Your Fund's Objective:
Seeks 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 share price.* *An investment in the fund is neither insured nor guaranteed
by the U.S. government or by any other entity or institution. There is no
assurance that the $1.00 per share price will be maintained.
March 14, 1997
Dear Shareholder:
It's a pleasure to bring you the Franklin Tax-Exempt Money Fund's semi-annual
report for the period ended January 31, 1997.
The Economy
The U.S. economy continued its strong performance over the reporting period.
Inflation remained under control, employment expanded, and commodity prices were
relatively stable. Short-term interest rates, as measured by the one-year U.S.
Treasury bill, fluctuated within a narrow band (between 5.38% and 5.91%) over
the six-month period.**
*An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution. There is no assurance that the
$1.00 per share price will be maintained.
**Source: Micropal.
Portfolio Activity
We believe that the current stable interest rate environment is likely to
continue for the near term. The Federal Reserve Board has not altered monetary
policy since February 1996, and based on current economic indicators, we do not
anticipate any developments over the next couple of months that could cause this
strategy to change.
As a result, we have managed the fund in a somewhat neutral stance, purchasing
securities which should do well in a largely unchanging interest rate
environment. Of course, preservation of capital and liquidity remain our top
priority and we have continued the fund's policy of acquiring the
highest-quality securities available to money market portfolios. The investment
instruments we purchased have been ranked in the top two rating categories by
one of the nationally recognized rating services. We will continue to manage the
fund with an emphasis on high quality securities and liquidity.
On January 31, 1997, the fund's seven-day effective yield, which assumes the
compounding of daily dividends, was 2.89%, and its seven-day annualized yield
was 2.85%. This tax-free rate is generally higher than the after-tax return on a
comparable taxable investment. For example, an investor in the maximum federal
income tax bracket of 39.6% would need to earn 4.72% from a taxable investment
to match the fund's tax-free yield.
GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT
As a Franklin Tax-Exempt Money Fund share-holder, you benefit from easy-access
to your money, and a high degree of credit safety. You also enjoy a wide range
of services, including draft writing for amounts of at least $100, free draft
books, and access to TeleFACTS(R), our around-the-clock automated customer
service line.
Celebrating 50 Years
This year marks 50 years of business for Franklin Templeton. Over these years,
we have experienced profound changes in technology, regulations and customer
expectations within the mutual fund industry. As one of the largest mutual fund
families, we're proud to be an innovative industry leader, providing people like
you with an opportunity to invest around the globe. We thank you for your past
support and look forward to serving your investment needs in the years ahead.
Sincerely,
Charles B. Johnson
Chairman
Franklin Tax-Exempt Money Fund
Franklin Tax-Exempt Money Fund
Period ended January 31, 1997
Seven-day effective yield1 2.89%
Seven-day annualized yield 2.85%
Taxable equivalent yield2 4.72%
1. The seven-day effective yield assumes the compounding of daily dividends.
2. Taxable equivalent yield assumes the 1997 maximum federal personal income tax
bracket of 39.6%.
Annualized and effective yields are for the seven days ended January 31, 1997.
Yields reflect fluctuations in interest rates on portfolio investments, as well
as 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 is not predictive of
future results.
The fund's manager agreed in advance to waive a portion of management fees,
which reduces expenses and increases yield to shareholders. Without these
reductions, the fund's annualized and effective yields for the period would have
been 2.63% and 2.66%, respectively. The fee waiver may be discontinued at any
time, upon notice to the fund's Board of Directors.
FRANKLIN TAX-EXEMPT MONEY FUND
Statement of Investments in Securities and Net Assets, January 31, 1997
(unaudited)
<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
Investments 101.5%
Alaska 0.1%
$ 100,000 aValdez Marine Terminal Revenue, Refunding, Exxon Pipeline Co. Project, Series A,
<C> <S> <C>
Daily VRDN and Put, 3.60%, 12/01/33 ............................................ $ 100,000
-------------
Arizona 4.8%
aApache County IDA,
100,000 IDR, Tuscon Electric Power, Springerville Project, Series C, Weekly VRDN and Put,
3.55%, 12/15/18 ............................................................ 100,000
500,000 PCR, Tuscon Electric Power, Series A, Weekly VRDN and Put, 3.55%, 06/15/20 .. 500,000
1,000,000 aChandler IDA, MFHR, Refunding, Southpark Apartments Project, Weekly VRDN and
Put, 3.60%, 12/01/02............................................................ 1,000,000
4,000,000 aHealth Facilities Authority Revenue, Arizona Voluntary Hospital Foundation, Series B,
Weekly VRDN and Put, 3.60%, 10/01/15 ........................................... 4,000,000
300,000 aMaricopa County IDA, Hospital Facilities Revenue, Samaritan Health Services Hospital,
Series B-2, MBIA Insured, Daily VRDN and Put, 3.65%, 12/01/08 .................. 300,000
200,000 aMaricopa County IDAR, Refunding, Royal Oaks Sun City Project, Weekly VRDN and
Put, 3.60%, 09/01/02 ........................................................... 200,000
600,000 aMaricopa County PCC, PCR, Refunding, Arizona Public Services Co., Series E,
Daily VRDN and Put, 3.65%, 05/01/29 ............................................ 600,000
1,000,000 aPinal County IDA, PCR, Magma-Copper Newmont Mining Corp., Daily VRDN and Put,
3.70%, 12/01/09 ................................................................ 1,000,000
-------------
7,700,000
-------------
Arkansas 1.9%
1,100,000 aSheridan IDR, Kohler Project, Weekly VRDN and Put, 3.60%, 08/01/00 ............. 1,100,000
1,900,000 aUniversity of Arkansas Revenue, Weekly VRDN and Put, 3.65%, 12/01/19 ........... 1,900,000
-------------
3,000,000
-------------
California 12.0%
2,000,000 aAlameda - Contra Costa Schools Financing Authority COP, Capital Improvement
Financing Projects, Weekly VRDN and Put, 3.50%, 07/01/16........................ 2,000,000
2,600,000 Alameda County TRAN, 4.50%, 06/30/97 ............................................ 2,605,614
700,000 aAnaheim COP, 1993 Refunding Projects, AMBAC Insured, Weekly VRDN and Put,
3.40%, 08/01/19 ................................................................ 700,000
aCalifornia Health Facilities Financing Authority Revenue,
300,000 Catholic Health Care, Series B, MBIA Insured, Weekly VRDN and Put, 3.45%,
07/01/16 ................................................................... 300,000
1,000,000 Refunding, Catholic West, Series D, MBIA Insured, Weekly VRDN and Put, 3.45%,
07/01/18 ................................................................... 1,000,000
aCalifornia PCFA, PCR,
600,000 Refunding, Shell Oil Co. Project, Series A, Daily VRDN and Put, 3.55%, 10/01/06 600,000
200,000 Refunding, Shell Oil Co. Project, Series B, Daily VRDN and Put, 3.55%, 10/01/11 200,000
California (cont.)
aCalifornia PCFA, PCR, (cont.)
$ 100,000 Refunding, Shell Oil Co. Project, Series C, Daily VRDN and Put, 3.55%, 11/01/00 $ 100,000
100,000 Southern California Edison Co., Series A, 3.70%, 02/28/08 ................... 100,000
aIrvine Ranch Water District,
1,500,000 COP, Capital Improvement Project, Weekly VRDN and Put, 3.55%, 08/01/16 ...... 1,500,000
200,000 Refunding, DATES, Consolidated Boards, Series B, Daily VRDN and Put, 3.55%,
10/01/99 ................................................................... 200,000
500,000 Refunding, DATES, Consolidated Boards, Series B, Daily VRDN and Put, 3.55%,
10/01/04 ................................................................... 500,000
600,000 Refunding, District Nos. 102, 103, 105, and 106, Daily VRDN and Put, 3.60%,
09/01/06 ................................................................... 600,000
600,000 District Nos. 105, 140, 240, and 250, Daily VRDN and Put, 3.60%, 01/01/21 ... 600,000
5,700,000 Los Angeles County TRAN, Series A, 4.50%, 06/30/97 .............................. 5,716,737
600,000 aLos Angeles MFHR, Mariposa Gardens Project, Series H, Weekly VRDN and Put,
3.30%, 09/01/15 ................................................................ 600,000
1,700,000 Sacramento MUD, TECP, 3.30%, 04/04/97 ........................................... 1,700,000
100,000 aTustin Improvement Bond Act 1915, Reassessment District No. 95-2, Series A,
Daily VRDN and Put, 3.60%, 09/02/13 ............................................ 100,000
-------------
19,122,351
-------------
Colorado 3.5%
Colorado Health Facilities Authority Revenue,
285,000 aBoulder Community Hospital Project, Series B, MBIA Insured, Weekly VRDN and
Put, 3.55%, 10/01/14 ....................................................... 285,000
2,355,000 aBoulder Community Hospital Project, Series C, MBIA Insured, Weekly VRDN and
Put, 3.55%, 10/01/14 ....................................................... 2,355,000
1,000,000 Sisters of Charity Health Care, Series A, MBIA Insured, 5.80%, 05/15/97 ..... 1,006,691
2,000,000 Colorado State General Fund Revenue, TRAN, Series A, 4.50%, 06/27/97 ............ 2,005,007
-------------
5,651,698
-------------
Florida 2.5%
2,000,000 aDade County Water and Sewer System Revenue, FGIC Insured, Weekly VRDN and
Put, 3.50%, 10/05/22 ........................................................... 2,000,000
1,200,000 aOrange County HFAR, Refunding, MF, Smokewood/Sun, Series A, Weekly VRDN and
Put, 3.60%, 12/01/22 ........................................................... 1,200,000
500,000 Orange County Water and Wastewater Revenue, MBIA Insured, 7.20%, 10/01/99 ....... 520,358
250,000 aVolusia County HFA, MFHR, Sun Pointe Apartments Project, Series H, Weekly VRDN
and Put, 3.55%, 12/01/05 ....................................................... 250,000
-------------
3,970,358
-------------
Georgia 10.7%
$ 1,100,000 aBurke County Development Authority, PCR, Georgia Power Co., Plant Vogtle, Series 9,
Daily VRDN and Put, 3.75%, 10/01/24 ............................................ $ 1,100,000
1,900,000 aDe Kalb County Hospital Authority Revenue Anticipation Certificates, De Kalb Medical
Center Project, Weekly VRDN and Put, 3.55%, 09/01/09 ........................... 1,900,000
5,000,000 aEagleston Children's Hospital, Series A, Weekly VRDN and Put, 3.55%, 03/01/24 .. 5,000,000
2,750,000 aFulton County Housing Authority, MFHR, Refunding, Spring Creek Crossing, Weekly
VRDN and Put, 3.65%, 10/01/24 .................................................. 2,750,000
3,500,000 Georgia State Municipal Gas Authority, TECP, 3.40%, 04/09/97 .................... 3,500,000
1,000,000 aMacon-Bibb County Hospital Authority Revenue Certificates, Medical Center of Central
Georgia, Weekly VRDN and Put, 3.55%, 04/01/07 .................................. 1,000,000
1,810,000 aRockdale County Hospital Authority Revenue Anticipation Certificates, Weekly VRDN
and Put, 3.55%, 10/01/09 ....................................................... 1,810,000
-------------
17,060,000
-------------
Hawaii 0.3%
450,000 Hawaii State GO, Refunding, Series CF, 3.80%, 07/01/97 .......................... 450,168
-------------
Illinois 4.8%
2,000,000 Chicago Tender Notes, 3.55%, 01/31/98 ........................................... 2,000,000
2,860,000 aCity of Chicago, O'Hare International Airport Revenue, General Airport, Second Lien,
Series B, Weekly VRDN and Put, 3.50%, 01/01/15 ................................. 2,860,000
200,000 aIllinois Development Finance Authority Revenue, Refunding, Olin Corp. Project,
Series A, Daily VRDN and Put, 3.60%, 06/01/04 .................................. 200,000
aIllinois Health Facilities Authority Revenue,
300,000 Hospital Sisters Services, Series E, MBIA Insured, Weekly VRDN and Put, 3.50%,
12/01/14 ................................................................... 300,000
200,000 Palos Community Hospital, Series B, Weekly VRDN and Put, 3.45%, 12/01/15 .... 200,000
2,100,000 aLisle MFR, Ashley of Lisle Project, Weekly VRDN and Put, 3.50%, 12/15/25 ....... 2,100,000
-------------
7,660,000
-------------
Indiana 0.1%
100,000 aIndianapolis EDR, Edgecomb Metals Co., Weekly VRDN and Put, 3.45%, 12/01/08 .... 100,000
-------------
Iowa 3.2%
5,000,000 Iowa School Corps Warrant Certificates, Series A, FSA Insured, 4.75%, 06/27/97 .. 5,015,380
-------------
Kentucky 1.1%
1,700,000 aKentucky Development Finance Authority Revenue, Pooled Loan Program, Series A,
FGIC Insured, Weekly VRDN and Put, 3.55%, 12/01/15.............................. 1,700,000
-------------
Louisiana 6.4%
$ 2,200,000 aCalcasieu Parish, Inc. IDB, PCR, Citgo Petroleum Corp., Weekly VRDN and Put,
3.55%, 08/01/04 ................................................................ $ 2,200,000
2,700,000 aEast Baton Rouge Parish PCR, Georgia Pacific Corp., Weekly VRDN and Put, 3.55%,
10/01/99 ....................................................................... 2,700,000
200,000 aJefferson Parish IDBR, Refunding, George J. Ackel Project, Weekly VRDN and Put,
3.60%, 12/01/04 ................................................................ 200,000
300,000 aLouisiana Public Facilities Authority Revenue, Kenner Hotel Ltd., Weekly VRDN and
Put, 3.65%, 12/01/15 ........................................................... 300,000
150,000 aSaint Charles Parish PCR, Shell Oil Co. Project, Weekly VRDN and Put, 3.45%,
06/01/05 ....................................................................... 150,000
1,400,000 aSouth Louisiana Port Commission, Marine Terminal Facilities Revenue, Refunding,
Occidental Petroleum Corp. Project, Monthly VRDN and Put, 3.55%, 07/01/21 ...... 1,400,000
3,100,000 aSouth Louisiana Port Commission, Port Revenue, Refunding, Occidental Petroleum
Corp. Project, Weekly VRDN and Put, 3.50%, 07/01/18 ............................ 3,100,000
100,000 aState Offshore Terminal Authority, Deepwater Port Revenue, Refunding, Daily VRDN
and Put, 3.65%, 9/01/06 ........................................................ 100,000
-------------
10,150,000
-------------
Maine 2.2%
3,500,000 Maine State TAN, 4.50%, 06/27/97 ................................................ 3,508,417
-------------
Massachusetts 1.6%
aMassachusetts State Health and Educational Facilities Authority Revenue,
1,300,000 Capital Asset Program, Series G-1, MBIA Insured, Weekly VRDN and Put, 3.25%,
1/01/19 ..................................................................... 1,300,000
1,200,000 Harvard University, Series I, Weekly VRDN and Put, 3.50%, 08/01/17 .......... 1,200,000
-------------
2,500,000
-------------
Michigan 1.5%
250,000 aDelta County Economic Development Corp. Environmental Improvement Revenue,
Refunding, Mead Escambia Paper, Series C, Daily VRDN and Put, 3.65%, 12/01/23.... 250,000
1,000,000 aGrand Rapids Water Supply System Revenue, Refunding, FGIC Insured, Daily VRDN
and Put, 3.45%, 01/01/20 ....................................................... 1,000,000
1,100,000 aMichigan Higher Education Student Loan Authority Revenue, Refunding, Series XII-B,
AMBAC Insured, Weekly VRDN and Put, 3.55%, 10/01/13 ............................ 1,100,000
-------------
2,350,000
-------------
...................................................................Minnesota 0.5%
$ 500,000 aBeltrami County Environmental Control Revenue, Refunding, Northwood Panel Board,
Weekly VRDN and Daily Put, 3.65%, 12/01/21 ..................................... $ 500,000
300,000 aDuluth Tax Increment Revenue, Lake Superior, Weekly VRDN and Put, 3.55%, 09/01/10 300,000
-------------
800,000
-------------
Mississippi 0.2%
aJackson County PCR, Refunding, Chevron U.S.A., Inc. Project,
100,000 Daily VRDN and Put, 3.60%, 12/01/16 ......................................... 100,000
200,000 Weekly VRDN and Put, 3.60%, 06/01/23 ........................................ 200,000
-------------
300,000
-------------
Missouri 2.6%
1,485,000 Kansas City Water Revenue, Refunding, Series A, 4.25%, 12/01/97 ................. 1,493,985
700,000 aMissouri State Health and Educational Facilities Authority, Educational Facilities
Revenue, Refunding, Washington University, Series A, Daily VRDN and Put, 3.70%,
09/01/30 ....................................................................... 700,000
2,000,000 aMissouri State Health and Educational Facilities Authority, Health Facilities Revenue,
Refunding, Sisters of Mercy, Series B, Weekly VRDN and Put, 3.50%, 06/01/14 .... 2,000,000
-------------
4,193,985
-------------
Montana 0.3%
500,000 aForsythe PCR, Portland General Electric, Series D, Weekly VRDN and Put, 3.60%,
06/01/13 ....................................................................... 500,000
-------------
Nevada 1.5%
1,000,000 aClark County, Airport Improvement Revenue, Sub. Lien, Series A-1, Weekly VRDN and
Put, 3.50%, 07/01/25 ........................................................... 1,000,000
1,410,000 Nevada State Highway Improvement Revenue, Motor Vehicle Fuel Tax, Series A,
5.30%, 04/01/97 ................................................................ 1,413,757
-------------
2,413,757
-------------
New Jersey 1.3%
2,000,000 aNew Jersey State Turnpike Authority Revenue, Refunding, Series D, FGIC Insured,
Weekly VRDN and Put, 3.35%, 01/01/18 ........................................... 2,000,000
-------------
New Mexico 1.7%
1,000,000 aFarmington PCR, Refunding, Arizona Public Services Co., Series A, Daily VRDN and
Put, 3.65%, 05/01/24 ........................................................... 1,000,000
1,700,000 aUniversity of New Mexico Revenue, Refunding, Sub. Lien, AMBAC Insured, Weekly
VRDN and Put, 3.50%, 06/01/06 .................................................. 1,700,000
-------------
2,700,000
-------------
New York 10.2%
aNew York City GO,
$ 2,000,000 Series D, FGIC Insured, Weekly VRDN and Put, 3.45%, 02/01/20 ................ $ 2,000,000
100,000 Subseries A-4, Daily VRDN and Put, 3.70%, 08/01/23 .......................... 100,000
1,500,000 Subseries A-5, Daily VRDN and Put, 3.65%, 08/01/15 .......................... 1,500,000
200,000 Subseries B-3, MBIA Insured, Daily VRDN and Put, 3.65%, 08/15/04 ............ 200,000
100,000 Subseries B-4, MBIA Insured, Daily VRDN and Put, 3.65%, 08/15/23 ............ 100,000
200,000 aNew York City Housing Development Corp. Mortgage Revenue, Columbus Apartments,
Series A, Weekly VRDN and Put, 3.35%, 03/15/25 ................................. 200,000
New York City Municipal Water Finance Authority, Water and Sewer System Revenue,
2,400,000 aSeries 93-C, FGIC Insured, Daily VRDN and Put, 3.65%, 06/15/22 ............. 2,400,000
1,000,000 Series A, 7.625%, 06/15/16 .................................................. 1,029,938
2,000,000 aSeries C, FGIC Insured, Daily VRDN and Put, 3.65%, 06/15/23 ................ 2,000,000
850,000 aSeries G, FGIC Insured, Daily VRDN and Put, 3.65%, 06/15/24 ................ 850,000
New York State Dormitory Authority Revenue,
1,000,000 Memorial Sloan Kettering, TECP, Series B, 3.25%, 04/08/97 ................... 1,000,000
100,000 aMetropolitan Museum of Art, Series A, Weekly VRDN and Put, 3.40%, 07/01/15 . 100,000
2,000,000 Suffolk County TAN, Series I, 4.00%, 08/14/97 ................................... 2,007,299
1,000,000 Suffolk County TRAN, 4.50%, 09/11/97 ............................................ 1,003,212
1,800,000 aTriborough Bridge and Tunnel Authority, Special Obligation, FGIC Insured, Weekly
VRDN and Put, 3.40%, 01/01/24 .................................................. 1,800,000
-------------
16,290,449
-------------
North Carolina 2.2%
1,900,000 aDurham Public Improvement, Weekly VRDN and Put, 3.55%, 02/01/13 ................ 1,900,000
1,450,000 aGreensboro Public Improvement, Series B, Weekly VRDN and Put, 3.55%, 04/01/08 .. 1,450,000
100,000 aWake County Industrial Facilities and PCFA Revenue, Carolina Power and Light Co.,
Series A, Weekly VRDN and Put, 3.50%, 05/01/15 ................................. 100,000
-------------
3,450,000
-------------
Ohio 3.8%
1,000,000 aColumbus GO, Series 1, Weekly VRDN and Put, 3.40%, 06/01/16 .................... 1,000,000
5,000,000 aCuyahoga County Hospital Revenue, Cleveland Clinic Foundation, Series A, Weekly
VRDN and Put, 3.55%, 01/01/26 .................................................. 5,000,000
-------------
6,000,000
-------------
Pennsylvania 2.0%
$ 1,000,000 aNortheastern Hospital and Education Authority Revenue, Allhealth Pooled Financing
Program, Weekly VRDN and Put, 3.65%, 07/01/26 .................................. $ 1,000,000
865,000 aPennsylvania Energy Development Authority, Energy Development Revenue, B&W
Ebensburg Project, Weekly VRDN and Put, 3.55%, 12/01/11 ........................ 865,000
1,300,000 Venango IDA, Residential Recovery Revenue, Scrubgrass Project, 3.50%, 04/04/97 .. 1,300,000
-------------
3,165,000
-------------
South Carolina 0.4%
300,000 aCharleston County Industrial Revenue, Massey Coal Terminal, South Carolina Corp.,
Refunding, Daily VRDN and Put, 3.65%, 01/01/07 ................................. 300,000
325,000 aRock Hill Utility System Revenue, FGIC Insured, Weekly VRDN and Put, 3.55%,
01/01/22 ....................................................................... 325,000
-------------
625,000
-------------
Tennessee 0.6%
1,000,000 aNashville Metropolitan Airport Authority Revenue, Refunding, FGIC Insured, Weekly
VRDN and Put, 3.50%, 07/01/19 .................................................. 1,000,000
-------------
Texas 7.4%
200,000 aHarris County IDC, PCR, DATES, Exxon Project 1984, Series B, Daily VRDN and Put,
3.65%, 03/01/24 ................................................................ 200,000
950,000 aMontgomery County IDC, IDR, Dal-Tile Corp., Series A, Weekly VRDN and Put, 3.60%,
12/01/03 ....................................................................... 950,000
1,285,000 aNueces County Health Facilities Development Corp. Revenue, Driscoll Childrens
Foundation, Weekly VRDN and Put, 3.60%, 07/01/15 ............................... 1,285,000
2,000,000 aPort Arthur Navigation District, PCR, Star Enterprises Project, Weekly VRDN and Put,
3.65%, 04/01/14 ................................................................ 2,000,000
1,100,000 aPort Development Corp., Texas Marine Term Revenue, Refunding, Stolt Terminals
Project, Weekly VRDN and Put, 3.50%, 01/15/14 .................................. 1,100,000
1,300,000 aRed River Authority, PCR, Refunding, Southwestern Public Services Co., Weekly
VRDN and Put, 3.55%, 07/01/11 .................................................. 1,300,000
2,000,000 aSilsbee Health Facilities Development Corp. Hospital Revenue, Silsbee Doctors
Hospital, Weekly VRDN and Put, 3.55%, 11/01/04.................................. 2,000,000
3,000,000 Texas State TRAN, 4.75%, 08/29/97 ............................................... 3,016,387
-------------
11,851,387
-------------
Utah 0.4%
600,000 aUtah State Board Regents, Student Loan Revenue, Series B, AMBAC Insured, Weekly
VRDN and Put, 3.55%, 11/01/00 .................................................. 600,000
-------------
Washington 5.9%
$ 2,480,000 Kitsap County GO, Series B, MBIA Insured, 4.00%, 07/01/97 ....................... $ 2,480,000
100,000 aPort Skagit County IDC Revenue, Hexcel Corp. Project, Weekly VRDN and Put, 4.05%,
12/01/24 ....................................................................... 100,000
2,000,000 aSeattle Water System Revenue, Weekly VRDN and Put, 3.50%, 09/01/25 ............. 2,000,000
2,000,000 Washington State GO, Series 1995C AT-8 and R-95B, 5.50%, 07/01/97 ............... 2,015,837
2,000,000 aWashington State Housing Finance Commission, MF, Mortgage Revenue, Lake
Washington Apartments Project, Weekly VRDN and Put, 3.70%, 10/01/26 ............ 2,000,000
900,000 aWashington State Public Power Supply System Revenue, Refunding, Nuclear
Project No. 3, Series 3A-1, Weekly VRDN and Put, 3.55%, 07/01/18 ............... 900,000
-------------
9,495,837
-------------
Wisconsin 0.6%
1,000,000 aWisconsin State Health & Educational Facilities Authority Revenue, Wheaton
Franciscan Services, Weekly VRDN and Put, 3.45%, 08/15/16 ...................... 1,000,000
-------------
Wyoming 3.2%
aLincoln County PCR, Exxon Project,
800,000 Series B, Daily VRDN and Put, 3.65%, 11/01/14 ............................... 800,000
400,000 Series C, Daily VRDN and Put, 3.65%, 11/01/14 ............................... 400,000
1,300,000 Series C, Daily VRDN and Put, 3.75%, 07/01/17 ............................... 1,300,000
500,000 aPlatte County PCR, DATES, Tri-State G&T, Series A, Daily VRDN and Put, 3.70%,
07/01/14 ....................................................................... 500,000
aUinta County PCR,
900,000 Refunding, Chevron U.S.A., Inc. Project, Daily VRDN and Put, 3.60%, 12/01/22 900,000
1,230,000 Refunding, Chevron U.S.A., Inc. Project, Weekly VRDN and Put, 3.60%, 08/15/20 1,230,000
-------------
5,130,000
-------------
Total Investments (Cost $161,553,787) 101.5% ......................... 161,553,787
Liabilities in Excess of Other Assets (1.5%) ......................... (2,448,211)
-------------
Net Assets 100%....................................................... $159,105,576
=============
</TABLE>
At January 31, 1997, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.
PORTFOLIO ABBREVIATIONS:
AMBAC - American Municipal Bond Assurance Corp.
COP - Certificate of Participation
DATES - Demand Adjustable Tax-Exempt Securities
EDR - Economic Development Revenue
FGIC - Financial Guaranty Insurance Co.
FSA - Financial Security Assistance
GO - General Obligation
HFA - Housing Finance Authority/Agency
HFAR - Housing Finance Agency Revenue
IDA - Industrial Development Authority/Agency
IDAR - Industrial Development Authority/Agency Revenue
IDB - Industrial Development Board
IDBR - Industrial Development Board Revenue
IDC - Industrial Development Corp.
IDR - Industrial Development Revenue
MBIA - Municipal Bond Investors Assurance Corp.
MF - Multi-Family
MFR - Multi-Family Revenue
MFHR - Multi-Family Housing Revenue
MUD - Municipal Utility District
PCC - Pollution Control Corp.
PCFA - Pollution Control Financing Authority
PCR - Pollution Control Revenue
TAN - Tax Anticipation Notes
TECP - Tax-Exempt Commercial Paper
TRAN - Tax Revenue Anticipation Notes
aVariable 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.
FRANKLIN TAX-EXEMPT MONEY FUND
Financial Statements
Statement of Assets and Liabilities
January 31, 1997 (unaudited)
Assets:
Investments in securities,
at value and cost $161,553,787
Cash 458,931
Receivables:
Capital shares sold 438,132
Interest 1,119,841
--------------
Total assets 163,570,691
--------------
Liabilities:
Payables:
Investment securities purchased 2,000,000
Capital shares repurchased 2,273,082
Management fees 118,436
Shareholder servicing costs 27,750
Distributions to shareholders 18,094
Accrued expenses and other liabilities 27,753
--------------
Total liabilities 4,465,115
--------------
Net assets (equivalent to $1.00 per share
based on 159,105,576 shares of
capital stock outstanding) $159,105,576
==============
Statement of Operations
for the six months ended January 31, 1997 (unaudited)
Investment income:
Interest $2,832,516
Expenses:
Management fees (Note 5) $470,426
Shareholder servicing costs
(Note 5) 121,089
Reports to shareholders 58,827
Registration fees 26,760
Professional fees 10,197
Directors' fees and expenses 7,308
Custodian fees 735
Other 23,811
Management fees waived by
manager (Note 5) (193,742)
--------------
Total expenses 525,411
--------------
Net investment income $2,307,105
==============
Statements of Changes in Net Assets for the six months ended January 31, 1997
(unaudited) and the year ended July 31, 1996
Six Months
Ended Year Ended
January 31, 1997 July 31, 1996
----------- -----------
Increase (decrease) in net assets:
Operations:
Net investment income $ 2,307,105 $4,860,147
Net realized loss from
security transactions -- (688)
----------- -----------
Net increase in net
assets resulting
from operations 2,307,105 4,859,459
Distributions to
shareholders from
undistributed net
investment income (2,307,105) (4,859,459)+
Decrease in net assets
from capital share
transactions (Note 2) (7,607,871) (6,409,169)
----------- -----------
Net decrease in
net assets (7,607,871) (6,409,169)
Net assets (there is no
undistributed net
investment income at
beginning or end of
period)
Beginning of period 166,713,447 173,122,616
----------- -----------
End of period $159,105,576 $166,713,447
=========== ===========
+Distributions were decreased by net realized loss from security transactions of
$688 in 1996.
The accompanying notes are an integral part of these financial statements.
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 investment objective of the Fund is high
current income exempt from federal income taxes, consistent with capital
preservation and liquidity.
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. Security 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 asked prices. The Board of Directors
(The Board) has 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 to 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
first day on which the put may be exercised.
c. Income Taxes:
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.
d. 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.
e. Investment Income, Expenses and Distributions:
Net investment income includes income, calculated on an accrual basis, and
estimated expenses which are accrued daily. The total available for distribution
is computed daily and includes the net investment income, plus or minus any
gains or losses on security transactions and any changes in unrealized portfolio
appreciation or depreciation.
Distributions are normally declared 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 distributions are automatically reinvested daily in
additional shares of the Fund at net asset value.
f. Accounting Estimates:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
2. CAPITAL STOCK
At January 31, 1997, there were 5,000,000,000 shares of no par value capital
stock authorized. Transactions in the Fund's shares at $1.00 per share were as
follows:
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
January 31, 1997 July 31, 1996
----------- -----------
<S> <C> <C>
Shares sold.......................................... $126,714,953 $264,699,526
Shares issued in reinvestment of distributions....... 2,302,728 4,872,946
Shares redeemed...................................... (136,625,552) (275,981,641)
----------- -----------
Net decrease......................................... $ (7,607,871) $ (6,409,169)
=========== ===========
3. DISTRIBUTIONS AND CAPITAL LOSS CARRYOVERS
At July 31, 1996, for tax purposes, the Fund had capital loss carryovers as
follows:
<S> <C> <C>
Expiring in: 2003........................... $9,193
2004........................... 688
$9,881
</TABLE>
For tax purposes, the aggregate cost of securities is the same as for financial
reporting purposes at January 31, 1997.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales/maturities of securities for the six months ended January
31, 1997, aggregated $125,977,269 and $132,666,785, respectively.
5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
a. Management Agreement:
Under the terms of a management agreement, Franklin Advisers, Inc., (Advisers)
provides investment advice, administrative services, office space and facilities
to the Fund and receives fees computed daily on the net assets of the Fund as
follows:
Annualized Fee RateAverage Daily Net Assets
- ------------- ----------------------------------
0.625% First $100 million
0.500% Over $100 million, up to and including $250 million
0.450% Over $250 million
Under an agreement with Advisers, Franklin Templeton Services, Inc. (FT
Services) provides administrative services and facilities for the Fund. The fee
is paid by Advisers and computed monthly based on average daily net assets. It
is not a separate expense of the Fund.
Advisers agreed in advance to waive management fees for the Fund, as noted in
the Statement of Operations.
b. Shareholder Services Agreement:
Under the terms of a shareholder services agreement with Franklin/Templeton
Investor Services, Inc. (Investor Services), the Fund pays costs on a per
shareholder account basis. Shareholder servicing costs incurred by the Fund for
the six months ended January 31, 1997 aggregated $121,089, of which $110,117 was
paid to Investor Services.
5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (cont.)
c. Other Affiliates and Related Party Transactions:
Certain officers and directors of the Fund are also officers and/or directors of
Advisers, Investor Services and FT Services, all wholly-owned subsidiaries of
Franklin Resources, Inc.
6. CREDIT RISKS
The Fund has investments in excess of 10% of its total net assets in the states
of California, Georgia, and New York. Such concentration may subject the Fund
more significantly to economic changes occurring within those states.
7. FINANCIAL HIGHLIGHTS
Selected data for a share of capital stock outstanding throughout each period
are as follows:
<TABLE>
<CAPTION>
Six Months
Ended Year Ended July 31,
January 31, 1997 1996 1995 1994 1993
---------- ------- ------- ------- -------
Per Share Operating Performance
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period............ $1.00 $1.00 $1.00 $1.00 $1.00
---------- ------- ------- ------- -------
Net investment income............................. .014 .029 .029 .020 .021
Distributions from net investment income.......... (.014) (.029) (.029) (.020) (.021)
---------- ------- ------- ------- -------
Net asset value at end of period.................. $1.00 $1.00 $1.00 $1.00 $1.00
========== ======= ======= ======= =======
Total return+..................................... 1.43% 2.93% 2.98% 1.85% 2.08%
Ratios/Supplemental Data
Net assets at end of period (in 000's)............ $159,106 $166,713 $173,123 $202,883 $193,565
Ratio of expenses to average net assets++......... .65%* .65% .65% .65% .69%
Ratio of net investment income to average net assets 2.85%* 2.88% 2.65% 1.84% 2.10%
</TABLE>
*Annualized
+Total return measures the change in value of an investment over the periods
indicated. It is not annualized. It assumes reinvestment of dividends and
capital gains at net asset value.
++During the periods indicated below, Advisers agreed in advance to waive a
portion of the Fund's management fees. Had such action not been taken, the
Fund's ratio of expenses to average net assets would have been as follows:
Ratio of expenses
to average net assets
1993............................ .80%
1994............................ .81%
1995............................ .78%
1996............................ .87%
1997............................ .89%*
Franklin Tax-Exempt Money Fund Semi-Annual Report January 31, 1997.
APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING (PURSUANT TO ITEM
304 (a) OF REGULATION S-T)
GRAPHIC MATERIAL (1)
This chart shows in bar format the comparison between the fund's seven-day
annualized yield of 2.85% and the taxable equivalent yield of 4.72%.
