o MUN *P1
SUPPLEMENT DATED JANUARY 12, 1999
TO THE PROSPECTUS OF
FRANKLIN MUNICIPAL SECURITIES TRUST
(Franklin Arkansas Municipal Bond Fund, Franklin California High Yield
Municipal Fund, Franklin Hawaii Municipal Bond Fund, Franklin Tennessee
Municipal Bond Fund and Franklin Washington Municipal Bond Fund)
dated October 1, 1998
On January 12, 1999, Franklin Municipal Securities Trust's Board of Trustees
approved proposals to merge the Franklin Arkansas Municipal Bond Fund, Franklin
Hawaii Municipal Bond Fund and Franklin Washington Municipal Bond Fund into
Franklin Federal Tax-Free Income Fund, subject to shareholder approval. Franklin
Federal Tax-Free Income Fund's Board of Directors also approved the mergers. The
investment goal of the Franklin Arkansas Municipal Bond Fund, Franklin Hawaii
Municipal Bond Fund and Franklin Washington Municipal Bond Fund is to maximize
income exempt from federal income taxes and from the personal income taxes, if
any, for resident shareholders of the fund's state to the extent consistent with
prudent investing and the preservation of shareholders' capital. The investment
goal of the Franklin Federal Tax-Free Income Fund is to provide investors with
as high a level of interest income exempt from federal income taxes as is
consistent with prudent investing, while seeking preservation of shareholders'
capital. The Boards believe these proposed mergers will benefit shareholders.
It is anticipated that in the spring of 1999 shareholders of Franklin Arkansas
Municipal Bond Fund, Franklin Hawaii Municipal Bond Fund and Franklin Washington
Municipal Bond Fund will receive a proxy and proxy statement requesting their
votes on the applicable merger.
Franklin Arkansas Municipal Bond Fund, Franklin Hawaii Municipal Bond Fund and
Franklin Washington Municipal Bond Fund will be closed to new investors after
the close of business on January 12, 1999. If you are a shareholder of record as
of the close of business on January 12, 1999, you may continue to add to your
account, subject to your applicable minimum additional investment amount, or buy
additional shares through reinvestment of dividend or capital gain
distributions.
Although you may redeem your shares, please keep in mind that if you sell all
the shares in your account, your account will be closed and you will not be
allowed to buy additional shares of Franklin Arkansas Municipal Bond Fund,
Franklin Hawaii Municipal Bond Fund and Franklin Washington Municipal Bond Fund
or to reopen your account in those funds.
Please keep this supplement for future reference.
