INSTITUTIONAL FIDUCIARY TRUST, 497, 1999-11-03

INSTITUTIONAL FIDUCIARY TRUST
497, 1999-11-03

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PROSPECTUS

INSTITUTIONAL FIDUCIARY TRUST

INVESTMENT STRATEGY
INCOME

MONEY MARKET PORTFOLIO
FRANKLIN U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO

NOVEMBER 1, 1999

[Insert Franklin Templeton Ben Head]
The SEC has not approved or disapproved these securities or passed upon the
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.

CONTENTS

THE FUNDS

[Begin callout]
INFORMATION ABOUT EACH FUND YOU SHOULD KNOW BEFORE INVESTING
[End callout]

2 Money Market Portfolio

9 Franklin U.S. Government Securities Money Market Portfolio

16 Distributions and Taxes;
Year 2000 Problem

YOUR ACCOUNT

[Begin callout]
INFORMATION ABOUT ACCOUNT TRANSACTIONS AND SERVICES
[End callout]

18 Buying Shares

21 Investor Services

23 Selling Shares

25 Account Policies

27 Questions

FOR MORE INFORMATION

[Begin callout]
WHERE TO LEARN MORE ABOUT EACH FUND
[End callout]

Back Cover

MONEY MARKET PORTFOLIO (MONEY FUND)

[Insert graphic of bullseye and arrows] GOAL AND STRATEGY

GOAL The fund's investment goal is to provide investors with as high a level of
current income as is consistent with the preservation of shareholders' capital
and liquidity. The fund also tries to maintain a stable $1 share price.

PRINCIPAL INVESTMENTS

The fund normally invests in high-quality, short-term money market securities of
domestic and foreign issuers, including U.S. government securities, repurchase
agreements, bank obligations and commercial paper.

U.S. GOVERNMENT SECURITIES include marketable fixed, floating and variable rate
securities issued or guaranteed by the U.S. government or its agencies, or by
various instrumentalities that have been established or sponsored by the U.S.
government.

A REPURCHASE AGREEMENT is an agreement to buy a security and then to sell the
security back after a short period of time (generally, less than seven days) at
a higher price.

BANK OBLIGATIONS, and instruments secured by bank obligations, include fixed,
floating or variable rate certificates of deposit, letters of credit, time
deposits, bank notes and bankers' acceptances.

COMMERCIAL PAPER typically refers to short-term obligations of banks,
corporations and other borrowers with maturities of up to 270 days.

The fund maintains a dollar-weighted average portfolio maturity of 90 days or
less and only buys securities:

o with remaining maturities of 397 days or less, and

o that the manager determines present minimal credit risks and are rated in
the top two short-term ratings by U.S. nationally recognized rating
services (or comparable unrated securities).

[Insert graphic of chart with line going up and down] MAIN RISKS

INCOME Since the fund can only distribute what it earns, the fund's
distributions to shareholders may decline when interest rates fall. Because the
fund limits its investments to high-quality, short-term securities, its
portfolio generally will earn lower yields than a portfolio with lower-quality,
longer-term securities subject to more risk.

[Begin callout]
Income risk is the risk that a fund's income will decrease due to falling
interest rates.
[End callout]

CREDIT There is the possibility that an issuer will be unable to make interest
payments and repay principal. Changes in an issuer's financial strength or in a
security's credit rating may affect a security's value.

INTEREST RATE When interest rates rise, security prices fall. The opposite is
also true: security prices rise when interest rates fall. In general, securities
with longer maturities are more sensitive to these price changes.

MARKET A security's value may be reduced by market activity or the results of
supply and demand. This is a basic risk associated with all securities. When
there are more sellers than buyers, prices tend to fall. Likewise, when there
are more buyers than sellers, prices tend to rise.

YEAR 2000 When evaluating current and potential portfolio positions, Year 2000
is one of the factors the manager considers.

The manager will rely upon public filings and other statements made by issuers
about their Year 2000 readiness. Issuers in countries outside the U.S. may be
more susceptible to Year 2000 risks and may not be required to make the same
level of disclosure about Year 2000 readiness as is required in the U.S. The
manager, of course, cannot audit each issuer and its major suppliers to verify
their Year 2000 readiness.

If an issuer in which the fund is invested is adversely affected by Year 2000
problems, it is likely that the price of its securities also will be adversely
affected. Please see page 17 for more information.

More detailed information about the fund, its policies and risks, and short-term
debt ratings can be found in the fund's Statement of Additional Information
(SAI).

[Begin callout]
Mutual fund shares are not deposits or obligations of, or guaranteed or endorsed
by, any bank, and are not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other agency of the U.S.
government. Although the fund tries to maintain a $1 share price, it is possible
to lose money by investing in the fund.
[End callout]

MASTER/FEEDER STRUCTURE The fund seeks to achieve its investment goal by
investing all of its assets in shares of The Money Market Portfolio (Money
Portfolio). The Money Portfolio has the same investment goal and substantially
similar investment policies as the fund. The fund buys shares of the Money
Portfolio at net asset value. An investment in the fund is an indirect
investment in the Money Portfolio.

It is possible that the fund may have to withdraw its investment in the Money
Portfolio if the Money Portfolio changes its investment goal or if the fund's
Board of Trustees, at any time, considers it to be in the fund's best interest.

[Insert graphic of bull and bear] PERFORMANCE

This bar chart and table show the volatility of the fund's returns, which is one
indicator of the risks of investing in the fund. The bar chart shows changes in
the fund's returns from year to year over the past 10 calendar years. The table
shows the fund's average annual total returns. Of course, past performance
cannot predict or guarantee future results.

ANNUAL TOTAL RETURNS 1

[Insert bar graph]

9.29% 8.24% 5.91% 3.74% 3.14% 4.19 5.98% 5.38% 5.49% 5.44%
89 90 91 92 93 94 95 96 97 98
YEAR

[Begin callout]
BEST
QUARTER:

Q2 '89
2.37%

WORST
QUARTER:

Q2 '86
0.76%
[End callout]

AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1998

1 YEAR 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------
Money Market Portfolio 5.44% 5.29% 5.67%

1. As of September 30, 1999, the fund's year-to-date return was 3.52%.
All fund performance assumes reinvestment of dividends.

To obtain the fund's current yield information, please call 1-800/321-8563.

[Insert graphic of percentage sign] FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

SHAREHOLDER FEES (fees paid directly from your investment)

Maximum sales charge (load) on purchases None

Exchange fee 1 $5.00

ANNUAL FUND OPERATING EXPENSES (expenses deducted from fund assets) 2

Management fees 3 0.35%

Other expenses 0.02%
----------

Total annual fund operating expenses 3 0.37%
==========

1. This fee is only for market timers (see page 26).
2. The annual fund operating expenses shown and included in the example below
reflect the expenses of both the fund and the Money Portfolio.
3. For the fiscal year ended June 30, 1999, the administrator had agreed in
advance to limit its fees and to assume as its own expense certain expenses
otherwise payable by the fund. With this reduction, management fees would have
been 0.33% and total annual fund operating expenses would have been 0.35%. The
administrator may end this arrangement at any time upon notice to the fund's
Board of Trustees.

EXAMPLE

This example can help you compare the cost of investing in the fund with the
cost of investing in other mutual funds. It assumes:

o You invest $10,000 for the periods shown;

o Your investment has a 5% return each year;

o The fund's operating expenses remain the same; and

o You sell your shares at the end of the periods shown.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------
$38 $119 $208 $468

[Insert graphic of briefcase] MANAGEMENT

Franklin Advisers, Inc. (Advisers), 777 Mariners Island Blvd., San Mateo, CA
94404, is the Money Portfolio's investment manager and the fund's administrator.
Together, Advisers and its affiliates manage over $222 billion in assets.

The Money Portfolio pays Advisers a fee for managing the Money Portfolio's
assets and making its investment decisions. For the fiscal year ended June 30,
1999, the fund's share of the Money Portfolio's management fees was 0.15% of the
fund's average daily net assets.

[Insert graphic of dollar bill] FINANCIAL HIGHLIGHTS

This table presents the fund's financial performance for the past five years.
This information has been audited by PricewaterhouseCoopers LLP.

1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------

PER SHARE DATA ($)

Net asset value, beginning of year 1.00 1.00 1.00 1.00 1.00
---------------------------------------------

Net investment income .049 .054 .053 .055 .053

Distributions from net investment
income (.049) (.054) (.053) (.055) (.053)
---------------------------------------------

Net asset value, end of year 1.00 1.00 1.00 1.00 1.00
=============================================

Total return (%) 5.02 5.58 5.42 5.61 5.46

RATIOS/SUPPLEMENTAL DATA

Net assets, end of
year ($ x 1,000) 1,289,010 175,881 185,088 341,295 272,147

Ratios to average net assets: (%)

Expenses 1 .31 .20 .20 .19 .15

Expenses excluding waiver and
payments by affiliate 1 .33 .24 .24 .24 .24

Net investment income 4.82 5.44 5.27 5.45 5.40

1. The expense ratio includes the fund's share of the Money Portfolio's
allocated expenses.

FRANKLIN U.S.
GOVERNMENT SECURITIES
MONEY MARKET PORTFOLIO
(U.S. SECURITIES FUND)

[Insert graphic of bullseye and arrows] GOAL AND STRATEGY

PRINCIPAL INVESTMENTS

The fund invests only in marketable securities issued or guaranteed by the U.S.
government or which carry a guarantee supported by the full faith and credit of
the U.S. government, repurchase agreements collateralized by such securities,
and stripped securities (as described below). At the present time, it is the
fund's policy to limit its investments to U.S. Treasury bills, notes and bonds
(including stripped securities), and repurchase agreements collateralized only
by such securities.

A REPURCHASE AGREEMENT is an agreement to buy a security and then to sell the
security back after a short period of time (generally, less than seven days) at
a higher price.

The fund maintains a dollar-weighted average portfolio maturity of 90 days or
less and only buys securities:

o with remaining maturities of 397 days or less, and

o that the manager determines present minimal credit risks and are rated in
the top two short-term ratings by U.S. nationally recognized rating
services (or comparable unrated securities).

[Insert graphic of chart with line going up and down] MAIN RISKS

[Begin callout]
Income risk is the risk that a fund's income will decrease due to falling
interest rates.
[End callout]

DERIVATIVE SECURITIES Stripped securities are considered derivative investments,
since their value depends on the value of the underlying asset to be purchased
or sold. The fund's investment in derivatives may involve a small investment
relative to the amount of risk assumed. To the extent the fund enters into these
transactions, their success will depend on the manager's ability to predict
market movements. Stripped securities do not make periodic payments of interest
prior to maturity and the stripping of the interest coupons causes them to be
offered at a discount from their face amount. This results in the securities
being subject to greater fluctuations in response to changing interest rates
than interest-paying securities of similar maturities.

YEAR 2000 When evaluating current and potential portfolio positions, Year 2000
is one of the factors the manager considers.

The manager will rely upon public filings and other statements made by issuers
about their Year 2000 readiness. The manager, of course, cannot audit each
issuer and its major suppliers to verify their Year 2000 readiness.

More detailed information about the fund, its policies and risks, and short-term
debt ratings can be found in the fund's Statement of Additional Information
(SAI).

MASTER/FEEDER STRUCTURE The fund seeks to achieve its investment goal by
investing all of its assets in shares of The U.S. Government Securities Money
Market Portfolio (U.S. Securities Portfolio). The U.S. Securities Portfolio has
the same investment goal and substantially similar investment policies as the
fund. The fund buys shares of the U.S. Securities Portfolio at net asset value.
An investment in the fund is an indirect investment in the U.S. Securities
Portfolio.

It is possible that a fund may have to withdraw its investment in the U.S.
Securities Portfolio if the U.S. Securities Portfolio changes its investment
goal or if the fund's Board of Trustees, at any time, considers it to be in the
fund's best interest.

[Insert graphic of bull and bear] PERFORMANCE

ANNUAL TOTAL RETURNS 1

[Insert bar graph]

9.21% 8.14% 5.71% 3.57% 3.06% 4.11% 5.83% 5.27% 5.41% 5.30%
89 90 91 92 93 94 95 96 97 98
YEAR

[Begin callout]
BEST
QUARTER:

Q2 '89
2.40%

WORST
QUARTER:

Q4 '93
0.75%
[End callout]

AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1998

1 YEAR 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------
Franklin U.S. Government Securities
Money Market Portfolio 5.30% 5.18% 5.56%

1. As of September 30, 1999, the fund's year-to-date return was 3.39%.
All fund performance assumes reinvestment of dividends.

To obtain the fund's current yield information, please call 1-800/321-8563.

[Insert graphic of percentage sign] FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

SHAREHOLDER FEES (fees paid directly from your investment)

Maximum sales charge (load) on purchases None

Exchange fee 1 $5.00

ANNUAL FUND OPERATING EXPENSES (expenses deducted from fund assets) 2

Management fees 3 0.35%

Other expenses 0.04%
----------

Total annual fund operating expenses 3 0.39%
==========

1. This fee is only for market timers (see page 26).
2. The annual fund operating expenses shown and included in the example below
reflect the expenses of both the fund and the U.S. Securities Portfolio.
3. For the fiscal year ended June 30, 1999, the administrator had agreed in
advance to limit its fees. With this reduction, management fees would have been
0.31% and total annual fund operating expenses would have been 0.35%. The
administrator may end this arrangement at any time upon notice to the fund's
Board of Trustees.

EXAMPLE

This example can help you compare the cost of investing in the fund with the
cost of investing in other mutual funds. It assumes:

o You invest $10,000 for the periods shown;

o Your investment has a 5% return each year;

o The fund's operating expenses remain the same; and

o You sell your shares at the end of the periods shown.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------
$40 $125 $219 $493

[Insert graphic of briefcase] MANAGEMENT

Franklin Advisers, Inc. (Advisers), 777 Mariners Island Blvd., San Mateo, CA
94404, is the U.S. Securities Portfolio's investment manager and the fund's
administrator. Together, Advisers and its affiliates manage over $222 billion in
assets.

The U.S. Securities Portfolio pays Advisers a fee for managing the U.S.
Securities Portfolio's assets and making its investment decisions. For the
fiscal year ended June 30, 1999, the fund's share of the U.S. Securities
Portfolio's management fees was 0.15% of the fund's average daily net assets.

[Insert graphic of dollar bill] FINANCIAL HIGHLIGHTS

This table presents the fund's financial performance for the past five years.
This information has been audited by PricewaterhouseCoopers LLP.

YEAR ENDED JUNE 30,
---------------------------------------------
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------
PER SHARE DATA ($)

Net asset value, beginning of year 1.00 1.00 1.00 1.00 1.00
---------------------------------------------

Net investment income .047 .054 .052 .054 .052

Distributions from net investment
income (.047) (.054) (.052) (.054) (.052)
---------------------------------------------

Net asset value, end of year 1.00 1.00 1.00 1.00 1.00
=============================================

Total return (%) 4.82 5.51 5.29 5.50 5.32

RATIOS/SUPPLEMENTAL DATA

Net assets, end of year ($ x 1,000) 111,566 131,151 136,705 152,173 334,830

Ratios to average net assets: (%)

Expenses 1 .30 .20 .20 .19 .15

Expenses excluding waiver and
payments by affiliate 1 .34 .26 .26 .26 .23

Net investment income 4.69 5.34 5.14 5.44 5.26

1. The expense ratio includes the fund's share of the U.S. Securities
Portfolio's allocated expenses.

[Insert graphic of dollar signs and stacks of coins]
DISTRIBUTIONS AND TAXES;
YEAR 2000 PROBLEM

INCOME DISTRIBUTIONS Each fund typically pays income dividends each day that its
net asset value is calculated. Your account may begin to receive dividends on
the day we receive your investment and will continue to receive dividends
through the day before we receive a request to sell your shares or the
settlement of a wire order trade. The amount of these dividends will vary and
there is no guarantee the fund will pay dividends.

TAX CONSIDERATIONS In general, fund distributions are taxable to you as ordinary
income. This is true whether you reinvest your distributions in additional fund
shares or receive them in cash.

[Begin callout]
BACKUP WITHHOLDING

By law, a fund must withhold 31% of your taxable distributions and proceeds if
you do not provide your correct social security or taxpayer identification
number, or if the Internal Revenue Service instructs the fund to do so.
[End callout]

Every January, you will receive a statement that shows the tax status of
distributions you received for the previous year. Distributions declared in
December but paid in January are taxable as if they were paid in December.

Because the funds expect to maintain a $1.00 net asset value per share, you
should not have any gain or loss on the sale of your fund shares. For tax
purposes, an exchange of your fund shares for shares of a different Franklin
Templeton Fund is the same as a sale.

Fund distributions generally will be subject to state and local income tax. It
is anticipated that no portion of fund distributions will qualify for exemption
from state and local taxes as dividends paid from interest earned on direct
obligations of the U.S. government. Non-U.S. investors may be subject to U.S.
withholding and estate tax. You should consult your tax advisor about federal,
state, local and foreign tax consequences of your investment in a fund.

YEAR 2000 PROBLEM The funds' business operations depend on a worldwide network
of computer systems that contain date fields, including securities trading
systems, securities transfer agent operations and stock market links. Many of
the systems currently use a two digit date field to represent the date, and
unless these systems are changed or modified, they may not be able to
distinguish the Year 1900 from the Year 2000 (commonly referred to as the Year
2000 problem). In addition, the fact that the Year 2000 is a leap year may
create difficulties for some systems.

When the Year 2000 arrives, the funds' operations could be adversely affected if
the computer systems used by the manager, its service providers and other third
parties it does business with are not Year 2000 ready. For example, the funds'
portfolio and operational areas could be impacted, including securities trade
processing, interest and dividend payments, securities pricing, shareholder
account services, reporting, custody functions and others. The funds could
experience difficulties in effecting transactions if any of their foreign
subcustodians or if foreign broker-dealers or foreign markets are not ready for
Year 2000.

Each fund's manager and its affiliated service providers are making a concerted
effort to take steps they believe are reasonably designed to address their Year
2000 problems. Of course, the funds' ability to reduce the effects of the Year
2000 problem is also very much dependent upon the efforts of third parties over
which the funds and the manager may have no control.

YOUR ACCOUNT

[Insert graphic of paper with lines and someone writing]
BUYING SHARES

Each fund is available for investment by individuals and institutional
investors, such as corporations, banks, savings and loan associations, trust
companies, and other institutional and government entities, for investment of
their own capital and of monies held in accounts for which they act in a
fiduciary, advisory, agency, custodial, or other similar capacity. The U.S.
Securities Fund is also designed for government authorities and agencies. Fund
shares are offered without a sales charge.

MINIMUM INVESTMENTS
- --------------------------------------------------------------------------------
INITIAL ADDITIONAL
- --------------------------------------------------------------------------------
Regular accounts $100,000 no minimum
- --------------------------------------------------------------------------------
States, counties, cities and their
instrumentalities, departments, $1,000 no minimum
agencies and authorities
- --------------------------------------------------------------------------------

PLEASE NOTE THAT YOU MAY ONLY BUY SHARES OF A FUND ELIGIBLE
FOR SALE IN YOUR STATE OR JURISDICTION.

[Begin callout]
The FRANKLIN TEMPLETON Funds include all of the Franklin Templeton U.S.
registered mutual funds, except Franklin Templeton Variable Insurance Products
Trust, Templeton Capital Accumulator Fund, Inc., and Templeton Variable Products
Series Fund.
[End callout]

Certain Franklin Templeton Funds offer multiple share classes not offered by
these funds. Please note that for selling or exchanging your shares, or for
other purposes, the funds' shares are considered Class A shares. Before January
1, 1999, the funds' shares were considered Class I shares.

Many of the Money Fund's investments, through the Money Portfolio, and the U.S.
Securities Fund's investments, through the U.S. Securities Portfolio, must be
paid for in federal funds, which are monies held by the fund's custodian on
deposit at the Federal Reserve Bank of San Francisco and elsewhere. A fund
generally cannot invest money it receives from you until it is available to the
fund in federal funds, which may take up to two days. Until then, your purchase
may not be considered in proper form. If the fund is able to make investments
within one business day, it may accept your order with payment in other than
federal funds.

DISTRIBUTION AND SERVICE (12B-1) FEES Each fund has a distribution plan,
sometimes known as a Rule 12b-1 plan, that allows the fund to pay distribution
and other fees of up to 0.15% per year for the sale of shares and for services
provided to shareholders. No payments have been made for 12b-1 expenses since
inception and the funds have no intention to use the Rule 12b-1 plan.

ACCOUNT APPLICATION If you are opening a new account, please complete and sign
an institutional account application. Institutional applications can be obtained
by calling Institutional Services at 1-800/321-8563.

BUYING SHARES
- --------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- --------------------------------------------------------------------------------

[Insert graphic of hands Contact your investment Contact your investment
shaking] representative representative

THROUGH YOUR INVESTMENT
REPRESENTATIVE
- --------------------------------------------------------------------------------

[Insert graphic of Make your check, Federal Make your check payable
envelope] Reserve Draft or to the fund. Include your
negotiable bank draft account number on the
BY MAIL payable to the fund. check.
Instruments drawn on other
mutual funds may not be Fill out the deposit slip
accepted. from your account
statement. If you do not
Mail the check or draft have a slip, include a
and your signed note with your name, the
application to fund name, and your
Institutional Services. account number.

Mail the check and
deposit slip or note to
Institutional Services.
- --------------------------------------------------------------------------------

[Insert graphic of three Call by 11:15 a.m. pacific Call by 11:15 a.m.
lightning bolts] time for the Money Fund pacific time for the
and by 1:30 p.m. pacific Money Fund and by 1:30
BY WIRE time for the U.S. p.m. pacific time for the
Securities Fund to receive U.S. Securities Fund to
See "Holiday that day's credit and be receive that day's credit
Schedule" under eligible to receive that and be eligible to
"Account Policies" day's dividend. The fund receive that day's
will supply a wire control dividend. The fund will
1-800/321-8563 number and wire supply a wire control
(or 1-650/312-3600) instructions. number and wire
instructions.
Wire the funds and mail
your signed application to Wire the funds to
Institutional Services. Institutional Services.
For investments over For investments over
$50,000, you also need to $50,000, you also need to
complete the Institutional complete the
Telephone Privileges Institutional Telephone
section of the Privileges section of the
application. Please application.
include the wire control
number on the application. To make a same day wire
investment, please make
To make a same day wire sure we receive your
investment, please make order by 3:00 p.m.
sure we receive your order pacific time.
by 3:00 p.m. pacific time.
- --------------------------------------------------------------------------------

[Insert graphic of two Call Institutional Call Institutional
arrows Services at the number Services at the number
pointing in opposite below, or send signed below, or send signed
directions] written instructions. written instructions.

BY EXCHANGE For requests over $50,000, For requests over
you must complete the $50,000, you must
1-800/321-8563 or Institutional Telephone complete the
1-650/312-3600 Privileges section of the Institutional Telephone
application. Privileges section of the
application.
(Please see page 21 for
information on exchanges.) (Please see page 21 for
information on exchanges.)
- --------------------------------------------------------------------------------

INSTITUTIONAL SERVICES, 777 MARINERS ISLAND BLVD, P.O. BOX 7777,
SAN MATEO, CA 94403-7777
CALL TOLL-FREE: 1-800/321-8563
(MONDAY THROUGH FRIDAY 6:00 A.M. TO 5:00 P.M., PACIFIC TIME)

[Insert graphic of person with handset] INVESTOR SERVICES

DISTRIBUTION OPTIONS You may reinvest distributions you receive from the fund,
you can have your distributions mailed by check, or you can have your
distributions wired to you.

Please indicate on your application the distribution option you have chosen,
otherwise we will reinvest your distributions in the fund. If you choose not to
reinvest your distributions, the fund will distribute distributions paid during
the month as directed on the last business day of each month.

TELEFACTS(R) Our TeleFACTS system offers around-the-clock access to information
about your account or any Franklin Templeton Fund. This service is available
from touch-tone phones at 1-800/247-1753. For a free TeleFACTS brochure, call
1-800/DIAL BEN.

TELEPHONE PRIVILEGES You will automatically receive telephone privileges when
you open your account, allowing you and your investment representative to sell
or exchange your shares and make certain other changes to your account by phone.

For accounts with more than one registered owner, telephone privileges also
allow the funds to accept written instructions signed by only one owner for
transactions and account changes that could otherwise be made by phone. For all
other transactions and changes, all registered owners must sign the
instructions.

As long as we take certain measures to verify telephone requests, we will not be
responsible for any losses that may occur from unauthorized requests. Of course,
you can decline telephone exchange or redemption privileges on your account
application.

The telephone transaction options available to retirement plans are limited to
those that are provided under the plan.

EXCHANGE PRIVILEGE You can exchange shares between most Franklin Templeton Funds
within the same class*. If you exchange shares from a fund to another Franklin
Templeton Fund, a sales charge may apply unless you acquired your fund shares by
exchange or through the reinvestment of dividends, or you otherwise qualify to
buy shares without an initial sales charge.

*Certain Class Z shareholders of Franklin Mutual Series Fund Inc. may exchange
into the funds. Advisor Class shareholders of other Franklin Templeton Funds
also may exchange into the funds. Advisor Class shareholders who exchange their
shares for shares of a fund and later decide they would like to exchange into
another fund that offers Advisor Class may do so.

FROM THE FUND INTO ANY OTHER SERIES OF THE TRUST. If you exchange shares from
the fund into any other series of the trust, the exchange will be processed the
day your request is received, prior to 11:15 a.m. pacific time for the Money
Fund and 1:30 p.m. pacific time for the U.S. Securities Fund, with payment for
the purchased shares processed on the following business day when the funds are
made available from the fund.

FROM THE FUND INTO CLASS A SHARES OF OTHER FRANKLIN TEMPLETON FUNDS. The
exchange will be effected at the respective net asset value or offering price of
the funds involved next computed on the day on which the request is received in
proper form prior to the above deadlines. Requests received after the deadlines
will be effective at the next day's price.

FROM ANOTHER FUND IN THE FRANKLIN TEMPLETON FUNDS INTO THE FUND. The transaction
will be processed as a liquidation from the other fund on the day the exchange
is received in proper form prior to the time of valuation for that fund (as
noted in that fund's prospectus) and shares of the fund will be bought on the
following business day when the money for purchase is available.

Retirement plan participants may exchange shares in accordance with the options
available under, and the requirements of, their plan and plan administrator.
Retirement plan administrators may charge a fee in connection with exchanges.

[Begin callout]
An EXCHANGE is really two transactions: a sale of one fund and the purchase of
another. In general, the same policies that apply to purchases and sales apply
to exchanges, including minimum investment amounts. Exchanges also have the same
tax consequences as ordinary sales and purchases.
[End callout]

Generally exchanges may only be made between identically registered accounts,
unless you send written instructions with a signature guarantee.

Frequent exchanges can interfere with fund management or operations and drive up
costs for all shareholders. To protect shareholders, there are limits on the
number and amount of exchanges you may make (please see "Market Timers" on page
26).

SELLING SHARES IN WRITING Generally, requests to sell $100,000 or less can be
made over the phone or with a simple letter. Sometimes, however, to protect you
and the fund we will need written instructions signed by all registered owners,
with a signature guarantee for each owner, if:

[Begin callout]
A SIGNATURE GUARANTEE helps protect your account against fraud. You can obtain a
signature guarantee at most banks and securities dealers.

A notary public CANNOT provide a signature guarantee.
[End callout]

o you are selling more than $100,000 worth of shares

o you want your proceeds paid to someone who is not a registered owner

o you want to send your proceeds somewhere other than the address of record,
or preauthorized bank or brokerage firm account

We also may require a signature guarantee on instructions we receive from an
agent, not the registered owners, or when we believe it would protect the fund
against potential claims based on the instructions received.

SELLING RECENTLY PURCHASED SHARES If you sell shares recently purchased with a
check or draft, we may delay sending you the proceeds until your check or draft
has cleared, which may take seven business days or more. A certified or
cashier's check may clear in less time.

REDEMPTION PROCEEDS Your redemption check will be sent within seven days after
we receive your request in proper form. We are not able to receive or pay out
cash in the form of currency. Redemption proceeds may be delayed if we have not
yet received your signed account application.

CONTINGENT DEFERRED SALES CHARGE (CDSC) Most Franklin Templeton Funds impose a
1% CDSC on certain investments of Class A shares sold within 12 months of
purchase. While the funds generally do not have a CDSC, they will impose one if
you sell shares exchanged into a fund from another Franklin Templeton Fund and
those shares would have been assessed a CDSC in the other fund. Please keep in
mind that the time the shares are held in the money fund does not count towards
the CDSC holding period.

The CDSC is based on the current value of the shares being sold or their net
asset value when purchased, whichever is less. To keep your CDSC as low as
possible, each time you place a request to sell shares we will first sell any
shares in your account that are not subject to a CDSC. If there are not enough
of these to meet your request, we will sell the shares in the order they were
purchased.

SELLING SHARES
- --------------------------------------------------------------------------------
TO SELL SOME OR ALL OF YOUR SHARES
- --------------------------------------------------------------------------------

[Insert graphic of hands Contact your investment representative
shaking]

THROUGH YOUR INVESTMENT
REPRESENTATIVE
- --------------------------------------------------------------------------------

[Insert graphic of envelope] Send written instructions to Institutional
Services. Corporate, partnership or trust
BY MAIL accounts may need to send additional documents.

Specify the fund, the account number and the
dollar value or number of shares you wish to
sell. Be sure to include all necessary
signatures and any additional documents, as
well as signature guarantees if required.

A check will be mailed to the name(s) and
address on the account, or otherwise according
to your written instructions.
- --------------------------------------------------------------------------------

[Insert graphic of phone] As long as your transaction is for $100,000 or
less, you have completed the Institutional
BY PHONE Telephone Privileges section of the
application, and you have not changed your
1-800/321-8563 address by phone within the last 15 days, you
can sell your shares by phone.
See "Holiday Schedule"
under "Account Policies" A check will be mailed to the name(s) and
address on the account. If requested,
redemption proceeds may also be wired directly
to a commercial bank previously designated by
you on an application, or in a
signature-guaranteed letter of instruction.
Written instructions, with a signature
guarantee, are required to send the check to
another address or to make it payable to
another person.
- --------------------------------------------------------------------------------

[Insert graphic of three You can call or write to have redemption
lightning bolts] proceeds wired to you. If requested, redemption
proceeds may also be wired directly to a
BY WIRE commercial bank previously designated by you on
an application, or in a signature-guaranteed
1-800/321-8563 letter of instruction. A payment may be
transmitted by wire the same business day if
See "Holiday Schedule" the phone request is received before 11:15 a.m.
under "Account Policies" pacific time for the Money Fund and 1:30 p.m.
pacific time for the U.S. Securities Fund. For
later requests, payments will be transmitted by
wire on the following business day. If you
anticipate requesting a same day wire
redemption over $5 million, please notify the
fund about this on the prior business day. In
order to maximize efficient fund management,
please request your same day wire redemption
(regardless of size) as early in the day as
possible. Prior business day notification of
the trade may be required.

Before requesting a bank wire, please make sure
we have your bank account information on file.
If we do not have this information, you will
need to send written instructions with your
bank's name and address, your bank account
number, the ABA routing number, and a signature
guarantee.

Requests received in proper form by 3:00 p.m.
pacific time will be wired the next business
day.
- --------------------------------------------------------------------------------

[Insert graphic of two arrows Obtain a current prospectus for the fund you
pointing are considering.
in opposite directions]
Call Institutional Services at the number below
BY EXCHANGE or send signed written instructions. See the
policies above for selling shares by mail or
TeleFACTS(R) phone.
1-800/247-1753
(around-the-clock access)
- --------------------------------------------------------------------------------

INSTITUTIONAL SERVICES, 777 MARINERS ISLAND BLVD, P.O. BOX 7777,
SAN MATEO, CA 94403-7777 CALL TOLL-FREE: 1-800/321-8563
(MONDAY THROUGH FRIDAY 6:00 A.M. TO 5:00 P.M., PACIFIC TIME)

[Insert graphic of paper and pen] ACCOUNT POLICIES

CALCULATING SHARE PRICE When you buy shares, you pay the net asset value (NAV)
per share. When you sell shares, you receive the NAV minus any applicable
contingent deferred sales charge (CDSC).

The Money Fund calculates its NAV per share at 12:30 p.m. pacific time and the
U.S. Securities Fund calculates its NAV per share at 3:00 p.m. pacific time,
each day the New York Stock Exchange and the Federal Reserve Bank of San
Francisco are open, by dividing their net assets by the number of shares
outstanding. A fund's assets are generally valued at their amortized cost.

Requests to buy and sell shares are processed at the NAV next calculated after
we receive your request in proper form.

HOLIDAY SCHEDULE In order to receive same day credit for transactions, you need
to transmit your request to buy, sell or exchange shares before 11:15 a.m.
pacific time for the Money Fund and before 1:30 p.m. pacific time for the U.S.
Securities Fund, except on holidays or the day before or after a holiday.

The funds are informed that the New York Stock Exchange (NYSE) and/or the
Federal Reserve Bank of San Francisco observe the following holidays: New Year's
Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day
(observed), Independence Day, Labor Day, Columbus Day (observed), Veterans' Day,
Thanksgiving Day and Christmas Day. Although the funds expect the same holiday
schedule to be observed in the future, the Federal Reserve Bank of San Francisco
or the NYSE may modify its holiday schedule at any time. On any day before or
after a NYSE or Federal Reserve Bank of San Francisco holiday, or on any day
when the Public Securities Association recommends an early closing, the funds
reserve the right to set an earlier time for notice and receipt of wire order
purchase and redemption orders submitted for same day credit or redemption.
Please place your trades as early in the day as possible on a day before or
after a holiday. To the extent that a fund's portfolio securities are traded in
other markets on days the Federal Reserve Bank of San Francisco or the NYSE is
closed, the fund's NAV may be affected when investors do not have access to the
fund to buy or sell shares. Other Franklin Templeton Funds may follow different
holiday closing schedules.

ACCOUNTS WITH LOW BALANCES If the value of your account falls below $20,000
($500 for states, counties, cities and their instrumentalities, departments,
agencies and authorities) because you sell some of your shares, we may mail you
a notice asking you to bring the account back up to its applicable minimum
investment amount. If you choose not to do so within 30 days, we may close your
account and mail the proceeds to the address of record.

STATEMENTS AND REPORTS You will receive statements that show your account
transactions. You also will receive the funds' financial reports every six
months. To reduce fund expenses, we try to identify related shareholders in a
household and send only one copy of the financial reports. If you need
additional copies, please call 1-800/321-8563.

If there is a dealer or other investment representative of record on your
account, he or she also will receive confirmations, account statements and other
information about your account directly from the fund.

STREET OR NOMINEE ACCOUNTS You may transfer your shares from the street or
nominee name account of one dealer to another, as long as both dealers have an
agreement with Franklin Templeton Distributors, Inc. We will process the
transfer after we receive authorization in proper form from your delivering
securities dealer.

JOINT ACCOUNTS Unless you specify a different registration, accounts with two or
more owners are registered as "joint tenants with rights of survivorship" (shown
as "Jt Ten" on your account statement). To make any ownership changes to a joint
account, all owners must agree in writing, regardless of the law in your state.

MARKET TIMERS The funds may restrict or refuse exchanges by market timers. If
accepted, each exchange by a market timer will be charged $5 by
Franklin/Templeton Investor Services, Inc., the funds' transfer agent. You will
be considered a market timer if you have (i) requested an exchange out of a fund
within two weeks of an earlier exchange request, or (ii) exchanged shares out of
a fund more than twice in a calendar quarter, or (iii) exchanged shares equal to
at least $5 million, or more than 1% of a fund's net assets, or (iv) otherwise
seem to follow a timing pattern. Shares under common ownership or control are
combined for these limits.

ADDITIONAL POLICIES Please note that the funds maintain additional policies and
reserve certain rights, including:

o The funds may refuse any order to buy shares, including any purchase under
the exchange privilege.

o At any time, the funds may change their investment minimums or waive or
lower their minimums for certain purchases.

o If you buy shares with a check or draft that is returned to the fund
unpaid, the funds may impose a $10 charge against your account for each
returned item.

o When you buy shares, it does not create a checking or other bank account
relationship with the fund or any bank.

o The funds may modify or discontinue the exchange privilege on 60 days'
notice.

o In unusual circumstances, we may temporarily suspend redemptions, or
postpone the payment of proceeds, as allowed by federal securities laws.

o For redemptions over a certain amount, the funds reserve the right to make
payments in securities or other assets of the fund, in the case of an
emergency or if the payment by check or wire would be harmful to existing
shareholders.

o To permit investors to obtain the current price, dealers are responsible
for transmitting all orders to the funds promptly.

GENERAL Government Accounting Standards Board (GASB) Statement No. 3 pertaining
to Deposits with Financial Institutions provides, in paragraph 69, that
investments in mutual funds should be disclosed, but not categorized.

[Insert graphic of question mark] QUESTIONS

If you have any questions about the funds or your account, you can write to us
at 777 Mariners Island Blvd., P.O. Box 7777, San Mateo, CA 94403-7777. You can
also call us at 1-800/321-8563 Monday through Friday, from 6:00 a.m. to 5:00
p.m. pacific time.

FOR MORE INFORMATION

You can learn more about each fund in the following documents:

ANNUAL/SEMIANNUAL REPORT TO SHAREHOLDERS

Includes a discussion of recent market conditions and fund strategies, financial
statements, detailed performance information, portfolio holdings, and the
auditor's report.

STATEMENT OF ADDITIONAL INFORMATION (SAI)

Contains more information about each fund, its investments and policies. It is
incorporated by reference (is legally a part of this prospectus).

For a free copy of the current annual/semiannual report or the SAI, please
contact your investment representative or call us at the number below.

FRANKLIN(R)TEMPLETON(R)
1-800/321-8563
www.franklintempleton.com

You can also obtain information about each fund by visiting the SEC's Public
Reference Room in Washington, D.C. (phone 1-800/SEC-0330) or by sending your
request and a duplicating fee to the SEC's Public Reference Section, Washington,
D.C. 20549-6009. You can also visit the SEC's Internet site at
http://www.sec.gov.

Investment Company Act file #811-4267 IFT1 P 11/99

PROSPECTUS

FRANKLIN
CASH RESERVES FUND

INSTITUTIONAL FIDUCIARY TRUST

INVESTMENT STRATEGY
INCOME

NOVEMBER 1, 1999

[Insert Franklin Templeton Ben Head]
The SEC has not approved or disapproved these securities or passed upon the
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.

CONTENTS

THE FUND

[Begin callout]
INFORMATION ABOUT THE FUND YOU SHOULD KNOW BEFORE INVESTING
[End callout]

2 Goal and Strategies

3 Main Risks

5 Performance

6 Fees and Expenses

7 Management

8 Distributions and Taxes

9 Financial Highlights

YOUR ACCOUNT

[Begin callout]
INFORMATION ABOUT ACCOUNT TRANSACTIONS AND SERVICES
[End callout]

10 Buying Shares

13 Investor Services

15 Selling Shares

18 Account Policies

20 Questions

FOR MORE INFORMATION

[Begin callout]
WHERE TO LEARN MORE ABOUT THE FUND
[End callout]

Back Cover

THE FUND

[Insert graphic of bullseye and arrows] GOAL AND STRATEGIES

PRINCIPAL INVESTMENTS

A REPURCHASE AGREEMENT is an agreement to buy a security and then to sell the
security back after a short period of time (generally, less than seven days) at
a higher price.

BANK OBLIGATIONS, and instruments secured by bank obligations, include fixed,
floating or variable rate certificates of deposit, letters of credit, time
deposits, bank notes and bankers' acceptances.

COMMERCIAL PAPER typically refers to short-term obligations of banks,
corporations and other borrowers with maturities of up to 270 days.

The fund maintains a dollar-weighted average portfolio maturity of 90 days or
less and only buys securities:

o with remaining maturities of 397 days or less, and

o that the manager determines present minimal credit risks and are rated in
the top two short-term ratings by U.S. nationally recognized rating
services (or comparable unrated securities).

[Insert graphic of chart with line going up and down] MAIN RISKS

[Begin callout]
Income risk is the risk that a fund's income will decrease due to falling
interest rates.
[End callout]

YEAR 2000 When evaluating current and potential portfolio positions, Year 2000
is one of the factors the manager considers. The manager will rely upon public
filings and other statements made by issuers about their Year 2000 readiness.
Issuers in countries outside the U.S. may be more susceptible to Year 2000 risks
and may not be required to make the same level of disclosure about Year 2000
readiness as is required in the U.S. The manager, of course, cannot audit each
issuer and its major suppliers to verify their Year 2000 readiness.

More detailed information about the fund, its policies and risks, and short-term
debt ratings can be found in the fund's Statement of Additional Information
(SAI).

MASTER/FEEDER STRUCTURE The fund seeks to achieve its investment goal by
investing all of its assets in shares of the The Money Market Portfolio
(Portfolio). The Portfolio has the same investment goal and substantially
similar investment policies as the fund. The fund buys shares of the Portfolio
at net asset value. An investment in the fund is an indirect investment in the
Portfolio.

It is possible that the fund may have to withdraw its investment in the
Portfolio if the Portfolio changes its investment goal or if the fund's Board of
Trustees, at any time, considers it to be in the fund's best interest.

[Insert graphic of bull and bear] PERFORMANCE

This bar chart and table show the volatility of the fund's returns, which is one
indicator of the risks of investing in the fund. The bar chart shows changes in
the fund's returns from year to year over the past 4 calendar years. The table
shows the fund's average annual total returns. Of course, past performance
cannot predict or guarantee future results.

ANNUAL TOTAL RETURNS 1

[Insert bar graph]

5.73% 5.08% 5.21% 5.03%
95 96 97 98
YEAR

[Begin callout]
BEST
QUARTER:

Q2 '95
1.45%

WORST
QUARTER:

Q2 '99
1.00%
[End callout]

AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1998

Since
Inception
1 YEAR (7/1/94)
- -------------------------------------------------------------------
Franklin Cash Reserves Fund 5.03% 5.22%

1. As of September 30, 1999, the fund's year-to-date return was 3.18%.
All fund performance assumes reinvestment of dividends.

To obtain the fund's current yield information, please call 1-800/321-8563.

[Insert graphic of percentage sign] FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

SHAREHOLDER FEES (fees paid directly from your investment)

Maximum sales charge (load) on purchases None

Exchange fee 1 $5.00

ANNUAL FUND OPERATING EXPENSES (expenses deducted from fund assets) 2

Management fees 0.40%

Distribution and service (12b-1) fees 0.25%

Other expenses 0.17%
----------

Total annual fund operating expenses 0.82%
==========

1. This fee is only for market timers (see page 19).
2. The annual fund operating expenses shown and included in the example below
reflect the expenses of both the fund and the Portfolio.

EXAMPLE

This example can help you compare the cost of investing in the fund with the
cost of investing in other mutual funds. It assumes:

o You invest $10,000 for the periods shown;

o Your investment has a 5% return each year;

o The fund's operating expenses remain the same; and

o You sell your shares at the end of the periods shown.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------
$84 $262 $455 $1,014

[Insert graphic of briefcase] MANAGEMENT

Franklin Advisers, Inc. (Advisers), 777 Mariners Island Blvd., San Mateo, CA
94404, is the Portfolio's investment manager and the fund's administrator.
Together, Advisers and its affiliates manage over $222 billion in assets.

The Portfolio pays Advisers a fee for managing the Portfolio's assets and making
its investment decisions. For the fiscal year ended June 30, 1999, the fund's
share of the Portfolio's management fees was 0.15% of the fund's average daily
net assets.

YEAR 2000 PROBLEM The fund's business operations depend on a worldwide network
of computer systems that contain date fields, including securities trading
systems, securities transfer agent operations and stock market links. Many of
the systems currently use a two digit date field to represent the date, and
unless these systems are changed or modified, they may not be able to
distinguish the Year 1900 from the Year 2000 (commonly referred to as the Year
2000 problem). In addition, the fact that the Year 2000 is a leap year may
create difficulties for some systems.

When the Year 2000 arrives, the fund's operations could be adversely affected if
the computer systems used by the manager, its service providers and other third
parties it does business with are not Year 2000 ready. For example, the fund's
portfolio and operational areas could be impacted, including securities trade
processing, interest and dividend payments, securities pricing, shareholder
account services, reporting, custody functions and others. The fund could
experience difficulties in effecting transactions if any of its foreign
subcustodians, or if foreign broker-dealers or foreign markets are not ready for
Year 2000.

The manager and its affiliated service providers are making a concerted effort
to take steps they believe are reasonably designed to address their Year 2000
problems. Of course, the fund's ability to reduce the effects of the Year 2000
problem is also very much dependent upon the efforts of third parties over which
the fund and the manager may have no control.

[Insert graphic of dollar signs and stacks of coins]
DISTRIBUTIONS AND TAXES

INCOME DISTRIBUTIONS The fund typically declares income dividends each day that
its net asset value is calculated and pays them monthly. Your account may begin
to receive dividends on the day after we receive your investment and will
continue to receive dividends through the day we receive a request to sell your
shares. The amount of these dividends will vary and there is no guarantee the
fund will pay dividends.

TAX CONSIDERATIONS In general, fund distributions are taxable to you as ordinary
income. This is true whether you reinvest your distributions in additional fund
shares or receive them in cash.

[Begin callout]
BACKUP WITHHOLDING

By law, the fund must withhold 31% of your taxable distributions and proceeds if
you do not provide your correct social security or taxpayer identification
number, or if the Internal Revenue Service instructs the fund to do so.
[End callout]

Because the fund expects to maintain a $1.00 net asset value per share, you
should not have any gain or loss on the sale of your fund shares. For tax
purposes, an exchange of your fund shares for shares of a different Franklin
Templeton Fund is the same as a sale.

[Insert graphic of dollar bill] FINANCIAL HIGHLIGHTS

This table presents the fund's financial performance for the past five years.
This information has been audited by PricewaterhouseCoopers LLP.

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
- ----------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------
PER SHARE DATA ($)

<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year 1.00 1.00 1.00 1.00 1.00
-------------------------------------------------

Net investment income .044 .051 .050 .052 .052

Distributions from net
investment income (.044) (.051) (.050) (.052) (.052)
-------------------------------------------------

Net asset value, end of year 1.00 1.00 1.00 1.00 1.00
=================================================

Total return (%) 4.49 5.28 5.11 5.35 5.34

RATIOS/SUPPLEMENTAL DATA

Net assets, end of year ($ x 1,000) 135,390 119,585 76,510 30,381 14,545

Ratios to average net assets: (%)

Expenses 1 .82 .50 .50 .49 .40

Expenses excluding waiver and
payments by affiliate 1 .82 .77 .69 .73 .79

Net investment income 4.38 5.14 5.00 5.10 5.69
</TABLE>

1. The expense ratio includes the fund's share of the Portfolio's allocated
expenses.

YOUR ACCOUNT

[Insert graphic of paper with lines and someone writing]
BUYING SHARES

You may buy shares of the fund without a sales charge. The fund is available
exclusively to retirement plan participants and other institutional investors,
including corporations, banks, savings and loan associations, and government
entities. Individuals may not otherwise buy shares of the fund. In the case of
retirement plans, there is no required minimum initial investment amount and
shares of the fund must be registered at the omnibus level. Although the amount
that may be contributed to the various investment options under a retirement
plan in any one year is subject to certain limitations, assets already held by a
retirement plan may be invested in the fund without regard to the limitations.
Certain institutional investors, such as corporations, banks, and savings and
loan associations, may also purchase shares of the fund subject to a minimum
initial investment of $100,000. Government entities, however, including states,
counties, cities, and their instrumentalities, departments, agencies, and
authorities may open an account in the fund with a minimum initial investment of
$1,000. Subsequent purchases are not subject to a minimum purchase requirement.

PLEASE NOTE THAT YOU MAY ONLY BUY SHARES OF A FUND
ELIGIBLE FOR SALE IN YOUR STATE OR JURISDICTION.

Certain Franklin Templeton Funds offer multiple share classes not offered by
this fund. Please note that for selling or exchanging your shares, or for other
purposes, the fund's shares are considered Class A shares. Before January 1,
1999, the fund's shares were considered Class I shares.

Many of the fund's investments, through The Money Market Portfolio, must be paid
for in federal funds, which are monies held by the fund's custodian on deposit
at the Federal Reserve Bank of San Francisco and elsewhere. The fund generally
cannot invest money it receives from you until it is available to the fund in
federal funds, which may take up to two days. Until then, your purchase may not
be considered in proper form. If the fund is able to make investments within one
business day, it may accept your order with payment in other than federal funds.

DISTRIBUTION AND SERVICE (12B-1) FEES The fund has a distribution plan,
sometimes known as a Rule 12b-1 plan, that allows the fund to pay distribution
and other fees of up to 0.25% per year for the sale of shares and for services
provided to shareholders.

Because these fees are paid out of the assets of the fund on an on-going basis,
over time these fees will increase the cost of your investment.

[Insert graphic of hands Contact your investment Contact your investment
shaking] representative representative

THROUGH YOUR INVESTMENT
REPRESENTATIVE
- --------------------------------------------------------------------------------

[Insert graphic of Make your check, Federal Make your check payable
envelope] Reserve Draft or negotiable to Franklin Cash
bank draft payable to Reserves Fund.
BY MAIL Franklin Cash Reserves
Fund. Instruments drawn on Mail the check to
other mutual funds may not Institutional Services.
be accepted.

Mail the check or draft and
your signed application to
Institutional Services.
- --------------------------------------------------------------------------------

[Insert graphic of three Call to receive a wire Call to receive a wire
lightning bolts] control number and wire control number and wire
instructions. instructions
BY WIRE
Wire the funds and mail Wire the funds to
See "Holiday Schedule" your signed application to Institutional Services.
under Institutional Services. For For investments over
"Account Policies" investments over $50,000, $50,000, you also need
you also need to complete to complete the
1-800/321-8563 the Institutional Telephone Institutional Telephone
(or 1-650/312-3600) Privileges section of the Privileges section of
application. Please include the application.
the wire control number on
the application. To make a same day wire
investment, please make
To make a same day wire sure we receive your
investment, please make order by 3:00 p.m.
sure we receive your order pacific time.
by 3:00 p.m. pacific time..
- --------------------------------------------------------------------------------

[Insert graphic of two Call Institutional Services Call Institutional
arrows at the number below, or Services at the number
pointing in opposite send signed written below, or send signed
directions] instructions. written instructions.

BY EXCHANGE For requests over $100,000, For requests over
you must complete the $100,000, you must
1-800/321-8563 Institutional Telephone complete the
or 1-650/312-3600 Privileges section of the Institutional Telephone
application. Privileges section of
the application.
(Please see page 13 for
information on exchanges.) (Please see page 13 for
information on
exchanges.)
- --------------------------------------------------------------------------------

INSTITUTIONAL SERVICES, 777 MARINERS ISLAND BLVD, P.O. BOX 7777,
SAN MATEO, CA 94403-7777
CALL TOLL-FREE: 1-800/321-8563
(MONDAY THROUGH FRIDAY 6:00 A.M. TO 5:00 P.M., PACIFIC TIME)

[Insert graphic of person with handset] INVESTOR SERVICES

DISTRIBUTION OPTIONS You may reinvest distributions you receive from the fund,
you can have your distributions mailed by check, or you can have your
distributions wired to you.

The telephone transaction options available to retirement plans are limited to
those that are provided under the plan.

EXCHANGE PRIVILEGE You can exchange shares between most Franklin Templeton Funds
within the same class*. If you exchange shares from the fund to another Franklin
Templeton Fund, a sales charge may apply unless you acquired your fund shares by
exchange or through the reinvestment of dividends, or you otherwise qualify to
buy shares without an initial sales charge.

*Certain Class Z shareholders of Franklin Mutual Series Fund Inc. may exchange
into the fund. Advisor Class shareholders of other Franklin Templeton Funds also
may exchange into the fund. Advisor Class shareholders who exchange their shares
for shares of the fund and later decide they would like to exchange into another
fund that offers Advisor Class may do so.

Generally exchanges may only be made between identically registered accounts,
unless you send written instructions with a signature guarantee.

[Insert graphic of certificate] SELLING SHARES

You can sell your shares at any time.

SELLING SHARES IN WRITING Generally, requests to sell $100,000 or less can be
made over the phone or with a simple letter if you have completed a separate
agreement. Call Institutional Services to receive a copy. Sometimes, however, to
protect you and the fund we will need written instructions signed by all
registered owners, with a signature guarantee for each owner, if:

[Begin callout]
A SIGNATURE GUARANTEE helps protect your account against fraud. You can obtain a
signature guarantee at most banks and securities dealers.

A notary public CANNOT provide a signature guarantee.
[End callout]

o you are selling more than $100,000 worth of shares

o you want your proceeds paid to someone who is not a registered owner

o you want to send your proceeds somewhere other than the address of record,
or preauthorized bank or brokerage firm account

CONTINGENT DEFERRED SALES CHARGE (CDSC) Most Franklin Templeton Funds impose a
1% CDSC on certain investments of Class A shares sold within 12 months of
purchase. While the fund generally does not have a CDSC, it will impose one if
you sell shares exchanged into the fund from another Franklin Templeton Fund and
those shares would have been assessed a CDSC in the other fund. Please keep in
mind that the time the shares are held in the money fund does not count towards
the CDSC holding period.

[Insert graphic of hands Contact your investment representative
shaking]

THROUGH YOUR INVESTMENT
REPRESENTATIVE
- --------------------------------------------------------------------------------

[Insert graphic of envelope] Send written instructions to Institutional
Services. Corporate, partnership or trust
BY MAIL accounts may need to send additional documents.

[Insert graphic of phone] As long as your transaction is for $100,000 or
less, you have completed the Institutional
BY PHONE Telephone Privileges section of the
application, and you have not changed your
1-800/321-8563 address by phone within the last 15 days, you
can sell your shares by phone.
See "Holiday Schedule" under
"Account Policies" A check will be mailed to the name(s) and
address on the account. Written instructions,
with a signature guarantee, are required to
send the check to another address or to make
it payable to another person.
- --------------------------------------------------------------------------------

[Insert graphic of three You can call or write to have redemption
lightning bolts] proceeds wired to you. If requested,
redemption proceeds may also be wired directly
BY WIRE to a commercial bank previously designated by
you on an application, or in a
1-800/321-8563 signature-guaranteed letter of instruction.
For non-retirement plan participants, payment
See "Holiday Schedule" under may be transmitted by wire the same business
"Account Policies" day, if the phone request is received before
11:15 a.m. pacific time that day. For later
requests, payment will be transmitted by wire
the next business day. If you anticipate
requesting a same-day wire redemption over $5
million, please notify the fund about this on
the prior business day. In order to maximize
efficient fund management, please request your
same-day wire redemption of any size as early
in the day as possible. Prior business day
notification of the trade may be required.

Before requesting a bank wire, please make
sure we have your bank account information on
file. If we do not have this information, you
will need to send written instructions with
your bank's name and address, your bank
account number, the ABA routing number, and a
signature guarantee.

Requests received in proper form by 3:00 p.m.
pacific time will be wired the next business
day.
- --------------------------------------------------------------------------------

[Insert graphic of two arrows Obtain a current prospectus for the fund you
pointing are considering.
in opposite directions]
Call Institutional Services at the number
BY EXCHANGE below or send signed written instructions. See
the policies above for selling shares by mail
or phone.
- --------------------------------------------------------------------------------

INSTITUTIONAL SERVICES, 777 MARINERS ISLAND BLVD, P.O. BOX 7777,
SAN MATEO, CA 94403-7777
CALL TOLL-FREE: 1-800/321-8563
(MONDAY THROUGH FRIDAY 6:00 A.M. TO 5:00 P.M., PACIFIC TIME)

[Insert graphic of paper and pen] ACCOUNT POLICIES

CALCULATING SHARE PRICE When you buy shares, you pay the net asset value (NAV)
per share. When you sell shares, you receive the NAV minus any applicable
contingent deferred sales charge (CDSC).

The fund calculates its NAV per share at 3:00 p.m. pacific time, each day the
New York Stock Exchange and the Federal Reserve Bank of San Francisco are open,
by dividing its net assets by the number of shares outstanding. The fund's
assets are generally valued at their amortized cost.

Requests to buy and sell shares are processed at the NAV next calculated after
we receive your request in proper form.

HOLIDAY SCHEDULE The fund is informed that the New York Stock Exchange (NYSE)
and/or the Federal Reserve Bank of San Francisco observe the following holidays:
New Year's Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday,
Memorial Day (observed), Independence Day, Labor Day, Columbus Day (observed),
Veterans' Day, Thanksgiving Day and Christmas Day. Although the fund expects the
same holiday schedule to be observed in the future, the Federal Reserve Bank of
San Francisco or the NYSE may modify its holiday schedule at any time. Please
place your trades as early in the day as possible on a day before or after a
holiday. To the extent that the fund's portfolio securities are traded in other
markets on days the Federal Reserve Bank of San Francisco or the NYSE is closed,
the fund's NAV may be affected when investors do not have access to the fund to
buy or sell shares. Other Franklin Templeton Funds may follow different holiday
closing schedules.

ACCOUNTS WITH LOW BALANCES If the value of your account falls below $20,000 (or
one-half the minimum required investment, whichever is less) because you sell
some of your shares, we may mail you a notice asking you to bring the account
back up to its applicable minimum investment amount. If you choose not to do so
within 30 days, we may close your account and mail the proceeds to the address
of record.

STATEMENTS AND REPORTS You will receive statements that show your account
transactions. You also will receive the fund's financial reports every six
months. If you need additional copies, please call 1-800/321-8563.

MARKET TIMERS The fund may restrict or refuse exchanges by market timers. If
accepted, each exchange by a market timer will be charged $5 by
Franklin/Templeton Investor Services, Inc., the fund's transfer agent. You will
be considered a market timer if you have (i) requested an exchange out of the
fund within two weeks of an earlier exchange request, or (ii) exchanged shares
out of the fund more than twice in a calendar quarter, or (iii) exchanged shares
equal to at least $5 million, or more than 1% of the fund's net assets, or (iv)
otherwise seem to follow a timing pattern. Shares under common ownership or
control are combined for these limits.

ADDITIONAL POLICIES Please note that the fund maintains additional policies and
reserves certain rights, including:

o The fund may refuse any order to buy shares, including any purchase under
the exchange privilege.

o At any time, the fund may change its investment minimums or waive or lower
its minimums for certain purchases.

o If you buy shares with a check or draft that is returned to the fund
unpaid, the fund may impose a $10 charge against your account for each
returned item.

o When you buy shares, it does not create a checking or other bank account
relationship with the fund or any bank.

o The fund may modify or discontinue the exchange privilege on 60 days'
notice.

o In unusual circumstances, we may temporarily suspend redemptions, or
postpone the payment of proceeds, as allowed by federal securities laws.

o For redemptions over a certain amount, the fund reserves the right to make
payments in securities or other assets of the fund, in the case of an
emergency or if the payment by check or wire would be harmful to existing
shareholders.

o To permit investors to obtain the current price, dealers are responsible
for transmitting all orders to the fund promptly.

[Insert graphic of question mark] QUESTIONS

If you have any questions about the fund or your account, you can write to us at
777 Mariners Island Blvd., P.O. Box 7777, San Mateo, CA 94403-7777. You can also
call us at 1-800/321-8563 Monday through Friday, from 6:00 a.m. to 5:00 p.m.
pacific time.

If you are a ValuSelect plan participant you may obtain current price, yield and
performance information regarding the Franklin Templeton Funds included in the
plan by calling KeyFACTSsm at 1-800 KEY-2110.

For your protection and to help ensure we provide you with quality service, all
calls may be monitored or recorded.

FOR MORE INFORMATION

You can learn more about the fund in the following documents:

ANNUAL/SEMIANNUAL REPORT TO SHAREHOLDERS

Includes a discussion of recent market conditions and fund strategies, financial
statements, detailed performance information, portfolio holdings, and the
auditor's report.

STATEMENT OF ADDITIONAL INFORMATION (SAI)

Contains more information about the fund, its investments and policies. It is
incorporated by reference (is legally a part of this prospectus).

For a free copy of the current annual/semiannual report or the SAI, please
contact your investment representative or call us at the number below.

FRANKLIN(R)TEMPLETON(R)
1-800/321-8563
www.franklintempleton.com

You can also obtain information about the fund by visiting the SEC's Public
Reference Room in Washington, D.C. (phone 1-800/SEC-0330) or by sending your
request and a duplicating fee to the SEC's Public Reference Section, Washington,
D.C. 20549-6009. You can also visit the SEC's Internet site at
http://www.sec.gov.

Investment Company Act file #811-4267 149 P 11/99

INSTITUTIONAL
FIDUCIARY TRUST

MONEY MARKET PORTFOLIO
FRANKLIN U.S. GOVERNMENT SECURITIES
MONEY MARKET PORTFOLIO

STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 1, 1999

[Insert Franklin Templeton Ben Head]
SAN MATEO, CA 94403-7777 1-800/321-8563
777 MARINERS ISLAND BLVD., P.O. BOX 7777
- -------------------------------------------------------------------------------

This Statement of Additional Information (SAI) is not a prospectus. It contains
information in addition to the information in the funds' prospectus. The funds'
prospectus, dated November 1, 1999, which we may amend from time to time,
contains the basic information you should know before investing in a fund. You
should read this SAI together with the funds' prospectus.

The audited financial statements and auditor's report in the trust's Annual
Report to Shareholders, for the fiscal year ended June 30, 1999, are
incorporated by reference (are legally a part of this SAI).

For a free copy of the current prospectus or annual report, contact
Institutional Services at 1-800/321-8563.

CONTENTS

Goals and Strategies................................ 2

Risks............................................... 6

Officers and Trustees............................... 7

Management and Other Services....................... 9

Portfolio Transactions.............................. 10

Distributions and Taxes............................. 11

Organization, Voting Rights
and Principal Holders.............................. 12

Buying and Selling Shares........................... 13

Pricing Shares...................................... 15

The Underwriter..................................... 15

Performance......................................... 17

Miscellaneous Information........................... 18

Description of Ratings.............................. 18

Appendices

California Government Code Section 53601 ......... 21

California Government Code Section 53635 ......... 24

- -------------------------------------------------------------------------------
MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENT PRODUCTS:

O ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY OF THE U.S. GOVERNMENT;

O ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK;

O ARE SUBJECT TO INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- -------------------------------------------------------------------------------

GOALS AND STRATEGIES
- -------------------------------------------------------------------------------

The investment goal of each fund is to provide investors with as high a level
of current income as is consistent with the preservation of shareholders'
capital and liquidity. This goal is fundamental, which means it may not be
changed without shareholder approval. Each fund also tries to maintain a
stable $1 share price.

U.S. GOVERNMENT SECURITIES As a fundamental policy, the Franklin U.S.
Government Securities Money Market Portfolio (U.S. Securities Fund) may
invest only in obligations, including U.S. Treasury bills, notes, bonds and
securities of the Government National Mortgage Association (popularly called
"GNMAs" or "Ginnie Maes") and the Federal Housing Administration, which are
issued or guaranteed by the U.S. government or that carry a guarantee
supported by the full faith and credit of the U.S. government, repurchase
agreements collateralized only by such securities, and stripped securities.
At the present time, it is the policy of the U.S. Securities Fund to limit
its investments to U.S. Treasury bills, notes and bonds (including stripped
securities) and repurchase agreements collateralized only by such securities.
This policy may only be changed upon 30 days' written notice to shareholders
and to the National Association of Insurance Commissioners.

The Money Market Portfolio (Money Fund) may invest in most types of U.S.
government securities. Some U.S. government securities, including U.S.
Treasury bills, notes and bonds and securities of the Government National
Mortgage Association are issued or guaranteed by the U.S. government or carry
a guarantee that is supported by the full faith and credit of the U.S.
government. Other U.S. government securities are issued or guaranteed by
federal agencies or government-sponsored enterprises and are not considered
direct obligations of the U.S. government. Instead, they involve sponsorship
or guarantees by government agencies or enterprises. For example, some
securities are supported by the right of the issuer to borrow from the U.S.
Treasury, such as obligations of the Federal Home Loan Bank. Others, such as
obligations of the Federal Farm Credit Banks Funding Corporation, are
supported only by the credit of the instrumentality.

BANK OBLIGATIONS The Money Fund may invest in obligations of U.S. banks,
foreign branches of U.S. or foreign banks, and U.S. branches of foreign
banks. These obligations may include deposits that are fully insured by the
U.S. government, its agencies or instrumentalities, such as deposits in
banking and savings institutions up to the current limit of the insurance on
principal provided by the Federal Deposit Insurance Corporation. Deposits are
frequently combined in larger units by an intermediate bank or other
institution.

The Money Fund will invest in these obligations or instruments issued by
banks and savings institutions with assets of at least $1 billion. Time
deposits are non-negotiable deposits that are held in a banking institution
for a specified time at a stated interest rate. The Money Fund may not invest
more than 10% of its assets in time deposits with more than seven days to
maturity.

The Money Fund may invest in an obligation issued by a branch of a bank only
if the parent bank has assets of at least $5 billion, and may invest only up
to 25% of its assets in obligations of foreign branches of U.S. or foreign
banks. The Money Fund may, however, invest more than 25% of its assets in
certain domestic bank obligations, including U.S. branches of foreign banks.

VARIABLE MASTER DEMAND NOTES are a type of commercial paper in which the
Money Fund may invest. They are direct arrangements between a lender and a
borrower that allow daily changes to the amount borrowed and to the interest
rate. The Money Fund, as lender, may increase or decrease the amount provided
by the note agreement, and the borrower may repay up to the full amount of
the note without penalty. Typically, the borrower may also set the interest
rate daily, usually at a rate that is the same or similar to the interest
rate on other commercial paper issued by the borrower. The Money Fund does
not have any limit on the amount of its assets that may be invested in
variable master demand notes and may invest only in variable master demand
notes of U.S. issuers.

Because variable master demand notes are direct lending arrangements between
the lender and the borrower, they generally are not traded and do not have a
secondary market. They are, however, redeemable at face value plus accrued
interest at any time, although the Money Fund's ability to redeem a note is
dependent on the ability of the borrower to pay the principal and interest on
demand. When determining whether to invest in a variable master demand note,
the manager considers, among other things, the earnings power, cash flow and
other liquidity ratios of the issuer.

ASSET-BACKED SECURITIES in which the Money Fund may invest are typically
commercial paper backed by the loans or accounts receivable of an entity,
such as a bank or credit card company. The issuer intends to repay using the
assets backing the securities (once collected). Therefore, repayment depends
largely on the cash-flows generated by the assets backing the securities.
Sometimes the credit support for these securities is limited to the
underlying assets. In other cases it may be provided by a third party through
a letter of credit or insurance guarantee.

Repayment of these securities is intended to be obtained from an identified
pool of diversified assets, typically receivables related to a particular
industry, such as asset-backed securities related to credit card receivables,
automobile receivables, trade receivables or diversified financial assets.
The credit quality of most asset-backed commercial paper depends primarily on
the credit quality of the assets underlying the securities, how well the
entity issuing the security is insulated from the credit risk of the
originator (or any other affiliated entities) and the amount and quality of
any credit support provided to the securities.

Asset-backed commercial paper is often backed by a pool of assets
representing the obligations of a number of different parties. To lessen the
effect of failures by obligors on these underlying assets to make payment,
the securities may contain elements of credit support. The credit support
falls into two categories: liquidity protection and protection against
ultimate default on the underlying assets. Liquidity protection refers to the
provision of advances, generally by the entity administering the pool of
assets, to ensure that scheduled payments on the underlying pool are made in
a timely fashion. Protection against ultimate default ensures payment on at
least a portion of the assets in the pool. This protection may be provided
through guarantees, insurance policies or letters of credit obtained from
third parties, through various means of structuring the transaction or
through a combination of these approaches. The degree of credit support
provided on each issue is based generally on historical information
respecting the level of credit risk associated with the payments. Delinquency
or loss that exceeds the anticipated amount could adversely impact the return
on an investment in an asset-backed security.

CORPORATE OBLIGATIONS in which the Money Fund may invest include fixed,
floating and variable rate bonds, debentures or notes.

COMMERCIAL PAPER The Money Fund may invest in commercial paper of domestic
and foreign issuers.

STRIPPED SECURITIES are the separate income and principal components of a
debt security. Once the securities have been stripped they are referred to as
zero coupon securities. Their risks are similar to those of other money
market securities although they may be more volatile. Stripped securities do
not make periodic payments of interest prior to maturity and the stripping of
the interest coupons causes them to be offered at a discount from their face
amount. This results in the securities being subject to greater fluctuations
in response to changing interest rates than interest-paying securities of
similar maturities.

Each fund only intends to buy stripped securities that are issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the
U.S. government.

MUNICIPAL SECURITIES The Money Fund may invest up to 10% of its assets in
taxable municipal securities. Municipal securities are issued by or on behalf
of states, territories or possessions of the U.S., the District of Columbia,
or their political subdivisions, agencies or instrumentalities. They are
generally issued to raise money for various public purposes, such as
constructing public facilities and making loans to public institutions.
Certain types of municipal securities are issued to provide funding for
privately operated facilities and are generally taxable.

DIVERSIFICATION Each fund is a diversified fund. As fundamental policies,
each fund: (a) may not buy a security if, with respect to 75% of its total
assets, more than 5% would be invested in the securities of any one issuer,
and (b) may not invest in a security if the fund would own more than 10% of
the outstanding voting securities of any one issuer. These limitations do not
apply to obligations issued or guaranteed by the U.S. government or its
instrumentalities.

As money market funds, however, the funds must follow certain procedures
required by federal securities laws that may be more restrictive than some of
the funds' other policies or investment restrictions. With respect to
diversification, these procedures require that each fund not invest more than
5% of its total assets in securities of a single issuer, other than U.S.
government securities, although it may invest up to 25% of its total assets
in securities of a single issuer that are rated in the highest rating
category for a period of up to three business days after purchase. Each fund
also must not invest more than (a) the greater of 1% of its total assets or
$1 million in securities issued by a single issuer that are rated in the
second highest rating category; and (b) 5% of its total assets in securities
rated in the second highest rating category. These procedures are fundamental
policies of each fund. See "Investment restrictions."

WHEN-ISSUED OR DELAYED-DELIVERY TRANSACTIONS are those where payment and
delivery for the security take place at a future date. Since the market price
of the security may fluctuate during the time before payment and delivery,
the fund assumes the risk that the value of the security at delivery may be
more or less than the purchase price. When the Money Fund is the buyer in the
transaction, it will maintain cash or liquid securities, with an aggregate
value equal to the amount of its purchase commitments, in a segregated
account with its custodian bank until payment is made. The Money Fund will
not engage in when-issued and delayed-delivery transactions for investment
leverage purposes.

REPURCHASE AGREEMENTS Each fund generally will have a portion of its assets
in cash or cash equivalents for a variety of reasons, including waiting for a
special investment opportunity or taking a defensive position. To earn income
on this portion of its assets, each fund may enter into repurchase
agreements. Under a repurchase agreement, a fund agrees to buy securities
guaranteed as to payment of principal and interest by the U.S. government or
its agencies from a qualified bank or broker-dealer and then to sell the
securities back to the bank or broker-dealer after a short period of time
(generally, less than seven days) at a higher price. The bank or
broker-dealer must transfer to the fund's custodian securities with an
initial market value of at least 102% of the dollar amount invested by the
fund in each repurchase agreement. The manager will monitor the value of such
securities daily to determine that the value equals or exceeds the repurchase
price.

Repurchase agreements may involve risks in the event of default or insolvency
of the bank or broker-dealer, including possible delays or restrictions upon
a fund's ability to sell the underlying securities. The funds will enter into
repurchase agreements only with parties who meet certain creditworthiness
standards, i.e., banks or broker-dealers that the manager has determined
present no serious risk of becoming involved in bankruptcy proceedings within
the time frame contemplated by the repurchase transaction. Both funds may
enter into repurchase agreements with certain U.S. and foreign banks and
broker-dealers.

LOANS OF PORTFOLIO SECURITIES To generate additional income, each fund may
lend certain of its portfolio securities to qualified banks and
broker-dealers. These loans may not exceed 25% of the value of the Money
Fund's total assets and 10% of the value of the U.S. Securities Fund's total
assets, measured at the time of the most recent loan. For each loan, the
borrower must maintain with the Money Fund's custodian collateral (consisting
of cash) and with the U.S. Securities Fund's custodian collateral (consisting
of any combination of cash, securities issued by the U.S. government and its
agencies and instrumentalities, or irrevocable letters of credit) with a
value at least equal to 100% of the current market value of the loaned
securities. The funds retain all or a portion of the interest received on
investment of the cash collateral or receive a fee from the borrower. The
funds also continues to receive any distributions paid on the loaned
securities. The funds may terminate the loan at any time and obtain the
return of the securities loaned within the normal settlement period for the
security involved.

Where voting rights with respect to the loaned securities pass with the
lending of the securities, the manager intends to call the loaned securities
to vote proxies, or to use other practicable and legally enforceable means to
obtain voting rights, when the manager has knowledge that, in its opinion, a
material event affecting the loaned securities will occur or the manager
otherwise believes it necessary to vote. As with other extensions of credit,
there are risks of delay in recovery or even loss of rights in collateral in
the event of default or insolvency of the borrower. The funds will loan their
securities only to parties who meet creditworthiness standards approved by
the funds' board of trustees, i.e., banks or broker-dealers that the manager
has determined present no serious risk of becoming involved in bankruptcy
proceedings within the time frame contemplated by the loan.

BORROWING The Money Fund may borrow up to 5% of its total assets from banks
for temporary or emergency purposes. The maximum amount the U.S. Securities
Fund may borrow from banks for such purposes is 10% of its total assets. The
funds will not make any new investments while any outstanding loans exceed 5%
of its total assets.

ILLIQUID INVESTMENTS The Money Fund's policy is not to invest more than 10%
of its net assets in illiquid securities. Illiquid securities are generally
securities that cannot be sold within seven days in the normal course of
business at approximately the amount at which the Money Fund has valued them.

OTHER LIMITATIONS The Money Fund may not invest more than 5% of its total
assets in securities of companies, including predecessors, that have been in
continuous operation for less than three years. The Money Fund also may not
invest more than 25% of its total assets in any particular industry, although
it may invest more than 25% of its assets in certain domestic bank
obligations. These limitations do not apply to U.S. government securities,
federal agency obligations, or repurchase agreements fully collateralized by
U.S. government securities. There are, however, certain tax diversification
requirements that may apply to investments in repurchase agreements and other
securities that are not treated as U.S. government securities under the
Internal Revenue Code.

MASTER/FEEDER STRUCTURE The Money Fund seeks to achieve its investment goal
by investing all of its assets in shares of The Money Market Portfolio (Money
Portfolio). The U.S. Securities Fund seeks to achieve its investment goal by
investing all of its assets in shares of The U.S. Government Securities Money
Market Portfolio (U.S. Securities Portfolio). The Money Portfolio and the
U.S. Securities Portfolio are series of The Money Market Portfolios (Money
Market). References to the "Portfolio," unless the context indicates that an
individual portfolio is being referenced, are to both the Money Portfolio and
the U.S. Securities Portfolio. The Portfolio has the same investment goal and
substantially similar investment policies as the funds, except, in all cases,
the funds may pursue their policies by investing in a mutual fund with the
same investment goal and substantially similar policies and restrictions as
the funds. The investment goal of the Portfolio also is fundamental and may
not be changed without shareholder approval.

Each fund's structure, where it invests all of its assets in the Portfolio,
is sometimes known as a "master/feeder" structure. By investing all of its
assets in shares of the Portfolio, each fund, other mutual funds and
institutional investors can pool their assets. This may result in asset
growth and lower expenses, although there is no guarantee this will happen.

If a fund, as a shareholder of the Portfolio, has to vote on a matter
relating to the Portfolio, it will hold a meeting of fund shareholders and
will cast its votes in the same proportion as the fund's shareholders voted.

INVESTMENT RESTRICTIONS Each fund has adopted the following restrictions as
fundamental policies. This means they may only be changed if the change is
approved by (i) more than 50% of the fund's outstanding shares or (ii) 67% or
more of the fund's shares present at a shareholder meeting if more than 50%
of the fund's outstanding shares are represented at the meeting in person or
by proxy, whichever is less.

Each fund may not:

(1) Borrow money or mortgage or pledge any of its assets, except that
borrowings (and a pledge of assets therefor) for temporary or emergency
purposes may be made from banks in any amount up to 5% of the Money Fund's
total asset value and up to 10% of the U.S. Securities Fund's total asset
value.

(2) Make loans, except (a) through the purchase of debt securities in
accordance with the investment objective and policies of the fund, (b) to the
extent the entry into a repurchase agreement is deemed to be a loan, or (c)
by the loan of its portfolio securities in accordance with the policies
described above.

(3) Acquire, lease or hold real estate, provided that this limitation shall
not prohibit the purchase of municipal and other debt securities secured by
real estate or interests therein.

(4) Buy any securities "on margin" or sell any securities "short," except
that it may use such short-term credits as are necessary for the clearance of
transactions.

(5) Invest in commodities and commodity contracts, puts, calls, straddles,
spreads or any combination thereof, or interests in oil, gas or other mineral
exploration or development programs, except that it may purchase, hold and
dispose of "obligations with puts attached" or write covered call options in
accordance with its stated investment policies.

(6) Purchase securities, in private placements or in other transactions, for
which there are legal or contractual restrictions on resale and are not
readily marketable, or enter into a repurchase agreement with more than seven
days to maturity if, as a result, more than 10% of the total assets of the
fund would be invested in such securities or repurchase agreements, except
that, to the extent this restriction is applicable, the fund may purchase, in
private placements, shares of another registered investment company having
the same investment objectives and policies as the fund.

(7) Act as underwriter of securities issued by other persons, except insofar
as the trust may technically be deemed an underwriter under the federal
securities laws in connection with the disposition of portfolio securities;
except that all or substantially all of the assets of the fund may be
invested in another registered investment company having the same investment
objectives and policies as the fund.

(8) Purchase securities of other investment companies, except in connection
with a merger, consolidation, acquisition or reorganization; provided that
all or substantially all of the assets of the fund may be invested in another
registered investment company having the same investment objectives and
policies as the fund.

(9) Invest in any issuer for purposes of exercising control or management,
except that, to the extent this restriction is applicable, all or
substantially all of the assets of the fund may be invested in another
registered investment company having the same investment objectives and
policies as the fund.

(10) Purchase securities from or sell to the trust's officers and trustees,
or any firm of which any officer or trustee is a member, as principal, or
retain securities of any issuer if, to the knowledge of the trust, one or
more of the trust's officers, trustees or the manager own beneficially more
than 1/2 of 1% of the securities of such issuer and all such officers and
trustees together own beneficially more than 5% of such securities.

(11) Invest more than 25% of its assets in securities of any industry,
although, for purposes of this limitation, U.S. government obligations are
not considered to be part of any industry. This prohibition does not apply
where the policies of a fund, as described in the Prospectus, state
otherwise, and further does not apply to the extent that the fund invests all
of its assets in another registered investment company having the same
investment objective and policy.

In addition to the above restrictions, the funds have the following
fundamental policies, which may only be changed with shareholder approval: i)
the U.S. Securities Fund may invest only in marketable securities issued or
guaranteed by the U.S. government, by various agencies of the U.S. government
and by various instrumentalities that have been established or sponsored by
the U.S. government, including U.S. Treasury bills, notes, bonds and
securities of the Government National Mortgage Association (GNMA) and the
Federal Housing Administration, which are issued or guaranteed by the U.S.
government or which carry a guarantee supported by the full faith and credit
of the U.S. government; or in another open-end investment company (such as
the U.S. Securities Fund) that has a fundamental policy to invest in these
types of securities; ii) each fund will invest 100% of its assets in
securities with remaining maturities of 397 days or less, or in another
open-end management investment company that has the same fundamental
investment policy; iii) the Money Fund will invest primarily in various types
of money market instruments, such as U.S. government and federal agency
obligations, certificates of deposit, banker's acceptances, time deposits of
major financial institutions, high grade commercial paper, high grade
short-term corporate obligations, taxable municipal securities and repurchase
agreements (secured by U.S. government securities) and may seek its
objectives by investing all or substantially all of its assets in an open-end
management investment company with the same investment objectives and
policies; iv) the Money Fund may not purchase the securities of any one
issuer (other than obligations of the U.S. government, its agencies or
instrumentalities) if, immediately thereafter, more than 5% of the value of
its total assets would be invested in the securities of any one issuer with
respect to 75% of the Money Fund's total assets (pursuant to an operating
policy on diversification adopted by the boards of trustees of the fund and
Money Market to comply with requirements under Rule 2a-7 under the Investment
Company Act of 1940 (1940 Act), the 5% limitation applies to the Portfolio's
total assets and is more restrictive than the fund's fundamental policy), or
more than 10% of the outstanding voting securities of any one issuer would be
owned by the Money Fund, except that this policy does not apply to the extent
all or substantially all of the assets of the Money Fund may be invested in
another registered investment company having the same investment objectives
and policies as the Money Fund; and v) the Money Fund may not invest more
than 5% of its total assets in the securities of companies (including
predecessors) that have been in continuous operation for less than three
years, except that this policy is inapplicable to the extent all or
substantially all of the assets of the Money Fund may be invested in another
registered investment company having the same investment objectives and
policies as the Money Fund.

Each fund presently has the following additional restrictions, which are not
fundamental and may be changed without shareholder approval.

Each fund may not invest in real estate limited partnerships (investments in
marketable securities issued by real estate investment trusts are not subject
to this restriction) or in interests (other than publicly traded equity
securities) in oil, gas, or other mineral leases, exploration or development
program.

The U.S. Securities Fund may invest only in U.S. Treasury bills, notes, and
bonds (including stripped securities) and repurchase agreements
collateralized only by such securities.

To continue its money market status in Texas, the Money Fund and its
respective Portfolio will comply with Section 123.3 of the Texas
Administrative Code (as stated in Conditions 1-7 listed in Form 133.26,
entitled "Request for Determination as a Money Market Fund," with the
understanding that Condition 4 excludes expenses of the Money Fund's transfer
agent associated with shareholder recordkeeping and reporting).

If a bankruptcy or other extraordinary event occurs concerning a particular
security the fund owns, the fund may receive stock, real estate, or other
investments that the fund would not, or could not, buy. If this happens, the
fund intends to sell such investments as soon as practicable while maximizing
the return to shareholders.

Generally, the policies and restrictions discussed in this SAI and in the
prospectus apply when the fund makes an investment. In most cases, the fund
is not required to sell a security because circumstances change and the
security no longer meets one or more of the fund's policies or restrictions.
If a percentage restriction or limitation is met at the time of investment, a
later increase or decrease in the percentage due to a change in the value or
liquidity of portfolio securities will not be considered a violation of the
restriction or limitation.

RISKS
- -------------------------------------------------------------------------------

FOREIGN SECURITIES The value of foreign (and U.S.) securities that the Money
Fund may hold is affected by general economic conditions and individual
company and industry earnings prospects. While foreign securities may offer
significant opportunities for gain, they also involve additional risks that
can increase the potential for losses in the fund.

The political, economic and social structures of some countries the fund
invests in may be less stable and more volatile than those in the U.S. The
risks of investing in these countries include the possibility of the
imposition of exchange controls, expropriation, restrictions on removal of
currency or other assets, nationalization of assets and punitive taxes.

There may be less publicly available information about a foreign company or
government than about a U.S. company or public entity. Certain countries'
financial markets and services are less developed than those in the U.S. or
other major economies. As a result, they may not have uniform accounting,
auditing and financial reporting standards and may have less government
supervision of financial markets. Foreign securities markets may have
substantially lower trading volumes than U.S. markets, resulting in less
liquidity and more volatility than experienced in the U.S. Transaction costs
on foreign securities markets are generally higher than in the U.S. The
settlement practices may be cumbersome and result in delays that may affect
portfolio liquidity. The fund may have greater difficulty exercising rights,
pursuing legal remedies, and obtaining judgments with respect to foreign
investments in foreign courts than with respect to domestic issuers in U.S.
courts.

DERIVATIVES Each fund's transactions in stripped securities involve certain
risks. These risks include, among others, the risk that the price movements
in the underlying securities correlate with price movements in the relevant
portion of the fund's portfolio, or that there may be a negative correlation
that would result in a loss on both the underlying security and the
derivative security. The fund bears the risk in the same amount as the
instrument it has purchased.

MASTER/FEEDER STRUCTURE There are some risks associated with the funds'
master/feeder structure. If other shareholders in the Portfolio sell their
shares, the corresponding fund's expenses may increase. Additionally, any
economies of scale a fund has achieved as a result of the structure may be
diminished. Institutional investors in the Portfolio that have a greater pro
rata ownership interest in the Portfolio than the corresponding fund could
also have effective voting control.

If the Portfolio changes its investment goal or any of its fundamental
policies and fund shareholders do not approve the same change for the fund,
the fund may need to withdraw its investment from the Portfolio. Likewise, if
the board of trustees considers it to be in a fund's best interest, it may
withdraw the fund's investment from the Portfolio at any time. If either
situation occurs, the board will decide what action to take. Possible
solutions might include investing all of a fund's assets in another pooled
investment entity with the same investment goal and policies as the fund, or
hiring an investment manager to manage the fund's investments. Either
circumstance could increase a fund's expenses.

OFFICERS AND TRUSTEES
- -------------------------------------------------------------------------------

Institutional Fiduciary Trust has a board of trustees. The board is
responsible for the overall management of the trust, including general
supervision and review of each fund's investment activities. The board, in
turn, elects the officers of the trust who are responsible for administering
the trust's day-to-day operations.

The name, age and address of the officers and board members, as well as their
affiliations, positions held with the trust, and principal occupations during
the past five years are shown below.

Frank H. Abbott, III (78)
1045 Sansome Street, San Francisco, CA 94111
TRUSTEE

President and Director, Abbott Corporation (an investment company); director
or trustee, as the case may be, of 27 of the investment companies in the
Franklin Templeton Group of Funds; and FORMERLY, Director, MotherLode Gold
Mines Consolidated (gold mining) (until 1996) and Vacu-Dry Co. (food
processing) (until 1996).

Harris J. Ashton (67)
191 Clapboard Ridge Road, Greenwich, CT 06830
TRUSTEE

Director, RBC Holdings, Inc. (bank holding company) and Bar-S Foods (meat
packing company); director or trustee, as the case may be, of 47 of the
investment companies in the Franklin Templeton Group of Funds; and FORMERLY,
President, Chief Executive Officer and Chairman of the Board, General Host
Corporation (nursery and craft centers) (until 1998).

Robert F. Carlson (71)
2120 Lambeth Way, Carmichael, CA 95608
TRUSTEE

Member and past President, Board of Administration, California Public
Employees Retirement Systems (CALPERS); director or trustee, as the case may
be, of nine of the investment companies in the Franklin Templeton Group of
Funds; and FORMERLY, member and Chairman of the Board, Sutter Community
Hospitals, member, Corporate Board, Blue Shield of California, and Chief
Counsel, California Department of Transportation.

S. Joseph Fortunato (67)
Park Avenue at Morris County, P.O. Box 1945
Morristown, NJ 07962-1945
TRUSTEE

Member of the law firm of Pitney, Hardin, Kipp & Szuch; and director or
trustee, as the case may be, of 49 of the investment companies in the
Franklin Templeton Group of Funds.

*Charles B. Johnson (66)
777 Mariners Island Blvd., San Mateo, CA 94404
CHAIRMAN OF THE BOARD AND TRUSTEE

President, Chief Executive Officer and Director, Franklin Resources, Inc.;
Chairman of the Board and Director, Franklin Advisers, Inc., Franklin
Investment Advisory Services, Inc. and Franklin Templeton Distributors, Inc.;
Director, Franklin/Templeton Investor Services, Inc. and Franklin Templeton
Services, Inc.; officer and/or director or trustee, as the case may be, of
most of the other subsidiaries of Franklin Resources, Inc. and of 48 of the
investment companies in the Franklin Templeton Group of Funds.

*Charles E. Johnson (43)
500 East Broward Blvd., Fort Lauderdale, FL 33394-3091
PRESIDENT AND TRUSTEE

Senior Vice President and Director, Franklin Resources, Inc.; Senior Vice
President, Franklin Templeton Distributors, Inc.; President and Director,
Templeton Worldwide, Inc.; Chairman and Director, Templeton Investment
Counsel, Inc.; Vice President, Franklin Advisers, Inc.; officer and/or
director of some of the other subsidiaries of Franklin Resources, Inc.; and
officer and/or director or trustee, as the case may be, of 32 of the
investment companies in the Franklin Templeton Group of Funds.

*Rupert H. Johnson, Jr. (59)
777 Mariners Island Blvd., San Mateo, CA 94404
VICE PRESIDENT AND TRUSTEE

Executive Vice President and Director, Franklin Resources, Inc. and Franklin
Templeton Distributors, Inc.; President and Director, Franklin Advisers, Inc.
and Franklin Investment Advisory Services, Inc.; Senior Vice President,
Franklin Advisory Services, LLC; Director, Franklin/Templeton Investor
Services, Inc.; and officer and/or director or trustee, as the case may be,
of most of the other subsidiaries of Franklin Resources, Inc. and of 51 of
the investment companies in the Franklin Templeton Group of Funds.

Frank W.T. LaHaye (70)
20833 Stevens Creek Blvd., Suite 102, Cupertino, CA 95014
TRUSTEE

General Partner, Miller & LaHaye, which is the General Partner of Peregrine
Ventures II (venture capital firm); director or trustee, as the case may be,
of 27 of the investment companies in the Franklin Templeton Group of Funds;
and FORMERLY, Director, Fischer Imaging Corporation (medical imaging
systems), Digital Transmission Systems, Inc. (wireless communications) and
Quarterdeck Corporation (software firm), and General Partner, Peregrine
Associates, which was the General Partner of Peregrine Ventures (venture
capital firm).

Gordon S. Macklin (71)
8212 Burning Tree Road, Bethesda, MD 20817
TRUSTEE

Director, Fund American Enterprises Holdings, Inc. (holding company), Martek
Biosciences Corporation, MCI WorldCom (information services), MedImmune, Inc.
(biotechnology), Spacehab, Inc. (aerospace services) and Real 3D (software);
director or trustee, as the case may be, of 47 of the investment companies in
the Franklin Templeton Group of Funds; and FORMERLY, Chairman, White River
Corporation (financial services) and Hambrecht and Quist Group (investment
banking), and President, National Association of Securities Dealers, Inc.

Harmon E. Burns (54)
777 Mariners Island Blvd., San Mateo, CA 94404
VICE PRESIDENT

Executive Vice President and Director, Franklin Resources, Inc., Franklin
Templeton Distributors, Inc. and Franklin Templeton Services, Inc.; Executive
Vice President, Franklin Advisers, Inc.; Director, Franklin Investment
Advisory Services, Inc. and Franklin/Templeton Investor Services, Inc.; and
officer and/or director or trustee, as the case may be, of most of the other
subsidiaries of Franklin Resources, Inc. and of 51 of the investment
companies in the Franklin Templeton Group of Funds.

Martin L. Flanagan (39)
777 Mariners Island Blvd., San Mateo, CA 94404
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER

Senior Vice President and Chief Financial Officer, Franklin Resources, Inc.,
Franklin/Templeton Investor Services, Inc. and Franklin Mutual Advisers, LLC;
Executive Vice President, Chief Financial Officer and Director, Templeton
Worldwide, Inc.; Executive Vice President, Chief Operating Officer and
Director, Templeton Investment Counsel, Inc.; Executive Vice President and
Chief Financial Officer, Franklin Advisers, Inc.; Chief Financial Officer,
Franklin Advisory Services, LLC and Franklin Investment Advisory Services,
Inc.; President and Director, Franklin Templeton Services, Inc.; officer
and/or director of some of the other subsidiaries of Franklin Resources,
Inc.; and officer and/or director or trustee, as the case may be, of 51 of
the investment companies in the Franklin Templeton Group of Funds.

Deborah R. Gatzek (50)
777 Mariners Island Blvd., San Mateo, CA 94404
VICE PRESIDENT AND SECRETARY

Senior Vice President and General Counsel, Franklin Resources, Inc.; Senior
Vice President, Franklin Templeton Services, Inc. and Franklin Templeton
Distributors, Inc.; Executive Vice President, Franklin Advisers, Inc.; Vice
President, Franklin Advisory Services, LLC and Franklin Mutual Advisers, LLC;
Vice President, Chief Legal Officer and Chief Operating Officer, Franklin
Investment Advisory Services, Inc.; and officer of 52 of the investment
companies in the Franklin Templeton Group of Funds.

Diomedes Loo-Tam (60)
777 Mariners Island Blvd., San Mateo, CA 94404
TREASURER AND PRINCIPAL ACCOUNTING OFFICER

Senior Vice President, Franklin Templeton Services, Inc.; and officer of 32
of the investment companies in the Franklin Templeton Group of Funds.

Thomas J. Runkel (41)
777 Mariners Island Blvd., San Mateo, CA 94404
VICE PRESIDENT

Senior Vice President and Portfolio Manager, Franklin Advisers, Inc.; and
officer of four of the investment companies in the Franklin Templeton Group
of Funds.

*This board member is considered an "interested person" under federal
securities laws.
Note: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers and the
father and uncle, respectively, of Charles E. Johnson.

The trust pays noninterested board members $310 per month plus $225 per
meeting attended. Board members who serve on the audit committee of the trust
and other funds in the Franklin Templeton Group of Funds receive a flat fee
of $2,000 per committee meeting attended, a portion of which is allocated to
the trust. Members of a committee are not compensated for any committee
meeting held on the day of a board meeting. Noninterested board members also
may serve as directors or trustees of other funds in the Franklin Templeton
Group of Funds and may receive fees from these funds for their services. The
fees payable to noninterested board members by the trust are subject to
reductions resulting from fee caps limiting the amount of fees payable to
board members who serve on other boards within the Franklin Templeton Group
of Funds. The following table provides the total fees paid to noninterested
board members by the trust and by the Franklin Templeton Group of Funds.

<TABLE>
<CAPTION>
NUMBER OF
BOARDS IN
TOTAL FEES THE FRANKLIN
RECEIVED FROM TEMPLETON
TOTAL FEES THE FRANKLIN GROUP
RECEIVED TEMPLETON OF FUNDS
FROM THE GROUP ON WHICH
NAME TRUST 1 ($) OF FUNDS 2 ($) EACH SERVES 3
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Frank H. Abbott, III 4,502 166,614 27

Harris J. Ashton 4,934 361,157 48

Robert Carlson 6,195 78,052 9

S. Joseph Fortunato 4,597 367,835 50

Frank W.T. LaHaye 4,727 171,536 27

Gordon S. Macklin 4,934 361,157 48
</TABLE>

1. For the fiscal year ended June 30, 1999.
2. For the calendar year ended December 31, 1998.
3. We base the number of boards on the number of registered investment companies
in the Franklin Templeton Group of Funds. This number does not include the total
number of series or funds within each investment company for which the board
members are responsible. The Franklin Templeton Group of Funds currently
includes 54 registered investment companies, with approximately 157 U.S. based
funds or series.

Noninterested board members are reimbursed for expenses incurred in
connection with attending board meetings, paid pro rata by each fund in the
Franklin Templeton Group of Funds for which they serve as director or
trustee. No officer or board member received any other compensation,
including pension or retirement benefits, directly or indirectly from the
fund or other funds in the Franklin Templeton Group of Funds. Certain
officers or board members who are shareholders of Franklin Resources, Inc.
may be deemed to receive indirect remuneration by virtue of their
participation, if any, in the fees paid to its subsidiaries.

Board members historically have followed a policy of having substantial
investments in one or more of the funds in the Franklin Templeton Group of
Funds, as is consistent with their individual financial goals. In February
1998, this policy was formalized through adoption of a requirement that each
board member invest one-third of fees received for serving as a director or
trustee of a Templeton fund in shares of one or more Templeton funds and
one-third of fees received for serving as a director or trustee of a Franklin
fund in shares of one or more Franklin funds until the value of such
investments equals or exceeds five times the annual fees paid such board
member. Investments in the name of family members or entities controlled by a
board member constitute fund holdings of such board member for purposes of
this policy, and a three year phase-in period applies to such investment
requirements for newly elected board members. In implementing such policy, a
board member's fund holdings existing on February 27, 1998, are valued as of
such date with subsequent investments valued at cost.

The board, with approval of all noninterested and interested board members,
has adopted written procedures designed to deal with potential conflicts of
interest that may arise from the fund and the Portfolio having substantially
the same boards. These procedures call for an annual review of the fund's
relationship with the Portfolio. If a conflict exists, the boards may take
action, which may include the establishment of a new board. The board has
determined that there are no conflicts of interest at the present time.

MANAGEMENT AND OTHER SERVICES
- -------------------------------------------------------------------------------

MANAGER AND SERVICES PROVIDED The Portfolio's manager is Franklin Advisers,
Inc. The manager is a wholly owned subsidiary of Franklin Resources, Inc.
(Resources), a publicly owned company engaged in the financial services
industry through its subsidiaries. Charles B. Johnson and Rupert H. Johnson,
Jr. are the principal shareholders of Resources.

The manager provides investment research and portfolio management services,
and selects the securities for the Portfolio to buy, hold or sell. The
manager also selects the brokers who execute the Portfolio's portfolio
transactions. The manager provides periodic reports to the board, which
reviews and supervises the manager's investment activities. To protect the
Portfolio, the manager and its officers, directors and employees are covered
by fidelity insurance.

The manager and its affiliates manage numerous other investment companies and
accounts. The manager may give advice and take action with respect to any of
the other funds it manages, or for its own account, that may differ from
action taken by the manager on behalf of the Portfolio. Similarly, with
respect to the Portfolio, the manager is not obligated to recommend, buy or
sell, or to refrain from recommending, buying or selling any security that
the manager and access persons, as defined by applicable federal securities
laws, may buy or sell for its or their own account or for the accounts of any
other fund. The manager is not obligated to refrain from investing in
securities held by the Portfolio or other funds it manages. Of course, any
transactions for the accounts of the manager and other access persons will be
made in compliance with the Portfolio's code of ethics.

Under the Portfolio's code of ethics, employees of the Franklin Templeton
Group who are access persons may engage in personal securities transactions
subject to the following general restrictions and procedures: (i) the trade
must receive advance clearance from a compliance officer and must be
completed by the close of the business day following the day clearance is
granted; (ii) copies of all brokerage confirmations and statements must be
sent to a compliance officer; (iii) all brokerage accounts must be disclosed
on an annual basis; and (iv) access persons involved in preparing and making
investment decisions must, in addition to (i), (ii) and (iii) above, file
annual reports of their securities holdings each January and inform the
compliance officer (or other designated personnel) if they own a security
that is being considered for a fund or other client transaction or if they
are recommending a security in which they have an ownership interest for
purchase or sale by a fund or other client.

MANAGEMENT FEES Each Portfolio pays the manager a fee equal to an annual rate
of 0.15 of 1% of the value of its average daily net assets.

The fee is computed at the close of business each day according to the terms of
the management agreement.

For the last three fiscal years ended June 30, the Portfolio paid the following
management fees:

MANAGEMENT FEES PAID1 ($)
1999 1998 1997
- ----------------------------------------------------------------------------

Money Portfolio 3,900,807 2,830,858 2,429,509

U.S. Securities Portfolio 430,179 367,433 364,509

1. For the fiscal years ended June 30, 1999, 1998 and 1997, management fees,
before any advance waiver, totaled $3,996,761, $2,963,304 and $2,547,891 for the
Money Portfolio and $437,891, $394,321 and $404,358 for the U.S. Securities
Portfolio. Under an agreement by the manager to limit its fees, the Portfolio
paid the management fees shown.

ADMINISTRATOR AND SERVICES PROVIDED Franklin Advisers, Inc. (Advisers) has an
agreement with each fund to provide various administrative, statistical and
other services to the fund.

ADMINISTRATION FEES Each fund pays Advisers a fee equal to an annual rate of
0.20 of 1% of the value of the fund's average daily net assets.

During the last three fiscal years ended June 30, 1999, the funds paid
Advisers the following administration fees:

ADMINISTRATION FEES PAID 1 ($)
1999 1998 1997
- ----------------------------------------------------------------------

Money Fund 491,517 39,173 70,428

U.S. Securities Fund 147,808 0 1,694

1. For the fiscal years ended June 30, 1999, 1998 and 1997, administration fees,
before any advance waiver, totaled $555,980, $104,796 and $150,356 for the Money
Fund and $203,308, $66,469 and $70,196 for the U.S. Securities Fund. Under an
agreement by the administrator to limit its fees, the funds paid the
administration fees shown.

SHAREHOLDER SERVICING AND TRANSFER AGENT Franklin/Templeton Investor Services,
Inc. (Investor Services) is each fund's shareholder servicing agent and acts as
the fund's transfer agent and dividend-paying agent. Investor Services is
located at 777 Mariners Island Blvd., San Mateo, CA 94404. Please send all
correspondence to Investor Services to P.O. Box 997151, Sacramento, CA
95899-9983.

For its services, Investor Services receives a fixed fee per account. Each fund
also will reimburse Investor Services for certain out-of-pocket expenses, which
may include payments by Investor Services to entities, including affiliated
entities, that provide sub-shareholder services, recordkeeping and/or transfer
agency services to beneficial owners of the fund. The amount of reimbursements
for these services per benefit plan participant fund account per year will not
exceed the per account fee payable by the fund to Investor Services in
connection with maintaining shareholder accounts.

CUSTODIAN Investor Services, as the transfer agent for the Portfolio,
effectively acts as each fund's custodian and holds the fund's shares of the
Portfolio on its books. Bank of New York, Mutual Funds Division, 90
Washington Street, New York, NY 10286, acts as custodian of each fund's cash,
pending investment in Portfolio shares. Bank of New York also acts as
custodian of the securities and other assets of the Portfolio.

AUDITOR PricewaterhouseCoopers LLP, 333 Market Street, San Francisco, CA
94105, is the funds' independent auditor. The auditor gives an opinion on the
financial statements included in the trust's Annual Report to Shareholders
and reviews the trust's registration statement filed with the U.S. Securities
and Exchange Commission (SEC).

PORTFOLIO TRANSACTIONS
- -------------------------------------------------------------------------------

The funds will not incur any brokerage or other costs in connection with
buying or selling shares of the Portfolio.

Since most purchases by the Portfolio are principal transactions at net
prices, the Portfolio incurs little or no brokerage costs. The Portfolio
deals directly with the selling or buying principal or market maker without
incurring charges for the services of a broker on its behalf, unless it is
determined that a better price or execution may be obtained by using the
services of a broker. Purchases of portfolio securities from underwriters
will include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers will include a spread between the bid
and ask prices. The Portfolio seeks to obtain prompt execution of orders at
the most favorable net price. Transactions may be directed to dealers in
return for research and statistical information, as well as for special
services provided by the dealers in the execution of orders.

It is not possible to place a dollar value on the special executions or on
the research services the manager receives from dealers effecting
transactions in portfolio securities. The allocation of transactions in order
to obtain additional research services allows the manager to supplement its
own research and analysis activities and to receive the views and information
of individuals and research staffs of other securities firms. As long as it
is lawful and appropriate to do so, the manager and its affiliates may use
this research and data in their investment advisory capacities with other
clients. If the Portfolio's officers are satisfied that the best execution is
obtained, the sale of fund shares, as well as shares of other funds in the
Franklin Templeton Group of Funds, also may be considered a factor in the
selection of broker-dealers to execute the Portfolio's portfolio transactions.

If purchases or sales of securities of the Portfolio and one or more other
investment companies or clients supervised by the manager are considered at
or about the same time, transactions in these securities will be allocated
among the several investment companies and clients in a manner deemed
equitable to all by the manager, taking into account the respective sizes of
the funds and the amount of securities to be purchased or sold. In some cases
this procedure could have a detrimental effect on the price or volume of the
security so far as the Portfolio is concerned. In other cases it is possible
that the ability to participate in volume transactions may improve execution
and reduce transaction costs to the Portfolio.

During the fiscal years ended June 30, 1999, 1998 and 1997, the Portfolio did
not pay any brokerage commissions.

As of June 30, 1999, The Money Market Portfolio owned the following
securities issued by its regular broker-dealers:

AGGREGATE VALUE OF
PORTFOLIO TRANSACTIONS ($)
- ----------------------------------------------------------------
American Express Service Corp. 124,421,000

Ford Motor Credit Corp. 98,913,000

Morgan Stanley Dean Witter 49,762,000

Salomon Smith Barney 49,722,000

Societe Generale Sec. Corp. 49,658,000

Wachovia Bank 25,000,000

Except as noted, neither the funds nor the corresponding Portfolio owned
securities issued by their regular broker-dealers as of the end of the fiscal
year.

DISTRIBUTIONS AND TAXES
- -------------------------------------------------------------------------------

The funds do not pay "interest" or guarantee any fixed rate of return on an
investment in their shares.

DISTRIBUTIONS OF NET INVESTMENT income The funds declare dividends for each
day that their net asset value is calculated. These dividends will equal all
of the funds' daily net income payable to shareholders of record as of the
close of business the preceding day.

The funds receive income generally in the form of dividends derived on its
investment in the Portfolio. This income, less expenses incurred in the
operation of the funds, constitutes its net investment income from which
dividends may be paid to you. Any distributions by the funds from such income
will be taxable to you as ordinary income, whether you take them in cash or
in additional shares.

The Portfolio's daily net income includes accrued interest and any original
issue or acquisition discount, plus or minus any gain or loss on the sale of
portfolio securities and changes in unrealized appreciation or depreciation
in portfolio securities (to the extent required to maintain a constant net
asset value per share), less the estimated expenses of the Portfolio.

DISTRIBUTIONS OF CAPITAL GAINS The funds may derive capital gains and losses
in connection with its investment in shares of the Portfolio. These capital
gains are distributed to you as capital gain distributions. Distributions
from net short-term capital gains will be taxable to you as ordinary income.
Because the funds are money market funds, they do not anticipate realizing
any long-term capital gains.

MAINTENANCE OF $1.00 NET ASSET VALUE Gains and losses derived by the funds on
its investment in shares of the Portfolio and unrealized appreciation or
depreciation in the value of these securities may require the funds to adjust
distributions in order to maintain a $1.00 net asset value. These procedures
may result in under- or over-distributions of net investment income.

EFFECT OF FOREIGN INVESTMENTS ON DISTRIBUTIONS Most foreign exchange gains
realized on the sale of debt securities are treated as ordinary income by the
Portfolio. Similarly, foreign exchange losses realized by the Portfolio on
the sale of debt securities are generally treated as ordinary losses by the
Portfolio. These gains when distributed will be taxable to the funds as
ordinary dividends, and any losses will reduce the Portfolio's ordinary
income otherwise available for distribution to the funds. This treatment
could increase or reduce the Portfolio's ordinary income distributions to the
funds and, in turn, to you.

INFORMATION ON THE TAX CHARACTER OF DISTRIBUTIONS The funds will inform you
of the amount of your distributions at the time they are paid, and will
advise you of their tax status for federal income tax purposes shortly after
the close of each calendar year.

ELECTION TO BE TAXED AS A REGULATED INVESTMENT COMPANY Each fund has elected
to be treated as a regulated investment company under Subchapter M of the
Internal Revenue Code, has qualified as such for its most recent fiscal year,
and intends to so qualify during the current fiscal year. As a regulated
investment company, the funds generally pay no federal income tax on the
income and gains it distributes. The board reserves the right not to maintain
the qualification of the funds as regulated investment companies if it
determines such course of action to be beneficial to shareholders. In such
case, the funds will be subject to federal, and possibly state, corporate
taxes on their taxable income and gains, and distributions will be taxed as
ordinary dividend income to the extent of the funds' earnings and profits.

EXCISE TAX DISTRIBUTION REQUIREMENTS To avoid federal excise taxes, the
Internal Revenue Code requires the funds to distribute to you by December 31
of each year, at a minimum, the following amounts: 98% of its taxable
ordinary income earned during the calendar year; 98% of its capital gain net
income earned during the twelve month period ending October 31; and 100% of
any undistributed amounts from the prior year. The funds intend to declare
and pay these amounts in December (or in January of the following year, in
which case these amounts must be treated by you as received in December of
the prior year) to avoid these excise taxes, but can give no assurances that
its distributions will be sufficient to eliminate all taxes.

REDEMPTION OF FUND SHARES Redemptions and exchanges of fund shares are
taxable transactions for federal and state income tax purposes. However,
because the funds seek to maintain a constant $1.00 per share net asset
value, you should not expect to realize a capital gain or loss upon
redemption or exchange of your fund shares.

U.S. GOVERNMENT OBLIGATIONS Many states grant tax-free status to dividends
paid to you from interest earned on direct obligations of the U.S.
government, subject in some states to minimum investment requirements that
must be met by the funds. Investments in Government National Mortgage
Association or Federal National Mortgage Association securities, bankers'
acceptances, commercial paper and repurchase agreements collateralized by
U.S. government securities do not generally qualify for tax-free treatment.
The rules on exclusion of this income are different for corporations. It is
anticipated, however, that no portion of the funds' distributions to you will
qualify for exemption from state and local personal income tax as dividends
paid from interest earned on direct obligations of the U.S. government. Even
if the portfolio invests in direct obligations of the U.S. government, the
funds do so only indirectly by investing in the portfolio's shares.

DIVIDENDS-RECEIVED DEDUCTION FOR CORPORATIONS Because the funds' income is
indirectly attributable to interest, no portion of its distributions
generally will be eligible for the corporate dividends-received deduction.
None of the dividends paid by the funds for the most recent fiscal year
qualified for such deduction, and it is anticipated that none of the current
year's dividends will so qualify.

INVESTMENT IN COMPLEX SECURITIES The Portfolio may invest in complex
securities. These investments may be subject to numerous special and complex
tax rules. These rules could affect whether gains and losses recognized by
the Portfolio are treated as ordinary income or capital gain, accelerate the
recognition of income to the Portfolio and/or defer the Portfolio's ability
to recognize losses, and, in limited cases, subject the Portfolio to U.S.
federal income tax on income from certain of its foreign securities. In turn,
these rules may affect the amount, timing or character of the income
distributed by the funds to you.

ORGANIZATION, VOTING RIGHTS AND PRINCIPAL HOLDERS
- -------------------------------------------------------------------------------

Each fund is a diversified series of the Institutional Fiduciary Trust, an
open-end management investment company, commonly called a mutual fund. The
trust was organized as a Massachusetts business trust on January 15, 1985,
and is registered with the SEC.

As a shareholder of a Massachusetts business trust, you could, under certain
circumstances, be held personally liable as a partner for its obligations.
The Agreement and Declaration of Trust, however, contains an express
disclaimer of shareholder liability for acts or obligations of the funds. The
Declaration of Trust also provides for indemnification and reimbursement of
expenses out of a fund's assets if you are held personally liable for
obligations of the fund. The Declaration of Trust provides that a fund shall,
upon request, assume the defense of any claim made against you for any act or
obligation of the fund and satisfy any judgment thereon. All such rights are
limited to the assets of the fund. The Declaration of Trust further provides
that each fund may maintain appropriate insurance (for example, fidelity
bonding and errors and omissions insurance) for the protection of the fund,
its shareholders, trustees, officers, employees and agents to cover possible
tort and other liabilities. Furthermore, the activities of a fund as an
investment company, as distinguished from an operating company, would not
likely give rise to liabilities in excess of the fund's total assets. Thus,
the risk that you would incur financial loss on account of shareholder
liability is limited to the unlikely circumstance in which both inadequate
insurance exists and the fund itself is unable to meet its obligations.

Certain Franklin Templeton Funds offer multiple classes of shares. The
different classes have proportionate interests in the same portfolio of
investment securities. They differ, however, primarily in their sales charge
structures and Rule 12b-1 plans. Please note that for selling or exchanging
your shares, or for other purposes, the funds' shares are considered Class A
shares. Before January 1, 1999, the funds' shares were considered Class I
shares.

The trust has noncumulative voting rights. For board member elections, this
gives holders of more than 50% of the shares voting the ability to elect all
of the members of the board. If this happens, holders of the remaining shares
voting will not be able to elect anyone to the board.

The trust does not intend to hold annual shareholder meetings. The trust or a
series of the trust may hold special meetings, however, for matters requiring
shareholder approval. A meeting may be called by the board to consider the
removal of a board member if requested in writing by shareholders holding at
least 10% of the outstanding shares. In certain circumstances, we are
required to help you communicate with other shareholders about the removal of
a board member. A special meeting also may be called by the board in its
discretion.

As of August 11, 1999, the principal shareholders of the funds, beneficial or
of record, were:

PERCENTAGE
NAME AND ADDRESS (%)
- --------------------------------------------------------------------
MONEY FUND

Franklin Resources, Inc. 11.95
Corporate Accounting
555 Airport Blvd. 4th Floor
Burlingame, CA 94010

Franklin Templeton Distributors, Inc. 20.69
Corporate Accounting
555 Airport Blvd. 4th Floor
Burlingame, CA 94010

Templeton International, Inc. 5.45
Corporate Accounting
555 Airport Blvd. 4th Floor
Burlingame, CA 94010

Franklin California Growth Fund 15.35
c/o Fund Accounting Department
3310 Quality Drive
Rancho Cordova, CA 95670

U.S. SECURITIES FUND

PNC Bank National Association 10.44
Two PNC Plaza
620 Liberty Avenue
Pittsburgh, PA 15222-2705

PNC Bank National Association 5.29
Two PNC Plaza
620 Liberty Plaza
Pittsburgh, PA 15222-2705

Franklin Resources, Inc. 17.49
Corporate Accounting
555 Airport Blvd. 4th Floor
Burlingame, CA 94010

City of Anaheim 13.53
c/o Road A 1992 Loan Fund
201 South Anaheim Blvd. 901
City Hall West
Anaheim, CA 92805

Note: Charles B. Johnson and Rupert H. Johnson, Jr., who are officers and
trustees of the trust, may be considered beneficial holders of the fund shares
held by Franklin Resources, Inc. (Resources), and its subsidiaries, including
Franklin Templeton Distributors, Inc. (Distributors) and Templeton
International, Inc. (International). As principal shareholders of Resources,
they may be able to control the voting of Resources', Distributors' and
International's shares of the funds.

From time to time, the number of fund shares held in the "street name"
accounts of various securities dealers for the benefit of their clients or in
centralized securities depositories may exceed 5% of the total shares
outstanding.

As of August 11, 1999, the officers and board members, as a group, owned of
record and beneficially less than 1% of the outstanding shares of the each
fund. The board members may own shares in other funds in the Franklin
Templeton Group of Funds.

BUYING AND SELLING SHARES
- -------------------------------------------------------------------------------

Each fund continuously offers its shares through securities dealers who have
an agreement with Franklin Templeton Distributors, Inc. (Distributors). A
securities dealer includes any financial institution that, either directly or
through affiliates, has an agreement with Distributors to handle customer
orders and accounts with the fund. This reference is for convenience only and
does not indicate a legal conclusion of capacity. Banks and financial
institutions that sell shares of the fund may be required by state law to
register as securities dealers.

For investors outside the U.S., the offering of fund shares may be limited in
many jurisdictions. An investor who wishes to buy shares of the fund should
determine, or have a broker-dealer determine, the applicable laws and
regulations of the relevant jurisdiction. Investors are responsible for
compliance with tax, currency exchange or other regulations applicable to
redemption and purchase transactions in any jurisdiction to which they may be
subject. Investors should consult appropriate tax and legal advisors to
obtain information on the rules applicable to these transactions.

All checks, drafts, wires and other payment mediums used to buy or sell
shares of the fund must be denominated in U.S. dollars, drawn on a U.S. bank,
and are accepted subject to collection at full face value. Checks drawn in
U.S. funds on foreign banks will not be credited to your account and
dividends will not begin to accrue until the proceeds are collected, which
may take a long period of time. We may, in our sole discretion, either (a)
reject any order to buy or sell shares denominated in any other currency or
(b) honor the transaction or make adjustments to your account for the
transaction as of a date and with a foreign currency exchange factor
determined by the drawee bank. We may deduct any applicable banking charges
imposed by the bank from your account.

The offering of fund shares may be suspended at any time and resumed at any
time thereafter.

DEALER COMPENSATION Distributors and/or its affiliates may provide financial
support to securities dealers that sell shares of the Franklin Templeton
Group of Funds. This support is based primarily on the amount of sales of
fund shares and/or total assets with the Franklin Templeton Group of Funds.
The amount of support may be affected by: total sales; net sales; levels of
redemptions; the proportion of a securities dealer's sales and marketing
efforts in the Franklin Templeton Group of Funds; a securities dealer's
support of, and participation in, Distributors' marketing programs; a
securities dealer's compensation programs for its registered representatives;
and the extent of a securities dealer's marketing programs relating to the
Franklin Templeton Group of Funds. Financial support to securities dealers
may be made by payments from Distributors' resources, from Distributors'
retention of underwriting concessions and, in the case of funds that have
Rule 12b-1 plans, from payments to Distributors under such plans. In
addition, certain securities dealers may receive brokerage commissions
generated by fund portfolio transactions in accordance with the rules of the
National Association of Securities Dealers, Inc.

Distributors routinely sponsors due diligence meetings for registered
representatives during which they receive updates on various Franklin
Templeton Funds and are afforded the opportunity to speak with portfolio
managers. Invitation to these meetings is not conditioned on selling a
specific number of shares. Those who have shown an interest in the Franklin
Templeton Funds, however, are more likely to be considered. To the extent
permitted by their firm's policies and procedures, registered
representatives' expenses in attending these meetings may be covered by
Distributors.

EXCHANGE PRIVILEGE If a substantial number of shareholders should, within a
short period, sell their fund shares under the exchange privilege, a fund
might have to sell portfolio securities it might otherwise hold and incur the
additional costs related to such transactions.

The proceeds from the sale of shares of an investment company are generally
not available until the seventh day following the sale. The funds you are
seeking to exchange into may delay issuing shares pursuant to an exchange
until that seventh day. The sale of fund shares to complete an exchange will
be effected at net asset value at the close of business on the day the
request for exchange is received in proper form.

REDEMPTIONS IN KIND Each fund has committed itself to pay in cash (by check)
all requests for redemption by any shareholder of record, limited in amount,
however, during any 90-day period to the lesser of $250,000 or 1% of the
value of the fund's net assets at the beginning of the 90-day period. This
commitment is irrevocable without the prior approval of the U.S. Securities
and Exchange Commission (SEC). In the case of redemption requests in excess
of these amounts, the board reserves the right to make payments in whole or
in part in securities or other assets of the fund, in case of an emergency,
or if the payment of such a redemption in cash would be detrimental to the
existing shareholders of the fund. In these circumstances, the securities
distributed would be valued at the price used to compute the fund's net
assets and you may incur brokerage fees in converting the securities to cash.
Redemptions in kind are taxable transactions.

SHARE CERTIFICATES We will credit your shares to your fund account. We do not
issue share certificates. This eliminates the costly problem of replacing
lost, stolen or destroyed certificates.

All purchases of fund shares will be credited to you, in full and fractional
fund shares (rounded to the nearest 1/100 of a share), in an account
maintained for you by the fund's transfer agent.

GENERAL INFORMATION If dividend checks are returned to the fund marked
"unable to forward" by the postal service, we will consider this a request by
you to change your dividend option to reinvest all distributions. The
proceeds will be reinvested in additional shares at net asset value until we
receive new instructions.

Distribution or redemption checks sent to you do not earn interest or any
other income during the time the checks remain uncashed. Neither the funds
nor their affiliates will be liable for any loss caused by your failure to
cash such checks. The funds are not responsible for tracking down uncashed
checks, unless a check is returned as undeliverable.

In most cases, if mail is returned as undeliverable we are required to take
certain steps to try to find you free of charge. If these attempts are
unsuccessful, however, we may deduct the costs of any additional efforts to
find you from your account. These costs may include a percentage of the
account when a search company charges a percentage fee in exchange for its
location services.

The wiring of redemption proceeds is a special service that we make available
whenever possible. By offering this service to you, the funds are not bound
to meet any redemption request in less than the seven day period prescribed
by law. Neither the funds nor their agents shall be liable to you or any
other person if, for any reason, a redemption request by wire is not
processed as described in the prospectus.

Franklin Templeton Investor Services, Inc. (Investor Services) may pay
certain financial institutions that maintain omnibus accounts with a fund on
behalf of numerous beneficial owners for recordkeeping operations performed
with respect to such owners. For each beneficial owner in the omnibus
account, the fund may reimburse Investor Services an amount not to exceed the
per account fee that the fund normally pays Investor Services. These
financial institutions also may charge a fee for their services directly to
their clients.

Special procedures have been designed for banks and other institutions
wishing to open multiple accounts. An institution may open a single master
account by filing one application form with a fund, signed by personnel
authorized to act for the institution. Individual sub-accounts may be opened
at the time the master account is filed by listing them, or instructions may
be provided to the fund at a later date. These sub-accounts may be
established by the institution with registration either by name or number.
The investment minimums applicable to the fund are applicable to each
sub-account. The fund will provide each institution with a written
confirmation for each transaction in a sub-account and arrangements may be
made at no additional charge for the transmittal of duplicate confirmations
to the beneficial owner of the sub-account.

The fund will provide to each institution, on a quarterly basis or more
frequently if requested, a statement setting forth each sub-account's share
balance, income earned for the period, income earned for the year to date,
and total current market value.

If you buy or sell shares through your securities dealer, we use the net
asset value next calculated after your securities dealer receives your
request, which is promptly transmitted to the fund.

In the event of disputes involving multiple claims of ownership or authority
to control your account, the fund has the right (but has no obligation) to:
(a) freeze the account and require the written agreement of all persons
deemed by the fund to have a potential property interest in the account,
before executing instructions regarding the account; (b) interplead disputed
funds or accounts with a court of competent jurisdiction; or (c) surrender
ownership of all or a portion of the account to the IRS in response to a
notice of levy.

PRICING SHARES
- -------------------------------------------------------------------------------

When you buy shares, you pay the net asset value (NAV) per share. When you
sell shares, you receive the NAV minus any applicable contingent deferred
sales charge (CDSC).

The value of a mutual fund is determined by deducting the fund's liabilities
from the total assets of the portfolio. The net asset value per share is
determined by dividing the net asset value of the fund by the number of
shares outstanding.

The valuation of the Portfolio's portfolio securities, including any
securities held in a separate account maintained for when-issued securities,
is based on the amortized cost of the securities, which does not take into
account unrealized capital gains or losses. This method involves valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. While this method
provides certainty in calculation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price the
Portfolio would receive if it sold the instrument. During periods of
declining interest rates, the daily yield on shares of the Portfolio computed
as described above may tend to be higher than a like computation made by a
fund with identical investments but using a method of valuation based upon
market prices and estimates of market prices for all of its portfolio
instruments. Thus, if the use of amortized cost by the Portfolio resulted in
a lower aggregate portfolio value on a particular day, a prospective investor
in the Portfolio would be able to obtain a somewhat higher yield than would
result from an investment in a fund using only market values, and existing
investors in the Portfolio would receive less investment income. The opposite
would be true in a period of rising interest rates.

The Portfolio's use of amortized cost, which helps the Portfolio maintain a
$1 share price, is permitted by a rule adopted by the U.S. Securities and
Exchange Commission (SEC). Under this rule, the Portfolio must adhere to
certain conditions. The Portfolio must maintain a dollar-weighted average
portfolio maturity of 90 days or less and only buy instruments with remaining
maturities of 397 days or less. The Portfolio also must invest only in those
U.S. dollar-denominated securities that the manager, in accordance with
procedures adopted by the board, determines present minimal credit risks and
that are rated in one of the top two ratings by U.S. nationally recognized
rating services (or comparable unrated securities), or are instruments issued
by an issuer that, with respect to an outstanding issue of short-term debt
that is comparable in priority and protection, has received a rating within
the two highest ratings. Securities subject to floating or variable interest
rates with demand features that comply with applicable SEC rules may have
stated maturities in excess of 397 days.

The board has established procedures designed to stabilize, to the extent
reasonably possible, the Portfolio's price per share at $1, as computed for
the purpose of sales and redemptions. These procedures include a review of
the Portfolio's holdings by the board, at such intervals as it may deem
appropriate, to determine if the Portfolio's net asset value calculated by
using available market quotations deviates from $1 per share based on
amortized cost. The extent of any deviation will be examined by the board. If
a deviation exceeds 1/2 of 1%, the board will promptly consider what action,
if any, will be initiated. If the board determines that a deviation exists
that may result in material dilution or other unfair results to investors or
existing shareholders, it will take corrective action that it regards as
necessary and appropriate, which may include selling portfolio instruments
before maturity to realize capital gains or losses or to shorten average
portfolio maturity, withholding dividends, redeeming shares in kind, or
establishing a net asset value per share by using available market quotations.

THE UNDERWRITER
- -------------------------------------------------------------------------------

Franklin Templeton Distributors, Inc. (Distributors) acts as the principal
underwriter in the continuous public offering of each fund's shares.
Distributors is located at 777 Mariners Island Blvd., San Mateo, CA 94404.

Distributors pays the expenses of the distribution of fund shares, including
advertising expenses and the costs of printing sales material and
prospectuses used to offer shares to the public. The fund pays the expenses
of preparing and printing amendments to its registration statements and
prospectuses (other than those necessitated by the activities of
Distributors) and of sending prospectuses to existing shareholders.

Distributors may be entitled to reimbursement under the Rule 12b-1 plans for
the funds, as discussed below. Distributors received no compensation from the
funds
for acting as underwriter.

DISTRIBUTION AND SERVICE (12B-1) FEES Each fund has a distribution or "Rule
12b-1" plan. Under each plan, the fund shall pay or may reimburse
Distributors or others for the expenses of activities that are primarily
intended to sell shares of the fund. These expenses may include, among
others, distribution or service fees paid to securities dealers or others who
have executed a servicing agreement with the fund, Distributors or its
affiliates; a prorated portion of Distributors' overhead expenses; and the
expenses of printing prospectuses and reports used for sales purposes, and
preparing and distributing sales literature and advertisements.

Payments by each fund under the plan may not exceed 0.15% per year of average
daily net assets, payable quarterly. All distribution expenses over this
amount will be borne by those who have incurred them.

The plan does not permit unreimbursed expenses incurred in a particular year
to be carried over to or reimbursed in later years.

In addition to the payments that Distributors or others are entitled to under
each plan, each plan also provides that to the extent the fund, the manager
or Distributors or other parties on behalf of the fund, the manager or
Distributors make payments that are deemed to be for the financing of any
activity primarily intended to result in the sale of fund shares within the
context of Rule 12b-1 under the Investment Company Act of 1940, as amended,
then such payments shall be deemed to have been made pursuant to the plan.
The terms and provisions of each plan relating to required reports, term, and
approval are consistent with Rule 12b-1.

In no event shall the aggregate asset-based sales charges, which include
payments made under each plan, plus any other payments deemed to be made
pursuant to a plan, exceed the amount permitted to be paid under the rules of
the National Association of Securities Dealers, Inc.

To the extent fees are for distribution or marketing functions, as
distinguished from administrative servicing or agency transactions, certain
banks will not be entitled to participate in the plans as a result of
applicable federal law prohibiting certain banks from engaging in the
distribution of mutual fund shares. These banking institutions, however, are
permitted to receive fees under the plans for administrative servicing or for
agency transactions. If you are a customer of a bank that is prohibited from
providing these services, you would be permitted to remain a shareholder of
the fund, and alternate means for continuing the servicing would be sought.
In this event, changes in the services provided might occur and you might no
longer be able to avail yourself of any automatic investment or other
services then being provided by the bank. It is not expected that you would
suffer any adverse financial consequences as a result of any of these changes.

Each plan has been approved in accordance with the provisions of Rule 12b-1.
The plans are renewable annually by a vote of the board, including a majority
vote of the board members who are not interested persons of the fund and who
have no direct or indirect financial interest in the operation of the plans,
cast in person at a meeting called for that purpose. It is also required that
the selection and nomination of such board members be done by the
noninterested members of the fund's board. The plans and any related
agreement may be terminated at any time, without penalty, by vote of a
majority of the noninterested board members on not more than 60 days' written
notice, by Distributors on not more than 60 days' written notice, by any act
that constitutes an assignment of the administration agreement between the
trust and the administrator, the management agreement between The Money
Market Portfolios and the manager, the underwriting agreement between the
trust and Distributors or by vote of a majority of the outstanding shares of
the Portfolio. Distributors or any dealer or other firm also may terminate
their respective distribution or service agreement at any time upon written
notice.

The plans and any related agreements may not be amended to increase
materially the amount to be spent for distribution expenses without approval
by a majority of the outstanding shares, and all material amendments to the
plans or any related agreements shall be approved by a vote of the
noninterested board members, cast in person at a meeting called for the
purpose of voting on any such amendment.

Distributors is required to report in writing to the board at least quarterly
on the amounts and purpose of any payment made under the plans and any
related agreements, as well as to furnish the board with such other
information as may reasonably be requested in order to enable the board to
make an informed determination of whether the plans should be continued.

For the fiscal year ended June 30, 1999, the funds did not incur any expenses
pursuant to the plans.

PERFORMANCE
- -------------------------------------------------------------------------------

Performance quotations are subject to SEC rules. These rules require the use
of standardized performance quotations or, alternatively, that every
non-standardized performance quotation furnished by the fund be accompanied
by certain standardized performance information computed as required by the
SEC. Average annual total return, current yield and effective yield
quotations used by the fund are based on the standardized methods of
computing performance mandated by the SEC. An explanation of these and other
methods used by the fund to compute or express performance follows.
Regardless of the method used, past performance does not guarantee future
results, and is an indication of the return to shareholders only for the
limited historical period used.

AVERAGE ANNUAL TOTAL RETURN Average annual total return is determined by
finding the average annual rates of return over the periods indicated below
that would equate an initial hypothetical $1,000 investment to its ending
redeemable value. The calculation assumes income dividends are reinvested at
net asset value. The quotation assumes the account was completely redeemed at
the end of each period and the deduction of all applicable charges and fees.

The average annual total returns for the indicated periods ended June 30,
1999, were:

1 YEAR (%) 5 YEARS (%) 10 YEARS (%)
- --------------------------------------------------------------------------
Money Fund 5.02 5.41 5.43
U.S. Securities Fund 4.82 5.29 5.31

The following SEC formula was used to calculate these figures:

n
P(1+T) = ERV

where:

P = a hypothetical initial payment of $1,000

T = average annual total return

n = number of years

ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of each period at the end of each period

CURRENT YIELD Current yield shows the income per share earned by the funds.
It is calculated by determining the net change, excluding capital changes, in
the value of a hypothetical pre-existing account with a balance of one share
at the beginning of the period, subtracting a hypothetical charge reflecting
deductions from shareholder accounts, and dividing the difference by the
value of the account at the beginning of the base period to obtain the base
period return. The result is then annualized by multiplying the base period
return by 365/7. The current yield for the seven day period ended June 30,
1999, was 4.61% for the Money Fund and 4.47% for the U.S. Securities Fund.

EFFECTIVE YIELD The funds' effective yield is calculated in the same manner
as their current yield, except the annualization of the return for the seven
day period reflects the results of compounding. The effective yield for the
seven day period ended June 30, 1999, was 4.72% for the Money Fund and 4.57%
for the U.S. Securities Fund.

The following SEC formula was used to calculate this figure:

365/7
Effective yield = [(Base period return + 1) ] - 1

OTHER PERFORMANCE QUOTATIONS Each fund may include in its advertising or
sales material information relating to investment goals and performance
results of funds belonging to the Franklin Templeton Group of Funds. Franklin
Resources, Inc. is the parent company of the advisors and underwriter of the
Franklin Templeton Group of Funds.

COMPARISONS To help you better evaluate how an investment in the fund may
satisfy your investment goal, advertisements and other materials about the
fund may discuss certain measures of fund performance as reported by various
financial publications. Materials also may compare performance (as calculated
above) to performance as reported by other investments, indices, and
averages. These comparisons may include, but are not limited to, the
following examples:

o IBC Money Fund Report(R) - industry averages for seven-day annualized and
compounded yields of taxable, tax-free, and government money funds.

o Bank Rate Monitor - a weekly publication that reports various bank
investments such as CD rates, average savings account rates and average
loan rates.

o Lipper - Mutual Fund Performance Analysis, Lipper - Fixed Income Fund
Performance Analysis, and Lipper - Mutual Fund Yield Survey - measure
total return and average current yield for the mutual fund industry and
rank individual mutual fund performance over specified time periods,
assuming reinvestment of all distributions, exclusive of any applicable
sales charges.

o Salomon Brothers Bond Market Roundup - a weekly publication that reviews
yield spread changes in the major sectors of the money, government agency,
futures, options, mortgage, corporate, Yankee, Eurodollar, municipal, and
preferred stock markets and summarizes changes in banking statistics and
reserve aggregates.

o Consumer Price Index (or Cost of Living Index), published by the U.S.
Bureau of Labor Statistics - a statistical measure of change, over time,
in the price of goods and services in major expenditure groups.

o Stocks, Bonds, Bills, and Inflation published by Ibbotson Associates - a
historical measure of yield, price, and total return for common and small
company stock, long term government bonds, Treasury bills and inflation.

o Financial publications: THE WALL STREET JOURNAL, AND BUSINESS WEEK,
CHANGING TIMES, FINANCIAL WORLD, FORBES, FORTUNE, AND MONEY MAGAZINES -
provide performance statistics over specified time periods.

From time to time, advertisements or information for each fund may include a
discussion of certain attributes or benefits to be derived from an investment
in the fund. The advertisements or information may include symbols,
headlines, or other material that highlights or summarizes the information
discussed in more detail in the communication.

Advertisements or information also may compare each fund's performance to the
return on certificates of deposit (CDs) or other investments. You should be
aware, however, that an investment in the fund involves the risk of
fluctuation of principal value, a risk generally not present in an investment
in a CD issued by a bank. CDs are frequently insured by an agency of the U.S.
government. An investment in a fund is not insured by any federal, state or
private entity.

In assessing comparisons of performance, you should keep in mind that the
composition of the investments in the reported indices and averages is not
identical to each fund's portfolio, the indices and averages are generally
unmanaged, and the items included in the calculations of the averages may not
be identical to the formula used by a fund to calculate its figures. In
addition, there can be no assurance that a fund will continue its performance
as compared to these other averages.

MISCELLANEOUS INFORMATION
- -------------------------------------------------------------------------------

The funds may help you achieve various investment goals such as accumulating
money for retirement, saving for a down payment on a home, college costs and
other long-term goals. The Franklin College Costs Planner may help you in
determining how much money must be invested on a monthly basis in order to
have a projected amount available in the future to fund a child's college
education. (Projected college cost estimates are based upon current costs
published by the College Board.) The Franklin Retirement Planning Guide leads
you through the steps to start a retirement savings program. Of course, an
investment in the fund cannot guarantee that these goals will be met.

The fund is a member of the Franklin Templeton Group of Funds, one of the
largest mutual fund organizations in the U.S., and may be considered in a
program for diversification of assets. Founded in 1947, Franklin is one of
the oldest mutual fund organizations and now services more than 4 million
shareholder accounts. In 1992, Franklin, a leader in managing fixed-income
mutual funds and an innovator in creating domestic equity funds, joined
forces with Templeton, a pioneer in international investing. The Mutual
Series team, known for its value-driven approach to domestic equity
investing, became part of the organization four years later. Together, the
Franklin Templeton Group has over $222 billion in assets under management for
more than 6 million U.S. based mutual fund shareholder and other accounts.
The Franklin Templeton Group of Funds offers 106 U.S. based open-end
investment companies to the public. Each fund may identify itself by its
NASDAQ symbol or CUSIP number.

Currently, there are more mutual funds than there are stocks listed on the
New York Stock Exchange. While many of them have similar investment goals, no
two are exactly alike. Shares of the fund are generally sold through
securities dealers, whose investment representatives are experienced
professionals who can offer advice on the type of investments suitable to
your unique goals and needs, as well as the risks associated with such
investments.

The Information Services & Technology division of Franklin Resources, Inc.
(Resources) established a Year 2000 Project Team in 1996. This team has been
making necessary software changes to help the computer systems that service
the fund and its shareholders to be Year 2000 compliant. After completing
these modifications, comprehensive tests are conducted in one of Resources'
U.S. test labs to verify their effectiveness. Resources continues to seek
reasonable assurances from all major hardware, software or data-services
suppliers that they will be Year 2000 compliant on a timely basis. Resources
is also developing a contingency plan, including identification of those
mission critical systems for which it is practical to develop a contingency
plan. However, in an operation as complex and geographically distributed as
Resources' business, the alternatives to use of normal systems, especially
mission critical systems, or supplies of electricity or long distance voice
and data lines are limited.

DESCRIPTION OF RATINGS
- -------------------------------------------------------------------------------

CORPORATE BOND RATINGS

MOODY'S INVESTORS SERVICE, INC. (MOODY'S)

Aaa: Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.

Aa: Bonds rated Aa are judged to be high quality by all standards. Together
with the Aaa group, they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large, fluctuation of protective elements may be of greater
amplitude, or there may be other elements present that make the long-term
risks appear somewhat larger.

A: Bonds rated A possess many favorable investment attributes and are
considered upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
that suggest a susceptibility to impairment sometime in the future.

Baa: Bonds rated Baa are considered medium-grade obligations. They are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. These bonds lack outstanding investment characteristics and, in fact,
have speculative characteristics as well.

Ba: Bonds rated Ba are judged to have predominantly speculative elements and
their future cannot be considered well assured. Often the protection of
interest and principal payments is very moderate and, thereby, not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond ratings. The modifier
1 indicates that the security ranks in the higher end of its generic rating
category; modifier 2 indicates a mid-range ranking; and modifier 3 indicates
that the issue ranks in the lower end of its generic rating category.

STANDARD & POOR'S CORPORATION (S&P)

AAA: This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.

AA: Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong and, in the majority of instances,
differ from AAA issues only in a small degree.

A: Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.

BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this
category than for bonds in the A category.

Plus (+) or minus (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

MUNICIPAL BOND RATINGS

MOODY'S

Aaa: Municipal bonds rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.

Aa: Municipal bonds rated Aa are judged to be high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large, fluctuation of protective elements may be of
greater amplitude, or there may be other elements present that make the
long-term risks appear somewhat larger.

A: Municipal bonds rated A possess many favorable investment attributes and
are considered upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
that suggest a susceptibility to impairment sometime in the future.

Baa: Municipal bonds rated Baa are considered medium-grade obligations. They
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. These bonds lack outstanding investment characteristics
and, in fact, have speculative characteristics as well.

S&P

AAA: Municipal bonds rated AAA are the highest-grade obligations. They
possess the ultimate degree of protection as to principal and interest. In
the market, they move with interest rates and, hence, provide the maximum
safety on all counts.

AA: Municipal bonds rated AA also qualify as high-grade obligations, and in
the majority of instances differ from AAA issues only in a small degree.
Here, too, prices move with the long-term money market.

A: Municipal bonds rated A are regarded as upper medium-grade. They have
considerable investment strength but are not entirely free from adverse
effects of changes in economic and trade conditions. Interest and principal
are regarded as safe. They predominantly reflect money rates in their market
behavior but also, to some extent, economic conditions.

BBB: Municipal bonds rated BBB are regarded as having an adequate capacity to
pay principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds
in this category than for bonds in the A category.

Plus (+) or minus (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

FITCH INVESTORS SERVICE, INC. (FITCH)

AAA: Municipal bonds rated AAA are considered to be investment grade and of
the highest credit quality. The obligor has an exceptionally strong ability
to pay interest and repay principal that is unlikely to be affected by
reasonably foreseeable events.

AA: Municipal bonds rated AA are considered to be investment grade and of
very high credit quality. The obligor's ability to pay interest and repay
principal is very strong although not quite as strong as bonds rated AAA and
not significantly vulnerable to foreseeable future developments.

A: Municipal bonds rated A are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.

BBB: Municipal bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have an adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the ratings
of these bonds will fall below investment grade is higher than for bonds with
higher ratings.

Plus (+) or minus (-) signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus or minus signs
are not used with the AAA category.

MUNICIPAL NOTE RATINGS

MOODY'S

Moody's ratings for state, municipal and other short-term obligations will be
designated Moody's Investment Grade (MIG). This distinction is in recognition
of the differences between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower are uppermost in importance in
short-term borrowing; factors of the first importance in long-term borrowing
risk are of lesser importance in the short run. Symbols used will be as
follows:

MIG 1: Notes are of the best quality enjoying strong protection from
established cash flows of funds for their servicing or from established and
broad-based access to the market for refinancing, or both.

MIG 2: Notes are of high quality, with margins of protection ample, although
not so large as in the preceding group.

MIG 3: Notes are of favorable quality, with all security elements accounted
for, but lacking the undeniable strength of the preceding grades. Market
access for refinancing, in particular, is likely to be less well established.

MIG 4: Notes are of adequate quality, carrying specific risk but having
protection and not distinctly or predominantly speculative.

S&P

Until June 29, 1984, S&P used the same rating symbols for notes and bonds.
After June 29, 1984, for new municipal note issues due in three years or
less, the ratings below will usually be assigned. Notes maturing beyond three
years will most likely receive a bond rating of the type recited above.

SP-1: Issues carrying this designation have a very strong or strong capacity
to pay principal and interest. Issues determined to possess overwhelming
safety characteristics will be given a "plus" (+) designation.

SP-2: Issues carrying this designation have a satisfactory capacity to pay
principal and interest.

SHORT-TERM DEBT & COMMERCIAL PAPER RATINGS

MOODY'S

Moody's short-term debt ratings are opinions of the ability of issuers to
repay punctually senior debt obligations. These obligations have an original
maturity not exceeding one year, unless explicitly noted. Moody's commercial
paper ratings, which are also applicable to municipal paper investments, are
opinions of the ability of issuers to repay punctually their promissory
obligations not having an original maturity in excess of nine months. Moody's
employs the following designations for both short-term debt and commercial
paper, all judged to be investment grade, to indicate the relative repayment
capacity of rated issuers:

P-1 (Prime-1): Superior capacity for repayment.

P-2 (Prime-2): Strong capacity for repayment.

S&P

S&P's ratings are a current assessment of the likelihood of timely payment of
debt having an original maturity of no more than 365 days. Ratings are graded
into four categories, ranging from "A" for the highest quality obligations to
"D" for the lowest. Issues within the "A" category are delineated with the
numbers 1, 2 and 3 to indicate the relative degree of safety, as follows:

A-1: This designation indicates the degree of safety regarding timely payment
is very strong. A "plus" (+) designation indicates an even stronger
likelihood of timely payment.

A-2: Capacity for timely payment on issues with this designation is strong.
The relative degree of safety, however, is not as overwhelming as for issues
designated A-1.

A-3: Issues carrying this designation have a satisfactory capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse effects
of changes in circumstances than obligations carrying the higher designations.

FITCH

Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal
and investment notes. The short-term rating places greater emphasis than a
long-term rating on the existence of liquidity necessary to meet the issuer's
obligations in a timely manner.

F-1+: Exceptionally strong credit quality. Regarded as having the strongest
degree of assurance for timely payment.

F-1: Very strong credit quality. Reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.

F-2: Good credit quality. A satisfactory degree of assurance for timely
payment, but the margin of safety is not as great as for issues assigned F-1+
and F-1 ratings.

LOC: The symbol LOC indicates that the rating is based on a letter of credit
issued by a commercial bank.

APPENDICES
- -------------------------------------------------------------------------------

CALIFORNIA GOVERNMENT CODE SECTION 53601.
SECURITIES AUTHORIZED FOR INVESTMENT; TEXT OF
SECTION EFFECTIVE ON JULY 7, 1988, AMENDED IN
1992, 1995 AND 1996.
- -------------------------------------------------------------------------------

The legislative body of a local agency having money in
a sinking fund of, or surplus money in, its treasury not required for the
immediate necessities of the local agency may invest any portion of the money
which it deems wise or expedient in those investments set forth below. A
local agency purchasing or obtaining any securities prescribed in this
section, in a negotiable, bearer, registered, or nonregistered format, shall
require delivery of the securities to the local agency, including those
purchased for the agency by financial advisors, consultants, or managers
using the agency's funds, by book entry, physical delivery or by third party
custodial agreement. The transfer of securities to the counterparty bank's
customer book entry account may be used for book entry delivery. For purposes
of this section "counterparty" means the other party to the transaction. A
counterparty bank's trust department or separate safekeeping department may
be used for the physical delivery of the security if the security is held in
the name of the local agency. Where this section does not specify a
limitation on the term or remaining maturity at the time of the investment,
no investment shall be made in any security, other than a security underlying
a repurchase or reverse repurchase agreement authorized by this section, that
at the time of the investment has a term remaining to maturity in excess of
five years, unless the legislative body has granted express authority to make
that investment either specifically or as a part of an investment program
approved by the legislative body no less than three months prior to the
investment:

(a) Bonds issued by the local agency, including bonds payable solely out of
the revenues from a revenue-producing property owned, controlled, or operated
by the local agency or by a department, board, agency, or authority of the
local agency.

(b) United States Treasury notes, bonds, bills, or certificates of
indebtedness, or those for which the faith and credit of the United States
are pledged for the payment of principal and interest.

(c) Registered state warrants or Treasury notes or bonds of this state,
including bonds payable solely out of the revenues from a revenue-producing
property owned, controlled, or operated by the state or by a department,
board, agency, or authority of the state.

(d) Bonds, notes, warrants, or other evidences of indebtedness of any local
agency within this state, including bonds payable solely out of the revenues
from a revenue-producing property owned, controlled or operated by the local
agency, or by a department, board, agency, or authority of the local agency.

(e) Obligations issued by banks for cooperatives, federal land banks, federal
intermediate credit banks, federal home loan banks, the Federal Home Loan
Bank Board, the Tennessee Valley Authority, or in obligations,
participations, or other instruments of, or issued by, or fully guaranteed as
to principal and interest by, the Federal National Mortgage Association; or
in guaranteed portions of Small Business Administration notes; or in
obligations, participations, or other instruments of, or issued by, a federal
agency or a United States government-sponsored enterprise.

(f) Bills of exchange or time drafts drawn on and accepted by a commercial
bank, otherwise known as banker's acceptances. Purchases of banker's
acceptances may not exceed 270 days maturity or 40 percent of the agency's
surplus money that may be invested pursuant to this section. However, no more
than 30 percent of the agency's surplus funds may be invested in the banker's
acceptances of any one commercial bank pursuant to this section.

This subdivision does not preclude a municipal utility district from
investing any surplus money in its treasury in any manner authorized by the
Municipal Utility District Act, (Division 6 (commencing with Section 11501)
of the Public Utilities Code).

(g) Commercial paper of "prime" quality of the highest ranking or of the
highest letter and numerical rating as provided for by Moody's Investors
Service, Inc., or Standard and Poor's Corporation. Eligible paper is further
limited to issuing corporations that are organized and operating within the
United States and having total assets in excess of five hundred million
dollars ($500,000,000) and having an "A" or higher rating for the issuer's
debt, other than commercial paper, if any, as provided for by Moody's
Investors Service, Inc. or Standard and Poor's Corporation. Purchases of
eligible commercial paper may not exceed 180 days maturity nor represent more
than 10 percent of the outstanding paper of an issuing corporation. Purchases
of commercial paper may not exceed 15 percent of the agency's surplus money
that may be invested pursuant to this section. An additional 15 percent, or a
total of 30 percent of the agency's surplus money, may be invested pursuant
to this subdivision. The additional 15 percent may be so invested only if the
dollar-weighted average maturity of the entire amount does not exceed 31
days. "Dollar-weighted average maturity" means the sum of the amount of each
outstanding commercial paper investment multiplied by the number of days to
maturity, divided by the total amount of outstanding commercial paper.

(h) Negotiable certificates of deposit issued by a nationally or
state-chartered bank or a state or federal association (as defined by Section
5102 of the Financial Code) or by a state-licensed branch of a foreign bank.
Purchases of negotiable certificates of deposit may not exceed 30 percent of
the agency's surplus money which may be invested pursuant to this section.
For purposes of this section, negotiable certificates of deposits do not come
within Article 2 (commencing with Section 53630) of Chapter 4 of Part 1 of
Division 2 of Title 5, except that the amount so invested shall be subject to
the limitations of Section 53638.

(i) (1) Investments in repurchase agreements or reverse repurchase agreements
of any securities authorized by this section as long as the agreements are
subject to this subdivision, including, the delivery requirements specified
in this section.

(2) Investments in repurchase agreements may be made, on any investment
authorized in this section when the term of the agreement does not exceed one
year. The market value of securities that underlay a repurchase agreement
shall be valued at 102 percent or greater of the funds borrowed against those
securities and the value shall be adjusted no less than quarterly.

(3) Reverse repurchase agreements may be utilized only when either of the
following conditions are met:

(A) The security was owned or specifically committed to purchase, by the
local agency prior to December 31, 1994, and was sold using a reverse
repurchase agreement on December 31, 1994.

(B) The security to be sold on reverse repurchase agreement has been owned
and fully paid for by the local agency for a minimum of 30 days prior to
sale; the total of all reverse repurchase agreements on investments owned by
the local agency not purchased or committed to purchase, prior to December
31, 1994, does not exceed 20 percent of the base value of the portfolio; and
the agreement does not exceed a term of 92 days, unless the agreement
includes a written codicil guaranteeing a minimum earning or spread for the
entire period between the sale of a security using a reverse repurchase
agreement and the final maturity date of the same security.

(4) After December 31, 1994, a reverse repurchase agreement may not be
entered into with securities not sold on a reverse repurchase agreement and
purchased, or committed to purchase, prior to that date, as a means of
financing or paying for the security sold on a reverse repurchase agreement,
but may only be entered into with securities owned and previously paid for a
minimum of 30 days prior to the settlement of the reverse repurchase
agreement, in order to supplement the yield on securities owned and
previously paid for or to provide funds for the immediate payment of a local
agency obligation. Funds obtained or funds within the pool of an equivalent
amount to that obtained from selling a security to a counterparty by way of a
reverse repurchase agreement, on securities originally purchased subsequent
to December 31, 1994, shall not be used to purchase another security with a
maturity longer than 92 days from the initial settlement date of the reverse
repurchase agreement, unless the reverse repurchase agreement includes a
written codicil guaranteeing a minimum earning or spread for the entire
period between the sale of a security using a reverse repurchase agreement
and the final maturity date of the same security. Reverse repurchase
agreements specified in subparagraph (B) of paragraph (3) may not be entered
into unless the percentage restrictions specified in that subparagraph are
met, including the total of any reverse repurchase agreements specified in
subparagraph (A) of paragraph (3).

(5) Investments in reverse repurchase agreements or similar investments in
which the local agency sells securities prior to purchase, with a
simultaneous agreement to repurchase the security, may only be made upon
prior approval of the governing body of the local agency and shall only be
made with primary dealers of the Federal Reserve Bank of New York.

(6) (A) "Repurchase agreement" means a purchase of securities by the local
agency pursuant to an agreement by which the counterparty seller will
repurchase the securities on or before a specified date and for a specified
amount and the counterparty will deliver the underlying securities to the
local agency by book entry, physical delivery, or by third party custodial
agreement. The transfer of underlying securities to the counterparty bank's
customer book-entry account may be used for book-entry delivery.

(B) "Securities," for purpose of repurchase under this subdivision, means
securities of the same issuer, description, issue date, and maturity.

(C) "Reverse repurchase agreement" means a sale of securities by the local
agency pursuant to an agreement by which the local agency will repurchase the
securities on or before a specified date and includes other comparable
agreements.

(D) For purposes of this section, the base value of the local agency's pool
portfolio shall be that dollar amount obtained by totaling all cash balances
placed in the pool by all pool participants, excluding any amounts obtained
through selling securities by way of reverse repurchase agreements or other
similar borrowing methods.

(E) For purposes of this section, the spread is the difference between the
cost of funds obtained using the reverse repurchase agreement and the
earnings obtained on the reinvestment of the funds.

(j) Medium-term notes of a maximum of five years maturity issued by
corporations organized and operating within the United States or by
depository institutions licensed by the United States or any state and
operating within the United States. Notes eligible for investment under this
subdivision shall be rated in a rating category of "A" or its equivalent or
better by a nationally recognized rating service. Purchases of medium-term
notes may not exceed 30 percent of the agency's surplus money which may be
invested pursuant to this section.

(k) (1) Shares of beneficial interest issued by diversified management
companies that invest in the securities and obligations as authorized by
subdivisions (a) to (j), inclusive, or subdivisions (m) or (n) and that
comply with the investment restrictions of this article and Article 2
(commencing with Section 53630). However, notwithstanding these restrictions,
a counterparty to a reverse repurchase agreement is not required to be a
primary dealer of the Federal Reserve Bank of New York if the company's board
of directors finds that the counterparty presents a minimal risk of default,
and the value of the securities underlying a repurchase agreement may be 100
percent of the sales price if the securities are marked to market daily.

(2) Shares of beneficial interest issued by diversified management companies
that are money market funds registered with the Securities and Exchange
Commission under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1, et
seq.).

(3) If investment is in shares issued pursuant to paragraph (1), the company
shall have met either of the following criteria:

(A) Attained the highest ranking or the highest letter and numerical rating
provided by not less than two nationally recognized statistical rating
organizations.

(B) Retained an investment adviser registered or exempt from registration
with the Securities and Exchange Commission with not less than five years'
experience investing in the securities and obligations authorized by
subdivisions (a) to (j), inclusive, or subdivisions (m) or (n) and with
assets under management in excess of five hundred million dollars
($500,000,000).

(4) If investment is in shares issued pursuant to paragraph (2), the company
shall have met either of the following criteria:

(A) Attained the highest ranking or the highest letter and numerical rating
provided by not less than two nationally recognized statistical rating
organizations.

(B) Retained an investment adviser registered or exempt from registration
with the Securities and Exchange Commission with not less than five years'
experience managing money market mutual funds with assets under management in
excess of five hundred million dollars ($500,000,000).

(5) The purchase price of shares of beneficial interest purchased pursuant to
this subdivision shall not include any commission that the companies may
charge and shall not exceed 20 percent of the agency's surplus money that may
be invested pursuant to this section. However, no more than 10 percent of the
agency's surplus funds may be invested in shares of beneficial interest of
any one mutual fund pursuant to paragraph (1).

(l) Notwithstanding anything to the contrary contained in this section,
Section 53635 or any other provision of law, money held by a trustee or
fiscal agent and pledged to the payment or security of bonds or other
indebtedness, or obligations under a lease, installment sale, or other
agreement of a local agency, or certificates of participation in those bonds,
indebtedness, lease installment sale, or other agreements, may be invested in
accordance with the statutory provisions governing the issuance of those
bonds, indebtedness, lease installment sale, or other agreement, or to the
extent not inconsistent therewith or if there are no specific statutory
provisions, in accordance with the ordinance, resolution, indenture, or
agreement of the local agency providing for the issuance.

(m) Notes, bonds, or other obligations that are at all times secured by a
valid first priority security interest in securities of the types listed by
Section 53651 as eligible securities for the purpose of securing local agency
deposits having a market value at least equal to that required by Section
53652 for the purpose of securing local agency deposits. The securities
serving as collateral shall be placed by delivery or book entry into the
custody of a trust company or the trust department of a bank which is not
affiliated with the issuer of the secured obligation, and the security
interest shall be perfected in accordance with the requirements of the
Uniform Commercial Code or federal regulations applicable to the types of
securities in which the security interest is granted.

(n) Any mortgage pass-through security, collateralized mortgage obligation,
mortgage-backed or other pay-through bond, equipment lease-backed
certificate, consumer receivable pass-through certificate, or consumer
receivable-backed bond of a maximum of five years maturity. Securities
eligible for investment under this subdivision shall be issued by an issuer
having an "A" or higher rating for the issuer's debt as provided by a
nationally recognized rating service and rated in a rating category of "AA"
or its equivalent or better by a nationally recognized rating service.
Purchase of securities authorized by this subdivision may not exceed 20
percent of the agency's surplus money that may be invested pursuant to this
section.

CALIFORNIA GOVERNMENT CODE SECTION 53635.
FUNDS OF LOCAL AGENCY; DEPOSIT OR INVESTMENT. TEXT
OF SECTION EFFECTIVE JULY 7, 1988, AMENDED IN 1995
AND 1996.
- -------------------------------------------------------------------------------

As far as possible, all money belonging to, or in the custody of, a local
agency, including money paid to the treasurer or other official to pay the
principal, interest or penalties of bonds, shall be deposited for safekeeping
in state or national banks, savings associations or federal associations,
credit unions, or federally insured industrial loan companies in this state
selected by the treasurer or other official having the legal custody of the
money; or, unless otherwise directed by the legislative body pursuant to
Section 53601, may be invested in the investments set forth below. A local
agency purchasing or obtaining any securities described in this section, in a
negotiable, bearer, registered, or nonregistered format, shall require
delivery of all the securities to the local agency, including those purchased
for the agency by financial advisors, consultants, or managers using the
agency's funds, by book entry, physical delivery, or by third-party custodial
agreement. The transfer of securities to the counterparty bank's customer
book entry account may be used for book-entry delivery. For purposes of this
section, "counterparty" means the other party to the transaction. A
counterparty bank's trust department or separate safekeeping department may
be used for the physical delivery of the security if the security is held in
the name of the local agency.

(b) United States Treasury notes, bonds, bills, or certificates of
indebtedness, or those for which the faith and credit of the United States
are pledged for the payment of principal and interest.

(d) Bonds, notes, warrants, or other evidences of indebtedness of any local
agency within this state, including bonds payable solely out of the revenues
from a revenue-producing property owned, controlled, or operated by the local
agency, or by a department, board, agency, or authority of the local agency.

(e) Obligations issued by banks for cooperatives, federal land banks, federal
intermediate credit banks, federal home loan banks, the Federal Home Loan
Bank, the Tennessee Valley Authority, or in obligations, participations, or
other instruments of, or issued by, or fully guaranteed as to principal and
interest by, the Federal National Mortgage Association; or in guaranteed
portions of Small Business Administration notes; or in obligations,
participations, or other instruments of, or issued by, a federal agency or a
United States government-sponsored enterprise.

(f) Bills of exchange or time drafts drawn on and accepted by a commercial
bank, otherwise known as banker's acceptances, which are eligible for
purchase by the Federal Reserve System. Purchases of banker's acceptances may
not exceed 270 days maturity or 40 percent of the agency's surplus funds
which may be invested pursuant to this section. No more than 30 percent of
the agency's surplus funds, however, may be invested in the banker's
acceptances of any one commercial bank pursuant to this section.

This subdivision does not preclude a municipal utility district from
investing any surplus money in its treasury in any manner authorized by the
Municipal Utility District Act, Division 6 (commencing with Section 11501) of
the Public Utilities Code.

(g) Commercial paper of "prime" quality of the highest ranking or of the
highest letter and numerical rating as provided for by Moody's Investors
Service, Inc. or Standard and Poor's Corporation. Eligible paper is further
limited to issuing corporations that are organized and operating within the
United States and having total assets in excess of five hundred million
dollars ($500,000,000) and having an "A" or higher rating for the issuer's
debt, other than commercial paper, if any, as provided for by Moody's
Investors Service, Inc. or Standard and Poor's Corporation. Purchases of
eligible commercial paper may not exceed 180 days maturity nor represent more
than 10 percent of the outstanding paper of an issuing corporation. Purchases
of commercial paper may not exceed 15 percent of the agency's surplus money
which may be invested pursuant to this section. An additional 15 percent, or
a total of 30 percent of the agency's money or money in its custody, may be
invested pursuant to this subdivision. The additional 15 percent may be so
invested only if the dollar-weighted average maturity of the entire amount
does not exceed 31 days. "Dollar-weighted average maturity" means the sum of
the amount of each outstanding commercial paper investment multiplied by the
number of days to maturity, divided by the total amount of outstanding
commercial paper.

(h) Negotiable certificates of deposit issued by a nationally or
state-chartered bank or a savings association or federal association or a
state or federal credit union or by a state-licensed branch of a foreign
bank. Purchases of negotiable certificates of deposit may not exceed 30
percent of the agency's surplus money which may be invested pursuant to this
section. For purposes of this section, negotiable certificates of deposit do
not come within Article 2 (commencing with Section 53630) of Chapter 4 of
Part 1 of Division 2 of Title 5, except that the amount so invested shall be
subject to the limitations of Section 53638. For purposes of this section,
the legislative body of a local agency and the treasurer or other official of
the local agency having legal custody of the money are prohibited from
depositing or investing local agency funds, or funds in the custody of the
local agency, in negotiable certificates of deposit issued by a state or
federal credit union if a member of the legislative body of the local agency,
or an employee of the administrative officer, manager's office, budget
office, auditor-controller's office, or treasurer's office of the local
agency also serves on the board of directors, or any committee appointed by
the board of directors, the credit committee or supervisory committee of the
state or federal credit union issuing the negotiable certificates of deposit.

(i) (1) Investments in repurchase agreements or reverse repurchase agreements
of any securities authorized by this section, so long as the agreements are
subject to this subdivision, including the delivery requirements specified in
this section.

(3) Reverse repurchase agreements may be utilized only when either of the
following conditions are met:

(A) The security was owned or specifically committed to purchase, by the
local agency, prior to repurchase agreement on December 31, 1994, and was
sold using a reverse repurchase agreement on December 31, 1994.

(B) The security to be sold on reverse repurchase agreement has been owned
and fully paid for by the local agency for a minimum of 30 days prior to
sale, the total of all reverse repurchase agreements on investments owned by
the local agency not purchased or committed to purchase, prior to December
31, 1994, does not exceed 20 percent of the base value of the portfolio, and
the agreement does not exceed a term of 92 days, unless the agreement
includes a written codicil guaranteeing a minimum earning or spread for the
entire period between the sale or a security using a reverse repurchase
agreement and the final maturity date of the same security.

(4) After December 31, 1994, a reverse repurchase agreement may not be
entered into with securities not sold on a reverse repurchase agreement and
purchased, or committed to purchase, prior to that date, as a means of
financing or paying for the security sold on a reverse repurchase agreement,
but may only be entered into with securities owned and previously paid for,
for a minimum of 30 days prior to the settlement of the reverse repurchase
agreement, in order or supplement the yield on securities owned and
previously paid for or to provide funds for the immediate payment of a local
agency obligation. Funds obtained or funds within the pool of an equivalent
amount to that obtained from selling a security to a counterparty by way of a
reverse repurchase agreement, on securities originally purchased subsequent
to December 31, 1994, shall not be used to purchase another security with a
maturity longer than 92 days from the initial settlement date of the reverse
repurchase agreement, unless the reverse repurchase agreement includes a
written codicil guaranteeing a minimum earning or spread for the entire
period between the sale of a security using a reverse repurchase agreement
and the final maturity date of the same security. Reverse repurchase
agreements specified in subparagraph (B) of paragraph (3) may not be entered
into unless the percentage restrictions specified in that subparagraph are
met, including the total of any reverse repurchase agreements specified in
subparagraph (A) of paragraph (3).

(6) (A) "Repurchase agreement" means a purchase of securities by the local
agency pursuant to an agreement by which the counterparty seller will
repurchase the securities on or before a specified date and for a specified
amount, and the counterparty will deliver the underlying securities to the
local agency by book entry, physical delivery, or by third party custodial
agreement. The transfer of underlying securities to the counterparty's bank's
customer book-entry account may be used for book-entry delivery.

(B) "Securities," for purpose of repurchase under this subdivision, means
securities of the same issuer, description, issue date, and maturity.

(C) "Reverse repurchase agreement" means a sale of securities by the local
agency, pursuant to an agreement by which the local agency will repurchase
the securities on or before a specified date and includes other comparable
agreements.

(E) For purposes of this section, the spread is the difference between the
costs of funds obtained using the reverse repurchase agreement and the
earnings obtained on the reinvestment of the funds.

(k) (1) Shares of beneficial interest issued by diversified management
companies that invest in the securities and obligations as authorized by
subdivisions (a) to (i), inclusive, or subdivisions (l) or (m) and that
comply with the investment restrictions of this article and Article 2
(commencing with Section 53600). However, notwithstanding these restrictions,
a counterparty to a reverse repurchase agreement is not required to be a
primary dealer of the Federal Reserve Bank of New York if the company's board
of directors finds that the counterparty presents a minimal risk of default,
and the value of the securities underlying a repurchase agreement may be 100
percent of the sales price if the securities are marked to market daily.

(3) If investment is in shares issued pursuant to paragraph (1), the company
shall have met either of the following criteria:

(A) Attained the highest ranking or the highest letter and numerical rating
provided by not less than two nationally recognized statistical rating
organizations.

(B) Retained an investment adviser registered or exempt from registration
with the Securities and Exchange Commission with not less than five years'
experience investing in the securities and obligations authorized by
subdivisions (a) to (j), inclusive, or subdivisions (l) or (m) and with
assets under management in excess of five hundred million dollars
($500,000,000).

(4) If investment is in shares issued pursuant to paragraph (2), the company
shall have met either of the following criteria:

(A) Attained the highest ranking or the highest letter and numerical rating
provided by not less than two nationally recognized statistical rating
organizations.

(l) Notes, bonds, or other obligations which are at all times secured by a
valid first priority security interest in securities of the types listed by
Section 53651 as eligible securities for the purpose of securing local agency
deposits having a market value at least equal to that required by Section
53652 for the purpose of securing local agency deposits. The securities
serving as collateral shall be placed by delivery or book entry into the
custody of a trust company or the trust department of a bank which is not
affiliated with the issuer of the secured obligation, and the security
interest shall be perfected in accordance with the requirements of the
Uniform Commercial Code or federal regulations applicable to the types of
securities in which the security interest is granted.

(m) Any mortgage pass-through security, collateralized mortgage obligation,
mortgage-backed or other pay-through bond, equipment lease-backed
certificate, consumer receivable pass-through certificate, or consumer
receivable-backed bond of a maximum of five years maturity. Securities
eligible for investment under this subdivision shall be issued by an issuer
having an "A" or higher rating for the issuer's debt as provided by a
nationally recognized rating service and rated in a rating category of "AA"
or its equivalent or better by a nationally recognized rating service.
Purchase of securities authorized by this subdivision may not exceed 20
percent of the agency's surplus money that may be invested pursuant to this
section.

FRANKLIN
CASH RESERVES
FUND

INSTITUTIONAL FIDUCIARY TRUST

STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 1, 1999

[Insert Franklin Templeton Ben Head]
777 MARINERS ISLAND BLVD., P.O. BOX 7777
SAN MATEO, CA 94403-7777 1-800/321-8563
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This Statement of Additional Information (SAI) is not a prospectus. It
contains information in addition to the information in the fund's prospectus.
The fund's prospectus, dated November 1, 1999, which we may amend from time
to time, contains the basic information you should know before investing in
the fund. You should read this SAI together with the fund's prospectus.

For a free copy of the current prospectus or annual report, contact
Institutional Services at 1-800/321-8563).

CONTENTS

Goal and Strategies................................. 2

Risks............................................... 5

Officers and Trustees............................... 6

Management and Other Services....................... 8

Portfolio Transactions.............................. 9

Distributions and Taxes............................. 10

Organization, Voting Rights
and Principal Holders.............................. 11

Buying and Selling Shares........................... 12

Pricing Shares...................................... 13

The Underwriter..................................... 14

Performance......................................... 15

Miscellaneous Information........................... 16

Description of Ratings.............................. 17

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MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENT PRODUCTS:

O ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY OF THE U.S. GOVERNMENT;

O ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK;

O ARE SUBJECT TO INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
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GOAL AND STRATEGIES
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The fund's investment goal is to provide investors with as high a level of
current income as is consistent with preservation of shareholders' capital
and liquidity. This goal is fundamental, which means it may not be changed
without shareholder approval. The fund also tries to maintain a stable $1
share price.

U.S. GOVERNMENT SECURITIES Some U.S. government securities, including U.S.
Treasury bills, notes and bonds and securities of the Government National
Mortgage Association are issued or guaranteed by the U.S. government or carry
a guarantee that is supported by the full faith and credit of the U.S.
government. Other U.S. government securities are issued or guaranteed by
federal agencies or government-sponsored enterprises and are not considered
direct obligations of the U.S. government. Instead, they involve sponsorship
or guarantees by government agencies or enterprises. For example, some
securities are supported by the right of the issuer to borrow from the U.S.
Treasury, such as obligations of the Federal Home Loan Bank. Others, such as
obligations of the Federal Farm Credit Banks Funding Corporation, are
supported only by the credit of the instrumentality.

BANK OBLIGATIONS The fund may invest in obligations of U.S. banks, foreign
branches of U.S. or foreign banks, and U.S. branches of foreign banks. These
obligations may include deposits that are fully insured by the U.S.
government, its agencies or instrumentalities, such as deposits in banking
and savings institutions up to the current limit of the insurance on
principal provided by the Federal Deposit Insurance Corporation. Deposits are
frequently combined in larger units by an intermediate bank or other
institution.

The fund will invest in these obligations or instruments issued by banks and
savings institutions with assets of at least $1 billion. Time deposits are
non-negotiable deposits that are held in a banking institution for a
specified time at a stated interest rate. The fund may not invest more than
10% of its assets in time deposits with more than seven days to maturity.

The fund may invest in an obligation issued by a branch of a bank only if the
parent bank has assets of at least $5 billion, and may invest only up to 25%
of its assets in obligations of foreign branches of U.S. or foreign banks.
The fund may, however, invest more than 25% of its assets in certain domestic
bank obligations, including U.S. branches of foreign banks.

VARIABLE MASTER DEMAND NOTES are a type of commercial paper. They are direct
arrangements between a lender and a borrower that allow daily changes to the
amount borrowed and to the interest rate. The fund, as lender, may increase
or decrease the amount provided by the note agreement, and the borrower may
repay up to the full amount of the note without penalty. Typically, the
borrower may also set the interest rate daily, usually at a rate that is the
same or similar to the interest rate on other commercial paper issued by the
borrower. The fund does not have any limit on the amount of its assets that
may be invested in variable master demand notes and may invest only in
variable master demand notes of U.S. issuers.

Because variable master demand notes are direct lending arrangements between
the lender and the borrower, they generally are not traded and do not have a
secondary market. They are, however, redeemable at face value plus accrued
interest at any time, although the fund's ability to redeem a note is
dependent on the ability of the borrower to pay the principal and interest on
demand. When determining whether to invest in a variable master demand note,
the manager considers, among other things, the earnings power, cash flow and
other liquidity ratios of the issuer.

ASSET-BACKED SECURITIES are typically commercial paper backed by the loans or
accounts receivable of an entity, such as a bank or credit card company. The
issuer intends to repay using the assets backing the securities (once
collected). Therefore, repayment depends largely on the cash-flows generated
by the assets backing the securities. Sometimes the credit support for these
securities is limited to the underlying assets. In other cases it may be
provided by a third party through a letter of credit or insurance guarantee.

CORPORATE OBLIGATIONS may include fixed, floating and variable rate bonds,
debentures or notes.

COMMERCIAL PAPER The fund may invest in commercial paper of domestic and
foreign issuers.

The fund only intends to buy stripped securities that are issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the
U.S. government.

MUNICIPAL SECURITIES The fund may invest up to 10% of its assets in taxable
municipal securities. Municipal securities are issued by or on behalf of
states, territories or possessions of the U.S., the District of Columbia, or
their political subdivisions, agencies or instrumentalities. They are
generally issued to raise money for various public purposes, such as
constructing public facilities and making loans to public institutions.
Certain types of municipal securities are issued to provide funding for
privately operated facilities and are generally taxable.

DIVERSIFICATION The fund is diversified. As fundamental policies: (a) the
fund may not buy a security if, with respect to 75% of its total assets, more
than 5% would be invested in the securities of any one issuer and (b) the
fund also may not invest in a security if the fund would own more than 10% of
the outstanding voting securities of any one issuer. These limitations do not
apply to obligations issued or guaranteed by the U.S. government or its
instrumentalities.

As a money market fund, however, the fund must follow certain procedures
required by federal securities laws that may be more restrictive than some of
the fund's other policies or investment restrictions. With respect to
diversification, these procedures require that the fund not invest more than
5% of its total assets in securities of a single issuer, other than U.S.
government securities, although it may invest up to 25% of its total assets
in securities of a single issuer that are rated in the highest rating
category for a period of up to three business days after purchase. The fund
also must not invest more than (a) the greater of 1% of its total assets or
$1 million in securities issued by a single issuer that are rated in the
second highest rating category; and (b) 5% of its total assets in securities
rated in the second highest rating category. These procedures are fundamental
policies of the fund, except to the extent that the fund invests all of its
assets in another registered investment company with the same investment
objective and substantially similar policies as the fund.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS are those where payment and
delivery for the security take place at a future date. Since the market price
of the security may fluctuate during the time before payment and delivery,
the fund assumes the risk that the value of the security at delivery may be
more or less than the purchase price. When the fund is the buyer in the
transaction, it will maintain cash or liquid securities, with an aggregate
value equal to the amount of its purchase commitments, in a segregated
account with its custodian bank until payment is made. The fund will not
engage in when-issued and delayed-delivery transactions for investment
leverage purposes.

REPURCHASE AGREEMENTS The fund generally will have a portion of its assets in
cash or cash equivalents for a variety of reasons, including waiting for a
special investment opportunity or taking a defensive position. To earn income
on this portion of its assets, the fund may enter into repurchase agreements.
Under a repurchase agreement, the fund agrees to buy securities guaranteed as
to payment of principal and interest by the U.S. government or its agencies
from a qualified bank or broker-dealer and then to sell the securities back
to the bank or broker-dealer after a short period of time (generally, less
than seven days) at a higher price. The bank or broker-dealer must transfer
to the fund's custodian securities with an initial market value of at least
102% of the dollar amount invested by the fund in each repurchase agreement.
The manager will monitor the value of such securities daily to determine that
the value equals or exceeds the repurchase price.

Repurchase agreements may involve risks in the event of default or insolvency
of the bank or broker-dealer, including possible delays or restrictions upon
the fund's ability to sell the underlying securities. The fund will enter
into repurchase agreements only with parties who meet certain
creditworthiness standards, i.e., banks or broker-dealers that the manager
has determined present no serious risk of becoming involved in bankruptcy
proceedings within the time frame contemplated by the repurchase transaction.
The fund may enter into repurchase agreements with certain U.S. and foreign
banks and broker-dealers.

LOANS OF PORTFOLIO SECURITIES To generate additional income, the fund may
lend certain of its portfolio securities to qualified banks and
broker-dealers. These loans may not exceed 25% of the value of the fund's
total assets, measured at the time of the most recent loan. For each loan,
the borrower must maintain with the fund's custodian collateral (consisting
of cash) with a value at least equal to 100% of the current market value of
the loaned securities. The fund retains all or a portion of the interest
received on investment of the cash collateral or receives a fee from the
borrower. The fund also continues to receive any distributions paid on the
loaned securities. The fund may terminate a loan at any time and obtain the
return of the securities loaned within the normal settlement period for the
security involved.

Where voting rights with respect to the loaned securities pass with the
lending of the securities, the manager intends to call the loaned securities
to vote proxies, or to use other practicable and legally enforceable means to
obtain voting rights, when the manager has knowledge that, in its opinion, a
material event affecting the loaned securities will occur or the manager
otherwise believes it necessary to vote. As with other extensions of credit,
there are risks of delay in recovery or even loss of rights in collateral in
the event of default or insolvency of the borrower. The fund will loan its
securities only to parties who meet creditworthiness standards approved by
the fund's board of trustees, i.e., banks or broker-dealers that the manager
has determined present no serious risk of becoming involved in bankruptcy
proceedings within the time frame contemplated by the loan.

BORROWING The fund may borrow up to 5% of its total assets from banks for
temporary or emergency purposes. The fund will not make any new investments
while any outstanding loans exceed 5% of its total assets.

ILLIQUID INVESTMENTS The fund's policy is not to invest more than 10% of its
net assets in illiquid securities. Illiquid securities are generally
securities that cannot be sold within seven days in the normal course of
business at approximately the amount at which the fund has valued them.

OTHER LIMITATIONS The fund may not invest more than 5% of its total assets in
securities of companies, including predecessors, that have been in continuous
operation for less than three years. The fund also may not invest more than
25% of its total assets in any particular industry, although it may invest
more than 25% of its assets in certain domestic bank obligations. These
limitations do not apply to U.S. government securities, federal agency
obligations, or repurchase agreements fully collateralized by U.S. government
securities. There are, however, certain tax diversification requirements that
may apply to investments in repurchase agreements and other securities that
are not treated as U.S. government securities under the Internal Revenue Code.

MASTER/FEEDER STRUCTURE The fund seeks to achieve its investment goal by
investing all of its assets in shares of The Money Market Portfolio
(Portfolio). The Portfolio has the same investment goal and substantially
similar investment policies as the fund, except, in all cases, the fund may
pursue its policies by investing in a mutual fund with the same investment
goal and substantially similar policies and restrictions as the fund. The
investment goal of the Portfolio also is fundamental and may not be changed
without shareholder approval.

The fund's structure, where it invests all of its assets in the Portfolio, is
sometimes known as a "master/feeder" structure. By investing all of its
assets in shares of the Portfolio, the fund, other mutual funds and
institutional investors can pool their assets. This may result in asset
growth and lower expenses, although there is no guarantee this will happen.

If the fund, as a shareholder of the Portfolio, has to vote on a matter
relating to the Portfolio, it will hold a meeting of fund shareholders and
will cast its votes in the same proportion as the fund's shareholders voted.

INVESTMENT RESTRICTIONS The fund has adopted the following restrictions as
fundamental policies. This means they may only be changed if the change is
approved by (i) more than 50% of the fund's outstanding shares or (ii) 67% or
more of the fund's shares present at a shareholder meeting if more than 50%
of the fund's outstanding shares are represented at the meeting in person or
by proxy, whichever is less.

The fund may not:

(3) Acquire, lease or hold real estate, provided that this limitation shall
not prohibit the purchase of municipal and other debt securities secured by
real estate or interests therein.

(4) Buy any securities "on margin" or sell any securities "short," except
that it may use such short-term credits as are necessary for the clearance of
transactions.

(5) Invest in commodities and commodity contracts, puts, calls, straddles,
spreads, or any combination thereof, or interests in oil, gas, or other
mineral exploration or development programs, except that it may purchase,
hold, and dispose of "obligations with puts attached" in accordance with its
stated investment policies.

(6) Purchase securities, in private placements or in other transactions, for
which there are legal or contractual restrictions on resale and that are not
readily marketable, or enter into a repurchase agreement with more than seven
days to maturity if, as a result, more than 10% of the total assets of the
fund would be invested in such securities or repurchase agreements, except
that, to the extent this restriction is applicable, the fund may purchase, in
private placements, shares of another registered investment company having
the same investment objectives and policies as the fund.

(7) Act as underwriter of securities issued by other persons, except insofar
as the fund may technically be deemed an underwriter under the federal
securities laws in connection with the disposition of portfolio securities;
except that all or substantially all of the assets of the fund may be
invested in another registered investment company having the same investment
objectives and policies as the fund.

(10) Purchase securities from or sell to the trust's officers and trustees,
or any firm of which any officer or trustee is a member, as principal, or
retain securities of any issuer if, to the knowledge of the trust, one or
more of the trust's officers, trustees, or the manager own beneficially more
than 1/2 of 1% of the securities of such issuer and all such officers and
trustees together own beneficially more than 5% of such securities.

(11) Invest more than 25% of its assets in securities of any industry, except
that this policy is inapplicable where the fund's policies, as described in
its current Prospectus, state otherwise, and further does not apply to the
extent that the fund invests all or substantially all of its assets in
another registered investment company having the same investment objectives
and policies. For purposes of this limitation, U.S. government obligations
are not considered to be part of any industry.

The Portfolio's investment restrictions are the same as the fund's, except as
necessary to reflect the fund's policy to invest all of its assets in shares
of the Portfolio.

RISKS
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FOREIGN SECURITIES The value of foreign (and U.S.) securities is affected by
general economic conditions and individual company and industry earnings
prospects. While foreign securities may offer significant opportunities for
gain, they also involve additional risks that can increase the potential for
losses in the fund.

DERIVATIVES The fund's transactions in stripped securities involve certain
risks. These risks include, among others, the risk that the price movements
in the underlying securities correlate with price movements in the relevant
portion of the fund's portfolio, or that there may be a negative correlation
that would result in a loss on both the underlying security and the
derivative security. The fund bears the risk in the same amount as the
instrument it has purchased.

MASTER/FEEDER STRUCTURE There are some risks associated with the fund's
master/feeder structure. If other shareholders in the Portfolio sell their
shares, the fund's expenses may increase. Additionally, any economies of
scale the fund has achieved as a result of the structure may be diminished.
Institutional investors in the Portfolio that have a greater pro rata
ownership interest in the Portfolio than the fund could also have effective
voting control.

If the Portfolio changes its investment goal or any of its fundamental
policies and fund shareholders do not approve the same change for the fund,
the fund may need to withdraw its investment from the Portfolio. Likewise, if
the board of trustees considers it to be in the fund's best interest, it may
withdraw the fund's investment from the Portfolio at any time. If either
situation occurs, the board will decide what action to take. Possible
solutions might include investing all of the fund's assets in another pooled
investment entity with the same investment goal and policies as the fund, or
hiring an investment manager to manage the fund's investments. Either
circumstance could increase the fund's expenses.

OFFICERS AND TRUSTEES
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Institutional Fiduciary Trust has a board of trustees. The board is
responsible for the overall management of the trust, including general
supervision and review of the fund's investment activities. The board, in
turn, elects the officers of the trust who are responsible for administering
the trust's day-to-day operations.