UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-03052
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FRANKLIN FEDERAL 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
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(Name and address of agent for service)

Registrant's telephone number, including area code: 650 312-2000
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Date of fiscal year end: 6/30
----

Date of reporting period: 6/30/05
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ITEM 1. REPORTS TO STOCKHOLDERS.

[GRAPHIC OMITTED]

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JUNE 30, 2005
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ANNUAL REPORT AND SHAREHOLDER LETTER INCOME
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WANT TO RECEIVE
THIS DOCUMENT
FASTER VIA EMAIL?
FRANKLIN
FEDERAL MONEY FUND Eligible shareholders can
sign up for eDelivery at
franklintempleton.com.
See inside for details.
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[LOGO](R)
FRANKLIN(R) TEMPLETON(R)
INVESTMENTS

FRANKLIN o Templeton o Mutual Series

FRANKLIN TEMPLETON INVESTMENTS

GAIN FROM OUR PERSPECTIVE(R)

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 recognized
leader in fixed income investing and also brings
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 offices in over 25 countries, Templeton offers
investors a truly global perspective.

MUTUAL SERIES. Founded in 1949, Mutual Series is
dedicated to a unique style of value investing,
searching aggressively for opportunity among what it
believes are undervalued stocks, as well as
arbitrage situations and distressed securities.

TRUE DIVERSIFICATION Because our management groups work independently and
adhere to different investment approaches, Franklin,
Templeton and Mutual Series funds typically have
distinct portfolios. That's why our funds can be
used to build truly diversified allocation plans
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, accurate and personal service that has
helped us become one of the most trusted names in
financial services.

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MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS
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[GRAPHIC OMITTED]

Not part of the annual report

CONTENTS

SHAREHOLDER LETTER ..................................................... 1

ANNUAL REPORT

Franklin Federal Money Fund ............................................ 3

Performance Summary .................................................... 5

Your Fund's Expenses ................................................... 6

Financial Highlights and Statement of Investments ...................... 8

Financial Statements ................................................... 10

Notes to Financial Statements .......................................... 13

Report of Independent Registered Public Accounting Firm ................ 18

Board Members and Officers ............................................. 19

The Money Market Portfolios ............................................ 24

Shareholder Information ................................................ 44

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SHAREHOLDER LETTER

Dear Shareholder:

During the 12 months under review, the U.S. economy continued to expand.
Corporate earnings were generally strong, and the labor market firmed with
June's unemployment rate at 5.0%. Oil prices remained a concern, as the
commodity reached record high levels. In response to inflationary pressures and
strong economic data, the Federal Reserve Board raised the federal funds target
rate to 3.25%; however, longer-term interest rates declined during the period.
In this environment, stock markets posted modest gains during the 12 months
under review, with the Dow Jones Industrial Average returning 0.66% and the
broader Standard & Poor's 500 Composite Index (S&P 500) returning 6.32%.(1)

In the enclosed annual report for Franklin Federal Money Fund, the portfolio
manager discusses market conditions, investment management decisions and Fund
performance during the period under review. You will also find performance data
and financial information. Please remember that all securities markets
fluctuate, as do mutual fund share prices.

(1) Source: Standard & Poor's Micropal. The Dow Jones Industrial Average is
price weighted based on the average market price of 30 blue chip stocks of
companies that are generally industry leaders. The S&P 500 consists of 500
stocks chosen for market size, liquidity and industry group
representation. Each stock's weight in the index is proportionate to its
market value. The S&P 500 is one of the most widely used benchmarks of
U.S. equity performance.

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EDELIVERY DETAILS

Log in at franklintempleton.com and click on eDelivery. Shareholders who are
registered at franklintempleton.com can receive these reports via email. Not all
accounts are eligible for eDelivery.

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NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
- -----------------------------------------------------

Not part of the annual report | 1

Also in the report is new information about the Board of Directors' approval of
the Fund's investment advisory contract in the past six months. It is designed
to give you an understanding of several factors considered before the Board
approved its contract with the Investment Manager. The disclosure is in the
"Shareholder Information" section beginning on page 44.

If you would like more frequent updates, FRANKLINTEMPLETON.COM provides daily
prices, monthly performance figures, portfolio holdings and other information.
You can also access your account, buy and sell shares, read timely commentary
from portfolio managers, and find helpful financial planning tools. We hope you
will take advantage of these online services.

We thank you for investing with Franklin Templeton, welcome your questions and
comments, and look forward to serving your investment needs in the years ahead.

Sincerely,

/s/ Charles B. Johnson

Charles B. Johnson
Chairman
Franklin Federal Money Fund

THIS LETTER REFLECTS OUR ANALYSIS AND OPINIONS AS OF JUNE 30, 2005. THE
INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET, COUNTRY,
INDUSTRY, SECURITY OR FUND. STATEMENTS OF FACT HAVE BEEN OBTAINED FROM SOURCES
CONSIDERED RELIABLE.

2 | Not part of the annual report

ANNUAL REPORT

FRANKLIN FEDERAL MONEY FUND

YOUR FUND'S GOAL AND MAIN INVESTMENTS: Franklin Federal 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
U.S. Government Securities Money Market Portfolio (the Portfolio), which has the
same investment goal. At present, the Portfolio's policy is to limit investments
to U.S. Treasury bills, notes and bonds (including stripped securities), and to
repurchase agreements collateralized by such securities.(1) The Fund attempts to
maintain a stable $1.00 share price.

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PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN WILL FLUCTUATE. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN. PLEASE VISIT FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236 FOR
MOST RECENT MONTH-END PERFORMANCE.
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AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY 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.
- --------------------------------------------------------------------------------

We are pleased to bring you Franklin Federal Money Fund's annual report for the
fiscal year ended June 30, 2005.

PERFORMANCE OVERVIEW

Rising short-term interest rates during the 12 months under review resulted in
an increase in the Fund's yields. In this environment, the Fund's seven-day
effective yield rose from 0.23% on June 30, 2004, to 2.11% on June 30, 2005.

ECONOMIC AND MARKET OVERVIEW

Overall domestic economic growth remained healthy during the reporting period.
Approximately two-thirds of U.S. gross domestic product (GDP) is generated by
consumer spending, and almost one-fifth by business spending. Since consumer
spending relies on consumers' ability to remain gainfully employed, many
analysts study the employment picture for indications of consumer spending. Over
the past year, nonfarm payroll data, as well as other indexes, showed growing
employment. This along with other factors helped consumer spending increase 6.7%
(not adjusted for inflation) in June 2005 compared with the same month a year
earlier, which supported U.S. economic growth.(2)

(1) Yield and share price are not guaranteed and will vary with market
conditions. U.S. government securities owned by the Portfolio or held
under repurchase agreement, but not shares of the Portfolio, are
guaranteed by the U.S. government, its agencies or instrumentalities.

(2) Source: Bureau of Economic Analysis.

THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND NAMES OF ALL
PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF INVESTMENTS (SOI). THE
SOI BEGINS ON PAGE 9.

Annual Report | 3

PORTFOLIO BREAKDOWN
6/30/05

- -------------------------------------------
% OF TOTAL
INVESTMENTS
- -------------------------------------------
Repurchase Agreements 81.5%
- -------------------------------------------
U.S. Treasury Notes 18.5%
- -------------------------------------------

Business spending also rose during the reporting period, contributing to
economic growth. Nonresidential investment spending rose in each of the past
year's four quarters, resulting in 9.2% growth for the year under review.(2)
Historically low interest rates continued to allow many companies easy access to
capital, and ample cash also helped some companies to support their spending
plans. Productivity continued to grow, which helped businesses generate more
goods and services without substantially raising inflation.

Energy prices rose significantly, as oil prices hit a record of $60.54 a barrel
on June 27.(3) Inflation remained relatively contained for the 12 months ended
June 30, 2005, as measured by the 2.0% rise for the core Consumer Price Index
(CPI), excluding volatile food and energy costs. This increase was below the
core CPI's 10-year average of 2.3%.(4) However, acknowledging the economy's
strength as well as potential inflationary pressure from high energy prices, the
Federal Reserve Board raised the federal funds target rate to 3.25% from 1.25%
during the 12-month period and indicated possible "measured" increases for the
second half of 2005. During the period, the yield curve flattened, as the
10-year U.S. Treasury yield fell while those of shorter-maturity Treasuries
rose. At period-end, the 10-year Treasury yielded 3.94%.

INVESTMENT STRATEGY

Consistent with our strategy, we invest, through the Portfolio, only in
marketable obligations issued or guaranteed by the U.S. government or with a
guarantee supported by the full faith and credit of the U.S. government,
repurchase agreements collateralized by these securities, and stripped
securities, which are separate income and principal components of a debt
security.(1) A repurchase agreement is an agreement to buy a security and then
sell it back after a short period of time (generally, less than seven days) at a
higher price. 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.

(3) Source: Bloomberg Energy/Commodity Service.

(4) Source: Bureau of Labor Statistics.

4 | Annual Report

MANAGER'S DISCUSSION

We continued to invest the Portfolio's assets in U.S. Treasury obligations and
repurchase agreements backed by U.S. Treasury securities.

We appreciate your support, welcome new shareholders and look forward to serving
your investment needs in the years ahead.

THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF JUNE 30, 2005, 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 ADVISER 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.

PERFORMANCE SUMMARY
(Symbol: FMNXX)
6/30/05

- -------------------------------------------
Seven-day effective yield* 2.11%
- -------------------------------------------
Seven-day annualized yield 2.09%
- -------------------------------------------

* The seven-day effective yield assumes compounding of daily dividends.

Annualized and effective yields are for the seven-day period ended 6/30/05. The
Fund's average weighted maturity was 13 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 Directors.

PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN WILL FLUCTUATE. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN. PLEASE VISIT FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236 FOR
MOST RECENT MONTH-END PERFORMANCE.

Annual Report | 5

YOUR FUND'S EXPENSES

As a Fund shareholder, you can incur two types of costs:

o Transaction costs, including sales charges (loads) on Fund purchases and
redemption fees; and

o Ongoing Fund costs, including management fees, distribution and service
(12b-1) fees, and other Fund expenses. All mutual funds have ongoing
costs, sometimes referred to as operating expenses.

The following table shows ongoing costs of investing in the Fund and can help
you understand these costs and compare them with those of other mutual funds.
The table assumes a $1,000 investment held for the six months indicated.

ACTUAL FUND EXPENSES

The first line (Actual) for each share class listed in the table below provides
actual account values and expenses. The "Ending Account Value" is derived from
the Fund's actual return, which includes the effect of Fund expenses.

You can estimate the expenses you paid during the period, by following these
steps. OF COURSE, YOUR ACCOUNT VALUE AND EXPENSES WILL DIFFER FROM THOSE IN THIS
ILLUSTRATION:

1. Divide your account value by $1,000.
IF AN ACCOUNT HAD AN $8,600 VALUE, THEN $8,600 / $1,000 = 8.6.

2. Multiply the result by the number under the heading "Expenses Paid During
Period."
IF EXPENSES PAID DURING PERIOD WERE $7.50, THEN 8.6 X $7.50 = $64.50.

In this illustration, the estimated expenses paid this period are $64.50.

HYPOTHETICAL EXAMPLE FOR COMPARISON WITH OTHER FUNDS

Information in the second line (Hypothetical) for each class in the table can
help you compare ongoing costs of investing in the Fund with those of other
mutual funds. This information may not be used to estimate the actual ending
account balance or expenses you paid during the period. The hypothetical "Ending
Account Value" is based on the actual expense ratio for each class and an
assumed 5% annual rate of return before expenses, which does not represent the
Fund's actual return. The figure under the heading "Expenses Paid During Period"
shows the hypothetical expenses your account would have incurred under this
scenario. You can compare this figure with the 5% hypothetical examples that
appear in shareholder reports of other funds.

6 | Annual Report

YOUR FUND'S EXPENSES (CONTINUED)

PLEASE NOTE THAT EXPENSES SHOWN IN THE TABLE ARE MEANT TO HIGHLIGHT ONGOING
COSTS AND DO NOT REFLECT ANY TRANSACTION COSTS, SUCH AS SALES CHARGES OR
REDEMPTION FEES. Therefore, the second line for each class is useful in
comparing ongoing costs only, and will not help you compare total costs of
owning different funds. In addition, if transaction costs were included, your
total costs would have been higher. Please refer to the Fund prospectus for
additional information on operating expenses.

- ---------------------------------------------------------------------------------------------------------
BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING
VALUE 12/31/04 VALUE 6/30/05 PERIOD* 12/31/04-6/30/05
- ---------------------------------------------------------------------------------------------------------

Actual $1,000 $1,009.10 $4.03
- ---------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,020.78 $4.06
- ---------------------------------------------------------------------------------------------------------

* Expenses are equal to the annualized expense ratio, net of expense waivers, of
0.81%, which includes the expenses incurred by the Portfolio, multiplied by the
average account value over the period, multiplied by 181/365 to reflect the
one-half year period.

Annual Report | 7

FRANKLIN FEDERAL MONEY FUND

FINANCIAL HIGHLIGHTS

------------------------------------------------------------------
YEAR ENDED JUNE 30,
2005 2004 2003 2002 2001
------------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)

Net asset value, beginning of year ............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------------------------------------------------------------
Income from net investment operations - net investment income . 0.013 0.002 0.007 0.018 0.050

Less distributions from net investment income ................. (0.013) (0.002) (0.007) (0.018) (0.050)
------------------------------------------------------------------
Net asset value, end of year .................................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==================================================================

Total return(a) ............................................... 1.31% 0.22% 0.70% 1.79% 5.08%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of year (000's) ............................... $ 110,655 $ 117,623 $ 125,130 $ 141,058 $ 132,916

Ratios to average net assets:

Expenses(b) .................................................. 0.83% 0.82% 0.81% 0.78% 0.80%

Expenses net of waiver and payments by affiliate(b) .......... 0.81% 0.81% 0.80% 0.77% 0.79%

Net investment income ........................................ 1.31% 0.21% 0.70% 1.74% 5.01%

(a) Total return does not reflect the contingent deferred sales charge.

(b) The expense ratio includes the Fund's share of the Portfolio's allocated
expenses.

8 | See notes to financial statements. | Annual Report

FRANKLIN FEDERAL MONEY FUND

STATEMENT OF INVESTMENTS, JUNE 30, 2005

- ---------------------------------------------------------------------------------------------------------------------------------
SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------------------

MUTUAL FUND (COST $110,761,398) 100.1%
The U.S. Government Securities Money Market Portfolio (Note 1) ......................... 110,761,398 $ 110,761,398
----------------

OTHER ASSETS, LESS LIABILITIES (0.1)% .................................................. (106,695)
----------------
NET ASSETS 100.0% ...................................................................... $ 110,654,703
================

Annual Report | See notes to financial statements. | 9

FRANKLIN FEDERAL MONEY FUND

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
June 30, 2005

Assets:
Investment in Portfolio, at value and cost ................... $110,761,398
Receivable from capital shares sold .......................... 168,044
------------
Total assets ............................................ 110,929,442
------------
Liabilities:
Payables:
Capital shares redeemed ..................................... 207,591
Affiliates .................................................. 49,885
Distributions to shareholders ............................... 17
Other liabilities ............................................ 17,246
------------
Total liabilities ....................................... 274,739
------------
Net assets, at value .......................................... $110,654,703
============
Shares outstanding ............................................ 110,654,703
============
Net asset value per share(a)................................... $ 1.00
============

(a) Redemption price is equal to net asset value less any applicable
contingent deferred sales charge.

10 | See notes to financial statements. | Annual Report

FRANKLIN FEDERAL MONEY FUND

FINANCIAL STATEMENTS (CONTINUED)

STATEMENT OF OPERATIONS
for the year ended June 30, 2005

Investment income:
Dividends from Portfolio (Note 1) ............................ $ 2,240,711
------------
Expenses:
Administrative fees (Note 3a) ................................ 501,304
Transfer agent fees (Note 3c) ................................ 158,070
Reports to shareholders ...................................... 26,740
Registration and filing fees ................................. 36,212
Professional fees ............................................ 17,251
Directors' fees and expenses ................................. 5,840
Other ........................................................ 5,682
------------
Total expenses .......................................... 751,099
------------
Net investment income ................................. 1,489,612
------------
Net increase (decrease) in net assets resulting from
operations .................................................. $ 1,489,612
============

Annual Report | See notes to financial statements. | 11

FRANKLIN FEDERAL MONEY FUND

FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF CHANGES IN NET ASSETS

-----------------------------------
YEAR ENDED JUNE 30,
2005 2004
-----------------------------------

Increase (decrease) in net assets:
Net investment income from operations .................................................... $ 1,489,612 $ 252,211
Distributions to shareholders from net investment income ................................. (1,489,612) (252,211)
Capital share transactions (Note 2)....................................................... (6,967,885) (7,507,776)
-----------------------------------
Net increase (decrease) in net assets ............................................... (6,967,885) (7,507,776)
Net assets (there is no undistributed net investment income at beginning or end of year):
Beginning of year ........................................................................ 117,622,588 125,130,364
-----------------------------------
End of year .............................................................................. $ 110,654,703 $ 117,622,588
===================================

12 | See notes to financial statements. | Annual Report

FRANKLIN FEDERAL MONEY FUND

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Franklin Federal Money Fund (the Fund) is registered under the Investment
Company Act of 1940 as a diversified, open-end investment company.

The Fund invests substantially all of its assets in The U.S. Government
Securities Money Market Portfolio (the Portfolio), which is registered under the
Investment Company Act of 1940 as a diversified, open-end investment company.
The accounting policies of the Portfolio, including the Portfolio's security
valuation policies, will directly affect the recorded value of the Fund's
investment in the Portfolio. 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 closing net asset value of the Portfolio. As of June 30, 2005, the Fund owns
100% of the Portfolio.

B. INCOME TAXES

No provision has been made for U.S. income taxes because the Fund's policy is to
continue to qualify as a regulated investment company under Subchapter M of the
Internal Revenue Code and to distribute substantially all of its taxable income.
Fund distributions to shareholders are determined on an income tax basis and may
differ from net investment income and realized gains for financial reporting
purposes.

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 received from the Portfolio are normally
declared daily. Such distributions are reinvested in additional shares of the
Fund.

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.

Annual Report | 13

FRANKLIN FEDERAL MONEY FUND

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

E. GUARANTEES AND INDEMNIFICATIONS

Under the Fund's organizational documents, its officers and directors are
indemnified by the Fund against certain liabilities 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.

2. CAPITAL STOCK

At June 30, 2005, there were 5 billion shares authorized (no par value).
Transactions in the Fund's shares at $1.00 per share were as follows:

-----------------------------
YEAR ENDED JUNE 30,
2005 2004
-----------------------------
Shares sold .................................... $ 98,860,390 $ 139,768,352
Shares issued in reinvestment of distributions . 1,485,088 256,330
Shares redeemed ................................ (107,313,363) (147,532,458)
-----------------------------
Net increase (decrease) ........................ $ (6,967,885) $ (7,507,776)
=============================

3. TRANSACTIONS WITH AFFILIATES

Franklin Resources, Inc. is the holding company for various subsidiaries that
together are referred to as Franklin Templeton Investments. Certain officers and
directors of the Fund are also officers and/or directors of the Portfolio and of
the following subsidiaries:

- ------------------------------------------------------------------------------------------
SUBSIDIARY AFFILIATION
- ------------------------------------------------------------------------------------------

Franklin Advisers, Inc. (Advisers) Administrative manager
Franklin Templeton Distributors, Inc. (Distributors) Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services) Transfer agent

A. ADMINISTRATIVE FEES

The Fund pays an administrative fee to Advisers based on the Fund's average
daily net assets as follows:

- --------------------------------------------------------------------------------
ANNUALIZED FEE RATE NET ASSETS
- --------------------------------------------------------------------------------
0.455% First $100 million
0.330% Over $100 million, up to and including $250 million
0.280% In excess of $250 million

14 | Annual Report

FRANKLIN FEDERAL MONEY FUND

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. TRANSACTIONS WITH AFFILIATES (CONTINUED)

B. SALES CHARGES/UNDERWRITING AGREEMENTS

Distributors has advised the Fund of the following commission transactions
related to the sales and redemptions of the Fund's shares for the year:

Contingent deferred sales charges retained .................... $638

C. TRANSFER AGENT FEES

The Fund paid transfer agent fees of $158,070, of which $115,890 was retained by
Investor Services.

4. INCOME TAXES

The tax character of distributions paid during the years ended June 30, 2005 and
2004, was as follows:

-----------------------------
2005 2004
-----------------------------
Distributions paid from - ordinary income ...... $ 1,489,612 $ 252,211

At June 30, 2005, the cost of investments and undistributed ordinary income for
income tax purposes were as follows.

Cost of investments............................. $ 110,761,398
=============

Undistributed ordinary income .................. $ 17
=============

5. REGULATORY MATTERS

INVESTIGATIONS AND SETTLEMENTS

As part of various investigations by a number of federal, state, and foreign
regulators and governmental entities, including the Securities and Exchange
Commission ("SEC"), the California Attorney General's Office ("CAGO"), and the
National Association of Securities Dealers, Inc. ("NASD"), relating to certain
practices in the mutual fund industry, including late trading, market timing and
marketing support payments to securities dealers who sell fund shares, Franklin
Resources, Inc. and certain of its subsidiaries (as used in this section,
together, the "Company"), as well as certain current or former executives and
employees of the Company, provided documents and information in response to
subpoenas and/or requests for documents, information and/or testimony. Beginning
in August 2004, the Company entered into settlements with certain of the
regulators and a governmental entity investigating the mutual fund industry
practices noted above. The Company believes that settlement of each of the
matters is in the best interest of the Company and shareholders of the Franklin,
Templeton, and Mutual Series mutual funds (the "funds").

Annual Report | 15

FRANKLIN FEDERAL MONEY FUND

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. REGULATORY MATTERS (CONTINUED)

INVESTIGATIONS AND SETTLEMENTS (CONTINUED)

Two of the settlement agreements, those with the SEC and the CAGO concerning
marketing support payments, provide that the distribution of settlement monies
are to be made to the relevant funds, not to individual shareholders. The CAGO
has approved the distribution plan pertaining to the distribution of the monies
owed under the CAGO settlement agreement and, in accordance with the terms and
conditions of that settlement, the monies were disbursed to the participating
funds. The Fund did not participate in the CAGO settlement. The SEC has not yet
approved the distribution plan pertaining to the SEC settlement. When approved,
disbursements of settlement monies under the SEC's settlement will be made
promptly in accordance with the terms and conditions of that order.

OTHER LEGAL PROCEEDINGS

On April 12, 2005, the Attorney General of West Virginia filed a complaint in
the Circuit Court of Marshall County, West Virginia against a number of
companies engaged in the mutual fund industry, including Franklin Resources,
Inc. and its subsidiary, Franklin Advisers, Inc., and certain other parties
alleging violations of the West Virginia Consumer Credit and Protection Act and
seeking, among other things, civil penalties and attorneys' fees and costs.
Defendants have since removed the matter to the United States District Court for
the Northern District of West Virginia. To the extent applicable to the Company,
the complaint arises from activity that occurred in 2001 and duplicates, in
whole or in part, the allegations asserted in the February 4, 2004 Massachusetts
Administrative Complaint concerning one instance of market timing (the
"Administrative Complaint") and the SEC's findings regarding market timing in
its August 2, 2004 Order (the "SEC Order"), both of which matters were
previously reported.

The Company, in addition to certain Franklin, Templeton, and Mutual Series
mutual funds, and certain current and former officers, employees, and directors
have been named in multiple lawsuits in different courts alleging violations of
various federal securities and state laws and seeking, among other relief,
monetary damages, restitution, removal of fund trustees, directors, advisers,
administrators, and distributors, rescission of management contracts and 12b-1
plans, and/or attorneys' fees and costs. Specifically, the lawsuits claim breach
of duty with respect to alleged arrangements to permit market timing and/or late
trading activity, or breach of duty with respect to the valuation of the
portfolio securities of certain Templeton funds managed by Franklin Resources,
Inc. subsidiaries, allegedly resulting in market timing activity. The majority
of these lawsuits duplicate, in whole or in part, the allegations asserted in
the Administrative Complaint and the SEC's findings regarding market timing in
the SEC Order. The lawsuits are styled as class actions, or derivative actions
on behalf of either the named funds or Franklin Resources, Inc.

16 | Annual Report

FRANKLIN FEDERAL MONEY FUND

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. REGULATORY MATTERS (CONTINUED)

OTHER LEGAL PROCEEDINGS (CONTINUED)

The Company, in addition to certain Franklin, Templeton, and Mutual Series
mutual funds, and certain current and former officers, employees, and directors
have been named in multiple lawsuits alleging violations of various securities
laws and pendent state law claims relating to the disclosure of marketing
support payments and/or payment of allegedly excessive commissions and/or
advisory or distribution fees, and seeking, among other relief, monetary
damages, restitution, rescission of advisory contracts, including recovery of
all fees paid pursuant to those contracts, an accounting of all monies paid to
the named advisers, declaratory relief, injunctive relief, and/or attorneys'
fees and costs. These lawsuits are styled as class actions or derivative actions
brought on behalf of the named funds.

The Company and fund management strongly believe that the claims made in each of
the lawsuits described above are without merit and intends to defend against
them vigorously. The Company cannot predict with certainty the eventual outcome
of these lawsuits, nor whether they will have a material negative impact on the
Company. Public trust and confidence are critical to the Company's business and
any material loss of investor and/or client confidence could result in a
significant decline in assets under management by the Company, which would have
an adverse effect on future financial results. If it is determined that the
Company bears responsibility for any unlawful or inappropriate conduct that
caused losses to the Fund, it is committed to making the Fund or its
shareholders whole, as appropriate. The Company is committed to taking all
appropriate actions to protect the interests of its funds' shareholders.

Annual Report | 17

FRANKLIN FEDERAL MONEY FUND

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF FRANKLIN FEDERAL MONEY FUND

In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Franklin Federal Money Fund (the
"Fund") at June 30, 2005, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then ended
and the financial highlights for each of the five years in the period then
ended, in conformity with accounting principles generally accepted in the United
States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California
August 10, 2005

18 | Annual Report

FRANKLIN FEDERAL MONEY FUND

BOARD MEMBERS AND OFFICERS

The name, year of birth and address of the officers and board members, as well
as their affiliations, positions held with the Fund, principal occupations
during the past five years and number of portfolios overseen in the Franklin
Templeton Investments fund complex are shown below. Each board member will serve
until that person's successor is elected and qualified.

INDEPENDENT BOARD MEMBERS

- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------

HARRIS J. ASHTON (1932) Director Since 1982 142 Director, Bar-S Foods
One Franklin Parkway (meat packing company).
San Mateo, CA 94403-1906
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; and FORMERLY, Director, RBC Holdings, Inc. (bank holding company) (until 2002); and President, Chief
Executive Officer and Chairman of the Board, General Host Corporation (nursery and craft centers) (until 1998).
- ------------------------------------------------------------------------------------------------------------------------------------
ROBERT F. CARLSON (1928) Director Since 1998 51 None
One Franklin Parkway
San Mateo, CA 94403-1906
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, senior member and past President, Board of Administration, California Public Employees Retirement Systems (CALPERS);
and FORMERLY, member and Chairman of the Board, Sutter Community Hospitals; member, Corporate Board, Blue Shield of California; and
Chief Counsel, California Department of Transportation.
- ------------------------------------------------------------------------------------------------------------------------------------
S. JOSEPH FORTUNATO (1932) Director Since 1989 143 None
One Franklin Parkway
San Mateo, CA 94403-1906
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Attorney; and FORMERLY, member of the law firm of Pitney, Hardin, Kipp & Szuch (until 2002) (Consultant (2003)).
- ------------------------------------------------------------------------------------------------------------------------------------
FRANK W.T. LAHAYE (1929) Director Since 1980 116 Director, The California Center for
One Franklin Parkway Land Recycling (redevelopment).
San Mateo, CA 94403-1906
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
General Partner, Las Olas L.P. (Asset Management); and FORMERLY, Chairman, Peregrine Venture Management Company (venture capital).
- ------------------------------------------------------------------------------------------------------------------------------------

Annual Report | 19

GORDON S. MACKLIN (1928) Director Since 1992 142 Director, Martek Biosciences
One Franklin Parkway Corporation, MedImmune, Inc.
San Mateo, CA 94403-1906 (biotechnology), and Overstock.com
(Internet services); and FORMERLY,
Director, MCI Communication
Corporation (subsequently known as
MCI WorldCom, Inc. and WorldCom,
Inc.) (communications services)
(1988-2002), White Mountains
Insurance Group, Ltd. (holding
company) (1987-2004) and Spacehab,
Inc. (aerospace services) (1994-2003).
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; and FORMERLY, Deputy Chairman, White Mountains Insurance Group, Ltd. (holding company) (2001-2004);
Chairman, White River Corporation (financial services) (1993-1998) and Hambrecht & Quist Group (investment banking) (1987-1992); and
President, National Association of Securities Dealers, Inc. (1970-1987).
- ------------------------------------------------------------------------------------------------------------------------------------

INTERESTED BOARD MEMBERS AND OFFICERS

**CHARLES B. JOHNSON (1933) Director and Director since 142 None
One Franklin Parkway Chairman of 1980 and
San Mateo, CA 94403-1906 the Board Chairman of the
Board since 1993
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman of the Board, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President, Franklin Templeton
Distributors, Inc.; Director, Fiduciary Trust Company International; and officer and/or director or trustee, as the case may be, of
some of the other subsidiaries of Franklin Resources, Inc. and of 44 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
**RUPERT H. JOHNSON, JR. Director and Director since 126 None
(1940) One Franklin Parkway President and 1980, President
San Mateo, CA 94403-1906 Chief since 1993 and
Executive Chief Executive
Officer - Officer -
Investment Investment
Management Management
since 2002
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and Director, Franklin
Templeton Distributors, Inc.; Director, Franklin Advisers, Inc.; Senior Vice President, Franklin Advisory Services, LLC; and officer
and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 47 of the
investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------

20 | Annual Report

**WILLIAM J. LIPPMAN (1925) Director Since 1994 19 None
One Parker Plaza, 9th Floor
Fort Lee, NJ 07024-2920
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Templeton Portfolio Advisors, Inc.; President, Franklin Advisory Services, LLC; and officer and/or
director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of seven of the
investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
HARMON E. BURNS (1945) Vice President Since 1986 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and Director, Franklin
Templeton Distributors, Inc.; Executive Vice President, Franklin Advisers, Inc.; and officer and/or director or trustee, as the case
may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 47 of the investment companies in Franklin Templeton
Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
JAMES M. DAVIS (1952) Chief Since 2004 Not Applicable Not Applicable
One Franklin Parkway Compliance
San Mateo, CA 94403-1906 Officer
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, Global Compliance, Franklin Resources, Inc.; officer of 49 of the investment companies in Franklin Templeton Investments;
and FORMERLY, Director of Compliance, Franklin Resources, Inc. (1994-2001).
- ------------------------------------------------------------------------------------------------------------------------------------
LAURA FERGERSON (1962) Treasurer Since 2004 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Officer of 33 of the investment companies in Franklin Templeton Investments; and FORMERLY, Director and member of Audit and
Valuation Committees, Runkel Funds, Inc. (2003-2004); Assistant Treasurer of most of the investment companies in Franklin Templeton
Investments (1997-2003); and Vice President, Franklin Templeton Services, LLC (1997-2003).
- ------------------------------------------------------------------------------------------------------------------------------------
MARTIN L. FLANAGAN (1960) Vice President Since 1995 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Co-President and Chief Executive Officer, Franklin Resources, Inc.; Senior Vice President and Chief Financial Officer, Franklin
Mutual Advisers, LLC; Executive Vice President, Chief Financial Officer and Director, Templeton Worldwide, Inc.; Executive Vice
President and Chief Operating Officer, Templeton Investment Counsel, LLC; President and Director, Franklin Advisers, Inc.; Executive
Vice President, Franklin Templeton Investor Services, LLC; Chief Financial Officer, Franklin Advisory Services, LLC; Chairman,
Franklin Templeton Services, LLC; and officer and/or director or trustee, as the case may be, of some of the other subsidiaries of
Franklin Resources, Inc. and of 47 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------

Annual Report | 21

JIMMY D. GAMBILL (1947) Senior Vice Since 2002 Not Applicable Not Applicable
500 East Broward Blvd. President and
Suite 2100 Fort Chief
Lauderdale, FL 33394-3091 Executive
Officer -
Finance and
Administration
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Templeton Services, LLC; Senior Vice President, Templeton Worldwide, Inc.; and officer of 49 of the investment
companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
DAVID P. GOSS (1947) Vice President Since 2000 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Resources, Inc.; officer and director of one of the subsidiaries of Franklin Resources,
Inc.; officer of 49 of the investment companies in Franklin Templeton Investments; and FORMERLY, President, Chief Executive Officer
and Director, Property Resources Equity Trust (until 1999) and Franklin Select Realty Trust (until 2000).
- ------------------------------------------------------------------------------------------------------------------------------------
BARBARA J. GREEN (1947) Vice President Since 2000 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Deputy General Counsel and Secretary, Franklin Resources, Inc.; Secretary and Senior Vice President, Templeton
Worldwide, Inc.; Secretary, Franklin Advisers, Inc., Franklin Advisory Services, LLC, Franklin Investment Advisory Services, LLC,
Franklin Mutual Advisers, LLC, Franklin Templeton Alternative Strategies, Inc., Franklin Templeton Investor Services, LLC, Franklin
Templeton Services, LLC, Franklin Templeton Distributors, Inc., Templeton Investment Counsel, LLC, and Templeton/Franklin Investment
Services, Inc.; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 49 of the investment companies in
Franklin Templeton Investments; and FORMERLY, Deputy Director, Division of Investment Management, Executive Assistant and Senior
Advisor to the Chairman, Counselor to the Chairman, Special Counsel and Attorney Fellow, U.S. Securities and Exchange Commission
(1986-1995); Attorney, Rogers & Wells (until 1986); and Judicial Clerk, U.S. District Court (District of Massachusetts) (until
1979).
- ------------------------------------------------------------------------------------------------------------------------------------
MICHAEL O. MAGDOL (1937) Vice President Since 2002 Not Applicable Not Applicable
600 Fifth Avenue - AML
Rockefeller Center Compliance
New York, NY 10020-2302
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Chief Banking Officer and Director, Fiduciary Trust Company International; Director, FTI Banque, Arch Chemicals, Inc.
and Lingnan Foundation; and officer and/or director, as the case may be, of some of the other subsidiaries of Franklin Resources,
Inc. and of 46 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------

22 | Annual Report

MURRAY L. SIMPSON (1937) Vice President Since 2000 Not Applicable Not Applicable
One Franklin Parkway and Secretary
San Mateo, CA 94403-1906
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Executive Vice President and General Counsel, Franklin Resources, Inc.; officer and/or director, as the case may be, of some of the
subsidiaries of Franklin Resources, Inc. and of 49 of the investment companies in Franklin Templeton Investments; and FORMERLY,
Chief Executive Officer and Managing Director, Templeton Franklin Investment Services (Asia) Limited (until 2000); and Director,
Templeton Asset Management Ltd. (until 1999).
- ------------------------------------------------------------------------------------------------------------------------------------
GALEN G. VETTER (1951) Chief Since 2004 Not Applicable Not Applicable
500 East Broward Blvd. Financial
Suite 2100 Officer
Fort Lauderdale,
FL 33394-3091
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Templeton Services, LLC; officer of 49 of the investment companies in Franklin Templeton
Investments; and FORMERLY, Managing Director, RSM McGladrey, Inc.; and Partner, McGladrey & Pullen, LLP.
- ------------------------------------------------------------------------------------------------------------------------------------

* We base the number of portfolios on each separate series of the U.S.
registered investment companies within the Franklin Templeton Investments fund
complex. These portfolios have a common investment adviser or affiliated
investment advisers.

** Charles B. Johnson and Rupert H. Johnson, Jr. are considered to be interested
persons of the Fund under the federal securities laws due to their positions as
officers and directors and major shareholders of Franklin Resources, Inc.
(Resources), which is the parent company of the Fund's administrator and
distributor. William J. Lippman is considered to be an interested person of the
Fund under the federal securities laws due to his position as an officer of
Resources.

Note: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers.

THE SARBANES-OXLEY ACT OF 2002 AND RULES ADOPTED BY THE SECURITIES AND EXCHANGE
COMMISSION REQUIRE THE FUND TO DISCLOSE WHETHER THE FUND'S AUDIT COMMITTEE
INCLUDES AT LEAST ONE MEMBER WHO IS AN AUDIT COMMITTEE FINANCIAL EXPERT WITHIN
THE MEANING OF SUCH ACT AND RULES. THE FUND'S BOARD OF DIRECTORS HAS DETERMINED
THAT THERE IS AT LEAST ONE SUCH FINANCIAL EXPERT ON THE AUDIT COMMITTEE AND HAS
DESIGNATED FRANK W.T. LAHAYE AS ITS AUDIT COMMITTEE FINANCIAL EXPERT. THE BOARD
BELIEVES THAT MR. LAHAYE QUALIFIES AS SUCH AN EXPERT IN VIEW OF HIS EXTENSIVE
BUSINESS BACKGROUND AND EXPERIENCE, INCLUDING SERVICE AS PRESIDENT AND DIRECTOR
OF MCCORMICK SELPH ASSOCIATES FROM 1954 THROUGH 1965; DIRECTOR AND CHAIRMAN OF
TELEDYNE CANADA LTD. FROM 1966 THROUGH 1971; DIRECTOR AND CHAIRMAN OF
QUARTERDECK CORPORATION FROM 1982 THROUGH 1998; AND SERVICES AS A DIRECTOR OF
VARIOUS OTHER PUBLIC COMPANIES INCLUDING U.S. TELEPHONE INC. (1981-1984), FISHER
IMAGING INC. (1991-1998) AND DIGITAL TRANSMISSIONS SYSTEMS (1995-1999). IN
ADDITION, MR. LAHAYE SERVED FROM 1981 TO 2000 AS A DIRECTOR AND CHAIRMAN OF
PEREGRINE VENTURE MANAGEMENT CO., A VENTURE CAPITAL FIRM, AND HAS BEEN A MEMBER
AND CHAIRMAN OF THE FUND'S AUDIT COMMITTEE SINCE ITS INCEPTION. AS A RESULT OF
SUCH BACKGROUND AND EXPERIENCE, THE BOARD OF DIRECTORS BELIEVES THAT MR. LAHAYE
HAS ACQUIRED AN UNDERSTANDING OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND
FINANCIAL STATEMENTS, THE GENERAL APPLICATION OF SUCH PRINCIPLES IN CONNECTION
WITH THE ACCOUNTING ESTIMATES, ACCRUALS AND RESERVES, AND ANALYZING AND
EVALUATING FINANCIAL STATEMENTS THAT PRESENT A BREADTH AND LEVEL OF COMPLEXITY
OF ACCOUNTING ISSUES GENERALLY COMPARABLE TO THOSE OF THE FUND, AS WELL AS AN
UNDERSTANDING OF INTERNAL CONTROLS AND PROCEDURES FOR FINANCIAL REPORTING AND AN
UNDERSTANDING OF AUDIT COMMITTEE FUNCTIONS. MR. LAHAYE IS AN INDEPENDENT
DIRECTOR AS THAT TERM IS DEFINED UNDER THE RELEVANT SECURITIES AND EXCHANGE
COMMISSION RULES AND RELEASES.

THE STATEMENT OF ADDITIONAL INFORMATION (SAI) INCLUDES ADDITIONAL INFORMATION
ABOUT THE BOARD MEMBERS AND IS AVAILABLE, WITHOUT CHARGE, UPON REQUEST.
SHAREHOLDERS MAY CALL 1-800/DIAL BEN (1-800/342-5236) TO REQUEST THE SAI.

Annual Report | 23

THE MONEY MARKET PORTFOLIOS

FINANCIAL HIGHLIGHTS

THE MONEY MARKET PORTFOLIO

---------------------------------------------------------------------------
YEAR ENDED JUNE 30,
2005 2004 2003 2002 2001
---------------------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)

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

Income from investment operations -
net investment income .......................... 0.020 0.009 0.014 0.026 0.059

Less distributions from net investment income .... (0.020) (0.009) (0.014) (0.026) (0.059)
---------------------------------------------------------------------------
Net asset value, end of year ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
===========================================================================

Total return ..................................... 2.06% 0.94% 1.41% 2.63% 6.08%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of year (000's) .................. $ 5,676,479 $ 5,505,394 $ 5,331,200 $ 4,734,196 $ 4,490,919

Ratios to average net assets:

Expenses ........................................ 0.16% 0.16% 0.15% 0.16% 0.16%

Expenses net of waiver and payments by affiliate 0.16% 0.15% 0.15% 0.15% 0.15%

Net investment income ........................... 2.04% 0.93% 1.39% 2.56% 5.91%

24 | See notes to financial statements. | Annual Report

THE MONEY MARKET PORTFOLIOS

STATEMENT OF INVESTMENTS, JUNE 30, 2005

- --------------------------------------------------------------------------------------------------------------------------------
THE MONEY MARKET PORTFOLIO PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------------

CERTIFICATES OF DEPOSIT 40.5%
Abbey National North America, Stamford Branch, 3.06% - 3.29%, 7/11/05 - 8/24/05 .... $ 150,000,000 $ 150,001,903
Bank of Montreal, Chicago Branch, 3.04% - 3.21%, 7/15/05 - 8/22/05 ................. 150,000,000 150,000,718
Bank of Nova Scotia, Portland Branch, 3.15%, 8/05/05 - 8/08/05 ..................... 150,000,000 150,000,000
Banque Nationale de Paris, New York Branch, 2.255% - 3.265%, 8/16/05 - 8/24/05 ..... 150,000,000 149,999,154
Barclay's Bank PLC, New York Branch, 3.070% - 3.105%, 7/11/05 - 7/14/05 ............ 150,000,000 150,000,239
Calyon North America Inc., New York Branch, 3.155%, 8/03/05 - 8/04/05 .............. 150,000,000 150,000,000
Dexia Credit Local NY, New York Branch, 3.19%, 8/09/05 - 8/12/05 ................... 150,000,000 150,001,699
HBOS Treasury Services, New York Branch, 3.16%, 8/08/05 ............................ 50,000,000 50,000,262
Landesbank Hessen Thueringen Girozentrale, New York Branch, 3.01% - 3.08%,
7/08/05 - 7/14/05 ................................................................ 150,000,000 150,000,359
Lloyds Bank PLC, New York Branch, 3.17% - 3.29%, 8/08/05 - 8/26/05 ................. 150,000,000 150,001,795
Rabobank Nederland N.V., New York Branch, 3.15%, 8/10/05 ........................... 100,000,000 100,001,104
Royal Bank of Canada, New York Branch, 3.13%, 7/29/05 .............................. 75,000,000 75,000,290
Royal Bank of Scotland, New York Branch, 3.115%, 7/25/05 ........................... 100,000,000 100,000,662
Societe Generale North America, New York Branch, 3.04% - 3.10%, 7/01/05 - 7/19/05 .. 150,000,000 150,000,000
Svenska Handelsbanken, New York Branch, 3.120% - 3.185%, 7/28/05 - 8/11/05 ......... 150,000,000 150,001,408
UBS Finance Delaware LLC, Stamford Branch, 3.110% - 3.235%, 7/22/05 - 8/17/05 ...... 125,000,000 125,001,084
Westdeutsche Landesbank, New York Branch, 3.05%, 7/11/05 ........................... 50,000,000 50,000,000
Westpac Banking Corp., New York Branch, 3.245%, 7/26/05 ............................ 150,000,000 150,000,519
----------------
TOTAL CERTIFICATES OF DEPOSIT (COST $2,300,011,196)................................. 2,300,011,196
----------------
(a)COMMERCIAL PAPER 51.9%
ANZ (Delaware) Inc., 7/21/05 - 8/09/05 ............................................. 175,000,000 174,545,417
Commonwealth Bank of Australia, 7/18/05 - 8/22/05 .................................. 150,000,000 149,693,253
Danske Corp., 8/11/05 - 8/19/05 .................................................... 175,000,000 174,266,393
Depfa Bank PLC, 7/06/05 - 7/07/05 .................................................. 50,000,000 49,976,625
General Electric Capital Corp., 8/25/05 - 8/26/05 .................................. 150,000,000 149,250,750
Gillette Co., 7/01/05 .............................................................. 250,000,000 250,000,000
Goldman Sachs Group Inc., 7/18/05 - 7/20/05 ........................................ 150,000,000 149,759,999
HBOS Treasury Services, 8/15/05 - 8/16/05 .......................................... 100,000,000 99,601,243
ING U.S. Funding Corp., 7/07/05 - 8/23/05 .......................................... 150,000,000 149,606,708
Merrill Lynch & Co. Inc., 7/01/05 - 7/08/05 ........................................ 225,000,000 224,918,751
National Australia Funding Inc., 8/01/05 - 8/02/05 ................................. 150,000,000 149,583,938
Nestle Capital Corp., 7/05/05 - 7/06/05 ............................................ 175,000,000 174,935,729
Pepsico Inc., 8/23/05 .............................................................. 50,000,000 49,765,917
Procter & Gamble Co., 7/25/05 - 7/27/05 ............................................ 100,000,000 99,779,861
Royal Bank of Scotland PLC, 8/15/05 ................................................ 50,000,000 49,802,500
Shell Finance UK PLC, 7/18/05 - 7/20/05 ............................................ 50,000,000 49,923,750
Siemens Capital Corp., 8/12/05 ..................................................... 100,000,000 99,627,833
Toronto Dominion Holding USA, 7/18/05 - 7/22/05 .................................... 150,000,000 149,758,145
Total Capital SA, 8/17/05 - 8/22/05 ................................................ 150,000,000 149,343,913
Toyota Motor Credit Corp., 8/29/05 - 8/30/05 ....................................... 150,000,000 149,184,167
UBS AG Finance Delaware Inc, 7/01/05 ............................................... 100,000,000 100,000,000
Wal-Mart Stores Inc., 7/13/05 - 8/30/05 ............................................ 150,000,000 149,629,500
----------------
TOTAL COMMERCIAL PAPER (COST $2,942,954,392)........................................ 2,942,954,392
----------------

Annual Report | 25

THE MONEY MARKET PORTFOLIOS

STATEMENT OF INVESTMENTS, JUNE 30, 2005 (CONTINUED)

(a)U.S. GOVERNMENT AND AGENCY SECURITIES 0.5%
Federal Home Loan Bank, 7/01/05 .................................................... $ 12,915,000 $ 12,915,000
Federal Home Loan Mortgage Corp., 7/01/05 .......................................... 3,390,000 3,390,000
Federal National Mortgage Association, 7/01/05 ..................................... 9,090,000 9,090,000
----------------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES (COST $25,395,000)...................... 25,395,000
----------------
BANK NOTES (COST $150,003,105) 2.6%
Bank of America NA, 3.12%, 7/26/05 - 7/27/05 ....................................... 150,000,000 150,003,105
----------------
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENTS (COST $5,418,363,693)................ 5,418,363,693
----------------

(b)REPURCHASE AGREEMENTS 4.4%
Deutsche Bank Securities Inc., 2.94%, 7/01/05 (Maturity Value $85,006,942)
Collateralized by (a)U.S. Treasury Bills, 11/17/05 ............................... 85,000,000 85,000,000
Morgan Stanley & Co. Inc., 2.87%, 7/01/05 (Maturity Value $134,720,739)
Collateralized by U.S. Treasury Notes, 3.875% - 4.00%, 3/15/10 - 5/15/10;
and U.S. Treasury Bonds, 10.75%, 8/15/05 ......................................... 134,710,000 134,710,000
UBS Securities LLC, 3.05%, 7/01/05 (Maturity Value $30,002,542)
Collateralized by U.S. Government Agency Securities, 2.875%, 9/15/05 ............. 30,000,000 30,000,000
----------------
TOTAL REPURCHASE AGREEMENTS (COST $249,710,000)..................................... 249,710,000
----------------
TOTAL INVESTMENTS (COST $5,668,073,693) 99.9%....................................... 5,668,073,693
OTHER ASSETS, LESS LIABILITIES 0.1%................................................. 8,405,725
----------------
NET ASSETS 100.0%................................................................... $ 5,676,479,418
================

(a) A portion or all of the security is traded on a discount basis with no
stated coupon rate.

(b) See Note 1(b) regarding repurchase agreements.

26 | See notes to financial statements. | Annual Report

THE MONEY MARKET PORTFOLIOS

FINANCIAL HIGHLIGHTS

THE U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO

---------------------------------------------------------------------------
YEAR ENDED JUNE 30,
2005 2004 2003 2002 2001
---------------------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)

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

Income from investment operations - net
investment income .............................. 0.020 0.009 0.013 0.024 0.056

Less distributions from net investment income .... (0.020) (0.009) (0.013) (0.024) (0.056)
---------------------------------------------------------------------------
Net asset value, end of year ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
===========================================================================

Total return ..................................... 1.99% 0.87% 1.34% 2.43% 5.75%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of year (000's) .................. $ 110,761 $ 117,815 $ 201,758 $ 226,676 $ 186,718

Ratios to average net assets:

Expenses ........................................ 0.17% 0.16% 0.16% 0.16% 0.16%

Expenses net of waiver and payments by affiliate 0.15% 0.15% 0.15% 0.15% 0.15%

Net investment income ........................... 1.97% 0.87% 1.34% 2.33% 5.63%

Annual Report | See notes to financial statements. | 27

THE MONEY MARKET PORTFOLIOS

STATEMENT OF INVESTMENTS, JUNE 30, 2005

- --------------------------------------------------------------------------------------------------------------------------------
THE U.S. GOVERNMENT SECURITIES MONEY MARKET PORTFOLIO PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------------

(a)U.S. GOVERNMENT SECURITIES 20.2%
U.S. Treasury Bill, 7/15/05......................................................... $ 5,000,000 $ 4,993,904
U.S. Treasury Bill, 7/28/05......................................................... 2,500,000 2,495,078
U.S. Treasury Bill, 8/11/05......................................................... 2,500,000 2,491,786
U.S. Treasury Bill, 8/18/05......................................................... 2,500,000 2,490,783
U.S. Treasury Bill, 8/25/05......................................................... 2,500,000 2,488,710
U.S. Treasury Bill, 10/06/05........................................................ 2,500,000 2,479,556
U.S. Treasury Bill, 11/17/05........................................................ 2,500,000 2,469,449
U.S. Treasury Bill, 12/22/05........................................................ 2,500,000 2,461,152
----------------
TOTAL U.S. GOVERNMENT SECURITIES (COST $22,370,418)................................. 22,370,418
----------------

(b)REPURCHASE AGREEMENTS 88.8%
ABN AMRO Bank, N.V., New York Branch, 2.67%, 7/01/05 (Maturity Value $10,000,742)
Collateralized by U.S. Treasury Notes, 2.00%, 5/15/06............................. 10,000,000 10,000,000
Banc of America Securities LLC, 2.70%, 7/01/05 (Maturity Value $5,000,375)
Collateralized by U.S. Treasury Notes, 4.00%, 4/15/10............................. 5,000,000 5,000,000
Barclays Capital Inc., 2.85%, 7/01/05 (Maturity Value $5,000,396)
Collateralized by (a)U.S. Treasury Bills, 7/07/05................................. 5,000,000 5,000,000
Deutsche Bank Securities Inc., 2.94%, 7/01/05 (Maturity Value $19,161,565)
Collateralized by (a)U.S. Treasury Notes, 0.00 - 6.625%, 10/6/05 - 5/15/07........ 19,160,000 19,160,000
Goldman, Sachs & Co., 2.70%, 7/01/05 (Maturity Value $10,000,750)
Collateralized by U.S. Treasury Notes, 6.50%, 2/15/10............................. 10,000,000 10,000,000
Greenwich Capital Markets Inc., 2.85%, 7/01/05 (Maturity Value $15,001,188)
Collateralized by U.S. Treasury Notes, 2.50%, 10/31/06............................ 15,000,000 15,000,000
Morgan Stanley & Co., 2.87%, 7/01/05 (Maturity Value $19,166,528)
Collateralized by U.S. Treasury Notes, 10.75%, 8/15/05............................ 19,165,000 19,165,000
UBS Securities LLC, 2.85%, 7/01/05 (Maturity Value $15,001,188)
Collateralized by U.S. Treasury Notes, 3.375%, 10/15/09........................... 15,000,000 15,000,000
----------------
TOTAL REPURCHASE AGREEMENTS (COST $98,325,000)...................................... 98,325,000
----------------
TOTAL INVESTMENTS (COST $120,695,418) 109.0%........................................ 120,695,418
OTHER ASSETS, LESS LIABILITIES (9.0)%............................................... (9,934,020)
----------------
NET ASSETS 100.0%................................................................... $ 110,761,398
================

(a) A portion or all of the security is traded on a discount basis with no
stated coupon rate.

(b) See Note 1(b) regarding repurchase agreements.

28 | See notes to financial statements. | Annual Report

THE MONEY MARKET PORTFOLIOS

FINANCIAL STATEMENTS

STATEMENTS OF ASSETS AND LIABILITIES
June 30, 2005

-------------------------------
THE U.S.
GOVERNMENT
THE SECURITIES
MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO
-------------------------------

Assets:
Investments in securities, at amortized cost ................. $5,418,363,693 $ 22,370,418
Repurchase agreements, at value and cost ..................... 249,710,000 98,325,000
-------------------------------
Total investments ....................................... 5,668,073,693 120,695,418
Cash ......................................................... 3,914 1,355
Interest receivable .......................................... 9,161,968 7,730
-------------------------------
Total assets ............................................ 5,677,239,575 120,704,503
-------------------------------
Liabilities:
Payables:
Investments securities purchased ............................ -- 9,924,505
Affiliates .................................................. 704,700 7,925
Distributions to shareholders ............................... 7,233 62
Other liabilities ............................................ 48,224 10,613
-------------------------------
Total liabilities ....................................... 760,157 9,943,105
-------------------------------
Net assets, at value .......................................... $5,676,479,418 $ 110,761,398
===============================
Shares outstanding ............................................ 5,676,479,418 110,761,398
===============================
Net asset value per share ..................................... $ 1.00 $ 1.00
===============================

Annual Report | See notes to financial statements. | 29

THE MONEY MARKET PORTFOLIOS

FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF OPERATIONS
for the year ended June 30, 2005

-------------------------------
THE U.S.
GOVERNMENT
THE SECURITIES
MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO
-------------------------------

Investment income:
Interest ..................................................... $ 128,511,065 $ 2,410,476
-------------------------------
Expenses:
Management fees (Note 3a) .................................... 8,798,240 170,696
Custodian fees (Note 4) ...................................... 119,166 2,196
Reports to shareholders ...................................... 6,242 2,587
Professional fees ............................................ 56,499 14,348
Other ........................................................ 174,147 4,716
-------------------------------
Total expenses .......................................... 9,154,294 194,543
Expense reductions (Note 4) ............................. (18,760) (1,572)
Expenses waived/paid by affiliate (Note 3d) ............. -- (22,238)
-------------------------------
Net expenses ........................................... 9,135,534 170,733
-------------------------------
Net investment income ................................. 119,375,531 2,239,743
-------------------------------
Net realized gain (loss) from investments ..................... -- 190
-------------------------------
Net increase (decrease) in net assets resulting from operations $ 119,375,531 $ 2,239,933
===============================

30 | See notes to financial statements. | Annual Report

THE MONEY MARKET PORTFOLIOS

FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF CHANGES IN NET ASSETS

---------------------------------------------------------------------
THE U.S. GOVERNMENT SECURITIES
THE MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
---------------------------------------------------------------------
YEAR ENDED JUNE 30, YEAR ENDED JUNE 30,
2005 2004 2005 2004
---------------------------------------------------------------------

Increase (decrease) in net assets:
Operations:
Net investment income ............................... $ 119,375,531 $ 49,426,140 $ 2,239,743 $ 1,508,957
Net realized gain (loss) from investments ........... -- 3,825 190 5,742
---------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations .............................. 119,375,531 49,429,965 2,239,933 1,514,699
Distributions to shareholders from net
investment income .................................. (119,375,531) (49,429,965)(a) (2,239,933)(b) (1,514,699)(c)
Capital share transactions (Note 2) .................. 171,085,254 174,194,451 (7,053,156) (83,943,475)
---------------------------------------------------------------------
Net increase (decrease) in net assets ........... 171,085,254 174,194,451 (7,053,156) (83,943,475)
Net assets (there is no undistributed net investment
income at beginning or end of year):
Beginning of year ................................... 5,505,394,164 5,331,199,713 117,814,554 201,758,029
---------------------------------------------------------------------
End of year ......................................... $5,676,479,418 $5,505,394,164 $ 110,761,398 $ 117,814,554
=====================================================================

(a) Distributions were increased by a net realized gain from investments of
$3,825.

(b) Distributions were increased by a net realized gain from investments of
$190.

Annual Report | See notes to financial statements. | 31

THE MONEY MARKET PORTFOLIOS

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Money Market Portfolios (the Trust) is registered under the Investment
Company Act of 1940 as a diversified, open-end investment company, consisting of
two separate portfolios (the Portfolios). The shares of the Portfolios are
issued in private placements and are exempt from registration under the
Securities Act of 1933.

The following summarizes the Portfolios' significant accounting policies.

A. SECURITY VALUATION

Securities are valued at amortized cost which approximates market value. This
method involves valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any discount or premium. All security
valuation procedures are approved by the Portfolios' Board of Trustees.

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%.
Repurchase agreements are valued at cost. At June 30, 2005, all repurchase
agreements held by the Portfolios had been entered into on that date.

C. INCOME TAXES

No provision has been made for U.S. income taxes because each Portfolio's policy
is to continue to qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code and to distribute substantially all of its taxable
income. Portfolio distributions to shareholders are determined on an income tax
basis and may differ from net investment income and realized gains for financial
reporting purposes.

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 of the
Trust. Portfolio specific expenses are charged directly to the portfolio that
incurred the expense.

32 | Annual Report

THE MONEY MARKET PORTFOLIOS

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

E. ACCOUNTING ESTIMATES

F. GUARANTEES AND INDEMNIFICATIONS

Under the Trust's organizational documents, its officers and trustees are
indemnified by the Trust against certain liabilities 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 June 30, 2005, there were an unlimited number of shares authorized ($0.01 par
value). Transactions in the Portfolio's shares at $1.00 per share were as
follows:

---------------------------------
THE U.S.
GOVERNMENT
THE SECURITIES
MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO
---------------------------------

Year ended June 30, 2005
Shares sold .................................. $ 5,623,149,272 $ 52,184,664
Shares issued in reinvestment of distributions 119,380,707 2,240,711
Shares redeemed .............................. (5,571,444,725) (61,478,531)
---------------------------------
Net increase (decrease) ...................... $ 171,085,254 $ (7,053,156)
=================================
Year ended June 30, 2004
Shares sold .................................. $ 5,413,860,590 $ 145,540,988
Shares issued in reinvestment of distributions 49,424,401 1,513,783
Shares redeemed .............................. (5,289,090,540) (230,998,246)
---------------------------------
Net increase (decrease) ...................... $ 174,194,451 $ (83,943,475)
=================================

Annual Report | 33

THE MONEY MARKET PORTFOLIOS

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. TRANSACTIONS WITH AFFILIATES

Franklin Resources, Inc. is the holding company for various subsidiaries that
together are referred to as Franklin Templeton Investments. Certain officers and
trustees of the Portfolios are also officers and/or directors of the Franklin
Money Fund, the Institutional Fiduciary Trust, the Franklin Templeton Money Fund
Trust and the Franklin Federal Money Fund, and of the following subsidiaries:

- ------------------------------------------------------------------------------------
SUBSIDIARY AFFILIATION
- ------------------------------------------------------------------------------------

Franklin Advisers Inc. (Advisers) Investment manager
Franklin Templeton Investor Services LLC (Investor Services) Transfer agent

A. MANAGEMENT FEE

The Portfolios pay an investment management fee to Advisers of 0.15% per year of
the average daily net assets of each Portfolio.

B. TRANSFER AGENT FEES

Investor Services, under terms of an agreement, performs shareholder servicing
for the Portfolios and is not paid by the Portfolios for the services.

C. OTHER AFFILIATED TRANSACTIONS

At June 30, 2005, the shares of The Money Market Portfolio were owned by the
following funds:

----------------------------------
PERCENTAGE OF
SHARES OUTSTANDING SHARES
----------------------------------

Institutional Fiduciary Trust - Money Market Portfolio ....... 3,934,213,030 69.31%
Franklin Money Fund .......................................... 1,452,679,478 25.59%
Institutional Fiduciary Trust - Franklin Cash Reserves Fund... 191,755,157 3.38%
Franklin Templeton Money Fund Trust - Franklin Templeton
Money Fund .................................................. 97,831,753 1.72%

At June 30, 2005, the shares of The U.S. Government Securities Money Market
Portfolio were owned by the following fund:

----------------------------------
PERCENTAGE OF
SHARES OUTSTANDING SHARES
----------------------------------

Franklin Federal Money Fund ............................... 110,761,398 100.00%

D. VOLUNTARY WAIVER AND EXPENSE REIMBURSEMENTS

Advisers agreed in advance to voluntarily waive a portion of management fees for
The U.S. Government Securities Money Market Portfolio, as noted in the Statement
of Operations. Total expenses waived by Advisers are not subject to
reimbursement by the Portfolio subsequent to the Portfolio's fiscal year end.

34 | Annual Report

THE MONEY MARKET PORTFOLIOS

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4. EXPENSE OFFSET ARRANGEMENT

The Portfolios have entered into an arrangement with their custodian whereby
credits realized as a result of uninvested cash balances are used to reduce a
portion of the Portfolios' custodian expenses. During the year ended June 30,
2005, the custodian fees were reduced as noted in the Statement of Operations.

5. INCOME TAXES

The tax character of distributions paid during the years ended June 30, 2005 and
2004, was as follows:

----------------------------------------------------
THE U.S. GOVERNMENT
THE MONEY MARKET SECURITIES
PORTFOLIO MONEY MARKET PORTFOLIO
----------------------------------------------------
2005 2004 2005 2004
----------------------------------------------------

Distributions paid from -
ordinary income..................... $119,375,531 $49,429,965 $2,239,933 $1,514,699
====================================================

At June 30, 2005, the cost of investments and undistributed ordinary income for
income tax purposes were as follows:

------------------------------
THE U.S.
GOVERNMENT
THE SECURITIES
MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO
------------------------------
Cost of investments ................. $5,668,073,693 $ 120,695,418
------------------------------
Undistributed ordinary income ....... $ 7,233 $ 62
------------------------------

6. REGULATORY MATTERS

INVESTIGATIONS AND SETTLEMENTS

Annual Report | 35

THE MONEY MARKET PORTFOLIOS

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6. REGULATORY MATTERS (CONTINUED)

INVESTIGATIONS AND SETTLEMENTS (CONTINUED)

noted above. The Company believes that settlement of each of the matters is in
the best interest of the Company and shareholders of the Franklin, Templeton,
and Mutual Series mutual funds (the "funds").

Two of the settlement agreements, those with the SEC and the CAGO concerning
marketing support payments, provide that the distribution of settlement monies
are to be made to the relevant funds, not to individual shareholders. The CAGO
has approved the distribution plan pertaining to the distribution of the monies
owed under the CAGO settlement agreement and, in accordance with the terms and
conditions of that settlement, the monies were disbursed to the participating
funds. The Trust did not participate in the CAGO settlement. The SEC has not yet
approved the distribution plan pertaining to the SEC settlement. When approved,
disbursements of settlement monies under the SEC's settlement will be made
promptly in accordance with the terms and conditions of that order.

OTHER LEGAL PROCEEDINGS

36 | Annual Report

THE MONEY MARKET PORTFOLIOS

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6. REGULATORY MATTERS (CONTINUED)

OTHER LEGAL PROCEEDINGS (CONTINUED)

The Company, in addition to certain Franklin, Templeton, and Mutual Series
mutual funds, and certain current and former officers, employees, and directors
have been named in multiple lawsuits alleging violations of various securities
laws and pendent state law claims relating to the disclosure of marketing
support payments and/or payment of allegedly excessive commissions and/or
advisory or distribution fees, and seeking, among other relief, monetary
damages, restitution, rescission of advisory contracts, including recovery of
all fees paid pursuant to those contracts, an accounting of all monies paid to
the named advisers, declaratory relief, injunctive relief, and/or attorneys'
fees and costs. These lawsuits are styled as class actions or derivative actions
brought on behalf of the named funds.

The Company and fund management strongly believe that the claims made in each of
the lawsuits described above are without merit and intends to defend against
them vigorously. The Company cannot predict with certainty the eventual outcome
of these lawsuits, nor whether they will have a material negative impact on the
Company. Public trust and confidence are critical to the Company's business and
any material loss of investor and/or client confidence could result in a
significant decline in assets under management by the Company, which would have
an adverse effect on future financial results. If it is determined that the
Company bears responsibility for any unlawful or inappropriate conduct that
caused losses to the Trust, it is committed to making the Trust or its
shareholders whole, as appropriate. The Company is committed to taking all
appropriate actions to protect the interests of its funds' shareholders.

Annual Report | 37

THE MONEY MARKET PORTFOLIOS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF THE MONEY MARKET PORTFOLIOS:

In our opinion, the accompanying statements of assets and liabilities, including
the statements of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Money Market Portfolio and The
U.S. Government Securities Money Market Portfolio constituting The Money Market
Portfolios, (hereafter referred to as the "Funds") at June 30, 2005, the results
of each of their operations for the year then ended, the changes in each of
their net assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then ended, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Funds' management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at June 30, 2005 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.

PricewaterhouseCoopers LLP

San Francisco, California
August 10, 2005

38 | Annual Report

THE MONEY MARKET PORTFOLIOS

BOARD MEMBERS AND OFFICERS

INDEPENDENT BOARD MEMBERS

HARRIS J. ASHTON (1932) Trustee Since 1992 142 Director, Bar-S Foods (meat packing
One Franklin Parkway company).
San Mateo, CA 94403-1906
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; and FORMERLY, Director, RBC Holdings, Inc. (bank holding company) (until 2002); and President, Chief
Executive Officer and Chairman of the Board, General Host Corporation (nursery and craft centers) (until 1998).
- -----------------------------------------------------------------------------------------------------------------------------------
ROBERT F. CARLSON (1928) Trustee Since 1998 51 None
One Franklin Parkway
San Mateo, CA 94403-1906
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, senior member and past President, Board of Administration, California Public Employees Retirement Systems
(CALPERS); and FORMERLY, member and Chairman of the Board, Sutter Community Hospitals; member, Corporate Board, Blue Shield of
California; and Chief Counsel, California Department of Transportation.
- -----------------------------------------------------------------------------------------------------------------------------------
S. JOSEPH FORTUNATO (1932) Trustee Since 1992 143 None
One Franklin Parkway
San Mateo, CA 94403-1906
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Attorney; and FORMERLY, member of the law firm of Pitney, Hardin, Kipp & Szuch (until 2002) (Consultant (2003)).
- -----------------------------------------------------------------------------------------------------------------------------------
EDITH E. HOLIDAY (1952) Trustee Since June 2005 135 Director, Amerada Hess Corporation
One Franklin Parkway (exploration and refining of oil and
San Mateo, CA 94403-1906 gas), H.J. Heinz Company (processed
foods and allied products), RTI
International Metals, Inc. (manufac-
ture and distribution of titanium),
Canadian National Railway (railroad),
and White Mountains Insurance
Group, Ltd. (holding company).
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director or Trustee of various companies and trusts; and FORMERLY, Assistant to the President of the United States and Secretary of
the Cabinet (1990-1993); General Counsel to the United States Treasury Department (1989-1990); and Counselor to the Secretary and
Assistant Secretary for Public Affairs and Public Liaison-United States Treasury Department (1988-1989).
- -----------------------------------------------------------------------------------------------------------------------------------
FRANK W.T. LAHAYE (1929) Trustee Since 1992 116 Director, The California Center for
One Franklin Parkway Land Recycling (redevelopment).
San Mateo, CA 94403-1906
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
General Partner, Las Olas L.P. (Asset Management); and FORMERLY, Chairman, Peregrine Venture Management Company (venture capital).
- -----------------------------------------------------------------------------------------------------------------------------------

Annual Report | 39

GORDON S. MACKLIN (1928) Trustee Since 1992 142 Director, Martek Biosciences
One Franklin Parkway Corporation, MedImmune, Inc.
San Mateo, CA 94403-1906 (biotechnology), and Overstock.com
(Internet services); and FORMERLY,
Director, MCI Communication
Corporation (subsequently known as
MCI WorldCom, Inc. and WorldCom,
Inc.) (communications services)
(1988-2002), White Mountains
Insurance Group, Ltd. (holding com-
pany) (1987-2004) and Spacehab,
Inc. (aerospace services) (1994-2003).
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; and FORMERLY, Deputy Chairman, White Mountains Insurance Group, Ltd. (holding company) (2001-2004);
Chairman, White River Corporation (financial services) (1993-1998) and Hambrecht & Quist Group (investment banking) (1987-1992);
and President, National Association of Securities Dealers, Inc. (1970-1987).
- -----------------------------------------------------------------------------------------------------------------------------------

INTERESTED BOARD MEMBERS AND OFFICERS

- -----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- -----------------------------------------------------------------------------------------------------------------------------------
**CHARLES B. JOHNSON (1933) Trustee and Trustee since 142 None
One Franklin Parkway Chairman of 1992 and
San Mateo, CA 94403-1906 the Board Chairman of the
Board since 1993
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman of the Board, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President, Franklin Templeton
Distributors, Inc.; Director, Fiduciary Trust Company International; and officer and/or director or trustee, as the case may be, of
some of the other subsidiaries of Franklin Resources, Inc. and of 44 of the investment companies in Franklin Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------------------
**RUPERT H. JOHNSON, JR. (1940) Trustee and Trustee since 126 None
One Franklin Parkway President and 1992 and
San Mateo, CA 94403-1906 Chief President and
Executive Chief Executive
Officer - Officer -
Investment Investment
Management Management
since 2002
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and Director, Franklin
Templeton Distributors, Inc.; Director, Franklin Advisers, Inc.; Senior Vice President, Franklin Advisory Services, LLC; and
officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 47 of
the investment companies in Franklin Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------------------

40 | Annual Report

HARMON E. BURNS (1945) Vice President Since 1992 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and Director, Franklin
Templeton Distributors, Inc.; Executive Vice President, Franklin Advisers, Inc.; and officer and/or director or trustee, as the
case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 47 of the investment companies in Franklin
Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------------------
JAMES M. DAVIS (1952) Chief Since 2004 Not Applicable Not Applicable
One Franklin Parkway Compliance
San Mateo, CA 94403-1906 Officer
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, Global Compliance, Franklin Resources, Inc.; officer of 49 of the investment companies in Franklin Templeton Investments;
and FORMERLY, Director of Compliance, Franklin Resources, Inc. (1994-2001).
- -----------------------------------------------------------------------------------------------------------------------------------
LAURA FERGERSON (1962) Treasurer Since 2004 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Officer of 33 of the investment companies in Franklin Templeton Investments; and FORMERLY, Director and member of Audit and
Valuation Committees, Runkel Funds, Inc. (2003-2004); Assistant Treasurer of most of the investment companies in Franklin Templeton
Investments (1997-2003); and Vice President, Franklin Templeton Services, LLC (1997-2003).
- -----------------------------------------------------------------------------------------------------------------------------------
MARTIN L. FLANAGAN (1960) Vice President Since 1995 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Co-President and Chief Executive Officer, Franklin Resources, Inc.; Senior Vice President and Chief Financial Officer, Franklin
Mutual Advisers, LLC; Executive Vice President, Chief Financial Officer and Director, Templeton Worldwide, Inc.; Executive Vice
President and Chief Operating Officer, Templeton Investment Counsel, LLC; President and Director, Franklin Advisers, Inc.;
Executive Vice President, Franklin Templeton Investor Services, LLC; Chief Financial Officer, Franklin Advisory Services, LLC;
Chairman, Franklin Templeton Services, LLC; and officer and/or director or trustee, as the case may be, of some of the other
subsidiaries of Franklin Resources, Inc. and of 47 of the investment companies in Franklin Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------------------
JIMMY D. GAMBILL (1947) Senior Vice Since 2002 Not Applicable Not Applicable
500 East Broward Blvd. President and
Suite 2100 Chief
Fort Lauderdale, FL 33394-3091 Executive
Officer -
Finance and
Administration
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Templeton Services, LLC; Senior Vice President, Templeton Worldwide, Inc.; and officer of 49 of the investment
companies in Franklin Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------------------

Annual Report | 41

DAVID P. GOSS (1947) Vice President Since 2000 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Resources, Inc.; officer and director of one of the subsidiaries of Franklin Resources,
Inc.; officer of 49 of the investment companies in Franklin Templeton Investments; and formerly, President, Chief Executive Officer
and Director, Property Resources Equity Trust (until 1999) and Franklin Select Realty Trust (until 2000).
- -----------------------------------------------------------------------------------------------------------------------------------
BARBARA J. GREEN (1947) Vice President Since 2000 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Deputy General Counsel and Secretary, Franklin Resources, Inc.; Secretary and Senior Vice President, Templeton
Worldwide, Inc.; Secretary, Franklin Advisers, Inc., Franklin Advisory Services, LLC, Franklin Investment Advisory Services, LLC,
Franklin Mutual Advisers, LLC, Franklin Templeton Alternative Strategies, Inc., Franklin Templeton Investor Services, LLC, Franklin
Templeton Services, LLC, Franklin Templeton Distributors, Inc., Templeton Investment Counsel, LLC, and Templeton/Franklin
Investment Services, Inc.; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 49 of the investment
companies in Franklin Templeton Investments; and FORMERLY, Deputy Director, Division of Investment Management, Executive Assistant
and Senior Advisor to the Chairman, Counselor to the Chairman, Special Counsel and Attorney Fellow, U.S. Securities and Exchange
Commission (1986-1995); Attorney, Rogers & Wells (until 1986); and Judicial Clerk, U.S. District Court (District of Massachusetts)
(until 1979).
- -----------------------------------------------------------------------------------------------------------------------------------
MICHAEL O. MAGDOL (1937) Vice President Since 2002 Not Applicable Not Applicable
600 Fifth Avenue - AML
Rockefeller Center Compliance
New York, NY 10020-2302
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Chief Banking Officer and Director, Fiduciary Trust Company International; Director, FTI Banque, Arch Chemicals, Inc.
and Lingnan Foundation; and officer and/or director, as the case may be, of some of the other subsidiaries of Franklin Resources,
Inc. and of 46 of the investment companies in Franklin Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------------------
MURRAY L. SIMPSON (1937) Vice President Since 2000 Not Applicable Not Applicable
One Franklin Parkway and Secretary
San Mateo, CA 94403-1906
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Executive Vice President and General Counsel, Franklin Resources, Inc.; officer and/or director, as the case may be, of some of the
subsidiaries of Franklin Resources, Inc. and of 49 of the investment companies in Franklin Templeton Investments; and FORMERLY,
Chief Executive Officer and Managing Director, Templeton Franklin Investment Services (Asia) Limited (until 2000); and Director,
Templeton Asset Management Ltd. (until 1999).
- -----------------------------------------------------------------------------------------------------------------------------------

42 | Annual Report

GALEN G. VETTER (1951) Chief Financial Since 2004 Not Applicable Not Applicable
500 East Broward Blvd. Officer and
Suite 2100 Chief
Fort Lauderdale, FL 33394-3091 Accounting
Officer
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Templeton Services, LLC; officer of 49 of the investment companies in Franklin Templeton
Investments; and FORMERLY, Managing Director, RSM Mcgladrey, Inc.; and Partner, Mcgladrey & Pullen, LLP.
- -----------------------------------------------------------------------------------------------------------------------------------

** Charles B. Johnson and Rupert H. Johnson, Jr. are considered to be interested
persons of the Trust under the federal securities laws due to their positions as
officers and directors and major shareholders of Franklin Resources, Inc., which
is the parent company of the Trust's adviser and distributor.

Note: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers.

Annual Report | 43

FRANKLIN FEDERAL MONEY FUND

SHAREHOLDER INFORMATION

BOARD REVIEW OF INVESTMENT ADVISORY CONTRACT

At a meeting held February 28, 2005, the Board of Directors ("Board"), including
a majority of non-interested or independent Directors, approved renewal of the
investment advisory contract for the Fund. In reaching this decision, the Board
took into account information furnished throughout the year at regular Board
meetings, as well as information prepared specifically in connection with the
annual renewal review process. Information furnished and discussed throughout
the year included investment performance reports and related financial
information for the Fund, as well as periodic reports on shareholder services,
legal compliance, pricing, brokerage commissions and execution and other
services provided by the Investment Manager ("Manager") and its affiliates.
Information furnished specifically in connection with the renewal process
included a report for the Fund prepared by Lipper Financial Services ("Lipper"),
an independent organization, as well as a Fund profitability analysis report
prepared by management. The Lipper report compared the Fund's investment
performance and expenses with those of other mutual funds deemed comparable to
the Fund as selected by Lipper. The Fund profitability analysis report discussed
the profitability to Franklin Templeton Investments from its overall U.S. fund
operations, as well as on an individual fund-by-fund basis. Included with such
profitability analysis report was information on a fund-by-fund basis listing
portfolio managers and other accounts they manage, as well as information on
management fees charged by the Manager including management's explanation of
differences where relevant and a three-year expense analysis with an explanation
for any increase in expense ratios. Additional information accompanying such
report was a memorandum prepared by management describing enhancements to the
services provided to the Fund by the Franklin Templeton Investments
organization, as well as a memorandum relating to economies of scale.

In considering such materials, the independent Directors received assistance and
advice from and met separately with independent counsel. In approving
continuance of the investment advisory contract for the Fund, the Board,
including a majority of independent Directors, determined that the existing
management fee structure was fair and reasonable and that continuance of the
investment advisory contract was in the best interests of the Fund and its
shareholders. While attention was given to all information furnished, the
following discusses the primary factors relevant to the Board's decision.

NATURE, EXTENT AND QUALITY OF SERVICES. The Board was satisfied with the nature
and quality of the overall services provided by the Manager and its affiliates
to the Fund and its shareholders. In addition to investment performance and
expenses of the Fund discussed later, the Board's opinion was based, in part,
upon periodic reports furnished them showing that the investment policies and
restrictions for the Fund were consistently complied with as well as other
reports period- ically furnished the Board covering matters such as the
compliance of portfolio managers and other management personnel with the code of
ethics adopted throughout the Franklin Templeton fund complex, the adherence to
fair value pricing procedures established by the Board, and the accuracy of net
asset value calculations. The Board also noted the extent of benefits provided
Fund shareholders from being part of the Franklin Templeton family of funds,
including the right to exchange investments between the same class of funds
without a sales charge, the ability to reinvest Fund dividends

44 | Annual Report

FRANKLIN FEDERAL MONEY FUND

SHAREHOLDER INFORMATION (CONTINUED)

BOARD REVIEW OF INVESTMENT ADVISORY CONTRACT (CONTINUED)

into other funds and the right to combine holdings in other funds to obtain a
reduced sales charge. Favorable consideration was given to management's efforts
and expenditures in establishing back-up systems and recovery procedures to
function in the event of a natural disaster, it being noted by the Board that
such systems and procedures had functioned smoothly during the hurricanes and
blackout experienced last year in Florida. Other factors taken into account by
the Board were the Manager's best execution trading policies, as well as the
compliance procedures and qualifications of the Chief Compliance Officer
established in accordance with recently adopted SEC requirements. Consideration
was also given to the experience of the Fund's portfolio management team, the
number of accounts managed and general method of compensation. In this latter
respect, the Board noted that a primary factor in management's determination of
the amount of a portfolio manager's bonus compensation was the relative
investment performance of the funds he or she managed so as to be aligned with
the interests of Fund shareholders. The Board also took into account the
transfer agent and shareholder services provided Fund shareholders by an
affiliate of the Manager, noting continuing expenditures by management to
increase and improve the scope of such services, periodic favorable reports on
such service conducted by third parties such as Dalbar, and the firsthand
experience of the individual Directors who deal with the shareholder services
department in their capacities as shareholders in one or more of the various
Franklin Templeton funds.

INVESTMENT PERFORMANCE. The Board placed significant emphasis on the investment
performance of the Fund in view of its importance to shareholders. While
consideration was given to performance reports and discussions with portfolio
managers at Board meetings during the year, particular attention in assessing
such performance was given to the Lipper report furnished for the contract
renewal. The Lipper report prepared for the Fund showed its investment
performance for the year ended December 31, 2004, as well as the previous ten
years ended that date in comparison to a performance universe consisting of the
Fund and all retail U.S. Treasury money market funds as selected by Lipper. The
Lipper report showed that the Fund's total return for the one-year period, as
well as for the previous three-, five- and ten-year periods on an annualized
basis was in the second lowest quintile of such universe. In discussing this
comparative performance, management pointed out that the Fund followed a very
conservative approach and unlike some other funds within such universe, did not
invest in agency securities, which yield more than comparable Treasuries.
Management further pointed out that its total return was close to the median of
its expense universe, being only eight basis points below the median for the
annualized ten-year period as shown in the Lipper report. The Board found the
Fund's performance to be acceptable in view of such facts.

COMPARATIVE EXPENSES. Consideration was given to a comparative analysis of the
management fee and total expense ratios of the Fund compared with those of a
group of other funds selected by Lipper as its appropriate Lipper expense group
under the Lipper report. Prior to making such comparison, the Board relied upon
a survey showing that the scope of management advisory services covered under
the Fund's investment advisory contract was similar to those provided by fund
managers to other mutual fund groups that would be used as a basis of comparison
in the

Annual Report | 45

FRANKLIN FEDERAL MONEY FUND

SHAREHOLDER INFORMATION (CONTINUED)

BOARD REVIEW OF INVESTMENT ADVISORY CONTRACT (CONTINUED)

Lipper report. In reviewing comparative costs, emphasis was given to the Fund's
management fee in comparison with the effective management fee that would have
been charged by other funds within its Lipper expense group assuming they were
the same size as the Fund, as well as the actual total expenses of the Fund in
comparison with those of its Lipper expense group. The Lipper effective
management fee analysis includes administrative charges as being part of a
management fee. The results of such comparisons showed the Fund's effective
management fee rate to be higher than all but three of the twelve funds
constituting the Lipper expense group and its actual total expenses to be higher
than all but two funds within such group. In discussing such comparative
expenses, management pointed out that this Fund is not actively marketed and
largely serves as an alternative investment vehicle for shareholders of the
various Franklin/Templeton/Mutual Series Fund families and provides a number of
courtesy services to shareholders, including check writing and wiring
privileges. The Board found such comparative expenses to be acceptable, noting
that the Fund's effective management fee rate and actual total expenses were
within seven basis points and three basis points, respectively, of its expense
group's median as shown in the Lipper expense report.

MANAGEMENT PROFITABILITY. The Board also considered the level of profits
realized by the Manager and its affiliates in connection with the operation of
the Fund. In this respect, the Board reviewed the Fund profitability analysis
that addresses the overall profitability of Franklin Templeton's U.S. fund
business, as well as its profits in providing management and other services to
each of the individual funds. The Board also considered the extent to which the
Manager and its affiliates might derive ancillary benefits from fund operations,
including potential benefits resulting from allocation of fund brokerage and the
use of "soft" commission dollars to pay for research. Specific attention was
given to the methodology followed in allocating costs to the Fund, it being
recognized that allocation methodologies are inherently subjective and various
allocation methodologies may each be reasonable while producing different
results. In this respect, the Board noted that the cost allocation methodology
was consistent with that followed in profitability report presentations for the
Fund made in prior years and that it had engaged on a biennial basis the Fund's
independent accountants to perform certain procedures specified by the Board
solely for its purpose and use. It was also noted that legal costs and payments
incurred by Franklin Templeton in resolving various legal proceedings arising
from its U.S. fund operations had not been allocated to the Fund for purposes of
determining profitability. Included in the analysis for the Fund were the
revenue and related costs broken down separately from the management,
underwriting and shareholder services functions provided by the Manager and its
affiliates to the Fund, as well as the relative contribution of the Fund to the
profitability of the Manager's parent. In reviewing and discussing such
analysis, management discussed with the Board its belief that costs incurred in
establishing the infrastructure necessary to the type of mutual fund operations
conducted by the Manager and its corporate affiliates may not be fully reflected
in the expenses allocated to the Fund in determining its profitability, as well
as the fact that the level of profits, to a certain extent, reflected
operational cost savings and efficiencies initiated by management. The Board
also took into account management's expenditures in improving shareholder
services provided the Fund, as well as the need to meet additional regulatory
and compliance

46 | Annual Report

FRANKLIN FEDERAL MONEY FUND

SHAREHOLDER INFORMATION (CONTINUED)

BOARD REVIEW OF INVESTMENT ADVISORY CONTRACT (CONTINUED)

requirements resulting from the Sarbanes-Oxley Act and recent SEC requirements.
In addition, the Board considered a third-party study comparing the
profitability of the Manager's parent on an overall basis as compared to other
publicly held managers broken down to show profitability from management
operations exclusive of distribution expenses, as well as profitability
including distribution expenses. Based upon their consideration of all these
factors, the Board determined that the level of profits realized by the Manager
under its investment advisory contract with the Fund was not excessive in view
of the nature, quality and extent of services provided.

ECONOMIES OF SCALE. The Board also considered whether economies of scale are
realized by the Manager as the Fund grows larger and the extent to which this is
reflected in the level of management fees charged. While recognizing that any
precise determination is inherently subjective, the Board noted that based upon
the Fund profitability analysis, it appears that as some funds get larger, at
some point economies of scale do result in the Manager realizing a larger profit
margin on management services provided such a fund. Fees under the Fund's
investment advisory contract consist of a flat 0.15% advisory fee component and
a separate administrative fee of 0.455% on the first $100 million of Fund net
assets; 0.330% on the next $150 million of Fund net assets; and 0.280% on Fund
net assets in excess of $250 million. The Fund's net assets were approximately
$112 million at the date of the Board meeting and the Board believed that to the
extent any economies of scale may be realized by the Manager and its affiliates,
the schedule of fees under the investment advisory contract provides a sharing
of benefits with the Fund and its shareholders.

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. Copies of the Fund's proxy voting records are also made available online
at franklintempleton.com and posted on the U.S. Securities and Exchange
Commission's website at sec.gov and reflect the most recent 12-month period
ended June 30.

QUARTERLY STATEMENT OF INVESTMENTS

The Fund files a complete statement of investments with the U.S. Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
website at sec.gov. The filed form may also be viewed and copied at the
Commission's Public Reference Room in Washington, DC. Information regarding the
operations of the Public Reference Room may be obtained by calling
1-800/SEC-0330.

Annual Report | 47

This page intentionally left blank.

LITERATURE REQUEST

LITERATURE REQUEST. TO RECEIVE A BROCHURE AND PROSPECTUS, PLEASE CALL US AT
1-800/DIAL BEN(R) (1-800/342-5236) OR VISIT FRANKLINTEMPLETON.COM. INVESTORS
SHOULD CAREFULLY CONSIDER A FUND'S INVESTMENT GOALS, RISKS, CHARGES AND EXPENSES
BEFORE INVESTING. THE PROSPECTUS CONTAINS THIS AND OTHER INFORMATION. PLEASE
CAREFULLY READ THE PROSPECTUS BEFORE INVESTING. 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

Mutual Discovery 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(2)
Franklin MidCap Value Fund
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Recovery Fund(3)
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

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 Technology Fund
Franklin Utilities Fund
Mutual Financial Services Fund

ASSET ALLOCATION

Franklin Templeton Corefolio Allocation Fund
Franklin Templeton Founding Funds Allocation Fund
Franklin Templeton Perspectives 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(4)
Franklin's AGE High Income Fund
Franklin Floating Rate Daily Access Fund
Franklin Income Fund
Franklin Limited Maturity
U.S. Government Securities Fund(4)
Franklin Low Duration Total Return Fund
Franklin Real Return Fund
Franklin Strategic Income Fund
Franklin Strategic Mortgage Portfolio
Franklin Templeton Hard Currency Fund
Franklin Total Return Fund
Franklin U.S. Government Securities Fund(4)
Templeton Global Bond Fund
Templeton Income Fund

TAX-FREE INCOME(5)

NATIONAL FUNDS

Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund(6)

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

Alabama
Arizona
California(7)
Colorado
Connecticut
Florida(7)
Georgia
Kentucky
Louisiana
Maryland
Massachusetts(6)
Michigan(6)
Minnesota(6)
Missouri
New Jersey
New York(7)
North Carolina
Ohio(7)
Oregon
Pennsylvania
Tennessee
Virginia

INSURANCE FUNDS

Franklin Templeton Variable Insurance Products
Trust(8)

(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 and select retirement
plans.

(3) 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.

(4) An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.

(5) For investors subject to the alternative minimum tax, a small portion of
fund dividends may be taxable. Distributions of capital gains are
generally taxable.

(6) Portfolio of insured municipal securities.

(7) These funds are available in two or more variations, including long-term
portfolios, portfolios of insured securities, a high-yield portfolio (CA)
and limited-term, intermediate-term and money market portfolios (CA and
NY).

(8) The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.

06/05 Not part of the annual report

[LOGO](R)
FRANKLIN(R) TEMPLETON(R) One Franklin Parkway
INVESTMENTS San Mateo, CA 94403-1906

o WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL?
Eligible shareholders can sign up for eDelivery at
franklintempleton.com. See inside for details.

ANNUAL REPORT AND SHAREHOLDER LETTER

FRANKLIN FEDERAL 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

Authorized for distribution only when accompanied or preceded by a prospectus.
Investors should carefully consider a fund's investment goals, risks, charges
and expenses before investing. The prospectus contains this and other
information; please read it carefully before investing.

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.

113 A2005 08/05

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.

(d) N/A

(f) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a copy
of its code of ethics that applies to its principal executive officers and
principal 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.

(a) Audit Fees
The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant for the audit of the registrant's annual
financial statements or for services that are normally provided by the principal
accountant in connection with statutory and regulatory filings or engagements
were $2,303 for the fiscal year ended June 30, 2005 and $21,657 for the fiscal
year ended June 30, 2004.

(b) Audit-Related Fees
There were no fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant that are
reasonably related to the performance of the audit of the registrant's financial
statements and are not reported under paragraph (a) of Item 4.

The aggregate fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant's investment
adviser and any entity controlling, controlled by or under common control with
the investment adviser that provides ongoing services to the registrant that are
reasonably related to the performance of the audit of their financial statements
were $0 for the fiscal year ended June 30, 2005 and $52,158 for the fiscal year
ended June 30, 2004. The services for which these fees were paid included
attestation services.

(c) Tax Fees
There were no fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant for tax compliance, tax
advice and tax planning.

The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant for tax
compliance, tax advice and tax planning were $19,591 for the fiscal year ended
June 30, 2005 and $0 for the fiscal year ended June 30, 2004. The services for
which these fees were paid included tax compliance and advise.

(d) All Other Fees
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant not reported in
paragraphs (a)-(c) of Item 4 were $0 for the fiscal year ended June 30, 2005 and
$64 for the fiscal year ended June 30, 2004. The services for which these fees
were paid included review of materials provided to the fund Board in connection
with the investment management contract renewal process.

The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant not reported
in paragraphs (a)-(c) of Item 4 were $4,500 for the fiscal year ended June 30,
2005 and $99,936 for the fiscal year ended June 30, 2004. The services for which
these fees were paid included review of materials provided to the fund Board in
connection with the investment management contract renewal process and the
review of the ICI transfer agent survey.

(e) (1) The registrant's audit committee is directly responsible for approving
the services to be provided by the auditors, including:

(i) pre-approval of all audit and audit related services;

(ii) pre-approval of all non-audit related services to be provided to the
Fund by the auditors;

(iii)pre-approval of all non-audit related services to be provided to the
registrant by the auditors to the registrant's investment adviser or to any
entity that controls, is controlled by or is under common control with the
registrant's investment adviser and that provides ongoing services to the
registrant where the non-audit services relate directly to the operations or
financial reporting of the registrant; and

(iv) establishment by the audit committee, if deemed necessary or
appropriate, as an alternative to committee pre-approval of services to be
provided by the auditors, as required by paragraphs (ii) and (iii) above, of
policies and procedures to permit such services to be pre-approved by other
means, such as through establishment of guidelines or by action of a designated
member or members of the committee; provided the policies and procedures are
detailed as to the particular service and the committee is informed of each
service and such policies and procedures do not include delegation of audit
committee responsibilities, as contemplated under the Securities Exchange Act of
1934, to management; subject, in the case of (ii) through (iv), to any waivers,
exceptions or exemptions that may be available under applicable law or rules.

(e) (2) None of the services provided to the registrant described in paragraphs
(b)-(d) of Item 4 were approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of regulation S-X.

(f) No disclosures are required by this Item 4(f).

(g) The aggregate non-audit fees paid to the principal accountant for services
rendered by the principal accountant to the registrant and the registrant's
investment adviser and any entity controlling, controlled by or under common
control with the investment adviser that provides ongoing services to the
registrant were $24,091 for the fiscal year ended June 30, 2005 and $152,158 for
the fiscal year ended June 30, 2004.

(h) The registrant's audit committee of the board of trustees has considered
whether the provision of non-audit services that were rendered to the
registrant's investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal accountant's
independence.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. N/A

ITEM 6. SCHEDULE OF INVESTMENTS. N/A

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES. N/A

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT
COMPANIES. N/A

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS. N/A

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have
been no changes to the procedures by which shareholders may recommend nominees
to the Registrant's Board of Directors that would require disclosure herein.

ITEM 11. 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 12. EXHIBITS.

(a) (1) Code of Ethics

(a) (2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
of Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Galen G. Vetter, Chief Financial Officer

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Galen G. Vetter, 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 FEDERAL MONEY FUND

By JIMMY G. GAMBILL
----------------
/s/Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date August 19, 2005

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
----------------
/s/Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date August 19, 2005

By GALEN G. VETTER
---------------
/s/Galen G. Vetter
Chief Financial Officer
Date August 19, 2005