Franklin Templeton Investments

<GAIN FROM OUR PERSPECTIVE>

Franklin High Yield Tax-Free Income Fund  – 
HY TF A : Newspaper symbol FRHIX : NASDAQ symbol Tax-Free Income : Fund Category
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Portfolio
Portfolio Facts1
Net Assets (millions) $5,756.6
Class A as of July 31, 2010
(updated monthly)
Average weighted maturity 20.5 Year(s)
as of July 31, 2010
(updated monthly)
Portfolio turnover ratio 8.58
as of February 28, 2010
(updated annually)
Average coupon rate 5.95%
as of July 31, 2010
(updated monthly)
Fees & Expenses View Performance
Expense ratio
as of July 01, 2010
(updated annually)		 0.63%
12b-1 fee2 0.1%
Max. initial sales charge 4.25%
Contingent deferred sales charge 0.00%
Volatility Measures
as of June 30, 2010
(Source: Thomson Financial)
(updated quarterly, based on a 3-year period)
Beta3 1.32
Alpha4 -3.36
Sharpe ratio5 0.25
R squared6 0.68
Standard deviation7 9.59
Asset Mix1
 as of July 31, 2010
(updated monthly)
 
 
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Portfolio Holdings1
Number of positions: 777
Bond Quality (as of July 31, 2010)
AAA: 15.65%
AA: 11.91%
A: 25.21%
BBB: 23.23%
BB: 7.31%
B: 6.11%
CCC: 1.09%
Not Rated:: 9.49%
Sector Breakdown (as of July 31, 2010)
Utilities 22.70%
Hospital & Health Care 16.30%
Transportation 13.20%
Prerefunded 9.80%
Tax Supported Debt 8.50%
General Obligation Bonds 8.40%
Corporate-Backed 6.10%
Other Revenue Bonds 5.80%
Subject to Government Appropriations 5.80%
Other 3.00%
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Important Legal Information

Performance data quoted represents past performance, which does not guarantee future results. Current performance may differ from figures shown. Investment return and principal value will fluctuate with market conditions, and you may have a gain or loss when you sell your shares.

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 from interest rates. Thus, as the prices of bonds in the fund adjust to a rise in interest rates, the fund's share price may decline. In general, an investor is paid a higher yield to assume a greater degree of credit risk.

Because municipal bonds are particularly sensitive to interest rate movements, the fund's yield and share price will fluctuate with market conditions. Bond prices, and thus the fund's share price, generally move in the opposite direction from interest rates. As the prices of bonds in a fund adjust to a rise in interest rates, the fund's share price may decline. It is important to note that the fund can only distribute what it earns and earnings are influenced by interest rates. When interest rates decline, fund earnings and dividend payments usually decline as well. This is what is known as income risk. Please consult the prospectus for a more detailed description of the fund's risks.

For more information on any of our funds, contact your financial advisor or download a free prospectus. Investors should carefully consider a fund's investment goals, risks, sales charges and expenses before investing. The prospectus contains this and other information. Please read the prospectus carefully before investing or sending money.

Footnotes

  1. Portfolio holdings are subject to change.
  2. Represents the maximum amount of Rule 12b-1 distribution and service fees the Fund may pay.
  3. A measure of the fund's volatility relative to the market, as represented by the Barclays Capital Municipal Bond Index. A beta greater than 1.00 indicates volatility greater than the market. Based on the 3-years ended as of the date of the calculation.
  4. The annualized percentage difference between a fund's actual returns and its expected performance given its level of market risk, as measured by beta. Based on the 3-years ended as of the date of the calculation.
  5. A statistical measurement of a fund's historical risk-adjusted performance. It is calculated by taking a fund's excess return over that of the three-month Treasury bill divided by its standard deviation. Higher values generally indicate better historical risk-adjusted performance. Based on the 3 years ended as of the date of the calculation.
  6. Percentage of the fund's returns explained by movements in the Barclays Capital Municipal Bond Index. 1.00 equals perfect correlation to the index. Based on the 3-years ended as of the date of the calculation.
  7. A statistical measurement of the range of a fund's total returns. In general, a higher standard deviation means greater volatility. Based on the fund's monthly returns over the 3-year period ended as of the date of the calculation.

For U.S. residents only.