STATEMENT OF ADDITIONAL INFORMATION FRANKLIN TAX-FREE TRUST July 1, 2021 Class A A1 C R6 Advisor Contents Franklin Federal Intermediate- Term Tax-Free Income Fund FKQTX FKITX FCITX FITQX FITZX Goals, Strategies and Risks ........... 2 Franklin Federal Limited-Term State and U.S. Territory Risks .......... 16 Tax-Free Income Fund FFLQX FFTFX — FFTRX FTFZX Officers and Trustees ................ 26 Franklin High Yield Tax-Free Income Fund FHYQX FRHIX FHYIX FHYRX FHYVX Fair Valuation. 32 Franklin Massachusetts Tax-Free Management and Other Services ....... 33 Income Fund FMAQX FMISX FMAIX FKTMX FMAHX Portfolio Transactions ................ 36 Franklin Municipal Green Bond Fund FGBGX — FGBHX FGBJX FGBKX Distributions and Taxes ............... 37 Franklin New Jersey Tax-Free Organization, Voting Rights and Income Fund FNJQX FRNJX FNIIX FNJRX FNJZX Principal Holders .................... 45 This Statement of Additional Information (SAI) is not a prospectus. It contains infor- Buying and Selling Shares. 49 mation in addition to the information in the Funds’ (hereafter “the Fund”) prospectus. The Underwriter ..................... 56 The Fund’s prospectus, dated July 1, 2021, which we may amend from time to time, Performance ....................... 58 contains the basic information you should know before investing in the Fund. You should read this SAI together with the Fund’s prospectus. Miscellaneous Information ............. 61 Description of Ratings ................ 62 The audited financial statements and Report of Independent Registered PublicAc - counting Firm in the Fund’s Annual Report to shareholders, for the fiscal year ended State Tax Treatment. 64 February 28, 2021, are incorporated by reference (are legally a part of this SAI). For a free copy of the current prospectus or annual report, contact your investment representative or call (800) DIAL BEN/342-5236. Mutual funds, annuities, and other investment products: • are not insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other agency of the U.S. government; • are not deposits or obligations of, or guaranteed or endorsed by, any bank; and • are subject to investment risks, including the possible loss of principal. P.O. Box 997151 ® 1 Sacramento, CA 95899-7151 (800) DIAL BEN /342-5236 TF1 SAI 07/21 Goals, Strategies and Risks taxes. Its secondary goal is capital appreciation to the extent possible and consistent with the Fund’s principal investment goal. The following information provided with respect to the Fund is in The Massachusetts Fund’s investment goal is to provide investors addition to that included in the Fund’s prospectus. with as high a level of income exempt from federal income taxes In addition to the main types of investments and strategies as is consistent with prudent investment management and undertaken by the Fund as described in the prospectus, the the preservation of shareholders’ capital. The Massachusetts Fund also may invest in other types of instruments and engage Fund also tries to provide a maximum level of income exempt in and pursue other investment strategies, which are described from personal income taxes, if any, for resident shareholders of in this SAI. Investments and investment strategies with respect Massachusetts. to the Fund are discussed in greater detail in the section below Under normal market conditions, the Municipal Green Bond Fund entitled “ Glossary of Investments, Techniques, Strategies and invests at least 80% of its net assets in municipal securities .” Their Risks whose interest is free from regular federal income taxes. Although Generally, the policies and restrictions discussed in this SAI and not part of the fundamental policy, “net assets” of the Fund for in the prospectus apply when the Fund makes an investment. purposes of the 80% policy means the Fund’s net assets, plus the In most cases, the Fund is not required to sell an investment amount of any borrowing for investment purposes. because circumstances change and the investment no longer The New Jersey Fund’s investment goal is to provide investors with meets one or more of the Fund’s policies or restrictions. If as high a level of income exempt from federal income taxes and a percentage restriction or limitation is met at the time of from personal income taxes, if any, for resident shareholders of investment, a later increase or decrease in the percentage due New Jersey as is consistent with prudent investment management to a change in the value of portfolio investments will not be and the preservation of shareholders’ capital. considered a violation of the restriction or limitation, with the exception of the Fund’s limitations on borrowing and illiquid Under normal market conditions, the Fund invests at least 80% securities as described herein or unless otherwise noted herein. of its assets in securities whose interest is free from federal income taxes, including the federal alternative minimum tax. Incidental to the Fund’s other investment activities, including in The Fund applies this test to its net assets, except for the Federal connection with a bankruptcy, restructuring, workout, or other Intermediate-Term Fund, the Federal Limited-Term Fund and the extraordinary events concerning a particular investment the Fund Massachusetts Fund, each of which applies this test to its total owns, the Fund may receive securities (including convertible assets. In addition, under normal market conditions, each state securities, warrants and rights), real estate or other investments Fund invests at least 80% of its total assets in securities that that the Fund normally would not, or could not, buy. If this pay interest free from the personal income taxes, if any, of that happens, the Fund may, although it is not required to, sell such Fund’s state. investments as soon as practicable while seeking to maximize the return to shareholders. The Fund may not: The Fund has adopted certain investment restrictions as 1. Borrow money, except to the extent permitted by the 1940 Act, fundamental and non-fundamental policies. A fundamental policy or any rules, exemptions or interpretations thereunder that may be may only be changed if the change is approved by (i) more than adopted, granted or issued by the U.S. Securities and Exchange 50% of the Fund’s outstanding shares or (ii) 67% or more of the Commission (SEC). Fund’s shares present at a shareholder meeting if more than 50% 2. Act as an underwriter, except to the extent the Fund may be of the Fund’s outstanding shares are represented at the meeting deemed to be an underwriter when disposing of securities it owns in person or by proxy, whichever is less. A non-fundamental policy or when selling its own shares. may be changed without the approval of shareholders. 3. Make loans if, as a result, more than 33 1/3% of its total For more information about the restrictions of the Investment assets would be lent to other persons, including other investment Company Act of 1940 (1940 Act) on the Fund with respect to companies to the extent permitted by the 1940 Act or any rules, borrowing and senior securities, see “Glossary of Investments, exemptions or interpretations thereunder that may be adopted, Techniques, Strategies and Their Risks - Borrowing” below. granted or issued by the SEC. This limitation does not apply Fundamental Investment Policies to (i) the lending of portfolio securities, (ii) the purchase of debt securities, other debt instruments, loan participations Each of the Federal Intermediate-Term Fund’s and the Federal and/or engaging in direct corporate loans in accordance with its Limited-Term Fund’s investment goal is to provide investors with investment goals and policies, and (iii) repurchase agreements to as high a level of income exempt from federal income taxes as the extent the entry into a repurchase agreement is deemed to be is consistent with prudent investment management and the a loan. preservation of shareholders’ capital. 4. Purchase or sell real estate unless acquired as a result of The High Yield Fund’s principal investment goal is to provide ownership of securities or other instruments and provided that investors with a high current yield exempt from federal income 2 this restriction does not prevent the Fund from (i) purchasing personal income taxes. If the Fund’s state requires this, the Fund or selling securities or instruments secured by real estate or will try to invest its assets as required so that its distributions will interests therein, securities or instruments representing interests be free from personal income taxes for resident shareholders of in real estate or securities or instruments of issuers that invest, the Fund’s state. deal or otherwise engage in transactions in real estate or interests The Municipal Green Bond Fund’s investment goal is to maximize therein, and (ii) making, purchasing or selling real estate income exempt from federal income taxes to the extent consistent mortgage loans. with prudent investing and the preservation of shareholders’ 5. Purchase or sell commodities, except to the extent permitted capital. Shareholders will be given at least 60 days’ advance by the 1940 Act or any rules, exemptions or interpretations notice of any change to the Fund’s investment goal. In addition, thereunder that may be adopted, granted or issued by the SEC. the Fund will invest at least 80% of its net assets in municipal 6. Issue senior securities, except to the extent permitted by the green bonds. Net Assets for this 80% policy include the amount of 1940 Act or any rules, exemptions or interpretations thereunder any borrowing for investment purposes. that may be adopted, granted or issued by the SEC. The Municipal Green Bond Fund may invest up to 20% of its net 7. Invest more than 25% of the Fund’s net assets in securities assets in securities that pay taxable interest. The Fund also may of issuers in any one industry (other than securities issued or have up to 100% of its assets in securities that pay interest guaranteed by the U.S.