UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSRS

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-03193
---------

FRANKLIN TAX-EXEMPT MONEY FUND
------------------------------
(Exact name of registrant as specified in charter)

_ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
(Address of principal executive offices) (Zip code)

CRAIG S. TYLE, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
-------------------------------------------------------------
(Name and address of agent for service)

Registrant's telephone number, including area code:(650) 312-2000
-------------

Date of fiscal year end: 07/31
-----

Date of reporting period: 01/31/06
--------

ITEM 1. REPORTS TO STOCKHOLDERS.

[GRAPHIC OMITTED]

- --------------------------------------------------------------------------------
JANUARY 31, 2006
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
SEMIANNUAL REPORT AND SHAREHOLDER LETTER TAX-FREE INCOME
- --------------------------------------------------------------------------------
WANT TO RECEIVE
THIS DOCUMENT
FASTER VIA EMAIL?

FRANKLIN
TAX-EXEMPT MONEY FUND Eligible shareholders
can sign up for
eDelivery at
franklintempleton.com.
See inside for
details.

- --------------------------------------------------------------------------------

[LOGO](R)
FRANKLIN TEMPLETON
INVESTMENTS

FRANKLIN o Templeton o Mutual Series

FRANKLIN TEMPLETON INVESTMENTS

GAIN FROM OUR PERSPECTIVE(R)

Franklin Templeton's distinct multi-manager
structure combines the specialized expertise of
three world-class investment management
groups--Franklin, Templeton and Mutual Series.

SPECIALIZED EXPERTISE Each of our portfolio management groups operates
autonomously, relying on its own research and
staying true to the unique investment disciplines
that underlie its success.

FRANKLIN. Founded in 1947, Franklin is a recognized
leader in fixed income investing and also brings
expertise in growth- and value-style U.S. equity
investing.

TEMPLETON. Founded in 1940, Templeton pioneered
international investing and, in 1954, launched what
has become the industry's oldest global fund. Today,
with offices in over 25 countries, Templeton offers
investors a truly global perspective.

MUTUAL SERIES. Founded in 1949, Mutual Series is
dedicated to a unique style of value investing,
searching aggressively for opportunity among what it
believes are undervalued stocks, as well as
arbitrage situations and distressed securities.

TRUE DIVERSIFICATION Because our management groups work independently and
adhere to different investment approaches, Franklin,
Templeton and Mutual Series funds typically have
distinct portfolios. That's why our funds can be
used to build truly diversified allocation plans
covering every major asset class.

RELIABILITY YOU CAN TRUST At Franklin Templeton Investments, we seek to
consistently provide investors with exceptional
risk-adjusted returns over the long term, as well as
the reliable, accurate and personal service that has
helped us become one of the most trusted names in
financial services.

- --------------------------------------------------------------------------------
MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS
- --------------------------------------------------------------------------------

[GRAPHIC OMITTED]

Not part of the semiannual report

CONTENTS

SHAREHOLDER LETTER ........................................................ 1

SEMIANNUAL REPORT

Franklin Tax-Exempt Money Fund ............................................ 3

Performance Summary ....................................................... 4

Your Fund's Expenses ...................................................... 6

Financial Highlights and Statement of Investments ......................... 8

Financial Statements ...................................................... 14

Notes to Financial Statements ............................................. 17

Shareholder Information ................................................... 21

- --------------------------------------------------------------------------------

SEMIANNUAL REPORT

FRANKLIN TAX-EXEMPT MONEY FUND

YOUR FUND'S GOAL AND MAIN INVESTMENTS: Franklin Tax-Exempt Money Fund seeks to
provide as high a level of income exempt from federal income taxes as is
consistent with prudent investment management and preservation of capital. 1 The
Fund invests at least 80% of its total assets in high-quality, short-term
municipal securities free from federal income taxes, including the federal
alternative minimum tax, as it seeks to maintain a stable $1.00 share price.

- --------------------------------------------------------------------------------
PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN WILL FLUCTUATE. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN. PLEASE VISIT FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236 FOR
MOST RECENT MONTH-END PERFORMANCE.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY OR INSTITUTION. ALTHOUGH
THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT
IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
- --------------------------------------------------------------------------------

We are pleased to bring you Franklin Tax-Exempt Money Fund's semiannual report
for the period ended January 31, 2006.

PERFORMANCE OVERVIEW

With rising short-term interest rates, money market portfolio yields climbed
during the period. Largely as a result, Franklin Tax-Exempt Money Fund's
seven-day effective yield rose from 1.49% at the beginning of the period to
2.37% on January 31, 2006.

ECONOMIC AND MARKET OVERVIEW

The U.S. economy continued to grow during the six months under review; however,
gross domestic product growth slowed from 4.1% annualized in third quarter 2005
to an estimated 1.6% annualized in the fourth quarter -- the slowest pace in
three years. 2 However, many analysts expected first quarter 2006 growth to
rebound from fourth quarter 2005's tepid level. Over the reporting period,
nonfarm payroll data, as well as other indexes, showed growing employment.
Consumer spending increased 6.8% (not adjusted for inflation) in January 2006
compared with the same month a year earlier, which supported the nation's
economic progress. 2

1. For investors subject to alternative minimum tax, a small portion of Fund
dividends may be taxable. Distributions of capital gains are generally taxable.

2. Source: Bureau of Economic Analysis.

THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND NAMES OF ALL
PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF INVESTMENTS (SOI). THE
SOI BEGINS ON PAGE 9.

Semiannual Report | 3

PERFORMANCE SUMMARY
1/31/06

- --------------------------------------------
Seven-day effective yield 1 2.37%
- --------------------------------------------
Seven-day annualized yield 2.35%
- --------------------------------------------
Taxable equivalent yield 2 3.61%
- --------------------------------------------

1. Seven-day effective yield assumes the compounding of daily dividends.

2. Taxable equivalent yield assumes the 2006 maximum regular federal income tax
rate of 35.00%. Annualized and effective yields are for the seven-day period
ended 1/31/06. The Fund's average weighted maturity was 29 days. Yields reflect
Fund expenses and fluctuations in interest rates on portfolio investments.

PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN WILL FLUCTUATE. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN. PLEASE VISIT FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236 FOR
MOST RECENT MONTH-END PERFORMANCE.

Business spending also rose during the reporting period, contributing to
economic growth. Historically low interest rates allowed many companies easy
access to capital, and ample cash also helped some companies to support their
spending plans. On the other hand, labor costs accelerated and business
productivity fell unexpectedly during fourth quarter 2005, the first decline in
nearly five years.

Oil prices remained high during the period amid concerns about potential
long-term supply limitations in the face of expected strong growth in global
demand, especially from China and India, and the potential for supply
disruptions stemming from geopolitical turmoil in several major oil-producing
countries. Despite high commodity prices, inflation remained relatively
contained for the 12 months ended January 31, 2006, as measured by the 2.1% rise
for the core Consumer Price Index (CPI), which was slightly below the core CPI's
10-year average of 2.2%. 3 During the six-month period, the Federal Reserve
Board (Fed) raised the federal funds target rate to 4.50% from 3.25%. In
January, the Fed acknowledged the economy's strength as well as potential
inflationary pressure from high energy prices, and suggested "some further
policy firming may be needed."

The 10-year Treasury note fluctuated considerably over the past six months, but
overall its yield rose from 4.28% at the beginning of the period to 4.53% on
January 31, 2006. The yield on the 30-year Treasury rose from 4.47% to 4.68%
during the same time. As short-term interest rates rose more than intermediate-
and long-term rates, the spread between short-term and long-term rates narrowed
and the yield curve flattened.

INVESTMENT STRATEGY

We invest predominantly in high-quality, short-term municipal securities.
Although the Fund tries to invest all of its assets in tax-free securities, it
is possible, although not anticipated, that a portion of its assets may be in
securities that pay taxable interest, including interest that may be subject to
federal alternative minimum tax. We maintain a dollar-weighted average portfolio
maturity of 90 days or less.

3. Source: Bureau of Labor Statistics. Core CPI excludes food and energy costs.

4 | Semiannual Report

MANAGER'S DISCUSSION

Short-term municipal bond yields increased during the reporting period,
reflecting the Fed's consecutive increases in the federal funds target rate. The
Bond Market Association Municipal Swap Index, a benchmark for variable rate
securities, which make up a large portion of Franklin Tax-Exempt Money Fund,
averaged a rate of 2.78% for the period under review. 4

During the reporting period, the Fund participated in several new issues
including Iowa School Cash Anticipation Program Notes, Massachusetts State
Development Finance Agency Revenue Commercial Paper Program, and Michigan
Municipal Bond Authority Revenue Notes.

Thank you for your continued participation in Franklin Tax-Exempt Money Fund. We
look forward to serving your future investment needs.

PORTFOLIO BREAKDOWN
1/31/06

- --------------------------------------------------------------------------------
% OF TOTAL
INVESTMENTS
- --------------------------------------------------------------------------------
Variable Rate Notes 81.84%
- --------------------------------------------------------------------------------
Notes & Bonds 12.74%
- --------------------------------------------------------------------------------
Tax-Exempt Commercial Paper 4.84%
- --------------------------------------------------------------------------------
Put or Option Tender Bonds 0.58%
- --------------------------------------------------------------------------------

4. Source: Thomson Financial. The Bond Market Association Municipal Swap Index
is a weekly high-grade market index composed of seven-day tax-exempt variable
rate demand notes and is produced by the Municipal Market Data Group. Actual
issues are selected from Municipal Market Data's database of more than 10,000
active issues based on several specific criteria. The index is unmanaged and
does not reflect management fees and expenses that affect Fund performance.

THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF JANUARY 31, 2006, THE END OF THE REPORTING PERIOD. THE WAY WE IMPLEMENT
OUR MAIN INVESTMENT STRATEGIES AND THE RESULTING PORTFOLIO HOLDINGS MAY CHANGE
DEPENDING ON FACTORS SUCH AS MARKET AND ECONOMIC CONDITIONS. THESE OPINIONS MAY
NOT BE RELIED UPON AS INVESTMENT ADVICE OR AN OFFER FOR A PARTICULAR SECURITY.
THE INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET,
COUNTRY, INDUSTRY, SECURITY OR THE FUND. STATEMENTS OF FACT ARE FROM SOURCES
CONSIDERED RELIABLE, BUT THE ADVISER MAKES NO REPRESENTATION OR WARRANTY AS TO
THEIR COMPLETENESS OR ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS, THESE INSIGHTS MAY HELP YOU UNDERSTAND OUR INVESTMENT
MANAGEMENT PHILOSOPHY.

Semiannual Report | 5

YOUR FUND'S EXPENSES

As a Fund shareholder, you can incur two types of costs:

o Transaction costs, including sales charges (loads) on Fund purchases and
redemption fees; and

o Ongoing Fund costs, including management fees, distribution and service
(12b-1) fees, and other Fund expenses. All mutual funds have ongoing
costs, sometimes referred to as operating expenses.

The following table shows ongoing costs of investing in the Fund and can help
you understand these costs and compare them with those of other mutual funds.
The table assumes a $1,000 investment held for the six months indicated.

ACTUAL FUND EXPENSES

The first line (Actual) of the table below provides actual account values and
expenses. The "Ending Account Value" is derived from the Fund's actual return,
which includes the effect of Fund expenses.

You can estimate the expenses you paid during the period, by following these
steps. OF COURSE, YOUR ACCOUNT VALUE AND EXPENSES WILL DIFFER FROM THOSE IN THIS
ILLUSTRATION:

1. Divide your account value by $1,000.

IF AN ACCOUNT HAD AN $8,600 VALUE, THEN $8,600 / $1,000 = 8.6.

2. Multiply the result by the number under the heading "Expenses Paid During
Period."

IF EXPENSES PAID DURING PERIOD WERE $7.50, THEN 8.6 X $7.50 = $64.50.

In this illustration, the estimated expenses paid this period are $64.50.

HYPOTHETICAL EXAMPLE FOR COMPARISON WITH OTHER FUNDS

Information in the second line (Hypothetical) of the table can help you compare
ongoing costs of investing in the Fund with those of other mutual funds. This
information may not be used to estimate the actual ending account balance or
expenses you paid during the period. The hypothetical "Ending Account Value" is
based on the Fund's actual expense ratio and an assumed 5% annual rate of return
before expenses, which does not represent the Fund's actual return. The figure
under the heading "Expenses Paid During Period" shows the hypothetical expenses
your account would have incurred under this scenario. You can compare this
figure with the 5% hypothetical examples that appear in shareholder reports of
other funds.

6 | Semiannual Report

YOUR FUND'S EXPENSES (CONTINUED)

PLEASE NOTE THAT EXPENSES SHOWN IN THE TABLE ARE MEANT TO HIGHLIGHT ONGOING
COSTS AND DO NOT REFLECT ANY TRANSACTION COSTS, SUCH AS SALES CHARGES OR
REDEMPTION FEES. Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you compare total costs of owning
different funds. In addition, if transaction costs were included, your total
costs would have been higher. Please refer to the Fund prospectus for additional
information on operating expenses.

- --------------------------------------------------------------------------------------------------------------
BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING
VALUE 8/1/05 VALUE 1/31/06 PERIOD* 8/1/05-1/31/06
- --------------------------------------------------------------------------------------------------------------

Actual $1,000 $1,010.40 $3.75
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,021.48 $3.77
- --------------------------------------------------------------------------------------------------------------

*Expenses are equal to the annualized expense ratio of 0.74%, multiplied by the
average account value over the period, multiplied by 184/365 to reflect the
one-half year period.

Semiannual Report | 7

FRANKLIN TAX-EXEMPT MONEY FUND

FINANCIAL HIGHLIGHTS

------------------------------------------------------------------------------
SIX MONTHS ENDED
JANUARY 31, 2006 YEAR ENDED JULY 31,
(UNAUDITED) 2005 2004 2003 2002 2001
------------------------------------------------------------------------------

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 $ 1.00 $ 1.00
------------------------------------------------------------------------------

Income from investment operations -
net investment income ........................... 0.010 0.011 0.002 0.005 0.011 0.029

Less distributions from net investment income .... (0.010) (0.011) (0.002) (0.005) (0.011) (0.029)
------------------------------------------------------------------------------
Net asset value, end of period ................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==============================================================================

Total return a ................................... 1.04% 1.11% 0.23% 0.53% 1.06% 2.98%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of period (000's) ................ $175,560 $165,736 $179,372 $176,834 $163,710 $167,705

Ratios to average net assets:

Expenses ........................................ 0.74% b 0.73% 0.74% 0.76% 0.76% 0.76%

Net investment income ........................... 2.02% b 1.10% 0.24% 0.53% 1.05% 2.94%

a Total return does not reflect the contingent deferred sales charge, and is
not annualized for periods less than one year.

b Annualized.

8 | See notes to financial statements. | Semiannual Report

FRANKLIN TAX-EXEMPT MONEY FUND

STATEMENT OF INVESTMENTS, JANUARY 31, 2006 (UNAUDITED)

- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------

SHORT TERM INVESTMENTS 100.0%
BONDS 100.0%
ALABAMA 1.1%
a Evergreen IDB, IDR, Tenax Manufacturing Project, Refunding, Weekly VRDN and Put, 3.03%,
12/01/12 ........................................................................................ $1,900,000 $ 1,900,000
-----------
ARIZONA 2.0%
a Apache County IDA, IDR, Tucson Electric Power Co. Project, Springerville Project, Series C,
Weekly VRDN and Put, 3.01%, 12/15/18 ............................................................ 1,000,000 1,000,000
a Arizona Health Facilities Authority Hospital System Revenue, Series B, MBIA Insured,
Weekly VRDN and Put, 3.02%, 10/01/26 ............................................................ 1,600,000 1,600,000
a Nanotechnology Research LLC Lease Revenue, Arizona State University Project, Series A,
MBIA Insured, Weekly VRDN and Put, 3.03%, 3/01/34 ............................................... 1,000,000 1,000,000
-----------
3,600,000
-----------
COLORADO 7.7%
a Colorado Springs Utilities Revenue, sub. lien, Series A, Weekly VRDN and Put, 3.02%,
11/01/29 ........................................................................................ 5,000,000 5,000,000
a Denver City and County COP,
Refunding, AMBAC Insured, Weekly VRDN and Put, 3.00%, 12/01/29 .................................. 4,000,000 4,000,000
Wellington E Web, Refunding, Series C3, AMBAC Insured, Weekly VRDN and Put, 3.03%,
12/01/29 ........................................................................................ 3,000,000 3,000,000
a University of Colorado COP, Series A, Weekly VRDN and Put, 3.03%, 7/01/18 ......................... 1,475,000 1,475,000
-----------
13,475,000
-----------
FLORIDA 5.0%
Cape Coral, TECP, 2.80%, 2/17/06 .................................................................. 2,500,000 2,500,000
a Florida Higher Education Facilities Financing Authority Revenue, St. Thomas University Project,
Daily VRDN and Put, 3.08%, 1/01/19 .............................................................. 1,600,000 1,600,000
a Martin County IDA, IDR, YMCA Treasure Coast Project, Weekly VRDN and Put, 3.03%,
10/01/16 ........................................................................................ 1,300,000 1,300,000
a Orange County School Board COP, Series B,
AMBAC Insured, Daily VRDN and Put, 3.07%, 8/01/25 ............................................... 2,275,000 2,275,000
MBIA Insured, Daily VRDN and Put, 3.07%, 8/01/27 ................................................ 1,035,000 1,035,000
-----------
8,710,000
-----------
GEORGIA 12.1%
a Atlanta Downtown Development Authority Revenue, Underground Atlanta Project, Refunding,
AMBAC Insured, Weekly VRDN and Put, 3.00%, 10/01/16 ............................................. 805,000 805,000
a Atlanta Water and Wastewater Revenue, Series C, FSA Insured, Daily VRDN and Put, 3.07%,
11/01/41 ........................................................................................ 3,700,000 3,700,000
a Fulco Hospital Authority Revenue, Anticipation Certificates, Shepherd Center Inc. Project,
Weekly VRDN and Put, 3.05%, 9/01/17 ............................................................. 1,000,000 1,000,000
a Gainesville RDA Educational Facilities Revenue, Riverside Military Project, Weekly VRDN and
Put, 3.03%, 12/01/25 ............................................................................ 4,600,000 4,600,000
a Metropolitan Atlanta Rapid Transit Authority Sales Tax Revenue, Series B, Weekly VRDN and
Put, 3.02%, 7/01/25 ............................................................................. 8,000,000 8,000,000
a Roswell Housing Authority MFR, Azalea Park Apartments, Refunding, FNMA Insured,
Weekly VRDN and Put, 3.04%, 6/15/25 ............................................................. 3,200,000 3,200,000
-----------
21,305,000
-----------

Semiannual Report | 9

FRANKLIN TAX-EXEMPT MONEY FUND

STATEMENT OF INVESTMENTS, JANUARY 31, 2006 (UNAUDITED) (CONTINUED)

SHORT TERM INVESTMENTS (CONT.)
BONDS (CONT.)
HAWAII 1.6%
a Hawaii State Department of Budget and Finance Special Purpose Revenue, Adventist Health
System West, Weekly VRDN and Put, 3.03%, 3/01/08 .............................................. $2,800,000 $ 2,800,000
-----------
IDAHO 1.7%
Idaho State Revenue, TAN, 4.00%, 6/30/06 ........................................................ 3,000,000 3,016,222
-----------
ILLINOIS 4.4%
Chicago GO, Tender Notes, Mandatory Put 12/07/06, 3.37%, 2/02/07 ................................ 2,000,000 2,000,000
a Illinois State Toll Highway Authority Toll Highway Priority Revenue, Refunding, Series B,
MBIA Insured, Weekly VRDN and Daily Put, 3.03%, 1/01/10 ....................................... 5,690,000 5,690,000
-----------
7,690,000
-----------
IOWA 2.9%
Iowa State School Cash Anticipation Program, wts. Certificates,
Series A, FSA Insured, 4.00%, 6/28/06 ........................................................ 3,000,000 3,016,118
Series B, FSA Insured, 4.50%, 1/26/07 ........................................................ 2,000,000 2,024,569
-----------
5,040,687
-----------
KENTUCKY 2.2%
a Kentucky Development Finance Authority Revenue, Pooled Loan Program, Series A,
FGIC Insured, Weekly VRDN and Put, 3.04%, 12/01/15 ............................................ 3,900,000 3,900,000
-----------
LOUISIANA 4.3%
a Louisiana State Offshore Terminal Authority Deepwater Port Revenue, Loop Inc. Project,
First Stage, ACES, Refunding, Daily VRDN and Put, 3.07%, 9/01/17 .............................. 7,500,000 7,500,000
-----------
MARYLAND 1.2%
a Community Development Administration MF Development Revenue, Avalon Ridge Apartments
Project, Refunding, FNMA Insured, Weekly VRDN and Put, 3.01%, 6/15/26 ......................... 2,100,000 2,100,000
-----------
MASSACHUSETTS 10.2%
a Massachusetts Bay Transportation Authority GO, General Transportation System, Weekly VRDN
and Put, 3.00%, 3/01/30 ....................................................................... 4,600,000 4,600,000
Massachusetts State Development Finance Agency Revenue, TECP, 3.05%, 3/01/06 .................... 3,000,000 3,000,000
a Massachusetts State GO, Refunding, Series B, Weekly VRDN and Put, 3.00%, 9/01/16 ................ 1,800,000 1,800,000
a Massachusetts State Health and Educational Facilities Authority Revenue, Capital Assets
Program, Series D, MBIA Insured, Daily VRDN and Put, 3.07%, 1/01/35 ........................... 2,020,000 2,020,000
a Massachusetts State Water Resource Authority Revenue, Multi-Modal, Refunding, Sub Series D,
Daily VRDN and Put, 3.07%, 8/01/17 ............................................................ 6,550,000 6,550,000
-----------
17,970,000
-----------
MICHIGAN 9.0%
a Detroit Sewage Disposal Revenue, senior lien,
Refunding, Series C-2, FGIC Insured, Weekly VRDN and Put, 3.04%, 7/01/29 ..................... 3,000,000 3,000,000
Series B, FSA Insured, Daily VRDN and Put, 3.07%, 7/01/33 .................................... 800,000 800,000
Michigan Municipal Bond Authority Revenue,
Detroit School District, Series A, 3.75%, 3/21/06 ............................................ 1,000,000 1,001,538
Notes, Series B-2, 4.00%, 8/18/06 ............................................................ 1,000,000 1,005,681
Michigan State GO, Series A, 4.50%, 9/29/06 ..................................................... 2,000,000 2,015,866

10 | Semiannual Report

FRANKLIN TAX-EXEMPT MONEY FUND

STATEMENT OF INVESTMENTS, JANUARY 31, 2006 (UNAUDITED) (CONTINUED)

SHORT TERM INVESTMENTS (CONT.)
BONDS (CONT.)
MICHIGAN (CONT.)
a Michigan State Revenue, Grant Anticipation Notes, Series B, FSA Insured, Weekly VRDN and
Put, 3.04%, 9/15/09 ........................................................................... $1,100,000 $ 1,100,000
a Michigan State University Revenues, Series A, Daily VRDN and Put, 3.07%, 8/15/32 ................ 6,960,000 6,960,000
-----------
15,883,085
-----------
MINNESOTA 2.7%
a Brown County Purchase Revenue, Martin Luther College Project, Weekly VRDN and Put, 2.99%,
9/01/24 ....................................................................................... 1,500,000 1,500,000
a Minneapolis MFR, Seven Corners Apartments Project, Weekly VRDN and Put, 2.99%,
11/01/31 ...................................................................................... 250,000 250,000
a Minneapolis Revenue, Adjusted Guthrie Theater Project, Series A, Weekly VRDN and Put,
3.02%, 10/01/23 ............................................................................... 3,000,000 3,000,000
-----------
4,750,000
-----------
NEVADA 0.6%
Clark County Highway Revenue, TECP, 3.06%, 2/06/06 .............................................. 1,000,000 1,000,000
-----------
NEW HAMPSHIRE 1.7%
a New Hampshire Higher Educational and Health Facilities Authority Revenue, VHA New
England Inc., Series G, AMBAC Insured, Weekly VRDN and Put, 3.01%, 12/01/25 ................... 3,025,000 3,025,000
-----------
NEW JERSEY 2.0%
a New Jersey State Turnpike Authority Turnpike Revenue,
Series C-2, FSA Insured, Weekly VRDN and Put, 3.00%, 1/01/24 ................................. 2,500,000 2,500,000
Series D, FGIC Insured, Weekly VRDN and Put, 3.01%, 1/01/18 .................................. 1,000,000 1,000,000
-----------
3,500,000
-----------
NEW MEXICO 5.9%
a Albuquerque Gross Receipts Lodgers Tax Revenue, Weekly VRDN and Put, 3.05%, 7/01/23 ............. 300,000 300,000
a Farmington PCR, Arizona Public Service Co.,
Refunding, Series B, Daily VRDN and Put, 3.07%, 9/01/24 ...................................... 3,400,000 3,400,000
Series A, Daily VRDN and Put, 3.10%, 5/01/24 ................................................. 4,400,000 4,400,000
New Mexico State GO, TRAN, 4.50%, 6/30/06 ....................................................... 2,000,000 2,010,059
a University of New Mexico Revenues, Refunding, AMBAC Insured, Weekly VRDN and Put,
3.03%, 6/01/06 ................................................................................ 200,000 200,000
-----------
10,310,059
-----------
NORTH CAROLINA 2.2%
a North Carolina State GO, Public Improvement, Series D, Weekly VRDN and Put, 2.95%,
5/01/21 ....................................................................................... 2,900,000 2,900,000
Wake County GO, Public Improvement, Mandatory Put 4/01/06, Series B, 4.00%, 4/01/16 ............. 1,000,000 1,011,770
-----------
3,911,770
-----------
PENNSYLVANIA 8.6%
a Delaware Valley Regional Finance Authority Local Government Revenue,
Series A, Weekly VRDN and Put, 3.05%, 12/01/20 ............................................... 2,150,000 2,150,000
Series C, Weekly VRDN and Put, 3.05%, 12/01/20 ............................................... 700,000 700,000
Series D, Weekly VRDN and Put, 3.05%, 12/01/20 ............................................... 3,100,000 3,100,000

Semiannual Report | 11

FRANKLIN TAX-EXEMPT MONEY FUND

STATEMENT OF INVESTMENTS, JANUARY 31, 2006 (UNAUDITED) (CONTINUED)

SHORT TERM INVESTMENTS (CONT.)
BONDS (CONT.)
PENNSYLVANIA (CONT.)
a Emmaus General Authority Revenue,
Local Government, Series F-19, Weekly VRDN and Put, 3.05%, 3/01/24 .......................... $1,250,000 $ 1,250,000
Sub Series G-19, Weekly VRDN and Put, 3.05%, 3/01/24 ........................................ 1,800,000 1,800,000
a Lehigh County General Purpose Authority Revenues, St. Lukes Hospital Project, Daily VRDN
and Put, 3.04%, 7/01/31 ...................................................................... 1,400,000 1,400,000
Temple University of the Commonwealth System of Higher Education GO, University Funding
Obligation, Refunding, 4.00%, 4/28/06 ........................................................ 1,700,000 1,704,792
a Upper Dauphin IDAR, United Church Christ Homes, Weekly VRDN and Put, 3.03%,
12/01/26 ..................................................................................... 3,000,000 3,000,000
------------
15,104,792
------------
TENNESSEE 3.5%
a Blount County PBA Revenue, Local Public Improvement, Series D-1-A, AMBAC Insured,
Daily VRDN and Put, 3.07%, 6/01/30 ........................................................... 2,000,000 2,000,000
a Montgomery County PBA Pooled Financing Revenue, Tennessee County Loan Pool,
Daily VRDN and Put, 3.08%, 7/01/34 .......................................................... 2,400,000 2,400,000
Weekly VRDN and Put, 3.02%, 11/01/27 ........................................................ 1,700,000 1,700,000
------------
6,100,000
------------
TEXAS 6.0%
a Bexar County HFA, MFR, Altamonte Apartments Project, Refunding, FNMA Insured,
Weekly VRDN and Put, 3.03%, 9/15/26 .......................................................... 3,900,000 3,900,000
Texas State Department of Transportation, TECP, 3.10%, 2/08/06 ................................. 2,000,000 2,000,000
Texas State GO, TRAN, 4.50%, 8/31/06 ........................................................... 4,525,000 4,564,231
------------
10,464,231
------------
WASHINGTON 1.4%
a Snohomish County PUD No. 001 Generation System Revenue, Refunding, Series A-1,
FSA Insured, Weekly VRDN and Put, 3.04%, 12/01/19 ............................................ 2,470,000 2,470,000
------------
TOTAL SHORT TERM INVESTMENTS (COST $175,525,846) ............................................... 175,525,846
OTHER ASSETS, LESS LIABILITIES 0.0% b .......................................................... 34,456
------------
NET ASSETS 100.0% .............................................................................. $175,560,302
============

a Variable rate demand notes (VRDNs) are tax-exempt obligations which contain a
floating or variable interest rate adjustment formula and an unconditional right
of demand to receive payment of the principal balance plus accrued interest at
specified dates. The coupon rate shown represents the rate at period end. VRDNs
are valued at cost.

b Rounds to less than 0.05% of net assets.

12 | See notes to financial statements. | Semiannual Report

FRANKLIN TAX-EXEMPT MONEY FUND

STATEMENT OF INVESTMENTS, JANUARY 31, 2006 (UNAUDITED)

SELECTED PORTFOLIO ABBREVIATIONS

ACES - Adjustable Convertible Exempt Securities
AMBAC - American Municipal Bond Assurance Corp.
COP - Certificate of Participation
FGIC - Financial Guaranty Insurance Co.
FNMA - Federal National Mortgage Association
FSA - Financial Security Assurance Inc.
GO - General Obligation
HFA - Housing Finance Authority/Agency
IDA - Industrial Development Authority/Agency
IDAR - Industrial Development Authority/Agency Revenue
IDB - Industrial Development Bond/Board
IDR - Industrial Development Revenue
MBIA - Municipal Bond Investors Assurance Corp.
MF - Multi-Family
MFR - Multi-Family Revenue
PBA - Public Building Authority
PCR - Pollution Control Revenue
PUD - Public Utility District
RDA - Redevelopment Agency/Authority
TAN - Tax Anticipation Notes
TECP - Tax-Exempt Commercial Paper
TRAN - Tax and Revenue Anticipation Notes
VHA - Volunteer Hospital of America

Semiannual Report | See notes to financial statements. | 13

FRANKLIN TAX-EXEMPT MONEY FUND

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
January 31, 2006 (unaudited)

Assets:
Investments in securities, at value and cost ............ $ 175,525,846
Cash .................................................... 231,947
Receivables:
Capital shares sold .................................... 789,657
Interest ............................................... 844,270
-------------
Total assets ....................................... 177,391,720
-------------
Liabilities:
Payables:
Capital shares redeemed ................................ 1,698,547
Affiliates ............................................. 104,543
Distributions to shareholders .......................... 23,105
Accrued expenses and other liabilities .................. 5,223
-------------
Total liabilities .................................. 1,831,418
-------------
Net assets, at value .............................. $ 175,560,302
=============
Net assets consist of:
Paid-in capital ......................................... $ 175,613,641
Accumulated net realized gain (loss) .................... (53,339)
-------------
Net assets, at value .............................. $ 175,560,302
=============
Shares outstanding ....................................... 175,615,977
=============
Net asset value per share a .............................. $ 1.00
=============

a Redemption price is equal to net asset value less contingent deferred
sales charges, if applicable.

14 | See notes to financial statements. | Semiannual Report

FRANKLIN TAX-EXEMPT MONEY FUND

FINANCIAL STATEMENTS (CONTINUED)

STATEMENT OF OPERATIONS
for the six months ended January 31, 2006 (unaudited)

Investment income:
Interest ........................................................ $2,413,253
----------
Expenses:
Management fees (Note 3a) ....................................... 505,113
Transfer agent fees (Note 3c) ................................... 79,787
Custodian fees .................................................. 1,277
Reports to shareholders ......................................... 17,581
Registration and filing fees .................................... 27,054
Professional fees ............................................... 5,982
Directors' fees and expenses .................................... 4,697
Other ........................................................... 7,211
----------
Total expenses ............................................. 648,702
----------
Net investment income ..................................... 1,764,551
----------
Net realized gain (loss) from investments ........................ --
----------
Net increase (decrease) in net assets resulting from operations .. $1,764,551
==========

Semiannual Report | See notes to financial statements. | 15

FRANKLIN TAX-EXEMPT MONEY FUND

FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF CHANGES IN NET ASSETS

---------------------------------
SIX MONTHS ENDED
JANUARY 31, 2006 YEAR ENDED
(UNAUDITED) JULY 31, 2005
---------------------------------

Increase (decrease) in net assets:
Operations:
Net investment income ...................................................................... $ 1,764,551 $ 1,873,525
Net realized gain (loss) from investments .................................................. -- (282)
---------------------------------
Net increase (decrease) in net assets resulting from operations ........................ 1,764,551 1,873,243
---------------------------------
Distributions to shareholders from net investment income .................................... (1,820,226) (1,873,243) a
Capital share transactions (Note 2) ......................................................... 9,880,326 (13,636,263)
---------------------------------
Net increase (decrease) in net assets .................................................. 9,824,651 (13,636,263)
Net assets (there is no undistributed net investment income at beginning or end of period):
Beginning of period ......................................................................... 165,735,651 179,371,914
---------------------------------
End of period ............................................................................... $ 175,560,302 $ 165,735,651
=================================

a Distributions were decreased by a net realized loss from investments of
$282.

16 | See notes to financial statements. | Semiannual Report

FRANKLIN TAX-EXEMPT MONEY FUND

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Franklin Tax-Exempt Money Fund (the Fund) is registered under the Investment
Company Act of 1940 as a diversified, open-end investment company.

The following summarizes the Fund's significant accounting policies.

A. SECURITY VALUATION

Securities are valued at amortized cost which approximates market value. This
method involves valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any discount or premium. All security
valuation procedures are approved by the Fund's Board of Directors.

B. INCOME TAXES

No provision has been made for U.S. income taxes because the Fund's policy is to
continue to qualify as a regulated investment company under the Internal Revenue
Code and to distribute to shareholders substantially all of its income and net
realized gains.

C. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS

Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income and estimated expenses are accrued daily. Amortization of
premium and accretion of discount on debt securities are included in interest
income. Dividends from net investment income are normally declared daily. Such
distributions are reinvested in additional shares of the Fund. Distributions to
shareholders are determined according to income tax regulations (tax basis).
Distributable earnings determined on a tax basis may differ from earnings
recorded in accordance with generally accepted accounting principles. These
differences may be permanent or temporary. Permanent differences are
reclassified among capital accounts to reflect their tax character. These
reclassifications have no impact on net assets or the results of operations.
Temporary differences are not reclassified, as they may reverse in subsequent
periods.

D. ACCOUNTING ESTIMATES

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the amounts of income
and expenses during the reporting period. Actual results could differ from those
estimates.

Semiannual Report | 17

FRANKLIN TAX-EXEMPT MONEY FUND

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

E. GUARANTEES AND INDEMNIFICATIONS

Under the Fund's organizational documents, its officers and directors are
indemnified by the Fund against certain liabilities arising out of the
performance of their duties to the Fund. Additionally, in the normal course of
business, the Fund enters into contracts with service providers that contain
general indemnification clauses. The Fund's maximum exposure under these
arrangements is unknown as this would involve future claims that may be made
against the Fund that have not yet occurred. However, based on experience, the
Fund expects the risk of loss to be remote.

2. CAPITAL STOCK

At January 31, 2006, there were 5 billion shares authorized (no par value).
Transactions in the Fund's shares at $1.00 per share were as follows:

----------------------------------
SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 2006 JULY 31, 2005
----------------------------------

Shares sold ................................................................ $ 101,996,985 $ 212,615,914
Shares issued in reinvestment of distributions ............................. 1,803,506 1,880,299
Shares redeemed ............................................................ (93,920,165) (228,132,476)
----------------------------------
Net increase (decrease) .................................................... $ 9,880,326 $ (13,636,263)
===================================

3. TRANSACTIONS WITH AFFILIATES

Franklin Resources, Inc. is the holding company for various subsidiaries that
together are referred to as Franklin Templeton Investments. Certain officers and
directors of the Fund are also officers and/or directors of the following
subsidiaries:

- ---------------------------------------------------------------------------------------------
SUBSIDIARY AFFILIATION
- ---------------------------------------------------------------------------------------------

Franklin Advisers, Inc. (Advisers) Investment manager
Franklin Templeton Services, LLC (FT Services) Administrative manager
Franklin Templeton Distributors, Inc. (Distributors) Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services) Transfer agent

A. MANAGEMENT FEES

The Fund pays an investment management fee to Advisers based on the average
daily net assets of the Fund as follows:

- --------------------------------------------------------------------------------
ANNUALIZED FEE RATE NET ASSETS
- --------------------------------------------------------------------------------
0.625% Up to and including $100 million
0.500% Over $100 million, up to and including $250 million
0.450% In excess of $250 million

18 | Semiannual Report

FRANKLIN TAX-EXEMPT MONEY FUND

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

3. TRANSACTIONS WITH AFFILIATES (CONTINUED)

B. ADMINISTRATIVE FEES

Under an agreement with Advisers, FT Services provides administrative services
to the Fund. The fee is paid by Advisers based on average daily net assets, and
is not an additional expense of the Fund.

C. TRANSFER AGENT FEES

The Fund paid transfer agent fees of $79,787, of which $56,176 was retained by
Investor Services.

4. INCOME TAXES

At July 31, 2005, the Fund had tax basis capital losses which may be carried
over to offset future capital gains, if any. At July 31, 2005, the capital loss
carryforwards were as follows:

Capital loss carryforwards expiring in:
2008........................................................ $ 8,419
2009........................................................ 26,572
2012........................................................ 17,134
2013........................................................ 932
-------
$53,057
=======

For tax purposes, realized capital losses occurring subsequent to October 31,
may be deferred and treated as occurring on the first day of the following
fiscal year. At July 31, 2005, the Fund deferred realized capital losses of
$282.

At January 31, 2006, the cost of investments for book and income tax purposes
was the same.

5. REGULATORY MATTERS

As part of various investigations by a number of federal, state, and foreign
regulators and governmental entities, relating to certain practices in the
mutual fund industry, including late trading, market timing and marketing
support payments to securities dealers who sell fund shares, Franklin Resources,
Inc. and certain of its subsidiaries (collectively, the "Company"), entered into
settlements with certain of those regulators.

Specifically, the Company entered into settlements with the Securities and
Exchange Commission ("SEC") concerning market timing (the "August 2, 2004 SEC
Order") and marketing support payments to securities dealers who sell fund
shares (the "December 13, 2004 SEC Order") and with the California Attorney
General's Office ("CAGO") concerning marketing support payments to securities
dealers who sell fund shares (the "CAGO Settlement"). Under the terms of the
settlements with the SEC and the CAGO, the Company retained an Independent
Distribution Consultant ("IDC") to develop a plan for distribution of the
respective settlement monies. The CAGO

Semiannual Report | 19

FRANKLIN TAX-EXEMPT MONEY FUND

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

5. REGULATORY MATTERS (CONTINUED)

approved the distribution plan under the CAGO Settlement and, in accordance with
the terms and conditions of that settlement, the monies were disbursed to the
relevant funds. The Fund did not participate in the CAGO Settlement. The SEC has
not yet approved the distribution plan pertaining to the December 13, 2004 SEC
Order. When approved, disbursements of settlement monies will be made promptly
to the relevant funds, in accordance with the terms and conditions of that
order. The IDC has also prepared and submitted to the SEC for its approval a
plan of distribution under the August 2, 2004 SEC Order that resolved the SEC's
market timing investigation.

In addition, the Company, as well as most of the mutual funds within Franklin
Templeton Investments and certain current or former officers, directors, and/or
employees, have been named in private lawsuits (styled as shareholder class
actions, or as derivative actions on behalf of either the named funds or
Franklin Resources, Inc.) relating to the industry practices referenced above,
as well as to allegedly excessive advisory fees, commissions, and/or 12b-1 fees.
The lawsuits were filed in different courts throughout the country. Many of
those suits are now pending in a multi-district litigation in the United States
District Court for the District of Maryland.

The Company and fund management strongly believe that the claims made in each of
the private lawsuits referenced above are without merit and intend to defend
against them vigorously. The Company cannot predict with certainty the eventual
outcome of these lawsuits, nor whether they will have a material negative impact
on the Company. If it is determined that the Company bears responsibility for
any unlawful or inappropriate conduct that caused losses to the Fund, it is
committed to making the Fund or its shareholders whole, as appropriate.

20 | Semiannual Report

FRANKLIN TAX-EXEMPT MONEY FUND

SHAREHOLDER INFORMATION

PROXY VOTING POLICIES AND PROCEDURES

The Fund has established Proxy Voting Policies and Procedures ("Policies") that
the Fund uses to determine how to vote proxies relating to portfolio securities.
Shareholders may view the Fund's complete Policies online at
franklintempleton.com. Alternatively, shareholders may request copies of the
Policies free of charge by calling the Proxy Group collect at 1-954/847-2268 or
by sending a written request to: Franklin Templeton Companies, LLC, 500 East
Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy
Group. Copies of the Fund's proxy voting records are also made available online
at franklintempleton.com and posted on the U.S. Securities and Exchange
Commission's website at sec.gov and reflect the most recent 12-month period
ended June 30.

QUARTERLY STATEMENT OF INVESTMENTS

The Fund files a complete statement of investments with the U.S. Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
website at sec.gov. The filed form may also be viewed and copied at the
Commission's Public Reference Room in Washington, DC. Information regarding the
operations of the Public Reference Room may be obtained by calling
1-800/SEC-0330.

Semiannual Report | 21

This page intentionally left blank.

LITERATURE REQUEST

LITERATURE REQUEST. TO RECEIVE A BROCHURE AND PROSPECTUS, PLEASE CALL US AT
1-800/DIAL BEN(R) (1-800/342-5236) OR VISIT FRANKLINTEMPLETON.COM. INVESTORS
SHOULD CAREFULLY CONSIDER A FUND'S INVESTMENT GOALS, RISKS, CHARGES AND EXPENSES
BEFORE INVESTING. THE PROSPECTUS CONTAINS THIS AND OTHER INFORMATION. PLEASE
CAREFULLY READ THE PROSPECTUS BEFORE INVESTING. To ensure the highest quality of
service, we may monitor, record and access telephone calls to or from our
service departments. These calls can be identified by the presence of a regular
beeping tone.

FRANKLIN TEMPLETON INVESTMENTS

INTERNATIONAL

Mutual European Fund
Templeton China World Fund
Templeton Developing Markets Trust
Templeton Foreign Fund
Templeton Foreign Smaller Companies Fund
Templeton International (Ex EM) Fund

GLOBAL

Mutual Discovery Fund
Templeton Global Long-Short Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund
Templeton Growth Fund
Templeton World Fund

GROWTH

Franklin Aggressive Growth Fund
Franklin Capital Growth Fund
Franklin Flex Cap Growth Fund
Franklin Small-Mid Cap Growth Fund
Franklin Small Cap Growth Fund II 1

VALUE

Franklin Balance Sheet Investment Fund 2
Franklin Equity Income Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund 2
Franklin MidCap Value Fund
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Recovery Fund 3
Mutual Shares Fund

BLEND

Franklin Blue Chip Fund
Franklin Convertible Securities Fund
Franklin Growth Fund
Franklin Rising Dividends Fund
Franklin U.S. Long-Short Fund

SECTOR

Franklin Biotechnology Discovery Fund
Franklin DynaTech Fund
Franklin Global Communications Fund
Franklin Global Health Care Fund
Franklin Gold and Precious Metals Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Technology Fund
Franklin Utilities Fund
Mutual Financial Services Fund

ASSET ALLOCATION

Franklin Templeton Corefolio Allocation Fund
Franklin Templeton Founding Funds Allocation Fund
Franklin Templeton Perspectives Allocation Fund

TARGET FUNDS

Franklin Templeton Conservative Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund

INCOME

Franklin Adjustable U.S. Government Securities Fund 4
Franklin's AGE High Income Fund
Franklin Floating Rate Daily Access Fund
Franklin Income Fund
Franklin Limited Maturity
U.S. Government Securities Fund 4
Franklin Low Duration Total Return Fund
Franklin Real Return Fund
Franklin Strategic Income Fund
Franklin Strategic Mortgage Portfolio
Franklin Templeton Hard Currency Fund
Franklin Total Return Fund
Franklin U.S. Government Securities Fund 4
Templeton Global Bond Fund
Templeton Income Fund

TAX-FREE INCOME 5

National Funds
Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund 6

LIMITED-TERM FUNDS

California Limited-Term Tax-Free Income Fund
Federal Limited-Term Tax-Free Income Fund
New York Limited-Term Tax-Free Income Fund

INTERMEDIATE-TERM FUNDS

California Intermediate-Term Tax-Free Income Fund
Federal Intermediate-Term Tax-Free Income Fund
New York Intermediate-Term Tax-Free Income Fund

STATE-SPECIFIC

Alabama
Arizona
California 7
Colorado
Connecticut
Florida 7
Georgia
Kentucky
Louisiana
Maryland
Massachusetts 6
Michigan 6
Minnesota 6
Missouri
New Jersey
New York 7
North Carolina
Ohio 7
Oregon
Pennsylvania
Tennessee
Virginia

INSURANCE FUNDS

Franklin Templeton Variable Insurance Products Trust 8

1. The fund is closed to new investors. Existing shareholders can continue
adding to their accounts.

2. The fund is only open to existing shareholders and select retirement plans.

3. The fund is a continuously offered, closed-end fund. Shares may be purchased
daily; there is no daily redemption. However, each quarter, pending board
approval, the fund will authorize the repurchase of 5%-25% of the outstanding
number of shares. Investors may tender all or a portion of their shares during
the tender period.

4. An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.

5. For investors subject to the alternative minimum tax, a small portion of fund
dividends may be taxable. Distributions of capital gains are generally taxable.

6. Portfolio of insured municipal securities.

7. These funds are available in two or more variations, including long-term
portfolios, portfolios of insured securities, a high-yield portfolio (CA) and
limited-term, intermediate-term and money market portfolios (CA and NY).

8. The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.

09/05 Not part of the semiannual report

[LOGO](R)
FRANKLIN TEMPLETON One Franklin Parkway
INVESTMENTS San Mateo, CA 94403-1906

o WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL?
Eligible shareholders can sign up for eDelivery at
franklintempleton.com. See inside for details.

SEMIANNUAL REPORT AND SHAREHOLDER LETTER

FRANKLIN TAX-EXEMPT
MONEY FUND

INVESTMENT MANAGER

Franklin Advisers, Inc.

DISTRIBUTOR

Franklin Templeton Distributors, Inc.
1-800/DIAL BEN(R)
franklintempleton.com

SHAREHOLDER SERVICES

1-800/632-2301

Authorized for distribution only when accompanied or preceded by a prospectus.
Investors should carefully consider a fund's investment goals, risks, charges
and expenses before investing. The prospectus contains this and other
information; please read it carefully before investing.

To ensure the highest quality of service, telephone calls to and from our
service departments may be monitored, recorded and accessed. These calls can be
identified by the presence of a regular beeping tone.

114 S2006 03/06

ITEM 2. CODE OF ETHICS.

(a) The Registrant has adopted a code of ethics that applies to its principal
executive officers and principal financial and accounting officer.

(d) N/A

(f) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a copy
of its code of ethics that applies to its principal executive officers and
principal financial and accounting officer.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

(a)(1) The Registrant has an audit committee financial expert serving on its
audit committee.

(2) The audit committee financial expert is Frank W. T. LaHaye and he is
"independent" as defined under the relevant Securities and Exchange Commission
Rules and Releases.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. N/A

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. N/A

ITEM 6. SCHEDULE OF INVESTMENTS. N/A

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES. N/A

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT
COMPANIES. N/A

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS. N/A

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have
been no changes to the procedures by which shareholders may recommend nominees
to the Registrant's Board of Directors that would require disclosure herein.

ITEM 11. CONTROLS AND PROCEDURES.
(A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Registrant maintains
disclosure controls and procedures that are designed to ensure that information
required to be disclosed in the Registrant's filings under the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 is recorded,
processed, summarized and reported within the periods specified in the rules and
forms of the Securities and Exchange Commission. Such information is accumulated
and communicated to the Registrant's management, including its principal
executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure. The Registrant's management,
including the principal executive officer and the principal financial officer,
recognizes that any set of controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving the desired
control objectives.

Within 90 days prior to the filing date of this Shareholder Report on Form
N-CSR, the Registrant had carried out an evaluation, under the supervision and
with the participation of the Registrant's management, including the
Registrant's principal executive officer and the Registrant's principal
financial officer, of the effectiveness of the design and operation of the
Registrant's disclosure controls and procedures. Based on such evaluation, the
Registrant's principal executive officer and principal financial officer
concluded that the Registrant's disclosure controls and procedures are
effective.

(B) CHANGES IN INTERNAL CONTROLS. There have been no significant changes in the
Registrant's internal controls or in other factors that could significantly
affect the internal controls subsequent to the date of their evaluation in
connection with the preparation of this Shareholder Report on Form N-CSR.

ITEM 12. EXHIBITS.

(a) (1) Code of Ethics

(a) (2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
of Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Galen G. Vetter, Chief Financial Officer

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Galen G. Vetter, Chief Financial Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

FRANKLIN TAX-EXEMPT MONEY FUND

By /S/ JIMMY D. GAMBILL

Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date March 22, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

By /S/ JIMMY D. GAMBILL

Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date March 22, 2006

By /S/ GALEN G. VETTER

Galen G. Vetter
Chief Financial Officer
Date March 22, 2006