As filed with the Securities and Exchange Commission on August 21, 1998.
File Nos.
33-88924
811-8962
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 4 (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 6 (X)
FRANKLIN TEMPLETON MONEY FUND TRUST
(Exact Name of Registrant as Specified in Charter)
777 MARINERS ISLAND BLVD., SAN MATEO, CALIFORNIA 94404
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (650) 312-2000
HARMON E. BURNS, 777 MARINERS ISLAND BLVD., SAN MATEO, CA. 94404
(Name and Address of Agent for Service of Process)
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[X] on November 1, 1998 pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date), pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Money Market Portfolios (the Master Fund) has executed this registration
statement.
Title of Securities being registered:
Shares of Beneficial Interest:
Franklin Templeton Money Fund II
FRANKLIN TEMPLETON MONEY FUND II
Franklin Templeton Money Fund Trust
CROSS REFERENCE SHEET
FORM N-1A
PART A: INFORMATION REQUIRED IN THE PROSPECTUS
N-1A Location in
ITEM NO. ITEM REGISTRATION STATEMENT
1. Cover Page Cover Page
2. Synopsis "Expense Summary"
3. Condensed Financial Information "Financial Highlights";
4. General Description of "How Is the Trust Organized?";
Registrant "How Does the Fund Invest Its
Assets?"; "What Are the Risks of
Investing in the Fund?"
5. Management of the Fund "Who Administers the Fund?"
5A. Management's Discussion of Fund Not Applicable
Performance
6. Capital Stock and Other "How Is the Trust Organized?";
Securities "Services To Help You Manage Your
Account"; "What Distributions
Might I Receive From the Fund?";
"How Taxation Affects the Fund
and Its Shareholders"; "What If I
Have Questions About My Account?"
7. Purchase of Securities Being "Who Administers the Fund?"; "How
Offered Do I Buy Shares?"; "May I
Exchange Shares for Shares of
Another Fund?"; "Transaction
Procedures and Special
Requirements"; "Services to Help
You Manage Your Account"; "Useful
Terms and Definitions"
8. Redemption or Repurchase "May I Exchange Shares for Shares
of Another Fund?"; "How Do I Sell
Shares?"; "Transaction Procedures
and Special Requirements";
"Services to Help You Manage Your
Account"; "Useful Terms and
Definitions"
9. Pending Legal Proceedings Not Applicable
FRANKLIN TEMPLETON MONEY FUND II
Franklin Templeton Money Fund Trust
CROSS REFERENCE SHEET
FORM N-1A
Part B: Information Required in the
STATEMENT OF ADDITIONAL INFORMATION
N-1A Location in
ITEM NO. ITEM REGISTRATION STATEMENT
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
13. Investment Objectives and "How Does the Fund Invest Its
Policies Assets?"; "Investment
Restrictions"
14. Management of the Fund "Officers and Trustees";
15. Control Persons and Principal "Officers and Trustees";
Holders of Securities "Investment Management and Other
Services"; "Miscellaneous
Information"
16. Investment Advisory and Other "Investment Management and Other
Services Services"; "The Fund's
Underwriter"
17. Brokerage Allocation and Other "How Does the Fund Buy Securities
Practices for Its Portfolio?"
18. Capital Stock and Other Not Applicable
Securities
19. Purchase, Redemption and "How Do I Buy, Sell and Exchange
Pricing of Securities Being Shares?"; "How Are Fund Shares
Offered Valued?"; "Financial Statements"
20. Tax Status "Additional Information on
Distributions and Taxes"
21. Underwriters "The Fund's Underwriter"
22. Calculation of Performance Data "How Does the Fund Measure
Performance?"
23. Financial Statements "Financial Statements"
PROSPECTUS
FRANKLIN TEMPLETON MONEY FUND II
NOVEMBER 1, 1998
INVESTMENT STRATEGY INCOME
FRANKLIN TEMPLETON MONEY FUND TRUST
Please read this prospectus before investing in the fund, and keep it for
future reference. It contains important information, including how the fund
invests and the services available to shareholders.
To learn more about the fund and its policies, you may request a copy of the
fund's Statement of Additional Information ("SAI"), dated November 1, 1998,
which we may amend from time to time. We have filed the SAI with the SEC and
have incorporated it by reference into this prospectus. For a free copy of
the SAI or a larger print version of this prospectus, contact your investment
representative or call 1-800/DIAL BEN.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN
A STABLE $1 SHARE PRICE.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY OF THE
U.S. GOVERNMENT. MUTUAL FUND SHARES INVOLVE INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
LIKE ALL MUTUAL FUND SHARES, THE SEC HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
Unlike most funds that invest directly in securities, the fund seeks to
achieve its investment goal by investing all of its assets in shares of The
Money Market Portfolio (the "Portfolio"). The Portfolio is a series of The
Money Market Portfolios ("Money Market"). Its investment goal is the same as
the fund's.
THIS PROSPECTUS IS NOT AN OFFERING OF THE SECURITIES HEREIN DESCRIBED IN ANY
STATE, JURISDICTION OR COUNTRY IN WHICH THE OFFERING IS NOT AUTHORIZED. NO
SALES REPRESENTATIVE, DEALER, OR OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS. FURTHER INFORMATION MAY BE OBTAINED FROM DISTRIBUTORS.
FRANKLIN TEMPLETON MONEY FUND II
November 1, 1998
When reading this prospectus, you will see certain terms beginning with
capital letters. This means the term is explained in our glossary section.
TABLE OF CONTENTS
ABOUT THE FUND
Expense Summary..........................................
Financial Highlights.....................................
How Does the Fund Invest Its Assets?.....................
What Are the Risks of Investing in the Fund?.............
Who Administers the Fund?................................
How Taxation Affects the Fund and Its Shareholders.......
How Is the Trust Organized?..............................
ABOUT YOUR ACCOUNT
How Do I Buy Shares?.....................................
May I Exchange Shares for Shares of Another Fund?........
How Do I Sell Shares?....................................
What Distributions Might I Receive From the Fund?........
Transaction Procedures and Special Requirements..........
Services to Help You Manage Your Account.................
What If I Have Questions About My Account?...............
GLOSSARY
Useful Terms and Definitions.............................
777 Mariners Island Blvd.
P.O. Box 7777
San Mateo
CA 94403-7777
1-800/DIAL BEN(R)
ABOUT THE FUND
EXPENSE SUMMARY
This table is designed to help you understand the costs of investing in the
fund. It is based on the fund's historical expenses, including its
proportionate share of the Portfolio's expenses, for the fiscal year ended
June 30, 1998. The fund's actual expenses may vary.
A. SHAREHOLDER TRANSACTION EXPENSES+
Deferred Sales Charge++ 1.00%
Exchange Fee (per transaction) $5.00*
B. ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management and Administration Fees 0.60%**
Rule 12b-1 Fees 0.46%***
Other Expenses of the Fund and the Portfolio
0.39%
--------
Total Fund Operating Expenses 1.45%**
========
C. EXAMPLE
Assume the fund's annual return is 5%, operating expenses are as
described above, and you sell your shares after the number of years
shown. These are the projected expenses for each $1,000 that you invest
in the fund.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$25 $46 $79 $174
For the same investment, you would pay projected expenses of $15 if you
did not sell your shares at the end of the first year. Your projected
expenses for the remaining periods would be the same.
THIS IS JUST AN EXAMPLE. IT DOES NOT REPRESENT PAST OR FUTURE EXPENSES OR
RETURNS. ACTUAL EXPENSES AND RETURNS MAY BE MORE OR LESS THAN THOSE
shown. The fund pays its operating expenses. The effects of these
expenses are reflected in its Net Asset Value or dividends and are not
directly charged to your account.
+If your transaction is processed through your Securities Dealer, you may be
charged a fee by your Securities Dealer for this service.
++A Contingent Deferred Sales Charge may apply if you sell the shares within
the Contingency Period. See "How Do I Sell Shares? - Contingent Deferred
Sales Charge" for details.
*$5.00 fee is only for Market Timers. We process all other exchanges without
a fee.
**For the period shown, Advisers had agreed in advance to limit its
management and administration fees. With this reduction, management fees of
the Portfolio were 0.14% and administration fees of the fund were 0.26%.
Total fund operating expenses were 1.25%.
***These fees may not exceed 0.65%. The Rule 12b-1 fees could cause long-term
shareholders to pay more than the economic equivalent of the maximum
front-end sales charge permitted under the NASD's rules. It is estimated,
however, that this would take a substantial number of years.
FINANCIAL HIGHLIGHTS
This table summarizes the fund's financial history. The information has been
audited by PricewaterhouseCoopers LLP, the fund's independent auditor. The
audit report covering the periods shown below appears in the Trust's Annual
Report to Shareholders for the fiscal year ended June 30, 1998. The Annual
Report to Shareholders also includes more information about the fund's
performance. For a free copy, please call Fund Information.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
<S> <C> <C> <C> <C>
1998 1997 1996 1995*
- ----------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00
-------------------------------------------
Income from investment operations- net
investment income .043 .042 .039 .007
Less distributions from net investment income (.043) (.042) (.039) (.007)
--------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00
============================================
Total return** 4.43% 4.29% 3.96% 0.73%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) $38,538 $9,72 $4,510 $152
Ratio to average net assets:
Expenses1 1.25% 1.25% 1.40% 1.83%***
Expenses excluding waiver and payments by
affiliate1 1.45% 1.59% 2.67% 1.84%***
Net investment income 4.39% 4.26% 4.00% 4.42%***
</TABLE>
*For the period April 13, 1995 (effective date) to June 30, 1995.
**Total return is not annualized.
***Annualized.
1 The expense ratio includes the fund's share of the Portfolio's allocated
expenses.
HOW DOES THE FUND INVEST ITS ASSETS?
WHAT IS THE FUND'S GOAL?
The investment goal of the fund is to provide investors with as high a level
of current income as is consistent with preservation of shareholders'
capital, and liquidity. This goal is fundamental, which means that it may not
be changed without shareholder approval. The fund also tries to maintain a
stable Net Asset Value of $1 per share.
THE FUND'S INVESTMENT IN THE PORTFOLIO
The fund seeks to achieve its investment goal by investing all of its assets
in the Portfolio. The Portfolio has the same investment goal as the fund.
Like the fund's goal, the Portfolio's goal is fundamental, which means that
it may not be changed without shareholder approval. The fund's investment
policies are also substantially similar to the Portfolio's except the fund
may pursue its policies by investing in an open-end management investment
company with the same investment goal and substantially similar policies and
restrictions as the fund. The fund buys shares of the Portfolio at Net Asset
Value. An investment in the fund is an indirect investment in the Portfolio.
It is possible that the fund may have to withdraw its investment in the
Portfolio and subsequently invest in another open-end management investment
company with the same investment goal and policies. This could happen if the
Portfolio changes it's investment goal or if the Board, at any time,
considers it in the fund's best interest to withdraw the fund's investment
from the Portfolio.
The fund's structure, where it invests all of its assets in the Portfolio, is
sometimes called a "Master/Feeder" structure. You will find more detailed
information about this fund structure and potential risks associated with it
in the SAI.
WHAT KINDS OF SECURITIES DOES THE PORTFOLIO BUY?
The Portfolio seeks to achieve its investment goal by investing in
high-quality, short-term money market securities. The portfolio invests in
high-quality money market securities of domestic and foreign issuers,
including U.S. Government securities and repurchase agreements. Because the
Portfolio limits its investments to high-quality securities, it will
generally earn lower yields than a portfolio with lower quality securities
that are subject to greater risk. Accordingly, the yield to shareholders in
the Portfolio, and thus the fund, will likely be lower.
QUALITY, MATURITY AND DIVERSIFICATION STANDARDS. The Portfolio, like all
money funds, follows SEC guidelines on the quality, maturity and
diversification of its investments. These guidelines are designed to help
reduce a money fund's risks so that it is more likely to keep its share price
at $1.
o The fund only buys securities that Advisers determines present minimal
credit risks and that are rated in one of the top two short-term rating
categories or that are comparable unrated securities in Advisers' opinion.
o The Portfolio only buys securities with remaining maturities of 397
calendar days or less and maintains a dollar-weighted average portfolio
maturity of 90 days or less.
o Generally, the Portfolio may not invest more than 5% of its total assets
in the securities of a single issuer, other than in U.S. government
securities.
More information about the Portfolio's diversification policies, and details
of the credit quality ratings are included in the SAI.
U.S. GOVERNMENT SECURITIES include marketable fixed, floating and variable
rate securities issued or guaranteed by the U.S. government or its agencies,
or by various instrumentalities that have been established or sponsored by
the U.S. government. Some of these securities, including U.S. Treasury bills,
notes and bonds and securities of the Government National Mortgage
Association and the Federal Housing Administration, are issued or guaranteed
by the U.S. government or carry a guarantee that is supported by the full
faith and credit of the U.S. government. Other U.S. government securities are
issued or guaranteed by federal agencies or government-sponsored enterprises
and are not direct obligations of the U.S. government. Instead, they involve
sponsorship or guarantees by government agencies or enterprises. For example,
some securities are supported by the right of the issuer to borrow from the
U.S. Treasury, such as obligations of the Federal Home Loan Bank. Others,
such as obligations of the Federal National Mortgage Association, are
supported only by the credit of the instrumentality.
BANK OBLIGATIONS, or instruments secured by bank obligations, include fixed,
floating or variable rate CDs, letters of credit, time deposits, bank notes
and bankers' acceptances. The Portfolio will invest in these obligations or
instruments issued by banks and savings institutions with assets of at least
$1 billion. Time deposits are non-negotiable deposits that are held in a
banking institution for a specified time at a stated interest rate. The
Portfolio may not invest more than 10% of its assets in time deposits with
more than seven days to maturity.
The Portfolio may invest in obligations of U.S. banks, foreign branches of
U.S. banks, foreign branches of foreign banks, and U.S. branches of foreign
banks that have a federal or state charter to do business in the U.S. and are
subject to U.S. regulatory authorities. The Portfolio may invest in an
obligation issued by a branch of a bank only if the parent bank has assets of
at least $5 billion, and may invest only up to 25% of its assets in
obligations of foreign branches of U.S. or foreign banks. The Portfolio may,
however, invest more than 25% of its assets in certain domestic bank
obligations, including U.S. branches of foreign banks.
COMMERCIAL PAPER typically refers to short-term obligations of banks,
corporations and other borrowers with maturities of up to 270 days. The
Portfolio may invest in domestic or foreign commercial paper.
CORPORATE OBLIGATIONS may include fixed, floating and variable rate bonds,
debentures or notes.
WHAT ARE SOME OF THE PORTFOLIO'S OTHER INVESTMENT STRATEGIES AND PRACTICES?
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS are those where payment and
delivery for the security take place at a future date. Since the market price
of the security may fluctuate during the time before payment and delivery,
the Portfolio assumes the risk that the value of the security at delivery may
be more or less than the purchase price.
REPURCHASE AGREEMENTS. The Portfolio will generally have a portion of its
assets in cash or cash equivalents. To earn income on this portion of its
assets, the Portfolio may enter into repurchase agreements with certain banks
and broker-dealers. Under a repurchase agreement, the Portfolio agrees to buy
a U.S. government security from one of these issuers and then to sell the
security back to the issuer after a short period of time (generally, less
than seven days) at a higher price. The bank or broker-dealer must transfer
to the Portfolio's custodian securities with an initial value of at least
102% of the dollar amount invested by the Portfolio in each repurchase
agreement.
PORTFOLIO TRADING. The Portfolio may actively trade securities in its
portfolio, without any limits, if Advisers believes that yields can be
increased by doing so. Advisers considers current market conditions, cash
requirements and its revised evaluations of a security when determining
whether or not to hold securities until maturity. The yield on some
securities held by the Portfolio may decline if the securities are sold
before maturity.
ILLIQUID INVESTMENTS. The Portfolio's policy is not to invest more than 10%
of its net assets in illiquid securities. Illiquid securities are generally
securities that cannot be sold within seven days in the normal course of
business at approximately the amount at which the Portfolio has valued them.
OTHER POLICIES AND RESTRICTIONS. The fund and the Portfolio have a number of
additional investment policies and restrictions that govern their activities.
Those that are identified as "fundamental" may only be changed with
shareholder approval. The others may be changed by the Board or the Board of
Trustees of Money Market alone. For a list of these restrictions and more
information about the fund's and the Portfolio's investment policies,
including those described above, please see "How Does the Fund Invest Its
Assets?" and "Investment Restrictions" in the SAI.
Generally, the policies and restrictions discussed in this prospectus and in
the SAI apply when the fund or the Portfolio makes an investment. In most
cases, the fund and the Portfolio are not required to sell a security because
circumstances change and the security no longer meets one or more of the
fund's or the Portfolio's policies or restrictions.
WHAT ARE THE RISKS OF INVESTING IN THE FUND?
Like all investments, an investment in the fund involves risk. The risks of
the fund are basically the same as those of other investments in money market
securities. The short duration and high credit quality of the securities in
which the Portfolio, and thus the fund, invests may help reduce the risks
detailed below.
There is no assurance that the fund or the Portfolio will meet its investment
goal. Although the fund tries to maintain a stable share price of $1, there
is no assurance that it will be able to do so.
INTEREST RATE RISK is the risk that changes in interest rates can reduce the
value of a security. Generally when interest rates rise, the value of a
security falls. The opposite is also true: security prices go up when
interest rates fall.
INCOME RISK is the risk that the Portfolio's, and thus the fund's, income
will decrease due to falling interest rates. Since the fund can only
distribute what it earns, the fund's distributions to its shareholders may
decline when interest rates fall.
CREDIT RISK is the possibility that an issuer will be unable to make interest
payments or repay principal. Changes in an issuer's financial strength or in
a security's credit rating may affect its value.
MARKET RISK is the risk that a security's value will be reduced by market
activity or the results of supply and demand. This a basic risk associated
with all securities, When there are more sellers than buyers, prices tend to
fall. Likewise, when there are more buyers, prices tend to increase.
FOREIGN SECURITIES. Investments in securities of foreign issuers, including
obligations of foreign branches of U.S. and foreign banks and obligations of
U.S. branches of foreign banks, involve special risks. These risks include
future unfavorable political and economic developments, possible withholding
taxes, seizure of foreign deposits, currency controls, interest limitations,
or other governmental restrictions that may affect the payment of principal
or interest on securities held by the Portfolio. In addition, there may be
less publicly available information about foreign issuers.
WHO ADMINISTERS THE FUND?
THE BOARD. The Board oversees the management of the fund and elects its
officers. The officers are responsible for the fund's day-to-day operations.
The Board, with approval of all disinterested and interested Board members,
has adopted written procedures designed to deal with potential conflicts of
interest that may arise from the fund and Money Market having substantially
the same boards. These procedures call for an annual review of the fund's
relationship with the Portfolio. If a conflict exists, the boards may take
action, which may include the establishment of a new board. The Board has
determined that there are no conflicts of interest at the present time. For
more information, please see "Summary of Procedures to Monitor Conflicts of
Interest" and "Officers and Trustees" in the SAI.
INVESTMENT MANAGER AND ADMINISTRATOR. Advisers manages the Portfolio's assets
and makes its investment decisions. Advisers also performs similar services
for other funds. It is wholly owned by Resources, a publicly owned company
engaged in the financial services industry through its subsidiaries. Charles
B. Johnson and Rupert H. Johnson, Jr. are the principal shareholders of
Resources. Together, Advisers and its affiliates manage over $236 billion in
assets. Advisers is also the administrator of the fund. Please see
"Investment Management and Other Services" and "Miscellaneous Information" in
the SAI for information on securities transactions and a summary of the
fund's Code of Ethics.
MANAGEMENT FEES. You will bear a portion of the Portfolio's operating
expenses, including its management fees, to the extent that the fund, as a
shareholder of the Portfolio, bears these expenses. The portion of the
Portfolio's expenses borne by the fund depends on the fund's proportionate
share of the Portfolio's net assets.
During the fiscal year ended June 30, 1998, the fund's proportionate share of
the Portfolio's management fees, before any advance waiver, totaled 0.15% of
the average daily net assets of the fund. The fund's administration fees,
before any advance waiver, totaled 0.45%. Total operating expenses, including
fees paid to Advisers before any advance waiver, were 1.45%. Under an
agreement by Advisers to limit its fees, the fund paid a proportionate share
of the Portfolio's management fees totaling 0.14% and administration fees
totaling 0.26%. Total expenses of the fund were 1.25%. Advisers may end this
arrangement at any time upon notice to the Board.
PORTFOLIO TRANSACTIONS. Advisers tries to obtain the best execution on all
transactions. If Advisers believes more than one broker or dealer can provide
the best execution, it may consider research and related services and the
sale of fund shares, as well as shares of other funds in the Franklin
Templeton Group of Funds, when selecting a broker or dealer. Please see "How
Does the Portfolio Buy Securities for Its Portfolio?" in the SAI for more
information.
YEAR 2000 ISSUE. Like other mutual funds, the fund could be adversely
affected if the computer systems used by Advisers and other service providers
do not properly process date-related information on or after January 1, 2000
("Year 2000 Issue"). The Year 2000 Issue, and in particular foreign service
providers' responsiveness to the issue, could affect portfolio and
operational areas including securities trade processing, interest and
dividend payments, securities pricing, shareholder account services,
reporting, custody functions, and others. While there can be no assurance
that the fund will not be adversely affected, Advisers and its affiliated
service providers are taking steps that they believe are reasonably designed
to address the Year 2000 Issue, including seeking reasonable assurances from
the fund's other major service providers.
THE RULE 12B-1 PLAN
The fund has a distribution plan or "Rule 12b-1 Plan" under which it may pay
or reimburse Distributors or others for the expenses of activities that are
primarily intended to sell shares of the fund. These expenses may include,
among others, distribution or service fees paid to Securities Dealers or
others who have executed a servicing agreement with the fund, Distributors or
its affiliates; a prorated portion of Distributors' overhead expenses; and
the expenses of printing prospectuses and reports used for sales purposes,
and preparing and distributing sales literature and advertisements.
Under the plan, the fund may pay Distributors up to 0.50% per year of the
fund's average daily net assets to pay Distributors or others for providing
distribution and related services and bearing certain fund expenses. All
distribution expenses over this amount will be borne by those who have
incurred them. During the first year after a purchase of Class II shares that
are exchanged for shares of the fund, Securities Dealers may not be eligible
to receive this portion of the Rule 12b-1 fees associated with the purchase.
The fund may also pay a servicing fee of up to 0.15% per year of the fund's
average daily net assets under the plan. This fee may be used to pay
Securities Dealers or others for, among other things, helping to establish
and maintain customer accounts and records, helping with requests to buy and
sell shares, receiving and answering correspondence, monitoring dividend
payments from the fund on behalf of customers, and similar servicing and
account maintenance activities.
For more information, please see "The Fund's Underwriter" in the SAI.
HOW TAXATION AFFECTS THE FUND AND ITS SHAREHOLDERS
TAXATION OF THE FUND. As a regulated investment company, the fund generally
pays no federal income tax on the income and gains that it distributes to you.
DISTRIBUTIONS. Distributions from the fund, whether you receive them in cash
or in additional shares, are generally subject to income tax. The fund will
send you a statement in January of each year that reflects the amount of
ordinary dividends you received from the fund in the prior year. This
statement will include distributions declared in December and paid to you in
January of the following year, but which are taxable as if paid on December
31 of the prior year. The IRS requires you to report these amounts on your
income tax return for the prior year.
DISTRIBUTIONS TO RETIREMENT PLANS. Fund distributions received by your
qualified retirement plan, such as a section 401(k) plan or IRA, are
generally tax-deferred; this means that you are not required to report fund
distributions on your income tax return when paid to your plan, but, rather,
when your plan makes payments to you. Special rules apply to payouts from
Roth and Education IRAs.
DIVIDENDS-RECEIVED DEDUCTION. It is anticipated that no portion of the
fund's distributions will qualify for the corporate dividends-received
deduction.
REDEMPTIONS AND EXCHANGES. Because the fund expects to maintain a $1.00 Net
Asset Value per share, you should not have any gain or loss on the redemption
or exchange of fund shares.
NON-U.S. INVESTORS. Ordinary dividends generally will be subject to U.S.
income tax withholding. Your home country may also tax ordinary dividends.
Fund shares held by the estate of a non-U.S. investor may be subject to U.S.
estate tax. You may wish to contact your tax advisor to determine the U.S.
and non-U.S. tax consequences of your investment in the fund.
STATE TAXES. Ordinary dividends that you receive from the fund will
generally be subject to state and local income tax. It is anticipated that
no portion of the fund's distributions will qualify for exemption from state
and local income tax as dividends paid from interest earned on direct
obligations of the U.S. Government. The holding of fund shares may also be
subject to state and local intangibles taxes. You may wish to contact your
tax advisor to determine the state and local tax consequences of your
investment in the fund.
BACKUP WITHHOLDING. When you open an account, IRS regulations require that
you provide your taxpayer identification number ("TIN"), certify that it is
correct, and certify that you are not subject to backup withholding under IRS
rules. If you fail to provide a correct TIN or the proper tax
certifications, the fund is required to withhold 31% of all taxable
distributions (including ordinary dividends and capital gain distributions),
and redemption proceeds paid to you. The fund is also required to begin
backup withholding on your account if the IRS instructs the fund to do so.
The fund reserves the right not to open your account, or, alternatively, to
redeem your shares at the current Net Asset Value, less any taxes withheld,
if you fail to provide a correct TIN, fail to provide the proper tax
certifications, or the IRS instructs the fund to begin backup withholding on
your account.
THIS TAX DISCUSSION IS FOR GENERAL INFORMATION ONLY. PROSPECTIVE INVESTORS
SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE FEDERAL, STATE, LOCAL OR
FOREIGN TAX CONSEQUENCES OF AN INVESTMENT IN THE FUND. A MORE COMPLETE
DISCUSSION OF THESE RULES AND RELATED MATTERS IS CONTAINED IN THE SECTION
ENTITLED "ADDITIONAL INFORMATION ON DISTRIBUTIONS AND TAXES" IN THE SAI. YOU
MAY REQUEST A FREE FRANKLIN TEMPLETON TAX INFORMATION HANDBOOK BY CONTACTING
FUND INFORMATION.
HOW IS THE TRUST ORGANIZED?
The fund is a no-load, diversified series of the Franklin Templeton Money
Fund Trust (the "Trust"), an open-end management investment company, commonly
called a mutual fund. It was organized as a Delaware business trust on
January 30, 1995, and is registered with the SEC. Shares of the fund are
considered Class II shares for redemption, exchange and other purposes.
Additional series may be offered in the future.
The Trust has noncumulative voting rights. This gives holders of more than
50% of the shares voting the ability to elect all of the members of the
Board. If this happens, holders of the remaining shares voting will not be
able to elect anyone to the Board.
The Trust does not intend to hold annual shareholder meetings. The Trust or a
series of the Trust may hold special meetings, however, for matters requiring
shareholder approval. A meeting may also be called by the Board in its
discretion or by shareholders holding at least 10% of the outstanding shares.
In certain circumstances, we are required to help you communicate with other
shareholders about the removal of a Board member.
ABOUT YOUR ACCOUNT
HOW DO I BUY SHARES?
OPENING YOUR ACCOUNT
You may acquire shares of the fund only in exchange for Class II shares of
other Franklin Templeton Funds sold subject to a Contingent Deferred Sales
Charge or through the reinvestment of dividends. Shares of the fund may not
be purchased directly from the fund or Distributors.
You may acquire fund shares without a front-end sales charge. A Contingent
Deferred Sales Charge may apply, however, if you sell your shares within the
Contingency Period. See "How Do I Sell Shares? - Contingent Deferred Sales
Charge." Redemption drafts (checks) may not be written on fund accounts.
The fund's minimum investments are:
o To open a regular, non-retirement account $1,000
o To open an IRA, IRA Rollover, Roth IRA,
or Education IRA $250*
o To open a custodial account for a minor
(an UGMA/UTMA account) $100
o To add to an account $50**
*For all other retirement accounts, there is no minimum investment
requirement.
**For all retirement accounts except IRAs, IRA Rollovers, Roth IRAs, or
Education IRAs, there is no minimum to add to an account.
For purchases by broker-dealers, registered investment advisors or
certified financial planners who have entered into an agreement with
Distributors for clients participating in comprehensive fee programs,
the minimum initial investment is $250. The minimum initial investment
is $100 for officers, trustees, directors and full-time employees of
the Franklin Templeton Funds or the Franklin Templeton Group, and their
family members, consistent with our then-current policies.
We reserve the right to change the amount of these minimums from time
to time or to waive or lower these minimums for certain purchases. We
also reserve the right to refuse any order to buy shares.
If the fund receives your order in proper form before 3:00 p.m. Pacific time,
we will credit the purchase to your account that day. Orders received after
3:00 p.m. will be credited the following business day.
The investment authority of certain investors may be restricted by law. If
you are such an investor, you should consult your legal advisor to determine
whether and to what extent shares of the fund are legal investments for you.
If you are a municipal investor considering investing proceeds of bond
offerings, you should consult with expert counsel to determine the effect, if
any, of payments by the fund on arbitrage rebate calculations.
MAY I EXCHANGE SHARES FOR SHARES OF ANOTHER FUND?
We offer a wide variety of funds. The shares of most of these funds are
offered to the public with a sales charge. If you would like, you can move
your investment from your fund account to an existing or new account in
another Franklin Templeton Fund (an "exchange"). Because it is technically a
sale and a purchase of shares, an exchange is a taxable transaction.
Before making an exchange, please read the prospectus of the fund you are
interested in. This will help you learn about the fund, its investment goal
and policies, and its rules and requirements for exchanges. For example, some
Franklin Templeton Funds do not accept exchanges and others may have
different investment minimums. Some Franklin Templeton Funds do not offer
Class II shares.
- -------------------------------------------------------------------------------
METHOD STEPS TO FOLLOW
- -------------------------------------------------------------------------------
BY MAIL Send us signed written instructions
- -------------------------------------------------------------------------------
BY PHONE Call Shareholder Services or TeleFACTS(R)
- If you do not want the ability to exchange by phone
to apply to your account, please let us know.
- -------------------------------------------------------------------------------
THROUGH YOUR DEALER Call your investment representative
- -------------------------------------------------------------------------------
Please refer to "Transaction Procedures and Special Requirements" for other
important information on how to exchange shares.
WILL SALES CHARGES APPLY TO MY EXCHANGE?
You will not pay a front-end sales charge on exchanges. We also will not
impose a Contingent Deferred Sales Charge when you exchange shares. Any
shares subject to a Contingent Deferred Sales Charge at the time of exchange,
however, will remain so in the new fund. See the discussion on Contingent
Deferred Sales Charges below and under "How Do I Sell Shares?"
For accounts with shares subject to a Contingent Deferred Sales Charge, we
will first exchange any shares in your account that are not subject to the
charge. If there are not enough of these to meet your exchange request, we
will exchange shares subject to the charge in the order they were purchased.
EXCHANGE RESTRICTIONS
Please be aware that the following restrictions apply to exchanges:
o You must meet the applicable minimum investment amount of the fund
you are exchanging into, or exchange 100% of your fund shares.
o You may only exchange shares within the SAME CLASS.
o The accounts must be identically registered. Additional procedures
may apply. Please see "Transaction Procedures and Special
Requirements."
o Trust Company IRA or 403(b) retirement plan accounts may exchange
shares as described above. Restrictions may apply to other types of
retirement plans. Please contact Retirement Plan Services for
information on exchanges within these plans.
o The fund you are exchanging into must be eligible for sale in your
state.
o We may modify or discontinue our exchange policy if we give you 60
days' written notice.
o Your exchange may be restricted or refused if you have: (i)
requested an exchange out of the fund within two weeks of an earlier
exchange request, (ii) exchanged shares out of the fund more than
twice in a calendar quarter, or (iii) exchanged shares equal to at
least $5 million, or more than 1% of the fund's net assets. Shares
under common ownership or control are combined for these limits. If
you have exchanged shares as described in this paragraph, you will
be considered a Market Timer. Each exchange by a Market Timer, if
accepted, will be charged $5.00. Some of our funds do not allow
investments by Market Timers.
Because excessive trading can hurt fund performance, operations and
shareholders, we may refuse any exchange purchase if (i) we believe the fund
would be harmed or unable to invest effectively, or (ii) the fund receives or
anticipates simultaneous orders that may significantly affect the fund.
HOW DO I SELL SHARES?
You may sell (redeem) your shares at any time.
- -------------------------------------------------------------------------------
METHOD STEPS TO FOLLOW
- -------------------------------------------------------------------------------
BY MAIL 1. Send us signed written instructions. If you would
like your redemption proceeds wired to a bank
account, complete the "Wire Redemption
Privilege" section of the revision form and send
it to us or include the following information in
your instructions:
o The name, address and telephone number of
the bank where you want the proceeds sent
o Your bank account number
o The Federal Reserve ABA routing number
o If you are using a savings and loan or
credit union, the name of the corresponding
bank and the account number
2. Provide a signature guarantee if required
3. Corporate, partnership and trust accounts may
need to send additional documents. Accounts
under court jurisdiction may have other
requirements.
- -------------------------------------------------------------------------------
BY PHONE Call Shareholder Services. If you would like your
redemption proceeds wired to a bank account, other
than an escrow account, you must first sign up for
the wire feature. To sign up, complete the "Wire
Redemption Privilege" section of the revision form
and send it to us or send us written instructions,
with a signature guarantee. To avoid any delay in
processing, the instructions should include the
items listed in "By Mail" above.
Telephone requests will be accepted:
o If the request is $50,000 or less.
Institutional accounts may exceed $50,000
by completing a separate agreement. Call
Institutional Services to receive a copy.
o Unless you are selling shares in a Trust
Company retirement plan account
o Unless the address on your account was
changed by phone within the last 15 days
- If you do not want the ability to redeem by phone
to apply to your account, please let us know.
- --------------------------------------------------------------------------------
THROUGH YOUR DEALER Call your investment representative
- --------------------------------------------------------------------------------
We will send your redemption check within seven days after we receive your
request in proper form. If you would like the check sent to an address other
than the address of record or made payable to someone other than the
registered owners on the account, send us written instructions signed by all
account owners, with a signature guarantee. We are not able to receive or pay
out cash in the form of currency.
The wiring of redemption proceeds is a special service that we make available
whenever possible for redemption requests of $1,000 or more. If we receive
your request in proper form before 3:00 p.m. Pacific time, your wire payment
will be sent the next business day. For requests received in proper form
after 3:00 p.m. Pacific time, the payment will be sent the second business
day. You may have redemption proceeds wired to an escrow account the same
day, if we receive your request in proper form before 9:00 a.m. Pacific time.
By offering this service to you, the fund is not bound to meet any redemption
request in less than the seven day period prescribed by law. Neither the fund
nor its agents shall be liable to you or any other person if, for any reason,
a redemption request by wire is not processed as described in this section.
If you sell shares you recently purchased with a check or draft, we may delay
sending you the proceeds until your check or draft has cleared, which may
take seven business days or more. A certified or cashier's check may clear in
less time.
Under unusual circumstances, we may suspend redemptions or postpone payment
for more than seven days as permitted by federal securities law.
Please refer to "Transaction Procedures and Special Requirements" for other
important information on how to sell shares.
TRUST COMPANY RETIREMENT PLAN ACCOUNTS
To comply with IRS regulations, you need to complete additional forms before
selling shares in a Trust Company retirement plan account. Tax penalties
generally apply to any distribution from these plans to a participant under
age 59 1/2, unless the distribution meets an exception stated in the Code. To
obtain the necessary forms, please call Retirement Plan Services.
CONTINGENT DEFERRED SALES CHARGE
A Contingent Deferred Sales Charge may apply if you sell your shares within
the Contingency Period. The charge is 1% of the value of the shares sold or
the Net Asset Value at the time of purchase, whichever is less.
We will first redeem any shares in your account that are not subject to the
charge. If there are not enough of these to meet your request, we will redeem
shares subject to the charge in the order they were purchased.
Unless otherwise specified, when you request to sell a stated DOLLAR AMOUNT,
we will redeem additional shares to cover any Contingent Deferred Sales
Charge. For requests to sell a stated NUMBER OF SHARES, we will deduct the
amount of the Contingent Deferred Sales Charge, if any, from the sale
proceeds.
WAIVERS. We waive the Contingent Deferred Sales Charge for:
o Account fees
o Redemptions by the fund when an account falls below the minimum
required account size
o Redemptions following the death of the shareholder or beneficial
owner
o Redemptions through a systematic withdrawal plan, at a rate of up
to 1% a month of an account's Net Asset Value. For example, if you
maintain an annual balance of $10,000, $1,200 may be redeemed
annually free of charge.
o Distributions from IRAs due to death or disability or upon periodic
distributions based on life expectancy
o Returns of excess contributions from employee benefit plans
o Redemptions by Trust Company employee benefit plans or employee
benefit plans serviced by ValuSelect(R)
o Participant initiated distributions from employee benefit plans or
participant initiated exchanges among investment choices in employee
benefit plans
WHAT DISTRIBUTIONS MIGHT I RECEIVE FROM THE FUND?
The fund declares dividends each day that its Net Asset Value is calculated
and pays them to shareholders of record as of the close of business the day
before. The daily allocation of net investment income begins on the day after
we receive your money or settlement of a wire order trade and continues to
accrue through the day we receive your request to sell your shares or the
settlement of a wire order trade.
Dividend payments may vary from day to day and may be omitted on some days,
depending on changes in the fund's net investment income. THE FUND DOES NOT
PAY "INTEREST" OR GUARANTEE ANY AMOUNT OF DIVIDENDS OR RETURN ON AN
INVESTMENT IN ITS SHARES.
DIVIDEND OPTIONS
Dividends will automatically be reinvested each day in the form of additional
shares of the fund at the Net Asset Value per share at the close of business.
If you complete the "Special Payment Instructions for Dividends" section of
the revision form included with this prospectus, you may direct your
dividends to buy shares of another Franklin Templeton Fund (without a sales
charge or imposition of a Contingent Deferred Sales Charge). Many
shareholders find this a convenient way to diversify their investments.
Dividends may be reinvested only in the SAME CLASS of shares, except as
follows: (i) shareholders who chose to reinvest their distributions in Class
I shares of another Franklin Templeton Fund before November 17, 1997, may
continue to do so; and (ii) you may reinvest your distributions in shares of
any other Franklin Templeton money fund.
You may also choose to receive dividends in cash. If you have the money sent
to another person or to a checking account, you may need a signature
guarantee. For Trust Company retirement plans, special forms are required to
receive distributions in cash.
If you choose one of these options, the dividends reinvested and credited to
your account during the month will be redeemed as of the close of business on
the last business day of the month and paid as directed on the revision form.
You may change your dividend option at any time by notifying us by mail or
phone. Please allow at least seven days for us to process the new option.
TRANSACTION PROCEDURES AND SPECIAL REQUIREMENTS
SHARE PRICE
You buy and sell shares at Net Asset Value. We will use the Net Asset Value
next calculated after we receive your transaction request in proper form. If
you buy or sell shares through your Securities Dealer, however, we will use
the Net Asset Value next calculated after your Securities Dealer receives
your request, which is promptly transmitted to the fund.
HOW AND WHEN SHARES ARE PRICED
The fund is open for business each day the NYSE is open. We determine the Net
Asset Value per share at 3:00 p.m. Pacific time. To calculate Net Asset Value
per share, the fund's assets are valued and totaled, liabilities are
subtracted, and the balance, called net assets, is divided by the number of
shares outstanding. The fund's assets are valued as described under "How Are
Fund Shares Valued?" in the SAI.
WRITTEN INSTRUCTIONS
Written instructions must be signed by all registered owners. To avoid any
delay in processing your transaction, they should include:
o Your name,
o The fund's name,
o A description of the request,
o For exchanges, the name of the fund you are exchanging into,
o Your account number,
o The dollar amount or number of shares, and
o A telephone number where we may reach you during the day, or in the
evening if preferred.
JOINT ACCOUNTS. For accounts with more than one registered owner, we accept
written instructions signed by only one owner for certain types of
transactions or account changes. These include transactions or account
changes that you could also make by phone, such as certain redemptions of
$50,000 or less, exchanges between identically registered accounts, and
changes to the address of record. For most other types of transactions or
changes, written instructions must be signed by all registered owners.
Please keep in mind that if you have previously told us that you do not want
telephone exchange or redemption privileges on your account, then we can only
accept written instructions to exchange or redeem shares if they are signed
by all registered owners on the account.
SIGNATURE GUARANTEES
For our mutual protection, we require a signature guarantee in the following
situations:
1) You wish to sell over $50,000 worth of shares,
2) You want the proceeds to be paid to someone other than the registered
owners,
3) The proceeds are not being sent to the address of record, preauthorized
bank account, or preauthorized brokerage firm account,
4) We receive instructions from an agent, not the registered owners,
5) We believe a signature guarantee would protect us against potential
claims based on the instructions received.
A signature guarantee verifies the authenticity of your signature. You should
be able to obtain a signature guarantee from a bank, broker, credit union,
savings association, clearing agency, or securities exchange or association.
A NOTARIZED SIGNATURE IS NOT SUFFICIENT.
SHARE CERTIFICATES
We will credit your shares to your fund account. We do not issue share
certificates. This eliminates the costly problem of replacing lost, stolen or
destroyed certificates.
TELEPHONE TRANSACTIONS
You may initiate many transactions and changes to your account by phone.
Please refer to the sections of this prospectus that discuss the transaction
you would like to make or call Shareholder Services.
When you call, we will request personal or other identifying information to
confirm that instructions are genuine. We may also record calls. If our lines
are busy or you are otherwise unable to reach us by phone, you may wish to
ask your investment representative for assistance or send us written
instructions, as described elsewhere in this prospectus.
For your protection, we may delay a transaction or not implement one if we
are not reasonably satisfied that the instructions are genuine. If this
occurs, we will not be liable for any loss. We also will not be liable for
any loss if we follow instructions by phone that we reasonably believe are
genuine or if you are unable to execute a transaction by phone.
TRUST COMPANY RETIREMENT PLAN ACCOUNTS. We cannot accept instructions to sell
shares or change distribution options on Trust Company retirement plans by
phone. While you may exchange shares of Trust Company IRA and 403(b)
retirement accounts by phone, certain restrictions may be imposed on other
retirement plans.
To obtain any required forms or more information about distribution or
transfer procedures, please call Retirement Plan Services.
ACCOUNT REGISTRATIONS AND REQUIRED DOCUMENTS
When you open an account, we need you to tell us how you want your shares
registered. How you register your account will affect your ownership rights
and ability to make certain transactions. If you have questions about how to
register your account, you should consult your investment representative or
legal advisor. Please keep the following information in mind when registering
your account.
JOINT OWNERSHIP. If you open an account with two or more owners, we register
the account as "joint tenants with rights of survivorship" unless you tell us
otherwise. An account registered as "joint tenants with rights of
survivorship" is shown as "Jt Ten" on your account statement. For any account
with two or more owners, we cannot accept instructions to change owners on
the account unless ALL owners agree in writing, even if the law in your state
says otherwise. If you would like another person or owner to sign for you,
please send us a current power of attorney.
GIFTS AND TRANSFERS TO MINORS. You may set up a custodial account for a minor
under your state's Uniform Gifts/Transfers to Minors Act. Other than this
form of registration, a minor may not be named as an account owner.
TRUSTS. You should register your account as a trust only if you have a valid
written trust document. This avoids future disputes or possible court action
over who owns the account.
REQUIRED DOCUMENTS. For corporate, partnership and trust accounts, please
send us the following documents when you open your account. This will help
avoid delays in processing your transactions while we verify who may sign on
the account.
- -------------------------------------------------------------------------------
TYPE OF ACCOUNT DOCUMENTS REQUIRED
- -------------------------------------------------------------------------------
CORPORATION Corporate Resolution
- -------------------------------------------------------------------------------
PARTNERSHIP 1. The pages from the partnership agreement that identify
the general partners, or
2. A certification for a partnership agreement
- -------------------------------------------------------------------------------
TRUST 1. The pages from the trust document that identify the
trustees, or
2. A certification for trust
- --------------------------------------------------------------------------------
STREET OR NOMINEE ACCOUNTS. If you have fund shares held in a "street" or
"nominee" name account with your Securities Dealer, you may transfer the
shares to the street or nominee name account of another Securities Dealer.
Both dealers must have an agreement with Distributors or we cannot process
the transfer. Contact your Securities Dealer to initiate the transfer. We
will process the transfer after we receive authorization in proper form from
your delivering Securities Dealer. Accounts may be transferred electronically
through the NSCC. For accounts registered in street or nominee name, we may
take instructions directly from the Securities Dealer or your nominee.
IMPORTANT INFORMATION IF YOU HAVE AN INVESTMENT REPRESENTATIVE
If there is a Securities Dealer or other representative of record on your
account, we are authorized: (1) to provide confirmations, account statements
and other information about your account directly to your dealer and/or
representative; and (2) to accept telephone and electronic instructions
directly from your dealer or representative, including instructions to
exchange or redeem your shares. Electronic instructions may be processed
through established electronic trading systems and programs used by the fund.
Telephone instructions directly from your representative will be accepted
unless you have told us that you do not want telephone privileges to apply to
your account.
KEEPING YOUR ACCOUNT OPEN
Due to the relatively high cost of maintaining a small account, we may close
your account if the value of your shares is less than $250, or less than $50
for employee accounts and custodial accounts for minors. We will only do this
if the value of your account fell below this amount because you voluntarily
sold your shares and your account has been inactive (except for the
reinvestment of distributions) for at least six months. Before we close your
account, we will notify you and give you 30 days to increase the value of
your account to $1,000, or $100 for employee accounts and custodial accounts
for minors. These minimums do not apply to IRAs and other retirement accounts
or to accounts managed by the Franklin Templeton Group.
SERVICES TO HELP YOU MANAGE YOUR ACCOUNT
CUMULATIVE QUANTITY DISCOUNTS
You may include the cost or current value (whichever is higher) of your fund
shares when determining if you may buy shares of another Franklin Templeton
Fund at a discount. You may also include your fund shares towards the
completion of a Letter of Intent established in connection with the purchase
of shares of another Franklin Templeton Fund.
SYSTEMATIC WITHDRAWAL PLAN
Our systematic withdrawal plan allows you to sell your shares and receive
regular payments from your account on a monthly, quarterly, semiannual or
annual basis. The value of your account must be at least $5,000 and the
minimum payment amount for each withdrawal must be at least $50. For
retirement plans subject to mandatory distribution requirements, the $50
minimum will not apply.
If you would like to establish a systematic withdrawal plan, please complete
the systematic withdrawal plan section of the revision form included with
this prospectus and indicate how you would like to receive your payments. You
may choose to direct your payments to buy the same class of shares of another
Franklin Templeton Fund or have the money sent directly to you, to another
person, or to a checking account.
You will generally receive your payment by the end of the month in which a
payment is scheduled. When you sell your shares under a systematic withdrawal
plan, it is a taxable transaction.
Shares sold under the plan may be subject to a Contingent Deferred Sales
Charge. Please see "Contingent Deferred Sales Charge" under "How Do I Sell
Shares?"
You may discontinue a systematic withdrawal plan, change the amount and
schedule of withdrawal payments, or suspend one payment by notifying us by
mail or by phone at least seven business days before the end of the month
preceding a scheduled payment. Please see "How Do I Buy, Sell and Exchange
Shares? - Systematic Withdrawal Plan" in the SAI for more information.
TELEFACTS(R)
From a touch-tone phone, you may call our TeleFACTS(R) system (day or night) at
1-800/247-1753 to:
o obtain information about your account;
o obtain price and performance information about any Franklin
Templeton Fund;
o exchange shares (within the same class) between identically
registered Franklin Templeton Class I and Class II accounts; and
o request duplicate statements and deposit slips for Franklin
Templeton accounts.
You will need the fund's code number to use TeleFACTS(R). The fund's code
number is 511.
STATEMENTS AND REPORTS TO SHAREHOLDERS
We will send you the following statements and reports on a regular basis:
o Confirmation and account statements reflecting transactions in your
account, including additional purchases and dividend reinvestments.
PLEASE VERIFY THE ACCURACY OF YOUR STATEMENTS WHEN YOU RECEIVE THEM.
o Financial reports of the fund will be sent every six months. To
reduce fund expenses, we attempt to identify related shareholders
within a household and send only one copy of a report. Call Fund
Information if you would like an additional free copy of the fund's
financial reports.
INSTITUTIONAL ACCOUNTS
Additional methods of buying, selling or exchanging shares of the fund may be
available to institutional accounts. Institutional investors may also be
required to complete an institutional account application. For more
information, call Institutional Services.
Special procedures have been designed for banks and other institutions that
would like to open multiple accounts in the fund. Please see the SAI for more
information.
AVAILABILITY OF THESE SERVICES
The services above are available to most shareholders. If, however, your
shares are held by a financial institution, in a street name account, or
networked through the NSCC, the fund may not be able to offer these services
directly to you. Please contact your investment representative.
WHAT IF I HAVE QUESTIONS ABOUT MY ACCOUNT?
If you have any questions about your account, you may write to Investor
Services at 777 Mariners Island Blvd., P.O. Box 7777, San Mateo, California
94403-7777. The fund, Distributors and Advisers are also located at this
address. You may also contact us by phone at one of the numbers listed below.
HOURS OF OPERATION
(PACIFIC TIME)
DEPARTMENT NAME TELEPHONE NO. (MONDAY THROUGH FRIDAY)
Shareholder Services 1-800/632-2301 5:30 a.m. to 5:00 p.m.
Dealer Services 1-800/524-4040 5:30 a.m. to 5:00 p.m.
Fund Information 1-800/DIAL BEN 5:30 a.m. to 8:00 p.m.
(1-800/342-5236) 6:30 a.m. to 2:30 p.m.
(Saturday)
Retirement Plan Services 1-800/527-2020 5:30 a.m. to 5:00 p.m.
Institutional Services 1-800/321-8563 6:00 a.m. to 5:00 p.m.
TDD (hearing impaired) 1-800/851-0637 5:30 a.m. to 5:00 p.m.
Your phone call may be monitored or recorded to ensure we provide you with
high quality service. You will hear a regular beeping tone if your call is
being recorded.
GLOSSARY
USEFUL TERMS AND DEFINITIONS
ADVISERS - Franklin Advisers, Inc., the Portfolio's investment manager and
the fund's administrator
BOARD - The Board of Trustees of the Trust
CLASS I AND CLASS II - Certain funds in the Franklin Templeton Funds offer
multiple classes of shares. The different classes have proportionate
interests in the same portfolio of investment securities. They differ,
however, primarily in their sales charge structures and Rule 12b-1 plans.
Shares of the fund are considered Class II shares for redemption, exchange
and other purposes.
CODE - Internal Revenue Code of 1986, as amended
CONTINGENCY PERIOD - The period during which a Contingent Deferred Sales
Charge may apply. It is 18 months from the date of purchase of the Class II
shares that were exchanged for shares of the fund. For example, if you
originally purchased the Class II shares on the 18th of the month, they will
age one month on the 18th day of the next month and each following month.
CONTINGENT DEFERRED SALES CHARGE (CDSC) - A sales charge of 1% that may apply
if you sell your shares within the Contingency Period.
DISTRIBUTORS - Franklin/Templeton Distributors, Inc., the fund's principal
underwriter. The SAI lists the officers and Board members who are affiliated
with Distributors. See "Officers and Trustees."
FRANKLIN TEMPLETON FUNDS - The U.S. registered mutual funds in the Franklin
Group of Funds(R) and the Templeton Group of Funds except Franklin Valuemark
Funds, Templeton Capital Accumulator Fund, Inc., and Templeton Variable
Products Series Fund
FRANKLIN TEMPLETON GROUP - Franklin Resources, Inc., a publicly owned holding
company, and its various subsidiaries
FRANKLIN TEMPLETON GROUP OF FUNDS - All U.S. registered investment companies
in the Franklin Group of Funds(R) and the Templeton Group of Funds
INVESTOR SERVICES - Franklin/Templeton Investor Services, Inc., the fund's
shareholder servicing and transfer agent
IRS - Internal Revenue Service
MARKET TIMERS - Market Timers generally include market timing or asset
allocation services, accounts administered so as to buy, sell or exchange
shares based on predetermined market indicators, or any person or group whose
transactions seem to follow a timing pattern or whose transactions include
frequent or large exchanges.
NASD - National Association of Securities Dealers, Inc.
NET ASSET VALUE (NAV) - The value of a mutual fund is determined by deducting
the fund's liabilities from the total assets of the portfolio. The net asset
value per share is determined by dividing the net asset value of the fund by
the number of shares outstanding.
NSCC - National Securities Clearing Corporation
NYSE - New York Stock Exchange
RESOURCES - Franklin Resources, Inc.
SAI - Statement of Additional Information
SEC - U.S. Securities and Exchange Commission
SECURITIES DEALER - A financial institution that, either directly or through
affiliates, has an agreement with Distributors to handle customer orders and
accounts with the fund. This reference is for convenience only and does not
indicate a legal conclusion of capacity.
TELEFACTS(R) - Franklin Templeton's automated customer servicing system
TRUST COMPANY - Franklin Templeton Trust Company. Trust Company is an
affiliate of Distributors and both are wholly owned subsidiaries of Resources.
WE/OUR/US - Unless the context indicates a different meaning, these terms
refer to the fund and/or Investor Services, Distributors, or other wholly
owned subsidiaries of Resources.
FRANKLIN TEMPLETON MONEY FUND II
FRANKLIN TEMPLETON MONEY FUND TRUST
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 1, 1998
777 MARINERS ISLAND BLVD., P.O. BOX 7777
SAN MATEO, CA 94403-7777 1-800/DIAL BEN(R)
TABLE OF CONTENTS
How Does the Fund Invest Its Assets?.........................
Investment Restrictions......................................
Officers and Trustees........................................
Investment Management
and Other Services..........................................
How Does the Portfolio Buy
Securities for Its Portfolio?...............................
How Do I Buy, Sell and Exchange Shares?......................
How Are Fund Shares Valued?..................................
Additional Information on
Distributions and Taxes.....................................
The Fund's Underwriter.......................................
How Does the Fund Measure Performance?.......................
Miscellaneous Information....................................
Financial Statements.........................................
Useful Terms and Definitions.................................
Appendices
Summary of Procedures to Monitor Conflicts of Interest......
Description of Ratings......................................
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When reading this SAI, you will see certain terms beginning with
capital letters. This means the term is explained under "Useful
Terms and Definitions."
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The fund is a no-load, diversified series of Franklin Templeton Money Fund
Trust(the "Trust"), an open-end management investment company. The
Prospectus, dated November 1, 1998, which we may amend from time to time,
contains the basic information you should know before investing in the fund.
For a free copy, call 1-800/DIAL BEN.
THIS SAI IS NOT A PROSPECTUS. IT CONTAINS INFORMATION IN ADDITION TO AND IN
MORE DETAIL THAN SET FORTH IN THE PROSPECTUS. THIS SAI IS INTENDED TO PROVIDE
YOU WITH ADDITIONAL INFORMATION REGARDING THE ACTIVITIES AND OPERATIONS OF
THE FUND, AND SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS.
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MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENT PRODUCTS:
o ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY OF THE U.S. GOVERNMENT;
o ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY
BANK;
o ARE SUBJECT TO INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
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HOW DOES THE FUND INVEST ITS ASSETS?
WHAT IS THE FUND'S GOAL?
The investment goal of the fund is to provide investors with as high a level
of current income as is consistent with preservation of shareholders'
capital, and liquidity. This goal is fundamental, which means that it may not
be changed without shareholder approval. The fund also tries to maintain a
stable Net Asset Value of $1 per share. The fund seeks to achieve its
investment goal by investing all of its assets in shares of The Money Market
Portfolio (the "Portfolio"). The Portfolio is a series of The Money Market
Portfolios ("Money Market"). Its investment goal is the same as the fund's.
The following gives more detailed information about the Portfolio's
investment policies and the types of securities that it may buy. Please read
this information together with the section "How Does the Fund Invest Its
Assets?" in the Prospectus.
MORE INFORMATION ABOUT THE KINDS OF SECURITIES THE PORTFOLIO BUYS
BANK OBLIGATIONS. As discussed in the Prospectus, the Portfolio may invest in
certain bank obligations or instruments secured by bank obligations. These
obligations may include deposits that are fully insured by the U.S.
government, its agencies or instrumentalities, such as deposits in banking
and savings institutions up to the current limit of the insurance on
principal provided by the Federal Deposit Insurance Corporation. Deposits are
frequently combined in larger units by an intermediate bank or other
institution.
VARIABLE MASTER DEMAND NOTES. Variable master demand notes are a type of
commercial paper. They are direct arrangements between a lender and a
borrower that allow daily changes to the amount borrowed and to the interest
rate. The Portfolio, as lender, may increase or decrease the amount provided
by the note agreement, and the borrower may repay up to the full amount of
the note without penalty. Typically, the borrower may also set the interest
rate daily, usually at a rate that is the same or similar to the interest
rate on other commercial paper issued by the borrower. The Portfolio does not
have any limit on the amount of its assets that may be invested in master
demand notes and may invest only in master demand notes of U.S. issuers.
Because variable master demand notes are direct lending arrangements between
the lender and the borrower, they generally are not traded and do not have a
secondary market. They are, however, redeemable at face value plus accrued
interest at any time, although the Portfolio's ability to redeem a note is
dependent on the ability of the borrower to pay the principal and interest on
demand. When determining whether to invest in a master demand note, Advisers
considers, among other things, the earning power, cash flow and other
liquidity ratios of the issuer.
MUNICIPAL SECURITIES. The Portfolio may invest up to 10% of its assets in
taxable municipal securities. Municipal securities are issued by or on behalf
of states, territories or possessions of the U.S., the District of Columbia,
or their political subdivisions, agencies or instrumentalities. They are
generally issued to raise money for various public purposes, such as
constructing public facilities and making loans to public institutions.
Certain types of municipal securities are issued to provide funding for
privately operated facilities and are generally taxable.
MORE INFORMATION ABOUT SOME OF THE PORTFOLIO'S OTHER INVESTMENT STRATEGIES
AND PRACTICES
DIVERSIFICATION. The Portfolio is a diversified fund. As fundamental
policies, the Portfolio may not buy a security if, with respect to 75% of its
total assets, more than 5% would be invested in the securities of any one
issuer. The Portfolio also may not invest in a security if the Portfolio
would own more than 10% of the outstanding voting securities of any one
issuer. These limitations do not apply to obligations issued or guaranteed by
the U.S. government or its instrumentalities.
As a money market fund, however, the Portfolio must follow certain procedures
required by federal securities laws that may be more restrictive than some of
the Portfolio's other policies or investment restrictions. With respect to
diversification, these procedures require that the Portfolio not invest more
than 5% of its total assets in securities of a single issuer, other than U.S.
government securities, although it may invest up to 25% of its total assets
in securities of a single issuer that are rated in the highest rating
category for a period of up to three business days after purchase. The
Portfolio also must not invest more than (a) the greater of 1% of its total
assets or $1 million in securities issued by a single issuer that are rated
in the second highest rating category; and (b) 5% of its total assets in
securities rated in the second highest rating category. These procedures are
fundamental policies of the Portfolio and the fund, except to the extent that
the Fund invests all of its assets in another registered investment company
with the same investment objective and substantially similar policies as the
fund.
WHEN-ISSUED OR DELAYED-DELIVERY TRANSACTIONS. When the Portfolio is the buyer
in the transaction, it will maintain cash or liquid securities, with an
aggregate value equal to the amount of its purchase commitments, in a
segregated account with its custodian bank until payment is made. The
Portfolio will not engage in when-issued and delayed-delivery transactions
for investment leverage purposes.
REPURCHASE AGREEMENTS. Repurchase agreements are contracts under which the
buyer of a security simultaneously commits to resell the security to the
seller at an agreed upon price and date. Under a repurchase agreement, the
seller is required to maintain the value of the securities subject to the
repurchase agreement at not less than the repurchase price. Advisers will
monitor the value of such securities daily to determine that the value equals
or exceed the repurchase price. Repurchase agreements may involve risks in
the event of default or insolvency of the seller, including possible delays
or restrictions upon the Portfolio's ability to dispose of the underlying
securities. The Portfolio will enter into repurchase agreements only with
parties who meet creditworthiness standards approved by Money Market's Board,
I.E., banks or broker-dealers that have been determined by Advisers to
present no serious risk of becoming involved in bankruptcy proceedings within
the time frame contemplated by the repurchase transaction.
LOANS OF PORTFOLIO SECURITIES. Consistent with procedures approved by the
Board of Trustees of Money Market and subject to the following conditions,
the Portfolio may lend its portfolio securities to qualified securities
dealers or other institutional investors, if such loans do not exceed 25% of
the value of the Portfolio's total assets at the time of the most recent
loan. The Portfolio, however, currently intends to limit its lending of
securities to no more than 5% of it total assets. The borrower must deposit
with the Portfolio's custodian bank collateral with an initial market value
of at least 102% of the market value of the securities loaned, including any
accrued interest, with the value of the collateral and loaned securities
marked-to-market daily to maintain collateral coverage of at least 100%. This
collateral shall consist of cash. The lending of securities is a common
practice in the securities industry. The Portfolio may engage in security
loan arrangements with the primary objective of increasing the Portfolio's
income either through investing cash collateral in short-term interest-
bearing obligations or by receiving a loan premium from the borrower. Under
the securities loan agreement, the Portfolio continues to be entitled to all
dividends or interest on any loaned securities. As with any extension of
credit, there are risks of delay in recovery and loss of rights in the
collateral should the borrower of the security fail financially.
BORROWING. The Portfolio may borrow up to 5% of its total assets from banks
for temporary or emergency purposes. The Portfolio will not make any new
investments while any outstanding loans exceed 5% of its total assets.
OTHER LIMITATIONS. The Portfolio may not invest more than 5% of its total
assets in securities of companies, including predecessors, that have been in
continuous operation for less than three years. The Portfolio also may not
invest more than 25% of its total assets in any particular industry, although
it may invest more than 25% of its assets in certain domestic bank
obligations. These limitations do not apply to U.S. government securities,
federal agency obligations, or repurchase agreements fully collateralized by
government securities. There are, however, certain tax diversification
requirements that may apply to investments in repurchase agreements and other
securities that are not treated as U.S. government securities under the Code.
THE FUND'S MASTER/FEEDER STRUCTURE
The fund's structure, where it invests all of its assets in the Portfolio, is
sometimes known as a "Master/Feeder" structure. By investing all of its
assets in shares of the Portfolio, the fund, other mutual funds and
institutional investors can pool their assets. This may result in asset
growth and lower expenses, although there is no guarantee that this will
happen.
If the fund, as a shareholder of the Portfolio, has to vote on a matter
relating to the Portfolio, it will hold a meeting of fund shareholders and
will cast its votes in the same proportion as the fund's shareholders voted.
There are some risks associated with the fund's Master/Feeder structure. If
other shareholders in the Portfolio sell their shares, the fund's expenses
may increase. Additionally, any economies of scale the fund has achieved as a
result of the structure may be diminished. Institutional investors in the
Portfolio that have a greater pro rata ownership interest in the Portfolio
than the fund could also have effective voting control.
If the Portfolio changes its investment goal or any of its fundamental
policies and fund shareholders do not approve the same change for the fund,
the fund may need to withdraw its investment from the Portfolio. Likewise, if
the Board considers it to be in the fund's best interest, it may withdraw the
fund's investment from the Portfolio at any time. If either situation occurs,
the Board will decide what action to take. Possible solutions might include
investing of all of the fund's assets in another pooled investment entity
with the same investment goal and policies as the fund, or hiring an
investment advisor to manage the fund's investments. Either circumstance
could increase the fund's expenses.
INVESTMENT RESTRICTIONS
The fund has adopted the following restrictions as fundamental policies.
These restrictions may not be changed without the approval of a majority of
the outstanding voting securities of the fund. Under the 1940 Act, this means
the approval of (i) more than 50% of the outstanding shares of the fund or
(ii) 67% or more of the shares of the fund present at a shareholder meeting
if more than 50% of the outstanding shares of the fund are represented at the
meeting in person or by proxy, whichever is less. The fund MAY NOT:
1. Borrow money or mortgage or pledge any of its assets, except that
borrowings (and a pledge of assets therefor) for extraordinary or emergency
purposes may be made from banks in any amount up to 5% of the total asset
value.
2. Make loans, except (a) through the purchase of debt securities in
accordance with the investment objective and policies of the Portfolio, (b)
to the extent the entry into a repurchase agreement is deemed to be a loan,
or (c) by the loan of its portfolio securities in accordance with the
policies described above.
3. Acquire, lease or hold real estate, including real estate limited
partnerships, provided that this limitation shall not prohibit the purchase
of municipal and other debt securities secured by real estate or interests
therein.
4. Buy any securities "on margin" or sell any securities "short," except
that it may use such short-term credits as are necessary for the clearance of
transactions.
5. Invest in commodities and commodity contracts, puts, calls, straddles,
spreads, or any combination thereof, except that it may purchase, hold and
dispose of "obligations with puts attached," or interests in oil, gas, or
other mineral leases or exploration or development programs.
6. Purchase securities in private placements or in other transactions, for
which there are legal or contractual restrictions on resale, except that, to
the extent this restriction is applicable, the fund may purchase, in private
placements, shares of another registered investment company having the same
investment objective and policies as the fund.
7. Act as underwriter of securities issued by other persons except insofar
as the fund may technically be deemed an underwriter under the federal
securities laws in connection with the disposition of portfolio securities,
except that all or substantially all of the assets of the fund may be
invested in another registered investment company having the same investment
objective and policies as the fund.
8. Purchase the securities of other investment companies, except in
connection with a merger, consolidation, acquisition, or reorganization;
provided that all or substantially all of the assets of the fund may be
invested in another registered investment company having the same investment
objective and policies as the fund.
9. Invest in any issuer for purposes of exercising control or management,
except that, to the extent this restriction is applicable, all or
substantially all of the assets of the fund may be invested in another
registered investment company having the same investment objective and
policies as the fund.
10. Purchase securities from or sell to the fund's officers and trustees, or
any firm of which any officer or trustee is a member, as principal, or retain
securities of any issuer if, to the knowledge of the fund, one or more of the
fund's officers, trustees, or investment advisor own beneficially more than
1/2 of 1% of the securities of such issuer and all such officers and trustees
together own beneficially more than 5% of such securities.
11. Invest more than 25% of its assets in securities of any industry,
although for purposes of this limitation U.S. government obligations are not
considered to be part of any industry. This prohibition does not apply where
the fund's policies, as described in the Prospectus, state otherwise, and
further does not apply to the extent that the fund invests all of its assets
in another registered investment company having the same investment objective
and policies.
The investment restrictions of the Portfolio are substantially similar to the
investment restrictions of the fund, except as necessary to reflect the
policy of the fund to invest all of its assets in shares of the Portfolio.
If a percentage restriction is met at the time of investment, a later
increase or decrease in the percentage due to a change in the value or
liquidity of portfolio securities or the amount of assets will not be
considered a violation of any of the foregoing restrictions.
OFFICERS AND TRUSTEES
The Board has the responsibility for the overall management of the fund,
including general supervision and review of its investment activities. The
Board, in turn, elects the officers of the fund who are responsible for
administering the fund's day-to-day operations. The affiliations of the
officers and Board members and their principal occupations for the past five
years are shown below. Members of the Board who are considered "interested
persons" of the fund under the 1940 Act are indicated by an asterisk (*).
POSITIONS AND OFFICES PRINCIPAL OCCUPATION
NAME, AGE AND ADDRESS WITH THE TRUST DURING THE PAST FIVE
YEARS
Frank H. Abbott, III (77)
1045 Sansome Street
San Francisco, CA 94111
Trustee
President and Director, Abbott Corporation (an investment company); director
or trustee, as the case may be, of 27 of the investment companies in the
Franklin Templeton Group of Funds; and FORMERLY, Director, MotherLode Gold
Mines Consolidated (gold mining) and Vacu-Dry Co. (food processing).
Harris J. Ashton (66)
191 Clapboard Ridge Road
Greenwich, CT 06830
Trustee
Director, RBC Holdings, Inc. (a bank holding company) and Bar-S Foods (a meat
packing company); director or trustee, as the case may be, of 49 of the
investment companies in the Franklin Templeton Group of Funds; and FORMERLY,
President, Chief Executive Officer and Chairman of the Board, General Host
Corporation (nursery and craft centers).
S. Joseph Fortunato (66)
Park Avenue at Morris County
P.O. Box 1945
Morristown, NJ 07962-1945
Trustee
Member of the law firm of Pitney, Hardin, Kipp & Szuch; director or trustee,
as the case may be, of 51 of the investment companies in the Franklin
Templeton Group of Funds; and FORMERLY, Director, General Host Corporation
(nursery and craft centers).
*Charles B. Johnson (65)
777 Mariners Island Blvd.
San Mateo, CA 94404
Chairman of the Board and Trustee
President, Chief Executive Officer and Director, Franklin Resources, Inc.;
Chairman of the Board and Director, Franklin Advisers, Inc., Franklin
Advisory Services, Inc., Franklin Investment Advisory Services, Inc. and
Franklin Templeton Distributors, Inc.; Director, Franklin/Templeton Investor
Services, Inc. and Franklin Templeton Services, Inc.; officer and/or director
or trustee, as the case may be, of most of the other subsidiaries of Franklin
Resources, Inc. and of 50 of the investment companies in the Franklin
Templeton Group of Funds; and FORMERLY, Director, General Host Corporation
(nursery and craft centers).
*Rupert H. Johnson, Jr. (58)
777 Mariners Island Blvd.
San Mateo, CA 94404
President and Trustee
Executive Vice President and Director, Franklin Resources, Inc. and Franklin
Templeton Distributors, Inc.; President and Director, Franklin Advisers,
Inc.; Senior Vice President and Director, Franklin Advisory Services, Inc.
and Franklin Investment Advisory Services, Inc.; Director, Franklin/Templeton
Investor Services, Inc.; and officer and/or director or trustee, as the case
may be, of most of the other subsidiaries of Franklin Resources, Inc. and of
53 of the investment companies in the Franklin Templeton Group of Funds.
Frank W.T. LaHaye (69)
20833 Stevens Creek Blvd.
Suite 102
Cupertino, CA 95014
Trustee
General Partner, Miller & LaHaye, which is the General Partner of Peregrine
Ventures II (venture capital firm); Chairman of the Board and Director,
Quarterdeck Corporation (software firm); Director, Digital Transmission
Systems, Inc. (wireless communications); director or trustee, as the case may
be, of 27 of the investment companies in the Franklin Templeton Group of
Funds; and FORMERLY, Director, Fischer Imaging Corporation (medical imaging
systems) and General Partner, Peregrine Associates, which was the General
Partner of Peregrine Ventures (venture capital firm).
Gordon S. Macklin (70)
8212 Burning Tree Road
Bethesda, MD 20817
Trustee
Director, Fund American Enterprises Holdings, Inc., MCI Communications
Corporation, MedImmune, Inc. (biotechnology), Spacehab, Inc. (aerospace
services) and Real 3D (software); director or trustee, as the case may be, of
49 of the investment companies in the Franklin Templeton Group of Funds; and
FORMERLY, Chairman, White River Corporation (financial services) and
Hambrecht and Quist Group (investment banking), and President, National
Association of Securities Dealers, Inc.
Harmon E. Burns (53)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President
Executive Vice President and Director, Franklin Resources, Inc., Franklin
Templeton Distributors, Inc. and Franklin Templeton Services, Inc.; Executive
Vice President, Franklin Advisers, Inc.; Director, Franklin/Templeton
Investor Services, Inc.; and officer and/or director or trustee, as the case
may be, of most of the other subsidiaries of Franklin Resources, Inc. and of
53 of the investment companies in the Franklin Templeton Group of Funds.
Martin L. Flanagan (38)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President and Chief Financial Officer
Senior Vice President and Chief Financial Officer, Franklin Resources, Inc.;
Executive Vice President and Director, Templeton Worldwide, Inc.; Executive
Vice President, Chief Operating Officer and Director, Templeton Investment
Counsel, Inc.; Executive Vice President and Chief Financial Officer, Franklin
Advisers, Inc.; Chief Financial Officer, Franklin Advisory Services, Inc. and
Franklin Investment Advisory Services, Inc.; President and Director, Franklin
Templeton Services, Inc.; Senior Vice President and Chief Financial Officer,
Franklin/Templeton Investor Services, Inc.; officer and/or director of some
of the other subsidiaries of Franklin Resources, Inc.; and officer and/or
director or trustee, as the case may be, of 53 of the investment companies in
the Franklin Templeton Group of Funds.
Deborah R. Gatzek (49)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President and Secretary
Senior Vice President and General Counsel, Franklin Resources, Inc.; Senior
Vice President, Franklin Templeton Services, Inc. and Franklin Templeton
Distributors, Inc.; Executive Vice President, Franklin Advisers, Inc.; Vice
President, Franklin Advisory Services, Inc.; Vice President, Chief Legal
Officer and Chief Operating Officer, Franklin Investment Advisory Services,
Inc.; and officer of 53 of the investment companies in the Franklin Templeton
Group of Funds.
Diomedes Loo-Tam (59)
777 Mariners Island Blvd.
San Mateo, CA 94404
Treasurer and Principal Accounting Officer
Senior Vice President, Franklin Templeton Services, Inc.; and officer of 32
of the investment companies in the Franklin Templeton Group of Funds.
Edward V. McVey (61)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President
Senior Vice President and National Sales Manager, Franklin Templeton
Distributors, Inc.; and officer of 28 of the investment companies in the
Franklin Templeton Group of Funds.
Thomas J. Runkel (40)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President
Vice President, Franklin Advisers, Inc.; and officer of four of the
investment companies in the Franklin Templeton Group of Funds.
Richard C. Stoker (61)
11615 Spring Ridge Rd.
Potomac, MD 20854
Vice President
Senior Vice President, Franklin Templeton Distributors, Inc.; Vice President,
Franklin Management, Inc.; and officer of five of the investment companies in
the Franklin Templeton Group of Funds.
R. Martin Wiskemann (71)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President
Senior Vice President, Portfolio Manager and Director, Franklin Advisers,
Inc.; Senior Vice President, Franklin Management, Inc.; Vice President and
Director, ILA Financial Services, Inc.; and officer and/or director or
trustee, as the case may be, of 15 of the investment companies in the
Franklin Templeton Group of Funds.
The officers and Board members of the fund are also officers and trustees of
Money Market, except as follows: Richard C. Stoker and Thomas J. Runkel, Vice
Presidents of the Trust, are not officers or trustees of Money Market. Rupert
H. Johnson, Jr., President and Trustee of the Trust, is Vice President and
Trustee of Money Market. The following trustees of Money Market are not
officers or trustees of the Trust.
POSITIONS AND OFFICES PRINCIPAL OCCUPATION
NAME, AGE AND ADDRESS WITH MONEY MARKET DURING THE PAST FIVE
YEARS
Robert F. Carlson (70)
2120 Lambeth Way
Carmichael, CA 95608
Trustee
Member and past President, Board of Administration, California Public
Employees Retirement Systems (CALPERS); former member and past Chairman of
the Board, Sutter Community Hospitals, Sacramento, CA; former member,
Corporate Board, Blue Shield of California; former Chief Counsel, California
Department of Transportation; and director or trustee, as the case may be, of
nine of the investment companies in the Franklin Templeton Group of Funds.
Charles E. Johnson (42)
500 East Broward Blvd.
Fort Lauderdale, FL 33394-3091
President and Trustee
Senior Vice President and Director, Franklin Resources, Inc.; Senior Vice
President, Franklin Templeton Distributors, Inc.; President and Director,
Templeton Worldwide, Inc.; President, Chief Executive Officer, Chief
Investment Officer and Director, Franklin Institutional Services Corporation;
Chairman and Director, Templeton Investment Counsel, Inc.; Vice President,
Franklin Advisers, Inc.; officer and/or director of some of the other
subsidiaries of Franklin Resources, Inc.; and officer and/or director or
trustee, as the case may be, of 34 of the investment companies in the
Franklin Templeton Group of Funds.
Charles E. Johnson is considered an "interested person" of Money Market under
the 1940 Act.
The tables above show the officers, Board members and the trustees of Money
Market who are affiliated with Distributors and Advisers. Nonaffiliated
members of the Board are not currently paid fees by the fund. Also as of June
1, 1998, nonaffiliated trustees of Money Market are no longer paid any fees.
As shown above, the nonaffiliated Board members and trustees of Money Market
also serve as directors or trustees of other investment companies in the
Franklin Templeton Group of Funds. They may receive fees from these funds for
their services. The fees payable to nonaffiliated Board members by the Trust
are subject to reductions resulting from fee caps limiting the amount of fees
payable to Board members who serve on other boards within the Franklin
Templeton Group of Funds. The following table provides the total fees paid to
nonaffiliated Board members and trustees of Money Market by Money Market, and
by other funds in the Franklin Templeton Group of Funds.
TOTAL FEES NUMBER OF
TOTAL RECEIVED BOARDS IN THE
FEES FROM FRANKLIN
RECEIVED THE FRANKLIN TEMPLETON GROUP
FROM TEMPLETON OF FUNDS ON
MONEY GROUP OF WHICH EACH
NAME MARKET** FUNDS*** SERVES****
- ---- -------- --------- --------------
Frank H. Abbott, III $1,100 $165,937 27
Harris J. Ashton 1,050 344,642 49
Robert Carlson 450 17,680 9
S. Joseph Fortunato 1,050 361,562 51
David W. Garbellano* 200 91,317 N/A
Frank W.T. LaHaye 1,100 141,433 27
Gordon S. Macklin 1,050 337,292 49
*Deceased, September 27, 1997.
**For the eleven month period ended June 1, 1998, fees at the rate of $50 per
month plus $50 per meeting attended were in effect for Money Market. For the
period June 1, 1998 to June 30, 1998, no fees were paid for Money Market.
***For the calendar year ended December 31, 1997.
****We base the number of boards on the number of registered investment
companies in the Franklin Templeton Group of Funds. This number does not
include the total number of series or funds within each investment company
for which the Board members and trustees of Money Market are responsible. The
Franklin Templeton Group of Funds currently includes 54 registered investment
companies, with approximately 170 U.S. based funds or series.
Nonaffiliated members of the Board and trustees of Money Market are
reimbursed for expenses incurred in connection with attending board meetings,
paid pro rata by each fund in the Franklin Templeton Group of Funds for which
they serve as director or trustee. No officer or Board member or trustee of
Money Market received any other compensation, including pension or retirement
benefits, directly or indirectly from the fund, Money Market or other funds
in the Franklin Templeton Group of Funds. Certain officers or Board members
and trustees of Money Market who are shareholders of Resources may be deemed
to receive indirect remuneration by virtue of their participation, if any, in
the fees paid to its subsidiaries.
As of August 4, 1998, the officers and Board members did not own of record or
beneficially any shares of the fund. Many of the Board members own shares in
other funds in the Franklin Templeton Group of Funds. Charles B. Johnson and
Rupert H. Johnson, Jr. are brothers and the father and uncle, respectively,
of Charles E. Johnson.
INVESTMENT MANAGEMENT AND OTHER SERVICES
INVESTMENT MANAGER AND ADMINISTRATOR AND SERVICES PROVIDED. Advisers is the
investment manager of the Portfolio and is also the administrator of the
fund. Advisers provides investment research and portfolio management
services, including the selection of securities for the Portfolio to buy,
hold or sell and the selection of brokers through whom the Portfolio's
portfolio transactions are executed. Advisers' activities are subject to the
review and supervision of the Board of Trustees of Money Market to whom
Advisers renders periodic reports of the Portfolio's investment activities.
Advisers and its officers, directors and employees are covered by fidelity
insurance for the protection of the fund and the Portfolio.
Advisers and its affiliates act as investment manager to numerous other
investment companies and accounts. Advisers may give advice and take action
with respect to any of the other funds it manages, or for its own account,
that may differ from action taken by Advisers on behalf of the Portfolio.
Similarly, with respect to the Portfolio, Advisers is not obligated to
recommend, buy or sell, or to refrain from recommending, buying or selling
any security that Advisers and access persons, as defined by the 1940 Act,
may buy or sell for its or their own account or for the accounts of any other
fund. Advisers is not obligated to refrain from investing in securities held
by the Portfolio or other funds that it manages. Of course, any transactions
for the accounts of Advisers and other access persons will be made in
compliance with the Portfolio's Code of Ethics. Please see "Miscellaneous
Information - Summary of Code of Ethics."
MANAGEMENT AND ADMINISTRATION FEES. Under its management agreement, the
Portfolio pays Advisers a management fee equal to an annual rate of 0.15 of
1% of the value of the Portfolio's average daily net assets. The fee is
computed at the close of business on the last business day of each month.
Advisers provides various administrative, statistical, and other services to
the fund. Under its administration agreement, the fund pays Advisers an
administration fee equal to an annual rate of 91/200 of 1% for the first $100
million of its average daily net assets; 33/100 of 1% of its average daily
net assets over $100 million up to and including $250 million; and 7/25 of 1%
of its average daily net assets in excess of $250 million. The fee is
computed at the close of business on the last business day of each month.
For the fiscal years ended June 30, 1998, 1997 and 1996, management fees of
the Portfolio, before any advance waiver, totaled $2,963,304, $2,547,891 and
$2,162,519, respectively. Administration fees of the fund, before any advance
waiver, totaled $110,622, $37,016 and $9,098. Under an agreement by Advisers
to limit its fees, the Portfolio paid management fees totaling $2,830,858,
$2,429,509 and $2,034,014 and the fund paid administration fees totaling
$64,151, $10,389 and $0, for the same periods.
MANAGEMENT AGREEMENT. The management agreement for the Portfolio is in effect
until February 28, 1999. It may continue in effect for successive annual
periods if its continuance is specifically approved at least annually by a
vote of the Board of Trustees of Money Market or by a vote of the holders of
a majority of the Portfolio's outstanding voting securities, and in either
event by a majority vote of the trustees of Money Market who are not parties
to the management agreement or interested persons of any such party (other
than as members of the Board of Trustees of Money Market), cast in person at
a meeting called for that purpose. The management agreement may be terminated
without penalty at any time by the Board of Trustees of Money Market or by a
vote of the holders of a majority of the Portfolio's outstanding voting
securities on 30 days' written notice to Advisers, or by Advisers on 60 days'
written notice to the Portfolio, and will automatically terminate in the
event of its assignment, as defined in the 1940 Act.
SHAREHOLDER SERVICING AGENT. Investor Services, a wholly owned subsidiary of
Resources, is the fund's shareholder servicing agent and acts as the fund's
transfer agent and dividend-paying agent. Investor Services is compensated on
the basis of a fixed fee per account. The fund may also reimburse Investor
Services for certain out-of-pocket expenses, which may include payments by
Investor Services to entities, including affiliated entities, that provide
sub-shareholder services, recordkeeping and/or transfer agency services to
beneficial owners of the fund. The amount of reimbursements for these
services per benefit plan participant fund account per year may not exceed
the per account fee payable by the fund to Investor Services in connection
with maintaining shareholder accounts.
CUSTODIAN. Investor Services, in its capacity as the transfer agent for the
Portfolio, effectively acts as the fund's custodian and holds the fund's
shares of the Portfolio on its books. Bank of New York, Mutual Funds
Division, 90 Washington Street, New York, New York 10286, acts as custodian
of the fund's cash, pending investment in shares of the Portfolio. Bank of
New York also acts as custodian of the securities and other assets of the
Portfolio. The custodian does not participate in decisions relating to the
purchase and sale of portfolio securities.
AUDITOR. PricewaterhouseCoopers LLP, 333 Market Street, San Francisco,
California 94105, is the fund's independent auditor. During the fiscal year
ended June 30, 1998, the auditor's services consisted of rendering an opinion
on the financial statements of the Trust included in the Trust's Annual
Report to Shareholders for the fiscal year ended June 30, 1998.
HOW DOES THE PORTFOLIO BUY SECURITIES FOR ITS PORTFOLIO?
The fund will not incur any brokerage or other costs in connection with its
purchase or redemption of shares of the Portfolio.
Since most purchases by the Portfolio are principal transactions at net
prices, the Portfolio incurs little or no brokerage costs. The Portfolio
deals directly with the selling or buying principal or market maker without
incurring charges for the services of a broker on its behalf, unless it is
determined that a better price or execution may be obtained by using the
services of a broker. Purchases of portfolio securities from underwriters
will include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers will include a spread between the bid
and ask prices. The Portfolio seeks to obtain prompt execution of orders at
the most favorable net price. Transactions may be directed to dealers in
return for research and statistical information, as well as for special
services provided by the dealers in the execution of orders.
It is not possible to place a dollar value on the special executions or on
the research services Advisers receives from dealers effecting transactions
in portfolio securities. The allocation of transactions in order to obtain
additional research services permits Advisers to supplement its own research
and analysis activities and to receive the views and information of
individuals and research staffs of other securities firms. As long as it is
lawful and appropriate to do so, Advisers and its affiliates may use this
research and data in their investment advisory capacities with other clients.
If the fund's officers are satisfied that the best execution is obtained, the
sale of fund shares, as well as shares of other funds in the Franklin
Templeton Group of Funds, may also be considered a factor in the selection of
broker-dealers to execute the Portfolio's transactions.
If purchases or sales of securities of the Portfolio and one or more other
investment companies or clients supervised by Advisers are considered at or
about the same time, transactions in these securities will be allocated among
the several investment companies and clients in a manner deemed equitable to
all by Advisers, taking into account the respective sizes of the funds and
the amount of securities to be purchased or sold. In some cases this
procedure could have a detrimental effect on the price or volume of the
security so far as the Portfolio is concerned. In other cases it is possible
that the ability to participate in volume transactions may improve execution
and reduce transaction costs to the Portfolio.
Depending on Advisers' view of market conditions, the Portfolio may or may
not buy securities with the expectation of holding them to maturity, although
its general policy is to hold securities to maturity. The Portfolio may,
however, sell securities before maturity to meet redemptions or as a result
of a revised management evaluation of the issuer.
During the fiscal years ended June 30, 1998, 1997 and 1996, the Portfolio
paid no brokerage commissions.
As of June 30, 1998, the Portfolio owned securities issued by Morgan Stanley
Dean Witter & Co. valued in the aggregate at $80 million, J.P. Morgan & Co.
valued in the aggregate at $49 million, and Swiss Bank Corp., valued in the
aggregate at $25 million. Morgan Stanley Dean Witter & Co, J.P. Morgan & Co.
and Swiss Bank Corp. are regular broker-dealers of the Portfolio. Except as
noted, neither the fund nor the Portfolio owned securities issued by its
regular broker-dealers as of the end of the fiscal year.
HOW DO I BUY, SELL AND EXCHANGE SHARES?
ADDITIONAL INFORMATION ON BUYING SHARES
The fund continuously offers its shares through Securities Dealers who have
an agreement with Distributors. Banks and financial institutions that sell
shares of the fund may be required by state law to register as Securities
Dealers.
All purchases of fund shares will be credited to you, in full and fractional
shares of the fund (rounded to the nearest 1/100 of a share), in an account
maintained for you by the fund's transfer agent. No share certificates will
be issued. The offering of shares of the fund may be suspended at any time
and resumed at any time thereafter.
ADDITIONAL INFORMATION ON EXCHANGING SHARES
If a substantial number of shareholders should, within a short period, sell
their shares of the fund under the exchange privilege, the fund might have to
sell portfolio securities it might otherwise hold and incur the additional
costs related to such transactions.
The proceeds from the sale of shares of an investment company are generally
not available until the seventh day following the sale. The funds you are
seeking to exchange into may delay issuing shares pursuant to an exchange
until that seventh day. The sale of fund shares to complete an exchange will
be effected at Net Asset Value at the close of business on the day the
request for exchange is received in proper form. Please see "May I Exchange
Shares for Shares of Another Fund?" in the Prospectus.
ADDITIONAL INFORMATION ON SELLING SHARES
SYSTEMATIC WITHDRAWAL PLAN. There are no service charges for establishing or
maintaining a systematic withdrawal plan. Payments under the plan will be
made from the redemption of an equivalent amount of shares in your account,
generally on the 25th day of the month in which a payment is scheduled. If
the 25th falls on a weekend or holiday, we will process the redemption on the
next business day.
Redeeming shares through a systematic withdrawal plan may reduce or exhaust
the shares in your account if payments exceed distributions received from the
fund. If a withdrawal amount exceeds the value of your account, your account
will be closed and the remaining balance in your account will be sent to you.
Because the amount withdrawn under the plan may be more than your actual
yield or income, part of the payment may be a return of your investment.
The fund may discontinue a systematic withdrawal plan by notifying you in
writing and will automatically discontinue a systematic withdrawal plan if
all shares in your account are withdrawn or if the fund receives notification
of the shareholder's death or incapacity.
REDEMPTIONS IN KIND. The fund has committed itself to pay in cash (by check)
all requests for redemption by any shareholder of record, limited in amount,
however, during any 90-day period to the lesser of $250,000 or 1% of the
value of the fund's net assets at the beginning of the 90-day period. This
commitment is irrevocable without the prior approval of the SEC. In the case
of redemption requests in excess of these amounts, the Board reserves the
right to make payments in whole or in part in securities or other assets of
the fund, in case of an emergency, or if the payment of such a redemption in
cash would be detrimental to the existing shareholders of the fund. In these
circumstances, the securities distributed would be valued at the price used
to compute the fund's net assets and you may incur brokerage fees in
converting the securities to cash.
GENERAL INFORMATION
If dividend checks are returned to the fund marked "unable to forward" by the
postal service, we will consider this a request by you to change your
dividend option to reinvest all distributions. The proceeds will be
reinvested in additional shares at Net Asset Value until we receive new
instructions.
Distribution or redemption checks sent to you do not earn interest or any
other income during the time the checks remain uncashed. Neither the fund nor
its affiliates will be liable for any loss caused by your failure to cash
such checks. The fund is not responsible for tracking down uncashed checks,
unless a check is returned as undeliverable.
In most cases, if mail is returned as undeliverable we are required to take
certain steps to try to find you free of charge. If these attempts are
unsuccessful, however, we may deduct the costs of any additional efforts to
find you from your account. These costs may include a percentage of the
account when a search company charges a percentage fee in exchange for its
location services.
SPECIAL SERVICES. Investor Services may pay certain financial institutions
that maintain omnibus accounts with the fund on behalf of numerous beneficial
owners for recordkeeping operations performed with respect to such owners.
For each beneficial owner in the omnibus account, the fund may reimburse
Investor Services an amount not to exceed the per account fee that the fund
normally pays Investor Services. These financial institutions may also charge
a fee for their services directly to their clients.
Investor Services may charge you separate fees, negotiated directly with you,
for providing special services in connection with your account. Fees for
special services will not increase the expenses borne by the fund.
Special procedures have been designed for banks and other institutions
wishing to open multiple accounts. An institution may open a single master
account by filing one application form with the fund, signed by personnel
authorized to act for the institution. Individual sub-accounts may be opened
at the time the master account is filed by listing them, or instructions may
be provided to the fund at a later date. These sub-accounts may be
established by the institution with registration either by name or number.
The investment minimums applicable to the fund are applicable to each
sub-account. The fund will provide each institution with a written
confirmation for each transaction in a sub-account and arrangements may be
made at no additional charge for the transmittal of duplicate confirmations
to the beneficial owner of the sub-account.
The fund will provide to each institution, on a quarterly basis or more
frequently if requested, a statement setting forth each sub-account's share
balance, income earned for the period, income earned for the year to date,
and total current market value.
HOW ARE FUND SHARES VALUED?
We calculate the Net Asset Value per share as of 3:00 p.m. Pacific time, each
day that the NYSE is open for trading. As of the date of this SAI, the fund
is informed that the NYSE observes the following holidays: New Year's Day,
Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The valuation of the Portfolio's portfolio securities, including any
securities held in a separate account maintained for when-issued securities,
is based on the amortized cost of the securities, which does not take into
account unrealized capital gains or losses. This method involves valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. While this method
provides certainty in calculation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price the
Portfolio would receive if it sold the instrument. During periods of
declining interest rates, the daily yield on shares of the Portfolio computed
as described above may tend to be higher than a like computation made by a
fund with identical investments but utilizing a method of valuation based
upon market prices and estimates of market prices for all of its portfolio
instruments. Thus, if the use of amortized cost by the Portfolio resulted in
a lower aggregate portfolio value on a particular day, a prospective investor
in the Portfolio would be able to obtain a somewhat higher yield than would
result from an investment in a fund utilizing only market values, and
existing investors in the Portfolio would receive less investment income. The
opposite would be true in a period of rising interest rates.
The Portfolio's use of amortized cost, which helps the Portfolio maintain its
Net Asset Value per share of $1, is permitted by a rule adopted by the SEC.
Under this rule, the Portfolio must adhere to certain conditions. The
Portfolio must maintain a dollar-weighted average portfolio maturity of 90
days or less and only buy instruments having remaining maturities of 397
calendar days or less. The Portfolio must also invest only in those U.S.
dollar-denominated securities that the Board of Trustees of Money Market
determines present minimal credit risks and that are rated in one of the two
highest short-term rating categories by nationally recognized rating
services, or if unrated are deemed comparable in quality, or are instruments
issued by an issuer that, with respect to an outstanding issue of short-term
debt that is comparable in priority and protection, has received a rating
within the two highest rating categories. Securities subject to floating or
variable interest rates with demand features that comply with applicable SEC
rules may have stated maturities in excess of one year.
The Board of Trustees of Money Market has established procedures designed to
stabilize, to the extent reasonably possible, the Portfolio's price per share
at $1, as computed for the purpose of sales and redemptions. These procedures
include a review of the Portfolio's holdings by the Board of Trustees of
Money Market, at such intervals as it may deem appropriate, to determine if
the Portfolio's Net Asset Value calculated by using available market
quotations deviates from $1 per share based on amortized cost. The extent of
any deviation will be examined by the Board of Trustees of Money Market. If a
deviation exceeds 1/2 of 1%, the trustees will promptly consider what action,
if any, will be initiated. If the Board of Trustees of Money Market
determines that a deviation exists that may result in material dilution or
other unfair results to investors or existing shareholders, it will take
corrective action that it regards as necessary and appropriate, which may
include selling portfolio instruments before maturity to realize capital
gains or losses or to shorten average portfolio maturity, withholding
dividends, redeeming shares in kind, or establishing a Net Asset Value per
share by using available market quotations.
ADDITIONAL INFORMATION ON DISTRIBUTIONS AND TAXES
DISTRIBUTIONS
DISTRIBUTIONS OF NET INVESTMENT INCOME. The fund declares dividends for each
day that the fund's Net Asset Value is calculated. These dividends will
equal all of the fund's daily net income payable to shareholders of record as
of the close of business the preceding day. The fund's daily net income
includes its pro rata share of the Portfolio's income plus or minus any gain
or loss on the sale of Portfolio shares and changes in unrealized
appreciation or depreciation in Portfolio shares (to the extent required to
maintain a constant Net Asset Value per share), less the estimated expenses
of the fund. The Portfolio's income consists of accrued interest and any
original issue or acquisition discount, plus or minus any gain or loss on the
sale of securities held by the Portfolio and changes in unrealized
appreciation or depreciation in securities held by the Portfolio, less the
estimated expenses of the Portfolio.
The fund earns income and gains on its investment in the Portfolios. The
Portfolios, in turn, earn income generally in the form of interest, original
issue, market and acquisition discount, and other income derived from their
investments. This income, together with the excess of any net short-term
capital gain over net long-term capital loss realized by the Portfolios, less
expenses incurred in the operation of the Portfolios, is paid to the fund as
ordinary dividend income. The ordinary dividend income received from the
Portfolios, less expenses incurred in the operation of the fund, constitute
the fund's net investment income from which dividends may be paid to you.
Any distributions by the fund from such income will be taxable to you as
ordinary income, whether you take them in cash or in additional shares.
DISTRIBUTIONS OF CAPITAL GAINS. The fund may receive capital gain
distributions from the Portfolios, consisting of the excess of any net
long-term capital gain over net short-term capital loss realized by a
Portfolio on the sale or disposition of its underlying portfolio securities.
The fund may also derive capital gains and losses in connection with the sale
of Portfolio shares. Distributions derived from the excess of net short-term
capital gain over net long-term capital loss will be taxable to you as
ordinary income. Distributions derived from the excess of net long-term
capital gain over net short-term capital loss, including capital gain
distributions received from a Portfolio, will be taxable to you as long-term
capital gain, regardless of how long you have held your shares in the fund.
Any net short-term or long-term capital gains realized by the fund (net of
any capital loss carryovers) generally will be distributed once each year,
and may be distributed more frequently, if necessary, in order to reduce or
eliminate federal excise or income taxes on the fund. Because the fund is a
money market fund, it does not anticipate realizing any long-term capital
gains, however.
CERTAIN DISTRIBUTIONS PAID IN JANUARY. Distributions which are declared in
October, November or December and paid to you in January of the following
year will be treated for tax purposes as if they had been received by you on
December 31 of the year in which they were declared. The fund will report
this income to you on your Form 1099-DIV for the year in which these
distributions were declared.
MAINTENANCE OF $1.00 NET ASSET VALUE. Gains and losses on the sale of
portfolio securities and unrealized appreciation or depreciation in the value
of these securities may require the fund to distribute income or make
distribution adjustments in order to maintain a $1.00 Net Asset Value. These
procedures may result in under- or over-distributions of net investment
income.
INFORMATION ON THE TAX CHARACTER OF DISTRIBUTIONS. The fund will inform you
of the amount and character of your distributions at the time they are paid,
and will advise you of the tax status for federal income tax purposes of such
distributions shortly after the close of each calendar year.
TAXES
ELECTION TO BE TAXED AS A REGULATED INVESTMENT COMPANY. The fund has elected
to be treated as a regulated investment company under Subchapter M of the
Code, has qualified as such for its most recent fiscal year, and intends so
to qualify during the current fiscal year. The Board reserves the right not
to maintain the qualification of the fund as a regulated investment company
if it determines such course of action to be beneficial to its shareholders.
In such case, the fund will be subject to federal, and possibly state,
corporate taxes on its taxable income and gains, and distributions to you
will be taxed as ordinary dividend income to the extent of the fund's
available earnings and profits.
In order to qualify as a regulated investment company for tax purposes, the
fund must meet certain specific requirements, including:
o The fund must maintain a diversified portfolio of securities, wherein no
security (other than U.S. government securities and securities of other
regulated investment companies) can exceed 25% of the fund's total assets,
and, with respect to 50% of the fund's total assets, no investment (other
than cash and cash items, U.S. government securities and securities of
other regulated investment companies) can exceed 5% of the fund's total
assets or 10% of the outstanding voting securities of the issuer;
o The fund must derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, and gains from the
sale or disposition of stock, securities or foreign currencies, or other
income derived with respect to its business of investing in such stock,
securities, or currencies; and
o The fund must distribute to its shareholders at least 90% of its
investment company taxable income (i.e., net investment income plus net
short-term capital gains) and net tax-exempt income for each of its fiscal
years.
EXCISE TAX DISTRIBUTION REQUIREMENTS. The Code requires the fund to
distribute at least 98% of its taxable ordinary income earned during the
calendar year and 98% of its capital gain net income earned during the twelve
month period ending October 31 (in addition to undistributed amounts from the
prior year) to you by December 31 of each year in order to avoid federal
excise taxes. The fund intends to declare and pay sufficient dividends in
December (or in January of the following year that are treated by you as
received in December of the prior year) but does not guarantee and can give
no assurances that its distributions will be sufficient to eliminate all such
taxes.
REDEMPTION OF FUND SHARES. Redemptions and exchanges of fund shares are
taxable transactions for federal and state income tax purposes. The tax law
requires that you recognize a gain or loss in an amount equal to the
difference between your tax basis and the amount you received in exchange for
your shares, subject to the rules described below. If you hold your shares
as a capital asset, the gain or loss that you realize will be capital gain or
loss, and will be long-term for federal income tax purposes if you have held
your shares for more than one year at the time of redemption or exchange.
Any loss incurred on the redemption or exchange of shares held for six months
or less will be treated as a long-term capital loss to the extent of any
long-term capital gains distributed to you by the fund on those shares.
All or a portion of any loss that you realize upon the redemption of your
fund shares will be disallowed to the extent that you purchase other shares
in the fund (through reinvestment of dividends or otherwise) within 30 days
before or after your share redemption. Any loss disallowed under these rules
will be added to your tax basis in the new shares you purchase. Because the
fund seeks to maintain a constant $1.00 per share Net Asset Value, you should
not expect to realize a gain or loss upon redemption of your fund shares,
however.
U.S. GOVERNMENT OBLIGATIONS. Many states grant tax-free status to dividends
paid to you from interest earned on direct obligations of the U.S.
Government, subject in some states to minimum investment requirements that
must be met by the fund. Investments in GNMA/FNMA securities, bankers'
acceptances, commercial paper and repurchase agreements collateralized by
U.S. government securities do not generally qualify for tax-free treatment.
It is anticipated, however, that no portion of the fund's distributions will
qualify for exemption from state and local income tax as dividends paid from
interest earned on direct obligations of the U.S. Government. At the end of
each calendar year, the fund will provide you with the percentage of any
dividends paid that may qualify for tax-free treatment on your personal
income tax return. You should consult with your own tax advisor to determine
the application of your state and local laws to these distributions. Because
the rules on exclusion of this income are different for corporations,
corporate shareholders should consult with their corporate tax advisors about
whether any of their distributions may be exempt from corporate income or
franchise taxes.
DIVIDENDS-RECEIVED DEDUCTION FOR CORPORATIONS. Because the fund's income is
derived primarily from interest rather than dividends, no portion of its
distributions will generally be eligible for the intercorporate
dividends-received deduction. None of the dividends paid by the fund for the
most recent fiscal year qualified for such deduction, and it is anticipated
that none of the current year's dividends will so qualify.
THE FUND'S UNDERWRITER
Pursuant to an underwriting agreement, Distributors acts as principal
underwriter in a continuous public offering of the fund's shares. The
underwriting agreement will continue in effect for successive annual periods
if its continuance is specifically approved at least annually by a vote of
the Board or by a vote of the holders of a majority of the fund's outstanding
voting securities, and in either event by a majority vote of the Board
members who are not parties to the underwriting agreement or interested
persons of any such party (other than as members of the Board), cast in
person at a meeting called for that purpose. The underwriting agreement
terminates automatically in the event of its assignment and may be terminated
by either party on 90 days' written notice.
Distributors pays the expenses of the distribution of fund shares, including
advertising expenses and the costs of printing sales material and
prospectuses used to offer shares to the public. The fund pays the expenses
of preparing and printing amendments to its registration statements and
prospectuses (other than those necessitated by the activities of
Distributors) and of sending prospectuses to existing shareholders.
For the fiscal years ended June 30, 1998, 1997 and 1996, Distributors
received $64,948, $27,110 and $1,484, respectively, in connection with
redemptions or repurchases of shares of the fund. Distributors may be
entitled to reimbursement under the Rule 12b-1 plan for the fund, as
discussed below. Except as noted, Distributors received no other compensation
from the fund for acting as underwriter.
THE RULE 12B-1 PLAN
The fund has a distribution plan or "Rule 12b-1 plan" that was adopted
pursuant to Rule 12b-1 of the 1940 Act.
Under the plan, the fund pays Distributors up to 0.50% per year of the fund's
average daily net assets, payable quarterly, for distribution and related
expenses. These fees may be used to compensate Distributors or others for
providing distribution and related services and bearing certain fund
expenses. All distribution expenses over this amount will be borne by those
who have incurred them without reimbursement by the fund.
Under the plan, the fund also pays an additional 0.15% per year of the fund's
average daily net assets, payable quarterly, as a servicing fee.
In addition to the payments that Distributors or others are entitled to under
the plan, the plan also provides that to the extent the fund, Advisers or
Distributors or other parties on behalf of the fund, Advisers or Distributors
make payments that are deemed to be for the financing of any activity
primarily intended to result in the sale of fund shares within the context of
Rule 12b-1 under the 1940 Act, then such payments shall be deemed to have
been made pursuant to the plan. The terms and provisions of the plan relating
to required reports, term, and approval are consistent with Rule 12b-1.
In no event shall the aggregate asset-based sales charges, which include
payments made under the plan, plus any other payments deemed to be made
pursuant to the plan, exceed the amount permitted to be paid under the rules
of the NASD.
To the extent fees are for distribution or marketing functions, as
distinguished from administrative servicing or agency transactions, certain
banks will not be entitled to participate in the plan as a result of
applicable federal law prohibiting certain banks from engaging in the
distribution of mutual fund shares. These banking institutions, however, are
permitted to receive fees under the plan for administrative servicing or for
agency transactions. If you are a customer of a bank that is prohibited from
providing these services, you would be permitted to remain a shareholder of
the fund, and alternate means for continuing the servicing would be sought.
In this event, changes in the services provided might occur and you might no
longer be able to avail yourself of any automatic investment or other
services then being provided by the bank. It is not expected that you would
suffer any adverse financial consequences as a result of any of these changes.
The plan has been approved in accordance with the provisions of Rule 12b-1.
The plan is renewable annually by a vote of the Board, including a majority
vote of the Board members who are not interested persons of the fund and who
have no direct or indirect financial interest in the operation of the plan,
cast in person at a meeting called for that purpose. It is also required that
the selection and nomination of such Board members be done by the
non-interested members of the Board. The plan and any related agreement may
be terminated at any time, without penalty, by vote of a majority of the
non-interested Board members on not more than 60 days' written notice, by
Distributors on not more than 60 days' written notice, by any act that
constitutes an assignment of the administration or management agreement with
Advisers or by vote of a majority of the fund's outstanding shares.
Distributors or any dealer or other firm may also terminate their respective
distribution or service agreement at any time upon written notice.
The plan and any related agreements may not be amended to increase materially
the amount to be spent for distribution expenses without approval by a
majority of the outstanding shares of the fund, and all material amendments
to the plan or any related agreements shall be approved by a vote of the
non-interested members of the Board, cast in person at a meeting called for
the purpose of voting on any such amendment.
Distributors is required to report in writing to the Board at least quarterly
on the amounts and purpose of any payment made under the plan and any related
agreements, as well as to furnish the Board with such other information as
may reasonably be requested in order to enable the Board to make an informed
determination of whether the plan should be continued.
For the fiscal year ended June 30, 1998, Distributors had eligible
expenditures of $111,401 for advertising, printing, and payments to
underwriters and broker-dealers pursuant to the plan, of which the fund paid
Distributors $88,239 under the plan.
HOW DOES THE FUND MEASURE PERFORMANCE?
Performance quotations are subject to SEC rules. These rules require the use
of standardized performance quotations or, alternatively, that every
non-standardized performance quotation furnished by the fund be accompanied
by certain standardized performance information computed as required by the
SEC. Current yield and effective yield quotations used by the fund are based
on the standardized methods of computing performance mandated by the SEC. An
explanation of these and other methods used by the fund to compute or express
performance follows. Regardless of the method used, past performance does not
guarantee future results.
YIELD
CURRENT YIELD. Current yield shows the income per share earned by the fund.
It is calculated by determining the net change, excluding capital changes, in
the value of a hypothetical pre-existing account having a balance of one
share at the beginning of the period, subtracting a hypothetical charge
reflecting deductions from shareholder accounts, and dividing the difference
by the value of the account at the beginning of the base period to obtain the
base period return. The result is then annualized by multiplying the base
period return by (365/7). The fund's current yield for the seven day period
ended June 30, 1998, was 4.39%.
EFFECTIVE YIELD. The fund's effective yield is calculated in the same manner
as its current yield, except the annualization of the return for the seven
day period reflects the results of compounding. The fund's effective yield
for the seven day period ended June 30, 1998, was 4.48%.
This figure was obtained using the following SEC formula:
365/7
Effective Yield = [(Base Period Return + 1) ]-1
OTHER PERFORMANCE QUOTATIONS
The fund may include in its advertising or sales material information
relating to investment goals and performance results of funds belonging to
the Franklin Templeton Group of Funds. Resources is the parent company of the
advisors and underwriter of the Franklin Templeton Group of Funds.
COMPARISONS
To help you better evaluate how an investment in the fund may satisfy your
investment goal, advertisements and other materials about the fund may
discuss certain measures of fund performance as reported by various financial
publications. Materials may also compare performance (as calculated above) to
performance as reported by other investments, indices, and averages. These
comparisons may include, but are not limited to, the following examples:
a) IBC Money Fund Report(R) - industry averages for seven-day annualized and
compounded yields of taxable, tax-free and government money funds.
b) Bank Rate Monitor - a weekly publication that reports various bank
investments such as CD rates, average savings account rates and average loan
rates.
c) Lipper - Mutual Fund Performance Analysis, Lipper - Fixed Income Fund
Performance Analysis, and Lipper - Mutual Fund Yield Survey - measure total
return and average current yield for the mutual fund industry and rank
individual mutual fund performance over specified time periods, assuming
reinvestment of all distributions, exclusive of any applicable sales charges.
d) Salomon Brothers Bond Market Roundup - a weekly publication that reviews
yield spread changes in the major sectors of the money, government agency,
futures, options, mortgage, corporate, Yankee, Eurodollar, municipal, and
preferred stock markets and summarizes changes in banking statistics and
reserve aggregates.
e) Consumer Price Index (or Cost of Living Index), published by the U.S.
Bureau of Labor Statistics - a statistical measure of change, over time, in
the price of goods and services in major expenditure groups.
f) Stocks, Bonds, Bills, and Inflation, published by Ibbotson Associates -
historical measure of yield, price, and total return for common and small
company stock, long-term government bonds, Treasury bills, and inflation.
g) Financial publications: THE WALL STREET JOURNAL, AND BUSINESS WEEK,
CHANGING TIMES, FINANCIAL WORLD, FORBES, FORTUNE, and MONEY MAGAZINES -
provide performance statistics over specified time periods.
Advertisements or information may also compare the fund's performance to the
return on CDs or other investments. You should be aware, however, that an
investment in the fund involves the risk of fluctuation of principal value, a
risk generally not present in an investment in a CD issued by a bank. CDs are
frequently insured by an agency of the U.S. government. An investment in the
fund is not insured by any federal, state or private entity.
In assessing comparisons of performance, you should keep in mind that the
composition of the investments in the reported indices and averages is not
identical to the fund's portfolio, the indices and averages are generally
unmanaged, and the items included in the calculations of the averages may not
be identical to the formula used by the fund to calculate its figures. In
addition, there can be no assurance that the fund will continue its
performance as compared to these other averages.
MISCELLANEOUS INFORMATION
The fund may help you achieve various investment goals such as accumulating
money for retirement, saving for a down payment on a home, college costs and
other long-term goals. The Franklin College Costs Planner may help you in
determining how much money must be invested on a monthly basis in order to
have a projected amount available in the future to fund a child's college
education. (Projected college cost estimates are based upon current costs
published by the College Board.) The Franklin Retirement Planning Guide leads
you through the steps to start a retirement savings program. Of course, an
investment in the fund cannot guarantee that these goals will be met.
The fund is a member of the Franklin Templeton Group of Funds, one of the
largest mutual fund organizations in the U.S., and may be considered in a
program for diversification of assets. Founded in 1947, Franklin, one of the
oldest mutual fund organizations, has managed mutual funds for over 50 years
and now services more than 3 million shareholder accounts. In 1992, Franklin,
a leader in managing fixed-income mutual funds and an innovator in creating
domestic equity funds, joined forces with Templeton, a pioneer in
international investing. The Mutual Series team, known for its value-driven
approach to domestic equity investing, became part of the organization four
years later. Together, the Franklin Templeton Group has over $236 billion in
assets under management for more than 6 million U.S. based mutual fund
shareholder and other accounts. The Franklin Templeton Group of Funds offers
119 U.S. based open-end investment companies to the public. The fund may
identify itself by its NASDAQ symbol or CUSIP number.
From time to time, the number of fund shares held in the "street name"
accounts of various Securities Dealers for the benefit of their clients or in
centralized securities depositories may exceed 5% of the total shares
outstanding. To the best knowledge of the fund, no other person holds
beneficially or of record more than 5% of the fund's outstanding shares.
In the event of disputes involving multiple claims of ownership or authority
to control your account, the fund has the right (but has no obligation) to:
(a) freeze the account and require the written agreement of all persons
deemed by the fund to have a potential property interest in the account,
before executing instructions regarding the account; (b) interplead disputed
funds or accounts with a court of competent jurisdiction; or (c) surrender
ownership of all or a portion of the account to the IRS in response to a
Notice of Levy.
Distributors and/or its affiliates provide financial support to various
Securities Dealers that sell shares of the Franklin Templeton Group of Funds.
This support is based primarily on the amount of sales of fund shares. The
amount of support may be affected by: total sales; net sales; levels of
redemptions; the proportion of a Securities Dealer's sales and marketing
efforts in the Franklin Templeton Group of Funds; a Securities Dealer's
support of, and participation in, Distributors' marketing programs; a
Securities Dealer's compensation programs for its registered representatives;
and the extent of a Securities Dealer's marketing programs relating to the
Franklin Templeton Group of Funds. Financial support to Securities Dealers
may be made by payments from Distributors' resources, from Distributors'
retention of underwriting concessions and, in the case of funds that have
Rule 12b-1 plans, from payments to Distributors under such plans. In
addition, certain Securities Dealers may receive brokerage commissions
generated by fund portfolio transactions in accordance with the NASD's rules.
SUMMARY OF CODE OF ETHICS. Employees of the Franklin Templeton Group who are
access persons under the 1940 Act are permitted to engage in personal
securities transactions subject to the following general restrictions and
procedures: (i) the trade must receive advance clearance from a compliance
officer and must be completed by the close of the business day following the
day clearance is granted; (ii) copies of all brokerage confirmations and
statements must be sent to a compliance officer; (iii) all brokerage accounts
must be disclosed on an annual basis; and (iv) access persons involved in
preparing and making investment decisions must, in addition to (i), (ii) and
(iii) above, file annual reports of their securities holdings each January
and inform the compliance officer (or other designated personnel) if they own
a security that is being considered for a fund or other client transaction or
if they are recommending a security in which they have an ownership interest
for purchase or sale by a fund or other client.
FINANCIAL STATEMENTS
The audited financial statements contained in the Annual Report to
Shareholders of the Trust, for the fiscal year ended June 30, 1998, including
the auditor's report, are incorporated herein by reference.
USEFUL TERMS AND DEFINITIONS
1940 ACT - Investment Company Act of 1940, as amended
ADVISERS - Franklin Advisers, Inc., the Portfolio's investment manager and
the fund's administrator
BOARD - The Board of Trustees of the Trust
CD - Certificate of deposit
CODE - Internal Revenue Code of 1986, as amended
DISTRIBUTORS - Franklin/Templeton Distributors, Inc., the fund's principal
underwriter
FITCH - Fitch Investors Service, Inc.
FRANKLIN TEMPLETON GROUP - Franklin Resources, Inc., a publicly owned holding
company, and its various subsidiaries
FRANKLIN TEMPLETON GROUP OF FUNDS - All U.S. registered investment companies
in the Franklin Group of Funds(R) and the Templeton Group of Funds
INVESTOR SERVICES - Franklin/Templeton Investor Services, Inc., the fund's
shareholder servicing and transfer agent
IRS - Internal Revenue Service
MOODY'S - Moody's Investors Service, Inc.
NASD - National Association of Securities Dealers, Inc.
NET ASSET VALUE (NAV) - The value of a mutual fund is determined by deducting
the fund's liabilities from the total assets of the portfolio. The net asset
value per share is determined by dividing the net asset value of the fund by
the number of shares outstanding.
NYSE - New York Stock Exchange
PROSPECTUS - The prospectus for the fund dated November 1, 1998, which we may
amend from time to time
RESOURCES - Franklin Resources, Inc.
SAI - Statement of Additional Information
S&P - Standard & Poor's Corporation
SEC - U.S. Securities and Exchange Commission
SECURITIES DEALER - A financial institution that, either directly or through
affiliates, has an agreement with Distributors to handle customer orders and
accounts with the fund. This reference is for convenience only and does not
indicate a legal conclusion of capacity.
WE/OUR/US - Unless a different meaning is indicated by the context, these
terms refer to the fund and/or Investor Services, Distributors, or other
wholly owned subsidiaries of Resources.
APPENDICES
SUMMARY OF PROCEDURES TO MONITOR CONFLICTS OF INTEREST
The Board of Trustees of Money Market, on behalf of its series ("master
funds"), and the Board of the fund ("feeder fund"), (both of which, except in
the case of two trustees, are composed of the same individuals) recognize
that there is the potential for certain conflicts of interest to arise
between the master fund and the feeder fund in this format. These potential
conflicts of interest could include, among others: the creation of additional
feeder funds with different fee structures; the creation of additional feeder
funds that could have controlling voting interests in any pass-through voting
which could affect investment and other policies; a proposal to increase fees
at the master fund level; and any consideration of changes in fundamental
policies at the master fund level that may or may not be acceptable to a
particular feeder fund.
In recognition of the potential for conflicts of interest to develop, the
Board of Trustees of Money Market and the Board of the fund have adopted
certain procedures under which i) management of the master fund and the
feeder fund will, on a yearly basis, report to each board, including the
independent members of each board, on the operation of the master/feeder fund
structure; ii) the independent members of each board will have ongoing
responsibility for reviewing all proposals at the master fund level to
determine whether any proposal presents a potential for a conflict of
interest and to the extent any other potential conflicts arise before the
normal annual review, they will act promptly to review the potential
conflict; iii) if the independent members of each board determine that a
situation or proposal presents a potential conflict, they will request a
written analysis from the master fund management describing whether the
apparent potential conflict of interest will impede the operation of the
constituent feeder fund and the interests of the feeder fund's shareholders;
and iv) upon receipt of the analysis, the independent members of each board
shall review the analysis and present their conclusion to the full boards.
If no actual conflict is deemed to exist, the independent board members will
recommend that no further action be taken. If the analysis is inconclusive,
they may submit the matter to and be guided by the opinion of independent
legal counsel issued in a written opinion. If a conflict is deemed to exist,
they may recommend one or more of the following actions: i) suggest a course
of action designed to eliminate the potential conflict of interest; ii) if
appropriate, request that the full boards submit the potential conflict to
shareholders for resolution; iii) recommend to the full boards that the
affected feeder fund no longer invest in its designated master fund and
propose either a search for a new master fund in which to invest the feeder
fund's assets or the hiring of an investment manager to manage the feeder
fund's assets in accordance with its investment goals and policies; iv)
recommend to the full boards that a new board be recommended to shareholders
for approval; or v) recommend such other action as may be considered
appropriate.
DESCRIPTION OF RATINGS
MUNICIPAL NOTE RATINGS
MOODY'S
Moody's ratings for state, municipal and other short-term obligations will be
designated Moody's Investment Grade ("MIG"). This distinction is in
recognition of the differences between short-term credit risk and long-term
risk. Factors affecting the liquidity of the borrower are uppermost in
importance in short-term borrowing; factors of the first importance in
long-term borrowing risk are of lesser importance in the short run. Symbols
used will be as follows:
MIG 1: Notes are of the best quality enjoying strong protection from
established cash flows of funds for their servicing or from established and
broad-based access to the market for refinancing, or both.
MIG 2: Notes are of high quality, with margins of protection ample, although
not so large as in the preceding group.
MIG 3: Notes are of favorable quality, with all security elements accounted
for, but lacking the undeniable strength of the preceding grades. Market
access for refinancing, in particular, is likely to be less well established.
MIG 4: Notes are of adequate quality, carrying specific risk but having
protection and not distinctly or predominantly speculative.
S&P
Until June 29, 1984, S&P used the same rating symbols for notes and bonds.
After June 29, 1984, for new municipal note issues due in three years or
less, the ratings below will usually be assigned. Notes maturing beyond three
years will most likely receive a bond rating of the type recited above.
SP-1: Issues carrying this designation have a very strong or strong capacity
to pay principal and interest. Issues determined to possess overwhelming
safety characteristics will be given a "plus" (+) designation.
SP-2: Issues carrying this designation have a satisfactory capacity to pay
principal and interest.
COMMERCIAL PAPER RATINGS
MOODY'S
Moody's commercial paper ratings, which are also applicable to municipal
paper investments permitted to be made by the fund, are opinions of the
ability of issuers to repay punctually their promissory obligations not
having an original maturity in excess of nine months. Moody's employs the
following designations, all judged to be investment grade, to indicate the
relative repayment capacity of rated issuers:
P-1 (PRIME-1): Superior capacity for repayment.
P-2 (PRIME-2): Strong capacity for repayment.
S&P
S&P's ratings are a current assessment of the likelihood of timely payment of
debt having an original maturity of no more than 365 days. Ratings are graded
into four categories, ranging from "A" for the highest quality obligations to
"D" for the lowest. Issues within the "A" category are delineated with the
numbers 1, 2 and 3 to indicate the relative degree of safety, as follows:
A-1: This designation indicates the degree of safety regarding timely payment
is very strong. A "plus" (+) designation indicates an even stronger
likelihood of timely payment.
A-2: Capacity for timely payment on issues with this designation is strong.
The relative degree of safety, however, is not as overwhelming as for issues
designated A-1.
A-3: Issues carrying this designation have a satisfactory capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse effects
of changes in circumstances than obligations carrying the higher designations.
FITCH
Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years, including
commercial paper, CDs, medium-term notes, and municipal and investment notes.
The short-term rating places greater emphasis than a long-term rating on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
F-1+: Exceptionally strong credit quality. Regarded as having the strongest
degree of assurance for timely payment.
F-1: Very strong credit quality. Reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.
F-2: Good credit quality. A satisfactory degree of assurance for timely
payment, but the margin of safety is not as great as for issues assigned F-1+
and F-1 ratings.
F-3: Fair credit quality. Have characteristics suggesting that the degree of
assurance for timely payment is adequate; however, near-term adverse changes
could cause these securities to be rated below investment grade.
LOC: The symbol LOC indicates that the rating is based on a letter of credit
issued by a commercial bank.
FRANKLIN TEMPLETON MONEY FUND II
Franklin Templeton Money Fund Trust
File Nos. 33-88924
811-8962
FORM N- 1A
PART C
OTHER INFORMATION
ITEM 24 FINANCIAL STATEMENTS AND EXHIBITS
a) Audited Financial Statements incorporated herein by reference to the
Registrant's Annual Report to Shareholders dated June 30, 1998 as filed
with the SEC electronically on form type N-30D on August 20, 1998
Franklin Templeton Money Fund Trust
(i) Financial Highlights
(ii) Statement of Investments - June 30, 1998
(iii) Statement of Assets and Liabilities - June 30, 1998
(iv) Statement of Operations for the year ended June 30, 1998
(v) Statements of Changes in Net Assets - for the years ended June
30, 1998 and 1997
(vi) Notes to Financial Statements
(vii) Independent Auditor's Report
The Money Market Portfolios
(i) Financial Highlights
(ii) Statement of Investments - June 30, 1998
(iii) Statements of Assets and Liabilities - June 30, 1998
(iv) Statements of Operations for the year ended June 30, 1998
(v) Statements of Changes in Net Assets for the years ended June 30,
1998 and 1997
(vi) Notes to Financial Statements
(vii) Independent Auditor's Report
b) Exhibits
The following exhibits are incorporated by reference herein, except
exhibits 8(iv), 10(i), 11(i), 17(iii), 17(iv) and 27(i) which are attached.
(1) copies of the charter as now in effect;
(i) Certificate of Trust of Franklin Templeton Money Fund Trust
dated January 17, 1995
Filing: Post-Effective Amendment No. 1 to
Registration Statement on Form N-1A
File No. 33-88924
Filing Date: August 31, 1995
(ii) Agreement and Declaration of Trust of Franklin Templeton
Money Fund Trust dated January 17, 1995
Filing: Post-Effective Amendment No. 1 to
Registration Statement on Form N-1A
File No. 33-88924
Filing Date: August 31, 1995
(2) copies of the existing By-Laws or instruments corresponding
thereto;
(i) By-Laws of Franklin Templeton Money Fund Trust
Filing: Post-Effective Amendment No. 1 to
Registration Statement on Form N-1A
File No. 33-88924
Filing Date: August 31, 1995
(3) copies of any voting trust agreement with respect to more than 5
percent of any class of equity securities of the Registrant;
Not Applicable
(4) copies of all instruments defining the rights of the holders of
the securities being registered including, where applicable, the
relevant portion of the articles of incorporation or by-laws of
the Registrant;
Not Applicable
(5) copies of all investment advisory contracts relating to the
management of the assets of the Registrant;
(i) Administration Agreement between the Registrant and Franklin
Advisers, Inc., on behalf of Franklin Templeton Money Fund
II, dated May 1, 1995
Filing: Post-Effective Amendment No. 1 to
Registration Statement on Form N-1A
File No. 33-88924
Filing Date: August 31, 1995
(ii) Amendment dated August 1, 1995 to Administration Agreement
between the Registrant and Franklin Advisers, Inc., on
behalf of Franklin Templeton Money Fund II, dated May 1, 1995
Filing: Post-Effective Amendment No. 2 to
Registration Statement on Form N-1A
File No. 33-88924
Filing Date: October 30, 1996
(6) copies of each underwriting or distribution contract between the
Registrant and a principal underwriter, and specimens or copies of
all agreements between principal underwriters and dealers;
(i) Underwriting Agreement between the Registrant and
Franklin/Templeton Distributors, Inc., dated May 1, 1995
Filing: Post-Effective Amendment No. 1 to Registration
Statement on Form N-1A
File No. 33-88924
Filing Date: August 31, 1995
(ii) Forms of Dealer Agreements between Franklin/Templeton
Distributors, Inc. and Securities Dealers
Registrant: Franklin Tax-Free Trust
Filing: Post-Effective Amendment No. 22 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: March 14, 1996
(7) copies of all bonus, profit sharing, pension or other similar
contracts or arrangements wholly or partly for the benefit of
trustees or officers of the Registrant in their capacity as such;
any such plan that is not set forth in a formal document, furnish
a reasonably detailed description thereof;
Not Applicable
(8) copies of all custodian agreements and depository contracts under
Section 17(f) of the 1940 Act, with respect to securities and
similar investments of the Registrant, including the schedule of
remuneration;
(i) Master Custody Agreement between the Registrant and Bank of
New York dated February 16, 1996
Filing: Post-Effective Amendment No. 2 to
Registration Statement on Form N-1A
File No. 33-88924
Filing Date: October 30, 1996
(ii) Terminal Link Agreement between the Registrant and Bank of
New York dated February 16, 1996
Filing: Post-Effective Amendment No. 2 to
Registration Statement on Form N-1A
File No. 33-88924
Filing Date: October 30, 1996
(iii) Amendment dated May 7, 1997 to the Master Custody Agreement
dated February 16, 1996 between Registrant and Bank of New
York
Filing: Post-Effective Amendment No. 3 to
Registration Statement on Form N-1A
File No. 33-88924
Filing Date: October 29, 1997
(iv) Amendment dated February 27, 1998 to the Master Custody
Agreement dated February 16, 1996 between Registrant and
Bank of New York
(9) copies of all other material contracts not made in the ordinary
course of business which are to be performed in whole or in part
at or after the date of filing the Registration Statement;
Not Applicable
(10) an opinion and consent of counsel as to the legality of the
securities being registered, indicating whether they will when
sold be legally issued, fully paid and nonassessable;
Opinion and consent of counsel dated August 18, 1998
(11) copies of any other opinions, appraisals or rulings and consents
to the use thereof relied on in the preparation of this
Registration Statement and required by Section 7 of the 1933 Act;
(i) Consent of Independent Auditor
(12) all financial statements omitted from Item 23;
Not Applicable
(13) copies of any agreements or understandings made in consideration
for providing the initial capital between or among the Registrant,
the underwriter, advisor, promoter or initial stockholders and
written assurances from promoters or initial stockholders that
their purchases were made for investment purposes without any
present intention of redeeming or reselling;
(i) Letter of Understanding dated April 13, 1995
Filing: Post-Effective Amendment No. 1 to
Registration Statement on Form N-1A
File No. 33-88924
Filing Date: August 31, 1995
(14) copies of the model plan used in the establishment of any
retirement plan in conjunction with which Registrant offers its
securities, any instructions thereto and any other documents
making up the model plan. Such form(s) should disclose the costs
and fees charged in connection therewith;
Not Applicable
(15) copies of any plan entered into by Registrant pursuant to Rule
12b-1 under the 1940 Act, which describes all material aspects of
the financing of distribution of Registrant's shares, and any
agreements with any person relating to implementation of such plan.
(i) Distribution Plan between the Registrant and
Franklin/Templeton Distributors, Inc., dated May 1, 1995
Filing: Post-Effective Amendment No. 1 to Registration
Statement on Form N-1A
File No. 33-88924
Filing Date: August 31, 1995
(16) schedule for computation of each performance quotation provided in
the Registration Statement in response to Item 22 (which need not
be audited).
Not Applicable
(17) Power of Attorney
(i) Power of Attorney for Franklin Templeton Money Fund Trust
dated January 17, 1995
Filing: Post-Effective Amendment No. 1 to
Registration Statement on Form N-1A
File No. 33-88924
Filing Date: August 31, 1995
(ii) Certificate of Secretary for Franklin Templeton Money Fund
Trust dated January 17, 1995
Filing: Post-Effective Amendment No. 1 to
Registration Statement on Form N-1A
File No. 33-88924
Filing Date: August 31, 1995
(iii) Power of Attorney for The Money Market Portfolios dated June
16, 1998
(iv) Certificate of Secretary for The Money Market Portfolios
dated June 16, 1998
(18) Copies of any Plan entered into by Registrant pursuant to Rule
18f-3 under the 1940 Act.
Not Applicable
(27) Financial Data Schedule
(i) Financial Data Schedule for Franklin Templeton Money Fund II
ITEM 25 PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None
ITEM 26 NUMBER OF HOLDERS OF SECURITIES
Not Applicable
ITEM 27 INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such trustee, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a Court of
appropriate jurisdiction the question whether such indemnification is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Please see the Declaration of Trust, By-Laws, Administration Agreement, and
Distribution Agreements, previously filed as exhibits and incorporated herein
by reference.
ITEM 28 BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The officers and directors of the Registrant's administrator and the Master
Fund's investment adviser, Franklin Advisers, Inc., ("Advisers") also serve as
officers and/or directors or trustees for (1) Advisers' corporate parent,
Franklin Resources, Inc., and/or (2) other investment companies in the
Franklin Templeton Group of Funds. In addition, Mr. Charles B. Johnson was
formerly a director of General Host Corporation. For additional information
please see Part B and Schedules A and D of Form ADV of Advisers (SEC File
801-26292), incorporated herein by reference, which sets forth the officers
and directors of Advisers and information as to any business, profession,
vocation or employment of a substantial nature engaged in by those officers
and directors during the past two years.
ITEM 29 PRINCIPAL UNDERWRITERS
a) Franklin/Templeton Distributors, Inc., ("Distributors") also acts as
principal underwriter of shares of:
Franklin Asset Allocation Fund
Franklin California Tax-Free Income Fund, Inc.
Franklin California Tax-Free Trust
Franklin Custodian Funds, Inc.
Franklin Equity Fund
Franklin Federal Money Fund
Franklin Federal Tax-Free Income Fund
Franklin Floating Rate Trust
Franklin Gold Fund
Franklin High Income Trust
Franklin Investors Securities Trust
Franklin Managed Trust
Franklin Money Fund
Franklin Mutual Series Fund Inc.
Franklin Municipal Securities Trust
Franklin New York Tax-Free Income Fund
Franklin New York Tax-Free Trust
Franklin Real Estate Securities Trust
Franklin Strategic Mortgage Portfolio
Franklin Strategic Series
Franklin Tax-Exempt Money Fund
Franklin Tax-Free Trust
Franklin Templeton Fund Allocator Series
Franklin Templeton Global Trust
Franklin Templeton International Trust
Franklin Value Investors Trust
Institutional Fiduciary Trust
Templeton American Trust, Inc.
Templeton Capital Accumulator Fund, Inc.
Templeton Developing Markets Trust
Templeton Funds, Inc.
Templeton Global Investment Trust
Templeton Global Opportunities Trust
Templeton Global Real Estate Fund
Templeton Global Smaller Companies Fund, Inc.
Templeton Growth Fund, Inc.
Templeton Income Trust
Templeton Institutional Funds, Inc.
Templeton Variable Products Series Fund
b) The information required by this Item 29 with respect to each director and
officer of Distributors is incorporated by reference to Part B of this N-1A
and Schedule A of Form BD filed by Distributors with the Securities and
Exchange Commission pursuant to the Securities Act of 1934 (SEC File No.
8-5889).
c) Not Applicable. Registrant's principal underwriter is an affiliated
person of an affiliated person of the Registrant.
ITEM 30 LOCATION OF ACCOUNTS AND RECORDS
The accounts, books or other documents required to be maintained by Section 31
(a) of the Investment Company Act of 1940 are kept by the Trust or its
shareholder services agent, Franklin/Templeton Investor Services, Inc., both
of whose address is 777 Mariners Island Blvd., San Mateo, CA 94404-1585.
ITEM 31 MANAGEMENT SERVICES
There are no management-related service contracts not discussed in Part A or
Part B.
ITEM 32 UNDERTAKINGS
a) The Registrant hereby undertakes to promptly call a meeting of
shareholders for the purpose of voting upon the question of removal of any
trustee or trustees when requested in writing to do so by the record
holders of not less than 10 percent of the Registrant's outstanding shares
and to assist its shareholders in communicating with other shareholders in
accordance with the requirements of Section 16(c) of the Investment
Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of San Mateo and the State of California, on the 21st
day of August, 1998.
FRANKLIN TEMPLETON MONEY FUND TRUST
(Registrant)
By: RUPERT H. JOHNSON, JR.*
Rupert H. Johnson, Jr., President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
RUPERT H. JOHNSON, JR.* Principal Executive Officer and
Rupert H. Johnson, Jr. Trustee
Dated: August 21, 1998
MARTIN L. FLANAGAN* Principal Financial Officer
Martin L. Flanagan Dated: August 21, 1998
DIOMEDES LOO-TAM* Principal Accounting Officer
Diomedes Loo-Tam Dated: August 21, 1998
FRANK H. ABBOTT III* Trustee
Frank H. Abbott III Dated: August 21, 1998
HARRIS J. ASHTON* Trustee
Harris J. Ashton Dated: August 21, 1998
S. JOSEPH FORTUNATO* Trustee
S. Joseph Fortunato Dated: August 21, 1998
CHARLES B. JOHNSON* Trustee
Charles B. Johnson Dated: August 21, 1998
FRANK W.T. LAHAYE* Trustee
Frank W.T. LaHaye Dated: August 21, 1998
GORDON S. MACKLIN* Trustee
Gordon S. Macklin Dated: August 21, 1998
*By /s/ Larry L. Greene - Attorney-in-Fact
(Pursuant to Power of Attorney previously filed)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the undersigned has duly consented to the
filing of this Registration Statement of Franklin Templeton Money Fund Trust
and has caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of San Mateo and the State
of California, on the 21st day of August, 1998.
THE MONEY MARKET PORTFOLIOS
By: CHARLES E. JOHNSON*
Charles E. Johnson, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following trustees and officers of The
Money Market Portfolios in the capacities and on the dates indicated:
CHARLES E. JOHNSON* Trustee and Principal Executive Officer
Charles E. Johnson Dated: August 21, 1998
MARTIN L. FLANAGAN* Principal Financial Officer Dated:
Martin L. Flanagan August 21, 1998
DIOMEDES LOO-TAM* Principal Accounting Officer
Diomedes Loo-Tam Dated: August 21, 1998
FRANK H. ABBOTT III* Trustee
Frank H. Abbott III Dated: August 21, 1998
HARRIS J. ASHTON* Trustee
Harris J. Ashton Dated: August 21, 1998
ROBERT F. CARLSON Trustee
Robert F. Carlson Dated: August 21, 1998
S. JOSEPH FORTUNATO* Trustee
S. Joseph Fortunato Dated: August 21, 1998
CHARLES B. JOHNSON* Trustee
Charles B. Johnson Dated: August 21, 1998
RUPERT H. JOHNSON, JR.* Trustee
Rupert H. Johnson, Jr. Dated: August 21, 1998
FRANK W.T. LAHAYE* Trustee
Frank W.T. LaHaye Dated: August 21, 1998
GORDON S. MACKLIN* Trustee
Gordon S. Macklin Dated: August 21, 1998
*By /s/ Larry L. Greene - Attorney-in-Fact
(Pursuant to Powers of Attorney filed herewith)
FRANKLIN TEMPLETON MONEY FUND TRUST
REGISTRATION STATEMENT
EXHIBITS INDEX
EXHIBIT NO. DESCRIPTION LOCATION
EX-99.B1(i) Certificate of Trust dated January 17, 1995 *
EX-99.B1(ii) Agreement and Declaration of Trust dated *
January 17, 1995
EX-99.B2(i) By-Laws *
EX-99.B5(i) Administration Agreement between the *
Registrant and Franklin Advisers, Inc., on
behalf of Franklin Templeton Money Fund II,
dated May 1, 1995
EX-99.B5(ii) Amendment dated August 1, 1995 to *
Administration Agreement between the
Registrant and Franklin Advisers, Inc., on
behalf of Franklin Templeton Money Fund II,
dated May 1, 1995
EX-99.B6(i) Underwriting Agreement between the Registrant *
and Franklin/Templeton Distributors, Inc.,
dated May 1, 1995
EX-99.B6(ii) Forms of Dealer Agreements between *
Franklin/Templeton Distributors, Inc. and
Securities Dealers
EX-99.B8(i) Master Custody Agreement between the *
Registrant and Bank of New York dated February
16, 1996
EX-99.B8(ii) Terminal Link Agreement between the Registrant *
and Bank of New York dated February 16, 1996
EX-99.B8(iii) Amendment dated May 7, 1997 to the Master *
Custody Agreement dated February 16, 1996
between Registrant and Bank of New York
EX-99.B8(iv) Amendment dated February 27, 1998 to Master Attached
Custody Agreement dated February 16, 1996
between Registrant and Bank of New York
EX-99.B10(i) Opinion and consent of counsel dated August Attached
18, 1998
EX-99.B11(i) Consent of Independent Auditor Attached
EX-99.B13(i) Letter of Understanding dated April 13, 1995 *
EX-99.B15(i) Distribution Plan pursuant to Rule 12b-1 *
between the Registrant and Franklin/Templeton
Distributors, Inc., dated May 1, 1995
EX-99.B17(i) Power of Attorney for Franklin Templeton Money *
Fund Trust dated January 17, 1995
EX-99.B17(ii) Certificate of Secretary for Franklin *
Templeton Money Fund Trust dated January 17,
1995
EX-99.B17(iii) Power of Attorney for The Money Market Attached
Portfolios dated June 16, 1998
EX-99.B17(iv) Certificate of Secretary for The Money Market Attached
Portfolios dated June 16, 1998
EX-27.B(i) Financial Data Schedule for Franklin Templeton Attached
Money Fund Trust
* Incorporated by Reference
Amendment to Master Custody Agreement
Effective February 27, 1998, The Bank of New York and each of the Investment
Companies listed in the Attachment appended to this Amendment, for themselves
and each series listed in the Attachment, hereby amend the Master Custody
Agreement dated as of February 16, 1996 by:
1. Replacing Exhibit A with the attached; and
2. Only with respect to the Investment Companies and series thereof listed
in the Attachment, deleting paragraphs (a) and (b) of Subsection 3.5 and
replacing them with the following:
(a) Promptly after each purchase of Securities by the Fund, the Fund shall
deliver to the Custodian Proper Instructions specifying with respect to
each such purchase: (a) the Series to which such Securities are to be
specifically allocated; (b) the name of the issuer and the title of the
Securities; (c) the number of shares or the principal amount purchased and
accrued interest, if any; (d) the date of purchase and settlement; (e) the
purchase price per unit; (f) the total amount payable upon such purchase;
(g) the name of the person from whom or the broker through whom the
purchase was made, and the name of the clearing broker, if any; and (h) the
name of the broker to whom payment is to be made. The Custodian shall, upon
receipt of Securities purchased by or for the Fund, pay to the broker
specified in the Proper Instructions out of the money held for the account
of such Series the total amount payable upon such purchase, provided that
the same conforms to the total amount payable as set forth in such Proper
Instructions.
(b) Promptly after each sale of Securities by the Fund, the Fund shall
deliver to the Custodian Proper Instructions specifying with respect to
each such sale: (a) the Series to which such Securities were specifically
allocated; (b) the name of the issuer and the title of the Security; (c)
the number of shares or the principal amount sold, and accrued interest, if
any; (d) the date of sale; (e) the sale price per unit; (f) the total
amount payable to the Fund upon such sale; (g) the name of the broker
through whom or the person to whom the sale was made, and the name of the
clearing broker, if any; and (h) the name of the broker to whom the
Securities are to be delivered. The Custodian shall deliver the Securities
specifically allocated to such Series to the broker specified in the Proper
Instructions against payment of the total amount payable to the Fund upon
such sale, provided that the same conforms to the total amount payable as
set forth in such Proper Instructions.
Investment Companies The Bank of New York
By: /S/ELIZABETH N. COHERNOUR By: /S/STEPHEN E. GRUNSTON
Name: Elizabeth N. Cohernour Stephen E. Grunston
Title: Authorized Oficer Title: Vice President
Attachment
INVESTMENT COMPANY SERIES
Franklin Mutual Series Fund Inc. Mutual Shares Fund
Mutual Qualified Fund
Mutual Beacon Fund
Mutual Financial Services
Fund
Mutual European Fund
Mutual Discovery Fund
Franklin Valuemark Funds Mutual Discovery
Securities Fund
Mutual Shares Securities
Fund
Templeton Variable Products Mutual Shares Investments Fund
Series Fund Mutual Discovery Investments Fund
THE BANK OF NEW YORK
MASTER CUSTODY AGREEMENT
EXHIBIT A
<TABLE>
<CAPTION>
The following is a list of the Investment Companies and their respective Series
for which the Custodian shall serve under the Master
Custody Agreement dated as of February 16, 1996.
- -------------------------------------------------------------------------- --------------------------------------------------------
<S> <C> <C>
INVESTMENT COMPANY ORGANIZATION SERIES ---(IF APPLICABLE)
- -------------------------------------------------------------------------- --------------------------------------------------------
Adjustable Rate Securities Portfolios Delaware Business Trust U.S. Government Adjustable Rate Mortgage Portfolio
Adjustable Rate Securities Portfolio
Franklin Asset Allocation Fund Delaware Business Trust
Franklin California Tax-Free Income Maryland Corporation
Fund, Inc.
Franklin California Tax-Free Trust Massachusetts Business Trust Franklin California Insured Tax-Free Income Fund
Franklin California Tax-Exempt Money Fund
Franklin California Intermediate-Term Tax-Free
Income Fund
Franklin Custodian Funds, Inc. Maryland Corporation Growth Series
Utilities Series
Dynatech Series
Income Series
U.S. Government Securities Series
Franklin Equity Fund California Corporation
Franklin Federal Money Fund California Corporation
Franklin Federal Tax- Free Income Fund California Corporation
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES ---(IF APPLICABLE)
- -----------------------------------------------------------------------------------------------------------------------------------
Franklin Gold Fund California Corporation
Franklin Government Securities Trust Massachusetts Business Trust
Franklin High Income Trust Delaware Business Trust AGE High Income Fund
Franklin Investors Securities Trust Massachusetts Business Trust Franklin Global Government Income Fund
Franklin Short-Intermediate U.S. Govt Securities Fund
Franklin Convertible Securities Fund
Franklin Adjustable U.S. Government Securities Fund
Franklin Equity Income Fund
Franklin Adjustable Rate Securities Fund
Franklin Managed Trust Massachusetts Business Trust Franklin Corporate Qualified Dividend Fund
Franklin Rising Dividends Fund
Franklin Investment Grade Income Fund
Franklin Institutional Rising Dividends Fund
Franklin Money Fund California Corporation
Franklin Municipal Securities Trust Delaware Business Trust Franklin Hawaii Municipal Bond Fund
Franklin California High Yield Municipal Fund
Franklin Washington Municipal Bond Fund
Franklin Tennessee Municipal Bond Fund
Franklin Arkansas Municipal Bond Fund
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES ---(IF APPLICABLE)
Franklin Mutual Series Fund Inc. Maryland Corporation Mutual Shares Fund
Mutual Qualified Fund
Mutual Beacon Fund
Mutual Financial Services Fund
Mutual European Fund
Mutual Discovery Fund
Franklin New York Tax-Free Income Fund Delaware Business Trust
Franklin New York Tax-Free Trust Massachusetts Business Trust Franklin New York Tax-Exempt Money Fund
Franklin New York Intermediate-Term Tax-Free
Income Fund
Franklin New York Insured Tax-Free Income Fund
Franklin Real Estate Securities Trust Delaware Business Trust Franklin Real Estate Securities Fund
Franklin Strategic Mortgage Portfolio Delaware Business Trust
Franklin Strategic Series Delaware Business Trust Franklin California Growth Fund
Franklin Strategic Income Fund
Franklin MidCap Growth Fund
Franklin Global Utilities Fund
Franklin Small Cap Growth Fund
Franklin Global Health Care Fund
Franklin Natural Resources Fund
Franklin Blue Chip Fund
Franklin Biotechnology Discovery Fund
Franklin Tax-Exempt Money Fund California Corporation
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES---(IF APPLICABLE)
Franklin Tax-Free Trust Massachusetts Business Trust Franklin Massachusetts Insured Tax-Free Income Fund
Franklin Michigan Insured Tax-Free Income Fund
Franklin Minnesota Insured Tax-Free Income
Fund
Franklin Insured Tax-Free Income Fund
Franklin Ohio Insured Tax-Free Income Fund
Franklin Puerto Rico Tax-Free Income Fund
Franklin Arizona Tax-Free Income Fund
Franklin Colorado Tax-Free Income Fund
Franklin Georgia Tax-Free Income Fund
Franklin Pennsylvania Tax-Free Income Fund
Franklin High Yield Tax-Free Income Fund
Franklin Missouri Tax-Free Income Fund
Franklin Oregon Tax-Free Income Fund
Franklin Texas Tax-Free Income Fund
Franklin Virginia Tax-Free Income Fund
Franklin Alabama Tax-Free Income Fund
Franklin Florida Tax-Free Income Fund
Franklin Connecticut Tax-Free Income Fund
Franklin Indiana Tax-Free Income Fund
Franklin Louisiana Tax-Free Income Fund
Franklin Maryland Tax-Free Income Fund
Franklin North Carolina Tax-Free Income
Fund
Franklin New Jersey Tax-Free Income Fund
Franklin Kentucky Tax-Free Income Fund
Franklin Federal Intermediate-Term Tax-
Free Income Fund
Franklin Arizona Insured Tax-Free Income
Fund
Franklin Florida Insured Tax-Free Income
Fund
Franklin Michigan Tax-Free Income Fund
- ----------------------------------------------------- -----------------------------------------------------------------------------
- ----------------------------------------------------- -----------------------------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES ---(IF APPLICABLE)
Franklin Templeton Fund Allocator Series Delaware Business Trust Franklin Templeton Conservative Target
Fund
Franklin Templeton Moderate Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Global Trust Delaware Business Trust Franklin Templeton German Government Bond
Fund
Franklin Templeton Global Currency Fund
Franklin Templeton Hard Currency Fund
Franklin Templeton High Income Currency
Fund
Franklin Templeton International Trust Delaware Business Trust Templeton Pacific Growth Fund
Templeton Foreign Smaller Companies Fund
Franklin Templeton Money Fund Trust Delaware Business Trust Franklin Templeton Money Fund II
Franklin Value Investors Trust Massachusetts Business Trust Franklin Balance Sheet Investment Fund
Franklin MicroCap Value Fund
Franklin Value Fund
Franklin Valuemark Funds Massachusetts Business Trust Money Market Fund
Growth and Income Fund
Natural Resources Securities Fund
Real Estate Securities Fund
Global Utilities Securities Fund
High Income Fund
Templeton Global Income Securities Fund
Income Securities Fund
U.S. Government Securities Fund
Zero Coupon Fund - 2000
Zero Coupon Fund - 2005
Zero Coupon Fund - 2010
Rising Dividends Fund
- ----------------------------------------------------- -----------------------------------------------------------------------------
- ----------------------------------------------------- -----------------------------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES ---(IF APPLICABLE)
Franklin Valuemark Funds (cont.) Massachusetts Business Trust Templeton Pacific Growth Fund
Templeton International Equity Fund
Templeton Developing Markets Equity Fund
Templeton Global Growth Fund
Templeton Global Asset Allocation Fund
Small Cap Fund
Capital Growth Fund
Templeton International Smaller Companies
Fund
Mutual Discovery Securities Fund
Mutual Shares Securities Fund
Global Health Care Securities Fund
Value Securities Fund
- ----------------------------------------------------- ----------------------------------- -----------------------------------------
Institutional Fiduciary Trust Massachusetts Business Trust Money Market Portfolio
Franklin U.S. Government Securities Money
Market Portfolio
Franklin U.S. Treasury Money Market
Portfolio
Franklin Institutional Adjustable U.S.
Government Securities Fund
Franklin Institutional Adjustable Rate
Securities Fund
Franklin U.S. Government Agency Money
Market Fund
Franklin Cash Reserves Fund
The Money Market Portfolios Delaware Business Trust The Money Market Portfolio
The U.S. Government Securities Money
Market Portfolio
Templeton Variable Products Series Fund Mutual Shares Investments Fund
Mutual Discovery Investments Fund
- ----------------------------------------------------- -----------------------------------------------------------------------------
- ----------------------------------------------------- -----------------------------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES---(IF APPLICABLE)
- ----------------------------------------------------- -----------------------------------------------------------------------------
CLOSED END FUNDS:
Franklin Multi-Income Trust Massachusetts Business Trust
Franklin Principal Maturity Trust Massachusetts Business Trust
Franklin Universal Trust Massachusetts Business Trust
INTERVAL FUND
Franklin Floating Rate Trust Delaware Business Trust
- ----------------------------------------------------- ----------------------------------- -----------------------------------------
</TABLE>
Law Offices
STRADLEY, RONON, STEVENS & YOUNG, LLP
2600 One Commerce Square
Philadelphia, Pennsylvania 19103-7098
(215) 564-8000
Direct Dial: (215) 564-8115
August 18, 1998
Franklin Templeton Money Fund Trust
777 Mariners Island Blvd.
San Mateo, CA 94403-7777
Re: LEGAL OPINION-SECURITIES ACT OF 1933
Ladies and Gentlemen:
We have examined the Agreement and Declaration of Trust, as amended (the
"Declaration of Trust") of the Franklin Templeton Money Fund Trust (the
"Trust"), a business trust organized under the laws of the State of Delaware on
January 17, 1995, the By-Laws of the Trust and the various pertinent proceedings
we deem material. We have also examined the Notification of Registration and the
Registration Statements filed under the Investment Company Act of 1940 (the
"Investment Company Act") and the Securities Act of 1933 (the "Securities Act"),
all as amended to date, as well as other items we deem material to this opinion.
The Trust is authorized by its Declaration of Trust to issue an unlimited
number of shares of beneficial interest with a par value of $0.01 per share.
The Trust issues a single series designated the Franklin Templeton Money Fund
II. The Declaration of Trust designates, or authorizes the Trustees to
designate, one or more series or classes of shares of the Trust, and allocates,
or authorizes the Trustees to allocate, shares of beneficial interest to each
such series or class. The Declaration of Trust also empowers the Trustees to
designate any additional series or classes and allocate shares to such series
or classes.
The Trust has filed with the U.S. Securities and Exchange Commission (the
"Commission"), a Registration Statement under the Securities Act, which
Registration Statement is deemed to register an indefinite number of shares of
the Trust pursuant to the provisions of Rule 24f-2 under the Investment Company
Act. You have further advised us that the Trust has filed, and each year
hereafter will timely file, a Notice pursuant to Rule 24f-2 perfecting the
registration of the shares sold by the Trust during each fiscal year during
which such registration of an indefinite number of shares remains in effect.
You have also informed us that the shares of the Trust have been, and will
continue to be, sold in accordance with the Trust's usual method of distributing
its registered shares, under which prospectuses are made available for delivery
to offerees and purchasers of such shares in accordance with Section 5(b) of the
Securities Act.
Based upon the foregoing information and examination, so long as the Trust
remains a valid and subsisting trust under the laws of the State of Delaware,
and the registration of an indefinite number of shares of the Trust remains
effective, the authorized shares of the Trust when issued for the consideration
set by the Board of Trustees pursuant to the Declaration of Trust, and subject
to compliance with Rule 24f-2, will be legally outstanding, fully-paid, and
non-assessable shares, and the holders of such shares will have all the rights
provided for with respect to such holding by the Declaration of Trust and the
laws of the State of Delaware.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement of the Trust, and any amendments thereto, covering the
registration of the shares of the Trust under the Securities Act and the
applications, registration statements or notice filings, and amendments thereto,
filed in accordance with the securities laws of the several states in which
shares of the Trust are offered, and we further consent to reference in the
registration statement of the Trust to the fact that this opinion concerning
the legality of the issue has been rendered by us.
Very truly yours,
STRADLEY, RONON, STEVENS & YOUNG, LLP
BY: /S/BRUCE G. LETO
Bruce G. Leto
CONSENT OF INDEPENDENT AUDITOR
We consent to the incorporation by reference in Post-Effective Amendment No. 4
to the Registration Statement of Franklin Templeton Money Fund Trust on Form
N-1A (File No. 33-88924) of our report dated July 30, 1998 on our audit of the
financial statements and financial highlights of the Franklin Templeton Money
Fund II of the Franklin Templeton Money Fund Trust for the year ended June 30,
1998 and our report dated July 30, 1998 on our audit of the financial statements
and financial highlights of The Money Market Portfolios for the year ended June
30, 1998.
PricewaterhouseCoopers LLP
/s/PricewaterhouseCoopers LLP
San Francisco, California
August 20, 1998
POWER OF ATTORNEY
The undersigned officers and trustees of THE MONEY MARKET PORTFOLIOS (the
"Registrant") hereby appoint HARMON E. BURNS, DEBORAH R. GATZEK, KAREN L.
SKIDMORE, LARRY L. GREENE, and MARK H. PLAFKER (with full power to each of them
to act alone) as their attorney-in-fact and agent, in all capacities, to
execute, and to file any of the documents referred to below relating to
Post-Effective Amendments to the Registrant's registration statement, or the
registration statements of other funds investing all or substantially all of
their assets in shares issued by the Registrant, on Form N-1A under the
Investment Company Act of 1940, as amended, and, in the case of a fund investing
all or substantially all of its assets in shares issued by the Registrant, the
Securities Act of 1933, covering the sale of shares of beneficial interest by
the Registrant or such other fund under prospectuses becoming effective after
the date hereof, including any amendment or amendments filed for the purpose of
updating the prospectus/or SAI, registering securities to be issued in
transactions permitted under the federal securities laws or increasing or
decreasing the amount of securities for which registration is being sought, with
all exhibits and any and all documents required to be filed with respect thereto
with any regulatory authority. Each of the undersigned grants to each of said
attorneys full authority to do every act necessary to be done in order to
effectuate the same as fully, to all intents and purposes as he could do if
personally present, thereby ratifying all that said attorneys-in-fact and agents
may lawfully do or cause to be done by virtue hereof.
The undersigned officers and trustees hereby execute this Power of Attorney as
of this 16th day of June 1998.
/s/ Charles E. Johnson /s/ C. B. Johnson
- ---------------------- ----------------------
Charles E. Johnson, Charles B. Johnson,
Principal Executive Officer Trustee
and Trustee
/s/ R. H. Johnson, Jr. /s/ Frank H. Abbott, III
- ------------------------ --------------------------
Rupert H. Johnson, Jr., Frank H. Abbott, III,
Trustee Trustee
/s/ Harris J. Ashton
- ------------------------ --------------------------
Harris J. Ashton, Robert F. Carlson,
Trustee Trustee
/s/ S. Joseph Fortunato /s/ Frank W. T. LaHaye
- ------------------------ --------------------------
S. Joseph Fortunato, Frank W. T. LaHaye,
Trustee Trustee
/s/ Gordon S. Macklin /s/ Diomedes Loo-Tam
- ----------------------- --------------------------
Gordon S. Macklin, Diomedes Loo-Tam,
Trustee Principal Accounting Officer
/s/ Martin L. Flanagan
- -----------------------
Martin L. Flanagan,
Principal Financial Officer
CERTIFICATE OF SECRETARY
I, Deborah R. Gatzek, certify that I am Secretary of The Money Market
Portfolios (the "Trust").
As Secretary of the Trust, I further certify that the following resolution
was adopted by a majority of the Trustees of the Trust present at a meeting
held at 777 Mariners Island Boulevard, San Mateo, California, on June 16,
1998.
RESOLVED, that a Power of Attorney, substantially in the form of the Power
of Attorney presented to his Board, appointing Harmon E. Burns,
Deborah R. Gatzek, Karen L. Skidmore, Larry L. Greene and Mark H.
Plafker as attorneys-in-fact for the purpose of filing documents with
the Securities and Exchange Commission, be executed by each Trustee
and designated officer.
I declare under penalty of perjury that the matters set forth in this
certificate are true and correct of my own knowledge.
Dated: June 16, 1998
/s/ DEBORAH R. GATZEK
Deborah R. Gatzek
Secretary
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FRANKLIN
TEMPLETON MONEY FUND TRUST JUNE 30, 1998 ANNUAL REPORT AND IS QUALIFIED IN ITS
ENTIRETY BY THE REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> FRANKLIN TEMPLETON MONEY FUND II
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 35,390,448
<INVESTMENTS-AT-VALUE> 35,390,448
<RECEIVABLES> 4,107,105
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 39,497,553
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 959,175
<TOTAL-LIABILITIES> 959,175
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38,538,378
<SHARES-COMMON-STOCK> 38,538,378
<SHARES-COMMON-PRIOR> 9,723,773
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 38,538,378
<DIVIDEND-INCOME> 1,342,841
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (269,302)
<NET-INVESTMENT-INCOME> 1,073,539
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,073,539
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,073,539)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 228,746,899
<NUMBER-OF-SHARES-REDEEMED> (200,990,729)
<SHARES-REINVESTED> 1,058,435
<NET-CHANGE-IN-ASSETS> 28,814,605
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (110,622)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (315,773)
<AVERAGE-NET-ASSETS> 24,450,080
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.043
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.043)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 1.250<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
<FN>
<F1>The expense ratio includes the Fund's share of The Money Market Portfolio's
allocated expenses.
</FN>
</TABLE>
