FUND OBJECTIVE
To provide a high level of current income consistent with liquidity and
preservation of capital. The fund pursues a conservative investment policy by
limiting its investments to high quality securities as it seeks to maintain a
$1.00 per share net asset value.(1)
March 15, 1995
Dear Shareholder:
We are pleased to bring you the semi-annual report for the Franklin Tax-Exempt
Money Fund, for the six months ended January 31, 1995.
During the period under review, the U.S. economy continued to grow, with the
Gross Domestic Product (GDP) increasing at an annualized rate of 4.32% for the
second half of 1994.(2) In addition, the nation's unemployment rate declined to
5.8% and its factories were operating at over 85% of total capacity by the end
of the year.(3) Although reported economic data did not show significant
increases in inflation, the Federal Reserve Board began raising short-term
interest rates in February, 1994. This action was taken in a pre-emptive effort
to prevent the expected higher inflation that normally accompanies rapid
economic growth. Following four interest rate hikes in the first half of 1994,
the Federal Reserve Board increased the federal funds rate -- the interest rate
banks charge each other for overnight loans -- on two occasions during the
reporting period, to 5.5% from 4.25%.
Due to the increases in short-term interest rates in August and November, the
fund lowered the average maturity of its portfolio from 48 days on July 31,
1994, to 28 days on January 31, 1995. Reducing the average maturity in this
manner enabled us to reinvest more quickly in new securities offering higher
yields. This, in turn, increased the fund's seven-day effective yield, which
assumes the compounding of daily dividends, to 3.10% on January 31, 1995, from
2.41% on July 31, 1994. The fund's annualized yield on January 31, 1995, was
3.06%.
The charts on page two illustrate that if you are in the maximum 39.6% federal
income tax bracket, you would have to earn two percentage points more from a
taxable investment to match your fund's tax-free yields.(4)
1. An investment in the fund is neither insured nor guaranteed by the U.S.
Government. There is no assurance that the fund will be able to maintain a
stable net asset value of $1.00 per share.
2. Source: U.S. Commerce Department
3. Source: U.S. Labor Dept., U.S. Federal Reserve
4. The fund's dividends are generally subject to state and local income taxes,
if any. For investors subject to federal or state alternative minimum tax, a
small portion of the income may be subject to such tax. Distributions of
capital gains and of ordinary income from accrued market discount, if any, are
generally taxable.
<PAGE>
The fund's objective is to provide shareholders with a high-quality,
conservative investment. The securities in which the fund invests are among the
highest quality available to money market portfolios. Its managers invest
primarily in high-quality, short-term municipal securities rated in one of the
two highest rating categories as determined by nationally recognized rating
agencies such as Standard & Poor's and Moody's. It may also invest in
non-rated securities judged to be of comparable quality by the fund's managers.
WE DO NOT INVEST IN DERIVATIVES OR OTHER POTENTIALLY VOLATILE SECURITIES THAT
WE THINK INVOLVE SIGNIFICANT RISK.
The Franklin Tax-Exempt Money Fund remains highly diversified. On January 31,
1995 its $191 million in total net assets was invested in the municipalities of
39 states throughout the United States and its territories. The importance of
portfolio diversification is highlighted especially by the recent negative news
regarding Orange County, California. On December 7, 1994, when the news about
Orange County's financial difficulties became known, the Franklin Tax-Exempt
Money Fund had minimal exposure to direct Orange County obligations.
Specifically, the fund held 0.25% of its net total assets in such securities on
that date. Your fund's manager did not expect this exposure to impact the
fund's ability to maintain its $1.00 net asset value per share price. However,
Franklin Resources -- parent company to the fund's advisers -- announced on
December 8, that it had applied for and received approval from the Securities
and Exchange Commission (SEC) to purchase $500,000 in face value amount of
unsecured Orange County obligations from the fund. Please keep in mind that the
securities were purchased by the company VOLUNTARILY in an effort to ensure the
fund's compliance with rules governing the quality of money fund portfolios.
Furthermore, in light of widespread publicity regarding the Orange County
situation, Franklin Resources wanted to alleviate any concerns that you, as a
[GRAPHIC MATERIAL (1&2) OMITTED - SEE APPENDIX]
5. Reflects compounding of daily dividends.
2
<PAGE>
shareholder, may have had regarding these investments. As a result, your fund
now has no exposure to direct Orange County obligations.
As a shareholder in the Franklin Tax-Exempt Money Fund, you continue to benefit
from easy access to your money and high credit safety.(6) You also enjoy a
variety of services, including free, unlimited check-writing for amounts of
$100 or more, unlimited service transactions, automatic dividend reinvestment,
and daily dividend compounding.
In addition, shares of the fund are bought and sold at net asset value, which
means there is absolutely no sales charge on investments in the fund.
We thank you for your continued support of the Franklin Tax-Exempt Money Fund
and look forward to serving your investment needs in the future.
Sincerely,
Charles B. Johnson
Chairman of the Board
Franklin Tax-Exempt Money Fund
6. An investment in the fund is neither insured nor guaranteed by the U.S.
Government. There is no assurance that the fund will be able to maintain a
stable net asset value of $1.00 per share.
FRANKLIN TAX-EXEMPT MONEY FUND
Periods ended January 31, 1995
<TABLE>
<S> <C>
Seven-day effective yield(7) . . . . . . . . 3.10%
Taxable equivalent effective yield(8). . . . 5.13%
Seven-day annualized yield . . . . . . . . . 3.06%
Taxable equivalent annualized yield(8) . . . 5.07%
</TABLE>
7. The seven-day effective yield assumes the compounding of daily dividends.
8. Taxable equivalent effective and annualized yields assume the 1994 maximum
39.6% federal income tax bracket. Annualized and effective yields are for the
seven days ended January 31, 1995. Yield reflects fluctuations in interest
rates on portfolio investments, and fund expenses. Yields should be viewed in
terms of the current, low rate of inflation -- just as high inflation usually
results in higher yields, low inflation often results in lower yields. Past
performance does not guarantee future results.
Management fees have been voluntarily waived by the fund's manager, which
reduces operating expenses and increases yield to shareholders. Without these
reductions, the fund's seven-day annualized and seven-day effective yields for
the period would have been 2.87% and 2.91%, respectively. Fee waivers and
expense reimbursements may be discontinued at any time unless otherwise
specified in the current prospectus.
Please remember that an investment in the fund is neither insured nor
guaranteed by the U.S. government, and there can be no assurance that the fund
will be able to maintain a stable net asset value of $1.00 per share.
3
<PAGE>
FRANKLIN TAX-EXEMPT MONEY FUND
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, JANUARY 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
FACE
VALUE
AMOUNT
(NOTE 1)
-------------------------------------------------------------------------------------------------------------
--------------
<S> <C>
<C>
INVESTMENTS 100.4%
ALABAMA .4%
$ 800,000 aStevenson IDBR, Environmental Improvement, Refunding, Mead Corp. Project, Daily
VRDN and Put, 3.70%, 11/01/16 . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 800,000
-----------
ARIZONA 1.3%
100,000 aApache County IDA, IDR, Tucson Electric Power, Springerville Project, Weekly VRDN
and Put, 3.35%, 12/15/18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100,000
1,500,000 aMaricopa County IDA, Hospital Facilities Revenue, Samaritan Health Services
Hospital, Series B-2, MBIA Insured, Daily VRDN and Put, 3.50%, 12/01/08 . . . . . .
1,500,000
300,000 aMaricopa County IDAR, Refunding, Royal Oaks Sun City Project, Weekly VRDN
and Put, 3.60%, 09/01/02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
300,000
600,000 aMaricopa County PCC, PCR, Refunding, Arizona Public Services Co., Series E,
Daily VRDN and Put, 3.70%, 05/01/29 . . . . . . . . . . . . . . . . . . . . . . . .
600,000
-----------
2,500,000
-----------
ARKANSAS 1.1%
2,000,000 aUniversity of Arkansas Revenues, Weekly VRDN and Put, 3.40%, 12/01/19 . . . . . . .
2,000,000
-----------
CALIFORNIA 6.9%
100,000 aCalifornia Health Facilities Financing Authority Revenue, Sutter Health, Series A,
Daily VRDN and Put, 3.40%, 03/01/20 . . . . . . . . . . . . . . . . . . . . . . . .
100,000
California PCFA, PCR,
3,000,000 Refunding, Pacific Gas and Electric, Series A, TECP, 3.50%, 03/07/95 . . . . . .
3,000,000
1,000,000 Refunding, Pacific Gas and Electric, Series C, TECP, 3.80%, 03/06/95 . . . . . .
1,000,000
200,000 aRefunding, Shell Oil Co. Project, Series C, Daily VRDN and Put, 3.40%, 11/01/00
200,000
300,000 aSouthern California Edison Co., Series A, Daily VRDN and Put, 3.40%, 02/28/08 . .
300,000
1,700,000 aSouthern California Edison Co., Series B, Daily VRDN and Put, 3.40%, 02/28/08 . .
1,700,000
300,000 aSouthern California Edison Co., Series C, Daily VRDN and Put, 3.40%, 02/28/08 . .
300,000
1,500,000 aLos Angeles County Metropolitan Transportation Authority, Sales Tax Revenue,
Refunding, Proposition C, Second Series A, Weekly VRDN and Put, 3.50%, 07/01/20 . .
1,500,000
1,200,000 aLos Angeles MFHR, Casden Project, Series K, Weekly VRDN and Put, 3.10%, 07/01/10 . .
1,200,000
600,000 aLos Angeles MFHR, Mariposa Gardens Project, Series H, Weekly VRDN and Put,
3.25%, 09/01/15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
600,000
1,000,000 Sacramento County, TRAN, 4.50%, 07/28/95 . . . . . . . . . . . . . . . . . . . . . .
1,001,489
2,200,000 Sacramento MUD, TECP, 3.85%, 03/06/95 . . . . . . . . . . . . . . . . . . . . . . . .
2,200,000
-----------
13,101,489
-----------
COLORADO 4.0%
3,000,000 Arapahoe County Capital Improvement Trust Fund, Highway Revenue, E-470 Project,
Series I, Optional Put 02/28/95, 3.80%, 08/31/26 . . . . . . . . . . . . . . . . . .
3,000,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
FRANKLIN TAX-EXEMPT MONEY FUND
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, JANUARY 31, 1995
(UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FACE
VALUE
AMOUNT
(NOTE 1)
-------------------------------------------------------------------------------------------------------------
--------------
<S> <C>
<C>
INVESTMENTS (CONT.)
COLORADO (CONT.)
aColorado Health Facilities Authority Revenue,
$ 200,000 Boulder Community Hospital Project, Series B, MBIA Insured, Weekly VRDN and
Put, 3.60%, 10/01/14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 200,000
300,000 Boulder Community Hospital Project, Series C, MBIA Insured, Weekly VRDN and
Put, 3.60%, 10/01/14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
300,000
1,400,000 Colorado State General Fund, TRAN, 4.50%, 06/27/95 . . . . . . . . . . . . . . . . .
1,404,318
2,650,000 aPitkin County MFR, Centennial Aspen Project, Weekly VRDN and Put, 3.7006%, 04/01/07
2,650,000
-----------
7,554,318
-----------
CONNECTICUT 1.8%
700,000 aConnecticut GO, State Economic Recreation Notes, Series B, Weekly VRDN and
Put, 3.40%, 06/01/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
700,000
500,000 Connecticut State HFA Mortgage, Series G, TRAN, 3.65%, 05/15/95 . . . . . . . . . .
500,000
2,300,000 aConnecticut State Special Tax Obligation Revenue, Second Lien, Weekly VRDN and
Put, 3.65%, 12/01/10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,300,000
-----------
3,500,000
-----------
DISTRICT OF COLUMBIA .8%
100,000 aDistrict of Columbia, Refunding, Series A-5, Daily VRDN and Put, 3.75%, 10/01/07 .
100,000
aDistrict of Columbia Revenue,
1,300,000 American University, Series A, Weekly VRDN and Put, 3.45%, 12/01/15 . . . . . .
1,300,000
200,000 American University, Weekly VRDN and Put, 3.45%, 10/01/15 . . . . . . . . . . .
200,000
-----------
1,600,000
-----------
FLORIDA 11.3%
aFlorida HFA, MF,
1,000,000 Cypress Lake, Weekly VRDN and Put, 3.45%, 12/01/07 . . . . . . . . . . . . . .
1,000,000
200,000 Sun Point Cove Apartments, Weekly VRDN and Put, 3.45%, 12/01/07 . . . . . . . .
200,000
3,400,000 Florida State Municipal Power Agency Revenue, Pooled Loan Project, Series A,
TECP, 4.00%, 03/02/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,400,000
5,000,000 Florida State Municipal Power Agency Revenue, TECP, 3.90%, 03/06/95 . . . . . . . .
5,000,000
700,000 aJacksonville Health Facilities Authority, Hospital Revenue, Baptist Medical Center
Project, MBIA Insured, Daily VRDN and Put, 3.65%, 06/01/08 . . . . . . . . . . . .
700,000
1,900,000 aOkaloosa County Revenue, Gulf Coast Treatment Center, Weekly VRDN and Put,
3.45%, 11/01/14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,900,000
700,000 aOrange County HFAR, Refunding, MF, Smokewood/Sun, Series A, Weekly VRDN
and Put, 3.65%, 12/01/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
700,000
3,585,000 Sarasota County Public Hospital District Revenue, Sarasota Memorial Hospital Project,
Series C, TECP, 3.75%, 03/09/95 . . . . . . . . . . . . . . . . . . . . . . . . .
3,585,000
5,000,000 Sunshine State Governmental Financing Commission Revenue, TECP, 3.95%, 03/03/95 . .
5,000,000
-----------
21,485,000
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
FRANKLIN TAX-EXEMPT MONEY FUND
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, JANUARY 31, 1995
(UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FACE
VALUE
AMOUNT
(NOTE 1)
-------------------------------------------------------------------------------------------------------------
--------------
<S> <C>
<C>
INVESTMENTS (CONT.)
GEORGIA 4.6%
$2,000,000 aDe Kalb County Hospital Authority Revenue Anticipation Certificates, De Kalb
Medical Center Project, Weekly VRDN and Put, 3.60%, 09/01/09 . . . . . . . . .
$2,000,000
aDe Kalb County Housing Authority MFHR,
300,000 Columbia on Clairmont Project, Series H, Weekly VRDN and Put, 3.45%, 08/01/05 . .
300,000
100,000 Wood Brook Project, Series J, Weekly VRDN and Put, 3.50%, 08/01/0 . . . . . . . .
100,000
2,750,000 aFulton County Housing Authority, MFHR, Refunding, Spring Creek Crossing,
Weekly VRDN and Put, 3.45%, 10/01/24 . . . . . . . . . . . . . . . . . . . . . . .
2,750,000
2,700,000 aHapeville IDAR, Hapeville Hotel, Ltd., Daily VRDN and Put, 3.80%, 11/01/15 . . . . .
2,700,000
1,000,000 aMacon-Bibb County Hospital Authority Revenue, Medical Center of Central Georgia,
Weekly VRDN and Put, 3.60%, 04/01/07 . . . . . . . . . . . . . . . . . . . . . . .
1,000,000
----------
8,850,000
----------
HAWAII .3%
500,000 Hawaii State Department, Budget and Finance, Special Purpose Mortgage Revenue,
Kaiser Permanente Medical Care, Series B, Optional Put 03/01/95, 3.60%, 03/01/14 .
500,000
----------
ILLINOIS 7.2%
3,500,000 aChicago GO, Tender Notes, Series B, Weekly VRDN and Put, 3.35%, 10/31/95 . . . . . .
3,500,000
2,935,000 City of Chicago, O'Hare International Airport Revenue, General Airport, Second Lien,
Series B, Optional Put 07/01/95, 3.35%, 01/01/15 . . . . . . . . . . . . . . . . .
2,935,000
aIllinois Health Facilities Authority Revenue,
300,000 Hospital Sisters Services, Series E, MBIA Insured, Weekly VRDN and Put,
3.45%, 12/01/04 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
300,000
3,100,000 Palos Community Hospital, Series B, Weekly VRDN and Put, 3.90%, 12/01/15 . . .
3,100,000
1,000,000 Illinois State Sales Tax Revenue, Series O, 5.10%, 06/15/95 . . . . . . . . . . . .
1,005,352
2,800,000 aLisle MFR, Ashley Lisle Project, Weekly VRDN and Put, 3.40%, 12/15/25 . . . . . . . .
2,800,000
----------
13,640,352
----------
INDIANA .8%
aFort Wayne Hospital Authority Revenue, Parkview Memorial Hospital,
200,000 Series B, Weekly VRDN and Put, 3.60%, 01/01/16 . . . . . . . . . . . . . . . .
200,000
300,000 Series B, Weekly VRDN and Put, 3.60%, 01/01/16 . . . . . . . . . . . . . . . .
300,000
1,000,000 Indiana Bond Bank, Advance Funding Program Notes, Series A-1, 5.25%, 07/10/95 . . .
1,002,810
100,000 aIndianapolis EDR, Edgecomb Metals Co., Weekly VRDN and Put, 3.45%, 12/01/08 . . . . .
100,000
----------
1,602,810
----------
IOWA 1.3%
1,900,000 aChillicothe PCR, Refunding, Southern Utilities Co., Series A, Weekly VRDN and
Put, 3.55%, 03/01/10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,900,000
500,000 aIowa Finance Authority, Solid Waste Disposal Revenue, Cedar River Paper Co.
Project, Series A, Daily VRDN and Put, 3.65%, 07/01/23 . . . . . . . . . . . . . .
500,000
----------
2,400,000
----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
FRANKLIN TAX-EXEMPT MONEY FUND
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, JANUARY 31, 1995
(UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FACE
VALUE
AMOUNT
(NOTE 1)
-------------------------------------------------------------------------------------------------------------
--------------
<S> <C>
<C>
INVESTMENTS (CONT.)
KENTUCKY .8%
$1,500,000 aKentucky Higher Education Revenue, Student Loan Corp., Series E, Weekly VRDN
and Put, 3.75%, 12/01/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,500,000
----------
LOUISIANA 3.3%
700,000 aEast Baton Rouge Parish, PCR, Georgia Pacific Corp., Weekly VRDN and Put,
3.60%, 10/01/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
700,000
200,000 aJefferson Parish IDBR, Refunding, George J. Ackel Project, Weekly VRDN and Put,
3.45%, 12/01/04 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
200,000
100,000 aLouisiana Public Facilities Authority Revenue, MF, Lincoln Park, Weekly VRDN and
Put, 3.45%, 08/01/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100,000
2,550,000 aSaint Charles Parish, PCR, Shell Oil Co. Project, Weekly VRDN and Put, 3.40%,
06/01/05 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,550,000
1,400,000 aSouth Louisiana Port Commission, Marine Terminal Facilities Revenue, Refunding,
Monthly VRDN and Put, 3.40%, 07/01/21 . . . . . . . . . . . . . . . . . . . . . .
1,400,000
1,300,000 aWest Baton Rouge Parish Revenue, Industrial District No. 3, Dow Chemical Co.
Project, Daily VRDN and Put, 4.00%, 12/01/23 . . . . . . . . . . . . . . . . . . .
1,300,000
----------
6,250,000
----------
MARYLAND 1.3%
1,765,000 aBaltimore County Housing Revenue, Refunding, Spring Hill Mortgage, Weekly VRDN
and Put, 3.40%, 09/20/28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,765,000
700,000 Baltimore Highway User, RAN, 5.00%, 06/09/95 . . . . . . . . . . . . . . . . . . . .
702,153
----------
2,467,153
----------
MASSACHUSETTS .6%
1,200,000 aMassachusetts State Health & Educational Facilities Authority Revenue, Harvard
University, Weekly VRDN and Put, 3.35%, 08/01/17 . . . . . . . . . . . . . . . . .
1,200,000
----------
MICHIGAN .5%
1,000,000 aGrand Rapids Water Supply System Revenue, Refunding, FGIC Insured, Daily VRDN
and Put, 3.60%, 01/01/20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,000,000
----------
MINNESOTA 1.5%
524,000 aAustin Commercial Development Revenue, Hy-Vee Food Stores, Monthly VRDN and
Weekly Put, 3.75%, 12/01/04 . . . . . . . . . . . . . . . . . . . . . . . . . . .
524,000
2,200,000 aDuluth Tax Increment Revenue, Lake Superior, Weekly VRDN and Put, 3.70%,
09/01/10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,200,000
100,000 aMinnetonka MFHR, Cliffs At Ridgedale, Weekly VRDN and Put, 3.45%, 03/01/09 . . . . .
100,000
----------
2,824,000
----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
FRANKLIN TAX-EXEMPT MONEY FUND
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, JANUARY 31, 1995
(UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FACE
VALUE
AMOUNT
(NOTE 1)
-------------------------------------------------------------------------------------------------------------
--------------
<S> <C>
<C>
INVESTMENTS (CONT.)
MISSISSIPPI 1.3%
$ 900,000 aJackson County PCR, Refunding, Chevron U.S.A., Inc. Project, Daily VRDN and Put,
3.40%, 12/01/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 900,000
1,600,000 aPerry County PCR, Refunding, Leaf River Forest Project, Daily VRDN and Put, 3.45%,
03/01/02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,600,000
---------
2,500,000
MISSOURI .8%
1,100,000 aKansas City IDA, MFHR, Locarno MF Project, Weekly VRDN and Put, 3.45%, 12/01/15 . . .
1,100,000
135,000 aSaint Louis County, IDA, IDR, Riverport Association Project, Weekly VRDN and Put,
3.40%, 12/01/15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
135,000
200,000 aWest Plains, IDA, IDR, West Plains Manor Project, Monthly VRDN and Weekly Put,
3.75%, 11/01/10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
200,000
---------
1,435,000
---------
MONTANA .3%
500,000 aForsythe PCR, Portland General Electric, Series D, Swiss Bank Corp., Weekly VRDN
and Put, 3.45%, 06/01/13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
500,000
---------
NEW JERSEY .9%
1,800,000 aNew Jersey EDA Revenue, Morris Hall/St. Lawrence, Series B, Monthly VRDN and
Put, 5.00%, 04/01/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,800,000
---------
NEW YORK 12.9%
400,000 aErie County Water Authority Revenue, Series B, AMBAC Insured, Weekly VRDN and
Put, 3.30%, 12/01/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
400,000
---------
200,000 aMetropolitan Transport Authority Commuter Facilities Revenue, Running Reserved
Notice, Weekly VRDN and Put, 3.25%, 07/01/21 . . . . . . . . . . . . . . . . . . .
200,000
aNew York City GO,
100,000 Series E, Subseries E-5, Daily VRDN and Put, 3.80%, 08/01/09 . . . . . . . . .
100,000
1,500,000 Subseries B-2, Daily VRDN and Put, 3.45%, 08/15/19 . . . . . . . . . . . . . .
1,500,000
1,500,000 Subseries B-4, Daily VRDN and Put, 3.40%, 08/15/22 . . . . . . . . . . . . . .
1,500,000
900,000 New York City Municipal Water Finance Authority Revenue, Water and Sewer System,
TAN, Series G, FGIC Insured, 3.40%, 06/15/24 . . . . . . . . . . . . . . . . . . .
900,000
New York City RAN,
800,000 Series A, 4.50%, 04/12/95 . . . . . . . . . . . . . . . . . . . . . . . . . . .
801,250
1,250,000 Series B, 4.75%, 06/30/95 . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,254,100
3,700,000 aNew York State Dormitory Authority Revenue, Metropolitan Museum of Art, Series A,
Weekly VRDN and Put, 3.25%, 07/01/15 . . . . . . . . . . . . . . . . . . . . . . .
3,700,000
100,000 aNew York State Energy Research and Development Authority, PCR, Niagara-Mohawk
Power, Series A, Daily VRDN and Put, 3.50%, 07/01/15 . . . . . . . . . . . . . . .
100,000
aNew York State Local Government Assistance Corp.,
800,000 Series A, Weekly VRDN and Put, 3.20%, 04/01/22 . . . . . . . . . . . . . . . .
800,000
3,400,000 Series A, Weekly VRDN and Put, 3.20%, 04/01/23 . . . . . . . . . . . . . . . . .
3,400,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
FRANKLIN TAX-EXEMPT MONEY FUND
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, JANUARY 31, 1995
(UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FACE
VALUE
AMOUNT
(NOTE 1)
-------------------------------------------------------------------------------------------------------------
--------------
<S> <C>
<C>
INVESTMENTS (CONT.)
NEW YORK (CONT.)
$3,700,000 New York City TAN, Coupon M, 4.25%, 02/15/95 . . . . . . . . . . . . . . . . . . . .
$ 3,701,013
6,300,000 aTriborough Bridge and Tunnel Authority, Special Obligation, FGIC Insured, Weekly
VRDN and Put, 3.20%, 01/01/24 . . . . . . . . . . . . . . . . . . . . . . . . . .
6,300,000
----------
24,656,363
----------
NORTH CAROLINA
100,000 aWake County Industrial Facilities and PCFA Revenue, Carolina Power and Light Co.,
Series A, Weekly VRDN and Put, 3.45%, 05/01/15 . . . . . . . . . . . . . . . . . .
100,000
----------
OHIO .5%
1,000,000 aCincinnati Student Loan Funding Corp. Revenue, Series 1983-A, Weekly VRDN and
Put, 3.50%, 12/29/98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,000,000
----------
OKLAHOMA .6%
1,100,000 aTulsa Industrial Authority Hospital Revenue, Hillcrest Medical Center Project, Weekly
VRDN and Put, 3.35%, 03/01/18 . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,100,000
----------
PENNSYLVANIA 4.1%
1,000,000 aAllentown, RDA MFHR, Refunding, Arcadia Association Project, Weekly VRDN and
Put, 3.75%, 07/01/20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,000,000
1,000,000 Carbon County IDAR, Resource Recovery, Panther Creek Partners, Series A, TECP,
3.70%, 02/21/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,000,000
Pennsylvania State TAN,
3,000,000 First Series, 4.75%, 06/30/95 . . . . . . . . . . . . . . . . . . . . . . . . .
3,009,523
1,000,000 First Series, 5.00%, 06/30/95 . . . . . . . . . . . . . . . . . . . . . . . . .
1,004,170
1,300,000 Pennsylvania Verango IDAR, Resources Recovery, TECP, 3.80%, 02/17/95 . . . . . . . .
1,300,000
400,000 aSayre Health Care Facilities Authority Revenue, VHA, Capital Financing Project,
Series K, AMBAC Insured, Weekly VRDN and Daily Put, 3.35%, 12/01/20 . . . . . . .
400,000
----------
7,713,693
PUERTO RICO
100,000 aPuerto Rico Commonwealth Government Development Bank, Refunding, Weekly
VRDN and Put, 3.05%, 12/01/15 . . . . . . . . . . . . . . . . . . . . . . . . . .
100,000
----------
RHODE ISLAND 3.8%
7,200,000 Rhode Island State TAN, 4.25%, 06/30/95 . . . . . . . . . . . . . . . . . . . . . .
7,211,715
----------
SOUTH CAROLINA 3.1%
2,500,000 aAbbeyville County IDR, Bibb Co. Project, Weekly VRDN and Put, 3.80%, 10/01/04 . . . .
2,500,000
1,400,000 aFlorence County Hospital Revenue, McLeod Regional Medical Center, Series A,
FGIC Insured, Weekly VRDN and Put, 3.60%, 11/01/15 . . . . . . . . . . . . . . . .
1,400,000
2,025,000 aRock Hill Utility Systems Revenue, FGIC Insured, Weekly VRDN and Put, 3.60%,
01/01/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,025,000
----------
5,925,000
----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
FRANKLIN TAX-EXEMPT MONEY FUND
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, JANUARY 31, 1995
(UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FACE
VALUE
AMOUNT
(NOTE 1)
-------------------------------------------------------------------------------------------------------------
--------------
<S> <C>
<C>
INVESTMENTS (CONT.)
SOUTH DAKOTA .5%
$1,000,000 South Dakota HDA, Homeownership Mortgage, Series C, Optional Put 06/06/95,
3.30%, 05/01/17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,000,000
----------
TENNESSEE 1.1%
1,000,000 aNashville Metropolitan Airport Authority Revenue, Refunding, FGIC Insured, Weekly
VRDN and Put, 3.50%, 07/01/19 . . . . . . . . . . . . . . . . . . . . . . . . . .
1,000,000
1,000,000 aTennessee State GO, BAN, Series B, Weekly VRDN and Put, 3.40%, 05/01/96 . . . . . . .
1,000,000
----------
2,000,000
----------
TEXAS 12.4%
6,000,000 Brazos River Harbor IDC, PCR, Dow Chemical Co. Project, TECP, 3.75%, 02/14/95 . . .
6,000,000
2,500,000 Dallas County, Texas Utility and Reclamation District, Refunding, Series A, MBIA
Insured, 6.90%, 02/15/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,503,223
2,800,000 aGalveston IDC Revenue, Refunding, Mitchell Interstate Project, Daily VRDN and Put,
3.75%, 06/01/09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,800,000
1,000,000 aGreater East Texas Higher Educational Authority, Inc., Student Loan Revenue,
Refunding, Series A, Weekly VRDN and Put, 3.55%, 09/01/02 . . . . . . . . . . . .
1,000,000
aHarris County IDC, PCR, Exxon Project,
300,000 Series A, Daily VRDN and Put, 3.75%, 03/01/24 . . . . . . . . . . . . . . . . .
300,000
2,700,000 Series B, Daily VRDN and Put, 3.75%, 03/01/24 . . . . . . . . . . . . . . . . .
2,700,000
1,600,000 Houston GO, Tender Notes, TECP, 3.30%, 02/22/95 . . . . . . . . . . . . . . . . . .
1,600,000
950,000 aMontgomery County, IDC, IDR, Series A, Weekly VRDN and Put, 3.40%, 12/01/03 . . . . .
950,000
1,285,000 aNueces County Health Facilities Development Corp. Revenue, Driscoll Children's
Foundation, Weekly VRDN and Put, 3.45%, 07/01/15 . . . . . . . . . . . . . . . . .
1,285,000
----------
2,000,000 aPort Arthur Navigation District, PCR, Star Enterprises Project, Weekly VRDN and Put,
3.50%, 04/01/14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,000,000
1,300,000 aRed River Authority, PCR, Refunding, Southwestern Public Services Co., Weekly
VRDN and Daily Put, 3.60%, 07/01/11 . . . . . . . . . . . . . . . . . . . . . . .
1,300,000
200,000 aTarrant County Health Facilities Development Corp., Health System Revenue, Harris
Methodist Health System, Weekly VRDN and Put, 3.75%, 09/01/18 . . . . . . . . . .
200,000
1,000,000 aTexas State Department Housing and Community Affairs, MFR, Refunding, High
Point III-A, Weekly VRDN and Put, 3.35%, 02/01/23 . . . . . . . . . . . . . . . .
1,000,000
----------
23,638,223
----------
UTAH 1.9%
3,000,000 Utah Intermountain Power Agency Supply Revenue, Series E, TECP, 3.75%, 03/20/95 . .
3,000,000
600,000 aUtah State Board Regents, Student Loan Revenue, Series B, AMBAC Insured,
Weekly VRDN and Put, 3.40%, 11/01/00 . . . . . . . . . . . . . . . . . . . . . . .
600,000
----------
3,600,000
----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
FRANKLIN TAX-EXEMPT MONEY FUND
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, JANUARY 31, 1995
(UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FACE
VALUE
AMOUNT
(NOTE 1)
-------------------------------------------------------------------------------------------------------------
-------------
<S> <C>
<C>
INVESTMENTS (CONT.)
VIRGINIA .4%
aLynchburg IDA, Hospital Facilities, First Mortgage Revenue, VHA, Mid-Atlantic,
$ 300,000 Series F, AMBAC Insured, Weekly VRDN and Put, 3.35%, 12/01/25 . . . . . . . . .
$ 300,000
400,000 Series G, AMBAC Insured, Weekly VRDN and Put, 3.35%, 12/01/25 . . . . . . . . .
400,000
------------
700,000
------------
WASHINGT0N .6%
100,000 aPort Skagit County, IDC Revenue, Hexcel Corp. Project, Weekly VRDN and Put,
4.20%, 12/01/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100,000
1,000,000 aWashington State Public Power Supply Revenue, Refunding, System Nuclear Project
No. 3, Series A, Weekly VRDN and Put, 3.35%, 07/01/18 . . . . . . . . . . . . . .
1,000,000
------------
1,100,000
------------
WISCONSIN
100,000 aMilwaukee Housing Authority, MFHR, Yankee Hill Apartments, Weekly VRDN and Put,
3.45%, 12/01/09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100,000
------------
WYOMING 5.4%
3,600,000 aLincoln County, PCR, Exxon Project, Series C, Daily VRDN and Put, 3.75%, 11/01/14 . .
3,600,000
1,400,000 aPlatte County PCR, Tri State G&T, Series A, Daily VRDN and Put, 3.80%, 07/01/14 . . .
1,400,000
aUinta County PCR, Refunding,
250,000 Amoco Standard Oil Co., Series A, Annual VRDN, Semi-Annual Put, 4.27%,
12/01/12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
250,000
4,400,000 Refunding, Chevron, Inc. Project, Daily VRDN and Put, 3.40%, 08/15/20 . . . . .
4,400,000
700,000 Refunding, Chevron, Inc. Project, Daily VRDN and Put, 3.40%, 12/01/22 . . . . .
700,000
------------
10,350,000
------------
TOTAL INVESTMENTS (COST $191,305,116) 100.4% . . . . . . . . . . . . . . .
191,305,116
LIABILITIES IN EXCESS OF OTHER ASSETS, NET (.4)% . . . . . . . . . . . . .
(735,319)
------------
NET ASSETS 100.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$190,569,797
============
</TABLE>
At January 31, 1995, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
FRANKLIN TAX-EXEMPT MONEY FUND
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, JANUARY 31, 1995
(UNAUDITED) (CONT.)
PORTFOLIO ABBREVIATIONS:
<TABLE>
<S> <C>
AMBAC - American Municipal Bond Assurance Corp.
BAN - Bond Anticipation Notes
EDA - Economic Development Authority
EDR - Economic Development Revenue
FGIC - Financial Guaranty Insurance Co.
GO - General Obligation
HDA - Housing Development Authority/Agency
HFA - Housing Finance Authority/Agency
HFAR - Housing Finance Agency Revenue
IDA - Industrial Development Authority/Agency
IDAR - Industrial Development Authority/Agency Revenue
IDBR - Industrial Development Board Revenue
IDC - Industrial Development Corp.
IDR - Industrial Development Revenue
MBIA - Municipal Bond Investors Assurance Corp.
MF - Multi-Family
MFHR - Multi-Family Housing Revenue
MFR - Multi-Family Revenue
MUD - Municipal Utility District
PCC - Pollution Control Corp.
PCFA - Pollution Control Financing Authority
PCR - Pollution Control Revenue
RAN - Revenue Anticipation Notes
RDA - Redevelopment Agency
TAN - Tax Anticipation Notes
TECP - Tax-Exempt Commercial Paper
TRAN - Tax Revenue Anticipation Notes
VHA - Volunteer Hospital of America
</TABLE>
(a) Variable rate demand notes (VRDN's) are tax-exempt 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 upon short notice prior to specified dates.
The interest rate may change on specified dates in relationship with
changes in a designated rate (such as the prime interest rate or U.S.
Treasury bills rate).
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
FRANKLIN TAX-EXEMPT MONEY FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1995 (UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investments in securities,
at value and cost $191,305,116
Cash 440,412
Receivables:
Capital shares sold 786,757
Interest 999,607
------------
Total assets 193,531,892
------------
Liabilities:
Payables:
Investment securities purchased 1,002,810
Capital shares repurchased 1,810,994
Dividends to shareholders 24,096
Management fees 57,967
Shareholder servicing costs 18,319
Accrued expenses and other liabilities 47,909
------------
Total liabilities 2,962,095
------------
Net assets (equivalent to $1.00 per
share based on 190,569,797 shares
of capital stock outstanding) $190,569,797
============
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JANUARY 31, 1995 (UNAUDITED)
<TABLE>
<C> <C>
Investment income:
Interest $3,655,005
Expenses:
Management fees, net (Note 5) $413,885
Shareholder servicing costs
(Note 5) 119,572
Reports to shareholders 96,663
Registration 42,957
Professional fees 14,500
Custodian fees 13,965
Directors' fees and expenses 10,633
Other 4,856
--------
Total expenses 717,031
----------
Net investment income 2,937,974
Realized loss on investments (9,193)
----------
Net increase in net assets resulting
from operations $2,928,781
==========
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JANUARY 31, 1995 (UNAUDITED)
AND THE YEAR ENDED JULY 31, 1994
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1995 JULY 31, 1994
---------------- -------------
<S> <C> <C>
Increase (decrease) in
net assets:
Operations:
Net investment
income $ 2,937,974 $ 4,138,176
Net realized loss
from investments (9,193) --
------------ ------------
Net increase in net
assets resulting
from operations (2,928,781)(+) 4,138,176
Distributions to
shareholders from
net investment income (2,928,781)(+) (4,138,176)
Increase (decrease) in
net assets from capital
share transactions
(Note 3) (12,313,011) 9,317,388
------------ ------------
Net increase
(decrease) in
net assets (12,313,011) 9,317,388
Net assets (there is
no undistributed net
investment income
at beginning or end
of period):
Beginning of
period 202,882,808 193,565,420
------------ ------------
End of period $190,569,797 $202,882,808
============ ============
</TABLE>
(+) Distributions were reduced by net realized loss from security transactions
of $9,193.
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
FRANKLIN TAX-EXEMPT MONEY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Franklin Tax-Exempt Money Fund (the Fund) is a no-load, open-end diversified
management investment company (mutual fund), registered under the Investment
Company Act of 1940, as amended.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
a. SECURITIES VALUATION:
Portfolio securities are valued at amortized cost, which approximates value.
The Fund must maintain a dollar-weighted average maturity of 90 days or less
and only purchase instruments having remaining maturities of 397 days or less.
If the Fund's portfolio has a remaining weighted average maturity of greater
than 90 days, the portfolio will be stated at value based on recorded closing
sales on a national securities exchange or, in the absence of a recorded sale,
within the range of the most recent quoted bid and ask prices. The directors
have established procedures designed to stabilize, to the extent reasonably
possible, the Fund's price per share as computed for the purpose of sales and
redemptions at $1.00.
b. MUNICIPAL BONDS OR NOTES WITH "PUTS":
The Fund has purchased municipal bonds or notes with the right to resell the
bonds or notes to the seller at an agreed upon price or yield on a specified
date or within a specified period (which will be prior to the maturity date of
the bonds or notes). Such a right to resell is commonly known as a "put." In
determining the weighted average maturity of the Fund's portfolio, municipal
bonds and notes as to which the Fund holds a put will be deemed to mature on
the last day on which the put may be exercisable.
c. VARIABLE RATE DEMAND NOTES:
The Fund has invested in certain variable interest rate demand notes with
maturities greater than 397 days but which are redeemable at specified
intervals upon demand. The maturity of these instruments for the purpose of
calculating the portfolio's weighted average maturity is considered to be the
lesser of the period until the interest rate is adjusted or until the principal
can be recovered by demand.
d. INCOME TAX:
The Fund intends to continue to qualify for the tax treatment applicable to
regulated investment companies under the Internal Revenue Code and to make the
requisite distributions to its shareholders which will be sufficient to relieve
it from income and excise taxes. Therefore, no income tax provision is
required.
e. SECURITY TRANSACTIONS:
Security transactions are accounted for on the date the securities are
purchased or sold (trade date). Realized gains and losses on security
transactions are determined on the basis of specific identification for both
financial statement and income tax purposes.
f. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:
Net investment income includes income, calculated on an accrual basis,
amortization of original issue and market discount or premium, if any, and
estimated expenses which are accrued daily. The total available for dividends
is computed daily and includes the net investment income, plus or minus any
gains or losses on security transactions and changes in unrealized portfolio
appreciation or depreciation, if any.
Distributions normally are declared for each day the New York Stock
Exchange is open for business, equal to the total available for distributions
(as defined above), and are payable to shareholders of record as of the close
of business the preceding day. Such dividends are automatically reinvested
daily in additional shares of the Fund at net asset value.
14
<PAGE>
FRANKLIN TAX-EXEMPT MONEY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONT.)
2. ACQUISITION OF TEMPLETON TAX FREE MONEY FUND
On August 27, 1993, the Fund acquired all of the net assets of Templeton Tax
Free Money Fund (the Templeton Money) pursuant to a plan of reorganization
approved by the shareholders of the Templeton Money on that date.
The acquisition was accomplished by a tax-free exchange of the Franklin
Tax-Exempt Money Fund shares for all the net assets of the Templeton Money,
which is accounted for as a pooling-of-interest without restatement for
financial reporting purposes.
The selected financial information and shares outstanding immediately before
and after the acquisition for the funds were as follows:
<TABLE>
<CAPTION>
NET ASSET
VALUE
NET ASSETS PER SHARE OUTSTANDING
---------- --------- -----------
<S> <C> <C> <C>
Templeton Tax Free Money Fund . . . . . . . . . $ 28,904,384 $1.00 28,904,384
Franklin Tax-Exempt Money Fund . . . . . . . . 162,656,518 1.00 162,656,518
Combined . . . . . . . . . . . . . . . . . . . 191,560,902 1.00 191,560,902
</TABLE>
3. CAPITAL STOCK
At January 31, 1995, there were 5,000,000,000 shares of no par value capital
stock authorized and capital paid in aggregated $190,569,797. Transactions in
capital stock at $1.00 per share were as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
JANUARY 31, 1995 JULY 31, 1994
---------------- -------------
<S> <C> <C>
Shares sold . . . . . . . . . . . . . . . . . . . . . . $ 77,661,683 $ 174,818,597
Shares issued in connection with acquisition (Note 2) . -- 28,904,384
Shares issued in reinvestment of distributions . . . . 2,915,383 4,129,686
Shares redeemed . . . . . . . . . . . . . . . . . . . . (141,872,606) (231,379,034)
Changes from exercise of exchange privilege:
Shares sold . . . . . . . . . . . . . . . . . . . . . 169,180,437 409,804,995
Shares redeemed . . . . . . . . . . . . . . . . . . . (120,197,908) (376,961,240)
------------- -------------
Net increase (decrease) . . . . . . . . . . . . . . . . $ (12,313,011) $ 9,317,388
============= =============
</TABLE>
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales/maturities of securities for the period ended January 31,
1995 aggregated $347,659,996 and $364,156,908 respectively.
5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Franklin Advisers, Inc., under the terms of an agreement, provides investment
advice, administrative services, office space and facilities to the Fund, and
receives fees computed daily at 1/584 of 1% (approximately 5/8 of 1% annually)
of the net assets on the first $100 million, 1/730 of 1% (approximately 1/2 of
1% annually) of net assets in excess of $100 million up to $250 million, and
1/811 of 1% (approximately 45/100 of 1% annually) of net assets in excess of
$250 million. The terms of the management agreement provide that aggregate
annual expenses of the Fund be limited to the extent necessary to comply with
the limitations set forth in the laws, regulations and administrative
interpretations of the states in which the Fund's shares are registered. The
Fund's expenses did not exceed these limitations; however, for the six months
ended January 31, 1995, Franklin Advisers, Inc., agreed in advance to waive a
portion of the management fees of $195,627 in an effort to minimize the Fund's
expenses.
15
<PAGE>
FRANKLIN TAX-EXEMPT MONEY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONT.)
5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONT.)
Under the terms of a shareholder services agreement with Franklin/Templeton
Investor Services, Inc., the Fund pays costs on a per shareholder account
basis. Shareholder servicing costs incurred for the six months ended January
31, 1995 aggregated $119,572, of which $119,310 was paid to Franklin/Templeton
Investor Services, Inc.
Certain officers and directors of the Fund are also officers and/or directors
of Franklin Advisers, Inc. and/or Franklin/Templeton Investor Services, Inc.,
both wholly owned subsidiaries of Franklin Resources, Inc.
On December 8, 1994, Franklin Resources, Inc. received approval from Securities
and Exchange Commission to purchase $500,000 in face value of unsecured Orange
County Tax Revenue Anticipation Notes, 4.5%, 07/19/95 from the Fund at
amortized cost of $501,752 plus accrued interest of $9,625.
6. CREDIT RISKS
Although the Fund has a diversified investment portfolio, it has investments in
excess of 10% of its total net assets in the states of Florida, New York and
Texas, which may subject the Fund more significantly to economic changes
occurring in those states.
7. FINANCIAL HIGHLIGHTS
Selected data for each share of capital stock outstanding throughout each
period are as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED JULY 31,
ENDED -----------------------------------------------------
01/31/95 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value at beginning of period . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- -----
Net investment income . . . . . . . . . . .014 .020 .021 .031 .045 .056
Distributions from net investment income (.014) (.020) (.021) (.031) (.045)
(.056)
------ ----- ----- ----- ----- ------
Net asset value at end of period . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== =====
-------------------------------------------------------------------------------------------------------------
Total return+ . . . . . . . . . . . . . . 1.36% 1.85% 2.08% 3.14% 4.65% 5.81%
-------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (in 000's) . $190,570 $202,883 $193,565 $207,374 $249,214 $228,001
Ratio of expenses to average net assets+ .66%* .65% .69% .70% .70% .74%
Ratio of net investment income to average
net assets . . . . . . . . . . . . . . . 2.71%* 1.84% 2.10% 3.15% 4.53% 5.60%
</TABLE>
*Annualized
+ Total return measures the change in value of an investment over the periods
indicated and is not annualized. It assumes reinvestment of dividends and
capital gains, if any, at net asset value.
++ During the periods indicated below, the Manager agreed to waive in
advance a portion of its management fees incurred by the Fund. Had such
action not been taken, the ratios of operating expenses to average net
assets would have been as follows:
(1) For the six months ended January 31, 1995
<TABLE>
<CAPTION>
RATIO OF
EXPENSES
TO AVERAGE
NET ASSETS
----------
<S> <C>
1991 . . . . . . . . . . . .71%
1992 . . . . . . . . . . . .75
1993 . . . . . . . . . . . .80
1994 . . . . . . . . . . . .81
1995(1) . . . . . . . . . . .84*
</TABLE>
16
<PAGE>
APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING
(PURSUANT TO ITEM 304 (a) of REGULATION S-T)
GRAPHIC MATERIAL(1)
This bar chart shows the comparison between the fund's seven-day effective
distribution rate of 3.10% and the taxable equivalent seven-day effective
distribution rate of 5.13%.
GRAPHIC MATERIAL(2)
This bar chart shows the comparison between the fund's seven-day annualized
distribution rate of 3.06% and the taxable equivalent seven-day annualized
distribution rate of 5.07%.
