INSTITUTIONAL FIDUCIARY TRUST, N-30D, 1996-09-10

INSTITUTIONAL FIDUCIARY TRUST
N-30D, 1996-09-10

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INSTITUTIONAL
FIDUCIARY
TRUST

Annual Report

June 30, 1996

Franklin's IFT
Money Market Portfolio

Franklin U.S. Government
Securities Money Market Portfolio

Franklin U.S. Treasury
Money Market Portfolio

Franklin U.S. Government Agency Money Market Fund

Contents

Franklin's IFT Money Market Portfolio Page 4

Franklin U.S. Government Securities
Money Market Portfolio Page 6

Franklin U.S. Treasury Money Market Portfolio Page 8

Franklin U.S. Government Agency Money Market Fund Page 10

For a prospectus on any Franklin or Templeton fund, please contact a Franklin
Templeton Institutional Services Representative, toll free, at 1-800/632-2000. A
prospectus contains more complete information about a fund, including fees,
charges and expenses. Be sure to read it carefully before investing or sending
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.

July 15, 1996

Dear Shareholder:

We are pleased to bring you the twelfth annual report for Franklin's
Institutional Fiduciary Trust (the Trust), covering the fiscal year ended June
30, 1996.

The Trust was developed specifically to meet the needs of institutional
investors. Part of the $147 billion Franklin Templeton Group, the Trust consists
of seven separate and distinct series. This report pertains to the following
money market funds: Franklin's IFT Money Market Portfolio, Franklin U.S.
Government Securities Money Market Portfolio, Franklin U.S. Treasury Money
Market Portfolio, and Franklin U.S. Government Agency Money Market Fund. Each
portfolio in the Trust has a unique composition designed to meet specific
investor preferences.

The reporting period was marked primarily by slow economic growth and low
inflation. In an effort to stimulate growth, the Federal Reserve lowered the
federal funds target rate several times in the second half of 1995, and in early
1996. A stronger-than-expected employment report released in March 1996,
however, drove up interest rates in general and caused weakness in the financial
markets. As a result, money market yields generally fell during the period and
did not rebound significantly. Within this environment, our managers have
steadfastly adhered to a disciplined investment strategy, which enables them to
seek out attractive opportunities through a variety of market conditions. We
believe this approach benefits our shareholders in the long run, and we will
continue to make every effort to employ this strategy going forward.

Thank you for your continued support of Franklin's Institutional Fiduciary
Trust. We look forward to serving your investment needs in the months and years
to come.

Sincerely,

Charles B. Johnson
Chairman of the Board
Franklin's Institutional Fiduciary Trust

Overview of the Economy

The economy began the second half of 1995 on a weak note, with growth well below
that of 1994. Gross Domestic Product (GDP) growth for the final two quarters of
1995 totaled 1.85% compared with 3.40% for the same period in 1994. Other weak
economic data included declining industrial production and sluggish retail,
home, and auto sales. In response, the Federal Reserve lowered its target for
the federal funds rate, from 6.00% to 5.75% in July 1995, and then to 5.50% in
December. The economy, however, continued to lose momentum in the early part of
1996. With prospects for continued slow growth and low inflation, the Federal
Reserve again lowered the federal funds rate target, to 5.25% in January 1996.

Surprisingly, economic reports turned sharply positive in March. GDP growth for
the first quarter of 1996 rebounded to 2.2%, compared with only 0.50% for the
fourth quarter of 1995. Since March 1996, much of the economic data has been
stronger than expected, with the index of leading economic indicators, consumer
confidence, and industrial production all up strongly. As a result, most
economists have raised their estimates for second quarter GDP, to over 4.0%.

Short-term interest rates reflected economic growth trends during the reporting
period. For example, the 90-day Treasury bill rate fell from 5.58% in July 1995
to 5.03% by February 29, 1996, while economic growth slowed. Since then, the
Treasury bill rate has risen slightly, to 5.16% as of June 30, 1996, as economic
growth strengthened.

Looking forward, the economy appears to be regaining its footing once again,
which has led some to believe that the Federal Reserve may raise short-term
interest rates in an effort to slow growth and decrease inflationary
expectations. We believe any tightening in monetary policy will depend on the
economy's response in the coming months. If reports suggest a weakening, rate
hikes may be unnecessary, but a strengthening may force the Federal Reserve to
raise short-term rates.

(PICTURE OMITTED)

Thomas J. Runkel, CFA
Portfolio Manager

Tom Runkel is a portfolio manager for Franklin's taxable money market funds. He
joined Franklin in 1983 and served as an equity and money market trader from
1985 to 1989.

Mr. Runkel received a Bachelor of Science degree in political science from the
University of California at Davis and a Master of Business Administration degree
from Santa Clara University. He is a Chartered Financial Analyst (CFA).

GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Franklin's IFT Money
Market Portfolio

The investment objective for Franklin's IFT Money Market Portfolio (the Fund) is
high current income, consistent with capital preservation and liquidity. It
pursues this objective by investing all of its assets in The Money Market
Portfolio (the Portfolio), which has an investment objective identical to the
Fund's. The Portfolio, in turn, invests in various money market instruments such
as:

o U.S. government and federal agency obligations1
o Certificates of deposit
o Bankers' acceptances
o High grade commercial paper
o High grade short-term corporate obligations
o Repurchase agreements collateralized by U.S.
government securities1

The Portfolio's composition as of June 30, 1996, is shown below.

The Money Market Portfolio
Portfolio Composition as of June 30, 1996

GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT

The money market securities in which the Portfolio invests are among the highest
quality available. As such, the Portfolio does not invest in exotic derivatives
or other potentially volatile securities that we think involve undue risk.
Instead, we seek to provide shareholders with a high-quality, conservative
investment. In addition, the Portfolio maintains an average weighted maturity of
90 days or less, which is relatively short and allows the Portfolio to adjust
quickly to changing interest rates.

Through investing in a portfolio of high-quality, short-term securities, the
Fund can provide a high level of credit safety combined with a stable net asset
value.2 As a result, investors often use Franklin's IFT Money Market Portfolio
for assets held in fiduciary, advisory and custodial capacities. The Fund's
competitive yield has also made it an attractive alternative cash management
tool for corporations, banks, savings and loan associations and trust
companies.3

Performance Summary

Interest rates fell during the second half of 1995 when economic growth slowed,
but subsequently reversed course and rose again in the first half of 1996, as
growth strengthened. To help us adapt quickly to interest rate changes, we
maintained a relatively short average weighted maturity. The Fund's average
weighted maturity fell from 60 days on June 30, 1995, to 46 days on December 31,
1995, and then rose to 54 days on June 30, 1996. As a result, the Fund's 7-day
yield mirrored the movements in Treasury bill rates. The Fund's 7-day yield
began the fiscal year at 5.97% and finished at 5.21% as of June 30, 1996.4

Weekly 7-day yields for the reporting period are shown below. As you can see,
the Fund consistently outperformed the IBC/Donoghue's Money Fund
Averages(TM)/First -Tier Institutional-Only benchmark for the one-year period
ended June 30, 1996.5 Of course, past performance cannot guarantee future
results.

Franklin's IFT Money Market Portfolio
Weekly 7-Day Yields vs. IBC/Donoghue's
First-Tier, Institutional-Only4,5
June 30, 1995 to June 30, 1996

GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Performance Figures
Period Ended June 30, 1996

7-Day Current Yield:4 5.21%

7-Day Effective Yield:4 5.35%

Average Weighted Maturity: 54 days

1. U.S. government securities owned by the Portfolio or held under repurchase
agreement, but not shares of Franklin's IFT Money Market Portfolio, are
guaranteed by the U.S. government as to the timely payment of principal and
interest.

2. An investment in Franklin's IFT Money Market Portfolio is neither insured nor
guaranteed by the U.S. government or by any other entity or institution. There
is no assurance that the $1.00 share price will be maintained.

3. Regulated investors should review their applicable investment restrictions to
determine whether the Fund is a permissible investment.

4. Annualized and effective yields are for the 7-day period shown and reflect
fluctuations in interest rates on portfolio investments, and Fund expenses. Past
performance does not guarantee future results.

Franklin Advisers, Inc., the Fund's administrator and manager of the underlying
portfolio, has agreed in advance to waive a portion of its management fees and
make payments of certain other expenses to limit total operating expenses to no
more than 0.20% per annum of average net assets. Without these reductions, the
Fund's current and effective 7-day yields for the period would have been 5.18%
and 5.31%, respectively. Franklin Advisers, Inc. may discontinue these
arrangements at any time, upon notice to the Fund's Board of Trustees.

5.Source: Money Fund Report(R), June 28, 1996. As of June 25, 1996, there were
137 funds in this category.

Franklin
U.S. Government
Securities Money
Market Portfolio

The Franklin U.S. Government Securities Money Market Portfolio's investment
objective is to earn high current income consistent with capital preservation
and liquidity. It pursues this objective by investing all of its assets in
shares of the U.S. Government Securities Money Market Portfolio (the Portfolio),
which has an investment objective identical to the Fund's. The Portfolio in
turn, invests primarily in repurchase agreements collateralized by U.S.
government securities, and in marketable securities issued or guaranteed by the
U.S. government, its agencies and instrumentalities.1 The Portfolio's
composition as of June 30, 1996 is shown below.

U.S. Government Securities
Money Market Portfolio
Portfolio Composition as of June 30, 1996

GRAPHIC MATERIAL 4 OMITTED - SEE APPENDIX AT END OF DOCUMENT

The Portfolio was created to comply with the investment criteria of many state,
county, and city governments. It may be an appropriate investment choice for
government investors, corporations, banks, and savings and loan associations
because of its history of principal stability and high degree of credit safety.2
In fact, its emphasis on high credit quality has helped the Portfolio earn the
highest possible ratings: "AAAm" by Standard and Poor's Corporation and "Aaa" by
Moody's Investors Service, two independent rating services.3

Franklin Templeton is pleased to announce extended times for placing trades in
the Franklin U.S. Government Securities Money Market Portfolio. Investors may
now purchase and redeem shares each business day, up to 4:30 p.m. Eastern
time/1:30 p.m. Pacific time. This feature gives our shareholders the opportunity
to invest monies received late in the day and earn same-day dividends, rather
than allow that money to remain idle overnight or over a weekend. When
purchasing shares of the Portfolio, investors may also request next-day
settlement exchanges to any other money market funds in the Trust.4

Performance Summary

The Federal Reserve lowered the federal funds target rate several times during
the reporting period, which contributed to the decline in the Franklin U.S.
Government Securities Money Market Portfolio's 7-day yield from 5.79% at the
beginning of the fiscal year to 5.13% on June 30, 1996.5 The Portfolio
maintained a relatively short average weighted maturity, which allowed us to
adapt quickly to interest rate changes. The Portfolio's average weighted
maturity decreased from 31 days on June 30, 1995, to 6 days on December 31,
1995, and then increased to 19 days on June 30, 1996.

The graph to the right illustrates how the 7-day current yield for the Franklin
U.S. Government Securities Money Market Portfolio performed against the
IBC/Donoghue's Money Fund Averages(TM)/First-Tier Institutional-Only benchmark.6
Of course, past performance cannot guarantee future results.

Franklin U.S. Government Securities
Money Market Portfolio
Weekly 7-Day Yields vs. IBC Donoghue's
Government-Only, Institutional-Only5,6
June 30, 1995 to June 30, 1996

GRAPHIC MATERIAL 5 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Performance Figures
Period ended June 30, 1996

7-Day Current Yield:5 5.13%
7-Day Effective Yield:5 5.26%
Average Weighted Maturity: 19 days

1. U.S. government securities owned by the underlying Portfolio or held under
repurchase agreement, but not shares of the Franklin U.S. Government Securities
Money Market Portfolio, are guaranteed by the U.S. government as to the timely
payment of principal and interest.

2. Regulated investors should review their applicable investment restrictions to
determine whether the Fund is a permissible investment.

3. The AAAm rating reflects Standard & Poor's assessment of the overall credit
quality of the Portfolio, based primarily on the Portfolio's stated investment
objectives and policies. It considers, for example, the credit quality of
Portfolio investments and management. The rating does not reflect the yield or
the market price of the Fund's shares nor approval by Standard & Poor's. The Aaa
rating reflects Moody's assessment of the investment quality of shares in the
Portfolio and factors in the Portfolio's investment objectives and policies,
creditworthiness of the Portfolio's investments and management. Funds rated Aaa
are judged to be of an investment quality similar to Aaa-rated fixed-income
obligations, which indicates best quality. The rating does not consider the
prospective performance of a fund with respect to appreciation, the volatility
of net asset value, or yield and does not reflect approval by Moody's. Both
ratings are subject to change.

4. The exchange program may be modified or discontinued by the Fund.
Shareholders using timing services will be charged a $5 fee for each exchange.
Certain funds do not permit timing accounts or there may be certain
restrictions, as detailed in each fund's prospectus.

5. Annualized and effective yields are for the 7-day period shown and reflect
fluctuations in interest rates on portfolio investments, and Fund expenses. Past
performance does not guarantee future results.

Franklin Advisers, Inc., the Fund's administrator and manager of the underlying
portfolio, has agreed in advance to waive a portion of its management fees and
make payments of certain other expenses to limit total operating expenses to no
more than 0.20% per annum of average net assets. Without these reductions, the
Fund's current and effective 7-day yields for the period would have been 5.05%
and 5.18%, respectively. Franklin Advisers, Inc. may discontinue these
arrangements at any time, upon notice to the Fund's Board of Trustees.

6. Source: Money Fund Report(R), June 28, 1996, IBC/Donoghue's Money Fund
Averages(TM)/Government-Only, Institutional-Only. As of June 25, 1996, there
were 172 funds in this category.

An investment in the Franklin U.S. Government Securities Money Market Portfolio
is neither insured nor guaranteed by the U.S. government or by any other entity
or institution. There is no assurance that the $1.00 share price will be
maintained.

Franklin
U.S. Treasury
Money Market Portfolio

The Franklin U.S. Treasury Money Market Portfolio seeks to earn a high level of
current income, consistent with capital preservation and liquidity, by investing
exclusively in U.S. Treasury securities such as bills, notes and bonds.1 The
Franklin U.S. Treasury Money Market Portfolio does not invest in repurchase
agreements, securities issued by agencies or instrumentalities of the federal
government, or any other type of money market instrument. The Fund's composition
on June 30, 1996, is shown below.

Franklin U.S. Treasury
Money Market Portfolio
Portfolio Composition as of June 30, 1996

GRAPHIC MATERIAL 6 OMITTED - SEE APPENDIX AT END OF DOCUMENT

The Franklin U.S. Treasury Money Market Portfolio provides institutional
investors an opportunity to take advantage of high current yields, combined with
the high degree of credit safety available from U.S. Treasury securities. Most
investment experts consider U.S. Treasuries to be among the safest investments
available in the marketplace. 1 The high credit quality of these securities has
earned the Franklin U.S. Treasury Money Market Portfolio the highest possible
ratings: "AAAm-G," from Standard & Poor's Corporation and "Aaa" from Moody's
Investors Service.2

In addition, the Franklin U.S. Treasury Money Market Portfolio may offer a tax
advantage, since income from U.S. Treasuries, and therefore from the Fund, may
be free of state and local income taxes for most investors. Investors may
therefore earn a higher after-tax return from the portfolio than is available in
a fully taxable money market account.3 Of course, all dividends paid out of U.S.
government obligation interest are fully taxable for federal income tax
purposes. Investors should consult with their own tax advisors for further
information on specific state tax rules.

The Franklin U.S. Treasury Money Market Portfolio should be attractive
to institutional investors seeking an economical and convenient means of
investing in a professionally managed portfolio of high-quality, short-term
government securities allowing them easy access to their money.

Performance Summary

Interest rates fluctuated during the fiscal year, gener-ally falling during the
second half of 1995 when economic growth slowed, and rising again as the economy
strengthened in the first half of 1996. The Fund maintained a relatively short
average weighted maturity, which allowed us to adapt quickly to interest rate
changes. During the period, the Fund's average weighted maturity rose from 51
days on June 30, 1995, to 58 days on June 30, 1996. As a result, the Fund's
7-day yield mirrored the movements in Treasury bill rates. The Fund's 7-day
yield began the fiscal year at 5.52% and finished at 4.92% on June 30, 1996.4

The graph to the right illustrates how the 7-day current yield for the Franklin
U.S. Treasury Money Market Portfolio performed against the IBC/Donoghue's
Government-Only/Institutional-Only for the 12-month period ended June 30, 1996.5
Of course, past performance cannot guarantee future results.

Franklin U.S. Treasury Money Market Portfolio

Weekly 7-Day Yields vs. IBC/Donoghue's
Government-Only, Institutional-Only4,5
June 30, 1995 to June 30, 1996

GRAPHIC MATERIAL 7 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Performance Figures
Period ended June 30, 1996

7-Day Current Yield:4 4.92%

7-Day Effective Yield:4 5.04%

Average Weighted Maturity: 58 days

1. U.S. Treasury securities owned by the Fund, but not shares of the Fund, are
guaranteed by the U.S. government as to the timely payment of principal and
interest.

2. The AAAm-G rating reflects Standard & Poor's assessment of the overall credit
quality of the Fund's portfolio, based primarily on the Fund's stated investment
objectives and policies. It considers, for example, the credit quality of
portfolio investments, and management. The rating does not reflect the yield or
the market price of the Fund's shares nor approval by Standard & Poor's. The Aaa
rating reflects Moody's assessment of the investment quality of shares in the
Fund, and factors in the Fund's investment objectives and policies,
creditworthiness of the Fund's investments, and management. Funds rated Aaa are
judged to be of an investment quality similar to Aaa-rated fixed-income
obligations, which indicates best quality. The rating does not consider the
prospective performance of a fund with respect to appreciation, the volatility
of net asset value, or yield and does not reflect approval by Moody's. Both
ratings are subject to change.

3. Income is subject to federal income tax. Shareholders should consult their
tax advisors regarding the applicability of state and local intangible property
or income taxes to their shares in the Fund and to distributions received from
the Fund.

The Fund's manager has agreed in advance to waive a portion of its management
fees and make payments of certain other expenses to limit total operating
expenses to no more than 0.20% per annum of average net assets. Without these
reductions, the Fund's current and effective 7-day yields for the period would
have been 4.81% and 4.93%, respectively. The Fund's manager may discontinue
these arrangements at any time, upon notice to the Fund's Board of Trustees.

5. Source: Money Fund Report(R), June 28. 1996, IBC/Donoghue's Money Fund
Averages(TM)/Government-Only, Institutional-Only. As of June 25, 1996, there
were 172 funds in this category.

An investment in the Franklin U.S. Treasury Money Market Portfolio is neither
insured nor guaranteed by the U.S. government or by any other entity or
institution. There is no assurance that the $1.00 share price will be
maintained. Regulated investors should review their applicable investment
restrictions to determine whether the Fund is a permissible investment.

Franklin U.S.
Government Agency
Money Market Fund

The investment objective of the Franklin U.S. Government Agency Money Market
Fund is to seek capital preservation and liquidity, while seeking high current
income consistent with capital preservation and liquidity.

The Franklin U.S. Government Agency Money Market Fund invests only in U.S.
government securities, which consist of marketable fixed, floating, and variable
rate securities issued or guaranteed by the U.S. government, its agencies, or by
various instrumentalities which have been established or sponsored by the U.S.
government, such as:1

o Federal Farm Credit System

o Federal Home Loan Banks

o Student Loan Marketing Association

o Tennessee Valley Authority

o Federal Deposit Insurance Corporation

o Federal Intermediate Credit Bank

o Government Securities Administration

In addition, the Franklin U.S. Government Agency Money Market Fund may invest in
direct obligations of the U.S. Treasury, which include U.S. Treasury bills,
notes, and bonds.1 The fund does not invest in repurchase agreements or any
other type of money market instruments. Its composition as of June 30, 1996 is
shown below.

Franklin U.S. Government Agency
Money Market Fund
Portfolio Composition on June 30, 1996

GRAPHIC MATERIAL 8 OMITTED - SEE APPENDIX AT END OF DOCUMENT

The Fund is designed for investors who want the credit safety of a government
securities money market fund, but seek the higher yield potential of agency
instruments. In certain states, income paid to shareholders from direct U.S.
government obligations may also be exempt from state personal income tax. Of
course, all income paid out of U.S. government obligation interest is fully
taxable for federal income tax purposes. Investors should consult with their own
tax advisors for further information on specific state tax rules.

Performance Summary

Despite recent interest rate increases, falling short-term rates overall were
the primary reason for the declining 7-day current yield of the Franklin U.S.
Government Agency Money Market Fund. The Fund maintained a relatively short
average weighted maturity, which allowed us to adapt quickly to interest rate
changes. During the period, the Fund's average weighted maturity decreased from
49 days on June 30, 1995, to 38 days on June 30, 1996. As a result, the Fund's
7-day yield mirrored the movements in Treasury bill rates. The Fund's 7-day
yield began the fiscal year at 5.62% and finished at 4.85% on June 30, 1996.2

The graph to the right illustrates how the 7-day current yield for Franklin's
U.S. Government Agency Money Market Fund has performed versus the IBC/Donoghue's
Money Fund Averages(TM)/Government-Only/Institutional-Only, for the one year
period ending June 30, 1996.3 Of course, past performance cannot guarantee
future results.

Franklin U.S. Government Agency
Money Market Fund
Weekly 7-Day Yields vs. IBC/Donoghue's
Government-Only, Institutional-Only2,3
June 30, 1995 to June 30, 1996

GRAPHIC MATERIAL 10 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Performance Figures
Period ended June 30, 1996

7-Day Current Yield:2 4.85%
7-Day Effective Yield:2 4.97%
Average Weighted Maturity: 38 days

1. Certain U.S. government securities owned by the Fund, but not shares of the
Fund, are guaranteed by the U.S. government as to the timely payment of
principal and interest.

2. Annualized and effective yields are for the 7-day period shown and reflect
fluctuations in interest rates on portfolio investments, and Fund expenses. Past
performance does not guarantee future results.

The Fund's manager has agreed in advance to waive a portion of its management
fees and make payments of certain other expenses to limit total operating
expenses to no more than 0.45% per annum of average net assets. Without these
reductions, the Fund's current and effective 7-day yields for the period would
have been 4.78% and 4.89%, respectively. The Fund's manager may discontinue
these arrangements at any time, upon notice to the Fund's Board of Trustees.

3. Source: Money Fund Report(R), June 28, 1996. IBC/Donoghue's Money Fund
Averages(TM)/Government-Only, Institutional-Only. As of June 25, 1996, there
were 172 funds in this category.

An investment in the Franklin U.S. Government Agency Money Market Fund is
neither insured nor guaranteed by the U.S. government or by any other entity or
institution. There is no assurance that the $1.00 share price will be
maintained. Regulated investors should review their applicable investment
restrictions to determine whether the fund is a permissible investment.

INSTITUTIONAL FIDUCIARY TRUST

Statement of Investments in Securities and Net Assets, June 30, 1996
<TABLE>
<CAPTION>
<S> <C> <C>

Value
Shares Money Market Portfolio (Note 1)
Mutual Funds 100.0%
341,314,800 The Money Market Portfolio (Note 1) ............................................................. $341,314,800
----------------
Total Investments (Cost $341,314,800) 100.0%.......................................... 341,314,800
Liabilities in Excess of Other Assets ................................................. (20,245)
----------------
Net Assets 100.0% .................................................................... $341,294,555
================

At June 30, 1996, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.

The accompanying notes are an integral part of these financial statements.

INSTITUTIONAL FIDUCIARY TRUST

Statement of Investments in Securities and Net Assets, June 30, 1996

Value
Shares Franklin U.S. Government Securities Money Market Portfolio (Note 1)
Mutual Funds 100%

152,155,022 The U.S. Government Securities Money Market Portfolio (Note 1) .................................. $152,155,022
----------------
Total Investments (Cost $152,155,022) 100.0% ......................................... 152,155,022
Other Assets and Liabilities, Net ..................................................... 18,086
----------------
Net Assets 100.0% .................................................................... $152,173,108
================

At June 30, 1996, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.

The accompanying notes are an integral part of these financial statements.

INSTITUTIONAL FIDUCIARY TRUST

Statement of Investments in Securities and Net Assets, June 30, 1996

Face Value
Amount Franklin U.S. Treasury Money Market Portfolio (Note 1)
a.Short Term Investments 100.3%

$ 10,630,000 U.S. Treasury Bills, 4.84%, 07/05/96 $ 10,624,167
8,530,000 U.S. Treasury Bills, 4.95%, 07/11/96 8,518,386
7,540,000 U.S. Treasury Bills, 4.895%, 07/25/96 7,515,307
9,200,000 U.S. Treasury Bills, 4.77%, 08/01/96 9,160,826
14,700,000 U.S. Treasury Bills, 4.75%, 08/08/96 14,622,582
9,050,000 U.S. Treasury Bills, 5.015%, 08/15/96 8,993,254
8,970,000 U.S. Treasury Bills, 4.86%, 08/22/96 8,905,199
6,530,000 U.S. Treasury Bills, 5.065%, 08/29/96 6,476,006
12,400,000 U.S. Treasury Bills, 4.86%, 09/05/96 12,285,711
7,470,000 U.S. Treasury Bills, 5.055%, 09/12/96 7,393,479
5,770,000 U.S. Treasury Bills, 5.01%, 09/19/96 5,704,991
10,100,000 U.S. Treasury Bills, 5.045%, 10/03/96 9,966,691
2,000,000 U.S. Treasury Bills, 4.99%, 10/17/96 1,969,670
2,550,000 U.S. Treasury Bills, 5.09%, 10/24/96 2,508,538
6,500,000 U.S. Treasury Bills, 5.06%, 11/07/96 6,381,042
2,500,000 U.S. Treasury Bills, 5.23%, 11/14/96 2,450,606
Total Investments (Cost $123,476,455) 100.3% 123,476,455
---------------
Liabilities in Excess of Other Assets (.3)% (319,098)
---------------
Net Assets 100.0% $123,157,357
===============

At June 30, 1996, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.

aSecurities are traded on a discount basis; the rates shown are the discount
rates at the time of purchase by the Fund.

The accompanying notes are an integral part of these financial statements.

INSTITUTIONAL FIDUCIARY TRUST

Statement of Investments in Securities and Net Assets, June 30, 1996

Face Value
Amount Franklin U.S. Government Agency Money Market Fund (Note 1)
aGovernment Agencies 96.1%

$ 4,500,000 Federal Farm Credit Discount Notes, 5.15%, 07/01/96 $ 4,500,000
3,500,000 Federal Farm Credit Discount Notes, 5.22%, 07/05/96 3,497,970
1,450,000 Federal Farm Credit Discount Notes, 5.20%, 07/09/96 1,448,324
1,000,000 Federal Farm Credit Discount Notes, 5.22%, 07/11/96 998,550
4,000,000 Federal Farm Credit Discount Notes, 5.22%, 07/15/96 3,991,880
650,000 Federal Farm Credit Discount Notes, 5.21%, 07/17/96 648,495
5,000,000 Federal Farm Credit Discount Notes, 5.18%, 07/18/96 4,987,769
2,115,000 Federal Farm Credit Discount Notes, 5.20%, 07/24/96 2,107,974
1,000,000 Federal Farm Credit Discount Notes, 5.21%, 08/02/96 995,369
5,000,000 Federal Farm Credit Discount Notes, 5.20%, 08/14/96 4,968,222
1,000,000 Federal Farm Credit Discount Notes, 5.19%, 08/16/96 993,368
2,000,000 Federal Farm Credit Discount Notes, 5.19%, 08/23/96 1,984,718
3,000,000 Federal Home Loan Bank Discount Notes, 4.95%, 07/01/96 3,000,000
2,500,000 Federal Home Loan Bank Discount Notes, 5.24%, 07/08/96 2,497,453
4,125,000 Federal Home Loan Bank Discount Notes, 5.21%, 07/10/96 4,119,659
5,825,000 Federal Home Loan Bank Discount Notes, 5.15%, 07/12/96 5,815,818
700,000 Federal Home Loan Bank Discount Notes, 5.28%, 07/19/96 698,152
5,000,000 Federal Home Loan Bank Discount Notes, 5.19%, 07/30/96 4,979,096
1,900,000 Federal Home Loan Bank Discount Notes, 5.19%, 08/09/96 1,889,318
10,000,000 Federal Home Loan Bank Discount Notes, 5.18%, 08/14/96 9,936,567
5,000,000 Federal Home Loan Bank Discount Notes, 5.28%, 01/07/97 4,860,666
----------------
Total Government Agencies (Cost $68,919,368) 68,919,368l
----------------

a.Government Securities 4.0%
2,865,000 U.S. Treasury Bills, 4.75% - 5.065%, 07/11/96 - 09/19/96 (Cost $2,841,225) 2,841,225
----------------
Total Investments (Cost $71,760,593) 100.1% 71,760,593
Liabilities in Excess of Other Assets (.1)% (66,646)
----------------
Net Assets 100.0% $71,693,947

================
</TABLE>

At June 30, 1996, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.

aSecurities are traded on a discount basis; the rates shown are the discount
rates at the time of purchase by the Fund.

The accompanying notes are an integral part of these financial statements.

INSTITUTIONAL FIDUCIARY TRUST

Financial Statements

Statements of Assets and Liabilities
June 30, 1996
<TABLE>
<CAPTION>

Franklin Franklin Franklin
Money U.S. Government U.S. Treasury U.S. Government
Market Securities Money Money Market Agency Money
Portfolio Market Portfolio Portfolio Market Fund
<S> <C> <C> <C> <C>
---------- --------------- ----------- ------------
Assets:
Investments in securities, at value and cost....................... $341,314,800 $152,155,022 $123,476,455 $71,760,593
Cash............................................................... 5,442 -- 13,189 14,600
Receivables:
Investment securities sold........................................ 767,784 233,906 -- --
From affiliates (Notes 5)......................................... -- 24,294 --
Prepaid expenses................................................... -- 24,261 -- --
Other assets....................................................... -- -- -- 2,910
----------- ----------- ---------- -----------
Total assets.................................................. 342,088,026 152,413,189 123,513,938 71,778,103
----------- ----------- ---------- -----------
Liabilities:
Payables:
Management fees................................................... -- -- 15,646 8,014
Administration fees............................................... 5,441 5,623 -- --
Distribution fees................................................. -- -- -- 45,062
Shareholder servicing costs....................................... 1,301 552 1,380 95
Distributions to shareholders..................................... 767,784 233,906 326,609 160
Accrued expenses and other liabilities............................. 18,945 -- 12,946 30,825
----------- ----------- ---------- -----------
Total liabilities............................................. 793,471 240,081 356,581 84,156
----------- ----------- ---------- -----------
Net assets, at value................................................ $341,294,555 $152,173,108 $123,157,357 $71,693,947
=========== =========== ========== ===========
Shares outstanding.................................................. 341,294,555 152,173,108 123,157,357 71,693,947
========== =========== ========== ============
Net asset value per share........................................... $1.00 $1.00 $1.00 $1.00
=========== =========== ========== ===========

Statements of Operations
for the year ended June 30, 1996

Franklin Franklin Franklin
Money U.S. Government U.S. Treasury U.S. Government
Market Securities Money Money Market Agency Money
Portfolio Market Portfolio Portfolio Market Fund
--------- --------------- ------------ ------------
Investment income:
Dividends............................................................ $16,947,851 $10,739,597 $-- $--
Interest............................................................. -- -- 8,465,897 4,186,024
---------- ------------ ----------- ----------
Total income.................................................... 16,947,851 10,739,597 8,465,897 4,186,024
---------- ------------ ----------- ----------
Expenses:
Management fees (Note 5)............................................. -- -- 393,481 115,022
Administration fees (Note 5)......................................... 154,740 98,326 -- --
Distribution fees (Note 5)........................................... -- -- -- 208,701
Shareholder servicing costs (Note 5)................................. 14,142 20,003 15,795 1,030
Professional fees.................................................... 26,414 21,017 16,586 5,548
Registration fees.................................................... 22,119 17,762 14,202 12,406
Trustees' fees and expenses.......................................... 17,142 15,302 7,831 3,008
Reports to shareholders.............................................. 15,258 8,633 7,417 4,341
Custodian fees....................................................... -- -- 5,482 3,929
Others............................................................... 8,575 14,562 4,615 2,409
Management fees waived by manager (Note 5)........................... -- -- (166,402) (20,927)
Administration fees waived by manager (Note 5)....................... (126,667) (98,326) -- --
Other expenses assumed by manager (Note 5)........................... -- (23,445) -- --
---------- ------------ ---------- ----------
Total expenses.................................................. 131,723 73,834 299,007 335,467
---------- ------------ ---------- ----------
Net investment income.......................................... 16,816,128 10,665,763 8,166,890 3,850,557
---------- ------------ ---------- ----------
Net realized gain (loss) on investments............................... -- -- 7,492 (2,545)
---------- ------------ ---------- ----------
Net increase in net assets resulting from operations.................. $16,816,128 $10,665,763 $8,174,382 $3,848,012
========== ============ ========== ==========
Statements of Changes in Net Assets
for the years ended June 30, 1996 and 1995

Franklin U.S. Government
Money Market Portfolio Securities Money Market Portfolio
----------------------- ----------------------------
1996 1995 1996 1995
---------- ---------- ----------- ----------
Increase (decrease) in net assets:
Operations:
Net investment income.............................................. $ 16,816,128 $ 13,288,573 $ 10,665,763 $ 14,715,535
----------- ---------- ---------- -----------
Net increase in net assets resulting from operations.......... 16,816,128 13,288,573 10,665,763 14,715,535
Distributions to shareholders from undistributed net investment income (16,816,128) (13,288,573) (10,665,763) (14,715,535)
Increase (decrease) in net assets from capital share transactions
(Note 2)........................................................... 69,147,853 53,892,705 (182,657,201) 116,283,327
----------- ---------- ------------ -----------
Net increase (decrease) in net assets............................... 69,147,853 53,892,705 (182,657,201) 116,283,327
Net assets (there is no undistributed net investment income at beginning
or end of the year):
Beginning of year................................................. 272,146,702 218,253,997 334,830,309 218,546,982
----------- ---------- ----------- -----------
End of year....................................................... $341,294,555 $272,146,702 $152,173,108 $334,830,309
=========== =========== =========== ===========

Franklin U.S. Treasury Franklin U.S. Government
Money Market Portfolio Agency Money Market Fund
----------------------- ------------------------
1996 1995 1996 1995
----------- ----------- ---------- ----------
Increase (decrease) in net assets:
Operations:
Net investment income............................................. $ 8,166,890 $ 11,171,262 $ 3,850,557 $ 763,361
Net realized gain (loss) from securities transactions............. 7,492 5,063 (2,545) 279
----------- ----------- ---------- ----------
Net increase in net assets resulting from operations......... 8,174,382 11,176,325 3,848,012 763,640
Distributions to shareholders from undistributed net investment income (8,174,382)a (11,176,325)b (3,848,012)c (763,640)d
Increase (decrease) in net assets from capital share transactions
(Note 2).......................................................... (77,778,057) 5,800,828 37,409,395 29,219,231
----------- ----------- ---------- ----------
Net increase (decrease) in net assets.............................. (77,778,057) 5,800,828 37,409,395 29,219,231
Net assets (there is no undistributed net investment income at beginning
or end of the year):
Beginning of year................................................ 200,935,414 195,134,586 34,284,552 5,065,321
----------- ----------- ---------- ----------
End of year...................................................... $123,157,357 $200,935,414 $71,693,947 $34,284,552
=========== =========== ========== ==========
</TABLE>

aDistributions were increased by a net realized gain from security transactions
of $7,492.
bDistributions were increased by a net realized gain from security transactions
of $5,063.
cDistributions were decreased by a net realized loss from security transactions
of $2,545.
dDistributions were increased by a net realized gain from security transactions
of $279.

The accompanying notes are an integral part of these financial statements.

INSTITUTIONAL FIDUCIARY TRUST

Notes to Financial Statements

1. SIGNIFICANT ACCOUNTING POLICIES

Institutional Fiduciary Trust (the Trust) is an open-end management investment
company (mutual fund), registered under the Investment Company Act of 1940, as
amended. The Trust consists of seven separate and distinct funds. These reports
pertain only to the four money market funds (the Funds), all diversified Funds
of the Trust. Each of the Funds issues a separate series of the Trust's shares
and maintains a totally separate and distinct investment portfolio. The
investment objectives of the Funds are high current income consistent with
capital preservation and liquidity.

Institutional Fiduciary Trust Money Market Portfolio (Money Market Fund) and
Franklin U.S. Government Securities Money Market Portfolio (U.S. Government
Fund) invest substantially all of their assets in The Money Market Portfolio and
The U.S. Government Securities Money Market Portfolio, respectively. Both are
no-load, open-end, diversified management investment companies having the same
investment objectives as the Money Market Fund and U.S. Government Fund. The
financial statements of The Money Market Portfolio and The U.S. Government
Securities Money Market Portfolio, including the Statements of Investments in
Securities and Net Assets, are included elsewhere in this report and should be
read in conjunction with the financial statements of the Money Market Fund and
U.S. Government Fund.

On June 14, 1996, the Franklin Late Day Money Market Portfolio (a fund of the
Trust) ceased operations pursuant to a resolution approved by the Board of
Trustees on May 14, 1996.

The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.

a. Security Valuation:

Securities in the Franklin U.S. Treasury Money Market portfolio, and the
Franklin U.S. Government Agency Money Market Fund are valued at amortized cost,
which approximates value. Each of these Funds 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 the Funds have a remaining weighted
average maturity of greater than 90 days, the portfolios 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 Fund's price per share as computed for the
purpose of sales and redemptions at $1.00.

The Money Market Fund and the U.S. Government Fund hold Portfolio shares that
are valued at their proportionate interest in the net asset value of The Money
Market Portfolio and The U.S. Government Securities Money Market Portfolio (the
Portfolios), respectively. As of June 30, 1996, the Money Market Fund owns
22.02% of The Money Market Portfolio and the U.S. Government Fund owns 53.26% of
The U.S. Government Securities Money Market Portfolio.

b. Income Taxes:

The Funds intend 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 shareholders which will be sufficient to relieve the
Funds from income and excise taxes. Each Fund 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.

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 distribution
is computed daily and includes the net investment income, plus or minus any
gains or losses on security transactions and any changes in unrealized portfolio
appreciation or depreciation.

Distributions are normally declared each day the New York Stock Exchange is open
for business, equal to the total available for distribution (as defined above),
and are payable to shareholders of record as of the close of business that day.
Such distributions are automatically reinvested monthly in additional shares of
these Funds at net asset value.

e. Expense Allocation:

Common expenses incurred by the Trust are allocated among the Funds based on the
ratio of net assets of each Fund to the combined net assets. In all other
respects, expenses are charged to each Fund as incurred on a specific
identification basis.

f. Accounting Estimates:

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

2. TRUST SHARES

At June 30, 1996, there was an unlimited number of no par value shares of
beneficial interest authorized. Transactions in the Funds at $1.00 per share for
the years ended June 30, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>

Year ended June 30, 1996
Shares sold................................................ $2,869,272,670 $1,106,494,209 $ 429,590,577 $239,775,798
Shares issued in reinvestment of distributions............. 7,425,431 6,441,951 2,512,183 3,833,612
Shares redeemed............................................ (2,807,550,248) (1,295,593,361) (509,880,817) (206,200,015)
------------- ------------- ------------ ------------
Net increase (decrease)..................................... $ 69,147,853 $ (182,657,201) $ (77,778,057) $ 37,409,395
============= ============= ============ ============
Year ended June 30, 1995
Shares sold................................................ $1,961,125,799 $2,881,865,521 $1,008,930,555 $ 52,530,734
Shares issued in reinvestment of distributions............. 7,436,624 9,481,867 5,715,958 758,682
Shares redeemed............................................ (1,914,669,718) (2,775,064,061) (1,008,845,685) (24,070,185)
------------- ------------- ------------- ------------
Net increase................................................ $ 53,892,705 $ 116,283,327 $ 5,800,828 $ 29,219,231
============= ============= ============= ============

3. CAPITAL LOSS CARRYOVERS

At June 30, 1996, for tax purposes, the Franklin U.S. Government Agency Money
Market Fund had an accumulated net capital loss carryover of $2,545 which
expires in the year 2004.

For tax purposes, the aggregate cost of securities are the same for financial
statement purposes at June 30, 1996.

4. PURCHASES AND SALES OF SECURITIES

Franklin Franklin
Money U.S. Government Franklin U.S. U.S. Government
Market Securities Money Treasury Money Agency Money
Portfolio Market Portfolio Market Portfolio Market Fund
----------- ----------------- -------------- --------------
Aggregate purchases and sales/maturities of securities
for the year ended June 30, 1996 were as follows:
Purchases...................................................... $1,703,887,846 $704,709,701 $ 967,592,293 $628,301,258
Sales.......................................................... $1,634,719,829 $885,898,964 $1,045,180,559 $591,103,297
</TABLE>

5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

a. Management/Administration Agreement:

Under the terms of a management agreement, Franklin Advisers, Inc. (Advisers),
provides investment advice, administrative services, office space and facilities
to each Fund below and receives fees computed monthly based on each Fund's
average daily net assets as follows:
<TABLE>
<CAPTION>
<S> <C> <C>

Fund Annualized Fee Rate
------------------------------------- -------------------
Franklin U.S. Treasury Money Market Portfolio 0.25%
Franklin U.S. Government Agency Money Market Fund 0.15%
</TABLE>

Under the terms of an administration agreement with the Money Market Fund and
the U.S Government Fund, Advisers provides various administrative, statistical,
and other services, and receives fees computed monthly based on each Fund's
average daily net assets at an annualized rate of .05%.

The terms of the management and administration agreements provide that aggregate
annual expenses of each 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 each Fund's shares are registered. For
the year ended June 30,1996, the Funds' expenses did not exceed these
limitations. However, Advisers agreed in advance to waive management and
administration fees and assume payment of other expenses, as noted in the
Statement of Operations.

b. Shareholder Services Agreement:

Under the terms of a shareholder services agreement with Franklin/Templeton
Investor Services, Inc. (Investor Services), the Funds pay costs on a per
shareholder account basis. Shareholder servicing costs incurred by the Funds for
the year ended June 30,1996 aggregated $50,970, of which $11,798 was paid to
Investor Services.

c. Distribution Plans:

Under the terms of a distribution plan pursuant to Rule 12b-1 of the Investment
Company Act of 1940 (the Plan), the Franklin U.S. Government Agency Money Market
Fund reimburses Franklin/Templeton Distributors, Inc. (Distributors), in an
amount up to 0.30% per annum of the Fund's average daily net assets for costs
incurred in the promotion, offering and marketing of the Fund's shares. Under
terms of distribution plans, Advisers may also be reimbursed for the above
mentioned costs at an approximate annual rate of .15% of the average daily net
assets of the remaining Funds. There were no payments under this plan for these
funds for the year ended June 30,1996. The plans do not permit nor require
payments of excess costs after termination.

d: Other Affiliates and Related Party Transactions:

Certain officers and trustees of the Trust are also officers and/or directors of
Distributors, Advisers, Investor Services, (all wholly-owned subsidiaries of
Franklin Resources, Inc.), and The Money Market Portfolio and The U.S.
Government Securities Money Market Portfolio.

6. FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout the
period by Fund are as follows:

Per Share Operating Performance Ratios/Supplemental Data
-------------------------------------- ----------------------------

Ratio of Net
Net Asset Distributions Net Ratio of Investment
Year Value at Net From Net Net Asset Assets at Expenses Income
Ended Beginning Investment Investment Value at Total End of Period to Average to Average
June 30 of Period Income Income End of Period Return+ (in 000's) Net Assets4 Net Assets

Money Market Portfolio:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1992 $1.00 $.046 $(.046) $1.00 4.72% $188,846 0.25% 4.69%
1993 1.00 .033 (.033) 1.00 3.30 222,282 0.203 3.25
1994 1.00 .033 (.033) 1.00 3.35 218,254 0.153 3.24
1995 1.00 .053 (.053) 1.00 5.46 272,147 0.153 5.40
1996 1.00 .055 (.055) 1.00 5.61 341,295 0.193 5.45
Franklin U.S. Government Securities Money Market Portfolio:
1992 1.00 .045 (.045) 1.00 4.55 195,286 0.25 4.59
1993 1.00 .031 (.031) 1.00 3.18 310,382 0.193 3.12
1994 1.00 .032 (.032) 1.00 3.25 218,547 0.153 3.20
1995 1.00 .052 (.052) 1.00 5.32 334,830 0.153 5.26
1996 1.00 .054 (.054) 1.00 5.50 152,173 0.193 5.44
Franklin U.S. Treasury Money Market Portfolio:
19921 1.00 .035 (.035) 1.00 3.59 194,223 0.02* 4.38*
1993 1.00 .031 (.031) 1.00 3.14 179,232 0.05 3.12
1994 1.00 .032 (.032) 1.00 3.23 195,135 0.05 3.17
1995 1.00 .051 (.051) 1.00 5.17 200,935 0.10 5.05
1996 1.00 .052 (.052) 1.00 5.29 123,157 0.19 5.20
Franklin U.S. Government Agency Money Market Fund:
19942 $1.00 $.013 $(.013) $1.00 1.31% $ 5,065 0.40%* 3.32%*
1995 1.00 .051 (.051) 1.00 5.22 34,285 0.30 5.39
1996 1.00 .051 (.051) 1.00 5.23 71,694 0.44 5.04
</TABLE>

*Annualized

+Total return measures the change in value of an investment over the periods
indicated. It is not annualized. It assumes reinvestment of dividends and
capital gains at net asset value.

1For the period August 2, 1991 (effective date) to June 30, 1992.

2For the period February 8, 1994 (effective date) to June 30, 1994.

3Includes the Fund's share of the Portfolio's allocated expenses.

4During the periods indicated, Advisers agreed in advance to waive a portion of
administration and management fees and made payments of other expenses incurred
by the Funds. Had such action not been taken, the ratio of expenses to average
net assets would have been as follows:

Ratio of Expenses to
Average Net Assets
------------------
Money Market Portfolio:
1992......................................... 0.74%
1993......................................... 0.493
1994......................................... 0.253
1995......................................... 0.243
1996......................................... 0.243

Franklin U.S. Government Securities
Money Market Portfolio:
1992.......................................... 0.59
1993.......................................... 0.453
1994.......................................... 0.253
1995.......................................... 0.233
1996.......................................... 0.263

Ratio of Expenses to
Average Net Assets
------------------
Franklin U.S. Treasury Money Market Portfolio:
19921......................................... 0.31*
1993.......................................... 0.35
1994.......................................... 0.30
1995.......................................... 0.30
1996.......................................... 0.30
Franklin U.S. Government Agency Money Market Fund:
19942......................................... 1.43*
1995.......................................... 0.47
1996.......................................... 0.47

INSTITUTIONAL FIDUCIARY TRUST

Report of Independent Auditors

To the Shareholders and Board of Trustees
of the Institional Fiduciary Trust:

We have audited the accompanying statements of assets and liabilities of four of
the funds of the Institutional Fiduciary Trust, including each Fund's statement
of investments in securities and net assets, as of June 30, 1996, the related
statements of operations for the year then ended, and 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 periods presented. These financial
statements and financial highlights are the responsibility of the Trust'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 June
30, 1996. 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 resonable
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 each of
the four funds of the Institutional Fiduciary Trust as of June 30, 1996, the
results of their operations for the year then ended, and the changes in their
net assets for each of the two years in the period then ended and the financial
highlights for each of the periods presented, in conformity with generally
accepted accounting principles.

COOPERS & LYBRAND L.L.P.

San Francisco, California
August 6, 1996

THE MONEY MARKET PORTFOLIOS

Statement of Investments in Securities and Net Assets, June 30, 1996
<TABLE>
<CAPTION>
<S> <C> <C>

Face Value
Amount The Money Market Portfolio (Note 1)
aShort Term Investments 90.5%
Bank Notes .6% $ 10,000,000
Bank of America NT & SA, 5.45%, 09/18/96 (Cost $9,999,766) $ 9,999,766
----------------
Certificates of Deposit 22.3%
65,000,000 Bank of Nova Scotia, Portland Branch, 5.035% - 5.58%, 07/05/96 - 01/24/97 64,999,984
35,000,000 Bayerische Landesbank, New York Branch, 5.06% - 5.36%, 07/08/96 - 07/10/96 35,000,141
25,000,000 Commerzbank, AG, New York Branch, 5.37%, 09/06/96 25,000,459
25,000,000 Credit Suisse, New York Branch, 5.35%, 09/13/96 25,000,506
15,000,000 Dresdner Bank, AG, New York Branch, 4.94%, 01/06/97 14,948,167
20,000,000 Lloyds Bank, Plc., New York Branch, 5.70%, 09/11/96 20,000,378
25,000,000 National Westminster Bank, New York Branch, 5.50%, 09/12/96 25,000,000
20,000,000 Rabobank Nederland, NV, New York Branch, 5.37%, 09/09/96 20,000,380
20,000,000 Royal Bank of Canada, New York Branch, 5.02%, 08/01/96 20,000,313
75,000,000 Societe Generale, New York Branch, 5.36% - 5.51%, 08/15/96 - 10/09/96 75,000,381
20,000,000 Westpac Banking Corp., New York Branch, 5.36%, 09/05/96 20,000,000
----------------
Total Certificates of Deposit (Cost $344,950,709) 344,950,709
----------------
Commercial Paper 67.6%
20,000,000 ABN AMRO North America Finance, Inc., 4.975%, 08/26/96 19,845,222
20,000,000 AIG Funding, Inc., 5.39%, 09/23/96 19,748,465
60,000,000 American Express Credit Corp., 4.88% - 5.28%, 07/22/96 - 08/20/96 59,694,249
20,000,000 ANZ (DE), Inc., 5.27%, 08/29/96 19,827,261
65,000,000 Associates Corp. of North America, 5.27% - 5.28%, 07/01/96 - 09/03/96 64,621,600
65,000,000 AT&T Corp., 4.91% - 5.30%, 07/19/96 - 09/20/96 64,555,765
30,000,000 BBV Finance, Inc., 5.32% - 5.39%, 08/07/96 - 09/16/96 29,775,358
60,000,000 Canadian Imperial Holdings, Inc., 5.27% - 5.44%, 07/02/96 - 09/16/96 59,570,954
35,000,000 Cheltnham & Gloucester Building Society, 5.33% - 5.38%, 09/09/96 - 09/25/96 34,599,939
65,000,000 CIESCO, L.P., 5.27% - 5.29%, 07/25/96 - 08/28/96 64,623,425
35,000,000 Den Danske Corp., Inc., 5.27% - 5.275%, 07/22/96 - 08/30/96 34,749,467
65,000,000 General Electric Capital Corp., 5.27% - 5.31%, 07/31/96 - 08/12/96 64,651,476
65,000,000 Generale Bank, Inc., 5.07% - 5.31%, 07/11/96 - 08/14/96 64,683,717
40,000,000 Halifax Building Society, 4.88% - 5.26%, 08/08/96 - 09/26/96 39,642,745
40,000,000 Metlife Funding, Inc., 5.28% - 5.40%, 08/26/96 - 10/01/96 39,555,755
40,000,000 National Rural Utilities Cooperative Finance Corp., 5.28% - 5.39%, 08/16/96 - 09/18/96 39,628,506
15,245,000 PepsiCo, Inc., 5.38%, 09/25/96 15,049,068
75,000,000 Prudential Funding Corp., 5.27% - 5.32%, 07/30/96 - 09/10/96 74,463,990
55,350,000 Schering Corp., 5.31% - 5.38%, 08/27/96 - 10/03/96 54,664,248
65,000,000 Svenska Handelsbanken, Inc., 5.29% - 5.40%, 07/15/96 - 09/17/96 64,522,195
20,000,000 Toronto Dominion Holdings USA, Inc., 5.28%, 08/21/96 19,850,400
40,000,000 Toyota Motor Credit Corp., 5.38% - 5.39%, 09/19/96 - 10/01/96 39,485,466
20,000,000 Westpac Capital Corp., 5.27%, 07/29/96 19,918,021
40,119,000 Wool International, 4.90% - 5.30%, 07/12/96 - 08/23/96 39,932,821
----------------
Total Commercial Paper (Cost $1,047,660,113) 1,047,660,113
----------------
Total Investments before Repurchase Agreements (Cost $1,402,610,588) 1,402,610,588
----------------
bReceivables from Repurchase Agreements 9.3%
$ 79,993,000 J.P. Morgan Securities, Inc., 5.42%, 07/01/96 (Maturity Value $74,133,469)
Collateral: U.S. Treasury Bills, 06/26/97 .................................................. $ 74,100,000
69,620,000 Morgan Stanley & Co., Inc., 5.35%, 07/01/96 (Maturity Value $70,031,208)
Collateral: U.S. Treasury Notes, 6.875%, 02/28/97 ............................................. 70,000,000
----------------
Total Receivables from Repurchase Agreements (Cost $144,100,000) 144,100,000
----------------
Total Investments (Cost $1,546,710,588) 99.8% 1,546,710,588
Other Assets and Liabilities, Net .2% 3,374,659
----------------
Net Assets 100.0% $1,550,085,247
================
At June 30, 1996, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.

PORTFOLIO ABBREVIATIONS:
L.P. - Limited Partnership

aCertain 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.

bFace amount for repurchase agreements is for the underlying collateral.

The accompanying notes are an integral part of these financial statements.

THE MONEY MARKET PORTFOLIOS

Statement of Investments in Securities and Net Assets, June 30, 1996

Face Value
Amount The U.S. Government Securities Money Market Portfolio (Note 1)

aShort Term Government Securities 100.1%
Government Securities 17.3%
$ 50,000,000 U.S. Treasury Bills, 4.75% - 5.14%, 08/08/96 - 12/12/96 (Cost $49,361,211) $ 49,361,211
----------------
bReceivables from Repurchase Agreements 82.8%
11,690,000 B.A. Securities, Inc., 5.40%, 07/01/96 (Maturity Value $12,005,400)
Collateral: U.S. Treasury Notes, 8.00%, 01/15/97 ................................................ 12,000,000
12,530,000 B.T. Securities Corp., 5.42%, 07/01/96 (Maturity Value $12,005,420)
Collateral: U.S. Treasury Notes, 5.25%, 01/31/01 .................................................. 12,000,000
11,509,000 Barclays de Zoete Wedd Securities, Inc., New York, 5.35%, 07/01/96
(Maturity Value $12,005,350)
Collateral: U.S. Treasury Notes, 7.875%, 01/15/98 ............................................... 12,000,000
12,185,000 Chase Securities, Inc., 5.40%, 07/01/96 (Maturity Value $12,005,400)
Collateral: U.S. Treasury Notes, 6.125%, 05/31/97 ............................................... 12,000,000
12,120,000 Citicorp Securities, Inc., 5.50%, 07/01/96 (Maturity Value $12,005,500)
Collateral: U.S. Treasury Notes, 5.75%, 09/30/97 ............................................... 12,000,000
12,195,000 Merrill Lynch Government Securities, Inc., 5.20%, 07/01/96 (Maturity Value $12,005,200)
Collateral: U.S. Treasury Notes, 5.875%, 04/30/98 .............................................. 12,000,000
18,201,000 J.P. Morgan Securities, Inc., 5.32%, 07/01/96 (Maturity Value $17,507,758)
Collateral: U.S. Treasury Bills, 11/07/96 ...................................................... 17,500,000
57,501,000 J.P. Morgan Securities, Inc., 5.42%, 07/01/96 (Maturity Value $55,024,842)
Collateral: U.S. Treasury Bills, 12/12/96 ...................................................... 55,000,000
68,530,000 Morgan Stanley & Co., Inc., 5.35%, 07/01/96 (Maturity Value $68,015,310)
Collateral: U.S. Treasury Bills, 09/12/96
U.S. Treasury Notes, 5.75% - 11.75%, 09/30/96 - 02/15/01............................ 67,985,000
12,506,000 SBC Capital Markets, Inc., 5.47%, 07/01/96 (Maturity Value $12,005,470)
Collateral: U.S. Treasury Notes, 5.125%, 11/30/98 .............................................. 12,000,000
11,507,000 UBS Securities, Inc., 5.43%, 07/01/96 (Maturity Value $12,005,430)
Collateral: U.S. Treasury Notes, 8.125%, 02/15/98 .............................................. 12,000,000
----------------
Total Receivables from Repurchase Agreements (Cost $236,485,000) 236,485,000
----------------
Total Investments (Cost $285,846,211) 100.1% $285,846,211
Liabilities in Excess of Other Assets (.1)% (145,107)
----------------
Net Assets 100.0% $285,701,104
================
</TABLE>

At June 30, 1996, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.

bFace amount for repurchase agreements is for the underlying collateral.

The accompanying notes are an integral part of these financial statement

THE MONEY MARKET PORTFOLIOS

Financial Statements

Statements of Assets and Liabilities
June 30, 1996

The U.S.
Government
The Money Securities Money
Market Portfolio Market Portfolio
---------------- ----------------
Assets:
Investment in securities,
at value and cost $1,402,610,588$ 49,361,211
Receivables from
repurchase agree-
ments, at value
and cost 144,100,000 236,485,000
Cash 3,626 --
Receivables:
Interest 4,328,950 106,080
From affiliates 6,003 19,602
------------- -----------
Total assets 1,551,049,167 285,971,893
------------- -----------
Liabilities:
Payables:
Capital shares
repurchased 767,784 233,906
Management fees 170,313 29,565
Accrued expenses and
other liabilities 25,823 7,318
------------- -----------
Total liabilities 963,920 270,789
------------- -----------
Net assets, at value $1,550,085,247 $285,701,104
============= ===========
Shares outstanding 1,550,085,247 285,701,104
============= ===========
Net asset value per share $1.00 $1.00
============= ===========

Statements of Operations
for the year ended June 30, 1996

The U.S.
Government
The Money Securities Money
Market Portfolio Market Portfolio
---------------- ----------------

Investment income:
Interest $81,172,665 $18,038,015
------------- -----------
Expenses:
Management fees
(Note 5a) 2,162,519 484,382
Professional fees 44,663 8,889
Custodian fees 26,784 22,841
Reports to shareholders 27,241 5,685
Trustees' fees and
expenses 7,447 10,769
Other 21,476 10,049
Management fees
waived by manager (128,505) (59,534)
--------- -----------
Total expenses 2,161,625 483,081
--------- -----------
Net investment
income 79,011,040 17,554,934
---------- -----------
Net realized gain on
investments -- 683
--------- -----------
Net increase in net
assets resulting from
operations $79,011,040 $17,555,617
========= ===========

Statements of Changes in Net Assets
for the years ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>

The U.S. Government Securities
The Money Market Portfolio Money Market Portfolio
-------------------------- -----------------------------
1996 1995 1996 1995
----------- ------------ ----------- -----------
Increase (decrease) in net assets:
Operations:
Net investment income....................................... $ 79,011,040 $ 65,941,077 $ 17,554,934 $ 22,234,614
Net realized gain from security transactions................ -- 1,356 683 392
----------- ------------ ----------- -----------
Net increase in net assets resulting from
operations.................................................. 79,011,040 65,942,433 17,555,617 22,235,006
Distributions to shareholders from undistributed
net investment income....................................... (79,011,040) (65,942,433)a (17,555,617)b (22,235,006)c
Increase (decrease) in net assets from capital
share transactions (Note 2)................................. 244,510,834 1,086,385,190 (188,953,282) 256,106,321
----------- ------------ ----------- -----------
Net increase (decrease) in net assets........................ 244,510,834 1,086,385,190 (188,953,282) 256,106,321
Net assets (there is no undistributed net
investment income at beginning or end
of the year):
Beginning of year.......................................... 1,305,574,413 219,189,223 474,654,386 218,548,065
----------- ------------ ----------- -----------
End of year................................................ $1,550,085,247 $1,305,574,413 $285,701,104 $474,654,386
============ ============= ============ ============
</TABLE>

aDistributions were increased by a net realized gain from security transactions
of $1,356.
bDistributions were increased by a net realized gain from security transactions
of $683.
cDistributions were increased by a net realized gain from security transactions
of $392.

The accompanying notes are an integral part of these financial statements.

THE MONEY MARKET PORTFOLIOS

Notes to Financial Statements

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. The portfolio's investment
objectives are high current income consistent with capital preservation and
liquidity. 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 Valuations:

Securities in the Portfolios 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:

Each Portfolio 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 their shareholders which will be sufficient to
relieve it from income and excise taxes. Each Portfolio is treated as a separate
entity in the determination of compliance with the Internal Revenue Code.

c. Security Transactions:

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 distribution
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 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 distributions are automatically reinvested daily 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.

f. Accounting Estimates:

g. Repurchase Agreements:

The Portfolios may enter into a joint repurchase agreement whereby their
uninvested cash balances are deposited into a joint cash account to be used to
invest in one or more repurchase agreements with government securities dealers
recognized by the Federal Reserve Board and/or member banks of the Federal
Reserve System. The value and face amount of the joint repurchase agreement are
allocated to the Portfolios based on their pro rata interest.

A repurchase agreement is accounted for as a loan by the Portfolios to the
seller, collateralized by underlying U.S. government securities, which are
delivered to the Portfolios' custodian. The market value, including accrued
interest, of the initial collateralization is required to be at least 102% of
the dollar amount invested by the Portfolios, with the value of the underlying
securities marked to market daily to maintain coverage of at least 100%. At June
30, 1996, all outstanding repurchase agreements held by the Portfolios had been
entered into on June 28, 1996.

2. TRUST SHARES

Transactions in each of the Portfolio's shares at $1.00 per share were as
follows:
<TABLE>
<CAPTION>
<S> <C> <C>

The U.S. Government
The Money Securities Money
Market Portfolio Market Portfolio
------------ -------------
1996
Shares sold................................................................................. $2,507,821,633 $ 824,267,024
Shares issued in reinvestment of distributions.............................................. 79,019,113 17,555,181
Shares redeemed............................................................................. (2,342,329,912) (1,030,775,487)
------------ -------------
Net increase (decrease)..................................................................... $ 244,510,834 $ (188,953,282)
============ =============
1995
Shares sold.................................................................................$ 2,811,245,134 $ 2,270,754,653
Shares issued in reinvestment of distributions.............................................. 65,932,187 22,235,271
Shares redeemed............................................................................. (2,923,489,920) (2,175,508,395)
Shares issued in connection with assets transfer (Note 6)................................... 1,132,697,789 138,624,792
------------ -------------
Net increase................................................................................$ 1,086,385,190 $ 256,106,321
============ =============
3. CAPITAL LOSS CARRYOVERS

At June 30, 1996, for tax purposes, The Money Market Portfolio had an
accumulated net realized capital loss carryover expiring in year 2002 of $3,790.
For tax purposes, the aggregate cost of securities are the same for financial
statement purposes at June 30, 1996.

4. PURCHASES AND SALES OF SECURITIES

Purchases and sales/maturities of securities, including repurchase agreements,
for the year ended June 30, 1996, were as follows:

The U.S. Government
The Money Securities Money
Market Portfolio Market Portfolio
---------------- ------------------
Purchases................................................................................... $60,355,427,309 $62,680,289,047
Sales....................................................................................... $60,113,260,920 $62,869,560,372

5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

a. Management Agreement:

Under the terms of a management agreement, Franklin Advisers, Inc. (Advisers)
provides investment advice, administrative services, office space and facilities
to the Portfolios, and receives fees computed monthly based on the average daily
net assets of the Portfolios during the month. The Portfolios pay fees equal to
an annualized rate of 15/100 of 1% of their daily net assets. For the year ended
June 30, 1996, the Portfolios expenses did not exceed these limitations.
However, Advisers agreed in advance to waive management fees and assume payment
of other expenses, as noted in the Statements of Operations.

b. Other Affiliates and Related Party Transactions:

Certain officers and trustees of the Portfolios are also officers and/or
directors of Advisers and Investor Services (all wholly-owned subsidiaries of
Franklin Resources, Inc.).

6. ASSET 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 June 30,1996, the shares of The Money Market Portfolio were owned by the
following funds:

Percentage of
Shares Outstanding Shares
------------ ----------------
Franklin Money Fund............................................................................. 1,173,771,347 75.72%
Institutional Fiduciary Trust - Money Market Portfolio.......................................... 341,314,800 22.02%
Institutional Fiduciary Trust - Franklin Cash Reserves Fund..................................... 30,405,256 1.96%
Franklin Templeton Money Fund Trust - Franklin Templeton Money Fund II.......................... 4,593,844 0.30%

As of June 30,1996, the shares of The U.S. Government Securities Money Market
Portfolio were owned by the following funds:

Percentage of
Shares Outstanding Shares
---------- ------------
Institutional Fiduciary Trust - Franklin U.S. Government Securities Money Market Portfolio...... 152,155,022 53.26%
Franklin Federal Money Fund..................................................................... 133,546,082 46.74%
</TABLE>

7. FINANCIAL HIGHLIGHTS

Selected data for each share of beneficial interest outstanding throughout each
period are as follows:
<TABLE>
<CAPTION>

Per Share Operating Performance Ratios/Supplemental Data
------------------------------------ -----------------------------------
Net Asset Distributions Net Assets Ratio of Ratio of Net
Year Values at Net From Net Net Asset at End Expenses Income
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
<S> <C> <C> <C> <C> <C> <C> <C> <C>

The Money Market Portfolio
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
1995 1.00 0.053 (0.053) 1.00 5.46 1,305,574 0.15 5.42
1996
The U.S. Government Securities Money Market Portfolio
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
1995 1.00 0.052 (0.052) 1.00 5.32 474,654 0.15 5.25
1996 1.00 0.054 (0.054) 1.00 5.55 285,701 0.15 5.45
</TABLE>

*July 28, 1992 (Effective date of registration) to June 30, 1993.
**Annualized
+Total return measures the change in value of an investment over the periods
indicated. It is not annualized (except as noted). It assumes reinvestment of
dividends and capital gains at net asset value.
++Advisers agreed in advance to waive a portion of its management fees of the
Portfolios during the periods indicated. Had such action not been taken, the
ratios of expenses to average net assets would have been as follows:

Ratio of Expenses to
Average Net Assets
-----------
The Money Market Portfolio
1993*...................................... .17%**
1994....................................... .17
1995....................................... .16
1996....................................... .16

The U.S. Government Securities
Money Market Portfolio
1993*...................................... .18**
1994....................................... .17
1995....................................... .16
1996....................................... .17

THE MONEY MARKET PORTFOLIOS

Report of Independent Auditors

To the Shareholders and Board of Trustees
The Money Market Portfolios

We have audited the accompanying statements of assets and liabilities of the two
portfolios comprising The Money Market Portfolios, including each Portfolio's
statement of investments in securities and net assets, as of June 30, 1996, and
the related statements of operations for the year them ended, the statements of
changes in net assets and the financial highlights for each of the periods
presented thereon. These financial statements and financial highlights for each
of the two years in the period then ended are the responsibility of the
Portfolios' 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 June
30, 1996, by correspondence with the custodian. 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 the
two Portfolios comprising The Money Market Portfolios as of June 30, 1996, the
results of their operations for the year then ended, the changes in their net
assets for each of the two years in the period then ended, and their financial
highlights for each of the periods presented, in conformity with generally
accepted accounting principles.

COOPERS & LYBRAND L.L.P.

San Francisco, California
August 6, 1996

Franklin Institutional Fiduciary Trust Money Market Funds Annual Report

APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING
(PURSUANT TO ITEM 304 (a) of REGULATION S-T)

GRAPHIC MATERIAL (1)

The following is a table describing the portfolio characteristics of Franklin's
Money Market Portfolio, the Franklin U.S. Government Securities Money Market
Portfolio, the Franklin U.S. Treasury Money Market Portfolio, and the Franklin
U.S. Government Agency Money Market Fund as of June 30, 1996.

Funds at a Glance June 30, 1996

<S> <C>
Portfolios/
Characteristics Franklin's IFT Money Market Portfolio (#0140)
7-Day Current Yield 5.21%
Average Weighted Maturity 54 days
Principal Holdings
Agencies
BAs X
CDs X
CP X
RPs X
Treasuries X

<S> <C>
Portfolios/
Characteristics Franklin U.S. Government Securities Money Market Portfolio (#0142)
7-Day Current Yield 5.13%
Average Weighted Maturity 19 days
Principal Holdings
Agencies
BAs
CDs
CP
RPs X
Treasuries X

<S> <C>
Portfolios/
Characteristics Franklin U.S. Treasury Money Market Portfolio (#0143)
7-Day Current Yield 4.92%
Average Weighted Maturity 58 days
Principal
Holdings
Agencies
BAs
CDs
CP
RPs
Treasuries X

<S> <C>
Portfolios/
Characteristics Franklin U.S. Government Agency Money Market Fund (#0146)
7-Day Current Yield 4.85%
Average Weighted Maturity 38 days
Principal Holdings
Agencies X
BAs
CDs
CP
RPs
Treasuries X

</TABLE>

GRAPHIC MATERIAL (2)

This chart shows in pie format the portfolio composition of the Franklin IFT
Money Market Portfolio as a percentage of the fund's total net assets on June
30, 1996.

The Money Market Portfolio Composition as of June 30, 1996

<S> <C>
Commercial Paper 67.6%
Certificates of Deposit 22.3%
Repurchase Agreements 9.3%
Bank Notes 0.6%
Other Assets and Liabilities 0.2%

</TABLE>

GRAPHIC MATERIAL (3)

The following line graph hypothetically compares the weekly yields of Franklin's
IFT Money Market Portfolio to that of the IBC/Donoghue's First Tier,
Institutional-Only, from June 30, 1995 to June 30, 1996.

Franklin's IFT Money Market Portfolio
Weekly 7-Day Yields vs. IBC/Donoghue's First-Tier, Institutional-Only
June 30, 1995 to June 30, 1996

<S> <C> <C>
Date Franklin Donoghue's
06/27/95 5.97% 5.75%
07/03/95 5.98% 5.76%
07/11/95 5.85% 5.70%
07/17/95 5.88% 5.63%
07/25/95 5.83% 5.61%
08/01/95 5.88% 5.61%
08/08/95 5.81% 5.57%
08/15/95 5.79% 5.55%
08/22/95 5.77% 5.54%
08/29/95 5.74% 5.54%
09/05/95 5.74% 5.53%
09/12/95 5.67% 5.52%
09/19/95 5.70% 5.53%
09/26/95 5.67% 5.50%
10/03/95 5.70% 5.56%
10/10/95 5.62% 5.49%
10/23/95 5.64% 5.49%
10/31/95 5.65% 5.52%
11/07/95 5.63% 5.49%
11/14/95 5.64% 5.50%
11/21/95 5.64% 5.51%
11/28/95 5.66% 5.53%
12/05/95 5.62% 5.49%
12/12/95 5.59% 5.48%
12/19/95 5.60% 5.50%
12/26/95 5.59% 5.46%
01/02/96 5.59% 5.45%
01/09/96 5.56% 5.42%
01/16/96 5.49% 5.35%
01/23/96 5.51% 5.33%
01/30/96 5.44% 5.30%
02/06/96 5.38% 5.21%
02/13/96 5.30% 5.14%
02/20/96 5.23% 5.10%
02/27/96 5.20% 5.07%
03/05/96 5.15% 5.08%
03/12/96 5.12% 5.01%
03/19/96 5.17% 5.06%
03/26/96 5.12% 5.03%
04/02/96 5.14% 5.06%
04/09/96 5.11% 5.03%
04/16/96 5.09% 5.04%
04/23/96 5.09% 5.02%
04/30/96 5.09% 5.04%
05/07/96 5.08% 5.02%
05/14/96 5.09% 5.02%
05/21/96 5.12% 5.03%
05/28/96 5.12% 5.01%
06/04/96 5.13% 5.02%
06/11/96 5.13% 5.01%
06/18/96 5.17% 5.02%
06/25/96 5.20% 5.04%

</TABLE>

GRAPHIC MATERIAL (4)

This chart shows in pie format the portfolio composition of the Franklin U.S.
Government Securities Money Market Portfolio as a percentage of the fund's total
net assets on June 30, 1996.

Franklin U.S. Government Securities Money Market Portfolio
Portfolio Composition as of June 30, 1996

<S> <C>
Repurchase Agreements 82.7%
Treasuries 17.3%

</TABLE>

GRAPHIC MATERIAL (5)

The following line graph hypothetically compares the weekly yields of the
Franklin U.S. Government Securities Money Market Portfolio to that of the
IBC/Donoghue's Government-Only, Institutional-Only from June 30, 1995 to June
30, 1996.

Franklin U.S. Government Securities Money Market Portfolio
Weekly 7-Day Yields vs. IBC/Donoghue's Government-Only, Institutional-Only
June 30, 1995 to June 30, 1996.

<S> <C> <C>
Date Franklin Donoghue's
06/27/95 5.83% 5.60%
07/03/95 5.83% 5.62%
07/11/95 5.74% 5.54%
07/17/95 5.57% 5.45%
07/25/95 5.57% 5.44%
08/01/95 5.62% 5.45%
08/08/95 5.59% 5.41%
08/15/95 5.56% 5.41%
08/22/95 5.59% 5.41%
08/29/95 5.56% 5.38%
09/05/95 5.55% 5.38%
09/12/95 5.54% 5.37%
09/19/95 5.57% 5.40%
09/26/95 5.51% 5.34%
10/03/95 5.77% 5.48%
10/10/95 5.49% 5.31%
10/23/95 5.50% 5.31%
10/31/95 5.59% 5.36%
11/07/95 5.56% 5.32%
11/14/95 5.58% 5.34%
11/21/95 5.59% 5.38%
11/28/95 5.72% 5.42%
12/05/95 5.60% 5.36%
12/12/95 5.60% 5.36%
12/19/95 5.64% 5.37%
12/26/95 5.50% 5.27%
01/02/96 5.54% 5.25%
01/09/96 5.46% 5.21%
01/16/96 5.31% 5.13%
01/23/96 5.32% 5.14%
01/30/96 5.34% 5.12%
02/06/96 5.17% 5.01%
02/13/96 4.98% 4.93%
02/20/96 5.01% 4.92%
02/27/96 4.96% 4.88%
03/05/96 5.13% 4.93%
03/12/96 5.01% 4.85%
03/19/96 5.23% 4.95%
03/26/96 5.04% 4.88%
04/02/96 5.19% 4.96%
04/09/96 5.06% 4.91%
04/16/96 5.08% 4.91%
04/23/96 4.96% 4.86%
04/30/96 5.04% 4.89%
05/07/96 5.02% 4.87%
05/14/96 5.05% 4.87%
05/21/96 5.05% 4.88%
05/28/96 5.04% 4.87%
06/04/96 5.15% 4.91%
06/11/96 5.00% 4.89%
06/18/96 5.13% 4.91%
06/25/96 5.09% 4.91%

</TABLE>

[GRAPHIC OMITTED]
GRAPHIC MATERIAL (6)

This chart shows in pie format the portfolio composition of Franklin U.S.
Treasury Money Market Portfolios a percentage of the fund's total net assets on
June 30, 1996.

Franklin U.S. Treasury Money Market Portfolio
Portfolio Composition as of June 30, 1996

<S> <C>
U.S. Treasuries 100%

</TABLE>

GRAPHIC MATERIAL (7)

The following line graph hypothetically compares the yields of the Franklin U.S.
Treasury Money Market Portfolio to that of IBC/Donoghue's Government-Only,
Institutional-Only from June 30, 1995 to June 30, 1996.

Franklin U.S. Treasury Money Market Portfolio
Weekly 7-Day Yields vs. IBC/Donoghue's Government-Only, Institutional-Only
June 30, 1995 to June 30, 1996

<S> <C> <C>
Date Franklin Donoghue's
06/27/95 5.53%5.60%
07/03/95 5.51% 5.62%
07/11/95 5.51% 5.54%
07/17/95 5.51% 5.45%
07/25/95 5.52% 5.44%
08/01/95 5.51% 5.45%
08/08/95 5.49% 5.41%
08/15/95 5.47% 5.41%
08/22/95 5.45% 5.41%
08/29/95 5.42% 5.38%
09/05/95 5.37% 5.38%
09/12/95 5.34% 5.37%
09/19/95 5.34% 5.40%
09/26/95 5.30% 5.34%
10/03/95 5.30% 5.48%
10/10/95 5.28% 5.31%
10/23/95 5.27% 5.31%
10/31/95 5.27% 5.36%
11/07/95 5.23% 5.32%
11/14/95 5.27% 5.34%
11/21/95 5.30% 5.38%
11/28/95 5.28% 5.42%
12/05/95 5.29% 5.36%
12/12/95 5.28% 5.36%
12/19/95 5.29% 5.37%
12/26/95 5.18% 5.27%
01/02/96 5.17% 5.25%
01/09/96 5.18% 5.21%
01/16/96 5.21% 5.13%
01/23/96 5.18% 5.14%
01/30/96 5.14% 5.12%
02/06/96 5.09% 5.01%
02/13/96 5.04% 4.93%
02/20/96 4.99% 4.92%
02/27/96 4.89% 4.88%
03/05/96 4.86% 4.93%
03/12/96 4.83% 4.85%
03/19/96 4.84% 4.95%
03/26/96 4.88% 4.88%
04/02/96 4.89% 4.96%
04/09/96 4.90% 4.91%
04/16/96 4.90% 4.91%
04/23/96 4.89% 4.86%
04/30/96 4.88% 4.89%
05/07/96 4.84% 4.87%
05/14/96 4.84% 4.87%
05/21/96 4.85% 4.88%
05/28/96 4.87% 4.87%
06/04/96 4.88% 4.91%
06/11/96 4.86% 4.89%
06/18/96 4.90% 4.91%
06/25/96 4.92% 4.91%

</TABLE>
[GRAPHIC OMITTED]
GRAPHIC MATERIAL (8)

This chart shows in pie format the portfolio composition of the Franklin U.S.
Government Agency Money Market Fund as a percentage of the fund's total net
assets on June 30, 1996.

Franklin U.S. Government Agency Money Market Fund
Portfolio Composition as of June 30, 1996

<S> <C>
Federal Home Loan Bank 53%
Federal Farm Credit Bank 43%
Treasuries 4%

</TABLE>

GRAPHIC MATERIAL (10)

The following line graph hypothetically compares the yields of the U.S.
Government Agency Money Market Fund to that of the IBC/Donoghue's
Government-Only, Institutional-Only from June 30, 1995 to June 30, 1996.

Franklin U.S. Government Agency Money Market Fund
Weekly 7-Day Yields vs. IBC/Donoghue's Government-Only, Institutional-Only
June 30, 1995 to June 30, 1996

<S> <C> <C>
Date Franklin Donoghue's
06/27/95 5.64% 5.60%
07/03/95 5.65% 5.62%
07/11/95 5.57% 5.54%
07/17/95 5.52% 5.45%
07/25/95 5.52% 5.44%
08/01/95 5.48% 5.45%
08/08/95 5.45% 5.41%
08/15/95 5.45% 5.41%
08/22/95 5.43% 5.41%
08/29/95 5.45% 5.38%
09/05/95 5.39% 5.38%
09/12/95 5.28% 5.37%
09/19/95 5.29% 5.40%
09/26/95 5.27% 5.34%
10/03/95 5.25% 5.48%
10/10/95 5.25% 5.31%
10/23/95 5.25% 5.31%
10/31/95 5.25% 5.36%
11/07/95 5.22% 5.32%
11/14/95 5.22% 5.34%
11/21/95 5.24% 5.38%
11/28/95 5.24% 5.42%
12/05/95 5.24% 5.36%
12/12/95 5.24% 5.36%
12/19/95 5.24% 5.37%
12/26/95 5.21% 5.27%
01/02/96 5.18% 5.25%
01/09/96 5.11% 5.21%
01/16/96 5.09% 5.13%
01/23/96 5.06% 5.14%
01/30/96 5.04% 5.12%
02/06/96 4.99% 5.01%
02/13/96 4.91% 4.93%
02/20/96 4.87% 4.92%
02/27/96 4.80% 4.88%
03/05/96 4.77% 4.93%
03/12/96 4.75% 4.85%
03/19/96 4.74% 4.95%
03/26/96 4.75% 4.88%
04/02/96 4.72% 4.91%
04/09/96 4.75% 4.91%
04/16/96 4.79% 4.91%
04/23/96 4.82% 4.86%
04/30/96 4.81% 4.89%
05/07/96 4.82% 4.87%
05/14/96 4.84% 4.87%
05/21/96 4.85% 4.88%
05/28/96 4.86% 4.87%
06/04/96 4.86% 4.91%
06/11/96 4.83% 4.89%
06/18/96 4.84% 4.91%
06/25/96 4.85% 4.91%

</TABLE>

- --------------------------------------------------------------------------------
Bulk Rate
U.S. Postage
PAID
So. San Francisco, CA
Permit No. 655
- --------------------------------------------------------------------------------

Franklin's Institutional
Fiduciary Trust
777 Mariners Island Blvd.
P.O. Box 7777
San Mateo, CA 94403-7777

Address Correction Requested

Annual Report

Investment Adviser/Administrator
Franklin Advisers, Inc.
777 Mariners Island Blvd.
San Mateo, CA 94404-1585

Distributor

Franklin Templeton Distributors, 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
1-800/632-2000

This report is intended for distribution to existing shareholders of the Fund or
Trust, who previously received a prospectus.

IFT2 A96 08/96

INSTITUTIONAL FIDUCIARY TRUST

Annual Report

June 30, 1996

Franklin Institutional Adjustable U.S. Government Securities Fund

Franklin Institutional Adjustable Rate Securities Fund

Table of Contents

Franklin Institutional

Adjustable U.S. Government Securities Fund ....... Page 4

Franklin Institutional

Adjustable Rate Securities Fund .................. Page 6

For a current prospectus on any Franklin or Templeton fund, please contact a
Franklin Templeton Institutional Services Representative, at 1-800/632-2000. A
prospectus contains more complete information about a fund, including fees and
expenses. Please be sure to read it carefully before investing money. 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
determined by the presence of a regular beeping tone.

July 15, 1996

PICTURE OMITTED

Charles B. Johnson
Chairman of the Board

Dear Shareholder,

We are pleased to bring you the fifth annual report for Franklin's Institutional
Fiduciary Trust adjustable rate securities funds, for the fiscal year ended June
30, 1996.

Franklin's Institutional Fiduciary Trust (the Trust) was developed specifically
to meet the needs of institutional investors. Part of the $147 billion Franklin
Templeton Group, the Trust consists of seven separate and distinct series. This
report pertains to the two adjustable rate securities funds: Franklin
Institutional Adjustable U.S. Government Securities Fund and Franklin
Institutional Adjustable Rate Securities Fund. Each fund is managed to maintain
a relatively short average duration, and the objective for both funds is to seek
a high level of current income, with lower volatility of principal than funds
that invest in fixed-rate securities.

Recently, we have begun to see strength in the economy, after an environment of
primarily slow growth and low inflation. Since the report of
stronger-than-expected employment data in March 1996, the economy has continued
to shown signs of improvement. The fixed-income markets responded well to
falling interest rates in the early part of the reporting period, but the signs
of economic strength have also led to heightened inflation fears and generally
rising interest rates. Higher rates subsequently dampened returns for most
taxable bond funds toward the close of the reporting period.

Maintaining a long-term investment approach, the Funds' managers have focused on
principal stability, while pursuing current income. The result has generally
proved favorable for the Funds despite the occasional short-term market
volatility. Our managers will continue to adhere to this approach, as we believe
it best serves our shareholders.

Thank you for your continued support of Franklin's Institutional Fiduciary
Trust. We look forward to serving your investment needs in the months and years
to come.

Sincerely,

Charles B. Johnson
Chairman of the Board
Franklin's Institutional Fiduciary Trust

Overview of
the Economy

PICTURE OMITTED

T. Anthony Coffey, CFA
Portfolio Manager

Tony Coffey is a portfolio manager for the Franklin Adjustable U.S. Government
Securities Fund, Franklin Adjustable Rate Securities Fund, and the Franklin
Valuemark Adjustable U.S. Government Fund. Mr. Coffey's area of expertise is
mortgage-backed securities. Prior to joining Franklin, Mr. Coffey was an
associate for Analysis Group, Inc., an economic consulting firm.

Mr. Coffey received a Bachelor of Arts degree in applied mathematics and
economics from Harvard University and a Master of Business Administration degree
from the University of California at Los Angeles. He is a Chartered Financial
Analyst (CFA), and is a member of the Security Analysts of San Francisco and the
Association for Investment Management and Research.

Franklin Institutional Adjustable
U.S. Government Securities Fund

The Franklin Institutional Adjustable U.S. Government Securities Fund seeks a
high level of current income, consistent with lower volatility of principal, by
investing all of its assets in the U.S. Government Adjustable Rate Mortgage
Portfolio (the Mortgage Portfolio), which has an investment objective identi-cal
to the Fund's. The Mortgage Portfolio, in turn, invests primarily in
mortgage-backed securities created from pools of adjustable rate mortgages
issued or guaranteed by the U.S. government, its agencies or instrumentalities.1

The Fund performed well during the twelve-month period, despite increased
volatility in the bond market. A combination of slow growth and low inflation
had led the Federal Reserve to lower short-term interest rates on multiple
occasions since the middle of 1995. However, recent indications of increasing
economic strength have led market participants to conclude that the Federal
Reserve has finished with its easing cycle and has moved to a more neutral
stance. Thus, interest rates have risen, leading to lower prices for bonds,
including adjustable-rate mortgage securities (ARMS).

Overall, ARMS price movements have been modest, as their caps have not yet been
reached. ARM prepayments, which limit their potential appreciation, continue to
be of concern. The generally lower levels of interest rates, especially
long-term rates, created an incentive for homeowners to refinance from ARMs to
fixed-rate mortgages to lock in the lower rates. In an effort to reduce the
negative impact of ARM prepayments, we maintained an overweighting in seasoned,
non-convertible ARMs, which are less likely to experience high levels of
prepayments. We generally prefer indices which adjust rapidly, such as the
Constant Maturity Treasury (CMT), over those which tend to lag market movements,
such as the Eleventh District Cost of Funds (COFI). The current breakdown of the
portfolio by agency is shown below.

U.S. Government Adjustable
Rate Mortgage Portfolio
Composition by Issuing Agency
June 30, 1996

GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT

We anticipate a resumption of the slow growth that has characterized most of the
past year. Meanwhile, fear of inflation and higher rates for mortgages, could
dampen the housing market in the short term. Regardless of short-term
volatility, our primary focus continues to be stability of principal, while
maintaining a yield that is competitive with short-term alternatives.

1. Individual securities held by the Mortgage Portfolio, but not shares of the
Franklin Institutional Adjustable U.S. Government Securities Fund, are
guaranteed by the U.S. government, its agencies or instrumentalities, as to
timely payment of principal and interest.

Performance Summary

The Franklin Institutional Adjustable U.S. Government Securities Fund's share
price, as measured by net asset value, rose from $9.25 on June 30, 1995, to
$9.28 on June 30, 1996.

The Fund continued to pursue its investment objective of providing high current
income to its shareholders. For the 12-month period ended June 30, 1996, the
Fund paid monthly income distributions totaling $0.59 per share. Of course,
dividends will vary based on the earnings of the Fund's underlying portfolio,
and past distributions are not predictive of future trends.

At the end of the reporting period, the Fund's distribution rate was 7.30%,
based on an annualization of the dividends distributed during the last 30 days
of the period ($0.055 per share) and the net asset value of $9.28 on June 30,
1996. The Fund provided a cumulative total return of 6.98% for the 12-month
period.

Cumulative total return reflects the change in value of an investment, assuming
reinvestment of dividends and capital gains, if any. Past performance is not
indicative of future results.

Franklin Institutional Adjustable
U.S. Government Securities Fund
Total Return Index Comparison2
Based on $1,000,000 Investment (12/2/91 - 6/30/96)

GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Performance Figures2
Periods ended June 30, 1996
- ------------------------------------------------------
Since
Inception
1-Year 3-Year (12/2/91)
Cumulative
Total Return:3 6.98% 10.45% 18.46%
Average Annual
Total Return:4 6.98% 3.37% 3.77%
30-Day Standardized Yield:5 6.22%
Distribution Rate:6 7.30%
- ------------------------------------------------------

2. Past expense reductions by the Fund's manager increased the Fund's total
returns.
3. Cumulative total return reflects the change in value of an investment over
the periods indicated, assuming reinvestment of dividends and capital gains.
4. Average annual total return reflects the average annual change in value of an
investment over the periods indicated, assuming reinvestment of dividends and
capital gains. Investment return and principal value fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost. Past
performance is not indicative of future results.
5. Yield, calculated as required by the SEC, is based on earnings of the Fund's
underlying portfolio during the 30 days ended on the date shown.
6. Based on an annualization of the Fund's dividends for the 30-day period
($0.055676 per share) and the net asset value of $9.28 per share on June 30,
1996.

Franklin Institutional Adjustable
Rate Securities Fund

The Franklin Institutional Adjustable Rate Securities Fund seeks a high level of
current income, with lower volatility of principal than a fund that invests in
fixed-rate securities. The Fund seeks to achieve its objective by investing all
of its assets in the Adjustable Rate Securities Portfolio, which in turn invests
in adjustable rate securities, including adjustable rate mortgage securities
(ARMs) issued or guaranteed by private institutions or by U.S. government
agencies.7 Investment in these securities has earned the Fund a credit rating of
Aa from Moody's Investors Service.8 Shown to the right is a list of the top five
issuers for the securities held in the Adjustable Rate Securities Portfolio as
of June 30, 1996.

The Fund performed well during the twelve month period, despite increased
volatility in the bond market. A combination of slow growth and low inflation
had led the Federal Reserve to lower short-term interest rates on multiple
occasions since the middle of 1995. However, recent indications of increasing
economic strength have led market participants to conclude that the Federal
Reserve has finished with its easing cycle and has moved to a more neutral
stance. Thus, interest rates have risen, leading to lower prices for bonds,
including adjustable-rate mortgage securities (ARMS), which are the Fund's
primary holdings.

Overall, ARMS price movements have been modest, as their caps are not yet being
reached. ARM prepayments, which limit their potential appreciation, continue to
be of concern. The generally lower levels of interest rates, especially
long-term rates, created an incentive for homeowners to refinance from ARMs to
fixed-rate mortgages to lock in the lower rates. In an effort to reduce the
negative impact of ARM prepayments, we have maintained an overweighting in
seasoned, non-convertible ARMs, which are less likely to experience high levels
of prepayments. We generally prefer indices which adjust rapidly, such as the
Constant Maturity Treasury (CMT), over those which tend to lag market movements,
such as the Eleventh District Cost of Funds (COFI). The current breakdown of the
portfolio by credit rating is as follows: AAA or agency (69.56%), AA (26.19%),
and Cash and Equivalents (4.25%).

- ------------------------------------------------------------------------------
Adjustable Rate Securities Portfolio
Top Five Issuers on June 30, 1996

Percent of
Issuer Total Net Assets
1. Resolution Trust Corporation 24.5%
2. Pru-Home 12.2%
3. Salomon 11.4%
4. Residential Funding Corporation 10.0%
5. FMNA 7.0%
- ------------------------------------------------------------------------------

7. Individual securities held by the Adjustable Rate Securities Portfolio, but
not shares of the Franklin Institutional Adjustable Rate Securities Fund, are
guaranteed by private institutions, the U.S. government, its agencies or
instrumentalities, as to timely payment of principal and interest.

8. The "Aa" rating reflects Moody's assessment of the investment quality of
shares in the Fund, which factors in the Fund's investment objectives and
policies, the creditworthiness of the Fund's investments, and management. Funds
rated Aa are judged to be of an investment quality similar to Aa-rated
fixed-income obligations, which indicates the next best level of quality after
Aaa. The rating does not consider the prospective performance of a fund with
respect to appreciation, the volatility of net asset value, or yield, and it
does not reflect approval by Moody's. The rating is subject to change.

Performance Summary

The Franklin Institutional Adjustable Rate Securities Fund's share price, as
measured by net asset value rose slightly, from $9.78 on June 30, 1995, to $9.79
on June 30, 1996.

The Fund continues to pursue its investment objective of providing a high level
of current income by investing in an underlying portfolio of adjustable-rate
securities. For the 12 months ended June 30, 1996, the Fund paid monthly income
distributions totaling $0.60 per share. Of course, dividends will vary based on
the earnings of the underlying portfolio, and past distributions are not
predictive of future trends.

At the end of the reporting period, the Fund's distribution rate was 6.01% based
on the annualization of the dividends distributed over the last 30 days of the
period ($0.048 per share) and the net asset value of $9.79 per share on June 30,
1996. Of course, distributions will vary depending on the earnings of the
underlying portfolio, and past performance cannot guarantee future results.

The Fund posted a cumulative total return of 6.41% for the 12-month period ended
June 30, 1996. Cumulative total return reflects the change in value of an
investment, assuming reinvestment of dividends and capital gains, if any. Past
performance is not indicative of future results.

Franklin Institutional Adjustable Rate
Securities Fund
Total Return Index Comparison9
Based on $1,000,000 Investment (1/3/92 - 6/30/96)

GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Performance Figures9
Periods ended June 30, 1996
- ------------------------------------------------------------------------------
Since
Inception
1-Year 3-Year (1/3/92)
Cumulative
Total Return:10 6.41% 15.04% 25.11%
Average Annual
Total Return:11 6.41% 4.78% 5.11%
30-Day Standardized Yield:12 6.00%
Distribution Rate:13 6.01%
- ------------------------------------------------------------------------------

9. Past expense reductions by the Fund's manager increased the Fund's total
returns.
10. Cumulative total return reflects the change in value of an investment over
the periods indicated, assuming reinvestment of dividends and capital gains.
11. Average annual total return reflects the average annual change in value of
an investment over the periods indicated, assuming reinvestment of dividends and
capital gains.
12. Yield, calculated as required by the SEC, is based on earnings of the Fund's
underlying portfolio during the 30 days ended on the date shown.
13. Based on an annualization of the Fund's dividends for the 30-day period
($0.048322 per share) and the net asset value of $9.79 per share on June 30,
1996. Investment return and principal value fluctuate, so that your shares, when
redeemed, may be worth more or less than their original cost. Past performance
is not indicative of future results.

INSTITUTIONAL FIDUCIARY TRUST

Statement of Investments in Securities and Net Assets, June 30, 1996

<TABLE>
<CAPTION>
Value
Shares Franklin Institutional Adjustable U.S. Government Securities Fund (Note 1)
- --------------------------------------------------------------------------------------------------------------------------------
Mutual Funds 100.0%
<S> <C> <C>
1,011,779 U.S. Government Adjustable Rate Mortgage Portfolio (Note 1) ......................................... $9,450,014
------------
Total Investments (Cost $9,925,322) 100.0% ................................................... 9,450,014
Liabilities in Excess of Other Assets ......................................................... (2,268)
------------
Net Assets 100.0% ............................................................................. $9,447,746
============

At June 30, 1996, the net unrealized depreciation based on the cost of investments
for income tax purposes of $10,153,642 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost .................................................................... $--
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value .................................................................... (703,628)
------------
Net unrealized depreciation ....................................................................... $ (703,628)
============
</TABLE>

<TABLE>
<CAPTION>
INSTITUTIONAL FIDUCIARY TRUST

Statement of Investments in Securities and Net Assets, June 30, 1996

Value
Shares Franklin Institutional Adjustable Rate Securities Fund (Note 1)
- --------------------------------------------------------------------------------------------------------------------------------
Mutual Funds 100.1%
<S> <C> <C>
455,170 Adjustable Rate Securities Portfolio (Note 1) ......................................................... $4,456,113
------------
Total Investments (Cost $4,578,967) 100.1% ..................................................... 4,456,113
Liabilities in Excess of Other Assets (0.1)% ................................................... (2,981)
------------
Net Assets 100.0% .............................................................................. $4,453,132
============

At June 30, 1996, the net unrealized depreciation based on the cost of investments
for income tax purposes of $4,578,967 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ...................................................................... $--
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ...................................................................... (122,854)
------------
Net unrealized depreciation ......................................................................... $ (122,854)
============
</TABLE>

INSTITUTIONAL FIDUCIARY TRUST

Financial Statements

Statements of Assets and Liabilities
June 30, 1996

Franklin
Institutional Franklin
Adjustable U.S. Institutional
Government Adjustable Rate
Securities Fund Securities Fund
__________ __________
Assets:
Investments in securities:
At identified cost $ 9,925,322 $4,578,967
__________ __________
At value 9,450,014 4,456,113
Cash 443 186
__________ __________
Total assets 9,450,457 4,456,299
__________ __________
Liabilities:
Payables:
Administration fees 393 187
Shareholder servicing costs 51 75
Accrued expenses and other
liabilities 2,267 2,905
__________ __________
Total liabilities 2,711 3,167
__________ __________
Net assets, at value $ 9,447,746 $4,453,132
========== ==========

Net assets consist of:
Undistributed net investment
income $ 14,621 $ --
Net unrealized depreciation on
investments (475,308) (122,854)
Net realized loss (30,193,248) (1,997,955)
Capital shares 40,101,681 6,573,941
__________ __________
Net assets, at value $ 9,447,746 $4,453,132
========== ==========
Shares outstanding 1,017,549 454,900
========== ==========
Net asset value per share $9.28 $9.79
========== ==========

Statements of Operations
for the year ended June 30, 1996

Franklin
Institutional Franklin
Adjustable U.S. Institutional
Government Adjustable Rate
Securities Fund Securities Fund
__________ __________
Investment income:
Dividends $ 876,882 $538,931
__________ __________
Expenses:
Administration fees (Note 5) 7,276 4,313
Shareholder servicing costs
(Note 5) 1,244 586
Registration Fees 3,533 1,040
Professional fees 2,028 944
Reports to shareholders 1,571 653
Directors' fees and expenses 843 413
Pricing fees 954 750
Other expenses 1,048 762
__________ __________
Total expenses 18,497 9,461
__________ __________
Net investment income 858,385 529,470
__________ __________
Realized and unrealized gain
(loss) on investments:
Net realized loss (1,419,252) (104,150)
Net unrealized appreciation 1,534,083 108,261
__________ __________
Net realized and unrealized gain
on investments 114,831 4,111
__________ __________
Net increase in net assets
resulting from operations $ 973,216 $533,581
========== ==========

<TABLE>
<CAPTION>
Statements of Changes in Net Assets
for the years ended June 30, 1996 and 1995

Franklin
Franklin Institutional Adjustable Institutional Adjustable
U.S. Government Securities Fund Rate Securities Fund
_____________________ ____________________
1996 1995 1996 1995
__________ __________ _________ __________
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Net investment income................................................ $ 858,385 $ 2,192,180 $ 529,470 $ 872,592
Net realized loss from securitiy transactions........................ (1,419,252) (2,295,273) (104,150) (772,268)
Net unrealized appreciation on investments........................... 1,534,083 1,324,517 108,261 646,566
__________ __________ _________ __________
Net increase in net assets resulting from operations............. 973,216 1,221,424 533,581 746,890
Distributions to shareholders from undistributed net investment income (886,196) (2,210,136) (529,470) (872,592)
Decrease in net assets from capital share transactions (Note 3)....... (15,659,221) (25,729,342) (4,147,031) (22,476,738)
__________ __________ _________ __________
Net decrease in net assets....................................... (15,572,201) (26,718,054) (4,142,920) (22,602,440)
Net assets:
Beginning of year..................................................... 25,019,947 51,738,001 8,596,052 31,198,492
__________ __________ _________ __________
End of year........................................................... $ 9,447,746 $25,019,947 $4,453,132 $ 8,596,052
========== ========== ========= ==========
Undistributed net investment income included in net assets:
Beginning of year..................................................... 42,432 60,388 -- --
__________ __________ _________ __________
End of year........................................................... $ 14,621 $ 42,432 $ -- $ --
========== ========== ========= ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

INSTITUTIONAL FIDUCIARY TRUST

Notes to Financial Statements

1. SIGNIFICANT ACCOUNTING POLICIES

Institutional Fiduciary Trust (the Trust) is a diversified, open-end management
investment company (mutual fund), registered under the Investment Company Act of
1940, as amended. The Trust currently consists of seven separate and distinct
Funds.

These financial statements pertain to the Franklin Institutional Adjustable U.S.
Government Securities Fund (the Adjustable U.S. Government Fund) and the
Franklin Institutional Adjustable Rate Securities Fund (the Adjustable Rate
Securities Fund) (the Funds). Each of the Funds issues a separate series of the
Trust's shares and maintains a totally separate and distinct investment
portfolio. The investment objective of each Fund is to seek current income.

The Funds invest substantially all of their assets in the Adjustable Rate
Securities Portfolios (the Portfolios), which is a no-load, open-end,
diversified management investment company that has two separate and distinct
Portfolios consisting of the U.S. Government Adjustable Rate Mortgage Portfolio
(the Mortgage Portfolio) and the Adjustable Rate Securities Portfolio (the
Securities Portfolio). The unaudited financial statements of the Portfolios,
including the statements of investments, are included elsewhere in this report
and should be read in conjunction with the Funds' financial statements.

On June 14, 1996, the Franklin Late Day Money Market Portfolio (a fund of the
Trust) ceased operations pursuant to a resolution appoved by the Board of
Trustees on May 14, 1996.

a. Security Valuation

The Funds hold Portfolio shares valued at their proportionate interest in the
net assets of the Mortgage Portfolio and the Securities Portfolio, respectively.
At June 30, 1996, the Adjustable U.S. Government Fund owns 2% of the Mortgage
Portfolio and the Adjustable Rate Securities Fund owns 23% of the Securities
Portfolio. The Portfolios' shares held by the Funds are valued at the net asset
value of the Portfolios.

b. Income Taxes:

The Funds intend 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 their shareholders which will be sufficient to
relieve the Funds from income and excise taxes. Each Fund is treated as a
separate entity in the determination of compliance with the Internal Revenue
Code.

c. Security Transactions:

d. Investment Income, Expenses and Distributions:

Net investment income includes income, calculated on an accrual basis, and
estimated expenses which are accrued daily. The total available for distrubution
is computed daily.

Distributions are normally declared 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 distributions are automatically reinvested monthly in
additional shares of the Funds at net asset value.

e. Accounting Estimates:

f. Expense Allocation:

2. CAPITAL LOSS CARRYOVERS

At June 30, 1996, for tax purposes, the Funds had accumulated net realized
capital loss carryovers as follows:

Adjustable U.S. Adjustable Rate
Government Fund Securities Fund
____________ __________
Capital loss carryovers
expiring in: 2001........................... $ 6,444,126 $ 1,762
2002........................... 20,034,597 1,111,813
2003........................... 2,287,422 771,534
2004........................... 935,431 4,914
____________ __________
$29,701,576 $1,890,023
============ ==========

In addition, from November 1, 1995 through June 30, 1996, the Adjustable U.S.
Government Fund and the Adjustable Rate Securities Fund incurred net realized
capital losses of approximately $263,352 and $107,932 respectively. As permitted
by tax regulations, the Funds intend to elect to defer these losses for tax
purposes and treat them as having arisen in the year ended June 30, 1997.

For tax purposes, the aggregate cost of securities and unrealized depreciation
are higher than for financial reporting purposes at June 30, 1996 by $228,320 in
the Adjustable U.S. Government Fund.

3. TRUST SHARES

At June 30, 1996, there was an unlimited number of no par value shares of
beneficial interest authorized. Transactions in the Funds' shares were as
follows:

<TABLE>
<CAPTION>
Franklin Institutional Franklin Institutional
Adjustable U.S. Government Adjustable Rate
Securities Fund Securities Fund
___________________ ___________________
Shares Amount Shares Amount
________ __________ ________ __________
Year ended June 30, 1996
<S> <C> <C> <C> <C>
Shares sold............................................................... 22,039 $ 204,794 365,324 $ 3,579,331
Shares issued in reinvestment of distributions............................ 11,742 109,054 3,008 29,513
Shares redeemed........................................................... (1,720,214) (15,973,069) (792,417) (7,755,875)
________ __________ ________ __________
Net decrease.............................................................. (1,686,433) $(15,659,221) (424,085) $ (4,147,031)
======== ========== ======== ==========
Year ended June 30, 1995
Shares sold............................................................... 407,666 $ 3,785,853 201,682 $ 1,956,062
Shares issued in reinvestment of distributions............................ 44,733 412,014 12,800 124,420
Shares redeemed........................................................... (3,255,282) (29,927,209) (2,528,833) (24,557,220)
________ __________ ________ __________
Net decrease.............................................................. (2,802,883) $(25,729,342) (2,314,351) $(22,476,738)
======== ========== ======== ==========
</TABLE>

4. PURCHASES AND SALES OF SECURITIES

Purchases and sales of securities (excluding purchases and sales of short-term
securities) for the year ended June 30, 1996, were as follows:

<TABLE>
<CAPTION>
Franklin Institutional Franklin Institutional
Adjustable U.S. Government Adjustable Rate
Securities Fund Securities Fund
_________________ _____________
<S> <C> <C>
Purchases.............................................. $15,015,947 $3,927,243
Sales.................................................. $30,704,050 $8,072,496
</TABLE>

5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

a. Administration Agreement:

Under the terms of the administration agreement, Franklin Advisers, Inc.
(Advisers), provides various administrative, statistical and other services, and
receives fees computed monthly based on each Fund's average daily net assets at
an annualized rate of .05%.

The terms of the administration agreement provide that aggregate annual expenses
of each 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 each Fund's shares are registered. For the year ended June 30,
1996, the Fund's expenses did not exceed these limitations.

b. Shareholder Services Agreement

Under the terms of a shareholder services agreement with Franklin/Templeton
Investor Services, Inc. (Investor Services), the Funds pay costs on a per
shareholder account basis. Shareholder servicing costs incurred by the Funds for
the year ended June 30, 1996, aggregated $1,244 and $586 respectively, of which
$630 and $112 respectively, were paid to Investor Services.

c. Other Affiliates and Related Party Transactions

Certain officers and trustees of the Trust are also officers and/or directors of
Distributors, Advisers, Investor Services (all wholly-owned subsidiaries of
Franklin Resources, Inc.), and of the Portfolios.

6. FINANCIAL HIGHLIGHTS

Selected data for each share of beneficial interest outstanding throughout the
period by Fund are as follows:

<TABLE>
<CAPTION>
Per Share Operating Performance Ratios/Supplemental Data
_____________________________________________________ _________________________________
Ratio of Net
Net Asset Net Realized Distributions Net Asset Ratio of Investment
Value at Net & Unrealized Total From From Net Value Net Assets at Expenses to Income to Portfolio
Period Beginning Investment Gain (Loss) Investment Investment at End Total End of Period Average Net Average Turnover
Ended of Period Income on Securities Operations Income of Period Return* (in 000's) Assets3** Net Assets Rate
- ------------------------------------------------------------------------------------------------------------------------------------
Franklin Institutional Adjustable U.S. Government Securities Fund:
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
19921 $10.00 $.373 $(.010) $.363 $(.373) $9.99 3.70% $1,265,392 .35% 6.24% 62.79%
1993 9.99 .480 (.130) .350 (.480) 9.86 4.01 861,311 .35 4.89 66.55
1994 9.86 .360 (.467) (.107) (.353) 9.40 (1.11) 51,738 .07 3.49 29.47
1995 9.40 .551 (.155) .396 (.546) 9.25 4.41 25,020 .23 5.81 14.86
1996 9.25 .600 .028 .628 (.598) 9.28 6.98 9,448 .38 5.90 102.66
Franklin Institutional Adjustable Rate Securities Fund:
19922 10.00 .239 .040 .279 (.239) 10.04 2.82 -- -- 7.13 --
1993 10.04 .559 -- .559 (.559) 10.04 5.72 44,734 -- 5.56 74.77
1994 10.04 .437 (.270) .167 (.437) 9.77 1.65 31,198 .25 4.32 197.22
1995 9.77 .589 .010 .599 (.589) 9.78 6.35 8,596 .31 5.84 12.44
1996 9.78 .600 .011 .611 (.601) 9.79 6.41 4,453 .36 6.16 45.98
</TABLE>

+Annualized.
1For the period November 1, 1991 (effective date of registration) to June 30,
1992.
2For the period January 3, 1992 (effective date of registration) to June 30,
1992.
3Includes the Funds' share of the Portfolios' allocated expenses.
*Total return measures the change in value of an investment over the period
indicated. It is not annualized. It assumes reinvestment of dividends and
capital gains, if any, at net asset value.
**During the periods indicated below, Advisers, the investment manager of the
portfolios, agreed in advance to waive a portion of its management fees and made
payments of other expenses incurred by the Portfolios. Had such action not been
taken, the ratios of expenses to average net assets would have been as follows:

Ratio of expenses
to average
net assets3
___________
Franklin Institutional Adjustable
U.S. Government Securities Fund++
19921................................. .49
1993.................................. .46
1994.................................. .45
1995.................................. .54
1996.................................. .55
Franklin Institutional Adjustable
Rate Securities Fund++
19922................................. .69
1993.................................. .60
1994.................................. .50
1995.................................. .59
1996.................................. .61

INSTITUTIONAL FIDUCIARY TRUST

Report of Independent Auditors

To the Shareholders and Board of Trustees of
Institutional Fiduciary Trust:

We have audited the accompanying statements of assets and liabilities of the
Franklin Institutional Adjustable U.S. Government Securities Fund and the
Franklin Institutional Adjustable Rate Securities Fund of the Institutional
Fiduciary Trust (the Funds), including each Fund's statement of investments in
securities and net assets, as of June 30, 1996, and the related statements 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 periods presented. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Funds as of June 30, 1996, the results of their operations for the year
then ended, the changes in their net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

San Francisco, California
August 6, 1996

ADJUSTABLE RATE SECURITIES PORTFOLIOS

Statement of Investments in Securities and Net Assets, June 30, 1996 (unaudited)

<TABLE>
<CAPTION>
Face Value
Amount U.S. Government Adjustable Rate Mortgage Portfolio (Note 1)
- --------------------------------------------------------------------------------------------------------------------------------
Adjustable Rate Mortgage Securities 94.8%
Federal Home Loan Mortgage Corp. (FHLMC) 25.0%
<C> <C> <C>
$ 5,803,035 FHLMC, Cap 11.253%, Margin 1.75% + CMT, Resets Annually, 7.375%, 11/01/16 ................... $ 5,951,804
2,148,012 FHLMC, Cap 11.939%, Margin 2.127% + CMT, Resets Annually, 7.806%, 07/01/20 .................. 2,230,454
888,149 FHLMC, Cap 12.176%, Margin 2.015% + CMT, Resets Annually, 7.343%, 04/01/20 .................. 916,685
3,647,386 FHLMC, Cap 12.177%, Margin 2.265% + CMT, Resets Annually, 7.582%, 07/01/20 .................. 3,795,361
897,322 FHLMC, Cap 12.68%, Margin 2.195% + CMT, Resets Annually, 7.951%, 02/01/19 ................... 934,005
2,499,106 FHLMC, Cap 12.723%, Margin 2.189% + CMT, Resets Annually, 7.721%, 04/01/19 .................. 2,598,945
5,384,672 FHLMC, Cap 12.744%, Margin 2.00% + CMT, Resets Annually, 7.425%, 07/01/18 ................... 5,559,405
909,972 FHLMC, Cap 12.80%, Margin 2.05% + CMT, Resets Annually, 7.752%, 11/01/18 .................... 926,125
7,960,206 FHLMC, Cap 12.806%, Margin 2.23% + CMT, Resets Annually, 7.724%, 04/01/18 ................... 8,322,952
6,524,760 FHLMC, Cap 13.006%, Margin 2.00% + CMT, Resets Annually, 7.542%, 9/01/19 .................... 6,700,789
6,828,582 FHLMC, Cap 13.065%, Margin 1.25% + COFI, Resets Monthly, 6.124%, 06/01/30 ................... 6,738,513
3,550,452 FHLMC, Cap 13.156%, Margin 1.915% + CMT, Resets Annually, 7.581%, 12/01/16 .................. 3,641,810
2,223,999 FHLMC, Cap 13.16%, Margin 2.115% + CMT, Resets Annually, 7.673%, 07/01/19 ................... 2,285,943
3,398,800 FHLMC, Cap 13.246%, Margin 2.175% + CMT, Resets Annually, 7.846%, 10/01/18 .................. 3,498,141
1,195,004 FHLMC, Cap 13.269%, Margin 2.249% + CMT, Resets Annually, 7.55%, 05/01/19 ................... 1,242,744
423,479 FHLMC, Cap 13.286%, Margin 2.164% + CMT, Resets Annually, 7.651%, 10/01/19 .................. 431,661
2,536,774 FHLMC, Cap 13.292%, Margin 2.115% + CMT, Resets Annually, 7.618%, 03/01/19 .................. 2,606,407
797,981 FHLMC, Cap 13.302%, Margin 2.04% + CMT, Resets Annually, 7.598%, 04/01/18 ................... 819,414
1,724,281 FHLMC, Cap 13.306%, Margin 2.057% + CMT, Resets Annually, 7.576%, 12/01/18 .................. 1,771,147
2,367,011 FHLMC, Cap 13.36%, Margin 2.242% + CMT, Resets Annually, 7.752%, 07/01/20 ................... 2,465,242
5,074,847 FHLMC, Cap 13.364%, Margin 2.225% + CMT, Resets Annually, 7.687%, 07/01/19 .................. 5,220,478
5,121,714 FHLMC, Cap 13.366%, Margin 2.102% + CMT, Resets Annually, 7.553%, 03/01/18 .................. 5,260,235
10,376,291 FHLMC, Cap 13.37%, Margin 2.04% + CMT, Resets Annually, 7.533%, 04/01/19 .................... 10,780,967
7,306,849 FHLMC, Cap 13.65%, Margin 2.249% + CMT, Resets Annually, 7.772%, 07/01/20 ................... 7,612,421
570,730 FHLMC, Cap 13.77%, Margin 2.057% + CMT, Resets Annually, 7.65%, 02/01/19 .................... 580,861
3,892,785 FHLMC, Cap 13.793%, Margin 2.214% + CMT, Resets Annually, 7.892%, 11/01/19 .................. 4,054,336
9,239,206 FHLMC, Cap 13.879%, Margin 2.089% + CMT, Resets Annually, 7.662%, 04/01/18 .................. 9,616,905
2,246,467 FHLMC, Cap 14.307%, Margin 1.957% + 3CMT, Resets Every 3 Years, 8.553%, 12/01/21 ............ 2,317,253
1,556,224 FHLMC, Cap 14.451%, Margin 2.00% + CMT, Resets Annually, 7.702%, 12/01/18 ................... 1,613,042
3,760,852 FHLMC, Cap 14.90%, Margin 2.546% + CMT, Resets Annually, 7.963%, 02/01/19 ................... 3,947,504
------------
Total Federal Home Loan Mortgage Corp. (Cost $114,215,786)............................. 114,441,549
------------
Federal National Mortgage Association (FNMA) 64.1%
2,897,541 FNMA, Cap 12.605%, Margin 2.536% + 6 Month DR, Resets Semi-Annually, 7.837%, 11/01/18 ....... 3,008,749
17,700,728 FNMA, Cap 12.637%, Margin 2.00% + NCI, Resets Monthly, 6.924%, 11/01/17 ..................... 17,777,373
5,104,168 FNMA, Cap 12.64%, Margin 2.00% + CMT, Resets Annually, 7.645%, 03/01/19 ..................... 5,287,306
13,113,811 FNMA, Cap 12.66%, Margin 1.75% + 6 Month DR, Resets Semi-Annually, 6.834%, 01/01/19 ......... 13,350,515
3,866,119 FNMA, Cap 12.662%, Margin 1.25% + COFI, Resets Monthly, 6.885%, 01/01/19 .................... 3,849,031
11,539,231 FNMA, Cap 12.705%, Margin 1.25% + COFI, Resets Semi-Annually, 6.225%, 09/01/18 .............. 11,448,417
4,785,458 FNMA, Cap 12.787%, Margin 1.25% + COFI, Resets Monthly, 7.486%, 01/01/19 .................... 4,813,597
4,546,117 FNMA, Cap 12.788%, Margin 2.11% + CMT, Resets Annually, 7.718%, 11/01/20 .................... 4,743,327
6,685,975 FNMA, Cap 12.804%, Margin 1.75% + CMT, Resets Annually, 7.341%, 05/01/19 .................... 6,889,443
3,732,676 FNMA, Cap 12.84%, Margin 2.762% + 6 Month DR, Resets Semi-Annually, 8.129%, 06/01/17 ........ 3,921,437
6,574,599 FNMA, Cap 12.85%, Margin 2.078% + 5CMT, Resets Every Five Years, 7.982%, 10/01/17 ........... 6,734,559
7,978,228 FNMA, Cap 12.89%, Margin 2.125% + 6 Month DR, Resets Monthly, 7.44%, 07/01/17 ............... 8,202,177
2,161,585 FNMA, Cap 12.911%, Margin 2.00% + 6 Month DR, Resets Semi-Annually, 7.200%, 02/01/18 ........ 2,204,709
10,453,785 FNMA, Cap 12.938%, Margin 1.25% + COFI, Resets Monthly, 6.225%, 02/01/19 .................... 10,371,514
4,201,981 FNMA, Cap 12.993%, Margin 2.092% + CMT, Resets Annually, 7.773%, 12/01/19 ................... 4,357,553
6,279,754 FNMA, Cap 13.005%, Margin 1.97% + 3CMT, Resets Every 3 Years, 8.087%, 11/01/17 .............. 6,442,149
6,308,274 FNMA, Cap 13.01%, Margin 2.10% + CMT, Resets Annually, 7.674%, 06/01/19 ..................... 6,529,671
9,536,401 FNMA, Cap 13.03%, Margin 1.25% + COFI, Resets Monthly, 6.904%, 02/01/20 ..................... 9,491,197
6,429,084 FNMA, Cap 13.03%, Margin 1.75% + 6 Month TB, Resets Semi-Annually, 7.078%, 12/01/20 ......... 6,541,272
$ 7,052,974 FNMA, Cap 13.063%, Margin 2.175% + CMT, Resets Annually, 7.649%, 04/01/19 ................... $ 7,389,824
6,620,650 FNMA, Cap 13.083%, Margin 2.005% + CMT, Resets Annually, 7.517%, 06/01/19 ................... 6,828,731
6,609,216 FNMA, Cap 13.099%, Margin 1.75% + 6 Month TB, Resets Semi-Annually, 7.108%, 07/01/20 ........ 6,710,072
5,097,177 FNMA, Cap 13.147%, Margin 1.895% + CMT, Resets Annually, 7.501%, 04/01/19 ................... 5,256,210
3,356,736 FNMA, Cap 13.202%, Margin 2.478% + 6 Month DR, Resets Semi-Annually, 7.486%, 11/01/26 ....... 3,484,561
3,421,263 FNMA, Cap 13.249%, Margin 2.00% + CMT, Resets Annually, 7.296%, 06/01/19 .................... 3,532,317
8,734,415 FNMA, Cap 13.281%, Margin 2.00% + CMT, Resets Annually, 7.622%, 10/01/19 .................... 9,030,951
8,397,497 FNMA, Cap 13.32%, Margin 1.25% + COFI, Resets Semi-Annually, 7.425%, 04/01/03 ............... 8,428,568
14,251,384 FNMA, Cap 13.452%, Margin 2.148% + CMT, Resets Annually, 7.713%, 09/01/22 ................... 14,727,096
14,414,704 FNMA, Cap 13.644%, Margin 2.011% + CMT, Resets Annually, 7.652%, 01/01/18 ................... 14,908,319
6,742,333 FNMA, Cap 13.662%, Margin 2.177% + CMT, Resets Annually, 7.696%, 03/01/21 ................... 6,986,644
9,521,840 FNMA, Cap 13.791%, Margin 2.143% + CMT, Resets Annually, 7.793%, 12/01/20 ................... 9,875,290
3,898,869 FNMA, Cap 13.797%, Margin 2.20% + CMT, Resets Annually, 7.527%, 03/01/19 .................... 4,061,959
5,383,219 FNMA, Cap 13.80%, Margin 0.94% + 6 Month DR, Resets Semi-Annually, 6.787%, 07/01/24 ......... 5,367,770
5,091,013 FNMA, Cap 13.887%, Margin 2.25% + CMT, Resets Annually, 7.753%, 02/01/19 .................... 5,316,698
3,648,545 FNMA, Cap 13.896%, Margin 2.25% + CMT, Resets Annually, 7.889%, 12/01/18 .................... 3,784,047
7,341,264 FNMA, Cap 14.069%, Margin 2.089% + CMT, Resets Annually, 7.691%, 01/01/19 ................... 7,602,280
2,266,708 FNMA, Cap 14.142%, Margin 2.118% + CMT, Resets Annually, 7.705%, 03/01/21 ................... 2,340,943
12,384,875 FNMA, Cap 14.354%, Margin 2.07% + 5CMT, Resets Every 5 Years, 8.043%, 05/01/21 .............. 12,651,273
3,660,473 FNMA, Cap 14.42%, Margin 2.099% + CMT, Resets Annually, 7.769%, 03/01/20 .................... 3,826,146
9,785,364 FNMA, Cap 14.887%, Margin 1.72% + CMT, Resets Annually, 7.365%, 01/01/16 .................... 9,968,350
3,488,400 FNMA, Cap 14.952%, Margin 2.523% + CMT, Resets Annually, 8.835%, 05/01/19 ................... 3,660,484
1,938,823 FNMA, Cap 15.381%, Margin 2.168% + CMT, Resets Annually, 7.93%, 02/01/20 .................... 2,012,764
------------
Total Federal National Mortgage Association (Cost $295,532,807)........................ 293,715,293
------------
Government National Mortgage Association (GNMA) 5.7%
8,369,506 GNMA, Cap 10.00%, Margin 1.50% + CMT, Resets Annually, 6.50%, 01/20/24 ...................... 8,391,685
7,850,617 GNMA, Cap 11.00%, Margin 2.50% + CMT, Resets Annually, 6.00%, 07/20/25 ...................... 7,977,796
10,000,000 f GNMA, Cap 11.50%, Margin 1.50% + CMT, Resets Annually, 6.50%, 06/01/26 ...................... 10,040,626
------------
Total Government National Mortgage Association (Cost $26,315,161)...................... 26,410,107
------------
Total Investments before Repurchase Agreements (Cost $436,063,754)..................... 434,566,949
------------
d,e Receivables from Repurchase Agreements 6.4%
28,914,334 Joint Repurchase Agreement, 5.439%, 07/01/96 (Maturity Value $29,060,904) (Cost $29,047,738)
Chase Securities, Inc., (Maturity Value $4,176,485)
Collateral: U.S. Treasury Notes, 5.375%, 11/30/97
Daiwa Securities America, Inc., (Maturity Value $4,176,485)
Collateral: U.S. Treasury Notes, 5.25% - 8.875%, 12/31/97 - 08/31/00
Donaldson, Lufkin, & Jenrette Securities Corp., (Maturity Value $4,001,994)
Collateral: U.S. Treasury Bills, 05/29/97
U.S. Treasury Notes, 5.125% - 6.75%, 07/31/97 - 07/31/00
Fuji Securities, Inc., (Maturity Value $4,176,485)
Collateral: U.S. Treasury Notes, 5.50% - 8.875%, 07/31/97 - 02/15/99
Lehman Brothers, Inc., (Maturity Value $4,176,485)
Collateral: U.S. Treasury Notes, 5.625% - 11.75%, 09/30/99 - 02/15/01
SBC Capital Markets, Inc., (Maturity Value $4,176,485)
Collateral: U.S. Treasury Notes, 5.75%, 09/30/97
UBS Securities, Inc., (Maturity Value $4,176,485)
Collateral: U.S. Treasury Notes, 6.50% - 8.875%, 11/15/98 - 11/30/99 ...................... 29,047,738
------------
Total Investments (Cost $465,111,492) 101.2%...................................... 463,614,687
Liabilities in Excess of Other Assets (1.2)% ..................................... (5,288,042)
------------
Net Assets 100.0% ................................................................ $458,326,645
============

At June 30, 1996, the net unrealized depreciation based on the cost of investments
for income tax purposes of $465,111,492 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ............................................................ $ 2,059,773
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ............................................................ (3,556,578)
------------
Net unrealized depreciation ............................................................... $ (1,496,805)
============
</TABLE>

PORTFOLIO ABBREVIATIONS :
3CMT - 3 Year Constant Maturity Treasury Index
5CMT - 5 Year Constant Maturity Treasury Index
CMT - 1 Year Constant Maturity Treasury Index
COFI - Eleventh District Cost of Funds Index
DR - Discount Rate
NCI - National Median Cost of Funds Index
TB - Treasury Bill Rate

dFace amount for repurchase agreements is for the underlying collateral.
eSee Note 1(g) regarding joint repurchase agreement.
fSee Note 1(h) regarding securities purchased on a when-issued basis.

The accompanying notes are an integral part of these financial statements.

<TABLE>
<CAPTION>
ADJUSTABLE RATE SECURITIES PORTFOLIOS

Statement of Investments in Securities and Net Assets, June 30, 1996 (unaudited)

Face Value
Amount Adjustable Rate Securities Portfolio (Note 1)
- --------------------------------------------------------------------------------------------------------------------------------
Adjustable Rate Mortgage Securities 80.9%
<C> <C> <C>
$ 865,891 FNMA, Cap 12.65%, Margin 1.75% + NCI, Resets Monthly, 6.625%, 10/01/28 ......................... $ 862,869
469,843 FNMA, Cap 13.86%, Margin 1.84% + CMT, Resets Monthly, 7.318%, 08/01/16 ......................... 483,509
1,149,775 Homeowners Federal Savings, Cap 13.00%, Margin 1.75% + CMT, Resets Annually, 7.309%,
01/25/18 ...................................................................................... 1,162,350
1,447,190 PHMS, Cap 11.67%, Margin 2.67% + CMT, Resets Annually, 7.922%, 07/25/22 ........................ 1,448,095
896,652 PHMS, Cap 12.02%, Margin 2.55% + CMT, Resets Annually, 8.031%, 04/25/22 ........................ 910,102
1,900,776 RFC, Cap 11.46%, Margin 2.25% + CMT, Resets Annually, 7.751%, 11/25/22 ......................... 1,931,664
1,413,707 RTC, Cap 12.66%, Margin 1.75% + 6 Month TB, Resets Semi-Annually, 7.008%, 04/26/21 ............. 1,354,729
2,016,597 RTC, Cap 14.69%, Margin 1.55% + 3CMT, Resets Every 3 Years, 7.552%, 06/25/22 ................... 2,005,255
1,426,120 RTC, Cap 16.48%, Margin NACR - 0.15%, Resets Annually, 7.559%, 07/25/20 ........................ 1,365,748
999,662 Ryland Mortgage Securities Corp., Cap 11.00%, Margin 1.00% + COFI, Resets Monthly, 5.874%,
04/25/21 ...................................................................................... 994,665
2,254,752 Salomon Brothers Mortgage Securities, Cap 14.00%, Margin 0.96% + NACR, Resets Annually,
8.023%, 10/25/16 .............................................................................. 2,201,554
869,056 Saxon Mortgage Securities Corp., Cap 10.78%, Margin 2.78% + 6 Month LIBOR, Resets Semi-Annually,
8.431%, 05/25/24 .............................................................................. 890,783
------------
Total Adjustable Rate Mortgage Securities (Cost $16,146,877).............................. 15,611,323
------------
Fixed Rate Mortgage Securities 6.1%
1,226,203 Countrywide Mortgage-Backed Securities, Inc., Series 1994-I, Class A8, 6.25%, 07/25/09
(Cost $1,192,483).............................................................................. 1,180,540
------------
Other Adjustable Rate Securities 6.6%
1,190,077 SBA, Cap 12.625%, Margin -0.125% + Prime, Resets Quarterly, 8.125%, 08/25/20 (Cost $1,282,309).. 1,282,309
------------
Total Investments before Repurchase Agreements (Cost $18,621,669)......................... 18,074,172
------------
d,eReceivables from Repurchase Agreements 4.8%
919,808 Joint Repurchase Agreement, 5.439%, 07/01/96 (Maturity Value $924,609) (Cost $924,193)
Chase Securities, Inc., (Maturity Value $132,880)
Collateral: U.S. Treasury Notes, 5.375%, 11/30/97
Daiwa Securities America, Inc., (Maturity Value $132,880)
Collateral: U.S. Treasury Notes, 5.25% - 8.875%, 12/31/97 - 08/31/00
Donaldson, Lufkin & Jenrette Securities Corp., (Maturity Value $127,329)
Collateral: U.S. Treasury Bills, 05/29/97
U.S. Treasury Notes, 5.125% - 6.75%, 07/31/97 - 07/31/00
Fuji Securities, Inc., (Maturity Value $132,880)
Collateral: U.S. Treasury Notes, 5.50% - 8.875%, 07/31/97 - 02/15/99
Lehman Brothers, Inc., (Maturity Value $132,880)
Collateral: U.S. Treasury Notes, 5.625% - 11.75%, 09/30/99 - 02/15/01
SBC Capital Markets, Inc., (Maturity Value $132,880)
Collateral: U.S. Treasury Notes, 5.75%, 09/30/97
UBS Securities, Inc., (Maturity Value $132,880)
Collateral: U.S. Treasury Notes, 6.50% - 8.875%, 11/15/98 - 11/30/99 ......................... 924,193
------------
Total Investments (Cost $19,545,862) 98.4%........................................... 18,998,365
Other Assets and Liabilities, Net 1.6%............................................... 299,868
------------
Net Assets 100.0%.................................................................... $19,298,233
============

At June 30, 1996, the net unrealized depreciation based on the cost of investments
for income tax purposes of $19,545,862 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ............................................................... $ 8,651
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ............................................................... (556,148)
------------
Net unrealized depreciation .................................................................. $ (547,497)
============
</TABLE>

PORTFOLIO ABBREVIATIONS:
3CMT - 3 Year Constant Maturity Treasury Index
CMT - 1 Year Constant Maturity Treasury Index
COFI - Eleventh District Cost of Funds Index
FNMA - Federal National Mortgage Association
LIBOR - London Interbank Offered Rate
NACR - National Average Contract Rate
NCI - National Median Cost of Funds Index
PHMS - Prudential Home Mortgage Securities
RFC - Residential Finance Corp.
RTC - Resolution Trust Corp.
SBA - Small Business Administration
TB - Treasury Bill Rate

dFace amount for repurchase agreements is for the underlying collateral.
eSee Note 1(g) regarding joint repurchase agreement.

The accompanying notes are an integral part of these financial statements.

ADJUSTABLE RATE SECURITIES PORTFOLIOS

Financial Statements

Statements of Assets and Liabilities
June 30, 1996 (unaudited)

U.S. Government
Adjustable Adjustable
Rate Mortgage Rate Securities
Portfolio Portfolio
___________ _________
Assets:
Investments in securities:
At identified cost $436,063,754 $18,621,669
=========== =========
At value 434,566,949 18,074,172
Receivables from repurchase
agreements, at value and cost 29,047,738 924,193
Cash -- 88,028
Receivables:
Interest 4,339,077 221,560
Investment securities sold 738,618 1,327
Other assets -- 1,277
Prepaid expenses 26,839 --
___________ _________
Total assets 468,719,221 19,310,557
___________ _________
Liabilities:
Payables:
Investment securities purchased:
When-issued basis (Note 1) 9,991,528 --
Capital shares repurchased 248,232 --
Management fees 90,478 3,023
Accrued expenses and other
liabilities 62,338 9,301
___________ _________
Total liabilities 10,392,576 12,324
___________ _________
Net assets, at value $458,326,645 $19,298,233
=========== =========
Net assets consist of:
Unrealized depreciation on
investments $ (1,496,805) $ (547,497)
Net realized loss from
investments (138,195,824) (2,740,245)
Capital shares 598,019,274 22,585,975
___________ _________
Net assets, at value $458,326,645 $19,298,233
=========== =========
Shares outstanding 49,094,684 1,971,194
=========== =========
Net asset value per share $9.34 $9.79
=========== =========

Statements of Operations
for the eight months ended June 30, 1996 (unaudited)

U.S. Government
Adjustable Adjustable
Rate MortgageRate Securities
Portfolio Portfolio
___________ _________
Investment income:
Interest (Note 1) $21,527,685 $1,026,163
___________ _________
Expenses:
Management fees (Note 5) 1,304,601 62,965
Professional fees 31,343 2,393
Custodian fees 12,380 737
Trustees' fees and expenses 5,007 237
Reports to shareholders 519 749
Shareholder servicing costs 13 25
Other 9,228 11,823
Management fees waived by
manager (Note 5) (549,745) (39,449)
___________ _________
Total expenses 813,346 39,480
___________ _________
Net investment income 20,714,339 986,683
___________ _________
Realized and unrealized gain
(loss) on investments:
Net realized loss (794,538) (34,357)
Net unrealized appreciation
(depreciation) on investments 1,123,922 (3,484)
___________ _________
Net realized and unrealized gain
(loss) on investments 329,384 (37,841)
___________ _________
Net increase in net assets resulting
from operations $21,043,723 $ 948,842
=========== =========

Statements of Changes in Net Assets
for the eight months ended June 30, 1996 (unaudited)
and the year ended October 31, 1995

<TABLE>
<CAPTION>
U.S. Government Adjustable Rate
Adjustable Rate Mortgage Portfolio Securities Portfolio
______________________ ____________________
For the eight For the For the eight For the
months ended year ended months ended year ended
6/30/96 10/31/95 6/30/96 10/31/95
__________ ___________ _________ __________
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Net investment income.............................................. $ 20,714,339 $ 37,919,267 $ 986,683 $ 1,896,437
Net realized loss from security transactions....................... (794,538) (7,672,691) (34,357) (602,782)
Net unrealized appreciation (depreciation) on investments.......... 1,123,922 16,342,196 (3,484) 913,301
__________ ___________ _________ __________
Net increase in net assets resulting from operations........... 21,043,723 46,588,772 948,842 2,206,956
Distributions to shareholders from undistributed net investment income
(Note 1)............................................................ (20,714,339) (37,919,267) (986,683) (1,896,437)
Decrease in net assets from capital share transactions (Note 3)...... (64,804,696) (233,338,662) (7,742,826) (14,850,372)
__________ ___________ _________ __________
Net decrease in net assets..................................... (64,475,312) (224,669,157) (7,780,667) (14,539,853)
Net assets (there is no undistributed net investment income at beginning
or end of period):
Beginning of period................................................ 522,801,957 747,471,114 27,078,900 41,618,753
__________ ___________ _________ __________
End of period...................................................... $458,326,645 $522,801,957 $19,298,233 $27,078,900
========== =========== ========= ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

ADJUSTABLE RATE SECURITIES PORTFOLIOS

Notes to Financial Statements (unaudited)

1. SIGNIFICANT ACCOUNTING POLICIES

Adjustable Rate Securities Portfolios (the Trust) is a no load, open-end,
management investment company (mutual fund), registered under the Investment
Company Act of 1940, as amended. The Trust currently has two separate
diversified portfolios (the Portfolios) consisting of the U.S. Government
Adjustable Rate Mortgage Portfolio (Mortgage Portfolio) and the Adjustable Rate
Securities Portfolio (Securities Portfolio). The shares of the Trust are issued
in private placements and are thus exempt from registration under the Securities
Act of 1933. The investment objective of each Portfolio is to seek current
income.

The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.

a. Security Valuation:

Portfolio securities listed on a securities exchange or on the NASDAQ for which
market quotations are readily available are valued at the last sale price or, if
there is no sale price, within the range of the most recent quoted bid and asked
prices. Other securities are valued based on a variety of factors, including
yield, risk, maturity, trade activity and recent developments related to the
securities. The Portfolios may utilize a pricing service, bank or broker/dealer
experienced in such matters to perform any of the pricing functions, under
procedures approved by the Board of Directors (the Board). Securities for which
market quotations are not available are valued in accordance with procedures
established by the Board.

b. Income Taxes:

The Portfolios intend 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
the Portfolios from income and excise taxes. Each Portfolio is treated as a
separate entity in the determination of compliance with the Internal Revenue
Code.

c. Security Transactions:

d. Investment Income, Expenses and Distributions:

Distributions to shareholders are recorded on the ex-dividend date. Interest
income and estimated expenses are accrued daily. Original issue discount is
amortized as required by the Internal Revenue Code. The Portfolios normally
declare dividends from their net investment income daily and distribute monthly.
Daily allocations of net investment income will commence on the date following
receipt of an investor's funds. Dividends declared by the Portfolios equal their
net investment income.

e. Accounting Estimates:

f. Expense Allocation:

Common expenses incurred by the Trust 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.

g. Repurchase Agreements:

h. Securities Purchased on a When-Issued or Delayed Delivery Basis:

The Portfolios may purchase securities on a when-issued or delayed delivery
basis, with payment and delivery scheduled for a future date. These transactions
are subject to market fluctuations and are subject to the risk that the value at
delivery may be more or less than the trade date purchase price. Although the
Portfolios will generally purchase these securities with the intention of
holding them, they may sell the securities before the settlement date. These
securities are identified on the accompanying Statement of Investments in
Securities and Net Assets. The Mortgage Portfolio has set aside sufficient
investment securities as collateral for these purchase commitments.

2. DISTRIBUTIONS AND CAPITAL LOSS CARRYOVERS

At October 31, 1995, for tax purposes, the Portfolios had accumulated net
realized capital loss carryovers as follows:

U.S. Government
Adjustable Rate Adjustable Rate
Mortgage Portfolio Securities Portfolio
___________ ____________
Capital loss carryovers
Expiring in: 2000................. $ 45,439,616 $ 57,701
2001................. 17,182,002 50,908
2002................. 67,102,060 1,987,888
2003................. 7,677,608 609,391
___________ ____________
$137,401,286 $2,705,888
=========== ============

For tax purposes, the aggregate cost of securities and unrealized depreciation
of the Portfolios are the same as for financial statement purposes at June 30,
1996.

3. TRUST SHARES

At June 30, 1996, there was an unlimited number of $.01 par value shares of
beneficial interest authorized. Transactions in each of the Portfolio's shares
were as follows:

<TABLE>
<CAPTION>
U.S. Government Adjustable Adjustable Rate
Rate Mortgage Portfolio Securities Portfolio
_____________________ ___________________
Shares Amount Shares Amount
_________ ___________ ________ __________
Eight months ended June 30, 1996
<S> <C> <C> <C> <C>
Shares sold ........................................................... 4,954,858 $ 46,301,846 478,111 $ 4,690,650
Shares issued in reinvestment of distributions ........................ 2,220,466 20,733,149 98,098 962,906
Shares redeemed ....................................................... (14,116,284) (131,839,691) (1,365,986) (13,396,382)
_________ ___________ ________ __________
Net decrease .......................................................... (6,940,960) $ (64,804,696) (789,777) $ (7,742,826)
========= =========== ======== ==========
Year ended October 31, 1995
Shares sold............................................................ 8,454,626 $ 78,435,001 1,241,431 $12,019,117
Shares issued in reinvestment of distributions......................... 4,106,743 37,916,533 196,161 1,906,803
Shares redeemed........................................................ (37,893,534) (349,690,196) (2,973,631) (28,776,292)
_________ ___________ ________ __________
Net decrease........................................................... (25,332,165) $(233,338,662) (1,536,039) $(14,850,372)
========= =========== ======== ==========
</TABLE>

4. PURCHASES AND SALES OF SECURITIES

Purchases and sales of securities (excluding purchases and sales of short-term
securities) for the eight months ended June 30, 1996, were as follows:

U.S. Government
Adjustable Rate Adjustable Rate
Mortgage Portfolio Securities Portfolio
___________ ____________
Purchases............................. $ 84,480,607 $ 7,174,134
Sales................................. $154,020,394 $15,224,920

5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

a. Management Agreement:

Under the terms of a management agreement, Franklin Advisers, Inc. (Advisers),
provides investment advice, administrative services, office space and facilities
to each Portfolio, and receives fees computed monthly based on the average daily
net assets of each Portfolio during the month as follows:

Annualized Fee Rate Average Daily Net Assets
_____________ ________________________________
0.400% First $5 billion
0.350% Over $5 billion, up to and including $10 billion
0.330% Over $10 billion, up to and including $15 billion

Fees are further reduced on net assets over $15 billion. Advisers agreed in
advance to waive management fees for the Portfolios, as noted in the Statement
of Operations.

b. Other Affiliates and Related Party Transactions

As of June 30, 1996, 48,077,489 shares of the Mortgage Portfolio were owned by
the Franklin Adjustable U.S. Government Securities Fund, and 1,011,779 shares
were owned by the Franklin Institutional Adjustable U.S. Government Securities
Fund. This represents 98% and 2%, respectively, of the outstanding shares of the
Mortgage Portfolio.

As of June 30, 1996, 1,512,469 shares of the Securities Portfolio were owned by
the Franklin Adjustable Rate Securities Fund and 455,170 shares were owned by
the Franklin Institutional Adjustable Securities Fund. This represents 77% and
23%, respectively, of the outstanding shares of the Securities Portfolio.

Certain officers and trustees of the Trust are also officers and/or directors of
Advisers (a wholly-owned subsidiary of Resources) and of the Franklin Adjustable
U.S. Government Securities Fund and the Franklin Adjustable Rate Securities
Fund.

6. FINANCIAL HIGHLIGHTS

Selected data for each share of beneficial interest outstanding throughout the
period by Portfolio are as follows:

<TABLE>
<CAPTION>
Per Share Operating Performance Ratios/Supplemental Data
___________________________________________________ _________________________
Ratio of Net
Net Ratio of Investment
Net Realized Distri- Distri- Assets Expenses Income
Net Asset Net & Unrealized butions butions Net Asset at to to
Year Value at Invest- Gain Total From From Net From Total Value at End of Average Average Portfolio
Ended Beginning ment (Loss) on Investment Investment Capital Distri- End of Total Period Net Net Turnover
Oct. 31 of Period Income Securities Operations Income Gains butions Period Return+ (in 000's) Assets+++ Assets Rate
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Government Adjustable Rate Mortgage Portfolio
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
19921 $10.00 $.493 $ .013 $ .506 $(.493) $(.003) $(.496) $10.01 5.13% $4,315,658 .31%* 7.25%* 48.96%
19933 10.01 .544 (.100) .444 (.544) -- (.544) 9.91 4.53 4,201,411 .30 5.49 66.44
19934 9.91 .313 (.090) .223 (.313) -- (.313) 9.82 2.28 2,130,229 .27* 4.15* 76.55
1994 9.82 .415 (.630) (.215) (.415) -- (.415) 9.19 (2.22) 747,471 .02 4.01 56.43
1995 9.19 .572 .140 .712 (.572) -- (.572) 9.33 7.99 522,802 .18 6.17 20.16
1996 9.33 .400 .006 .406 (.396) -- (.396) 9.34 3.36 458,327 .25* 6.38* 15.89
Adjustable Rate Securities Portfolio
19922 10.00 -- -- -- -- -- -- 10.00 -- -- -- -- --
19933 10.00 .599 .020 .619 (.599) -- (.599) 10.02 6.36 44,656 -- 5.80 88.92
19934 10.02 .368 .010 .378 (.368) -- (.368) 10.03 3.83 124,309 .11* 4.76* 158.70
1994 10.03 .469 (.340) .129 (.469) -- (.469) 9.69 1.32 41,619 .25 4.55 192.06
1995 9.69 .625 .120 .745 (.625) -- (.625) 9.81 7.94 27,079 .25 6.36 50.29
1996 9.81 .400 (.020) .380 (.400) -- (.400) 9.79 3.94 19,298 .25* 6.27* 31.49
</TABLE>

*Annualized.
1For the period May 20, 1991 (effective date) to January 31, 1992.
2For the period December 26, 1991 (effective date) to January 31, 1992.
3For the year ended January 31,1993.
4For the nine months ended October 31,1993.
+Total return measures the change in value of an investment over the period
indicated. It is not annualized. It assumes reinvestment of dividends and
capital gains, if any, at net asset value.
++For the eight months ended June 30, 1996.
+++During the periods indicated below, Franklin Advisers, Inc., the investment
manager, agreed to waive in advance a portion of its management fees and made
payments of other expenses incurred by the Portfolios. Had such action not been
taken, the ratios of expenses to average net assets would have been as follows:

Ratio of
expenses
to average
net assets
________
U.S. Government Adjustable Rate Mortgage Portfolio
19921................................................ .41%*
19933................................................ .42
19934................................................ .41*
1994................................................. .42
1995................................................. .43
1996++............................................... .42*

Ratio of
expenses
to average
net assets
________
Adjustable Rate Securities Portfolio
19922................................................ --%
19933................................................ .64
19934................................................ .47*
1994................................................. .43
1995................................................. .47
1996++............................................... .50*

Franklin Institutional Fiduciary Trust Adjustable Rate Mortgage Annual Report

APPENDIX

DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING
(PURSUANT TO ITEM 304 (a) OF REGULATION S-T)

GRAPHIC MATERIAL (1)

This chart shows in pie format the portfolio composition of the Franklin U.S.
Government Adjustable Rate Mortgage Portfolio as a percentage of the fund's
total net assets on June 30, 1996.

U.S. Government Adjustable Rate Mortgage Portfolio
Composition by Issuing Agency
June 30, 1996

<S> <C>
FNMA 64%
FHLMC 25%
GNMA 6%
Cash and Equivalents 5%
</TABLE>

GRAPHIC MATERIAL (2)

The following line graph hypothetically compares a $1,000,000 investment in the
Franklin Institutional Adjustable U.S. Government Securities Fund, the Lehman
Brothers Short 1-2 Government Index and a six month certificate of deposit from
December 2, 1991 to June 30, 1996.

<TABLE>
<CAPTION>
Franklin Institutional Adjustable U.S. Government Securities Fund Total Return
Index Comparison Based on $1,000,000 Investment (12/2/91 - 6/30/96)

Date LB 6 Month CD Franklin
<S> <C> <C> <C>
Dec-91 $ 1,012,581 $ 1,003,000 $ 1,005,763
Jan-92 $ 1,012,682 $ 1,006,009 $ 1,008,016
Feb-92 $ 1,015,619 $ 1,009,128 $ 1,013,300
Mar-92 $ 1,016,634 $ 1,012,357 $ 1,018,313
Apr-92 $ 1,025,377 $ 1,015,394 $ 1,021,505
May-92 $ 1,033,991 $ 1,018,440 $ 1,027,510
Jun-92 $ 1,042,779 $ 1,021,394 $ 1,035,289
Jul-92 $ 1,053,520 $ 1,023,947 $ 1,035,689
Aug-92 $ 1,061,000 $ 1,026,507 $ 1,040,608
Sep-92 $ 1,069,700 $ 1,028,868 $ 1,045,261
Oct-92 $ 1,064,780 $ 1,031,337 $ 1,042,846
Nov-92 $ 1,063,821 $ 1,034,225 $ 1,045,257
Dec-92 $ 1,072,970 $ 1,036,810 $ 1,048,967
Jan-93 $ 1,082,734 $ 1,039,299 $ 1,053,160
Feb-93 $ 1,090,313 $ 1,041,689 $ 1,058,546
Mar-93 $ 1,093,257 $ 1,044,085 $ 1,059,897
Apr-93 $ 1,099,270 $ 1,046,486 $ 1,065,206
May-93 $ 1,096,852 $ 1,048,893 $ 1,066,863
Jun-93 $ 1,103,652 $ 1,051,411 $ 1,072,500
Jul-93 $ 1,106,301 $ 1,053,934 $ 1,076,718
Aug-93 $ 1,114,045 $ 1,056,358 $ 1,080,244
Sep-93 $ 1,117,499 $ 1,058,788 $ 1,079,225
Oct-93 $ 1,119,957 $ 1,061,223 $ 1,077,839
Nov-93 $ 1,120,965 $ 1,063,664 $ 1,070,331
Dec-93 $ 1,124,888 $ 1,066,110 $ 1,067,319
Jan-94 $ 1,131,188 $ 1,068,456 $ 1,070,661
Feb-94 $ 1,126,211 $ 1,071,234 $ 1,066,441
Mar-94 $ 1,123,282 $ 1,074,340 $ 1,058,202
Apr-94 $ 1,120,250 $ 1,077,778 $ 1,052,676
May-94 $ 1,122,154 $ 1,081,550 $ 1,057,195
Jun-94 $ 1,124,623 $ 1,085,552 $ 1,060,598
Jul-94 $ 1,133,845 $ 1,089,569 $ 1,063,904
Aug-94 $ 1,137,473 $ 1,093,600 $ 1,064,243
Sep-94 $ 1,136,563 $ 1,097,974 $ 1,063,579
Oct-94 $ 1,139,745 $ 1,103,135 $ 1,052,939
Nov-94 $ 1,136,098 $ 1,108,209 $ 1,052,260
Dec-94 $ 1,138,825 $ 1,113,750 $ 1,049,380
Jan-95 $ 1,152,718 $ 1,119,096 $ 1,058,105
Feb-95 $ 1,166,436 $ 1,124,356 $ 1,070,544
Mar-95 $ 1,173,085 $ 1,129,641 $ 1,077,181
Apr-95 $ 1,182,587 $ 1,134,837 $ 1,087,672
May-95 $ 1,199,024 $ 1,139,830 $ 1,111,157
Jun-95 $ 1,205,379 $ 1,144,732 $ 1,107,339
Jul-95 $ 1,211,045 $ 1,149,654 $ 1,115,457
Aug-95 $ 1,217,705 $ 1,154,597 $ 1,123,652
Sep-95 $ 1,223,185 $ 1,159,562 $ 1,131,701
Oct-95 $ 1,232,237 $ 1,165,012 $ 1,136,576
Nov-95 $ 1,241,355 $ 1,169,905 $ 1,146,760
Dec-95 $ 1,250,045 $ 1,174,702 $ 1,150,702
Jan-96 $ 1,259,920 $ 1,179,401 $ 1,159,171
Feb-96 $ 1,257,148 $ 1,184,000 $ 1,160,348
Mar-96 $ 1,257,902 $ 1,188,736 $ 1,167,762
Apr-96 $ 1,260,292 $ 1,193,610 $ 1,168,754
May-96 $ 1,264,073 $ 1,198,504 $ 1,172,487
Jun-96 $ 1,272,543 $ 1,203,538 $ 1,184,681
</TABLE>

GRAPHIC MATERIAL (3)

The following line graph hypothetically compares a $1,000,000 investment in the
Franklin Institutional Adjustable Rate Securities Fund, the Lehman Brothers
Short 1-2 Government Index, and a six month certificate of deposit from January
3, 1992 to June 30, 1996.

Franklin Institutional Adjustable Rate Securities Fund
Total Return Index Comparison
Based on $1,000,000 Investment (1/3/92 - 6/30/96)

Date LB 6 Month CD Franklin
<S> <C> <C> <C>
Jan-92 $1,000,090 $ 1,002,710 $ 1,000,000
Feb-92 $1,002,991 $ 1,005,818 $ 1,002,902
Mar-92 $1,003,994 $ 1,009,037 $ 1,006,473
Apr-92 $1,012,628 $ 1,012,064 $ 1,015,036
May-92 $1,021,134 $ 1,015,100 $ 1,019,506
Jun-92 $1,029,814 $ 1,018,044 $ 1,028,229
Jul-92 $1,040,421 $ 1,020,589 $ 1,031,395
Aug-92 $1,047,808 $ 1,023,140 $ 1,038,848
Sep-92 $1,056,400 $ 1,025,494 $ 1,045,265
Oct-92 $1,051,540 $ 1,027,955 $ 1,047,029
Nov-92 $1,050,594 $ 1,030,833 $ 1,050,643
Dec-92 $1,059,629 $ 1,033,410 $ 1,057,011
Jan-93 $1,069,272 $ 1,035,890 $ 1,062,116
Feb-93 $1,076,757 $ 1,038,273 $ 1,070,078
Mar-93 $1,079,664 $ 1,040,661 $ 1,075,909
Apr-93 $1,085,602 $ 1,043,054 $ 1,081,495
May-93 $1,083,214 $ 1,045,453 $ 1,084,023
Jun-93 $1,089,930 $ 1,047,963 $ 1,087,528
Jul-93 $1,092,545 $ 1,050,478 $ 1,092,991
Aug-93 $1,100,193 $ 1,052,894 $ 1,097,077
Sep-93 $1,103,604 $ 1,055,315 $ 1,100,207
Oct-93 $1,106,032 $ 1,057,743 $ 1,102,842
Nov-93 $1,107,027 $ 1,060,175 $ 1,104,743
Dec-93 $1,110,902 $ 1,062,614 $ 1,108,983
Jan-94 $1,117,123 $ 1,064,952 $ 1,111,629
Feb-94 $1,112,207 $ 1,067,720 $ 1,109,156
Mar-94 $1,109,316 $ 1,070,817 $ 1,099,484
Apr-94 $1,106,321 $ 1,074,243 $ 1,099,312
May-94 $1,108,201 $ 1,078,003 $ 1,103,342
Jun-94 $1,110,639 $ 1,081,992 $ 1,105,751
Jul-94 $1,119,747 $ 1,085,995 $ 1,110,743
Aug-94 $1,123,330 $ 1,090,013 $ 1,116,963
Sep-94 $1,122,431 $ 1,094,374 $ 1,114,187
Oct-94 $1,125,574 $ 1,099,517 $ 1,117,521
Nov-94 $1,121,972 $ 1,104,575 $ 1,118,366
Dec-94 $1,124,665 $ 1,110,098 $ 1,122,392
Jan-95 $1,138,386 $ 1,115,426 $ 1,129,077
Feb-95 $1,151,933 $ 1,120,669 $ 1,139,293
Mar-95 $1,158,499 $ 1,125,936 $ 1,145,098
Apr-95 $1,167,882 $ 1,131,115 $ 1,155,015
May-95 $1,184,116 $ 1,136,092 $ 1,168,400
Jun-95 $1,190,392 $ 1,140,977 $ 1,175,969
Jul-95 $1,195,987 $ 1,145,883 $ 1,178,479
Aug-95 $1,202,565 $ 1,150,811 $ 1,189,575
Sep-95 $1,207,976 $ 1,155,759 $ 1,195,751
Oct-95 $1,216,915 $ 1,161,191 $ 1,204,488
Nov-95 $1,225,920 $ 1,166,068 $ 1,211,917
Dec-95 $1,234,502 $ 1,170,849 $ 1,222,135
Jan-96 $1,244,254 $ 1,175,533 $ 1,228,522
Feb-96 $1,241,517 $ 1,180,117 $ 1,228,900
Mar-96 $1,242,262 $ 1,184,838 $ 1,234,068
Apr-96 $1,244,622 $ 1,189,695 $ 1,239,078
May-96 $1,248,356 $ 1,194,573 $ 1,241,180
Jun-96 $1,256,720 $ 1,199,590 $ 1,251,109
</TABLE>

July 15, 1996

Dear Shareholder:

We are pleased to bring you the annual report for the Franklin Cash Reserves
Fund (the Fund), covering the period ended June 30, 1996.

The Fund is a series of Franklin's Institutional Fiduciary Trust, which is
offered exclusively to qualified retirement plan participants and other
institutional investors including corporations, banks, savings and loan
associations, and government entities. Its investment objective is to seek high
current income, consistent with capital preservation and liquidity. To achieve
this objective, the Fund invests all of its assets in The Money Market
Portfolio, whose investment objective is the same as the Fund's. The Fund's
underlying portfolio is managed to maintain a stable net asset value of $1.00
per share, although there is no guarantee that it will accomplish this goal.

Thank you for your investment in the Franklin Cash Reserves Fund. We look
forward to serving your investment needs in the months and years ahead.

Sincerely,

Charles B. Johnson
Chairman of the Board

OVERVIEW OF THE ECONOMY

The economy began the second half of 1995 on a weak note, with growth well-below
that of 1994. Gross Domestic Product (GDP) growth for the final two quarters of
1995 totaled 1.85% compared with 3.40% for the same period in 1994. Other weak
economic data included declining industrial production and sluggish retail,
home, and auto sales. In response, the Federal Reserve lowered its target for
the federal funds rate, from 6.00% to 5.75% in July 1995, and then to 5.50% in
December. The economy, however, continued to lose momentum in the early part of
1996. With prospects for continued slow growth and low inflation, the Federal
Reserve again lowered the federal funds rate target, to 5.25% in January 1996.

GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT

(PICTURE OMITTED)
Thomas J. Runkel, CFA Portfolio Manager

Tom Runkel is a portfolio manager for Franklin's taxable money market funds. He
joined Franklin in 1983 and served as an equity and money market trader from
1985 to 1989.

FRANKLIN CASH RESERVES FUND

The Franklin Cash Reserve Fund's investment objective is to provide high current
income, consistent with capital preservation and liquidity. It seeks to achieve
this objective by investing all of its assets in The Money Market Portfolio (the
Portfolio), whose investment objective is the same as the Fund's. The Portfolio,
in turn, invests in various money market instruments such as:

* U.S. government and federal agency obligations1
* Certificates of deposit
* Bankers' acceptances
* High grade commercial paper
* High grade short-term corporate obligations
* Repurchase agreements collateralized by
U.S. government securities1

The chart below illustrates the Portfolio's composition on June 30, 1996.

GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT

The Portfolio's holdings are limited to money market instruments within the two
highest rating categories assigned by Standard & Poor's Corporation or Moody's
Investors Service, or in non-rated securities determined by the managers to be
of comparable quality. In addition, the Portfolio invests 100% of its assets in
securities with remaining maturities of 397 days or less. Such relatively short
maturities allow the Portfolio to adjust quickly to changing interest rates.

Security Selection Criteria

Portfolio managers employ specific guidelines for determining buy and sell
opportunities. For corporate paper, the selection process generally includes the
following criteria:

* The issuer should have a long-term debt rating of single "A" or higher from
at least two major credit rating agencies
* Cash flow from operations to short-term debt should be 100% or higher
* Short-term debt-to-capital ratio should be 15% or lower
* The issuer's standard deviation of cash flow growth should be 8.5 or lower
* Profitability ratios should be positive and trending higher
* Total debt-to-capital ratio should be 35% or lower

Through investing in a portfolio of high quality, short-term securities, the
Franklin Cash Reserves Fund is designed to provide a high level of credit safety
combined with a stable net asset value.2 As a result, investors often use the
Franklin Cash Reserves Fund for qualified retirement assets, as well as monies
held in fiduciary, advisory and custodial capacities. Its competitive yield has
also made it an attractive alternative cash management tool for corporations,
banks, savings and loan associations and trust companies.3

PERFORMANCE SUMMARY

Interest rates fell during the second half of 1995 when economic growth slowed,
but subsequently reversed course and rose again in the first half of 1996 as
growth strengthened. To help us adapt quickly to interest rate changes, we
maintained a relatively short average weighted maturity. The Fund's average
weighted maturity fell from 60 days on June 30, 1995, to 46 days on December 31,
1995, and then rose to 54 days on June 30, 1996. As a result, the Fund's 7-day
current yield mirrored the movements in Treasury bill rates. The Fund's 7-day
current yield began the fiscal year at 5.76% and finished at 4.90% as of June
30, 1996.4

Weekly 7-day yields for the reporting period are shown below.5 Of course, past
performance cannot guarantee future results.

GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Performance Figures
Period ended June 30, 1996

7-Day Current Yield:4 4.90%
7-Day Effective Yield:4 5.02%
Average Weighted Maturity: 54 days

1. U.S. government securities owned by the Portfolio or held under repurchase
agreement, but not shares of the Franklin Cash Reserves Fund, are guaranteed by
the U.S. government as to the timely payment of principal and interest.

2. An investment in the Franklin Cash Reserves Fund is neither insured nor
guaranteed by the U.S. government or by any other entity or institution. There
is no assurance that the $1.00 share price will be maintained.

3. Regulated investors should review their applicable investment restrictions to
determine whether the Fund is a permissible investment.

4. Annualized and effective yields are for the 7-day period shown and reflect
fluctuations in interest rates on portfolio investments and Fund expenses. Past
performance does not guarantee future results. Franklin Advisers, Inc., the
administrator and manager of the underlying portfolio, has agreed in advance to
waive a portion of its management fees and make payments of certain other
expenses to limit total operating expenses to no more than 0.50% per annum of
average net assets. Without these reductions, the Fund's current and effective
7-day yields for the period would have been 4.72% and 4.83%, respectively.
Franklin Advisers, Inc. may discontinue these arrangements at any time, upon
notice to the Fund's Board of Trustees.

5. Source: Money Fund Report(R), June 28, 1996. As of June 25, 1996, there were
137 funds in this category.

INSTITUTIONAL FIDUCIARY TRUST

Statement of Investments in Securities and Net Assets, June 30, 1996
<TABLE>
<CAPTION>

Value
Shares Franklin Cash Reserves Fund (Note 1)
Mutual Funds 100.1%
<S> <C> <C>

30,405,256 The Money Market Portfolio (Note 1)................................................ $30,405,256
----------------
Total Investments (Cost $30,405,256) 100.1% .............................. 30,405,256
Liabilities in Excess of Other Assets (.1%)............................... (24,199)
----------------
Net Assets 100.0% ........................................................ $30,381,057
================
</TABLE>

At June 30, 1996, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.

The accompanying notes are an integral part of these financial statements.

INSTITUTIONAL FIDUCIARY TRUST

Franklin Cash Reserves Fund

Financial Statements

Statement of Assets and Liabilities
J<TABLE>
<CAPTION>
<S> <C>

Assets:
Investments in securities, at value
and cost $30,405,256
Cash 390
----------------
Total assets 30,405,646
================

Liabilities:
Payables:
Administration fees 5,315
Distribution fees 10,526
Shareholder servicing costs 390
Accrued expenses and other liabilities 8,358
----------------
Total liabilities 24,589
----------------

Net assets (equivalent to $1.00 per share
based on 30,381,057 shares of capital
stock outstanding) $30,381,057
================

Statement of Operations
for the year ended June 30, 1996

Investment income:
Dividends $1,335,467
----------------
Expenses:
Administration fees (Note 4) $ 61,531
Distribution fees (Note 4) 52,208
Shareholder servicing costs
(Note 4) 3,377
Registration fees 12,924
Reports to shareholders 7,242
Professional fees 1,364
Trustees' fees and expenses 979
Other 638
Administration fees waived by
manager (Note 4) (56,216)
------------
Total expenses 84,047
----------------
Net investment income $1,251,420
================
</TABLE>

Statement of Changes in Net Assets
for the years ended June 30, 1996 and 1995

1996 1995
---------- --------------

Increase (decrease) in net assets:
Operations:
Net investment income $ 1,251,420 $ 536,173
Distributions to
shareholders from net
investment income (1,251,420) (536,173)
Increase in net assets
from capital share
transactions (Note 2) 15,835,753 14,544,804
----------- ------------
Net increase in
net assets 15,835,753 14,544,804
Net assets (there is no
undistributed net investment
income at beginning or
end of year):
Beginning of year 14,545,304 500
----------- ------------
End of year $30,381,057 $14,545,304
=========== ============

</TABLE>

The accompanying notes are an integral part of these financial statements.

INSTITUTIONAL FIDUCIARY TRUST

Franklin Cash Reserves Fund

Notes to Financial Statements

1. SIGNIFICANT ACCOUNTING POLICIES

Institutional Fiduciary Trust (the Trust) is an open-end, management investment
company (mutual fund), registered under the Investment Company Act of 1940, as
amended. The Trust consists of seven separate and distinct funds. This report
pertains only to the Franklin Cash Reserves Fund (the Fund), a diversified
series of the Trust. Each of the Funds issues a separate series of the Trust's
shares and maintains a totally separate and distinct investment portfolio. The
Fund's investment objectives are high current income consistent with capital
preservation and liquidity.

The Fund invests substantially all of its assets in The Money Market Portfolio
(the Portfolio), which is a no-load, open-end, diversified management investment
company having the same investment objectives as the Fund. The financial
statements of the Portfolio, including the Statement of Investments in
Securities and Net Assets, are included elsewhere in this report and should be
read in conjunction with the Fund's financial statements.

On June 14, 1996, the Franklin Late Day Money Market Portfolio (a fund of the
Trust) ceased operations pursuant to a resolution approved by the Board of
Trustees on May 14, 1996.

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 principals for
investment companies.

a. Security Valuation:

The Fund holds portfolio shares that are valued at its proportionate interest in
the net asset value of the Portfolio. As of June 30, 1996, the Fund owns 1.96%
of the Portfolio.

b. Income Taxes:

The Fund intends to continue to qualify for the tax treatment applicable to
regulated investment companies under the Internal Revenue Code and to make the
requisite distributions to its shareholders which will be sufficient to relieve
it from income and excise taxes.

c. Security Transactions:

d. Investment Income, Expenses and Distributions:

Net investment income includes income, calculated on an accrual basis, and
estimated expenses which are accrued daily. The total available for distribution
is computed daily and includes the net investment income, plus or minus any
gains or losses on security transactions and any changes in unrealized portfolio
appreciation or depreciation.

e. Expense Allocation:

1. SIGNIFICANT ACCOUNTING POLICIES (cont.)

f. Accounting Estimates:

2. TRUST SHARES

At June 30, 1996, there was an unlimited number of no par value shares of
beneficial interest authorized. Transactions in the Fund's shares at $1.00 per
share were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>

Year Ended Year Ended
June 30, 1996 June 30, 1995
------------ -----------
Shares sold................................... $ 146,315,356 $ 55,543,343
Shares issued in reinvestment of distributions 1,232,299 490,930
Shares redeemed............................... (131,711,902) (41,489,469)
----------- -----------
Net increase.................................. $ 15,835,753 $ 14,544,804
============ ===========
</TABLE>

3. PURCHASES AND SALES OF SECURITIES

Purchases and sales of securities for the year ended June 30, 1996 aggregated
$101,162,926 and $85,342,748, respectively.

4. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

a. Administration Agreement:

Under the terms of an administrative agreement, Franklin Advisers, Inc.
(Advisers), provides various administrative, statistical, and other services,
and receives fees computed monthly based on the Fund's average daily net assets
at an annualized rate of .25%.

The terms of the administration agreement provide that aggregate annual expenses
of the Fund be limited to the extent necessary to comply with the limitations
set forth in the laws, regulations, and administrative interpretations of the
states in which the Fund's shares are registered. For the year ended June 30,
1996, the Fund's expenses did not exceed these limitations. However, Advisers
agreed in advance to waive administration fees, as noted in the Statement of
Operations.

b. Shareholder Services Agreement:

Under the terms of a shareholder services agreement with Franklin/Templeton
Investor Services, Inc. (Investor Services), the Fund pays costs on a per
shareholder account basis. Shareholder servicing costs incurred by the Fund for
the year ended June 30, 1996 aggregated $3,377, all of which was paid to
Investor Services.

c. Distribution Plans:

Under the terms of a distribution plan pursuant to Rule 12b-1 of the Investment
Company Act of 1940 (the Plan), the Fund reimburses Franklin/Templeton
Distributors, Inc. (Distributors), in an amount up to .25% per annum of the
Fund's average daily net assets for the costs incurred in the promotion,
offering and marketing of the Fund's shares. The Plan does not permit nor
require payments of excess costs after termination.

4. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (cont.)

d. Other Affiliates and Related Party Transactions:

Certain officers and trustees of the Trust are also officers and/or directors of
Distributors, Advisers and Investor Services (all wholly-owned subsidiaries of
Franklin Resources, Inc.), and of the Portfolio.

5. FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout the
period are as follows:
<TABLE>
<CAPTION>
<C> <C> <C>

Year Ended June 30,
1996 1995
------ -------
Per Share Operating Performance
Net asset value at beginning of period........................ $1.00 $1.00
Net investment income......................................... .052 .052
Distributions from net investment income...................... (.052) (.052)
------ -------
Net asset value at end of period.............................. $1.00 $1.00
====== =======
Total Return*................................................. 5.35% 5.34%

Ratios/Supplemental Data
Net assets at end of period (in 000's)........................ $30,381 $14,545
Ratio of expenses to average net assets+**.................... .49% .40%
Ratio of net investment income to average net assets.......... 5.10% 5.69%
</TABLE>

*Total return measures the change in value of an investment over the periods
indicated. It is not annualized. It assumes reinvestment of dividends and
capital gains at net asset value.

+Includes the Fund's share of the Portfolio's allocated expenses.

**During the periods indicated, Advisers agreed in advance to waive a portion of
its administration fees and the management fees of the Portfolio. Had such
action not been taken, the ratio of expenses to average net assets would have
been as follows:

Ratio of Expenses
to Average Net Assets+

1995...................... 0.79%
1996...................... 0.73%

INSTITUTIONAL FIDUCIARY TRUST

Franklin Cash Reserves Fund

Report of Independent Auditors

To the Shareholders and Board of Trustees
of Institutional Fiduciary Trust

We have audited the accompanying statement of assets and liabilities of Franklin
Cash Reserves Fund of the Institutional Fiduciary Trust, including the statement
of investments in securities and net assets, as of June 30, 1996, 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 the periods presented. 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.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Franklin Cash Reserves Fund of the Institutional Fiduciary Trust as of June 30,
1996, and the results of its operations for the year then ended, the changes in
its net assets for the each of the two years in the period then ended, and the
financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

San Francisco, California
August 6, 1996

THE MONEY MARKET PORTFOLIOS

Statement of Investments in Securities and Net Assets, June 30, 1996
<TABLE>
<CAPTION>

Face Value
Amount The Money Market Portfolio (Note 1)
a.Short Term Investments 90.5%

Bank Notes .6%
$ 10,000,000 Bank of America NT & SA, 5.45%, 09/18/96 (Cost $9,999,766) $9,999,766
----------------
Certificates of Deposit 22.3%
65,000,000 Bank of Nova Scotia, Portland Branch, 5.035% - 5.58%, 07/05/96 - 01/24/97 64,999,984
35,000,000 Bayerische Landesbank, New York Branch, 5.06% - 5.36%, 07/08/96 - 07/10/96 35,000,141
25,000,000 Commerzbank, AG, New York Branch, 5.37%, 09/06/96 25,000,459
25,000,000 Credit Suisse, New York Branch, 5.35%, 09/13/96 25,000,506
15,000,000 Dresdner Bank, AG, New York Branch, 4.94%, 01/06/97 14,948,167
20,000,000 Lloyds Bank, Plc., New York Branch, 5.70%, 09/11/96 20,000,378
25,000,000 National Westminster Bank, New York Branch, 5.50%, 09/12/96 25,000,000
20,000,000 Rabobank Nederland, NV, New York Branch, 5.37%, 09/09/96 20,000,380
20,000,000 Royal Bank of Canada, New York Branch, 5.02%, 08/01/96 20,000,313
75,000,000 Societe Generale, New York Branch, 5.36% - 5.51%, 08/15/96 - 10/09/96 75,000,381
20,000,000 Westpac Banking Corp., New York Branch, 5.36%, 09/05/96 20,000,000
----------------

Total Certificates of Deposit (Cost $344,950,709) 344,950,709
================

Commercial Paper 67.6%
20,000,000 ABN AMRO North America Finance, Inc., 4.975%, 08/26/96 19,845,222
20,000,000 AIG Funding, Inc., 5.39%, 09/23/96 19,748,465
60,000,000 American Express Credit Corp., 4.88% - 5.28%, 07/22/96 - 08/20/96 59,694,249
20,000,000 ANZ (DE), Inc., 5.27%, 08/29/96 19,827,261
65,000,000 Associates Corp. of North America, 5.27% - 5.28%, 07/01/96 - 09/03/96 64,621,600
65,000,000 AT&T Corp., 4.91% - 5.30%, 07/19/96 - 09/20/96 64,555,765
30,000,000 BBV Finance, Inc., 5.32% - 5.39%, 08/07/96 - 09/16/96 29,775,358
60,000,000 Canadian Imperial Holdings, Inc., 5.27% - 5.44%, 07/02/96 - 09/16/96 59,570,954
35,000,000 Cheltnham & Gloucester Building Society, 5.33% - 5.38%, 09/09/96 - 09/25/96 34,599,939
65,000,000 CIESCO, L.P., 5.27% - 5.29%, 07/25/96 - 08/28/96 64,623,425
35,000,000 Den Danske Corp., Inc., 5.27% - 5.275%, 07/22/96 - 08/30/96 34,749,467
65,000,000 General Electric Capital Corp., 5.27% - 5.31%, 07/31/96 - 08/12/96 64,651,476
65,000,000 Generale Bank, Inc., 5.07% - 5.31%, 07/11/96 - 08/14/96 64,683,717
40,000,000 Halifax Building Society, 4.88% - 5.26%, 08/08/96 - 09/26/96 39,642,745
40,000,000 Metlife Funding, Inc., 5.28% - 5.40%, 08/26/96 - 10/01/96 39,555,755
40,000,000 National Rural Utilities Cooperative Finance Corp., 5.28% - 5.39%,
08/16/96 - 09/18/96 ........................................................ 39,628,506
15,245,000 PepsiCo, Inc., 5.38%, 09/25/96 15,049,068
75,000,000 Prudential Funding Corp., 5.27% - 5.32%, 07/30/96 - 09/10/96 74,463,990
55,350,000 Schering Corp., 5.31% - 5.38%, 08/27/96 - 10/03/96 54,664,248
65,000,000 Svenska Handelsbanken, Inc., 5.29% - 5.40%, 07/15/96 - 09/17/96 64,522,195
20,000,000 Toronto Dominion Holdings USA, Inc., 5.28%, 08/21/96 19,850,400
40,000,000 Toyota Motor Credit Corp., 5.38% - 5.39%, 09/19/96 - 10/01/96 39,485,466

Commercial Paper (cont.)
$ 20,000,000 Westpac Capital Corp., 5.27%, 07/29/96 $ 19,918,021
40,119,000 Wool International, 4.90% - 5.30%, 07/12/96 - 08/23/96 39,932,821
----------------
Total Commercial Paper (Cost $1,047,660,113) 1,047,660,113
----------------
Total Investments before Repurchase Agreements
(Cost $1,402,610,588)................................................... 1,402,610,588
----------------
bReceivables from Repurchase Agreements 9.3%
79,993,000 J.P. Morgan Securities, Inc., 5.42%, 07/01/96 (Maturity Value $74,133,469)
Collateral: U.S. Treasury Bills, 06/26/97 .................................. 74,100,000
69,620,000 Morgan Stanley & Co., Inc., 5.35%, 07/01/96 (Maturity Value $70,031,208)
Collateral: U.S. Treasury Notes, 6.875%, 02/28/97 70,000,000
----------------
Total Receivables from Repurchase Agreements (Cost $144,100,000) 144,100,000
----------------
Total Investments (Cost $1,546,710,588) 99.8% 1,546,710,588
Other Assets and Liabilities, Net .2% 3,374,659
----------------
Net Assets 100.0% $1,550,085,247

================
</TABLE>

At June 30, 1996, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.

PORTFOLIO ABBREVIATIONS:

L.P. - Limited Partnership

bFace amount for repurchase agreements is for the underlying collateral.

The accompanying notes are an integral part of these financial statements.

THE MONEY MARKET PORTFOLIOS
Statement of Investments in Securities and Net Assets, June 30, 1996
<TABLE>
<CAPTION>
<S> <C> <C>

Face Value
Amount The U.S. Government Securities Money Market Portfolio (Note 1)
a Short Term Government Securities 100.1%
Government Securities 17.3%
$ 50,000,000 U.S. Treasury Bills, 4.75% - 5.14%, 08/08/96 - 12/12/96 (Cost $49,361,211) $ 49,361,211
----------------
b Receivables from Repurchase Agreements 82.8%
11,690,000 B.A. Securities, Inc., 5.40%, 07/01/96 (Maturity Value $12,005,400)
Collateral: U.S. Treasury Notes, 8.00%, 01/15/97 ............................. 12,000,000
12,530,000 B.T. Securities Corp., 5.42%, 07/01/96 (Maturity Value $12,005,420)
Collateral: U.S. Treasury Notes, 5.25%, 01/31/01 ..............................12,000,000
11,509,000 Barclays de Zoete Wedd Securities, Inc., New York, 5.35%, 07/01/96
(Maturity Value $12,005,350)
Collateral: U.S. Treasury Notes, 7.875%, 01/15/98 .............................12,000,000
12,185,000 Chase Securities, Inc., 5.40%, 07/01/96 (Maturity Value $12,005,400)
Collateral: U.S. Treasury Notes, 6.125%, 05/31/97 .............................12,000,000
12,120,000 Citicorp Securities, Inc., 5.50%, 07/01/96 (Maturity Value $12,005,500)
Collateral: U.S. Treasury Notes, 5.75%, 09/30/97 ..............................12,000,000
12,195,000 Merrill Lynch Government Securities, Inc., 5.20%, 07/01/96
(Maturity Value $12,005,200)
Collateral: U.S. Treasury Notes, 5.875%, 04/30/98 .............................12,000,000
18,201,000 J.P. Morgan Securities, Inc., 5.32%, 07/01/96 (Maturity Value $17,507,758)
Collateral: U.S. Treasury Bills, 11/07/96 .....................................17,500,000
57,501,000 J.P. Morgan Securities, Inc., 5.42%, 07/01/96 (Maturity Value $55,024,842)
Collateral: U.S. Treasury Bills, 12/12/96 .....................................55,000,000
68,530,000 Morgan Stanley & Co., Inc., 5.35%, 07/01/96 (Maturity Value $68,015,310)
Collateral: U.S. Treasury Bills, 09/12/96
U.S. Treasury Notes, 5.75% - 11.75%, 09/30/96 - 02/15/01...........67,985,000
12,506,000 SBC Capital Markets, Inc., 5.47%, 07/01/96 (Maturity Value $12,005,470)
Collateral: U.S. Treasury Notes, 5.125%, 11/30/98 .............................12,000,000
11,507,000 UBS Securities, Inc., 5.43%, 07/01/96 (Maturity Value $12,005,430)
Collateral: U.S. Treasury Notes, 8.125%, 02/15/98 .............................12,000,000
----------------
Total Receivables from Repurchase Agreements (Cost $236,485,000) 236,485,000
----------------

Total Investments (Cost $285,846,211) 100.1% $285,846,211
Liabilities in Excess of Other Assets (.1)% (145,107)
----------------
Net Assets 100.0% $285,701,104
================
</TABLE>

At June 30, 1996, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.

bFace amount for repurchase agreements is for the underlying collateral.

The accompanying notes are an integral part of these financial statements.

THE MONEY MARKET PORTFOLIOS
Financial Statements

Statements of Assets and Liabilities
June 30, 1996

The U.S.
Government
The Money Securities Money
Market Portfolio Market Portfolio

----------------- ----------------
Assets:
Investment in securities,
at value and cost $1,402,610,588 $ 49,361,211
Receivables from
repurchase agree-
ments, at value
and cost 144,100,000 236,485,000
Cash 3,626 --
Receivables:
Interest 4,328,950 106,080
From affiliates 6,003 19,602
-------------- -------------
Total assets 1,551,049,167 285,971,893
-------------- -------------
Liabilities:
Payables:
Capital shares
repurchased 767,784 233,906
Management fees 170,313 29,565
Accrued expenses and
other liabilities 25,823 7,318
-------------- -------------
Total liabilities 963,920 270,789
-------------- -------------
Net assets, at value $1,550,085,247 $285,701,104
============== =============
Shares outstanding 1,550,085,247 285,701,104
============== =============
Net asset value per share $1.00 $1.00
============== =============

Statements of Operations
for the year ended June 30, 1996

The U.S.
Government
The Money Securities Money
Market Portfolio Market Portfolio
---------------- ----------------
Investment income:
Interest $81,172,665 $18,038,015
---------------- ----------------
Expenses:
Management fees
(Note 5a) 2,162,519 484,382
Professional fees 44,663 8,889
Custodian fees 26,784 22,841
Reports to shareholders 27,241 5,685
Trustees' fees and
expenses 7,447 10,769
Other 21,476 10,049
Management fees
waived by manager (128,505) (59,534)
--------------- ---------------
Total expenses 2,161,625 483,081
--------------- ---------------
Net investment
income 79,011,040 17,554,934
--------------- ---------------
Net realized gain on
investments -- 683
--------------- ---------------
Net increase in net
assets resulting from
operations $79,011,040 $17,555,617
=============== ===============

The accompanying notes are an integral part of these financial statements.

THE MONEY MARKET PORTFOLIOS Financial Statements (cont.)

Statements of Changes in Net Assets
for the years ended June 30, 1996 and 1995
<TABLE>
<CAPTION>

The U.S. Government Securities
The Money Market Portfolio Money Market Portfolio
------------------------ -----------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
------------ ------------ ----------- -----------
Increase (decrease) in net assets:
Operations:
Net investment income........................ $ 79,011,040 $ 65,941,077 $ 17,554,934 $ 22,234,614
Net realized gain from security transactions. -- 1,356 683 392
------------ ------------ ----------- ----------
Net increase in net assets resulting from
operations................................... 79,011,040 65,942,433 17,555,617 22,235,006
Distributions to shareholders from undistributed
net investment income........................ (79,011,040) (65,942,433)a (17,555,617)b (22,235,006)c
Increase (decrease) in net assets from capital
share transactions (Note 2).................. 244,510,834 1,086,385,190 (188,953,282) 256,106,321
------------ ------------- ----------- -----------
Net increase (decrease) in net assets......... 244,510,834 1,086,385,190 (188,953,282) 256,106,321
Net assets (there is no undistributed net
investment income at beginning or end
of the year):
Beginning of year........................... 1,305,574,413 219,189,223 474,654,386 218,548,065
------------ ------------ ----------- -----------
End of year................................. $1,550,085,247 $1,305,574,413 $285,701,104 $474,654,386
============ ============ ============ ============
</TABLE>

The accompanying notes are an integral part of these financial statements.

THE MONEY MARKET PORTFOLIOS

Notes to Financial Statements

1. SIGNIFICANT ACCOUNTING POLICIES

a. Security Valuations:

b. Income Taxes:

c. Security Transactions:

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 distribution
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.

e. Expense Allocation:

1. SIGNIFICANT ACCOUNTING POLICIES (cont.)

f. Accounting Estimates:

g. Repurchase Agreements:

2. TRUST SHARES

Transactions in each of the Portfolio's shares at $1.00 per share were as
follows:
<TABLE>
<CAPTION>

The U.S. Government
The Money Securities Money
Market Portfolio Market Portfolio
<S> <C> <C>

------------ -------------
1996
Shares sold................................................................. $2,507,821,633 $ 824,267,024
Shares issued in reinvestment of distributions.............................. 79,019,113 17,555,181
Shares redeemed............................................................. (2,342,329,912) (1,030,775,487)
------------ -------------
Net increase (decrease)..................................................... $ 244,510,834 $ (188,953,282)
============ =============
1995
Shares sold................................................................. $ 2,811,245,134 $ 2,270,754,653
Shares issued in reinvestment of distributions.............................. 65,932,187 22,235,271
Shares redeemed............................................................. (2,923,489,920) (2,175,508,395)
Shares issued in connection with assets transfer (Note 6)................... 1,132,697,789 138,624,792
------------ -------------
Net increase................................................................ $ 1,086,385,190 $ 256,106,321
============ =============
</TABLE>

3. CAPITAL LOSS CARRYOVERS

4. PURCHASES AND SALES OF SECURITIES

Purchases and sales/maturities of securities, including repurchase agreements,
for the year ended June 30, 1996, were as follows:
<TABLE>
<CAPTION>

The U.S. Government
The Money Securities Money
Market Portfolio Market Portfolio
<S> <C> <C>
------------ -------------
Purchases................................................................... $60,355,427,309 $62,680,289,047
Sales....................................................................... $60,113,260,920 $62,869,560,372

</TABLE>

5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

a. Management Agreement:

b. Other Affiliates and Related Party Transactions:

Certain officers and trustees of the Portfolios are also officers and/or
directors of Advisers and Investor Services (all wholly-owned subsidiaries of
Franklin Resources, Inc.).

6. ASSET TRANSFER

As of June 30,1996, 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............................................................. 1,173,771,347 75.72%
Institutional Fiduciary Trust - Money Market Portfolio.......................... 341,314,800 22.02%
Institutional Fiduciary Trust - Franklin Cash Reserves Fund..................... 30,405,256 1.96%
Franklin Templeton Money Fund Trust - Franklin Templeton Money Fund II.......... 4,593,844 0.30%

As of June 30,1996, the shares of The U.S. Government Securities Money Market
Portfolio were owned by the following funds:

Percentage of
Shares Outstanding Shares
--------- ------------
Institutional Fiduciary Trust - Franklin U.S. Government Securities Money Market
Portfolio 152,155,022 53.26%

Franklin Federal Money Fund....................................................... 133,546,082 46.74%
</TABLE>

7. FINANCIAL HIGHLIGHTS

Selected data for each share of beneficial interest outstanding throughout each
period are as follows:
<TABLE>
<CAPTION>
Per Share Operating Performance Ratios/Supplemental Data
------------------------------------ ---------------------------

Net Asset Distributions Net Assets Ratio of Ratio of Net
Year Values at Net From Net Net Asset at End Expenses Income
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
1995 1.00 0.053 (0.053) 1.00 5.46 1,305,574 0.15 5.42
1996 1.00 0.055 (0.055) 1.00 5.66 1,550,085 0.15 5.50

The U.S. Government Securities Money Market Portfolio
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
1995 1.00 0.052 (0.052) 1.00 5.32 474,654 0.15 5.25
1996 1.00 0.054 (0.054) 1.00 5.55 285,701 0.15 5.45

*July 28, 1992 (Effective date of registration) to June 30, 1993.
</TABLE>

**Annualized

+Total return measures the change in value of an investment over the periods
indicated. It is not annualized (except as noted). It assumes reinvestment of
dividends and capital gains at net asset value.

++Advisers agreed in advance to waive a portion of its management fees of the
Portfolios during the periods indicated. 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
-----------
<C> <C>

The Money Market Portfolio
1993*...................................... .17%**
1994....................................... .17
1995....................................... .16
1996....................................... .16

</TABLE>

THE MONEY MARKET PORTFOLIOS

Report of Independent Auditors

To the Shareholders and Board of Trustees
The Money Market Portfolios

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 June
30, 1996, by correspondence with the custodian. 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.

COOPERS & LYBRAND L.L.P.

San Francisco, California
August 6, 1996

This page intentionally left blank.

LITERATURE REQUEST

Franklin Cash Reserves Fund Annual Report

APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING
(PURSUANT TO ITEM 304 (a) of REGULATION S-T)

GRAPHIC MATERIAL (1)

This chart shows in line graph format the 90-Day Treasury bill rates from June
30, 1995 - June 30, 1996.
<TABLE>
<CAPTION>

90- Day Treasury Bill Rates
June 30, 1995 - June 30, 1996

<S> <C>

Jun-95 5.57
Jul-95 5.58
Aug-95 5.45
Sep-95 5.41
Oct-95 5.51
Nov-95 5.49
Dec-95 5.08
Jan-96 5.05
Feb-96 5.03
Mar-96 5.14
Apr-96 5.15
May-96 5.18
Jun-96 5.16

</TABLE>

GRAPHIC MATERIAL (2)

This chart shows in pie chart format the fund's securities breakdown by security
type as a percentage of the fund's total net assets.
<TABLE>
<CAPTION>
The Money Market Portfolio
Portfolio Composition as of June 30, 1996

<S> <C>
Commercial Paper 67.6%
Certificates of Deposit 22.3%
Repurchase Agreements 9.3%
Bank Notes 0.6%
Other Assets and Liabilities 0.2%

</TABLE>

GRAPHIC MATERIAL(3)

The following line graph hypothetically compares the 7-day yields of the
Franklin Cash Reserves Fund to that of IBC/Donoghue's First Tier,
Institutional-Only, from 7/3/95 to 6/25/96.
<TABLE>
<CAPTION>
Franklin Cash Reserves Fund Weekly 7-Day Yields vs. IBC/Donoghue's First-Tier,
Institutional Only July 3, 1995 to June 25, 1996

Date Franklin Donoghue's
<S> <C> <C>

Franklin Donoghue's
7/3/95 5.75% 5.76%
7/11/95 5.69% 5.70%
7/17/95 5.66% 5.63%
7/25/95 5.62% 5.61%
8/1/95 5.65% 5.61%
8/8/95 5.59% 5.57%
8/15/95 5.58% 5.55%
8/22/95 5.55% 5.54%
8/29/95 5.55% 5.54%
9/5/95 5.49% 5.53%
9/12/95 5.44% 5.52%
9/19/95 5.46% 5.53%
9/26/95 5.42% 5.50%
10/3/95 5.45% 5.56%
10/10/95 5.38% 5.49%
10/23/95 5.36% 5.49%
10/31/95 5.38% 5.52%
11/7/95 5.36% 5.49%
11/14/95 5.36% 5.50%
11/21/95 5.37% 5.51%
11/28/95 5.33% 5.53%
12/5/95 5.37% 5.49%
12/12/95 5.34% 5.48%
12/19/95 5.33% 5.50%
12/26/95 5.34% 5.46%
1/2/96 5.32% 5.45%
1/9/96 5.30% 5.42%
1/16/96 5.21% 5.35%
1/23/96 5.25% 5.33%
1/30/96 5.19% 5.30%
2/6/96 5.09% 5.01%
2/13/96 5.02% 4.93%
2/20/96 4.96% 4.92%
2/27/96 4.91% 4.88%
3/5/96 4.90% 5.08%
3/12/96 4.85% 5.01%
3/19/96 4.90% 5.06%
3/26/96 4.84% 5.03%
4/2/96 4.87% 5.03%
4/9/96 4.84% 5.03%
4/16/96 4.83% 5.04%
4/23/96 4.82% 5.02%
4/30/96 4.81% 5.04%
5/7/96 4.84% 5.02%
5/14/96 4.84% 5.02%
5/21/96 4.84% 5.03%
5/28/96 4.85% 5.01%
6/4/96 4.86% 5.02%
6/11/96 4.85% 5.01%
6/18/96 4.90% 5.02%
6/25/96 4.93% 5.04%

</TABLE>