<PAGE> 1
TEMPLETON MONEY FUND
Auditors
McGladrey & Pollen, LLP
555 Fifth Avenue
New York, New York 10017-2416
Principal Underwriter:
Franklin Templeton
Distributors, Inc.
700 Central Avenue
St. Petersburg,
Florida 33701-3628
Shareholder Services
1-800-632-2301
Fund Information
1-800-342-5236
This report must be preceded or accompanied by the prospectus of Templeton
Money Fund, which contains more complete information including charges and
expenses. Like any investment in securities, the Fund's portfolio will be
subject to the risk of loss from market, economic, political, and other factors,
as well as investment decisions by the investment manager, Therefore, investors
who cannot accept the risk of such losses should not invest in shares of the
Fund.
To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded, and accessed. These calls can be
determined by the presence of a regular beeping tone.
[RECYCLE LOGO] TL407 A96 10/96
TEMPLETON
MONEY
FUND
Annual Report
August 31, 1996
[FRANKLIN TEMPLETON LOGO]
[BACKGROUND GRAPHIC OF WORLD GLOBE]
<PAGE> 2
TEMPLETON MONEY FUND
YOUR FUND'S OBJECTIVE:
The Templeton Money Fund seeks current income, stability of principal, and
liquidity by investing in high-quality money market instruments with maturities
not exceeding 397 days, consisting primarily of short-term U.S. government
securities, bank certificates of deposit, time deposits, banker's acceptances,
commercial paper and repurchase agreements.(1)
OCTOBER 15, 1996
Dear Shareholder:
We are pleased to bring you the Templeton Money Fund's ninth annual report,
which covers the 12 months ended August 31, 1996.
During this period, the U.S. economy experienced an inconsistent pattern of
growth. In the fourth quarter of 1995, Gross Domestic Product (GDP) increased at
an annualized rate of only 0.3%.(2)This weak performance stemmed from declines
in consumer spending and inventory investment, and in part from federal
government shutdowns in November and December 1995. In an attempt to stimulate
the economy, the Federal Reserve Board (the Fed) lowered its federal funds rate
in December from 5.75% to 5.50%. At the end of January 1996, the Fed cut this
rate to 5.25% to prevent the economy from falling into a recessionary slump. By
the end of March, however, unemployment had dropped, GDP had rebounded, and the
Fed
1. AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT OR BY ANY OTHER ENTITY OR INSTITUTION. WHILE THE FUND SEEKS TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE, THERE CAN BE NO ASSURANCE
THAT IT WILL BE ABLE TO DO SO.
2. SOURCE FOR ALL GDP FIGURES: BLOOMBERG.
1
<PAGE> 3
stopped easing monetary policy. Although GDP increased at an annualized rate of
4.8% between April and June, the economy slowed in July and August, and the Fed
left monetary policy unchanged.
These economic conditions were also reflected in the 90-day U.S. Treasury bill
yield, which in turn affected the Fund's seven-day effective yield. The Treasury
bill yield declined from 5.45% on August 31, 1995, to 5.02% on February 29,
1996.(3) Afterward, it steadily rose to 5.29% on August 31, 1996. At the
beginning of the reporting period, the Templeton Money Fund's seven-day
effective yield was 4.91%. It dropped to 4.23% at the end of February, and then
advanced to 4.43% on August 31, 1996.
As interest rates declined during the first half of the fiscal year, we extended
the average maturity of the Fund's portfolio, from 39 days on August 31, 1995,
to 40 days on February 29, 1996, in an effort to seek higher yields. During the
second half, we reduced the average maturity to 19 days by August 31, 1996, as a
defensive strategy in a potentially rising interest rate environment.
Looking forward, the Fed may tighten monetary policy to some degree before the
end of 1996 if evidence points to a stronger economy. In our opinion, the Fund's
diversified and highly liquid portfolio (66.3% invested in short-term U.S.
government agency securities, 33.5% in repurchase agreements backed by U.S.
government collateral, and 0.2% in other net assets) positions it to respond
quickly to future conditions.
This discussion reflects the strategies we employed for the Fund during the 12
months under review, and includes our opinions as of the close of the period.
Since economic and market conditions are constantly changing, our strategies,
evaluations, conclusions, and decisions regarding portfolio holdings may change
as new circumstances arise. Although past performance of a specific investment
or sector cannot guarantee future performance, such information can be useful in
analyzing securities we purchase or sell for the Fund.
Templeton Money Fund shareholders continue to benefit from convenience, easy
access to their money, and a high degree of credit safety. They also enjoy a
variety of services, including free, unlimited check
3. SOURCE FOR ALL 90-DAY U.S. TREASURY BILL YIELD FIGURES: BLOOMBERG.
2
<PAGE> 4
writing for amounts of $500 or more, unlimited transactions, automatic dividend
reinvestment and daily compounding of dividends. In addition, shares of the Fund
are bought and sold at net asset value, which means there is never a sales
charge on your purchases.
We thank you for your participation in the Templeton Money Fund and welcome any
comments or suggestions you may have.
Sincerely,
/S/Thomas Latta
_____________________
Thomas Latta
Portfolio Manager
Templeton Money Fund
TEMPLETON MONEY FUND
<TABLE>
<CAPTION>
Yield for August 31, 1996
<S> <C>
Seven-day effective yield 4.43%
Seven-day annualized yield 4.34%
</TABLE>
YIELD REFLECTS FLUCTUATIONS IN INTEREST RATES ON PORTFOLIO INVESTMENTS, AS WELL
AS FUND EXPENSES. THE SEVEN-DAY EFFECTIVE YIELD ASSUMES THE COMPOUNDING OF DAILY
DIVIDENDS. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
3
<PAGE> 5
TEMPLETON MONEY FUND
Financial Highlights
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31
---------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- ------- --------
Net investment income .044 .046 .026 .021 .036
Dividends from net investment income (.044) (.046) (.026) (.021) (.036)
-------- -------- -------- ------- --------
Change in net asset value -- -- -- -- --
-------- -------- -------- ------- --------
Net asset value, end of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======= ========
TOTAL RETURN 4.45% 4.73% 2.66% 2.10% 3.62%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000) $165,185 $137,245 $144,415 $81,874 $125,445
Ratio of expenses to average net assets 1.10% .99% .90% 1.39% 1.04%
Ratio of expenses, net of reimbursement, to average
net assets .96% .99% .90% 1.39% 1.04%
Ratio of net investment income to average net assets 4.61% 4.62% 2.77% 2.50% 3.65%
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE> 6
TEMPLETON MONEY FUND
Investment Portfolio, August 31, 1996
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
ANNUALIZED
PRINCIPAL MATURITY YIELD AT DATE VALUE
AMOUNT DATE OF PURCHASE (NOTE 1)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
BONDS--GOVERNMENT AND GOVERNMENT AGENCIES: 66.3%
- ---------------------------------------------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK:
$ 605,000 9/05/96 5.25% $ 604,647
8,000,000 9/23/96 5.16 7,974,773
8,000,000 9/25/96 5.14 7,972,587
8,000,000 10/02/96 5.17 7,964,384
5,000,000 10/02/96 5.54 5,000,087
8,000,000 10/10/96 5.15 7,955,367
FEDERAL HOME LOAN BANK:
8,000,000 9/04/96 5.25 7,996,500
5,000,000 9/09/96 5.21 4,994,211
6,000,000 9/30/96 5.22 5,974,770
2,500,000 10/03/96 5.23 2,488,378
2,000,000 10/30/96 5.60 1,999,684
FEDERAL HOME LOAN MORTGAGE CORP.:
1,300,000 9/03/96 5.22 1,299,623
8,000,000 9/12/96 5.27 7,987,118
8,000,000 9/18/96 5.22 7,980,280
8,000,000 10/03/96 5.21 7,962,951
FEDERAL NATIONAL MORTGAGE ASSN.:
5,020,000 9/09/96 5.22 5,014,177
8,000,000 9/24/96 5.29 7,972,962
2,500,000 10/11/96 5.23 2,485,472
8,000,000 10/23/96 5.17 7,940,258
------------
TOTAL BONDS--GOVERNMENT AND GOVERNMENT AGENCIES (cost $109,568,229) 109,568,229
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MATURITY
VALUE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS: 33.5%
- ---------------------------------------------------------------------------------------------------------------------------
BANK OF AMERICA:
Collateralized by $27,740,000, U.S. Treasury
Note,
6.25%, 7/31/98, value $27,809,350 27,259,000 9/03/96 5.23 27,259,000
UBS SECURITIES INC.:
Collateralized by $28,201,000, U.S. Treasury
Note,
7.25%, 2/15/98, value $28,588,764 28,000,000 9/03/96 5.24 28,000,000
------------
TOTAL REPURCHASE AGREEMENTS (cost $55,259,000) 55,259,000
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS: 99.8% (cost $164,827,229*) 164,827,229
OTHER ASSETS, LESS LIABILITIES: 0.2% 357,829
------------
TOTAL NET ASSETS: 100.0% $165,185,058
============
</TABLE>
* COST FOR FEDERAL INCOME TAXES IS THE SAME AS VALUE.
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE> 7
TEMPLETON MONEY FUND
Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1996
Assets:
Investments in securities, at value
and cost $164,827,229
Cash 139,255
Receivables:
Fund shares sold 908,991
Interest 107,152
------------
Total assets 165,982,627
------------
Liabilities:
Payables:
Fund shares redeemed 631,067
Dividends 24,266
Accrued expenses 142,236
------------
Total liabilities 797,569
------------
Net assets (equivalent to $1.00 per share
based on 165,185,058 outstanding
shares) $165,185,058
============
STATEMENT OF OPERATIONS
for the year ended August 31, 1996
Interest income: $8,421,331
Expenses:
Management fees (Note 3) $ 533,128
Administrative fees (Note 3) 217,045
Distribution fees (Note 3) 229,291
Transfer agent fees (Note 3) 478,500
Reports to shareholders 116,000
Registration and filing fees 51,900
Audit fees 9,600
Legal fees (Note 3) 14,000
Trustees' fees and expenses 15,030
----------
Total expenses 1,664,494
Less expenses reimbursed
(Note 3) (208,596)
----------
Total expenses less
reimbursement 1,455,898
----------
Net investment income 6,965,433
Net realized gain on investments 2,105
----------
Net increase in net assets
resulting from operations $6,967,538
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE> 8
TEMPLETON MONEY FUND
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
for the years ended August 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 6,965,433 $ 9,494,808
Net realized gain (loss) on investment 2,105 (2,070)
------------ ------------
Net increase in net assets resulting from operations 6,967,538 9,492,738
Distributions to shareholders
from net investment income (6,967,538) (9,492,738)
Fund share transactions (Note 2) 27,939,650 (7,169,493)
------------ ------------
Net increase (decrease) in net assets 27,939,650 (7,169,493)
Net assets:
Beginning of year 137,245,408 144,414,901
------------ ------------
End of year $165,185,058 $137,245,408
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE> 9
TEMPLETON MONEY FUND
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. SUMMARY OF ACCOUNTING POLICIES
Templeton Money Fund (the Fund) is a separate series of Templeton Income Trust
(the Trust), a Massachusetts Business Trust, which is an open-end, diversified
management investment company registered under the Investment Company Act of
1940. The Fund seeks current income, stability of principal and liquidity by
investing in high quality money market instruments with maturities not exceeding
397 days, consisting primarily of short term U.S. Government securities, bank
certificates of deposit, time deposits, bankers' acceptances, commercial paper
and repurchase agreements. The following summarizes the Fund's significant
accounting policies.
A. SECURITIES VALUATIONS:
The Fund values securities utilizing the amortized cost valuation method, which
involves valuing a portfolio security at its cost and thereafter assuming a
constant amortization to maturity of any discount or premium.
B. INCOME TAXES:
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to its shareholders. Therefore, no provision has been made for
income taxes.
C. DIVIDENDS TO SHAREHOLDERS:
Dividends to shareholders are declared daily from investment income (including
realized capital gains and losses) and are paid monthly.
D. REPURCHASE AGREEMENTS:
The Fund, through its custodian, receives delivery of the underlying securities,
whose market is required to be at least 102% of the resale price at the time of
purchase. The Fund's investment manager, Templeton Investment Counsel, Inc., is
responsible for determining that the value of these underlying securities
remains at least equal to the resale price.
E. OTHER:
Investment transactions are accounted for on a trade date basis. Interest income
and estimated expenses are accrued daily.
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. TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
At August 31, 1996, there were an unlimited number of shares of beneficial
interest authorized ($.01 par value). Transactions in the Fund shares at net
asset value of $1.00 per share for the years ended August 31, 1996 and 1995 were
as follows:
<TABLE>
<CAPTION>
1996 1995
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 529,872,656 $ 529,872,656 508,966,058 $ 508,966,058
Shares issued on reinvestment of
distributions 6,342,705 6,342,705 8,706,019 8,706,019
Shares redeemed (508,275,711) (508,275,711) (524,841,570) (524,841,570)
------------ ------------- ------------ -------------
Net increase (decrease) 27,939,650 $ 27,939,650 (7,169,493) $ (7,169,493)
============ ============= ============ =============
</TABLE>
8
<PAGE> 10
TEMPLETON MONEY FUND
Notes to Financial Statements (cont.)
- --------------------------------------------------------------------------------
3. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Certain officers of the Fund are also directors or officers of Templeton
Investment Counsel, Inc. (TICI), Templeton Global Investors, Inc. (TGII),
Franklin Templeton Distributors, Inc. (FTD), and Franklin Templeton Investor
Services, Inc. (FTIS), the Fund's investment manager, administrative manager,
principal underwriter and transfer agent, respectively.
The Fund pays monthly an investment management fee to TICI equal, on an annual
basis, to 0.35% per annum on the first $200 million of its average daily net
assets, 0.30% of the next $1.1 billion and 0.25% per annum of such average daily
net assets in excess of $1.3 billion. The Fund pays TGII monthly its allocated
share of an administrative fee of 0.15% per annum on the first $200 million of
the Trust's aggregate average daily net assets, 0.135% of the next $500 million,
0.10% of the next $500 million and 0.075% per annum of such average net assets
in excess of $1.2 billion. During the period ended August 31, 1996, TICI has
voluntarily agreed to temporarily reduce its investment management fees by
0.20%. The amount of the reimbursement for the period ended August 31, 1996 is
set forth in the Statement of Operations. For the year ended August 31, 1996,
FTIS received fees of $478,500.
Pursuant to a Distribution Plan, the Fund reimburses FTD monthly (subject to a
limit of 0.15% per annum of the Fund's average daily net assets) for FTD's costs
and expenses in connection with any activity which is primarily intended to
result in sales of Fund shares. Such distribution fees are set forth in the
Statement of Operations. Under the distribution plan, costs and expenses
exceeding the maximum may be reimbursed in subsequent periods. At August 31,
1996, unreimbursed expenses amounted to $8,955.
An officer of the Trust is a partner of Dechert Price & Rhoads, legal counsel
for the Fund, which firm received fees of $14,000 for the year ended August 31,
1996.
9
<PAGE> 11
TEMPLETON MONEY FUND
Independent Auditor's Report
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders
Templeton Money Fund--Income Trust
We have audited the accompanying statement of assets and liabilities, including
the investment portfolio, of Templeton Money Fund, a series of Templeton Income
Trust, as of August 31, 1996, and the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for the periods
indicated in the accompanying financial statements. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1996 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Templeton Money Fund as of August 31, 1996, the results of its operations, the
changes in its net assets and the financial highlights for the periods
indicated, in conformity with generally accepted accounting principles.
/s/ McGladrey & Pullen, LLP
[McGladrey & Pullen, LLP]
New York, New York
September 27, 1996
10
<PAGE> 12
LITERATURE REQUEST
- --------------------------------------------------------------------------------
For a free brochure and prospectus, which contain more complete information,
including charges and expenses, call Franklin Fund Information, toll free, at
1-800/DIAL BEN (1-800/342-5236). Please read the prospectus carefully before you
invest or send money. To ensure the highest quality of service, telephone calls
to or from our service departments may be monitored, recorded and accessed.
These calls can be determined by the presence of a regular beeping tone.
FRANKLIN TEMPLETON GROUP
GLOBAL GROWTH INCOME
Franklin Global Health Franklin Adjustable Rate
Care Fund Securities Fund
Franklin Templeton Franklin Adjustable U.S.
Japan Fund Government Securities Fund
Templeton Developing Franklin's AGE High
Markets Trust Income Fund
Templeton Foreign Fund Franklin Investment Grade
Templeton Foreign Smaller Income Fund
Companies Fund Franklin Short-Intermediate U.S.
Templeton Global Government Securities Fund
Infrastructure Fund Franklin U.S. Government
Templeton Global Securities Fund
Opportunities Trust Franklin Money Fund
Templeton Global Franklin Federal Money Fund
Real Estate Fund
Templeton Global Smaller FOR NON-U.S. INVESTORS:
Companies Fund
Templeton Greater Franklin Tax-Advantaged
European Fund High Yield Securities Fund
Templeton Growth Fund Franklin Tax-Advantaged
Templeton Latin America International Bond Fund
Fund Franklin Tax-Advantaged U.S.
Templeton Pacific Government Securities Fund
Growth Fund
Templeton World Fund FOR CORPORATIONS:
GLOBAL GROWTH AND INCOME Franklin Corporate Qualified
Dividend Fund
Franklin Global Utilities Fund
Franklin Templeton German FRANKLIN FUNDS SEEKING
Government Bond Fund TAX-FREE INCOME
Franklin Templeton
Global Currency Fund Federal Intermediate-Term
Templeton Global Bond Fund Tax-Free Income Fund
Templeton Growth and Federal Tax-Free Income Fund
Income Fund High Yield Tax-Free
Income Fund
GLOBAL INCOME Insured Tax-Free Income Fund
Puerto Rico Tax-Free
Franklin Global Government Income Fund
Income Fund Tax-Exempt Money Fund
Franklin Templeton Hard
Currency Fund FRANKLIN STATE-SPECIFIC
Franklin Templeton High FUNDS SEEKING
Income Currency Fund TAX-FREE INCOME
Templeton Americas
Government Securities Fund Alabama
Arizona*
GROWTH Arkansas**
California*
Franklin Blue Chip Fund Colorado
Franklin California Growth Fund Connecticut
Franklin DynaTech Fund Florida*
Franklin Equity Fund Georgia
Franklin Gold Fund Hawaii**
Franklin Growth Fund Indiana
Franklin MidCap Growth Fund Kentucky
Franklin Small Cap Growth Fund Louisiana
Maryland
GROWTH AND INCOME Massachusetts***
Michigan*
Franklin Asset Allocation Fund Minnesota***
Franklin Balance Sheet Missouri
Investment Fund New Jersey
Franklin Convertible New York*
Securities Fund North Carolina
Franklin Equity Income Fund Ohio***
Franklin Income Fund Oregon
Franklin MicroCap Value Fund Pennsylvania
Franklin Natural Resources Fund Tennessee**
Franklin Real Estate Texas
Securities Fund Virginia
Franklin Rising Dividends Fund Washington**
Franklin Strategic Income Fund
Franklin Utilities Fund VARIABLE ANNUITIES
Franklin Value Fund
Templeton American Trust, Inc. Franklin Valuemark(SM)
Franklin Templeton
Valuemark Income Plus
(an immediate annuity)
*Two or more fund options available: long-term portfolio, intermediate-term
portfolio, a portfolio of insured municipal securities, and/or a high yield
portfolio (CA) and a money market portfolio (CA and NY).
**The fund may invest up to 100% of its assets in bonds that pay interest
subject to the federal alternative minimum tax.
***Portfolio of insured municipal securities. 10/96.1
