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 811-04267
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INSTITUTIONAL FIDUCIARY TRUST
-----------------------------
(Exact name of registrant as specified in charter)

ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
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(Address of principal executive offices) (Zip code)

CRAIG S. TYLE, 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
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Date of reporting period: 6/30/06
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ITEM 1. REPORTS TO STOCKHOLDERS.

[GRAPHIC OMITTED]

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JUNE 30, 2006
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ANNUAL REPORT
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FRANKLIN CASH
RESERVES FUND

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[LOGO](R)
FRANKLIN TEMPLETON
INVESTMENTS

FRANKLIN o Templeton o Mutual Series

Contents

ANNUAL REPORT

Franklin Cash Reserves Fund ................................................ 1

Performance Summary ........................................................ 2

Your Fund's Expenses ....................................................... 4

Financial Highlights & Statement of Investments ............................ 6

Financial Statements ....................................................... 8

Notes to Financial Statements .............................................. 11

Report of Independent Registered Public Accounting Firm .................... 16

Tax Designation ............................................................ 17

Board Members and Officers ................................................. 18

The Money Market Portfolios ................................................ 23

Shareholder Information .................................................... 43

Annual Report

Franklin Cash Reserves Fund

YOUR FUND'S GOAL AND MAIN INVESTMENTS: Franklin Cash Reserves Fund seeks to
provide as high a level of current income as is consistent with liquidity and
preservation of capital. The Fund invests all of its assets in the shares of The
Money Market Portfolio (the Portfolio), which has the same investment goal. The
Portfolio, in turn, invests mainly in high-quality, short-term U.S. dollar
denominated money market securities of domestic and foreign issuers. 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 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.
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We are pleased to bring you Franklin Cash Reserves Fund's annual report for the
fiscal year ended June 30, 2006.

PERFORMANCE OVERVIEW

Rising short-term interest rates during the year under review resulted in an
increase in the Fund's yield. In this environment, the Fund's seven-day
effective yield rose from 2.34% on June 30, 2005, to 4.36% on June 30, 2006.

ECONOMIC AND MARKET OVERVIEW

The U.S. economy continued to grow at a healthy pace during the year under
review, although the second quarter's pace slowed to an estimated annualized

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 7.

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NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
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Annual Report | 1

PORTFOLIO BREAKDOWN
6/30/06

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% OF TOTAL
INVESTMENTS
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Certificates of Deposit 52.2%
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Commercial Paper 44.7%
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Repurchase Agreements 3.0%
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U.S. Government Agency Securities 0.1%
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PERFORMANCE SUMMARY
Symbol: INRXX
6/30/06

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Seven-day effective yield* 4.36%
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Seven-day annualized yield 4.27%
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* THE SEVEN-DAY EFFECTIVE YIELD ASSUMES COMPOUNDING OF DAILY DIVIDENDS.

ANNUALIZED AND EFFECTIVE YIELDS ARE FOR THE SEVEN-DAY PERIOD ENDED 6/30/06. THE
FUND'S AVERAGE WEIGHTED MATURITY WAS 26 DAYS. YIELD REFLECTS FUND EXPENSES AND
FLUCTUATIONS IN INTEREST RATES ON PORTFOLIO INVESTMENTS.

FRANKLIN ADVISERS, INC., THE FUND'S ADMINISTRATOR AND MANAGER OF THE UNDERLYING
PORTFOLIO, AGREED IN ADVANCE TO WAIVE A PORTION OF ITS MANAGEMENT FEES AND MAKE
PAYMENTS TO LIMIT OTHER EXPENSES. IF THE MANAGER HAD NOT TAKEN THIS ACTION, THE
FUND'S ANNUALIZED AND EFFECTIVE YIELDS FOR THE PERIOD WOULD HAVE BEEN 4.27% AND
4.36%. THIS ARRANGEMENT MAY BE DISCONTINUED AT ANY TIME UPON NOTICE TO THE
FUND'S BOARD OF TRUSTEES.

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

2.5% rate from the first quarter's 5.6% annualized rate. Overall, several
factors contributed to real growth. During the reporting period, the labor
markets continued to improve, indicated by nonfarm payroll data and the
unemployment rate. Rising personal income also helped support consumer spending
increases. Finally, business spending and productivity also rose during the
reporting period. Double-digit profit growth provided companies with strong
revenues, and ample cash helped some companies to support their capital
spending.

Oil prices reached a historical high during the year, which contributed to the
rise in headline, or overall, inflation. Core inflation, which excludes food and
energy costs, remained more contained but nonetheless began to experience some
upward pressure. For example, while June's headline Consumer Price Index (CPI)
reported a 12-month rise of 4.3%, core CPI increased 2.6%. 1

Several times during the period the Federal Reserve Board acknowledged the
economy's strength as well as the potential inflationary pressure from high
energy prices. By period-end it had raised the federal funds target rate to
5.25% and indicated its next moves would be highly dependent on forthcoming
economic data. The 10-year Treasury note yield rose from 3.94% at the beginning
of the period to 5.15% on June 30, 2006, as some inflationary concerns began to
affect intermediate- and long-maturity Treasuries.

INVESTMENT STRATEGY

Consistent with our strategy, we invest, through the Portfolio, mainly in
high-quality, short-term U.S. dollar denominated money market securities of
domestic and foreign issuers, including bank obligations, commercial paper,
repurchase agreements and U.S. government securities. We maintain a
dollar-weighted average portfolio maturity of 90 days or less. We seek to
provide shareholders with a high-quality, conservative investment vehicle; thus,
we do not invest the Fund's cash in derivatives or other potentially volatile
securities that we believe involve undue risk.

1. Source: Bureau of Labor Statistics.

2 | Annual Report

Manager's Discussion

We continued to invest the Portfolio's assets in high-quality money market
securities. For example, on June 30, 2006, 100% of the securities purchased for
the Portfolio carried short-term credit ratings of A-1 or P-1, or higher, by
independent credit rating agency Standard & Poor's or Moody's Investors
Service.2

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

2. These do not indicate ratings of the Fund.

THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF JUNE 30, 2006, 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 INVESTMENT MANAGER 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.

Annual Report | 3

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) of 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) of 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 Fund's actual expense ratio 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.

4 | 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 of the table 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.

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BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING
CLASS A VALUE 1/1/06 VALUE 6/30/06 PERIOD* 1/1/06-6/30/06
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Actual $1,000 $1,019.80 $4.16
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Hypothetical (5% return before expenses) $1,000 $1,020.67 $4.16
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* EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO, NET OF EXPENSE
WAIVERS, OF 0.83%, WHICH INCLUDES THE NET 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 | 5

Institutional Fiduciary Trust

FINANCIAL HIGHLIGHTS

FRANKLIN CASH RESERVES FUND

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YEAR ENDED JUNE 30,
2006 2005 2004 2003 2002
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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
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Income from investment operations - net investment income 0.034 0.013 0.002 0.007 0.018

Less distributions from net investment income ........... (0.034) (0.013) (0.002) (0.007) (0.018)
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Net asset value, end of year ............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========================================================

Total return ............................................ 3.49% 1.36% 0.21% 0.70% 1.85%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of year (000's) ......................... $142,192 $190,179 $196,808 $231,196 $180,909

Ratios to average net assets:

Expenses before waiver and payments by affiliate a .... 0.84% 0.98% 1.06% 0.96% 0.94%

Expenses net of waiver and payments by affiliate a .... 0.81% 0.85% 0.85% 0.88% 0.93%

Net investment income ................................. 3.35% 1.34% 0.23% 0.66% 1.80%

a The expense ratio includes the Fund's share of the Portfolio's allocated
expenses.

6 | See notes to financial statements. | Annual Report

Institutional Fiduciary Trust

STATEMENT OF INVESTMENTS, JUNE 30, 2006

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FRANKLIN CASH RESERVES FUND SHARES VALUE
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MUTUAL FUND (COST $142,719,536) 100.4%
a The Money Market Portfolio, 5.12% (Note 1) .... 142,719,536 $ 142,719,536
OTHER ASSETS, LESS LIABILITIES (0.4)% ......... (527,335)
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NET ASSETS 100.0% ............................. $ 142,192,201
=============

a The rate shown is the annualized seven-day yield at period end.

Annual Report | See notes to financial statements. | 7

Institutional Fiduciary Trust

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
June 30, 2006

-------------
FRANKLIN
CASH RESERVES
FUND
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Assets:

Investments in Portfolio, at value and cost (Note 1) ......... $142,719,536
Receivables from capital shares sold ......................... 235,589
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Total assets ............................................ 142,955,125
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Liabilities:
Payables:
Capital shares redeemed ..................................... 514,840
Affiliates .................................................. 193,273
Distributions to shareholders ............................... 2,491
Accrued expenses and other liabilities ....................... 52,320
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Total liabilities ....................................... 762,924
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Net assets, at value ................................... $142,192,201
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Net assets consist of paid-in capital ......................... $142,192,201
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Shares outstanding ............................................ 142,192,201
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Net asset value per share ..................................... $ 1.00
============

8 | See notes to financial statements. | Annual Report

Institutional Fiduciary Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENT OF OPERATIONS
for the year ended June 30, 2006

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FRANKLIN
CASH RESERVES
FUND
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Investment income:
Dividends from Portfolio ..................................... $ 6,431,460
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Expenses:
Administrative fees (Note 3a) ................................ 401,411
Distribution fees (Note 3b) .................................. 341,022
Transfer agent fees (Note 3c) ................................ 261,560
Reports to shareholders ...................................... 42,220
Registration and filing fees ................................. 17,410
Professional fees ............................................ 26,328
Trustees' fees and expenses .................................. 2,171
Other ........................................................ 5,984
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Total expenses .......................................... 1,098,106
Expenses waived/paid by affiliates (Note 3d) ............ (42,845)
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Net expenses ........................................... 1,055,261
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Net investment income ................................. 5,376,199
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Net increase (decrease) in net assets resulting from operations $ 5,376,199
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Annual Report | See notes to financial statements. | 9

Institutional Fiduciary Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF CHANGES IN NET ASSETS

-----------------------------
FRANKLIN CASH RESERVES FUND
-----------------------------
YEAR ENDED JUNE 30,
2006 2005
-----------------------------

Increase (decrease) in net assets:
Net investment income ........................................................................ $ 5,376,199 $ 2,523,757
Distributions to shareholders from net investment income ..................................... (5,376,199) (2,523,757)
Capital share transactions (Note 2) .......................................................... (47,987,093) (6,628,506)
-----------------------------
Net increase (decrease) in net assets ................................................... (47,987,093) (6,628,506)
Net assets (there is no undistributed net investment income at the beginning or end of period):
Beginning of year ............................................................................ 190,179,294 196,807,800
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End of year .................................................................................. $ 142,192,201 $ 190,179,294
=============================

10 | See notes to financial statements. | Annual Report

Institutional Fiduciary Trust

NOTES TO FINANCIAL STATEMENTS

FRANKLIN CASH RESERVES FUND

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Institutional Fiduciary Trust (the Trust) is registered under the Investment
Company Act of 1940 (1940 Act) as an open-end investment company, consisting of
four separate series. The Franklin Cash Reserves Fund (the Fund) included in
this report is diversified. The financial statements of the remaining funds in
the series are presented separately.

The Fund invests substantially all of its assets in The Money Market Portfolio
(the Portfolio), which is registered under the 1940 Act 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, 2006, the Fund owns
2.86% of the Portfolio.

B. INCOME TAXES

No provision has been made for U.S. income taxes because the Fund intends to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute to shareholders substantially all of its taxable income and net
realized gains.

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 received from the Portfolio are normally declared daily and distributed
monthly. Distributions to shareholders are determined according to income tax
regulations (tax basis). Distributable earnings determined on a tax basis may
differ from earnings recorded in accordance with generally accepted accounting
principles. These differences may be permanent or temporary. Permanent
differences are reclassified among capital accounts to reflect their tax
character. These reclassifications have no impact on net assets or the results
of operations. Temporary differences are not reclassified, as they may reverse
in subsequent periods.

Common expenses incurred by the Trust are allocated among the Funds based on the
ratio of net assets of each fund to the combined net assets of the Trust. Fund
specific expenses are charged directly to the fund that incurred the expense.

Annual Report | 11

Institutional Fiduciary Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FRANKLIN CASH RESERVES FUND

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D. ACCOUNTING ESTIMATES

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the amounts of income
and expenses during the reporting period. Actual results could differ from those
estimates.

E. GUARANTEES AND INDEMNIFICATIONS

Under the 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, 2006, there were an unlimited number of shares authorized (no par
value). Transactions in the Fund's shares at $1.00 per share were as follows:

-----------------------------
Year Ended June 30,
2006 2005
-----------------------------
Shares sold .................................... $ 122,263,231 $ 144,098,196
Shares issued in reinvestment of distributions . 5,367,649 2,520,175
Shares redeemed ................................ (175,617,973) (153,246,877)
-----------------------------
Net increase (decrease) ........................ $ (47,987,093) $ (6,628,506)
=============================

3. TRANSACTIONS WITH AFFILIATES

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

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

12 | Annual Report

Institutional Fiduciary Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FRANKLIN CASH RESERVES FUND

3. TRANSACTIONS WITH AFFILIATES (CONTINUED)

A. ADMINISTRATIVE FEES

The Fund pays an administrative fee to Advisers of 0.25% per year of the average
daily net assets of the Fund.

B. DISTRIBUTION FEES

The Fund's Board of Trustees has adopted a reimbursement distribution plan
pursuant to Rule 12b-1 under the 1940 Act, under which the Fund reimburses
Distributors for costs incurred in connection with the sale and distribution of
the Fund's shares up to 0.25% per year of its average daily net assets. Costs
exceeding the maximum for the current plan year cannot be reimbursed in
subsequent periods.

C. TRANSFER AGENT FEES

The Fund paid transfer agent fees of $261,560, of which $230,667 was retained by
Investor Services.

D. VOLUNTARY WAIVER AND EXPENSE REIMBURSEMENTS

Advisers agreed in advance to voluntarily waive a portion of administrative
fees. Total expenses waived by Advisers are not subject to reimbursement by the
Fund subsequent to the Fund's fiscal year end.

4. INCOME TAXES

The tax character of distributions paid during the years ended June 30, 2006 and
2005, was as follows:

-----------------------
2006 2005
-----------------------
Distributions paid from ordinary income.......... $5,376,199 $2,523,757
=======================

At June 30, 2006, the cost of investments and undistributed ordinary income for
income tax purposes were as follows:

Cost of investments............................................. $142,719,536
============
Undistributed ordinary income................................... $ 2,491
============

Annual Report | 13

Institutional Fiduciary Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FRANKLIN CASH RESERVES FUND

5. REGULATORY MATTERS

As part of various investigations by a number of federal, state, and foreign
regulators and governmental entities, 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 (collectively, the "Company"), entered into
settlements with certain of those regulators.

Specifically, the Company entered into settlements with the Securities and
Exchange Commission ("SEC") concerning market timing (the "August 2, 2004 SEC
Order") and marketing support payments to securities dealers who sell fund
shares (the "December 13, 2004 SEC Order") and with the California Attorney
General's Office ("CAGO") concerning marketing support payments to securities
dealers who sell fund shares (the "CAGO Settlement"). Under the terms of the
settlements with the SEC and the CAGO, the Company retained an Independent
Distribution Consultant ("IDC") to develop separate plans for the distribution
of the respective settlement monies. The CAGO approved the distribution plan
pertaining to the distribution of the monies owed under the CAGO settlement
agreement, and in March 2005, the disbursement of monies to the relevant funds
in accordance with the terms and conditions of that settlement was completed.
The Trust did not participate in the CAGO Settlement.

On June 23, 2006, the SEC approved the IDC's proposed plan of distribution
arising from the December 13, 2004 SEC Order and disbursement of the settlement
monies to the designated funds in accordance with the terms and conditions of
the SEC's order and the plan will be completed in August, 2006. The Trust did
not participate in the December 13, 2004 SEC Order.

The IDC has also completed a proposed Plan of Distribution under the August 2,
2004 SEC Order resolving the SEC's market timing investigation and has submitted
that plan to the SEC staff, where it is under review. The SEC has announced the
following expected schedule with respect to the market timing Plan of
Distribution: "The SEC anticipates that Notice of the Plan will be published on
or after September 15, 2006. After publication and comment, the proposed
Distribution Plan will be submitted to the SEC for approval. When the SEC
approves the proposed Distribution Plan, with modifications as appropriate,
distributions will begin pursuant to that Plan. The SEC anticipates the
distribution will begin in the fall of 2006."

In addition, the Company, as well as most of the mutual funds within Franklin
Templeton Investments and certain current or former officers, directors, and/or
employees, have been named in private lawsuits (styled as shareholder class
actions, or as derivative actions on behalf of either the named funds or
Franklin Resources, Inc.) relating to the industry practices referenced above,
as well as to allegedly excessive advisory fees, commissions, and/or 12b-1 fees.
The lawsuits were filed in different courts throughout the country. Many of
those suits are now pending in a multi-district litigation in the United States
District Court for the District of Maryland.

14 | Annual Report

Institutional Fiduciary Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FRANKLIN CASH RESERVES FUND

5. REGULATORY MATTERS (CONTINUED)

The Company and fund management strongly believe that the claims made in each of
the private lawsuits referenced above are without merit and intend 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. 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.

6. FASB INTERPRETATION NO. 48

In July 2006, the FASB issued FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109" ("FIN
48"), which clarifies the accounting for uncertainty in tax positions taken or
expected to be taken in a tax return. FIN 48 provides guidance on the
measurement, recognition, classification and disclosure of tax positions, along
with accounting for the related interest and penalties. FIN 48 is effective for
fiscal years beginning after December 15, 2006, and is to be applied to all open
tax years as of the date of effectiveness. We have not yet completed our
evaluation of the impact, if any, of adopting FIN 48 on the Trust's financial
statements.

Annual Report | 15

Institutional Fiduciary Trust

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

FRANKLIN CASH RESERVES FUND

TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF INSTITUTIONAL FIDUCIARY TRUST

In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Franklin Cash Reserves Fund (one of
the funds constituting the Institutional Fiduciary Trust, hereafter referred to
as the "Fund") at June 30, 2006, 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 16, 2006

16 | Annual Report

Institutional Fiduciary Trust

TAX DESIGNATION (UNAUDITED)

Under Section 871(k)(1)(C) of the Internal Revenue Code (Code), the Fund
designates the maximum amount allowable but no less than $5,197,102 as interest
related dividends for purposes of the tax imposed under section 871(a)(1)(A) of
the Code for the fiscal year ended June 30, 2006.

Annual Report | 17

Institutional Fiduciary Trust

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) Trustee Since 1985 141 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 56 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 1989 142 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 2005 137 Director, Hess Corporation (formerly,
One Franklin Parkway Amerada Hess Corporation) (exploration
San Mateo, CA 94403-1906 and refining of oil and gas),
H.J. Heinz Company (processed foods
and allied products), RTI International
Metals, Inc. (manufacture 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).
- ----------------------------------------------------------------------------------------------------------------------------------

18 | Annual Report

FRANK W.T. LAHAYE (1929) Trustee Since 1985 114 Director, Center for Creative Land
One Franklin Parkway 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).
- ----------------------------------------------------------------------------------------------------------------------------------
GORDON S. MACKLIN (1928) Trustee Since 1992 141 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).
- ----------------------------------------------------------------------------------------------------------------------------------
FRANK A. OLSON (1932) Trustee Since 2005 104 Director, Hess Corporation (formerly,
One Franklin Parkway Amerada Hess Corporation) (explo-
San Mateo, CA 94403-1906 ration and refining of oil and gas) and
Sentient Jet (private jet service); and
FORMERLY, Director, Becton Dickinson
and Company (medical technology),
Cooper Industries, Inc. (electrical
products and tools and hardware),
Health Net, Inc. (formerly, Foundation
Health) (integrated managed care),
The Hertz Corporation, Pacific
Southwest Airlines, The RCA
Corporation, Unicom (formerly,
Commonwealth Edison), UAL
Corporation (airlines) and White
Mountains Insurance Group, Ltd.
(holding company).

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman Emeritus, The Hertz Corporation (car rental) (since 2000) (Chairman of the Board (1980-2000) and Chief Executive Officer
(1977-1999)); and FORMERLY, Chairman of the Board, President and Chief Executive Officer, UAL Corporation (airlines).
- ----------------------------------------------------------------------------------------------------------------------------------

Annual Report | 19

Interested Board Members and Officers

**CHARLES B. JOHNSON (1933) Trustee and Trustee since 141 None
One Franklin Parkway Chairman of 1985 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 42 of the investment companies in Franklin Templeton
Investments.
- ----------------------------------------------------------------------------------------------------------------------------------
**RUPERT H. JOHNSON, JR. (1940) Trustee, Trustee since 123 None
One Franklin Parkway President and 1985, President
San Mateo, CA 94403-1906 Chief and Chief
Executive 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 45 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 45 of the investment companies in Franklin
Templeton Investments.
- ----------------------------------------------------------------------------------------------------------------------------------
JAMES M. DAVIS (1952) Chief Chief Compliance Not Applicable Not Applicable
One Franklin Parkway Compliance Officer since 2004
San Mateo, CA 94403-1906 Officer and and Vice
Vice President President - AML
- AML Compliance since
Compliance February 2006

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, Global Compliance, Franklin Resources, Inc.; officer of 47 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:
Vice President, Franklin Templeton Services, LLC; officer of 31 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).
- ----------------------------------------------------------------------------------------------------------------------------------

20 | Annual Report

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Templeton Services, LLC; Senior Vice President, Templeton Worldwide, Inc.; and officer of 47 of the investment
companies in Franklin Templeton Investments.
- ----------------------------------------------------------------------------------------------------------------------------------
DAVID P. GOSS (1947) Vice Since 2000 Not Applicable Not Applicable
One Franklin Parkway President
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Templeton Investments; officer and director of one of the subsidiaries of Franklin
Resources, Inc.; and officer of 47 of the investment companies in Franklin Templeton Investments.
- ----------------------------------------------------------------------------------------------------------------------------------
BARBARA J. GREEN (1947) Vice Since 2000 Not Applicable Not Applicable
One Franklin Parkway President
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 47 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).
- ----------------------------------------------------------------------------------------------------------------------------------
KAREN L. SKIDMORE (1952) Vice Vice President Not Applicable Not Applicable
One Franklin Parkway President since March 2006
San Mateo, CA 94403-1906 and and Secretary
Secretary since April 2006

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Templeton Investments; Vice President and Secretary, Templeton Funds Annuity Company;
and officer of 31 of the investment companies in Franklin Templeton Investments.
- ----------------------------------------------------------------------------------------------------------------------------------

Annual Report | 21

CRAIG S. TYLE (1960) Vice President Since October Not Applicable Not Applicable
One Franklin Parkway 2005
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
General Counsel and Executive Vice President, Franklin Resources, Inc.; officer of 47 of the investment companies in Franklin
Templeton Investments; and FORMERLY, Partner, Shearman & Sterling, LLP (2004-2005); and General Counsel, Investment Company
Institute (ICI) (1997-2004).
- ----------------------------------------------------------------------------------------------------------------------------------
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 47 of the investment companies in Franklin Templeton
Investments; and FORMERLY, Managing Director, RSM McGladrey, Inc. (1999-2004); and Partner, McGladrey & Pullen, LLP (1979-1987 and
1991-2004).
- ----------------------------------------------------------------------------------------------------------------------------------

* 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 manager or
affiliated investment managers.

** 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
administrator and distributor.

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 TRUSTEES 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 TRUSTEES 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 TRUSTEE
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.

22 | Annual Report

The Money Market Portfolios

FINANCIAL HIGHLIGHTS

THE MONEY MARKET PORTFOLIO

------------------------------------------------------------------
YEAR ENDED JUNE 30,
2006 2005 2004 2003 2002
------------------------------------------------------------------

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 .......................................... 0.041 0.020 0.009 0.014 0.026
------------------------------------------------------------------
Less distributions from net investment income ........ (0.041) (0.020) (0.009) (0.014) (0.026)
------------------------------------------------------------------
Net asset value, end of year ......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==================================================================

Total return ......................................... 4.15% 2.06% 0.94% 1.41% 2.63%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of year (000's) ...................... $4,993,739 $5,676,479 $5,505,394 $5,331,200 $4,734,196

Ratios to average net assets:

Expenses before waiver and payments by affiliate and
expense reduction ............................... 0.16% 0.16% 0.16% 0.15% 0.16%

Expenses net of waiver and payments by affiliate and
expense reduction ............................... 0.16% a 0.16% a 0.15% a 0.15% 0.15%

Net investment income .............................. 4.09% 2.04% 0.93% 1.39% 2.56%

a Benefit of expense reduction is less than 0.01%.

Annual Report | See notes to financial statements. | 23

The Money Market Portfolios

STATEMENT OF INVESTMENTS, JUNE 30, 2006

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

SHORT TERM INVESTMENTS 99.8%
CERTIFICATES OF DEPOSIT 52.1%
Abbey National Treasury Services PLC, Stamford Branch, 5.26%, 7/24/06 .... $ 200,000,000 $ 200,000,000
ABN AMRO Bank N.V., Chicago Branch, 5.05%, 7/07/06 ....................... 200,000,000 200,000,332
Bank of Nova Scotia, Portland Branch, 5.18%, 7/18/06 ..................... 200,000,000 200,000,000
Banque Nationale de Paris, New York Branch, 5.27%, 7/25/06 ............... 100,000,000 100,000,664
Barclay's Bank PLC, New York Branch, 4.97%, 2/09/07 ...................... 99,500,000 99,505,868
Calyon North America Inc., New York Branch, 5.06%, 3/02/07 ............... 100,000,000 100,000,000
Dexia Credit Local NY, New York Branch, 4.875 - 5.305%, 8/08/06 - 2/01/07 200,000,000 200,000,787
HBOS Treasury Services, New York Branch, 5.21%, 7/19/06 .................. 100,000,000 100,000,498
Lloyds Bank PLC, New York Branch, 5.07%, 7/14/06 ......................... 200,000,000 200,000,718
Royal Bank of Canada, New York Branch, 5.23 - 5.28%, 7/21/06 - 7/28/06 ... 200,000,000 200,000,746
Societe Generale North America, New York Branch, 5.125%, 7/12/06 ......... 200,000,000 200,000,000
Svenska Handelsbanken, New York Branch, 5.06%, 7/10/06 ................... 200,000,000 200,000,497
Toronto Dominion Bank, New York Branch, 5.29%, 7/27/06 ................... 200,000,000 200,000,000
UBS AG, Stamford Branch, 5.30%, 8/04/06 .................................. 200,000,000 200,000,000
Wells Fargo Bank NA, San Francisco Branch, 5.16%, 7/13/06 ................ 200,000,000 200,000,664
--------------
TOTAL CERTIFICATES OF DEPOSIT (COST $2,599,510,774) ...................... 2,599,510,774
--------------
a COMMERCIAL PAPER 44.6%
Bank of Ireland, 7/26/06 ................................................. 200,000,000 199,272,222
Bank of Montreal, 7/06/06 ................................................ 150,000,000 149,895,521
Concentrate Manufacturing Co., 7/10/06 - 7/19/06 ......................... 85,000,000 84,853,487
Depfa Bank PLC, 7/11/06 .................................................. 200,000,000 199,717,778
General Electric Capital Corp., 7/17/06 .................................. 200,000,000 199,551,111
ING (US) Funding LLC, 7/13/06 - 7/25/06 .................................. 200,000,000 199,479,333
Merrill Lynch & Co. Inc., 7/06/06 - 7/07/06 .............................. 200,000,000 199,841,417
Morgan Stanley Group Inc., 7/05/06 ....................................... 200,000,000 199,882,889
National Australia Funding, 7/05/06 ...................................... 225,000,000 224,868,750
Shell Finance UK PLC, 7/03/06 ............................................ 148,036,000 147,992,658
Total Capital SA, 7/03/06 ................................................ 225,000,000 224,934,125
Toyota Motor Credit Corp, 7/20/06 ........................................ 200,000,000 199,452,167
--------------
TOTAL COMMERCIAL PAPER (COST $2,229,741,458) ............................. 2,229,741,458
--------------
U.S. GOVERNMENT AND AGENCY SECURITIES (COST $4,519,771) 0.1%

a FEDERAL HOME LOAN BANK, 7/03/06 .......................................... 4,521,000 4,519,771
--------------
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENTS (COST $4,833,772,003) ..... 4,833,772,003
--------------
b REPURCHASE AGREEMENTS 3.0%
Deutsche Bank Securities Inc., 4.49%, 7/03/06 (Maturity Value $25,009,354)
Collateralized by U.S. Treasury Notes, 0.875%, 4/15/10 ................. 25,000,000 25,000,000
Morgan Stanley & Co. Inc., 4.50%, 7/03/06 (Maturity Value $125,912,199)
Collateralized by U.S. Treasurty Notes, 3.50%, 1/15/11 ................. 125,865,000 125,865,000
--------------
TOTAL REPURCHASE AGREEMENTS (COST $150,865,000) .......................... 150,865,000
--------------
TOTAL SHORT TERM INVESTMENTS (COST $4,984,637,003) 99.8% ................. 4,984,637,003
OTHER ASSETS, LESS LIABILITIES 0.2% ...................................... 9,102,017
--------------
NET ASSETS 100.0% ........................................................ $4,993,739,020
==============

a The security is traded on a discount basis with no stated coupon rate.

b See Note 1(b) regarding repurchase agreements.

24 | 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,
2006 2005 2004 2003 2002
------------------------------------------------------------

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 0.040 0.020 0.009 0.013 0.024
-------------------------------------------------------------
Less distributions from net investment income ........... (0.040) (0.020) (0.009) (0.013) (0.024)
-------------------------------------------------------------
Net asset value, end of year ............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=============================================================
Total return ............................................ 4.03% 1.99% 0.87% 1.34% 2.43%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of year (000's) ......................... $ 94,019 $110,761 $117,815 $201,758 $226,676

Ratios to average net assets:

Expenses before waiver and payments by affiliate and
expense reduction .................................. 0.17% 0.17% 0.16% 0.16% 0.16%

Expenses net of waiver and payments by affiliate and
expense reduction .................................. 0.15% a 0.15% a 0.15% a 0.15% 0.15%

Net investment income ................................. 3.95% 1.97% 0.87% 1.34% 2.33%

a Benefit of expense reduction is less than 0.01%.

Annual Report | See notes to financial statements. | 25

The Money Market Portfolios

STATEMENT OF INVESTMENTS, JUNE 30, 2006

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

U.S. GOVERNMENT AND AGENCY SECURITIES 7.9%
a U.S. Treasury Bill,
7/20/06 ............................................................................... $ 5,000,000 $ 4,987,848
8/03/06 ............................................................................... 2,500,000 2,489,882
-------------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES (COST $7,477,730) ........................... 7,477,730
-------------
b REPURCHASE AGREEMENTS 92.1%
ABN AMRO Bank, N.V., New York Branch, 4.50%, 7/03/06 (Maturity Value $5,001,875)
Collateralized by U.S. Treasury Notes, 4.875%, 4/30/08 ................................ 5,000,000 5,000,000
Banc of America Securities LLC, 4.19%, 7/03/06 (Maturity Value $5,001,746)
Collateralized by U.S. Treasury Notes, 5.125%, 6/30/11 ................................ 5,000,000 5,000,000
Barclays Capital Inc., 4.40%, 7/03/06 (Maturity Value $10,003,667)
Collateralized by U.S. Treasury Notes, 3.375%, 10/15/09 ............................... 10,000,000 10,000,000
Bear, Stearns & Co. Inc., 4.35%, 7/03/06 (Maturity Value $5,001,813)
Collateralized by U.S. Treasury Notes, 4.75%, 3/31/11 ................................. 5,000,000 5,000,000
Deutsche Bank Securities Inc., 4.49%, 7/03/06 (Maturity Value $18,281,838)
Collateralized by U.S. Treasury Notes, 0.875%, 4/15/10 ................................ 18,275,000 18,275,000
Dresdner Kleinwort Wasserstein Securites LLC, 4.50%, 7/03/06 (Maturity Value $10,003,750)
Collateralized by U.S. Treasury Notes, 4.25%, 1/15/11 ................................. 10,000,000 10,000,000
Greenwich Capital Markets Inc., 4.50%, 7/03/06 (Maturity Value $5,001,875)
Collateralized by U.S. Treasury Notes, 7.00%, 7/15/06 ................................. 5,000,000 5,000,000
Merrill Lynch Government Securities Inc., 4.45%, 7/03/06 (Maturity Value $5,001,854)
Collateralized by aU.S. Treasury Bills, 12/14/06 ...................................... 5,000,000 5,000,000
Morgan Stanley & Co. Inc., 4.50%, 7/03/06 (Maturity Value $18,281,853)
Collateralized by U.S. Treasury Notes, 3.50%, 1/15/11 ................................. 18,275,000 18,275,000
UBS Securities LLC, 4.25%, 7/03/06 (Maturity Value $5,001,771)
Collateralized by aU.S. Treasury Bills, 12/28/06 ...................................... 5,000,000 5,000,000
-------------
TOTAL REPURCHASE AGREEMENTS (COST $86,550,000) .......................................... 86,550,000
-------------
TOTAL INVESTMENTS (COST $94,027,730) 100.0% ............................................. 94,027,730
OTHER ASSETS, LESS LIABILITIES 0.0% c ................................................... (8,293)
-------------
NET ASSETS 100.0% ....................................................................... $ 94,019,437
=============

a The security is traded on a discount basis with no stated coupon rate.

b See Note 1(b) regarding repurchase agreements.

c Rounds to less than 0.1% of net assets.

26 | See notes to financial statements. | Annual Report

The Money Market Portfolios

FINANCIAL STATEMENTS

STATEMENTS OF ASSETS AND LIABILITIES
June 30, 2006

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

Assets:
Investments in securities, at amortized cost $4,833,772,003 $ 7,477,730
Repurchase agreements, at value and cost ... 150,865,000 86,550,000
--------------------------------
Total investments ..................... $4,984,637,003 $ 94,027,730
Cash ....................................... 5,627 4,062
Interest receivable ........................ 9,837,091 10,680
--------------------------------
Total assets .......................... 4,994,479,721 94,042,472
--------------------------------
Liabilities:
Payables:
Affiliates ................................ 686,436 10,365
Distributions to shareholders ............. 185 128
Accrued expenses and other liabilities ..... 54,080 12,542
--------------------------------
Total liabilities ..................... 740,701 23,035
--------------------------------
Net assets, at value ................. $4,993,739,020 $ 94,019,437
================================
Net assets consist of paid-in capital ....... $4,993,739,020 $ 94,019,437
================================
Shares outstanding .......................... 4,993,739,020 94,019,437
================================
Net asset value per share ................... $ 1.00 $ 1.00
================================

Annual Report | See notes to financial statements. | 27

the Money Market Portfolios

FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF OPERATIONS
for the year ended June 30, 2006

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

Investment income:
Interest........................................................... $ 244,427,644 $ 4,014,074
----------------------------------
Expenses:
Management fees (Note 3a).......................................... 8,645,042 147,003
Custodian fees (Note 4)............................................ 119,710 1,692
Reports to shareholders............................................ 7,921 2,626
Professional fees.................................................. 41,776 11,902
Other.............................................................. 175,505 3,583
----------------------------------
Total expenses................................................ 8,989,954 166,806
Expense reductions (Note 4)................................... (25,699) (2,032)
Expenses waived/paid by affiliates (Note 3c).................. -- (17,912)
----------------------------------
Net expenses................................................. 8,964,255 146,862
----------------------------------
Net investment income....................................... 235,463,389 3,867,212
----------------------------------
Net increase (decrease) in net assets resulting from operations..... $ 235,463,389 $ 3,867,212
==================================

28 | 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,
2006 2005 2006 2005
-----------------------------------------------------------------------

Increase (decrease) in net assets:
Operations:
Net investment income............................... $ 235,463,389 $ 119,375,531 $ 3,867,212 $ 2,239,743
Net realized gain (loss) from investments .......... -- -- -- 190
-----------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations ..................... 235,463,389 119,375,531 3,867,212 2,239,933
Distributions to shareholders from net
investment income ................................... (235,463,389) (119,375,531) (3,867,212) (2,239,933) a
Capital share transactions (Note 2) .................. (682,740,398) 171,085,254 (16,741,961) (7,053,156)
-----------------------------------------------------------------------
Net increase (decrease) in
net assets .................................... (682,740,398) 171,085,254 (16,741,961) (7,053,156)
Net assets (there is no undistributed net investment
income at beginning or end of year):
Beginning of year ................................... 5,676,479,418 5,505,394,164 110,761,398 117,814,554
-----------------------------------------------------------------------
End of year ......................................... $ 4,993,739,020 $ 5,676,479,418 $ 94,019,437 $ 110,761,398
=======================================================================

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

Annual Report | See notes to financial statements. | 29

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

The 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 Trust's 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, 2006, 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 intends
to qualify as a regulated investment company under the Internal Revenue Code and
to distribute to shareholders substantially all of its taxable income and net
realized gains.

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. Amortization of
premium and accretion of discount on debt securities are included in interest
income. Dividends from net investment income are normally declared daily.
Distributions from net realized capital gains are recorded on the ex-dividend
date. Such distributions are reinvested in additional shares of the Portfolios.
Distributions to shareholders are determined according to income tax regulations
(tax basis). Distributable earnings determined on a tax basis may differ from
earnings recorded in accordance with accounting principles generally accepted in
the United States. These differences may be permanent or temporary. Permanent
differences are reclassified among capital accounts to reflect their tax
character. These reclassifications have no impact on net assets or the results
of operations. Temporary differences are not reclassified, as they may reverse
in subsequent periods.

30 | Annual Report

The Money Market Portfolios

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
(CONTINUED)

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.

E. ACCOUNTING ESTIMATES

F. GUARANTEES AND INDEMNIFICATIONS

2. SHARES OF BENEFICIAL INTEREST

At June 30, 2006, there were an unlimited number of shares authorized ($0.01 par
value). Transactions in the Portfolios' shares at $1.00 per share were as
follows:

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

Year ended June 30, 2006
Shares sold .................................. $ 5,987,924,802 $ 34,043,854
Shares issued in reinvestment of distributions 235,470,437 3,867,146
Shares redeemed .............................. (6,906,135,637) (54,652,961)
-----------------------------------
Net increase (decrease) ...................... $ (682,740,398) $ (16,741,961)
===================================
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)
===================================

Annual Report | 31

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 Trust 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 FEES

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. 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.

D. OTHER AFFILIATED TRANSACTIONS

At June 30, 2006, the shares of The Money Market Portfolio were owned by the
following funds:

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

Institutional Fiduciary Trust - Money Market Portfolio .................. 3,009,335,464 60.26%
Franklin Money Fund ..................................................... 1,696,238,367 33.97%
Institutional Fiduciary Trust - Franklin Cash Reserves Fund.............. 142,719,536 2.86%
Franklin Templeton Money Fund Trust - Franklin Templeton Money Fund..... 145,445,653 2.91%

At June 30, 2006, 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 ............................................. 94,019,437 100.00%

32 | 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,
2006, 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, 2006 and
2005, was as follows:

------------------------------------------------------------
THE U.S. GOVERNMENT
THE MONEY MARKET SECURITIES
PORTFOLIO MONEY MARKET PORTFOLIO
------------------------------------------------------------
2006 2005 2006 2005
------------------------------------------------------------

Distributions paid from ordinary income ........ $235,463,389 $119,375,531 $ 3,867,212 $ 2,239,933
============================================================

At June 30, 2006, 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 ........................ $4,984,637,003 $ 94,027,730
================================
Undistributed ordinary income .............. $ 185 $ 128
================================

6. UPCOMING ACQUISITIONS/MERGERS

On February 28, 2006, the Board of Directors for the Franklin Federal Money Fund
(the Federal Money Fund) approved a proposal to merge the Federal Money Fund
into the Franklin Money Fund. On August 15, 2006, shareholders of the Federal
Money Fund approved the proposal. Upon completion of the merger, assets in The
U.S. Government Securities Money Market Portfolio will be transferred into The
Money Market Portfolio.

7. REGULATORY MATTERS

Annual Report | 33

The Money Market Portfolios

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

7. REGULATORY MATTERS (CONTINUED)

34 | Annual Report

The Money Market Portfolios

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

8. FASB INTERPRETATION NO. 48

Annual Report | 35

The Money Market Portfolios

INDEPENDENT AUDITORS' REPORT (UNAUDITED)

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, 2006, 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, 2006 by
correspondence with the custodian, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California
August 16, 2006

36 | Annual Report

The Money Market Portfolios

TAX DESIGNATION (UNAUDITED)

Under Section 871(k)(1)(C) of the Internal Revenue Code (Code), the Portfolios
designate the maximum amount allowable but no less than the following amounts as
interest related dividends for purposes of the tax imposed under Section
871(a)(1)(A) of the Code for the fiscal year ended June 30, 2006.

------------------------------------------
THE U.S. GOVERNMENT
THE MONEY MARKET SECURITIES MONEY
PORTFOLIO MARKET PORTFOLIO
------------------------------------------
$228,010,675 $3,867,212

Annual Report | 37

The Money Market Portfolios

BOARD MEMBERS AND OFFICERS

INDEPENDENT BOARD MEMBERS

HARRIS J. ASHTON (1932) Trustee Since 1992 141 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 56 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 142 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 2005 137 Director, Hess Corporation (FORMERLY,
One Franklin Parkway Amerada Hess Corporation) (exploration
San Mateo, CA 94403-1906 and refining of oil and gas),
H.J. Heinz Company (processed foods
and allied products), RTI International
Metals, Inc. (manufacture and
distribution of titanium), Canadian
National Railway (railroad), and White
Mountains Insurance Group, Ltd.
(holding company).

38 | Annual Report

GORDON S. MACKLIN (1928) Trustee Since 1992 141 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).

Interested Board Members and Officers

**CHARLES B. JOHNSON (1933) Trustee and Trustee since 141 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 42 of the investment companies in Franklin Templeton
Investments.
- ----------------------------------------------------------------------------------------------------------------------------------
**RUPERT H. JOHNSON, JR. (1940) Trustee, Trustee since 123 None
One Franklin Parkway President 1992 and
San Mateo, CA 94403-1906 and Chief President and
Executive Chief Executive
Officer Officer -
- Investment Investment
Management Management
since 2002

Annual Report | 39

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 45 of the investment companies in Franklin
Templeton Investments.
- ----------------------------------------------------------------------------------------------------------------------------------
JAMES M. DAVIS (1952) Chief Chief Compliance Not Applicable Not Applicable
One Franklin Parkway Compliance Officer since 2004
San Mateo, CA 94403-1906 Officer and and Vice
Vice President President - AML
- AML Compliance since
Compliance February 2006

LAURA FERGERSON (1962) Treasurer Since 2004 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906

40 | Annual Report

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 Templeton Investments; officer and director of one of the subsidiaries of Franklin
Resources, Inc.; and officer of 47 of the investment companies in Franklin Templeton Investments.
- ----------------------------------------------------------------------------------------------------------------------------------
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 47 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).
- ----------------------------------------------------------------------------------------------------------------------------------
KAREN L. SKIDMORE (1952) Vice President Vice President Not Applicable Not Applicable
One Franklin Parkway and Secretary since March 2006
San Mateo, CA 94403-1906 and Secretary
since April 2006

Annual Report | 41

GALEN G. VETTER (1951) Chief Since 2004 Not Applicable Not Applicable
500 East Broward Blvd. Financial
Suite 2100 Officer and
Fort Lauderdale, FL 33394-3091 Chief
Accounting
Officer

** 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., which is the parent company of the Fund's
investment manager and distributor.

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

42 | Annual Report

Institutional Fiduciary Trust

SHAREHOLDER INFORMATION

FRANKLIN CASH RESERVES FUND

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT

At a meeting held April 18, 2006, the Board of Trustees ("Board"), including a
majority of non-interested or independent Trustees, approved renewal of the
investment management agreement for each of the four separate funds within the
Trust ("Fund(s)"). 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 each 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 each
Fund prepared by Lipper, Inc. ("Lipper"), an independent organization, as well
as a Fund profitability analysis report prepared by management. The Lipper
reports compared each 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 and its affiliates 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 Funds by the Franklin Templeton Investments organization, as
well as a memorandum relating to economies of scale.

In considering such materials, the independent Trustees received assistance and
advice from and met separately with independent counsel. While the investment
management agreements for all Funds were considered at the same Board meeting,
the Board dealt with each Fund separately. In approving continuance of the
investment management agreement for each Fund, the Board, including a majority
of independent Trustees, determined that the existing management fee structure
was fair and reasonable and that continuance of the investment management
agreement was in the best interests of each Fund and its shareholders. While
attention was given to all information furnished, the following discusses some
primary factors relevant to the Board's decision.

NATURE, EXTENT AND QUALITY OF SERVICE. The Board was satisfied with the nature
and quality of the overall services provided by the Manager and its affiliates
to the Funds and their shareholders. In addition to investment performance and
expenses discussed later, the Board's opinion was based, in part, upon periodic
reports furnished them showing that the investment policies and restrictions for
each Fund were consistently complied with as well as other reports periodically
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,

Annual Report | 43

Institutional Fiduciary Trust

SHAREHOLDER INFORMATION (CONTINUED)

FRANKLIN CASH RESERVES FUND

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)

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
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. Among other factors taken into
account by the Board were the Manager's best execution trading policies,
including a favorable report by an independent portfolio trading analytical
firm. Consideration was also given to the experience of each 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 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 and the firsthand experience of the
individual Trustees 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 each Fund in view of its importance to shareholders. While
consideration was given to performance reports and discussions with portfolio
managers at Board meetings throughout the year, particular attention in
assessing performance was given to the Lipper reports furnished for the
agreement renewals. The Lipper reports prepared for each individual Fund showed
its investment performance in comparison to a performance universe selected by
Lipper for the one-year period ended January 31, 2006, and for additional yearly
periods ended that date depending on when a particular Fund commenced
operations. The following summarizes the performance results for the Fund and
the Board's view of such performance.

The performance universe for the Fund consisted of the Fund and all
institutional money market funds as selected by Lipper. The Lipper report
comparison showed the Fund's total return to be in the lowest quintile of its
performance universe for the one-year period and for each of the previous
three-, five- and ten-year periods on an annualized basis. In discussing such
performance, management pointed out that the Fund followed a very conservative
approach with investments made only in those securities having the highest
short-term ratings from rating agencies that rate such securities and constant
monitoring that avoided ownership of any downgraded securities to tier II
status. Management further noted such policy was believed appropriate in view of
the fact that Fund

44 | Annual Report

Institutional Fiduciary Trust

SHAREHOLDER INFORMATION (CONTINUED)

FRANKLIN CASH RESERVES FUND

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)

shareholders largely consisted of 401(k) or other defined contribution plans.
Management further stated its belief, given the account size and servicing needs
of these types of accounts, that the Fund was more retail than institutional in
nature and its performance was in line with the retail money market universe,
which it believed to be a more appropriate measure. The Board believed the
Fund's performance to be acceptable, noting management's explanation.

COMPARATIVE EXPENSES. Consideration was given to a comparative analysis of the
management fees 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 reports. Prior to making such comparison, the Board relied upon
a survey showing that the scope of investment management services covered under
the Fund's investment management agreement was similar to those provided by fund
managers to other mutual fund groups that would be used as a basis of comparison
in the Lipper reports. In reviewing comparative costs, emphasis was given to the
management fees of the Fund in comparison with the effective management fee that
would have been charged by other funds within its Lipper expense group assuming
it was the same size as the master money fund through which the Fund invests, as
stated in the Lipper report, 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 these comparisons showed the Fund's effective
management fee rate and total expenses were the second most expensive in its 15
fund Lipper expense group. In discussing these expenses, management pointed out
that while the Fund's expense group consisted of institutional funds, the nature
of its shareholders and their servicing needs were believed to be more retail in
nature, justifying higher expenses. In addition, management pointed out that the
Fund was part of a master/feeder relationship and, while the Fund's
non-management expenses were calculated at its actual asset size level of
approximately $150 million, such expenses were compared to those of a fund group
approximating the $6 billion size of the money market master fund through which
it invests. As noted in the Lipper report, the selection of the size of the
expense group based on this size may cause the Fund's non-management expenses,
which were the highest in the group, to be overstated relative to such group.
The Board found the expenses of this Fund to be acceptable, noting they were
subsidized by fee waivers or management reimbursements.

Annual Report | 45

Institutional Fiduciary Trust

SHAREHOLDER INFORMATION (CONTINUED)

FRANKLIN CASH RESERVES FUND

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)

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 each 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 Funds made in prior years and that
the Fund's independent registered public accounting firm had been engaged by the
Manager to perform certain procedures on a biennial basis, specified and
approved by the Manager and the Fund's Board solely for their purposes and use
in reference to the profitability analysis. Included in the analysis were the
revenue and related costs involved in providing services to the Fund, as well as
each Fund's relative contribution 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 affiliates
may not be fully reflected in the expenses allocated to each 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 Funds, as well as the need to meet
additional regulatory and compliance 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
its consideration of all these factors, the Board determined that the level of
profits realized by the Manager and its affiliates from providing services to
each 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 Funds grow 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's realizing a larger
profit margin on management services provided such a fund. The advisory fee at
the master fund level for the Fund is a flat rate of 0.15% at all asset levels.
In addition, a separate fee for administrative services amounting to 0.25% at
all asset levels is charged to the Fund. While intending to continuously review
the issue, the Board believed it questionable for reasons, including the size of
the Fund and the nature of its shareholder accounts, that the Manager and its
affiliates realized any meaningful economies of scale in furnishing advisory and
administrative services to the Fund.

46 | Annual Report

Institutional Fiduciary Trust

SHAREHOLDER INFORMATION (CONTINUED)

FRANKLIN CASH RESERVES FUND

PROXY VOTING POLICIES AND PROCEDURES

The Trust has established Proxy Voting Policies and Procedures ("Policies") that
the Trust uses to determine how to vote proxies relating to portfolio
securities. Shareholders may view the Trust'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 1-954/527-7678 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 Trust'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 Trust 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.

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

ANNUAL REPORT

FRANKLIN CASH RESERVES FUND

INVESTMENT MANAGER

Franklin Advisers, Inc.

DISTRIBUTOR

Franklin Templeton Distributors, Inc.
One Franklin Parkway
San Mateo, CA 94403-1906

SHAREHOLDER SERVICES

1-800/342-5236

FRANKLINTEMPLETONINSTITUTIONAL.COM

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.

149 A2006 08/06

ANNUAL REPORT | 06 30 2006
- --------------------------------------------------------------------------------

THE EXPERTISE OF MANY. THE STRENGTH OF ONE.

- --------------------------------------------------------------------------------

INSTITUTIONAL FIDUCIARY TRUST

Franklin Structured Large Cap Core Equity Fund

Franklin Structured Large Cap Growth Equity Fund

[LOGO](R)
FRANKLIN TEMPLETON
INSTITUTIONAL

FRANKLIN o TEMPLETON o FIDUCIARY

Contents

ANNUAL REPORT

Franklin Structured Large Cap Core Equity Fund ............................ 1

Franklin Structured Large Cap Growth Equity Fund .......................... 9

Financial Highlights & Statements of Investments .......................... 17

Financial Statements ...................................................... 34

Notes to Financial Statements ............................................. 37

Report of Independent Registered Public Accounting Firm ................... 44

Tax Designation ........................................................... 45

Board Members and Officers ................................................ 46

Shareholder Information ................................................... 51

- --------------------------------------------------------------------------------

Annual Report

Franklin Structured Large
Cap Core Equity Fund

YOUR FUND'S GOAL AND MAIN INVESTMENTS: Franklin Structured Large Cap Core Equity
Fund seeks long-term capital appreciation by investing at least 80% of its net
assets in equity securities of companies whose market capitalizations are within
the top 50% in terms of size of companies whose equity securities are listed on
a U.S. securities exchange or traded on the National Association of Securities
Dealers Automated Quotations (NASDAQ) system.

- --------------------------------------------------------------------------------
PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU MAY HAVE
A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN. PLEASE VISIT FRANKLINTEMPLETONINSTITUTIONAL.COM OR CALL
1-800/321-8563 FOR MOST RECENT MONTH-END PERFORMANCE.
- --------------------------------------------------------------------------------

This annual report for Franklin Structured Large Cap Core Equity Fund covers the
fiscal year ended June 30, 2006.

PERFORMANCE OVERVIEW

Franklin Structured Large Cap Core Equity Fund posted a +7.92% cumulative total
return for the period under review. The Fund underperformed the Russell 1000(R)
Index and the Standard & Poor's 500 Index (S&P 500), which returned +9.08% and
+8.62%. 1 Effective November 30, 2005, we replaced the S&P 500 with the Russell
1000 Index as the Fund's benchmark because we believe the

1. Source: Standard & Poor's Micropal. The Russell 1000 Index is market
capitalization weighted and measures performance of the 1,000 largest
companies in the Russell 3000(R) Index, which represent approximately 92%
of total market capitalization of the Russell 3000 Index. 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. The indexes are unmanaged and include reinvested
dividends. One cannot invest directly in an index, nor is an index
representative of the Fund's portfolio.

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 18.

- --------------------------------------------------------------------------------

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

Annual Report | 1

PORTFOLIO BREAKDOWN

Franklin Structured Large Cap
Core Equity Fund
Based on Total Net Assets as of 6/30/06

[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]

Finance 20.0%
Electronic Technology* 10.8%
Health Technology* 10.4%
Consumer Non-Durables 8.6%
Producer Manufacturing 8.4%
Energy Minerals 6.7%
Technology Services* 6.0%
Retail Trade 4.2%
Non-Energy Minerals 3.2%
Communications 2.9%
Health Services 2.8%
Consumer Durables 2.8%
Utilities 2.4%
Consumer Services 2.2%
Distribution Services 2.0%
Industrial Services 2.0%
Other 3.8%
Short-Term Investments & Other Net Assets 0.8%

* Significant exposure to a single sector may result in greater volatility
for the Fund than a more broadly diversified portfolio. There are specific
risks to investing in technology company stocks, which can be subject to
abrupt or erratic price movements and have been volatile, especially over
the short term.

composition of the Russell 1000 Index better reflects the Fund's investments.
You can find more of the Fund's performance data in the Performance Summary
beginning on page 5.

ECONOMIC AND MARKET OVERVIEW

During the 12 months ended June 30, 2006, the U.S. economy advanced at a
moderate pace. After a slow fourth quarter 2005, gross domestic product grew an
annualized 5.6% in first quarter 2006 and moderated to an estimated 2.5%
annualized rate in the second quarter. Growth was driven by consumer, business
and government spending. Productivity gains and corporate profits also
contributed. Export growth picked up some momentum, but a wide trade deficit
remained. The labor market firmed as employment generally increased and the
unemployment rate fell from 5.0% to 4.6%. 2 Although labor costs rose during the
reporting period, hiring increased in many industries and personal income grew.

Elevated energy and other commodity prices were a primary economic concern. Oil
prices remained high, largely due to potential supply disruptions and strong
growth in global demand, especially from China and India. Gasoline, medical and
pharmacy costs climbed substantially. Consumer confidence and spending remained
surprisingly strong but could weaken with the impact of higher prices. With
slowing home-price appreciation, borrowing against home equity flattened and
could have a gradual effect on consumer spending. The core Consumer Price Index
(CPI) rose 2.6% for the 12 months ended June 30, 2006, which was higher than the
2.2% 10-year average. 3

The Federal Reserve Board (Fed) raised the federal funds target rate from 3.25%
to 5.25% in eight quarter-point steps. The Fed's credit-tightening campaign
contributed to cooler housing and real estate markets as the cost of credit grew
less attractive to most consumers who were already dealing with near-record
consumer debt burdens, low personal savings and historically high gas prices.
Fed Chairman Ben Bernanke indicated the Fed might pause its rate tightening at
some future meeting and cited rising energy costs and a growing economy as
having the potential to sustain inflation pressures.

2. Source: Bureau of Labor Statistics.

3. Source: Bureau of Labor Statistics. Core CPI excludes food and energy
costs.

2 | Annual Report

In this environment, equity markets experienced dramatic swings late in the
period. Overall, the blue chip stocks of the Dow Jones Industrial Average posted
a 12-month total return of +11.09%, while the broader S&P 500 and the
technology-heavy NASDAQ Composite Index returned +8.62% and +6.48%. 4 Energy,
materials and industrials stocks performed particularly well.
Large-capitalization stocks generally lagged their small- and mid-cap
counterparts for most of the fiscal year until May 2006, at which point
large-cap stocks produced smaller losses as the stock market entered a downturn.
Higher interest rates and indications of a slowing economy meant more investors
began shifting money away from companies with small market capitalizations into
larger, less risky companies toward period-end.

INVESTMENT STRATEGY

Our twin objectives for Franklin Structured Large Cap Core Equity Fund are very
tight risk controls and modest excess return over the Fund's benchmark. To
achieve the first objective, the portfolio is managed using robust quantitative
tools that match broad risk characteristics of the index. To achieve the second
objective, we tap into Franklin's deep pool of research analysis. The portfolio
is managed to very closely follow the index with very tight tracking error
levels. The portfolio generally is sector- and industry-neutral (i.e., it does
not typically deviate from the index weightings by more than 2%) with excess
return coming primarily from security selection of Franklin Advisers, Inc.

MANAGER'S DISCUSSION

Franklin Structured Large Cap Core Equity Fund uses an enhanced index strategy
that seeks to outperform the Russell 1000 Index marginally, with very little
excess relative risk. We expect the majority of our over- or under-performance
to come from security selection.

For the 12 months ended June 30, 2006, when compared with the benchmark Russell
1000 Index, the Fund's position in Continental Airlines (which is not in the
index), and our overweighted allocations to pharmacy benefits management company
Express Scripts and electric utility TXU contributed to relative

TOP 10 HOLDINGS

Franklin Structured Large Cap Core Equity Fund 6/30/06

- --------------------------------------------------------------------------------
COMPANY % OF TOTAL
SECTOR/INDUSTRY NET ASSETS
- --------------------------------------------------------------------------------
Exxon Mobil Corp. 4.0%
ENERGY MINERALS
- --------------------------------------------------------------------------------
Citigroup Inc. 2.4%
FINANCE
- --------------------------------------------------------------------------------
Pfizer Inc. 2.1%
HEALTH TECHNOLOGY
- --------------------------------------------------------------------------------
Microsoft Corp. 2.1%
TECHNOLOGY SERVICES
- --------------------------------------------------------------------------------
Johnson & Johnson 1.8%
HEALTH TECHNOLOGY
- --------------------------------------------------------------------------------
General Electric Co. 1.8%
PRODUCER MANUFACTURING
- --------------------------------------------------------------------------------
Bank of America Corp. 1.8%
FINANCE
- --------------------------------------------------------------------------------
Merck & Co. Inc. 1.7%
HEALTH TECHNOLOGY
- --------------------------------------------------------------------------------
The Procter & Gamble Co. 1.6%
CONSUMER NON-DURABLES
- --------------------------------------------------------------------------------
Intel Corp. 1.6%
ELECTRONIC TECHNOLOGY
- --------------------------------------------------------------------------------

4. 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. See footnote 1 for a
description of the S&P 500. The NASDAQ Composite Index measures all NASDAQ
domestic and international based common type stocks listed on The NASDAQ
Stock Market. The index is market value weighted and includes more than
3,000 companies.

Annual Report | 3

performance. Conversely, our overweighted positions in computer vendor Dell and
home builder NVR, as well as a position in William Lyon Homes (sold by
period-end), detracted from our overall results this fiscal year. Despite
continued healthy sales and margins, Dell's share price suffered as investors
perceived waning corporate demand for its PCs and servers. Shares of William
Lyon and NVR benefited greatly from the housing boom in recent years, but began
to adjust downward this reporting period as the housing market cooled and new
home orders decreased in some regions.

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

4 | Annual Report

Performance Summary as of 6/30/06

FRANKLIN STRUCTURED LARGE CAP CORE EQUITY FUND

Your dividend income will vary depending on dividends or interest paid by
securities in the Fund's portfolio, adjusted for operating expenses. Capital
gain distributions are net profits realized from the sale of portfolio
securities. The performance table and graph do not reflect any taxes that a
shareholder would pay on Fund dividends, capital gain distributions, if any, or
any realized gains on the sale of Fund shares. Total return reflects
reinvestment of the Fund's dividends and capital gain distributions, if any, and
any unrealized gains or losses on the sale of Fund shares.

PRICE INFORMATION

- -------------------------------------------------------------------------------------------------
SYMBOL: N/A CHANGE 6/30/06 6/30/05
- -------------------------------------------------------------------------------------------------

Net Asset Value (NAV) -$0.17 $11.61 $11.78
- -------------------------------------------------------------------------------------------------

PERFORMANCE 1

THE FUND MAY CHARGE A 2% FEE ON REDEMPTIONS MADE WITHIN SEVEN DAYS OF PURCHASE.

- -------------------------------------------------------------------------------------------------
1-YEAR 3-YEAR INCEPTION (4/30/03)
- -------------------------------------------------------------------------------------------------

Cumulative Total Return 2 +7.92% +34.67% +43.82%
- -------------------------------------------------------------------------------------------------
Average Annual Total Return 3 +7.92% +10.43% +12.16%
- -------------------------------------------------------------------------------------------------
Value of $1,000,000 Investment 4 $1,079,198 $1,346,686 $1,438,260
- -------------------------------------------------------------------------------------------------

PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU MAY HAVE
A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN.

FOR MOST RECENT MONTH-END PERFORMANCE, PLEASE CALL 1-800/321-8563.

Annual Report | 5

Performance Summary (CONTINUED)

TOTAL RETURN INDEX COMPARISON FOR HYPOTHETICAL $1 MILLION INVESTMENT 1

Total return represents the change in value of an investment over the periods
shown. It includes any Fund expenses, account fees and reinvested distributions.
The unmanaged indexes include reinvestment of any income or distributions. They
differ from the Fund in composition and do not pay management fees or expenses.
One cannot invest directly in an index.

AVERAGE ANNUAL TOTAL RETURN

- --------------------------------------------------------------------------------
6/30/06
- --------------------------------------------------------------------------------
1-Year +7.92%
- --------------------------------------------------------------------------------
3-Year +10.43%
- --------------------------------------------------------------------------------
Since Inception (4/30/03) +12.16%
- --------------------------------------------------------------------------------

4/30/03-6/30/06
$ Millions

[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]

Franklin Structured Large Cap Russell 1000 Index 5 S&P 500 5
Core Equity Fund

USD USD USD
Franklin Structured Large Cap Core Equity Fund S&P 500 Index 5 Russell 1000 Index 5

Apr-2003 * 1,000,000.00 1,000,000.00 1,000,000.00
Apr-03 1,000,000.00 1,000,000.00 1,000,000.00
May-03 1,056,999.77 1,052,475.46 1,057,015.95
Jun-03 1,067,999.70 1,065,909.78 1,070,917.28
Jul-03 1,088,999.61 1,083,876.17 1,092,256.83
Aug-03 1,108,999.47 1,104,686.65 1,114,424.98
Sep-03 1,095,999.60 1,093,260.71 1,103,009.96
Oct-03 1,152,999.81 1,155,001.78 1,167,684.09
Nov-03 1,166,999.51 1,164,601.03 1,181,684.56
Dec-03 1,222,703.87 1,225,846.62 1,238,271.90
Jan-04 1,241,323.75 1,248,533.36 1,261,807.75
Feb-04 1,252,702.56 1,266,631.87 1,279,283.43
Mar-04 1,237,186.15 1,247,945.38 1,261,830.93
Apr-04 1,211,325.40 1,228,812.94 1,239,020.61
May-04 1,223,738.57 1,245,467.94 1,256,892.84
Jun-04 1,250,633.86 1,269,753.45 1,279,551.25
Jul-04 1,207,187.28 1,226,811.17 1,234,614.70
Aug-04 1,212,359.56 1,231,409.30 1,240,705.93
Sep-04 1,217,531.80 1,244,863.44 1,256,366.08
Oct-04 1,225,807.32 1,264,058.64 1,276,631.40
Nov-04 1,268,219.20 1,314,591.78 1,331,288.29
Dec-04 1,308,957.34 1,359,648.14 1,379,490.93
Jan-05 1,281,805.23 1,327,005.40 1,344,731.92
Feb-05 1,316,876.56 1,353,748.53 1,374,972.07
Mar-05 1,297,643.91 1,330,734.78 1,353,206.38
Apr-05 1,276,149.58 1,305,960.39 1,328,251.55
May-05 1,321,400.62 1,347,102.39 1,375,334.59
Jun-05 1,332,712.04 1,349,005.06 1,380,953.32
Jul-05 1,376,837.23 1,399,455.62 1,434,661.75
Aug-05 1,357,603.88 1,385,955.23 1,422,245.49
Sep-05 1,364,395.11 1,397,605.80 1,435,462.24
Oct-05 1,344,028.08 1,374,908.83 1,410,283.98
Nov-05 1,397,204.05 1,425,333.63 1,463,969.23
Dec-05 1,398,612.02 1,425,988.00 1,465,925.33
Jan-06 1,443,211.71 1,464,619.20 1,507,025.64
Feb-06 1,428,346.38 1,467,192.10 1,510,396.29
Mar-06 1,453,125.16 1,487,067.11 1,531,778.74
Apr-06 1,474,186.67 1,507,299.53 1,550,159.98
May-06 1,427,111.60 1,463,109.62 1,504,385.94
Jun-06 1,438,260.52 1,465,318.50 1,506,350.92

ENDNOTES

WHILE STOCKS HAVE HISTORICALLY OUTPERFORMED OTHER ASSET CLASSES OVER THE LONG
TERM, THEY TEND TO FLUCTUATE MORE DRAMATICALLY OVER THE SHORT TERM. THESE PRICE
MOVEMENTS MAY RESULT FROM FACTORS AFFECTING INDIVIDUAL COMPANIES, INDUSTRIES OR
THE SECURITIES MARKET AS A WHOLE. INVESTING IN A FUND THAT FOCUSES IN ONE OR A
FEW SECTORS INVOLVES SPECIAL RISKS, INCLUDING GREATER SENSITIVITY TO ECONOMIC,
POLITICAL OR REGULATORY DEVELOPMENTS IN THAT SECTOR. THE FUND'S PORTFOLIO
INCLUDES INVESTMENTS IN THE TECHNOLOGY SECTOR, WHICH HAS BEEN AMONG THE MARKET'S
MOST VOLATILE SECTORS. THE FUND'S PROSPECTUS ALSO INCLUDES A DESCRIPTION OF THE
MAIN INVESTMENT RISKS.

1. The Fund's manager and administrator have agreed in advance to waive a
portion of their fees and to make certain payments to reduce expenses. If
the manager and administrator had not taken this action, the Fund's total
return would have been lower. The fee waiver may be discontinued at any
time, upon notice to the Fund's Board of Trustees.

2. Cumulative total return represents the change in value of an investment
over the periods indicated.

3. Average annual total return represents the average annual change in value
of an investment over the periods indicated.

4. These figures represent the value of a hypothetical $1,000,000 investment
in the Fund over the periods indicated.

5. Source: Standard & Poor's Micropal. The Russell 1000 Index is market
capitalization weighted and measures performance of the 1,000 largest
companies in the Russell 3000 Index, which represent approximately 92% of
total market capitalization of the Russell 3000 Index. 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.

6 | Annual Report

Your Fund's Expenses

FRANKLIN STRUCTURED LARGE CAP CORE EQUITY FUND

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.

ACTUAL 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) of the table below 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 Fund's actual expense ratio 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.

Annual Report | 7

Your Fund's Expenses (CONTINUED)

- --------------------------------------------------------------------------------------------------------------
BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING
VALUE 1/1/06 VALUE 6/30/06 PERIOD* 1/1/06-6/30/06
- --------------------------------------------------------------------------------------------------------------

Actual $1,000 $1,028.30 $3.52
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,021.32 $3.51
- --------------------------------------------------------------------------------------------------------------

* Expenses are equal to the annualized expense ratio, net of expense
waivers, of 0.70% multiplied by the average account value over the period,
multiplied by 181/365 to reflect the one-half year period.

8 | Annual Report

Franklin Structured Large Cap Growth Equity Fund

YOUR FUND'S GOAL AND MAIN INVESTMENTS: Franklin Structured Large Cap Growth
Equity Fund seeks long-term capital appreciation by investing at least 80% of
its net assets in equity securities of companies whose market capitalizations
are within the top 50% in terms of size of companies whose equity securities are
listed on a U.S. securities exchange or traded on the National Association of
Securities Dealers Automated Quotations (NASDAQ) system.

- --------------------------------------------------------------------------------
PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU MAY HAVE
A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN. PLEASE VISIT FRANKLINTEMPLETONINSTITUTIONAL.COM OR CALL
1-800/321-8563 FOR MOST RECENT MONTH-END PERFORMANCE.
- --------------------------------------------------------------------------------

This annual report for Franklin Structured Large Cap Growth Equity Fund covers
the fiscal year ended June 30, 2006.

PERFORMANCE OVERVIEW

Franklin Structured Large Cap Growth Equity Fund posted a +4.44% cumulative
total return for the period under review. The Fund underperformed the Russell
1000 Growth Index, which returned +6.12%. 1 You can find more of the Fund's
performance data in the Performance Summary beginning on page 13.

ECONOMIC AND MARKET OVERVIEW

1. Source: Standard & Poor's Micropal. The Russell 1000 Growth Index is
market capitalization weighted and measures performance of those Russell
1000 companies with higher price-to-book ratios and higher forecasted
growth values. The index is unmanaged and includes reinvested dividends.
One cannot invest directly in an index, nor is an index representative of
the Fund's portfolio.

2. Source: Bureau of Labor Statistics.

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 26.

Annual Report | 9

PORTFOLIO BREAKDOWN
Franklin Structured Large Cap
Growth Equity Fund
Based on Total Net Assets as of 6/30/06

[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]

Electronic Technology* 16.7%
Health Technology* 13.6%
Technology Services* 11.2%
Finance 8.2%
Producer Manufacturing 8.0%
Consumer Non-Durables 7.8%
Retail Trade 7.5%
Consumer Services 3.8%
Health Services 3.7%
Transportation 3.4%
Energy Minerals 2.4%
Process Industries 2.2%
Communications 2.1%
Other 7.8%
Short-Term Investments & Other Net Assets 1.6%

* Significant exposure to a single sector may result in greater volatility for
the Fund than a more broadly diversified portfolio. There are specific risks to
investing in technology company stocks, which can be subject to abrupt or
erratic price movements and have been volatile, especially over the short term.

In this environment, equity markets experienced dramatic swings late in the
period. Overall, the blue chip stocks of the Dow Jones Industrial Average posted
a 12-month total return of +11.09%, while the broader Standard & Poor's 500
Index (S&P 500) and the technology-heavy NASDAQ Composite Index returned +8.62%
and +6.48%. 4 Energy, materials and industrials stocks performed particularly
well. Large-capitalization stocks generally lagged their small- and mid-cap
counterparts for most of the fiscal year until May 2006, at which point
large-cap stocks produced smaller losses as the stock market entered a downturn.
Higher interest rates and indications of a slowing economy meant more investors
began shifting money away from companies with small market capitalizations into
larger, less risky companies toward period-end.

INVESTMENT STRATEGY

Our twin objectives for Franklin Structured Large Cap Growth Equity Fund are
very tight risk controls and modest excess return over the Russell 1000 Growth
Index. To achieve the first objective, the portfolio is run using robust

3. Source: Bureau of Labor Statistics. Core CPI excludes food and energy
costs.

4. 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. The NASDAQ Composite Index measures all NASDAQ
domestic and international based common type stocks listed on The NASDAQ
Stock Market. The index is market value weighted and includes more than
3,000 companies.

10 | Annual Report

quantitative tools that match broad risk characteristics of the index. To
achieve the second objective, we tap into Franklin's deep pool of research
analysis. The portfolio is managed to very closely follow the index with very
tight tracking error levels. The portfolio generally is sector- and
industry-neutral (i.e., it does not typically deviate from the index weightings
by more than 1%) with excess return coming primarily from security selection of
Franklin Advisers, Inc.

MANAGER'S DISCUSSION

Franklin Structured Large Cap Growth Equity Fund uses an enhanced index strategy
that seeks to outperform the Russell 1000 Growth Index marginally, with very
little excess relative risk. We expect the majority of our over- or
underperformance to come from security selection.

For the 12 months ended June 30, 2006, the Fund benefited from its overweighted
position, versus the benchmark Russell 1000 Growth Index, in global logistics
and freight forwarding company Expeditors International of Washington. The
company's net income increased significantly as it landed a great deal of new
transportation business while realizing increased efficiency and productivity.
Oil services and exploration companies also fared well, partially due to
record-high oil prices, but also due to rising demand for oil and gas
exploration and discovery. The Fund held Veritas DGC and McDermott International
(sold by period-end), which are not index components. Veritas, which uses
seismic data to survey oil and gas fields, and McDermott, which builds deepwater
oil and gas production facilities, provided stellar returns in this environment
and were two of our top performers.

On the contrary, our underweighted position in Apple Computer, zero weighting in
heavy equipment manufacturer Caterpillar, and overweighted positions in computer
vendor Dell and semiconductor giant Intel hindered the Fund's overall results.
Apple stock rose substantially for the year despite growing investor caution as
product launches were delayed and the surge in demand for the company's
ubiquitous iPod music players appeared to be waning. Dell posted healthy sales
and margins but its share price suffered throughout the Fund's fiscal year as
investors perceived waning corporate demand for its PCs and servers. Intel had a
strong sales year but its stock fell in part due to reduced revenue
expectations.

TOP 10 HOLDINGS
Franklin Structured Large Cap
Growth Equity Fund
6/30/06

- --------------------------------------------------------------------------------
COMPANY % OF TOTAL
SECTOR/INDUSTRY NET ASSETS
- --------------------------------------------------------------------------------
Microsoft Corp. 4.5%
TECHNOLOGY SERVICES
- --------------------------------------------------------------------------------
Johnson & Johnson 4.1%
HEALTH TECHNOLOGY
- --------------------------------------------------------------------------------
The Procter & Gamble Co. 3.8%
CONSUMER NON-DURABLES
- --------------------------------------------------------------------------------
General Electric Co. 3.2%
PRODUCER MANUFACTURING
- --------------------------------------------------------------------------------
Cisco Systems Inc. 3.1%
ELECTRONIC TECHNOLOGY
- --------------------------------------------------------------------------------
Intel Corp. 2.7%
ELECTRONIC TECHNOLOGY
- --------------------------------------------------------------------------------
Wal-Mart Stores Inc. 2.3%
RETAIL TRADE
- --------------------------------------------------------------------------------
Amgen Inc. 2.2%
HEALTH TECHNOLOGY
- --------------------------------------------------------------------------------
Lowe's Cos. Inc. 1.8%
RETAIL TRADE
- --------------------------------------------------------------------------------
Dell Inc. 1.8%
ELECTRONIC TECHNOLOGY
- --------------------------------------------------------------------------------

Annual Report | 11

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

12 | Annual Report

Performance Summary as of 6/30/06

FRANKLIN STRUCTURED LARGE CAP GROWTH EQUITY FUND

PRICE INFORMATION

- -----------------------------------------------------------------------------------------------------
SYMBOL: N/A CHANGE 6/30/06 6/30/05
- -----------------------------------------------------------------------------------------------------

Net Asset Value (NAV) +$0.39 $11.40 $11.01
- -----------------------------------------------------------------------------------------------------

PERFORMANCE 1

THE FUND MAY CHARGE A 2% FEE ON REDEMPTIONS MADE WITHIN SEVEN DAYS OF PURCHASE.

- -----------------------------------------------------------------------------------------------------
1-YEAR 3-YEAR INCEPTION (4/30/03)
- -----------------------------------------------------------------------------------------------------

Cumulative Total Return 2 +4.44% +21.83% +30.48%
- -----------------------------------------------------------------------------------------------------
Average Annual Total Return 3 +4.44% +6.80% +8.76%
- -----------------------------------------------------------------------------------------------------
Value of $1,000,000 Investment 4 $1,044,420 $1,218,276 $1,304,773
- -----------------------------------------------------------------------------------------------------

FOR MOST RECENT MONTH-END PERFORMANCE, PLEASE CALL 1-800/321-8563.

Annual Report | 13

Performance Summary (CONTINUED)

TOTAL RETURN INDEX COMPARISON FOR HYPOTHETICAL $1 MILLION INVESTMENT 1

Total return represents the change in value of an investment over the periods
shown. It includes any Fund expenses, account fees and reinvested distributions.
The unmanaged index includes reinvestment of any income or distributions. It
differs from the Fund in composition and does not pay management fees or
expenses. One cannot invest directly in an index.

AVERAGE ANNUAL TOTAL RETURN

- --------------------------------------------------------------------------------
6/30/06
- --------------------------------------------------------------------------------
1-Year +4.44%
- --------------------------------------------------------------------------------
3-Year +6.80%
- --------------------------------------------------------------------------------
Since Inception (4/30/03) +8.76%
- --------------------------------------------------------------------------------

4/30/03-6/30/06
$ Millions

Franklin Structured Large Cap Growth Equity Fund Russell 1000 Growth Index 5

[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]

USD USD
Franklin Structured Large Cap Growth Equity Fund Russell 1000 Growth Index 5

Apr-2003 * 1,000,000.00 1,000,000.00
Apr-03 1,000,000.00 1,000,000.00
May-03 1,055,000.00 1,049,917.74
Jun-03 1,071,000.02 1,064,373.28
Jul-03 1,094,000.07 1,090,859.64
Aug-03 1,119,999.95 1,117,989.49
Sep-03 1,109,999.93 1,106,021.71
Oct-03 1,170,999.81 1,168,142.74
Nov-03 1,184,999.84 1,180,372.57
Dec-03 1,227,458.61 1,221,195.05
Jan-04 1,249,565.93 1,246,132.36
Feb-04 1,253,776.79 1,254,050.07
Mar-04 1,230,616.79 1,230,787.86
Apr-04 1,210,615.24 1,216,478.26
May-04 1,228,511.50 1,239,153.37
Jun-04 1,256,934.53 1,254,637.19
Jul-04 1,186,403.03 1,183,709.48
Aug-04 1,182,192.17 1,177,864.90
Sep-04 1,189,561.18 1,189,066.46
Oct-04 1,209,562.75 1,207,611.88
Nov-04 1,242,196.72 1,249,150.84
Dec-04 1,287,857.51 1,298,129.87
Jan-05 1,244,739.64 1,254,839.52
Feb-05 1,249,278.41 1,268,193.82
Mar-05 1,223,180.79 1,245,087.50
Apr-05 1,199,353.57 1,221,377.49
May-05 1,257,221.65 1,280,470.09
Jun-05 1,249,280.28 1,275,749.98
Jul-05 1,306,014.29 1,338,103.20
Aug-05 1,286,725.59 1,320,868.00
Sep-05 1,287,861.96 1,326,951.40
Oct-05 1,273,109.10 1,314,054.85
Nov-05 1,328,710.98 1,370,749.25
Dec-05 1,317,362.66 1,366,450.40
Jan-06 1,345,975.63 1,390,442.36
Feb-06 1,343,687.00 1,388,233.23
Mar-06 1,359,709.13 1,408,729.05
Apr-06 1,353,988.70 1,406,815.14
May-06 1,303,629.07 1,359,129.75
Jun-06 1,304,773.64 1,353,766.14

ENDNOTES

2. Cumulative total return represents the change in value of an investment
over the periods indicated.

3. Average annual total return represents the average annual change in value
of an investment over the periods indicated.

4. These figures represent the value of a hypothetical $1,000,000 investment
in the Fund over the periods indicated.

5. Source: Standard & Poor's Micropal. The Russell 1000 Growth Index is
market capitalization weighted and measures performance of those Russell
1000 companies with higher price-to-book ratios and higher forecasted
growth values.

14 | Annual Report

Your Fund's Expenses

FRANKLIN STRUCTURED LARGE CAP GROWTH EQUITY FUND

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.

ACTUAL 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

Annual Report | 15

Your Fund's Expenses (CONTINUED)

- ----------------------------------------------------------------------------------------------------------------
BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING
VALUE 1/1/06 VALUE 6/30/06 PERIOD* 1/1/06-6/30/06
- ----------------------------------------------------------------------------------------------------------------

Actual $1,000 $ 990.40 $3.45
- ----------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,021.32 $3.51
- ----------------------------------------------------------------------------------------------------------------

16 | ANNUAL REPORT

Institutional Fiduciary Trust

FINANCIAL HIGHLIGHTS

FRANKLIN STRUCTURED LARGE CAP CORE EQUITY FUND

----------------------------------------------
YEAR ENDED JUNE 30,
2006 2005 2004 2003 e
----------------------------------------------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ......................... $11.78 $12.09 $10.68 $10.00
----------------------------------------------
Income from investment operations a:
Net investment income b ................................... 0.14 0.16 0.09 0.02
Net realized and unrealized gains (losses) ................ 0.78 0.61 1.71 0.66
----------------------------------------------
Total from investment operations ........................... 0.92 0.77 1.80 0.68
----------------------------------------------
Less distributions from:
Net investment income ..................................... (0.22) (0.06) (0.09) --
Net realized gains ........................................ (0.87) (1.02) (0.30) --
----------------------------------------------
Total distributions ........................................ (1.09) (1.08) (0.39) --
----------------------------------------------
Net asset value, end of year ............................... $11.61 $11.78 $12.09 $10.68
==============================================
Total return c ............................................. 7.92% 6.56% 17.10% 6.80%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ............................ $3,203 $2,969 $2,786 $2,137
Ratios to average net assets:
Expenses before waiver and payments by affiliate .......... 2.39% d 2.26% d 3.66% 1.03% f
Expenses net of waiver and payments by affiliate .......... 0.70% d 0.70% d 0.70% 0.12% f
Net investment income ..................................... 1.18% 1.37% 0.81% 0.17%f
Portfolio turnover rate .................................... 77.16% 112.78% 164.34% 9.93%

a The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to timing of
sales and repurchase of the Fund shares in relation to income earned
and/or fluctuating market value of the investments of the Fund.

b Based on average daily shares outstanding.

c Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable, and is not annualized for periods less than
one year.

d Benefit of expense reduction is less than 0.01%.

e For the period April 30, 2003 (commencement of operations) to June 30,
2003.

f Not annualized.

Annual Report | See notes to financial statements. | 17

Institutional Fiduciary Trust

STATEMENT OF INVESTMENTS, JUNE 30, 2006

- --------------------------------------------------------------------------------
FRANKLIN STRUCTURED LARGE CAP CORE EQUITY FUND SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 99.2%
COMMERCIAL SERVICES 0.4%
a Dun & Bradstreet Corp. ........................... 90 $ 6,271
Moody's Corp. .................................... 78 4,248
SEI Investments Co. .............................. 61 2,982
----------
13,501
----------
COMMUNICATIONS 2.9%
AT&T Inc. ........................................ 1,234 34,416
BellSouth Corp. .................................. 472 17,086
CenturyTel Inc. .................................. 93 3,455
Sprint Nextel Corp. .............................. 357 7,137
Verizon Communications Inc. ...................... 928 31,079
----------
93,173
----------
CONSUMER DURABLES 2.8%
Black & Decker Corp. ............................. 221 18,666
a Electronic Arts Inc. ............................. 156 6,714
Ethan Allen Interiors Inc. ....................... 232 8,480
Ford Motor Co. ................................... 2,306 15,980
Furniture Brands International Inc. .............. 8 167
a Goodyear Tire & Rubber Co. ....................... 770 8,547
a Marvel Entertainment Inc. ........................ 362 7,240
a NVR Inc. ......................................... 27 13,264
The Ryland Group Inc. ............................ 243 10,587
----------
89,645
----------
CONSUMER NON-DURABLES 8.6%
Altria Group Inc. ................................ 448 32,897
Anheuser-Busch Cos. Inc. ......................... 536 24,436
The Coca-Cola Co. ................................ 1,147 49,344
Colgate-Palmolive Co. ............................ 511 30,609
General Mills Inc. ............................... 354 18,288
K-Swiss Inc., A .................................. 584 15,593
Loews Corp. - Carolina Group ..................... 37 1,901
PepsiCo Inc. ..................................... 523 31,401
The Procter & Gamble Co. ......................... 934 51,930
Seaboard Corp. ................................... 1 1,280
a Timberland Co., A ................................ 47 1,227
VF Corp. ......................................... 105 7,131
a The Warnaco Group Inc. ........................... 356 6,650
Wolverine World Wide Inc. ........................ 64 1,493
----------
274,180
----------
CONSUMER SERVICES 2.2%
CBS Corp., B ..................................... 219 5,924
Cendant Corp. .................................... 88 1,434
Clear Channel Communications Inc. ................ 175 5,416
a Comcast Corp. .................................... 183 5,991
Gannett Co. Inc. ................................. 21 1,175
IHOP Corp. ....................................... 85 4,087

18 | Annual Report

Institutional Fiduciary Trust

STATEMENT OF INVESTMENTS, JUNE 30, 2006 (CONTINUED)

- --------------------------------------------------------------------------------
FRANKLIN STRUCTURED LARGE CAP CORE EQUITY FUND SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
CONSUMER SERVICES (CONTINUED)
Meredith Corp. ................................... 180 $ 8,917
a Papa John's International Inc. ................... 144 4,781
Time Warner Inc. ................................. 128 2,214
a Viacom Inc., B ................................... 219 7,849
The Walt Disney Co. .............................. 767 23,010
----------
70,798
----------
DISTRIBUTION SERVICES 2.0%
a Brightpoint Inc. ................................. 76 1,028
Cardinal Health Inc. ............................. 118 7,591
CDW Corp. ........................................ 122 6,667
McKesson Corp. ................................... 81 3,830
a Performance Food Group Co. ....................... 145 4,405
Sysco Corp. ...................................... 865 26,435
a WESCO International Inc. ......................... 216 14,904
----------
64,860
----------
ELECTRONIC TECHNOLOGY 10.8%
a Agilent Technologies Inc. ........................ 378 11,930
a Apple Computer Inc. .............................. 309 17,650
Applied Materials Inc. ........................... 405 6,593
The Boeing Co. ................................... 477 39,071
a Broadcom Corp., A ................................ 16 481
a Ceradyne Inc. .................................... 179 8,859
a Cisco Systems Inc. ............................... 2,522 49,255
a Dell Inc. ........................................ 992 24,215
General Dynamics Corp. ........................... 380 24,875
Hewlett-Packard Co. .............................. 343 10,866
Intel Corp. ...................................... 2,666 50,521
a Lam Research Corp. ............................... 537 25,035
Lockheed Martin Corp. ............................ 289 20,733
Motorola Inc. .................................... 90 1,813
National Semiconductor Corp. ..................... 310 7,393
a NCR Corp. ........................................ 132 4,836
Nokia Corp., ADR (Finland) ....................... 937 18,984
a QLogic Corp. ..................................... 1,051 18,119
Texas Instruments Inc. ........................... 116 3,514
a Trident Microsystems Inc. ........................ 41 778
----------
----------
345,521
----------
----------
ENERGY MINERALS 6.7%
Chevron Corp. .................................... 299 18,556
Devon Energy Corp. ............................... 485 29,299
Exxon Mobil Corp. ................................ 2,097 128,651
Frontier Oil Corp. ............................... 580 18,792
Royal Dutch Shell PLC, A, ADR (United Kingdom) ... 133 8,908
Sunoco Inc. ...................................... 172 11,918
----------
----------
216,124
----------

Annual Report | 19

Institutional Fiduciary Trust

STATEMENT OF INVESTMENTS, JUNE 30, 2006 (CONTINUED)

- --------------------------------------------------------------------------------
FRANKLIN STRUCTURED LARGE CAP CORE EQUITY FUND SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
FINANCE 20.0%
Advance America Cash Advance Centers Inc. ........ 100 $ 1,754
AFLAC Inc. ....................................... 760 35,226
The Allstate Corp. ............................... 125 6,841
American Express Co. ............................. 64 3,406
American International Group Inc. ................ 275 16,239
a AmeriCredit Corp. ................................ 406 11,336
Ameriprise Financial Inc. ........................ 149 6,656
Assurant Inc. .................................... 679 32,864
Bank of America Corp. ............................ 1,203 57,864
The Bank of New York Co. Inc. .................... 263 8,469
a Berkshire Hathaway Inc., B ....................... 1 3,043
BlackRock Inc., A ................................ 44 6,123
Capital One Financial Corp. ...................... 327 27,942
Chubb Corp. ...................................... 480 23,952
Citigroup Inc. ................................... 1,598 77,088
Commerce Group Inc. .............................. 234 6,912
a CompuCredit Corp. ................................ 16 615
Doral Financial Corp. (Puerto Rico) .............. 261 1,673
Fannie Mae ....................................... 559 26,888
Fidelity National Financial Inc. ................. 279 10,867
a FirstFed Financial Corp. ......................... 65 3,749
Genworth Financial Inc., A ....................... 219 7,630
Golden West Financial Corp. ...................... 226 16,769
The Goldman Sachs Group Inc. ..................... 91 13,689
Greenhill & Co. Inc. ............................. 3 182
Hartford Financial Services Group Inc. ........... 24 2,030
HCC Insurance Holdings Inc. ...................... 174 5,123
Investors Financial Services Corp. ............... 196 8,800
JPMorgan Chase & Co. ............................. 146 6,132
Lehman Brothers Holdings Inc. .................... 96 6,254
M&T Bancorp ...................................... 91 10,731
MGIC Investment Corp. ............................ 38 2,470
Morgan Stanley ................................... 121 7,648
Nationwide Financial Services Inc., A ............ 235 10,359
a NCO Group Inc. ................................... 57 1,507
Northern Trust Corp. ............................. 77 4,258
Old Republic International Corp. ................. 563 12,031
Protective Life Corp. ............................ 101 4,709
Prudential Financial Inc. ........................ 255 19,814
SAFECO Corp. ..................................... 314 17,694
Selective Insurance Group Inc. ................... 341 19,052
StanCorp Financial Group Inc. .................... 40 2,036
W. R. Berkley Corp. .............................. 642 21,911
Wachovia Corp. ................................... 122 6,598
Washington Mutual Inc. ........................... 421 19,189
Wells Fargo & Co. ................................ 596 39,980
Zenith National Insurance Corp. .................. 140 5,554
----------
641,657
----------

20 | Annual Report

Institutional Fiduciary Trust

STATEMENT OF INVESTMENTS, JUNE 30, 2006 (CONTINUED)

- --------------------------------------------------------------------------------
FRANKLIN STRUCTURED LARGE CAP CORE EQUITY FUND SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
HEALTH SERVICES 2.8%
Aetna Inc. ....................................... 295 $ 11,779
CIGNA Corp. ...................................... 244 24,037
a Coventry Health Care Inc. ........................ 15 824
a Express Scripts Inc. ............................. 220 15,783
HCA Inc. ......................................... 395 17,044
LCA-Vision Inc. .................................. 56 2,963
a Pediatrix Medical Group Inc. ..................... 21 951
UnitedHealth Group Inc. .......................... 364 16,300
----------
89,681
----------
HEALTH TECHNOLOGY 10.4%
Abbott Laboratories .............................. 445 19,406
a Alkermes Inc. .................................... 176 3,330
Alpharma Inc., A ................................. 654 15,722
a Amgen Inc. ....................................... 326 21,265
a Barr Pharmaceuticals Inc. ........................ 50 2,385
Bristol-Myers Squibb Co. ......................... 608 15,723
a Endo Pharmaceuticals Holdings Inc. ............... 647 21,338
a Forest Laboratories Inc. ......................... 114 4,411
a Invitrogen Corp. ................................. 1 66
Johnson & Johnson ................................ 982 58,841
Merck & Co. Inc. ................................. 1,495 54,463
Mylan Laboratories Inc. .......................... 174 3,480
Pfizer Inc. ...................................... 2,842 66,702
a Varian Medical Systems Inc. ...................... 32 1,515
a ViroPharma Inc. .................................. 134 1,155
a Waters Corp. ..................................... 486 21,578
Wyeth ............................................ 503 22,338
----------
333,718
----------
INDUSTRIAL SERVICES 2.0%
Building Materials Holding Corp. ................. 43 1,198
Halliburton Co. .................................. 100 7,421
a Helix Energy Solutions Group Inc. ................ 405 16,346
a Maverick Tube Corp. .............................. 454 28,688
a Superior Energy Services Inc. .................... 11 373
Todco, A ......................................... 233 9,518
----------
63,544
----------
NON-ENERGY MINERALS 3.2%
Eagle Materials Inc. ............................. 586 27,835
Florida Rock Industries Inc. ..................... 46 2,285
Freeport-McMoRan Copper & Gold Inc., B ........... 481 26,652
Louisiana-Pacific Corp. .......................... 48 1,051
Metal Management Inc. ............................ 280 8,574
Nucor Corp. ...................................... 198 10,741
Steel Dynamics Inc. .............................. 216 14,200
Texas Industries Inc. ............................ 15 796

Annual Report | 21

Institutional Fiduciary Trust

STATEMENT OF INVESTMENTS, JUNE 30, 2006 (CONTINUED)

- --------------------------------------------------------------------------------
FRANKLIN STRUCTURED LARGE CAP CORE EQUITY FUND SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
NON-ENERGY MINERALS (CONTINUED)
United States Steel Corp. ........................ 80 $ 5,610
USEC Inc. ........................................ 273 3,235
----------
100,979
----------
PROCESS INDUSTRIES 0.9%
Agrium Inc. (Canada) ............................. 65 1,509
The Dow Chemical Co. ............................. 266 10,382
FMC Corp. ........................................ 100 6,439
H.B. Fuller Co. .................................. 8 348
Westlake Chemical Corp. .......................... 367 10,937
----------
29,615
----------
PRODUCER MANUFACTURING 8.4%
3M Co. ........................................... 524 42,324
Autoliv Inc. (Sweden) ............................ 191 10,805
Crane Co. ........................................ 86 3,578
Cummins Inc. ..................................... 64 7,824
Emerson Electric Co. ............................. 4 335
a Energizer Holdings Inc. .......................... 360 21,085
Freightcar America Inc. .......................... 225 12,490
General Electric Co. ............................. 1,769 58,306
Honeywell International Inc. ..................... 118 4,755
Joy Global Inc. .................................. 283 14,741
a Mettler-Toledo International Inc. (Switzerland) .. 474 28,710
Mueller Industries Inc. .......................... 594 19,620
Simpson Manufacturing Co. Inc. ................... 230 8,292
a Terex Corp. ...................................... 9 888
Textron Inc. ..................................... 72 6,637
Toro Co. ......................................... 6 280
a TRW Automotive Holdings Corp. .................... 86 2,346
Tyco International Ltd. .......................... 100 2,750
United Technologies Corp. ........................ 318 20,168
Watsco Inc. ...................................... 28 1,675
----------
267,609
----------
REAL ESTATE INVESTMENT TRUSTS 0.8%
FelCor Lodging Trust Inc. ........................ 599 13,022
PS Business Parks Inc. ........................... 225 13,275
----------
26,297
----------
RETAIL TRADE 4.2%
Abercrombie & Fitch Co., A ....................... 34 1,885
Best Buy Co. Inc. ................................. 86 4,716
a Dollar Tree Stores Inc. .......................... 158 4,187
a Dress Barn Inc. .................................. 57 1,445
The Gap Inc. ..................................... 120 2,088
The Home Depot Inc. .............................. 354 12,670
a InterActiveCorp .................................. 597 15,814

22 | Annual Report

Institutional Fiduciary Trust

STATEMENT OF INVESTMENTS, JUNE 30, 2006 (CONTINUED)

- --------------------------------------------------------------------------------
FRANKLIN STRUCTURED LARGE CAP CORE EQUITY FUND SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
RETAIL TRADE (CONTINUED)
J.C. Penney Co. Inc. ............................. 152 $ 10,261
a Kohl's Corp. ..................................... 36 2,128
Limited Brands Inc. .............................. 253 6,474
Lowe's Cos. Inc. ................................. 70 4,247
a Pantry Inc. ...................................... 9 518
a Rent-A-Center Inc. ............................... 150 3,729
Ross Stores Inc. ................................. 153 4,292
The Sherwin-Williams Co. ......................... 116 5,508
Target Corp. ..................................... 94 4,594
Wal-Mart Stores Inc. ............................. 1,012 48,748
Williams-Sonoma Inc. ............................. 54 1,839
----------
135,143
----------
TECHNOLOGY SERVICES 6.0%
Accenture Ltd., A ................................ 91 2,577
Automatic Data Processing Inc. ................... 202 9,161
a CSG Systems International Inc. ................... 161 3,983
a Digital Insight Corp. ............................ 46 1,577
a EarthLink Inc. ................................... 1,858 16,090
Fair Isaac Corp. ................................. 27 980
First Data Corp. ................................. 91 4,099
Global Payments Inc. ............................. 229 11,118
a InfoSpace Inc. ................................... 120 2,721
International Business Machines Corp. ............ 516 39,639
a Intuit Inc. ...................................... 183 11,051
Microsoft Corp. .................................. 2,850 66,405
a MicroStrategy Inc. ............................... 122 11,898
a Oracle Corp. ..................................... 459 6,651
a Salesforce.com Inc. .............................. 14 373
United Online Inc. ............................... 240 2,880
----------
191,203
----------
TRANSPORTATION 1.7%
C.H. Robinson Worldwide Inc. ..................... 240 12,792
a Continental Airlines Inc., B ..................... 104 3,099
a EGL Inc. ......................................... 238 11,948
United Parcel Service Inc., B .................... 327 26,922
----------
54,761
----------
UTILITIES 2.4%
Entergy Corp. .................................... 201 14,221
Exelon Corp. ..................................... 104 5,910
PG&E Corp. ....................................... 511 20,072
TXU Corp. ........................................ 634 37,907
----------
78,110
----------
TOTAL COMMON STOCKS (COST $3,006,856) ............ 3,180,119
----------

Annual Report | 23

Institutional Fiduciary Trust

STATEMENT OF INVESTMENTS, JUNE 30, 2006 (CONTINUED)

- ----------------------------------------------------------------------------------------------------------
FRANKLIN STRUCTURED LARGE CAP CORE EQUITY FUND SHARES VALUE
- ----------------------------------------------------------------------------------------------------------

SHORT TERM INVESTMENT (COST $8,375) 0.3%
MONEY MARKET FUND 0.3%
b Franklin Institutional Fiduciary Trust Money Market Portfolio, 4.83% ......... 8,375 $ 8,375
----------
TOTAL INVESTMENTS (COST $3,015,231) 99.5% .................................... 3,188,494
OTHER ASSETS, LESS LIABILITIES 0.5% .......................................... 14,661
----------
NET ASSETS 100.0% ............................................................ $3,203,155
==========

See Selected Portfolio Abbreviations on page 33.

a Non-income producing for the twelve months ended June 30, 2006.

b See Note 7 regarding investments in the Franklin Institutional Fiduciary
Trust Money Market Portfolio. The rate shown is the annualized seven-day
yield at period end.

24 | See notes to financial statements. | Annual Report

Institutional Fiduciary Trust

FINANCIAL HIGHLIGHTS

FRANKLIN STRUCTURED LARGE CAP GROWTH EQUITY FUND

----------------------------------------------
YEAR ENDED JUNE 30,
2006 2005 2004 2003 e
----------------------------------------------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ........................ $11.01 $11.94 $10.71 $10.00
----------------------------------------------
Income from investment operations a:
Net investment income b .................................. 0.06 0.09 0.04 0.01
Net realized and unrealized gains (losses) ............... 0.43 (0.14) 1.79 0.70
----------------------------------------------
Total from investment operations .......................... 0.49 (0.05) 1.83 0.71
----------------------------------------------
Less distributions from:
Net investment income .................................... (0.05) (0.10) (0.06) --
Net realized gains ....................................... (0.05) (0.78) (0.54) --
----------------------------------------------
Total distributions ....................................... (0.10) (0.88) (0.60) --
----------------------------------------------
Net asset value, end of year .............................. $11.40 $11.01 $11.94 $10.71
==============================================
Total return c ............................................ 4.44% (0.61)% 17.36% 7.10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ........................... $2,883 $2,761 $2,974 $2,143
Ratios to average net assets:
Expenses before waiver and payments by affiliate ......... 2.53% d 2.21% d 3.72% 1.03% f
Expenses net of waiver and payments by affiliate ......... 0.70% d 0.70% d 0.70% 0.12% f
Net investment income .................................... 0.49% 0.82% 0.32% 0.11% f
Portfolio turnover rate ................................... 30.83% 73.10% 173.60% 11.93%

b Based on average daily shares outstanding.

c Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable, and is not annualized for periods less than
one year.

d Benefit of expense reduction is less than 0.01%.

e For the period April 30, 2003 (commencement of operations) to June 30,
2003.

f Not annualized.

Annual Report | See notes to financial statements. | 25

Institutional Fiduciary Trust

STATEMENT OF INVESTMENTS, JUNE 30, 2006

- ----------------------------------------------------------------------------------------------------------------------------
FRANKLIN STRUCTURED LARGE CAP GROWTH EQUITY FUND COUNTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------

LONG TERM INVESTMENTS 98.4%
COMMON STOCKS 98.0%
COMMERCIAL SERVICES 1.2%
Moody's Corp. ................................................................ United States 204 $ 11,110
Robert Half International Inc. ............................................... United States 554 23,268
a Wright Express Corp. ......................................................... United States 9 258
----------
34,636
----------
COMMUNICATIONS 2.1%
America Movil SA de CV, L, ADR ............................................... Mexico 420 13,969
AT&T Inc. .................................................................... United States 204 5,690
a Embarq Corp. ................................................................. United States 16 656
a NII Holdings Inc. ............................................................ United States 290 16,350
Partner Communications Co. Ltd., ADR ......................................... Israel 814 6,683
Sprint Nextel Corp. .......................................................... United States 320 6,397
Telefonos de Mexico SA de CV, L, ADR ......................................... Mexico 533 11,102
----------
60,847
----------
CONSUMER DURABLES 1.2%
Eastman Kodak Co. ............................................................ United States 51 1,213
a Electronic Arts Inc. ......................................................... United States 162 6,973
Ethan Allen Interiors Inc. ................................................... United States 196 7,164
Ford Motor Co. ............................................................... United States 265 1,836
Furniture Brands International Inc. .......................................... United States 167 3,480
Harman International Industries Inc. ......................................... United States 101 8,622
a Meritage Homes Corp. ......................................................... United States 132 6,237
a Toll Brothers Inc. ........................................................... United States 4 102
----------
35,627
----------
CONSUMER NON-DURABLES 7.8%
American Greetings Corp., A .................................................. United States 120 2,521
Anheuser-Busch Cos. Inc. ..................................................... United States 71 3,237
Clorox Co. ................................................................... United States 137 8,353
The Coca-Cola Co. ............................................................ United States 591 25,425
Coca-Cola Femsa SA de CV, L, ADR ............................................. Mexico 47 1,387
a Guess? Inc. .................................................................. United States 78 3,257
K-Swiss Inc., A .............................................................. United States 200 5,340
Loews Corp. - Carolina Group ................................................. United States 285 14,640
PepsiCo Inc. ................................................................. United States 704 42,268
Phillips-Van Heusen Corp. .................................................... United States 54 2,061
The Procter & Gamble Co. ..................................................... United States 1,956 108,754
Reynolds American Inc. ....................................................... United States 24 2,767
Yankee Candle Co. Inc. ....................................................... United States 132 3,301
----------
223,311
----------
CONSUMER SERVICES 3.8%
a Apollo Group Inc., A ......................................................... United States 115 5,942
a eBay Inc. .................................................................... United States 306 8,963
Entercom Communications Corp. ................................................ United States 148 3,872
Gannett Co. Inc. ............................................................. United States 45 2,517
Hilton Hotels Corp. .......................................................... United States 305 8,625

26 | Annual Report

Institutional Fiduciary Trust

STATEMENT OF INVESTMENTS, JUNE 30, 2006 (CONTINUED)

LONG TERM INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED)
CONSUMER SERVICES (CONTINUED)
IHOP Corp. ................................................................... United States 2 $ 96
International Game Technology ................................................ United States 110 4,173
Intrawest Corp. .............................................................. Canada 230 7,328
a Jack in the Box Inc. ......................................................... United States 32 1,254
Landry's Restaurants Inc. .................................................... United States 228 7,399
a Scholastic Corp. ............................................................. United States 123 3,194
a Univision Communications Inc., A ............................................. United States 517 17,320
a Vail Resorts Inc. ............................................................ United States 179 6,641
a Viacom Inc., B ............................................................... United States 267 9,569
The Walt Disney Co. .......................................................... United States 727 21,810
----------
108,703
----------
DISTRIBUTION SERVICES 1.5%
AmerisourceBergen Corp. ...................................................... United States 127 5,324
Cardinal Health Inc. ......................................................... United States 65 4,181
a Performance Food Group Co. ................................................... United States 399 12,122
Sysco Corp. .................................................................. United States 717 21,911
----------
43,538
----------
ELECTRONIC TECHNOLOGY 16.7%
a Agilent Technologies Inc. .................................................... United States 84 2,651
a Apple Computer Inc. .......................................................... United States 375 21,420
Applied Materials Inc. ....................................................... United States 1,397 22,743
a Ase Test Ltd. ................................................................ Taiwan 479 4,349
The Boeing Co. ............................................................... United States 476 38,989
a Brocade Communications Systems Inc. .......................................... United States 746 4,581
a Cisco Systems Inc. ........................................................... United States 4,519 88,256
a Dell Inc. .................................................................... United States 2,096 51,163
a EMC Corp. .................................................................... United States 635 6,966
Harris Corp. ................................................................. United States 297 12,329
Intel Corp. .................................................................. United States 4,075 77,221
KLA-Tencor Corp. ............................................................. United States 161 6,693
a Lam Research Corp. ........................................................... United States 310 14,452
Linear Technology Corp. ...................................................... United States 655 21,936
a Network Appliance Inc. ....................................................... United States 63 2,224
Nokia Corp., ADR ............................................................. Finland 665 13,473
a Powerwave Technologies Inc. .................................................. United States 368 3,356
QUALCOMM Inc. ................................................................ United States 969 38,828
Rockwell Automation Inc. ..................................................... United States 214 15,410
a Silicon Laboratories Inc. .................................................... United States 34 1,195
Siliconware Precision Industries Co. Ltd., ADR ............................... Taiwan 337 2,015
a Sycamore Networks Inc. ....................................................... United States 1,809 7,345
Texas Instruments Inc. ....................................................... United States 33 1,000
a Trident Microsystems Inc. .................................................... United States 140 2,657
a Varian Inc. .................................................................. United States 342 14,197
Xilinx Inc. .................................................................. United States 199 4,507
----------
479,956
----------

Annual Report | 27

Institutional Fiduciary Trust

STATEMENT OF INVESTMENTS, JUNE 30, 2006 (CONTINUED)

LONG TERM INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED)
ENERGY MINERALS 2.4%
Devon Energy Corp. ........................................................... United States 540 $ 32,621
Exxon Mobil Corp. ............................................................ United States 327 20,062
Frontier Oil Corp. ........................................................... United States 84 2,722
Peabody Energy Corp. ......................................................... United States 32 1,784
Pogo Producing Co. ........................................................... United States 37 1,706
Valero Energy Corp. .......................................................... United States 172 11,441
----------
70,336
----------
FINANCE 8.2%
AFLAC Inc. ................................................................... United States 580 26,883
American Financial Group Inc. ................................................ United States 177 7,593
a AmeriCredit Corp. ............................................................ United States 56 1,564
AmerUs Group Co. ............................................................. United States 4 234
a Arch Capital Group Ltd. ...................................................... United States 301 17,897
Aspen Insurance Holdings Ltd. ................................................ United States 289 6,731
a Berkshire Hathaway Inc., B ................................................... United States 3 9,129
Calamos Asset Management Inc., A ............................................. United States 37 1,073
Doral Financial Corp. ........................................................ Puerto Rico 405 2,596
Downey Financial Corp. ....................................................... United States 73 4,953
a E*TRADE Financial Corp. ...................................................... United States 718 16,385
Fannie Mae ................................................................... United States 386 18,567
FBL Financial Group Inc., A .................................................. United States 111 3,596
Federated Investors Inc., B .................................................. United States 96 3,024
Fidelity National Financial Inc. ............................................. United States 194 7,556
First American Corp. ......................................................... United States 174 7,355
Freddie Mac .................................................................. United States 120 6,841
GATX Corp. ................................................................... United States 12 510
Golden West Financial Corp. .................................................. United States 239 17,734
a Knight Capital Group Inc. .................................................... United States 284 4,325
LandAmerica Financial Group Inc. ............................................. United States 55 3,553
Marsh & McLennan Cos. Inc. ................................................... United States 355 9,546
MetLife Inc. ................................................................. United States 57 2,919
Nuveen Investments ........................................................... United States 46 1,980
Ohio Casualty Corp. .......................................................... United States 52 1,546
RLI Corp. .................................................................... United States 137 6,601
Selective Insurance Group Inc. ............................................... United States 111 6,202
StanCorp Financial Group Inc. ................................................ United States 24 1,222
a United Rentals Inc. .......................................................... United States 31 991
Wachovia Corp. ............................................................... United States 104 5,624
Wells Fargo & Co. ............................................................ United States 446 29,918
XL Capital Ltd., A ........................................................... Bermuda 19 1,165
Zenith National Insurance Corp. .............................................. United States 14 555
----------
236,368
----------
HEALTH SERVICES 3.7%
Caremark Rx Inc. ............................................................. United States 415 20,696
CIGNA Corp. .................................................................. United States 14 1,379
a Community Health Systems Inc. ................................................ United States 6 221

28 | Annual Report

Institutional Fiduciary Trust

STATEMENT OF INVESTMENTS, JUNE 30, 2006 (CONTINUED)

LONG TERM INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED)
HEALTH SERVICES (CONTINUED)
a Express Scripts Inc. ......................................................... United States 150 $ 10,761
HCA Inc. ..................................................................... United States 109 4,703
a Health Net Inc., A ........................................................... United States 62 2,801
a Kindred Healthcare Inc. ...................................................... United States 263 6,838
a Molina Healthcare Inc. ....................................................... United States 26 989
Quest Diagnostics Inc. ....................................................... United States 90 5,393
UnitedHealth Group Inc. ...................................................... United States 404 18,091
a VCA Antech Inc. .............................................................. United States 200 6,386
a WellPoint Inc. ............................................................... United States 400 29,108
----------
107,366
----------
HEALTH TECHNOLOGY 13.6%
Abbott Laboratories .......................................................... United States 445 19,406
a Alkermes Inc. ................................................................ United States 63 1,192
Alpharma Inc., A ............................................................. United States 333 8,005
a Amgen Inc. ................................................................... United States 990 64,578
a Bio-Rad Laboratories Inc., A ................................................. United States 64 4,156
Biomet Inc. .................................................................. United States 134 4,193
Biovail Corp. ................................................................ Canada 143 3,348
a Boston Scientific Corp. ...................................................... United States 936 15,762
a Celgene Corp. ................................................................ United States 182 8,632
Eli Lilly and Co. ............................................................ United States 236 13,044
a Endo Pharmaceuticals Holdings Inc. ........................................... United States 270 8,904
a Genentech Inc. ............................................................... United States 106 8,671
a Invitrogen Corp. ............................................................. United States 38 2,511
Johnson & Johnson ............................................................ United States 1,961 117,503
a King Pharmaceuticals Inc. .................................................... United States 226 3,842
Medtronic Inc. ............................................................... United States 453 21,255
Merck & Co. Inc. ............................................................. United States 176 6,412
Pfizer Inc. .................................................................. United States 1,096 25,723
Schering-Plough Corp. ........................................................ United States 262 4,986
Serono SA, ADR ............................................................... Switzerland 142 2,435
a Varian Medical Systems Inc. .................................................. United States 419 19,840
a ViroPharma Inc. .............................................................. United States 102 879
a Waters Corp. ................................................................. United States 14 622
Wyeth ........................................................................ United States 472 20,961
a Zimmer Holdings Inc. ......................................................... United States 92 5,218
----------
392,078
----------
INDUSTRIAL SERVICES 1.5%
a Dycom Industries Inc. ........................................................ United States 199 4,237
Granite Construction Inc. .................................................... United States 62 2,807
Halliburton Co. .............................................................. United States 39 2,894
a Helix Energy Solutions Group Inc. ............................................ United States 361 14,570
a Jacobs Engineering Group Inc. ................................................ United States 54 4,300
Smith International Inc. ..................................................... United States 41 1,823
a Veritas DGC Inc. ............................................................. United States 270 13,927
----------
44,558
----------

Annual Report | 29

Institutional Fiduciary Trust

STATEMENT OF INVESTMENTS, JUNE 30, 2006 (CONTINUED)

LONG TERM INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED)
NON-ENERGY MINERALS 1.9%
Cemex SA de CV, CPO, ADR ..................................................... Mexico 120 $ 6,836
a Century Aluminum Co. ......................................................... United States 1 36
Companhia Vale do Rio Doce, ADR .............................................. Brazil 154 3,702
Freeport-McMoRan Copper & Gold Inc., B ....................................... United States 70 3,879
Louisiana-Pacific Corp. ...................................................... United States 22 482
Mittal Steel Co. NV, N.Y. shs., A ............................................ Netherlands 223 6,804
Nucor Corp. .................................................................. United States 70 3,797
Quanex Corp. ................................................................. United States 105 4,522
Southern Copper Corp. ........................................................ United States 37 3,298
Steel Dynamics Inc. .......................................................... United States 169 11,110
Texas Industries Inc. ........................................................ United States 169 8,974
----------
53,440
----------
PROCESS INDUSTRIES 1.8%
Agrium Inc. .................................................................. Canada 320 7,430
Bunge Ltd. ................................................................... United States 31 1,558
Celanese Corp., A ............................................................ United States 116 2,369
Eastman Chemical Co. ......................................................... United States 13 702
FMC Corp. .................................................................... United States 86 5,538
H.B. Fuller Co. .............................................................. United States 149 6,492
a Headwaters Inc. .............................................................. United States 258 6,594
Lyondell Chemical Co. ........................................................ United States 602 13,641
a PolyOne Corp. ................................................................ United States 75 659
Westlake Chemical Corp. ...................................................... United States 258 7,688
----------
52,671
----------
PRODUCER MANUFACTURING 8.0%
3M Co. ....................................................................... United States 444 35,862
A.O. Smith Corp. ............................................................. United States 116 5,378
ArvinMeritor Inc. ............................................................ United States 12 206
Commercial Metals Co. ........................................................ United States 22 565
General Electric Co. ......................................................... United States 2,757 90,871
Kennametal Inc. .............................................................. United States 60 3,735
a Mettler-Toledo International Inc. ............................................ Switzerland 265 16,051
Modine Manufacturing Co. ..................................................... United States 2 47
Mueller Industries Inc. ...................................................... United States 229 7,564
a Terex Corp. .................................................................. United States 166 16,384
Tyco International Ltd. ...................................................... United States 180 4,950
United Technologies Corp. .................................................... United States 778 49,341
----------
230,954
----------
REAL ESTATE INVESTMENT TRUSTS 0.1%
Boston Properties Inc. ....................................................... United States 28 2,531
Post Properties Inc. ......................................................... United States 17 771
----------
3,302
----------
RETAIL TRADE 7.5%
Abercrombie & Fitch Co., A ................................................... United States 55 3,049
Best Buy Co. Inc. ............................................................ United States 118 6,471

30 | Annual Report

Institutional Fiduciary Trust

STATEMENT OF INVESTMENTS, JUNE 30, 2006 (CONTINUED)

LONG TERM INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED)
RETAIL TRADE (CONTINUED)
a Charming Shoppes Inc. ........................................................ United States 557 $ 6,261
a Children's Place Retail Stores Inc. .......................................... United States 40 2,402
Dillard's Inc., A ............................................................ United States 132 4,204
The Home Depot Inc. .......................................................... United States 814 29,133
Longs Drug Stores Corp. ...................................................... United States 37 1,688
Lowe's Cos. Inc. ............................................................. United States 858 52,055
a Pacific Sunwear of California Inc. ........................................... United States 99 1,775
a Pantry Inc. .................................................................. United States 44 2,532
Ross Stores Inc. ............................................................. United States 56 1,571
Target Corp. ................................................................. United States 476 23,262
a Too Inc. ..................................................................... United States 129 4,952
Wal-Mart Stores Inc. ......................................................... United States 1,382 66,571
Walgreen Co. ................................................................. United States 209 9,371
----------
215,297
----------
TECHNOLOGY SERVICES 11.2%
Accenture Ltd., A ............................................................ United States 429 12,149
Adobe Systems Inc. ........................................................... United States 1 30
a CSG Systems International Inc. ............................................... United States 109 2,697
a EarthLink Inc. ............................................................... United States 732 6,339
Fair Isaac Corp. ............................................................. United States 48 1,743
First Data Corp. ............................................................. United States 516 23,241
a Google Inc., A ............................................................... United States 84 35,224
International Business Machines Corp. ........................................ United States 315 24,198
a Mercury Interactive Corp. .................................................... United States 254 8,882
Microsoft Corp. .............................................................. United States 5,574 129,874
a MicroStrategy Inc. ........................................................... United States 2 195
a Novell Inc. .................................................................. United States 515 3,415
Paychex Inc. ................................................................. United States 694 27,052
a RealNetworks Inc. ............................................................ United States 191 2,044
SAP AG, ADR .................................................................. Germany 23 1,208
a Sybase Inc. .................................................................. United States 509 9,875
a Symantec Corp. ............................................................... United States 243 3,776
a Yahoo! Inc. .................................................................. United States 907 29,931
----------
321,873
----------
TRANSPORTATION 3.4%
a British Airways PLC, ADR ..................................................... United Kingdom 58 3,684
C.H. Robinson Worldwide Inc. ................................................. United States 141 7,515
a Continental Airlines Inc., B ................................................. United States 264 7,867
a EGL Inc. ..................................................................... United States 21 1,054
Expeditors International of Washington Inc. .................................. United States 640 35,846
Lan Airlines SA, ADR ......................................................... Chile 144 4,686
Overseas Shipholding Group Inc. .............................................. United States 218 12,895
Southwest Airlines Co. ....................................................... United States 1,277 20,905
a YRC Worldwide Inc. ........................................................... United States 101 4,253
----------
98,705
----------

Annual Report | 31

Institutional Fiduciary Trust

STATEMENT OF INVESTMENTS, JUNE 30, 2006 (CONTINUED)

LONG TERM INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED)
UTILITIES 0.4%
Cleco Corp. .................................................................. United States 50 $ 1,162
a NRG Energy Inc. .............................................................. United States 209 10,070
----------
11,232
----------
TOTAL COMMON STOCKS (COST $2,574,297) ........................................ 2,824,798
----------
PREFERRED STOCK (COST $9,958) 0.4%
PROCESS INDUSTRIES 0.4%
Aracruz Celulose SA, ADR, pfd ................................................ Brazil 249 13,053
----------
TOTAL LONG TERM INVESTMENTS (COST $2,584,255) ................................ 2,837,851
----------
SHORT TERM INVESTMENT (COST $30,286) 1.1%
MONEY MARKET FUND 1.1%
b Franklin Institutional Fiduciary Trust Money Market Portfolio, 4.83% ......... United States 30,286 30,286
----------
TOTAL INVESTMENTS (COST $2,614,541) 99.5% .................................... 2,868,137
OTHER ASSETS, LESS LIABILITIES 0.5% .......................................... 14,714
----------
NET ASSETS 100.0% ............................................................ $2,882,851
==========

See Selected Portfolio Abbreviations on page 33.

a Non-income producing for the twelve months ended June 30, 2006.

b See Note 7 regarding investments in the Franklin Institutional Fiduciary
Trust Money Market Portfolio. The rate shown is the annualized seven-day
yield at period end.

32 | See notes to financial statements. | Annual Report

Institutional Fiduciary Trust

STATEMENT OF INVESTMENTS, JUNE 30, 2006

SELECTED PORTFOLIO ABBREVIATIONS

ADR - American Depository Receipt
MGIC - Mortgage Guaranty Insurance Corp.
CPO - Certificates of Ordinary Participation

Annual Report | See notes to financial statements. | 33

Institutional Fiduciary Trust

FINANCIAL STATEMENTS

STATEMENTS OF ASSETS AND LIABILITIES
June 30, 2006

-----------------------------------------
FRANKLIN STRUCTURED FRANKLIN STRUCTURED
LARGE CAP CORE LARGE CAP GROWTH
EQUITY FUND EQUITY FUND
-----------------------------------------

Assets:
Investments in securities:
Cost - Unaffiliated issuers ................................ $3,006,856 $2,584,255
Cost - Sweep Money Fund (Note 7) ........................... 8,375 30,286
-------------------------------
Total cost of investments .................................. $3,015,231 $2,614,541
===============================
Value - Unaffiliated issuers ............................... $3,180,119 $2,837,851
Value - Sweep Money Fund (Note 7) .......................... 8,375 30,286
-------------------------------
Total value of investments ................................. 3,188,494 2,868,137
Receivables:
Dividends .................................................. 3,206 1,448
Affiliates ................................................. 31,134 33,081
-------------------------------
Total assets ......................................... 3,222,834 2,902,666
-------------------------------
Liabilities:
Payables:
Reports to shareholders .................................... 4,570 5,504
Professional fees .......................................... 13,146 13,146
Pricing fees ............................................... 1,829 1,072
Accrued expenses and other liabilities ...................... 134 93
-------------------------------
Total liabilities .................................... 19,679 19,815
-------------------------------
Net assets, at value ............................... $3,203,155 $2,882,851
===============================
Net assets consist of:
Paid-in capital ............................................. $2,852,660 $2,606,354
Undistributed net investment income ......................... 19,507 7,853
Net unrealized appreciation (depreciation) .................. 173,263 253,596
Accumulated net realized gain (loss) ........................ 157,725 15,048
===============================
Net assets, at value ......................................... $3,203,155 $2,882,851
===============================
Shares outstanding ........................................... 275,889 252,939
===============================
Net asset value and maximum offering price per share ......... $ 11.61 $ 11.40
===============================

34 | See notes to financial statements. | Annual Report

Institutional Fiduciary Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF OPERATIONS
for the year ended June 30, 2006

----------------------------------------
FRANKLIN STRUCTURED FRANKLIN STRUCTURED
LARGE CAP CORE LARGE CAP GROWTH
EQUITY FUND EQUITY FUND
----------------------------------------

Investment income:
Dividends:
Unaffiliated issuers ....................................................... $ 58,301 $ 34,269
Sweep Money Fund (Note 7) .................................................. 401 413
----------------------------
Total investment income .............................................. 58,702 34,682
----------------------------
Expenses:
Management fees (Note 3a) .................................................. 15,536 14,502
Administrative fees (Note 3b) .............................................. 6,231 5,815
Transfer agent fees (Note 3c) .............................................. 184 209
Custodian fees (Note 4) .................................................... 77 82
Reports to shareholders .................................................... 9,952 10,848
Registration and filing fees ............................................... 13,432 13,357
Professional fees .......................................................... 20,508 20,731
Pricing fees ............................................................... 6,017 5,122
Trustees' fees and expenses ................................................ 37 35
Other ...................................................................... 2,731 2,975
----------------------------
Total expenses ....................................................... 74,705 73,676
Expense reductions (Note 4) .......................................... (7) (5)
Expenses waived/paid by affiliates (Note 3d) ......................... (52,828) (53,317)
----------------------------
Net expenses ....................................................... 21,870 20,354
----------------------------
Net investment income ............................................. 36,832 14,328
----------------------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ................................................................ 234,104 73,848
Foreign currency transactions .............................................. 4 (52)
----------------------------
Net realized gain (loss) .................................................... 234,108 73,796
----------------------------
Net change in unrealized appreciation (depreciation) on investments ......... (36,905) 34,171
----------------------------
Net realized and unrealized gain (loss) ...................................... 197,203 107,967
----------------------------
Net increase (decrease) in net assets resulting from operations .............. $234,035 $122,295
============================

Annual Report | See notes to financial statements. | 35

Institutional Fiduciary Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF CHANGES IN NET ASSETS

-------------------------------------------------------
FRANKLIN STRUCTURED FRANKLIN STRUCTURED
LARGE CAP CORE LARGE CAP GROWTH
EQUITY FUND EQUITY FUND
YEAR ENDED JUNE 30, YEAR ENDED JUNE 30,
-------------------------------------------------------
2006 2005 2006 2005
-------------------------------------------------------

Increase (decrease) in net assets:
Operations:
Net investment income ............................................. $ 36,832 $ 38,606 $ 14,328 $ 23,518
Net realized gain (loss) from investments and foreign currency
transactions .................................................... 234,108 154,431 73,796 (28,599)
Net change in unrealized appreciation (depreciation)
on investments .................................................. (36,905) (9,893) 34,171 (11,837)
-------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations ........................................... 234,035 183,144 122,295 (16,918)
-------------------------------------------------------
Distributions to shareholders from:
Net investment income ............................................. (56,237) (13,085) (13,541) (24,746)
Net realized gains ................................................ (218,748) (235,307) (12,162) (194,106)
-------------------------------------------------------
Total distributions to shareholders ................................ (274,985) (248,392) (25,703) (218,852)
-------------------------------------------------------
Capital share transactions (Note 2) ................................ 274,985 248,392 25,703 21,831
-------------------------------------------------------
Net increase (decrease) in net assets ........................ 234,035 183,144 122,295 (213,939)
Net assets:
Beginning of year .................................................. 2,969,120 2,785,976 2,760,556 2,974,495
-------------------------------------------------------
End of year ........................................................ $3,203,155 $2,969,120 $2,882,851 $2,760,556
=======================================================
Undistributed net investment income included in net assets:
End of year ........................................................ $ 19,507 $ 38,691 $ 7,853 $ 7,066
=======================================================

36 | See notes to financial statements. | Annual Report

Institutional Fiduciary Trust

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Institutional Fiduciary Trust (the Trust) is registered under the Investment
Company Act of 1940 (1940 Act) as an open-end investment company, consisting of
four separate series. All funds included in this report (the Funds) are
diversified. The financial statements of the remaining funds in the series are
presented separately.

The following summarizes the Funds' significant accounting policies.

A. SECURITY VALUATION

Securities listed on a securities exchange or on the NASDAQ National Market
System are valued at the last quoted sale price or the official closing price of
the day, respectively. Over-the-counter securities and listed securities for
which there is no reported sale are valued within the range of the most recent
quoted bid and ask prices. Securities that trade in multiple markets or on
multiple exchanges are valued according to the broadest and most representative
market. Investments in open-end mutual funds are valued at the closing net asset
value.

The Trust has procedures to determine the fair value of individual securities
and other assets for which market prices are not readily available or which may
not be reliably priced. Methods for valuing these securities may include:
fundamental analysis, matrix pricing, discounts from market prices of similar
securities, or discounts applied due to the nature and duration of restrictions
on the disposition of the securities. Due to the inherent uncertainty of
valuations of such securities, the fair values may differ significantly from the
values that would have been used had a ready market for such investments
existed. Occasionally, events occur between the time at which trading in a
security is completed and the close of the NYSE that might call into question
the availability (including the reliability) of the value of a portfolio
security held by the Fund. If such an event occurs, the securities may be valued
using fair value procedures, which may include the use of independent pricing
services. All security valuation procedures are approved by the Trust's Board of
Trustees.

B. FOREIGN CURRENCY TRANSLATION

Portfolio securities and other assets and liabilities denominated in foreign
currency are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities, income and expense items denominated in foreign currencies are
translated into U.S. dollars at the exchange rate in effect on the transaction
date. Occasionally, events may impact the availability or reliability of foreign
exchange rates used to convert the U.S. dollar equivalent value. If such an
event occurs, the foreign exchange rate will be valued at fair value using
procedures established and approved by the Trust's Board of Trustees.

The Funds do not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments on the
Statement of Operations.

Annual Report | 37

Institutional Fiduciary Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

B. FOREIGN CURRENCY TRANSLATION (CONTINUED)

Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions and the difference between the recorded amounts
of dividends, interest, and foreign withholding taxes and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in foreign exchange rates on
foreign denominated assets and liabilities other than investments in securities
held at the end of the reporting period.

C. FOREIGN CURRENCY CONTRACTS

When the Funds purchase or sell foreign securities they may enter into foreign
exchange contracts to minimize foreign exchange risk from the trade date to the
settlement date of the transactions. A foreign exchange contract is an agreement
between two parties to exchange different currencies at an agreed upon exchange
rate on a specified date. Realized and unrealized gains and losses on these
contracts may be in excess of the amount reflected in the Statement of
Operations.

The risk of these contracts includes movement in the values of the foreign
currencies relative to the U.S. dollar and possible inability of the counter
parties to fulfill their obligations under the contracts, which may be in excess
of the amounts reflected in the Statement of Assets and Liabilities.

D. INCOME TAXES

No provision has been made for U.S. income taxes because each fund intends to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute to shareholders substantially all of its taxable income and net
realized gains.

E. 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. Dividend income is
recorded on the ex-dividend date. Distributions to shareholders are recorded on
the ex-dividend date and are determined according to income tax regulations (tax
basis). Distributable earnings determined on a tax basis may differ from
earnings recorded in accordance with accounting principles generally accepted in
the United States. These differences may be permanent or temporary. Permanent
differences are reclassified among capital accounts to reflect their tax
character. These reclassifications have no impact on net assets or the results
of operations. Temporary differences are not reclassified, as they may reverse
in subsequent periods.

Common expenses incurred by the Trust are allocated among the funds based on the
ratio of net assets of each fund to the combined net assets of the Trust. Fund
specific expenses are charged directly to the fund that incurred the expense.

38 | Annual Report

Institutional Fiduciary Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

F. ACCOUNTING ESTIMATES

G. REDEMPTION FEES

A short term trading redemption fee will be imposed, with some exceptions, on
any Fund shares that are redeemed or exchanged within seven calendar days
following their purchase date. The redemption fee is 2% of the amount redeemed.
Such fees are retained by the Funds and accounted for as an addition to paid-in
capital. There were no redemption fees for the year.

H. GUARANTEES AND INDEMNIFICATIONS

2. SHARES OF BENEFICIAL INTEREST

At June 30, 2006, there were an unlimited number of shares authorized ($0.01 par
value). Transactions in the Funds' shares were as follows:

-------------------------------------------------
FRANKLIN FRANKLIN
STRUCTURED LARGE CAP STRUCTURED LARGE CAP
CORE EQUITY FUND GROWTH EQUITY FUND
-------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------

CLASS A SHARES:
Year ended June 30, 2006
Shares issued in reinvestment of distributions ...... 23,933 $ 274,985 2,178 $ 25,703
-------------------------------------------------
Net increase (decrease) ............................. 23,933 $ 274,985 2,178 $ 25,703
=================================================
Year ended June 30, 2005
Shares issued in reinvestment of distributions ...... 21,580 $ 248,392 18,115 $ 204,333
Shares redeemed ..................................... -- -- (16,531) (182,502)
-------------------------------------------------
Net increase (decrease) ............................. 21,580 $ 248,392 1,584 $ 21,831
=================================================

Annual Report | 39

Institutional Fiduciary Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. TRANSACTIONS WITH AFFILIATES

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

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

A. MANAGEMENT FEES

The Funds pay an investment management fee to Advisers of 0.50% per year of the
average daily net assets of each of the Funds.

B. ADMINISTRATIVE FEES

The Funds pay an administrative fee to FT Services of 0.20% per year of the
average daily net assets of each of the Funds.

C. TRANSFER AGENT FEES

The Funds paid transfer agent fees as noted in the Statement of Operations of
which the following amounts were retained by Investor Services:

-------------------------------------
FRANKLIN FRANKLIN
STRUCTURED STRUCTURED
LARGE CAP CORE LARGE CAP GROWTH
EQUITY FUND EQUITY FUND
-------------------------------------
Transfer agent fees ................... $48 $52

D. VOLUNTARY WAIVER AND EXPENSE REIMBURSEMENTS

FT Services agreed in advance to voluntarily waive administrative fees.
Additionally, Advisers agreed in advance to voluntarily waive management fees
and assume payment of other expenses. Total expenses waived /paid by FT Services
and Adviser are not subject to reimbursement by the Funds subsequent to the
Funds' fiscal year end.

E. OTHER AFFILIATED TRANSACTIONS

At June 30, 2006, Advisers owned 89.80% and 90.50% of the Franklin Structured
Large Cap Core Equity Fund and the Franklin Structured Large Cap Growth Equity
Funds' outstanding shares, respectively.

40 | Annual Report

Institutional Fiduciary Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4. EXPENSE OFFSET ARRANGEMENT

The Funds 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 Funds' custodian expenses. During the year ended June 30, 2006, the
custodian fees were reduced as noted in the Statement of Operations.

5. INCOME TAXES

During the year ended June 30, 2006, the Franklin Structured Large Cap Growth
Equity Fund utilized $16,486 of capital loss carryforwards. For tax purposes,
realized currency losses occurring subsequent to October 31, may be deferred and
treated as occurring on the first day of the following fiscal year. At June 30,
2006, the Franklin Structured Large Cap Growth Fund deferred realized currency
losses of $52.

The tax character of distributions paid during the years ended June 30, 2006 and
2005, was as follows:

-----------------------------------------------
FRANKLIN STRUCTURED FRANKLIN STRUCTURED
LARGE CAP CORE LARGE CAP GROWTH
EQUITY FUND EQUITY FUND
-----------------------------------------------
2006 2005 2006 2005
-----------------------------------------------

Distributions paid from:
Ordinary income ................. $208,872 $203,145 $ 13,541 $141,294
Long term capital gain .......... 66,113 45,247 12,162 77,558
-----------------------------------------------
$274,985 $248,392 $ 25,703 $218,852
===============================================

At June 30, 2006, the cost of investments, net unrealized appreciation
(depreciation), undistributed ordinary income and undistributed long term
capital gains for income tax purposes were as follows:

---------------------------------
FRANKLIN FRANKLIN
STRUCTURED STRUCTURED
LARGE CAP CORE LARGE CAP GROWTH
EQUITY FUND EQUITY FUND
---------------------------------

Cost of investments .............................. $3,020,258 $2,636,990
----------------------------
Unrealized appreciation .......................... $ 333,800 $ 374,217
Unrealized depreciation .......................... (165,564) (143,070)
----------------------------
Net unrealized appreciation (depreciation) ....... $ 168,236 $ 231,147
============================
Undistributed ordinary income .................... $ 133,914 $ 16,756
Undistributed long term capital gains ............ 48,345 28,644
----------------------------
Distributable earnings ........................... $ 182,259 $ 45,400
============================

Annual Report | 41

Institutional Fiduciary Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. INCOME TAXES (CONTINUED)

Net investment income differs for financial statement and tax purposes primarily
due to differing treatment of foreign currency transactions.

Net realized gains (losses) differ for financial statement and tax purposes
primarily due to differing treatments of wash sales and foreign currency
transactions.

6. INVESTMENT TRANSACTIONS

Purchases and sales (excluding short term securities) for the year ended June
30, 2006, were as follows:

-----------------------------------
FRANKLIN FRANKLIN
STRUCTURED STRUCTURED
LARGE CAP CORE LARGE CAP GROWTH
EQUITY FUND EQUITY FUND
-----------------------------------
Purchases ............................... $2,475,584 $889,566
Sales ................................... $2,395,899 $921,815

7. INVESTMENTS IN FRANKLIN INSTITUTIONAL FIDUCIARY TRUST MONEY MARKET PORTFOLIO

The Funds may invest in the Franklin Institutional Fiduciary Trust Money Market
Portfolio (the Sweep Money Fund), an open-end investment company managed by
Advisers. Management fees paid by the Funds are reduced on assets invested in
the Sweep Money Fund, in an amount not to exceed the management and
administrative fees paid by the Sweep Money Fund.

8. REGULATORY MATTERS

42 | Annual Report

Institutional Fiduciary Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

8. REGULATORY MATTERS (CONTINUED)

to the relevant funds in accordance with the terms and conditions of that
settlement was completed. The Trust did not participate in the CAGO Settlement.

9. FASB INTERPRETATION NO. 48

Annual Report | 43

Institutional Fiduciary Trust

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF INSTITUTIONAL FIDUCIARY TRUST

In our opinion, the accompanying statements of assets and liabilities, including
the statements of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Franklin Structured Large Cap Core
Equity Fund and Franklin Structured Large Cap Growth Equity Fund (separate
portfolios of Institutional Fiduciary Trust, hereafter referred to as the
"Funds") at June 30, 2006, the results of each of their operations for the year
then ended, the changes in each of their net assets for each of the two years in
the period then ended and the financial highlights for each of the periods
presented, in conformity with accounting principles generally accepted in the
United States 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, 2006 by correspondence with the custodian, provide a reasonable basis for
our opinion.

PricewaterhouseCoopers LLP

San Francisco, California
August 16, 2006

44 | Annual Report

Institutional Fiduciary Trust

TAX DESIGNATION (UNAUDITED)

Under Section 852(b)(3)(C) of the Internal Revenue Code (Code), the Funds
designate the maximum amount allowable but no less than the following amounts as
long term capital gain dividends for the fiscal year ended June 30, 2006:

--------------------------------------
FRANKLIN FRANKLIN
STRUCTURED STRUCTURED
LARGE CAP CORE LARGE CAP GROWTH
EQUITY FUND EQUITY FUND
--------------------------------------
$74,952 $40,806

Under Section 871(k)(2)(C) of the Code, the Funds designate the maximum amount
allowable but no less than the following amounts as short term capital gain
dividends for purposes of the tax imposed under Section 871(a)(1)(A) of the Code
for the fiscal year ended June 30, 2006:

--------------------------------------
FRANKLIN FRANKLIN
STRUCTURED STRUCTURED
LARGE CAP CORE LARGE CAP GROWTH
EQUITY FUND EQUITY FUND
--------------------------------------
$157,202 $8,903

Under Section 854(b)(2) of the Code, the Funds designate the following maximum
amounts as qualified dividends for purposes of the maximum rate under Section
1(h)(11) of the Code for the fiscal year ended June 31, 2006:

--------------------------------------
FRANKLIN FRANKLIN
STRUCTURED STRUCTURED
LARGE CAP CORE LARGE CAP GROWTH
EQUITY FUND EQUITY FUND
--------------------------------------
$58,067 $33,932

In January 2007, shareholders will receive Form 1099-DIV which includes their
share of qualified dividends distributed during the calendar year 2006.
Shareholders are advised to check with their tax advisors for information on the
treatment of these amounts on their individual income tax returns.

Under Section 854(b)(2) of the Code, the Funds designate the following
percentage amounts of the ordinary income dividends as income qualifying for the
dividends received deduction for the fiscal year ended June 30, 2006:

--------------------------------------
FRANKLIN FRANKLIN
STRUCTURED STRUCTURED
LARGE CAP CORE LARGE CAP GROWTH
EQUITY FUND EQUITY FUND
--------------------------------------
27.40% 100%

Annual Report | 45

Institutional Fiduciary Trust

BOARD MEMBERS AND OFFICERS

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) Trustee Since 1985 141 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 56 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 1989 142 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 2005 137 Director, Hess Corporation (formerly,
One Franklin Parkway Amerada Hess Corporation) (explo-
San Mateo, CA 94403-1906 ration and refining of oil and gas),
H.J. Heinz Company (processed foods
and allied products), RTI International
Metals, Inc. (manufacture and distri-
bution 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).
- ------------------------------------------------------------------------------------------------------------------------------------

46 | Annual Report

FRANK W.T. LAHAYE (1929) Trustee Since 1985 114 Director, Center for Creative Land
One Franklin Parkway 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).
- ------------------------------------------------------------------------------------------------------------------------------------
GORDON S. MACKLIN (1928) Trustee Since 1992 141 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).
- ------------------------------------------------------------------------------------------------------------------------------------
FRANK A. OLSON (1932) Trustee Since 2005 104 Director, Hess Corporation (formerly,
One Franklin Parkway Amerada Hess Corporation) (explo-
San Mateo, CA 94403-1906 ration and refining of oil and gas) and
Sentient Jet (private jet service); and
FORMERLY, Director, Becton Dickinson
and Company (medical technology),
Cooper Industries, Inc. (electrical
products and tools and hardware),
Health Net, Inc. (formerly, Foundation
Health) (integrated managed care),
The Hertz Corporation, Pacific
Southwest Airlines, The RCA
Corporation, Unicom (formerly,
Commonwealth Edison), UAL
Corporation (airlines) and White
Mountains Insurance Group, Ltd.
(holding company).
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Chairman Emeritus, The Hertz Corporation (car rental) (since 2000) (Chairman of the Board (1980-2000) and Chief Executive Officer
(1977-1999)); and FORMERLY, Chairman of the Board, President and Chief Executive Officer, UAL Corporation (airlines).
- ------------------------------------------------------------------------------------------------------------------------------------

Annual Report | 47

INTERESTED BOARD MEMBERS AND OFFICERS

**CHARLES B. JOHNSON (1933) Trustee and Trustee since 141 None
One Franklin Parkway Chairman of 1985 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 42 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
**RUPERT H. JOHNSON, JR. (1940) Trustee, Trustee since 123 None
One Franklin Parkway President and 1985, President
San Mateo, CA 94403-1906 Chief and Chief
Executive 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 45 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 45 of the investment companies in Franklin
Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
JAMES M. DAVIS (1952) Chief Chief Compliance Not Applicable Not Applicable
One Franklin Parkway Compliance Officer since 2004
San Mateo, CA 94403-1906 Officer and and Vice
Vice President President - AML
- AML Compliance since
Compliance February 2006
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Director, Global Compliance, Franklin Resources, Inc.; officer of 47 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:

Vice President, Franklin Templeton Services, LLC; officer of 31 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).
- ------------------------------------------------------------------------------------------------------------------------------------

48 | Annual Report

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 47 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 Templeton Investments; officer and director of one of the subsidiaries of Franklin
Resources, Inc.; and officer of 47 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
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 47 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).
- ------------------------------------------------------------------------------------------------------------------------------------
KAREN L. SKIDMORE (1952) Vice President Vice President Not Applicable Not Applicable
One Franklin Parkway and Secretary since March 2006
San Mateo, CA 94403-1906 and Secretary
since April 2006
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Senior Associate General Counsel, Franklin Templeton Investments; Vice President and Secretary, Templeton Funds Annuity Company;
and officer of 31 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------

Annual Report | 49

CRAIG S. TYLE (1960) Vice President Since October Not Applicable Not Applicable
One Franklin Parkway 2005
San Mateo, CA 94403-1906
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

General Counsel and Executive Vice President, Franklin Resources, Inc.; officer of 47 of the investment companies in Franklin
Templeton Investments; and FORMERLY, Partner, Shearman & Sterling, LLP (2004-2005); and General Counsel, Investment Company
Institute (ICI) (1997-2004).
- ------------------------------------------------------------------------------------------------------------------------------------
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 47 of the investment companies in Franklin Templeton
Investments; and FORMERLY, Managing Director, RSM McGladrey, Inc. (1999-2004); and Partner, McGladrey & Pullen, LLP (1979-1987 and
1991-2004).
- ------------------------------------------------------------------------------------------------------------------------------------

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

50 | Annual Report

Institutional Fiduciary Trust

SHAREHOLDER INFORMATION

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT

Annual Report | 51

Institutional Fiduciary Trust

SHAREHOLDER INFORMATION (CONTINUED)

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)

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 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 backup 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. Among other factors taken into
account by the Board were the Manager's best execution trading policies,
including a favorable report by an independent portfolio trading analytical
firm. Consideration was also given to the experience of each 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 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 and the firsthand experience of the
individual Trustees who deal with the shareholder services department in their
capacities as shareholders in one or more of the various Franklin Templeton
funds.

FRANKLIN STRUCTURED LARGE CAP CORE EQUITY FUND - The performance universe for
this Fund consisted of the Fund and all retail and institutional large-cap core
funds as selected by Lipper. The Lipper report comparison showed the Fund's
total return for the one-year period to be in the second-highest quintile of its
performance universe and for the two-year period of its operation to be in the
third or middle quintile of such universe. The Board found such performance
acceptable.

FRANKLIN STRUCTURED LARGE CAP GROWTH EQUITY FUND - The performance universe for
this Fund consisted of the Fund and all retail and institutional large-cap
growth funds as selected by Lipper. The Lipper report comparison showed the
Fund's total return for the two-year period of its existence to be in the lowest
quintile of such universe. The Board found such performance acceptable, noting
the Fund's small size, which as of December 31, 2005, was under $3 million and
the fact that its total return for the one-year period exceeded 8% as shown in
the Lipper report.

52 | Annual Report

Institutional Fiduciary Trust

SHAREHOLDER INFORMATION (CONTINUED)

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)

COMPARATIVE EXPENSES. Consideration was given to a comparative analysis of the
management fees and total expense ratios of each Fund compared with those of a
group of other funds selected by Lipper as its appropriate Lipper expense group
under Lipper reports for each Fund. Prior to making such comparison, the Board
relied upon a survey showing that the scope of investment management services
covered under the Fund's investment management agreement was similar to those
provided by fund managers to other mutual fund groups that would be used as a
basis of comparison in the Lipper reports. The Lipper reports showed the
effective management fee rates for Franklin Structured Large Cap Core Equity
Fund and Franklin Structured Large Cap Growth Equity Fund in comparison with
those charged by other funds within their Lipper expense group assuming they
were the same size of these respective Funds to be in the middle and second
least expensive quintiles of their Lipper expense groups, respectively, and
their actual total expenses were in each case within the least expensive
quintiles of their respective Lipper expense groups. The Board was satisfied
with the comparative expenses of these two Funds, noting they both benefited
from management fee waivers or reimbursements.

MANAGEMENT PROFITABILITY. The Board also considered the level of profits
realized by the Manager and its affiliates in connection with the operation of
each 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 each 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
Funds made in prior years and that the Funds' independent registered public
accounting firm had been engaged by the Manager to perform certain procedures on
a biennial basis, specified and approved by the Manager and the Funds' Board
solely for their purposes and use in reference to the profitability analysis.
Included in the analysis were the revenue and related costs involved in
providing services to the Funds, as well as each Fund's relative contribution 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 affiliates may not be fully reflected in the
expenses allocated to each 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
Funds, as well as the need to meet additional regulatory and compliance
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

Annual Report | 53

Institutional Fiduciary Trust

SHAREHOLDER INFORMATION (CONTINUED)

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)

profitability from management operations exclusive of distribution expenses, as
well as profitability including distribution expenses. Based upon its
consideration of all these factors, the Board determined that the level of
profits realized by the Manager and its affiliates from providing services to
each 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 Funds grow 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's realizing a larger
profit margin on management services provided such a fund. In view of the
relatively small asset size of Franklin Structured Large Cap Core Equity Fund
and Franklin Structured Large Cap Growth Equity Fund, which in each case was
approximately $3 million at December 31, 2005, and the fact that such Funds
benefited from fee waivers or reimbursements, the Board did not believe that
management was realizing economies of scale in its management of these two
Funds.

PROXY VOTING POLICIES AND PROCEDURES

QUARTERLY STATEMENT OF INVESTMENTS

54 | Annual Report

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[LOGO](R) FRANKLIN TEMPLETON INSTITUTIONAL
FRANKLIN TEMPLETON 600 Fifth Avenue
INSTITUTIONAL New York, NY 10020

ANNUAL REPORT

INSTITUTIONAL FIDUCIARY TRUST

FRANKLIN STRUCTURED LARGE CAP CORE EQUITY FUND
FRANKLIN STRUCTURED LARGE CAP GROWTH EQUITY FUND

INVESTMENT MANAGER

Franklin Advisers, Inc.

DISTRIBUTOR

Franklin Templeton Distributors, Inc.
One Franklin Parkway
San Mateo, CA 94403-1906

FRANKLIN TEMPLETON INSTITUTIONAL SERVICES

1-800/321-8563
franklintempletoninstitutional.com

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.

IFT-2 A2006 08/06

ANNUAL REPORT
- ------------------------------------------------------------------------ 30 2006
06

THE EXPERTISE OF MANY. THE STRENGTH OF ONE.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

INSTITUTIONAL FIDUCIARY TRUST

----------------------------------------

Money Market Portfolio

[LOGO](R)
FRANKLIN TEMPLETON
INSTITUTIONAL

FRANKLIN o TEMPLETON o FIDUCIARY

Contents

ANNUAL REPORT

IFT Money Market Portfolio ................................................. 1

Performance Summary ........................................................ 2

Your Fund's Expenses ....................................................... 4

Financial Highlights and Statement of Investments .......................... 6