INSTITUTIONAL FIDUCIARY TRUST, N-30D, 1997-09-10

INSTITUTIONAL FIDUCIARY TRUST
N-30D, 1997-09-10

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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 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, expenses, and risks. 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, 1997

GRAPHIC PICTURE OMITTED

Charles B. Johnson
Chairman of the Board

Dear Shareholder:

We are pleased to bring you the thirteenth annual report for Franklin's
Institutional Fiduciary Trust (the Trust), for the period ended June 30, 1997.

The Trust was developed specifically to meet the needs of institutional
investors. Part of the $201 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.

During the reporting period, the U.S. economy experienced robust growth, forcing
the Federal Reserve to raise its target for the federal funds rate by
twenty-five basis points in March. As a result, the economy slowed somewhat
before strengthing to close out the reporting period. Within this environment,
our managers adhered steadfastly to a disciplined investment strategy, enabling
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

Strong economic growth coupled with mild inflation characterized most of the
period under review. This relatively stable environment eliminated the need for
the Federal Reserve Board to make any significant adjustments to monetary
policy, and the federal funds rate (the interest rate banks charge each other
for overnight loans) remained at 5.25% through the first half of the fiscal
year. In the second half of the fiscal year, growth accelerated considerably.
Real gross domestic product growth for the quarter ended March 31, 1997 was
5.90%, which was considerably above the Federal Reserve's targeted long-term
growth rate of 2.50%. Moreover, unemployment levels trended downward to 4.80%,
which is the lowest level experienced in twenty-three years. Despite the
blistering economic growth, inflation indicators have continued to remain
relatively low. Low inflation indicators notwithstanding, the Federal Reserve
responded preemptively to the potential for higher prices by increasing the
federal funds rate twenty-five basis points on March 25, 1997. In response to
this action, most other short-term interest rates also rose slightly during the
reporting period.

Since we maintained a relatively neutral average weighted maturity in the funds
during the reporting period, the funds' seven-day yields reflected the rise in
short-term interest rates.

Looking forward, we believe the economy is in the later stages of the current
business cycle. Growth should continue to come from higher private consumption,
capital spending, and improving foreign economies. However, we expect that these
forces, coupled with a tight labor market, could jeopardize the current benign
inflation picture. As a result, we believe the Federal Reserve may raise
short-term interest rates again in an effort to control potentially accelerating
inflation.

GRAPHIC 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 securities
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).

<TABLE>
<CAPTION>
Funds at a Glance
Performance as of June 30, 1997

Portfolios/Characteristics

Franklin U.S. Franklin Franklin U.S.
Franklin's IFT Government U.S. Treasury Government
Money Market Securities Money Money Market Agency Money
Portfolio Market Portfolio Portfolio Market Fund
(0140) (0142) (0143) (0146)
- ---------------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C>
7-Day Current Yield1 5.46% 5.29% 4.87% 5.09%
- ---------------------------------------------------------------------------------------------------------------------------

Avg. Weighted Maturity 39 days 5 days 55 days 42 days

- ---------------------------------------------------------------------------------------------------------------------------
Principal
Holdings2

Agencies
- ---------------------------------------------------------------------------------------------------------------------------

BAs

CDs

RPs

Treasuries

- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

1. Yield reflects the interest income per share earned by the Funds' investments
for the 7-day period ended June 30, 1997, calculated as an annual percentage
rate.
2. The mix of each Fund's or underlying portfolio's holdings of approved
investments or maturities will fluctuate. U.S. government securities owned or
held under repurchase agreements by the Funds or their underlying portfolios,
but not shares of the Funds, are guaranteed by the U.S. government, its agencies
or instrumentalities, as to the timely payment of principal and interest.

Shares of the Funds are not deposits or obligations of any bank or financial
institution. They are not insured or guaranteed by any such institution, the
FDIC, the U.S. government or any government agency, and involve investment
risks, including possible loss of the principal amount invested.

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 Banker's 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, 1997, is shown below.

GRAPHIC MATERIAL 1 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 seeks to 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

During the reporting period, the economy experienced strong growth, increasing
inflationary pressures, and growing expectations that the Federal Reserve would
take action against inflation. In response to this enviroment, the Federal
Reserve raised its target for the federal funds rate by twenty-five basis points
on March 25, 1997.

The economy then slowed somewhat as consumer demand remained high and the
unemployment level remained low near the end of the period. Reflecting this
climate, the Fund's 7-day yield over the twelve-month period started at 5.21% on
June 30, 1996, and ended at 5.46% as of June 30, 1997.4 In addition, we
shortened the Fund's average weighted maturity from 54 days on June 30, 1996, to
39 days on June 30, 1997, allowing the Fund to adjust more quickly to interest
rate changes.

Total returns for the 1-, 3-, 5- and 10-year periods ended June 30, 1997, are
shown to the right. As you can see, the Fund consistently outperformed its
benchmark, the Lipper Institutional Money Market Index for each of these
periods.5 Of course, past performance is not predictive of future results.

GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Performance Figures
Period Ended June 30, 1997
- --------------------------------------------------------------------------------

7-Day Current Yield:4 5.46%

7-Day Effective Yield:4 5.61%

Average Weighted Maturity: 39 days
- --------------------------------------------------------------------------------

1. U.S. government securities owned or held under repurchase agreement by the
Portfolio, 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 5.40%
and 5.54%, respectively. Franklin Advisers, Inc. may discontinue these
arrangements at any time, upon notice to the Fund's Board of Trustees.

5. Total return calculations show the change in the value of an investment over
the periods indicated and assume reinvestment of dividends and capital gains, if
any, at net asset value. Source for the Lipper Institutional Money Market Funds
Index is Lipper Analytical Services, Inc. As of June 30, 1997, there were 173
funds in the institutional money market funds category. This index is unmanaged,
and one cannot invest directly in an index.

Franklin
U.S. Government
Securities Money
Market Portfolio

The Franklin U.S. Government Securities Money Market Portfolio's (the Fund'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, 1997 is shown below.

GRAPHIC MATERIAL 3 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 rating: "AAAm" by Standard and Poor's Corporation, an
independent rating service.3

GRAPHIC PICTURE OMITTED

Franklin Templeton provides extended times for placing trades in the Franklin
U.S. Government Securities Money Market Portfolio. Investors may 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
Fund, investors may also request next-day settlement exchanges to any other
money market fund in the Trust.4

Performance Summary

Economic growth accelerated mid-way through the reporting period, causing
investors to speculate about the future direction of short-term interest rates.
Inflationary pressures forced the Federal Reserve to raise the target for the
federal funds rate on March 25, 1997. To help the Fund adapt quickly to interest
rates changes, we shortened the Fund's average weighted maturity from 19 days on
June 30, 1996, to 5 days on June 30, 1997. As a result, the Fund's 7-day yield,
which began the period at 5.13%, rose to 5.29% by June 30, 1997.

The graph to the right illustrates how the total returns for the Franklin U.S.
Government Securities Money Market Portfolio performed against its benchmark,
the Lipper Institutional U.S. Government Money Market Funds Index for the 1-,
3-, and 5-year periods ended June 30, 1997.6 Of course, past performance cannot
guarantee future results.

GRAPHIC MATERIAL 4 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Performance Figures
Period ended June 30, 1997
- --------------------------------------------------------------------------------

7-Day Current Yield:5 5.29%

7-Day Effective Yield:5 5.43%

Average Weighted Maturity: 5 days
- --------------------------------------------------------------------------------

1. U.S. government securities owned or held under repurchase agreement by the
underlying Portfolio, 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(R) assessment of the overall
credit quality of the underlying Portfolio, based primarily on the Portfolio's
stated investment objectives and policies. It considers, for example, the credit
quality of the Portfolio's investments and management, but does not reflect the
yield or the market price of the Fund's shares nor approval by Standard &
Poor's(R). 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 5.18%
and 5.32%, respectively. Franklin Advisers, Inc. may discontinue these
arrangements at any time, upon notice to the Fund's Board of Trustees.

6. Total return calculations show the change in the value of an investment over
the periods indicated and assume reinvestment of dividends and capital gains, if
any, at net asset value. Source for the Lipper Institutional U.S. Government
Money Market Funds Index is Lipper Analytical Services, Inc. As of June 30,
1997, there were 81 funds in the institutional U.S. government money market
funds category. This index is unmanaged, and one cannot invest directly in an
index.

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, 1997, is shown below.

GRAPHIC MATERIAL 5 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
rating: "AAAm-G," from Standard & Poor's Corporation.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 that allows them easy access to their money.

Performance Summary

Persistent economic growth in the middle of the period raised fears that
inflation would rise. As inflationary pressures mounted, the Federal Reserve
took action and raised its target for the federal funds rate by twenty-five
basis points on March 25, 1997, causing economic growth to slow somewhat during
the period. During the period, we shortened the Fund's average weighted maturity
from 58 days on June 30, 1996, to 55 days on June 30, 1997. The Fund's 7-day
yield began the period at 4.92% and fell slightly to 4.87% on June 30, 1997.4

The chart on the right illustrates how the Franklin U.S. Treasury Money Market
Portfolio performed against its benchmark, the Lipper Institutional U.S Treasury
Money Market Funds Index for the 1-, 3-, and 5-year periods ended June 30,
1997.5 Of course, past performance cannot predict future results.

GRAPHIC MATERIAL 6 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Performance Figures
Period ended June 30, 1997
- --------------------------------------------------------------------------------

7-Day Current Yield:4 4.87%

7-Day Effective Yield:4 4.99%

Average Weighted Maturity: 55 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(R) 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(R). 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.

4. Annualized and effective yields are for the 7-day period shown and reflect
fluctuations in interest rates on portfolio ivestments, 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 0.20% 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 4.92%, respectively. The Fund's manager may discontinue
these arrangements at any time, upon notice to the Fund's Board of Trustees.

5. Total return calculations show the change in the value of an investment over
the periods indicated and assume reinvestment of dividends and capital gains, if
any, at net asset value. Source for the Lipper Institutional U.S. Treasury Money
Market Funds Index is Lipper Analytical Services, Inc. As of June 30, 1997,
there were 114 funds in the institutional U.S. treasury money market fudns
category. This index is unmanaged, and one cannot invest directly in an index.

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, consisting 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, including 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, 1997 is shown below.

GRAPHIC MATERIAL 7 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

During the reporting period, the economy experienced strong growth, which raised
fears that inflation was on the rise. To eliminate a potential rise in
inflation, the Federal Reserve nudged the federal funds target rate higher by
twenty-five basis points on March 25, 1997. As a result, economic growth slowed
somewhat by the close of the period. The Fund's average weighted maturity
remained relatively unchanged, rising slightly from 38 days on June 30, 1996, to
42 days on June 30, 1997. The Fund's 7-day yield rose from 4.85% on June 30,
1996, to 5.09% on June 30, 1997.2

The graph to the right illustrates how the Franklin U.S. Government Agency Money
Market Fund performed versus its benchmark, the Lipper Institutional U.S.
Government Money Market Funds Index, for the 1- and 3-year periods ending June
30, 1997.3 Of course, past performance cannot guarantee future results.

GRAPHIC MATERIAL 8 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Performance Figures
Period ended June 30, 1997
- --------------------------------------------------------------------------------

7-Day Current Yield:2 5.09%

7-Day Effective Yield:2 5.23%

Average Weighted Maturity: 42 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 5.07% and 5.20%, respectively. The Fund's manager may discontinue
these arrangements at any time, upon notice to the Fund's Board of Trustees.

3. Total return calculations show the change in the value of an investment over
the periods indicated and assume reinvestment of dividends and capital gains, if
any, at net asset value. Source for the Lipper Institutional U.S. Government
Money Market Fund Index is Lipper Analytical Services, Inc. As of June 30, 1997,
there were 81 funds in the institutional U.S. government money market funds
category. This index is unmanaged, and one cannot invest directly in an index.

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.

<TABLE>
<CAPTION>
INSTITUTIONAL FIDUCIARY TRUST
- ------------------------------------------------------------------------------------------------------------------------------------
Statement of Investments in Securities and Net Assets, June 30, 1997

Value
Shares Money Market Portfolio (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mutual Funds 100.0%
185,105,166 The Money Market Portfolio (Note 1) ............................................................. $185,105,166
----------
Total Investments (Cost $185,105,166) 100.0%.......................................... 185,105,166
Liabilities in Excess of Other Assets ................................................. (17,007)
----------
Net Assets 100.0% .................................................................... $185,088,159
==========

At June 30, 1997, 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.
</TABLE>

Value
Shares Franklin U.S. Government Securities Money Market Portfolio (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mutual Funds 100.0%
136,748,226 The U.S. Government Securities Money Market Portfolio (Note 1) ................................. $136,748,226
----------
Total Investments (Cost $136,748,226) 100.0% ........................................ 136,748,226
Liabilities in Excess of Other Assets ............................................... (43,563)
----------
Net Assets 100.0% ................................................................... $136,704,663
==========

At June 30, 1997, 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.
</TABLE>

Face Value
Amount Franklin U.S. Treasury Money Market Portfolio (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
bShort Term Investments 100.1%
$ 510,000 U.S. Treasury Bills, 4.50%, 07/03/97............................................................. $ 509,873
1,090,000 U.S. Treasury Bills, 4.88% - 5.15%, 07/10/97..................................................... 1,088,624
4,930,000 U.S. Treasury Bills, 4.75% - 5.11%, 07/17/97..................................................... 4,919,235
515,000 U.S. Treasury Bills, 5.16% - 5.17%, 07/24/97..................................................... 513,302
3,000,000 U.S. Treasury Bills, 4.80%, 07/31/97............................................................. 2,988,000
3,330,000 U.S. Treasury Bills, 5.07%, 08/07/97............................................................. 3,312,648
11,005,000 U.S. Treasury Bills, 4.90% - 5.045%, 08/14/97.................................................... 10,937,384
12,230,000 U.S. Treasury Bills, 4.90% - 5.06%, 08/21/97..................................................... 12,144,777
8,140,000 U.S. Treasury Bills, 4.67% - 4.895%, 08/28/97.................................................... 8,076,273
8,410,000 U.S. Treasury Bills, 4.825% - 5.05%, 09/04/97.................................................... 8,333,826
5,990,000 U.S. Treasury Bills, 4.84% - 4.945%, 09/11/97.................................................... 5,931,364
6,970,000 U.S. Treasury Bills, 5.04% - 5.335%, 09/18/97.................................................... 6,890,970
3,280,000 U.S. Treasury Bills, 5.385%, 10/16/97............................................................ 3,227,502
----------
Total Investments (Cost $68,873,778)100.1%....................................................... 68,873,778
Liabilities in Excess of Other Assets(0.1)%...................................................... (58,677)
----------
Net Assets100.0%................................................................................. $68,815,101
==========

At June 30, 1997, there was no unrealized appreciation or depreciation for financial statement or income tax purposes.

bSecurities 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.
</TABLE>

Face Value
Amount Franklin U.S. Government Agency Money Market Fund (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
bGovernment Agencies 97.7%
$ 3,700,000 Federal Farm Credit Discount Notes, 5.43%, 07/02/97 ............................................ $ 3,699,442
4,000,000 Federal Farm Credit Discount Notes, 5.38%, 07/03/97 ............................................ 3,998,804
1,000,000 Federal Farm Credit Discount Notes, 5.45%, 07/07/97 ............................................ 999,092
5,500,000 Federal Farm Credit Discount Notes, 5.45%, 07/16/97 ............................................ 5,487,510
1,600,000 Federal Farm Credit Discount Notes, 5.49%, 07/31/97 ............................................ 1,592,680
1,010,000 Federal Farm Credit Discount Notes, 5.45%, 08/20/97 ............................................ 1,002,354
3,800,000 Federal Farm Credit Discount Notes, 5.44% - 5.45%, 08/22/97..................................... 3,770,109
2,100,000 Federal Farm Credit Discount Notes, 5.29%, 09/02/97 ............................................ 2,080,559
3,000,000 Federal Farm Credit Discount Notes, 5.30%, 09/10/97 ............................................ 2,968,642
4,450,000 Federal Farm Credit Discount Notes, 5.43% , 10/03/97 ........................................... 4,386,906
2,500,000 Federal Home Loan Bank Discount Notes, 5.51%, 07/03/97 ......................................... 2,499,235
8,000,000 Federal Home Loan Bank Discount Notes, 5.36%, 07/07/97 ......................................... 7,992,853
6,200,000 Federal Home Loan Bank Discount Notes, 5.36%, 07/08/97 ......................................... 6,193,538
4,000,000 Federal Home Loan Bank Discount Notes, 5.40%, 07/14/97 ......................................... 3,992,200
8,700,000 Federal Home Loan Bank Discount Notes, 5.47%, 07/17/97 ......................................... 8,678,849
3,500,000 Federal Home Loan Bank Discount Notes, 5.42%, 07/18/97 ......................................... 3,491,059
4,600,000 Federal Home Loan Bank Discount Notes, 5.41%, 07/25/97 ......................................... 4,583,409
1,200,000 Federal Home Loan Bank Discount Notes, 5.49%, 07/31/97 ......................................... 1,194,510
4,000,000 Federal Home Loan Bank Discount Notes, 5.29%, 08/07/97 ......................................... 3,978,252
3,008,000 Federal Home Loan Bank Discount Notes, 5.43%, 08/08/97 ......................................... 2,990,784
5,000,000 Federal Home Loan Bank Discount Notes, 5.51%, 08/11/97 ......................................... 4,968,624
2,300,000 Federal Home Loan Bank Discount Notes, 5.52%, 08/14/97 ......................................... 2,284,482
4,750,000 Federal Home Loan Bank Discount Notes, 5.405%, 08/15/97 ........................................ 4,717,908
8,700,000 Federal Home Loan Bank Discount Notes, 5.38% - 5.40%, 08/20/97 ................................. 8,634,853
4,100,000 Federal Home Loan Bank Discount Notes, 5.41% - 5.42%, 08/21/97 ................................. 4,068,556
1,700,000 Federal Home Loan Bank Discount Notes, 5.55%, 08/25/97 ......................................... 1,685,586
4,000,000 Federal Home Loan Bank Discount Notes, 5.45%, 08/28/97 ......................................... 3,964,877
3,500,000 Federal Home Loan Bank Discount Notes, 5.43%, 09/02/97 ......................................... 3,466,741
2,760,000 Federal Home Loan Bank Discount Notes, 5.30%, 09/04/97 ......................................... 2,733,588
2,000,000 Federal Home Loan Bank Discount Notes, 5.42%, 09/05/97 ......................................... 1,980,127
3,900,000 Federal Home Loan Bank Discount Notes, 5.47%, 09/10/97 ......................................... 3,857,927
6,000,000 Federal Home Loan Bank Discount Notes, 5.44%, 09/15/97 ......................................... 5,931,093
4,500,000 Federal Home Loan Bank Discount Notes, 5.43%, 09/22/97 ......................................... 4,443,665
3,000,000 Federal Home Loan Bank Discount Notes, 5.35%, 10/09/97 ......................................... 2,953,335
----------
Total Government Agencies (Cost $131,272,149) ............................................ 131,272,149
----------
bGovernment Securities 2.5 %
3,365,000 U.S. Treasury Bills, 4.895% - 5.43%, 07/24/97 - 09/04/97 (Cost $3,340,863) ..................... 3,340,863
----------
Total Investments (Cost $134,613,012) 100.2% .................................................. 134,613,012
Liabilities in Excess of Other Assets (0.2)%................................................... (251,300)
----------
Net Assets 100.0%.............................................................................. $134,361,712
==========

At June 30, 1997, there was no unrealized appreciation or depreciation for financial statement or income tax purposes.

bSecurities 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.
</TABLE>

Statements of Assets and Liabilities
June 30, 1997

Franklin Franklin Franklin
U.S. Government U.S. Treasury U.S. Government
Money Market Securities Money Money Market Agency Money
Portfolio Market Portfolio Portfolio Market Fund
---------- ----------- --------- ----------
Assets:
<S> <C> <C> <C> <C>
Investments in securities, at value and cost .................. $185,105,166 $136,748,226 $68,873,778 $134,613,012
Cash .......................................................... -- -- 34,450 30,294
Receivables:
Investment securities sold.................................... 281,205 184,384 -- --
From affiliates .............................................. 1,765 1,757 44,696 --
---------- ----------- --------- ----------
Total assets ................................................... 185,388,136 136,934,367 68,952,924 134,643,306
---------- ----------- --------- ----------
Liabilities:
Payables:
Management fees ................................................ -- -- 8,224 30,851
Distribution fees .............................................. -- -- -- 56,198
Shareholder servicing costs .................................... 3,735 5,714 3,470 --
Distributions to shareholders .................................. 269,129 184,384 118,770 119,169
Other payables to shareholders................................. 19,502 19,103 836 52,900
Accrued expenses and other liabilities ........................ 7,611 20,503 6,523 22,476
---------- ----------- --------- ----------
Total liabilities............................................... 299,977 229,704 137,823 281,594
---------- ----------- --------- ----------
Net assets, at value ........................................... $185,088,159 $136,704,663 $68,815,101 $134,361,712
========== =========== ========= ==========
Shares outstanding.............................................. 185,088,159 136,704,663 68,815,101 134,361,712
========== =========== ========= ==========
Net asset value per share ...................................... $1.00 $1.00 $1.00 $1.00
========== =========== ========= ==========

The accompanying notes are an integral part of these financial statements.
</TABLE>

Statements of Operations
For the year ended June 30, 1997

Franklin Franklin Franklin
U.S. Government U.S. Treasury U.S. Government
Money Market Securities Money Money Market Agency Money
Portfolio Market Portfolio Portfolio Market Fund
--------- ----------- --------- ----------
Investment income:
<S> <C> <C> <C> <C>
Dividends...................................................... $16,036,209 $7,307,099 $-- $--
Interest....................................................... -- -- 3,426,753 5,824,062
--------- ----------- --------- ----------
Total income.................................................... 16,036,209 7,307,099 3,426,753 5,824,062
--------- ----------- --------- ----------
Expenses:
Management fees (Note 5)....................................... -- -- 165,739 161,912
Administration fees (Note 5)................................... 150,356 70,196 -- --
Distribution fees (Note 5)..................................... -- -- -- 310,089
Shareholder servicing costs (Note 5)........................... 14,715 26,786 14,594 1,098
Registration and filing fees................................... 19,951 9,131 11,055 11,283
Reports to shareholders........................................ 14,896 8,832 3,108 4,339
Professional fees.............................................. 13,569 7,764 6,910 21,577
Trustees' fees and expenses.................................... 11,185 5,859 2,754 4,557
Rating service fees............................................ -- 6,211 -- --
Custodian fees................................................. -- -- 2,432 1,176
Other.......................................................... 5,313 3,791 9,157 1,584
Management fees waived by manager (Note 5)..................... -- -- (83,746) (32,190)
Administration fees waived by manager (Note 5)................. (79,928) (68,502) -- --
--------- ----------- --------- ----------
Total expenses.................................................. 150,057 70,068 132,003 485,425
--------- ----------- --------- ----------
Net investment income.......................................... 15,886,152 7,237,031 3,294,750 5,338,637
--------- ----------- --------- ----------
Net realized gain (loss) on investments......................... -- -- 1,688 (890)
--------- ----------- --------- ----------
Net increase in net assets resulting from operations............ $15,886,152 $7,237,031 $3,296,438 $5,337,747
========= =========== ========= ==========

The accompanying notes are an integral part of these financial statements.
</TABLE>

Statements of Changes in Net Assets
for the years ended June 30, 1997 and 1996

Franklin U.S. Government
Money Market Portfolio Securities Money Market Portfolio
---------------------- -----------------------
1997 1996 1997 1996
----------- ---------- ---------- -----------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Net investment income....................................... $ 15,886,152 $ 16,816,128 $ 7,237,031 $ 10,665,763
----------- ---------- ---------- -----------
Distributions to shareholders from net investment income..... (15,886,152) (16,816,128) (7,237,031) (10,665,763)
Increase (decrease) in net assets from capital share
transactions (Note 2)........................................ (156,206,396) 69,147,853 (15,468,445) (182,657,201)
----------- ---------- ---------- -----------
Net increase (decrease) in net assets......................... (156,206,396) 69,147,853 (15,468,445) (182,657,201)
Net assets (there is no undistributed net investment income
at beginning or end of year):
Beginning of year............................................. 341,294,555 272,146,702 152,173,108 334,830,309
----------- ---------- ---------- -----------
End of year................................................... $185,088,159 $341,294,555 $136,704,663 $152,173,108
=========== ========== ========== ===========

Franklin U.S. Treasury Franklin U.S. Government
Money Market Portfolio Agency Money Market Fund
---------------------- ----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Net investment income.......................................... $ 3,294,750 $ 8,166,890 $ 5,338,637 $ 3,850,557
Net realized gain (loss) from securities transactions.......... 1,688 7,492 (890) (2,545)
---------- ---------- ---------- ----------
Net increase in net assets resulting from operations........... 3,296,438 8,174,382 5,337,747 3,848,012
Distributions to shareholders from net investment income...... (3,296,438)a (8,174,382)b (5,337,747)c (3,848,012)d
Increase (decrease) in net assets from capital share
transactions (Note 2)......................................... (54,342,256) (77,778,057) 62,667,765 37,409,395
---------- ---------- ---------- ----------
Net increase (decrease) in net assets.......................... (54,342,256) (77,778,057) 62,667,765 37,409,395
Net assets (there is no undistributed net investment income
at beginning or end of year):
Beginning of year.............................................. 123,157,357 200,935,414 71,693,947 34,284,552
---------- ---------- ---------- ----------
End of year.................................................... $ 68,815,101 $123,157,357 $134,361,712 $71,693,947
========== ========== ========== ==========

aDistributions were increased by a net realized gain from security transactions of $1,688.
bDistributions were increased by a net realized gain from security transactions of $7,492.
cDistributions were decreased by a net realized loss from security transactions of $890.
dDistributions were decreased by a net realized loss from security transactions of $2,545.

The accompanying notes are an integral part of these financial statements.
</TABLE>

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 series. This report pertains to
the four money market funds (the Funds) included in the accompanying financial
statements, each a no-load, diversified series of the Trust. Each of the Funds
issues a separate series of the Trust's shares and maintains a totally separate
investment portfolio. The investment objective of the Funds is high current
income.

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 (the Portfolios),
respectively. Both are no-load, open-end, diversified management investment
companies having the same investment objective as the Money Market Fund and U.S.
Government Fund. The financial statements of the Portfolios, 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.

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:

Portfolio 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' portfolios 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,
respectively. At June 30, 1997, the Money Market Fund owned 10.44% of The Money
Market Portfolio and the U.S. Government Fund owned 52.87% 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:

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.

e. Accounting Estimates:

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

f. 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.

<TABLE>
<CAPTION>
2. TRUST SHARES

At June 30, 1997, there was an unlimited number of no par value shares of
beneficial interest authorized. Transactions in each of the Fund's shares at
$1.00 per share for the years ended June 30, 1997 and 1996 were as follows:

3. DISTRIBUTIONS AND CAPITAL LOSS CARRYOVERS

At June 30, 1997, for tax purposes, the Franklin U.S. Government Agency Money
Market Fund had capital loss carryovers as follows:

Capital loss carryovers expiring in: 2004 ...... $2,545
2005 ...... 890
-----
$3,435
=====

For tax purposes, the aggregate cost of securities is the same as for financial
statement purposes at June 30, 1997.

<TABLE>
<CAPTION>
4. PURCHASES AND SALES OF SECURITIES

Aggregate purchases and sales/maturities of securities for the year ended June
30, 1997 were as follows:

Franklin Franklin
U.S. Government Franklin U.S. U.S. Government
Money Market Securities Money Treasury Money Agency Money
Portfolio Market Portfolio Market Portfolio Market Fund
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Purchases............................... $2,058,092,923 $848,702,321 $482,847,911 $796,052,604
Sales................................... $2,214,302,557 $864,109,117 $540,879,020 $739,023,353
</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:

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

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 0.05%. Advisers agreed in
advance to waive management and administration fees as noted in the Statement of
Operations, for the year ended June 30, 1997.

a. Management/Administration Agreement: (cont.)

Under an agreement with Advisers, Franklin Templeton Services, Inc. (FT
Services) provides administrative services and facilities for the Franklin U.S.
Treasury Money Market Portfolio and the Franklin U.S. Government Agency Money
Market Fund. The fee is paid by Advisers and computed monthly based on average
daily net assets. It is not a separate expense of the Funds.

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, 1997 aggregated $57,193, of which $9,492 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 a maximum of 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, Distributors may also be reimbursed
for the above mentioned costs at an annual rate of 0.15% of the average daily
net assets of the remaining Funds. Except for the Franklin U.S. Government
Agency Money Market Fund, there were no payments under the distribution plans
for the year ended June 30, 1997. 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, FT Services, Investor Services, (all wholly-owned
subsidiaries of Franklin Resources, Inc.), and of the Portfolios.

<TABLE>
<CAPTION>
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 Assets3 Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Money Market Portfolio:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1993 $1.00 $.033 $(.033) $1.00 3.30% $222,282 0.20%1 3.25%
1994 1.00 .033 (.033) 1.00 3.35 218,254 0.151 3.24
1995 1.00 .053 (.053) 1.00 5.46 272,147 0.151 5.40
1996 1.00 .055 (.055) 1.00 5.61 341,295 0.191 5.45
1997 1.00 .053 (.053) 1.00 5.42 185,088 0.201 5.27
Franklin U.S. Government Securities Money Market Portfolio:
1993 1.00 .031 (.031) 1.00 3.18 310,382 0.191 3.12
1994 1.00 .032 (.032) 1.00 3.25 218,547 0.151 3.20
1995 1.00 .052 (.052) 1.00 5.32 334,830 0.151 5.26
1996 1.00 .054 (.054) 1.00 5.50 152,173 0.191 5.44
1997 1.00 .052 (.052) 1.00 5.29 136,705 0.201 5.14
Franklin U.S. Treasury Money Market Portfolio:
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
1997 1.00 .050 (.050) 1.00 5.09 68,815 0.20 4.97
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
1997 1.00 .049 (.049) 1.00 5.06 134,362 0.45 4.95
</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.
1Includes the Fund's share of the Portfolio's allocated expenses.
2For the period February 8, 1994 (effective date) to June 30, 1994.
3During the periods indicated, Advisers agreed in advance to waive a portion of
the Money Market Fund and the U.S. Government Fund's administration fees and the
management fees of the Portfolios. Advisers also agreed in advance to waive a
portion of the Franklin U.S. Treasury Money Market Portfolio and the Franklin
U.S. Government Agency Money Market Fund's management fees. 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:
1993.............................................. 0.49%1
1994.............................................. 0.251
1995.............................................. 0.241
1996.............................................. 0.241
1997.............................................. 0.241

Franklin U.S. Government Securities Money Market Portfolio:
1993.............................................. 0.451
1994.............................................. 0.251
1995.............................................. 0.231
1996.............................................. 0.261
1997.............................................. 0.261

Ratio of
Expenses
to Average
Net Assets
----------
Franklin U.S. Treasury Money Market Portfolio:
1993.............................................. 0.35%
1994.............................................. 0.30
1995.............................................. 0.30
1996.............................................. 0.30
1997.............................................. 0.33

Franklin U.S. Government Agency Money Market Fund:
19942............................................. 1.43*
1995.............................................. 0.47
1996.............................................. 0.47
1997.............................................. 0.48

INSTITUTIONAL FIDUCIARY TRUST

Report of Independent Auditors

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

We have audited the accompanying statements of assets and liabilities of the
four funds presented herein of the Institutional Fiduciary Trust including each
Fund's statement of investments in securities and net assets, as of June 30,
1997, 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.

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, 1997, 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 each
of the four funds presented herein of the Institutional Fiduciary Trust as of
June 30, 1997, 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 4, 1997

<TABLE>
<CAPTION>
THE MONEY MARKET PORTFOLIOS
- ------------------------------------------------------------------------------------------------------------------------------------
Statement of Investments in Securities and Net Assets, June 30, 1997

Face Value
Amount The Money Market Portfolio (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
aShort Term Investments 99.7%
Bankers' Acceptances 0.7%
$ 12,000,000 Toronto Dominion Bank, New York Branch, 5.56%, 09/25/97 (Cost $11,840,613) ................... $ 11,840,613
----------
Certificates of Deposit 35.2%
25,000,000 ABN-AMRO Bank NV, Chicago Branch, 5.69%, 07/16/97 ............................................ 25,000,000
50,000,000 Australia & NZ Banking Group, New York Branch, 5.66% - 5.71%, 08/08/97 - 10/23/97 ............ 50,000,260
25,000,000 Bank of Montreal, Chicago Branch, 5.71%, 07/30/97............................................. 25,000,099
75,000,000 Bank of Nova Scotia, Portland Branch, 5.64% - 5.70%, 07/25/97 - 09/18/97...................... 75,000,000
25,000,000 Bayerische Vereinsbank, New York Branch, 5.65%, 10/21/97...................................... 25,000,000
25,000,000 Commerzbank, AG, New York Branch, 5.68%, 07/10/97............................................. 24,999,871
75,000,000 Credit Agricole, New York Branch, 5.66% - 5.70%, 07/24/97 - 09/16/97.......................... 75,000,000
25,000,000 Den Danske Bank, New York Branch, 5.70%, 08/29/97............................................. 25,000,203
50,000,000 Deutsche Bank, AG, New York Branch, 5.44% - 5.70%, 07/17/97 - 09/15/97........................ 50,000,366
25,000,000 Landesbank Hessen Thueringen, New York Branch, 6.09%, 09/11/97................................ 25,024,054
75,000,000 Societe Generale, New York Branch, 5.64% - 5.70%, 07/15/97 - 09/26/97 ........................ 75,000,000
25,000,000 Svenska Handelsbanken, New York Branch, 5.69%, 07/11/97....................................... 25,000,068
75,000,000 Swiss Bank Corp., New York Branch, 5.43% - 5.67%, 08/26/97 - 09/19/97......................... 75,000,000
50,000,000 Westdeutsch Landesbank, New York Branch, 5.68% - 5.72%, 08/19/97 - 09/08/97................... 50,000,000
----------
Total Certificates of Deposit (Cost $625,024,921)........................................... 625,024,921
----------
Commercial Paper 44.4%
52,600,000 Abbey National North America, 5.28% - 5.60%, 07/01/97 - 08/21/97.............................. 52,392,250
20,000,000 American Express Credit Corp., 5.54%, 08/13/97 - 08/14/97..................................... 19,866,117
25,000,000 ANZ (DE), Inc., 5.60%, 07/08/97............................................................... 24,972,777
40,000,000 Associates Corp. of North America, 5.58% - 5.61%, 07/09/97 - 07/29/97......................... 39,887,933
25,000,000 B.B.V. Finance, Inc., 5.63%, 08/18/97......................................................... 24,812,333
25,000,000 BIL North America, Inc., 5.64%, 08/12/97...................................................... 24,835,500
25,000,000 Canadian Imperial Holdings, Inc., 5.275%, 08/25/97............................................ 24,798,524
25,000,000 CIESCO, L.P., 5.60%, 07/10/97................................................................. 24,965,000
30,000,000 Commonwealth Bank of Australia, 5.62%, 07/18/97............................................... 29,920,384
50,000,000 Den Danske Corp., Inc., 5.58% - 5.60%, 07/07/97 - 10/01/97.................................... 49,620,166
65,000,000 General Electric Capital Corp., 5.56% - 5.63%, 08/04/97 - 10/10/97............................ 64,394,888
65,000,000 Generale Bank, Inc., 5.62% - 5.64%, 07/15/97 - 07/31/97....................................... 64,768,058
55,000,000 Goldman Sachs Group, L.P., 5.56% - 5.57%, 09/04/97 - 09/23/97................................. 54,371,636
25,000,000 Halifax Building Society, 5.27%, 08/21/97..................................................... 24,813,355
75,000,000 Merrill Lynch & Co., Inc., 5.57% - 5.65%, 07/28/97 - 09/22/97................................. 74,256,302
75,000,000 Morgan Stanley Group, Inc., 5.60% - 5.61%, 08/20/97 - 08/27/97................................ 74,381,270
25,000,000 National Australian Funding (DE), Inc., 5.62%, 07/21/97....................................... 24,921,945
15,000,000 National Rural Utilities Cooperative Finance Corp., 5.64%, 08/01/97........................... 14,927,150
24,000,000 Royal Bank of Canada, 5.295%, 07/14/97........................................................ 23,954,110
50,000,000 Svenska Handelsbanken, Inc., 5.58% - 5.59%, 07/02/97 - 09/12/97............................... 49,712,744
----------
Total Commercial Paper (Cost $786,572,442).................................................... 786,572,442
----------
Total Investments before Repurchase Agreements (Cost $1,423,437,976).......................... 1,423,437,976
----------
bReceivables from Repurchase Agreements 19.4%
10,499,000 CIBC Wood Gundy Securities Corp., 5.95%, 07/01/97 (Maturity Value $10,333,708)
Collateral: U.S. Treasury Notes, 5.375%, 11/30/97............................................ 10,332,000
50,000,000 CIBC Wood Gundy Securities Corp., 5.95%, 07/01/97 (Maturity Value $49,676,209)
Collateral: U.S. Treasury Notes, 5.125%, 02/28/98 ........................................... 49,668,000
82,426,000 J. P. Morgan Securities, Inc., 5.95%, 07/01/97 (Maturity Value $82,378,613)
Collateral: U.S. Treasury Bills, 07/17/97 - 10/16/97
U.S. Treasury Bonds, 11.75%, 02/15/01
U.S. Treasury Notes, 5.125% - 8.875%, 07/31/97 - 05/31/02 ....................... 82,365,000
86,480,000 Morgan Stanley & Co., Inc., 5.75%, 07/01/97 (Maturity Value $82,378,156)
Collateral: U.S. Treasury Bills, 12/11/97 ................................................... 82,365,000
$ 61,354,000 SBC Warburg, Inc., 5.92%, 07/01/97 (Maturity Value $60,009,867)
Collateral: U.S. Treasury Notes, 5.625%, 11/30/98 ........................................... $ 60,000,000
35,000,000 UBS Securities, L.L.C., 5.90%, 07/01/97 (Maturity Value $34,232,609)
Collateral: U.S. Treasury Notes, 5.75%,12/31/98 ............................................. 34,227,000
24,426,000 UBS Securities, L.L.C., 5.90%, 07/01/97 (Maturity Value $25,777,224)
Collateral: U.S. Treasury Notes, 7.75%, 02/15/01............................................. 25,773,000
----------
Total Receivables from Repurchase Agreements (Cost $344,730,000) ............................. 344,730,000
----------
Total Investments (Cost $1,768,167,976) 99.7% ............................................... 1,768,167,976
Other Assets and Liabilities, Net 0.3% ...................................................... 5,378,013
----------
Net Assets 100.0% ........................................................................... $1,773,545,989
==========

At June 30, 1997, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.

PORTFOLIO ABBREVIATIONS:
L.L.C. - Limited Liability Corp.
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 Portfolio. 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.
</TABLE>

Face Value
Amount The U.S. Government Securities Money Market Portfolio (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
aShort Term Investments 100.1%
Government Securities 7.7%
$ 20,000,000 U.S. Treasury Bills, 5.43%, 08/21/97 (Cost $19,853,658)........................................ $ 19,853,658
----------
bReceivables from Repurchase Agreements 92.4%
10,745,000 Aubrey G. Lanston & Co., Inc., 5.85%, 07/01/97 (Maturity Value $10,601,723)
Collateral: U.S. Treasury Notes, 5.00%, 01/31/99.............................................. 10,600,000
10,840,000 B.A. Securities, Inc., 6.00%, 07/01/97 (Maturity Value $10,601,767)
Collateral: U.S. Treasury Bills, 07/10/97..................................................... 10,600,000
10,674,000 Barclays de Zoete Wedd Securities, Inc., 5.85%, 07/01/97 (Maturity Value $10,601,723)
Collateral: U.S. Treasury Notes, 6.375%, 05/15/99............................................. 10,600,000
10,545,000 Bear, Stearns & Co., Inc., 5.60%, 07/01/97 (Maturity Value $10,601,648)
Collateral: U.S. Treasury Notes, 6.50%, 08/15/97.............................................. 10,600,000
10,720,000 Chase Securities, Inc., 5.85%, 07/01/97 (Maturity Value $10,601,723)
Collateral: U.S. Treasury Notes, 5.625%, 10/31/97............................................. 10,600,000
10,824,000 CIBC Wood Gundy Securities Corp., 5.95%, 07/01/97 (Maturity Value $10,601,752)
Collateral: U.S. Treasury Notes, 5.25%, 12/31/97.............................................. 10,600,000
10,680,000 Citicorp Securities, Inc., 5.95%, 07/01/97 (Maturity Value $10,601,752)
Collateral: U.S. Treasury Notes, 5.875%, 03/31/99............................................. 10,600,000
26,277,000 J.P. Morgan Securities, Inc., 5.85%, 07/01/97 (Maturity Value $26,184,254)
Collateral: U.S. Treasury Bills, 07/03/97
U.S. Treasury Notes, 6.25% - 8.00%, 03/31/99 - 08/15/99........................... 26,180,000
35,175,000 J.P. Morgan Securities, Inc., 5.95%, 07/01/97 (Maturity Value $35,005,784)
Collateral: U.S. Treasury Bills, 08/14/97 - 03/05/98
U.S. Treasury Bonds, 13.125%, 05/15/01
U.S. Treasury Notes, 5.125% - 9.25%, 07/15/97 - 02/28/02 ......................... 35,000,000
10,600,000 Merrill Lynch Government Securities, Inc., 5.50%, 07/01/97 (Maturity Value $10,601,619)
Collateral: U.S. Treasury Notes, 6.00%, 08/31/97.............................................. 10,600,000
27,130,000 Morgan Stanley & Co., Inc., 5.75%, 07/01/97 (Maturity Value $26,184,182)
Collateral: U.S. Treasury Bills, 09/11/97..................................................... 26,180,000
36,030,000 Morgan Stanley & Co., Inc., 5.75%, 07/01/97 (Maturity Value $35,005,590)
Collateral: U.S. Treasury Bills, 07/31/97..................................................... 35,000,000
10,308,000 Sanwa Securities (USA) Co., L.P., 5.85%, 07/01/97 (Maturity Value $10,601,723)
Collateral: U.S. Treasury Notes, 8.875%, 11/15/98............................................. 10,600,000
10,840,000 SBC Warburg, Inc., 5.92%, 07/01/97 (Maturity Value $10,601,743)
Collateral: U.S. Treasury Notes, 4.75%, 09/30/98.............................................. 10,600,000
10,666,000 UBS Securities, L.L.C., 5.90%, 07/01/97 (Maturity Value $10,601,737)
Collateral: U.S. Treasury Notes, 5.50%, 09/30/97.............................................. 10,600,000
----------
Total Receivables from Repurchase Agreements (Cost $238,960,000)............................... 238,960,000
----------
Total Investments (Cost $258,813,658) 100.1%.................................................. 258,813,658
Liabilities in Excess of Other Assets (0.1)%.................................................. (184,481)
----------
Net Assets 100.0%............................................................................. $258,629,177
==========

At June 30, 1997, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.

PORTFOLIO ABBREVIATIONS:
L.L.C. - Limited Liability Corp.
L.P. - Limited Partnership

The accompanying notes are an integral part of these financial statements.
</TABLE>

THE MONEY MARKET PORTFOLIOS
- --------------------------------------------------------------------------------
Financial Statements

Statements of Assets and Liabilities
June 30, 1997

The U.S.
Government
The Money Securities Money
Market Portfolio Market Portfolio
----------- -----------
Assets:
Investment in securities,
at value and cost $1,423,437,976 $ 19,853,658
Receivables from
repurchase agreements,
at value and cost 344,730,000 238,960,000
Cash -- 9,280
Interest receivable 6,047,149 38,720
----------- -----------
Total assets 1,774,215,125 258,861,658
----------- -----------
Liabilities:
Payables:
Capital shares repurchased 284,775 184,384
Management fees 220,381 39,100
Bank overdraft 109,834 --
Accrued expenses and
other liabilities 54,146 8,997
----------- -----------
Total liabilities 669,136 232,481
----------- -----------
Net assets, at value $1,773,545,989 $258,629,177
=========== ===========
Shares outstanding 1,773,545,989 258,629,177
=========== ===========
Net asset value per share $1.00 $1.00
=========== ===========

Statements of Operations
for the year ended June 30, 1997
The The U.S.
Money Government
Market Securities Money
Portfolio Market Portfolio
--------- -----------
Investment income:
Interest $93,270,589 $14,434,535
--------- -----------
Expenses:
Management fees (Note 5) 2,547,891 404,358
Reports to shareholders 36,839 6,282
Professional fees 29,374 8,090
Custodian fees 21,365 9,193
Trustees' fees and expenses 7,532 1,150
Other 21,914 12,533
Management fees waived
by manager (Note 5) (118,382) (39,849)
--------- -----------
Total expenses 2,546,533 401,757
--------- -----------
Net investment income 90,724,056 14,032,778
--------- -----------
Net realized gain (loss)
on investments (931) 3,978
--------- -----------
Net increase in net assets
resulting from operations $90,723,125 $14,036,756
========= ===========

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

Statements of Changes in Net Assets
for the years ended June 30, 1997 and 1996

The U.S. Government Securities
The Money Market Portfolio Money Market Portfolio
------------------------ -----------------------
1997 1996 1997 1996
----------- ----------- ---------- -----------

Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Net investment income..................................... $ 90,724,056 $ 79,011,040 $ 14,032,778 $ 17,554,934
Net realized gain (loss) from security transactions ...... (931) -- 3,978 683
----------- ----------- ---------- -----------
Net increase in net assets resulting from operations ..... 90,723,125 79,011,040 14,036,756 17,555,617
Distributions to shareholders from
net investment income .................................... (90,723,125)a (79,011,040) (14,036,756)b (17,555,617)c
Increase (decrease) in net assets from capital share
transactions (Note 2)..................................... 223,460,742 244,510,834 (27,071,927) (188,953,282)
----------- ----------- ---------- -----------
Net increase (decrease) in net assets ..................... 223,460,742 244,510,834 (27,071,927) (188,953,282)
Net assets (there is no undistributed net investment
income at beginning or end of year):
Beginning of year ......................................... 1,550,085,247 1,305,574,413 285,701,104 474,654,386
----------- ----------- ---------- -----------
End of year ............................................... $1,773,545,989 $1,550,085,247 $258,629,177 $285,701,104
=========== =========== ========== ===========

aDistributions were decreased by a net realized loss from security transactions of $931.
bDistributions were increased by a net realized gain from security transactions of $3,978.
cDistributions were increased by a net realized gain from security transactions of $683.

The accompanying notes are an integral part of these financial statements.
</TABLE>

THE MONEY MARKET PORTFOLIOS
- --------------------------------------------------------------------------------
Notes to Financial Statements

1. SIGNIFICANT ACCOUNTING POLICIES

The Money Market Portfolios (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 Portfolios' investment objective is high
current income. Each of the Portfolios issues a separate series of shares and
maintains a totally separate and distinct investment portfolio. The shares of
the Money Market are issued in private placements and are thus exempt from
registration under the Securities Act of 1933.

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

a. Security Valuation:

Portfolio securities are valued at amortized cost, which approximates value.
Each of the Portfolios must maintain a dollar weighted average maturity of 90
days or less and only purchase instruments having remaining maturities of 397
days or less. If the 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 Board
has established procedures designed to stabilize, to the extent reasonably
possible, each Portfolio's price per share as computed for the purpose of sales
and redemptions at $1.00.

b. Income Taxes:

The 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 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:

Net investment income includes income, calculated on an accrual basis, and
estimated expenses which are accrued daily. The total available for distribution
is computed daily and includes the net investment income, plus or minus any
gains or losses on security transactions and any changes in unrealized portfolio
appreciation or depreciation. Distributions are normally declared each day the
New York Stock Exchange is open for business, equal to the total available for
distribution (as defined above), and are payable to shareholders of record as of
the close of business that day.

e. Accounting Estimates:

f. 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.

g. Repurchase Agreements:

The Portfolios may enter into repurchase agreements with government securities
dealers recognized by the Federal Reserve Board and/or member banks of the
Federal Reserve System. A repurchase agreement is accounted for as a loan by the
Portfolio to the seller, collateralized by underlying U.S. government
securities, which are delivered to the Portfolio's 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, 1997, all outstanding repurchase agreements held by the
Portfolios had been entered into on that date.

<TABLE>
<CAPTION>
2. TRUST SHARES

At June 30, 1997, there was an unlimited number of $0.01 par value shares of
beneficial interest authorized. Transactions in each of the Portfolios' shares
at $1.00 per share for the years ended June 30, 1997 and 1996 were as follows:

The U.S. Government
The Money Securities Money
Market Portfolio Market Portfolio
------------ -------------
1997
<S> <C> <C>
Shares sold .............................................................. $4,134,527,818 $ 937,979,469
Shares issued in reinvestment of distributions ........................... 90,722,912 14,037,460
Shares redeemed .......................................................... (4,001,789,988) (979,088,856)
------------ -------------
Net increase (decrease) .................................................. $ 223,460,742 $ (27,071,927)
============ =============
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)
============ =============
</TABLE>

3. DISTRIBUTIONS AND CAPITAL LOSS CARRYOVERS

At June 30, 1997, for tax purposes, the Money Market Portfolio had capital loss
carryovers as follows:

Capital loss carryovers expiring in: 2002 .................... $3,560
------
$3,560
======

From November 1, 1996 through June 30, 1997, The Money Market Portfolio incurred
$1,161 of net realized capital losses. As permitted by tax regulations, the
Portfolio intends to elect to defer these losses and treat them as having arisen
in the year ended June 30, 1998.

For tax purposes, the aggregate cost of securities is the same as for financial
reporting purposes at June 30, 1997.

4. PURCHASES AND SALES OF SECURITIES

Purchases and sales/maturities of securities (including repurchase agreements)
for the year ended June 30, 1997, were as follows:

The U.S. Government
The Money Securities Money
Market Portfolio Market Portfolio
------------ -------------
Purchases .................... $80,755,607,940 $60,181,996,328
Sales ........................ $80,533,562,518 $60,208,670,575

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. The Portfolios pay fees equal to an annualized
rate of 15/100 of 1% of their average daily net assets. Advisers agreed in
advance to waive a portion of its management fees for the Portfolios as noted in
the Statements of Operations for the year ended June 30, 1997.

<TABLE>
<CAPTION>
b. Other Affiliates and Related Party Transactions:

At June 30, 1997, the shares of The Money Market Portfolio were owned by the
following funds:

Percentage of
Shares Outstanding Shares
---------- ------------
<S> <C> <C>
Franklin Money Fund ............................................................ 1,502,261,263 84.70%
Institutional Fiduciary Trust - Money Market Portfolio ......................... 185,105,166 10.44%
Institutional Fiduciary Trust - Franklin Cash Reserves Fund .................... 76,597,681 4.32%
Franklin Templeton Money Fund Trust - Franklin Templeton Money Fund II ......... 9,581,879 0.54%

At June 30, 1997, the shares of The U.S. Government Securities Money Market
Portfolio were owned by the following funds:

Percentage of
Shares Outstanding Shares
---------- ------------
<S> <C> <C>
Institutional Fiduciary Trust - Franklin U.S. Government Securities Money Market Portfolio ... 136,748,226 52.87%
Franklin Federal Money Fund .................................................................. 121,880,951 47.13%
</TABLE>

Certain officers and trustees of the Portfolios are also officers and/or
directors of Advisers (a wholly-owned subsidiary of Franklin Resources), and of
the Franklin Money Fund, Institutional Fiduciary Trust, Franklin Templeton Money
Fund Trust and Franklin Federal Money Fund.

<TABLE>
<CAPTION>
6. FINANCIAL HIGHLIGHTS

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

Per Share Operating Performance Ratios/Supplemental Data
----------------------------------------- ------------------------------
Ratio of Net
Net Asset Distributions Net Assets Ratio of Investment
Year Value at Net From Net Net Asset at End Expenses Income
Ended Beginning Investment Investment Value 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
1997 1.00 0.056 (0.056) 1.00 5.47 1,773,546 0.15 5.34

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
1997 1.00 0.052 (0.052) 1.00 5.34 258,629 0.15 5.20
</TABLE>

*July 28, 1992 (effective date) 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.
++During the periods indicated, Advisers agreed in advance to waive a portion of
its management fees of the Portfolios. Had such action not been taken, the
ratios of expenses to average net assets would have been as follows:

Ratio of
Expenses
to Average
Net Assets
----------
The Money Market Portfolio
1993*............................................. 0.17%**
1994 ............................................. 0.17
1995 ............................................. 0.16
1996 ............................................. 0.16
1997 ............................................. 0.16

Ratio of
Expenses
to Average
Net Assets
----------
The U.S. Government Securities Money Market Portfolio
1993*............................................. 0.18%**
1994 ............................................. 0.17
1995 ............................................. 0.16
1996 ............................................. 0.17
1997 ............................................. 0.16

THE MONEY MARKET PORTFOLIOS

Report of Independent Accountants

To the Shareholders and Board of Trustees
of 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, 1997, 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 Portfolios'
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 Portfolios comprising the Money Market Portfolios as of June 30, 1997,
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 4, 1997

Franklin's IFT Money Market Portfolio

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 chart format the fund's securities breakdown by
sector as a percentage of the fund's total net assets.

Portfolio Breakdown on 6/30/97

Commercial Paper 44.5%
Certificates of Deposit 35.3%
Repurchase Agreements 19.5%
Bankers' Acceptances 0.7%

GRAPHIC MATERIAL (2)

This bar chart shows the comparison between Franklin's IFT Money Market
Portfolio's total returns of 5.42%, 17.42%, 25.34%, and 78.75% for the one-,
three-, five- and ten-year periods ended 6/30/97 and the Lipper Institutional
Money Market Funds Index's total returns of 5.19%, 16.66%, 24.06%, and 76.20%
for the one-, three-, five- and ten-year periods ended 6/30/97.

GRAPHIC MATERIAL (3)

This chart shows in pie chart format the fund's securities breakdown by
sector as a percentage of the fund's total net assets.

Portfolio Breakdown on 6/30/97

Repurchase Agreements 92.3%
Treasuries 7.7%

GRAPHIC MATERIAL (4)

This bar chart shows the comparison between Franklin U.S. Government
Securities Money Market Portfolio's total returns of 5.29%, 17.00%, and
24.65% for the one-, three- and five-year periods ended 6/30/97 and the
Lipper Institutional U.S. Government Money Market Funds Index's total returns
of 5.15%, 16.48%, and 23.60% for the one-, three- and five-year periods ended
6/30/97.

GRAPHIC MATERIAL (5)

This chart shows in pie chart format the fund's securities breakdown by
sector as a percentage of the fund's total net assets.

Portfolio Breakdown on 6/30/97

U.S. Treasuries 100.0%

GRAPHIC MATERIAL (6)

This bar chart shows the comparison between Franklin U.S. Treasury Money
Market Portfolio's total returns of 5.09%, 16.37%, and 23.90% for the one-,
three- and five-year periods ended 6/30/97 and the Lipper Institutional U.S.
Treasury Money Market Funds Index's total returns of 5.02%, 16.11%, and
23.14% for the one-, three- and five-year periods ended 6/30/97.

GRAPHIC MATERIAL (7)

This chart shows in pie chart format the fund's securities breakdown by
sector as a percentage of the fund's total net assets.

Portfolio Breakdown on 6/30/97

Federal Home Loan Bank 75.2%
Federal Farm Credit Bank 22.3%
Treasuries 2.5%

GRAPHIC MATERIAL (8)

This bar chart shows the comparison between Franklin U.S. Government Agency
Money Market Portfolio's total returns of 5.06% and 16.34% for the one- and
three-year periods ended 6/30/97 and the Lipper Institutional U.S. Government
Money Market Funds Index's total returns of 5.15% and 16.48% for the one- and
three-year periods ended 6/30/97.

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 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,
expenses and risks. 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, 1997

GRAPHIC PICTURE OMITTED

Dear Shareholder,

We are pleased to bring you the sixth annual report for Franklin's Institutional
Fiduciary Trust adjustable rate securities funds, cover- ing the period ended
June 30, 1997.

Franklin's Institutional Fiduciary Trust (the Trust) was developed specifically
to meet the needs of institutional investors. Part of the $201 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.

In the first half of 1997, the economy remained strong, surpassing the economic
growth experienced in the last half of 1996. With continued strong economic
growth and the fear of increased inflation, the Federal Reserve decided to raise
the target for the federal funds rate at their March 25, 1997 meeting. As a
result, the growth slowed somewhat before favorable conditions pushed the
economy towards new heights by the end of the reporting period.

Maintaining a long-term investment approach, the Funds' managers have focused on
principal stability, while pursuing current income. This strategy 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

Strong economic growth coupled with mild inflation characterized most of the
period under review. This relatively stable environment eliminated the need for
the Federal Reserve Board to make any significant adjustments to monetary
policy, and the federal funds rate (the interest rate banks charge each other
for overnight loans) remained at 5.25% through the first half of the fiscal
year. In the second half of the fiscal year, growth accelerated considerably.
Real gross domestic product growth for the quarter ended March 31, 1997 was
5.90%, which was considerably above the Federal Reserve's targeted long-term
growth rate of 2.50%. Moreover, unemployment levels trended downward to 4.80%,
which is the lowest level experienced in twenty-three years. Despite the
blistering economic growth, inflation indicators have continued to remain
relatively low. Low inflation indicators notwithstanding, the Federal Reserve
responded preemptively to the potential for higher prices by increasing the
federal funds rate twenty-five basis points on March 25, 1997. In response to
the rise in the federal funds rate, most other short-term interest rates also
rose slightly during the reporting period.

GRAPHIC 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 U.S. Government Securities Fund.

Mr. Coffey's area of expertise is mortgage-backed securities. Prior to joining
Franklin, he 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 identical
to the Fund's. The Mortgage Portfolio, in turn, invests primarily in
mortgage-backed securities created from pools of adjustable rate mortgages
(ARMS) issued or guaranteed by the U.S. government, its agencies or
instrumentalities.1

The Fund performed well over the last twelve months, as ARM securities benefited
from declining market volatility. After remaining in a fairly narrow band during
the second half of 1996, interest rates began to move higher, as strong economic
growth created concerns that inflation, currently dormant, would increase over
the subsequent months. It was feared that the Federal Reserve would be forced to
raise short-term interest rates in order to preempt such a rise in inflation.
Indeed, the Federal Reserve took such action in March, when they raised the
target for the federal funds rate 25 basis points to 5.50%. Further rate hikes
are possible if strong growth continues. Higher short-term interest rates, in
turn, could lead to lower ARM prices, due to their lagging coupon adjustments.

Overall, ARM price movements were modest, and their caps have not been reached.
ARM prepayments, which limit their potential appreciation, began to slow down as
interest rates moved higher. However, prepayments could rise again if the
differential between adjustable and fixed-rate mortgages narrows, enticing ARM
holders to refinance and lock in a fixed-rate. In an effort to reduce the
negative impact of ARM prepayments, we maintained an overweighting in seasoned,
non-convertible ARMS, which we believe are less likely to experience high levels
of prepayments. These securities performed relatively well during the reporting
period. By index, we tend to prefer those 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).

GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Going forward, we anticipate an environment with above-average growth and modest
inflation. This could potentially lead to stable or slightly higher interest
rates and a lower level of interest rate volatility. This should be beneficial
to ARM securities in general. We are actively positioning the Fund to perform
well in this environment. Our main concern continues to be stability of
principal while maintaining a yield which 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 $9.28 on June 30, 1996, to
$9.36 on June 30, 1997.

The Fund continued to pursue its investment objective of providing high current
income to its shareholders. For the twelve-month period ended June 30, 1997, the
Fund paid monthly income distributions totaling $0.58 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 6.32%,
based on an annualization of the dividends distributed during the last 30 days
of the period ($0.0486 per share) and the net asset value of $9.36 on June 30,
1997.

The Fund provided a cumulative total return of 7.37% for the twelve-month period
ended June 30, 1997. 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.

As illustrated by the chart, your fund's performance exceeded the six-month
Certicate of Deposits rate and underperformed the Lehman Brothers Short 1-2 Year
Government Index. Of course, unmanaged market indices have inherent performance
differentials in comparison with any fund. They do not pay management fees to
cover the salaries of security analysts or portfolio managers, nor do they pay
commissions to buy and sell bonds. Unlike indices, mutual funds are never fully
invested since they need to keep cash on hand to redeem shares or pay for
upcoming investments. The fund's performance figures include all fund expenses
and account fees. If operating expenses such as the fund's had been applied to
this index, the index's performance would have been lower. Please remember that
an index is simply a measure of performance, and one cannot invest directly in
an index.

GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Performance Figures3
Periods Ended June 30, 1997
- --------------------------------------------------------------------------------

Since
Inception
1-Year 5-Year (12/2/91)
Cumulative
Total Return:4 7.37% 22.84% 27.17%
Average Annual
Total Return:5 7.37% 4.20% 4.40%
30-Day Standardized Yield: 66.30%
Distribution Rate:7 6.32%
- --------------------------------------------------------------------------------

2. Performance assumes an initial $1,000,000 investment in the Fund from its
inception (12/2/91). It represents the change in value of an investment over the
period shown and assumes the reinvestment of dividends and capital gains. Past
performance is not indicative of future results. Indices are unmanaged, and one
cannot invest directly in an index.

3. Past expense reductions by the Fund's manager increased the Fund's total
returns.

4. Cumulative total return reflects the change in value of an investment over
the periods indicated, assuming reinvestment of dividends and capital gains, if
any.

5. 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, if any.

6. 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.

7. Based on an annualization of the Fund's dividends for the 30-day period
($0.0486 per share) and the net asset value of $9.36 per share on June 30, 1997.

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.

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.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, 1997.

The Franklin Institutional Adjustable Rate Securities Fund performed well over
the last twelve months, as ARM securities benefited from declining market
volatility. After remaining in a fairly narrow band during the second half of
1996, interest rates began to move higher, as strong economic growth created
concerns that inflation, currently dormant, would increase over the subsequent
months. It was feared the Federal Reserve would be forced to raise short-term
interest rates in order to preempt such a rise in inflation. Indeed, the Federal
Reserve took such action in March when they raised the target for the federal
funds rate 25 basis points to 5.50%. Further rate hikes are possible if strong
growth continues. Higher short-term interest rates, in turn, could lead to lower
ARM prices due to their lagging coupon adjustments.

Adjustable Rate Securities Portfolio
Top Five Issuers on June 30, 1997

Percent of
Issuer Total Net Assets
1. FNMA Resolution Trust Corporation 15.5%
2. Resolution Trust Corporation 15.2%
3. Residential Funding Corporation 14.2%
4. Saxon 7.5%
5. PHMS 7.2%
- --------------------------------------------------------------------------------

8. 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.

Performance Summary

The Franklin Institutional Adjustable Rate Securities Fund's share price, as
measured by net asset value, rose from $9.79 on June 30, 1996, to $9.93 on June
30, 1997.

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 twelve-months ended June 30, 1997, the Fund paid monthly
income distributions totaling $0.59 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 6.11% based
on the annualization of the dividends distributed over the last 30 days of the
period ($0.0499 per share) and the net asset value of $9.93 per share on June
30, 1997.

The Fund posted a cumulative total return of 7.66% for the twelve-month period
ended June 30, 1997. 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.

As shown in the chart, your fund's performance since inception has exceeded the
six-month Certicate of Deposits rate and closely tracked the Lehman Brothers
Short 1-2 Year Government Index. Of course, unmanaged market indices have
inherent performance differentials in comparison with any fund. They do not pay
management fees to cover the salaries of security analysts or portfolio
managers, nor do they pay commissions to buy and sell bonds. Unlike indices,
mutual funds are never fully invested since they need to keep cash on hand to
redeem shares or pay for upcoming investments. The fund's performance figures
include all fund expenses and account fees. If operating expenses such as the
fund's had been applied to this index, the index's performance would have been
lower. Please remember that an index is simply a measure of performance, and one
cannot invest directly in an index.

GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Performance Figures10
Periods Ended June 30, 1997
- --------------------------------------------------------------------------------

Since
Inception
1-Year 5-Year (1/3/92)
Cumulative
Total Return:11 7.66% 30.98% 34.68%
Average Annual
Total Return:12 7.66% 5.55% 5.57%
30-Day Standardized Yield:13 5.88%
Distribution Rate:14 6.11%
- --------------------------------------------------------------------------------

9. Performance assumes an initial $1,000,000 investment in the Fund from its
inception (1/3/92). It represents the change in value of an investment over the
period shown and assumes the reinvestment of dividends and capital gains. Past
Performance is not indicative of future results. Indices are unmanged, and one
cannot invest directly in an index.

10. Past expense reductions by the Fund's manager increased the Fund's total
returns.

11. Cumulative total return reflects the change in value of an investment over
the periods indicated, assuming reinvestment of dividends and capital gains, if
any.

12. 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, if any.

13. 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.

14. Based on an annualization of the Fund's dividends for the 30-day period
($0.0499 per share) and the net asset value of $9.93 per share on June 30, 1997.

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.

Value
Shares Franklin Institutional Adjustable U.S. Government Securities Fund (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
Mutual Funds 100.0%
<S> <C> <C>
792,283 U.S. Government Adjustable Rate Mortgage Portfolio (Note 1) ........................................... $7,471,224
----------
Total Investments (Cost $7,728,365) 100.0% ................................................. 7,471,224
Other Assets and Liabilities, Net ........................................................... 259
----------
Net Assets 100.0% .......................................................................... $7,471,483
==========

At June 30, 1997, the net unrealized depreciation based on the cost of investments
for income tax purposes of $7,949,316 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 ................................................................... (478,092)
----------
Net unrealized depreciation ......................................................................... $ (478,092)
==========

The accompanying notes are an integral part of these financial statements.
</TABLE>

Value
Shares Franklin Institutional Adjustable Rate Securities Fund (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mutual Funds 100.5%
481,288 Adjustable Rate Securities Portfolio (Note 1).......................................................... $4,779,198
----------
Total Investments (Cost $4,823,703) 100.5% ................................................. 4,779,198
Liabilities in Excess of Other Assets (0.5)% ............................................... (25,258)
----------

Net Assets 100.0% .......................................................................... $4,753,940
==========

At June 30, 1997, the net unrealized depreciation based on the cost of investments
for income tax purposes of $4,830,107 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....................................................................... (50,909)
----------
Net unrealized depreciation ......................................................................... $ (50,909)
==========

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

INSTITUTIONAL FIDUCIARY TRUST
- --------------------------------------------------------------------------------
Financial Statements

Statements of Assets and Liabilities
June 30, 1997

Franklin
Institutional Franklin
Adjustable U.S. Institutional
Government Adjustable Rate
Securities Fund Securities Fund
------------- -------------
Assets:
Investments in securities:
At identified cost $ 7,728,365 $4,823,703
------------- -------------
At value 7,471,224 4,779,198
Cash 364 203
Other assets 5,000 --
------------- -------------
Total assets 7,476,588 4,779,401
------------- -------------
Liabilities:
Payables:
Administration fees 307 196
Shareholder servicing costs 165 7
Distributions to shareholders -- 19,001
Other payables to shareholders 1,963 63
Accrued expenses and other
liabilities 2,670 6,194
------------- -------------
Total liabilities 5,105 25,461
------------- -------------
Net assets, at value $ 7,471,483 $4,753,940
============= =============
Net assets consist of:
Net unrealized depreciation on
investments (257,141) (44,505)
Accumulated net realized
loss from investments (30,335,403) (2,008,058)
Capital shares 38,064,027 6,806,503
------------- -------------
Net assets, at value $ 7,471,483 $4,753,940
============= =============
Shares outstanding 798,274 478,842
============= =============
Net asset value per share $9.36 $9.93
============= =============

Statements of Operations
for the year ended June 30, 1997

Franklin
Institutional Franklin
Adjustable U.S. Institutional
Government Adjustable Rate
Securities Fund Securities Fund
------------- -------------
Investment income:
Dividends $545,674 $293,499
------------- -------------
Expenses:
Administration fees (Note 5) 4,327 2,368
Shareholder servicing costs
(Note 5) 1,006 111
Reports to shareholders 3,933 1,351
Registration and filing fees 2,760 1,040
Professional fees 2,065 2,058
Rating service fees 1,000 --
Trustees' fees and expenses 385 442
Other expenses 372 757
------------- -------------
Total expenses 15,848 8,127
------------- -------------
Net investment income 529,826 285,372
------------- -------------
Realized and unrealized gain (loss)
on investments:
Net realized loss (142,155) (10,103)
Net unrealized appreciation 218,167 78,349
------------- -------------
Net realized and unrealized
gain on investments 76,012 68,246
------------- -------------
Net increase in net assets
resulting from operations $605,838 $353,618
============= =============

The accompanying notes are an integral part of these financial statements.
</TABLE>

Statements of Changes in Net Assets
for the years ended June 30, 1997 and 1996

Franklin Franklin
Institutional Adjustable Institutional Adjustable
U.S. Government Securities Fund Rate Securities Fund
--------------------------- ----------------------
1997 1996 1997 1996
-------- -------- -------- --------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Net investment income ............................................ $ 529,826 $ 858,385 $ 285,372 $ 529,470
Net realized loss from securitiy transactions .................... (142,155) (1,419,252) (10,103) (104,150)
Net unrealized appreciation on investments ....................... 218,167 1,534,083 78,349 108,261
-------- -------- -------- --------
Net increase in net assets resulting from operations ......... 605,838 973,216 353,618 533,581
Distributions to shareholders from undistributed net investment
income ............................................................ (544,447) (886,196) (285,372) (529,470)
Increase (decrease) in net assets from capital share transactions
(Note 3) .......................................................... (2,037,654) (15,659,221) 232,562 (4,147,031)
-------- -------- -------- --------
Net increase (decrease) in net assets ........................ (1,976,263) (15,572,201) 300,808 (4,142,920)
Net assets:
Beginning of year ................................................. 9,447,746 25,019,947 4,453,132 8,596,052
-------- -------- -------- --------
End of year ....................................................... $7,471,483 $ 9,447,746 $4,753,940 $4,453,132
======== ======== ======== ========
Undistributed net investment income included in net assets:
Beginning of year ................................................. $ 14,621 $ 42,432 $ -- $ --
======== ======== ======== ========
End of year ....................................................... $ -- $ 14,621 $ -- $ --
======== ======== ======== ========

The accompanying notes are an integral part of these financial statements.
</TABLE>

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 series. This report pertains 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) included in
the accompanying financial statements, each a no-load, diversified series of the
Trust. Each of the Funds issues a separate series of the Trust's shares and
maintains a totally separate investment portfolio. The investment objective of
the Funds is to seek high 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, management
investment company that has two separate and distinct diversified 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 in Securities and Net Assets, are included elsewhere
in this report and should be read in conjunction with the Funds' financial
statements.

a. Security Valuation:

The Funds hold Portfolio shares that are valued at their proportionate interest
in the net assets of the Mortgage Portfolio and the Securities Portfolio,
respectively. At June 30, 1997, the Adjustable U.S. Government Fund owned 2% of
the Mortgage Portfolio and the Adjustable Rate Securities Fund owned 18% 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
distrubutions is computed daily.

e. Accounting Estimates:

f. Expense Allocation:

<TABLE>
<CAPTION>
2. DISTRIBUTIONS AND CAPITAL LOSS CARRYOVERS

At June 30, 1997, for tax purposes, the Funds had accumulated net realized
capital loss carryovers as follows:

Franklin Institutional Franklin Institutional
Adjustable U.S. Government Adjustable Rate
Securities Fund Securities Fund
------------- -------------
Capital loss carryovers
<S> <C> <C>
Expiring in: 2001............... $ 6,444,126 $ 1,762
2002............... 20,034,597 1,111,813
2003............... 2,287,422 771,534
2004............... 1,064,617 4,914
2005............... 162,757 108,420
------------- -------------
$29,993,519 $1,998,443
============= =============
</TABLE>

In addition, from November 1, 1996 through June 30, 1997, the Adjustable U.S.
Government Fund and the Adjustable Rate Securities Fund incurred net realized
capital losses of approximately $120,933 and $3,211 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, 1998.

For tax purposes, the aggregate cost of securities and unrealized depreciation
are higher than for financial reporting purposes at June 30, 1997 by $220,951 in
the Adjustable U.S. Government Fund and by $6,404 in the Adjustable Rate
Securities Fund.

<TABLE>
<CAPTION>
3. TRUST SHARES

At June 30, 1997, there was an unlimited number of no par value shares of
beneficial interest authorized. Transactions in each of the Funds' shares for
the years ended June 30, 1997 and 1996 were as follows:

Franklin Institutional Franklin Institutional
Adjustable U.S. Government Adjustable Rate
Securities Fund Securities Fund
------------------- -------------------
Shares Amount Shares Amount
-------- ---------- -------- ----------
1997
<S> <C> <C> <C> <C>
Shares sold ............................................. 4,317 $ 40,168 83,275 $ 815,985
Shares issued in reinvestment of distributions .......... 6,691 62,259 4,876 48,022
Shares redeemed ......................................... (230,283) (2,140,081) (64,209) (631,445)
-------- ---------- -------- ----------
Net increase (decrease) ................................. (219,275) $ (2,037,654) 23,942 $ 232,562
======== ========== ======== ==========
1996
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)
======== ========== ======== ==========
</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, 1997, were as follows:

Franklin Institutional Franklin Institutional
Adjustable U.S. Government Adjustable Rate
Securities Fund Securities Fund
--------------- ---------------
Purchases .................... $ 584,692 $1,106,719
Sales ........................ $2,639,494 $ 851,880

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%.

b. Shareholder Services Agreement

c. Other Affiliates and Related Party Transactions

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

<TABLE>
<CAPTION>
6. FINANCIAL HIGHLIGHTS

Selected data for each 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 Net Realized Distributions Net Asset Ratio of Investment
Year Value at Net & Unrealized Total From From Net Value Net Assets at Expenses to Income to Portfolio
Ended Beginning Investment Gain (Loss) Investment Investment at End Total End of Year Average Net Average Turnover
June 30 of Period Income on Securities Operations Income of Period Return* (in 000's) Assets1** Net Assets Rate
- ------------------------------------------------------------------------------------------------------------------------------------
Franklin Institutional Adjustable U.S. Government Securities Fund:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1993 $ 9.99 $.48 $(.13) $.35 $(.48) $9.86 4.01% $ 861,311 .35% 4.89% 66.55%
1994 9.86 .36 (.47) (.11) (.35) 9.40 (1.11) 51,738 .07 3.49 29.47
1995 9.40 .55 (.15) .40 (.55) 9.25 4.41 25,020 .23 5.81 14.86
1996 9.25 .60 .03 .63 (.60) 9.28 6.98 9,448 .38 5.90 102.66
1997 9.28 .57 .09 .66 (.58) 9.36 7.37 7,471 .43 6.12 6.78

Franklin Institutional Adjustable Rate Securities Fund:
1993 10.04 .56 -- .56 (.56) 10.04 5.72 44,734 -- 5.56 74.77
1994 10.04 .44 (.27) .17 (.44) 9.77 1.65 31,198 .25 4.32 197.22
1995 9.77 .59 .01 .60 (.59) 9.78 6.35 8,596 .31 5.84 12.44
1996 9.78 .60 .01 .61 (.60) 9.79 6.41 4,453 .36 6.16 45.98
1997 9.79 .59 .14 .73 (.59) 9.93 7.66 4,754 .42 6.03 18.02

</TABLE>

1Includes 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 at net asset value.
**During the periods indicated, Advisers 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 Assets1
-----------
Franklin Institutional Adjustable
U.S. Government Securities Fund
1993.................................. .46%
1994.................................. .45
1995.................................. .54
1996.................................. .55
1997.................................. .61
Franklin Institutional Adjustable
Rate Securities Fund
1993.................................. .60
1994.................................. .50
1995.................................. .59
1996.................................. .61
1997.................................. .62

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, 1997, 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.

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, 1997 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 each
of the Funds as of June 30, 1997, 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 4, 1997

<TABLE>
<CAPTION>
ADJUSTABLE RATE SECURITIES PORTFOLIOS
- ------------------------------------------------------------------------------------------------------------------------------------
Statement of Investments in Securities and Net Assets, June 30, 1997 (unaudited)

Face Value
Amount U.S. Government Adjustable Rate Mortgage Portfolio (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Adjustable Rate Mortgage Securities 94.9%
Federal Home Loan Mortgage Corp. (FHLMC) 21.8%
$ 4,982,808 FHLMC, Cap 11.253%, Margin 1.75% + CMT, Resets Annually, 7.625%, 11/01/16 ................... $ 5,217,200
2,134,556 FHLMC, Cap 12.723%, Margin 2.189% + CMT, Resets Annually, 7.804%, 04/01/19 .................. 2,233,855
4,804,013 FHLMC, Cap 12.744%, Margin 2.00% + CMT, Resets Annually, 7.563%, 07/01/18 ................... 4,956,877
7,161,647 FHLMC, Cap 12.806%, Margin 2.23% + CMT, Resets Annually, 7.874%, 04/01/18 ................... 7,544,007
5,805,478 FHLMC, Cap 13.006%, Margin 2.00% + CMT, Resets Annually, 7.655%, 09/01/19 ................... 6,078,045
2,847,090 FHLMC, Cap 13.156%, Margin 1.915% + CMT, Resets Annually, 7.646%, 12/01/16 .................. 2,980,733
1,958,020 FHLMC, Cap 13.16%, Margin 2.115% + CMT, Resets Annually, 7.736%, 07/01/19 ................... 2,050,967
2,572,502 FHLMC, Cap 13.246%, Margin 2.175% + CMT, Resets Annually, 7.948%, 10/01/18 .................. 2,695,545
2,179,667 FHLMC, Cap 13.292%, Margin 2.115% + CMT, Resets Annually, 7.737%, 03/01/19 .................. 2,283,027
1,379,899 FHLMC, Cap 13.306%, Margin 2.057% + CMT, Resets Annually, 7.675%, 12/01/18 .................. 1,445,017
1,872,936 FHLMC, Cap 13.36%, Margin 2.242% + CMT, Resets Annually, 7.763%, 07/01/20 ................... 1,962,388
4,375,605 FHLMC, Cap 13.366%, Margin 2.102% + CMT, Resets Annually, 7.626%, 03/01/18 .................. 4,579,814
8,922,864 FHLMC, Cap 13.37%, Margin 2.04% + CMT, Resets Annually, 7.662%, 04/01/19 .................... 9,334,118
6,800,662 FHLMC, Cap 13.65%, Margin 2.249% + CMT, Resets Annually, 7.871%, 07/01/20 ................... 7,125,462
3,157,422 FHLMC, Cap 13.793%, Margin 2.214% + CMT, Resets Annually, 7.862%, 11/01/19 .................. 3,307,242
8,178,237 FHLMC, Cap 13.879%, Margin 2.089% + CMT, Resets Annually, 7.703%, 04/01/18 .................. 8,573,901
1,987,864 FHLMC, Cap 14.307%, Margin 1.957% + CMT, Resets Every 3 Years, 8.781%, 12/01/21 ............. 2,067,201
1,439,091 FHLMC, Cap 14.451%, Margin 2.00% + CMT, Resets Annually, 7.794%, 12/01/18 ................... 1,506,038
3,101,004 FHLMC, Cap 14.90%, Margin 2.546% + CMT, Resets Annually, 8.085%, 02/01/19 ................... 3,285,918
----------
Total Federal Home Loan Mortgage Corp. (Cost $78,135,613) ............................. 79,227,355
----------
Federal National Mortgage Association (FNMA) 69.2%
9,803,614 FNMA, Cap 12.00%, Margin 1.25% + COFI, Resets Monthly, 6.016%, 11/01/35 ..................... 9,715,676
2,431,160 FNMA, Cap 12.605%, Margin 2.536% + DR, Resets Semi-Annually, 7.711%, 11/01/18 ............... 2,522,207
16,146,634 FNMA, Cap 12.637%, Margin 2.00% + NCI, Resets Annually, 6.876%, 11/01/17 .................... 16,297,120
4,261,921 FNMA, Cap 12.64%, Margin 2.00% + CMT, Resets Annually, 7.728%, 03/01/19 ..................... 4,444,161
11,034,878 FNMA, Cap 12.66%, Margin 1.75% + DR, Resets Semi-Annually, 6.817%, 01/01/19 ................. 11,303,357
2,985,486 FNMA, Cap 12.662%, Margin 1.25% + COFI, Resets Monthly, 6.888%, 01/01/19 .................... 2,976,918
11,294,894 FNMA, Cap 12.705%, Margin 1.25% + COFI, Resets Monthly, 6.009%, 09/01/18 .................... 11,128,406
2,919,967 FNMA, Cap 12.787%, Margin 1.25% + COFI, Resets Monthly, 7.477%, 01/01/19 .................... 2,988,236
3,859,912 FNMA, Cap 12.788%, Margin 2.11% + CMT, Resets Annually, 7.762%, 11/01/20 .................... 4,058,736
5,287,903 FNMA, Cap 12.804%, Margin 1.75% + CMT, Resets Annually, 7.43%, 05/01/19 ..................... 5,525,383
3,136,243 FNMA, Cap 12.84%, Margin 2.762% + DR, Resets Semi-Annually, 7.916%, 06/01/17 ................ 3,282,110
5,181,712 FNMA, Cap 12.85%, Margin 2.078% + CMT, Resets Every 5 Years, 8.072%, 10/01/17 ............... 5,322,292
7,334,399 FNMA, Cap 12.89%, Margin 2.125% + DR, Resets Semi-Annually, 7.299%, 07/01/17 ................ 7,613,693
1,702,746 FNMA, Cap 12.911%, Margin 2.00% + DR, Resets Semi-Annually, 6.97%, 02/01/18 ................. 1,740,428
10,245,035 FNMA, Cap 12.938%, Margin 1.25% + COFI, Resets Monthly, 6.009%, 02/01/19 .................... 10,094,022
3,521,547 FNMA, Cap 12.993%, Margin 2.092% + CMT, Resets Annually, 7.741%, 12/01/19 ................... 3,705,900
5,441,578 FNMA, Cap 13.005%, Margin 1.97% + CMT, Resets Every 3 Years, 8.155%, 11/01/17 ............... 5,621,586
5,295,636 FNMA, Cap 13.01%, Margin 2.10% + CMT, Resets Annually, 7.775%, 06/01/19 ..................... 5,573,657
8,512,877 FNMA, Cap 13.03%, Margin 1.25% + COFI, Resets Monthly, 6.923%, 02/01/20 ..................... 8,491,169
5,569,518 FNMA, Cap 13.03%, Margin 1.75% + TB, Resets Semi-Annually, 7.087%, 12/01/20 ................. 5,711,987
5,981,132 FNMA, Cap 13.063%, Margin 2.175% + CMT, Resets Annually, 7.759%, 04/01/19 ................... 6,319,125
4,971,790 FNMA, Cap 13.083%, Margin 2.005% + CMT, Resets Annually, 7.575%, 06/01/19 ................... 5,228,087
4,591,925 FNMA, Cap 13.147%, Margin 1.895% + CMT, Resets Annually, 7.559%, 04/01/19 ................... 4,828,225
2,636,058 FNMA, Cap 13.202%, Margin 2.478% + DR, Resets Semi-Annually, 7.638%, 11/01/26 ............... 2,761,139
3,001,113 FNMA, Cap 13.249%, Margin 2.00% + CMT, Resets Annually, 7.61%, 06/01/19 ..................... 3,127,550
7,576,196 FNMA, Cap 13.281%, Margin 2.00% + CMT, Resets Annually, 7.775%, 10/01/19 .................... 7,973,947
6,487,875 FNMA, Cap 13.32%, Margin 1.25% + COFI, Resets Monthly, 7.447%, 04/01/03 ..................... 6,536,210
12,187,076 FNMA, Cap 13.452%, Margin 2.148% + CMT, Resets Annually, 7.801%, 09/01/22 ................... 12,769,130
5,857,260 FNMA, Cap 13.457%, Margin 1.903% + CMT, Resets Annually, 7.63%, 06/01/18 .................... 6,160,784
5,252,813 FNMA, Cap 13.662%, Margin 2.177% + CMT, Resets Annually, 7.858%, 03/01/21 ................... 5,530,109
Federal National Mortgage Association (FNMA) (cont.)
$ 7,978,769 FNMA, Cap 13.791%, Margin 2.143% + CMT, Resets Annually, 7.844%, 12/01/20 ................... $ 8,427,176
2,810,339 FNMA, Cap 13.797%, Margin 2.20% + CMT, Resets Annually, 7.75%, 03/01/19 ..................... 2,951,587
5,839,473 FNMA, Cap 13.80%, Margin 0.94% + DR, Resets Semi-Annually, 6.792%, 07/01/24 ................. 5,809,983
4,272,156 FNMA, Cap 13.887%, Margin 2.25% + CMT, Resets Annually, 7.772%, 02/01/19 .................... 4,493,582
3,199,488 FNMA, Cap 13.896%, Margin 2.25% + CMT, Resets Annually, 7.978%, 12/01/18 .................... 3,370,437
6,368,683 FNMA, Cap 14.069%, Margin 2.089% + CMT, Resets Annually, 7.755%, 01/01/19 ................... 6,702,402
2,144,088 FNMA, Cap 14.142%, Margin 2.118% + CMT, Resets Annually, 7.762%, 03/01/21 ................... 2,244,496
10,672,972 FNMA, Cap 14.354%, Margin 2.07% + CMT, Resets Every 5 Years, 8.073%, 05/01/21 ............... 10,952,603
3,236,327 FNMA, Cap 14.42%, Margin 2.099% + CMT, Resets Annually, 7.749%, 03/01/20 .................... 3,409,114
8,453,728 FNMA, Cap 14.887%, Margin 1.72% + CMT, Resets Annually, 7.262%, 01/01/16 .................... 8,708,185
3,143,915 FNMA, Cap 14.952%, Margin 2.523% + CMT, Resets Annually, 8.344%, 05/01/19 ................... 3,348,113
1,521,774 FNMA, Cap 15.381%, Margin 2.168% + CMT, Resets Annually, 7.771%, 02/01/20 ................... 1,601,667
----------
Total Federal National Mortgage Association (Cost $251,260,647)........................ 251,370,695
----------
Government National Mortgage Association (GNMA) 3.9%
7,289,663 GNMA, Cap 10.00%, Margin 1.50% + CMT, Resets Annually, 7.00%, 01/20/24 ...................... 7,486,339
6,458,273 GNMA, Cap 11.00%, Margin 2.50% + CMT, Resets Annually, 7.00%, 07/20/25 ...................... 6,689,995
----------
Total Government National Mortgage Association (Cost $13,870,347)...................... 14,176,334
----------
Total Long Term Investments (Cost $343,266,607) ....................................... 344,774,384
----------
c,dReceivables from Repurchase Agreements 3.8%
13,684,834 Joint Repurchase Agreement, 5.884%, 07/01/97, (Maturity Value $13,691,500) (Cost $13,689,263)
Aubrey G. Lanston & Co., Inc., (Maturity Value $1,357,040)
Collateral: U.S. Treasury Notes, 6.00% - 8.25%, 04/15/98 - 08/15/99
Barclays de Zoete Wedd Securities, Inc., (Maturity Value $1,357,040)
Collateral: U.S. Treasury Notes, 5.25% - 7.125%, 12/31/97 - 02/28/01
Chase Securities, Inc., (Maturity Value $799,623)
Collateral: U.S. Treasury Notes, 5.875%, 01/31/99
CIBC Wood Gundy Securities Corp., (Maturity Value $1,357,040)
Collateral: U.S. Treasury Notes, 5.375% - 6.875%, 11/30/97 - 07/31/99
Daiwa Securities America, Inc., (Maturity Value $1,357,040)
Collateral: U.S. Treasury Notes, 5.875% - 7.75%, 03/31/99 - 08/31/01
Donaldson, Lufkin & Jenrette Securities Corp., (Maturity Value $678,517)
Collateral: U.S. Treasury Notes, 5.00% - 6.25%, 09/30/97 - 07/31/98
Fuji Securities, Inc., (Maturity Value $1,357,040)
Collateral: U.S. Treasury Notes, 4.75% - 7.125%, 02/28/98 - 03/31/01
Sanwa Securities (USA) Co., L.P., (Maturity Value $1,357,040)
Collateral: U.S. Treasury Notes, 6.50% - 8.875%, 11/15/98 - 06/30/01
SBC Warburg, Inc., (Maturity Value $1,357,040)
Collateral: U.S. Treasury Notes, 5.50%, 11/15/98
The Nikko Securities Co. International, Inc., (Maturity Value $1,357,040)
Collateral: U.S. Treasury Notes, 5.125% - 7.875%, 12/31/98 - 08/15/01
UBS Securities, L.L.C., (Maturity Value $1,357,040)
Collateral: U.S. Treasury Notes, 5.00% - 6.00%, 07/31/98 - 04/15/00 ....................... 13,689,263
----------
Total Investments (Cost $356,955,870) 98.7% ...................................... 358,463,647
Other Assets and Liabilities, Net 1.3% ........................................... 4,649,358
----------
Net Assets 100.0% ................................................................ $363,113,005
==========

At June 30, 1997, the net unrealized appreciation based on the cost of investments
for income tax purposes of $356,955,870 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was
an excess of value over tax cost ......................................................... $ 3,871,908
Aggregate gross unrealized depreciation for all investments in which there was
an excess of tax cost over value ......................................................... (2,364,131)
----------
Net unrealized appreciation ............................................................... $ 1,507,777
==========

PORTFOLIO ABBREVIATIONS:
CMT - Constant Maturity Treasury Index
COFI - Eleventh District Cost of Funds Index
DR - Discount Rate
L.L.C. - Limited Liability Corp.
L.P. - Limited Partnership
NCI - National Median Cost of Funds Index
TB - Treasury Bill Rate

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

The accompanying notes are an integral part of these financial statements.
</TABLE>

Face Value
Amount Adjustable Rate Securities Portfolio (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Adjustable Rate Mortgage Securities 77.1%
$ 882,325 FNMA, Cap 12.00%, Margin 1.25% + COFI, Resets Monthly, 6.016%, 11/01/35 ........................ $ 874,410
844,975 FNMA, Cap 12.65%, Margin 1.75% + NCI, Resets Monthly, 6.50%, 10/01/28 .......................... 843,606
389,673 FNMA, Cap 13.86%, Margin 1.84% + CMT, Resets Annually, 7.529%, 08/01/16 ........................ 409,577
1,856,604 FNMA, Cap 14.68%, Margin 2.125% + CMT, Resets Every 3 Years, 8.565%, 08/01/22 .................. 1,957,214
798,163 GNMA, Cap 13.00%, Margin 1.50% + CMT, Resets Annually, 7.125%, 07/20/18 ........................ 823,441
948,250 Homeowners Federal Savings, Cap 13.00%, Margin 1.75% + CMT, Resets Annually, 7.393%, 01/25/18 .. 958,621
1,165,972 PHMS, Cap 11.67%, Margin 2.67% + CMT, Resets Annually, 8.294%, 07/25/22 ........................ 1,204,595
674,465 PHMS, Cap 12.02%, Margin 2.55% + CMT, Resets Annually, 8.158%, 04/25/22 ........................ 683,739
905,797 RFC, Cap 10.00%, Margin 0.85% + COFI, Resets Monthly, 5.565%, 02/25/22 ......................... 901,685
1,357,385 RFC, Cap 11.092%, Margin 2.456% + CMT, Resets Annually, 8.032%, 09/25/24 ....................... 1,406,590
1,375,071 RFC, Cap 11.46%, Margin 2.25% + CMT, Resets Annually, 7.662%, 11/25/22 ......................... 1,411,752
1,298,374 RTC, Cap 13.82%, Margin 0.92% + CMT, Resets Every 3 Years, 7.051%, 04/25/22 .................... 1,308,517
1,605,637 RTC, Cap 14.69%, Margin 1.55% + CMT, Resets Every 3 Years, 7.619%, 06/25/22 .................... 1,558,471
1,127,782 RTC, Cap 16.48%, Margin NACR - 0.15%, Resets Annually, 7.541%, 07/25/20 ........................ 1,138,707
1,595,760 Salomon Brothers Mortgage Securities, Cap 14.00%, Margin 0.96% + NACR, Resets Annually, 8.027%,
10/25/16 ...................................................................................... 1,594,763
1,344,605 Saxon Mortgage Securities Corp., Cap 11.68%, Margin 2.13% + 6 Month LIBOR, Resets Semi-Annually,
7.781%, 02/25/23 .............................................................................. 1,361,413
604,382 Saxon Mortgage Securities Corp., Cap 10.78%, Margin 2.78% + 6 Month LIBOR, Resets Semi-Annually,
8.384%, 05/25/24 .............................................................................. 617,722
808,363 Travelers Mortgage Services, Inc., Cap 13.95%, Margin 2.25% + CMT, Resets Annually, 7.758%,
12/25/18 ...................................................................................... 809,880
395,652 Western Federal Savings and Loan Association, Cap 13.00%, Margin 1.80% + COFI, Resets Monthly,
6.559%, 03/25/19 .............................................................................. 401,573
----------
Total Adjustable Rate Mortgage Securities (Cost $20,437,730).............................. 20,266,276
----------
Fixed Rate Mortgage Securities 3.9%
1,035,280 Countrywide Mortgage-Backed Securities, Inc., Series 1994-I, Class A8, 6.25%, 07/25/09
(Cost $1,006,810) ............................................................................. 1,013,342
----------
Other Adjustable Rate Securities 3.7%
909,558 SBA, Cap 12.625%, Margin -0.125% + Prime, Resets Quarterly, 8.375%, 08/25/20 (Cost $980,617) ... 977,775
----------
U.S. Government Securities 11.4%
1,000,000 U.S. Treasury Notes, 6.00%, 06/30/99 ........................................................... 998,751
2,000,000 U.S. Treasury Notes, 6.375%, 05/15/99 .......................................................... 2,010,626
----------
Total U.S Government Securities (Cost $3,010,547) ........................................ 3,009,377
----------
Total Long Term Investments (Cost $25,435,704) ........................................... 25,266,770
----------
c,dReceivables from Repurchase Agreements 3.3%
$ 857,319 Joint Repurchase Agreement, 5.884%, 07/01/97 (Maturity Value $857,323) (Cost $857,183)
Aubrey G. Lanston & Co., Inc., (Maturity Value $84,974)
Collateral: U.S. Treasury Notes, 6.00% - 8.25%, 04/15/98 - 08/15/99
Barclays de Zoete Wedd Securities, Inc., (Maturity Value $84,974)
Collateral: U.S. Treasury Notes, 5.25% - 7.125%, 12/31/97 - 02/28/01
Chase Securities, Inc., (Maturity Value $50,070)
Collateral: U.S. Treasury Notes, 5.875%, 01/31/99
CIBC Wood Gundy Securities Corp., (Maturity Value $84,974)
Collateral: U.S. Treasury Notes, 5.375% - 6.875%, 11/30/97 - 07/31/99
Daiwa Securities America, Inc., (Maturity Value $84,974)
Collateral: U.S. Treasury Notes, 5.875% - 7.75%, 03/31/99 - 08/31/01
Donaldson, Lufkin & Jenrette Securities Corp., (Maturity Value $42,487)
Collateral: U.S. Treasury Notes, 5.00% - 6.25%, 09/30/97 - 07/31/98
Fuji Securities, Inc., (Maturity Value $84,974)
Collateral: U.S. Treasury Notes, 4.75% - 7.125%, 02/28/98 - 03/31/01
Sanwa Securities (USA) Co., L.P., (Maturity Value $84,974)
Collateral: U.S. Treasury Notes, 6.50% - 8.875%, 11/15/98 - 06/30/01
SBC Warburg, Inc., (Maturity Value $84,974)
Collateral: U.S. Treasury Notes, 5.50%, 11/15/98
The Nikko Securities Co. International, Inc., (Maturity Value $84,974)
Collateral: U.S. Treasury Notes, 5.125% - 7.875%, 12/31/98 - 08/15/01
UBS Securities, L.L.C., (Maturity Value $84,974)
Collateral: U.S. Treasury Notes, 5.00% - 6.00%, 07/31/98 - 04/15/00 ......................... $ 857,183
----------
Total Investments (Cost $26,292,887) 99.4% ......................................... 26,123,953
Other Assets and Liabilities, Net 0.6% ............................................ 149,843
----------
Net Assets 100% .................................................................... $26,273,796
==========

At June 30, 1997, the net unrealized depreciation based on the cost of investments
for income tax purposes of $26,292,887 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was
an excess of value over tax cost ........................................................... $ 80,466
Aggregate gross unrealized depreciation for all investments in which there was
an excess of tax cost over value ........................................................... (249,400)
----------
Net unrealized depreciation ................................................................. $ (168,934)
----------

PORTFOLIO ABBREVIATIONS:
CMT - Constant Maturity Treasury Index
COFI - Eleventh District Cost of Funds Index
FNMA - Federal National Mortgage Association
GNMA - Government National Mortgage Association
L.L.C. - Limited Liability Corp.
L.P. - Limited Partnership
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
cFace amount for repurchase agreements is for the underlying collateral.

dSee Note 1 (g) regarding joint repurchase agreement.

The accompanying notes are an integral part of these financial statements.
</TABLE>

ADJUSTABLE RATE SECURITIES PORTFOLIOS
- --------------------------------------------------------------------------------
Financial Statements

Statements of Assets and Liabilities
June 30, 1997 (unaudited)

U.S. Government
Adjustable Adjustable
Rate Mortgage Rate Securities
Portfolio Portfolio
----------- -----------
Assets:
Investments in securities:
At identified cost $343,266,607 $25,435,704
=========== ===========
At value 344,774,384 25,266,770
Receivables from repurchase
agreements, at value and cost 13,689,263 857,183
Cash 1,594,548 --
Receivables:
Interest 2,559,711 157,394
Investment securities sold 7,644,032 3,042,954
----------- -----------
Total assets 370,261,938 29,324,301
----------- -----------
Liabilities:
Payables:
Investment securities purchased 7,069,538 3,029,802
Capital shares repurchased -- 13,836
Management fees 72,027 4,230
Accrued expenses and other
liabilities 7,368 2,637
----------- -----------
Total liabilities 7,148,933 3,050,505
----------- -----------
Net assets, at value $363,113,005 $26,273,796
=========== ===========

Net assets consist of:
Unrealized appreciation
(depreciation) on investments 1,507,777 (168,934)
Accumulated net realized loss
from investments (137,439,401) (2,750,378)
Capital shares 499,044,629 29,193,108
----------- -----------
Net assets, at value $363,113,005 $26,273,796
=========== ===========
Shares outstanding 38,514,963 2,645,078
=========== ===========
Net asset value per share $9.43 $9.93
=========== ===========

Statements of Operations
for the eight months ended June 30, 1997 (unaudited)

U.S. Government
Adjustable Adjustable
Rate Mortgage Rate Securities
Portfolio Portfolio
----------- -----------
Investment income:
Interest $16,838,189 $1,005,470
----------- -----------
Expenses:
Management fees (Note 5) 1,019,002 63,491
Professional fees 37,148 3,174
Trustees' fees and expenses 4,929 284
Custodian fees 2,636 161
Reports to shareholders 901 727
Other 19,948 3,688
Management fees waived by
manager (Note 5) (448,003) (31,159)
----------- -----------
Total expenses 636,561 40,366
----------- -----------
Net investment income 16,201,628 965,104
----------- -----------
Realized and unrealized gain (loss)
from investments:
Net realized gain (loss) 381,188 (6,662)
Net unrealized appreciation 2,117,221 235,217
----------- -----------
Net realized and unrealized gain
from investments 2,498,409 228,555
----------- -----------
Net increase in net assets
resulting from operations $18,700,037 $1,193,659
=========== ===========

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

Statements of Changes in Net Assets
for the eight months ended June 30, 1997 (unaudited)
and the year ended October 31, 1996

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
6/30/97 10/31/96 6/30/97 10/31/96
---------- ----------- ---------- ----------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Net investment income ......................................... $ 16,201,628 $ 29,813,817 $ 965,104 $ 1,391,109
Net realized gain (loss) from security transactions ........... 381,188 (419,303) (6,662) (37,828)
Net unrealized appreciation on investments .................... 2,117,221 2,011,283 235,217 139,862
---------- ----------- ---------- ----------
Net increase in net assets resulting from operations ...... 18,700,037 31,405,797 1,193,659 1,493,143
Distributions to shareholders from net investment income ....... (16,201,628) (29,813,817) (965,104) (1,391,109)
Increase (decrease) in net assets from capital share transactions
(Note 3) ....................................................... (45,816,401) (117,962,940) 5,510,994 (6,646,687)
---------- ----------- ---------- ----------
Net increase (decrease) in net assets ..................... (43,317,992) (116,370,960) 5,739,549 (6,544,653)
Net assets (there is no undistributed net investment income at
beginning or end of the period)
Beginning of period ........................................... 406,430,997 522,801,957 20,534,247 27,078,900
---------- ----------- ---------- ----------
End of period ................................................. $363,113,005 $406,430,997 $26,273,796 $20,534,247
========== =========== ========== ==========

The accompanying notes are an integral part of these financial statements.
</TABLE>

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,
diversified management investment company (mutual fund), registered under the
Investment Company Act of 1940, as amended. The Trust currently consists of two
separate portfolios (the Portfolios): 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. Portfolio securities which are traded both in the over-the-counter
market and on a securities exchange are valued according to the broadest and
most representative market as determined by the Manager. 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
Trustees (the Board). Securities for which market quotations are not available
are valued in accordance with procedures established by the Board.

b. Income Taxes:

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. 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. 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.

f. Accounting Estimates:

g. Joint 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, 1997, all
outstanding repurchase agreements held by the Portfolios had been entered into
on that date.

h. Mortgage Dollar Rolls:

The Portfolios may enter into mortgage dollar rolls in which the Portfolio sells
mortgage-backed securities and simultaneously contracts to repurchase
substantially similar, but not identical, securities on a specified future date,
generally at a price lower than the price of the security sold. The counterparty
receives all principal and interest payments, including prepayments, made on the
mortgage-backed security sold while it is the holder. Mortgage dollar rolls may
be renewed with a new sale and repurchase price fixed and a cash settlement made
without physical delivery of the securities subject to the contract, at the
renewal date. Mortgage dollar rolls are accounted for as collateralized
financing transactions.

2. DISTRIBUTIONS AND CAPITAL LOSS CARRYOVERS

At October 31, 1996, for tax purposes, the Portfolios had accumulated 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
2004.......................... 419,303 37,828
----------- ------------
$137,820,589 $2,743,716
=========== ============

For tax purposes, the aggregate cost of securities and unrealized appreciation
(depreciation) of the Portfolios are the same as for financial statement
purposes at June 30, 1997.

<TABLE>
<CAPTION>
3. TRUST SHARES

At June 30, 1997, there was an unlimited number of $.01 par value shares of
beneficial interest authorized. Transactions in each of the Portfolios' shares
were as follows:

U.S Government Adjustable Rate
Adjustable Rate Mortgage Portfolio Securities Portfolio
-------------------------------- ----------------------
Shares Amount Shares Amount
---------- ---------- ---------- ----------
Eight months ended June 30, 1997
<S> <C> <C> <C> <C>
Shares sold ....................................................... 9,346,194 $ 87,756,396 1,698,687 $16,752,699
Shares issued in reinvestment of distributions .................... 1,725,525 16,201,617 97,758 965,103
Shares redeemed ................................................... (15,953,829) (149,774,414) (1,234,703) (12,206,808)
---------- ---------- ---------- ----------
Net increase (decrease) ...................................... (4,882,110) $ (45,816,401) 561,742 $ 5,510,994
========== ========== ========== ==========
Year ended October 31, 1996
Shares sold ....................................................... 8,516,434 $ 79,504,622 741,450 $ 7,267,077
Shares issued in reinvestment of distributions .................... 3,196,067 29,832,645 141,790 1,391,107
Shares redeemed ................................................... (24,351,072) (227,300,207) (1,560,875) (15,304,871)
---------- ---------- ---------- ----------
Net decrease.................................................. (12,638,571) $(117,962,940) (677,635) $ (6,646,687)
========== ========== ========== ==========
</TABLE>

4. PURCHASES AND SALES OF SECURITIES

Purchases and sales of securities (excluding purchases and sales of short-term
securities and mortgage dollar roll transactions) for the eight months ended
June 30, 1997, were as follows:

U.S. Government
Adjustable Rate Adjustable Rate
Mortgage Portfolio Securities Portfolio
---------------- ------------------
Purchases ........................ $44,938,451 $30,298,704
Sales ............................ $82,432,589 $23,811,708

5.TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

a. Management Agreement:

Annualized Fee Rate 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 a portion of its management fees for the Portfolios aggregating
$479,162, for the eight months ended June 30, 1997.

<TABLE>
<CAPTION>
b. Other Affiliates and Related Party Transactions:

As of June 30, 1997, the shares of the Mortgage Portfolio were owned by the
following funds:

Percentage of
Shares Outstanding Shares
-------- ------------
<S> <C> <C>
Franklin Adjustable U.S. Government Securities Fund .................................. 37,722,680 98%
Franklin Institutional Adjustable U.S. Government Securities Fund .................... 792,283 2%

As of June 30, 1997, the shares of the Securities Portfolio were owned by the
following funds:

Percentage of
Shares Outstanding Shares
-------- ------------
<S> <C> <C>
Franklin Adjustable Rate Securities Fund ............................................. 2,162,305 82%
Franklin Institutional Adjustable Rate Securities Fund ............................... 481,288 18%
</TABLE>

The remaining 1,485 shares of the Securities Portfolio were owned by Franklin
Resources, Inc. (Resources).

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 Investors
Securities Trust and Institutional Fiduciary Trust.

6. FINANCIAL HIGHLIGHTS

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

Per Share Operating Performance Ratios/Supplemental Data
--------------------------------------------------- ----------------------------------
Ratio of Net
Net Asset Net Realized Distributions Ratio of Investment
Year Value at Net & Unrealized Total From From Net Net Asset Net Assets at Expenses to Income to Portfolio
Ended Beginning Investment Gain (Loss) Investment Investment Value at End Total End of Period Average Net Average Turnover
Oct. 31 of Period Income on Securities Operations Income of Period Return+ (in 000's) Assets++ Net Assets Rate
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Government Adjustable Rate Mortgage Portfolio
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
19931 $10.01 $.54 $(.10) $.44 $(.54) $ 9.91 4.53% $4,201,411 .30% 5.49% 66.44%
19932 9.91 .31 (.09) .22 (.31) 9.82 2.28 2,130,229 .27* 4.15* 76.55
1994 9.82 .41 (.63) (.22) (.41) 9.19 (2.22) 747,471 .02 4.01 56.43
1995 9.19 .57 .14 .71 (.57) 9.33 7.99 522,802 .18 6.17 20.16
1996 9.33 .59 .04 .63 (.59) 9.37 6.95 406,431 .25 6.31 24.63
19973 9.37 .40 .06 .46 (.40) 9.43 4.98 363,113 .25* 6.39* 12.24
Adjustable Rate Securities Portfolio
19931 10.00 .60 .02 .62 (.60) 10.02 6.36 44,656 -- 5.80 88.92
19932 10.02 .37 .01 .38 (.37) 10.03 3.83 124,309 .11* 4.76* 158.70
1994 10.03 .47 (.34) .13 (.47) 9.69 1.32 41,619 .25 4.55 192.06
1995 9.69 .63 .12 .75 (.63) 9.81 7.94 27,079 .25 6.36 50.29
1996 9.81 .61 .05 .66 (.61) 9.86 6.91 20,534 .25 6.19 46.78
19973 9.86 .40 .07 .47 (.40) 9.93 4.89 26,274 .25* 6.08* 102.54
</TABLE>

*Annualized
1For the year ended January 31, 1993.
2For the nine months ended October 31, 1993.
3For the eight months ended June 30, 1997.
+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, Advisers agreed in advance to waive a portion of
its management fees and to make 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
19931................................................ .42%
19932................................................ .41*
1994 ................................................ .42
1995 ................................................ .43
1996 ................................................ .42
19973................................................ .43*

Ratio of
Expenses
to Average
Net Assets
------------
Adjustable Rate Securities Portfolio
19931................................................ .64%
19932................................................ .47*
1994 ................................................ .43
1995 ................................................ .47
1996................................................. .47
19973................................................ .45*

Franklin Institutional Adjustable U.S. Government Securities Fund

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 chart format the fund's securities breakdown by
sector as a percentage of the fund's total net assets.

Portfolio Breakdown on 6/30/97

FNMA 69.2%
FHLMC 21.8%
GNMA 3.9%
Cash & Equivalents 5.1%

GRAPHIC MATERIAL (2)

The following line graph hypothetically compares the performance of the
Franklin Institutional Adjustable U.S. Government Securities Fund to that of
the Lehman Brothers Short 1-2 Year Government Index and the six-month
Certificate of Deposits rate, based on a $1,000,000 investment from 12/2/91
to 6/30/97.

Period Ending Lehman Brothers 6-Month CD Franklin

12/2/91 $ 1,000,000 $ 1,000,000 $ 1,000,000.00
12/31/91 $ 1,012,581 $ 1,003,000 $ 1,005,763.00
1/31/92 $ 1,012,682 $ 1,006,009 $ 1,008,015.94
2/29/92 $ 1,015,619 $ 1,009,128 $ 1,013,299.68
3/31/92 $ 1,016,634 $ 1,012,357 $ 1,018,313.33
4/30/92 $ 1,025,377 $ 1,015,394 $ 1,021,505.08
5/31/92 $ 1,033,991 $ 1,018,440 $ 1,027,510.94
6/30/92 $ 1,042,779 $ 1,021,394 $ 1,035,289.46
7/31/92 $ 1,053,520 $ 1,023,947 $ 1,035,689.49
8/31/92 $ 1,061,000 $ 1,026,507 $ 1,040,608.75
9/30/92 $ 1,069,700 $ 1,028,868 $ 1,045,261.68
10/31/92 $ 1,064,780 $ 1,031,337 $ 1,042,846.61
11/30/92 $ 1,063,821 $ 1,034,225 $ 1,045,257.02
12/31/92 $ 1,072,970 $ 1,036,810 $ 1,048,967.84
1/31/93 $ 1,082,734 $ 1,039,299 $ 1,053,160.53
2/28/93 $ 1,090,313 $ 1,041,689 $ 1,058,546.93
3/31/93 $ 1,093,257 $ 1,044,085 $ 1,059,898.00
4/30/93 $ 1,099,270 $ 1,046,486 $ 1,065,207.09
5/31/93 $ 1,096,852 $ 1,048,893 $ 1,066,864.38
6/30/93 $ 1,103,652 $ 1,051,411 $ 1,072,501.14
7/31/93 $ 1,106,301 $ 1,053,934 $ 1,076,720.47
8/31/93 $ 1,114,045 $ 1,056,358 $ 1,080,246.26
9/30/93 $ 1,117,499 $ 1,058,788 $ 1,079,227.31
10/31/93 $ 1,119,957 $ 1,061,223 $ 1,077,841.78
11/30/93 $ 1,120,965 $ 1,063,664 $ 1,070,334.30
12/31/93 $ 1,124,888 $ 1,066,110 $ 1,067,321.89
1/31/94 $ 1,131,188 $ 1,068,456 $ 1,070,664.35
2/28/94 $ 1,126,211 $ 1,071,234 $ 1,066,444.93
3/31/94 $ 1,123,282 $ 1,074,340 $ 1,058,205.49
4/30/94 $ 1,120,250 $ 1,077,778 $ 1,052,679.41
5/31/94 $ 1,122,154 $ 1,081,550 $ 1,057,198.89
6/30/94 $ 1,124,623 $ 1,085,552 $ 1,060,601.89
7/31/94 $ 1,133,845 $ 1,089,569 $ 1,063,907.89
8/31/94 $ 1,137,473 $ 1,093,600 $ 1,064,247.81
9/30/94 $ 1,136,563 $ 1,097,974 $ 1,063,584.19
10/31/94 $ 1,139,745 $ 1,103,135 $ 1,052,943.74
11/30/94 $ 1,136,098 $ 1,108,209 $ 1,052,265.51
12/31/94 $ 1,138,825 $ 1,113,750 $ 1,049,385.97
1/31/95 $ 1,152,718 $ 1,119,096 $ 1,058,110.70
2/28/95 $ 1,166,436 $ 1,124,356 $ 1,070,549.09
3/31/95 $ 1,173,085 $ 1,129,641 $ 1,077,185.82
4/30/95 $ 1,182,587 $ 1,134,837 $ 1,087,677.18
5/31/95 $ 1,199,024 $ 1,139,830 $ 1,111,161.72
6/30/95 $ 1,205,379 $ 1,144,732 $ 1,107,344.71
7/31/95 $ 1,211,045 $ 1,149,654 $ 1,115,462.50
8/31/95 $ 1,217,705 $ 1,154,597 $ 1,123,656.94
9/30/95 $ 1,223,185 $ 1,159,562 $ 1,131,706.44
10/31/95 $ 1,232,237 $ 1,165,012 $ 1,136,580.89
11/30/95 $ 1,241,355 $ 1,169,905 $ 1,146,766.09
12/31/95 $ 1,250,045 $ 1,174,702 $ 1,150,707.93
1/31/96 $ 1,259,920 $ 1,179,401 $ 1,159,176.88
2/29/96 $ 1,257,148 $ 1,184,000 $ 1,160,354.70
3/31/96 $ 1,257,902 $ 1,188,736 $ 1,167,769.01
4/30/96 $ 1,260,292 $ 1,193,610 $ 1,168,760.99
5/31/96 $ 1,264,073 $ 1,198,504 $ 1,172,494.40
6/30/96 $ 1,272,543 $ 1,203,538 $ 1,184,635.55
7/31/96 $ 1,277,633 $ 1,208,713 $ 1,188,636.95
8/31/96 $ 1,282,871 $ 1,213,789 $ 1,191,353.53
9/30/96 $ 1,293,134 $ 1,218,887 $ 1,200,495.77
10/31/96 $ 1,306,065 $ 1,224,007 $ 1,213,159.41
11/30/96 $ 1,314,424 $ 1,229,147 $ 1,219,434.83
12/31/96 $ 1,316,527 $ 1,234,310 $ 1,225,718.46
1/31/97 $ 1,322,715 $ 1,239,494 $ 1,233,390.57
2/28/97 $ 1,326,551 $ 1,244,948 $ 1,241,018.28
3/31/97 $ 1,327,081 $ 1,250,675 $ 1,244,749.79
4/30/97 $ 1,337,035 $ 1,256,428 $ 1,254,982.54
5/31/97 $ 1,345,993 $ 1,262,207 $ 1,262,666.75
6/30/97 $ 1,354,472 $ 1,268,013 $ 1,271,728.27

Franklin Institutional Adjustable Rate Securities Fund

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

GRAPHIC MATERIAL (3)

The following line graph hypothetically compares the performance of the
Franklin Institutional Adjustable Rate Securities Fund to that of the Lehman
Brothers Short 1-2 Year Government Index and the six-month Certificate of
Deposits rate, based on a $1,000,000 investment from 1/3/92 to 6/30/97.

Period Ending Lehman Brothers 6-Month CD Franklin

01/03/92 $ 1,000,000 $ 1,000,000 $ 1,000,000.00
01/31/92 $ 1,000,090 $ 1,002,710 $ 1,000,000.00
02/28/92 $ 1,002,991 $ 1,005,818 $ 1,002,902.00
03/31/92 $ 1,003,994 $ 1,009,037 $ 1,006,472.29
04/30/92 $ 1,012,628 $ 1,012,064 $ 1,015,035.44
05/29/92 $ 1,021,134 $ 1,015,100 $ 1,019,505.24
06/30/92 $ 1,029,814 $ 1,018,044 $ 1,028,228.56
07/31/92 $ 1,040,421 $ 1,020,589 $ 1,031,395.22
08/31/92 $ 1,047,808 $ 1,023,140 $ 1,038,847.57
09/30/92 $ 1,056,400 $ 1,025,494 $ 1,045,264.85
10/31/92 $ 1,051,540 $ 1,027,955 $ 1,047,028.83
11/30/92 $ 1,050,594 $ 1,030,833 $ 1,050,643.25
12/31/92 $ 1,059,629 $ 1,033,410 $ 1,057,011.16
01/31/93 $ 1,069,272 $ 1,035,890 $ 1,062,116.88
02/28/93 $ 1,076,757 $ 1,038,273 $ 1,070,078.49
03/31/93 $ 1,079,664 $ 1,040,661 $ 1,075,910.18
04/30/93 $ 1,085,602 $ 1,043,054 $ 1,081,496.06
05/31/93 $ 1,083,214 $ 1,045,453 $ 1,084,023.90
06/30/93 $ 1,089,930 $ 1,047,963 $ 1,087,528.35
07/31/93 $ 1,092,545 $ 1,050,478 $ 1,092,990.93
08/31/93 $ 1,100,193 $ 1,052,894 $ 1,097,076.86
09/30/93 $ 1,103,604 $ 1,055,315 $ 1,100,207.60
10/31/93 $ 1,106,032 $ 1,057,743 $ 1,102,841.94
11/30/93 $ 1,107,027 $ 1,060,175 $ 1,104,743.10
12/31/93 $ 1,110,902 $ 1,062,614 $ 1,108,983.28
01/31/94 $ 1,117,123 $ 1,064,952 $ 1,111,629.97
02/28/94 $ 1,112,207 $ 1,067,720 $ 1,109,156.58
03/31/94 $ 1,109,316 $ 1,070,817 $ 1,099,484.07
04/30/94 $ 1,106,321 $ 1,074,243 $ 1,099,312.95
05/31/94 $ 1,108,201 $ 1,078,003 $ 1,103,343.01
06/30/94 $ 1,110,639 $ 1,081,992 $ 1,105,752.62
07/31/94 $ 1,119,747 $ 1,085,995 $ 1,110,744.91
08/31/94 $ 1,123,330 $ 1,090,013 $ 1,116,964.78
09/30/94 $ 1,122,431 $ 1,094,374 $ 1,114,188.39
10/31/94 $ 1,125,574 $ 1,099,517 $ 1,117,522.87
11/30/94 $ 1,121,972 $ 1,104,575 $ 1,118,367.07
12/31/94 $ 1,124,665 $ 1,110,098 $ 1,122,393.27
01/31/95 $ 1,138,386 $ 1,115,426 $ 1,129,077.48
02/28/95 $ 1,151,933 $ 1,120,669 $ 1,139,293.08
03/31/95 $ 1,158,499 $ 1,125,936 $ 1,145,099.01
04/30/95 $ 1,167,882 $ 1,131,115 $ 1,155,015.67
05/31/95 $ 1,184,116 $ 1,136,092 $ 1,168,401.30
06/30/95 $ 1,190,392 $ 1,140,977 $ 1,175,970.11
07/31/95 $ 1,195,987 $ 1,145,883 $ 1,178,480.80
08/31/95 $ 1,202,565 $ 1,150,811 $ 1,189,576.64
09/30/95 $ 1,207,976 $ 1,155,759 $ 1,195,752.96
10/31/95 $ 1,216,915 $ 1,161,191 $ 1,204,489.71
11/30/95 $ 1,225,920 $ 1,166,068 $ 1,211,919.18
12/31/95 $ 1,234,502 $ 1,170,849 $ 1,222,137.24
01/31/96 $ 1,244,254 $ 1,175,533 $ 1,228,524.33
02/29/96 $ 1,241,517 $ 1,180,117 $ 1,228,901.96
03/31/96 $ 1,242,262 $ 1,184,838 $ 1,234,070.58
04/30/96 $ 1,244,622 $ 1,189,695 $ 1,239,079.87
05/31/96 $ 1,248,356 $ 1,194,573 $ 1,241,182.16
06/30/96 $ 1,256,720 $ 1,199,590 $ 1,251,142.11
07/31/96 $ 1,261,747 $ 1,204,749 $ 1,256,240.32
08/31/96 $ 1,266,920 $ 1,209,809 $ 1,261,221.19
09/30/96 $ 1,277,055 $ 1,214,890 $ 1,270,352.91
10/31/96 $ 1,289,826 $ 1,219,992 $ 1,286,021.81
11/30/96 $ 1,298,081 $ 1,225,116 $ 1,294,004.57
12/31/96 $ 1,300,158 $ 1,230,262 $ 1,296,743.51
01/31/97 $ 1,306,268 $ 1,235,429 $ 1,303,117.06
02/28/97 $ 1,310,057 $ 1,240,865 $ 1,308,026.23
03/31/97 $ 1,310,581 $ 1,246,573 $ 1,318,640.37
04/30/97 $ 1,320,410 $ 1,252,307 $ 1,327,552.35
05/31/97 $ 1,329,257 $ 1,258,068 $ 1,336,246.95
06/30/97 $ 1,337,631 $ 1,263,855 $ 1,347,040.81

July 15, 1997

Dear Shareholder:

We are pleased to bring you the annual report for the Franklin Cash Reserves
Fund (the Fund), for the period ended June 30, 1997.

The Fund is a series of Franklin's Institutional Fiduciary Trust, and it 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
(the 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.

The U.S. economy experienced strong growth during the reporting period, forcing
the Federal Reserve to take action against increasing inflationary pressures.
The result was a twenty-five basis point increase in their target for the
federal funds rate, causing the economy's first quarter momentum to slow
somewhat before the end of period. Within this environment, our managers adhered
to a disciplined investment strategy, enabling 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 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
- --------------------------------------------------------------------------------

Strong economic growth coupled with mild inflation characterized most of the
period under review. This relatively stable environment eliminated the need for
the Federal Reserve Board to make any significant adjustments to monetary
policy, and their target for the federal funds rate (the interest rate banks
charge each other for overnight loans) remained at 5.25% through the first half
of the fiscal year. In the second half of the fiscal year, growth accelerated
considerably. Real GDP growth for the quarter ended March 31, 1997 was 5.90%,
which is considerably above the Federal Reserve's targeted long-term growth rate
of 2.50%. Moreover, unemployment levels trended downward to 4.80%, which is the
lowest level experienced in twenty-three years. Despite the blistering economic
growth, inflation indicators have continued to remain relatively low. Low infla-
tion indicators notwithstanding, the Federal

GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Reserve responded preemptively to the potential for higher prices by increasing
the federal funds target rate twenty-five basis points on March 25, 1997. In
response to this action, most other short-term interest rates also rose slightly
during the reporting period.

Since we maintained a relatively neutral aver- age weighted maturity in the Fund
during the reporting period, the Fund's seven-day yield reflected the rise in
short-term interest rates. The Fund's seven-day yield, which began the period at
4.90%, ended the period at 5.15%.

GRAPHIC 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 by investing all of its assets in The Money Market Portfolio, whose
investment objective is the same as the Fund's. The Portfolio, in turn, invests
in various money market instruments such as:

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

The chart below illustrates the Portfolio's composition on June 30, 1997.

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:

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

During the first half of 1997, strong economic growth forced the Federal Reserve
to take action and raise the federal funds rate target by twenty-five basis
points. As a result, we maintained a relatively short average weighted maturity
through the period to help us adapt quickly to any further interest rate
changes. The Fund's average weighted maturity was shortened from 54 days on June
30, 1996, to 39 days as of June 30, 1997. The Fund's 7-day yield, which began
the period at 4.90% on June 30, 1996, rose to 5.15%, as of June 30, 1997.4

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, 1997

7-Day Current Yield:4 5.15%

7-Day Effective Yield:4 5.28%

Average Weighted Maturity: 39 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 4.97% and 5.09%, respectively.
Franklin Advisers, Inc. may discontinue these arrangements at any time, upon
notice to the Fund's Board of Trustees.

5. Source for the Lipper Institutional Money Market Funds Index is Lipper
Analytical Services, Inc. As of June 30, 1997, there were 173 funds in the
institutional money market funds category. This index is unmanaged, and one
cannot invest directly in an index. Total return calculations show the change in
the value of an investment over the periods indicated and assume reinvestment of
dividends and capital gains, if any, at net asset value.

Value
Shares Franklin Cash Reserves Fund (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
Mutual Funds 100.1%
<S> <C>
76,597,681 The Money Market Portfolio (Note 1).................................................. $76,597,681
----------
Total Investments (Cost $76,597,681) 100.1% .............................. 76,597,681
Liabilities in Excess of Other Assets (0.1)%.............................. (87,464)
----------
Net Assets 100.0% ........................................................ $76,510,217
==========

At June 30, 1997, 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.
</TABLE>

INSTITUTIONAL FIDUCIARY TRUST
- --------------------------------------------------------------------------------
Franklin Cash Reserves Fund

Financial Statements

Statement of Assets and Liabilities
June 30, 1997

Assets:
Investments in securities, at value
and cost $76,597,681
Receivables for investment securities sold 3,570
--------------
Total assets 76,601,251
--------------

Liabilities:
Payables:
Administration fees 43,895
Distribution fees 28,062
Shareholder servicing costs 686
Distributions to shareholders 2,895
Other payables to shareholders 8,600
Accrued expenses and other liabilities 6,896
--------------
Total liabilities 91,034
--------------

Net assets (equivalent to $1.00 per
share based on 76,510,217 outstanding
shares of beneficial interest) $76,510,217
==============

Statement of Operations
for the year ended June 30, 1997

Investment income:
Dividends $3,168,841
--------------
Expenses:
Administration fees (Note 4) $148,055
Distribution fees (Note 4) 133,095
Shareholder servicing costs
(Note 4) 6,575
Registration and filing fees 12,584
Reports to shareholders 5,215
Professional fees 3,799
Trustees' fees and expenses 2,502
Administration fees waived by
manager (Note 4) (104,156)
--------------
Total expenses 207,669
--------------
Net investment income $2,961,172
==============

Statements of Changes in Net Assets
for the years ended June 30, 1997 and 1996

1997 1996
---------- ----------
Increase (decrease) in
net assets:
Operations:
Net investment income $ 2,961,172 $ 1,251,420
Distributions to
shareholders from net
investment income (2,961,172) (1,251,420)
Increase in net assets
from capital share
transactions (Note 2) 46,129,160 15,835,753
---------- ----------
Net increase in
net assets 46,129,160 15,835,753
Net assets (there is no
undistributed net investment
income at beginning or
end of year):
Beginning of year 30,381,057 14,545,304
---------- ----------
End of year $76,510,217 $30,381,057
========== ==========

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 funds (the Funds). This report
pertains only to the Franklin Cash Reserves Fund (the Fund), a no-load,
diversified series of the Trust. Each of the Funds issues a separate series of
the Trust's shares and maintains a totally separate investment portfolio. The
Fund's investment objective is high current income.

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

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

a. Security Valuation:

The Fund holds Portfolio shares that are valued at its proportionate interest in
the net asset value of the Portfolio. At June 30, 1997, the Fund owned 4.32% 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:

e. Expense Allocation:

f. Accounting Estimates:

<TABLE>
<CAPTION>
2. TRUST SHARES

At June 30, 1997, 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:

Year Ended June 30,
-------------------------
1997 1996
----------- -----------
<S> <C> <C>
Shares sold...................................... $ 222,797,987 $ 146,315,356
Shares issued in reinvestment of distributions... 2,916,349 1,232,299
Shares redeemed.................................. (179,585,176) (131,711,902)
----------- -----------
Net increase.................................. $ 46,129,160 $ 15,835,753
=========== ===========
</TABLE>

3. PURCHASES AND SALES OF SECURITIES

Purchases and sales of securities for the year ended June 30, 1997 aggregated
$167,688,108 and $121,495,683, respectively.

4. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

a. Administration Agreement:

Under the terms of an administration agreement, Franklin Advisers, Inc.
(Advisers), provides various administrative, statistical, and other services,
and receives fees computed monthly based on the Fund's average daily net assets
at an annualized rate of 0.25%.

For the year ended June 30, 1997, Advisers agreed in advance to waive a portion
of the 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, 1997 aggregated $6,575, 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 a maximum of 0.25% 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.

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 of the Portfolio.

<TABLE>
<CAPTION>
5. FINANCIAL HIGHLIGHTS

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

Year Ended June 30,
-------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value at beginning of period........................................ $1.00 $1.00 $1.00
Net investment income......................................................... .050 .052 .052
Distributions from net investment income...................................... (.050) (.052) (.052)
-------- -------- --------
Net asset value at end of period.............................................. $1.00 $1.00 $1.00
======== ======== ========
Total Return*................................................................. 5.11% 5.35% 5.34%

Ratios/Supplemental Data
Net assets at end of period (in 000's)........................................ $76,510 $30,381 $14,545
Ratio of expenses to average net assets1,2.................................... .50% .49% .40%
Ratio of expenses to average net assets (before fee waiver)1,2................ .69% .73% .79%
Ratio of net investment income to average net assets.......................... 5.00% 5.10% 5.69%

*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.
1Includes the Fund's share of the Portfolio's allocated expenses.
2During the periods indicated, Advisers agreed in advance to waive a portion of
its administration fees of the Fund and its management fees of the Portfolio.

</TABLE>

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, 1997, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the 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,
1997, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and its financial
highlights for each of the periods presented, in conformity with generally
accepted accounting principles.

COOPERS & LYBRAND L.L.P.

San Francisco, California
August 4, 1997

Face Value
Amount The Money Market Portfolio (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
aShort Term Investments 99.7%
Bankers' Acceptances 0.7%
<S> <C> <C>
$ 12,000,000 Toronto Dominion Bank, New York Branch, 5.56%, 09/25/97 (Cost $11,840,613) ... $ 11,840,613
----------
Certificates of Deposit 35.2%
25,000,000 ABN-AMRO Bank NV, Chicago Branch, 5.69%, 07/16/97 ............................ 25,000,000
50,000,000 Australia & NZ Banking Group, New York Branch, 5.66% - 5.71%,
08/08/97 - 10/23/97 ......................................................... 50,000,260
25,000,000 Bank of Montreal, Chicago Branch, 5.71%, 07/30/97............................. 25,000,099
75,000,000 Bank of Nova Scotia, Portland Branch, 5.64% - 5.70%, 07/25/97 - 09/18/97...... 75,000,000
25,000,000 Bayerische Vereinsbank, New York Branch, 5.65%, 10/21/97...................... 25,000,000
25,000,000 Commerzbank, AG, New York Branch, 5.68%, 07/10/97............................. 24,999,871
75,000,000 Credit Agricole, New York Branch, 5.66% - 5.70%, 07/24/97 - 09/16/97.......... 75,000,000
25,000,000 Den Danske Bank, New York Branch, 5.70%, 08/29/97............................. 25,000,203
50,000,000 Deutsche Bank, AG, New York Branch, 5.44% - 5.70%, 07/17/97 - 09/15/97........ 50,000,366
25,000,000 Landesbank Hessen Thueringen, New York Branch, 6.09%, 09/11/97................ 25,024,054
75,000,000 Societe Generale, New York Branch, 5.64% - 5.70%, 07/15/97 - 09/26/97 ........ 75,000,000
25,000,000 Svenska Handelsbanken, New York Branch, 5.69%, 07/11/97....................... 25,000,068
75,000,000 Swiss Bank Corp., New York Branch, 5.43% - 5.67%, 08/26/97 - 09/19/97......... 75,000,000
50,000,000 Westdeutsch Landesbank, New York Branch, 5.68% - 5.72%, 08/19/97 - 09/08/97... 50,000,000
----------
Total Certificates of Deposit (Cost $625,024,921)........................ 625,024,921
----------
Commercial Paper 44.4%
52,600,000 Abbey National North America, 5.28% - 5.60%, 07/01/97 - 08/21/97.............. 52,392,250
20,000,000 American Express Credit Corp., 5.54%, 08/13/97 - 08/14/97..................... 19,866,117
25,000,000 ANZ (DE), Inc., 5.60%, 07/08/97............................................... 24,972,777
40,000,000 Associates Corp. of North America, 5.58% - 5.61%, 07/09/97 - 07/29/97......... 39,887,933
25,000,000 B.B.V. Finance, Inc., 5.63%, 08/18/97......................................... 24,812,333
25,000,000 BIL North America, Inc., 5.64%, 08/12/97...................................... 24,835,500
25,000,000 Canadian Imperial Holdings, Inc., 5.275%, 08/25/97............................ 24,798,524
25,000,000 CIESCO, L.P., 5.60%, 07/10/97................................................. 24,965,000
30,000,000 Commonwealth Bank of Australia, 5.62%, 07/18/97............................... 29,920,384
50,000,000 Den Danske Corp., Inc., 5.58% - 5.60%, 07/07/97 - 10/01/97.................... 49,620,166
65,000,000 General Electric Capital Corp., 5.56% - 5.63%, 08/04/97 - 10/10/97............ 64,394,888
65,000,000 Generale Bank, Inc., 5.62% - 5.64%, 07/15/97 - 07/31/97....................... 64,768,058
55,000,000 Goldman Sachs Group, L.P., 5.56% - 5.57%, 09/04/97 - 09/23/97................. 54,371,636
25,000,000 Halifax Building Society, 5.27%, 08/21/97..................................... 24,813,355
75,000,000 Merrill Lynch & Co., Inc., 5.57% - 5.65%, 07/28/97 - 09/22/97................. 74,256,302
75,000,000 Morgan Stanley Group, Inc., 5.60% - 5.61%, 08/20/97 - 08/27/97................ 74,381,270
25,000,000 National Australian Funding (DE), Inc., 5.62%, 07/21/97....................... 24,921,945
15,000,000 National Rural Utilities Cooperative Finance Corp., 5.64%, 08/01/97........... 14,927,150
$ 24,000,000 Royal Bank of Canada, 5.295%, 07/14/97........................................ $ 23,954,110
50,000,000 Svenska Handelsbanken, Inc., 5.58% - 5.59%, 07/02/97 - 09/12/97............... 49,712,744
----------
Total Commercial Paper (Cost $786,572,442)............................... 786,572,442
----------
Total Investments before Repurchase Agreements (Cost $1,423,437,976).......... 1,423,437,976
----------
bReceivables from Repurchase Agreements 19.4%
10,499,000 CIBC Wood Gundy Securities Corp., 5.95%, 07/01/97 (Maturity Value $10,333,708)
Collateral: U.S. Treasury Notes, 5.375%, 11/30/97............................ 10,332,000
50,000,000 CIBC Wood Gundy Securities Corp., 5.95%, 07/01/97 (Maturity Value $49,676,209)
Collateral: U.S. Treasury Notes, 5.125%, 02/28/98 ........................... 49,668,000
82,426,000 J. P. Morgan Securities, Inc., 5.95%, 07/01/97 (Maturity Value $82,378,613)
Collateral: U.S. Treasury Bills, 07/17/97 - 10/16/97
U.S. Treasury Bonds, 11.75%, 02/15/01
U.S. Treasury Notes, 5.125% - 8.875%, 07/31/97 - 05/31/02 ....... 82,365,000
86,480,000 Morgan Stanley & Co., Inc., 5.75%, 07/01/97 (Maturity Value $82,378,156)
Collateral: U.S. Treasury Bills, 12/11/97 ................................... 82,365,000
61,354,000 SBC Warburg, Inc., 5.92%, 07/01/97 (Maturity Value $60,009,867)
Collateral: U.S. Treasury Notes, 5.625%, 11/30/98 ........................... 60,000,000
35,000,000 UBS Securities, L.L.C., 5.90%, 07/01/97 (Maturity Value $34,232,609)
Collateral: U.S. Treasury Notes, 5.75%,12/31/98 ............................. 34,227,000
24,426,000 UBS Securities, L.L.C., 5.90%, 07/01/97 (Maturity Value $25,777,224)
Collateral: U.S. Treasury Notes, 7.75%, 02/15/01............................. 25,773,000
----------
Total Receivables from Repurchase Agreements (Cost $344,730,000) ........ 344,730,000
----------
Total Investments (Cost $1,768,167,976) 99.7% ..................... 1,768,167,976
Other Assets and Liabilities, Net 0.3% ............................ 5,378,013
----------
Net Assets 100.0% ................................................. $1,773,545,989
==========

At June 30, 1997, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.

PORTFOLIO ABBREVIATIONS:
L.L.C. - Limited Liability Corp.
L.P. - Limited Partnership

The accompanying notes are an integral part of these financial statements.
</TABLE>

Face Value
Amount The U.S. Government Securities Money Market Portfolio (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
aShort Term Investments 100.1%
Government Securities 7.7%
<S> <C> <C>
$ 20,000,000 U.S. Treasury Bills, 5.43%, 08/21/97 (Cost $19,853,658)........................ $ 19,853,658
----------
bReceivables from Repurchase Agreements 92.4%
10,745,000 Aubrey G. Lanston & Co., Inc., 5.85%, 07/01/97 (Maturity Value $10,601,723)
Collateral: U.S. Treasury Notes, 5.00%, 01/31/99.............................. 10,600,000
10,840,000 B.A. Securities, Inc., 6.00%, 07/01/97 (Maturity Value $10,601,767)
Collateral: U.S. Treasury Bills, 07/10/97..................................... 10,600,000
10,674,000 Barclays de Zoete Wedd Securities, Inc., 5.85%, 07/01/97 (Maturity Value $10,601,723)
Collateral: U.S. Treasury Notes, 6.375%, 05/15/99............................. 10,600,000
10,545,000 Bear, Stearns & Co., Inc., 5.60%, 07/01/97 (Maturity Value $10,601,648)
Collateral: U.S. Treasury Notes, 6.50%, 08/15/97.............................. 10,600,000
10,720,000 Chase Securities, Inc., 5.85%, 07/01/97 (Maturity Value $10,601,723)
Collateral: U.S. Treasury Notes, 5.625%, 10/31/97............................. 10,600,000
10,824,000 CIBC Wood Gundy Securities Corp., 5.95%, 07/01/97 (Maturity Value $10,601,752)
Collateral: U.S. Treasury Notes, 5.25%, 12/31/97.............................. 10,600,000
10,680,000 Citicorp Securities, Inc., 5.95%, 07/01/97 (Maturity Value $10,601,752)
Collateral: U.S. Treasury Notes, 5.875%, 03/31/99............................. 10,600,000
26,277,000 J.P. Morgan Securities, Inc., 5.85%, 07/01/97 (Maturity Value $26,184,254)
Collateral: U.S. Treasury Bills, 07/03/97
U.S. Treasury Notes, 6.25% - 8.00%, 03/31/99 - 08/15/99........... 26,180,000
35,175,000 J.P. Morgan Securities, Inc., 5.95%, 07/01/97 (Maturity Value $35,005,784)
Collateral: U.S. Treasury Bills, 08/14/97 - 03/05/98
U.S. Treasury Bonds, 13.125%, 05/15/01
U.S. Treasury Notes, 5.125% - 9.25%, 07/15/97 - 02/28/02 ......... 35,000,000
10,600,000 Merrill Lynch Government Securities, Inc., 5.50%, 07/01/97 (Maturity Value $10,601,619)
Collateral: U.S. Treasury Notes, 6.00%, 08/31/97.............................. 10,600,000
27,130,000 Morgan Stanley & Co., Inc., 5.75%, 07/01/97 (Maturity Value $26,184,182)
Collateral: U.S. Treasury Bills, 09/11/97..................................... 26,180,000
36,030,000 Morgan Stanley & Co., Inc., 5.75%, 07/01/97 (Maturity Value $35,005,590)
Collateral: U.S. Treasury Bills, 07/31/97..................................... 35,000,000
10,308,000 Sanwa Securities (USA) Co., L.P., 5.85%, 07/01/97 (Maturity Value $10,601,723)
Collateral: U.S. Treasury Notes, 8.875%, 11/15/98............................. 10,600,000
10,840,000 SBC Warburg, Inc., 5.92%, 07/01/97 (Maturity Value $10,601,743)
Collateral: U.S. Treasury Notes, 4.75%, 09/30/98.............................. 10,600,000
10,666,000 UBS Securities, L.L.C., 5.90%, 07/01/97 (Maturity Value $10,601,737)
Collateral: U.S. Treasury Notes, 5.50%, 09/30/97.............................. 10,600,000
----------
Total Receivables from Repurchase Agreements (Cost $238,960,000)........... 238,960,000
----------
Total Investments (Cost $258,813,658) 100.1%........................ 258,813,658
Liabilities in Excess of Other Assets (0.1)%........................ (184,481)
----------
Net Assets 100.0%................................................... $258,629,177
==========

At June 30, 1997, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.

PORTFOLIO ABBREVIATIONS:
L.L.C. - Limited Liability Corp.
L.P. - Limited Partnership

The accompanying notes are an integral part of these financial statements.
</TABLE>

THE MONEY MARKET PORTFOLIOS
- --------------------------------------------------------------------------------
Financial Statements

Statement of Assets and Liabilities
June 30, 1997

The U.S.
The Money Government
Market Securities Money
Market Portfolio Market Portfolio
----------- -----------
Assets:
Investment in
securities, at value
and cost $1,423,437,976 $ 19,853,658
Receivables from
repurchase agree-
ments, at value
and cost 344,730,000 238,960,000
Cash -- 9,280
Interest receivable 6,047,149 38,720
----------- -----------
Total assets 1,774,215,125 258,861,658
----------- -----------
Liabilities:
Payables:
Capital shares
repurchased 284,775 184,384
Management fees 220,381 39,100
Bank overdraft 109,834 --
Accrued expenses and
other liabilities 54,146 8,997
----------- -----------
Total liabilities 669,136 232,481
----------- -----------
Net assets, at value $1,773,545,989 $258,629,177
=========== ===========
Shares outstanding 1,773,545,989 258,629,177
=========== ===========
Net asset value
per share $1.00 $1.00
=========== ===========

Statement of Operations
for the year ended June 30, 1997

The U.S.
The Money Government
Market Securities Money
Market Portfolio Market Portfolio
---------- -----------
IInvestment income:
Interest $93,270,589 $14,434,535
---------- -----------
Expenses:
Management fees (Note 5) 2,547,891 404,358
Reports to shareholders 36,839 6,282
Professional fees 29,374 8,090
Custodian fees 21,365 9,193
Trustees' fees and
expenses 7,532 1,150
Other 21,914 12,533
Management fees waived
by manager (Note 5) (118,382) (39,849)
---------- -----------
Total expenses 2,546,533 401,757
---------- -----------
Net investment
income 90,724,056 14,032,778
---------- -----------
Net realized gain (loss)
on investments (931) 3,978
---------- -----------
Net increase in net assets
resulting from operations $90,723,125 $14,036,756
========== ===========

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

Statements of Changes in Net Assets
for the year ended June 30, 1997 and 1996

The U.S. Government Securities
The Money Market Portfolio Money Market Portfolio
------------------------ ----------------------------
1997 1996 1997 1996
----------- ----------- ----------- ----------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Net investment income.................... $ 90,724,056 $ 79,011,040 $ 14,032,778 $ 17,554,934
Net realized gain (loss) from security
transactions ........................... (931) -- 3,978 683
----------- ----------- ----------- ----------
Net increase in net assets resulting
from operations ........................ 90,723,125 79,011,040 14,036,756 17,555,617
Distributions to shareholders from
net investment income ................... (90,723,125)a (79,011,040) (14,036,756)b (17,555,617)c
Increase (decrease) in net assets from
capital share transactions (Note 2)...... 223,460,742 244,510,834 (27,071,927) (188,953,282)
----------- ----------- ----------- ----------
Net increase (decrease) in net assets .... 223,460,742 244,510,834 (27,071,927) (188,953,282)
Net assets (there is no undistributed net
investment income at beginning or end of year):
Beginning of year ........................ 1,550,085,247 1,305,574,413 285,701,104 474,654,386
----------- ----------- ----------- ----------
End of year .............................. $1,773,545,989 $1,550,085,247 $258,629,177 $285,701,104
=========== =========== =========== ==========

The accompanying notes are an integral part of these financial statements.
</TABLE>

THE MONEY MARKET PORTFOLIOS
- --------------------------------------------------------------------------------
Notes to Financial Statements

1. SIGNIFICANT ACCOUNTING POLICIES

a. Security Valuation:

b. Income Taxes:

c. Security Transactions:

d. Investment Income, Expenses and Distributions:

e. Accounting Estimates:

f. Expense Allocation:

g. Repurchase Agreements:

<TABLE>
<CAPTION>
2. TRUST SHARES

The U.S. Government
The Money Securities Money
Market Portfolio Market Portfolio
------------ -------------
1997
<S> <C> <C>
Shares sold .............................................................. $4,134,527,818 $ 937,979,469
Shares issued in reinvestment of distributions ........................... 90,722,912 14,037,460
Shares redeemed .......................................................... (4,001,789,988) (979,088,856)
------------ -------------
Net increase (decrease) .................................................. $ 223,460,742 $ (27,071,927)
============ =============
1996
<S> <C> <C>
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)
============ =============
</TABLE>

3. DISTRIBUTIONS AND CAPITAL LOSS CARRYOVERS

At June 30, 1997, for tax purposes, the Money Market Portfolio had capital loss
carryovers as follows:

Capital loss carryovers expiring in: 2002........... $3,560
------
$3,560
======

For tax purposes, the aggregate cost of securities is the same as for financial
reporting purposes at June 30, 1997.

<TABLE>
<CAPTION>
4. PURCHASES AND SALES OF SECURITIES

Purchases and sales/maturities of securities (including repurchase agreements)
for the year ended June 30, 1997, were as follows:

The U.S. Government
The Money Securities Money
Market Portfolio Market Portfolio
------------ -------------
<S> <C> <C>
Purchases........................................ $80,755,607,940 $60,181,996,328
Sales............................................ $80,533,562,518 $60,208,670,575
</TABLE>

5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

a. Management Agreement:

b. Other Affiliates and Related Party Transactions:

<TABLE>
<CAPTION>
At June 30, 1997, the shares of The Money Market Portfolio were owned by the
following funds:

Percentage of
Outstanding
Shares Shares
------------ -------------
<S> <C> <C>
Franklin Money Fund .............................................................. 1,502,261,263 84.70%
Institutional Fiduciary Trust - Money Market Portfolio ........................... 185,105,166 10.44%
Institutional Fiduciary Trust - Franklin Cash Reserves Fund ...................... 76,597,681 4.32%
Franklin Templeton Money Fund Trust - Franklin Templeton Money Fund II ........... 9,581,879 0.54%

At June 30, 1997, the shares of The U.S. Government Securities Money Market
Portfolio were owned by the following funds:

Percentage of
Outstanding
Shares Shares
------------ --------------
<S> <C> <C>
Institutional Fiduciary Trust - Franklin U.S. Government Securities Money Market Portfolio 136,748,226 52.87%
Franklin Federal Money Fund ...................................................... 121,880,951 47.13%
</TABLE>

<TABLE>
<CAPTION>
6. FINANCIAL HIGHLIGHTS

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

Per Share Operating Performance Ratios/Supplemental Data
------------------------------------ -----------------------------
Ratio of Net
Net Asset Distributions Net Asset Net Assets Ratio of Investment
Year Value at Net From Net Value at at End Expenses Income
Ended Beginning Investment Investment End of Total of Period to Average to Average
June 30, of Period Income Income 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
1997 1.00 0.056 (0.056) 1.00 5.47 1,773,546 0.15 5.34

The U.S. Government Securities Money Market Portfolio
1993*............................................. 0.18%**
1994 ............................................. 0.17
1995 ............................................. 0.16
1996 ............................................. 0.17
1997 ............................................. 0.16

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.

THE MONEY MARKET PORTFOLIOS
- --------------------------------------------------------------------------------
Report of Independent Accountants

To the Shareholders and Board of Trustees
of The Money Market Portfolios:

COOPERS & LYBRAND L.L.P.

San Francisco, California
August 4, 1997

Franklin Cash Reserves Fund

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

GRAPHIC MATERIAL (1)
The following line graph shows the 90 day Treasury bill yields from
6/30/96-6/30/97.

6/96 5.16%
7/96 5.31%
8/96 5.28%
9/96 5.03%
10/96 5.15%
11/96 5.13%
12/96 5.17%
1/97 5.15%
2/97 5.22%
3/97 5.32%
4/97 5.23%
5/97 4.94%
6/97 5.17%

GRAPHIC MATERIAL (2)

This chart shows in pie chart format the fund's securities breakdown sector
as a percentage of the fund's total net assets.

Portfolio Breakdown on 6/30/97

Commercial Paper 44.5%
Certificates of Deposit 35.3%
Repurchase Agreements 19.5%
Bankers' Acceptances 0.7%

GRAPHIC MATERIAL (3)

The bar chart shows the comparison between the Franklin Cash Reserves Fund's
total return of 5.11% and the Lipper Institutional Money Market Funds Index's
total return of 5.19% for the period ended 6/30/97.