N-CSR

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-03395

Franklin Federal Tax-Free Income Fund

(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: 4/30

Date of reporting period: 4/30/18

Item 1. Reports to Stockholders.

Franklin Templeton Investments

Why choose Franklin Templeton Investments?

Successful investing begins with ambition. And achievement only comes when you reach for it. That’s why we continually strive to deliver better outcomes for investors. No matter what your goals are, our deep, global investment expertise allows us to offer solutions that can help.

During our more than 70 years of experience, we’ve managed through all kinds of markets—up, down and those in between. We’re always preparing for what may come next. It’s because of this, combined with our strength as one of the world’s largest asset managers that we’ve earned the trust of millions of investors around the world.

Dear Shareholder:

The 12 months ended April 30, 2018, benefited from mostly upbeat economic data as the US job market continued to improve and the unemployment rate declined. Accordingly, the US Federal Reserve (Fed), under new chairman Jerome Powell, increased its range for the federal funds rate from 1.25% to 1.50% to a range of 1.50% to 1.75% at its March meeting and maintained its forecast of three rate increases in 2018, while upgrading its economic forecasts for 2018 and 2019. This was the Fed’s third rate hike for the 12 months, following June and December of 2017. Shortly after the reporting period, the Fed left its range unchanged at its May 2018 meeting and expressed confidence that inflation was moving closer to its goal.

During the 12 months, the municipal bond market posted modest performance similar to other US fixed income classes, with generally higher returns for longer term and lower rated municipal bonds. Factors contributing to this positive investment environment for municipals included relatively low inflation, stagnant wage growth and international political concerns. Federal government fiscal reform uncertainty also

benefited tax-free municipals during most of the period, despite some volatility in reaction to the government’s tax code efforts.

Franklin Federal Tax-Free Income Fund’s annual report includes more detail about municipal bond market conditions and a discussion from the portfolio managers. In addition, on our website, franklintempleton.com, you can find updated commentary by our municipal bond experts. Municipal bonds can provide tax-free income and diversification from equities. Despite periods of volatility, municipal bonds historically have had a solid long-term record of performance, driven mostly by their compounding income component. Please remember all securities markets fluctuate, as do mutual fund share prices.

As always, we recommend investors consult their financial advisors to help them make the best decisions for the long term. In a constantly changing market environment, we remain committed to our disciplined strategy as we manage the Fund, keeping in mind the trust you have placed in us. We appreciate your confidence in us and encourage you to contact us when

 Not FDIC Insured | May Lose Value | No Bank  Guarantee 

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you have questions about your Franklin Templeton tax-free investment.

Sincerely,

Rupert H. Johnson, Jr.

Chairman

Franklin Federal Tax-Free Income Fund

Sheila Amoroso

Rafael R. Costas, Jr.

Senior Vice Presidents and Co-Directors

Franklin Municipal Bond Department

This letter reflects our analysis and opinions as of April 30, 2018, unless otherwise indicated. The information is not a complete analysis of every aspect of any market, state, industry, security or fund. Statements of fact are from sources considered reliable.

Contents
Annual Report
Franklin Federal Tax-Free Income Fund	3
Performance Summary	6
Your Fund’s Expenses	10
Financial Highlights and Statement of Investments	11
Financial Statements	45
Notes to Financial Statements	49
Report of Independent Registered Public Accounting Firm	57
Tax Information	58
Special Meeting of Shareholders	59
Board Members and Officers	61
Shareholder Information	66

Visit franklintempleton.com for fund updates, to access your account, or to find helpful financial planning tools.

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Annual Report

Franklin Federal Tax-Free Income Fund

This annual report for Franklin Federal Tax-Free Income Fund covers the fiscal year ended April 30, 2018.

Your Fund’s Goal and Main Investments

The Fund seeks to provide as high a level of income exempt from federal income taxes as is consistent with prudent investment management and preservation of capital by investing at least 80% of its total assets in investment-grade municipal securities that pay interest free from such taxes.¹

Credit Quality Composition*

4/30/18

Ratings	% of Total Investments
AAA	11.09%
AA	46.90%
A	20.19%
BBB	3.91%
Below Investment Grade	1.18%
Refunded	15.86%
Not Rated	0.87%

*Securities, except for those labeled Not Rated, are assigned ratings by one or more Nationally Recognized Statistical Credit Rating Organizations (NRSROs), such as Standard & Poor’s, Moody’s and Fitch, that can be considered by the investment manager as part of its independent securities analysis. When ratings from multiple agencies are available, the highest is used, consistent with the portfolio investment process. Ratings reflect an NRSRO’s opinion of an issuer’s creditworthiness and typically range from AAA (highest) to D (lowest). The Below Investment Grade category consists of bonds rated below BBB-. The Refunded category generally consists of refunded bonds secured by US government or other high-quality securities and not rerated by an NRSRO. The Not Rated category consists of ratable securities that have not been rated by an NRSRO. Cash and equivalents are excluded from this composition.

Performance Overview

The Fund’s Class A share price, as measured by net asset value, decreased from $12.02 on April 30, 2017, to $11.68 on April 30, 2018. The Fund’s Class A shares paid dividends totaling 44.35 cents per share for the reporting period.² The

Performance Summary beginning on page 6 shows that at the end of this reporting period the Fund’s Class A shares’ distribution rate was 3.59% based on an annualization of April’s 3.65 cent per share dividend and the maximum offering price of $12.20 on April 30, 2018. An investor in the 2018 maximum federal personal income tax bracket of 37.00% (plus 3.80% Medicare tax) would need to earn a distribution rate of 6.06% from a taxable investment to match the Fund’s Class A tax-free distribution rate. For other performance data, please see the Performance Summary. During the period under review, the Fund experienced a reduction of its monthly dividend. While there are many factors that can impact a fund’s ability to distribute dividends, the primary reason for the dividend cut was due to bonds maturing or being called away by issuers, which were purchased by the Fund at yields greater than the prevailing market yields.

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, go to franklintempleton.com or call (800) 342-5236.

Municipal Bond Market Overview

The municipal bond market outperformed the US Treasury market but underperformed US stock markets during the 12-month period ended April 30, 2018. Investment-grade municipal bonds, as measured by the Bloomberg Barclays Municipal Bond Index, generated a +1.56% total return for the period, while US Treasuries, as measured by the Bloomberg Barclays US Treasury Index, had a -1.07% total return.³ Both high-yield corporate bonds and high-yield municipal bonds outperformed their investment-grade counterparts. US stocks, as represented by the Standard & Poor’s^® 500 Index, outperformed both municipals and US Treasuries with a +13.27% total return for the reporting period.³ US stocks generated strong returns through the first nine months of the

1. Dividends are generally subject to state and local taxes, if any. 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. The distribution amount is the sum of all net investment income distributions for the period shown. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.

3. Source: Morningstar. Treasuries, if held to maturity, offer a fixed rate of return and a fixed principal value; their interest payments and principal are guaranteed.

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 16.

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

reporting period, but experienced a significant bout of volatility in early February that led to losses in that month and reduced overall returns. Multiple factors, including recent indications of rising interest rates and proposed steel and aluminum tariffs, contributed to the volatility in stock markets and also drove losses in both the municipal bond market and US Treasury market during the year-to-date 2018.

Municipal issuance during the reporting period totaled $419 billion, a modest 3% decline from total issuance in the previous 12-month period ended April 30, 2017.⁴ Impending tax reform contained potential implications for the municipal bond market and caused a deluge of supply in December, as issuers rushed to market before the end of the 2017. December supply of $63 billion and fourth-quarter 2017 supply of $145 billion eclipsed previous monthly and quarterly records of municipal bond issuance, respectively.⁴ Despite this extraordinary supply pressuring the market, strong demand buoyed returns through the end of 2017. However, diminished issuance ($94 billion in the year-to-date 2018, a 23% decline from the same time period in 2017),⁴ heavy dealer inventories and selling pressures in 2018 led municipals to have a -1.46% total return year-to-date in 2018, as measured by the Bloomberg Barclays Municipal Bond Index.³ Municipal performance slightly outperformed US Treasuries, which had a total return of -1.98% during the same period.³

After accounting for redemptions (bonds that matured or were called out of the market), net issuance stood at $64 billion in 2017, which marked a third consecutive year of positive net issuance.⁵ Net issuance turned negative in the first four months of 2018,

standing at -$11 billion at period-end.⁵ According to the Investment Company Institute, municipal bond funds reported inflows for nine of the 12 months of the reporting period, with the only negative flows occurring in December 2017 and in February and April of 2018. The total inflows for the period were approximately $25 billion.⁶

The Federal Reserve (Fed) raised its target range for the federal funds rate 0.25% at its December 2017 meeting and another 0.25% at its March 2018 meeting. The target range stood at 1.50%–1.75% at period-end. The Fed also increased the discount rate 0.25% to 2.00% in December and another 0.25% at the March 2018 meeting, to finish the period at 2.25%. The Fed cited a strengthening economic outlook and strong labor market conditions in its press release following the March 2018

Dividend Distributions*

5/1/17–4/30/18

	Dividend per Share (cents)
Month	Class A	Class M**	Class C	Class R6***	Advisor Class
May	3.90	—	3.34	—	4.00
June	3.80	—	3.25	—	3.90
July	3.75	—	3.20	—	3.85
August	3.70	—	3.15	—	3.80
September	3.65	—	3.09	3.79	3.75
October	3.65	—	3.09	3.79	3.75
November	3.65	—	3.09	3.79	3.75
December	3.65	—	3.10	3.79	3.75
January	3.65	—	3.10	3.79	3.75
February	3.65	3.75	3.10	3.79	3.75
March	3.65	3.74	3.10	3.78	3.74
April	3.65	3.74	3.10	3.78	3.74
Total	44.35	11.23	37.71	30.30	45.53

*The distribution amount is the sum of all net investment income distributions for the period shown. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.

**Effective 1/25/18, the Fund began offering Class M shares. See the prospectus for details.

***Effective 8/1/17, the Fund began offering Class R6 shares. See the prospectus for details.

decision. In total, the Fed raised the target range three times in 2017 (March, June, and December), and once so far in 2018.

Investors continued to favor risky assets through most of the period. Municipal bonds with longer maturities generally performed better than bonds with shorter maturities, and high yield tax-exempt bonds outperformed their investment-grade counterparts. During the 12-month reporting period, the Bloomberg Barclays High Yield Municipal Bond Index generated a +5.79% total return and the Bloomberg Barclays Municipal Long Bond (22+ Years) Index returned +3.25%.³

Several developments affected Puerto Rico bonds over the reporting period. Please visit franklintempleton.com/ investor/products/fund-resources/puerto-rico for the latest Puerto Rico updates from Franklin Templeton.

At period-end, we maintained our positive view of the municipal bond market. We believe municipal bonds continue to be an attractive asset class among fixed income securities,

4. Source: SIFMA.org, Bloomberg.

5. Source: Barclays Municipal Credit Research.

6. Source: Investment Company Institute.

See www.franklintempletondatasources.com for additional data provider information.

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

Portfolio Composition

4/30/18

	% of Total Investments*
Refunded**	23.35%
Utilities	18.38%
Transportation	14.54%
General Obligation	11.58%
Hospital & Health Care	11.37%
Subject to Government Appropriations	7.16%
Higher Education	5.23%
Tax-Supported	4.47%
Other Revenue	2.62%
Corporate-Backed	0.75%
Housing	0.55%

*Does not include cash and cash equivalents.

**Includes all refunded bonds; the percentage may differ from that in the Credit Quality Composition.

and we intend to follow our solid discipline of investing to maximize income, while seeking value in the municipal bond market.

Investment Strategy

We use a consistent, disciplined strategy in an effort to maximize tax-exempt income for our shareholders by seeking to maintain exposure to higher coupon securities while balancing risk and return within the Fund’s range of allowable investments. We generally employ a buy-and-hold approach and invest in securities we believe should provide the most relative value in the market. We do not use leverage or derivatives, nor do we use hedging techniques that could add volatility and contribute to underperformance in adverse markets.

Manager’s Discussion

Our value-oriented philosophy of investing primarily for income and stability of principal, when combined with a positive-sloping municipal yield curve, in which yields for longer term bonds are higher than those for shorter term bonds, led us to favor longer term bonds during the period under review. Consistent with our strategy, we sought to remain invested in bonds ranging from 15 to 30 years in maturity with good call features. Our relative-value, income-oriented philosophy also led the Fund to maintain its positions in higher coupon bonds, which provided income performance during the reporting period. We believe our conservative, buy-and-hold investment strategy can help us achieve high, current, tax-free income for shareholders.

The Fund holds a very small portion of its assets in Puerto Rico bonds, which decreased in price over the period. Puerto Rico and its municipal issuers continue to experience significant financial difficulties and we continue to monitor developments affecting them.

Thank you for your continued participation in Franklin Federal 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 April 30, 2018, 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.

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

Performance Summary as of April 30, 2018

The performance tables and graphs do 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. 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.

Performance as of 4/30/18

Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 4.25% and the minimum is 0%. Class A: 4.25% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.

Share Class	Cumulative  Total Return1		Average Annual  Total Return2
A
1-Year		+0.85%		-3.41%
5-Year		+10.61%		+1.15%
10-Year		+48.82%		+3.61%
Advisor
1-Year		+0.95%		+0.95%
5-Year		+11.16%		+2.14%
10-Year		+50.36%		+4.16%

Share Class	Distribution  Rate3		Taxable Equivalent  Distribution Rate4		30-Day  Standardized Yield5		Taxable Equivalent 30-Day  Standardized Yield4
A		3.59%		6.06%		2.00%		3.38%
Advisor		3.84%		6.49%		2.19%		3.70%

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, go to franklintempleton.com or call (800) 342-5236.

See page 9 for Performance Summary footnotes.

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

PERFORMANCE SUMMARY

Total Return Index Comparison for a Hypothetical $10,000 Investment

Total return represents the change in value of an investment over the periods shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged indexes include reinvestment of any income or distributions. They differ from the Fund in composition and do not pay management fees or expenses. One cannot invest directly in an index.

Class A (5/1/08–4/30/18)

Advisor Class (5/1/08–4/30/18)

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

PERFORMANCE SUMMARY

Net Asset Value

Share Class (Symbol)	4/30/18			1/25/18		8/1/17		4/30/17		Change
A (FKTIX)		$11.68			N/A		N/A	$	12.02		-$0.34
M (TBD)		$11.69		$	11.89		N/A		N/A		-$0.20
C (FRFTX)		$11.68			N/A		N/A	$	12.01		-$0.33
R6 (FFTQX)		$11.69			N/A	$	12.03		N/A		-$0.34
Advisor (FAFTX)		$11.69			N/A		N/A	$	12.03		-$0.34
Distributions (5/1/17–4/30/18)
Share Class	Net Investment Income
A		$0.4435
M (1/25/18-4/30/18)		$0.1123
C		$0.3771
R6 (8/1/17-4/30/18)		$0.3030
Advisor		$0.4553
Total Annual Operating Expenses8
Share Class
A		0.62	%
Advisor		0.52	%

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

PERFORMANCE SUMMARY

Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.

All investments involve risks, including possible loss of principal. Because municipal bonds are 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. The Fund holds a very small portion of its assets in Puerto Rico municipal bonds that have been impacted by recent adverse economic and market changes, which may cause the Fund’s share price to decline. Changes in the credit rating of a bond, or in the credit rating or financial strength of a bond’s issuer, insurer or guarantor, may affect the bond’s value. The Fund may invest a significant part of its assets in municipal securities that finance similar types of projects, such as utilities, hospitals, higher education and transportation. A change that affects one project would likely affect all similar projects, thereby increasing market risk. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

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. Return for less than one year, if any, has not been annualized.

3. Distribution rate is based on an annualization of the respective class’s April dividend and the maximum offering price (NAV for Advisor Class) per share on 4/30/18.

4. Taxable equivalent distribution rate and yield assume the 2018 maximum federal income tax rate of 37.00% plus 3.80% Medicare tax.

5. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.

6. Source: Morningstar. The Bloomberg Barclays Municipal Bond Index is a market value-weighted index engineered for the long-term tax-exempt bond market. To be included in the index, bonds must be fixed rate, have at least one year to final maturity and be rated investment grade (Baa3/BB- or higher) by at least two of the following agencies: Moody’s, Standard & Poor’s and Fitch.

7. Source: Bureau of Labor Statistics, bls.gov/cpi. The Consumer Price Index is a commonly used measure of the inflation rate.

8. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.

See www.franklintempletondatasources.com for additional data provider information.

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

Your Fund’s Expenses

As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) 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 table below 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 table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. 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): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.

Hypothetical Example for Comparison with Other Funds

Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.

Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.

		Actual     (actual return after expenses)		Hypothetical     (5% annual return before expenses)
Share Class	Beginning Account Value1	Ending Account Value 4/30/18	Expenses Paid During Period2,3,4	Ending Account Value 4/30/18	Expenses Paid During Period 11/1/17–4/30/183,4	Net Annualized Expense       Ratio4
A	$1,000	$993.10	$3.11	$1,021.67	$3.16	0.63%
M	$1,000	$992.60	$1.37	$1,022.17	$2.66	0.53%
C	$1,000	$991.20	$5.83	$1,018.94	$5.91	1.18%
R6	$1,000	$993.80	$2.47	$1,022.32	$2.51	0.50%
Advisor	$1,000	$993.60	$2.62	$1,022.17	$2.66	0.53%

1. For Classes A, C, R6 and Advisor, 11/1/17 for Actual and Hypothetical. For Class M, 1/25/18 for Actual and 11/1/17 for Hypothetical.

2. For Classes A, C, R6 and Advisor, 11/1/17–4/30/18. For Class M, 1/25/18–4/30/18.

3. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period. The multiplier is 95/365 for Actual Class M expenses to reflect the number of days since inception.

4. Reflects expenses after fee waivers and expense reimbursements, for Class R6.

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

Financial Highlights

	Year Ended April 30,
	2018			2017			2016			2015			2014
Class A
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$12.02			$12.48			$12.45			$12.22			$12.79
Income from investment operationsa:
Net investment incomeb		0.44			0.47			0.48			0.47			0.49
Net realized and unrealized gains (losses)		(0.34	)		(0.47	)		0.02			0.23			(0.57	)
Total from investment operations		0.10			—			0.50			0.70			(0.08	)
Less distributions from net investment income		(0.44	)		(0.46	)		(0.47	)		(0.47	)		(0.49	)
Net asset value, end of year		$11.68			$12.02			$12.48			$12.45			$12.22
Total returnc		0.85%			0.01%			4.16%			5.82%			(0.49)%
Ratios to average net assets
Expenses		0.63%			0.62%			0.61%			0.62%			0.62%
Net investment income		3.66%			3.82%			3.87%			3.80%			4.11%
Supplemental data
Net assets, end of year (000’s)		$8,616,659			$9,342,715			$8,384,079			$8,505,853			$8,243,367
Portfolio turnover rate		16.46%			13.86%			6.07%			5.49%			8.51%

^aThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable.

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

FINANCIAL HIGHLIGHTS

	Year Ended April 30, 2018a
Class M
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$11.89
Income from investment operationsb:
Net investment incomec		0.12
Net realized and unrealized gains (losses)		(0.21	)
Total from investment operations		(0.09	)
Less distributions from net investment income		(0.11	)
Net asset value, end of year		$11.69
Total returnd		(0.74)%
Ratios to average net assetse
Expenses		0.53%
Net investment income		3.76%
Supplemental data
Net assets, end of year (000’s)		$5
Portfolio turnover rate		16.46%

^aFor the period January 25, 2018 (effective date) to April 30, 2018.

^bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^cBased on average daily shares outstanding.

^dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

12           Annual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN FEDERAL TAX-FREE INCOME FUND

FINANCIAL HIGHLIGHTS

	Year Ended April 30,
	2018			2017			2016			2015			2014
Class C
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$12.01			$12.47			$12.44			$12.21			$12.78
Income from investment operationsa:
Net investment incomeb		0.37			0.40			0.41			0.40			0.43
Net realized and unrealized gains (losses)		(0.32	)		(0.47	)		0.03			0.23			(0.58	)
Total from investment operations		0.05			(0.07	)		0.44			0.63			(0.15	)
Less distributions from net investment income		(0.38	)		(0.39	)		(0.41	)		(0.40	)		(0.42	)
Net asset value, end of year		$11.68			$12.01			$12.47			$12.44			$12.21
Total returnc		0.37%			(0.55)%			3.59%			5.24%			(1.05)%
Ratios to average net assets
Expenses		1.18%			1.17%			1.16%			1.17%			1.17%
Net investment income		3.11%			3.27%			3.32%			3.25%			3.56%
Supplemental data
Net assets, end of year (000’s)		$1,220,402			$1,411,391			$1,215,034			$1,166,771			$1,120,471
Portfolio turnover rate		16.46%			13.86%			6.07%			5.49%			8.51%

^aThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable.

franklintempleton.com The accompanying notes are an integral part of these financial statements. | Annual Report       13

FRANKLIN FEDERAL TAX-FREE INCOME FUND

FINANCIAL HIGHLIGHTS

	Year Ended April 30, 2018a
Class R6
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$12.03
Income from investment operationsb:
Net investment incomec		0.34
Net realized and unrealized gains (losses)		(0.38	)
Total from investment operations		(0.04	)
Less distributions from net investment income		(0.30	)
Net asset value, end of year		$11.69
Total returnd		(0.32)%
Ratios to average net assetse
Expenses		0.49%	f
Net investment income		3.80%
Supplemental data
Net assets, end of year (000’s)		$365,406
Portfolio turnover rate		16.46%

^aFor the period August 1, 2017 (effective date) to April 30, 2018.

^bThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^cBased on average daily shares outstanding.

^dTotal return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fBenefit of waiver and payments by affiliates rounds to less than 0.01%.

14       Annual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN FEDERAL TAX-FREE INCOME FUND

FINANCIAL HIGHLIGHTS

	Year Ended April 30,
	2018			2017			2016			2015			2014
Advisor Class
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$12.03			$12.49			$12.46			$12.23			$12.80
Income from investment operationsa:
Net investment incomeb		0.45			0.48			0.49			0.49			0.50
Net realized and unrealized gains (losses)		(0.33	)		(0.47	)		0.03			0.22			(0.57	)
Total from investment operations		0.12			0.01			0.52			0.71			(0.07	)
Less distributions from net investment income		(0.46	)		(0.47	)		(0.49	)		(0.48	)		(0.50	)
Net asset value, end of year		$11.69			$12.03			$12.49			$12.46			$12.23
Total return		0.95%			0.11%			4.26%			5.92%			(0.39)%
Ratios to average net assets
Expenses		0.53%			0.52%			0.51%			0.52%			0.52%
Net investment income		3.76%			3.92%			3.97%			3.90%			4.21%
Supplemental data
Net assets, end of year (000’s)		$1,207,490			$1,633,602			$1,443,272			$1,689,267			$1,314,233
Portfolio turnover rate		16.46%			13.86%			6.07%			5.49%			8.51%

^aThe 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Annual Report       15

FRANKLIN FEDERAL TAX-FREE INCOME FUND

Statement of Investments, April 30, 2018

	Principal Amount		Value
Municipal Bonds 98.7%
Alabama 1.6%
Alabama State Incentives Financing Authority Special Obligation Revenue, Series A, 5.00%, 9/01/42	$	14,300,000	$	15,350,478
Alabama State Port Authority Docks Facilities Revenue, Pre-Refunded, 6.00%, 10/01/40		6,000,000		6,558,240
Alabama State Public Health Care Authority Lease Revenue, Department of Public Health Facilities, Refunding, 5.00%, 9/01/44		17,085,000		18,759,843
Birmingham Airport Authority Airport Revenue, AGMC Insured, 5.50%, 7/01/40		20,000,000		21,377,800
Birmingham Water Works Board Water Revenue,
Series A, Assured Guaranty, Pre-Refunded, 5.125%, 1/01/34		5,600,000		5,725,216
Series A, Assured Guaranty, Pre-Refunded, 5.25%, 1/01/39		5,000,000		5,115,900
Series B, 5.00%, 1/01/38		3,500,000		3,808,770
Series B, 5.00%, 1/01/43		8,000,000		8,680,320
Subordinate, Refunding, Series B, 5.00%, 1/01/43		10,000,000		11,239,500
Chatom IDB Gulf Opportunity Zone Revenue,
PowerSouth Energy Cooperative, Refunding, Series A, Assured Guaranty, 5.00%, 8/01/30		5,250,000		5,532,502
PowerSouth Energy Cooperative, Refunding, Series A, Assured Guaranty, 5.00%, 8/01/37		5,000,000		5,262,350
Chilton County Health Care Authority Limited Obligation Sales Tax Revenue, Chilton County Hospital Project, Series A, 5.00%, 11/01/40		8,425,000		8,777,586
aEast Alabama Health Care Authority Health Care Facilities Revenue, Mandatory Put, Series B, Pre-Refunded, 5.50%, 9/01/18		18,500,000		18,725,145
Limestone County Water and Sewer Authority Water Revenue, BAM Insured, 5.00%, 12/01/45		10,500,000		11,641,980
Mobile Water and Sewer Commissioners Water and Sewer Revenue, Refunding, 5.00%, 1/01/36		11,300,000		12,312,367
Phenix City Water and Sewer Revenue, wts., Series A, AGMC Insured, 5.00%, 8/15/40		8,090,000		8,512,379
Tuscaloosa Public Educational Building Authority Student Housing Revenue, Ridgecrest Student Housing LLC, University of Alabama Ridgecrest Residential Project, Assured Guaranty, Pre-Refunded, 6.75%, 7/01/38		15,000,000		15,121,350
				182,501,726
Alaska 0.9%
Alaska Energy Authority Power Revenue, Bradley Lake Project, Refunding, NATL Insured, 6.25%, 7/01/21		5,000		5,018
Alaska Municipal Bond Bank GO,
Refunding, Series Three, 5.25%, 10/01/36		16,045,000		18,017,251
Refunding, Series Three, 5.00%, 10/01/39		12,950,000		14,133,371
Alaska State Industrial Development and Export Authority Revenue, Providence Health and Services, Series A, 5.00%, 10/01/40		10,000,000		10,610,700
Alaska State International Airports Revenue, Series C, 5.00%, 10/01/33		12,565,000		13,317,392
Anchorage Electric Revenue, senior lien, Refunding, Series A, 5.00%, 12/01/41		8,875,000		9,711,203
Matanuska-Susitna Borough Lease Revenue, Goose Creek Correctional Center Project, Assured Guaranty, Pre-Refunded, 6.00%, 9/01/32		30,000,000		31,619,700
				97,414,635
Arizona 2.7%
Arizona Board of Regents Arizona State University System Revenue, Series C, 5.00%, 7/01/42		9,000,000		10,155,420
Arizona Board of Regents University of Arizona Revenue, Stimulus Plan for Economic and Educational Development, 5.00%, 8/01/44		10,000,000		10,975,800
Arizona State COP,
Department of Administration, Series A, AGMC Insured, 5.25%, 10/01/26		8,500,000		8,874,595
Department of Administration, Series A, AGMC Insured, 5.00%, 10/01/27		14,440,000		15,020,055
Department of Administration, Series A, AGMC Insured, 5.25%, 10/01/28		10,000,000		10,440,700
Department of Administration, Series A, AGMC Insured, 5.00%, 10/01/29		5,000,000		5,200,150
Department of Administration, Series B, AGMC Insured, 5.00%, 10/01/27		8,000,000		8,423,600
Arizona State Lottery Revenue, Series A, AGMC Insured, 5.00%, 7/01/27		15,000,000		15,702,150
Glendale Municipal Property Corp. Excise Tax Revenue, Subordinate, Refunding, Series C, 5.00%, 7/01/38		15,500,000		16,762,010

16           Annual Report franklintempleton.com

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
Arizona (continued)
Lake Havasu Wastewater System Revenue, senior lien, Refunding, Series B, AGMC Insured, 5.00%, 7/01/40	$	15,000,000	$	16,483,950
Maricopa County IDA Senior Living Facilities Revenue, Christian Care Retirement Apartments Inc. Project, Refunding, Series A, 5.00%, 1/01/36		5,000,000		5,559,450
Maricopa County IDAR, Banner Health, Series A, 4.00%, 1/01/41		10,000,000		10,217,000
Maricopa County PCC, PCR, El Paso Electric Co. Palo Verde Project, Series A, 7.25%, 2/01/40		10,000,000		10,380,900
Mesa Utility Systems Revenue, 4.00%, 7/01/36		19,000,000		19,505,400
Phoenix Civic Improvement Corp. Airport Revenue,
junior lien, Refunding, Series D, 4.00%, 7/01/40		25,000,000		25,714,750
junior lien, Series A, Pre-Refunded, 5.00%, 7/01/40		24,000,000		25,485,120
Phoenix Civic Improvement Corp. Distribution Revenue,
Capital Appreciation, Civic Plaza Expansion Project, Series B, NATL Insured, 5.50%, 7/01/32		6,000,000		7,592,940
Capital Appreciation, Civic Plaza Expansion Project, Series B, NATL Insured, 5.50%, 7/01/34		5,000,000		6,376,450
Capital Appreciation, Civic Plaza Expansion Project, Series B, NATL Insured, 5.50%, 7/01/35		9,860,000		12,654,718
Phoenix Civic Improvement Corp. Water System Revenue,
junior lien, Series A, Pre-Refunded, 5.00%, 7/01/32		21,095,000		21,868,554
junior lien, Series A, Pre-Refunded, 5.00%, 7/01/34		10,000,000		10,366,700
Pima County IDA Lease Revenue, Clark County Detention Facility Project, 5.00%, 9/01/39		20,000,000		20,045,200
Pima County Sewer System Revenue, Obligations, AGMC Insured, Pre-Refunded, 5.00%, 7/01/25		7,000,000		7,448,490
Pinal County Electrical District No. 3 Electric System Revenue, Pre-Refunded, 5.25%, 7/01/36		10,000,000		10,972,000
				312,226,102
Arkansas 0.4%
Bentonville School District No. 6 GO, Construction and Refunding, Series B, 4.00%, 6/01/47		27,935,000		28,593,428
University of Arkansas Revenue,
Various Facilities, Fayetteville Campus, 5.00%, 11/01/47		6,500,000		7,428,785
Various Facilities, Fayetteville Campus, Series B, 5.00%, 11/01/37		3,100,000		3,398,034
Various Facilities, Fayetteville Campus, Series B, 5.00%, 11/01/42		9,360,000		10,241,150
				49,661,397
California 11.2%
Bay Area Toll Authority Toll Bridge Revenue,
San Francisco Bay Area, Series F-1, Pre-Refunded, 5.00%, 4/01/28		24,000,000		24,726,000
San Francisco Bay Area, Series F-1, Pre-Refunded, 5.00%, 4/01/34		9,530,000		9,818,282
California Health Facilities Financing Authority Revenue,
Children’s Hospital of Orange County, Series A, 6.50%, 11/01/24		5,000,000		5,349,450
Children’s Hospital of Orange County, Series A, 6.50%, 11/01/38		8,000,000		8,587,520
California Infrastructure and Economic Development Bank Revenue, Bay Area Toll Bridges Seismic Retrofit, first lien, Series A, AMBAC Insured, Pre-Refunded, 5.00%, 7/01/33		24,500,000		29,964,235
California State Economic Recovery GO, Series A, Pre-Refunded, 5.25%, 7/01/21		28,580,000		29,750,351
California State Educational Facilities Authority Revenue, Carnegie Institution of Washington, Refunding, Series A, 5.00%, 7/01/40		24,525,000		25,940,828
California State GO,
Refunding, NATL Insured, 5.00%, 10/01/32		20,000		20,052
Various Purpose, 6.00%, 5/01/18		175,000		175,000
Various Purpose, 5.90%, 4/01/23		1,200,000		1,221,432
Various Purpose, 5.00%, 10/01/29		15,000,000		15,666,900
Various Purpose, 6.00%, 4/01/38		100,000,000		103,751,000
Various Purpose, 6.00%, 11/01/39		25,000,000		26,521,250
Various Purpose, 5.25%, 11/01/40		50,000,000		53,799,500
Various Purpose, AGMC Insured, 6.00%, 4/01/38		30,000,000		31,136,400
Various Purpose, FGIC Insured, 6.00%, 5/01/20		850,000		868,624
Various Purpose, Refunding, 5.25%, 3/01/30		30,000,000		31,899,600

franklintempleton.com Annual Report       17

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
California (continued)
California State GO, (continued)
Various Purpose, Refunding, 6.00%, 3/01/33	$	12,000,000	$	12,921,240
Various Purpose, Refunding, 5.50%, 3/01/40		25,000,000		26,676,250
California State Public Works Board Lease Revenue,
Department of Education, Riverside Campus Project, Series B, Pre-Refunded, 6.125%, 4/01/28		2,740,000		2,850,723
Department of General Services, Office Buildings 8 and 9 Renovation, Series A, Pre-Refunded, 6.00%, 4/01/27		3,980,000		4,136,334
Department of General Services, Office Buildings 8 and 9 Renovation, Series A, Pre-Refunded, 6.125%, 4/01/29		5,000,000		5,202,050
Various Capital Projects, Series A, 5.00%, 4/01/30		18,000,000		19,794,600
Various Capital Projects, Series A, 5.00%, 4/01/33		12,475,000		13,650,145
Various Capital Projects, Series A, AGMC Insured, 5.00%, 4/01/28		13,030,000		14,375,347
Various Capital Projects, Series A, AGMC Insured, 5.00%, 4/01/29		21,000,000		23,126,670
Various Capital Projects, Series G, Subseries G-1, Assured Guaranty, Pre-Refunded, 5.25%, 10/01/24		5,000,000		5,242,550
Various Capital Projects, Series I, Pre-Refunded, 6.125%, 11/01/29		29,300,000		31,199,812
California Statewide CDA, PCR, Southern California Edison Co., Refunding, Series A, 4.50%, 9/01/29		14,830,000		15,555,484
California Statewide CDA Revenue, St. Joseph Health System, Series B, FGIC Insured, Pre-Refunded, 5.75%, 7/01/47		5,000,000		5,033,650
Colton Joint USD, GO, San Bernardino and Riverside Counties, Election of 2008, Series A, Assured Guaranty, Pre-Refunded, 5.375%, 8/01/34		25,000,000		26,115,750
Corona-Norco USD,
GO, Riverside County, Capital Appreciation, Election of 2006, Series C, AGMC Insured, 6.20%, 8/01/29		3,250,000		4,243,427
GO, Riverside County, Capital Appreciation, Election of 2006, Series C, AGMC Insured, 6.80%, 8/01/39		8,500,000		11,179,540
GO, Riverside County, Capital Appreciation, Election of 2006, Series C, AGMC Insured, zero cpn., 8/01/39		7,500,000		3,069,525
East Side UHSD Santa Clara County GO, Election of 2008, Series B, Assured Guaranty, Pre-Refunded, 5.25%, 8/01/35		23,800,000		24,825,542
Foothill/Eastern Transportation Corridor Agency Toll Road Revenue,
Capital Appreciation, Refunding, Series A, AGMC Insured, zero cpn. to 1/15/24, 5.40% thereafter, 1/15/30		15,475,000		13,753,561
Capital Appreciation, Refunding, Series A, zero cpn. to 1/14/24, 6.85% thereafter, 1/15/42		20,000,000		17,765,800
Refunding, Series A, 5.75%, 1/15/46		25,000,000		28,437,250
Refunding, Series A, 6.00%, 1/15/49		20,000,000		23,259,000
Hartnell Community College District GO, Monterey and San Benito Counties, Capital Appreciation, Election of 2002, Series D, Pre-Refunded, zero cpn., 8/01/39		45,000,000		10,228,950
Jefferson UHSD San Mateo County GO,
Capital Appreciation, Election of 2006, Series D, Pre-Refunded, zero cpn., 8/01/35		10,500,000		3,132,990
Capital Appreciation, Election of 2006, Series D, Pre-Refunded, zero cpn., 8/01/40		10,000,000		1,970,600
Capital Appreciation, Election of 2006, Series D, Pre-Refunded, zero cpn., 8/01/41		13,590,000		2,462,644
Los Angeles Community College District GO, Election of 2008, Series C, Pre-Refunded, 5.25%, 8/01/39		30,000,000		32,268,600
Los Angeles Department of Airports Revenue,
Los Angeles International Airport, Senior, Refunding, Series A, 5.00%, 5/15/40		25,485,000		27,065,835
Los Angeles International Airport, Senior, Series D, 5.00%, 5/15/40		50,000,000		53,101,500
Los Angeles Department of Water and Power Revenue, Power System, Series B, 5.00%, 7/01/31		20,000,000		22,677,000
Los Angeles USD, GO, Series KRY, 5.25%, 7/01/34		36,625,000		39,092,060
Montebello USD, GO, Election of 2004, Series A-1, Assured Guaranty, Pre-Refunded, 5.25%, 8/01/34		5,000,000		5,215,450
M-S-R Energy Authority Gas Revenue, Series B, 6.50%, 11/01/39		12,500,000		17,313,625

18           Annual Report franklintempleton.com

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
California (continued)
New Haven USD,
GO, Alameda County, Capital Appreciation, Assured Guaranty, zero cpn., 8/01/31	$	2,055,000	$	1,296,068
GO, Alameda County, Capital Appreciation, Assured Guaranty, zero cpn., 8/01/32		7,830,000		4,703,089
GO, Alameda County, Capital Appreciation, Assured Guaranty, zero cpn., 8/01/33		7,660,000		4,379,835
Pomona USD, GO, Los Angeles County, Election of 2008, Series A, Assured Guaranty, Pre-Refunded, 5.00%, 8/01/29		5,585,000		5,808,512
Rialto USD, GO, Capital Appreciation, Election of 2010, Series A, AGMC Insured, zero cpn., 8/01/36		20,000,000		9,199,600
Richmond Joint Powers Financing Authority Lease Revenue, Civic Center Project, Refunding, Assured Guaranty, 5.75%, 8/01/29		13,315,000		13,897,931
Sacramento County Airport System Revenue, Senior, Series B, AGMC Insured, 5.25%, 7/01/33		16,355,000		16,438,738
San Diego Public Facilities Financing Authority Water Revenue, Series B, Pre-Refunded, 5.375%, 8/01/34		15,000,000		15,669,450
San Francisco City and County COP, Multiple Capital Improvement Projects, Series A, 5.25%, 4/01/31		10,000,000		10,313,000
San Joaquin Hills Transportation Corridor Agency Toll Road Revenue,
Capital Appreciation, senior lien, ETM, zero cpn., 1/01/23		7,000,000		6,288,940
senior lien, Refunding, Series A, 5.00%, 1/15/34		50,000,000		54,851,000
San Jose USD Santa Clara County GO, Election of 2012, Series E, 4.00%, 8/01/42		10,600,000		11,015,202
San Mateo UHSD,
GO, Capital Appreciation, Election of 2010, Refunding, Series A, zero cpn. to 9/01/28, 6.70% thereafter, 9/01/41		20,000,000		16,792,200
GO, Capital Appreciation, Election of 2010, Series A, zero cpn. to 9/01/28, 6.45% thereafter, 9/01/33		6,065,000		4,886,995
San Mateo-Foster City School District GO, Capital Appreciation, Election of 2008, Series A, zero cpn. to 8/01/26, 6.625% thereafter, 8/01/42		50,000,000		42,632,500
Santa Ana USD,
GO, Orange County, Capital Appreciation, Election of 2008, Series B, Assured Guaranty, zero cpn., 8/01/35		10,000,000		5,180,400
GO, Orange County, Capital Appreciation, Election of 2008, Series B, Assured Guaranty, zero cpn., 8/01/36		18,865,000		9,323,272
GO, Orange County, Capital Appreciation, Election of 2008, Series B, Assured Guaranty, zero cpn., 8/01/37		10,000,000		4,728,000
Santa Clara County GO, Election of 2008, Series A, Pre-Refunded, 5.00%, 8/01/34		25,000,000		26,000,500
Upland USD, GO, San Bernardino County, Election of 2008, Series B, Pre-Refunded, zero cpn., 8/01/39		50,075,000		13,535,272
Washington Township Health Care District Revenue, Series A, 6.25%, 7/01/39		3,000,000		3,109,860
West Contra Costa USD,
GO, Election of 2005, Series C-1, Assured Guaranty, zero cpn., 8/01/29		10,000,000		6,889,700
GO, Election of 2005, Series C-1, Assured Guaranty, zero cpn., 8/01/30		20,845,000		13,710,799
GO, Election of 2005, Series C-1, Assured Guaranty, zero cpn., 8/01/31		20,000,000		12,532,000
GO, Election of 2005, Series C-1, Assured Guaranty, zero cpn., 8/01/32		10,730,000		6,373,298
Whittier UHSD, GO, Los Angeles County, Capital Appreciation, Election of 2008, Refunding, Series A, zero cpn., 8/01/34		20,000,000		7,576,000
				1,273,272,089
Colorado 1.7%
Colorado Health Facilities Authority Revenue,
Children’s Hospital Colorado Project, Series A, 5.00%, 12/01/41		5,000,000		5,509,000
Children’s Hospital Colorado Project, Series A, 5.00%, 12/01/44		10,200,000		11,215,716
The Evangelical Lutheran Good Samaritan Society Project, Refunding, Series A, 5.00%, 6/01/45		19,000,000		20,209,160
Hospital, Adventist Health System Sunbelt Obligated Group, Refunding, Series A, 5.00%, 11/15/41		30,505,000		33,888,920
Hospital, Health Facility Authority, Refunding, Series B, AGMC Insured, 5.25%, 3/01/36		20,000,000		20,572,200
Valley View Hospital Assn. Project, Pre-Refunded, 5.50%, 5/15/28		4,920,000		4,926,740

franklintempleton.com Annual Report       19

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
Colorado (continued)
Colorado Health Facilities Authority Revenue, (continued)
Valley View Hospital Assn. Project, Pre-Refunded, 5.75%, 5/15/36	$	7,000,000	$	7,010,220
Colorado State Higher Education Capital Construction Lease Purchase Financing Program COP, Pre-Refunded, 5.50%, 11/01/27		10,000,000		10,187,300
Denver City and County Airport System Revenue,
Series C, NATL Insured, ETM, 6.125%, 11/15/25		3,590,000		4,248,586
Series C, NATL Insured, Pre-Refunded, 6.125%, 11/15/25		4,410,000		4,563,556
Subordinate, Series B, 5.25%, 11/15/33		16,405,000		18,345,711
Park Creek Metropolitan District Revenue, Senior Limited Property Tax Supported, Improvement, Assured Guaranty, Pre-Refunded, 6.25%, 12/01/30		6,000,000		6,404,400
Public Authority for Colorado Energy Natural Gas Purchase Revenue, 6.50%, 11/15/38		20,000,000		27,405,200
Regional Transportation District Sales Tax Revenue, FasTracks Project, Series A, 5.00%, 11/01/32		10,000,000		11,021,400
University of Colorado Enterprise Revenue, Series A, Pre-Refunded, 5.375%, 6/01/32		3,500,000		3,631,705
				189,139,814
Connecticut 0.1%
Connecticut State Health and Educational Facilities Authority Revenue, Child Care Facilities Program, Series G, Assured Guaranty, Pre-Refunded, 6.00%, 7/01/38		5,000,000		5,034,750
District of Columbia 3.0%
District of Columbia Ballpark Revenue,
Series B-1, BHAC Insured, 5.00%, 2/01/24		12,120,000		12,166,177
Series B-1, BHAC Insured, 5.00%, 2/01/25		7,000,000		7,026,670
Series B-1, BHAC Insured, 5.00%, 2/01/26		9,950,000		9,987,910
District of Columbia Hospital Revenue,
Children’s Hospital Obligated Group Issue, Refunding, 5.00%, 7/15/40		6,830,000		7,525,840
Children’s Hospital Obligated Group Issue, SubSeries 1, AGMC Insured, Pre-Refunded, 5.45%, 7/15/35		40,655,000		41,369,308
District of Columbia Income Tax Secured Revenue,
Refunding, Series A, 5.00%, 12/01/31		10,000,000		10,583,000
Series A, 5.25%, 12/01/34		11,000,000		11,542,740
District of Columbia Revenue,
Assn. of American Medical Colleges Issue, Series B, 5.25%, 10/01/41		15,000,000		15,817,500
The Catholic University America, Refunding, Series B, 5.00%, 10/01/42		20,660,000		22,934,046
The Catholic University America, Refunding, Series B, 5.00%, 10/01/47		24,985,000		27,630,162
Deed Tax, Housing Production Trust Fund, New Communities Project, Series A, NATL Insured, 5.00%, 6/01/32		5,000,000		5,011,200
Georgetown University Issue, Growth and Income Securities, AMBAC Insured, zero cpn., 4/01/32		15,370,000		16,353,834
National Academy of Sciences Project, Series A, Pre-Refunded, 5.00%, 4/01/35		10,905,000		11,524,513
National Academy of Sciences Project, Series A, Pre-Refunded, 5.00%, 4/01/40		16,960,000		17,923,498
National Public Radio Inc. Issue, Pre-Refunded, 5.00%, 4/01/35		7,750,000		8,175,320
District of Columbia Tobacco Settlement FICO Revenue, Asset-Backed, Refunding, 6.50%, 5/15/33		30,490,000		34,350,339
District of Columbia University Revenue, Georgetown University Issue, Series D, Pre-Refunded, 5.50%, 4/01/36		5,000,000		5,075,000
District of Columbia Water and Sewer Authority Public Utility Revenue, senior lien, Series A, Pre- Refunded, 6.00%, 10/01/35		8,000,000		8,141,440
Metropolitan Washington Airports Authority Airport System Revenue,
Refunding, Series A, 5.375%, 10/01/29		5,000,000		5,083,950
Refunding, Series A, 5.00%, 10/01/35		5,000,000		5,315,150
Refunding, Series C, 5.25%, 10/01/27		10,745,000		10,897,794
Series A, 5.00%, 10/01/39		5,000,000		5,305,450
Series C, 5.00%, 10/01/26		10,235,000		10,370,102

20           Annual Report franklintempleton.com

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
District of Columbia (continued)
Metropolitan Washington Airports Authority Dulles Toll Road Revenue, Dulles Metrorail and Capital Improvement Projects, Convertible Capital Appreciation, second senior lien, Series C, Assured Guaranty, 6.50%, 10/01/41	$	25,000,000	$	31,463,000
				341,573,943
Florida 5.1%
Brevard County Health Facilities Authority Health Facilities Revenue, Health First Inc. Project, Series B, Pre-Refunded, 7.00%, 4/01/39		6,500,000		6,797,570
Broward County HFAR,
MFH, Heron Pointe Apartments Project, Series A, SPA FHLMC, 5.65%, 11/01/22		400,000		402,960
MFH, Heron Pointe Apartments Project, Series A, SPA FHLMC, 5.70%, 11/01/29		225,000		226,184
Broward County Water and Sewer Utility Revenue, Series A, Pre-Refunded, 5.25%, 10/01/34		8,800,000		8,928,480
Cape Coral Water and Sewer Revenue,
Refunding, 5.00%, 10/01/39		10,000,000		11,313,900
Series A, AGMC Insured, Pre-Refunded, 5.00%, 10/01/42		21,510,000		23,591,523
Celebration CDD Special Assessment, Series B, NATL Insured, 5.50%, 5/01/19		20,000		20,000
Central Expressway Authority Revenue, Refunding, BAM Insured, 5.00%, 7/01/38		6,750,000		7,702,358
Citizens Property Insurance Corp. Revenue, Coastal Account, senior secured, Series A-1, 5.00%, 6/01/20		20,000,000		21,195,400
Clearwater City Water and Sewer Revenue, Series A, Pre-Refunded, 5.25%, 12/01/39		7,000,000		7,368,900
Dade County HFA, MFMR, Siesta Pointe Apartments, Series A, AGMC Insured, SPA FHLMC, 5.75%, 9/01/29		1,890,000		1,910,053
Deltona Utility System Revenue, Refunding, AGMC Insured, 5.125%, 10/01/39		5,000,000		5,490,450
Florida State Board of Education GO, Public Education Capital Outlay, Refunding, Series D, 6.00%, 6/01/23		17,500,000		20,624,450
Florida State Municipal Loan Council Revenue, Series D, AGMC Insured, 5.50%, 10/01/41		4,750,000		5,213,410
Gainesville Utilities System Revenue, Series A, 5.00%, 10/01/36		7,150,000		8,270,619
Greater Orlando Aviation Authority Airport Facilities Revenue, Priority Subordinated, Series A, 5.00%, 10/01/47		20,000,000		22,252,200
Hillsborough County Aviation Authority Revenue,
Tampa International Airport, Series A, Assured Guaranty, 5.50%, 10/01/38		5,000,000		5,071,450
Tampa International Airport, Subordinated, Refunding, Series B, 5.00%, 10/01/44		10,000,000		10,884,700
Hillsborough County IDA, PCR, Tampa Electric Co. Project, Series A, 5.65%, 5/15/18		6,500,000		6,508,450
Hillsborough County School Board COP, Master Lease Program, Refunding, Series A, 5.00%, 7/01/28		520,000		572,385
Lee Memorial Health System Hospital Revenue, Series A, AMBAC Insured, 5.00%, 4/01/37		11,000,000		11,027,390
Martin County Health Facilities Authority Hospital Revenue,
Martin Memorial Medical Center, 5.50%, 11/15/42		3,800,000		4,111,106
Martin Memorial Medical Center, AGMC Insured, 5.50%, 11/15/42		3,800,000		4,124,406
Miami Beach RDA Tax Increment Revenue, City Center/Historic Convention Village, Refunding, Series A, AGMC Insured, 5.00%, 2/01/44		12,000,000		13,311,240
Miami Beach Resort Tax Revenue, 5.00%, 9/01/40		11,000,000		12,178,100
Miami-Dade County Aviation Revenue,
Miami International Airport, Hub of the Americas, Refunding, Series A, 5.50%, 10/01/36		20,000,000		20,953,400
Miami International Airport, Hub of the Americas, Series A, Assured Guaranty, Pre-Refunded, 5.25%, 10/01/33		8,625,000		8,743,680
Miami International Airport, Hub of the Americas, Series A, Assured Guaranty, Pre-Refunded, 5.25%, 10/01/38		5,640,000		5,717,606
Miami International Airport, Refunding, Series A, Assured Guaranty, 5.25%, 10/01/38		1,240,000		1,255,562
Miami International Airport, Refunding, Series B, 5.00%, 10/01/40		15,000,000		16,714,500
Miami International Airport, Series A, AGMC Insured, Pre-Refunded, 5.25%, 10/01/38		6,120,000		6,204,211
Miami International Airport, Series A, Assured Guaranty, Pre-Refunded, 5.25%, 10/01/33		2,375,000		2,407,680

franklintempleton.com Annual Report       21

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
Florida (continued)
Miami-Dade County Expressway Authority Toll System Revenue,
Refunding, Series A, 5.00%, 7/01/29	$	10,000,000	$	10,887,400
Refunding, Series A, 5.00%, 7/01/32		6,375,000		6,943,331
Series A, 5.00%, 7/01/40		30,265,000		31,821,832
Miami-Dade County GO, Building Better Communities Program, Series B-1, Pre-Refunded, 5.75%, 7/01/33		20,000,000		20,132,600
Miami-Dade County School Board COP,
Master Lease Purchase Agreement, Refunding, Series A, 5.00%, 5/01/31		10,000,000		10,965,500
Master Lease Purchase Agreement, Series A, Assured Guaranty, Pre-Refunded, 5.25%, 2/01/27		10,000,000		10,259,900
Miami-Dade County Special Obligation Revenue,
sub. bond, Refunding, Series B, 5.00%, 10/01/31		5,000,000		5,449,300
sub. bond, Refunding, Series B, 5.00%, 10/01/32		4,500,000		4,898,520
sub. bond, Refunding, Series B, 5.00%, 10/01/35		3,250,000		3,529,370
Miami-Dade County Transit System Sales Surtax Revenue, Refunding, 5.00%, 7/01/35		7,000,000		7,819,630
Miami-Dade County Water and Sewer System Revenue, Refunding, Series A, 5.00%, 10/01/42		20,000,000		21,745,200
Orange County Health Facilities Authority Revenue,
Hospital, Orlando Health Obligated Group, Refunding, Series A, 5.00%, 10/01/39		6,000,000		6,614,100
Hospital, Orlando Health Obligated Group, Series B, AGMC Insured, Pre-Refunded, 5.00%, 12/01/32		27,000,000		27,458,730
Presbyterian Retirement Communities Project, 5.00%, 8/01/47		14,000,000		15,199,520
Orange County School Board COP, Series A, Assured Guaranty, Pre-Refunded, 5.50%, 8/01/34		15,000,000		15,679,050
Orlando-Orange County Expressway Authority Revenue,
Series A, Pre-Refunded, 5.00%, 7/01/40		5,000,000		5,314,900
Series C, Pre-Refunded, 5.00%, 7/01/40		15,000,000		15,944,700
Palm Beach County Solid Waste Authority Revenue, Improvement, Series B, Pre-Refunded, 5.50%, 10/01/28		10,000,000		10,156,300
Pensacola Airport Revenue, Refunding, 6.25%, 10/01/38		16,500,000		16,787,430
Pinellas County Sewer Revenue, AGMC Insured, 5.00%, 10/01/32		610,000		611,610
Port St. Lucie Utility System Revenue,
Assured Guaranty, Pre-Refunded, 5.25%, 9/01/35		2,755,000		2,787,206
Refunding, Assured Guaranty, 5.25%, 9/01/35		245,000		247,724
South Lake County Hospital District Revenue, South Lake Hospital Inc., Series A, 6.25%, 4/01/39		5,735,000		5,921,101
South Miami Health Facilities Authority Hospital Revenue, Baptist Health South Florida, Refunding, 5.00%, 8/15/42		15,000,000		16,757,400
Sunrise Utilities System Revenue,
AMBAC Insured, Pre-Refunded, 5.20%, 10/01/22		860,000		907,773
Refunding, AMBAC Insured, 5.20%, 10/01/22		1,140,000		1,156,359
Tampa-Hillsborough County Expressway Authority Revenue, 5.00%, 7/01/47		10,000,000		11,233,500
Tohopekaliga Water Authority Utility System Revenue, Refunding, 5.00%, 10/01/46		5,000,000		5,659,150
Town of Davie Water and Sewer Revenue, AGMC Insured, 5.00%, 10/01/32		8,575,000		9,292,642
				583,276,101
Georgia 4.0%
Albany Dougherty Payroll Development Authority Revenue, Darton College Project, AGMC Insured, 5.75%, 6/15/41		5,550,000		5,948,490
Athens-Clarke County Unified Government Water and Sewerage Revenue, Pre-Refunded, 5.50%, 1/01/38		14,500,000		14,859,890
Atlanta Airport General Revenue,
Refunding, Series C, 6.00%, 1/01/30		15,000,000		16,556,700
Series A, AGMC Insured, 5.00%, 1/01/40		9,215,000		9,637,139

22           Annual Report franklintempleton.com

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
Georgia (continued)
The Atlanta Development Authority Revenue,
New Downtown Atlanta Stadium Project, senior lien, Series A-1, 5.25%, 7/01/44	$	3,000,000	$	3,405,210
Tuff Yamacraw LLC Project, Refunding, Series A, AMBAC Insured, 5.00%, 1/01/24		6,385,000		6,788,532
Tuff Yamacraw LLC Project, Refunding, Series A, AMBAC Insured, 5.00%, 1/01/25		6,955,000		7,425,019
Tuff Yamacraw LLC Project, Refunding, Series A, AMBAC Insured, 5.00%, 1/01/26		5,000,000		5,354,250
Tuff Yamacraw LLC Project, Refunding, Series A, AMBAC Insured, 5.00%, 1/01/27		5,000,000		5,381,750
Atlanta Water and Wastewater Revenue,
Refunding, 5.00%, 11/01/40		30,000,000		33,701,100
Refunding, Series B, AGMC Insured, 5.25%, 11/01/34		10,545,000		11,035,237
Refunding, Series B, AGMC Insured, 5.375%, 11/01/39		7,940,000		8,318,897
Series A, Pre-Refunded, 6.25%, 11/01/34		20,000,000		21,281,400
Series B, AGMC Insured, Pre-Refunded, 5.25%, 11/01/34		19,455,000		20,430,279
Series B, AGMC Insured, Pre-Refunded, 5.375%, 11/01/39		15,060,000		15,842,668
Bleckley-Dodge County Joint Development Authority Student Housing Facilities Revenue,
MGC Real Estate Foundation II LLC Project, 5.00%, 7/01/33		5,000,000		5,022,000
MGC Real Estate Foundation II LLC Project, 5.25%, 7/01/38		10,000,000		10,049,200
Burke County Development Authority PCR, Oglethorpe Power Corp. Vogtle Project, Refunding, Series D, 4.125%, 11/01/45		18,000,000		17,810,100
Cherokee County Water and Sewerage Authority Revenue, NATL Insured, 6.90%, 8/01/18		15,000		15,062
Clarke County Hospital Authority Revenue, Piedmont Health Care Inc. Project, Refunding, Series A, 5.00%, 7/01/46		10,835,000		11,915,358
Cobb County Kennestone Hospital Authority Revenue, Revenue Anticipation Certificates, Wellstar Health System, Refunding, Series A, 5.00%, 4/01/47		5,000,000		5,501,550
Dahlonega Water and Wastewater Revenue, Series A, Assured Guaranty, Pre-Refunded, 5.50%, 9/01/37		6,450,000		6,530,690
DeKalb Newton and Gwinnett County Joint Development Authority Revenue, GGC Foundation LLC Project, Pre-Refunded, 6.00%, 7/01/34		10,000,000		10,469,400
Fayette County Hospital Authority Revenue, Anticipation Certificates, Piedmont Fayette Hospital Project, Refunding, Series A, 5.00%, 7/01/39		11,420,000		12,481,032
Fulton County Development Authority Hospital Revenue, Anticipation Certificates, Wellstar Health System Inc. Project, Series A, 5.00%, 4/01/47		5,000,000		5,501,550
Fulton County Development Authority Revenue, Piedmont Healthcare Inc. Project, Refunding, Series A, 5.00%, 7/01/46		11,005,000		12,077,767
Gainesville and Hall County Hospital Authority Revenue, Anticipation Certificates, Northeast Georgia Health System Inc. Project, Refunding, Series A, 5.00%, 2/15/45		13,040,000		14,321,571
Georgia State GO, Series A-2, 4.00%, 2/01/36		30,000,000		31,513,200
Georgia State Higher Education Facilities Authority Revenue,
USG Real Estate Foundation I LLC Project, Assured Guaranty, Pre-Refunded, 5.625%, 6/15/38		5,000,000		5,023,400
USG Real Estate Foundation I LLC Project, Pre-Refunded, 6.25%, 6/15/40		13,970,000		14,044,880
USG Real Estate Foundation II LLC Project, Series A, 5.50%, 6/15/34		10,000,000		10,375,100
USG Real Estate Foundation III LLC Project, Series A, 5.00%, 6/15/40		3,700,000		3,888,922
USG Real Estate Foundation III LLC Project, Series A, Assured Guaranty, 5.00%, 6/15/38		6,845,000		7,195,943
USG Real Estate Foundation III LLC Project, Series A, Assured Guaranty, Pre-Refunded, 5.00%, 6/15/38		2,405,000		2,556,010
USG Real Estate Foundation III LLC Project, Series A, Pre-Refunded, 5.00%, 6/15/40		1,300,000		1,381,627
Glynn-Brunswick Memorial Hospital Authority Revenue,
Anticipation Certificates, Southeast Georgia Health System Project, 5.00%, 8/01/43		3,000,000		3,263,670
Anticipation Certificates, Southeast Georgia Health System Project, 5.00%, 8/01/47		2,250,000		2,442,285
Main Street Natural Gas Inc. Revenue, Gas Project, Series A, 5.50%, 9/15/28		5,000,000		5,983,400

franklintempleton.com Annual Report       23

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
Georgia (continued)
Medical Center Hospital Authority Revenue,
Anticipation Certificates, Columbus Regional Healthcare System Inc. Project, Assured Guaranty, Pre-Refunded, 6.50%, 8/01/38	$	10,000,000	$	10,114,400
Anticipation Certificates, Columbus Regional Healthcare System Inc. Project, Refunding, AGMC Insured, 5.00%, 8/01/41		7,500,000		7,853,250
Private Colleges and Universities Authority Revenue,
Emory University, Refunding, Series A, 5.00%, 9/01/41		10,000,000		10,820,500
Emory University, Refunding, Series A, 5.00%, 10/01/43		10,000,000		11,013,300
Emory University, Refunding, Series C, 5.25%, 9/01/39		21,000,000		21,910,980
Savannah EDA Revenue, SSU Community Development I LLC Project, Assured Guaranty, 5.75%, 6/15/41		10,000,000		10,718,000
				457,760,708
Hawaii 0.4%
Hawaii State Department of Budget and Finance Special Purpose Revenue, Hawaiian Electric Co. Inc. and Subsidiary Projects, 6.50%, 7/01/39		7,500,000		7,870,050
Honolulu City and County Wastewater System Revenue,
First Bond Resolution, Senior Series A, 5.00%, 7/01/47		25,000,000		28,557,750
First Bond Resolution, Senior Series A, Pre-Refunded, 5.00%, 7/01/38		10,000,000		10,911,800
				47,339,600
Idaho 0.2%
Idaho State Health Facilities Authority Hospital Revenue, Trinity Health Credit Group, Refunding, Series A, 5.00%, 12/01/47		7,335,000		8,255,616
Idaho State Health Facilities Authority Revenue, St. Luke’s Health System Project, Series A, 6.75%, 11/01/37		12,500,000		12,790,375
				21,045,991
Illinois 3.9%
Bolingbrook GO, Will and DuPage Counties, Capital Appreciation, Refunding, Series A, zero cpn., 1/01/36		19,000,000		7,698,990
Chicago GO, Lakefront Millennium Project, Parking Facilities, NATL Insured, ETM, 5.75%, 1/01/23		8,955,000		10,149,508
Chicago Midway Airport Revenue,
Refunding, Series B, 5.00%, 1/01/46		18,420,000		20,210,424
Refunding, Series C, Assured Guaranty, 5.50%, 1/01/24		18,460,000		20,121,769
Chicago O’Hare International Airport Revenue,
General Airport, senior lien, Series D, 5.25%, 1/01/42		10,000,000		11,329,600
General Airport, senior lien, Series D, 5.00%, 1/01/47		18,000,000		19,860,480
General Airport, third lien, Series A, 5.75%, 1/01/39		840,000		911,030
General Airport, third lien, Series A, Pre-Refunded, 5.75%, 1/01/39		4,160,000		4,551,248
General Airport, third lien, Series C, Assured Guaranty, 5.25%, 1/01/35		39,485,000		41,295,387
Chicago Transit Authority Sales Tax Receipts Revenue, 5.25%, 12/01/40		10,000,000		10,670,600
Illinois Health Facilities Authority Revenue, Loyola University Health System, Series A, NATL Insured, ETM, 5.625%, 7/01/18		2,105,000		2,118,177
Illinois State Finance Authority Revenue,
Art Institute of Chicago, Refunding, Series A, 5.25%, 3/01/40		16,000,000		16,885,120
Carle Foundation, Refunding, Series A, 5.00%, 2/15/45		20,000,000		21,561,400
Mercy Health System Corp., Refunding, 5.00%, 12/01/46		30,000,000		32,440,500
Northwest Community Hospital, Refunding, Series A, 5.00%, 7/01/36		7,490,000		8,148,296
Resurrection Health Care, Series B, AGMC Insured, Pre-Refunded, 5.25%, 5/15/29		1,710,000		1,712,189
Riverside Health System, Pre-Refunded, 6.25%, 11/15/35		2,930,000		3,122,501
Riverside Health System, Refunding, 6.25%, 11/15/35		2,070,000		2,189,791
Rush University Medical Center Obligated Group, Series B, NATL Insured, Pre-Refunded, 5.75%, 11/01/28		2,500,000		2,549,300

24           Annual Report franklintempleton.com

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
Illinois (continued)
Illinois State Finance Authority Revenue, (continued)
Rush University Medical Center Obligated Group, Series B, NATL Insured, Pre-Refunded, 5.25%, 11/01/35	$	3,000,000	$	3,051,750
Rush University Medical Center Obligated Group, Series B, Pre-Refunded, 7.25%, 11/01/38		10,000,000		10,266,000
Southern Illinois HealthCare Enterprise Inc., AGMC Insured, Pre-Refunded, 5.375%, 3/01/35		8,500,000		9,022,325
Illinois State Finance Authority Student Housing Revenue,
CHF-DeKalb II LLC, Northern Illinois University Project, 6.875%, 10/01/43		15,000,000		16,317,750
CHF-Normal LLC, Illinois State University Project, Pre-Refunded, 7.00%, 4/01/43		7,500,000		8,503,650
Illinois State GO,
AGMC Insured, 5.00%, 3/01/27		11,500,000		12,248,765
AGMC Insured, 5.00%, 9/01/29		9,965,000		9,985,129
Assured Guaranty, 5.25%, 4/01/34		10,000,000		10,026,600
Refunding, AGMC Insured, 5.00%, 1/01/23		10,000,000		10,320,200
Illinois State Toll Highway Authority Revenue, Toll Highway, Senior, Refunding, Series A-1, 5.00%, 1/01/31		10,245,000		10,686,867
Metropolitan Pier and Exposition Authority Dedicated State Tax Revenue,
McCormick Place Expansion Project, Capital Appreciation, Refunding, Series B, NATL Insured, 5.50%, 6/15/20		1,080,000		1,093,273
McCormick Place Expansion Project, Capital Appreciation, Refunding, Series B, NATL Insured, 5.55%, 6/15/21		2,540,000		2,571,090
McCormick Place Expansion Project, Capital Appreciation, Series B, NATL Insured, 5.65%, 6/15/22		24,500,000		27,097,490
McCormick Place Expansion Project, Capital Appreciation, Series B, NATL Insured, ETM, 5.65%, 6/15/22		2,855,000		3,239,597
McCormick Place Expansion Project, Capital Appreciation, Series B, NATL Insured, ETM, 5.65%, 6/15/22		2,645,000		2,995,727
Metropolitan Pier and Exposition Authority Hospitality Facilities Revenue, McCormick Place Convention Center, ETM, 7.00%, 7/01/26		12,000,000		14,315,880
Northern Illinois Municipal Power Agency Power Project Revenue, Refunding, Series A, 5.00%, 12/01/41		5,500,000		5,979,215
Railsplitter Tobacco Settlement Authority Revenue, Pre-Refunded, 6.00%, 6/01/28		14,530,000		16,206,907
Regional Transportation Authority GO, Cook DuPage Kane Lake McHenry and Will Counties, Series A, AMBAC Insured, 7.20%, 11/01/20		470,000		505,635
Southwestern Illinois Development Authority Revenue,
Capital Appreciation, Local Government Program, AGMC Insured, zero cpn., 12/01/24		3,850,000		3,001,345
Capital Appreciation, Local Government Program, AGMC Insured, zero cpn., 12/01/26		7,700,000		5,523,210
St. Clair County School District No. 189 East St. Louis GO, Alternate Revenue Source, Refunding, AMBAC Insured, 5.125%, 1/01/28		7,135,000		7,135,785
University of Illinois University Revenue,
Auxiliary Facilities System, Refunding, Series A, 5.125%, 4/01/36		2,950,000		3,101,660
Auxiliary Facilities System, Refunding, Series A, 5.25%, 4/01/41		5,000,000		5,264,350
Auxiliary Facilities System, Series A, Pre-Refunded, 5.75%, 4/01/38		7,000,000		7,241,570
Upper River Valley Development Authority Environmental Facilities Revenue, General Electric Co. Project, 5.45%, 2/01/23		3,600,000		3,607,380
				446,835,460
Indiana 2.2%
Indiana Bond Bank Revenue, Special Program, Hendricks Regional Health Project, Series A, 5.50%, 2/01/29		9,000,000		9,243,090
Indiana Finance Authority Revenue,
Baptist Homes of Indiana Senior Living, Series A, 5.25%, 11/15/46		5,000,000		5,414,300
Deaconess Health System Obligated Group, Refunding, Series A, 5.00%, 3/01/39		5,000,000		5,483,750
Educational Facilities, Marian University Project, 6.375%, 9/15/41		12,500,000		13,471,375

franklintempleton.com Annual Report       25

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
Indiana (continued)
Indiana Finance Authority Revenue, (continued)
Stadium Project, Refunding, Series A, 5.25%, 2/01/37	$	10,000,000	$	11,504,500
Indiana Finance Authority Wastewater Utility Revenue,
CWA Authority Project, first lien, Refunding, Series A, 5.00%, 10/01/39		30,000,000		33,643,800
CWA Authority Project, first lien, Series A, 5.00%, 10/01/37		5,000,000		5,425,500
CWA Authority Project, first lien, Series A, 5.25%, 10/01/38		12,000,000		13,093,680
CWA Authority Project, first lien, Series A, 4.00%, 10/01/42		22,615,000		23,036,091
Indiana Health and Educational Facility Financing Authority Revenue, Sisters of St. Francis Health Services Inc. Obligated Group, Series E, AGMC Insured, Pre-Refunded, 5.25%, 5/15/41		3,750,000		3,750,000
Indiana State Finance Authority Environmental Revenue, Duke Energy Indiana Inc. Project, Refunding, Series B, 6.00%, 8/01/39		10,000,000		10,507,700
Indiana State Finance Authority Hospital Revenue, Deaconess Hospital Obligated Group, Series A, Pre-Refunded, 6.75%, 3/01/39		9,750,000		10,133,370
Indiana State Municipal Power Agency Revenue,
Power Supply System, Refunding, Series A, 4.00%, 1/01/42		5,860,000		6,007,614
Power Supply System, Refunding, Series A, 5.00%, 1/01/42		21,290,000		23,909,309
Power Supply System, Series B, Pre-Refunded, 6.00%, 1/01/39		4,000,000		4,109,720
Indianapolis Local Public Improvement Bond Bank Revenue,
Pilot Infrastructure Project, Refunding, Series C, 5.00%, 1/01/40		23,225,000		26,222,186
Pilot Infrastructure Project, Series F, AGMC Insured, Pre-Refunded, 5.00%, 1/01/35		10,000,000		10,500,100
Waterworks Project, Refunding, Series A, Assured Guaranty, 5.50%, 1/01/38		7,030,000		7,188,878
Waterworks Project, Series A, Assured Guaranty, Pre-Refunded, 5.50%, 1/01/38		1,620,000		1,660,208
Indianapolis Water System Revenue, first lien, Refunding, Series B, 5.00%, 10/01/37		15,000,000		16,894,950
Northern Indiana Commuter Transportation District Revenue, Limited Obligation, 5.00%, 7/01/41		6,000,000		6,647,520
University of Southern Indiana Revenue, Student Fee, Series J, Assured Guaranty, Pre-Refunded, 5.75%, 10/01/28		2,000,000		2,107,460
				249,955,101
Iowa 0.2%
Iowa State Finance Authority Revenue, Green Bond, Refunding, 5.00%, 8/01/42		16,000,000		18,413,280
Kansas 0.8%
Butler County USD No. 490 GO, School Building, Series B, BAM Insured, 4.00%, 9/01/43		10,000,000		10,270,800
Kansas State Development Finance Authority Hospital Revenue,
Adventist Health System/Sunbelt Obligated Group, Refunding, Series C, 5.75%, 11/15/38		6,110,000		6,461,569
Adventist Health System/Sunbelt Obligated Group, Series C, Pre-Refunded, 5.75%, 11/15/38		140,000		147,706
University of Kansas Hospital Authority Health Facilities Revenue, Kansas University Health System, Refunding, Series A, 5.00%, 3/01/47		23,115,000		25,598,707
Wyandotte County Kansas City Unified Government Utility System Revenue,
Improvement, Refunding, Series A, 5.00%, 9/01/44		3,000,000		3,292,680
Improvement, Series A, 5.00%, 9/01/45		10,000,000		11,043,600
Improvement, Series C, 5.00%, 9/01/41		5,000,000		5,552,950
Improvement, Series C, 5.00%, 9/01/46		16,565,000		18,333,645
Series A, BHAC Insured, Pre-Refunded, 5.25%, 9/01/34		5,000,000		5,143,550
				85,845,207
Kentucky 0.6%
Carroll County Environmental Facilities Revenue, Kentucky Utilities Co. Project, Series A, AMBAC Insured, 5.75%, 2/01/26		12,500,000		12,531,625
Kentucky Economic Development Finance Authority Health System Revenue, Norton Healthcare Inc., Capital Appreciation, Refunding, Series B, NATL Insured, zero cpn., 10/01/18		8,585,000		8,501,983
Kentucky Economic Development Finance Authority Revenue, Louisville Arena Project, Louisville Arena Authority Inc., Series A, Subseries A-1, Assured Guaranty, Pre-Refunded, 6.00%, 12/01/38		4,000,000		4,013,840

26           Annual Report franklintempleton.com

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
Kentucky (continued)
Kentucky State Municipal Power Agency Power System Revenue,
Prairie State Project, Refunding, Series A, NATL Insured, 5.00%, 9/01/35	$	7,750,000	$	8,489,505
Prairie State Project, Refunding, Series A, NATL Insured, 5.00%, 9/01/42		10,000,000		10,901,200
Kentucky State Property and Buildings Commission Revenue, Project No. 90, Pre-Refunded, 5.50%, 11/01/28		15,000,000		15,273,893
Louisville/Jefferson County Metro Government Revenue, College, Bellarmine University Project, Improvement, Series A, Pre-Refunded, 6.00%, 5/01/33		3,000,000		3,000,000
Paducah Electric Plant Board Revenue, Series A, Assured Guaranty, Pre-Refunded, 5.25%, 10/01/35		7,000,000		7,216,510
				69,928,556
Louisiana 2.3%
East Baton Rouge Sewerage Commission Revenue, Series A, Pre-Refunded, 5.25%, 2/01/39		6,000,000		6,155,940
Lafayette Communications System Revenue, Refunding, AGMC Insured, 5.00%, 11/01/30		5,000,000		5,588,650
Lafayette Public Trust Financing Authority Revenue,
Ragin’ Cajun Facilities Inc. Housing and Parking Project, AGMC Insured, Pre-Refunded, 5.00%, 10/01/25		5,500,000		5,889,565
Ragin’ Cajun Facilities Inc. Housing and Parking Project, AGMC Insured, Pre-Refunded, 5.50%, 10/01/35		6,000,000		6,495,300
Ragin’ Cajun Facilities Inc. Housing and Parking Project, AGMC Insured, Pre-Refunded, 5.50%, 10/01/41		15,000,000		16,238,250
Louisiana Local Government Environmental Facilities and CDA Revenue,
East Baton Rouge Sewerage Commission Projects, sub. lien, Series A, 5.00%, 2/01/44		5,820,000		6,356,138
LCTCS Act 360 Project, 5.00%, 10/01/39		10,000,000		11,054,300
LCTCS Facilities Corp. Project, Series B, Assured Guaranty, Pre-Refunded, 5.00%, 10/01/26		2,750,000		2,869,103
Southeastern Louisiana University, Student Union/University Facilities Inc. Project, Series A, AGMC Insured, 5.00%, 10/01/40		8,545,000		8,992,929
Louisiana Public Facilities Authority Hospital Revenue,
Franciscan Missionaries of Our Lady Health System Project, Series A, 5.00%, 7/01/47		35,000,000		37,969,050
Franciscan Missionaries of Our Lady Health System Project, Series A, Pre-Refunded, 6.75%, 7/01/39		10,000,000		10,549,400
Louisiana Public Facilities Authority Revenue,
Millennium Housing LLC Student Housing, Student Housing and Auxiliary Facilities Project, Assured Guaranty, 5.00%, 11/01/30		4,765,000		4,774,816
Ochsner Clinic Foundation Project, Pre-Refunded, 6.75%, 5/15/41		15,500,000		17,530,810
Ochsner Clinic Foundation Project, Refunding, 5.00%, 5/15/42		20,000,000		21,868,800
Ochsner Clinic Foundation Project, Refunding, 5.00%, 5/15/47		7,500,000		8,099,025
Ochsner Clinic Foundation Project, Series B, ETM, 5.75%, 5/15/23		10,000,000		11,642,000
Louisiana State Citizens Property Insurance Corp. Assessment Revenue, Series C-2, Assured Guaranty, Pre-Refunded, 6.75%, 6/01/26		21,000,000		21,084,420
Louisiana State Gasoline and Fuels Tax Revenue, second lien, Series B, Pre-Refunded, 5.00%, 5/01/45		13,690,000		14,501,269
Louisiana State Public Facilities Authority Lease Revenue, Provident Group, Flagship Properties LLC, Louisiana State University Nicholson Gateway Project, Series A, 5.00%, 7/01/51		26,145,000		28,100,123
New Orleans Aviation Board Revenue, General Airport, North Terminal Project, Series B, 5.00%, 1/01/48		4,000,000		4,372,960
Shreveport Water and Sewer Revenue, Series B, 5.00%, 12/01/41		10,000,000		11,002,000
				261,134,848

franklintempleton.com Annual Report       27

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
Maine 0.5%
Maine State Educational Loan Authority Student Loan Revenue, Supplemental Education Loan Program, Series A-3, Assured Guaranty, 5.875%, 12/01/39	$	16,020,000	$	16,564,680
Maine State Health and Higher Educational Facilities Authority Revenue,
Maine General Medical Center Issue, 6.75%, 7/01/36		4,250,000		4,609,592
Maine General Medical Center Issue, 7.00%, 7/01/41		10,000,000		10,938,600
Maine State Turnpike Authority Revenue, 5.00%, 7/01/47		15,500,000		17,672,790
Portland Airport Revenue,
General, AGMC Insured, 5.25%, 1/01/35		3,000,000		3,139,050
General, AGMC Insured, 5.00%, 1/01/40		6,000,000		6,234,780
				59,159,492
Maryland 0.8%
Baltimore Revenue,
Mayor and City Council of Baltimore, Wastewater Projects, Series C, 5.00%, 7/01/38		5,000,000		5,550,150
Mayor and City Council of Baltimore, Wastewater Projects, Series C, 5.00%, 7/01/43		10,000,000		11,078,200
Mayor and City Council of Baltimore, Water Projects, Subordinate, Refunding, Series C, 5.00%, 7/01/39		10,000,000		11,193,100
Mayor and City Council of Baltimore, Water Projects, Subordinate, Refunding, Series C, 5.00%, 7/01/44		10,000,000		11,148,300
Mayor and City Council of Baltimore, Water Projects, Subordinate, Series A, 5.00%, 7/01/39		9,430,000		10,530,953
Mayor and City Council of Baltimore, Water Projects, Subordinate, Series A, 5.00%, 7/01/44		5,500,000		6,135,085
Maryland State EDC, PCR, Potomac Electric Project, Refunding, 6.20%, 9/01/22		5,000,000		5,173,650
Maryland State Health and Higher Educational Facilities Authority Revenue,
Adventist HealthCare Issue, Series A, 5.50%, 1/01/46		12,500,000		13,880,125
Anne Arundel Health System Issue, Series A, Pre-Refunded, 6.75%, 7/01/39		3,000,000		3,164,820
LifeBridge Health Issue, Refunding, 4.00%, 7/01/42		3,000,000		3,036,660
Medstar Health Issue, Series A, 5.00%, 5/15/42		7,500,000		8,303,700
University of Maryland Medical System Issue, Series B, NATL Insured, ETM, 7.00%, 7/01/22		135,000		152,747
				89,347,490
Massachusetts 2.6%
Massachusetts Bay Transportation Authority Sales Tax Revenue, Refunding, Senior Series A, 5.00%, 7/01/28		10,000,000		12,081,500
Massachusetts Development Finance Agency Revenue,
Brandeis University Issue, Refunding, Series O-1, 5.00%, 10/01/40		19,865,000		20,665,957
Dana-Farber Cancer Institute Issue, Series N, 5.00%, 12/01/41		10,135,000		11,348,768
Partners HealthCare System Issue, Refunding, Series Q, 5.00%, 7/01/47		15,000,000		16,551,450
Wellesley College Issue, Series J, 5.00%, 7/01/42		10,000,000		11,015,800
Massachusetts State Department of Transportation Metropolitan Highway System Revenue, Senior, Refunding, Series B, 5.00%, 1/01/37		31,000,000		32,295,490
Massachusetts State Educational Financing Authority Education Loan Revenue,
Issue H, Assured Guaranty, 6.35%, 1/01/30		2,395,000		2,417,633
Issue I, 6.00%, 1/01/28		7,885,000		8,208,285
Issue K, Refunding, 5.25%, 7/01/29		6,940,000		7,378,747
Massachusetts State GO,
Consolidated Loan of 2016, Series G, 4.00%, 9/01/42		20,000,000		20,570,600
Consolidated Loan of 2017, Green Bonds, Series B, 5.00%, 4/01/47		12,335,000		13,962,973
Series A, 5.00%, 1/01/41		15,000,000		17,174,850
Series A, 5.00%, 1/01/46		10,000,000		11,405,300
Series A, 5.00%, 1/01/47		20,000,000		22,828,400

28           Annual Report franklintempleton.com

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
Massachusetts (continued)
Massachusetts State Health and Educational Facilities Authority Revenue,
Berklee College of Music Issue, Refunding, Series A, 5.00%, 10/01/37	$	490,000	$	491,294
CareGroup Issue, Series A, NATL Insured, Pre-Refunded, 5.00%, 7/01/25		750,000		800,535
Harvard Pilgrim Health Care Issue, Series A, AGMC Insured, 5.00%, 7/01/18		800,000		800,960
Northeastern University Issue, Series A, 5.00%, 10/01/35		20,000,000		21,168,600
Northeastern University Issue, Series R, 5.00%, 10/01/33		6,830,000		6,913,326
Springfield College Issue, Pre-Refunded, 5.50%, 10/15/31		1,710,000		1,797,022
Springfield College Issue, Pre-Refunded, 5.625%, 10/15/40		7,000,000		7,368,690
Massachusetts State HFAR, Housing, Series B, 7.00%, 12/01/38		9,140,000		9,300,681
Massachusetts State School Building Authority Sales Tax Revenue, Subordinate, Refunding, Series A, 4.00%, 2/15/43		10,750,000		11,065,727
Massachusetts State Transportation Fund Revenue, Accelerated Bridge Program, Series A, 4.00%, 6/01/35		10,000,000		10,232,700
Massachusetts State Water Pollution Abatement Trust Revenue,
MWRA Program, Series A, 5.00%, 8/01/32		225,000		225,549
Water Pollution Abatement, MWRA Program, Subordinate, Refunding, Series A, 5.75%, 8/01/29		450,000		451,453
University of Massachusetts Building Authority Project Revenue, Senior Series 1, 5.00%, 11/01/39		20,000,000		22,445,800
				300,968,090
Michigan 2.8%
Detroit City School District GO,
School Building and Site Improvement, Refunding, Series A, 5.00%, 5/01/30		1,245,000		1,351,335
School Building and Site Improvement, Refunding, Series A, 5.00%, 5/01/33		1,500,000		1,620,435
Detroit Sewage Disposal System Revenue, second lien, Series B, NATL Insured, 5.00%, 7/01/36		10,000		10,022
Detroit Water and Sewerage Department Sewage Disposal System Revenue,
senior lien, Refunding, Series A, 5.25%, 7/01/39		12,000,000		12,840,120
senior lien, Refunding, Series A, AGMC Insured, 5.00%, 7/01/39		10,000,000		10,544,300
Detroit Water Supply System Revenue,
second lien, Series B, AGMC Insured, Pre-Refunded, 7.00%, 7/01/36		5,000,000		5,289,000
senior lien, Series B, NATL Insured, 5.00%, 7/01/34		10,000		10,023
Jackson County Hospital Finance Authority Revenue, W.A. Foote Memorial Hospital, Series C, Assured Guaranty, Pre-Refunded, 5.00%, 6/01/26		15,000,000		15,924,900
Michigan Finance Authority Revenue,
Hospital, Beaumont Health Credit Group, Series A, 5.00%, 11/01/44		20,925,000		22,863,701
Hospital, Trinity Health Credit Group, Refunding, Series A, 5.00%, 12/01/37		6,500,000		7,447,115
Hospital, Trinity Health Credit Group, Refunding, Series MI, 5.00%, 12/01/39		29,610,000		32,076,809
Hospital, Trinity Health Credit Group, Refunding, Series MI, 5.00%, 12/01/45		10,000,000		11,092,100
Hospital, Trinity Health Credit Group, Series MI, Pre-Refunded, 5.00%, 12/01/39		140,000		153,576
Michigan Hospital Finance Authority Revenue,
Ascension Health Senior Credit Group, Refunding, Series F-8, 5.00%, 11/15/47		10,000,000		11,303,200
MidMichigan Obligated Group, Series A, Pre-Refunded, 6.00%, 6/01/29		4,000,000		4,177,160
MidMichigan Obligated Group, Series A, Pre-Refunded, 6.125%, 6/01/39		5,000,000		5,228,100
Trinity Health Credit Group, Refunding, Series A-1, 6.50%, 12/01/33		745,000		765,517
Trinity Health Credit Group, Refunding, Series C, 5.00%, 12/01/34		9,230,000		10,011,412
Trinity Health Credit Group, Series A-1, Pre-Refunded, 6.50%, 12/01/33		24,255,000		24,914,251
Trinity Health Credit Group, Series C, Pre-Refunded, 5.00%, 12/01/34		770,000		853,376
Michigan State Building Authority Revenue,
Facilities Program, Refunding, Series I, 6.25%, 10/15/38		440,000		448,664
Facilities Program, Refunding, Series I-A, 5.375%, 10/15/36		6,730,000		7,417,739
Facilities Program, Refunding, Series I-A, 5.25%, 10/15/44		20,655,000		22,866,737
Facilities Program, Series H, 5.125%, 10/15/33		12,500,000		13,041,750
Facilities Program, Series H, AGMC Insured, 5.00%, 10/15/26		5,000,000		5,211,500
Facilities Program, Series I, Pre-Refunded, 6.25%, 10/15/38		14,560,000		14,847,997

franklintempleton.com Annual Report       29

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
Michigan (continued)
Michigan State GO,
Environmental Program, Series A, Pre-Refunded, 6.00%, 11/01/24	$	1,000,000	$	1,041,020
Environmental Program, Series A, Pre-Refunded, 5.50%, 11/01/25		1,000,000		1,036,100
Michigan State Strategic Fund Limited Obligation Revenue,
The Detroit Edison Co. Exempt Facilities Project, Refunding, Series KT, 5.625%, 7/01/20		7,000,000		7,485,240
The Detroit Edison Co. Pollution Control Bonds Project, Refunding, Collateralized, Series BB, AMBAC Insured, 7.00%, 5/01/21		250,000		282,757
Michigan Tobacco Settlement Finance Authority Revenue, Tobacco Settlement Asset-Backed, Senior, Series A, 6.00%, 6/01/34		40,000,000		40,238,800
Royal Oak Hospital Finance Authority Hospital Revenue,
William Beaumont Hospital Obligated Group, Series V, Pre-Refunded, 8.25%, 9/01/39		20,000,000		20,425,000
William Beaumont Hospital Obligated Group, Series W, Pre-Refunded, 6.375%, 8/01/29		10,000,000		10,541,000
				323,360,756
Minnesota 0.2%
Minneapolis Health Care System Revenue,
Fairview Health Services, Series A, Pre-Refunded, 6.625%, 11/15/28		11,000,000		11,284,790
Fairview Health Services, Series A, Pre-Refunded, 6.75%, 11/15/32		6,250,000		6,415,937
St. Cloud Health Care Revenue, CentraCare Health System, Refunding, Series A, 5.00%, 5/01/46		5,000,000		5,522,900
				23,223,627
Mississippi 1.0%
Medical Center Educational Building Corp. Revenue, University of Mississippi Medical Center, Refunding, Series A, 5.00%, 6/01/47		25,000,000		27,588,000
Mississippi Business Finance Corp. PCR, System Energy Resource Inc. Project, Refunding, 5.875%, 4/01/22		27,930,000		27,990,887
Mississippi Development Bank Special Obligation Revenue,
City of Jackson Capital City Convention Center Project, Refunding, Series A, 5.00%, 3/01/36		10,000,000		11,241,100
City of Jackson Water and Sewer System Project, AGMC Insured, 6.875%, 12/01/40		3,400,000		4,097,442
Mississippi Hospital Equipment and Facilities Authority Revenue,
Baptist Memorial Health Care, Series A, 5.00%, 9/01/36		6,350,000		6,828,409
Baptist Memorial Health Care, Series A, 5.00%, 9/01/46		34,500,000		36,720,765
				114,466,603
Missouri 0.6%
Bi-State Development Agency Missouri-Illinois Metropolitan District Mass Transit Sales Tax Appropriation Revenue, Metrolink Cross County Extension Project, Assured Guaranty, 5.00%, 10/01/39		6,000,000		6,227,400
Missouri State Health and Educational Facilities Authority Health Facilities Revenue,
Mercy Health, Series F, 5.00%, 11/15/45		25,000,000		27,372,250
bSSM Health, Series A, 5.00%, 6/01/48		7,500,000		8,286,300
St. Luke’s Health System Inc., Series B, AGMC Insured, Pre-Refunded, 5.50%, 11/15/35		30,000,000		30,597,600
				72,483,550
Montana 0.0%†
Montana State Facility Finance Authority Revenue, Benefits Health System Obligated Group, Refunding, 5.00%, 2/15/41		2,650,000		2,912,509
Nebraska 1.1%
Douglas County Hospital Authority No. 2 Revenue, Health Facilities, Children’s Hospital Obligated Group, 5.00%, 11/15/47		10,000,000		11,055,400
Lancaster County Correctional Facility Joint Public Agency GO, Building, Pre-Refunded, 5.00%, 12/01/28		5,000,000		5,094,250
Lancaster County Hospital Authority Revenue, Bryan Memorial Hospital Project No. 1, NATL Insured, ETM, 6.70%, 6/01/22		1,440,000		1,572,177

30           Annual Report franklintempleton.com

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
Nebraska (continued)
Madison County Hospital Authority No. 001 Hospital Revenue, Faith Regional Health Services Project, Series A-1, Pre-Refunded, 6.00%, 7/01/33	$	12,000,000	$	12,322,800
Municipal Energy Agency of Nebraska Power Supply System Revenue, Series A, BHAC Insured, Pre-Refunded, 5.375%, 4/01/39		5,000,000		5,162,600
Omaha Public Facilities Corp. Lease Revenue, Baseball Stadium Project, Pre-Refunded, 5.00%, 6/01/36		9,000,000		9,302,760
Omaha Public Power District Electric System Revenue, Series C, Pre-Refunded, 5.00%, 2/01/39		23,305,000		25,164,040
Omaha Public Power District Separate Electric System Revenue,
Nebraska City 2, Refunding, Series A, 5.00%, 2/01/49		10,000,000		11,016,800
Nebraska City 2, Series A, 5.25%, 2/01/42		10,000,000		11,273,500
Public Power Generation Agency Revenue,
Whelan Energy Center Unit 2, Refunding, Series A, 5.00%, 1/01/39		7,340,000		8,165,236
Whelan Energy Center Unit 2, Refunding, Series A, 5.00%, 1/01/41		5,140,000		5,683,144
University of Nebraska Revenue,
Lincoln Student Fees and Facilities, 5.00%, 7/01/37		5,000,000		5,431,200
Lincoln Student Fees and Facilities, 5.00%, 7/01/42		7,500,000		8,130,375
Lincoln Student Fees and Facilities, Series A, Pre-Refunded, 5.25%, 7/01/34		5,000,000		5,115,900
				124,490,182
Nevada 0.3%
Carson City Hospital Revenue, Carson Tahoe Regional Healthcare Project, Series A, 5.00%, 9/01/47		2,775,000		3,000,413
Clark County Passenger Facility Charge Revenue,
Las Vegas, McCarran International Airport, Series A, AGMC Insured, 5.25%, 7/01/39		20,000,000		21,017,600
Las Vegas, McCarran International Airport, Series A, AGMC Insured, 5.25%, 7/01/42		5,000,000		5,251,850
Reno Hospital Revenue,
Washoe Medical Center Project, Refunding, Series C, AGMC Insured, 5.375%, 6/01/39		1,535,000		1,613,039
Washoe Medical Center Project, Series C, AGMC Insured, Pre-Refunded, 5.375%, 6/01/39		3,465,000		3,705,021
				34,587,923
New Hampshire 0.5%
Manchester GARB, Refunding, Series A, AGMC Insured, 5.125%, 1/01/30		6,000,000		6,111,240
New Hampshire Health and Education Facilities Authority Revenue,
Concord Hospital Trust, 5.00%, 10/01/47		6,000,000		6,590,100
Elliot Hospital Issue, Refunding, 5.00%, 10/01/38		4,000,000		4,318,840
University System of New Hampshire Issue, Refunding, 5.00%, 7/01/45		10,350,000		11,505,784
New Hampshire Municipal Bond Bank Revenue, Series B, Pre-Refunded, 5.00%, 8/15/39		11,250,000		12,021,075
New Hampshire State Business Finance Authority Revenue, Elliot Hospital Obligated Group, Series A, Pre-Refunded, 6.125%, 10/01/39		5,000,000		5,291,050
New Hampshire State Municipal Bond Bank Revenue, Refunding, Series D, 4.00%, 8/15/39		10,000,000		10,415,000
				56,253,089
New Jersey 2.3%
Bayonne GO, General Improvement, Pre-Refunded, 5.75%, 7/01/35		9,000,000		9,402,030
New Jersey EDA Revenue,
Municipal Rehabilitation, Series A, AMBAC Insured, 5.00%, 4/01/28		4,000,000		4,008,600
School Facilities Construction, Series AAA, 5.00%, 6/15/41		26,000,000		27,567,280
School Facilities Construction, Series NN, 5.00%, 3/01/28		22,000,000		23,253,340
New Jersey Health Care Facilities Financing Authority State Contract Revenue,
Hospital Asset Transformation Program, Series A, Pre-Refunded, 5.25%, 10/01/38		7,770,000		7,880,178
Hospital Asset Transformation Program, Series A, Pre-Refunded, 5.25%, 10/01/38		2,230,000		2,262,558
New Jersey State COP,
Equipment Lease Purchase Agreement, Series A, Pre-Refunded, 5.25%, 6/15/25		20,305,000		21,056,691
Equipment Lease Purchase Agreement, Series A, Pre-Refunded, 5.25%, 6/15/26		8,000,000		8,296,160
Equipment Lease Purchase Agreement, Series A, Pre-Refunded, 5.25%, 6/15/27		4,000,000		4,148,080

franklintempleton.com Annual Report       31

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
New Jersey (continued)
New Jersey State COP, (continued)
Equipment Lease Purchase Agreement, Series A, Pre-Refunded, 5.25%, 6/15/28	$	2,000,000	$	2,074,040
New Jersey State Educational Facilities Authority Revenue, Higher Education Capital Improvement Fund Issue, Series B, 5.00%, 9/01/36		14,000,000		14,860,580
New Jersey State Transportation Trust Fund Authority Revenue,
Transportation Program, Series AA, 5.00%, 6/15/45		15,000,000		15,731,100
Transportation System, Series A, 6.00%, 12/15/38		49,125,000		50,269,121
Transportation System, Series A, AMBAC Insured, 5.00%, 12/15/32		9,705,000		9,725,672
Transportation System, Series A, Pre-Refunded, 6.00%, 12/15/38		25,875,000		26,553,960
Transportation System, Series B, 5.25%, 6/15/36		10,000,000		10,404,400
New Jersey State Turnpike Authority Revenue,
Turnpike, Series E, 5.00%, 1/01/45		11,475,000		12,596,911
Turnpike, Series E, Pre-Refunded, 5.25%, 1/01/40		13,925,000		14,238,452
				264,329,153
New Mexico 0.3%
New Mexico Hospital Equipment Loan Council Hospital System Revenue,
Presbyterian Healthcare Services, Refunding, 5.00%, 8/01/44		10,000,000		11,046,600
Presbyterian Healthcare Services, Refunding, Series A, 5.00%, 8/01/46		15,000,000		16,727,700
				27,774,300
New York 11.1%
Hudson Yards Infrastructure Corp. Revenue,
Senior, Fiscal 2012, Series A, AGMC Insured, 5.00%, 2/15/47		15,745,000		16,545,476
Senior, Fiscal 2012, Series A, AGMC Insured, Pre-Refunded, 5.00%, 2/15/47		730,000		789,247
Long Island Power Authority Electric System Revenue,
General, Refunding, Series B, 5.00%, 9/01/46		13,000,000		14,507,350
General, Series A, Pre-Refunded, 6.00%, 5/01/33		12,500,000		13,007,750
MTA Dedicated Tax Fund Revenue,
Build America Bonds, Series B, Pre-Refunded, 5.25%, 11/15/28		6,000,000		6,314,040
Build America Bonds, Series B, Pre-Refunded, 5.25%, 11/15/29		4,000,000		4,209,360
Build America Bonds, Series B, Pre-Refunded, 5.25%, 11/15/30		3,000,000		3,157,020
Build America Bonds, Series B, Pre-Refunded, 5.00%, 11/15/34		15,000,000		15,728,550
MTA Revenue,
Refunding, Series D, 4.00%, 11/15/42		25,000,000		25,392,750
Transportation, Series A, 5.00%, 11/15/38		11,800,000		12,895,394
Transportation, Series C, 6.50%, 11/15/28		2,805,000		2,876,976
Transportation, Series C, Pre-Refunded, 6.50%, 11/15/28		12,195,000		12,503,290
Transportation, Series D, Pre-Refunded, 5.00%, 11/15/34		10,000,000		10,769,100
Transportation, Series D, Pre-Refunded, 5.00%, 11/15/36		9,500,000		10,468,240
Transportation, Series D, Pre-Refunded, 5.25%, 11/15/40		15,000,000		16,246,050
Transportation, Series D, Sub Series D-1, 5.00%, 11/15/39		15,000,000		16,618,200
Transportation, Sub Series A-1, 5.00%, 11/15/40		30,000,000		32,594,700
New York City GO,
Fiscal 2002, Series D, 5.50%, 6/01/24		180,000		180,563
Fiscal 2010, Refunding, Series C, 5.00%, 8/01/23		24,620,000		25,586,581
Series E, Subseries E-1, 6.25%, 10/15/28		480,000		489,936
Series E, Subseries E-1, Pre-Refunded, 6.25%, 10/15/28		9,520,000		9,713,066
Series E-1, 5.00%, 3/01/40		14,570,000		16,660,649
Series F, 5.25%, 1/15/23		5,000		5,015

32           Annual Report franklintempleton.com

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
New York (continued)
New York City Municipal Water Finance Authority Water and Sewer System Revenue,
Fiscal 2009, Series A, 5.75%, 6/15/40	$	2,500,000	$	2,511,250
Fiscal 2009, Series A, Pre-Refunded, 5.75%, 6/15/40		3,500,000		3,517,185
Second General Resolution, Fiscal 2009, Refunding, Series EE, 5.25%, 6/15/40		64,970,000		67,264,741
Second General Resolution, Fiscal 2009, Refunding, Series FF, Subseries FF-2, 5.50%, 6/15/40		15,000,000		15,617,100
Second General Resolution, Fiscal 2011, Refunding, Series GG, 5.00%, 6/15/43		25,000,000		26,824,750
Second General Resolution, Fiscal 2012, Refunding, Series AA, 5.00%, 6/15/34		10,000,000		10,773,600
Second General Resolution, Fiscal 2012, Refunding, Series AA, 5.00%, 6/15/44		21,550,000		23,116,254
Second General Resolution, Fiscal 2013, Refunding, Series DD, 5.00%, 6/15/35		30,705,000		34,121,852
Second General Resolution, Fiscal 2014, Refunding, Series BB, 5.00%, 6/15/46		15,000,000		16,495,650
Second General Resolution, Fiscal 2015, Refunding, Series FF, 5.00%, 6/15/39		10,000,000		11,184,800
Second General Resolution, Fiscal 2015, Refunding, Series HH, 5.00%, 6/15/39		15,000,000		16,777,200
Second General Resolution, Fiscal 2017, Series CC, Subseries CC-2, 5.00%, 6/15/46		32,500,000		36,529,025
Second General Resolution, Fiscal 2018, Series CC, Subseries CC-1, 5.00%, 6/15/48		100,000,000		113,712,000
New York City Transitional Finance Authority Building Aid Revenue,
Fiscal 2009, Series S-2, 6.00%, 7/15/38		20,000,000		20,168,400
Fiscal 2009, Series S-3, 5.25%, 1/15/34		10,170,000		10,407,164
Fiscal 2009, Series S-4, 5.50%, 1/15/34		12,890,000		13,224,882
Fiscal 2011, Series S-2, Subseries S-2A, 5.00%, 7/15/40		35,000,000		37,686,950
Fiscal 2012, Series S-1, Subseries S-1A, 5.25%, 7/15/37		30,300,000		33,161,532
New York City Transitional Finance Authority Revenue,
Future Tax Secured, Subordinate, Fiscal 2011, Series C, 5.00%, 11/01/39		15,000,000		15,969,900
Future Tax Secured, Subordinate, Fiscal 2014, Series A, Subseries A-1, 5.00%, 11/01/34		15,000,000		16,816,650
Future Tax Secured, Subordinate, Fiscal 2016, Series E, Subseries E-1, 5.00%, 2/01/38		10,000,000		11,240,600
Future Tax Secured, Subordinate, Fiscal 2017, Series B, Subseries B-1, 5.00%, 8/01/36		10,000,000		11,341,800
Future Tax Secured, Subordinate, Fiscal 2017, Series B, Subseries B-1, 5.00%, 8/01/38		10,000,000		11,310,700
Future Tax Secured, Subordinate, Fiscal 2018, Series A, Subseries A-3, 5.00%, 8/01/41		57,915,000		65,951,286
New York Liberty Development Corp. Liberty Revenue,
One World Trade Center, Port Authority Consolidated, Secured, 5.25%, 12/15/43		25,000,000		27,291,750
Second Priority, Bank of America Tower at One Bryant Park Project, Class 1, Refunding, 5.625%, 1/15/46		25,000,000		26,509,000
Seven World Trade Center Project, Refunding, 5.00%, 9/15/43		6,500,000		6,996,015
New York Liberty Development Corp. Revenue,
Goldman Sachs Headquarters Issue, 5.50%, 10/01/37		24,995,000		31,667,915
Goldman Sachs Headquarters Issue, Second Tranche, 5.25%, 10/01/35		40,000,000		48,950,800
New York State Dormitory Authority Revenues,
Lease, State University Dormitory Facilities, Series A, 5.00%, 7/01/41		10,000,000		10,774,600
State Supported Debt, Upstate Community Colleges, Series C, 6.00%, 7/01/31		23,215,000		23,873,610
New York State Dormitory Authority Sales Tax Revenue,
Bid Group 4, Series A, 5.00%, 3/15/45		25,000,000		28,667,750
Series A, 5.00%, 3/15/44		10,105,000		11,482,817
New York State Dormitory Authority State Personal Income Tax Revenue,
General Purpose, Series A, 5.00%, 2/15/36		15,000,000		16,425,750
Group C, Series B, 5.00%, 2/15/40		20,000,000		22,256,800
New York State Dormitory Personal Income Tax Revenue, Bidding Group 3 Bonds, Refunding, Series B, 5.00%, 2/15/42		11,035,000		12,552,754
New York State HFAR, Housing Project Mortgage, Refunding, Series A, AGMC Insured, 6.125%, 11/01/20		50,000		50,135
New York State Thruway Authority General Junior Indebtedness Obligations Revenue, junior lien, Series A, 5.25%, 1/01/56		10,000,000		11,231,300

franklintempleton.com Annual Report       33

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
New York (continued)
New York State Urban Development Corp. Revenue,
State Personal Income Tax, General Purpose, Series A, 5.00%, 3/15/31	$	10,000,000	$	10,756,900
State Personal Income Tax, State Facilities and Equipment, Series B-1, Pre-Refunded, 5.00%, 3/15/36		5,000,000		5,142,150
Port Authority of New York and New Jersey Revenue, Consolidated, Refunding, One Hundred Seventy-Ninth Series, 5.00%, 12/01/38		20,000,000		22,291,000
Triborough Bridge and Tunnel Authority Revenue,
General, Series A-2, 5.25%, 11/15/34		4,620,000		4,707,872
General, Series A-2, Pre-Refunded, 5.25%, 11/15/34		2,880,000		2,935,238
General Purpose, Series B, Pre-Refunded, 5.50%, 1/01/30		15,000,000		16,564,500
MTA Bridges and Tunnels, Series A, 5.00%, 11/15/44		25,000,000		28,697,750
				1,262,810,980
North Carolina 1.9%
Charlotte COP, Cultural Arts Facilities, Refunding, Series E, 5.00%, 6/01/34		13,000,000		13,384,930
North Carolina Eastern Municipal Power Agency Power System Revenue,
Series A, Pre-Refunded, 5.50%, 1/01/26		4,500,000		4,610,160
Series B, ETM, 6.00%, 1/01/22		1,250,000		1,419,113
Series B, ETM, 6.25%, 1/01/23		39,030,000		45,828,636
North Carolina State Capital Improvement Limited Obligation Revenue,
Series A, Pre-Refunded, 5.00%, 5/01/23		20,000,000		21,165,000
Series A, Pre-Refunded, 5.00%, 5/01/24		5,500,000		5,674,295
Series A, Pre-Refunded, 5.00%, 5/01/25		5,750,000		5,932,217
Series A, Pre-Refunded, 5.00%, 5/01/26		20,000,000		21,165,000
Series A, Pre-Refunded, 5.00%, 5/01/27		4,500,000		4,642,605
Series A, Pre-Refunded, 5.00%, 5/01/28		4,250,000		4,384,682
North Carolina Turnpike Authority Revenue,
Triangle Expressway System, Capital Appreciation, Series B, Assured Guaranty, zero cpn., 1/01/33		25,000,000		14,415,750
Triangle Expressway System, Capital Appreciation, Series B, Assured Guaranty, zero cpn., 1/01/34		15,000,000		8,191,050
Triangle Expressway System, Capital Appreciation, Series B, Assured Guaranty, zero cpn., 1/01/35		15,215,000		7,915,604
Triangle Expressway System, senior lien, Series A, Assured Guaranty, Pre-Refunded, 5.50%, 1/01/29		6,750,000		6,915,240
Triangle Expressway System, senior lien, Series A, Assured Guaranty, Pre-Refunded, 5.75%, 1/01/39		10,380,000		10,651,229
Raleigh Combined Enterprise System Revenue, Pre-Refunded, 5.00%, 3/01/40		15,830,000		17,130,118
Wake County GO, Refunding, Series C, 5.00%, 3/01/25		21,780,000		25,431,853
				218,857,482
Ohio 3.1%
Akron Income Tax Revenue, Community Learning Centers, Refunding, Series A, 5.00%, 12/01/29		10,000,000		10,963,900
American Municipal Power Inc. Revenue,
Combined Hydroelectric Projects, Green Bonds, Refunding, Series A, 5.00%, 2/15/46		20,000,000		21,971,000
Prairie State Energy Campus Project, Refunding, Series A, 5.00%, 2/15/39		5,000,000		5,441,400
Prairie State Energy Campus Project, Refunding, Series A, 5.00%, 2/15/42		2,500,000		2,715,225
Bowling Green Student Housing Revenue, CFP I LLC, State University Project, Pre-Refunded, 6.00%, 6/01/45		6,750,000		7,295,940
Buckeye Tobacco Settlement Financing Authority Revenue,
Tobacco Settlement, Senior, Convertible, Capital Appreciation, Turbo Term, Series A-3, 6.25%, 6/01/37		15,000,000		15,335,100
Tobacco Settlement, Senior, Turbo Term, Series A-2, 5.75%, 6/01/34		10,000,000		9,941,400

34           Annual Report franklintempleton.com

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
Ohio (continued)
Butler County Hospital Facilities Revenue, UC Health, Refunding, 5.00%, 11/15/45	$	7,500,000	$	8,213,700
Cleveland Airport System Revenue, Refunding, Series A, AGMC Insured, 5.00%, 1/01/28		9,500,000		10,257,055
Cleveland-Cuyahoga County Port Authority Development Lease Revenue, Administrative Headquarters Project, 5.00%, 7/01/37		6,000,000		7,077,360
Franklin County Hospital Facilities Revenue, OhioHealth Corp., 5.00%, 5/15/40		10,000,000		11,119,200
Franklin County Revenue, Trinity Health Credit Group, Series OH, 5.00%, 12/01/46		10,000,000		11,207,600
Hamilton County Healthcare Facilities Revenue, The Christ Hospital Project, AGMC Insured, 5.00%, 6/01/42		22,500,000		24,296,400
Hamilton County Sewer System Revenue, The Metropolitan Sewer District of Greater Cincinnati, Improvement and Refunding, Series A, 5.00%, 12/01/38		12,000,000		13,328,760
JobsOhio Beverage System Statewide Liquor Profits Revenue, senior lien, Series A, 5.00%, 1/01/38		21,060,000		22,994,782
Kent State University Revenues, General Receipts, Series A, 5.00%, 5/01/37		10,500,000		11,326,560
Northeast Regional Sewer District Revenue,
Wastewater Improvement, Refunding, 4.00%, 11/15/38		15,830,000		16,535,702
Wastewater Improvement, Refunding, 4.00%, 11/15/43		10,000,000		10,342,800
Ohio State Air Quality Development Authority Revenue, Environmental Improvement, Buckeye Power Inc. Project, 6.00%, 12/01/40		15,000,000		16,402,200
Ohio State Higher Educational Facility Commission Revenue, Hospital Facilities, Summa Health System, 2010 Project, Refunding, AGMC Insured, 5.25%, 11/15/40		15,000,000		15,752,700
Ohio State Hospital Revenue,
Cleveland Clinic Health System Obligated Group, Refunding, Series A, 4.00%, 1/01/36		6,500,000		6,786,000
University Hospitals Health System Inc., Refunding, Series A, AGMC Insured, 5.00%, 1/15/41		7,000,000		7,398,720
Ohio State Turnpike and Infrastructure Commission Revenue, Infrastructure Projects, Capital Appreciation, junior lien, Series A-3, zero cpn. to 2/14/23, 5.75% thereafter, 2/15/35		35,000,000		33,465,600
Ohio State Turnpike Revenue, Series A, 5.00%, 2/15/43		20,000,000		22,769,000
Ohio State University Revenue, Special Purpose, General Receipts, Series A, 5.00%, 6/01/38		10,000,000		10,965,400
Toledo Water System Revenue, Improvement and Refunding, 5.00%, 11/15/38		20,000,000		21,817,400
				355,720,904
Oklahoma 0.3%
Edmond Public Works Authority Sales Tax and Utility System Revenue,
5.00%, 7/01/42		4,000,000		4,543,960
5.00%, 7/01/47		4,500,000		5,092,920
McGee Creek Authority Water Revenue, NATL Insured, 6.00%, 1/01/23		185,000		200,790
Oklahoma Development Finance Authority Revenue, Provident Education Resources Inc. Cross Village Student Housing Project, Series A, 5.00%, 8/01/47		8,000,000		8,522,800
Oklahoma Municipal Power Authority Revenue, Power Supply System, Refunding, Series A, 5.00%, 1/01/47		3,100,000		3,447,510
Oklahoma State Turnpike Authority Revenue, Second, Series C, 5.00%, 1/01/47		5,500,000		6,225,890
				28,033,870
Oregon 0.7%
Medford Hospital Facilities Authority Revenue, Hospital, Asante Health System, Series A, AGMC Insured, 5.00%, 8/15/40		4,935,000		5,156,878
Oregon Health and Science University Revenue, Series A, Pre-Refunded, 5.75%, 7/01/39		5,000,000		5,223,350
Port of Portland International Airport Revenue, Series Nineteen, Pre-Refunded, 5.50%, 7/01/38		25,000,000		25,155,750
Portland Sewer System Revenue, second lien, Series A, 5.00%, 3/01/35		11,540,000		12,116,308
University of Oregon General Revenue, Series A, 5.00%, 4/01/48		14,500,000		16,595,830
Washington Clackamas and Yamhill Counties School District No. 88J GO,
Deferred Interest, Series A, zero cpn., 6/15/41		5,725,000		2,228,742
Deferred Interest, Series A, zero cpn., 6/15/42		5,900,000		2,197,278
Deferred Interest, Series A, zero cpn., 6/15/43		5,500,000		1,961,025

franklintempleton.com Annual Report       35

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
Oregon (continued)
Washington Multnomah and Yamhill Counties School District No. 1J GO,
5.00%, 6/15/36	$	4,000,000	$	4,606,440
5.00%, 6/15/37		4,000,000		4,603,000
				79,844,601
Pennsylvania 3.6%
Allegheny County Sanitary Authority Sewer Revenue, BAM Insured, 5.25%, 12/01/44		5,000,000		5,538,750
Bucks County Water and Sewer Authority Water System Revenue,
AGMC Insured, Pre-Refunded, 5.00%, 12/01/33		5,500,000		6,043,290
AGMC Insured, Pre-Refunded, 5.00%, 12/01/37		10,520,000		11,559,166
AGMC Insured, Pre-Refunded, 5.00%, 12/01/41		5,110,000		5,614,766
Centennial School District Bucks County GO, Series B, AGMC Insured, Pre-Refunded, 5.25%, 12/15/37		13,655,000		13,950,494
Commonwealth Financing Authority Revenue,
Series A, 5.00%, 6/01/33		4,550,000		5,108,012
Series B, 5.00%, 6/01/42		5,400,000		5,771,034
Delaware County Regional Water Quality Control Authority Revenue,
Sewer, 5.00%, 11/01/41		5,000,000		5,629,300
Sewer, 5.00%, 11/01/46		10,315,000		11,564,559
Delaware River Port Authority Revenue, Series D, AGMC Insured, 5.00%, 1/01/40		15,000,000		15,689,550
Erie Water Authority Water Revenue, Refunding, 5.00%, 12/01/43		5,000,000		5,528,200
Lackawanna County GO,
Refunding, Series B, AGMC Insured, 5.00%, 9/01/35		2,850,000		2,999,625
Series B, AGMC Insured, Pre-Refunded, 5.00%, 9/01/35		4,650,000		4,968,200
Montour School District GO,
Series A, AGMC Insured, 5.00%, 4/01/40		3,170,000		3,539,432
Series A, AGMC Insured, 5.00%, 4/01/41		2,000,000		2,228,900
Series A, AGMC Insured, 5.00%, 4/01/42		2,000,000		2,227,500
Northampton County General Purpose Authority Hospital Revenue, St. Luke’s Hospital Project, Series A, Pre-Refunded, 5.375%, 8/15/28		5,000,000		5,051,000
Pennsylvania Convention Center Authority Revenue, Series A, FGIC Insured, ETM, 6.00%, 9/01/19		360,000		371,347
Pennsylvania State Economic Development Financing Authority Revenue,
Water Facilities, Aqua Pennsylvania Inc. Project, Series B, 5.00%, 12/01/43		20,000,000		21,195,200
Water Facility, Pennsylvania-American Water Co. Project, 6.20%, 4/01/39		12,500,000		12,954,250
Pennsylvania State GO, Refunding, First Series, AGMC Insured, 5.00%, 8/15/26		20,805,000		23,801,960
Pennsylvania State Turnpike Commission Turnpike Revenue,
Subordinate, Convertible Capital Appreciation, Series C, AGMC Insured, 6.25%, 6/01/33		5,000,000		6,142,100
Subordinate, Motor License Fund-Enhanced, Series A, Subseries A-1, Pre-Refunded, 5.00%, 12/01/38		20,000,000		20,928,600
Subordinate, Series A, Assured Guaranty, Pre-Refunded, 5.00%, 6/01/39		8,690,000		8,982,331
Subordinate, Series B, Pre-Refunded, 5.75%, 6/01/39		20,000,000		20,832,600
Subordinate, Series C, Subseries C-1, Assured Guaranty, Pre-Refunded, 6.00%, 6/01/28		5,000,000		5,016,900
Subordinate, Series C, Subseries C-1, Assured Guaranty, Pre-Refunded, 6.25%, 6/01/38		25,000,000		25,089,250
Subseries A, Assured Guaranty, Pre-Refunded, 5.00%, 6/01/39		1,310,000		1,354,068
Philadelphia GO,
Refunding, Series A, AGMC Insured, 5.00%, 8/01/24		9,805,000		10,172,688
Series A, AGMC Insured, Pre-Refunded, 5.00%, 8/01/24		1,195,000		1,241,019
Philadelphia Municipal Authority Lease Revenue, Pre-Refunded, 6.375%, 4/01/29		4,500,000		4,684,860
Philadelphia School District GO,
Refunding, Series F, 5.00%, 9/01/33		6,415,000		7,139,125
Refunding, Series F, 5.00%, 9/01/36		4,090,000		4,514,256
Series E, Pre-Refunded, 6.00%, 9/01/38		25,000,000		25,349,439

36           Annual Report franklintempleton.com

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
Pennsylvania (continued)
Philadelphia Water and Wastewater Revenue,
Series A, 5.00%, 7/01/45	$	15,000,000	$	16,428,600
Series A, Pre-Refunded, 5.25%, 1/01/25		1,000,000		1,022,170
Series A, Pre-Refunded, 5.00%, 1/01/26		5,000,000		5,102,650
Series A, Pre-Refunded, 5.00%, 1/01/27		1,750,000		1,785,928
Series A, Pre-Refunded, 5.25%, 1/01/32		5,000,000		5,110,850
Series C, AGMC Insured, 5.00%, 8/01/40		7,000,000		7,367,290
Pittsburgh and Allegheny County Sports and Exhibition Authority Hotel Room Regional Enterprise Tower Revenue, Refunding, AGMC Insured, 5.00%, 2/01/35		18,000,000		18,940,320
South Fork Municipal Authority Hospital Revenue, Conemaugh Valley Memorial Hospital, Series B, Assured Guaranty, Pre-Refunded, 5.375%, 7/01/35		15,000,000		16,030,200
State Public School Building Authority Revenue, Commonwealth of Pennsylvania, School Lease, The School District of Philadelphia Project, Refunding, Series A, AGMC Insured, 5.00%, 6/01/32		10,000,000		11,197,600
Westmoreland County Municipal Authority Revenue, Municipal Service, Refunding, BAM Insured, 5.00%, 8/15/42		17,205,000		19,072,947
				414,840,326
Rhode Island 0.8%
Rhode Island Convention Center Authority Revenue, Series A, Assured Guaranty, Pre-Refunded, 5.50%, 5/15/27		17,300,000		17,957,573
Rhode Island Health and Educational Building Corp. Revenue, Hospital Financing, Lifespan Obligation Group, Refunding, 5.00%, 5/15/39		5,500,000		5,909,915
Rhode Island Housing and Mortgage Finance Corp. Revenue,
Homeownership Opportunity, Refunding, Series 15-A, 6.85%, 10/01/24		120,000		120,361
Homeownership Opportunity, Series 10-A, 6.50%, 10/01/22		215,000		215,645
Homeownership Opportunity, Series 10-A, 6.50%, 4/01/27		130,000		130,610
Rhode Island State Health and Educational Building Corp. Higher Education Facilities Revenue, Brown University Issue, Refunding, Series A, 5.00%, 9/01/39		9,000,000		9,362,160
Rhode Island State Health and Educational Building Corp. Higher Education Facility Revenue,
Board of Governors for Higher Education, University of Rhode Island, Auxiliary Enterprise Issue, Series B, AGMC Insured, Pre-Re, 5.00%, 9/15/30		7,535,000		8,059,059
Board of Governors for Higher Education, University of Rhode Island, Auxiliary Enterprise Issue, Series B, AGMC Insured, Pre-Re, 5.00%, 9/15/35		4,500,000		4,812,975
Board of Governors for Higher Education, University of Rhode Island, Auxiliary Enterprise Issue, Series B, AGMC Insured, Pre-Re, 5.00%, 9/15/40		10,270,000		10,984,278
New England Institute of Technology Issue, Series A, Pre-Refunded, 5.125%, 3/01/40		16,435,000		17,341,062
Rhode Island State Health and Educational Building Corp. Revenue,
Hospital Financing, Lifespan Obligated Group Issue, Series A, Pre-Refunded, 7.00%, 5/15/39		8,200,000		8,628,696
Public Schools, Bond Financing Program, Town of East Greenwich Issue, Series A, 5.00%, 5/15/37		10,000,000		10,905,800
				94,428,134
South Carolina 1.0%
Greenwood County Hospital Revenue,
Facilities Health Regional Healthcare, Refunding, 4.00%, 10/01/39		1,445,000		1,442,890
Facilities Self Regional Healthcare, Refunding, 4.00%, 10/01/37		8,465,000		8,544,233
Piedmont Municipal Power Agency Electric Revenue, Refunding, NATL Insured, 6.25%, 1/01/21		200,000		220,674
Rock Hill Utility System Revenue,
Combined Utility System, Refunding, 5.00%, 1/01/41		7,690,000		8,486,376
Combined Utility System, Refunding, 5.00%, 1/01/47		5,000,000		5,496,600

franklintempleton.com Annual Report       37

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
South Carolina (continued)
South Carolina Jobs EDA Hospital Revenue,
AnMed Health Project, Improvement, Series B, Assured Guaranty, Pre-Refunded, 5.375%, 2/01/29	$	4,000,000	$	4,104,640
Palmetto Health, Improvement, Pre-Refunded, 5.75%, 8/01/39		3,000,000		3,141,210
Palmetto Health, Refunding, Series A, AGMC Insured, 5.00%, 8/01/35		40,000,000		40,104,400
South Carolina State Public Service Authority Revenue,
Refunding and Improvement, Series A, 5.00%, 12/01/55		20,000,000		21,247,400
Series A, Pre-Refunded, 5.50%, 1/01/38		7,500,000		7,678,944
Series B, Pre-Refunded, 5.25%, 1/01/34		6,000,000		6,133,020
Spartanburg Water System Revenue, Assured Guaranty, Pre-Refunded, 5.00%, 6/01/39		6,000,000		6,205,140
Woodruff Roebuck Water District Revenue, South Carolina Water System Improvement, AGMC Insured, Pre-Refunded, 5.00%, 6/01/40		3,000,000		3,184,980
				115,990,507
South Dakota 0.6%
Huron School District No. 2-2 GO, 5.00%, 6/15/39		4,000,000		4,523,360
South Dakota State Building Authority Revenue, Refunding, Series A, 5.00%, 6/01/42		5,450,000		6,162,588
South Dakota State Health and Educational Facilities Authority Revenue,
Avera Health Issue, Refunding, 4.00%, 7/01/42		10,000,000		10,076,000
Avera Health Issue, Series B, Pre-Refunded, 5.50%, 7/01/35		3,000,000		3,018,690
Avera Health Issue, Series B, Pre-Refunded, 5.25%, 7/01/38		5,000,000		5,029,100
Regional Health, 4.00%, 9/01/37		10,920,000		11,046,890
Regional Health, 5.00%, 9/01/40		10,000,000		11,100,700
Vocational Education Program, Refunding, Series A, 5.00%, 8/01/38		3,475,000		3,878,934
Vocational Education Program, Refunding, Series A, 5.00%, 8/01/46		6,005,000		6,527,795
Vocational Education Program, Series A, 5.125%, 8/01/46		7,000,000		7,587,650
				68,951,707
Tennessee 1.0%
Johnson City Health and Educational Facilities Board Hospital Revenue,
Johnson City Medical Center Hospital, Improvement, Series C, NATL Insured, ETM, 5.25%, 7/01/28		8,500,000		8,846,460
Johnson City Medical Center Hospital, Improvement, Series C, NATL Insured, Pre-Refunded, 5.125%, 7/01/25		115,000		115,288
Knox County Health Educational and Housing Facility Board Hospital Revenue, Covenant Health, Refunding, Series A, 5.00%, 1/01/42		35,000,000		38,209,150
Metropolitan Government of Nashville and Davidson County Water and Sewer Revenue,
Green Bonds, Subordinate, Series A, 5.00%, 7/01/46		6,000,000		6,836,340
Subordinate, Refunding, Series B, 5.00%, 7/01/42		21,645,000		24,735,906
Subordinate, Refunding, Series B, 5.00%, 7/01/46		15,925,000		18,144,786
Tennessee State School Bond Authority Revenue, Higher Educational Facilities Second Program, Series A, 5.00%, 11/01/47		15,000,000		17,262,600
				114,150,530
Texas 13.9%
Aldine ISD, GO, Harris County, School Building, Refunding, Series A, PSF Guarantee, 5.00%, 2/15/45		15,000,000		17,016,150
Allen ISD, GO, Collin County, School Building, Series A, Pre-Refunded, 5.00%, 2/15/39		11,575,000		11,850,601
Arlington Special Tax Revenue, Series A, AGMC Insured, 4.00%, 2/15/44		20,000,000		20,471,400
Austin Community College District Public Facility Corp. Revenue,
Educational Facility Project, Round Rock Campus, Pre-Refunded, 5.25%, 8/01/33		8,675,000		8,748,824
Hays New Campus Project, 5.00%, 8/01/36		5,700,000		6,220,125
Austin Electric Utility System Revenue, Refunding, Series A, 5.00%, 11/15/45		10,000,000		11,147,100
Austin Water and Wastewater System Revenue, Travis Williamson and Hays Counties, Refunding, Series A, 5.00%, 11/15/38		20,000,000		21,944,800

38       Annual Report franklintempleton.com

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
Texas (continued)
Bexar County GO, Refunding, 5.00%, 6/15/43	$	13,000,000	$	14,591,980
Central Texas Regional Mobility Authority Revenue,
senior lien, Pre-Refunded, 6.00%, 1/01/41		14,000,000		15,368,640
senior lien, Refunding, 5.00%, 1/01/40		12,505,000		13,694,100
senior lien, Refunding, 5.00%, 1/01/46		11,245,000		12,227,813
senior lien, Series A, 5.00%, 1/01/45		5,000,000		5,441,600
Comal ISD GO, School Building, PSF Guarantee, 5.00%, 2/01/42		15,000,000		16,926,750
Corpus Christi Utility System Revenue,
Improvement, junior lien, 5.00%, 7/15/38		6,000,000		6,564,720
Improvement, junior lien, 5.00%, 7/15/43		7,000,000		7,641,270
Improvement, junior lien, Series A, 5.00%, 7/15/40		13,200,000		14,547,456
Crowley ISD GO, School Building, PSF Guarantee, 5.00%, 2/01/47		16,000,000		18,055,200
Dallas Area Rapid Transit Sales Tax Revenue,
Refunding, Series A, 5.00%, 12/01/46		10,000,000		11,153,000
Refunding, Series A, 5.00%, 12/01/48		12,200,000		13,580,674
Dallas Civic Center Revenue, Refunding and Improvement, Assured Guaranty, 5.25%, 8/15/34		18,975,000		19,711,609
Dallas Waterworks and Sewer System Revenue,
Pre-Refunded, 5.00%, 10/01/35		4,515,000		4,823,736
Refunding, 5.00%, 10/01/35		5,485,000		5,842,677
Dallas/Fort Worth International Airport Revenue,
Joint Improvement, Series A, 5.00%, 11/01/42		25,000,000		26,610,250
Joint Refunding, Series D, 5.25%, 11/01/32		10,000,000		11,283,700
Ector County ISD, GO, School Building, PSF Guarantee, 5.00%, 8/15/36		10,355,000		11,482,867
Forney ISD,
GO, Refunding, PSF Guarantee, 5.00%, 8/15/37		15,000,000		16,876,500
GO, School Building, Series A, PSF Guarantee, Pre-Refunded, 6.00%, 8/15/37		2,000,000		2,023,660
Frisco ISD,
GO, Collin and Denton Counties, School Building, Refunding, Series B, PSF Guarantee, 5.00%, 8/15/41		10,000,000		11,308,400
GO, Collin and Denton Counties, School Building, Refunding, Series B, PSF Guarantee, 5.00%, 8/15/46		20,000,000		22,539,200
Goose Creek Consolidated ISD, GO, Schoolhouse, PSF Guarantee, Pre-Refunded, 5.00%, 2/15/38		6,045,000		6,806,791
Grand Parkway Transportation Corp. System Toll Revenue, Capital Appreciation, Series B, zero cpn. to 9/30/23, 5.80% thereafter, 10/01/45		10,000,000		9,172,600
Harris County Cultural Education Facilities Finance Corp. Revenue,
Houston Methodist Hospital, 5.00%, 12/01/45		30,000,000		33,036,900
Memorial Hermann Health System, 5.00%, 7/01/45		15,000,000		16,395,600
Harris County Health Facilities Development Corp. Hospital Revenue, Memorial Hermann Healthcare System, Series B, Pre-Refunded, 7.25%, 12/01/35		13,500,000		13,925,115
Harris County MTA Revenue, Sales and Use Tax, Contractual Obligations, Series B, Pre-Refunded, 5.00%, 11/01/33		10,000,000		10,449,400
Harris County Toll Road Revenue, senior lien, Refunding, Series A, 5.00%, 8/15/43		8,000,000		9,129,120
Hays County GO, Road, Pre-Refunded, 5.00%, 2/15/36		6,960,000		7,326,862
Hidalgo County Regional Mobility Authority Vehicle Registration Revenue,
senior lien, Refunding, 5.25%, 12/01/38		5,000,000		5,636,950
senior lien, Refunding, 5.00%, 12/01/43		5,000,000		5,515,600
Houston Airport System Revenue,
Refunding, second lien, Series A, 5.50%, 7/01/34		5,000,000		5,029,350
Refunding, second lien, Series A, 5.50%, 7/01/39		30,850,000		31,031,089
Houston Utility System Revenue, Combined, first lien, Refunding, Series D, 5.00%, 11/15/36		10,000,000		10,851,600
Hutto ISD, GO, Refunding, Series A, PSF Guarantee, 5.00%, 8/01/39		10,000,000		11,103,300
Keller ISD, GO, School Building, Pre-Refunded, 5.50%, 2/15/35		10,000,000		10,292,800

franklintempleton.com Annual Report       39

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
Texas (continued)
Laredo Waterworks Sewer System Revenue,
AGMC Insured, 5.00%, 3/01/41	$	2,500,000	$	2,668,275
Pre-Refunded, 5.25%, 3/01/40		16,535,000		17,498,825
Refunding, 4.00%, 3/01/41		9,690,000		9,846,106
Lower Colorado River Authority Transmission Contract Revenue,
LCRA Transmission Services Corp. Project, Refunding, 5.50%, 5/15/36		15,310,000		15,848,606
LCRA Transmission Services Corp. Project, Refunding, Series A, 5.00%, 5/15/36		10,000,000		10,913,600
Lubbock-Cooper ISD, GO, Refunding, PSF Guarantee, 5.00%, 2/15/41		12,500,000		14,106,000
Lufkin Health Facilities Development Corp. Revenue, Memorial Health System of East Texas, Pre-Refunded, 6.25%, 2/15/37		5,000,000		5,171,550
Midlothian ISD, GO, School Building, Series A, PSF Guarantee, 5.00%, 2/15/47		11,865,000		13,440,316
New Hope Cultural Education Facilities Finance Corp. Revenue, Texas A&M University Project, Series A-1, 5.00%, 4/01/46		6,000,000		6,647,880
New Hope Cultural Education Facilities Finance Corp. Student Housing Revenue,
CHF-Collegiate Housing Island Campus LLC, Series A, 5.00%, 4/01/37		2,500,000		2,715,100
Collegiate Housing Corpus Christi II, Texas A&M University Corpus Christi Project, Series A, 5.00%, 4/01/48		7,825,000		7,947,305
NCCD-College Station Properties LLC, Texas A&M University Project, Series A, 5.00%, 7/01/47		10,000,000		8,262,200
North East Regional Mobility Authority Revenue, senior lien, Series A, 5.00%, 1/01/41		16,750,000		18,331,032
North Fort Bend Water Authority Water System Revenue, Assured Guaranty, 5.25%, 12/15/34		40,000,000		41,982,000
North Harris County Regional Water Authority Revenue,
senior lien, 5.00%, 12/15/46		18,685,000		20,916,550
senior lien, Pre-Refunded, 5.25%, 12/15/33		27,000,000		27,575,640
senior lien, Pre-Refunded, 5.50%, 12/15/38		25,000,000		25,571,500
senior lien, Refunding, 4.00%, 12/15/41		20,000,000		20,617,600
North Texas Tollway Authority Revenue,
first tier, Series A, 6.25%, 1/01/39		2,270,000		2,331,404
first tier, Series A, Pre-Refunded, 6.25%, 1/01/39		10,230,000		10,527,386
Special Projects System, Capital Appreciation, first tier, Refunding, Series I, 6.50%, 1/01/43		25,000,000		30,014,000
Special Projects System, Capital Appreciation, Series B, Pre-Refunded, zero cpn., 9/01/37		7,500,000		3,186,300
Special Projects System, Capital Appreciation, Series B, Pre-Refunded, zero cpn., 9/01/43		7,500,000		2,030,775
Special Projects System, Capital Appreciation, Series C, Pre-Refunded, zero cpn. to 9/01/21, 6.75% thereafter, 9/01/45		25,000,000		29,568,750
System, first tier, Refunding, Series A, 5.00%, 1/01/39		10,000,000		11,156,800
System, first tier, Refunding, Series A, 5.00%, 1/01/39		8,000,000		9,067,600
System, first tier, Refunding, Series A, 5.00%, 1/01/43		40,000,000		45,091,600
System, first tier, Refunding, Series A, 5.00%, 1/01/48		33,500,000		37,588,675
System, first tier, Series K, Subseries K-2, Assured Guaranty, Pre-Refunded, 6.00%, 1/01/38		15,000,000		15,406,350
System, second tier, Refunding, Series A, 5.00%, 1/01/35		10,000,000		11,015,400
System, second tier, Refunding, Series A, 5.00%, 1/01/38		10,000,000		10,940,200
System, second tier, Refunding, Series B, 5.00%, 1/01/43		20,000,000		22,256,200
System, second tier, Refunding, Series B, 5.00%, 1/01/48		19,000,000		21,038,320
Palestine ISD, GO, Anderson County, School Building, Assured Guaranty, Pre-Refunded, 5.50%, 2/15/39		12,530,000		12,891,866
Port of Houston Authority Harris County GO, Refunding, Series A, 5.625%, 10/01/38		14,000,000		14,225,400
Prosper ISD, GO, School Building, PSF Guarantee, 5.00%, 2/15/47		9,725,000		11,016,188
Red River Education Financing Corp. Higher Education Revenue, St. Edwards University Project, Refunding, 5.00%, 6/01/46		2,250,000		2,450,993
San Antonio Airport System Revenue, Passenger Facility Charge, sub. lien, Improvement and Refunding, AGMC Insured, 5.375%, 7/01/40		5,000,000		5,316,050

40       Annual Report franklintempleton.com

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
Texas (continued)
San Antonio Electric and Gas Systems Revenue,
junior lien, 5.00%, 2/01/38	$	10,000,000	$	10,869,100
Refunding, 5.00%, 2/01/47		17,500,000		19,868,450
San Antonio Public Facilities Corp. Lease Revenue, Improvement and Refunding, Lease, Convention Center Refinancing and Expansion Project, 4.00%, 9/15/42		36,500,000		36,833,975
San Antonio Water System Revenue,
b junior lien, Refunding, Series A, 5.00%, 5/15/43		6,000,000		6,865,320
b junior lien, Refunding, Series A, 5.00%, 5/15/48		10,000,000		11,387,200
junior lien, Refunding, Series C, 5.00%, 5/15/46		13,000,000		14,632,280
San Jacinto River Authority Special Project Revenue,
Group Project, AGMC Insured, 5.00%, 10/01/32		5,000,000		5,193,750
Group Project, AGMC Insured, 5.00%, 10/01/37		3,000,000		3,108,150
San Marcos Electric Utility System Revenue, Hays Caldwell and Guadalupe Counties, BAM Insured, 5.00%, 11/01/33		6,300,000		6,851,313
Schertz-Cibolo-Universal City ISD, GO, School Building, PSF Guarantee, 5.00%, 2/01/42		10,000,000		11,255,200
Sherman ISD, GO, School Building, Series A, PSF Guarantee, 5.00%, 2/15/45		11,000,000		12,621,950
Southwest Higher Education Authority Revenue, Southern Methodist University Project, Series A, 5.00%, 10/01/38		24,380,000		26,901,867
Tarrant County Cultural Education Facilities Finance Corp. Hospital Revenue,
Cook Children’s Medical Center, Refunding, Series A, 5.25%, 12/01/39		10,000,000		11,050,600
Hendrick Medical Center Obligation Group, Refunding, 5.50%, 9/01/43		5,350,000		5,830,644
Tarrant County Cultural Education Facilities Finance Corp. Revenue, Texas Health Resources System, Series A, 5.00%, 11/15/52		5,000,000		5,441,350
Tarrant County Health Facilities Development Corp. Health System Revenue,
Harris Methodist Health System, FGIC Insured, ETM, 6.00%, 9/01/24		3,040,000		3,406,107
Harris Methodist Health System, NATL Insured, ETM, 6.00%, 9/01/24		2,535,000		2,840,290
Tarrant Regional Water District Water Revenue, Refunding and Improvement, 5.00%, 3/01/37		10,000,000		10,876,900
Texas City IDC Marine Terminal Revenue, ARCO Pipe Line Co. Project, Refunding, 7.375%, 10/01/20		500,000		556,740
Texas State GO,
Transportation Commission, Highway Improvement, 5.00%, 4/01/39		40,000,000		44,442,000
Transportation Commission, Mobility Fund, Refunding, Series A, 5.00%, 10/01/39		30,000,000		33,587,700
Water Financial Assistance, Refunding, Series C-1, 5.00%, 8/01/34		7,000,000		7,244,860
Texas State Municipal Power Agency Revenue, Transmission, sub. lien, Refunding, 5.00%, 9/01/40		15,250,000		16,135,873
Texas State Transportation Commission Turnpike System Revenue,
first tier, Refunding, Series A, AGMC Insured, 5.00%, 8/15/41		16,000,000		17,270,720
first tier, Refunding, Series A, BAM Insured, 5.00%, 8/15/41		9,665,000		10,432,594
first tier, Refunding, Series B, 5.00%, 8/15/37		10,000,000		10,945,600
second tier, Refunding, Series C, 5.00%, 8/15/37		15,000,000		16,276,650
second tier, Refunding, Series C, 5.00%, 8/15/42		10,000,000		10,804,200
Texas State Water Development Board Revenue, Series A, 4.00%, 10/15/42		50,000,000		51,792,500
West Travis County Public Utility Agency Revenue, Refunding, BAM Insured, 4.00%, 8/15/41		5,000,000		5,140,550
Ysleta ISD, GO, School Building, PSF Guarantee, 5.00%, 8/15/45		15,000,000		16,970,700
				1,590,013,354
Utah 1.1%
Central Utah Water Conservancy District Water Revenue,
Refunding, Series B, 4.00%, 10/01/37		2,600,000		2,741,882
Refunding, Series B, 4.00%, 10/01/38		10,000,000		10,520,900
Jordan Valley Water Conservancy District Water Revenue,
Refunding, Series B, 4.00%, 10/01/41		6,000,000		6,233,820
Series B, Pre-Refunded, 5.00%, 10/01/41		15,000,000		16,254,000
Salt Lake City Airport Revenue, Series A, 5.00%, 7/01/42		15,000,000		16,737,750

franklintempleton.com Annual Report       41

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
Utah (continued)
St. George Electric Revenue,
AGMC Insured, Pre-Refunded, 5.00%, 6/01/33	$	5,000,000	$	5,012,250
AGMC Insured, Pre-Refunded, 5.00%, 6/01/38		5,000,000		5,012,250
State Board of Regents University of Utah Revenue, General, Series A, Pre-Refunded, 5.00%, 8/01/43		21,975,000		24,949,316
Uintah County Municipal Building Authority Lease Revenue, Pre-Refunded, 5.50%, 6/01/37		5,000,000		5,015,100
Utah Associated Municipal Power Systems Revenue, Central St. George Project, Pre-Refunded, 5.25%, 12/01/27		9,735,000		10,224,671
Utah State Municipal Power Agency Supply System Revenue, Series B, 5.00%, 7/01/38		12,105,000		13,475,044
Weber Basin Water Conservancy District Water Revenue, Series B, 5.00%, 4/01/39		7,180,000		7,924,566
				124,101,549
Vermont 0.4%
Vermont Educational and Health Buildings Financing Agency Revenue,
Middlebury College Project, Refunding, 5.00%, 11/01/38		10,000,000		10,417,700
Middlebury College Project, Refunding, 5.00%, 11/01/40		26,565,000		28,249,487
The University of Vermont Medical Center Project, Refunding, Series A, 5.00%, 12/01/36		5,000,000		5,564,700
				44,231,887
Virginia 0.6%
Chesterfield County EDA Revenue, Bon Secours Health System Inc., Series C-2, Assured Guaranty, 5.00%, 11/01/42		8,000,000		8,479,280
Hampton Roads Sanitation District Wastewater Revenue, Subordinate, Series A, 5.00%, 10/01/47		14,575,000		16,641,589
Hampton Roads Transportation Accountability Commission Revenue, Transportation Fund, senior lien, Series A, 5.00%, 7/01/42		25,000,000		28,894,250
Virginia State Resources Authority Infrastructure Revenue,
Virginia Pooled Financing Program, Refunding, Series A, 5.00%, 11/01/39		7,380,000		8,097,557
Virginia Pooled Financing Program, Series A, Pre-Refunded, 5.00%, 11/01/39		4,975,000		5,554,787
				67,667,463
Washington 2.1%
FYI Properties Lease Revenue,
Washington State District Project, 5.50%, 6/01/34		11,935,000		12,340,074
Washington State District Project, 5.50%, 6/01/39		16,250,000		16,785,600
King County GO, Sewer Revenues, Pre-Refunded, 5.125%, 1/01/33		10,000,000		10,223,600
King County Sewer Revenue,
Pre-Refunded, 5.00%, 1/01/32		7,085,000		7,538,936
Refunding, 5.00%, 7/01/49		12,000,000		13,682,880
NJB Properties Lease Revenue, King County Washington Project, Series A, 5.00%, 12/01/36		5,000		5,013
Seattle Municipal Light and Power Revenue,
Improvement and Refunding, Series C, 4.00%, 9/01/36		22,170,000		23,297,566
Improvement and Refunding, Series C, 4.00%, 9/01/40		10,650,000		11,078,982
University of Washington Revenues, 5.00%, 4/01/48		29,450,000		33,483,178
Washington Health Care Facilities Authority Revenue,
Central Washington Health Services Assn., Pre-Refunded, 6.75%, 7/01/29		5,000,000		5,271,700
Fred Hutchinson Cancer Research Center, Refunding, Series A, 5.00%, 1/01/47		10,000,000		10,924,600
Fred Hutchinson Cancer Research Center, Series A, Pre-Refunded, 6.00%, 1/01/33		7,500,000		7,847,625
MultiCare Health System, Refunding, Series B, 4.00%, 8/15/41		25,000,000		25,424,750
MultiCare Health System, Series B, Assured Guaranty, Pre-Refunded, 6.00%, 8/15/39		3,000,000		3,155,040
Providence Health and Services, Refunding, Series A, 5.00%, 10/01/42		10,175,000		11,054,018
Providence Health and Services, Refunding, Series D, 5.00%, 10/01/41		10,000,000		10,938,900
Seattle Children’s Hospital, Refunding, Series B, 5.00%, 10/01/38		15,000,000		16,672,200
Washington State GO, Motor Vehicle Fuel Tax, Senior 520 Corridor Program Toll, Series C, 5.00%, 6/01/33		5,000,000		5,379,100

42       Annual Report franklintempleton.com

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
Washington (continued)
Washington State Health Care Facilities Authority Revenue, Overlake Hospital Medical Center, Series A, 5.00%, 7/01/42	$	5,000,000	$	5,511,050
Washington State Higher Education Facilities Authority Revenue,
Whitworth University Project, Pre-Refunded, 5.375%, 10/01/29		3,000,000		3,141,270
Whitworth University Project, Pre-Refunded, 5.875%, 10/01/34		6,000,000		6,324,120
				240,080,202
West Virginia 0.8%
Berkeley County Public Service Sewer District Sewer Revenue, Refunding, Series B, BAM Insured, 5.00%, 6/01/36		1,000,000		1,119,690
County Commission of Harrison County Solid Waste Disposal Revenue, Allegheny Energy Supply Co. LLC Harrison Station Project, Refunding, Series D, 5.50%, 10/15/37		9,000,000		8,952,930
Pleasants County PCR, County Commission, Series F, 5.25%, 10/15/37		14,000,000		13,841,940
West Virginia EDA Lottery Revenue, Series A, Pre-Refunded, 5.00%, 6/15/35		9,415,000		10,006,168
West Virginia Hospital Finance Authority Revenue,
Hospital, Improvement, West Virginia University Health System Obligated Group, Series A, 5.00%, 6/01/42		7,000,000		7,617,330
Hospital, Improvement, West Virginia University Health System Obligated Group, Series A, 5.00%, 6/01/47		5,000,000		5,421,000
West Virginia State GO, Series A, NATL Insured, Pre-Refunded, 5.20%, 11/01/26		10,000,000		10,370,900
West Virginia State University Revenues, West Virginia University Projects, Series A, 5.00%, 10/01/44		21,800,000		23,978,910
West Virginia State Water Development Authority Infrastructure Revenue,
West Virginia Infrastructure and Jobs Development Council Program, Refunding, Series A, 5.00%, 10/01/36		5,000,000		5,500,300
West Virginia Infrastructure and Jobs Development Council Program, Refunding, Series A, 5.00%, 10/01/45		5,435,000		5,921,161
				92,730,329
Wisconsin 1.2%
Monroe RDAR, The Monroe Clinic Inc., Pre-Refunded, 6.00%, 2/15/39		11,790,000		12,171,642
Superior Limited Obligation Revenue, Midwest Energy Resources Company Project, Refunding, Series E, NATL Insured, 6.90%, 8/01/21		3,000,000		3,419,160
Wisconsin Health and Educational Facilities Authority Revenue,
Marquette University, Refunding, Series B-1, 5.00%, 10/01/30		3,880,000		4,052,854
Marquette University, Refunding, Series B-2, 5.00%, 10/01/30		2,540,000		2,653,157
Marquette University, Series B-1, Pre-Refunded, 5.00%, 10/01/30		2,985,000		3,126,370
Marquette University, Series B-1, Pre-Refunded, 5.00%, 10/01/33		1,500,000		1,572,285
Marquette University, Series B-2, Pre-Refunded, 5.00%, 10/01/30		930,000		975,589
Marquette University, Series B-3, 5.00%, 10/01/30		1,570,000		1,639,944
Marquette University, Series B-3, Pre-Refunded, 5.00%, 10/01/30		580,000		608,432
Marquette University, Series B-3, Pre-Refunded, 5.00%, 10/01/33		1,750,000		1,835,785
Marshfield Clinic Health System Inc., Refunding, Series C, 5.00%, 2/15/47		37,795,000		40,860,552
Thedacare Inc., Series A, 5.50%, 12/15/38		5,000,000		5,208,100
Wisconsin State General Fund Annual Appropriation Revenue,
Series A, Pre-Refunded, 6.00%, 5/01/33		25,290,000		26,340,293
Series A, Pre-Refunded, 6.00%, 5/01/36		20,000,000		20,830,600
Wisconsin State Health and Educational Facilities Authority Revenue, Children’s Hospital of Wisconsin, Refunding, 4.00%, 8/15/42		15,000,000		15,196,950
				140,491,713

franklintempleton.com Annual Report       43

FRANKLIN FEDERAL TAX-FREE INCOME FUND

STATEMENT OF INVESTMENTS

	Principal Amount		Value
Municipal Bonds (continued)
Wyoming 0.1%
Campbell County Solid Waste Facilities Revenue, Basin Electric Power Cooperative, Dry Fork Station Facilities, Series A, 5.75%, 7/15/39	$	5,500,000	$	5,732,320
Wyoming Municipal Power Agency Power Supply System Revenue, Series A, BAM Insured, 5.00%, 1/01/42		7,000,000		7,795,200
				13,527,520
U.S. Territories 0.1%
Puerto Rico 0.1%
c Puerto Rico Electric Power Authority Power Revenue,
Refunding, Series A, 5.00%, 7/01/42		18,925,000		7,711,937
Series XX, 5.25%, 7/01/40		15,000,000		6,112,500
				13,824,437
Total Municipal Bonds before Short Term Investments (Cost $10,795,639,561)				11,266,013,567
Short Term Investments 0.3%
Municipal Bonds 0.3%
Florida 0.0%†
d St. Lucie County PCR, Florida Power and Light Co. Project, Refunding, Daily VRDN and Put, 1.45%, 9/01/28		2,200,000		2,200,000
New York 0.2%
d MTA Dedicated Tax Fund Revenue, Refunding, Subseries A-1, LOC Toronto Dominion Bank, Daily VRDN and Put, 1.40%, 11/01/31		1,000,000		1,000,000
d New York City Transitional Finance Authority Revenue, Future Tax Secured, Senior, Multi-Modal, Fiscal 2003, Refunding, Subseries A-4, SPA Toronto Dominion Bank, Daily VRDN and Put, 1.40%, 11/01/29		18,400,000		18,400,000
				19,400,000
Tennessee 0.1%
d Shelby County Health Educational and Housing Facility Board Revenue, Methodist Le Bonheur Healthcare, Refunding, Series A, AGMC Insured, SPA US Bank National Association, Daily VRDN and Put, 1.45%, 6/01/42		7,400,000		7,400,000
Total Short Term Investments (Cost $29,000,000)				29,000,000
Total Investments (Cost $10,824,639,561) 99.0%				11,295,013,567
Other Assets, less Liabilities 1.0%				114,949,326
Net Assets 100.0%			$	11,409,962,893

See Abbreviations on page 56.

^†Rounds to less than 0.1% of net assets.

^aThe maturity date shown represents the mandatory put date.

^bSecurity purchased on a when-issued basis. See Note 1(b).

^cSee Note 7 regarding defaulted securities.

^dVariable rate demand notes (VRDNs) are 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. Unless otherwise noted, the coupon rate is determined based on factors including supply and demand, underlying credit, tax treatment, and current short term rates. The coupon rate shown represents the rate at period end.

44       Annual Report  |  The accompanying notes are an integral part of these financial  statements. franklintempleton.com

FRANKLIN FEDERAL TAX-FREE INCOME FUND

Financial Statements

Statement of Assets and Liabilities

April 30, 2018

Assets:
Investments in securities:
Cost - Unaffiliated issuers	$10,824,639,561
Value - Unaffiliated issuers	$11,295,013,567
Cash	109,928
Receivables:
Capital shares sold	9,029,190
Interest	152,159,042
Other assets	9,666
Total assets	11,456,321,393
Liabilities:
Payables:
Investment securities purchased	26,305,260
Capital shares redeemed	12,594,267
Management fees	4,255,977
Distribution fees	1,371,895
Transfer agent fees	1,246,121
Accrued expenses and other liabilities	584,980
Total liabilities	46,358,500
Net assets, at value	$11,409,962,893
Net assets consist of:
Paid-in capital	$11,342,695,904
Undistributed net investment income	22,383,334
Net unrealized appreciation (depreciation)	470,374,006
Accumulated net realized gain (loss)	(425,490,351	)
Net assets, at value	$11,409,962,893

franklintempleton.com The accompanying notes are an integral part of these financial statements.   |  Annual Report        45

FRANKLIN FEDERAL TAX-FREE INCOME FUND

FINANCIAL STATEMENTS

Statement of Assets and Liabilities (continued)

April 30, 2018

Class A:
Net assets, at value	$	8,616,659,417
Shares outstanding		737,559,002
Net asset value per sharea		$11.68
Maximum offering price per share (net asset value per share ÷ 95.75%)		$12.20
Class M:
Net assets, at value	$	4,914
Shares outstanding		421
Net asset value per sharea		$11.69b
Maximum offering price per share (net asset value per share ÷ 95.75%)		$12.21
Class C:
Net assets, at value	$	1,220,402,032
Shares outstanding		104,528,391
Net asset value and maximum offering price per sharea		$11.68
Class R6:
Net assets, at value	$	365,406,449
Shares outstanding		31,257,499
Net asset value and maximum offering price per share		$11.69
Advisor Class :
Net assets, at value	$	1,207,490,081
Shares outstanding		103,254,611
Net asset value and maximum offering price per share		$11.69

^aRedemption price is equal to net asset value less contingent deferred sales charges, if applicable.

^bNet asset value and maximum offering price may not recalculate due to rounding of net assets and/or shares outstanding.

46       Annual Report  |  The accompanying notes are an integral part of these financial  statements. franklintempleton.com

FRANKLIN FEDERAL TAX-FREE INCOME FUND

FINANCIAL STATEMENTS

Statement of Operations

for the year ended April 30, 2018

Investment income:
Interest:
Unaffiliated issuers	$	517,752,715
Expenses:
Management fees (Note 3a)		53,791,265
Distribution fees: (Note 3c)
Class A		9,118,032
Class C		8,632,198
Transfer agent fees: (Note 3e)
Class A		5,391,800
Class M		1
Class C		785,473
Class R6		39,005
Advisor Class		873,849
Custodian fees (Note 4)		96,015
Reports to shareholders		383,727
Registration and filing fees		359,689
Professional fees		789,546
Trustees’ fees and expenses		117,824
Other		559,633
Total expenses		80,938,057
Expenses waived/paid by affiliates (Note 3f)		(705	)
Net expenses		80,937,352
Net investment income		436,815,363
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		(167,936,251	)
Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		(164,114,748	)
Net realized and unrealized gain (loss)		(332,050,999	)
Net increase (decrease) in net assets resulting from operations	$	104,764,364

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Annual Report       47

FRANKLIN FEDERAL TAX-FREE INCOME FUND

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Year Ended April 30,
	2018			2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	436,815,363		$	440,560,829
Net realized gain (loss)		(167,936,251	)		(24,031,855	)
Net change in unrealized appreciation (depreciation)		(164,114,748	)		(383,188,451	)
Net increase (decrease) in net assets resulting from operations		104,764,364			33,340,523
Distributions to shareholders from:
Net investment income:
Class A		(339,166,473	)		(331,153,686	)
Class M		(47	)		—
Class C		(42,090,359	)		(42,107,969	)
Class R6		(5,620,544	)		—
Advisor Class		(56,997,094	)		(57,250,896	)
Total distributions to shareholders		(443,874,517	)		(430,512,551	)
Capital share transactions: (Note 2)
Class A		(469,700,466	)		1,257,433,741
Class M		5,000			—
Class C		(154,348,270	)		241,141,581
Class R6		374,249,871			—
Advisor Class		(388,841,492	)		243,919,209
Total capital share transactions		(638,635,357	)		1,742,494,531
Net increase (decrease) in net assets		(977,745,510	)		1,345,322,503
Net assets:
Beginning of year		12,387,708,403			11,042,385,900
End of year	$	11,409,962,893		$	12,387,708,403
Undistributed net investment income included in net assets:
End of year	$	22,383,334		$	22,954,834

48       Annual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN FEDERAL TAX-FREE INCOME FUND

Notes to Financial Statements

1.  Organization and Significant Accounting Policies

Franklin Federal Tax-Free Income Fund (Fund) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Fund offers five classes of shares: Class A, Class M, Class C, Class R6 and Advisor Class. Each class of shares may differ by its initial sales load, contingent deferred sales charges, voting rights on matters affecting a single class, its exchange privilege and fees due to differing arrangements for distribution and transfer agent fees. Effective August 1, 2017, the Fund began offering a new class of shares, Class R6. Effective January 25, 2018, the Fund began offering a new class of shares, Class M. On June 8, 2018, the Fund liquidated Class M.

The following summarizes the Fund’s significant accounting policies.

a.  Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. Under compliance policies and procedures approved by the Fund’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Debt securities generally trade in the over-the-counter market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary

valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

b.  Securities Purchased on a When-Issued Basis

The Fund purchases securities on a when-issued basis, with payment and delivery scheduled for a future date. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of holding the securities, it may sell the securities before the settlement date. Sufficient assets have been segregated for these securities.

c.  Income Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.

franklintempleton.com Annual Report       49

FRANKLIN FEDERAL TAX-FREE INCOME FUND

NOTES TO FINANCIAL STATEMENTS

1.  Organization and Significant Accounting Policies (continued)

c.  Income Taxes (continued)

The Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of April 30, 2018, the Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on the statute of limitations in each jurisdiction in which the Fund invests.

d.  Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. 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.

Realized and unrealized gains and losses and net investment income, excluding 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.

e.  Insurance

The scheduled payments of interest and principal for each insured municipal security in the Fund are insured by either a new issue insurance policy or a secondary insurance 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.

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, an event involving an insurer could have an adverse effect on the value of the securities insured by that insurance company. There can be no assurance the insurer will be able to fulfill its obligations under the terms of the policy.

f.  Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP 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.

g.  Guarantees and Indemnifications

Under the Fund’s organizational documents, its officers and trustees are indemnified by the Fund against certain liabilities arising out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. Currently, the Fund expects the risk of loss to be remote.

50       Annual Report franklintempleton.com

FRANKLIN FEDERAL TAX-FREE INCOME FUND

NOTES TO FINANCIAL STATEMENTS

2.  Shares of Beneficial Interest

At April 30, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Year Ended April 30,
	2018						2017
	Shares			Amount			Shares			Amount
Class A Shares:
Shares sold		73,028,535		$	871,574,079			90,539,595		$	1,109,317,525
Shares issued in reinvestment of distributions		25,257,992			301,272,020			23,991,962			293,857,679
Shares issued on reorganization		—			—			128,179,562			1,526,626,933
Shares redeemed		(137,858,514	)		(1,642,546,565	)		(137,377,476	)		(1,672,368,396	)
Net increase (decrease)		(39,571,987	)	$	(469,700,466	)		105,333,643		$	1,257,433,741
Class M Sharesa:
Shares sold		421		$	5,000
Class C Shares:
Shares sold		9,367,235		$	111,923,358			15,472,829		$	190,807,233
Shares issued in reinvestment of distributions		3,190,500			38,054,402			3,021,130			36,978,463
Shares issued on reorganization		—			—			20,739,803			247,011,073
Shares redeemed		(25,508,244	)		(304,326,030	)		(19,189,681	)		(233,655,188	)
Net increase (decrease)		(12,950,509	)	$	(154,348,270	)		20,044,081		$	241,141,581
Class R6 Sharesb:
Shares sold		33,911,537		$	405,677,112
Shares issued in reinvestment of distributions		463,632			5,483,895
Shares redeemed		(3,117,670	)		(36,911,136	)
Net increase (decrease)		31,257,499		$	374,249,871
Advisor Class Shares:
Shares sold		36,899,463		$	441,364,947			53,426,552		$	652,653,037
Shares issued in reinvestment of distributions		4,015,476			47,980,826			3,892,888			47,733,709
Shares issued on reorganization		—			—			4,902,948			58,443,306
Shares redeemed		(73,426,328	)		(878,187,265	)		(42,008,684	)		(514,910,843	)
Net increase (decrease)		(32,511,389	)	$	(388,841,492	)		20,213,704		$	243,919,209

^aFor the period January 25, 2018 (effective date) to April 30, 2018.

^bFor the period August 1, 2017 (effective date) to April 30, 2018.

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 Fund 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

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

NOTES TO FINANCIAL STATEMENTS

3.  Transactions with Affiliates (continued)

a.  Management Fees

The Fund pays an investment management fee to Advisers based on the month-end net assets of the Fund as follows:

Annualized Fee Rate	Net Assets
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

For the year ended April 30, 2018, the gross effective investment management fee rate was 0.445% of the Fund’s average daily net assets.

b.  Administrative Fees

Under an agreement with Advisers, FT Services provides administrative services to the Fund. The fee is paid by Advisers based on the Fund’s average daily net assets, and is not an additional expense of the Fund.

c.  Distribution Fees

The Board has adopted distribution plans for each share class, with the exception of Class R6 and Advisor Class shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s Class A and M reimbursement distribution plans, the Fund reimburses Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to the maximum annual plan rates for each share class. Under the Class A and M reimbursement distribution plans, costs exceeding the maximum for the current plan year cannot be reimbursed in subsequent periods. In addition, under the Fund’s Class C compensation distribution plan, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to the maximum annual plan rate. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.

The maximum annual plan rates, based on the average daily net assets, for each class, are as follows:

Class A	0.10	%
Class M	0.25	%
Class C	0.65	%

d.  Sales Charges/Underwriting Agreements

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. These charges are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. Distributors has advised the Fund of the following commission transactions related to the sales and redemptions of the Fund’s shares for the year:

Sales charges retained net of commissions paid to unaffiliated brokers/dealers	$	1,256,001
CDSC retained	$	173,356

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

NOTES TO FINANCIAL STATEMENTS

e.  Transfer Agent Fees

Each class of shares pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations. Effective November 1, 2017, the fees are based on an annualized asset based fee of 0.02% plus a transaction based fee. Prior to November 1, 2017, the fees were account based fees that varied based on fund or account type. In addition, each class reimburses Investor Services for out of pocket expenses incurred and, except for Class R6, reimburses shareholder servicing fees paid to third parties. These fees are allocated daily based upon their relative proportion of such classes’ aggregate net assets. Class R6 pays Investor Services transfer agent fees specific to that class.

For the year ended April 30, 2018, the Fund paid transfer agent fees of $7,090,128, of which $2,663,943 was retained by Investor Services.

f.  Waiver and Expense Reimbursements

Investor Services has voluntarily agreed in advance to waive or limit its fees so that the Class R6 transfer agent fees do not exceed 0.03%. Investor Services may discontinue this waiver in the future.

g.  Interfund Transactions

The Fund engaged in purchases and sales of investments with funds or other accounts that have common investment managers (or affiliated investment managers), directors, trustees or officers. During the year ended April 30, 2018, these purchase and sale transactions aggregated $368,003,800 and $431,435,000, respectively.

4.  Expense Offset Arrangement

Effective December 1, 2017, the Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the year ended April 30, 2018, there were no credits earned.

5.  Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains. Capital loss carryforwards with no expiration, if any, must be fully utilized before those losses with expiration dates.

At April 30, 2018, capital loss carryforwards were as follows:

Capital loss carryforwards subject to expiration:
2019	$	17,435,155
Capital loss carryforwards not subject to expiration:
Short term		153,015,785
Long term		232,148,067
Total capital loss carryforwards	$	402,599,007a

^aIncludes $54,890,384 from the merged Franklin Insured Tax-Free Income Fund, which may be carried over to offset future capital gains, subject to certain limitations.

On April 30, 2018, the Fund had expired capital loss carryforwards of $3,803,336, which were reclassified to paid-in capital.

The tax character of distributions paid during the years ended April 30, 2018 and 2017, was as follows:

	2018		2017
Distributions paid from tax exempt income	$	443,874,517	$	430,512,551

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

NOTES TO FINANCIAL STATEMENTS

5.  Income Taxes (continued)

At April 30, 2018, the cost of investments, net unrealized appreciation (depreciation), undistributed tax exempt and ordinary income for income tax purposes were as follows:

Cost of investments	$	10,846,766,771
Unrealized appreciation	$	536,391,897
Unrealized depreciation		(88,145,101	)
Net unrealized appreciation (depreciation)	$	448,246,796
Undistributed tax exempt income	$	22,424,144
Undistributed ordinary income		57,110
Distributable earnings	$	22,481,254

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of defaulted securities, bond discounts and premiums, wash sales and bond workout expenditures.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into law. Certain provisions of the Act were effective upon enactment with the remainder becoming effective for tax years beginning after December 31, 2017. Management has reviewed the requirements and believes the adoption of these provisions of the Act will not have a material impact on the financial statements.

6.  Investment Transactions

Purchases and sales of investments (excluding short term securities) for the year ended April 30, 2018, aggregated $1,951,223,588 and $2,479,489,732, respectively.

7.  Defaulted Securities

The Fund held defaulted securities and/or other securities for which the income has been deemed uncollectible. At April 30, 2018, the aggregate value of these securities was $13,824,437, representing 0.1% of the Fund’s net assets. The Fund discontinues accruing income on securities for which income has been deemed uncollectible and provides an estimate for losses on interest receivable. The securities have been identified in the accompanying Statement of Investments.

8.  Concentration of Risk

Investing in Puerto Rico securities may expose the Fund to heightened risks due to recent adverse economic and market changes, credit downgrades and ongoing restructuring discussions. In addition, investments in these securities are sensitive to interest rate changes and credit risk of the issuer and may subject the Fund to increased market volatility. The market for these investments may be limited, which may make them difficult to buy or sell.

9.  Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $2 billion (Global Credit Facility) which matures on February 8, 2019. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

NOTES TO FINANCIAL STATEMENTS

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.15% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses in the Statement of Operations. During the year ended April 30, 2018, the Fund did not use the Global Credit Facility.

10.  Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

• Level 1 – quoted prices in active markets for identical financial instruments

• Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

At April 30, 2018, all of the Fund’s investments in financial instruments carried at fair value were valued using Level 2 inputs.

11.  New Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2017-08, Receivables— Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendments in the ASU shorten the amortization period for certain callable debt securities acquired at a premium, to be amortized to the earliest call date. The ASU does not require an accounting change for securities acquired at a discount, which continues to be amortized to maturity. The ASU is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Management has reviewed the requirements and believes the adoption of this ASU will not have a material impact on the financial statements.

12.  Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure other than those already disclosed in the financial statements.

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

NOTES TO FINANCIAL STATEMENTS

Abbreviations

Selected Portfolio

AGMC	Assured Guaranty Municipal Corp.	IDAR	Industrial Development Authority Revenue
AMBAC	American Municipal Bond Assurance Corp.	IDB	Industrial Development Bond/Board
BAM	Build America Mutual Assurance Co.	IDC	Industrial Development Corp.
BHAC	Berkshire Hathaway Assurance Corp.	ISD	Independent School District
CDA	Community Development Authority/Agency	LOC	Letter of Credit
CDD	Community Development District	MFH	Multi-Family Housing
COP	Certificate of Participation	MFMR	Multi-Family Mortgage Revenue
EDA	Economic Development Authority	MTA	Metropolitan Transit Authority
EDC	Economic Development Corp.	NATL	National Public Financial Guarantee Corp.
ETM	Escrow to Maturity	PCC	Pollution Control Corp.
FGIC	Financial Guaranty Insurance Co.	PCR	Pollution Control Revenue
FHLMC	Federal Home Loan Mortgage Corp.	PSF	Permanent School Fund
FICO	Financing Corp.	RDA	Redevelopment Agency/Authority
GARB	General Airport Revenue Bonds	RDAR	Redevelopment Agency Revenue
GO	General Obligation	SPA	Standby Purchase Agreement
HFA	Housing Finance Authority/Agency	UHSD	Unified/Union High School District
HFAR	Housing Finance Authority Revenue	USD	Unified/Union School District
IDA	Industrial Development Authority/Agency

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of Franklin Federal Tax-Free Income Fund

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Franklin Federal Tax-Free Income Fund (the “Fund”) as of April 30, 2018, the related statement of operations for the year ended April 30, 2018, the statement of changes in net assets for each of the two years in the period ended April 30, 2018, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of April 30, 2018, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended April 30, 2018 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of April 30, 2018 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California

June 18, 2018

We have served as the auditor of one or more investment companies in the Franklin Templeton Group of Funds since 1948.

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

Tax Information (unaudited)

Under Section 852(b)(5)(A) of the Internal Revenue Code, the Fund hereby reports 100% of the distributions paid from net investment income as exempt-interest dividends for the fiscal year ended April 30, 2018. A portion of the Fund’s exempt-interest dividends may be subject to the federal alternative minimum tax. By mid-February 2019, shareholders will be notified of amounts for use in preparing their 2018 income tax returns.

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

Special Meeting of Shareholders

MEETING OF SHAREHOLDERS: OCTOBER 30, 2017 AND RECONVENED ON DECEMBER 15, 2017

(UNAUDITED)

A Special Meeting of Shareholders of the Fund was held at the offices of Franklin Templeton Investments, One Franklin Parkway, San Mateo, California on October 30, 2017 and reconvened on December 15, 2017. The purpose of the meeting was to elect Trustees of the Fund and to vote on the following proposals for the Fund: to approve the use of a “manager of managers” structure whereby the Fund’s investment manager would be able to hire and replace subadvisers without shareholder approval and to approve an amended fundamental investment restriction regarding investments in commodities. At the meeting, (i) the following persons were elected by the shareholders to serve as Trustees of the Fund: Harris J. Ashton, Terrence J. Checki, Mary C. Choksi, Edith E. Holiday, Gregory E. Johnson, Rupert H. Johnson, Jr., J. Michael Luttig, Larry D. Thompson, and John B. Wilson; and (ii) the proposals to use a “manager of managers” structure and to approve an amended fundamental investment restriction regarding investments in commodities were approved by shareholders of the Fund. No other business was transacted at the meeting.

In connection with the meeting, management is aware that some shareholders received from the proxy solicitor numerous calls and mailings that may have been distracting. Management is taking steps to ensure that, in the future, for any new shareholder meeting solicitations that occur, such activity is not repeated. Management apologizes for any inconvenience that may have been caused as a result of such calls and mailings.

The results of the voting at the meeting are as follows:

Proposal 1. To elect a Board of Trustees:

Name	For		Withheld
Harris J. Ashton		586,968,901		18,552,749
Terrence J. Checki		587,067,424		18,454,226
Mary C. Choksi		587,559,428		17,962,222
Edith E. Holiday		587,690,205		17,831,445
Gregory E. Johnson		587,598,227		17,923,423
Rupert H. Johnson, Jr.		587,204,078		18,317,573
J. Michael Luttig		587,668,014		17,853,636
Larry D. Thompson		587,358,284		18,163,366
John B. Wilson		587,676,823		17,844,827

Total Trust Shares Outstanding*: 1,025,958,484

* As of the record date.

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

SPECIAL MEETING OF SHAREHOLDERS

Proposal 2. To approve the use of a “manager of managers” structure whereby the Fund’s investment manager would be able to hire and replace subadvisers without shareholder approval:

	Shares
For		421,717,060
Against		31,987,624
Abstain		23,422,375
Broker Non-Votes		128,394,587
Total Fund Shares Voted		605,521,651
Total Fund Shares Outstanding*		1,025,958,484

Proposal 3. To approve an amended fundamental investment restriction regarding investments in commodities:

	Shares
For		422,772,501
Against		24,575,782
Abstain		29,778,780
Broker Non-Votes		128,394,587
Total Fund Shares Voted		605,521,651
Total Fund Shares Outstanding*		1,025,958,484

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

Board Members and Officers

The name, year of birth and address of the officers and board members, as well as their affiliations, positions held with the Fund, principal occupations during at least the past five years and number of US registered portfolios overseen in the Franklin Templeton Investments fund complex, are shown below. Generally, each board member serves until that person’s successor is elected and qualified.

Independent Board Members

Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years
Harris J. Ashton (1932) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 1982	138	Bar-S Foods (meat packing company) (1981-2010).
Principal Occupation During at Least the Past 5 Years:
Director of various companies; and formerly, Director, RBC Holdings, Inc. (bank holding company) (until 2002); and President, Chief Executive Officer and Chairman of the Board, General Host Corporation (nursery and craft centers) (until 1998).
Terrence J. Checki (1945) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since December 2017	112	Hess Corporation (exploration of oil and gas) (2014-present).
Principal Occupation During at Least the Past 5 Years:
Member of the Council on Foreign Relations (1996-present); Member of the National Committee on U.S.-China Relations (1999- present); member of the Board of Trustees of the Economic Club of New York (2013 -present); member of the Board of Trustees of the Foreign Policy Association (2005-present) and member of various other boards of trustees and advisory boards; and formerly, Executive Vice President of the Federal Reserve Bank of New York and Head of its Emerging Markets and Internal Affairs Group and Member of Management Committee (1995-2014); and Visiting Fellow at the Council on Foreign Relations (2014).
Mary C. Choksi (1950) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2014	138	Avis Budget Group Inc. (car rental) (2007-present), Omnicom Group Inc. (advertising and marketing communications services) (2011-present) and White Mountains Insurance Group, Ltd. (holding company) (2017-present).
Principal Occupation During at Least the Past 5 Years:
Director of various companies; and formerly, Founder and Senior Advisor, Strategic Investment Group (investment management group) (2015–2017); Founding Partner and Senior Managing Director, Strategic Investment Group (1987-2015); Founding Partner and Managing Director, Emerging Markets Management LLC (investment management firm) (1987-2011); and Loan Officer/Senior Loan Officer/Senior Pension Investment Officer, World Bank Group (international financial institution) (1977-1987).
Edith E. Holiday (1952) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2005	138	Hess Corporation (exploration of oil and gas) (1993-present), Canadian National Railway (railroad) (2001-present), White Mountains Insurance Group, Ltd. (holding company) (2004-present), Santander Consumer USA Holdings, Inc. (consumer finance) (2016-present), RTI International Metals, Inc. (manufacture and distribution of titanium) (1999-2015) and H.J. Heinz Company (processed foods and allied products) (1994-2013).
Principal Occupation During at Least the Past 5 Years:
Director or Trustee of various companies and trusts; and formerly, Assistant to the President of the United States and Secretary of the Cabinet (1990-1993); General Counsel to the United States Treasury Department (1989-1990); and Counselor to the Secretary and Assistant Secretary for Public Affairs and Public Liaison – United States Treasury Department (1988-1989).
J. Michael Luttig (1954) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2009	138	Boeing Capital Corporation (aircraft financing) (2006-2013).
Principal Occupation During at Least the Past 5 Years:
Executive Vice President, General Counsel and member of the Executive Council, The Boeing Company (aerospace company) (2006- present); and formerly, Federal Appeals Court Judge, U.S. Court of Appeals for the Fourth Circuit (1991-2006).

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

Independent Board Members (continued)

Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years
Larry D. Thompson (1945) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2007	138	The Southern Company (energy company) (2014-present); previously 2010-2012), Graham Holdings Company (education and media organization) (2011-present) and Cbeyond, Inc. (business communications provider) (2010-2012).
Principal Occupation During at Least the Past 5 Years:
Director of various companies; Counsel, Finch McCranie, LLP (law firm) (2015-present); Independent Compliance Monitor and Auditor, Volkswagen AG (manufacturer of automobiles and commercial vehicles) (2017 – present); John A. Sibley Professor of Corporate and Business Law, University of Georgia School of Law (2015-present; previously 2011-2012); and formerly, Executive Vice President — Government Affairs, General Counsel and Corporate Secretary, PepsiCo, Inc. (consumer products) (2012-2014); Senior Vice President Government Affairs, General Counsel and Corporate Secretary, PepsiCo, Inc. (consumer products) (2012-2014); Senior Vice President — Government Affairs, General Counsel and Secretary, PepsiCo, Inc. (2004-2011); Senior Fellow of The Brookings Institution (2003-2004); Visiting Professor, University of Georgia School of Law (2004); and Deputy Attorney General, U.S. Department of Justice (2001-2003).
John B. Wilson (1959) One Franklin Parkway San Mateo, CA 94403-1906	Lead Independent Trustee	Trustee sice 2006 and lead Independent Trustee since 2008	112	None
Principal Occupation During at Least the Past 5 Years:
President and Founder, Hyannis Port Capital, Inc. (real estate and private equity investing) (2002-present); Senior Advisor, McKinsey & Co. (consulting) (2017-present); serves on private and non-profit boards; and formerly, President, Staples International and Head of Global Transformation (office supplies) (2012-2016); Chief Operating Officer and Executive Vice President, Gap, Inc. (retail) (1996-2000); Chief Financial Officer and Executive Vice President – Finance and Strategy, Staples, Inc. (1992-1996); Senior Vice President – Corporate Planning, Northwest Airlines, Inc. (airlines) (1990-1992); and Vice President and Partner, Bain & Company (consulting firm) (1986-1990).
Interested Board Members and Officers
Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years
**Gregory E. Johnson (1961) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2007	152	None
Principal Occupation During at Least the Past 5 Years:
Chairman of the Board, Member - Office of the Chairman, Director and Chief Executive Officer, Franklin Resources, Inc.; officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 43 of the investment companies in Franklin Templeton Investments; Vice Chairman, Investment Company Institute; and formerly, President, Franklin Resources, Inc. (1994-2015).
**Rupert H. Johnson, Jr. (1940) One Franklin Parkway San Mateo, CA 94403-1906	Chairman of the Board and Trustee	Chairman of the Board and Trustee since 2013	138	None
Principal Occupation During at Least the Past 5 Years:
Vice Chairman, Member – Office of the Chairman and Director, Franklin Resources, Inc.; Director, Franklin Advisers, Inc.; Senior Vice President, Franklin Advisory Services, LLC; and officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 41 of the investment companies in Franklin Templeton Investments.
Sheila Amoroso (1959) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 1999	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Senior Vice President, Franklin Advisers, Inc.; and officer of seven of the investment companies in Franklin Templeton Investments.

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

Interested Board Members and Officers (continued)

Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years
Alison E. Baur (1964) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2012	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Deputy General Counsel, Franklin Templeton Investments; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 45 of the investment companies in Franklin Templeton Investments.
Rafael R. Costas, Jr. (1965) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 1999	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Senior Vice President, Franklin Advisers, Inc.; and officer of seven of the investment companies in Franklin Templeton Investments.
Gaston Gardey (1967) One Franklin Parkway San Mateo, CA 94403-1906	Chief Financial Officer, Chief Accounting Officer and Treasurer	Since 2009	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Treasurer, U.S. Fund Administration & Reporting, Franklin Templeton Investments; and officer of 28 of the investment companies in Franklin Templeton Investments.
Aliya S. Gordon (1973) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2009	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Senior Associate General Counsel, Franklin Templeton Investments; and officer of 45 of the investment companies in Franklin Templeton Investments.
Steven J. Gray (1955) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2009	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Senior Associate General Counsel, Franklin Templeton Investments; Vice President, Franklin Templeton Distributors, Inc. and FASA, LLC; and officer of 45 of the investment companies in Franklin Templeton Investments.
Matthew T. Hinkle (1971) One Franklin Parkway San Mateo, CA 94403-1906	Chief Executive Officer – Finance and Administration	Since June 2017	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Senior Vice President, Franklin Templeton Services, LLC; officer of 45 of the investment companies in Franklin Templeton Investments; and formerly, Vice President, Global Tax (2012-April 2017) and Treasurer/Assistant Treasurer, Franklin Templeton Investments (2009-2017).
Robert Lim (1948) One Franklin Parkway San Mateo, CA 94403-1906	Vice President – AML Compliance	Since 2016	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Vice President, Franklin Templeton Companies, LLC; Chief Compliance Officer, Franklin Templeton Distributors, Inc. and Franklin Templeton Investor Services, LLC; and officer of 45 of the investment companies in Franklin Templeton Investments.

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

Interested Board Members and Officers (continued)

Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years
Christopher J. Molumphy (1962) One Franklin Parkway San Mateo, CA 94403-1906	President and Chief Executive Officer – Investment Management	Since 2010	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Director and Executive Vice President, Franklin Advisers, Inc.; Executive Vice President, Franklin Templeton Institutional, LLC; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 21 of the investment companies in Franklin Templeton Investments.
Kimberly H. Novotny (1972) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923	Vice President	Since 2013	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Associate General Counsel, Franklin Templeton Investments; Vice President and Corporate Secretary, Fiduciary Trust International of the South; Vice President, Templeton Investment Counsel, LLC; Assistant Secretary, Franklin Resources, Inc.; and officer of 45 of the investment companies in Franklin Templeton Investments.
Robert C. Rosselot (1960) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923	Chief Compliance Officer	Since 2013	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Director, Global Compliance, Franklin Templeton Investments; Vice President, Franklin Templeton Companies, LLC; officer of 45 of the investment companies in Franklin Templeton Investments; and formerly, Senior Associate General Counsel, Franklin Templeton Investments (2007-2013); and Secretary and Vice President, Templeton Group of Funds (2004-2013).
Karen L. Skidmore (1952) One Franklin Parkway San Mateo, CA 94403-1906	Vice President and Secretary	Since 2006	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Senior Associate General Counsel, Franklin Templeton Investments; and officer of 45 of the investment companies in Franklin Templeton Investments.
Navid J. Tofigh (1972) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2015	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Associate General Counsel, Franklin Templeton Investments; and officer of 45 of the investment companies in Franklin Templeton Investments.
Craig S. Tyle (1960) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2005	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
General Counsel and Executive Vice President, Franklin Resources, Inc.; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 45 of the investment companies in Franklin Templeton Investments.
Thomas Walsh (1961) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 1999	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Senior Vice President, Franklin Advisers, Inc.; and officer of seven of the investment companies in Franklin Templeton Investments.

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

Interested Board Members and Officers (continued)

Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years
Lori A. Weber (1964) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923	Vice President	Since 2011	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Senior Associate General Counsel, Franklin Templeton Investments; Assistant Secretary, Franklin Resources, Inc.; Vice President and Secretary, Templeton Investment Counsel, LLC; and officer of 45 of the investment companies in Franklin Templeton Investments.

*We base the number of portfolios on each separate series of the US registered investment companies within the Franklin Templeton Investments fund complex. These portfolios have a common investment manager or affiliated investment managers.

**Gregory E. Johnson is considered to be an interested person of the Fund under the federal securities laws due to his position as an officer and director of Franklin Resources, Inc. (Resources), which is the parent company of the Fund’s investment manager and distributor. Rupert H. Johnson, Jr. is considered to be an interested person of the Fund under the federal securities laws due to his position as officer and director and major shareholder of Resources.

Note 1: Rupert H. Johnson, Jr. is the uncle of Gregory E. Johnson.

Note 2: Officer information is current as of the date of this report. It is possible that after this date, information about officers may change.

The Sarbanes-Oxley Act of 2002 and Rules adopted by the Securities and Exchange Commission require the Fund to disclose whether the Fund’s Audit Committee includes at least one member who is an audit committee financial expert within the meaning of such Act and Rules. The Fund’s Board has determined that there is at least one such financial expert on the Audit Committee and has designated John B. Wilson as its audit committee financial expert. The Board believes that Mr. Wilson qualifies as such an expert in view of his extensive business background and experience, including service as chief financial officer of Staples, Inc. from 1992 to 1996. Mr. Wilson has been a Member and Chairman of the Fund’s Audit Committee since 2006. As a result of such background and experience, the Board believes that Mr. Wilson has acquired an understanding of generally accepted accounting principles and financial statements, the general application of such principles in connection with the accounting estimates, accruals and reserves, and analyzing and evaluating financial statements that present a breadth and level of complexity of accounting issues generally comparable to those of the Fund, as well as an understanding of internal controls and procedures for financial reporting and an understanding of audit committee functions. Mr. Wilson is an independent Board member as that term is defined under the relevant Securities and Exchange Commission Rules and Releases.

The Statement of Additional Information (SAI) includes additional information about the board members and is available, without charge, upon request. Shareholders may call (800) DIAL BEN/342-5236 to request the SAI.

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

Shareholder Information

Board Approval of Investment Management Agreements

FRANKLIN FEDERAL TAX-FREE INCOME FUND

(Fund)

At an in-person meeting held on February 27, 2018 (Meeting), the Board of Trustees (Board) of the Fund, including a majority of the trustees who are not “interested persons” as defined in the Investment Company Act of 1940 (Independent Trustees), reviewed and approved the continuance of the investment management agreement between Franklin Advisers, Inc. (Manager) and the Fund (Management Agreement) for an additional one-year period. The Independent Trustees received advice from and met separately with Independent Trustee counsel in considering whether to approve the continuation of the Management Agreement.

In considering the continuation of the Management Agreement, the Board reviewed and considered information provided by the Manager at the Meeting and throughout the year at meetings of the Board and its committees. The Board also reviewed and considered information provided in response to a detailed set of requests for information submitted to the Manager by Independent Trustee counsel on behalf of the Independent Trustees in connection with the annual contract renewal process. In addition, prior to the Meeting, the Independent Trustees held a telephonic contract renewal meeting at which the Independent Trustees conferred amongst themselves and Independent Trustee counsel about contract renewal matters. The Board reviewed and considered all of the factors it deemed relevant in approving the continuance of the Management Agreement, including, but not limited to: (i) the nature, extent and quality of the services provided by the Manager; (ii) the investment performance of the Fund; (iii) the costs of the services provided and profits realized by the Manager and its affiliates from the relationship with the Fund; (iv) the extent to which economies of scale are realized as the Fund grows; and (v) whether fee levels reflect these economies of scale for the benefit of Fund investors.

In approving the continuance of the Management Agreement, the Board, including a majority of the Independent Trustees, determined that the terms of the Management Agreement are fair and reasonable and that the continuance of such Management Agreement is in the interests of the Fund and its shareholders. While attention was given to all information furnished, the following discusses some primary factors relevant to the Board’s determination.

Nature, Extent and Quality of Services

The Board reviewed and considered information regarding the nature, extent and quality of investment management services provided by the Manager and its affiliates to the Fund and its shareholders. This information included, among other things, the qualifications, background and experience of the senior management and investment personnel of the Manager; the structure of investment personnel compensation; oversight of third-party service providers; investment performance reports and related financial information for the Fund; reports on expenses, shareholder services, marketing support payments made to financial intermediaries and third party servicing arrangements; legal and compliance matters; risk controls; pricing and other services provided by the Manager and its affiliates; and management fees charged by the Manager and its affiliates to U.S. funds and other accounts, including management’s explanation of differences among accounts where relevant. The Board also reviewed and considered an annual report on payments made by Franklin Templeton Investments (FTI) or the Fund to financial intermediaries, as well as a memorandum relating to third-party servicing arrangements in response to a guidance update in 2016 from the U.S. Securities and Exchange Commission (SEC) relating to mutual fund distribution and sub-accounting fees. The Board noted management’s continuing efforts and expenditures in establishing effective business continuity plans and developing strategies to address areas of heightened concern in the mutual fund industry, such as cybersecurity and liquidity risk management. The Board also recognized management’s commitment to facilitating Board oversight of particular areas, including derivatives and payments to intermediaries, by enhanced reporting.

The Board also reviewed and considered the benefits provided to Fund shareholders of investing in a fund that is part of the Franklin Templeton family of funds. The Board noted the financial position of Franklin Resources, Inc. (FRI), the Manager’s parent, and its commitment to the mutual fund business as evidenced by its continued introduction of new funds, reassessment of the fund offerings in response to the market environment and project initiatives and capital investments relating to the services provided to the Fund by the FTI organization.

Following consideration of such information, the Board was satisfied with the nature, extent and quality of services provided by the Manager and its affiliates to the Fund and its shareholders.

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

SHAREHOLDER INFORMATION

Fund Performance

The Board reviewed and considered the performance results of the Fund over various time periods ended December 31, 2017. The Board considered the performance returns for the Fund in comparison to the performance returns of mutual funds deemed comparable to the Fund included in a universe (Performance Universe) selected by Broadridge Financial Solutions, Inc. (Broadridge), an independent provider of investment company data. The Board received a description of the methodology used by Broadridge to select the mutual funds included in a Performance Universe. The Board also reviewed and considered Fund performance reports provided and discussions that occurred with portfolio managers at Board meetings throughout the year. A summary of the Fund’s performance results is below.

The Performance Universe for the Fund included the Fund and all retail and institutional general & insured municipal debt funds. The Board noted that the Fund’s annualized income return for the one-, three-, five- and 10-year periods was in the first (the best) or second quintile and above the median of its Performance Universe. The Board also noted that the Fund’s annualized total return for the one-, three- and five-year periods was below the median of its Performance Universe, but for the 10-year period was above the median of its Performance Universe. Given the Fund’s income-oriented investment objective, the Board concluded that the Fund’s performance was satisfactory. In doing so, the Board noted that the Fund’s annualized total return for each of the one-, three- and five-year periods, while below the median, exceeded 2.2%.

Comparative Fees and Expenses

The Board reviewed and considered information regarding the Fund’s actual total expense ratio and its various components, including, as applicable, management fees; transfer agent expenses; underlying fund expenses; Rule 12b-1 and non-Rule 12b-1 service fees; and other non-management fees. The Board also noted the quarterly and annual reports it receives on all marketing support payments made by FTI to financial intermediaries. The Board considered the actual total expense ratio and, separately, the contractual management fee rate, without the effect of fee waivers (Management Rate), if any, of the Fund in comparison to the median expense ratio and median Management Rate, respectively, of other mutual funds deemed comparable to and with a similar expense structure as the Fund selected by Broadridge (Expense Group). Broadridge fee and expense data is based upon information taken from each fund’s most recent annual report, which reflects historical asset levels that may be quite different from those currently

existing, particularly in a period of market volatility. While recognizing such inherent limitation and the fact that expense ratios and Management Rates generally increase as assets decline and decrease as assets grow, the Board believed the independent analysis conducted by Broadridge to be an appropriate measure of comparative fees and expenses. The Broadridge Management Rate includes administrative charges, and the actual total expense ratio, for comparative consistency, was shown for Class A shares for funds with multiple classes of shares. The Board received a description of the methodology used by Broadridge to select the mutual funds included in an Expense Group.

The Expense Group for the Fund included the Fund and 11 other general & insured municipal debt funds. The Board noted that the Management Rate for the Fund was slightly above the median of its Expense Group, but its actual total expense ratio was below the median of its Expense Group. The Board concluded that the Management Rate charged to the Fund is reasonable.

Profitability

The Board reviewed and considered information regarding the profits realized by the Manager and its affiliates in connection with the operation of the Fund. In this respect, the Board considered the Fund profitability analysis provided by the Manager that addresses the overall profitability of FTI’s U.S. fund business, as well as its profits in providing investment management and other services to each of the individual funds during the 12-month period ended September 30, 2017, being the most recent fiscal year-end for FRI. The Board noted that although management continually makes refinements to its methodologies used in calculating profitability in response to organizational and product-related changes, the overall methodology has remained consistent with that used in the Fund’s profitability report presentations from prior years. Additionally, PricewaterhouseCoopers LLP, auditor to Franklin Resources, Inc. and certain Franklin Templeton funds, has been engaged by the Manager to periodically review and assess the allocation methodologies to be used solely by the Fund’s Board with respect to the profitability analysis.

The Board noted management’s 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 the Fund in determining its profitability, as well as the fact that the level of profits, to a certain extent, reflected operational cost savings and efficiencies initiated by management. The Board also noted

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FRANKLIN FEDERAL TAX-FREE INCOME FUND

SHAREHOLDER INFORMATION

management’s expenditures in improving shareholder services provided to the Fund, as well as the need to implement systems and meet additional regulatory and compliance requirements resulting from recent SEC and other regulatory requirements.

The Board also considered the extent to which the Manager and its affiliates might derive ancillary benefits from fund operations, including revenues generated from transfer agent services, potential benefits resulting from personnel and systems enhancements necessitated by fund growth, as well as increased leverage with service providers and counterparties. Based upon its consideration of all these factors, the Board concluded that the level of profits realized by the Manager and its affiliates from providing services to the Fund was not excessive in view of the nature, extent and quality of services provided to the Fund.

Economies of Scale

The Board reviewed and considered the extent to which the Manager may realize economies of scale, if any, as the Fund grows larger and whether the Fund’s management fee structure reflects any economies of scale for the benefit of shareholders. With respect to possible economies of scale, the Board noted the existence of management fee breakpoints, which operate generally to share any economies of scale with a Fund’s shareholders by reducing the Fund’s effective management fees as the Fund grows in size. The Board considered the Manager’s view that any analyses of potential economies of scale in managing a particular fund are inherently limited in light of the joint and common costs and investments the Manager incurs across the Franklin Templeton family of funds as a whole. The Board concluded that to the extent economies of scale may be realized by the Manager and its affiliates, the Fund’s management fee structure provided a sharing of benefits with the Fund and its shareholders as the Fund grows.

Conclusion

Based on its review, consideration and evaluation of all factors it believed relevant, including the above-described factors and conclusions, the Board unanimously approved the continuation of the Management Agreement for an additional one-year period.

Proxy Voting Policies and Procedures

The Fund’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Fund uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Fund’s complete Policies online at franklintempleton.com. Alternatively, shareholders may request

copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Fund’s proxy voting records are also made available online at franklintempleton.com and posted on the US 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 Fund files a complete statement of investments with the US 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 (800) SEC-0330.

Householding of Reports and Prospectuses

You will receive the Fund’s financial reports every six months as well as an annual updated summary prospectus (prospectus available upon request). To reduce Fund expenses, we try to identify related shareholders in a household and send only one copy of the financial reports and summary prospectus. This process, called “householding,” will continue indefinitely unless you instruct us otherwise. If you prefer not to have these documents householded, please call us at (800) 632-2301. At any time you may view current prospectuses/summary prospectuses and financial reports on our website. If you choose, you may receive these documents through electronic delivery.

68       Annual Report franklintempleton.com

Annual Report and Shareholder Letter Franklin Federal Tax-Free Income Fund   Investment Manager Franklin Advisers, Inc.   Distributor Franklin Templeton Distributors, Inc. (800) DIAL BEN^® / 342-5236 franklintempleton.com   Shareholder Services (800) 632-2301

Authorized for distribution only when accompanied or preceded by a summary prospectus and/or prospectus. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. A prospectus contains this and other information; please read it carefully before investing.

To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.

© 2018 Franklin Templeton Investments. All rights reserved. 116 A 06/18

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.

(a) Audit Fees

The aggregate fees paid to the principal accountant for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or for services that are normally provided by the principal accountant in connection with statutory and regulatory filings or engagements were $84,661 for the fiscal year ended April 30, 2018 and $73,932 for the fiscal year ended April 30, 2017.

(b) Audit-Related Fees

There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of Item 4.

There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant that are reasonably related to the performance of the audit of their financial statements.

(c) Tax Fees

There were no fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant for tax compliance, tax advice and tax planning.

There were no fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant’s

investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant for tax compliance, tax advice and tax planning.

(d) All Other Fees

The aggregate fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant not reported in paragraphs (a)-(c) of Item 4 were $4,302 for the fiscal year ended April 30, 2018 and $0 for the fiscal year ended April 30, 2017. The services for which these fees were paid include review of materials provided to the fund Board in connection with the investment management contract renewal process.

The aggregate fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant other than services reported in paragraphs (a)-(c) of Item 4 were $14,000 for the fiscal year ended April 30, 2018 and $255,000 for the fiscal year ended April 30, 2017. The services for which these fees were paid included preparation and review of materials provided to the fund Board in connection with the investment management contract renewal process and derivatives assessments and benchmarking services in connection with the ICI TA survey.

(e) (1) The registrant’s audit committee is directly responsible for approving the services to be provided by the auditors, including:

(i)    pre-approval of all audit and audit related services;

(ii)    pre-approval of all non-audit related services to be provided to the Fund by the auditors;

(iii)    pre-approval of all non-audit related services to be provided to the registrant by the auditors to the registrant’s investment adviser or to any entity that controls, is controlled by or is under common control with the registrant’s investment adviser and that provides ongoing services to the registrant where the non-audit services relate directly to the operations or financial reporting of the registrant; and

(iv)    establishment by the audit committee, if deemed necessary or appropriate, as an alternative to committee pre-approval of services to be provided by the auditors, as required by paragraphs (ii) and (iii) above, of policies and procedures to permit such services to be pre-approved by other means, such as through establishment of guidelines or by action of a designated member or members of the committee; provided the policies and procedures are detailed as to the particular service and the committee is informed of each service and such policies and procedures do not include delegation of audit committee responsibilities, as contemplated under the Securities Exchange Act of 1934, to management; subject, in the case of (ii) through (iv), to any waivers, exceptions or exemptions that may be available under applicable law or rules.

(e) (2) None of the services provided to the registrant described in paragraphs (b)-(d) of Item 4 were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of regulation S-X.

(f) No disclosures are required by this Item 4(f).

(g) The aggregate non-audit fees paid to the principal accountant for services rendered by the principal accountant to the registrant and the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant were $18,302 for the fiscal year ended April 30, 2018 and $255,000 for the fiscal year ended April 30, 2017.

(h) The registrant’s audit committee of the board has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.

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 changes in the Registrant’s internal controls or in other factors that could materially affect the internal controls over financial reporting 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 Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting Officer

(b)    Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Gaston Gardey, 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 FEDERAL TAX-FREE INCOME FUND

By	/s/ MATTHEW T. HINKLE
	Matthew T. Hinkle
	Chief Executive Officer –
	Finance and Administration
Date June 26, 2018

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/ MATTHEW T. HINKLE
	Matthew T. Hinkle
	Chief Executive Officer –
	Finance and Administration
Date June 26, 2018
By	/s/ GASTON GARDEY
	Gaston Gardey
	Chief Financial Officer and
	Chief Accounting Officer
Date June 26, 2018

EX-99.CODE

Exhibit 12(a)(1)

CODE OF ETHICS FOR PRINCIPAL EXECUTIVES & SENIOR FINANCIAL OFFICERS

PROCEDURES    Revised December 18, 2009

FRANKLIN TEMPLETON FUNDS

CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND

SENIOR FINANCIAL OFFICERS

I. Covered Officers and Purpose of the Code

This code of ethics (the “Code”) applies to the Principal Executive Officers, Principal Financial Officer and Principal Accounting Officer (the “Covered Officers,” each of whom is set forth in Exhibit A) of each investment company advised by a Franklin Resources subsidiary and that is registered with the United States Securities & Exchange Commission (“SEC”) (collectively, “FT Funds”) for the purpose of promoting:

• Honest and ethical conduct, including the ethical resolution of actual or apparent conflicts of interest between personal and professional relationships;

• Full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the SEC and in other public communications made by or on behalf of the FT Funds;

• Compliance with applicable laws and governmental rules and regulations;

• The prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and

• Accountability for adherence to the Code.

Each Covered Officer will be expected to adhere to a high standard of business ethics and must be sensitive to situations that may give rise to actual as well as apparent conflicts of interest.

II. Other Policies and Procedures

This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder.

Franklin Resources, Inc. has separately adopted the CODE OF ETHICS AND BUSINESS CONDUCT (“Business Conduct”), which is applicable to all officers, directors and employees of Franklin Resources, Inc., including Covered Officers. It summarizes the values, principles and business practices that guide the employee’s business conduct and also provides a set of basic principles to guide officers, directors and employees regarding the minimum ethical requirements expected of them. It supplements the values, principles and business conduct identified in the Code and other existing employee policies.

Additionally, the Franklin Templeton Funds have separately adopted the CODE OF ETHICS AND POLICY STATEMENT ON INSIDER TRADING governing personal securities trading and other related matters. The Code for Insider Trading provides for separate requirements that apply to the Covered Officers and others, and therefore is not part of this Code.

Page 1

Insofar as other policies or procedures of Franklin Resources, Inc., the Funds, the Funds’ adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superceded by this Code to the extent that they overlap or conflict with the provisions of this Code. Please review these other documents or consult with the Legal Department if have questions regarding the applicability of these policies to you.

III. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest

OVERVIEW. A “conflict of interest” occurs when a Covered Officer’s private interest interferes with the interests of, or his or her service to, the FT Funds. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of apposition with the FT Funds.

Certain conflicts of interest arise out of the relationships between Covered Officers and the FT Funds and already are subject to conflict of interest provisions in the Investment Company Act of 1940 (“Investment Company Act”) and the Investment Advisers Act of 1940 (“Investment Advisers Act”). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the FT Funds because of their status as “affiliated persons” of the FT Funds. The FT Funds’ and the investment advisers’ compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code.

Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the FT Funds, the investment advisers and the fund administrator of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the FT Funds, for the adviser, the administrator, or for all three), be involved in establishing policies and implementing decisions that will have different effects on the adviser, administrator and the FT Funds. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the FT Funds, the adviser, and the administrator and is consistent with the performance by the Covered Officers of their duties as officers of the FT Funds. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the FT Funds’ Boards of Directors (“Boards”) that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes.

Other conflicts of interest are covered by the Code, even if such conflictsof interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the FT Funds.

Each Covered Officer must:

• Not use his or her personal influence or personal relationships improperly to influence investment decisions orfinancial reporting by the FT Funds whereby the Covered Officer would benefit personally to the detriment of the FT Funds;

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• Not cause the FT Funds to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit the FT Funds;

• Not retaliate against any other Covered Officer or any employee of the FT Funds or their affiliated persons for reports of potential violations that are made in good faith;

• Report at least annually the following affiliations or other relationships:/1

• all directorships for public companies and all companies that are required to file reports with the SEC;

• any direct or indirect business relationship with any independent directors of the FT Funds;

• any direct or indirect business relationship with any independent public accounting firm (which are not related to the routine issues related to the firm’s service as the Covered Persons accountant); and

• any direct or indirect interest in any transaction with any FT Fund that will benefit the officer (not including benefits derived from the advisory, sub-advisory, distribution or service agreements with affiliates of Franklin Resources).

These reports will be reviewed by the Legal Department for compliance with the Code.

There are some conflict of interest situations that should always be approved in writing by Franklin Resources General Counsel or Deputy General Counsel, if material. Examples of these include/2:

• Service as a director on the board of any public or private Company;

• The receipt of any gifts in excess of $100 from any person, from any corporation or association

• The receipt of any entertainment from any Company with which the FT Funds has current or prospective business dealings unless such entertainment is business related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety. Notwithstanding the foregoing, the Covered Officers must obtain prior approval from the Franklin Resources General Counsel for any entertainment with a value in excess of $1000.

• Any ownership interest in, or any consulting or employment relationship with, any of the FT Fund’s service providers, other than an investment adviser, principal underwriter, administrator or any affiliated person thereof;

• A direct or indirect financial interest in commissions, transaction charges or spreads paid by the FT Funds for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer’s employment, such as compensation or equity ownership.

Franklin Resources General Counsel or Deputy General Counsel will provide a report to the FT Funds Audit Committee of any approvals granted at the next regularly scheduled meeting.

IV. Disclosure and Compliance

• Each Covered Officer should familiarize himself with the disclosure requirements generally applicable to the FT Funds;

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• Each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the FT Funds to others, whether within or outside the FT Funds, including to the FT Funds’ directors and auditors, and to governmental regulators and self-regulatory organizations;

• Each Covered Officer should, to the extent appropriate within his or her area of responsibility, consult with other officers and employees of the FT Funds, the FT Fund’s adviser and the administrator with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the FT Funds file with, or submit to, the SEC and in other public communications made by the FT Funds; and

• It is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations.

V. Reporting and Accountability

Each Covered Officer must:

• Upon becoming a covered officer affirm in writing to the Board that he or she has received, read, and understands the Code (see Exhibit B);

• Annually thereafter affirm to the Board that he has complied with the requirements of the Code; and

• Notify Franklin Resources’ General Counsel or Deputy General Counsel promptly if he or she knows of any violation of this Code. Failure to do so is itself is a violation of this Code.

Franklin Resources’ General Counsel and Deputy General Counsel are responsible for applying this Code to specific situations in which questions are presented under it and have the authority to interpret this Code in any particular situation./3 However, the Independent Directors of the respective FT Funds will consider any approvals or waivers/4 sought by any Chief Executive Officers of the Funds.

The FT Funds will follow these procedures in investigating and enforcing this Code:

• Franklin Resources General Counsel or Deputy General Counsel will take all appropriate action to investigate any potential violations reported to the Legal Department;

• If, after such investigation, the General Counsel or Deputy General Counsel believes that no violation has occurred, The General Counsel is not required to take any further action;

• Any matter that the General Counsel or Deputy General Counsel believes is a violation will be reported to the Independent Directors of the appropriate FT Fund;

• If the Independent Directors concur that a violation has occurred, it will inform and make a recommendation to the Board of the appropriate FT Fund or Funds, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer;

• The Independent Directors will be responsible for granting waivers, as appropriate; and

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• Any changes to or waivers of this Code will, to the extent required, are disclosed as provided by SEC rules./5

VI. Other Policies and Procedures

This Code shall be the sole code of ethics adopted by the FT Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the FT Funds, the FT Funds’ advisers, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The FT Code of Ethics and Policy Statement On Insider Trading, adopted by the FT Funds, FT investment advisers and FT Fund’s principal underwriter pursuant to Rule 17j-1 under the Investment Company Act, the Code of Ethics and Business Conduct and more detailed policies and procedures set forth in FT’s Employee Handbook are separate requirements applying to the Covered Officers and others, and are not part of this Code.

VII. Amendments

Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the FT Funds’ Board including a majority of independent directors.

VIII. Confidentiality

All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the FT Funds’ Board and their counsel.

IX. Internal Use

The Code is intended solely for the internal use by the FT Funds and does not constitute an admission, by or on behalf of any FT Funds, as to any fact, circumstance, or legal conclusion.

X. Disclosure on Form N-CSR

Item 2 of Form N-CSR requires a registered management investment company to disclose annually whether, as of the end of the period covered by the report, it has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these officers are employed by the registrant or a third party. If the registrant has not adopted such a code of ethics, it must explain why it has not done so.

The registrant must also: (1) file with the SEC a copy of the code as an exhibit to its annual report; (2) post the text of the code on its Internet website and disclose, in its most recent report on Form N-CSR, its Internet address and the fact that it has posted the code on its Internet website; or (3) undertake in its most recent report on Form N-CSR to provide to any person without charge, upon request, a copy of the code and explain the manner in which such request may be made. Disclosure is also required of amendments to, or waivers (including implicit waivers) from, a provision of the code in the registrant’s annual report on Form N-CSR or on its website. If the registrant intends to satisfy the requirement to disclose amendments and waivers by posting such information on its website, it will be required to disclose its Internet address and this intention.

The Legal Department shall be responsible for ensuring that:

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• a copy of the Code is filed with the SEC as an exhibit to each Fund’s annual report; and

• any amendments to, or waivers (including implicit waivers) from, a provision of the Code is disclosed in the registrant’s annual report on Form N-CSR.

In the event that the foregoing disclosure is omitted or is determined to be incorrect, the Legal Department shall promptly file such information with the SEC as an amendment to Form N-CSR.

In such an event, the Fund Chief Compliance Officer shall review the Code and propose such changes to the Code as are necessary or appropriate to prevent reoccurrences.

EXHIBIT A

Persons Covered by the Franklin Templeton Funds

Code of Ethics

December 2013

FRANKLIN GROUP OF FUNDS

Edward B. Jamieson	President and Chief Executive Officer - Investment Management
Rupert H. Johnson, Jr.	President and Chief Executive Officer - Investment Management
William J. Lippman	President and Chief Executive Officer - Investment Management
Christopher Molumphy	President and Chief Executive Officer - Investment Management
Laura Fergerson	Chief Executive Officer - Finance and Administration
Gaston R. Gardey	Chief Financial Officer and Chief Accounting Officer
FRANKLIN MUTUAL SERIES FUNDS
Peter Langerman	Chief Executive Officer - Investment Management
Laura Fergerson	Chief Executive Officer - Finance and Administration
Robert G. Kubilis	Chief Financial Officer and Chief Accounting Officer
FRANKLIN ALTERNATIVE STRTEGIES FUNDS
William Yun	Chief Executive Officer - Investment Management
Laura Fergerson	Chief Executive Officer - Finance and Administration
Robert G. Kubilis	Chief Financial Officer and Chief Accounting Officer
TEMPLETON GROUP OF FUNDS
Mark Mobius	President and Chief Executive Officer - Investment Management
Christopher J. Molumphy	President and Chief Executive Officer - Investment Management
Norman Boersma	President and Chief Executive Officer - Investment Management
Donald F. Reed	President and Chief Executive Officer - Investment Management
Laura Fergerson	Chief Executive Officer - Finance and Administration
Mark H. Otani	Chief Financial Officer and Chief Accounting Officer

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EXHIBIT B

ACKNOWLEDGMENT FORM

DECEMBER

FRANKLIN TEMPLETON FUNDS CODE OF ETHICS

FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS

INSTRUCTIONS:

1. Complete all sections of this form.

2. Print the completed form, sign, and date.

3. Submit completed form to FT’s General Counsel c/o Code of Ethics Administration within 10 days of becoming a Covered Officer and by February 15th of each subsequent year.

INTER-OFFICE MAIL:	Code of Ethics Administration, Global Compliance SM-920/2
Fax:	(650) 312-5646
E-MAIL:	Preclear-Code of Ethics (internal address); lpreclear@frk.com (external address)

COVERED OFFICER’S NAME:

TITLE:

DEPARTMENT:

LOCATION:

CERTIFICATION FOR YEAR ENDING:

TO:   Franklin Resources General Counsel, Legal Department

I acknowledge receiving, reading and understanding the Franklin Templeton Fund’s Code of Ethics for Principal Executive Officers and Senior Financial Officers (the “Code”). I will comply fully with all provisions of the Code to the extent they apply to me during the period of my employment. I further understand and acknowledge that any violation of the Code may subject me to disciplinary action, including termination of employment.

Signature Date signed

1. Reporting of these affiliations or other relationships shall be made by completing the annual Directors and Officers Questionnaire and returning the questionnaire to Franklin Resources Inc, General Counsel or Deputy General Counsel.

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2. Any activity or relationship that would present a conflict for a Covered Officer may also present a conflict for the Covered Officer if a member of the Covered Officer’s immediate family engages in such an activity or has such a relationship. The Cover Person should also obtain written approval by FT’s General Counsel in such situations.

3. Franklin Resources General Counsel and Deputy General Counsel are authorized to consult, as appropriate, with members of the Audit Committee, counsel to the FT Funds and counsel to the Independent Directors, and are encouraged to do so.

4. Item 2 of Form N-CSR defines “waiver” as “the approval by the registrant of a material departure from a provision of the code of ethics” and “implicit waiver,” which must also be disclosed, as “the registrant’s failure to take action within a reasonable period of time regarding a material departure from a provision of the code of ethics that has been made known to an executive officer” of the registrant. See Part X.

5. See Part X.

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EX-99.CERT

Exhibit 12(a)(2)

I, Matthew T. Hinkle, certify that:

1. I have reviewed this report on Form N-CSR of Franklin Federal Tax-Free Income Fund;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

6/26/2018

/s/ MATTHEW T. HINKLE

Matthew T. Hinkle

Chief Executive Officer - Finance and Administration

Exhibit 12(a)(2)

I, Gaston Gardey, certify that:

1. I have reviewed this report on Form N-CSR of Franklin Federal Tax-Free Income Fund;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

6/26/2018

/s/ GASTON GARDEY

Gaston Gardey

Chief Financial Officer and Chief Accounting Officer

EX-99.906CERT

Exhibit 12(b)

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Matthew T. Hinkle, Chief Executive Officer of the Franklin Federal Tax-Free Income Fund (the “Registrant”), certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The periodic report on Form N-CSR of the Registrant for the period ended 4/30/2018 (the “Form N-CSR”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Dated: 6/26/2018

/s/ MATTHEW T. HINKLE

Matthew T. Hinkle

Chief Executive Officer - Finance and Administration

Exhibit 12(b)

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Gaston Gardey, Chief Financial Officer of the Franklin Federal Tax-Free Income Fund (the “Registrant”), certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The periodic report on Form N-CSR of the Registrant for the period ended 4/30/2018 (the “Form N-CSR”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Dated: 6/26/2018

/s/ GASTON GARDEY

Gaston Gardey

Chief Financial Officer and Chief Accounting Officer