Summary

• Franklin New York Tax-Free Income Fund outperformed its benchmark, the Linked Bloomberg Muni Bond New York Exempt/Muni Bond Index, during the first quarter of 2026.
• The Federal Reserve indicated it would look through any initial oil supply shock effect on inflation to focus on core developments while noting a likely dragging effect on the economy.
• The Franklin New York Tax-Free Income Fund's yield curve positioning detracted from relative performance, primarily driven by an overweight to muni bonds with 20 or more years to maturity.
• Rating allocations benefited relative returns for the period, led by overweight allocations to bonds with no external credit rating along with an overweight to BBB rated bonds.
• Franklin New York Tax-Free Income Fund management noted that municipal bond valuations have strengthened and continue to appear attractive, particularly on a tax-adjusted basis.

Key Takeaways

• Markets: In the first quarter of 2026, new issuance of municipal (MUNI) bonds exceeded the average seen in the past few years. The war in the Middle East which began at the

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