share price, as measured by net asset value, declined from $10.80 on September 30, 2007, to $10.76 on March 31, 2008. The Fund's Class A shares paid dividends totaling 20.21 cents per share for the same period. (2) The Performance Summary beginning on page 22 shows that at the end of this reporting period the Fund's Class A shares' distribution rate was 3.63%, based on an annualization of the current 3.33 cent per share dividend and the maximum offering price of $11.01 on March 31, 2008. An investor in the 2008 maximum combined effective federal and New York state and City personal income tax bracket of 41.82% would need to earn a distribution rate of 6.24% from a taxable investment to match the Fund's Class A tax-free distribution rate. For the Fund's Class C shares' performance, please see the Performance Summary. 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, the Fund's portfolio becomes well diversified with a broad range of securities. This broad diversification may help mitigate interest rate risk. We do not use leverage or exotic derivatives, nor do we use hedging techniques that could add volatility and contribute to underperformance in adverse markets. We generally stay fully invested to maximize income distribution. 2. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends. 20 | Semiannual Report DIVIDEND DISTRIBUTIONS* Franklin New York Intermediate-Term Tax-Free Income Fund
DIVIDEND PER SHARE ------------------------ MONTH CLASS A CLASS C ------------------------ ---------- ----------- October 2007 3.33 cents 2.84 cents November 2007 3.33 cents 2.84 cents December 2007 3.33 cents 2.83 cents January 2008 3.33 cents 2.83 cents February 2008 3.33 cents 2.83 cents March 2008 3.33 cents 2.81 cents
* Assumes shares were purchased and held for the entire accrual period, which differs from the calendar month. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends. MANAGER'S DISCUSSION Consistent with our strategy, we typically look to remain fully invested in a portfolio of bonds that maintain an average weighted maturity of three to 10 years. We also maintained our conservative, buy-and-hold investment strategy as we attempted to provide shareholders with high, current, tax-free income. Thank you for your participation in Franklin New York Intermediate-Term Tax-Free Income Fund. We look forward to serving your future investment needs. THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS AS OF MARCH 31, 2008, 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 INVESTMENT MANAGER 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. Semiannual Report | 21 Performance Summary as of 3/31/08 FRANKLIN NEW YORK INTERMEDIATE-TERM TAX-FREE INCOME FUND Your dividend income will vary depending on dividends or interest paid by securities in the Fund's portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities. The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund's dividends and capital gain distributions, if any, and any unrealized gains or losses. PRICE AND DISTRIBUTION INFORMATION
CLASS A (SYMBOL: FKNIX) CHANGE 3/31/08 9/30/07 ------------------------------- ---------- ---------- -------- Net Asset Value (NAV) -$ 0.04 $ 10.76 $ 10.80 DISTRIBUTIONS (10/1/07-3/31/08) Dividend Income $ 0.2021
CLASS C (SYMBOL: FKNCX) CHANGE 3/31/08 9/30/07 ------------------------------- ---------- ---------- -------- Net Asset Value (NAV) -$ 0.05 $ 10.77 $ 10.82 DISTRIBUTIONS (10/1/07-3/31/08) Dividend Income $ 0.1716
PERFORMANCE (1) CUMULATIVE TOTAL RETURN EXCLUDES SALES CHARGES. AVERAGE ANNUAL TOTAL RETURN INCLUDES MAXIMUM SALES CHARGES. CLASS A: 2.25% MAXIMUM INITIAL SALES CHARGE; CLASS C: 1% CONTINGENT DEFERRED SALES CHARGE IN FIRST YEAR ONLY. THE FUND MAY CHARGE A 2% FEE ON REDEMPTIONS MADE WITHIN SEVEN DAYS OF PURCHASE.
CLASS A 6-MONTH 1-YEAR 5-YEAR 10-YEAR ------------------------------------------ -------- -------- -------- -------- Cumulative Total Return (2) +1.50% +2.71% +16.23% +53.64% Average Annual Total Return (3) -0.80% +0.40% +2.59% +4.15% Distribution Rate (4) 3.63% Taxable Equivalent Distribution Rate (5) 6.24% 30-Day Standardized Yield (6) 3.39% Taxable Equivalent Yield (5) 5.83% Total Annual Operating Expenses (7) 0.74%
CLASS C 6-MONTH 1-YEAR 3-YEAR INCEPTION (7/1/03) ---------------------------------------- -------- -------- -------- ------------------ Cumulative Total Return (2) +1.12% +2.05% +7.92% +10.21% Average Annual Total Return (3) +0.12% +1.06% +2.57% +2.07% Distribution Rate (4) 3.13% Taxable Equivalent Distribution Rate (5) 5.38% 30-Day Standardized Yield (6) 2.94% Taxable Equivalent Yield (5) 5.05% Total Annual Operating Expenses (7) 1.29%
PERFORMANCE DATA REPRESENT 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. FOR MOST RECENT MONTH-END PERFORMANCE, SEE "FUNDS AND PERFORMANCE" AT FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236. 22 | Semiannual Report Performance Summary (CONTINUED) ENDNOTES BECAUSE MUNICIPAL BONDS ARE PARTICULARLY SENSITIVE TO INTEREST RATE MOVEMENTS, THE FUND'S YIELD AND SHARE PRICE WILL FLUCTUATE WITH MARKET CONDITIONS. BOND PRICES GENERALLY MOVE IN THE OPPOSITE DIRECTION OF INTEREST RATES. THUS, AS PRICES OF BONDS IN THE FUND ADJUST TO A RISE IN INTEREST RATES, THE FUND'S SHARE PRICE MAY DECLINE. 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 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. 1. Past expense reductions by the Fund's manager increased the Fund's total returns. If the manager had not taken this action, the Fund's total returns would have been lower. 2. Cumulative total return represents the change in value of an investment over the periods indicated. 3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Six-month return has not been annualized. 4. Distribution rate is based on an annualization of the respective class's current monthly dividend and the maximum offering price (NAV for Class C) per share on 3/31/08. 5. Taxable equivalent distribution rate and yield assume the published rates as of 12/24/07 for the maximum combined effective federal and New York state and City personal income tax rate of 41.82%, 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 3/31/08. 7. Figures are as stated in the Fund's prospectus current as of the date of this report. Semiannual Report | 23 Your Fund's Expenses FRANKLIN NEW YORK INTERMEDIATE-TERM TAX-FREE INCOME FUND As a Fund shareholder, you can incur two types of costs: - Transaction costs, including sales charges (loads) on Fund purchases and redemption fees; and - Ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The following table shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated. ACTUAL FUND EXPENSES The first line (Actual) for each share class listed in the table provides actual account values and expenses. The "Ending Account Value" is derived from the Fund's actual return, which includes the effect of Fund expenses. You can estimate the expenses you paid during the period by following these steps. OF COURSE, YOUR ACCOUNT VALUE AND EXPENSES WILL DIFFER FROM THOSE IN THIS ILLUSTRATION: 1. Divide your account value by $1,000. IF AN ACCOUNT HAD AN $8,600 VALUE, THEN $8,600 / $1,000 = 8.6. 2. Multiply the result by the number under the heading "Expenses Paid During Period." IF EXPENSES PAID DURING PERIOD WERE $7.50, THEN 8.6 X $7.50 = $64.50. In this illustration, the estimated expenses paid this period are $64.50. HYPOTHETICAL EXAMPLE FOR COMPARISON WITH OTHER FUNDS Information in the second line (Hypothetical) for each class in the table can help you compare ongoing costs of investing in the Fund with those of other mutual funds. This information may not be used to estimate the actual ending account balance or expenses you paid during the period. The hypothetical "Ending Account Value" is based on the actual expense ratio for each class and an assumed 5% annual rate of return before expenses, which does not represent the Fund's actual return. The figure under the heading "Expenses Paid During Period" shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds. 24 | Semiannual Report Your Fund's Expenses (CONTINUED) PLEASE NOTE THAT EXPENSES SHOWN IN THE TABLE ARE MEANT TO HIGHLIGHT ONGOING COSTS AND DO NOT REFLECT ANY TRANSACTION COSTS, SUCH AS SALES CHARGES OR REDEMPTION FEES. Therefore, the second line for each class is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transaction costs were included, your total costs would have been higher. Please refer to the Fund prospectus for additional information on operating expenses.
BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING CLASS A VALUE 10/1/07 VALUE 3/31/08 PERIOD* 10/1/07 - 3/31/08 ---------------------------------------- ----------------- -------------- ------------------------- Actual $ 1,000 $ 1,015.00 $ 3.68 Hypothetical (5% return before expenses) $ 1,000 $ 1,021.35 $ 3.69 CLASS C Actual $ 1,000 $ 1,011.20 $ 6.44 Hypothetical (5% return before expenses) $ 1,000 $ 1,018.60 $ 6.46
* Expenses are calculated using the most recent six-month expense ratio, annualized for each class (A: 0.73% and C: 1.28%), multiplied by the average account value over the period, multiplied by 183/366 to reflect the one-half year period. Semiannual Report | 25 FRANKLIN NEW YORK LIMITED-TERM TAX-FREE INCOME FUND YOUR FUND'S GOAL AND MAIN INVESTMENTS: Franklin New York Limited-Term Tax-Free Income Fund seeks to provide as high a level of income exempt from federal, New York state and New York City personal income taxes as is consistent with prudent investment management and preservation of capital by investing at least 80% of its net assets in securities that pay interest free from federal income taxes and New York state personal income taxes. (1) As a non-fundamental policy, the Fund also normally invests at least 80% of its total assets in securities that pay interest free from the personal income taxes of New York City. The Fund maintains a dollar-weighted average portfolio maturity (the time at which the debt must be repaid) of five years or less. CREDIT QUALITY BREAKDOWN * Franklin New York Limited-Term Tax-Free Income Fund Based on Total Long-Term Investments as of 3/31/08** [PIE CHART] AAA 43.4% AA 19.6% A 4.5% BBB 18.8% Not Rated by S&P 13.7%
* Standard & Poor's (S&P) is the primary independent rating agency; Moody's is the secondary rating agency. Ratings for securities not rated by S&P are in the table below. ** Does not include short-term investments and other net assets.
RATINGS MOODY'S AAA or Aaa 6.9% AA or Aa 6.8% ------- Total 13.7%
We are pleased to bring you Franklin New York Limited-Term Tax-Free Income Fund's semiannual report for the period ended March 31, 2008. 1. For investors subject to alternative minimum tax, a small portion of Fund dividends may be taxable. Distributions of capital gains are generally taxable. To avoid imposition of 28% backup withholding on all Fund distributions and redemption proceeds, U.S. investors must be properly certified on Form W-9 and non-U.S. investors on Form W-8BEN. 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 52. 26| Semiannual Report PERFORMANCE OVERVIEW The Fund's Class A share price, as measured by net asset value, increased from $9.88 on September 30, 2007, to $9.93 on March 31, 2008. The Fund's Class A shares paid dividends totaling 15.73 cents per share for the same period. (2) The Performance Summary beginning on page 29 shows that at the end of this reporting period the Fund's Class A shares' distribution rate was 2.31%. An investor in the 2008 maximum combined effective federal and New York state and City personal income tax bracket of 41.82% would need to earn a distribution rate of 3.97% from a taxable investment to match the Fund's Class A tax-free distribution rate. The Fund was subject to bond calls during the period 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 addition, the Fund had prerefunded bonds that reached their maturity or call dates. In general, we were limited to reinvesting these proceeds as well as those 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. 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. We do not use leverage or exotic derivatives, nor do we use hedging techniques that could add volatility and contribute to underperformance in adverse markets. We generally stay fully invested to maximize income distribution. 2. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends. PERFORMANCE DATA REPRESENT 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. DIVIDEND DISTRIBUTIONS* Franklin New York Limited-Term Tax-Free Income Fund -Class A
MONTH DIVIDEND PER SHARE ------------- ------------------ October 2007 2.90 cents November 2007 2.90 cents December 2007 2.70 cents January 2008 2.70 cents February 2008 2.70 cents March 2008 1.96 cents
* Assumes shares were purchased and held for the entire accrual period, which differs from the calendar month. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends. Semiannual Report | 27 PORTFOLIO BREAKDOWN Franklin New York Limited-Term Tax-Free Income Fund 3/31/08
% OF TOTAL LONG-TERM INVESTMENTS* ---------------------- Other Revenue 20.7% Hospital & Health Care 18.1% Higher Education 16.7% General Obligation 15.9% Utilities 13.0% Tax-Supported 4.5% Prerefunded 3.5% Subject to Government Appropriations 3.1% Housing 2.8% Transportation 1.7%
* Does not include short-term investments and other net assets. MANAGER'S DISCUSSION Consistent with our investment strategy, we invested in bonds we believed could provide the most relative value from an income perspective. Seeking a dollar-weighted average portfolio maturity of five years or less, we concentrated in the one- to five-year range in an effort to reduce volatility and deliver tax-free income. As a result of our strategy, the Fund was positioned to capture changes in short-term interest rates, preserve capital and produce tax-free income. Thank you for your participation in Franklin New York Limited-Term Tax-Free Income Fund. We look forward to serving your future investment needs. THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS AS OF MARCH 31, 2008, 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 INVESTMENT MANAGER 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. 28 | Semiannual Report Performance Summary as of 3/31/08 FRANKLIN NEW YORK LIMITED-TERM TAX-FREE INCOME FUND Your dividend income will vary depending on dividends or interest paid by securities in the Fund's portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities. The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund's dividends and capital gain distributions, if any, and any unrealized gains or losses. PRICE AND DISTRIBUTION INFORMATION
CLASS A (SYMBOL: FNYLX) CHANGE 3/31/08 9/30/07 --------------------------------- ------ ------- ------- Net Asset Value (NAV) +$0.05 $ 9.93 $ 9.88 DISTRIBUTIONS (10/1/07 - 3/31/08) Dividend Income $ 0.1573
PERFORMANCE (1) CUMULATIVE TOTAL RETURN EXCLUDES THE SALES CHARGE. AVERAGE ANNUAL TOTAL RETURN INCLUDES THE MAXIMUM SALES CHARGE. CLASS A: 2.25% MAXIMUM INITIAL SALES CHARGE. THE FUND MAY CHARGE A 2% FEE ON REDEMPTIONS MADE WITHIN SEVEN DAYS OF PURCHASE.
CLASS A 6-MONTH 1-YEAR 3-YEAR INCEPTION (9/2/03) ------------------------------------------- ------- ------ ------ ------------------ Cumulative Total Return (2) +2.11% +3.75% +9.13% +10.32% Average Annual Total Return (3) -0.21% +1.39% +2.17% +1.66% Distribution Rate (4) 2.31% Taxable Equivalent Distribution Rate (5) 3.97% 30-Day Standardized Yield (6) 2.88% Taxable Equivalent Yield (5) 4.95% Total Annual Operating Expenses (7) Without Waiver 1.40% With Waiver 0.50%
PERFORMANCE DATA REPRESENT 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. FOR MOST RECENT MONTH-END PERFORMANCE, SEE "FUNDS AND PERFORMANCE" AT FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236. THE MANAGER AND ADMINISTRATOR HAVE CONTRACTUALLY AGREED TO LIMIT FUND EXPENSES SO THAT ANNUAL FUND OPERATING EXPENSES DO NOT EXCEED 0.50% (OTHER THAN CERTAIN NON-ROUTINE EXPENSES) UNTIL 1/31/09. Semiannual Report | 29 Performance Summary (CONTINUED) ENDNOTES BECAUSE MUNICIPAL BONDS ARE PARTICULARLY SENSITIVE TO INTEREST RATE MOVEMENTS, THE FUND'S YIELD AND SHARE PRICE WILL FLUCTUATE WITH MARKET CONDITIONS. BOND PRICES GENERALLY MOVE IN THE OPPOSITE DIRECTION OF INTEREST RATES. THUS, AS PRICES OF BONDS IN THE FUND ADJUST TO A RISE IN INTEREST RATES, THE FUND'S SHARE PRICE MAY DECLINE. 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 2/1/06, these shares were offered without an initial sales charge; thus actual total returns would have differed. 1. If the manager and administrator had not waived fees, the Fund's distribution rate and total returns would have been lower, and yield for the period would have been 2.23%. 2. Cumulative total return represents the change in value of an investment over the periods indicated. 3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Six-month return has not been annualized. 4. Distribution rate is based on an annualization of the 1.96 cent per share current monthly dividend and the maximum offering price of $10.16 on 3/31/08. 5. Taxable equivalent distribution rate and yield assume the published rates as of 12/24/07 for the maximum combined effective federal and New York state and City personal income tax rate of 41.82%, 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 3/31/08. 7. Figures are as stated in the Fund's prospectus current as of the date of this report. 30 | Semiannual Report Your Fund's Expenses FRANKLIN NEW YORK LIMITED-TERM TAX-FREE INCOME FUND As a Fund shareholder, you can incur two types of costs: - Transaction costs, including sales charges (loads) on Fund purchases and redemption fees; and - Ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The following table shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated. ACTUAL FUND EXPENSES The first line (Actual) for each share class listed in the table provides actual account values and expenses. The "Ending Account Value" is derived from the Fund's actual return, which includes the effect of Fund expenses. You can estimate the expenses you paid during the period by following these steps. OF COURSE, YOUR ACCOUNT VALUE AND EXPENSES WILL DIFFER FROM THOSE IN THIS ILLUSTRATION: 1. Divide your account value by $1,000. IF AN ACCOUNT HAD AN $8,600 VALUE, THEN $8,600 / $1,000 = 8.6. 2. Multiply the result by the number under the heading "Expenses Paid During Period." IF EXPENSES PAID DURING PERIOD WERE $7.50, THEN 8.6 X $7.50 = $64.50. In this illustration, the estimated expenses paid this period are $64.50. HYPOTHETICAL EXAMPLE FOR COMPARISON WITH OTHER FUNDS Information in the second line (Hypothetical) in the table can help you compare ongoing costs of investing in the Fund with those of other mutual funds. This information may not be used to estimate the actual ending account balance or expenses you paid during the period. The hypothetical "Ending Account Value" is based on the actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund's actual return. The figure under the heading "Expenses Paid During Period" shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds. Semiannual Report | 31 Your Fund's Expenses (CONTINUED) PLEASE NOTE THAT EXPENSES SHOWN IN THE TABLE ARE MEANT TO HIGHLIGHT ONGOING COSTS AND DO NOT REFLECT ANY TRANSACTION COSTS, SUCH AS SALES CHARGES OR REDEMPTION FEES. Therefore, the second line for each class is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transaction costs were included, your total costs would have been higher. Please refer to the Fund prospectus for additional information on operating expenses.
BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING CLASS A VALUE 10/1/07 VALUE 3/31/08 PERIOD* 10/1/07 - 3/31/08 ---------------------------------------- ----------------- -------------- ------------------------- Actual $ 1,000 $ 1,021.10 $ 2.53 Hypothetical (5% return before expenses) $ 1,000 $ 1,022.50 $ 2.53
* Expenses are calculated using the most recent six-month annualized expense ratio, net of expense waiver, of 0.50%, multiplied by the average account value over the period, multiplied by 183/366 to reflect the one-half year period. 32 | Semiannual Report Franklin New York Tax-Exempt Money Fund YOUR FUND'S GOAL AND MAIN INVESTMENTS: Franklin New York Tax-Exempt Money Fund seeks to provide as high a level of income exempt from federal, New York state and New York City personal income taxes as is consistent with prudent investment management, preservation of capital and liquidity by investing at least 80% of its total assets in securities that pay interest free from federal income taxes and New York state personal income taxes. (1) As a non-fundamental policy, the Fund also normally invests at least 80% of its total assets in securities that pay interest free from the personal income taxes of New York City. The Fund tries to maintain a stable $1.00 share price. AN INVESTMENT IN THE FUND IS NOT GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY OR INSTITUTION. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN WILL FLUCTUATE. CURRENT PERFORMANCE MAY DIFFER FROM FIGURES SHOWN. PLEASE VISIT FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236 FOR MOST RECENT MONTH-END PERFORMANCE. This semiannual report for Franklin New York Tax-Exempt Money Fund covers the period ended March 31, 2008. PERFORMANCE OVERVIEW Short-term yields generally fell over the period. Largely as a result, Franklin New York Tax-Exempt Money Fund's seven-day effective yield decreased from 3.22% on September 30, 2007, to 1.72% on March 31, 2008. INVESTMENT STRATEGY We invest predominantly in high-quality, short-term municipal securities. Although the Fund tries to invest all of its assets in tax-free securities, it is possible, although not anticipated, that a portion of its assets may be in securities that pay taxable interest, including interest that may be subject to federal alternative minimum tax. We maintain a dollar-weighted average portfolio maturity of 90 days or less. 1. For investors subject to alternative minimum tax, a small portion of Fund dividends may be taxable. Distributions of capital gains are generally taxable. To avoid imposition of 28% backup withholding on all Fund distributions and redemption proceeds, U.S. investors must be properly certified on Form W-9 and non-U.S. investors on Form W-8BEN. 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 56. Semiannual Report | 33 PORTFOLIO BREAKDOWN Franklin New York Tax-Exempt Money Fund 3/31/08
% OF TOTAL INVESTMENTS ----------- Variable Rate Notes 84.4% Tax-Exempt Commercial Paper 7.0% Notes and Bonds 6.7% Put or Option Tender Bonds 1.9%
PERFORMANCE SUMMARY (1) SYMBOL: FRNXX Franklin New York Tax-Exempt Money Fund 3/31/08 Seven-day effective yield (2) 1.72% Seven-day annualized yield 1.71% Taxable equivalent yield (3) 2.94% Total annual operating expenses (4) Without waiver 0.79% With waiver 0.64%
PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN WILL FLUCTUATE. CURRENT PERFORMANCE MAY DIFFER FROM FIGURES SHOWN. PLEASE VISIT FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236 FOR MOST RECENT MONTH-END PERFORMANCE. THE MANAGER HAS CONTRACTUALLY AGREED TO LIMIT FUND EXPENSES SO THAT TOTAL ANNUAL FUND OPERATING EXPENSES DO NOT EXCEED 0.64% (OTHER THAN CERTAIN NON-ROUTINE EXPENSES) UNTIL 1/31/09. 1. If the manager had not waived fees, the Fund's annualized and effective yields would have been 1.56% and 1.58%. 2. The seven-day effective yield assumes the compounding of daily dividends. 3. Taxable equivalent yield assumes the published rates as of 12/24/07 for the maximum combined effective federal and New York state and City personal income tax rate of 41.82%, based on the federal income tax rate of 35.00%. 4. Figures are as stated in the Fund's prospectus current as of the date of this report. Annualized and effective yields are for the seven-day period ended 3/31/08. The Fund's average weighted maturity was 21 days. Yields reflect Fund expenses and fluctuations in interest rates on portfolio investments. MANAGER'S DISCUSSION During the reporting period, the Federal Reserve Board cut the federal funds target rate from 4.75% to 2.25% to help maintain liquidity as credit conditions tightened and economic activity weakened. The Securities Industry and Financial Markets Association (SIFMA) Municipal Swap Index, a benchmark for variable rate securities, which make up a large portion of Franklin New York Tax-Exempt Money Fund, averaged a rate of 2.94% for the period under review. (2) During the reporting period, the Fund purchased several issues including Kenmore-Tonawanda, New York, Union Free School District bonds and Metropolitan Transportation Authority Tax-Exempt Commercial Paper. Thank you for your participation in Franklin New York Tax-Exempt Money Fund. We look forward to serving your future investment needs. 2. Source: Thomson Financial. The SIFMA Municipal Swap Index is a weekly high-grade market index composed of seven-day tax-exempt variable rate demand notes produced by the Municipal Market Data Group. Actual issues are selected from Municipal Market Data's database of more than 10,000 active issues based on several specific criteria. THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS AS OF MARCH 31, 2008, 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 INVESTMENT MANAGER 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. 34 | Semiannual Report Your Fund's Expenses FRANKLIN NEW YORK TAX-EXEMPT MONEY FUND As a Fund shareholder, you can incur two types of costs: - Transaction costs, including sales charges (loads) on Fund purchases and redemption fees; and - Ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The following table shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated. ACTUAL FUND EXPENSES The first line (Actual) of the table provides actual account values and expenses. The "Ending Account Value" is derived from the Fund's actual return, which includes the effect of Fund expenses. You can estimate the expenses you paid during the period by following these steps. OF COURSE, YOUR ACCOUNT VALUE AND EXPENSES WILL DIFFER FROM THOSE IN THIS ILLUSTRATION: 1. Divide your account value by $1,000. IF AN ACCOUNT HAD AN $8,600 VALUE, THEN $8,600 / $1,000 = 8.6. 2. Multiply the result by the number under the heading "Expenses Paid During Period." IF EXPENSES PAID DURING PERIOD WERE $7.50, THEN 8.6 X $7.50 = $64.50. In this illustration, the estimated expenses paid this period are $64.50. HYPOTHETICAL EXAMPLE FOR COMPARISON WITH OTHER FUNDS Information in the second line (Hypothetical) of the table can help you compare ongoing costs of investing in the Fund with those of other mutual funds. This information may not be used to estimate the actual ending account balance or expenses you paid during the period. The hypothetical "Ending Account Value" is based on the Fund's actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund's actual return. The figure under the heading "Expenses Paid During Period" shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds. Semiannual Report | 35 Your Fund's Expenses (CONTINUED) PLEASE NOTE THAT EXPENSES SHOWN IN THE TABLE ARE MEANT TO HIGHLIGHT ONGOING COSTS AND DO NOT REFLECT ANY TRANSACTION COSTS, SUCH AS SALES CHARGES OR REDEMPTION FEES. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transaction costs were included, your total costs would have been higher. Please refer to the Fund prospectus for additional information on operating expenses.
BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING VALUE 10/1/07 VALUE 3/31/08 PERIOD* 10/1/07 - 3/31/08 ----------------- -------------- ---------------------------- Actual $ 1,000 $ 1,012.50 $ 3.22 Hypothetical (5% return before expenses) $ 1,000 $ 1,021.80 $ 3.23
* Expenses are calculated using the most recent six-month annualized expense ratio, net of expense waiver, of 0.64%, multiplied by the average account value over the period, multiplied by 183/366 to reflect the one-half year period. 36 | Semiannual Report Franklin New York Tax-Free Trust FINANCIAL HIGHLIGHTS FRANKLIN NEW YORK INSURED TAX-FREE INCOME FUND
SIX MONTHS ENDED YEAR ENDED MARCH 31, 2008 YEAR ENDED SEPTEMBER 30, DECEMBER 31, CLASS A (UNAUDITED) 2007 2006 2005 2004 (F) 2003 ------------------------------------------------- ---------------- --------- ---------- ------------- -------- ------------ PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the period) Net asset value, beginning of period ............ $ 11.37 $ 11.58 $ 11.62 $ 11.64 $ 11.71 $ 11.69 --------- --------- --------- --------- --------- -------- Income from investment operations (a): Net investment income (b) .................... 0.23 0.46 0.48 0.50 0.39 0.52 Net realized and unrealized gains (losses) ... (0.41) (0.20) (0.04) (0.01) (0.07) 0.02 --------- --------- --------- --------- --------- -------- Total from investment operations ................ (0.18) 0.26 0.44 0.49 0.32 0.54 --------- --------- --------- --------- --------- -------- Less distributions from net investment income ....................................... (0.23) (0.47) (0.48) (0.51) (0.39) (0.52) --------- --------- --------- --------- --------- -------- Redemption fees ................................. -- (e) -- (e) -- (e) -- (e) -- -- --------- --------- --------- --------- --------- -------- Net asset value, end of period .................. $ 10.96 $ 11.37 $ 11.58 $ 11.62 $ 11.64 $ 11.71 ========= ========= ========= ========= ========= ======== Total return (c) ................................ (1.62)% 2.24% 3.90% 4.23% 2.77% 4.69% RATIOS TO AVERAGE NET ASSETS (d) Expenses ........................................ 0.65% 0.68% 0.70% 0.70% 0.71% 0.71% Net investment income ........................... 4.14% 4.04% 4.17% 4.25% 4.44% 4.44% SUPPLEMENTAL DATA Net assets, end of period (000's) ............... $505,909 $518,353 $ 326,772 $ 304,673 $292,813 $296,917 Portfolio turnover rate ......................... 4.12% 33.49% 24.10% 13.65% 7.96% 7.96%
(a) The amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating market value of the investments of the Fund. (b) Based on average daily shares outstanding. (c) Total return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year. (d) Ratios are annualized for periods less than one year. (e) Amount rounds to less than $0.01 per share. (f) For the period January 1, 2004 to September 30, 2004. Semiannual Report | The accompanying notes are an integral part of these financial statements. | 37 Franklin New York Tax-Free Trust FINANCIAL HIGHLIGHTS (CONTINUED) FRANKLIN NEW YORK INSURED TAX-FREE INCOME FUND
SIX MONTHS ENDED YEAR ENDED MARCH 31, 2008 YEAR ENDED SEPTEMBER 30, DECEMBER 31, CLASS C (UNAUDITED) 2007 2006 2005 2004 (F) 2003 ----------------------------------------------- ---------------- -------- --------- --------- -------- ------------ PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the period) Net asset value, beginning of period ............ $ 11.55 $ 11.75 $ 11.78 $ 11.81 $ 11.87 $ 11.84 ---------- -------- -------- --------- -------- -------- Income from investment operations (a): Net investment income (b) .................... 0.21 0.41 0.42 0.44 0.34 0.46 Net realized and unrealized gains (losses) ... (0.42) (0.21) (0.03) (0.03) (0.06) 0.02 ---------- -------- -------- --------- -------- -------- Total from investment operations ................ (0.21) 0.20 0.39 0.41 0.28 0.48 ---------- -------- -------- --------- -------- -------- Less distributions from net investment income ....................................... (0.20) (0.40) (0.42) (0.44) (0.34) (0.45) ---------- -------- -------- --------- -------- -------- Redemption fees ................................. -- (e) -- (e) -- (e) -- (e) -- -- ---------- -------- -------- --------- -------- -------- Net asset value, end of period .................. $ 11.14 $ 11.55 $ 11.75 $ 11.78 $ 11.81 $ 11.87 ========== ======== ======== ========= ======== ======== Total return (c)................................. (1.86)% 1.74% 3.36% 3.52% 2.40% 4.12% RATIOS TO AVERAGE NET ASSETS (d) Expenses ........................................ 1.20% 1.23% 1.25% 1.25% 1.26% 1.27% Net investment income ........................... 3.59% 3.49% 3.62% 3.70% 3.89% 3.88% SUPPLEMENTAL DATA Net assets, end of period (000's) ............... $ 58,887 $ 53,452 $ 44,446 $ 40,110 $ 37,606 $ 39,803 Portfolio turnover rate ......................... 4.12% 33.49% 24.10% 13.65% 7.96% 7.96%
(a) The amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating market value of the investments of the Fund. (b) Based on average daily shares outstanding. (c) Total return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year. (d) Ratios are annualized for periods less than one year. (e) Amount rounds to less than $0.01 per share. (f) For the period January 1, 2004 to September 30, 2004. 38 | The accompanying notes are an integral part of these financial statements. | Semiannual Report Franklin New York Tax-Free Trust STATEMENT OF INVESTMENTS, MARCH 31, 2008 (UNAUDITED)
FRANKLIN NEW YORK INSURED TAX-FREE INCOME FUND PRINCIPAL AMOUNT VALUE ------------------------------------------------------------------------------------------- ---------------- --------------- LONG TERM INVESTMENTS 98.7% MUNICIPAL BONDS 98.7% NEW YORK 98.7% Amherst IDA Civic Facility Revenue, University of Buffalo Foundation, Student Housing, Creekside Project, Series A, AMBAC Insured, 5.00%, 8/01/32 ............................. $ 2,785,000 $ 2,796,446 Babylon IDA Civic Facility Revenue, Winthrop South Nassau University Health Systems East Inc. Project, Series A, AMBAC Insured, 6.00%, 8/01/24 ................................. 4,020,000 4,218,066 Brookhaven GO, Series B, MBIA Insured, 7.00%, 5/01/09 .................................... 200,000 210,054 Buffalo Municipal Water Finance Authority Water System Revenue, FSA Insured, Pre-Refunded, 6.00%, 7/01/26 ......................................................................... 4,185,000 4,434,175 Central Square GO, Central School District, FGIC Insured, ETM, 6.50%, 6/15/09 ............. 900,000 946,872 Erie County GO, Sewer District, Series B, MBIA Insured, 5.00%, 12/01/35 ................... 2,000,000 1,947,260 Fredonia Central School District GO, Refunding, FGIC Insured, 5.00%, 6/01/19 .............. 2,300,000 2,433,124 Hempstead Town IDA Civic Facilities Revenue, Hofstra University Project, MBIA Insured, 5.80%, 7/01/15 ......................................................................... 1,340,000 1,349,795 Hudson Yards Infrastructure Corp. Revenue, Series A, FSA Insured, 5.00%, 2/15/47 .......... 15,000,000 14,948,100 Liberty Development Corp. Revenue, Goldman Sachs Headquarters, 5.25%, 10/01/35 ............ 10,000,000 10,102,000 Long Island Power Authority Electric System Revenue, General, Series A, FSA Insured, Pre-Refunded, 5.125%, 12/01/22 .......................................... 5,000,000 5,077,550 MBIA Insured, Pre-Refunded, 5.75%, 12/01/24 .......................................... 1,540,000 1,565,425 Madison County IDA Civic Facility Revenue, Colgate University Project, Series A, AMBAC Insured, 5.00%, 7/01/35 .................. 6,165,000 6,183,125 College University Project, Series A, MBIA Insured, 5.00%, 7/01/39 ................... 3,750,000 3,737,925 Morrisville State College Foundation, Series A, CIFG Insured, 5.00%, 6/01/37 ......... 1,000,000 967,160 Middle Country Central School District Centereach GO, FSA Insured, 4.875%, 6/01/20 ........ 1,650,000 1,693,626 Monroe County IDA Civic Facility Revenue, Nazareth College Rochester Project, MBIA Insured, 5.25%, 10/01/21 ...................................................................... 1,520,000 1,590,574 5.00%, 10/01/31 ...................................................................... 3,100,000 3,119,809 Mount Sinai Union Free School District, Refunding, AMBAC Insured, 6.20%, 2/15/13 .......... 1,055,000 1,197,045 MTA Commuter Facilities Revenue, Series A, FSA Insured, Pre-Refunded, 5.00%, 7/01/23 ...... 3,000,000 3,237,090 MTA Dedicated Tax Fund Revenue, Refunding, Series A, MBIA Insured, 5.00%, 11/15/30 ................................... 8,000,000 8,009,360 Series A, FGIC Insured, Pre-Refunded, 6.00%, 4/01/30 ................................. 2,500,000 2,682,350 Series A, MBIA Insured, 5.00%, 11/15/35 ............................................. 16,000,000 15,647,520 MTA Revenue, Refunding, Series A, FGIC Insured, 5.25%, 11/15/31 ........................... 4,000,000 4,007,880 MTA Service Contract Revenue, Refunding, AMBAC Insured, 5.00%, 7/01/30 ............................................. 7,000,000 7,034,020 Series B, MBIA Insured, 5.00%, 1/01/31 ............................................... 3,000,000 3,004,320 Nassau County GO, Public Improvement, Series E, FSA Insured, Pre-Refunded, 6.00%, 3/01/20 ................................................................................ 1,510,000 1,614,130 Nassau Health Care Corp. Health System Revenue, Nassau County Guaranteed, FSA Insured, Pre-Refunded, 5.75%, 8/01/29 ........................................................... 2,655,000 2,837,186 New York City Educational Construction Fund Revenue, Series A, FGIC Insured, 5.00%, 4/01/37 ................................................................................ 19,750,000 19,306,415 New York City GO, Refunding, Series A, FSA Insured, 5.00%, 8/01/26 ..................................... 9,450,000 9,610,272 Series A, MBIA Insured, 6.00%, 5/15/30 ............................................... 15,000 15,989 Series A, MBIA Insured, Pre-Refunded, 6.00%, 5/15/30 ................................. 1,985,000 2,159,501 Series D1, 5.125%, 12/01/28 .......................................................... 5,000,000 5,035,650 Series I, MBIA Insured, 5.00%, 4/15/29 ............................................... 2,345,000 2,351,496 Series I, MBIA Insured, Pre-Refunded, 5.00%, 4/15/29 ................................. 655,000 683,827
Semiannual Report | 39 Franklin New York Tax-Free Trust STATEMENT OF INVESTMENTS, MARCH 31, 2008 (UNAUDITED) (CONTINUED)
FRANKLIN NEW YORK INSURED TAX-FREE INCOME FUND PRINCIPAL AMOUNT VALUE ------------------------------------------------------------------------------------------ ---------------- --------------- LONG TERM INVESTMENTS (CONTINUED) MUNICIPAL BONDS (CONTINUED) NEW YORK (CONTINUED) New York City Health and Hospital Corp. Revenue, Health System, Series A, FSA Insured, 5.125%, 2/15/23 ....................................................................... $ 3,890,000 $ 4,004,405 New York City IDA Civic Facility Revenue, Polytechnic Prep Country Day School, FSA Insured, 5.375%, 5/01/29 .............................................................. 980,000 1,006,617 New York City IDAR, Queens Baseball Stadium, Pilot, AMBAC Insured, 5.00%, 1/01/36 ....................... 5,000,000 4,918,500 Queens Baseball Stadium, Pilot, AMBAC Insured, 4.75%, 1/01/42 ....................... 2,000,000 1,881,560 Queens Baseball Stadium, Pilot, AMBAC Insured, 5.00%, 1/01/46 ....................... 10,000,000 9,718,300 Yankee Stadium, Pilot, FGIC Insured, 5.00%, 3/01/46 ................................. 20,000,000 19,117,000 New York City Municipal Water Authority Revenue, Refunding, Series E, FGIC Insured, 5.00%, 6/15/26 ............................................................................... 1,000,000 1,006,680 New York City Municipal Water Finance Authority Water and Sewer System Revenue, Refunding, Series B, FGIC Insured, 5.125%, 6/15/31 .................................. 5,000,000 5,041,400 Series G, FSA Insured, 5.00%, 6/15/34 ............................................... 3,000,000 3,019,170 New York City Transitional Finance Authority Building Aid Revenue, Fiscal 2007, Series S-1, FGIC Insured, 5.00%, 7/15/31 ..................................................... 10,700,000 10,554,266 New York City Transitional Finance Authority Revenue, Future Tax Secured, Series A, FGIC Insured, 5.00%, 5/01/28 .............................................. 5,915,000 5,939,843 Series A, FGIC Insured, Pre-Refunded, 5.00%, 5/01/28 ................................ 85,000 91,386 Series C, 4.75%, 5/01/23 ............................................................ 1,755,000 1,762,160 Series C, Pre-Refunded, 4.75%, 5/01/23 .............................................. 45,000 45,551 Series D, MBIA Insured, 5.00%, 2/01/22 .............................................. 2,000,000 2,078,000 New York City Transportation Authority MTA Triborough Bridge and Tunnel Authority COP, AMBAC Insured, Pre-Refunded, 5.75%, 1/01/20 ......................................... 3,000,000 3,210,570 Series A, AMBAC Insured, Pre-Refunded, 5.25%, 1/01/29 ............................... 3,500,000 3,715,915 New York City Trust for Cultural Resources Revenue, Museum of Modern Art 2001, Series D, AMBAC Insured, 5.125%, 7/01/31 ........................................................ 7,500,000 7,594,875 New York Convention Center Development Corp. Revenue, Hotel Unit Fee Secured, AMBAC Insured, 5.00%, 11/15/35 ............................................................................ 5,675,000 5,624,322 11/15/44 ............................................................................ 13,000,000 12,848,420 New York State Appropriated Tobacco Corp. Revenue, Asset-Backed, Series A-1, AMBAC Insured, 5.25%, 6/01/21 ......................................................... 6,000,000 6,179,760 New York State Dormitory Authority Lease Revenue, Delaware Chenango Madison Otsego Board of Cooperative Education Services, XLCA Insured, 5.00%, 8/15/27 .......................................................... 10,000,000 9,913,700 Master Boces Program, Series A, FSA Insured, 5.25%, 8/15/21 ......................... 1,740,000 1,803,910 New York State Dormitory Authority Revenue, Iona College, XLCA Insured, 5.125%, 7/01/32 ......................................... 4,000,000 3,719,240 School Districts Financing Program, Series D, MBIA Insured, 5.25%, 10/01/23 ......... 1,750,000 1,827,455 School Districts Financing Program, Series D, MBIA Insured, 5.00%, 10/01/30 ......... 1,750,000 1,766,100 New York State Dormitory Authority Revenues, 853 Schools Program, Issue 2, Series E, AMBAC Insured, 5.75%, 7/01/19 ............... 1,340,000 1,400,394 City University System Consolidated, Third General, Series 1, FSA Insured, Pre-Refunded, 5.50%, 7/01/29 ..................................................... 1,585,000 1,669,671 Good Samaritan Hospital Medical Center, Series A, MBIA Insured, 5.50%, 7/01/24 ...... 2,000,000 2,040,280
40 | Semiannual Report Franklin New York Tax-Free Trust STATEMENT OF INVESTMENTS, MARCH 31, 2008 (UNAUDITED) (CONTINUED)
FRANKLIN NEW YORK INSURED TAX-FREE INCOME FUND PRINCIPAL AMOUNT VALUE ------------------------------------------------------------------------------------------ ---------------- --------------- LONG TERM INVESTMENTS (CONTINUED) MUNICIPAL BONDS (CONTINUED) NEW YORK (CONTINUED) New York State Dormitory Authority Revenues, (continued) Insured Mortgage Nursing Home, MBIA Insured, 5.40%, 2/01/31 ........................... $ 400,000 $ 410,376 Insured Mortgage Nursing Home, MBIA Insured, 5.50%, 2/01/41 ........................... 1,880,000 1,926,210 Maimonides Medical Center, MBIA Insured, 5.00%, 8/01/24 ............................... 6,205,000 6,325,874 Maimonides Medical Center, Series A, MBIA Insured, 5.75%, 8/01/24 ..................... 1,500,000 1,503,570 Mental Health Services, Series B, MBIA Insured, Pre-Refunded, 5.00%, 2/15/24 .......... 1,975,000 2,051,136 Mental Health Services, Series D, FSA Insured, Pre-Refunded, 5.25%, 2/15/29 ........... 1,850,000 1,950,418 Mental Health Services, Series D, FSA Insured, Pre-Refunded, 5.25%, 2/15/29 ........... 150,000 152,838 Mental Health Services Facilities Improvement, Series A, MBIA Insured, Pre-Refunded, 5.25%, 8/15/26 ...................................................................... 2,570,000 2,801,094 Montefiore Hospital, FGIC Insured, 5.00%, 8/01/33 ..................................... 11,000,000 10,483,110 New York University, Series 2, AMBAC Insured, 5.00%, 7/01/23 .......................... 885,000 899,762 Non-State Supported Debt, Albany Public Library, AMBAC Insured, 5.00%, 7/01/37 ........ 10,720,000 10,621,483 Non-State Supported Debt, Educational Housing Services, Cuny Student Housing Project, AMBAC Insured, 5.25%, 7/01/30 ....................................................... 5,150,000 5,169,776 Non-State Supported Debt, Fashion Institute Student Housing Corp., FGIC Insured, 5.25%, 7/01/34 ............................................................................. 13,220,000 12,674,146 Non-State Supported Debt, Health Quest Systems, Series A, Assured Guaranty, 5.25%, 7/01/27 ............................................................................. 4,000,000 4,075,960 Non-State Supported Debt, Hospital Special Surgery, MBIA Insured, 5.00%, 8/15/29 ...... 2,500,000 2,502,725 Non-State Supported Debt, Mount Sinai School Medical New York University, Refunding, MBIA Insured, 5.00%, 7/01/35 ........................................................ 5,000,000 4,743,250 Non-State Supported Debt, New York University, Series A, AMBAC Insured, 5.00%, 7/01/37 ............................................................................. 20,000,000 19,937,400 Non-State Supported Debt, NYSARC Inc., Refunding, Series A, FSA Insured, 5.00%, 7/01/34 ............................................................................. 5,510,000 5,549,507 Non-State Supported Debt, School District Financing Program, Series C, FSA Insured, 5.00%, 10/01/32 ..................................................................... 5,000,000 5,030,050 Non-State Supported Debt, St. John's University, Series A, MBIA Insured, 5.25%, 7/01/37 ............................................................................. 10,000,000 10,138,100 Non-State Supported Debt, The New School, Refunding, MBIA Insured, 5.00%, 7/01/46 ..... 12,000,000 11,719,080 Non-State Supported Debt, University of Rochester, Refunding, Series A, MBIA Insured, 5.00%, 7/01/27 ...................................................................... 145,000 145,876 Non-State Supported Debt, University of Rochester, Series A, MBIA Insured, Pre-Refunded, 5.00%, 7/01/27 ........................................................ 855,000 870,441 NYSARC Inc., Series A, FSA Insured, 5.00%, 7/01/26 .................................... 1,700,000 1,738,403 Pace University, MBIA Insured, Pre-Refunded, 6.00%, 7/01/29 ........................... 3,000,000 3,277,470 Secondarily Insured, Lease, State University, AMBAC Insured, 5.00%, 7/01/32 ........... 5,000,000 4,985,700 Secondarily Insured, Mental Health Services, Series B, MBIA Insured, Pre-Refunded, 5.00%, 2/15/24 ...................................................................... 25,000 25,376 Secondarily Insured, Mental Health Services, Series B, MBIA Insured, Pre-Refunded, 5.00%, 2/15/24 ...................................................................... 260,000 270,023 Series 1, MBIA Insured, 5.00%, 7/01/24 ................................................ 2,000,000 2,040,500 Siena College, MBIA Insured, 5.00%, 7/01/31 ........................................... 3,500,000 3,521,000 St. John's University, Series A, MBIA Insured, Pre-Refunded, 5.25%, 7/01/30 ........... 3,500,000 3,836,070 State Supported Debt, Lease, State University Dormitory Facilities, Series A, MBIA Insured, 5.00%, 7/01/36 ............................................................. 5,170,000 5,130,915 Upstate Community Colleges, MBIA Insured, Pre-Refunded, 5.125%, 7/01/30 ............... 5,945,000 6,381,541
Semiannual Report | 41 Franklin New York Tax-Free Trust STATEMENT OF INVESTMENTS, MARCH 31, 2008 (UNAUDITED) (CONTINUED)
FRANKLIN NEW YORK INSURED TAX-FREE INCOME FUND PRINCIPAL AMOUNT VALUE ----------------------------------------------------------------------------------------- ---------------- --------------- LONG TERM INVESTMENTS (CONTINUED) MUNICIPAL BONDS (CONTINUED) NEW YORK (CONTINUED) New York State Energy Research and Development Authority PCR, Central Hudson Gas, Refunding, Series A, AMBAC Insured, 5.45%, 8/01/27 ................................... $ 3,500,000 $ 3,577,910 New York State Environmental Facilities Corp. Water Facilities Revenue, Spring Valley Water Project, Refunding, Series B, AMBAC Insured, 6.15%, 8/01/24 .................... 3,000,000 3,008,070 New York State Municipal Bond Bank Agency Special Program Revenue, Buffalo, Series A, AMBAC Insured, 5.25%, 5/15/31 ........................................................ 4,000,000 4,072,160 New York State Power Authority Revenue, Series A, MBIA Insured, 5.00%, 11/15/47 ......... 15,000,000 14,695,050 New York State Thruway Authority General Revenue, AMBAC Insured, 5.00%, 1/01/30 ......... 7,540,000 7,552,215 New York State Urban Development Corp. Revenue, Correctional Facilities Service Contract, Series C, AMBAC Insured, Pre-Refunded, 6.00%, 1/01/29 ................................................................... 11,200,000 11,669,280 State Personal Income Tax, Series A-1, 5.00%, 12/15/27 ............................. 5,000,000 5,072,600 Niagara Falls City School District COP, High School Facility, MBIA Insured, Pre-Refunded, 5.375%, 6/15/28 ........................................ 2,000,000 2,034,480 Refunding, FSA Insured, 5.00%, 6/15/28 ............................................. 4,155,000 4,194,722 Niagara Falls Public Improvement GO, MBIA Insured, 6.85%, 3/01/19 ....................... 5,000 5,010 North Hempstead GO, Refunding, Series B, FGIC Insured, 6.40%, 4/01/15 ............................................................................ 1,065,000 1,247,222 4/01/16 ............................................................................ 1,000,000 1,179,320 Oswego County IDA Civic Facility Revenue, Oswego School District Public Library Project, XLCA Insured, 5.00%, 12/15/30 ........................................................ 1,805,000 1,754,749 Rensselaer City School District COP, XLCA Insured, 5.00%, 6/01/36 ....................... 20,240,000 19,326,974 Rensselaer County GO, AMBAC Insured, 6.70%, 2/15/11 .................................... 810,000 899,238 Rockland County IDA Civic Facility Revenue, Nyack Library Project, Series A, AMBAC Insured, 5.00%, 12/01/32 ........................................................................... 2,000,000 1,997,060 12/01/37 ........................................................................... 3,320,000 3,289,356 Sachem Central School District Holbrook GO, MBIA Insured, Pre-Refunded, 5.00%, 6/15/30 .............................................................................. 1,000,000 1,101,150 Sales Tax Asset Receivable Corp. Revenue, Series A, AMBAC Insured, 5.00%, 10/15/32 ...... 10,000,000 10,099,700 Schenectady IDA Civic Facility Revenue, Schaffer Heights, Series A, GNMA Secured, 6.00%, 11/01/30 .......................... 3,000,000 3,052,920 Schaffer Heights, Series A, GNMA Secured, 6.05%, 11/01/35 .......................... 2,375,000 2,416,230 Union College Project, Series A, AMBAC Insured, 5.00%, 7/01/32 ..................... 2,395,000 2,399,191 St.Lawrence County IDA Civic Facility Revenue, St. Lawrence University Project, Series A, MBIA Insured, 5.00%, 7/01/28 ............................................... 2,455,000 2,466,710 Taconic Hills Central School District at Craryville GO, Columbia County, Refunding, FGIC Insured, 5.00%, 6/15/27 ......................................................... 1,295,000 1,301,721 Triborough Bridge and Tunnel Authority Revenues, General Purpose, Series B, MBIA Insured, Pre-Refunded, 5.20%, 1/01/27 ......................................................... 1,000,000 1,096,960 Upper Mohawk Valley Regional Water Finance Authority Water Systems Revenue, AMBAC Insured, Pre-Refunded, 5.75%, 8/01/29 .......................................... 550,000 582,758 Warren and Washington Counties IDA Civic Facility Revenue, Series B, FSA Insured, 5.00%, 12/01/27 ............................................................................. 3,680,000 3,757,942 Westchester County Health Care Corp. Revenue, Series B, 5.375%, 11/01/30................. 1,500,000 1,526,430 --------------- TOTAL LONG TERM INVESTMENTS (COST $564,347,101) ......................................... 557,520,895 ---------------
42 | Semiannual Report Franklin New York Tax-Free Trust STATEMENT OF INVESTMENTS, MARCH 31, 2008 (UNAUDITED) (CONTINUED)
FRANKLIN NEW YORK INSURED TAX-FREE INCOME FUND PRINCIPAL AMOUNT VALUE ----------------------------------------------------------------------------------------- ---------------- ------------ SHORT TERM INVESTMENTS 0.1% MUNICIPAL BONDS 0.1% NEW YORK 0.1% (a) New York City IDA Civic Facility Revenue, Ethical Culture School Project, Series A, XLCA Insured, Weekly VRDN and Put, 6.50%, 6/01/35 .................................. $ 200,000 $ 200,000 ------------ U.S. TERRITORY 0.0% (b) PUERTO RICO 0.0% (b) (a) Puerto Rico Commonwealth GO, Public Improvement, Refunding, Series A-5, FGIC Insured, Weekly VRDN and Put, 8.00%, 7/01/32 ................................................ 100,000 100,000 ------------ TOTAL SHORT TERM INVESTMENTS(COST $300,000) ........................................ 300,000 ------------ TOTAL INVESTMENTS (COST $564,647,101) 98.8% ........................................ 557,820,895 OTHER ASSETS, LESS LIABILITIES 1.2% ................................................ 6,975,411 ------------ NET ASSETS 100.0% .................................................................. $564,796,306 ============
See Selected Portfolio Abbreviations on page 58. (a) Variable rate demand notes (VRDNs) are tax-exempt obligations which contain a floating or variable interest rate adjustment formula and an unconditional right of demand to receive payment of the principal balance plus accrued interest at specified dates. The coupon rate shown represents the rate at period end. (b) Rounds to less than 0.1% of net assets. Semiannual Report | The accompanying notes are an integral part of these financial statements. | 43 Franklin New York Tax-Free Trust FINANCIAL HIGHLIGHTS FRANKLIN NEW YORK INTERMEDIATE-TERM TAX-FREE INCOME FUND
SIX MONTHS ENDED YEAR ENDED MARCH 31, 2008 YEAR ENDED SEPTEMBER 30, DECEMBER 31, CLASS A (UNAUDITED) 2007 2006 2005 2004 (F) 2003 ---------------- ---------- ---------- ---------- ---------- ------------ PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the period) Net asset value, beginning of period... $ 10.80 $ 10.93 $ 10.96 $ 11.15 $ 11.16 $ 11.04 ---------------- ---------- ---------- ---------- ---------- ----------- Income from investment operations (a): Net investment income (b) .......... 0.20 0.39 0.39 0.38 0.30 0.41 Net realized and unrealized gains (losses) ........................ (0.04) (0.12) (0.04) (0.19) (0.02) 0.12 ---------------- ---------- ---------- ---------- ---------- ----------- Total from investment operations ...... 0.16 0.27 0.35 0.19 0.28 0.53 ---------------- ---------- ---------- ---------- ---------- ----------- Less distributions from net investment income .................. (0.20) (0.40) (0.38) (0.38) (0.29) (0.41) ---------------- ---------- ---------- ---------- ---------- ----------- Redemption fees ....................... -- (e) -- (e) -- (e) -- (e) -- -- ---------------- ---------- ---------- ---------- ---------- ----------- Net asset value, end of period ........ $ 10.76 $ 10.80 $ 10.93 $ 10.96 $ 11.15 $ 11.16 ================ ========== ========== ========== ========== =========== Total return (c) ...................... 1.50% 2.51% 3.28% 1.72% 2.57% 4.85% RATIOS TO AVERAGE NET ASSETS (d) Expenses before waiver and payments by affiliates . .................... 0.73% 0.74% 0.75% 0.74% 0.75% 0.75% Expenses net of waiver and payments by affiliates. ..................... 0.73% 0.74% 0.75% 0.74% 0.67% 0.60% Net investment income ................. 3.60% 3.62% 3.56% 3.40% 3.57% 3.64% SUPPLEMENTAL DATA Net assets, end of period (000's) ..... $ 293,093 $ 273,552 $ 222,308 $ 233,785 $ 227,288 $ 217,829 Portfolio turnover rate ............... 3.48% 20.61% 30.01% 5.42% 4.66% 3.35%
(a) The amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating market value of the investments of the Fund. (b) Based on average daily shares outstanding. (c) Total return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year. (d) Ratios are annualized for periods less than one year. (e) Amount rounds to less than $0.01 per share. (f) For the period January 1, 2004 to September 30, 2004. 44 | The accompanying notes are an integral part of these financial statements. | Semiannual Report Franklin New York Tax-Free Trust FINANCIAL HIGHLIGHTS (CONTINUED) FRANKLIN NEW YORK INTERMEDIATE-TERM TAX-FREE INCOME FUND
SIX MONTHS ENDED PERIOD ENDED MARCH 31, 2008 YEAR ENDED SEPTEMBER 30, DECEMBER 31, CLASS C (UNAUDITED) 2007 2006 2005 2004(F) 2003(G) ---------------- ---------- ---------- ---------- ---------- ---------- PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the period) Net asset value, beginning of period ... $ 10.82 $ 10.95 $ 10.97 $ 11.16 $ 11.17 $ 11.27 ---------------- ---------- ---------- ---------- ---------- ---------- Income from investment operations (a): Net investment income (b) ........... 0.17 0.33 0.33 0.32 0.25 0.17 Net realized and unrealized gains (losses) .......................... (0.05) (0.12) (0.03) (0.19) (0.01) (0.10) ---------------- ---------- ---------- ---------- ---------- ---------- Total from investment operations ....... 0.12 0.21 0.30 0.13 0.24 0.07 ---------------- ---------- ---------- ---------- ---------- ---------- Less distributions from net investment income .............................. (0.17) (0.34) (0.32) (0.32) (0.25) (0.17) ---------------- ---------- ---------- ---------- ---------- ---------- Redemption fees ........................ -- (e) -- (e) -- (e) -- (e) -- -- ---------------- ---------- ---------- ---------- ---------- ---------- Net asset value, end of period. ........ $ 10.77 $ 10.82 $ 10.95 $ 10.97 $ 11.16 $ 11.17 ================ ========== ========== ========== ========== ========== Total return (c) ....................... 1.12% 1.95% 2.81% 1.16% 2.14% 0.64% RATIOS TO AVERAGE NET ASSETS (d) Expenses before waiver and payments by affiliates ....................... 1.28% 1.29% 1.29% 1.29% 1.30% 1.30% Expenses net of waiver and payments by affiliates ....................... 1.28% 1.29% 1.29% 1.29% 1.22% 1.15% Net investment income .................. 3.05% 3.07% 3.02% 2.85% 3.02% 3.09% SUPPLEMENTAL DATA Net assets, end of period (000's) ...... $ 13,076 $ 11,175 $ 12,123 $ 12,323 $ 8,772 $ 3,965 Portfolio turnover rate ................ 3.48% 20.61% 30.01% 5.42% 4.66% 3.35%
(a) The amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating market value of the investments of the Fund. (b) Based on average daily shares outstanding. (c) Total return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year. (d) Ratios are annualized for periods less than one year. (e) Amount rounds to less than $0.01 per share. (f) For the period January 1, 2004 to September 30, 2004. (g) For the period July 1, 2003 (effective date) to December 31, 2003. Semiannual Report | The accompanying notes are an integral part of these financial statements. | 45 Franklin New York Tax-Free Trust STATEMENT OF INVESTMENTS, MARCH 31, 2008 (UNAUDITED)
FRANKLIN NEW YORK INTERMEDIATE-TERM TAX-FREE INCOME FUND PRINCIPAL AMOUNT VALUE -------------------------------------------------------- ---------------- --------------- LONG TERM INVESTMENTS 97.7% MUNICIPAL BONDS 97.7% NEW YORK 86.3% Albany County Airport Authority Revenue, Series B, FSA Insured, 4.75%, 12/15/13 ................................................................... $ 1,850,000 $ 1,889,646 Albany IDA Civic Facility Revenue, Albany Medical Center Project, 5.75%, 5/01/09 ........................... 535,000 535,674 St. Peter's Hospital Project, Series A, 5.75%, 11/15/22 ................. 4,090,000 4,220,798 St. Rose Project, Series A, AMBAC Insured, Pre-Refunded, 5.00%, 7/01/12 .............................................................. 420,000 456,385 Amherst IDA Civic Facility Revenue, Mandatory Put 10/01/11, Refunding, Series A, Radian Insured, 4.20%, 10/01/31 ............................................................. 4,235,000 4,321,987 University of Buffalo Foundation, Student Housing, Creekside Project, Series A, AMBAC Insured, 4.625%, 8/01/16 ............................. 1,030,000 1,079,708 Bath Central School District GO, Refunding, FGIC Insured, 4.00%, 6/15/19 ............................................ 1,850,000 1,812,260 FSA Insured, 5.10%, 6/15/13 ............................................. 775,000 803,985 Buffalo GO, Refunding, Series C, FGIC Insured, 5.25%, 12/01/15 ...................... 1,225,000 1,285,968 Series E, FSA Insured, Pre-Refunded, 5.35%, 12/01/12 .................... 880,000 937,464 Byram Hills Central School District GO, ETM, 4.00%, 11/15/10 ................. 1,375,000 1,435,074 Canisteo Central School District GO, Refunding, FSA Insured, 4.25%, 6/15/14 .................................................................... 1,080,000 1,126,786 Clarence Central School District GO, Refunding, FSA Insured, 4.75%, 5/15/15 .................................................................... 2,390,000 2,519,466 Connetquot Central School District Islip GO, Series B, FSA Insured, 4.40%, 6/15/16 .................................................................... 1,000,000 1,027,690 Dansville Central School District GO, Refunding, Series B, FGIC Insured, 4.25%, 6/15/11 .......................................................... 930,000 965,470 4.35%, 6/15/12 .......................................................... 870,000 905,861 4.45%, 6/15/13 .......................................................... 995,000 1,033,546 Erie County GO, FGIC Insured, 4.70%, 11/01/12 ........................................... 700,000 712,376 Public Improvement, Series A, FGIC Insured, 5.625%, 10/01/12. ........... 1,000,000 1,043,000 Fayetteville-Manlius Central School District GO, Refunding, FGIC Insured, 4.50%, 6/15/15 ............................................................. 1,095,000 1,144,647 Fredonia Central School District GO, Refunding, FGIC Insured, 4.125%, 6/01/09 .................................................................... 1,000,000 1,025,060 Guilderland Central School District, Refunding, Series A, FSA Insured, 4.00%, 5/15/10 ............................................................. 1,260,000 1,304,251 Harborfields Central School District Greenlawn GO, FSA Insured, 5.00%, 6/01/17 .................................................................... 2,105,000 2,267,253 Highland Central School District GO, Refunding, FSA Insured, 4.125%, 6/15/16 .................................................................... 1,080,000 1,105,261 Holland Patent Central School District GO, MBIA Insured, ETM, 4.25%, 6/15/09 ................................................................. 1,125,000 1,155,791 6/15/10 ................................................................. 1,125,000 1,174,478 Huntington GO, Public Improvement, 4.20%, 9/01/13 ............................ 1,230,000 1,263,764 Islip Union Free School District No. 002 GO, Refunding, FGIC Insured, 5.00%, 7/01/18. ............................................................ 2,215,000 2,348,697 Long Island Power Authority Electric System Revenue, General, Refunding, Series A, FGIC Insured, 5.00%, 12/01/19 ............. 8,000,000 8,253,680 MBIA Insured, Pre-Refunded, 5.125%, 4/01/11 ............................. 1,410,000 1,424,100 Refunding, Series 8, AMBAC Insured, 5.25%, 4/01/09 ...................... 2,000,000 2,053,680 Madison County IDA Civic Facility Revenue, Morrisville State College Foundation, Series A, CIFG Insured, 5.00%, 6/01/15 ......................... 1,000,000 1,083,700 Middle Country Central School District Centereach GO, FSA Insured, 4.75%, 6/01/17 .................................................................... 1,650,000 1,703,972 Monroe County GO, Public Improvement, FGIC Insured, 4.30%, 3/01/13. .......... 3,015,000 3,092,395 Montgomery Otsego Schoharie Counties Solid Waste Management Authority Revenue, Refunding, MBIA Insured, 4.00%, 1/01/13 ........................... 1,920,000 1,994,765
46 | Semiannual Report Franklin New York Tax-Free Trust STATEMENT OF INVESTMENTS, MARCH 31, 2008 (UNAUDITED) (CONTINUED)
FRANKLIN NEW YORK INTERMEDIATE-TERM TAX-FREE INCOME FUND PRINCIPAL AMOUNT VALUE ---------------- ------------- LONG TERM INVESTMENTS (CONTINUED) MUNICIPAL BONDS (CONTINUED) NEW YORK (CONTINUED) MTA Transit Facilities Revenue, Series A, Pre-Refunded, 6.00%, 7/01/15 ................................ $ 1,500,000 $ 1,573,710 Series C, FSA Insured, Pre-Refunded, 4.75%, 7/01/16 ................... 1,370,000 1,479,573 Series C, FSA Insured, Pre-Refunded, 4.75%, 7/01/16 ................... 545,000 583,711 Nassau County GO, Refunding, Series A, FGIC Insured, 6.00%, 7/01/11 ........ 1,000,000 1,095,280 Nassau County Interim Finance Authority Revenue, Sales Tax Secured, Refunding, Series H, AMBAC Insured, 5.25%, 11/15/17 ..................... 1,500,000 1,636,200 Nassau Health Care Corp. Health System Revenue, Nassau County Guaranteed, FSA Insured, Pre-Refunded, 6.00%, 8/01/10 ............................... 1,000,000 1,071,880 New York Bridge Authority Revenue, General, 4.125%, 1/01/13 ................ 4,000,000 4,152,360 New York City GO, Refunding, Series F, 5.25%, 8/01/13 ................................... 1,095,000 1,158,466 Refunding, Series G, XLCA Insured, 5.50%, 8/01/12 ..................... 2,000,000 2,172,640 Series D, 4.30%, 10/15/16 ............................................. 3,000,000 3,054,690 Series E, 5.00%, 8/01/19 .............................................. 3,000,000 3,152,730 Series H, 4.125%, 8/01/11 ............................................. 1,560,000 1,613,134 New York City Health and Hospital Corp. Revenue, Health System, Refunding, Series A, AMBAC Insured, 4.60%, 2/15/12 .................... 1,000,000 1,022,780 Series A, FSA Insured, 4.15%, 2/15/12 ................................. 750,000 782,363 Series A, FSA Insured, 4.30%, 2/15/13 ................................. 1,000,000 1,043,380 New York City IDA Civic Facility Revenue, Institute of International Education Inc. Project, 5.125%, 9/01/16 ................................. 2,320,000 2,418,159 New York City Transitional Finance Authority Revenue, Future Tax Secured, Series A, 4.75%, 11/15/13 ............................................. 1,000,000 1,028,270 Series B, 4.75%, 11/01/16 ............................................. 2,200,000 2,248,796 Series B, Pre-Refunded, 6.00%, 11/15/13 ............................... 1,000,000 1,087,910 New York Convention Center Development Corp. Revenue, Hotel Unit Fee Secured, AMBAC Insured, 5.00%, 11/15/20 ................................. 5,775,000 6,077,090 New York State Appropriated Tobacco Corp. Revenue, Asset-Backed, Series A-1, AMBAC Insured, 5.25%, 6/01/21 ...................................... 4,200,000 4,325,832 New York State Dormitory Authority Lease Revenue, Delaware Chenango Madison Otsego Board of Cooperative Education Services, XLCA Insured, 5.00%, 8/15/21 ............................. 5,340,000 5,533,682 State University Dormitory Facilities, Series A, Pre-Refunded, 5.50%, 7/01/12 ............................................................ 1,815,000 1,961,017 New York State Dormitory Authority Revenue, Mount St. Mary College, Radian Insured, 4.00%, 7/01/12 ................ 2,080,000 2,108,288 Teachers College, MBIA Insured, 4.00%, 7/01/12 ........................ 1,000,000 1,040,750 New York State Dormitory Authority Revenues, City University, Refunding, Series F, FGIC Insured, 5.75%, 7/01/09 .... 1,000,000 1,022,760 Department of Health, Refunding, Series 2, 5.00%, 7/01/19 ............. 3,740,000 3,896,369 Department of Health, Refunding, Sub Series 2, FGIC Insured, 5.00%, 7/01/18 ............................................................ 5,000,000 5,265,100 Hospital, Insured, Mortgage, Series A, FSA Insured, 5.25%, 8/15/15 .... 5,000,000 5,510,300 Hospital, Maimonides, MBIA Insured, 5.00%, 8/01/17 .................... 1,720,000 1,836,031 Hospital, Maimonides, MBIA Insured, 5.00%, 8/01/19 .................... 1,895,000 1,991,266 Mandatory Put 5/15/12, Refunding, Series B, 5.25%, 11/15/23 ........... 2,000,000 2,146,520 Montefiore Hospital, FGIC Insured, 5.00%, 2/01/18 ..................... 2,975,000 3,118,425 New York State Department of Health, Refunding, 5.25%, 7/01/17 ........ 5,000,000 5,347,750
Semiannual Report | 47 Franklin New York Tax-Free Trust STATEMENT OF INVESTMENTS, MARCH 31, 2008 (UNAUDITED) (CONTINUED)
FRANKLIN NEW YORK INTERMEDIATE-TERM TAX-FREE INCOME FUND PRINCIPAL AMOUNT VALUE ---------------- --------------- LONG TERM INVESTMENTS (CONTINUED) MUNICIPAL BONDS (CONTINUED) NEW YORK (CONTINUED) New York State Dormitory Authority Revenues, (continued) Non-State Supported Debt, Bishop Henry B. Hucles Nursing, 5.00%, 7/01/24 ............................................................ $ 4,765,000 $ 4,733,217 Non-State Supported Debt, Columbia University, Series C, 5.00%, 7/01/24 ............................................................ 4,135,000 4,296,017 Non-State Supported Debt, Mount Sinai School Medical New York University, Refunding, MBIA Insured, 5.00%, 7/01/19 ................ 2,500,000 2,616,625 Non-State Supported Debt, Mount Sinai School Medical New York University, Refunding, MBIA Insured, 5.00%, 7/01/20 ................ 3,670,000 3,810,084 Non-State Supported Debt, New York University, Series A, AMBAC Insured, 5.00%, 7/01/23 ............................................ 2,000,000 2,080,960 Non-State Supported Debt, North Shore L.I. Jewish Obligation Group, Series A, 5.00%, 5/01/23 ........................................... 4,990,000 5,018,742 Office of General Services, MBIA Insured, Pre-Refunded, 5.00%, 4/01/18 ............................................................ 2,000,000 2,085,480 Secured Hospital, Catskill Regional, Refunding, FGIC Insured, 5.25%, 2/15/18 ............................................................ 2,300,000 2,466,750 St. John's University, Series A, MBIA Insured, 5.00%, 7/01/14 750,000 796,350 State Supported Debt, Lease, State University Dormitory Facilities, Series A, MBIA Insured, 5.00%, 7/01/21 ............................. 1,980,000 2,072,426 State Supported Debt, Lease, State University Dormitory Facilities, Series A, MBIA Insured, 5.00%, 7/01/22 ............................. 1,730,000 1,798,577 State Supported Debt, Lease, State University Dormitory Facilities, Series B, MBIA Insured, 5.00%, 7/01/17 ............................. 2,875,000 3,102,872 State University Educational Facilities, 3rd General, Refunding, Series A, FGIC Insured, 5.50%, 5/15/21 ............................. 7,000,000 7,651,070 University of Rochester, Series A, Pre-Refunded, 5.25%, 7/01/21 ....... 500,000 558,775 New York State Dormitory Authority State Personal Income Tax Revenue, Education, Series D, 5.00%, 3/15/14 ................................... 1,000,000 1,098,510 New York State Energy Research and Development Authority PCR, New York State Electric and Gas, MBIA Insured, 4.10%, 3/15/15. ................. 2,000,000 2,030,660 Series B, MBIA Insured, 4.00%, 10/15/15 ............................... 5,000,000 5,062,450 Series D, MBIA Insured, 4.10%, 12/01/15 ............................... 2,000,000 2,031,180 New York State Environmental Facilities Corp. State Clean Water and Drinking Revenue, Revolving Funds, Series B, 5.80%, 1/15/16 ........... 1,010,000 1,057,763 Pre-Refunded, 5.80%, 1/15/16 .......................................... 1,490,000 1,577,240 New York State GO, Series A, FGIC Insured, 4.00%, 3/01/24 .................. 5,000,000 4,601,900 New York State Thruway Authority General Revenue, Series F, AMBAC Insured, 5.00%, 1/01/22 ........................................................ 6,535,000 6,761,242 New York State Thruway Authority Highway and Bridge Trust Fund Revenue, General, Second, Refunding, Series B, AMBAC Insured, 5.00%, 4/01/21 ... 5,000,000 5,258,200 General, Second, Series B, 5.00%, 4/01/18 ............................. 5,000,000 5,445,350 Series A, FSA Insured, 5.25%, 4/01/12 ................................. 1,620,000 1,765,168 Series C, FGIC Insured, Pre-Refunded, 5.25%, 4/01/14 .................. 2,000,000 2,020,000 New York State Urban Development Corp. Revenue, Correctional Capital Facilities, Refunding, MBIA Insured, 5.00%, 1/01/09 ............................................................ 1,525,000 1,550,056 Correctional Facilities Service Contract, Series C, AMBAC Insured, Pre-Refunded, 6.00%, 1/01/15 ....................................... 1,000,000 1,041,900
48 | Semiannual Report Franklin New York Tax-Free Trust STATEMENT OF INVESTMENTS, MARCH 31, 2008 (UNAUDITED) (CONTINUED)
FRANKLIN NEW YORK INTERMEDIATE-TERM TAX-FREE INCOME FUND PRINCIPAL AMOUNT VALUE ---------------- ------------- LONG TERM INVESTMENTS (CONTINUED) MUNICIPAL BONDS (CONTINUED) NEW YORK (CONTINUED) New York State Urban Development Corp. Revenue, (continued) State Personal Income Tax, Series A-1, 5.00%, 12/15/22 ................. $ 3,000,000 $ 3,147,930 State Personal Income Tax, Series C-1 Empire State, 4.125%, 12/15/16 ... 1,490,000 1,533,791 State Personal Income Tax, Series C-1 Empire State, 4.25%, 12/15/17 .... 1,955,000 2,007,687 North Hempstead GO, FGIC Insured, Pre-Refunded, 6.00%, 7/15/14 .............. 1,715,000 1,819,735 Olean City School District GO, Refunding, FGIC Insured, 4.375%, 6/15/17 ..... 1,335,000 1,348,964 Rochester GO, MBIA Insured, ETM, 4.125%, 2/15/10 ..................................... 520,000 538,294 Refunding, MBIA Insured, 4.125%, 2/15/10 ............................... 490,000 506,239 Sales Tax Asset Receivable Corp. Revenue, Series A, MBIA Insured, 5.25%, 10/15/18 ................................................................. 5,000,000 5,421,900 Saratoga Springs City School District GO, Series A, FSA Insured, 4.50%, 6/15/15 .................................................................. 1,025,000 1,070,295 Schenectady Metroplex Development Authority Revenue, FGIC Insured, 4.50%, 9/15/21 .................................................................. 1,720,000 1,725,728 Suffolk County Judicial Facilities Agency Service Agreement Revenue, John P. Cohalan Complex, AMBAC Insured, 5.25%, 10/15/14 ........................................................ 1,435,000 1,490,793 5.00%, 4/15/16 ......................................................... 1,000,000 1,030,610 Suffolk County Water Authority Waterworks Revenue, sub. lien, Refunding, MBIA Insured, 5.10%, 6/01/13 ............................................. 2,000,000 2,187,340 Tobacco Settlement Financing Corp. Revenue, Asset-Backed, Series A-1, 5.50%, 6/01/19 ........................................................... 5,000,000 5,220,650 Upper Mohawk Valley Regional Water Finance Authority Water System Revenue, AMBAC Insured, 5.75%, 4/01/20 ............................................ 165,000 174,649 Pre-Refunded, 5.75%, 4/01/20 ........................................... 835,000 900,698 Western Nassau County Water Authority Water System Revenue, AMBAC Insured, 5.00%, 5/01/19 ........................................................... 1,525,000 1,615,250 Yonkers GO, Series A, AMBAC Insured, 5.00%, 12/15/14 ........................ 1,795,000 1,902,700 Yorktown Central School District GO, MBIA Insured, 4.625%, 6/15/18 .......... 1,890,000 1,946,870 ------------- 264,045,537 ------------- U.S. TERRITORIES 11.4% PUERTO RICO 9.7% Puerto Rico Commonwealth Aqueduct and Sewer Authority Revenue, Senior Lien, Series A, Assured Guaranty, 5.00%, 7/01/16 ......................... 5,190,000 5,558,646 Puerto Rico Commonwealth GO, Public Improvement, Assured Guaranty Insured, 5.25%, 7/01/18 ........................................................... 1,820,000 1,957,228 Puerto Rico Commonwealth Highway and Transportation Authority Transportation Revenue, Refunding, Series N, Assured Guaranty, 5.50%, 7/01/21 ........................................................... 4,000,000 4,345,520 Puerto Rico Commonwealth Infrastructure Financing Authority Special Tax Revenue, Refunding, Series C, BHAC Insured, 5.50%, 7/01/20 ............... 11,550,000 12,593,196 Puerto Rico Industrial Tourist Educational Medical and Environmental Control Facilities Financing Authority Revenue, Ana G. Mendez University System Project, 5.00%, 3/01/16 ................................................................ 2,605,000 2,685,546 3/01/21 ................................................................ 2,555,000 2,479,219 ------------- 29,619,355 ------------- VIRGIN ISLANDS 1.7% Virgin Islands PFAR, senior lien, Refunding, Series A, 5.30%, 10/01/11 ...... 3,000,000 3,054,990 Virgin Islands Water and Power Authority Electric System Revenue, Refunding, 5.125%, 7/01/13 ................................................ 1,775,000 1,788,880
Semiannual Report | 49 Franklin New York Tax-Free Trust STATEMENT OF INVESTMENTS, MARCH 31, 2008 (UNAUDITED) (CONTINUED)
FRANKLIN NEW YORK INTERMEDIATE-TERM TAX-FREE INCOME FUND PRINCIPAL AMOUNT VALUE ---------------- ------------- LONG TERM INVESTMENTS (CONTINUED) MUNICIPAL BONDS (CONTINUED) U.S. TERRITORIES (CONTINUED) VIRGIN ISLANDS (CONTINUED) Virgin Islands Water and Power Authority Water System Revenue, Refunding, 5.00%, 7/01/09 .............................................. $ 400,000 $ 410,176 ------------- 5,254,046 ------------- TOTAL U.S. TERRITORIES ................................................... 34,873,401 ------------- TOTAL LONG TERM INVESTMENTS (COST $295,067,554) .......................... 298,918,938 ------------- SHORT TERM INVESTMENTS 0.7% MUNICIPAL BONDS 0.7% NEW YORK 0.7% (a) MTA Dedicated Tax Fund Revenue, Refunding, Series A-1, XLCA Insured, Weekly VRDN and Put, 10.00%, 11/01/31 .................................... 1,300,000 1,300,000 (a) New York City IDA Civic Facility Revenue, Ethical Culture School Project, Series A, XLCA Insured, Weekly VRDN and Put, 6.50%, 6/01/35 ..... 300,000 300,000 (a) New York City Trust for Cultural Resources Revenue, Manhattan School of Music, Radian Insured, Weekly VRDN and Put, 7.00%, 10/01/29 ........... 300,000 300,000 (a) New York State Dormitory Authority Revenues, Non-State Supported Debt, Long Island University, Refunding, CIFG Insured, Daily VRDN and Put, 8.50%, 9/01/36 ......................................................... 200,000 200,000 ------------- 2,100,000 ------------- U.S. TERRITORY 0.0%(b) PUERTO RICO 0.0%(b) (a) Puerto Rico Commonwealth Highway and Transportation Authority Transportation Revenue, Series A, AMBAC Insured, Weekly VRDN and Put, 5.25%, 7/01/28 ......................................................... 100,000 100,000 ------------- TOTAL SHORT TERM INVESTMENTS (COST $2,200,000) ........................... 2,200,000 ------------- TOTAL INVESTMENTS (COST $297,267,554) 98.4% .............................. 301,118,938 OTHER ASSETS, LESS LIABILITIES 1.6% ...................................... 5,050,082 ------------- NET ASSETS 100.0% ........................................................ $ 306,169,020 =============
See Selected Portfolio Abbreviations on page 58. (a) Variable rate demand notes (VRDNs) are tax-exempt obligations which contain a floating or variable interest rate adjustment formula and an unconditional right of demand to receive payment of the principal balance plus accrued interest at specified dates. The coupon rate shown represents the rate at period end. (b) Rounds to less than 0.1% of net assets. 50 | The accompanying notes are an integral part of these financial statements. | Semiannual Report Franklin New York Tax-Free Trust FINANCIAL HIGHLIGHTS FRANKLIN NEW YORK LIMITED-TERM TAX-FREE INCOME FUND
SIX MONTHS ENDED PERIOD ENDED MARCH 31, 2008 YEAR ENDED SEPTEMBER 30, DECEMBER 31, ---------------- -------------------------------------- ----------------------- (UNAUDITED) 2007 2006 2005 2004(F) 2003(G) ---------------- ---------- ---------- ---------- ---------- ---------- PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the period) Net asset value, beginning of period .. $ 9.88 $ 9.90 $ 9.92 $ 10.02 $ 10.06 $ 10.00 ---------------- ---------- ---------- ---------- ---------- ---------- Income from investment operations (a): Net investment income(b) ........... 0.15 0.31 0.25 0.18 0.10 0.04 Net realized and unrealized gains (losses) .......................... 0.06 --(e) (0.02) (0.11) (0.03) 0.05 ---------------- ---------- ---------- ---------- ---------- ---------- Total from investment operations ...... 0.21 0.31 0.23 0.07 0.07 0.09 ---------------- ---------- ---------- ---------- ---------- ---------- Less distributions from net investment income ............................. (0.16) (0.33) (0.25) (0.17) (0.11) (0.03) ---------------- ---------- ---------- ---------- ---------- ---------- Redemption fees ....................... -- -- --(e) -- -- -- ---------------- ---------- ---------- ---------- ---------- ---------- Net asset value, end of period ........ $ 9.93 $ 9.88 $ 9.90 $ 9.92 $ 10.02 $ 10.06 ================ ========== ========== ========== ========== ========== Total return(c) ....................... 2.11% 3.15% 2.34% 0.70% 0.68% 0.94% RATIOS TO AVERAGE NET ASSETS (d) Expenses before waiver and payments by affiliates ...................... 1.25% 1.40% 1.31% 1.23% 1.57% 2.22% Expenses net of waiver and payments by affiliates ...................... 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% Net investment income ................. 3.07% 3.16% 2.57% 1.82% 1.33% 1.18% SUPPLEMENTAL DATA Net assets, end of period (000's) ..... $ 14,817 $ 8,132 $ 9,219 $ 9,322 $ 9,816 $ 5,773 Portfolio turnover rate ............... 23.00% 9.12% 69.02% 14.22% 8.21% --
(a) The amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating market value of the investments of the Fund. (b) Based on average daily shares outstanding. (c) Total return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year. (d) Ratios are annualized for periods less than one year. (e) Amount rounds to less than $0.01 per share. (f) For the period January 1, 2004 to September 30, 2004. (g) For the period September 2, 2003 (commencement of operations) to December 31, 2003. Semiannual Report | The accompanying notes are an integral part of these financial statements. | 51 Franklin New York Tax-Free Trust STATEMENT OF INVESTMENTS, MARCH 31, 2008 (UNAUDITED)
FRANKLIN NEW YORK LIMITED-TERM TAX-FREE INCOME FUND PRINCIPAL AMOUNT VALUE ----------------- ------------ LONG TERM INVESTMENTS 46.6% MUNICIPAL BONDS 46.6% NEW YORK 41.0% Albany IDA Civic Facility Revenue, St. Peter's Hospital Project, Series A, 4.75%, 11/15/09 ........................................................... $ 295,000 $ 298,695 Amherst IDA Civic Facility Revenue, Mandatory Put 10/01/11, Refunding, Series A, Radian Insured, 4.20%, 10/01/31 ................................. 510,000 520,475 Hempstead Town IDA Civic Facility Revenue, Adelphi University Civic Facility, 3.75%, 10/01/09 ................................................. 315,000 320,972 Long Island Power Authority Electric System Revenue, General, Series A, FSA Insured, Pre-Refunded, 5.00%, 12/01/18 .................................... 250,000 253,828 New York City IDA Civic Facility Revenue, USTA National Tennis Center Inc. Project, Refunding, FSA Insured, 5.00%, 11/15/09 .......................... 600,000 625,548 New York Local Government Assistance Corp. Revenue, Senior Lien, Refunding, Series A, 5.00%, 4/01/11 .................................................. 300,000 320,523 New York State Dormitory Authority Revenues, Kateri Residence, Refunding, 4.00%, 7/01/10 ............................ 230,000 234,747 Non-State Supported Debt, Aids Long Term Health Care Facility, Refunding, 5.00%, 11/01/11. .......................................... 250,000 258,785 Non-State Supported Debt, Manhattan College, Series B, Radian Insured, 5.00%, 7/01/13 ....................................................... 340,000 361,043 Non-State Supported Debt, Rochester General Hospital, Refunding, Radian Insured, 5.00%, 12/01/15 ...................................... 100,000 105,659 The New York and Presbyterian Hospital, Mortgage, Refunding, Series A, FHA Insured, 5.00%, 8/15/09 .......................................... 250,000 259,368 White Plains Hospital, Mortgage, FHA Insured, 3.55%, 2/15/10 ........... 70,000 70,141 New York State Environmental Facilities Corp. Special Obligation Revenue, Riverbank State Park, Refunding, CIFG Insured, 5.00%, 4/01/16 ............. 200,000 219,010 Poughkeepsie Town GO, Public Improvement, Refunding, FSA Insured, 5.00%, 4/15/15 ................................................................... 250,000 275,490 Rockland County Solid Waste Management Authority Revenue, Series A, AMBAC Insured, 4.50%, 12/15/08 .................................................. 400,000 406,260 Suffolk County IDA Civic Facility Revenue, Westhampton Free Associates Library, AMBAC Insured, 3.25%, 6/15/09 ................................................................ 150,000 151,407 6/15/12 ................................................................ 300,000 302,103 Warren and Washington Counties IDAR, Hudson Falls Recovery, Refunding, Series A, AMBAC Insured, 3.375%, 11/01/10 ................................. 300,000 306,813 Western Nassau County Water Authority Water System Revenue, AMBAC Insured, 3.00%, 5/01/09 ............................................................ 215,000 216,430 Yonkers GO, Series A, 4.00%, 11/01/09 ....................................... 565,000 571,887 ------------ 6,079,184 ------------ U.S. TERRITORIES 5.6% GUAM 0.9% Guam International Airport Authority Revenue, Series A, MBIA Insured, 2.75%, 10/01/09 ........................................................... 125,000 124,819 ------------
52 | Semiannual Report Franklin New York Tax-Free Trust STATEMENT OF INVESTMENTS, MARCH 31, 2008 (UNAUDITED) (CONTINUED)
FRANKLIN NEW YORK LIMITED-TERM TAX-FREE INCOME FUND PRINCIPAL AMOUNT VALUE ---------------- ------------ LONG TERM INVESTMENTS (CONTINUED) MUNICIPAL BONDS (CONTINUED) U.S. TERRITORIES (CONTINUED) PUERTO RICO 4.7% Puerto Rico Commonwealth GO, Public Improvement, Mandatory Put 7/01/08, Refunding, Series C, MBIA Insured, 5.00%, 7/01/28 ..................... $ 295,000 $ 296,439 Puerto Rico Commonwealth Government Development Bank Revenue, senior notes, Series B, 5.00%, 12/01/08 ...................................... 400,000 405,972 ------------ 702,411 ------------ TOTAL U.S. TERRITORIES .................................................. 827,230 ------------ TOTAL LONG TERM INVESTMENTS (COST $6,841,798) ........................... 6,906,414 ------------ SHORT TERM INVESTMENTS 51.2% MUNICIPAL BONDS 51.2% NEW YORK 39.1% Albany IDA Civic Facility Revenue, St. Peter's Hospital Project, Series A, 4.50%, 11/15/08 .................................................... 70,000 70,285 (a) Broome County IDA Civic Facility Revenue, Elizabeth Church Manor, Refunding, Weekly VRDN and Put, 2.25%, 2/01/29 ........................................................... 125,000 125,000 James G. Johnston Memorial, Refunding, Weekly VRDN and Put, 2.25%, 2/01/29 ........................................................... 100,000 100,000 (a) Long Island Power Authority Electric System Revenue, Sub Series 3B, Daily VRDN and Put, 0.98%, 5/01/33 ..................................... 100,000 100,000 (a) Monroe County IDA Civic Facility Revenue, St. John Fisher College Project, Radian Insured, Weekly VRDN and Put, 3.75%, 6/01/34 ........... 100,000 100,000 (a) MTA Dedicated Tax Fund Revenue, Series D-1, AMBAC Insured, Weekly VRDN and Put, 2.57%, 11/01/34 ............................................... 295,000 295,000 (a) MTA Revenue, Sub Series A-3, XLCA Insured, Weekly VRDN and Put, 8.50%, 11/01/34 ............................................................... 700,000 700,000 (a) Nassau County IDA Civic Facility Revenue, Cold Spring Harbor, Refunding and Improvement, Daily VRDN and Put, 1.15%, 1/01/34 .......... 400,000 400,000 (a) New York City GO, Series B, Sub Series B-5, MBIA Insured, Daily VRDN and Put, 1.75%, 8/15/22 ................................................ 100,000 100,000 New York City HDC Revenue, Capital Fund Program, New York City Housing Authority Program, Series A, FGIC Insured, 5.00%, 7/01/08 .............. 200,000 201,224 (a) New York City IDA Civic Facility Revenue, Ethical Culture School Project, Series A, XLCA Insured, Weekly VRDN and Put, 6.50%, 6/01/35 ... 200,000 200,000 (a) New York City Transitional Finance Authority Revenue, New York City Recovery, Series 1, Sub Series 1C, Daily VRDN and Put, 1.20%, 11/01/22 ............................................................... 500,000 500,000 (a) New York City Trust for Cultural Resources Revenue, Manhattan School of Music, Radian Insured, Weekly VRDN and Put, 7.00%, 10/01/29 ......... 500,000 500,000 (a) New York State Dormitory Authority Revenue, Cornell University, Series B, Daily VRDN and Put, 1.22%, 7/01/25 .................................. 100,000 100,000 (a) New York State Dormitory Authority Revenues, Non-State Supported Debt, Barnard College, Series B, FGIC Insured, Weekly VRDN and Put, 10.00%, 7/01/37 ................................................... 500,000 500,000 Long Island University, Refunding, CIFG Insured, Daily VRDN and Put, 8.50%, 9/01/36 ............................................... 1,000,000 1,000,000 (a) Triborough Bridge and Tunnel Authority Revenues, General, Refunding, Sub Series B-4, Weekly VRDN and Put, 2.05%, 1/01/32 ........................................................... 300,000 300,000 Refunding, Series C, AMBAC Insured, Weekly VRDN and Put, 5.25%, 1/01/33 ........................................................... 500,000 500,000 ------------ 5,791,509 ------------
Semiannual Report | 53 Franklin New York Tax-Free Trust STATEMENT OF INVESTMENTS, MARCH 31, 2008 (UNAUDITED) (CONTINUED)
FRANKLIN NEW YORK LIMITED-TERM TAX-FREE INCOME FUND PRINCIPAL AMOUNT VALUE ---------------- ------------ SHORT TERM INVESTMENTS (CONTINUED) MUNICIPAL BONDS (CONTINUED) U.S. TERRITORY 12.1% PUERTO RICO 12.1% (a) Puerto Rico Commonwealth GO, Public Improvement, Refunding, Series A-4, FSA Insured, Daily VRDN and Put, 1.10%, 7/01/31 ......... $ 1,100,000 $ 1,100,000 Series A-5, FGIC Insured, Weekly VRDN and Put, 8.00%, 7/01/32 ....... 700,000 700,000 ------------ 1,800,000 ------------ TOTAL SHORT TERM INVESTMENTS (COST $7,591,443) ......................... 7,591,509 ------------ TOTAL INVESTMENTS (COST $14,433,241) 97.8% ............................. 14,497,923 OTHER ASSETS, LESS LIABILITIES 2.2% .................................... 319,076 ------------ NET ASSETS 100.0% ...................................................... $ 14,816,999 ============
See Selected Portfolio Abbreviations on page 58. (a) Variable rate demand notes (VRDNs) are tax-exempt obligations which contain a floating or variable interest rate adjustment formula and an unconditional right of demand to receive payment of the principal balance plus accrued interest at specified dates. The coupon rate shown represents the rate at period end. 54 | The accompanying notes are an integral part of these financial statements. | Semiannual Report Franklin New York Tax-Free Trust FINANCIAL HIGHLIGHTS FRANKLIN NEW YORK TAX-EXEMPT MONEY FUND
SIX MONTHS ENDED YEAR ENDED MARCH 31, 2008 YEAR ENDED SEPTEMBER 30, DECEMBER 31, ---------------- ---------------------------------- --------------------- (UNAUDITED) 2007 2006 2005 2004 (C) 2003 ---------------- ----------- --------- ------- -------- -------- PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the period) Net asset value, beginning of period ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------------ ----------- --------- -------- -------- -------- Income from investment operations - net investment income ....................... 0.012 0.030 0.026 0.014 0.003 0.004 Less distributions from net investment income ...................................... (0.012) (0.030) (0.026) (0.014) (0.003) (0.004) ------------ ----------- --------- -------- -------- -------- Net asset value, end of period ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ============ =========== ========= ======== ======== ======== Total return (a) ............................... 1.25% 3.02% 2.59% 1.42% 0.32% 0.45% RATIOS TO AVERAGE NET ASSETS (b) Expenses before waiver and payments by affiliates ............................... 0.80% 0.79% 0.79% 0.80% 0.76% 0.76% Expenses net of waiver and payments by affiliates ............................... 0.64% 0.64% 0.64% 0.64% 0.62% 0.60% Net investment income .......................... 2.45% 2.99% 2.56% 1.39% 0.42% 0.44% SUPPLEMENTAL DATA Net assets, end of period (000's) .............. $ 71,964 $ 64,648 $ 60,786 $ 59,965 $ 72,147 $ 75,278
(a) Total return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year. (b) Ratios are annualized for periods less than one year. (c) For the period January 1, 2004 to September 30, 2004. Semiannual Report | The accompanying notes are an integral part of these financial statements. | 55 Franklin New York Tax-Free Trust STATEMENT OF INVESTMENTS, MARCH 31, 2008 (UNAUDITED)
FRANKLIN NEW YORK TAX-EXEMPT MONEY FUND PRINCIPAL AMOUNT VALUE ---------------- ------------ INVESTMENTS 99.5% MUNICIPAL BONDS 99.5% NEW YORK 93.4% (a) Albany IDA Civic Facilities Revenue, Albany Medical Center Hospital Project, Series A, Weekly VRDN and Put, 2.15%, 5/01/27 ..................................................... $ 1,000,000 $ 1,000,000 (a) Jay Street Development Corp. Courts Facility Lease Revenue, New York City Jay Street Project, Series A, Daily VRDN and Put, 1.25%, 5/01/22 ....................................... 1,900,000 1,900,000 Series A-4, Daily VRDN and Put, 1.25%, 5/01/22 ..................................... 1,095,000 1,095,000 Kenmore-Tonawanda Union Free School District GO, Refunding, Assured Guaranty, 2.875%, 2/15/09 ................................................................................. 689,000 695,687 Long Island Power Authority Electric System Revenue, General, Series A, Pre-Refunded, 5.75%, 12/01/24 ................................... 1,140,000 1,170,662 (a) Sub Series 3B, Daily VRDN and Put, 0.98%, 5/01/33 .................................. 3,200,000 3,200,000 (a) Monroe County IDA Civic Facility Revenue, St. John Fisher College Project, Radian Insured, Weekly VRDN and Put, 3.75%, 6/01/34 ............................................ 1,710,000 1,710,000 (a) MTA Revenue, Transportation, Sub Series G-2, Daily VRDN and Put, 1.25%, 11/01/26 ......... 3,200,000 3,200,000 MTA Transportation Facilities Revenue, TECP, 3.05%, 8/12/08 .............................. 2,000,000 2,000,000 Nassau County Interim Finance Authority Revenue, Sales Tax Secured, Refunding, Series A, AMBAC Insured, 4.00%, 11/15/08 ........................................... 1,255,000 1,260,021 (a) Series B, FSA Insured, Weekly VRDN and Put, 2.15%, 11/15/22 ........................ 1,800,000 1,800,000 (a) New York City GO, Refunding, Sub Series C-4, Weekly VRDN and Put, 2.00%, 8/01/20 ..................... 1,000,000 1,000,000 Series E, Sub Series E-2, Daily VRDN and Put, 1.00%, 8/01/34 ....................... 200,000 200,000 Sub Series E-3, Daily VRDN and Put, 1.25%, 8/01/23 ................................. 500,000 500,000 Sub Series H-4, Daily VRDN and Put, 1.25%, 3/01/34 ................................. 1,050,000 1,050,000 (a) New York City HDC, MF Rental Housing Revenue, Carnegie Park, Series A, FNMA Insured, Weekly VRDN and Put, 2.05%, 11/15/19 ............................................................ 2,950,000 2,950,000 MF Rental Housing Revenue, One Columbus Place Development, Series A, FNMA Insured, Weekly VRDN and Put, 2.17%, 11/15/28 ............................................ 1,000,000 1,000,000 MF Revenue, Mortgage, Marseilles Apartments, Series A, Weekly VRDN and Put, 1.99%, 12/01/34 ........................................................................ 2,575,000 2,575,000 (a) New York City IDA Civic Facility Revenue, American Civil Project, Refunding and Improvement, Daily VRDN and Put, 1.20%, 6/01/35 .......................................... 600,000 600,000 (a) New York City IDAR, Liberty, One Bryant Park LLC, Series A, Weekly VRDN and Put, 2.10%, 11/01/39 ................................................................................ 3,000,000 3,000,000 (a) New York City Municipal Water Finance Authority Water and Sewer System Revenue, Fiscal 2003, Refunding, Sub Series C-3, Daily VRDN and Put, 1.25%, 6/15/18 ......... 1,200,000 1,200,000 Second General Resolution, Fiscal 2008, Refunding, Series BB, Daily VRDN and Put, 1.25%, 6/15/36 ..................................................................... 500,000 500,000 Second General Resolution, Refunding, Series CC-1, Daily VRDN and Put, 1.00%, 6/15/38 ......................................................................... 700,000 700,000 (a) New York City Transitional Finance Authority Revenue, Future Tax Secured, Refunding, Sub Series C2, Daily VRDN and Put, 1.22%, 8/01/31 ... 400,000 400,000 Future Tax Secured, Series C, Daily VRDN and Put, 1.20%, 5/01/28 ................... 1,100,000 1,100,000 New York City Recovery, Series 1, Sub Series 1C, Daily VRDN and Put, 1.20%, 11/01/22......................................................................... 750,000 750,000 New York City Recovery, Series 1, Sub Series 1D, Daily VRDN and Put, 1.22%, 11/01/22......................................................................... 500,000 500,000 (a) New York City Trust for Cultural Resources Revenue, Alvin Ailey Dance Foundation, Weekly VRDN and Put, 1.99%, 7/01/33 .................. 2,400,000 2,400,000 Guggenheim Project, Series B, Weekly VRDN and Put, 2.05%, 12/01/15 ................. 1,295,000 1,295,000 Manhattan School of Music, Radian Insured, Weekly VRDN and Put, 7.00%, 10/01/29 .... 550,000 550,000 Refunding, American Museum Natural History, Series A, MBIA Insured, Weekly VRDN and Put, 2.75%, 4/01/21 .......................................................... 500,000 500,000
56 | Semiannual Report Franklin New York Tax-Free Trust STATEMENT OF INVESTMENTS, MARCH 31, 2008 (UNAUDITED) (CONTINUED)
FRANKLIN NEW YORK TAX-EXEMPT MONEY FUND PRINCIPAL AMOUNT VALUE ---------------- -------------- INVESTMENTS (CONTINUED) MUNICIPAL BONDS (CONTINUED) NEW YORK (CONTINUED) (a) New York State Dormitory Authority Revenues, Cornell University, Series A, Weekly VRDN and Put, 1.70%, 7/01/29 ...................... $ 1,800,000 $ 1,800,000 Cornell University, Series B, Weekly VRDN and Put, 1.70%, 7/01/30 ...................... 200,000 200,000 Mental Health Facilities Improvement, Refunding, Series F-2B, FSA Insured, Weekly VRDN and Put, 1.90%, 2/15/21.......................................................... 1,000,000 1,000,000 Mental Health Services, Sub Series D-2B, FSA Insured, Weekly VRDN and Put, 1.90%, 2/15/31 .............................................................................. 2,000,000 2,000,000 New York Public Library, Series B, MBIA Insured, Weekly VRDN and Put, 3.25%, 7/01/28 ... 2,100,000 2,100,000 Non-State Supported Debt, Court Facilities Lease, Series B, Weekly VRDN and Put, 1.90%, 5/15/39 .............................................................................. 3,000,000 3,000,000 Non-State Supported Debt, University of Rochester, Refunding, Series A-1, MBIA Insured, Weekly VRDN and Put, 2.75%, 7/01/27 .................................................. 1,000,000 1,000,000 Oxford University Press Inc., Weekly VRDN and Put, 1.70%, 7/01/25 ...................... 700,000 700,000 (a) New York State Energy Research and Development Authority PCR, Orange and Rockland Project, Series A, AMBAC Insured, Weekly VRDN and Put, 3.25%, 8/01/15 ........................... 1,350,000 1,350,000 New York State GO, Mandatory Put 7/02/08, Refunding, Series B, 2.80%, 3/15/30 .............. 1,350,000 1,350,000 (a) New York State HFA Service Contract Revenue, Refunding, Series C, Weekly VRDN and Put, 1.92%, 3/15/26 ......................................................................... 800,000 800,000 (a) New York State HFAR, 350 West 43rd Street, Series A, Weekly VRDN and Put, 2.19%, 11/01/34 ................... 2,000,000 2,000,000 FNMA Insured, Weekly VRDN and Put, 2.15%, 11/15/29 ..................................... 500,000 500,000 (a) New York State Local Government Assistance Corp. Revenue, Series F, Weekly VRDN and Put, 2.00%, 4/01/25 .......................................... 800,000 800,000 Series G, Weekly VRDN and Put, 1.98%, 4/01/25 .......................................... 2,600,000 2,600,000 New York State Power Authority Revenue, TECP, 2.65%, 7/06/08 ............................... 3,000,000 3,000,000 (a) Triborough Bridge and Tunnel Authority Revenues, Refunding, Series F, Weekly VRDN and Put, 1.98%, 11/01/32 ........................................................................ 1,200,000 1,200,000 -------------- 67,201,370 -------------- U.S. TERRITORY 6.1% PUERTO RICO 6.1% Puerto Rico Commonwealth GO, Public Improvement, Mandatory Put 7/01/08, Refunding, Series C, MBIA Insured, 5.00%, 7/01/28 ................................................. 1,735,000 1,741,897 (a) Puerto Rico Commonwealth Government Development Bank Revenue, Refunding, MBIA Insured, Weekly VRDN and Put, 6.25%, 12/01/15 ................................................... 800,000 800,000 (a) Puerto Rico Commonwealth Highway and Transportation Authority Transportation Revenue, Series A, AMBAC Insured, Weekly VRDN and Put, 5.25%, 7/01/28 ........................... 1,850,000 1,850,000 -------------- 4,391,897 -------------- TOTAL INVESTMENTS (COST $71,593,267) 99.5% .................................................. 71,593,267 OTHER ASSETS, LESS LIABILITIES 0.5% ......................................................... 371,157 -------------- NET ASSETS 100.0% ........................................................................... $ 71,964,424 ==============
See Selected Portfolio Abbreviations on page 58. (a) Variable rate demand notes (VRDNs) are tax-exempt obligations which contain a floating or variable interest rate adjustment formula and an unconditional right of demand to receive payment of the principal balance plus accrued interest at specified dates. The coupon rate shown represents the rate at period end. Semiannual Report | The accompanying notes are an integral part of these financial statements. | 57 Franklin New York Tax-Free Trust STATEMENT OF INVESTMENTS, MARCH 31, 2008 (UNAUDITED) SELECTED PORTFOLIO ABBREVIATIONS
AMBAC - American Municipal Bond Assurance Corp. BHAC - Berkshire Hathaway Housing Assurance Corp. CIFG - CDC IXIS Financial Guaranty COP - Certificate of Participation ETM - Escrow to Maturity FGIC - Financial Guaranty Insurance Co. FHA - Federal Housing Authority/Agency FNMA - Federal National Mortgage Association FSA - Financial Security Assurance Inc. GNMA - Government National Mortgage Association GO - General Obligation HDC - Housing Development Corp. HFA - Housing Finance Authority/Agency HFAR - Housing Finance Authority Revenue IDA - Industrial Development Authority/Agency IDAR - Industrial Development Authority Revenue MBIA - Municipal Bond Investors Assurance Corp. MF - Multi-Family MTA - Metropolitan Transit Authority PCR - Pollution Control Revenue PFAR - Public Financing Authority Revenue TECP - Tax-Exempt Commercial Paper XLCA - XL Capital Assurance
58| The accompanying notes are an integral part of these financial statements. | Semiannual Report Franklin New York Tax-Free Trust FINANCIAL STATEMENTS STATEMENTS OF ASSETS AND LIABILITIES March 31, 2008 (unaudited)
FRANKLIN FRANKLIN FRANKLIN NEW YORK NEW YORK FRANKLIN NEW YORK INTERMEDIATE-TERM LIMITED-TERMS NEW YORK INSURED TAX-FREE TAX-FREE TAX-FREE TAX-EXEMPT INCOME FUND INCOME FUND INCOME FUND MONEY FUND ---------------- ------------------ ------------- ------------- Assets: Investments in securities: Cost ........................................ $ 564,647,101 $ 297,267,554 $ 14,433,241 $ 71,593,267 ============== ================ ============ ============= Value ....................................... $ 557,820,895 $ 301,118,938 $ 14,497,923 $ 71,593,267 Cash .......................................... 48,369 1,719,371 108,164 335,161 Receivables: Capital shares sold ......................... 1,655,096 759,952 100,000 129,306 Interest .................................... 7,973,190 3,995,241 135,326 255,646 -------------- ---------------- ------------ ------------- Total assets ............................. 567,497,550 307,593,502 14,841,413 72,313,380 -------------- ---------------- ------------ ------------- Liabilities: Payables: Capital shares redeemed ..................... 1,826,590 889,416 694 297,236 Affiliates .................................. 384,415 200,275 3,129 30,744 Distributions to shareholders ............... 470,816 322,418 9,809 3,675 Professional fees ........................... 12,999 11,339 10,336 9,260 Accrued expenses and other liabilities ........ 6,424 1,034 446 8,041 -------------- ---------------- ------------ ------------- Total liabilities ........................ 2,701,244 1,424,482 24,414 348,956 -------------- ---------------- ------------ ------------- Net assets, at value ................... $ 564,796,306 $ 306,169,020 $ 14,816,999 $ 71,964,424 ============== ================ ============ ============= Net assets consist of: Paid-in capital ............................... $ 578,733,695 $ 304,849,811 $ 14,856,548 $ 71,982,406 Undistributed net investment income (distributions in excess of net investment income) .................................... 253,416 (88,628) 8,899 -- Net unrealized appreciation (depreciation) .... (6,826,206) 3,851,384 64,682 -- Accumulated net realized gain (loss) .......... (7,364,599) (2,443,547) (113,130) (17,982) -------------- ---------------- ------------ ------------- Net assets, at value ................... $ 564,796,306 $ 306,169,020 $ 14,816,999 $ 71,964,424 ============== ================ ============ ============= CLASS A: Net assets, at value ......................... $ 505,909,395 $ 293,092,824 $ 14,816,999 $ 71,964,424 ============== ================ ============ ============= Shares outstanding ............................ 46,141,516 27,248,983 1,491,558 71,982,406 ============== ================ ============ ============= Net asset value per share (a) ................. $ 10.96 $ 10.76 $ 9.93 $ 1.00 ============== ================ ============ ============= Maximum offering price per share (net asset value per share / 95.75%, 97.75%, 97.75% and 100%, respectively) ..................... $ 11.45 $ 11.01 $ 10.16 $ 1.00 ============== ================ ============ ============= CLASS C: Net assets, at value .......................... $ 58,886,911 $ 13,076,196 ============== ================ Shares outstanding ............................ 5,284,982 1,213,778 ============== ================ Net asset value and maximum offering price per share (a) .............................. $ 11.14 $ 10.77 ============== ================
(a) Redemption price is equal to net asset value less contingent deferred sales charges, if applicable, and redemption fees retained by the Fund. Semiannual Report | The accompanying notes are an integral part of these financial statements. | 59 Franklin New York Tax-Free Trust FINANCIAL STATEMENTS (CONTINUED) STATEMENTS OF OPERATIONS for the six months ended March 31, 2008 (unaudited)
FRANKLIN FRANKLIN FRANKLIN NEW YORK NEW YORK FRANKLIN NEW YORK INTERMEDIATE-TERM LIMITED-TERM NEW YORK INSURED TAX-FREE TAX-FREE TAX-FREE TAX-EXEMPT INCOME FUND INCOME FUND INCOME FUND MONEY FUND ---------------- ------------------ --------------- ------------- Investment income: Interest ............................................ $ 14,137,087 $ 6,337,954 $ 198,163 $ 1,027,204 ---------------- ----------------- --------------- ------------- Expenses: Management fees (Note 3a) ........................... 1,443,576 787,248 27,657 207,200 Administrative fees (Note 3b) ....................... -- -- 11,063 -- Distribution fees: (Note 3c) Class A ........................................... 267,064 136,666 8,192 -- Class C ........................................... 187,506 37,640 -- -- Transfer agent fees (Note 3e) ....................... 97,202 69,421 2,589 29,792 Custodian fees ...................................... 4,158 2,115 65 465 Reports to shareholders ............................. 22,217 14,755 533 3,949 Registration and filing fees ........................ 11,235 7,317 3,776 5,587 Professional fees ................................... 13,752 11,847 9,924 9,382 Trustees' fees and expenses ......................... 11,089 5,398 274 1,492 Other ............................................... 20,587 17,514 5,181 6,972 ---------------- ----------------- ------------- ------------- Total expenses ................................. 2,078,386 1,089,921 69,254 264,839 Expenses waived/paid by affiliates (Note 3f) ... -- -- (41,596) (50,787) ---------------- ----------------- ------------- ------------- Net expenses ................................. 2,078,386 1,089,921 27,658 214,052 ---------------- ----------------- ------------- ------------- Net investment income ..................... 12,058,701 5,248,033 170,505 813,152 ---------------- ----------------- ------------- ------------- Realized and unrealized gains (losses): Net realized gain (loss) from investments .......... (737,294) 194,205 411 -- Net change in unrealized appreciation (depreciation) on investments .................................... (20,637,351) (1,414,801) 63,491 -- ---------------- ----------------- ------------- ------------ Net realized and unrealized gain (loss) ................ (21,374,645) (1,220,596) 63,902 -- ---------------- ----------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations ..................................... $ (9,315,944) $ 4,027,437 $ 234,407 $ 813,152 ================ ================= ============= =============
60 | The accompanying notes are an integral part of these financial statements. | Semiannual Report Franklin New York Tax-Free Trust FINANCIAL STATEMENTS (CONTINUED) STATEMENTS OF CHANGES IN NET ASSETS
FRANKLIN NEW YORK FRANKLIN NEW YORK INSURED INTERMEDIATE-TERM TAX-FREE INCOME FUND TAX-FREE INCOME FUND -------------------------------------- -------------------------------------- SIX MONTHS ENDED SIX MONTHS ENDED MARCH 31, 2008 YEAR ENDED MARCH 31, 2008 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2007 (UNAUDITED) SEPTEMBER 30, 2007 ----------------- ------------------- ----------------- ------------------- Increase (decrease) in net assets: Operations: Net investment income .................. $ 12,058,701 $ 17,944,708 $ 5,248,033 $ 9,157,937 Net realized gain (loss) from investments ......................... (737,294) (3,678,147) 194,205 (1,076,950) Net change in unrealized appreciation (depreciation) on investments ....... (20,637,351) (4,675,613) (1,414,801) (1,865,418) ----------------- ------------------ ---------------- ------------------- Net increase (decrease) in net assets resulting from operations ...................... (9,315,944) 9,590,948 4,027,437 6,215,569 ----------------- ------------------ ---------------- ------------------- Distributions to shareholders from: Net investment income: Class A ............................. (10,870,798) (16,099,367) (5,232,112) (8,908,346) Class C ............................. (992,508) (1,650,631) (181,293) (363,852) ----------------- ------------------ ---------------- ------------------- Total distributions to shareholders ...... (11,863,306) (17,749,998) (5,413,405) (9,272,198) ----------------- ------------------ ---------------- ------------------- Capital share transactions: (Note 2) Class A ............................. 6,550,267 198,869,995 20,865,360 54,150,921 Class C ............................. 7,617,684 9,863,278 1,958,373 (803,794) ----------------- ------------------ ---------------- ------------------- Total capital share transactions ......... 14,167,951 208,733,273 22,823,733 53,347,127 ----------------- ------------------ ---------------- ------------------- Redemption fees .......................... 2,475 12,567 4,411 4,770 ----------------- ------------------ ---------------- ------------------- Net increase (decrease) in net assets ..................... (7,008,824) 200,586,790 21,442,176 50,295,268 Net assets: Beginning of period ...................... 571,805,130 371,218,340 284,726,844 234,431,576 ----------------- ------------------ ---------------- ------------------- End of period ............................ $ 564,796,306 $ 571,805,130 $ 306,169,020 $ 284,726,844 ----------------- ------------------ ---------------- ------------------- Undistributed net investment income (distributions in excess of net investment income) included in net assets: End of period .......................... $ 253,416 $ 58,021 $ (88,628) $ 76,744 ================= ================== ================ ===================
Semiannual Report | The accompanying notes are an integral part of these financial statements. | 61 Franklin New York Tax-Free Trust FINANCIAL STATEMENTS (CONTINUED) STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FRANKLIN NEW YORK LIMITED-TERM FRANKLIN NEW YORK TAX-FREE INCOME FUND TAX-EXEMPT MONEY FUND ------------------------------------- -------------------------------------- SIX MONTHS ENDED SIX MONTHS ENDED MARCH 31, 2008 YEAR ENDED MARCH 31, 2008 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2007 (UNAUDITED) SEPTEMBER 30, 2007 ---------------- ------------------ ----------------- ------------------ Increase (decrease) in net assets: Operations: Net investment income .................. $ 170,505 $ 235,447 $ 813,152 $ 1,861,609 Net realized gain (loss) from investments ......................... 411 (1,691) -- (12,505) Net change in unrealized appreciation (depreciation) on investments........ 63,491 (2,418) -- -- ---------------- ------------------ ----------------- ------------------ Net increase (decrease) in net assets resulting from operations ................... 234,407 231,338 813,152 1,849,104 ---------------- ------------------ ----------------- ------------------ Distributions to shareholders from net investment income ...................... (170,386) (245,713) (813,152) (1,861,609) Capital share transactions (Note 2)....... 6,621,121 (1,073,128) 7,316,317 3,874,370 ---------------- ------------------ ----------------- ------------------ Net increase (decrease) in net assets ...................... 6,685,142 (1,087,503) 7,316,317 3,861,865 Net assets: Beginning of period ...................... 8,131,857 9,219,360 64,648,107 60,786,242 ---------------- ------------------ ----------------- ------------------ End of period ............................ $ 14,816,999 $ 8,131,857 $ 71,964,424 $ 64,648,107 ================ ================== ================= ================== Undistributed net investment income included in net assets: End of period .......................... $ 8,899 $ 8,780 $ -- $ -- ================ ================== ================= ==================
62| The accompanying notes are an integral part of these financial statements. | Semiannual Report Franklin New York Tax-Free Trust NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Franklin New York Tax-Free Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end investment company, consisting of four funds (Funds). All Funds are diversified, except the Franklin New York Limited-Term Tax-Free Income Fund, which is non-diversified. The classes of shares offered within each of the Funds are indicated below. 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.
CLASS A CLASS A & CLASS C --------------------------------------------------- -------------------------------------------------------- Franklin New York Limited-Term Tax-Free Income Fund Franklin New York Insured Tax-Free Income Fund Franklin New York Tax-Exempt Money Fund Franklin New York Intermediate-Term Tax-Free Income Fund
The following summarizes the Funds' significant accounting policies. a. SECURITY VALUATION Municipal securities generally trade in the over-the-counter market rather than on a securities exchange. The Trust may utilize independent pricing services, quotations from bond dealers, and information with respect to bond and note transactions, to assist in determining a current market value for each security. The Trust's pricing services use valuation models or matrix pricing, which considers information with respect to comparable bond and note transactions, quotations from bond dealers or by reference to other securities that are considered comparable in such characteristics as rating, interest rate and maturity date, to determine current value. Securities in the Franklin New York Tax-Exempt Money Fund are valued at amortized cost which approximates market value. This method involves valuing an instrument at its cost and thereafter assuming a constant amortization to maturity of any discount or premium. The Trust has procedures to determine the fair value of individual securities and other assets for which market prices are not readily available or which may not be reliably priced. Methods for valuing these securities may include: fundamental analysis, matrix pricing, discounts from market prices of similar securities, or discounts applied due to the nature and duration of restrictions on the disposition of the securities. Due to the inherent uncertainty of valuations of such securities, the fair values may differ significantly from the values that would have been used had a ready market for such investments existed. Occasionally, events occur between the time at which trading in a security is completed and the close of the NYSE that might call into question the availability (including the reliability) of the value of a portfolio security held by the fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services. All security valuation procedures are approved by the Trust's Board of Trustees. Semiannual Report | 63 Franklin New York Tax-Free Trust NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) b. INCOME TAXES No provision has been made for U.S. income taxes because it is each fund's policy to qualify as a regulated investment company under the Internal Revenue Code and to distribute to shareholders substantially all of its income and net realized gains. c. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. For the Franklin New York Insured Tax-Free Income Fund, the Franklin New York Intermediate-Term Tax-Free Income Fund and the Franklin New York Limited-Term Tax-Free Income Fund, dividends from net investment income are normally declared daily and distributed monthly to shareholders. For the Franklin New York Tax-Exempt Money Fund, dividends from net investment income are normally declared daily. Distributions to shareholders are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods. Common expenses incurred by the Trust are allocated among the Funds based on the ratio of net assets of each fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the fund that incurred the expense. 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. Differences in per share distributions, by class, are generally due to differences in class specific expenses. 64| Semiannual Report Franklin New York Tax-Free Trust NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) d. INSURANCE The scheduled payments of interest and principal for each insured municipal security in the Trust are insured by either a new issue insurance policy or a secondary insurance policy. Some municipal securities in the Funds are secured by collateral guaranteed by an agency of the U.S. government. Insurance companies typically insure municipal bonds that tend to be of very high quality, with the majority of underlying municipal bonds rated A or better. However, there is a risk that in the event of an issuer default, the insurer will not be able to fulfill its obligations under the terms of the policy. Depending on the type of coverage, premiums for insurance are either added to the cost basis of the security or paid by a third party. 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. REDEMPTION FEES A short term trading redemption fee will be imposed, with some exceptions, on any fund shares that are redeemed or exchanged within seven calendar days following their purchase date. The redemption fee is 2% of the amount redeemed. Such fees are retained by the funds and accounted for as an addition to paid-in capital. g. GUARANTEES AND INDEMNIFICATIONS Under the Trust's organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Funds, enters into contracts with service providers that contain general indemnification clauses. The Trust's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote. Semiannual Report | 65 Franklin New York Tax-Free Trust NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 2. SHARES OF BENEFICIAL INTEREST At March 31, 2008, there were an unlimited number of shares authorized (without par value). Transactions in the Franklin New York Tax-Exempt Money Fund's shares were at $1.00 per share. Transactions in the Funds' shares were as follows:
FRANKLIN NEW YORK FRANKLIN NEW YORK INSURED INTERMEDIATE-TERM TAX-FREE INCOME FUND TAX-FREE INCOME FUND ---------------------------- ------------------------------ SHARES AMOUNT SHARES AMOUNT ----------- -------------- ---------- ----------------- CLASS A SHARES: Six months ended March 31, 2008 Shares sold ....................... 7,950,742 $ 90,072,987 5,505,224 $ 59,813,778 Shares issued in reinvestment of distributions ................ 665,719 7,504,356 343,028 3,729,842 Shares redeemed ................... (8,083,707) (91,027,076) (3,930,160) (42,678,260) ----------- -------------- ---------- ----------------- Net increase (decrease) ........... 532,754 $ 6,550,267 1,918,092 $ 20,865,360 ----------- -------------- ---------- ----------------- Year ended September 30, 2007 Shares sold ....................... 22,049,389 $ 252,271,062 10,479,023 $ 113,596,335 Shares issued in reinvestment of distributions ................ 905,009 10,358,358 568,908 6,152,151 Shares redeemed ................... (5,574,631) (63,759,425) (6,056,998) (65,597,565) ----------- -------------- ---------- ----------------- Net increase (decrease) ........... 17,379,767 $ 198,869,995 4,990,933 $ 54,150,921 ----------- -------------- ---------- ----------------- CLASS C SHARES: Six months ended March 31, 2008 Shares sold ....................... 1,230,186 $ 14,141,546 294,330 $ 3,193,535 Shares issued in reinvestment of distributions ................ 55,517 635,217 10,653 116,020 Shares redeemed ................... (630,482) (7,159,079) (124,512) (1,351,182) ----------- -------------- ---------- ----------------- Net increase (decrease) ........... 655,221 $ 7,617,684 180,471 $ 1,958,373 ----------- -------------- ---------- ----------------- Year ended September 30, 2007 Shares sold ....................... 1,843,384 $ 21,442,578 227,809 $ 2,478,033 Shares issued in reinvestment of distributions ................ 85,055 990,211 23,139 250,971 Shares redeemed ................... (1,080,664) (12,569,511) (325,133) (3,532,798) ----------- -------------- ---------- ----------------- Net increase (decrease) ........... 847,775 $ 9,863,278 (74,185) $ (803,794) ----------- -------------- ---------- -----------------
66| Semiannual Report Franklin New York Tax-Free Trust NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 2. SHARES OF BENEFICIAL INTEREST (CONTINUED)
FRANKLIN NEW YORK FRANKLIN NEW YORK LIMITED-TERM TAX-EXEMPT TAX-FREE INCOME FUND MONEY FUND --------------------------- ----------------- SHARES AMOUNT AMOUNT ----------- ------------ ----------------- CLASS A SHARES: Six months ended March 31, 2008 Shares sold ........................................ 776,445 $ 7,694,476 $ 34,220,470 Shares issued in reinvestment of distributions ..... 9,573 94,928 826,216 Shares redeemed .................................... (117,784) (1,168,283) (27,730,369) ----------- ------------ ----------------- Net increase (decrease) ............................ 668,234 $ 6,621,121 $ 7,316,317 =========== ============ ================= Year ended September 30, 2007 Shares sold ........................................ 242,506 $ 2,393,144 $ 36,139,125 Shares issued in reinvestment of distributions ..... 13,608 134,387 1,847,575 Shares redeemed .................................... (364,012) (3,600,659) (34,112,330) ----------- ------------ ----------------- Net increase (decrease) ............................ (107,898) $ (1,073,128) $ 3,874,370 =========== ============ =================
3. TRANSACTIONS WITH AFFILIATES Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Trust are also officers and/or directors of the following subsidiaries:
SUBSIDIARY AFFILIATION ------------------------------------------------------------- ------------------------ Franklin Advisers, Inc. (Advisers) Investment manager Franklin Templeton Services, LLC (FT Services) Administrative manager Franklin Templeton Distributors, Inc. (Distributors) Principal underwriter Franklin Templeton Investor Services, LLC (Investor Services) Transfer agent
a. MANAGEMENT FEES Effective January 1, 2008, the Franklin New York Insured Tax-Free Income Fund and the Franklin New York Intermediate-Term Tax-Free Income Fund pay an investment management fee to Advisers based on the month-end net assets of each of the funds and the Franklin New York Tax-Exempt Money Fund pays an investment management fee to Advisers based on the average daily net assets as follows:
ANNUALIZED FEE RATE NET ASSETS ------------------- ----------------------------------------------------- 0.625% Up to and including $100 million 0.500% Over $100 million, up to and including $250 million 0.450% Over $250 million, up to and including $7.5 billion 0.440% Over $7.5 billion, up to and including $10 billion 0.430% Over $10 billion, up to and including $12.5 billion 0.420% Over $12.5 billion, up to and including $15 billion 0.400% Over $15 billion, up to and including $ 17.5 billion 0.380% Over $17.5 billion, up to and including $20 billion 0.360% In excess of $20 billion
Semiannual Report | 67 Franklin New York Tax-Free Trust NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 3. TRANSACTIONS WITH AFFILIATES (CONTINUED) a. MANAGEMENT FEES (CONTINUED) Prior to January 1, 2008, the Franklin New York Insured Tax-Free Income Fund and the Franklin New York Intermediate-Term Tax-Free Income Fund paid fees to Advisers based on the month-end net assets of each of the funds and the Franklin New York Tax-Exempt Money Fund paid fees to Advisers based on the average daily net assets as follows:
ANNUALIZED FEE RATE NET ASSETS ------------------- ---------------------------------------------------- 0.625% Up to and including $100 million 0.500% Over $100 million, up to and including $250 million 0.450% Over $250 million, up to and including $10 billion 0.440% Over $10 billion, up to and including $12.5 billion 0.420% Over $12.5 billion, up to and including $15 billion 0.400% Over $15 billion, up to and including $17.5 billion 0.380% Over $17.5 billion, up to and including $20 billions 0.360% In excess of $20 billion
The Franklin New York Limited-Term Tax-Free Income Fund pays an investment management fee to Advisers based on the average daily net assets of the fund as follows:
ANNUALIZED FEE RATE NET ASSETS ------------------- ---------------------------------------------------- 0.500% Up to and including $100 million 0.450% Over $100 million, up to and including $250 million 0.425% Over $250 million, up to and including $500 million 0.400% In excess of $500 million
b. ADMINISTRATIVE FEES Under an agreement with Advisers, FT Services provides administrative services to the Funds, except for the Franklin New York Limited-Term Tax-Free Income Fund. The fee is paid by Advisers based on average daily net assets, and is not an additional expense of the funds. The Franklin New York Limited-Term Tax-Free Income Fund pays an administrative fee to FT Services of 0.20% per year of the average daily net assets of the fund. c. DISTRIBUTION FEES The Trust's Board of Trustees has adopted distribution plans for each share class pursuant to Rule 12b-1 under the 1940 Act. Under the funds' Class A reimbursement distribution plans, the Franklin New York Insured Tax-Free Income Fund and the Franklin New York Intermediate-Term Tax-Free Income Fund reimburse Distributors for costs incurred in connection with the servicing, sale and distribution of each fund's shares up to the maximum annual plan rate. Under the Class A reimbursement distribution plans, costs exceeding the maximum for the current plan year cannot be reimbursed in subsequent periods. 68 | Semiannual Report Franklin New York Tax-Free Trust NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 3. TRANSACTIONS WITH AFFILIATES (CONTINUED) c. DISTRIBUTION FEES (CONTINUED) In addition, under the funds' compensation distribution plans, the Funds, except the Franklin New York Tax-Exempt Money Fund, pays Distributors for costs incurred in connection with the servicing, sale and distribution of each fund's shares up to the maximum annual plan rate for each class. The maximum annual plan rates, based on the average daily net assets, for each class, are as follows:
FRANKLIN NEW YORK FRANKLIN NEW YORK FRANKLIN NEW YORK INSURED INTERMEDIATE-TERM LIMITED-TERM TAX-FREE INCOME FUND TAX-FREE INCOME FUND TAX-FREE INCOME FUND -------------------- -------------------- -------------------- Reimbursement Plans: Class A .................... 0.10% 0.10% -- Compensation Plans: Class A .................... -- -- 0.15% Class C .................... 0.65% 0.65% --
d. SALES CHARGES/UNDERWRITING AGREEMENTS Distributors has advised the Funds of the following commission transactions related to the sales and redemptions of the Funds' shares for the period:
FRANKLIN NEW YORK FRANKLIN NEW YORK INSURED INTERMEDIATE-TERM TAX-FREE INCOME FUND TAX-FREE INCOME FUND -------------------- ---------------------- Sales charges retained net of commissions paid to unaffiliated broker/dealers ................. $ 71,616 $ 15,914 Contingent deferred sales charges retained ...... $ 43,388 $ 1,508
FRANKLIN NEW YORK FRANKLIN NEW YORK LIMITED-TERM TAX-EXEMPT TAX-FREE INCOME FUND MONEY FUND -------------------- ----------------- Sales charges retained net of commissions paid to unaffiliated broker/dealers ................. $ 3,951 -- Contingent deferred sales charges retained ...... $ 1,063 $ 18,237
e. TRANSFER AGENT FEES For the period ended March 31, 2008, the Funds paid transfer agent fees as noted in the Statements of Operations of which the following amounts were retained by Investor Services:
FRANKLIN NEW YORK FRANKLIN NEW YORK INSURED INTERMEDIATE-TERM TAX-FREE INCOME FUND TAX-FREE INCOME FUND -------------------- -------------------- Transfer agent fees ............................. $ 56,247 $ 34,434
69 | Semiannual Report Franklin New York Tax-Free Trust NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 3. TRANSACTIONS WITH AFFILIATES (CONTINUED) e. TRANSFER AGENT FEES (CONTINUED)
FRANKLIN NEW YORK FRANKLIN NEW YORK LIMITED-TERM TAX-EXEMPT TAX-FREE INCOME FUND MONEY FUND -------------------- ----------------- Transfer agent fees ............................. $1,338 $15,746
f. WAIVER AND EXPENSE REIMBURSEMENTS FT Services and Advisers have agreed in advance to waive all or a portion of their respective fees and to assume payment of other expenses through January 31, 2009 for the Franklin New York Limited-Term Tax-Free Income Fund and the Franklin New York Tax-Exempt Money Fund. Total expenses waived or paid are not subject to reimbursement by the funds subsequent to the funds' fiscal year end. After January 31, 2009, FT Services and Advisers may discontinue this waiver at any time upon notice to the funds' Board of Trustees. 4. INCOME TAXES For tax purposes, capital losses may be carried over to offset future capital gains, if any. At September 30, 2007, the capital loss carryforwards were as follows:
FRANKLIN FRANKLIN NEW YORK FRANKLIN NEW YORK NEW YORK FRANKLIN INSURED INTERMEDIATE-TERM LIMITED-TERM NEW YORK TAX-FREE TAX-FREE TAX-FREE TAX-EXEMPT INCOME FUND INCOME FUND INCOME FUND MONEY FUND ----------- ----------------- ------------ ---------- Capital loss carryforwards expiring in: 2008............................... $ 2,471,475 $ 283,875 $ -- $ -- 2009............................... -- 251 -- -- 2010............................... -- 34,731 -- -- 2011............................... 474,738 -- -- -- 2012............................... -- 164,472 -- -- 2014............................... 18,771 10,330 -- -- 2015............................... -- 1,070,408 111,850 5,477 ----------- ----------------- ------------ ---------- $ 2,964,984 $ 1,564,067 $ 111,850 $ 5,477 =========== ================= ============ ==========
For tax purposes, realized capital losses occurring subsequent to October 31, may be deferred and treated as occurring on the first day of the following fiscal year. At September 30, 2007, the Funds' deferred realized capital losses were as follows:
FRANKLIN NEW YORK FRANKLIN NEW YORK FRANKLIN NEW YORK FRANKLIN NEW YORK INSURED INTERMEDIATE-TERM LIMITED-TERM TAX-EXEMPT TAX-FREE INCOME FUND TAX-FREE INCOME FUND TAX-FREE INCOME FUND MONEY FUND -------------------- -------------------- -------------------- ----------------- $ 3,662,321 $ 1,073,685 $ 1,691 $ 12,505 ==================== ==================== ==================== =================
70 | Semiannual Report Franklin New York Tax-Free Trust NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 4. INCOME TAXES (CONTINUED) At March 31, 2008, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:
FRANKLIN NEW YORK FRANKLIN NEW YORK INSURED INTERMEDIATE-TERM TAX-FREE INCOME FUND TAX-FREE INCOME FUND -------------------- -------------------- Cost of investments .......................... $ 564,553,428 $ 297,191,755 ==================== ==================== Unrealized appreciation ...................... $ 9,280,184 $ 5,781,063 Unrealized depreciation ...................... (16,012,717) (1,853,880) -------------------- -------------------- Net unrealized appreciation (depreciation) ... $ (6,732,533) $ 3,927,183 ==================== ====================
FRANKLIN NEW YORK FRANKLIN NEW YORK LIMITED-TERM TAX-EXEMPT TAX-FREE INCOME FUND MONEY FUND -------------------- ------------------- Cost of investments .......................... $ 14,433,089 $ 71,593,267 ==================== =================== Unrealized appreciation ...................... $ 77,078 $ -- Unrealized depreciation ...................... (12,244) -- -------------------- ------------------- Net unrealized appreciation (depreciation) ... $ 64,834 $ -- ==================== ===================
Net investment income and net realized gains (losses) differ for financial statement and tax purposes primarily due to differing treatment of bond discounts. 5. INVESTMENT TRANSACTIONS Purchases and sales (excluding short term securities) for the period ended March 31, 2008, were as follows:
FRANKLIN NEW YORK FRANKLIN NEW YORK FRANKLIN NEW YORK INSURED INTERMEDIATE-TERM LIMITED-TERM TAX-FREE INCOME FUND TAX-FREE INCOME FUND TAX-FREE INCOME FUND -------------------- -------------------- -------------------- Purchases ................................ $ 52,858,800 $ 29,027,698 $ 3,759,310 Sales .................................... $ 23,560,275 $ 9,899,838 $ 1,253,750
6. CONCENTRATION OF RISK Each of the Funds invests a large percentage of its total assets in obligations of issuers within New York and U.S. territories. Such concentration may subject the Funds to risks associated with industrial or regional matters, and economic, political or legal developments occurring within New York and U.S. territories. Semiannual Report | 71 Franklin New York Tax-Free Trust NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 7. REGULATORY AND LITIGATION MATTERS As part of various investigations by a number of federal, state, and foreign regulators and governmental entities, including the U.S. Securities and Exchange Commission (SEC), relating to certain practices in the mutual fund industry, including late trading, market timing and marketing support payments to securities dealers who sell fund shares (marketing support), Franklin Resources, Inc. and certain of its subsidiaries (collectively, the Company), entered into settlements with certain of those regulators and governmental entities. Specifically, the Company entered into settlements with the SEC, among others, concerning market timing and marketing support. On May 9, 2008, the SEC approved a final plan of distribution for the Company's market timing settlement. Disbursements of settlement monies will be made promptly to individuals who were shareholders of the designated funds during the relevant period, in accordance with the terms and conditions of the settlement and plan. In addition, the Company, as well as most of the mutual funds within Franklin Templeton Investments and certain current or former officers, Company directors, fund directors, and employees, have been named in private lawsuits (styled as shareholder class actions, or as derivative actions on behalf of either the named funds or Franklin Resources, Inc.). The lawsuits relate to the industry practices referenced above. The Company and fund management believe that the claims made in each of the private lawsuits referenced above are without merit and intend to defend against them vigorously. The Company cannot predict with certainty the eventual outcome of these lawsuits, nor whether they will have a material negative impact on the Company. If it is determined that the Company bears responsibility for any unlawful or inappropriate conduct that caused losses to the Trust, it is committed to making the Trust or its shareholders whole, as appropriate. 72 | Semiannual Report Franklin New York Tax-Free Trust NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 8. NEW ACCOUNTING PRONOUNCEMENTS The Funds adopted Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109" (FIN 48), on March 31, 2008. FIN 48 clarifies the accounting for uncertainty in tax positions taken or expected to be taken in a tax return. FIN 48 provides guidance on the measurement, recognition, classification and disclosure of tax positions, along with accounting for the related interest and penalties. The Funds have reviewed the tax positions for each of the three open tax years as of September 30, 2007 and have determined that the implementation of FIN 48 did not have a material impact on the Funds' financial statements. In September 2006, FASB issued FASB Statement No. 157, "Fair Value Measurement" (SFAS 157), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Trust believes the adoption of SFAS 157 will have no material impact on its financial statements. Semiannual Report | 73 Franklin New York Tax-Free Trust SHAREHOLDER INFORMATION BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT At a meeting held February 25, 2008, the Board of Trustees (Board), including a majority of non-interested or independent Trustees, approved renewal of the investment management agreement for each of the four separate tax-exempt funds within the Trust (Fund(s)). In reaching this decision, the Board took into account information furnished throughout the year at regular Board meetings, as well as information prepared specifically in connection with the annual renewal review process. Information furnished and discussed throughout the year included investment performance reports and related financial information for each Fund, as well as periodic reports on shareholder services, legal, compliance, pricing, and other services provided by the Investment Manager (Manager) and its affiliates. Information furnished specifically in connection with the renewal process included a report for each Fund prepared by Lipper, Inc. (Lipper), an independent organization, as well as a Fund profitability analysis report prepared by management. The Lipper reports compared each Fund's investment performance and expenses with those of other mutual funds deemed comparable to the Fund as selected by Lipper. The Fund profitability analysis report discussed the profitability to Franklin Templeton Investments from its overall U.S. fund operations, as well as on an individual fund-by-fund basis. Included with such profitability analysis report was information on a fund-by-fund basis listing portfolio managers and other accounts they manage, as well as information on management fees charged by the Manager and its affiliates including management's explanation of differences where relevant and a three-year expense analysis with an explanation for any increase in expense ratios. Additional material accompanying such report was a memorandum prepared by management describing project initiatives and capital investments relating to the services provided to the Funds by the Franklin Templeton Investments organization, as well as a memorandum relating to economies of scale and a comparative analysis concerning transfer agent fees charged each Fund. In considering such materials, the independent Trustees received assistance and advice from and met separately with independent counsel. While the investment management agreements for all Funds were considered at the same Board meeting, the Board dealt with each Fund separately. In approving continuance of the investment management agreement for each Fund, the Board, including a majority of independent Trustees, determined that the existing management fee structure was fair and reasonable and that continuance of the investment management agreement was in the best interests of each Fund and its shareholders. While attention was given to all information furnished, the following discusses some primary factors relevant to the Board's decision. NATURE, EXTENT AND QUALITY OF SERVICE. The Board was satisfied with the nature and quality of the overall services provided by the Manager and its affiliates to the Funds and their shareholders. In addition to investment performance and expenses discussed later, the Board's opinion was based, in part, upon periodic reports furnished them showing that the investment policies and restrictions for each Fund were consistently complied with as well as other reports periodically furnished the Board covering matters such as the compliance of portfolio managers and other management personnel with the code of ethics adopted throughout the Franklin Templeton fund complex, the adherence to fair value pricing procedures established by the Board, and the accuracy 74 | Semiannual Report Franklin New York Tax-Free Trust SHAREHOLDER INFORMATION (CONTINUED) BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED) of net asset value calculations. The Board also noted the extent of benefits provided Fund shareholders from being part of the Franklin Templeton family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds and the right to combine holdings in other funds to obtain a reduced sales charge. Favorable consideration was given to management's continuous efforts and expenditures in establishing back-up systems and recovery procedures to function in the event of a natural disaster, it being noted that such systems and procedures had functioned smoothly during the Florida hurricanes and blackouts experienced in recent years. Consideration was also given to the experience of each Fund's portfolio management team, the number of accounts managed and general method of compensation. In this latter respect, the Board noted that a primary factor in management's determination of a portfolio manager's bonus compensation was the relative investment performance of the funds he or she managed and that a portion of such bonus was required to be invested in a predesignated list of funds within such person's fund management area so as to be aligned with the interests of Fund shareholders. The Board also took into account the quality of transfer agent and shareholder services provided Fund shareholders by an affiliate of the Manager, noting continuing expenditures by management to increase and improve the scope of such services, periodic favorable reports on such service conducted by third parties, the high industry ranking given to the Franklin Templeton website, and the firsthand experience of individual Board members who deal with the shareholder services department in their capacities as shareholders in one or more of the various Franklin Templeton funds. INVESTMENT PERFORMANCE. The Board placed significant emphasis on the investment performance of each Fund in view of its importance to shareholders. While consideration was given to performance reports and discussions with portfolio managers at Board meetings during the year, particular attention in assessing performance was given to the Lipper reports furnished for the agreement renewals. The Lipper reports prepared for each Fund showed its investment performance in comparison with a performance universe selected by Lipper. The following summarizes the performance results for each of the Funds. FRANKLIN NEW YORK INSURED TAX-FREE INCOME FUND - The Lipper report for this Fund showed the investment performance of its Class A shares during 2007 and the previous 10-year period ended December 31, 2007, in comparison with a performance universe consisting of all retail and institutional insured municipal debt funds as selected by Lipper. The Lipper report showed that the Fund's income return during 2007 was in the second-highest quintile of its performance universe, and for the previous three-, five- and 10-year periods on an annualized basis was in the highest quintile of its performance universe. The Lipper report also showed that the Fund's total return during 2007 was in the second-lowest quintile of its performance universe and for each of the previous three-, five- and 10-year periods on an annualized basis was in the second-highest quintile of such universe. The Board expressed its satisfaction with such performance noting the Fund's investment objective is to obtain a high level of tax-exempt income. Semiannual Report | 75 Franklin New York Tax-Free Trust SHAREHOLDER INFORMATION (CONTINUED) BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED) FRANKLIN NEW YORK INTERMEDIATE-TERM TAX-FREE INCOME FUND - The Lipper report for this Fund showed the investment performance of its Class A shares during 2007 and the previous 10-year period ended December 31, 2007, in comparison with a performance universe consisting of all retail and institutional New York intermediate municipal debt funds as selected by Lipper. The Lipper report showed that the Fund's income return in 2007 was in the second-highest quintile of its performance universe, and during each of the previous three-, five- and 10-year periods on an annualized basis was in either the highest or second-highest quintile of its performance universe. The Lipper report also showed that the Fund's total return during 2007 was at the median of its performance universe and for each of the previous three-, five- and 10-year periods on an annualized basis was either in the highest or second-highest quintile of its performance universe. The Board expressed its satisfaction with such performance. FRANKLIN NEW YORK LIMITED-TERM TAX-FREE INCOME FUND - The Lipper report for this Fund showed its investment performance during the past four calendar years in comparison with a performance universe consisting of all retail and institutional other states short-intermediate municipal debt funds as selected by Lipper. The Lipper report showed that for 2007 the Fund's income return was in the highest quintile of its performance universe while its total return was at the median of such universe. The Lipper report showed the Fund's income return during each of the previous three years to be in either the lowest or next-to-lowest quintile of its performance universe, and its total return during such three years to be in the second-highest, middle and next-to-lowest quintile of such universe, respectively. The Board found the Fund's performance to be acceptable in view of the conservative investment objectives of the Fund, including the fact that it did not invest in lower quality bonds or those subject to the alternative minimum tax, as well as its relatively small size, noting also that the Fund's expenses had been partially waived or subsidized by management. FRANKLIN NEW YORK TAX-EXEMPT MONEY FUND - Lipper compared this Fund's performance to a performance universe consisting of all retail and institutional New York tax-exempt money market funds as selected by Lipper. This Fund's performance was in the next-to-lowest quintile of its performance universe during 2007, as well as during each of the previous three-, five- and 10-year periods on an annualized basis. The Board found such performance acceptable, noting that this Fund was conservatively run to ensure safety and stability of assets with no holdings in non-rated or tier 2 securities and that during 2007 and each of the previous three-, five- and 10-year periods on an annualized basis its return was within a tenth of a percent of its performance universe median. COMPARATIVE EXPENSES. Consideration was given to the management fees and total expense ratios of each Fund compared with those of a group of other funds selected by Lipper as its appropriate Lipper expense group. Prior to making such comparison, the Board relied upon a survey showing that the scope of services covered under the Fund's investment management agreement was similar to those provided by fund managers to other mutual fund groups. In reviewing comparative costs, emphasis was given to each Fund's contractual investment management fee in comparison with the contractual investment management fee that would have been charged by 76 | Semiannual Report Franklin New York Tax-Free Trust SHAREHOLDER INFORMATION (CONTINUED) BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED) other funds within its Lipper expense group assuming they were similar in size to the Fund, as well as the actual total expenses of each Fund in comparison with those of its Lipper expense group. The Lipper contractual investment management fee analysis includes administrative charges as being part of the contractual investment management fee and total expenses for comparative consistency are shown by Lipper for Fund Class A shares for funds having multiple share classes. The results of such Lipper expense comparisons showed that the contractual investment management fee rate of Franklin New York Insured Tax-Free Income Fund was below the median of its Lipper expense group and its actual total expenses were the least expensive of such group. The contractual investment management fee rate of Franklin New York Intermediate-Term Tax-Free Income Fund was below the median of its Lipper expense group, while its total expenses were in the least expensive quintile of its Lipper expense group. The Board was satisfied with the contractual investment management fee and total expenses of these Funds in comparison to their Lipper expense groups. The Lipper expense comparison for Franklin New York Limited-Term Tax-Free Income Fund was not considered to be particularly meaningful in view of this Fund's small size and management's partial waiver or absorption of expenses. The Lipper expense comparison for Franklin New York Tax-Exempt Money Fund showed its contractual investment management fee rate and total expenses were in the most expensive and middle quintiles, respectively, of its Lipper expense group. In discussing these expense comparisons, management pointed out that this Fund is not actively marketed and largely serves as an alternative and frequently temporary investment vehicle for shareholders of other funds within the Franklin Templeton family of funds and provides a number of services to shareholders, including check writing and interfund exchange rights. The Board found such expenses to be acceptable, noting the points raised by management, as well as management's partial absorption of expenses for this Fund. MANAGEMENT PROFITABILITY. The Board also considered the level of profits realized by the Manager and its affiliates in connection with the operation of each Fund. In this respect, the Board reviewed the Fund profitability analysis that addresses the overall profitability of Franklin Templeton's U.S. fund business, as well as its profits in providing management and other services to each Fund. Specific attention was given to the methodology followed in allocating costs to each Fund, it being recognized that allocation methodologies are inherently subjective and various allocation methodologies may each be reasonable while producing different results. In this respect, the Board noted that, while being continuously refined and reflecting changes in the Manager's own cost accounting, the allocation methodology was consistent with that followed in profitability report presentations for the Funds made in prior years and that the Funds' independent registered public accounting firm had been engaged by the Manager to perform certain procedures on a biennial basis, specified and approved by the Manager and the Funds' Board solely for their purposes and use in reference to the profitability analysis. In reviewing and discussing such analysis, management discussed with the Board its belief that costs incurred in establishing the infrastructure necessary for the type of mutual fund operations conducted by the Manager and its affiliates may not be fully reflected in the expenses allocated to each Fund in determining its profitability, as well as the Semiannual Report | 77 Franklin New York Tax-Free Trust SHAREHOLDER INFORMATION (CONTINUED) BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED) fact that the level of profits, to a certain extent, reflected operational cost savings and efficiencies initiated by management. The Board also took into account management's expenditures in improving shareholder services provided the Funds, as well as the need to meet additional regulatory and compliance requirements resulting from the Sarbanes-Oxley Act and recent SEC and other regulatory requirements. In addition, the Board considered a third-party study comparing the profitability of the Manager's parent on an overall basis as compared to other publicly held managers broken down to show profitability from management operations exclusive of distribution expenses, as well as profitability including distribution expenses. The Board also considered the extent to which the Manager and its affiliates might derive ancillary benefits from fund operations, including its interest in a joint venture entity that financed up-front commissions paid to brokers/dealers who sold fund Class B shares prior to February 2005, when the offering of such shares was discontinued. Based upon its consideration of all these factors, the Board determined that the level of profits realized by the Manager and its affiliates from providing services to each Fund was not excessive in view of the nature, quality and extent of services provided. ECONOMIES OF SCALE. The Board also considered whether economies of scale are realized by the Manager as the Funds grow larger and the extent to which this is reflected in the level of management fees charged. While recognizing any precise determination is inherently subjective, the Board noted that based upon the Fund profitability analysis, it appeared as some funds get larger, at some point economies of scale do result in the Manager realizing a larger profit margin on management services provided such fund. The Board noted that the investment management agreements for each of the Funds provide for fee breakpoints continuing beyond their existing asset size so that as each Fund grows in size, its effective management fee rate declines. The Board believed that to the extent economies of scale may be realized by the Manager and its affiliates, the schedule of fees under the investment management agreement for each Fund provided a sharing of benefits with the Fund and its shareholders. 78| Semiannual Report Franklin New York Tax-Free Trust SHAREHOLDER INFORMATION (CONTINUED) PROXY VOTING POLICIES AND PROCEDURES The Trust has established Proxy Voting Policies and Procedures (Policies) that the Trust uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Trust'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 1-954/527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 500 East Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy Group. Copies of the Trust's proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission's website at sec.gov and reflect the most recent 12-month period ended June 30. QUARTERLY STATEMENT OF INVESTMENTS The Trust files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's website at sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800/SEC-0330. Semiannual Report | 79 This page intentionally left blank. This page intentionally left blank. This page intentionally left blank. [FRANKLIN TEMPLETON INVESTMENTS LOGO] One Franklin Parkway San Mateo, CA 94403-1906 FRANKLIN TEMPLETON INVESTMENTS WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL? Eligible shareholders can sign up for eDelivery at franklintempleton.com. See inside for details. SEMIANNUAL REPORT AND SHAREHOLDER LETTER FRANKLIN NEW YORK TAX-FREE TRUST 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. 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 12(a)(1), 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 expert is John B. Wilson and he is "independent" as defined under the relevant Securities and Exchange Commission Rules and Releases. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. N/A ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. N/A ITEM 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. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. N/A ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. N/A ITEM 10. 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 11. 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 12. EXHIBITS. (a)(1) Code of Ethics. (a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Galen G. Vetter, Chief Executive Officer - Finance and Administration, and Laura F. Fergerson, Chief Financial Officer and Chief Accounting Officer (b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Galen G. Vetter, Chief Executive Officer - Finance and Administration, and Laura F. Fergerson, Chief Financial Officer and Chief Accounting 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 TRUST By /S/GALEN G. VETTER ------------------ Galen G. Vetter Chief Executive Officer - Finance and Administration Date May 27, 2008 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/GALEN G. VETTER ------------------ Galen G. Vetter Chief Executive Officer - Finance and Administration Date May 27, 2008 By /S/LAURA F. FERGERSON --------------------- Laura F. Fergerson Chief Financial Officer and Chief Accounting Officer Date May 27, 2008