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                         SUPPLEMENT DATED AUGUST 3, 1998
                             TO THE PROSPECTUSES OF

                             FRANKLIN TAX-FREE TRUST
    (TF1 - ARIZONA INSURED, FLORIDA INSURED, INSURED, MASSACHUSETTS INSURED,
  MICHIGAN INSURED, MINNESOTA INSURED, AND OHIO INSURED TAX-FREE INCOME FUNDS)

   (TF2 - ALABAMA, FLORIDA, GEORGIA, KENTUCKY, LOUISIANA, MARYLAND, MISSOURI,
           NORTH CAROLINA, TEXAS, AND VIRGINIA TAX-FREE INCOME FUNDS)

    (TF3 - ARIZONA, COLORADO, CONNECTICUT, FEDERAL INTERMEDIATE, HIGH YIELD,
            INDIANA, MICHIGAN, NEW JERSEY, OREGON, PENNSYLVANIA, AND
                       PUERTO RICO TAX-FREE INCOME FUNDS)
                               DATED JULY 1, 1998

The prospectus is amended as follows:

I. The second step in the section "How Do I Buy Shares?  - Opening Your Account"
is replaced with the following:

 2. Determine  how much you would like to invest. The funds' minimum investments
 are:

   o To open a regular account ........................................ $1,000
   o To open a custodial account for a minor (an UGMA/UTMA account) ... $  100
   o To open an account with an automatic investment plan ............. $   50
   o To add to an account ............................................. $   50

   For purchases by broker-dealers,  registered investment advisors or certified
   financial  planners who have entered into an agreement with  Distributors for
   clients  participating  in  comprehensive  fee programs,  the minimum initial
   investment  is $250.  The minimum  initial  investment  is $100 for officers,
   trustees,  directors and full-time  employees of the Franklin Templeton Funds
   or the Franklin  Templeton Group,  and their family members,  consistent with
   our then-current policies.

   We reserve the right to change the amount of these minimums from time to time
   or to waive or lower these  minimums for certain  purchases.  We also reserve
   the right to refuse any order to buy shares.

II. The  following  new  category  10 is added to the end of the second  list of
sales charge waiver  categories in the section  "Sales  Charge  Waivers,"  found
under "How Do I Buy Shares? - Sales Charge Reductions and Waivers":

 10. Qualified registered investment advisors who buy through a broker-dealer or
     service agent who has entered into an agreement with Distributors

III.  The first  paragraph  under "May I  Exchange  Shares for Shares of Another
Fund? Will Sales Charges Apply to My Exchange?" is replaced with the following:

   You generally will not pay a front-end sales charge on exchanges. If you have
   held your shares less than six months,  however,  you will pay the percentage
   difference  between the sales charge you  previously  paid and the applicable
   sales charge of the new fund, if the  difference  is more than 0.25%.  If you
   have never paid a sales charge on your shares because, for example, they have
   always been held in a money fund,  you will pay the fund's  applicable  sales
   charge no matter how long you have held your  shares.  These  charges may not
   apply if you qualify to buy shares without a sales charge.

IV. The following  new item is added under "May I Exchange  Shares for Shares of
Another Fund? - Exchange Restrictions":

 o You must meet the applicable  minimum  investment  amount of the fund you are
   exchanging into, or exchange 100% of your fund shares.

V. The section "Keeping Your Account Open," found under "Transaction  Procedures
and Special Requirements," is replaced in its entirety with the following:

 KEEPING YOUR ACCOUNT OPEN

 Due to the relatively  high cost of  maintaining a small account,  we may close
 your  account if the value of your  shares is less than $250,  or less than $50
 for employee  accounts and custodial  accounts for minors. We will only do this
 if the value of your  account  fell below this amount  because you  voluntarily
 sold  your  shares  and  your  account  has  been  inactive   (except  for  the
 reinvestment of  distributions)  for at least six months.  Before we close your
 account,  we will notify you and give you 30 days to increase the value of your
 account to $1,000,  or $100 for employee  accounts and  custodial  accounts for
 minors.  These  minimums  do not  apply to  accounts  managed  by the  Franklin
 Templeton Group.



                 Please keep this supplement for future reference.