<PAGE>
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/
April 16, 1996
Dear Shareholder:
We are pleased to bring you the semi-annual report of the Templeton Money Fund
for the six months ended February 29, 1996.
During this period, the U.S. economy continued to slow, with Gross Domestic
Product (GDP) increasing at an annualized rate of 0.9% for the fourth quarter of
1995./2/ The U.S. Commerce Department attributed this low growth to subdued
inflation, declines in consumer spending and inventory investment, and also in
part to federal government shutdowns in November and December.
In response to this decline in growth, the Federal Reserve Board cut the federal
funds rates twice during the reporting period. In December 1995, it lowered
them from 5.75% to 5.50%, and in January 1996, it cut them again to 5.25%.
Along with perceptions that the economy was likely to continue to slow, these
actions encouraged other short-term interest rates to decline. Falling interest
rates also resulted in lower yields for the Fund, and its seven-
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. U.S. Commerce Dept.
1
<PAGE>
day effective yield, which assumes daily compounding of dividends, decreased
from 4.91% on August 31, 1995, to 4.23% on February 29, 1996.
Throughout the period, we maintained a portfolio of high-quality, liquid assets
with 10% invested in repurchase agreements backed by U.S. government collateral,
and the remaining 90% in U.S. government bills and agency securities. On
February 29, 1996, the Fund had total net assets of $115.1 million, 16.1% less
than on August 31, 1995. This resulted from a significant number of redemptions
in November and December, as many investors moved out of money funds and sought
to take advantage of rallies in the stock and bond markets. In an effort to
seek higher yields, we extended the average maturity of the Fund's portfolio
from 38 days on August 31, 1995, to 40 days on February 29, 1996. We expect to
sustain a relatively long average maturity in light of current federal monetary
policy.
This discussion reflects the strategies we employed for the Fund during the six
months under review, and includes our opinions as of the close of the period.
Since economic and market conditions are constantly changing, our strategies,
and our 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 writing for amounts of $500
or more, unlimited 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 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
Yield for February 29, 1996
Seven-day effective yield.......... 4.23%
Seven-day annualized yield......... 4.14%
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 indicative of future results.
2
<PAGE>
Templeton Money Fund
Financial Highlights
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE (For a share outstanding throughout the period)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED AUGUST 31
FEBRUARY 29, 1996 -----------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
----------------- -------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- ------- -------- --------
Net investment income .024 .046 .026 .021 .036 .061
Dividends from net
investment income (.024) (.046) (.026) (.021) (.036) (.061)
-------- -------- -------- ------- -------- --------
Change in net asset
value -- -- -- -- -- --
-------- -------- -------- ------- -------- --------
Net asset value, end of
period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======= ======== ========
TOTAL RETURN* 2.33% 4.73% 2.66% 2.10% 3.62% 6.23%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (000) $115,111 $137,245 $144,415 $81,874 $125,445 $174,265
Ratio of expenses to
average net assets 1.07%** .99% .90% 1.39% 1.04% .89%
Ratio of expenses, net
of reimbursement,
to average net assets .98%** .99% .90% 1.39% 1.04% .89%
Ratio of net investment
income to average net
assets 4.79% 4.62% 2.77% 2.50% 3.65% 6.18%
</TABLE>
*NOT ANNUALIZED FOR PERIODS OF LESS THAN ONE YEAR.
**ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
Templeton Money Fund
Investment Portfolio, February 29, 1996 (unaudited)
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<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:
90.2%
- --------------------------------------------------------------------------------
Federal Farm Credit Bank:
$2,000,000 3/12/96 5.33% $ 1,996,743
2,065,000 3/26/96 5.05 2,057,758
7,000,000 4/19/96 5.10 6,951,408
6,880,000 5/22/96 5.03 6,801,174
2,500,000 7/01/96 5.29 2,500,303
Federal Home Loan Bank:
4,000,000 4/03/96 5.28 3,980,640
2,000,000 4/11/96 5.27 1,987,996
5,500,000 4/22/96 5.03 5,460,039
5,920,000 5/15/96 4.98 5,858,580
Federal Home Loan Mortgage
Corp.:
6,690,000 3/04/96 5.32 6,687,034
7,500,000 3/07/96 5.35 7,493,312
5,550,000 4/22/96 5.21 5,508,233
4,000,000 4/24/96 5.32 3,968,680
1,875,000 4/29/96 5.01 1,859,605
6,000,000 5/06/96 5.00 5,945,000
Federal National Mortgage
Association:
6,000,000 3/22/96 5.15 5,981,975
8,900,000 3/27/96 6.46 8,899,625
6,000,000 4/04/96 5.07 5,971,270
5,000,000 4/26/96 5.08 4,960,489
6,000,000 5/01/96 5.04 5,948,760
3,000,000 6/28/96 5.63 3,005,122
------------
TOTAL BONDS--GOVERNMENT AND GOVERNMENT AGENCIES (cost $103,823,746) 103,823,746
- --------------------------------------------------------------------------------
<CAPTION>
MATURITY
VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENTS: 9.7%
(cost $11,164,000)
- --------------------------------------------------------------------------------
SBC Capital Markets, 5.43%,
3/01/96
Collateralized by
$10,575,000, U.S. Treasury
Note,
7.875%, 4/15/98, value
$11,390,755 11,165,684 11,164,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS: 99.9% (cost
$114,987,746*) 114,987,746
OTHER ASSETS, LESS LIABILITIES:
0.1% 122,780
------------
TOTAL NET ASSETS: 100.0% $115,110,526
============
</TABLE>
*COST FOR FEDERAL INCOME TAXES IS THE SAME AS VALUE.
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
Templeton Money Fund
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996 (unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value and cost $114,987,746
Receivables:
Fund shares sold 829,493
Investment securities sold 303,579
Interest 66,226
------------
Total assets 116,187,044
------------
Liabilities:
Payables:
Funds advanced by custodian 755,508
Fund shares redeemed 184,802
Accrued expenses 136,208
------------
Total liabilities 1,076,518
------------
Net assets (equivalent to $1.00 per share based on outstanding
shares 115,110,526) $115,110,526
============
</TABLE>
STATEMENT OF OPERATIONS
for the six months ended February 29, 1996 (unaudited)
<TABLE>
<S> <C> <C>
Interest income: $4,594,663
Expenses:
Management fees (Note 3) $277,729
Administrative fees (Note 3) 113,775
Distribution fees (Note 3) 121,998
Transfer agent fees (Note 3) 218,500
Reports to shareholders 56,500
Registration and filing fees 38,500
Audit fees 3,000
Legal fees (Note 3) 7,000
Trustees' fees and expenses 10,000
Other 1,434
--------
Total expenses 848,436
Less expenses reimbursed (Note 3) (65,216)
--------
Total expenses less reimbursement 783,220
----------
Net investment income 3,811,443
Net realized gain on investments 2,105
----------
Net increase in net assets resulting from operations $3,813,548
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
Templeton Money Fund
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
FEBRUARY 29, 1996 ENDED
(UNAUDITED) AUGUST 31, 1995
----------------- ---------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 3,811,443 $ 9,494,808
Net realized gain (loss) on investments
and foreign currency transactions 2,105 (2,070)
------------ ------------
Net increase in net assets resulting
from operations 3,813,548 9,492,738
Distributions to shareholders
from net investment income (3,813,548) (9,492,738)
Fund share transactions (Note 2) (22,134,882) (7,169,493)
------------ ------------
Net decrease in net assets (22,134,882) (7,169,493)
------------ ------------
Net assets:
Beginning of period 137,245,408 144,414,901
------------ ------------
End of period $115,110,526 $137,245,408
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
Templeton Money Fund
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
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 exceed-
ing 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 signifi-
cant 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 securi-
ties, whose market is required to be at least 102% of the resale price at the
time of purchase. The Fund's investment advisor, Templeton Investment Counsel,
Inc., is responsible for determining that the value of these underlying securi-
ties remains at least equal to the resale price.
e. Other:
Investment transactions are accounted for on a trade date basis. Interest in-
come 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 February 29, 1996 there were an unlimited number of shares of beneficial in-
terest authorized ($.01 par value). Transactions in the Fund shares at net as-
set value of $1.00 per share are as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
FEBRUARY 29, 1996 AUGUST 31, 1995
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Shares sold 232,393,057 $ 232,393,057 508,966,058 $ 508,966,058
Shares issued on
reinvestment of
distributions 3,731,196 3,731,196 8,706,019 8,706,019
Shares redeemed (258,259,135) (258,259,135) (524,841,570) (524,841,570)
------------ ------------- ------------ -------------
Net decrease (22,134,882) $ (22,134,882) (7,169,493) $ (7,169,493)
============ ============= ============ =============
</TABLE>
7
<PAGE>
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 In-
vestment Counsel, Inc. (TICI), Templeton Global Investors, Inc. (TGII), Frank-
lin Templeton Distributors, Inc. (FTD), and Franklin Templeton Investor Serv-
ices, 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 al-
located 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 av-
erage net assets in excess of $1.2 billion. During the period ended February
29, 1996, TICI has voluntarily agreed to temporary reduce its investment man-
agement fees by 0.20%. The amount of the reimbursement for the period is set
forth in the Statement of Operations. For the six months ended February 29,
1996, FTIS received fees of $218,500.
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 ex-
ceeding the maximum may be reimbursed in subsequent periods. At February 29,
1996, unreimbursed expenses amounted to $5,972.
An officer of the Trust is a partner of Dechert Price & Rhoads, legal counsel
for the Fund, which firm received fees of $7,000 for the six months ended Feb-
ruary 29, 1996.
8
<PAGE>
Notes
-----
<PAGE>
Notes
-----
<PAGE>
THE FRANKLIN TEMPLETON GROUP
Literature Request - Call today for a free descriptive brochure and prospectus
on any of the funds listed below. The prospectus contains more complete
information, including fees, charges and expenses, and should be read carefully
before investing or sending money.
Templeton Funds
Americas Government
Securities Fund
Developing Markets Trust
Foreign Fund
Global Infrastructure Fund
Global Opportunities Trust
Greater European Fund
Growth Fund
Growth and Income Fund
Income Fund
Latin America Fund
Real Estate
Securities Fund
Smaller Companies
Growth Fund
World Fund
Franklin Funds Seeking
Tax-Free Income
Federal Tax-Free
Income Fund
Federal Intermediate-Term
Tax-Free Income Fund
High Yield Tax-Free
Income Fund
Insured Tax-Free
Income Fund***
Puerto Rico Tax-Free
Income Fund
Franklin State-Specific
Funds Seeking Tax-Free
Income
Alabama
Arizona*
Arkansas**
California*
Colorado
Connecticut
Florida*
Georgia
Hawaii**
Indiana
Kentucky
Louisiana
Maryland
Massachusetts***
Michigan***
Minnesota***
Missouri
New Jersey
New York*
North Carolina
Ohio***
Oregon
Pennsylvania
Tennessee
Texas
Virginia
Washington**
Franklin Funds
Seeking Capital Growth
California Growth Fund
DynaTech Fund
Equity Fund
Global Health
Care Fund
Gold Fund
Growth Fund
International
Equity Fund
Japan Fund
Pacific Growth Fund
Small Cap Growth Fund
Franklin Funds Seeking
Growth and Income
Balance Sheet
Investment Fund
Convertible Securities Fund
Equity Income Fund
Global Utilities Fund
Income Fund
Natural Resources Fund
Premier Return Fund
Real Estate Securities Fund
Rising Dividends Fund
Strategic Income Fund
Utilities Fund
Franklin Funds Seeking
High Current Income
AGE High Income Fund
Global Government
Income Fund
Investment Grade
Income Fund
U.S. Government
Securities Fund
Franklin Funds Seeking
High Current Income and
Stability of Principal
Adjustable Rate
Securities Fund
Adjustable U.S. Government
Securities Fund
Short-Intermediate U.S.
Government
Securities Fund
Franklin Funds for
Non-U.S. Investors
Tax-Advantaged High Yield
Securities Fund
Tax-Advantaged International
Bond Fund
Tax-Advantaged U.S.
Government Securities Fund
Franklin Templeton Global
Currency Funds
German Government
Bond Fund
Global Currency Fund
High Income Currency Fund
Hard Currency Fund
Franklin Money
Market Funds
Money Fund
Federal Money Fund
Tax-Exempt Money
Fund
California Tax-Exempt
Money Fund
New York Tax-Exempt
Money Fund
IFT U.S. Treasury Money
Market Portfolio
Franklin Fund for
Corporations
Corporate Qualified
Dividend Fund
Franklin Tax-Deferred
Annuity
Franklin Valuemark
Franklin Templeton
Valuemark Income Plus
(an immediate annuity)
Fund Information: 1-800/342-5236
Shareholder Services: 1-800/632-2301
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.
*Two or more fund options available: long-term portfolio, intermediate-term
portfolio, a portfolio of insured municipal securities, and a high yield
portfolio (CA).
**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.
<PAGE>
- --------------------------------------------------------------------------------
TEMPLETON MONEY
FUND
PRINCIPAL UNDERWRITER:
TEMPLETON
Franklin Templeton MONEY
Distributors, Inc. FUND
700 Central Avenue
St. Petersburg, Semi-Annual Report
Florida 33701-3628 February 29, 1996
Shareholder Services
1-800-632-2301
Fund Information
1-800-342-5236
This report must be preceded or accompanied
by the current prospectus of the Templeton
Money Fund, which contains more complete
information including charges and expenses.
Like any investment in securities, the value
of 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 which will not always
be profitable or wise. The Fund and its investors
are not protected from such losses by the investment
manager. Therefore, investors who cannot accept this
risk 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.
[LOGO OF FRANKLIN
TEMPLETON APPEARS HERE]
[RECYCLED PAPER
LOGO APPEARS HERE]
TL407 S96 04/96
- --------------------------------------------------------------------------------
