<PAGE>
YOUR FUND'S OBJECTIVE
The Franklin Federal Money Fund seeks to provide a high level of current income,
consistent with liquidity and preservation of capital. The fund invests all of
its assets in The U.S. Government Securities Money Market Portfolio (the
Portfolio), which has the same investment objectives. At the present time, it is
the Portfolio's policy to limit its investments to U.S. Treasury bills, notes
and bonds, and to repurchase agreements collateralized by such securities.(1)
The fund seeks to maintain a $1.00 per share net asset value.(2)
January 16, 1995
Dear Shareholder:
We are pleased to bring you the 14th annual report of the Franklin Federal Money
Fund, which covers the period ended November 30, 1994.
During the period under review, the U.S. economy grew rapidly, with Gross
Domestic Product (GDP) increasing at an annualized rate of 3.62% for the first
three quarters of 1994.(3) In addition, by the end of the period, the nation's
unemployment rate declined to 5.8% and its factory capacity utilization rate
rose to over 84%.(4) Although reported economic data did not show significant
increases in inflationary pressures, the Federal Reserve Board moved in
pre-emptive fashion to push up short-term interest rates in an effort to control
the expected higher inflation that normally accompanies economic recoveries.
Since early February, it has increased the federal funds rate (the interest rate
banks charge each other for overnight loans) on six occasions, from 3.0% to
5.5%.
After the first interest rate increase in February, we began reducing the
Portfolio's weighted average maturity, from 41 days on February 4, 1994 to 23
days on May 31, 1994. Average maturity was further decreased to 20 days by the
end of the reporting period. Reducing the Portfolio's average maturity in this
manner enabled us to reinvest more quickly in new securities offering higher
rates. This, in turn, helped increase the fund's seven-day effective yield,
which rose from 2.29% on November 30, 1993, to 4.86% on November 30, 1994.
Looking forward, we believe that lower unemployment and higher corporate
earnings should translate into higher personal income and spending, which should
continue to fuel the economic recovery currently underway in the U.S. In most
economic recovery cycles, as the economy approaches full employment, capacity
utilization increases in the nation's factories, eventually creating bottlenecks
that can lead to inflationary pressures. If economic growth continues at its
current pace, which is higher than the Federal
1. U.S. government securities owned by the Portfolio or held under repurchase
agreement, but not shares of the fund, are guaranteed by the U.S. government,
its agencies and instrumentalities as to the timely payment of principal and
interest.
2. Please remember, an investment in the fund is neither insured nor
guaranteed by the U.S. government, and there can be no assurance that the fund
will be able to maintain a stable net asset value of $1.00 per share.
3. Source: U.S. Commerce Dept.
4. Sources: U.S. Labor Dept., U.S. Federal Reserve Board
<PAGE>
Reserve's long-term target of 2.5%, the Federal Reserve may continue to raise
short-term rates as it seeks to prevent inflation from getting out of control.
Because of its relatively short, weighted average maturity, the Portfolio is
well-positioned to roll over its maturities into higher-yielding instruments
should interest rates continue to rise.
The securities in which the Portfolio invests are among the highest quality
available to money market funds. Since the fund's objective is to provide
shareholders with a high-quality, conservative investment, we do not invest in
derivatives or other potentially volatile securities that we think involve
significant risk.
Franklin Federal Money Fund shareholders continue to benefit from convenience,
easy access to their money and a high degree of credit safety. They also enjoy a
wide range of services including low minimum investments, free unlimited check
writing for amounts of $100 or more, and monthly shareholder statement mailings.
We thank you for your continued support of the Franklin Federal Money Fund and
look forward to serving your investment needs in the months and years to come.
Sincerely,
/s/ CHARLES B. JOHNSON
- - ------------------------------------
Charles B. Johnson
Chairman of the Board
Franklin Federal Money Fund
FRANKLIN FEDERAL MONEY FUND YIELD
for November 30, 1994
<TABLE>
<S> <C>
Seven-day annualized yield................ 4.75%
Seven-day effective yield*................ 4.86%
</TABLE>
*The seven-day effective yield assumes the compounding of daily dividends, and
reflects fluctuations in interest rates on portfolio investments, as well as
fund expenses. Yield should be viewed in terms of the current, low rate of
inflation--just as high inflation usually results in higher yields, low
inflation often results in lower yields. Past performance is not indicative of
future results.
SPECIAL NOTE TO SHAREHOLDERS:
The fund's fiscal year-end date was recently changed to June 30. Because of this
change, the fund's Financial Statements, which begin on page 3, include
additional data for the one-month period ended 12/31/94. The next report you
will receive will cover the fiscal period ended June 30, 1995.
For a free brochure and prospectus on one or more Franklin funds, please contact
your investment representative, or call Franklin Templeton Fund Information,
toll free, at 1-800/DIAL BEN (1-800/342-5236). A prospectus contains more
complete information about a fund, including charges and expenses. Please read
it carefully before you invest or send money. To ensure the highest quality of
service, telephone calls to or from our service departments may be monitored,
recorded and accessed. These calls can be determined by the presence of a
regular beeping tone.
2
<PAGE>
FRANKLIN FEDERAL MONEY FUND
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, DECEMBER 31, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- - ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MUTUAL FUNDS 105.1%
155,515,634 The U.S. Government Securities Money Market Portfolio (Note 1) .................. $155,515,634
------------
TOTAL INVESTMENTS (COST $155,515,634) 105.1% ......................... 155,515,634
LIABILITIES IN EXCESS OF OTHER ASSETS, NET (5.1%) .................... (7,546,099)
------------
NET ASSETS 100.0% .................................................... $147,969,535
============
</TABLE>
At December 31, 1994, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
FRANKLIN FEDERAL MONEY FUND
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, NOVEMBER 30, 1994
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- - ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MUTUAL FUNDS 104.6%
176,327,193 The U.S. Government Securities Money Market Portfolio (Note 1) .................. $176,327,193
------------
TOTAL INVESTMENTS (COST $176,327,193) 104.6% ......................... 176,327,193
LIABILITIES IN EXCESS OF OTHER ASSETS, NET (4.6%) .................... (7,797,338)
------------
NET ASSETS 100.0% .................................................... $168,529,855
============
</TABLE>
At November 30, 1994, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
FRANKLIN FEDERAL MONEY FUND
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1994 (UNAUDITED) AND NOVEMBER 30, 1994
<TABLE>
<CAPTION>
DECEMBER 31, 1994
(UNAUDITED) NOVEMBER 30, 1994
----------------- -----------------
<S> <C> <C>
Assets:
Investments in securities, at value and cost............................... $155,515,634 $176,327,193
Capital shares sold........................................................ -- 935,777
Prepaid expenses........................................................... 9,002 9,000
----------------- -----------------
Total assets.......................................................... 155,524,636 177,271,970
----------------- -----------------
Liabilities:
Payables:
Capital shares repurchased................................................ 7,413,388 8,643,980
Distributions to shareholders............................................. 24,599 --
Shareholder servicing costs............................................... 15,595 15,550
Administration fees....................................................... 59,025 59,252
Bank overdraft............................................................. -- 2,604
Accrued expenses and other payables........................................ 42,494 20,729
----------------- -----------------
Total liabilities..................................................... 7,555,101 8,742,115
----------------- -----------------
Net assets (equivalent to $1.00 per share based on 147,969,535 and
168,529,855 shares of capital stock outstanding, respectively)............. $147,969,535 $168,529,855
================= =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
FRANKLIN FEDERAL MONEY FUND
FINANCIAL STATEMENTS (CONT.)
STATEMENTS OF OPERATIONS
FOR THE ONE MONTH ENDED DECEMBER 31, 1994 (UNAUDITED) AND THE YEAR ENDED
NOVEMBER 30, 1994
<TABLE>
<CAPTION>
ONE MONTH ENDED
DECEMBER 31, 1994 YEAR ENDED
(UNAUDITED) NOVEMBER 30, 1994
----------------- -----------------
<S> <C> <C>
Investment income:
Interest.................................................................. $ -- $3,851,544
Dividends................................................................. 783,030 2,788,504
----------------- -----------------
Total income......................................................... 783,030 6,640,048
----------------- -----------------
Expenses:
Management fees (Note 4).................................................. -- 615,344
Administration fees (Note 4).............................................. 59,025 242,157
Shareholder servicing costs (Note 4)...................................... 16,000 186,308
Reports to shareholders................................................... 13,739 185,420
Registration fees......................................................... 6,440 89,904
Professional fees......................................................... 2,147 24,142
Custodian fees............................................................ -- 17,980
Directors' fees and expenses.............................................. 988 11,213
Other..................................................................... 730 7,007
----------------- -----------------
Total expenses....................................................... 99,069 1,379,475
----------------- -----------------
Net investment income............................................... 683,961 5,260,573
----------------- -----------------
Realized gain on investments............................................... -- 140
----------------- -----------------
Net increase in net assets resulting from operations....................... $683,961 $5,260,713
================= =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
FRANKLIN FEDERAL MONEY FUND
FINANCIAL STATEMENTS (CONT.)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE ONE MONTH ENDED DECEMBER 31, 1994 (UNAUDITED) AND THE YEARS ENDED
NOVEMBER 30, 1994 AND 1993
<TABLE>
<CAPTION>
ONE MONTH ENDED YEAR ENDED NOVEMBER 30,
DECEMBER 31, 1994 -----------------------------
(UNAUDITED) 1994 1993
----------------- ------------ ------------
<S> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income........................................ $ 683,961 $ 5,260,573 $ 2,809,931
Net realized gain from security transactions................. -- 140 --
------------- ------------ ------------
Net increase in net assets resulting from operations..... 683,961 5,260,713 2,809,931
Distributions to shareholders from net investment income...... (683,961) (5,260,713)+ (2,809,931)
Increase (decrease) in net assets from capital share
transactions (Note 2)........................................ (20,560,320) 47,597,119 (13,998,630)
------------- ------------ ------------
Net increase (decrease) in net assets.................... (20,560,320) 47,597,119 (13,998,630)
Net assets (there is no undistributed net investment income at
beginning or end of period):
Beginning of period.......................................... 168,529,855 120,932,736 134,931,366
------------- ------------ ------------
End of period................................................ $147,969,535 $168,529,855 $120,932,736
============= ============ ============
</TABLE>
+Distributions were increased by net realized gain from security transactions
of $140
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
FRANKLIN FEDERAL MONEY FUND
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Franklin Federal Money Fund (the Fund) is a no-load, open-end, diversified
management investment company (mutual fund), registered under the Investment
Company Act of 1940 as amended.
On August 1, 1994, the Fund transferred substantially all of its assets, valued
at $138,624,792, into The U.S. Government Securities Money Market Portfolio (the
Portfolio), in exchange for 138,624,792 capital shares of the Portfolio.
On December 13, 1994, the Board of Directors authorized a change in the
fiscal year end of the Fund from November 30 of each year to June 30.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
A. SECURITIES VALUATIONS:
The Fund invests all of its investable assets in the Portfolio. As of December
31, 1994 (unaudited) and November 30, 1994, the Fund owns 37.94% and 34.61% of
the Portfolio, respectively. The Portfolio shares held by the Fund are valued at
their proportionate interest in net asset value of the Portfolio. The financial
statements of the Portfolio, including the statement of investments, are
included elsewhere in this report and should be read in conjunction with the
Fund's financial statements.
B. INCOME TAX:
The Fund intends to continue to qualify for the tax treatment applicable to
regulated investment companies under the Internal Revenue Code and to make the
requisite distributions to its shareholders which will be sufficient to relieve
it from income and excise taxes. Therefore, no income tax provision is required.
C. SECURITY TRANSACTIONS:
Security transactions are accounted for on the date the securities are purchased
or sold (trade date). Realized gains and losses on security transactions are
determined on the basis of specific identification for both financial statement
and income tax purposes.
D. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:
Net investment income includes income, calculated on an accrual basis, and
expenses as incurred on an accrual basis. The total available for dividends is
computed daily and includes the net investment income, plus or minus any gains
or losses on security transactions and changes in unrealized portfolio
appreciation or depreciation, (if any).
Distributions are normally declared for each day the New York Stock Exchange is
open for business, equal to the total available for distributions (as defined
above), and are payable to shareholders of record as of the close of business
the preceding day. Such dividends are automatically reinvested daily in
additional shares of the Fund at net asset value.
8
<PAGE>
FRANKLIN FEDERAL MONEY FUND
NOTES TO FINANCIAL STATEMENTS (CONT.)
2. CAPITAL STOCK
At December 31, 1994 (unaudited) and November 30, 1994, there were 5,000,000,000
shares of no par value capital stock authorized and capital paid-in aggregated
$147,969,535 and $168,529,855, respectively. Transactions in capital stock at
$1.00 per share were as follows:
<TABLE>
<CAPTION>
ONE MONTH ENDED YEAR ENDED NOVEMBER 30,
DECEMBER 31, 1994 ------------------------------
(UNAUDITED) 1994 1993
----------------- ------------- -------------
<S> <C> <C> <C>
Shares sold................................................. $ 12,382,783 $ 132,210,246 $ 134,220,650
Shares issued in reinvestment of distributions.............. 660,320 5,292,309 2,795,619
Shares redeemed............................................. (28,145,576) (177,458,519) (159,181,809)
Changes from exercise of exchange privilege:
Shares sold................................................ 36,010,850 537,081,791 307,980,153
Shares redeemed............................................ (41,468,697) (449,528,708) (299,813,243)
------------- ------------- -------------
Net increase (decrease)..................................... $(20,560,320) $ 47,597,119 $ (13,998,630)
============= ============= =============
</TABLE>
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales/maturities of securities, other than repurchase agreements,
for the one month ended December 31, 1994 (unaudited), aggregated $15,463,670
and $36,275,229, respectively; and for the year ended November 30, 1994,
aggregated $21,568,080,783 and $21,519,388,922, respectively.
4. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Effective August 1, 1994, Franklin Advisers, Inc., under the terms of an
administrative agreement, provides various administrative, statistical, and
other services, and receives fees calculated at the annual rate of 91/200 of 1%
for the first $100 million of the Fund's average daily net assets, and 33/100 of
1% of its net assets over $100 million up to $250 million, and 7/25 of 1% of its
net assets in excess of $250 million. The terms of the agreements provide that
aggregate annual expenses of the Fund be limited to the extent necessary to
comply with the limitations set forth in the laws, regulations and
administrative interpretations of the states in which the Fund's shares are
registered. The Fund's expenses were not limited under this provision for the
one month ended December 31, 1994 and the year ended November 30, 1994.
Prior to August 1, 1994, Franklin Advisers, Inc., under the terms of an
agreement, provided investment advice, administrative services, office space and
facilities to the Fund, and received fees computed daily at 1/584 of 1%
(approximately 5/8 of 1% annually) of the first $100 million of net assets,
1/730 of 1% (approximately 1/2 of 1% annually) of net assets in excess of $100
million up to $250 million, and 1/811 of 1% (approximately 45/100 of 1%
annually) of net assets in excess of $250 million.
Pursuant to a shareholder service agreement with Franklin/Templeton Investor
Services, Inc., the Fund pays costs on a per shareholder account basis. Such
costs incurred for the one month ended December 31, 1994 (unaudited) and the
year ended November 30, 1994 aggregated $16,000 and $186,308, respectively, all
of which was paid to Franklin/Templeton Investor Services, Inc.
Certain officers and directors of the Fund are also officers and/or directors of
Franklin Advisers, Inc. and/or Franklin/Templeton Investor Services, Inc., both
wholly owned subsidiaries of Franklin Resources, Inc.
9
<PAGE>
FRANKLIN FEDERAL MONEY FUND
NOTES TO FINANCIAL STATEMENTS (CONT.)
5. FINANCIAL HIGHLIGHTS
Selected data for a share of capital stock outstanding throughout the periods
are as follows:
<TABLE>
<CAPTION>
ONE MONTH ENDED YEAR ENDED NOVEMBER 30,
DECEMBER 31, 1994 -------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990
----------------- --------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value at beginning of period....... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Net investment income........................ .004 .031 .022 .029 .053 .074
----------------- --------- ------- ------- ------- -------
Distributions from net investment income..... (.004) (.031) (.022) (.029) (.053) (.074)
Net asset value at end of period............. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
================ ========= ======= ======= ======= =======
===================================================================================================================
Total return**............................... .38% 3.15% 2.22% 2.97% 5.42% 7.69%
===================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (in 000's)....... $147,970 $168,530 $120,933 $134,931 $211,249 $196,535
Ratio of expenses to average net assets...... .69%* .83% .90% .85% .79% .81%
Ratio of net investment income to average
net assets.................................. 4.76%* 3.15% 2.20% 2.95% 5.26% 7.33%
</TABLE>
*Annualized
**Total return measures the change in value of an investment over the periods
indicated. It assumes reinvestment of dividends at net asset value and is not
annualized.
10
<PAGE>
FRANKLIN FEDERAL MONEY FUND
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors
of Franklin Federal Money Fund:
We have audited the accompanying statement of assets and liabilities of Franklin
Federal Money Fund, including the statement of investments in securities and net
assets, as of November 30, 1994, and the related statement of operations for the
year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1994 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Franklin Federal Money Fund as of November 30, 1994, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
San Francisco, California
December 29, 1994
11
<PAGE>
THE MONEY MARKET PORTFOLIOS
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, DECEMBER 31, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT THE MONEY MARKET PORTFOLIO (NOTE 1)
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(a)SHORT TERM INVESTMENTS 99.8%
BANK NOTES 7.1%
$ 40,000,000 Abbey National Treasury Services, variable rate note, 5.09%, 11/24/95 . . . . . . . . . $ 40,000,000
20,000,000 Bayerische Landesbank, New York Branch, 3.55% - 3.625%, 01/18/95 . . . . . . . . . . . . 19,998,466
13,000,000 Boatmens 1st National Bank, variable rate note, 5.14%, 04/21/95 . . . . . . . . . . . . 13,001,829
20,000,000 Wachovia Bank, North Carolina Branch, 6.125%, 03/02/95 . . . . . . . . . . . . . . . . . 19,994,004
10,000,000 Westdeutsche Landesbank, New York Branch, 3.70%, 01/11/95 . . . . . . . . . . . . . . . 9,999,836
-------------
TOTAL BANK NOTES (COST $83,000,131) . . . . . . . . . . . . . . . . . . . . . . . 102,994,135
-------------
BANKERS' ACCEPTANCES 1.3%
5,000,000 NBD Bank, NA, Detroit Branch, 6.15%, 03/13/95 . . . . . . . . . . . . . . . . . . . . . 4,939,354
15,000,000 Societe Generale, New York Branch, 6.12%, 03/16/95 . . . . . . . . . . . . . . . . . . . 14,811,300
-------------
TOTAL BANKERS' ACCEPTANCES (COST $39,744,658) . . . . . . . . . . . . . . . . . . 19,750,654
-------------
CERTIFICATES OF DEPOSIT 13.0%
45,000,000 Bank of Nova Scotia, Portland Branch, 5.37% - 5.70%, 01/09/95 - 02/13/95 . . . . . . . . 44,999,039
30,000,000 Banque Nationale de Paris, New York Branch, 5.45% - 6.15%, 01/17/95 - 02/07/95 . . . . . 29,999,691
30,000,000 Commerzbank AG, New York Branch, 3.60% - 5.88%, 02/01/95 - 02/22/95 . . . . . . . . . . 29,999,938
45,000,000 National Westminster Bank, New York Branch, 6.25% - 6.28%, 02/28/95 - 03/24/95 . . . . 45,002,841
40,000,000 Societe Generale, New York Branch, 5.18% - 5.50%, 01/03/95 - 01/23/95 . . . . . . . . . 39,995,936
-------------
TOTAL CERTIFICATES OF DEPOSIT (COST $189,997,445) . . . . . . . . . . . . . . . . 189,997,445
-------------
COMMERCIAL PAPER 46.0%
25,000,000 Abbey National North America, 5.745%, 02/15/95 . . . . . . . . . . . . . . . . . . . . . 24,820,469
9,000,000 ABN AMRO North America Finance Inc., 5.45%, 01/11/95 . . . . . . . . . . . . . . . . . . 8,986,375
55,000,000 Associates Corp. of North America, 5.42% - 6.15%, 01/13/95 - 03/27/95 . . . . . . . . . 54,555,079
40,000,000 AT&T Corp., 5.39% - 5.70%, 01/25/95 - 01/30/95 . . . . . . . . . . . . . . . . . . . . . 39,843,552
40,000,000 Barclays US Funding Corp., 5.49% - 5.50%, 01/03/95 - 01/05/95 . . . . . . . . . . . . . 39,978,628
20,000,000 BFCE US Finance Corp., 6.16%, 03/09/95 . . . . . . . . . . . . . . . . . . . . . . . . . 19,770,711
30,000,000 Canadian Imperial Holdings, Inc., 5.37% - 5.73%, 01/20/95 - 02/14/95 . . . . . . . . . . 29,852,438
10,000,000 Cargill, Inc., 6.16%, 03/29/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,851,133
10,000,000 Cheltenham & Gloucester Building Society, 5.47%, 01/27/95 . . . . . . . . . . . . . . . 9,960,494
20,000,000 CIESCO L.P., 5.42% - 5.45%, 01/10/95 - 01/12/95 . . . . . . . . . . . . . . . . . . . . 19,969,814
55,000,000 General Electric Capital Corp., 4.96% - 5.78%, 01/30/95 - 02/27/95 . . . . . . . . . . . 54,680,536
35,000,000 Goldman Sachs Group, 4.95% - 5.08%, 02/01/95 - 03/07/95 . . . . . . . . . . . . . . . . 34,728,069
10,000,000 Kingdom of Sweden, 5.40%, 01/19/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,973,000
35,000,000 Merrill Lynch & Co., Inc., 5.40% - 5.78%, 01/17/95 - 02/21/95 . . . . . . . . . . . . . 34,827,675
20,000,000 MetLife Funding, Inc., 5.42%, 01/24/95 . . . . . . . . . . . . . . . . . . . . . . . . . 19,930,744
35,000,000 Morgan Stanley Group, Inc., 5.50% - 5.95%, 01/03/95 - 01/26/95 . . . . . . . . . . . . . 34,936,097
15,000,000 National Australia Funding (DE), Inc., 5.46%, 01/04/95 . . . . . . . . . . . . . . . . . 14,993,175
30,000,000 Ontario Hydro, 5.44%, 01/06/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,977,333
40,000,000 Province of Alberta, 5.63% - 5.75%, 02/09/95 - 02/16/95 . . . . . . . . . . . . . . . . 39,724,832
60,000,000 Svenska Handelsbanken, Inc., 5.25% - 6.15%, 01/10/95 - 03/21/95 . . . . . . . . . . . . 59,454,333
40,000,000 Treasury Corp. of New South Wales, 5.80% - 6.15%, 02/23/95 - 03/20/95 . . . . . . . . . 39,586,653
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
THE MONEY MARKET PORTFOLIOS
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, DECEMBER 31, 1994
(UNAUDITED)(CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT THE MONEY MARKET PORTFOLIO (NOTE 1)
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(a)SHORT TERM INVESTMENTS (CONT.)
COMMERCIAL PAPER (CONT.)
$ 25,000,000 U.S. Central Credit Union, 5.73%, 02/17/95 . . . . . . . . . . . . . . . . . . . . . . . $ 24,812,979
15,000,000 Westpac Capital Corp., 5.18% - 5.75%, 01/10/95 - 02/14/95 . . . . . . . . . . . . . . . . 14,923,247
--------------
TOTAL COMMERCIAL PAPER (COST $670,137,366) . . . . . . . . . . . . . . . . . . . . 670,137,366
--------------
GOVERNMENT SECURITIES 1.0%
15,000,000 U.S. Treasury Notes, 3.875%, 04/30/95 (Cost $14,951,251) . . . . . . . . . . . . . . . . 14,951,251
--------------
MEDIUM TERM NOTES 1.4%
20,000,000 Merrill Lynch & Co., Inc., variable rate note, 5.11%, 10/11/95 (Cost $20,000,000) . . . 20,000,000
--------------
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENTS
(COST $1,017,830,851) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,017,830,851
--------------
(b)RECEIVABLES FROM REPURCHASE AGREEMENTS 30.0%
31,525,000 Daiwa Securities America, Inc., 5.80%, 01/03/95 (Maturity Value $30,500,643)
Collateral: U.S. Treasury Notes, 4.625%, 02/15/96 . . . . . . . . . . . . . . . . . . 30,481,000
25,000,000 Daiwa Securities America, Inc., 5.80%, 01/03/95 (Maturity Value $23,758,301)
Collateral: U.S. Treasury Notes, 5.50%, 07/31/97 . . . . . . . . . . . . . . . . . . . 23,743,000
35,200,000 Daiwa Securities America, Inc., 5.80%, 01/03/95 (Maturity Value $35,092,601)
Collateral: U.S. Treasury Notes, 7.875%, 04/15/98 . . . . . . . . . . . . . . . . . . 35,070,000
72,655,000 Daiwa Securities America, Inc., 5.80%, 01/03/95 (Maturity Value $65,037,886)
Collateral: U.S. Treasury Notes, 5.125%, 11/30/98 . . . . . . . . . . . . . . . . . . 64,996,000
50,000,000 Daiwa Securities America, Inc., 5.80%, 01/03/95 (Maturity Value $45,739,458)
Collateral: U.S. Treasury Notes, 5.125%, 12/31/98 . . . . . . . . . . . . . . . . . . 45,710,000
5,066 (c)J.P. Morgan Securities, Inc., 4.44%, 01/03/95 (Maturity Value $5,068) . . . . . . . . . 5,066
39,847,000 J.P. Morgan Securities, Inc., 5.40%, 01/03/95 (Maturity Value $37,912,734)
Collateral: U.S. Treasury Bills, 06/22/95 . . . . . . . . . . . . . . . . . . . . . . 37,890,000
101,390,000 Nikko Securities Co. International, Inc., 5.75%, 01/03/95 (Maturity Value $93,813,898)
Collateral: U.S. Treasury Notes, 5.875%, 03/31/99 . . . . . . . . . . . . . . . . . . 93,754,000
110,000,000 Nikko Securities Co. International, Inc., 5.75%, 01/03/95 (Maturity Value $106,313,879)
Collateral: U.S. Treasury Notes, 6.875%, 08/31/99 . . . . . . . . . . . . . . . . . . 106,246,000
--------------
TOTAL RECEIVABLES FROM REPURCHASE AGREEMENTS (COST $437,895,066) . . . . . . . . . 437,895,066
--------------
TOTAL INVESTMENTS (COST $1,455,725,917) 99.8% . . . . . . . . . . . . . . . 1,455,725,917
OTHERS ASSETS AND LIABILITIES, NET .2% . . . . . . . . . . . . . . . . . . 2,262,443
--------------
NET ASSETS 100.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,457,988,360
==============
</TABLE>
At December 31, 1994, there was no unrealized appreciation or depreciation for
financial statements or income tax purposes.
(a)Certain short-term securities are traded on a discount basis; the rate shown
are the discount rates at the time of purchase by the Fund. Other securities
bear interest at the rates shown, payable at fixed dates or upon maturity.
(b)Face amount for repurchase agreements is for the underlying collateral.
(c)See Note 1(f) regarding sweep repurchase agreement.
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
THE MONEY MARKET PORTFOLIOS
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, DECEMBER 31, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT THE U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO (NOTE 1)
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(a)SHORT TERM INVESTMENTS 100.0%
GOVERNMENT SECURITIES 13.6%
$ 57,000,000 U.S. Treasury Bills, 4.89% - 5.81%, 02/16/95 - 05/25/95 (Cost $55,893,685) . . . . . . . $ 55,893,685
------------
(b)RECEIVABLES FROM REPURCHASE AGREEMENTS 86.4%
16,360,000 Barclays de Zoete Wedd Securities, Inc., New York, 5.50%, 01/03/95
(Maturity Value $17,010,389) Collateral: U.S. Treasury Notes, 9.25%, 01/15/96 . . . . . 17,000,000
16,000,000 Daiwa Securities America, Inc., 5.80%, 01/03/95 (Maturity Value $15,028,679)
Collateral: U.S. Treasury Notes, 6.00%, 11/30/97 . . . . . . . . . . . . . . . . . . . 15,019,000
20,000,000 Daiwa Securities America, Inc., 5.80%, 01/03/95 (Maturity Value $18,466,893)
Collateral: U.S. Treasury Notes, 5.125%, 02/28/98 . . . . . . . . . . . . . . . . . . 18,455,000
1,135,000 Daiwa Securities America, Inc., 5.80%, 01/03/95 (Maturity Value $1,037,668)
Collateral: U.S. Treasury Notes, 5.125%, 03/31/98 . . . . . . . . . . . . . . . . . . 1,037,000
23,135,000 Daiwa Securities America, Inc., 5.80%, 01/03/95 (Maturity Value $21,218,665)
Collateral: U.S. Treasury Notes, 5.125%, 03/31/98 . . . . . . . . . . . . . . . . . . 21,205,000
25,000,000 Daiwa Securities America, Inc., 5.80%, 01/03/95 (Maturity Value $23,053,847)
Collateral: U.S. Treasury Notes, 5.25%, 07/31/98 . . . . . . . . . . . . . . . . . . . 23,039,000
22,000,000 Daiwa Securities America, Inc., 5.80%, 01/03/95 (Maturity Value $21,258,691)
Collateral: U.S. Treasury Notes, 6.875%, 08/31/99 . . . . . . . . . . . . . . . . . . 21,245,000
17,225,000 Dean Witter Reynolds, Inc., 5.50%, 01/03/95 (Maturity Value $17,010,389)
Collateral: U.S. Treasury Notes, 7.375%, 05/15/96 . . . . . . . . . . . . . . . . . . 17,000,000
17,705,000 Fuji Securities, Inc., 6.20%, 01/03/95 (Maturity Value $17,011,711)
Collateral: U.S. Treasury Notes, 6.50%, 05/15/97 . . . . . . . . . . . . . . . . . . . 17,000,000
17,290,000 Greenwich Capital Markets, Inc., 5.50%, 01/03/95 (Maturity Value $17,010,389)
Collateral: U.S. Treasury Notes, 6.125%, 07/31/96 . . . . . . . . . . . . . . . . . . 17,000,000
18,450,000 Lehman Government Securities, Inc., 5.75%, 01/03/95 (Maturity Value $17,010,861)
Collateral: U.S. Treasury Notes, 6.00%, 10/15/99 . . . . . . . . . . . . . . . . . . . 17,000,000
7,928 (c)J.P. Morgan Securities, Inc., 4.19%, 01/03/95 (Maturity Value $7,932) . . . . . . . . . 7,928
101,195,000 J.P. Morgan Securities, Inc., 5.40%, 01/03/95 (Maturity Value $101,255,717) . . . . . . 101,195,000
17,455,000 Morgan Stanley & Co., Inc., 5.60%, 01/03/95 (Maturity Value $17,010,578)
Collateral: U.S. Treasury Notes, 7.125%, 10/15/98 . . . . . . . . . . . . . . . . . . 17,000,000
16,528,000 Nikko Securities Co. International, Inc., 5.75%, 01/03/95 (Maturity Value $17,010,861)
Collateral: U.S. Treasury Notes, 8.25%, 07/15/98 . . . . . . . . . . . . . . . . . . . 17,000,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
THE MONEY MARKET PORTFOLIOS
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, DECEMBER 31, 1994
(CONT.) (UNAUDITED)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT THE U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO (NOTE 1)
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(b)RECEIVABLES FROM REPURCHASE AGREEMENTS (CONT.)
$17,804,000 Sanwa Securities (USA) Co., L.P., 5.50%, 01/03/95 (Maturity Value $17,010,389)
Collateral: U.S. Treasury Notes, 6.375%, 07/15/99 . . . . . . . . . . . . . . . . . . $ 17,000,000
18,090,000 Yamaichi International (America), Inc., 5.65%, 01/03/95 (Maturity Value $17,010,672)
Collateral: U.S. Treasury Notes, 5.75%, 10/31/97 . . . . . . . . . . . . . . . . . . . 17,000,000
------------
TOTAL RECEIVABLES FROM REPURCHASE AGREEMENTS (COST $354,202,928) . . . . . . . . . 354,202,928
------------
TOTAL INVESTMENTS (COST $410,096,613) 100.0% . . . . . . . . . . . . . . . . . 410,096,613
LIABILITIES IN EXCESS OF OTHER ASSETS, NET . . . . . . . . . . . . . . . . . (219,018)
------------
NET ASSETS 100.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $409,877,595
============
</TABLE>
At December 31, 1994, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.
(a)Certain short-term securities are traded on a discount basis; the rates
shown are the discount rates at the time of purchase by the Fund. Other
securities bear interest at the rates shown, payable at fixed dates or upon
maturity.
(b)Face amount for repurchase agreements is for the underlying collateral.
(c)See Note 1(f) regarding sweep repurchase agreement.
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
THE MONEY MARKET PORTFOLIOS
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1994 (UNAUDITED)
<TABLE>
<CAPTION>
THE U.S. GOVERNMENT
THE MONEY SECURITIES MONEY
MARKET PORTFOLIO MARKET PORTFOLIO
---------------- -------------------
<S> <C> <C>
Assets:
Investments in securities, at value and cost . . . . . . . . . . . $1,017,830,851 $ 55,893,685
Receivables from repurchase agreements, at value and cost . . . . 437,895,066 354,202,928
Interest receivables . . . . . . . . . . . . . . . . . . . . . . . 2,920,195 110,876
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . 12,714 15,651
-------------- --------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . 1,458,658,826 410,223,140
-------------- --------------
Liabilities:
Payables:
Distributions to shareholders . . . . . . . . . . . . . . . . . . 1,777 277,083
Management fees . . . . . . . . . . . . . . . . . . . . . . . . . 173,369 58,609
Capital shares repurchased . . . . . . . . . . . . . . . . . . . 483,448 --
Accrued expenses and other liabilities . . . . . . . . . . . . . . 11,872 9,853
-------------- --------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . 670,466 345,545
-------------- --------------
Net assets, at value . . . . . . . . . . . . . . . . . . . . . . . $1,457,988,360 $409,877,595
============== ==============
Shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . 1,457,988,360 409,877,595
============== ==============
Net asset value per share . . . . . . . . . . . . . . . . . . . . . $1.00 $1.00
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
THE MONEY MARKET PORTFOLIOS
FINANCIAL STATEMENTS (CONT.)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1994 (UNAUDITED)
<TABLE>
<CAPTION>
THE U.S. GOVERNMENT
THE MONEY SECURITIES MONEY
MARKET PORTFOLIO MARKET PORTFOLIO
---------------- -------------------
<S> <C> <C>
Investment income:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $28,366,649 $9,851,732
-------------- --------------
Expenses:
Management fees, net (Note 4) . . . . . . . . . . . . . . . . . . 807,445 280,812
Reports to shareholders . . . . . . . . . . . . . . . . . . . . . 24,706 5,402
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . 7,711 12,063
Professional fees . . . . . . . . . . . . . . . . . . . . . . . . 4,959 2,865
Trustees' fees and expenses . . . . . . . . . . . . . . . . . . . 2,494 1,165
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,772 2,979
-------------- --------------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . 853,087 305,286
-------------- --------------
Net investment income . . . . . . . . . . . . . . . . . . . 27,513,562 9,546,446
-------------- --------------
Realized gain on investments . . . . . . . . . . . . . . . . . . . -- 392
-------------- --------------
Net increase in net assets resulting from operations . . . . . . . $27,513,562 $9,546,838
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
THE MONEY MARKET PORTFOLIOS
FINANCIAL STATEMENTS (CONT.)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1994 (UNAUDITED)
AND FOR THE YEAR ENDED JUNE 30, 1994
<TABLE>
<CAPTION>
THE U.S. GOVERNMENT SECURITIES
THE MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
-------------------------------- ------------------------------
PERIOD YEAR PERIOD YEAR
ENDED 12/31/94 ENDED 6/30/94 ENDED 12/31/94 ENDED 6/30/94
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income . . . . . . . . . . $ 27,513,562 $ 9,998,562 $ 9,546,446 $ 7,622,616
Net realized gain (loss) from security
transactions . . . . . . . . . . . . . . -- (5,146) 392 350
-------------- ------------ ------------ ------------
Net increase in net assets resulting from
operations . . . . . . . . . . . . . . . 27,513,562 9,993,416 9,546,838 7,622,966
Distributions to shareholders from
undistributed net investment income . . . (27,513,562) (9,993,416)+++ (9,546,838)++ (7,622,966)+
Increase (decrease) in net assets
from capital share transactions
(Notes 2 and 5) . . . . . . . . . . . . . 1,238,799,137 (3,168,832) 191,329,530 (91,771,434)
-------------- ------------ ------------ ------------
Net increase (decrease) in net assets . . . 1,238,799,137 (3,168,832) 191,329,530 (91,771,434)
Net assets (there is no undistributed net
investment income at beginning or end
of the period):
Beginning of period . . . . . . . . . . 219,189,223 222,358,055 218,548,065 310,319,499
-------------- ------------ ------------ ------------
End of period . . . . . . . . . . . . . . $1,457,988,360 $219,189,223 $409,877,595 $218,548,065
============== ============ ============ ============
</TABLE>
+Distributions were increased by net realized gain from security transactions
of $350.
++Distributions were increased by net realized gain from security transactions
of $392.
+++Distributions were reduced by net realized loss from security transactions
of $5,146.
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
THE MONEY MARKET PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Money Market Portfolios (the Money Market) is a no load, open-end
diversified management investment company (mutual fund), registered under the
Investment Company Act of 1940, as amended. The Money Market has two portfolios
(the Portfolios) consisting of: The Money Market Portfolio and The U.S.
Government Securities Money Market Portfolio. Each of the Portfolios issues a
separate series of shares and maintains a totally separate and distinct
investment portfolio. The shares of the Money Market are issued in private
placements and are thus exempt from registration under the Securities Act of
1933.
The following is a summary of significant accounting policies consistently
followed by the Portfolios in the preparation of their financial statements.
The policies are in conformity with generally accepted accounting principles
for investment companies.
A. SECURITY VALUATION:
Portfolio securities are valued at amortized cost, which approximates value.
Each of the Portfolios must maintain a dollar weighted average maturity of 90
days or less and only purchase instruments having remaining maturities of 397
days or less. If a Portfolio has a remaining weighted average maturity of
greater than 90 days, the Portfolio will be stated at value based on recorded
closing sales on a national securities exchange or, in the absence of a
recorded sale, within the range of the most recent quoted bid and asked prices.
The trustees have established procedures designed to stabilize, to the extent
reasonably possible, each Portfolio's price per share as computed for the
purpose of sales and redemptions at $1.00.
B. INCOME TAXES:
The Money Market intends to continue to qualify for the tax treatment
applicable to regulated investment companies under the Internal Revenue Code
and to make the requisite distributions to its shareholders which will be
sufficient to relieve it from income and excise taxes. Therefore, no income tax
provision is required.
Each Portfolio is treated as a separate entity in the determination of
compliance with the Internal Revenue Code.
C. SECURITY TRANSACTIONS:
Security transactions are accounted for on the date the securities are
purchased or sold (trade date). Realized gains and losses on security
transactions are determined on the basis of specific identification for both
financial statement and income tax purposes.
D. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:
Net investment income includes income, calculated on an accrual basis,
amortization of original issue and market discount or premium (if any), and
estimated expenses which are accrued daily. The total available for dividends
is computed daily and includes the net investment income, plus or minus any
gains or losses on security transactions and changes in unrealized portfolio
appreciation or depreciation, (if any).
Dividends are normally declared for each day the New York Stock Exchange is
open for business, equal to the total available for distributions (as defined
above), and are payable to shareholders of record as of the close of business
that day. Such dividends are automatically reinvested monthly in additional
shares of the Portfolio at net asset value.
E. EXPENSE ALLOCATION:
Common expenses incurred by the Money Market are allocated among the Portfolios
based on the ratio of net assets of each Portfolio to the combined net assets.
In all other respects, expenses are charged to each Portfolio as incurred on a
specific identification basis.
19
<PAGE>
THE MONEY MARKET PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONT.)
1. SIGNIFICANT ACCOUNTING POLICIES (CONT.)
F. REPURCHASE AGREEMENTS:
The Portfolios may enter into repurchase agreements with government securities
dealers recognized by the Federal Reserve Board and/or member banks of the
Federal Reserve System. In a repurchase agreement, the Portfolios purchases a
U.S. government security from a dealer or bank subject to an agreement to
resell it at a mutually agreed upon price and date. Such a transaction is
accounted for as a loan by the Portfolio to the seller, collateralized by the
underlying security. The transaction requires the initial collateralization of
the seller's obligation by U.S. government securities with market value,
including accrued interest, of at least 102% of the dollar amount invested by
the Portfolio, with the value of the underlying security marked to market daily
to maintain coverage of at least 100%. The collateral is delivered to the
Portfolios' custodian and held until resold to the dealer or bank. At
December 31, 1994, all outstanding repurchase agreements held by the Portfolios
had been entered into on that date.
The Portfolios may enter into a sweep agreement with their custodian bank. In a
sweep, the excess cash in the Portfolios' direct deposit accounts at the end of
the day is invested overnight. The Money Market Portfolio's excess cash is
invested in a AAA rated time deposit of Morgan Guaranty Trust Company's Nassau
branch. The U.S. Government Securities Money Market Portfolio's excess cash is
invested in a U.S. government backed repurchase agreement with Morgan Guaranty
of New York. Funds are returned to the Portfolios' direct deposit accounts as
the first transaction of the next business day.
2. TRUST SHARES
At December 31, 1994, there was an unlimited number of $.01 par value shares of
beneficial interest authorized, and paid-in capital aggregated as follows:
<TABLE>
<CAPTION>
THE U.S. GOVERNMENT
THE MONEY SECURITIES MONEY
MARKET PORTFOLIO MARKET PORTFOLIO
---------------- ----------------
<S> <C> <C>
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,457,988,360 $ 409,877,595
================ ================
</TABLE>
Transactions in the Portfolios' shares at $1.00 per share for the six months
ended December 31, 1994 and the year ended June 30, 1994 are as follows:
<TABLE>
<CAPTION>
THE U.S. GOVERNMENT
THE MONEY SECURITIES MONEY
MARKET PORTFOLIO MARKET PORTFOLIO
---------------- ----------------
<S> <C> <C>
Period ended December 31, 1994
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,670,645,690 $ 1,466,094,747
Shares issued in reinvestment of distributions . . . . . . . . . . . 27,511,902 9,547,126
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,592,056,244) (1,422,937,135)
Shares issued in connection with assets transfer (Note 5) . . . . . . 1,132,697,789 138,624,792
---------------- ----------------
Net increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,238,799,137 $ 191,329,530
================ ================
Year ended June 30, 1994
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,699,503,699 $ 2,476,681,838
Shares issued in reinvestment of distributions . . . . . . . . . . . 9,993,345 7,620,764
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,712,665,876) (2,576,074,036)
---------------- ----------------
Net decrease . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (3,168,832) $ (91,771,434)
================ ================
</TABLE>
20
<PAGE>
THE MONEY MARKET PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONT.)
3. PURCHASES AND SALES OF SECURITIES
Aggregate purchases and sales/maturities of securities, including repurchase
agreements, for the six months ended December 31, 1994 were as follows:
<TABLE>
<CAPTION>
THE U.S. GOVERNMENT
THE MONEY SECURITIES MONEY
MARKET PORTFOLIO MARKET PORTFOLIO
---------------- -------------------
<S> <C> <C>
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 31,456,519,553 $ 42,459,700,296
================ ================
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 31,272,859,704 $ 42,269,978,691
================ ================
</TABLE>
4. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Franklin Advisers, Inc., under the terms of a management agreement, provides
investment advice, administrative services, office space and facilities to the
Portfolios, and receives fees computed monthly on the average daily net assets
of the Portfolios during the month. The Money Market Portfolio and The U.S.
Government Securities Money Market Portfolio pay a fee equal to an annualized
rate of 15/100 of 1% of their average daily net assets.
The terms of the agreement provide that annual aggregate expenses of the
Portfolios be limited to the extent necessary to comply with the limitations
set forth in the laws, regulations and administrative interpretations of the
states in which the Portfolios' shares are registered. The Portfolios' expenses
did not exceed these limitations; however, for the period ended December 31,
1994, Franklin Advisers, Inc. agreed in advance to waive a portion of the
management fees for The Money Market Portfolio and The U.S. Government
Securities Money Market Portfolio by $45,283 and $24,533, respectively.
Certain officers and trustees of the Portfolios are also officers and/or
directors of Franklin Advisers, Inc. and Franklin/Templeton Investor Services,
Inc., all wholly-owned subsidiaries of Franklin Resources, Inc.
5. ASSETS TRANSFER
On August 1, 1994, the Franklin Money Fund and the Franklin Federal Money Fund
transferred substantially all of their assets, respectively, into The Money
Market Portfolio and The U.S. Government Securities Money Market Portfolio. The
transfers were accompanied by a tax-free exchange of 1,132,697,789 capital
shares of The Money Market Portfolio for net assets valued at $1,132,697,789 of
the Franklin Money Fund and 138,624,792 capital shares of The U.S. Government
Securities Money Market Portfolio for net assets valued at $138,624,792 of the
Franklin Federal Money Fund.
As of December 31, 1994, the shares of The Money Market Portfolio were owned by
the following funds:
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OUTSTANDING SHARES
-------------- ------------------
<S> <C> <C>
Franklin Money Fund . . . . . . . . . . . . . . . . . . . . . . . . . 1,236,849,414 84.83%
Institutional Fiduciary Trust Money Market Portfolio . . . . . . . . 219,453,043 15.05%
Institutional Fiduciary Trust AEA Cash Management Fund . . . . . . . 1,392,120 0.10%
Institutional Fiduciary Trust Franklin Cash Reserves Fund . . . . . . 293,783 0.02%
</TABLE>
21
<PAGE>
THE MONEY MARKET PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONT.)
5. ASSETS TRANSFER (CONT.)
As of December 31, 1994, the shares of The U.S. Government Securities Money
Market Portfolio were owned by the following funds:
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OUTSTANDING SHARES
------------ ------------------
<S> <C> <C>
Institutional Fiduciary Trust Franklin U.S. Government Securities
Money Market Portfolio . . . . . . . . . . . . . . . . . . . . . . 254,361,961 62.06%
Franklin Federal Money Fund . . . . . . . . . . . . . . . . . . . . . 155,515,634 37.94%
</TABLE>
6. FINANCIAL HIGHLIGHTS
Selected data for a share of capital stock outstanding throughout the period.
<TABLE>
<CAPTION>
PER SHARE OPERATING PERFORMANCE RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------ ---------------------------------------
NET ASSET DISTRIBUTIONS NET ASSETS RATIO OF RATIO OF
VALUES AT NET FROM NET NET ASSET AT END EXPENSES NET INCOME
PERIOD ENDED BEGINNING INVESTMENT INVESTMENT VALUES AT TOTAL OF PERIOD TO AVERAGE TO AVERAGE
JUNE 30, OF PERIOD INCOME INCOME END OF PERIOD RETURN++ (IN 000'S) NET ASSETS+ NET ASSETS
- - ------------------------------------------------------------------------------------------------------------------------------------
THE MONEY MARKET PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1993* $1.00 $0.027 $(0.027) $1.00 2.92%** $ 222,358 0.15%** 3.18%**
1994 1.00 0.033 (0.033) 1.00 3.33 219,189 0.15 3.25
1994*** 1.00 0.024 (0.024) 1.00 2.41 1,457,988 0.15** 4.75**
<CAPTION>
THE U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1993* 1.00 0.021 (0.021) 1.00 2.27** 310,319 0.15** 3.05**
1994 1.00 0.032 (0.032) 1.00 3.25 218,548 0.15 3.20
1994*** 1.00 0.023 (0.023) 1.00 2.36 409,878 0.15** 4.74**
</TABLE>
*July 28, 1992 (Effective date of registration) to June 30, 1993.
**Annualized
***For the six months ended December 31, 1994.
++Total return measures the change in value of an investment over the periods
indicated. It assumes reinvestment of dividends and capital gains, if any, at
net asset value and is not annualized.
+During the period indicated, the Manager agreed to waive in advance a portion
of its management fees of the Portfolios. Had such action not been taken, the
ratios of expenses to average net assets would have been as follows.
<TABLE>
<CAPTION>
RATIO OF EXPENSES TO
AVERAGE NET ASSETS
------------------
<S> <C>
THE MONEY MARKET PORTFOLIO
1993* . . . . . . . . . . . . . . .17%**
1994 . . . . . . . . . . . . . . . .17
1994*** . . . . . . . . . . . . . .16**
THE U.S. GOVERNMENT SECURITIES
MONEY MARKET PORTFOLIO
1993* . . . . . . . . . . . . . . .18%**
1994 . . . . . . . . . . . . . . . .17
1994*** . . . . . . . . . . . . . .16**
</TABLE>
22
<PAGE>
THE MONEY MARKET PORTFOLIOS
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, NOVEMBER 30, 1994
(UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT THE MONEY MARKET PORTFOLIO (NOTE 1)
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(a)SHORT TERM INVESTMENTS 99.8%
BANK NOTES 6.4%
$ 40,000,000 Abbey National Treasury Services, Variable Rate Note, 5.81%, 11/24/95 . . . . . . . . . $ 40,000,000
25,000,000 Bayerische Landesbank, New York Branch, 3.55% - 3.625%, 12/09/94 - 01/18/95 . . . . . . 24,995,567
13,000,000 Boatmens 1st National Bank, Variable Rate Note, 5.86%, 04/21/95 . . . . . . . . . . . . 13,002,344
10,000,000 Westdeutsche Landesbank, New York Branch, 3.70%, 01/11/95 . . . . . . . . . . . . . . . 9,999,326
-------------
TOTAL BANK NOTES (COST $87,997,237) . . . . . . . . . . . . . . . . . . . . . . . 87,997,237
-------------
BANKERS' ACCEPTANCES 1.5%
10,000,000 Mitsubishi Bank, Ltd., New York Branch, 5.50%, 12/19/94 . . . . . . . . . . . . . . . . 9,972,500
10,000,000 Societe Generale, New York Branch, 5.25%, 12/16/94 . . . . . . . . . . . . . . . . . . . 9,978,125
-------------
TOTAL BANKERS' ACCEPTANCES (COST $19,950,625) . . . . . . . . . . . . . . . . . . 19,950,625
-------------
CERTIFICATES OF DEPOSIT 15.3%
35,000,000 ABN AMRO Bank NV, New York Branch, 4.94%, 12/21/94 . . . . . . . . . . . . . . . . . . . 35,000,000
50,000,000 Bank of Nova Scotia, Portland Branch, 4.92% - 5.70%, 12/27/94 - 02/13/95 . . . . . . . . 49,996,831
55,000,000 Banque Nationale de Paris, New York Branch, 4.87% - 5.45%, 12/07/94 - 01/17/95 . . . . . 54,995,534
30,000,000 Commerzbank AG, New York Branch, 3.60% - 5.88%, 02/01/95 - 02/22/95 . . . . . . . . . . 29,999,732
40,000,000 Societe Generale, New York Branch, 5.18% - 5.50%, 01/03/95 - 01/23/95 . . . . . . . . . 39,990,209
--------------
TOTAL CERTIFICATES OF DEPOSIT (COST $209,982,306) . . . . . . . . . . . . . . . . 209,982,306
--------------
COMMERCIAL PAPER 56.0%
25,000,000 Abbey National North America, 5.745%, 02/15/95 . . . . . . . . . . . . . . . . . . . . . 24,696,792
9,000,000 ABN AMRO North America Finance Inc., 5.45%, 01/11/95 . . . . . . . . . . . . . . . . . . 8,944,138
40,000,000 AT&T Corp., 5.39% - 5.70%, 01/18/95 - 01/30/95 . . . . . . . . . . . . . . . . . . . . . 39,651,826
55,000,000 Associates Corp. of North America, 5.21% - 5.48%, 12/13/94 - 01/25/95 . . . . . . . . . 54,730,997
40,000,000 Barclays US Funding Corp., 5.49% - 5.50%, 01/03/95 - 01/05/95 . . . . . . . . . . . . . 39,789,356
20,000,000 BFCE US Finance Corp., 4.86%, 12/08/94 . . . . . . . . . . . . . . . . . . . . . . . . . 19,981,100
55,000,000 Canadian Imperial Holdings, Inc., 4.84% - 5.73%, 12/01/94 - 02/14/95 . . . . . . . . . . 54,709,063
10,000,000 Cheltenham & Gloucester Building Society, 5.47%, 01/27/95 . . . . . . . . . . . . . . . 9,913,392
35,000,000 CIESCO L.P., 4.82% - 5.45%, 12/06/94 - 01/12/95 . . . . . . . . . . . . . . . . . . . . 34,866,169
55,000,000 General Electric Capital Corp., 4.96% - 5.78%, 01/30/95 - 02/27/95 . . . . . . . . . . . 54,420,524
35,000,000 Goldman Sachs Group, 4.95% - 5.08%, 02/01/95 - 03/07/95 . . . . . . . . . . . . . . . . 34,576,083
30,000,000 Halifax Building Society, 5.01%, 12/28/94 - 12/30/94 . . . . . . . . . . . . . . . . . . 29,883,100
3,000,000 Intel Corp., 5.22%, 12/23/94 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,990,430
25,000,000 J. P. Morgan & Co., Inc., 5.22% - 5.50%, 12/19/94 - 12/20/94 . . . . . . . . . . . . . . 24,930,358
10,000,000 Kingdom of Sweden, 5.40%, 01/19/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,926,500
35,000,000 Merrill Lynch & Co., Inc., 5.40% - 5.78%, 01/17/95 - 02/21/95 . . . . . . . . . . . . . 34,660,017
20,000,000 MetLife Funding, Inc., 5.42%, 01/24/95 . . . . . . . . . . . . . . . . . . . . . . . . . 19,837,400
35,000,000 Morgan Stanley Group, Inc., 5.50% - 5.95%, 01/03/95 - 01/26/95 . . . . . . . . . . . . . 34,762,584
15,000,000 National Australia Funding (DE), Inc., 5.46%, 01/04/95 . . . . . . . . . . . . . . . . . 14,922,650
30,000,000 Ontario Hydro, 5.44%, 01/06/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,836,800
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
THE MONEY MARKET PORTFOLIOS
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, NOVEMBER 30, 1994
(UNAUDITED)(CONT.)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT THE MONEY MARKET PORTFOLIO (NOTE 1)
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(a)SHORT TERM INVESTMENTS (CONT.)
COMMERCIAL PAPER (CONT.)
$ 40,000,000 Province of Alberta, 5.63% - 5.75%, 02/09/95 - 02/16/95 . . . . . . . . . . . . . . . . $ 39,528,327
10,000,000 Smithkline Beecham Corp., 5.49%, 12/16/94 . . . . . . . . . . . . . . . . . . . . . . . 9,977,125
30,000,000 Svenska Handelsbanken, Inc., 5.20% - 5.46%, 12/09/94 - 01/27/95 . . . . . . . . . . . . 29,840,319
25,000,000 Treasury Corp. of New South Wales, 5.80%, 02/23/95 . . . . . . . . . . . . . . . . . . . 24,661,667
25,000,000 U.S. Central Credit Union, 5.73%, 02/17/95 . . . . . . . . . . . . . . . . . . . . . . . 24,689,625
60,000,000 Westpac Capital Corp., 4.91% - 5.75%, 12/12/94 - 02/14/95 . . . . . . . . . . . . . . . 59,752,681
--------------
TOTAL COMMERCIAL PAPER (COST $766,479,023) . . . . . . . . . . . . . . . . . . . . 766,479,023
--------------
GOVERNMENT SECURITIES 1.1%
15,000,000 U.S. Treasury Notes, 3.875%, 04/30/95 (COST $14,938,552) . . . . . . . . . . . . . . . . 14,938,552
--------------
MEDIUM TERM NOTES 1.5%
20,000,000 Merrill Lynch & Co., Inc., Variable Rate Note, 5.83%, 10/11/95 (COST $20,000,000) . . . . 20,000,000
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENTS (COST $1,119,347,743) . . . . . . . 1,119,347,743
--------------
(b)RECEIVABLES FROM REPURCHASE AGREEMENTS 18.0%
158,555,000 Daiwa Securities America, Inc., 5.70%, 12/01/94 (Maturity Value $150,023,750)
Collateral: U.S. Treasury Notes, 4.375%, 08/15/96 . . . . . . . . . . . . . . . . . . 150,000,000
3,420 (c)J.P. Morgan Securities, Inc., 5.16%, 12/01/94 (Maturity Value $3,420) . . . . . . . . . 3,420
98,620,000 (c)J.P. Morgan Securities, Inc., 5.77%, 12/01/94 (Maturity Value $95,435,294)
Collateral: U.S. Treasury Bills, 02/23/95 . . . . . . . . . . . . . . . . . . . . . . 95,420,000
--------------
TOTAL RECEIVABLES FROM REPURCHASE AGREEMENTS (COST $245,423,420) . . . . . . . . . 245,423,420
--------------
TOTAL INVESTMENTS (COST $1,364,771,163) 99.8% . . . . . . . . . . . . . . . . 1,364,771,163
OTHERS ASSETS AND LIABILITIES, NET .2% . . . . . . . . . . . . . . . . . . . 2,174,826
--------------
NET ASSETS 100.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,366,945,989
==============
</TABLE>
At November 30, 1994, there was no unrealized appreciation or depreciation for
financial statements or income tax purposes.
(a)Certain short-term securities are traded on a discount basis; the rate shown
are the discount rates at the time of purchase by the Fund. Other securities
bear interest at the rates shown, payable at fixed dates or upon maturity.
(b)Face amount for repurchase agreements is for the underlying collateral.
(c)See Note 1(f) regarding sweep repurchase agreement.
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
THE MONEY MARKET PORTFOLIOS
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, NOVEMBER 30, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT THE U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO (NOTE 1)
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(a)SHORT TERM INVESTMENTS
GOVERNMENT SECURITIES 16.6%
$ 86,000,000 U.S. Treasury Bills, 3.35% - 5.81%, 12/15/94 - 07/27/95 (COST $84,519,345) . . . . . . . $ 84,519,345
------------
(b)RECEIVABLES FROM REPURCHASE AGREEMENTS 83.7%
23,495,000 B.A. Securities, Inc., 5.70%, 12/01/94 (Maturity Value $24,003,800)
Collateral: U.S. Treasury Notes, 8.25%, 07/15/98 . . . . . . . . . . . . . . . . . . . 24,000,000
24,980,000 Barclays de Zoete Wedd Securities, Inc., New York, 5.65%, 12/01/94
(Maturity Value $24,003,767) Collateral: U.S. Treasury Notes, 5.875%, 05/31/96 . . . . 24,000,000
27,020,000 Citicorp Securities, Inc., 5.70%, 12/01/94 (Maturity Value $24,003,800)
Collateral: U.S. Treasury Notes, 4.75%, 09/30/98 . . . . . . . . . . . . . . . . . . . 24,000,000
24,510,000 Daiwa Securities America, Inc., 5.70%, 12/01/94 (Maturity Value $24,003,800)
Collateral: U.S. Treasury Notes, 7.25%, 11/15/96 . . . . . . . . . . . . . . . . . . . 24,000,000
25,500,000 Dean Witter Reynolds, Inc., 5.65%, 12/01/94 (Maturity Value $24,003,767)
Collateral: U.S. Treasury Notes, 5.625%, 01/31/98 . . . . . . . . . . . . . . . . . . 24,000,000
24,490,000 Fuji Securities, Inc., 5.70%, 12/01/94 (Maturity Value $24,003,800)
Collateral: U.S. Treasury Notes, 7.25%, 11/15/96 . . . . . . . . . . . . . . . . . . . 24,000,000
25,875,000 HSBC Securities, Inc., 5.65%, 12/01/94 (Maturity Value $24,003,767)
Collateral: U.S. Treasury Notes, 4.375%, 11/15/96 . . . . . . . . . . . . . . . . . . 24,000,000
694,000 (c)J.P. Morgan Securities, Inc., 4.91%, 12/01/94 (Maturity Value $694,095) . . . . . . . . 694,000
113,555,000 (c)J.P. Morgan Securities, Inc., 5.77%, 12/01/94 (Maturity Value $113,573,200) . . . . . . 113,555,000
50,000,000 Nikko Securities Co. International, Inc., 5.70%, 12/01/94 (Maturity Value $46,067,293)
Collateral: U.S. Treasury Notes, 5.875%, 03/31/99 . . . . . . . . . . . . . . . . . . 46,060,000
28,826,000 Nikko Securities Co. International, Inc., 5.70%, 12/01/94 (Maturity Value $27,034,280)
Collateral: U.S. Treasury Notes, 6.50%, 04/30/99 . . . . . . . . . . . . . . . . . . . 27,030,000
6,600,000 Nikko Securities Co. International, Inc., 5.70%, 12/01/94 (Maturity Value $6,474,025)
Collateral: U.S. Treasury Notes, 6.75%, 02/28/97 . . . . . . . . . . . . . . . . . . . 6,473,000
43,000,000 Nikko Securities Co. International, Inc., 5.70%, 12/01/94 (Maturity Value $40,443,403)
Collateral: U.S. Treasury Notes, 6.75%, 05/31/99 . . . . . . . . . . . . . . . . . . . 40,437,000
24,197,000 Sanwa Securities (USA) Co., L.P., 5.65%, 12/01/94 (Maturity Value $24,003,767)
Collateral: U.S. Treasury Notes, 4.25%, 01/31/95 . . . . . . . . . . . . . . . . . . . 24,000,000
------------
TOTAL RECEIVABLES FROM REPURCHASE AGREEMENTS (COST $426,249,000) . . . . . . . . . 426,249,000
------------
TOTAL INVESTMENTS (COST $510,768,345) 100.3% . . . . . . . . . . . . . . . . 510,768,345
LIABILITIES IN EXCESS OF OTHER ASSETS, NET (.3)% . . . . . . . . . . . . . . (1,341,320)
------------
NET ASSETS 100.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $509,427,025
============
</TABLE>
At November 30, 1994, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.
PORTFOLIO ABBREVIATIONS: L.P. - LIMITED PARTNERSHIP
(a)Certain short-term securities are traded on a discount basis; the rates
shown are the discount rates at the time of purchase by the Fund. Other
securities bear interest at the rates shown, payable at fixed dates or upon
maturity.
(b)Face amount for repurchase agreements is for the underlying collateral.
(c)See Note 1(f) regarding sweep repurchase agreement.
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
THE MONEY MARKET PORTFOLIOS
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1994 (UNAUDITED)
<TABLE>
<CAPTION>
THE U.S. GOVERNMENT
THE MONEY SECURITIES MONEY
MARKET PORTFOLIO MARKET PORTFOLIO
---------------- -------------------
<S> <C> <C>
Assets:
Investments in securities, at value and cost . . . . . . . . . . . $1,119,347,743 $ 84,519,345
Receivables from repurchase agreements, at value and cost . . . . 245,423,420 426,249,000
Interest receivables . . . . . . . . . . . . . . . . . . . . . . . 2,793,305 67,467
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . 12,853 16,441
-------------- ---------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . 1,367,577,321 510,852,253
-------------- ---------------
Liabilities:
Payables:
Distributions to shareholders . . . . . . . . . . . . . . . . . . 142 674
Management fees . . . . . . . . . . . . . . . . . . . . . . . . . 159,381 64,818
Capital shares repurchased . . . . . . . . . . . . . . . . . . . 463,811 1,350,475
Accrued expenses and other liabilities . . . . . . . . . . . . . . 7,998 9,261
-------------- ---------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . 631,332 1,425,228
-------------- ---------------
Net assets, at value . . . . . . . . . . . . . . . . . . . . . . . $1,366,945,989 $509,427,025
============== ===============
Shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . 1,366,945,989 509,427,025
============== ===============
Net asset value per share . . . . . . . . . . . . . . . . . . . . . $1.00 $1.00
============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
THE MONEY MARKET PORTFOLIOS
FINANCIAL STATEMENTS (CONT.)
STATEMENTS OF OPERATIONS
FOR THE PERIOD JUNE 30, 1994 TO NOVEMBER 30, 1994 (UNAUDITED)
<TABLE>
<CAPTION>
THE U.S. GOVERNMENT
THE MONEY SECURITIES MONEY
MARKET PORTFOLIO MARKET PORTFOLIO
---------------- -------------------
<S> <C> <C>
Investment income:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $21,764,196 $7,830,490
------------- -------------
Expenses:
Management fees, net (Note 4) . . . . . . . . . . . . . . . . . . 643,157 232,121
Reports to shareholders . . . . . . . . . . . . . . . . . . . . . 16,438 3,823
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . 6,250 9,025
Professional fees . . . . . . . . . . . . . . . . . . . . . . . . 3,772 2,294
Trustees' fees and expenses . . . . . . . . . . . . . . . . . . . 1,945 927
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,115 2,090
------------- -------------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . 675,677 250,280
------------- -------------
Net investment income . . . . . . . . . . . . . . . . . . . 21,088,519 7,580,210
------------- -------------
Realized gain on investments . . . . . . . . . . . . . . . . . . . -- 162
------------- -------------
Net increase in net assets resulting from operations . . . . . . . $21,088,519 $7,580,372
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
THE MONEY MARKET PORTFOLIOS
FINANCIAL STATEMENTS (CONT.)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD JUNE 30, 1994 TO NOVEMBER 30, 1994 (UNAUDITED)
AND THE YEAR ENDED JUNE 30, 1994
<TABLE>
<CAPTION>
THE U.S. GOVERNMENT SECURITIES
THE MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
-------------------------------- --------------------------------
PERIOD YEAR PERIOD YEAR
ENDED 11/30/94 ENDED 6/30/94 ENDED 11/30/94 ENDED 6/30/94
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income . . . . . . . . . . $ 21,088,519 $ 9,998,562 $ 7,580,210 $ 7,622,616
Net realized gain (loss) from security
transactions . . . . . . . . . . . . . . -- (5,146) 162 350
-------------- ------------ ------------ ------------
Net increase in net assets
resulting from operations . . . . . 21,088,519 9,993,416 7,580,372 7,622,966
Distributions to shareholders from
undistributed net investment income . . . (21,088,519) (9,993,416)+++ (7,580,372)++ (7,622,966)+
Increase (decrease) in net assets
from capital share transactions
(Notes 2 and 5) . . . . . . . . . . . . . 1,147,756,766 (3,168,832) 290,878,960 (91,771,434)
-------------- ------------ ------------ ------------
Net increase (decrease)
in net assets . . . . . . . . . . . 1,147,756,766 (3,168,832) 290,878,960 (91,771,434)
Net assets (there is no undistributed net
investment income at beginning or end
of the period):
Beginning of period . . . . . . . . . . . 219,189,223 222,358,055 218,548,065 310,319,499
-------------- ------------ ------------ ------------
End of period . . . . . . . . . . . . . . $1,366,945,989 $219,189,223 $509,427,025 $218,548,065
============== ============ ============ ============
</TABLE>
+ Distributions were increased by net realized gain from security transactions
of $350.
++Distributions were increased by net realized gain from security transactions
of $162.
+++Distributions were reduced by net realized loss from security transactions
of $5,146.
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
THE MONEY MARKET PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Money Market Portfolios (the Money Market) is a no load, open-end
diversified management investment company (mutual fund), registered under the
Investment Company Act of 1940, as amended. The Money Market has two portfolios
(the Portfolios) consisting of: The Money Market Portfolio and The U.S.
Government Securities Money Market Portfolio. Each of the Portfolios issues a
separate series of shares and maintains a totally separate and distinct
investment portfolio. The shares of the Money Market are issued in private
placements and are thus exempt from registration under the Securities Act of
1933.
The following is a summary of significant accounting policies consistently
followed by the Portfolios in the preparation of their financial statements.
The policies are in conformity with generally accepted accounting principles
for investment companies.
A. SECURITY VALUATION:
Portfolio securities are valued at amortized cost, which approximates value.
Each of the Portfolios must maintain a dollar weighted average maturity of 90
days or less and only purchase instruments having remaining maturities of 397
days or less. If a Portfolio has a remaining weighted average maturity of
greater than 90 days, the Portfolio will be stated at value based on recorded
closing sales on a national securities exchange or, in the absence of a
recorded sale, within the range of the most recent quoted bid and asked prices.
The trustees have established procedures designed to stabilize, to the extent
reasonably possible, each Portfolio's price per share as computed for the
purpose of sales and redemptions at $1.00.
B. INCOME TAXES:
The Money Market intends to continue to qualify for the tax treatment
applicable to regulated investment companies under the Internal Revenue Code
and to make the requisite distributions to its shareholders which will be
sufficient to relieve it from income and excise taxes. Therefore, no income tax
provision is required.
Each Portfolio is treated as a separate entity in the determination of
compliance with the Internal Revenue Code.
C. SECURITY TRANSACTIONS:
Security transactions are accounted for on the date the securities are
purchased or sold (trade date). Realized gains and losses on security
transactions are determined on the basis of specific identification for both
financial statement and income tax purposes.
D. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:
Net investment income includes income, calculated on an accrual basis,
amortization of original issue and market discount or premium (if any), and
estimated expenses which are accrued daily. The total available for dividends
is computed daily and includes the net investment income, plus or minus any
gains or losses on security transactions and changes in unrealized portfolio
appreciation or depreciation, (if any).
Dividends are normally declared for each day the New York Stock Exchange is
open for business, equal to the total available for distributions (as defined
above), and are payable to shareholders of record as of the close of business
that day. Such dividends are automatically reinvested monthly in additional
shares of the Portfolio at net asset value.
E. EXPENSE ALLOCATION:
Common expenses incurred by the Money Market are allocated among the Portfolios
based on the ratio of net assets of each Portfolio to the combined net assets.
In all other respects, expenses are charged to each Portfolio as incurred on a
specific identification basis.
29
<PAGE>
THE MONEY MARKET PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONT.)
1. SIGNIFICANT ACCOUNTING POLICIES (CONT.)
F. REPURCHASE AGREEMENTS:
The Portfolios may enter into repurchase agreements with government securities
dealers recognized by the Federal Reserve Board and/or member banks of the
Federal Reserve System. In a repurchase agreement, the Portfolios purchases a
U.S. government security from a dealer or bank subject to an agreement to
resell it at a mutually agreed upon price and date. Such a transaction is
accounted for as a loan by the Portfolio to the seller, collateralized by the
underlying security. The transaction requires the initial collateralization of
the seller's obligation by U.S. government securities with market value,
including accrued interest, of at least 102% of the dollar amount invested by
the Portfolio, with the value of the underlying security marked to market daily
to maintain coverage of at least 100%. The collateral is delivered to the
Portfolios' custodian and held until resold to the dealer or bank. At
November 30, 1994, all outstanding repurchase agreements held by the
Portfolios had been entered into on that date.
The Portfolios may enter into a sweep agreement with their custodian bank. In a
sweep, the excess cash in the Portfolios' direct deposit accounts at the end of
the day is invested overnight. The Money Market Portfolio's excess cash is
invested in a AAA rated time deposit of Morgan Guaranty Trust's Nassau branch.
The U.S. Government Securities Money Market Portfolio's excess cash is invested
in a U.S. government backed repurchase agreement with Morgan Guaranty of New
York. Funds are returned to the Portfolios' direct deposit accounts as the
first transaction of the next business day.
2. TRUST SHARES
At November 30, 1994, there was an unlimited number of $.01 par value shares of
beneficial interest authorized, and paid-in capital aggregated as follows:
<TABLE>
<CAPTION>
THE U.S. GOVERNMENT
THE MONEY SECURITIES MONEY
MARKET PORTFOLIO MARKET PORTFOLIO
---------------- -------------------
<S> <C> <C>
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,366,945,989 $ 509,427,025
================ ================
</TABLE>
Transactions in the Portfolio shares at $1.00 per share for the period June 30,
1994 to November 30, 1994 and the year ended June 30, 1994 are as follows:
<TABLE>
<CAPTION>
THE U.S. GOVERNMENT
THE MONEY SECURITIES MONEY
MARKET PORTFOLIO MARKET PORTFOLIO
---------------- -------------------
<S> <C> <C>
Period ended November 30, 1994
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,393,970,109 $ 1,233,976,703
Shares issued in reinvestment of distributions . . . . . . . . . . . 21,088,493 7,580,373
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,399,999,625) (1,089,302,908)
Shares issued in connection with assets transfer (Note 5) . . . . . . 1,132,697,789 138,624,792
---------------- ----------------
Net increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,147,756,766 $ 290,878,960
================ ================
Year ended June 30, 1994
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,699,503,699 $ 2,476,681,838
Shares issued in reinvestment of distributions . . . . . . . . . . . 9,993,345 7,620,764
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,712,665,876) (2,576,074,036)
---------------- ----------------
Net decrease . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (3,168,832) $ (91,771,434)
================ ================
</TABLE>
30
<PAGE>
THE MONEY MARKET PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONT.)
3. PURCHASES AND SALES OF SECURITIES
Aggregate purchases and sales/maturities of securities, including repurchase
agreements, for the period June 30, 1994 to November 30, 1994 were as follows:
<TABLE>
<CAPTION>
THE U.S. GOVERNMENT
THE MONEY SECURITIES MONEY
MARKET PORTFOLIO MARKET PORTFOLIO
---------------- ----------------
<S> <C> <C>
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $25,193,835,927 $34,845,613,146
=============== ===============
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $24,052,333,842 $34,554,108,401
=============== ===============
</TABLE>
4. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Franklin Advisers, Inc., under the terms of a management agreement, provides
investment advice, administrative services, office space and facilities to the
Portfolios, and receives fees computed monthly on the average daily net assets
of the Portfolios during the month. The Money Market Portfolio and The U.S.
Government Securities Money Market Portfolio pay a fee equal to an annualized
rate of 15/100 of 1% of their average net assets.
The terms of the agreement provide that annual aggregate expenses of the
Portfolios be limited to the extent necessary to comply with the limitations
set forth in the laws, regulations and administrative interpretations of the
states in which the Portfolios' shares are registered. The Portfolios' expenses
did not exceed these limitations; however, for the period ended November 30,
1994, Franklin Advisers, Inc. agreed in advance to waive a portion of the
management fees for The Money Market Portfolio and The U.S. Government
Securities Money Market Portfolio by $32,430 and $18,121, respectively.
Certain officers and trustees of the Portfolios are also officers and/or
directors of Franklin Advisers, Inc. and Franklin/Templeton Investor Services,
Inc., all wholly-owned subsidiaries of Franklin Resources, Inc.
5. ASSETS TRANSFER
On August 1, 1994, the Franklin Money Fund and the Franklin Federal Money Fund
transferred substantially all of their assets, respectively, into The Money
Market Portfolio and The U.S. Government Securities Money Market Portfolio. The
transfers were accompanied by a tax-free exchange of 1,132,697,789 capital
shares of The Money Market Portfolio for net assets valued at $1,132,697,789 of
the Franklin Money Fund and 138,624,792 capital shares of The U.S. Government
Securities Money Market Portfolio for net assets valued at $138,624,792 of the
Franklin Federal Money Fund.
As of November 30, 1994, the shares of The Money Market Portfolio were owned by
the following funds:
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OUTSTANDING SHARES
--------------- ------------------
<S> <C> <C>
Franklin Money Fund . . . . . . . . . . . . . . . . . . . . . . . . . 1,125,139,301 82.31%
Institutional Fiduciary Trust Money Market Portfolio . . . . . . . . 240,272,879 17.58%
Institutional Fiduciary Trust AEA Cash Management Fund . . . . . . . 1,387,639 0.10%
Institutional Fiduciary Trust Franklin Cash Reserves Fund . . . . . . 146,170 0.01%
</TABLE>
31
<PAGE>
THE MONEY MARKET PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONT.)
5. ASSETS TRANSFER (CONT.)
As of November 30, 1994, the shares of The U.S. Government Securities Money
Market Portfolio were owned by the following funds:
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OUTSTANDING SHARES
--------------- ------------------
<S> <C> <C>
Institutional Fiduciary Trust Franklin U.S. Government Securities
Money Market Portfolio . . . . . . . . . . . . . . . . . . . . . . . 333,099,832 65.39%
Franklin Federal Money Fund . . . . . . . . . . . . . . . . . . . . . 176,327,193 34.61%
</TABLE>
6. FINANCIAL HIGHLIGHTS
Selected data for a share of capital stock outstanding throughout the period.
<TABLE>
<CAPTION>
PER SHARE OPERATING PERFORMANCE RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------ ---------------------------------------
NET ASSET DISTRIBUTIONS NET ASSETS RATIO OF RATIO OF
VALUES AT NET FROM NET NET ASSET AT END EXPENSES NET INCOME
PERIOD ENDED BEGINNING INVESTMENT INVESTMENT VALUES AT TOTAL OF PERIOD TO AVERAGE TO AVERAGE
JUNE 30, OF PERIOD INCOME INCOME END OF PERIOD RETURN++ (IN 000'S) NET ASSETS+ NET ASSETS
- - ------------------------------------------------------------------------------------------------------------------------------------
THE MONEY MARKET PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1993* $1.00 $0.027 $(0.027) $1.00 2.92%** $ 222,358 0.15%** 3.18%**
1994 1.00 0.033 (0.033) 1.00 3.33 219,189 0.15 3.25
1994*** 1.00 0.020 (0.020) 1.00 1.94 1,366,946 0.15** 4.55**
<CAPTION>
THE U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1993* 1.00 0.021 (0.021) 1.00 2.27** 310,319 0.15** 3.05**
1994 1.00 0.032 (0.032) 1.00 3.25 218,548 0.15 3.20
1994*** 1.00 0.019 (0.019) 1.00 1.89 509,427 0.15** 4.58**
</TABLE>
*July 28, 1992 (Effective date of registration) to June 30, 1993.
**Annualized
***For the period June 30, 1994 to November 30, 1994.
++Total return measures the change in value of an investment over the periods
indicated. It assumes reinvestment of dividends and capital gains, if any, at
net asset value and is not annualized.
+During the period indicated, the Manager agreed to waive in advance a portion
of its management fees of the Portfolios. Had such action not been taken, the
ratios of expenses to average net assets would have been as follows.
<TABLE>
<CAPTION>
RATIO OF EXPENSES TO
AVERAGE NET ASSETS
------------------
<S> <C>
THE MONEY MARKET PORTFOLIO
1993* . . . . . . . . . . . . . . .17%**
1994 . . . . . . . . . . . . . . . .17
1994*** . . . . . . . . . . . . . .16**
THE U.S. GOVERNMENT SECURITIES
MONEY MARKET PORTFOLIO
1993* . . . . . . . . . . . . . . .18%**
1994 . . . . . . . . . . . . . . . .17
1994*** . . . . . . . . . . . . . .16**
</TABLE>
32
<PAGE>
FRANKLIN DEPOSIT SLIP
Please deposit the attached check for $_____________________ into the following
Franklin account number: ___________________________________.
Name(s): ___________________________________________________
(Please print as shown on account registration.)
Mail to: [FRANKLIN
Franklin/Templeton Group TEMPLETON
777 Mariners Island Blvd. LOGO]
P.O. Box 7777
San Mateo, CA 94403-7777
Checks should be made payable to the applicable fund.
You have previously received a prospectus for the fund in
which you are a shareholder.
- - --------------------------------------------------------------------------------
FRANKLIN DEPOSIT SLIP
Please deposit the attached check for $_____________________ into the following
Franklin account number: ___________________________________.
Name(s): ___________________________________________________
(Please print as shown on account registration.)
Mail to: [FRANKLIN
Franklin/Templeton Group TEMPLETON
777 Mariners Island Blvd. LOGO]
P.O. Box 7777
San Mateo, CA 94403-7777
Checks should be made payable to the applicable fund.
You have previously received a prospectus for the fund in
which you are a shareholder.
- - --------------------------------------------------------------------------------
FRANKLIN DEPOSIT SLIP
Please deposit the attached check for $_____________________ into the following
Franklin account number: ___________________________________.
Name(s): ___________________________________________________
(Please print as shown on account registration.)
Mail to: [FRANKLIN
Franklin/Templeton Group TEMPLETON
777 Mariners Island Blvd. LOGO]
P.O. Box 7777
San Mateo, CA 94403-7777
Checks should be made payable to the applicable fund.
You have previously received a prospectus for the fund in
which you are a shareholder.
- - --------------------------------------------------------------------------------
07/94
<PAGE>
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
<PAGE>
THE FRANKLIN/TEMPLETON GROUP
For a free brochure and prospectus, which contain more complete information,
including charges and expenses, call Franklin Fund Information, toll free, at
1-800/DIAL BEN (800/342-5236). Please read the prospectus carefully before you
invest or send money. To ensure the highest quality of service, telephone
calls to or from our service departments may be monitored, recorded and
accessed. These calls can be determined by the presence of a regular beeping
tone.
<TABLE>
<S> <C> <C> <C>
TEMPLETON Colorado FRANKLIN FUNDS SEEKING FRANKLIN FUNDS FOR
GROUPS OF FUNDS Connecticut GROWTH AND INCOME NON-U.S. INVESTORS
Americas Government Florida* Balance Sheet Tax-Advantaged
Securities Fund Georgia Investment Fund High Yield Securities Fund
Developing Markets Trust Hawaii** Convertible Tax-Advantaged
Foreign Fund Indiana Securities Fund International Bond Fund
Global Instrastructure Fund Kentucky Equity Income Fund Tax-Advantaged
Global Opportunities Trust Louisiana Global Utilities Fund U.S. Government
Global Rising Maryland Income Fund Securities Fund
Dividends Fund Massachusetts*** Premier Return Fund
Growth Fund Michigan*** Rising Dividends Fund FRANKLIN/TEMPLETON
Income Fund Minnesota*** Utilities Fund GLOBAL CURRENCY FUNDS
Real Estate Missouri Global Currency Fund
Securities Fund New Jersey FRANKLIN FUNDS SEEKING High Income
Smaller Companies New York* HIGH CURRENT INCOME Currency Fund
Growth Fund North Carolina AGE High Income Fund Hard Currency Fund
World Fund Ohio*** German Government
Oregon Bond Fund FRANKLIN MONEY
FRANKLIN FUNDS SEEKING Pennsylvania Global Government MARKET FUNDS
TAX-FREE INCOME Tennessee** Income Fund Money Funds
Federal Tax-Free Texas Investment Grade Federal Money Fund
Income Fund Virginia Income Fund Tax-Exempt Money Fund
Federal Intermediate-Term Washington** U.S. Government California Tax-Exempt
Tax-Free Income Fund Securities Fund Money Fund
High Yield Tax-Free FRANKLIN FUNDS SEEKING New York Tax-Exempt
Income Fund CAPITAL GROWTH FRANKLIN FUNDS SEEKING Money Fund
Insured Tax-Free California Growth Fund HIGH CURRENT INCOME IFT U.S. Treasury Money
Income Fund*** DynaTech Fund AND STABILITY OF PRINCIPAL Market Portfolio
Puerto Rico Tax-Free Equity Fund Adjustable Rate
Income Fund Global Health Care Fund Securities Fund FRANKLIN FUND
Gold Fund Adjustable U.S. FOR CORPORATIONS
FRANKLIN STATE-SPECIFIC Growth Fund Government Corporate Qualified
FUNDS SEEKING International Equity Fund Securities Fund Dividend Fund
TAX-FREE INCOME Japan Fund Short-Intermediate
Alabama Pacific Growth Fund U.S. Government FRANKLIN TAX-DEFERRED
Arizona* Real Estate Securities Fund ANNUITY
Arkansas** Securities Fund Valuemark
California* Small Cap Growth Fund
</TABLE>
*Two or more fund options available: long-term portfolio, intermediate-term
portfolio, a portfolio of insured municipal securities, and a high yield
portfolio (CA).
**The fund may invest up to 100% of its assets in bonds that pay interest
subject to the federal alternative minimum tax.
***Portfolio of insured municipal securities.
12/94
<PAGE>
FRANKLIN
FEDERAL
MONEY FUND
- - --------------------------------------------
ANNUAL REPORT
NOVEMBER 30, 1994
[FRANKLIN TEMPLETON LOGO]
FRANKLIN FEDERAL MONEY FUND
777 Mariners Island Blvd., P.O. Box 7777
San Mateo, CA 94403-7777
- - --------------------------------------------
ADDRESS CORRECTION REQUESTED
ANNUAL REPORT
INVESTMENT ADVISOR
Franklin Advisers, Inc.
777 Mariners Island Blvd.
San Mateo, CA 94404-1585
DISTRIBUTOR
Franklin/Templeton Distribution, Inc.
777 Mariners Island Blvd.
San Mateo, CA 94404-1585
SHAREHOLDER SERVICES AGENT
Franklin/Templeton Investor Services, Inc.
777 Mariners Island Blvd.
San Mateo, CA 94404-1585
1-800/632-2301
This report is intended for distribution to existing shareholders of the fund
who previously recieved a prospectus.
13 A94 12/94
- - -------------------------
Bulk Rate
U.S. Postage
PAID
So. San Francisco, CA
Permit No. 655
- - -------------------------
