SHAREHOLDER LETTER
Dear Shareholder:
We are pleased to bring you the semiannual report for Franklin's IFT Money
Market Portfolio and Franklin U.S. Government Securities Money Market Portfolio
for the period ended December 31, 1999.
During the six months under review, domestic economic growth accelerated from a
pace that was already well above the Federal Reserve Board's (the Fed's)
targeted long-term growth rate, or "speed limit," of 3.0%. The overall economy,
as measured by U.S. gross domestic product (GDP), grew at blistering annualized
rates of 5.7% and 5.8% during the third and fourth quarters of 1999,
respectively. Higher equity and real estate prices, increasing wages and tight
labor markets helped spur consumer spending during the reporting period. The
booming economy also contributed to a continued downtrend in the national
unemployment rate, which reached a 30-year low of 4.1% by the end of the
reporting period.(1)
CONTENTS
Shareholder Letter ............ 1
Fund Reports
Franklin's IFT
Money Market Portfolio ........ 4
Franklin U.S. Government
Securities Money Market
Portfolio ..................... 6
Financial Highlights &
Statement of Investments ...... 8
Financial Statements .......... 12
Notes to
Financial Statements .......... 15
[PYRAMID]
1. Source: Bureau of Labor Statistics.
A rebound in the manufacturing sector and improving international growth
contributed to the U.S. economy as it entered its ninth consecutive year of
expansion, marking the longest growth period in the nation's history. As
expected, the combination of strong domestic and overseas expansion caused the
inflation rate to rise during the reporting period. Inflation, as measured by
the year-over-year change in the Consumer Price Index (CPI), increased from 2.0%
on June 30, 1999 to 2.7% for the year ending December 31, 1999.
Seeking to stay ahead of the curve on inflation, the Fed increased the federal
funds target rate from 5.00% to 5.50% during the reporting period. In turn, bond
prices dropped, but yields rose, a positive outcome for money market investors.
The yield on the bellwether 30-year Treasury advanced from 5.96% on June 30,
1999, to 6.48% on December 31, 1999.
Reflecting the Fed's 50 basis point increase in short-term interest rates during
the last half of 1999, the seven-day current yield of Franklin's IFT Money
Market Portfolio ended the reporting period higher, from 4.61% on June 30, 1999,
to 5.46% on December 31, 1999. Similarly, Franklin U.S. Government Securities
Money Market Portfolio's seven-day current yield increased from 4.47% on June
30, 1999 to 5.04% on December 28, 1999. Then because of Y2K related liquidity
fears, short-term interest rates dropped dramatically just prior to and over the
Y2K weekend. As a result of the temporary drop in short-term interest rates at
year-end, the Franklin U.S. Government Securities Money Market Portfolio's
seven-day current yield ended the period at 4.43% on December 31, 1999. After a
smooth transition into the new millennium, liquidity returned to the short-term
markets and interest rates rose back to the levels just prior to the drop in
rates at year-end. As of January 10, 2000, the Franklin U.S. Government
Securities Money Market Portfolio's seven-day current yield rose to 5.10%.
Going forward, underlying concerns linger regarding the economy's strength, and
the possibility that short-term interest rates may rise further in the near
future. As the world approached its date with Y2K, it became clear that the pace
of the U.S. economy was largely unaffected by the rate hikes of 1999, reviving
the specter of inflation. In light of surging consumer spending, rising
commodity prices and other inflation-inducing trends, most analysts ended the
year anticipating an even tighter monetary policy by the Fed in 2000. We will
continue to closely monitor political and economic events and make adjustments
to your portfolio as necessary.
We appreciate your support, welcome new shareholders and look forward to serving
your investment needs in the years ahead.
Sincerely,
/s/Charles B. Johnson
Charles B. Johnson
Chairman
Franklin's Institutional Fiduciary Trust
FRANKLIN'S
IFT MONEY MARKET PORTFOLIO
The Money Market Portfolio
Portfolio Composition
12/31/99
<TABLE>
<CAPTION>
<S> <C>
Certificates of Deposit 43.9%
Commercial Paper 38.2%
Repurchase Agreements 10.3%
Bank Notes 4.1%
Discounted Notes 2.8%
Other Assets 0.7%
</TABLE>
[PIE CHART]
Franklin's IFT Money Market Portfolio (the Fund) seeks to provide a high level
of current income, consistent with capital preservation and liquidity. The Fund
invests all of its assets in the shares of The Money Market Portfolio (the
Portfolio), which has the same investment objective as the Fund's. The
Portfolio, in turn, invests in various money market instruments such as:
- - U.S. government and federal agency obligations(2)
- - Certificates of deposit
- - Banker's acceptances
- - High grade commercial paper
- - High grade short-term corporate obligations
- - Repurchase agreements collateralized by U.S. government securities(2)
The Portfolio's composition as of December 31, 1999, is shown to the left.
2. U.S. government securities owned or held under repurchase agreement by the
Portfolio, but not shares of Franklin's IFT Money Market Portfolio, are
guaranteed by the U.S. government as to the timely payment of principal and
interest.
An investment in Franklin's IFT Money Market Portfolio is neither insured nor
guaranteed by the U.S. government or by any other entity or institution. There
is no assurance that the $1.00 share price will be maintained.
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 9 of
this report.
PERFORMANCE SUMMARY
FRANKLIN'S
IFT MONEY MARKET PORTFOLIO
Period Ended December 31, 1999
<TABLE>
<CAPTION>
<S> <C>
7-Day Current Yield(4): 5.46%
7-Day Effective Yield(4): 5.61%
Average Weighted
Maturity: 50 days
</TABLE>
3. Source for the Lipper Institutional Money Market Funds Index is Lipper
Analytical Services, Inc. As of December 31, 1999, there were 207 funds in the
institutional money market funds category. This index is unmanaged, and one
cannot invest directly in an index. Total return calculations show the change in
the value of an investment over the periods indicated and assume reinvestment of
dividends and capital gains, if any, at net asset value.
4. Annualized and effective yields are for the 7-day period shown and reflect
fluctuations in interest rates on Portfolio investments, and Fund expenses. Past
performance does not guarantee future results.
Franklin Advisers, Inc., the Fund's administrator and manager of the underlying
portfolio, agreed in advance to waive a portion of its management fees and make
payments of certain other expenses to limit total operating expenses to no more
than 0.35% per annum of average net assets. Without these reductions, the Fund's
current and effective 7-day yields for the period would have been 5.45% and
5.60%, respectively. Franklin Advisers, Inc. may discontinue these arrangements
at any time, upon notice to the Fund's Board of Trustees.
Franklin's IFT Money Market Portfolio
Total Returns vs.
Lipper Institutional Money Market Funds Index(3)
Periods Ended December 31, 1999
<TABLE>
<CAPTION>
Franklin Lipper
<S> <C> <C>
One-Year 4.92% 4.92%
Three-Year 16.77% 16.39%
Five-Year 30.37% 29.56%
Ten-Year 66.70% 65.20%
</TABLE>
[GRAPHIC]
Past performance does not guarantee future results.
FRANKLIN U.S. GOVERNMENT
SECURITIES MONEY MARKET PORTFOLIO
U.S. Government Securities
Money Market Portfolio
Portfolio Composition
12/31/99
<TABLE>
<CAPTION>
<S> <C>
Repurchase Agreements 58.5%
U.S. Treasuries 41.3%
Other Assets 0.2%
</TABLE>
[PIE CHART]
The Franklin U.S. Government Securities Money Market Portfolio (the Fund) seeks
to earn high current income consistent with capital preservation and liquidity.
It pursues its objective by investing all of its assets in shares of the U.S.
Government Securities Money Market Portfolio (the Portfolio), which has an
investment objective identical to the Fund's. The Portfolio, in turn, invests
primarily in repurchase agreements collateralized by U.S. government securities,
and in marketable securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities.(5) The Portfolio's composition as of December
31, 1999 is shown to the left.
Franklin Templeton provides extended times for placing trades in the Franklin
U.S. Government Securities Money Market Portfolio. Investors may purchase and
redeem shares each business day, up to 4:30 p.m. Eastern time (1:30 p.m. Pacific
time). This feature gives our shareholders the opportunity to invest monies
received late in the day and earn same-day dividends, rather than allow that
money to remain idle overnight or over a weekend. When purchasing shares of the
Fund, investors may also request next-day settlement exchanges to other money
market funds in the Trust.(6)
5. U.S. government securities owned or held under repurchase agreement by the
underlying Portfolio, but not shares of the Franklin U.S. Government Securities
Money Market Portfolio, are guaranteed by the U.S. government as to the timely
payment of principal and interest.
6. The exchange program may be modified or discontinued by the Fund.
Shareholders using timing services will be charged a $5 fee for each exchange.
Certain funds do not permit timing accounts or there may be certain
restrictions, as detailed in each fund's prospectus.
An investment in Franklin's IFT Money Market Portfolio is neither insured nor
guaranteed by the U.S. government or by any other entity or institution. There
is no assurance that the $1.00 share price will be maintained.
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 11 of
this report.
PERFORMANCE SUMMARY
FRANKLIN
U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO
Period Ended December 31, 1999
<TABLE>
<CAPTION>
<S> <C>
7-Day Current Yield(8): 4.43%
7-Day Effective Yield(8): 4.52%
Average Weighted
Maturity: 42 days
</TABLE>
7. Source for the Lipper Institutional U.S. Government Money Market Funds Index
is Lipper Analytical Services, Inc. As of December 31, 1999, there were 104
funds in the institutional U.S. government money market funds category. This
index is unmanaged, and one cannot invest directly in an index. Total return
calculations show the change in the value of an investment over the periods
indicated and assume reinvestment of dividends and capital gains, if any, at net
asset value.
8. Annualized and effective yields are for the 7-day period shown and reflect
fluctuations in interest rates on portfolio investments, and Fund expenses. Past
performance does not guarantee future results.
Franklin Advisers, Inc., the Fund's administrator and manager of the underlying
portfolio, agreed in advance to waive a portion of its management fees and make
payments of certain other expenses to limit total operating expenses to no more
than 0.35% per annum of average net assets. Without these reductions, the Fund's
current and effective 7-day yields for the period would have been 4.39% and
4.49%, respectively. Franklin Advisers, Inc. may discontinue these arrangements
at any time, upon notice to the Fund's Board of Trustees.
FRANKLIN U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO
Total Returns vs.
Lipper Institutional U.S. Government Market Funds Index(7)
Period Ended December 31, 1999
Franklin Lipper
One-Year 4.68% 4.82%
Three-Year 16.25% 16.13%
Five-Year 29.49% 29.11%
Ten-Year 64.50% 63.23%
[GRAPHIC]
Past performance does not guarantee future results.
INSTITUTIONAL FIDUCIARY TRUST
Financial Highlights
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED JUNE 30,
DECEMBER 31, 1999 ------------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period .......... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----------------------------------------------------------------------------------
Income from investment operations -
net investment income ........................ .026 .049 .054 .053 .055 .053
Less distributions from net investment income . (.026) (.049) (.054) (.053) (.055) (.053)
----------------------------------------------------------------------------------
Net asset value, end of period ................ $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
==================================================================================
Total return* ................................. 2.59% 5.02% 5.58% 5.42% 5.61% 5.46%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ............. $600,684 $1,289,010 $175,881 $185,088 $341,295 $272,147
Ratios to average net assets:
Expenses(1) .................................. .35%** .31% .20% .20% .19% .15%
Expenses excluding waiver and payments
by affiliate(1) .............................. .38%** .33% .24% .24% .24% .24%
Net investment income ........................ 5.12%** 4.82% 5.44% 5.27% 5.45% 5.40%
</TABLE>
*Total return is not annualized for periods less than one year.
**Annualized
(1)The expense ratio includes the Fund's share of the Portfolio's allocated
expenses.
See notes to financial statements.
INSTITUTIONAL FIDUCIARY TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO SHARES VALUE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUTUAL FUNDS 100.0%
The Money Market Portfolio (Note 1) (Cost $600,929,608) 600,929,608 $600,929,608
OTHER ASSETS, LESS LIABILITIES ........................ (245,695)
------------
NET ASSETS 100.0% ..................................... $600,683,913
===== ============
</TABLE>
See notes to financial statements.
INSTITUTIONAL FIDUCIARY TRUST
Financial Highlights
FRANKLIN U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED JUNE 30,
DECEMBER 31, 1999 --------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ................ $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----------------------------------------------------------------------------
Income from investment operations -
net investment income .............................. .024 .047 .054 .052 .054 .052
Less distributions from net investment income ....... (.024) (.047) (.054) (.052) (.054) (.052)
----------------------------------------------------------------------------
Net asset value, end of period ...................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
============================================================================
Total return* ....................................... 2.45% 4.82% 5.51% 5.29% 5.50% 5.32%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ................... $68,691 $111,566 $131,151 $136,705 $152,173 $334,830
Ratios to average net assets:
Expenses(1) ........................................ .35%** .30% .20% .20% .19% .15%
Expenses excluding waiver and payments by affiliate(1) .42%** .34% .26% .26% .26% .23%
Net investment income .............................. 4.82%** 4.69% 5.34% 5.14% 5.44% 5.26%
</TABLE>
*Total return is not annualized for periods less than one year.
**Annualized
(1)The expense ratio includes the Fund's share of the Portfolio's allocated
expenses.
See notes to financial statements.
INSTITUTIONAL FIDUCIARY TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FRANKLIN U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO SHARES VALUE
MUTUAL FUNDS 100.0%
<S> <C> <C>
The U.S. Government Securities Money Market Portfolio (Note 1) (Cost $68,738,848) ..................... 68,738,848 $68,738,848
Other Assets, less Liabilities ........................................................................ (47,600)
-----------
Net Assets 100.0% ..................................................................................... $68,691,248
===========
</TABLE>
See notes to financial statements.
INSTITUTIONAL FIDUCIARY TRUST
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
FRANKLIN
U.S. GOVERNMENT
SECURITIES
MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO
-------------------------------
<S> <C> <C>
Assets:
Investments in securities, at value and cost $600,929,608 $68,738,848
Receivable from capital shares sold ........ 94,994 --
-------------------------------
Total assets ............................ 601,024,602 68,738,848
-------------------------------
Liabilities:
Payables to affiliates ..................... 131,831 20,912
Distributions to shareholders .............. 179,617 26,289
Other liabilities .......................... 29,241 399
-------------------------------
Total liabilities ....................... 340,689 47,600
-------------------------------
Net assets, at value ........................ $600,683,913 $68,691,248
===============================
Shares outstanding .......................... 600,683,913 68,691,248
===============================
Net asset value per share ................... $1.00 $1.00
===============================
</TABLE>
See notes to financial statements.
INSTITUTIONAL FIDUCIARY TRUST
Financial Statements (continued)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FRANKLIN
U.S. GOVERNMENT
SECURITIES
MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO
--------------------------------
<S> <C> <C>
Investment income:
Dividends ......................................... $14,421,142 $2,207,836
--------------------------------
Expenses:
Administrative fees (Note 3) ...................... 547,273 88,511
Transfer agent fees (Note 3) ...................... 2,542 6,798
Reports to shareholders ........................... 3,798 1,938
Registration and filing fees ...................... 9,938 6,331
Professional fees ................................. 5,585 4,589
Trustees' fees and expenses ....................... 10,430 3,450
Other ............................................. 15,396 150
--------------------------------
Total expenses ..................................... 594,962 111,767
Expenses waived/paid by affiliate (Note 3) ......... (47,578) (23,255)
--------------------------------
Net expenses ...................................... 547,384 88,512
--------------------------------
Net investment income .............................. 13,873,758 2,119,324
--------------------------------
Net increase in net assets resulting from operations $13,873,758 $2,119,324
================================
</TABLE>
See notes to financial statements.
INSTITUTIONAL FIDUCIARY TRUST
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (UNAUDITED)
AND THE YEAR ENDED JUNE 30, 1999 14
<TABLE>
<CAPTION>
FRANKLIN U.S. GOVERNMENT SECURITIES
MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
-----------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, 1999 JUNE 30, 1999 DECEMBER 31, 1999 JUNE 30, 1999
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income .............................. $13,873,758 $13,473,371 $2,119,324 $6,469,392
Distributions to shareholders from net
investment income .................................. (13,873,758) (13,473,371) (2,119,324) (6,469,392)
Capital share transactions (Note 2) ............... (688,326,075) 1,113,128,619 (42,874,784) (19,584,891)
-----------------------------------------------------------------------------
Net increase (decrease) in net assets .............. (688,326,075) 1,113,128,619 (42,874,784) (19,584,891)
Net assets (there is no undistributed net investment
income at beginning or end of period):
Beginning of period ................................ 1,289,009,988 175,881,369 111,566,032 131,150,923
-----------------------------------------------------------------------------
End of period ...................................... $600,683,913 $1,289,009,988 $68,691,248 $111,566,032
=============================================================================
</TABLE>
See notes to financial statements.
INSTITUTIONAL FIDUCIARY TRUST
Notes to Financial Statements (unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Institutional Fiduciary Trust (the Trust) is registered under the Investment
Company Act of 1940 as an open-end investment company, consisting of three
separate series (the Funds). All funds included in this report are diversified.
The investment objective of the funds included in this report is to seek high
current income consistent with the preservation of capital and liquidity.
The Institutional Fiduciary Trust Money Market Portfolio (Money Market Fund) and
the Franklin U.S. Government Securities Money Market Portfolio (U.S. Government
Fund) invest substantially all of their assets in the Money Market Portfolio and
the U.S. Government Securities Money Market Portfolio (the Portfolios),
respectively. The Portfolios are registered under the Investment Company Act of
1940 as diversified, open-end investment companies having the same investment
objectives as the funds'. The financial statements of the Portfolios, including
the Statement of Investments, are included elsewhere in this report and should
be read in conjunction with the funds' financial statements.
The following summarizes the funds' significant accounting policies.
a. SECURITY VALUATION:
The Money Market Fund and the U.S. Government Fund hold Portfolio shares that
are valued at their proportionate interest in the net asset values of the Money
Market Portfolio and the U.S. Government Securities Money Market Portfolio,
respectively. At December 31, 1999, the Money Market Fund owns 16.56% of the
Money Market Portfolio and the U.S. Government Fund owns 24.29% of the U.S.
Government Securities Money Market Portfolio.
b. INCOME TAXES:
No provision has been made for income taxes because each fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute substantially all of its taxable income.
c. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Income and estimated expenses are accrued daily. Dividends from net investment
income and capital gains or losses are normally declared daily. Such
distributions are reinvested in additional shares of the funds.
Common expenses incurred by the Trust are allocated among the Funds based on the
ratio of net assets of each fund to the combined net assets. Other expenses are
charged to each fund on a specific identification basis.
d. ACCOUNTING ESTIMATES:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
INSTITUTIONAL FIDUCIARY TRUST
Notes to Financial Statements (unaudited) (continued)
2. SHARES OF BENEFICIAL INTEREST
At December 31, 1999, there were an unlimited number of shares authorized (no
par value). Transactions in the fund's shares were as follows:
<TABLE>
<CAPTION>
FRANKLIN
U.S. GOVERNMENT
SECURITIES
MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO
----------------------------------------------
<S> <C> <C>
Six months ended December 31, 1999
Shares sold ......................................................... $2,892,697,656 $93,205,704
Shares issued in reinvestment of distributions ...................... 12,218,896 1,746,390
Shares redeemed ..................................................... (3,593,242,627) (137,826,878)
----------------------------------------------
Net decrease ........................................................ $(688,326,075) $(42,874,784)
==============================================
Year ended June 30, 1999
Shares sold ......................................................... $3,137,711,337 $716,692,153
Shares issued in reinvestment of distributions ...................... 10,832,591 4,641,979
Shares redeemed ..................................................... (2,035,415,309) (740,919,023)
----------------------------------------------
Net increase (decrease) ............................................ $1,113,128,619 $(19,584,891)
==============================================
</TABLE>
3. TRANSACTIONS WITH AFFILIATES
Certain officers and trustees of the Funds are also officers and/or directors of
Franklin Advisers Inc. (Advisers), Franklin/Templeton Distributors Inc.
(Distributors), and Franklin/Templeton Investor Services Inc. (Investor
Services), the Funds' administrative manager, principal underwriter, and
transfer agent respectively, and of the Portfolios.
Shares of the Money Market Fund are offered to other investment companies
managed by Advisers, or its affiliates.
At December 31, 1999, investment companies managed by Advisers or its affiliates
owned 387,770,627 shares of the Money Market Fund.
The funds pay an administrative fee to Advisers of .20% per year of the funds'
average daily net assets.
Advisers agreed in advance to waive management fees as noted in the Statement of
Operations.
The funds paid transfer agent fees of $9,340 of which $2,659 was paid to
Investor Services.
THE MONEY MARKET PORTFOLIOS
Financial Highlights
<TABLE>
<CAPTION>
THE MONEY MARKET PORTFOLIO
SIX MONTHS ENDED YEAR ENDED JUNE 30,
DECEMBER 31, 1999 --------------------------------------
(UNAUDITED) 1999 1998
---------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ............... $1.00 $1.00 $1.00
---------------------------------------------------------------
Income from investment operations -
net investment income ............................. .027 .051 .055
Less distributions from net investment income ...... (.027) (.051) (.055)
---------------------------------------------------------------
Net asset value, end of period ..................... $1.00 $1.00 $1.00
---------------------------------------------------------------
Total return(a) .................................... 2.69% 5.18% 5.64%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) .................. $3,628,518 $3,672,404 $2,043,629
Ratios to average net assets:
Expenses .......................................... .15%(b) .15% .15%
Expenses excluding waiver and payments by affiliate .16%(b) .15% .16%
Net investment income ............................. 5.32%(b) 5.04% 5.50%
</TABLE>
<TABLE>
<CAPTION>
Year Ended June 30,
---------------------------------------------------------------
1997 1996 1995
---------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ............... $1.00 $1.00 $1.00
Income from investment operations -
net investment income ............................. .053 .055 .053
Less distributions from net investment income ...... (.053) (.055) (.053)
---------------------------------------------------------------
Net asset value, end of period ..................... $1.00 $1.00 $1.00
---------------------------------------------------------------
Total return(a) .................................... 5.47% 5.66% 5.46%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) .................. $1,773,546 $1,550,085 $1,305,574
Ratios to average net assets:
Expenses .......................................... .15% .15% .15%
Expenses excluding waiver and payments by affiliate .16% .16% .16%
Net investment income ............................. 5.34% 5.50% 5.42%
</TABLE>
(a)Total return is not annualized for periods less than one year.
(b)Annualized
See notes to financial statements.
THE MONEY MARKET PORTFOLIOS
STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
THE MONEY MARKET PORTFOLIO PRINCIPAL
BANK NOTES 4.1% AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Bank of America NA, 5.70% - 6.03%, 1/28/00 - 3/21/00 (COST $150,000,130) .............. $150,000,000 $150,000,130
-------------
CERTIFICATES OF DEPOSIT 43.9%
ABN-AMRO Bank NV, Chicago Branch, 5.10% - 6.00%, 4/05/00 - 8/10/00 .................... 154,000,000 153,984,546
Australia & New Zealand Banking Group, New York Branch, 6.01%, 1/06/00 ................ 30,000,000 30,000,041
Bank of Montreal, Chicago Branch, 5.12% - 6.03%, 3/02/00 - 4/12/00 .................... 120,000,000 119,999,716
Bayerische Landesbank, New York Branch, 5.89% - 5.99%, 2/17/00 - 3/17/00 .............. 120,000,000 120,001,678
Bayerische Vereinsbank, New York Branch, 5.55% - 5.86%, 1/10/00 - 1/24/00 ............. 90,000,000 90,000,251
Credit Agricole Indosuez, New York Branch, 5.03% - 5.98%, 1/13/00 - 3/20/00 ........... 130,000,000 130,001,940
Credit Communal De Belgique, New York Branch, 6.00%, 1/07/00 .......................... 30,000,000 30,000,049
Den Danske Bank, New York Branch, 5.98% - 6.00%, 3/30/00 - 4/14/00 .................... 85,000,000 85,001,409
Deutsche Bank AG, New York Branch, 5.27% - 5.62%, 3/03/00 - 6/26/00 ................... 124,000,000 123,975,744
Dresdner Bank AG, New York Branch, 5.56% - 6.06%, 1/11/00 - 3/01/00 ................... 115,000,000 115,001,100
Lloyds Bank PLC, New York Branch, 5.90% - 5.99%, 2/24/00 - 3/31/00 .................... 150,000,000 150,002,387
Rabobank Nederland NV, New York Branch, 5.41%, 6/01/00 ................................ 25,000,000 24,995,999
Royal Bank of Canada, New York Branch, 5.70%, 7/03/00 ................................. 25,000,000 24,997,585
Svenska Handelsbanken, New York Branch, 5.865% - 5.94%, 1/12/00 - 3/09/00 ............. 120,000,000 120,001,549
Toronto Dominion Bank, New York Branch, 5.10% - 6.11%, 1/19/00 - 3/23/00 .............. 155,000,000 155,001,441
UBS AG, New York Branch, 6.03%, 4/20/00 ............................................... 30,000,000 30,001,347
Westpac Banking Corp., New York Branch, 5.91%, 3/07/00 - 3/10/00 ...................... 90,000,000 90,001,654
-------------
TOTAL CERTIFICATES OF DEPOSIT (COST $1,592,968,436) ................................... 1,592,968,436
-------------
(a)COMMERCIAL PAPER 38.2%
American Express Credit Corp., 5.88% - 5.90%, 2/04/00 - 2/09/00 ....................... 120,000,000 119,273,616
Associates Corp. of North America, 5.90%, 4/04/00 ..................................... 35,000,000 34,460,806
Bank of Montreal, 6.01%, 1/28/00 ...................................................... 25,000,000 24,887,313
BIL North America Inc., 5.75%, 1/27/00 ................................................ 30,000,000 29,875,417
Canadian Imperial Holdings Inc., 6.43%, 1/05/00 ....................................... 150,000,000 149,892,834
Chevron U.K. Investment PLC, 5.98%, 2/16/00 ........................................... 30,000,000 29,770,767
Ciesco LP, 5.75% - 5.90%, 1/25/00 - 2/15/00 ........................................... 120,000,000 119,265,500
Coca Cola Co., 5.86%, 3/28/00 - 3/29/00 ............................................... 70,000,000 69,002,986
Commonwealth Bank of Australia, 5.90%, 2/23/00 ........................................ 30,000,000 29,739,417
Den Danske Corp. Inc., 6.03% - 6.05%, 1/21/00 - 2/01/00 ............................... 60,000,000 59,744,285
Ford Motor Credit Co., 6.40%, 1/06/00 ................................................. 150,000,000 149,866,668
General Electric Capital Corp., 5.74% - 6.01%, 1/26/00 - 3/27/00 ...................... 150,000,000 149,200,375
Halifax Building Society Ltd., 5.77% - 6.01%, 1/25/00 - 3/24/00 ....................... 60,000,000 59,434,226
International Nederlanden (U.S.) Funding Corp., 5.88%, 4/03/00 ........................ 35,000,000 34,468,350
Morgan Stanley Dean Witter & Co., 6.03% - 6.10%, 1/10/00 - 1/14/00 .................... 140,000,000 139,740,936
National Rural Utilities Cooperative Finance Corp. Finance, 5.98%, 3/07/00 - 3/10/00 .. 20,000,000 19,775,750
Schering Corp., 5.92%, 1/18/00 ........................................................ 25,000,000 24,930,111
UBS Finance Delaware LLC, 5.75%, 3/13/00 - 3/14/00 .................................... 70,000,000 69,189,410
Walt Disney Co., 5.86% - 5.88%, 1/19/00 - 1/24/00 ..................................... 75,000,000 74,755,250
-------------
TOTAL COMMERCIAL PAPER (COST $1,387,274,017) .......................................... 1,387,274,017
-------------
U.S. GOVERNMENT AGENCY SECURITIES 2.8%
Federal Home Loan Mortgage Corp., 4.50%, 1/05/00 (COST $99,950,000) ................... 100,000,000 99,950,000
-------------
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENTS (COST $3,230,192,583) .................. 3,230,192,583
-------------
</TABLE>
THE MONEY MARKET PORTFOLIOS
STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
THE MONEY MARKET PORTFOLIOS AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(b)REPURCHASE AGREEMENTS 10.3%
Banc of America Securities LLC, 2.40%, 1/03/00 (Maturity Value $80,016,000) ............... $80,000,000 $80,000,000
Collateralized by U.S. Treasury Notes
Dresdner Kleinwort Benson, North America LLC, 2.50%, 1/03/00 (Maturity Value $80,016,667).. 80,000,000 80,000,000
Collateralized by U.S. Treasury Notes
J.P. Morgan Securities Inc., 2.50%, 1/03/00 (Maturity Value $78,126,273) .................. 78,110,000 78,110,000
Collateralized by U.S. Treasury Notes
Morgan Stanley & Co. Inc., 2.50%, 1/03/00 (Maturity Value $79,016,458) .................... 79,000,000 79,000,000
Collateralized by U.S. Treasury Notes
Warburg Dillon Read LLC, 2.50%, 1/03/00 (Maturity Value $55,011,458) ...................... 55,000,000 55,000,000
--------------
Collateralized by U.S. Treasury Notes
TOTAL REPURCHASE AGREEMENTS (COST $372,110,000) ........................................... 372,110,000
--------------
TOTAL INVESTMENTS (COST $3,602,302,583) 99.3% ............................................. 3,602,302,583
OTHER ASSETS, LESS LIABILITIES .7% ........................................................ 26,215,182
--------------
NET ASSETS 100.0% ......................................................................... $3,628,517,765
--------------
</TABLE>
(a)Securities are traded on a discount basis; the rates shown are the discount
rates at the time of purchase by the portfolio.
(b)See Note 1(b) regarding repurchase agreements.
See notes to financial statements.
THE MONEY MARKET PORTFOLIOS
Financial Highlights
THE U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED JUNE 30,
DECEMBER 31, 1999 -------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ............... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-----------------------------------------------------------------------------
Income from investment operations -
net investment income ............................. .025 .049 .054 .052 .054 .052
Less distributions from net investment income ...... (.025) (.049) (.054) (.052) (.054) (.052)
-----------------------------------------------------------------------------
Net asset value, end of period ..................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-----------------------------------------------------------------------------
Total return(a) .................................... 2.55% 4.97% 5.53% 5.34% 5.55% 5.32%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) .................. $283,009 $258,458 $263,226 $285,629 $285,701 $474,654
Ratios to average net assets:
Expenses .......................................... .15%(b) .15% .15% .15% .15% .15%
Expenses excluding waiver and payments by affiliate .16%(b) .15% .16% .16% .17% .16%
Net investment income ............................. 5.06%(b) 4.84% 5.40% 5.20% 5.45% 5.25%
</TABLE>
(a)Total return is not annualized for periods less than one year.
(b)Annualized
See notes to financial statements.
THE MONEY MARKET PORTFOLIOS
STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
THE U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT SECURITIES 41.3%
U.S. Treasury Bill, 1/13/00 ................................................................. $72,000,000 $ 71,876,713
U.S. Treasury Notes, 6.375%, 5/15/00 ........................................................ 10,000,000 10,044,944
U.S. Treasury Notes, 5.125%, 8/31/00 ........................................................ 10,000,000 9,974,444
U.S. Treasury Notes, 6.25%, 8/31/00 ......................................................... 20,000,000 20,083,734
U.S. Treasury Notes, 4.625%, 11/30/00 ....................................................... 5,000,000 4,939,439
------------
TOTAL GOVERNMENT SECURITIES (COST $116,919,274) ............................................. 116,919,274
------------
(b)REPURCHASE AGREEMENTS 58.5%
Banc of America Securities LLC, 2.40%, 1/03/00 (Maturity Value $11,002,200) ................. 11,000,000 11,000,000
Collateralized by U.S. Treasury Notes
Barclays Capital Inc., 2.50%, 1/03/00 (Maturity Value $11,002,292) .......................... 11,000,000 11,000,000
Collateralized by U.S. Treasury Notes
Dresdner Kleinwort Benson, North America LLC, 2.50%, 1/03/00 (Maturity Value $11,002,292) ... 11,000,000 11,000,000
Collateralized by U.S. Treasury Notes
J.P. Morgan Securities Inc., 2.50%, 1/03/00 (Maturity Value $40,008,333) .................... 40,000,000 40,000,000
Collateralized by U.S. Treasury Bills and Notes
J.P. Morgan Securities Inc., 2.40%, 1/03/00 (Maturity Value $20,719,143) .................... 20,715,000 20,715,000
Collateralized by U.S. Treasury Bills and Notes
Morgan Stanley & Co. Inc., 2.50%, 1/03/00 (Maturity Value $40,008,333) ...................... 40,000,000 40,000,000
Collateralized by U.S. Treasury Bills and Notes
Morgan Stanley & Co. Inc., 2.50%, 1/03/00 (Market Value $20,719,316) ........................ 20,715,000 20,715,000
Collateralized by U.S. Treasury Bills and Notes
Warburg Dillon Read LLC, 2.50%, 1/03/00 (Maturity Value $11,002,292) ........................ 11,000,000 11,000,000
Collateralized by U.S. Treasury Notes
------------
TOTAL REPURCHASE AGREEMENTS (COST $165,430,000) ............................................. 165,430,000
------------
TOTAL INVESTMENTS (COST $282,349,274) 99.8% ................................................. 282,349,274
OTHER ASSETS, LESS LIABILITIES .2% .......................................................... 659,342
------------
NET ASSETS 100.0% ........................................................................... $283,008,616
============
</TABLE>
(b)See note 1(b) regarding repurchase agreements.
See notes to financial statements.
THE MONEY MARKET PORTFOLIOS
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
THE U.S.
GOVERNMENT
THE SECURITIES
MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO
------------------------------------
<S> <C> <C>
Assets:
Investments in securities, at value and cost $3,230,192,583 $116,919,274
Repurchase agreements, at value and cost ... 372,110,000 165,430,000
Cash ....................................... 24,944 1,372
Interest receivable ........................ 26,670,489 709,503
------------------------------------
Total assets .......................... 3,628,998,016 283,060,149
------------------------------------
Liabilities:
Payables to affiliates ..................... 453,487 45,781
Other liabilities .......................... 26,764 5,752
------------------------------------
Total liabilities ..................... 480,251 51,533
------------------------------------
Net assets, at value ....................... $3,628,517,765 $283,008,616
====================================
Shares outstanding .......................... 3,628,517,765 283,008,616
====================================
Net asset value per share ................... $1.00 $1.00
====================================
</TABLE>
See notes to financial statements.
THE MONEY MARKET PORTFOLIOS
Financial Statements (continued)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
THE U.S.
GOVERNMENT
THE SECURITIES
MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO
----------- ----------
<S> <C> <C>
Investment income:
Interest .......................................... $90,215,751 $6,652,929
----------- ----------
Expenses:
Management fees (Note 3) .......................... 2,491,154 193,416
Custodian fees .................................... 13,521 1,022
Reports to shareholders ........................... 1,647 688
Professional fees ................................. 29,201 3,094
Other ............................................. 5,308 1,583
----------- ----------
Total expenses ............................... 2,540,831 199,803
Expenses waived/paid by affiliate (Note 3) ... (49,417) (6,396)
----------- ----------
Net expenses ................................ 2,491,414 193,407
----------- ----------
Net investment income ...................... 87,724,337 6,459,522
----------- ----------
Net increase in net assets resulting from operations $87,724,337 $6,459,522
=========== ==========
</TABLE>
See notes to financial statements.
THE MONEY MARKET PORTFOLIOS
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (UNAUDITED)
AND THE YEAR ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
THE U.S. GOVERNMENT SECURITIES
THE MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
---------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1999 JUNE 30, 1999 DECEMBER 31, 1999 JUNE 30, 1999
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ............................ $87,724,337 $134,356,042 $6,459,522 $14,158,082
Net realized gain from investments ............... -- 651 -- --
---------------------------------------------------------------------------
Net increase in net assets resulting from
operations .................................. 87,724,337 134,356,693 6,459,522 14,158,082
Distributions to shareholders from net
investment income ................................ (87,724,337) (134,356,693)* (6,459,522) (14,158,082)
Capital share transactions (Note 2) ............... (43,886,020) 1,628,774,482 24,550,235 (4,767,997)
---------------------------------------------------------------------------
Net increase (decrease) in net assets ........ (43,886,020) 1,628,774,482 24,550,235 (4,767,997)
Net assets (there is no undistributed net investment
income at beginning or end of period):
Beginning of period .............................. 3,672,403,785 2,043,629,303 258,458,381 263,226,378
---------------------------------------------------------------------------
End of period .................................... $3,628,517,765 $3,672,403,785 $283,008,616 $258,458,381
===========================================================================
</TABLE>
*Distributions were increased by a net realized gain from investments of $651.
See notes to financial statements.
THE MONEY MARKET PORTFOLIOS
Notes to Financial Statements (unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Money Market Portfolios (the Trust) is registered under the Investment
Company Act of 1940 as a diversified, open-end investment company, consisting of
two separate portfolios (the Portfolios). The shares of the Trust are issued in
private placements and are exempt from registration under the Securities Act of
1933. The Portfolios seek to provide high current income consistent with
preservation of capital and liquidity. The following summarizes the Portfolios'
significant accounting policies.
a. SECURITY VALUATION:
Securities are valued at amortized cost which approximates value.
b. REPURCHASE AGREEMENTS:
The Portfolios may enter into repurchase agreements, which are accounted for as
a loan by the Portfolios to the seller, collateralized by securities which are
delivered to the Portfolios' custodian. The market value, including accrued
interest, of the initial collateralization is required to be at least 102% of
the dollar amount invested by the Portfolios, with the value of the underlying
securities marked to market daily to maintain coverage of at least 100%. At
December 31, 1999, all outstanding repurchase agreements held by the Portfolios
had been entered into on that date.
c. INCOME TAXES:
No provision has been made for income taxes because each Portfolio's policy is
to qualify as a regulated investment company under the Internal Revenue Code and
to distribute substantially all of its taxable income.
d. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income and estimated expenses are accrued daily. Dividends from net
investment income and capital gains or losses are normally declared daily. Such
distributions are reinvested in additional shares of the Portfolios.
Common expenses incurred by the Trust are allocated among the Portfolios based
on the ratio of net assets of each Portfolio to the combined net assets. Other
expenses are charged to each Portfolio on a specific identification basis.
e. ACCOUNTING ESTIMATES:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
THE MONEY MARKET PORTFOLIOS
Notes to Financial Statements (unaudited) (continued)
2. SHARES OF BENEFICIAL INTEREST
At December 31, 1999, there were an unlimited number of shares authorized ($0.01
par value). Transactions in the Portfolios' shares were as follows:
<TABLE>
<CAPTION>
THE U.S.
THE GOVERNMENT
MONEY MARKET SECURITIES MONEY
PORTFOLIO MARKET PORTFOLIO
----------------------------------------
<S> <C> <C>
Six months ended December 31, 1999
Shares sold .................................. $15,324,799,016 $546,033,547
Shares issued in reinvestment of distributions 87,722,893 6,453,353
Shares redeemed .............................. (15,456,407,929) (527,936,665)
----------------------------------------
Net increase (decrease) ................. $(43,886,020) $24,550,235
========================================
Year ended June 30, 1999
Shares sold .................................. $13,314,265,139 $963,424,640
Shares issued in reinvestment of distributions 134,356,720 14,164,293
Shares redeemed .............................. (11,819,847,377) (982,356,930)
----------------------------------------
Net increase (decrease) ................. $1,628,774,482 $(4,767,997)
========================================
</TABLE>
3. TRANSACTIONS WITH AFFILIATES
Certain officers and trustees of the Trust are also officers and/or directors of
Franklin Advisers, Inc. (Advisers) and Franklin/Templeton Investor Services,
Inc. (Investor Services), the Portfolios' investment manager and transfer agent,
respectively, and of the Franklin Money Fund, Institutional Fiduciary Trust,
Franklin Templeton Money Fund Trust, and Franklin Federal Money Fund.
The Portfolios pay an investment management fee to Advisers of .15% per year of
the average daily net assets of each Portfolio. Advisers agreed in advance to
waive management fees, as noted in the Statements of Operations.
At December 31, 1999, the shares of The Money Market Portfolio were owned by the
following funds:
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OUTSTANDING SHARES
-------------------------------------
<S> <C> <C>
Franklin Money Fund ....................................... 2,787,557,120 76.83%
Institutional Fiduciary Trust - Money Market Portfolio .... 600,929,608 16.56%
Institutional Fiduciary Trust - Franklin Cash Reserves Fund 123,859,827 3.41%
Franklin Templeton Money Fund ............................. 116,171,210 3.20%
</TABLE>
THE MONEY MARKET PORTFOLIOS
Notes to Financial Statements (unaudited) (continued)
3. TRANSACTIONS WITH AFFILIATES (CONT.)
At December 31, 1999, the shares of The U.S. Government Securities Money Market
Portfolio were owned by the following funds:
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OUTSTANDING SHARES
---------------------------------
<S> <C> <C>
Institutional Fiduciary Trust - Franklin U.S. Government Securities Money Market Portfolio ...... 68,738,848 24.29%
Franklin Federal Money Fund ..................................................................... 214,269,768 75.71%
</TABLE>
4. INCOME TAXES
At June 30, 1999, The Money Market Portfolio has deferred capital losses
occurring subsequent to October 31, 1998 of $8,692. For tax purposes, such
losses will be reflected in the year ending June 30, 2000.
This page intentionally left blank.
SHAREHOLDER LETTER
CONTENTS
<TABLE>
<S> <C>
Shareholder Letter ............................ 1
Franklin
Cash Reserves Fund ............................ 4
Financial Highlights &
Statement of Investments ...................... 6
Financial Statements .......................... 8
Notes to
Financial Statements .......................... 11
</TABLE>
- --------------------------------------------------------------------------------
Your fund's objective: The Franklin Cash Reserves Fund (the Fund) seeks high
current income, consistent with capital preservation and liquidity. The Fund
seeks to achieve this objective by investing all of its assets in The Money
Market Portfolio, whose investment objective is the same as the Fund's. The
Fund's underlying portfolio is managed to maintain a stable net asset value of
$1.00 per share, although there is no guarantee that it will accomplish this
goal.(1)
- --------------------------------------------------------------------------------
Dear Shareholder:
It's a pleasure to bring you Franklin Cash Reserves Fund's semiannual report for
the period ended December 31, 1999.
During the six months under review, domestic economic growth accelerated from a
pace that was already well above the Federal Reserve Board's (the Fed's)
targeted long-term growth rate, or "speed limit," of 3.0%. The overall economy,
as measured by U.S. gross domestic product (GDP), grew at blistering annualized
rates of 5.7% and 5.8% during the third and fourth quarters of 1999,
respectively. Higher equity and real estate prices, increasing wages and tight
labor markets helped spur consumer spending during the reporting period. The
booming economy also contributed to a continued
[PYRAMID GRAPH]
(1) An investment in Franklin Cash Reserves Fund is neither insured nor
guaranteed by the U.S. government or by any other entity or institution. There
is no assurance that the $1.00 share price will be maintained.
<PAGE>
downtrend in the national unemployment rate, which reached a 30-year low of 4.1%
by the end of the reporting period.(2)
A rebound in the manufacturing sector and improving international growth
contributed to the U.S. economy as it entered its ninth consecutive year of
expansion, marking the longest growth period in the nation's history. As
expected, the combination of strong domestic and overseas expansion caused the
inflation rate to rise during the reporting period. Inflation, as measured by
the year-over-year change in the Consumer Price Index (CPI), increased from 2.0%
on June 30 to 2.7% for the year ending December 31, 1999.
Seeking to stay ahead of the curve on inflation, the Fed increased the federal
funds target rate from 5.00% to 5.50% during the reporting period. In turn, bond
prices dropped but yields rose, a positive outcome for money market investors.
The yield on the bellwether 30-year Treasury advanced from 5.96% on June 30 to
6.48% on December 31, 1999. Reflecting the Fed's 50 basis point increase in
short-term interest rates during the last half of 1999, the fund's seven-day
current yield during the reporting period rose from 3.94% on June 30, 1999, to
5.05% on December 31, 1999.
We continue to invest the fund's assets in only the highest-quality money market
securities. For example, over 75% of the paper purchased for the fund carries
long-term credit ratings of "AA" or higher as rated by Standard & Poor's(R) and
Moody's, with the balance of the portfolio rated "A."(2) Consistent with the
fund's objective of providing shareholders with a higher quality and
conservative investment vehicle, we do not invest the fund's cash in derivatives
or other potentially volatile securities that we believe involve undue risk.
(2) Standard & Poor's and Moody's are independent credit rating agencies, and
their ratings do not indicate ratings of the fund.
Going forward, underlying concerns linger regarding the economy's strength, and
the possibility that short-term interest rates may rise further in the near
future. As the world approached its date with Y2K, it became clear that the pace
of the U.S. economy was largely unaffected by the rate hikes of 1999, reviving
the specter of inflation. In light of surging consumer spending, rising
commodity prices and other inflation-inducing trends, most analysts ended the
year anticipating an even tighter monetary policy by the Fed in 2000. We will
continue to closely monitor political and economic events and make adjustments
to your portfolio as necessary.
We appreciate your support, welcome new shareholders and look forward to serving
your investment needs in the years ahead.
Sincerely,
/S/ Charles B. Johnson
Charles B. Johnson
Chairman
Franklin's Institutional Fiduciary Trust
FRANKLIN CASH RESERVES FUND
THE MONEY MARKET PORTFOLIO
Portfolio Composition
12/31/99
<TABLE>
<S> <C>
Certificates of Deposit 43.9%
Commercial Paper 38.2%
Repurchase Agreements 10.3%
Bank Notes 4.1%
Discounted Notes 2.8%
Other Assets 0.7%
</TABLE>
The Franklin Cash Reserves Fund's investment objective is to provide high
current income, consistent with capital preservation and liquidity. The Fund
invests all of its assets in the shares of The Money Market Portfolio (the
Portfolio), which has the same investment objective as the Fund's. The
Portfolio, in turn, invests in various money market instruments such as:
- - U.S. government and federal agency obligations(3)
- - Certificates of deposit
- - Banker's acceptances
- - High grade commercial paper
- - High grade short-term corporate obligations
- - Repurchase agreements collateralized by U.S. government securities(3)
The Portfolio's composition as of December 31, 1999, is shown to the left.
(3) U.S. government securities owned by the Portfolio or held under repurchase
agreement, but not shares of the Franklin Cash Reserves Fund, are guaranteed by
the U.S. government as to the timely payment of principal and interest.
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 7 of
this report.
PERFORMANCE SUMMARY
FRANKLIN CASH RESERVES FUND
Total Return vs. Lipper Institutional Money Market Funds Index(4)
Period Ended December 31, 1999
<TABLE>
<CAPTION>
1-Year 3-Year 5-Year
------ ------ ------
<S> <C> <C> <C>
Franklin Cash Reserves Fund 4.46% 15.42% 28.26%
Lipper Institutional Money
Market Funds Index 4.92% 16.39% 29.56%
</TABLE>
FRANKLIN CASH RESERVES FUND
PERIOD ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C>
7-Day Current Yield(5): 5.05%
7-Day Effective Yield(5): 5.17%
Average Weighted Maturity: 50 days
</TABLE>
(4) Source for the Lipper Institutional Money Market Funds Index is Lipper
Analytical Services, Inc. As of December 31, 1999, there were 207 funds in the
institutional money market funds category. This index is unmanaged, and one
cannot invest directly in an index. Total return calculations show the change in
the value of an investment over the periods indicated and assume reinvestment of
dividends and capital gains, if any, at net asset value.
(5) Annualized and effective yields are for the 7-day period shown and reflect
fluctuations in interest rates on Portfolio investments, and Fund expenses.
Past performance does not guarantee future results.
INSTITUTIONAL FIDUCIARY TRUST
Financial Highlights
FRANKLIN CASH RESERVES FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED JUNE 30,
DECEMBER 31, 1999 --------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
----------------- --------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------
Income from investment operations -
net investment income .......................... .023 .044 .051 .050 .052 .052
Less distributions from net investment income ... (.023) (.044) (.051) (.050) (.052) (.052)
-------- -------- -------- -------- -------- -------
Net asset value, end of period .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== =======
Total return(a) ................................. 2.35% 4.49% 5.28% 5.11% 5.35% 5.34%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ............... $121,756 $135,390 $119,585 $ 76,510 $ 30,381 $14,545
Ratios to average net assets:
Expenses(b) .................................... .83%(c) .82% .50% .50% .49% .40%
Expenses excluding waiver and payments by
affiliate(b) ................................. .84%(c) .82% .77% .69% .73% .79%
Net investment income .......................... 4.62%(c) 4.38% 5.14% 5.00% 5.10% 5.69%
</TABLE>
(a) Total return is not annualized for periods less than one year.
(b) The expense ratio includes the Fund's share of the Portfolio's allocated
expenses.
(c) Annualized
See notes to financial statements.
INSTITUTIONAL FIDUCIARY TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FRANKLIN CASH RESERVES FUND SHARES VALUE
- --------------------------- ------ -----
<S> <C> <C>
Mutual Funds 101.7%
The Money Market Portfolio (Note 1) (Cost $123,859,827) .................. 123,859,827 $123,859,827
Other Assets, less Liabilities (1.7)% .................................... (2,103,417)
------------
Net Assets 100.0% ........................................................ $121,756,410
============
</TABLE>
See notes to financial statements.
INSTITUTIONAL FIDUCIARY TRUST
FRANKLIN CASH RESERVES FUND
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value and cost ........... $123,859,827
Receivable for capital shares sold ..................... 4,625,313
------------
Total assets ...................................... 128,485,140
-----------
Liabilities:
Payables:
Capital shares redeemed ............................... 6,435,046
Affiliates ............................................ 278,235
Other liabilities ...................................... 15,449
------------
Total liabilities ................................. 6,728,730
------------
Net assets, at value .................................... $121,756,410
============
Shares outstanding ...................................... 121,756,410
===========
Net asset value per share ............................... $ 1.00
===========
</TABLE>
See notes to financial statements.
INSTITUTIONAL FIDUCIARY TRUST
FRANKLIN CASH RESERVES FUND
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE THE SIX MONTHS ENDED DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Dividends ................................................ $3,512,668
----------
Expenses:
Administrative fees (Note 3) ............................. 166,802
Distribution fees (Note 3) ............................... 166,802
Transfer agent fees (Note 3) ............................. 86,574
Reports to shareholders .................................. 4,372
Registration and filing fees ............................. 9,387
Professional fees ........................................ 3,770
Trustees' fees and expenses .............................. 3,564
Other .................................................... 11,408
----------
Total expenses ...................................... 452,679
----------
Net investment income .............................. 3,059,989
----------
Net increase in net assets resulting from operations ...... $3,059,989
==========
</TABLE>
See notes to financial statements.
INSTITUTIONAL FIDUCIARY TRUST
FRANKLIN CASH RESERVES FUND
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (UNAUDITED)
AND THE YEAR ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
DECEMBER 31, 1999 JUNE 30, 1999
----------------- -------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ........................................... $ 3,059,989 $ 6,472,002
Distributions to shareholders from net investment income ......... (3,059,989) (6,472,002)
Capital share transactions (Note 2) .............................. (13,633,142) 15,804,969
------------ ------------
Net increase (decrease) in net assets ....................... (13,633,142) 15,804,969
Net assets (there is no undistributed net investment income
at beginning or end of period):
Beginning of period .............................................. 135,389,552 119,584,583
------------ ------------
End of period .................................................... $121,756,410 $135,389,552
============ ============
</TABLE>
See notes to financial statements.
INSTITUTIONAL FIDUCIARY TRUST
FRANKLIN CASH RESERVES FUND
Notes to Financial Statements (unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Franklin Cash Reserves Fund (the Fund) is a separate, diversified series of
Institutional Fiduciary Trust (the Trust). The Trust is registered under the
Investment Company Act of 1940 as an open-end investment company, consisting of
three separate series (the Funds). The Fund's objective is to seek high current
income consistent with the preservation of capital and liquidity.
The Fund invests substantially all of its assets in The Money Market Portfolio
(the Portfolio), which is registered under the Investment Company Act of 1940 as
a diversified, open-end investment company having the same investment objectives
as the Fund. The financial statements of the Portfolio, including the Statement
of Investments, are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The following summarizes the Fund's significant accounting policies.
a. SECURITY VALUATION
The Fund holds Portfolio shares that are valued at its proportionate interest in
net asset value of the Portfolio. As of December 31, 1999, the Fund owns 3.41%
of the Portfolio.
b. INCOME TAXES
No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute substantially all of its taxable income.
c. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Income and estimated expenses are accrued daily. Dividends from net investment
income and capital gains or losses are normally declared daily. Such
distributions are reinvested in additional shares of the Fund.
Common expenses incurred by the Trust are allocated among the funds based on the
ratio of net assets of each fund to the combined net assets. Other expenses are
charged to each fund on a specific identification basis.
d. ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
INSTITUTIONAL FIDUCIARY TRUST
FRANKLIN CASH RESERVES FUND
Notes to Financial Statements (unaudited) (continued)
2. SHARES OF BENEFICIAL INTEREST
At December 31, 1999, there were an unlimited number of shares authorized (no
par value). Transactions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
DECEMBER 31, 1999 JUNE 30, 1999
----------------- -------------
<S> <C> <C>
Shares sold ............................ $ 112,983,213 $ 296,189,371
Shares issued in reinvestment
of distributions ...................... 3,059,967 6,445,425
Shares redeemed ........................ (129,676,322) (286,829,827)
------------- -------------
Net increase (decrease) ................ ($ 13,633,142) $ 15,804,969
============= =============
</TABLE>
3. TRANSACTIONS WITH AFFILIATES
Certain officers and trustees of the Fund are also officers and/or directors of
Franklin Advisers, Inc. (Advisers), Franklin/Templeton Distributors, Inc.
(Distributors), and Franklin/Templeton Investors Services, Inc. (Investors
Services), the Fund's investment manager, principal underwriter, and transfer
agent, respectively, and of the Portfolio.
The Fund pays an administrative fee to Advisers of .25% per year of the Fund's
average daily net assets.
The Fund reimburses Distributors up to .25% per year of its average daily net
assets, for costs incurred in marketing the Fund's shares.
The Fund paid transfer agent fees of $86,574 of which $70,443 was paid to
Investor Services.
THE MONEY MARKET PORTFOLIOS
Financial Highlights
THE MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED JUNE 30,
DECEMBER 31, 1999 -------------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
----------------- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ---------- ----------
Income from investment operations -
net investment income ........................ .027 .051 .055 .053 .055 .053
Less distributions from net investment income . (.027) (.051) (.055) (.053) (.055) (.053)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ---------- ----------
Total return(a)................................ 2.69% 5.18% 5.64% 5.47% 5.66% 5.46%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ............. $3,628,518 $3,672,404 $2,043,629 $1,773,546 $1,550,085 $1,305,574
Ratios to average net assets:
Expenses ..................................... .15%(b) .15% .15% .15% .15% .15%
Expenses excluding waiver and payments by
affiliate .................................. .16%(b) .15% .16% .16% .16% .16%
Net investment income ........................ 5.32%(b) 5.04% 5.50% 5.34% 5.50% 5.42%
</TABLE>
(a) Total return is not annualized for periods less than one year.
(b) Annualized
See notes to financial statements.
THE MONEY MARKET PORTFOLIOS
Statement of Investments, December 31, 1999 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
The Money Market Portfolio AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BANK NOTES 4.1%
Bank of America NA, 5.70% - 6.03%, 1/28/00 - 3/21/00 (Cost $150,000,130) ....... $150,000,000 $ 150,000,130
--------------
CERTIFICATES OF DEPOSIT 43.9%
ABN-AMRO Bank NV, Chicago Branch, 5.10% - 6.00%, 4/05/00 - 8/10/00 ............. 154,000,000 153,984,546
Australia & New Zealand Banking Group, New York Branch, 6.01%, 1/06/00 ......... 30,000,000 30,000,041
Bank of Montreal, Chicago Branch, 5.12% - 6.03%, 3/02/00 - 4/12/00 ............. 120,000,000 119,999,716
Bayerische Landesbank, New York Branch, 5.89% - 5.99%, 2/17/00 - 3/17/00 ....... 120,000,000 120,001,678
Bayerische Vereinsbank, New York Branch, 5.55% - 5.86%, 1/10/00 - 1/24/00 ...... 90,000,000 90,000,251
Credit Agricole Indosuez, New York Branch, 5.03% - 5.98%, 1/13/00 - 3/20/00 .... 130,000,000 130,001,940
Credit Communal De Belgique, New York Branch, 6.00%, 1/07/00 ................... 30,000,000 30,000,049
Den Danske Bank, New York Branch, 5.98% - 6.00%, 3/30/00 - 4/14/00 ............. 85,000,000 85,001,409
Deutsche Bank AG, New York Branch, 5.27% - 5.62%, 3/03/00 - 6/26/00 ............ 124,000,000 123,975,744
Dresdner Bank AG, New York Branch, 5.56% - 6.06%, 1/11/00 - 3/01/00 ............ 115,000,000 115,001,100
Lloyds Bank PLC, New York Branch, 5.90% - 5.99%, 2/24/00 - 3/31/00 ............. 150,000,000 150,002,387
Rabobank Nederland NV, New York Branch, 5.41%, 6/01/00 ......................... 25,000,000 24,995,999
Royal Bank of Canada, New York Branch, 5.70%, 7/03/00 .......................... 25,000,000 24,997,585
Svenska Handelsbanken, New York Branch, 5.865% - 5.94%, 1/12/00 - 3/09/00 ...... 120,000,000 120,001,549
Toronto Dominion Bank, New York Branch, 5.10% - 6.11%, 1/19/00 - 3/23/00 ....... 155,000,000 155,001,441
UBS AG, New York Branch, 6.03%, 4/20/00 ........................................ 30,000,000 30,001,347
Westpac Banking Corp., New York Branch, 5.91%, 3/07/00 - 3/10/00 ............... 90,000,000 90,001,654
--------------
TOTAL CERTIFICATES OF DEPOSIT (COST $1,592,968,436) ............................ 1,592,968,436
--------------
(a)COMMERCIAL PAPER 38.2%
American Express Credit Corp., 5.88% - 5.90%, 2/04/00 - 2/09/00 ................ 120,000,000 119,273,616
Associates Corp. of North America, 5.90%, 4/04/00 .............................. 35,000,000 34,460,806
Bank of Montreal, 6.01%, 1/28/00 ............................................... 25,000,000 24,887,313
BIL North America Inc., 5.75%, 1/27/00 ......................................... 30,000,000 29,875,417
Canadian Imperial Holdings Inc., 6.43%, 1/05/00 ................................ 150,000,000 149,892,834
Chevron U.K. Investment PLC, 5.98%, 2/16/00 .................................... 30,000,000 29,770,767
Ciesco LP, 5.75% - 5.90%, 1/25/00 - 2/15/00 .................................... 120,000,000 119,265,500
Coca Cola Co., 5.86%, 3/28/00 - 3/29/00 ........................................ 70,000,000 69,002,986
Commonwealth Bank of Australia, 5.90%, 2/23/00 ................................. 30,000,000 29,739,417
Den Danske Corp. Inc., 6.03% - 6.05%, 1/21/00 - 2/01/00 ........................ 60,000,000 59,744,285
Ford Motor Credit Co., 6.40%, 1/06/00 .......................................... 150,000,000 149,866,668
General Electric Capital Corp., 5.74% - 6.01%, 1/26/00 - 3/27/00 ............... 150,000,000 149,200,375
Halifax Building Society Ltd., 5.77% - 6.01%, 1/25/00 - 3/24/00 ................ 60,000,000 59,434,226
International Nederlanden (U.S.) Funding Corp., 5.88%, 4/03/00 ................. 35,000,000 34,468,350
Morgan Stanley Dean Witter & Co., 6.03% - 6.10%, 1/10/00 - 1/14/00 ............. 140,000,000 139,740,936
National Rural Utilities Cooperative Finance Corp. Finance, 5.98%, 3/07/00 -
3/10/00 ...................................................................... 20,000,000 19,775,750
Schering Corp., 5.92%, 1/18/00 ................................................. 25,000,000 24,930,111
UBS Finance Delaware LLC, 5.75%, 3/13/00 - 3/14/00 ............................. 70,000,000 69,189,410
Walt Disney Co., 5.86% - 5.88%, 1/19/00 - 1/24/00 .............................. 75,000,000 74,755,250
--------------
TOTAL COMMERCIAL PAPER (COST $1,387,274,017) ................................... 1,387,274,017
--------------
U.S. GOVERNMENT AGENCY SECURITIES 2.8%
Federal Home Loan Mortgage Corp., 4.50%, 1/05/00 (Cost $99,950,000) ............ 100,000,000 99,950,000
--------------
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENTS (COST $3,230,192,583) ........... 3,230,192,583
--------------
</TABLE>
THE MONEY MARKET PORTFOLIOS
Statement of Investments, December 31, 1999 (unaudited) (cont.)
<TABLE>
<CAPTION>
PRINCIPAL
THE MONEY MARKET PORTFOLIO AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(b)REPURCHASE AGREEMENTS 10.3%
Banc of America Securities LLC, 2.40%, 1/03/00 (Maturity Value $80,016,000) $80,000,000 $ 80,000,000
Collateralized by U.S. Treasury Notes
Dresdner Kleinwort Benson, North America LLC, 2.50%, 1/03/00 (Maturity
Value $80,016,667) ...................................................... 80,000,000 80,000,000
Collateralized by U.S. Treasury Notes
J.P. Morgan Securities Inc., 2.50%, 1/03/00 (Maturity Value $78,126,273) .. 78,110,000 78,110,000
Collateralized by U.S. Treasury Notes
Morgan Stanley & Co. Inc., 2.50%, 1/03/00 (Maturity Value $79,016,458) .... 79,000,000 79,000,000
Collateralized by U.S. Treasury Notes
Warburg Dillon Read LLC, 2.50%, 1/03/00 (Maturity Value $55,011,458) ...... 55,000,000 55,000,000
Collateralized by U.S. Treasury Notes
--------------
TOTAL REPURCHASE AGREEMENTS (COST $372,110,000) ........................... 372,110,000
--------------
TOTAL INVESTMENTS (COST $3,602,302,583) 99.3% ............................. 3,602,302,583
OTHER ASSETS, LESS LIABILITIES .7% ........................................ 26,215,182
--------------
NET ASSETS 100.0% ......................................................... $3,628,517,765
==============
</TABLE>
(a) Securities are traded on a discount basis; the rates shown are the discount
rates at the time of purchase by the portfolio.
(b) See Note 1(b) regarding repurchase agreements.
See notes to financial statements.
THE MONEY MARKET PORTFOLIOS
Financial Highlights
THE U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED JUNE 30,
DECEMBER 31, 1999 --------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Income from investment operations -
net investment income .............................. .025 .049 .054 .052 .054 .052
Less distributions from net investment income ....... (.025) (.049) (.054) (.052) (.054) (.052)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Total return(a) ..................................... 2.55% 4.97% 5.53% 5.34% 5.55% 5.32%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ................... $283,009 $258,458 $263,226 $285,629 $285,701 $474,654
Ratios to average net assets:
Expenses ........................................... .15%(b) .15% .15% .15% .15% .15%
Expenses excluding waiver and payments by affiliate .16%(b) .15% .16% .16% .17% .16%
Net investment income .............................. 5.06%(b) 4.84% 5.40% 5.20% 5.45% 5.25%
</TABLE>
(a) Total return is not annualized for periods less than one year.
(b) Annualized
See notes to financial statements.
THE MONEY MARKET PORTFOLIOS
STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
THE U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT SECURITIES 41.3%
U.S. Treasury Bill, 1/13/00 $72,000,000 $ 71,876,713
U.S. Treasury Notes, 6.375%, 5/15/00 10,000,000 10,044,944
U.S. Treasury Notes, 5.125%, 8/31/00 10,000,000 9,974,444
U.S. Treasury Notes, 6.25%, 8/31/00 20,000,000 20,083,734
U.S. Treasury Notes, 4.625%, 11/30/00 5,000,000 4,939,439
------------
TOTAL GOVERNMENT SECURITIES (COST $116,919,274) 116,919,274
------------
(b)REPURCHASE AGREEMENTS 58.5%
Banc of America Securities LLC, 2.40%, 1/03/00 (Maturity Value $11,002,200) 11,000,000 11,000,000
Collateralized by U.S. Treasury Notes
Barclays Capital Inc., 2.50%, 1/03/00 (Maturity Value $11,002,292) 11,000,000 11,000,000
Collateralized by U.S. Treasury Notes
Dresdner Kleinwort Benson, North America LLC, 2.50%, 1/03/00 (Maturity Value
$11,002,292) 11,000,000 11,000,000
Collateralized by U.S. Treasury Notes
J.P. Morgan Securities Inc., 2.50%, 1/03/00 (Maturity Value $40,008,333) 40,000,000 40,000,000
Collateralized by U.S. Treasury Bills and Notes
J.P. Morgan Securities Inc., 2.40%, 1/03/00 (Maturity Value $20,719,143) 20,715,000 20,715,000
Collateralized by U.S. Treasury Bills and Notes
Morgan Stanley & Co. Inc., 2.50%, 1/03/00 (Maturity Value $40,008,333) 40,000,000 40,000,000
Collateralized by U.S. Treasury Bills and Notes
Morgan Stanley & Co. Inc., 2.50%, 1/03/00 (Market Value $20,719,316) 20,715,000 20,715,000
Collateralized by U.S. Treasury Bills and Notes
Warburg Dillon Read LLC, 2.50%, 1/03/00 (Maturity Value $11,002,292) 11,000,000 11,000,000
Collateralized by U.S. Treasury Notes
------------
TOTAL REPURCHASE AGREEMENTS (COST $165,430,000) 165,430,000
------------
TOTAL INVESTMENTS (COST $282,349,274) 99.8% 282,349,274
OTHER ASSETS, LESS LIABILITIES .2% 659,342
------------
NET ASSETS 100.0% $283,008,616
============
</TABLE>
(b) See note 1(b) regarding repurchase agreements.
See notes to financial statements.
THE MONEY MARKET PORTFOLIOS
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
THE U.S.
GOVERNMENT
THE SECURITIES
MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO
--------- ---------
<S> <C> <C>
Assets:
Investments in securities, at value and cost ...... $3,230,192,583 $116,919,274
Repurchase agreements, at value and cost .......... 372,110,000 165,430,000
Cash .............................................. 24,944 1,372
Interest receivable ............................... 26,670,489 709,503
-------------- ------------
Total assets ................................. 3,628,998,016 283,060,149
-------------- ------------
Liabilities:
Payables to affiliates ............................ 453,487 45,781
Other liabilities ................................. 26,764 5,752
-------------- ------------
Total liabilities ............................ 480,251 51,533
-------------- ------------
Net assets, at value .............................. $3,628,517,765 $283,008,616
============== ============
Shares outstanding ................................. 3,628,517,765 283,008,616
============== ============
Net asset value per share .......................... $1.00 $1.00
============== ============
</TABLE>
See notes to financial statements.
THE MONEY MARKET PORTFOLIOS
Financial Statements (continued)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
THE U.S.
GOVERNMENT
THE SECURITIES
MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO
--------- ---------
<S> <C> <C>
Investment income:
Interest ............................................................... $90,215,751 $6,652,929
----------- ----------
Expenses:
Management fees (Note 3) ............................................... 2,491,154 193,416
Custodian fees ......................................................... 13,521 1,022
Reports to shareholders ................................................ 1,647 688
Professional fees ...................................................... 29,201 3,094
Other .................................................................. 5,308 1,583
----------- ----------
Total expenses .................................................... 2,540,831 199,803
Expenses waived/paid by affiliate (Note 3) ........................ (49,417) (6,396)
----------- ----------
Net expenses ..................................................... 2,491,414 193,407
----------- ----------
Net investment income ........................................... 87,724,337 6,459,522
----------- ----------
Net increase in net assets resulting from operations .................... $87,724,337 $6,459,522
=========== ==========
</TABLE>
See notes to financial statements.
THE MONEY MARKET PORTFOLIOS
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS FOR THE SIX MONTHS ENDED DECEMBER 31, 1999
(UNAUDITED) AND THE YEAR ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
THE U.S. GOVERNMENT SECURITIES
THE MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
---------------------------------- -----------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1999 JUNE 30, 1999 DECEMBER 31, 1999 JUNE 30, 1999
----------------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income .............................. $ 87,724,337 $ 134,356,042 $ 6,459,522 $ 14,158,082
Net realized gain from investments ................. -- 651 -- --
-------------- -------------- --------------- ---------------
Net increase in net assets resulting from
operations .................................... 87,724,337 134,356,693 6,459,522 14,158,082
Distributions to shareholders from net
investment income .................................. (87,724,337) (134,356,693)* (6,459,522) (14,158,082)
Capital share transactions (Note 2) ................. (43,886,020) 1,628,774,482 24,550,235 (4,767,997)
-------------- -------------- --------------- ---------------
Net increase (decrease) in net assets .......... (43,886,020) 1,628,774,482 24,550,235 (4,767,997)
Net assets (there is no undistributed net investment
income at beginning or end of period):
Beginning of period ................................ 3,672,403,785 2,043,629,303 258,458,381 263,226,378
-------------- -------------- --------------- ---------------
End of period ...................................... $3,628,517,765 $3,672,403,785 $ 283,008,616 $ 258,458,381
============== ============== =============== ===============
</TABLE>
* Distributions were increased by a net realized gain from investments of $651.
See notes to financial statements.
THE MONEY MARKET PORTFOLIOS
Notes to Financial Statements (unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Money Market Portfolios (the Trust) is registered under the Investment
Company Act of 1940 as a diversified, open-end investment company, consisting of
two separate portfolios (the Portfolios). The shares of the Trust are issued in
private placements and are exempt from registration under the Securities Act of
1933. The Portfolios seek to provide high current income consistent with
preservation of capital and liquidity. The following summarizes the Portfolios'
significant accounting policies.
a. SECURITY VALUATION:
Securities are valued at amortized cost which approximates value.
b. REPURCHASE AGREEMENTS:
The Portfolios may enter into repurchase agreements, which are accounted for as
a loan by the Portfolios to the seller, collateralized by securities which are
delivered to the Portfolios' custodian. The market value, including accrued
interest, of the initial collateralization is required to be at least 102% of
the dollar amount invested by the Portfolios, with the value of the underlying
securities marked to market daily to maintain coverage of at least 100%. At
December 31, 1999, all outstanding repurchase agreements held by the Portfolios
had been entered into on that date.
c. INCOME TAXES:
No provision has been made for income taxes because each Portfolio's policy is
to qualify as a regulated investment company under the Internal Revenue Code and
to distribute substantially all of its taxable income.
d. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income and estimated expenses are accrued daily. Dividends from net
investment income and capital gains or losses are normally declared daily. Such
distributions are reinvested in additional shares of the Portfolios.
Common expenses incurred by the Trust are allocated among the Portfolios based
on the ratio of net assets of each Portfolio to the combined net assets. Other
expenses are charged to each Portfolio on a specific identification basis.
e. ACCOUNTING ESTIMATES:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
THE MONEY MARKET PORTFOLIOS
Notes to Financial Statements (unaudited) (continued)
2. SHARES OF BENEFICIAL INTEREST
At December 31, 1999, there were an unlimited number of shares authorized ($0.01
par value). Transactions in the Portfolios' shares were as follows:
<TABLE>
<CAPTION>
THE U.S.
THE GOVERNMENT
MONEY MARKET SECURITIES MONEY
PORTFOLIO MARKET PORTFOLIO
--------- ----------------
<S> <C> <C>
Six months ended December 31, 1999
Shares sold .................................. $ 15,324,799,016 $ 546,033,547
Shares issued in reinvestment of distributions 87,722,893 6,453,353
Shares redeemed .............................. (15,456,407,929) (527,936,665)
---------------- ----------------
Net increase (decrease) ................. $ (43,886,020) $ 24,550,235
================ ================
Year ended June 30, 1999
Shares sold .................................. $ 13,314,265,139 $ 963,424,640
Shares issued in reinvestment of distributions 134,356,720 14,164,293
Shares redeemed .............................. (11,819,847,377) (982,356,930)
---------------- ----------------
Net increase (decrease) ................. $ 1,628,774,482 $ (4,767,997)
================ ================
</TABLE>
3. TRANSACTIONS WITH AFFILIATES
Certain officers and trustees of the Trust are also officers and/or directors of
Franklin Advisers, Inc. (Advisers) and Franklin/Templeton Investor Services,
Inc. (Investor Services), the Portfolios' investment manager and transfer agent,
respectively, and of the Franklin Money Fund, Institutional Fiduciary Trust,
Franklin Templeton Money Fund Trust, and Franklin Federal Money Fund.
The Portfolios pay an investment management fee to Advisers of .15% per year of
the average daily net assets of each Portfolio. Advisers agreed in advance to
waive management fees, as noted in the Statements of Operations.
At December 31, 1999, the shares of The Money Market Portfolio were owned by the
following funds:
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OUTSTANDING SHARES
------ ------------------
<S> <C> <C>
Franklin Money Fund 2,787,557,120 76.83%
Institutional Fiduciary Trust - Money Market Portfolio 600,929,608 16.56%
Institutional Fiduciary Trust - Franklin Cash Reserves Fund 123,859,827 3.41%
Franklin Templeton Money Fund 116,171,210 3.20%
</TABLE>
THE MONEY MARKET PORTFOLIOS
Notes to Financial Statements (unaudited) (continued)
3. TRANSACTIONS WITH AFFILIATES (CONT.)
At December 31, 1999, the shares of The U.S. Government Securities Money Market
Portfolio were owned by the following funds:
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OUTSTANDING SHARES
------ ------------------
<S> <C> <C>
Institutional Fiduciary Trust - Franklin U.S. Government Securities Money Market Portfolio 68,738,848 24.29%
Franklin Federal Money Fund 214,269,768 75.71%
</TABLE>
4. INCOME TAXES
At June 30, 1999, The Money Market Portfolio has deferred capital losses
occurring subsequent to October 31, 1998 of $8,692. For tax purposes, such
losses will be reflected in the year ending June 30, 2000.
