CHAIRMAN'S MESSAGE
Your Fund's Objective:
The Franklin Templeton Money Fund II seeks to provide a high level of current
income, consistent with liquidity and preservation of capital. The fund invests
all of its assets in the shares of The Money Market Portfolio (the Portfolio),
which has the same investment objective. The Portfolio, in turn, invests in
various money market instruments such as U.S. government securities and other
U.S. dollar-denominated securities. The fund attempts to maintain a stable net
asset value of $1.00 per share.1
February 18, 1997
Dear Shareholder:
We are pleased to bring you the Franklin Templeton Money Fund Trust's
semi-annual report for the period ended December 31, 1996.
Moderate economic growth and mild inflation characterized the six months under
review. This relatively stable environment eliminated the need for the Federal
Reserve Board (Fed) to adjust monetary policy, and the federal funds rate (the
interest rate banks charge each other for overnight loans) remained at 5.25%
throughout the period.
1. Please remember, an investment in the fund is neither insured nor guaranteed
by the U.S. government or by any other entity or institution, and there can be
no assurance that the fund will be able to maintain a net asset value of $1.00
per share.
Since we maintained a relatively neutral-weighted average maturity during the
reporting period, the fund's seven-day yield reflected the stable federal funds
rate. The fund's seven-day effective yield began the period at 4.06% and
finished the period at 4.34%.
Looking forward, we expect the economy to proceed on its path of slow growth
without the threat of higher inflation. Assuming these conditions continue, the
Fed should have little reason to make any policy moves, and we believe
short-term rates are likely to remain stable. However, changes in monetary
policy are linked to the performance of the economy, and if the economy
strengthens, the Fed may raise short-term interest rates in an effort to control
potentially accelerating inflation.
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,
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. Since the fund's
objective is to provide shareholders with a high-quality, conservative
investment, we do not invest in leveraged derivatives or other potentially
volatile securities that we believe involve undue risk.
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 in companies and governments 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 Templeton Money Fund Trust
Performance Summary
Franklin Templeton Money Fund Trust
December 31, 1996
Seven-day annualized yield 4.26%
Seven-day effective yield* 4.34%
*The seven-day effective yield assumes the compounding of daily dividends, and
reflects 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.
Franklin Advisers, Inc., the fund's administrator and the manager of the fund's
underlying portfolio, has agreed in advance to waive a portion of its fees,
which reduces expenses and increases yield to shareholders. Without these
reductions, the fund's yield would have been lower. The fee waiver may be
discontinued at any time upon notice to the fund's Board of Directors.
FRANKLIN TEMPLETON MONEY FUND TRUST
Statement of Investments in Securities and Net Assets, December 31, 1996
(unaudited)
Value
Shares Franklin Templeton Money Fund II (Note 1)
Mutual Funds 101.5%
6,874,423 The Money Market Portfolio (Note 1) .....................$6,874,423
-----------
Total Investments (Cost $6,874,423) 101.5% .........6,874,423
Liabilities in Excess of Other Assets (1.5)% ...... (102,075)
-----------
Net Assets 100.0% .................................$6,772,348
===========
At December 31, 1996, 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.
FRANKLIN TEMPLETON MONEY FUND TRUST
Franklin Templeton Money Fund II
Financial Statements
Statement of Assets and Liabilities
December 31, 1996 (unaudited)
Assets:
Investments in securities, at value and cost $6,874,423
Capital shares sold 5,169
Receivable from Affiliates 2,475
Unamortized organization costs (Note 2) 5,150
Other assets 616
-------
Total assets 6,887,833
---------
Liabilities:
Payables:
Capital shares repurchased 114,624
Distribution fees 861
--------
Total liabilities 115,485
--------
Net assets (equivalent to $1.00 per share
based on 6,772,348 shares of capital
stock outstanding) $6,772,348
===========
Statement of Operations
for the six months ended December 31, 1996 (unaudited)
Investment Income:
Dividends $154,730
Expenses:
Administration fees (Note 5) $13,235
Shareholder servicing costs (Note 5) 6,082
Distribution fees (Note 5) 5,832
Registration and filing fees 12,360
Professional fees 4,033
Reports to shareholders 3,988
Amortization of organization costs
(Note 2) 792
Other 1,406
Administration fees waived
by manager (Note 5) (13,235)
Other expenses assumed
by manager (Note 5) (2,475
------
Total expenses 32,018
------
Net investment income $122,712
========
Statement of Changes in Net Assets
for the six months ended December 31, 1996
(unaudited) and the year ended June 30, 1996
Six Months Year
Ended Ended
December 31, June 30,
1996 1996
---------- -----------
Increase (decrease) in net assets:
Operations:
Net investment income $ 122,712 $ 79,844
------------ -----------
Distributions to shareholders
from net investment income (122,712) (79,844)
Increase in net assets from
capital share transactions
(Note 3) 2,261,894 4,358,698
---------- ----------
Net increase in
net assets 2,261,894 4,358,698
Net assets (there is no
undistributed net investment
income at beginning or end
of period):
Beginning of period 4,510,454 151,756
---------- ----------
End of period $6,772,348 $4,510,454
========== ===========
The accompanying notes are an integral part of these financial statements.
FRANKLIN TEMPLETON MONEY FUND TRUST
Franklin Templeton Money Fund II
Notes to Financial Statements (unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Franklin Templeton Money Fund II (the Fund) is a no-load, open-end, diversified
series of the Franklin Templeton Money Fund Trust (the Trust), a management
investment company (mutual fund), registered under the Investment Company Act of
1940, as amended. The Fund is the Trust's only series. The Fund's investment
objective is high current income.
The Fund invests substantially all of its assets in The Money Market Portfolio
(the Portfolio), which is a no-load, open-end, diversified management investment
company having the same investment objectives as the Fund. The financial
statements of the Portfolio, including the Statement of Investments in
Securities and Net Assets, are included elsewhere in this report and should be
read in conjunction with the Fund's financial statements.
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:
The Fund holds Portfolio shares that are valued at its proportionate interest in
the net asset value of the Portfolio. At December 31, 1996, the Fund owns 0.45%
of the Portfolio.
b. 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.
c. 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.
d. 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 distribution (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.
e. 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. ORGANIZATION COSTS
The organization costs of the Fund are amortized on a straight-line basis over a
period of five years from the effective date of registration under the
Securities Act of 1933. In the event Franklin Resources, Inc. (Resources) (which
was the sole shareholder prior to the effective date) redeems its initial shares
within the five-year period, the pro-rata share of the then-unamortized deferred
organization costs will be deducted from the redemption price paid to Resources.
New investors exchanging into the Fund subsequent to that date bear such costs
during the amortization period only as such charges are accrued daily against
investment income.
3. TRUST SHARES
At December 31, 1996, there was an unlimited number of $.01 par value shares of
beneficial interest authorized. Transactions in the Fund's shares at $1.00 per
share were as follows:
Six Months Ended Year Ended
December 31, 1996 June 30, 1996
------------ -----------
Shares sold .......................... $20,440,493 $ 19,289,858
Shares issued in reinvestment of distributions 121,543 68,559
Shares redeemed....................... (18,300,142) (14,999,719
------------ ------------
Net increase ................................. $ 2,261,894 $ 4,358,698
============ ===========
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities for the six months ended December 31, 1996
aggregated $ 16,828,073 and $14,547,494, respectively.
5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
a. Administration Agreement:
Under the terms of an administration agreement, Franklin Advisers, Inc.
(Advisers) provides various administrative, statistical and other services, and
receives fees computed monthly based on the average daily net assets of the Fund
as follows:
<TABLE>
<CAPTION>
Annualized Fee Rate Average Daily Net Assets
------------------- -----------------------------
<S> <C>
0.455% First $100 million
0.330% Over $100 million, up to and including $250 million
0.280% In excess of $250 million
</TABLE>
The terms of the 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. For the six months ended December 31, 1996,
Advisers agreed in advance to waive administration fees and assume payment of
other expenses, 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 December 31, 1996, are noted in the Statement of
Operations.
5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (cont.)
c. Distribution Plans and Underwriting Agreement:
Under the terms of a distribution plan pursuant to Rule 12b-1 of the Investment
Company Act of 1940 (the Plan), the Fund reimburses Franklin/Templeton
Distributors, Inc. (Distributors), in an amount up to 0.65% per annum of the
Fund's average daily net assets for costs incurred in the promotion, offering
and marketing of the Fund's shares. The Plan does not permit nor require
payments of excess costs after termination.
In its capacity as underwriter for the shares of the Fund, Distributors also
received contingent deferred sales charges relating to transactions in the Fund
of $ 9,536.
d. Other Affiliates and Related Party Transactions:
Certain officers and trustees of the Trust are also officers and /or directors
of Distributors, Advisers, Investor Services (all wholly-owned subsidiaries of
Resources), and of the Money Market Portfolio.
6. FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
period are as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended Period Ended
December 31, 1996 June 30, 1996 June 30, 1995+
----------- ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance......
Net asset value at beginning of period $1.00 $1.00 $1.00
Net investment income ............... .021 .039 .007
Distributions from net investment income (.021) (.039) .007
----------- --------- ---------
Net asset value at end of period .... $1.00 $1.00 $1.00
============ ========= =========
Total Return** ...................... 2.14% 3.96% .73%
Ratios/Supplemental Data
Net assets at end of period (in 000's) $6,772 $4,510 $152
Ratio of expenses to average net assets1,2,3 1.25%* 1.40% 1.83%*
Ratio of expenses to average net assets
(before fee waiver)1,2,3............ 1.73%* 2.67% 1.84%*
Ratio of net investment income to average net assets 4.25%* 4.00% 4.42%*
</TABLE>
+April 13, 1995 (effective date) to June 30, 1995.
* Annualized
**Total return measures the change in value of an investment over the periods
indicated. It is not annualized. It does not include the contingent deferred
sales charge, and assumes reinvestment of dividends and capital gains, at net
asset value.
1Includes the Fund's shares of the Portfolio's allocated expenses.
2During the periods indicated, Advisers agreed in advance to waive a portion of
administration and management fees and made payments of other expenses incurred
by the Funds.
3See Note 5
