Dear Shareholder:
We are pleased to bring you the first annual report of the Franklin Templeton
Money Fund Trust for the fiscal period ended June 30, 1995.
The Franklin Templeton Money Fund II, currently the only series in the Trust,
commenced operations on May 1, 1995. The fund was designed for investors holding
class II shares of Franklin or Templeton funds who wish to exchange those shares
for a money market investment.
Like the rest of Franklin Templeton's money market funds, this fund's investment
approach focuses on discipline and quality. Adherence to traditional,
time-proven strategies has been a central part of our money fund philosophy for
nearly 20 years, and our managers emphasize quality in their selection of
instruments for the portfolios. As such, the fund does not invest in leveraged
derivatives or other potentially volatile instruments that we believe involve
undue risk. We seek to protect the interests of our shareholders and offer them
a conservative, high-quality investment vehicle.
We thank you for your support of the Franklin Templeton Money Fund Trust, and we
look forward to continuing our relationship by serving your investment needs in
the future.
Sincerely,
Charles B. Johnson
Chairman
Franklin Templeton Money Fund II
Your Fund's Objective
The Franklin Templeton Money Fund II seeks to provide 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 Portfolio, in turn, invests in
various money market instruments such as U.S. government securities and other
U.S. dollar denominated securities. The fund seeks to maintain a $1.00 per share
net asset value.1
Economic growth finally began to slow this year as 1994's interest-rate
increases began to be felt. Growth slowed most noticeably in the second quarter
of 1995 following another rate hike in February. In response to slower growth,
interest rates declined slightly during the brief two-month reporting period
ended June 30, 1995.
To head off further contraction, the Federal Reserve Board lowered the federal
funds rate by 25 basis points on July 6 to 5.75% from 6.00%. This cut in
short-term rates was the first in nearly three years and reverses a trend that
began in early 1994, during which the Federal Reserve raised rates on seven
occasions by a total of three percentage points.
The fund opened on May 1, 1995, with an average maturity of 39 days. With
interest rates declining, we increased the fund's average maturity during the
reporting period to lock in higher rates for as long as possible. On June 30,
1995, the fund's average maturity had risen to 60 days.
Looking forward, although many economic indic-ators have been mixed, slower
manufacturing activity and a decline in the number of jobs have led some to
expect that the Federal Reserve will further ease monetary policy. It's unclear
at this point whether the July reduction will be a one-time action or if
additional cuts will be forthcoming. Clearly, this will depend on how the
economy responds in the months ahead. If reports suggest the economy is
weakening, additional rate cuts will be likely. If the economy rebounds,
however, it may be some time before another rate cut occurs.
We will continue to monitor interest rates and the economic environment, and
will position the fund according to its investment objectives.
MANAGER'S DISCUSSION
1. Please remember, an investment in the fund is neither insured nor guaranteed
by the U.S. government, and there can be no assurance that the fund will be able
to maintain a stable net asset value of $1.00 per share.
Performance Summary
Franklin Templeton Money Fund II
June 30, 1995
Seven-day annualized yield ............... 4.32%
Seven-day effective yield2................ 4.42%
2. The seven-day effective yield assumes the compounding of daily dividends, and
reflects fluctuations in interest rates on portfolio investments, as well as
fund expenses. Yield should be viewed in terms of the current, low rate of
inflation -- just as high inflation usually results in higher yields, low
inflation often results in lower yields. Past performance is not indicative of
future results.
Franklin Advisers, Inc., the fund's administrator and the manager of the fund's
underlying portfolio, is voluntarily waiving a portion of its fees, which
reduces expenses and increases yield to shareholders. Without these reductions,
the fund's yield would have been lower. The fee waiver may be discontinued at
any time upon notice to the fund's Board of Trustees.
FRANKLIN TEMPLETON MONEY FUND TRUST
Statement of Investments in Securities and Net Assets, June 30, 1995
<TABLE>
<CAPTION>
Value
Shares Franklin Templeton Money Fund II (Note 1)
Mutual Funds 100%.......................................................................
<S> <C> <C>
151,237 The Money Market Portfolio (Note 1) ..................................................... $151,237
-----------
Total Investments (Cost $151,237) 100% ........................................... 151,237
Other Assets and Liabilities, Net .3% ............................................ 519
-----------
Net Assets 100% .................................................................. $151,756
===========
</TABLE>
At June 30, 1995, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes. The accompanying notes are an
integral part of these financial statements.
FRANKLIN TEMPLETON MONEY FUND TRUST
Franklin Templeton Money Fund II
Financial Statements
Statement of Assets and Liabilities
June 30, 1995
Assets:
Investments in securities, at value and cost $151,237
Unamortized organization costs (Note 2) 3,850
Prepaid expenses 791
-----------
Total assets 155,878
-----------
Liabilities:
Payables
Administration fees 47
Accrued expenses and other liabilities 4,075
-----------
Total liabilities 4,122
-----------
Net assets (equivalent to $1.00 per share
based on 151,756 shares of capital
stock outstanding) $151,756
===========
Statement of Operations
for the period April 13, 1995
to June 30, 1995
Investment Income:
Dividends $1,153
Expenses:
Administration fees, net (Note 5) 86
Amortization of organization costs 150
Professional fees 42
Custodian fees 16
Other 24
-----------
Total expenses 318
-----------
Net investment income $ 835
===========
Statement of Changes in Net Assets
for the period April 13, 1995
to June 30, 1995
Increase (decrease) in net assets:
Operations:
Net investment income $ 835
Distributions to shareholders from
net investment income (835)
Increase in net assets from capital
share transactions (Note 3) 151,756
-----------
Net increase in net assets 151,756
Net assets (there is no undistributed
net investment income at beginning
or end of the period):
Beginning of period --
-----------
End of period $151,756
===========
The accompanying notes are an integral part of these financial statements.
FRANKLIN TEMPLETON MONEY FUND TRUST
Franklin Templeton Money Fund II
Notes to Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
Franklin Templeton Money Fund II (the Fund) is an open-end, diversified series
of the Franklin Templeton Money Fund Trust (the Trust), a management investment
company (mutual fund), registered under the Investment Company Act of 1940, as
amended. The Fund is the Trust's only series.
The Fund invests substantially all of its assets in The Money Market Portfolio
(the Portfolio), which is a no-load, open-end, diversified management investment
company having the same investment objectives as the Fund. The financial
statements of the Portfolio, including the statement of investments, are
included elsewhere in this report and should be read in conjunction with the
Fund's financial statements.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
a. Securities Valuation:
The Portfolio's shares held by the Fund are valued at their proportionate
interest at net asset value of the Portfolio. As of June 30, 1995, the Fund owns
.01% of the Portfolio. The trustees have established procedures designed to
stabilize, to the extent reasonably possible the fund's price per share, as
computed for the purpose of sales and redemptions at $1.00.
b. Income Taxes:
The Trust intends to qualify for the tax treatment applicable to regulated
investment companies under the Internal Revenue Code and to make the requisite
distributions to its shareholders which will be sufficient to relieve it from
income and excise taxes. Therefore, no income tax provision is required.
c. Security Transactions:
Security transactions are accounted for on the date the securities are purchased
or sold (trade date). Realized gains and losses on security transactions are
determined on the basis of specific identification for both financial statement
and income tax purposes.
d. Investment Income, Expenses and Distributions:
Net investment income includes income, calculated on an accrual basis, and
estimated expenses which are accrued daily. The total available for
distributions is computed daily and includes the net investment income, plus or
minus any gains or losses on security transactions and changes in unrealized
portfolio appreciation or depreciation, if any.
Distributions are normally declared each day the New York Stock Exchange is open
for business, equal to the total available for distributions (as defined above),
and are payable to shareholders of record as of the close of business that day.
Such distributions are automatically declared and reinvested monthly in
additional shares of the Fund at net asset value.
2. UNAMORTIZED ORGANIZATION COSTS
The organization costs of the Fund are amortized on a straight line basis over a
period of five years from the effective date of registration under the
Securities Act of 1933. In the event that Franklin Resources, Inc., (which was
the sole shareholder prior to the effective date) redeems its initial shares
within the five-year period, the pro-rata share of the then-unamortized deferred
organization cost will be deducted from the redemption price paid to Franklin
Resources, Inc. New investors exchanging into the fund subsequent to that date
bear such costs during the amortization period only as such charges are accrued
daily against investment income.
3. TRUST SHARES
At June 30, 1995, there was an unlimited number of no par value shares of
beneficial interest authorized, and paid-in capital aggregated $151,756.
Transactions in the Fund's shares at $1.00 per share for the period April 13,
1995 to June 30, 1995 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Shares sold ............................................................... $100,000
Shares issued in reinvestment of distributions ............................ 835
Changes from exercise of exchange privilege:
Shares Sold .............................................................. 50,921
-----------
Net Increase .............................................................. $151,756
===========
</TABLE>
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities for the period ended June 30, 1995 aggregated
$151,944 and $708, respectively.
5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Franklin Advisers, Inc. ("Advisers") under the terms of an administration
agreement, provides investment advice, administrative services, office space and
facilities to the Fund, and receives fees computed monthly on the last day of
the month at an annualized rate of 91/200 of 1% for the first $100 million of
net assets; 33/100 of 1% of net assets in excess of $100 million up to 250
million; and 7/25 of 1% of net assets in excess of $250 million. Fees incurred
by the Fund aggregated $86 for the period ended June 30, 1995. The terms of the
agreement provide that aggregate annual expense of the Fund be limited to the
extent necessary to comply with the limitations set forth in the laws,
regulations, and administrative interpretations of the states in which the
Fund's shares are registered. For the period ended June 30, 1995, the Fund's
expenses did not exceed these limitations.
Under the terms of a Distribution Agreement pursuant to Rule 12b-1 of the
Investment Company Act of 1940, the Trust will reimburse Franklin/Templeton
Distributors, Inc., in an amount up to 0.65% per annum of the Fund's average
daily net assets for costs incurred in the promotion, offering, and marketing of
the Fund's shares. There were no fees incurred by the Fund under the agreement
for the period ended June 30, 1995.
Under the terms of a shareholder agreement with Franklin/Templeton Investor
Services, Inc., the Fund pays costs on a per shareholder account basis. There
were no fees incurred by the Fund under the agreement for the period ended June
30, 1995.
Certain officers and trustees of the Trust are also officers and/or directors of
Franklin/Templeton Distributors, Inc., Franklin Advisers, Inc., and
Franklin/Templeton Investor Services, Inc., all wholly-owned subsidiaries of
Franklin Resources, Inc.
6. FINANCIAL HIGHLIGHTS
Selected data for each share of beneficial interest outstanding throughout the
period are as follows:
<TABLE>
<CAPTION>
PER SHARE OPERATING PERFORMANCE 1995
-----------
<S> <C>
Net asset value at beginning of period ....................................... $1.00
Net investment income ........................................................ 0.007
Distributions from net investment income ..................................... (0.007)
-----------
Net asset value at end of period ............................................. $1.00
===========
TOTAL RETURN** .............................................................. 0.73%
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (in 000's) ....................................... $152
Ratio of expenses to average net assets1,2 ................................... 1.83%*
Ratio of expenses to average net assets (excluding Advisers'
waiver of Portfolio's expenses).............................................. 1.84%*
Ratio of net investment income to average net assets ......................... 4.42%*
</TABLE>
*Annualized
**Total Return measures the change in value of an investment over the period
indicated. It assumes reinvestment of dividends and capital gains at net asset
value and is not annualized.
+For the period April 13, 1995 to June 30, 1995.
1Includes the Fund's share of the Portfolio's allocated expenses.
2During the period indicated, Advisers agreed in advance to waive a portion of
its management fees incurred by the Portfolio.
FRANKLIN TEMPLETON MONEY FUND TRUST
Report of Independent Accountants
To the Shareholders and Board of Trustees of Franklin Templeton Money Fund
Trust:
We have audited the accompanying statements of assets and liabilities of the
Franklin Templeton Money Fund II of the Franklin Templeton Money Fund Trust,
including the statement of investments in securities and net assets, as of June
30, 1995, and the related statements of operations and changes in net assets,
and the financial highlights for the period April 13, 1995 to June 30, 1995.
These financial statements and financial highlights are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of investments and cash held by the custodian
as of June 30, 1995. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Franklin Templeton Money Fund II of the Franklin Templeton Money Fund Trust as
of June 30, 1995, the results of operations, the changes in net assets, and the
financial highlights for the period April 13, 1995 to June 30, 1995, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
San Francisco, California
August 4, 1995
THE MONEY MARKET PORTFOLIOS
Statement of Investments in Securities and Net Assets, June 30, 1995
<TABLE>
<CAPTION>
Face Value
Amount The Money Market Portfolio (Note 1)
a Short Term Investments 99.9%
Bank Notes6.1%
<S> <C> <C>
$ 40,000,000 Abbey National Treasury Services, 6.063%, 11/24/95 .......................... $ 40,000,000
10,000,000 NBD Bank, 6.20%, 10/16/95.................................................... 9,999,372
20,000,000 Wachovia Bank, North Carolina Branch, 5.80%, 08/30/95........................ 20,000,000
10,000,000 Westdeutsche Landesbank, New York Branch, 6.14%, 09/01/95.................... 10,000,169
-------------
Total Bank Notes (Cost $79,999,541) ......................................... 79,999,541
-------------
Certificates of Deposit15.3%
10,000,000 Banque Nationale de Paris, New York Branch, 6.11%, 08/03/95 ................. 10,000,053
35,000,000 Commerzbank AG, New York Branch, 5.78% - 6.19%, 09/06/95 - 09/26/95 ......... 34,999,371
10,000,000 Lloyds Bank Plc, New York Branch, 5.94%, 09/18/95 ........................... 10,001,452
60,000,000 National Westminster Bank, New York Branch, 6.09% - 6.22%, 09/22/95 - 11/08/95 60,004,040
10,000,000 Rabobank Nederland NV, New York Branch, 6.28%, 10/10/95 ..................... 10,002,228
55,000,000 Societe Generale, New York Branch, 5.94% - 6.03%, 08/01/95 - 09/05/95 ....... 55,000,369
20,000,000 Swiss Bank Corp, 5.80%, 08/07/95 ............................................ 19,997,926
-------------
Total Certificates of Deposit (Cost $200,005,439)............................ 200,005,439
-------------
Commercial Paper 60.7%
20,000,000 ANZ (DE), Inc., 5.86%, 09/13/95 ............................................. 19,759,089
40,000,000 American Express Credit Corp., 5.85% - 5.93%, 08/15/95 - 08/28/95 ........... 39,663,250
25,000,000 Ameritech Corp., 5.70%, 02/26/95 ............................................ 24,050,000
55,000,000 Associates Corp. of North America, 5.96% - 6.07%, 07/26/95 - 08/10/95 ....... 54,671,511
60,000,000 AT&T Corp., 5.77% - 6.20%, 07/11/95 - 09/25/95 .............................. 59,497,800
20,000,000 Bank of Nova Scotia., 5.78%, 09/27/95 ....................................... 19,717,422
20,000,000 Campbell Soup Co., 5.92%, 02/02/96 .......................................... 19,289,600
20,000,000 Canadian Imperial Holdings, Inc., 5.96%, 07/20/95 ........................... 19,937,089
15,000,000 Cargill, Inc., 5.86%, 09/11/95 .............................................. 14,824,200
20,000,000 Cheltenham & Gloucester Building Society, 5.80%, 09/29/95 ................... 19,710,000
13,200,000 CIESCO L.P., 5.77%, 10/06/95 ................................................ 12,994,780
20,000,000 Commerzbank U.S. Finance Inc., 5.77%, 10/02/95 .............................. 19,701,883
55,000,000 Den Danske Corp. Inc., 5.78% - 6.06%, 08/14/95 - 09/28/95 ................... 54,435,661
60,000,000 General Electric Capital Corp., 5.70% - 6.21%, 07/07/95 - 08/31/95 .......... 59,753,389
25,000,000 Halifax Building Society, 5.85%, 09/15/95 ................................... 24,691,250
40,000,000 Kingdom of Sweden, 6.02% - 6.26%, 08/04/95 - 09/18/95 ....................... 39,617,544
20,000,000 MetLife Funding, Inc., 5.90%, 08/24/95 ...................................... 19,823,000
45,000,000 National Rural Utilities Cooperative Finance Corp., 5.69% - 5.94%,
08/16/95 - 10/26/95 ....................................................... 44,419,140
20,000,000 Pepsico Inc., 5.93%, 07/28/95 ............................................... 19,911,050
15,000,000 Province of Alberta, 6.29%, 08/02/95 ........................................ 14,916,134
40,000,000 Prudential Funding Corp., 6.06% - 6.21%, 07/12/95 - 10/16/95 ................ 39,601,817
20,000,000 Smithkline Beecham Corp., 5.75%, 02/02/96 ................................... 19,310,000
Commercial Paper (cont.)
$ 58,000,000 Svenska Handelsbanken, Inc., 5.71% - 6.30%, 07/27/95 - 09/14/95 ............. $ 57,552,377
20,000,000 Treasury Corp. of New South Wales, 5.95%, 07/21/95 .......................... 19,933,889
55,000,000 Westpac Capital Corp., 5.60% - 6.30%, 07/06/95 - 10/05/95 .................. 54,649,472
-------------
Total Commercial Paper (Cost $792,431,347)................................... 792,431,347
-------------
Medium Term Notes1.6%
20,000,000 Merrill Lynch & Co., Inc., variable rate note, 6.28%, 10/11/95 (Cost $20,000,000) 20,000,000
-------------
Total Investments before Repurchase Agreements
(Cost $1,092,436,327)........................................................ 1,092,436,327
-------------
b Receivables from Repurchase Agreements16.2%
89,980,000 Chase Securities, Inc., 6.125%, 07/03/95 (Maturity Value $90,045,938)
Collateral: U.S. Treasury Notes, 7.50%, 12/31/96 ............................ 90,000,000
6,391 c J.P. Morgan Securities, Inc., 6.61%, 07/03/95 (Maturity Value $6,394)........ 6,391
121,570,000 J.P. Morgan Securities, Inc., 5.80%, 07/03/95 (Maturity Value $121,628,759)
Collateral: U.S. Treasury Bills, 07/06/95 - 05/30/96
U.S. Treasury Notes, 5.63%, 06/30/97 ............................. 121,570,000
-------------
Total Receivables from Repurchase Agreements (Cost $211,576,391 ) ............ 211,576,391
-------------
Total Investments (Cost $1,304,012,718)99.9% ........................... 1,304,012,718
Others Assets and Liabilities, Net.1%............................ ...... 1,561,695
-------------
Net Assets 100.0% ............................................................ $1,305,574,413
=============
At June 30, 1995, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.
aCertain short-term securities are traded on a discount basis; the rates shown
are the discount rates at the time of purchase by the Fund. Other securities
bear interest at the rates shown, payable at fixed dates or upon maturity.
bFace amount for repurchase agreements is for the underlying collateral.
cSee Note 1(f) regarding sweep repurchase agreement.
The accompanying notes are an integral part of these financial statements.
THE MONEY MARKET PORTFOLIOS
Statement of Investments in Securities and Net Assets, June 30, 1995
Face Value
Amount The U.S. Government Securities Money Market Portfolio (Note 1)
a Short Term Government Securities100%
Government Securities24.0%
$116,000,000 U.S. Treasury Bills, 5.26% - 6.16%, 07/27/95 - 12/21/95 (Cost $ 113,909,415) .. $113,909,415
--------------
b Receivables from Repurchase Agreements76.1%
19,563,000 Barclays de Zoete Wedd Securities, Inc., New York, 5.90%, 07/03/95
(Maturity Value $20,009,833) Collateral: U.S. Treasury Notes, 7.875%, 02/15/96 ................ 20,000,000
99,370,000 Chase Securities, Inc., 6.125%, 07/03/95 (Maturity Value $100,051,042)
Collateral: U.S. Treasury Notes, 6.625%, 03/31/97.............................................. 100,000,000
19,760,000 Citicorp Securities, Inc., 6.125%, 07/03/95 (Maturity Value $20,010,208)
Collateral: U.S. Treasury Notes, 6.875%, 03/31/97.............................................. 20,000,000
19,880,000 Fuji Securities, Inc., 6.10%, 07/03/95 (Maturity Value $20,010,167)
Collateral: U.S. Treasury Notes, 7.625%, 04/30/96 ............................................. 20,000,000
18,990,000 Lehman Government Securities, Inc., 6.21%, 07/03/95 (Maturity Value $20,010,350)
Collateral: U.S. Treasury Notes, 8.875%, 11/15/97.............................................. 20,000,000
101,200,000 J.P. Morgan Securities, Inc., 5.80%, 07/03/95 (Maturity Value $101,248,913)
Collateral: U.S. Treasury Notes, 6.125%, 05/31/97.............................................. 101,200,000
8,121 c J.P. Morgan Securities, Inc., 5.36%, 07/03/95 (Maturity Value $8,124)........................... 8,121
20,195,000 Morgan Stanley & Co., Inc., 6.00%, 07/03/95 (Maturity Value $20,010,000)
Collateral: U.S. Treasury Notes, 6.00%, 10/15/99............................................... 20,000,000
19,690,000 Nomura Securities International, Inc., 6.125%, 07/03/95 (Maturity Value $20,010,208)
Collateral: U.S. Treasury Notes, 6.75%, 02/28/97............................................... 20,000,000
21,202,000 Sanwa Securities (USA) Co., L.P., 5.95%, 07/03/95 (Maturity Value $20,009,917)
Collateral: U.S. Treasury Notes, 03/07/96...................................................... 20,000,000
20,000,000 UBS Securities, Inc., 6.10%, 07/03/95 (Maturity Value $20,010,167)
Collateral: U.S. Treasury Notes, 6.50%, 04/30/97............................................... 20,000,000
Total Receivables from Repurchase Agreements (Cost $361,208,121)............................... 361,208,121
-------------
Total Investments (Cost $475,117,536)100.1%..................................................... 475,117,536
Liabilities in Excess of Other Assets, Net(.1)%................................................. (463,150)
-------------
Net Assets 100.0%................................................................................ $474,654,386
=============
</TABLE>
At June 30, 1995, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.
aCertain short-term securities are traded on a discount basis; the rates shown
are the discount rates at the time of purchase by the Fund. Other securities
bear interest at the rates shown, payable at fixed dates or upon maturity.
bFace amount for repurchase agreements is for the underlying collateral.
cSee Note 1(f) regarding sweep repurchase agreement.
The accompanying notes are an integral part of these financial statements.
THE MONEY MARKET PORTFOLIOS
Financial Statements
Statements of Assets and Liabilities
June 30, 1995
The The U.S.
Money Government
Market Securities Money
Portfolio Market Portfolio
----------- -----------
Assets:
Investments in
securities, at value
and cost $1,092,436,327 $113,909,415
Receivables from
repurchase agree-
ments, at value and
cost 211,576,391 361,208,121
Receivables:
Interest 2,434,443 60,545
From affiliates 7,934 9,645
----------- -----------
Total assets 1,306,455,095 475,187,726
----------- -----------
Liabilities:
Payables:
Capital shares
repurchased 554,979 461,622
Management fees 308,405 64,872
Distributions to
shareholders 9,133 410
Accrued expenses and
other liabilities 8,165 6,436
----------- -----------
Total liabilities 880,682 533,340
----------- -----------
Net assets, at value $1,305,574,413 $474,654,386
=========== ===========
Shares outstanding 1,305,574,413 474,654,386
=========== ===========
Net asset value
per share $1.00 $1.00
=========== ===========
Statements of Operations
for the year ended June 30, 1995
The The U.S.
Money Government
Market Securities Money
Portfolio Market Portfolio
--------- -----------
Investment income:
Interest $67,765,165 $22,867,808
--------- -----------
Expenses:
Management fees, net
(Note 5) 1,730,028 581,495
Reports to shareholders 33,892 12,653
Custodian fees 32,238 25,590
Professional fees 11,920 6,084
Trustees' fees and
expenses 7,224 2,953
Other 8,786 4,419
--------- -----------
Total expenses 1,824,088 633,194
--------- -----------
Net investment
income 65,941,077 22,234,614
--------- -----------
Net realized gain
on investments 1,356 392
--------- -----------
Net increase in net assets
resulting from operations $65,942,433 $22,235,006
========= ===========
The accompanying notes are an integral part of these financial statements.
THE MONEY MARKET PORTFOLIOS
Financial Statements (cont.)
Statements of Changes in Net Assets
for the years ended June 30, 1995 and 1994
<TABLE>
<CAPTION>
The U.S. Government Securities
The Money Market Portfolio Money Market Portfolio
------------------------ -----------------------
1995 1994 1995 1994
------------ ----------- ----------- -----------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Net investment income.......................... $ 65,941,077 $ 9,998,562 $ 22,234,614 $ 7,622,616
Net realized gain (loss) from security
transactions................................... 1,356 (5,146) 392 350
------------ ----------- ----------- -----------
Net increase in net assets resulting from
operations..................................... 65,942,433 9,993,416 22,235,006 7,622,966
Distributions to shareholders from undistributed
net investment income.......................... (65,942,433)d (9,993,416)c (22,235,006)b (7,622,966)a
Increase (decrease) in net assets from capital
share transactions (Notes 2 and 5)............. 1,086,385,190 (3,168,832) 256,106,321 (91,771,434)
------------ ----------- ----------- -----------
Net increase (decrease) in net assets........... 1,086,385,190 (3,168,832) 256,106,321 (91,771,434)
Net assets (there is no undistributed net invest-
ment income at beginning or end of the year):
Beginning of year............................... 219,189,223 222,358,055 218,548,065 310,319,499
------------ ----------- ----------- -----------
End of year..................................... $1,305,574,413 $219,189,223 $474,654,386 $218,548,065
============ =========== =========== ===========
aDistributions were increased by net realized gain from security transactions of $350.
bDistributions were increased by net realized gain from security transactions of $392.
cDistributions were decreased by net realized loss from security transactions of $5,146.
dDistributions were increased by net realized gain from security transactions of $1,356.
</TABLE>
The accompanying notes are an integral part of these financial statements.
THE MONEY MARKET PORTFOLIOS
Notes to Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
The Money Market Portfolios (the Money Market) is a no load, open-end
diversified management investment company (mutual fund), registered under the
Investment Company Act of 1940, as amended. The Money Market has two portfolios
(the Portfolios) consisting of The Money Market Portfolio and The U.S.
Government Securities Money Market Portfolio. Each of the Portfolios issues a
separate series of shares and maintains a totally separate and distinct
investment portfolio. The shares of the Money Market are issued in private
placements and are thus exempt from registration under the Securities Act of
1933.
The following is a summary of significant accounting policies consistently
followed by the Portfolios in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
a. Security Valuation:
Portfolio securities are valued at amortized cost, which approximates value.
Each of the Portfolios must maintain a dollar weighted average maturity of 90
days or less and only purchase instruments having remaining maturities of 397
days or less. If a Portfolio has a remaining weighted average maturity of
greater than 90 days, the Portfolio will be stated at value based on recorded
closing sales on a national securities exchange or, in the absence of a recorded
sale, within the range of the most recent quoted bid and ask prices. The
trustees have established procedures designed to stabilize, to the extent
reasonably possible, each Portfolio's price per share as computed for the
purpose of sales and redemptions at $1.00.
b. Income Taxes:
The Money Market intends to continue to qualify for the tax treatment applicable
to regulated investment companies under the Internal Revenue Code and to make
the requisite distributions to its shareholders which will be sufficient to
relieve it from income and excise taxes. Therefore, no income tax provision is
required.
Each Portfolio is treated as a separate entity in the determination of
compliance with the Internal Revenue Code.
c. Security Transactions:
Security transactions are accounted for on the date the securities are purchased
or sold (trade date). Realized gains and losses on security transactions are
determined on the basis of specific identification for both financial statement
and income tax purposes.
d. Investment Income, Expenses and Distributions:
Net investment income includes income, calculated on an accrual basis,
amortization of original issue and market discount or premium (if any), and
estimated expenses which are accrued daily. The total available for
distributions is computed daily and includes the net investment income, plus or
minus any gains or losses on security transactions and changes in unrealized
portfolio appreciation or depreciation, (if any).
Distributions are normally declared for each day the New York Stock Exchange is
open for business, equal to the total available for distributions (as defined
above), and are payable to shareholders of record as of the close of business
that day. Such distributions are automatically reinvested monthly in additional
shares of the Portfolio at net asset value.
e. Expense Allocation:
Common expenses incurred by the Money Market are allocated among the Portfolios
based on the ratio of net assets of each Portfolio to the combined net assets.
In all other respects, expenses are charged to each Portfolio as incurred on a
specific identification basis.
1. SIGNIFICANT ACCOUNTING POLICIES (cont.)
f. Repurchase Agreements:
The Portfolios may enter into repurchase agreements with government securities
dealers recognized by the Federal Reserve Board and/or member banks of the
Federal Reserve System. In a repurchase agreement, the Portfolios purchase a
U.S. government security from a dealer or bank subject to an agreement to resell
it at a mutually agreed upon price and date. Such a transaction is accounted for
as a loan by the Portfolio to the seller, collateralized by the underlying
security. The transaction requires the initial collateralization of the seller's
obligation by U.S. government securities with market value, including accrued
interest, of at least 102% of the dollar amount invested by the Portfolio, with
the value of the underlying security marked to market daily to maintain coverage
of at least 100%. The collateral is delivered to the Portfolios' custodian and
held until resold to the dealer or bank. At June 30, 1995, all outstanding
repurchase agreements held by the Portfolios had been entered into on that date.
The Portfolios may enter into a sweep agreement with their custodian bank. In a
sweep, the excess cash in the Portfolios' direct deposit accounts at the end of
the day is invested overnight. The Money Market Portfolio's excess cash is
invested in a AAA rated time deposit of Morgan Guaranty Trust Company's Nassau
branch. The U.S. Government Securities Money Market Portfolio's excess cash is
invested in a U.S. government-backed repurchase agreement with Morgan Guaranty
of New York. Funds are returned to the Portfolios' direct deposit accounts as
the first transaction of the next business day.
2. TRUST SHARES
At June 30, 1995, there was an unlimited number of $.01 par value shares of
beneficial interest authorized, and paid-in capital aggregated as follows:
<TABLE>
<CAPTION>
The U.S. Government
The Money Securities Money
Market Portfolio Market Portfolio
----------- -------------
<S> <C> <C>
Paid-in capital............................................................... $1,305,574,413 $474,654,386
=========== =============
Transactions in the Portfolios' shares at $1.00 per share for the years ended June 30, 1995 and June 30, 1994 were as
follows:
The U.S. Government
The Money Securities Money
Market Portfolio Market Portfolio
------------ -------------
Year ended June 30, 1995
Shares sold................................................................. $ 2,811,245,134 $ 2,270,754,653
Shares issued in reinvestment of distributions.............................. 65,932,187 22,235,271
Shares redeemed............................................................. (2,923,489,920) (2,175,508,395)
Shares issued in connection with assets transfer (Note 5)................... 1,132,697,789 138,624,792
------------ -------------
Net increase................................................................ $ 1,086,385,190 $ 256,106,321
============ =============
Year ended June 30, 1994
Shares sold................................................................. $ 1,699,503,699 $ 2,476,681,838
Shares issued in reinvestment of distributions.............................. 9,993,345 7,620,764
Shares redeemed............................................................. (1,712,665,876) (2,576,074,036)
------------ -------------
Net decrease................................................................ $ (3,168,832) $ (91,771,434)
============ =============
3. CAPITAL LOSS CARRYOVERS
At June 30, 1995, for tax purposes, The Money Market Portfolio had an
accumulated net realized loss of $5,146. For tax purposes, the aggregate cost of
securities are the same for financial statement purposes at June 30, 1995.
4. PURCHASES AND SALES OF SECURITIES
Aggregate purchases and sales/maturities of securities, including repurchase
agreements, for the year ended June 30, 1995 were as follows:
The U.S. Government
The Money Securities Money
Market Portfolio Market Portfolio
------------ -------------
Purchases................................................................... $83,142,429,080 $90,292,725,226
============ =============
Sales....................................................................... $83,111,797,358 $90,036,843,956
============ =============
</TABLE>
5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Franklin Advisers, Inc., under the terms of a management agreement, provides
investment advice, administrative services, office space and facilities to the
Portfolios, and receives fees computed monthly on the average daily net assets
of the Portfolios during the month. The Money Market Portfolio and The U.S.
Government Securities Money Market Portfolio pay fees equal to an annualized
rate of 15/100 of 1% of their average daily net assets.
The terms of the agreement provide that annual aggregate expenses of the
Portfolios be limited to the extent necessary to comply with the limitations set
forth in the laws, regulations and administrative interpretations of the states
in which the Portfolios' shares are registered. The Portfolios' expenses did not
exceed these limitations; however, for the year ended June 30, 1995, Franklin
Advisers, Inc. agreed in advance to waive $93,609 and $53,499 of the management
fees for The Money Market Portfolio and The U.S. Government Securities Money
Market Portfolio, respectively.
Certain officers and trustees of the Portfolios are also officers and/or
directors of Franklin Advisers, Inc. and Franklin/Templeton Investor Services,
Inc., all wholly-owned subsidiaries of Franklin Resources, Inc.
6. ASSETS TRANSFER
On August 1, 1994, the Franklin Money Fund and the Franklin Federal Money Fund
transferred substantially all of their net assets, respectively, into The Money
Market Portfolio and The U.S. Government Securities Money Market Portfolio. The
transfers were accompanied by a tax-free exchange of 1,132,697,789 capital
shares of The Money Market Portfolio for net assets valued at $1,132,697,789 of
the Franklin Money Fund and 138,624,792 capital shares of The U.S. Government
Securities Money Market Portfolio for net assets valued at $138,624,792 of the
Franklin Federal Money Fund.
As of June 30, 1995, the shares of The Money Market Portfolio were owned by the
following funds:
<TABLE>
<CAPTION>
Percentage of
Shares Outstanding Shares
---------- ------------
<S> <C> <C>
Franklin Money Fund............................................................. 1,018,691,315 78.03%
Institutional Fiduciary Trust - Money Market Portfolio.......................... 272,146,783 20.84%
Institutional Fiduciary Trust - Franklin Cash Reserves Fund..................... 14,585,078 1.12%
Franklin Templeton Money Fund Trust - Franklin Templeton Money Fund II.......... 151,237 .01%
6. ASSETS TRANSFER (cont.)
As of June 30, 1995, the shares of The U.S. Government Securities Money Market
Portfolio were owned by the following funds:
Percentage of
Shares Outstanding Shares
--------- ------------
Institutional Fiduciary Trust-Franklin U.S. Government Securities Money Market Portfolio 334,830,412 70.54%
Franklin Federal Money Fund.............................................................. 139,823,974 29.46%
7. FINANCIAL HIGHLIGHTS
Selected data for each share of beneficial interest outstanding throughout the
period are as follows:
Per Share Operating Performance Ratios/Supplemental Data
------------------------------------ ---------------------------
Net Asset Distributions Net Assets Ratio of Ratio of
Values at Net From Net Net Asset at End Expenses Net Income
Year Ended Beginning Investment Investment Values at Total of Period to Average to Average
June 30 of Year Income Income End of Year Return++ (in 000's) Net Assets+ Net Assets
The Money Market Portfolio
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1993* $1.00 $0.027 $(0.027) $1.00 2.92%** $ 222,358 0.15%** 3.18%**
1994 1.00 0.033 (0.033) 1.00 3.33 219,189 0.15 3.25
1995 1.00 0.053 (0.053) 1.00 5.46 1,305,574 0.15 5.42
The U.S. Government Securities Money Market Portfolio
1993* 1.00 0.021 (0.021) 1.00 2.27** 310,319 0.15** 3.05**
1994 1.00 0.032 (0.032) 1.00 3.25 218,548 0.15 3.20
1995 1.00 0.052 (0.052) 1.00 5.32 474,654 0.15 5.25
*July 28, 1992 (Effective date of registration) to June 30, 1993.
**Annualized
++Total return measures the change in value of an investment over the periods
indicated. It assumes reinvestment of dividends and capital gains, if any, at
net asset value and is not annualized.
+During the period indicated, the Manager agreed to waive in advance a portion
of its management fees of the Portfolios. Had such action not been taken, the
ratios of expenses to average net assets would have been as follows.
Ratio of Expenses to
Average Net Assets
-----------
The Money Market Portfolio
<S> <C>
1993*...................................... .17%**
1994....................................... .17
1995....................................... .16
The U.S. Government Securities
Money Market Portfolio
1993*...................................... .18%**
1994....................................... .17
1995....................................... .16
</TABLE>
THE MONEY MARKET PORTFOLIOS
Report of Independent Accountants
To the Shareholders and Board of Trustees
The Money Market Portfolios
We have audited the accompanying statements of assets and liabilities of the two
portfolios comprising The Money Market Portfolios, including each Portfolio's
statement of investments in securities and net assets, as of June 30, 1995, and
the related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the three years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Portfolios' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
two Portfolios comprising The Money Market Portfolios as of June 30, 1995, the
results of their operations for the year then ended, the changes in their net
assets for each of the two years in the period then ended and the financial
highlights for the period then ended in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
San Francisco, California
August 4, 1995
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.
