-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OSujQx44sAc/Cv37cHYNIgc2TL5iAASkcusuol3DowCsI7+JeLGqmo3K3LHpweNa oLdF9jcDqwTa9ydeYl0yLQ== 0000038778-04-000005.txt : 20040302 0000038778-04-000005.hdr.sgml : 20040302 20040302150045 ACCESSION NUMBER: 0000038778-04-000005 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040302 EFFECTIVENESS DATE: 20040302 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FRANKLIN MONEY FUND CENTRAL INDEX KEY: 0000038778 IRS NUMBER: 942312649 STATE OF INCORPORATION: CA FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-02605 FILM NUMBER: 04642494 BUSINESS ADDRESS: STREET 1: ONE FRANKLIN PARKWAY CITY: SAN MATEO STATE: CA ZIP: 94403-1906 BUSINESS PHONE: 650-570-3000 MAIL ADDRESS: STREET 1: ONE FRANKLIN PARKWAY CITY: SAN MATEO STATE: CA ZIP: 94403-1906 FORMER COMPANY: FORMER CONFORMED NAME: FRANKLIN RESOURCES LIQUID ASSETS FUND DATE OF NAME CHANGE: 19800402 N-CSRS 1 fmfsemincsr.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSRS CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-2605 -------- FRANKLIN MONEY FUND ------------------- (Exact name of registrant as specified in charter) ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906 (Address of principal executive offices) (Zip code) MURRAY L. SIMPSON, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906 ----------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (650) 312-2000 -------------- Date of fiscal year end: 06/30 ----- Date of reporting period: 12/31/03 -------- ITEM 1. REPORTS TO STOCKHOLDERS. DECEMBER 31, 2003 [GRAPHIC OMITTED] SEMIANNUAL REPORT AND SHAREHOLDER LETTER INCOME FRANKLIN MONEY FUND [GRAPHIC OMITTED] WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL? Eligible shareholders can sign up for eDeliery at franklintempleton.com. See inside for details. [LOGO OMITTED] FRANKLIN(R) TEMPLETON(R) INVESTMENTS FRANKLIN o Templeton o Mutual Series Franklin Templeton Investments GAIN FROM OUR PERSPECTIVE Franklin Templeton's distinct multi-manager structure combines the specialized expertise of three world-class investment management groups--Franklin, Templeton and Mutual Series. SPECIALIZED EXPERTISE Each of our portfolio management groups operates autonomously, relying on its own research and staying true to the unique investment disciplines that underlie its success. FRANKLIN. Founded in 1947, Franklin is a leader in tax-free investing and a driving force in fixed income investing around the globe. They also bring expertise in growth- and value-style U.S. equity investing. TEMPLETON. Founded in 1940, Templeton pioneered international investing and, in 1954, launched what has become the industry's oldest global fund. Today, with research offices in over 25 countries, they offer investors the broadest global reach in the industry. MUTUAL SERIES. Established in 1949, Mutual Series is dedicated to a unique style of value investing, searching aggressively for opportunity among undervalued stocks, arbitrage situations and distressed companies. TRUE DIVERSIFICATION Because our management groups work independently and adhere to distinctly different investment approaches, Franklin, Templeton and Mutual Series funds typically have a low overlap of securities. That's why our funds can be used to build truly diversified portfolios covering every major asset class. RELIABILITY YOU CAN TRUST At Franklin Templeton Investments, we seek to consistently provide investors with exceptional risk-adjusted returns over the long term, as well as the reliable account services that have helped us become one of the most trusted names in financial services. MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS [GRAPHIC OMITTED] Not part of the semiannual report Contents SHAREHOLDER LETTER ................................. 1 SEMIANNUAL REPORT Franklin Money Fund ................................ 4 Performance Summary ................................ 5 Financial Highlights and Statement of Investments ........................... 6 Financial Statements ............................... 8 Notes to Financial Statements ...................... 11 Proxy Voting Policies and Procedures ............... 26 Regulatory Update AS OF FEBRUARY 12, 2004 On February 4, 2004, the Securities Division of the Office of the Secretary of the Commonwealth of Massachusetts filed an administrative complaint against Franklin Resources, Inc. and certain of its subsidiaries (the "Company"), alleging violations of the Massachusetts Uniform Securities Act. The complaint arises from activity that occurred in 2001 during which time an officer of a Company subsidiary was negotiating an agreement with an investor relating to investments in a mutual fund and a hedge fund. The Company, in addition to other entities within Franklin Templeton Investments, including the Fund and other funds, has been named in shareholder class actions related to the matter described above. The Company believes that the claims made in the lawsuit are without merit and it intends to defend vigorously against the allegations. It is anticipated that the Company may be named in additional similar civil actions related to the matter described above. In addition, as part of ongoing investigations by the U.S. Securities and Exchange Commission (the "SEC"), the U.S. Attorney for the Northern District of California, the New York Attorney General, the California Attorney General, the U.S. Attorney for the District of Massachusetts, the Florida Department of Financial Services, and the Commissioner of Securities and the Attorney General of the State of West Virginia, relating to certain practices in the mutual fund industry, including late trading, market timing and sales compensation arrangements, the Company and its subsidiaries, as well as certain current or former executives and employees of the Company, have received requests for information and/or subpoenas to testify or produce documents. The Company and its current employees are providing documents and information in response to these requests and subpoenas. In addition, the Company has responded to requests for similar kinds of information from regulatory authorities in some of the foreign countries where the Company conducts its global asset management business. The Staff of the SEC has informed the Company that it intends to recommend that the Commission authorize an action against the Fund's investment adviser and a senior executive officer relating to the frequent trading issues that are the subject of the SEC's investigation. These issues were previously disclosed as being under investigation by government authorities and the subject of an internal inquiry by the Company in its Annual Report on Form 10-K and on its public website. The Company currently is in discussions with the SEC Staff in an effort to resolve the issues raised in their investigation. Such discussions are preliminary and the Company cannot predict the likelihood of whether those discussions will result in a settlement and, if so, the terms of such settlement. The impact, if any, of these matters on the Fund is uncertain at this time. If it is found that the Company bears responsibility for any unlawful or improper conduct, we have committed to making the funds or their shareholders whole, as appropriate. Any further updates on these matters will be disclosed on the Company's website at franklintempleton.com under "Statement on Current Industry Issues." Not part of the semiannual report | 3 Semiannual Report Franklin Money Fund YOUR FUND'S GOAL AND PRIMARY INVESTMENTS: Franklin Money Fund seeks to provide as high a level of current income as is 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 goal. 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 attempts to maintain a stable $1.00 share price. 1 This semiannual report for Franklin Money Fund covers the period ended December 31, 2003. PERFORMANCE OVERVIEW Relatively steady, low interest rates resulted in minimal changes for the Fund's yields. In this environment, the Fund's seven-day effective yield fell from 0.48% on June 30, 2003, to 0.43% on December 31, 2003. ECONOMIC AND MARKET OVERVIEW During the six months ended December 31, 2003, many factors strongly impacted the U.S. economy and markets. Uncertainty about economic recovery and geopolitical events pushed U.S. interest rates to their lowest level in more than four decades in June 2003. For consumers, historically low mortgage rates enabled many homeowners to refinance their mortgages, and refinancing applications reached their highest levels on record. The U.S. government injected fiscal stimulus into the economy, approving another round of tax cuts and rebates that included dividend and capital gains tax reductions. These tax cuts, increased refinancing activity, rising home values and stabilizing equity markets all improved consumers' net worths and allowed them to continue spending, which helped to keep the economy moving forward. Increases in business spending also helped economic growth. After having been largely absent since the end of 2000, business spending improved in the latter half of 2003. Nonresidential fixed investment increased 12.8% annualized in the third 1. An investment in the Fund is not insured or guaranteed by the U.S. government or any other entity or institution. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND COMPLETE LEGAL TITLES OF ALL PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF INVESTMENTS (SOI). THE SOI BEGINS ON PAGE 7. 4 | Semiannual Report quarter of 2003, the highest increase since the second quarter of 2000. Lower interest rates during the past year allowed many businesses the opportunity to refinance their old debt at more attractive levels. This helped enhance business operating performance. Additionally, businesses continued to achieve productivity gains by reducing their labor forces and taking advantage of recent technology investments. Higher productivity levels helped dampen inflation. Core inflation (excluding food and energy), as measured by the Consumer Price Index, rose at a modest, seasonally adjusted, annualized rate of 0.6% for the six months under review. Expectations for lower inflation contributed to the historically lower overall interest rate environment during the period. An area of concern, employment, made some gains during the period. The unemployment rate began the period at 6.2% and declined to 5.7% by period-end. With inflation expectations muted, the Federal Reserve Board maintained its accommodative stance and kept the federal funds target rate at 1.00% through period-end. INVESTMENT STRATEGY Consistent with our strategy, we invest, through the Portfolio, mainly in high-quality, short-term U.S. dollar denominated money market securities of domestic and foreign issuers, including bank obligations, commercial paper, repurchase agreements and U.S. government securities. We maintain a dollar-weighted average portfolio maturity of 90 days or less. We seek to provide shareholders with a high-quality, conservative investment vehicle; thus, we do not invest the Fund's cash in derivatives or other relatively volatile securities that we believe involve undue risk. 1 MANAGER'S DISCUSSION We continued to invest the Portfolio's assets in high-quality money market securities. For example, on December 31, 2003, 86.9% of the securities purchased for the Portfolio carried AA or higher long-term credit ratings by independent credit rating agencies Standard & Poor's and Moody's Investors Service, with the balance rated A. 2 We appreciate your support, welcome new shareholders and look forward to serving your investment needs in the years ahead. THIS DISCUSSION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS AS OF DECEMBER 31, 2003, THE END OF THE REPORTING PERIOD. THE WAY WE IMPLEMENT OUR MAIN INVESTMENT STRATEGIES AND THE RESULTING PORTFOLIO HOLDINGS MAY CHANGE DEPENDING ON FACTORS SUCH AS MARKET AND ECONOMIC CONDITIONS. THESE OPINIONS MAY NOT BE RELIED UPON AS INVESTMENT ADVICE OR AN OFFER FOR A PARTICULAR SECURITY. THE INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET, COUNTRY, INDUSTRY, SECURITY OR THE FUND. STATEMENTS OF FACT ARE FROM SOURCES CONSIDERED RELIABLE, BUT THE ADVISOR MAKES NO REPRESENTATION OR WARRANTY AS TO THEIR COMPLETENESS OR ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS, THESE INSIGHTS MAY HELP YOU UNDERSTAND OUR INVESTMENT MANAGEMENT PHILOSOPHY. 2. These do not indicate ratings of the Fund. [SIDEBAR] PERFORMANCE SUMMARY 12/31/03 - ---------------------------------------- Seven-day effective yield* 0.43% - ---------------------------------------- Seven-day annualized yield 0.43% - ---------------------------------------- *Seven-day effective yield assumes compounding of daily dividends. Annualized and effective yields are for the seven-day period ended 12/31/03. The Fund's average weighted maturity was 54 days. Yield reflects Fund expenses and fluctuations in interest rates on portfolio investments. Franklin Advisers, Inc., the Fund's administrator and the manager of the Fund's underlying Portfolio, has agreed in advance to waive a portion of its fees. If the manager had not taken this action, the Portfolio's annualized and effective yields for the period would have been lower. The fee waiver may be discontinued at any time upon notice to the Fund's Board of Trustees. Past performance does not guarantee future results. Semiannual Report | 5 Franklin Money Fund FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------------------ SIX MONTHS ENDED DECEMBER 31, 2003 YEAR ENDED JUNE 30, (UNAUDITED) 2003 2002 2001 2000 1999 ------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the period) Net asset value, beginning of period ................................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 ------------------------------------------------------------------------------------ Income from investment operations - net investment income .................... .002 .010 .021 .054 .052 .046 Less distributions from net investment income ................................... (.002) (.010) (.021) (.054) (.052) (.046) ------------------------------------------------------------------------------------ Net asset value, end of period $1.00 ...... $1.00 $1.00 $1.00 $1.00 $1.00 ==================================================================================== Total return a ............................ .23% .93% 2.16% 5.59% 5.29% 4.66% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's) ......... $1,719,211 $1,956,924 $2,095,945 $2,255,111 $2,437,183 $1,969,264 Ratios to average net assets: Expenses b ............................... .64% c .62% .61% .62% .61% .67% Expenses excluding waiver and payments by affiliate b ................. .64% c .62% .62% .63% .62% .67% Net investment income .................... .45% c .93% 2.16% 5.51% 5.17% 4.54%
aThe total return does not reflect the contingent deferred sales charge, and is not annualized for periods less than one year. bThe expense ratio includes the Fund's share of the Portfolio's allocated expenses. cAnnualized. 6 | See notes to financial statements. | Semiannual Report Franklin Money Fund STATEMENT OF INVESTMENTS, DECEMBER 31, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------------- SHARES VALUE MUTUAL FUNDS (COST $1,720,139,543) 100.1% The Money Market Portfolio (Note 1) ......................................... 1,720,139,543 $ 1,720,139,543 OTHER ASSETS, LESS LIABILITIES (.1)% ........................................ (928,912) --------------- NET ASSETS 100.0% ........................................................... $ 1,719,210,631 ===============
Semiannual Report | See notes to financial statements. | 7 Franklin Money Fund FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES December 31, 2003 (unaudited) Assets: Investments in securities, at value and cost ................ $1,720,139,543 Receivables from capital shares sold ........................ 12,026,505 -------------- Total assets ........................................... 1,732,166,048 -------------- Liabilities: Payables: Capital shares redeemed .................................... 9,029,676 Affiliates ................................................. 649,919 Shareholders ............................................... 2,948,177 Other liabilities ........................................... 327,645 -------------- Total liabilities ...................................... 12,955,417 -------------- Net assets, at value ......................................... $1,719,210,631 ============== Shares outstanding ........................................... 1,719,210,631 ============== Net asset value per share a .................................. $1.00 ============== aRedemption price is equal to net asset value less any applicable contingent deferred sales charge. 8 | See notes to financial statements. | Semiannual Report Franklin Money Fund FINANCIAL STATEMENTS (CONTINUED) STATEMENT OF OPERATIONS for the six months ended December 31, 2003 (unaudited)
Investment income: Dividends .................................................................. $8,794,124 ---------- Expenses: Administrative fees (Note 3) ............................................... 2,754,756 Transfer agent fees (Note 3) ............................................... 1,597,061 Reports to shareholders .................................................... 88,927 Registration and filing fees ............................................... 56,102 Professional fees .......................................................... 18,499 Directors' fees and expenses ............................................... 41,187 Other ...................................................................... 6,957 ---------- Total expenses ........................................................ 4,563,489 ---------- Net investment income ................................................ 4,230,635 ---------- Net increase (decrease) in net assets resulting from operations ............. $4,230,635 ==========
Semiannual Report | See notes to financial statements. | 9 Franklin Money Fund FINANCIAL STATEMENTS (CONTINUED) STATEMENTS OF CHANGES IN NET ASSETS for the six months ended December 31, 2003 (unaudited) and the year ended June 30, 2003
---------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, 2003 JUNE 30, 2003 ---------------------------------------- Increase (decrease) in net assets: Net investment income from operations .......................................... $ 4,230,635 $ 19,611,141 Distributions to shareholders from net investment income ....................... (4,230,635) (19,611,141) Capital share transactions (Note 2) ............................................ (237,713,534) (139,020,642) ---------------------------------------- Net increase (decrease) in net assets ..................................... (237,713,534) (139,020,642) Net assets (there is no undistributed net investment income at beginning or end of period): Beginning of period ............................................................ 1,956,924,165 2,095,944,807 ---------------------------------------- End of period .................................................................. $1,719,210,631 $1,956,924,165 ========================================
10 | See notes to financial statements. | Semiannual Report Franklin Money Fund NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Franklin Money Fund (the Fund) is registered under the Investment Company Act of 1940 as a diversified, open-end investment company. 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 December 31, 2003, the Fund owns 31.17% 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 either reinvested in additional shares of the Fund or distributed monthly. D. ACCOUNTING ESTIMATES The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America 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 expenses during the reporting period. Actual results could differ from those estimates. E. GUARANTEES AND INDEMNIFICATIONS Under the Fund's organizational documents, its officers and trustees are indemnified against certain liability arising out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote. Semiannual Report | 11 Franklin Money Fund NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 2. CAPITAL STOCK At December 31, 2003, there were an unlimited number of shares authorized ($0.01 par value). Transactions in the Fund's shares at $1.00 per share were as follows:
---------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, 2003 JUNE 30, 2003 ---------------------------------------- Shares sold ................................................ $ 1,032,137,679 $ 2,856,367,616 Shares issued in reinvestment of distributions ............. 4,217,150 19,802,711 Shares redeemed ............................................ (1,274,068,363) (3,015,190,969) ---------------------------------------- Net increase (decrease) .................................... $ (237,713,534) $ (139,020,642) ========================================
3. TRANSACTIONS WITH AFFILIATES Certain officers and directors of the Fund are also officers and/or directors of Franklin Advisers Inc. (Advisers), Franklin/Templeton Distributors Inc. (Distributors), and Franklin/Templeton Investor Services LLC (Investor Services), the Fund's administrative manager, principal underwriter, and transfer agent, respectively, and of the Portfolio. The Fund pays an administrative fee to Advisers based on the net assets of the Fund as follows: - -------------------------------------------------------------------------------- ANNUALIZED FEE RATE DAILY NET ASSETS - -------------------------------------------------------------------------------- .455% First $100 million .330% Over $100 million, up to and including $250 million .280% In excess of $250 million Distributors received contingent deferred sales charges for the period of $146,905. The Fund paid transfer agent fees of $1,597,061, of which $1,144,195 was paid to Investor Services. 4. INCOME TAXES At December 31, 2003, the cost of investments for book and income tax purposes were the same. 12 | Semiannual Report Franklin Money Fund NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 5. REGULATORY MATTERS On February 4, 2004, the Securities Division of the Office of the Secretary of the Commonwealth of Massachusetts filed an administrative complaint against Franklin Resources, Inc. and certain of its subsidiaries (the "Company"), alleging violations of the Massachusetts Uniform Securities Act. The complaint arises from activity that occurred in 2001 during which time an officer of a Company subsidiary was negotiating an agreement with an investor relating to investments in a mutual fund and a hedge fund. The Fund, in addition to other entities within Franklin Templeton Investments, including the Company and other funds, has been named in shareholder class actions related to the matter described above. The Fund's management believes that the claims made in the lawsuit are without merit and it intends to defend vigorously against the allegations. It is anticipated that the Funds may be named in additional similar civil actions related to the matter described above. In addition, as part of ongoing investigations by the U.S. Securities and Exchange Commission (the "SEC"), the U.S. Attorney for the Northern District of California, the New York Attorney General, the California Attorney General, the U.S. Attorney for the District of Massachusetts, the Florida Department of Financial Services, and the Commissioner of Securities and the Attorney General of the State of West Virginia, relating to certain practices in the mutual fund industry, including late trading, market timing and sales compensation arrangements, the Company and its subsidiaries, as well as certain current or former executives and employees of the Company, have received requests for information and/or subpoenas to testify or produce documents. The Company and its current employees are providing documents and information in response to these requests and subpoenas. In addition, the Company has responded to requests for similar kinds of information from regulatory authorities in some of the foreign countries where the Company conducts its global asset management business. The Staff of the SEC has informed the Company that it intends to recommend that the Commission authorize an action against the Fund's investment adviser and a senior executive officer relating to the frequent trading issues that are the subject of the SEC's investigation. These issues were previously disclosed as being under investigation by government authorities and the subject of an internal inquiry by the Company in its Annual Report on Form 10-K and on its public website. The Company currently is in discussions with the SEC Staff in an effort to resolve the issues raised in their investigation. Such discussions are preliminary and the Fund's management has been advised that the Company cannot predict the likelihood of whether those discussions will result in a settlement and, if so, the terms of such settlement. The impact, if any, of these matters on the Fund is uncertain at this time. If the Company finds that it bears responsibility for any unlawful or improper conduct, it has committed | to making the Fund or its shareholders whole, as appropriate. Semiannual Report | 13 The Money Market Portfolios FINANCIAL HIGHLIGHTS THE MONEY MARKET PORTFOLIO
------------------------------------------------------------------------------------ SIX MONTHS ENDED DECEMBER 31, 2003 YEAR ENDED JUNE 30, (UNAUDITED) 2003 2002 2001 2000 1999 ------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the period) Net asset value, beginning of period .................................. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 ------------------------------------------------------------------------------------ Income from investment operations - net investment income ................... .005 .014 .026 .059 .056 .051 Less distributions from net investment income .................................. (.005) (.014) (.026) (.059) (.056) (.051) ------------------------------------------------------------------------------------ Net asset value, end of period ........... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 ==================================================================================== Total return a ........................... .47% 1.41% 2.63% 6.08% 5.75% 5.18% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's) ........ $5,518,199 $5,331,200 $4,734,196 $4,490,919 $4,144,043 $3,672,404 Ratios to average net assets: Expenses ................................ .15% b .15% .15% .15% .15% .15% Expenses excluding waiver by affiliate .............................. .15% b .15% .16% .16% .16% .15% Net investment income ................... .94% b 1.39% 2.56% 5.91% 5.65% 5.04%
aTotal return is not annualized for periods less than one year. bAnnualized. 14 | See notes to financial statements. | Semiannual Report The Money Market Portfolios STATEMENT OF INVESTMENTS, DECEMBER 31, 2003 (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------------- THE MONEY MARKET PORTFOLIO PRINCIPAL AMOUNT VALUE - ---------------------------------------------------------------------------------------------------------------------------- CERTIFICATES OF DEPOSIT 39.9% Australia & New Zealand Banking Group, New York Branch, 1.08% - 1.085%, 1/21/04 - 3/04/04 ................................................................. $ 50,000,000 $ 50,000,357 Bank of Montreal, Chicago Branch, 1.08% - 1.133%, 2/18/04 - 4/30/04 ................................................................. 150,000,000 150,001,490 Bank of Nova Scotia, Portland Branch, 1.08%, 1/21/04 - 2/20/04 ..................... 150,000,000 150,000,000 Banque Nationale De Paris, New York Branch, 1.08% - 1.35%, 1/14/04 - 4/13/04 ................................................................. 150,000,000 150,000,560 Barclays Bank PLC, New York Branch, 1.09% - 1.10%, 3/05/04 - 4/09/04 ........................................................................... 100,000,000 100,002,498 Bayerische Landesbank Girozen, New York Branch, 1.06% - 2.10%, 3/12/04 - 4/26/04 ................................................................. 160,000,000 160,120,682 Credit Agricole, New York Branch, 1.06% - 1.43%, 1/05/04 - 10/22/04 .......................................................................... 155,000,000 155,002,135 Dexia Bank, New York Branch, 1.508%, 12/07/04 ...................................... 50,000,000 50,003,495 Landesbank Hessen Thueringen Giro., New York Branch, 1.11%, 3/03/04 ........................................................................... 75,000,000 75,002,576 Lloyds Bank PLC, New York Branch, 1.06% - 1.07%, 2/17/04 - 2/19/04 ................. 150,000,000 150,000,000 Rabobank Nederland NV, New York Branch, 1.06%, 4/05/04 - 4/22/04 ................... 150,000,000 149,998,837 Royal Bank of Canada, New York Branch, 1.06% - 1.42%, 4/27/04 - 10/22/04 ................................................................ 125,000,000 125,005,272 Royal Bank of Scotland NY, New York Branch, 1.08%, 1/08/04 - 1/27/04 ........................................................................... 138,958,000 138,957,995 Svenska Handelsbanken, New York Branch, 1.08% - 1.09%, 1/13/04 - 2/23/04 ................................................................. 100,000,000 100,000,433 Toronto Dominion Bank, New York Branch, 1.075% - 1.085%, 1/16/04 - 2/04/04 ................................................................. 150,000,000 150,000,457 UBS AG, Stamford, CT Branch, 1.075% - 1.305%, 4/14/04 - 4/22/04 .................... 150,000,000 150,001,133 Wells Fargo Bank, San Francisco Branch, 1.05% - 1.07%, 1/07/04 - 2/25/04 ................................................................. 150,000,000 150,000,000 Westdeutsche Landesbank, New York Branch, 1.09% - 1.25%, 4/07/04 - 4/14/04 ................................................................. 50,000,000 50,007,495 ---------------- TOTAL CERTIFICATES OF DEPOSIT (COST $2,204,105,415) ................................ 2,204,105,415 ---------------- COMMERCIAL PAPER 45.5% a Abbott Laboratories, 1.04%, 3/08/04 ................................................ 25,000,000 24,951,611 a American International Group I, 1.07% - 1.085%, 2/20/04 - 2/26/04 .................. 100,000,000 99,841,431 a ANZ (Delaware) Inc., 1.07% - 1.075%, 1/12/04 - 2/26/04 ............................. 108,400,000 108,319,627 a Citigroup Global Markets Holdings, 1.06% - 1.08%, 1/05/04 - 1/15/04 ................................................................. 150,000,000 149,968,035 a Commonwealth Bank of Australia, 1.05% - 1.08%, 2/17/04 - 4/02/04 ................... 150,000,000 149,652,083 a Den Danske Corp. Inc., 1.065% - 1.08%, 1/14/04 - 3/18/04 ........................... 150,000,000 149,743,642 a Dexia Bank, 1.07% - 1.08%, 3/09/04 - 3/17/04 ....................................... 100,000,000 99,790,528 a Dupont De Nemours Inc., 1.05% - 1.07%, 2/10/04 - 2/23/04 ........................... 83,538,000 83,416,619 a General Electric Capital Corp., 1.08% - 1.19%, 3/23/04 - 6/03/04 ................... 150,000,000 149,369,597 a Goldman Sachs Group Inc, 1.07%, 1/09/04 - 1/16/04 .................................. 150,000,000 149,945,756 a HBOS Treasury Services, 1.07% - 1.10%, 2/24/04 - 3/29/04 ........................... 146,600,000 146,256,749 a Internationale Ned. U.S. Funding Corp., 1.08% - 1.10%, 2/03/04 - 5/12/04 ................................................................. 145,000,000 144,740,080 a Merrill Lynch & Co Inc., 1.04%, 1/28/04 - 1/30/04 .................................. 150,000,000 149,878,667 a Nestle Capital Corp., 1.05%, 2/24/04 ............................................... 50,000,000 49,921,250 a Pfizer Inc., 1.05%, 1/06/04 - 1/07/04 .............................................. 72,000,000 71,988,462 a Procter & Gamble Co., 1.05%, 2/09/04 ............................................... 50,000,000 49,943,125 a Province of British Columbia, 1.11%, 4/19/04 ....................................... 12,000,000 11,959,670 a Shell Finance (UK) PLC, 1.06% - 1.07%, 2/09/04 - 3/09/04 ........................... 136,300,000 136,060,161 a Societe Generale NA Inc., 1.075%, 3/15/04 - 3/17/04 ................................ 150,000,000 149,664,063 a Svenska Handelsbanken Inc., 1.07%, 2/11/04 ......................................... 50,000,000 49,939,069 a Toyota Motor Credit Corp., 1.05%, 1/23/04 - 3/11/04 ................................ 134,600,000 134,464,219 a Westdeutsche Landesbank, 1.065% - 1.08%, 1/09/04 - 3/11/04 ......................... 100,000,000 99,929,750 a Westpac Capital Corp., 1.07% - 1.115%, 2/10/04 - 4/20/04 ........................... 150,000,000 149,599,862 ---------------- TOTAL COMMERCIAL PAPER (COST $2,509,344,056) ....................................... 2,509,344,056 ----------------
Semiannual Report | 15 The Money Market Portfolios STATEMENT OF INVESTMENTS, DECEMBER 31, 2003 (UNAUDITED) (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------- THE MONEY MARKET PORTFOLIO PRINCIPAL AMOUNT VALUE - ---------------------------------------------------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY SECURITIES (COST $54,253,547) 1.0% FHLB, 1.07%, 12/23/04 .............................................................. $ 54,280,000 $ 54,253,547 ---------------- TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENTS (COST $4,767,703,018) .............................................................. 4,767,703,018 ---------------- REPURCHASE AGREEMENTS 17.1% b ABN AMRO Bank, NV, New York Branch, .90%, 1/02/04, (Maturity Value $365,018,250) ...................................................... 365,000,000 365,000,000 Collateralized by U.S. Government Agency Securities b Deutsche Bank Securities Inc., .80%, 1/02/04 (Maturity Value $107,954,798) ...................................................................... 107,950,000 107,950,000 Collateralized by U.S. Treasury Notes b Morgan Stanley & Co. Inc., .81%, 1/02/04 (Maturity Value $107,959,858) ...................................................................... 107,955,000 107,955,000 Collateralized by U.S. Treasury Notes b UBS Securities LLC, .85%, 1/02/04 (Maturity Value $365,017,236) .................... 365,000,000 365,000,000 Collateralized by U.S. Government Agency Securities ---------------- TOTAL REPURCHASE AGREEMENTS (COST $945,905,000) .................................... 945,905,000 ---------------- TOTAL INVESTMENTS (COST $5,713,608,018) 103.5% ..................................... 5,713,608,018 OTHER ASSETS, LESS LIABILITIES (3.5)% .............................................. (195,409,004) ---------------- NET ASSETS 100.0% .................................................................. $5,518,199,014 ================
aSecurities are traded on a discount basis; the rates shown are the discount rates at the time of purchase by the portfolio. bSee Note 1(b) regarding repurchase agreements. 16 | See notes to financial statements. | Semiannual Report The Money Market Portfolios FINANCIAL HIGHLIGHTS THE U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO
--------------------------------------------------------------------------- SIX MONTHS ENDED DECEMBER 31, 2003 YEAR ENDED JUNE 30, (UNAUDITED) 2003 2002 2001 2000 1999 --------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the period) Net asset value, beginning of period .............. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 --------------------------------------------------------------------------- Income from investment operations - net investment income ................................ .004 .013 .024 .056 .054 .049 Less distributions from net investment income ..... (.004) (.013) (.024) (.056) (.054) (.049) --------------------------------------------------------------------------- Net asset value, end of period .................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 =========================================================================== Total return a .................................... .44% 1.34% 2.43% 5.75% 5.48% 4.97% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's) ................. $184,898 $201,758 $226,676 $186,718 $221,993 $258,458 Ratios to average net assets: Expenses ......................................... .15% b .15% .15% .15% .15% .15% Expenses excluding waiver by affiliate ........... .16% b .16% .16% .16% .16% .15% Net investment income ............................ .87% b 1.34% 2.33% 5.63% 5.36% 4.84%
aTotal return is not annualized for periods less than one year. bAnnualized. Semiannual Report | See notes to financial statements. | 17 The Money Market Portfolios STATEMENT OF INVESTMENTS, DECEMBER 31, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------------- THE U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO PRINCIPAL AMOUNT VALUE - --------------------------------------------------------------------------------------------------------------------------- GOVERNMENT SECURITIES 29.3% U.S. Treasury Bill, 1/15/04 ........................................................... $ 5,000,000 $ 4,998,182 U.S. Treasury Bill, 4/22/04 ........................................................... 5,000,000 4,984,211 U.S. Treasury Bill, 5/06/04 ........................................................... 5,000,000 4,982,325 U.S. Treasury Bill, 5/13/04 ........................................................... 5,000,000 4,980,604 U.S. Treasury Bill, 5/27/04 ........................................................... 5,000,000 4,979,134 U.S. Treasury Note, 3.625%, 3/31/04 ................................................... 10,000,000 10,063,689 U.S. Treasury Note, 3.375%, 4/30/04 ................................................... 3,000,000 3,020,585 U.S. Treasury Note, 2.875%, 6/30/04 ................................................... 11,000,000 11,094,281 U.S. Treasury Note, 1.875%, 9/30/04 ................................................... 5,000,000 5,023,801 -------------- TOTAL GOVERNMENT SECURITIES (COST $54,126,812) ........................................ 54,126,812 -------------- REPURCHASE AGREEMENTS 70.6% a ABN AMRO Bank, N.V., New York Branch, .85%, 1/02/04 (Maturity Value $8,000,378) .......................................................... 8,000,000 8,000,000 Collateralized by U.S. Treasury Bonds a Banc of America Securities LLC, .77%, 1/02/04 (Maturity Value $8,000,342) .................................................................... 8,000,000 8,000,000 Collateralized by U.S. Treasury Bonds a Barclays Capital Inc., .83%, 1/02/04 (Maturity Value $8,000,369) ...................... 8,000,000 8,000,000 Collateralized by U.S. Treasury Notes a Bear, Stearns & Co. Inc., .80%, 1/02/04 (Maturity Value $8,000,356) ................... 8,000,000 8,000,000 Collateralized by U.S. Treasury Notes a Deutsche Bank Securities Inc., .80%, 1/02/04 (Maturity Value $33,331,481) ................................................................... 33,330,000 33,330,000 Collateralized by U.S. Treasury Notes a Dresdner Kleinwort Wasserstein Securities LLC, .83%, 1/02/04 (Maturity Value $8,000,369) .......................................................... 8,000,000 8,000,000 Collateralized by U.S. Treasury Bonds a Goldman, Sachs, & Co., .80%, 1/02/04 (Maturity Value $8,000,356) ...................... 8,000,000 8,000,000 Collateralized by U.S. Treasury Notes a Greenwich Capital Markets Inc., .83%, 1/02/04 (Maturity Value $8,000,369) .................................................................... 8,000,000 8,000,000 Collateralized by U.S. Treasury Notes a Morgan Stanley & Co. Inc., .81%, 1/02/04 (Maturity Value $33,336,500) ................................................................... 33,335,000 33,335,000 Collateralized by U.S. Treasury Notes a UBS Securities LLC, .83%, 1/02/04 (Maturity Value $8,000,369) ......................... 8,000,000 8,000,000 Collateralized by U.S. Treasury Notes -------------- TOTAL REPURCHASE AGREEMENTS (COST $130,665,000) ....................................... 130,665,000 -------------- TOTAL INVESTMENTS (COST $184,791,812) 99.9% ........................................... 184,791,812 OTHER ASSETS, LESS LIABILITIES .1% .................................................... 106,245 -------------- NET ASSETS 100.0% ..................................................................... $184,898,057 ==============
aSee Note 1(b) regarding repurchase agreements. 18 | See notes to financial statements. | Semiannual Report The Money Market Portfolios FINANCIAL STATEMENTS STATEMENTS OF ASSETS AND LIABILITIES December 31, 2003 (unaudited)
------------------------------ THE U.S. GOVERNMENT THE SECURITIES MONEY MARKET MONEY MARKET PORTFOLIO PORTFOLIO ------------------------------ Assets: Investments in securities, at value and cost ...... $4,767,703,018 $ 54,126,812 Repurchase agreements, at value and cost .......... 945,905,000 130,665,000 Cash .............................................. 7,568 1,953 Interest receivable ............................... 4,959,814 136,991 ------------------------------ Total assets ................................. 5,718,575,400 184,930,756 ------------------------------ Liabilities: Payables: Investment securities purchased .................. 199,737,643 -- Affiliates ....................................... 604,940 20,339 Professional fees ................................ 28,952 12,194 Other liabilities ................................. 4,851 166 ------------------------------ Total liabilities ............................ 200,376,386 32,699 ------------------------------ Net assets, at value ............................... $5,518,199,014 $184,898,057 ============================== Shares outstanding ................................. 5,518,199,014 184,898,057 ============================== Net asset value per share .......................... $1.00 $1.00 ==============================
Semiannual Report | See notes to financial statements. | 19 The Money Market Portfolios FINANCIAL STATEMENTS (CONTINUED) STATEMENTS OF OPERATIONS for the six months ended December 31, 2003 (unaudited)
----------------------------- THE U.S. GOVERNMENT THE SECURITIES MONEY MARKET MONEY MARKET PORTFOLIO PORTFOLIO ----------------------------- Investment income: Interest ................................................................. $28,081,749 $1,001,989 ----------------------------- Expenses: Management fees (Note 3) ................................................. 3,870,224 146,362 Custodian fees ........................................................... 26,180 1,114 Professional fees ........................................................ 25,843 10,414 Other .................................................................... 56,137 1,517 ----------------------------- Total expenses ...................................................... 3,978,384 159,407 Expenses waived by affiliate (Note 3) ............................... (108,026) (10,891) ----------------------------- Net expenses ....................................................... 3,870,358 148,516 ----------------------------- Net investment income ............................................. 24,211,391 853,473 ----------------------------- Net realized gain (loss) from investments ................................. -- 5,742 ----------------------------- Net increase (decrease) in net assets resulting from operations ........... $24,211,391 $ 859,215 =============================
20 | See notes to financial statements. | Semiannual Report The Money Market Portfolios FINANCIAL STATEMENTS (CONTINUED) STATEMENTS OF CHANGES IN NET ASSETS for the six months ended December 31, 2003 (unaudited) and the year ended June 30, 2003
--------------------------------------------------------------------- THE U.S. GOVERNMENT SECURITIES THE MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO --------------------------------------------------------------------- SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED DECEMBER 31, 2003 JUNE 30, 2003 DECEMBER 31, 2003 JUNE 30, 2003 --------------------------------------------------------------------- Increase (decrease) in net assets: Operations: Net investment income ................... $ 24,211,391 $ 73,176,506 $ 853,473 $ 2,883,855 Net realized gain (loss) from investments ....................... -- 19,063 5,742 -- --------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations .......... 24,211,391 73,195,569 859,215 2,883,855 Distributions to shareholders from net investment income ........................ (24,211,391) (73,195,569) a (859,215) b (2,883,855) Capital share transactions (Note 2) ................................ 186,999,301 597,003,871 (16,859,972) (24,918,467) --------------------------------------------------------------------- Net increase (decrease) in net assets ......................... 186,999,301 597,003,871 (16,859,972) (24,918,467) Net assets (there is no undistributed net investment income at beginning or end of period): Beginning of period ..................... 5,331,199,713 4,734,195,842 201,758,029 226,676,496 --------------------------------------------------------------------- End of period ........................... $5,518,199,014 $5,331,199,713 $184,898,057 $201,758,029 =====================================================================
aDistributions were increased by a net realized gain from investments of $19,063. bDistributions were increased by a net realized gain from investmentsof $5,742. Semiannual Report | See notes to financial statements. | 21 The Money Market Portfolios NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES The Money Market Portfolios (the Trust) is registered under the Investment Company Act of 1940 as a diversified, open-end investment company, consisting of two separate portfolios (the Portfolios). The shares of the Trust are issued in private placements and are exempt from registration under the Securities Act of 1933. The Portfolios seek to provide high current income consistent with preservation of capital and liquidity. The following summarizes the Portfolios' significant accounting policies. A. SECURITY VALUATION Securities are valued at amortized cost which approximates value. B. REPURCHASE AGREEMENTS The Portfolios may enter into repurchase agreements, which are accounted for as a loan by the Portfolios to the seller, collateralized by securities which are delivered to the Portfolios' custodian. The market value, including accrued interest, of the initial collateralization is required to be at least 102% of the dollar amount invested by the Portfolios, with the value of the underlying securities marked to market daily to maintain coverage of at least 100%. At December 31, 2003, 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. Discounts and premiums on securities purchased are amortized over the lives of the respective securities. 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 accounting principles generally accepted in the United States of America 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 | Semiannual Report The Money Market Portfolios NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) F. GUARANTEES AND INDEMNIFICATIONS Under the Trust's organizational documents, its officers and trustees are indemnified against certain liability arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust enters into contracts with service providers that contain general indemnification clauses. The Trust's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. However, based on experience, the Trust expects the risk of loss to be remote. 2. SHARES OF BENEFICIAL INTEREST At December 31, 2003, there were an unlimited number of shares authorized ($.01 par value). Transactions in the Portfolios' shares at $1.00 per share were as follows:
------------------------------------- THE U.S. GOVERNMENT THE SECURITIES MONEY MARKET MONEY MARKET PORTFOLIO PORTFOLIO ------------------------------------- Six months ended December 31, 2003 Shares sold ...................................................... $ 2,857,333,193 $ 80,579,932 Shares issued in reinvestment of distributions ................... 24,213,385 858,973 Shares redeemed .................................................. (2,694,547,277) (98,298,877) ------------------------------------- Net increase (decrease) .......................................... $ 186,999,301 $ (16,859,972) ===================================== Year ended June 30, 2003 Shares sold ...................................................... $ 6,279,565,500 $ 309,427,987 Shares issued in reinvestment of distributions ................... 73,193,516 2,884,175 Shares redeemed .................................................. (5,755,755,145) (337,230,629) ------------------------------------- Net increase (decrease) .......................................... $ 597,003,871 $ (24,918,467) =====================================
Semiannual Report | 23 The Money Market Portfolios NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 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 LLC (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. At December 31, 2003, the shares of The Money Market Portfolio were owned by the following funds:
------------------------------------ PERCENTAGE OF SHARES OUTSTANDING SHARES ------------------------------------ Institutional Fiduciary Trust - Money Market Portfolio .............................. 3,464,130,196 62.78% Franklin Money Fund ................................................................. 1,720,139,543 31.17% Institutional Fiduciary Trust - Franklin Cash Reserves Fund ......................... 213,907,784 3.88% Franklin Templeton Money Fund Trust - Franklin Templeton Money Fund ......................................................................... 120,021,491 2.17%
At December 31, 2003, the shares of The U.S. Government Securities Money Market Portfolio were owned by the following funds:
------------------------------------ PERCENTAGE OF SHARES OUTSTANDING SHARES ------------------------------------ Franklin Federal Money Fund ......................................................... 112,150,304 60.66% Institutional Fiduciary Trust - Franklin U.S. Government Securities Money Market Portfolio ............................................................. 72,747,753 39.34%
4. INCOME TAXES At December 31, 2003, the cost of investments for book and income tax purposes were the same. 24 | Semiannual Report The Money Market Portfolios NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 5. REGULATORY MATTERS On February 4, 2004, the Securities Division of the Office of the Secretary of the Commonwealth of Massachusetts filed an administrative complaint against Franklin Resources, Inc. and certain of its subsidiaries (the "Company"), alleging violations of the Massachusetts Uniform Securities Act. The complaint arises from activity that occurred in 2001 during which time an officer of a Company subsidiary was negotiating an agreement with an investor relating to investments in a mutual fund and a hedge fund. The Company, in addition to other entities within Franklin Templeton Investments, has been named in shareholder class actions related to the matter described above. The Company believes that the claims made in the lawsuit are without merit and it intends to defend vigorously against the allegations. The Company and the funds may be named in similar civil actions related to the matter described above. In addition, as part of ongoing investigations by the U.S. Securities and Exchange Commission (the "SEC"), the U.S. Attorney for the Northern District of California, the New York Attorney General, the California Attorney General, the U.S. Attorney for the District of Massachusetts, the Florida Department of Financial Services, and the Commissioner of Securities and the Attorney General of the State of West Virginia, relating to certain practices in the mutual fund industry, including late trading, market timing and sales compensation arrangements, the Company and its subsidiaries, as well as certain current or former executives and employees of the Company, have received requests for information and/or subpoenas to testify or produce documents. The Company and its current employees are providing documents and information in response to these requests and subpoenas. In addition, the Company has responded to requests for similar kinds of information from regulatory authorities in some of the foreign countries where the Company conducts its global asset management business. The Staff of the SEC has informed the Company that it intends to recommend that the Commission authorize an action against the funds' investment adviser and a senior executive officer relating to the frequent trading issues that are the subject of the SEC's investigation. These issues were previously disclosed as being under investigation by government authorities and the subject of an internal inquiry by the Company in its Annual Report on Form 10-K and on its public website. The Company currently is in discussions with the SEC Staff in an effort to resolve the issues raised in their investigation. Such discussions are preliminary and the funds' management has been advised that the Company cannot predict the likelihood of whether those discussions will result in a settlement and, if so, the terms of such settlement. The impact, if any, of these matters on the funds is uncertain at this time. If the Company finds that it bears responsibility for any unlawful or improper conduct, it has committed to making the funds or their shareholders whole, as appropriate. Semiannual Report | 25 Franklin Money Fund PROXY VOTING POLICIES AND PROCEDURES The Fund has established Proxy Voting Policies and Procedures ("Policies") that the Fund uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Fund's complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at 1-954/847-2268 or by sending a written request to: Franklin Templeton Companies, LLC, 500 East Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy Group. 26 | Semiannual Report This page intentionally left blank. This page intentionally left blank. Literature Request For a brochure and prospectus, which contains more complete information, including charges and expenses, call Franklin Templeton Investments 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, we may monitor, record and access telephone calls to or from our service departments. These calls can be identified by the presence of a regular beeping tone. FRANKLIN TEMPLETON INVESTMENTS INTERNATIONAL Mutual European Fund Templeton China World Fund Templeton Developing Markets Trust Templeton Foreign Fund Templeton Foreign Smaller Companies Fund Templeton International (Ex EM) Fund GLOBAL Franklin Global Aggressive Growth Fund Franklin Global Growth Fund Mutual Discovery Fund Templeton Capital Accumulator Fund Templeton Global Long-Short Fund Templeton Global Opportunities Trust Templeton Global Smaller Companies Fund Templeton Growth Fund Templeton World Fund GROWTH Franklin Aggressive Growth Fund Franklin Capital Growth Fund Franklin Flex Cap Growth Fund Franklin Small-Mid Cap Growth Fund Franklin Small Cap Growth Fund II 1 VALUE Franklin Balance Sheet Investment Fund 2 Franklin Equity Income Fund Franklin Large Cap Value Fund Franklin MicroCap Value Fund 3 Franklin Small Cap Value Fund Mutual Beacon Fund Mutual Qualified Fund Mutual Recovery Fund 4 Mutual Shares Fund BLEND Franklin Blue Chip Fund Franklin Convertible Securities Fund Franklin Growth Fund Franklin Rising Dividends Fund Franklin U.S. Long-Short Fund 5 SECTOR Franklin Biotechnology Discovery Fund Franklin DynaTech Fund Franklin Global Communications Fund Franklin Global Health Care Fund Franklin Gold and Precious Metals Fund Franklin Natural Resources Fund Franklin Real Estate Securities Fund Franklin Utilities Fund Franklin Technology Fund Mutual Financial Services Fund ASSET ALLOCATION Franklin Templeton Corefolio Allocation Fund Franklin Templeton Founding Funds Allocation Fund TARGET FUNDS Franklin Templeton Conservative Target Fund Franklin Templeton Growth Target Fund Franklin Templeton Moderate Target Fund INCOME Franklin Adjustable U.S. Government Securities Fund 6 Franklin's AGE High Income Fund Franklin Federal Money Fund 6, 7 Franklin Floating Rate Daily Access Fund Franklin Floating Rate Trust 4 Franklin Income Fund Franklin Money Fund 6, 7 Franklin Short-Intermediate U.S. Government Securities Fund 6 Franklin Strategic Income Fund Franklin Strategic Mortgage Portfolio 6 Franklin Templeton Hard Currency Fund Franklin Total Return Fund Franklin U.S. Government Securities Fund 6 Templeton Global Bond Fund TAX-FREE INCOME 8 NATIONAL FUNDS Double Tax-Free Income Fund Federal Tax-Free Income Fund High Yield Tax-Free Income Fund Insured Tax-Free Income Fund 9 Tax-Exempt Money Fund 6, 7 LIMITED-TERM FUNDS California Limited-Term Tax-Free Income Fund Federal Limited-Term Tax-Free Income Fund New York Limited-Term Tax-Free Income Fund INTERMEDIATE-TERM FUNDS California Intermediate-Term Tax-Free Income Fund Federal Intermediate-Term Tax-Free Income Fund New York Intermediate-Term Tax-Free Income Fund STATE-SPECIFIC 8 Alabama Arizona California 10 Colorado Connecticut Florida 10 Georgia Kentucky Louisiana Maryland Massachusetts 9 Michigan 9 Minnesota 9 Missouri New Jersey New York 10 North Carolina Ohio 9 Oregon Pennsylvania Tennessee Virginia INSURANCE FUNDS Franklin Templeton Variable Insurance Products Trust 11 1. The fund is closed to new investors. Existing shareholders can continue adding to their accounts. 2. The fund is only open to existing shareholders as well as select retirement plans. 3. Effective June 30, 2003, the fund reopened to all new investors. 4. The fund is a continuously offered, closed-end fund. Shares may be purchased daily; there is no daily redemption. However, each quarter, pending board approval, the fund will authorize the repurchase of 5%-25% of the outstanding number of shares. Investors may tender all or a portion of their shares during the tender period. 5. Upon reaching approximately $350 million in assets, the fund intends to close to all investors. 6. An investment in the fund is neither insured nor guaranteed by the U.S. government or by any other entity or institution. 7. No assurance exists that the fund's $1.00 per share price will be maintained. It is possible to lose money by investing in the fund. 8. For investors subject to the alternative minimum tax, a small portion of these dividends may be taxable. Distributions of capital gains are generally taxable. 9. Portfolio of insured municipal securities. 10. These funds are available in two or more variations, including long-term portfolios, portfolios of insured securities, a high-yield portfolio (CA) and money market portfolios (CA and NY). 11. The funds of the Franklin Templeton Variable Insurance Products Trust are generally available only through insurance company variable contracts. 11/03 Not part of the annual report [LOGO OMITTED] FRANKLIN(R) TEMPLETON(R) INVESTMENTS One Franklin Parkway San Mateo, CA 94403-1906 WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL? Eligible shareholders can sign up for eDelivery at franklintempleton.com. See inside for details. SEMIANNUAL REPORT AND SHAREHOLDER LETTER FRANKLIN MONEY FUND INVESTMENT MANAGER Franklin Advisers, Inc. DISTRIBUTOR Franklin Templeton Distributors, Inc. 1-800/DIAL BEN(R) franklintempleton.com SHAREHOLDER SERVICES 1-800/632-2301 This report must be preceded or accompanied by the current Franklin Money Fund prospectus, which contains more complete information, including charges, expenses and risks. 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. 111 S2003 02/04 ITEM 2. CODE OF ETHICS. (A) THE REGISTRANT HAS ADOPTED A CODE OF ETHICS THAT APPLIES TO ITS PRINCIPAL EXECUTIVE OFFICERS AND PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER. (C) N/A (D) N/A (F) PURSUANT TO ITEM 10(A), THE REGISTRANT IS ATTACHING AS AN EXHIBIT A COPY OF ITS CODE OF ETHICS THAT APPLIES TO ITS PRINCIPAL EXECUTIVE OFFICERS FINANCIAL AND ACCOUNTING OFFICER. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (A)(1) THE REGISTRANT HAS AN AUDIT COMMITTEE FINANCIAL EXPERT SERVING ON ITS AUDIT COMMITTEE. (2) THE AUDIT COMMITTEE FINANCIAL EXPERT IS FRANK W.T. LAHAYE, AND HE IS "INDEPENDENT" AS DEFINED UNDER THE RELEVANT SECURITIES AND EXCHANGE COMMISSION RULES AND RELEASES. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. N/A ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. N/A ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. N/A ITEM 9. CONTROLS AND PROCEDURES. (a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Registrant maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Registrant's filings under the Securities Exchange Act of 1934 and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant's management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant's management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Within 90 days prior to the filing date of this Shareholder Report on Form N-CSR, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant's management, including the Registrant's principal executive officer and the Registrant's principal financial officer, of the effectiveness of the design and operation of the Registrant's disclosure controls and procedures. Based on such evaluation, the Registrant's principal executive officer and principal financial officer concluded that the Registrant's disclosure controls and procedures are effective. (B) CHANGES IN INTERNAL CONTROLS. There have been no significant changes in the Registrant's internal controls or in other factors that could significantly affect the internal controls subsequent to the date of their evaluation in connection with the preparation of this Shareholder Report on Form N-CSR. ITEM 10. EXHIBITS. (A) CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS. (B)(1) CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 OF JIMMY D. GAMBILL, CHIEF EXECUTIVE OFFICER - FINANCE AND ADMINISTRATION, AND KIMBERLEY H. MONASTERIO, CHIEF FINANCIAL OFFICER (B)(2) CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 OF JIMMY D. GAMBILL, CHIEF EXECUTIVE OFFICER - FINANCE AND ADMINISTRATION, AND KIMBERLEY H. MONASTERIO, CHIEF FINANCIAL OFFICER SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FRANKLIN MONEY FUND By /s/Jimmy D. Gambill Chief Executive Officer - Finance and Administration Date February 27, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By ____________________ Jimmy D. Gambill Chief Executive Officer - Finance and Administration Date February 27, 2004 By ____________________ Kimberley H. Monasterio Chief Financial Officer Date February 27, 2004 EX-99.CODE ETH 3 codeofethics.txt EXHIBIT (A) FRANKLIN TEMPLETON FUNDS CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS I. COVERED OFFICERS AND PURPOSE OF THE CODE This code of ethics (the "Code")1 is for the investment companies within the complex registered with the United States Securities & Exchange Commission ("SEC") (collectively, "FT Funds") applies to each FT Fund's Principal Executive Officers, Principal Financial Officer and Principal Accounting Officer (the "Covered Officers" each of whom are set forth in Exhibit A) for the purpose of promoting: o Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o Full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the SEC and in other public communications made by or on behalf of the FT Funds; o Compliance with applicable laws and governmental rules and regulations; o The prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and o Accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. II. COVERED OFFICERS SHOULD HANDLE ETHICALLY ACTUAL AND APPARENT CONFLICTS OF INTEREST OVERVIEW. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his service to, the FT Funds. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with the FT Funds. Certain conflicts of interest arise out of the relationships between Covered Officers and the FT Funds and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the FT Funds because of their status as "affiliated persons" of the FT Funds. The FT Funds' and the investment advisers' compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the FT Funds, the investment advisers and the fund administrator of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the FT Funds, for the adviser, the administrator, or for all three), be involved in establishing policies and implementing decisions that will have different effects on the adviser, administrator and the FT Funds. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the FT Funds, the adviser, and the administrator and is consistent with the performance by the Covered Officers of their duties as officers of the FT Funds. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the FT Funds' Boards of Directors ("Boards") that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the FT Funds. Each Covered Officer must: o Not use his personal influence or personal relationships improperly to influence investment decisions or financial reporting by the FT Funds whereby the Covered Officer would benefit personally to the detriment of the FT Funds; o Not cause the FT Funds to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit the FT Funds; o Not retaliate against any other Covered Officer or any employee of the Funds or their affiliated persons for reports of potential violations that are made in good faith; o Report at least annually the following affiliations or other relationships:/2 o all directorships for public companies and all companies that are required to file reports with the SEC; o any direct or indirect business relationship with any independent directors; o any direct or indirect business relationship with any independent public accounting firm; and o any direct or indirect interest in any transaction with any FT Fund that will benefit the officer (not including benefits derived from the advisory, sub-advisory, distribution or service agreements with affiliates of Franklin Resources). There are some conflict of interest situations that should always be approved in writing by FT's General Counsel or Deputy General Counsel, if material. Examples of these include/3: o Service as a director on the board of any public or private Company; o The receipt of any gifts in excess of $100; o The receipt of any entertainment from any Company with which the FT Funds has current or prospective business dealings unless such entertainment is business related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety. Notwithstanding the foregoing, the Covered Officers must obtain prior approval for any entertainment with a value in excess of $1000. o Any ownership interest in, or any consulting or employment relationship with, any of the FT Fund's service providers, other than an investment adviser, principal underwriter, administrator or any affiliated person thereof; o A direct or indirect financial interest in commissions, transaction charges or spreads paid by the FT Funds for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. FT's General Counsel or Deputy General Counsel will provide a report to the FT Funds Audit Committee of any approvals granted at the next regularly scheduled meeting. III. DISCLOSURE AND COMPLIANCE o Each Covered Officer should familiarize himself with the disclosure requirements generally applicable to the FT Funds; o Each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the FT Funds to others, whether within or outside the FT Funds, including to the FT Funds' directors and auditors, and to governmental regulators and self-regulatory organizations; o Each Covered Officer should, to the extent appropriate within his area of responsibility, consult with other officers and employees of the FT Funds, the adviser and the administrator with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the FT Funds file with, or submit to, the SEC and in other public communications made by the FT Funds; and o It is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. IV. REPORTING AND ACCOUNTABILITY Each Covered Officer must: o Upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board that he has received, read, and understands the Code (see Exhibit B); o Annually thereafter affirm to the Board that he has complied with the requirements of the Code; and o Notify FT's General Counsel or Deputy General Counsel promptly if he knows of any violation of this Code. Failure to do so is itself is a violation of this Code. FT's General Counsel and Deputy General Counsel are responsible for applying this Code to specific situations in which questions are presented under it and have the authority to interpret this Code in any particular situation.4 However, the Independent Directors of the respective fund will consider any approvals or waivers5 sought by any Chief Executive Officers of the Funds. The FT Funds will follow these procedures in investigating and enforcing this Code: o FT's General Counsel or Deputy General Counsel will take all appropriate action to investigate any potential violations reported to him; o If, after such investigation, FT's General Counsel or Deputy General Counsel believes that no violation has occurred, FT's General Counsel is not required to take any further action; o Any matter that FT's General Counsel or Deputy General Counsel believes is a violation will be reported to the Independent Directors of the appropriate FT Fund; o If the Independent Directors concur that a violation has occurred, it will inform and make a recommendation to the Board of the appropriate Funds, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer; o The Independent Directors will be responsible for granting waivers, as appropriate; and o Any changes to or waivers of this Code will, to the extent required, are disclosed as provided by SEC rules. V. OTHER POLICIES AND PROCEDURES This Code shall be the sole code of ethics adopted by the FT Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies there under. Insofar as other policies or procedures of the FT Funds, the FT Funds' advisers, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The FT Code of Ethics and Policy Statement On Insider Trading, adopted by the FT Funds, FT investment advisers and FT Fund's principal underwriter pursuant to Rule 17j-l under the Investment Company Act and more detailed policies and procedures set forth in FT's Employee Handbook are separate requirements applying to the Covered Officers and others, and are not part of this Code. VI. AMENDMENTS Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the FT Funds' Board including a majority of independent directors. VII. CONFIDENTIALITY All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the FT Funds' Board and their counsel. VIII. INTERNAL USE The Code is intended solely for the internal use by the FT Funds and does not constitute an admission, by or on behalf of any FT Funds, as to any fact, circumstance, or legal conclusion. EXHIBIT A Persons Covered by the Franklin Templeton Funds Code of Ethics FRANKLIN GROUP OF FUNDS Edward b. Jamieson, President and Chief Executive Officer - Investment Management Charles B. Johnson, President and Chief Executive Officer - Investment Management Gregory E. Johnson, President and Chief Executive Officer - Investment Management Rupert H. Johnson, Jr. President and Chief Executive Officer - Investment Management William J. Lippman, President and Chief Executive Officer - Investment Management Christopher Molumphy President and Chief Executive Officer - Investment Management Jimmy D. Gambill, Senior Vice President and Chief Executive Officer - Finance and Administration Kimberley H. Monasterio Treasurer & Chief Financial Officer FRANKLIN MUTUAL SERIES FUNDS David Winters Chairman of the Board, President, Chief Executive Officer-Investment Management Jimmy D. Gambill Senior Vice President and Chief Executive Officer- Finance and Administration Bruce S. Rosenberg Treasurer & Chief Financial Officer TEMPLETON GROUP OF FUNDS Jeffrey A. Everett President and Chief Executive Officer - Investment Management Martin L. Flanagan President and Chief Executive Officer - Investment Management Mark Mobius President and Chief Executive Officer - Investment Management Christopher J. Molumphy President and Chief Executive Officer - Investment Management Gary P. Motyl President and Chief Executive Officer - Investment Management Donald F. Reed President and Chief Executive Officer - Investment Management Jimmy D. Gambill, Senior Vice President and Chief Executive Officer - Finance and Administration Bruce S. Rosenberg Treasurer & Chief Financial Officer EXHIBIT B ACKNOWLEDGMENT FORM FRANKLIN TEMPLETON FUNDS CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS. INSTRUCTIONS: 1. Complete all sections of this form. 2. Print the completed form, sign, and date. 3. Submit completed form to FT's General Counsel within 10 days of becoming a Covered Officer and by January 30th of each subsequent year. INTER-OFFICE MAIL: Murray Simpson, General Counsel, Legal SM-920/2 TELEPHONE: (650) 312-7331 Fax: (650) 312-2221 E-MAIL: Simpson, Murray (internal address); mlsimpson@frk.com (external address) - ---------------------------------------------------------------------------- COVERED OFFICER'S NAME: - ---------------------------------------------------------------------------- TITLE: - ---------------------------------------------------------------------------- DEPARTMENT: - ---------------------------------------------------------------------------- LOCATION: - ---------------------------------------------------------------------------- CERTIFICATION FOR YEAR ENDING: - ---------------------------------------------------------------------------- TO: FT GENERAL COUNSEL, LEGAL DEPARTMENT I hereby acknowledge receipt of a copy of Franklin Templeton Fund's code of ethics for Principal Executive Officers and Senior Financial Officers (the "Code") that I have read and understand. I will comply fully with all provisions of the Code to the extent they apply to me during the period of my employment. I further understand and acknowledge that any violation of the Code may subject me to disciplinary action, including termination of employment -------------------- --------------------- Signature Date signed 1 Item 2 of Form N-CSR requires a registered management investment company to disclose annually whether, as of the end of the period covered by the report, it has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these officers are employed by the registrant or a third party. If the registrant has not adopted such a code of ethics, it must explain why it has not done so. The registrant must also: (1) file with the SEC a copy of the code as an exhibit to its annual report; (2) post the text of the code on its Internet website and disclose, in its most recent report on Form N-CSR, its Internet address and the fact that it has posted the code on its Internet website; or (3) undertake in its most recent report on Form N-CSR to provide to any person without charge, upon request, a copy of the code and explain the manner in which such request may be made. Disclosure is also required of amendments to, or waivers (including implicit waivers) from, a provision of the code in the registrant's annual report on Form N-CSR or on its website. If the registrant intends to satisfy the requirement to disclose amendments and waivers by posting such information on its website, it will be required to disclose its Internet address and this intention. 2 Reporting of these affiliations or other relationships may be made separately by completing the Directors and Officers Questionnaire and returning to FT's General Counsel or Deputy General Counsel. 3 Any activity or relationship that would present a conflict for a Covered Officer would likely also present a conflict for the Covered Officer if a member of the Covered Officer's immediate family engages in such an activity or has such a relationship. The Cover Person should also obtain written approval by FT's General Counsel in such situations. 4 FT's General Counsel and Deputy General Counsel are authorized to consult, as appropriate, with members of the Audit Committee, counsel to the FT Funds and counsel to the Independent Directors, and are encouraged to do so. 5 Item 2 of Form N-CSR defines "waiver" as "the approval by the registrant of a material departure from a provision of the code of ethics" and "implicit waiver," which must also be disclosed, as "the registrant's failure to take action within a reasonable period of time regarding a material departure from a provision of the code of ethics that has been made known to an executive officer" of the registrant. EX-99.CERT 4 fmfjimg302.txt EXHIBIT (B)(1) CERTIFICATIONS I, Jimmy D. Gambill, certify that: 1. I have reviewed this report on Form N-CSR of Franklin Money Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. February 25, 2004 /s/JIMMY D. GAMBILL Chief Executive Officer - Finance and Administration I, Kimberley H. Monasterio, certify that: 1. I have reviewed this report on Form N-CSR of Franklin Money Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. February 25, 2004 /S/KIMBERLEY H. MONASTERIO Treasurer and Chief Financial Officer EX-99.906 5 fmfjimg906.txt EXHIBIT (B)(2) CERTIFICATIONS CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURUSANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Jimmy D. Gambill, Chief Executive Officer of the Franklin Money Fund (the "Registrant"), certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: 1. The periodic report on Form N-CSR of the Registrant for the period ended 12/31/03 (the "Form N-CSR") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Dated: February 25, 2004 /S/JIMMY D. GAMBILL Chief Executive Officer - Finance and Administration A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Registrant and will be retained by Registrant and furnished to the Securities and Exchange Commission or its staff upon request. CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURUSANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Kimberley H. Monasterio, Chief Financial Officer of the Franklin Money Fund (the "Registrant"), certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: 1. The periodic report on Form N-CSR of the Registrant for the period ended 12/31/03 (the "Form N-CSR") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Dated: February 25, 2004 /S/KIMBERLEY H. MONASTERIO Treasurer and Chief Financial Officer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Registrant and will be retained by Registrant and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----