Annual
[CURRENCY GRAPHIC]
Institutional Fiduciary Trust
Franklin's IFT Money Market Portfolio
Franklin U.S. Government Securities
Money Market Portfolio
[FRANKLIN(R) TEMPLETON(R) INVESTMENTS(TM) LOGO]
June 30, 2000
Report
Thank you for investing with
Franklin Templeton. We encourage
our investors to maintain a long-term
perspective and remember that all
securities markets move both up and
down, as do portfolio share prices.
We appreciate your past support
and look forward to serving your
investment needs in the years ahead.
[CELEBRATING OVER 50 YEARS GRAPHIC]
[PICTURE-CHARLES B. JOHNSON]
CHARLES B. JOHNSON
Chairman
Institutional Fiduciary Trust
SHAREHOLDER LETTER
SHAREHOLDER LETTER
Dear Shareholder:
We are pleased to bring you the annual report for Franklin's IFT Money Market
Portfolio and Franklin U.S. Government Securities Money Market Portfolio for the
fiscal year ended June 30, 2000.
The 12 months under review marked the U. S. economy's ninth year of expansion.
The long-term effects of the Federal Reserve Board's (the Fed's) 1998 policies
to ease global liquidity pressures fueled the U.S. economy, resulting in recent
signs of inflation.
Consumer spending, which represents two-thirds of U.S. gross domestic product
(GDP), increased dramatically during the period, to its highest level in 17
years. Wage gains, record low unemployment, and the much talked-about wealth
effect were key drivers to this increase. As a result, real GDP grew at a robust
annualized pace of 5.4% in the first quarter of 2000, well above the Fed's
long-term growth target rate of 3.0%.
Seeking to curb growth to a more sustainable level, the Fed raised the federal
funds target rate a total of 150 basis points (1.50%) during the past 12 months.
In March 2000, it appeared that the Fed's actions were having little effect on
the strong
CONTENTS
<TABLE>
<S> <C>
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
Independent
Auditor's Report 17
</TABLE>
FUND CATEGORY
[PYRAMID GRAPHIC]
<PAGE>
economy. The majority of economic indicators pointed to an economy that was on
the verge of overheating. During the final three months of the fiscal year,
however, we began to see the first signs of a much-needed economic slowdown.
Consumer spending, housing starts, inflation as measured by the Consumer Price
Index, as well as other economic indicators displayed some signs of a slowing
economy.
Looking forward, we are optimistic that the economy will continue to moderate,
but are nonetheless concerned about inflation and the level of interest rates.
Although many people anticipate a slowdown and a soft landing, we believe it is
really too early to tell. Numerous Fed governors have cautioned against jumping
to any conclusions, and have advised waiting for more data that would confirm
the slowdown or spark further tightening. Therefore, we will closely watch
economic reports to help anticipate future Fed actions.
We continue to invest the funds' assets in only the highest quality money market
securities. Consistent with the funds' objectives of providing shareholders with
a higher quality and conservative investment vehicle, we do not invest the
funds' cash in derivatives or other potentially volatile securities that we
believe involve undue risk.
Please remember, this discussion reflects our views and opinions, as well as the
portfolio holdings, as of June 30, 2000, the end of the reporting period. Market
and economic conditions, however, are changing constantly, which can be expected
to affect our strategies and the funds' portfolio compositions. Although
2
<PAGE>
historical performance is no guarantee of future results, these insights may
help you understand our investment and management philosophy.
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
3
<PAGE>
FRANKLIN'S
IFT MONEY MARKET PORTFOLIO
THE MONEY MARKET PORTFOLIO
Portfolio Composition
6/30/00
[PIE CHART]
Commercial Paper 49.6%
Certificates of Deposit 29.4%
Repurchase Agreements 14.9%
Bank Notes 5.5%
Other Assets 0.6%
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 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(1)
- Certificates of deposit
- Bank notes
- High grade commercial paper
- High grade short-term corporate obligations
- Repurchase agreements collateralized by U.S. government securities(1)
The Portfolio's composition as a percentage of total investments on June 30,
2000, is shown to the left.
1. U.S. government securities owned or held under repurchase agreements 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.
4
<PAGE>
PERFORMANCE SUMMARY
Reflecting the rise in short term interest rates during the reporting period,
the Fund's seven-day effective yield rose from 4.72% as of June 30, 1999 to
6.52% as of June 30, 2000. The average weighted maturity as of June 30, 2000 was
59 days, compared to 57 days as of June 30, 1999.
FRANKLIN'S IFT MONEY MARKET PORTFOLIO
Total Returns vs.
Lipper Institutional Money Market Funds Index(2)
Periods Ended June 30, 2000
[BAR GRAPH]
<TABLE>
<CAPTION>
One-Year Three-Year Five-Year Ten-Year
-------- ---------- --------- --------
<S> <C> <C> <C> <C>
Franklin's IFT Money
Market Portfolio 5.54% 17.02% 30.21% 64.79%
Lipper Institutional
Money Market Funds Index 5.51% 16.79% 29.68% 63.59%
</TABLE>
FRANKLIN'S
IFT MONEY MARKET PORTFOLIO
Period Ended June 30, 2000
Seven-day current yield(3) 6.32%
Seven-day effective yield(3) 6.52%
Average Weighted Maturity 59 days
2. Source for Lipper Institutional Money Market Funds Index is Lipper Analytical
Services, Inc. As of June 30, 2000, there were 210 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.
3. Annualized and effective yields are for the 7-day period shown and reflect
fluctuations in interest rates on Portfolio investments and Fund expenses.
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 6.24% and
6.43%, respectively. Franklin Advisers, Inc. may discontinue these arrangements
at any time, upon notice to the Fund's Board of Trustees.
Past performance does not guarantee future results. 5
<PAGE>
U.S. GOVERNMENT SECURITIES
MONEY MARKET PORTFOLIO
Portfolio Composition
6/30/00
[PIE CHART]
<TABLE>
<S> <C>
Repurchase Agreements 82.4%
U.S. Treasury Notes 17.3%
Other Assets 0.3%
</TABLE>
FRANKLIN U.S. GOVERNMENT
SECURITIES MONEY MARKET PORTFOLIO
The Franklin U.S. Government Securities Money Market Portfolio (the Fund) seeks
to provide a high level of 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.(4) The Portfolio's composition
as of June 30, 2000, 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 the
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.(5)
4. U.S. government securities owned by the Portfolio or held under repurchase
agreements, 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.
5. The exchange program may be modified or discontinued by the Fund. Certain
funds do not permit timing accounts or there may be certain restrictions, as
detailed in each fund's prospectus.
6
<PAGE>
PERFORMANCE SUMMARY
Reflecting the rise in short term interest rates, the Fund's seven-day effective
yield rose during the reporting period, from 4.57% as of June 30, 1999 to 6.29%
as of June 30, 2000. The average weighted maturity was 30 days as of June 30,
2000, compared to 36 days as of June 30, 1999.
FRANKLIN U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO
Total Returns vs.
Lipper Institutional U.S. Government Market Funds Index(6)
Period Ended June 30, 2000
[BAR GRAPH]
<TABLE>
<CAPTION>
One-Year Three-Year Five-Year Ten-Year
-------- ---------- --------- --------
<S> <C> <C> <C> <C>
Franklin U.S.
Government Securities
Money Market Portfolio 5.27% 16.41% 29.28% 62.53%
Lipper Institutional
U.S. Government Market
Funds Index 5.10% 15.63% 27.81% 60.22%
</TABLE>
FRANKLIN U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO
Period Ended June 30, 2000
<TABLE>
<S> <C>
Seven-day current yield(7) 6.10%
Seven-day effective yield(7) 6.29%
Average Weighted Maturity 30 days
</TABLE>
6. Source for Lipper Institutional U.S. Government Market Funds Index is
Lipper Analytical Services, Inc. As of June 30, 2000, there were 125 funds in
the institutional U.S. government money market funds category. This index is
unmanaged, and one can not 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.
7. Annualized and effective yields are for the 7-day period shown and reflect
fluctuations in interest rates on Portfolio investments and Fund expenses.
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 5.99% and
6.17%, respectively. Franklin Advisers, Inc. may discontinue these arrangements
at any time, upon notice to the Fund's Board of Trustees.
Past performance does not guarantee future results. 7
<PAGE>
INSTITUTIONAL FIDUCIARY TRUST
Financial Highlights
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------------------------------------------------------------------------------
Income from investment operations
- net investment income .054 .049 .054 .053 .055
Less distributions from net investment income (.054) (.049) (.054) (.053) (.055)
----------------------------------------------------------------------------------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==================================================================================
Total return(a) 5.54% 5.02% 5.58% 5.42% 5.61%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $1,010,170 $1,289,010 $175,881 $185,088 $341,295
Ratios to average net assets:
Expenses(b) .35% .31% .20% .20% .19%
Expenses excluding waiver and payments
by affiliate(b) .40% .33% .24% .24% .24%
Net investment income 5.48% 4.82% 5.44% 5.27% 5.45%
</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.
8 See notes to financial statements.
<PAGE>
INSTITUTIONAL FIDUCIARY TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO SHARES VALUE
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MUTUAL FUNDS 100.0%
The Money Market Portfolio (Note 1) (COST $1,010,362,054) 1,010,362,054 $1,010,362,054
OTHER ASSETS, LESS LIABILITIES (192,256)
--------------
NET ASSETS 100.0% $1,010,169,798
==============
</TABLE>
See notes to financial statements. 9
<PAGE>
INSTITUTIONAL FIDUCIARY TRUST
Financial Highlights
FRANKLIN U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------------
2000 1999 1998 1997 1996
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------------------------------------------------------
Income from investment operations - net investment income .. .051 .047 .054 .052 .054
Less distributions from net investment income .............. (.051) (.047) (.054) (.052) (.054)
---------------------------------------------------------
Net asset value, end of year ............................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========================================================
Total return(a) ............................................ 5.27% 4.82% 5.51% 5.29% 5.50%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ............................ $ 56,436 $ 111,566 $ 131,151 $ 136,705 $ 152,173
Ratios to average net assets:
Expenses(b) ............................................... .35% .30% .20% .20% .19%
Expenses excluding waiver and payments by affiliate(b) .... .43% .34% .26% .26% .26%
Net investment income ..................................... 5.08% 4.69% 5.34% 5.14% 5.44%
</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.
10 See notes to financial statements.
<PAGE>
INSTITUTIONAL FIDUCIARY TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 2000
<TABLE>
<CAPTION>
FRANKLIN U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO SHARES VALUE
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MUTUAL FUNDS 100.1%
The U.S. Government Securities Money Market Portfolio (Note 1)(COST $56,482,885) .... 56,482,885 $ 56,482,885
OTHER ASSETS, LESS LIABILITIES (.1%) ................................................ (47,081)
-------------
NET ASSETS 100.0% ................................................................... $ 56,435,804
=============
</TABLE>
See notes to financial statements. 11
<PAGE>
INSTITUTIONAL FIDUCIARY TRUST
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2000
<TABLE>
<CAPTION>
FRANKLIN U.S.
GOVERNMENT
MONEY MARKET SECURITIES MONEY
PORTFOLIO MARKET PORTFOLIO
--------------------------------------
<S> <C> <C>
Assets:
Investments in securities, at value and cost ........... $ 1,010,362,054 $ 56,482,885
Receivables from capital shares sold ................... 50,000 1,468
--------------------------------------
Total assets ...................................... 1,010,412,054 56,484,353
--------------------------------------
Liabilities:
Payables:
Capital shares redeemed ............................... 177,291 --
Affiliates ............................................ 52,224 15,558
Professional fees ..................................... 12,000 5,000
Distributions to shareholders .......................... 445 23,630
Other liabilities ...................................... 296 4,361
--------------------------------------
Total liabilities ................................. 242,256 48,549
--------------------------------------
Net assets, at value .................................... $ 1,010,169,798 $ 56,435,804
======================================
Shares outstanding ...................................... 1,010,169,798 56,435,804
======================================
Net asset value per share ............................... $ 1.00 $ 1.00
======================================
</TABLE>
12 See notes to financial statements.
<PAGE>
INSTITUTIONAL FIDUCIARY TRUST
Financial Statements (continued)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
FRANKLIN U.S.
GOVERNMENT
MONEY MARKET SECURITIES MONEY
PORTFOLIO MARKET PORTFOLIO
-------------------------------------
<S> <C> <C>
Investment income:
Dividends ............................................... $ 39,753,996 $ 4,111,299
-------------------------------------
Expenses:
Administrative fees (Note 3) ............................ 1,400,074 156,306
Transfer agent fees (Note 3) ............................ 11,877 11,907
Reports to shareholders ................................. 4,261 1,757
Registration and filing fees ............................ 193,757 25,421
Professional fees (Note 3) .............................. 32,020 6,873
Trustees' fees and expenses ............................. 26,009 4,332
Other ................................................... 7,143 144
-------------------------------------
Total expenses ..................................... 1,675,141 206,740
Expenses waived/paid by affiliate (Note 3) ......... (271,507) (50,774)
-------------------------------------
Net expenses ...................................... 1,403,634 155,966
-------------------------------------
Net investment income ............................ 38,350,362 3,955,333
-------------------------------------
Net increase in net assets resulting from operations ..... $ 38,350,362 $ 3,955,333
=====================================
</TABLE>
See notes to financial statements. 13
<PAGE>
INSTITUTIONAL FIDUCIARY TRUST
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
<TABLE>
<CAPTION>
FRANKLIN U.S. GOVERNMENT SECURITIES
MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
-------------------------------------------------------------------------
2000 1999 2000 1999
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ......................... $ 38,350,362 $ 13,473,371 $ 3,955,333 $ 6,469,392
Distributions to shareholders from
net investment income ......................... (38,350,362) (13,473,371) (3,955,333) (6,469,392)
Capital share transactions (Note 2) ............ (278,840,190) 1,113,128,619 (55,130,228) (19,584,891)
-------------------------------------------------------------------------
Net increase (decrease) in net assets (278,840,190) 1,113,128,619 (55,130,228) (19,584,891)
Net assets (there is no undistributed net
investment income at beginning or end of year):
Beginning of year ............................. 1,289,009,988 175,881,369 111,566,032 131,150,923
-------------------------------------------------------------------------
End of year ................................... $ 1,010,169,798 $ 1,289,009,988 $ 56,435,804 $ 111,566,032
=========================================================================
</TABLE>
14 See notes to financial statements.
<PAGE>
INSTITUTIONAL FIDUCIARY TRUST
Notes to Financial Statements
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 June 30, 2000, the Money Market Fund owns 24.56% of The Money
Market Portfolio and the U.S. Government Fund owns 25.44% 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.
15
<PAGE>
INSTITUTIONAL FIDUCIARY TRUST
Notes to Financial Statements (continued)
2. SHARES OF BENEFICIAL INTEREST
At June 30, 2000, there were an unlimited number of shares authorized (no par
value). Transactions in the Funds' shares were as follows:
<TABLE>
<CAPTION>
FRANKLIN U.S.
GOVERNMENT
MONEY MARKET SECURITIES MONEY
PORTFOLIO MARKET PORTFOLIO
-------------------------------------
<S> <C> <C>
Year ended June 30, 2000
Shares sold ........................................... $ 7,525,215,799 $ 195,363,342
Shares issued in reinvestment of distributions ........ 35,652,431 3,365,740
Shares redeemed ....................................... (7,839,708,420) (253,859,310)
-------------------------------------
Net decrease .......................................... $ (278,840,190) $ (55,130,228)
=====================================
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 June 30, 2000, investment companies managed by Advisers or its affiliates
owned 923,942,440 shares of the Money Market Fund.
The Funds pay an administrative fee to Advisers of .20% per year of the average
daily net assets of each Fund.
Advisers agreed in advance to waive administrative fees as noted in the
Statement of Operations.
The Funds paid transfer agent fees of $23,784 of which $5,291 was paid to
Investor Services.
Included in professional fees are legal fees of $21,909 that were paid to a law
firm in which a partner of that firm was an officer of the Funds.
16
<PAGE>
INSTITUTIONAL FIDUCIARY TRUST
Independent Auditors' Report
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
OF INSTITUTIONAL FIDUCIARY TRUST
In our opinion, the accompanying statements of assets and liabilities, including
the statements of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of each of the funds included in this
report constituting part of the Institutional Fiduciary Trust (hereafter
referred to as the "Funds") at June 30, 2000, the results of each of their
operations for the year then ended, the changes in each of their net assets for
each of the two years in the period then ended and the financial highlights for
each of the periods presented, in conformity with accounting principles
generally accepted in the United States. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at June 30,
2000, by correspondence with the custodian, provide a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers LLP
San Francisco, California
August 3, 2000
17
<PAGE>
THE MONEY MARKET PORTFOLIOS
Financial Highlights
THE MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------------------------
2000 1999 1998 1997 1996
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------------------------------------------------------------------
Income from investment operations - net investment income .056 .051 .055 .053 .055
Less distributions from net investment income (.056) (.051) (.055) (.053) (.055)
---------------------------------------------------------------------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------------------------------------------------------------------
Total return(a) 5.75% 5.18% 5.64% 5.47% 5.66%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $ 4,144,043 $ 3,672,404 $ 2,043,629 $ 1,773,546 $ 1,550,085
Ratios to average net assets:
Expenses .15% .15% .15% .15% .15%
Expenses excluding waiver and payments by affiliate .16% .15% .16% .16% .16%
Net investment income 5.65% 5.04% 5.50% 5.34% 5.50%
</TABLE>
(a)Total return is not annualized for periods less than one year.
18 See notes to financial statements.
<PAGE>
THE MONEY MARKET PORTFOLIOS
STATEMENT OF INVESTMENTS, JUNE 30, 2000
<TABLE>
<CAPTION>
PRINCIPAL
THE MONEY MARKET PORTFOLIO AMOUNT VALUE
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BANK NOTES 5.5%
Bank of America NT & SA, 6.29% - 6.77%, 8/01/00 - 8/18/00 ............................. $ 155,000,000 $ 155,000,328
Wachovia Bank NA, North Carolina Branch, 6.20%, 7/27/00 - 7/28/00 ..................... 70,000,000 70,000,253
--------------
TOTAL BANK NOTES (COST $225,000,581) .................................................. 225,000,581
--------------
CERTIFICATES OF DEPOSIT 29.4%
ABN-AMRO Bank NV, Chicago Branch, 5.69% - 5.91%, 7/10/00 - 8/10/00 .................... 80,000,000 79,997,903
Bank of Nova Scotia, Portland Branch, 6.68% , 9/20/00 - 9/21/00 ....................... 50,000,000 50,000,000
Barclays Bank PLC, New York Branch, 5.90%, 10/02/00 ................................... 25,000,000 24,930,771
Bayerische Vereinsbank, New York Branch, 6.70% - 6.71%, 9/05/00 - 9/07/00 ............. 50,000,000 50,000,405
Commerzbank AG, New York Branch, 6.09% - 6.15%, 7/11/00 - 7/14/00 ..................... 140,000,000 140,000,438
Credit Agricole Indosuez, New York Branch, 6.76% - 7.10%, 4/11/01 - 6/15/01 ........... 135,000,000 134,989,937
Credit Communal De Belgique, New York Branch, 7.075% - 7.25%, 5/03/01- 5/09/01 ........ 60,000,000 60,006,117
Den Danske Bank, New York Branch, 6.23%, 7/31/00 ...................................... 35,000,000 35,000,859
Deutsche Bank AG, New York Branch, 6.69% - 6.70%, 9/18/00 - 9/29/00 ................... 99,900,000 99,902,209
Dexia Bank, New York Branch, 7.105%, 6/18/01 .......................................... 25,000,000 24,998,806
Dresdner Bank AG, New York Branch, 6.09% - 6.70%, 7/06/00 - 9/28/00 ................... 75,000,000 75,000,682
Lloyds Bank PLC, New York Branch, 6.21% - 6.25%, 7/20/00 - 7/24/00 .................... 65,000,000 64,999,969
Royal Bank of Canada, New York Branch, 5.70% - 6.48%, 7/03/00 - 1/16/01 ............... 95,000,000 94,985,347
Societe Generale, New York Branch, 6.26%, 7/24/00 - 7/28/00 ........................... 75,000,000 75,000,000
Svenska Handelsbanken, New York Branch, 6.75%, 8/24/00 - 8/25/00 ...................... 50,000,000 50,000,745
Toronto Dominion Bank, New York Branch, 6.30% - 7.16%, 8/01/00 - 6/08/01 .............. 125,000,000 124,993,135
UBS AG, New York Branch, 7.08%, 6/22/01 ............................................... 24,990,544 24,990,544
--------------
TOTAL CERTIFICATES OF DEPOSIT (COST $1,209,797,867) ................................... 1,209,797,867
--------------
(a)COMMERCIAL PAPER 49.6%
Abbey National North America Corp., 6.00% , 7/17/00 ................................... 35,000,000 34,906,667
American Express Credit Corp., 6.6937% - 6.88%, 7/03/00 - 9/08/00 ..................... 205,000,000 204,950,311
Archer Daniels Midland Co., 6.55%, 9/14/00 ............................................ 20,000,000 19,727,083
Asset Securitization Cooperative Corp., 144A, 6.57% - 6.60%, 8/28/00 - 10/04/00 ....... 150,000,000 148,032,945
Bank of Nova Scotia, 6.60%, 9/07/00 ................................................... 25,000,000 24,688,333
Canadian Imperial Holdings Inc., 6.59% - 6.60%, 9/08/00 - 9/27/00 ..................... 75,000,000 73,882,882
Ciesco LP, 6.35% - 6.64%, 7/05/00 - 8/15/00 ........................................... 95,000,000 94,550,229
Coca-Cola Co., 6.06% - 6.55%, 7/18/00 - 8/31/00 ....................................... 155,000,000 154,129,299
Commonwealth Bank of Australia, 6.11%, 7/26/00 ........................................ 35,000,000 34,851,493
Delaware Funding Corp., 144A, 6.65%, 8/23/00 .......................................... 25,000,000 24,755,243
Den Danske Corp. Inc., 6.40% - 6.59%, 7/31/00 - 9/11/00 ............................... 38,313,000 37,912,497
Dupont de Nemours Co., 6.09% - 6.11%, 7/25/00 - 8/11/00 ............................... 105,000,000 104,394,558
General Electric Capital Corp., 6.39% - 6.62%, 8/03/00 - 12/12/00 ..................... 130,000,000 127,849,814
Halifax Building Society Ltd., 6.58%, 9/25/00 ......................................... 25,000,000 24,607,028
International Lease Finance Corp., 6.53% - 6.57%, 8/21/00 - 9/12/00 ................... 96,485,000 95,468,270
J.P. Morgan & Co. Inc., 6.60%, 9/12/00 ................................................ 25,000,000 24,665,417
Merrill Lynch & Co. Inc., 6.55% - 6.63%, 8/14/00 - 8/25/00 ............................ 75,000,000 74,301,618
Morgan Stanley Dean Witter & Co., 6.57% - 6.65%, 8/07/00 - 9/05/00 .................... 155,000,000 153,622,460
National Australia Funding (DE) Inc., 6.57%, 9/15/00 .................................. 25,000,000 24,653,250
National Rural Utilities Cooperative Finance Corp., 6.58% - 6.63%, 8/10/00 - 8/18/00 .. 75,000,000 74,379,826
Rabobank Nederland NV, 6.92%, 7/05/00 ................................................. 190,000,000 189,853,912
Salomon Smith Barney Holdings Inc., 6.15% - 6.64%, 7/10/00 - 8/11/00 .................. 165,000,000 164,514,089
</TABLE>
19
<PAGE>
THE MONEY MARKET PORTFOLIOS
STATEMENT OF INVESTMENTS, JUNE 30, 2000
<TABLE>
<CAPTION>
PRINCIPAL
THE MONEY MARKET PORTFOLIO AMOUNT VALUE
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(a)COMMERCIAL PAPER (CONT.)
Schering Corp., 5.94% - 6.15%, 7/06/00 - 8/08/00 ...................................... $ 47,000,000 $ 46,762,893
Svenska Handelsbanken Inc., 6.155% - 6.60%, 7/28/00 - 9/22/00 ......................... 85,000,000 84,142,917
---------------
TOTAL COMMERCIAL PAPER (COST $2,041,603,034) .......................................... 2,041,603,034
---------------
U.S. GOVERNMENT AGENCY SECURITIES
Federal Home Loan Mortgage Corp., 6.44%, 9/14/00 ...................................... 60,000 59,195
Fannie Mae, 6.47%, 9/21/00 ............................................................ 100,000 98,526
---------------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (COST $157,721) ............................... 157,721
---------------
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENTS (COST $3,476,559,203) .................. 3,476,559,203
---------------
(b)REPURCHASE AGREEMENTS 14.9%
Barclays Capital Inc., 6.60%, 7/03/00 (Maturity Value $200,110,000) ................... 200,000,000 200,000,000
Collateralized by U.S. Treasury Notes
J.P. Morgan Securities Inc., 6.50%, 7/03/00 (Maturity Value $107,423,156) ............. 107,365,000 107,365,000
Collateralized by U.S. Treasury Notes
Morgan Stanley & Co., 6.50%, 7/03/00 (Maturity Value $107,423,156) .................... 107,365,000 107,365,000
Collateralized by U.S. Treasury Notes
UBS Warburg, 6.70%, 7/03/00 (Maturity Value $200,111,667) ............................. 200,000,000 200,000,000
Collateralized by U.S. Treasury Notes
---------------
TOTAL REPURCHASE AGREEMENTS (COST $614,730,000) ....................................... 614,730,000
---------------
TOTAL INVESTMENTS (COST $4,091,289,203) 99.4% ......................................... 4,091,289,203
OTHER ASSETS, LESS LIABILITIES .6% .................................................... 22,753,837
---------------
NET ASSETS 100.0% ..................................................................... $ 4,114,043,040
================
</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.
20 See notes to financial statements.
<PAGE>
THE MONEY MARKET PORTFOLIOS
Financial Highlights
THE U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------------------------------------------------------------
Income from investment operations - net investment income .054 .049 .054 .052 .054
Less distributions from net investment income (.054) (.049) (.054) (.052) (.054)
------------------------------------------------------------------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------------------------------------------------------------
Total return(a) 5.48% 4.97% 5.53% 5.34% 5.55%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $ 221,993 $ 258,458 $ 263,226 $ 285,629 $ 285,701
Ratios to average net assets:
Expenses .15% .15% .15% .15% .15%
Expenses excluding waiver and payments by affiliate .16% .15% .16% .16% .17%
Net investment income 5.36% 4.84% 5.40% 5.20% 5.45%
</TABLE>
(a)Total return is not annualized for periods less than one year.
See notes to financial statements. 21
<PAGE>
THE MONEY MARKET PORTFOLIOS
STATEMENT OF INVESTMENTS, JUNE 30, 2000
<TABLE>
<CAPTION>
PRINCIPAL
THE U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO AMOUNT VALUE
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT SECURITIES 17.3%
U.S. Treasury Notes, 5.125%, 8/31/00 ...................................................... $ 10,000,000 $ 9,993,585
U.S. Treasury Notes, 6.25%, 8/31/00 ....................................................... 3,500,000 3,503,503
U.S. Treasury Notes, 4.00%, 10/31/00 ...................................................... 5,000,000 4,963,877
U.S. Treasury Notes, 4.625%, 11/30/00 ..................................................... 5,000,000 4,972,439
U.S. Treasury Notes, 5.375%, 2/15/01 ...................................................... 5,000,000 4,967,729
U.S. Treasury Notes, 7.75%, 2/15/01 ....................................................... 5,000,000 5,039,338
U.S. Treasury Notes, 6.25%, 4/30/01 ....................................................... 5,000,000 4,974,515
--------------
TOTAL GOVERNMENT SECURITIES (COST $38,414,986) ............................................ 38,414,986
--------------
(b)REPURCHASE AGREEMENTS 82.4%
Banc of America Securities LLC, 6.60%, 7/03/00 (Maturity Value $9,004,950) ................ 9,000,000 9,000,000
Collateralized by U.S. Treasury Notes
Barclays Capital Inc., 6.45%, 7/03/00 (Maturity Value $9,004,838) ......................... 9,000,000 9,000,000
Collateralized by U.S. Treasury Notes
Bear, Stearns & Co. Inc., 6.50%, 7/03/00 (Maturity Value $9,004,875) ...................... 9,000,000 9,000,000
Collateralized by U.S. Treasury Bills
Dresdner Kleinwort Benson, North America LLC, 6.40%, 7/03/00 (Maturity Value $9,004,800) .. 9,000,000 9,000,000
Collateralized by U.S. Treasury Bills
Goldman, Sachs & Co., 6.38%, 7/03/00 (Maturity Value $9,004,785) .......................... 9,000,000 9,000,000
Collateralized by U.S. Treasury Bond
Greenwich Capital Markets Inc., 6.50%, 7/03/00 (Maturity Value $9,004,875) ................ 9,000,000 9,000,000
Collateralized by U.S. Treasury Notes
J.P. Morgan Securities Inc., 6.40%, 7/03/00 (Maturity Value $21,001,195) .................. 20,990,000 20,990,000
Collateralized by U.S. Treasury Notes
J.P. Morgan Securities Inc., 6.50%, 7/03/00 (Maturity Value $30,016,250) .................. 30,000,000 30,000,000
Collateralized by U.S. Treasury Notes
Merrill Lynch Government Securities Inc., 6.25%, 7/03/00 (Maturity Value $9,004,688) ...... 9,000,000 9,000,000
Collateralized by U.S. Treasury Notes
Morgan Stanley & Co. Inc., 6.50%, 7/03/00 (Maturity Value $21,001,370) .................... 20,990,000 20,990,000
Collateralized by U.S. Treasury Notes
Morgan Stanley & Co. Inc., 6.50%, 7/03/00 (Maturity Value $30,016,250) .................... 30,000,000 30,000,000
Collateralized by U.S. Treasury Notes
Nesbitt Burns Securities Inc., 6.55%, 7/03/00 (Maturity Value $9,004,913) ................. 9,000,000 9,000,000
Collateralized by U.S. Treasury Notes
UBS Warburg, 6.50%, 7/03/00 (Maturity Value $9,004,875) ................................... 9,000,000 9,000,000
Collateralized by U.S. Treasury Notes
--------------
TOTAL REPURCHASE AGREEMENTS (COST $182,980,000) ........................................... 182,980,000
--------------
TOTAL INVESTMENTS (COST $221,394,986) 99.7% ............................................... 221,394,986
OTHER ASSETS, LESS LIABILITIES .3% ........................................................ 597,959
--------------
NET ASSETS 100.0% ......................................................................... $ 221,992,945
==============
</TABLE>
(b)See note 1(b) regarding repurchase agreements.
22 See notes to financial statements.
<PAGE>
THE MONEY MARKET PORTFOLIOS
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2000
<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 .. $3,476,559,203 $ 38,414,986
Repurchase agreements, at value and cost ...... 614,730,000 182,980,000
Cash .......................................... 3,236 9,578
Interest receivable ........................... 23,833,771 630,227
-------------------------------------
Total assets ............................. 4,115,126,210 222,034,791
-------------------------------------
Liabilities:
Payables:
Affiliates ................................... 449,624 29,821
Professional fees ............................ 30,000 10,000
Distribution to shareholders .................. 576,601 113
Other liabilities ............................. 26,945 1,912
-------------------------------------
Total liabilities ........................ 1,083,170 41,846
-------------------------------------
Net assets, at value ........................... $4,114,043,040 $ 221,992,945
=====================================
Shares outstanding ............................. 4,114,043,040 221,992,945
=====================================
Net asset value per share ...................... $ 1.00 $ 1.00
=====================================
</TABLE>
See notes to financial statements. 23
<PAGE>
THE MONEY MARKET PORTFOLIOS
Financial Statements (continued)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
THE U.S.
GOVERNMENT
THE SECURITIES
MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO
------------------------------------
<S> <C> <C>
Investment income:
Interest ............................................ $ 206,206,553 $ 13,671,482
------------------------------------
Expenses:
Management fees (Note 3) ............................ 5,343,198 376,050
Transfer agent fees (Note 3) ........................ 32,576 2,250
Custodian fees ...................................... 39,041 2,437
Reports to shareholders ............................. 6,133 569
Professional fees (Note 3) .......................... 56,286 12,294
Trustees' expenses .................................. 4,167 287
Other ............................................... 30,011 4,335
------------------------------------
Total expenses ................................. 5,511,412 398,222
Expenses waived/paid by affiliate (Note 3) ..... (164,153) (24,664)
------------------------------------
Net expenses .................................. 5,347,259 373,558
------------------------------------
Net investment income ........................ 200,859,294 13,297,924
------------------------------------
Net realized loss from investments ................... (9,285) --
------------------------------------
Net increase in net assets resulting from operations.. $ 200,850,009 $ 13,297,924
====================================
</TABLE>
24 See notes to financial statements.
<PAGE>
THE MONEY MARKET PORTFOLIOS
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
<TABLE>
<CAPTION>
THE U.S. GOVERNMENT SECURITIES
THE MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
------------------------------------------------------------------------------
2000 1999 2000 1999
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ........................ $ 200,859,294 $ 134,356,042 $ 13,297,924 $ 14,158,082
Net realized gain (loss) from investments .... (9,285) 651 -- --
------------------------------------------------------------------------------
Net increase in net assets resulting
from operations .......................... 200,850,009 134,356,693 13,297,924 14,158,082
Distributions to shareholders from net
investment income ............................ (200,850,009)(a) (134,356,693)(b) (13,297,924) (14,158,082)
Capital share transactions (Note 2) ........... 441,639,255 1,628,774,482 (36,465,436) (4,767,997)
------------------------------------------------------------------------------
Net increase (decrease) in net assets .... 441,639,255 1,628,774,482 (36,465,436) (4,767,997)
Net assets (there is no undistributed net
investment income at beginning or end of year):
Beginning of year ............................ 3,672,403,785 2,043,629,303 258,458,381 263,226,378
------------------------------------------------------------------------------
End of year .................................. $ 4,114,043,040 $ 3,672,403,785 $ 221,992,945 $ 258,458,381
==============================================================================
</TABLE>
(a) Distributions were decreased by a net realized loss from investments of
$9,285.
(b) Distributions were increased by a net realized gain from investments of
$651.
See notes to financial statements. 25
<PAGE>
THE MONEY MARKET PORTFOLIOS
Notes to Financial Statements
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 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 June
30, 2000, 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.
26
<PAGE>
THE MONEY MARKET PORTFOLIOS
Notes to Financial Statements (continued)
2. SHARES OF BENEFICIAL INTEREST
At June 30, 2000, 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>
Year ended June 30, 2000
Shares sold .................................. $ 38,813,462,724 $ 1,220,241,486
Shares issued in reinvestment of distributions 200,275,366 13,291,931
Shares redeemed .............................. (38,572,098,835) (1,269,998,853)
------------------------------------------
Net increase (decrease) ...................... $ 441,639,255 $ (36,465,436)
==========================================
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, the Institutional Fiduciary Trust,
the Franklin Templeton Money Fund Trust, and the 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.
Included in professional fees are legal fees of $11,240 that were paid to a law
firm in which a partner of that firm was an officer of the Portfolios.
At June 30, 2000, 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 ............................................... 2,883,392,424 70.09%
Institutional Fiduciary Trust - Money Market Portfolio ............ 1,010,362,054 24.56%
Institutional Fiduciary Trust - Franklin Cash Reserves Fund ....... 119,060,923 2.89%
Franklin Templeton Money Fund Trust - Franklin Templeton Money Fund 101,227,639 2.46%
</TABLE>
27
<PAGE>
THE MONEY MARKET PORTFOLIOS
Notes to Financial Statements (continued)
3. TRANSACTIONS WITH AFFILIATES (CONT.)
At June 30, 2000, 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 ................... 56,482,885 25.44%
Franklin Federal Money Fund ............................ 165,510,060 74.56%
</TABLE>
4. INCOME TAXES
At June 30, 2000, The Money Market Portfolio had tax basis capital losses of
$8,692, which may be carried over to offset future capital gains. Such losses
expire in 2008.
At June 30, 2000, The Money Market Portfolio has deferred capital losses
occurring subsequent to October 31, 1999 of $9,285. For tax purposes, such
losses will be reflected in the year ending June 30, 2001.
28
<PAGE>
THE MONEY MARKET PORTFOLIOS
Independent Auditors' Report
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
THE MONEY MARKET PORTFOLIOS
In our opinion, the accompanying statements of assets and liabilities, including
the statements of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of each of the portfolios constituting
The Money Market Portfolios (hereafter referred to as the "Portfolios") at June
30, 2000, the results of each of their operations for the year then ended, the
changes in each of their net assets for each of the two years in the period then
ended and the financial highlights for each of the periods presented, in
conformity with accounting principles generally accepted in the United States.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Portfolios' management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with auditing standards generally accepted in the United States,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at June 30, 2000 by correspondence with the custodian
and brokers, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
San Francisco, California
August 3, 2000
29
<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
LITERATURE REQUEST
For a free brochure and prospectus, which contain more complete information,
including charges and expenses, call Franklin Templeton Fund Information at
1-800/DIAL BEN(R) (1-800/342-5236). Please read the prospectus carefully before
investing or sending money. To ensure the highest quality of service, telephone
calls to or from our service departments may be monitored, recorded and
accessed. These calls can be determined by the presence of a regular beeping
tone.
FRANKLIN TEMPLETON GROUP
GLOBAL GROWTH
Franklin Global Health Care Fund
Mutual Discovery Fund
Templeton Developing Markets Trust
Templeton Foreign Fund
Templeton Foreign Smaller Companies Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund
Templeton Growth Fund
Templeton International Fund
Templeton Latin America Fund
Templeton Pacific Growth Fund
Templeton World Fund
GLOBAL GROWTH AND INCOME
Franklin Global Communications Fund
Mutual European Fund
Templeton Global Bond Fund
GLOBAL INCOME
Franklin Global Government Income Fund
Franklin Templeton Global Currency Fund
Franklin Templeton Hard Currency Fund
GROWTH
Franklin Aggressive Growth Fund
Franklin Biotechnology Discovery Fund(1)
Franklin Blue Chip Fund
Franklin California Growth Fund
Franklin DynaTech Fund
Franklin Equity Fund
Franklin Gold and Precious Metals Fund
Franklin Growth Fund
Franklin Large Cap Growth Fund
Franklin Small Cap Growth Fund I(2)
Franklin Small Cap Growth Fund II
Franklin Technology Fund
Franklin U.S. Long-Short Fund
GROWTH AND INCOME
Franklin Asset Allocation Fund
Franklin Balance Sheet Investment Fund
Franklin Convertible Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Rising Dividends Fund
Franklin Utilities Fund
Franklin Value Fund
Mutual Beacon Fund
Mutual Financial Services Fund
Mutual Qualified Fund
Mutual Shares Fund
FUND ALLOCATOR SERIES
Franklin Templeton Conservative Target Fund
Franklin Templeton Moderate Target Fund
Franklin Templeton Growth Target Fund
INCOME
Franklin Adjustable U.S. Government Securities Fund(3)
Franklin's AGE High Income Fund
Franklin Bond Fund
Franklin Floating Rate Trust
Franklin Short-Intermediate U.S. Government Securities Fund(3)
Franklin Strategic Income Fund
Franklin U.S. Government Securities Fund(3)
Franklin Federal Money Fund(3)
Franklin Money Fund(3)
TAX-FREE INCOME
Federal Intermediate-Term Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund
Puerto Rico Tax-Free Income Fund
Tax-Exempt Money Fund(3)
STATE-SPECIFIC TAX-FREE INCOME
Alabama
Arizona(4)
California(4)
Colorado
Connecticut
Florida(4)
Georgia
Kentucky
Louisiana
Maryland
Massachusetts(5)
Michigan(5)
Minnesota(5)
Missouri
New Jersey
New York(4)
North Carolina
Ohio(5)
Oregon
Pennsylvania
Tennessee(6)
Texas
Virginia
INSURANCE FUNDS
Franklin Templeton Variable Insurance Products Trust(7)
1. As of February 18, 2000, the fund is closed to new investors with the
exception of retirement plans.
2. As of April 30, 2000, the fund is closed to new investors, with the
exception of retirement plans, wrap programs and Advisor Class and Class
C shares.
3. An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.
4. These funds are available in two or more variations, including long-term
portfolios, portfolios of insured securities, a high-yield portfolio (CA)
and intermediate-term and money market portfolios (CA and NY).
5. Portfolio of insured municipal securities.
6. The fund may invest up to 100% of its assets in bonds that pay interest
subject to the federal alternative minimum tax.
7. The funds of the Franklin Templeton Variable Insurance Products Trust are
generally only available as investment options in variable annuity or
variable life insurance contracts.
05/00
<PAGE>
[FRANKLIN(R) TEMPLETON(R) INVESTMENTS(TM) LOGO]
Franklin's Institutional Fiduciary Trust
777 Mariners Island Blvd., P.O. Box 7777
San Mateo, CA 94403-7777
ANNUAL REPORT
INVESTMENT MANAGER AND ADMINISTRATOR
Franklin Advisers, Inc.
DISTRIBUTOR
Franklin/Templeton Distributors, Inc.
1-800/DIAL BEN(R)
franklintempleton.com
INSTITUTIONAL SERVICES
1-800/321-8563
For a prospectus on any Franklin Templeton fund, please contact a Franklin
Templeton Institutional Services Representative, toll free, at 1-800/321-8563. A
prospectus contains more complete information about a fund, including fees,
charges, expenses, and risks. Be sure to read it carefully before investing or
sending money.
To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded, and accessed. These calls can be
identified by the presence of a regular beeping tone.
IFT1 A00 08/00 [RECYCLE LOGO] Printed on recycled paper
<PAGE>
ANNUAL
JUNE 30, 2000
REPORT
INSTITUTIONAL FIDUCIARY TRUST
FRANKLIN CASH RESERVES FUND
[LOGO]
FRANKLIN(R) TEMPLETON(R)
INVESTMENTS
<PAGE>
[50TH ANNIVERSARY SEAL]
Thank you for investing with Franklin Templeton. We encourage our investors to
maintain a long-term perspective and remember that all securities markets move
both up and down, as do portfolio share prices. We appreciate your past support
and look forward to serving your investment needs in the years ahead.
[PHOTO OF CHARLES B. JOHNSON]
CHARLES B. JOHNSON
Chairman
Institutional Fiduciary Trust
<PAGE>
SHAREHOLDER LETTER
Your Fund's Goal: The Franklin Cash Reserves Fund seeks a high level of current
income, consistent with liquidity and preservation of capital. The Fund invests
all of its assets in the shares of The Money Market Portfolio (the Portfolio),
which has the same investment objective. The Fund attempts 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:
We are pleased to bring you the annual report for the Franklin Cash Reserves
Fund for the fiscal year ended June 30, 2000.
The 12 months under review marked the U. S. economy's ninth year of expansion.
The long-term effects of the Federal Reserve Board's (the Fed's) 1998 policies
to ease global liquidity pressures fueled the U.S. economy, resulting in recent
signs of inflation.
Consumer spending, which represents two-thirds of U.S. gross domestic product
(GDP), increased dramatically during the period, to its highest level in 17
years. Wage gains, record low unemployment, and the much talked-about wealth
effect were key drivers to this increase. As a result,
(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.
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
Independent
Auditors' Report 13
</TABLE>
FUND CATEGORY
[GRAPHIC OF PYRAMID]
<PAGE>
real GDP grew at a robust annualized pace of 5.4% in the first quarter of 2000,
well above the Fed's long-term growth target rate of 3.0%.
Seeking to curb growth to a more sustainable level, the Fed raised the federal
funds target rate a total of 150 basis points (1.50%) during the past 12 months.
In March 2000, it appeared that the Fed's actions were having little effect on
the strong economy. The majority of economic indicators pointed to an economy
that was on the verge of overheating. During the final three months of the
fiscal year, however, we began to see the first signs of a much-needed economic
slowdown. Consumer spending, housing starts, inflation as measured by the
Consumer Price Index, as well as other economic indicators displayed some signs
of a slowing economy.
Looking forward, we are optimistic that the economy will
continue to moderate, but are nonetheless concerned about inflation and the
level of interest rates. Although many people anticipate a slowdown and a soft
landing, we believe it is really too early to tell. Numerous Fed governors have
cautioned #against jumping to any conclusions, and have advised waiting for more
data that would confirm the slowdown or spark further tightening. Therefore, we
will closely watch economic reports to help anticipate future Fed actions.
We continue to invest the Portfolio's assets in only the highest quality money
market securities. For example, on June 30, 2000, more than 75% of the
securities purchased for the Portfolio carried a AA or higher long-term credit
rating by Standard & Poor's(R) and Moody's, two independent credit rating
agencies,
2
<PAGE>
with the balance 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 Portfolio's cash in derivatives or other potentially volatile
securities that we believe involve undue risk.
Please remember that this discussion reflects our views and opinions, as well as
the portfolio holdings, as of June 30, 2000, the end of the reporting period.
Market and economic conditions, however, are changing constantly, which can be
expected to affect our strategies and the fund's portfolio composition. Although
historical performance is no guarantee of future results, these insights may
help you understand our investment and management philosophy.
We appreciate your support, welcome new shareholders and look forward to serving
your investment needs in the years ahead.
Sincerely,
/S/ C. B. Johnson
Charles B. Johnson
Chairman
Franklin's Institutional Fiduciary Trust
(2.) This does not indicate a rating of the fund.
3
<PAGE>
THE MONEY MARKET PORTFOLIO
[PIE CHART GRAPHIC]
Portfolio Composition
6/30/00
Commercial Paper 49.6%
Certificates of Deposit 29.4%
Repurchase Agreements 14.9%
Bank Notes 5.5%
Other Assets 0.6%
FRANKLIN CASH RESERVES FUND
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 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
- Bank notes
- High grade commercial paper
- High grade short-term corporate obligations
- Repurchase agreements collateralized by U.S. government securities(3)
The Portfolio's composition as a percentage of total investments on June 30,
2000, is shown to the left.
(3.) U.S. government securities owned by the Portfolio or held under repurchase
agreements, 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.
4
<PAGE>
PERFORMANCE SUMMARY
Reflecting the increase in short-term interest rates, the fund's seven-day
effective yield rose during the reporting period from 4.02% on June 30, 1999, to
5.99% on June 30, 2000. The average weighted maturity as of June 30, 2000 was 59
days, compared to 57 days as of June 30, 1999.
FRANKLIN CASH RESERVES FUND
[BAR GRAPH]
FRANKLIN CASH RESERVES FUND
Total Returns vs. Lipper Institutional Money Market Funds Index(4)
Periods Ended June 30, 2000
<TABLE>
<CAPTION>
One-Year Three-Year Five-Year
<S> <C> <C> <C>
Franklin Cash Reserves Fund 5.07% 15.58% 27.98%
Lipper Institutional Money
Market Funds Index 5.51% 16.79% 29.68%
</TABLE>
FRANKLIN CASH
RESERVES FUND
Period Ended June 30, 2000
<TABLE>
<S> <C>
Seven-day current yield(5) 5.82%
Seven-day effective yield(5) 5.99%
Average Weighted Maturity 59 days
</TABLE>
(4.) Source for Lipper Institutional Money Market Funds Index is Lipper
Analytical Services, Inc. As of June 30, 2000, there were 210 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. 5
<PAGE>
INSTITUTIONAL FIDUCIARY TRUST
FRANKLIN CASH RESERVES FUND
Financial Highlights
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ...................... $1.00 $1.00 $1.00 $1.00 $1.00
-------------------------------------------------------------------
Income from investment operations - net investment
income ................................................ .049 .044 .051 .050 .052
Less distributions from net investment income ........... (.049) (.044) (.051) (.050) (.052)
-------------------------------------------------------------------
Net asset value, end of year ............................ $1.00 $1.00 $1.00 $1.00 $1.00
===================================================================
Total return(a) ......................................... 5.07% 4.49% 5.28% 5.11% 5.35%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ......................... $117,081 $135,390 $119,585 $76,510 $30,381
Ratios to average net assets:
Expenses(b) ............................................ .81% .82% .50% .50% .49%
Expenses excluding waiver and payment by affiliate(b) .. .82% .82% .77% .69% .73%
Net investment income .................................. 4.91% 4.38% 5.14% 5.00% 5.10%
</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.
6 See notes to financial statements.
<PAGE>
INSTITUTIONAL FIDUCIARY TRUST
FRANKLIN CASH RESERVES FUND
STATEMENT OF INVESTMENTS, JUNE 30, 2000
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
MUTUAL FUNDS 101.7%
The Money Market Portfolio (Note 1) (COST $119,060,923) ............... 119,060,923 $119,060,923
OTHER ASSETS, LESS LIABILITIES (1.7)% ................................. (1,980,379)
-----------
NET ASSETS 100.0% ..................................................... $117,080,544
===========
</TABLE>
See notes to financial statements.
7
<PAGE>
INSTITUTIONAL FIDUCIARY TRUST
FRANKLIN CASH RESERVES FUND
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
<TABLE>
<CAPTION>
<S> <C>
Assets:
Investments in securities, at value and cost $119,060,923
Receivables from capital shares sold 971,145
-----------
Total assets 120,032,068
-----------
Liabilities:
Payables:
Capital shares redeemed 2,872,466
Affiliates 48,019
Other liabilities 31,039
------------
Total liabilities 2,951,524
------------
Net assets, at value $117,080,544
============
Shares outstanding 117,080,544
============
Net asset value per share $1.00
============
</TABLE>
See notes to financial statements.
8
<PAGE>
INSTITUTIONAL FIDUCIARY TRUST
FRANKLIN CASH RESERVES FUND
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
<S> <C>
Investment income:
Dividends $6,997,090
----------
Expenses:
Administrative fees (Note 3) 314,363
Distribution fees (Note 3) 314,363
Transfer agent fees (Note 3) 153,957
Reports to shareholders 7,949
Registration and filing fees 20,091
Professional fees (Note 3) 12,081
Trustees' fees and expenses 5,974
Other 5,255
----------
Total expenses 834,033
----------
Net investment income 6,163,057
----------
Net increase in net assets resulting from operations $6,163,057
==========
</TABLE>
See notes to financial statements.
9
<PAGE>
INSTITUTIONAL FIDUCIARY TRUST
FRANKLIN CASH RESERVES FUND
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ............................. $ 6,163,057 $ 6,472,002
Distributions to shareholders from investment
income ........................................... (6,163,057) (6,472,002)
Capital share transactions (Note 2) ................ (18,309,008) 15,804,969
------------ ------------
Net increase (decrease) in net assets ......... (18,309,008) 15,804,969
Net assets (there is no undistributed net investment
income at beginning or end of year):
Beginning of year .................................. 135,389,552 119,584,583
------------ ------------
End of year ........................................ $117,080,544 $135,389,552
============ ============
</TABLE>
See notes to financial statements.
10
<PAGE>
INSTITUTIONAL FIDUCIARY TRUST
FRANKLIN CASH RESERVES FUND
Notes to Financial Statements
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 seeks 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
the net asset value of the Portfolio. As of June 30, 2000, the Fund owns 2.89%
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.
11
<PAGE>
INSTITUTIONAL FIDUCIARY TRUST
FRANKLIN CASH RESERVES FUND
Notes to Financial Statements (continued)
2. SHARES OF BENEFICIAL INTEREST
At June 30, 2000, there were an unlimited number of shares of no par value
authorized. Transactions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------
2000 1999
---- ----
<S> <C> <C>
Shares sold ...................... $199,299,321 $296,189,371
Shares issued in reinvestment
of distributions ................ 6,162,552 6,445,425
Shares redeemed .................. (223,770,881) (286,829,827)
------------ ------------
Net increase (decrease) .......... $(18,309,008) $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 administrative 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 $153,957 of which $99,194 was paid to
Investor Services.
Included in professional fees are legal fees of $6,029 that were paid to a law
firm in which a partner of that firm was an officer of the Fund.
12
<PAGE>
INSTITUTIONAL FIDUCIARY TRUST
FRANKLIN CASH RESERVES FUND
Independent Auditors' Report
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
OF INSTITUTIONAL FIDUCIARY TRUST
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Franklin Cash Reserves Fund (the
"Fund") (one of the funds constituting the Institutional Fiduciary Trust) at
June 30, 2000, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended and
the financial highlights for each of the periods presented, in conformity with
accounting principles generally accepted in the United States. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with auditing
standards generally accepted in the United States which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at June
30, 2000 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
San Francisco, California
August 3, 2000
13
<PAGE>
THE MONEY MARKET PORTFOLIOS
Financial Highlights
THE MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ...................... $1.00 $1.00 $1.00 $1.00 $1.00
--------------------------------------------------------------------
Income from investment operations - net investment income .056 .051 .055 .053 .055
Less distributions from net investment income ........... (.056) (.051) (.055) (.053) (.055)
--------------------------------------------------------------------
Net asset value, end of year ............................ $1.00 $1.00 $1.00 $1.00 $1.00
--------------------------------------------------------------------
Total return(a) ......................................... 5.75% 5.18% 5.64% 5.47% 5.66%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ......................... $4,144,043 $3,672,404 $2,043,629 $1,773,546 $1,550,085
Ratios to average net assets:
Expenses ............................................... .15% .15% .15% .15% .15%
Expenses excluding waiver and payments by affiliate .... .16% .15% .16% .16% .16%
Net investment income .................................. 5.65% 5.04% 5.50% 5.34% 5.50%
</TABLE>
(a) Total return is not annualized for periods less than one year.
14 See notes to financial statements.
<PAGE>
THE MONEY MARKET PORTFOLIOS
STATEMENT OF INVESTMENTS, JUNE 30, 2000
<TABLE>
<CAPTION>
PRINCIPAL
THE MONEY MARKET PORTFOLIO AMOUNT VALUE
-------------------------- ------ -----
<S> <C> <C>
BANK NOTES 5.5%
Bank of America NT & SA, 6.29% - 6.77%, 8/01/00 - 8/18/00 .............................. $155,000,328 $155,000,000
Wachovia Bank NA, North Carolina Branch, 6.20%, 7/27/00 - 7/28/00 ...................... 70,000,000 70,000,253
--------------
TOTAL BANK NOTES (COST $225,000,581) ................................................... 225,000,581
--------------
CERTIFICATES OF DEPOSIT 29.4%
ABN-AMRO Bank NV, Chicago Branch, 5.69% - 5.91%, 7/10/00 - 8/10/00 ..................... 80,000,000 79,997,903
Bank of Nova Scotia, Portland Branch, 6.68% , 9/20/00 - 9/21/00 ........................ 50,000,000 50,000,000
Barclays Bank PLC, New York Branch, 5.90%, 10/02/00 .................................... 25,000,000 24,930,771
Bayerische Vereinsbank, New York Branch, 6.70% - 6.71%, 9/05/00 - 9/07/00 .............. 50,000,000 50,000,405
Commerzbank AG, New York Branch, 6.09% - 6.15%, 7/11/00 - 7/14/00 ...................... 140,000,000 140,000,438
Credit Agricole Indosuez, New York Branch, 6.76% - 7.10%, 4/11/01 - 6/15/01 ............ 135,000,000 134,989,937
Credit Communal De Belgique, New York Branch, 7.075% - 7.25%, 5/03/01- 5/09/01 ......... 60,000,000 60,006,117
Den Danske Bank, New York Branch, 6.23%, 7/31/00 ....................................... 35,000,000 35,000,859
Deutsche Bank AG, New York Branch, 6.69% - 6.70%, 9/18/00 - 9/29/00 .................... 99,900,000 99,902,209
Dexia Bank, New York Branch, 7.105%, 6/18/01 ........................................... 25,000,000 24,998,806
Dresdner Bank AG, New York Branch, 6.09% - 6.70%, 7/06/00 - 9/28/00 .................... 75,000,000 75,000,682
Lloyds Bank PLC, New York Branch, 6.21% - 6.25%, 7/20/00 - 7/24/00 ..................... 65,000,000 64,999,969
Royal Bank of Canada, New York Branch, 5.70% - 6.48%, 7/03/00 - 1/16/01 ................ 95,000,000 94,985,347
Societe Generale, New York Branch, 6.26%, 7/24/00 - 7/28/00 ............................ 75,000,000 75,000,000
Svenska Handelsbanken, New York Branch, 6.75%, 8/24/00 - 8/25/00 ....................... 50,000,000 50,000,745
Toronto Dominion Bank, New York Branch, 6.30% - 7.16%, 8/01/00 - 6/08/01 ............... 125,000,000 124,993,135
UBS AG, New York Branch, 7.08%, 6/22/01 ................................................ 24,990,544 24,990,544
--------------
TOTAL CERTIFICATES OF DEPOSIT (COST $1,209,797,867) .................................... 1,209,797,867
--------------
(a) COMMERCIAL PAPER 49.6%
Abbey National North America Corp., 6.00% , 7/17/00 .................................... 35,000,000 34,906,667
American Express Credit Corp., 6.6937% - 6.88%, 7/03/00 - 9/08/00 ...................... 205,000,000 204,950,311
Archer Daniels Midland Co., 6.55%, 9/14/00 ............................................. 20,000,000 19,727,083
Asset Securitization Cooperative Corp., 144A, 6.57% - 6.60%, 8/28/00 - 10/04/00 ........ 150,000,000 148,032,945
Bank of Nova Scotia, 6.60%, 9/07/00 .................................................... 25,000,000 24,688,333
Canadian Imperial Holdings Inc., 6.59% - 6.60%, 9/08/00 - 9/27/00 ...................... 75,000,000 73,882,882
Ciesco LP, 6.35% - 6.64%, 7/05/00 - 8/15/00 ............................................ 95,000,000 94,550,229
Coca-Cola Co., 6.06% - 6.55%, 7/18/00 - 8/31/00 ........................................ 155,000,000 154,129,299
Commonwealth Bank of Australia, 6.11%, 7/26/00 ......................................... 35,000,000 34,851,493
Delaware Funding Corp., 144A, 6.65%, 8/23/00 ........................................... 25,000,000 24,755,243
Den Danske Corp. Inc., 6.40% - 6.59%, 7/31/00 - 9/11/00 ................................ 38,313,000 37,912,497
Dupont de Nemours Co., 6.09% - 6.11%, 7/25/00 - 8/11/00 ................................ 105,000,000 104,394,558
General Electric Capital Corp., 6.39% - 6.62%, 8/03/00 - 12/12/00 ...................... 130,000,000 127,849,814
Halifax Building Society Ltd., 6.58%, 9/25/00 .......................................... 25,000,000 24,607,028
International Lease Finance Corp., 6.53% - 6.57%, 8/21/00 - 9/12/00 .................... 96,485,000 95,468,270
J.P. Morgan & Co. Inc., 6.60%, 9/12/00 ................................................. 25,000,000 24,665,417
Merrill Lynch & Co. Inc., 6.55% - 6.63%, 8/14/00 - 8/25/00 ............................. 75,000,000 74,301,618
Morgan Stanley Dean Witter & Co., 6.57% - 6.65%, 8/07/00 - 9/05/00 ..................... 155,000,000 53,622,460
National Australia Funding (DE) Inc., 6.57%, 9/15/00 ................................... 25,000,000 24,653,250
National Rural Utilities Cooperative Finance Corp., 6.58% - 6.63%, 8/10/00 - 8/18/00 ... 75,000,000 74,379,826
Rabobank Nederland NV, 6.92%, 7/05/00 .................................................. 190,000,000 189,853,912
Salomon Smith Barney Holdings Inc., 6.15% - 6.64%, 7/10/00 - 8/11/00 ................... 165,000,000 164,514,089
</TABLE>
15
<PAGE>
THE MONEY MARKET PORTFOLIOS
STATEMENT OF INVESTMENTS, JUNE 30, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
THE MONEY MARKET PORTFOLIO AMOUNT VALUE
-------------------------- ------ -----
<S> <C> <C>
(a) COMMERCIAL PAPER (CONT.)
Schering Corp., 5.94% - 6.15%, 7/06/00 - 8/08/00 ....................................... $47,000,000 $46,762,893
Svenska Handelsbanken Inc., 6.155% - 6.60%, 7/28/00 - 9/22/00 .......................... 85,000,000 84,142,917
--------------
TOTAL COMMERCIAL PAPER (COST $2,041,603,034) ........................................... 2,041,603,034
--------------
U.S. GOVERNMENT AGENCY SECURITIES
Federal Home Loan Mortgage Corp., 6.44%, 9/14/00 ....................................... 60,000 59,195
Fannie Mae, 6.47%, 9/21/00 ......................................................... 100,000 98,526
--------------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (COST $157,721) ................................ 157,721
--------------
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENTS (COST $3,476,559,203) ................... 3,476,559,203
--------------
(b) REPURCHASE AGREEMENTS 14.9%
Barclays Capital Inc., 6.60%, 7/03/00 (Maturity Value $200,110,000) .................... 200,000,000 200,000,000
Collateralized by U.S. Treasury Notes
J.P. Morgan Securities Inc., 6.50%, 7/03/00 (Maturity Value $107,423,156) .............. 107,365,000 107,365,000
Collateralized by U.S. Treasury Notes
Morgan Stanley & Co., 6.50%, 7/03/00 (Maturity Value $107,423,156) ..................... 107,365,000 107,365,000
Collateralized by U.S. Treasury Notes
UBS Warburg, 6.70%, 7/03/00 (Maturity Value $200,111,667) .............................. 200,000,000 200,000,000
Collateralized by U.S. Treasury Notes
--------------
TOTAL REPURCHASE AGREEMENTS (COST $614,730,000) ........................................ 614,730,000
--------------
TOTAL INVESTMENTS (COST $4,091,289,203) 99.4% .......................................... 4,091,289,203
--------------
OTHER ASSETS, LESS LIABILITIES .6% ..................................................... 22,753,837
--------------
NET ASSETS 100.0% ...................................................................... $4,114,043,040
==============
</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.
16
<PAGE>
THE MONEY MARKET PORTFOLIOS
Financial Highlights
THE U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .......... $1.00 $1.00 $1.00 $1.00 $1.00
--------- --------- --------- --------- ---------
Income from investment operations -
net investment income ..................... .054 .049 .054 .052 .054
Less distributions from net investment income (.054) (.049) (.054) (.052) (.054)
--------- --------- --------- --------- ---------
Net asset value, end of year ................ $1.00 $1.00 $1.00 $1.00 $1.00
--------- --------- --------- --------- ---------
Total return(a) ............................... 5.48% 4.97% 5.53% 5.34% 5.55%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ............. $221,993 $258,458 $263,226 $285,629 $285,701
Ratios to average net assets:
Expenses ................................... .15% .15% .15% .15% .15%
Expenses excluding waiver and payments
by affiliate ............................. .16% .15% .16% .16% .17%
Net investment income ...................... 5.36% 4.84% 5.40% 5.20% 5.45%
</TABLE>
(a) Total return is not annualized for periods less than one year.
See notes to financial statements.
17
<PAGE>
THE MONEY MARKET PORTFOLIOS
STATEMENT OF INVESTMENTS, JUNE 30, 2000
<TABLE>
<CAPTION>
PRINCIPAL
THE U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO AMOUNT VALUE
----------------------------------------------------- ------ -----
<S> <C> <C>
GOVERNMENT SECURITIES 17.3%
U.S. Treasury Notes, 5.125%, 8/31/00 ......................................................... $10,000,000 $9,993,585
U.S. Treasury Notes, 6.25%, 8/31/00 .......................................................... 3,500,000 3,503,503
U.S. Treasury Notes, 4.00%, 10/31/00 ......................................................... 5,000,000 4,963,877
U.S. Treasury Notes, 4.625%, 11/30/00 ........................................................ 5,000,000 4,972,439
U.S. Treasury Notes, 5.375%, 2/15/01 ......................................................... 5,000,000 4,967,729
U.S. Treasury Notes, 7.75%, 2/15/01 .......................................................... 5,000,000 5,039,338
U.S. Treasury Notes, 6.25%, 4/30/01 .......................................................... 5,000,000 4,974,515
------------
TOTAL GOVERNMENT SECURITIES (COST $38,414,986) ............................................... 38,414,986
------------
(b)REPURCHASE AGREEMENTS 82.4%
Banc of America Securities LLC, 6.60%, 7/03/00 (Maturity Value $9,004,950) ................... 9,000,000 9,000,000
Collateralized by U.S. Treasury Notes
Barclays Capital Inc., 6.45%, 7/03/00 (Maturity Value $9,004,838) ............................ 9,000,000 9,000,000
Collateralized by U.S. Treasury Notes
Bear, Stearns & Co. Inc., 6.50%, 7/03/00 (Maturity Value $9,004,875) ......................... 9,000,000 9,000,000
Collateralized by U.S. Treasury Bills
Dresdner Kleinwort Benson, North America LLC, 6.40%, 7/03/00 (Maturity Value $9,004,800) ..... 9,000,000 9,000,000
Collateralized by U.S. Treasury Bills
Goldman, Sachs & Co., 6.38%, 7/03/00 (Maturity Value $9,004,785) ............................. 9,000,000 9,000,000
Collateralized by U.S. Treasury Bond
Greenwich Capital Markets Inc., 6.50%, 7/03/00 (Maturity Value $9,004,875) ................... 9,000,000 9,000,000
Collateralized by U.S. Treasury Notes
J.P. Morgan Securities Inc., 6.40%, 7/03/00 (Maturity Value $21,001,195) ..................... 20,990,000 20,990,000
Collateralized by U.S. Treasury Notes
J.P. Morgan Securities Inc., 6.50%, 7/03/00 (Maturity Value $30,016,250) ..................... 30,000,000 30,000,000
Collateralized by U.S. Treasury Notes
Merrill Lynch Government Securities Inc., 6.25%, 7/03/00 (Maturity Value $9,004,688) ......... 9,000,000 9,000,000
Collateralized by U.S. Treasury Notes
Morgan Stanley & Co. Inc., 6.50%, 7/03/00 (Maturity Value $21,001,370) ....................... 20,990,000 20,990,000
Collateralized by U.S. Treasury Notes
Morgan Stanley & Co. Inc., 6.50%, 7/03/00 (Maturity Value $30,016,250) ....................... 30,000,000 30,000,000
Collateralized by U.S. Treasury Notes
Nesbitt Burns Securities Inc., 6.55%, 7/03/00 (Maturity Value $9,004,913) .................... 9,000,000 9,000,000
Collateralized by U.S. Treasury Notes
UBS Warburg, 6.50%, 7/03/00 (Maturity Value $9,004,875) ...................................... 9,000,000 9,000,000
------------
Collateralized by U.S. Treasury Notes
TOTAL REPURCHASE AGREEMENTS (COST $182,980,000) .............................................. 182,980,000
------------
TOTAL INVESTMENTS (COST $221,394,986) 99.7% .................................................. 221,394,986
OTHER ASSETS, LESS LIABILITIES .3% ........................................................... 597,959
------------
NET ASSETS 100.0% ............................................................................ $221,992,945
============
</TABLE>
(b) See note 1(b) regarding repurchase agreements.
See notes to financial statements.
18
<PAGE>
THE MONEY MARKET PORTFOLIOS
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2000
<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 $3,476,559,203 $ 38,414,986
Repurchase agreements, at value and cost ... 614,730,000 182,980,000
Cash ....................................... 3,236 9,578
Interest receivable ........................ 23,833,771 630,227
-------------- ------------
Total assets .......................... 4,115,126,210 222,034,791
-------------- ------------
Liabilities:
Payables:
Affiliates ................................ 449,624 29,821
Professional fees ......................... 30,000 10,000
Distribution to shareholders ............... 576,601 113
Other liabilities .......................... 26,945 1,912
-------------- ------------
Total liabilities ..................... 1,083,170 41,846
-------------- ------------
Net assets, at value ........................ $4,114,043,040 $221,992,945
============== ============
Shares outstanding .......................... 4,114,043,040 221,992,945
============== ============
Net asset value per share ................... $1.00 $1.00
============== ============
</TABLE>
See notes to financial statements.
19
<PAGE>
THE MONEY MARKET PORTFOLIOS
Financial Statements (continued)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
THE U.S.
GOVERNMENT
THE SECURITIES
MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO
--------- ---------
<S> <C> <C>
Investment income:
Interest .......................................... $206,206,553 $13,671,482
------------ -----------
Expenses:
Management fees (Note 3) .......................... 5,343,198 376,050
Transfer agent fees (Note 3) ...................... 32,576 2,250
Custodian fees .................................... 39,041 2,437
Reports to shareholders ........................... 6,133 569
Professional fees (Note 3) ........................ 56,286 12,294
Trustees' expenses ................................ 4,167 287
Other ............................................. 30,011 4,335
------------ -----------
Total expenses ............................... 5,511,412 398,222
Expenses waived/paid by affiliate (Note 3) ... (164,153) (24,664)
------------ -----------
Net expenses ................................ 5,347,259 373,558
------------ -----------
Net investment income ...................... 200,859,294 13,297,924
------------ -----------
Net realized loss from investments ................. (9,285) --
------------ -----------
Net increase in net assets resulting from operations $200,850,009 $13,297,924
============ ===========
</TABLE>
See notes to financial statements.
20
<PAGE>
THE MONEY MARKET PORTFOLIOS
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2000 AND 1999
<TABLE>
<CAPTION>
THE U.S. GOVERNMENT SECURITIES
THE MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
------------------------------------------------------------------------------
2000 1999 2000 1999
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ........................ $ 200,859,294 $ 134,356,042 $ 13,297,924 $ 14,158,082
Net realized gain (loss) from investments .... (9,285) 651 -- --
------------------------------------------------------------------------------
Net increase in net assets resulting
from operations ......................... 200,850,009 134,356,693 13,297,924 14,158,082
Distributions to shareholders from net
investment income ............................ (200,850,009)(a) (134,356,693)(b) (13,297,924) (14,158,082)
Capital share transactions (Note 2) ........... 441,639,255 1,628,774,482 (36,465,436) (4,767,997)
------------------------------------------------------------------------------
Net increase (decrease) in net assets .... 441,639,255 1,628,774,482 (36,465,436) (4,767,997)
Net assets (there is no undistributed net
investment income at beginning or end of year):
Beginning of year ............................ 3,672,403,785 2,043,629,303 258,458,381 263,226,378
------------------------------------------------------------------------------
End of year .................................. $ 4,114,043,040 $3,672,403,785 $ 221,992,945 $ 258,458,381
==============================================================================
</TABLE>
(a) Distributions were decreased by a net realized loss from investments of
$9,285.
(b) Distributions were increased by a net realized gain from investments of
$651.
See notes to financial statements.
21
<PAGE>
THE MONEY MARKET PORTFOLIOS
Notes to Financial Statements
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 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 June
30, 2000, 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.
22
<PAGE>
THE MONEY MARKET PORTFOLIOS
Notes to Financial Statements (continued)
2. SHARES OF BENEFICIAL INTEREST
At June 30, 2000, 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>
Year ended June 30, 2000
Shares sold .................................. $ 38,813,462,724 $ 1,220,241,486
Shares issued in reinvestment of distributions 200,275,366 13,291,931
Shares redeemed .............................. (38,572,098,835) (1,269,998,853)
---------------------------------------
Net increase (decrease) ...................... $ 441,639,255 $ (36,465,436)
=======================================
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, the Institutional Fiduciary Trust,
the Franklin Templeton Money Fund Trust, and the 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.
Included in professional fees are legal fees of $11,240 that were paid to a law
firm in which a partner of that firm was an officer of the Portfolios.
At June 30, 2000, 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 ............................................... 2,883,392,424 70.09%
Institutional Fiduciary Trust - Money Market Portfolio ............ 1,010,362,054 24.56%
Institutional Fiduciary Trust - Franklin Cash Reserves Fund ....... 119,060,923 2.89%
Franklin Templeton Money Fund Trust - Franklin Templeton Money Fund 101,227,639 2.46%
</TABLE>
23
<PAGE>
THE MONEY MARKET PORTFOLIOS
Notes to Financial Statements (continued)
3. TRANSACTIONS WITH AFFILIATES (CONT.)
At June 30, 2000, 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 56,482,885 25.44%
Franklin Federal Money Fund .............................................................. 165,510,060 74.56%
</TABLE>
4. INCOME TAXES
At June 30, 2000, The Money Market Portfolio had tax basis capital losses of
$8,692, which may be carried over to offset future capital gains. Such losses
expire in 2008.
At June 30, 2000, The Money Market Portfolio has deferred capital losses
occurring subsequent to October 31, 1999 of $9,285. For tax purposes, such
losses will be reflected in the year ending June 30, 2001.
24
<PAGE>
THE MONEY MARKET PORTFOLIOS
Independent Auditors' Report
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
THE MONEY MARKET PORTFOLIOS
In our opinion, the accompanying statements of assets and liabilities, including
the statements of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of each of the portfolios constituting
The Money Market Portfolios (hereafter referred to as the "Portfolios") at June
30, 2000, the results of each of their operations for the year then ended, the
changes in each of their net assets for each of the two years in the period then
ended and the financial highlights for each of the periods presented, in
conformity with accounting principles generally accepted in the United States.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Portfolios' management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with auditing standards generally accepted in the United States,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at June 30, 2000 by correspondence with the custodian
and brokers, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
San Francisco, California
August 3, 2000
25
<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
LITERATURE REQUEST
For a free brochure and prospectus, which contain more complete information,
including charges and expenses, call Franklin Templeton Fund Information at
1-800/DIAL BEN(R) (1-800/342-5236). Please read the prospectus carefully before
investing or sending money. To ensure the highest quality of service, telephone
calls to or from our service departments may be monitored, recorded and
accessed. These calls can be determined by the presence of a regular beeping
tone.
FRANKLIN TEMPLETON GROUP
GLOBAL GROWTH
Franklin Global Health Care Fund
Mutual Discovery Fund
Templeton Developing Markets Trust
Templeton Foreign Fund
Templeton Foreign Smaller
Companies Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund
Templeton Growth Fund
Templeton International Fund
Templeton Latin America Fund
Templeton Pacific Growth Fund
Templeton World Fund
GLOBAL GROWTH AND INCOME
Franklin Global Communications
Fund
Mutual European Fund
Templeton Global Bond Fund
GLOBAL INCOME
Franklin Global Government
Income Fund
Franklin Templeton Global
Currency Fund
Franklin Templeton Hard
Currency Fund
GROWTH
Franklin Aggressive Growth
Fund
Franklin Biotechnology
Discovery Fund(1)
Franklin Blue Chip Fund
Franklin California Growth Fund
Franklin DynaTech Fund
Franklin Equity Fund
Franklin Gold and Precious
Metals Fund
Franklin Growth Fund
Franklin Large Cap Growth
Fund
Franklin Small Cap Growth
Fund I(2)
Franklin Small Cap Growth
Fund II
Franklin Technology Fund
Franklin U.S. Long-Short Fund
GROWTH AND INCOME
Franklin Asset Allocation Fund
Franklin Balance Sheet
Investment Fund
Franklin Convertible
Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Rising Dividends Fund
Franklin Utilities Fund
Franklin Value Fund
Mutual Beacon Fund
Mutual Financial Services Fund
Mutual Qualified Fund
Mutual Shares Fund
FUND ALLOCATOR SERIES
Franklin Templeton Conservative
Target Fund
Franklin Templeton Moderate
Target Fund
Franklin Templeton Growth
Target Fund
INCOME
Franklin Adjustable U.S.
Government Securities Fund(3)
Franklin's AGE High Income Fund
Franklin Bond Fund
Franklin Floating Rate Trust
Franklin Short-Intermediate
U.S. Government Securities Fund(3)
Franklin Strategic Income Fund
Franklin U.S. Government
Securities Fund(3)
Franklin Federal Money Fund(3)
Franklin Money Fund(3)
TAX-FREE INCOME
Federal Intermediate-Term
Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund
Puerto Rico Tax-Free
Income Fund
Tax-Exempt Money Fund(3)
STATE-SPECIFIC
TAX-FREE INCOME
Alabama
Arizona(4)
California(4)
Colorado
Connecticut
Florida(4)
Georgia
Kentucky
Louisiana
Maryland
Massachusetts(5)
Michigan(5)
Minnesota(5)
Missouri
New Jersey
New York(4)
North Carolina
Ohio(5)
Oregon
Pennsylvania
Tennessee(6)
Texas
Virginia
INSURANCE FUNDS
Franklin Templeton Variable
Insurance Products Trust(7)
(1.) As of February 18, 2000, the fund is closed to new investors with the
exception of retirement plans.
(2.) As of April 30, 2000, the fund is closed to new investors, with the
exception of retirement plans, wrap programs and Advisor Class and Class C
shares.
(3.) An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.
(4.) These funds are available in two or more variations, including long-term
portfolios, portfolios of insured securities, a high-yield portfolio (CA) and
intermediate-term and money market portfolios (CA and NY).
(5.) Portfolio of insured municipal securities.
(6.) The fund may invest up to 100% of its assets in bonds that pay interest
subject to the federal alternative minimum tax.
(7.) The funds of the Franklin Templeton Variable Insurance Products Trust are
generally only available as investment options in variable annuity or variable
life insurance contracts.
05/00
<PAGE>
[FRANKLIN TEMPLETON
INVESTMENTS LOGO]
Franklin's Institutional Fiduciary Trust
777 Mariners Island Blvd., P.O. Box 7777
San Mateo, CA 94403-7777
ANNUAL REPORT
INVESTMENT MANAGER AND ADMINISTRATOR
Franklin Advisers, Inc.
DISTRIBUTOR
Franklin/Templeton Distributors, Inc.
1-800/DIAL BEN(R)
franklintempleton.com
INSTITUTIONAL SERVICES
1-800/321-8563
This report must be preceded or accompanied by the current Franklin Cash
Reserves Fund prospectus, which contains more complete information including
charges and expenses.
To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded and accessed. These calls can be
determined by the presence of a regular beeping tone.
149 A00 08/00 [RECYCLE LOGO] Printed on recycled paper
